ACM - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the AECOM Fourth Quarter 2019 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After speakers' presentation, there will be a question-and-answer session [Operator Instructions]. Please be advised that today's conference is being recorded [Operator Instructions].

to Gabrielski, conference Vice like speaker to now Will today, President, would hand over the your I Investor Relations. you. Thank ahead, go sir. Please

Will Gabrielski

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

incorporated on using which dispositions. non-core measures constant-currency We non-GAAP Organic planned into basis, and progress website. The our a of in presentation adjusted financial presented and appropriate exclude noted. as and where year-over-year percentages growth refer actual is to presentation. is and impacts discussion businesses available, on to in reconciliations except today's posted are our our All are GAAP is financial year-over-year

note Management should the consistent will I services Building to professional work. of business, nature the with the as now Construction business our we Construction refer

these which Professional and our exclude will separations refer for our to consulting is presentation, stranded which of planned business We to costs expected with divestitures, the segment, Construction businesses Services Capital. be Management EBITDA AECOM Adjusted in the comprised associated services and design are eliminated. business and

figures materially these and to of are final the date presentation on other recast closing results available metrics our services adjustments due as date this financial based differ the that of finalized. professional arise the from final this The financial of reflect may of between the information amounts developments time completion procedures, our quarterly the estimates current and preliminary presentation. Historical may

divestitures. EBITDA into excluding results insights business for business Services business the the We of believe by performance planned adjusted Professional provides additional

forward-looking statements are estimates such inherently uncertain. and However, are

you Reconciliation such, the should comparable with is certainty reliance not not components required cannot measure because fiscal provide Professional on Company all differ as most undue adjusted materially. such time. for of for place the predict without statements effort, may such the sufficient unreasonable to GAAP business to As EBITDA XXXX of directly at actual the results reconciliation available this Services

may risks call includes Services close the sale the business, not announced been to has including does closing that yet related previously not potential delayed. the Management Today's and discussion transaction which be completed and of uncertainties, the or includes

that XX-week XXXX note I a should is period. fiscal Finally,

Mike Burke, today's Chief Executive Beginning presentation is Officer. AECOM's Chairman and Mike?

Mike Burke

Thank everyone. you, Welcome, Will.

resulted that over strategic financial actions our update Randy Joining an our in Chief our me substantial a review call the Officer in including a and begin will trends value. the increase today Officer. a across greater discussion we executing the Troy performance outlook before our Rudd, I business, are of turning Operating AECOM's Wotring, Financial in will Troy detail session. shareholder and results have question-and-answer for are Chief with on Then and

XXXX Fiscal for was X. Slide a to on year fronts. several turn Please successful AECOM

quarter. nearly of year million, every fifth a excess record of free Adjusted fourth cash our in we and exceeded $XXX key flow on XX%, we delivered metric. cash First, by grew consecutive the in expectations flow EBITDA financial including

adjusted XX% Professional an Importantly, rate. Services our EBITDA delivered growth business even stronger

stock to we Services highly authorization. value. premium sheet transform sale will at substantial business attractive Second, price repurchases proceeds our valuation, expected us unlocked The accelerate a our enable Management under a at the through existing of the balance shareholder cash

margin all-time year. the in record and to the continue for profitability, including we full the high DCS actions restructuring quarter take Third, have in resulting an and fourth taken are

an enhance in XX.X% margin, X% profitability, additional net approximately This the we fiscal an On actions service to with revenue which to XXXX. to consistent pass-throughs. that achieve taking DCS translates basis, reiterated margin excludes expectation is are With our we a our peers.

near high all-time $XX Finally, and we at are a pace work winning strong billion. backlog an at remains

confirms, expectation expect fiscal our Services EBITDA XX% adjusted business, guidance of another fiscal adjusted in year Professional XXXX XX% growth including growth, for supported our growth strong backlog we As in by EBITDA our XXXX.

of accomplishments and deliberate executing ago enhance for two are positive value. years began these outlook of XXXX All our efforts shareholder our we in fiscal focused the to results

X. Please turn to Slide

additional in profitability and capitalize steadfast August. XXXX, actions and announced executed been fully $XXX we enhance have restructuring plan near-record to our We We to backlog. during on our in restructuring commitment a million

basis we by a to supported the in to result, to margin already increase DCS in a point As point achieve by expect basis XXXX. XXX fiscal achieved XXXX, XXX continue increase compared greater than fiscal XXXX

We upside. are centers global and design additional shared efficiently. consistently for evaluating further our include best These investments in industry in opportunities work delivering margin centers service and further cost lead to

return includes improving on return This where plan focused XX% on countries, progress our are XX time. management continued than on exit are nearly more complete. to capital and we on we Additionally,

evaluate are strategic ensure priorities. financial and are with in we aligned our entire investing portfolio our continuing to to are We markets that

expected also are making on time, year. cycle to this achieve power combined de-risk We our gas on The plant progress business. to later substantial commitment our Alliant is completion

and priorities. aligned our returning years, International financial including addition, have numerous business businesses and that several our businesses the with we oil over and lower strategic were past gas In two Development divested not

of to continued remaining the self-perform our exit these ongoing construction this from As to on managing our parties. reward profile we businesses, businesses and the third risk pursue are maximize work we to value attractiveness

nearly We of at-risk are state exposure. goal self-perform committed construction an zero to end

billion intrinsic a value for substantial professional sale we as will generate close in of view announced discount proposed premium repurchase to which MS service cash The value. at certainty at deploy all stakeholders. a is of what which and debt the substantial sale expected to last we valuation, and transaction business the spin-off to peers month will quarter. we This much proceeds, for the the second our than Finally, in estimate stock sooner our reduce $X.XXX creates unlocks

business trends. in This from performance in our profitability and benefiting record discussion highlighted Beginning Professional Please and largest in Canada. we turn DCS both was by XXXX. our strong X of market, to Services favorable in was our gains efficiency Slide U.S. where the the are conditions for the business segment, Americas, a market in

State and to healthy with and rainy-day budgets local clients continue operate funds. record

on five in In over infrastructure. the underscoring tax past gas phased addition, focus critical clients' year, our increases, funding states

bipartisan infrastructure Importantly, remains strong. for investment support

are and pipeline. similarly growing have growth delivering federal of for agencies We a Conditions work number our also a Canada in are strong. support where we clients, in

transportation in the and led year, delivered large our franchise. several on growth for double-digit region by revenue executing projects are We transportation the leading

ourselves our from work large delivered our markets. environment deliver actions across extract we Brexit monitoring have wins taken to EMEA the is Turning We business a delayed in the in international results to Saudi and growth UK. region, With and returning Arabia more region, profitability lower now least, from range are Across to at led macroeconomic efficiently to until, in by the the of markets. is outcomes. resilient ensure we the January, closely potential solid benefiting

address economic the potential UK that to is growth and capitalize to committed remains these Importantly, investments allows position infrastructure supporting leading to maintain us on economic opportunities. a government weakness. We prioritizing

balanced In remains Australia, economic of execution across a public is and Asia-Pacific strong. on slowing growth and operating benefiting from execution Geopolitical efficiencies. is rate Hong uncertainty sharp the Profitability sector in a the stable the region, but Kong investment macro in growth region. resulting backdrop against mixed economic focus in is

strong, which was Execution business. Management Construction profitability. in increase led the to Pivoting a substantial to

airport robust of aviation our New are our City, backlog increased Our demonstrating JFK larger deliver in selection pipeline Terminal and highlighted by project a York both year One strength and XX% was the at The York. New opportunities. position pursuing our in we new leadership the market to in by

of nearly annual growth result, and a expect beyond. and XXXX revenue, revenue our in backlog profit As we represents years and four

In of last we Management which month's evident market Across made investments stellar strong delivered growth, strength valuation XX% AECOM, Services, strategic initiatives. of number key sale. across financial execution the we and The in premium growth platform XXXX a realized the this as and in announced trends. we've was was part of reflects successful revenue

our year XX% lower-risk enhance for This double-digit we commitments. against this Services deliver to We performance focused by where another make remain into our Professional our XXXX, on in value capitalizing business, of we energized further to continuing on adjusted expectations our underpins EBITDA growth and transformation as including and to momentum backlog year. the growth are opportunity continue We a XXXX in higher-returning are on growth. progress XX%

the turn Troy, now over quarter call the more will discuss in who will to detail. I

Troy Rudd

of all in turn Please X. our and including Slide delivered our exceeding financial targets. Thanks accomplishments on of to a expectations nearly Mike. number fiscal XXXX, financial strategic We

associated reviewing few with to want our to greater we performance maximize in take discuss impacts to the actions I strategic taken have a Before value. detail, and continue financial

recognized we intend million First, of associated businesses strategy our to in self-perform quarter. with exit goodwill the impairment as the $XXX We de-risk profile. to construction to apart businesses part fourth the at-risk these business non-cash

the costs. to actions of includes quarter, improvement actions the to we actions well in the fourth This enhance stranded third during anticipate as the Second, as to commencement profitability. take actions in Mike detailed, as margin associated plan we and further eliminate restructuring in required announced continue XXXX year quarter with the fiscal

approximately reduction related the impact Finally, will shortly. these from million restructuring $XXX discuss to and the There of quarter we P&L to estate is a item. of accounting one-time new from adjustment, actions non-cash expect the to first report this lease components real in no is of the cash this standard. a I equity adoption

basis and Please the solid a prior high the new already which Also for adjusted The X.X%. underlying was from turn expectations. increase The restructuring margin year. adjusted and full-year in fourth to execution. XXX point benefits record exceeded DCS our improvement reflects completed operating actions from was DCS margin performance In a the operating a new marked the quarter, Slide and X. strong. segment, was The X% substantial

high challenging year. to quarter growth recovery We Contracted executed due an backlog of supports the year, in full half of rates impact. Americas, increased comparison XXXX X% in all-time should by continue fourth high, led Revenue work first be the excluding last increased storm in of that growth the in a by by impacted to elevated storm low-single expectation first the our growth this in recovery which For digits. X% in fiscal increased revenue faced work the for the XXXX. half note the XXXX. continued to volumes will I

year is growth the as and revenue increase for year. to expected deliver we However, expect to accelerate progresses, low-single-digit the a

price X. expected the X% our decision to new power no combine Organic backlog, in combined business, revenue price project cycle to due fixed pursue to the completed in plant, segment decline was the year. longer included this be full This turn in CS only plants. fixed our Please generation performance declined Slide in to by power Alliant track later The circle large on power the is year. gas which

margin X% with XX% by expect increase significantly operating backlog. consistent adjusted year, in expectations. which was improved XXXX, double-digit growth In for management the full in profitability The CS, supported was and we in construction XXXX, our

As which excludes adjusted these comprises pass-through a management of revenue construction contains XX.X% year. in reminder, level an was the this revenue. pass-throughs, which high the of margin approximately basis, XX% our On operating a for business, the segment, NSR

in the expectation. the set on turn X.X%, now up. a fourth operating have record. of The several XX% full-year Slide X% adjusted resulted our Activities margin in projects Revenue year in ramped in MS exceeded to Please larger and which quarter, by segment margin the our of fully was XX. increased a X.X% new

work the since headwinds by $X.X Virgin cash we of despite fiscal our full-year from to set US turn metrics across Both quarter free and flow flow operating and ingrained new is the completed collections records have a in $XXX cash delayed cash flow reflects to cash for of culture, efforts Slide drive as Islands. free the great million flow in XXXX. generated $XXX Generating cash billion free $XXX organization Fourth and the our demonstrated Please million. continued million is This and resulted respectively. is XX. were outcome flow in cash

priorities. Turning capital to our allocation

to continue maximize our to our will shareholder value. consistent We commitment allocate capital with

was cash Our target substantial quarter the $XXX fourth enabled times. within to fourth leverage is debt X.X exiting X.X reduction. This of And our generation X our million range in times. quarter net of ratio the

of $XX, the billion $XXX price of repurchased we our stock year an $XX million average million at during under addition, and have $X remaining share authorization. In

business MS in second the is the sale The to close of expected quarter.

allocate estimate profile, cash transformed to as believe consistent expect to a leverage to available leverage proceeds trades for intrinsic debt reduction, free fair execute our we repurchases a to value. discount With to at and our continue We expect stock our purchases. with substantial continued goals cash growth allocate thereafter, to our continue to and expectations we to of share flow

turn Slide Please XX. to

reiterating our XXXX guidance. are We fiscal

of midpoint, any $X,XXX business, to impacts at We growth expect construction. Services exit from EBITDA excluding Professional from XX% of the our million plan self-perform sale our at-risk business, the enterprise adjusted which for the includes MS

on would earnings both $XXX expected within million And have free have interest our consolidated a expectation lower growth, million basis, flow for would our to cash and expected the $XXX reflected generate to in we continued range. This expense taxes. increase cash

this variables may year. few a flow However, our impact cash

would capital add First, for will with to billion the of net substantially $XXX quarter, and of the $X.X deployment. the available which second MS associated the sale expect to purchase items we receive cash from we to approximately million in price, proceeds contingent continue pursue

million a of expect use. this restructuring two main There for $XXX activities. use we and $XXX cash between million Second, drivers of are cash

the increase best The to is real on This we design in plan centers. and first estate cost service usage actions quarter announced driving shared increased focused is restructuring third additional the of efficiencies the margins. and further

the stranded elimination business The associated the services businesses. of and at-risk of self-perform with divestitures costs planned second is the management

quarter, we flow cash year to likely the the typically expect year-to-date is close a negative. in second point MS Third, sale the in when at

will from full-year be impacted we don't cash benefit the flow such, year flow as MS because As progresses. cash

MS be will of we receivables from to there had within sold the headwind the Finally, elimination that flow cash a portfolio.

the negatively impact short in flow will cash term. This

this with other We're Services provide time to formal program ready business. cash from replace over flow receivables we yet to guidance. Professional intend the However, not

details We York on the at New provide cash on Investor City. will fiscal flow in Day XXXX December our XXth

in Looking ahead, direction we business. of the the confident are

adjusted Our than in on is enhance flow to repurchase cash greater Professional to cash to value. is Services free unlevered flow profile double-digit basis. continued creates a EBITDA fiscal EBITDA XX% to to XXXX convert deploy capital to business expected and strong a growth normalized and at expected opportunities This rate stock shareholder deliver

turn over now questions. will are for for we ready that, the Operator, With call we Q&A.

Operator

[Operator Kaplowitz Instructions] Our Andy comes Citi. from with first question

Your line open. is

Andy Kaplowitz

about your You effort as can ongoing quarter in out? as DCS the on Mike, margin X% ramped QX, the last operating within consulting well focus that you mentioned business. up talk you've cost the

you future road like of given is DCS expansion? both FY in along, XXXX, cause, as margin your goal segment? of which you actually planning margin as will for the Are as X% so plus target main you're getting terms And a new Day, on the signpost on a that Analyst us of proceeding in you as what to what longer more part looks the at margin of that confidence well a give about And think executing.

Mike Burke

half or we've that that happened The to the majority in to year actions get taken target of the first FY X% in XXXX, taken margin XXXX. of be would of the

year. We that. level over increase progress on now. But We continued competence the we expansion have high for We and past right margin centers a opportunities still have additional actions continued of that we're on executing through our design global services of of centers. a both in the our global have made those business lot still have some

places that We basis. the continue estate deliver a to an a pretty outlook have platform we that have an actions on translates reduction are we of to we That planned want X% margin about us taking as XX.X% have work. still where there. right on some good the to basis within NSR real to portfolio we and It on NSR gives our refine and continued want that

made it and how the sense opportunities over were you past and progress the much we've years where we FYXX. in so two a And gives

insight continue We when into will improvement margin the get give to opportunities future in December. more we together

Andy Kaplowitz

million. obviously million the Islands And of from It's mentioned $XXX significant you free to year or you end cash kind quite million $XXX you collect that $XXX the pre-announced do good. flow were of $XXX the you're a versus in know full guiding refinery that going Virgin didn't Troy, I to the of the million low to of payments quarter, you concern past.

So cash, today? what assuming plus, sit you of you I million Company the together. do here that from better was there get expectations? so if pull still as your mean, was any Was cash Islands Can XXXX? And than much forward $XXX you Virgin

Troy Rudd

focusing there's folks It when single effort And an was in that on timeframe, So quarter-to-quarter. entire Andy, from the of cash things Company years, free five point no I to flow. what the flow. billion around within item $X.X to at flow across of, kind we outsized result. that we of we driving outperformed, cash could of guided said, cash move quarter we really terms last and we an said look that generated And last

within than entire and certainly guidance come in when organization together look range. we pulled So the The expected at year, we did I this better quarter. fourth our did had

we did the make turn of to the we that was gave And indication to were continues the belief from reason entire significant wasn't pulling subsequent that We Company next for forward just that we still same the something earnings to have million a million sure of guidance $XXX business that million consistent a $XXX that there that benefit say gave the for year. into year September on between terms $XX having I cash benefit the be of of basis, of for timing, us to flow performance. and the fluctuations quarters. that estimate terms year-end recognizing there provide instead XXth, will in a are September XXXX again, XXth, I small in that on about

Andy Kaplowitz

I for million on taking a stranding $XXX -- cash said talked I just costs, And of million it then restructuring a Troy, you new clarification about you the quick -- in care original million $XX $XXX about know, the $XX And the subset program. in margin on was in incremental if ratio similar focused on focused costs, of for DCS? of but costs think the that of also $XXX million. past I DCS, Is it that million to core stranded ratio that is think cash

Troy Rudd

it's now real a of undertaking different because to No, is restructuring slightly related the we're profile, that estate. part

little costs element term. other And it the is would as which different benefit will we benefit cash bit business then a that service that benefit the management It longer But in Company, those again to but a so we the think a a profile. margins that's the is bit have stranded payback QX. a costs, significant removing is exit has the And see would little significant certainly in sometime of payback. not as

Operator

you. Thank

question comes America. next Our from Feniger Bank of Michael with

Your open. is line

Michael Feniger

know awards? October I in Mike, at is there reaccelerate anything highlight back the in seeing, ended that's obviously, can the that the your quarter, lap I'm maybe, in and especially a expect you're of is week organic confidence Any giving you to end or just once of in you terms you already DCS with comps there half? September. of tougher those anything so slowdown about some or Mike, talk November, that in you the growth you hoping

Mike Burke

indications not we're seeing certainly of Well, a slowdown. any

had wins. FY we billion In in $XX.X XXXX, fact, of

what at FY the burn call book in we'll of and to look the a we you If CM XXXX. Professional had business, Services segment, DCS X.X

broad We But mid-single-digit longer sense term growth and the business. we haven't FY have for right of on momentum So the short a you organic coming But sense. scale. that seen the that gives in it that you target any gives XXXX. us market kind you indicators the for a a is still both in believe into

Michael Feniger

that in thinking just seeing then about And and DCS. you're the CS backlog

now I'm you this is, do say that the selective that any with more pipeline a push the you and curious backlog Just price, manage bit visibility you approach is you little of there robust? get as that. backlog some you still how you view just curious, that where did is that have the internally more

Mike Burke

XX% So backlog again, a the the Professional Services segment increase year. for is got in

being we of, We that, we are kind definitely profile continuing are to grow. risk want. But selective of

suggest focused have enormous feel of we type organic question on is an is and to don't mid-single-digit the higher-margin higher-growth continue to we're that I growth focus There still in We no take an on. on We want somehow stay enormous willing markets. that negative have laser projects different the impact, on to But rates. going impact growth. a to confident

Michael Feniger

the some know you cash on talked that for there have just I lastly, strong in so assets you on there? about oil quarter. loose as timeline you're your it the what fourth the that, ends. the just is about we gas side thinking I'm provide Mike how on just still you Could came the fact civil update Troy, XXXX? flow and timeline all, especially at and And with The side, public construction? approach Does us in change And market civil construction. seeing curious in we're some guys an

Mike Burke

So self-perform to at-risk it is ourselves still our divest strong intention of work.

Development our We plant be sell During I've selling sold gas as in and civil year, combined said the conditions this cycle oil wrapping construction International portions market difficult the We're our gas. quarter. we did business. power Alliant are the assets up right now. of to But past,

we're really So for to But It's to we the focused that meantime, also market we continue we the performing carefully value flow. generating sure maintain business potential managing that well. want that the asset. maintain ensuring today in And And risk exists It's on we're cash we in sale. that that make a on in focused portfolio. that that.

give same to So of divest have not away, those to we those assets we're certainly still the but intention business. going

Operator

Thank you.

next comes Capital Our KeyBanc Sean with from Markets. question Eastman

open. line Your is

Sean Eastman

moving in fiscal as parts less First we fiscal XXXX, the into a refinery flow. fiscal may claim, big one on a cash cash be for into drive brought USVI likely me and be of discrete December. just I look XXXX, are cadence Clearly, those just like help receivable up and loaded back we'll items, to in the coming back-end more just ton is wondered, they two color Andy free and those XXXX? could additive to items. those flow just sounds get But it the

Troy Rudd

of built what So have into for this our At Islands element project some forward, we're we guiding some in, flow time, Sean, what we have collections don't upside project. Virgin cash beyond projection look But of we is have will that forecast. the a be similar US in resolved. do when for of and baked certainly as refinery the we point

additional allocation are So for has buying as provide year. items guide our of and also our view And in deployed would this back to we point provide intentions this that that resolved those again, upside against coming stated gets being upside stock. they capital to cash our flow, would capital the our terms to

Sean Eastman

move capital And next then above plan net leverage within guys AECOM on diving quarters, the just threshold deleveraging But few priority? think in down I'm allocation the want as for pay still we a guys on to How get are to just clearly, X target. debt much a we, gross of, before start buyback move basis. the I sense out more buybacks. over ended trying well kind do when times you take to to that XQ But from you

Mike Burke

opportunity with specifics will in deploy the Services have exact net and about quarter buyback we achieve price. to certainly the plans the a the pre-empt on net leverage to from quarter But in proceeds a to expected and in timing But X.X comments that we our not the target in record I were down quarter. market the just yet we're quantity public we had think pleased to ready giving deal. with Management our So fourth the substantial

uses and in cash year. As on of remarks noted considerations got Troy some this his we've sources earlier, timing

is allocation be pre-empt day number the capital plan debt we the after on a that a priorities to expected But the down to ratio previously X.X. to market we about, on don't talked will timing. with consistent net the developing and our be to our certainly in keeping transaction, substantial paying which repurchase shares, exact we've one that debt want X of So of

Sean Eastman

rationalize do last more percent have more And me, of on program, exotic then XX on of see those countries, process And locations? kind exiting we completions quick of you think sort you what than that charges to just might right impairment as had one we more for simplification some the now?

Mike Burke

about So XX complete way with countries. we're exiting XX% the of those

are carefully. We very doing them

-- we're in down. some time. places we've continue that for But We working We impairment we on. spending to opportunities to winding anticipate and that will over countries organization time on simplify those charges have got commitments are work want client don't to got our I we're those look ensure this that not highest-margin, that continued that distracted getting so the focused margin management's of focused by these work be currently operating, we the we're countries of the some can opportunities highest on delivering. energy that small biggest and more to and on us markets they'll from so and for opportunities extract the lowest-risk, we and more highest-growth best get we're

Operator

you. Thank

next comes Michael Vertical from Our Dudas Research. with question

is line open. Your

Michael Dudas

on more look sure relative add term? returns we I'm longer term? December looking as to the business contribute AECOM each that businesses? we'll Day, about? we're Mike, you more CM where on as about to when or it investment any just longer at talent those come over talk the restructured of business, in best you'd How looking pro it CS business, Investor thought more the think one can about to How the just where at opportunities and at holistic but forma Professional are Services Or DCS CS, there's and the

Mike Burke

So where those businesses we markets competitive are a in position. have strong very

We continue and higher look and that opportunities growth skills line services. up with our for markets to constantly

to saw this very about market into an those we that you look space, opportunity so, where time. move to expansionary aviation an the be we a America North one in year, saw aviation of saw And in

of business or in that so a of achieved, dedicated wins that our I number dollars we market saw space. so $X in And lot and billion development think I the last

opportunities, growth get a at to to of outsized provide And from we change markets time. so, They to may focused, number we'll are those. and continue can look there time so that

opportunity. is that us dollars of strong about opportunity. heard soils from There expected talk PFAS really is You've to to decontaminate billions be spent a the mass. That toxic

the And pretty special increases good we skill transportation market. opportunity gas with set. transportation have so, lines big I markets operate. We're to markets, still -- and across mentioned as our as markets be which some the And core funds water as and earlier, seeing, good tax well we in well continues our it in a for up

make So there. We opportunity with margin risk. just amount there's are the areas of plenty least we sure highest to on the that the and want of biggest focused growth

Michael Dudas

trying off following be you're business about still, of, you bookings not and to sub-optimal projects, the your are relative realistic is is flux? business, issue? level or monetize. market than many to it ago. But timing six to it working or burning projects thinking sure you months months whenever would comes intention probably the longer Because back kind de-risk lost the there are what Mike, And take business good you're thought monetize? off? months, keep when in to or just things a six to you nine the on at-risk a the up, at I'm that lot going is monetize a you timing is is to as can have a Or like And

Mike Burke

at, Nothing And a to say on we're every to in earlier, we're we we're off is are away. managing as along I maintain to ever them but we're timeline are it, want going don't to perfect those large But offer at the right of on or big to we market price. project and said the But to a performing anything. inherent buyer off the look I projects Michael. a working I well in right not the problem problem projects. put But risk I project, value focus real that comes those when say assets them wouldn't every reward number we'll ensuring buyer wouldn't continue balance. of specific working businesses Yes, on the today, give

Operator

you. Thank

Our from Cook next question Credit with comes Suisse. Jamie

open. Your is line

Jamie Cook

in margin higher function that the or think potential questions, I Services the within more guess, just just When two and a DCS of is, the some the also we that upside? target. you've opportunity reason booking cutting the Mike. margin you've cost been longer-term Professional opportunities contracted that we about you done your think follow-up backlog see is about broadly it to Is or or ability achieve already margin could backlog

Mike Burke

for pieces give One on markets of ensuring there. there the most is margin. Jamie, to that the think, just are opportunity I couple Yes, we a more is focused

better as-sold just our deploying So deliver that sell making when some markets resources so those and sure markets the in margin you we're simply margins higher than others them. offer that projects

it of scale look increasing the reduce for the as and the centers continued rapid to to costs Troy expansion. will to that is to to piece without pace the more utilize opportunity business much what for second continue mentioned But The centers, design that it at present margin earlier. opportunities I costs our is business mentioned continuing service up a opportunities global our global

little it's but So all Jamie. say all one it's that, a a of I or of of of those. bit can't it's combination the other,

Jamie Cook

bookings internally slows more you through it of going a very I that's you Do you're order throughout have rate of the given have Thank within can rate and working normalized comment, you been to the exercise. trend? the before this pace then DCS obviously, it think the at going back sort get I strong. starts then just opportunities backlog And bit be that growth just you. just on there? to year perhaps the mean, Or can need to that guess a the backlog growth because out are continue

Mike Burke

that want bit another and that of over we don't our to really going want might have years. to expect. track I of Yes, past a of management year to a forecast almost backlog to couple good is XX% don't wins. had But And suggest too I growth future try backlog business construction much that be growing record the in have

did year. which that services feels think I pretty the mention abnormal So our in professional good. I But X.X business, book-to-burn was an

and So seeing front changing. the see opportunities that term. don't certainly It's still I in near of us, market we're in

Operator

comes Wittmann question Andrew with from next Baird. Our

line is Your open.

Andrew Wittmann

the of end like ask to liability here got year the balance more It what the a want and flow working capital Troy, the you've of skeleton about We've sequentially? us. I cash, couple questions sheet the the increased on you looks gave how changes payables receivable here. change was liability. cash on at the you talk and side that accounts the ledger, balance from can

Troy Rudd

first over of use cash. talking so a And year our working the of of working about was total terms year-over-year the total capital just effectively in all, of course capital,

use of it cash. was in So aggregate a

timing year almost We increase affected. that was we year The we I of And it terms of the a fact receivables course and payables the commensurate out we is thing the In of end $XX one said at of the year-end. had increase door by amount. XXth was September from with a bit the of and payments and timing did and saw as benefit balances the saw that, million. our a about September our that earlier, we've in the XXth end year, our going little liabilities the accrued impacted

Andrew Wittmann

end What of payables balance at was year? the the the

Troy Rudd

payables don't I have the balance.

I'll with have to So you. share that

Andrew Wittmann

unwind are that do that. on XXXX. amount the that I the you that to you sold receivables you guess to think has some mentioned credit the the in facility I governor going with a that do of had could Presumably, that on maximum previously

wondering, I I be think we is quarter should sell EBITDA the is finished was of about terms of that you the next you're dollars? year the in in Is to unwind that of that the million be last size amount could receivable about a going to good the the thinking with what the that. a of kind $XXX just that reduction commensurate in reduction allowed Company generating MS sale? on assume that way after

Troy Rudd

within $XX programs been plus-or-minus Andy, I'll those we two receivables same level. we selling the million years, at have bit business have last and tell the for programs differently, about little been the have four that you, about which last for think that running a years

within we business. exit been have the Services receivables selling we business, that that Management As

we'll sales of longer sale unwind. no the effectively and that business, With opportunity have will those

programs business. doing of the is, be we'll replacing what that But remainder with in the

So was not when dependent program in us Services kind putting in the it's we of replace about the currently have, think upon business. additional that to It's place a you Management the dependent just one program our and actually that EBITDA. upon

the I course impact certainly an timing place $XXX of the one And other a question, it and in be the another view about the out will year right there the the of of AP sheet, into balance over another in your year. to accruals, as increased program and business. the by So Andy, it side answer impact move in as million. we

Andrew Wittmann

is And about Mike. for buyback. then been a my of last guess There's talk lot question, I

But You've been at just deployment the consider a conversation level for that is option wondering you of capital? how Board time. as in talking about was the I that another long if a and would as serious a dividend

Mike Burke

Right quite point, it's the And pretty about now, feel of matter then so in matter But the certainly that consider allocation through dividend. is bit about something at a of and for some at we a the and opportunities our it's capital level be a we to we when that we just But be plans always something a consideration, Board that could possibility first it stock future. good timing. our may go definitely It's year-by-year on a buy the talk back would in us. importance basis.

Operator

question comes Fisher UBS. next Our with Steven from

Your is open. line

Steven Fisher

these and JFK construction where be quarter and to are in in margins services segment? that of the thinking -- Should One projects fourth for effect guess, we in Troy margins of does I holding some higher puts takes the than walk like some through how XXXX? of PX we you the the could

Troy Rudd

So the the that segment entirety, we in talking if about we're see changing Construction in wouldn't in margins XXXX. business its Services

the is, in businesses. we're the However, thinking we're again taking two components; and construction other that one it about business management at-risk is and in

at think that mid work construction you think the is. JFK in The in about where terminal margins teens. management we're in that we about that's thinking described business the and are the business, the again, If basis, NSR I

and we kind the net be expect the the in that XX.X% will net business across our service the and forward in be Services Professional aggregate. move year of service range So coming we business margins revenues with will as we reporting revenue in margins

Steven Fisher

I and if trends talk in opportunities. you're the private then of sector could about state U.S. talk infrastructure lot you guess markets you I'm just what the talk maybe, And little private a Mike, markets status the about about seeing you in could bit in heard some if the funding a particularly wondering particular? sector of the I robust

Mike Burke

and in that in is XX% the was sector private component mention space me largest Construction business, you almost Management our that heard our year. up So backlog this earlier

And continue so, type robust of very a see work. to that opportunity for we

increasing pretty time don't in So forever. backlog for But it see it just coming. still that good. we We've keeps that quite some saying kind been feels growth of

that slowdown a the now, of And we're on business. so right side not signs seeing of

in sector or business, pieces is we earlier, present Engineering I space. The of And component Most the divest new PFAS we cleanup, that then the sector business components business driven for work And mentioned to is opportunities Environmental the do continue other to work for construction in of our opportunity demand. increase other to and from at-risk those big business. environmental that we continue private when course, grow us of that necessarily divesting of is driven regulatory regulatory that private heavily CapEx requirements not developments. by of our the the the are by

Steven Fisher

talked on businesses, then questions areas. DCS. more margin explicitly on to higher And things higher to are at focusing be extent have valuations. some wondering, a you and increasingly to that, about I margin I really like technical to to approach know moving seems PFAS. popular what putting achieve your mentioned within type our exposure? Is it -- mean, type area about you answered going just services things guess, Mike, there that's I'm focus like do an you if that you are I technical increase where because enhancing want specifically lastly,

Randy Wotring

Randy. is this So

are those that in global were Global service which accelerated business, margins play making are will give that on indicated, increased in basis. for everybody doing going up us centers fact lead That the investments and be Mike we activities increasing as mentioned. to go-forward said, a on leg focused be we're significant shared markets we to a focus centers, on that context, basis. digital margins everything will as services allow just higher anywhere, margin so previously not on will our implement Just that the an design digital well transformation and expect also we us to to as transformation shared our

Operator

you. Thank

question comes Dillard Chad Deutsche next from with Bank. Our

open. is line Your

Chad Dillard

Thank understand, to what's back for guidance just I the So there. And hoping up-single-digit revenue you are embedded private, there there? will public versus versus wanted can How was of growth. in of to a I helpful. just of, seeing just I pipeline want couple kind to in, the go ways, Any you maybe DCS is what be opportunity? different you. color domestic international, big

Randy Wotring

So the Americas, in then see we'll the the growth slightly DCS outside you'll business, US. more see

projects in in low-single EMEA. up for that We're in digits still CapEx see resolution the We that frozen some will has waiting Brexit market.

So a is mixed low-single APAC a we're bag. of digits. not big a seeing opportunity there growth

Hong some there decline seeing markets to Some going you're growth, to doing you're organic organic the to going and We're not. as are continue like worsen. well see not where Kong, see markets really are protests

So when for you opportunity a put to growth XXXX. all single-digit those low-to-mid get in FY together, you

Chad Dillard

first we there half And then versus given year, the How it. cadence that of cash just flow, Yes, a cash should should that moving parts about the second about are like operating the think through we on flow number that's build? of how think half?

Mike Burke

in performance, you So gave underlying for that. guide million we level when of Chad, the the I'm the about little work of see our $XXX But and earnings to to terms to detail. as $XXX Again, going the million. growth some to year enterprise we down that think higher contributing start a the

tax headwind in had cash the past a have will year. also we that We haven't

underlying tax cash performance and conversion So earnings headwind. profile has a performance, similar that with a within range getting earnings improved

the of that would timing obviously, you look make elements impact challenging. a the of little that a When at year, to there is this events more

will the First the during which flow. also that little year. generate have the free cash of we business flow to it's nature The but if cash flow a Then guide full-year happen Services impact cash timing you the of than The Management the timing businesses, business. means look at year, the all, things businesses of Services at-risk an that Professional it's the some expect free that on in lumpier of that impact of our for bit those timing sale. might

be for last receivables Management and program. then Services year the the restructuring. the the the then first restructuring. restructuring on pointed costs in the And And elements our we be that, sale in place, half divestitures cash to timing as of We thing will some is other the then are by will being as cost the our out, see of stranded And impacted stranded the of impacted, spent that. take costs

As Management have other business, the Services leaves, timing. in places replace to program will from we'll and that also that impact the

of very you, not -- that's there us unfortunately, specifically. generate great similar. from cash difficult that for the to underlying a Chad. But moving remains to But make for our ability answer in lot So business remains a are guide the our it parts year

Operator

call Thank you. this time. the turn currently remarks. to like And I'd back I'm closing no Mike showing for further over questions Burke at

Mike Burke

you, Thank operator.

of today, So and process just a I success position before long-term business to very our embarked on for transform course, call years we want conclude ago, shareholder and us the to a maximize deliberate call. reiterate Two takeaways value. we to today's few from

part top in that commitments our achieving business. growth growth clearly Services a XX% of priority XX% this XXXX, we our our with we on and As In in EBITDA, did EBITDA said plan. delivering was Professional fiscal our journey, in our

the margins our expansion well we continue trajectory also enhance in that we were of to quarter. on We in that basis margin XXX We fourth DCS in to delivered substantially poised fiscal said the and quite points going are segment, XXXX.

And allow announced a valuation sale going capital value. to last our to We that's unlock our Services going of to us accelerate the also we business said, our are evaluate at to we allocation plans. portfolio Management premium month

and We countries mentioned that lower-risk business. have the returning about several higher complete with our exited businesses. gas earlier. we to a We were mentioned we I business as XX exit sold oil and Development and Services us into earlier, transform of our Professional We're de-risk And XX% said I business. also our International non-core going from that

million We our of very discount, we flow and finally, stock at of million. bought last year strong And we said capital. we substantially back debt. are cash in excess allocate $XX had fifth our free consecutive And prudently $XXX a going quarter of we to reduced our

tremendous exceptionally ability result, are growth confident So position opportunities in of we the us. front to our for Company in as a

discussing the joined their the our Investor this Steve seeing greater And the well at be respectively. our the our lead for December. and these and We'll and by ground. And detail trends they'll of in overviews look of that two sharing market to some Lara forward Day as trends vision executives and Poloni, businesses business they're Morriss EMEA Americas be on that I as in Company team,

ourselves how showcase we'll finally, innovations, that as and to market. differentiating are virtual our the products such then demonstrate augmented several reality And we

I hope So in New of we're month. to Thank to And all looking you. next see York you forward it.

Operator

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

You may now disconnect.

AECOM (ACM) 12 Nov 192019 Q4 Earnings call transcript