• AECOM reiterated its financial guidance for fiscal 2023, which includes an expectation to deliver another year of record profitability, accelerating NSR growth, continued margin expansion and strong per share profit growth. The Company’s guidance includes expectations for:
  • Full year organic NSR² growth of approximately 8%.
  • An adjusted¹ operating margin of approximately 14.6%, which would be a 40 basis point increase from fiscal 2022 and includes investments to expand the Company’s competitive advantage and to capitalize on a record pipeline of opportunities.
  • Adjusted¹ EBITDA⁴ of between $935 million and $975 million, an increase of 10% on a constant-currency basis at the mid-point.
  • Adjusted¹ EPS of between $3.55 and $3.75, an increase of 10% on a constant-currency basis at the mid-point; EPS guidance does not include a benefit from incremental share repurchases expected in the remainder of fiscal 2023.
• Other assumptions incorporated into guidance:
  • An average fully diluted share count of 141 million, which reflects only shares repurchased to date.
  • An effective tax rate of between 24% and 26%.
• The Company continues to expect free cash flow⁵ of between $475 million and $675 million, reflecting a continued high conversion of earnings to cash flow.
• The Company also reiterated its financial targets for fiscal 2024, which include an expectation to deliver adjusted¹ EPS of $4.75+ and a 15% segment adjusted operating margin, as well as long-term targets for a segment adjusted operating margin of 17% and return on invested capital⁸ of 17%.

“Our Think and Act Globally strategy continues to result in consistently strong financial performance, highlighted by accelerating organic NSR growth, strong profitability and cash flow, and a record design backlog and pipeline of opportunities,” said Troy Rudd, AECOM’s chief executive officer. “Importantly, through the execution of our strategy, we are leveraging our competitive advantages to favorably transform the composition of our wins and backlog and to expand the long-term earnings power of the business. This includes our sharp focus on allocating our time and capital to winning what matters, including prioritizing pursuits and clients with the highest lifetime value potential. As a result, our backlog and pipeline growth have accelerated, our visibility for growth and continued margin expansion have never been greater, and our teams are energized by the organic growth opportunities ahead.”

“Our competitive advantage is widening as we realize a strong return on our investments in our teams and in pursuing the highest value organic growth opportunities,” said Lara Poloni, AECOM’s president. “The three secular growth drivers of growing global investments in infrastructure, sustainability and resilience, and changing supply chains and assets are accelerating opportunities in our markets. Through our technical leadership, culture of collaboration and our expanded addressable market through our program management and advisory practices, we are well positioned to outperform. Our teams are committed to our purpose of delivering a better world, which is reflected in our number one ranking in our industry on Fortune’s World’s Most Admired Company list for the third consecutive year.”

“We continued to set new records this quarter while delivering on our financial targets, including accelerating top line growth and expanded profitability, and driving further shareholder value,” said Gaurav Kapoor, AECOM’s chief financial officer. “We remain committed to our returns-focused capital allocation policy, led by investments in organic growth, share repurchases and our quarterly dividend program, which we recently increased by 20%. Our balance sheet and cash flow remain strong, which allows us to execute with certainty.”

Business Segments

Americas

Revenue in the first quarter was $2.6 billion. Net service revenue² was $924 million and included a 6% increase in the design business.

Operating income increased by 7% over the prior year to $164 million. On an adjusted¹ basis, operating income increased by 7% to $168 million. The adjusted operating margin on an NSR² basis of 18.2% reflected a 50 basis point increase over the prior year and continues to include accelerating investments in organic growth opportunities to capitalize on a record pipeline of pursuits.

International

Revenue in the first quarter was $803 million. Net service revenue² was $669 million, a 12% increase from the prior year, which included growth across all key regions.

Operating income increased by 4% over the prior year to $55 million. On an adjusted basis¹, operating income increased by 4% to $55 million. The adjusted operating margin on an NSR² basis increased by 10 basis points over the prior year to 8.3% as the Company continues to make strong progress on its goal of achieving a double-digit margin in the International segment.

Balance Sheet

As of December 31, 2022, AECOM had $1.2 billion of total cash and cash equivalents, $2.2 billion of total debt and $1.1 billion of net debt (total debt less cash and cash equivalents). Net leverage⁹ was 1.0x.

Tax Rate

The effective tax rate was 21.0% in the first quarter. On an adjusted basis, the effective tax rate was 23.0%. The adjusted tax rate was derived by re-computing the quarterly effective tax rate on earnings from adjusted net income.¹⁰ The adjusted tax expense differs from the GAAP tax expense based on the taxability or deductibility and tax rate applied to each of the adjustments.

Conference Call

AECOM is hosting a conference call tomorrow at 12 p.m. Eastern Time, during which management will make a brief presentation focusing on the Company's results, strategy and operating trends. Interested parties can listen to the conference call and view accompanying slides via webcast at https://investors.aecom.com. The webcast will be available for replay following the call.

¹ Excludes the impact of certain items, such as restructuring costs, amortization of intangible assets and other items. See Regulation G Information for a reconciliation of non-GAAP measures to the comparable GAAP measures.
² Revenue, less pass-through revenue; growth rates are presented on a constant-currency basis.
³ Reflects segment operating performance, excluding AECOM Capital and G&A.
⁴ Net income before interest expense, tax expense, depreciation and amortization.
⁵ Free cash flow is defined as cash flow from operations less capital expenditures, net of proceeds from disposals of property and equipment.
⁶ Book-to-burn ratio is defined as the dollar amount of wins divided by revenue recognized during the period, including revenue related to work performed in unconsolidated joint ventures.
⁷ On a constant-currency basis.
⁸ Return on invested capital, or ROIC, reflects continuing operations and is calculated as the sum of adjusted net income as presented in the Company’s Regulation G Information and adjusted interest expense, net of interest income, divided by average quarterly invested capital as defined as the sum of attributable shareholder’s equity and total debt, less cash and cash equivalents.
⁹ Net leverage is comprised of EBITDA as defined in the Company’s credit agreement dated October 17, 2014, as amended, and total debt on the Company’s financial statements, net of total cash and cash equivalents.
¹⁰ Inclusive of non-controlling interest deduction and adjusted for financing charges in interest expense, the amortization of intangible assets and is based on continuing operations.

About AECOM

AECOM (NYSE: ACM) is the world’s trusted infrastructure consulting firm, delivering professional services throughout the project lifecycle – from advisory, planning, design and engineering to program and construction management. On projects spanning transportation, buildings, water, new energy, and the environment, our public- and private-sector clients trust us to solve their most complex challenges. Our teams are driven by a common purpose to deliver a better world through our unrivaled technical and digital expertise, a culture of equity, diversity and inclusion, and a commitment to environmental, social and governance priorities. AECOM is a Fortune 500 firm and its Professional Services business had revenue of $13.1 billion in fiscal year 2022. See how we are delivering sustainable legacies for generations to come at aecom.com and @AECOM.