Edit Symbol List
Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.
Don't know the stock symbol? Use the
Symbol Lookup tool.
Alphabetize the sort order of my symbols
Investing just got easier…
Sign up now to become a NASDAQ.com member and begin receiving instant notifications when key events occur that affect the stocks you follow.Access Now
Q3 2018 Earnings Call
August 07, 2018 12:00 pm ET
William J. Gabrielski - AECOM
Michael S. Burke - AECOM
W. Troy Rudd - AECOM
Randall A. Wotring - AECOM
Tahira Afzal - KeyBanc Capital Markets, Inc.
Michael S. Dudas - Vertical Research Partners LLC
Andrew Kaplowitz - Citigroup Global Markets, Inc.
Jamie L. Cook - Credit Suisse Securities (USA) LLC
Steven Michael Fisher - UBS Securities LLC
Anna Kaminskaya - Bank of America Merrill Lynch
Chad Dillard - Deutsche Bank Securities, Inc.
Previous Statements by ACM
» AECOM (ACM) Q2 2018 Results - Earnings Call Transcript
» AECOM (ACM) Q1 2018 Results - Earnings Call Transcript
» AECOM (ACM) Q4 2017 Results - Earnings Call Transcript
(00:48) Will Gabrielski, Vice President, Investor Relations.
William J. Gabrielski - AECOM
Thank you, operator. I would like to direct your attention to the Safe Harbor statement on page 1 of today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties including the risks described in our periodic reports filed with the SEC. Except as required by law, we take no obligation to update our forward-looking statements. We are using non-GAAP financial measures in our presentation. The appropriate GAAP financial reconciliations are incorporated into our presentation, which is posted on our website. Please note that all percentages refer to year-over-year progress except as noted.
Our discussion of earnings results and guidance is adjusted for non-core business and asset dispositions, loss on disposals, and on assets held for sale, acquisition and integration-related items, financing charges and interest expense, amortization of intangible assets, deferred taxes, and tax effects and discrete tax items associated with U.S. tax reform, unless otherwise noted. Today's discussion of organic growth is on a year-over-year and constant currency basis.
Beginning today's presentation is Mike Burke, AECOM's Chairman and Chief Executive Officer. Mike?
Michael S. Burke - AECOM
Thank you, Will. Welcome, everyone. Joining me today are Troy Rudd, our Chief Financial Officer; and Randy Wotring, our Chief Operating Officer. I will begin with an overview of AECOM's results and discuss the trends across our business. Then, Troy will review our financial performance and outlook in greater detail, before turning the call over for a question-and-answer session.
Please turn to slide 3. Our third quarter results included several strategic and financial accomplishments. We delivered new highs for revenue, backlog, and wins which clearly demonstrate the successful execution of our strategy and momentum across our markets.
Total revenue increased by 13% to $5.1 billion and organic revenue increased by 10%. This marks the 7th consecutive quarter of organic growth and we continue to experience a favorable mix shift to our higher margin DCS and MS segments.
Excluding the AECOM Capital gain from the year-ago period, adjusted EBITDA increased by 15%. In fact, both revenue and adjusted EBITDA growth are outperforming the targets we set in our five-year financial plan.
Wins were $9.4 billion, a new high for the company and have now exceeded $6 billion for three consecutive quarters. Our year-to-date wins of $22 billion is a 22% increase from the year-ago period. Our backlog increased by 16% reaching a record high of $54 billion.
Importantly, the composition of our backlog is strong with an increasing share of larger projects that carry a longer duration. We are off to a strong start in the fourth quarter with several sizeable wins across the business and we expect our backlog to be even higher at year-end.
As a result of these accomplishments and our backlog momentum already in the fourth quarter, we are pleased to announce that we intend to enter into a $150 million accelerated share repurchase agreement which will take effect when our trading window opens on Thursday. This marks the first tranche of our repurchases under our $1 billion authorization. We are confident in our financial outlook and believe that repurchasing stock at current levels puts us on a great path to maximize shareholder value.
Please turn to slide 4 for a discussion of our business trends. Beginning in Management Services, wins totaled $6.7 billion and backlog reached a new high of nearly $20 billion which is an increase of 124% since the start of fiscal 2017. This growth represents a transformation in the business including substantial wins for our U.S. departments of Defense and Energy clients. Our win rate remains strong and includes a growing presence in the classified sector where the barriers to entry are higher and contract durations are longer.
Looking ahead, our MS pipeline remains robust with an approximately $30 billion pipeline of pursuits including more than $10 billion of bids under client evaluation. Our clients are in a strong funding position. The two-year Defense budget that passed in February included a double-digit increase in overall spending and House and Senate fiscal 2019 appropriation bills have cleared their respective committees. As a result, we expect elevated levels of activity to persist.
Turning to the DCS segment. Revenue increased by 12% and backlog increased by 9%. This is the eighth consecutive quarter of backlog growth led by continued momentum in our largest market, the Americas. We are benefiting from the more than $200 billion of state and local level infrastructure ballot measures that passed in 2016, full funding of the FAST Act, and strong activity in Canada.