Sevenson Environmental Services Inc. reported a 52 percent drop in its third-quarter profits Monday, due to continued delays in U.S. government cleanup projects and heightened competition for private-sector work.
The Niagara Falls-based hazardous waste cleanup firm said its net income fell to $1.8 million, or 29 cents per share, from $3.8 million, or 60 cents per share, a year ago, when the company enjoyed record profits and a strong backlog of orders.
"Our third-quarter results continue to reflect the difficulties in obtaining new contracts we encountered last year and earlier this year," said Michael A. Elia, Sevenson's president.
He explained that federally funded cleanup projects continue to be delayed by last year's budget stalemate, although conditions seem to have improved during the last few months.
In addition, the slowdown in the federally funded markets caused some cleanup firms to try to win work on privately funded projects that they otherwise might have ignored, Elia said. That has caused competition to heat up and pushed the prices that contractors can get for their services down to dramatically lower levels.
As a result, Sevenson's revenues fell by 21 percent to $23.4 million from $29.4 million a year ago, and Elia said the difficult market conditions are expected to continue throughout the rest of the year.
However, the executive sees signs of hope in Sevenson's backlog of orders, which grew by $13 million to end the third quarter at $66 million. "Included in our current backlog is a new $7.5 million U.S. Army Corps of Engineers project for dredging and dewatering work," Elia said. "Although 1996 has been a disappointing year so far, new projects such as this, together with our increasing backlog are reasons for encouragement," he said.
For the first nine months of the year, Sevenson's earnings fell by 47 percent to $4.3 million, or 68 cents per share, from $8.1 million, or $1.28 cents per share, a year earlier. Its revenues declined by 24 percent to $56 million from $74 million one year ago.