Aecom · NYSE:ACM
Aecom — Investor Day (December 2023)
46 slides from Aecom's investor day presentation, December 2023
Slide 1: AECOM 2023 Investor Day
AECOM 2023 Investor Day A=COM vreierwora
Slide 2: Disclosures
Disclosures Forward-Looking Statements All statements in this communication other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any statements of the plans, strategies and objectives for future operations, profitabili
Slide 3: Today's Agenda
Today’s Agenda Speaker Key Topics ‒ Delivering on Our Commitments ‒ Expanding Our Addressable Market Troy Rudd ‒ Investing in Digital and Innovation Chief Executive Officer ‒ Setting an Aspiration to Be the Leading Professional Services Consulting Firm ‒ Capitalizing on Unprecedented Growth Opportun
Slide 4: Troy Rudd, Chief Executive Officer
Troy Rudd Chief Executive Officer A=COM
Slide 5: Key Messages from Today
Key Messages from Today Outperforming on our strategic and financial commitments Through our Think and Act Globally strategy, we have demonstrated a track record of consistently strong execution and financial outperformance Converging secular megatrends create an accelerating growth backdrop Global
Slide 6: AECOM at a glance: project lifecycle services
10% Water Attractive Exposure 24% Transportation to Growing End 28% Facilities We deliver professional services throughout the project Markets 38% Environment / lifecycle – from advisory, planning, design and New Energy engineering to program and construction management. Percentage of Segment1 NSR2
Slide 7: Creating a Highly Differentiated Industry Leader
Creating a Highly Differentiated Industry Leader • Created a culture, leadership team, operating structure and incentive program to drive collaboration and create a competitive Share of profit from the resilient Americas, U.K. and Ireland, and advantage Australia markets • Expanded our addressable m
Slide 8: We Are Outperforming on Every Key Measure
We Are Outperforming on Every Key Measure Benefitting from record investments in our growth initiatives, our performance is leading the industry 15.6% Substantially $1,085M $4.45 Higher ~20% Margins 14.0% Industry $746M Leading 12.3% ROIC 13.9% 11% $2.15 ACM ACM FY'23 AEC 4 ACM ACM ACM ACM ACM ACM A
Slide 9: Delivering on Our Think and Act Globally Strategy
Delivering on Our Think and Act Globally Strategy to Extend Our Advantage Our strategy for delivering industry-leading organic growth, profitability and shareholder value creation focused on technical and leadership development to create high engagement and long-term careers for our people, and to a
Slide 10: Expanding Our Addressable Market on the Highest Value Elements of a Project
Expanding Our Addressable Market on the Highest Value Elements of a Project We have expanded our addressable market and profit share on a project Illustrative Project Opportunity 2020 Today Advisory Higher Lower ~30% Margin Risk Program Management 15% Through our world-class Program Design & Executi
Slide 11: We Are a Complete Consulting Firm
We Are a Complete Consulting Firm Ideally Suited for the Opportunities Ahead Partnering with clients to address their primary challenges against a backdrop of rising project size and complexity Management Program Consulting Traditional KEY MEGATRENDS Manager Firm Design Firm UNDERSCORE • Engaging wi
Slide 12: Transforming How We Work Through Digital
Transforming How We Work Through Digital Today < 1% Focused Digital Technical Leader Opportunity 5 – 15% Culture Building a Substantial 4 Data Competitive Advantage: • Built a culture that inspires 3 innovation to transform how we work Capacity to • We own our data, which gives us a significant Digi
Slide 13: Case Study: Computational Design on JFK Terminal 1
Case Study: Computational Design on JFK International Airport Terminal 1 Client Experience & Innovation in Action: • Leveraging its digital solutions, AECOM is helping to deliver the new complex Terminal 1 in a way that is significantly faster and more accurate • By using script and code to automate
Slide 14: Our Model for Long-Term Organic Growth Outperformance
Our Model for Long-Term Organic Growth Outperformance • Long-term infrastructure investment tends to match GDP growth • For the next several years, we expect market growth to accelerate above the trend line driven by funding to address long-term underinvestment, as evidenced by our expected FY’24 8-
Slide 15: Our Model for Compounding Long-Term Value
Our Model for Compounding Long-Term Value Setting a long-term financial model that builds on near-term accelerating momentum Organic NSR2 Growth FY’24E Organic NSR2 Growth FY’24E Adjusted3 EPS Growth Segment Adj.3 Operating Margin1 bps FY’24E Return on Invested FY’24E Segment Adjusted3 Capital6 Oper
Slide 16: Our Aspiration: A World-Class Professional Services Consulting Firm
Our Aspiration: A World-Class Professional Services Consulting Firm Expanding Segment Adjusted3 Operating Margin1 Leadership Delivering the Highest-Value Services EV / EBITDA World-Class 17% + 17% + Professional 15.6% Services Consulting 14.0% Value Creation Opportunity AEC Peer 4 ACM ACM Management
Slide 17: Lara Poloni, President
Lara Poloni President A=COM
Slide 18: Undeniable Multi-Decade Secular Growth Drivers Are Converging
Undeniable Multi-Decade Secular Growth Drivers Are Converging Undeniable Demand Drivers Multi-Decade Secular Megatrends Investments in the Energy Global Population Global Infrastructure Investment Transition and Sustainability and Resilience Growth Added Global Population by 2050 Urbanization Total
Slide 19: Leader in Every Market Poised to Benefit from Accelerating Growth
Leader in Every Market Poised to Benefit from Accelerating Growth Multi-Decade Megatrends Our Leading Position Our Market Presence #1 Transportation Investments in Global #1 Mass Transit 11% #1 Airports 26% Infrastructure Water #1 Highways 23% Transportation #1 General Building Facilities Environmen
Slide 20: We Have Made Significant Investments to Outgrow the Market
We Have Made Significant Investments to Outgrow the Market Prioritizing Our Time and Capital on the Highest Value Pursuits ✓ Prioritizing our best resources to our largest clients and bringing all capabilities to our largest clients Investing in through our CAM program Extending Competitive Accelera
Slide 21: Capitalizing on Growth Opportunities Across Our Markets
Capitalizing on Growth Opportunities Across Our Markets Market % of Design NSR2 Long-Term Market Trends Our Leading Position Project Win in FY’23 Expected Organic Growth ACM 24% • $1+ trillion investment in 26% U.S. water infrastructure PureWater Program Peer Water 6 – 9% over the next decade Avg 4
Slide 22: Key Growth Accelerants
Key Growth Accelerants These markets represent less than 1% of NSR today, and we expect them to grow 2x+ AECOM is a leader in the We are winning against traditional Through our Day 1, Day 2 and Day 3 Rising demand for electricity is driving accelerating global PFAS market, consulting firms, which is
Slide 23: Winning the Marquee Infrastructure Projects Across the Globe
Winning the Marquee Infrastructure Projects Across the Globe Our strong technical foundation, combined with our Day 1, Day 2 and Day 3 strategy, has transformed the nature of our wins Network Rail Supporting the backbone and economic spine of Britain’s rail network Value of FY’23 wins Hamilton LRT g
Slide 24: Showcasing Our Competitive Advantage – A Case Study in Winning
Showcasing Our Competitive Advantage – A Case Study in Winning Day 1 NAVFAC CLEAN Advisory Climate Change and Resilience Advising the U.S. Navy on its Comprehensive Long-Term Environmental Engaging earlier and Action (CLEAN) Program in both the longer with our clients Atlantic and Pacific regions, t
Slide 25: Case Study: AI-Enabled Flood Mapping Tool
Case Study: AI-Enabled Flood Mapping Tool An Innovative Approach to Address Climate Change: • We are developing digital tools that are AI- enabled to create flood models, that would normally take one year to develop, in only three days • This innovative technology leverages our global scale and wate
Slide 26: Delivering on Our Sustainable Legacies Strategy
Delivering on Our Sustainable Legacies Strategy Embedding sustainable development across our Improving social outcomes Achieving net zero Enhancing governance work Driving substantial engagement Achieved new diversity targets that Among the first companies globally to Awarded the Terra Carta Seal by
Slide 27: Chief Financial & Operations Officer
Chief Financial & Operations Officer
Slide 28: Key Advantages of Our Professional Services Model
Key Advantages of Our Professional Services Model Revenue from Repeat Clients ✓ Unrivaled global technical expertise on the world’s most iconic programs, as projects increase in size and complexity ✓ Positioned for accelerating converging secular megatrends % of Costs Are Variable ✓ Record design ba
Slide 29: Our Global Risk Management Approach Results in Predictable Outcomes
Our Global Risk Management Approach Results in Predictable Outcomes Risk Identified Performance as compared to Every Bid as-sold margins across fixed or price design portfolio Proposal Project evaluation Local or Enterprise including: Region Risk • ESG Evaluation Risk Committee ✓ We are consistently
Slide 30: Delivering Best-in-Class Margins
Delivering Best-in-Class Margins 17%+ 17%+ Near-term Accelerants of • Digital initiatives 15.6% Outperformance • Global work-sharing • Overhead and real estate 14.7% efficiencies Even greater near- • Best-in-class International margins term opportunity and continued expansion in the 14.0% with expec
Slide 31: Key Initiatives Underpinning Our Near-Term Margin Expansion
Key Initiatives Underpinning Our Near-Term Margin Expansion Accelerants We are innovating to expand the capacity of our professionals and deliver globally for our clients at a world-class level and accelerate our margin expansion • We are capitalizing on our scale and digital libraries to generate s
Slide 32: Case Study: Introducing AECOM Bid AI
Case Study: Introducing AECOM Bid AI Transforming Efficiency and Knowledge Sharing: • Today, AECOM Bid AI is enhancing collaboration across our teams and allowing us to reduce the time to tender a draft from 10 days to 2 days • Going forward, we see the opportunity to further reduce the time to draf
Slide 33: The Result: Our Backlog Is an Appreciating Asset
The Result: Our Backlog Is an Appreciating Asset • As margins expand, our wins and Continued Segment Adjusted Accelerating Total Design Expanding Pipeline of Operating Margin Expansion Backlog Growth Opportunities our backlog become even more valuable • Our record design backlog and Design Bids 20%
Slide 34: Our Record Design Backlog Provides Tremendous Visibility
Our Record Design Backlog Provides Tremendous Visibility • Design backlog increased by 13% in % of Backlog in Q4 FY’23 % of NSR2 in FY’24E Q4 FY’23 over the prior year • Our design contracted backlog 7% represents nearly 1.5 years of design revenue, which is 20% higher compared to 2020 48% 52% • The
Slide 35: We Are Leaders in Highly Resilient Well-Funded Markets
We Are Leaders in Highly Resilient Well-Funded Markets Water 10% 24% Transportation Growing End 28% • Leading across markets that are benefiting from unprecedented secular funding growth Markets Facilities 38% Environment / New Energy 10% Americas, • ~90% of our profit is generated in resilient geog
Slide 36: AECOM's Highly Cash Generative Business
AECOM’s Highly Cash Generative Business Historical Adjusted Net Income to Free Cash Flow8 Conversion • We expect to continue to deliver consistent 138% industry-leading free cash flow 118% 114% 98% 117% Avg – We expect to convert adjusted3 net income to free cash flow8 at a 100%+ rate • Our culture
Slide 37: A Returns-Focused Capital Allocation Policy
A Returns-Focused Capital Allocation Policy Backed by a strong balance sheet with low net leverage, approximately 80% of our debt is fixed, swapped or capped over the next several years, and no near-term debt maturities resulting in certainty 161 Capital Allocation Framework Delivering on Our 138 Or
Slide 38: Substantial Shareholder Value Creation Opportunity
Substantial Shareholder Value Creation Opportunity Narrowed Our Valuation Further Expanded Our Substantially Enhanced Gap to Peers… but Still Industry-Leading Our Returns Trade at a Substantial Margins Discount 15.6% Substantially ~20% Discount to Higher Discount to Management Margins Industry 14.0%
Slide 39: Appendix
Appendix A=COM
Slide 40: Footnotes
Footnotes 1 Reflects segment operating performance, excluding AECOM Capital and G&A. 2 Revenue, less pass-through revenue; growth rates are presented on a constant-currency basis. 3 Excludes the impact of certain items, such as restructuring costs, amortization of intangible assets, non-core AECOM C
Slide 41: As a Professional Services Business, AECOM Is Poised to Thrive
As a Professional Services Business, AECOM Is Poised to Thrive Attractive Exposure Balanced Geographic Diverse Deep Technical Lower-Risk to Key End Markets Exposure Funding Sources Expertise Business Model Engineers Water 10% U.S. Program 6% 8% 24% Transportation 20% Managers Cost-Plus Design 18% Eu
Slide 42: Affirming Our Fiscal 2024 Guidance
Affirming Our Fiscal 2024 Guidance EXPECTATIONS FOR STRONG GROWTH IN FY’24 • We expect to deliver another strong year, highlighted 8% 8-10% by 8-10% organic NSR2 growth, record margins and 5% Strong double-digit adjusted3 EPS growth Organic NSR2 Growth Organic NSR Growth – Organic NSR growth rate h
Slide 43: Regulation G Information
Regulation G Information Page 43
Slide 44: Regulation G Information
Regulation G Information Page 44
Slide 45: Regulation G Information
Regulation G Information Page 45
Slide 46: A=COM ovreiier ora
A=COM ovreiier ora