December 2019

AEC Quarterly Earnings Synopsis – Q3 2019

The following report outlines our review and synopsis of results and earnings call commentary for the third quarter of 2019. This summary includes the most recent financial results for key publicly traded companies in the Architecture, Engineering & Environmental Services (AEC) sector for the period July – September 2019.

M&A Indicators:

• Digital transformation triggers M&A activity. In efforts to reduce costs and increase productivity, AEC companies are transitioning strategy to address the demanding digital age. Jacobs engineering specifically cited an M&A pipeline “rich” with opportunities as they looked to strengthen their offerings in Consulting, Digital Capacity, and Innovative Technology.
• There has been a continuing theme throughout 2019 of corporate restructuring, as businesses buy and divest units as they shift strategic resources and strategy. This has contributed to the M&A activity throughout the year as acquired revenue and business can help accelerate a company’s strategic plans. For example, WSP enhanced its advisory services offering in its Environmental space with the Orbicon acquisition.
• Increasing momentum for corporate and private buyers to make substantial investments. In the AEC sector, the current revenue growth rate is slightly below the past several years’ averages, but EBITDA margins are more robust than in past years. As Charles L. Harrington, President and CEO of Parsons Corporation stated, “The M&A pipeline remains robust. We continue to see companies come out who are looking for options.”