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GROUNDWATER TECHNOLOGY, INC. REPORTS FOURTH QUARTER AND YEAR END RESULTS

 NORWOOD, Mass., June 10 /PRNewswire/ -- Groundwater Technology, Inc. (NASDAQ-NMS:GWTI), today reported earnings of 5 cents per share and 76 cents per share for the quarter and fiscal year ended May 1, 1993, which compares with 37 cents and $1.30 for the same periods in fiscal 1992. The results of the fourth quarter reflected certain special charges related to future costs associated with restructuring that commenced during the quarter. The aggregate negative impact of these charges was approximately 12 cents per share in the fourth quarter.
 Net revenues in the fourth quarter of fiscal 1993 were $30,970,000, down 24 percent from a year earlier (18 percent giving consideration to the 14 week quarter in fiscal 1992). Net revenues for the year were $130,715,000, down 11 percent from the prior year (10 percent giving consideration for the 53 week year in fiscal 1992).
 Gross margins on net revenues were 35.6 percent and 38 percent in the fourth quarter and for the fiscal year, respectively. This represents a decline from gross margins of 41.6 percent and 42.7 percent, respectively, for the same periods last year. The pressure on margins related primarily to the significant price pressures exerted by the company's major customers and under utilization of company personnel. Despite a headcount reduction of 15 percent during the current year, 284 people, the company's utilization for both the fourth quarter and year were approximately 58 percent compared with 62 percent and 61 percent for the same periods in fiscal 1992.
 Fourth quarter operating expenses of $10,585,000 reflect a reduction of $530,000 which relates to the termination of the company's Supplemental Executive Retirement Plan. Senior management, although the principal beneficiaries of this non-qualified plan, determined it to be too expensive to be an acceptable cost for the company. The reduction, which passed through general and administrative expenses, is the amount previously accrued less plan termination charges. On a year-to-year basis selling, general and administrative expenses were reduced approximately 10 percent (8 percent giving consideration for the 53 week year in fiscal 1992).
 The special restructuring charges taken in the fourth quarter relate to the reorganization of the company's operating structure, designed to improve the alignment between the company's services and its customers, which commenced during the fourth quarter. In addition to the cost of the reorganization, the consolidation of certain administrative support functions has created opportunities to eliminate costs related to excess capacity.
 Walter Barber, president and chief executive officer commented, "The rate of decline in the UST market with our major customers has been dramatic. Normally, net revenues in the fourth quarter have been higher than the preceding quarter. In fiscal 1993, fourth quarter revenues were virtually the same as those of the third quarter. While some of this revenue shortfall may be attributed to poor weather conditions as well as orgainizational attention to the realignment to the detriment of billed hours, there is ample evidence that spending patterns by our major customers will be as controlled in calendar 1994 as they were in 1993.
 "While a stronger economy and increased regulatory activity may improve revenues somewhat, we expect that price pressures related to reduced capital expenditures by our major customers and excess capacity in the industry will continue. Our mission is to continue to work toward becoming the premier quality provider of the lowest cost services.
 "We are disturbed by the poor earnings performance, particularly at the operating income line. Management will remain focused on cost reductions wherever possible. We will continue to examine each of our operating units to identify under-performing assets and investments that do not meet operating goals. We are mindful, however, that we must invest in the future to ensure profitable growth, and must not discardthe long-term benefits we will derive from the investment in our dedicated, highly skilled work force for short-term profits. Reducing unproductive costs while maintaining and building our productive resources, as we continue to realign our business focus, will be a significant management challenge in the coming year."
 Commenting on the company's balance sheet, Robert Sliney, chief financial officer, said, "The company's financial position remains very strong. Working capital has improved over the prior year even though approximately $6 million of the company's cash was applied to the repurchase of stock under the company's stock repurchase program. We believe the continued strength of our balance sheet will be a significant competitive advantage contributing to our long-term success in the business."
 GROUNDWATER TECHNOLOGY, INC.
 CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 Quarter Ended Fiscal Year Ended
 May 1, May 2, May 1, May 2,
 1993 1992 1993 1992
 Gross revenue $42,373 $52,109 $175,003 $193,700
 Cost of
 subcontracted
 services 11,403 11,421 44,288 47,232
 Net revenue 30,970 40,688 130,715 146,468
 Cost of net
 revenue 19,941 23,771 80,993 83,986
 Gross profit 11,029 16,917 49,722 62,482
 Selling,
 general and
 administrative 10,585 12,556 42,632 47,858
 Provision for
 restructuring
 charges 1,425 --- 1,425 ---
 Income (loss)
 from operations (981) 4,361 5,665 14,624
 Investment
 income, net 386 417 1,683 1,893
 Other income,
 (expense) net 1,081 (32) 2,205 112
 Income before
 provision for
 income taxes 486 4,746 9,553 16,629
 Provision for
 income taxes 91 1,803 3,630 6,319
 Net income $395 $2,943 $5,923 $10,310
 Earnings per
 common share $.05 $.37 $.76 $1.30
 Weighted average
 shares
 outstanding 7,650 8,030 7,779 7,931
 -0- 6/10/93
 /CONTACT: Patricia O. Muzzy, investor relations manager of Groundwater Technology, 617-769-7600/
 (GWTI)


CO: Groundwater Technology ST: Massachusetts IN: SU: ERN

DD -- NE002 -- 0446 06/10/93 08:21 EST
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Date:Jun 10, 1993
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