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IT Group is it! when it comes to making money
Sunday, April 09, 2000 By Steve Massey, Associate Editor/Business
IT Group may sound like another hot information technology concern that has popped up on the local scene.
There are only two problems with that assumption.
The Monroeville-based company is profitable, a quality many young tech start-ups can't make.
Also, IT deals in the murky business of hazardous waste cleanup and environmental services, hardly the sort of nerdy-clean image typically associated with high-tech enterprises.
Still, IT Group has more in common with the high-tech world than it would appear.
Its work force of 7,000 -- about 600 locally -- is heavily weighted with engineers, scientists and other highly educated professionals capable of mapping out and monitoring strategies for cleaning up military and government research sites and developing new pollution-control technology.
And like many high-tech concerns, IT has been experiencing tremendous growth. Fueled by acquisitions, revenue has quadrupled to $1.3 billion in 1999, since it moved here from suburban Los Angeles in 1997 and changed its name from International Technology Corp.
But its appearance in The Business of Pittsburgh is driven by profits. Its net income from continuing operations soared 171 percent last year, good enough for first in the profit-growth category, well ahead of No. 2 American Eagle Outfitters' 67.5 percent increase and No. 3 Tollgrade Communications' 50.4 percent increase.
Of course, it's not hard to rack up impressive gains when you've been struggling to make money, which has been the case for IT much of the past decade as it took on a lot of debt to buy other concerns.
Indeed, it wouldn't have even made this year's list had the PG not decided to ignore one-time charges and gains related to divestitures, closings and acquisitions. The newspaper opted to do this because it felt results from continuing operations was the fairest barometer of performance for the companies it reviewed.
It remains to be seen whether IT's improved performance -- it's been profitable five straight quarters -- will be enough to add some pop to its sagging stock, which has been languishing in the $6-to-$7 range.
But at least two analysts are convinced better times lie ahead, in part because they believe IT has been hurt by an accounting fiasco at giant Waste Management that has hurt all environmental stocks.
Salomon Smith Barney's Leone T. Young has put a $16 target on IT's stock, while T. Rowe Price Small-Cap Value Fund manager Preston Athey believes there's a lot of upside for a company he expects to earn $1.50 a share this year.
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