URS Corp. Beats by a Cent - Analyst Blog

URS Corp. (URS) reported second quarter 2010 earnings per share from continuing operations of 80 cents, which was ahead of the Zacks Consensus Estimate by 1 cent. The company reported revenues of $2.25 billion, compared with the revenues of $2.30 billion in the year-ago quarter. The Zacks Consensus revenue estimate for the quarter was $2.38 billion.
 
Segment Results
 
URS changed the names of its 3 financial reporting segments in the fourth quarter of fiscal 2009. The new segment names are: Infrastructure and Environment (formerly the URS Division); Federal Services (formerly the EG&G Division); and Energy and Construction (formerly the Washington Division).
 
Infrastructure and Environment.
 
For the most recent quarter, Infrastructure and Environment segment revenues were $751.1 million and operating income was $54.6 million, compared with revenues of $812.1 million and operating income of $70.2 million for the year-ago quarter.
 
Federal Services
 
For the recently concluded quarter, the Federal Services segment reported revenues of $652 million and operating income of $37.6 million.
 
Energy and Construction
 
For the last quarter, Energy and Construction segment revenues were $859.7 million and operating income was $55.7 million.
 
Guidance
 
URS Corp. expects its fiscal 2010 revenues to be in the range of $9.4 billion and $9.7 billion. The company expects GAAP EPS in the range of $3.65 to $3.75 for fiscal 2010. Total revenue for 2010 are expected to be slightly higher than in 2009.
 
URS Corp. 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 Department of Defense initiatives and stable funding for the Department of Energy's environmental and nuclear programs, including the National Nuclear Security Administration. Consequently, URS continues to expect revenues in its federal sector in the range of $4.3 billion and $4.5 billion in 2010.
 
With respect to infrastructure, URS’ long-term outlook is very positive. State and local governments continue 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.
 
As companies explore and develop remote production areas such as the Arctic and the Gulf of Mexico, URS can capitalize on its ability to deploy resources across a range of project sizes and in diverse geographic areas. In addition, the company is well-positioned to help clients build, upgrade or modify refineries to handle new types of fuels such as oil from Canada's oil sands. Energy companies have invested over $100 billion in Alberta, for example, with the goal of doubling oil sand production to 2 billion barrels a day.
 
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.
 
We currently have a Neutral recommendation on URS Corp.