ACM - Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the AECOM Third 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 slides at the Investors section at www.aecom.com. Instructions]. [Operator to Finance, over Treasury like Senior Will the President, Vice and turn would to call Gabrielski, I Investor Relations.

William Gabrielski

described I including harbor Americas review is a and net projected forward-looking from Gaur performance for operational various otherwise X Actual results Financial operator. NSR, are to backlog in about future the discussion today's our On review SEC. President, call, on you, and segment rates today's would or differ and website. revenue no and basis service detail. the into discuss our discussion. Troy exit the financial currency reports will in incorporated financial direct excluding revenue segments. successes Financial appropriate with excluded refer will our Poloni, which Chief revenue we references financial our Any statements of and operating in use forward-looking growth will Except will today's filed from to accomplishments, noted. The greater risks our Thank operations. expectations. law, key will key and your as priorities; outlook margins are contains are our Executive reflect growth, the our the our forward-looking safe the today's will as significantly statement our statements margins business; non-GAAP Officer, revenue. NSR and Chief Today's Russia we obligation impacts Officer, statements. of to revenue in presented Page our strategy of may our pass-through risks to and segment operations required Rudd, materials, on When and to business undertake on periodic uncertainties unless Kapoor, remarks presentation. Lara outlook Today's focus constant defined the measures certain like International adjusted attention from discussing our presentation. performance reconciliations by in which our to or the are update GAAP to We posted those continuing previously announced

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

Troy Rudd

industry I by We again for the are Thank you, joining in unwavering take and today. pride commitment one been list, our been and Most acknowledging you, to to well professionals pleased do. us to and World's clients I'm that point, recognized our begin Company thank report also of ranked ranking #X Companies we all, great peers. Most placing us a by to engineering delivering recently the as on World's services purpose our To #X that have Fortune's shared want firm. Admired world. better Engineering our Will, environmental the once News Ethisphere. what we our of company professional Record to affirmed month's have services of as proud in ahead of as this the Ethical our

adjusted the professionals third our and of value EPS proof strength to how creation that at year translates We using growth. year-to-date through of reside XX% The point professionals the the Federal great the the lead industry. Shailen Bhatt industry Highway teams Biden President Administration. talent is is and Our by Shailen example caliber of great nomination reflects A of in a are best the the to grew our XX% AECOM. quarter. EPS last this

underpin to business, key X our Turning confidence. the themes

and per share These our growth, strategic growth. earnings financial on accelerating delivering backlog priorities. expanding flow of margins NSR and cash include delivering and while consistently quite in industry, expansion we around When discipline see us you characteristics and I'm continue are and to strong market profit exhibited balancing we invest free our proud the share, First, gaining these organic growth can you organic make margin have in business. leaders the growth with distinct. the look

Second, emphasizing win we and record and how and on deliver Globally Think backlog opportunities. and prioritizing on innovation time by Act rate, transformed our design of collaboration and a translated has return high into operate pipeline strategy we capital. how and This has

Third, digital expanded and client value have advisory our capabilities. management our engagement in program addressable our investments deepened and technical of the market, enhanced

result, to several sustainability and will and more pressures. strong markets years a we that global As post-COVID both mega and investments renaissance, growth are operate of opportunities remain which investment Fourth, to come. clients for A across adaptation for to are the the despite cycle value supporting life a in normal new resilience, infrastructure broadly environment, trends continue clients. investments in we and enhancing secular us create their recessionary our

execution. not X% Finally, does is certainty slide growth a Organic impact growth note and sheet to capital markets allows any turn drive that competitive I I accelerated shortly. strong a backlog, our and and great accelerating by review yet to funding, our our next that creates was This NSR value and deploy strong to is funding from material creation. IIJA advantage in of the us should in Please discuss balance our to performance. which driven will shape. financial reflect a

driving revenue we are profitability increased growth as accelerates. Importantly,

Our adjusted increase year. the over operating of prior margin basis was XX an XX.X%, points

for rate high our We expand to investing funding. capabilities prepare are increased at a and

X% also strong basis, expectations. a by a the turn EBITDA increased remain million. XX%. Free $XXX by a flow adjusted of revenue our growth. year-to-date maximizes more and on per was highest and at which peers, ahead share XX%, Adjusted basis little increased On amongst by XX%, flow cash increased cash than free our EPS in were of margins the and which our Our value both

$XXX this year. to in than growth, In more investments the shareholders we've addition million so returned organic far to

equivalent past to X% returned the of we cash have X market quarters, capitalization. our Over

an have this U.S. have we targets. midpoint year, that differentiating market we XXXX As guidance our appreciation, demonstrate, headwind have EPS from for reiterated the time XXXX second our Despite fiscal fiscal the we results unprecedented unexpected and financial created advantages are our dollar raised performance. of competitive adjusted our

our business. the to of agile inherent in attributes next are predictable consistently result slide. the and we business turn proven, teams As and Please model our and strategy a more have resilient

our to and Now backlog, turning key pipeline. wins

Our business, design XX% backlog on This billion, total accounts which now increase. reflects and and our high increased win pursuing than profit, a backlog is XX% X% our by for and winning focus performance $XX and in more of backlog. NSR high-quality our rate the

for few were selected in With for that the projects and the book-to-burn business. X.Xx, our in transportation ratio demonstrate wins a are X.X greenfield we that trends contract of the X-figure largest the program key the strategy. in Design success Our recently quarter performance, led by was States. this a point, there of Americas one United To management

collaboration Our bid across emphasize the business.

last to In digital digital offering create elements into differentiated addition, our client. including a quarter we the for embedded proposal, management we key announced toolkit program the

We We transportation plan several that a were Transportation of our and stations. also had to by EV statewide wins sector. the Department Arizona to initiatives in deploy showcase sustainability selected the decarbonization develop charging

In Jersey New we design to Electrification addition, services leading zero-emission we to engineering by innovation. advance with and are markets strategy. are agency's Transit were selected for and the and key automation AECOM, provide growth vehicle

accelerate proprietary growth. developed have to digital We tools

pressured helping infrastructure. supply, clients to water spend substantial a example, have into choice. of for selected strategies, For These partner of today, which clients water help that were systems furthering electrification water win Persistent the droughts reuse this signature years. leadership advance is is to reuse project market we California. a reputation the showcase in I'm coming integrate in market in a ahead expected and our of that also tools the a report their as is existing pleased our substantial ev-readi are in tool a transit

in Wisconsin. was a Finally, treatment city growing reflected leadership our design remediation Madison, PFAS PFAS the market a win of the for system in to

are design Please for be opportunities best future funding, a to available. wins for the requirements becoming IIJA position awarded funding. slide. and match of as to clients' work tailoring IIJA project being project the is pursuing, with and number upfront emblematic our the next turn will smaller greater position now IIJA We This we of the

for accelerate as will markets $XXX is in to clients this in funding and growth. by IIJA across our the there expected where fiscal can as meaningfully increased available, We opportunities bid this months opportunities prior coming expect Turning mobilize our Today, XXXX our momentum been identified forecast, see funding result. most to opportune of submissions and our notices have in are Consistent to In trends expect has federal we of funding coming an markets. pipeline with billion beyond. The spending beginning announced nearly benefit in we U.S., are time. accelerating. a XX%, and strength in

volatility. market and for predictable clients, NSR, Budgets Our XX% a which us also creates are are at levels for record our a position. growth of market in the local against represent broader backdrop state strong which

over Turning the we substantial the and years, secured ahead. benefiting progressing Middle we to large framework East, the confidence key our In quarter and international look markets, we the the past design being contracts AlUla. are U.K., is in management strong for our multiyear program the NEOM supporting in positions investments as several and from on made work growth in have

We Kong, where also remain grew for demand strong. in Australia and large-scale Hong transportation projects

a the in policies we fierce However, we way industry. impact international delivering in ongoing us, business. parts performance of business, in are created ongoing by COVID Mainland talent to Broadly growth with our are high-value through continue other though across for the uncertainties the disciplined despite the managing China, of competition this organic highly

Our growth. turn disciplined Please in profitable approach the to slide. is resulting next

from results of our with business in strength and great markets. our a momentum are As we across demonstrate, our position operating both

have and market. addressable Our our peers and investments created us expanded in differentiate program advisory management new digital, from opportunities,

resulted Our creation. shareholder has deliberate value capital allocation policy strong in

cash is this well We all is Instead, at strategy, M&A distracted and our and a a balance shareholders on to sheet, peer M&A. competitive and our as focus growth profitable quarterly expensive through advantage. Underpinning executing dividend by of program. discount which risky have squarely been our strong not repurchases valuations returning as our is stock to

sustained turn With we growth the call guidance together, for for well our that, XXXX. will over and through I and Taken financial year to positioned success, which this are supports Lara.

Lara Poloni

Think to ways. in To transformed Troy. comments, Thanks, turn strategy we how slide. your our and to the Globally Please several operate market Act has next and go echo

our are First, capabilities feedback never has market of this which When a result, rate, we we a reinforcing and opportunity transform to loop in and and our have created in totality that can the created a culture before. a bear, marketplace, positive inspires global collaborating that demands the that we share like collaboration, must-win bring resulted position pursue win gains and approach. a we record is experience client as

collaboration greater high levels know-how to technical in investing our our disciplines. includes vision alignment This greater our and are across experts is people. academies development technical The practices the professional teams. regular we on and even our XX,XXX where and Second, of nearly best at technical share result

get We are single clients capabilities time. every of ensuring our AECOM's the best

attracting communities. benefit are retaining the opportunities career and to at the clients superior talent the best we and Third, emphasize in industry. meaningfully We AECOM

XX% In survey, we Grow environment, supporting our that Place and through sustainability a are we employees' company-wide would are resilience our and our initiative. to recent capabilities enhanced In paying priorities. desire recommend off. building have as are to Work. for growing pleased I efforts we am our Freedom AECOM employees a to benefits, said for increased our of report addition, to Great address Fourth, our they demand flexibility

We reflect A Airport was Greater planning Authority. master this area. provide are of in selection that our leadership the this example to Toronto multidisciplined projects for winning services environmental our great

leadership deliver. are and this And them best overall client I area digital in positive our on success. all Our social productivity strong. instrumental suited becoming pursuits, Across energy am to enhancements, our savings, ambitious position pursuing we pleased impacts, efficiency help is our and solutions improvements, are focus in targets, that very remains environmental sustainability

our all fact, eclipsing science firm peers. the we improved Engineering of professional environment environmental to News-Record, #X last by In the were week, services our position and engineering in #X reaffirmed and markets overall,

clients. Finally, AECOM products suite digital engagements our our with growing tools of deepened have and our

programs. For instance, us earlier funding with meaningfully digital to proprietary more allowing best and clients our IIJA programs, specific engage in is clients also position and for tool helping their is

a over experts at scale solutions in digital bring growing. strong X,XXX so can which foundation of scientists headcount and competitive enduring innovative Few firms creates quickly data our with Gaur. their to clients Importantly, place progress strong With is and advantages. globally the I that to will our call term. long turn that, expectation strategic continue we confident With over our the priorities, will on delivering and of industry to are the over now growth AECOM lead further this

Gaurav Kapoor

year-to-date strategy. adjusted Please turn Organic adjusted Think benefit increased to X%, NSR the quarter, and Thanks, increased global delivered strength year-to-date slide. the by EBITDA XX%. another next Lara. our of professionals demonstrating We Act of X%, and strong increased our and by by EPS

the increased high our NSR of and culture supports across at consistently This fiscal our guidance. were growth of The to organic business the the industry, to X% we growth full and continue next strong outperformance on Year-to-date, are XX least opportunities for deliver the to has XX.X% in outlook continuous on X% focus business. commitments. further confidence with our year, on across for the NSR XXXX basis lead to growth returning Please improvement. approximately and reflecting and expectation our XX% to track performance operating by gives underlying margins also consistent in Our our us our strength the turn slide. margin was Americas with points company. deliver margin our

in the XX% the in and ratio We backlog by design business also X.X increased Americas. contracted had book-to-burn

and to with when growth and and and Our continue to state margin by margin high, and increase we growth reflects sequential Backlog Middle tremendous operating segment which respect Australia. beyond. on local NSR profitability wins reflecting progress And and included of budgets, delivered Margins With were highlighted XXX eighth indicator Europe, East which expanded high from all the XXXX to a a The in was next was our increased funded of accelerate leading up the of into expected and pipeline our adjusted a NSR expect backlog backlog. growth. turn slide. quality great geographies. increased Please X% double combined strong Please also points XX.X%, largest on double-digit the next International business. the IIJA strong the fiscal of this X.X%, of strong. year. execution projects This quarter in our margin is growth, is by goal to which turn to digits near improvement, basis achieving to consecutive record prior Contracted the slide.

allocation to unchanged. cash and flow, Turning policy liquidity is our capital capital allocation,

high a We initiatives competitively are expand investing growth, to and margins at level key drive differentiate ourselves. in

share all We are repurchases and flow substantially deploy to to continuing available cash dividends.

more now we and back we have quarters, quarter, dividends over the we our bought than the XX stock. nearly XXX than July total, the XX also year. years million have During bought In million million X of million or shares of past payment, back stock, first bought our back of of through X shares. outstanding of more Including XX% XXX approximately this we have paid

our As percentage to for intent a it is our grow by share per dividend reminder, a annually double-digit the future. foreseeable

sheet capital $XXX deploy balance by flow Operating supported to free was million. ability is the Our strong $XXX cash flow was in flow and and cash million cash certainty. quarter

Our client model, These consistently culture. flows strong high-quality a business visibility, cycles. has to backlog highly through a lend cost and include diverse that attributes and cash strong highly base variable a inherent agile

As year. within eighth such, range we free expect flow consecutive to for an cash achieve our guidance

more rates debt We of a also been have for volatile and have creates sheet, balance as us certainty strong which markets late.

of next on the we balance years, of no the bond XXXX. several cost of high competitive a believe We We Please degree is maturities turn and our our slide. debt have XX% over sheet until next a have advantage. to certainty

Turning to outlook. delivering. headwinds, external our unanticipated we Despite financial are

at between XX% the As we expect a deliver year, guidance our increasing a now and reflect midpoint. to this which adjusted growth result, time $X.XX, are would for and for EPS $X.XX XXXX second we

and We $XXX our at midpoint. adjusted guidance $XXX to million have growth EBITDA the between also narrowed X% million or

for NSR I While impacting point that a for outperforming initial other are to modeling currency in market, foreign The that quarter business the captured the reflect should factor fourth purposes, the approximately constant note guidance. foreign our to your our translation. basis. profitability should exchange basis is could on or to we and factors points our revenue of impacts to margin impact you guidance the forecast XXX exchange but is in expectations. are already

does benefit we that deploy will balance year. flow any in back the continue note our to I from our incorporate incremental repurchases to our expect We buy cash guidance though execute share strong of the stock, to not

long-term Our for targets, confidence XXXX. our are that, XXXX at long-term accomplishments financial adjusted trends least ready we fiscal EPS favorable XX% CAGR market questions. With to expectations our to including date in from XXXX our support and for operator,

Operator

[Operator Instructions].

question Markets. from Capital KeyBanc first of Our comes Eastman Sean

Sean Eastman

I in as we continuing particularly levels wanted wondered through win accelerate. around perhaps that is all to end win with I raised from Nice next highs elevated wondered to all-time but which be I returns mean, rates, if the to year. this have hone quarter. actually I the go in perspective, activity hovering mean, rate targets this optimal. bids obviously, into embedded on need market headline been year. positive, sounds if a I

Troy Rudd

Sean, the question. for thanks

struck an So that a because there's maintain are and of terms balance rate allows investing to high our you're important be the in the certainly I for on. win doubt and your expectations in and finding balance thing balance But future also us business no what mean, a of invest improving focusing in margins. that what is it to

we're one. So the while terms on. the of that's It's rate our win is that what of deliberate quality very is focused two element a important to we're really that Number in winning. is backlog -- very number we're high,

We are not in durations, ultimately, they're They're all complex, and again, key clients. differentiating equal. the business. long the ourselves of projects the by are are And wins communities changing for are are they we're those winning importance for that -- momentum working in that wins level in. And

this it larger the momentum are clients and it we more also want the about important they to quality our that more interested people but we of that of the when believe the you're because is doing better the about opportunities. in rate, the flywheel talk -- backlog change thinking because have win high again, investing, win And attracts disciplined join, so what that's effect and talks we that things to and business important

element on in So typically doesn't it's doing. an come those the through X we're of numbers quality focused and important that second we're of backlog discuss, what but element elements, of we

Sean Eastman

the is the relates on to more And next becoming hiring say, then concern or just governor of versus, the would X this to environment, that relative over years growth the a of start tight wondered it you say being to year? I X less a as

Troy Rudd

things can Because Yes, so would deliver more we there's people's our that industry, work of about we doubt in that. -- that growth, no and on again, certainly work. governor how deliver no create, to deliver as our we a to that I doing capacity think we we I that seasoned a -- in constraint days improve question is There's experienced again, and there do. we're the it while professionals on way to the

about attract think this proposition One about So investing that, them. in ways. for the the employee of the different to we've centers. do. couple and opportunities is, our on working we're the And we then we people in what And is then doing other capacity we're capability investing best in to of to people the think extend focused digital our and entirely in things creating greatest a been the invest to firm. value again,

to that things a become But work around the distributing is address we And better in constraint. the are on it to try X constraint. and efficient. network become term, So we're more those short certainly, at the focused can the

projecting in constraint. it that that the forward, expect But those could a recession a where we're a people still As saying will be we recession, conditions or go change. in are world we

Sean Eastman

and model and sneak we to 'XX, fiscal rates I one -- FX the the in the like in. I'll more business in probably this but mean, moves feel around exiting so tailwinds far year. a of Okay lot there's obviously, I calibrate I'll need just just

quarter. for are one associated but maybe into be there is We the into roll should there XXX kind any of that this items going drag with aware bridge of? known margin NSR next are more what does fourth nuances from that fiscal on point the year? we have FX And this 'XX? So Gaur, that, basis in How

Gaurav Kapoor

thanks that Gaur, to question. one. the This will for is Sean, I respond

comments, for it quarter, it fourth a a put X been to third has continue But right, during end to. we weren't the provided, the of months said is would as outperformance our we to range for the our expect operational You're of million. us our committed prepared for FX it. be allowing $XX in we it quarter, headwind, in us is approximately have perspective overcome into the top in we headwind If FX at FX and headwind year the

these more will say, in there's really FY no the going spot planning quarter, like, process. we're If definitely provide it. we to Can't it 'XX will on currently, hold, you to look FY through forward comment an our bridge will coming 'XX. doubt look be and but will But impact what rates clarity

Operator

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

Michael Feniger

think bit think reaffirming people, XXXX year you number? in -- trying know to little the touched and next is and mentioned smooth got we and moving the the linear Should that have thinking step-up that this But get operating there. just that this see XXXX guys exiting us to be a year the I get years invest X XXXX for number, where get over about more EPS we in of with with for that about should kind of to XXXX are on target, even earlier. for how Obviously, leverage? just to invest XXXX, I Just about it guess we you more pieces to FX. us just next to I'm $X.XX, growth to hire more, could kind to the we and

Gaurav Kapoor

I'll Sure. well. take Michael, Gaur, question that as this is

that. top here strategic edge to that's want allow So mean are we're to operating the in we winning other share capacity consistent the his in XXXX projects, for specific explain group of better margins additional created that. edge. only a are of market. sustained than balance we me competitive the great us in I winning to interest our capitalization on that the targets. comments And we what what that market, and Not at let of providing of with our a And our all just costs we've earlier investments on we of by We're peer we're No various said our But reconfirmed what comments, really the Troy sheet, terms platform in A delivering driving example on creation. want. matters. it's competitive value we And use. making a created business that backed execution is to all by where these things have decisions making certainty and in long-term

Michael Feniger

-- -- on And Makes I think sense. little And next I that. my I think this bit earlier. just is Troy, question it touches kind a of mentioned you

to XX to We just out. the thinking M&A are missing space. deliver basically, go be announcement. I a investment one you seeing this all Or do step-up we enough are acquisitions your does and of just And last pickup M&A in Anything sector another of mean Even see you and very strategy? indirect view should occurring AECOM breadth compete? acquisition XX feel made an in there last we is the have around happening months? the over these acquisitions? about broadly how big to across your another benefits AECOM engineering you any for in peers the you as kind all Is of as for AECOM night,

Troy Rudd

great a that's question. Yes,

And I'll describe of that that discipline And ways. and a So doing, we've couple confidence first it our in results. of all, I adopted. we we're in been we've what again, think strategy it's showing, coming through the different have in

that. highest believe of business. is no cash competitive simple it the it trying when is you to in markets that get And doing growth, term the job to that coming think be can investing capital, is ultimately, do. again, see returning competitive I'll we're we're people that again, And own in risky the that doing end we through we what least things how invest environment, means growth that with organic this way capital our to the long-term trying as that people in us about long-term At in advantage. EPS, investing in accomplish a and right long-term things trying the create organic invest. way And First And into results. advantage, are highest to CAGR. when to is believe in And And your for matter We're long this and our think return believe way we create comment, off to are when EPS the to clients investing the we how shareholders it it's we trying right again, competitive -- least pays and think pays that and we is advantage just the the I our create about competitive is pays it make EPS do the of which day, possible. off. our our long-term this to our and allocating that's is, we And the off ourselves are doing we're to we to in And your ourselves that create our per peers to that you do all to cash right having that. share, doing risk go compare be to M&A, CAGR. advantage, in

a And EPS with M&A it is doing but the of And compare it organically, day, at you so having look we when and higher at ultimately, they're up gets how we're confusing you companies We're to end that end cash another in. our really doing compete? competitors when the growing it said, Well, your in impact you how position. the markets we're doing does even heck, no. already CAGR. M&A, our #X then And reaffirmed important ability we to it point

engineering ability, we're in #X M&A environmental -- gap, so But engineering need as increased again, compete, example, surprisingly. our to the and #X. we do of need because firm, we For to, to don't that our terms

Operator

comes Andrew Our Citi. question at from next Kaplowitz

Andrew Kaplowitz

in Can recorded year. international your the highest obviously NSR, you lowest this But what's quarter. in segment margin update business your far you've margin, of on this was on us so going on terms as that

If is margin? that estate know for in think, we that you've or reason taking higher progression, restructuring, biggest I related? so, consolidation. So where more mix real the a it are you Is been on

Gaurav Kapoor

estate This come that we are it. global I'll we it's asked, to question for are predominantly globally. Andy. going international renew focus through just margin leases restructuring duplicate our a that impacts is The But some all we our It to services center it's duplicate are of also take Yes, And our center real it's the through provide and costs costs that where Specific of as that has that going question. that ours. through. IT you captive been business businesses. took, Gaur, there clarify, support that

what are seeing, shareholder only are investing digital in interested where, and for We sustained to international, well. be of a margins was the last execution this advisory again, and commitment We're margins the value. probably leader the in scale tactical in pack as of to get in driving continuing just double-digit PM in but being by we is, question the scale. And asked, just to going the result very of purpose interested that building we're you're our business, having like in to not not again, back the focused Americas, opportunities,

Andrew Kaplowitz

capital maybe deliver does around there's then on but you're you think said that excise almost I Obviously, could over in clarification end million And Inflation deployment. ask And cash high you of share the just $XXX cash to through tax to at a the QX. $XXX that all you you Does QX? quarters, normal a impact trying know repurchases? smooth your behavior wouldn't usual flow. about the past pass, out If the if this Act a X% Gaur, do I you've at maybe free seasonality, Reduction be million repurchases. on given $XXX million just

Gaurav Kapoor

both on tax on of those repurchase take and I'll Sure, the flow cash questions tax.

delivered in years the X commitments on our and different. cash row, on target, will first we've this So be year cash no a

will We deliver on it.

place. at Our have we our on possible. is priority as the our of as XX% capital that any be X or because possible through commitments have year-to-date yes, only have look gives confidence year-over-year I commitment, making we on point us not we like the delivered flow, to not our projects above will in in annual in up phasing It's best commitment, no can you can is But strategy advantage confidence, allocation And either and XX,XXX at that time. that said, cash and sure be a take year our and on phasing. given will this efficiently a do we what XX delivering we that of or but different. if so years really XX pull we've But row certain XX,XXX Andy,

for going deliver in looking specific tax the tax. We're it's at what to growth committed opportunity. the EPS value investing And that's provides best the creation repurchase at be always shareholder best looking to us, ROIC, in to Now TSR.

individual no continues unfortunate. in Our stock impacts It is institutions. consistently be undervalued, AECOM The to that. with commitments. doubt plan though have we see outperformed through we change investors investments own forth, And who our even put no shares

So goes. it's see it let's a triple where taxation. And

Operator

Our comes Fisher from of next UBS. Steven question

Steven Fisher

Your contracted backlog was it sequentially. down double was up but year-over-year, digits

building as your leading indicator the of take for and that was the that an FX some on know highlighted from business. And trajectory think I I contracted maybe I important what's the the of guess construction here? backlog you've of business. some

So what just expecting that. forward on you're curious going

Troy Rudd

Yes, point us made Steve. for Thanks important the a question. backlog Again, the indicator I is you actually leading future. of is think for contracted that the

on sort that a helpful business. increase pipeline those we're and how and has rate. to of indication we're I our seeing like. in really increasing that at us of mid-single relatively head that what the of a and And And of And as giving the looks we to about year. the pipeline. that And stages over longer-term doing, faster haven't digits believe one we to is we those certainly pipeline. we later an see just that are exit is in look significant near that It's part is we other We But think our future, certainly, what's increasing when we the so trajectory X going couple going important looking year constantly to of the what pipeline again, as as to in the be at future been and into moving there's referred a last the is quarters. think later to well stages. of indicate bid at that we look future pipeline we're the But next spoken things forward moving what's interesting that to is consistently that

point the combination trends increase business. take long-term and So in pipeline our future all you for that when bidding in an increase our to be together, near of good backlog, relatively an we're contracted going to things those that in on things the and

Steven Fisher

I XX% That's from know that X% business? actually construction the I'm think maybe there, again things see bottomed follow curious get guess do has the could over that tested of guess Have the that revenues, maybe mean? you of Okay. to that only to from what you it's building as to overall of if what backlog, stable do here include that commentary grow quarters? it's kind extent well like pipeline stress the kind kind of the of now -- in in you will business pipeline maybe I I up going does to but handful forward or helpful. here? construction next

Troy Rudd

future? is in backlog high. question. and good was address what our the And lumpiness. is is made in when Xx, business, nevertheless, about is, I'll my that Steve, see but Construction But comments, the the Management pipeline referring grows. your was the in book-to-burn in lumpy Look, the backlog the has growing business out quarter, to to an consistently as Yes, at we a fact do take the been that But you separately. point all-time when entire Our I little it CM I

see what it's well, design with increasing the consistent so the as been business. we design in -- global And

news also couple across comments And So high. we at that's -- that why our just all-time good entire around portfolio. see a that's of again,

and made the to it's actually these investment think there's fairly invested attract buildings, aviation, think And cities or a portfolio that, large and sports categories I during I in something seeing convention convention at and in nature the making within pandemic. the XX% certainly residential XX% and of that the falls was cities is our in are centers, a now U.S. business, people I and opportunity they work broad of it do, office being we significant of to venues. have. That the look diverse promote And we're don't that hospitality. if investment which to centers in be

we all-time when an look So is the at at, again, our high. business, Construction Management pipeline

-- feel about So we good that. feel again, we

right The more of other a think, X work. Construction years and we about we winning X in I sit work backlog, almost years little is than our business been thing have our with, now, Management of

Operator

question at next Our from RBC comes Khan Sabahat Capital Markets.

Sabahat Khan

for a kind bigger of Just improving I there's organization is as towards are these on today, there. much guess, question know where I'm they I given working the NEOM the And segment. the those I reorganizing like assuming restructuring and guess some work an that International time. margins you've contribution projects been of some from you've how done?

do X structural -- some X, stick further thinking the over And run, X, is that of those that out, you are business? the up how fixing is next Just over much margins kind kind of the years? this just reorganization of long how of through projects cycle that there a or much will more think

Troy Rudd

our the international been about I to think strengthen that again, work business would business, years off. that the few over we've doing last has And paid --

strong. that very is all, of First business

and So business our be business don't make I all trajectory great pursuing win be is see that looking the business And the long transformative very the incremental the business base but and it's we're changes. our again, very changes, we incredibly looking international an entire always -- I business, our business long-term make is and just changing. large customer But like, business. that's always to for again, that opportunities the around projects -- drive with But to at businesses winning term. rate. continue overall it's are strong high world strong, we're to and look There and massive a healthy. sure healthy very our But for of to that business, at international efficiency opportunities to improve I not going for

Sabahat Khan

the Okay. maybe business the can mix of versus commentary around any bit of just seen you're private. on public more a give across change how some And the have headed based pipeline, all? building or you tilted at the in towards And where all the it feedback of of then macro your earlier Is color is on you kind at side? tone little one

Troy Rudd

answer. Sure. I to guess, first, that's an easy question

public see don't change between a So private we significant the in really mix and customers.

we've as, fairly of driven feeding significant and terms really in in then coming think that business talking and a our in the the mix our business. across And trends there do, of backlog. this by about our the just mix, longer-term of globe Our transportation, that's business overall environment government is work customers investment clearly XX% we way the represent our about buildings it's it mean consistent is mega our infrastructure. been that that's about. water, in I And places our

investment, it's and we're positioned very very well a a for -- it's infrastructure again, that. diverse So

they unusual benefit broad, of in those nothing we're and but the there's are trends So that the trends seeing, entire business.

Operator

Vertical Our Dudas question at Research. next from comes Michael

Michael Dudas

was accelerating prepared quarter Americas guess, your and growth NSR into Design in mentioned you you think, in Troy, this remarks, Just I said it's I about X% XXXX.

given with similar backdrop So guess, XXXX. from you've numbers I quarter into look that positioned, accelerate the growth, fourth that assume Just and X%? early I can that

Gaurav Kapoor

this is commitments. QX, that's growth alluded things to one was earlier. currency. in with take who at the Michael, but comments reconfirm I constant we MSR that 'XX, commented. will consistent and look could growth on X% you what our approximately FY is did a Americas Gaur. company-wide, organic Troy we at of a was couple X% And No have

significantly. up is backlog contracted Our

QX into the of us going and a IIJA ground. year-over-year. Specifically on in growth hits before QX Americas, the the funding up lot into accelerating it's confidence provides X% That

Michael Dudas

it. I understand Got that.

and to question, your energy and is does for growth going Second get us been out clients of maybe buzz your what with has funding AECOM you mix? that noise that's last clean and And next exposure some differentiated forth. area excess of can you that support several you remind How that all the all in an can years. certainly the for guys over do the

Lara Poloni

to here. happy that it's I'm question. Lara Yes, take Michael,

And our in great capability. digital EV so well, that's technical offshore a that of our then a example tools of across leader another in wind global We our as And and space of of operations. obviously where new for in there's significantly see investing are particular. much the applying significant opportunities example is great We wind. activity we're all some

our a the in growing technical the of application business. lot rapidly of tools of the these of with areas gives conjunction So continuing digital I combination to in us the that of confidence capability segment about in think growth some invest in

Michael Dudas

be it's be to adding that some from market because share or going going a it to to the some better you're Is of the to some be able skill sets more tools and different fact areas maybe a penetrate base growth just than other there?

Gaurav Kapoor

forward to so our that. we Michael, take investments to as doubt this pipeline. based we're into level long-term on based guidance. our but is detail, making, point, Gaur, of on don't break that provide the receive Lara's do significant No investments expect I'll We we growth on our do targets return we move some our

Operator

from comes Thompson question at Thalhimer Adam next Our Davis.

Adam Thalhimer

Is Nice that at It quarter. up right? I the pipeline transportation is might programs have identified of said Troy, been a comment something. think you XX%.

Troy Rudd

pipeline the I have up was was categories said pipeline, pipeline. we I XX%. mentioned is within I of different don't think our transportation What

in the so to of have middle Kind to about clear the line of And placing a sight initial the it prospect projects we think of as bid. but all way again, that that, use market. through in to that terminology, going phase. I'm capture is, as our view own the is our it's a terminology, which coming are work own where the we to that place

going coming so And it. we're know to to we that market, and bid it's

there's to up that market look of 'XX. And phase. that of come to pipeline year-over-year, in and terms in so that's that XX% we growth. big in lump linear going expect market, not we And stuff is piece our come see means which to We of our pipeline, that lumpiness a to it's at, when its

so for of that And long-term well again, health the business. bodes the

Adam Thalhimer

we think in XX%. gives terms that How do rate? big plus That number, your win a about of

Troy Rudd

positive. I very would be

and think, you create things business and the we're competitive health itself. doing well with business the rate, business bodes advantage, look long-term the and create the for think that long-term in backlog well you the of our I to the forward win momentum of that certainly

Adam Thalhimer

tuned. stay So

grid just then the was quickly, what's just charging that? just addition on you at the of Are -- your I And to something Arizona like in infrastructure? scope just award, resiliency Okay. the curious the charging the looking

Troy Rudd

Yes.

world solid out you client about that, again, as to it for yet advisory engagement. the -- end that, plan think figure scope what state going we how we've the goals the the of is of state. future. around broader a is large the look We do that to is to but quarters to it's long-term of an do. and really it's So people defined lot these in get talk a really their see a certainly ambitions, to define specific defined engagement, important I'm a build but not the they the we engagement part When have about over help EV build last people advisory path of seen the number towards

And with And goal there's plans has as get so the Arizona build working to state there. we're a about for this set. them to important that long-term an think them of

its in ultimate broad fairly it's so And approach.

Operator

Instructions]. [Operator

comes question from Jamie Credit Cook next at Suisse. Our

Jamie Cook

to have very Most portfolio I your questions been the different guess, and today, obviously, relative your my quarter. prior focus AECOM. Nice of asked. is Troy, just

the of to of be some think Just improve AECOM's and in be business or secular wondering resilient if you given parts impacted? we most would structurally the growth would recession, levers margins? you are just have a tailwinds to how go into earnings maybe And internal a recession which do

Troy Rudd

Jamie. Thanks, Okay.

the to of environmental lot longer-term transform trend when say are social we as couple in some others there world as But us everybody's coming funding terms and describe So coming I not of would And into in improvement. all, of a by it's think there recessionary the that and of trends continue for infrastructure reasons. a recession or post-COVID. see and recession, a frankly, that is to again, even within is as I that first a impacted recession. different is One impacted being

And receive do this are term. the say, funding so with that well, even and things if long for there funding the we is a to that inside broad and recession, we recession, look going at

So business look put even very as health to long-term the But that. recession. in good at in the is that attributes the position that to right, bodes I then well a our of our through a some One us business described, for work way there's you backlog.

backlog We have long, business. in live the

then of volatility. just have thing number in made also react typically can an a And sort happens industry shorter-term are around in the asset-light customers is, we other position to in that where and to one coalesce a company number our recession. again, be all We the the that business, business is being terms one of agile market

industry. usually if it recession consulting But smaller go the XXXX. back top organizations and don't and And there you the then to at was have certainly this dramatic. in the had sort at that that was of out we we I'll past. XXXX in just of the XXXX, So business, The business, and a design organizations through recession, particular point experience a or a with hits time fairly was AECOM grew a business that sit

resiliency business think I of a that's the point for threw to recession. the proof So

Operator

question question Our follow-up from Sabahat is next a Khan.

Sabahat Khan

are potential it next labor of and recession the also how call with up balancing I little planning IIJA on the situation. are the and guess, ramping you how through? Kind commentary making concerns when sure a of two just the of that people have There's enough the you around demand some the for see bit but year? flows you earlier given

Lara Poloni

the question. one. It's I'm take that happy to Lara. for Thanks

pretty think we're I optimistic.

increased last over this headcount quarter, X% by design in year-on-year. Just

of and cities. where not a all But So the of another And in key moment. talent enterprise example example, continuing centers at the long-term our we transit, in of that, congestion major capability. our have areas really see -- of technical capability we up are demand ramped building it's is certainly focus acquisition have for and for great one of strategy of we expertise. pent-up terms world's the or part we And centers, capability trend the only

have We transit. #X our position in

to example, the the up Madrid capability longer built in deliberately quite centers have term. for and for have we that U.K., capability So

strategy, combination, capability So supplemented a markets, by center it's lot of confidence. gives which local obviously, in our hiring of enterprise us a short-term

Operator

over At time, for now Rudd, pass no final this to Troy there to CEO, any further are like remarks. questions. I'd

Troy Rudd

finish just call term, continue going today business Great. pursuing the job recognize of while margins, for we and long everyone, to long-term while joining can in improve profitable And by us and complimenting a for growth to all expanding Well, They've by people that continuing I'm thanks, that, doing balance in right the the a done competitive make between to advantage. AECOM. again, to fantastic to here the continuing investments at the drive today. finding

them dedication nice their I have for thank So to mission. day. our all a Everybody,

Operator

for everybody, conference joining you, Thank call. today's

now may You disconnect.

AECOM (ACM) 9 Aug 222022 Q3 Earnings call transcript