Contacts:
Sard Verbinnen & Co
Hugh Burns/Jamie Tully
(212) 687-8080
URS Corporation
H. Thomas Hicks
Vice President
& Chief Financial Officer
(415) 774-2700
URS CORPORATION REPORTS FIRST QUARTER
RESULTS FOR FISCAL 2007
Revenues Up 14 Percent, EPS Up 23 Percent
From First Quarter 2006
SAN FRANCISCO, CA - May 2, 2007 - URS Corporation (NYSE: URS) today reported its financial results for the first quarter of fiscal 2007, which ended on March 30, 2007. Revenues for the quarter were $1.14 billion, compared with revenues of $998.1 million during the comparable period in 2006, an increase of 14%. Net income was $30.4 million, 26% higher than the $24.2 million reported for the corresponding period in 2006. Earnings per share (“EPS”) of $0.58, fully diluted, increased 23%, compared with EPS of $0.47, fully diluted, for the same period last year.
As of March 30, 2007, the Company’s backlog was $5.02 billion, compared to $4.64 billion as of December 29, 2006, an increase of 8%.
Commenting on the Company’s financial results, Martin M. Koffel, Chairman and Chief Executive Officer, stated: “URS performed very well in the first quarter. We saw strong growth in the private sector, primarily due to increased capital spending by our clients in the power and oil and gas industries. At the same time, revenues from our state and local government sector business grew significantly as a result of the growth in public investment in transportation, facilities and other infrastructure programs.”
Mr. Koffel continued: “The long term trends in all of our key markets look favorable, including demand for the engineering and operations and maintenance services we provide to federal government agencies. The Company is well positioned to benefit from these trends, and we remain on track to meet our financial objectives for the year.”
For the purpose of calculating diluted EPS, weighted-average shares outstanding for the first quarter of 2007 were 52.1 million, compared to 51.3 million for the corresponding period last year.
Business Segments
In addition to providing consolidated financial results, URS reports separate financial information for its two segments: the URS Division and the EG&G Division. The URS Division’s revenues include the Company’s work in the state and local government market, the private sector and the international business. In addition, the URS Division provides engineering services to federal government agencies, primarily for contingency contracts and facilities and environmental projects. The EG&G Division primarily serves the federal government market, providing a range of operations and maintenance and technical support services to the Departments of Defense, Homeland Security, Energy, Treasury and NASA, among others.
URS Division. For the first quarter of fiscal 2007, the URS Division reported revenues of $793.4 million and operating income of $55.3 million, compared to revenues of $643.3 million and operating income of $42.3 million for the corresponding period in 2006.
EG&G Division. For the first quarter of fiscal 2007, the EG&G Division reported revenues of $345.0 million and operating income of $16.2 million, compared to revenues of $360.4 million and operating income of $15.3 million for the corresponding period in 2006.
Outlook for the Remainder of Fiscal 2007
The Company reaffirmed its expectation that fiscal 2007 revenues will be approximately $4.65 billion. Assuming this revenue expectation is met, the Company continues to expect that 2007 net income will be approximately $128 million and now expects that earnings per share will be at the high end of the $2.40 to $2.45 range previously announced.
In addition, the Company continues to expect its effective tax rate for 2007 to be approximately 42.0%, compared to 42.6% in 2006. Finally, the Company’s weighted average shares outstanding for 2007 is expected to be 53.2 million, compared with 51.7 million in 2006.
Web Cast Information
URS will host a dial-in conference call on Thursday, May 3 at 11:00 a.m. (EDT) to discuss its first quarter fiscal 2007 results. A live web cast of this call will be available on the investor relations portion of URS’ website at www.urscorp.com.
URS Corporation offers a comprehensive range of professional planning and design, systems engineering and technical assistance, program and construction management, and operations and maintenance services for transportation, facilities, environmental, water/wastewater, industrial infrastructure and process, homeland security, installations and logistics, and defense systems. Headquartered in San Francisco, the Company operates in more than 20 countries with approximately 29,500 employees providing engineering and technical services to federal, state and local governmental agencies as well as private clients in the chemical, pharmaceutical, oil and gas, power, manufacturing, mining and forest products industries (www.urscorp.com).
TABLES TO FOLLOW
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Statements contained in this earnings release that are not historical facts may constitute forward-looking statements, including statements relating to future revenues, future earnings, future tax rates, future outstanding shares and future economic and industry conditions. The Company believes that its expectations are reasonable and are based on reasonable assumptions. However, such forward-looking statements by their nature involve risks and uncertainties that could cause actual results to differ materially from the results predicted. The potential risks and uncertainties include, but are not limited to: an economic downturn; changes in the Company’s book of business; the Company’s compliance with government contract procurement regulations; the Company’s ability to procure government contracts; the Company’s reliance on government appropriations; the ability of the government to unilaterally terminate the Company’s contracts; the Company’s ability to make accurate estimates and control costs; the Company’s ability to win or renew contracts; the Company’s and its partners’ ability to bid on, win, perform and renew contracts and projects; environmental issues and liabilities; liabilities for pending and future litigation; the impact of changes in laws and regulations; a decline in defense spending; industry competition; the Company’s ability to attract and retain key individuals; employee, agent or partner misconduct; risks associated with changes in equity-based compensation requirements; the Company’s leveraged position and ability to service its debt; risks associated with international operations; business activities in high security risk countries; third party software risks; terrorist and natural disaster risks; the Company’s relationships with its labor unions; the Company’s ability to protect its intellectual property rights; anti-takeover risks and other factors discussed more fully in the Company's Form 10-K for its fiscal year ended December 29, 2006, as well as in other reports filed from time to time with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statements.
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands, except per share data)
| | | March 30, 2007 | | December 29, 2006 | |
ASSETS | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents, including $13,155 and $44,557 of short-term money market funds, respectively | | $ | 64,854 | | $ | 89,502 | |
| Accounts receivable, including retainage of $37,332 and $37,368, respectively | | | 609,151 | | | 680,631 | |
| Costs and accrued earnings in excess of billings on contracts in process | | | 606,836 | | | 552,526 | |
| Less receivable allowances | | | (41,515 | ) | | (50,458 | ) |
| Net accounts receivable | | | 1,174,472 | | | 1,182,699 | |
| Deferred tax assets | | | 35,900 | | | 36,547 | |
| Prepaid expenses and other assets | | | 78,486 | | | 65,405 | |
| Total current assets | | | 1,353,712 | | | 1,374,153 | |
| Property and equipment at cost, net | | | 166,064 | | | 163,142 | |
| Goodwill | | | 990,905 | | | 989,111 | |
| Purchased intangible assets, net | | | 3,589 | | | 3,839 | |
| Other assets | | | 44,318 | | | 50,784 | |
| | | $ | 2,558,588 | | $ | 2,581,029 | |
LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS’ EQUITY | | | | | | | |
| Current liabilities: | | | | | | | |
| Book overdrafts | | $ | 31,136 | | $ | 3,334 | |
| Current portion of long-term debt | | | 16,472 | | | 19,120 | |
Accounts payable and subcontractors payable, including retainage of $20,626 and $19,515, respectively | | | 289,895 | | | 290,651 | |
| Accrued salaries and wages | | | 179,486 | | | 230,905 | |
| Accrued expenses and other | | | 63,836 | | | 73,704 | |
| Billings in excess of costs and accrued earnings on contracts in process | | | 126,109 | | | 168,271 | |
| Total current liabilities | | | 706,934 | | | 785,985 | |
| Long-term debt | | | 151,214 | | | 149,494 | |
| Deferred tax liabilities | | | 16,570 | | | 17,808 | |
| Other long-term liabilities | | | 129,362 | | | 117,586 | |
| Total liabilities | | | 1,004,080 | | | 1,070,873 | |
| Commitments and contingencies | | | | | | | |
| Minority interest | | | 5,317 | | | 3,469 | |
| Stockholders’ equity: | | | | | | | |
| Preferred stock, authorized 3,000 shares; no shares outstanding | | | — | | | — | |
| Common shares, par value $.01; authorized 100,000 shares; 53,004 and 52,309 shares issued, respectively; and 52,952 and 52,257 shares outstanding, respectively | | | 530 | | | 523 | |
| Treasury stock, 52 shares at cost | | | (287 | ) | | (287 | ) |
| Additional paid-in capital | | | 989,347 | | | 973,892 | |
| Accumulated other comprehensive loss | | | (2,668 | ) | | (3,638 | ) |
| Retained earnings | | | 562,269 | | | 536,197 | |
| Total stockholders’ equity | | | 1,549,191 | | | 1,506,687 | |
| | | $ | 2,558,588 | | $ | 2,581,029 | |
URS CORPORATION AND SUBSIDIARIES
(In thousands, except per share data)
| | | Three Months Ended | |
| | | March 30, 2007 | | March 31, 2006 | |
| | | | | | |
| Revenues | | $ | 1,135,595 | | $ | 998,149 | |
| Direct operating expenses | | | 741,554 | | | 631,304 | |
Gross profit | | | 394,041 | | | 366,845 | |
| Indirect, general and administrative expenses | | | 336,355 | | | 319,171 | |
| Operating income | | | 57,686 | | | 47,674 | |
| Interest expense | | | 3,940 | | | 5,135 | |
| Income before income taxes and minority interest | | | 53,746 | | | 42,539 | |
| Income tax expense | | | 22,306 | | | 17,993 | |
| Minority interest in income of consolidated subsidiaries, net of tax | | | 1,079 | | | 358 | |
| Net income | | | 30,361 | | | 24,188 | |
| Other comprehensive income (loss): | | | | | | | |
| Minimum pension liability adjustments, net of tax benefit | | | — | | | (2,366 | ) |
Foreign currency translation adjustments | | | 970 | | | 44 | |
| Comprehensive income | | $ | 31,331 | | $ | 21,866 | |
Earnings per share: | | | | | | | |
| Basic | | $ | .59 | | $ | .48 | |
| Diluted | | $ | .58 | | $ | .47 | |
Weighted-average shares outstanding: | | | | | | | |
| Basic | | | 51,249 | | | 50,302 | |
| Diluted | | | 52,106 | | | 51,315 | |
URS CORPORATION AND SUBSIDIARIES
(In thousands)
| | | Three Months Ended | |
| | | March 30, 2007 | | March 31, 2006 | |
| Cash flows from operating activities: | | | | | | | |
| Net income | | $ | 30,361 | | $ | 24,188 | |
| Adjustments to reconcile net income to net cash from operating activities: | | | | | | | |
| Depreciation and amortization | | | 9,684 | | | 9,187 | |
| Amortization of debt issuance costs | | | 429 | | | 461 | |
| Provision for doubtful accounts | | | 530 | | | 4,013 | |
| Deferred income taxes | | | (249 | ) | | (2,712 | ) |
| Stock-based compensation | | | 6,636 | | | 3,777 | |
| Excess tax benefits from stock-based compensation | | | (1,500 | ) | | (1,187 | ) |
| Minority interest in net income of consolidated subsidiaries | | | 1,079 | | | 358 | |
| Changes in assets and liabilities: | | | | | | | |
| Accounts receivable and costs and accrued earnings in excess of billings on contracts in process | | | 434 | | | (24,619 | ) |
| Prepaid expenses and other assets | | | (7,583 | ) | | (5,829 | ) |
| Accounts payable, accrued salaries and wages and accrued expenses | | | (48,674 | ) | | (64,770 | ) |
| Billings in excess of costs and accrued earnings on contracts in process | | | (42,162 | ) | | 3,927 | |
| Distributions from unconsolidated affiliates, net | | | 5,024 | | | 15,503 | |
| Other long-term liabilities | | | (273 | ) | | 2,945 | |
| Other assets, net | | | (1,962 | ) | | (4,781 | ) |
| Total adjustments and changes | | | (78,587 | ) | | (63,727 | ) |
| Net cash from operating activities | | | (48,226 | ) | | (39,539 | ) |
Cash flows from investing activities: | | | | | | | |
| Capital expenditures, less equipment purchased through capital leases | | | (4,771 | ) | | (5,146 | ) |
| Net cash from investing activities | | | (4,771 | ) | | (5,146 | ) |
Cash flows from financing activities: | | | | | | | |
| Long-term debt principal payments | | | (379 | ) | | (11,744 | ) |
| Net borrowings (payments) under the lines of credit and short-term notes | | | (4,705 | ) | | 3,782 | |
| Net change in book overdrafts | | | 27,802 | | | (11 | ) |
| Capital lease obligation payments | | | (3,296 | ) | | (3,058 | ) |
| Excess tax benefits from stock-based compensation | | | 1,500 | | | 1,187 | |
| Proceeds from employee stock purchase plan and exercise of stock options | | | 7,427 | | | 12,650 | |
| Net cash from financing activities | | | 28,349 | | | 2,806 | |
| Net decrease in cash and cash equivalents | | | (24,648 | ) | | (41,879 | ) |
| Cash and cash equivalents at beginning of period | | | 89,502 | | | 101,545 | |
| Cash and cash equivalents at end of period | | $ | 64,854 | | $ | 59,666 | |
| | | | | | | | |
| Supplemental information: | | | | | | | |
| Interest paid | | $ | 2,814 | | $ | 4,621 | |
| Taxes paid | | $ | 26,378 | | $ | 6,129 | |
| Equipment acquired through capital leases | | $ | 7,470 | | $ | 5,054 | |
