Third Quarter Fiscal 2020

DALLAS I-35EI-30 HORSESHOE INTERCHANGE

United States

Dubbed the "Horseshoe Project" due to its U-shape, AECOM provided design services to replace and upgrade capacity on the I-30 and I-35E bridges that cross the Trinity River near Downtown Dallas.

Third Quarter Fiscal 2020

Disclosures

Forward-Looking Statements

All statements in this communication other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any statements of the plans, strategies and objectives for future operations, profitability, strategic value creation, coronavirus impacts, risk profile and investment strategies, any statements regarding future economic conditions or performance, the expected financial and operational results of AECOM. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, but are not limited to, the following: our business is cyclical and vulnerable to economic downturns and client spending reductions; impacts caused by the coronavirus and the related economic instability and market volatility, including the reaction of governments to the coronavirus, including any prolonged period of travel, commercial or other similar restrictions, the delay in commencement, or temporary or permanent halting of construction, infrastructure or other projects, requirements that we remove our employees or personnel from the field for their protection, and delays or reductions in planned initiatives by our governmental or commercial clients or potential clients; losses under fixed-price contracts; limited control over operations run through our joint venture entities; liability for misconduct by our employees or consultants; failure to comply with laws or regulations applicable to our business; maintaining adequate surety and financial capacity; high leverage and potential inability to service our debt and guarantees; exposure to Brexit; exposure to political and economic risks in different countries; currency exchange rate fluctuations; retaining and recruiting key technical and management personnel; legal claims; inadequate insurance coverage; environmental law compliance and adequate nuclear indemnification; unexpected adjustments and cancellations related to our backlog; partners and third parties who may fail to satisfy their legal obligations; AECOM Capital real estate development projects; managing pension cost; cybersecurity issues, IT outages and data privacy; risks associated with the benefits and costs of the Management Services transaction, including the risk that the expected benefits of the Management Services transaction or any contingent purchase price will not be realized within the expected time frame, in full or at all; the risk that costs of restructuring transactions and other costs incurred in connection with the Management Services transaction will exceed our estimates or otherwise adversely affect our business or operations; as well as other additional risks and factors that could cause actual results to differ materially from our forward-looking statements set forth in our reports filed with the Securities and Exchange Commission. Any forward-looking statements are made as of the date hereof. We do not intend, and undertake no obligation, to update any forward-looking statement.

Non-GAAP Financial Information

This communication contains financial information calculated other than in accordance with U.S. generally accepted accounting principles ("GAAP"). The Company believes that non-GAAP financial measures such as adjusted EPS, adjusted EBITDA, adjusted net/operating income, adjusted tax rate, organic revenue, net service revenue and free cash flow provide a meaningful perspective on its business results as the Company utilizes this information to evaluate and manage the business. We use adjusted EBITDA, adjusted EPS, adjusted net/operating income and adjusted tax rate to exclude the impact of non-operating items, such as amortization expense, taxes and non-core operating losses to aid investors in better understanding our core performance results. We use free cash flow to represent the cash generated after capital expenditures to maintain our business. We present constant currency information, such as organic revenue, to help assess how our underlying businesses performed excluding the effect of foreign currency rate fluctuations to aid investors in better understanding our international operational performance. We present net service revenue to exclude subcontractor costs from revenue to provide investors with a better understanding of our operational performance. We present segment adjusted operating margin to reflect segment operating performance of our Americas and International segments, excluding AECOM Capital.

Our non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of these non- GAAP measures is found in the Regulation G Information tables at the back of this communication.

When we provide our long term projections for adjusted EBITDA and free cash flow on a forward-looking basis, the closest corresponding GAAP measure and a reconciliation of the differences between the non- GAAP expectation and the corresponding GAAP measure generally is not available without unreasonable effort due to the length, high variability, complexity and low visibility associated with the non-GAAP expectation projected against the multi-year forecast which could significantly impact the GAAP measure.

Third Quarter Fiscal 2020 Page 1

Today's Participants

Michael S. Burke

W. Troy Rudd

Lara Poloni

Chairman and Chief Executive

Chief Financial Officer

Chief Executive - EMEA

Officer

Third Quarter Fiscal 2020 Page 2

AECOM: A Great Professional Services Business

What makes AECOM a great Professional Services business? OUR PEOPLE

PRIORITIES FOR OUR LEADERSHIP TEAM AND COMPANY:

1

2

3

4

Committed to our professionals: investing in our people and fostering a culture that promotes equity, diversity and inclusion to build one AECOM

Leading the digital transformation: building on our investments over the past several years in technology and innovation to deliver for all stakeholders

Driving efficiencies: improving our focus and execution, and unlocking capital to invest and deliver on our long-term financial and strategic objectives

Creating a virtuous cycle: attracting the best people to build careers at AECOM, delivering on our profitability targets and returning excess capital to shareholders

WE ARE FOCUSED ON CREATING VALUE FOR ALL OF OUR STAKEHOLDERS

Third Quarter Fiscal 2020 Page 3

Strong Third Quarter Results Provide Significant Momentum

  • Proud of how our organization has performed in the face of unprecedented challenges
  • Delivered a seventh-consecutive quarter of double- digit adjusted EBITDA1 growth
    • 250 basis points of expansion in our segment adjusted operating margin1, 2, highlighted by another strong quarter in the Americas and continued improvement in International
  • Free cash flow3 of $272 million was consistent with expectations and reflects continued strong collection trends across the enterprise
  • Continued strong backlog position, including record contracted backlog, that allows us to operate and plan with greater certainty

All numbers presented reflect Continuing Operations.

Third Quarter Fiscal 2020 Page 4

Double-Digit Adjusted EBITDA1 Growth

Substantial Segment

Adjusted Operating

Margin1, 2 Expansion

Near-Record Total Backlog, including Record Contracted Backlog

$187M

$159M

Q3'19Q3'20

13.2%

10.7%

Q3'19

Q3'20

3.1 years

2.6 years

$41.5B

$35.7B

$17.4B

$21.2B

$17.3B

$19.5B

Q3'19

Q3'20

Total

Unconsolidated JV

Contracted

Backlog/TTM Revenue

Q3'20 Segment Results - Americas

GAAP RESULTS VS. PRIOR YEAR:

TOTAL REVENUE

$2.48 billion

(4%)

OPERATING INCOME

$161 million

26%

KEY PERFORMANCE INDICATORS VS. PRIOR YEAR (NON-GAAP):

NET SERVICE REVENUE4

$923 million

2%5

ADJ. OPERATING INCOME1

$165 million

25%

ADJ. OPERATING MARGIN1

17.9%

+340 bps

3%

16%

1%

Transportation

9%

33%

Environment & Water

Facilities

16%

Construction Management

Power & Industrial

90%

U.S.

Canada

32%

Latin America

% of Segment TTM NSR (as of Q3'20)

  • NSR4 grew by 2% on an organic5 basis, led by double- digit growth in the Construction Management business
    • Our largest public sector design markets, transportation and water, also were strong in the quarter, demonstrating our leadership position and strength of our people
  • 340 basis point improvement in the adjusted operating margin1 to 17.9%
  • Backlog increased by 18% and includes record contracted backlog, which supports our confidence in delivering industry-leading performance
  • Key indicators, such as vehicle miles traveled, are approaching pre-COVID levels in some geographies, inspiring optimism; however, there are near-term uncertainties as state and local clients face budget pressures that have delayed decision making in certain markets
    • Substantial federal infrastructure proposals could solidify budgets from the expiration of the FAST Act in September and resolve potential shortfalls

Third Quarter Fiscal 2020 Page 5

Q3'20 Segment Results - International

GAAP RESULTS VS. PRIOR YEAR:

TOTAL REVENUE

$718 million

(10%)

OPERATING INCOME

$32 million

(3%)

KEY PERFORMANCE INDICATORS VS. PRIOR YEAR (NON-GAAP):

NET SERVICE REVENUE4

$590 million

(3%)5

ADJ. OPERATING INCOME1

$34 million

3%

ADJ. OPERATING MARGIN1

5.7%

+50 bps

3%

Facilities

Transportation

20%

15%

Environment & Water

26%

8%

40%

Power & Industrial

U.K. & Ireland

15%

Australia-New Zealand

Hong Kong

19%

17%

Middle East

Continental Europe

37%

Other

% of Segment TTM NSR (as of Q3'20)

Third Quarter Fiscal 2020

Page 6

  • Organic5 NSR4 declined by 3%, reflecting COVID-related headwinds in EMEA offset by growth in Australia and stable performance in Hong Kong
  • Adjusted operating margin1 of 5.7%, up 50 basis points over the prior year; year-to-date margin has increased by 170 basis points despite revenue headwinds
    • Benefitting from actions to consolidate our real estate portfolio, reductions to our G&A and ongoing exit of underperforming markets
    • Improving our International margins remains a top priority for value creation
  • Trends in international markets are mixed, but we are gaining share with 6% backlog growth in EMEA
    • Successfully capitalizing on our 250+ framework positions in the U.K. to gain market share
    • Greater than $100 million dollar win in the Middle East, creating visibility in an uncertain market and further deepening our engagement with key clients
    • Growth opportunities in Australia and stable trends in Hong Kong are also helping to offset slower levels of activity in the region, particularly in Southeast Asia

Cash Flow and Capital Allocation Highlights

Gross Leverage6

4.0x

2.8x

Q3'19

Q3'20

Substantially Reduced

Net Leverage6

Remaining Stock

Repurchase Authorization

  • Delivered free cash flow3 of $272 million, which was consistent with expectations and included strong collections across the company
    • Collected $122 million in connection with a previously announced favorable net working capital true-up related to the sale of the Management Services business
  • Gross leverage declined from 3.1x to 2.8x, and net leverage now stands at 0.8x, reflecting our substantial liquidity position
  • Further strengthening our balance sheet through redemption of our 5% 2022 notes
    • Funded through existing delayed draw term loan facility, which will allow for approximately $6 million of lower annual interest expense while extending our debt maturity profile
  • Going forward, we will target gross leverage6 below 3x to ensure the best capital structure to execute the business and capital allocation priorities, including share repurchases

Third Quarter Fiscal 2020 Page 7

Discontinued Operations Update

  • Delivered improved profitability in the third quarter
  • Achieved substantial completion on the Alliant combined-cycle gas power plant project in July
  • Process to exit our at-risk,self-perform construction businesses has intensified
  • Through our year-to-date restructuring activities, we have fully eliminated stranded costs associated with the Management Services sale

COMMITTED TO MANAGING RISK AND PRESERVING BUSINESS STRENGTH TO

MAXIMIZE VALUE FOR ALL STAKEHOLDERS

Third Quarter Fiscal 2020 Page 8

Strong Fiscal 2020 Outlook

Adjusted EBITDA1

$720M - $740M

$657M

$528M

FY'18

FY'19

FY'20E

  • Increased fiscal 2020 guidance includes continued expectation for 11% adjusted EBITDA1 growth at the mid-point of our range
    • Guidance includes an expected $20 million headwind from changes in foreign exchange
    • Productivity levels remain high with utilization continuing to trend above pre-COVID levels
    • Employee and client satisfaction also remain high, supporting our confidence in our outlook
  • Reiterated guidance for full year free cash flow3 of between $100 million and $300 million

Third Quarter Fiscal 2020 Page 9

Appendix

Third Quarter Fiscal 2020

Footnotes

  1. Excludes the impact of non-operating items, such as non-core operating losses and transaction-related expenses, restructuring costs and other items. See Regulation G Information for a complete reconciliation of Non-GAAP measures.
  2. Reflects segment operating performance, excluding AECOM Capital.
  3. Free cash flow is defined as cash flow from operations less capital expenditures net of proceeds from disposals and includes the receipt of a favorable $122 million net working capital purchase price adjustment collected in May 2020 in connection with the sale of the Management Services (MS) business. The working capital adjustment represents the recovery of an operating cash flow shortfall of the MS business prior to its sale. See Regulation G Information for a complete reconciliation of Non-GAAP measures.
  4. Revenue, net of subcontractor and other direct costs. See Regulation G Information for a complete reconciliation of Non-GAAP measures.
  5. Organic growth is year-over-year at constant currency and reflects revenue associated with continuing operations. Results expressed in constant currency are presented excluding the impact from changes in currency exchange rates.
  6. Gross leverage is comprised of EBITDA as defined in the Company's credit agreement dated October 17, 2014, as amended, which excludes stock-based compensation, and total debt on the Company's financial statements; net leverage is defined similarly but is also net of total cash and cash equivalents.

Third Quarter Fiscal 2020 Page 11

AECOM:

The World's Premier Infrastructure Firm

We deliver professional services throughout the project lifecycle - from planning, design and engineering to consulting and construction management.

Across the globe, we partner with our clients in the public and private sectors to solve their most complex challenges and pioneer innovative solutions.

professionals

ranked transportation and building design and environment firm

Fortune World's Most

Admired 6 years in a row

As a Professional Services Business, AECOM Is Poised to Thrive

Attractive Exposure to

Balanced Geographic

Diverse

Lower-Risk Professional

Key End Markets

Exposure

Funding Sources

Services Business

3%

Transportation

6%

U.S.

10%

Private

6%1%

Cost-Plus

27%

35%

20%

Facilities

Asia Pacific

23%

44%

State & Local Governments

Fixed Price (Design)

54%

40%

53%

Environment / Water

EMEA

Non-U.S. Governments

Construction Management

35%

Power / Industrial

20%

Canada

23%

Federal U.S. Government

GMP

Fixed Price (Construction)

All numbers are presented as a percentage of TTM NSR (as of Q3'20)

Focused on our core higher-returning and lower-risk businesses

Lead in key engineering and construction management markets

Strengthened financial profile with a higher expected earnings growth and transformed balance sheet Capitalizing on a strong backlog position and sizable market opportunities with long-term profitable growth

Third Quarter Fiscal 2020 Page 13

Regulation G Information

Reconciliation of Revenue to Revenue, Net of Subcontractor and Other Direct Costs (NSR)

Three Months Ended

Nine Months Ended

Jun 30,

Mar 31,

Jun 30,

Jun 30,

Jun 30,

2019

2020

2020

2019

2020

Americas

Revenue

$

2,563.8

$

2,475.7

$

2,471.5

$

7,700.7

$ 7,399.2

Less: Subcontractor and other direct costs

1,655.2

1,542.5

1,548.5

4,976.6

4,637.4

Revenue, net of subcontractor and other direct costs

$

908.6

$

933.2

$

923.0

$

2,724.1

$ 2,761.8

International

Revenue

$

794.8

$

769.5

$

718.0

$

2,421.4

$ 2,270.6

Less: Subcontractor and other direct costs

161.8

143.2

128.5

497.1

421.1

Revenue, net of subcontractor and other direct costs

$

633.0

$

626.3

$

589.5

$

1,924.3

$ 1,849.5

Segment Performance (excludes ACAP)

Revenue

$

3,358.6

$

3,245.2

$

3,189.5

$

10,122.1

$ 9,669.8

Less: Subcontractor and other direct costs

1,817.0

1,685.7

1,677.0

5,473.7

5,058.5

Revenue, net of subcontractor and other direct costs

$

1,541.6

$

1,559.5

$

1,512.5

$

4,648.4

$ 4,611.3

Consolidated

Revenue

$

3,360.0

$

3,245.7

$

3,189.7

$

10,129.0

$ 9,671.0

Less: Subcontractor and other direct costs

1,817.0

1,685.7

1,677.0

5,473.7

5,058.5

Revenue, net of subcontractor and other direct costs

$

1,543.0

$

1,560.0

$

1,512.7

$

4,655.3

$ 4,612.5

Three Months Ended

Nine Months Ended

Jun 30,

Mar 31,

Jun 30,

Jun 30,

Jun 30,

2019

2020

2020

2019

2020

Reconciliation of Segment Income from Operations to Adjusted Income from Operations

Americas Segment:

Income from operations

$

127.7

$

141.0

$

160.8

$

369.7

$

447.7

Non-core operating losses & transaction related expenses

(0.7)

-

-

7.5

-

Amortization of intangible assets

4.8

4.8

4.5

14.4

14.0

Adjusted income from operations

$

131.8

$

145.8

$

165.3

$

391.6

$

461.7

International Segment:

Income from operations

$

33.2

$

35.8

$

32.3

$

70.0

$

96.8

Non-core operating losses & transaction related expenses

(1.8)

-

-

(1.8)

(0.1)

Amortization of intangible assets

1.5

1.4

1.4

4.6

4.2

Adjusted income from operations

$

32.9

$

37.2

$

33.7

$

72.8

$

100.9

Segment Performance (excludes ACAP):

Income from operations

$

160.9

$

176.8

$

193.1

$

439.7

$

544.5

Non-core operating losses & transaction related expenses

(2.5)

-

-

5.7

(0.1)

Amortization of intangible assets

6.3

6.2

5.9

19.0

18.2

Adjusted income from operations

$

164.7

$

183.0

$

199.0

$

464.4

$

562.6

Third Quarter Fiscal 2020 Page 14

Restructuring costs

-

Amortization of intangible assets

0.04

Financing charges in interest expense

0.02

Regulation G

Information

Tax effect of the above adjustments*

(0.02)

Valuation allowances and other tax only items

0.05

Adjusted net income attributable to AECOM - per diluted

share

$

0.43

$

Weighted average shares outstanding - diluted

159.8

0.19

0.13

0.50

0.60

0.04

0.04

0.12

0.11

0.01

0.01

0.05

0.03

(0.07)

(0.06)

(0.20)

(0.22)

0.01

(0.20)

(0.17)

(0.19)

0.55

$

0.55

$

1.22

$

1.56

160.7

161.8

159.3

161.1

  • Adjusts the income tax expense (benefit) during the period to exclude the impact on our effectiveThree Monthstax rate ofEndedthe pre-tax adjustments shown Nineabove.Months Ended

Jun 30,

Mar 31,

Jun 30,

Jun 30,

Jun 30,

2019

2020

2020

2019

2020

e Attributable to AECOM to EBITDA to Adjust d EBITDA and to Adjusted Income from

Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share

Operations

Net income attributable to AECOM - per diluted share

$

0.35

$

0.30

$

0.56

$

0.88

$

1.06

N t income attributable to AECOM

$

56.0

$

48.5

$

91.1

$

139.4

$

170.5

Per diluted share adjustments:

27.2

21.6

(7.2)

(3.1)

.

I come tax expense (benefit)

Non-core operating losses & transaction related expenses

(0.01)

-

-

0.04

30.03

AcceleratedIncome attributabledepreciatitonAECOMof project management tool

83.2-

070. .71

083.07.9

136.-3

20.140.8

RestructuringDepreciationcostsand amortization expense1

42.6-

048.19.7

051.1.3

1250. .09

1410.60.1

2

0(3.04.)

0(3.04.6)

0(2.04.6)

0(8.12.1)

0(9.11.6)

AmortizaInterestionincomef intangible assets

3

40.02.7

037.01.1

034.01.9

1210.05.4

1120.0.3

FinancingInterest expensecharges in interest expense

TaxAmortizedeffect of bankthe abovefees incladjustmeded intsinterest*

expense

(0(2.02.5)

(0(1.07.3))

(0(1.06.3))

(0(7.20.3))

(0(4.22.6)

Valuation allowances and other tax only items

$

0.

$

0.01

$

(0.

)

$

(0.17)

$

(0.19)

EBITDA

16105.

151.0

16620.

368.2

440.0

Adjusted net income attributable to AECOM - per diluted

Non-core operating losses & transaction related

share

expenses

$

0.43

$

0.55

$

0.55

$

1.22

$

1.5

(2.5)

-

-

5.7

5.6

Restructuring costs

-

31.2

20.3

79.2

96.5

AdjustedWeightedEBITDAaverage shares outstanding - diluted

$

1589.58

$

160182..72

$

16186..85

$

159453..31

$

542161.1

Other income

(4.4)

(2.4)

(3.1)

(11.2)

(9.5)

* Adjusts the income tax expense (benefit) during the period to exclude the impact on our effective tax rate of the pre-tax adjustments shown above.

(95.9)

Depreciation1

(34.0)

(30.0)

(32.8)

(100.1)

Interest income2

3.1

3.6

2.6

8.2

9.6

Noncontrolling interests in income of consolidated

Reconciliationsubsidiaries,of NetnetIncomeof tax Attributable to AECOM to EBITDA to6.1Adjusted EBITDA5.3

and to3Adjusted.1

Income18.1from

12.5

OperatiAmortizationns

of intangible assets included in NCI,

net of tax

0.1

0.1

0.1

0.3

0.2

Net income attributable to AECOM

$

56.0

$

48.5

$

91.1

$

139.4

$

170.5

Adjusted income from operations

$

129.4

$

158.8

$

156.4

$

368.4

$

459.0

Income tax expense (benefit)

27.2

21.6

(7.2

)

(3.1

)

30.3

Income attributable to AECOM

83.2

70.1

83.9

136.3

200.8

1 Excludes depreciation from non-core operating losses, and accelerated depreciation of project management tool;

2 Included in other income;

3 Excludes related amortization

141.1

Depreciation and amortization expense1

42.6

48.7

51.3

125.9

Interest income2

(3.0)

(3.6)

(2.6)

(8.1)

(9.6)

Interest expense3

40.7

37.1

34.9

121.4

112.3

Amortized bank fees included in interest expense

(2.5)

(1.3)

(1.3)

(7.3)

(4.6)

EBITDA

$

161.0

$

151.0

$

166.2

$

368.2

$

440.0

Non-core operating losses & transaction related

expenses

(2.5)

-

-

5.7

5.6

Restructuring costs

-

31.2

20.3

79.2

96.5

Adjusted EBITDA

$

158.5

$

182.2

$

186.5

$

453.1

$

542.1

Other income

(4.4)

(2.4)

(3.1)

(11.2)

(9.5)

Depreciation1

Page 15

(34.0)

(30.0)

(32.8)

(100.1)

(95.9)

Third Quarter Fiscal 2020

Interest income

2

3.1

3.6

2.6

8.2

9.6

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

Three Months Ended

Jun 30,

Mar 31,

Jun 30,

2019

2020

2020

Net cash provided by (used in) operating activities $

76.9

$ (299.0)

$

186.3

Capital expenditures, net

(24.7)

(13.5)

(36.3)

Working capital adjustment from sale of

Management

Services business

-

-

122.0

Free cash flow

$

52.2

$ (312.6)

$

272.0

Third Quarter Fiscal 2020

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AECOM published this content on 04 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 August 2020 15:26:06 UTC