What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2025-02-04 · 140 added, 109 removed, 301 unchanged (45% of the section changed)

59 unchanged sentences

• International :

Planning, advisory, consulting, architectural and engineering design services and program management to public and private clients in Europe, the Middle East, India, Africa and the Asia-Australia-Pacific regions in major end markets such as transportation, water, government, facilities, environmental, and energy.

Planning, advisory, consulting, architectural and engineering design services, site supervision and program management to public and private clients in Europe, the Middle East, India, Africa and the Asia-Australia-Pacific regions in major end markets such as transportation, water, government, facilities, environmental, and energy.

• AECOM Capital (ACAP) :

5 unchanged sentences

Our costs consist primarily of the compensation we pay to our employees, including salaries, fringe benefits, the costs of hiring subcontractors, other project-related expenses and sales, general and administrative costs.

At December 31, 2024, we had approximately $974.8 million remaining of the Board’s stock repurchase authorization.

At March 31, 2025, we had approximately $899.2 million remaining of the Board’s stock repurchase authorization.

On November 14, 2024, the Board approved an increase in our stock repurchase authorization to $1.0 billion.

We intend to deploy future available cash towards dividends and stock repurchases consistent with our returns driven capital allocation policy.

We have exited substantially all of our former self-perform at-risk construction businesses.

As part of our ongoing plan to improve profitability and maintain a reduced risk profile, we continuously evaluate our geographic exposure.

We have exited substantially all of our self-perform at-risk construction businesses.

As part of our ongoing plan to improve profitability and maintain a reduced risk profile, we continuously evaluate our business portfolio.

We completed a transaction that transitioned the AECOM Capital team to a new third-party platform in the third quarter of fiscal 2024.

1 unchanged sentence

Results of Operations

Three months ended December 31, 2024 compared to the three months ended December 31, 2023

Three and six months ended March 31, 2025 compared to the three and six months ended March 31, 2024

Consolidated Results

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 Changes March 31,

2025 March 31,

($ in millions)

2 unchanged sentences

Gross profit 290.8 261.1 29.7 11.4 559.2 505.1 54.1 10.7

Equity in earnings (losses) of joint ventures 9.6 (29.0) 38.6 (133.1)

Equity in earnings of joint ventures 6.8 19.5 (12.7) (65.1) 16.4 (9.5) 25.9 (272.6)

General and administrative expenses (40.0) (44.7) 4.7 (10.5) (80.5) (80.4) (0.1) 0.1

1 unchanged sentence

Income from operations 257.6 200.5 57.1 28.5 495.1 363.6 131.5 36.2

Other income 6.9 2.6 4.3 165.4

Other (loss) income (8.7) 2.6 (11.3) (434.6) (1.8) 5.2 (7.0) (134.6)

Interest income 14.5 15.4 (0.9) (5.8) 31.1 27.5 3.6 13.1

12 unchanged sentences

The following table presents the percentage relationship of statement of operations items to revenue:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2024 March 31,

2025 March 31,

Revenue 100.0 % 100.0 % 100.0 % 100.0 %

1 unchanged sentence

Gross profit 7.7 6.6 7.2 6.4

Equity in earnings (losses) of joint ventures 0.2 (0.7)

Equity in earnings of joint ventures 0.2 0.5 0.2 (0.1)

General and administrative expenses (1.1) (1.1) (1.0) (1.0)

1 unchanged sentence

Income from operations 6.8 5.1 6.4 4.6

Other income 0.2 0.1

Other (loss) income (0.2) 0.1 0.0 0.1

Interest income 0.4 0.4 0.4 0.4

2 unchanged sentences

Income tax expense for continuing operations

1.4 1.1 1.0 0.9

Net income from continuing operations 4.5 3.2 4.6 3.0

7 unchanged sentences

Net income attributable to AECOM 3.8 % 0.0 % 4.0 % 1.2 %

Our revenue for the three months ended December 31, 2024 increased $114.3 million, or 2.9%, to $4,014.2 million as compared to $3,899.9 million for the corresponding period last year.

Revenue increased across most of our end markets as a result of increased investment by large, publicly financed, global infrastructure programs including the Infrastructure Investment and Jobs Act in the U.S.

Our revenue for the three months ended March 31, 2025 decreased $172.3 million, or 4.4%, to $3,771.6 million as compared to $3,943.9 million for the corresponding period last year.

Our revenue for the six months ended March 31, 2025 decreased $58.0 million, or 0.7%, to $7,785.8 million as compared to $7,843.8 million for the corresponding period last year.

While revenues in the current period declined from prior year, the Company's portion of revenue excluding pass-through revenue attributable to subcontractors continued to increase.

Underlying revenue excluding pass-through revenues increased across most of our end markets as a result of increased investment by large, publicly financed, global infrastructure programs including the Infrastructure Investment and Jobs Act in the U.S.

and similar large programs in our largest end markets globally.

1 unchanged sentence

Our Transportation end market has been benefiting from incremental investments across the globe to modernize transportation infrastructure and address growth and urbanization trends, while our Environment end market has been benefiting from infrastructure that requires permitting, compliance, and remediation as well as investments in energy.

Our Facilities end market has been benefiting from positive trends in asset maintenance repositioning and demand for modern, efficient facilities.

Our Facilities end market has been benefiting from positive public sector investment, trends in asset maintenance and repositioning as well as demand for modern, efficient facilities.

The quantification of the impact of these trends by end market is noted within our Americas and International reportable segments discussion below, where applicable, and represents substantially all of our revenue change.

2 unchanged sentences

Because these pass-through revenues can change significantly from project to project and period to period, changes in revenue may not be indicative of business trends.

Pass-through revenues for the quarters ended December 31, 2024 and 2023 were $2.2 billion for both periods.

Pass-through revenue as a percentage of total revenue was 55% and 56% during the three months ended December 31, 2024 and 2023, respectively.

Pass-through revenues for the quarters ended March 31, 2025 and 2024 were $1.9 billion and $2.1 billion, respectively.

Pass-through revenue as a percentage of total revenue was 50% and 54% during the three months ended March 31, 2025 and 2024, respectively.

Pass-through revenues for the six months ended March 31, 2025 and 2024 were $4.1 billion and $4.3 billion, respectively.

Pass-through revenue as a percentage of total revenue was 53% and 55% during the six months ended March 31, 2025 and 2024, respectively.

Cost of Revenue

Our cost of revenue increased to $3,745.8 million for the three months ended December 31, 2024 compared to $3,655.9 million for the corresponding period last year, an increase of $89.9 million, or 2.5%.

Substantially all of the change in our cost of revenue for the three months ended December 31, 2024 occurred in our Americas and International reportable segments, which is discussed in more detail below.

Our gross profit for the three months ended December 31 , 2024 increased $24.4 million, or 10.0%, to $268.4 million as compared to $244.0 million for the corresponding period last year.

For the three months ended December 31, 2024, gross profit, as a percentage of revenue, increased to 6.7% from 6.3% in the corresponding period last year.

Our cost of revenue decreased to $3,480.8 million for the three months ended March 31, 2025 compared to $3,682.8 million for the corresponding period last year, a decrease of $202.0 million, or 5.5%.

Our cost of revenue decreased to $7,226.6 million for the six months ended March 31, 2025 compared to 7,338.7 million for the corresponding period last year, a decrease of $112.1 million, or 1.5%.

Substantially all of the change in our cost of revenue for the three and six months ended March 31, 2025 occurred in our Americas and International reportable segments, which is discussed in more detail below.

Our gross profit for the three months ended March 31, 2025 increased $29.7 million, or 11.4%, to $290.8 million as compared to $261.1 million for the corresponding period last year.

For the three months ended March 31, 2025 , gross profit, as a percentage of revenue, increased to 7.7% from 6.6% in the corresponding period last year.

Our gross profit for the six months ended March 31, 2025 increased $54.1 million , or 10.7% , to $559.2 million as compared to $505.1 million for the corresponding period last year.

For the six months ended March 31, 2025 , gross profit, as a percentage of revenue, increased to 7.2% from 6.4% in the corresponding period last year.

Gross profit changes were due to the reasons noted in our Americas and International reportable segments below.

Equity in Earnings of Joint Ventures

Our equity in earnings of joint ventures for the three months ended December 31, 2024 was $9.6 million as compared to equity in losses of $29.0 million in the corresponding period last year.

The increase in equity in earnings of joint ventures for the three months ended December 31, 2024 compared to the same period in the prior year was primarily due to impairment losses of $35.9 million recorded by our AECOM Capital segment in fiscal 2024 that did not repeat in fiscal 2025.

Our equity in earnings of joint ventures for the three months ended March 31, 2025 was $6.8 million as compared to $19.5 million in the corresponding period last year.

Our equity in earnings of joint ventures for the six months ended March 31, 2025 was $16.4 million as compared to equity in losses of $9.5 million in the corresponding period last year.

The decrease in equity in earnings of joint ventures for the three months ended March 31, 2025 compared to the same period in the prior year was primarily due to a favorable close out in our AECOM Capital segment in the prior year that did not repeat in the current year.

The increase in equity in earnings of joint ventures for the six months ended March 31, 2025 compared to the same period in the prior year was primarily due to impairment losses recorded by our AECOM Capital segment in the first half of fiscal 2024 that did not repeat in fiscal 2025.

General and Administrative Expenses

Our general and administrative expenses for the three months ended December 31, 2024 increased $4.8 million, or 13.4%, to $40.5 million as compared to $35.7 million for the corresponding period last year.

For the three months ended December 31, 2024, general and administrative expenses, as a percentage of revenue, was 1.0% which was consistent with the corresponding period last year.

The increase in general and administrative expenses was primarily due to increased costs related to investments to drive organic growth.

Our general and administrative expenses for the three months ended March 31, 2025 decreased $4.7 million, or 10.5%, to $40.0 million as compared to $44.7 million for the corresponding period last year.

For the three months ended March 31, 2025, general and administrative expenses, as a percentage of revenue, was 1.1% which was consistent with the corresponding period last year.

Our general and administrative expenses for the six months ended March 31, 2025 increased $0.1 million, or 0.1%, to $80.5 million as compared to $80.4 million for the corresponding period last year.

For the six months ended March 31, 2025, general and administrative expenses, as a percentage of revenue, was 1.0% which was consistent with the corresponding period last year.

The decrease in general and administrative expenses for the three months ended March 31, 2025 was primarily due to increased costs related to nonrecurring expenses in our AECOM Capital segment in fiscal 2024 that did not repeat in fiscal 2025.

Restructuring Costs

Restructuring costs are comprised of personnel costs, real estate costs, and costs associated with business exits.

No new transformative restructuring actions were initiated during the three months ended December 31, 2024.

During the three months ended December 31, 2023, we incurred restructuring costs of $16.2 million, primarily related to costs incurred to continue to align our real estate portfolio with our employee flexibility initiatives, and continue our exit of certain countries in Southeast Asia.

Our other income for the three months ended December 31, 2024 increased to $6.9 million from $2.6 million for the corresponding period last year.

The increase in other income for the three months ended December 31, 2024 was primarily due to the increase in fair value of our investments measured at fair value.

No new transformative restructuring actions were initiated during the three and six months ended March 31, 2025.

During the three and six months ended March 31, 2024, we incurred total restructuring costs of $35.4 million and $51.6 million, respectively, primarily related to costs incurred to continue to align our real estate portfolio with our employee flexibility initiatives, continue our exit of certain countries in Southeast Asia, drive support function efficiency, and reduce our risk profile.

Other (loss) Income

Our other loss for the three months ended March 31, 2025 was $8.7 million compared to other income of $2.6 million for the corresponding period last year.

Our other loss for the six months ended March 31, 2025 was $1.8 million compared to other income of $5.2 million for the corresponding period last year.

The decreases in other income for the three and six months ended March 31, 2025 were primarily due to the decrease in fair value of our investments measured at fair value.

Interest Income

Our interest income for the three months ended December 31, 2024 increased to $16.6 million from $12.1 million for the corresponding period last year.

The increase in interest income for the three months ended December 31, 2024 was primarily due to an increase in our interest-bearing assets.

Our interest income for the three months ended March 31, 2025 decreased to $14.5 million from $15.4 million for the corresponding period last year.

Our interest income for the six months ended March 31, 2025 increased to $31.1 million from $27.5 million for the corresponding period last year.

The increase in interest income for the six months ended March 31, 2025 was primarily due to an increase in our interest-bearing assets.

Interest Expense

Our interest expense for the three months ended December 31, 2024 was $43.0 million as compared to $41.3 million for the corresponding period last year.

The increase in interest expense for the three months ended December 31, 2024 was primarily due to an increase in our debt as compared to the prior year.

Our interest expense for the three months ended March 31, 2025 was $42.3 million as compared to $47.7 million for the corresponding period last year.

Our interest expense for the six months ended March 31, 2025 was $85.3 million as compared to $89.0 million for the corresponding period last year.

The decreases in interest expense for the three and six months ended March 31, 2025 were primarily due to a decrease in the use of our revolving credit facility as compared to the prior year.

Income Tax Expense

Our income tax expense for the three months ended December 31, 2024 was $29.3 million as compared to

$26.6 million in the corresponding period last year.

The increase in tax expense for the current period compared to the corresponding period last year was due primarily to the tax impact of an increase in pre-tax income of $81.5 million, partially offset by a tax benefit of $20.1 million related to deferred tax assets recognized due to legal entity restructuring implemented in the first quarter of fiscal 2025, and a tax benefit of $6.9 million related to an audit settlement in the first quarter of fiscal 2024 that did not repeat if fiscal 2025.

Our income tax expense for the three months ended March 31, 2025 was $51.2 million as compared to $45.4 million in the corresponding period last year.

The increase in tax expense for the current period compared to the corresponding period last year was due primarily to the tax impact of an increase in pre-tax income of $57.1 million, partially offset by tax benefit of $6.1 million related to changes in uncertain tax positions.

Our income tax expense for the six months ended March 31, 2025 was $80.5 million as compared to $72.0 million in the corresponding period last year.

The increase in tax expense for the current period compared to the corresponding period last year was due primarily to the tax impact of an increase in pre-tax income of $131.5 million, partially offset by a tax benefit of $20.1 million related to deferred tax assets recognized due to legal entity restructuring implemented in the first quarter of fiscal 2025, a tax benefit of $8.4 million related to changes in valuation allowances, and a tax benefit of $6.9 million related to an audit settlement in the first quarter of fiscal 2024 that did not repeat in fiscal 2025.

During the first quarter of fiscal 2025, we recognized deferred tax assets of $20.1 million related to legal entity restructuring.

4 unchanged sentences

As a result of these strategic actions, the self-perform at-risk construction businesses were classified as discontinued operations.

Net loss from discontinued operations was $9.6 million for the three months ended December 31, 2024 and was $1.3 million for the three months ended December 31, 2023, an increase of $8.3 million.

The increase was primarily due to a change in our expected recovery on a project completed prior to the sale of our at-risk power construction business.

Net loss from discontinued operations was $10.3 million for the three months ended March 31, 2025 and was $109.4 million for the three months ended March 31, 2024, a decrease of $99.1 million.

Net loss from discontinued operations was $19.9 million for the six months ended March 31, 2025 and was $110.7 million for the six months ended March 31, 2024, a decrease of $90.8 million.

The decreases in net loss from discontinued operations for the three and six months ended March 31, 2025 were primarily due to revisions of estimated contingent consideration related to the sale of our civil infrastructure construction business in fiscal 2024 that did not repeat in fiscal 2025.

Net Income Attributable to AECOM

The factors described above resulted in net income attributable to AECOM of $167.0 million for the three months ended December 31, 2024 as compared to net income attributable to AECOM of $94.4 million for the three months ended December 31, 2023.

The factors described above resulted in net income attributable to AECOM of $143.4 million and $310.4 million for the three and six months ended March 31, 2025 as compared to net income attributable to AECOM of $1.0 million and $95.4 million for the three and six months ended March 31, 2024.

Results of Operations by Reportable Segment

Three Months Ended

2024 December 31,

($ in millions)

Three Months Ended Six Months Ended

March 31, 2025 March 31, 2024 Change March 31, 2025 March 31, 2024 Change

($ in millions) ($ in millions)

Revenue $ 2,896.7 $ 3,038.6 $ (141.9) (4.7) % $ 6,008.7 $ 6,077.3 $ (68.6) (1.1) %

2 unchanged sentences

The following table presents the percentage relationship of statement of operations items to revenue:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

March 31, 2025 March 31, 2024 March 31, 2025 March 31, 2024

Revenue 100.0 % 100.0 % 100.0 % 100.0 %

1 unchanged sentence

Gross profit 7.3 % 6.1 % 6.7 % 5.8 %

Revenue for our Americas segment for the three months ended December 31, 2024 increased $73.3 million, or 2.4%, to $3,112.0 million as compared to $3,038.7 million for the corresponding period last year.

The increase in revenue for the three months ended December 31, 2024 was primarily driven by organic growth.

Pass-through revenues on contracts for which we subcontract work on behalf of our clients was flat compared to the corresponding period last year.

Revenue from increased project activity in the Americas included growth in our Transportation end market of $58.7 million, or 11.3%, Water and Environment end markets of $35.7 million, or 7.1%, and Energy end market of $19.6 million, or 58.5%, partially offset by a decrease in our Facilities end market of $39.8 million, or 2.0%, compared to the corresponding period last year, which have benefited from the end market trends discussed in the consolidated revenue section above.

Revenue for our Americas segment for the three months ended March 31, 2025 decreased $141.9 million, or 4.7%, to $2,896.7 million as compared to $3,038.6 million for the corresponding period last year.

The decrease in revenue for the three months ended March 31, 2025 was primarily due to a decrease in pass-through revenues on contracts for which we subcontract work on behalf of our clients of $193.2 million compared to the corresponding period last year.

Revenue from increased project activity in the Americas included growth in our Transportation end market of $40.8 million, or 7.3%, offset by decreases in our Water and Environment end markets of $14.9 million, or 2.7%, and in our Facilities end market of $178.1 million, or 18.4%, compared to the corresponding period last year.

Revenue for our Americas segment for the six months ended March 31, 2025 decreased $68.6 million, or 1.1%, to $6,008.7 million as compared to $6,077.3 million for the corresponding period last year.

Pass-through revenues on contracts for which we subcontract work on behalf of our clients decreased $193.3 million compared to the corresponding period last year.

Revenue from increased project activity in the Americas included growth in our Transportation end market of $99.4 million, or 9.2%, and our Water and Environment end markets of $20.8 million, or 2.0%, offset by a decrease in our Facilities end market of $217.8 million, or 5.7%, compared to the corresponding period last year.

Cost of Revenue

Cost of revenue for our Americas segment for the three months ended December 31, 2024 increased by $54.1 million, or 1.9%, to $2,921.8 million compared to $2,867.7 million for the corresponding period last year.

The increase in cost of revenue for the three months ended December 31, 2024 was consistent with the increases in revenue.

The increase in cost of revenue for the three months ended December 31, 2024 was due to higher labor volume compared to the same period in the prior year.

Gross profit for our Americas segment for the three months ended December 31, 2024 increased $19.2 million, or 11.2%, to $190.2 million as compared to $171.0 million for the corresponding period last year.

As a percentage of revenue, gross profit increased to 6.1% of revenue for the three months ended December 31, 2024 from 5.6% in the corresponding period last year.

The increase in gross profit and gross profit as a percentage of revenue for the three months ended December 31, 2024 was primarily due to revenue growth and delivery efficiencies realized from cost reductions.

In addition, underlying revenue, excluding pass-through revenues, increased as noted above.

Cost of revenue for our Americas segment for the three months ended March 31, 2025 decreased by $170.0 million, or 6.0%, to $2,684.2 million compared to $2,854.2 million for the corresponding period last year.

Cost of revenue for our Americas segment for the six months ended March 31, 2025 decreased by $115.9 million, or 2.0%, to $5,606.0 million compared to $5,721.9 million for the corresponding period last year.

The decreases in cost of revenue for the three and six months ended March 31, 2025 were consistent with the decreases in revenue and was due to the decreases in subcontractor and other direct costs.

Gross profit for our Americas segment for the three months ended March 31, 2025 increased $28.1 million, or 15.2%, to $212.5 million as compared to $184.4 million for the corresponding period last year.

As a percentage of revenue, gross profit increased to 7.3% of revenue for the three months ended March 31, 2025 from 6.1% in the corresponding period last year.

Gross profit for our Americas segment for the six months ended March 31, 2025 increased $47.3, or 13.3%, to $402.7 million as compared to $355.4 million for the corresponding period last year.

As a percentage of revenue, gross profit increased to 6.7% of revenue for the six months ended March 31, 2025 from 5.8% in the corresponding period last year.

The increases in gross profit and gross profit as a percentage of revenue for the three and six months ended March 31, 2025 were primarily due to the benefit from restructuring actions taken last year, growth in enterprise capability centers, ongoing continuous improvement initiatives, and growth in higher margin advisory services.

International

Three Months Ended

2024 December 31,

($ in millions)

Three Months Ended Six Months Ended

March 31, 2025 March 31, 2024 Change March 31, 2025 March 31, 2024 Change

($ in millions) ($ in millions)

Revenue $ 874.8 $ 904.8 $ (30.0) (3.3) % $ 1,776.8 $ 1,765.8 $ 11.0 0.6 %

2 unchanged sentences

The following table presents the percentage relationship of statement of operations items to revenue:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

March 31, 2025 March 31, 2024 March 31, 2025 March 31, 2024

Revenue 100.0 % 100.0 % 100.0 % 100.0 %

1 unchanged sentence

Gross profit 8.9 % 8.4 % 8.8 % 8.4 %

Revenue for our International segment for the three months ended December 31, 2024 increased $41.0 million, or 4.8%, to $902.0 million as compared to $861.0 million for the corresponding period last year.

The increase in revenue for the three months ended December 31, 2024 was primarily due to growth in the Middle East of $34.7 million and the U.K.

of $4.1 million, partially offset by a decrease in Australia of $7.9 million, compared to the corresponding period last year.

Growth was led by our Facilities end market, which increased $51.4 million, or 15.6%, partially offset by a decrease in our Transportation end market of $13.3 million, or 4.2%, compared to the corresponding period last year, which have benefited from the end market trends discussed in the consolidated revenue section above.

Revenue for our International segment for the three months ended March 31, 2025 decreased $30.0 million, or 3.3%, to $874.8 million as compared to $904.8 million for the corresponding period last year.

The decrease in revenue for the three months ended March 31, 2025 was primarily due to a decrease in pass-through revenues of $26.5 million compared to the corresponding period in the prior year.

Revenue increased in our Water and Environment end market by $22.1 million, or 12.5%, offset by decreases in our Facilities end market, of $18.4 million, or 4.8%, and in our Transportation end market of $32.1 million, or 10.1%, compared to the corresponding period last year.

Revenue for our International segment for the six months ended March 31, 2025 increased $11.0 million, or 0.6%, to $1,776.8 million as compared to $1,765.8 million for the corresponding period last year.

Growth was led by our Facilities end market, which increased $34.3 million, or 4.8%, and our Water and Environment end market, which increased by $22.4 million, or 6.1%, partially offset by a decrease in our Transportation end market of $45.7 million, or 7.2%, compared to the corresponding period last year, which have benefited from the end market trends discussed in the consolidated revenue section above.

Cost of Revenue

Cost of revenue our International segment for the three months ended December 31, 2024 increased $35.8 million, or 4.5%, to $824.0 million as compared to $788.2 million for the corresponding period last year.

The increase in cost of revenue for the three months ended December 31, 2024 was consistent with the increase in revenue and was due to increases in subcontractor and other direct costs of $20.7 million and labor expenses of $15.1 million.

Gross profit for our International segment for the three months ended December 31, 2024 increased $5.2 million, or 7.1%, to $78.0 million as compared to $72.8 million for the corresponding period last year.

As a percentage of revenue, gross profit increased to 8.6% of revenue for the three months ended December 31, 2024 from 8.5% in the corresponding period last year.

The increase in gross profit and gross profit as a percentage of revenue for the three months ended December 31, 2024 were primarily due to an increase in revenue and reduced costs resulting from ongoing exiting of lower margin countries, ongoing investments to expand enterprise capability centers, shared service centers, and delivery efficiencies.

Cost of revenue for our International segment for the three months ended March 31, 2025 decreased $32.0 million, or 3.9%, to $796.6 million as compared to $828.6 million for the corresponding period last year.

The decrease in cost of revenue for the three months ended March 31, 2025 was consistent with the decrease in revenue and was due to the decreases in subcontractor and other direct costs.

Cost of revenue for our International segment for the six months ended March 31, 2025 increased $3.8 million, or 0.2%, to $1,620.6 million as compared to $1,616.8 million for the corresponding period last year.

The increase in cost of revenue for the six months ended March 31, 2025 was consistent with the increase in revenue.

Gross profit for our International segment for the three months ended March 31, 2025 increased $2.0 million, or 2.6%, to $78.2 million as compared to $76.2 million for the corresponding period last year.

As a percentage of revenue, gross profit increased to 8.9% of revenue for the three months ended March 31, 2025 from 8.4% in the corresponding period last year.

Gross profit for our International segment for the six months ended March 31, 2025 increased $7.2 million, or 4.8%, to $156.2 million as compared to $149.0 million for the corresponding period last year.

As a percentage of revenue, gross profit increased to 8.8% of revenue for the six months ended March 31, 2025 from 8.4% in the corresponding period last year.

The increases in gross profit and gross profit as a percentage of revenue for the three and six months ended March 31, 2025 were primarily due to benefits from restructuring actions taken last year, ongoing exits from lower margin countries, growth in the enterprise capability centers, and continuous improvement initiatives.

AECOM Capital

Three Months Ended

2024 December 31,

($ in millions)

Three Months Ended Six Months Ended

March 31, 2025 March 31, 2024 Change March 31, 2025 March 31, 2024 Change

($ in millions) ($ in millions)

Revenue $ 0.1 $ 0.5 $ (0.4) (80.0) % $ 0.3 $ 0.7 $ (0.4) (57.1) %

Equity in earnings (losses) of joint ventures $ 1.2 $ (36.9) $ 38.1 (103.3) %

Equity in (losses) earnings of joint ventures $ (2.1) $ 9.7 $ (11.8) (121.6) % $ (0.9) $ (27.2) $ 26.3 (96.7) %

General and administrative expenses $ (2.8) $ (9.7) $ 6.9 (71.1) % $ (5.2) $ (12.1) $ 6.9 (57.0) %

Equity in earnings of joint ventures for the three months ended December 31, 2024 increased $38.1 million, or 103.3%, to $1.2 million compared to a loss of $36.9 million for the corresponding period last year.

The change in equity in earnings of joint ventures for the three months ended December 31, 2024 was primarily due to impairment losses of $35.9 million recognized in the fiscal 2024 that did not repeat in fiscal 2025.

Equity in earnings of joint ventures for the three months ended March 31, 2025 decreased $11.8 million, or 121.6%, to a loss of $2.1 million compared to earnings of $9.7 million for the corresponding period last year.

The change in equity in earnings of joint ventures for the three months ended March 31, 2025 was primarily due to favorable close out of an investment in the prior year that did not repeat in the current year.

Equity in losses of joint ventures for the six months ended March 31, 2025 decreased $26.3 million, or 96.7%, to $0.9 million compared to a loss of $27.2 million for the corresponding period last year.

The change in equity in losses of joint ventures for the six months ended March 31, 2025 was primarily due to impairment losses of $35.9 million recognized in the fiscal 2024 that did not repeat in fiscal 2025.

We experience seasonal trends in our business.

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subsidiaries because such basis differences are able to and intended to be reinvested indefinitely.

At December 31, 2024, we have determined that we will continue to indefinitely reinvest the earnings of some foreign subsidiaries and, therefore, we will continue to account for these undistributed earnings based on our existing accounting under ASC 740 and not accrue additional tax.

At March 31, 2025, we have determined that we will continue to indefinitely reinvest the earnings of some foreign subsidiaries and, therefore, we will continue to account for these undistributed earnings based on our existing accounting under ASC 740 and not accrue additional tax.

Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the complexities of the hypothetical calculation.

Based on the available sources of cash flows discussed above, we anticipate we will continue to have the ability to permanently reinvest these remaining amounts.

At December 31, 2024, cash and cash equivalents, including cash and cash equivalents included in current assets held for sale, were $1,584.7 million, a decrease of $0.2 million from $1,584.9 million at September 30, 2024.

Net cash provided by operating activities was $151.1 million for the three months ended December 31, 2024 as compared to $143.1 million for the three months ended December 31, 2023.

At March 31, 2025, cash and cash equivalents, including cash and cash equivalents included in current assets held for sale, were $1,600.1 million, a decrease of $15.2 million from $1,584.9 million at September 30, 2024.

Net cash provided by operating activities was $341.7 million for the six months ended March 31, 2025 as compared to $237.4 million for the six months ended March 31, 2024.

The change was primarily attributable to an increase in net income of approximately $214.1 million and cash provided by changes in working capital of $24.7 million, partially offset by a decrease in adjustments for non-cash items of approximately $134.5 million.

The sale of trade receivables to financial institutions included in operating cash flows increased $66.2 million during the three months ended December 31, 2024 compared to the three months ended December 31, 2023.

The sale of trade receivables to financial institutions included in operating cash flows increased $63.6 million during the six months ended March 31, 2025 compared to the six months ended March 31, 2024.

We expect to continue to sell trade receivables in the future as long as the terms continue to remain favorable to us.

Net cash used in investing activities was $24.7 million for the three months ended December 31, 2024, as compared to $86.8 million for the three months ended December 31, 2023.

The change was primarily attributable to cash repayments of $16.3 million on the revolving credit facility from the counterparty to our sale of our civil infrastructure construction business and a decrease in cash payments for capital expenditures of approximately $16.0 million.

Net cash used in financing activities was $121.3 million for the three months ended December 31, 2024 as compared to $126.3 million for the three months ended December 31, 2023.

The decrease from prior year was primarily attributable to a $33.2 million decrease in stock repurchases under our stock repurchase program partially offset by higher distributions to noncontrolling interests of $24.8 million.

Net cash used in investing activities was $86.0 million for the six months ended March 31, 2025, as compared to $121.9 million for the six months ended March 31, 2024.

The change was primarily attributable to cash repayments of $14.3 million on the revolving credit facility from the counterparty to our sale of our civil infrastructure construction business, a $25.5 million decrease in investments in unconsolidated joint ventures and a decrease in cash payments for capital expenditures of approximately $24.1 million, partially offset by cash outflow from the deconsolidation of a discontinued operation of $45.4 million.

Net cash used in financing activities was $236.4 million for the six months ended March 31, 2025 as compared to $188.4 million for the six months ended March 31, 2024.

The change from the prior year was primarily attributable to a $24.4 million increase in stock repurchases under our stock repurchase program and higher distributions to noncontrolling interests of $38.8 million, partially offset by higher contributions from noncontrolling interests of $13.8 million.

Total borrowings under our Credit Agreement may vary during the period as we regularly draw and repay amounts to fund working capital.

Working Capital

Working capital, or current assets less current liabilities, increased $57.8 million, or 7.2%, to $859.8 million at December 31, 2024 from $802.0 million at September 30, 2024.

Net accounts receivable and contract assets, net of contract liabilities, decreased to $3,144.0 million at December 31, 2024 from $3,301.4 million at September 30, 2024.

Days Sales Outstanding (DSO), which includes net accounts receivable and contract assets, net of contract liabilities, was 69 days at December 31, 2024 compared to 70 days at September 30, 2024.

Working capital, or current assets less current liabilities, increased $113.6 million, or 14.2%, to $915.6 million at March 31, 2025 from $802.0 million at September 30, 2024.

Net accounts receivable and contract assets, net of contract liabilities, decreased to $3,143.5 million at March 31, 2025 from $3,301.4 million at September 30, 2024.

Days Sales Outstanding (DSO), which includes net accounts receivable and contract assets, net of contract liabilities, was 73 days at March 31, 2025 compared to 70 days at September 30, 2024.

In Note 4, Revenue Recognition, in the notes to our consolidated financial statements, a comparative analysis of the various components of accounts receivable is provided.

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The following table presents, in millions, scheduled maturities of our debt as of December 31, 2024:

2025 (nine months remaining) $ 61.3

2025 (six months remaining) $ 53.4

Thereafter 662.8

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dollars or in certain foreign currencies.

The New Credit Facilities replace in full our existing revolving credit facility, term loan A facility and term loan B facility, and borrowings under the New Credit Facilities were

used to refinance in full our existing credit facilities and for general corporate purposes.

The New Credit Facilities replace in full our existing revolving credit facility, term loan A facility and term loan B facility, and borrowings under the New Credit Facilities were used to refinance in full our existing credit facilities and for general corporate purposes.

The Credit Agreement permits us to designate certain of our subsidiaries as additional co-borrowers from time to time.

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

As of December 31, 2024, we were in compliance with the covenants of the Credit Agreement.

As of March 31, 2025, we were 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, 2024 and September 30, 2024, letters of credit totaled $4.4 million and $4.4 million, respectively, under our New Revolving Credit Facility.

As of December 31, 2024 and September 30, 2024, we had $1,495.6 million and $1,495.6 million, respectively, available under our New Revolving Credit Facility.

At March 31, 2025 and September 30, 2024, letters of credit totaled $4.4 million and $4.4 million, respectively, under our New Revolving Credit Facility.

As of March 31, 2025 and September 30, 2024, we had $1,495.6 million and $1,495.6 million, respectively, available under our New Revolving Credit Facility.

2027 Senior Notes

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

As of December 31, 2024, 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, 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 March 31, 2025, the estimated fair value of the 2027 Senior Notes was approximately $997.3 million.

The fair value of the 2027 Senior Notes as of March 31, 2025 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.

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The indenture also contains customary negative covenants.

We were in compliance with the covenants relating to the 2027 Senior Notes as of December 31, 2024.

We were in compliance with the covenants relating to the 2027 Senior Notes as of March 31, 2025.

Other Debt and Other Items

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The 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, 2024 and September 30, 2024, these outstanding standby letters of credit totaled $930.2 million and $934.5 million, respectively.

As of December 31, 2024, we had $390.9 million available under these unsecured credit facilities.

At March 31, 2025 and September 30, 2024, these outstanding standby letters of credit totaled $889.3 million and $934.5 million, respectively.

As of March 31, 2025, we had $387.5 million available under these unsecured credit facilities.

Effective Interest Rate

Our average effective interest rate on our total debt, including the effects of the interest rate swap agreements and interest rate cap agreements during the three months ended December 31, 2024 and 2023 was 5.2% and 5.4%, respectively.

Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the three months ended December 31, 2024 and 2023 of $1.4 million and $1.2 million, respectively.

Our average effective interest rate on our total debt, including the effects of the interest rate swap agreements and interest rate cap agreements during the six months ended March 31, 2025 and 2024 was 5.1% and 5.5%, 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, 2025 of $1.2 million and $2.6 million, respectively, and for the three and six months ended March 31, 2024 of $1.2 million and $2.4 million, respectively.

Other Commitments

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However, if we acquire additional businesses in the future or if we embark on other capital-intensive initiatives, additional working capital may be required.

Under our secured revolving credit facility and other facilities discussed in Other Debt and Other Items above, as of December 31, 2024, there was approximately $934.6 million, including both continuing and discontinued operations, outstanding under standby letters of credit primarily issued in connection with general and professional liability insurance programs and for contract performance guarantees.

Under our secured revolving credit facility and other facilities discussed in Other Debt and Other Items above, as of March 31, 2025, there was approximately $893.7 million, including both continuing and discontinued operations, outstanding under standby letters of credit primarily issued in connection with general and professional liability insurance programs and for contract performance guarantees.

For those projects for which we have issued a performance guarantee, if the project subsequently fails to meet guaranteed performance standards, we may either incur significant additional costs or be held responsible for the costs incurred by the client to achieve the required performance standards.

We recognized on our balance sheet the funded status of our pension benefit plans, measured as the difference between the fair value of plan assets and the projected benefit obligation.

At December 31, 2024, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of approximately $119.9 million.

The total amounts of employer contributions paid for the three months ended December 31, 2024 were $2.9 million for U.S.

At March 31, 2025, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of approximately $112.1 million.

The total amounts of employer contributions paid for the six months ended March 31, 2025 were $4.8 million for U.S.

plans and $10.9 million for non-U.S.

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Refer to our Annual Report on Form 10-K for the year ended September 30, 2024 for a discussion of our contractual obligations.

There have been no changes, outside of the ordinary course of business, to these contractual obligations during the three months ended December 31, 2024.

There have been no changes, outside of the ordinary course of business, to these contractual obligations during the six months ended March 31, 2025.

Condensed Combined Financial Information

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All intercompany balances and transactions are eliminated in the presentation of the combined financial statements.

Amounts provided do not represent our total consolidated amounts as of December 31, 2024 and September 30, 2024, and for the three months ended December 31, 2024.

Amounts provided do not represent our total consolidated amounts as of March 31, 2025 and September 30, 2024, and for the six months ended March 31, 2025.

Condensed Combined Balance Sheets

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(unaudited - in millions)

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Current assets $ 3,491.6 $ 3,405.2

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(unaudited - in millions)

For the three months ended

December 31, 2024

For the six months ended

March 31, 2025

Revenue $ 4,565.5

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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 2. Management’s Discussion and Analysis