What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2024-02-07 · 195 added, 123 removed, 591 unchanged (35% of the section changed)

38 unchanged sentences

AECOM STOCKHOLDERS’ EQUITY:

Common stock-authorized, 300,000,000 shares of $ 0.01 par value as of December 31, 2023 and September 30, 2023;

issued and outstanding 136,018,182 and 136,210,883 shares as of December 31, 2023 and September 30, 2023, respectively

Common stock-authorized, 300,000,000 shares of $ 0.01 par value as of March 31, 2024 and September 30, 2023;

issued and outstanding 135,872,491 and 136,210,883 shares as of March 31, 2024 and September 30, 2023, respectively

Additional paid-in capital

11 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenue

Equity in (losses) earnings of joint ventures

Equity in earnings (losses) of joint ventures

General and administrative expenses

11 unchanged sentences

Net income attributable to AECOM from continuing operations

Net (loss) income attributable to AECOM from discontinued operations

Net loss attributable to AECOM from discontinued operations

Net income attributable to AECOM

11 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income, net of tax:

Net unrealized loss on derivatives, net of tax

Net unrealized gain (loss) on derivatives, net of tax

Foreign currency translation adjustments

Pension adjustments, net of tax

Other comprehensive income, net of tax

Comprehensive income, net of tax

Other comprehensive (loss) income, net of tax

Comprehensive (loss) income, net of tax

Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax

Comprehensive income attributable to AECOM, net of tax

Comprehensive (loss) income attributable to AECOM, net of tax

See accompanying Notes to Consolidated Financial Statements.

4 unchanged sentences

Stockholders’

BALANCE AT DECEMBER 31, 2023

( 1,109,616 )

Dividends declared

Other comprehensive loss

Issuance of stock

Repurchases of stock

Stock-based compensation

Contributions from noncontrolling interests

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2024

( 1,160,441 )

Comprehensive

Stockholders’

BALANCE AT DECEMBER 31, 2022

Dividends declared

Other comprehensive loss

Issuance of stock

Repurchases of stock

Stock-based compensation

Contributions from noncontrolling interests

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2023

Comprehensive

Stockholders’

BALANCE AT SEPTEMBER 30, 2023

7 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT DECEMBER 31, 2023

BALANCE AT MARCH 31, 2024

( 1,160,441 )

10 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT DECEMBER 31, 2022

BALANCE AT MARCH 31, 2023

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

(unaudited - in thousands)

Three Months Ended December 31,

Six Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

Non-cash stock compensation

Loss on sale of discontinued operations

Foreign currency translation

Changes in operating assets and liabilities:

Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable and contract assets

17 unchanged sentences

( 2,590,331 )

( 1,564,820 )

Dividends paid

Proceeds from issuance of common stock

Proceeds from exercise of stock options

Payments to repurchase common stock

17 unchanged sentences

The consolidated financial statements included in this report have been prepared consistently with the accounting policies described in the Annual Report, except as noted, and should be read together with the Annual Report.

The results of operations for the three months ended December 31, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2024.

The results of operations for the three and six months ended March 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2024.

As discussed in more detail in Note 3, the Company concluded that its self-perform at-risk construction businesses met the criteria for held for sale beginning in the first quarter of fiscal 2020 and met the criteria for discontinued operation classification.

17 unchanged sentences

After consideration of the relevant facts, the Company concluded the assets and liabilities of its self-perform at-risk construction businesses met the criteria for classification as held for sale.

The Company concluded the actual and proposed disposal activities represented a strategic shift that would have a major

effect on the Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with FASB ASC 205-20.

The Company concluded the actual and proposed disposal activities represented a strategic shift that would have a major effect on the Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with FASB ASC 205-20.

Accordingly, the financial results of the self-perform at-risk construction businesses are presented in the Consolidated Statement of Operations as discontinued operations for all periods presented.

2 unchanged sentences

The Company completed the sale of its civil infrastructure construction business to affiliates of Oroco Capital in the second quarter of fiscal 2021.

In the second quarter of fiscal 2023, the Company recorded a $ 38.9 million loss related to a revised estimate of its contingent consideration receivable recognized at the sale.

In the second quarter of fiscal 2024 and 2023, the Company recorded losses related to revised estimates of its contingent consideration receivable recognized in its civil infrastructure construction business of $ 103.1 million and $ 38.9 million, respectively.

The following table represents summarized balance sheet information of assets and liabilities held for sale (in millions):

11 unchanged sentences

Three months ended

Six months ended

Cost of revenue

Gross profit (loss)

Equity in earnings of joint ventures

7 unchanged sentences

Three months ended

Six months ended

Payments for capital expenditures

The Company completed one acquisition in the first quarter of fiscal 2024.

The changes in the carrying value of goodwill by reportable segment for the three months ended December 31, 2023 were as follows:

The changes in the carrying value of goodwill by reportable segment for the six months ended March 31, 2024 were as follows:

September 30,

1 unchanged sentence

International

The gross amounts and accumulated amortization of the Company’s acquired identifiable intangible assets with finite useful lives as of December 31, 2023 and September 30, 2023, included in intangible assets—net, in the accompanying consolidated balance sheets, were as follows:

December 31, 2023

The gross amounts and accumulated amortization of the Company’s acquired identifiable intangible assets with finite useful lives as of March 31, 2024 and September 30, 2023, included in intangible assets—net, in the accompanying consolidated balance sheets, were as follows:

March 31, 2024

September 30, 2023

1 unchanged sentence

Backlog and Customer relationships

Amortization expense of acquired intangible assets included within cost of revenue was $ 4.6 million and $ 4.7 million for the three months ended December 31, 2023 and 2022, respectively.

Amortization expense of acquired intangible assets included within cost of revenue was $ 9.4 million and $ 9.3 million for the six months ended March 31, 2024 and 2023, respectively.

The following table presents estimated amortization expense of existing intangible assets for the remainder of fiscal 2024 and for the succeeding years:

(in millions)

2024 (nine months remaining)

2024 (six months remaining)

Revenue Recognition

4 unchanged sentences

These costs are passed through to clients and, in accordance with GAAP, are included in the Company’s revenue and cost of revenue.

These pass-through revenues for the three months ended December 31, 2023 and 2022 were $ 2.2 billion and $ 1.8 billion, respectively.

These pass-through revenues for the six months ended March 31, 2024 and 2023 were $ 4.3 billion and $ 3.6 billion, respectively.

Recognition of revenue and profit is dependent upon a number of factors, including the accuracy of a variety of estimates made at the balance sheet date, such as engineering progress, material quantities, the achievement of milestones, penalty provisions, labor productivity and cost estimates.

26 unchanged sentences

Three months ended

Six months ended

(in millions)

3 unchanged sentences

Three months ended

Six months ended

(in millions)

2 unchanged sentences

Total revenue

As of December 31, 2023, the Company had allocated $ 21.8 billion of transaction price to unsatisfied or partially satisfied performance obligations, of which approximately 55 % is expected to be satisfied within the next twelve months .

As of March 31, 2024, the Company had allocated $ 21.4 billion of transaction price to unsatisfied or partially satisfied performance obligations, of which approximately 55 % is expected to be satisfied within the next twelve months .

The majority of remaining performance obligation after the first 12 months are expected to be recognized over a two-year period.

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date.

The Company recognized revenue of $ 527.0 million and $ 423.0 million during the three months ended December 31, 2023 and 2022, respectively, that was included in contract liabilities as of September 30, 2023 and 2022, respectively.

The Company recognized revenue of $ 685.3 million and $ 696.9 million during the six months ended March 31, 2024 and 2023, respectively, that was included in contract liabilities as of September 30, 2023 and 2022, respectively.

The Company’s timing of revenue recognition may not be consistent with its rights to bill and collect cash from its clients.

10 unchanged sentences

Total accounts receivable—net

Substantially all contract assets as of December 31, 2023 and September 30, 2023 are expected to be billed and collected within twelve months , except for claims.

Significant claims recorded in contract assets and other non-current assets were approximately $ 160 million and $ 160 million as of December 31, 2023 and September 30, 2023, respectively.

Substantially all contract assets as of March 31, 2024 and September 30, 2023 are expected to be billed and collected within twelve months , except for claims.

Significant claims recorded in contract assets and other non-current assets were approximately $ 170 million and $ 160 million as of March 31, 2024 and September 30, 2023, respectively.

The asset related to the Deactivation, Demolition, and Removal Project retained from the MS Purchaser as defined in and discussed in Note 15 is presented in prepaid expense and other current assets from continuing operations in the Consolidated Balance Sheet.

2 unchanged sentences

Negative macroeconomic trends or delays in payment of outstanding receivables could result in an increase in the estimated credit losses.

No single client accounted for more than 10 % of the Company’s outstanding receivables at December 31, 2023 and September 30, 2023.

The Company sold trade receivables to financial institutions, of which $ 298.5 million and $ 291.0 million were outstanding as of December 31, 2023 and September 30, 2023, respectively.

No single client accounted for more than 10 % of the Company’s outstanding receivables at March 31, 2024 and September 30, 2023.

The Company sold trade receivables to financial institutions, of which $ 291.9 million and $ 291.0 million were outstanding as of March 31, 2024 and September 30, 2023, respectively.

The Company does not retain financial or legal obligations for these receivables that would result in material losses.

1 unchanged sentence

Joint Ventures and Variable Interest Entities

The Company’s joint ventures provide architecture, engineering, program management, construction management, operations and maintenance services, and invest in real estate projects.

The Company’s joint ventures provide architecture, engineering, program management, construction management, and manages investments in real estate projects.

Joint ventures, the combination of two or more partners, are generally formed for a specific project.

27 unchanged sentences

Total liabilities and owners’ equity

Total revenue of the consolidated joint ventures was $ 505.1 million and $ 484.8 million for the three months ended December 31, 2023 and 2022, respectively.

Total revenue of the consolidated joint ventures was $ 1,171.4 million and $ 941.7 million for the six months ended March 31, 2024 and 2023, respectively.

The assets of the Company’s consolidated joint ventures are restricted for use only by the particular joint venture and are not available for the general operations of the Company.

Summary of unaudited financial information of the unconsolidated joint ventures, as derived from their unaudited financial statements, is as follows:

Summary of unaudited financial information of the unconsolidated joint ventures, as derived from their unaudited financial statements, was as follows:

September 30,

8 unchanged sentences

AECOM’s investment in unconsolidated joint ventures

Three Months Ended

Six Months Ended

(in millions)

1 unchanged sentence

Summary of AECOM’s equity in earnings of unconsolidated joint ventures is as follows:

Three Months Ended

Six Months Ended

(in millions)

10 unchanged sentences

The components of net periodic benefit cost other than the service cost component are included in other income in the consolidated statement of operations.

The following table details the components of net periodic benefit cost for the Company’s pension plans for the three months ended December 31, 2023 and 2022:

The following table details the components of net periodic benefit cost for the Company’s pension plans for the three and six months ended March 31, 2024 and 2023:

Three Months Ended

December 31, 2023

December 31, 2022

Six Months Ended

March 31, 2024

March 31, 2023

March 31, 2024

March 31, 2023

(in millions)

5 unchanged sentences

Net periodic benefit cost (credit)

The total amounts of employer contributions paid for the three months ended December 31, 2023 were $ 2.3 million for U.S.

The total amounts of employer contributions paid for the six months ended March 31, 2024 were $ 4.4 million for U.S.

plans and $ 13.1 million for non-U.S.

9 unchanged sentences

Long-term debt

The following table presents, in millions, scheduled maturities of the Company’s debt as of December 31, 2023:

2024 (nine months remaining)

The following table presents, in millions, scheduled maturities of the Company’s debt as of March 31, 2024:

2024 (six months remaining)

Credit Agreement

On February 8, 2021, the Company entered into the 2021 Refinancing Amendment to the Credit Agreement (as amended, modified or otherwise supplemented, the “Credit Agreement”), pursuant to which the Company amended and restated its Syndicated Credit Facility Agreement, dated as of October 17, 2014 (as amended prior to February 8, 2021, the “Original Credit Agreement”), between the Company, as borrower, Bank of America, N.A., as administrative agent, and other parties thereto.

At the time of amendment, the Credit Agreement consisted of a $ 1,150,000,000 revolving credit facility (the “Revolving Credit Facility”) and a $ 246,968,737.50 term loan A facility (the “Term A Facility,” together with the Revolving Credit Facility, the “Credit Facilities”), each of which mature on February 8, 2026.

The outstanding loans under the Term A Facility were borrowed in U.S.

Loans under the Revolving Credit Facility may be borrowed, and letters of credit thereunder may be issued, in U.S.

dollars or in certain foreign currencies.

The proceeds of the Revolving Credit Facility may be used from time to time for ongoing working capital and for other general corporate purposes.

The proceeds of the Revolving Credit Facility and the Term A Loan facility borrowed on February 8, 2021 were used to refinance the existing revolving credit facility and the existing term loan facility under the Original Credit

Agreement and to pay related fees and expenses.

The Credit Agreement permits the Company to designate certain of its subsidiaries as additional co-borrowers from time to time.

Currently, there are no co-borrowers under the Credit Facilities.

On February 8, 2021, the Company entered into the 2021 Refinancing Amendment to Credit Agreement (as amended, modified or otherwise supplemented, the “Credit Agreement”), pursuant to which the Company amended and restated its Syndicated Facility Agreement, dated as of October 17, 2014 (as amended prior to February 8, 2021, the “Original Credit Agreement”), between the Company, as borrower, Bank of America, N.A., as administrative agent, and other parties thereto.

At the time of amendment, the Credit Agreement consisted of a $ 1,150,000,000 revolving credit facility (the “Original Revolving Credit Facility”) and a $ 246,968,737.50 term loan A facility (the “Original Term A Facility,”), each of which would have matured on February 8, 2026.

The proceeds of the Original Revolving Credit Facility and the Original Term A Loan facility borrowed on February 8, 2021 were used to refinance the existing revolving credit facility and the existing term loan facility under the Original Credit Agreement and to pay related fees and expenses.

On April 13, 2021, the Company entered into Amendment No.

10 to the Credit Agreement, pursuant to which the lenders thereunder provided a secured term B credit facility (the “Term B Facility”) to the Company in an aggregate principal amount of $ 700,000,000 .

The Term B Facility matures on April 13, 2028.

The proceeds of the Term B Facility were used to fund the purchase price, fees and expenses in connection with the Company’s cash tender offer to purchase up to $ 700,000,000 aggregate purchase price (not including any accrued and unpaid interest) of its outstanding 5.875 % Senior Notes due 2024.

10 to Credit Agreement, pursuant to which the lenders thereunder provided a secured term B credit facility (the “Original Term B Facility,” and together with the Original Term A Facility and Original Revolving Credit Facility, the “Original Credit Facilities”) to the Company in an aggregate principal amount of $ 700,000,000 .

The Original Term B Facility would have matured on April 13, 2028.

The proceeds of the Original Term B Facility were used to fund the purchase price, fees and expenses in connection with the Company’s cash tender offer to purchase up to $ 700,000,000 aggregate purchase price (not including any accrued and unpaid interest) of its outstanding 5.875 % Senior Notes due 2024.

On June 25, 2021, the Company entered into Amendment No.

11 to the Credit Agreement, pursuant to which lenders thereunder have provided the Company an additional $ 215,000,000 in aggregate principal amount under the Term A Facility.

The Company used the net proceeds from the increase in the Term A Facility (together with cash on hand), to (i) redeem all of the Company’s remaining 5.875 % Senior Notes due 2024 and (ii) pay fees and expenses related to such redemption.

11 to Credit Agreement, pursuant to which lenders thereunder provided the Company an additional $ 215,000,000 in aggregate principal amount under the Original Term A Facility.

The Company used the net proceeds from the increase in the Original Term A Facility (together with cash on hand), to (i) redeem all of the Company’s remaining 5.875 % Senior Notes due 2024 and (ii) pay fees and expenses related to such redemption.

On May 23, 2023, the Company entered into Amendment No.

12 to the Credit Agreement, pursuant to which LIBOR as a benchmark rate of interest was replaced by, in the case of US Dollar-denominated loans, a secured overnight financing rate subject to a spread adjustment, and, in the case of loans denominated in other currencies, other customary successor rates, subject in certain cases to a spread adjustment.

12 to Credit Agreement, pursuant to which LIBOR as a benchmark rate of interest was replaced by, in the case of U.S.

dollar-denominated loans, a secured overnight financing rate subject to a spread adjustment, and, in the case of loans denominated in other currencies, other customary successor rates, subject in certain cases to a spread adjustment.

On May 23, 2023, the Company entered into Amendment No.

13 to the Credit Agreement, pursuant to which the spread adjustments with respect to the Revolving Credit Facility and the Term A Facility were amended.

The applicable interest rate for loans under the Term B Facility is calculated at a per annum rate equal to, at the Company’s option, (a) the Term SOFR (as defined in the Credit Agreement) plus 1.75 % or (b) the Base Rate (as defined in the Credit Agreement) plus 0.75 %.

The applicable interest rate for U.S.

Dollar-denominated loans under the Revolving Credit Facility and the Term A Facility is calculated at a per annum rate equal to, at the Company’s option, (a) the Term SOFR (as defined in the Credit Agreement) plus an applicable margin (the “SOFR Applicable Margin”), which is currently at 1.2250 % or (b) the Base Rate (as defined in the Credit Agreement) plus an applicable margin (the “Base Rate Applicable Margin,” and together with the SOFR Applicable Margin, the “Applicable Margins”), which is currently at 0.2250 %.

The applicable interest rate for loans under the Revolving Credit Facility denominated in other currencies is calculated at a per annum rate equal to a customary floating reference rate for such currency specified in the Credit Agreement plus the SOFR Applicable Margin.

The Credit Agreement includes certain environmental, social and governance (ESG) metrics relating to the Company’s CO 2 emissions and its percentage of employees who identify as women (each, a “Sustainability Metric”).

The Applicable Margins for the Term A Facility and the Revolving Credit Facility and the commitment fees for the Revolving Credit Facility will be adjusted on an annual basis based on the Company’s achievement of preset thresholds for each Sustainability Metric.

Some of the Company’s material subsidiaries (the “Guarantors”) have guaranteed the Company’s obligations of the borrowers under the Credit Agreement, subject to certain exceptions.

13 to Credit Agreement, pursuant to which the spread adjustments with respect to the Original Revolving Credit Facility and the Original Term A Facility were amended.

On April 19, 2024, the Company entered into Amendment No.

14 to Syndicated Facility Agreement, pursuant to which the Company obtained a new $ 1,500,000,000 revolving credit facility (the “New Revolving Credit Facility”), a new $ 750,000,000 term loan A facility (the “New Term A Facility” and, together with the New Revolving Credit Facility, the “New Pro Rata Facilities”) and a new $ 700,000,000 term loan B facility (the “New Term B Facility” and, together with the New Pro Rata Facilities, the “New Credit Facilities”).

The New Revolving Credit Facility and the New Term A Facility mature on April 19, 2029.

The New Term B Facility matures on April 19, 2031.

The New Term A Facility and the New Term B Facility were borrowed in full on April 19, 2024 in U.S.

Loans under the New Revolving Credit Facility may be borrowed, and letters of credit thereunder may be issued, in U.S.

dollars or in certain foreign currencies.

The New Credit Facilities replace in full the Original Revolving Credit Facility, the Original Term A Facility and the Original Term B Facility, and borrowings under the New Credit Facilities were used to refinance in full the Original Credit Facilities and for general corporate purposes.

The Credit Agreement permits the Company to designate certain of its subsidiaries as additional co-borrowers from time to time.

Currently, there are no co-borrowers under the New Credit Facilities.

Borrowings under (a) the New Revolving Credit Facility (in U.S.

dollars) and the New Term A Facility will bear interest at a rate per annum equal to, at the Company’s option, (i) a Term SOFR rate (with a 0 % floor and SOFR adjustment of 0.10 %) or (ii) a base rate (with a 0 % floor), in each case, plus an applicable margin of 1.25 % in the case of the Term SOFR rate and 0.25 % in the case of the base rate, and (b) the New Revolving Credit Facility in currencies other U.S.

dollars will bear interest at a rate per annum equal to the applicable reference rate for such currency (including any related adjustments), plus an applicable margin of 1.25 %.

The applicable margin is subject, in each case, to adjustment based on the Company’s consolidated leverage ratio from time to time.

Borrowings under the New Term B Facility will bear interest at a rate per annum equal to, at the Company’s option, (a) a Term SOFR rate (with a 0 % floor and a SOFR adjustment of 0 %) or (b) a base rate (with a 0 % floor), in each case, plus an applicable margin of 1.875 % in the case of the Term SOFR rate and 0.875 % in the case of the base rate.

Certain of the Company’s material subsidiaries (the “Guarantors”) have guaranteed the Company’s obligations of the borrowers under the Credit Agreement, subject to certain exceptions.

The borrowers’ obligations under the Credit Agreement are secured by a lien on substantially all of the Company’s assets and its Guarantors’ assets, subject to certain exceptions.

The Credit Agreement contains customary negative covenants that include, among other things, limitations on the ability of the Company and certain of its subsidiaries, subject to certain exceptions, to incur liens and debt, make investments, dispositions, and restricted payments, change the nature of their business, consummate mergers, consolidations and the sale of all or substantially all of their respective assets, taken as a whole, and transact with affiliates.

The Company is also required to maintain a consolidated interest coverage ratio of at least 3.00 to 1.00 and a consolidated leverage ratio of less than or equal to 4.00 to 1.00 (subject to certain adjustments in connection with permitted acquisitions), tested on a quarterly basis (the “Financial Covenants”).

The Financial Covenants do not apply to the Term B Facility.

The Company’s consolidated leverage ratio was 2.00 to 1.00 at December 31, 2023.

As of December 31, 2023, the Company was in compliance with the covenants of the Credit Agreement.

The Company is also required to maintain a consolidated leverage ratio of less than or equal to 4.00 to 1.00 (subject to certain adjustments in connection with permitted acquisitions), tested on a quarterly basis (the “Financial Covenants”).

The Financial Covenants do not apply to the New Term B Facility.

As of March 31, 2024, the Company was in compliance with the covenants of the Credit Agreement.

The Credit Agreement contains customary affirmative covenants, including, among other things, compliance with applicable law, preservation of existence, maintenance of properties and of insurance, and keeping proper books and records.

The Credit Agreement contains customary events of default, including, among other things, nonpayment of principal, interest or fees, cross-defaults to other debt, inaccuracies of representations and warranties, failure to perform covenants, events of bankruptcy and insolvency, change of control and unsatisfied judgments, subject in certain cases to notice and cure periods and other exceptions.

At December 31, 2023 and September 30, 2023, letters of credit totaled $ 4.4 million and $ 4.4 million, respectively, under the Company’s Revolving Credit Facility.

As of December 31, 2023 and September 30, 2023, the Company had $ 1,145.6 million and $ 1,145.6 million, respectively, available under its revolving credit facility.

At March 31, 2024 and September 30, 2023, letters of credit totaled $ 4.4 million and $ 4.4 million, respectively, under the Company’s Original Revolving Credit Facility.

As of March 31, 2024 and September 30, 2023, the Company had $ 1,145.6 million and $ 1,145.6 million, respectively, available under its Original Revolving Credit Facility .

2027 Senior Notes

1 unchanged sentence

On June 30, 2017, the Company completed an exchange offer to exchange the unregistered 2027 Senior Notes for registered notes, as well as related guarantees.

As of December 31, 2023, the estimated fair value of the 2027 Senior Notes was approximately $ 979.8 million.

The fair value of the 2027 Senior Notes as of December 31, 2023 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2027 Senior Notes.

As of March 31, 2024, the estimated fair value of the 2027 Senior Notes was approximately $ 977.3 million.

The fair value of the 2027 Senior Notes as of March 31, 2024 was derived by taking the mid-point of the trading prices from an observable market input (Level 2) in the secondary bond market and multiplying it by the outstanding balance of the 2027 Senior Notes.

Interest is payable on the 2027 Senior Notes at a rate of 5.125 % per annum.

5 unchanged sentences

The indenture also contains customary negative covenants.

The Company was in compliance with the covenants relating to the 2027 Senior Notes as of December 31, 2023.

The Company was in compliance with the covenants relating to the 2027 Senior Notes as of March 31, 2024.

Other Debt and Other Items

1 unchanged sentence

The Company’s unsecured credit facilities are primarily used for standby letters of credit issued in connection with general and professional liability insurance programs and for contract performance guarantees.

At December 31, 2023 and September 30, 2023, these outstanding standby letters of credit totaled $ 887.6 million and $ 878.9 million, respectively.

As of December 31, 2023, the Company had $ 406.1 million available under these unsecured credit facilities.

At March 31, 2024 and September 30, 2023, these outstanding standby letters of credit totaled $ 895.3 million and $ 878.9 million, respectively.

As of March 31, 2024, the Company had $ 418.9 million available under these unsecured credit facilities.

Effective Interest Rate

The Company’s average effective interest rate on its total debt, including the effects of the interest rate swap and interest rate cap agreements, during the three months ended December 31, 2023 and 2022 was 5.4 % and 5.1 %, respectively.

Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the three months ended December 31, 2023 and 2022 of $ 1.2 million and $ 1.2 million, respectively.

The Company’s average effective interest rate on its total debt, including the effects of the interest rate swap and interest rate cap agreements, during the six months ended March 31, 2024 and 2023 was 5.5 % and 5.2 %, respectively.

Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the three and six months ended March 31, 2024 of $ 1.2 million and $ 2.4 million, respectively, and for the three and six months ended March 31, 2023 of $ 1.2 million and $ 2.4 million, respectively.

Derivative Financial Instruments and Fair Value Measurements

11 unchanged sentences

The notional principal, fixed rates and related effective and expiration dates of the Company’s outstanding interest rate swap agreements were as follows:

December 31, 2023

March 31, 2024

Notional Amount

17 unchanged sentences

The Company uses foreign currency forward contracts which are not designated as accounting hedges to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary.

Gains and losses on these contracts were not material for the three months ended December 31, 2023 and 2022.

Gains and losses on these contracts were not material for the six months ended March 31, 2024 and 2023.

Fair Value Measurements

The Company’s non-pension financial assets and liabilities recorded at fair value relate to the interest rate swap and interest rate cap agreements included in other current assets, other non-current assets, and other long-term liabilities on December 31, 2023 and were $ 13.9 million, $ 23.5 million and $ 2.4 million, respectively.

The Company’s non-pension financial assets and liabilities recorded at fair value relate to the interest rate swap and interest rate cap agreements included in other current assets, other non-current assets, and other non-current liabilities on March 31, 2024 were $ 15.2 million, $ 27.1 million and $ 0.6 million, respectively.

The fair values of the interest rate swap and interest rate cap agreements included in other current assets and other non-current assets on September 30, 2023 were $ 17.2 million and $ 37.5 million, respectively.

The fair values of the interest rate swap and interest rate cap agreements were derived by taking the net present value of the expected cash flows using observable market inputs (Level 2) such as SOFR rate curves, futures, volatilities and basis spreads (when applicable).

See Note 14 for accumulated balances and reporting period activities of derivatives related to reclassifications out of accumulated other comprehensive loss for the three months ended December 31, 2023 and 2022.

Additionally, there were no material losses recognized in income due to amounts excluded from effectiveness testing from the Company’s interest rate swap agreements.

See Note 14 for accumulated balances and reporting period activities of derivatives related to reclassifications out of accumulated other comprehensive loss for the six months ended March 31, 2024 and 2023.

Additionally, there were no material losses recognized in income due to amounts excluded from effectiveness testing from the Company’s interest rate swap and interest rate cap agreements.

Share-based Payments

2 unchanged sentences

The grant date fair value of PEP awards and restricted stock unit awards is primarily based on that day’s closing market price of the Company’s common stock.

Restricted stock units and PEP units activity for the three months ended December 31 was as follows:

Restricted stock units and PEP units activity for the six months ended March 31 was as follows:

(in millions)

4 unchanged sentences

PEP units earned

Outstanding at December 31,

Total compensation expense related to these share-based payments including stock options was $ 15.1 million and $ 11.9 million during the three months ended December 31, 2023 and 2022, respectively.

Unrecognized compensation expense related to total share-based payments outstanding as of December 31, 2023 and September 30, 2023 was $ 83.6 million and $ 48.3 million, respectively, to be recognized on a straight-line basis over the awards’ respective vesting periods which are generally three years .

The Company’s effective tax rate was 19.5 % and 21.0 % for the three months ended December 31, 2023 and 2022, respectively.

Outstanding at March 31,

Total compensation expense related to these share-based payments including stock options was $ 30.6 million and $ 24.6 million during the six months ended March 31, 2024 and 2023, respectively.

Unrecognized compensation expense related to total share-based payments outstanding as of March 31, 2024 and September 30, 2023 was $ 78.7 million and $ 48.3 million, respectively, to be recognized on a straight-line basis over the awards’ respective vesting periods which are generally three years .

The Company’s effective tax rate was 23.4 % and 23.1 % for the six months ended March 31, 2024 and 2023, respectively.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the three-month period ended December 31, 2023 were a tax benefit of $ 13.0 million related to income tax credits and incentives, tax expense of $ 11.3 million related to foreign residual income, a tax benefit of $ 6.9 million related to an audit settlement, tax expense of $ 4.4 million related to changes in valuation allowances, and tax expense of $ 4.2 million related to state income taxes.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the six-month period ended March 31, 2024 were a tax benefit of $ 29.4 million related to income tax credits and incentives, tax expense of $ 26.2 million related to foreign residual income, tax expense of $ 12.3 million related to state income taxes, a tax benefit of $ 6.9 million related to an audit settlement, and tax expense of $ 6.6 million related to changes in valuation allowances.

All these items, except for the audit settlement, are expected to have a continuing impact on the effective tax rate for the remainder of the fiscal year.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the three-month period ended December 31, 2022 were a tax benefit of $ 8.6 million related to income tax credits and incentives and tax expense of $ 8.5 million related to foreign residual income.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the six-month period ended March 31, 2023 were a tax benefit of $ 23.6 million related to income tax credits and incentives, tax expense of $ 19.1 million related to foreign residual income, and tax expense of $ 9.0 million related to state income taxes.

During the first quarter of fiscal 2024, the Company settled its tax audit in Hong Kong for fiscal year 2011 through fiscal year 2021 and recorded a tax benefit of $ 6.9 million due primarily to changes in uncertain tax positions.

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The Company is currently under tax audit in several jurisdictions including the U.S.

and believes the outcomes which are reasonably possible within the next twelve months, including lapses in statutes of limitations, could result in future adjustments in the liability for uncertain tax positions, but an estimate of the range of the reasonably possible outcomes cannot be made.

where its federal income tax returns for fiscal 2017 through 2020 are being examined by the IRS.

Disputes can arise with tax authorities involving issues related to the timing of deductions, the calculation and use of credits, and the taxation of income in various tax jurisdictions because of differing interpretations or application of tax laws, regulations, and relevant facts.

The IRS is currently auditing certain tax credits and the methodology for calculating the credits.

While the Company has reserves for uncertain tax positions and has historically been able to sustain the credits in previous audit cycles without adjustment, the Company believes it’s reasonably possible there could be an adjustment to the liability for uncertain tax positions within the next twelve months related to this issue.

However, given the early stages of the audit of these credits, the Company is not able to reasonably estimate the range of potential outcomes.

Generally, the Company does not provide for U.S.

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subsidiaries because such basis differences of approximately $ 1.3 billion are able to and intended to be reinvested indefinitely.

If these basis differences were distributed, foreign tax credits could become available under current law to partially or

fully reduce the resulting U.S.

If these basis differences were distributed, foreign tax credits could become available under current law to partially or fully reduce the resulting U.S.

income tax liability.

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The Company includes as potential common shares the weighted average dilutive effects of equity awards using the treasury stock method.

For the three months ended December 31, 2023 and 2022, equity awards excluded from the calculation of potential common shares were not significant.

For the three and six months ended March 31, 2024 and 2023, equity awards excluded from the calculation of potential common shares were not significant.

The following table sets forth a reconciliation of the denominators for basic and diluted earnings per share:

Three Months Ended

Six Months Ended

(in millions)

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Three Months Ended

December 31, 2023

December 31, 2022

Six Months Ended

March 31, 2024

March 31, 2023

March 31, 2024

March 31, 2023

(in millions)

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Balance Sheet Classification

December 31, 2023

March 31, 2024

September 30, 2023

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Total non-current lease liabilities

December 31, 2023

March 31, 2024

September 30, 2023

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Additional cash flow information related to leases is as follows:

Three Months Ended

Six Months Ended

(in millions)

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(in millions)

2024 (nine months remaining)

2024 (six months remaining)

Total lease payments

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Other accrued expenses

Accrued contract costs above include balances related to professional liability accruals of $ 813.8 million and $ 809.6 million as of December 31, 2023 and September 30, 2023, respectively.

Accrued contract costs above include balances related to professional liability accruals of $ 793.8 million and $ 809.6 million as of March 31, 2024 and September 30, 2023, respectively.

The remaining accrued contract costs primarily relate to costs for services provided by subcontractors and other non-employees.

Liabilities recorded related to accrued contract losses were not material as of December 31, 2023 and September 30, 2023.

The Company did not have material revisions to estimates for contracts where revenue is recognized using the input method during the three months ended December 31, 2023 and 2022.

During the first three months of fiscal 2024, the Company incurred restructuring expenses of $ 16.2 million, including personnel and other costs of $ 8.7 million and real estate costs of $ 7.5 million, of which $ 5.0 million was accrued and unpaid at December 31, 2023.

During the first three months of fiscal 2023, the Company incurred restructuring expenses of $ 37.5 million, including personnel and other costs of $ 36.2 million and real estate costs of $ 1.3 million, of which $ 32.6 million was accrued and unpaid at December 31, 2022.

On November 13, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.22 per share, which was paid on January 19, 2024 to stockholders of record as of January 4, 2024.

As of December 31, 2023, accrued and unpaid dividends totaled $ 32.3 million and were classified within other accrued expenses on the consolidated balance sheet.

Liabilities recorded related to accrued contract losses were not material as of March 31, 2024 and September 30, 2023.

The Company did not have material revisions to estimates for contracts where revenue is recognized using the input method during the six months ended March 31, 2024 and 2023.

During the first half of fiscal 2024, the Company incurred restructuring expenses of $ 51.6 million, including personnel and other costs of $ 38.6 million and real estate costs of $ 13.0 million, of which $ 7.3 million was accrued and unpaid at March 31, 2024.

During the first half of fiscal 2023, the Company incurred restructuring expenses of $ 41.4 million, including personnel and other costs of $ 39.0 million and real estate costs of $ 2.4 million, of which $ 30.7 million was accrued and unpaid at March 31, 2023.

On March 21, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.22 per share, which is payable on May 10, 2024 to stockholders of record as of April 24, 2024.

As of March 31, 2024, accrued and unpaid dividends totaled $ 32.1 million and were classified within other accrued expenses on the consolidated balance sheet.

Reclassifications out of Accumulated Other Comprehensive Loss

The accumulated balances and reporting period activities for the three months ended December 31, 2023 and 2022 related to reclassifications out of accumulated other comprehensive loss are summarized as follows (in millions):

The accumulated balances and reporting period activities for the three and six months ended March 31, 2024 and 2023 related to reclassifications out of accumulated other comprehensive loss are summarized as follows (in millions):

Gain/(Loss) on

Comprehensive

Balances at December 31, 2023

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2024

Gain/(Loss) on

Comprehensive

Balances at December 31, 2022

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other comprehensive income (loss)

Balances at March 31, 2023

Gain/(Loss) on

Comprehensive

Balances at September 30, 2023

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Amounts reclassified from accumulated other comprehensive loss

Balances at December 31, 2023

Balances at March 31, 2024

Gain/(Loss) on

1 unchanged sentence

Balances at September 30, 2022

Other comprehensive income (loss) before reclassification

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other comprehensive income (loss)

Balances at December 31, 2022

Balances at March 31, 2023

Commitments and Contingencies

8 unchanged sentences

The Company’s unsecured credit arrangements are used for standby letters of credit issued in connection with general and professional liability insurance programs and for contract performance guarantees.

At December 31, 2023 and September 30, 2023, these outstanding standby letters of credit totaled $ 887.6 million and $ 878.9 million, respectively.

As of December 31, 2023, the Company had $ 406.1 million available under these unsecured credit facilities.

At March 31, 2024 and September 30, 2023, these outstanding standby letters of credit totaled $ 895.3 million and $ 878.9 million, respectively.

As of March 31, 2024, the Company had $ 418.9 million available under these unsecured credit facilities.

Performance arrangements typically have various expiration dates ranging from the completion of the project contract and extending beyond contract completion in some circumstances such as for warranties.

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Generally, under joint venture arrangements, if a partner is financially unable to complete its share of the contract, the other partner(s) may be required to complete those activities.

At December 31, 2023, the Company was contingently liable in the amount of approximately $ 891.9 million in issued standby letters of credit and $ 4.9 billion in issued surety bonds primarily to support project execution.

At March 31, 2024, the Company was contingently liable in the amount of approximately $ 899.7 million in issued standby letters of credit and $ 4.7 billion in issued surety bonds primarily to support project execution.

In the ordinary course of business, the Company enters into various agreements providing financial or performance assurances to clients on behalf of certain unconsolidated partnerships, joint ventures and other jointly executed contracts.

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(the “Fund”), in which the Company indirectly holds an equity interest and has an ongoing capital commitment to fund investments.

At December 31, 2023, the Company has capital commitments of $ 7.1 million to the Fund over the next 5 years .

At March 31, 2024, the Company has capital commitments of $ 7.1 million to the Fund over the next 5 years .

In addition, in connection with the investment activities of AECOM Capital, the Company provides guarantees of certain contractual obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and other lender required guarantees.

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however, the Refinery Turnaround Project, including related claims and liabilities, has been retained by the Company.

Trial is expected to begin in the second quarter of fiscal year 2025.

The Company intends to vigorously prosecute and defend this matter;

however, the Company cannot provide assurance that the Company will be successful in these efforts.

The resolution of this matter and any potential range of loss cannot be reasonably determined or estimated at this time, primarily because the matter raises complex legal issues that Company is continuing to assess.

Reportable Segments

The Company’s reportable segments are presented according to their geographic regions and business activities.

The Company manages its operations under three reportable segments according to their geographic regions and business activities.

The Americas segment provides planning, consulting, architectural and engineering design services, and construction management services to public and private clients in the United States, Canada, and Latin America, while the International segment provides similar professional services to public and private clients in Europe, the Middle East, India, Africa, and the Asia-Australia-Pacific regions.

The Company’s AECOM Capital segment primarily invests in and develops real estate projects.

These reportable segments are organized by the differing specialized needs of the respective clients, and how the Company manages its business.

The Company has aggregated various operating segments into its reportable segments based on their similar characteristics, including similar long term financial performance, the nature of services provided, internal processes for delivering those services, and types of customers.

The Company’s AECOM Capital (ACAP) segment primarily invests in and develops real estate projects.

Although the services provided are similar, these reportable segments are organized by the differing specialized needs of the respective clients, and how the Company manages its business.

The Company has aggregated operating segments into its Americas and International reportable segments based on their similar characteristics, including similar long term financial performance, the nature of services provided, internal processes for delivering those services, and types of customers.

The following tables set forth summarized financial information concerning the Company’s reportable segments:

2 unchanged sentences

( $ in millions)

Three Months Ended December 31, 2023:

Three Months Ended March 31, 2024:

Equity in earnings of joint ventures

1 unchanged sentence

Restructuring costs

Operating income

Gross profit as a % of revenue

Three Months Ended March 31, 2023:

Equity in earnings of joint ventures

General and administrative expenses

Restructuring costs

Operating income (loss)

Gross profit as a % of revenue

Three Months Ended December 31, 2022:

Six Months Ended March 31, 2024:

Equity in earnings of joint ventures

1 unchanged sentence

Restructuring costs

Operating income

Operating income (loss)

Gross profit as a % of revenue

Six Months Ended March 31, 2023:

Equity in earnings of joint ventures

General and administrative expenses

Restructuring costs

Operating income (loss)

Gross profit as a % of revenue

Reportable Segments:

December 31, 2023

March 31, 2024

September 30, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements