AECOM (NYSE:ACM) Q3 2020 Earnings Conference Call - Final Transcript

Aug 04, 2020 • 12:00 pm ET


AECOM (NYSE:ACM) Q3 2020 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the AECOM Third Quarter 2020 Conference Call. [Operator Instructions].

This broadcast is copyrighted property of AECOM. Any rebroadcast of this information in whole or part without the prior written permission of AECOM is prohibited. As a reminder, AECOM is also simulcasting this presentation with slides at the Investors section at [Operator Instructions]

I would now like to turn the call over to Will Gabrielski, Senior Vice President, Investor Relations. Please go ahead.

William Gabrielski

Thank you, Operator. I would like to direct your attention to the safe harbor statement on page one of today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations, including expected and potential impacts of the COVID-19 pandemic. 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 undertake 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 where available, which is posted on our website. As a reminder, we sold the management services business earlier this year and intend to exit our remaining at-risk, self-perform construction businesses. As a result, these businesses are classified as discontinued operations in our financial statements. Today's comments will focus on continuing operations, unless otherwise noted. Today's references to adjusted operating margins reflect segment level performance for the Americas and international segments. We will refer to net service revenue or NSR, which is defined as revenue excluding subcontractor and other direct costs.

Our discussion of margins will be on an NSR basis, unless otherwise noted. Beginning today's call is Mike Burke. Mike?

Michael Burke

Thank you, Will, and thanks to all of you for joining us today. I'm joined by Troy Rudd, our Chief Financial Officer; and as we announced in June, our incoming CEO; Lara Poloni, Chief Executive of our EMEA business and incoming President; and Randy Wotring, our Chief Operating Officer. I'll begin today's discussion with a high-level summary of our results. Troy and Lara will then review our performance and outlook in greater detail, before turning the call over for a question-and-answer session. I'm proud of our people and very pleased with our Q3 FY 2020 results. For a seventh consecutive quarter, we delivered double-digit growth in EBITDA, while hitting our free cash flow targets, continuing to win great new work, growing backlog and advancing our transformation into our industry's premier professional services firm.

For the third quarter, we delivered adjusted EBITDA of $187 million, which is an increase of 18% over the prior year and above our expectations for the quarter. The benefits of our ongoing initiatives to expand margins contributed to this outcome. The segment adjusted operating margin was 13.2%, an increase of 250 basis points over the prior year, setting a new quarterly record for the professional services business. With $3.1 billion in new project wins during