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3/18/2004

Back from meltdown

By Tony Kindelspire
The Daily Times-Call

LAFAYETTE — Nimble moves by executives and a change in the government’s philosophy have combined to bring the S.M. Stoller Corp. back from near-death.

Founded in 1959, the environmental clean-up company had reached a crisis stage by the mid-1990s. The company was left out of a couple of major contracts, and its then-management team had begun to branch out beyond the company’s core competencies.

“The company was essentially going bankrupt,” said Nicholas Lombardo, Stoller’s president.

In 1997, Lombardo, Curtis Hull and Jim Moran bought the company and re-focused its business philosophy. The company’s revival since then has been dramatic.

“Really, ’98 was our (management team’s) first year of operations, and we had some growth,” said Lombardo. “And we had some growth in ’99, but 2000 was what I would call a watershed year for our company.”

At one point, a workforce that had numbered close to 300 dwindled to only about 35, but Lombardo and his team built the company back up to where it now employs about 400 and has re-established itself as a major player in environmental clean-up — specifically, cleaning up sites contaminated by nuclear materials.

In the past 18 months, the company has landed federal contracts totaling nearly $400 million, and it shows no signs of slowing down.

“What this means is we’re hitting our sweet spot,” Lombardo said, adding that his company expects to be bidding on $1 billion to $2 billion worth of projects in the next year or two.

Back in 1998, revenues were around $5 million a year. “And that’s almost a month’s worth of revenue now,” said Hull, senior vice president.

Last year’s revenues were around $50 million. But things weren’t always so smooth.

“We didn’t take a salary initially, and we had to fund our own expenses,” said Lombardo, whose company tests everything from soil to road kill. “But we never missed a payroll, and we never missed a vendor’s invoice.”

Federal contracts make up about 85 percent of Stoller’s revenue. Locally, the company is one of many subcontractors working on the Rocky Flats clean up — it tests groundwater and other materials for the primary contractor, Kaiser-Hill, and has assisted in the facility’s decommissioning for more than a decade.

Stoller has multiple projects going on at other “hot spots”, including the Los Alamos National Laboratory in New Mexico, the former atomic bomb proving grounds in the desert near Las Vegas, and in Grand Junction, where Stoller serves as the primary contractor on the Department of Energy’s Legacy Project — cleaning up abandoned uranium mine sites.

“We have kind of a niche area,” said Lombardo. “We’re a large small business” — under 500 employees — “with 40 years of experience in the industry, and there aren’t that many companies that fit that profile.”

Company executives say that in the early 1990s, management had started to get into things, like training and consulting, that really didn’t fit with the company’s traditional areas of expertise. That was hurting the overall business, they say.

“Basically what we did was we concentrated more on the environmental remediation side of the business,” said Moran, also a senior vice president. “We saw that was the side of the business that was going to grow in the future.”

The growth of that part of the business was put into hyper-drive when the DOE made the decision that it would accelerate the clean-up of such contaminated sites, determining that spending a large amount of money up-front would not only speed up the clean-up but also save money in the long run.

That, combined with a government mandate to “set aside” a percentage of DOE contracts for small companies, like Stoller, have been the spikes behind the company’s recent, dramatic growth.

“We had ideas of how we could make this company grow,” said Eric Olson, vice president for Stoller’s nuclear services group. “Right from the beginning, we had targets of going after things like the Grand Junction project.”

That contract alone already makes up a substantial percentage of Stoller’s revenue, said Lombardo.

“This year we’ll do $65 million with just the work in hand,” said Lombardo, adding that his company’s goal is $100 million in revenues in fiscal year 2005.

Tony Kindelspire can be reached at 303-776-2244, Ext. 291, or by e-mail at tkindelspire@times-call.com.