AECOM Technology Corporation
) reported third-quarter fiscal 2014 (ended Jun 30, 2014) adjusted
earnings of 65 cents per share, in line with the Zacks Consensus
Estimate. However, earnings were down 7.7% compared with the
prior-year quarter earnings of 70 cents. Including one-time costs,
the GAAP earnings for the quarter came in at 70 cents per
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AECOM reported revenues of $1,968 million, down 4.8% year over
year while the net service revenue declined 2.5% to $1,205 million.
The revenues were primarily impacted by the dismal performance of
the Management Support Services segment. However, the increased
demand for the company's construction services business partially
offset the decline. The new orders in the quarter aggregated $2.2
billion, which led to a 22% year over year increase in backlog
levels at $20.5 billion. Revenues were marginally ahead of
the Zacks Consensus Estimate of $1,967 million.
AECOM's operating income decreased 18.2% year over year to $91.5
million in the quarter. The company's gross margin decreased to
5.5% from 6.4% in the prior-year quarter.
The general and administration expense stood at $22.9 million
versus $24.0 million in the year-ago quarter.
Professional Technical Services
(PTS) revenues in the quarter were $1,794.6 million, down 2.8% on
year-over-year basis. The net service revenue (NSR) also increased
0.9% to $1.11 billion, attributable to ongoing growth in regions
like EMEA and Asia. The company's construction services business in
the Americas was also a positive.
Management Support Services
(MSS) segment reported revenues of $173.5 million, which declined
21.3% year over year whereas its net service revenue declined 30.8%
year over year to $93 million in the quarter. The decline was due
to the project repositioning initiative taken by the company to
shift focus from lower-margin projects to higher-margin
Other Financial details
AECOM ended the quarter with cash and cash equivalents of $510.1
million, long-term debt of $977.0 million and stockholder's equity
of $2,197.5 million.
Cash flow from operating activities was $79.7 million in the
quarter. Free cash flow stood at $63.3 million including capital
expenditures of $16.4 million.
In July, AECOM announced its decision to acquire San
Francisco-based URS Corp. (
) for about $4 billion or $56.31 per URS share. Slated to close in
Oct 2014, the deal's total enterprise value stands at around $6
billion. Post merger, AECOM is likely to become one of the largest
companies, in terms of revenues, in the engineering and
construction industry. The combined entity will be headquartered in
Los Angeles with a key operational presence in San Francisco, where
URS is presently based.
AECOM reaffirmed its guidance for earnings in fiscal 2014 in the
range of $2.50-$2.60 per share.
AECOM currently holds a Zacks Rank #3 (Hold). Other stocks worth
considering include VSE Corp. (
) and North American Palladium Ltd. (
), both of which carry a Zacks Rank #2 (Buy).
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