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E&E cutting jobs as CEO leaves after management shakeup

Gerard A. Gallagher III, who has been Ecology & Environment's chief executive officer since 2015, left his job at the Lancaster environmental services firm on Monday after seeing his role diminished following a management reshuffling earlier in the year.

The departure comes as E&E has started a wave of job cuts throughout its operations by a combination of voluntary buyouts and firings, the company said in a regulatory filing that did not say how many jobs would be eliminated.

"We do not know at this time how many people will choose to participate in the voluntary retirement program and therefore are not yet in a position to indicate how many people and from which offices will be impacted," said Sara Herrmann, an E&E spokeswoman.

E&E said the job cuts would save the company between $5 million and $6.5 million annually, with the company taking a charge against its earnings of $1 million to $1.5 million during the current fiscal year. E&E said it expects the job cuts to be completed by the end of April.

E&E employs about 180 people at its Lancaster headquarters and has about 400 employees across the United States. Its global work force tops 700.

Gallagher, who worked at E&E for more than 30 years, was named CEO after a bitter split among the company's founding partners five years ago. But his role was reduced earlier this year with the appointment of Todd Musterait as president for E&E's U.S. operations.

In addition, Marshall A. Heinberg, an investment banker who joined E&E's board last year as a company-backed director and its eventual chairman, took on a more active role by becoming E&E's interim executive chairman. That left Gallagher responsible for E&E's international operations and its relationship with key clients.

Fred J. McKosky, E&E's technical operations director, will assume Gallagher's international duties, while the company's operations committee, which includes Heinberg, Musterait and another new manager, Chief Administrative Officer JoAnn Shea, will take on the remainder of Gallagher's responsibilities.

E&E's sales and profits have slumped since peaking in 2011. Its stock, which peaked at around $20 in the spring of 2011, now trades for less than $12.

Musterait, in an interview earlier this fall, said E&E plans to focus on segments of the environmental services market that have greater growth potential. That includes environmental issues arising from climate change, the rise in sea levels, coastal restoration work and resiliency.

The Nasdaq Stock Market has threatened to delist E&E’s stock because it missed the late October deadline to file its financial statements for the fiscal year that ended in July. E&E has until Jan. 14 to file the annual report, known as a 10-K, or develop a plan to comply with the financial reporting rules.

The delay stems from what E&E’s audit committee determined to be accounting errors related to its ownership stake in a Chilean subsidiary. E&E said in a Securities and Exchange Commission filing that it no longer believes that it owns a controlling stake in the subsidiary, leading to errors in the way its previous financial statements accounted for the Chilean operations.

E&E previously said its profits last year fell by more than 40 percent to about $1.7 million. The company said it expects to report a loss of $200,000 to $300,000 during the first quarter, which ended in October, because of delays in U.S. clients awarding contracts. E&E said the accounting errors are not expected to result in a significant change to its reported earnings.

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