Los Angeles-based construction giant AECOM wrapped up its 2016 fiscal year in the middle of a huge push for new business that includes attempted revenue grabs in legacy nuclear waste cleanup work for the U.S. Energy Department.
AECOM’s Management Services division, which covers DOE legacy nuclear cleanup, had “nearly $25 billion of bids under client evaluation” as of Sept. 30, according to an earnings press release that hit the wire before the bell Monday. DOE work already under contract made up about 25 percent of this segment’s revenue in the fiscal 2016.
On a Monday conference call with investors, AECOM President and CEO Michael Burke expressed confidence that the money the company spent in 2016 bidding on contracts in “our sweet spot of Department of Energy and Department of Defense” would pay off handsomely in the next two years.
Among the company bids being evaluated by DOE is the follow-on contract to the massive liquid-waste cleanup deal in South Carolina now held by the AECOM-led Savannah River Remediation conglomerate. Also bidding on the estimated 10-year, $6-billion contract that would kick in next July are BWX Technologies and Fluor Corp.
In the Management Services division, quarterly operating income was just over $70 million, down more than 8.5 percent from some $75 million in the year-ago quarter. The 2016 quarter benefited “from resolutions of project and legal matters,” the company said in its fourth-quarter earnings release. Except to say that this favorable gain added about $0.07 per share in the fourth quarter, the company provided no further details.
Quarterly revenue in Management Services was roughly $856 million, down about 3 percent from the 2015 fiscal fourth quarter. For the year, Management Services posted operating income of just over $305 million on revenue of about $3.2 billion, up some 13.5 percent and down roughly 3 percent, respectively.
Overall, quarterly net income for AECOM improved to roughly $7 million in 2016 from about $1 million in 2015. Quarterly revenue landed at about $4.3 billion, the company said.
For the year, AECOM posted a roughly $95 million profit to follow up a 2015 net loss of about $155 million. Costs related to AECOM’s 2014 acquisition of URS Energy hurt the company in 2015; these expenses were much lower in 2016, during which time the company’s operating income as a whole almost quadrupled that of 2015.
Company-wide revenue in 2016 fell about 3 percent year over year to roughly $17.5 billion.
Also, as of the year ended Sept. 30, AECOM remained at loggerheads with DOE over a roughly $100 million Contracts Dispute Act claim the company filed against the agency in December 2014 over cleanup costs at the Separations Process Research Unit in upstate New York. That is according to the company’s latest 10-K filing with the U.S. Securities and Exchange Commission.
The AECOM-owned Washington Group International, DOE prime contractor at the Cold War-era plutonium research site, wound up doing work outside the scope of its contract with the department after damage to the site caused by Hurricane Irene in 2011. The parent has sought to recover that money, and DOE has buckled down.
In August, the agency gave contract resolutions firm C2G International a contract worth up to $2.3 million over three years, including options, to “assist DOE in evaluating and resolving contract claims, review previously submitted Requests for Equitable Adjustments and Proposals, assist with the Alternative Dispute Resolution process and assist with drafting Expert reports to cover critical path delays and construction in support of the DOE Separations Process Research Unit field office,” according to an agency press release that was briefly posted online and has since been removed by DOE’s Office of Environmental Management.
