SEGMENT INFORMATION

9 Months Ended

Sep. 24, 2022

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 6 – SEGMENT INFORMATION

Our segments are strategic business units that offer our services and products to customers in their respective industry segments. The operating performance of our segments is regularly reviewed with operational leaders in charge of these segments, the chief executive officer (“CEO”), the chief financial officer (“CFO”) and others. This group represents the chief operating decision maker (“CODM”) for ENGlobal.

We have identified four strategic markets where we have a long history of delivering project solutions and can provide complete project execution. These four targeted markets include: (i) Energy & Renewables, (ii) Automation, (iii) Oil, Gas, and Petrochemicals, and (iv) Government Services.

Within the Energy & Renewables group, our focus is to design and build production facilities for hydrogen and associated products, together with converting existing production facilities to produce products from renewable feedstock sources. These projects often utilize technologies that are more fuel efficient, and therefore reduce the associated carbon footprint of the facility. Our scope of work on these projects will typically include front-end development, engineering, procurement, mechanical fabrication, automation and commissioning services, and may be performed in conjunction with a construction partner.

Our Automation group provides the design and programming of automated control systems as well as designs, fabricates, integrates and commissions modular systems that include remote instrumentation control stations, on-line process analytical data, continuous emission monitoring, and electric power distribution. Often these packaged systems are housed in a fabricated metal enclosure, modular building or freestanding metal rack, which are commonly included in our scope of work. We provide automation engineering, procurement, fabrication, systems integration, programing and on-site commissioning services to our clients for both new and existing facilities.

Our Oil, Gas, and Petrochemicals group focuses on providing engineering, procurement, construction, field services, and automation services as well as fabricated products to downstream refineries and petrochemical facilities as well as midstream pipeline, storage and other transportation related companies. These services are often applied to small capital improvement and maintenance projects within refineries and petrochemical facilities. For our transportation clients, we work on facilities that include pumping, compression, gas processing, metering, storage terminals, product loading and blending systems. In addition, this group designs, programs and maintains supervisory control and data acquisition (“SCADA”) systems for our transportation clients. This group also provides engineering, fabrication and automation services to clients who have operations in the U.S. oil and gas exploration and development markets. The operations are usually associated with the completion, purification, storage and transmission of the oil and gas from the well head to the terminal or pipeline destination.

Our Government Services group provides services related to the engineering, design, installation and maintenance of automated fuel handling and tank gauging systems for the U.S. military across the globe.

We have two reportable segments: Commercial and Government Services. Our Energy & Renewables, Automation, and Oil, Gas, and Petrochemical groups are aggregated into one reportable segment, Commercial.

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.

Segment information is as follows (dollars in thousands):

	Commercial			Government Services			Corporate			Consolidated
For the three months ended September 24, 2022:
Revenue	$	10,229		$	2,827		$	—		$	13,056
Gross profit (loss)		(368	)		1,032			—			664
Gross profit (loss) margin		(3.6	)%		36.5	%					5.1	%
SG&A		1,572			164			1,184			2,920
Operating income (loss)		(1,940	)		868			(1,184	)		(2,256	)
Other income, net											5
Interest expense, net											(63	)
Tax expense											(21	)
Net loss											(2,335	)
	Commercial			Government Services			Corporate			Consolidated
For the three months ended September 25, 2021:
Revenue	$	3,935		$	1,986		$	—		$	5,921
Gross profit (loss)		(1,089	)		275			—			(814	)
Gross profit (loss) margin		(27.7	)%		13.8	%					(13.7	)%
SG&A		1,534			280			1,275			3,089
Operating loss		(2,623	)		(5	)		(1,275	)		(3,903	)
Other income, net											6,371
Interest expense, net											(46	)
Tax expense											(21	)
Net income											2,401

	Commercial			Government Services			Corporate			Consolidated
For the nine months ended September 24, 2022:
Revenue	$	24,835		$	6,942		$	—		$	31,777
Gross profit (loss)		(591	)		1,929			—			1,338
Gross profit (loss) margin		(2.4	)%		27.8	%					4.2	%
SG&A		4,668			554			3,431			8,653
Operating income (loss)		(5,259	)		1,375			(3,431	)		(7,315	)
Other income, net											36
Interest expense, net											(166	)
Tax expense											(43	)
Net loss											(7,488	)
	Commercial			Government Services			Corporate			Consolidated
For the nine months ended September 25, 2021:
Revenue	$	23,141		$	6,308		$	—		$	29,449
Gross profit (loss)		(375	)		647			—			272
Gross profit (loss) margin		(1.6	)%		10.3	%					0.9	%
SG&A		5,643			677			3,594			9,914
Operating loss		(6,018	)		(30	)		(3,594	)		(9,642	)
Other income, net											8,061
Interest expense, net											(161	)
Tax expense											(67	)
Net loss											(1,809	)