AECOM

Good morning and welcome to the AECOM third quarter 2020 conference call. I would like to inform all participants this call is being recorded at the request of AECOM. This broadcast is copyrighted property of AECOM. Any rebroadcast of this information in whole or part without the prior written permission of AECOM is prohibited. As a reminder, AECOM is also simulcasting this presentation with slides at the investor section at www.aecom.com. Later, we will conduct a question and answer session. To ask a question, please press star, then the number one on your telephone keypad. To withdraw your question, press the pound key. I would now like to take the call over to Will Gabrielski, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Operator. I would like to direct your attention to the safe harbor statement on page one of today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations. including expected and potential impact for the COVID-19 pandemic. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. We are using non-GAAP financial measures in our presentation. The appropriate GAAP financial reconciliations are incorporated into our presentation where available, which is posted on our website. As a reminder, we sold the management services business earlier this year and intend to exit our remaining at-risk, self-performed construction businesses. As a result, these businesses are classified as discontinued operations in our financial statements. Today's comments will focus on continuing operations unless otherwise noted. Today's references to adjusted operating margins reflect segment-level performance for the Americas and international segments. We will refer to Net Service Revenue, or NSR, which is defined as revenue excluding subcontractor and other direct costs. Our discussion of margins will be on an NSR basis, unless otherwise noted. Beginning today's call is Mike Burke.

Mike? Thank you, Will, and thanks to all of you for joining us today. I'm joined by Troy Rudd, our Chief Financial Officer, and as we announced in June, our incoming CEO. Laura Filoni, Chief Executive of our EMEA business and incoming president, and Randy Wattring, our Chief Operating Officer. I'll begin today's discussion with a high-level summary of our results. Troy and Laura will then review our performance and outlook in greater detail before turning the call over for a question-and-answer session. I'm proud of our people and very pleased with our Q3 FY 2020 results. For a seventh consecutive quarter, we delivered double-digit growth in EBITDA while hitting our free cash flow targets, continuing to win great new work, growing backlog, and advancing our transformation into our industry's premier professional services firm. For the third quarter, we delivered adjusted EBITDA of $187 million, which is an increase of 18% over the prior year and above our expectations for the quarter. The benefits of our ongoing initiatives to expand margins contributed to this outcome. The segment-adjusted operating margin was 13.2%, an increase of 250 basis points over the prior year, setting a new quarterly record for the professional services business. With $3.1 billion in new project wins during the quarter, our backlog increased by 16% over the prior year and remains near a record. We have more than three years of revenue in backlog and record contracted backlog. This visibility provides us with many strengths to outperform, including the ability to maintain a strong workforce and provide more certainty for our teams, which include the best and brightest minds in our industry. Troy, Laura, Randy, and I all share pride in the incredible efforts our employees are making each day to address our clients' needs. Their efforts continue to make the difference in AECOM rising above an operating environment that changes almost daily because of the COVID-19 pandemic. Given the tremendous progress we are making with substantially improved financial performance and the smooth leadership transition, I plan to accelerate my departure from AECOM and transition my responsibilities to Troy Rudd on August 15th. While we are only six weeks into our transition, Troy and Laura have already proven they are ready to lead this company immediately. I see no reason to further delay this transition. We are all excited about what the future holds for AECOM under their leadership, and we are ready to accelerate the transition to more quickly take advantage of the opportunities in front of us. I remain highly confident in the continued upward trajectory of the business under Troy's leadership. The transformation of our business is not yet complete, But over the past two years, we have simplified our organization through the sale of our management services business, lowered our risk tolerance, improved our margins by almost 500 basis points since FY18, and built a foundation for an incredibly resilient and agile business that allowed us to outperform our sector during the pandemic. After six years, this will be the final time I speak with all of you as CEO of AECOM. I want to thank our shareholders, employees, and all our stakeholders. everyone who counts on the value AECOM creates. I came to AECOM 15 years ago, drawn by its purpose to build a better world. In that time, we've grown from a private company with $1.5 billion in revenue to a public company and market leader with $21 billion in revenue last year. Our innovation and expertise have given rise to iconic projects around the world, from modern airports, ports, and transportation systems to the rebuilding of the World Trade Center. While the look and focus of our great company continues to evolve, the purpose that aligns our professionals around the world is stronger than ever. This has been particularly evident in our response to the coronavirus and the results we are achieving. AECOM is built for moments like these, and our Q3 results and FY20 outlets highlight the momentum that, through Troy's and Laura's continuing guidance, will carry forward well into the future. I have the utmost confidence that they will continue the incredible trajectory of our business and that we have experienced over the past two years. With that, and to go into further detail on our performance, I want to hand it over to our next CEO, Troy Rudd.