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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, 2022

OR

   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 000-52423

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

13355 Noel Road

Dallas, Texas

75240

Address of Principal Executive Offices

Zip Code

(972) 788-1000

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 every Interactive Data File required to be submitted 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  N

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 August 5, 2022, 139,649,705 shares of the registrant’s common stock were outstanding.

AECOM

INDEX

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

1

Consolidated Balance Sheets as of June 30, 2022 (unaudited) and September 30, 2021

1

Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)

2

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)

3

Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)

4

Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)

6

Notes to Consolidated Financial Statements (unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

40

Item 4.

Controls and Procedures

40

PART II.

OTHER INFORMATION

41

Item 1.

Legal Proceedings

41

Item 1A.

Risk Factors

41

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

42

Item 3.

Defaults Upon Senior Securities

42

Item 4.

Mine Safety Disclosure

42

Item 5.

Other Information

42

Item 6.

Exhibits

43

SIGNATURES

44

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AECOM

Consolidated Balance Sheets

(unaudited - in thousands, except share data)

June 30, 

September 30, 

    

2022

    

2021

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

865,813

$

1,120,790

Cash in consolidated joint ventures

 

144,909

 

108,406

Total cash and cash equivalents

 

1,010,722

 

1,229,196

Accounts receivable—net

 

2,439,538

 

2,619,491

Contract assets

1,435,145

1,369,031

Prepaid expenses and other current assets

 

768,225

 

739,044

Current assets held for sale

94,542

139,426

Income taxes receivable

 

47,615

 

77,355

TOTAL CURRENT ASSETS

 

5,795,787

 

6,173,543

PROPERTY AND EQUIPMENT—NET

 

454,403

 

398,876

DEFERRED TAX ASSETS—NET

 

326,687

 

360,260

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

 

347,240

 

328,906

GOODWILL

 

3,435,625

 

3,502,499

INTANGIBLE ASSETS—NET

 

40,442

 

54,867

OTHER NON-CURRENT ASSETS

 

288,555

 

307,927

OPERATING LEASE RIGHT-OF-USE ASSETS

551,669

607,076

NON-CURRENT ASSETS HELD FOR SALE

 

7,939

 

TOTAL ASSETS

$

11,248,347

$

11,733,954

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Short-term debt

$

2,309

$

4,369

Accounts payable

 

1,998,922

 

2,090,479

Accrued expenses and other current liabilities

 

2,258,984

 

2,174,201

Income taxes payable

50,303

50,511

Contract liabilities

 

1,051,317

 

1,058,643

Current liabilities held for sale

60,786

94,043

Current portion of long-term debt

42,318

 

49,469

TOTAL CURRENT LIABILITIES

 

5,464,939

 

5,521,715

OTHER LONG-TERM LIABILITIES

 

106,315

 

145,444

OPERATING LEASE LIABILITIES, NON-CURRENT

610,169

679,059

LONG-TERM LIABILITIES HELD FOR SALE

345

11,095

DEFERRED TAX LIABILITY-NET

6,103

5,420

PENSION BENEFIT OBLIGATIONS

320,361

383,904

LONG-TERM DEBT

2,162,271

 

2,157,740

TOTAL LIABILITIES

 

8,670,503

 

8,904,377

COMMITMENTS AND CONTINGENCIES (Note 15)

AECOM STOCKHOLDERS’ EQUITY:

Common stock-authorized, 300,000,000 shares of $0.01 par value as of June 30, 2022 and September 30, 2021; issued and outstanding 139,578,447 and 143,168,815 shares as of June 30, 2022 and September 30, 2021, respectively

 

1,396

 

1,432

Additional paid-in capital

 

4,139,019

 

4,115,541

Accumulated other comprehensive loss

 

(958,140)

 

(900,377)

Accumulated deficits

 

(731,265)

 

(504,126)

TOTAL AECOM STOCKHOLDERS’ EQUITY

 

2,451,010

 

2,712,470

Noncontrolling interests

 

126,834

 

117,107

TOTAL STOCKHOLDERS’ EQUITY

 

2,577,844

 

2,829,577

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

11,248,347

$

11,733,954

See accompanying Notes to Consolidated Financial Statements.

1

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, 

    

2022

    

2021

    

2022

    

2021

Revenue

$

3,241,695

$

3,408,357

$

9,722,069

$

9,987,085

Cost of revenue

 

3,021,145

3,206,823

9,091,363

9,405,922

Gross profit

 

220,550

201,534

630,706

581,163

Equity in earnings of joint ventures

 

7,489

8,270

27,358

23,628

General and administrative expenses

 

(32,766)

(36,340)

(106,365)

(110,707)

Restructuring costs

(12,264)

(12,971)

(88,927)

(34,755)

Income from operations

 

183,009

160,493

462,772

459,329

Other income

 

4,314

 

4,482

10,517

11,812

Interest expense

 

(27,416)

 

(149,038)

(76,972)

(212,489)

Income from continuing operations before taxes

 

159,907

 

15,937

396,317

258,652

Income tax expense (benefit) for continuing operations

 

44,517

 

(17,938)

103,084

42,811

Net income from continuing operations

 

115,390

 

33,875

293,233

215,841

Net loss from discontinued operations

 

(3,481)

 

(15,502)

(71,534)

(119,168)

Net income

 

111,909

 

18,373

221,699

96,673

Net income attributable to noncontrolling interests from continuing operations

(8,487)

(5,901)

(19,535)

(16,160)

Net (income) loss attributable to noncontrolling interests from discontinued operations

(1,534)

(941)

2,829

(3,495)

Net income attributable to noncontrolling interests

(10,021)

(6,842)

(16,706)

(19,655)

Net income attributable to AECOM from continuing operations

106,903

27,974

273,698

199,681

Net loss attributable to AECOM from discontinued operations

(5,015)

(16,443)

(68,705)

(122,663)

Net income attributable to AECOM

$

101,888

$

11,531

$

204,993

$

77,018

Net income (loss) attributable to AECOM per share:

Basic continuing operations per share

$

0.76

$

0.19

$

1.94

$

1.35

Basic discontinued operations per share

$

(0.04)

$

(0.11)

$

(0.49)

$

(0.83)

Basic earnings per share

$

0.72

$

0.08

$

1.45

$

0.52

Diluted continuing operations per share

$

0.75

$

0.19

$

1.91

$

1.32

Diluted discontinued operations per share

$

(0.03)

$

(0.11)

$

(0.48)

$

(0.81)

Diluted earnings per share

$

0.72

$

0.08

$

1.43

$

0.51

Weighted average shares outstanding:

Basic

 

140,608

 

146,109

141,149

148,434

Diluted

 

142,178

 

148,859

143,147

150,707

See accompanying Notes to Consolidated Financial Statements.

2

AECOM

Consolidated Statements of Comprehensive Income

(unaudited—in thousands)

Three Months Ended

Nine Months Ended

June 30, 

June 30, 

    

June 30, 

    

June 30, 

    

2022

    

2021

    

2022

    

2021

Net income

$

111,909

$

18,373

$

221,699

$

96,673

Other comprehensive income (loss), net of tax:

Net unrealized gain on derivatives, net of tax

 

(560)

830

20,076

2,783

Foreign currency translation adjustments

 

(112,217)

(18,775)

(108,318)

13,111

Pension adjustments, net of tax

 

18,279

3,220

30,042

(7,491)

Other comprehensive income (loss), net of tax

 

(94,498)

(14,725)

(58,200)

8,403

Comprehensive income, net of tax

 

17,411

3,648

163,499

105,076

Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax

 

(9,576)

(6,913)

(16,269)

(19,916)

Comprehensive income (loss) attributable to AECOM, net of tax

$

7,835

$

(3,265)

$

147,230

$

85,160

See accompanying Notes to Consolidated Financial Statements.

3

AECOM

Consolidated Statements of Stockholders’ Equity

(unaudited—in thousands)

    

    

Accumulated 

    

    

Total 

    

    

Additional 

Other 

AECOM 

Non-

Total 

Common 

Paid-In 

Comprehensive

Accumulated

Stockholders’ 

Controlling 

Stockholders’ 

    

Stock

    

Capital

    

 Loss

    

Deficits

    

Equity

    

Interests

    

Equity

BALANCE AT MARCH 31, 2022

$

1,407

$

4,100,905

$

(864,087)

$

(706,783)

$

2,531,442

$

118,211

$

2,649,653

Net income

101,888

101,888

10,021

111,909

Dividends declared

(21,305)

(21,305)

(21,305)

Other comprehensive income

(94,053)

(94,053)

(445)

(94,498)

Issuance of stock

5

32,445

32,450

32,450

Repurchases of stock

(16)

(23)

(105,065)

(105,104)

(105,104)

Stock-based compensation

5,692

5,692

5,692

Other transactions with noncontrolling interests

(9)

(9)

Contributions from noncontrolling interests

7

7

Distributions to noncontrolling interests

(951)

(951)

BALANCE AT JUNE 30, 2022

$

1,396

$

4,139,019

$

(958,140)

$

(731,265)

$

2,451,010

$

126,834

$

2,577,844

Accumulated 

Total 

Additional 

Other 

AECOM 

Non-

Total 

Common 

Paid-In 

Comprehensive

Accumulated

Stockholders’ 

Controlling 

Stockholders’ 

    

Stock

    

Capital

    

 Loss

    

Deficits

    

Equity

    

Interests

    

Equity

BALANCE AT MARCH 31, 2021

$

1,468

$

4,054,089

$

(895,736)

$

(336,852)

$

2,822,969

$

103,731

$

2,926,700

Net income

11,531

11,531

6,842

18,373

Other comprehensive loss

(14,796)

(14,796)

71

(14,725)

Issuance of stock

5

34,913

34,918

34,918

Repurchases of stock

(24)

(111)

(158,041)

(158,176)

(158,176)

Stock-based compensation

11,591

11,591

11,591

Distributions to noncontrolling interests

(1,703)

(1,703)

BALANCE AT JUNE 30, 2021

$

1,449

$

4,100,482

$

(910,532)

$

(483,362)

$

2,708,037

$

108,941

$

2,816,978

4

    

    

Accumulated 

    

    

Total 

    

    

Additional 

Other 

AECOM 

Non-

Total 

Common 

Paid-In 

Comprehensive

Accumulated

Stockholders’ 

Controlling 

Stockholders’ 

    

Stock

    

Capital

    

 Loss

    

Deficits

    

Equity

    

Interests

    

Equity

BALANCE AT SEPTEMBER 30, 2021

$

1,432

$

4,115,541

$

(900,377)

$

(504,126)

$

2,712,470

$

117,107

$

2,829,577

Net income

204,993

204,993

16,706

221,699

Dividends declared

(64,256)

(64,256)

(64,256)

Other comprehensive income

(57,763)

(57,763)

(437)

(58,200)

Issuance of stock

24

46,029

46,053

46,053

Repurchases of stock

(60)

(49,962)

(367,876)

(417,898)

(417,898)

Stock-based compensation

27,411

27,411

27,411

Other transactions with noncontrolling interests

(127)

(127)

Contributions from noncontrolling interests

9

9

Distributions to noncontrolling interests

(6,424)

(6,424)

BALANCE AT JUNE 30, 2022

$

1,396

4,139,019

(958,140)

(731,265)

2,451,010

126,834

2,577,844

    

Accumulated 

Retained

Total 

Additional 

Other 

Earnings/

AECOM 

Non-

Total 

Common 

Paid-In 

Comprehensive

(Accumulated

Stockholders’ 

Controlling 

Stockholders’ 

    

Stock

    

Capital

    

 Loss

    

Deficits)

    

Equity

    

Interests

    

Equity

BALANCE AT SEPTEMBER 30, 2020

$

1,570

$

4,035,414

$

(918,674)

$

174,248

$

3,292,558

$

120,986

$

3,413,544

Net income

77,018

77,018

19,655

96,673

Cumulative effect of accounting standard adoption

(7,979)

(7,979)

(7,979)

Other comprehensive income

8,142

8,142

261

8,403

Issuance of stock

24

51,908

51,932

51,932

Repurchases of stock

(145)

(23,053)

(726,649)

(749,847)

(749,847)

Stock-based compensation

36,213

36,213

36,213

Other transactions with noncontrolling interests

580

580

Disposal of noncontrolling interest of business sold

(24,039)

(24,039)

Contributions from noncontrolling interests

226

226

Distributions to noncontrolling interests

(8,728)

(8,728)

BALANCE AT JUNE 30, 2021

$

1,449

$

4,100,482

$

(910,532)

$

(483,362)

$

2,708,037

$

108,941

$

2,816,978

See accompanying Notes to Consolidated Financial Statements.

5

AECOM

Consolidated Statements of Cash Flows

(unaudited - in thousands)

Nine Months Ended June 30,

    

2022

    

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

221,699

$

96,673

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

126,605

 

129,288

Equity in earnings of unconsolidated joint ventures

 

(21,921)

 

(28,294)

Distribution of earnings from unconsolidated joint ventures

 

18,807

 

26,554

Non-cash stock compensation

27,411

36,213

Prepayment premium on redemption of unsecured notes

117,500

Impairment of long-lived assets

 

105,194

Loss on sale of discontinued operations

50,940

56,222

Foreign currency translation

(30,208)

(33,318)

Other

10,921

11,162

Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable and contract assets

 

72,140

373,248

Prepaid expenses and other assets

 

132,695

(290,039)

Accounts payable

 

(181,718)

(271,947)

Accrued expenses and other current liabilities

 

123,336

58,901

Contract liabilities

(7,375)

134,815

Other long-term liabilities

 

(145,264)

(135,584)

Net cash provided by operating activities

398,068

386,588

CASH FLOWS FROM INVESTING ACTIVITIES:

Payments for sale of discontinued operations including cash disposed

 

(42,261)

(265,876)

Investment in unconsolidated joint ventures

(20,205)

(51,852)

Return of investment in unconsolidated joint ventures

1,731

2,868

Proceeds from sale of investments

9,032

15,507

Proceeds from disposal of property and equipment

637

10,284

Payments for capital expenditures

(70,494)

(112,603)

Net cash used in investing activities

(121,560)