By a News Reporter-Staff News Editor at Energy Weekly News -- URS Corporation (NYSE:URS) announced preliminary financial results for fiscal 2013 ended January 3, 2014. The Company expects fiscal 2013 revenues to be approximately $11.0 billion. Fully diluted earnings per share are expected to be between $3.20 and $3.30. Cash flow from Operations for 2013 is expected to be approximately $600 million, and Cash EPS, a non-GAAP measure, is expected to be between $4.16 and $4.26, on a fully diluted basis. A reconciliation of Cash EPS to GAAP EPS for fiscal year 2013 is attached to this release and available on the investor relations page of URS' website at www.urs.com. The 2013 fiscal year results are preliminary and are unaudited.
The Company's backlog as of January 3, 2014 is expected to be approximately $11.3 billion, compared to $13.3 billion on December 28, 2012, the last day of the Company's 2012 fiscal year. URS' year-end fiscal 2013 book of business is expected to be approximately $22.8 billion, compared to $24.9 billion as of December 28, 2012.
Martin M. Koffel, Chairman and Chief Executive Officer, stated: "We are extremely disappointed with the Company's fourth quarter financial performance, which fell significantly short of our expectations. Execution issues in our new Oil & Gas Division, which were identified during a review of the fourth quarter of 2013, led to a significant deterioration in project earnings. We also experienced project delays caused, in part, by the residual effects of lower than expected natural gas prices and pipeline capacity. These issues adversely impacted Q4 operating income in Oil & Gas by approximately $40 million."
Koffel continued: "Notwithstanding these unanticipated operational shortcomings, revenues for our Oil & Gas Division were $2.2 billion, in line with our expectations, and the business is well positioned for the future. It has a strong franchise, an outstanding customer base and relationships, and a dedicated and talented workforce in Canada and the U.S."
In addition, the Company's income tax expense for the year will be approximately $15 million higher than expected due to the performance of the Oil & Gas Division and certain international operations. Also, the increase in the value of the U.S. dollar relative to the Canadian dollar created approximately $4 million of foreign currency losses on intercompany notes that affected financial results for the fourth quarter. Finally, the results were negatively influenced by recent events that required the Company to reduce the carrying value of two assets by a total of $15 million. One asset is real property the Company is holding for sale and a change in a zoning ordinance applicable to the property reduced its marketable value. The other asset was an exclusive technology license held by the Company. The value of this asset was lost when the licensor filed for bankruptcy protection and thereafter rejected the Company's exclusive license as part of a plan of reorganization. Organizational Changes The Company already has taken a number of corrective actions, including more closely aligning the Energy & Construction and the Oil & Gas Divisions. Effective immediately, Wayne S. Shaw, President of Oil & Gas, will report to George L. Nash, the President of the Energy & Construction Division. Both of these divisions are construction intensive, and aligning them more closely will promote the standardization of work practices, enhance focus on project execution, and increase collaboration on new business pursuits. It also will enhance the sharing of project resources, particularly the Energy & Construction Division's large project management skills, enabling the Company to pursue larger and more technically complex projects.
URS also noted that W. J. (Bill) Lingard, the former President and Chief Executive Officer of Flint Energy Services Ltd., which URS acquired in May 2012, has resigned his position as URS' President and Chief Operating Officer, effective February 10, 2014. Preliminary Fiscal 2014 Outlook Commenting on the Company's outlook, Mr. Koffel said: "URS is well positioned across all of our markets and we are optimistic about our long-term prospects and our continued ability to generate substantial free cash flow. Trends in our industrial, infrastructure and power markets for 2014 are positive. In the federal market, we expect the impact of sequestration to continue, and we also will have a difficult year-over-year comparison (2014 to 2013) due to the wind down of our highly successful work on the DoD's chemical weapons demilitarization (Chem Demil) program. In 2014, we expect revenues from this program to decrease by approximately $355 million and operating income to decrease by approximately $125 million. However, due to the diversity of our federal business, we have confidence in its future growth prospects."
Based on its preliminary plan, URS expects that fiscal 2014 consolidated revenues will be between $10.8 billion and $11.2 billion. The Company expects fiscal 2014 EPS will be between $3.20 and $3.50 and Cash EPS for fiscal 2014 will be between $4.13 and $4.43, on a fully diluted basis. In addition, URS expects that 2014 operating cash flow will be between $725 million and $775 million. Accordingly, the Company is accelerating its previously announced plan to return a total of at least $500 million to stockholders through stock repurchases and dividends by the end of 2015. URS now expects to spend approximately $350 million for stock repurchases in 2014. A reconciliation of Cash EPS to GAAP EPS for the fiscal year 2014 preliminary plan is attached to this release and available on the investor relations page of URS' website at www.urs.com.
To accommodate the accelerated stock repurchase plan, the Company's Board of Directors approved a modification of the stock repurchase program to allow for the repurchase of up to 12 million shares of the Company's common stock during the 2014 fiscal year. Call Information URS will host a call at 8:30 a.m. (EST) on February 13, 2014 to discuss its preliminary fiscal 2013 results. A live webcast will be available at http://investors.urs.com. URS will announce its full fourth quarter and fiscal 2013 results after the market close on Monday, March 3, 2014, and will hold its usual call to discuss the full results at 5:00 p.m. (EST) that day. A live webcast of that call also will be available at http://investors.urs.com.
Keywords for this news article include: URS Corporation.
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