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URS Revisits FY12 Guidance

Zacks Equity Research

URS Corporation (URS) changed its guidance for 2012 prior to its earnings release, scheduled for February 25, 2013. The revision is on the basis of change in the timing of a performance-based incentive award for achieving key milestones on a large chemical weapons demilitarization program.

The company will be receiving an incentive award of about $15 million after-tax, or 20 cents per share. Initially the amount was to be included in the fourth quarter of 2012 but now it will be incorporated in the first quarter of 2013. The chemical weapons demilitarization program is a long-duration program. Hence, URS will be eligible for additional incentive awards during the years of operations till the completion phase.

Due to the effect of this change in timing of the incentive award, the company expects its earnings per share for 2012 to be between $4.12 and $4.17, down from its prior guidance of $4.20 to $4.30. However, revenue for 2012 is expected to be as per the prior guidance of approximately $11.0 billion.

Zacks Consensus Estimate for earnings per share for 2012 is $4.26 give the zacks estimate for revenue also.

Strong performance of its Infrastructure and Federal sectors, well position the company to achieve its guidance. The company enjoys sizable and stable base for work with a diverse set of clients. The May 2012 acquisition of Flint Energy Services Ltd. is also expected to be accretive for the company.

However, delay in receipt of notices to proceed on several new contracts affects the revenue. Further, uncertain conditions remain a matter of concern in a few markets.

URS Corporation currently has a Zacks Rank #4 (Sell). Its close rivals such as Quanta Services Inc. (PWR) currently has a Zacks Rank #1 (Strong Buy) while Jacobs Engineering Group (JEC) and Aecom Technology Corporation (ACM) have a Zacks Rank #2 (Buy).

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