of Aecom Tech (ACM 34.84 -0.76) are trading lower this morning after the company
reported quarterly results and issued its outlook.
For the fourth quarter, the company reported earnings of $0.74 per share, excluding non-recurring items, which came in above expectations.
Total backlog increased 11% over the prior-year period to $47.5 billion.
On the top line, revenues rose 12.3% year/year to $4.86 billion, which also came in above expectations.
In its Design & Consulting Services segment, revenue in the fourth quarter was $2.0 billion. Constant-currency organic revenue increased by 4%. In its Construction Services segment, revenue in the fourth quarter was $2.0 billion. Constant-currency organic revenue increased by 21%. In Management Services, revenue in the fourth quarter was $890 million. Organic revenue was up slightly over the prior year period.
As of September 30, 2017, AECOM had $802 million of total cash and cash equivalents, $3.1 billion of net debt and $992 million in unused capacity under its $1.05 billion revolving credit facility. Total debt has declined by $1.4 billion since closing the URS acquisition in October 2014.
During the fiscal fourth quarter, AECOM announced a formalized capital allocation policy and the authorization by the company's Board of Directors of a new $1 billion stock repurchase program.
Key features of the capital allocation policy include the following:
- Allocating substantially all free cash flow to debt reduction until achieving net debt-to-EBITDA of 2.5x, which is expected to occur by the end of fiscal year 2018
- Upon achievement of 2.5x net leverage, the Company intends to return substantially all free cash flow to investors through the new $1 billion stock repurchase authorization as part of the longer-term capital allocation framework
- Acquisitions are expected to be limited to strategic, niche targets that will not adversely impact the Company's 2.5x net leverage target
ahead, for its fiscal year 2018, the company expects to see earnings fall in
the range of $2.05-2.90, excluding non-recurring items, which falls in-line
with expectations. However, the mid-point of the range, which is $2.48, comes
in easily below expectations.
The company also initiated fiscal 2018 adjusted EBITDA guidance of $910 million. Meanwhile, free cash flow is expected to fall between $600 million and $800 million, consistent with the company's fiscal 2017 - 2021 $3.5 billion cumulative free cash flow forecast.
The company said, "We entered fiscal 2018 with substantial momentum, which is reflected in our guidance for strong underlying earnings growth and cash flow performance. In addition, we are focused on stockholder value creation through our new capital allocation policy, which includes continued debt reduction to achieve net leverage of 2.5x, followed by an expectation to repurchase stock under a recently-authorized $1 billion stock repurchase program."
Following the open of the stock market, shares of ACM are now down 2.1%.