Environmental Elements won't declare dividend

April 17, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

Faced with losses from its air pollution control business, Environmental Elements Corp. announced yesterday that it will not declare an annual dividend as it did last year. Last week, the company laid off about 30 employees -- about 10 percent of its work force -- to cut costs.

The Baltimore company has lost $6.2 million, or 33 cents a share, in the first nine months of its fiscal year. It expects another loss in the fourth quarter, which ended March 31. The fourth-quarter results will be released next month.

Revenue dropped in the first three quarters by 16.6 percent, to $58.5 million, from $70.1 million for the same period a year ago.

The company's stock dropped by 62.5 cents yesterday, to close at $4.75. The stock had traded as high as $17.50 in the last 52 weeks.

The main reason for the losses is the delay by utilities in buying new air pollution control equipment to meet federal rules that go into effect Jan. 1, 1995, said John S. Lalley Jr., a spokesman for the company.

Last year, the company expected a marked increase in orders this year. But those orders have not materialized because of the weak economic recovery, uncertainty by the utilities on what equipment is necessary, confusion over the complex regulations and political disputes over whether the cost of new equipment is passed on to ratepayers.

Meanwhile, upgrades of existing air pollution control systems have dropped off because companies will have replaced them with more sophisticated systems, Mr. Lalley said.

Besides fewer orders from utility companies, competition for the remaining business has cut into the profitability of the work, said David A. Trossman, an analyst at Alex. Brown & Sons, a Baltimore investment banking firm.

Two major competitors for Environmental Elements are Research Cottrell, a subsidiary of Air & Water Technologies Corp. of Branchburg, N.J.; and Joy Environmental, a subsidiary of Joy Technologies Inc. of Pittsburgh, Mr. Trossman said.

"The outlook for the market continues to be pretty cloudy," he said, citing the complexity of the air pollution regulations and the variety of ways they can be met.

Environmental Elements paid its first annual dividend of 3 cents a share in June, costing the company about $200,000. The company has not ruled out declaring a dividend later this year if conditions improve, Mr. Lalley said.

The layoffs, which occurred on April 8, also included a small number of early retirements, Mr. Lalley said. Severance arrangements were not disclosed.

Environmental Elements, which has about 300 workers, became a publicly traded company in July 1990 after seven years as a privately held business. Before 1983, it was a division of Koppers Co. Inc.

The company designs and supplies electrostatic precipitator, fabric filter, flue gas desulfurization, acid gas cleaning and continuous emissions monitoring systems.

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