URS Corporation reported third-quarter 2013 non-GAAP earnings of $1.42 per share, which beat the Zacks Consensus Estimate of $1.20 by 18.3%. The company reported GAAP net income of $88.8 million or $1.20 per share in third quarter 2013, down from $106.7 million or $1.43 per share in the prior-year quarter.
The company benefited from its initiatives to diversify its business across both private and public sectors, which negated the difficult conditions arising due to unprecedented government shutdown and sequestration.
Total revenue in the quarter was $2.74 billion, down 7.2% compared with $2.95 billion in the prior-year quarter and missed the Zacks Consensus Estimate of $2.96 billion. The decline in revenues was due to an after-tax goodwill impairment charge in the quarter. However, the company benefited from an after-tax income from its acquisition of Flint Energy Services and a positive currency gain from Canada.
At the end of the quarter, the company had backlog of $11.6 billion compared with $13.3 billion at year-end 2012. It reported book of business of $23.3 billion, down from $24.9 billion as on Dec 28, 2012.
Infrastructure and Environment revenues in the quarter were $922.3 million, a marginal increase of 0.2% from $920.7 million reported 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 and the company’s industrial business is benefiting from the increased demand in North America.
Federal Services revenues were $538.9 million, down 22.7% from $682.8 million a year ago.
Energy and Construction revenues were $775.5 million, marginally down 0.8% from $781.5 million in the prior-year period.
The Oil & gas segment reported revenues of $532.6 million, which declined 10.1% from $592.2 million in the third quarter of 2012. The decline was due to continued effect of unfavorable weather conditions and flooding in western Canada in the previous quarter.
Income and Expenses
Operating income in the quarter was $179.3 million, down 13.1% from $203.6 million in the prior-year quarter. The company’s general and administrative expenses were $14.3 million compared with $22.6 million a year ago.
Balance Sheet and Cash Flow
Cash and cash equivalents were $314.2 million at the end of the quarter, compared with $314.5 million as on Dec 28, 2012. Long-term debt was $1.9 billion and shareowners equity was $4.1 billion as on Sep 27, 2013.
The company’s cash flow in the quarter was $268.0 million, bringing its year-to-date tally to $358.3 million, an increase of 20% from last year.
Following the earnings release, URS now expects 2013 consolidated revenues to be between $11.0 billion and $11.5 billion. The company lowered its higher end of its earnings guidance to be in the range of $4.10 to $4.25 a share, down from the previous range of $4.25 to $4.50 a share. URS expects non-GAAP cash earnings for 2013 to be between $5.05 and $5.20 per share. Ongoing uncertainty related to the political impasse that also led to the U.S. government shutdown and its subsequent effects resulted in the lowered guidance.
URS currently has a Zacks Rank #4 (Sell). Other companies that can be considered at the moment include Jacobs Engineering Group Inc. (JEC - Analyst Report), AO Smith Corporation (AOS - Analyst Report) and Quanta Services, Inc. (PWR - Analyst Report).Jacobs Engineering Group and AO Smith Corporation both carry a Zacks Rank #1 (Strong Buy), whereas Quanta Services has a Zacks Rank #2 (Buy).