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What changed in AECOM's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AECOM's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+295 added−326 removedSource: 10-K (2023-11-15) vs 10-K (2022-11-17)

Top changes in AECOM's 2023 10-K

295 paragraphs added · 326 removed · 256 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

71 edited+13 added−13 removed49 unchanged
Biggest changeProgram and construction management contracts may employ small or large project teams and, in many cases, operate as an outsourcing arrangement with our staff located at the project site. 4 Table of Contents ​ We provide the services in these segments both directly and through joint ventures or similar arrangements to the following end markets or business sectors: Transportation. ● Transit and Rail.
Biggest changeWe provide the services in these segments both directly and through joint ventures or similar arrangements to the following end markets or business sectors: Transportation. ● Transit and Rail. Light rail, heavy rail (including highspeed, commuter and freight) and multimodal transit projects. ● Marine, Ports and Harbors.
Freedom to Grow is our global framework designed to support employees in finding the balance and flexibility they need to be their best and deliver for clients, and a key factor in our ability to attract and retain talent.
Freedom to Grow . Freedom to Grow is our global framework designed to support employees in finding the balance and flexibility they need to be their best and deliver for clients, and a key factor in our ability to attract and retain talent.
We have aggregated various operating segments into our 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. ● Americas: Planning, consulting, architectural and engineering design, and construction and program management services to commercial and government clients in the United States, Canada, and Latin America in major end markets such as transportation, facilities, water, government, environmental, and energy. ● International: Planning, consulting, architectural and engineering design services and program management to commercial and government clients in Europe, the Middle East, India, Africa, and the Asia-Australia-Pacific regions in major end markets such as transportation, facilities, water, government, environmental, and energy. ● AECOM Capital (ACAP): Invests primarily in and develops real estate projects.
We have aggregated various operating segments into our 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. ● Americas : Planning, consulting, architectural and engineering design, construction management and program management services to public and private clients in the United States, Canada, and Latin America in major end markets such as transportation, water, government, facilities, environmental, and energy. ● International : Planning, 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. ● AECOM Capital (ACAP) : Primarily invests in and develops real estate projects.
Accordingly, RUPO is $19.4 billion lower than backlog. For non-government contracts, our backlog includes future revenue at contract rates, excluding contract renewals or extensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in backlog to the extent of the remaining estimated amount.
Accordingly, RUPO is $19.3 billion lower than backlog. For non-government contracts, our backlog includes future revenue at contract rates, excluding contract renewals or extensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in backlog to the extent of the remaining estimated amount.
The services we provide to the U.S. federal government are subject to Federal Acquisition Regulation, the Truth in Negotiations Act, Cost Accounting Standards, the Services Contract Act, export controls rules and Department of Defense (DOD) security regulations, as well as many other laws and regulations.
The services we provide to the U.S. federal government are subject to Federal Acquisition Regulation, the Truth in Negotiations Act, Cost Accounting Standards, the Services Contract Act, False Claims Act, export controls rules and Department of Defense (DOD) security regulations, as well as many other laws and regulations.
Purpose and impact . As the world’s trusted infrastructure consulting firm and a leader in environmental, social and corporate governance (ESG), we are determined and well-positioned to deliver positive, impactful and Sustainable Legacies for our company, our communities and our planet.
As the world’s trusted infrastructure consulting firm and a leader in environmental, social and corporate governance (ESG), we are determined and well-positioned to deliver positive, impactful and Sustainable Legacies for our company, our communities and our planet.
We are advancing efforts globally in four key areas: 1) Building a workforce reflective of the communities we serve through our recruitment efforts, building leadership accountability, and partnering with nonprofit organizations and universities to build the talent pipeline for the future; 2) Enriching communities through pro-bono work, volunteerism, philanthropy and strategic partnerships; 3) Expanding understanding and empathy among employees through employee resource groups, ED&I events and celebrations, and family-friendly benefit policies; and 4) Prioritizing social equity and impact in every project we pursue and the innovative solutions we deliver. 8 Table of Contents ​ Freedom to Grow .
We are advancing efforts globally in four key areas: 1) Building a workforce reflective of the communities we serve through our recruitment efforts, building leadership accountability, and partnering with nonprofit organizations and universities to build the talent pipeline for the future; 2) Enriching communities through pro-bono work, volunteerism, philanthropy and strategic partnerships; 3) Expanding understanding and empathy among employees through employee resource groups, ED&I events and celebrations, and family-friendly benefit policies; and 4) Prioritizing social equity and impact in every project we pursue and the innovative solutions we deliver.
Approximately 6%, 8%, and 8% of our revenue was derived through direct contracts with agencies of the U.S. federal government in the years ended September 30, 2022, 2021, and 2020, respectively. Contracts The price provisions of the contracts we undertake can be grouped into several broad categories: cost-reimbursable contracts, guaranteed maximum price contracts, and fixed-price contracts.
Approximately 5%, 6%, and 8% of our revenue was derived through direct contracts with agencies of the U.S. federal government in the years ended September 30, 2023, 2022, and 2021, respectively. Contracts The price provisions of the contracts we undertake can be grouped into several broad categories: cost-reimbursable contracts, guaranteed maximum price contracts, and fixed-price contracts.
The following table sets forth our total revenue attributable to these categories of clients for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ ​ ($ in millions) ​ 2022 2021 2020 ​ U.S.
The following table sets forth our total revenue attributable to these categories of clients for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ ​ ($ in millions) ​ 2023 2022 2021 ​ U.S.
Additional information regarding our ESG initiatives is located on the investor relations section of our website, at https://investors.aecom.com/esg. Human Capital Management Our principal asset is our employees, and large percentages of our employees have technical and professional backgrounds and undergraduate and/or advanced degrees.
Additional information regarding our ESG initiatives is located on the investor relations section of our website, at https://investors.aecom.com/esg. 8 Table of Contents ​ Human Capital Management Our principal asset is our employees and large percentages of our employees have technical and professional backgrounds and undergraduate and/or advanced degrees.
Through strategic nonprofit partnerships, pro-bono work, skills-based volunteering and philanthropy, and Blueprint for a Better World , our corporate responsibility platform, we are focused on delivering access to safe and secure infrastructure to those who need it most, creating opportunity for the leaders of tomorrow and protecting our planet so that our company can fulfill its purpose to deliver a better world.
Through strategic nonprofit partnerships, pro-bono work, skills-based volunteering and philanthropy, our corporate responsibility platform is focused on delivering access to safe and secure infrastructure to those who need it most, creating opportunity for the leaders of tomorrow and protecting our planet so that our company can fulfill its purpose to deliver a better world.
Backlog is expressed in terms of gross revenue and, therefore, may include significant estimated amounts of third party or pass-through costs to subcontractors and other parties. We report transaction price allocated to remaining unsatisfied performance obligations (RUPO) of $20.8 billion, as described in Note 4, Revenue Recognition, in the notes to our consolidated financial statements.
Backlog is expressed in terms of gross revenue and, therefore, may include significant estimated amounts of third party or pass-through costs to subcontractors and other parties. We report transaction price allocated to remaining unsatisfied performance obligations (RUPO) of $21.9 billion, as described in Note 4, Revenue Recognition, in the notes to our consolidated financial statements.
Should public policies and laws change, however, U.S. federal government indemnification may not be available in the case of any future claims or liabilities relating to hazardous activities that we undertake to perform. 14 Table of Contents ​ Government Procurement.
Should public policies and laws change, however, U.S. federal government indemnification may not be available in the case of any future claims or liabilities relating to hazardous activities that we undertake to perform. Government Procurement.
Production facilities such as ethanol plants, onshore and offshore wind farms and micro hydropower, and geothermal subsections of regional power grids. ● Hydropower/Dams. Hydroelectric power stations, dams, spillways, and flood control systems. ● Solar. Solar photovoltaic projects and environmental permitting services.
Production facilities such as ethanol plants, onshore and offshore wind farms and micro hydropower, and geothermal subsections of regional power grids. ● Hydropower/Dams. Hydroelectric power stations, dams, spillways, and flood control systems. 6 Table of Contents ​ ● Solar. Solar photovoltaic projects and environmental permitting services.
In addition, our industry is undergoing a digital transformation, and we are investing in digital capabilities to extend our advantages, improve overall delivery, and create distinct solutions for clients that differentiate us from competitors.
In addition, our industry is undergoing a digital transformation, and we are investing in digital capabilities to extend our advantages, improve overall delivery, and create distinct solutions for clients that differentiate us from competitors and enhance our client experience.
We are also advancing initiatives to enable the digital delivery of our work by establishing best practices and governance protocols for the digital reuse of core elements of the design process. 9 Table of Contents ​ Technical and professional development.
We are also advancing initiatives to enable the digital delivery of our work by establishing best practices and governance protocols for the digital reuse of core elements of the design process. Technical and professional development.
For clarity of presentation, we present all periods as if the year ended on September 30. We refer to the fiscal year ended September 30, 2021 as “fiscal 2021” and the fiscal year ended September 30, 2022 as “fiscal 2022.” Overview We are a leading global provider of professional infrastructure consulting services for governments, businesses and organizations throughout the world.
For clarity of presentation, we present all periods as if the year ended on September 30. We refer to the fiscal year ended September 30, 2022 as “fiscal 2022” and the fiscal year ended September 30, 2023 as “fiscal 2023.” Overview We are a leading global provider of professional infrastructure consulting services for governments, businesses and organizations throughout the world.
Public K12 schools and universities, health care facilities, and courthouses and other public buildings, as well as energy conservation systems for utilities. ● Transmission and Distribution. Power stations and electric transmissions and distribution and cogeneration systems. ● Alternative/Renewable Energy.
Public K-12 schools and universities, health care facilities, and courthouses and other public buildings, as well as energy conservation systems for utilities. ● Transmission and Distribution. Power stations and electric transmissions and distribution and cogeneration systems. ● Alternative/Renewable Energy.
We are transforming the way we deliver work through technology and digital platforms improving the client experience and increasing efficiency. Lastly, we are building upon our position as a leading ESG company, unified by our purpose to deliver a better world.
We are transforming the way we deliver work through technology 7 Table of Contents ​ and digital platforms improving the client experience and increasing efficiency. Lastly, we are building upon our position as a leading ESG company, unified by our purpose to deliver a better world.
Our government clients can also terminate, renegotiate, or modify any of their contracts with us at their convenience; and many of our government contracts are subject to renewal or extension annually. Anti-Bribery and other regulations. We are subject to the U.S.
Our government clients can also terminate, renegotiate, or modify any of their contracts with us at their convenience; and many of our government contracts are subject to renewal or extension annually. Anti-Bribery and other regulations. We are subject to the U.S. Foreign Corrupt Practices Act, the U.K.
We provide advisory, planning, consulting, architectural and engineering design, construction and program management services, and investment and development services to commercial and government clients worldwide in major end markets such as transportation, facilities, water, environmental, and new energy.
We provide advisory, planning, consulting, architectural and engineering design, construction and program management services, and investment and development services to public- and private-sector clients worldwide in major end markets such as transportation, facilities, water, environmental, and new energy.
This understanding informs our approach to managing our human capital resources. Our human capital objectives and initiatives are overseen by our Board as per our Corporate Governance Guidelines. Health and Safety . Core to our corporate values is safeguarding our people and fostering a culture of caring that promotes the wellbeing of our employees, contractors and business partners.
Our human capital objectives and initiatives are overseen by our Board as per our Corporate Governance Guidelines. Health and Safety . Core to our corporate values is safeguarding our people and fostering a culture of caring that promotes the wellbeing of our employees, contractors and business partners.
At the end of our fiscal 2022, we employed approximately 50,000 persons, of whom approximately 18,000 were employed in the United States. Over 450 of our domestic employees are covered by collective bargaining agreements or by specific labor agreements, which expire upon completion of the relevant project.
At the end of our fiscal 2023, we employed approximately 52,000 persons, of whom approximately 18,000 were employed in the United States. Over 400 of our domestic employees are covered by collective bargaining agreements or by specific labor agreements, which expire upon completion of the relevant project.
Employees and managers can evaluate work schedules and locations and align on an arrangement that prioritizes client and team responsibilities while supporting individual needs and includes two-to-three days a week in the office as an expectation. Our Freedom to Grow program goes far beyond just when and where we work.
Employees and managers can evaluate work schedules and locations and align on an arrangement that prioritizes client and team responsibilities while 9 Table of Contents ​ supporting individual needs and includes three days a week in the office or at project sites as an expectation. Our Freedom to Grow program goes far beyond just when and where we work.
We believe that the quality and level of service that our professionals deliver are among the highest in our industry. We are committed to enhancing our position as a leading employer in our industry.
We believe that the quality and level of service that our professionals deliver are among the highest in our industry. We are committed to enhancing our position as a leading employer in our industry by attracting and retaining the best technical professionals in the world.
The following summarizes backlog (in billions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ 2022 2021 Backlog: ​ ​ Americas segment ​ $ 35.1 ​ $ 33.4 International segment ​ 5.1 ​ 5.2 Total backlog ​ $ 40.2 ​ $ 38.6 ​ Competition The markets we serve are highly fragmented and we compete with a large number of regional, national and international companies.
The following summarizes backlog (in billions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ 2023 2022 Backlog: ​ ​ Americas segment ​ $ 34.9 ​ $ 35.1 International segment ​ 6.3 ​ 5.1 Total backlog ​ $ 41.2 ​ $ 40.2 ​ Competition The markets we serve are highly fragmented and we compete with a large number of regional, national and international companies.
Governments ​ 1,800.6 14 ​ 1,896.8 14 ​ 1,869.0 14 ​ Subtotal Governments ​ 5,445.9 41 ​ 5,721.3 43 ​ 5,606.5 42 ​ Private Entities (worldwide) ​ 7,702.3 59 ​ 7,619.6 57 ​ 7,633.5 58 ​ Total ​ $ 13,148.2 100 % $ 13,340.9 100 % $ 13,240.0 100 % ​ No single client accounted for 10% or more of our revenue in any of the past five fiscal years.
Governments ​ 2,544.7 18 ​ 1,800.6 14 ​ 1,896.8 14 ​ Subtotal Governments ​ 6,254.2 43 ​ 5,445.9 41 ​ 5,721.3 43 ​ Private Entities (worldwide) ​ 8,124.3 57 ​ 7,702.3 59 ​ 7,619.6 57 ​ Total ​ $ 14,378.5 100 % $ 13,148.2 100 % $ 13,340.9 100 % ​ No single client accounted for 10% or more of our revenue in any of the past five fiscal years.
According to Engineering News-Record’s (ENR’s) 2022 Design Survey, we are the second largest general architectural and engineering design firm in the world, ranked by 2021 design revenue, and we are ranked as the largest environmental and transportation engineering and environmental science firm in the world.
According to Engineering News-Record’s (ENR’s) 2023 Design Survey, we are the second largest general architectural and engineering design firm in the world, ranked by 2022 design revenue, and we are the number one ranked transportation design, facilities design, environmental engineering, environmental consulting and environmental science firm in the world.
Federal Government $ 821.3 6 % $ 1,026.6 8 % $ 1,027.8 8 % U.S. State and Local Governments ​ 2,824.0 21 ​ 2,797.9 21 ​ 2,709.7 20 ​ Non-U.S.
Federal Government $ 790.6 5 % $ 821.3 6 % $ 1,026.6 8 % U.S. State and Local Governments ​ 2,918.9 20 ​ 2,824.0 21 ​ 2,797.9 21 ​ Non-U.S.
Our Americas and International Segments Our Americas and International segments comprise a broad array of services, generally provided on a fee-for-service basis. These services include advisory, planning, consulting, architectural and engineering design, program management and construction management for industrial, commercial, institutional and government clients worldwide.
Our Americas and International Segments Our Americas and International segments are comprised of a broad array of services, generally provided on a fee-for-service basis. These services include advisory, planning, consulting, architectural and engineering design, program management and construction management for public and private clients worldwide.
Emergency response services for the U.S. Department of Homeland Security, including the Federal Emergency Management Agency and engineering and program management services for agencies of the Department of Defense and Department of Energy. ● Industrial.
Department of Homeland Security, including the Federal Emergency Management Agency and engineering and program management services for agencies of the Department of Defense and Department of Energy. 5 Table of Contents ​ ● Industrial.
Revenue is recognized for fixed-price contracts using the input method measured on a cost-to-cost basis. Some of our fixed-price contracts require us to provide surety bonds or parent company guarantees to assure our clients that their project will be completed in accordance with the terms of the contracts as further disclosed in Note 18—Commitments and Contingencies.
Some of our fixed-price contracts require us to provide surety bonds or parent company guarantees to assure our clients that their project will be completed in accordance with the terms of the contracts as further disclosed in Note 18—Commitments and Contingencies.
For each of these services, our technical expertise includes civil, structural, process, mechanical, geotechnical systems and electrical engineering, architectural, landscape and interior design, urban and regional planning, project economics, cost consulting and environmental, health and safety work. Our Americas segment provides services generally in the United States, Canada and Latin America.
For each of these services, our technical expertise includes civil engineering, structural engineering, process engineering, mechanical engineering, geotechnical systems and electrical engineering, architectural, landscape and interior design, urban and regional planning, project economics, cost consulting and environmental, health and safety work.
Many of our contracts require us to provide services over more than one year. Our backlog for the year ended September 30, 2022 increased $1.6 billion, or 4.1%, to $40.2 billion as compared to $38.6 billion for the corresponding period last year, primarily due to an increase in our Americas design and construction management business.
Many of our contracts require us to provide services over more than one year. Our backlog for the year ended September 30, 2023 increased $1.0 billion, or 2.5%, to $41.2 billion as compared to $40.2 billion for the corresponding period last year, primarily due to an increase in our International design business.
Further, our construction management revenue typically increases during the high construction season of the summer months. Within the United States, as well as other parts of the world, our business generally benefits from milder weather conditions in our fiscal fourth quarter, which allows for more productivity from our on-site civil services.
Further, our construction management revenue typically increases during the high construction season of the summer months. Within the United States, as well as other parts of the world, our business generally benefits from milder weather conditions in our fiscal fourth quarter. Our construction and project management services also typically expand during the high construction season of the summer months.
ACAP may, but is not required to, enter into contracts with our other AECOM affiliates to provide design, owners engineer, construction management, development and operations and maintenance services for ACAP funded projects.
Our AECOM Capital Segment ACAP typically partners with investors and experienced developers as co-general partners. These partnerships may, but is not required to, enter into contracts with our other AECOM affiliates to provide design, owners engineer, construction management, development and operations and maintenance services for ACAP funded projects.
We generally recognize revenue to the extent of costs actually incurred plus a proportionate amount of the fee expected to be earned.
In addition, we may share award fees with subcontractors. We generally recognize revenue to the extent of costs actually incurred plus a proportionate amount of the fee expected to be earned.
For example, in the area of program management and construction management services, our work for a client may begin with a small consulting or planning contract, and may later develop into an overall management role for the project or a series of projects, which we refer to as a program.
For example, in the area of program management and construction management services, our work for a client may begin with a small consulting or planning contract, and may later develop into an overall management role for the project or a series of projects, which we refer to as a program. 4 Table of Contents ​ Program and construction management contracts may employ small or large project teams and, in many cases, operate as an outsourcing arrangement with our staff located at the project site.
We have taken and will continue to take critical steps to keep our people, clients and communities safe from Covid-19. Equity, diversity and inclusion . We are committed to advancing equity, diversity and inclusion in our organization and within our industry.
We have taken and will continue to take critical steps to keep our people, clients and communities safe, including any necessary actions in response to local and global health crises. Equity, diversity and inclusion . We are committed to advancing equity, diversity and inclusion in our organization and within our industry.
Foreign Corrupt Practices Act and similar anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business. The U.K. Bribery Act of 2010 prohibits both domestic and international bribery, as well as bribery across both private and public sectors.
Bribery Act of 2010, and similar anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business.
In addition, we are ranked by ENR as the leading firm in a number of design end markets, including several water infrastructure-related markets, as well as the number one green design firm and the number six green contractor in the world.
In addition, we are ranked by ENR as the leading firm in a number of design end markets, including several water infrastructure-related markets, as well as the number two green design firm and the number six green contractor in the world. We utilize our scale and the technical strength of our workforce to create innovative solutions for our clients.
The harsher weather conditions impact our ability to complete work in parts of North America and the holiday season schedule affects our productivity during this period.
The first quarter of our fiscal year (October 1 to December 31) is typically our lowest revenue quarter. The harsher weather conditions impact our ability to complete work in parts of North America and the holiday season schedule affects our productivity during this period.
Light rail, heavy rail (including highspeed, commuter and freight) and multimodal transit projects. ● Marine, Ports and Harbors. Wharf facilities and container port facilities for private and public port operators. ● Highways, Bridges and Tunnels. Interstate, primary and secondary urban and rural highway systems and bridge projects. ● Aviation. Landside terminal and airside facilities, runways, and taxiways. Facilities. ● Government.
Wharf facilities and container port facilities for private and public port operators. ● Highways, Bridges and Tunnels. Interstate, primary and secondary urban and rural highway systems and bridge projects. ● Aviation. Landside terminal and airside facilities, runways, and taxiways. Facilities. ● Green Facilities.
During the first quarter of fiscal 2020, we reorganized our operating and reporting structure to better align with our ongoing professional services business. This reorganization better reflected our continuing operations after the sale of our Management Services segment, the sale of our self-perform at-risk civil infrastructure and power construction businesses, and the sale of our oil & gas construction business.
This reorganization better reflected our continuing operations after the sale of our Management Services segment, the sale of our self-perform at-risk civil infrastructure and power construction businesses, and the sale of our oil & gas construction business.
Through our projects and our operations, we have both a significant opportunity and a responsibility to protect, enhance and restore the world’s natural and social systems. 7 Table of Contents ​ We are committed to addressing the effects of climate change as a key priority for our sustainability program by improving resilience and working to advance increasingly ambitious greenhouse gas emissions reduction targets.
We are committed to addressing the effects of climate change as a key priority for our sustainability program by improving resilience and working to advance increasingly ambitious greenhouse gas emissions reduction targets.
These estimates are revised when necessary based upon additional information that becomes available as the contract progresses. 11 Table of Contents ​ Guaranteed Maximum Price Contracts Guaranteed maximum price (GMP) contracts share many of the same contract provisions as cost-plus and fixed-price contracts.
These estimates are revised when necessary based upon additional information that becomes available as the contract progresses. Guaranteed Maximum Price Contracts Guaranteed maximum price (GMP) contracts share many of the same contract provisions as cost-plus and fixed-price contracts. As with cost-plus contracts, clients are provided a disclosure of all project costs, and a lump sum percentage fee is separately identified.
Risk Management and Insurance Risk management is an integral part of our project management approach and our project execution process. We have an Office of Risk Management that reviews and oversees the risk profile of our operations.
Risk Management and Insurance Risk management is an integral part of our project management approach and our project execution process. We have an Office of Risk Management that reviews and oversees the risk profile of our operations through a tiered process of formal risk committees with the highest-risk pursuits subject to vetting at each tier.
As part of the Blueprint pro-bono program, our technical experts partnered with nonprofit organizations in their local communities to provide critical design, engineering and infrastructure solutions.
As part of our pro-bono program, our technical experts partnered with nonprofit organizations in their local communities to provide critical design, engineering and infrastructure solutions. In addition, we have maintained our commitment to our enterprise strategic nonprofit partners – Engineers Without Borders and Water for People.
We primarily derive income from our ability to generate revenue and collect cash from our clients through the billing of our employees’ time spent on client projects and our ability to manage our costs. AECOM Capital primarily derives its income from real estate development sales and management fees.
Our business focuses primarily on providing fee-based knowledge-based services. We primarily derive income from our ability to generate revenue and collect cash from our clients through the billing of our employees’ time spent on client projects and our ability to manage our costs.
We recognize revenues based on actual direct costs incurred and the applicable fixed rate or portion of the fixed fee earned as of the balance sheet date. Under time-and-materials price contracts, we negotiate hourly billing rates and charge clients based on the actual time we expend on the project.
Under cost-plus contracts, we charge clients for our costs, including both direct and indirect costs, plus a negotiated fee or rate. We recognize revenues based on actual direct costs incurred and the applicable fixed rate or portion of the fixed fee earned as of the balance sheet date.
Liabilities related to environmental contamination or human exposure to hazardous substances, comparable national and state laws or a failure to comply with applicable regulations could result in substantial costs to us, including cleanup costs, fines and civil or criminal sanctions, third-party claims for property damage or personal injury, or cessation of remediation activities.
Liabilities related to environmental contamination or human exposure to hazardous substances, comparable national and state laws or a failure to comply with applicable regulations could result in substantial costs to us, including cleanup costs, fines and civil or criminal sanctions, third-party claims for property damage or personal injury, or cessation of remediation activities. 14 Table of Contents ​ Some of our business operations are covered by Public Law 85-804, which provides for indemnification by the U.S. federal government against claims and damages arising out of unusually hazardous or nuclear activities performed at the request of the U.S. federal government.
Clients are turning to us to create solutions to achieve their Environmental, Social, and Governance (ESG) objectives with a focus on sustainability and resilience, such as supporting the advancement of more efficient energy infrastructure.
Clients are turning to us to create solutions to achieve their Environmental, Social, and Governance (ESG) objectives with a focus on sustainability and resilience initiatives, which include supporting the advancement of more energy efficient and less-carbon-intensive infrastructure. With our market leading technical capabilities, we are uniquely well suited to address these challenges.
Below is a summary of some of the significant regulations that impact our business. Environmental, Health and Safety. Our business involves the planning, design, program management, construction management, and operations and maintenance at various project sites, including, but not limited to, nuclear facilities, hazardous waste and Superfund sites, hydrocarbon production, distribution and transport sites, and other infrastructure-related facilities.
Our business involves the planning, design, program management, construction management, and operations and maintenance at various project sites, including, but not limited to, nuclear facilities, hazardous waste and Superfund sites, hydrocarbon production, distribution and transport sites, and other infrastructure-related facilities. We also regularly perform work in and around sensitive environmental areas, such as rivers, lakes and wetlands.
Some cost-plus contracts provide for award fees or a penalty based on performance criteria in lieu of a fixed fee or fixed rate. Other contracts include a base fee component plus a performance-based award fee. In addition, we may share award fees with subcontractors.
Time-and-material price contracts may also have a fixed-price element in the form of not-to-exceed or guaranteed maximum price provisions. Some cost-plus contracts provide for award fees or a penalty based on performance criteria in lieu of a fixed fee or fixed rate. Other contracts include a base fee component plus a performance-based award fee.
Sustainability is at the core of what we do and how we operate — focusing on the environmental, social and governance impact of our business.
Sustainability is at the core of what we do and how we operate — focusing on the environmental, social and governance impact of our business. Through our projects and our operations, we have both a significant opportunity and a responsibility to protect, enhance and restore the world’s natural and social systems.
We utilize our scale and the strength of our workforce to create innovative solutions for our clients, including investments to accelerate the expansion of our digital services and solutions and to create innovative ways of solving the world’s most complex challenges.
We are accelerating investments to extend our capabilities, including the expansion of our digital capabilities to create innovative ways of delivering our work and solving the world’s most complex challenges.
Our International segment provides similar services generally in Europe, the Middle East, India, Africa and the Asia-Australia-Pacific regions. With our technical, advisory and program management expertise, we are able to provide our clients a broad spectrum of services.
With our technical, advisory and program management expertise, we are able to provide our clients a broad spectrum of services.
A full range of professional development programs called Leadership at all Levels cultivates innovative thinkers, supportive managers, and impactful leaders through coaching and skill building at every career level. These programs are based on our four pillars of Leadership Capabilities, which outline the behaviors we want our leaders to demonstrate and exemplify for the collective success as an organization.
These programs are based on our four pillars of Leadership Capabilities, which outline the behaviors we want our leaders to demonstrate and exemplify for the collective success as an organization. Purpose and impact .
For the year ended September 30, 2022, our revenue was comprised of 41%, 33%, and 26% cost-reimbursable, guaranteed maximum price, and fixed-price contracts, respectively. Cost-Reimbursable Contracts Cost-reimbursable contracts include cost-plus fixed fee, cost-plus fixed rate, and time-and-materials price contracts. Under cost-plus contracts, we charge clients for our costs, including both direct and indirect costs, plus a negotiated fee or rate.
For the year ended September 30, 2023, our revenue was comprised of 43%, 34%, and 23% cost-reimbursable, guaranteed maximum price, and fixed-price contracts, respectively. 11 Table of Contents ​ Cost-Reimbursable Contracts Cost-reimbursable contracts include cost-plus fixed fee, cost-plus fixed rate, and time-and-materials price contracts.
ACAP focuses on investing in co-general partner equity opportunities with high quality partners, primarily targeting “build-to-core” investments in the top U.S. markets across all property types. Thinking and Acting Globally AECOM is at its best when we think and act globally. Our strategy is focused on setting a new standard of excellence in the professional services industry.
ACAP has focused on investing in co-general partner equity opportunities with high quality partners, primarily targeting “build-to-core” investments in the top U.S. markets across all property types. During fiscal 2023, we initiated a process to explore strategic options for the AECOM Capital business. This process is consistent with our focus on our professional services business.
In addition, clients reimburse us for materials and other direct incidental expenditures, including payments to subcontractors, incurred in connection with our performance under the contract. Time-and-material price contracts may also have a fixed-price element in the form of not-to-exceed or guaranteed maximum price provisions.
Under time-and-materials price contracts, we negotiate hourly billing rates and charge clients based on the actual time we expend on the project. In addition, clients reimburse us for materials and other direct incidental expenditures, including payments to subcontractors, incurred in connection with our performance under the contract.
Wherever possible, we endeavor to eliminate or reduce the risk of loss on a project through the use of quality assurance/control, risk management, workplace safety and similar methods. Regulations Our business is impacted by environmental, health and safety, government procurement, anti-bribery and other government regulations and requirements.
We maintain insurance covering professional liability and claims involving bodily injury and property damage, among other coverages. Wherever possible, we endeavor to eliminate or reduce the risk of loss on a project through the use of quality assurance/control, risk management, workplace safety and similar methods.
The foundation of our continuing success is our ability to attract, recruit and retain the industry’s best, diverse talent by offering a compelling employee value proposition that promises competitive pay and benefits, flexibility and a foundation of learning and career growth, an inclusive culture that supports well-being and encourages collaboration and innovation, and a shared commitment to our values and purpose.
Critical to our continued success is our ability to offer a compelling employee value proposition that promises competitive pay and benefits, an inclusive environment that supports flexibility and well-being and encourages collaboration and innovation, and a shared commitment to technical excellence, continuous learning and career growth. This understanding informs our approach to managing our human capital resources.
Clients are asking for innovative and more advanced solutions to increasingly complex challenges, where our digital suite of products and investments in innovation are creating a more holistic approach to our work.
These investments include capturing the value of our libraries of data to build more efficient design processes, and innovative and more advanced solutions for increasingly complex challenges, where our digital suite of products are creating a more holistic approach to our work. Our services may be sequenced over multiple phases or multiple projects in the form of a program.
As with cost-plus contracts, clients are provided a disclosure of all project costs, and a lump sum percentage fee is separately identified. We provide clients with a guaranteed price for the overall project (adjusted for change orders issued by clients) and a schedule including the expected completion date.
We provide clients with a guaranteed price for the overall project (adjusted for change orders issued by clients) and a schedule including the expected completion date. Cost overruns or costs associated with project delays in completion could generally be our responsibility.
Construction Management – We provide program and construction management services for large scale building facility construction projects primarily in the Americas including: ● Sports arenas. ● Modern office and residential towers. ● Hotel and gaming facilities. ● Meeting and exhibition spaces. ● Performance venues. ● Aviation. ● Education facilities. ● Mass transit terminals. ● Data centers. 6 Table of Contents ​ Our AECOM Capital Segment ACAP typically partners with investors and experienced developers as co-general partners.
Program and construction management services for large scale building facility construction projects primarily in the Americas including: sports arenas, modern office and residential towers, hotels, meeting and exhibition spaces, performance venues, aviation, and other facilities. Water. ● Water and Wastewater.
Also, pursuant to our internal delegations of authority, a group of senior members of our risk management team evaluates risk through internal risk analyses of higher-risk projects, contracts or other business decisions. We maintain insurance covering professional liability and claims involving bodily injury and property damage.
Following contract execution, and commencement of delivery, projects are monitored via a formal monthly or quarterly project-review process designed to ensure project performance and risk mitigation. Also, pursuant to our internal delegations of authority, a group of senior members of our risk management team evaluates risk through internal risk analyses of higher-risk projects, contracts or other business decisions.
Remediation, waste handling, testing and monitoring of environmental conditions, and environmental construction management. ● Water Resources. Regional-scale floodplain mapping and analysis for public agencies, along with the analysis and development of protected groundwater resources for companies in the bottled water industry. New Energy. ● Demand Side Management.
Treatment facilities as well as supply, distribution and collection systems, stormwater management, desalinization, and other water reuse technologies. ● Water Resources. Regional-scale floodplain mapping and analysis for public agencies, along with the analysis and development of protected groundwater resources for companies in the bottled water industry. ● Drought Response and Mitigation.
In addition, we have maintained our commitment to our enterprise strategic nonprofit partners – Engineers Without Borders and Water for People. 10 Table of Contents ​ Our Clients Our clients consist primarily of national, state, regional and local governments, public and private institutions and major corporations.
Our Clients Our clients consist primarily of national, state, regional and local governments, public and private institutions and major corporations.
For example, within our environmental service offerings, we provide remediation, regulatory compliance planning and management, environmental modeling, climate adaptation and resilience, environmental and social impact assessment and environmental permitting for major capital/infrastructure projects.
For example, within our water service offerings, we provide water, wastewater, water supply and water resource services, which are necessary in response to climate adaptation and resilience, drought mitigation and other environmental and social impact factors as part of major capital/infrastructure projects.
We also provide high-quality, structured training programs through our Global Business Line Technical Academies, which are created by our global experts and business line leaders to deliver the latest technical training courses on key global topics, practices and markets that are relevant to our global business.
Created by us for us, Academies deliver structured and self-directed technical training courses on key 10 Table of Contents ​ global topics, practices and markets that are relevant to our business. Our Technical Practice Network connects nearly 20,000 professionals every day in a global online community to enable networking, collaboration and problem solving.
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With our market leading capabilities, we are uniquely well suited to address these challenges. 3 Table of Contents ​ Our business focuses primarily on providing fee-based knowledge-based services.
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AECOM Capital primarily derives its income from real estate development sales and management fees. 3 Table of Contents ​ During the first quarter of fiscal 2020, we reorganized our operating and reporting structure to better align with our ongoing professional services business.
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For example, in fiscal 2022, we launched PipeInsights™, which is a digital pipe inspection tool that accelerates the time and reduces the cost of inspection with a high degree of accuracy with embedded Machine Learning capabilities. Our services may be sequenced over multiple phases.
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Sustainably-designed new build construction or refurbishment projects, such as office buildings, data centers and other facilities with high energy demands. ● Government. Emergency response services for the U.S.
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College and university campuses and other educational facilities. ● Health Care. Private and public health facilities. 5 Table of Contents ​ Environmental. ● Water and Wastewater. Treatment facilities as well as supply, distribution and collection systems, stormwater management, desalinization, and other water reuse technologies. ● Environmental Management.
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College and university campuses and other educational facilities. ● Health Care. Private and public health facilities. ● Sports. Sustainable building design for world-class sports arenas and stadiums. ● Construction Management.
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AECOM supports community uptake of approved Covid-19 vaccines as the most effective measure to end the global pandemic and we strongly encourage that employees receive an approved vaccine. Employees supporting clients through site visits and face-to-face meetings abide by client-worksite Covid-19 protocols, which may include documentation establishing proof of immunization or proof of negative Covid-19 test.
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Designing water re-use and similar systems to enhance resiliency of water supply. ● Hazardous Chemicals. Treating and addressing disposal of hazardous chemicals in water supplies and surrounding environments, such as per- and polyfluoroalkyl substances (PFAS). Environment. ● Environmental Management. Waste handling, testing and monitoring of environmental conditions, and environmental construction management. ● Remediation.
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As we move beyond the pandemic, we are continuing to evolve the way we work and offer our employees more freedom of movement and more choices in their personal and professional lives.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTo the extent the Covid-19 pandemic adversely affects our business, results of operations and financial condition, it may also have the effect of exacerbating the other risks discussed in this “Risk Factors” section. Our industry is highly competitive, and we may be unable to compete effectively, which could result in reduced revenue, profitability and market share.
Biggest changeRisks Related to Our Markets, Customers and Business Our industry is highly competitive, and we may be unable to compete effectively, which could result in reduced revenue, profitability and market share. We are engaged in a highly competitive business. The markets we serve are highly fragmented and we compete with a large number of regional, national and international companies.
Additional difficulties we may encounter as part of the integration process include the following: ● the consequences of a change in tax treatment and the possibility that the full benefits anticipated from the acquisition or disposition will not be realized; ● any delay in the integration or disposition of management teams, strategies, operations, products and services; ● differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration; ● the ability to retain key employees; ● the ability to create and enforce uniform standards, controls, procedures, policies and information systems; ● the challenge of restructuring complex systems, technology, networks and other assets in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies; ● potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisition, including costs to integrate beyond current estimates; ● the ability to deduct or claim tax attributes or benefits such as operating losses, business or foreign tax credits; and ● the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies.
Additional difficulties we may encounter as part of the integration process include the following: ● the consequences of a change in tax treatment and the possibility that the full benefits anticipated from the acquisition or disposition will not be realized; 24 Table of Contents ​ ● any delay in the integration or disposition of management teams, strategies, operations, products and services; ● differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration; ● the ability to retain key employees; ● the ability to create and enforce uniform standards, controls, procedures, policies and information systems; ● the challenge of restructuring complex systems, technology, networks and other assets in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies; ● potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisition, including costs to integrate beyond current estimates; ● the ability to deduct or claim tax attributes or benefits such as operating losses, business or foreign tax credits; and ● the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies.
There are risks inherent in doing business internationally, including: ● the ongoing conflict between Russia and Ukraine, which has resulted in the imposition by the U.S. and other nations of restrictive actions against Russia, Belarus and certain banks, companies and individuals; ● imposition of governmental controls and changes in laws, regulations or policies; ● political and economic instability, including in the Middle East and Southeast Asia; ● civil unrest, acts of terrorism, force majeure, war, or other armed conflict; ● changes in U.S. and other national government trade policies affecting the markets for our services, such as retaliatory tariffs between the United States and China; ● political unrest in Hong Kong where we have a significant presence; ● impact of the Covid-19 pandemic and its related economic impacts; 20 Table of Contents ​ ● increases in the consumer price index and interest rates; ● changes in regulatory practices, tariffs and taxes, such as Brexit; ● potential non-compliance with a wide variety of laws and regulations, including anti-corruption, export control and anti-boycott laws and similar non-U.S. laws and regulations; ● changes in labor conditions; ● logistical and communication challenges; and ● currency exchange rate fluctuations, devaluations and other conversion restrictions.
There are risks inherent in doing business internationally, including: ● the ongoing conflict between Russia and Ukraine, which has resulted in the imposition by the U.S. and other nations of restrictive actions against Russia, Belarus and certain banks, companies and individuals; ● imposition of governmental controls and changes in laws, regulations or policies; ● political and economic instability, including in the Middle East; ● civil unrest, acts of terrorism, force majeure, war, or other armed conflict; ● changes in U.S. and other national government trade policies affecting the markets for our services, such as retaliatory tariffs between the United States and China; ● political unrest in Hong Kong where we have a significant presence; ● impact of the Covid-19 pandemic and its related economic impacts; ● increases in the consumer price index and interest rates; ● changes in regulatory practices, tariffs and taxes; ● potential non-compliance with a wide variety of laws and regulations, including anti-corruption, export control and anti-boycott laws and similar non-U.S. laws and regulations; ● changes in labor conditions; 19 Table of Contents ​ ● logistical and communication challenges; and ● currency exchange rate fluctuations, devaluations and other conversion restrictions.
Past business practices at companies that we have acquired may also expose us to future unknown environmental liabilities. 24 Table of Contents ​ Significant fines, penalties and other sanctions may be imposed for non-compliance with environmental laws and regulations, and some environmental laws provide for joint and several strict liabilities for remediation of releases of hazardous substances, rendering a person liable for environmental damage, without regard to negligence or fault on the part of such person.
Past business practices at companies that we have acquired may also expose us to future unknown environmental liabilities. 23 Table of Contents ​ Significant fines, penalties and other sanctions may be imposed for non-compliance with environmental laws and regulations, and some environmental laws provide for joint and several strict liabilities for remediation of releases of hazardous substances, rendering a person liable for environmental damage, without regard to negligence or fault on the part of such person.
While no one client accounted for over 10% of our revenue for fiscal 2022, we face collection risk as a normal part of our business where we perform services and subsequently bill our clients for such services, or when we make equity investments in majority or minority controlled large-scale client projects and other long-term capital projects before the project completes operational status or completes its project financing.
While no one client accounted for over 10% of our revenue for fiscal 2023, we face collection risk as a normal part of our business where we perform services and subsequently bill our clients for such services, or when we make equity investments in majority or minority controlled large-scale client projects and other long-term capital projects before the project completes operational status or completes its project financing.
During fiscal 2022 and 2021, approximately 41% and 43%, respectively, of our revenue was derived from contracts with government entities. Most government contracts are subject to such government’s budgetary approval process. Legislatures typically appropriate funds for a given program on an annual basis, even though contract performance may take more than one year.
During fiscal 2023 and 2022, approximately 43% and 41%, respectively, of our revenue was derived from contracts with government entities. Most government contracts are subject to such government’s budgetary approval process. Legislatures typically appropriate funds for a given program on an annual basis, even though contract performance may take more than one year.
Accordingly, RUPO is $19.4 billion lower than backlog. We cannot guarantee that future revenue will be realized from either category of backlog or, if realized, will result in profits. Many projects may remain in our backlog for an extended period of time because of the size or long-term nature of the contract.
Accordingly, RUPO is $19.3 billion lower than backlog. We cannot guarantee that future revenue will be realized from either category of backlog or, if realized, will result in profits. Many projects may remain in our backlog for an extended period of time because of the size or long-term nature of the contract.
In addition, in connection with the investment activities of ACAP, we provide guarantees of obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and other lender required guarantees. 23 Table of Contents ​ AECOM Capital’s real estate development and investment activities are inherently risky and may result in a future loss.
In addition, in connection with the investment activities of ACAP, we provide guarantees of obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and other lender required guarantees. 22 Table of Contents ​ AECOM Capital’s real estate development and investment activities are inherently risky and may result in a future loss.
Our continuing work in the areas governed by these laws and regulations exposes us to the risk of substantial liability. Risks Related to Climate Change Climate change and related environmental issues could have a material adverse impact on us.
Our continuing work in the areas governed by these laws and regulations exposes us to the risk of substantial liability. Risks Related to Climate Change Climate change, natural disasters and related environmental issues could have a material adverse impact on us.
Losses under fixed-price or guaranteed contracts could be substantial and adversely impact our results of operations. 22 Table of Contents ​ Our failure to meet contractual schedule or performance requirements that we have guaranteed could adversely affect our operating results.
Losses under fixed-price or guaranteed contracts could be substantial and adversely impact our results of operations. 21 Table of Contents ​ Our failure to meet contractual schedule or performance requirements that we have guaranteed could adversely affect our operating results.
We may experience errors, outages, or delays of service in our information technology systems, which could significantly disrupt our operations, impact our clients and employees, damage our reputation, and result in litigation and regulatory fines or penalties. Various privacy and securities laws pertaining to client and employee data usage require us to manage and protect sensitive and proprietary information.
We may experience errors, outages, or delays of service in our information technology systems, which could significantly disrupt our operations, impact our clients and employees, damage our reputation, and result in litigation and regulatory fines or penalties. 20 Table of Contents ​ Various privacy and securities laws pertaining to client and employee data usage require us to manage and protect sensitive and proprietary information.
In addition, the divestiture of any business could negatively impact our profitability because of losses that may result from such a sale, the loss of sales and operating income, or a decrease in cash flows. 26 Table of Contents ​ Other Risks An impairment charge of goodwill could have a material adverse impact on our financial condition and results of operations.
In addition, the divestiture of any business could negatively impact our profitability because of losses that may result from such a sale, the loss of sales and operating income, or a decrease in cash flows. Other Risks An impairment charge of goodwill could have a material adverse impact on our financial condition and results of operations.
In addition, public-supported financing such as state and local municipal bonds may be only partially raised to support existing infrastructure projects. As a result, at the beginning of a program, the related contract is only partially funded, and additional funding is normally committed only as appropriations are made in each fiscal year.
In addition, public-supported financing such as state and local municipal bonds may be only partially raised to support existing infrastructure projects. As 16 Table of Contents ​ a result, at the beginning of a program, the related contract is only partially funded, and additional funding is normally committed only as appropriations are made in each fiscal year.
As a result, our failure to maintain adequate safety standards and equipment could result in reduced profitability or the loss of projects or clients, and could have a material adverse impact on our business, financial condition, and results of operations. 21 Table of Contents ​ Cybersecurity threats, information technology systems outages and data privacy incidents could adversely harm our business.
As a result, our failure to maintain adequate safety standards and equipment could result in reduced profitability or the loss of projects or clients, and could have a material adverse impact on our business, financial condition, and results of operations. Cybersecurity threats, information technology systems outages and data privacy incidents could adversely harm our business.
Such defaults could materially adversely impact our revenues, results of operations or accounts receivable. 27 Table of Contents ​ Our services expose us to significant risks of liability and our insurance policies may not provide adequate coverage. Our services involve significant risks of professional and other liabilities that may substantially exceed the fees that we derive from such services.
Such defaults could materially adversely impact our revenues, results of operations or accounts receivable. Our services expose us to significant risks of liability and our insurance policies may not provide adequate coverage. Our services involve significant risks of professional and other liabilities that may substantially exceed the fees that we derive from such services.
The Credit Agreement and the indentures governing our debt contain a number of significant covenants that impose operating and other restrictions on us and our subsidiaries.
The Credit Agreement (defined below) and the indentures governing our debt contain a number of significant covenants that impose operating and other restrictions on us and our subsidiaries.
Failure to adequately protect, maintain, or enforce our intellectual property rights may adversely limit our competitive position. Our revenue and growth prospects may be harmed if we or our employees are unable to obtain government granted eligibility or other qualifications we and they need to perform services for our customers.
Failure to adequately protect, maintain, or enforce our intellectual property rights may adversely limit our competitive position. 28 Table of Contents ​ Our revenue and growth prospects may be harmed if we or our employees are unable to obtain government granted eligibility or other qualifications we and they need to perform services for our customers.
We conduct a portion of our operations through joint venture entities, over which we may have limited control. Approximately 11% of our fiscal 2022 revenue was derived from our operations through joint ventures or similar partnership arrangements, where control may be shared with unaffiliated third parties.
We conduct a portion of our operations through joint venture entities, over which we may have limited control. Approximately 14% of our fiscal 2023 revenue was derived from our operations through joint ventures or similar partnership arrangements, where control may be shared with unaffiliated third parties.
Sales of our services provided to our unconsolidated joint ventures were approximately 3% of our fiscal 2022 revenue. We generally do not have control of these unconsolidated joint ventures. These joint ventures may not be subject to the same requirements regarding internal controls and internal control over financial reporting that we follow.
Sales of our services provided to our unconsolidated joint ventures were approximately 2% of our fiscal 2023 revenue. We generally do not have control of these unconsolidated joint ventures. These joint ventures may not be subject to the same requirements regarding internal controls and internal control over financial reporting that we follow.
Our backlog of uncompleted projects under contract is subject to unexpected adjustments and cancellations and, thus may not accurately reflect future revenue and profits. At September 30, 2022, backlog was approximately $40.2 billion.
Our backlog of uncompleted projects under contract is subject to unexpected adjustments and cancellations and, thus may not accurately reflect future revenue and profits. At September 30, 2023, backlog was approximately $41.2 billion.
We reported transaction price allocated to remaining unsatisfied performance obligations (RUPO) of $20.8 billion, as described in Note 4, Revenue Recognition, in the notes to our consolidated financial statements.
We reported transaction price allocated to remaining unsatisfied performance obligations (RUPO) of $21.9 billion, as described in Note 4, Revenue Recognition, in the notes to our consolidated financial statements.
We rely on a combination of intellectual property policies and other contractual arrangements to protect much of our intellectual property where we do not believe that trademark, patent or copyright protection is appropriate or obtainable. Trade secrets are generally difficult to protect.
Our success depends, in part, upon our ability to protect our intellectual property. We rely on a combination of intellectual property policies and other contractual arrangements to protect much of our intellectual property where we do not believe that trademark, patent or copyright protection is appropriate or obtainable. Trade secrets are generally difficult to protect.
The new legislation may result in new risk, regulatory and cost challenges for our United Kingdom and global operations which are not presently estimable. Any of these events could adversely affect our United Kingdom, European operations and overall business and financial results.
The new legislation may result in new risk, regulatory and cost challenges for our United Kingdom and global operations. Any of these events could adversely affect our United Kingdom, European operations and overall business and financial results.
As of September 30, 2022 and September 30, 2021, we were contingently liable for $4.4 billion and $4.3 billion, respectively, in issued surety bonds primarily to support project execution and we had outstanding letters of credit totaling $644.7 million and $483.0 million, respectively.
As of September 30, 2023 and September 30, 2022, we were contingently liable for $4.6 billion and $4.4 billion, respectively, in issued surety bonds primarily to support project execution and we had outstanding letters of credit totaling $883.3 million and $644.7 million, respectively.
Our collective bargaining agreements with unions require us to contribute to various multiemployer pension plans; however, we do not control or manage these plans. For the year ended September 30, 2022, we contributed $2.9 million to multiemployer pension plans.
Our collective bargaining agreements with unions require us to contribute to various multiemployer pension plans; however, we do not control or manage these plans. For the year ended September 30, 2023, we contributed $3.0 million to multiemployer pension plans.
Because we have grown in part through acquisitions, goodwill and intangible assets-net represent a substantial portion of our assets, and were $3.4 billion and $35.6 million, respectively as of September 30, 2022.
Because we have grown in part through acquisitions, goodwill and intangible assets-net represent a substantial portion of our assets, and were $3.4 billion and $17.8 million, respectively as of September 30, 2023.
Similarly, the impact of an economic downturn on governments, including as a result of the Covid-19 pandemic, may make it more difficult for them to fund infrastructure projects. If appropriations are not made in subsequent years on our government contracts, then we will not realize all of our potential revenue and profit from that contract.
Similarly, the impact of an economic downturn on governments may make it more difficult for them to fund infrastructure projects. If appropriations are not made in subsequent years on our government contracts, then we will not realize all of our potential revenue and profit from those contracts.
At September 30, 2022, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of approximately $204.4 million.
At September 30, 2023, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of approximately $165.3 million.
In addition, we may enter guaranteed maximum price contracts where we guarantee a price or delivery date. For the year ended September 30, 2022, our revenue was comprised of 41%, 33%, and 26% cost-reimbursable, guaranteed maximum price, and fixed-price contracts, respectively.
In addition, we may enter guaranteed maximum price contracts where we guarantee a price or delivery date. For the year ended September 30, 2023, our revenue was comprised of 43%, 34%, and 23% cost-reimbursable, guaranteed maximum price, and fixed-price contracts, respectively.
Such restrictions affect or will affect and, in many respects, limit or prohibit, among other things, our ability and the ability of some of our subsidiaries to: ● incur additional indebtedness; ● create liens; ● pay dividends and make other distributions in respect of our equity securities; ● redeem or repurchase our equity securities; ● distribute excess cash flow from foreign to domestic subsidiaries; ● make investments or other restricted payments; ● sell assets; ● enter into transactions with affiliates; and ● effect mergers or consolidations. 18 Table of Contents ​ In addition, our Credit Agreement requires us to comply with a consolidated interest coverage ratio and consolidated leverage ratio.
Such restrictions affect or will affect and, in many respects, limit or prohibit, among other things, our ability and the ability of some of our subsidiaries to: ● incur additional indebtedness; ● create liens; ● pay dividends and make other distributions in respect of our equity securities; ● redeem or repurchase our equity securities; ● distribute excess cash flow from foreign to domestic subsidiaries; ● make investments or other restricted payments; ● sell assets; ● enter into transactions with affiliates; and ● effect mergers or consolidations.
Demand for our services is cyclical and may be vulnerable to sudden economic downturns, interest rate fluctuations and reductions in government and private industry spending that result in clients delaying, curtailing or canceling proposed and existing projects. For example, the Covid-19 pandemic reduced demand for some of our services and impacted certain client spending.
Demand for our services is cyclical and may be vulnerable to sudden economic downturns, interest rate fluctuations and reductions in government and private industry spending that result in clients delaying, curtailing or canceling proposed and existing projects.
These types of backlog reductions adversely affect the revenue and profits that we ultimately receive from contracts reflected in our backlog. 28 Table of Contents ​ From time to time, we submit claims to clients for work we performed beyond the initial scope of some of our contracts.
In addition, from time to time, projects are delayed, scaled back or canceled. These types of backlog reductions adversely affect the revenue and profits that we ultimately receive from contracts reflected in our backlog. From time to time, we submit claims to clients for work we performed beyond the initial scope of some of our contracts.
A 1.00% increase in such interest rates would increase total interest expense under our Credit Agreement for the year ended September 30, 2022 by $11.3 million, including the effect of our interest rate swaps.
A 1.00% increase in such interest rates would increase total interest expense under our Credit Agreement for the year ended September 30, 2023 by $8.6 million, including the effect of our interest rate swap and interest rate cap agreements.
Bribery Act of 2010, generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business.
Foreign Corrupt Practices Act (FCPA) and similar worldwide anti-corruption laws, including the U.K. Bribery Act of 2010, generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business.
The U.S. and many international legislative and regulatory bodies continually propose and enact legislation that could significantly impact how U.S. multinational corporations are taxed. 30 Table of Contents ​ Due to the large scale of our U.S. and international business activities, many of these proposed changes, if enacted into law, could have an adverse impact on our worldwide effective tax rate, income tax expense and cash flows. ​
Due to the large scale of our U.S. and international business activities, many of these proposed changes, if enacted into law, could have an adverse impact on our worldwide effective tax rate, income tax expense and cash flows. ​ 29 Table of Contents ​
Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as well as disrupt the management of our business operations. We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and because some of our contracts require us to maintain specific insurance coverage limits.
We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and because some of our contracts require us to maintain specific insurance coverage limits.
We regularly review our portfolio of businesses and pursue growth through acquisitions and seek to divest non-core businesses. We may not be able to complete transactions on favorable terms, on a timely basis, or at all, and during the integration of any acquisition, we may discover regulatory and compliance issues.
We may not be able to complete transactions on favorable terms, on a timely basis, or at all, and during the integration of any acquisition, we may discover regulatory and compliance issues.
Some of our services are performed in high-risk locations, such as the Middle East, Africa, and Southeast Asia, where the location is suffering from political, social or economic problems, or war or civil unrest. In those locations where we have employees or operations, we may incur material costs to maintain the safety of our personnel.
We work in international locations where there are high security risks, which could result in harm to our employees and contractors or material costs to us. Some of our services are performed in high-risk locations, such as the Middle East, Africa, and Southeast Asia, where the location is suffering from political, social or economic problems, or war or civil unrest.
Our SEC-registered investment adviser jointly manages and sponsors the AECOM-Canyon Equity Fund, L.P. (the “Fund”), in which the Company indirectly holds an equity interest and which also invests in and develops Real Estate Joint Ventures on behalf of its investors.
(the “Fund”), in which the Company indirectly holds an equity interest and which also invests in and develops Real Estate Joint Ventures on behalf of its investors.
AECOM’s provision of lender guarantees is contingent upon the Real Estate Joint Ventures meeting AECOM’s underwriting criteria, including an affiliate of AECOM acting as either the construction manager at risk or the owner’s representative for the project, no material adverse change in AECOM’s financial condition, and the guarantee not violating a covenant under a material AECOM agreement.
AECOM’s provision of lender guarantees is contingent upon the Real Estate Joint Ventures meeting AECOM’s underwriting criteria, which include an affiliate of AECOM acting as either the construction manager at risk or the owner’s representative for the project.
We rely heavily upon the expertise and leadership of our people. There is strong competition for qualified technical and management personnel in the sectors in which we compete.
Our ability to compete in our industry will be harmed if we do not retain the continued services of our senior management and key technical personnel. We rely heavily upon the expertise and leadership of our people. There is strong competition for qualified technical and management personnel in the sectors in which we compete.
These events or circumstances could include a significant change in the business climate, including a significant sustained decline in a reporting unit’s market value, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of our business, a significant sustained decline in our market capitalization and other factors.
These events or circumstances could include a significant change in the business climate, including a significant sustained decline in a reporting unit’s market value, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of our business, a significant sustained decline in our market capitalization and other factors. 25 Table of Contents ​ In addition, if we experience a decrease in our stock price and market capitalization over a sustained period, we would have to record an impairment charge in the future.
Borrowings under our Credit Agreement are at variable rates of interest and expose us to interest rate risk. In March 2022, the Federal Reserve began and it has continued, and is expected to continue, to raise interest rates in an effort to curb inflation.
In March 2022, the Federal Reserve began and it has continued, and is expected to continue, to raise interest rates in an effort to curb inflation.
If an event of default occurs, our creditors could elect to: ● declare all borrowings outstanding, together with accrued and unpaid interest, to be immediately due and payable; ● require us to apply all of our available cash to repay the borrowings; or ● prevent us from making debt service payments on our borrowings.
If an event of default occurs, our creditors could elect to: ● declare all borrowings outstanding, together with accrued and unpaid interest, to be immediately due and payable; ● require us to apply all of our available cash to repay the borrowings; or ● prevent us from making debt service payments on our borrowings. 18 Table of Contents ​ If we were unable to repay or otherwise refinance these borrowings when due, the applicable creditors could sell the collateral securing some of our debt instruments, which constitutes substantially all of our domestic and foreign, wholly owned subsidiaries’ assets.
In addition, we may not be awarded government contracts because of existing government policies designed to protect small businesses and under-represented minority contractors.
In addition, we may not be awarded government contracts because of existing government policies designed to protect small businesses and under-represented minority contractors. Our inability to win or renew government contracts during regulated procurement processes could harm our operations and reduce our profits and revenues.
The extent of our competition varies according to the particular markets and geographic area. In addition, the technical and professional aspects of some of our services generally do not require large upfront capital expenditures and provide limited barriers against new competitors.
In addition, the technical and professional aspects of some of our services generally do not require large upfront capital expenditures and provide limited barriers against new competitors. The degree and type of competition we face is also influenced by the type and scope of a particular project.
Despite these precautions, the safety of our personnel in these locations may continue to be at risk.
In those locations where we have employees or operations, we may incur material costs to maintain the safety of our personnel. Despite these precautions, the safety of our personnel in these locations may continue to be at risk.
Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations or financial condition. We work in international locations where there are high security risks, which could result in harm to our employees and contractors or material costs to us.
Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations or financial condition.
Our contracts with governmental agencies are subject to audit, which could result in adjustments to reimbursable contract costs or, if we are charged with wrongdoing, possible temporary or permanent suspension from participating in government programs. Our books and records are subject to audit by the various governmental agencies we serve and their representatives.
If a government terminates a contract due to our default, we could be liable for excess costs incurred by the government in obtaining services from another source. 17 Table of Contents ​ Our contracts with governmental agencies are subject to audit, which could result in adjustments to reimbursable contract costs or, if we are charged with wrongdoing, possible temporary or permanent suspension from participating in government programs.
Our operations worldwide expose us to legal, political and economic risks in different countries as well as currency exchange rate fluctuations and impacts from inflation that could harm our business and financial results. During fiscal 2022, revenue attributable to our services provided outside of the United States to non-U.S. clients was approximately 29% of our total revenue.
Risks Related to our International Operations Our operations worldwide expose us to legal, political and economic risks in different countries as well as currency exchange rate fluctuations and impacts from inflation that could harm our business and financial results.
When these types of events occur and unresolved claims are pending, we have used working capital in projects to cover cost overruns pending the resolution of the relevant claims. If these claims are not approved, our revenue may be reduced in future periods. In conducting our business, we depend on other contractors, subcontractors and equipment and material providers.
If these claims are not approved, our revenue may be reduced in future periods. 27 Table of Contents ​ In conducting our business, we depend on other contractors, subcontractors and equipment and material providers.
Additionally, our insurance policies may not protect us against potential liability due to various exclusions in the policies and self-insured retention amounts. Partially or completely uninsured claims, if successful and of significant magnitude, could have a material adverse effect on our business.
Additionally, our insurance policies may not protect us against potential liability due to various exclusions in the policies and self-insured retention amounts.
We could be liable to third parties who use or rely upon our reports and other work product even if we are not contractually bound to those third parties.
We could be liable to third parties who use or rely upon our reports and other work product even if we are not contractually bound to those third parties. These events could in turn result in monetary damages and penalties. Failure to adequately protect, maintain, or enforce our rights in our intellectual property may adversely limit our competitive position.
The degree and type of competition we face is also influenced by the type and scope of a particular project. Our clients make competitive determinations based upon qualifications, experience, performance, reputation, technology, customer relationships, price and ability to provide the relevant services in a timely, safe and cost-efficient manner.
Our clients make competitive determinations based upon qualifications, experience, performance, reputation, technology, customer relationships, price and ability to provide the relevant services in a timely, safe and cost-efficient manner. Increased competition may result in our inability to win bids for future projects, increased margin pressure and loss of revenue, profitability and market share.
We are engaged in a highly competitive business. The markets we serve are highly fragmented and we compete with a large number of regional, national and international companies. These competitors may have greater financial and other resources than we do. Others are smaller and more specialized, and concentrate their resources in particular areas of expertise.
These competitors may have greater financial and other resources than we do. Others are smaller and more specialized, and concentrate their resources in particular areas of expertise. The extent of our competition varies according to the particular markets and geographic area.
In addition, for some assignments, the U.S. government may attempt to “insource” the services to government employees rather than outsource to a contractor. If a government terminates a contract due to our default, we could be liable for excess costs incurred by the government in obtaining services from another source.
In addition, for some assignments, the U.S. government may attempt to “insource” the services to government employees rather than outsource to a contractor.
As a result, performance by the divested businesses or other conditions outside of our control could have a material adverse effect on our results of operations.
In addition, any purchase price adjustments could be unfavorable and other future proceeds owed to us as part of these transactions could be lower than we expect. As a result, performance by the divested businesses or other conditions outside of our control could have a material adverse effect on our results of operations.
We operate in many different jurisdictions and we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws. The U.S. Foreign Corrupt Practices Act (FCPA) and similar worldwide anti-corruption laws, including the U.K.
Any of these factors could have a material adverse effect on our business, results of operations or financial condition. We operate in many different jurisdictions and we could be adversely affected by legislative actions of governments, as well as violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws. The U.S.
Our ability to comply with these ratios may be affected by events beyond our control.
In addition, our Credit Agreement requires us to comply with a consolidated interest coverage ratio and consolidated leverage ratio. Our ability to comply with these ratios may be affected by events beyond our control.
Our inability to win or renew government contracts during regulated procurement processes could harm our operations and reduce our profits and revenues. 17 Table of Contents ​ Governmental agencies may modify, curtail or terminate our contracts at any time prior to their completion and, if we do not replace them, we may suffer a decline in revenue.
Governmental agencies may modify, curtail or terminate our contracts at any time prior to their completion and, if we do not replace them, we may suffer a decline in revenue. Most government contracts may be modified, curtailed or terminated by the government either at its discretion or upon the default of the contractor.
There is no guarantee that we can continue to renew our credit facility on terms as favorable as those in our existing credit facility and, if we are unable to do so, our costs of borrowing and our business may be adversely affected. 19 Table of Contents ​ Risks Related to our International Operations The uncertainty surrounding the implementation of and effects of the United Kingdom’s proposed withdrawal from the European Union could have an adverse effect on our business and financial results.
We use credit facilities to support our working capital and other needs. There is no guarantee that we can continue to renew our credit facility on terms as favorable as those in our existing credit facility and, if we are unable to do so, our costs of borrowing and our business may be adversely affected.
ACAP’s real estate business involves managing, sponsoring, investing in and developing commercial real estate projects and joint ventures (Real Estate Joint Ventures) that are inherently risky and may result in future losses since real estate markets are significantly impacted by economic trends and government policies that we do not control.
ACAP’s real estate business involves managing, sponsoring, investing in and developing commercial real estate projects and joint ventures (Real Estate Joint Ventures) that are inherently risky and may result in future losses based on factors beyond our control, including economic trends, government policies and competition. Our SEC-registered investment adviser jointly manages and sponsors the AECOM-Canyon Equity Fund, L.P.
These audits can result in adjustments to the amount of contract costs we believe are reimbursable by the agencies and the amount of our overhead costs allocated to the agencies. If such matters are not resolved in our favor, they could have a material adverse effect on our business.
If such matters are not resolved in our favor, they could have a material adverse effect on our business.
If we were unable to repay or otherwise refinance these borrowings when due, the applicable creditors could sell the collateral securing some of our debt instruments, which constitutes substantially all of our domestic and foreign, wholly owned subsidiaries’ assets. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. Borrowings under our Credit Agreement are at variable rates of interest and expose us to interest rate risk.
As a result, we may be more vulnerable to changing market conditions, which could have a material adverse effect on our business, financial condition, and results of operations. 25 Table of Contents ​ We may be unable to successfully execute or effectively integrate acquisitions and divestitures may not occur as planned.
Risks Related to Acquisitions and Divestitures We may be unable to successfully execute or effectively integrate acquisitions and divestitures may not occur as planned. We regularly review our portfolio of businesses and pursue growth through acquisitions and seek to divest non-core businesses.
Removed
Risks Related to Our Markets, Customers and Business Our business, results of operations and financial condition have been adversely affected and could in the future be materially adversely affected by the Covid-19 pandemic.
Added
Our books and records are subject to audit by the various governmental agencies we serve and their representatives. These audits can result in adjustments to the amount of contract costs we believe are reimbursable by the agencies and the amount of our overhead costs allocated to the agencies.
Removed
Our business could be materially and adversely affected by the risk, or the public perception of risk, related to a pandemic or widespread health crisis, such as the Covid-19 pandemic.
Added
During fiscal 2023, revenue attributable to our services provided outside of the United States to non-U.S. clients was approximately 29% of our total revenue.
Removed
A significant outbreak, epidemic or pandemic of contagious diseases in the human population could result in a widespread health crisis adversely affecting the broader economies, financial markets and overall demand for our services.
Added
Partially or completely uninsured claims, if successful and of significant magnitude, could have a material adverse effect on our business. 26 Table of Contents ​ Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as well as disrupt the management of our business operations.
Removed
In addition, any preventative or protective actions that governments implement or that we take in respect of a global health crisis, such as travel restrictions, quarantines, or site closures, may interfere with the ability of our employees and vendors to perform their responsibilities.
Added
When these types of events occur and unresolved claims are pending, we have used working capital in projects to cover cost overruns pending the resolution of the relevant claims.
Removed
For example, lockdowns and other Covid-19 related restrictions implemented by China starting in late March 2022 had a negative impact on our business in China for the third and fourth quarters of 2022 and we expect that if any similar lockdowns and restrictions in China are implemented in the future, our business in China could be negatively impacted in future quarters.
Added
The U.S. and many international legislative and regulatory bodies continually propose and enact legislation that could significantly impact how U.S. multinational corporations are taxed. The Organization for Economic Co-operation and Development (OECD), a global coalition of member countries, has developed a two-pillar framework to reform international taxation.
Removed
Such results could have a material adverse effect on our operations, business, financial condition, results of operations, or cash flows. Our operations have been affected by a range of external factors related to the Covid-19 pandemic that are not within our control.
Added
The proposal aims to ensure that multinationals pay a minimum rate of tax on their foreign profits through the introduction of a global minimum tax among other provisions. As this framework is subject to further negotiation and implementation by each member country, the timing and ultimate impact of any such changes on our tax obligations are uncertain.
Removed
For example, some jurisdictions have imposed a wide range of restrictions on the physical movement of our employees and vendors to limit the spread of Covid-19 and some non-essential construction and other client projects temporarily halted as a result.
Removed
Extended disruptions due to the Covid-19 pandemic could further delay or limit our ability to perform services, make or receive timely payments, and impair our ability to win future contracts. Any cost increases due to Covid-19 or future pandemics may not be fully recoverable or adequately covered by our insurance.
Removed
Our management continues to focus on mitigating the effects of Covid-19 on our business, which has required and will continue to require a substantial investment of their time and may delay their other efforts.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES 31 ITEM 3. LEGAL PROCEEDINGS 31 ITEM 4. MINE SAFETY DISCLOSURE 31 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 32 ITEM 6. [RESERVED] 33 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 34 ITEM 7A.
Biggest changeITEM 2. PROPERTIES 30 ITEM 3. LEGAL PROCEEDINGS 30 ITEM 4. MINE SAFETY DISCLOSURE 30 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 31 ITEM 6. [RESERVED] 32 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 33 ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 54 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 56
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 53 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 54

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed2 unchanged
Biggest changeStock repurchases can be made through open market purchases or other methods, including pursuant to a Rule 10b5-1 plan. On November 13, 2020, the Board approved an increase in the Company’s repurchase authorization to $1.0 billion. On September 22, 2021, the Board approved another increase in the Company’s repurchase authorization to $1.0 billion.
Biggest changeStock repurchases can be made through open market purchases or other methods, including pursuant to a Rule 10b5-1 plan. On November 9, 2023, the Board approved another increase in the Company’s repurchase authorization back up to $1.0 billion.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange (NYSE) under the symbol “ACM.” According to the records of our transfer agent, there were 1,575 stockholders of record as of November 10, 2022. Unregistered Sales of Equity Securities None.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange (NYSE) under the symbol “ACM.” According to the records of our transfer agent, there were 1,467 stockholders of record as of November 10, 2023. Unregistered Sales of Equity Securities None.
Performance Measurement Comparison (1) The following chart compares the cumulative total stockholder return of AECOM stock (ACM) with the cumulative total return of the S&P MidCap 400, and the S&P Composite 1500 Construction & Engineering, from September 29, 2017 to September 30, 2022.
Performance Measurement Comparison (1) The following chart compares the cumulative total stockholder return of AECOM stock (ACM) with the cumulative total return of the S&P MidCap 400, and the S&P Composite 1500 Construction & Engineering, from September 28, 2018 to September 29, 2023.
(1) This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any of our filings under the Securities Act or Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. ​ 32 Table of Contents ​ ​ Stock Repurchase Program On September 21, 2017, the Company’s Board of Directors announced a capital allocation policy that authorized the repurchase of up to $1.0 billion in AECOM common stock.
(1) This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any of our filings under the Securities Act or Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. ​ 31 Table of Contents ​ ​ Stock Repurchase Program On September 22, 2021, the Company’s Board of Directors approved an increase in the Company’s repurchase authorization of AECOM common stock to $1.0 billion.
Equity Compensation Plans The following table presents certain information about shares of AECOM common stock that may be issued under our equity compensation plans as of September 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Column A ​ Column B Column C ​ ​ ​ ​ Number of securities ​ ​ ​ ​ ​ ​ ​ remaining available ​ ​ Number of securities ​ Weighted ‑ average ​ for future ​ ​ to be issued ​ exercise price of ​ issuance under ​ ​ upon exercise ​ Outstanding ​ equity compensation ​ ​ of outstanding ​ options, ​ plans (excluding ​ ​ options, warrants, ​ warrants, and ​ securities reflected Plan Category and rights (1) Rights in Column A) Equity compensation plans not approved by stockholders N/A ​ N/A ​ N/A Equity compensation plans approved by stockholders: ​ ​ AECOM Stock Incentive Plans 2,034,230 (1) ​ $ 38.72 (2) ​ 11,276,755 AECOM Employee Stock Purchase Plan (3) N/A ​ N/A ​ 9,059,560 Total 2,034,230 ​ $ 38.72 ​ 20,336,315 (1) Includes 265,487 shares issuable upon the exercise of stock options, 1,042,780 shares issuable upon the vesting of Restricted Stock Units and 725,963 shares issuable if specified performance targets are met under Performance Earnings Program Awards (PEP).
Equity Compensation Plans The following table presents certain information about shares of AECOM common stock that may be issued under our equity compensation plans as of September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Column A ​ Column B Column C ​ ​ ​ ​ Number of securities ​ ​ ​ ​ ​ ​ ​ remaining available ​ ​ Number of securities ​ Weighted ‑ average ​ for future ​ ​ to be issued ​ exercise price of ​ issuance under ​ ​ upon exercise ​ Outstanding ​ equity compensation ​ ​ of outstanding ​ options, ​ plans (excluding ​ ​ options, warrants, ​ warrants, and ​ securities reflected Plan Category and rights (1) Rights in Column A) Equity compensation plans not approved by stockholders N/A ​ N/A ​ N/A Equity compensation plans approved by stockholders: ​ ​ AECOM Stock Incentive Plans 1,576,417 (1) ​ ​ 38.72 (2) ​ 10,239,810 AECOM Employee Stock Purchase Plan (3) N/A ​ N/A ​ 8,440,301 Total 1,576,417 ​ $ 38.72 ​ 18,680,111 (1) Includes 106,194 shares issuable upon the exercise of stock options, 772,818 shares issuable upon the vesting of Restricted Stock Units, and 697,405 shares issuable if specified performance targets are met under Performance Earnings Program Awards (PEP).
A summary of the repurchase activity for the three months ended September 30, 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number ​ ​ ​ Total Number of Shares Maximum Approximate Dollar ​ ​ of Shares ​ Average Price ​ Purchased as Part of Publicly ​ Value that May Yet Be Purchased Period Purchased Paid Per Share Announced Plans or Programs Under the Plans or Programs July 1 – 31, 2022 ​ — ​ $ — ​ — ​ $ 632,071,000 August 1 – 31, 2022 — ​ — ​ — ​ 632,071,000 September 1 – 30, 2022 788,881 ​ 69.73 ​ 788,881 ​ 577,060,000 Total 788,881 ​ $ 69.73 ​ 788,881 ​ ​ ​ ​ ​
A summary of the repurchase activity for the three months ended September 30, 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number ​ ​ ​ Total Number of Shares Maximum Approximate Dollar ​ ​ of Shares ​ Average Price ​ Purchased as Part of Publicly ​ Value that May Yet Be Purchased Period Purchased Paid Per Share Announced Plans or Programs Under the Plans or Programs July 1 – 31, 2023 ​ — ​ $ — ​ — ​ $ 452,000,000 August 1 – 31, 2023 1,138,926 ​ 87.82 ​ 1,138,926 ​ 352,000,000 September 1 – 30, 2023 1,551,753 ​ 83.79 ​ 1,551,753 ​ 220,200,000 Total 2,690,679 ​ $ 85.50 ​ 2,690,679 ​ ​ ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

107 edited+20 added−26 removed100 unchanged
Biggest changeFiscal year ended September 30, 2022 compared to the fiscal year ended September 30, 2021 Consolidated Results ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ Change ​ ​ ​ September 30, ​ September 30, ​ ​ ​ ​ ​ ​ ​ 2022 2021 $ % ​ ​ ​ ($ in millions) ​ Revenue $ 13,148.2 ​ $ 13,340.9 ​ $ (192.7) ​ (1.4) % Cost of revenue ​ 12,300.2 ​ 12,542.5 ​ (242.3) ​ (1.9) Gross profit ​ 848.0 ​ 798.4 ​ 49.6 ​ 6.2 Equity in earnings of joint ventures ​ 53.6 ​ 35.0 ​ 18.6 ​ 53.1 General and administrative expenses ​ (147.3) ​ (155.0) ​ 7.7 ​ (5.0) Restructuring cost ​ (107.5) ​ (48.8) ​ (58.7) ​ 120.3 ​ Income from operations ​ 646.8 ​ 629.6 ​ 17.2 ​ 2.7 Other income ​ 14.1 ​ 17.6 ​ (3.5) ​ (19.9) Interest expense ​ (110.2) ​ (238.4) ​ 128.2 ​ (53.8) Income from continuing operations before taxes ​ 550.7 ​ 408.8 ​ 141.9 ​ 34.7 Income tax expense from continuing operations ​ 136.1 ​ 89.0 ​ 47.1 ​ 52.9 Net income from continuing operations ​ 414.6 ​ 319.8 ​ 94.8 ​ 29.6 Net loss from discontinued operations ​ (79.9) ​ (116.8) ​ 36.9 ​ (31.6) Net income ​ ​ 334.7 ​ ​ 203.0 ​ ​ 131.7 ​ 64.9 ​ Net income attributable to noncontrolling interests from continuing operations ​ ​ (25.5) ​ ​ (25.1) ​ ​ (0.4) ​ 1.6 ​ Net income attributable to noncontrolling interests from discontinued operations ​ ​ 1.4 ​ ​ (4.7) ​ ​ 6.1 ​ (129.8) ​ Net income attributable to noncontrolling interests ​ ​ (24.1) ​ ​ (29.8) ​ ​ 5.7 ​ (19.1) ​ Net income attributable to AECOM from continuing operations ​ ​ 389.1 ​ ​ 294.7 ​ ​ 94.4 ​ 32.0 ​ Net loss attributable to AECOM from discontinued operations ​ ​ (78.5) ​ ​ (121.5) ​ ​ 43.0 ​ (35.4) ​ Net income attributable to AECOM ​ $ 310.6 ​ $ 173.2 ​ $ 137.4 ​ 79.3 % ​ 41 Table of Contents ​ The following table presents the percentage relationship of statement of operations items to revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ September 30, ​ September 30, ​ ​ 2022 ​ 2021 ​ Revenue 100.0 % 100.0 % Cost of revenue 93.6 94.0 ​ Gross profit 6.4 6.0 ​ Equity in earnings of joint ventures 0.4 0.3 ​ General and administrative expenses (1.1) (1.2) ​ Restructuring costs (0.8) (0.4) ​ Income from operations 4.9 4.7 ​ Other income 0.1 0.1 ​ Interest expense (0.8) (1.7) ​ Income from continuing operations before taxes ​ 4.2 3.1 ​ Income tax expense from continuing operations ​ 1.0 0.7 ​ Net income from continuing operations ​ 3.2 2.4 ​ Net loss from discontinued operations ​ (0.7) (0.9) ​ Net income ​ 2.5 ​ 1.5 ​ Net income attributable to noncontrolling interests from continuing operations ​ (0.2) ​ (0.2) ​ Net income attributable to noncontrolling interests from discontinued operations ​ 0.0 ​ 0.0 ​ Net income attributable to noncontrolling interests ​ (0.2) ​ (0.2) ​ Net income attributable to AECOM from continuing operations ​ 3.0 ​ 2.2 ​ Net loss attributable to AECOM from discontinued operations ​ (0.7) ​ (0.9) ​ Net income attributable to AECOM ​ 2.3 % 1.3 % ​ Revenue Our revenue for the year ended September 30, 2022 decreased $192.7 million, or 1.4%, to $13,148.2 million as compared to $13,340.9 million for the corresponding period last year.
Biggest changeIt is possible that our estimate of loss may be revised based on the actual or revised estimate of liability of the claims. 39 Table of Contents ​ Fiscal year ended September 30, 2023 compared to the fiscal year ended September 30, 2022 Consolidated Results ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ Change ​ ​ ​ September 30, ​ September 30, ​ ​ ​ ​ ​ ​ ​ 2023 2022 $ % ​ ​ ​ ($ in millions) ​ Revenue $ 14,378.5 ​ $ 13,148.2 ​ $ 1,230.3 ​ 9.4 % Cost of revenue ​ 13,433.0 ​ 12,300.2 ​ 1,132.8 ​ 9.2 Gross profit ​ 945.5 ​ 848.0 ​ 97.5 ​ 11.5 Equity in (losses) earnings of joint ventures ​ (279.4) ​ 53.6 ​ (333.0) ​ (621.3) General and administrative expenses ​ (153.6) ​ (147.3) ​ (6.3) ​ 4.3 Restructuring cost ​ (188.4) ​ (107.5) ​ (80.9) ​ 75.3 ​ Income from operations ​ 324.1 ​ 646.8 ​ (322.7) ​ (49.9) Other income ​ 8.3 ​ 5.9 ​ 2.4 ​ 40.7 Interest income ​ 40.3 ​ ​ 8.2 ​ ​ 32.1 ​ 391.5 ​ Interest expense ​ (159.3) ​ (110.2) ​ (49.1) ​ 44.6 Income from continuing operations before taxes ​ 213.4 ​ 550.7 ​ (337.3) ​ (61.2) Income tax expense from continuing operations ​ 56.1 ​ 136.1 ​ (80.0) ​ (58.8) Net income from continuing operations ​ 157.3 ​ 414.6 ​ (257.3) ​ (62.1) Net loss from discontinued operations ​ ​ (57.2) ​ (79.9) ​ 22.7 ​ (28.4) Net income ​ ​ 100.1 ​ ​ 334.7 ​ ​ (234.6) ​ (70.1) ​ Net income attributable to noncontrolling interests from continuing operations ​ ​ (43.2) ​ ​ (25.5) ​ ​ (17.7) ​ 69.4 ​ Net (loss) income attributable to noncontrolling interests from discontinued operations ​ ​ (1.6) ​ ​ 1.4 ​ ​ (3.0) ​ (214.3) ​ Net income attributable to noncontrolling interests ​ ​ (44.8) ​ ​ (24.1) ​ ​ (20.7) ​ 85.9 ​ Net income attributable to AECOM from continuing operations ​ ​ 114.1 ​ ​ 389.1 ​ ​ (275.0) ​ (70.7) ​ Net loss attributable to AECOM from discontinued operations ​ ​ (58.8) ​ ​ (78.5) ​ ​ 19.7 ​ (25.1) ​ Net income attributable to AECOM ​ $ 55.3 ​ $ 310.6 ​ $ (255.3) ​ (82.2) % ​ 40 Table of Contents ​ The following table presents the percentage relationship of statement of operations items to revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ September 30, ​ September 30, ​ ​ 2023 2022 ​ Revenue 100.0 % 100.0 % Cost of revenue 93.4 93.6 ​ Gross profit 6.6 6.4 ​ Equity in (losses) earnings of joint ventures (1.9) 0.4 ​ General and administrative expenses (1.1) (1.1) ​ Restructuring costs (1.3) (0.8) ​ Income from operations 2.3 4.9 ​ Other income 0.1 0.0 ​ Interest income ​ 0.3 ​ 0.1 ​ Interest expense (1.2) (0.8) ​ Income from continuing operations before taxes ​ 1.5 4.2 ​ Income tax expense from continuing operations ​ 0.4 1.0 ​ Net income from continuing operations ​ 1.1 3.2 ​ Net loss from discontinued operations ​ (0.4) (0.7) ​ Net income ​ 0.7 ​ 2.5 ​ Net income attributable to noncontrolling interests from continuing operations ​ (0.3) ​ (0.2) ​ Net (loss) income attributable to noncontrolling interests from discontinued operations ​ 0.0 ​ 0.0 ​ Net income attributable to noncontrolling interests ​ (0.3) ​ (0.2) ​ Net income attributable to AECOM from continuing operations ​ 0.8 ​ 3.0 ​ Net loss attributable to AECOM from discontinued operations ​ (0.4) ​ (0.7) ​ Net income attributable to AECOM ​ 0.4 % 2.3 % ​ Revenue Our revenue for the year ended September 30, 2023 increased $1,230.3 million, or 9.4%, to $14,378.5 million as compared to $13,148.2 million for the corresponding period last year.
We regularly integrate and consolidate our business operations and legal entity structure, and such internal initiatives could impact the assessment of uncertain tax positions, indefinite reinvestment assertions and the realizability of deferred tax assets. Net Loss From Discontinued Operations During the first quarter of fiscal 2020, management approved a plan to dispose via sale our self-perform at-risk construction businesses.
We regularly integrate and consolidate our business operations and legal entity structure, and such internal initiatives could impact the assessment of uncertain tax positions, indefinite reinvestment assertions and the realizability of deferred tax assets. Net Loss From Discontinued Operations During the first quarter of fiscal 2020, management approved a plan to dispose of via sale our self-perform at-risk construction businesses.
On or after December 15, 2026, we may redeem all or part of the 2027 Senior Notes at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to the redemption date.
On or after December 15, 2026, we may redeem all or part of the 2027 Senior Notes at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest on the redemption date.
The ownership percentage of these joint ventures is typically representative of the work to be performed or the amount of risk assumed by each joint venture partner. Some of these joint ventures are considered variable interest. We have consolidated all joint ventures for which we have control.
The ownership percentage of these joint ventures is typically representative of the work to be performed or the amount of risk assumed by each joint venture partner. Some of these joint ventures are considered variable interest entities. We have consolidated all joint ventures for which we have control.
We have aggregated various operating segments into our 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. ● Americas : Planning, consulting, architectural and engineering design, construction management and program management services to commercial and government clients in the United States, Canada, and Latin America in major end markets such as transportation, water, government, facilities, environmental, and energy. ● International : Planning, consulting, architectural and engineering design services and program management to commercial and government 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) : Invests primarily in and develops real estate projects.
We have aggregated various operating segments into our 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. ● Americas: Planning, consulting, architectural and engineering design, construction management and program management services to public and private clients in the United States, Canada, and Latin America in major end markets such as transportation, water, government, facilities, environmental, and energy. ● International: Planning, 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. ● AECOM Capital (ACAP): Primarily invests in and develops real estate projects.
Deconstruction, decommissioning and site restoration activities are complete. 52 Table of Contents ​ On January 31, 2020, the Company completed the sale of its Management Services business, including the Former Affiliate who worked on the DOE project, to Maverick Purchaser Sub LLC (MS Purchaser), an affiliate of American Securities LLC and Lindsay Goldberg LLC.
Deconstruction, decommissioning and site restoration activities are complete. 51 Table of Contents ​ On January 31, 2020, the Company completed the sale of its Management Services business, including the Former Affiliate who worked on the DOE project, to Maverick Purchaser Sub LLC (MS Purchaser), an affiliate of American Securities LLC and Lindsay Goldberg LLC.
The indenture pursuant to which the 2027 Senior Notes were issued contains customary events of default, including, among other things, payment default, exchange default, failure to provide notices thereunder and provisions related to bankruptcy events. The indenture also contains customary negative covenants. We were in compliance with the covenants relating to the 2027 Senior Notes as of September 30, 2022.
The indenture pursuant to which the 2027 Senior Notes were issued contains customary events of default, including, among other things, payment default, exchange default, failure to provide notices thereunder and provisions related to bankruptcy events. The indenture also contains customary negative covenants. We were in compliance with the covenants relating to the 2027 Senior Notes as of September 30, 2023.
In the ordinary course of business, we may not be aware that we or our affiliates are under investigation and may not be aware of whether or not a known investigation has been concluded. 51 Table of Contents ​ In the ordinary course of business, we may enter into various arrangements providing financial or performance assurance to clients, lenders, or partners.
In the ordinary course of business, we may not be aware that we or our affiliates are under investigation and may not be aware of whether or not a known investigation has been concluded. 50 Table of Contents ​ In the ordinary course of business, we may enter into various arrangements providing financial or performance assurance to clients, lenders, or partners.
At September 30, 2022, 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 September 30, 2023, 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.
The fair value of the 2027 Senior Notes as of September 30, 2022 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.
The fair value of the 2027 Senior Notes as of September 30, 2023 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.
The Credit Agreement contains customary negative covenants that include, among other things, limitations on our ability and certain of our 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, taken as a whole, and transact with affiliates.
The Credit Agreement contains customary negative covenants that include, among other things, limitations on our and certain of our subsidiaries’ ability, subject to certain exceptions, to incur liens and debt, make investments, dispositions, and restricted payments, change the nature of our business, consummate mergers, consolidations and the sale of all or substantially all of our respective assets, taken as a whole, and transact with affiliates.
In our assessment, we determine whether identifiable intangible assets exist, which typically include backlog and customer relationships. 39 Table of Contents ​ We test goodwill for impairment annually for each reporting unit in the beginning of the fourth quarter of the fiscal year and between annual tests, if events occur or circumstances change which suggest that goodwill should be evaluated.
In our assessment, we determine whether identifiable intangible assets exist, which typically include backlog and customer relationships. We test goodwill for impairment annually for each reporting unit in the beginning of the fourth quarter of the fiscal year and between annual tests, if events occur or circumstances change which suggest that goodwill should be evaluated.
Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the years ended September 30, 2022, 2021 and 2020 of $4.9 million, $10.2 million and $5.4 million, respectively. Other Commitments We enter into various joint venture arrangements to provide architectural, engineering, program management, construction management and operations and maintenance services.
Interest expense in the consolidated statements of operations included amortization of deferred debt issuance costs for the years ended September 30, 2023, 2022 and 2021 of $4.9 million, $4.9 million and $10.2 million, respectively. Other Commitments We enter into various joint venture arrangements to provide architectural, engineering, program management, construction management and operations and maintenance services.
There can be no assurance that audits by the DCAA or other governmental agencies will not result in material cost disallowances in the future. Allowance for Doubtful Accounts and Expected Credit Losses We record accounts receivable net of an allowance for doubtful accounts.
There can be no assurance that audits by the DCAA or other governmental agencies will not result in material cost disallowances in the future. 36 Table of Contents ​ Allowance for Doubtful Accounts and Expected Credit Losses We record accounts receivable net of an allowance for doubtful accounts.
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 years ended September 30, 2022 and 2021 were $6.8 billion and $7.2 billion, respectively.
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 years ended September 30, 2023 and 2022 were $7.7 billion and $6.8 billion, respectively.
General and Administrative Expenses General and administrative expenses include corporate expenses, including personnel, occupancy, and administrative expenses. Restructuring Expenses Restructuring expenses are comprised of personnel and other costs, real estate costs, and costs associated with the exit of our Russia-related businesses primarily related to actions that are expected to deliver continued margin improvements and efficiencies.
General and Administrative Expenses General and administrative expenses include corporate expenses, including personnel, occupancy, and administrative expenses. 35 Table of Contents ​ Restructuring Expenses Restructuring expenses are comprised of personnel and other costs, real estate costs, and costs associated with the exit of our Russia-related businesses primarily related to actions that are expected to deliver continued margin improvements and efficiencies.
The Credit Agreement permits us to designate certain of its subsidiaries as additional co-borrowers from time to time. Currently, there are no co-borrowers under the Credit Facilities.
The Credit Agreement permits us to designate certain of our subsidiaries as additional co-borrowers from time to time. Currently, there are no co-borrowers under the Credit Facilities.
During the impairment test, we estimate the fair value of the reporting unit using income and market approaches, and compare that amount to the carrying value of that reporting unit.
During a quantitative impairment test, we estimate the fair value of the reporting unit using income and market approaches, and compare that amount to the carrying value of that reporting unit.
As of September 30, 2022 and 2021, we had $1,145.6 million and $1,144.8 million, respectively, available under our Revolving Credit Facility. 2027 Senior Notes On February 21, 2017, we completed a private placement offering of $1,000,000,000 aggregate principal amount of our unsecured 5.125% Senior Notes due 2027 (the “2027 Senior Notes”).
As of September 30, 2023 and September 30, 2022, we had $1,145.6 million and $1,145.6 million, respectively, available under our revolving credit facility. 2027 Senior Notes On February 21, 2017, we completed a private placement offering of $1,000,000,000 aggregate principal amount of our unsecured 5.125% Senior Notes due 2027 (the “2027 Senior Notes”).
If inflation increased by 25 basis points, plan liabilities in the United Kingdom would increase by approximately $17.7 million and plan expense would increase by approximately $1.3 million. At each measurement date, all assumptions are reviewed and adjusted as appropriate.
If inflation increased by 25 basis points, plan liabilities in the United Kingdom would increase by approximately $17.1 million and plan expense would increase by approximately $2.0 million. At each measurement date, all assumptions are reviewed and adjusted as appropriate.
The Term B Facility matures on April 13, 2028. The proceeds of the Term B Facility were used to fund the purchase price, fees and expenses in connection with our cash tender offer to purchase up to $700,000,000 aggregate purchase price (not including any accrued and unpaid interest) of our outstanding 5.875% Senior Notes due 2024.
The proceeds of the Term B Facility were used to fund the purchase price, fees and expenses in connection with our cash tender offer to purchase up to $700,000,000 aggregate purchase price (not including any accrued and unpaid interest) of our outstanding 5.875% Senior Notes due 2024.
Other Debt and Other Items Other debt consists primarily of obligations under finance leases and loans and unsecured credit facilities. Our 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.
Other Debt and Other Items Other debt consists primarily of obligations under capital leases and loans and unsecured credit facilities. 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.
Under our secured revolving credit facility and other facilities discussed in Other Debt and Other Items above, as of September 30, 2022, there was approximately $644.7 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.
Under our secured revolving credit facility and other facilities discussed in Other Debt and Other Items above, as of September 30, 2023, there was approximately $883.3 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.
The new guidance creates an exception to the general requirement to measure acquired assets and liabilities at fair value on the acquisition date. Under this exception, an acquirer applies ASC 606 to recognize and measure contract assets and contract liabilities on the acquisition date.
The new guidance creates an exception to the general requirement to measure acquired assets and liabilities at fair value on the acquisition 52 Table of Contents ​ date. Under this exception, an acquirer applies ASC 606 to recognize and measure contract assets and contract liabilities on the acquisition date.
Our required minimum contributions for our U.S. qualified plans are not significant. In addition, we may make additional discretionary contributions. We currently expect to contribute $8.8 million to our U.S. plans (including benefit payments to nonqualified plans and postretirement medical plans) in fiscal 2023.
Our required minimum contributions for our U.S. qualified plans are not significant. In addition, we may make additional discretionary contributions. We currently expect to contribute $12.9 million to our U.S. plans (including benefit payments to nonqualified plans and postretirement medical plans) in fiscal 2024.
We evaluate the funded status of each of our retirement plans using these current assumptions and determine the appropriate funding level considering applicable regulatory requirements, tax deductibility, reporting considerations and other factors. Based upon current assumptions, we expect to contribute $21.4 million to our international plans in fiscal 2023.
We evaluate the funded status of each of our retirement plans using these current assumptions and determine the appropriate funding level considering applicable regulatory requirements, tax deductibility, reporting considerations and other factors. Based upon current assumptions, we expect to contribute $22.2 million to our international plans in fiscal 2024.
Between September 30, 2021 and September 30, 2022, the aggregate worldwide pension deficit decreased from $345.5 million to $204.4 million due to increased discount rates. If the various plans do not experience future investment gains to reduce this shortfall, the deficit will be reduced by additional contributions.
Between September 30, 2022 and September 30, 2023, the aggregate worldwide pension deficit decreased from $204.4 million to $165.3 million due to increased discount rates. If the various plans do not experience future investment gains to reduce this shortfall, the deficit will be reduced by additional contributions.
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 September 30, 2022, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of approximately $204.4 million.
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 September 30, 2023, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of approximately $165.3 million.
The total amounts of employer contributions paid for the year ended September 30, 2022 were $9.8 million for U.S. plans and $23.6 million for non-U.S. plans. Funding requirements for each plan are determined based on the local laws of the country where such plan resides. In some countries, the funding requirements are mandatory while in other countries, they are discretionary.
The total amounts of employer contributions paid for the year ended September 30, 2023 were $8.2 million for U.S. plans and $24.8 million for non-U.S. plans. Funding requirements for each plan are determined based on the local laws of the country where such plan resides. In some countries, the funding requirements are mandatory while in other countries, they are discretionary.
In addition, we have collective bargaining agreements with unions that require us to contribute to various third-party multiemployer pension plans that we do not control or manage. For the year ended September 30, 2022, we contributed $2.9 million to multiemployer pension plans.
In addition, we have collective bargaining agreements with unions that require us to contribute to various third-party multiemployer plans that we do not control or manage. For the year ended September 30, 2023, we contributed $3.0 million to multiemployer pension plans.
Components of Income and Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ 2022 2021 2020 2019 2018 ​ ​ (in millions) Other Financial Data: ​ ​ ​ ​ ​ Revenue ​ $ 13,148 ​ $ 13,341 ​ $ 13,240 ​ $ 13,642 ​ $ 13,878 Cost of revenue ​ 12,300 ​ 12,543 ​ 12,530 ​ 13,030 ​ 13,399 Gross profit ​ 848 ​ 798 ​ 710 ​ 612 ​ 479 Equity in earnings of joint ventures ​ 54 ​ 35 ​ 49 ​ 49 ​ 49 General and administrative expenses ​ (147) ​ (155) ​ (190) ​ (148) ​ (135) Restructuring cost ​ (108) ​ (48) ​ (188) ​ (95) ​ — Gain on disposal activities ​ — ​ — ​ — ​ 3 ​ — Impairment of long-lived assets ​ — ​ — ​ — ​ (25) ​ — Income from operations ​ $ 647 ​ $ 630 ​ $ 381 ​ $ 396 ​ $ 393 ​ Revenue We generate revenue primarily by providing planning, consulting, architectural and engineering design, construction and program management services to commercial and government clients around the world.
Components of Income and Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ 2023 2022 2021 2020 2019 ​ ​ (in millions) Other Financial Data: ​ Revenue ​ $ 14,378 ​ $ 13,148 ​ $ 13,341 ​ $ 13,240 ​ $ 13,642 Cost of revenue ​ 13,433 ​ 12,300 ​ 12,543 ​ 12,530 ​ 13,030 Gross profit ​ 945 ​ 848 ​ 798 ​ 710 ​ 612 Equity in earnings of joint ventures ​ (279) ​ 54 ​ 35 ​ 49 ​ 49 General and administrative expenses ​ (154) ​ (147) ​ (155) ​ (190) ​ (148) Restructuring cost ​ (188) ​ (108) ​ (48) ​ (188) ​ (95) Gain on disposal activities ​ — ​ — ​ — ​ — ​ 3 Impairment of long-lived assets ​ — ​ — ​ — ​ — ​ (25) Income from operations ​ $ 324 ​ $ 647 ​ $ 630 ​ $ 381 ​ $ 396 ​ Revenue We generate revenue primarily by providing planning, consulting, architectural and engineering design, construction and program management services to public and private clients around the world.
The applicable interest rate for the Term B Facility is calculated at a per annum rate equal to, at our option, (a) the Eurocurrency Rate (as defined in the Credit Agreement) plus 1.75% or (b) the Base Rate (as defined in the Credit Agreement) plus 0.75%.
The applicable interest rate for loans under the Term B Facility is calculated at a per annum rate equal to, at our option, (a) the Term SOFR (as defined in the Credit Agreement) plus 1.75% or (b) the Base Rate (as defined in the Credit Agreement) plus 0.75%. The applicable interest rate for U.S.
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 September 30, 2022, the estimated fair value of the 2027 Senior Notes was approximately $930.0 million.
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 September 30, 2023, the estimated fair value of the 2027 Senior Notes was approximately $939.9 million.
We provide advisory, planning, consulting, architectural and engineering design, construction and program management services, and investment and development services to commercial and government clients worldwide in major end markets such as transportation, facilities, water, environmental, and energy. Our business focuses primarily on providing fee-based knowledge-based services.
We provide advisory, planning, consulting, architectural and engineering design, construction and 33 Table of Contents ​ program management services, and investment and development services to public and private clients worldwide in major end markets such as transportation, facilities, water, environmental, and energy. Our business focuses primarily on providing fee-based knowledge-based services.
We expect to spend approximately $30 million to $40 million in restructuring costs in fiscal 2023 associated with ongoing restructuring actions that are expected to deliver continued margin improvement and efficiencies.
We expect to spend approximately $110 million in restructuring costs in fiscal 2024 associated with ongoing restructuring actions that are expected to deliver continued margin improvement and efficiencies.
These liabilities and net periodic costs are sensitive to changes in those assumptions. The assumptions include discount rates, long-term rates of return on plan assets and inflation levels limited to the United Kingdom and are generally determined based on the current economic environment in each host country at the end of each respective annual reporting period.
The assumptions include discount rates, long-term rates of return on plan assets and inflation levels limited to the United Kingdom and are generally determined based on the current economic environment in each host country at the end of each respective annual reporting period.
As a result of these strategic actions, the self-perform at-risk construction businesses were classified as discontinued operations. That classification was applied retrospectively for all periods presented. Net loss from discontinued operations was $79.9 million for the year ended September 30, 2022 and net loss was $116.8 million for the year ended September 30, 2021, a decrease of $36.9 million.
As a result of these strategic actions, the self-perform at-risk construction businesses were classified as discontinued operations. That classification was applied retrospectively for all periods presented. Net loss from discontinued operations was $57.2 million for the year ended September 30, 2023 and net loss was $79.9 million for the year ended September 30, 2022, a decrease of $22.7 million.
We expect to continue to sell trade receivables in the future as long as the terms continue to remain favorable to us. 46 Table of Contents ​ Net cash used in investing activities was $175.0 million for the year ended September 30, 2022, as compared to $421.1 million for the year ended September 30, 2021.
We expect to continue to sell trade receivables in the future as long as the terms continue to remain favorable to us. 45 Table of Contents ​ Net cash used in investing activities was $138.2 million for the year ended September 30, 2023, as compared to $175.0 million for the year ended September 30, 2022.
These statements include forward-looking statements with respect to the Company, including the Company’s business, operations and strategy, and the engineering and construction industry.
These statements include forward-looking statements with respect to the Company, including the Company’s business, operations and strategy, and infrastructure consulting industry.
Under these principles, we recognize the amount of income tax payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in our financial statements or tax returns.
Income Taxes We provide for income taxes in accordance with principles contained in ASC Topic 740, Income Taxes. Under these principles, we recognize the amount of income tax payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in our financial statements or tax returns.
As a percentage of revenue, gross profit increased to 6.4% of revenue for the year ended September 30, 2022 from 6.2% in the corresponding period last year.
For the year ended September 30, 2023, gross profit, as a percentage of revenue, increased to 6.6% from 6.4% in the year ended September 30, 2022.
At September 30, 2022 and 2021, letters of credit totaled $4.4 million and $5.2 million, respectively, under our Revolving Credit Facility.
At September 30, 2023 and September 30, 2022, letters of credit totaled $4.4 million and $4.4 million, respectively, under our Revolving Credit Facility.
These fees result in earnings to the joint venture and are split with each of the joint venture partners and paid to the joint venture partners upon collection from the third-party customer. We record our allocated share of these fees as equity in earnings of joint ventures.
These fees result in earnings to the joint venture and are split with each of the joint venture partners and paid to the joint venture partners upon collection from the third-party customer. We record our allocated share of these fees as equity in earnings of joint ventures. Additionally, our ACAP segment primarily invests in real estate projects.
At September 30, 2022, we were contingently liable in the amount of approximately $644.7 million in issued standby letters of credit and $4.4 billion in issued surety bonds primarily to support project execution.
At September 30, 2023, we were contingently liable in the amount of approximately $883.3 million in issued standby letters of credit and $4.6 billion in issued surety bonds primarily to support project execution.
Net Income Attributable to AECOM The factors described above resulted in the net income attributable to AECOM of $310.6 million for the year ended September 30, 2022, as compared to the net income attributable to AECOM of $173.2 million for the year ended September 30, 2021.
Net Income Attributable to AECOM The factors described above resulted in the net income attributable to AECOM of $55.3 million for the year ended September 30, 2023, as compared to the net income attributable to AECOM of $310.6 million for the year ended September 30, 2022.
Regarding our capital allocation policy, on September 22, 2021, the Board approved an increase in our stock repurchase authorization to $1.0 billion. At September 30, 2022, we have approximately $0.6 billion remaining of the Board’s repurchase authorization. We intend to deploy future available cash towards dividends and stock repurchases consistent with our capital allocation policy.
In September 2021, the Board approved an increase in our stock repurchase authorization to $1.0 billion. At September 30, 2023, we have approximately $220 million remaining of the Board’s repurchase authorization. We intend to deploy future available cash towards dividends and stock repurchases consistent with our return driven capital allocation policy.
If the discount rate was reduced by 25 basis points, plan liabilities would increase by approximately $28.1 million. If the discount rate and return on plan assets were reduced by 25 basis points, plan expense would decrease by approximately $0.5 million and increase by approximately $2.6 million, respectively.
If the discount rate was reduced by 25 basis points, plan liabilities would increase by approximately $26.6 million. If the discount rate and return on plan assets were reduced by 25 basis points, plan expense would increase by approximately $0.3 million and increase by approximately $2.7 million, respectively.
We refer to the fiscal year ended September 30, 2021 as “fiscal 2021” and the fiscal year ended September 30, 2022 as “fiscal 2022.” Fiscal years 2022, 2021, and 2020 each contained 52, 52, and 53 weeks, respectively, and ended on September 30, October 1, and October 2, respectively.
We refer to the fiscal year ended September 30, 2022 as “fiscal 2022” and the fiscal year ended September 30, 2023 as “fiscal 2023.” Fiscal years 2023, 2022, and 2021 each contained 52, 52, and 52 weeks, respectively, and ended on September 29, September 30, and October 1, respectively.
(the “Fund”), in which we indirectly hold an equity interest and have an ongoing capital commitment to fund investments. At September 30, 2022, we have capital commitments of $13.2 million to the Fund over the next 6 years.
(the “Fund”), in which we indirectly hold an equity interest and have an ongoing capital commitment to fund investments. At September 30, 2023, we have capital commitments of $8.3 million to the Fund over the next 5 years.
Costs attributable to claims are treated as costs of contract performance as incurred. Government Contract Matters Our federal government and certain state and local agency contracts are subject to, among other regulations, regulations issued under the Federal Acquisition Regulations (FAR).
The amounts recorded, if material, are disclosed in the notes to the financial statements. Costs attributable to claims are treated as costs of contract performance as incurred. Government Contract Matters Our federal government and certain state and local agency contracts are subject to, among other regulations, regulations issued under the Federal Acquisition Regulations (FAR).
The borrowers’ obligations under the Credit Agreement are secured by a lien on substantially all of our assets and our Guarantors’ assets, subject to certain exceptions.
Some of our material subsidiaries (the “Guarantors”) have guaranteed the obligations of the borrowers under the Credit Agreement, subject to certain exceptions. The borrowers’ obligations under the Credit Agreement are secured by a lien on substantially all of our assets and the Guarantors’ assets, subject to certain exceptions.
We expect to adopt the new guidance starting on October 1, 2022 on a prospective basis for any business combinations we undertake. Off-Balance Sheet Arrangements We enter into various joint venture arrangements to provide architectural, engineering, program management, construction management and operations and maintenance services.
We adopted the new guidance starting on October 1, 2022 on a prospective basis and the revised guidance will be applied to any business combinations the Company undertakes. Off-Balance Sheet Arrangements We enter into various joint venture arrangements to provide architectural, engineering, program management, construction management and operations and maintenance services.
Debt Debt consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2022 2021 ​ ​ (in millions) Credit Agreement ​ $ 1,143.3 ​ $ 1,155.3 2027 Senior Notes ​ 997.3 ​ ​ 997.3 Other debt ​ 84.0 ​ ​ 83.0 Total debt ​ 2,224.6 ​ ​ 2,235.6 Less: Current portion of debt and short-term borrowings ​ (48.6) ​ ​ (53.8) Less: Unamortized debt issuance costs ​ (19.3) ​ ​ (24.1) Long-term debt ​ $ 2,156.7 ​ $ 2,157.7 ​ 47 Table of Contents ​ The following table presents, in millions, scheduled maturities of our debt as of September 30, 2022: ​ ​ ​ ​ ​ Fiscal Year ​ 2023 ​ $ 48.6 2024 ​ 72.4 2025 ​ 40.3 2026 ​ ​ 403.2 2027 ​ ​ 1,004.2 Thereafter ​ 655.9 Total ​ $ 2,224.6 ​ Credit Agreement On February 8, 2021, we entered into the 2021 Refinancing Amendment to the Credit Agreement (the “Credit Agreement”), pursuant to which we amended and restated our Syndicated Credit Facility Agreement, dated as of October 17, 2014 (as amended prior to February 8, 2021, the “Original Credit Agreement”), between the Company, as borrower, Bank of America, N.A., as administrative agent, and other parties thereto.
Debt Debt consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2023 2022 ​ ​ (in millions) Credit Agreement ​ $ 1,119.8 ​ $ 1,143.3 2027 Senior Notes ​ 997.3 ​ ​ 997.3 Other debt ​ 100.2 ​ ​ 84.0 Total debt ​ 2,217.3 ​ ​ 2,224.6 Less: Current portion of debt and short-term borrowings ​ (89.5) ​ ​ (48.6) Less: Unamortized debt issuance costs ​ (14.4) ​ ​ (19.3) Long-term debt ​ $ 2,113.4 ​ $ 2,156.7 ​ 46 Table of Contents ​ The following table presents, in millions, scheduled maturities of our debt as of September 30, 2023: ​ ​ ​ ​ ​ Fiscal Year ​ 2024 ​ $ 89.5 2025 ​ 49.6 2026 ​ 412.6 2027 ​ ​ 1,009.2 2028 ​ ​ 656.4 Thereafter ​ — Total ​ $ 2,217.3 ​ Credit Agreement On February 8, 2021, we entered into the 2021 Refinancing Amendment to the Credit Agreement (as amended, modified or otherwise supplemented, the “Credit Agreement”), pursuant to which we amended and restated our Syndicated Credit Facility Agreement, dated as of October 17, 2014 (as amended prior to February 8, 2021, the “Original Credit Agreement”), between the Company, as borrower, Bank of America, N.A., as administrative agent, and other parties thereto.
International ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ September 30, September 30, Change ​ 2022 2021 $ % ​ (in millions) ​ Revenue $ 3,206.7 ​ $ 3,112.6 ​ $ 94.1 3.0 % Cost of revenue ​ 3,000.8 ​ 2,947.8 ​ 53.0 1.8 ​ Gross profit ​ $ 205.9 ​ $ 164.8 ​ $ 41.1 24.9 % ​ The following table presents the percentage relationship of statement of operations items to revenue: ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ September 30, September 30, ​ ​ ​ 2022 ​ 2021 ​ Revenue 100.0 % 100.0 % Cost of revenue 93.6 94.7 ​ Gross profit 6.4 % 5.3 % ​ Revenue Revenue for our International segment for the year ended September 30, 2022 increased $94.1 million, or 3.0%, to $3,206.7 million as compared to $3,112.6 million for the corresponding period last year.
International ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ September 30, September 30, Change ​ 2023 2022 $ % ​ (in millions) ​ Revenue $ 3,402.1 ​ $ 3,206.7 ​ $ 195.4 6.1 % Cost of revenue ​ 3,157.0 ​ 3,000.8 ​ 156.2 5.2 ​ Gross profit ​ $ 245.1 ​ $ 205.9 ​ $ 39.2 19.0 % ​ The following table presents the percentage relationship of statement of operations items to revenue: ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ September 30, September 30, ​ ​ ​ 2023 ​ 2022 ​ Revenue 100.0 % 100.0 % Cost of revenue 92.8 93.6 ​ Gross profit 7.2 % 6.4 % ​ Revenue Revenue for our International segment for the year ended September 30, 2023 increased $195.4 million, or 6.1%, to $3,402.1 million as compared to $3,206.7 million for the corresponding period last year.
We continuously monitor factors that may affect the quality of our estimates, and material changes in estimates are disclosed accordingly. 37 Table of Contents ​ Claims Recognition Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price) that we seek to collect from customers or others for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved contracts as to both scope and price or other causes of unanticipated additional costs.
Claims Recognition Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price) that we seek to collect from customers or others for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved contracts as to both scope and price or other causes of unanticipated additional costs.
As of September 30, 2022, we had $427.4 million available under these unsecured credit facilities. 49 Table of Contents ​ Effective Interest Rate Our average effective interest rate on our total debt, including the effects of the interest rate swap agreements and excluding the effects of prepayment premiums included in interest expense, during the years ended September 30, 2022, 2021 and 2020 was 3.8%, 4.4% and 5.3%, respectively.
As of September 30, 2023, we had $416.7 million available under these unsecured credit facilities. 48 Table of Contents ​ Effective Interest Rate Our average effective interest rate on our total debt, including the effects of the interest rate swap and interest rate cap agreements during the years ended September 30, 2023, 2022 and 2021 was 5.3%, 3.8% and 4.4%, respectively.
The applicable interest rate under the Credit Agreement is calculated at a per annum rate equal to, at our option, (a) the Eurocurrency Rate (as defined in the Credit Agreement) plus an applicable margin (the “LIBOR Applicable Margin”), which is currently at 1.2250% or (b) the Base Rate (as defined in the Credit Agreement) plus an applicable margin (the “Base Rate Applicable Margin” and together with the LIBOR Applicable Margin, the “Applicable Margins”), which is currently at 0.2250%.
Dollar-denominated loans under the Revolving Credit Facility and the Term A Facility is calculated at a per annum rate equal to, at our option, (a) the Term SOFR (as defined in the Credit Agreement) plus an applicable margin (the “SOFR Applicable Margin”), which is currently at 1.2250% or (b) the Base Rate (as defined in the Credit Agreement) plus an applicable margin (the “Base Rate Applicable Margin,” and together with the SOFR Applicable Margin, the “Applicable Margins”), which is currently at 0.2250%.
In such cases, revenue is recorded only to the extent that contract costs relating to the claim have been incurred. Award fees in contract assets are accrued only when there is sufficient information to assess contract performance. On contracts that represent higher than normal risk or technical difficulty, award fees are generally deferred until an award fee letter is received.
Award fees in contract assets are accrued only when there is sufficient information to assess contract performance. On contracts that represent higher than normal risk or technical difficulty, award fees are generally deferred until an award fee letter is received.
Results of Operations by Reportable Segment Americas ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ September 30, September 30, Change ​ 2022 2021 $ % ​ ( in millions) ​ Revenue $ 9,939.3 ​ $ 10,226.3 ​ $ (287.0) (2.8) % Cost of revenue ​ 9,299.4 ​ 9,594.7 ​ (295.3) (3.1) ​ Gross profit ​ $ 639.9 ​ $ 631.6 ​ $ 8.3 1.3 % ​ The following table presents the percentage relationship of statement of operations items to revenue: ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ September 30, September 30, ​ ​ 2022 ​ 2021 Revenue 100.0 % 100.0 % Cost of revenue 93.6 93.8 ​ Gross profit 6.4 % 6.2 % ​ 44 Table of Contents ​ Revenue Revenue for our Americas segment for the year ended September 30, 2022 decreased $287.0 million, or 2.8%, to $9,939.3 million as compared to $10,226.3 million for the corresponding period last year.
Results of Operations by Reportable Segment Americas ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ September 30, September 30, Change ​ 2023 2022 $ % ​ ( in millions) ​ Revenue $ 10,975.7 ​ $ 9,939.3 ​ $ 1,036.4 10.4 % Cost of revenue ​ 10,276.0 ​ 9,299.4 ​ 976.6 10.5 ​ Gross profit ​ $ 699.7 ​ $ 639.9 ​ $ 59.8 9.3 % ​ The following table presents the percentage relationship of statement of operations items to revenue: 43 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ September 30, September 30, ​ ​ 2023 ​ 2022 Revenue 100.0 % 100.0 % Cost of revenue 93.6 93.6 ​ Gross profit 6.4 % 6.4 % ​ Revenue Revenue for our Americas segment for the year ended September 30, 2023 increased $1,036.4 million, or 10.4%, to $10,975.7 million as compared to $9,939.3 million for the corresponding period last year.
We are also required to maintain a consolidated interest coverage ratio of at least 3.00 to 1.00 and 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”). Our consolidated leverage ratio was 2.30 to 1.00 at September 30, 2022.
We are also required to maintain a consolidated interest coverage ratio of at least 3.00 to 1.00 and 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 Term B Facility.
As of September 30, 2022, 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.
Our consolidated leverage ratio was 2.00 to 1.00 at September 30, 2023. As of September 30, 2023, 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.
At September 30, 2022 and 2021, these outstanding standby letters of credit totaled $640.3 million and $478.5 million, respectively.
At September 30, 2023 and 2022, these outstanding standby letters of credit totaled $878.9 million and $640.3 million, respectively.
The sale of trade receivables to financial institutions included in operating cash flows decreased $23.7 million during the year ended September 30, 2022 compared to the year ended September 30, 2021.
The sale of trade receivables to financial institutions included in operating cash flows increased $50.0 million during the year ended September 30, 2023 compared to the year ended September 30, 2022.
Pass-through revenue as a percentage of total revenue was 52% and 54% during the year ended September 30, 2022 and 2021, respectively. Gross Profit Our gross profit for the year ended September 30, 2022 increased $49.6 million, or 6.2%, to $848.0 million as compared to $798.4 million for the corresponding period last year.
Pass-through revenue as a percentage of total revenue was 53% and 52% during the year ended September 30, 2023 and 2022, respectively. Gross Profit Our gross profit for the year ended September 30, 2023 increased $97.5 million, or 11.5%, to $945.5 million as compared to $848.0 million for the corresponding period last year.
Amounts provided do not represent our total consolidated amounts as of September 30, 2022 and for the twelve months then ended. 50 Table of Contents ​ Condensed Combined Balance Sheets Parent and Subsidiary Guarantors (unaudited - in millions) ​ ​ ​ ​ ​ ​ September 30, 2022 Current assets ​ $ 2,645.0 Non-current assets ​ ​ 3,140.3 Total assets ​ $ 5,785.3 ​ ​ ​ ​ Current liabilities ​ $ 2,365.9 Non-current liabilities ​ ​ 2,712.1 Total liabilities ​ ​ 5,078.0 ​ ​ ​ ​ Total stockholders’ equity ​ ​ 707.3 Total liabilities and stockholders’ equity ​ $ 5,785.3 ​ Condensed Combined Statement of Operations Parent and Subsidiary Guarantors (unaudited - in millions) ​ ​ ​ ​ ​ ​ ​ For the twelve months ended ​ September 30, 2022 Revenue ​ $ 6,730.1 ​ ​ ​ ​ Cost of revenue ​ 6,214.6 Gross profit ​ ​ 515.5 ​ ​ ​ ​ Net income from continuing operations ​ 95.1 Net loss from discontinued operations ​ — Net income ​ $ 95.1 ​ ​ ​ ​ Net income attributable to AECOM ​ $ 95.1 ​ Commitments and Contingencies We record amounts representing our probable estimated liabilities relating to claims, guarantees, litigation, audits and investigations.
Amounts provided do not represent our total consolidated amounts as of September 30, 2023 and for the twelve months then ended. 49 Table of Contents ​ Condensed Combined Balance Sheets Parent and Subsidiary Guarantors (unaudited - in millions) ​ ​ ​ ​ ​ ​ September 30, 2023 Current assets ​ $ 2,617.7 Non-current assets ​ ​ 3,230.7 Total assets ​ $ 5,848.4 ​ ​ ​ ​ Current liabilities ​ $ 2,414.4 Non-current liabilities ​ ​ 2,601.6 Total liabilities ​ ​ 5,016.0 ​ ​ ​ ​ Total stockholders’ equity ​ ​ 832.4 Total liabilities and stockholders’ equity ​ $ 5,848.4 ​ Condensed Combined Statement of Operations Parent and Subsidiary Guarantors (unaudited - in millions) ​ ​ ​ ​ ​ ​ ​ For the twelve months ended ​ September 30, 2023 Revenue ​ $ 7,077.5 Cost of revenue ​ 6,582.5 Gross profit ​ ​ 495.0 ​ ​ ​ ​ Net income from continuing operations ​ 3.2 Net loss from discontinued operations ​ — Net income ​ $ 3.2 ​ ​ ​ ​ Net income attributable to AECOM ​ $ 3.2 ​ Commitments and Contingencies We record amounts representing our probable estimated liabilities relating to claims, guarantees, litigation, audits and investigations.
In establishing those capital market assumptions and expectations, we rely on the assistance of our actuaries and our investment consultants. We and the plan trustees review whether changes to the various plans’ target asset allocations are appropriate. A change in the plans’ target asset allocations would likely result in a change in the expected return on asset assumptions.
We and the plan trustees review whether changes to the various plans’ target asset allocations are appropriate. A change in the plans’ target asset allocations would likely result in a change in the expected return on asset assumptions.
Statements that are not historical facts, without limitation, including statements that use terms such as “anticipates,” “believes,” “expects,” “estimates,” “intends,” “may,” “plans,” “potential,” “projects,” and “will” and that relate to future impacts caused by the Covid-19 coronavirus pandemic, economic instability and market volatility, including the reaction of governments, such as any prolonged period of travel, commercial or other similar restrictions, the delay in commencement, or temporary or permanent halting of construction, infrastructure or other projects, requirements that we remove our employees or personnel from the field for their protection, and delays or reductions in planned initiatives by our governmental or commercial clients or potential clients; future revenues, expenditures and business trends; future reduction of our self-perform at-risk construction exposure; future accounting estimates; future contractual performance obligations; future conversions of backlog; future capital allocation priorities, including common stock repurchases, future trade receivables, future debt pay downs; future post-retirement expenses; future tax benefits and expenses, and the impact of future tax laws; future compliance with regulations; future legal claims and insurance coverage; future effectiveness of our disclosure and internal controls over financial reporting; future costs savings; and other future economic and industry conditions, are forward-looking statements.
Statements that are not historical facts, without limitation, including statements that use terms such as “anticipates,” “believes,” “expects,” “estimates,” “intends,” “may,” “plans,” “potential,” “projects,” and “will” and that relate to our future revenues, expenditures and business trends; future reduction of our self-perform at-risk construction exposure; future accounting estimates; future contractual performance obligations; future conversions of backlog; future capital allocation priorities, including common stock repurchases, future trade receivables, future debt pay downs; future post-retirement expenses; future tax benefits and expenses, and the impact of future tax laws; future compliance with regulations; future legal claims and insurance coverage; future effectiveness of our disclosure and internal controls over financial reporting; future costs savings; and other future economic and industry conditions, are forward-looking statements.
At September 30, 2022, cash and cash equivalents, including cash and cash equivalents included in current assets held for sale, were $1,176.8 million, a decrease of $58.0 million, or 4.7%, from $1,234.8 million at September 30, 2021.
At September 30, 2023, cash and cash equivalents, including cash and cash equivalents included in current assets held for sale, were $1,262.2 million, an increase of $85.4 million, or 7.3%, from $1,176.8 million at September 30, 2022.
Acquisitions There were no acquisitions consummated during the years ended September 30, 2022, 2021 and 2020. All of our acquisitions have been accounted for as business combinations and the results of operations of the acquired companies have been included in our consolidated results since the dates of the acquisitions.
All of our acquisitions have been accounted for as business combinations and the results of operations of the acquired companies have been included in our consolidated results since the dates of the acquisitions.
Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred tax assets may not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and tax rates on the date of enactment of such changes to laws and tax rates. 37 Table of Contents ​ Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred tax assets may not be realized.
During the first quarter of fiscal 2022, valuation allowances in the amount of $21.9 million primarily related to net operating losses in certain foreign entities were released due to sufficient positive evidence obtained during the quarter.
During the first quarter of fiscal 2022, valuation allowances in the amount of $21.9 million primarily related to net operating losses in certain foreign entities were released due to sufficient positive evidence. The positive evidence included a realignment of our global transfer pricing methodology which resulted in forecasting the utilization of the net operating losses within the foreseeable future.
This is necessary in order to generate a distribution of possible returns which reflects diversification of assets.
This is necessary in order to generate a distribution of possible returns which reflects diversification of assets. Based on this information, a distribution of possible returns is generated based on the plan’s target asset allocation.
We record contract revenue related to claims only if it is probable that the claim will result in additional contract revenue and only to the extent that a significant reversal would not be probable. The amounts recorded, if material, are disclosed in the notes to the financial statements.
Judgment is required to estimate the amount, if any, of revenue to be recognized on claims. We record contract revenue related to claims only if it is probable that the claim will result in additional contract revenue and only to the extent that a significant reversal would not be probable.
We have ascribed value to identifiable intangible assets other than goodwill in our purchase price allocations for companies we have acquired. These assets include, but are not limited to, backlog and customer relationships. To the extent we ascribe value to identifiable intangible assets that have finite lives, we amortize those values over the estimated useful lives of the assets.
Amortization Expense of Acquired Intangible Assets Included in our cost of revenue is amortization of acquired intangible assets. We have ascribed value to identifiable intangible assets other than goodwill in our purchase price allocations for companies we have acquired. These assets include, but are not limited to, backlog and customer relationships.
The decrease in net loss from discontinued operations for the year ended September 30, 2022 was primarily due to losses recorded on the sales of our power business and our civil infrastructure businesses in fiscal 2021 that did not recur in fiscal 2022, partially offset by a $3.0 million gain on sale, net of transaction costs, of our oil and gas construction business and losses recorded in the first half of fiscal 2022 of $43.9 million related to revisions of estimates for our working capital obligation to be paid and contingent consideration receivable related to the civil infrastructure business.
The decrease in net loss from discontinued operations for the year ended September 30, 2023 was primarily due to losses related to revisions of estimates for our working capital obligations to be paid and contingent consideration receivable related to the civil infrastructure business recorded in the first half of fiscal 2022 that did not recur to the same extent in fiscal 2023.
The increase was primarily due to monetization of two of its real estate investments. Liquidity and Capital Resources Cash Flows Our principal sources of liquidity are cash flows from operations, borrowings under our credit facilities, and access to financial markets.
The decrease was primarily due to impairment losses recognized in the third quarter of fiscal 2023. Liquidity and Capital Resources Cash Flows Our principal sources of liquidity are cash flows from operations, borrowings under our credit facilities, and access to financial markets.
In this section, we discuss the results of our operations for the year ended September 30, 2022 compared to the year ended September 30, 2021. For a discussion on the year ended September 30, 2021 compared to the year ended September 30, 2020, please refer to Part II, Item 7.
In this section, we discuss the results of our operations for the year ended September 30, 2023 compared to the year ended September 30, 2022.
The Credit Agreement includes certain environmental, social and governance (ESG) metrics relating to our CO 2 emissions and our percentage of employees who identify as women (each, a “Sustainability Metric”). The Applicable Margins and the commitment fees for the Revolving Credit Facility will be adjusted on an annual basis based on our achievement of preset thresholds for each Sustainability Metric.
The Credit Agreement includes certain environmental, social and governance (ESG) metrics relating to our CO 2 emissions and the percentage of employees who identify as women (each, a “Sustainability Metric”).
Contractual Obligations and Commitments The following summarizes our contractual obligations and commercial commitments as of September 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contractual Obligations and Commitments ​ ​ Less than One to Three to More than ​ ​ Total ​ One Year ​ Three Years ​ Five Years ​ Five Years ​ ​ (in millions) Debt ​ $ 2,224.6 ​ $ 48.6 ​ $ 112.7 ​ $ 1,407.4 ​ $ 655.9 Interest on debt ​ 495.5 ​ 112.7 ​ 220.0 ​ 144.3 ​ 18.5 Operating leases ​ 846.2 ​ 173.0 ​ 270.9 ​ 170.3 ​ 232.0 Pension funding obligations (1) ​ 30.2 ​ 30.2 ​ — ​ — ​ — Total contractual obligations and commitments ​ $ 3,596.5 ​ $ 364.5 ​ $ 603.6 ​ $ 1,722.0 ​ $ 906.4 (1) Represents expected fiscal 2023 contributions to fund our defined benefit pension and other postretirement plans.
Contractual Obligations and Commitments The following summarizes our contractual obligations and commercial commitments as of September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than One to Three to More than Contractual Obligations and Commitments ​ Total ​ One Year ​ Three Years ​ Five Years ​ Five Years ​ ​ (in millions) Debt ​ $ 2,217.3 ​ $ 89.5 ​ $ 462.2 ​ $ 1,665.6 ​ $ — Interest on debt ​ 483.2 ​ 147.2 ​ 251.0 ​ 85.0 ​ — Operating leases ​ 794.3 ​ 164.4 ​ 255.1 ​ 161.7 ​ 213.1 Pension funding obligations (1) ​ 35.1 ​ 35.1 ​ — ​ — ​ — Total contractual obligations and commitments ​ $ 3,529.9 ​ $ 436.2 ​ $ 968.3 ​ $ 1,912.3 ​ $ 213.1 (1) Represents expected fiscal 2024 contributions to fund our defined benefit pension and other postretirement plans.
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. 48 Table of Contents ​ On April 13, 2021, we entered into Amendment No. 10 to the Credit Agreement, pursuant to which the lenders thereunder provided a secured term “B” credit facility (the “Term B Facility”) to the Company in an aggregate principal amount of $700,000,000.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor the year ended September 30, 2022, our weighted average floating rate borrowings were $1,340.1 million, or $1,063.5 million excluding borrowings with effective fixed interest rates due to interest rate swap agreements and interest rate caps.
Biggest changeFor the year ended September 30, 2023, our weighted average floating rate borrowings were $1,485.8 million, or $846.3 million excluding borrowings with effective fixed interest rates due to interest rate swap and interest rate cap agreements.
We invest our cash in a variety of financial instruments, consisting principally of money market securities or other highly liquid, short-term securities that are subject to minimal credit and market risk. ​ 55 Table of Contents ​
We invest our cash in a variety of financial instruments, consisting principally of money market securities or other highly liquid, short-term securities that are subject to minimal credit and market risk. ​ 53 Table of Contents ​
It is our policy and practice to use derivative financial instruments only to the extent necessary to manage our exposures. We do not use derivative financial instruments for trading purposes. 54 Table of Contents ​ Foreign Exchange Rates We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S.
It is our policy and practice to use derivative financial instruments only to the extent necessary to manage our exposures. We do not use derivative financial instruments for trading purposes. Foreign Exchange Rates We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S.
Interest Rates Our Credit Agreement and other debt obligations are subject to variable rate interest which could be adversely affected by an increase in interest rates. As of September 30, 2022 and 2021, we had $1,143.3 million and $1,155.3 million, respectively, in outstanding borrowings under our term credit agreements and our revolving credit facility.
Interest Rates Our Credit Agreement and other debt obligations are subject to variable rate interest which could be adversely affected by an increase in interest rates. As of September 30, 2023 and 2022, we had $1,119.8 million and $1,143.3 million, respectively, in outstanding borrowings under our term credit agreements and our revolving credit facility.
If short-term floating interest rates had increased by 1.00%, our interest expense for the year ended September 30, 2022 would have increased by $11.3 million.
If short-term floating interest rates had increased by 1.00%, our interest expense for the year ended September 30, 2023 would have increased by $8.6 million.

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