SOURCE: Ecology and Environment, Inc.

Ecology and Environment, Inc.

November 16, 2016 10:00 ET

Ecology and Environment, Inc. Reports Annual Income of $0.21 per Share

LANCASTER, NY--(Marketwired - November 16, 2016) - Ecology and Environment, Inc., ("E & E" or the "Company") (NASDAQ: EEI) reported consolidated net after tax income of $0.21 per share for the fiscal year ended July 31, 2016, down from $0.79 per share reported for the prior year. Net income was heavily impacted by the economic downturn in South American and an unusually high 86% effective income tax rate for fiscal year 2016.

"E & E weathered a poor economic year in the U.S. and South America because of the positive impact of our reorganizational strategy implemented over the past two years," said E & E president and CEO Gerard A. Gallagher III. "In fiscal year 2016, we saw some of the positive results of our strategy."

Consolidated net income of $0.9 million for fiscal year 2016 was down 74% from $3.4 million reported for the prior year. Net income from U.S. operations increased $1.0 million to $2.0 million, while net income from foreign operations decreased a combined $3.5 million to a net loss of $1.1 million for fiscal year 2016.

Consolidated revenues of $105.8 million for fiscal year 2016 were 17% lower than the prior year. Revenues from U.S. operations and from foreign operations declined 6% and 41%, respectively, during fiscal year 2016.

Higher net income from U.S. operations was primarily due to the positive impact of disposing of a majority owned U.S. subsidiary, and initiatives to integrate certain wholly-owned U.S. subsidiaries with other U.S. operations. Each of the disposed or integrated subsidiaries experienced operating losses during recent fiscal years which were reduced or eliminated during fiscal year 2016. The reduction of revenue from these initiatives was more than offset by elimination of significant operating expenses, resulting in a combined improvement of $2.1 million in net income during fiscal year 2016.

Excluding the disposed or integrated operations noted above, net income from ongoing U.S. operations declined $1.1 million to $2.1 million during fiscal year 2016. Global economic trends in oil, gas and commodity prices continued to have a negative impact on revenues from energy and mining sectors in the U.S. The Company also experienced a distinct shift of direct labor hours during fiscal year 2016 from commercial projects to government projects, for which selling rates tend to be lower than commercial rates.

Net income from South American operations decreased $4.1 million to a loss of $1.1 million for fiscal year 2016. The Company's Chilean operations experienced revenue and earnings growth during fiscal year 2016 as a result of higher energy sector revenues. In Peru, significant energy sector project work was completed late in fiscal year 2015 and early in fiscal year 2016, which was not replaced during fiscal year 2016. As a result, revenues from Peruvian operations decreased 57% during fiscal year 2016.

"Fiscal year 2016 was a difficult one for our Brazilian operations," said Gallagher. "We continue to implement cost reduction and reorganizational initiatives, and refocus of business development efforts in response to economic and political uncertainty as it reflects on our marketplace. Our disciplined approach has improved the situation with respect to this subsidiary, and we saw progress toward stabilizing operations in Brazil during the fourth quarter of 2016."

The Company's Brazilian operations incurred a loss of $1.7 million for fiscal year 2016, which was partially due to a 37% decrease in revenues in that subsidiary. Additionally, due to recurring Brazilian losses, the Company recorded a $0.9 million valuation reserve against Brazilian deferred tax assets and was not able to recognize any tax benefit from fiscal year 2016 operating losses. As a result, the Company recorded significant income tax expense related to its Brazilian operations, despite a fiscal year 2016 operating loss.

"Fiscal year 2016 was a challenging one for E & E," Gallagher said. "But operational improvements, together with our ongoing strategic initiatives, have made E & E a stronger and more resilient company capable of responding to market challenges. We are committed to our strategic plan going forward and remain optimistic about future opportunities."

E & E is listed on the NASDAQ under the symbol EEI and the information contained in this press release is available on the Company's website at www.ene.com.

            
            
Financial Report -           
            
(In thousands, except per share information)           
   Three Months Ending  
   July 31, 2016  July 31, 2015  % Increase  
              
Revenue  $25,894  $35,119  -26 %
              
Revenue less Subcontract Costs  $21,557  $27,486  -22 %
              
Total Operating Expenses (excluding depreciation and amortization)  $24,162  $32,115  -25 %
              
Net Income  $529  $907  -42 %
              
Net Income Per Common Share: Basic and Diluted  $0.12  $0.21  -43 %
              
              
   Fiscal Year Ending  
   July 31, 2016  July 31, 2015  % Increase  
            
Revenue  $105,817  $126,935  -17 %
              
Revenue less Subcontract Costs  $87,267  $103,608  -16 %
              
Total Operating Expenses (excluding depreciation and amortization)  $100,532  $117,864  -15 %
              
Net Income  $886  $3,396  -74 %
              
Net Income Per Common Share: Basic and Diluted  $0.21  $0.79  -73 %