LOS ANGELES — Los Angeles-based engineering firm Aecom has announced a record order sheet of US$54 billion, representing growth of 14 per cent, and also unveiled a plan to end operations in 30 countries where growth prospects are considered low.
A Nov. 14 statement reported fourth quarter revenue of $5.3 billion (figures in U.S. funds) and full year revenue of $20.2 billion.
Among other measures announced to improve profitability, de-risk its business profile and prioritize investments in its highest-growth markets, Aecom announced cost reductions of $225 million, most of which will occur in the first half of fiscal 2019.
The decision to exit 30 countries was explained as a move to prioritize investments in markets with higher growth prospects and where its competitive advantages are greatest, the statement said.
The firm also announced Aecom Capital has formed a joint venture with Canyon Partners for a real estate investment fund that will generate management fees to support the segment’s overhead costs and which will limit Aecom’s future balance sheet commitments.
The statement said, “A more profitable and lower-risk business profile, combined with the company’s capital allocation policy focused on shareholder returns, including $850 million remaining under the $1 billion board stock repurchase authorization, is expected to result in consistently strong financial performance and shareholder value creation.”
“Our fourth quarter and full year 2018 results include new records for revenue, backlog, wins and free cash flow, demonstrating the strength of our industry-leading franchises and setting a strong foundation for continued growth,” said Michael Burke, Aecom’s chairman and CEO, in the statement.
“We are proud of these many accomplishments. However, our adjusted EBITDA for the fourth quarter and full year was below our expectations due to the timing of Aecom Capital asset sales, which we now expect in 2019, and execution challenges on a handful of projects in the Construction Services segment. Importantly, we are taking strategic actions from a position of strength that we expect will substantially improve our profitability.”
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