AECOM’s earnings in its fiscal third quarter grew company-wide and in the business segment that provides services widely across the Department of Energy complex.
The quarter was highlighted by a $3.6 billion Air Force contract win in AECOM’s Management Services branch and a record $394 million in free cash flow, according to the Aug. 8 earnings release from the Los Angeles-based integrated services provider. Just days after the quarter ended, management announced the planned acquisition of Shimmick Construction.
Total revenue bumped up 3 percent year over year, to nearly $4.6 billion, for the quarter ended June 30. As reported operating income spiked by 88 percent, to $208 million; adjusted operating income rose by 9 percent, to $239 million. The net income numbers were slightly mixed: up 50 percent, to $101 million, on an as-reported basis; down 2 percent, to $123 million, on an adjusted basis.
AECOM’s contracts for federal agencies including DOE, Homeland Security, and the Defense Department, brought in $856 million in revenue in the quarter. Operating income rose from $55 million in third-quarter 2016 to $66 million this year; the rise for the adjusted income number was more modest: $76 million to $79 million.
“With the successful resolution of an incumbent protest at the GAO on a $3.6 billion Air Force win, we have now won nearly $7 billion of work this year, and our backlog has increased by nearly 50%,” Chairman and CEO Michael Burke said during the quarterly earnings conference call. “Our pipeline of pursuits remained high at over $40 billion, and we expect decisions on over $20 billion of bids over the next several quarters.”
Executives did not elaborate on potential award wins, but AECOM is waiting on several contract awards at DOE sites where it works.
The company has confirmed it is seeking the follow-on deal to the current liquid waste management contract for the Savannah River Site in South Carolina. AECOM leads the incumbent, Savannah River Remediation. The contractor received a six-month extension in April, but there has been no word publicly regarding the winner of the upcoming contract award that could be worth up to $6 billion over a decade.
AECOM is one of the partners in Los Alamos National Security (LANS), management and operations contractor for the Los Alamos National Laboratory in New Mexico until Sept. 30, 2018; DOE last month issued a draft request for proposals for the next contract. LANS also holds a two-year, $230 million bridge contract for legacy cleanup operations at the nuclear-weapon laboratory. The contract expires on Sept. 30, but DOE has not yet announced the award for the follow-on deal, which could be valued at up to $1.5 billion over 10 years.
