Conference Call To Discuss 2019 Results Scheduled Today at 9:00 am Eastern
Houston, March 26, 2020 (GLOBE NEWSWIRE) — ENGlobal Corporation (Nasdaq: ENG), a leading provider of engineered modular solutions, today announced that it achieved a profit of $741,000, or $.03 per share, in the fourth quarter of 2019 – the company’s first quarterly profit in five years. The company also announced it is currently on track for continued profitability in the first quarter of 2020.
For the year ended December 28, 2019, the company had a net loss of $1,466,000, or $(.05) per share, on revenue of $56,446,000, compared with a net loss of $5,671,000, or $(.21) per share, on revenue of $53,996,000 for the year ended December 29, 2018. ENGlobal’s reduced annual loss – an improvement of 74 percent over 2018 – was primarily the result of the increased revenue and reduced operating cost and expenses in 2019 and a $2.1 million goodwill write off in 2018.
At December 28, 2019, ENGlobal had cash on hand of $8.3 million compared to $6.1 million at December 29, 2018. The company has no significant debt.
“The company’s turnaround,” said CFO Mark Hess, “is the direct result of our strategic shift away from performing on smaller project assignments toward higher-value modular process and automation systems supply contracts.”
“These contracts – one of which is expected to contribute over $22 million in revenue and involves the production of clean hydrogen fuel as part of a renewable diesel production unit – are expected to permit ENGlobal to achieve higher revenues while leveraging overall operating costs,” Mr. Hess added.
“We are extremely happy with our 2019 results,” commented CEO William A. Coskey, “in particular our crossover to profitability in the fourth quarter. Importantly, we are making good headway in adding to our list of established technology partners which adds to our differentiated capabilities.”
“ENGlobal’s success in building these new relationships is expected to help us sign and perform the higher-value modular contracts that we are targeting, including the most attractive green and renewable energy projects. As a direct result of these strategic efforts and the roughly $10 to $250 million size installations we are targeting, we believe ENGlobal is well positioned for significant growth throughout this and future years,” he added.
Going forward, ENGlobal is expected to benefit from several external trends, especially the nation’s accelerating dependence on the production of alternative and renewable energy. The company also sees continuing demand resulting from large process control and analytical equipment installations, as well as the U.S. Military’s increasing need to upgrade or replace its fueling systems.
The Company does recognize we are in an unprecedented situation in regards to the COVID-19 virus. We are seeing city, county, and state governments issue stay at home mandates across the country, some of which are in cities where we have offices and employees. While most of our employees can telecommute, some cannot. Our challenge as a company is to stay productive and responsive to our clients while not being located at our normal workplace, in some cases. We are working through the logistics surrounding our employees in light of the recently issued Families First Coronavirus Response Act in order to minimize the impact to both the employee and the company.  
The following table illustrates the composition of the Company’s revenue and profitability for its operations for the fiscal years ended December 28, 2019 and December 29, 2018:

 
Year Ended
 
Year Ended

(amounts in thousands)
December 28, 2019
 
December 29, 2018

Segment
Total Revenue
% of Total Revenue
Gross Profit Margin
Operating Profit (Loss) Margin
 
Total Revenue
% of Total Revenue
Gross Profit Margin
Operating Profit (Loss)Margin

 
 
 
 
 
 
 
 
 
 

Engineering & Construction
$
19,436
34.4
%
8.4
%
(4.3 
)%
 
$
24,152
44.7
%
12.5
%
4.7  
%

Automation
 
37,010
65.6
%
17.0
%
12.4  
%
 
 
29,844
55.3
%
13.1
%
(2.5 
)%

Consolidated
$
56,446
100.0
%
14.0
%
(2.5 
)%
 
$
53,996
100.0
%
12.8
%
(9.6 
)%

 
 
 
 
 
 
 
 
 
 

The following table illustrates the composition of the Company’s revenue and profitability for its operations for the three months ended December 28, 2019 and December 29, 2018:

 
Three Months Ended
 
Three Months Ended

(amounts in thousands)
December 28, 2019
 
December 29, 2018

Segment
Total Revenue
% of Total Revenue
Gross Profit Margin
Operating Profit Margin
 
Total Revenue
% of Total Revenue
Gross Profit Margin
Operating Profit Margin

 
 
 
 
 
 
 
 
 
 

Engineering & Construction
$
3,888
23.3
%
1.5
%
(14.9 
)%
 
$
5,583
44.0
%
2.4
%
(5.6 
)%

Automation
 
12,800
76.7
%
22.7
%
19.2  
%
 
 
7,098
56.0
%
11.9
%
(25.6 
)%

Consolidated
 
16,688
100.0
%
17.7
%
4.6  
%
 
 
12,681
100.0
%
7.7
%
(25.3
)%

 
 
 
 
 
 
 
 
 
 

The following is a summary of the Company’s statement of operations for the last four quarters which may be helpful in analyzing our ongoing business:

 (amounts in thousands)
 
2019
 
 
Fiscal Year

 
 Q1
 Q2
 Q3
 Q4
 
 
2019
 

Revenue
$
12,163 
 
$
13,621 
 
$
13,974 
 
$
16,688
 
 
$
56,446 
 

Gross Profit
 
1,338 
 
 
1,942 
 
 
1,675 
 
 
2,961
 
 
 
7,916 
 

Gross Profit Margin
 
11.0
%
 
14.3
%
 
12.0
%
 
17.7
%
 
 
14.0
%

General & Administrative Expenses
 
2,304 
 
 
2,450 
 
 
2,371 
 
 
2,192
 
 
 
9,317 
 

Operating Income (Loss)
 
(966
)
 
(508
)
 
(696
)
 
769
 
 
 
(1,401
)

Net Income (Loss)
 
(974
)
 
(517
)
 
(716
)
 
741
 
 
 
(1,466
)

The following table presents certain balance sheet items as of December 28, 2019 and December 29, 2018:

 
(amounts in thousands)
As ofDecember 28, 2019
As of December 29, 2018

Cash and restricted cash
$
8,307
$
6,060

Working capital
 
11,289
 
13,725

 
 
 

For further information on ENGlobal’s 2019 financial results, please refer to its Form 10-K 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 2019 financial results and 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/2272/33183
You may access the teleconference replay by dialing (Toll Free) 877-481-4010 domestically or 919-882-2331 internationally, referencing conference ID 33183 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 June 26, 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 company’s ability to increase the company’s revenue and profitability; (4) 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; (5) the effect of economic downturns and the volatility and level of oil and natural gas prices; (6) the impact of the outbreak of the COVID-19 coronavirus on the company’s business, financial condition, and results of operations; (7) the company’s ability to retain existing customers and attract new customers; (8) the company’s ability to accurately estimate the overall risks, revenue or costs on a contract; (9) the risk of providing services in excess of original project scope without having an approved change order; (10) 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; (11) the company’s ability to attract and retain key professional personnel; (12) 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; (13) the company’s ability to obtain additional financing, including pursuant to a new credit facility, when needed: (14) the company’s dependence on one or a few customers; (15) 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; (16) 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; (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. HessPhone: (281) 878-1000E-mail: ir@ENGlobal.com
Market Makers – Investor RelationsJimmy Caplan512-329-9505Email: jimmycaplan@me.com
Market Makers – Media RelationsRick Eisenberg212-496-6828Email: eiscom@msn.com

ENGLOBAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(amounts in thousands, except per share amounts)

 
 
Year Ended December 28,
 
 
Year Ended December 29,
 

 
 
2019
 
 
2018
 

 
 
 
 
 
 
 

Operating revenues
 
$
56,446
 
 
$
53,996
 

Operating costs
 
 
48,530
 
 
 
47,063
 

Gross profit
 
 
7,916
 
 
 
6,933
 

Operating costs and expenses:
 
 
 
 
 
 
 
 

Selling, general, and administrative expenses
 
 
9,317
 
 
 
10,030
 

Goodwill impairment
 
 

 
 
 
2,086
 

Operating loss
 
 
(1,401
)
 
 
(5,183
)

Other income (expense)
 
 
 
 
 
 
 
 

Interest expense, net
 
 
(31
)
 
 
(22
)

Other income (expense), net
 
 
49
 
 
 
(356

Loss before income taxes
 
 
(1,383
)
 
 
(5,561
)

 
 
 
 
 
 
 
 
 

Provision for federal and state income taxes
 
 
(83
)
 
 
(110
)

 
 
 
 
 
 
 
 
 

Net loss
 
$
(1,466
)
 
$
(5,671
)

 
 
 
 
 
 
 
 
 

Basic and diluted loss per common share
 
$
(0.05
)
 
$
(0.21
)

 
 
 
 
 
 
 
 
 

Basic and diluted weighted average shares used in computing loss per share:
 
 
27,414
 
 
 
27,510
 

ENGLOBAL CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(amounts in thousands, except share amounts)

 
 
December 28, 2019
 
 
December 29, 2018
 

ASSETS
 
 
 
 
 
 
 
 

Current Assets:
 
 
 
 
 
 
 
 

Cash and cash equivalents
 
$
8,307
 
 
$
6,060
 

Trade receivables, net of allowances of $236 and $202
 
 
11,435
 
 
 
10,211
 

Prepaid expenses and other current assets
 
 
889
 
 
 
1,096
 

Contract assets
 
 
3,862
 
 
 
3,175
 

Total Current Assets
 
 
24,493
 
 
 
20,542
 

Property and equipment, net
 
 
1,033
 
 
 
677
 

Goodwill
 
 
720
 
 
 
720
 

Other assets
 
 
 
 
 
 
 
 

Right of use asset
 
 
2,133
 
 
 

 

Deposits and other assets
 
 
307
 
 
 
367
 

Total Other Assets
 
 
2,440
 
 
 
367
 

Total Assets
 
$
28,686
 
 
$
22,306
 

 
 
 
 
 
 
 
 
 

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

Current Liabilities:
 
 
 
 
 
 
 
 

Accounts payable
 
$
3,261
 
 
$
3,172
 

Accrued compensation and benefits
 
 
2,783
 
 
 
2,301
 

Current portion of leases
 
 
1,041
 
 
 

 

Contract liabilities
 
 
5,438
 
 
 
604
 

Other current liabilities
 
 
681
 
 
 
740
 

Total Current Liabilities
 
 
13,204
 
 
 
6,817
 

 
 
 
 
 
 
 
 
 

Long Term Leases
 
 
1,458
 
 
 

 

Total Liabilities
 
 
14,662
 
 
 
6,817
 

Commitment and Contingencies (Note 14)
 
 
 
 
 
 
 
 

Stockholders’ Equity:
 
 
 
 
 
 
 
 

Common stock – $0.001 par value; 75,000,000 shares authorized; 27,413,626 and 27,487,594 shares issued and outstanding at December 28, 2019 and December 29, 2018, respectively
 
 
27
 
 
 
27
 

Additional paid-in capital
 
 
36,934
 
 
 
36,934
 

Accumulated deficit
 
 
(22,937
)
 
 
(21,472
)

Total Stockholders’ Equity
 
 
14,024
 
 
 
15,489
 

Total Liabilities and Stockholders’ Equity
 
$
28,686
 
 
$
22,306
 

ENGLOBAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(amounts in thousands)

 
 
For the Year Ended
 
 

 
 
December 28, 2019
 
 
December 29, 2018
 
 

Cash Flows from Operating Activities:
 
 
 
 
 
 
 
 
 

Net loss
 
$
(1,466
)
 
$
(5,671
)
 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 

Depreciation and amortization
 
 
389
 
 
 
460
 
 

Share-based compensation expense
 
 
61
 
 
 
106
 
 

Goodwill impairment
 
 

 
 
 
2,086
 
 

Gain on sale of asset
 
 

 
 
 
(2
)
 

Changes in current assets and liabilities:
 
 
 
 
 
 
 
 
 

Trade accounts receivable
 
 
(1,224

 
 
(1,097
)
 

Contract assets
 
 
(689
)
 
 
2,099
 
 

Other current assets
 
 
245
 
 
 
(104

 

Accounts payable
 
 
89
 
 
 
(570
)
 

Accrued compensation and benefits
 
 
482
 
 
 
262
 
 

Contract liabilities
 
 
4,834
 
 
 
(731
)
 

Income taxes payable
 
 
84
 
 
 
25
 
 

Other current liabilities, net
 
 
(140
)
 
 
(291
)
 

Net cash provided by (used in) operating activities
 
$
2,665
 
 
$
(3,428
)
 

 
 
 
 
 
 
 
 
 
 

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 

Proceeds from notes receivable
 
 
24
 
 
 
24
 
 

Property and equipment acquired
 
 
(345
)
 
 
(107
)
 

Net cash used in investing activities
 
$
(321

 
$
(83
)
 

 
 
 
 
 
 
 
 
 
 

Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 

Purchase of stock
 
 
(61
)
 
 
(15

 

Payments on finance leases
 
 
(36
)
 
 
(62
)
 

Net cash used in financing activities
 
$
(97
)
 
$
(77
)
 

Net change in cash, cash equivalents and restricted cash
 
 
2,247
 
 
 
(3,588
)
 

Cash, cash equivalents and restricted cash, at beginning of period
 
 
6,060
 
 
 
9,648
 
 

Cash, cash equivalents and restricted cash, at end of period
 
$
8,307
 
 
$
6,060
 
 

 
 
 
 
 
 
 
 
 
 

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
 
 

Cash paid during the period for interest
 
$
33
 
 
$
22
 
 

Right of use assets obtained in exchange for new operating lease liability
 
$
2,854
 
 
$

 
 

Leased assets obtained in exchange for new finance lease liabilities
 
$
351
 
 
$

 
 

Cash paid during the period for income taxes (net of refunds)
 
$
26
 
 
$
85

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