• Fourth quarter revenue increased 12% to $3.8 billion, operating income decreased by 56% to $80 million, the operating margin decreased by 330 basis points to 2.1%, net income decreased 71% to $34 million and diluted earnings per share decreased 71% to $0.24.
  • Reported results for the fourth quarter included approximately $138 million of costs primarily related to accelerated margin expansion initiatives, including the optimization of office real estate, with a benefit beginning in fiscal 2024 and beyond.
• Fourth quarter organic NSR² in the design business increased by 10% for a second consecutive quarter and increased by 9% for the full year.
  • Growth was led by the transportation and water markets, which account for approximately 60% of the Company’s NSR².
• The segment adjusted¹ operating margin³ was 15.2% in the fourth quarter, an increase of 60 basis points from the prior year.
  • The full year segment adjusted¹ operating margin³ of 14.7% exceeded guidance and increased 60 basis points from the prior year to an all-time high.
• Full year adjusted¹ EBITDA⁴ and adjusted¹ EPS of $964 million and $3.71, respectively, exceeded both the Company’s original and increased guidance mid-points.
  • Adjusted¹ EPS increased by 12% compared to the prior year on a constant-currency basis, which outperformed prior guidance for a 10% year-over-year increase.
• Backlog in the design business increased by 12%⁶ to a record high, driven by strength in the Company’s global water, transportation and environment businesses, which are benefitting from increased investment in infrastructure, sustainability and resilience, and the energy transition.

Fiscal 2024 Financial Guidance

• Building on the successes of fiscal 2023, AECOM expects to deliver another year of strong organic NSR² growth, record segment adjusted¹ operating margins³, and double-digit adjusted¹ earnings per share growth, including:
  • Organic NSR² growth of approximately 8% to 10%.
  • A segment adjusted¹ operating margin³ of approximately 15.6%, a 90 basis point increase from fiscal 2023, which includes:
    • Approximately two-thirds of the margin expansion from high-returning organic growth, which alone puts the Company ahead of its 15% target for fiscal 2024.
    • Approximately one-third of the margin expansion from the acceleration of the Company’s continuous improvement initiatives, primarily related to real estate efficiencies.
  • Adjusted¹ EBITDA⁴ of between $1,065 million and $1,105 million, representing a 13% increase at the mid-point over fiscal 2023.
  • Adjusted¹ EPS of between $4.35 and $4.55, reflecting a 20% increase at the mid-point over fiscal 2023.
• Other assumptions incorporated into guidance:
  • Reflecting the highly cash generative nature of its Professional Services business, the Company expects 100%+ adjusted¹ net income to free cash flow⁵ conversion.
  • An average fully diluted share count of 138 million, which reflects only shares repurchased to-date, though the Company intends to continue repurchasing stock that would provide a benefit to per share earnings.
  • An effective tax rate of between 24% and 26%.
• The Company expects a return on invested capital⁷ (ROIC) of approximately 20% in fiscal 2024, reflecting its achievement in fiscal 2023 of its previously increased 17% target.

Cash Flow, Balance Sheet and Capital Allocation Update

• Full year operating cash flow was $696 million and free cash flow⁵ was $591 million, reflecting the achievement of the Company’s cash flow guidance for a ninth consecutive year.
• The Company also affirmed its returns-focused capital allocation policy, including:
  • The Board of Directors approved an increase to its share repurchase authorization to $1 billion, reflecting the Company’s commitment to returning substantially all available cash flow to investors after investments in accelerating organic growth.
  • Increased the quarterly dividend by 22% to $0.22 per share, marking a second consecutive year of 20%+ increases and fulfilling the Company’s ongoing commitment to raise the dividend per share by double-digits annually.
  • Allocated approximately $475 million to stockholders in fiscal 2023 through share repurchases and dividends.
    • In total, shares outstanding has declined by 19% since the initiation of the repurchase program in September 2020.
• The Company continues to operate with a strong balance sheet that provides a competitive advantage, with approximately 80% of its debt fixed, swapped to fixed, or capped over the next several years and no near-term bond maturities.

“I am proud of our performance in fiscal 2023, including exceeding our initial and increased earnings guidance mid-points and enhancing our long-term visibility through a record design backlog and 20% pipeline growth,” said Troy Rudd, AECOM’s chief executive officer. “We have focused our capital and technical expertise on the fastest-growing markets around the globe, which has resulted in a record win rate on the highest-returning opportunities. As reflected in our strong fiscal 2024 guidance, which includes 20% expected adjusted EPS growth, we have built an enviable leadership position and competitive advantage to fully capitalize on robust end market growth ahead.”

“Our unrivaled technical expertise and culture of collaboration is evident in the many transformational wins of the past year that reaffirm our leadership position in key markets including water, transportation, and environment,” said Lara Poloni, AECOM’s president. “The secular megatrends of global investments in infrastructure, sustainability, resilience and the energy transition are converging to create an undeniable growth cycle and we are well positioned to lead. Through our Think and Act Globally strategy, we are magnifying our competitive advantages by collaborating to bring the best technical resources to our clients for their most complex and challenging projects.”

“Our consistently strong financial performance is a testament to the inherent attributes of our Professional Services business, including high-returning, lower risk consulting activities for well-funded clients, that result in consistently strong cash flow,” said Gaurav Kapoor, AECOM’s chief financial officer. “Through our returns-focused capital allocation policy, we have returned $2 billion to stockholders since 2020. We are furthering this focus with our increased repurchase authorization and increased quarterly dividend, which reflects our confidence in continued earnings and cash flow growth.”

Business Segments

Americas

Revenue in the fourth quarter was $2.9 billion, a 12% increase from the prior year. Full year revenue was $11.0 billion, a 10% increase from the prior year.

NSR² in the fourth quarter was $1.0 billion. This included 9% growth in the design business, which was led by the Company’s water, transportation, and environment markets. Full year NSR was $3.9 billion, a 6% increase from the prior year, highlighted by 8% growth in the design business.

Fourth quarter operating income increased by 10% over the prior year to $186 million and increased by 9% for the full year to $715 million. On an adjusted¹ basis, fourth quarter operating income increased by 10% to $190 million and increased by 9% to $732 million for the full year. The fourth quarter adjusted operating margin on NSR² was 19.0% and reflected a 60 basis point increase over the prior year, which contributed to a full year adjusted operating margin of 18.7%, which marked a 60 basis point increase over the prior year and included increased investments to capitalize on organic growth opportunities.

International

Revenue in the fourth quarter was $905 million, a 12% increase from the prior year. Full year revenue was $3.4 billion, a 6% increase from the prior year.

NSR² in the fourth quarter was $722 million, an 11% increase from the prior year. Full year NSR was $2.8 billion, an 11% increase from the prior year.