Despite the movement in Congress toward relaxing environmental regulation, a Hunt Valley-based environmental services company yesterday said that its primary business of cleaning up military bases is not threatened.
"Spending constraints don't really cause me to lose sleep at night," said Loren D. Jensen, chairman and chief executive officer of EA Engineering, Science and Technology Inc.
Speaking to a meeting of the Baltimore Security Analysts Society, he said the environmental cleanup of closed military bases -- which accounts for 56 percent of the company's revenue -- has to continue because the contaminated bases cannot be left dormant.
"It would be too high a cost," he said. Without the cleanup, all that would be left from closed bases would be "scorched earth and unemployment."
Concentrating on this work in recent years, the 22-year-old company has rapidly expanded its business. Last year, its backlog of work ballooned by 106 percent, to $505.1 million, and net income in the six months that ended Feb. 28 jumped 58.3 percent, to $1.2 million.
Despite these results, the company's stock price has been held down in the $6-to-$7-per-share range because of market concerns about the anti-regulatory mood in Washington. The company's stock hit a high of $12.50 a share July 14. Yesterday, it closed at $7 a share, unchanged on the day.
Even though the Pentagon plans a 15 percent reduction of the $5.5 billion of contract awards it made last year, Mr. Jensen said the company's earnings are expected to continue to grow at the rate of 15 percent annually.
"We expected to be impacted, but we are not worried that the backlog is going to go away," he told the analysts.
Mr. Jensen said his company also has the advantage over other companies of offering a wide range of services, including consulting services, chemical testing, engineering and remediation. This allows the company to deal with unexpected problems in cleaning a military site, which often happens.
"When the government was making war, they were not making environmental impact statements," he said.
The company also is better suited for the new budget-cutting trend in Washington because of its history of working for business or government customers that are paying for cleanup work, rather than the regulators that order it.
Companies that are attuned to holding down costs will be the winners in the future, agreed Deborah Coy, an environmental policy analyst for NatWest Securities.
She said federal and state regulators are loosening their grip on businesses, allowing them to find their own, less expensive solutions to pollution problems. This was particularly true with the Clean Air Act of 1990, where utilities switched to low-sulfur coal to comply rather than spend hundreds of millions on smokestack scrubbers, Ms. Coy said.
But despite the relaxing of regulation, the country is not abandoning environmental standards, she said. "The concern is these evil, wicked Republicans are going to roll back 20 years of environmental programs," she said. "That will hardly be the case."