The DCS segment delivers planning, consulting, architectural and engineering design services to commercial and government clients worldwide in markets such as transportation, facilities, environmental, energy, water, and government.
Revenue in the fourth quarter was $2.0 billion. Constant-currency7 organic revenue declined 11 percent. Full-year revenue of $8.0 billion increased 46 percent and constant-currency7 organic revenue decreased 4 percent. Adjusted operating income8 was $153 million and $504 million in the fourth quarter and fiscal year, respectively.
Construction Services (CS)
The CS segment provides construction services for energy, commercial, industrial and public and private infrastructure clients.
Revenue in the fourth quarter was $1.8 billion, an increase of 118 percent. Organic revenue increased 21 percent. Full-year revenue of $6.7 billion increased 233 percent and organic revenue increased 32 percent. Adjusted operating income8 was $42 million and $152 million in the fourth quarter and fiscal year, respectively.
Management Services (MS)
The MS segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance and systems-integration services, primarily for agencies of the U.S. government, national governments around the world, and commercial customers.
Revenue in the fourth quarter was $885 million, an increase of 262 percent. Full-year revenue of $3.4 billion increased 268 percent and organic revenue decreased 16 percent. Adjusted operating income8 was $114 million and $414 million in the fourth quarter and fiscal year, respectively.
Tax Rate
Inclusive of the non-controlling interest deduction — and excluding acquisition and integration related expenses, financing charges in interest expense, and amortization of intangible assets — the effective adjusted tax rate was 25.5 percent and 27.4 percent in the fourth quarter and fiscal year, respectively.
Cash Flow
Free cash flow1 for the fourth quarter was $268 million. For the fiscal year, AECOM generated free cash flow of $695 million, which was within the company’s target of $600 million to $800 million.
Balance Sheet
As of September 30, 2015, AECOM had $684 million of total cash and cash equivalents, $4.6 billion of debt and $948 million in unused capacity under its $1.05 billion revolving credit facility.
Financial Outlook
AECOM is providing adjusted EPS4 guidance for fiscal year 2016 of $3.00 to $3.40, which assumes an expected contribution from the monetization of a portion of AECOM Capital investments.
The company expects to exit fiscal 2016 at a synergy savings run-rate of $275 million. In addition, the company is increasing its expected total synergy savings target to $325 million, due primarily to additional real estate savings opportunities. Benefits are expected to begin impacting results in fiscal 2017.
The company expects to incur approximately $200 million of acquisition and integration expenses in fiscal 2016.
In addition, the company expects 2016 full-year interest expense, excluding acquisition-related amortization, of approximately $210 million and a full-year share count of 156 million. The company also expects an adjusted effective tax rate9 of approximately 28%, which includes the anticipated retroactive extension of U.S. R&D tax credits and other incentives.
The company expects fiscal year 2016 capital expenditures10 to be approximately $150 million, depreciation of approximately $165 million, and amortization of intangible assets11 of approximately $195 million.
AECOM is hosting a conference call today at 12 p.m. EST, during which management will make a brief presentation focusing on the company's results, strategies and operating trends. Interested parties can listen to the conference call and view accompanying slides via webcast at www.aecom.com. The webcast will be available for replay following the call.
1 Free cash flow is defined as cash flow from operations less capital expenditures net of proceeds from disposals, and is a non-GAAP measure.
2 Defined as attributable to AECOM, excluding acquisition and integration related expenses, financing charges in interest expense, and the amortization of intangible assets.
3 Book-to-burn ratio is defined as the amount of wins divided by revenue recognized during the period.
4 Defined as attributable to AECOM, excluding acquisition and integration related expenses, financing charges in interest expense, the amortization of intangible assets, and financial impacts associated with expected dispositions of non-core businesses or assets.
5 Defined as attributable to AECOM.
6 Defined as attributable to AECOM, basic.
7 Results expressed in constant currency are presented excluding the impact from changes in currency exchange rates.
8 Excluding intangible amortization.
9 Inclusive of the non-controlling interest deduction and excluding acquisition and integration related expenses, financing charges in interest expense, and the amortization of intangible assets.
10 Capital expenditures, net of proceeds from disposals.
11 Amortization of intangible assets expense includes the impact of amortization included in equity in earnings of joint ventures and non-controlling interests.
About AECOM
AECOM (NYSE: ACM) is built to deliver a better world. We design, build, finance and operate infrastructure assets for governments, businesses and organizations in more than 150 countries. As a fully integrated firm, we connect knowledge and experience across our global network of experts to help clients solve their most complex challenges. From high-performance buildings and infrastructure, to resilient communities and environments, to stable and secure nations, our work is transformative, differentiated and vital. A Fortune 500 firm, AECOM companies had revenue of approximately $18 billion during the 12 months ended September 30, 2015. See how we deliver what others can only imagine at aecom.com and @AECOM.
Forward-Looking Statements: All statements in this press release other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue, cash flows, tax rate, share count, interest expense, amortization of intangible assets, AECOM Capital contributions, synergy costs, acquisition and integration costs, or other financial items; any statements of the plans, strategies and objectives for future operations; and any statements regarding future economic conditions or performance. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.
Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward looking statements include, but are not limited to, the following: demand for our services is cyclical; uncertainties related to government contract appropriations; governmental agencies may modify, curtail or terminate our contracts; government contracts are subject to audits and adjustments of contractual terms; losses under fixed-price contracts; limited control over operations run through our joint venture entities; misconduct by our employees or consultants or our failure to comply with laws or regulations applicable to our business; our leveraged position and ability to service our debt; exposure to legal, political and economic risks in different countries as well as currency exchange rate fluctuations; the failure to retain and recruit key technical and management personnel; our insurance policies may not provide adequate coverage; unexpected adjustments and cancellations related to our backlog; dependence on third party contractors who fail to satisfy their obligations; systems and information technology interruption; and changing client preferences/demands, fiscal positions and payment patterns. Additional factors that could cause actual results to differ materially from our forward-looking statements are set forth in our reports filed with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statement.
This press release contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”). In particular, the company believes that non-GAAP financial measures such as adjusted EPS, adjusted operating income, adjusted tax rate, organic revenue, and free cash flow also provide a meaningful perspective on its business results as the company utilizes this information to evaluate and manage the business. We are also providing additional non-GAAP financial measures to reflect the impact of the URS acquisition, including expected acquisition and integration expenses. Our non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
