Ecology and Environment Inc Reports Operating Results (10-Q)

Author's Avatar
Jun 15, 2010
Ecology and Environment Inc (EEI, Financial) filed Quarterly Report for the period ended 2010-05-01.

Ecology And Environment Inc has a market cap of $52.2 million; its shares were traded at around $12.45 with a P/E ratio of 17.1 and P/S ratio of 0.4. The dividend yield of Ecology And Environment Inc stocks is 3.4%. Ecology And Environment Inc had an annual average earning growth of 11% over the past 10 years. GuruFocus rated Ecology And Environment Inc the business predictability rank of 3-star.EEI is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Operating activities provided $3.4 million of cash during the first nine months of fiscal year 2010. This was mainly attributable to the reported $4.1 million in net income, a $3.7 million decrease in contracts receivables, and a $1.2 million change in income tax accruals. Contracts receivable decreased $3.7 million during the first nine months of fiscal year 2010 mainly attributable to decreased work levels at Ecology and Environment, Inc. (the parent company) and the payment of receivables that were outstanding at the end of the fourth quarter of fiscal year 2009. Offsetting these was a $6.2 million decrease in accounts payable and a $.4 million decrease in accrued payroll costs. Accounts payable decreased $6.2 million during the first nine months of fiscal year 2010 primarily due to the decreased work levels at the parent company and the payment of payables that were outstanding from the increased work levels at Walsh Environmental and the parent company during the fourth quarter of fiscal year 2009.

The Company maintains an unsecured line of credit available for working capital and letters of credit of $20.2 million at interest rates ranging from 3% to 5% at May 1, 2010. Other lines are available solely for letters of credit in the amount of $18.5 million. The Company guarantees the line of credit of its majority owned subsidiary, Walsh. The banks have reaffirmed the Company s lines of credit within the past twelve months. At May 1, 2010 and July 31, 2009 the Company had letters of credit outstanding totaling approximately $3.0 million and $.6 million, respectively. After letters of credit and loans, there was $35.7 million of availability under the lines of credit at May 1, 2010. The Company believes that cash flows from operations and borrowings against the line of credit will be sufficient to cover all working capital requirements for at least the next twelve months and the foreseeable future.

Revenues for the third quarter of fiscal year 2010 were $33.3 million, a decrease of $4.7 million from the $38.0 million reported for the third quarter of fiscal year 2009. The decrease in revenue was mainly attributable to decreased work levels at the Company s subsidiary Walsh. Walsh reported revenues of $8.9 million for the third quarter of 2010, a decrease of $5.9 million or 40% from the $14.8 million reported in the third quarter of fiscal year 2009 mainly attributable to the completion of work associated with a redevelopment project. Offsetting these was a $.9 million increase in revenue reported at the Company s subsidiary E&E do Brazil. E&E do Brasil reported revenue of $2.4 million during the third quarter of fiscal year 2010, an increase of $.8 million or 50% from the $1.6 million reported in the third quarter of fiscal year 2009. The increase in revenue at E&E do Brasil was associated with increased work on contracts in the energy market.

Revenues for the first nine months of fiscal year 2010 were $103.9 million, a decrease of $1.9 million from the $105.8 million reported for the first nine months of fiscal year 2009. The decrease in revenue was mainly attributable to decreased work levels at the parent company and Walsh. Revenues of the parent company were $58.9 million for the first nine months of fiscal year 2010, a decreased of $5.3 million from the $64.2 million reported in the first nine months of the prior year. The decrease in revenue was attributable to project delays throughout all sectors of the parent company. Revenues from Walsh were $31.9 million for the first nine months of fiscal year 2010, a decrease of $.5 million from the $32.4 million reported in the first nine months of fiscal year 2009. The decrease in Walsh revenues was mainly attributable to the completion of work associated with a redevelopment project. Revenues from E&E do Brasil were $7.8 million for the first nine months of fiscal year 2010, an increase of $2.5 million from the $5.3 million reported in the first nine months of fiscal year 2009. The increase in E&E do Brasil revenues was mainly attributable to increased work in the energy market.

The Company s income before income taxes was $1.8 million for the third quarter of fiscal year 2010 and the third quarter of 2009. The third quarter of fiscal year 2009 includes a net gain of $.24 per share attributable to the favorable tax settlement in Kuwait, net of an additional charge to fully reserve the balance of accounts receivable from work in the Middle East. Excluding this $.24 per share gain, the third quarter earnings for fiscal year 2009 were $.18 per share. Revenue less subcontract costs was $26.9 million, an increase of $3.6 million from the $23.3 million reported in the third quarter of the prior year due to a large contract with significant subcontract costs ending during the period. Income from operations for the third quarter of fiscal year 2010 was $1.8 million, up 13% from the $1.6 million reported in the prior year. Indirect costs increased $1.4 million during the third quarter of fiscal year 2010 attributable to increased staffing levels and business development and proposal costs worldwide in anticipation of a significant increase in work in the fourth quarter or fiscal year 2010. The parent company reported indirect costs of $8.5 million for the third quarter of 2010, an increase of $.4 million from the $8.1 million reported in the third quarter of fiscal year 2009. Walsh reported indirect costs of $3.2 million for the third quarter of fiscal year 2010, an increase of $.2 million from the $3.0 million reported in the prior year. E&E do Brasil reported indirect costs of $1.0 million for the third quarter of fiscal year 2010, an increase of $.3 million from the $.7 million reported in the prior year. Indirect costs during the third quarter of fiscal year 2009 were impacted by a $.5 million reduction associated with the favorable tax settlement in Kuwait.

The Company s income before income taxes was $6.3 million for the first nine months of fiscal year 2010, a decrease of $.6 million from the $6.9 million reported in the first nine month of the prior year. Indirect costs increased $4.8 million during the first nine months of fiscal year 2010. The increase was attributable to increased staffing levels and business development and proposal costs worldwide in anticipation of a significant increase in work in the fourth quarter or fiscal year 2010. The parent company reported indirect costs of $25.3 million for the first nine months of 2010, an increase of $2.3 million from the $23.0 million reported in the first nine months of fiscal year 2009. Walsh reported indirect costs of $9.2 million for the first nine months of fiscal year 2010, an increase of $1.1 million from the $8.1 million reported in the first nine months of the prior year. E&E do Brasil reported indirect costs of $3.0 million for the first nine months of fiscal year 2010, an increase of $.8 million from the $2.2 million reported in the first nine months of fiscal year 2009. During the first quarter of fiscal year 2010, the Company recorded a sale of 16.5 acres of land at its Walden Avenue facility in Lancaster, New York for the sum of approximately $959,000 plus closing costs. This sale resulted in a gain of approximately $809,000 ($453,000 after tax) which positively impacted earnings by $.11 per share.

Read the The complete Report