URS Corporation (
Q3 2011 Earnings Call
November 8, 2011 5:00 pm ET
H. Thomas Hicks – Chief Financial Officer & Vice President
Martin M. Koffel – Chairman of the Board, President and Chief Executive Officer
Gary V. Jandegian – Vice President Infrastructure & Environment Business
Randall A. Wotring – Vice President & President Federal Services Business
Robert W. Zaist – President Energy & Construction
Martin Tanzer – Executive Vice President of Marketing
Reed N. Brimhall – Vice President, Chief Accounting Officer & Corporate Controller
Sam Ramraj – Vice President Investor Relations
Tahire Afzal – Keybank Capital Markets
Andy Kaplowitz – Barclays Capital
Scott Levine – JP Morgan
Avram Fisher – BMO Capital Markets
Richard Paget – WJB Capital Group, Inc.
Andrew Wittmann – Robert W. Baird & Co., Inc.
[Will Cabroleski – Unidentified]
Previous Statements by URS
» URS's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» URS Corporation Q3 2009 Earnings Call Transcript
» URS Corp. Q2 2009 Earnings Call Transcript
Welcome to the URS Corporation earnings conference call for the third quarter fiscal of 2011. To begin I’ll turn the call over to Mr. Thomas Hicks, Chief Financial Officer of URS.
H. Thomas Hicks
Before we get started, let me remind you today’s call will contain forward-looking statements including statements about our revenues, business prospects, book of business, earnings and financial condition, economic and industry conditions, and other statements that are not historic facts. These statements represent our predictions and expectations as to future events which we believe are reasonable and based on reasonable assumptions. However, numerous risks and uncertainties could cause actual result to differ materially from those expressed or implied in the forward-looking statements.
Information about some of these risks and uncertainties can be found in our earnings release and Form 10Q for the quarterly period ended September 30, 2011 as well as in our other SEC filings and we assume no obligation to revise or update any forward-looking statements. A webcast of this call is available on the investor relations portion of our website and will be archived in audio form on the website for a limit period. With that, I’ll turn the call over to Martin Koffel, our Chairman and Chief Executive Officer.
Martin M. Koffel
In addition to Tom Hicks, the team here with me in San Francisco includes: Gary Jandegian, President of Infrastructure and Environment; Randy Wotring, President of Federal Services; Bob Zaist, President of Energy and Construction; Martin Tanzer, Executive Vice President of Marketing; Reed Brimhall, Corporate Controller and Chief Accounting Officer; and Sam Ramraj, Vice President of Investor Relations.
As you will have seen in our earnings press release, while we continued to perform very well operationally, accounting rules required us to take a non-cash goodwill impairment charge during the third quarter. The impairment primarily is due to the volatile stock market conditions in recent months. And while significant in size, it has no effect on our cash position and no bearing on our operational performance or our outlook for the business itself.
In fact, our third quarter operating results were strong. Our revenues were $2.47 billion, an increase of 6% from the third quarter of last year. Including the goodwill impairment charge, we reported a net loss at $623.1 million or $8.05 per share but excluding this charge net income was $76.2 million, that’s up 8% from the third quarter 2010 and earnings per share excluding the charge were $0.98, up 13% from last year. A reconciliation of net income and earnings per share with and without the goodwill impairment charge is provided in the reconciliation schedule that is available on our website at
and in our earnings press release.
Our cash flow continues to be robust and we generated $100 million in cash from operations during the third quarter and $363 million during the first nine months of 2011. At the end of September our total book of business was $29 billion, an increase of $272 million from the end of the second quarter. Our operating results reflect the benefits of our mix of business across four market sectors. Third quarter revenues from the industrial and commercial sector increased 20% compared to last year. This is the third consecutive quarter that our industrial and commercial revenues have grown by at least 20% over the prior year period. Demand for work under our master service agreement with major multinationals remains particularly high.
The revenues from our federal business grew by 7%. As you know, we serve an increasingly diversified client base of federal agencies and provide a full lifecycle of services. This now includes sophisticated IT services such as cloud computing and cyber security which we added with our acquisition of Apptis in June. And while power sector revenues were flat compared with last year, the outlook for our power business continues to improve. Power sector backlog grew by almost $400 million in the quarter, an increase of 30% from the second quarter.
The increase primarily is due to new air quality control projects and assignments to modify nuclear facilities. Revenues from the infrastructure sector decreased by 7% and this reflects the completion of a large infrastructure project in our energy and construction division. The demand for infrastructure works remains strong as does our competitive position. At the end of the quarter, our infrastructure backlog was $3 billion. This is essentially flat with the second quarter but an increase of 17% since the beginning of the year.
With only a few weeks left in 2011, we know that many of you are beginning to turn your attention to next year. Accordingly, we shall focus our prepared remarks on the trends and market fundamentals that are shaping our outlook. Our preliminary plans indicate that both revenue and operating income will grow in 2012. Consistent with our usual practice, we will provide specific guidance for 2012 during our fourth quarter call.