-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EMIyGHy/K237jwxHB0z6dOUlM3cs4T6kEbtMcuT9WZAsn46Ym6/SdJ9DktwSdBr9 v6BqW+ABCpmrW+wyWuMH/Q== 0001050502-06-000468.txt : 20061115 0001050502-06-000468.hdr.sgml : 20061115 20061114183854 ACCESSION NUMBER: 0001050502-06-000468 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060930 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061115 DATE AS OF CHANGE: 20061114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENGLOBAL CORP CENTRAL INDEX KEY: 0000933738 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 880322261 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14217 FILM NUMBER: 061217459 BUSINESS ADDRESS: STREET 1: 654 N. SAM HOUSTON PKWY E STREET 2: SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77060-5914 BUSINESS PHONE: 281-878-1000 MAIL ADDRESS: STREET 1: 654 N. SAM HOUSTON PKWY E STREET 2: SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77060-5914 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL DATA SYSTEMS CORP DATE OF NAME CHANGE: 19970123 8-K 1 englobal8k9-30.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) September 30, 2006 --------------------------- ENGLOBAL CORPORATION -------------------- (Exact name of registrant as specified in its chapter) Nevada 001-14217 88-0322261 ------ --------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 654 N. Sam Houston Parkway E., Suite 400, Houston, Texas 77060-5914 - -------------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 281-878-1000 ----------------------- ---------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operation and Financial Condition On November 13, 2006, the Company issued a press release with respect to the Company's performance during the quarter ended September 30, 2006. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. Number Exhibit - ------ ------- 99.1 Press Release, dated November 13, 2006, of ENGlobal Corporation SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ENGlobal Corporation Date: November 13, 2006 /s/ Natalie S. Hairston --------------------- ----------------------------------- Natalie S. Hairston, Investor Relations Officer, Chief Governance Officer and Corporate Secretary EX-99.1 2 englobal8k9-30991.txt PRESS RELEASE Exhibit 99.1 - -------------------------------------------------------------------------------- NEWS RELEASE - -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE ENGlobal Corporation CONTACT: Natalie S. Hairston (281) 878-1000 ir@ENGlobal.com --------------- ENGLOBAL CORPORATION REPORTS THIRD QUARTER RESULTS HOUSTON, TX, November 13, 2006 - ENGlobal Corporation (AMEX: ENG), a leading provider of engineering services, today reported revenues of $82.5 million for the third quarter ended September 30, 2006, an increase of 39.2%, when compared to the prior year period. The net loss for the third quarter was $1.6 million, or $(0.06) per diluted share, which included a charge of approximately $6.6 million, $3.5 million after taxes, or approximately $0.13 per diluted share, for previously announced cost overruns on two domestic fixed price EPC projects. Excluding the charge on these two projects, net income would have been approximately $2.0 million, or $0.07 per diluted share. The following table illustrates the composition of the Company's revenue for the three and nine months ended September 30, 2006: Quarter Ended Nine Months Ended (Dollars in millions) September 30, 2006 September 30, 2006 -------------------- ---------------------- Revenue % of Total Revenue % of Total Revenue Revenue ------- --------- --------- --------- 1. Detail-design $ 33.9 41% $ 89.9 40% 2. Field services 29.0 35% 73.7 33% 3. Procurement and construction 1.3 2% 18.2 8% 4. Design-build fixed price 12.4 15% 27.2 12% 5. Systems 5.9 7% 15.2 7% ------- --------- --------- --------- $ 82.5 100% $ 224.2 100% ======= ========= ========= ========= Revenue increased $23.2 million, or 39.2%, for the three months ended September 30, 2006 from the comparable prior year period, with approximately $20.7 million of the increase coming from ENGlobal's engineering segment and $2.5 million attributable to the systems segment. Operating income decreased approximately $5.0 million, or 181.6%, to $(2.3) million for the three months ended September 30, 2006 from $2.8 million compared to the same period in 2005. Excluding approximately $6.6 million of reversals related to the two fixed price EPC projects and on a pro forma basis, the Company's operating income for the three months ended September 30, 2006 would have been approximately $4.3 million, resulting in an operating margin of approximately 5.2%. ~ more ~ - -------------------------------------------------------------------------------- 654 N. Sam Houston Parkway E. o Suite 400 o Houston, Texas 77060 www.ENGlobal.com ENGlobal Corporation Press Release November 13, 2006 Page 2 Total expense for SG&A increased $1.7 million, or 34.1%, to $6.8 million for the three months ended September 30, 2006 from $5.1 million for the comparable prior year period. As a percentage of revenue, SG&A was 8.2% for the latest quarter, when compared to 8.6% for the prior year period. The adoption of SFAS 123(R) related to stock-based compensation, which was recorded in SG&A expense, for the three and nine months ended September 30, 2006, respectively, included $404,000 and $895,000 of expense related to stock options. The Company's cash flow from operations has been affected primarily by: 1) delays in receipts for fees on the start-up of a major alliance agreement; 2) an increase in retention on cost plus fees; and 3) an increase in cost and estimated earnings-in-excess of billing. Although the average accounts receivable days outstanding increased to 60 days for the nine month period ended September 30, 2006 from 51 days for the comparable period in 2005 the current year trend has improved from 64 days at the end of the three month period ended March 31, 2006 and from 63 days at the end of the six month period ended June 30, 2006. Our average for accounts receivable days outstanding was 59 days for the year ended December 31, 2005. The Company has been able to lower the average accounts receivable days outstanding primarily through an expanded focus on collections of past due accounts. Long-term debt, net of current portion, increased 337%, or $17.6 million, from $5.2 million at December 31, 2005 to $22.8 million at September 30, 2006, and as a percentage of stockholders' equity, long-term debt increased from 13.1% to 50.9% at these same dates. The increase in long-term debt is primarily attributable to approximately $10.4 million used in transactions to acquire two companies, additional investments in capital equipment totaling approximately $2.8 million, plus delays in collections of fees primarily on a new alliance contract totaling approximately $3.7 million. Management's Assessment: Commenting on the overall results, ENGlobal's President and Chief Executive Officer, Michael L. Burrow, P.E., noted, "I have analyzed most of our operations and developed a plan document that focuses on both short term remediation as well as longer term measures to improve our business. We expect to emphasize cost plus activities going forward, an area that continues to be strong. As one example, for the third quarter just ended, billable hours increased approximately 42% when compared to the third quarter of last year. Mr. Burrow, continued, "The Company has made many types of internal investments in its recent past, involving new operations and also overhead that has been put in place to facilitate our growth. Each of these areas will also be reviewed, with the expectation of producing improved financial results for our stockholders." The Company will host a conference call to discuss its third quarter results at 11:00 a.m. EST (10:00 a.m. CST) on November 13, 2006. To participate in the conference call, please dial (877) 407-0782 (Domestic) or (201) 689-8567 (International) approximately 10 minutes before the scheduled start time and request the "ENGlobal Third Quarter 2006 Earnings Conference Call". If you are unable to join the call, a replay will be available approximately three hours after the conclusion of the call until Monday, November 27, 2006. The replay can ENGlobal Corporation Press Release November 13, 2006 Page 3 be accessed by dialing (877) 660-6853 (Domestic) or (201) 612-7415 (International), Account #286, Conference ID #220256. The call will be webcast live at www.englobal.com in the Investor Relations section, and an audio archive will be available on the Company's website shortly after the call concludes. The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 will be filed with the Securities and Exchange Commission on November 14, 2006 reflecting these results. About ENGlobal Corporation - -------------------------- ENGlobal Corporation provides engineering, automation systems, field inspection, and land management and regulatory services principally to the petroleum refining, petrochemical, pipeline, production, and process industries throughout the United States and internationally. The Company, with its subsidiaries, now employs over 2,200 employees in 18 offices and occupies over 400,000 square feet of office and manufacturing space. In 2004 and 2005, the Company was named the #1 fastest growing engineering firm in the United States and Canada by ZweigWhite and was ranked #2 in 2006 and 2003. Further information about the Company and its subsidiaries is available at www.ENGlobal.com. Safe Harbor for Forward-Looking Statements - ------------------------------------------ Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks and uncertainties including, but not limited to; (1) the Company's ability to achieve its business strategy while effectively managing costs and expenses; (2) the Company's ability to successfully and profitably integrate acquisitions; and (3) the continued strong performance of the energy sector. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors detailed from time to time in ENGlobal's filings with the Securities and Exchange Commission. In addition, reference is hereby made to cautionary statements set forth in the Company's most recent reports on Form 10-K and 10-Q, and other SEC filings. Also, the information contained in this press release is subject to the risk factors identified in the Company's most recent Form 10-K. ~~ more ~~
ENGlobal Corporation Press Release November 13, 2006 Page 4 FINANCIAL HIGHLIGHTS (in thousands, except per share data) Quarter Ended Nine Months Ended September 30 September 30 ---------------------------- ---------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Operating Revenue $ 82,504 $ 59,266 $ 224,196 $ 163,314 Operating Expenses: Direct cost 77,954 51,427 200,697 142,499 Selling, general and administrative 6,411 4,815 18,921 12,991 Depreciation and amortization 393 258 1,150 814 ------------ ------------ ------------ ------------ Total operating expenses 84,759 56,500 220,768 156,304 ------------ ------------ ------------ ------------ Operating income (loss) (2,255) 2,765 3,428 7,010 Other Income (Expense): Other income (expense) (20) 6 389 79 Interest income (expense), net (371) (199) (786) (643) ------------ ------------ ------------ ------------ Income before Provision for Income Taxes (2,647) 2,572 3,031 6,446 Provision for Income Taxes (1,076) 952 1,036 2,385 ------------ ------------ ------------ ------------ Net Income (Loss) (1,570) 1,620 1,995 4,061 ============ ============ ============ ============ Net Income Per Common Share: Basic (0.06) 0.07 0.08 0.17 Diluted (0.06) 0.07 0.07 0.17 Weighted Average Shares Used in Computing Net Income Per Share: Basic 26,645,830 23,890,842 26,475,353 23,637,345 Diluted 26,645,830 24,898,045 27,027,931 24,460,313 Selected Balance Sheet Information (in thousands): - -------------------------------------------------- As of Sept. 30, 2006 Dec. 31, 2005 -------------- ------------- Cash 1,071 159 Working capital 35,503 21,825 Property and equipment, net 7,960 6,861 Total assets 99,384 75,936 Long-term debt, net of current portion 22,831 5,228 Stockholders' Equity 44,882 39,865 ###
-----END PRIVACY-ENHANCED MESSAGE-----