AECOM

Good morning and welcome to the AECOM's first quarter 2024 conference call. I would like to inform all participants this call is being recorded at the request of AECOM. This broadcast is a copyrighted property of AECOM and 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. If you have a question, please press star, then the number one on your touchstone phone. If you wish to be removed from the queue, please press star one. I would now like to turn the conference call over to Will Gabrielski, Senior Vice President, Finance, Treasury, and 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. 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 use certain non-GAAP financial measures in our presentation. The appropriate GAAP reconciliations are incorporated into our materials, which are posted to our website. Growth rates are presented on a year-over-year basis and less otherwise noted. Any references to segment margins or segment-adjusted operating margins will reflect the performance for the Americas and international segments. When discussing revenue and revenue growth, we will refer to net service revenue, or NSR, which is defined as revenue excluding pass-through revenue. NSR and backlog growth rates are presented on a constant currency basis unless otherwise noted. Today's remarks will be focused on continuing operations. Our discussion excludes the results of the AECOM capital business, which we announced our intended exit from last year. During the quarter, based on current market conditions, we incurred a $29 million after-tax adjustment to the carrying value of our investments. We continue to expect positive cash recovery as we exit our investments. On today's call, Troy Rudd, our Chief Executive Officer, will review our key accomplishments, our strategy, and our outlook for the business. Laura Pelloni, our President, will discuss key operational successes and priorities. And Garth Kapoor, our Chief Financial and Operations Officer, will review our financial performance and outlook in greater detail. We will conclude with a question and answer session. With that, I will turn the call over to Troy.

Thank you, Will, and thank you all for joining us. Our first quarter performance exceeded our expectations, and I'm very proud of how the organization is delivering on our key priorities. We've established ourselves as a trusted infrastructure consulting firm at a time when funding is accelerating at an unprecedented pace across our markets. As a professional services organization, our people and their passion to deliver a better world create the competitive advantage we bring to our clients. It is through their unrivaled technical expertise and our collaborative culture that we consistently win at a high rate and distinguish ourselves from the competition. To that point, I'm also pleased to report that we were recently recognized as one of Fortune's world's most admired companies for the 10th consecutive year. In addition, our employee satisfaction scores remain at an all-time high. And employee retention means well ahead of both internal and industry benchmarks, which is significantly better than our pre-COVID levels. Our headcount also continues to increase organically across our largest markets, demonstrating the health and strength of our workforce and business. These outcomes demonstrate the value we realize when we consistently invest in our teams through technical and leadership development and the positive benefits to recruiting and retention from winning marquee projects globally. Turning to our financial performance for the quarter, organic NSR in the design business increased by 9% in the Americas and 8% overall. Growth was also especially strong in our global water and transportation markets. The segment adjusted operating margin increased by 100 basis points to 15%, which is a new first quarter high. This performance reflects the high returns we deliver on organic growth and our commitment to efficient delivery. As a result, adjusted EBITDA and adjusted EPS increased by 14% and 25% respectively, which puts us firmly on track to deliver on our full year guidance. During the quarter, we continued to execute on a returns-focused capital allocation policy. Free cash flow was $87 million, and we returned nearly $100 million through repurchases and dividends. In addition, in November, our board approved an increase to the share repurchase authorization to $1 billion, and our January dividend payment reflected a 22% increase in our quarterly dividend program. Supporting future organic growth, our design backlog hit a new record high, and our pipeline continued to expand, reflecting the strength of our end markets and the continued expansion of our addressable market through our day one, day two, day three strategy. To that point, our program management pipeline remains at an all-time high, which is consistent with our long-term aspiration for program management and advisory to represent 50% of our revenue. We are encouraged by our clients' investment plans, the growth of which is apparent in our record pipeline of pursuits. Even more encouragingly, growth is accelerating in the earlier stages of our pipeline, which aligns well with our expectation for an extended period of elevated growth and opportunity. Please turn to the next slide. Our strong start to the year and consistently strong execution as a result of our think and act globally strategy, which we discussed in detail at our investor day in December, Laura will further discuss how our strategy is delivering results across our business, but before that, I'd like to highlight a few notable trends. First, the funding outlook in our core markets has never been stronger. In the Americas, IIJA funding is accelerating, as evidenced by another milestone program management win for Amtrak's Susquehanna Bridge Replacement Project, which will improve operations on one of the busiest rail corridors in the U.S. Additionally, state and local budgets remain strong, Our private sector clients are investing to reshore capacity and adapt to water and energy transition impacts. In Canada, large transit projects are advancing against a backdrop of continued national and provincial investment, and water and mining markets also remain robust. Other international markets are similarly strong. In the UK, growth in the water market is set to accelerate from the substantially expected AMP8 funding. And in Australia, We want two substantial water projects in the quarter that reflect a continued focus amongst our clients on water capacity expansion and achieving their net zero ambitions. Second, investments in sustainability, resilience, and energy transition are expanding rapidly, which is creating new opportunities for which we are ideally suited. Today, more than $1 trillion is spent annually on the energy transition alone, and this is expected to double by the year 2030. As a result, Projects are increasing in size and complexity, and clients are seeking more holistic, programmatic solutions to create execution certainty. For instance, we are helping the New York City Department of Environmental Protection achieve their 80% greenhouse gas reduction goal. Water infrastructure accounts for nearly 15% of the city's emissions, and reducing water's emission is a key element to their plan. Nearly every market and client we serve is working to address a similar challenge, which is evident on a record pipeline. Third, we continue to gain market share organically by winning at a high rate while bidding record levels of work. Our share of $25 million or greater wins represents more than one-third of our wins in the past 12 months, and our overall win rate remained at the historically high 50% mark. Finally, we are successfully investing to build highly complementary revenue streams that pair well with our strong domain expertise and high credibility with clients. A great example is digital consulting. We are helping clients with their digital journeys in markets such as water and transportation. Our recent selection on the UK's Intelligent Automation Framework for the National Health Service showcases our advantage. ACOM was the only infrastructure firm selected amongst the field of traditional IT and management consulting firms, demonstrating the enhanced value proposition we bring to our infrastructure clients and their IT journeys. This is a multi-billion dollar market and a substantial growth opportunity. Importantly, as we look ahead, momentum in the business is strong, and the overall funding environment is robust. As such, we are affirming our fiscal 2024 guidance, which includes an expectation for 20% adjusted EPS growth, resulting from high margin and high returning organic growth. With that, I'll turn the call over to Laura.