ACM - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Second Quarter 2018 Earnings Call. I would like to inform all participants, this call is being recorded at the request of AECOM. This broadcast is the copyrighted property of AECOM. Any rebroadcast of this information in whole or part without the prior written permission of AECOM is prohibited.

As a reminder, AECOM is also simulcasting this presentation with slides at the Investors section at www.aecom.com. a conduct will we question-and-answer session. Later, like Gabrielski, Vice would to turn Will to over call President, the I Investor Relations.

William J. Gabrielski

Thank statement of like the contains differ you, to direct results expectations. future significantly about your would operator. business may attention forward-looking and statements Safe on presentation. today's Harbor X page Today's discussion from Actual I financial to by periodic those law, statements. Except the risks including risks and projected uncertainties, SEC. obligation no in today's take the in we forward-looking reports our to statements as forward-looking with due required to various our filed described update

progress, financial in Please as reconciliations website. which non-GAAP using are noted. GAAP our posted appropriate is presentation. note financial that We incorporated presentation, except into measures year-over-year our all our The percentages on are to refer

adjusted associated intangible earnings items is operating on tax effects taxes Officer. growth unless Beginning currency foreign exchange and Our Chief and constant results Chairman non-core in Burke, held Today's interest year-over-year is and assets, today's and organic with basis. noted. of charges guidance AECOM's reform, and expense, for discrete for assets Executive of amortization deferred is of a Mike gains, discussion sale, loss losses, tax discussion U.S. Mike? tax and presentation otherwise financing

Michael S. Burke

Thank Will. you, Welcome, everyone.

to Troy call Then turn session. an performance before turning business. of our detail, overview AECOM's Joining a review Officer; over slide and discuss Chief begin with trends X. outlook Officer. for question-and-answer will are our across and me Randy today greater Operating our Financial results Rudd, will the Wotring, our Please in I Chief Troy the financial and

revenue long-term $X.X positive This segments. book-to-burn billion, end was all on by book-to-burn highest reflect strength growth which X%. MS the total marks DCS with continued the greater and the X.X X capabilities, wins our a led sixth and and increased total three MS objectives. the organic included This in history Our second We Revenue segments. of our strategic growth and organic company's with of quarter ratio. by quarterly second X%, markets, by performance higher-margin the continued results consecutive across increased industry-leading and is momentum our progress in segments in financial quarter a the highest and DCS delivered ratio than the in and resulted

I Importantly, this also the backlog wins than XXXX MS $X where in free beginning which we am more of billion, Including delivered already expectations. that MS $XX alone. fiscal continued momentum doubled, $XX report pleased than with the million to segment into to April, billion more was strong. have of the these remains of since pipeline and wins, we flow, our our consistent has cash

our first-half track are achieve free cash well ahead and we to Our cash of guidance. on flow year, flow last is full-year

review to segments, taken turning have long-term want the to success. on best our for decisions Before to the we I comment that of two business position strategic

yet that This two align combined-cycle backlog by with price we have had decision, no conditions our and related was desired opportunities that number Consistent decreasing weak profile. $XXX begun not fixed First, longer a market EPC with from million this decision the pursue in combined-cycle market. to gas gas informed of removed projects construction. our risk plants will we

the to progressing outcome Riverside with for well client. Importantly, is ensure our plant Wisconsin outstanding Alliant's team ongoing work an on in diligently the gas working

on-budget to and expect completed be on-time in We construction XXXX.

strategic buyers not exit sell & which plan certain higher where Second, AECOM's with growth objectives. are operations, and ongoing we value see broader Gas to non-core Oil aligned and potential

the of details by We completed expect fiscal to sales announce of end the year.

our we doubled a since XX% XXXX, $X In backlog the in maximizing end accelerate and government stock shareholder the of billion the Services, strong authorization. than rate substantial reflecting our April, wins $X our expected slide on business on more on Based start May River the of more strong client core These fiscal for project reflect protest in of sales for cash and month our contract buyback opportunities our XXXX. X plans from to on than the and market we revised the our has to capitalizing actions upheld the GAO proposal. our in win turn performance than deleveraging Savannah history We under commitment services of Management trends. of of and infrastructure bid, the highlights. February, and with received more will value by use to Beginning through review markets. our billion Please are our our a already optimistic strength our extension the

backlog In billion pipeline of addition, pursuits key was visibility sites. September from adds Hanford an XXXX, our through we that to venture $XX the awarded continue extension to DOE here. exited our at which joint are quarter grow We across with can confident and

law trillion into March, XX% the a increase signed and defense fiscal for in nearly $X.X fact, XXXX. a budget In baseline in omnibus sets spending included solid

revenue the led to by alternative measures drivers ongoing hurricane wins firmly represent contributed adoption, in our ballot and and highest place. growth in of we and Hong in Southeast billion. Asia the hundred water already and Design the both several dollars of for in to pipeline strength the in the X% Australia. PX recovery have the funding years increased several $XX markets billion passed XX%, our These $X by are Kong, include transportation and business, now markets. to Canadian billion organic growth Key recovery-related by also million Americas growth led and $XXX metrics growth XXXX, U.S., positively Bank hurricane accelerated where exceeds delivery Turning be with International in that to Infrastructure funding backlog continuing increased

markets. services impacting funding Brexit strong we for are and those the from in for While uncertainty near-term in East, budget and and UK demand to Middle geopolitical shortfalls position continue long-term conditions infrastructure

for been opportunities a pipeline. Construction has several there the our CS Services, on of quarter. of key referenced converted Moving in number last wins in we a our including the reacceleration in to approximately accounts quarter, large our Construction of We to segment, business, pursuits revenue which Building three-fourths

a total the wins year through of all fiscal total for already the As of half result, first our exceeded XXXX. wins have

given Importantly, to construction in projects, duration we stadia of consecutive growth and building a the this of have and expect our beyond. growth year fourth deliver visibility longer organic into year XXXX and double-digit increasing

XX% opportunities. in The the creating is gone in addition, by construction fourth well, civil acquired Construction revenue business, strong we and XXXX. increased markets which than integration In capability in a of the quarter fiscal leading having more Shimmick new growth has

of DBFO value financing are we arm continue volume Turning investments proposition, to and CS attractive significant portfolio managing our an to the our through AECOM segment. of Capital, drive

and now quarter business, to we are are over for a to the trajectory jointly ACAP Denver, were with our quarter, half real development raise are in on our This is and capital turn co-developing with expand in discuss revenue in estate backlog construction Troy, beyond. of greater-than-$XXX-million second in performance, pleased a the fiscal awarded more we third-party Across progressing co-sponsor and working project the industry-leading by the contract plan will our confident invest detail. I will call to we who a or ACAP we projects. to year in the

W. Troy Rudd

We three segments. Please Mike. growth, slide all delivered positive X. in to X% organic turn growth Thanks, including organic

for and company. segments. MS a growth of highest this margin wins quarter, These high our accounted for backlog, second our is DCS the $X.X quarter. new shifting set increasingly our the XX% a $XX segments we billion Importantly, two billion to had of growth In and which

also quarter the margin in growth mix to reflected backlog XX% shift higher our Our this favorable segments.

Gas gas our the plant two was XX% compares Even XX% I than April, Oil by so, Our DCS in projects quarter respectively. ever backlog well year. two-thirds than non-core us our half slightly and and more is wins combined-cycle first related cash million for note backlog our in and which segments, Free which the substantial in and & future. margin year, MS year-ago Including is $XX the ahead flow stronger highest to from in both quality million for period. total removed that $XXX last the and of increased second we million MS the the should the are $XXX backlog half positions of of in backlog to operations.

we with to shareholder As was year $X.XX adjusted and for was and long-term remain capital guidance on result, our committed the our EBITDA Adjusted million. EPS a $XXX are goals. pace value-focused allocation

expect EBITDA margins our of year of to short second our two we We're to items these not half Our ensure CS. in was the expectations non-recurring return to taking in due CS. and of for repeat do the target X% issues to types action

more credit In the lower a agreement, continued at debt quarter, of our debt executed rates refinancing which addition, our reduction. created we flexibility for in and extended

in exposure now either is which more of on rates. interest than multi-year our or XX% debt changes basis, limits a our Importantly, fixed swapped to

was de-risk Mike and Gas for tailwinds. the to operating progress Department As accelerate quarter. margin any $X we on of by strategic higher momentum by markets earlier, sales MS and X.X of execution billion the conversion decisions in start us reduction of on The backlog target of grew year-end turn track which earlier, payments X. the The that and by with did our cycle Oil our & reflects several tend recognize X.X%. in guidance adjusted mentioned X%, slide strong full-year power Americas of X%, our strategic Revenue which our strong provides more cash Including positive many a The discussed margins. the in than wins reflecting volumes We increased to business, in We're and overall visibility. better shorter leverage on with The doubled into was material DCS the in X. segment Revenue benefit. especially the backlog towards the years. We financial the April market and is to milestones our activities and We're net apply through growth our deliver business, Please highest portfolio X.X%. better Mike to expected significant of across incentive XXXX, the objectives. from our oil long-term debt as not than acceleration operating since Defense. or revenue our X% X%. in has providing increased the driving Please some margin segment slide which is position the gas positive times. adjusted margin turn continued to

of margin the half target. However, improve second we're long-term our we track expect on year, and with to X% the in

the all future than in payments of the slide upside. of create the another fiscal trajectory year expect the in strong to and more Construction by X. Revenue to had quarter, Please X%. with revenue half of We turn confident and first in the growth we're business incentive CS Building segment increased milestone XXXX, wins in The business.

In addition, our revenue growth exceeded for expectations had strong Construction wins well. and Shimmick as

of terms other civil we've with remains on set deliver growing our and expectation $XXX construction is goodwill. prospects a reduction across non-cash on Oil Gas favorable & We In non-core anticipation operating at of was non-current portfolio a pricing. plant, the complete. including assets gas Alliant which the of a profit nearly the a loss X.X%. have of in margin combined-cycle including the was in carrying solid, increasingly value and majority sales, million Adjusted and quarter, the Execution to XX% track recorded our

However, by our items. was margin as noted, non-recurring two impacted

is Please cash Operating $XX quarter I expect Importantly, flow earlier. the and of should in that noted incur the to sell full-year half year XX. we flow second the X.X%, cost was million. slide approximately half million, the target Oil mostly our first to and restructuring $XXX & X%. exit to was free turn our operations consistent of cash higher second was margin with non-core in note Gas

of with flow midpoint Our first cash the $XXX XX% is free million cash normal million seasonality. our annual and to half free consistent represented of $XXX approximately flow target

million As free million our of cash in straight year. we're guidance $XXX a $XXX confident fourth for a between achieving result, flow full-year and

execution flow Please performance XX. notable in cash on that lumpier stockholder consistent creation. slide to Our turn an and for tends cash to flow value is is have industry key a

related is to $XXX from proceed our that year decision we repositioning no are reducing press This previously the the in reduction of due power EBITDA business. our backlog longer disclosed for two the to were in our primarily combined-cycle to we $XXX As our million. with million gas and impact release, plants guidance

the items our CS impact addition, of guidance two the the segment. non-recurring in updated In includes

full-year reiterating This previously. better our XX%, anticipated XX% tax and EPS $X.XX. than tax a of and now $X.XX guidance down between we are of We guidance expect performance reflects full-year from rate

material quarter. realizations We continue We of have occur most properties not any year's $X.XX achieving did at various of of but stages to Capital and maturity attractive fourth the we our to from have in of of expect sight AECOM guidance, EPS which midpoint line this at the likely quarter, in earnings the to is guidance. second portfolio an

grow the of expected Q&A. we in will increase substantial now a more As slightly second in for the I now third this sequential result turn for quarter. with EBITDA fourth quarter, to the the phasing, expect we're a With ready Operator, quarter from questions. call over that,

Operator

you. Thank

now Capital Please ahead. Markets, will from Afzal. go KeyBanc the session. And We Tahira have begin question-and-answer we

Tahira Afzal

enough the for Thank taking plate? Hi. questions your hand these as room does plant given to for still strength in on businesses, exit but have your decision you on you making look congratulations two my at business. there, feel create you guys verticals doing I power you and to you the pretty you know verticals, a well are other it

Michael S. Burke

arena, the much Yes, us price EPC of exit we certainly, business, resources fixed markets the opportunities. to allow a price think we that power market, better be us So, as the redeploy going in question. of Tahira, should to power EPC in does but you fixed we're return portion thank those and better that where it not for much to present still some

nuclear in of Onofre big Canyon, big first we the decommissioning project will Power Diablo here U.S. decommissioning next the Bruce for We're activities the on in U.S. be the the focused won Canada. number decommissioning the has San which instance, in a For space, decommissioning.

opportunities and much redirect we to at, billion our growth opportunities away And constantly see better risk when present from margin we're we right margin for $XXX don't right opportunity. and we the better profile. And how towards resources that So, looking the do that create we a take as much resources, opportunity. look markets that, deploy it think,

certainly we power the So, will doing be that business. in

Tahira Afzal

it. Got

this even second said, free you outlook of the than you've you, you last. sense essentially had the a year cetera. flow, a And, free as I EBITDA guess, have side, you earlier decent sort Thank question had some same Mike. Okay. flow kept is, your And cash cash little in headwinds et though in

So, are little coming wide seeing just that you've with? a that to cash just stronger free or is there you reflective some areas the a side it flow had are in range begin

W. Troy Rudd

from Troy. conversion It's free about view I our cash really, our that hi. to drive unchanged, our earnings. cash Tahira, of is going flow guidance, think free is flow simply When we're the underlying

course there perspective takes view there's or flow. it's a full-year. wide guidance always and there's some We or are by that's going related to of headwinds, of issues all the achieving always year, have that. cash range our our change puts because for But, the our to But we the timing the that during flow. again, some way of our nothing in to and conversion manage tailwinds always of terms of driven earnings through the And cash headwinds, in there's

Tahira Afzal

very it. Troy. much, Thanks Got

Operator

Please Dudas. Michael have ahead. we Research, Vertical go From

Michael S. Dudas

Good morning, gentlemen.

Michael S. Burke

morning. Good

W. Troy Rudd

Good morning.

Michael S. Dudas

private – seen? the pace Could seen are you the what of across kind you we've quickness is attacking sector, Mike, trends, that great And businesses? backlog surprised on constrained new from does have board. thinking about how resources and your you of full certainly, your and given business orders you're pretty a incoming news about it you're given the or the whether by you're public backlog certain change how

Michael S. Burke

surprised. No, particularly we weren't

very about it I been talking think for We're a encouraged. we while. have

in growth MS. growth backlog and the the thing segments in of higher-margin DCS the the think most important I about is the

we But So, segment. seeing that's the started have increasing heavily results of MS development what's business of years in we that. most the our a and activity been ago, encouraging investing about it. couple And

rate win greater than a have XX%. that's We

business continuing are development dollars. to we invest so, And

in $XX DCS segment we're the that still MS have in front a Americas. of opportunities of in alone pursuing billion us pipeline We

that over positioned we've restructuring best So, segment. the the business to past to few potential maximize years, through gone that and it that caused be in

expect through, say wouldn't something It's continue and some I results future. delighted working for to the into momentum to to and So, us. quite the coming on we've we see surprising time, it's well we're been that

Michael S. Dudas

to the and (XX:XX) you civil highlighted more at funding right. opportunities looking about results the there? nice are My margins to Services up question, comfortable Are would levels U.S. at are the to be you infrastructure anticipate the show in follow-up It's or above opportunities. Mike, and backlog All being And as feeling some in starting you've and past, start margins visible to Construction see the surprised. you would that opportunities those metro that forward? see areas expected what opposed going

Michael S. Burke

things. Yeah. A few

organic a the as the the than markets where business, is win growth where Shimmick all, high, XX% in the had up, presence. of market is of also hot a back, margins California, We evidenced – very business has trajectory civil the U.S. is Americas rate is the most are growth success that in by of the DCS year-over-year. First whole trending but there most white greater

hot margins. better-than-average And see so in white markets, to those you tend

seeing And and so, growth expansion margin we're that in seeing space. the some we're

we encouraged we're what and looked size front just nature than us ever what in but currently the won space. by opportunities we and to-date have to experiencing, not better the be in So, continue very the of civil of

Michael S. Dudas

And one you have follow-up, quick on of any SB repeal Mike, just views the final efforts X? do

Michael S. Burke

No. Nothing new.

Michael S. Dudas

you. Thank

Operator

Andrew Kaplowitz. From Citigroup, Please we ahead. go have

Andrew Kaplowitz

Good morning guys.

Michael S. Burke

Andy. morning, Good

Andrew Kaplowitz

organic quarters to Your here Mike, forward? growth begun into about single growth revenue digits. last how tick we should has think couple moving the over up MS high the

you and the River mentioned Awarded said, backlog, over You up Savannah as XXX%. Hanford. extensions of

is to guess, only a a just won thing I bit. a offsetting little down billion $X I work. little You that contracted continues bit be see more that's, The of backlog

double-digits the on in see revenue relatively forward moving backlog, to decline basis? begin growth MS into organic here wouldn't up sustainable we that despite a from why So, pick contracted and

Michael S. Burke

question. Randy to okay, I'm Andy, ask that to to respond If it's Yeah. going

Randall A. Wotring

Good morning, Yeah. Andy.

revenue ramp-up year. We're be on would of have ramp-up. in of FY expect MS at to in think and organic We in in to point expect of the the we are double-digit And this as... half XXXX. revenue the second pleased over with involved contracts seen time the growth begin that, we two major we And and on certainly growth transition I the revenue top in

Andrew Kaplowitz

Okay.

Randall A. Wotring

a ...what of us. Mike said, we of billion $XX front still opportunities in pipeline have

awaiting proposals $X in We awards. submitted than more already have billion

So, this to market. we legs see some

Andrew Kaplowitz

what maybe margins Randy, a you still follow-up lower X% me you, ask And, are the the there, obviously, a little bit let than have target.

get to the of level of sort the sort projects maybe your for winning – enhancement fees we many enhancement Or sort as of margins Is about to beginning? to fees. new performance new talked performance should concept in you us start, anything guys don't the confidence of have range? and based to as higher projects, it expect there there in get just on decently half You really you're X% they year the second is that get timing so

Randall A. Wotring

We're we So, the in some do we a see we in involved as thing. in business Andy, as margins, and try continue our the to get are do continue long volume margin contracts, there think share going to third, marketplace. opportunity Two, see great front to invest invest, us. and to benefits these of contracts. take I in development we to one transition opportunities as to And on improvement pipeline

of major In see contracts MS, to our are So, business expect manner. we perform. an to outstanding our general, performing in in continue all

on performance performance our scoring and We are no high have awards. issues major

Andrew Kaplowitz

your And let strategic context But price watching applaud fixed Alliant projects to the San your go as people given them? just hitch, be power did seem we stuff review, backlog watching a sort they do work price think like me that remains fixed here. did plans to you in I So, about know adjust the you and their make without ask Onofre of what in your decision that will and (XX:XX) of closely. Mike, sure through obviously, anything you to

Michael S. Burke

dig you our and and had. lot have Our really looked a our don't footfalls, back some process, closely to When carefully. any of very these in it we of we back projects went that sure make issues peers that have at saw of experienced some causes our we competitors

seen of a and management and risk management project very now and projects, protocols that comfortable of back up not for checked there, some And talk those so, all they've taken the at understand these we our that almost out per been. are that ever we've doubled projects. very our one back XXX,XXX on finishing that projects. we've as higher gone rigorous on fact people XX% to a price are kilowatt some of their that projects. the making a closely But than look hard risk And on pricing money watch about because is as they're things we feel kilowatt. we couple per point these we And totally the our We protocols

justify not risk we are point below do so, And in the the we chase think the projects contract. where inherent margins to a

we've back you've and very fixed-priced at closely. finish our closely we of and We only what that have confident X% living. a for them that going our got other on feel these So, projects, and revenue is watch do and on-budget, to on-time we're gone We projects. Alliant to today we of always carefully. looked risk That's project all watch

Andrew Kaplowitz

the Mike, thanks color. for

Michael S. Burke

Sure.

Operator

From Baird, go have we Wittmann. ahead. Please Andy

Andrew John Wittmann

maybe those when Maybe complete? margins those reason the that expected we balance jobs Troy, non-recurring of is us taking can the Services, get the segment year, called impacts our that the is quarter? XXXX, in that Great. Thanks it dig But, some stuff. items on What you the here? Construction two you recurring Services and Construction the the can improve so my like second help in this non-recurring the impact arms or to by here. Looks I also, And some of half something out for wanted to of else? works how there's around understand will are question. the

W. Troy Rudd

Yeah.

all was once. So, lot that a at Andy,

sure those me points. make hit I Let all

projects. had and businesses had had, all, a being of as those project We've we problem types view CS issues on First we in issues the non-recurring. to with those the we've in past of two where respect never

it one and that we fact it had especially we on projects summer. being completed be The So, the did have to impact as those margins which given where will view was and as of be, was our that we X% clearly that it this and down above, the on withdraw for year was onto The on that plants impact biggest business our cost quarter and on in the related we other our these again have teams have an impact our two from combined-cycle take year. those to this gas projects. and guidance drove impact unusual, an to to view below being did that guidance non-recurring, power expected reposition the the

Andrew John Wittmann

Okay.

Michael S. Burke

I that come top over to can be Just the on to clear. just

full-year had is in our margins we north have quarter. expectation the Our be in project the X%, of CS the the that impact past for hits segment of that will back including the

implies have the in that margins year the the better So CS we'll remainder segment. of X% in than that significantly the

Andrew John Wittmann

business. that that Looks segment the CS That's related helpful. & losses segment that the are excluding EPS. Okay. to it? to about those had exiting normal be Troy, you excluded the There's operating you adjusted Gas those the are something that million. like also you're associated probably Oil plan I from $XX with guess now

W. Troy Rudd

Yeah.

as loss That's at those we and again but the combination are that We'd our businesses of impact have businesses neutral, exiting. the worsened. that or of those conditions EBITDA a the have So, businesses say non-core market we're selling beginning what is the been or planned would things. year from

that & in I'll Oil remind seasonality there's And the Gas a that business business, to result. restructuring you addition again, are are that, costs in just costs project there In especially particular included in in wind-down that Canada. and

we're and half an the be continuing first majors, consistent business, of the of dramatically with, in you the is see the of the what profitable going business customers, large year in the point with and to to the half in run. key results year. see I field half oil the the of being our worst and your that you second the out our that see the in the typically think leave year, guidance, beginning or But the or it O&M clients serving is improves and actually of I in is that half year, services for in with second ability So, provide second going oil improving because gas year. long And to and than EBITDA that of from contributor remain we we guidance be gas the and the

Andrew John Wittmann

Okay.

relates otherwise that had fact original posted the would excluding that your suggest original it losses. is you're would normal in to was to that probably excluding it guidance you're you your So your as raise the guidance, this have so guidance, since

you to So, it expecting the the instead for year previously were of EBITDA neutral losses. be

you're an an so, to the EBITDA your saying that, gas this be and guidance's by cut The impact of impact fully plant And and shouldn't not is exit the right? guidance. the on by is explained mostly

Michael S. Burke

Andy. That's right, Yes.

Andrew John Wittmann

and Okay. maybe it there back Thanks. All right. later. We'll circle leave

Michael S. Burke

Okay.

Operator

From Steven UBS, we have Fisher. Please ahead. go

Erika Jackson

that costs be helping there but growth, backlog those would had investments I a the drive MS that quarter strong know is development business and said were are last segment. This Hi. costs Fisher. some question just Erika had Jackson you on I I year-over-year. about for think Steve those flat

we full-year might it opportunities? how you're an be still if a now, investment for costs incremental that's should if there's thinking if about wondering, up just those be or maybe So thinking

Randall A. Wotring

is This Randy. Yeah.

business the the cost for So, year, over development first of last half did increase year. our

over think I success see in the had again, to we full As those a of front column. opportunities of some though win we've of bringing still even us pipeline in great

of We our same see we're stay expect front of continue a opportunities to We we'll plate invest opportunities to being in as the that And in – spend capture. us. and continue about and see our on full again, rate we development. business successful to very

of we spend that same about in the the half. continue have So, we'll level first

Erika Jackson

was associated how should this Gas businesses telling? And And the cash on CapEx free that year? flow much Okay. & then add Thank you're you. guidance also non-core with to that Oil

W. Troy Rudd

that business. the is particular CapEx answer wasn't The material in really

Erika Jackson

Okay. Thanks.

Operator

- have we Themis Davris ahead. Jamie LLC Hi. Suisse, go is Jamie. Credit This Suisse Themis Securities (USA) Credit From Please Cook. actually on for

question opportunities. in to and millions $X hundreds in hurricane going of back noted booking efforts, work a potential over you Just billion the the

work much the maybe So, what's could benefited full-year second outlook? you your color how provide embedded now in on quarter, and any

Michael S. Burke

that's then (USA) had these Davris $XXX us I wondering, our the terms opportunities its of we've on Securities million about pipeline and yeah, business, revenue, maybe Thanks. you can We've are organic billion opportunities was about And if progressing talk come how P&L. also that market? greater year-to-date $X that Shimmick. than Okay. pipeline if we we So, LLC are bidding of update year-to-date, growth and currently. we have for - $XXX year-to-date, of about construction of of and million could a than Credit Suisse the pursuing in through wins Themis had more civil

Michael S. Burke

has The been in integration first organic But acquisition basis because up Yeah. year their from Shimmick stand-alone organic successful. our course, The calculations, the incredibly on year-over-year revenue still – number it's their of is of a acquisition. excluded over organic revenue is and XX%.

it So, revenue is Shimmick's one the exclusively the right the well on activities the profitability practically is the is States market as is well important hottest, line the line. civil California, it construction world. of in of, United on both hottest which and performing one as almost equally And not very in are in now

continue Securities Mike. and pool to large Themis exceptionally very Suisse right us you, Credit Okay. see Davris we opportunities well. in And that to so, LLC now perform front we of - of a Thank (USA) expect

Michael S. Burke

You're welcome.

Operator

From Bank ahead. go Please Kaminskaya. have of America, Anna we

Anna Kaminskaya

segment, outlook Good for Maybe DCS outlook. organic start I'll morning, on guys. your

double-digit and should how can in XXXX the your organic of and square half for trying in to the in we growth just get Can I off the second business? go? where we think if do, to And about Just XXXX? organic growth business growth backlog margins double-digit

Michael S. Burke

just I Anna, to want clear. So, be

said? DCS you growth that You said what organic segment, the is in the

Anna Kaminskaya

segment. DCS Yeah. Yeah.

Michael S. Burke

continue you exceptional. that we rates saw were the – the So, backlog in clearly, growth quite

I margins not for we're And the but improving quarter. results rate actual think in in in not from continue mid-single-digit growth been The growing solid perform so, And growth backlog there. continues this that now the backlog, a X.X well. several has see quarters row. and the for improving book-to-burn in but organic to very organic we rate And in seeing just margins it's in exceptionally – DCS, the and just backlog quarter, the book-to-burn to

think of business trajectory So, we like I also. that the

Anna Kaminskaya

of is into So, go the parts should the trying longer little the in in thought I business Is to can book perform why coming quicker business duration type a the of not it in bit we reconcile quarters the work? the north project? X% of always backlog. Just organic moving more see XXXX? growth just of of and kind

Michael S. Burke

Yeah.

in growth. to the has of But been you're we've significantly, think higher-margin quarters I one of we're projects trying right the number now. wouldn't not the the heading difficult especially organic or very I to So, quarter is support the given Winds that direction. not for in thesis point revenue giving overall it to one point growth, and other whether next increase of guidance on guidance giving quarters right going We're time. a direction XX,XXX line on there, projects, organic is at But to our in leave direction Anna. large than quarter in to a the specific I right to segments got couple revenue for Backlog Margins heading in pointing the with are quarter. to number out will long-term But on are MS tick continues by any project, to starts for in organic and guidance to two quarters DCS. give get the try want up of right heading everything it our in direction. the

that So, right everything is pointing in direction.

Anna Kaminskaya

We of of millions can of losing any any tens that of Oil and about revenue around breakeven proceeds? around business business? terms numbers Just should is it proceeds or ranges be & And in thinking is of Okay. you the we effectively money? should thinking millions hundreds provide or be business Gas that

Michael S. Burke

And around I'll we said you you, give we It's going earlier, bit in that the see a $XXX business. as & the to somewhere That million rate. profitable do contributor. O&M low-single-digit some $XXX I'll just Oil staying an EBITDA growing information a the that's Anna, a between full-year. give is business be as to revenue at I business, that with million expect for Again, and us. be business Gas little

Anna Kaminskaya

just about that How the business trying to (XX:XX) you're exiting,

Michael S. Burke

that at the a are revenue about same businesses exiting The we're size.

$XXX about million. roughly it's So,

Anna Kaminskaya

you Thank Right. much. very

Michael S. Burke

Yeah. not it's again, positive. And,

Operator

we go Please Deutsche have ahead. Bank, Dillard. Chad From

Chad Dillard

Good Hi. everyone. afternoon,

Michael S. Burke

Chad. Hi,

Chad Dillard

a how to there's is pickup the maybe some seen strong broad-based maybe in to perspective to if XX business in out, margins just U.S.? work you've wanted from and even trying months I'm DCS it inside bookings XX and So, geographic know in to I that months? ago year just acceleration versus figure a enough the further drive over next

Michael S. Burke

not to growth and in that specific obvious you've so in you've and East for that the reasons the sources. where price in in But then, infrastructure take Atlanta Pacific, about talk DCS revenue with growth and just U.S. So, while, Asia growth seeing big us a cities Europe much happening for the the U.S., of we're significant of heard significant oil. and Middle Brexit very civil Los got is Seattle the Angeles the the within globally, markets

fairly mid-single-digit quite broad-based we're win achieve able positive confident organic to fairly growth, a rate broad-based we're seeing with be that trajectory. to a we're and organic to that going real So, and rate continue growth

Chad Dillard

$X want for the also helpful. projects? higher chunky billion there of And these margin Is projects or those awards be X% of of dig to I I any within were MS protest would of that or April. this risk that that about color any the awards? into Then How think it target won? on lower? how the Should be should Any you past

Randall A. Wotring

This Yeah. Randy. is

XX going a recently there the periods are won all number transition and days of XX So, days. projects – through they were to we period. projects are a those Usually, transition that

I we start mix that work rest should revenue up of see ramp have to the in last here of same our guess business. the They of significantly. the So, you over are part summer

using I is I model Most a work it. a standpoint, that should we're methodology. cost of So are same think winning lot from these the think given – of of margin nature you the reimbursable,

Margins work today So less normally a is see cost price of the would reimbursement. world. most than in But you in MS is are fixed our risk again lower.

been you same projections. for of use think I using the have purposes model So,

Michael S. Burke

And, Randy, one the part answer of that question was, are we expecting a think protest, and is... I

Randall A. Wotring

Yeah.

So, look, new all major the awards. protest passed for we periods

the place were we have awards in that So, protests April. made no in on

Chad Dillard

Great. all me. you. Thank for That's

Operator

have From Seiden. ahead. go Adam Barclays, we Please

Adam Seiden

question. taking Hi. Thanks the for

you'd nice mentioned of so. you today think I How like sit you Shimmick, do XX% where seeing civil or you be? you're the it with think to your growth So in scale business growth versus

Michael S. Burke

civil of is limited to markets. Washington business Hawaii scale our and California, the The

the the of And global were to we important so, across market. states, When attractiveness Mountain Shimmick, it's attracted the as the earlier, projects $XX is and bill a and in market said business. dedicated not Angeles but U.S. Rocky wholly felt to with we transportation California, we billion that the California describe what's civil $XXX exception, look the transportation hot. do think to of infrastructure the a you have was, that's that it. of look a the And I was because couple that widespread the Los I of measure, But at State billion It's white best infrastructure, at you not way in

our area, mostly right so, And place be good a civil and limited is infrastructure business to to it's that now.

Adam Seiden

Now, for understand that. sure, I

the when markets of country in carry it you're in of in that you like guess, – the trends, with the do you on everything positive but there, just think it seems some California, very generally, in you expect over and I civil to various across positive that So, see then U.S.?

Michael S. Burke

Yeah, If markets us markets does. want markets. us margins allow the the with we capabilities. those move competitive to those we metrics attract into the right to think will carefully it the in have allow we perform right But that and

those now what to And us on give to of with to capabilities Shimmick. undertake right we did move have some probably don't markets, require to it small so, wanted But, niche we some us would similar acquisitions that. docket we into that any the other if anything would do

Adam Seiden

one when a And margins question. more in maybe or MS to look bit last where awards the year the thinking DCS, the the little sits then Randy backlog last new that. you compare appreciate at perhaps that you versus least today in believe I ago? margin just one. I at some just business does Excellent. Maybe spoke in DCS broadly we a and today, of have how

W. Troy Rudd

Adam, Yes. Troy. it's

Adam Seiden

Yeah.

W. Troy Rudd

organic over by be driven what with consistent the to the is, is DCS saw that think true. proving was described we've time, I to improving in going with be really we that business, growth So, growth the and and margins

we the we're of business So margin in from our first longer-term that X%. point. longer-term quarter, the X.X% as And business in of And the that in second in gave DCS being quarter, we X.X being up guide seen already in range the – a improvement. margins saw certainly, at guide you've

longer-term ourselves margins with in that we expectation. growth. said that forecast, again, our And as that we we line grow so, expanding see as performing And with to continue in see business, we long-term beyond

Adam Seiden

guys. Thanks, Great.

Operator

we Davidson, And go D.A. ahead. have Please from Thielman. Brent

Brent Edward Thielman

you. Thank Great.

I for that discontinuation Just it CS kind X-plus-percent & a of follow-up fair for non-core the a on not margins power or that and with removal gas-fired or longer Oil should longer-term margins. obviously term, the is kind of expectations but Gas of guess still this target? year segment, structurally the change operations, the

Michael S. Burke

the the see we in Shimmick. still That's in through our there's longer-term as expansion target. business, Again, business out our changes No. again and power, we civil of moved

the target. still right that's long-term So

Brent Edward Thielman

Great. know early. it's Okay. And I Mike, then,

touched the had prepared in you think on I it remarks.

little great Can a be East, that opportunity. Just area bigger an it's elaborate you more with longer-term you're for think When there? opportunity obviously, Middle that could you? just seeing regards what you to longer-term the develop into a could really on a

Michael S. Burke

the That's Saudi development incredibly going be world. be the be city there built. that So, business currently $X.X-billion Arabia expected part we on is right nowadays, a of there now our we Middle right Dubai amount building are are out that's on. to tower for exciting, Tower, spent the in will and to is bid opportunities in incredible continue to that The It's region. the smaller to a opportunities in focused some focus Creek but East. The money tallest of that which new now, are

to still reasonable are And back to allows to So, comes oil-rich budget of opportunities us. the nations of when there's a little region. oil that come level the there more and surpluses to back interest great

a expect the will couple but the little of oil. it's to return due price We past growth there, of sluggish over years, been

Brent Edward Thielman

right. All

you. Thank Okay.

Operator

you. Thank

comments. closing Burke Mike now for it will back turn to We

Michael S. Burke

you, operator. Thank Okay.

in So, business. to a just that the we few wrap up tremendous that today's confidence just we reiterate before I want support call, the have points

First supported further week and growth the we the growth great of of just April. deliver of by revenue in clearly not industry-leading billion first revenue continued but all, $X that we to and have and backlog backlog, had wins

to up that backlog now long-term we're a so, $XX of a bit quite us And gives billion visibility.

growth The us second the in we point the and segments momentum is and due of margin deal a gives I to in make expect that business MS, the and great continued of comfort DCS committed to we growth confidence want higher of then, for and shareholders most our this announced by finally, remain we decisions of And profitable value and that saw some strategic that you today. evidenced driving the in the business. to importantly, long-term mainly

of it are We caused the the are at and from Oil fiscal and business times our on this that opportunities year. to our X.X crude constantly that announced the focused right us to looking we the we redeploy to market. ourselves accelerate allocate allow capital growth will that that and us capital EPC once heavy to debt to desired de-risk away right during stock how from caused get us previously portfolio Canadian we ensuring Gas And program capital by we have buyback power the & ratio allocation extracting

confident current So, in business. quite we of our future are the confident even more and state business in the of our

Have thank thank day. interest you and for participating for in AECOM a continued your So, you great today.

Operator

Ladies conference. you. Thank concludes for this and gentlemen, joining. you today's Thank

disconnect. now may You

AECOM (ACM) 8 May 182018 Q2 Earnings call transcript