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Alternative energy business seen boosting Ecology & Environment Firm is working on projects for LNG terminals, wind farms

Ecology & Environment is looking to cash in on the renewed push to come up with alternative energy sources.

The Lancaster-based environmental services firm is working on a host of projects to develop wind farms, liquefied natural gas terminals, clean-coal electricity generating stations and even nuclear power plants.

Gerhard J. Neumaier, E&E's president, expects the work to keep coming.

"We're going to have considerably more work as the world changes its energy sources," Neumaier told shareholders during the company's annual meeting on Thursday.

As a result, Neumaier said he expects E&E's sales and profits to rise this year, although he wasn't willing to make any firm forecasts during an interview after the meeting. And he said the company is interested in making acquisitions, most likely ones that would push the company into new international markets.

"We'll continue to expand with acquisitions from time to time, but we want to make sure it makes sense from a business and technical standpoint," Neumaier said.

As always, Neumaier's half-hour talk to shareholders was part lecture about major environmental issues -- this year it was global warming -- and partly about the company's business and how it relates to those environmental problems.

"This is a year of change. Global warming is becoming a real issue," Neumaier said. "The global warming issues are having major effects on our business throughout the world."

As those concerns grow, Neumaier said he expects a growing focus on developing renewable energy sources, including wind energy. E&E did about $5 million in work on wind-related projects last year, and Neumaier expects that to keep growing.

"I think you'll see a lot more wind," he said.

Projects to import liquefied natural gas into the United States also is likely to be a growing source of business for E&E, which currently is working on six LNG projects.

"Bringing in natural gas will be a necessity . . . to meet our demands," Neumaier said. "But the price (of that natural gas) also is going up."

Over the last decade, E&E has gone through a major transformation. The company's work for the Environmental Protection Agency, which once accounted for more than $40 million a year in revenues, has dwindled to less than $3 million. E&E backed away from that EPA work as it became less lucrative. "We made the decision that marketplace was too difficult," Neumaier said. "It has not been a profitable marketplace."

E&E also closed its Lancaster testing laboratory two years ago after growing competition caused a series of painful losses at the facility. And its venture into shrimp farming in Costa Rica failed after a virus repeatedly contaminated the facility's ponds.

In its place, E&E is relying more on its traditional consulting work, which helped the company increase its sales last year by 10 percent to $82 million, although that still was less than the $89.5 million in revenues it generated in 2004, when the lab still was open.

But even with reduced revenues, E&E now is more profitable than it was two years ago, with earnings approaching $2.6 million last year. Higher staffing and business development costs led to a 7 percent drop in E&E's first-quarter profits, despite a 3 percent increase in revenues.


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