Built to Deliver a Better World Letter from Michael S
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Built to deliver a better world Letter from Michael S. Burke Chairman & Chief Executive Officer AECOM Dear Stockholders: This has been a remarkable year for AECOM. We doubled our revenue to $18 billion and grew our adjusted EPS and free cash flow per share by 14% and 52%, respectively. We ended the year with over $40 billion of backlog. And, we progressed our capital allocation strategy designed to generate stockholder value by paying down over $700 million of the debt incurred to execute the URS transaction. Due to our strong execution, we also increased our synergy savings target to $325 million from $250 million at the outset of the year — a sign of increasing confidence in our combined business. But the numbers only represent a portion of our accomplishments as a company. With the URS transaction, we completed the largest combination in our industry’s history, uniting two proud cultures, and began setting the path for new opportunities that leverage our combined strengths, unparalleled talent and global reach. Our focus has moved from integration to transformation, and we continue to drive closer to our destination — to be the premier, fully-integrated global infrastructure firm. As a company, we are in a better position for growth than ever before. AECOM’s combined structure allows us to design, build, finance and operate (DBFO) critical infrastructure assets for our clients around the world and brings together the former operations of AECOM and URS into four principal business groups: Design & Consulting Services; Construction Services; Management Services and AECOM Capital. Our combined DBFO strengths, expertise and relationships are important competitive differentiators for us as we generate more opportunities with clients who already appreciate our creativity, innovation and ability to deliver. There are very few companies in the world that can execute at the scale and technical level that AECOM is known for, and our capabilities are enhanced with this new structure. Our diversified business model proved resilient in the face of market headwinds, but those forces, along with uneven business performance during the integration, challenged our overall operating performance, resulting in adjusted earnings per share of $3.08 for FY15. We enter 2016 with a great deal of momentum. − We are seeing signs of better revenue performance in our DCS Americas group as contracted backlog grew in the fourth quarter. − In Construction Services, we are benefiting from our geographic diversification strategy as we focus on targeted efforts to expand into Asia-Pacific and Europe, Middle East, India and Africa. − Management Services entered 2016 with a solid new business pipeline internationally — another credit to our diversification strategy that took us into new geographies. − We are going to continue to build out AECOM Capital, which has invested in real estate projects with a total capitalization of $3 billion. 2 AECOM Throughout 2015 we remained focused on delivering a better world through flawless execution and by concentrating on the core enablers of our success — people, clients and excellence, as well as our remaining core values — integrity, safety and innovation. People The expertise, passion and thought leadership of our talented people around the world make our success possible. During 2015, we implemented programs and initiatives to empower our people, advance our high-performance culture and engagement, and create more opportunities for growth. Significantly, and included among our Diversity and Inclusion activities, we pushed to increase gender diversity at all levels of the enterprise by ensuring hiring decisions are made from a consistently diverse slate of candidates. AECOM made several key executive hires and appointments this year, including Carla Christofferson, executive vice president and general counsel; General Janet C. Wolfenbarger, USAF Retired, Board of Directors; Mary E. Finch, executive vice president and chief human resources officer; and Heather Rim, senior vice president and chief communications officer. We continue to invest in our people with programs and benefits that are above industry- standard to make AECOM the employer of choice. Clients We are committed to our clients and to setting industry standards for service and delivery. We take ownership for solving our clients’ problems and anticipating new opportunities. In 2015, we focused on delivering the full strengths of our newly combined company to our clients, earning favorable reviews and strong client satisfaction marks. Excellence We believe in delivering unequivocal excellence in everything that we do. We make a positive, lasting impact by applying our global best practices, connected expertise and innovative thinking to solve complex, evolving challenges. I am proud of how we demonstrate our project excellence through our commitment to sustainability. AECOM defines sustainability as helping clients, society and the company address complex challenges by managing financial, natural, social and human capital, with minimum risk. This year, we were recognized for excellence in sustainability by being ranked the #1 Top 100 Green Building Design Firm by Engineering News Record for 2015. Integrity At AECOM, we take pride in how our people conduct themselves with integrity. We are committed to integrity and ethical business practices as we continue to earn our clients’ trust by providing outstanding customer service and acting ethically in all that we do. In 2015, our approach to ethical behavior and compliance with local laws and regulations resulted in accolades such as being named a World’s Most Admired Company by Fortune magazine, an annual list that identifies companies with the strongest reputations across almost all industries. AECOM’s debut on Fortune’s 2015 list reflects recognized progress in the nine key performance areas including ability to attract and retain talented people, quality of management, social responsibility to the community and the environment, innovativeness, quality of products or services, wise use of corporate assets, financial soundness, long-term investment value and effectiveness in doing business globally. AECOM 3 Safety Safety remains a critical component to AECOM’s overall success, and our evolving safety culture continues to put us on a trajectory toward best-in-class performance within our industry. I’m proud to report that during FY15, AECOM achieved a total recordable injury rate (TRIR) 7.5 percent lower than our target. TRIR represents work-related incidents that result in injury and/or ill health requiring medical attention beyond first-aid, restriction of work activities and/or absence from the workplace in order to recover, and measures the frequency of all work-related injuries and illnesses. AECOM’s safety efforts have also been recognized by several safety industry organizations during FY15, including the U.S. National Safety Council, Hong Kong’s Development Bureau and the Construction Industry Council, the Royal Society for the Prevention of Accidents and the Campbell Institute. Innovation Innovation that promotes positive change and tackles the world’s most complex challenges is at the heart of what we do. As a leading, fully integrated global infrastructure company, AECOM counts among its workforce some of the brightest minds in the industry — talented people whose work cuts across the spectrum of design, engineering, construction, financing, government services and operations. AECOM consistently demonstrates an outstanding ability to advance innovation in delivering high performing projects that meet client demands. Built to Deliver a Better World We have built this company to deliver infrastructure and solutions to complex problems that improve people’s lives and seed opportunity for change, growth and resiliency. As a company, we are in a stronger position for growth than ever before. Our clients face tough, interrelated challenges that can only be solved by a company like ours — a company with deep roots, diverse perspectives and an innovative approach. We are proud to be a company that has the people, technology and vision to deliver what others can only imagine. On behalf of everyone at AECOM, I thank you for your continued support. Best Regards, Mike Burke Chairman & Chief Executive Officer January 22, 2016 4 AECOM Board of Directors Michael S. Burke Dr. Robert J. Routs Chairman & Chief Executive Executive Director (retired), Officer, U.S. Downstream Operations, AECOM Royal Dutch Shell, plc John M. Dionisio William P. Rutledge Former Chief Executive Officer, Chief Executive Officer, AECOM Aquanano, LLC James H. Fordyce Clarence T. Schmitz Co-Founder & Co-Chief Co-Founder & Former Chief Executive Officer, Executive Officer, Stone Canyon Industries, LLC Outsource Partners International, Inc. Senator William H. Frist Partner, Douglas W. Stotlar Cressey & Company Former President & Chief Executive Officer, Linda Griego Con-way, Inc. President & Chief Executive Officer, Daniel R. Tishman Griego Enterprises, Inc. Vice Chairman, AECOM David W. Joos Chairman, General Janet C. Wolfenbarger CMS Energy; General (retired), Chairman, United States Air Force Consumers Energy Corporation Dr. William G. Ouchi Sanford & Betty Sigoloff Distinguished Professor in Corporate Renewal, Anderson School of Management, UCLA AECOM 5 AECOM Executive Officers Michael S. Burke W. Troy Rudd Chairman and Chief Executive Executive Vice President, Officer Chief Financial Officer Carla J. Christofferson Daniel R. Tishman