Citing its large profit from the sale of shares in two wood-fired power plants, Ultrasystems Inc. Wednesday reported record net income for the third fiscal quarter, up 104% from the year-ago period.
The Irvine-based engineering and construction company reported net income of $3.18 million for the period ended Oct. 31, 1985, compared with $1.56 million for the year-ago period. Operating earnings, however, were up only 12% for the quarter, to $1.16 million from $1.04 million. And revenues fell 15% for the quarter, to $41.85 million from $49.26 million.
The biggest boost to the company's third quarter was the $1.82 million it received for selling 66% of its ownership in two Maine power plants. "The sale of these assets is part of our corporate strategy," said Phillip J. Stevens, president and chairman.
The company commonly builds power plant projects as joint ventures and maintains a 50% ownership until the facility is completed. Ultrasystems then sells off much of its equity.
FOR THE RECORD
Los Angeles Times Friday December 6, 1985 Orange County Edition Business Part 4 Page 2 Column 6 Financial Desk 1 inches; 19 words Type of Material: Correction
Ultrasystems Inc. of Irvine has an order backlog of $200 million. The Times incorrectly reported the figure in Thursday's edition.
Ultrasystems recorded nine-month profits that exceeded total profits of any 12-month period in is 16-year history, Stevens said. Net income for the first nine months was up nearly 19%, to $5.69 million from $4.79 million. Revenues for the nine months were up slightly, to $110 million compared with $107 million for the year-before period.
Ultrasystems appears to be "turning around and refocusing its direction," said James L. Bellessa Jr., an analyst at D.A. Davidson & Co. Inc., a Great Falls, Mont., brokerage house. Bellessa said that D.A. Davidson followed Ultrasystems until late last year, when the company posted a $4.4-million fourth-quarter loss.
With most energy tax credits expected to expire at the end of this year, Ultrasystems no longer will be able to rely on doing engineering and construction work for companies looking for tax breaks through small alternative energy projects. "They've seen that these gifts from Santa Claus will be going out the window," Bellessa said.
With that in mind, Ultrasystems has mapped its fiscal 1986 corporate strategy around the assumption that all energy tax credits will expire, Stevens said. To remain profitable with fewer jobs, he said, Ultrasystems plans to build bigger power plants. Large plants, he said, are more cost-efficient and provide a fatter profit margin than small projects.
In the current fiscal quarter, the company also expects to sell an interest in another of its existing power plants--a deal the company was negotiating late Wednesday, Stevens said. He would not give any specifics of the potential sale.
He also said that the company expects to announce a new $48-million alternative energy contract before the end of the year. He gave no details on that project.
Ultrasystems now holds an order backlog of $20 million, Stevens said.
The company payroll has remained mostly stable this year, with 1,200 workers nationwide, about 500 of whom work in Orange County. Because of "improved efficiency" at the company, Stevens said, he does not expect to see any rise in employment this year. He said that he does expect a "very strong" fiscal 1986, however.