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  "documentTitle": "AECOM (ACM)",
  "authorId": "03_Starboard_Value",
  "authorName": "Peter A. Feld",
  "documentKindSlug": "shareholder-letter",
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  "presentationDate": "2019-06-20 00:00:00",
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  "notes": "The slide argues for operational improvement or divestiture of the MS segment based on margin underperformance.",
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      "text": "It is imperative that the Company immediately identify a viable plan to grow profitability at MS. The Company will need to clearly articulate this plan to both its current shareholders and future shareholders of the proposed spin-off in order to ensure it trades favorably. Alternatively, an outright sale of the segment may be the prudent course of action for the current shareholders on a risk-adjusted basis.",
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      "text": "Moreover, the segment's deteriorating operating performance and management's consistent inability to forecast operations would seem to support our belief that operational execution can be improved meaningfully.",
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      "text": "In CS, adjusted operating margins have declined by 30 basis points from FY15 to FY18 on the segment's substantial revenue base of approximately $8.2 billion, implying an approximately $25 million loss in profitability in FY18 and demonstrating negative operating leverage as segment revenues grew by 26% in that period. While we believe there is room for margin improvement and mitigation of project delivery risks, ultimately it may be in the best interest of the Company and its shareholders to sell this business.",
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      "text": "The scope for operating improvements is most pronounced and evident in DCS. A comparison of DCS with its peers illustrates the extent of the margin opportunity. Despite being one of the largest engineering and planning consultancies globally, as shown in the chart below, AECOM's DCS segment operates at a 310 basis point EBITDA margin gap to its closest peers.",
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      "text": "Source: CapitalIQ, Starboard estimates. (1) Federal Contractor peers as presented by AECOM management in a Company presentation on June 17, 2019. (2) EBITDA margin for standalone MS segment per AECOM management commentary on an investor call on June 17, 2019.",
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      "text": "EBITDA Margin Comparison – AECOM MS Segment vs. Federal Contractor Peers(1)",
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      "text": "Improvements in DCS",
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