AECOM reported Tuesday $4.4 billion in revenue for the third quarter of its fiscal 2016, down 3 percent from $4.5 billion the same period last year. It also reported net income of $67.4 million and earnings per share of $0.43 for the period ending June 30, an 11 percent and 10 percent increase, respectively, from the same period last year.
AECOM is a major player in facility management and nuclear cleanup for the National Nuclear Security Administration and the Department of Energy, partnering in consortiums that manage the Los Alamos National Laboratory in New Mexico, the Lawrence Livermore National Laboratory in California, the Nevada National Security Site, and Washington Closure Hanford. It also leads the groups that offer liquid waste remediation at the Savannah River Site in South Carolina and transuranic waste storage at the Waste Isolation Pilot Plant in New Mexico.
AECOM’s Management Services business segment, which includes the company’s DOE and NNSA contracts, brought in $804 million in quarterly revenue, down from $851.7 million for fiscal third-quarter 2015. Adjusted operating income of $75 million – a combination of income from operations and amortization of intangible assets – was down from $93 million. The segment also reported a $39.3 million gross profit in the latest quarter.
Troy Rudd, AECOM executive vice president and chief financial officer, said during an earnings call Tuesday that the business segment’s revenue declined by 5.5 percent. “The operating margin declined to 9.3 percent from 10.9 percent last year but remained above our long-term expectations of approximately 8 percent,” he said. “This margin performance is driven by large, incentive-based contracts where we have a strong history of execution.”
“In Management Services, we delivered another solid quarter of profitability and further added to our already strong pipeline,” Chairman and CEO Michael Burke said during the call.
“We were selected for $400 million of new work after the quarter close, have submitted $15 billion of bids for client evaluation, and anticipate submitting another $10 billion of bids over the coming months,” Burke said, adding, “We are leveraging all of our capabilities to pursue large nuclear decommissioning work.”
The management and operations contract for LANL, currently held by a partnership of AECOM, Bechtel, BWX Technologies, and the University of California, will expire in 2018. Meanwhile, AECOM has expressed some interest in the SRS liquid waste contract currently held by its partnership with Bechtel, BWXT, and CH2M, which expires next June.
The company expects capital expenditures of approximately $150 million in this fiscal year and is “on track to achieve its $325 million run-rate synergy savings target by the end of fiscal 2017,” it said in an earnings announcement.
AECOM’s Design and Consulting Services business segment earned $1.9 billion in revenue in the third quarter and an adjusted operating income of $150 million. The company’s Construction Services segment earned $1.7 billion in revenue and $23 million in adjusted operating income.
The company is reiterating adjusted earnings per share guidance for the fiscal year of $3.00 to $3.40.
