AECOM announces capital allocation policy and $1 billion stock repurchase authorization
September 21 2017 - 4:49PM
Business Wire
AECOM to reduce net leverage to 2.5x and immediately thereafter
devote substantially all free cash flow to stock repurchases under
new $1 billion Board repurchase authorization
AECOM (NYSE:ACM), a premier, fully integrated global
infrastructure firm, today announced a formalized capital
allocation policy that provides specificity on intended future uses
of capital, including the authorization by the Company’s Board of
Directors of a new $1 billion stock repurchase program.
Key features of AECOM’s capital allocation policy include the
following:
- Allocating substantially all free cash
flow1 to debt reduction until achieving net debt-to-EBITDA2 of
2.5x, which is expected to occur by the end of fiscal year
2018
- Upon achievement of 2.5x net leverage,
the Company intends to return substantially all free cash flow to
investors through the new $1 billion stock repurchase authorization
as part of the longer-term capital allocation framework
- Acquisitions are expected to be limited
to strategic, niche targets that will not adversely impact the
Company’s 2.5x net leverage target
- Additional details of the Company’s
capital allocation policy will be provided on its fourth quarter
earnings conference call and at its annual Investor Day in
December
“Our formalized capital allocation policy includes a new $1
billion stock repurchase program and reinforces our commitment to
drive stockholder value, as well as our confidence in our strategy,
fully integrated capabilities and the markets we serve,” said
Michael S. Burke, AECOM’s chairman and chief executive officer. “We
have made substantial progress with $1.4 billion of debt reduction
over the past several years. We will continue to focus on debt
reduction towards our 2.5x net leverage target, at which point we
expect to return substantially all free cash flow to our investors
under our new stock repurchase program. Returning capital through
stock repurchases is a core tenet of our long-term capital
allocation policy, which remains focused on maximizing stockholder
value.”
“We have a track record of generating industry leading cash flow
and consistent operating performance, including $1.9 billion of
free cash flow over the past three years and a forecast for at
least $3.5 billion of cumulative free cash flow from fiscal years
2017 through 2021,” said W. Troy Rudd, AECOM’s chief financial
officer. “We are optimizing our capital structure through continued
debt reduction, which will provide us with an improved cost of
capital and enable us to return substantial cash to stockholders in
the future.”
About AECOM
AECOM is built to deliver a better world. We design, build,
finance and operate infrastructure assets for governments,
businesses and organizations in more than 150 countries. As a fully
integrated firm, we connect knowledge and experience across our
global network of experts to help clients solve their most complex
challenges. From high-performance buildings and infrastructure, to
resilient communities and environments, to stable and secure
nations, our work is transformative, differentiated and vital. A
Fortune 500 firm, AECOM had revenue of approximately $17.4 billion
during fiscal year 2016. See how we deliver what others can only
imagine at aecom.com and @AECOM.
Forward-Looking Statements and Non-GAAP Measures
All statements in this press release other than statements of
historical fact are “forward-looking statements” for purposes of
federal and state securities laws, including any estimates or
projections related to our capital allocation policy, future debt
reductions and net leverage, future stock repurchases, future
acquisitions, cumulative free cash flow projections and any other
statements regarding our future business performance. Although we
believe that the expectations reflected in our forward-looking
statements are reasonable, actual results could differ materially
from those projected or assumed in any of our forward-looking
statements. Important factors that could cause our actual results,
performance and achievements, or industry results to differ
materially from estimates or projections contained in our
forward-looking statements include, but are not limited to, the
following: our business is cyclical and vulnerable to economic
downturns and client spending reductions; we are dependent on
long-term government contracts and subject to uncertainties related
to government contract appropriations; governmental agencies may
modify, curtail or terminate our contracts; government contracts
are subject to audits and adjustments of contractual terms; we may
experience losses under fixed-price contracts; we have limited
control over operations run through our joint venture entities; we
may be liable for misconduct by our employees or consultants or our
failure to comply with laws or regulations applicable to our
business; we may not maintain adequate surety and financial
capacity; we are highly leveraged and may not be able to service
our debt and guarantees; we have exposure to political and economic
risks in different countries where we operate as well as currency
exchange rate fluctuations; we may not be able to retain and
recruit key technical and management personnel; we may be subject
to legal and claims and inadequate insurance coverage; we are
subject to environmental law compliance and may not have adequate
nuclear indemnification; there may be unexpected adjustments and
cancellations related to our backlog; we are dependent on partners
and third parties who may fail to satisfy their obligations; we may
not be able to manage pension costs; we may face cybersecurity
issues and data loss; as well as other additional risks and factors
that could cause actual results to differ materially from our
forward-looking statements set forth in our reports filed with
the Securities and Exchange Commission. We do not intend, and
undertake no obligation, to update any forward-looking
statement.
This press release also contains financial information
calculated other than in accordance with U.S. generally accepted
accounting principles (“GAAP”). We use free cash flow to represent
the cash generated after capital expenditures to maintain our
business. In addition, when we provide our long term projections of
free cash flow and net debt-to-EBITDA, the closest corresponding
GAAP measure and a reconciliation of the differences between
non-GAAP expectations and the corresponding GAAP measures is not
available without unreasonable effort due to potentially high
variability, complexity and low visibility as to items that would
be excluded from the GAAP measures in the relevant future period.
Our non-GAAP disclosures have limitations as an analytical tool,
should not be viewed as a substitute for financial information
determined in accordance with GAAP, and should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP, nor is it necessarily comparable to non-GAAP
performance measures that may be presented by other companies.
Footnotes
1 Free cash flow is defined as cash flow from operations
less capital expenditures net of proceeds from disposals. 2 Net
debt-to-EBITDA is comprised of EBITDA as defined in the Company’s
credit agreement, which excludes stock-based compensation, and net
debt as defined as total debt on the Company’s financial
statements, net of cash and cash equivalents.
Reconciliation of Net Cash Provided by Operating
Activities to Free Cash Flow Three Years Ended
Jun 30, 2017 Net cash provided by (used in) operating
activities $ 2,198.9 Capital expenditures, net (278.0 ) Free
cash flow $ 1,920.9
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version on businesswire.com: http://www.businesswire.com/news/home/20170921006168/en/
AECOMInvestors:Will Gabrielski, 213-593-8208Vice
President, Investor
RelationsWilliam.Gabrielski@aecom.comorMedia:Brendan
Ranson-Walsh, 212-739-7212Vice President, Global External
CommunicationsBrendan.Ranson-Walsh@aecom.com
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