AECOM management said Monday the company remains a major player in cleaning up the U.S. Department of Energy’s nuclear complex and believes it has a real chance of overturning the recent loss of the $4.7 billion contract for liquid waste management at the Savannah River Site in South Carolina.
“We still consider the Savannah River competition to be open and not closed,” Chief Operating Officer Randall Wotring said during AECOM’s fiscal fourth-quarter earnings call with financial analysts.
The Energy Department on Oct. 12 awarded the 10-year contract to Savannah River EcoManagement, a venture led by BWX Technologies. The losing teams, one led by AECOM and the other by Fluor, filed contract protests with the Government Accountability Office on Oct. 31.
AECOM executives said the company does not bring protests lightly.
“We are extremely disappointed by that initial decision,” Wotring said. “We are continuing to win [major contracts] above the industry average,” he added.
AECOM reported about $4.9 billion in revenue for the quarter ended Sept. 30, which marked the end of the company’s 2017 fiscal year. That was up from $4.32 billion in the same period a year ago. Revenue for the past 12 months landed at $18.2 billion, up from $17.41 billion for fiscal 2016, the company said in its earnings release.
AECOM’s management services division, which includes its DOE business, recorded $890 million in revenue during the just-completed quarter, which was relatively flat with the $887 million reported during the same period one year ago.
The company recorded $88 million in net income for the quarter, $0.55 per share. The full-year numbers were $339 million and $2.13.
When it comes to lining up business, AECOM achieved record full-year wins of $23.2 billion, resulting in an all-time high backlog of $47.5 billion driven by management services as well as the company’s design and consulting services group. The latter group serves clients in the transportation, water, and energy industries. These two groups tend to have particularly high margins, AECOM executives said.
Some government contracts the company expected to be awarded in the past 12 months have not yet been realized, according to management. One such contract mentioned in passing on the call involves DOE’s Los Alamos National Laboratory in New Mexico.
In September, the department issued a six-month extension of the current contract for legacy nuclear cleanup operations at LANL. Incumbent Los Alamos National Security features Bechtel National, AECOM, BWXT Technologies, and the University of California. DOE has yet to award a long-term contract for the work.
Los Alamos National Security is also the incumbent contractor for management and operation of the nuclear-weapon lab. The Energy Department last month released the request for proposals for the next contract, which would be worth about $2 billion per year. The University of California has already confirmed its intention to bid, while its corporate partners in LANS have largely remained mum on the matter. A University of California regent this week said the LANS partnership will split up, with some of the incumbent’s industry teammates pursuing other proposals to run Los Alamos.
AECOM is also the partner in a corresponding team – also including the University of California, Bechtel, and BWXT– for management and operations of the Lawrence Livermore National Laboratory in California.
Separately, Nuclear Waste Partnership, a joint venture between AECOM AND BWXT, in September was awarded a three-year extension for continued operation and management of DOE’s Waste Isolation Pilot Plant near Carlsbad, N.M. The extension, which is worth $928 million, keeps the joint venture on the job at WIPP through September 2020.
AECOM CEO Sees Big Future in Reactor Decommissioning
During the call, AECOM executives said they see great potential in the nuclear plant decommissioning market in the United States, Canada, Japan, and elsewhere.
The company is already muscling into the business. In December 2016, an AECOM-EnergySolutions team landed the roughly $1 billion general contract business for decommissioning the San Onofre Nuclear Generating Station in California.
AECOM Chairman and CEO Michael Burke said the international engineering and infrastructure company sees decommissioning of nuclear power plants as a potential $200 billion global market.
Burke also indicated that AECOM’s experience in cleaning up the legacy of U.S. Cold War nuclear operations, including retired reactors, should enable it to assume a growing role in decommissioning commercial power reactors.
San Onofre “was a real test case for us to bring together our extensive power, construction expertise, our environmental engineering expertise, and most importantly, our federal government nuclear decommissioning expertise and put all that together,” Burke said during the earnings call.
Over the past couple years, nuclear operators have announced a number of premature retirements of power reactors in the United States, citing factors including weak power demand and competition from electricity generated by cheap natural gas. Six power reactors went into decommissioning from 2013 to 2016, while eight more are already scheduled for closure from 2018 to 2025, according to recent figures from the Nuclear Regulatory Commission.
“Canada has an enormous nuclear decommissioning opportunity,” Burke said. “We’ve been spending time in Japan where they’re going to take down 35 reactors, we’ve been spending time in Taiwan where they’re going to take down a large reactor. So, I think we are positioned as well as anybody to benefit from that $200 billion market.”
