eng_ex991
ENGLOBAL ANNOUNCES FIRST QUARTER EARNINGS OF $1.1 MILLION, REVENUE
UP 58 PERCENT VS. Q1 2019
Conference Call to Discuss Results at 9:00 am EDT
Today
Houston, May 7, 2020 -- ENGlobal Corporation (Nasdaq: ENG),
a leading provider of engineered modular solutions, today announced
that, for the first quarter ended March 28, 2020, it achieved net
income of $1,101,000, or $.04 per share, compared to a net loss of
$974,000, or $(.04) per share, in the first quarter ended March 30,
2019.
Added
to the company’s Q4 2019 earnings of $741,000, or $.03 per
share, this marks ENGlobal’s first consecutive profitable
quarters since the third and fourth quarter of 2015.
In the
first quarter of 2020, ENGlobal achieved revenue of $19,260,000, a
58 percent improvement on revenue of $12,163,000 recorded in Q1
2019. This gain was the result of a 116 percent rise in revenue
from the company’s automation segment, which compiled a gross
profit margin of 21 percent in Q1 2020 compared to 10 percent in
last year’s first quarter. The company’s overall gross
profit margin in Q1 2020 improved to 17 percent compared to 11
percent in the same quarter a year ago.
SG&A
expenses for Q1 2020 decreased by $171,000 compared to Q1 2019,
primarily due to the reduction of both salaries and facilities
costs.
These
improvements, in particular the company’s increase in
quarterly gross profit, were responsible for ENGlobal’s
improved bottom line performance compared to Q1 2019.
“We
are encouraged by our first quarter results,” said CEO
William A. Coskey, P.E. “Not only did our company achieve its
second consecutive quarterly profit, but it also grew revenue by
58% versus the prior year quarter.”
Mr.
Coskey added: “Today’s results serve as further
validation of our strategic shift toward higher-value, modular
engineered process and automation systems, as well as select,
high-revenue automation commissioning work.”
“Going
forward,” he said, “the company will continue to focus
on building industry alliances and thus securing more of these
targeted projects, most of which are estimated to have revenue
value of between $10 to $250 million each.”
“Regarding
the ongoing coronavirus pandemic,” added Mr. Coskey,
“our company, like most others today, is in a dynamic and
difficult to predict situation. We have a double dose of issues to
manage through – both the pandemic as well as a difficult
energy industry environment. While most of our office staff
returned this week, we have experienced project execution
inefficiencies and constraints on pursuing new business due to a
majority of employees needing to work from home for about one
month. It is tough to put a number on both of these
factors.”
Mr. Coskey continued: “ENGlobal had approximately $53 million
of backlog as of March 28, 2020, after giving effect for a project
cancellation and we have also had one project delayed until next
year. An important metric is that we currently have in excess of
$100 million of proposals outstanding which are awaiting our
customers’ feedback. Over a one year look back period, the
company has been successful in landing approximately 39 percent of
our proposals outstanding on a dollar volume basis. However,
because the severity, magnitude and duration of the COVID-19
pandemic and its economic consequences are uncertain and dynamic,
our ability to convert proposals into backlog, and the results of
future operations continues to be difficult to
predict.”
The
following is a summary of the income statement for the three months
ended March 28, 2020 and March 30, 2019:
(amounts
in thousands)
|
Three months
ended
March
28,
2020
|
Three months
ended
March
30,
2019
|
Revenue
|
$19,260
|
$12,163
|
Gross
Profit
|
3,260
|
1,338
|
Selling, General
and Administrative Expenses
|
2,133
|
2,304
|
Operating Income
(Loss)
|
1,127
|
(966)
|
Net Income
(Loss)
|
1,101
|
(974)
|
The following table illustrates the composition of the company's
revenue and profitability for its operations for the three months
ended March 28, 2020 and March 30, 2019:
|
|
|
(amounts in
thousands)
|
|
|
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering &
Construction
|
$5,122
|
26.6%
|
5.4%
|
(7.6)%
|
$5,633
|
46.3%
|
11.9%
|
1.5%
|
Automation
|
14,138
|
73.4%
|
21.1%
|
18.7%
|
6,530
|
53.7%
|
10.2%
|
3.7%
|
Consolidated
|
19,260
|
100.0%
|
16.9%
|
5.9%
|
12,163
|
100.0%
|
11.0%
|
(7.9)%
|
The following table presents certain balance sheet items as of
March 28, 2020 and December 28, 2019:
(amounts in
thousands)
|
|
|
Cash and cash
equivalents
|
$6,769
|
$8,307
|
Working
capital
|
11,908
|
11,289
|
For
further information on ENGlobal’s first quarter 2020
financial results, please refer to its Form 10-Q filing on the
company’s website at www.englobal.com,
or on the SEC’s website at www.sec.gov.
Conference Call
Management
will host a conference call today at 9:00am EDT to discuss the
company’s Q1 2020 financial results, provide updates on
contract awards, and provide outlook for 2020.
To participate in the conference call, please dial (Toll Free)
844-369-8770 domestically or 862-298-0840 internationally,
approximately 5-to-10 minutes before the beginning of the call. The
conference call will also be broadcast live over the Internet and
can be accessed at: https://www.webcaster4.com/Webcast/Page/2272/34133
You may access the teleconference replay by dialing (Toll Free)
877-481-4010 domestically or 919-882-2331 internationally,
referencing conference ID 34133 or by visiting the company's web
site. The replay will be available shortly after the completion of
the live event through 9:00am EDT on May 14, 2020.
About ENGlobal
ENGlobal
(ENG) is a provider of engineering and automation services
primarily to the energy sector throughout the United States and
internationally. ENGlobal operates through two business segments:
Automation and Engineering. ENGlobal's Automation segment provides
services related to the design, fabrication and implementation of
distributed control, instrumentation and process analytical
systems. The Engineering segment provides consulting services for
the development, management and execution of projects requiring
professional engineering, construction management, and related
support services. Within ENGlobal's Engineering segment, ENGlobal
Government Services, Inc. provides engineering, design,
installation, operations, and maintenance of various government,
public sector, and international facilities, specializing in
turnkey automation and instrumentation systems for the U.S. Defense
industry worldwide. Further information about the company and its
businesses is available at www.ENGlobal.com.
Safe Harbor for Forward-Looking Statements
The statements above regarding the company's expectations, its
operations and certain other matters discussed in this press
release may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995, which are statements related to future, not past, events and
are based on the company’s current expectations and
assumptions regarding the company’s business, the economy and
other future conditions, and are subject to risks and
uncertainties. Generally, the words “anticipate,”
“believe,” “estimate,”
“expect,” “may” and similar expressions,
identify forward-looking statements, which generally are not
historical in nature. Although the company believes that the
expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will
prove to have been correct. Actual results could differ materially
from the results described in the forward-looking statements due to
the risks and uncertainties, including, among other things, (1) the
company’s ability to identify, evaluate, and complete any
strategic alternative in connection with the company’s review
of strategic alternatives; (2) the impact of the announcement of
the company’s review of strategic alternatives on the
company’s business, including the company’s financial
and operating results, or the company’s employees, suppliers
and customers; (3) the impact of the COVID-19 pandemic and of the
actions taken by governmental authorities, individuals and
companies in response to the pandemic on the company’s
business, financial condition, and results of operations, including
on the company’s revenues and profitability; (4) the effect
of economic downturns and the volatility and level of oil and
natural gas prices, including the severe disruptions in the
worldwide economy, including the global demand for oil and natural
gas, resulting from the COVID-19 pandemic; (5) the company’s
ability to realize revenue projected in the company’s backlog
and the company’s ability to collect accounts receivable and
process accounts payable in a timely manner; (6) the
company’s ability to increase the company’s revenue and
profitability; (7) the company’s ability to realize project
awards or contracts on the company’s pending proposals, and
the timing, scope and amount of any related awards or contracts;
(8) the company’s ability to retain existing customers and
attract new customers; (9) the company’s ability to
accurately estimate the overall risks, revenue or costs on a
contract; (10) the risk of providing services in excess of original
project scope without having an approved change order; (11) the
company’s ability to execute the company’s expansion
into the modular solutions market and to execute the
company’s updated business growth strategy to position the
company as a leading provider of engineered modular solutions to
its customer base; (12) the company’s ability to attract and
retain key professional personnel; (13) the company’s ability
to fund the company’s operations and grow the company’s
business utilizing cash on hand, internally generated funds and
other working capital; (14) the company’s ability to obtain
additional financing, including pursuant to a new credit facility,
when needed; (15) the company’s dependence on one or a few
customers; (16) the risks of internal system failures of the
company’s information technology systems, whether caused by
the company, third-party service providers, intruders or hackers,
computer viruses, malicious code, cyber-attacks, phishing and other
cyber security problems, natural disasters, power shortages or
terrorist attacks; (17) the uncertainties related to the U.S.
Government’s budgetary process and their effects on the
company’s long-term U.S. Government contracts; (18) the risk
of unexpected liability claims or poor safety performance; (19) the
company’s ability to identify, consummate and integrate
potential acquisitions; (20) the company’s reliance on
third-party subcontractors and equipment manufacturers; (21) the
company’s ability to satisfy the continued listing standards
of NASDAQ with respect to the company’s common stock or to
cure any continued listing standard deficiency with respect
thereto; and (22) the effect of changes in laws and regulations,
including U.S. tax laws, with which the company must comply and the
associated cost of compliance with such laws and regulations. For
additional information regarding known material factors that could
cause the company’s actual results to differ from the
company’s projected results, please see ENGlobal's
filings with the Securities and Exchange Commission, including the
company's most recent reports on Form 10-K and 10-Q, and other SEC
filings. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date
hereof. The company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or
otherwise.
Click
here to join the company’s email list: http://www.b2i.us/irpass.asp?BzID=702&to=ea&s=0.
CONTACT:
Mark A. Hess
Phone: (281) 878-1000
E-mail: ir@ENGlobal.com
Market Makers - Investor Relations
Jimmy Caplan
512-329-9505
Email: jimmycaplan@me.com
Market Makers - Media Relations
Rick Eisenberg
212-496-6828
Email: eiscom@msn.com
ENGlobal Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(amounts in thousands, except per share data)
|
For
the
Three Months
Ended
|
|
|
|
Operating
revenues
|
$19,260
|
$12,163
|
Operating
costs
|
16,000
|
10,825
|
Gross
profit
|
3,260
|
1,338
|
|
|
|
Selling, general
and administrative expenses
|
2,133
|
2,304
|
Operating
income (loss)
|
1,127
|
(966)
|
|
|
|
Other
income (expense):
|
|
|
Other income,
net
|
1
|
15
|
Interest expense,
net
|
(5)
|
(3)
|
Income
(Loss) from operations before income taxes
|
1,123
|
(954)
|
|
|
|
Provision
for federal and state income taxes
|
22
|
20
|
|
|
|
Net
income (loss)
|
1,101
|
(974)
|
|
|
|
Basic
and diluted income (loss) per common share:
|
$0.04
|
$(0.04)
|
|
|
|
Basic
and diluted weighted average shares used in computing income (loss)
per share:
|
27,414
|
27,431
|
ENGlobal Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands, except share amounts)
|
|
|
ASSETS
|
|
|
Current
Assets:
|
|
|
Cash and cash
equivalents
|
$6,769
|
$8,307
|
Trade receivables,
net of allowances of $216 and $236
|
10,780
|
11,435
|
Prepaid expenses
and other current assets
|
698
|
889
|
Contract
assets
|
5,774
|
3,862
|
Total Current
Assets
|
24,021
|
24,493
|
Property
and equipment, net
|
981
|
1,033
|
Goodwill
|
720
|
720
|
Other
assets
|
|
|
Right of use
asset
|
2,733
|
2,133
|
Deposits and other
assets
|
333
|
307
|
Total Other
Assets
|
3,066
|
2,440
|
Total
Assets
|
$28,788
|
$28,686
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
Accounts
payable
|
$3,705
|
$3,261
|
Accrued
compensation and benefits
|
2,375
|
2,783
|
Current portion of
leases
|
1,553
|
1,041
|
Contract
liabilities
|
3,637
|
5,438
|
Other current
liabilities
|
843
|
681
|
Total Current
Liabilities
|
12,113
|
13,204
|
|
|
|
Long
Term Leases
|
1,535
|
1,458
|
Total
Liabilities
|
13,648
|
14,662
|
Commitments
and Contingencies (Note 7)
|
|
|
Stockholders’
Equity:
|
|
|
Common stock -
$0.001 par value; 75,000,000
shares authorized; 27,413,626 shares issued and outstanding at
March 28, 2020 and December 28, 2019
|
27
|
27
|
Additional paid-in
capital
|
36,949
|
36,934
|
Accumulated
deficit
|
(21,836)
|
(22,937)
|
Total
Stockholders’ Equity
|
15,140
|
14,024
|
Total Liabilities
and Stockholders’ Equity
|
$28,788
|
$28,686
|
ENGlobal Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)
|
For
the
Three Months
Ended
|
|
|
|
Cash
Flows from Operating Activities:
|
|
|
Net income
(loss)
|
$1,101
|
$(974)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
Depreciation and
amortization
|
96
|
84
|
Share-based
compensation expense
|
15
|
16
|
Changes in current
assets and liabilities:
|
|
|
Trade accounts
receivable
|
655
|
29
|
Contract
assets
|
(1,912)
|
1,175
|
Other current
assets
|
165
|
163
|
Accounts
payable
|
444
|
29
|
Accrued
compensation and benefits
|
(408)
|
(397)
|
Contract
liabilities
|
(1,801)
|
1,406
|
Income taxes
payable
|
258
|
20
|
Other current
liabilities, net
|
(97)
|
(253)
|
Net cash provided
by (used in) operating activities
|
$(1,484)
|
$1,298
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
Proceeds from notes
receivable
|
—
|
5
|
Property and
equipment acquired
|
(34)
|
(5)
|
Net cash used in
investing activities
|
$(34)
|
$—
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
Purchase of
treasury stock
|
—
|
(60)
|
Payments on finance
leases
|
(20)
|
(1)
|
Net cash used in
financing activities
|
$(20)
|
$(61)
|
Net change in cash
and cash equivalents
|
(1,538)
|
1,237
|
Cash
and cash equivalents at beginning of period
|
8,307
|
6,060
|
Cash
and cash equivalents at end of period
|
$6,769
|
$7,297
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Cash paid during
the period for interest
|
$5
|
$5
|
Right of use assets
obtained in exchange for new operating lease liability
|
$963
|
$209
|