AECOM is a provider of professional, technical and management
support services. We are reiterating our Neutral recommendation
with a target price of $34. The company reported soft
fourth-quarter and fiscal 2014 results with earnings lagging the
Zacks Consensus Estimate. However, the top line improved driven by
the strength in Professional Technical Services business. The
company's backlog levels remain strong, with the Management Support
Services business starting to benefit from the restructuring
initiatives. The recent acquisition of URS Corp is also likely to
be accretive for the company. However, this acquisition is expected
to substantially drive the company's debt levels, which can weigh
on its financials in the short term.
AECOM Technology Corporation (ACM) is a leading solutions
provider for supporting professional, technical and management
solutions for diverse industries across end markets like
transportation, facilities, government as well as those in
environmental, energy and water businesses. AECOM specializes in
providing integrated services for planning, construction and
maintenance of infrastructures that includes consulting,
architecture, engineering as well as managing the requirements for
energy, water and environment.
The company's core area of expertise comprises planning and
installing critical infrastructure systems by providing high
quality commercial services aimed at extending the life of new and
existing structures. The company's underlying motto is Create.
Enhance. Sustain.'. The operations and maintenance services for
these facility environment systems are also provided by the
company. AECOM serves both private and institutional clients along
with government entities.
In Oct 2014, AECOM closed the acquisition of San Francisco-based
URS Corp. for about $4 billion. The deal's total enterprise value
was around $6 billion. This acquisition has made AECOM one of the
largest companies, in terms of revenues, in the engineering and
construction industry. Post integration, the company intends to
accelerate its strategy of offering an integrated-delivery model,
by adding key capabilities and expertise in vital markets. Going
forward, URS knowledge in sectors like construction, oil & gas,
power and government services will likely be a significant growth
driver for AECOM.
AECOM's businesses have been classified into two distinct
segments: Professional Technical Services (PTS) and Management
Support Services (MSS).
Professional Technical Services (PTS): (contributed 92.2% of the
total revenue in fiscal 2014) The company's PTS segment provides
planning, consulting, architecture and engineering design, along
with services for managing program and construction for various
institutional, commercial and public sector clients across the
Management Support Services (MSS): (7.8%) The MSS segment
specializes in maintenance services that include management of
program and facilities as well as training and logistics services.
It also excels in providing other core services including
consulting and technical assistance, along with services for
integrating the systems. The segment primarily provides services to
various federal agencies.
AECOM Technology Corporation (ACM): Read the Full
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