Environmental Elements Corp. reported yesterday that its net loss more than quadrupled in the second quarter, to $6 million.
For the three months that ended Sept. 30, the Baltimore-based maker of pollution-control equipment lost 84 cents a share on sales of $12 million. That compares with a net loss of $1.3 million - or 18 cents a share - on sales of $13.5 million in the second period a year earlier.
EEC President John L. Sams said the larger loss was the "result of looking at a lot of contracts that were sold in 1998 and 1999, and where they presently stood." He refused to elaborate.
In its regular quarterly report to the Securities and Exchange Commission, the company said its cost of sales increased $3.6 million, or 28.5 percent, to $16 million, "as the result of revisions to estimates of cost of completion and warranty experience on certain contracts."
The filing said about $720,000 of the cost-of-sales increase was the result of a larger allowance for "doubtful accounts receivable on two contracts" and $450,000 is "the result of the unfavorable resolution of a contract dispute."
The company, which has about 100 employees, had announced last week that it was filing its quarterly statement late to deal with the adjustments. At that time, the company also said it was in violation of certain covenants in its line of credit with its bank, Mercantile-Safe Deposit & Trust Co.
According to yesterday's filing, the company is still not meeting certain covenants, but the bank has waived the noncompliance through April 1.
The bank also has waived the covenant that EEC not have a cumulative net loss of more than $1 million and replaced it with a requirement that EEC not have a net loss in the second half of the fiscal year, which will end March 31.
Despite the loss, Sams said, the company "has the right platform to grow from." New orders during the second quarter increased to $20.8 million from $3.7 million in the second quarter last year.
Shares of EEC closed unchanged yesterday at $1.63.