Get started. Welcome to day two of Citi's 2025 Global Industrial Tech and Mobility Conference. Again, I'm Andy Kaplowitz, cover engineering, construction, multi industry for Citigroup, so we are very excited to have AECOM with us. CEO is Troy Rudd. Troy, you've been coming to this conference for a while. Thank you for that. I'm going to turn it over to you in case you have a couple prepared remarks and then we'll get into Q& A.
Okay, thank you very much and again, thank you for inviting us down to the conference. It's nice to be in Miami even at 7:00 A.M. because I checked the weather at home and in Dallas it is actually with windchill about 0 degrees. So, it's awesome to be here and thanks everyone for getting up early in the morning to come and hear more about us. So, I just, I don't have a lot of prepared remarks, but I thought I just, I would start by just maybe answering the obvious question which is there's a lot of there. We feel there's a lot of uncertainty in the market and there's a lot of uncertainty in our largest market in the U.S. But I'll make a couple of points about that.
First of all, even though there is a lot of uncertainty and typically, and this is around the change in federal government, that we're really not feeling a significant difference in our markets that we work in. So we're not feeling a significant difference in our transportation market, certainly not in our water market and our environment market and even in our buildings market. There is just a continued investment, whether through state and local governments or through our private clients. And we're just not seeing a significant slowdown or change in our business. Where we are seeing a bit of a change is the obvious place in the federal government and in certain budgets. And I guess the best way to describe it is I would describe it as we're not the fat that's being addressed.
When I look at the federal government spend in our business, we have about 8% of our work comes through the federal government and of the agencies where we know that spending is being significantly affected, which is in the EPA, it's in USAID, it's in the funding under the certain funding under the IRA legislation that represents a really small percentage, you know, less than 50 basis points of our business. So we're not being impacted by that and where we are exposed or we do a lot of work with the federal government, that's with the Department of Defense agencies and our budgets and their programs are not being affected because of the nature of those programs. One of those is an example in Asia, the AUKUS program. A significant investment is being made by the various agencies in the Department of Defense.
That's not changing. So we're participating in those programs. The other place where we do a lot of work is for FEMA. Despite the fact that there might be a discussion on whether in fact FEMA may exist or not, when you look at what happens as a result of a climate-impacted or climate impact or climate disaster, the funding for the recovery comes through the federal government. There is very limited funding that is available through state and local governments and certainly through state governments. When you're talking about climate impacts that are so significant, the money has to come through the federal government and it will come through the federal government.
And so whether it comes through FEMA or whether it comes directly to the agencies that are state and local that are going to actually be responsible for the rebuilding, the money is going to be available. I mean, it's possible to say that if the money isn't being managed by FEMA, you're taking a layer of management out of the way. In fact, you're actually getting the funding to the recovery projects at a faster rate and you're probably getting more money that's available. So, you know, regardless of what actually happens kind of with the agencies that will be required to help communities through disasters, the funding will always be there. And now, just a point about our business is we've built a business that I think is on its own actually performing at an extraordinary rate and is incredibly resilient.
And a couple of measures of that performance is we've been growing organically for quite a period of time and we have an organic growth algorithm for us that kind of works for the long term and we're very comfortable with that. But the other part of that algorithm is that we're winning work at a really high rate and we're winning the kinds of projects that we want at a really high rate that make a meaningful difference in the future of the business. So, we take advantage of some competitive advantages we've created, but we're building some new businesses that I think will be very strong in the future. And I'm sure you're going to give me a question, so I won't expand upon that.
Then the other really important part of this is we're growing our businesses, but we have the highest margins in our industry. We have the highest margins in our industry by a significant amount. Again, an anecdote, as I learned this morning. One of our competitors had an investor day this week and they said that they're going to be targeting the margins that we have in our business this year to achieve those by 2029. I'm like, wow, that's awesome. They're going to work for five years to get to where we are today. So, we'll be way beyond that. So again, I sort of look at the strength of the resilience of our business and it is very strong.
While it might feel like there's a lot of uncertainty in the markets that, you know, that we play in the U.S., what we're seeing is we're seeing continued strength in our markets and we're seeing continued strength in the performance of our business.
Troy, you answered all my questions, so thank you. Let me ask you one follow-up to what you just said. I often get asked, you know, how long could the higher level of funding last basically for you? And so like, you know, we use the American baseball analogy, like what inning are you in? You think of elevated spend, you know, with the understanding the administration to change, all that kind of stuff. You still have strong state and local budgets. IIJA, what inning do you think we're in of this cycle, if you want to call it that?
They're short. They're obviously they're called short term or medium term cycles. Right. We do see that in the world, giving examples. In the U.S. we certainly, I don't know, you know, if we sort of look at the funding that has been authorized and put into the marketplace from the IIJA, it represents a very small portion of what's been appropriated. So maybe you could say that that represents the third inning. And so that's called. Think of that as a medium term cycle. We see that, for example, in other places. We see that in Australia, right? There's been a large infrastructure spend for a decade in Australia and governments take a pause and then they say, what is going to be next on our agenda?
Australia's in that moment of pause and they're moving from transportation infrastructure into water and energy infrastructure and into defense infrastructure, right, so there are these medium- term cycles and we participate in those, but we have a business that's very broad in what we do, so we participate in all of those cycles. I look at this also in terms of a long term cycle and I'd say if you look at the long term cycle for infrastructure spend, we're in the first inning and they were probably perpetually in the first inning, and the reason is if you sort of look at infrastructure, world doesn't have infrastructure that's properly invested in and it's always going to need to be continually invested in, but then if you look at the major trends, so there's the trend of the economic to drive economic trends.
There's the underlying need which is infrastructure, so the insatiable need for energy, right. Which creates an insatiable need for environment work, for water work, for all the work that you support the energy cycle with, which is generation, storage and transmission, and right now there's a really significant trend that's taking place in investing in transmission around the world. The other thing is we talk about resiliency and sustainability. There's a climate event, a community has to recover. There is a lot of money that has to go into recovery, but there's also this really long term trend about building those communities back in a different way so that when the next storm or the next fire or the next earthquake happens that they can be a little more resilient and recover a little faster, and there are massive investments that are going on.
And I'll just give you the obvious example that is in California right now. It's a recovery phase in California from the fires in Southern California. And it's going to go on. The recovery phase is probably going to go on for the next three to five years. But during that point in time there's already discussion about as we get through recovery, as the infrastructure comes back, it will be built back in a very different way. And so there's long term investment that's going to be made in the infrastructure to support Southern California. That's going to be investments that are going to be made sort of between years three and years 10. And those trends are not going to change in the long run. So you know, you've got economic activity is ultimately supported and built by infrastructure.
There's infrastructure that is underinvested in and has to be replaced and that's happening. We have an energy transition that's taking place and then we have to support all these communities and their continued. When we look forward, this is what our business focuses on. And so I look at the long term and say we've built a business that's focused on long term trends. There may be medium term trends kind of get a little bumpiness, but the long term we're built for our business in its first inning.
It's helpful, Troy, and I want to back up for a second because, you know, it's been about five years almost that you and Lara took over. Maybe just talk about one or two things that really have gone right because AECOM has changed pretty dramatically since I first started covering the company. And then what are one or two things that you still need to do that you haven't accomplished it, but you want to.
29 minutes. Okay.
Yeah, and try to keep this.
Keep it to like two or three. So I think one thing that we've done that's had an extraordinary impact is we've built a different culture. So we've created a culture in the organization that didn't exist, and it's a consistent culture across the company. And I think that culture is incredibly important and we're seeing the real benefit of that culture.
It's kind of a hard thing to describe or talk about, but it's incredibly important because we had a strategy and we've been following that strategy and it continues to evolve, but the way that you execute on that strategy is you get everyone in the organization to sort of move along at the same pace and do the same things. You do that because of the culture that you've created. We've created, first, for example, a culture of collaboration. Sounds kind of hockey, but we have a leadership team and now leadership teams across the entire company that they think about how do we work together to get the best result, and so that means that we can, when we're trying to solve a client's problem, we don't just draw from what exists locally.
We draw from all over the world. The other things that we do is that culture has enabled us to all agree on how we're going to invest and how we're going to reap the benefits from those investments, and again, this may sound odd, but we haven't been a good industry that knows how to invest and how to obtain the benefit from those investments, and we've done that, and I'll give a couple examples, so we said that we look around the world years ago.
We said there is a need for someone to be on the client side of the table that has really deep technical skills that can help them actually execute their vision and turn something into some piece of infrastructure, or more importantly, that it's infrastructure that will help them deliver their community or their personnel or their company objectives. So, we invested to build a program management business. We had a small one and four years later we're the number one program management business. We've grown it from something that's small to something that is the largest. And it's billions of dollars of revenue for us. And you know, we sort of said now that represents when we started, about 3%- 4% of our overall business. Today it represents 16%- 17% of our business.
And so building a culture that allows us to invest and then actually take the investments and turn them into growth and obviously into more profitable growth is a really important part of what we've created and it's the enabler of what we're able to do. And I'll. There're some things that we're focused on to invest in now to continue to build the future, but I'll hold off. Keep it to four minutes.
No, that's not bad. Okay, so maybe I'll ask a related question then. So you've got this 5%-8% longer term growth algorithm, right? And you say 2%-3% from expanding end markets, 1% or 2% from market share gains. Like, how sustainable or how difficult is it to hit those targets? Like, you talked about program management, right. It's growing 20 or something like that right now. Can you keep that up? That's a big number, you know, to be able to hit your targets.
So at some point in time the answer is that will slow down, but it will grow at a faster rate. There's no question about that. So I'm going to take the business apart and think about it in sort of three different chunks. So in the world of design and sort of the world of the science based work that we did in our environment business, that business is going to continue to grow, but it's not going to look like it grows at the same pace. And the reason is we are able to do the same amount of work with a lot less hours. And in the world of design and engineering, it was an hours based business and we're replacing those hours.
Let's just say, for the example, I'm going to use it right now, just the example of technology. I can expand upon that. So that business actually is growing, but it might not look like it's growing at the same rate. But what you do see is you actually see the margins growing in that business. And so you sort of have to think about the world of design as a business that's going to grow, but because the efficiency gains can be so significant that a business might look like it actually is kind of holding steady or maybe not growing as fast, but it actually is growing. And you've seen that through the margins. Then you say, well, let's look at the businesses that are not going to be as impacted by technology. And those are the worlds of program management.
It's more of a people business. Technology does improve the efficiency, but it will not have nearly the same impact. And so you grow that business but you need the underlying technical skills to be able to deliver that work. So that grows at a faster rate. The world of advisory is the same thing. If you're giving advice to someone on the front end, the front end thinking that's more of a people- based business where you need technical skills to continue to grow. So those by nature you want to invest in because you're going to be able to grow those. And the growth is a little more obvious as to how you see it. But the growth in our design business is different.
And over time we actually see our business changing because we're going to drive efficiency in design, use far less hours to do that work and make it more profitable and more productive. Take the people with those skills and redeploy them into program management and into advisory. And so that's the journey that we're on. So those other businesses will grow at a faster rate. Design may not look like it's growing as fast rate, but it is because the margin improvement is part of the equation.
I think Troy, you should give one example of a program management job because I get asked that question all the time, what really is program management? And then when you're thinking about what you're doing, right, what program management and advisory, do they have the same or better margins than the design business? With the understanding design margins are coming up like is it mix accretive or not? What's going on?
The answer is that program management and design, their margins are very similar. Those margins are similar advisory, the margins are higher.
Yeah, it's like consultant.
It's. So think about it as the margins are again, so you kind of have, there's various consulting that goes on but you sort of say well you've got the consultants, I'm just going to use the sort of the three firms, right, Bain, McKinsey and BCG, they've got margins that are here. The margins that are in our engineering design business are here, our advisory business are kind of in between but have the opportunity to expand. So, as you expand your advisory business, which we are planning to do and we're investing in that, it will also be helpful to our margins. And so I, you know, again, I can sort of, we talk a little margins. I can sort of take the margins apart and explain why they're going to continue to grow over time as we grow the business.
Our margins are already the top of our industry because we've made investments in the past, we've done the things that have improved margins and we have this path to continue to do it. Some of it's based on mix the way we're investing in business but also it's the way that we're investing in our individual businesses that will drive those margins.
The advisory is still small, right?
Advisory right now for us is about $200 million. I expect we said we would double that in three years. I expect we'll do it based on the pace that we're growing, we'll do it at a faster rate than that. And we expect that to be in a relatively near future. A $1 billion business. And so we would have three $1 billion businesses and advisory is the one that will be focused on investing in now
And then.
Just a quick example of a good program management job. Just
sure. How about the Olympic Games? Sort of think about the Olympic Games is every four years like a new team comes to town and has to build for four years to deliver the Olympic Games. It's the, you know, kind of the Olympic Committee has a small group of people that move with the Olympics every year. And then the local committee has to build a team of people, but they don't have the ability to build that group of people that's actually going to deliver the Games. So, venues, the athletes are going to be able to show up, they're going to be able to perform. You're going to have venues that are built. You're going to put all the infrastructure necessary to support the Games. The Games will end.
When I say the Games because there is the Olympic Games and the Paralympic Games, they are one. Again, it's a sort of continuous event. They'll end and then it'll take about three or four months and then the Games are dismantled and they're sort of transferred over to what exists, transferred to the community. It's a great example. You start with the Olympic Games. It's about a 10 year cycle. So there's the master planning and winning and the design work that goes on. For the LA28 Games, we've been doing that for a long period of time now in the process of transitioning to what is program management and construction management. A large group of people will work with the LA28 committee to actually deliver the Games.
And that's a great, again, it's a great visible example of what program management, sort of what you have. You've got kind of the planning, the design, the program management and construction management is part of it because you have to deliver venues. But program management isn't about, it's about delivering outcomes because you measure the game's success in outcomes. And so if you kind of went to the LA28 committee, you'd say what are the outcomes you need to deliver on? And these are those outcomes. Program management sits alongside the owners and delivers outcomes. And so that translates into almost every major program in the world. And so, you know, we've won a lot of these large programs where you need the technical skills because a lot of these are infrastructure based, but how you actually deliver the technical infrastructure.
And so it's a perfect marriage of kind of what you need to do in planning and design and then delivery of those to put that into program management and sit with the owner and deliver outcomes. I hope that was an explanation.
So, let me go back to your first comments about, you know, the change in admin. The question I get asked is, is there a near-term risk of booking slowdown? You know, whether it's federal, state and local customers like you talked about uncertainty in the beginning, but you're not seeing it. Do you worry about book-to-bill going under one for a couple quarters? Because you've been pretty good with that metric. Like what do you worry about for that?
So overall I don't worry about that and I don't worry for a couple reasons. One is, and as sort of, as I said in the opening, our, our work with the federal government represents about 8% of our overall business. But of that, the, this, the spend that has been clearly slowed down, we're not, we're just, we're not materially exposed to. And then the other agencies work with, we're not seeing, we're just not seeing a change in their agendas. So you know, there will be, at some point in time this year there will be a budget and that budget will then lay out the continued spending. But the, but the underlying programs for the Department of Defense, the underlying work that FEMA or funding that would go to FEMA needs to be committed to, those missions aren't going to change. So we don't see that change.
And then the rest of the business. Think about a third of our business is state and local, and we don't see the funding from state and local governments changing. We're not experiencing that. Our private customers, which represent about a third of the business, we're not seeing a change in that as well. And that's our private customers is a relatively healthy mix of kind of their OpEx budgets and CapEx budgets, which is a little different than the rest of our government work. And then around the world about, you know, again, sort of about the other third of our businesses really work from outside the United States. So from around the world, and it's from government agencies. And it's hard to say. It's bumpy.
And we've said that in the first half of this year, we expect that part of our business to grow at a lower rate. And it did grow at a lower rate. And we sort of see that through the first half of the year. But based on kind of the awards that we've seen, the wins that we've had in the last quarter and the pipeline that we see, we see that trajectory changing. And part of that change is it's a change in the work, the mix of work. So, the infrastructure that's been invested around the world is different. I'll give the Middle East as an example. You know, the Middle East is, in particular, Saudi Arabia is invested in infrastructure, but over the last two years, we've seen a change in the focus of that investment.
And so it's moved from some of these. I don't call them rural, but they really were out of the city, large mega projects. There's still spend being made on those infrastructure programs, but it's now moved to the communities with a different set of agendas. So we see a lot of investment being made in and around Riyadh. And we see a lot of investment being made to support things like the World Cup that's going to be in Saudi Arabia in 2034. And so there's a large investment that's being made in the infrastructure to support FIFA in 2034. So there's a change in mix. And for us, we have the skills to sort of move with that change in mix and move with our clients.
Got it. So I want to open it up to the audience in a second. But it sounds like summarizing, right? Think about the near term. You still think book-to-bill over 1. It's likely over the next few quarters, U.S. a little bit better than international. International getting better over time and 5% to 8% NSR growth still looks good.
Right.
Summing up that, any questions from the audience? Otherwise I'll keep going.
Can you hear me?
Yes,
Thanks for doing this. I guess one theme that's come from the new administration is deregulation overall and what the puts and takes would be for your business from deregulation and maybe we could segment that from water advisory like kind of all the different sub segments you play in.
Just so on a net basis, deregulation would be awesome for our business. The reason I say it would be awesome because deregulation number one means change in regulation. When there's change in regulation, that means you need people like us to kind of help you work through the change in regulation. Even if it's less, it's still new and so you need to help to work through that. But it's a good kind of new because ultimately it means that there would be an improvement in the return on the investment in infrastructure because you'd be able to get it in place sooner.
And so that would be a net positive for the business because you're going to have more money that's going to come to infrastructure at a sooner point in time, increases the returns and you know, we're trying to have a voice in that conversation. So you know, in D.C. where we started back in November, kind of, you know, taking the knowledge that we have about the process and advancing it into the agenda to say, look, if you're going to consider doing this, let us give some guidance and say here's a way to think about how you would take what is typically a permitting process, an approval process that would take on average six years. Here's a way that you can comfortably compress that so it looks like three or four.
It's not removing any of the necessary steps that should exist to make sure that what you're building is going to be long lasting and to be appropriate for the, for that use. But there are some really good ways. It's a mixture of not just saying let's do less, it's saying let's do it a little differently, let's change the process you go through and frankly let's take advantage of some of the technology that's available to do that. There's no reason this needs to be a manual paper process. It's typically how it's done today. So I think it would be net positive for all of us.
Thank you. I mean, I guess one follow up would be if there's more volume of projects to work on, is there less complexity per project and what that would mean for like the size per project?
I don't, I mean that's a difficult question to ask. I imagine if there's more regulation, there's just more projects. I can't see the leaning towards smaller projects because usually the projects that get held up by regulation are the bigger projects. The smaller projects, you know, the kind of, there's less community concern, less community involvement, less kind of process you have to go through. A lot of it's more local and it's less visible and you have less outside agencies or sorry, outside participants coming in, for example, to file litigation. And so I think that this would have a much bigger benefit on the larger programs and larger projects. And that's where we play. Right.
You know, where the playing field is really narrow and where we win at a really high rate again on our largest projects that we pursue. Our win rate so far this year is almost 80%. That's because we have a natural competitive advantage and we've built to create an even better competitive advantage. That's where our focus is. I think we would disproportionately benefit from that because I think that regulation would have a greater impact on all projects but more important on bigger, more visible projects.
Any other questions? So I want to ask you, like, why is water so good like compared to other markets? It seems like you really focus on water.
It's a question you give to the water boy.
Yeah, I mean, you know, water so.
Good because we drink it.
But why has it led to better growth for you guys, I think than other sectors? Then, you know, you've talked about this water environment advisory business. Yeah, the $200 million of NSR getting to the $1 billion over time, doubling it in a few years. Like, how do you do that and why is it so good?
Okay, well, I mean, maybe I think the two largest problems that exist in the world are focused around water and energy. I won't focus on energy, but energy is what ultimately fuels growth in economies. Water ultimately is what supports people and supports economies. The world is a weird place. You either don't have enough or you have too much. Then when you do have it, you can't get it to the right place you need it efficiently. The water infrastructure in most of the developed world has been underinvested in for decades. There is a massive need for investment to sort of make sure that we can address situations where there's too much water or we can make sure that we get water to where it needs to go.
Ultimately water is like energy is what fuels economic growth. You talk about, again sort of talking about creating computing power. The ingredients that you need is you need energy and water. Again, I just, it's, there's just a massive recognition that there needs to be a large investment in water infrastructure. Whether that's fresh water conveyance or wastewater, it needs to happen. When you sort of look at, you know, you talked about how does that translate into an advisory water advisory business? So 60% of the world's water doesn't generate revenue. Right? It's non-revenue-generating water. That doesn't make any sense. A big part of that is in fact just lost water.
And so if you sort of say, well look, if we can figure out how to address that one problem, that 60% of the world's water is just lost, not generating revenue. Well, if we can get, capture some of that and generate, effectively recognize and generate revenue from it or actually just make it available to be used so it becomes revenue generating water, that's a massive value proposition. And so within our advisory business, we actually have a business that is built around that. Those are the conversations that are happening with our customers. It's how to address that problem. I think the water that's lost in the United States through our conveyance system represents the amount of fresh water that's consumed in the U.K., Germany, France and Italy. Put it in perspective.
So there are these massive consulting advisory opportunities around water and that's one of them.
So I'm going to start running out of time quickly. So, like, let me ask you about margins, Troy. Like, you know, your long-term guidance is 20-30 basis points, but you really done more than 75 basis points a year in margin improvement. I think this year, guiding to 30 basis points of Adjusted EBITDA margin expansion. So, look, I understand you want to do, you know, leave some contingency in, but you, you know, you just talked about how design is getting better margin, all that kind of stuff. So why can't you do more than 30 basis points?
Well, it's a balance, you know, you sort of. You're in. You have to invest. You don't just improve your margins by. It's not magic. You don't say, hey, I'm just gonna be better at doing contracts. That doesn't. That's not sustainably improving your margins. If you were that bad at contracts, that's a different problem that you have. So you have to invest to continue to improve your margins. And so within our. Unfortunately, the way our business works is we don't make capital investments to improve our margins. We make investments that run through our operating line to improve margins. So, in our margin improvement, think about it this way. We've made investments in the past that continue to improve margins.
Then as we go into the next year, we take some of that and we say we need to invest that to continue to grow in the future. And so, yes, we could have better margins, but we've decided that this is a great opportunity for us to continue to invest to improve our margins in the future. I'll give you a couple of examples of that. First is we're growing an advisory business which has higher margins. You have to invest to grow that business. And what does an investment look like? Well, investment means that you're hiring people. And so you start by hiring really senior, impactful, influential people that are expensive and you don't get a return on them immediately. So you invest. And we're going through their process. We are hiring a lot of really senior people, and we're having great success at it.
Part of. Because of the culture we've created, people want to join to participate. They want to come and join us to do that. So that's an investment. And then as we look next year, we'll say, well, our margins will improve because we've invested in the business and we've grown the advisory business. Another investment that we're making is, you know, in our industry. We started talking to us about four or five years ago. We said, we need to invest in digital, right? Which really, we need to invest in improving the efficiency of our business through technology, particular design. Well, about 18 months ago, we realized that digital really isn't digital what we're talking about, because five years ago, artificial intelligence didn't really exist in the way that it does now. We don't talk about digital anymore. We're talking about investing in artificial intelligence.
And so we started this 18 months ago, and we did an experiment 18 months ago, and it's now successful. So all of our bid and proposal work across the company is now done using AI. And we can get about 60%-70% of the bid and proposal work done in an almost, almost instantaneously point in time. And then we spend the rest of our time because there's a lot of technical work that has to go into proposals, we start doing that. So, you know, we started 18 months ago, we were successful using that. Now it's used across the company. We said, well, we should have a roadmap about how we're going to continue to use AI to transform the delivery in the business. And so we've defined this a couple different ways.
This one is how do we support the underlying business, like run the business and actually support projects, and we have a roadmap with use cases on it that we are in the process of now executing on, and we're going to put those three use cases into place. We're investing in them, and guess what? Margins will improve next year. That roadmap has a whole bunch of use cases on it that we are going to continue to adopt and develop. We invest in it and it will improve margins next year, and then the next big piece is that we're investing in is how do we actually deliver our underlying design work in an entirely different way, and we actually have those use cases and those prototypes going on.
I'm not going to talk about them, but that's going to be an investment that we'll make this year and next year. And that will have a really big difference, really big impact on our margins in the future. And so that's why our margins will improve, but they won't improve kind of at a higher rate. We think about them in terms of balance, improve margins, invest, continue to make them better for the future, and always continue to invest to improve the strength of the business.
Just a simple question there, Troy. So like you mentioned your competitor talking about 16% margins, you've had the 17% margin, you know, target out there for a while. Everything that I hear you say today suggests either that's more attainable or it's too low. Like, how do you respond to that?
I'm very comfortable with a 17%+ margin target.
Okay.
I mean, that's the best way to describe it. That's our guidance. We're comfortable with it. So, you know, we're into the 16s and so I guess at some point in time we'll have to adjust it.
So, and then, strategy around cash and cash deployment. It's been very consistent for a while now, right? And do generate good cash. Obviously, you have peers that have been more acquisitive. Do you pivot at all, and if so, why would you do that?
First of all, we're going to be returns focused. We use this term. And so we look at where we think the best return is on deploying capital. Business first and obvious is organic growth. We'll deploy as much as we possibly can to the organic growth or driving efficiency in the business. Our limitation on how we can deploy capital in the business is actually the time of leaders. We run out of time of leadership to actually drive more capital into the business. I think at the moment, this moment in time, deploying the way we have, returning to shareholders, is the highest return opportunity. We've said this for probably two years now, that we will look at acquisitions where we think there's an opportunity to invest money to accelerate organic growth.
If there's a capability that we don't have in a part of the business that we think we're going to grow that will be a high returning part of the business we are looking at. We will continue to look at those opportunities but we will always be disciplined about it. Unfortunately over the last few years there's been a significant amount of capital coming into our industry into acquisitions that are driving up the purchase prices. That's to the point that they don't make any sense.
So just last question I asked you before, in every company here, what are the top two or three innovations and structural changes affecting your company over the next five years? Are there any emerging industry trends that are perhaps being overlooked in the current discourse?
I don't feel we have. I think we're focused on the right long-term markets. I think we built a really strong culture that differentiates us and allows us to execute in the future. I think we're invested in the right places that are actually, you know, the right places to be driving value in the business. We're going to continue to invest in building the right businesses, investing in our people, and we're going to be investing in technology or AI.
Excellent. Well, thank you very much, Troy, for joining us.
Appreciate it.