Zacks_Analysts' Blog : URS Below Estimate - Analyst Blog

URS Corp. (URS) reported second-quarter fiscal 2011 earnings per share of 86 cents, below the Zacks Consensus Estimate of 92 cents. Earnings for the quarter were above the prior-year earnings per share of 76 cents.

Total Revenue

Total revenue in the quarter was $2.36 billion compared with $2.25 billion in the prior-year quarter. The company benefited from revenue growth in the industrial and commercial business, which includes mining, oil and gas, and industrial and manufacturing industries. URS continues to benefit from its strategy to setup a diversified business. 

Segment Result

Infrastructure and Environment revenue in the quarter was $929.5 million compared with $751.1 million in the prior-year quarter. The segment revenue included $115.0 million contribution from Scott Wilson Group plc, acquired by URS in September 2010.

Federal Services revenue was $668.6 million compared with $652.0 million, aided by continued demand for URS’ specialized engineering and technical services. The federal segment revenue in the quarter included $27.6 million contribution from Apptis Holdings Inc., acquired in June 2011.

Energy and Construction revenue was $810.5 million compared with $859.7 million in the prior-year period.

Income and Expenses

Operating income for the quarter came in at $150.6 million compared with $134.6 million in the prior-year period. General and administrative expenses were $19.0 million compared with $13.3 million.

Balance Sheet and Cash Flow

Cash and cash equivalents was $433.8 million at the end of the second quarter of 2011 compared with $573.8 million at the end of 2010. Long-term debt was $395.9 million compared with $641.3 million and shareowners equity was $4.25 billion compared with $4.20 billion at the end of 2010.

Outlook

The company reaffirmed its 2011 revenue guidance range of $9.8 billion to $10.0 billion and EPS range of $3.60 to $3.70.

Improving capital spending environment will continue to benefit both the power and industrial and commercial sectors. The company’s infrastructure business continues to expand in international market. These positive factors will aid the company’s performance in 2011.

URS Corp. 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 (ACM), Fluor Corporation (FLR) and KBR Inc. (KBR).

We currently maintain our Neutral rating on URS Corp. with a Zacks #3 Rank (short-term Hold recommendation) over the next one-to-three months.