Q1 sees AECOM secure record projects

AECOM has reported its first quarterly results for the 2014 US fiscal year, noting a record win of $US3.7 billion ($A4.1 billion) in new projects.

Marion Lopez

The wins were driven by the company’s construction services business and its management support services segment.

As a result, total backlog for the first quarter – ending December 31, 2013 – equalled $18.4 billion, up 8% compared to the same period last year.

“We are encouraged by the momentum in large construction management wins along with a cautious resumption of US federal project start-ups, now that a budget has been passed,” AECOM chairman and CEO John Dionisio said.

“These wins enhance backlog and visibility, giving us increased confidence in the future – a future in which our ability to deliver an integrated delivery offering of design, build, finance and operations and maintenance differentiates AECOM in the industry.”

The good news was offset by the company’s two segments recording declines in revenue.

The professional technical services segment – which delivers planning, consulting, architecture and engineering design, as well as program and construction management services to institutional, commercial and public-sector clients worldwide – had revenue of $1.8 billion, down 0.1% compared to the same period last year.

Net service revenue declined 4.8% to $1 billion, driven by declines in the Americas design business and Australia.

The company had growth in Europe, the Middle East, Africa and Asia.

Its global construction services business was the only one to record growth in the segment, with operating income increasing 26.5% in the quarter.

The second segment – management support services – provides program and facilities management and maintenance, training, logistics, consulting, technical assistance and systems integration services, primarily for agencies of the US government.

Revenue declined 25.3% to $184 million compared to the same period last year and net service revenue declined 27.4% to $110 million.

Declines in revenue and net service revenue were primarily due to the shift of business mix from low-margin work to higher-margin projects, as reflected in the company’s migration away from operations in the Middle East.

Recent wins in the segment reflect the successful diversification of the business.

Operating profit increased 110%, benefiting from a gain on an MSS project.

Combined, the two segments produced first-quarter revenue of $2 billion and net service revenue of $1.2 billion.

Operating income equalled $90 million and reported net income was $56 million.

Diluted earnings per share equalled 58c.

Cash flow from operations for the quarter was $137 million.

Free cash flow, which includes capital expenditures of $21 million, totalled $117 million.

The company reconfirmed that it was well positioned to meet its FY14 target of generating free cash flow roughly equal to its net income.

During the quarter, the company invested $24.8 million to repurchase approximately 800,000 shares.

As of the end of Q1 FY14, $340 million remains in the company’s share repurchase authorisation.

AECOM had $682 million of total cash and cash equivalents, $1.2 billion of debt and $1.05 billion in committed bank facilities with $876.3 million in unused capacity at the end of December 31, 2013.

For the remainder of FY14, AECOM said it would target earnings per share of $2.50 to $2.60.