AECOM, a near-ubiquitous presence on the Energy Department’s legacy nuclear cleanup sites, said this week that operating income at its Management Services division sank 55 percent year over year to slightly more than $50 million in the quarter ended March 31.
Management Services’ earnings from joint ventures — including some of AECOM’s partnerships for DOE nuclear remediation work — fell 70 percent to about $10.5 million in the company’s fiscal second quarter. That was in part because the 2016 quarter included revenue from nuclear-waste cleanup in the United Kingdom under a contract the British government has since canceled, AECOM wrote in its May 10 10-Q filing with the U.S. Securities and Exchange Commission.
Los Angeles-based AECOM was part of Nuclear Management Partners, which after the end of the 2016 second quarter was stripped of its contract to clean up the U.K.’s Sellafield site. The U.K. Nuclear Decommissioning Authority criticized AECOM and partners Amec Foster Wheeler and AREVA for cost overruns and delays at the site, which houses most of the nation’s nuclear waste.
Quarterly revenue at Management Services fell more than 8 percent to about $827 million, AECOM said.
The segment began its 2017 fiscal year six months ago with about $8 billion in backlog: a figure the company still expects to double by the end of the year, CEO Michael Burke said on the company’s latest quarterly earnings call with investors. Management Services is also aggressively seeking new business, with about $50 billion in what Burke called the company’s “pipeline of pursuits.” Of that, some “$25 billion of bids [are] under client evaluation,” Burke said.
The latter includes the next liquid waste cleanup contract at the Savannah River Site in Aiken, S.C. The AECOM-led Savannah River Remediation is the incumbent prime. The new pact would be worth up to $6 billion over 10 years, including options.
Overall, AECOM’s earnings soared in the quarter even as revenue remained basically flat.
Net income for the fiscal second quarter ended March 31 was about $102 million, or almost one-and-a-half times its take for the comparable period of 2016. Diluted earnings per share landed at $0.65. Higher acquisition and integration expenses in the previous quarter and an income tax benefit in the 2017 quarter accounted in part for the spread.
Total revenue at AECOM rose about 1 percent year over year to roughly $4.4 billion, the company said.
Late in April, about a month into the company’s third fiscal quarter, DOE extended for six months the liquid waste management contract at the Savannah River Site held by Savannah River Remediation. The pact was set to expire June 30 and now will remain in effect through Dec. 31. Neither DOE nor AECOM has disclosed the value of that modification. Before the modification, and including options, the eight-year contract would have been worth roughly $4 billion.
AECOM also leads the Nuclear Waste Partnership, management and operations contractor for the Waste Isolation Pilot Plant in New Mexico and is principal subcontractor to Bechtel National for the Waste Treatment Plant at the Hanford Site in Washington state, among other roles across the DOE complex.
