EA Engineering says profits slipped sharply

September 22, 1995|By Kim Clark | Kim Clark,SUN STAFF

EA Engineering, Science, and Technology Inc. reported lower-than-expected earnings for its fiscal fourth quarter yesterday and said it had laid off about 25 administrators and executives to improve profitability.

The Hunt Valley-based environmental testing and cleanup firm said its net profits fell by more than half, to $305,000, in the three months that ended Aug. 31, from $616,000 in the same period last year.

At the same time, revenues grew to $19.2 million, from $17.3 million in the fourth quarter of 1994.

Company officials blamed the disappointing performance on disputes over payment for government cleanup work, a slowdown in orders for laboratory analyses and interest costs.

To cut its overhead, EA last month completed a small restructuring, including a corporate reorganization, closure of a Colorado sales office and layoff of about 25 managers.

The company's chief financial officer, Joseph Spadaro, said that because the layoffs reached high up the corporate ladder -- to the vice-presidential level -- they reduced the company's costs by about $2 million a year.

The reorganization and layoffs come three years after the company's last major restructuring and eight months after the company's president, Edward V. Lower, announced that booming business would require the company to add 100 scientists, engineers and other workers.

Mr. Spadaro said yesterday that the company had been, and planned to continue, adding technical workers.

EA now has about 850 employees, he said. That's down from about 875 three months ago, and is under the goal of 900 laid out in January by Mr. Lower.

Last month's actions also recombined units separated as a part of a decentralization plan earlier in the decade, Mr. Spadaro said.

He said that the company does not expect to follow up with another restructuring and that it expects profitability to start rising again.

"This is a a temporary slip," Mr. Spadaro said. "We'll return to continuing growth and profitability patterns."

Investors and analysts were mildly disappointed by the showing. EA's stock fell 75 cents to $4.50 in unusually heavy NASDAQ trading yesterday.

Frank Latuda, who follows EA Engineering for Burns Pauli Mahoney Co. in St. Louis, said EA is suffering from a slowdown in environmental spending.

For the year, EA said its net income rose by 22 percent to $2.2 million, or 36 cents per share, compared to net income of $1.8 million, or 30 cents per share in 1994.

Revenues rose nearly 14 percent to a record $72.5 million from 1994's $63.7 million.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.