Aecom forecasts more than $3.5 billion of free cash flow through 2022

By Devika Patel

Knoxville, Tenn., Dec. 11 – Aecom expects to generate more than $3.5 billion of cumulative free cash flow during the fiscal 2018 to 2022 period.

“We are also reiterating our expectation of $3.5 billion of free cash flow over the course of that five-year period with our almost $700 million of free cash flow in FY 2018,” chairman and chief executive officer Michael S. Burke said at the company’s investor day presentation outlining its expected financials for the fiscal 2018 to 2022 period in New York on Tuesday.

“That gives us about $2.8 billion left to go in the next four years, and we expect to use substantially all of that cash to buy back stock,” Burke said.

The company had “record” free cash in its most recent fiscal quarter and expects to generate over $800 million of free cash flow in fiscal 2022.

“We delivered record free cash flow in the fourth quarter of fiscal 2018, building on our track record of consistently strong free cash flow generation over the past several years,” chief financial officer W. Troy Rudd said in a press release.

“Our businesses are highly cash generative, which, along with the actions we are taking to drive growth and enhance profitability, position us to deliver increased free cash flow over the next several years.

“This forecast includes today’s announced target to generate more than $800 million of free cash flow in fiscal 2022,” Rudd said in the release.

The company’s free cash flow yield is quite good in comparison to other companies, both within the segment and without.

“We have had, without a doubt, an industry-leading free cash flow yield, and we are in an industry that sets a low bar and so being top in our industry is not something to brag about,” Burke said.

“Not only are we number one in sector and free cash flow yield, but if you look at the S&P 500, exclude financial institutions, we’d be a top decile performer on free cash flow yield.

“That is something that we ought to be particularly proud of,” Burke said.

In 2018, the company paid down $223 million of debt.

“We remain committed to our capital allocation policy which is evidenced by the $223 million of debt reduction that we achieved in FY 2018,” Burke said.

Aecom is a Los Angeles-based designer, builder, financer and operator of infrastructure assets for governments, businesses and organizations.

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