Aecom Technology Q4 Profit Down 16%, But Revenues Beat View

(RTTNews) - Engineering design company Aecom Technology Corp. (ACM) on Tuesday reported a 16 percent decline in profit for the fourth quarter from last year, as expenses related to the acquisition of URS Corp. and lower margins offset strong revenue growth.

Adjusted earnings per share for the quarter missed analysts' expectations, while revenues beat their estimates. Looking ahead, the company forecast fiscal 2015 earnings above Street estimates.

Los Angeles, California-based Aecom Technology's net income for the fourth quarter was $64.03 million or $0.64 per share, down from $76.57 million or $0.77 per share in the prior-year period.

The company completed the acquisition of engineering and construction services company URS Corp. on October 17, 2014. After adjusting for acquisition and integration expenses, earnings per share for the latest quarter were $0.79, compared to $0.77 in the previous-year quarter.

On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.82 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter grew 23 percent to $2.56 billion from $2.08 billion last year. Analysts had a consensus revenue estimate of $2.25 billion for the quarter.

Net service revenue rose 6 percent from the year-ago period to $1.32 billion.

Segment-wise, Professional Technical Services revenues for the quarter increased 27 percent to $2.36 billion. Growth in construction services and continued strength in Europe, the Middle East, Africa, and Asia helped offset a lower-than-anticipated contribution from the company's design business in the Americas.

However, Management Support Services revenue declined 9 percent in the quarter to $201.00 million.

The company's gross margin for the quarter contracted to 5 percent from 6.7 percent in the previous-year quarter.

Aecom's general and administrative expenses for the quarter declined 35 percent from last year to $15.55 million. The company recorded acquisition and integration expenses of $19.47 million in the quarter.

The company noted that new wins in the quarter of $4.2 billion were driven by strength in the company's construction services business, which continues to benefit from strong spending growth in Aecom's core metropolitan markets. Hunt Construction Group, which Aecom acquired during the fourth quarter, contributed $3 billion of acquired backlog.

For fiscal 2014, Aecom's net income declined to $229.85 million or $2.33 per share from $239.24 million or $2.35 per share in the previous year. Adjusted earnings for the year were $2.53 per share, compared to $2.35 per share last year.

Revenue for the year rose 3 percent to $8.36 billion from $8.15 billion in the prior year.

Street expected the company to earn $2.52 per share for the year on revenues of $8.06 billion.

Looking ahead to fiscal 2015, Aecom forecasts adjusted earnings per share of $2.75 to $3.35 per share. The company noted that the mid-point of the guidance range assumes about $110 million of realized synergies from the acquisition of URS Corp.

Analysts expect the company to report full-year earnings of $2.73 per share.

ACM closed Monday's trading at $32.78, down $0.22 or 0.67 percent on a volume of 1.29 million shares. In Tuesday's pre-market activity, the stock is adding $0.22 or 0.67 percent to $33.00.