URS Corporation (URS) won a three-year contract extension from Detroit Edison to provide engineering design, construction and consultancy services for the installation of two flue gas desulfurization systems in Michigan.
The first system is expected to be commissioned by Nov 2013, and the second system by May 2014. The contract extension has a potential value of $274 million to URS.
URS continues to see favorable trends in the federal government sector. There is strong funding for O&M programs – which means increased opportunities to support long-term Department of Defense (DoD) initiatives and stable funding for the Department of Energy’s (DoE) environmental and nuclear programs, including the National Nuclear Security Administration. Consequently, URS continues to expect that revenues in its federal sector will be between $4.3 billion and $4.5 billion in 2010.
With respect to infrastructure, URS’ long-term outlook is very positive. State and local governments continue to fund infrastructure programs. In the previous fiscal year, states and municipalities sold billions of dollars of new bonds to fund infrastructure projects, including education and healthcare facilities as well as new roads. Key projects continue to move forward.
As companies explore and develop remote production areas such as the Arctic and the Gulf of Mexico, URS can capitalize on its ability to deploy resources across a range of project sizes and in diverse geographic areas.
In addition, URS is well-positioned to help clients build, upgrade or modify refineries to handle new types of fuels such as oil from Canada’s oil sands. Energy companies have invested over $100 billion in Alberta, for example, with the goal of doubling oil production from oil sands to 2 billion barrels a day.
URS is a major government contractor and must comply with various procurement laws and regulations, and is subject to regular government audits. As a major contractor to the U.S. federal government, URS serves a wide variety of government departments and agencies.
A violation of any of the above laws and regulations could result in sanctions, contract termination, forfeiture of profit, damage to reputation or loss of its status as an eligible government contractor. Any interruption or termination of its government contractor status could reduce profits and revenues significantly.
URS provides engineering, construction and technical services. As such, it offers a broad range of program management, planning, design, engineering, construction and construction management, operations and maintenance, and decommissioning and closure services to public agencies and private sector clients globally.
URS is also is a major U.S. federal government contractor in the areas of systems engineering and technical assistance, and operations and maintenance. It has approximately 56,000 employees operating from a worldwide network of offices and contract-specific job sites in more than 30 countries. Fluor Corporation (FLR) is a major competitor.
We currently have a Neutral recommendation on URS Corporation.
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