2023 Annual Report
Extending Our
Advantage
Intuit Dome
United States
Contents
02
08
Letter from the CEO
Our Think and Act
Globally Strategy
04
FY23 financial
performance
05
Accolades
06
Work highlights
10
Investing In
Our People
18
Transforming
How We Work
22
Extending Client
Relationships
26
Delivering
Sustainable
Legacies
31
Corporate
governance
Our purpose
Delivering a Better World
Our vision
We believe infrastructure creates opportunity for everyone—uplifting
communities, improving access, and sustaining our planet.
By bringing together the best people, ideas, and technical expertise, we
partner with clients to turn their ambitions into action, and we embrace
our core values—Deliver, Collaborate, Innovate, Sustain, Thrive, and
Safeguard—in everything we do.
Our values
Deliver
Collaborate
Innovate
We grow our business through
relentless client focus, operational
excellence, and exceptional
project execution.
We connect unrivaled expertise
from around the world to
anticipate and solve our clients’
most pressing challenges.
We think without limits and embrace
new ideas, shaping digital solutions
to help clients address current and
future challenges.
Sustain
Thrive
Safeguard
We take action to make a positive
impact on the planet, enrich the
communities we touch, and build
legacies for future generations.
We build diverse teams, create an
inclusive workplace, and provide
opportunities where each one of our
people can reach their full potential.
We operate ethically and with
integrity, while prioritizing safety
and security in all that we do.
•
1
2023 Annual Report
Dear
stockholders:
In fiscal 2023, we celebrated another
monumental year. Across each of our
strategic and financial objectives, we
met or exceeded our target metrics.
Our revenue growth continued to
accelerate, our design backlog
achieved record levels, our win rates
are at or near all-time highs, and our
position in the marketplace has never
been stronger.
We owe this success to our incredible teams who are committed to
providing the best service to our clients and realizing our purpose
of delivering a better world. As we continue to lead the industry,
we recognize that our people are our most valuable asset. Their
technical expertise, agility, and teamwork set us apart and drive
our innovation. And more importantly, we continue to look after our
colleagues with safety performance that leads our industry.
By honoring our commitments and through effective
collaboration, we are successfully expanding our long-term
competitive advantage and positioning AECOM as the best place
for our people in the industry.
With our teams thinking and acting globally more than ever before,
we achieved numerous milestones throughout the year, including:
• By concentrating our capital and technical expertise on our fastest-
growing markets worldwide, we have attained a high win rate on
the most profitable opportunities. Our design business achieved
record wins, and with a record backlog, we are poised for further
growth. By generating strong and consistent cash flow, we are
able to invest in our workforce continuously, while also investing to
create shareholder value.
• Through the execution of our Think and Act Globally strategy,
we brought the full power of our company to our pursuits and
won positions on some of the world’s most complex programs.
Notable wins during the year included the Brent Spence Bridge
Corridor project in the U.S., the Pure Water Southern California
program, multiple environmental contracts supporting the U.S.
Navy, the Chemours green hydrogen facility expansion in France,
transformative projects with NEOM in Saudi Arabia, the Tsing Yi–
Lantau Link in Hong Kong, and Western Harbour Tunnel in Australia.
In each of these marquee projects, our expanded addressable
market in program management and advisory is providing a critical
advantage.
• We further invested in technical excellence and professional
development through award-winning learning programs and
enhanced Career Paths resources. We are committed to
sustaining this momentum in the upcoming year, including
through the launch of our latest Global Technical Academies
courses. Our own best-in-class experts develop these courses
and help ensure we continue to deliver the greatest possible
outcomes for our clients around the world.
• In an increasingly digital world, we advanced digital delivery
through automated and computational design, deploying new
products like Program Management’s Program Advance and
expanding our rapidly growing digital consulting business. Similarly,
we enhanced global collaboration with our Enterprise Capabilities
teams, expanding our capability to deliver more efficiently. We
will continue to advance our digital strategy, aiming to create a
truly differentiated client experience by leveraging products like
PlanEngage™ and implementing our most advanced digital tools
and methods through Enterprise Capabilities.
• We also took bold steps to embed sustainability and resilience
into our work, establishing an industry-leading profile. Our ESG
advisory practice grew at a double-digit pace, with wins including
a sustainability component increasing nearly 300%. We solidified
our position as the leader in helping our clients to decarbonize,
transition to renewable and sustainable energy sources, enhance
water security, and invest in nature and biodiversity. Furthermore,
2
AECOM I am incredibly proud of
where our organization stands
today. Our consistently strong
performance is expanding our
competitive advantage and the
long-term earnings power of the
business to deliver growth into
the future.
—Troy Rudd
I’m proud of the positive societal impact we made for the
communities we serve. Internally, we achieved our near-term 20%
gender diversity target for our leadership team and continued to
progress against our regional diversity targets while fostering an
environment where all voices are respected and valued.
• Reflecting our focus on value creation, we allocated approximately
$475 million of capital to shareholders through our quarterly
dividend and share repurchase programs. In addition, we increased
our quarterly dividend by 22% in November, marking the second
year of annual dividend increases of more than 20%, and increased
our share repurchase authorization to $1 billion. Our commitment
to value creation was further reflected in our long-term financial
growth outlook we unveiled in December, which includes an
expectation for strong organic NSR growth, further margin
expansion, double-digit per share earnings growth, and continued
strong free cash flow.
As we look ahead, the strength of our company’s foundation is
unparalleled—and with demand at unprecedented levels, the
opportunities in our markets remain equally strong. With the best
technical consultants in the industry, an aligned culture focused
on global collaboration, and our investments in the highest-
returning markets, I remain confident the best days for AECOM
are ahead of us.
We appreciate your continued support and look forward to another
successful year.
Troy Rudd
Chief Executive Officer
3
2023 Annual Report FY23 financial
performance
Our strong fiscal 2023 performance met or exceeded our guidance on every key
financial metric. Reflecting our culture of collaboration and focus on winning what
matters, our full-year win rate set a new record and contracted backlog in the design
business increased by 15%1 to an all-time high.
In addition, we extended our track record of outperformance with record profitability,
continued industry-leading margin expansion, and strong cash flow. These successes
reflect the benefits of continued execution of our strategy, high-returning organic
growth, and our technical advantage.
By expanding our addressable market in program management and advisory, we aim
to support clients with their most critical projects and programs. Simultaneously,
by developing our digital delivery capabilities, we enhance our ability to meet their
evolving needs. In this strong position, we are ideally suited to capitalize on global
investments in infrastructure, sustainability, resilience, and the energy transition, which
are expected to drive strong demand in 2024 and beyond.
+15%1
Record design
contracted backlog
+70%
Value of wins greater
than $50M since 2019
Organic NSR2
growth
Record segment
adjusted3 operating
margin4
Double-digit adjusted3
EBITDA5 growth
Double-digit adjusted3
EPS growth
Strong free
cash flow6
8%
14.7%
$964M
$3.71
$591M
$586M
5%
14.2%
$886M
$3.40
FY’22
FY’23
FY’22
FY’23
FY’22
FY’23
FY’22
FY’23
FY’22
FY’23
+10%
Design NSR1 growth
in Q4‘23
+60 bps
Exceeded our full-year
guidance
+10%
Adjusting for foreign
exchange impact to
FY’23 results
+12%
Adjusting for foreign
exchange impact to
FY’23 results
9th
Consecutive year
of delivering on free
cash flow guidance
4
AECOM Accolades
#1
#2
#3
Transportation
Design Firm
Facilities Design
Firm
Environmental
Engineering Firm
Environmental
Science Firm
Chemical
Remediation
Mass Transit
and Rail
Airports
Highways
Dams and
Reservoirs
Environmental Firm
Water Design Firm
Green Design Firm
Marine and Ports
Water Transmission
Lines and Aqueducts
Wastewater
Treatment Plants
Hazardous Waste
Education
Sewer and Waste
Water Treatment and
Desalination
Clean Air Compliance
Site Assessment and
Compliance
Water Supply
#4
#6
Program
Management Firm
Green
Contractor
Source: 2023 ENR Rankings, reflecting global revenue
Fortune World’s Most
Admired Companies
Named to Fortune magazine’s World’s
Most Admired Companies, and No.
1 in our industry in 2023 for a third
consecutive year
Ethisphere World’s
Most Ethical Companies
Named by Ethisphere one of
2023 World’s Most Ethical
Companies for the seventh year
Human Rights
Campaign Foundation
Earned the Equality 100 Award,
HRC Foundation’s top score on its
assessment of LGBTQ+ workplace
equality for a sixth consecutive year
5
2023 Annual Report 1
2
5
4
3
6
7
8
9
Work
highlights
10
11
12
1. SEA S Concourse
5. Cloudburst Flooding Mitigation
9. NEOM International Airport
Extending our leadership in the aviation
sector, our teams will lead the renovation
of the new S Concourse at Seattle-Tacoma
International Airport—one of the busiest
airports in the U.S.
Continuing our decades-long client
relationship with the City of New York, our
teams will deliver innovative resilience
solutions to improve stormwater
management and mitigate flooding.
2. Pure Water SoCal
6. Uisce Éireann
Through our provision of program
management support services for the Pure
Water Southern California program, we are
employing the latest in water recycling and
reuse technologies to create a high-quality,
climate-resilient water supply for up to 15
million people.
3. Dallas Fair Park
Our Program Management global business
line will deliver this marquee project to
revitalize Fair Park in Dallas, Texas.
4. Brent Spence Bridge
We’ve been selected to deliver the Brent
Spence Bridge Corridor Project, one of
the United States' most transformative
infrastructure projects and a major recipient
of federal infrastructure funds.
As investment in water infrastructure
accelerates globally, we’ve been selected
to a major capital works program for
Ireland’s public water utility.
7. Chemours Green Hydrogen
As Chemours invests in green hydrogen,
we’re providing the expertise to realize the
facilities it will need to support production of
this sustainable future fuel.
8. Ukraine Reconstruction
We have formalized partnerships with the
Government of Ukraine to provide program
management and technical advisory support
for the nation’s reconstruction.
Deploying our global program management
and aviation expertise, our teams will play
a key role in the delivery of the new NEOM
International Airport.
10. Tsing Yi–Lantau Link
Our world-class road infrastructure
expertise and vast, local transportation
experience prepare us to deliver this
critical transportation link, extending our
role on Hong Kong’s Northern Metropolis
development.
11. Western Harbour Tunnel
We're providing the detailed design for this
critical transport link that will create a bypass
of Sydney’s central business district and
minimize impact to the marine environment.
12. RiverLink New Zealand
We will provide multidisciplinary expertise
to realize this critical program to revitalize
and safeguard one of New Zealand’s
largest cities.
6
AECOM 3
1
6
4
8
9
11
2
5
7
7
10
10
12
7
2023 Annual Report Think and Act
Globally Strategy
We are at our best when we think and act globally. Launched in
2020, our strategy comprises four pillars that have positioned
us for continued growth. Through developing our teams’
technical expertise, deepening our client relationships,
transforming the way we work through technology and
digital platforms, and enhancing our position as a leading
infrastructure and sustainability consulting company, the
execution of our strategy is setting new standards for
excellence in our industry.
8
AECOM Investing In
Our People
We are making AECOM the best place
to be in our industry—a place where you
are welcomed, trusted, and empowered
to solve our clients’ most complex
challenges.
Transforming
How We Work
We are deploying world-class technology
and digital innovations to deliver our work
significantly faster and with even greater
accuracy, which improves the client
experience and creates more flexible ways
of working.
Extending Client
Relationships
We are expanding our addressable
market through our Program
Management global business line and
advisory expertise while focusing
our technical experts on our highest
returning markets to deliver long-term
profitable growth.
Delivering
Sustainable
Legacies
We are leading the change toward a more
sustainable, resilient, and equitable future
through our own operational commitments
and by helping our clients.
9
2023 Annual Report Investing In
Our People
We continue to attract and retain our
industry's best talent with a winning
employee value proposition, offering
learning, development, and career
opportunities within a culture that
rewards collaboration and innovation.
Throughout the year, we invested in
our people and programs that enrich
our employees’ experience and
success. This included continued
support and focus on safety and well-
being, and personal and professional
development programs.
10
AECOM AECOM is home to the industry's best technical
minds—approximately 52,000 technical
and business professionals who thrive in an
environment that supports their learning and
growth, encourages innovation, and celebrates
great project and client outcomes.
Our ability to deliver excellence and a high level of service to our
clients requires attracting and retaining the industry’s best talent
and advancing our equity, diversity and inclusion objectives.
We’ve made significant investments to support the learning
and development of our people so they can build their skills and
rewarding careers with us, provide competitive pay and benefits so
they can make the best choices for themselves and their families,
and are building a culture of flexibility, trust, and performance so
they can be at their best.
Delivering excellence
through technical expertise
Market trends, client needs, and delivery approaches are always
evolving, and clients depend on our strategic insight and advisory
capabilities—in addition to our technical expertise—to address
their challenges. To ensure our teams are project-ready, we
continue to make investments in technical learning and professional
development programs that build and enhance technical skills,
future-proof careers, help us exceed client expectations, and
ensure we stay ahead of industry trends.
Building technical skills in AECOM’s Global Technical
Academies
All employees are offered access to our proprietary Global
Technical Academies. With course content developed by our own
subject matter experts, these academies provide our people with
high-quality structured learning and development opportunities
that build knowledge and networks, extend technical skills, and
foster our culture of technical excellence and quality.
·
·
·
·
·
·
Buildings + Places Academy
Environment Academy
Global Program Management Academy
Sustainable Legacies Academy
Transportation Academy
Water Academy
Broadening the horizons
of our Technical Practice
Network
These development programs complement our global Technical
Practice Network, the entry point to a world of technical experts,
training, standards, templates, and other resources that connect
our people and capabilities across regions and business lines
via 81 Technical Practice Groups, Tool Channels, and other
Functional Groups.
Throughout 2023, we commenced a process to better align our
Technical Practice Groups with areas of business growth and
launched consolidated, digital-focused groups supporting Building
Information Modeling, Data Science, and GIS.
The vast majority of our people across all business lines and regions
have joined at least one Technical Practice Group, complementing
additional self-directed, personalized learning available via LinkedIn
Learning, Autodesk, and Bentley through AECOM University and our
Global Technical Academies.
11
2023 Annual Report GOL D
2023
Scaling our professional development programs
Leadership at All Levels is our full range of professional
development programs, offering both regional and global
experiences. Designed to cultivate innovative thinkers, supportive
managers, and effective leaders, the tailored programs develop the
leadership skills and capabilities our employees need irrespective
of where they are in in their career journeys.
CEO Circle, our best-in-class learning experience designed for
AECOM’s top strategic, operational, and technical leaders, was
recognized with a gold medal for Best Advance in Leadership
Development as part of the Brandon Hall Group’s HCM Excellence
Awards. Participants in this program are selected to take part in a
year-long learning experience that includes in-person and virtual
workshops and coaching. Through CEO Circle, we are developing
the next generation of AECOM’s executive leadership.
Leadership at All Levels
Professional development programs that support
employees throughout their careers
A global program designed to
progress employees into trusted
advisors and develop an
enterprise mindset.
A global program focused on
building strategic, well-rounded
leaders with a global perspective
for all career paths.
Early Career
Regional career development programs
that help participants establish core
foundations of knowledge and key
business learnings to launch their
careers at AECOM.
A series of programs and courses that
the balance between delivering great
work and supporting their teams.
A premier learning
experience for the strongest
drivers of our business and
client development that
features the Center for
Creative Leadership as a
learning partner.
An award-winning
executive leadership
development program
designed to deliver a best-
in-class learning experience
for the next generation of
executives. Features Wharton
Executive Education as a
learning partner.
12
AECOM Building illustrious
and rewarding careers
From a progressive career development philosophy that offers multiple paths to Global Technical
Academies that provide structured technical learning and professional development programs
for learners at every career level, our people are supported with resources to build connections
throughout our organization and explore the opportunities that inspire them.
To help navigate the tremendous opportunities at AECOM, we encourage everyone to develop
their core skill set and capabilities and then explore different roles across our business to
broaden their experience.
“
One benefit about a large organization like AECOM is
the opportunities to chart your own career path. You
can quite literally transform your career over and
over again without ever leaving AECOM. Whether
you stay focused on a single career trajectory or move
between multiple paths, there is no limit to what you
can achieve if you are motivated and open to new
opportunities.
“
The sky is the limit at AECOM. You
should have the ambition to rise to the
top of the organization. You should
be open to opportunities to move to
different roles in the organization—to
a new location, a different business
line, a new type of service, a different
career path.
Lindsey Cavallaro
Department Manager
Environmental Planning
and Permitting
Asif Shafi
Managing Director
Civil Infrastructure, Middle
East and Africa
Technical
excellence
Growth and client
management
Project and program
management
Business area
leadership
Work closely with clients,
building strong relationships
and developing new business
opportunities as part of our
growth strategy.
Work closely with clients
on planning, executing, and
overseeing activities across the
project life cycle or on large-
scale and complex portfolios of
projects.
Leading our business and
workforce, overseeing a
geographic area, business
line, or function.
Deliver our core design and
consulting services, and
career advancement could
include practice leadership,
or an AECOM Fellowship,
which recognizes thought
leaders in our industry who
make significant contributions
to our company, clients, and
communities.
13
2023 Annual Report Creating a culture of flexibility,
trust, performance, and well-being
Freedom to Grow is our work-life balance framework designed
to support the balance and flexibility our people need to thrive
and deliver their best for their team and clients. Employees and
managers work together to evaluate work schedules and locations
to align on a flexible work arrangement that prioritizes work
responsibilities while supporting individual needs and includes at
least three days a week, or 60% of their schedule, working from an
AECOM office or client site.
Eligible employees in the U.S. and Canada also enjoy our Flexible
Time Off policy, which eliminates vacation accrual limitations,
ensuring our people can take time off to support their needs and
well-being and be their best when at work.
Flexibility at AECOM goes far beyond just when and where we work.
We consider our holistic experience, respecting diversity in work,
communication and thinking styles, and what makes each of our
employees unique.
Work time
Break the 9-5
This includes our culture of well-being, which helps safeguard our
people, clients, and communities. By being well, we bring our best
selves to everything we do personally and professionally. We are
focused on six pillars of well-being: emotional, financial, intellectual,
physical, social, and for the planet.
This year, in support of emotional well-being, we introduced a new
global Mental Health Allies network—dedicated AECOM colleagues
who are equipped with the language, tools, and knowledge to speak
one-on-one with those who are facing a mental health challenge
and connect them to resources that can help. Global Mental Health
Allies are specially trained by a Certified Mental Health First Aid
instructor to understand the signs and symptoms of mental health
challenges and be well-versed in how to listen nonjudgmentally and
respect privacy.
Time off
Take a break
Work locations
Choose where you work
Being
Be yourself
Our people have the
Freedom to Grow
Workstyle
Perform at your best
Thinking
Play to your strengths
Communicating
Speak freely
14
AECOM Fostering a welcoming and
respectful environment
AECOM is committed to creating a respectful, inclusive
culture that celebrates diversity—allowing us to bring our
best ideas to our clients, which is what ultimately contributes
to a strong organization and better outcomes for the
communities we serve.
Enterprisewide awards received by AECOM led by assessments
and submissions in the Americas region include: the top score on
the Human Rights Campaign Foundation’s assessment of LGBTQ+
workplace equality for the sixth consecutive year, the 2024
Military Friendly Employer Friend award by Viqtory, and the 2024
Diamond Award for Diversity, Equity, Inclusion, and Belonging by the
American Council of Engineering Companies of Pennsylvania.
In Europe and India, we received our Silver level diversity and
inclusion accreditation with The Clear Company, after our first
Bronze designation received just last year. The Clear Company is a
recognized Inclusion Standard that provides clarity and direction
to continually improve our inclusive and fair work practices. At
the Employers Network for Equality & Inclusion (enei) Inclusivity
Excellence Awards, AECOM won the Inclusive Culture Award and
Influencer of the Year. The awards showcase organizations and their
achievements in promoting and progressing workplace diversity,
equality, inclusion, and belonging.
Accolades received in Asia include the Inclusive Enterprise Gold
Award from the Dream Come True Foundation in Hong Kong, in
recognition of companies employing young people with special
educational needs and providing them with meaningful career
prospects. AECOM Hong Kong is also a key partner in the Inclusive
100 initiative launched by the Dialogue in the Dark (HK) Foundation,
which aims to promote inclusive workplaces that value people with
varying abilities.
In Australia and New Zealand, we
attained Bronze Tier Status from the
Australian Workplace Equality Index
(AWEI), a national benchmark on
LGBTQ+ workplace inclusion. AWEI comprises the largest and only
national employee survey designed to gauge the overall impact of
inclusion initiatives on organizational culture as well as identifying
and nonidentifying employees. The Index drives best practices
in Australia and sets a comparative benchmark for Australian
employers across all sectors.
We are advancing
efforts globally in
four key areas:
Building diverse talent
Ensuring, through our recruitment
efforts, that our teams reflect the
diversity of the communities we serve
with a focus on building leadership
accountability, and partnering
with nonprofit organizations and
universities to build the talent pipeline
for the future.
Expanding understanding
Expanding understanding and
empathy among employees through
employee resource groups, ED&I
events and celebrations, unconscious
bias training, and family-friendly
benefit policies.
Thinking without limits
Thinking without limits by prioritizing
social equity and impact in every
project we pursue and in every
innovative solution we deliver.
Enriching communities
Enriching communities through pro
bono work, volunteerism, philanthropy,
and strategic partnerships.
15
2023 Annual Report BeBOLD: Americas
Black community
Beyond Abilities: Americas,
Europe, and India
Community for the disabled,
neurodiverse, and caregivers
Connect: Americas,
Asia, Australia, and
New Zealand
Early career professionals
Ethnic Diversity Network:
Europe and India
Community for ethnic
minorities
Gender Alliance:
Europe and India
Community for gender
empowerment
JUNTOS: Americas
MOSAIC: Americas
Hispanic community
Asian Pacific Islander
community
Pride: Americas,
Europe, Australia, and
New Zealand
LGBTQ+ community
Veterans Alliance:
Americas
Veterans community
Women’s Leadership
Alliance: Americas
Community for gender
equality
Cultivating community and connection
Our Pride ERG does incredible work to develop tools and resources
to educate and ensure the visibility of LGBTQ+ groups and
allies. This year for Pride Month in June, our Pride ERG chapters
collaborated to create a one-of-a-kind, unifying event that truly
represented how we Think and Act Globally. 24 hours of Pride
was a global event that consisted of informative and interactive
programming spanning across the Americas, Asia, Europe and India,
and Australia and New Zealand. The wide-ranging list of events
included everything from trivia and DJ sets to insightful panels
with LGBTQ+ colleagues and speakers to sessions for parents of
LGBTQ+ children. It was an opportunity for our employees to share
stories, resources, and demonstrate allyship.
We continue to encourage and support bonding and community
within AECOM. Employee resource groups (ERGs) help strengthen
the connections between us and the communities we serve. They
provide rich opportunities for the exchange of ideas and powerful
dialogue, professional networking and development, talent
attraction, and philanthropic impact.
In 2023, we launched two new global ERGs: Beyond Abilities, a
community for the disabled, neurodiverse, and caregivers in the
Americas, Europe, and India that aims to foster a collaborative and
inclusive environment to support people of all abilities, so they
are empowered to succeed at AECOM; and Connect, a community
for our early career professionals spanning the Americas, Europe
and India, and Australia and New Zealand that strives to cultivate
an environment where insights from all levels of expertise can be
considered. Our ERGs lead many cultural activities to help raise
awareness and understanding of what makes us unique and provide
an important platform and connection for our people.
16
AECOM Celebrating, attracting, and
retaining women in our industry
One of our key commitments to improve social outcomes across our
work is to ensure our teams reflect the diversity of the clients and
communities we serve. We continue to make progress on gender
diversity targets, including the achievement of our 20% target for
women in leadership roles, while continuing to progress against our
35% target for our overall workforce.
To celebrate the women in our industry, we take part in International
Women’s Day in March and International Day of Women in
Engineering in June on a global scale. Our women colleagues are
recognized throughout the year, but we set these moments apart by
showcasing the incredible contributions made by our colleagues and
the career possibilities that are available here.
17
2023 Annual Report Transforming
How We Work
As project delivery approaches evolve
and rapid advances in technology
present new opportunities to realize
efficiency and quality improvements
on projects of all sizes, we continue
to invest to deliver better project
outcomes for our clients—both in
advancing new ways of working
and in digital technologies,
tools, and innovations.
18
AECOM Harnessing the full strength of our
technical expertise and digital capabilities
Whether through our expanding digital project delivery efforts or
our digital-focused consulting services, digital transformation is
driving our evolution as a business—challenging us to explore and
implement new ways of connecting, collaborating, and delivering
projects while helping our clients progress their own digital
journeys.
This is no more apparent than in the rapid advances in generative
AI technology encompassing text, imagery, and code—and equally
rapid adoption of chatbots like ChatGPT and other deep-learning
and large language models (LLMs)—which represent an inflection
point for our industry. Throughout 2023, we explored how AI can be
used to extend our competitive advantage.
Another great example of our digital innovation in action is our
use of the latest computational design technologies on our major
infrastructure projects throughout 2023. From bridge and tunnel
design to water treatment facilities, we are using algorithms and
parameters to solve design challenges, achieve workflow
efficiencies, and improve accuracy, all while sharing insights with
our clients to build their understanding and accelerate their own
digital adoption efforts.
Alongside ongoing internal training to accelerate our teams’
adoption, we continue to deploy computational and parametric
design at scale, demonstrating the power and potential of
transforming how we work.
Across all of our work, our network of Enterprise Capabilities (EC)
centers continues to grow and impact as both an extension and
complement to our regional teams’ capabilities and as the anchor
to our global workshare efforts. Operating across seven countries
and comprising more than 2,500 technical professionals, our EC
network provides specialist and niche technical services that
utilize the latest industry insights and technology, drive margin
improvement, and extend our competitive advantage.
AECOM BidAI
Developed in partnership with Microsoft, AECOM BidAI is AECOM’s
generative AI tool to support the development and delivery of
key pursuits. Launched across our Marketing teams, AECOM
BidAI provides instant and consistent access to our global bid
and pursuit data and can significantly reduce the time required to
produce draft tenders.
Beyond expediting tender processes, BidAI serves as the engine
behind a more efficient and standardized knowledge management
approach. This, in turn, enables a sharper focus on our clients and
their evolving needs. As our team members continue to enhance their
understanding of AI best practices and our governance framework
evolves to maximize BidAI’s value, we plan to extend its usage across
global teams. The commitment to educating ourselves on AI’s
capabilities and refining its application underscores our dedication
to staying at the forefront of technological advancements, ultimately
enhancing our ability to deliver outstanding solutions for our clients
on a global scale.
19
2023 Annual Report
PlanEngage™: Faro Mine Remediation
In executing the Faro Mine Remediation
project, our paramount objective was
to restore the area to the First Nations
communities in the region, surpassing
its initial state. A considerable challenge
involved ensuring timely access to
information. Through the establishment
of technical credibility and the assembly
of an expert team, we actively pursued
digital solutions, leveraging tools like
PlanEngage™. Clients enthusiastically
embraced transformative change,
transitioning from conventional methods
to prioritizing efficiency and collaboration.
Project teams have acknowledged the
advantages of digital transformation,
fostering improved collaboration through
real-time information accessibility.
In today’s landscape where data stands as a
vital resource, PlanEngage™ has facilitated
swift access to the right information,
transforming it from aspiration to reality.
AECOM’s distinctive approach, utilizing our
global reach and expertise across various
business lines, remains pivotal in setting
us apart. The continuous commitment to
innovation and collaborative solutions
positions us at the forefront of industry
excellence. As we navigate the evolving
landscape, our dedication to enhancing
project outcomes and community impact
will be the cornerstone of our success.
AI-enabled flood modeling tool
Our team in the Water business line in
Australia developed an AI-enabled solution
that radically accelerates the process for
developing a predictive flood model for a
project.
20
This work typically required a significant
amount of manual effort that through this
digital solution can be done automatically,
reducing the amount of time required by
up to 90%. This approach allows us to not
only improve the quality and accuracy of the
product the client receives, it also frees up
our professionals to spend more time with
clients on higher-value work.
Initially intended to develop flood models,
the solution is now being applied across
a variety of applications across all of our
business lines, underscoring our ability to
deploy unique solutions at scale globally.
AECOM Computational design: JFK International Airport Terminal 1
As our aviation projects, notably the
modernization of JFK Terminal 1, grow in
complexity, we’ve harnessed the power of
digital tools to revolutionize our support
for clients and deliver effective solutions.
In addressing challenges within the
framework of an aging airport, our team
utilized computational and automated
design techniques specifically tailored to
the redevelopment of JFK’s new Terminal 1.
Employing software codes, we established
streamlined paths for design elements,
significantly accelerating processes that
traditionally consume much more time.
When presenting this innovation solution
to the Port Authority of New York and New
Jersey, the response was nothing short of
enthusiastic—a virtual standing ovation.
This unique approach, inspired by global
best practices, embodies the AECOM way
of problem-solving. Drawing insights from
diverse projects worldwide positions us
to bring cutting-edge practices to any
challenge, making a transformative impact in
our industry.
Automation Factory
The adoption of automated design
approaches is central to transforming how
we work and to realizing significant time and
efficiency gains for our people and clients.
Compare spaces and rooms leverages
‘Spaces’ in Revit to illustrate changes in any
given space when an architectural model is
changed, allowing rapid modification.
Through collaboration across business
lines and our Digital and Enterprise
Capabilities teams, we launched several
new, universally accessible tools in 2023 via
our Automation Factory.
Bulk place families provides a streamlined
approach to populating models with digital
objects.
Duct system export facilitates the
connection of airflow across duct systems in
separate models, allowing streamlined total
airflow calculation and use of automatic duct
sizing if there is sufficient space.
21
2023 Annual Report Extending
Client
Relationships
We are collaborating more than ever
before. Through prioritizing strategic
opportunities and leveraging our
advisory services and Program
Management global business
line, we are winning what matters
and nurturing long-term client
relationships across our core and
emerging markets.
22
AECOM AECOM has a good pool of experienced technical
specialists who—as a client—work together as
a single team with excellent technical and team
leadership. We developed a culture of frank, open,
and honest discussion and a team approach, which
made it easier when the projects took unexpected
twists and turns and a variety of matters.
—National Grid, Europe
The reason I would recommend AECOM is due to their
deep technical expertise and broad geographic reach.
—DuPont Specialty Products USA, LLC.
The AECOM team is phenomenal. The level of detail
in the structural analysis and modeling is the best in
the business… And that they can always figure out a
solution that puts the mission first. Not only are they
professional giants in the industry, but it is also a
pleasure to work with this team.
—U.S. Navy
AECOM’s global reach of available experts is excellent
and provides flexibility and great coverage on major
projects. All of our AECOM team members were highly
accessible, well communicated, and well resourced.
—RES Australia
By expanding our addressable market in program management and advisory and the value we
bring through our technical leadership, we are expanding the scope of work we can deliver for
our clients as projects and programs increase in size and complexity. This is transforming the
nature of our wins.
Through these services, we have built a competitive advantage in participating throughout the
project’s entire life cycle, by engaging with our clients earlier and longer. Our culture of global
collaboration creates competitive advantages that allow us to win what matters, which continued
to our record full-year win rate on the highest-value pursuits and a more than doubling of our
addressable share of profit opportunity on a project. As a result, our share of wins valued at greater
than $50 million has increased by 100% compared to a few years ago, and we have won more than
80% of our enterprise critical pursuits.
23
2023 Annual Report Program Management
Our world-class program management business is increasingly
valuable when combined with our global scale, advisory
capabilities, and our technical expertise. This has allowed us to
create a firm that clients will always seek out to support their most
critical projects and programs.
Notably, our program management business has experienced
substantial growth, doubling in size over the last three years. This
success enhances the long-term earnings power and visibility of
the company.
Solving our clients’ most difficult challenges
through the full strength of our capabilities
City of Norfolk Flood and Coastal Resilience Program
Norfolk, Virginia, stands as a major coastal city and critical
maritime hub with a rich history. Yet, rising sea levels and storm
surges pose clear challenges to its dynamic waterfront and
critical infrastructure. Recognizing this vulnerability, the city
has selected an AECOM-led joint venture to spearhead its $2.6
billion Coastal Storm Risk Management (CSRM) Program.
As an initiative of the Army Corps of Engineers (USACE), the
program aims to increase the city’s infrastructure resiliency,
protecting it from coastal flooding and mitigating damage
from significant storm events. Drawing upon our extensive
knowledge of coastal resilience and decades of collaboration
with the USACE, the team has assembled local professionals
and subject-matter experts to identify mitigation measures
against flooding and extreme weather events.
Ukraine infrastructure delivery advisor
Embarking on one of the world’s most intricate program
management endeavors, AECOM has partnered with the Ukrainian
government to focus on the reconstruction of the nation. In June
2023, a memorandum of understanding with Ukraine’s Ministry
for Communities, Territories, and Infrastructure Development was
formalized to serve as a reconstruction delivery partner and provide
infrastructure and program management advisory support to help
Ukraine achieve its reconstruction goals.
The partnership will leverage our vast program management
capabilities, as well as our extensive experience participating in
reconstruction efforts around the globe, ranging from initial response
to recovery, reconstruction, and long-term resilience. In addition to
designing and establishing an overall program management approach,
a key component of the work will help create opportunities for public
and private investors to participate in the future reconstruction of
Ukraine’s infrastructure.
24
AECOM Eglinton Crosstown West Extension
By connecting its industry-leading transportation expertise and unique program management capabilities through a global and
collaborative culture, AECOM was selected by Metrolinx to serve as the delivery partner for the Eglinton Crosstown West Extension in
Toronto. The transformative project will extend the Eglinton Crosstown Light Rail Transit line by 9.2-kilometers, from the future Mount Dennis
Station to Renforth Drive. Once complete, it will create a continuous rapid transit line that stretches from Scarborough through midtown
Toronto, and into Mississauga.
As delivery partner, AECOM will be an integral part of the Metrolinx delivery team across the breadth of the infrastructure project.
This includes a global and multi-disciplinary service offering, integrating the Company’s program management, advisory, commercial
management, procurement and supply chain management, and project supervision services, among others. By bringing together its full
strengths, AECOM will help deliver a project that will improve the quality of life for residents and commuters, and contribute to greener,
more sustainable communities.
Chicago Department of Water Management Capital
Improvement Program
In partnership with minority-owned business enterprise DB Sterlin
(DBS), we have secured a contract to provide program management
services to the Chicago Department of Water Management (DWM).
The DWM facilities play a crucial role, supplying 750 million gallons
of drinking water to residents daily. Our joint venture aims to improve
this vast water distribution system, which spans a length of 4,300
miles, 12 pumping stations, and two of the world's largest water
purification plants.
A key focus of this project is to address one of the most significant
health and equity challenges associated with water delivery in the
U.S.—lead service line replacement. Through close collaboration,
AECOM and DBS will support the ongoing delivery of high-quality
drinking water and efficient management of waste and stormwater
infrastructure as well as the replacement of 400,000 lead service
lines. Employing a facility planning, design, and construction
management approach, our team is committed to ensuring a
seamless transition, promptly addressing DWM’s long-term planning
needs while minimizing community disruption.
25
2023 Annual Report Delivering
Sustainable
Legacies
Around the world, demand for
sustainability and resilience has
never been greater. The effects
of climate change, worsening
impacts from extreme climate
events, and increasing recognition
of societal challenges compel us
as an organization to act. That
is the thrust of our Sustainable
Legacies strategy—to ensure
that the work we do in partnership
with our clients leaves a positive,
lasting impact for communities
and our planet.
26
AECOM Over the past year, we have continued to take great strides toward our
ambitions. We have continued to reduce our emissions footprint, particularly
within our supply chain, that constitutes the majority of emissions. We also
continued to advance our ESG Advisory offering with our clients, including
a more than fourfold increase in the revenue generated from projects that
include an ESG-embedded service. In the year, we also achieved our near-term
target of at least 20% women comprising our leadership, reflecting further
progress on our social value priorities.
1
2
3
Achieve net zero
carbon emissions
by 2040
We have furthered our own carbon emissions goals by achieving
operational net zero beginning in fiscal 2021 while also committing to
reach science-based net zero carbon emissions by 2040.
Embed sustainable
development and
resilience across
our work
We introduced ScopeX™, a first-of-its-kind approach with the goal of
substantially reducing carbon impact on major projects. We will also
embed net zero, resilience, and social value targets into our client
account management program.
Improve social
outcomes
We believe diversity and inclusion enable better outcomes for clients, a
deeper understanding of community challenges, and more innovative
solutions that propel the industry forward. As part of this pledge, we
have set an industry-leading, near-term target of women comprising
at least 20% of senior leadership roles and at least 35% of the overall
workforce. In addition, we have implemented new required unconscious
bias training and set specific targets within each of our regions to
advance our equity, diversity, and inclusion goals.
4
Enhance
governance
To better assess ESG risk factors in potential projects, we have
deployed an enterprise framework supported by leadership
accountability and advocacy through the audit of specific ESG
targets and metrics on an annual basis.
27
2023 Annual Report Further progressing our
Sustainable Legacies strategy
1
Furthered our
commitment to
biodiversity and
nature
We recognize that our focus
on the environment cannot
just be limited to carbon
emissions—we must be
evaluating the impact of our
operations and our client
work on biodiversity and
nature more holistically. That
is why during fiscal 2023 we
formalized a biodiversity
statement that has been
signed by our CEO, Troy Rudd,
and includes commitments
to support the Global
Biodiversity Framework of
reversing nature loss by 2030.
Furthermore, reflecting our
commitment to sustainability
and leadership in advancing
environmental stewardship
industrywide, we were
awarded the Terra Carta Seal
by the Sustainable Markets
Initiative in fiscal 2023.
28
Continued to grow our
ESG Advisory practice
through technical
excellence, including
our ScopeX™ process
2
As we continue to enhance the
sustainability of our operations,
we also continue to grow our ESG
Advisory practice to further embed
sustainability and resilience into our
client offering. With unprecedented
demand, we increasingly are
integrating sustainability services in
our projects, with revenue generated
from projects with an ESG-embedded
service up by more than four times
in fiscal 2023. Our leading technical
expertise, combined with our ambitious
approach to sustainability, is creating
a unique client value proposition that
is also contributing to record win rates
across our business.
One example of embedding
sustainability principles into
everything we do is our ScopeX™
approach, which considers materials,
site locations, logistics, and
construction methods to reduce and
eliminate a project’s impact on the
natural environment. We minimize
energy use, optimize sources
of renewable power, and, where
feasible, work with and enhance
natural habitats to eliminate carbon
emissions. We believe that ScopeX™
will be our biggest contribution to help
end the climate emergency.
By decarbonizing the built
environment and supporting our
clients to achieve their net-zero
agendas, we’re striving to improve the
cities and communities we serve and
deliver a better world.
3
Advanced our social
value initiatives
We believe that investing in local
communities to create positive
social and economic outcomes is
at the heart of generating social
value. We work with our clients,
partners, and suppliers to link
the opportunities presented
by our projects to the needs
of the local communities we
operate in, driving the creation of
positive, lasting legacies. Social
value is critical to achieving our
Sustainable Legacies strategy
and making sure that no one is
left behind.
In fiscal 2023, we continued to
advance our equity, diversity,
and inclusion initiatives in our
company with the achievement
of our near-term target of
20% women in leadership.
We also continue to make
further progress against
our 35% near-term target of
women companywide while
also advancing our nongender
diversity targets within each
region of our business.
4
Promoted
positive
impact in our
communities
Our corporate responsibility
platform is focused on delivering
access to safe and secure
infrastructure to those who need
it most via strategic nonprofit
partnerships, pro bono work,
skills-based volunteering, and
philanthropy. In fiscal 2023, we
continued to take a leading role in
the response to extreme events
that devastated communities.
This was no more apparent than in
the aftermath of the Maui, Hawaii
fires, where we contributed
nearly $300,000 through an
employee-matched donation
campaign in collaboration
with the American Red Cross’s
Hawaii Wildfires Relief Fund.
Funds raised contributed to
ongoing assessment activities,
distribution of relief supplies, and
other important work.
Our technical teams partner with
nonprofit organizations in their
local communities to provide
critical design, engineering, and
infrastructure solutions, and we
maintain our relationship with our
enterprise strategic nonprofit
partners—Engineers Without
Borders and Water for People. In
FY’23, our employees donated
more than $80,000 to Water for
People.
AECOM Reducing emissions towards our Science Based
Targets initiative-validated net zero targets
To keep up with the latest best practices and climate science, we set a more ambitious 2040
net zero target that was validated by the Science Based Targets initiative (SBTi) in 2022, making
AECOM one of the first companies globally to achieve this at the time. As part of our updated, more
ambitious net zero commitment, we are also targeting:
60%
50%
Reducing Scope 1 and 2 emissions
60% by 2030
(compared with 2018)
Reducing Scope 3 emissions
50% by 2030
(compared with 2018)
90%
Reducing all emissions
90% by 2040
(compared with 2018)
Our global Scope 1 and 2 emissions,
covering fleet vehicles and office energy,
respectively, declined by 61% from our fiscal
2018 baseline year as a result of key travel
and real estate initiatives. We continue to
make progress against this commitment
in various ways, including by increasing
the efficiency of our office spaces, further
extending sustainability guidelines for future
office refurbishments and relocations, and
transitioning our automotive fleet to either
more fuel efficient or electric vehicles.
Reducing our Scope 3 emissions means
focusing on our supply chain emissions
and business travel. Our supply chain
emissions have declined by 23%, including
a 65% reduction in business travel since
2018. We are looking to build on this
progress through initiatives such as our
expanded supplier engagement program,
through which we are reaching out to the
top 80% of our suppliers by emissions to
support them in setting targets and their
own decarbonization efforts.
Reducing all emissions 90% by 2040
(compared with 2018) and offsetting
remaining emissions in 2040 through high-
quality carbon removal projects—achieving
this long-term reduction target will mean
building on the initiatives across Scopes 1, 2,
and 3 as put in place for our 2030 targets.
We also maintained our operational net zero status in 2023 and commit to maintaining operational
net zero status annually. We achieved operational net zero through reduction of Scopes 1 and 2
emissions in line with climate science and offsetting remaining emissions.
Scope
Scope 1
Scope 2
Scope 3—Supply Chain (Purchased Goods & Services, Capital Goods)
Scope 3—Business Travel
Total
2018 emissions
(MtCO2e)
2023 emissions
(MtCO2e)
% change
33,718
104,307
2,740,482
158,182
3,036,689
23,745
30,113
2,214,243
56,032
2,324,133
- 30%
-71%
-19%
-65%
-23%
29
2023 Annual Report Leading by example:
Advising on the energy transition
With our own industry-leading sustainability journey to guide us,
we're helping organizations protect the environment, enhance
communities, integrate sustainable development into everyday
business, and improve governance.
These ambitions look different for every organization and
industry, so we help clients understand where they are in
the energy transition continuum and then develop a tailored
roadmap with tangible next steps so they can build momentum
to achieve their goals.
We're advancing our leading advisory position by partnering
with clients to navigate and accelerate their energy
transition. Our flagship global thought leadership report, The
Future of Infrastructure, Lost in Transition? is driving these
conversations. Based on qualitative and quantitative research
carried out with nearly 850 senior executives spanning nine
industries and 22 countries, it provides our clients and the
broader industry with practical, profitable, predictable, and
people-centric strategies to achieve net zero.
Powering New York with offshore wind
In line with our client, Equinor’s commitment to cleaner energy
for New York, the Beacon Wind project was carefully crafted
with a strategic approach. Our role centers on environmental
permitting and engineering for the offshore lease area, covering
128,000 acres south of Nantucket, MA. This area is integral to
Equinor’s portfolio, including Empire Wind 1, Empire Wind 2, and
Beacon Wind 1, collectively aiming to provide 3.3 gigawatts of
electricity to New York.
Community engagement is vital, involving Indigenous nations,
stakeholders, and local fishing communities to assess and
minimize the project’s impact on the local economy. Working
closely with the Bureau of Ocean Energy Management (BOEM)
and the National Oceanic and Atmospheric Administration
(NOAA), we are obtaining approvals for the site assessment plan
(SAP) and conducting essential surveys and studies.
COP28
As the sustainability consultant for the 28th UNFCC Conference
of Parties (COP28) in the United Arab Emirates (UAE), we played a
pivotal role in shaping a leading sustainability and environmental
management strategy, guiding the event toward carbon
neutrality. Our comprehensive approach established frameworks,
management guidelines, and carbon management plans,
integrating sustainability processes and carbon-tracking tools
into the event. Our role extended beyond COP28 itself, creating
the foundation for sustainable operations in future COPs and
elevating sustainability standards within the UAE’s event sector.
Leveraging our UAE-based environmental consultants and global
network of experts, we provided advisory services to attain ISO
20121 certification for sustainable events and supported the
implementation of operational sustainability throughout the
event’s supply chain. Following the event, there’s a tremendous
amount of work to do to move us from ambition to action.
Initiatives like the near-zero emissions building breakthrough
highlight the value of COP28, but also that we must now take
steps to operationalize.
30
Our team conducts in-depth research to design alternative
submarine cable routing options, considering cost, schedule,
and environmental factors. Beacon Wind, set to be operational
in 2028, signifies a massive investment in sustainable energy,
solidifying New York’s position as a hub for wind-powered
renewable energy.
With our technical expertise, knowledge of the increasingly
multifaceted energy infrastructure landscape, plus
implementation experience of new and upcoming technologies,
AECOM is well positioned to advise on and help drive this
transformative change.
AECOM Corporate governance
Safety
Safeguarding our people remains a core value at
AECOM. Fostering a Culture of Caring based on equity,
diversity, and inclusion—where communication,
collaboration, and consultation enable ownership for
the well-being of individuals and others—continued to
be a critical focus in fiscal 2023.
0.025
0.030
0.020
We are committed to maintaining the physical, psychological,
and social well-being of our employees, stakeholders, and
global communities through appropriate risk management
strategies. Our Culture of Caring and Safety for Life programs
enable us to identify, manage, and eliminate hazards and
reduce risk in our workplaces proactively and aggressively.
These incident prevention efforts have continued to result in
successfully meeting annually established leading and lagging
key indicator targets, our Core Value Metrics, for both the
AECOM Enterprise and all associated business groups, with
our incident rates remaining superior to industry average.
Within fiscal year 2023, our Total Recordable Incident Rate
(TRIR) in our Professional Services businesses reflect an
improvement of 45% since fiscal 2020, while our Lost Workday
Case Rate (LWCR) improved by 67% over the same period.
0.000
0.010
0.015
0.005
We apply the U.S. Occupational Safety and Health
Administration (OSHA) recordable injury and illness definition to
our global operations, allowing for a standard record-keeping
approach across all regions. Our metrics include injury and
illness incidents associated with our employees and do not
include contractor data.
0.12
0.10
TRIR
= total number of recordable incidents x 200,000 hours
0.08
Total hours worked
0.06
LWCR
= total number of lost time incidents x 200,000 hours
0.04
0.02
Total hours worked
0.00
Multiyear LWCR trend
0.03
0.03
0.03
0.03
0.02
0.01
0
67%
Reduction in
LWCR since
FY’20
0.01
FY’20
FY’21
FY’22
FY’23
Multiyear TRIR trend
0.12
0.11
0.09
0.09
0.08
0.04
0
45%
Reduction in
TRIR since
FY’20
0.06
FY’20
FY’21
FY’22
FY’23
31
2023 Annual Report
AECOM’s Safety for Life program, driven by
leadership commitment and empowered
employees, has been fundamental to
delivering industry-leading performance
and recognition by clients and agencies
around the world. A key example of this was
AECOM’s Royal Society for the Prevention
of Accidents (RoSPA) President’s Award
for having achieved 14 consecutive annual
Gold Awards. Our culture’s impact was also
recognized by the United States Occupational
Safety and Health Administration (OSHA), with
our AECOM Turner NBA Joint Venture Intuit
Dome project awarded Voluntary Protection
Programs (VPP) Star status.
The previous year highlighted programs
to support exercising both collective
and individual care, including our “Take a
Moment” focus, driven globally through
first-person video accounts shared by our
people. “Take a Moment” emphasizes the
critical importance of exercising mindfulness
before acting and pre-planning to produce
safe work environments, while continuing
to empower employees to “Stop Work” in
unsafe conditions. The power of our Culture
of Caring was also highlighted with AECOM’s
celebration of International Women in
Engineering Day. Our women engineers
published testimonials sharing how they make
safety seen as they execute AECOM’s Safety
for Life program in their work.
Over the course of fiscal 2023 our Global
Safety, Health and Environment (SH&E)
teams also collaborated to improve the
accessibility of employee resources and
tools. One example is the execution of a new
innovative Global SH&E Lessons Learned
repository. This digital tool provides easy
access and searchability of lessons learned
from all regions and business lines, extending
the reach of incident prevention efforts.
These represent only a few examples of the
efforts that contribute to our continuous
improvement successes and further
strengthen our Safety for Life program.
Global Security and Resilience
Leveraging deep industry experience
and insight, and the strength of evolving
security technologies and processes,
AECOM’s Global Security and Resilience
(GSR) team provides our global operations
with the professional knowledge and
awareness needed to eliminate or minimize
threats to our personnel and operations.
The GSR team expertise has proactively
supported proper project planning to
effectively manage applicable security risks
and, thereafter supports execution across
our operations. From advising on situational
awareness on-site, in the office or while,
to—in more extreme cases—helping our
people when they find themselves stranded
in locations due to extreme weather or
other dangerous geopolitical events, our
GSR team has been critical to our business
continuity. While continuing to support
operations in high- and elevated-risk
countries, our team also actively identifies
and manages security risks with high
potential in low-risk countries. Maintaining
the security of our personnel and our
operations is crucial and a critical element
of our core value, Safeguard.
32
AECOM Data security
We understand the evolving landscape of cybersecurity threats, and
we constantly invest in measures to safeguard data from unauthorized
access, cyberattacks, phishing, and other malicious activities.
We prioritize data security through a comprehensive Information
Security Program aligned with industry standards like ISO 27001,
NIST CSF, and NIST 800-53. This program safeguards our information
against unauthorized access, alteration, disclosure, or destruction.
Ethics and compliance
We believe good ethics is good business. We are committed to always
prioritizing ethics and integrity, not simply because it’s the right
thing to do, but also because it helps safeguard our people and our
company from potential wrongdoing while strengthening our brand
and reputation around the world.
Our Code of Conduct outlines the legal guidelines we must follow and
general ethical principles to help each of us make the right decisions
when conducting business worldwide. Leaders at the company
promote ethical behavior through a global ethics committee as well
as through regional ethics committees. Our employees take part
in annual Code of Conduct training, which received 100 percent
completion in fiscal 2023. We also provide supplemental training on
ethics and compliance issues throughout the year and incorporate
ethics and compliance principles in our training for new employees
and new managers.
Furthermore, we have a comprehensive cross-functional ethics and
compliance program focused on preventing issues from occurring,
detecting them if they happen, effectively and expediently resolving
issues, and capturing and communicating lessons learned to prevent
them from repeating. As a result, we have been recognized seven
times by Ethisphere as one of the World’s Most Ethical Companies.
Human rights commitment
AECOM is a signatory to the U.N. Global Compact and adheres to the International Bill of Rights and International Labor Organization’s
Declaration of Fundamental Principles and Rights at Work, which underscore our commitment to abiding by and promoting international
human rights. AECOM’s Human Rights Statement and Modern Slavery Act Statement provide more detail on our policies and commitments
related to ensuring fundamental rights at work, such as reasonable working conditions and wages, the right to collective bargaining, and
combatting human rights abuses, such as modern slavery and child labor.
33
2023 Annual Report AECOM Leadership
Troy Rudd
Chief Executive Officer
Shirley Adams
Chief Human
Resources Officer
Todd Battley
Chief Strategy Officer
David Gan
Chief Legal Officer
Gaurav Kapoor
Chief Financial and
Operations Officer
Lara Poloni
President
Board of Directors
Bradley W. Buss
Lydia Kennard
Derek J. Kerr
Kristy Pipes
Douglas W. Stotlar
Director
Director
Director
Director
Director and Chairman
of the Board
Troy Rudd
Daniel R. Tishman
Gen. Janet C. Wolfenbarger
Sander van ’t Noordende
Director and
Chief Executive Officer
Director
Director
Director
34
AECOM AECOM on NYSE
Disclaimers
AECOM’s common stock trades on the New York
Stock Exchange under the symbol ACM.
Investor materials
AECOM’s Investor Relations website contains
background on our company and our services,
financial information, frequently asked
questions, and our online annual report, as
well as other useful information. For investor
information, including additional copies of our
Annual Report, Form 10-K, Form 10-Q, or other
financial literature, please visit our website at
investors.aecom.com.
Copies of AECOM’s Form 10-K may be obtained
free of charge by contacting William Gabrielski
in our Investor Relations department via email
at AECOMInvestorRelations@aecom.com or via
phone at (212) 973-2982.
Independent registered public accounting firm
Ernst & Young LLP, Los Angeles, California, USA
Transfer Agent
Computershare
P.O. Box 30170
College Junction, TX 77842
(800) 368-5948
www.computershare.com
Scope of report
The sustainability data and activities included in this report
cover the past several years to provide a clearer picture of
our performance. This report covers our owned or operated
businesses and does not address the performance of our
suppliers, contractors, or partners unless otherwise noted. We
have prepared the information and case studies solely to provide
a general overview of our sustainability activities. In addition,
the sustainability data and activities information in this report
is summarized and is not a complete description of all of our
activities; therefore, we have made qualitative judgments as to
certain information to include that could be determined to be
inaccurate or incomplete.
Forward-looking information
This report contains forward-looking statements relating to
the manner in which we intend to conduct our activities based
on our current plans and expectations. These statements are
not promises of our future conduct or policy and are subject to
a variety of uncertainties and other factors, many of which are
beyond our control. Therefore, the actual conduct of our activities,
including the development, implementation, or continuation of
any program, policy, or initiative discussed in this report may differ
materially in the future. The statements of intention in this report
speak only as of the date of this report, and we do not undertake to
publicly update any statements in this report. As used in this report,
the term “AECOM” and such terms as “the company,” “our,” “its,”
“we,” and “us” may refer to one or more of AECOM’s consolidated
subsidiaries or affiliates or to all of them taken as a whole. All these
terms are used for convenience only and are not intended as a
precise description of any of the separate entities, each of which
manages its own affairs.
FOOTNOTES
1 On a constant-currency basis.
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, noncore AECOM Capital, and other items. See
Regulation G information for a reconciliation of non-GAAP measures to the comparable GAAP measures.
4 Reflects segment operating performance, excluding AECOM Capital and G&A.
5 Net income before interest expense, tax expense, depreciation, and amortization.
6 Free cash flow is defined as cash flow from operations less capital expenditures, net of proceeds from disposals of property, and equipment.
35
2023 Annual Report Regulation G information
Reconciliation of NSR
(in millions)
Americas
Revenue
Less: Pass-through revenue
Net service revenue
International
Revenue
Less: Pass-through revenue
Net service revenue
Twelve Months Ended
Sep 30, 2022
Sep 30, 2023
$9,939.3
$10,975.7
6,228.2
7,056.8
$3,711.1
$3,918.9
$3,206.7
$3,402.1
609.0
619.0
$2,597.7
$2,783.1
Reconciliation of adjusted EBITDA
(in millions)
Net income (loss) attributable to AECOM
from continuing operations
Income tax expense (benefit)
Depreciation and amortization
Interest income
Interest expense
Amortized bank fees included
in interest expense
Segment Performance (excludes ACAP)
EBITDA
Revenue
Less: Pass-through revenue
Net service revenue
Consolidated
Revenue
Less: Pass-through revenue
Net service revenue
$13,146.0
$14,377.8
6,837.2
7,675.8
$6,308.8
$6,702.0
$13,148.2
$14,378.5
6,837.2
7,675.8
$6,311.0
$6,702.7
Noncore AECOM Capital (income) loss,
net of NCI
Restructuring costs
Adjusted EBITDA
Reconciliation of adjusted EPS
Twelve Months Ended
Sep 30, 2022
Sep 30, 2023
$389.1
136.1
170.2
(8.2)
110.3
$114.1
56.1
175.1
(40.3)
159.4
(4.8)
(4.8)
$792.7
$459.6
(13.9)
107.6
$886.4
315.8
188.5
$963.9
Twelve Months Ended
Sep 30, 2022
Sep 30, 2023
Reconciliation of adjusted operating income
Per diluted share adjustments:
Net income attributable to AECOM from
continuing operations—per diluted share(2)
$2.73
$0.81
Twelve Months Ended
Noncore AECOM Capital (income) loss,
net of NCI
Sep 30, 2022
Sep 30, 2023
Restructuring costs
(in millions)
Americas Segment:
Income from operations
Amortization of intangible assets
Adjusted income from operations
International Segment:
$653.8
17.4
$671.2
$714.6
17.3
$731.9
Income from operations
$221.2
$254.7
Amortization of intangible assets
1.4
1.2
Adjusted income from operations
$222.6
$255.9
Segment Performance (excludes ACAP)
Income from operations
Amortization of intangible assets
Adjusted income from operations
$875.0
18.8
$893.8
$969.3
18.5
$987.8
(0.10)
0.75
0.13
0.03
2.26
1.34
0.13
0.03
Amortization of intangible assets
Financing charges in interest expense
Tax effect of the above adjustments(1)
(0.14)
(1.01)
Valuation allowances and
other tax only items
Adjusted net income attributable to
AECOM from continuing operations
per diluted share
—
0.15
$3.40
$3.71
Reconciliation of net cash provided by
operating activities to free cash flow
(in millions)
Twelve Months Ended
Sep 30, 2022
Sep 30, 2023
Net cash provided by operating activities
Capital expenditures, net
Free cash flow
$713.7
(128.1)
$585.6
$696.0
(105.3)
$590.7
(1)Adjusts the income taxes during the period to exclude the impact on our effective tax rate of the pretax adjustments shown above.
36
AECOM
37
2023 Annual Report About AECOM
AECOM (NYSE: ACM) is the world’s trusted infrastructure consulting firm, delivering professional services throughout the project
lifecycle—from advisory, planning, design, and engineering to program and construction management. On projects spanning
transportation, buildings, water, new energy, and the environment, our public- and private-sector clients trust us to solve their
most complex challenges. Our teams are driven by a common purpose to deliver a better world through our unrivaled technical
and digital expertise, a culture of equity, diversity, and inclusion, and a commitment to environmental, social, and governance
priorities. AECOM is a Fortune 500 firm, and its Professional Services business had revenue of $14.4 billion in fiscal year 2023.
See how we are delivering sustainable legacies for generations to come at aecom.com and @AECOM.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-52423
AECOM
(Exact name of Registrant as specified in its charter)
Delaware
State or Other Jurisdiction Of Incorporation or Organization
61-1088522
I.R.S. Employer Identification Number
13355 Noel Road
Dallas, Texas
Address of Principal Executive Offices
75240
Zip Code
(972) 788-1000
Registrant’s Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Trading Symbol(s)
ACM
Name of each exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. ☒ Yes ☐ No
Regulation S-T (§
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any
of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of registrant’s common stock held by non-affiliates on March 31, 2023 (the last business day of the registrant’s most recently completed
second fiscal quarter), based upon the closing price of a share of the registrant’s common stock on such date as reported on the New York Stock Exchange was approximately
$11.7 billion.
Number of shares of the registrant’s common stock outstanding as of November 10, 2023: 135,987,254
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the registrant’s definitive proxy statement for the 2024 Annual Meeting of Stockholders, to be filed within
120 days of the registrant’s fiscal 2023 year-end.
TABLE OF CONTENTS
ITEM 1.
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2.
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 3.
MINE SAFETY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ITEM 5.
ITEM 6.
ITEM 7.
ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
ITEM 9.
FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS . . . . . . . . . . . . . .
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 10.
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
ITEM 12.
Page
3
16
30
30
30
30
31
32
33
53
54
94
94
95
95
95
95
ITEM 13.
ITEM 14.
ITEM 15.
ITEM 16.
RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE . . . . .
PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FORM 10-K SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
95
95
96
100
2
ITEM 1. BUSINESS
PART I
In this report, we use the terms “the Company,” “we,” “us” and “our” to refer to AECOM and its consolidated subsidiaries.
Unless otherwise noted, references to years are for fiscal years. Our fiscal year consists of 52 or 53 weeks, ending on the Friday closest
to September 30. For clarity of presentation, we present all periods as if the year ended on September 30. We refer to the fiscal year
ended September 30, 2022 as “fiscal 2022” and the fiscal year ended September 30, 2023 as “fiscal 2023.”
Overview
We are a leading global provider of professional infrastructure consulting services for governments, businesses and
organizations throughout the world. We provide advisory, planning, consulting, architectural and engineering design, construction and
program management services, and investment and development services to public- and private-sector clients worldwide in major end
markets such as transportation, facilities, water, environmental, and new energy.
According to Engineering News-Record’s (ENR’s) 2023 Design Survey, we are the second largest general architectural and
engineering design firm in the world, ranked by 2022 design revenue, and we are the number one ranked transportation design, facilities
design, environmental engineering, environmental consulting and environmental science firm in the world. In addition, we are ranked
by ENR as the leading firm in a number of design end markets, including several water infrastructure-related markets, as well as the
number two green design firm and the number six green contractor in the world. We utilize our scale and the technical strength of our
workforce to create innovative solutions for our clients. We are accelerating investments to extend our capabilities, including the
expansion of our digital capabilities to create innovative ways of delivering our work and solving the world’s most complex challenges.
Clients are turning to us to create solutions to achieve their Environmental, Social, and Governance (ESG) objectives with a focus on
sustainability and resilience initiatives, which include supporting the advancement of more energy efficient and less-carbon-intensive
infrastructure. With our market leading technical capabilities, we are uniquely well suited to address these challenges.
Our business focuses primarily on providing fee-based knowledge-based services. We primarily derive income from our ability
to generate revenue and collect cash from our clients through the billing of our employees’ time spent on client projects and our ability
to manage our costs. AECOM Capital primarily derives its income from real estate development sales and management fees.
3
During the first quarter of fiscal 2020, we reorganized our operating and reporting structure to better align with our ongoing
professional services business. This reorganization better reflected our continuing operations after the sale of our Management Services
segment, the sale of our self-perform at-risk civil infrastructure and power construction businesses, and the sale of our oil & gas
construction business. Our Management Services and self-perform at-risk construction businesses were part of our former Management
Services segment and represented a substantial portion of the revenue of our former Construction Services segment, respectively. These
businesses are classified as discontinued operations in all periods presented.
We report our continuing business through three segments, each of which is described in further detail below: Americas,
International, and AECOM Capital (ACAP). Such segments are organized by the differing specialized needs of the respective clients
and how we manage the business. We have aggregated various operating segments into our reportable segments based on their similar
characteristics, including similar long-term financial performance, the nature of services provided, internal processes for delivering those
services, and types of customers.
• Americas: Planning, consulting, architectural and engineering design, construction management and program management
services to public and private clients in the United States, Canada, and Latin America in major end markets such as
transportation, water, government, facilities, environmental, and energy.
•
International: Planning, consulting, architectural and engineering design services and program management to public and
private clients in Europe, the Middle East, India, Africa, and the Asia-Australia-Pacific regions in major end markets such
as transportation, water, government, facilities, environmental, and energy.
• AECOM Capital (ACAP): Primarily invests in and develops real estate projects.
Our Americas and International Segments
Our Americas and International segments are comprised of a broad array of services, generally provided on a fee-for-service
basis. These services include advisory, planning, consulting, architectural and engineering design, program management and
construction management for public and private clients worldwide. For each of these services, our technical expertise includes civil
engineering, structural engineering, process engineering, mechanical engineering, geotechnical systems and electrical engineering,
architectural, landscape and interior design, urban and regional planning, project economics, cost consulting and environmental, health
and safety work.
With our technical, advisory and program management expertise, we are able to provide our clients a broad spectrum of
services. For example, within our water service offerings, we provide water, wastewater, water supply and water resource services,
which are necessary in response to climate adaptation and resilience, drought mitigation and other environmental and social impact
factors as part of major capital/infrastructure projects.
In addition, our industry is undergoing a digital transformation, and we are investing in digital capabilities to extend our
advantages, improve overall delivery, and create distinct solutions for clients that differentiate us from competitors and enhance our
client experience. These investments include capturing the value of our libraries of data to build more efficient design processes, and
innovative and more advanced solutions for increasingly complex challenges, where our digital suite of products are creating a more
holistic approach to our work.
Our services may be sequenced over multiple phases or multiple projects in the form of a program. For example, in the area of
program management and construction management services, our work for a client may begin with a small consulting or planning
contract, and may later develop into an overall management role for the project or a series of projects, which we refer to as a program.
4
Program and construction management contracts may employ small or large project teams and, in many cases, operate as an outsourcing
arrangement with our staff located at the project site.
We provide the services in these segments both directly and through joint ventures or similar arrangements to the following
end markets or business sectors:
Transportation.
• Transit and Rail. Light rail, heavy rail (including highspeed, commuter and freight) and multimodal transit projects.
• Marine, Ports and Harbors. Wharf facilities and container port facilities for private and public port operators.
• Highways, Bridges and Tunnels. Interstate, primary and secondary urban and rural highway systems and bridge projects.
• Aviation. Landside terminal and airside facilities, runways, and taxiways.
Facilities.
• Green Facilities. Sustainably-designed new build construction or refurbishment projects, such as office buildings, data
centers and other facilities with high energy demands.
• Government. Emergency response services for the U.S. Department of Homeland Security, including the Federal
Emergency Management Agency and engineering and program management services for agencies of the Department of
Defense and Department of Energy.
5
•
Industrial. Industrial facilities for a variety of niche end markets such as manufacturing, distribution, aviation, aerospace,
communications, media, pharmaceuticals, renewable energy, chemical, and food and beverage facilities.
• Urban Master Planning/Design. Strategic planning and master planning services for new cities and major mixed-use
developments in locations such as India, China, Southeast Asia, the Middle East, North Africa, the United Kingdom, and
the United States.
• Commercial and Leisure Facilities. Corporate headquarters, high-rise office towers, historic buildings, hotels, leisure,
sports and entertainment facilities, and corporate campuses.
• Educational. College and university campuses and other educational facilities.
• Health Care. Private and public health facilities.
•
Sports. Sustainable building design for world-class sports arenas and stadiums.
• Construction Management. Program and construction management services for large scale building facility construction
projects primarily in the Americas including: sports arenas, modern office and residential towers, hotels, meeting and
exhibition spaces, performance venues, aviation, and other facilities.
Water.
• Water and Wastewater. Treatment facilities as well as supply, distribution and collection systems, stormwater
management, desalinization, and other water reuse technologies.
• Water Resources. Regional-scale floodplain mapping and analysis for public agencies, along with the analysis and
development of protected groundwater resources for companies in the bottled water industry.
• Drought Response and Mitigation. Designing water re-use and similar systems to enhance resiliency of water supply.
• Hazardous Chemicals. Treating and addressing disposal of hazardous chemicals in water supplies and surrounding
environments, such as per- and polyfluoroalkyl substances (PFAS).
Environment.
• Environmental Management. Waste handling, testing and monitoring of environmental conditions, and environmental
construction management.
• Remediation. Restoring and remediating natural habitats, such as in response to industrial activity related to closed or
abandoned mines.
• Permitting and Community Engagement. Advancing client projects
through permitting processes,
including
implementation of innovative online engagement platforms, such as PlanEngageTM.
New Energy.
• Demand Side Management. Public K-12 schools and universities, health care facilities, and courthouses and other public
buildings, as well as energy conservation systems for utilities.
• Transmission and Distribution. Power stations and electric transmissions and distribution and cogeneration systems.
• Alternative/Renewable Energy. Production facilities such as ethanol plants, onshore and offshore wind farms and micro
hydropower, and geothermal subsections of regional power grids.
• Hydropower/Dams. Hydroelectric power stations, dams, spillways, and flood control systems.
6
•
Solar. Solar photovoltaic projects and environmental permitting services.
Program Management – We provide program management and advisory services for large scale public- and private-sector
infrastructure programs around the world, including:
• Megacity development.
• Transformational transportation infrastructure, such as high-speed rail.
• Aviation.
• Environmental remediation programs.
• Energy and grid infrastructure.
• Water supply systems.
Our AECOM Capital Segment
ACAP typically partners with investors and experienced developers as co-general partners. These partnerships may, but is not
required to, enter into contracts with our other AECOM affiliates to provide design, owners engineer, construction management,
development and operations and maintenance services for ACAP funded projects. ACAP development activity is conducted through
joint ventures or subsidiaries that may be consolidated or unconsolidated for financial reporting purposes depending on the extent and
nature of our ownership interest. In addition, in connection with the investment activities of ACAP, AECOM or an affiliate may provide
guarantees of certain financial obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity
obligations, and other lender required guarantees. ACAP has focused on investing in co-general partner equity opportunities with high
quality partners, primarily targeting “build-to-core” investments in the top U.S. markets across all property types.
During fiscal 2023, we initiated a process to explore strategic options for the AECOM Capital business. This process is
consistent with our focus on our professional services business. AECOM Capital will continue to manage existing investment vehicles
and investments in a manner consistent with their current obligations.
Thinking and Acting Globally
AECOM is at its best when we think and act globally. Our strategy is focused on setting a new standard of excellence in the
professional services industry. First, our operating structure promotes greater connectivity and collaboration across our seven regions
and five global business lines. We drive growth by prioritizing our core markets, leaning into our greatest strengths and ensuring our
best talent and resources are focused on nurturing client relationships. We are transforming the way we deliver work through technology
7
and digital platforms improving the client experience and increasing efficiency. Lastly, we are building upon our position as a leading
ESG company, unified by our purpose to deliver a better world.
Environmental, Social and Governance Matters
We are committed to being a leader in environmental sustainability, social responsibility, and corporate governance.
We embrace sustainability by striving to make a positive, lasting impact on society and the environment. Sustainability is at
the core of what we do and how we operate — focusing on the environmental, social and governance impact of our business. Through
our projects and our operations, we have both a significant opportunity and a responsibility to protect, enhance and restore the world’s
natural and social systems.
We are committed to addressing the effects of climate change as a key priority for our sustainability program by improving
resilience and working to advance increasingly ambitious greenhouse gas emissions reduction targets. To this point, in fiscal 2022, we
were among the first companies globally to have set net zero emissions reduction targets approved by the Science Based Targets
Initiative (SBTi), which are designed to exceed the goals of the Paris Agreement on climate change. These net zero emissions reduction
goals include a near-term target to reduce Scope 1, 2 and 3 emissions by 50% by 2030 and a long-term target to reduce total emissions
by 90% by 2040. These commitments build upon our commitments as a signatory to the UN Global Compact.
In addition, we continue to invest in proprietary innovations and digital solutions. This includes a solution to combat globally
pervasive emerging contaminants, such as our proprietary DE-FLUOROTM water treatment solution to destroy per and polyfluoroalkyl
substances (PFAS) on-site. In addition, we are leading on decarbonization measurement, biodiversity impact and re-wilding through our
innovative work at the National Capital Laboratory (NCL) in the U.K., where we are restoring 100 acres of forest and reintroducing lost
species. Our work at the NCL won the 2022 Verdantix Innovation Excellence Award for Sustainability Strategy Implementation for
success in analyzing and measuring biodiversity impact.
We maintain an internal Global ESG Council to coordinate and drive our ESG initiatives across AECOM worldwide, and our
Board has oversight over ESG matters. Additional information regarding our ESG initiatives is located on the investor relations section
of our website, at https://investors.aecom.com/esg.
8
Human Capital Management
Our principal asset is our employees and large percentages of our employees have technical and professional backgrounds and
undergraduate and/or advanced degrees. At the end of our fiscal 2023, we employed approximately 52,000 persons, of whom
approximately 18,000 were employed in the United States. Over 400 of our domestic employees are covered by collective bargaining
agreements or by specific labor agreements, which expire upon completion of the relevant project. We believe that the quality and level
of service that our professionals deliver are among the highest in our industry.
We are committed to enhancing our position as a leading employer in our industry by attracting and retaining the best technical
professionals in the world. Critical to our continued success is our ability to offer a compelling employee value proposition that promises
competitive pay and benefits, an inclusive environment that supports flexibility and well-being and encourages collaboration and
innovation, and a shared commitment to technical excellence, continuous learning and career growth. This understanding informs our
approach to managing our human capital resources. Our human capital objectives and initiatives are overseen by our Board as per our
Corporate Governance Guidelines.
Health and Safety. Core to our corporate values is safeguarding our people and fostering a culture of caring that promotes the
wellbeing of our employees, contractors and business partners. We safeguard our people, projects and reputation by striving for zero
employee injuries and illnesses, while operating and delivering our work responsibly and sustainably. We maintain our industry’s best-
in-class lost workday case and recordable incident rates, and our safety performance is consistently recognized by key clients across the
regions where we work as well as by recognized safety organizations. We have taken and will continue to take critical steps to keep our
people, clients and communities safe, including any necessary actions in response to local and global health crises.
Equity, diversity and inclusion. We are committed to advancing equity, diversity and inclusion in our organization and within
our industry. We build safe and respectful work environments where our employees are invited to bring their talents, backgrounds and
expertise to bear on some of the world’s most complex problems and where every person has the opportunity to thrive personally and
professionally. We are advancing efforts globally in four key areas: 1) Building a workforce reflective of the communities we serve
through our recruitment efforts, building leadership accountability, and partnering with nonprofit organizations and universities to build
the talent pipeline for the future; 2) Enriching communities through pro-bono work, volunteerism, philanthropy and strategic
partnerships; 3) Expanding understanding and empathy among employees through employee resource groups, ED&I events and
celebrations, and family-friendly benefit policies; and 4) Prioritizing social equity and impact in every project we pursue and the
innovative solutions we deliver.
Freedom to Grow. Freedom to Grow is our global framework designed to support employees in finding the balance and
flexibility they need to be their best and deliver for clients, and a key factor in our ability to attract and retain talent. Employees and
managers can evaluate work schedules and locations and align on an arrangement that prioritizes client and team responsibilities while
9
supporting individual needs and includes three days a week in the office or at project sites as an expectation. Our Freedom to Grow
program goes far beyond just when and where we work. We consider our people’s holistic experience, respecting diversity in work,
communication and thinking styles.
Workplace of the future. Drawing on the experiences of our teams and our clients during the pandemic, we developed a space
and technology framework that allows for seamless connectivity between home offices, company offices and client sites, and a new
global workplace design that accounts for reduced capacity requirements and prioritizes sustainability, collaboration and engagement.
We are also advancing initiatives to enable the digital delivery of our work by establishing best practices and governance protocols for
the digital reuse of core elements of the design process.
Technical and professional development. Technical excellence is the foundation of our business—it’s how we harness the
power of our teams’ technical skills and expertise to deliver high quality solutions for clients and communities we serve. We strive to
be home to our industry's best technical minds — professionals who thrive in an environment that encourages their collaboration and
innovation and celebrates great project and client outcomes.
We have invested in a robust learning ecosystem that keeps our employees project-ready with 'on the job' technical training,
future-ready with new digital tools, thought leadership and programs that inspire innovation, and globally connected within their
technical practice and strategic partnerships.
Our digital learning platform, AECOM University, delivers high-quality and personalized learning experiences, including our
Global Technical Academies. Created by us for us, Academies deliver structured and self-directed technical training courses on key
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global topics, practices and markets that are relevant to our business. Our Technical Practice Network connects nearly 20,000
professionals every day in a global online community to enable networking, collaboration and problem solving.
In addition, our full range of professional development programs, called Leadership at all Levels, enhance business and
leadership skills. From early career and graduate programs, to practical manager training, and executive coaching and leadership
development, we are supporting development at every career level. These programs are based on our four pillars of Leadership
Capabilities, which outline the behaviors we want our leaders to demonstrate and exemplify for the collective success as an organization.
Purpose and impact. As the world’s trusted infrastructure consulting firm and a leader in environmental, social and corporate
governance (ESG), we are determined and well-positioned to deliver positive, impactful and Sustainable Legacies for our company, our
communities and our planet. Through strategic nonprofit partnerships, pro-bono work, skills-based volunteering and philanthropy, our
corporate responsibility platform is focused on delivering access to safe and secure infrastructure to those who need it most, creating
opportunity for the leaders of tomorrow and protecting our planet so that our company can fulfill its purpose to deliver a better world.
As part of our pro-bono program, our technical experts partnered with nonprofit organizations in their local communities to provide
critical design, engineering and infrastructure solutions. In addition, we have maintained our commitment to our enterprise strategic
nonprofit partners – Engineers Without Borders and Water for People.
Our Clients
Our clients consist primarily of national, state, regional and local governments, public and private institutions and major
corporations. The following table sets forth our total revenue attributable to these categories of clients for each of the periods indicated:
U.S. Federal Government . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. State and Local Governments . . . . . . . . . . . . . . . . . .
Non-U.S. Governments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal Governments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private Entities (worldwide) . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
790.6
$
2,918.9
2,544.7
6,254.2
8,124.3
$ 14,378.5
5 % $
20
18
43
57
2,824.0
1,800.6
5,445.9
7,702.3
100 % $ 13,148.2
2021
6 % $ 1,026.6
21
14
41
59
2,797.9
1,896.8
5,721.3
7,619.6
100 % $ 13,340.9
8 %
21
14
43
57
100 %
Year Ended September 30,
($ in millions)
2022
821.3
No single client accounted for 10% or more of our revenue in any of the past five fiscal years. Approximately 5%, 6%, and 8%
of our revenue was derived through direct contracts with agencies of the U.S. federal government in the years ended September 30,
2023, 2022, and 2021, respectively.
Contracts
The price provisions of the contracts we undertake can be grouped into several broad categories: cost-reimbursable contracts,
guaranteed maximum price contracts, and fixed-price contracts. For the year ended September 30, 2023, our revenue was comprised of
43%, 34%, and 23% cost-reimbursable, guaranteed maximum price, and fixed-price contracts, respectively.
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Cost-Reimbursable Contracts
Cost-reimbursable contracts include cost-plus fixed fee, cost-plus fixed rate, and time-and-materials price contracts. Under
cost-plus contracts, we charge clients for our costs, including both direct and indirect costs, plus a negotiated fee or rate. We recognize
revenues based on actual direct costs incurred and the applicable fixed rate or portion of the fixed fee earned as of the balance sheet
date. Under time-and-materials price contracts, we negotiate hourly billing rates and charge clients based on the actual time we expend
on the project. In addition, clients reimburse us for materials and other direct incidental expenditures, including payments to
subcontractors, incurred in connection with our performance under the contract. Time-and-material price contracts may also have a
fixed-price element in the form of not-to-exceed or guaranteed maximum price provisions.
Some cost-plus contracts provide for award fees or a penalty based on performance criteria in lieu of a fixed fee or fixed rate.
Other contracts include a base fee component plus a performance-based award fee. In addition, we may share award fees with
subcontractors. We generally recognize revenue to the extent of costs actually incurred plus a proportionate amount of the fee expected
to be earned. We take the award fee or penalty on contracts into consideration when estimating revenue and profit rates, and record
revenue related to the award fees when there is sufficient information to assess anticipated contract performance and a significant reversal
of the award fee is not probable. Once an award is received, the estimated or accrued fees are adjusted to the actual award amount.
Some cost-plus contracts provide for incentive fees based on performance against contractual milestones. The amount of the
incentive fees varies, depending on whether we achieve above, at, or below target results. We originally recognize revenue on these
contracts based upon expected results. These estimates are revised when necessary based upon additional information that becomes
available as the contract progresses.
Guaranteed Maximum Price Contracts
Guaranteed maximum price (GMP) contracts share many of the same contract provisions as cost-plus and fixed-price contracts.
As with cost-plus contracts, clients are provided a disclosure of all project costs, and a lump sum percentage fee is separately identified.
We provide clients with a guaranteed price for the overall project (adjusted for change orders issued by clients) and a schedule including
the expected completion date. Cost overruns or costs associated with project delays in completion could generally be our responsibility.
For many of our commercial or residential GMP contracts, the final price is generally not established until we have subcontracted a
substantial percentage of the trade contracts with terms consistent with the master contract, and we have negotiated additional contract
limitations, such as waivers of consequential damages as well as aggregate caps on liabilities and liquidated damages. Revenue is
recognized for GMP contracts as project costs are incurred relative to total estimated project costs.
Fixed-Price Contracts
Fixed-price contracts include both lump-sum and fixed-unit price contracts. Under lump-sum contracts, we perform all the
work under the contract for a specified price. Lump-sum contracts are typically subject to price adjustments if the scope of the project
changes or unforeseen conditions arise. Under fixed-unit price contracts, we perform a number of units of work at an agreed price per
unit with the total payment under the contract determined by the actual number of units delivered. Revenue is recognized for fixed-price
contracts using the input method measured on a cost-to-cost basis as the Company believes this is the best measure of progress towards
completion.
Some of our fixed-price contracts require us to provide surety bonds or parent company guarantees to assure our clients that
their project will be completed in accordance with the terms of the contracts as further disclosed in Note 18—Commitments and
Contingencies. In such cases, we may require our primary subcontractors to provide similar performance bonds and guarantees and to
be adequately insured, and we may flow down the terms and conditions set forth in our agreement on to our subcontractors. There may
be risks associated with completing these projects profitably if we are not able to perform our services within the fixed-price contract
terms.
Joint Ventures
Some of our larger contracts may operate under joint ventures or other arrangements under which we team with other reputable
companies, typically companies with which we have worked for many years. This is often done where the scale of the project dictates
such an arrangement or when we want to strengthen either our market position or our technical skills.
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Backlog
Backlog represents revenue we expect to realize for work completed by our consolidated subsidiaries and our proportionate
share of work to be performed by unconsolidated joint ventures. Backlog is expressed in terms of gross revenue and, therefore, may
include significant estimated amounts of third party or pass-through costs to subcontractors and other parties. We report transaction
price allocated to remaining unsatisfied performance obligations (RUPO) of $21.9 billion, as described in Note 4, Revenue Recognition,
in the notes to our consolidated financial statements. The most significant differences between our backlog and RUPO are backlog
contains revenue we expect to record in the future where we have been awarded the work, but the contractual agreement has not yet
been signed, unconsolidated joint venture backlog where we expect to realize income through equity earnings rather than revenue, and
revenue related to service contracts that extend beyond the termination provision of those contracts, where RUPO requires us to assume
the contract will be terminated at its earliest convenience. Accordingly, RUPO is $19.3 billion lower than backlog. For non-government
contracts, our backlog includes future revenue at contract rates, excluding contract renewals or extensions that are at the discretion of
the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in backlog to the extent of the
remaining estimated amount. We calculate backlog without regard to possible project reductions or expansions or potential cancellations
until such changes or cancellations occur. No assurance can be given that we will ultimately realize our full backlog. Backlog fluctuates
due to the timing of when contracts are awarded and contracted and when contract revenue is recognized. Many of our contracts require
us to provide services over more than one year. Our backlog for the year ended September 30, 2023 increased $1.0 billion, or 2.5%, to
$41.2 billion as compared to $40.2 billion for the corresponding period last year, primarily due to an increase in our International design
business.
The following summarizes backlog (in billions):
Backlog:
Americas segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
34.9 $
6.3
41.2 $
35.1
5.1
40.2
September 30,
2023
2022
Competition
The markets we serve are highly fragmented and we compete with a large number of regional, national and international
companies. We have numerous competitors, ranging from small private firms to multi-billion dollar companies, some of which have
greater financial resources or that are more specialized and concentrate their resources in particular areas of expertise. The extent of our
competition varies according to the particular markets and geographic area. The degree and type of competition we face is also influenced
by the type and scope of a particular project. The technical and professional aspects of our services generally do not require large upfront
capital expenditures and, therefore, provide limited barriers against new competitors.
We believe that we are well positioned to compete in our markets because of our reputation, our cost effectiveness, our long-
term client relationships, our extensive network of offices, our employee expertise, and our broad range of services. In addition, as a
result of our extensive national and international network, we are able to offer our clients localized knowledge and expertise, as well as
the support of our worldwide professional staff. In addition, through investments in technology and innovation, we are able to bring
advanced solutions to clients.
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Seasonality
We experience seasonal trends in our business. Our revenue is typically higher in the last half of the fiscal year. The fourth
quarter of our fiscal year (July 1 to September 30) is typically our strongest quarter. We find that the U.S. federal government tends to
authorize more work during the period preceding the end of our fiscal year, September 30. In addition, many U.S. state governments
with fiscal years ending on June 30 tend to accelerate spending during their first quarter, when new funding becomes available. Further,
our construction management revenue typically increases during the high construction season of the summer months. Within the United
States, as well as other parts of the world, our business generally benefits from milder weather conditions in our fiscal fourth quarter.
Our construction and project management services also typically expand during the high construction season of the summer months.
The first quarter of our fiscal year (October 1 to December 31) is typically our lowest revenue quarter. The harsher weather conditions
impact our ability to complete work in parts of North America and the holiday season schedule affects our productivity during this
period. For these reasons, coupled with the number and significance of client contracts commenced and completed during a particular
period, as well as the timing of expenses incurred for corporate initiatives, it is not unusual for us to experience seasonal changes or
fluctuations in our quarterly operating results.
Risk Management and Insurance
Risk management is an integral part of our project management approach and our project execution process. We have an Office
of Risk Management that reviews and oversees the risk profile of our operations through a tiered process of formal risk committees with
the highest-risk pursuits subject to vetting at each tier. Following contract execution, and commencement of delivery, projects are
monitored via a formal monthly or quarterly project-review process designed to ensure project performance and risk mitigation. Also,
pursuant to our internal delegations of authority, a group of senior members of our risk management team evaluates risk through internal
risk analyses of higher-risk projects, contracts or other business decisions. We maintain insurance covering professional liability and
claims involving bodily injury and property damage, among other coverages. Wherever possible, we endeavor to eliminate or reduce
the risk of loss on a project through the use of quality assurance/control, risk management, workplace safety and similar methods.
Regulations
Our business is impacted by environmental, health and safety, government procurement, anti-bribery and other government
regulations and requirements. Below is a summary of some of the significant regulations that impact our business.
Environmental, Health and Safety. Our business involves the planning, design, program management, construction
management, and operations and maintenance at various project sites, including, but not limited to, nuclear facilities, hazardous waste
and Superfund sites, hydrocarbon production, distribution and transport sites, and other infrastructure-related facilities. We also regularly
perform work in and around sensitive environmental areas, such as rivers, lakes and wetlands.
Significant fines, penalties and other sanctions may be imposed for non-compliance with environmental and health and safety
laws and regulations, and some laws provide for joint and several strict liabilities for remediation of releases of hazardous substances,
rendering a person liable for environmental damage, without regard to negligence or fault on the part of such person. These laws and
regulations may expose us to liability arising out of the conduct of operations or conditions caused by others, or for our acts that were
in compliance with all applicable laws at the time these acts were performed. For example, there are a number of governmental laws
that strictly regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances, such as the
Comprehensive Environmental Response Compensation and Liability Act of 1980, and comparable national and state laws, that impose
strict, joint and several liabilities for the entire cost of cleanup, without regard to whether a company knew of or caused the release of
hazardous substances. In addition, some environmental regulations can impose liability for the entire clean-up upon owners, operators,
generators, transporters and other persons arranging for the treatment or disposal of such hazardous substances related to contaminated
facilities or project sites. Other federal environmental, health and safety laws affecting us include, but are not limited to, the Resource
Conservation and Recovery Act, the National Environmental Policy Act, the Clean Air Act, the Clean Air Mercury Rule, the
Occupational Safety and Health Act, the Toxic Substances Control Act, and the Superfund Amendments and Reauthorization Act, as
well as other comparable national and state laws. Liabilities related to environmental contamination or human exposure to hazardous
substances, comparable national and state laws or a failure to comply with applicable regulations could result in substantial costs to us,
including cleanup costs, fines and civil or criminal sanctions, third-party claims for property damage or personal injury, or cessation of
remediation activities.
14
Some of our business operations are covered by Public Law 85-804, which provides for indemnification by the U.S. federal
government against claims and damages arising out of unusually hazardous or nuclear activities performed at the request of the U.S.
federal government. Should public policies and laws change, however, U.S. federal government indemnification may not be available
in the case of any future claims or liabilities relating to hazardous activities that we undertake to perform.
Government Procurement. The services we provide to the U.S. federal government are subject to Federal Acquisition
Regulation, the Truth in Negotiations Act, Cost Accounting Standards, the Services Contract Act, False Claims Act, export controls
rules and Department of Defense (DOD) security regulations, as well as many other laws and regulations. These laws and regulations
affect how we transact business with our clients and, in some instances, impose additional costs on our business operations. A violation
of specific laws and regulations could lead to fines, contract termination or suspension of future contracts. Our government clients can
also terminate, renegotiate, or modify any of their contracts with us at their convenience; and many of our government contracts are
subject to renewal or extension annually.
Anti-Bribery and other regulations. We are subject to the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010,
and similar anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to foreign
government officials for the purpose of obtaining or retaining business. To the extent we export technical services, data and products
outside of the U.S., we are subject to U.S. and international laws and regulations governing international trade and exports, including,
but not limited to, the International Traffic in Arms Regulations, the Export Administration Regulations, and trade sanctions against
embargoed countries. We provide services to the DOD and other defense-related entities that often require specialized professional
qualifications and security clearances. In addition, as engineering design services professionals, we are subject to a variety of local,
state, federal, and foreign licensing and permit requirements and ethics rules.
Raw Materials
We purchase most of the raw materials and components necessary to operate our business from numerous sources. However,
the price and availability of raw materials and components may vary from year to year due to customer demand, production capacity,
market conditions, and material shortages. While we do not currently foresee the lack of availability of any particular raw materials in
the near term, prolonged unavailability of raw materials necessary to our projects and services or significant price increases for those
raw materials could have a material adverse effect on our business in the near term.
Government Contracts
Generally, our government contracts are subject to renegotiation or termination of contracts or subcontracts at the discretion of
the U.S. federal, state or local governments, and national governments of other countries.
Trade Secrets and Other Intellectual Property
We rely principally on trade secrets, confidentiality policies and other contractual arrangements to protect much of our
intellectual property.
Available Information
The reports we file with the Securities and Exchange Commission, including annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K and proxy materials, including any amendments, are available free of charge on our website
at www.aecom.com as soon as reasonably practicable after we electronically file such material with or furnish it to the SEC. The SEC
also maintains a website (www.sec.gov) containing reports, proxy and information statements, and other information that we file with
the SEC. Our Corporate Governance Guidelines and our Code of Ethics are available on our website at www.aecom.com under the
“Investors” section. Copies of the information identified above may be obtained without charge from us by writing to AECOM, 13355
Noel Road, Suite 400, Dallas, Texas 75240, Attention: Corporate Secretary.
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ITEM 1A. RISK FACTORS
We operate in a changing global environment that involves numerous known and unknown risks and uncertainties that could
materially adversely affect our operations. The risks described below highlight some of the factors that have affected, and in the future
could affect our operations. Additional risks we do not yet know of or that we currently believe are immaterial may also affect our
business operations. If any of the events or circumstances described in the following risks actually occurs, our business, financial
condition or results of operations could be materially adversely affected.
Risks Related to Our Markets, Customers and Business
Our industry is highly competitive, and we may be unable to compete effectively, which could result in reduced revenue, profitability
and market share.
We are engaged in a highly competitive business. The markets we serve are highly fragmented and we compete with a large
number of regional, national and international companies. These competitors may have greater financial and other resources than we
do. Others are smaller and more specialized, and concentrate their resources in particular areas of expertise. The extent of our competition
varies according to the particular markets and geographic area. In addition, the technical and professional aspects of some of our services
generally do not require large upfront capital expenditures and provide limited barriers against new competitors.
The degree and type of competition we face is also influenced by the type and scope of a particular project. Our clients make
competitive determinations based upon qualifications, experience, performance, reputation, technology, customer relationships, price
and ability to provide the relevant services in a timely, safe and cost-efficient manner. Increased competition may result in our inability
to win bids for future projects, increased margin pressure and loss of revenue, profitability and market share.
Our ability to compete in our industry will be harmed if we do not retain the continued services of our senior management and key
technical personnel.
We rely heavily upon the expertise and leadership of our people. There is strong competition for qualified technical and
management personnel in the sectors in which we compete. We may not be able to continue to attract and retain qualified technical and
management personnel, such as engineers, architects and project managers, who are necessary for the development of our business or
to replace qualified personnel in the timeframe demanded by our clients. Also, some of our personnel hold government granted eligibility
that may be required to obtain government projects. Loss of the services of, or failure to recruit, senior management or key technical
personnel could impact the long-term performance of the Company and limit our ability to successfully complete existing projects and
compete for new projects.
Demand for our services is cyclical and vulnerable to sudden economic downturns and reductions in government and private industry
spending. If economic conditions remain uncertain and/or weaken, our revenue and profitability could be adversely affected.
Demand for our services is cyclical and may be vulnerable to sudden economic downturns, interest rate fluctuations and
reductions in government and private industry spending that result in clients delaying, curtailing or canceling proposed and existing
projects. Where economies are weakening, our clients may demand more favorable pricing or other terms while their ability to pay our
invoices or to pay them in a timely manner may be adversely affected. Our government clients may face budget deficits that prohibit
them from funding proposed and existing projects. If economic conditions remain uncertain and/or weaken and/or government spending
is reduced, our revenue and profitability could be materially adversely affected.
We depend on long-term government contracts, some of which are only funded on an annual basis. If appropriations for funding
are not made in subsequent years of a multiple-year contract, we may not be able to realize all of our anticipated revenue and profits
from that project.
A substantial portion of our revenue is derived from contracts with agencies and departments of national, state, and local
governments. During fiscal 2023 and 2022, approximately 43% and 41%, respectively, of our revenue was derived from contracts with
government entities.
Most government contracts are subject to such government’s budgetary approval process. Legislatures typically appropriate
funds for a given program on an annual basis, even though contract performance may take more than one year. In addition, public-
supported financing such as state and local municipal bonds may be only partially raised to support existing infrastructure projects. As
16
a result, at the beginning of a program, the related contract is only partially funded, and additional funding is normally committed only
as appropriations are made in each fiscal year. These appropriations, and the timing of payment of appropriated amounts, may be
influenced by, among other things, the state of the economy, an extended government shutdown, competing priorities for appropriation,
changes in administration or control of legislatures, and the timing and amount of tax receipts and the overall level of government
expenditures. Similarly, the impact of an economic downturn on governments may make it more difficult for them to fund infrastructure
projects. If appropriations are not made in subsequent years on our government contracts, then we will not realize all of our potential
revenue and profit from those contracts.
If we are unable to win or renew government contracts during regulated procurement processes, our operations and financial results
would be harmed.
Government contracts are awarded through a regulated procurement process. The federal government has awarded multi-year
contracts with pre-established terms and conditions, such as indefinite delivery contracts, that generally require those contractors that
have previously been awarded the indefinite delivery contract to engage in an additional competitive bidding process before a task order
is issued. The federal government has also awarded federal contracts based on a low-price, technically acceptable criteria emphasizing
price over qualitative factors, such as past performance. As a result of these competitive pricing pressures, our profit margins on future
federal contracts may be reduced and may require us to make sustained efforts to reduce costs in order to realize profits under government
contracts. If we are not successful in reducing the amount of costs we incur, our profitability on government contracts will be negatively
impacted. In addition, we may not be awarded government contracts because of existing government policies designed to protect small
businesses and under-represented minority contractors. Our inability to win or renew government contracts during regulated
procurement processes could harm our operations and reduce our profits and revenues.
Governmental agencies may modify, curtail or terminate our contracts at any time prior to their completion and, if we do not replace
them, we may suffer a decline in revenue.
Most government contracts may be modified, curtailed or terminated by the government either at its discretion or upon the
default of the contractor. If the government terminates a contract at its discretion, then we typically are able to recover only costs incurred
or committed, settlement expenses and profit on work completed prior to termination, which could prevent us from recognizing all of
our potential revenue and profits from that contract. In addition, for some assignments, the U.S. government may attempt to “insource”
the services to government employees rather than outsource to a contractor. If a government terminates a contract due to our default, we
could be liable for excess costs incurred by the government in obtaining services from another source.
17
Our contracts with governmental agencies are subject to audit, which could result in adjustments to reimbursable contract costs or,
if we are charged with wrongdoing, possible temporary or permanent suspension from participating in government programs.
Our books and records are subject to audit by the various governmental agencies we serve and their representatives. These
audits can result in adjustments to the amount of contract costs we believe are reimbursable by the agencies and the amount of our
overhead costs allocated to the agencies. If such matters are not resolved in our favor, they could have a material adverse effect on our
business. In addition, if one of our subsidiaries is charged with wrongdoing as a result of an audit, that subsidiary, and possibly our
company as a whole, could be temporarily suspended or could be prohibited from bidding on and receiving future government contracts
for a period of time. Furthermore, as a government contractor, we are subject to an increased risk of investigations, criminal prosecution,
civil fraud actions, whistleblower lawsuits, and other legal actions and liabilities to which purely private sector companies are not, the
results of which could materially adversely impact our business. For example, from time to time we may be subject to qui tam lawsuits,
which typically allege that we have made false statements or certifications in connection with claims for payment, or improperly retained
overpayments, from the government. These suits may remain under seal (and hence, be unknown to us) for some time while the
government decides whether to intervene on behalf of the qui tam plaintiff.
Risks Related to our Capital Structure
The agreements governing our debt contain a number of restrictive covenants which will limit our ability to finance future operations,
acquisitions or capital needs or engage in other business activities that may be in our interest.
The Credit Agreement (defined below) and the indentures governing our debt contain a number of significant covenants that
impose operating and other restrictions on us and our subsidiaries. Such restrictions affect or will affect and, in many respects, limit or
prohibit, among other things, our ability and the ability of some of our subsidiaries to:
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incur additional indebtedness;
create liens;
pay dividends and make other distributions in respect of our equity securities;
redeem or repurchase our equity securities;
distribute excess cash flow from foreign to domestic subsidiaries;
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sell assets;
enter into transactions with affiliates; and
effect mergers or consolidations.
In addition, our Credit Agreement requires us to comply with a consolidated interest coverage ratio and consolidated leverage
ratio. Our ability to comply with these ratios may be affected by events beyond our control. These restrictions could limit our ability to
plan for or react to market or economic conditions or meet capital needs or otherwise restrict our activities or business plans, and could
adversely affect our ability to finance our operations, acquisitions, investments or strategic alliances or other capital needs or to engage
in other business activities that would be in our interest. A breach of any of these covenants or our inability to comply with the required
financial ratios could result in a default under our debt instruments. If an event of default occurs, our creditors could elect to:
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declare all borrowings outstanding, together with accrued and unpaid interest, to be immediately due and payable;
require us to apply all of our available cash to repay the borrowings; or
prevent us from making debt service payments on our borrowings.
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If we were unable to repay or otherwise refinance these borrowings when due, the applicable creditors could sell the collateral
securing some of our debt instruments, which constitutes substantially all of our domestic and foreign, wholly owned subsidiaries’
assets.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase
significantly.
Borrowings under our Credit Agreement are at variable rates of interest and expose us to interest rate risk. In March 2022, the
Federal Reserve began and it has continued, and is expected to continue, to raise interest rates in an effort to curb inflation. As interest
rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains
the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. A
1.00% increase in such interest rates would increase total interest expense under our Credit Agreement for the year ended September 30,
2023 by $8.6 million, including the effect of our interest rate swap and interest rate cap agreements. We may, from time to time, enter
into additional interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate
volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we
enter into may not fully mitigate our interest rate risk and could be subject to credit risk themselves.
If we are unable to continue to access credit on acceptable terms, our business may be adversely affected.
The changing nature of the global credit markets could make it more difficult for us to access funds, refinance our existing
indebtedness, enter into agreements for uncommitted debt bond facilities and new indebtedness, replace our existing revolving and term
credit agreements or obtain funding through the issuance of our securities. We use credit facilities to support our working capital and
other needs. There is no guarantee that we can continue to renew our credit facility on terms as favorable as those in our existing credit
facility and, if we are unable to do so, our costs of borrowing and our business may be adversely affected.
Risks Related to our International Operations
Our operations worldwide expose us to legal, political and economic risks in different countries as well as currency exchange rate
fluctuations and impacts from inflation that could harm our business and financial results.
During fiscal 2023, revenue attributable to our services provided outside of the United States to non-U.S. clients was
approximately 29% of our total revenue. There are risks inherent in doing business internationally, including:
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the ongoing conflict between Russia and Ukraine, which has resulted in the imposition by the U.S. and other nations of
restrictive actions against Russia, Belarus and certain banks, companies and individuals;
imposition of governmental controls and changes in laws, regulations or policies;
political and economic instability, including in the Middle East;
civil unrest, acts of terrorism, force majeure, war, or other armed conflict;
changes in U.S. and other national government trade policies affecting the markets for our services, such as retaliatory
tariffs between the United States and China;
political unrest in Hong Kong where we have a significant presence;
impact of the Covid-19 pandemic and its related economic impacts;
increases in the consumer price index and interest rates;
changes in regulatory practices, tariffs and taxes;
potential non-compliance with a wide variety of laws and regulations, including anti-corruption, export control and anti-
boycott laws and similar non-U.S. laws and regulations;
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changes in labor conditions;
logistical and communication challenges; and
currency exchange rate fluctuations, devaluations and other conversion restrictions.
Any of these factors could have a material adverse effect on our business, results of operations or financial condition.
We operate in many different jurisdictions and we could be adversely affected by legislative actions of governments, as well as
violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws.
The U.S. Foreign Corrupt Practices Act (FCPA) and similar worldwide anti-corruption laws, including the U.K. Bribery Act
of 2010, generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of
obtaining or retaining business. Our internal policies mandate compliance with these anti-corruption laws, including the requirements
to maintain accurate information and internal controls which may fall within the purview of the FCPA, its books and records provisions
or its anti-bribery provisions. We operate in many parts of the world that have experienced governmental corruption to some degree;
and, in some circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices. Despite our
training and compliance programs, we cannot assure that our internal control policies and procedures always will protect us from reckless
or criminal acts committed by our employees or agents. In addition, from time to time, government investigations of corruption in
construction-related industries affect us and our peers. Violations of these laws, or allegations of such violations, could disrupt our
business and result in a material adverse effect on our results of operations or financial condition.
The Building Safety Act, the primary legislation which introduces a new framework for the regulation of the UK construction
industry, became law on April 28, 2022 with certain provisions coming into force on June 28, 2022 and remaining provisions and
secondary legislation to follow. The Act extends liability periods for some historical defects in residential properties completed prior to
2022, creates a new government regulatory body responsible for building safety and new legal obligations regarding building safety,
reallocates the risk related to design and construction, and requires the development of a more stringent regulatory regime for select
buildings. The new legislation may result in new risk, regulatory and cost challenges for our United Kingdom and global operations.
Any of these events could adversely affect our United Kingdom, European operations and overall business and financial results.
We work in international locations where there are high security risks, which could result in harm to our employees and contractors
or material costs to us.
Some of our services are performed in high-risk locations, such as the Middle East, Africa, and Southeast Asia, where the
location is suffering from political, social or economic problems, or war or civil unrest. In those locations where we have employees or
operations, we may incur material costs to maintain the safety of our personnel. Despite these precautions, the safety of our personnel
in these locations may continue to be at risk. Acts of terrorism and threats of armed conflicts in or around various areas in which we
operate could limit or disrupt markets and our operations, including disruptions resulting from the evacuation of personnel, cancellation
of contracts, or the loss of key employees, contractors or assets.
Risks Related to Our Operations and Technology
Many of our project sites are inherently dangerous workplaces. Failure to maintain safe work sites and equipment could result in
environmental disasters, employee deaths or injuries, reduced profitability, the loss of projects or clients and possible exposure to
litigation.
Our project sites often put our employees and others in close proximity with mechanized equipment, moving vehicles, chemical
and manufacturing processes, and highly regulated materials. On some project sites, we may be responsible for safety and, accordingly,
we have an obligation to implement effective safety procedures. If we fail to implement these procedures or if the procedures we
implement are ineffective, we may suffer the loss of or injury to our employees, as well as expose ourselves to possible litigation. As a
result, our failure to maintain adequate safety standards and equipment could result in reduced profitability or the loss of projects or
clients, and could have a material adverse impact on our business, financial condition, and results of operations.
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Cybersecurity threats, information technology systems outages and data privacy incidents could adversely harm our business.
We may experience errors, outages, or delays of service in our information technology systems, which could significantly
disrupt our operations, impact our clients and employees, damage our reputation, and result in litigation and regulatory fines or penalties.
Various privacy and securities laws pertaining to client and employee data usage require us to manage and protect sensitive and
proprietary information. For example, the European’s Union General Data Protection Regulation extends the scope of the European
Union data protection laws to all companies processing data of European Union residents, regardless of the company’s location. In
addition, the California Consumer Privacy Act increased the penalties for data privacy incidents.
We face threats to our information technology systems, including unauthorized access, computer hackers, computer viruses,
malicious code, cyber-attacks, phishing and other cybersecurity problems and system disruptions, including possible unauthorized
access to our and our clients’ proprietary information. We rely on industry-accepted security measures and technology to securely
maintain all proprietary information on our information technology systems. In the ordinary course of business, we have been targeted
by malicious cyber-attacks. Anyone who circumvents our security measures could misappropriate proprietary information, including
information regarding us, our employees and/or our clients, or cause interruptions in our operations. Although we devote significant
resources to our cybersecurity programs and have implemented security measures to protect our systems and to prevent, detect and
respond to cybersecurity incidents, there can be no assurance that our efforts will prevent these threats. As these security threats continue
to evolve, we may be required to devote additional resources to protect, prevent, detect and respond against system disruptions and
security breaches.
We also rely in part on third-party software and information technology vendors to run our critical accounting, project
management and financial information systems. We depend on our software and information technology vendors to provide long-term
software and hardware support for our information systems. Our software and information technology vendors may decide to discontinue
further development, integration or long-term software and hardware support for our information systems, in which case we may need
to abandon one or more of our current information systems and migrate some or all of our accounting, project management and financial
information to other systems, thus increasing our operational expense, as well as disrupting the management of our business operations.
Any of these events could damage our reputation and have a material adverse effect on our business, financial condition, results
of operations and cash flows. Furthermore, while we maintain insurance that specifically covers these attacks, our coverage may not
sufficiently cover all types of losses or claims that may arise.
Risks Related to Contracts and Joint Ventures
Our business and operating results could be adversely affected by losses under fixed-price or guaranteed maximum price contracts.
Fixed-price contracts require us to either perform all work under the contract for a specified lump-sum or to perform an
estimated number of units of work at an agreed price per unit, with the total payment determined by the actual number of units performed.
In addition, we may enter guaranteed maximum price contracts where we guarantee a price or delivery date. For the year ended
September 30, 2023, our revenue was comprised of 43%, 34%, and 23% cost-reimbursable, guaranteed maximum price, and fixed-price
contracts, respectively. Fixed-price contracts expose us to a number of risks not inherent in cost-reimbursable contracts, including
underestimation of costs, ambiguities in specifications, unforeseen increases in or failures in estimating the cost of raw materials,
equipment or labor, increased costs as a result of inflation, problems with new technologies, delays beyond our control, fluctuations in
profit margins, failures of subcontractors to perform and economic or other changes that may occur during the contract period. United
States and foreign trade policy actions and tariffs such as the 2018 tariffs on steel and aluminum imports in the United States could
affect the profitability of our fixed-price construction projects. Losses under fixed-price or guaranteed contracts could be substantial and
adversely impact our results of operations.
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Our failure to meet contractual schedule or performance requirements that we have guaranteed could adversely affect our operating
results.
In some circumstances, we can incur liquidated or other damages if we do not achieve project completion by a scheduled date.
If we or an entity for which we have provided a guarantee fails to complete the project as scheduled and the matter cannot be satisfactorily
resolved with the client, we may be responsible for cost impacts to the client resulting from any delay or the cost to complete the project.
Our costs generally increase from schedule delays and/or could exceed our projections for a particular project. In addition, project
performance can be affected by a number of factors beyond our control, including unavoidable delays from governmental inaction,
public opposition, inability to obtain financing, weather conditions, unavailability of vendor materials, changes in the project scope of
services requested by our clients, industrial accidents, environmental hazards, labor disruptions, pandemics including the current
coronavirus, and other factors. Material performance problems for existing and future contracts could cause actual results of operations
to differ from those anticipated by us and also could cause us to suffer damage to our reputation within our industry and client base.
We may not be able to maintain adequate surety and financial capacity necessary for us to successfully bid on and win contracts.
In line with industry practice, we are often required to provide surety bonds, standby letters of credit or corporate guarantees
to our clients that indemnify them should our affiliate fail to perform its obligations under the terms of a contract. As of September 30,
2023 and September 30, 2022, we were contingently liable for $4.6 billion and $4.4 billion, respectively, in issued surety bonds primarily
to support project execution and we had outstanding letters of credit totaling $883.3 million and $644.7 million, respectively. A surety
may issue a performance or payment bond to guarantee to the client that our affiliate will perform under the terms of a contract. If our
affiliate fails to perform under the terms of the contract, then the client may demand that the surety or another corporate affiliate provide
the contracted services. In addition, we would typically have obligations to indemnify the surety for any loss incurred in connection
with the bond. If a surety bond or a letter of credit is required for a particular project and we are unable to obtain an appropriate surety
bond or letter of credit, we may not be able to pursue that project, which in turn could have a material adverse impact on our business,
financial condition, results of operations, and cash flows.
We conduct a portion of our operations through joint venture entities, over which we may have limited control.
Approximately 14% of our fiscal 2023 revenue was derived from our operations through joint ventures or similar partnership
arrangements, where control may be shared with unaffiliated third parties. As with most joint venture arrangements, differences in views
among the joint venture participants may result in delayed decisions or disputes. We also cannot control the actions of our joint venture
partners and we typically have joint and several liability with our joint venture partners under the applicable contracts for joint venture
projects. These factors could potentially adversely impact the business and operations of a joint venture and, in turn, our business and
operations.
Operating through joint ventures in which we are minority holders results in us having limited control over many decisions
made with respect to projects and internal controls relating to projects. Sales of our services provided to our unconsolidated joint ventures
were approximately 2% of our fiscal 2023 revenue. We generally do not have control of these unconsolidated joint ventures. These joint
ventures may not be subject to the same requirements regarding internal controls and internal control over financial reporting that we
follow. As a result, internal control problems may arise with respect to these joint ventures, which could have a material adverse effect
on our financial condition and results of operations and could also affect our reputation.
We participate in joint ventures where we provide guarantees and may be adversely impacted by the failure of the joint venture or its
participants to fulfill their obligations.
We have investments in and commitments to joint ventures with unrelated parties, including in connection with construction
services, government services, and the investment activities of ACAP. For example, real estate and infrastructure joint ventures are
inherently risky and may result in future losses since real estate markets are impacted by economic trends and government policies that
we do not control. These joint ventures from time to time may borrow money to help finance their activities and, in some circumstances,
we are required to provide guarantees of obligations of our affiliated entities. In addition, in connection with the investment activities of
ACAP, we provide guarantees of obligations, including guarantees for completion of projects, repayment of debt, environmental
indemnity obligations and other lender required guarantees.
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AECOM Capital’s real estate development and investment activities are inherently risky and may result in a future loss.
ACAP’s real estate business involves managing, sponsoring, investing in and developing commercial real estate projects and
joint ventures (Real Estate Joint Ventures) that are inherently risky and may result in future losses based on factors beyond our control,
including economic trends, government policies and competition. Our SEC-registered investment adviser jointly manages and sponsors
the AECOM-Canyon Equity Fund, L.P. (the “Fund”), in which the Company indirectly holds an equity interest and which also invests
in and develops Real Estate Joint Ventures on behalf of its investors. Real Estate Joint Ventures rely on substantial amounts of third
party borrowing to finance their development activities and the lenders of such financings typically require AECOM or an affiliate to
provide completion guarantees, repayment guarantees, environmental indemnities and other lender required credit support guarantees
to secure the Real Estate Joint Ventures financing. AECOM’s provision of lender guarantees is contingent upon the Real Estate Joint
Ventures meeting AECOM’s underwriting criteria, which include an affiliate of AECOM acting as either the construction manager at
risk or the owner’s representative for the project. Although the Fund and such Real Estate Joint Ventures have reserves that will be used
to share any cost overruns of the Real Estate Joint Ventures, if such reserves are depleted, then AECOM may be required to make
support payments to fund non-budgeted cost overruns on behalf of the Fund (but not on behalf of the Fund’s co-partner or any
unaffiliated limited partners of the Real Estate Joint Ventures). Some of the Fund’s limited partners may be permitted to make additional
equity co-investments in certain Real Estate Joint Ventures for which AECOM will provide support payments on behalf of the limited
partner co-investor in the event of a cost overrun of the Real Estate Joint Ventures after additional specific reserves have been depleted.
Risks Related to Laws and Regulations
Misconduct by our employees, subcontractors, partners or consultants or our failure to comply with laws or regulations applicable
to our business could cause us to lose customers or lose our ability to contract with government agencies.
As a government contractor, misconduct, fraud or other improper activities caused by our employees’, subcontractors’,
partners’ or consultants’ failure to comply with laws or regulations could have a significant negative impact on our business and
reputation. Such misconduct could include the failure to comply with procurement regulations, environmental regulations, regulations
regarding the protection of sensitive government information, legislation regarding the pricing of labor and other costs in government
contracts, regulations on lobbying or similar activities, and anti-corruption, anti-competition, export control and other applicable laws
or regulations. Our failure to comply with applicable laws or regulations, misconduct by any of our employees, subcontractors, partners
or consultants, or our failure to make timely and accurate certifications to government agencies regarding misconduct or potential
misconduct could subject us to fines and penalties, loss of government granted eligibility, cancellation of contracts and suspension or
debarment from contracting with government agencies, any of which may adversely affect our business.
We may be subject to substantial liabilities under environmental laws and regulations.
Our services are subject to numerous environmental protection laws and regulations that are complex and stringent. Our
business involves in part the planning, design, program management, construction management, and operations and maintenance at
various sites, including but not limited to, nuclear facilities, hazardous waste and Superfund sites, hydrocarbon production, distribution
and transport sites, and other infrastructure-related facilities. We also regularly perform work in and around sensitive environmental
areas, such as rivers, lakes and wetlands. In addition, we have contracts in support of U.S. federal government entities to destroy
hazardous materials, including chemical agents and weapons stockpiles, as well as to decontaminate and decommission nuclear facilities.
These activities may require us to manage, handle, remove, treat, transport and dispose of toxic or hazardous substances. We also own
and operate several properties in the U.S. and Canada that have been used for the storage and maintenance of construction equipment.
In the conduct of operations on these properties, and despite precautions having been taken, it is possible that there have been accidental
releases of individually relatively small amounts of fuel, oils, hydraulic fluids and other fluids while storing or servicing this equipment.
Such accidental releases though individually relatively small may have accumulated over time. Past business practices at companies that
we have acquired may also expose us to future unknown environmental liabilities.
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Significant fines, penalties and other sanctions may be imposed for non-compliance with environmental laws and regulations,
and some environmental laws provide for joint and several strict liabilities for remediation of releases of hazardous substances, rendering
a person liable for environmental damage, without regard to negligence or fault on the part of such person. These laws and regulations
may expose us to liability arising out of the conduct of operations or conditions caused by others, or for our acts that were in compliance
with all applicable laws at the time these acts were performed. For example, there are a number of governmental laws that strictly
regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances, such as Comprehensive
Environmental Response Compensation and Liability Act of 1980, and comparable state laws, that impose strict, joint and several
liabilities for the entire cost of cleanup, without regard to whether a company knew of or caused the release of hazardous substances. In
addition, some environmental regulations can impose liability for the entire cleanup upon owners, operators, generators, transporters
and other persons arranging for the treatment or disposal of such hazardous substances related to contaminated facilities or project sites.
Other federal environmental, health and safety laws affecting us include, but are not limited to, the Resource Conservation and Recovery
Act, the National Environmental Policy Act, the Clean Air Act, the Clean Air Mercury Rule, the Occupational Safety and Health Act,
the Toxic Substances Control Act and the Superfund Amendments and Reauthorization Act and the Energy Reorganization Act of 1974,
as well as other comparable national and state laws. Liabilities related to environmental contamination or human exposure to hazardous
substances, or a failure to comply with applicable regulations could result in substantial costs to us, including cleanup costs, fines and
civil or criminal sanctions, third-party claims for property damage or personal injury or cessation of remediation activities. Our
continuing work in the areas governed by these laws and regulations exposes us to the risk of substantial liability.
Risks Related to Climate Change
Climate change, natural disasters and related environmental issues could have a material adverse impact on us.
Climate-related events, such as an increase in frequency and severity of storms, floods, wildfires, droughts, hurricanes, freezing
conditions, and other natural disasters, may have a long-term impact on our business, financial condition and results of operation. While
we seek to mitigate our business risks associated with climate events, we recognize that there are inherent climate-related risks regardless
of where we conduct our businesses. For example, a catastrophic natural disaster could negatively impact any of our office locations
and the locations of our clients. Accordingly, a natural disaster has the potential to disrupt our and our clients’ businesses and may cause
us to experience work stoppages, project delays, financial losses and additional costs to resume operations, including increased insurance
costs or loss of cover, legal liability and reputational losses.
There is a rapidly evolving awareness and focus from stakeholders with respect to environmental, social and governance practices,
which could affect our business.
Stakeholder expectations with respect to environmental, social and governance matters have been rapidly evolving and
increasing. We risk damage to our reputation if we do not act responsibly in key areas including diversity and inclusion, environmental
stewardship, support for local communities and corporate governance. A failure to adequately meet stakeholders’ expectations may
result in loss of business, and an inability to attract and retain customers and talented personnel, which could have a negative impact on
our business, results of operations and financial condition, and potentially on the price of our common stock and cost of capital.
Risks Related to Acquisitions and Divestitures
We may be unable to successfully execute or effectively integrate acquisitions and divestitures may not occur as planned.
We regularly review our portfolio of businesses and pursue growth through acquisitions and seek to divest non-core businesses.
We may not be able to complete transactions on favorable terms, on a timely basis, or at all, and during the integration of any acquisition,
we may discover regulatory and compliance issues. In addition, our results of operations and cash flows may be adversely impacted by
(i) the failure of acquired businesses to meet or exceed expected returns; (ii) the failure to integrate acquired businesses on schedule
and/or to achieve expected synergies; (iii) the inability to dispose of non-core assets and businesses on satisfactory terms and conditions;
(iv) diversion of attention and increased burdens on our employees; and (v) the discovery of unanticipated liabilities or other problems
in acquired businesses for which we lack contractual protections, insurance or indemnities, or with regard to divested businesses, claims
by purchasers to whom we have provided contractual indemnification. Additional difficulties we may encounter as part of the integration
process include the following:
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the consequences of a change in tax treatment and the possibility that the full benefits anticipated from the acquisition or
disposition will not be realized;
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any delay in the integration or disposition of management teams, strategies, operations, products and services;
differences in business backgrounds, corporate cultures and management philosophies that may delay successful
integration;
the ability to retain key employees;
the ability to create and enforce uniform standards, controls, procedures, policies and information systems;
the challenge of restructuring complex systems, technology, networks and other assets in a seamless manner that minimizes
any adverse impact on customers, suppliers, employees and other constituencies;
potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisition, including costs
to integrate beyond current estimates;
the ability to deduct or claim tax attributes or benefits such as operating losses, business or foreign tax credits; and
the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls,
procedures and policies.
Any of these factors could adversely affect our ability to maintain relationships with customers, suppliers, employees and other
constituencies or could reduce our earnings or otherwise adversely affect our business and financial results.
Our plans to divest businesses are subject to various risks and uncertainties and may not be completed in accordance with the
expected plans or anticipated time frame, or at all, and will involve significant time and expense, which could disrupt or adversely
affect our business.
Divesting businesses involve risks and uncertainties, such as the difficulty separating assets related to such businesses from the
businesses we retain, employee distraction, the need to obtain regulatory approvals and other third-party consents, which potentially
disrupts customer and vendor relationships, and the fact that we may be subject to additional tax obligations or loss of tax benefits.
Because of these challenges, as well as market conditions or other factors, anticipated divestitures may take longer or be costlier or
generate fewer benefits than expected and may not be completed at all. If we are unable to complete divestitures or to successfully
transition divested businesses, our business and financial results could be negatively impacted. After we dispose of a business, we may
retain exposure on financial or performance guarantees and other contractual, employment, pension and severance obligations, and
potential liabilities that may arise under law because of the disposition or the subsequent failure of an acquirer. Our results of operations,
cash flows, working capital, effective tax rate, and financing requirements may be subject to increased volatility and our ability to fund
capital expenditures, investments and service debt may be diminished. In addition, any purchase price adjustments could be unfavorable
and other future proceeds owed to us as part of these transactions could be lower than we expect. As a result, performance by the divested
businesses or other conditions outside of our control could have a material adverse effect on our results of operations. In addition, the
divestiture of any business could negatively impact our profitability because of losses that may result from such a sale, the loss of sales
and operating income, or a decrease in cash flows.
Other Risks
An impairment charge of goodwill could have a material adverse impact on our financial condition and results of operations.
Because we have grown in part through acquisitions, goodwill and intangible assets-net represent a substantial portion of our
assets, and were $3.4 billion and $17.8 million, respectively as of September 30, 2023. Under generally accepted accounting principles
in the United States, we are required to test goodwill carried in our consolidated balance sheets for possible impairment on an annual
basis based upon a fair value approach and whenever events occur that indicate impairment could exist. These events or circumstances
could include a significant change in the business climate, including a significant sustained decline in a reporting unit’s market value,
legal factors, operating performance indicators, competition, sale or disposition of a significant portion of our business, a significant
sustained decline in our market capitalization and other factors.
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In addition, if we experience a decrease in our stock price and market capitalization over a sustained period, we would have to
record an impairment charge in the future. The amount of any impairment could be significant and could have a material adverse impact
on our financial condition and results of operations for the period in which the charge is taken.
We may be required to contribute additional cash to meet our significant underfunded benefit obligations associated with pension
benefit plans we manage or multiemployer pension plans in which we participate.
We have defined benefit pension plans for employees in the United States, United Kingdom, Canada, Australia, and Ireland.
At September 30, 2023, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the
fair value of plan assets) of approximately $165.3 million. In the future, our pension deficits may increase or decrease depending on
changes in the levels of interest rates, pension plan performance and other factors that may require us to make additional cash
contributions to our pension plans and recognize further increases in our net pension cost to satisfy our funding requirements. If we are
forced or elect to make up all or a portion of the deficit for unfunded benefit plans, our results of operations could be materially and
adversely affected.
A multiemployer pension plan is typically established under a collective bargaining agreement with a union to cover the union-
represented workers of various unrelated companies. Our collective bargaining agreements with unions require us to contribute to
various multiemployer pension plans; however, we do not control or manage these plans. For the year ended September 30, 2023, we
contributed $3.0 million to multiemployer pension plans. Under the Employee Retirement Income Security Act, an employer who
contributes to a multiemployer pension plan, absent an applicable exemption, may also be liable, upon termination or withdrawal from
the plan, for its proportionate share of the multiemployer pension plan’s unfunded vested benefit. If we terminate or withdraw from a
multiemployer plan, absent an applicable exemption (such as for some plans in the building and construction industry), we could be
required to contribute a significant amount of cash to fund the multiemployer plan’s unfunded vested benefit, which could materially
and adversely affect our financial results; however, since we do not control the multiemployer plans, we are unable to estimate any
potential contributions that could be required.
We may experience disproportionately high levels of collection risk and nonpayment if clients in specific geographic areas or
industries are adversely affected by factors particular to their geographic area or industry.
Our clients include public and private entities that have been, and may continue to be, negatively impacted by the changing
landscape in the global economy. While no one client accounted for over 10% of our revenue for fiscal 2023, we face collection risk as
a normal part of our business where we perform services and subsequently bill our clients for such services, or when we make equity
investments in majority or minority controlled large-scale client projects and other long-term capital projects before the project
completes operational status or completes its project financing. In the event that we have concentrated credit risk from clients in a
specific geographic area or industry, continuing negative trends or a worsening in the financial condition of that specific geographic
area or industry could make us susceptible to disproportionately high levels of default by those clients. Such defaults could materially
adversely impact our revenues, results of operations or accounts receivable.
Our services expose us to significant risks of liability and our insurance policies may not provide adequate coverage.
Our services involve significant risks of professional and other liabilities that may substantially exceed the fees that we derive
from such services. In addition, we sometimes contractually assume liability to clients on projects under indemnification or guarantee
agreements. We cannot predict the magnitude of potential liabilities from the operation of our business. In addition, in the ordinary
course of our business, we frequently make professional judgments and recommendations about environmental and engineering
conditions of project sites for our clients. We may be deemed to be responsible for these professional judgments and recommendations
if they are later determined to be inaccurate. Any unfavorable legal ruling against us could result in substantial monetary damages or
even criminal violations.
Our professional liability policies cover only claims made during the term of the policy. Additionally, our insurance policies
may not protect us against potential liability due to various exclusions in the policies and self-insured retention amounts. Partially or
completely uninsured claims, if successful and of significant magnitude, could have a material adverse effect on our business.
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Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as well as disrupt the
management of our business operations.
We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and because some
of our contracts require us to maintain specific insurance coverage limits. If any of our third-party insurers fail, suddenly cancel our
coverage or otherwise are unable to provide us with adequate insurance coverage, then our overall risk exposure and our operational
expenses would increase and the management of our business operations would be disrupted. In addition, there can be no assurance that
any of our existing insurance coverage will be renewable upon the expiration of the coverage period or that future coverage will be
affordable at the required limits.
If we do not have adequate indemnification for our services related to nuclear materials, it could adversely affect our business and
financial condition.
We provide services to the nuclear energy industry in the ongoing maintenance and modification, as well as the decontamination
and decommissioning, of nuclear energy plants. Indemnification provisions under the Price-Anderson Act available to nuclear energy
plant operators and contractors do not apply to all liabilities that we might incur while performing services as a radioactive materials
cleanup contractor for the nuclear energy industry. If the Price-Anderson Act’s indemnification protection does not apply to our services
or if our exposure occurs outside the U.S., our business and financial condition could be adversely affected either by our client’s refusal
to retain us, by our inability to obtain commercially adequate insurance and indemnification, or by potentially significant monetary
damages we may incur.
Our backlog of uncompleted projects under contract is subject to unexpected adjustments and cancellations and, thus may not
accurately reflect future revenue and profits.
At September 30, 2023, backlog was approximately $41.2 billion. We reported transaction price allocated to remaining
unsatisfied performance obligations (RUPO) of $21.9 billion, as described in Note 4, Revenue Recognition, in the notes to our
consolidated financial statements. The most significant differences between our backlog and RUPO are backlog contains revenue we
expect to record in the future where we have been awarded the work, but the contractual agreement has not yet been signed,
unconsolidated joint venture backlog where we expect to realize income through equity earnings rather than revenue, and revenue related
to service contracts that extend beyond the termination provisions of those contracts, where guidance for the calculation of RUPO
requires us to assume the contract will be terminated at its earliest convenience. Accordingly, RUPO is $19.3 billion lower than backlog.
We cannot guarantee that future revenue will be realized from either category of backlog or, if realized, will result in profits. Many
projects may remain in our backlog for an extended period of time because of the size or long-term nature of the contract. In addition,
from time to time, projects are delayed, scaled back or canceled. These types of backlog reductions adversely affect the revenue and
profits that we ultimately receive from contracts reflected in our backlog.
From time to time, we submit claims to clients for work we performed beyond the initial scope of some of our contracts. If these
clients do not approve these claims, our results of operations could be adversely impacted.
We typically have pending claims submitted under some of our contracts for payment of work performed beyond the initial
contractual requirements for which we have already recorded revenue. In general, we cannot guarantee that such claims will be approved
in whole, in part, or at all. Often, these claims can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to
accurately predict when these claims will be fully resolved. When these types of events occur and unresolved claims are pending, we
have used working capital in projects to cover cost overruns pending the resolution of the relevant claims. If these claims are not
approved, our revenue may be reduced in future periods.
27
In conducting our business, we depend on other contractors, subcontractors and equipment and material providers. If these parties
fail to satisfy their obligations to us or other parties or if we are unable to maintain these relationships, our revenue, profitability
and growth prospects could be adversely affected.
We depend on contractors, subcontractors and equipment and material providers in conducting our business. There is a risk
that we may have disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by
the subcontractor, customer concerns about the subcontractor, or our failure to extend existing task orders or issue new task orders under
a subcontract. Also, to the extent that we cannot acquire equipment and materials at reasonable costs, or if the amount we are required
to pay exceeds our estimates, our ability to complete a project in a timely fashion or at a profit may be impaired. In addition, if any of
our subcontractors fail to deliver on a timely basis the agreed-upon supplies and/or perform the agreed-upon services, our ability to
fulfill our obligations as a prime contractor may be jeopardized; we could be held responsible for such failures and/or we may be required
to purchase the supplies or services from another source at a higher price. This may reduce the profit to be realized or result in a loss on
a project for which the supplies or services are needed.
We also rely on relationships with other contractors when we act as their subcontractor or joint venture partner. Our future
revenue and growth prospects could be adversely affected if other contractors eliminate or reduce their subcontracts or joint venture
relationships with us, or if a government agency terminates or reduces these other contractors’ programs, does not award them new
contracts or refuses to pay under a contract. In addition, due to “pay when paid” provisions that are common in subcontracts in many
countries, including the U.S., we could experience delays in receiving payment if the prime contractor experiences payment delays.
If clients use our reports or other work product without appropriate disclaimers or in a misleading or incomplete manner, or if our
reports or other work product are not in compliance with professional standards and other regulations, our business could be
adversely affected.
The reports and other work product we produce for clients sometimes include projections, forecasts and other forward-looking
statements. Such information by its nature is subject to numerous risks and uncertainties, any of which could cause the information
produced by us to ultimately prove inaccurate. While we include appropriate disclaimers in the reports that we prepare for our clients,
once we produce such written work product, we do not always have the ability to control the manner in which our clients use such
information. As a result, if our clients reproduce such information to solicit funds from investors for projects without appropriate
disclaimers and the information proves to be incorrect, or if our clients reproduce such information for potential investors in a misleading
or incomplete manner, our clients or such investors may threaten to or file suit against us for, among other things, securities law
violations. If we were found to be liable for any claims related to our client work product, our business could be adversely affected.
In addition, our reports and other work product may need to comply with professional standards, licensing requirements,
securities regulations and other laws and rules governing the performance of professional services in the jurisdiction where the services
are performed. We could be liable to third parties who use or rely upon our reports and other work product even if we are not contractually
bound to those third parties. These events could in turn result in monetary damages and penalties.
Failure to adequately protect, maintain, or enforce our rights in our intellectual property may adversely limit our competitive
position.
Our success depends, in part, upon our ability to protect our intellectual property. We rely on a combination of intellectual
property policies and other contractual arrangements to protect much of our intellectual property where we do not believe that trademark,
patent or copyright protection is appropriate or obtainable. Trade secrets are generally difficult to protect. Although our employees are
subject to confidentiality obligations, this protection may be inadequate to deter or prevent misappropriation of our confidential
information and/or the infringement of our patents and copyrights. Further, we may be unable to detect unauthorized use of our
intellectual property or otherwise take appropriate steps to enforce our rights. Failure to adequately protect, maintain, or enforce our
intellectual property rights may adversely limit our competitive position.
28
Our revenue and growth prospects may be harmed if we or our employees are unable to obtain government granted eligibility or
other qualifications we and they need to perform services for our customers.
A number of government programs require contractors to have government granted eligibility, such as security clearance
credentials. Depending on the project, eligibility can be difficult and time-consuming to obtain. If we or our employees are unable to
obtain or retain the necessary eligibility, we may not be able to win new business, and our existing customers could terminate their
contracts with us or decide not to renew them. To the extent we cannot obtain or maintain the required security clearances for our
employees working on a particular contract, we may not derive the revenue or profit anticipated from such contract.
Negotiations with labor unions and possible work actions could divert management attention and disrupt operations. In addition,
new collective bargaining agreements or amendments to agreements could increase our labor costs and operating expenses.
We regularly negotiate with labor unions and enter into collective bargaining agreements. The outcome of any future
negotiations relating to union representation or collective bargaining agreements may not be favorable to us. We may reach agreements
in collective bargaining that increase our operating expenses and lower our net income as a result of higher wages or benefit expenses.
In addition, negotiations with unions could divert management attention and disrupt operations, which may adversely affect our results
of operations. If we are unable to negotiate acceptable collective bargaining agreements, we may have to address the threat of union-
initiated work actions, including strikes. Depending on the nature of the threat or the type and duration of any work action, these actions
could disrupt our operations and adversely affect our operating results.
Our charter documents contain provisions that may delay, defer or prevent a change of control.
Provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us,
even if the change in control would be beneficial to stockholders. These provisions include the following:
•
•
•
ability of our Board of Directors to authorize the issuance of preferred stock in series without stockholder approval;
vesting of exclusive authority in our Board of Directors to determine the size of the board and to fill vacancies; and
advance notice requirements for stockholder proposals and nominations for election to our Board of Directors.
We cannot guarantee the timing, amount or payment of dividends.
Although our Board of Directors has adopted a dividend policy under which we intend to pay a regular quarterly cash dividend,
the timing and amount of any subsequently declared dividend (or any special dividend) is subject to the discretion of the Board of
Directors and will be based on a variety of factors, including cash flows, earnings and financial borrowing availability and other
restrictions under our outstanding indebtedness. We are not required to declare dividends and we are restricted under our outstanding
indebtedness and could be restricted under future financing or other arrangements. Our Board of Directors may modify or terminate our
dividend policy. Accordingly, we cannot provide any assurances that we will pay quarterly or special dividends or the amount or timing
thereof. Any reduction or elimination of our dividend policy or dividend payments could have a negative effect on the price of our
common stock.
Changes in tax laws could increase our worldwide tax rate and materially affect our results of operations.
We are subject to tax laws in the U.S. and numerous foreign jurisdictions. The U.S. and many international legislative and
regulatory bodies continually propose and enact legislation that could significantly impact how U.S. multinational corporations are
taxed.
The Organization for Economic Co-operation and Development (OECD), a global coalition of member countries, has
developed a two-pillar framework to reform international taxation. The proposal aims to ensure that multinationals pay a minimum rate
of tax on their foreign profits through the introduction of a global minimum tax among other provisions. As this framework is subject
29
to further negotiation and implementation by each member country, the timing and ultimate impact of any such changes on our tax
obligations are uncertain.
Due to the large scale of our U.S. and international business activities, many of these proposed changes, if enacted into law,
could have an adverse impact on our worldwide effective tax rate, income tax expense and cash flows.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our corporate offices are located in approximately 9,000 square feet of space at 13355 Noel Road, Dallas, Texas. Our other
offices, including smaller administrative or project offices, consist of an aggregate of approximately 6.4 million square feet worldwide.
Virtually all of our offices are leased. See Note 11 in the notes to our consolidated financial statements for information regarding our
lease obligations. We may add additional facilities from time to time in the future as the need arises.
ITEM 3. LEGAL PROCEEDINGS
As a government contractor, we are subject to various laws and regulations that are more restrictive than those applicable to
non-government contractors. Intense government scrutiny of contractors’ compliance with those laws and regulations through audits
and investigations is inherent in government contracting and, from time to time, we receive inquiries, subpoenas, and similar demands
related to our ongoing business with government entities. Violations can result in civil or criminal liability as well as suspension or
debarment from eligibility for awards of new government contracts or option renewals.
We are involved in various investigations, claims and lawsuits in the normal conduct of our business. We are not always aware
if we or our affiliates are under investigation or the status of such matters. Although the outcome of our legal proceedings cannot be
predicted with certainty and no assurances can be provided, in the opinion of our management, based upon current information and
discussions with counsel, with the exception of the matters noted in Note 18, Commitments and Contingencies, to the financial
statements contained in this report to the extent stated therein, none of the investigations, claims and lawsuits in which we are involved
is expected to have a material adverse effect on our consolidated financial position, results of operations, cash flows or our ability to
conduct business. See Note 18, Commitments and Contingencies, to the financial statements contained in this report for a discussion of
certain matters to which we are a party. The information set forth in such note is incorporated by reference into this Item 3. From time
to time, we establish reserves for litigation when we consider it probable that a loss will occur.
ITEM 4. MINE SAFETY DISCLOSURES
None.
30
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange (NYSE) under the symbol “ACM.” According to the records of
our transfer agent, there were 1,467 stockholders of record as of November 10, 2023.
Unregistered Sales of Equity Securities
None.
Equity Compensation Plans
The following table presents certain information about shares of AECOM common stock that may be issued under our equity
compensation plans as of September 30, 2023:
Plan Category
Equity compensation plans not approved by stockholders . . . .
Equity compensation plans approved by stockholders:
AECOM Stock Incentive Plans . . . . . . . . . . . . . . . . . . . . . . .
AECOM Employee Stock Purchase Plan(3) . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Column A
Column B
Column C
Number of securities
to be issued
upon exercise
of outstanding
options, warrants,
and rights(1)
N/A
1,576,417 (1)
N/A
1,576,417
$
Weighted‑average
exercise price of
Outstanding
options,
warrants, and
Rights
Number of securities
remaining available
for future
issuance under
equity compensation
plans (excluding
securities reflected
in Column A)
N/A
38.72 (2)
N/A
38.72
N/A
10,239,810
8,440,301
18,680,111
(1)
Includes 106,194 shares issuable upon the exercise of stock options, 772,818 shares issuable upon the vesting of Restricted Stock
Units, and 697,405 shares issuable if specified performance targets are met under Performance Earnings Program Awards (PEP).
(2) Weighted-average exercise price of outstanding options only.
(3) Amounts only reflected in column (c) and include all shares available for future issuance and subject to outstanding rights.
Performance Measurement Comparison(1)
The following chart compares the cumulative total stockholder return of AECOM stock (ACM) with the cumulative total return
of the S&P MidCap 400, and the S&P Composite 1500 Construction & Engineering, from September 28, 2018 to September 29, 2023.
We believe the S&P 400 MidCap is an appropriate independent broad market index, since it measures the performance of
similar mid-sized companies in numerous sectors. In addition, we believe the S&P Composite 1500 Construction & Engineering index
is an appropriate third party published industry index since it measures the performance of engineering and construction companies.
(1) This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any of our filings
under the Securities Act or Exchange Act whether made before or after the date hereof and irrespective of any general incorporation
language in any such filing.
31
Stock Repurchase Program
On September 22, 2021, the Company’s Board of Directors approved an increase in the Company’s repurchase authorization
of AECOM common stock to $1.0 billion. Stock repurchases can be made through open market purchases or other methods, including
pursuant to a Rule 10b5-1 plan. On November 9, 2023, the Board approved another increase in the Company’s repurchase authorization
back up to $1.0 billion. A summary of the repurchase activity for the three months ended September 30, 2023 is as follows:
Period
July 1 – 31, 2023 . . . . . . . . . . . . . . . . . . .
August 1 – 31, 2023 . . . . . . . . . . . . . . . .
September 1 – 30, 2023 . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Number
of Shares
Purchased
Total Number of Shares
Maximum Approximate Dollar
Purchased as Part of Publicly Value that May Yet Be Purchased
Average Price
Paid Per Share Announced Plans or Programs Under the Plans or Programs
452,000,000
352,000,000
220,200,000
— $
1,138,926
1,551,753
2,690,679
—
87.82
83.79
85.50
— $
1,138,926
1,551,753
2,690,679
$
ITEM 6. RESERVED
32
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect the Company’s current beliefs,
expectations or intentions regarding future events. These statements include forward-looking statements with respect to the Company,
including the Company’s business, operations and strategy, and infrastructure consulting industry. Statements that are not historical
facts, without limitation, including statements that use terms such as “anticipates,” “believes,” “expects,” “estimates,” “intends,”
“may,” “plans,” “potential,” “projects,” and “will” and that relate to our future revenues, expenditures and business trends; future
reduction of our self-perform at-risk construction exposure; future accounting estimates; future contractual performance obligations;
future conversions of backlog; future capital allocation priorities, including common stock repurchases, future trade receivables, future
debt pay downs; future post-retirement expenses; future tax benefits and expenses, and the impact of future tax laws; future compliance
with regulations; future legal claims and insurance coverage; future effectiveness of our disclosure and internal controls over financial
reporting; future costs savings; and other future economic and industry conditions, are forward-looking statements. In light of the risks
and uncertainties inherent in all forward-looking statements, the inclusion of such statements in this Annual Report should not be
considered as a representation by us or any other person that our objectives or plans will be achieved. Although management believes
that the assumptions underlying the forward-looking statements are reasonable, these assumptions and the forward-looking statements
are subject to various factors, risks and uncertainties, many of which are beyond our control, including, but not limited to, our business
is cyclical and vulnerable to economic downturns and client spending reductions; government shutdowns; long-term government
contracts and subject to uncertainties related to government contract appropriations; governmental agencies may modify, curtail or
terminate our contracts; government contracts are subject to audits and adjustments of contractual terms; losses under fixed-price
contracts; limited control over operations run through our joint venture entities; liability for misconduct by our employees or
consultants; failure to comply with laws or regulations applicable to our business; maintaining adequate surety and financial capacity;
potential high leverage and inability to service our debt and guarantees; ability to continue payment of dividends; exposure to political
and economic risks in different countries, including tariffs; currency exchange rate and interest fluctuations; retaining and recruiting
key technical and management personnel; legal claims; inadequate insurance coverage; environmental law compliance and inadequate
nuclear indemnification; unexpected adjustments and cancellations related to our backlog; partners and third parties who may fail to
satisfy their legal obligations; managing pension costs; AECOM Capital’s real estate development; cybersecurity issues, IT outages
and data privacy; risks associated with the benefits and costs of the sale of our Management Services and self-perform at-risk civil
infrastructure, power construction, and oil and gas construction businesses, including the risk that any purchase adjustments from those
transactions could be unfavorable and any future proceeds owed to us as part of the transactions could be lower than we expect; as
well as other additional risks and factors discussed in this Annual Report on Form 10-K and any subsequent reports we file with the
SEC. Accordingly, actual results could differ materially from those contemplated by any forward-looking statement.
All subsequent written and oral forward-looking statements concerning the Company or other matters attributable to the
Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. You are
cautioned not to place undue reliance on these forward-looking statements, which speak only to the date they are made. The Company
is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statement that may be
made from time to time, whether as a result of new information, future developments or otherwise. Please review “Part I, Item 1A—
Risk Factors” in this Annual Report for a discussion of the factors, risks and uncertainties that could affect our future results.
Our fiscal year consists of 52 or 53 weeks, ending on the Friday closest to September 30. For clarity of presentation, we present
all periods as if the year ended on September 30. We refer to the fiscal year ended September 30, 2022 as “fiscal 2022” and the fiscal
year ended September 30, 2023 as “fiscal 2023.” Fiscal years 2023, 2022, and 2021 each contained 52, 52, and 52 weeks, respectively,
and ended on September 29, September 30, and October 1, respectively.
In this section, we discuss the results of our operations for the year ended September 30, 2023 compared to the year ended
September 30, 2022. For a discussion on the year ended September 30, 2022 compared to the year ended September 30, 2021, please
refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual
Report on Form 10-K for the year ended September 30, 2022.
Overview
We are a leading global provider of professional infrastructure consulting services for governments, businesses and
organizations throughout the world. We provide advisory, planning, consulting, architectural and engineering design, construction and
33
program management services, and investment and development services to public and private clients worldwide in major end markets
such as transportation, facilities, water, environmental, and energy.
Our business focuses primarily on providing fee-based knowledge-based services. We primarily derive income from our ability
to generate revenue and collect cash from our clients through the billing of our employees’ time spent on client projects and our ability
to manage our costs. AECOM Capital primarily derives its income from real estate development sales and management fees.
We report our continuing business through three segments, each of which is described in further detail below: Americas,
International, and AECOM Capital (ACAP). Such segments are organized by the differing specialized needs of the respective clients,
and how we manage the business. We have aggregated various operating segments into our reportable segments based on their similar
characteristics, including similar long-term financial performance, the nature of services provided, internal processes for delivering those
services, and types of customers.
• Americas: Planning, consulting, architectural and engineering design, construction management and program management
services to public and private clients in the United States, Canada, and Latin America in major end markets such as
transportation, water, government, facilities, environmental, and energy.
•
International: Planning, consulting, architectural and engineering design services and program management to public and
private clients in Europe, the Middle East, India, Africa and the Asia-Australia-Pacific regions in major end markets such
as transportation, water, government, facilities, environmental, and energy.
• AECOM Capital (ACAP): Primarily invests in and develops real estate projects.
Our revenue is dependent on our ability to attract and retain qualified and productive employees, identify business opportunities,
allocate our labor resources and capital to profitable and high growth markets, secure new contracts, and renew existing client
agreements. Demand for our services may be vulnerable to sudden economic downturns and reductions in government and private
industry spending, which may result in clients delaying, curtailing or canceling proposed and existing projects. Moreover, as a
professional services company, maintaining the high quality of the work generated by our employees is integral to our revenue generation
and profitability. Given the global nature of our business, our revenue is exposed to currency rate fluctuations that could change from
period to period and year to year.
Our costs consist primarily of the compensation we pay to our employees, including salaries, fringe benefits, the costs of hiring
subcontractors, other project-related expenses and sales, general and administrative costs.
In September 2021, the Board approved an increase in our stock repurchase authorization to $1.0 billion. At September 30,
2023, we have approximately $220 million remaining of the Board’s repurchase authorization. We intend to deploy future available
cash towards dividends and stock repurchases consistent with our return driven capital allocation policy.
We have exited substantially all of our self-perform at-risk construction businesses and divested our remaining non-core oil
and gas businesses in January 2022. As part of our ongoing plan to improve profitability and maintain a reduced risk profile, we
continuously evaluate our geographic exposure. In March 2022, we substantially completed our exit of all business operations in Russia
consistent with our announcement on March 7, 2022.
In fiscal year 2023, we initiated a process to explore strategic options for the AECOM Capital business. This process is
consistent with our focus on our professional services business. AECOM Capital will continue to support AECOM’s existing investment
vehicles and investments in a manner consistent with their current obligations. We initiated a project-by-project review of the existing
investment portfolio, including an analysis of the incremental cash requirements that might be required to carry the investments on our
balance sheet if current market conditions persist. We determined that the incremental investments to these assets did not meet the
objectives of our capital allocation policy. We reflected this change in strategy and the expected acceleration of these investment exits
as an impairment charge of $307.0 million in the third quarter of fiscal 2023. This impairment did not relate to investments in respect
of which affiliates of AECOM Capital provide advisory services or manage third party capital.
We expect to incur restructuring costs of approximately $50 million to $70 million in fiscal 2024, primarily related to ongoing
actions that are expected to deliver continued margin improvement and efficiencies. Our estimated restructuring costs include the
ongoing optimization of our office real estate portfolio and exit of certain countries in Southeast Asia, subject to applicable laws, as part
of our ongoing plan to evaluate our geographic exposure and reduce our risk profile.
34
Acquisitions
There were no acquisitions consummated during the years ended September 30, 2023, 2022 and 2021.
All of our acquisitions have been accounted for as business combinations and the results of operations of the acquired
companies have been included in our consolidated results since the dates of the acquisitions.
Components of Income and Expense
2023
2022
Year Ended September 30,
2021
(in millions)
2020
Other Financial Data:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposal activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 14,378
13,433
945
(279)
(154)
(188)
—
—
324
$
$ 13,148
12,300
848
54
(147)
(108)
—
—
647
$
Revenue
$ 13,341 $ 13,240
12,530
710
49
(190)
(188)
—
—
381
12,543
798
35
(155)
(48)
—
—
630 $
$
2019
$ 13,642
13,030
612
49
(148)
(95)
3
(25)
396
$
We generate revenue primarily by providing planning, consulting, architectural and engineering design, construction and
program management services to public and private clients around the world. Our revenue consists of both services provided by our
employees and pass-through revenues from subcontractors and other direct costs. We generally recognize revenue over time as
performance obligations are satisfied and control over promised goods or services are transferred to our customers. We generally
measure progress to completion using an input measure of total costs incurred divided by total costs expected to be incurred.
Cost of Revenue
Cost of revenue reflects the cost of our own personnel (including fringe benefits and overhead expense) and fees from
subcontractors and other direct costs associated with revenue.
Amortization Expense of Acquired Intangible Assets
Included in our cost of revenue is amortization of acquired intangible assets. We have ascribed value to identifiable intangible
assets other than goodwill in our purchase price allocations for companies we have acquired. These assets include, but are not limited
to, backlog and customer relationships. To the extent we ascribe value to identifiable intangible assets that have finite lives, we amortize
those values over the estimated useful lives of the assets. Such amortization expense, although non-cash in the period expensed, directly
impacts our results of operations.
Equity in Earnings of Joint Ventures
Equity in earnings of joint ventures includes our portion of fees charged by our unconsolidated joint ventures to clients for
services performed by us and other joint venture partners along with earnings we receive from our return on investments in
unconsolidated joint ventures.
General and Administrative Expenses
General and administrative expenses include corporate expenses, including personnel, occupancy, and administrative expenses.
35
Restructuring Expenses
Restructuring expenses are comprised of personnel and other costs, real estate costs, and costs associated with the exit of our
Russia-related businesses primarily related to actions that are expected to deliver continued margin improvements and efficiencies.
Geographic Information
For geographic financial information, please refer to Note 4 and Note 19 in the notes to our consolidated financial statements
found elsewhere in the Form 10-K.
Critical Accounting Estimates
Our accounting policies, including those described below, often require management to make significant estimates and
assumptions using information available at the time the estimates are made. Such estimates and assumptions significantly affect various
reported amounts of assets, liabilities, revenue and expenses. If future experience differs significantly from these estimates and
assumptions, our results of operations and financial condition could be affected. Our most critical accounting policies and estimates are
described below. We have not materially changed our estimation methodology during the period presented.
Revenue Recognition
Our accounting policies establish principles for recognizing revenue upon the transfer of control of promised goods or services
to customers. We generally recognize revenues over time as performance obligations are satisfied. We generally measure our progress
to completion using an input measure of total costs incurred divided by total costs expected to be incurred. In the course of providing
these services, we routinely subcontract for services and incur other direct cost on behalf of our clients. These costs are passed through
to clients and, in accordance with accounting rules, are included in our revenue and cost of revenue.
Revenue recognition and profit is dependent upon a number of factors, including the accuracy of a variety of estimates made
at the balance sheet date, such as engineering progress, material quantities, the achievement of milestones, penalty provisions, labor
productivity and cost estimates. Additionally, we are required to make estimates for the amount of consideration to be received, including
bonuses, awards, incentive fees, claims, unpriced change orders, penalties and liquidated damages. Variable consideration is included
in the estimate of transaction price only to the extent that a significant reversal would not be probable. We continuously monitor factors
that may affect the quality of our estimates, and material changes in estimates are disclosed accordingly.
Claims Recognition
Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price) that we seek
to collect from customers or others for delays, errors in specifications and designs, contract terminations, change orders in dispute or
unapproved contracts as to both scope and price or other causes of unanticipated additional costs. Judgment is required to estimate the
amount, if any, of revenue to be recognized on claims. We record contract revenue related to claims only if it is probable that the claim
will result in additional contract revenue and only to the extent that a significant reversal would not be probable. The amounts recorded,
if material, are disclosed in the notes to the financial statements. Costs attributable to claims are treated as costs of contract performance
as incurred.
Government Contract Matters
Our federal government and certain state and local agency contracts are subject to, among other regulations, regulations issued
under the Federal Acquisition Regulations (FAR). These regulations can limit the recovery of certain specified indirect costs on contracts
and subject us to ongoing multiple audits by government agencies such as the Defense Contract Audit Agency (DCAA). In addition,
most of our federal and state and local contracts are subject to termination at the discretion of the client.
Audits by the DCAA and other agencies consist of reviews of our overhead rates, operating systems and cost proposals to
ensure that we account for such costs in accordance with the Cost Accounting Standards of the FAR (CAS). If the DCAA determines
we have not accounted for such costs consistent with CAS, the DCAA may disallow these costs. There can be no assurance that audits
by the DCAA or other governmental agencies will not result in material cost disallowances in the future.
36
Allowance for Doubtful Accounts and Expected Credit Losses
We record accounts receivable net of an allowance for doubtful accounts. This allowance for doubtful accounts is estimated
based on management’s evaluation of the contracts involved and the financial condition of our clients. The factors we consider in our
contract evaluations include, but are not limited to:
• Client type—federal or state and local government or commercial client;
• Historical contract performance;
• Historical collection and delinquency trends;
• Client credit worthiness; and
• General economic conditions.
Contract Assets and Contract Liabilities
Contract assets represent the contract revenue recognized but not yet billed pursuant to contract terms.
Contract liabilities represent the billings to date, as allowed under the terms of a contract, but not yet recognized as contract
revenue using our revenue recognition policy.
Investments in Unconsolidated Joint Ventures
We have noncontrolling interests in joint ventures accounted for under the equity method. Fees received for and the associated
costs of services performed by us and billed to joint ventures with respect to work done by us for third-party customers are recorded as
our revenues and costs in the period in which such services are rendered. In certain joint ventures, a fee is added to the respective billings
from both us and the other joint venture partners on the amounts billed to the third-party customers. These fees result in earnings to the
joint venture and are split with each of the joint venture partners and paid to the joint venture partners upon collection from the third-party
customer. We record our allocated share of these fees as equity in earnings of joint ventures.
Additionally, our ACAP segment primarily invests in real estate projects.
Income Taxes
We provide for income taxes in accordance with principles contained in ASC Topic 740, Income Taxes. Under these principles,
we recognize the amount of income tax payable or refundable for the current year and deferred tax assets and liabilities for the future
tax consequences of events that have been recognized in our financial statements or tax returns.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in earnings in the period when the new rate is enacted. Deferred tax assets are evaluated for future realization and reduced by a valuation
allowance if it is more likely than not that a portion will not be realized.
We measure and recognize the amount of tax benefit that should be recorded for financial statement purposes for uncertain tax
positions taken or expected to be taken in a tax return. With respect to uncertain tax positions, we evaluate the recognized tax benefits
for recognition, measurement, derecognition, classification, interest and penalties, interim period accounting and disclosure
requirements. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial
statements or tax returns.
Valuation Allowance. Deferred income taxes are provided on the liability method whereby deferred tax assets and liabilities
are established for the difference between the financial reporting and income tax basis of assets and liabilities, as well as for tax attributes
such as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws
and tax rates on the date of enactment of such changes to laws and tax rates.
37
Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or
all of the deferred tax assets may not be realized. The evaluation of the recoverability of the deferred tax asset requires the Company to
weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax
assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified.
Whether a deferred tax asset may be realized requires considerable judgment by us. In considering the need for a valuation allowance,
we consider a number of factors including the nature, frequency, and severity of cumulative financial reporting losses in recent years,
the future reversal of existing temporary differences, predictability of future taxable income exclusive of reversing temporary differences
of the character necessary to realize the asset, relevant carryforward periods, taxable income in carry-back years if carry-back is
permitted under tax law, and prudent and feasible tax planning strategies that would be implemented, if necessary, to protect against the
loss of the deferred tax asset that would otherwise expire. Whether a deferred tax asset will ultimately be realized is also dependent on
varying factors, including, but not limited to, changes in tax laws and audits by tax jurisdictions in which we operate.
If future changes in judgment regarding the realizability of our deferred tax assets lead us to determine that it is more likely
than not that we will not realize all or part of our deferred tax asset in the future, we will record an additional valuation allowance.
Conversely, if a valuation allowance exists and we determine that the ultimate realizability of all or part of the net deferred tax asset is
more likely than not to be realized, then the amount of the valuation allowance will be reduced. This adjustment will increase or decrease
income tax expense in the period of such determination.
Undistributed Non-U.S. Earnings. The results of our operations outside of the United States are consolidated for financial
reporting; however, earnings from investments in non-U.S. operations are included in domestic U.S. taxable income only when actually
or constructively received. No deferred taxes have been provided on the undistributed gross book-tax basis differences of our non-U.S.
operations of approximately $1.3 billion because we have the ability to and intend to permanently reinvest these basis differences
overseas. If we were to repatriate these basis differences, additional taxes could be due at that time.
We continually explore initiatives to better align our tax and legal entity structure with the footprint of our non-U.S. operations
and we recognize the tax impact of these initiatives, including changes in assessment of its uncertain tax positions, indefinite
reinvestment exception assertions and realizability of deferred tax assets, earliest in the period when management believes all necessary
internal and external approvals associated with such initiatives have been obtained, or when the initiatives are materially complete.
Goodwill and Acquired Intangible Assets
Goodwill represents the excess of amounts paid over the fair value of net assets acquired from an acquisition. In order to
determine the amount of goodwill resulting from an acquisition, we perform an assessment to determine the value of the acquired
company’s tangible and identifiable intangible assets and liabilities. In our assessment, we determine whether identifiable intangible
assets exist, which typically include backlog and customer relationships.
We test goodwill for impairment annually for each reporting unit in the beginning of the fourth quarter of the fiscal year and
between annual tests, if events occur or circumstances change which suggest that goodwill should be evaluated. Such events or
circumstances include significant changes in legal factors and business climate, recent losses at a reporting unit, and industry trends,
among other factors. A reporting unit is defined as an operating segment or one level below an operating segment. Our impairment tests
are performed at the operating segment level as they represent our reporting units.
Goodwill is evaluated for impairment either by assessing qualitative factors or by performing a quantitative assessment.
Qualitative factors, such as overall financial performance, industry or market considerations, or other relevant events, are assessed to
determine if it is more likely than not that the fair value of the reporting units is less than their carrying amounts. During a quantitative
impairment test, we estimate the fair value of the reporting unit using income and market approaches, and compare that amount to the
carrying value of that reporting unit. In the event the fair value of the reporting unit is determined to be less than the carrying value,
goodwill is impaired, and an impairment loss is recognized equal to the excess, limited to the total amount of goodwill allocated to the
reporting unit.
The impairment evaluation process includes, among other things, making assumptions about variables such as revenue growth
rates, profitability, discount rates, and industry market multiples, which are subject to a high degree of judgment.
There are inherent uncertainties related to each of the above listed assumptions, and our judgment in applying them. Changes
in the assumptions used in our goodwill and intangible assets could result in impairment charges that could be material to our
consolidated financial statements in any given period. We have not materially changed our estimation methodology during the periods
presented.
38
Pension Benefit Obligations
A number of assumptions are necessary to determine our pension liabilities and net periodic costs. These liabilities and net
periodic costs are sensitive to changes in those assumptions. The assumptions include discount rates, long-term rates of return on plan
assets and inflation levels limited to the United Kingdom and are generally determined based on the current economic environment in
each host country at the end of each respective annual reporting period. We evaluate the funded status of each of our retirement plans
using these current assumptions and determine the appropriate funding level considering applicable regulatory requirements, tax
deductibility, reporting considerations and other factors. Based upon current assumptions, we expect to contribute $22.2 million to our
international plans in fiscal 2024. Our required minimum contributions for our U.S. qualified plans are not significant. In addition, we
may make additional discretionary contributions. We currently expect to contribute $12.9 million to our U.S. plans (including benefit
payments to nonqualified plans and postretirement medical plans) in fiscal 2024. If the discount rate was reduced by 25 basis points,
plan liabilities would increase by approximately $26.6 million. If the discount rate and return on plan assets were reduced by 25 basis
points, plan expense would increase by approximately $0.3 million and increase by approximately $2.7 million, respectively. If inflation
increased by 25 basis points, plan liabilities in the United Kingdom would increase by approximately $17.1 million and plan expense
would increase by approximately $2.0 million.
At each measurement date, all assumptions are reviewed and adjusted as appropriate. With respect to establishing the return on
assets assumption, we consider the long-term capital market expectations for each asset class held as an investment by the various
pension plans. In addition to expected returns for each asset class, we take into account standard deviation of returns and correlation
between asset classes. This is necessary in order to generate a distribution of possible returns which reflects diversification of assets.
Based on this information, a distribution of possible returns is generated based on the plan’s target asset allocation.
Capital market expectations for determining the long-term rate of return on assets are based on forward-looking assumptions
which reflect a 20-year view of the capital markets. In establishing those capital market assumptions and expectations, we rely on the
assistance of our actuaries and our investment consultants. We and the plan trustees review whether changes to the various plans’ target
asset allocations are appropriate. A change in the plans’ target asset allocations would likely result in a change in the expected return on
asset assumptions. In assessing a plan’s asset allocation strategy, we and the plan trustees consider factors such as the structure of the
plan’s liabilities, the plan’s funded status, and the impact of the asset allocation to the volatility of the plan’s funded status, so that the
overall risk level resulting from our defined benefit plans is appropriate within our risk management strategy.
Between September 30, 2022 and September 30, 2023, the aggregate worldwide pension deficit decreased from $204.4 million
to $165.3 million due to increased discount rates. If the various plans do not experience future investment gains to reduce this shortfall,
the deficit will be reduced by additional contributions.
Accrued Professional Liability Costs
We carry professional liability insurance policies or self-insure for our initial layer of professional liability claims under our
professional liability insurance policies and for a deductible for each claim even after exceeding the self-insured retention. We accrue
for our portion of the estimated ultimate liability for the estimated potential incurred losses. We establish our estimate of loss for each
potential claim in consultation with legal counsel handling the specific matters and based on historic trends taking into account recent
events. We also use an outside actuarial firm to assist us in estimating our future claims exposure. It is possible that our estimate of loss
may be revised based on the actual or revised estimate of liability of the claims.
39
Fiscal year ended September 30, 2023 compared to the fiscal year ended September 30, 2022
Consolidated Results
Fiscal Year Ended
September 30, September 30,
Change
2023
2022
($ in millions)
$
%
$ 14,378.5 $ 13,148.2 $ 1,230.3
12,300.2 1,132.8
97.5
(333.0)
(6.3)
(80.9)
(322.7)
2.4
32.1
(49.1)
(337.3)
(80.0)
(257.3)
22.7
(234.6)
(17.7)
13,433.0
945.5
(279.4)
(153.6)
(188.4)
324.1
8.3
40.3
(159.3)
213.4
56.1
157.3
(57.2)
100.1
(43.2)
848.0
53.6
(147.3)
(107.5)
646.8
5.9
8.2
(110.2)
550.7
136.1
414.6
(79.9)
334.7
(25.5)
9.4 %
9.2
11.5
(621.3)
4.3
75.3
(49.9)
40.7
391.5
44.6
(61.2)
(58.8)
(62.1)
(28.4)
(70.1)
69.4
(1.6)
(44.8)
114.1
(58.8)
55.3 $
(3.0)
1.4
(20.7)
(24.1)
(275.0)
389.1
(78.5)
19.7
310.6 $ (255.3)
(214.3)
85.9
(70.7)
(25.1)
(82.2)%
$
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in (losses) earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests from continuing operations . . .
Net (loss) income attributable to noncontrolling interests from discontinued
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to AECOM from continuing operations . . . . . . . . . . . . . . .
Net loss attributable to AECOM from discontinued operations . . . . . . . . . . . . . . . .
Net income attributable to AECOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
The following table presents the percentage relationship of statement of operations items to revenue:
Fiscal Year Ended
September 30,
2023
September 30,
2022
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in (losses) earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests from continuing operations . . . . . . . . . . . . . . . . . .
Net (loss) income attributable to noncontrolling interests from discontinued operations . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to AECOM from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to AECOM from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to AECOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0 %
93.4
6.6
(1.9)
(1.1)
(1.3)
2.3
0.1
0.3
(1.2)
1.5
0.4
1.1
(0.4)
0.7
(0.3)
0.0
(0.3)
0.8
(0.4)
0.4 %
100.0 %
93.6
6.4
0.4
(1.1)
(0.8)
4.9
0.0
0.1
(0.8)
4.2
1.0
3.2
(0.7)
2.5
(0.2)
0.0
(0.2)
3.0
(0.7)
2.3 %
Revenue
Our revenue for the year ended September 30, 2023 increased $1,230.3 million, or 9.4%, to $14,378.5 million as compared to
$13,148.2 million for the corresponding period last year.
In the course of providing our services, we routinely subcontract for services and incur other direct costs on behalf of our
clients. These costs are passed through to clients and, in accordance with industry practice and GAAP, are included in our revenue and
cost of revenue. Because these pass-through revenues can change significantly from project to project and period to period, changes in
revenue may not be indicative of business trends. Pass-through revenues for the years ended September 30, 2023 and 2022 were
$7.7 billion and $6.8 billion, respectively. Pass-through revenue as a percentage of total revenue was 53% and 52% during the year
ended September 30, 2023 and 2022, respectively.
Gross Profit
Our gross profit for the year ended September 30, 2023 increased $97.5 million, or 11.5%, to $945.5 million as compared to
$848.0 million for the corresponding period last year. For the year ended September 30, 2023, gross profit, as a percentage of revenue,
increased to 6.6% from 6.4% in the year ended September 30, 2022.
Gross profit changes were due to the reasons noted in Americas and International reportable segments below.
41
Equity in (Losses) Earnings of Joint Ventures
Our equity in losses of joint ventures for the year ended September 30, 2023 was $279.4 million as compared to equity in
earnings of $53.6 million in the corresponding period last year.
The decrease in earnings of joint ventures for the year ended September 30, 2023 compared to the same period in the prior year
was primarily due to impairment losses recorded in our AECOM Capital segment during the third quarter of fiscal 2023. These
impairments were primarily as a result of a project-by-project review of the existing investment portfolio, the expected acceleration of
exits from certain investments caused by a change in strategy, and volatility in the commercial real estate market caused by higher
interest rates and lack of liquidity.
General and Administrative Expenses
Our general and administrative expenses for the year ended September 30, 2023 increased $6.3 million, or 4.3%, to
$153.6 million as compared to $147.3 million for the corresponding period last year. For the years ended September 30, 2023 and 2022,
general and administrative expenses as a percentage of revenue remained unchanged at 1.1%.
Restructuring Costs
Restructuring expenses are comprised of personnel costs, real estate costs, and costs associated with business exits. During
fiscal year ended September 30, 2023, we incurred total restructuring expenses of $188.4 million primarily related to actions taken to
align our real estate portfolio with our employee flexibility initiatives and costs incurred in preparation for the exit of certain countries
in Southeast Asia. During fiscal year ended September 30, 2022, we incurred restructuring expenses of $107.5 million, primarily related
to costs associated with exit of Russia-related businesses and management actions to deliver margin improvement and efficiencies that
result in a more agile organization.
Interest Income
Our interest income for the year ended September 30, 2023 increased to $40.3 million from $8.2 million for the corresponding
period last year.
The increase in interest income for the year ended September 30, 2023 was primarily due to an increase in interest rates on our
interest-bearing assets.
Interest Expense
Our interest expense for the year ended September 30, 2023 was $159.3 million as compared to $110.2 million for the
corresponding period last year.
The increase in interest expense for the year ended September 30, 2023 was primarily due to an increase in interest rates on the
variable component of our debt.
42
Income Tax Expense
Our income tax expense for the year ended September 30, 2023 was $56.1 million compared to $136.1 million for the year
ended September 30, 2022. The decrease in tax expense for the current period compared to the corresponding period last year was due
primarily to a tax benefit of $65.0 million related to the AECOM Capital impairment charge, including an increase in valuation
allowances of $21.0 million for the portion of the charge that is not expected to be realized, and a net tax benefit recorded in fiscal 2022
related to changes in valuation allowances providing a tax benefit of $21.9 million and foreign uncertain tax provisions generating a tax
expense of $16.1 million.
During the first quarter of fiscal 2022, valuation allowances in the amount of $21.9 million primarily related to net operating
losses in certain foreign entities were released due to sufficient positive evidence. The positive evidence included a realignment of our
global transfer pricing methodology which resulted in forecasting the utilization of the net operating losses within the foreseeable future.
We are currently under tax audit in several jurisdictions including the U.S. and believe the outcomes which are reasonably
possible within the next twelve months, including lapses in statutes of limitations, could result in future adjustments, but will not result
in a material change in the liability for uncertain tax positions.
We regularly integrate and consolidate our business operations and legal entity structure, and such internal initiatives could
impact the assessment of uncertain tax positions, indefinite reinvestment assertions and the realizability of deferred tax assets.
Net Loss From Discontinued Operations
During the first quarter of fiscal 2020, management approved a plan to dispose of via sale our self-perform at-risk construction
businesses. As a result of these strategic actions, the self-perform at-risk construction businesses were classified as discontinued
operations. That classification was applied retrospectively for all periods presented.
Net loss from discontinued operations was $57.2 million for the year ended September 30, 2023 and net loss was $79.9 million
for the year ended September 30, 2022, a decrease of $22.7 million. The decrease in net loss from discontinued operations for the year
ended September 30, 2023 was primarily due to losses related to revisions of estimates for our working capital obligations to be paid
and contingent consideration receivable related to the civil infrastructure business recorded in the first half of fiscal 2022 that did not
recur to the same extent in fiscal 2023.
Net Income Attributable to AECOM
The factors described above resulted in the net income attributable to AECOM of $55.3 million for the year ended
September 30, 2023, as compared to the net income attributable to AECOM of $310.6 million for the year ended September 30, 2022.
Results of Operations by Reportable Segment
Americas
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10,975.7
10,276.0
699.7
$
$
$
9,939.3 $
9,299.4
639.9 $
1,036.4
976.6
59.8
10.4 %
10.5
9.3 %
The following table presents the percentage relationship of statement of operations items to revenue:
Fiscal Year Ended
September 30, September 30,
Change
2023
2022
$
%
( in millions)
43
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue
Fiscal Year Ended
September 30, September 30,
2023
100.0 %
93.6
6.4 %
2022
100.0 %
93.6
6.4 %
Revenue for our Americas segment for the year ended September 30, 2023 increased $1,036.4 million, or 10.4%, to
$10,975.7 million as compared to $9,939.3 million for the corresponding period last year.
The increase in revenue for the year ended September 30, 2023 was primarily driven by increased project activity in the
Americas design business including growth in the Water, Transportation, and Environment markets.
Gross Profit
Gross profit for our Americas segment for the year ended September 30, 2023 increased $59.8 million, or 9.3%, to
$699.7 million as compared to $639.9 million for the corresponding period last year. Gross profit, as a percentage of revenue, remained
unchanged at 6.4% for the years ended September 30, 2023 and 2022.
The increase in gross profit for the year ended September 30, 2023 was primarily due to revenue growth and execution
efficiency. In addition, underlying revenue, excluding pass-through revenues, increased.
International
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
3,402.1
3,157.0
245.1
$
$
(in millions)
3,206.7 $
3,000.8
205.9 $
195.4
156.2
39.2
6.1 %
5.2
19.0 %
Fiscal Year Ended
September 30, September 30,
Change
2023
2022
$
%
The following table presents the percentage relationship of statement of operations items to revenue:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0 %
92.8
7.2 %
100.0 %
93.6
6.4 %
Fiscal Year Ended
September 30, September 30,
2023
2022
Revenue
Revenue for our International segment for the year ended September 30, 2023 increased $195.4 million, or 6.1%, to
$3,402.1 million as compared to $3,206.7 million for the corresponding period last year.
The increase in revenue for the year ended September 30, 2023 was primarily due to increased growth in the United Kingdom,
Middle East and Australia compared to the prior year, which more than offset the impact of the stronger U.S. dollar as compared to the
functional currencies of our foreign operations. Growth was led by the Transportation, Facilities, and Water markets.
Gross Profit
Gross profit for our International segment for the year ended September 30, 2023 increased $39.2 million, or 19.0%, to
$245.1 million as compared to $205.9 million for the corresponding period last year. As a percentage of revenue, gross profit increased
to 7.2% of revenue for the year ended September 30, 2023 from 6.4% in the corresponding period last year.
44
The increase in gross profit and gross profit as a percentage of revenue for the year ended September 30, 2023 was primarily
due to an increase in revenue and reduced costs resulting from country exits, ongoing investments in enterprise capability centers, shared
service centers, and delivery efficiency.
AECOM Capital
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
0.7
(303.9)
(12.6)
$
$
$
(in millions)
2.2 $
24.4 $
(12.6) $
(1.5)
(328.3)
—
(68.2)%
NM *
0.0 %
Fiscal Year Ended
September 30, September 30,
Change
2023
2022
$
%
* Not Meaningful
Equity in earnings of joint ventures for the year ended September 30, 2023 decreased $328.3 million, or 1345.5%, to a loss of
$303.9 million compared to earnings of $24.4 million for the corresponding period in the prior year. The decrease was primarily due to
impairment losses recognized in the third quarter of fiscal 2023.
Liquidity and Capital Resources
Cash Flows
Our principal sources of liquidity are cash flows from operations, borrowings under our credit facilities, and access to financial
markets. Our principal uses of cash are operating expenses, capital expenditures, working capital requirements, acquisitions, repurchases
of common stock, dividend payments, and refinancing or repayment of debt. We believe our anticipated sources of liquidity including
operating cash flows, existing cash and cash equivalents, borrowing capacity under our revolving credit facility and our ability to issue
debt or equity, if required, will be sufficient to meet our projected cash requirements for at least the next twelve months. We expect to
spend approximately $110 million in restructuring costs in fiscal 2024 associated with ongoing restructuring actions that are expected
to deliver continued margin improvement and efficiencies.
Generally, we do not provide for U.S. taxes or foreign withholding taxes on gross book-tax basis differences in our non-U.S.
subsidiaries because such basis differences are able to and intended to be reinvested indefinitely. At September 30, 2023, we have
determined that we will continue to indefinitely reinvest the earnings of some foreign subsidiaries and, therefore, we will continue to
account for these undistributed earnings based on our existing accounting under ASC 740 and not accrue additional tax. Determination
of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the
complexities of the hypothetical calculation. Based on the available sources of cash flows discussed above, we anticipate we will
continue to have the ability to permanently reinvest these remaining amounts.
At September 30, 2023, cash and cash equivalents, including cash and cash equivalents included in current assets held for sale,
were $1,262.2 million, an increase of $85.4 million, or 7.3%, from $1,176.8 million at September 30, 2022. The increase in cash and
cash equivalents was primarily attributable to a decrease of $93.7 million of cash used to repurchase common stock, of which
$67.9 million was related to a decrease in repurchases under the existing Board repurchase authorization.
Net cash provided by operating activities was $696.0 million for the year ended September 30, 2023 as compared to
$713.6 million for the year ended September 30, 2022. The change was primarily attributable to a decrease in cash provided by working
capital of approximately $84.2 million, offset by an increase in adjustments for non-cash items of approximately $301.1 million and a
decrease in net income of approximately $234.6 million. The sale of trade receivables to financial institutions included in operating cash
flows increased $50.0 million during the year ended September 30, 2023 compared to the year ended September 30, 2022. We expect
to continue to sell trade receivables in the future as long as the terms continue to remain favorable to us.
45
Net cash used in investing activities was $138.2 million for the year ended September 30, 2023, as compared to $175.0 million
for the year ended September 30, 2022. The decrease in cash used in investing activities was primarily due to cash outflows for sale of
discontinued operations of $42.3 million in fiscal year 2022 that did not repeat in the current year.
Net cash used in financing activities was $472.9 million for the year ended September 30, 2023, as compared to $588.3 million
for the year ended September 30, 2022. The decrease from the prior year was primarily attributable to decreased stock repurchases under
the Stock Repurchase Program. Total borrowings under our Credit Agreement may vary during the period as we regularly draw and
repay amounts to fund working capital.
Working Capital
Working capital, or current assets less current liabilities, decreased $99.4 million, or 23.7%, to $319.2 million at September 30,
2023 from $418.6 million at September 30, 2022. Net accounts receivable and contract assets, net of contract liabilities, increased to
$2,880.8 million at September 30, 2023 from $2,671.9 million at September 30, 2022.
Days Sales Outstanding (DSO), which includes net accounts receivable and contract assets, net of contract liabilities, was
65 days at September 30, 2023 compared to 68 days at September 30, 2022.
In Note 4, Revenue Recognition, in the notes to our consolidated financial statements, a comparative analysis of the various
components of accounts receivable is provided. Except for claims, substantially all contract assets are expected to be billed and collected
within twelve months.
Contract assets related to claims are recorded only if it is probable that the claim will result in additional contract revenue and
only to the extent that a significant reversal would not be probable. In such cases, revenue is recorded only to the extent that contract
costs relating to the claim have been incurred. Award fees in contract assets are accrued only when there is sufficient information to
assess contract performance. On contracts that represent higher than normal risk or technical difficulty, award fees are generally deferred
until an award fee letter is received.
Because our revenue depends to a great extent on billable labor hours, most of our charges are invoiced following the end of
the month in which the hours were worked, the majority usually within 15 days. Other direct costs are normally billed along with labor
hours. However, as opposed to salary costs, which are generally paid on either a bi-weekly or monthly basis, other direct costs are
generally not paid until payment is received (in some cases in the form of advances) from the customers.
Debt
Debt consisted of the following:
September 30, September 30,
2023
2022
Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current portion of debt and short-term borrowings . . . . . . . . . . . . . . . . . .
Less: Unamortized debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(in millions)
1,119.8 $
997.3
100.2
2,217.3
(89.5)
(14.4)
2,113.4 $
1,143.3
997.3
84.0
2,224.6
(48.6)
(19.3)
2,156.7
46
The following table presents, in millions, scheduled maturities of our debt as of September 30, 2023:
Fiscal Year
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
89.5
49.6
412.6
1,009.2
656.4
—
2,217.3
Credit Agreement
On February 8, 2021, we entered into the 2021 Refinancing Amendment to the Credit Agreement (as amended, modified or
otherwise supplemented, the “Credit Agreement”), pursuant to which we amended and restated our Syndicated Credit Facility
Agreement, dated as of October 17, 2014 (as amended prior to February 8, 2021, the “Original Credit Agreement”), between the
Company, as borrower, Bank of America, N.A., as administrative agent, and other parties thereto. At the time of amendment, the Credit
Agreement consisted of a $1,150,000,000 revolving credit facility (the “Revolving Credit Facility”) and a $246,968,737.50 term loan A
facility (the “Term A Facility,” together with the Revolving Credit Facility, the “Credit Facilities”), each of which mature on February 8,
2026. The outstanding loans under the Term A Facility were borrowed in U.S. dollars. Loans under the Revolving Credit Facility may
be borrowed, and letters of credit thereunder may be issued, in U.S. dollars or in certain foreign currencies. The proceeds of the
Revolving Credit Facility may be used from time to time for ongoing working capital and for other general corporate purposes. The
proceeds of the Revolving Credit Facility and the Term A Loan facility borrowed on February 8, 2021 were used to refinance the existing
revolving credit facility and the existing term loan facility under the Original Credit Agreement and to pay related fees and expenses.
The Credit Agreement permits us to designate certain of our subsidiaries as additional co-borrowers from time to time. Currently, there
are no co-borrowers under the Credit Facilities.
On April 13, 2021, we entered into Amendment No. 10 to the Credit Agreement, pursuant to which the lenders thereunder
provided a secured term B credit facility (the “Term B Facility”) to the Company in an aggregate principal amount of $700,000,000.
The Term B Facility matures on April 13, 2028. The proceeds of the Term B Facility were used to fund the purchase price, fees and
expenses in connection with our cash tender offer to purchase up to $700,000,000 aggregate purchase price (not including any accrued
and unpaid interest) of our outstanding 5.875% Senior Notes due 2024.
On June 25, 2021, we entered into Amendment No. 11 to the Credit Agreement, pursuant to which lenders thereunder have
provided us with an additional $215,000,000 in aggregate principal amount under the Term A Facility. We used the net proceeds from
the increase in the Term A Facility (together with cash on hand), to (i) redeem all of our remaining 5.875% Senior Notes due 2024 and
(ii) pay fees and expenses related to such redemption.
On May 23, 2023, the Company entered into Amendment No. 12 to the Credit Agreement, pursuant to which LIBOR as a
benchmark rate of interest was replaced by, in the case of US Dollar-denominated loans, a secured overnight financing rate subject to a
spread adjustment, and, in the case of loans denominated in other currencies, other customary successor rates, subject in certain cases
to a spread adjustment. On May 23, 2023, the Company entered into Amendment No. 13 to the Credit Agreement, pursuant to which
the spread adjustments with respect to the Revolving Credit Facility and the Term A Facility was amended.
The applicable interest rate for loans under the Term B Facility is calculated at a per annum rate equal to, at our option, (a) the
Term SOFR (as defined in the Credit Agreement) plus 1.75% or (b) the Base Rate (as defined in the Credit Agreement) plus 0.75%.
The applicable interest rate for U.S. Dollar-denominated loans under the Revolving Credit Facility and the Term A Facility is
calculated at a per annum rate equal to, at our option, (a) the Term SOFR (as defined in the Credit Agreement) plus an applicable margin
(the “SOFR Applicable Margin”), which is currently at 1.2250% or (b) the Base Rate (as defined in the Credit Agreement) plus an
applicable margin (the “Base Rate Applicable Margin,” and together with the SOFR Applicable Margin, the “Applicable Margins”),
which is currently at 0.2250%. The applicable interest rate for loans under the Revolving Credit Facility denominated in other currencies
is calculated at a per annum rate equal to a customary floating reference rate for such currency specified in the Credit Agreement plus
the SOFR Applicable Margin. The Credit Agreement includes certain environmental, social and governance (ESG) metrics relating to
our CO2 emissions and the percentage of employees who identify as women (each, a “Sustainability Metric”). The Applicable Margins
47
for the Term A Facility and the Revolving Credit Facility and the commitment fees for the Revolving Credit Facility will be adjusted
on an annual basis based on our achievement of preset thresholds for each Sustainability Metric.
Some of our material subsidiaries (the “Guarantors”) have guaranteed the obligations of the borrowers under the Credit
Agreement, subject to certain exceptions. The borrowers’ obligations under the Credit Agreement are secured by a lien on substantially
all of our assets and the Guarantors’ assets, subject to certain exceptions.
The Credit Agreement contains customary negative covenants that include, among other things, limitations on our and certain
of our subsidiaries’ ability, subject to certain exceptions, to incur liens and debt, make investments, dispositions, and restricted payments,
change the nature of our business, consummate mergers, consolidations and the sale of all or substantially all of our respective assets,
taken as a whole, and transact with affiliates. We are also required to maintain a consolidated interest coverage ratio of at least 3.00 to
1.00 and a consolidated leverage ratio of less than or equal to 4.00 to 1.00 (subject to certain adjustments in connection with permitted
acquisitions), tested on a quarterly basis (the “Financial Covenants”). The Financial Covenants do not apply to the Term B Facility. Our
consolidated leverage ratio was 2.00 to 1.00 at September 30, 2023. As of September 30, 2023, we were in compliance with the
covenants of the Credit Agreement.
The Credit Agreement contains customary affirmative covenants, including, among other things, compliance with applicable
law, preservation of existence, maintenance of properties and of insurance, and keeping proper books and records. The Credit Agreement
contains customary events of default, including, among other things, nonpayment of principal, interest or fees, cross-defaults to other
debt, inaccuracies of representations and warranties, failure to perform covenants, events of bankruptcy and insolvency, change of
control and unsatisfied judgments, subject in certain cases to notice and cure periods and other exceptions.
At September 30, 2023 and September 30, 2022, letters of credit totaled $4.4 million and $4.4 million, respectively, under our
Revolving Credit Facility. As of September 30, 2023 and September 30, 2022, we had $1,145.6 million and $1,145.6 million,
respectively, available under our revolving credit facility.
2027 Senior Notes
On February 21, 2017, we completed a private placement offering of $1,000,000,000 aggregate principal amount of our
unsecured 5.125% Senior Notes due 2027 (the “2027 Senior Notes”). On June 30, 2017, we completed an exchange offer to exchange
the unregistered 2027 Senior Notes for registered notes, as well as related guarantees.
As of September 30, 2023, the estimated fair value of the 2027 Senior Notes was approximately $939.9 million. The fair value
of the 2027 Senior Notes as of September 30, 2023 was derived by taking the mid-point of the trading prices from an observable market
input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2027 Senior Notes. Interest is payable
on the 2027 Senior Notes at a rate of 5.125% per annum. Interest on the 2027 Senior Notes is payable semi-annually on March 15 and
September 15 of each year, commencing on September 15, 2017. The 2027 Senior Notes will mature on March 15, 2027.
At any time and from time to time prior to December 15, 2026, we may redeem all or part of the 2027 Senior Notes, at a
redemption price equal to 100% of their principal amount, plus a “make whole” premium as of the redemption date, and accrued and
unpaid interest to the redemption date. On or after December 15, 2026, we may redeem all or part of the 2027 Senior Notes at a
redemption price equal to 100% of their principal amount, plus accrued and unpaid interest on the redemption date.
The indenture pursuant to which the 2027 Senior Notes were issued contains customary events of default, including, among
other things, payment default, exchange default, failure to provide notices thereunder and provisions related to bankruptcy events. The
indenture also contains customary negative covenants.
We were in compliance with the covenants relating to the 2027 Senior Notes as of September 30, 2023.
Other Debt and Other Items
Other debt consists primarily of obligations under capital leases and loans and unsecured credit facilities. The unsecured credit
facilities are primarily used for standby letters of credit issued in connection with general and professional liability insurance programs
and for contract performance guarantees. At September 30, 2023 and 2022, these outstanding standby letters of credit totaled
$878.9 million and $640.3 million, respectively. As of September 30, 2023, we had $416.7 million available under these unsecured
credit facilities.
48
Effective Interest Rate
Our average effective interest rate on our total debt, including the effects of the interest rate swap and interest rate cap
agreements during the years ended September 30, 2023, 2022 and 2021 was 5.3%, 3.8% and 4.4%, respectively.
Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the years
ended September 30, 2023, 2022 and 2021 of $4.9 million, $4.9 million and $10.2 million, respectively.
Other Commitments
We enter into various joint venture arrangements to provide architectural, engineering, program management, construction
management and operations and maintenance services. The ownership percentage of these joint ventures is typically representative of
the work to be performed or the amount of risk assumed by each joint venture partner. Some of these joint ventures are considered
variable interest entities. We have consolidated all joint ventures for which we have control. For all others, our portion of the earnings
is recorded in equity in earnings of joint ventures. See Note 6, Joint Ventures and Variable Interest Entities, in the notes to our
consolidated financial statements.
Other than normal property and equipment additions and replacements, expenditures to further the implementation of our
various information technology systems, commitments under our incentive compensation programs, amounts we may expend to
repurchase stock under our stock repurchase program and acquisitions from time to time and disposition costs, we currently do not have
any significant capital expenditures or outlays planned except as described below. However, if we acquire additional businesses in the
future or if we embark on other capital-intensive initiatives, additional working capital may be required.
Under our secured revolving credit facility and other facilities discussed in Other Debt and Other Items above, as of
September 30, 2023, there was approximately $883.3 million including both continuing and discontinued operations, outstanding under
standby letters of credit primarily issued in connection with general and professional liability insurance programs and for contract
performance guarantees. For those projects for which we have issued a performance guarantee, if the project subsequently fails to meet
guaranteed performance standards, we may either incur significant additional costs or be held responsible for the costs incurred by the
client to achieve the required performance standards.
We recognized on our balance sheet the funded status of our pension benefit plans, measured as the difference between the fair
value of plan assets and the projected benefit obligation. At September 30, 2023, our defined benefit pension plans had an aggregate
deficit (the excess of projected benefit obligations over the fair value of plan assets) of approximately $165.3 million. The total amounts
of employer contributions paid for the year ended September 30, 2023 were $8.2 million for U.S. plans and $24.8 million for non-U.S.
plans. Funding requirements for each plan are determined based on the local laws of the country where such plan resides. In some
countries, the funding requirements are mandatory while in other countries, they are discretionary. There is a required minimum
contribution for one of our domestic plans; however, we may make additional discretionary contributions. In the future, such pension
funding may increase or decrease depending on changes in the levels of interest rates, pension plan performance and other factors. In
addition, we have collective bargaining agreements with unions that require us to contribute to various third-party multiemployer plans
that we do not control or manage. For the year ended September 30, 2023, we contributed $3.0 million to multiemployer pension plans.
Condensed Combined Financial Information
The 2027 Senior Notes are fully and unconditionally guaranteed on a joint and several basis by some of AECOM’s directly
and indirectly 100% owned subsidiaries (the Subsidiary Guarantors). Accordingly, AECOM became subject to the requirements of Rule
3-10 of Regulation S-X, as amended, regarding financial statements of guarantors and issuers of guaranteed securities. Other than
customary restrictions imposed by applicable statutes, there are no restrictions on the ability of the Subsidiary Guarantors to transfer
funds to AECOM in the form of cash dividends, loans or advances.
The following tables present condensed combined summarized financial information for AECOM and the Subsidiary
Guarantors. All intercompany balances and transactions are eliminated in the presentation of the combined financial statements.
Amounts provided do not represent our total consolidated amounts as of September 30, 2023 and for the twelve months then ended.
49
Condensed Combined Balance Sheets
Parent and Subsidiary Guarantors
(unaudited - in millions)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
September 30, 2023
2,617.7
3,230.7
5,848.4
2,414.4
2,601.6
5,016.0
832.4
5,848.4
Condensed Combined Statement of Operations
Parent and Subsidiary Guarantors
(unaudited - in millions)
For the twelve months ended
September 30, 2023
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to AECOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
7,077.5
6,582.5
495.0
3.2
—
3.2
3.2
Commitments and Contingencies
We record amounts representing our probable estimated liabilities relating to claims, guarantees, litigation, audits and
investigations. We rely in part on qualified actuaries to assist us in determining the level of reserves to establish for insurance-related
claims that are known and have been asserted against us, and for insurance-related claims that are believed to have been incurred based
on actuarial analysis, but have not yet been reported to our claims administrators as of the respective balance sheet dates. We include
any adjustments to such insurance reserves in our consolidated results of operations. Our reasonably possible loss disclosures are
presented on a gross basis prior to the consideration of insurance recoveries. We do not record gain contingencies until they are realized.
In the ordinary course of business, we may not be aware that we or our affiliates are under investigation and may not be aware of whether
or not a known investigation has been concluded.
50
In the ordinary course of business, we may enter into various arrangements providing financial or performance assurance to
clients, lenders, or partners. Such arrangements include standby letters of credit, surety bonds, and corporate guarantees to support the
creditworthiness or the project execution commitments of our affiliates, partnerships and joint ventures. Performance arrangements
typically have various expiration dates ranging from the completion of the project contract and extending beyond contract completion
in some circumstances such as for warranties. We may also guarantee that a project, when complete, will achieve specified performance
standards. If the project subsequently fails to meet guaranteed performance standards, we may incur additional costs, pay liquidated
damages or be held responsible for the costs incurred by the client to achieve the required performance standards. The potential payment
amount of an outstanding performance arrangement is typically the remaining cost of work to be performed by or on behalf of third
parties. Generally, under joint venture arrangements, if a partner is financially unable to complete its share of the contract, the other
partner(s) may be required to complete those activities.
At September 30, 2023, we were contingently liable in the amount of approximately $883.3 million in issued standby letters of
credit and $4.6 billion in issued surety bonds primarily to support project execution.
In the ordinary course of business, we enter into various agreements providing financial or performance assurances to clients
on behalf of certain unconsolidated partnerships, joint ventures and other jointly executed contracts. These agreements are entered into
primarily to support the project execution commitments of these entities.
Our investment adviser jointly manages and sponsors the AECOM-Canyon Equity Fund, L.P. (the “Fund”), in which we
indirectly hold an equity interest and have an ongoing capital commitment to fund investments. At September 30, 2023, we have capital
commitments of $8.3 million to the Fund over the next 5 years.
In addition, in connection with the investment activities of AECOM Capital, we provide guarantees of certain contractual
obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and other lender
required guarantees.
Department of Energy Deactivation, Demolition, and Removal Project
A former affiliate of the Company, Amentum Environment & Energy, Inc., f/k/a AECOM Energy and Construction, Inc.
(“Former Affiliate”), executed a cost-reimbursable task order with the Department of Energy (DOE) in 2007 to provide deactivation,
demolition and removal services at a New York State project site that, during 2010, experienced contamination and performance issues.
In February 2011, the Former Affiliate and the DOE executed a Task Order Modification that changed some cost-reimbursable contract
provisions to at-risk. The Task Order Modification, including subsequent amendments, required the DOE to pay all project costs up to
$106 million, required the Former Affiliate and the DOE to equally share in all project costs incurred from $106 million to $146 million,
and required the Former Affiliate to pay all project costs exceeding $146 million.
Due to unanticipated requirements and permitting delays by federal and state agencies, as well as delays and related ground
stabilization activities caused by Hurricane Irene in 2011, the Former Affiliate was required to perform work outside the scope of the
Task Order Modification. In December 2014, the Former Affiliate submitted an initial set of claims against the DOE pursuant to the
Contracts Disputes Acts seeking recovery of $103 million, including additional fees on changed work scope (the “2014 Claims”). On
December 6, 2019, the Former Affiliate submitted a second set of claims against the DOE seeking recovery of an additional
$60.4 million, including additional project costs and delays outside the scope of the contract as a result of differing site and ground
conditions (the “2019 Claims”). The Former Affiliate also submitted three alternative breach of contract claims to the 2014 and 2019
Claims that may entitle the Former Affiliate to recovery of $148.5 million to $329.4 million. On December 30, 2019, the DOE denied
the Former Affiliate’s 2014 Claims. On September 25, 2020, the DOE denied the Former Affiliate’s 2019 Claims. The Company filed
an appeal of these decisions on December 20, 2020 in the Court of Federal Claims. Deconstruction, decommissioning and site restoration
activities are complete.
51
On January 31, 2020, the Company completed the sale of its Management Services business, including the Former Affiliate
who worked on the DOE project, to Maverick Purchaser Sub LLC (MS Purchaser), an affiliate of American Securities LLC and Lindsay
Goldberg LLC. The Company and the MS Purchaser agreed that all future DOE project claim recoveries and costs will be split 10% to
the MS Purchaser and 90% to the Company with the Company retaining control of all future strategic legal decisions.
The Company intends to vigorously pursue all claimed amounts but can provide no certainty that the Company will recover
2014 Claims and 2019 Claims submitted against the DOE, or any additional incurred claims or costs, which could have a material
adverse effect on the Company’s results of operations.
Refinery Turnaround Project
A Former Affiliate of the Company entered into an agreement to perform turnaround maintenance services during a planned
shutdown at a refinery in Montana in December 2017. The turnaround project was completed in February 2019. Due to circumstances
outside of the Company’s Former Affiliate’s control, including client directed changes and delays and the refinery’s condition, the
Company’s Former Affiliate performed additional work outside of the original contract over $90 million and is entitled to payment from
the refinery owner of approximately $144 million. In March 2019, the refinery owner sent a letter to the Company’s Former Affiliate
alleging it incurred approximately $79 million in damages due to the Company’s Former Affiliate’s project performance. In April 2019,
the Company’s Former Affiliate filed and perfected a $132 million construction lien against the refinery for unpaid labor and materials
costs. In August 2019, following a subcontractor complaint filed in the Thirteen Judicial District Court of Montana asserting claims
against the refinery owner and the Company’s Former Affiliate, the refinery owner crossclaimed against the Company’s Former Affiliate
and the subcontractor. In October 2019, following the subcontractor’s dismissal of its claims, the Company’s Former Affiliate removed
the matter to federal court and cross claimed against the refinery owner. In December 2019, the refinery owner claimed $93.0 million
in damages and offsets against the Company’s Former Affiliate.
On January 31, 2020, the Company completed the sale of its Management Services business, including the Former Affiliate,
to the MS Purchaser; however, the Refinery Turnaround Project, including related claims and liabilities, has been retained by the
Company.
The Company intends to vigorously prosecute and defend this matter; however, the Company cannot provide assurance that
the Company will be successful in these efforts. The resolution of this matter and any potential range of loss cannot be reasonably
determined or estimated at this time, primarily because the matter raises complex legal issues that Company is continuing to assess.
Contractual Obligations and Commitments
The following summarizes our contractual obligations and commercial commitments as of September 30, 2023:
Contractual Obligations and Commitments
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension funding obligations(1) . . . . . . . . . . . . . . . . . . . . . .
Total contractual obligations and commitments . . . . . . . .
$
$
Total
2,217.3
483.2
794.3
35.1
3,529.9
Less than
One Year
$
$
89.5
147.2
164.4
35.1
436.2
One to
Three Years
(in millions)
$
Three to
Five Years
More than
Five Years
462.2 $
251.0
255.1
—
968.3 $
1,665.6
85.0
161.7
—
1,912.3
$
$
—
—
213.1
—
213.1
$
(1) Represents expected fiscal 2024 contributions to fund our defined benefit pension and other postretirement plans. Contributions
beyond one year have not been included as amounts are not determinable.
New Accounting Pronouncements and Changes in Accounting
In December 2019, the Financial Accounting Standards Board (FASB) issued new accounting guidance which simplifies the
accounting for income taxes. The guidance amends certain exceptions to the general principles of Accounting Standards Codification
(ASC) 740, Income Taxes, and simplifies several areas such as accounting for a franchise tax or similar tax that is partially based on
income. We adopted the new guidance starting on October 1, 2021. The adoption of the new guidance did not have a significant impact
on our consolidated financial statements.
In October 2021, the FASB issued final guidance to companies that apply ASC 606, Revenue from Contracts with Customers,
to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. The
52
new guidance creates an exception to the general requirement to measure acquired assets and liabilities at fair value on the acquisition
date. Under this exception, an acquirer applies ASC 606 to recognize and measure contract assets and contract liabilities on the
acquisition date. We adopted the new guidance starting on October 1, 2022 on a prospective basis and the revised guidance will be
applied to any business combinations the Company undertakes.
Off-Balance Sheet Arrangements
We enter into various joint venture arrangements to provide architectural, engineering, program management, construction
management and operations and maintenance services. The ownership percentage of these joint ventures is typically representative of
the work to be performed or the amount of risk assumed by each joint venture partner. Some of these joint ventures are considered
variable interest entities. We have consolidated all joint ventures for which we have control. For all others, our portion of the earnings
are recorded in equity in earnings of joint ventures. See Note 6 in the notes to our consolidated financial statements. We do not believe
that we have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources
that would be material to investors.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial Market Risks
We are exposed to market risk, primarily related to foreign currency exchange rates and interest rate exposure of our debt
obligations that bear interest based on floating rates. We actively monitor these exposures. Our objective is to reduce, where we deem
appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign exchange rates and interest rates. In
order to accomplish this objective, we sometimes enter into derivative financial instruments, such as forward contracts and interest rate
hedge contracts. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage our exposures.
We do not use derivative financial instruments for trading purposes.
Foreign Exchange Rates
We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S. We use foreign currency
forward contracts from time to time to mitigate foreign currency risk. We limit exposure to foreign currency fluctuations in most of our
contracts through provisions that require client payments in currencies corresponding to the currency in which costs are incurred. As a
result of this natural hedge, we generally do not need to hedge foreign currency cash flows for contract work performed. The functional
currency of our significant foreign operations is the respective local currency.
Interest Rates
Our Credit Agreement and other debt obligations are subject to variable rate interest which could be adversely affected by an
increase in interest rates. As of September 30, 2023 and 2022, we had $1,119.8 million and $1,143.3 million, respectively, in outstanding
borrowings under our term credit agreements and our revolving credit facility. Interest on amounts borrowed under these agreements is
subject to adjustment based on specified levels of financial performance. The applicable margin that is added to the borrowing in the
base rate can range from 0.25% to 1.00% and the applicable margin that is added to borrowings in the eurocurrency rate can range from
1.25% to 2.00%. For the year ended September 30, 2023, our weighted average floating rate borrowings were $1,485.8 million, or
$846.3 million excluding borrowings with effective fixed interest rates due to interest rate swap and interest rate cap agreements. If
short-term floating interest rates had increased by 1.00%, our interest expense for the year ended September 30, 2023 would have
increased by $8.6 million. We invest our cash in a variety of financial instruments, consisting principally of money market securities or
other highly liquid, short-term securities that are subject to minimal credit and market risk.
53
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AECOM
Index to Consolidated Financial Statements
September 30, 2023
Audited Annual Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets at September 30, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Years Ended September 30, 2023, 2022 and 2021. . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2023, 2022, and 2021 . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for the Years Ended September 30, 2023, 2022, and 2021 . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Years Ended September 30, 2023, 2022, and 2021 . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
58
59
60
61
62
63
54
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AECOM
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AECOM (the Company) as of September 30, 2023 and 2022, the
related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in
the period ended September 30, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at September 30, 2023 and 2022, and the results of its operations and its cash flows for
each of the three years in the period ended September 30, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our
report dated November 14, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures
to which it relates.
55
Revenue Recognition - Contract cost and claim recovery estimates
Description of the
Matter
For the year ended September 30, 2023, contract revenues recognized by the Company were $14.4 billion.
Contract revenues include $3.4 billion which relate to fixed price contracts and $4.9 billion which relate to
guaranteed maximum price contracts. As described in Note 4 of the consolidated financial statements, the
Company generally recognizes revenues for these contracts over time as performance obligations are satisfied.
The Company generally measures its progress to completion using an input measure of total costs incurred
divided by total costs expected to be incurred. In addition, the Company’s estimate of transaction price includes
variable consideration associated with claims only to the extent that a significant reversal would not be probable.
Recognition of revenue and profit over time as performance obligations are satisfied for long-term fixed price
contracts is highly judgmental as it requires the Company to prepare estimates of total contract revenue and total
contract costs, including costs to complete in-process contracts. These estimates are dependent upon a number of
factors, including the accuracy of estimates made at the balance sheet date, such as engineering progress, material
quantities, the achievement of milestones, penalty provisions, labor productivity and cost estimates.
As of September 30, 2023, significant claims recorded in contract assets and other non-current assets on the
consolidated balance sheet were approximately $160.0 million. Revenue recognition relating to claims is highly
judgmental as the amount has been disputed by the customer and it requires the Company to prepare estimates of
amounts expected to be recovered. Changes in recovery estimates can have a material effect on the amount of
revenue recognized.
Auditing contract revenue recognition is complex and highly judgmental due to the variability and uncertainty
associated with estimating the costs to complete and amounts expected to be recovered from claims. Changes in
these estimates would have a significant effect on the amount of contract revenue recognized.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that
address the risk of material misstatement of contract revenue including those associated with cost to complete
estimates for long-term fixed price contracts and estimates of amounts expected to be recovered from claims. For
example, we tested controls over the Company’s review of estimated direct and indirect costs to be incurred and
estimates of claim recovery amounts.
To evaluate the Company’s determination of estimated costs to complete, we selected a sample of contracts and,
among other things, inspected the executed contracts including any significant amendments; conducted
interviews with and inspected questionnaires prepared by project personnel; tested key components of the cost to
complete estimates, including materials, labor, and subcontractors costs; reviewed support for estimates of project
contingencies; compared actual project margins to historical and expected results; and recalculated revenues
recognized.
To test revenue recognized relating to claims, we selected a sample of projects and evaluated the estimates made
by management by reviewing documentation from management’s specialists and external counsel to support the
amount of the claim. We also tested management’s estimation process by performing a lookback analysis to
evaluate claims settled in the current year compared to management’s prior year estimates.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1990.
Los Angeles, California
November 14, 2023
56
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors and Stockholders of AECOM
Opinion on Internal Control Over Financial Reporting
We have audited AECOM’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal
Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) (the COSO criteria). In our opinion, AECOM (the Company) maintained, in all material respects, effective internal control
over financial reporting as of September 30, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the 2023 consolidated financial statements of the Company and our report dated November 14, 2023 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Los Angeles, California
November 14, 2023
57
AECOM
Consolidated Balance Sheets
(in thousands, except share data)
September 30,
2023
September 30,
2022
CURRENT ASSETS:
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash in consolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTY AND EQUIPMENT—NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFERRED TAX ASSETS—NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GOODWILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INTANGIBLE ASSETS—NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER NON-CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING LEASE RIGHT-OF-USE ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CURRENT LIABILITIES:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER LONG-TERM LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING LEASE LIABILITIES, NON-CURRENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LONG-TERM LIABILITIES HELD FOR SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFERRED TAX LIABILITY-NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PENSION BENEFIT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
1,030,447
229,759
1,260,206
2,544,453
1,525,051
730,145
95,221
14,435
6,169,511
382,638
439,604
139,236
3,418,930
17,769
218,666
447,044
11,233,398
3,085
2,190,755
2,287,546
48,161
1,188,742
45,625
86,369
5,850,283
123,846
548,851
792
16,960
195,586
2,113,369
8,849,687
COMMITMENTS AND CONTINGENCIES (Note 18)
AECOM STOCKHOLDERS’ EQUITY:
Common stock—authorized, 300,000,000 shares of $0.01 par value as of September 30, 2023 and 2022; issued and
outstanding 136,210,883 and 138,933,907 shares as of September 30, 2023 and 2022, respectively . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL AECOM STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,362
4,241,523
(926,577)
(1,103,976)
2,212,332
171,379
2,383,711
11,233,398
$
See accompanying Notes to Consolidated Financial Statements.
$
$
$
$
972,661
199,548
1,172,209
2,317,812
1,405,299
759,402
79,000
89,088
5,822,810
428,239
284,154
354,983
3,380,761
35,552
293,043
539,773
11,139,315
5,032
2,027,314
2,181,408
46,336
1,051,258
49,249
43,574
5,404,171
135,795
595,308
200
9,224
232,552
2,156,686
8,533,936
1,389
4,156,594
(979,675)
(701,654)
2,476,654
128,725
2,605,379
11,139,315
58
AECOM
Consolidated Statements of Operations
(in thousands, except per share data)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in (losses) earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense for continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests from continuing operations . . . .
Net (loss) income attributable to noncontrolling interests from discontinued
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to AECOM from continuing operations . . . . . . . . . . . . . . . .
Net loss attributable to AECOM from discontinued operations . . . . . . . . . . . . . . . . .
Net income attributable to AECOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to AECOM per share:
Basic continuing operations per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic discontinued operations per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted continuing operations per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted discontinued operations per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30,
2023
Fiscal Year Ended
September 30,
2022
$
14,378,461
13,432,996
$
945,465
(279,352)
(153,575)
(188,404)
324,134
8,357
40,251
(159,342)
213,400
56,052
157,348
(57,207)
100,141
13,148,182
12,300,208
847,974
53,640
(147,309)
(107,501)
646,804
5,942
8,210
(110,274)
550,682
136,051
414,631
(79,929)
334,702
September 30,
2021
$
13,340,852
12,542,431
798,421
35,044
(155,072)
(48,840)
629,553
10,883
6,720
(238,352)
408,804
89,011
319,793
(116,813)
202,980
(43,262)
(25,521)
(25,109)
(1,547)
(44,809)
114,086
(58,754)
1,430
(24,091)
389,110
(78,499)
55,332
$
310,611
$
0.82
(0.42)
0.40
0.81
(0.42)
0.39
$
$
$
$
$
$
2.76
(0.55)
2.21
2.73
(0.55)
2.18
$
$
$
$
$
$
(4,686)
(29,795)
294,684
(121,499)
173,185
2.00
(0.82)
1.18
1.97
(0.81)
1.16
$
$
$
$
$
$
$
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138,614
140,109
140,768
142,696
147,279
149,676
See accompanying Notes to Consolidated Financial Statements.
59
AECOM
Consolidated Statements of Comprehensive Income
(in thousands)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax:
Net unrealized gain on derivatives, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests in comprehensive income of consolidated
Fiscal Year Ended
September 30, September 30, September 30,
2022
334,702
2021
202,980
2023
100,141
$
$
$
2,165
59,720
(8,719)
53,166
153,307
41,002
(220,043)
98,893
(80,148)
254,554
4,541
(12,601)
26,591
18,531
221,511
subsidiaries, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to AECOM, net of tax. . . . . . . . . . . . . . .
$
(44,877)
108,430
$
(23,241)
231,313
$
(30,029)
191,482
See accompanying Notes to Consolidated Financial Statements.
60
AECOM
Consolidated Statements of Stockholders’ Equity
(in thousands)
Common
Stock
BALANCE AT SEPTEMBER 30, 2020 . . . . . . . . . . . . . $ 1,570
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of accounting standard adoption . . . . .
—
—
Other comprehensive income . . . . . . . . . . . . . . . . . . . . .
Issuance of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
Repurchases of stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
(163)
—
Stock based compensation . . . . . . . . . . . . . . . . . . . . . . .
Other transactions with noncontrolling interests . . . . . . .
—
Disposal of noncontrolling interest of business
Additional
Paid-In
Capital
$ 4,035,414
—
—
—
58,733
(23,348)
44,742
—
sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Contributions from noncontrolling interests . . . . . . . . . .
—
Distributions to noncontrolling interests . . . . . . . . . . . . .
—
BALANCE AT SEPTEMBER 30, 2021 . . . . . . . . . . . . . $ 1,432
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Dividends declared. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . .
—
Issuance of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
Repurchases of stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
(68)
—
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . .
Other transactions with noncontrolling interests . . . . . . .
—
Contributions from noncontrolling interests . . . . . . . . . .
—
—
Distributions to noncontrolling interests . . . . . . . . . . . . .
BALANCE AT SEPTEMBER 30, 2022 . . . . . . . . . . . . . $ 1,389
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . .
—
19
Issuance of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
(46)
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . .
—
—
Contributions from noncontrolling interests . . . . . . . . . .
Distributions to noncontrolling interests . . . . . . . . . . . . .
—
BALANCE AT SEPTEMBER 30, 2023 . . . . . . . . . . . . . $ 1,362
—
—
—
$ 4,115,541
—
—
—
52,605
(50,023)
38,471
—
—
—
$ 4,156,594
—
—
—
64,964
(25,917)
45,882
—
—
$ 4,241,523
Accumulated Retained
Earnings/
Other
Total
AECOM
Non-
Total
Comprehensive (Accumulated Stockholders’ Controlling Stockholders’
$
$
$
Loss
(918,674) $
—
—
18,297
—
—
—
—
—
—
—
(900,377) $
—
—
(79,298)
—
—
—
—
—
—
(979,675) $
—
—
53,098
—
—
—
—
—
Deficits)
$
174,248
173,185
(7,979)
—
—
(843,580)
—
—
—
—
—
(504,126) $
310,611
(85,260)
—
—
(422,879)
—
—
—
—
(701,654) $
55,332
(100,872)
—
—
(356,782)
—
—
—
$
(926,577) $ (1,103,976) $
Interests
Equity
3,292,558 $ 120,986
29,795
—
234
—
—
—
405
173,185
(7,979)
18,297
58,758
(867,091)
44,742
—
—
—
—
310,611
(85,260)
(79,298)
52,630
(472,970)
38,471
—
—
—
(24,039)
271
(10,545)
2,712,470 $ 117,107
24,091
—
(850)
—
—
—
772
185
(12,580)
2,476,654 $ 128,725
44,809
—
68
—
—
—
17,225
(19,448)
2,212,332 $ 171,379
55,332
(100,872)
53,098
64,983
(382,745)
45,882
—
—
Equity
3,413,544
202,980
(7,979)
18,531
58,758
(867,091)
44,742
405
(24,039)
271
(10,545)
2,829,577
334,702
(85,260)
(80,148)
52,630
(472,970)
38,471
772
185
(12,580)
2,605,379
100,141
(100,872)
53,166
64,983
(382,745)
45,882
17,225
(19,448)
2,383,711
$
$
$
$
See accompanying Notes to Consolidated Financial Statements.
61
AECOM
Consolidated Statements of Cash Flows
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in losses (earnings) of unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution of earnings from unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayment premium on redemption of unsecured senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:
Accounts receivable and contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for sale of discontinued operations, net of cash disposed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return of investment in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under credit agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of borrowings under credit agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of unsecured senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayment premium on redemption of unsecured senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments to repurchase common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net distributions to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EFFECT OF EXCHANGE RATE CHANGES ON CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LESS: CASH AND CASH EQUIVALENTS INCLUDED IN CURRENT ASSETS HELD FOR SALE . . . .
CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS AT END OF YEAR . . . . . . . . . .
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
September 30, September 30, September 30,
2023
2022
2021
$
100,141
$
334,702
$
202,980
175,725
282,291
41,178
45,882
—
86,199
43,222
969
(135,878)
6,388
(402,498)
131,903
169,514
97,239
137,484
(83,779)
695,980
—
(59,772)
20,874
5,977
344
(105,600)
(138,177)
3,506,668
(3,552,639)
—
—
—
(96,192)
32,897
6,168
(379,284)
(2,223)
11,670
(472,935)
512
85,380
1,176,772
1,262,152
(1,946)
1,260,206
(153,975)
(78,448)
170,886
(46,303)
27,175
38,471
—
—
48,095
(31,529)
22,821
15,295
236,605
132,003
(102,873)
48,019
(7,434)
(172,297)
713,636
(42,261)
(26,672)
11,723
10,242
8,951
(137,017)
(175,034)
3,618,585
(3,657,308)
—
—
(155)
(63,288)
26,666
—
(472,970)
(12,395)
(27,450)
(588,315)
(8,307)
(58,020)
1,234,792
1,176,772
(4,563)
1,172,209
(104,644)
(104,742)
$
$
$
$
$
$
$
$
$
176,400
(39,104)
46,358
44,742
117,500
105,194
52,532
(42,728)
(48,265)
16,063
533,006
(100,526)
(250,142)
(84,073)
103,999
(129,266)
704,670
(265,876)
(57,388)
8,110
15,507
14,822
(136,262)
(421,087)
3,638,916
(2,726,347)
(797,252)
(117,500)
(11,280)
—
25,686
4,038
(867,091)
(10,274)
(11,429)
(872,533)
5,493
(583,457)
1,818,249
1,234,792
(5,596)
1,229,196
(255,679)
(114,464)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
See accompanying Notes to Consolidated Financial Statements.
62
AECOM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Organization— AECOM and its consolidated subsidiaries provide planning, consulting, architectural and engineering design
services to public and private clients worldwide in major end markets such as transportation, facilities, environmental, energy, water
and government. The Company also provides construction services, including building construction and energy, infrastructure and
industrial construction, primarily in the Americas.
Fiscal Year—The Company reports results of operations based on 52-or 53-week periods ending on the Friday nearest
September 30. For clarity of presentation, all periods are presented as if the year ended on September 30. Fiscal years 2023, 2022 and
2021 each contained 52, 52 and 52 weeks, respectively, and ended on September 29, September 30, and October 1, respectively. Certain
prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform with the current
period’s presentation.
Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the
United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The more significant estimates affecting amounts reported in the consolidated financial statements
relate to revenues under long-term contracts and self-insurance accruals. Actual results could differ from those estimates.
Principles of Consolidation and Presentation—The consolidated financial statements include the accounts of all
majority-owned subsidiaries and joint ventures in which the Company is the primary beneficiary. All inter-company accounts have been
eliminated in consolidation. Also see Note 6 regarding joint ventures and variable interest entities.
Government Contract Matters—The Company’s federal government and certain state and local agency contracts are subject
to, among other regulations, regulations issued under the Federal Acquisition Regulations (FAR). These regulations can limit the
recovery of certain specified indirect costs on contracts and subjects the Company to ongoing multiple audits by government agencies
such as the Defense Contract Audit Agency (DCAA). In addition, most of the Company’s federal and state and local contracts are
subject to termination at the discretion of the client.
Audits by the DCAA and other agencies consist of reviews of the Company’s overhead rates, operating systems and cost
proposals to ensure that the Company accounted for such costs in accordance with the Cost Accounting Standards of the FAR (CAS).
If the DCAA determines the Company has not accounted for such costs consistent with CAS, the DCAA may disallow these costs.
There can be no assurance that audits by the DCAA or other governmental agencies will not result in material cost disallowances in the
future.
Cash and Cash Equivalents—The Company’s cash equivalents include highly liquid investments which have an initial
maturity of three months or less.
Allowance for Doubtful Accounts—The Company records its accounts receivable net of an allowance for doubtful accounts.
This allowance for doubtful accounts is estimated based on management’s evaluation of the contracts involved and the financial
condition of its clients. The factors the Company considers in its contract evaluations include, but are not limited to:
• Client type—federal or state and local government or commercial client;
• Historical contract performance;
• Historical collection and delinquency trends;
• Client credit worthiness; and
• General economic conditions.
63
Derivative Financial Instruments—The Company accounts for its derivative instruments as either assets or liabilities and
carries them at fair value.
For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow
hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other
comprehensive income in stockholders’ equity and reclassified into income in the same period or periods during which the hedged
transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in current
income. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash
flows on hedged transactions.
The net gain or loss on the effective portion of a derivative instrument that is designated as an economic hedge of the foreign
currency translation exposure generated by the re-measurement of certain assets and liabilities denominated in a non-functional currency
in a foreign operation is reported in the same manner as a foreign currency translation adjustment. Accordingly, any gains or losses
related to these derivative instruments are recognized in current income.
Derivatives that do not qualify as hedges are adjusted to fair value through current income.
Fair Value of Financial Instruments—The Company determines the fair values of its financial instruments, including
short-term investments, debt instruments and derivative instruments, and pension and post-retirement plan assets based on inputs or
assumptions that market participants would use in pricing an asset or a liability. The Company categorizes its instruments using a
valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels
as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted
prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly
through market corroboration, for substantially the full term of the financial instrument; Level 3 inputs are unobservable inputs based
on the Company’s assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability
within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because
of the short maturities of these instruments. The carrying amount of the revolving credit facility approximates fair value because the
interest rates are based upon variable reference rates.
The Company’s fair value measurement methods may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Although the Company believes its valuation methods are appropriate and consistent
with those used by other market participants, the use of different methodologies or assumptions to determine fair value could result in a
different fair value measurement at the reporting date.
Property and Equipment—Property and equipment are recorded at cost and are depreciated over their estimated useful lives
using the straight-line method. Expenditures for maintenance and repairs are expensed as incurred. Typically, estimated useful lives
range from ten to forty-five years for buildings, three to ten years for furniture and fixtures and three to twelve years for computer
systems and equipment. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives
or the remaining terms of the underlying lease agreement.
Long-Lived Assets—Long-lived assets to be held and used are reviewed for impairment whenever events or circumstances
indicate that the assets may not be recoverable. The carrying amount of an asset to be held and used is not recoverable if it exceeds the
sum of the undiscounted cash flows expected from the use and eventual disposition of the asset. For assets to be held and used,
impairment losses are recognized based upon the excess of the asset’s carrying amount over the fair value of the asset. For long-lived
assets to be disposed, impairment losses are recognized at the lower of the carrying amount or fair value less cost to sell.
Goodwill and Acquired Intangible Assets—Goodwill represents the excess of amounts paid over the fair value of net assets
acquired from an acquisition. In order to determine the amount of goodwill resulting from an acquisition, the Company performs an
assessment to determine the value of the acquired company’s tangible and identifiable intangible assets and liabilities. In its assessment,
the Company determines whether identifiable intangible assets exist, which typically include backlog and customer relationships.
Intangible assets are amortized over the period in which the contractual or economic benefits of the intangible assets are expected to be
realized.
64
The Company tests goodwill for impairment annually for each reporting unit in the fourth quarter of the fiscal year and between
annual tests, if events occur or circumstances change which suggest that goodwill should be evaluated. Such events or circumstances
include significant changes in legal factors and business climate, recent losses at a reporting unit, and industry trends, among other
factors. A reporting unit is defined as an operating segment or one level below an operating segment. The Company’s impairment tests
are performed at the operating segment level as they represent the Company’s reporting units.
Goodwill is evaluated for impairment either by assessing qualitative factors or by performing a quantitative assessment.
Qualitative factors, such as overall financial performance, industry or market considerations, or other relevant events, are assessed to
determine if it is more likely than not that the fair value of the reporting units is less than their carrying amounts. During a quantitative
impairment test, the Company estimates the fair value of the reporting unit using income and market approaches, and compares that
amount to the carrying value of that reporting unit. In the event the fair value of the reporting unit is determined to be less than the
carrying value, goodwill is impaired, and an impairment loss is recognized equal to the excess, limited to the total amount of goodwill
allocated to the reporting unit. See also Note 3.
Pension Plans—The Company has certain defined benefit pension plans. The Company calculates the market-related value of
assets, which is used to determine the return-on-assets component of annual pension expense and the cumulative net unrecognized gain
or loss subject to amortization. This calculation reflects the Company’s anticipated long-term rate of return and amortization of the
difference between the actual return (including capital, dividends, and interest) and the expected return over a five-year period.
Cumulative net unrecognized gains or losses that exceed 10% of the greater of the projected benefit obligation or the fair market related
value of plan assets are subject to amortization.
Insurance Reserves—The Company maintains insurance for certain insurable business risks. Insurance coverage contains
various retention and deductible amounts for which the Company accrues a liability based upon reported claims and an actuarially
determined estimated liability for certain claims incurred but not reported. It is generally the Company’s policy not to accrue for any
potential legal expense to be incurred in defending the Company’s position. The Company believes that its accruals for estimated
liabilities associated with professional and other liabilities are sufficient and any excess liability beyond the accrual is not expected to
have a material adverse effect on the Company’s results of operations or financial position.
Foreign Currency Translation—The Company’s functional currency is generally the U.S. dollar, except for foreign operations
where the functional currency is generally the local currency. Results of operations for foreign entities are translated to U.S. dollars
using the average exchange rates during the period. Assets and liabilities for foreign entities are translated using the exchange rates in
effect as of the date of the balance sheet. Resulting translation adjustments are recorded as a foreign currency translation adjustment into
other accumulated comprehensive income/(loss) in stockholders’ equity.
The Company uses foreign currency forward contracts from time to time to mitigate foreign currency risk. The Company limits
exposure to foreign currency fluctuations in most of its contracts through provisions that require client payments in currencies
corresponding to the currency in which costs are incurred. As a result of this natural hedge, the Company generally does not need to
hedge foreign currency cash flows for contract work performed.
Noncontrolling Interests—Noncontrolling interests represent the equity investments of the minority owners in the Company’s
joint ventures and other subsidiary entities that the Company consolidates in its financial statements.
Income Taxes—The Company files a consolidated U.S. federal corporate income tax return and combined / consolidated state
tax returns and separate company state tax returns. The Company accounts for certain income and expense items differently for financial
reporting and income tax purposes. Deferred tax assets and liabilities are determined based on the difference between the financial
statement and tax basis of assets and liabilities, applying enacted statutory tax rates in effect for the year in which the differences are
expected to reverse. In determining the need for a valuation allowance, management reviews both positive and negative evidence,
including the nature, frequency, and severity of cumulative financial reporting losses in recent years, the future reversal of existing
temporary differences, predictability of future taxable income exclusive of reversing temporary differences of the character necessary
to realize the asset, relevant carryforward periods, taxable income in carry-back years if carry-back is permitted under tax law, and
prudent and feasible tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax asset
that would otherwise expire. Based upon management’s assessment of all available evidence, the Company has concluded that it is more
likely than not that the deferred tax assets, net of valuation allowance, will be realized.
65
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act, which significantly changed U.S. tax law and
included a provision to tax global intangible low-taxed income (GILTI) of foreign subsidiaries. The Company recognizes taxes due
under the GILTI provision as a current period expense.
2. New Accounting Pronouncements and Changes in Accounting
In December 2019, the Financial Accounting Standards Board (FASB) issued new accounting guidance which simplifies the
accounting for income taxes. The guidance amends certain exceptions to the general principles of Accounting Standards Codification
(ASC) 740, Income Taxes, and simplifies several areas such as accounting for a franchise tax or similar tax that is partially based on
income. The Company adopted the new guidance starting on October 1, 2021. The adoption of the new guidance did not have a
significant impact on the Company’s consolidated financial statements.
In October 2021, the FASB issued final guidance to companies that apply ASC 606, Revenue from Contracts with Customers,
to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. The
new guidance creates an exception to the general requirement to measure acquired assets and liabilities at fair value on the acquisition
date. Under this exception, an acquirer applies ASC 606 to recognize and measure contract assets and contract liabilities on the
acquisition date. The Company adopted the new guidance starting on October 1, 2022 on a prospective basis and the revised guidance
will be applied to any business combinations the Company undertakes.
3. Discontinued Operations, Goodwill, and Intangible Assets
In the first quarter of fiscal 2020, management approved a plan to dispose of via sale the Company’s self-perform at-risk
construction businesses. These businesses include the Company’s civil infrastructure, power, and oil and gas construction businesses
that were previously reported in the Company’s Construction Services segment. After consideration of the relevant facts, the Company
concluded the assets and liabilities of its self-perform at-risk construction businesses met the criteria for classification as held for sale.
The Company concluded the actual and proposed disposal activities represented a strategic shift that would have a major effect on the
Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with FASB ASC
205-20. Accordingly, the financial results of the self-perform at-risk construction businesses are presented in the Consolidated Statement
of Operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses not
sold as of the balance sheet date are presented in the Consolidated Balance Sheets as assets and liabilities held for sale for both periods
presented.
The Company completed the sale of its civil infrastructure construction business to affiliates of Oroco Capital in the second
quarter of fiscal 2021. In the first quarter of fiscal 2022, the Company recorded an additional $40.0 million loss primarily related to
revisions of estimates for its working capital obligation to be paid and a contingent consideration receivable. In the second quarter of
fiscal 2023, the Company recorded a $38.9 million loss related to a revised estimate of its contingent consideration receivable recognized
at the sale. Under the terms of the sale agreement, the Company made the required cash payments and delivered the cash and cash
equivalents, including cash in consolidated joint ventures, on the balance sheet at closing. As a result, the Company recorded the net
cash impact of the sale as a use of cash in the investing section of its statement of cash flows.
On January 28, 2022, the Company completed the sale of its oil and gas construction business to affiliates of Graham
Maintenance Services LP for a purchase price of $14 million, subject to cash, debt and working capital adjustments. The Company
recorded a pre-tax gain of approximately $3.0 million on the sale, net of transaction costs. During the third quarter of fiscal 2023, the
Company collected approximately $9.2 million cash payment for contingent consideration completing this transaction.
66
The following table represents summarized balance sheet information of assets and liabilities held for sale (in millions):
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-down of assets to fair value less cost to sell . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term liabilities held for sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, September 30,
2023
2022
$
$
$
$
$
$
$
1.9 $
93.3
—
95.2 $
14.2 $
(14.2)
— $
45.6 $
45.6 $
4.6
66.2
8.2
79.0
8.0
(8.0)
—
49.2
49.2
0.8 $
0.2
The following table represents summarized income statement information of discontinued operations (in millions):
Fiscal Year Ended
September 30, September 30, September 30,
2023
2022
2021
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross (loss) profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss from discontinued operations . . . . . . . . . . . . . . . . . . . .
$
$
$
212.8
223.2
(10.4)
(2.9)
(50.6)
(0.2)
—
(64.1)
(1.0)
—
(65.1)
(7.9)
(57.2) $
347.4 $
360.2
(12.8)
(7.4)
(48.1)
(9.7)
—
(78.0)
—
(0.1)
(78.1)
1.8
(79.9) $
771.5
760.5
11.0
4.0
(52.5)
(15.3)
(105.2)
(158.0)
—
(0.5)
(158.5)
(41.7)
(116.8)
The significant components included in the Consolidated Statement of Cash Flows for the discontinued operations are as
follows (in millions):
Payments for capital expenditures . . . . . . . . . . . . . . . . . . . . . . .
$
(6.2) $
(2.7) $
(7.3)
The changes in the carrying value of goodwill by reportable segment for the year ended September 30, 2023 were as follows:
Fiscal Year Ended
September 30, September 30, September 30,
2022
2023
2021
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2,610.7
770.1
3,380.8
September 30,
2022
67
Foreign
Exchange
Impact
(in millions)
$
3.3 $
34.8
$ 38.1 $
September 30,
2023
2,614.0
804.9
3,418.9
The gross amounts and accumulated amortization of the Company’s acquired identifiable intangible assets with finite useful
lives as of September 30, 2023 and 2022, included in intangible assets—net, in the accompanying consolidated balance sheets, were as
follows:
Customer relationships . . . . . . . . $
663.8 $
(646.0)
$
17.8
$
663.0
$
(627.4) $
35.6
Gross
Amount
September 30, 2023
Accumulated
Amortization Assets, Net
Intangible
Gross
Amount
(in millions)
September 30, 2022
Accumulated
Amortization Assets, Net
Intangible Amortization
Period
(years)
1 - 11
Amortization expense of acquired intangible assets included within cost of revenue was $18.6 million and $18.9 million for
the years ended September 30, 2023 and 2022, respectively. The following table presents estimated amortization expense of existing
intangible assets for the succeeding years:
Fiscal Year
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(in millions)
17.1
0.7
17.8
4. Revenue Recognition
The Company follows accounting principles for recognizing revenue upon the transfer of control of promised goods or services
to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The Company
generally recognizes revenues over time as performance obligations are satisfied. The Company generally measures its progress to
completion using an input measure of total costs incurred divided by total costs expected to be incurred, which it believes to be the best
measure of progress towards completion of the performance obligation. In the course of providing its services, the Company routinely
subcontracts for services and incurs other direct costs on behalf of its clients. These costs are passed through to clients and, in accordance
with GAAP, are included in the Company’s revenue and cost of revenue. These pass-through revenues for the years ended September 30,
2023, 2022 and 2021 were $7.7 billion, $6.8 billion and $7.2 billion, respectively.
Recognition of revenue and profit is dependent upon a number of factors, including the accuracy of a variety of estimates made
at the balance sheet date, such as engineering progress, material quantities, the achievement of milestones, penalty provisions, labor
productivity and cost estimates. Additionally, the Company is required to make estimates for the amount of consideration to be received,
including bonuses, awards, incentive fees, claims, unpriced change orders, penalties, and liquidated damages. Variable consideration is
included in the estimate of the transaction price only to the extent that a significant reversal would not be probable. Management
continuously monitors factors that may affect the quality of its estimates, and material changes in estimates are disclosed accordingly.
Costs attributable to claims are treated as costs of contract performance as incurred.
The following summarizes the Company’s major contract types:
Cost Reimbursable Contracts
Cost reimbursable contracts include cost-plus fixed fee, cost-plus fixed rate, and time-and-materials price contracts. Under
cost-plus contracts, the Company charges clients for its costs, including both direct and indirect costs, plus a negotiated fee or rate. The
Company recognizes revenue based on actual direct costs incurred and the applicable fixed rate or portion of the fixed fee earned as of
the balance sheet date. Under time-and-materials price contracts, the Company negotiates hourly billing rates and charges its clients
based on the actual time that it expends on a project. In addition, clients reimburse the Company for materials and other direct incidental
expenditures incurred in connection with its performance under the contract. The Company may apply a practical expedient to recognize
revenue in the amount in which it has the right to invoice if its right to consideration is equal to the value of performance completed to
date.
Guaranteed Maximum Price Contracts (GMP)
GMP contracts share many of the same contract provisions as cost-plus and fixed-price contracts. As with cost-plus contracts,
clients are provided a disclosure of all the project costs, and a lump sum or percentage fee is separately identified. The Company provides
clients with a guaranteed price for the overall project (adjusted for change orders issued by clients) and a schedule including the expected
completion date. Cost overruns or costs associated with project delays in completion could generally be the Company’s responsibility.
68
For many of the Company’s commercial or residential GMP contracts, the final price is generally not established until the Company has
subcontracted a substantial percentage of the trade contracts with terms consistent with the master contract, and it has negotiated
additional contractual limitations, such as waivers of consequential damages as well as aggregate caps on liabilities and liquidated
damages. Revenue is recognized for GMP contracts as project costs are incurred relative to total estimated project costs.
Fixed-Price Contracts
Fixed-price contracts include both lump-sum and fixed-unit price contracts. Under lump-sum contracts, the Company performs
all the work under the contract for a specified fee. Lump-sum contracts are typically subject to price adjustments if the scope of the
project changes or unforeseen conditions arise. Under fixed-unit price contracts, the Company performs a number of units of work at an
agreed price per unit with the total payment under the contract determined by the actual number of units delivered. Revenue is recognized
for fixed-price contracts using the input method measured on a cost-to-cost basis as the Company believes this is the best measure of
progress towards completion.
The following tables present the Company’s revenues disaggregated by revenue sources:
Cost reimbursable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guaranteed maximum price. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,128.8
4,887.7
3,362.0
$ 14,378.5
September 30,
2023
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe, Middle East, India, Africa . . . . . . . . . . . . . . . . . . . . . . .
Asia-Australia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10,976.4
1,937.3
1,464.8
$ 14,378.5
September 30,
2023
September 30,
2021
Fiscal Year Ended
September 30,
2022
(in millions)
$
5,454.9 $
4,325.0
3,368.3
5,319.4
4,582.7
3,438.8
$ 13,148.2 $ 13,340.9
September 30,
2021
Fiscal Year Ended
September 30,
2022
(in millions)
$
9,941.6 $ 10,228.3
1,691.3
1,759.8
1,421.3
1,446.8
$ 13,148.2 $ 13,340.9
As of September 30, 2023, the Company had allocated $21.9 billion of transaction price to unsatisfied or partially satisfied
performance obligations, of which approximately 55% is expected to be satisfied within the next twelve months and the remaining 45%
thereafter.
Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. The Company recognized
revenue of $1,043.7 million and $565.2 million during the years ended September 30, 2023 and 2022, respectively, that was included
in contract liabilities as of September 30, 2022 and 2021, respectively.
69
The Company’s timing of revenue recognition may not be consistent with its rights to bill and collect cash from its clients.
Those rights are generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of work
or when services are performed. The Company’s accounts receivables represent amounts billed to clients that have yet to be collected
and represent an unconditional right to cash from its clients. Contract assets represent the amount of contract revenue recognized but
not yet billed pursuant to contract terms or accounts billed after the balance sheet date. Contract liabilities represent billings as of the
balance sheet date, as allowed under the terms of a contract, but not yet recognized as contract revenue pursuant to the Company’s
revenue recognition policy.
Net accounts receivable consisted of the following:
Billed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract retentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accounts receivable—gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts and credit losses . . . . . . . . . . . . . . . . . . . . . . .
Total accounts receivable—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2023
2022
(in millions)
2,122.2 $
516.5
2,638.7
(94.2)
2,544.5 $
1,931.4
490.4
2,421.8
(104.0)
2,317.8
Fiscal Year Ended
September 30, September 30,
Substantially all contract assets as of September 30, 2023 and September 30, 2022 are expected to be billed and collected within
twelve months, except for claims. Significant claims recorded in contract assets and other non-current assets were approximately
$160 million and $110 million as of September 30, 2023 and 2022, respectively. The asset related to the Deactivation, Demolition, and
Removal Project retained from the MS Purchaser as defined in discussed in Note 18 is presented in prepaid expense and other current
assets from continuing operations in the Consolidated Balance Sheet. Contract retentions represent amounts invoiced to clients where
payments have been withheld from progress payments until the contracted work has been completed and approved by the client but
nonetheless represent an unconditional right to cash.
The Company considers a broad range of information to estimate expected credit losses including the related ages of past due
balances, projections of credit losses based on historical trends, and collection history and credit quality of its clients. Negative
macroeconomic trends or delays in payment of outstanding receivables could result in an increase in the estimated credit losses.
No single client accounted for more than 10% of the Company’s outstanding receivables at September 30, 2023 and 2022.
The Company sold trade receivables to financial institutions, of which $291.0 million and $240.3 million were outstanding as
of September 30, 2023 and 2022, respectively. The Company does not retain financial or legal obligations for these receivables that
would result in material losses. The Company’s ongoing involvement is limited to the remittance of customer payments to the financial
institutions with respect to the sold trade receivables.
5. Property and Equipment
Property and equipment, at cost, consists of the following:
Fiscal Year Ended
September 30, September 30, Useful Lives
2023
2022
(years)
Building and land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer systems and equipment . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
9.9 10 - 45
339.7 1 - 20
672.1 3 - 12
103.1 3 - 10
$
(in millions)
10.4
329.4
716.7
97.9
1,154.4
(771.8)
382.6
$
1,124.8
(696.6)
428.2
Depreciation expense for the fiscal years ended September 30, 2023, 2022 and 2021 was $152.3 million, $147.0 million, and
$143.6 million, respectively. Depreciation is calculated using primarily the straight-line method over the estimated useful lives of the
70
assets, or in the case of leasehold improvements and capitalized leases, the lesser of the remaining term of the lease or its estimated
useful life.
6. Joint Ventures and Variable Interest Entities
The Company’s joint ventures provide architecture, engineering, program management, construction management, operations
and maintenance services, and invest in real estate projects. Joint ventures, the combination of two or more partners, are generally
formed for a specific project. Management of the joint venture is typically controlled by a joint venture executive committee, comprised
of representatives from the joint venture partners. The joint venture executive committee normally provides management oversight and
controls decisions which could have a significant impact on the joint venture.
Some of the Company’s joint ventures have no employees and minimal operating expenses. For these joint ventures, the
Company’s employees perform work for the joint venture, which is then billed to a third-party customer by the joint venture. These joint
ventures function as pass- through entities to bill the third-party customer. For consolidated joint ventures of this type, the Company
records the entire amount of the services performed and the costs associated with these services, including the services provided by the
other joint venture partners, in the Company’s result of operations. For certain of these joint ventures where a fee is added by an
unconsolidated joint venture to client billings, the Company’s portion of that fee is recorded in equity in earnings of joint ventures.
The Company also has joint ventures that have their own employees and operating expenses, and to which the Company
generally makes a capital contribution. The Company accounts for these joint ventures either as consolidated entities or equity method
investments based on the criteria further discussed below.
The Company follows guidance on the consolidation of variable interest entities (VIEs) that requires companies to utilize a
qualitative approach to determine whether it is the primary beneficiary of a VIE. The process for identifying the primary beneficiary of
a VIE requires consideration of the factors that indicate a party has the power to direct the activities that most significantly impact the
joint venture’s economic performance, including powers granted to the joint venture’s program manager, powers contained in the joint
venture governing board and, to a certain extent, a company’s economic interest in the joint venture. The Company analyzes its joint
ventures and classifies them as either:
•
•
a VIE that must be consolidated because the Company is the primary beneficiary or the joint venture is not a VIE and the
Company holds the majority voting interest with no significant participative rights available to the other partners; or
a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the
primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest.
As part of the above analysis, if it is determined that the Company has the power to direct the activities that most significantly
impact the joint venture’s economic performance, the Company considers whether or not it has the obligation to absorb losses or rights
to receive benefits of the VIE that could potentially be significant to the VIE.
Contractually required support provided to the Company’s joint ventures is discussed in Note 18.
71
Summary of financial information of the consolidated joint ventures is as follows:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total AECOM (deficit) equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total owners’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and owners’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, September 30,
2023
2022
(in millions)
$
$
$
$
806.3 $
75.9
882.2 $
779.6 $
1.5
781.1
(54.9)
156.0
101.1
882.2 $
630.8
73.8
704.6
530.6
1.5
532.1
56.7
115.8
172.5
704.6
Total revenue of the consolidated joint ventures was $1,984.3 million, $1,411.7 million, and $826.8 million for the years ended
September 30, 2023, 2022 and 2021, respectively. The assets of the Company’s consolidated joint ventures are restricted for use only
by the particular joint venture and are not available for the general operations of the Company.
Summary of financial information of the unconsolidated joint ventures, as derived from their unaudited financial statements, is
as follows:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Joint ventures’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and joint ventures’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . .
AECOM’s investment in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, September 30,
2023
2022
(in millions)
1,177.4 $
996.3
2,173.7 $
1,279.4
1,128.7
2,408.1
605.9 $
441.7
1,047.6
1,126.1
2,173.7 $
751.4
521.3
1,272.7
1,135.4
2,408.1
139.2 $
355.0
$
$
$
$
$
Twelve Months Ended
September 30, September 30,
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
2023
2022
(in millions)
1,248.2 $
1,170.7
77.5 $
72.9 $
1,801.5
1,743.1
58.4
52.1
72
Summary of AECOM’s equity in earnings of unconsolidated joint ventures is as follows:
September 30, September 30, September 30,
Fiscal Year Ended
Pass-through joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
24.5
(303.9)
(279.4) $
29.2 $
24.4
53.6 $
2023
2022
(in millions)
$
2021
23.6
11.4
35.0
During fiscal 2023, the Company initiated a process to explore strategic options for the AECOM Capital business, consistent
with the Company's focus on its professional services business. During the third quarter of fiscal 2023, the Company identified indicators
of impairment in the equity method investments held in its AECOM Capital segment. Specifically, the Company identified evidence
that the carrying value of certain of the investments in its real estate portfolio were in excess of their fair values. The Company concluded
it no longer had the intent to retain certain of these investments for a period of time sufficient to allow for an anticipated recovery in
market value. In the third quarter of fiscal 2023, the Company recorded an impairment loss of $307.0 million to reduce the carrying
value of these investments to their estimated fair values. This impairment did not relate to investments in respect of which affiliates of
AECOM Capital provide advisory services or manage third party capital. AECOM Capital will continue to manage existing investment
vehicles and investments in a manner consistent with their current obligations. Fair value was determined using Level 3 inputs such as
forecasted cash flows and comparable sales prices.
7. Pension Benefit Obligations
In the U.S., the Company sponsors various qualified defined benefit pension plans. Benefits under these plans generally are
based on the employee’s years of creditable service and compensation; however, all U.S. defined benefit plans are closed to new
participants and have frozen accruals.
The Company also sponsors various non-qualified plans in the U.S.; all of these plans are frozen. Outside the U.S., the Company
sponsors various pension plans, which are appropriate to the country in which the Company operates, some of which are government
mandated.
The following tables provide reconciliations of the changes in the U.S. and international plans’ benefit obligations,
reconciliations of the changes in the fair value of assets for the last three years ended September 30, and reconciliations of the funded
status as of September 30 of each year.
September 30,
2023
Fiscal Year Ended
September 30,
2022
September 30,
2021
U.S.
Int’l
U.S.
Int’l
U.S.
Int’l
(in millions)
Change in benefit obligation:
Benefit obligation at beginning of year . . . . . $
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . .
Participant contributions . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits and expenses paid . . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . .
Plan settlements . . . . . . . . . . . . . . . . . . . . . . . .
Transfers in . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan amendments . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation (gain) loss . . . . .
Benefit obligation at end of year . . . . . . . . . . $
198.1
—
0.1
9.8
(17.2)
(8.8)
(1.5)
0.7
—
—
181.2
$
$
791.2
0.3
0.2
47.7
(42.2)
(112.5)
(1.5)
—
—
73.0
756.2
$
$
265.4
—
0.1
4.7
(18.4)
(51.9)
(1.8)
—
—
—
198.1
$ 1,470.8 $
0.5
0.3
24.1
(44.3)
(458.1)
(2.2)
—
—
(199.9)
791.2 $
$
283.9
—
0.1
4.3
(18.5)
(3.7)
(0.7)
—
—
—
265.4
$ 1,440.3
0.5
0.3
21.6
(48.6)
(4.7)
(5.9)
—
0.4
66.9
$ 1,470.8
73
September 30,
2023
Fiscal Year Ended
September 30,
2022
September 30,
2021
U.S.
Int’l
U.S.
Int’l
U.S.
Int’l
(in millions)
Change in plan assets
Fair value of plan assets at beginning of year . . . $
Actual return on plan assets . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . .
Participant contributions . . . . . . . . . . . . . . . . . . . .
Benefits and expenses paid . . . . . . . . . . . . . . . . . .
Plan settlements . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation (loss) gain . . . . . . . .
Fair value of plan assets at end of year . . . . . . . . $
101.4
7.8
8.2
0.1
(17.2)
(1.5)
—
98.8
$
$
683.5
(54.2)
24.8
0.2
(42.2)
(1.5)
62.7
673.3
$
$
138.9
(27.2)
9.8
0.1
(18.4)
(1.8)
—
101.4
$ 1,251.8 $
(374.5)
23.6
0.3
(44.3)
(2.2)
(171.2)
683.5 $
$
129.6
14.7
13.7
0.1
(18.5)
(0.7)
—
138.9
$ 1,166.2
61.1
25.2
0.3
(48.6)
(5.9)
53.5
$ 1,251.8
September 30, 2023
Int’l
U.S.
Fiscal Year Ended
September 30, 2022
Int’l
U.S.
(in millions)
September 30, 2021
Int’l
U.S.
Reconciliation of funded status:
Funded status at end of year . . . . . . . . . . . . . . . . . . $
Contribution made after measurement date . . . . . .
Net amount recognized at end of year . . . . . . . . . . $
(82.4) $
N/A
(82.4) $
(82.9) $
N/A
(82.9) $
(96.7) $ (107.7) $
N/A
(96.7) $ (107.7) $
N/A
(126.5) $
N/A
(126.5) $
(219.0)
N/A
(219.0)
The following table sets forth the amounts recognized in the consolidated balance sheets as of September 30, 2023, 2022 and
2021:
September 30, 2023
Int’l
U.S.
Fiscal Year Ended
September 30, 2022
Int’l
U.S.
(in millions)
September 30, 2021
Int’l
U.S.
Amounts recognized in the consolidated balance
sheets:
Other non-current assets . . . . . . . . . . . . . . . . . . . . $
Accrued expenses and other current liabilities . .
Pension benefit obligations . . . . . . . . . . . . . . . . . .
Net amount recognized in the balance sheet . . . . $
— $
(8.4)
(74.0)
(82.4) $
38.7
—
(121.6)
(82.9) $
$
— $
36.8 $
—
(144.5)
(8.6)
(88.1)
(96.7) $ (107.7) $
— $
(9.1)
(117.4)
(126.5) $
47.5
—
(266.5)
(219.0)
The following table details the reconciliation of amounts in the consolidated statements of stockholders’ equity for the fiscal
years ended September 30, 2023, 2022 and 2021:
September 30, 2023
Int’l
U.S.
Fiscal Year Ended
September 30, 2022
Int’l
U.S.
(in millions)
September 30, 2021
Int’l
U.S.
Reconciliation of amounts in consolidated
statements of stockholders’ equity:
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.1) $
(77.5)
(1.2) $
(207.1)
(0.1) $
(91.7)
(1.2) $
(0.1) $
(187.1)
(116.5)
(1.6)
(279.5)
Total recognized in accumulated other
comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . $
(77.6) $
(208.3) $
(91.8) $ (188.3) $
(116.6) $
(281.1)
74
The components of net periodic benefit cost other than the service cost component are included in other income in the
consolidated statement of operations. The following table details the components of net periodic benefit cost for the Company’s pension
plans for fiscal years ended September 30, 2023, 2022 and 2021:
Components of net periodic benefit cost:
Service costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest cost on projected benefit obligation . . .
Expected return on plan assets . . . . . . . . . . . . . .
Amortization of prior service costs . . . . . . . . . . .
Amortization of net loss (gain) . . . . . . . . . . . . . .
Settlement (gain) loss recognized . . . . . . . . . . . .
Net periodic benefit cost (credit) . . . . . . . . . . . $
September 30, 2023
Int’l
U.S.
Fiscal Year Ended
September 30, 2022
Int’l
U.S.
(in millions)
September 30, 2021
Int’l
U.S.
— $
9.8
(5.8)
—
3.5
(0.1)
7.4
$
$
0.3
47.7
(60.8)
0.1
(0.6)
0.2
(13.1) $
— $
4.7
(5.6)
—
5.6
0.2
4.9
$
0.5 $
24.1
(41.4)
0.1
6.9
0.3
(9.5) $
— $
4.3
(6.5)
—
5.9
0.2
3.9
$
0.5
21.6
(43.5)
0.1
9.2
0.8
(11.3)
The amount of applicable deferred income taxes included in other comprehensive income arising from a change in net prior
service cost and net gain/loss was $3.1 million, $18.8 million, and $9.3 million in the years ended September 30, 2023, 2022 and 2021,
respectively.
Amounts included in accumulated other comprehensive loss as of September 30, 2023 that are expected to be recognized as
components of net periodic benefit cost during fiscal 2024 are (in millions):
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net actuarial (losses) gain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
U.S.
Int’l
— $
(3.1)
(3.1) $
(0.1)
2.3
2.2
The table below provides additional year-end information for pension plans with accumulated benefit obligations in excess of
plan assets.
September 30,
2023
Fiscal Year Ended
September 30,
2022
September 30,
2021
U.S.
Int’l
U.S.
Int’l
U.S.
Int’l
(in millions)
Projected benefit obligation . . . . . . . . . . . . . . . . . $
Accumulated benefit obligation . . . . . . . . . . . . . . $
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . $
168.8
168.8
98.8
$
$
$
628.1
628.1
506.5
$
$
$
184.8
184.8
101.4
$
$
$
601.4 $
600.1 $
456.9 $
247.8
247.8
138.9
$ 1,248.8
$ 1,243.9
982.4
$
Funding requirements for each pension plan are determined based on the local laws of the country where such pension plan
resides. In certain countries, the funding requirements are mandatory while in other countries, they are discretionary. The Company
currently intends to contribute $22.2 million to the international plans in fiscal 2024. The required minimum contributions for U.S. plans
are not significant. In addition, the Company may make discretionary contributions. The Company currently intends to contribute
$12.9 million to U.S. plans in fiscal 2024.
The table below provides the expected future benefit payments, in millions:
Year Ending September 30,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2029-2033 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
U.S.
Int’l
20.2 $
19.3
19.1
18.1
17.4
74.3
168.4 $
47.1
45.0
46.3
47.8
49.3
267.6
503.1
75
The underlying assumptions for the pension plans are as follows:
September 30,
2023
Fiscal Year Ended
September 30,
2022
September 30,
2021
U.S.
Int’l
U.S.
Int’l
U.S.
Int’l
(in millions)
Weighted-average assumptions to determine benefit
obligation:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salary increase rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average assumptions to determine net
periodic benefit cost:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salary increase rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected long-term rate of return on plan assets . . . . .
5.76 %
N/A
5.65 %
3.06 %
5.40 %
N/A
5.27 %
3.48 %
2.46 %
N/A
1.98 %
3.13 %
5.40 %
N/A
7.00 %
5.27 %
3.48 %
6.04 %
2.46 %
N/A
6.25 %
1.98 %
3.13 %
3.93 %
2.20 %
N/A
6.80 %
1.67 %
2.68 %
3.95 %
Pension costs are determined using the assumptions as of the beginning of the plan year. The funded status is determined using
the assumptions as of the end of the plan year.
The following table summarizes the Company’s target allocation for 2023 and pension plan asset allocation, both U.S. and
international, as of September 30, 2023 and 2022:
Asset Category:
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Target Allocations
Int’l
U.S.
2023
2022
U.S.
Int’l
U.S.
Int’l
Percentage of Plan Assets
as of September 30,
32 %
58
2
8
100 %
27 %
61
—
12
100 %
33 %
56
2
9
100 %
24 %
62
4
10
100 %
36 %
48
5
11
100 %
20 %
47
15
18
100 %
The Company’s domestic and foreign plans seek a competitive rate of return relative to an appropriate level of risk depending
on the funded status and obligations of each plan and typically employ both active and passive investment management strategies. The
Company’s risk management practices include diversification across asset classes and investment styles and periodic rebalancing toward
asset allocation targets. The target asset allocation selected for each plan reflects a risk/return profile that the Company believes is
appropriate relative to each plan’s liability structure and return goals.
76
To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the
future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio and the diversification
of the portfolio. This resulted in the selection of a 7.00% and 6.04% weighted-average long-term rate of return on assets assumption for
the fiscal year ended September 30, 2023 for U.S. and non-U.S. plans, respectively.
As of September 30, 2023, the fair values of the Company’s pension plan assets by major asset categories were as follows:
Total
Carrying
Value as of
September 30,
2023
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment funds:
Diversified and equity funds . . . . . . . . . . . . . . . . . . . . .
Fixed income funds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common collective funds . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
29.5
338.3
43.5
26.1
372.0
(37.3)
772.1
$
$
Quoted
Prices in
Active
Markets
(Level 1)
Fair Value Measurement as of
September 30, 2023
Significant
Other
Observable
Inputs
(Level 2)
(in millions)
$
9.3 $
—
20.2
338.3
30.3
21.7
—
1.5
412.0
$
13.2
4.4
—
(38.8)
(11.9) $
Significant
Unobservable
Inputs
(Level 3)
Investments
measured at
NAV
— $
—
—
—
—
—
— $
—
—
—
—
372.0
—
372.0
As of September 30, 2022, the fair values of the Company’s pension plan assets by major asset categories were as follows:
Total
Carrying
Value as of
September 30,
2022
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment funds:
Diversified and equity funds . . . . . . . . . . . . . . . . . . . . .
Fixed income funds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common collective funds . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
104.8
339.1
22.2
7.9
451.6
(140.7)
784.9
$
$
Quoted
Prices in
Active
Markets
(Level 1)
Fair Value Measurement as of
September 30, 2022
Significant
Other
Observable
Inputs
(Level 2)
(in millions)
$
5.8 $
—
99.0
339.1
7.3
5.7
—
—
451.1
$
14.9
2.2
—
(140.7)
(117.8) $
Significant
Unobservable
Inputs
(Level 3)
Investments
measured at
NAV
— $
—
—
—
—
—
— $
—
—
—
—
451.6
—
451.6
Changes for the year ended September 30, 2022 in the fair value of the Company’s recurring post-retirement plan Level 3 assets
are as follows:
Actual return Actual return
on plan assets, on plan assets,
September 30,
2021
Beginning
balance
relating to
assets still
held at
reporting date
relating to
assets sold
during the
period
Transfer
Change
due to
Purchases,
sales and
into /
(out of)
settlements Level 3
exchange September 30,
rate
2022
changes Ending balance
Level 3 Assets . . . . . . . . . . . . . . . . . . . . . . . . . $
4.0
$
— $
(0.2) $
(3.5) $
— $ (0.3) $
—
(in millions)
Cash equivalents are mostly comprised of short-term money-market instruments and are valued at cost, which approximates
fair value.
For investment funds not traded on an active exchange, or if the closing price is not available, the trustee obtains indicative
quotes from a pricing vendor, broker, or investment manager. These funds are categorized as Level 2 if the custodian obtains
77
corroborated quotes from a pricing vendor or categorized as Level 3 if the custodian obtains uncorroborated quotes from a broker or
investment manager.
Fixed income investment funds, not traded on an active exchange, categorized as Level 2 are valued by the trustee using pricing
models that use verifiable observable market data (e.g., interest rates and yield curves observable at commonly quoted intervals), bids
provided by brokers or dealers, or quoted prices of securities with similar characteristics.
Hedge funds categorized as Level 3 are valued based on valuation models that include significant unobservable inputs and
cannot be corroborated using verifiable observable market data. Hedge funds are valued by independent administrators. Depending on
the nature of the assets, the general partners or independent administrators use both the income and market approaches in their models.
The market approach consists of analyzing market transactions for comparable assets while the income approach uses earnings or the
net present value of estimated future cash flows adjusted for liquidity and other risk factors. As of September 30, 2023, there were no
material changes to the valuation techniques.
Common collective funds are valued based on net asset value (NAV) per share or unit as a practical expedient as reported by
the fund manager, multiplied by the number of shares or units held as of the measurement date. Accordingly, these NAV-based
investments have been excluded from the fair value hierarchy. These collective investment funds have redemption notice periods and
are redeemable at the NAV, less transaction fees. There are no significant unfunded commitments related to these investments.
Multiemployer Pension Plans
The Company participates in construction-industry multiemployer pension plans. Generally, the plans provide defined benefits
to substantially all employees covered by collective bargaining agreements. Under the Employee Retirement Income Security Act, a
contributor to a multiemployer plan is liable, upon termination or withdrawal from a plan, for its proportionate share of a plan’s unfunded
vested liability. The Company’s aggregate contributions to these multiemployer plans were $3.0 million and $2.9 million for the years
ended September 30, 2023 and 2022, respectively. At September 30, 2023 and 2022, none of the plans in which the Company
participates are individually significant to its consolidated financial statements.
8. Debt
Debt consisted of the following:
September 30, September 30,
Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2027 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current portion of debt and short-term borrowings . . . . . . . . . . . . . . . . . .
Less: Unamortized debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2023
2022
(in millions)
1,119.8 $
997.3
100.2
2,217.3
(89.5)
(14.4)
2,113.4 $
1,143.3
997.3
84.0
2,224.6
(48.6)
(19.3)
2,156.7
The following table presents, in millions, scheduled maturities of the Company’s debt as of September 30, 2023:
Fiscal Year
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
89.5
49.6
412.6
1,009.2
656.4
—
2,217.3
78
Credit Agreement
On February 8, 2021, the Company entered into the 2021 Refinancing Amendment to the Credit Agreement (as amended,
modified or otherwise supplemented, the “Credit Agreement”), pursuant to which the Company amended and restated its Syndicated
Credit Facility Agreement, dated as of October 17, 2014 (as amended prior to February 8, 2021, the “Original Credit Agreement”),
between the Company, as borrower, Bank of America, N.A., as administrative agent, and other parties thereto. At the time of amendment,
the Credit Agreement consisted of a $1,150,000,000 revolving credit facility (the “Revolving Credit Facility”) and a $246,968,737.50
term loan A facility (the “Term A Facility,” together with the Revolving Credit Facility, the “Credit Facilities”), each of which mature
on February 8, 2026. The outstanding loans under the Term A Facility were borrowed in U.S. dollars. Loans under the Revolving Credit
Facility may be borrowed, and letters of credit thereunder may be issued, in U.S. dollars or in certain foreign currencies. The proceeds
of the Revolving Credit Facility may be used from time to time for ongoing working capital and for other general corporate purposes.
The proceeds of the Revolving Credit Facility and the Term A Loan facility borrowed on February 8, 2021 were used to refinance the
existing revolving credit facility and the existing term loan facility under the Original Credit Agreement and to pay related fees and
expenses. The Credit Agreement permits the Company to designate certain of its subsidiaries as additional co-borrowers from time to
time. Currently, there are no co-borrowers under the Credit Facilities.
On April 13, 2021, the Company entered into Amendment No. 10 to the Credit Agreement, pursuant to which the lenders
thereunder provided a secured term B credit facility (the “Term B Facility”) to the Company in an aggregate principal amount of
$700,000,000. The Term B Facility matures on April 13, 2028. The proceeds of the Term B Facility were used to fund the purchase
price, fees and expenses in connection with the Company’s cash tender offer to purchase up to $700,000,000 aggregate purchase price
(not including any accrued and unpaid interest) of its outstanding 5.875% Senior Notes due 2024.
On June 25, 2021, the Company entered into Amendment No. 11 to the Credit Agreement, pursuant to which lenders thereunder
have provided the Company an additional $215,000,000 in aggregate principal amount under the Term A Facility. The Company used
the net proceeds from the increase in the Term A Facility (together with cash on hand), to (i) redeem all of the Company’s remaining
5.875% Senior Notes due 2024 and (ii) pay fees and expenses related to such redemption.
On May 23, 2023, the Company entered into Amendment No. 12 to the Credit Agreement, pursuant to which LIBOR as a
benchmark rate of interest was replaced by, in the case of US Dollar-denominated loans, a secured overnight financing rate subject to a
spread adjustment, and, in the case of loans denominated in other currencies, other customary successor rates, subject in certain cases
to a spread adjustment. On May 23, 2023, the Company entered into Amendment No. 13 to the Credit Agreement, pursuant to which
the spread adjustments with respect to the Revolving Credit Facility and the Term A Facility was amended.
The applicable interest rate for loans under the Term B Facility is calculated at a per annum rate equal to, at the Company’s
option, (a) the Term SOFR (as defined in the Credit Agreement) plus 1.75% or (b) the Base Rate (as defined in the Credit Agreement)
plus 0.75%.
The applicable interest rate for U.S. Dollar-denominated loans under the Revolving Credit Facility and the Term A Facility is
calculated at a per annum rate equal to, at the Company’s option, (a) the Term SOFR (as defined in the Credit Agreement) plus an
applicable margin (the “SOFR Applicable Margin”), which is currently at 1.2250% or (b) the Base Rate (as defined in the Credit
Agreement) plus an applicable margin (the “Base Rate Applicable Margin,” and together with the SOFR Applicable Margin, the
“Applicable Margins”), which is currently at 0.2250%. The applicable interest rate for loans under the Revolving Credit Facility
denominated in other currencies is calculated at a per annum rate equal to a customary floating reference rate for such currency specified
in the Credit Agreement plus the SOFR Applicable Margin. The Credit Agreement includes certain environmental, social and
governance (ESG) metrics relating to the Company’s CO2 emissions and its percentage of employees who identify as women (each, a
“Sustainability Metric”). The Applicable Margins for the Term A Facility and the Revolving Credit Facility and the commitment fees
for the Revolving Credit Facility will be adjusted on an annual basis based on the Company’s achievement of preset thresholds for each
Sustainability Metric.
Some of the Company’s material subsidiaries (the “Guarantors”) have guaranteed the Company’s obligations of the borrowers
under the Credit Agreement, subject to certain exceptions. The borrowers’ obligations under the Credit Agreement are secured by a lien
on substantially all of the Company’s assets and its Guarantors’ assets, subject to certain exceptions.
The Credit Agreement contains customary negative covenants that include, among other things, limitations on the ability of the
Company and certain of its subsidiaries, subject to certain exceptions, to incur liens and debt, make investments, dispositions, and
restricted payments, change the nature of their business, consummate mergers, consolidations and the sale of all or substantially all of
79
their respective assets, taken as a whole, and transact with affiliates. The Company is also required to maintain a consolidated interest
coverage ratio of at least 3.00 to 1.00 and a consolidated leverage ratio of less than or equal to 4.00 to 1.00 (subject to certain adjustments
in connection with permitted acquisitions), tested on a quarterly basis (the “Financial Covenants”). The Financial Covenants do not
apply to the Term B Facility. The Company’s consolidated leverage ratio was 2.00 to 1.00 at September 30, 2023. As of September 30,
2023, the Company was in compliance with the covenants of the Credit Agreement.
The Credit Agreement contains customary affirmative covenants, including, among other things, compliance with applicable
law, preservation of existence, maintenance of properties and of insurance, and keeping proper books and records. The Credit Agreement
contains customary events of default, including, among other things, nonpayment of principal, interest or fees, cross-defaults to other
debt, inaccuracies of representations and warranties, failure to perform covenants, events of bankruptcy and insolvency, change of
control and unsatisfied judgments, subject in certain cases to notice and cure periods and other exceptions.
At September 30, 2023 and September 30, 2022, letters of credit totaled $4.4 million and $4.4 million, respectively, under our
Revolving Credit Facility. As of September 30, 2023 and September 30, 2022, we had $1,145.6 million and $1,145.6 million,
respectively, available under our revolving credit facility.
2027 Senior Notes
On February 21, 2017, the Company completed a private placement offering of $1,000,000,000 aggregate principal amount of
its unsecured 5.125% Senior Notes due 2027 (the “2027 Senior Notes”). On June 30, 2017, the Company completed an exchange offer
to exchange the unregistered 2027 Senior Notes for registered notes, as well as related guarantees.
As of September 30, 2023, the estimated fair value of the 2027 Senior Notes was approximately $939.9 million. The fair value
of the 2027 Senior Notes as of September 30, 2023 was derived by taking the mid-point of the trading prices from an observable market
input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2027 Senior Notes. Interest is payable
on the 2027 Senior Notes at a rate of 5.125% per annum. Interest on the 2027 Senior Notes is payable semi-annually on March 15 and
September 15 of each year, commencing on September 15, 2017. The 2027 Senior Notes will mature on March 15, 2027.
At any time and from time to time prior to December 15, 2026, the Company may redeem all or part of the 2027 Senior Notes,
at a redemption price equal to 100% of their principal amount, plus a “make whole” premium as of the redemption date, and accrued
and unpaid interest to the redemption date. On or after December 15, 2026, the Company may redeem all or part of the 2027 Senior
Notes at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest on the redemption date.
The indenture pursuant to which the 2027 Senior Notes were issued contains customary events of default, including, among
other things, payment default, exchange default, failure to provide notices thereunder and provisions related to bankruptcy events. The
indenture also contains customary negative covenants.
The Company was in compliance with the covenants relating to the 2027 Senior Notes as of September 30, 2023.
Other Debt and Other Items
Other debt consists primarily of obligations under capital leases and loans, and unsecured credit facilities. The Company’s
unsecured credit facilities are primarily used for standby letters of credit issued in connection with general and professional liability
insurance programs and for contract performance guarantees. At September 30, 2023 and September 30, 2022, these outstanding standby
letters of credit totaled $878.9 million and $640.3 million, respectively. As of September 30, 2023, the Company had $416.7 million
available under these unsecured credit facilities.
Effective Interest Rate
The Company’s average effective interest rate on its total debt, including the effects of the interest rate swap and interest rate
cap agreements, during the years ended September 30, 2023, 2022 and 2021 was 5.3%, 3.8% and 4.4%, respectively.
Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the years
ended September 30, 2023, 2022 and 2021 of $4.9 million, $4.9 million and $10.2 million, respectively.
80
9. Derivative Financial Instruments and Fair Value Measurements
The Company uses interest rate derivative contracts to hedge interest rate exposures on the Company’s variable rate debt. The
Company enters into foreign currency derivative contracts with financial institutions to reduce the risk that its cash flows and earnings
will be adversely affected by foreign currency exchange rate fluctuations. The Company’s hedging program is not designated for trading
or speculative purposes.
The Company recognizes derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets
at fair value. The Company records changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as
accounting hedges in the accompanying consolidated statements of operations as cost of revenue, interest expense or to accumulated
other comprehensive loss in the accompanying consolidated balance sheets.
Cash Flow Hedges
The Company uses interest rate swap and interest rate cap agreements designated as cash flow hedges to limit exposure to
variable interest rates on portions of the Company’s debt. The Company initially reports any gain on the effective portion of a cash flow
hedge as a component of accumulated other comprehensive loss. Depending on the type of cash flow hedge, the gain is subsequently
reclassified against interest expense when the interest expense on the variable rate debt is recognized. If the hedged transaction becomes
probable of not occurring, any gain or loss related to interest rate swap or interest rate cap agreements would be recognized in other
income.
During the third quarter of fiscal 2023, the hedged debt index was changed from LIBOR to SOFR. The notional principal, fixed
rates and related effective and expiration dates of the Company’s outstanding interest rate swap agreements were as follows:
Notional Amount
Currency
USD . . . . . . . . .
Notional Amount
(in millions)
September 30, 2023
Fixed
Rate
Effective
Date
400.0
1.283 % February 2023
Expiration
Date
March 2028
Notional Amount
Currency
USD . . . . . . . . .
USD . . . . . . . . .
Notional Amount
(in millions)
200.0
400.0
September 30, 2022
Fixed
Rate
Effective
Date
2.60 % March 2018
1.349 % February 2023
Expiration
Date
February 2023
March 2028
In the fourth quarter of fiscal 2021, the Company entered into new interest rate swap agreements with a notional value of
$400.0 million to manage the interest rate exposure of its variable rate loans. The new swaps will become effective February 2023 and
terminate in March 2028. By entering into the swap agreements, the Company converted a portion of the SOFR rate-based liability into
a fixed rate liability. The Company will pay a fixed rate of 1.283% and receive payment at the prevailing one-month SOFR.
In the third quarter of fiscal 2022, the Company purchased interest rate cap agreements with a notional value of $300.0 million
to manage interest rate exposure of its variable rate loans. The caps became effective on June 30, 2022 and terminate in March 2028.
The caps reduce the Company’s exposure to one-month SOFR. In the event one-month SOFR exceeds 3.465%, the Company will pay
the spread between prevailing one-month SOFR and 3.465%.
Other Foreign Currency Forward Contracts
The Company uses foreign currency forward contracts which are not designated as accounting hedges to hedge intercompany
transactions and other monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary. Gains
and losses on these contracts were not material for the years ended September 30, 2023, 2022 and 2021.
Fair Value Measurements
The Company’s non-pension financial assets and liabilities recorded at fair value relate to the interest rate swap and interest
rate cap agreements included in other current assets and other non-current assets on September 30, 2023 and were $17.2 million and
$37.5 million, respectively. The fair values of the interest rate swap and interest rate cap agreements included in other current assets and
other non-current assets on September 30, 2022 were $9.4 million and $41.8 million, respectively. The fair values of the interest rate
81
swap and interest rate cap agreements were derived by taking the net present value of the expected cash flows using observable market
inputs (Level 2) such as SOFR rate curves, futures, volatilities and basis spreads (when applicable).
See Note 17 for accumulated balances and reporting period activities of derivatives related to reclassifications out of
accumulated other comprehensive income for the years ended September 30, 2023, 2022 and 2021. Additionally, there were no material
losses recognized in income due to amounts excluded from effectiveness testing from the Company’s interest rate swap agreements.
10. Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash
investments and trade receivables. The Company’s cash balances and short-term investments are maintained in accounts held by major
banks and financial institutions located primarily in the U.S., Canada, Europe, Australia, Middle East and Hong Kong. If the Company
extends significant credit to clients in a specific geographic area or industry, the Company may experience disproportionately high levels
of default if those clients are adversely affected by factors particular to their geographic area or industry. Concentrations of credit risk
with respect to trade receivables are limited due to the large number of customers comprising the Company’s customer base, including,
in large part, governments, government agencies and quasi-government organizations, and their dispersion across many different
industries and geographies. See Note 4 regarding the Company’s foreign revenues. In order to mitigate credit risk, the Company
continually reviews the credit worthiness of its major private clients.
11. Leases
The Company and its subsidiaries are lessees in non-cancelable leasing agreements for office buildings and equipment.
Substantially all of the Company’s office building leases are operating leases, and its equipment leases are both operating and finance
leases. The Company groups lease and non-lease components for its equipment leases into a single lease component but separates lease
and non-lease components for its office building leases.
The Company recognizes a right-of-use asset and lease liability for its operating leases at the commencement date equal to the
present value of the contractual minimum lease payments over the lease term. The present value is calculated using the rate implicit in
the lease, if known, or the Company’s incremental secured borrowing rate. The discount rate used for operating leases is primarily
determined based on an analysis of the Company’s incremental secured borrowing rate, while the discount rate used for finance leases
is primarily determined by the rate specified in the lease.
The related lease payments are expensed on a straight-line basis over the lease term, including, as applicable, any free-rent
period during which the Company has the right to use the asset. For leases with renewal options where the renewal is reasonably assured,
the lease term, including the renewal period, is used to determine the appropriate lease classification and to compute periodic rental
expense. Leases with initial terms shorter than 12 months are not recognized on the balance sheet, and lease expense is recognized on a
straight-line basis.
During the fourth quarter of fiscal 2023, the Company approved a restructuring plan primarily to optimize its office real estate
portfolio with its freedom to grow strategy, which initiated a review of the carrying value of right-of-use assets and leasehold
improvements. In connection with the review, the Company identified leased assets that were no longer recoverable. The Company
recorded an impairment charge of $86.2 million to reduce its right-of-use assets and leasehold improvements to their fair values and
recorded the expense in restructuring costs on the Consolidated Statement of Operations. Fair value was determined primarily using
Level 3 inputs, such as discounted cash flows.
The components of lease expenses are as follows:
September 30, 2023 September 30, 2022 September 30, 2021
Fiscal Year Ended
Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . .
Finance lease cost:
Amortization of right-of-use assets . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . .
Variable lease cost . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(in millions)
164.0
$
172.5 $
23.1
2.6
34.1
223.8
18.0
2.2
34.0
$
226.7 $
186.5
13.0
2.0
35.5
237.0
82
Additional balance sheet information related to leases is as follows:
(in millions except as noted)
Assets:
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . Operating lease right-of-use assets
Finance lease assets . . . . . . . . . . . . . . . . . . . . . . . Property and equipment – net
Balance Sheet Classification
Total lease assets . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Liabilities:
Current:
Operating lease liabilities . . . . . . . . . . . . . . . . . . . Accrued expenses and other current liabilities $
Finance lease liabilities . . . . . . . . . . . . . . . . . . . . Current portion of long-term debt
Total current lease liabilities . . . . . . . . . . . . . . .
Non-current:
Operating lease liabilities . . . . . . . . . . . . . . . . . . . Operating lease liabilities, noncurrent
Finance lease liabilities . . . . . . . . . . . . . . . . . . . . Long-term debt
Total non-current lease liabilities . . . . . . . . . . .
$
September 30, 2023 September 30, 2022
447.0
64.8
511.8
139.8
25.0
164.8
548.9
39.8
588.7
$
$
$
$
539.8
49.4
589.2
145.6
18.1
163.7
595.3
32.0
627.3
Weighted average remaining lease term (in years):
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average discount rates:
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional cash flow information related to leases is as follows:
As of
September 30, 2023 September 30, 2022 September 30, 2021
6.4
2.9
4.3 %
4.1 %
6.5
3.1
4.0 %
3.8 %
6.9
3.5
4.3 %
4.3 %
Cash paid for amounts included in the measurement of lease
liabilities:
Operating cash flows from operating leases . . . . . . . . . . . . . .
Operating cash flows from finance leases . . . . . . . . . . . . . . . .
Financing cash flows from finance leases . . . . . . . . . . . . . . . .
Right-of-use assets obtained in exchange for new operating
leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets obtained in exchange for new finance
leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
September 30, September 30,
2023
2022
(in millions)
September 30,
2021
$
188.3
2.5
23.7
96.6
37.5
$
201.8 $
2.2
19.8
90.9
26.2
221.4
2.0
13.7
102.7
28.5
Total remaining lease payments under both the Company’s operating and finance leases are as follows:
Fiscal Year
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Amounts representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Leases Finance Leases
(in millions)
$
$
$
$
164.4
142.3
112.8
86.0
75.7
213.1
794.3
(105.6)
688.7
$
$
$
$
27.2
21.3
14.3
5.8
0.5
—
69.1
(4.3)
64.8
83
12. Stockholders’ Equity
Common Stock Units—Common stock units are only redeemable for common stock. In the event of liquidation of the
Company, holders of stock units are entitled to no greater rights than holders of common stock. See also Note 13.
13. Share-Based Payments
Defined Contribution Plans—Substantially all permanent domestic employees are eligible to participate in defined
contribution plans provided by the Company. Under these plans, participants may make contributions into a variety of funds, including
a fund that is fully invested in Company stock. Employees are not required to allocate any funds to Company stock; however, the
Company does provide an annual Company match in AECOM shares. Employees may generally reallocate their account balances on a
daily basis; however, employees classified as insiders are restricted under the Company’s insider trading policy. Compensation expense
for the employer contributions related to AECOM stock issued under defined contribution plans during fiscal years ended September 30,
2023, 2022 and 2021 was $23.1 million, $22.7 million, and $26.1 million, respectively.
Stock Incentive Plans—Under the 2020 Stock Incentive Plan, the Company has up to 10.2 million securities remaining
available for future issuance as of September 30, 2023. Stock options may be granted to employees and non-employee directors with an
exercise price not less than the fair market value of the stock on the date of grant. Unexercised options expire seven years after date of
grant.
The fair value of the Company’s employee stock option awards is estimated on the date of grant. The expected term of awards
granted represents the period of time the awards are expected to be outstanding. The risk-free interest rate is based on U.S. Treasury
bond rates with maturities equal to the expected term of the option on the grant date. The Company uses historical data as a basis to
estimate the probability of forfeitures.
The Company grants stock units to employees under its Performance Earnings Program (PEP), whereby units are earned and
issued dependent upon meeting established cumulative performance objectives and vest over a three-year service period. Additionally,
the Company issues restricted stock units to employees which are earned based on service conditions. The grant date fair value of PEP
awards and restricted stock unit awards is primarily based on that day’s closing market price of the Company’s common stock.
Restricted stock unit, PEP unit, and Stock Option activity for the year ended September 30 was as follows:
Weighted
Average
Restricted Grant-Date
Stock Units
Fair Value
(in millions)
Weighted
Average
Grant-Date
Fair Value
PEP Units
(in millions)
Stock Options Exercise Price
(in millions)
Weighted
Average
Outstanding at September 30, 2020 . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PEP units earned (unearned) . . . . . . . . . . . . . . . . . . . . . .
Vested / Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at September 30, 2021 . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PEP units earned (unearned) . . . . . . . . . . . . . . . . . . . . . .
Vested / Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at September 30, 2022 . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PEP units earned (unearned) . . . . . . . . . . . . . . . . . . . . . .
Vested / Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at September 30, 2023 . . . . . . . . . . . . . . . . . .
2.1 $
0.4 $
— $
(0.9) $
(0.3) $
1.3 $
0.3 $
— $
(0.5) $
(0.1) $
1.0 $
0.3 $
— $
(0.4) $
(0.1) $
0.8 $
35.56
49.21
—
36.24
36.89
38.88
74.30
—
29.44
49.74
53.05
83.64
—
44.35
62.09
68.34
1.6 $
0.3 $
0.1 $
(0.6) $
(0.2) $
1.2 $
0.2 $
0.6 $
(1.3) $
— $
0.7 $
0.2 $
0.2 $
(0.4) $
— $
0.7 $
33.86
52.76
37.37
38.13
37.53
37.22
85.46
27.90
27.90
56.64
60.60
94.64
43.19
43.19
71.71
75.54
0.4 $
— $
— $
(0.1) $
— $
0.3 $
— $
— $
— $
— $
0.3 $
— $
— $
(0.2) $
— $
0.1 $
36.41
—
—
31.62
—
38.72
—
—
—
—
38.72
—
—
38.72
—
38.72
Total compensation expense related to these share-based payments including stock options was $45.9 million, $38.5 million,
and $44.7 million during the years ended September 30, 2023, 2022 and 2021, respectively. Unrecognized compensation expense related
84
to total share-based payments outstanding as of September 30, 2023 and 2022 was $48.3 million and $45.9 million, respectively, to be
recognized on a straight-line basis over the awards’ respective vesting periods which are generally three years.
14. Income Taxes
Income (loss) before income taxes included loss from domestic operations of $129.2 million, income of $235.2 million, and
income of $98.6 million for fiscal years ended September 30, 2023, 2022 and 2021 and income from foreign operations of
$342.6 million, $315.4 million, and $310.2 million for fiscal years ended September 30, 2023, 2022 and 2021.
Income tax expense was comprised of:
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current income tax expense . . . . . . . . . . . . . . . . . . . .
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred income tax benefit . . . . . . . . . . . . . . . . . . . .
Total income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
September 30, September 30, September 30,
2023
2022
(in millions)
2021
$
$
67.7
71.9
52.8
192.4
(71.8)
(84.3)
19.8
(136.3)
56.1
$
$
22.8 $
16.0
75.8
114.6
22.1
11.8
(12.4)
21.5
136.1 $
32.2
6.8
53.2
92.2
(28.8)
18.8
6.8
(3.2)
89.0
The major elements contributing to the difference between the U.S. federal statutory rate of 21% for fiscal years ended
September 30, 2023, 2022 and 2021 and the effective tax rate are as follows:
September 30,
2023
Fiscal Year Ended
September 30,
2022
September 30,
2021
Amount
%
Amount
%
Amount
%
(in millions)
Tax at federal statutory rate . . . . . . . . . . . . . . . . . . . . .
State income tax, net of federal benefit . . . . . . . . . . . .
Foreign residual income . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . .
Nondeductible costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in uncertain tax positions . . . . . . . . . . . . . . . .
Audit settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax rate differential . . . . . . . . . . . . . . . . . . . . .
Income tax credits and incentives . . . . . . . . . . . . . . . .
Exclusion of tax on non-controlling interests . . . . . . .
Tax exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return to provision . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other items, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax expense . . . . . . . . . . . . . . . . . . . . .
$
$
44.8
(7.1)
59.4
16.6
10.7
9.4
1.9
0.2
(68.2)
(9.4)
(3.3)
(3.2)
(0.5)
4.8
56.1
21.0 % $
(3.3)
27.8
7.8
5.0
4.4
0.9
0.1
(31.9)
(4.4)
(1.5)
(1.5)
(0.2)
2.1
26.3 % $
115.6
20.2
46.4
(18.0)
19.7
15.4
(1.5)
1.1
(51.0)
(5.1)
(5.9)
(4.1)
(1.5)
4.8
136.1
21.0 % $
3.7
8.4
(3.3)
3.6
2.8
(0.3)
0.2
(9.3)
(0.9)
(1.1)
(0.7)
(0.3)
0.9
24.7 % $
85.8
8.0
45.6
12.4
6.0
8.5
10.4
8.8
(51.3)
(6.1)
(5.4)
(26.8)
(9.5)
2.6
89.0
21.0 %
2.0
11.1
3.0
1.5
2.1
2.5
2.1
(12.5)
(1.5)
(1.3)
(6.5)
(2.3)
0.6
21.8 %
During fiscal 2023, valuation allowances in the amount of $21.0 million related to the AECOM Capital impairment charge
were established for the portion of the charge that is not expected to be realized.
During fiscal 2022, valuation allowances in the amount of $21.9 million primarily related to net operating losses in certain
foreign entities were released due to sufficient positive evidence. The positive evidence included a realignment of the Company’s global
transfer pricing methodology which resulted in forecasting the utilization of the net operating losses within the foreseeable future.
85
During fiscal 2021, the United Kingdom enacted a corporate tax rate increase from 19% to 25% beginning April 2023 requiring
deferred tax assets and liabilities to be remeasured. The remeasurement resulted in a $25.9 million tax benefit, which is included in tax
rate changes above.
During fiscal 2021, the Company partially settled its U.S. federal audit for fiscal 2015 and 2016 and recorded tax expense of
$13.2 million due primarily to changes in tax attributes.
The Company is currently under tax audit in several jurisdictions including the U.S. and believe the outcomes which are
reasonably possible within the next twelve months, including lapses in statutes of limitations, could result in adjustments, but will not
result in a material change in the liability for uncertain tax positions.
Generally, the Company would reverse its valuation allowance in a particular tax jurisdiction if the positive evidence examined,
such as projected and sustainable earnings or a tax-planning strategy that allows for the usage of the deferred tax asset, is sufficient to
overcome significant negative evidence, such as large net operating loss carryforwards or a cumulative history of losses in recent years.
In the United States, the valued deferred tax assets have a restricted life or use under relevant tax law and, therefore, it is unlikely that
the valuation allowance related to these assets will reverse. In addition, the Company is continually investigating tax planning strategies
that, if prudent and feasible, may be implemented to realize a deferred tax asset that would otherwise expire unutilized. The identification
and internal/external approval (as relevant) of such a prudent and feasible tax planning strategy could cause a reduction in the valuation
allowance.
The deferred tax assets (liabilities) are as follows:
Fiscal Year Ended
September 30, September 30,
2023
2022
(in millions)
Deferred tax assets:
Compensation and benefit accruals not currently deductible. . . . . . . . . . . . .
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Self-insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and experimentation and other tax credits. . . . . . . . . . . . . . . . . . . .
Pension liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partnership investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
92.2 $
102.3
23.2
43.1
44.7
295.1
64.0
102.0
7.1
773.7
91.6
113.7
4.5
111.4
52.1
280.4
64.4
—
5.3
723.4
Deferred tax liabilities:
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right of use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(7.0)
(13.1)
(5.4)
(10.7)
(94.0)
(34.2)
(15.5)
(179.9)
(171.2)
422.6 $
(1.5)
(111.4)
(11.2)
(10.8)
(125.6)
(33.6)
—
(294.1)
(154.4)
274.9
As of September 30, 2023, and 2022, the Company has available unused federal, foreign and state net operating loss (NOL)
carryforwards of $757.5 million and $848.0 million, respectively, which expire at various dates over the next several years and capital
loss carryforwards of $199.4 million and $205.2 million, respectively, which mostly expire in 2025; some foreign NOL carryforwards
never expire. In addition, as of September 30, 2023, the Company has unused state and foreign research and development credits of
$27.2 million and $9.6 million, respectively, and other credits of $10.4 million which expire at various dates over the next several years.
As of September 30, 2023 and 2022, gross deferred tax assets were $773.7 million and $723.4 million, respectively. The
Company has recorded a valuation allowance of $171.2 million and $154.4 million as of September 30, 2023 and 2022, respectively,
86
primarily related to foreign and state net operating loss carryforwards, capital loss carryforwards, tax credits and other deferred tax
assets. The Company has performed an assessment of positive and negative evidence, including the nature, frequency, and severity of
cumulative financial reporting losses in recent years, the future reversal of existing temporary differences, predictability of future taxable
income exclusive of reversing temporary differences of the character necessary to realize the asset, relevant carryforward periods, taxable
income in carry-back years if carry-back is permitted under tax law, and prudent and feasible tax planning strategies that would be
implemented, if necessary, to protect against the loss of the deferred tax asset that would otherwise expire. Although realization is not
assured, based on the Company’s assessment, the Company has concluded that it is more likely than not that the remaining gross deferred
tax asset (exclusive of deferred tax liabilities) of $602.5 million will be realized and, as such, no additional valuation allowance has been
provided. The net increase in the valuation allowance of $16.8 million is primarily attributable to an increase in valuation allowances of
$21.0 million related to the AECOM Capital impairment charge in the US, a decrease in valuation allowances on foreign net operating
losses and currency translation adjustments of $3.3 million, and decreases in valuation allowances of $0.9 million related to state net
operating losses and credits.
Generally, the Company does not provide for U.S. taxes or foreign withholding taxes on gross book-tax differences in its non-
U.S. subsidiaries because such basis differences of approximately $1.3 billion are able to and intended to be reinvested indefinitely. If
these basis differences were distributed, foreign tax credits could become available under current law to partially or fully reduce the
resulting U.S. income tax liability. There may also be additional U.S. or foreign income tax liability upon repatriation, although the
calculation of such additional taxes is not practicable.
As of September 30, 2023, and 2022, the Company had a liability for unrecognized tax benefits, including potential interest
and penalties, net of related tax benefit, totaling $79.5 million and $70.5 million, respectively. The gross unrecognized tax benefits as
of September 30, 2023 and 2022 were $62.1 million and $55.2 million, respectively, excluding interest, penalties, and related tax benefit.
Of the $62.1 million, approximately $60.7 million would be included in the effective tax rate if recognized. A reconciliation of the
beginning and ending amount of gross unrecognized tax benefits is as follows:
Fiscal Year Ended
September 30, September 30,
2023
2022
(in millions)
Balance at the beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase in current period’s tax positions. . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase in prior years’ tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross decrease in prior years’ tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease due to settlement with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease due to lapse of statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross change due to foreign exchange fluctuations. . . . . . . . . . . . . . . . . . . . . . .
Balance at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
55.2 $
3.5
17.9
(13.3)
(1.0)
—
(0.2)
62.1 $
46.4
17.4
2.4
(8.0)
(1.4)
(0.5)
(1.1)
55.2
The Company classifies interest and penalties related to uncertain tax positions within the income tax expense line in the
accompanying consolidated statements of operations. As of September 30, 2023, the accrued interest and penalties were $24.4 million
and $1.5 million, respectively, excluding any related income tax benefits. As of September 30, 2022, the accrued interest and penalties
were $20.5 million and $1.7 million, respectively, excluding any related income tax benefits.
The Company files income tax returns in numerous tax jurisdictions, including the U.S., and numerous U.S. states and non-
U.S. jurisdictions around the world. The statute of limitations varies by jurisdiction in which the Company operates. Because of the
number of jurisdictions in which the Company files tax returns, in any given year the statute of limitations in certain jurisdictions may
expire without examination within the 12-month period from the balance sheet date.
While it is reasonably possible that the total amounts of unrecognized tax benefits could significantly increase or decrease
within the next twelve months, an estimate of the range of possible change cannot be made.
15. Earnings Per Share
Basic earnings per share (EPS) excludes dilution and is computed by dividing net income attributable to AECOM by the
weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income attributable
to AECOM by the weighted average number of common shares outstanding and potential common shares for the period. The Company
87
includes as potential common shares the weighted average dilutive effects of equity awards using the treasury stock method. For the
periods presented, equity awards excluded from the calculation of potential common shares were not significant.
The following table sets forth a reconciliation of the denominators of basic and diluted earnings per share:
Denominator for basic earnings per share . . . . . . . . . . . . . . . . .
Potential common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denominator for diluted earnings per share . . . . . . . . . . . . . . . .
138.6
1.5
140.1
140.8
1.9
142.7
147.3
2.4
149.7
Fiscal Year Ended
September 30, September 30, September 30,
2023
2022
(in millions)
2021
16. Other Financial Information
Accrued expenses and other current liabilities consist of the following:
Accrued salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued contract costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
September 30, September 30,
2023
2022
(in millions)
599.8 $
1,340.4
347.3
2,287.5 $
602.2
1,246.0
333.2
2,181.4
$
$
Accrued contract costs above include balances related to professional liability accruals of $809.6 million and $789.3 million
as of September 30, 2023 and 2022, respectively. The remaining accrued contract costs primarily relate to costs for services provided
by subcontractors and other non-employees. Liabilities recorded related to accrued contract losses were not material as of September 30,
2023 and 2022. The Company did not have material revisions to estimates for contracts where revenue is recognized using the input
method during the twelve months ended September 30, 2023 and 2022. For the year ended September 30, 2023, the Company incurred
restructuring expenses of $188.4 million, included personnel and other costs of $91.6 million and real estate costs of $96.8 million, of
which $53.3 million was accrued and unpaid at September 30, 2023. During the year ended September 30, 2022, the Company incurred
restructuring expenses of $107.5 million, of which $69.1 million was related to the exit of our Russia-related businesses. The remaining
$38.4 million related to actions to improve margins and deliver efficiencies. These expenses included personnel and other costs of
$27.5 million and real estate costs of $10.9 million, of which $7.9 million was accrued and unpaid at September 30, 2022.
On September 13, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.18 per share, which was
paid on October 20, 2023 to stockholders of record as of the close of business on October 5, 2023. As of September 30, 2023, accrued
and unpaid dividends totaled $26.7 million and were classified within other accrued expenses on the consolidated balance sheet.
88
17. Reclassifications out of Accumulated Other Comprehensive Loss
The accumulated balances and reporting period activities for the years ended September 30, 2023, 2022 and 2021 related to
reclassifications out of accumulated other comprehensive loss are summarized as follows (in millions):
Balances at September 30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before reclassification . . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive loss . . . . . . . .
Balances at September 30, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(342.8) $
14.6
12.0
(316.2) $
(567.3) $
(12.8)
—
(580.1) $
(8.6) $
0.8
3.7
(4.1) $
(918.7)
2.6
15.7
(900.4)
Foreign
Currency
Translation
Adjustments
Accumulated
Loss on
Other
Derivative Comprehensive
Instruments
Loss
Pension
Related
Adjustments
$
Foreign
Currency
Translation
Adjustments Adjustments Instruments
Loss on
Derivative
Pension
Related
Accumulated
Other
Comprehensive
Loss
(900.4)
(110.9)
31.6
(979.7)
Loss
(979.7)
59.4
(6.3)
(926.6)
Balances at September 30, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before reclassification . . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive loss . . . . . . . .
Balances at September 30, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(316.2) $
89.9
9.0
(217.3) $
(580.1) $
(238.7)
19.5
(799.3) $
(4.1) $
37.9
3.1
36.9
$
Foreign
Currency
Translation
Adjustments Adjustments Instruments
Loss on
Derivative
Pension
Related
Accumulated
Other
Comprehensive
Balances at September 30, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive (loss) income before reclassification . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive loss . . . . . . .
Balances at September 30, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(217.3) $
(10.9)
2.2
(226.0) $
(799.3) $
59.6
—
(739.7) $
36.9
10.7
(8.5)
39.1
$
$
18. Commitments and Contingencies
The Company records amounts representing its probable estimated liabilities relating to claims, guarantees, litigation, audits
and investigations. The Company relies in part on qualified actuaries to assist it in determining the level of reserves to establish for
insurance-related claims that are known and have been asserted against it, and for insurance-related claims that are believed to have
been incurred based on actuarial analysis, but have not yet been reported to the Company’s claims administrators as of the respective
balance sheet dates. The Company includes any adjustments to such insurance reserves in its consolidated results of operations. The
Company’s reasonably possible loss disclosures are presented on a gross basis prior to the consideration of insurance recoveries. The
Company does not record gain contingencies until they are realized. In the ordinary course of business, the Company may not be aware
that it or its affiliates are under investigation and may not be aware of whether or not a known investigation has been concluded.
In the ordinary course of business, the Company may enter into various arrangements providing financial or performance
assurance to clients, lenders, or partners. Such arrangements include standby letters of credit, surety bonds, and corporate guarantees to
support the creditworthiness or the project execution commitments of its affiliates, partnerships and joint ventures. The Company’s
unsecured credit arrangements are used for standby letters of credit issued in connection with general and professional liability insurance
programs and for contract performance guarantees. At September 30, 2023 and 2022, these outstanding standby letters of credit totaled
$878.9 million and $640.3 million, respectively. As of September 30, 2023, the Company had $416.7 million available under these
unsecured credit facilities. Performance arrangements typically have various expiration dates ranging from the completion of the project
contract and extending beyond contract completion in some circumstances such as for warranties. The Company may also guarantee
that a project, when complete, will achieve specified performance standards. If the project subsequently fails to meet guaranteed
performance standards, the Company may incur additional costs, pay liquidated damages or be held responsible for the costs incurred
by the client to achieve the required performance standards. The potential payment amount of an outstanding performance arrangement
is typically the remaining cost of work to be performed by or on behalf of third parties. Generally, under joint venture arrangements, if
a partner is financially unable to complete its share of the contract, the other partner(s) may be required to complete those activities.
89
At September 30, 2023, the Company was contingently liable in the amount of approximately $883.3 million in issued standby
letters of credit and $4.6 billion in issued surety bonds primarily to support project execution.
In the ordinary course of business, the Company enters into various agreements providing financial or performance assurances
to clients on behalf of certain unconsolidated partnerships, joint ventures and other jointly executed contracts. These agreements are
entered into primarily to support the project execution commitments of these entities.
The Company’s investment adviser jointly manages and sponsors the AECOM-Canyon Equity Fund, L.P. (the “Fund”), in
which the Company indirectly holds an equity interest and has an ongoing capital commitment to fund investments. At September 30,
2023, the Company has capital commitments of $8.3 million to the Fund over the next 5 years.
In addition, in connection with the investment activities of AECOM Capital, the Company provides guarantees of certain
contractual obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and
other lender required guarantees.
Department of Energy Deactivation, Demolition, and Removal Project
A former affiliate of the Company, Amentum Environment & Energy, Inc., f/k/a AECOM Energy and Construction, Inc.
(“Former Affiliate”), executed a cost-reimbursable task order with the Department of Energy (DOE) in 2007 to provide deactivation,
demolition and removal services at a New York State project site that, during 2010, experienced contamination and performance issues.
In February 2011, the Former Affiliate and the DOE executed a Task Order Modification that changed some cost-reimbursable contract
provisions to at-risk. The Task Order Modification, including subsequent amendments, required the DOE to pay all project costs up to
$106 million, required the Former Affiliate and the DOE to equally share in all project costs incurred from $106 million to $146 million,
and required the Former Affiliate to pay all project costs exceeding $146 million.
Due to unanticipated requirements and permitting delays by federal and state agencies, as well as delays and related ground
stabilization activities caused by Hurricane Irene in 2011, the Former Affiliate was required to perform work outside the scope of the
Task Order Modification. In December 2014, the Former Affiliate submitted an initial set of claims against the DOE pursuant to the
Contracts Disputes Acts seeking recovery of $103 million, including additional fees on changed work scope (the “2014 Claims”). On
December 6, 2019, the Former Affiliate submitted a second set of claims against the DOE seeking recovery of an additional
$60.4 million, including additional project costs and delays outside the scope of the contract as a result of differing site and ground
conditions (the “2019 Claims”). The Former Affiliate also submitted three alternative breach of contract claims to the 2014 and 2019
Claims that may entitle the Former Affiliate to recovery of $148.5 million to $329.4 million. On December 30, 2019, the DOE denied
the Former Affiliate’s 2014 Claims. On September 25, 2020, the DOE denied the Former Affiliate’s 2019 Claims. The Company filed
an appeal of these decisions on December 20, 2020 in the Court of Federal Claims. Deconstruction, decommissioning and site restoration
activities are complete.
On January 31, 2020, the Company completed the sale of its Management Services business, including the Former Affiliate
who worked on the DOE project, to Maverick Purchaser Sub LLC (MS Purchaser), an affiliate of American Securities LLC and Lindsay
Goldberg LLC. The Company and the MS Purchaser agreed that all future DOE project claim recoveries and costs will be split 10% to
the MS Purchaser and 90% to the Company with the Company retaining control of all future strategic legal decisions.
The Company intends to vigorously pursue all claimed amounts but can provide no certainty that the Company will recover
2014 Claims and 2019 Claims submitted against the DOE, or any additional incurred claims or costs, which could have a material
adverse effect on the Company’s results of operations.
Refinery Turnaround Project
A Former Affiliate of the Company entered into an agreement to perform turnaround maintenance services during a planned
shutdown at a refinery in Montana in December 2017. The turnaround project was completed in February 2019. Due to circumstances
outside of the Company’s Former Affiliate’s control, including client directed changes and delays and the refinery’s condition, the
Company’s Former Affiliate performed additional work outside of the original contract over $90 million and is entitled to payment
from the refinery owner of approximately $144 million. In March 2019, the refinery owner sent a letter to the Company’s Former
Affiliate alleging it incurred approximately $79 million in damages due to the Company’s Former Affiliate’s project performance. In
April 2019, the Company’s Former Affiliate filed and perfected a $132 million construction lien against the refinery for unpaid labor
and materials costs. In August 2019, following a subcontractor complaint filed in the Thirteen Judicial District Court of Montana
90
asserting claims against the refinery owner and the Company’s Former Affiliate, the refinery owner crossclaimed against the Company’s
Former Affiliate and the subcontractor. In October 2019, following the subcontractor’s dismissal of its claims, the Company’s Former
Affiliate removed the matter to federal court and cross claimed against the refinery owner. In December 2019, the refinery owner claimed
$93.0 million in damages and offsets against the Company’s Former Affiliate.
On January 31, 2020, the Company completed the sale of its Management Services business, including the Former Affiliate,
to the MS Purchaser; however, the Refinery Turnaround Project, including related claims and liabilities, has been retained by the
Company.
The Company intends to vigorously prosecute and defend this matter; however, the Company cannot provide assurance that
the Company will be successful in these efforts. The resolution of this matter and any potential range of loss cannot be reasonably
determined or estimated at this time, primarily because the matter raises complex legal issues that Company is continuing to assess.
19. Reportable Segments and Geographic Information
The Company’s reportable segments are presented according to their geographic regions and business activities. The Americas
segment provides planning, consulting, architectural and engineering design services, and construction management services to public
and private clients in the United States, Canada, and Latin America, while the International segment provides similar professional
services to public and private clients in Europe, the Middle East, India, Africa, and the Asia-Australia-Pacific regions.
The Company’s AECOM Capital (ACAP) segment primarily invests in and develops real estate projects. These reportable
segments are organized by the differing specialized needs of the respective clients, and how the Company manages its business. The
Company has aggregated various operating segments into its reportable segments based on their similar characteristics, including similar
long term financial performance, the nature of services provided, internal processes for delivering those services, and types of customers.
91
The following tables set forth summarized financial information concerning the Company’s reportable segments:
Reportable Segments:
Fiscal Year Ended September 30, 2023:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit as a % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended September 30, 2022:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit as a % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended September 30, 2021:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of joint ventures . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit as a % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Geographic Information:
Long-Lived Assets
Americas
International Capital
(in millions)
Corporate
Total
AECOM
$
$
$
$ 10,975.7
699.7
14.9
—
—
714.6
7,433.1
$ 3,402.1
245.1
9.6
—
—
254.7
2,536.2
6.4 %
7.2 %
$ 9,939.3
639.9
13.9
—
—
653.8
7,232.2
$ 3,206.7
205.9
15.3
—
—
221.2
2,467.9
6.4 %
6.4 %
$ 10,226.3
631.6
11.4
—
—
643.0
7,204.6
$ 3,112.6
164.8
12.2
—
—
177.0
2,764.5
6.2 %
5.3 %
0.7 $
0.7
(303.9)
(12.6)
—
(315.8)
64.5
—
— $ 14,378.5
945.5
—
(279.4)
—
(153.6)
(141.0)
(188.4)
(188.4)
(329.4)
324.1
1,104.4
—
6.6 %
2.2 $
2.2
24.4
(12.6)
—
14.0
264.9
—
— $ 13,148.2
848.0
—
53.6
—
(147.3)
(134.7)
(107.5)
(107.5)
(242.2)
646.8
1,095.3
—
6.4 %
2.0 $
2.0
11.4
(11.1)
—
2.3
234.6
—
— $ 13,340.9
798.4
—
35.0
—
(155.0)
(143.9)
(48.8)
(48.8)
629.6
(192.7)
1,390.9
—
6.0 %
2023
Fiscal Year Ended
September 30, September 30, September 30,
2022
(in millions)
3,906.7
763.6
362.1
5,032.4
3,478.5 $
803.5
342.3
4,624.3 $
3,922.8
872.3
405.0
5,200.1
2021
$
$
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe, Middle East, India, Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Australia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Long-lived assets consist of noncurrent assets excluding deferred tax assets.
20. Major Clients
No single client accounted for 10% or more of the Company’s revenue in any of the past five fiscal years. Approximately 5%,
6%, and 8% of the Company’s revenue was derived through direct contracts with agencies of the U.S. federal government in the years
ended September 30, 2023, 2022 and 2021, respectively.
92
AECOM Technology Corporation
Schedule II: Valuation and Qualifying Accounts
(amounts in millions)
Balance at
Beginning
of Year
Additions
Charged to Cost
of Revenue
Deductions(a)
Other and
Foreign
Exchange Impact
Balance at
the End of
the Year
Allowance for Doubtful Accounts
Fiscal Year 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
104.0
92.8
77.9
$
$
$
40.9
43.9
29.1
$
$
$
(50.8) $
(29.6) $
(14.9) $
0.1
(3.1)
0.7
$
$
$
94.2
104.0
92.8
(a) Primarily relates to accounts written-off and recoveries
93
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on management’s evaluation, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer
(CFO), our CEO and CFO have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and
15(d)-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), were effective as of September 30, 2023 to ensure
that information required to be disclosed by us in this Annual Report on Form 10-K or submitted under the Exchange Act is (i) recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and
(ii) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as
amended, as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and
effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections
of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation of our CEO and CFO, assessed the effectiveness of our internal control over financial
reporting as of September 30, 2023, the end of our fiscal year. Our management based its assessment on criteria established in Internal
Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our
management’s assessment included evaluation and testing of the design and operating effectiveness of key financial reporting controls,
process documentation, accounting policies, and our overall control environment.
Based on our management’s assessment, our management has concluded that our internal control over financial reporting was
effective as of September 30, 2023. Our management communicated the results of its assessment to the Audit Committee of our Board
of Directors.
Our independent registered public accounting firm, Ernst & Young LLP, audited our financial statements for the fiscal year
ended September 30, 2023 included in this Annual Report on Form 10-K, and has issued an audit report with respect to the effectiveness
of the Company’s internal control over financial reporting, a copy of which is included earlier in this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2023
identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
94
ITEM 9B. OTHER INFORMATION
During the quarterly period ended September 30, 2023, no director or officer of the Company adopted or terminated a Rule
10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement as each term is defined in Item 408(a) of Regulation S-K.
As previously reported on our Form 8-K filed March 31, 2023, disclosing the Company’s 2023 Annual Meeting of Stockholders
(“2023 Annual Meeting”) results, the holders of a majority of the shares of common stock present in person or represented by proxy and
entitled to vote on the proposal voted to hold future advisory votes on the Company’s executive compensation every year. In light of
these results and in accordance with its previous recommendation in the proxy statement for the 2023 Annual Meeting, the Company’s
Board of Directors (the “Board”) determined that the Company will hold future advisory votes on the approval of executive
compensation of the Company’s named executive officers on an annual basis. The Board will reevaluate this determination after the
next shareholder advisory vote on the frequency of future advisory votes on approval of executive compensation of the Company’s
named executive officers, which is required to occur no later than the Company’s 2029 annual meeting of shareholders. This disclosure
is intended to satisfy the requirements of Item 5.07(d) of Form 8-K.
The Company expects to incur restructuring costs of approximately $50 million to $70 million in fiscal year 2024 primarily
related to ongoing actions that are expected to deliver continued margin improvement and efficiencies. Total cash costs for restructuring
in fiscal year 2024 are expected to be approximately $110 million.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated by reference from our definitive proxy statement for the 2024 Annual Meeting of Stockholders, to be filed within
120 days of our fiscal 2023 year end.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from our definitive proxy statement for the 2024 Annual Meeting of Stockholders, to be filed within
120 days of our fiscal 2023 year end.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDERS MATTERS
Other than with respect to the information relating to our equity compensation plans, which is incorporated herein by reference
to Part II, Item 5, “Equity Compensation Plans” of this Form 10-K, the information required by this item is incorporated by reference
from our definitive proxy statement for the 2024 Annual Meeting of Stockholders, to be filed within 120 days of our fiscal 2023 year
end.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Incorporated by reference from our definitive proxy statement for the 2024 Annual Meeting of Stockholders, to be filed within
120 days of our fiscal 2023 year end.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated by reference from our definitive proxy statement for the 2024 Annual Meeting of Stockholders, to be filed within
120 days of our fiscal 2023 year end.
95
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
Documents filed as part of this report:
(1)
(2)
The Company’s Consolidated Financial Statements at September 30, 2023 and 2022 and for each of the three
years in the period ended September 30, 2023 and the notes thereto, together with the report of the
independent auditors on those Consolidated Financial Statements are hereby filed as part of this report.
Financial Statement Schedule II—Valuation and Qualifying Accounts for the Years Ended September 30,
2023, 2022 and 2021.
(3)
See Exhibits and Index to Exhibits, below.
(b)
Exhibits.
Exhibit
Number
Exhibit Description
3.1 Amended and Restated Certificate of Incorporation
of AECOM Technology Corporation.
3.2 Certificate of Amendment to Amended and Restated
Certificate of Incorporation of AECOM Technology
Corporation.
3.3 Certificate of Correction of Amended and Restated
Certificate of Incorporation of AECOM Technology
Corporation.
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Exhibit
3.1
3.2
Filing Date
11/21/2011
8/1/2014
Form
10-K
S-4
Filed
Herewith
10-K
3.3
11/17/2014
3.4 Certificate of Amendment
to
the Company’s
8-K
Certificate of Incorporation.
3.5 Certificate of Amendment
to
the Company’s
8-K
Certificate of Incorporation.
3.6 Third Amended and Restated Bylaws
4.1 Form of Common Stock Certificate.
4.2 Description of Registrant’s Securities.
4.3
Indenture, dated as of February 21, 2017, by and
among AECOM, the Guarantors party thereto and
U.S. Bank, National Association, as trustee.
4.4 First Supplemental Indenture, dated as of March 13,
2018, by and among AECOM, the guarantors party
thereto and U.S. Bank National Association.
4.5 Second Supplemental
Indenture, dated as of
April 23, 2020, by and among AECOM,
the
guarantors party thereto and U.S. Bank National
Association.
4.6 Credit Agreement, dated as of October 17, 2014,
among AECOM Technology Corporation and certain
of its subsidiaries, as borrowers, certain lenders,
Bank of America, N.A., as Administrative Agent,
Swing Line Lender and L/C Issuer, MUFG Union
Bank, N.A., BNP Paribas, JPMorgan Chase Bank,
N.A., and
the Bank of Nova Scotia, as
Co-Syndication Agents, and BBVA Compass, Credit
Agricole Corporate and Investment Bank, HSBC
Bank USA, National Association, Sumitomo Mitsui
Banking Corporation and Wells Fargo Bank,
National Association, as Co-Documentation Agents.
3.1
3.1
3.1
4.1
4.2
4.1
1/9/2015
3/3/2017
5/19/2023
1/29/2007
11/19/2020
2/21/2017
8-K
Form 10
10-K
8-K
8-K
10.3
3/14/2018
10-Q
10.2
5/6/2020
8-K
10.1
10/17/2014
96
Exhibit
Number
Exhibit Description
4.7 Amendment No. 1 to the Credit Agreement, dated as
of July 1, 2015, by and among AECOM and certain
of its subsidiaries, as borrowers, certain lenders,
Bank of America, N.A., as Administrative Agent,
Swing Line Lender and L/C Issuer.
4.8 Amendment No. 2 to Credit Agreement, dated as of
December 22, 2015, among the Company, the
Lenders party thereto, and Bank of America, N.A., as
Administrative Agent, Swing Line Lender, and an
L/C Issuer.
4.9 Amendment No. 3
to Credit Agreement and
Amendment No. 1 to the Security Agreement, dated
as of September 29, 2016, among the Company, the
Lenders party thereto, and Bank of America, N.A., as
Administrative Agent, Swing Line Lender, and an
L/C Issuer.
4.10 Amendment No. 4 to Credit Agreement dated as of
March 31, 2017, among the Company, the Lenders
party thereto, and Bank of America, N.A., as
Administrative Agent, Swing Line Lender, and an
L/C Issuer.
4.11 Amendment No. 5 to Credit Agreement dated as of
March 13, 2018, among AECOM, the Lenders party
thereto,
as
Administrative Agent, Swing Line Lender, and an
L/C Issuer.
and Bank of America, N.A.,
4.12 Amendment No. 6 to Credit Agreement, dated as of
November 12, 2018, among AECOM, the Lenders
party thereto, and Bank of America, N.A., as
Administrative Agent, Swing Line Lender, and an
L.C. Issuer.
4.13 Amendment No. 7 to Credit Agreement, dated as of
January 28, 2020, by and among AECOM, each
borrower and guarantor party thereto, the lenders
party thereto, and Bank of America, N.A, as
administrative agent.
4.14 Amendment No. 8 to the Credit Agreement, dated as
of May 1, 2020, by and among AECOM, each
borrower and guarantor party thereto, the lenders
party thereto, and Bank of America, N.A., as of
administrative agent.
4.15 2021 Refinancing Amendment to Credit Agreement,
dated as of February 8, 2021, by and among
AECOM, each borrower and guarantor party thereto,
the lenders party thereto, and Bank of America, N.A.,
as administrative Agent.
4.16 Amendment No. 10 to Credit Agreement, dated as of
April 13, 2021, by and among AECOM, each
borrower and guarantor party thereto, the lenders
party thereto, and Bank of America, N.A., as
administrative Agent.
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Form
8-K
Exhibit
10.1
Filing Date
7/7/2015
Filed
Herewith
8-K
10.1
12/22/2015
8-K
10.1
9/30/2016
8-K
10.1
4/6/2017
8-K
10.1
3/14/2018
10-K
4.21
11/13/2018
8-K
10.1
2/3/2020
10-Q
10.3
5/6/2020
10-Q
10.2
2/10/2021
8-K
10.1
4/13/2021
97
Exhibit
Number
Exhibit Description
4.17 Amendment No. 11 to Credit Agreement, dated as of
June 25, 2021, by and among AECOM, each
borrower and guarantor party thereto, the lenders
party thereto, and Bank of America, N.A., as
administrative Agent.
4.18 Amendment No. 12 to the Credit Agreement, dated
as of May 23, 2023, by and among AECOM and
Bank of America, N.A., as Administrative Agent
4.19 Amendment No. 13 to Credit Agreement, dated as of
May 23, 2023, by and among AECOM and the
lenders party thereto, and Bank of America, N.A., as
Administrative Agent
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Form
8-K
Exhibit
10.1
Filing Date
6/25/2021
Filed
Herewith
10-Q
10.1
8/9/2023
10-Q
10.2
8/9/2023
10.1# AECOM Technology Corporation Change in Control
10-Q
10.1
2/7/2018
Severance Policy for Key Executives.
10.3# Amended and Restated 2006 Stock Incentive Plan.
10.4# Form of Stock Option Standard Terms and
Conditions under 2006 Stock Incentive Plan.
10.5# Form of Restricted Stock Unit Standard Terms and
Conditions under 2006 Stock Incentive Plan.
10.6# Standard Terms and Conditions for Performance
Earnings Program under AECOM Technology
Corporation 2006 Stock Incentive Plan.
10.7# AECOM Amended & Restated 2016 Stock Incentive
Plan.
Schedule
14A
8-K
8-K
8-K
Schedule
14A
10-Q
10.8# Form Standard Terms and Conditions for Restricted
Stock Units for Non-Employee Directors under the
2016 Stock Incentive.
10.9# Form Standard Terms and Conditions for Restricted
10-Q
Stock Units under the 2016 Stock Incentive Plan.
and Conditions
10.10# Form Standard Terms
for
Performance Earnings Program under the 2016 Stock
Incentive Plan.
10.11# Form Standard Terms
for
Non-Qualified Stock Options under the 2016 Stock
Incentive Plan.
and Conditions
10-Q
10.12# Standard Terms and Conditions for Performance
Earnings Program and Performance Criteria.
10.13# AECOM Technology Corporation Executive
8-K
8-K
Deferred Compensation Plan.
10.14# First Amendment to the AECOM Executive Deferred
10-Q
Compensation Plan.
10.15# AECOM Technology Corporation Executive
Incentive Plan.
10.16# Form of Special LTI Award Stock Option Terms and
Conditions under the 2006 Stock Incentive Plan.
10.17# AECOM Retirement & Savings Plan (amended and
10-Q
restated effective July 1, 2016).
Schedule
14A
8-K
Annex B
1/21/2011
10.1
10.2
10.3
12/5/2008
12/21/2012
12/5/2008
Annex B
1/19/2017
10.3
5/11/2016
10.4
10.5
5/11/2016
5/11/2016
10.1
10.1
10.3
12/15/2016
12/21/2012
2/10/2016
Annex A
1/22/2010
10.2
10.1
3/12/2014
8/10/2016
10-Q
10.6
5/11/2016
10.18# AECOM Amended and Restated Employee Stock
DEF 14A
Annex A
1/23/2019
Purchase Plan.
98
Exhibit
Number
10.19# Form Standard Terms
Exhibit Description
for
Performance Earnings Program under the 2016 Stock
Incentive Plan (Fiscal Year 2019).
and Conditions
10.20# Form Standard Terms
for
Performance Earnings Program under the 2016 Stock
Incentive Plan (Fiscal Year 2020).
and Conditions
Incorporated by
Reference (Exchange Act
Filings Located at File
No. 0-52423)
Form
10-Q
Exhibit
10.1
Filing Date
2/6/2019
Filed
Herewith
10-Q
10.1
2/5/2020
10.23# AECOM 2020 Stock Incentive Plan.
10.24# Letter Agreement between AECOM and W. Troy
DEF 14A
10-Q
Annex A
10.1
Rudd dated June 13, 2020.
10.25# Letter Agreement between AECOM and Lara Poloni
10-Q
dated June 13, 2020.
10.26# Senior Leadership Severance Plan.
10.27# Form Standard Terms
for
Performance Earnings Program under the 2020 Stock
Incentive Plan (Fiscal Year 2021)
and Conditions
10-Q
10-Q
10.2
10.3
10.1
1/23/2020
8/5/2020
8/5/2020
8/5/2020
2/10/21
10.28# Form Standard Terms
for
Performance Earnings Program under the 2020 Stock
Incentive Plan (Fiscal Year 2023)
and Conditions
10.29# Form Standard Terms and Conditions for Restricted
Stock Units under the 2020 Stock Incentive Plan
(Fiscal 2023)
10-Q
10.1
2/7/2023
10-Q
10.2
2/7/2023
10.30# Employment Agreement, dated March 1, 2023, by
10-Q
10.1
5/9/2023
and between AECOM and Lara Poloni
21.1 Subsidiaries of AECOM.
23.1 Consent
of
Independent Registered Public
Accounting Firm.
31.1 Certification of the Company’s Chief Executive
the
to Section 302 of
Officer pursuant
Sarbanes-Oxley Act of 2002.
31.2 Certification of the Company’s Chief Financial
the
to Section 302 of
Officer pursuant
Sarbanes-Oxley Act of 2002.
following
101 The
financial statements
32* Certification of the Company’s Chief Executive
Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
from
the
Company’s Annual Report on Form 10-K for the
year ended September 30, 2023 were formatted in
iXBRL (Inline eXtensible Business Reporting
Language):
(i) Consolidated Balance Sheets,
(ii) Consolidated Statements of Operations, (iii)
Consolidated Statements of Comprehensive Income
of
(Loss),
Stockholders’ Equity, (v) Condensed Consolidated
Statements of Cash Flows, and (vi) the Notes to
Condensed Consolidated Financial Statements,
tagged as blocks of text and including detailed tags.
104 The cover page from the Company’s Annual Report
on Form 10-K for the year ended September 30,
2023, formatted in Inline XBRL.
(iv) Consolidated
Statements
# Management contract or compensatory plan or arrangement.
99
X
X
X
X
X
X
X
* Document has been furnished and not filed.
ITEM 16. FORM 10-K SUMMARY
None.
100
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURE
AECOM
By:
Date:
/s/ GAURAV KAPOOR
Gaurav Kapoor
Chief Financial Officer
(Principal Financial Officer)
November 14, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant in the capacities and on the date indicated.
Signature
Title
Date
Director (Chairman)
November 14, 2023
November 14, 2023
November 14, 2023
November 14, 2023
November 14, 2023
November 14, 2023
November 14, 2023
November 14, 2023
November 14, 2023
/s/ W. TROY RUDD
W. Troy Rudd
Chief Executive Officer
(Principal Executive Officer)
/s/ GAURAV KAPOOR
Gaurav Kapoor
/s/ BRADLEY W. BUSS
Bradley W. Buss
/s/ LYDIA H. KENNARD
Lydia H. Kennard
/s/ KRISTY PIPES
Kristy Pipes
/s/ DOUGLAS W. STOTLAR
Douglas W. Stotlar
/s/ DANIEL R. TISHMAN
Daniel R. Tishman
/s/ SANDER VAN’T NOORDENDE
Sander van’t Noordende
Chief Financial Officer
(Principal Financial Officer,
Principal Accounting Officer)
Director
Director
Director
Director
Director
/s/ GEN. JANET C. WOLFENBARGER, USAF RET.
Gen. Janet C. Wolfenbarger, USAF Ret.
Director
101