Chairman of EEC replaced

Verdery was CEO of Baltimore-based pollution controller

`A new direction'

Vice President Sams named president

Woodside to be chair

February 26, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

Environmental Elements Corp., which has seen its stock price shrink tenfold over the past decade, said yesterday that its chairman, chief executive officer and president, E. H. "Ted" Verdery, has been replaced, effective immediately.

John L. Sams, who was brought on as Environmental Elements' senior vice president of business development in August, was named president. Samuel T. Woodside, president and chief executive officer of Energy Controls International in Hunt Valley, who has been on Environmental Elements' board since 1996, was named chairman. The position of chief executive officer was left vacant.

Verdery joined the Baltimore-based pollution-control company in 1993 as chief operating officer and executive vice president, and was named president and CEO three years later.

Although the company earned modest profits in six of the past 10 years, including the last two, the gains were overshadowed by even bigger losses.

Its stock price hit a high of $22.50 in February 1992, but has since steadily declined. It closed unchanged yesterday on the American Stock Exchange at $2.5625.

Verdery could not be reached for comment yesterday.

Environmental Elements, which spun off from Koppers Co. in 1983 with a management-driven buyout, went public a decade ago. Its IPO coincided with the 1990 Clean Air Act and there were high hopes that the company's sales would rise as companies scrambled to comply with new regulations.

"The air-pollution control industry boosted capacity to handle the growth that was expected, but it didn't materialize," said David D. Weaver, an analyst at Legg Mason Wood Walker Inc. in Baltimore, who rates the company as a hold.

Regulations were challenged in court and many companies have taken a wait-and-see approach before buying pollution-control equipment, Weaver said, because they don't want to spend money complying with regulations that may later be nullified.

Environmental firms "went through consolidations and downsizing," Weaver said. "EEC made it through. A lot of companies did not."

Even so, investors and board members wanted more.

"The performance of the company has been inconsistent and there was a feeling on the part of internal personnel and the board that there was a need for a new direction and more focus, and a change in leadership came out of those discussions," Woodside, the new chairman, said yesterday.

"I think it was a joint decision on [Verdery's] part with the board that different leadership might be more effective in pursuing the new direction," he said.

Before joining Environmental Elements, Sams was president and chief executive officer of Alfa Laval Celleco, a Swedish company with operations in Atlanta that provided process equipment for the paper and pulp industry. Paper and pulp companies are among Environmental Elements' main sources of revenue. Alfa Laval was sold to a Canadian firm in 1998.

Sams said he plans to focus on servicing existing contracts and on new markets. The company will put more of an emphasis on its "Ammonia on Demand" technology, which reduces smog-producing nitrogen oxide from power plants' emissions.

"I'm good at being a change agent," said Sams, 48.

Environmental Elements earned $1.27 million last year -- up from $50,000 the previous year -- on sales of $68 million. For the three months ended Dec. 31 it made $90,000 on sales of $14 million.

It moved from the New York Stock Exchange in October because it didn't expect to meet a new NYSE rule that requires member companies to have market capitalization and shareholder equity of at least $50 million.

Despite Environmental Elements' lackluster performance, Weaver said Verdery did "a great job." He added that he does not believe the company is "in a dire position."

"He is very knowledgeable about the industry, and he has a lot of experience in the industry," Weaver said. "He really knew what he was talking about."

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