• Revenue decreased 5% to $3.2 billion, operating income increased 14% to $183 million, the operating margin increased 90 basis points to 5.6%, net income increased 282% to $107 million and diluted earnings per share increased 295% to $0.75.
• Net service revenue² growth accelerated to 6%, with growth across the business.

– This performance was underpinned by strong client budgets, a continued record high win rate and a record backlog in the Company’s design business.

• The segment adjusted¹ operating margin³ increased 50 basis points to 14.6%, which marked a new high for a fiscal third quarter, reflecting strong execution and the Company’s focus on allocating time and resources to the highest returning and best growth opportunities.
• Adjusted¹ EBITDA⁴ increased by 7% and adjusted¹ EPS increased by 18%.
• Total backlog of $41.1 billion included 10%⁶ growth in the design business; contracted backlog increased by 17%.

– Strong wins resulted in a 1.2 book-to-burn ratio⁷ across the enterprise, highlighted by a 1.5 book-to-burn ratio in the Americas design business.

Cash Flow, Balance Sheet and Capital Allocation Update

• Third quarter operating cash flow of $205 million and free cash flow⁵ of $183 million contributed to year-to-date free cash flow growth of 15%.
• The Company’s capital allocation policy is built on the continued intent to return substantially all available cash flow to stockholders through share repurchases and dividends.

– Returned more than $400 million to stockholders fiscal year-to-date through share repurchases and dividends.

– Capital returns over the past 12 months equate to approximately 6% of the Company’s current market capitalization.

– Repurchased more than 15% of shares outstanding over the past two years.

Increased Fiscal 2022 EPS Guidance and Affirmed Long-Term Fiscal 2024 Financial Targets

• AECOM raised the mid-point its fiscal 2022 diluted adjusted¹ EPS guidance to between $3.35 and $3.50, which would mark 21% growth over the prior year and reflect strong operational performance.
• The Company also affirmed the mid-point and narrowed the range for adjusted¹ EBITDA⁴ guidance to between $890 and $910 million, or 8% growth at the mid-point.
• Guidance includes the following assumptions:

– Approximately 6% organic NSR² growth underpinned by a strong contracted backlog position and a record pipeline.

– A segment adjusted¹ operating margin³ of at least 14.1%, which would reflect an increase of at least 30 basis points as compared to fiscal 2021.

– An average fully diluted share count of 143 million, reflecting only shares repurchased to date, even as the Company intends to continue to repurchase stock consistent with its capital allocation policy.

– An effective tax rate of approximately 25%.

– AECOM Capital earnings in the mid-single digit millions.

• The Company continues to expect free cash flow⁵ of between $450 million and $650 million in fiscal 2022, which is consistent with the highly cash generative nature of its Professional Services business and incorporates strong year-to-date cash flow performance.
• The Company also reiterated its long-term financial targets for fiscal 2024, which include an expectation for adjusted¹ EPS of $4.75+, a 15% segment adjusted¹ operating margin³, and a 15% return on invested capital⁸, as well as a long-term segment adjusted operating margin goal of 17%.

“We continue to execute well on our shared purpose of delivering a better world, which has resulted in consistent outperformance, including 31% adjusted EPS growth last year and 28% adjusted EPS growth year-to-date through the third quarter,” said Troy Rudd, AECOM’s chief executive officer. “We are operating with a great deal of certainty, built on our deliberate approach of prioritizing high-returning organic growth opportunities, collaboration across the business to win transformation projects, a disciplined capital allocation policy and a strong balance sheet. When combined with our record design backlog, we are positioned better than ever to capitalize on record infrastructure funding. The three long-term mega-trends of a global infrastructure renaissance, ESG investments, and client investments to adapt to a post-pandemic world are fully intact, which underpins our confidence in the future.”

“Our professionals have embraced our Think and Act Globally strategy, which is directly translating to strong employee engagement, client satisfaction and financial results,” said Lara Poloni, AECOM’s president. “Through our ongoing focus on collaboration, investments to develop and grow our teams, and prioritizing time and capital towards transformation pursuits, we are delivering unrivaled global expertise to our clients and our projects. Looking ahead, we are energized by the accelerating growth opportunities across our markets and by what our broad and deep set of capabilities and technical expertise enables us to deliver.”

“Our third quarter and year-to-date results, along with our increased adjusted EPS guidance, are a testament to our professionals, our strategy and our capital allocation discipline, which are allowing us to deliver through varied macroeconomic backdrops and external factors, including the rapid appreciation of the U.S. dollar,” said Gaurav Kapoor, AECOM’s chief financial officer. “Free cash flow was strong in the third quarter and year-to-date free cash flow was up 15% as compared to last year, which has enabled continued investments in organic growth and the return of more than $400 million to investors this year through dividends and share repurchases. I can’t emphasize enough how important the strength of our balance sheet is in today’s environment. We have taken several actions over the past few years to extend maturities and lock in historically low rates, and this certainty enables us to invest and deploy capital in a highly efficient manner.”

Business Segments

Americas

Revenue in the third quarter was $2.5 billion. Net service revenue² was $926 million, a 4% increase from the prior year, reflecting the benefits of a record design backlog, strengthening markets and long-term funding certainty. In addition, a high win rate and investments in Advisory and Program Management have resulted in an expanded addressable market, and deeper and more valuable engagement with clients.

Operating income increased by 2% over the prior year to $168 million. On an adjusted¹ basis, operating income increased by 2% to $172 million. The adjusted operating margin on NSR² of 18.5% reflects continued strong execution that is enabling ongoing reinvestment in growth and innovation while delivering enhanced overall profitability.

International

Revenue in the third quarter was $784 million. Net service revenue² was $638 million, an 8% increase from the prior year, including growth in the Company’s largest and most profitable markets, highlighted by the U.K., Australia and Middle East.

Operating income increased by 23% over the prior year to $56 million. On an adjusted basis¹, operating income increased by 21% to $56 million. The adjusted operating margin on NSR² increased by 150 basis points over the prior year to 8.8%, which marked the eighth consecutive quarter of sequential margin improvement and reflects continued progress towards achieving a double-digit margin in the International segment.

Balance Sheet

As of June 30, 2022, AECOM had $1.0 billion of total cash and cash equivalents, $2.2 billion of total debt and $1.2 billion of net debt (total debt less cash and cash equivalents). Net leverage⁹ was 1.2x.

Tax Rate

The effective tax rate was 27.8% in the third quarter. On an adjusted¹ basis, the effective tax rate was 28.0%. The adjusted tax rate was derived by re-computing the quarterly effective tax rate on adjusted net income.¹⁰ The adjusted tax expense differs from the GAAP tax expense based on the taxability or deductibility and tax rate applied to each of the adjustments.