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 HOUSTON, Sept. 7 /PRNewswire/ -- The GNI Group, Inc. (NASDAQ-NMS: GNUC), reported that its deepwell No. 1 (WDW-169) resumed operation on Saturday, Sept. 4, 1993, after having been shutdown for a period of eight days. Deepwell No. 1 was taken down for repairs after it experienced injection tubing failure. The well had been in operation for only approximately 30 days since a complete workover had been performed. The failure of the injection tubing has not been traced to a manufacturing defect or an installation error at this time. Typically, the cost of such repairs are accrued for on the company's balance sheet over time; however, due to the suddenness of this injection tubing failure and the short period of time since the last workover, the cost of this repair will negatively impact first quarter earnings. The magnitude of this impact, when considering the cost of the repair and the associated disruption of business, is expected to be between 4 cents and 5 cents per share.
 Additionally, GNI was recently notified that two large projects in its chemical processing and recovery (CRP) operation's base of business were suddenly and unexpectedly cancelled. In the first instance, GNI's customer has closed a section within its plant and ceased production of a family of products. In the second instance, soft demand for its product due to economic conditions has forced the customer to reduce production. During the last fiscal year, these projects represented approximately 25 percent of the company's CRP operations and revenues. The impact on first quarter earnings from the loss of these two projects is expected to be between 4 cents and 5 cents per share. However, GNI expects that the capacity represented by these two projects will be utilized by other projects in subsequent quarters.
 The first step in the company's current expansion of its CRP operation, the recently commissioned wiped film evaporator unit, has developed a strong book of business and is operating smoothly. The second step in this expansion, which includes two batch reactor units, is on schedule for a start-up during November, and business for these units appears to be stronger than originally anticipated.
 Due to the combination of factors detailed above, the company expects that the results for its first quarter of fiscal 1994 ending Sept. 30, 1993, will be between 0 cents per share and earnings of 4 cents per share on revenues of between $5.3 million and $5.7 million. This compares to earnings of 11 cents per share on revenues of $6,068,256 for the same period last year. Further, based on the time required to replace the two large projects at the company's CRP operation, the company expects that its second quarter of fiscal 1994 will be negatively impacted by 2 cents to 3 cents per share. The company expects that the second half of fiscal 1994 will not be impacted by the recent loss of these two projects.
 The GNI Group, Inc., headquartered in Deer Park, Texas, provides specialized chemical recovery and processing services and treats and disposes of hazardous and non-hazardous waste and by-product streams.
 -0- 9/7/93
 /CONTACT: Titus H. Harris III, CFO of The GNI Group, 713-930-0350, or Pat Hoyt of Hoyt & Associates Investor Relations, 713-665-2549/

CO: The GNI Group, Inc. ST: Texas IN: OIL SU: ERP

TW -- NY015 -- 9183 09/07/93 08:48 EDT
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Publication:PR Newswire
Date:Sep 7, 1993

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