Ultrasystems Inc. is "pulling back on the throttle" from growth that took it to a 181% revenue increase in two years but sacrificed profits, said Phillip J. Stevens, president and chairman of the Irvine engineering and construction company.
Phillips told a group of securities analysts meeting in Newport Beach on Monday that the company experienced "growing pains" during fiscal 1985, which ended Jan. 31. "We experienced more problems this year because we just grew out of our pants," said Stevens. To alleviate the problems, he said the company has reviewed its operations and plans to slow its rapid growth.
Late last month, Ultrasystems reported that it expects to report a quarterly loss but will be profitable for the year. The company specializes in building alternative energy plants and space- and defense-related computer systems.
Stevens said the company's stock price has taken a beating in recent months in reaction to new tax law proposals that may affect investment tax credits and accelerated depreciation. The stock, which was selling for about $16 a share late last year, closed at $9 in over-the-counter trading Monday.
On top of that, the company experienced unexpected start-up problems with its two new Northern California wood-burning power plants. One plant, at Westwood, is operating at reduced capacity until its air pollution control system can be repaired. The other plant, in Burney, is shut down awaiting the repair of one turbine. Phillips said repairs at both plants should be completed during April.
"We clearly underestimated the magnitude of the start-up costs," said Phillips, adding, "I feel the technical problems are the easiest to solve."
Meanwhile, he said, the company has reassessed the start-up costs for their other wood-burning plants in California and Maine and has substantially increased the reserves to cover any unexpected problems.
The company had hoped to complete and begin operating one new plant each quarter, but permit delays have forced the schedule to slip, Phillips said. To take up the slack, he said, Ultrasystems recently signed contracts with San Diego Gas & Electric Co. and Southern California Edison Co. for smaller construction projects.