United by Purpose. Unrivaled in Expertise
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UNITED BY PURPOSE. UNRIVALED IN EXPERTISE. 2019 Annual Report Dear Stockholders, Our fiscal year 2019 performance marks yet another significant milestone in AECOM’s history. Across our company, strong execution against our financial and strategic objectives positions us to extend our track record of delivering profitable growth and enhancing value for our employees, clients and investors. As you will read in this report, we are poised to further market leadership and build upon our tremendous momentum as a leading Professional Services firm. Underpinning my optimism is the broad-based strength I see in several aspects of our business. Most important is the positive impact we have as an organization on the communities we serve in tandem with our clients. Throughout fiscal 2019, our teams delivered transformative work that will leave a lasting legacy—from the development of new megacities in the Middle East to skyline-shaping projects in New York City, from iconic new stadiums and arenas in Los Angeles to critical transportation projects in the United Kingdom and first-of-their-kind environmental solutions in Hong Kong. Most important is the Our reputation as the world’s premier infrastructure firm remains stronger than ever. positive impact we have Reflective of our leading global brand, we were again ranked the No. 1 design firm by as an organization on Engineering News-Record in 2019 in several key markets, including transportation, ‘‘ environment and facilities. In addition, we were named one of Fortune’s World’s Most the communities we Admired Companies for the fifth consecutive year. We demonstrated our commitment to fostering the diversity of our workforce with another perfect score in the Human Rights serve in tandem with Campaign’s Corporate Equality Index. And, as a signatory of the UN Global Compact our clients. since 2012, we continued to infuse sustainability principles throughout our company. We could not be such a highly regarded firm if we did not operate safely and with integrity. As such, I was thrilled to see that our safety results in fiscal 2019 continued to set a world-class standard for our industry. As in years past, our established culture of trust, accountability and flawless execution is benefitting the entire organization and ensuring we set high expectations for ethics, compliance and quality. From delivering legacy-defining projects around the world and bettering the communities we serve through our Blueprint for a Better World corporate responsibility platform to advancing innovations that improve our client solutions and generating exceptional shareholder value, I am confident that AECOM will continue to define excellence in the industry. On behalf of all our 86,000 professionals united in purpose to deliver a better world, I thank you for continuing this journey with us. Best Regards, Michael S. Burke Chairman & Chief Executive Officer AECOM 2019 ANNUAL REPORT 1 FINANCIAL PERFORMANCE In fiscal year 2019, we delivered on our strategic and financial objectives by driving double-digit earnings growth and building an even stronger foundation for success. FULL YEAR FINANCIAL ACCOMPLISHMENTS: Adjusted EBITDA1 increased by 13%, which exceeded our guidance and included 25% growth in our pro forma Professional Services2 business. +13% ADJUSTED EBITDA1 $837M $948M FY’18 FY’19 % ADJUSTED $ FREE 10.6 OPERATING MARGIN1 779M CASH FLOW4 Margins in the DCS segment set new records, including Free cash flow4 of $779 million in the fourth quarter a 10.6% adjusted operating margin1 on a net service set a new record and contributed to full year free cash revenue (NSR)3 basis. flow of $694 million, which marked the fifth consecutive year of free cash flow in excess of $600 million. 2 ACCOLADES Throughout the year, we celebrated numerous industry awards that reflect our continued commitment to excellence. World’s Most Admired Companies 2019 Ranked #1 in Transportation and General Building in 2019 “Top 500 Design Firms” Ranked #1 in 2019 “Top 200 Environmental Firms” No. 1 2020 Military Friendly® Supplier 100% Rating on Corporate Equality Diversity Program in the U.S. Index/Best Places to Work for LGBT Equality 2019 Military Friendly® Spouse Employer 2019 Military Friendly® GOLD Employer 400+ 500+ 50+ INNOVATIVE AND SAFETY ACCOLADES FOR TRANSFORMATIONAL PERFORMANCE OUR LEADERS AND PROJECT AWARDS AWARDS EMPLOYEES AECOM 2019 ANNUAL REPORT 3 BUILT TO DELIVER A BETTER WORLD 4 OUR VISION We envision a world where infrastructure creates opportunity for everyone. OUR MISSION We partner with clients to solve the world’s most complex challenges and build legacies for generations to come. VALUES THAT DRIVE US Safeguard Collaborate Deliver We operate ethically and with We build diverse teams that We grow our business through integrity, while prioritizing safety connect expertise to create operational excellence and and security in all that we do. innovative solutions. flawless execution. Anticipate Inspire Dream We understand the complexity of We develop and celebrate We transcend the industry by our clients’ challenges and help our people and elevate the reimagining what is possible— them see further. communities we touch. and realizing it. AECOM 2019 ANNUAL REPORT 5 OUR STRATEGY OUR PRIORITY IS TO CREATE LONG-TERM VALUE FOR OUR PEOPLE, CLIENTS AND SHAREHOLDERS. Looking ahead, AECOM will be focused on higher- returning and lower-risk Professional Services businesses, including our industry-leading design, planning, architecture, engineering, program management and construction management capabilities. © Hufton + Crow 6 5 CORE STRATEGIES BUILD A DIVERSE, WINNING TEAM ELEVATE OUR CLIENT FOCUS The foundation of our strategy is the ability to attract We will partner with our clients to solve their diverse and retain talent by providing a culture of inclusion, needs through technology-driven solutions, delivered development, opportunity and empowerment. by world-class talent. GROW IN CORE MARKETS AND SERVICES MAXIMIZE OPERATIONAL PERFORMANCE We will align our focus and investments to markets We will deliver value by being disciplined and efficient where we are positioned to deliver differentiated in how we evaluate and execute projects through a services and generate value for our clients. commitment to quality, safety and risk management. ADVANCE A CULTURE OF TECHNICAL EXCELLENCE AND INNOVATION We will drive innovation and digital technology into our businesses to unlock new growth opportunities and transform how we deliver value to our clients. SUCCESS MEASURES ENGAGED, STRONGER GREATER ENHANCED HIGHER EMPOWERED CLIENT MARKET REPUTATION PROFITABILITY EMPLOYEES RELATIONSHIPS SHARE AECOM 2019 ANNUAL REPORT 7 TOGETHER, WE THINK WITHOUT LIMITS 8 OUR WORK OUR CLIENTS ARE AT THE HEART OF EVERYTHING WE DO. From planning, design and engineering to consulting and construction management, we deliver professional services throughout the project lifecycle. KEY MARKETS Buildings Energy Environment Governments Transportation Water AECOM 2019 ANNUAL REPORT 9 6 4 1 2 3 7 8 5 Across the globe, our clients in the public and private 9 sectors count on us to push the limits of what’s possible. Our accomplishments are the result of outstanding work from our 86,000 professionals who delivered remarkable impact for the communities we serve, including these highlights: 1. Inglewood Basketball & Entertainment Center 2. Dallas/Fort Worth I-635 LBJ East Freeway 3. Louis Armstrong New Orleans International Airport North Terminal AECOM was selected to lead the design of the AECOM is the lead engineering firm on the Inglewood Basketball & Entertainment Center— Pegasus Link Constructors team to widen and AECOM Hunt, in a joint venture, is serving as an iconic new venue in Inglewood, Calif. Designed reconstruct I-635 LBJ East Freeway in Dallas. construction manager for the Louis Armstrong for optimal engagement of community and fans, The $1.73 billion project will improve mobility and New Orleans International Airport North Terminal. the arena will be home to the L.A. Clippers and reduce traffic congestion in a main Dallas-Fort It was designed with an ease-of-use customer feature a multi-purpose plaza, complete with Worth commuter corridor by expanding the experience in mind, featuring centralized local concert stage, community basketball courts and facility from 12 to 22 lanes. restaurants and retail shops, a new consolidated space for the community to gather. security checkpoint, an open concept design, and a new inbound and outbound in-line baggage system. 10 4. Hudson Yards 5. Virgin Islands Housing Finance Authority 6. Heathrow Terminal 2 Emergency Home Repairs Program Located on Midtown Manhattan’s booming West AECOM will deliver design and project management Side, Hudson Yards is the largest commercial In the wake of devastating back-to-back Category services for a new baggage handling system and development currently under way in the United 5 hurricanes Irma and Maria that struck the U.S. infrastructure to support the expected growth in States. AECOM Tishman’s work encompasses Virgin Islands, our outreach and work in support of passenger numbers at T2. AECOM brings global the Shops & Restaurants, 30 Hudson Yards, 35 FEMA’s Sheltering and Temporary Essential Power expertise in the delivery of aviation projects at Hudson Yards, the fit-out of L’Oreal’s headquarters program resulted in repairs on more than 6,400 some of the world’s biggest and most complex at 10 Hudson Yards and the Plaza, including Vessel homes and 680 roofs, which allowed residents to airports, working behind the scenes to help —an interactive public landmark. return to safe and habitable environments. improve passenger experiences. 7. Phase 1 of NEOM Bay 8. Integrated Waste Management Facilities 9. Melbourne Metro Tunnel Phase 1 AECOM has been selected to drive the delivery of The highly complex and challenging design brief Saudi Arabia’s NEOM Bay mega-project, a special AECOM is the consultant to the Environmental will connect the new 9-kilometer Metro tunnels to economic zone and diverse society offering world- Protection Department of the government of Hong the existing live rail corridors.