TOP 100: AECOM's $6B acquisition sets the stage for bigger opportunities
- By Stephanie Kanowitz
- Jun 12, 2015
It’s impossible to talk about AECOM Technology Corp. and 2014 without focusing on the engineering and construction firm’s merger with URS, a major rival. Although the $6 billion deal was finalized 17 days after the company’s fiscal year ended, the announcement of it was front and center for months before that.
Specifically, the union created a $19 billion company with 95,000 employees, more than doubling both numbers for Los Angeles-based AECOM. In fiscal 2014, the company had $8.4 billion in revenue and $13.8 billion in new wins. Its Management Support Services segment had revenues of $700 million, or 9 percent of the total revenue. The company ended its fiscal year with a backlog of $25.1 billion, representing 52 percent total growth and 33 percent organic growth.
The company holds the No. 18 spot on the Top 100 this year, jumping from 39 last year and 60 in 2012.
Despite the distraction of the impending merger, “we didn’t take our eye off the ball,” said Randy Wotring, group president of AECOM’s Management Services. In terms of contract wins, he points to a $670 million defense infrastructure contract that the United Kingdom’s Ministry of Defense awarded last summer to four firms, including AECOM and URS, to manage the entire defense estate portfolio.
“Why I’m happy about that: It’s two reasons primarily,” Wotring said. “One, it really took us into a new marketplace in a bigger way. And two, it showed how successful we can be when we leveraged the resources, capabilities and experience from all parts of our organization.”
The merger wasn’t the only change coming to AECOM. In December 2013, it named a new chief executive officer, Michael Burke. He took the reins the following March.
While AECOM dealt with these internal changes, it was addressing the same challenges other federal contractors faced in the marketplace last year. Still, those worries were lessened considerably by the impending merger, which opened plenty of business opportunities to the company.
“The uncertainty that we see in budgets with the federal government are causing some slowdowns with procurements, but in general, we believe the market is still a half a trillion-dollar market,” Wotring said. “It’s fragmented and we have more opportunity right now than we’ve ever had.
He’s got his eye toward growing technology solutions in areas such as the electromagnetic spectrum, cyber, cloud services and unmanned systems.
“We’re putting together solution sets that are customized to customer needs, but our strength is in integrating those technologies and bringing them to market,” Wotring said. “We feel good about that. From a sector standpoint, I would tell you that we see great opportunities and growing opportunities in Asia-Pacific and longer term in India and Africa, along with the commercial marketplace. Heretofore, our organization hasn’t really focused on the commercial market, but we’re now taking these technology solutions there.”
Domestically, he cites cybersecurity and intelligence as the areas of greatest focus for his segment. Indeed, the federal government has been the only single client to account for 10 percent or more of AECOM’s revenue in the past five fiscal years. In fiscal 2014, it accounted for about 15 percent.
But recently – and understandably – AECOM’s focus has been inward as it pieces itself together and settles in with URS.
“It was a tough merger. It was two big companies coming together – a lot of hard work in 2014,” Wotring said. “We’ve made really good progress, but the upsides there are huge.”
With the first half of its fiscal 2015 now over, he says the strategy going forward has three main parts: recruiting and developing employees, anticipating and meeting customer needs, and providing world-class operational excellence.
“We feel we’ve done a lot of work to get externally focused and we’re ready to rock and roll,” Wotring said.
Stephanie Kanowitz is a freelance writer based in northern Virginia.