Segment Information

9 Months Ended

Sep. 29, 2018

Segment Reporting [Abstract]

Segment Information

NOTE 6 – SEGMENT INFORMATION

Our segments are strategic business units that offer different services and products and therefore require different marketing and management strategies. During 2017, ENGlobal changed the reporting structure within the Company by placing an operational leader in charge of its engineering offices and a separate operational leader in charge of its automation offices, including the office that contracts with government agencies. The operating performance is regularly reviewed with these two operational leaders, the chief executive officer (“CEO”), the chief financial officer (“CFO”) and others. This group represents the chief operating decision maker (“CODM”) for ENGlobal.

The Engineering, Procurement and Construction Management (“EPCM”) segment provides services relating to the development, management and execution of projects requiring professional engineering and related project services primarily to the energy industry throughout the United States. The Automation segment provides services related to the design, integration and implementation of advanced automation, information technology, process distributed control systems, analyzer systems, and electrical projects primarily to the upstream and downstream sectors throughout the United States. The Automation segment includes the government services group, which provides engineering, design, installation and operation and maintenance of various government, public sector and international facilities and the fabrication operation.

We have revised our segment reporting to reflect our current management approach and recast prior periods to conform to the current segment presentation.

Effective December 31, 2017, we adopted the requirements of Topic 606 using the modified retrospective method as discussed in “Note 2 – Accounting Standards.” The presentation of our business segments, including corporate, set forth in these consolidated financial statements reflect these changes.

Revenues, operating income, and identifiable assets for each segment are set forth in the following table. The amount identified as Corporate includes those activities that are not allocated to the operating segments and includes costs related to business development, executive functions, finance, accounting, safety, human resources and information technology that are not specifically identifiable with the segments.

Segment information for the three months ended September 29, 2018 and September 30, 2017 is as follows (dollars in thousands):

For the three months ended September 29, 2018:	EPCM			Automation			Corporate			Consolidated
Revenue	$	6,821		$	7,434		$	—		$	14,255
Gross profit		1,133			1,160			—			2,293
Gross Profit Margin		16.6	%		15.6	%					16.1	%
SG&A		469			633			1,381			2,483
Operating income (loss)		664			527			(1,381	)		(190	)
Other income											11
Interest expense, net											(1	)
Tax expense											(17	)
Net loss										$	(197	)

For the three months ended September 30, 2017:	EPCM			Automation			Corporate			Consolidated
Revenue	$	5,399		$	7,497		$	—		$	12,896
Gross profit		411			1,210			—			1,621
Gross Profit Margin		7.6	%		16.1	%					12.6	%
SG&A		516			699			1,826			3,041
Operating income (loss)		(105	)		511			(1,826	)		(1,420	)
Other income											2
Interest expense, net											(19	)
Tax expense											(10,717	)
Net loss										$	(12,154	)

Segment information for the nine months ended September 29, 2018 and September 30, 2017 is as follows (dollars in thousands):

For the nine months ended September 29, 2018:	EPCM			Automation			Corporate			Consolidated
Revenue	$	18,568		$	22,746		$	—		$	41,314
Gross profit		2,879			3,080			—			5,959
Gross Profit Margin		15.5	%		13.5	%					14.4	%
SG&A		1,426			2,001			4,508			7,935
Operating income (loss)		1,453			1,079			(4,508	)		(1,976	)
Other expense											(367	)
Interest expense, net											(14	)
Tax expense											(31	)
Net loss										$	(2,388	)

For the nine months ended September 30, 2017:	EPCM			Automation			Corporate			Consolidated
Revenue	$	16,976		$	24,360		$	—		$	41,336
Gross profit		1,742			4,123			—			5,865
Gross Profit Margin		10.3	%		16.9	%					14.2	%
SG&A		1,614			2,106			5,783			9,503
Operating income (loss)		128			2,017			(5,783	)		(3,638	)
Other income											57
Interest expense, net											(95	)
Tax expense											(10,250	)
Net loss										$	(13,926	)

Total Assets by Segment	As of September 29, 2018		As of December 30, 2017
	(dollars in thousands)
EPCM	$	6,457	$	5,976
Automation		12,388		12,485
Corporate		5,415		10,791
Consolidated	$	24,260	$	29,252