URS Corp. Misses 4Q Estimate

Mar. 1.11 | About: URS Corporation (URS)

URS Corporation (NYSE:URS) reported fourth-quarter 2010 earnings per share from continuing operations of 75 cents, underperforming the Zacks Consensus Estimate of 90 cents. Earnings for the quarter were above the prior-year earnings per share of 41 cents.

For 2010, earnings per share from continuing operations were $3.69 compared with $3.16 in 2009 and were in line with the Zacks Consensus Estimate.

Total Revenue

Total revenue in the quarter was $2.38 billion compared with $2.11 billion in the prior-year quarter.

For 2010, total revenue was $9.18 billion compared with $9.25 billion in 2009. The company benefited from increased revenue from infrastructure and federal sectors, which more than offset the declined growth in the power and industrial sectors. Backlog at the end of the year was $16.6 billion compared with $17.3 billion at the end of 2009.

Segment Result

Infrastructure and Environment revenue in the quarter was $904.1 million compared with $733.7 million in the prior-year quarter. Federal Services revenue was $648.0 million compared with $620.7 million and Energy and Construction revenue was $854.4 million compared with 773.4 million in the prior-year period.

Income and Expenses

Operating Income for the quarter came in at $122.4 million compared with $75.5 million in the prior-year period. General and administrative expenses were $16.1 million compared with $19.2 million.

In 2010, the company reinvested earnings from its international business in order to achieve its goal of worldwide expansion. Therefore, the company earned a net tax benefit of $42.1 million or 52 cents in 2010. Tax rate for the year was 30% compared with 38% in 2009.

Balance Sheet and Cash Flow

Cash and cash equivalents was $573.3 million at the end of 2010 compared with $720.6 million at the end of 2009. Long-term debt was $641.3 million compared with $689.7 million and shareowners equity was $4.2 billion compared with $4.0 billion in 2009.

Outlook

The company expects total revenue to be in the range of $9.8 billion to $10.0 billion. Earnings per share are expected to be in the range of $3.60 to $3.70. Fully diluted weighted-average shares outstanding are expected to be between 77.0 million to 79.0 million shares after taking into consideration the new share repurchase plan of the company. Tax rate for 2011 will be approximately 40.0%.

The growth revenue in 2011 will be supported by improving market trends and increased revenue expected in all sectors. Incoming contracts of indefinite period from large indefinite delivery contracts with the Department of Defense as well as new opportunities with the Department of Energy will lead to increased growth in Federal sector. The company also expects to benefit substantially in Infrastructure, Power and Industrial and Commercial businesses.

URS Corporation was originally incorporated in California on May 1, 1957 as Broadview Research Corporation. On May 18, 1976, it was re-incorporated in Delaware under the name URS Corporation. The name “URS Corporation” was formally adopted on February 21, 1990. URS Corp. provides engineering, construction and technical services. As such, it offers a broad range of program management, planning, design, engineering, construction and construction management, operations and maintenance, and decommissioning and closure services to public agencies and private sector clients globally. It is also a major U.S. federal government contractor in the areas of systems engineering and technical assistance, and operations and maintenance.

Major competitors of URS are AECOM Technology Corporation (NYSE:ACM), Fluor Corporation (NYSE:FLR) and KBR Inc. (NYSE:KBR).