Company Perspectives
URS is one of the largest engineering design firms worldwide and a leading U.S. federal government contractor. Our business focuses primarily on providing professional and technical services in the engineering, construction services and defense markets. We execute large and complex engineering projects and provide a comprehensive range of professional planning and design, systems engineering and technical assistance, program and construction management, and operations and maintenance services.
URS Corporation is one of the world's largest engineering design firms. Listed on the New York Stock Exchange, San Francisco-based URS operates in 20 countries, although 90 percent of its sales come from North America. Business is divided among two divisions. The URS division offers planning, design, and program and construction management services to both public and private clients, involved in such projects as mass transit systems, highways, bridges, airports, water supply and treatment systems, manufacturing plants, healthcare facilities, college facilities, grade school and high schools, military housing, courthouses, and the construction of other government buildings. The EG&G division provides planning, systems engineering and technical assistance, and operations and maintenance services to the United States government, primarily the Department of Homeland Security and the military.
Company Origins: 1951
URS was started in 1951 under the name Broadview Research. It was a small private company that was dependent on a modest Army operations contract, employing physical and engineering sciences. The business was incorporated in 1957 as Broadview Research Corporation, and in 1962 changed its name to United Research Services, Inc. Two years later it took the name URS Corporation, the company's current name, though more permutations were to follow over the years. In 1967 the company launched a strategy to become a multidisciplinary services firm. A year later it made an initial public offering of stock, gaining a listing on the American Stock Exchange, and once again changed its name, this time becoming URS Systems Corporation. It also looked to grow externally through acquisitions, making half-a-dozen purchases over the next two years. URS still relied on its military contract, however, and when that expired in fiscal 1970, the company lost money, prompting a change in management and direction.
In March 1970 Arthur H. Stromberg joined URS and became chief executive officer in 1971. (He added the chairmanship in 1976.) Under his direction the company bounced back, recording record earnings for two consecutive years before business fell off during a recession, resulting in three straight years of declining profits. The company at this stage provided architectural and engineering services, mostly to local, state, and federal agencies. Earlier Stromberg diversified somewhat by acquiring Pollution Control Engineering, Inc. in 1973, and URS would continue to add environmental practices, but in 1976 he went far a field by purchasing Advanced Systems, Inc., which produced video-assisted training programs. A year later he added the well-known speed-reading company, Evelyn Wood Reading Dynamics, Inc., for $7 million. It was an unlikely combination, but it at least improved the company's non-government business. The new assets also played their part in URS posting a record $3.8 million in profits in 1977 on sales of about $37 million.
URS enjoyed steady growth for several years, as the number of offices increased from nine to 32 and sales approach $100 million by fiscal 1985. Investors were having a difficult time, however, comprehending a company that on one hand cleaned up toxic waste sites and on the other taught speed reading. To simplify the company, Evelyn Wood was divested and Advanced Systems was spun off, the shares distributed to URS stock holders. The company now became listed on the New York Stock Exchange and enjoyed a nice run, as did the stock of the now independent Advanced Systems.
In 1986 URS had a healthy backlog of contracts and appeared to be well positioned in high growth areas like hazardous waste and pollution control. The company wanted to commit further to this sector and in 1987 began a reorganization, spinning off its consulting business into two companies: URS Consultants Inc. and URS International Inc. The remaining assets now took the name Thortec International, Inc. in November 1987. The plan was to make public offerings of the spin-offs, with Thortec retaining majority stock ownership of both companies. The money raised would then be used to expand Thortec's hazardous- and toxic-waste remediation business into a full-service operation. In addition, Thortec hoped to build its forensic engineering, project and program management software systems, and other management services. The strategy did not work out as planned, however.
Fiscal 1986 Results Draw SEC Scrutiny
Thortec lost money in fiscal 1987 and the situation grew worse in 1988, as it lost $17.3 million on revenues of $113.7 million. Moreover, the company had to admit in its public filings that it had become the subject of a Securities and Exchange Commission investigation of its reported results for fiscal 1986. The SEC contended that the company added $8.4 million to the reported $115.7 in revenues and $8.7 million in revenues, and inflated fiscal 1987 results by another $5 million. Shareholders then filed a class-action suit alleging the company misrepresented its financial situation, and this matter was eventually settled out of court. In the meantime, Thortec's chief financial officer, its chief accounting officer, and its chief operating officer resigned in 1988. Stromberg held out until the spring of 1989, when he relinquished the CEO post and the chairmanship (although he stayed on as a director for several more months). The four executives reached an agreement with the SEC in 1990, agreeing to a permanent injunction that barred them from future securities laws violations, although they neither admitted or denied the charges.
While the SEC matter was being resolved, a group of shareholders, lead by Richard C. Blum--husband of former San Francisco mayor and future U.S. Senator, Dianne Feinstein--took control and launched a reorganization. Blum would also end up with a controlling interest of more than 60 percent after providing $12.5 million in much needed cash in October 1989, adding to a small stake he previously owned. A new CEO had already been brought in several months earlier, Martin M. Koffel, a friend recruited by new director, Bill Walsh, the chairman of buyout firm Sequoia Associates. (Koffel was subsequently named chairman as well.) Walsh told the Wall Street Journal, "I knew he was very expert at turnarounds, and we needed help badly." An Australian, Koffel had proven his abilities by turning around, among other companies, Oral-B Laboratories Inc. and selling it to Gillette Co. According to the Wall Street Journal, "Koffel spent his first three years at URS shutting down all businesses that had no relation to the company's basic expertise in providing engineering services for large-scale projects such as airport and road construction. 'We had a great reputation for engineering, so I wanted to get back to that,' Mr. Koffel says." In keeping with that plan, the company reverted to the URS name in February 1990. To shore up the company's stock price, which had fallen to the $1 range, he engineered a one-for-ten reverse stock, thus increasing the price ten-fold and making it more visible with investors. Koffel's changes began to have an immediate positive effect, as URS returned to profitability in 1991 on sales of $122 million. The company was strong enough that in June 1991 it was able to return to the public market to raised nearly $20 million in an offering of new shares of stock. Most of the proceeds were used to pay down debt.
By 1995 URS had increased its revenues to $180 million and net income reached $5.1 million. "As it grew," reported industry publication ENR, "URS Engineers needed to win the megaprojects that will keep its staff busy and challenged. But the company wasn't getting the respect afforded to companies the size of Sverdrup Corporation and CH2M Hill Cos. Ltd." Koffel now became a consolidator in the engineering field, which was undergoing a industry shakeout that would result in a handful of large international companies and many small specialty firms. His first major step came in 1995 with the $73 million cash and stock acquisition of Greiner Engineering Inc., an Irving, Texas-based firm that for the past three years had been of interest to Koffel. Although it was struggling financially, primarily due to an investment in a California toll road project, Greiner had a solid reputation in airports as well as expertise in surface transportation and bridges, thus providing a better business mix for URS, which was too dependent on environmental projects, as well as federal contracts. Moreover, Greiner added some international assets, operating in Asia.
With Greiner in the fold, URS saw revenues increase to $305.5 million in fiscal 1996 and net income improve to $7.4 million. The next major acquisition occurred in November 1997, when URS added Woodward-Clyde Group, Inc, in a $132.4 million transaction that included $39.2 million in cash, stock worth $61.9 million, and the assumption of $31.1 million in debt. Denver-based Woodward-Clyde, a major geotechnical engineering and environmental consulting firm, doubled the size of URS, making it the United States' fifth largest engineering firm. The deal lessened URS's dependence on government contracts and expanded the firm's market coverage, which now included offices in Canada, Europe and Latin America.
Dames & Moore Acquisition: 1999
Revenues increased to $406.5 million in fiscal 1997 and net income improved to $11.5 million, but once Woodward-Clyde was digested and contributing to the balance sheet for the full year, the results would become even more dramatic. Revenues nearly doubled to $806 million, as did net income, which totaled $22.7 million in fiscal 1998. With Greiner and Woodward-Clyde fully assimilated, URS was ready once again on the acquisition trail. In February 1999 the company completed a relatively small purchase, paying $13.6 million and assuming debt to pick up Thorbun Colquhoun Holdings plc, a mid-size United Kingdom based engineering firm that specialized in transportation projects and structural engineering services for manufacturing facilities and stadiums. Thorbun's addition beefed up URS's operations in Europe. A far more significant transaction took place in June 1999 when URS acquired Dames & Moore Group in a $357.4 million deal. Based in Los Angeles, Dames & Moore had fancied itself an industry consolidator, so that its willingness to be acquired by URS came as a surprise to knowledgeable observers. Dames & Moore, in fact, had also attempted to buy Woodward-Clyde. Combined with URS, the result, according to ENR, was a "supercompany," one that set a new size standard for design firms. Dames & Moore maintained offices in more than 30 countries, thereby adding to URS's presence in the United States, Europe, and Asia. URS also broadened its areas of expertise by adding nearly 8,000 engineers, planners, and construction managers. With Dames & Moore's partial contribution, URS recorded revenues of more than $1.4 billion and net income of $33.2 million in fiscal 1999. Those totals grew to more than $2.2 billion in revenue and net income of nearly $50 million in fiscal 2000 when Dames & Moore was more fully integrated. During the course of the year, URS also completed a corporate branding program, applying the URS name to all aspects of the now massive firm.
According to ENR, URS emerged in 2001 as number one on the publication's annual list of the Top 500 Design Firms. In fiscal 2001, URS increased revenues to $2.32 billion and net income to $57.9 million. The company was not content, however, to stand pat. In August 2002 it completed yet another significant acquisition: the $500 million purchase of EG&G Federal Services Inc. from The Carlyle Group. The Gaithersburg, Maryland-based firm positioned URS to become a major player in the growing markets for homeland security, in the wake of the September 11th terrorist attacks, and government outsourcing. Moreover, EG&G brought other aspects to the table. "EG&G has all sorts of whizbang things but was not allowed to flex its technology wings under Carlyle," an engineering executive told ENR. "Now we have a company with a bigger toolbox and we will see them in the market quite quickly and competitively."
URS assimilated EG&G and reorganized the business into two units: URS Division and EG&G. Revenues totaled $3.2 billion in fiscal 2003, when net income reached 58.1 million. In fiscal 2005 revenues approached the $4 billion threshold and the company reported net income of $61.7 million. In a matter of 15 years, URS had gone from the brink of bankruptcy to becoming a dominant international firm, and there was every reason to expect the upward trend to continue for some time to come.
Principal Divisions
URS Division; EG&G Division
Principal Competitors
AECOM Technology Corporation; Bechtel Group, Inc.; Jacobs Engineering Group Inc..
This web site and associated pages are not associated with, endorsed by, or sponsored by URS Corporation and has no official or unofficial affiliation with URS Corporation.