GROUNDWATER TECHNOLOGY, INC. REPORTS FIRST QUARTER RESULTS
NORWOOD, Mass., Sept. 1 /PRNewswire/ -- Groundwater Technology, Inc. (NASDAQ-NMS: GWTI), today announced that due to continuing poor market conditions and the deterioration of gross margin in its core business the company has initiated several actions to improve its profitability. Walter C. Barber, chief executive officer stated, "Over the past fifteen months, the company has made a series of changes that have reduced headcount and operating costs in an attempt to mitigate the harsh economic conditions of the underground storage tank (UST) remediation market. It is clear that the depth and length of this market downturn are greater than we anticipated. To ensure the company maintains a strong position in the soil and groundwater remediation industry, we have elected to focus our energies on the profitability of our core business and to dispose of those elements which do not either provide strategic value or make a current contribution to profits." Specifically, the company intends to sell its ORS Environmental Equipment manufacturing operation, and will consolidate its two environmental testing laboratories in California. In addition, the company has identified other non-performing assets which are not central to its core business, with the expectation that these will be discontinued or sold. The company has accelerated the reduction of selling, general and administrative costs to improve efficiencies in order to ensure competitiveness and profitability in its pricing. For the quarter, which ended July 31, 1993, gross revenues were $40,090,000 compared to $44,992,000 in FY 1993, and net revenues were $29,018,000 compared to $34,504,000 for FY 1993, with FY 93 restated in both cases for the discontinuation of ORS Environmental Equipment. A loss of 57 cents per share for the first quarter of FY 94 compares with earnings of 26 cents per share for same period last year. Income from continuing operations excluding restructuring charges was $364,000 for the first quarter in FY 94 compared to $3,642,000 for the same period last year, restated. The impact on earnings per share for the company's first quarter charge for the discontinuation of ORS Environmental Equipment was 22 cents, and for the provision for future costs related to the consolidation of the California laboratories and other Management actions was 40 cents. Barber stated, "GTI will be a smaller but more profitable company. It will focus on project profitability in its core business of soil and groundwater remediation while continuing its strategic initiatives to provide cost-effective remedial services to new government and industry customers."
The company has recently received a number of new contract awards from federal and local government agencies and by major industrial customers. Noteworthy among these are selection for up to $37.5 million in project work for the Omaha District of the U.S. Army Corps of Engineers, teaming with Ebasco Environmental under a $150 million, 10-year Total Environmental Restoration contract; the award of up to $20 million over five years for soil and groundwater remediation for the U.S. Dept. of the Navy, again teaming with Ebasco Environmental; and a $7.9 million performance contract to remediate the Union Chemical Superfund Site in South Hope, Maine.
According to Barber, "These awards are the direct result of our efforts to diversify our client and project base to offset reduced revenues in the UST market. We are confident that our market's long- term opportunities are significant, and we are equally confident that a leaner, more focused business will return the company to profitability." Under the company's continuing stock repurchase program it was announced that the Board of Directors has authorized the company to repurchase up to an additional 2 million shares of its common stock from time to time through open market purchases. There remain 173,500 available for repurchase under the prior authorization. Approximately 7,658,000 shares of common stock are currently outstanding. The funds required for stock repurchases will be provided out of available cash balances. GROUNDWATER TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Thirteen weeks ended July 31, August 1, 1993 1992 Gross revenue $40,090 $44,992 Cost of subcontracted services 11,072 10,488 Net revenue 29,018 34,504 Cost of net revenue 19,628 20,813 Gross profit 9,390 13,691 Selling, general and administrative (9,349) (10,152) Reserve for future costs (5,000) -- Licenses and other income 323 103 Income (loss) from operations (4,636) 3,642 Investment income, net 366 446 Other income (expense), net (5) 56 Income (loss) on continuing operations before provision for income taxes (4,275) 4,144 Provision (benefit) for income taxes (1,583) 1,620 Income (loss) from continuing operations (2,692) 2,524 Loss from operations of discontinued manufacturing operations, net of tax benefit of $395 (605) (421) Loss on disposal of manufacturing operations, net of tax benefit of $692 (1,058) -- Net income (loss) (4,355) 2,103 Earnings (loss) per common share: Income (loss) from continuing operations (35 cents) 31 cents Loss from discontinued operations (22 cents) (5 cents) Total (57 cents) 26 cents Weighted average shares outstanding 7,657 7,983 GROUNDWATER TECHNOLOGY, INC. Quarterly Income Statements Impact of FY94 reclass on FY93 and FY92 Unaudited (000)'s Omitted Q1 93 Q2 93 Q3 93 Q4 93 Gross revenue $44,992 $42,998 $41,639 $41,807 Cost of subcontracted services 10,488 10,800 11,597 11,403 Net revenue 34,504 32,198 30,042 30,404 Cost of net revenue 20,813 19,738 18,674 20,173 Gross profit 13,691 12,460 11,368 10,231 Selling, general and administrative (10,152) (9,672) (9,705) (9,432) Reserve for future costs --- --- --- (1,425) Licenses and other income 103 54 1,143 662 Income from operations 3,642 2,842 2,806 36 Investment income, net 446 409 442 386 Other income (expense), net 56 35 (268) 420 Income on continuing operations before provision for income taxes 4,144 3,286 2,980 842 Provision for income taxes 1,620 1,284 1,167 232 Income from continuing operations 2,524 2,002 1,813 610 Loss from operations of discontinued manufacturing operations, net of tax benefit (421) (160) (230) (215) Net income $2,103 $1,842 $1,583 $395 Earnings (loss) per common share: Income from continuing operations 31 cents 26 cents 24 cents 8 cents Loss from discontinued operations (5 cents) (2 cents) (3 cents) (3 cents) Total 26 cents 24 cents 21 cents 5 cents Weighted average shares outstanding 7,983 7,763 7,700 7,650 Total FY93 Total FY92 Gross revenue $171,436 $189,400 Cost of subcontracted services 44,288 47,232 Net revenue 127,148 142,168 Cost of net revenue 79,398 83,107 Gross profit 47,750 59,061 Selling, general and administrative (38,961) (43,187) Reserve for future costs (1,425) --- Licenses and other income 1,962 173 Income from operations 9,326 16,047 Investment income, net 1,683 1,893 Other income (expense), net 243 (61) Income on continuing operations before provision for income taxes 11,252 17,879 Provision for income taxes 4,304 6,819 Income from continuing operations 6,948 11,060 Loss from operations of discontinued manufacturing operations, net of tax benefit (1,025) (750) Net income $5,923 $10,310 Earnings (loss) per common share: Income from continuing operations 89 cents 1.39 Loss from discontinued operations (13 cents) (9 cents) Total 76 cents $1.30 Weighted average shares outstanding 7,779 7,931 -0- 9/1/93 /CONTACT: Robert E. Sliney, Jr., chief financial officer of Groundwater Technology, 617-769-7600/ (GWTI)
CO: Groundwater Technology ST: Massachusetts IN: ENV SU: ERN
DJ -- NE005 -- 7775 09/01/93 08:24 EDT
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|Date:||Sep 1, 1993|
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