AECOM said Monday it plans next year to spin off its multibillion-dollar government contracting branch into a separate publicly traded company.
The Board of Directors to the Los Angeles-based infrastructure multinational unanimously signed off on the separation, which is expected to occur in the second half of 2020, according to an AECOM press release.
In a message Monday to company employees, AECOM Chairman and CEO Michael Burke called the spinoff “a strategic move that unlocks new value and will accelerate long-term growth for both companies.”
“This decision, which was approved unanimously by our Board of Directors, acknowledges the success and potential of Management Services, as well as our confidence that both companies separately can attain even greater heights,” Burke wrote. “On its own in 2020, Management Services will immediately become a competitive powerhouse in the fragmented government services sector – a Top 20 provider with more than 25,000 employees, $4 billion in revenue and the ability to more quickly expand and acquire the capabilities it needs to meet evolving and complex client demands.”
In AECOM’s latest earnings report in May, for the second quarter of its fiscal 2019, Management Services reported slightly more than $1 billion in revenue. That represented a $14% rise on a year-over-basis, from $897.8 million in the same quarter of 2018. It was roughly 20% of AECOM’s total revenue for the second quarter.
For the full fiscal year 2018, Management Services brought in $3.7 billion in revenue, which generated $200 million in operating income and $239 in adjusted operating income, the press release says.
Through Management Services, AECOM works a number of contracts for the Department of Energy. AECOM-led Nuclear Waste Partnership is the management prime for the Waste Isolation Pilot Plant in New Mexico. AECOM is also a partner in contractors for waste management at DOE’s Hanford Site in Washington state and the Savannah River Site in South Carolina.
