What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 163 added, 141 removed, 645 unchanged (32% of the section changed)

38 unchanged sentences

AECOM STOCKHOLDERS’ EQUITY:

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

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

issued and outstanding 135,702,623 and 136,210,883 shares as of June 30, 2024 and September 30, 2023, respectively

Additional paid-in capital

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of revenue

2 unchanged sentences

Restructuring costs

Income from operations

Income (loss) from operations

Interest income

Interest expense

Income from continuing operations before taxes

Income tax expense for continuing operations

Net income from continuing operations

Net loss from discontinued operations

Income (loss) from continuing operations before taxes

Income tax expense (benefit) for continuing operations

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Net income (loss)

Net income attributable to noncontrolling interests from continuing operations

Net loss (income) attributable to noncontrolling interests from discontinued operations

Net income attributable to noncontrolling interests from discontinued operations

Net income attributable to noncontrolling interests

Net income attributable to AECOM from continuing operations

Net loss attributable to AECOM from discontinued operations

Net income attributable to AECOM

Net income (loss) attributable to AECOM from continuing operations

Net income (loss) attributable to AECOM from discontinued operations

Net income (loss) attributable to AECOM

Net income (loss) attributable to AECOM per share:

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net income (loss)

Other comprehensive income, net of tax:

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

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

Foreign currency translation adjustments

Pension adjustments, net of tax

Other comprehensive (loss) income, net of tax

Comprehensive (loss) income, net of tax

Other comprehensive income, net of tax

Comprehensive income (loss), net of tax

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

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

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

See accompanying Notes to Consolidated Financial Statements.

4 unchanged sentences

Stockholders’

BALANCE AT DECEMBER 31, 2023

BALANCE AT MARCH 31, 2024

( 1,160,441 )

6 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2024

BALANCE AT JUNE 31, 2024

( 1,106,797 )

2 unchanged sentences

Stockholders’

BALANCE AT DECEMBER 31, 2022

BALANCE AT MARCH 31, 2023

Dividends declared

Other comprehensive loss

Other comprehensive income

Issuance of stock

3 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2023

BALANCE AT JUNE 30, 2023

Comprehensive

10 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2024

BALANCE AT JUNE 30, 2024

( 1,106,797 )

10 unchanged sentences

Distributions to noncontrolling interests

BALANCE AT MARCH 31, 2023

BALANCE AT JUNE 30, 2023

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

(unaudited - in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

Equity in losses (earnings) of unconsolidated joint ventures

Equity in losses of unconsolidated joint ventures

Distribution of earnings from unconsolidated joint ventures

15 unchanged sentences

Proceeds from sale of investments

Other investing activities

Proceeds from disposal of property and equipment

6 unchanged sentences

( 2,534,373 )

Cash paid for debt issuance costs

Dividends paid

2 unchanged sentences

Payments to repurchase common stock

Net distributions to noncontrolling interests

Net (distributions) contributions to noncontrolling interests

Other financing activities

Net cash used in financing activities

Net cash provided by (used in) financing activities

EFFECT OF EXCHANGE RATE CHANGES ON CASH

NET DECREASE IN CASH AND CASH EQUIVALENTS

NET INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

11 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 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.

The results of operations for the three and nine months ended June 30, 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.

23 unchanged sentences

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.

During the third quarter of fiscal 2024, the Company resolved contingencies related to the sale of its civil infrastructure construction business and received equity in the counterparty, and the Company recorded a $ 12.7 million gain based on the fair value of the equity received.

Concurrently, the Company participated as a member of a lending group in a revolving credit facility for the counterparty, committing to fund $ 30 million that matures in May 2029.

As of June 30, 2024, the Company has funded $ 27.1 million, all of which was classified as a cash outflow in other investing activities and outstanding.

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

Nine months ended

Cost of revenue

Gross profit (loss)

Equity in earnings of joint ventures

Loss on disposal activities

Income (loss) on disposal activities

Transaction costs

Loss from operations

Loss before taxes

Income tax benefit

Net loss from discontinuing operations

Income (loss) from operations

Other expense

Income (loss) before taxes

Income tax expense (benefit)

Net income (loss) from discontinuing operations

The significant components included in our Consolidated Statement of Cash Flows for the discontinued operations are as follows (in millions):

Three months ended

Six months ended

Nine 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 six months ended March 31, 2024 were as follows:

The changes in the carrying value of goodwill by reportable segment for the nine months ended June 30, 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 March 31, 2024 and September 30, 2023, included in intangible assets—net, in the accompanying consolidated balance sheets, were as follows:

March 31, 2024

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

June 30, 2024

September 30, 2023

1 unchanged sentence

Backlog and Customer relationships

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.

Amortization expense of acquired intangible assets included within cost of revenue was $ 14.1 million and $ 13.9 million for the nine months ended June 30, 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 (six months remaining)

2024 (three 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 six months ended March 31, 2024 and 2023 were $ 4.3 billion and $ 3.6 billion, respectively.

These pass-through revenues for the nine months ended June 30, 2024 and 2023 were $ 6.6 billion and $ 5.6 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

Nine months ended

(in millions)

3 unchanged sentences

Three months ended

Six months ended

Nine months ended

(in millions)

2 unchanged sentences

Total revenue

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 .

As of June 30, 2024, the Company had allocated $ 20.7 billion of transaction price to unsatisfied or partially satisfied performance obligations, of which approximately 58 % 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 $ 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 recognized revenue of $ 764.7 million and $ 869.5 million during the nine months ended June 30, 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 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.

Substantially all contract assets as of June 30, 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 June 30, 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 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.

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

The Company sold trade receivables to financial institutions, of which $ 305.7 million and $ 291.0 million were outstanding as of June 30, 2024 and September 30, 2023, respectively.

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

31 unchanged sentences

Total liabilities and owners’ equity

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.

Total revenue of the consolidated joint ventures was $ 1,799.2 million and $ 1,441.9 million for the nine months ended June 30, 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.

10 unchanged sentences

AECOM’s investment in unconsolidated joint ventures

Six Months Ended

Nine Months Ended

(in millions)

1 unchanged sentence

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

Six Months Ended

Nine 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 and six months ended March 31, 2024 and 2023:

The following table details the components of net periodic benefit cost for the Company’s pension plans for the three and nine months ended June 30, 2024 and 2023:

Three Months Ended

Six Months Ended

March 31, 2024

March 31, 2023

March 31, 2024

March 31, 2023

Nine Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

(in millions)

3 unchanged sentences

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss (gain)

Settlement loss recognized

Net periodic benefit cost (credit)

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

The total amounts of employer contributions paid for the nine months ended June 30, 2024 were $ 8.6 million for U.S.

plans and $ 19.0 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 March 31, 2024:

2024 (six months remaining)

The following table presents, in millions, scheduled maturities of the Company’s debt as of June 30, 2024:

2024 (three months remaining)

Credit Agreement

25 unchanged sentences

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 %.

dollars) and the New Term A Facility 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 1.225 % 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 than U.S.

dollars 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 1.225 %.

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.

Borrowings under the New Term B Facility 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.

1 unchanged sentence

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 and transact with affiliates.

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 Financial Covenant does not apply to the New Term B Facility.

As of June 30, 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 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 .

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

As of June 30, 2024 and September 30, 2023, the Company had $ 1,495.6 million and $ 1,145.6 million, respectively, available under its New Revolving Credit Facility and Original Revolving Credit Facility, respectively .

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 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.

As of June 30, 2024, the estimated fair value of the 2027 Senior Notes was approximately $ 974.9 million.

The fair value of the 2027 Senior Notes as of June 30, 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 March 31, 2024.

The Company was in compliance with the covenants relating to the 2027 Senior Notes as of June 30, 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 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.

At June 30, 2024 and September 30, 2023, these outstanding standby letters of credit totaled $ 909.4 million and $ 878.9 million, respectively.

As of June 30, 2024, the Company had $ 407.1 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 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.

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 nine months ended June 30, 2024 and 2023 was 5.5 % and 5.3 %, respectively.

Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the three and nine months ended June 30, 2024 of $ 4.0 million and $ 6.4 million, respectively, and for the three and nine months ended June 30, 2023 of $ 1.2 million and $ 3.7 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:

March 31, 2024

June 30, 2024

Notional Amount

7 unchanged sentences

February 2023

In the fourth quarter of fiscal 2021, the Company entered into new interest rate swap agreements with a notional value of $ 400.0 million to manage the interest rate exposure of its variable rate loans.

The new swaps became effective February 2023 and terminate in March 2028.

In the fourth quarter of fiscal 2021, the Company entered into interest rate swap agreements with a notional value of $ 400.0 million to manage the interest rate exposure of its variable rate loans.

These swaps became effective February 2023 and terminate in March 2028.

By entering into the swap agreements, the Company converted a portion of the SOFR rate-based liability into a fixed rate liability.

6 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 six months ended March 31, 2024 and 2023.

Gains and losses on these contracts were not material for the nine months ended June 30, 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 non-current liabilities on March 31, 2024 were $ 15.2 million, $ 27.1 million and $ 0.6 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, as well as equity and participation in a revolving credit facility with the civil infrastructure construction business buyer included in other current assets, other non-current assets, and other non-current liabilities on June 30, 2024 were $ 15.3 million, $ 67.1 million and $ 0.1 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 six months ended March 31, 2024 and 2023.

The Company elected the fair value option for its equity method investment in the civil infrastructure construction business buyer due to the availability of quoted prices of identical assets.

The fair value options was also elected for the credit facility.

Both instruments are classified on the consolidated balance sheets as other non-current assets, and changes in fair value of both instruments are classified within other income on the consolidated statements of operations.

The Company records interest income at the stated coupon rate of the credit facility and also classifies it within other income.

Fair value for the equity instruments is determined using Level 1 inputs, and fair value of the credit facility is determined using Level 3 inputs, such as discounted cash flows and estimated discount rates.

The Company recorded a loss of $ 1.6 million in other income in the third quarter of fiscal 2024 representing the decrease in fair value of these instruments.

As of June 30, 2024, the fair value of the equity and revolving credit facility were $ 12.0 million and $ 26.3 million, respectively.

See Note 14 for accumulated balances and reporting period activities of derivatives related to reclassifications out of accumulated other comprehensive loss for the nine months ended June 30, 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.

1 unchanged sentence

The Company grants stock units to employees under its Performance Earnings Program (PEP), whereby units are earned and issued dependent upon meeting established cumulative performance objectives and vest over a three-year service period.

Additionally, the Company issues restricted stock units to employees which are earned based on service conditions.

Additionally, the Company issues restricted stock units to employees and directors which are earned based on service conditions.

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 six months ended March 31 was as follows:

Restricted stock units and PEP units activity for the nine months ended June 30 was as follows:

(in millions)

4 unchanged sentences

PEP units earned

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.

Outstanding at June 30,

Total compensation expense related to these share-based payments including stock options was $ 44.8 million and $ 40.9 million during the nine months ended June 30, 2024 and 2023, respectively.

Unrecognized compensation expense related to total share-based payments outstanding as of June 30, 2024 and September 30, 2023 was $ 70.3 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 23.6 % and 29.9 % for the nine months ended June 30, 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 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.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the nine-month period ended June 30, 2024 were a tax benefit of $ 46.1 million related to income tax credits and incentives, tax expense of $ 39.7 million related to foreign residual income, tax expense of $ 18.2 million related to state income taxes, a tax benefit of $ 8.4 million related to the exclusion of tax on non - controlling interests, tax expense of $ 7.4 million related to changes in valuation allowances, a tax benefit of $ 6.9 million related to an audit settlement, and tax expense of $ 5.6 million related to nondeductible costs.

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 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.

federal corporate tax rate of 21.0 % and the Company’s effective tax rate for the nine-month period ended June 30, 2023 were a tax benefit of $ 35.7 million related to income tax credits and incentives, tax expense of $ 32.2 million related to foreign residual income, and tax expense of $ 21.0 million related to valuation allowances established in the third quarter of fiscal 2023 due to the AECOM Capital impairment charge.

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.

7 unchanged sentences

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.

While the Company 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.

10 unchanged sentences

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

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.

For the three months ended June 30, 2024 and for the nine months ended June 30, 2024 and 2023, equity awards excluded from the calculation of potential common shares were not significant.

The computation of diluted loss per share for the three months ended June 30, 2023 excludes 1.3 million potential common shares due to their antidilutive effect.

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

Three Months Ended

Six Months Ended

Nine Months Ended

(in millions)

13 unchanged sentences

Three Months Ended

Six Months Ended

March 31, 2024

March 31, 2023

March 31, 2024

March 31, 2023

Nine Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

(in millions)

8 unchanged sentences

Balance Sheet Classification

March 31, 2024

June 30, 2024

September 30, 2023

14 unchanged sentences

Total non-current lease liabilities

March 31, 2024

June 30, 2024

September 30, 2023

6 unchanged sentences

Additional cash flow information related to leases is as follows:

Six Months Ended

Nine Months Ended

(in millions)

9 unchanged sentences

(in millions)

2024 (six months remaining)

2024 (three months remaining)

Total lease payments

8 unchanged sentences

Other accrued expenses

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.

Accrued contract costs above include balances related to professional liability accruals of $ 824.1 million and $ 809.6 million as of June 30, 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 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.

Liabilities recorded related to accrued contract losses were not material as of June 30, 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 nine months ended June 30, 2024 and 2023.

During the first nine months of fiscal 2024, the Company incurred restructuring expenses of $ 80.7 million, including labor-related costs of $ 15.1 million and non-labor costs of $ 65.6 million, of which $ 22.4 million was accrued and unpaid at June 30, 2024.

During the first nine months of fiscal 2023, the Company incurred restructuring expenses of $ 50.5 million, including labor-related costs of $ 20.3 million and non-labor costs of $ 30.2 million, of which $ 28.3 million was accrued and unpaid at June 30, 2023.

On June 5, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.22 per share, which was payable on July 19, 2024 to stockholders of record as of July 3, 2024.

As of June 30, 2024, accrued and unpaid dividends totaled $ 32.5 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 and six months ended March 31, 2024 and 2023 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 nine months ended June 30, 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

Other comprehensive income before reclassification

Amounts reclassified from accumulated other comprehensive income

Balances at June 30, 2024

Gain/(Loss) on

Comprehensive

Balances at December 31, 2022

Balances at March 31, 2023

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other comprehensive income (loss)

Balances at March 31, 2023

Balances at June 30, 2023

Gain/(Loss) on

2 unchanged sentences

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other comprehensive loss

Balances at March 31, 2024

Amounts reclassified from accumulated other comprehensive income (loss)

Balances at June 30, 2024

Gain/(Loss) on

3 unchanged sentences

Amounts reclassified from accumulated other comprehensive income (loss)

Balances at March 31, 2023

Balances at June 30, 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 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.

At June 30, 2024 and September 30, 2023, these outstanding standby letters of credit totaled $ 909.4 million and $ 878.9 million, respectively.

As of June 30, 2024, the Company had $ 407.1 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.

3 unchanged sentences

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 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.

At June 30, 2024, the Company was contingently liable in the amount of approximately $ 913.8 million in issued standby letters of credit and $ 5.3 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.

2 unchanged sentences

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

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.

At June 30, 2024, the Company has capital commitments of $ 6.3 million to the Fund over the next 4 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, limited debt repayment, environmental indemnity obligations and other lender required guarantees.

In February 2024, the Company was informed of a potential liability as one of the indemnitors on a divested business’ surety bonds.

The Company does not have sufficient information to determine the range of potential impacts, however, it is reasonably possible that the Company may incur additional costs related to these bonds.

In connection with the resolution of contingencies related to the sale of the civil infrastructure construction business, the Company agreed to act as an additional guarantor on the counterparty’s existing debt, which matures on September 30, 2024.

Department of Energy Deactivation, Demolition, and Removal Project

15 unchanged sentences

Refinery Turnaround Project

A Former Affiliate of the Company entered into an agreement to perform turnaround maintenance services during a planned shutdown at a refinery in Montana in December 2017.

The Former Affiliate of the Company entered into an agreement to perform turnaround maintenance services during a planned shutdown at a refinery in Montana in December 2017.

The turnaround project was completed in February 2019.

13 unchanged sentences

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 (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.

In identifying its reportable segments, the Company considered the financial information provided to its chief operating decision maker (CODM), who is the chief executive officer.

The financial data is organized by geographic region and global business lines.

The CODM uses this information to allocate resources and assess the performance of the segments primarily based on revenue less pass - through revenue and attributable earnings before interest, tax, and amortization expense.

After considering various factors, including the development and utilization of financial data to the CODM, the Company concluded that identifying its operating segments by geography was consistent with the objectives of ASC 280 - 10.

Certain operating segments have been aggregated based on similar characteristics, including long-term financial performance, the nature of services provided, internal process for delivering those services, and types of customers, to arrive at the Company’s reportable segments.

The Company’s Americas reportable 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 and is comprised of the Design and Consulting Services Americas and Construction Management operating segments.

The Company’s International reportable segment provides similar professional services to public and private clients in Europe and India, the Middle East and Africa, Asia, and Australia and New Zealand and is comprised of the operating segments in those geographic regions.

The Company’s AECOM Capital (ACAP) operating segment is its own reportable segment and primarily invests in and develops real estate projects.

Certain expenses that are determined to be related to the Company as a whole are not deemed to be part of an operating segment but are reported within Corporate.

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

2 unchanged sentences

($ in millions)

Three Months Ended March 31, 2024:

Three Months Ended June 30, 2024:

Equity in earnings of joint ventures

3 unchanged sentences

Gross profit as a % of revenue

Three Months Ended March 31, 2023:

Equity in earnings of joint ventures

Three Months Ended June 30, 2023:

Equity in earnings (losses) of joint ventures

General and administrative expenses

2 unchanged sentences

Gross profit as a % of revenue

Six Months Ended March 31, 2024:

Equity in earnings of joint ventures

Nine Months Ended June 30, 2024:

Equity in earnings (losses) of joint ventures

General and administrative expenses

2 unchanged sentences

Gross profit as a % of revenue

Six Months Ended March 31, 2023:

Equity in earnings of joint ventures

Nine Months Ended June 30, 2023:

Equity in earnings (losses) of joint ventures

General and administrative expenses

2 unchanged sentences

Gross profit as a % of revenue

Reportable Segments:

March 31, 2024

June 30, 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