Aecom Earnings 2019-06-28

ACM 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-52423

AECOM

(Exact Name of Registrant as Specified in its Charter)

Delaware		61-1088522
State or Other Jurisdiction Of Incorporation or Organization		I.R.S. Employer Identification Number

1999 Avenue of the Stars, Suite 2600
Los Angeles, California		90067
Address of Principal Executive Offices		Zip Code

(213) 593-8000

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value		ACM		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of July 31, 2019, 157,726,729 shares of the registrant’s common stock were outstanding.

Table of Contents

AECOM

INDEX


PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1

	Consolidated Balance Sheets as of June 30, 2019 (unaudited) and September 30, 2018	1

	Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2019 (unaudited) and June 30, 2018 (unaudited)	2

	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended June 30, 2019 (unaudited) and June 30, 2018 (unaudited)	3

	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended June 30, 2019 (unaudited) and June 30, 2018 (unaudited)	4

	Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2019 (unaudited) and June 30, 2018 (unaudited)	6

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53

Item 4.	Controls and Procedures	54

PART II.	OTHER INFORMATION	54

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72

Item 4.	Mine Safety Disclosures	72

Item 6.	Exhibits	73

SIGNATURES		74

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AECOM

Consolidated Balance Sheets

(in thousands, except share data)


	June 30,		September 30,
	2019		2018
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	592,784	$	642,168
Cash in consolidated joint ventures		200,783		244,565
Total cash and cash equivalents		793,567		886,733
Accounts receivable—net		3,373,361		3,307,851
Contract assets		2,454,757		2,160,970
Prepaid expenses and other current assets		607,511		585,152
Current assets held for sale		—		59,800
Income taxes receivable		42,629		126,816
TOTAL CURRENT ASSETS		7,271,825		7,127,322
PROPERTY AND EQUIPMENT—NET		603,480		614,062
DEFERRED TAX ASSETS—NET		160,289		159,396
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES		391,520		310,661
GOODWILL		5,906,484		5,921,116
INTANGIBLE ASSETS—NET		255,213		319,892
OTHER NON-CURRENT ASSETS		206,401		228,682
TOTAL ASSETS	$	14,795,212	$	14,681,131

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term debt	$	44,886	$	8,353
Accounts payable		2,609,905		2,726,047
Accrued expenses and other current liabilities		2,157,870		2,267,046
Income taxes payable		43,351		39,802
Contract liabilities		969,944		931,431
Current liabilities held for sale		—		22,300
Current portion of long-term debt		114,749		134,698
TOTAL CURRENT LIABILITIES		5,940,705		6,129,677
OTHER LONG-TERM LIABILITIES		326,588		329,457
DEFERRED TAX LIABILITY—NET		5,168		47,273
PENSION BENEFIT OBLIGATIONS		372,448		412,604
LONG-TERM DEBT		3,653,291		3,483,746
TOTAL LIABILITIES		10,298,200		10,402,757

COMMITMENTS AND CONTINGENCIES (Note 14)

AECOM STOCKHOLDERS’ EQUITY:
Common stock—authorized, 300,000,000 shares of $0.01 par value as of June 30, 2019 and September 30, 2018; issued and outstanding 157,659,181 and 156,983,356 shares as of June 30, 2019 and September 30, 2018, respectively		1,577		1,570
Additional paid-in capital		3,930,999		3,846,392
Accumulated other comprehensive loss		(718,396)		(703,330)
Retained earnings		1,088,824		948,148
TOTAL AECOM STOCKHOLDERS’ EQUITY		4,303,004		4,092,780
Noncontrolling interests		194,008		185,594
TOTAL STOCKHOLDERS’ EQUITY		4,497,012		4,278,374
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	14,795,212	$	14,681,131

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Operations

(unaudited - in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	June 30,		June 30,		June 30,		June 30,
	2019		2018		2019		2018

Revenue	$	4,980,204	$	5,147,920	$	15,057,721	$	14,849,662
Cost of revenue		4,770,960		4,962,741		14,482,502		14,387,059
Gross profit		209,244		185,179		575,219		462,603

Equity in earnings of joint ventures		28,563		12,863		67,030		55,621
General and administrative expenses		(37,534)		(35,159)		(110,867)		(100,046)
Restructuring costs		—		—		(79,170)		—
Loss on disposal activities		(7,404)		(2,149)		(7,404)		(2,149)
Impairment of assets held for sale, including goodwill		—		—		—		(168,178)
Income from operations		192,869		160,734		444,808		247,851

Other income		4,886		2,752		12,749		17,542
Interest expense		(55,764)		(55,213)		(169,618)		(211,955)
Income before income tax expense (benefit)		141,991		108,273		287,939		53,438

Income tax expense (benefit)		36,603		33,131		23,946		(38,362)
Net income		105,388		75,142		263,993		91,800
Noncontrolling interests in income of consolidated subsidiaries, net of tax		(21,650)		(14,232)		(50,891)		(39,309)
Net income attributable to AECOM	$	83,738	$	60,910	$	213,102	$	52,491

Net income attributable to AECOM per share:
Basic	$	0.53	$	0.38	$	1.36	$	0.33
Diluted	$	0.52	$	0.37	$	1.34	$	0.32

Weighted average shares outstanding:
Basic		157,429		160,395		156,822		159,266
Diluted		159,787		163,213		159,269		162,426

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Comprehensive Income

(unaudited—in thousands)


	Three Months Ended				Nine Months Ended
	June 30,		June 30,		June 30,		June 30,
	2019		2018		2019		2018

Net income	$	105,388	$	75,142	$	263,993	$	91,800

Other comprehensive loss, net of tax:
Net unrealized (loss) gain on derivatives, net of tax		(3,570)		626		(13,926)		(214)
Foreign currency translation adjustments		(6,073)		(67,255)		(5,108)		(57,742)
Pension adjustments, net of tax		2,464		15,188		4,367		1,553
Other comprehensive loss, net of tax		(7,179)		(51,441)		(14,667)		(56,403)
Comprehensive income, net of tax		98,209		23,701		249,326		35,397
Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax		(21,846)		(14,078)		(51,290)		(40,532)
Comprehensive income (loss) attributable to AECOM, net of tax	$	76,363	$	9,623	$	198,036	$	(5,135)

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Stockholders’ Equity

(unaudited—in thousands)


					Accumulated				Total
			Additional		Other				AECOM		Non-		Total
	Common		Paid-In		Comprehensive		Retained		Stockholders’		Controlling		Stockholders’
	Stock		Capital		Loss		Earnings		Equity		Interests		Equity

BALANCE AT MARCH 31, 2019	$	1,573	$	3,904,298	$	(711,021)	$	1,005,086	$	4,199,936	$	194,938	$	4,394,874
Net income		—		—		—		83,738		83,738		21,650		105,388
Other comprehensive loss		—		—		(7,375)		—		(7,375)		196		(7,179)
Issuance of stock		4		11,154		—		—		11,158		—		11,158
Repurchases of stock		—		(109)		—		—		(109)		—		(109)
Stock based compensation		—		15,656		—		—		15,656		—		15,656
Contributions from noncontrolling interests		—		—		—		—		—		30		30
Distributions to noncontrolling interests		—		—		—		—		—		(22,806)		(22,806)
BALANCE AT JUNE 30, 2019	$	1,577	$	3,930,999	$	(718,396)	$	1,088,824	$	4,303,004	$	194,008	$	4,497,012


					Accumulated				Total
			Additional		Other				AECOM		Non-		Total
	Common		Paid-In		Comprehensive		Retained		Stockholders’		Controlling		Stockholders’
	Stock		Capital		Loss		Earnings		Equity		Interests		Equity

BALANCE AT MARCH 31, 2018	$	1,602	$	3,792,929	$	(707,000)	$	953,221	$	4,040,752	$	223,873	$	4,264,625
Net income		—		—		—		60,910		60,910		14,232		75,142
Other comprehensive loss		—		—		(51,287)		—		(51,287)		(154)		(51,441)
Issuance of stock		5		12,311		—		—		12,316		—		12,316
Repurchases of stock		—		(2,104)		—		—		(2,104)		—		(2,104)
Stock based compensation		—		17,145		—		—		17,145		—		17,145
Other transactions with noncontrolling interests		—		—		—		—		—		(6,871)		(6,871)
Contributions from noncontrolling interests		—		—		—		—		—		189		189
Distributions to noncontrolling interests		—		—		—		—		—		(48,867)		(48,867)
BALANCE AT JUNE 30, 2018	$	1,607	$	3,820,281	$	(758,287)	$	1,014,131	$	4,077,732	$	182,402	$	4,260,134

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Stockholders’ Equity

(unaudited—in thousands)


					Accumulated				Total
			Additional		Other				AECOM				Total
	Common		Paid-In		Comprehensive		Retained		Stockholders’		Non-Controlling		Stockholders’
	Stock		Capital		Loss		Earnings		Equity		Interests		Equity

BALANCE AT SEPTEMBER 30, 2018	$	1,570	$	3,846,392	$	(703,330)	$	948,148	$	4,092,780	$	185,594	$	4,278,374
Net income		—		—		—		213,102		213,102		50,891		263,993
Cumulative effect of accounting standard adoption		—		—		—		(12,453)		(12,453)		—		(12,453)
Other comprehensive loss		—		—		(15,066)		—		(15,066)		399		(14,667)
Issuance of stock		42		59,833		—		—		59,875		—		59,875
Repurchases of stock		(35)		(22,675)		—		(59,973)		(82,683)		—		(82,683)
Stock based compensation		—		47,449		—		—		47,449		—		47,449
Other transactions with noncontrolling interests		—		—		—		—		—		15,922		15,922
Contributions from noncontrolling interests		—		—		—		—		—		3,180		3,180
Distributions to noncontrolling interests		—		—		—		—		—		(61,978)		(61,978)
BALANCE AT JUNE 30, 2019	$	1,577	$	3,930,999	$	(718,396)	$	1,088,824	$	4,303,004	$	194,008	$	4,497,012


					Accumulated				Total
			Additional		Other				AECOM				Total
	Common		Paid-In		Comprehensive		Retained		Stockholders’		Non-Controlling		Stockholders’
	Stock		Capital		Loss		Earnings		Equity		Interests		Equity

BALANCE AT SEPTEMBER 30, 2017	$	1,575	$	3,733,572	$	(700,661)	$	961,640	$	3,996,126	$	218,560	$	4,214,686
Net income		—		—		—		52,491		52,491		39,309		91,800
Other comprehensive loss		—		—		(57,626)		—		(57,626)		1,223		(56,403)
Issuance of stock		39		60,588		—		—		60,627		—		60,627
Repurchases of stock		(8)		(30,969)		—		—		(30,977)		—		(30,977)
Proceeds from exercise of options		1		2,749		—		—		2,750		—		2,750
Stock based compensation		—		54,341		—		—		54,341		—		54,341
Other transactions with noncontrolling interests		—		—		—		—		—		(3,954)		(3,954)
Contributions from noncontrolling interests		—		—		—		—		—		7,730		7,730
Distributions to noncontrolling interests		—		—		—		—		—		(80,466)		(80,466)
BALANCE AT JUNE 30, 2018	$	1,607	$	3,820,281	$	(758,287)	$	1,014,131	$	4,077,732	$	182,402	$	4,260,134

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Cash Flows

(unaudited - in thousands)


	Nine Months Ended June 30,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	263,993	$	91,800
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		193,484		200,141
Equity in earnings of unconsolidated joint ventures		(67,030)		(55,621)
Distribution of earnings from unconsolidated joint ventures		41,195		86,367
Non-cash stock compensation		47,449		54,341
Prepayment premium on redemption of unsecured senior notes		—		34,504
Impairment of assets held for sale, including goodwill		—		168,178
Foreign currency translation		(180)		(49,687)
Write-off of debt issuance costs		—		7,048
Loss on disposal activities		7,404		2,149
Other		4,835		115
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable and contract assets		(340,445)		(365,608)
Prepaid expenses and other assets		11,554		(32,375)
Accounts payable		(103,962)		258,349
Accrued expenses and other current liabilities		(30,082)		(94,533)
Contract liabilities		37,612		41,662
Other long-term liabilities		(81,914)		(104,163)
Net cash (used in) provided by operating activities		(16,087)		242,667

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from purchase price adjustment on business acquisition		—		2,203
Cash acquired from consolidation of joint venture		—		7,630
Proceeds from disposal of business, net of cash disposed		37,412		19,537
Investment in unconsolidated joint ventures		(117,251)		(75,992)
Return of investment in unconsolidated joint ventures

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$33.86	157	$5,330

10-Q	2019-06-28	Quarter: 2019-06-28
10-Q	2019-03-29	Quarter: 2019-03-29
10-Q	2018-12-28	Quarter: 2018-12-28
10-K	2018-09-28	Annual: 2018-09-28
10-Q	2018-06-29	Quarter: 2018-06-29
10-Q	2018-03-30	Quarter: 2018-03-30
10-Q	2017-12-29	Quarter: 2017-12-29
10-K	2017-09-29	Annual: 2017-09-29
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-Q	2016-12-30	Quarter: 2016-12-30
10-K	2016-09-30	Annual: 2016-09-30
10-Q	2016-07-01	Quarter: 2016-07-01
10-Q	2016-04-01	Quarter: 2016-04-01
10-Q	2016-01-01	Quarter: 2016-01-01
10-K	2015-10-02	Annual: 2015-10-02
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-04-03	Quarter: 2015-04-03
10-Q	2015-01-02	Quarter: 2015-01-02
10-K	2014-09-30	Annual: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-Q	2013-12-31	Quarter: 2013-12-31

8-K	2019-08-06	Earnings, Exhibits
8-K	2019-06-17	Regulation FD, Exhibits
8-K	2019-05-08	Earnings, Exhibits
8-K	2019-03-06	Shareholder Vote
8-K	2019-02-04	Earnings, Exhibits
8-K	2018-11-14	Amend Bylaw, Exhibits
8-K	2018-11-12	Earnings, Exhibits
8-K	2018-08-09	Regulation FD, Exhibits
8-K	2018-08-07	Earnings, Exhibits
8-K	2018-05-08	Earnings, Exhibits
8-K	2018-03-13	Enter Agreement, Off-BS Arrangement, Regulation FD, Exhibits
8-K	2018-02-28	Shareholder Vote
8-K	2018-02-14	Regulation FD
8-K	2018-02-06	Earnings, Exhibits

INDB	Independent Bank	2,740
BECN	Beacon Roofing Supply	2,690
BRY	Berry Petroleum	937
AVRO	Avrobio	472
DNBF	DNB Financial	170
EDUC	Educational Development	68
SCPH	Scpharmaceuticals	66
ZZHJC	Atel Capital Equipment Fund Ix	0
BNKL	Bionik Laboratories	0
NYB	New York Community Bancorp	0

EX-31.1	acm-20190630ex311dff2fb.htm
EX-31.2	acm-20190630ex3125206f1.htm
EX-32	acm-20190630xex32.htm
EX-95	acm-20190630xex95.htm