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GROUNDWATER TECHNOLOGY, INC. REPORTS THIRD QUARTER RESULTS

 NORWOOD, Mass., Feb. 18 /PRNewswire/ -- Groundwater Technology, Inc. (NASDAQ/NMS: GWTI), a leading environmental consulting and remediation firm, today reported third quarter and nine month results for the period ending Jan. 30, 1993.
 Gross revenues for the third quarter of fiscal 1993 were $42.5 million, a decrease of 10 percent, compared to gross revenues of $47.2 million in the same quarter last year. Net revenues were $30.9 million for the three month period, down 11 percent from $34.9 million for the corresponding period of the prior year. Net income for the quarter was $1.6 million, or $.21 per share, compared to $2.2 million, or $.28 per share, for the third quarter of fiscal 1992.
 For the nine months ended Jan. 30, 1993, gross revenues were $132.6 million, down 6 percent from $141.6 million a year earlier. Net revenues for the first nine months of fiscal 1993 were $99.7 million, a 6 percent decrease from $105.8 million for the same period in fiscal 1992. Net income was $5.5 million, or $.71 per share, for the fiscal 1993 nine month period compared to $7.4 million, or $.93 per share, for the same period last year.
 Management reported that while the Company has maintained its market share with its major petroleum customers, the increased competition and resultant price pressure, combined with seasonally low margins related to weather and holidays, have produced gross profit margins of 27.6 percent down from 30.6 percent in the third quarter of the prior year. In addition, a number of factors, including delays in the release of committed projects, resulted in operating losses during the quarter in the Company's Government Services and International business units. The company anticipates that these operations will contribute to profits in the fourth quarter.
 The Company's laboratory business has also been adversely impacted by the change in market conditions. This business's composition has shifted over the first nine months of the current fiscal year. External revenues, which are directly contracted with third party customers, had been approximately 50 percent and 30 percent in fiscal 1992 and 1991, respectively, are approaching 60 percent for the nine months ended Jan. 30, 1993. The increase in external sales reflects the trend in the market to negotiate directly for subcontractor services thereby achieving lower prices and avoiding the margin on pass through mark-ups. Management's response has been to invest in new systems which will increase GTEL's capabilities and efficiencies. While the revenues projected for this business are adequate to cover the additional fixed costs resulting from these actions, the operating earnings are susceptible to short term revenue shortfalls as experienced in the current quarter.
 As reported earlier in the quarter, the Company has entered into a technology license agreement with Kurita Water Industries Ltd. of Japan. Other income of $876K is principally due to the recognition of income on the disclosure fee, training and documentation related to this agreement.
 Selling, general and administrative costs of approximately $10.4 million compared with $11.3 million in fiscal 1992 demonstrated the Company's commitment to control costs at all levels. The reduced revenue base in the third quarter resulted in the SG&A costs as a percentage of revenues being 24.6 percent compared with 23.9 percent for the same quarter in fiscal 1992.
 Commenting on third quarter results, Walter C. Barber, president and chief executive officer, stated, "The company remains committed to its principal customer base, the retail petroleum industry, and has taken several initiatives to ensure continued success in this area. In addition to continuing to focus on improving quality and efficiency at the project management level, the company will change its geographic regional system from four to three regions. This will provide the Company the opportunity to reduce the amount of administrative overhead costs in this business segment as the company is committed to being the low cost provider of quality on site remedial services to these customers."
 Barber further stated, "In addition, we recognize the opportunities which exist in the Industrial and Government portions of our business. During the third quarter the company has designated Jack Patterson, most recently vice president of the Midwest Region to be the vice president of the Industrial Environmental Services operation, which will specifically focus on our growing industrial customer base. Mr. Steve Paquette has been appointed President of the company's Government Services operation with the responsibility to grow this segment which is becoming an increasingly important part of Groundwater Technology's business.
 We are disappointed in the gross margins on our services and the operating income reflected in the results reported in the third quarter. Management is confident however, that the Company is properly directed towards being the most cost effective supplier of quality services. While it appears that there will be no near term relief to budgetary constraints on our major retail petroleum customers, we are confident that continuing success in the areas of cost control and project productivity will result in a return to the growth in the company's profitability."
 The company has an ongoing Stock Repurchase Program which authorizes up to 800,000 shares of its common stock from time to time through open market purchases. The company has purchased approximately 600,000 shares since the beginning of this program.
 GROUNDWATER TECHNOLOGY, INC.
 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
 (In thousands, except per share amounts)
 Thirteen weeks ended Thirty-nine weeks ended
 Jan. 30, Jan. 25, Jan. 30, Jan. 25,
 1993 1992 1993 1992
 Gross revenue $ 42,477 $ 47,232 $132,630 $141,591
 Cost of
 subcontracted
 services 11,597 12,381 32,885 35,811
 Net revenue 30,880 34,851 99,745 105,780
 Cost of net
 revenue 19,159 20,390 61,052 60,215
 Gross profit 11,721 14,461 38,693 45,565
 Selling,
 general and
 administrative 10,440 11,303 32,047 35,302
 Income from
 operations 1,281 3,158 6,646 10,263
 Investment
 income, net 442 447 1,297 1,476
 Other income,
 net 876 (3) 1,124 144
 Income before
 provision for
 income taxes 2,599 3,602 9,067 11,883
 Provision for
 income taxes 1,016 1,369 3,539 4,516
 Net income $ 1,583 $ 2,233 $ 5,528 $ 7,367
 Earnings per
 common share $.21 $.28 $.71 $.93
 Weighted average
 shares
 outstanding 7,700 7,966 7,800 7,910
 GROUNDWATER TECHNOLOGY, INC.
 Gross Revenues vs. Net Revenues
 (in thousands except per share data)
 Fiscal year 1993
 Q3 Q2 Q1
 Gross revenues 42,477 44,183 45,970
 Less cost of
 subcontracted services 11,597 10,800 10,488
 Net revenues 30,880 33,383 35,482
 Less equipment revenues 2,289 2,842 2,837
 Net services revenues 28,591 30,541 32,645
 Gross profit on services 11,051 12,662 13,559
 Gross profit on services
 as a percentage of net
 services revenue 38.7 pct 41.5 pct 41.5 pct
 Income from operations 1,281 2,523 2,842
 Operating income as a
 percentage of gross
 revenues 3.0 pct 5.7 pct 6.2 pct
 Operating income as a
 percentage of net revenues 4.1 pct 7.6 pct 8.0 pct
 Fiscal year 1992
 Q4 Q3 Q2 Q1
 Gross revenues 52,109 47,232 49,536 44,823
 Less cost of
 subcontracted services 11,421 12,381 12,697 10,733
 Net revenues 40,688 34,851 36,839 34,090
 Less equipment revenues 3,695 3,123 3,558 3,331
 Net services revenues 36,993 31,728 33,281 30,759
 Gross profit on services 16,464 13,837 15,308 13,920
 Gross profit on services
 as a percentage of net
 services revenue 44.5 pct 43.6 pct 46.0 pct 45.3 pct
 Income from operations 4,361 3,158 3,917 3,188
 Operating income as a
 percentage of gross
 revenues 8.4 pct 6.7 pct 7.9 pct 7.1 pct
 Operating income as a
 percentage of net
 revenues 10.7 pct 9.1 pct 10.6 pct 9.4 pct
 Fiscal year 1991
 Q4
 Gross revenues 43,539
 Less cost of
 subcontracted services 9,095
 Net revenues 34,444
 Less equipment revenues 3,750
 Net services revenues 30,694
 Gross profit on services 13,689
 Gross profit on services
 as a percentage of net
 of net services revenue 44.6 pct
 Income from operations 2,838
 Operating income as a
 percentage of gross
 revenues 6.5 pct
 Operating income as a
 percentage of net
 revenues 8.2 pct
 -0- 2/18/93
 /CONTACT: Patricia O. Muzzy, investor relations manager of Groundwater Technology, 617-769-7600/
 (GWTI)


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

TM -- NE012 -- 8161 02/18/93 17:57 EST
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