SAN FRANCISCO URS Corp URS.N reported a quarterly profit that fell short of expectations, but the U.S. engineering company stuck with its full-year targets and spotted signs of life in some previously dormant markets.
Chief Executive Martin Koffel was pleased by revenue growth in the commercial and power/industrial business lines, with clients having deferred projects during the economic downturn.
But the company's backlog of work declined again in the quarter, with more work going straight into revenue under some new types of contracts, URS executives said.
Its first-quarter net profit fell to $62.1 million, or 79 cents per share, from $95.6 million, or $1.17 per share, in the same period last year, when the company received a one-time boost of 51 cents per share from a tax expense reduction.
Revenue grew 5 percent to $2.32 billion. Analysts had expected a profit of 84 cents per share on revenue of $2.42 billion, according to the averages on Thomson Reuters I/B/E/S.
The San Francisco-based company said it was still targeting 2011 profit of $3.60 to $3.70 per share on revenue of $9.8 billion to $10 billion. Analysts have been looking for a profit of $3.64 per share on revenue of $9.9 billion.
URS, also a leading U.S. government contractor, said its backlog fell to $16.3 billion as of April 1, from $16.6 billion at the end of 2010 and from $17.2 billion three months before that.
Koffel said its federal bidding activity was at its highest level in years, and URS continued to win contracts, including a major deal to remediate facilities originally used on the World War Two-era Manhattan Project nuclear bomb work in Tennessee.
"We're now straddling a couple dozen federal agencies," Koffel said on a conference call, explaining how URS no longer relied on U.S. defense spending as in the past.
Competition for government work is steady as private-sector investment remains patchy, even if it is picking up.
Jacobs Engineering Group Inc (JEC.N), the Pasadena, California-based rival to URS, announced earlier on Tuesday a $65 million contract with the U.S. Army, a week after winning $50 million in work from the U.S. State Department. Late last month, Jacobs had reported a small rise in profits for the latest quarter.
Fluor Corp (FLR.N), the sector leader among publicly traded companies, reported a higher-than-expected profit last week, helped by increased work on mining projects.
But in a clear indicator of the squeeze the industry has been facing, privately held giant Bechtel reported recently a 9 percent decline in 2010 revenue.
Shares of URS showed no after-hours movement after rising 1.4 percent to close at $45.50 on Tuesday. The stock is up 9 percent so far in 2011, in line with Fluor shares.
(Reporting by Braden Reddall; Editing by Richard Chang and Tim Dobbyn)