Weak 1Q Earnings for URS
URS Corp. (URS) reported first-quarter 2013 recurring earnings per share of 96 cents a share, 14.3% below the Zacks Consensus Estimate of $1.12 a share. Quarterly earnings were down 10.3% year over year. Profits for the company are uneven as the company primarily generates revenues from large-scale projects which vary from quarter to quarter.
Total revenue in the quarter was $2.80 billion, up 18.7% compared with $2.36 billion in the prior-year quarter. Revenue growth was driven by continued strength of the energy sector and the oil & gas sector. In addition, the bidding activity in the U.S. has increased significantly in the recent past and favorable upstream, midstream and the downstream segments have also contributed positively to the top line.
Further, lower energy costs are aiding in increased manufacturing activity which has increased the demand for the facilities management, O&M and EPC services.
Backlog as of Mar 29 2013 was $24.2 billion compared with $24.9 billion at the end of Mar 28, 2012.
Infrastructure and Environment revenue in the quarter was $933.4 million, down 3.2% from $964.2 million in the prior-year quarter. The segment continues to bear the brunt of the slowdown in the Infrastructure market. However, there has been a steady recovery in the Infrastructure industry with new opportunities in highway, transit, airports and other public infrastructure projects.
Federal Services revenue was $678.2 million, down 5.4% from $717.1 million a year ago. The decline in the Federal services reflects the continuing delay in procurement decisions and reduction in anticipated spending against previously awarded contracts.
Energy and Construction revenue was $664.8 million, down 8.4% from $725.7 million in the prior-year period. The decline in revenues there has been a gap between the last finished projects and the new ones that are being completed.
The Oil & Gas segment reported revenues of $583.8 million which increased almost 250% from just $163 million in the first quarter of 2012. This robust increase was driven by the Flint acquisition and the strong pipeline of EPC opportunities.
Income and Expenses
Operating income in the quarter was $152.6 million, down 5.5% from $161.4 million in the prior-year quarter. The decline was attributable to higher costs and general and administrative expenses were $22.7 million compared with $20.0 million a year ago.
Balance Sheet and Cash Flow
Cash and cash equivalents were $248.8 million as on Mar 29, 2013 compared with $314.5 million as on Dec 28, 2012. Long-term debt was $2.0 billion and shareowners equity was $3.76 billion as on Mar 29, 2013 which was unchanged as on Dec 28, 2012.
Concurrent with the earnings release, management reaffirmed the guidance for 2013. URS expects full year 2013 consolidated revenues to be between $11.8 billion and $12.2 billion. The company expects EPS to be between $4.25 and $4.75 a share, on a fully diluted basis.
URS currently has a Zacks Rank #4 (Sell) which is not a good option as present. However, other companies that can be considered at the moment are Crane Co. (CR), Honeywell International Inc. (HON) and Raven Industries Inc. (RAVN), all having Zacks Rank #2 (Buy).
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