Corporate Restructuring and Sale of Analytical Laboratory
Return EA to Profitability
Third Quarter Highlights:
-- EPS of $0.05 highlights strong comeback
-- Sale of EA Labs results in $0.01 per share gain and increases earnings
quality and stability
-- Net revenues of $9.2 million reflect increase from prior year quarter
-- 16% increase in industrial sector net revenue; reduced reliance on
federal sector
-- New orders of $14.7 million, up 21.3% over prior year quarter,
excluding discontinued operations
-- Expected to be profitable in fourth quarter
BALTIMORE, Md., June 25 /PRNewswire/ -- EA Engineering, Science, and
Technology, Inc. (Nasdaq: EACO), an international consulting firm specializing
in energy, the environment, and health and safety, today reported financial
results for the third fiscal quarter ended May 31, 1999. The Company reported
net income of $288,800 for the third quarter, or $0.05 per diluted share.
Third quarter earnings include $0.04 per diluted share from continuing
operations and $0.01 per diluted share from discontinued operations,
reflecting the sale of EA Laboratories. This compares to net income of
$312,500 in the third quarter of 1998 or $0.05 per diluted share, including
$0.04 per diluted share from continuing operations, and $0.01 per diluted
share from discontinued operations. The $312,500 net income recorded in the
third fiscal quarter of 1998 included a one-time gain of $261,100 in the cash
surrender value of "key employee" life insurance held by the Company. This
gain had a net impact of $0.02 per diluted share.
For the first nine months of fiscal 1999, the Company reported a net loss
of $1.8 million or $0.28 per diluted share, including a loss of $0.27 per
diluted share from continuing operations and a loss of $0.01 per diluted share
from discontinued operations. This compares to net income of $0.7 million for
the first nine months of fiscal 1998 or $0.11 per diluted share, including
$0.13 per diluted share from continuing operations and a loss of $0.02 per
diluted share from discontinued operations. The fiscal year 1999 nine month
earnings include a one-time restructuring charge of $0.20 per diluted share,
reflecting the Company's decision to restructure and downsize certain
functions of the Corporate staff, and a $0.05 per diluted share write-off of
certain non-collectible prior period revenue. Excluding the impact of the
restructuring charge and the write-off of prior period assets, the net loss
for the first nine months of fiscal 1999 is $0.03 per diluted share.
Net revenues for the third quarter of fiscal 1999 were $9.2 million,
compared to $9.1 million for the third quarter of fiscal 1998. New contracts
in the industrial sector more than offset the completion of federal government
contracts this quarter, marking the first quarter this fiscal year that net
revenues have increased over the prior year. Net revenues for the first nine
months of fiscal 1999 were $24.9 million, compared to $28.2 million for the
first nine months of fiscal 1998. The $3.3 million net revenue decline in the
nine month period reflects the Company's continued completion of several large
contracts with the federal government, only partially offset by planned new
awards in the industrial and municipal sectors.
Management Comments
Loren D. Jensen, EA's founder and Chief Executive Officer, said, "We are
very pleased and encouraged by our operating results this quarter. The
quarter to quarter swing in our earnings, from a loss of $0.08 per share in
the second quarter of 1999 -- excluding certain restructuring charges and
write-offs -- to a gain of $0.05 per share in the third quarter, provides
tangible evidence that our turnaround is underway. I am very proud of the
changes we have made in our organization leading to these greatly improved
results."
Dr. Jensen noted, "Under the new, streamlined organizational structure,
branch management has direct access to senior management for guidance and
support, which has helped to improve branch-level performance; operating
income from consolidated operations this quarter was $500,000, versus a loss
in the second quarter of fiscal 1999. As employees begin to see favorable
results from their efforts, morale has greatly improved, and there is a
renewed sense of optimism in EA's future."
Dr. Jensen continued, "In keeping with our strategic transition, we are
placing less of an emphasis on commodity type work, and are receiving more
profitable proposals involving our consulting expertise. In particular, we
are becoming increasingly involved in resolving issues stemming from the
deregulation of the electric utilities industry. These assignments require
specialized management consulting expertise, and EA has the capability to
service these types of assignments, which are generally higher margin
business."
Dr. Jensen added, "New orders this quarter were up 21.3% over the prior
year quarter, excluding discontinued operations, and our contract backlog is
quite strong. Although revenues this year have been steadily declining,
reflecting the completion of several multi-year government contracts, this
quarter net revenues showed a slight increase over the same quarter last year,
as revenues from new industrial sector contracts more than offset the revenue
decline. We are entering our fourth quarter with positive momentum in both
earnings and new awards."
Barbara Posner, the Company's Chief Operating Officer and Chief Financial
Officer, added, "Our financial results were in line with our expectations. We
have eliminated an ongoing burden of fixed overhead, and returned the Company
to profitability. The sale of the lab resulted in a $0.1 per share gain, and
we achieved a $0.04 per share gain in continuing operations. We fully expect
to finish our fiscal year on a strong note, with our solid performance and
profitability continuing into the fourth quarter."
EA Engineering, Science, and Technology, Inc., is a publicly held
international management consulting firm specializing in energy, the
environment, and health and safety. Through its network of more than 20
offices, EA provides scientific, engineering, economic, analytical, and
management solutions to corporate, utility, municipal, and federal government
clients.
Certain of the statements contained in this news release are
forward-looking statements that involve risks and uncertainties, such as those
related to the Company's contracts and other business risks, including general
economic conditions, the effects of the Company's restructuring, and
industry-wide market factors, as detailed from time to time in the Company's
filings with the Securities and Exchange Commission.
The Company's results of operations are also affected by significant
competition in the industry, including a very competitive requirement for
successful bidding and solicitation of contracts. As such, operating results
for the reporting period are not necessarily indicative of the results that
may be expected for any subsequent periods.
EA Engineering, Science, and Technology, Inc. and Subsidiaries
Consolidated Operating Results
Adjusted for Discontinued Operations
For the Third Quarter For the Nine Months
ended May 31, ended May 31,
1999 1998 1999 1998
Total revenue 12,349,000 12,641,400 34,963,700 40,303,700
Less:
Subcontractor costs 2,043,300 2,126,700 6,051,700 7,978,200
Less:
Other direct
project costs 1,118,300 1,406,000 4,038,500 4,122,900
Net Revenue 9,187,400 9,108,700 24,873,500 28,202,600
Costs and operating
expenses:
Direct salaries
and other operating 6,746,400 6,443,600 19,307,900 19,825,900
Sales, general
and administrative 1,941,900 2,439,300 6,136,300 7,115,800
Gain on "key employee"
life insurance 0 (261,100) 0 (261,100)
Restructuring 0 0 2,132,600 0
Total costs
and operating
expenses 8,688,300 8,621,800 27,576,800 26,680,600
Income (loss)
from operations 499,100 486,900 (2,703,300) 1,522,000
Other income
and expense, net (64,400) (21,700) (139,600) (93,200)
Income (loss)
before income taxes 434,700 465,200 (2,842,900) 1,428,800
Provision for (benefit from)
income taxes 181,200 188,800 (1,137,600) 574,200
Net income (loss)
from Continued
Operations 253,500 276,400 (1,705,300) 854,600
Discontinued Operations:
Net Income (loss)
from Disc. Ops. 0 36,100 (119,000) (136,500)
Net Gain on Sale of Labs 35,300 0 35,300 0
Income (loss) from EA Labs 35,300 36,100 (83,700) (136,500)
Net Income (loss) 288,800 312,500 (1,789,000) 718,100
Basic EPS
-- Continued ops. $0.04 $0.04 $(0.27) $0.14
Diluted EPS
-- Continued ops. $0.04 $0.04 $(0.27) $0.13
Basic EPS
-- Discontinued ops. -- $0.01 $(0.01) $(0.02)
Diluted EPS
-- Discontinued ops. -- $0.01 $(0.01) $(0.02)
Basic EPS
-- Gain on disposal of lab $0.01 -- -- --
Diluted EPS
-- Gain on disposal of labs$0.01 -- -- --
Basic EPS -- Net $0.05 $0.05 $(0.28) $0.11
Diluted EPS -- Net $0.05 $0.05 $(0.28) $0.11
Weighted
average shares O/S 6,319,000 6,246,800 6,305,900 6,246,600
Diluted weighted
shares O/S 6,319,600 6,517,300 6,306,600 6,352,300
SOURCE EA Engineering, Science, and Technology, Inc.
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CONTACT: Melissa L. Kunkel, Manager of Marketing and Communications of EA Engineering, Science, and Technology, Inc., 410-527-2442, or fax, 410-771-9148; general inquiries, Shelley Young, analyst inquiries, Nicole Innarella, of the Financial Relations Board, 212-661-8030, or fax, 212-867-7970
NOTE TO EDITORS: For more information on EA Engineering, Science, and Technology via fax at no charge, please call 1-800-PRO-INFO and enter ticker symbol "EACO."
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