Aecom · NYSE:ACM
Aecom — Investor Day (December 2019)
43 slides from Aecom's investor day presentation, Dec 10, 2019
Slide 1: AECOM 2020 Investor Day
AECOM Investor 2020 Day BOSTON LOGAN INTERNATIONAL AIRPORT United States Serving several design and construction management roles across the 18th busiest airport in the United States. 2020 Investor Day
Slide 2: Disclosures Safe Harbor
Disclosures Safe Harbor Except for historical information contained herein, this presentation contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, financial and business proj
Slide 3: Today's Agenda
Today’s Agenda 2020 Investor Day Page 2 Speaker Subject Mike Burke Chairman & Chief Executive Officer –Introductions and Safe Harbor Statement –Key Messages –Executing on Our Commitments –Positioned for a Strong Future Lara Poloni Chief Executive, EMEA –Business Overview –Capitalizing on Our Strengt
Slide 4: Michael S. Burke, Chairman and CEO
Michael S. Burke Chairman Chief Executive Officer 2020 Investor Day
Slide 5: Key Messages from Today: Delivering on Our Transformation
Key Messages from Today: Delivering on Our Transformation EXECUTING ON OUR STRATEGIC AND FINANCIAL COMMITMENTS Delivered 13% adjusted EBITDA1 growth, a near-record backlog and record-high DCS margins, and our Professional Services business2 had even stronger 25% adjusted EBITDA1 growth and 19% backl
Slide 6: Executing on Our Strategic & Financial Commitments
Executing on Our Strategic & Financial Commitments WHAT WE SAID WE WOULD DO WHAT WE’ VE DONE Exceeded our expectations on nearly every metric in FY’19, including 13% adjusted EBITDA1 growth, record free cash flow4 in the fourth quarter and near-record wins and backlog ACHIEVE OUR FY’19 FINANCIAL TAR
Slide 7: Transformation into a Professional Services Business
Transformation into a Professional Services Business ✓ Being a leading Professional Services company led by investments in the industry’s brightest people and innovations that shape how our clients solve their most complex and critical challenges × Provide all services to all clients in all markets
Slide 8: AECOM Value Proposition
AECOM Value Proposition ✓ We will complete our transformation into a Professional Services company before the end of FY’20, resulting in a higher-returning, lower-risk, highly-diverse business with a proven ability to grow through economic cycles ✓ Consistently strong cash flow profile with high-qua
Slide 9: Lara Poloni, Chief Executive – EMEA
Lara Poloni Chief Executive – EMEA 2020 Investor Day
Slide 10: DCS International Overview
DCS International Overview KEY BUSINESS HIGHLIGHTS: • World-class design and program management capabilities Diverse Client Base Public-Sector Private-Sector 48% 52% (% of DCS International FY’19 NSR ) 5 • Leaders in our largest markets, led by the U.K., Australia-New Zealand, Hong Kong and the Midd
Slide 11: Key International Market Trends
Key International Market Trends as public infrastructure investment with developing position in growth decommissioning, including 2020 Investor Day Page 10 AUSTRALIA + NEW ZEALAND Market has experienced steady growth over the past several years has increased. Strong position in core markets markets
Slide 12: Strategic Initiatives to Drive the International Business
Strategic Initiatives to Drive the International Business AUSTRALIA-NEW ZEALAND • Substantially restructured the business following the decline in natural resources investment activity, contributing to an 80% increase in profit since FY’16 Contracted backlog up nearly 40% since FY’16, with key wins
Slide 13: KSA Journey – Key Wins and Opportunities
KSA Journey – Key Wins and Opportunities CAPITALIZING $500 BILLION MEGACITY DEVELOPMENT OPPORTUNITY IN NEOM BAY ON A Deployment of world-class experts to support the delivery of key projects Focus on key client relationships Positioning in the market Future opportunities Key wins Partnering with uni
Slide 14: Innovating Hand-in-Hand with Our Clients
Innovating Hand-in-Hand with Our Clients HELPING CLIENT ADDRESS PFAS: MODULAR DELIVERY: • Fully integrated solution: design, engineering, assembly and project delivery • Process for decontaminating sites exposed to per-and polyfluoroalkyl substances (PFAS) • 50% reduction in program time with 95% of
Slide 15: Steve Morriss, Group President DCS Americas
Steve Morriss Group President Design & Consulting Services – Americas 2020 Investor Day
Slide 16: Design & Consulting Services Americas (DCSA) Overview
Design & Consulting Services Americas (DCSA) Overview KEY BUSINESS HIGHLIGHTS: 7% State & Local Governments Federal U.S. Government Private Non-U.S. Government 40% • World-class design and engineering capabilities 30% Client Type (% of DCSA FY’19 NSR5) 23% • Consistently ranked #1 by ENR in key tran
Slide 17: Enhancing Profitability and Positioning for Growth
Enhancing Profitability and Positioning for Growth FY’17 – FY’18 FY’19 FY’20+ Driving growth, further enhancing margins Cost reductions to drive Efficiency and client focus margin improvement • Streamline procurement to recognize benefits and savings with existing vendor relationships • Simpler and
Slide 18: FY'19 Performance Reflects Successful Execution of Our Strategy
FY’19 Performance Reflects Successful Execution of Our Strategy DCSA Contracted Backlog DCSA NTM Revenue % of Contracted Backlog • These efforts have contributed performance in FY’19 to record $7.0 100% 80% $6.0 60% 40% – Substantially improved margins and profitability $5.0 20% $4.0 0% – Record con
Slide 19: Strong Trends Across Our Markets
Strong Trends Across Our Markets TRANSPORTATION • • • Industry-leading position built on delivering our clients’ most complex projects Funding environment buoyed by record state tax revenues and rainy day funds Ongoing client effort to diversify funding sources, as demonstrated by Measure M in Los A
Slide 20: Investing to Capitalize on Key Market Drivers
Investing to Capitalize on Key Market Drivers Delivering Services that Target Core External Themes: Digitization & Technology Integration Aging & Inadequate Infrastructure Urbanization & Shifting Demographics Sustainability Resilience Progressive engagement with key clients in transportation, water,
Slide 21: Innovating Hand-in-Hand with Our Clients
Innovating Hand-in-Hand with Our Clients REVOLUTIONIZING WASTEWATER TREATMENT PLANTS: AUTOMATED BUS CONSORTIUM: • Through a patent-pending nutrient removal and recovery technology, Aerobic Granular Sludge (AGS), we are developing innovative methods to increase water treatment capacity by 30 – 50% wi
Slide 22: W. Troy Rudd, Chief Financial Officer
W. Troy Rudd Chief Financial Officer 2020 Investor Day
Slide 23: Strong Professional Services Foundation
Strong Professional Services Foundation % of Segment Pro Forma Professional Services2 Adj. Operating Income1 DESIGN & CONSULTING SERVICES ~90% • • Leading engineering and design consulting business #1 rankings in key end markets that are benefitting from durable client funding environments – transpo
Slide 24: Robust Backlog Provides Us With Confidence
Robust Backlog Provides Us With Confidence • Professional Services2 backlog increased by 19% to more than $36 billion, providing tremendous long-term visibility $36.5B $30.7B CONSTRUCTION MANAGEMENT • DCS Americas contracted backlog grew 8% year-over-year to an all-time high • Construction Managemen
Slide 25: Ability to Perform Across Economic Cycles
Ability to Perform Across Economic Cycles AECOM ORGANIC NSR5 GROWTH (2006 – 2011) • Our diversification by client, service and end market results in resiliency during periods of economic weakness 4% – Delivered double-digit NSR5 growth during the global recession (2007 – 2009) 13% – Infrastructure i
Slide 26: We Have Substantially Increased Our Profitability
We Have Substantially Increased Our Profitability WE HAVE DELIVERED A STEP CHANGE IN OUR MARGINS: RESULTING IN INDUSTRY-LEADING MARGINS: 12.9% - 13.4% Simplified operating structure to reduce G&A ~12.0% Shrinking real estate portfolio to align with business transformation Rationalizing geographic fo
Slide 27: Focused on Delivering Industry-Leading Profitability
Focused on Delivering Industry-Leading Profitability BUILDING ON OUR MOMENTUM: Continuing to optimize our cost structure ~12.0% Investing in people, technology, and innovation to change how we deliver our work with scale enabling repeatable designs, digital libraries and proprietary technology (e.g.
Slide 28: FY'21 Outlook and Long-Term Financial Targets
FY’21 Outlook and Long-Term Financial Targets FY’ 21 E XPECTATIONS: KEY PRO FORMA PROFESSIONAL SERVICES4 FINANCIAL TARGETS: • Our strong backlog position provides for continued low-single digit organic NSR5 growth Normalized7 Unlevered Free Cash Flow Conversion8 (% of EBITDA) Adj. EBITA1 Margin Long
Slide 29: FY'20 Cash Flow Detail – Key Sources and Uses
FY’20 Cash Flow Detail – Key Sources and Uses ENTERPRISE EXPECTED FY’20 N ORMALIZED7 FREE CASH FLOW4: Expected FY’20 Key Cash Sources / Uses: • Strong underlying cash flow in the business • Eliminating all stranded costs from the Management Services (MS) sale, and proactively addressing anticipated
Slide 30: Professional Services Business with a Strong Cash Flow Profile
Professional Services Business with a Strong Cash Flow Profile KEY ATTRIBUTES THAT RESULT IN CONSISTENTLY STRONG CASH GENERATION: Unlevered Free Cash Flow Conversion8 (% of EBITDA) FY’20 Unlevered Free Cash Flow8 (Normalized7) • Broadly diversified by end market, client type and service type $740 $6
Slide 31: Capital Allocation Policy to Maximize Shareholder Value
Capital Allocation Policy to Maximize Shareholder Value Transforming Our Capital Structure Executing Substantial Stock Repurchase Program Maximizing Stockholder Value Reduction and EBITDA 2.0 - 2.5x Net Leverage9 • Expected cash proceeds from the Management Services sale combined with expected posit
Slide 32: Highly Attractive Opportunity to Deploy Capital to Repurchases
Highly Attractive Opportunity to Deploy Capital to Repurchases • AECOM’s current unlevered free cash flow yield is approximately 8%, a substantial discount to market averages • This disconnect suggests a highly attractive value creation opportunity in AECOM shares, underscoring our commitment to rep
Slide 33: Key Messages from Today: Delivering on Our Transformation
Key Messages from Today: Delivering on Our Transformation EXECUTING ON OUR STRATEGIC AND FINANCIAL COMMITMENTS Delivered 13% adjusted EBITDA1 growth, a near-record backlog and record-high DCS margins, and our Professional Services business2 had even stronger 25% adjusted EBITDA1 growth and 19% backl
Slide 34: Appendix
Appendix 2020 Investor Day
Slide 35: AECOM: The World's Premier Infrastructure Firm
AECOM: The World’s Premier Infrastructure Firm We deliver professional services across the project lifecycle – from planning, design and engineering to consulting and construction management. Across the globe, we partner with our clients in the public and private sectors to solve their most complex
Slide 36: Footnotes
Footnotes 1 Excludes the impact of non-operating items, such as acquisition and integration-related items, transaction-related expenses and restructuring costs and other items. See Regulation G Information for a complete reconciliation of Non-GAAP measures. 2 A non-GAAP measure comprised of the Comp
Slide 37: Key Attributes of Our Professional Services Business
Key Attributes of Our Professional Services Business Diversified business with a proven track record of performing across varied economic cycles Focused on our core higher-returning and lower-risk businesses Leading position in key engineering and construction management markets Strengthened financi
Slide 38: Historical Pro Forma Professional Services Financial Results
Historical Pro Forma Professional Services Financial Results 2020 Investor Day Page 37 ($ in millions)Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019 Design & Consulting Services (DCS) 16,659 8,223 5,704 455 483 8.5% 14,006 5,656 498 58 59 11.9% (125) 4 421 16,243 8,268 5,670
Slide 39: Pro Forma Professional Services Balance Sheet and Valuation
Pro Forma Professional Services Balance Sheet and Valuation CONSOLIDATED FINANCIAL STATS ($ IN MILLIONS): $42 161 $6,762 $42 161 $6,762 Stock Price (current) Shares Outstanding Market Capitalization (current) Adjusted EBITDA (FY’20E) $1,060 PROFESSIONAL SERVICES2 FINANCIAL STATS ($ IN MILLIONS): Adj
Slide 40: Regulation G Information
Regulation G Information Three Months Ended Twelve Months Ended Reconciliation of Net Income Attributable to AECOM to EBITDA, Adjusted Sep 30, 2018 Jun 30, 2019 Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 EBITDA and Professional Services Adjusted EBITDA Fiscal Years Ended Sept 30, 2018 2019 Reconciliatio
Slide 41: Regulation G Information
Regulation G Information Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow Reconciliation of Revenue to Net Service Revenue Three Months Ended Twelve Months Ended Three Months Ended Twelve Months Ended Sep 30, 2018 Jun 30, 2019 Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Sep 3
Slide 42: Regulation G Information
Regulation G Information Three Months Ended Twelve Months Ended Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Reconciliation of Segment Income from Operations to Adjusted Income from Operations Design & Consulting Se
Slide 43: 2020 Investor Day
2020 Investor Day