URS Gets a Boost From Federal Government Spending

| About: URS Corporation (URS)

URS Corporation (NYSE:URS) has been awarded an order by the Department of Defense to provide maintenance support services for U.S. Marine Corps vehicles and support equipment in Georgia, North Carolina, and South Carolina.

The indefinite delivery/indefinite quantity contract has a maximum value of $101 million to URS.

URS continues to see favorable trends in the federal government sector. There is strong funding for O&M programs -- which means increased opportunities to support long-term DoD initiatives and stable funding for the DoE's environmental and nuclear programs, including the National Nuclear Security Administration.

With respect to infrastructure, URS’ long-term outlook is very positive. State and local governments continue to find resources to fund infrastructure programs. In the previous fiscal year, states and municipalities sold billions of dollars of new bonds to fund infrastructure projects, including education and healthcare facilities as well as new roads. Key projects continue to move forward.

Demand for its services is cyclical and vulnerable to economic downturns and reductions in government and private industry spending. If the economy remains weak or client spending declines further, then its revenues, profits and financial condition may deteriorate.

Global economic conditions have caused, and may continue to cause, clients to delay, curtail or cancel proposed and existing projects. This decreases the overall demand for services, leading to weak financial results.

URS 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 also is a major U.S. federal government contractor in the areas of systems engineering and technical assistance, and operations and maintenance. It has approximately 56,000 employees in a worldwide network of offices and contract-specific job sites in more than 30 countries. Fluor Corporation (NYSE:FLR) is a major competitor.

We currently have a Neutral recommendation on URS.