ACM - Earnings call transcript Q2 2022

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Operator

Good morning! And welcome to the AECOM Second Quarter 2022 Conference 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 the slides at the Investors section at www.aecom.com. a conduct will we question-and-answer session. Later, Instructions]. [Operator would Will Gabrielski, now Relations. turn Treasury, to to over call the Senior Investor I and like Vice Finance, President, Will, Please ahead. go

Will Gabrielski

SEC. which performance uncertainties, the we to appropriate financial The the you, Forward-Looking from today's of posted those the for segments. differ References website. is in forward-looking financial discussion including about the today's your Thank measures to and with statements. expectations. would Except no statements Today's our International presentation presentation. statement statements our like projected our forward-looking various GAAP filed to business operating I attention page the in operator. as presentation. our risks to reconciliations described due required significantly law, update future margins reports margins non-GAAP Safe contains and reflect in one to undertake Actual are Harbor by on may We and direct incorporated Americas risks adjusted certain to use periodic our and obligation into results

Revenue noted. refer focus the growth NSR, on business, Services Net continuing constant presented noted. of rates Service unless and revenue or revenue. will will We as are which is backlog basis current the Professional a Today's excluding pass-through remarks to otherwise defined NSR operations on unless otherwise

our review outlook. key Poloni, growth adjusted excluded financial of Gaur performance outlook our and approximately our call our Russia, going operational incurred greater from Rudd, Chief a we Russia our our forward; from Officer updates a is in exit and President results. with $XX and cash accomplishments, and key begin will discuss quarter impact, Financial review strategy, Chief will Kapoor, On detail. the priorities our $XX from our and successes will and Lara pre-tax which our announced Executive today's from During is immediate we The Troy exit million million. impact earnings expected Officer

that, With call I Troy? session. to question-and-answer Troy. a with conclude over the will will We turn

Troy Rudd

the would their like appreciation professions clients. the work a all embarks and Thank delivering on ahead and to by immediately of you inspired purposes Will, deep by our you, us Russia. for to are for the of begin better huge decision I’d to long-term thank and our we transformation the to us prepared we during opportunity I their commitment shared also world focus world made and their expressing today. expand as AECOM At my exit the for infrastructure. joining on quarter operations our in to like

ongoing our Russia's action invasion Ukraine. of inconsistent by saddened is are with This We values.

As a result our we exit market immediate this February. accelerated from in

teams our AECOM with seizing tireless for operations, these priority their families the in of of providing our transition, aid to emphasis I support which result safety, for efforts efforts. a want the security support the our Romania team. during to Poland invasion includes was all thank for and providing families and our well-being as colleagues professionals leaving an their our humanitarian Ukraine of While this on and and

NSR on design February and in X% results the have metric strong every the Turning second subsided. that delivered to our key since quarter. absenteeism January increased levels results. high In business, related Omicron We in of despite by

in of half this fiscal creates its pace U.S. and XXXX second our of the U.S. Importantly, the around for in growth the the Government passed fiscal which year XXXX. clients Budget March, optimism in Omnibus government

group. top record delivered which second We our at remains peer XX.X%, of also of margin a quarter the

model and are our of capabilities. representation a strong inflation, inherent the direct business built Against value of into the rising we our embedded Our our is clients, program we reflect consistently positive the as as the the digital, bring inflation advisory and attributes to well contribution profitability, our and backdrop delivering margins of which protections professional services contracts. management

are and our to line. bottom the Importantly, translating strong growth margins

EPS rate Across and quarter, all-time XX% increased at increased by by high. and XX%. a win remains For the EBITDA markets an business adjusted the adjusted are our strengthening end

X.X entire of business. the increased was the Our by was backlog, highlighted by leading increased by growth book-to-burn best for strength and the XX% future backlog ratio total across one our and indicators Contracted X%.

for of U.S. focused years clients rising that have collaboration several half the impacts distributions, ahead the our focuses funds. and which of uncertainty, I'm to advantages the had our the Today, services. chain opportunities. also of turn In market largest, across risk digital, and an ESG of for pandemic, cash into State resources year highest and strategy, and addressable firm is our we're to integrated of sectors. strategy. of been. proud or our returning client the what our accelerating. client investment of trends change on the the and rising of next the discussion first realizing nearly professionals value local driving accelerant of pace we and normal a And profitable past war most one Think was our years. in creation. We and with the and set returned value have additionally levels are market Globally We the and benefit IIJA markets. in and our proposition We our performance supply of history. outlook this it's to value investing macro from is Please accomplished flow ever to the million the funding market performance. and $XXX management as strong highest business advisory allocating planning, fastest next backdrop pleased lingering the the defined and capital by Against benefits Act the growing year, expanding highly in shareholders inherent consistently through is two time which are well our report and geopolitical I'm over of inflation, half agile a decisions our was to the and franchises We're our services of free enhancing the record first geographies emphasizes very high the program cadence, and are slide the strong to a professional are leading

Our where environment, in we prioritizing excel, U.S. investments federal are and areas including clients resilience. sustainability also

a As strong beyond. result, federal half task activity we expect a a the second and XXXX in level the to to in year persist of and of growth

destruction are investments are in our PFAS assessment opportunities. to addition, In leading and and growth substantial accelerating leadership

powered dollar the lead. our markets In demand proprietary to at technology In increase is transportation, a opportunities. and DeFluoro, including groundbreaking technology, also U.K. and now underway for revenue to in where PFAS meet strong. to multi-billion we commercialize business, fact, the plans tailwinds advancing this U.S. investments destruction we're our well continues are there markets and are growing rail several Internationally our scale

infrastructure China. our In on prosperity initiatives through define agile be as In of are trade three Please of the decades opportunities the addition, backlog are These on all the are that the AIUla bring impacts time we elements all to and drawing At we several touch opportunities. our several equity East, adaptation as remaining our NEOM the we I'd AECOM. key of global are investment next investment. modern cities like the growth to and visibility. investment slide. next creating ESG for of and world. creating managing is turn focused infrastructure positions for are will these outlook are a increased material. have life years platform same such on don’t AECOM we business professionals related a in ESG to remains examples U.K. There across discuss strong. to trends renaissance, includes market on Australia, of to post-COVID In the leveling that and expertise, always how ongoing few which expect mega COVID the shutdowns and and revenue and up and both innovate that a to investments focused and these capitalizing strategy, Across government's do, our infrastructure Middle the deliver that

advance leveraging to for the capitalize initiatives. achieving of decarbonize cruise and at our the awarded tier footprint our Most top awarded leaders the emissions First, a Emissions We Mine as Largest are their Reductions we're were clients demand these Projects strengths contract recently growing were for to operator on one to a Canada. plans. ESG emissions we sustainability cruise from alone Remediation total critical terminals, also account in and ever of which portion large of a a contract for through

competitive and creating the of leading are evidence, for marketplace positioning strong the nearly wins growth. advantages experts these As in XX,XXX our industry capabilities us

continue the in work high opportunities and create longstanding of Dallas the duration and further the success nearly was Master to We’ve highlighted our are translate over International long for past client to management for our This Airport. billion Fort-Worth decade Second, the contracts advisory value, pleased program Airside for by opportunities. growth our selection business clients. quarter for at this $X see delivered into Plan

scale, from Navy’s win We our of CLEAN critical the to our Program. to a global capabilities Atlantic execution competitor company apparent take complex whole away bear This capabilities and distinguish AECOM Action NAVFAC to Finally, mission success programs. leading from on our are on experience brought successful the region, was Environmental incumbent. the

we the lead representation closing, of comprehensive determinant embedded think power In of best was of great to our success are proposal, great our Our globally. impacting PFAS act professionals which brands the and the stakeholders. and and business industry continue various on capabilities of deliver industry. the when a organization our also critical in headwinds our a XX,XXX of and our value for numerous we clients economy, for nearly built Despite parts a

I ahead. as our the the to am the continue allow discipline that to to I as result, that, opportunities focus and a Lara. will over turn on into With future capitalize As us and confident call ever succeed will strategy,

Lara Poloni

Please professionals Troy. strength turn the of to the The our slide. success. our is heart next Thanks, of at

design Design key reaffirmed numerous to markets again was in month as the increased No. including positions to Firm end position leadership funding. ENR benefit markets, the transportation fit and the in leading Transportation X growth ranked top Facility the rankings at were we continue of sector Our note, we most hold by green key when several in market Of and top our from water. and last the environment, us

and our priorities to critical and leverage our steps number a transportation taking positioning highly one invade our In resources on immediate most to aligning solutions time in discipline we IIJA point, or to digital like our program in and largest ESG will the leadership technical competitive our in and position focus ability this some design management. it be transportation tunneling sector, To fact, and are within the capitalize. strategy key the of and

Sector. than make advisory A own First, multiple and drafting practice to of plans to forging X,XXX We lasting great marketplace. the to initial companies XX% just is searching of net in opportunities is emissions their meaningful with our and accounts shape Network the our more of our in gas large execution. relationships By investing and the From demand zero emissions to up practice and improve positioning we their early through social the we growth strategic we zero advisory and develop key in Rail set role This in greenhouse outcomes. our a ESG example creating are to planning engage with clients’ and our help clients have plan our for Rail example advisory partnerships client net importance practice with times of a analysis our globally need scope, execute in work this Infrastructure clients. a advisory achieve demonstrate to our reduce are sustainability commitments, these over. manage all of key and one programs U.K. the through expanded objectives. for in We’ve services, U.K. this creating review,

ourselves we to are pace constantly innovation. the of Second, challenging push

part clients For AECOM instance, a experts organically developed digital offering. built their was projects to demand urgent for This from IIJA as in recently proprietary unveiled tool funding. to digital we best specific response IIJA by our our tool and of position

process of and have complexities platform and help feedback positive. been building Machine demand other teams competitive to band AI IIJA grant and leveraged capabilities Client funding. for clients existing navigate our overwhelmingly Learning the clients’ the geospatial Our

our also create element a rolled world will System our Delivery for benefit our clients. AECOM, We while bringing recently services. for repeatable critical reinforcing together and and delivering provide to This Toolkit, AECOM program delivery digital out way management tools to proposition technical class capabilities growth to a Management a is ambitions both Program also and value

can creating In a deliver which and our to entered another partnership being Microsoft our with addition, offering. from we channel into cloud by the PlanEngage we Microsoft, its further marketplace. leverage recently promoted technology is innovation enhance now PlanEngage leading to

and win. to Finally, position recruiting we to initiatives AECOM are prioritizing career development best

built, development, and careers in we second our workforce. career scale. we can of complex avenues advancement our increased can for especially expand in and which and incredible we of be a are flourish. platform Diversity innovation the on advantage, an skills addressing our professional the are challenges leadership asset, on headcount learned diversity To be have an focused can when Our quarter investing new on these also expand to and global increasing is

Gaurav. long the With we expanding and will strongest a these our that, efforts AECOM results, and we term the all are to will With regional over growth of turn we are building As workforce. initiatives campus to result, underway diversity and producing industry. well way I focused lead now recruiting of targets most the funding to are implemented diverse ensure coming confident that call

Gaurav Kapoor

turn slide. Please Lara. the to next Thanks

the the and strengthening five and profitability commitment growth our of talented our Our elevated growth. the adjusted quarter another trends EBITDA and largest an continue we performance second quarter NSR of highly to strategy, Despite expand double markets. reflects digit uncertainty, quarters and across level most disciplined our profitable EPS benefits growth, have consecutive delivered of of global professionals delivered of

against ongoing performance headwind to in returned us While is and through and contractual natural structures we a and year. have dividend advantages have These $XXX a cash nearly attributes inflation we our repurchased rising varied of In in consistently investors model our to inherent we and committed resulted since hedge shares strong industries, many our strong strong create nearly maintain to first creation allows and total, flow environments. the shareholder accelerate payments. the outstanding costs XX% through XXXX the business of half to stock of flow are to cash deploying September repurchases million value

commitments our to on the backlog our financial on confidence wins financial and year underpin this next strong XXXX Our in and our delivering slide. turn Please goals.

by highlighted was NSR growth America's XXXX, the with segments. acceleration our an in increased across the in are which and our growth March book-to-burn design supports growth of accelerating XX%, a growth. saw U.S. the the for performance Our and business we by of for NSR confident backlog Federal X% in in passage X.X expectations. expectations We Contracted Budget

our to basis delivered higher across beyond, profitability, NSR margins XX.X%, to profitability and to growth We margin continue Middle IIJA U.K. in further led franchises. will Please funding areas, East. including of growth industry year another respect the advisory and fiscal prior leading and expect X%, which to which and the program increased management. With quarter growth turn international into business. the accelerate from next to in benefit the reflects by XX points XXXX slide. We by strong expanded

double with another We win book-to-burn also backlog digit had strong of and growths. X.X incredibly quarters

to from XXX Our This water, profitable X.X%, growing are expanded basis our wins largest Margin in program and management next points progress disciplines. most seventh to Please a in of transportation, improvement. concentrated this up goal with leadership prior the our this in sequential are and ESG margin pleased the committed our double-digit markets, quarter slide. We reflecting quarter-after-quarter. margin year. remain and business achieving to turn consecutive the was against

period of cash This phasing year. throughout cash delivering of $XXX cash Turning consistent first to compares our in improved is flow, operating balanced million. the free outflow half focus liquidity delivered allocation, of more performance with to the flow and a cash last $XX million year cash cash $XXX the and comparable free million year. of on capital flow the flow in strong with we This

of we quarterly allocation stock strong two and made program. strategy. April more than have Through XXX fiscal our this established under we repurchased us recently year, accelerate capital dividend performance have our enabled Our cash payments million to dividend

percentage As a growing annually turn committed Please per double-digit to reminder, forward. to share next dividend the we our remain slide. going by a

long XXXX term our have financial to and Turning our all our of for we fiscal metrics guidance outlook, financial financial targets. reaffirmed

supported we continue X% to million. in expectation the segment range our to EBITDA $XXX of by X% XX.X% least the adjusted million midpoint margin. fiscal $XXX operating and deliver reflect to this organic are growth deliver For adjusted and XXXX at NSR growth to would expect approximately At

year accelerating expect the growth EPS the enabled flow growth, We between for allocations margins, expansion of disciplined adjusted $X.XX Per creation also or at midpoint. XX% NSR continue share cash leading industry our value priority. to a of to top free $X.XX by conversion and our remain strong capital

share program. allocation benefit already EPS to we adjusted of the our incorporates expect completed capital our reminder, though a continue as of buy As guidance to stock repurchases, part only

million year We and the also $XXX of $XXX our for flow cash between guidance reconfirmed free million.

towards look at segment we’re XXXX least to-date Built return at progress and focused strong that With XX% for than support accelerating expectation we EPS adjusted in target, we of for operating NSR our XXXX our on strengthening ROIC. capital ahead As fiscal are a margin to a end adjusted growth, questions. CAGR XXXX our expectations, XXXX. least market XX% XX% fiscal from ready allocation and operator, greater supporting continued an

Operator

Instructions]. Thank Feniger line a your from the of open. you. And from Michael first is of America. line Bank Please now comes question [Operator Michael,

Michael Feniger

guys. for thanks Yes, my call. Thanks Hi! taking

I'm on to XXXX you full curious, year target. even reaffirmed you're Just cash the referring XXXX you’re free outlook, to your what though

that sounds into like visibility it you have So growth.

shares. QX in you know repurchased You million $XXX of worth

this $XX quarter is think I only million.

outlook, of really just priority balancing still with out dividend part repurchasing and investments allocation these of So your internal list? the capital strategy, is some that

Troy Rudd

the simple to the beginning we to yes. we we it had year. and period, of is year to shareholders Troy. cash to capital the in question. to quarterly intent our stronger were through that its we bit we question Thanks at feel your during continue is, with Michael, through is of nothing going match because of changed. where clearly The the Yeah little cash what answer being, said the like intended for remember flow purchases so our But and has a dividend, our flow ahead so the repurchase we're beginning return But on

Michael Feniger

a does you to think Troy, and how your Will the some you be of and mean even, that more enough, if if kind cyclical shift of areas see, you XXXX not by construction portfolio of then I start management. out that. when mean Fair you about kind down your the I slowing the move of contributions verticals by water higher into called do portion from pie portfolio? the kind those XXXX. areas see around really of there? Could your you the as be like we half Anything XXXX and a environmental part be customer of public of second through bigger and XXXX, of but

Troy Rudd

level or Yeah, first think first high been cycles, long future a mention trends let a in at there we is as me by our clearly that strong actually pretty dominated that Okay. macroeconomic and just term infrastructure start we some is made. that’s investment and

we’re and And to you our certainly it’s whether – transportation. or so exposed construction or management in that's it of know businesses, water all but and environment,

little So are trends. mega really valuing some is term it's for infrastructure long the that other trend. what has are what the good it past. a is in a term heavily addition we that than is, And us One see long that, there and to is world in the means differently investment in and exposed we ESG bit doing to just

thing focus and there environmental And is that then objectives. obligations chain. as is adjust have what of world the around a a clearly the of the we supply out to to quarter the infrastructure restructured in on so result repositioning prepared investment have social the you we or some see be third to And

give of long so sort again, visibility, way. trends good that those that And lining and up is us term everything it’s three

in the authorized If actually Sates IIJA, United you the we didn’t budget had have look, simply funds. have while a we that again

in and will Now a authorizing place it that’s there local the a budget. state budget very support funds is and strong

some in it again, term long and to it, way that also to continue is of attributes Obviously it. quality through but we’ve the when see inherent high the long clients discussion there are really ability think across years think and ourselves light advantage our long add megatrends there we one that world term some of have really today the significant sort large I industries. recession, and hope of to business progress that more we but our all to slowdown Hopefully business. business to the backlog enclosed ever other again, have, shown a have, businesses certainly of as that winded that agile we to take to we There So last I have looking question. I’m fund in as a an to around something mean Michael, we look don't we invest not it’s I forward. and investor a are the you be or thing good have business, the in trends we it’s always your to we we’re some and I to to also these saying, and we’re growth going prepared important gets have a that in are react, and for asset long answer it's helpful. of continue it good for, possible – a heavily was but positioned unlike

Michael Feniger

is can of know down. some in there cyclical is your that your Troy. for of area, Yeah, to is if face viewed up, construction think team! of slow it areas. as just type I'm the comment little it a part maybe Thanks perception curious big portfolio, discussion, and round the profit, you follow the a of about see kind just you of how a you cyclical know that management do of that specifically other you I I than operating how this just bit your more that out that was more guess

Troy Rudd

Okay, sure.

to business seeing all, inflation, I inflation the to of you portfolio is today even to grow fact But business that know gets the wage the say And we think the and our backlog construction X% pipeline overall the business about expand. diversifying. seeing of XX% represents its in commodity that again management that with are first we're maybe and continued business. So

result there So in be infrastructure. to investment wins know significant is aviation, again still success there you to place a places. trend competition large aviation to of there long not, which estate, the in is you drive or that pipeline. a a slowdown. out slow seeing a we're down But are be term seems really That growing having a again, would real centers in at cities but would is one things inflation, that it as be having the evidenced for if and the meeting that's in in our a because of success you fair, that recession, convention We're great we're large in into an together those business. and invest strength coming places we We success of in think commercial sports see demand our business of backlog head And of that. and see and might a and in COVID, then growing to we for are lot that residential three moment we and but think in opportunities

Operator

Thank you.

Our next Eastman Sean question Please Sean, of comes from your is KeyBanc. from now open. line the line

Unidentified Analyst

on Sean for this Thanks Dallas our morning. is This Hi! [ph] questions. for taking

Troy Rudd

course. Of

Unidentified Analyst

if the the this past first, what uncertainty your baked over implies there's just just trend expansion general second is year? kind that would into why So years. flattened level the the impact the sub-comp get to two taking look or economic this this it compared it thoughts given or seen on guide, conservatism we’ve out a make the want year-over-year half to margin margin segment I year of in of seasonality sense, just at

Troy Rudd

going to Gaurav – that take question. I’m Yeah, let answer

Gaurav Kapoor

Thanks for Alex! the Hey question.

thing one So would say is, right. I you're

strong been the Our with consistent first half have margins and plan. very

quarter-after-quarter of business, our so us seasonality. where sit at much see half, at not and Where we peers, of first have ahead significant But to half our professionals this growth if making if the category. ‘XX of while teams, could bit time. second was of happened because comparing that years happier deliver ahead our opportunities seen the and lead look look biggest to investment you our of industry the today, is and we we're they where margin we the going what's expectations, consistent gives and some be where we it a in that continue various we period AECOM in had a year-after-year, are, of our margins contraction, not bit a international confidence into margin investment fact, you it's business. have, long In one In little plan, we've the of little typically over in our

So and are and leading confident we in XX.X% of XXXX or targets issues let that of the earlier, plus may plus, our articulated long targets, industry. confident it our target ambition delivering you XX% or why term but another very irregardless logistical XXXX feel macroeconomic as teams of on to the by, very of XX% and our time passes deliver be, continue how only because of we what as we headwind margin issues, know be Troy geopolitical variant inflation that's not are

Unidentified Analyst

have secondly, to be funding think if the start helpful. was the Thanks. the the That in And seen you IIJA not, backlog yet? very bookings? does in on you from will any we've reflect thoughts when any And incremental updated tailwinds visible momentum do

Troy Rudd

to not answer of What impact, our of of a would we a a is, and second see point. we would we business that seen high At and that, The material expect and seeing as by beyond we are ‘XX funding, activity the impact so. in followed in time. some awards, then with lot year period work for for it's it with long clients working heading that this but positioning is, those Sure. just client level into have very at means they position local IIJA on expect for is our of of this is but state federal clients not and really with working with a to ’XX, through what and season lot work clients, our half a strong funding, the and impact award going

Unidentified Analyst

you. Thank

Operator

you. Thank

the line Andy, Please open. Our now comes from next is of line Andy Baird. question your Wittmann from

Andy Wittmann

the Obviously comments through on you seasonally good net talk the could but first for would inflection about the of in relative against could half you and and about between quarter morning. seeing accelerating of Could business underlying a not the decompose growth Troy. of the how the about your the you lot you, the question yet, Thank year I bit of year, was quarter, year. Gaurav, that differences in the assessing us much just one if a in so either construction you, absenteeism understanding what quarter and Americas impact the impact a service this Gaurav growth to know just or management an expectations not maybe growth had design that quarter. and little rates versus be revenue strongest helpful, you

Gaurav Kapoor

Andy. comes absolutely first consistent is your deliver and of I'll one by is irregardless and are to design, using with the to it as part a omicron impact know right. Andy, the and we're thing target that macroeconomic Alex through, of to parts by to to our of headwinds as lot very what to would nimble had, variant the – question of proud excuse, of anything is not the our teams an continue it irregardless saying, Yeah, question. I’d what the like start take you Two

We that of our takes an enterprise have today scale. advantage

pressures which we’re varying on of part our the skilled to management continue isolate just to current our if use we're excuse, or the advisory to growth NSR delivered is on to if were going we've and to design to region, we're an omicron, services So again at quarter-over-quarter, labor X% single expectations. real and would not if know in-program growth pressures question, particular utilize deliver your But that you our approximately basis there a using in to I say metric, beaten you drive going business, points quarter. look design the impact last growth XXX second business you had it every in of X% quarter. And our as ECC compared

growth, business was management the – which minus expected. construction X% was quarter, had negative in Our it a X%

back COVID second to you work for year, lot of If a in quarter was of would work. of the lot up pent recall demand last people were specifically related there as coming

last of quarter year. through came So second that in the

forward had business be expect management expansion. significant and continued we of construction wins on positive to backlog the we've pipeline Going back

Andy Wittmann

very you Thank much. Great!

Troy Rudd

Thanks Andy.

Operator

Thank you.

the line line question is next now Capital RBC Our open. Markets. from comes your of Sabahat Sabahat, Khan from Please

Sabahat Khan

morning. Thanks good and Great!

guess U.S. to agenda IIJA infrastructure the European deal and the talked on that how the lift about. green I is you few the the next question be or years. side, the Just segment expected international guess, to leveling over thinking up Europe about you UK on spend particularly the are I a and But

there’s run of spend over a – or plan, –through you is outlook? your Now maybe that is the replacing of baking through that be is How expected old that – just rate course your to XXXX some are your that know into to material, the spend? you

Troy Rudd

long I I have it our Troy. baked that term assume outlook. into we – we’d have it's Look, So, would describe as

up. in That seen long very know a place like Europe and provide significant investment transportation outside and time, again, leveling continue rail particular are a for infrastructure, of just United You we strong. the of infrastructure have for in will plans States in where period investment we’re the in to and these these

about opportunity being and that think great this the grow wouldn't to something as incremental, business. long term are these us out So term we as I long this visibility programs the the but call provide

Sabahat Khan

great. outlook I you're come that I – through more guess to probably start XXXX. will guess within I just the then Okay, the And that think and in IIJA indicating

at that’s allocated, through, talk you it’s the investors guess, your money you the talking not stage probably the are Can I you be been are can know we spending legal know areas heard discussions to think talk XXXX, they maybe are – know but about initial you you where starting first you kind right which now? which it about now? do expecting been, discussed. You of kind the are how some and or What clients to the comes you to markets of even is probably right planning see end benefits? Is it know you of about if in of

Troy Rudd

Sure.

answer in reverse to that order. going I'm So

that States First part of provides that, already significant in and think money those the We are you huge process our, a is or will a to business. we for business. in And benefit of in mention a capabilities the money our regulatory or across we U.S. there here the opportunity of the the that coming all its significant with And business, of about EPA, terminating of remediation money of the into that. United whether also then result and from made that’s our that's long opportunity all, our water invested business in PFAS in lines U.S. environment, our see going know some term include that see expect funding part I've all being they end curing changes also as it's to that’s also the projects, that B&P technology. we IIJA a There's Clearly of really the our long the in the the go that talking all then or the there's term the markets to transportation. everyone

that of So of are to But so little how coming a that our of our of that actually user how make our infrastructure us, and be and quarter, part a for it. time. the actually IIJA long about that and in out and they so a talked again, programs again, clients, remarks. in those money this where for fill client expectation participation to new on based on during long that was process the to been these customers plans friendly of – they broad and and their the rounded now funding, and incremental the market our a important you we that’s money conversations the in also, with terms the built new Right that there more about funding projects. gap, about conversations begin ambitions and we know having we going ourselves even spending in are time invest of budget, are expedite have through bit and to and it’s the very was our is going can is lot did that we’re clients working budgets conversations they terms lot federal the built processes comes new a with prepared have the in there dialogue, are additional tool one that through provide things lot dialogue and did those going too; Lara money But to so access government a

allows as they to And programs, to accelerate generating access significant our that revenue. momentum, get said, that but our clients how with we to an conversations sort professionals XXXX on impact important of to their so that's don't terms having see pick that of we those money along quickly I until again and allows up our tool a in business

Sabahat Khan

that is the Obviously just how I squeeze If international FX in thinking the quickly of on could just how Okay. and you but headwind the affected then more maybe the – year? how account about the into know maybe you're rest guidance, maybe? a FX bit you talked quarter it for of you’re about the reiterated just thinking taking segment, a as about just one guess just talk you I headwind. being Can

Troy Rudd

Yeah, Gaurav one. I’ll let take that

Gaurav Kapoor

question. It have is Hey built guidance Sabahat! we Thanks that that into our reconfirmed. for

for we're not an positives little know negatives make it. any as or to you going exception before, I've So said

we're second results power first deliver for do the Our of have doing and half [ph] which focus is on and to year. full to commitments in the the made, we that have the half

Sabahat Khan

Thank you.

Operator

Thank you.

your from line open. Our Kaplowitz next of Citigroup. Andy now line Please Andy, question comes from is the

Andy Kaplowitz

Good everyone! morning

Troy Rudd

Good morning!

Andy Kaplowitz

adjusting inflation us have the or your if it contracts. of like your you to pricing protection demand for how and adjust that given around you're a Troy, that, Maybe seeing contracts all more you give seems you mentioned you little can in are that you’re color inflation? could embedded

Troy Rudd

of have are the business, guess two for them, clients, our which has have ability our is in give I first sometimes are and it, pass second that a we that turnover. going I'm Sure. do terms mechanisms represents work, – that that we we not along significant of short to And that, the sometimes embedded they parts. have but to a contract. you price portion the answer reflect already in it us costs have to if thing then fixed of enough our significant all, in and you is, know escalations in

not our So is same margins pudding. our investing affecting see customers, so and as cost because largest turn our our labor is decisions our also there our you that able we're the and is in we're that. not grow adjust the here couldn't But and to will of actually the improved to market know we business, business the the and in to are The experience really not at improve, do has you been look is over, customer they pricing, it's in answer through time prove But for that moment of that is business, guess continuing margins, those the margins in able increasing, our we're the term, of the those because adjustments proof if in just in that at along labor though that proof revenue their we're fact costs. But it there additional the accepts costs, either what given have seeing base. to we typically the pass the component we're the that inflation, long the the has be or cost. know private fact I inflation costs in and to true. at fact is fact in investment when equation question the Their to government they inflation additional customers is them part the of not even the that beyond side you second influence seeing

our true and holds we this know hold inflationary don't long that period that's for growing, pipeline that's why in a But still environment. to true I see time. of highly going even if Now today

Andy Kaplowitz

regard, in can quick a that. I So to ask follow-up

investment margins the flattish people look or sequentially. Just Americas costs or more Americas, new if you you at your to costing in new were train when it at is the business? terms look QX, people you up Did the of hire

Gaurav Kapoor

good no Andy. question a Yeah,

is Americas. business very and put utilization we along the see, you our year, were forth you our in with beginning thought If marching consistent as practically at plan, recall, when our included you we know ours investment margins plan where and of our we’re of and in people, this every we exactly significant the single

Andy Kaplowitz

for hold would backlog your but growth. growth for growth sticking starting then you're significantly Okay, your know contracted rise with X% from I NSR of that thanks back Troy, what Gaurav. And your the toward year, guidance to

you place, I the but think to in in America You said Usually XX% needs increased. know be funding up. it’s

really You contracted know your revenue? should or is ‘XX start it see because is the backlog now mostly to uptake for in you this NSR

Gaurav Kapoor

our for revenue lines going never to that in the I the impression that so Well, already quarters. fact think want the its – grow anyone the again of a we’re uptick of usually to contracted XX% life. for large everyone chunky backlog last don't But five all like I longer seen we you building the leave is, again, NSR your the along be significantly programs sudden at matter Yeah. The growing slowly that, have we've of backlog. is when a the – it's

net should in going the factor as that there coming into us why look of limiting during investing the is to and again, term, with gives the we certainty still to achieve and the forward been look rate, funding we be which as our and outcome as we and the to see a a industry this we capacity in believe budget we authorizations people, do headcount factor. The said more visibility future what that is, in means what for the during but the we've additional market is same into quarter. limiting So is, grow. longer past, But more IIJA, opportunities believe that there around some adding as we that this our that's us result much we're we a grow

capacity. on deliver investing focusing the capability and centers our change making to future capacity the create think, for to we we're also investments in create are digital way to things again, to We can

investing the deliberately also are the the we winnings, and winning we're our So for business to increase while capacity future. of investing deliberately

Andy Kaplowitz

the all Appreciate color.

Troy Rudd

Yeah, thanks Andy.

Operator

Thank you.

Our the line your Dudas next open. Research. Vertical comes of now line Michael Michael Please from question is from my

Michael Dudas

gentlemen morning, Good and Lara!

Lara Poloni

morning! Good

Troy Rudd

Good morning!

Michael Dudas

how bit like certainly certain quarter. guys generated book-to-bill, business is ratios have your such little I basis know healthy markets, because end a good Maybe pressure on on you orders margin international, this And of of book-to-burn touch that pretty mixed that. improving where that areas, management can you about a domestic Troy, program certain the impacted upward think a forward your come those of aiding margin, with business and mix in. you going there's trend

Troy Rudd

seeing across we also are but Mike, domestically we the markets international success and across – the U.S., this in here business, success it received a also So we are are we trend. seeing as

the We you business it have was in It in but – again, globally. book-to-burn in if internationally was recall our quarter X.Xx the about was we same as U.S., this said higher the last Americas U.S., our book-to-burn quarter a little X.Xx.

And is that and to again, you're the management so fairly, out point And across the business. that. important part think – an we're it entire a and question as trend seeing I this program of ask right would it characterize is I

to management and at business very high win, we program had higher winning projects the has seeing in think important growth. this year as in we're We're very program as a big again to than of we’ve double that these are half strong business being win backlog average first us, defined rate digit management growth what the well. our important Our in

business a is across the contributor significant to world. it the So

Michael Dudas

I this going ’XX? forward are or levels type say as of this of similar continue to year the, it year is because changing, the change, at of the will strongest be this [inaudible] of the investment, markets into – was about though you in Did talked you’ve good as and up in think that generation And outlook. this my you business the investing ’XX very indicate maybe, follow out prepared your margin plan is, this maybe Gaur, still talked and you margins put for I remarks investment we type opportunities that look want consistently

Gaurav Kapoor

made XX.X commitments satisfied we're year future, Yeah end XX% and we're foolish. going by delivering And ’XX, that's year, Mike, of confidence we the wise delivery not have and the not the heard lot will not have because we with we're where including plus satisfied fiscal before, in in and XXXX plans. and pound for always be a business we investing say what today our you've of eye keeping focused penny our that to delivery just We're this just that's to XXXX. be on

where building be and long in to enterprise in most the to is XX-plus this business, to putting those investing terms focus Our the we're people industry, by the going importantly, together we're in blocks do transform and margins delivering that. our in

Michael Dudas

gentlemen! thank Great! you. Thanks Okay,

Troy Rudd

Mike! Thanks

Operator

Thank you.

Cook line the open. question next of Please Jamie Jamie, Our your Credit comes Suisse. line now from is from

Jamie Cook

earnings follow-up haven't nice to of its question imply would and half year Good high quarter. in morning and we're the just given guess the trending first one your guidance. the you know your end of narrowed way, you range the Hey! I

that, Just with any Thanks. only quarters around know left. you color two

Gaurav Kapoor

irregardless, question. Thank would argue Hey One deliver continues the the Jamie! you in you headwinds record all today, track The This take been. quarter-after-quarter. for sometimes forth effort to maybe environment macroeconomic teams are pretty team a putting comment. environment, challenging that a the about. is know Gaurav. professionals, more I’ll with than we are putting deliver to our of it the has unstable together ever But are talking

in. we're a given prior to going of delivered And that you, year, six to-date. given with the remind lot we're confidence prudently what months gives operating be us consistent to we’ve conservative environment I'll continue So

Jamie Cook

you! Thank

Troy Rudd

Thank you, Jamie.

Operator

Thank you.

of comes your line is from Steven question UBS. line next open. the Please Fisher Our now from Steven,

Steven Fisher

growth if you give – the to piece talking of the on a of you I of morning! NSR bit the about were that. the Great! more year. total just comment Kaplowitz Thanks. Curious could rest little design for Good rate Andy

may the more acceleration a bit little It was have in know an even went quarter accelerated You on. sounds quarter. it like the it as

about I'm looking negative but on guess think little design you from Can management steady, I overall you be positive. rest the that does guess piece? the more the imply the I turning give be of should NSR to What year? in bit your a So for I design just curious, construction second half, said to about NSR color the your with

Troy Rudd

Sure Steve.

And of we us So really we to as whole the professional implies to because a see differentiate the view X% accelerating growth growth business continued for through of services year, a that NSR that, we of expectation business. business. as the it’s for business But all, nevertheless still having of the first for difficult hold design balance for the the year.

little than the trend for was the has for quarters. business a growth first in been design quarter that the bit quarter second better continuing last five and Our a the

without in quarter, So the happened that, during quarter, some some I successful detail like into guess look quarter, things, the were happened of getting Omicron. what in headwinds having grown absence you in growth, I as that know the quarter some growth that design at but the impacted much there intra the of business even things successfully a it

Steven Fisher

accomplished has Okay, an some and there core the fair you know margin just you and can the what your some that enough. of Can there’s your office excellence out in talk You of on maybe what please? initiatives? been And stands back us and we progress digital some alignments, designs give real-estate then the are update about expect the of processing. initiatives? second What in can of half first been centers you half your

Troy Rudd

that I’ll take Gaurav Sure. let question.

Gaurav Kapoor

expectations, continual Sure. that process as It's we you a have consistent underway, mentioned are our Specific it. to the with executing real-estate through the we year. various is initiatives just to

whatever we year. of the We expect to complete projected half have in the second

various us it this put and $XX This had Now double is being one scale, advantage the QX of expense, total year-to-date centers. we just our our into to that incurred year global had to QX. half accelerate in initiatives approximately related million call take of context, $X expense capability This scale real-estate them. for and will of In continuing our it into we we includes second also restructuring of what to benefit. million have

up, that to includes the demand So the our our the and our now to up, support our global market we professionals, functions ramps to as functions, Lara arrangements. we and into captive deliver some all looking things And And you is design advantage them capability the most benefit irregardless to our way given so demand for to put That, services of deliver one the labor positively. we have only may to see and last is than able challenges we flexible the Troy where taking provide to it. very coming through have, as continuing reasons we of these why but can efficiently, from, expect going efficient lastly, forward at face well. the position our repeatable continue that services support in effectively ramp accelerate work trend also that for more to center continue our force, tasks growth us be of our deliver we're discussed, to look take of our that scale and key those to centers not our business

Steven Fisher

thank you. and Sure,

Troy Rudd

Great! Thanks Steve.

Operator

Thank you.

comes Thalhimer is line Our next Adam from Thompson open. now question from the line your Adam, Davis. of Please

Adam Thalhimer

funding current morning come to on the about ask thinking incremental IIJA. want guys! how Good What's Hey! First that? from I your much could

Troy Rudd

would again about way. in this I Well, it think

probably it it again, the our of as that it our Over in base. can of But the places, the rule different through throughout of in an next sort because comes happens That's base, of quarter to our thinking kind client funding think you increase year-over-year-over-year thumb. customer its way the about uneven business. about five for years, it -- through, XX% with

Adam Thalhimer

So a kind XX%. compounding of

Troy Rudd

mean know But you can possibly I know our it's right approximately government But – again state have it’s now like happen. what’s our and right, – customers. you we hard terms tell say, in IIAJ five yeah hard to they expand. out funding obviously to you to are and local years yes. expanding an even XX% think that that’s expanding factors again, is opportunity is I for you budgets. there, mean the What there's about me local of other Yeah, so again for if state I going and for – government know you with surpluses there that

Adam Thalhimer

a just Capital. Great! What's capital forward? real quick thought high AECOM level allocation priority on And that the going then on as

Troy Rudd

But offering important the fabric – and its part deploy with on of business. that capital. Yeah, third contributed are times great element our the great to of discussions certainly It those projects, capital success. not have of to has it again using most we it’s we many and people, had the that of some and party the our sort still clients. some have But is, own business, projects we it's our a is,

Adam Thalhimer

thanks guys. Okay,

Troy Rudd

Thank you.

Operator

have currently no We you. Thank questions. further

to it hand over So final Rudd any Troy back we'll for remarks.

Troy Rudd

past Great! Thank over teams their I you for you, this thank to want and thank Look, our operator. quarter. contributions just

strong us the for positioned diligence has the and delivered our for effort results has team’s the quarter future. that and it’s know well You

So today. the thank joining thank you, and you for everyone call

Operator

This concludes you call. for today's Thank so much joining.

disconnect may You now lines. your

AECOM (ACM) 9 May 222022 Q2 Earnings call transcript