HOUSTON, TX, Aug. 09, 2018 (GLOBE NEWSWIRE) --
ENGlobal (NASDAQ: ENG), a leading provider of engineering and automation services, today announced results for
the second quarter ended June 30, 2018.
ENGlobal reported a net loss of $1.0 million for the second quarter of 2018 as compared to a $0.9 million net
loss reported for the prior year period. Net loss per diluted share was $0.04 and $0.03 for the second quarter just ended and for
the second quarter of 2017, respectively.
Adjusted for non-recurring costs, the Company posted a net loss of $0.3 million for the second quarter of 2018,
as compared to a net loss of $0.9 million for the second quarter of 2017. During the second quarter of 2018, the Company settled
two litigation matters, representing all outstanding litigation, and retained an investment banking firm. The non-recurring costs
incurred during the quarter associated with these actions of approximately $0.7 million were recorded as $0.3 million in SG&A
and $0.4 million in Other Expense.
Revenue decreased by $2.1 million to $13.9 million for the three months ended June 30, 2018 from $16.0 million
for the three months ended July 1, 2017 while gross profit margins increased to 16.2% for the quarter ended June 30, 2018 as
compared to 15.7% for the quarter ended July 1, 2017.
Management's Assessment
Mark Hess, ENGlobal's Chief Financial Officer stated: “Our revenue decline on a quarter over quarter basis is
primarily due to a couple of large projects that were completed last year, including the Caspian Pipeline Consortium project, and a
reduction in procurement activities in our Automation segment. The decline was partially offset by revenue resulting from our focus
on engineered modular solutions, which produced slightly higher margins. Our SG&A for the quarter, adjusted for a
one-time cost, was $2.6 million, or a $10.4 million annual run rate, which is the lowest SG&A level we have had in many
years.”
Mr. Hess continued: “As expected, with the shift from a pure staffing business model to that of providing more
turnkey systems, we have seen a shift in our working capital from cash to other components. We expect this shift to continue in the
near term as the volume of turnkey execution increases. However, our overall working capital at the end of the quarter was $15.0
million, which we feel is sufficient to provide for our near-term growth.”
William A. Coskey, P.E., Chairman and CEO of ENGlobal added: “I am encouraged by the increase in volume of
engineered modular systems that we have produced thus far this year and I expect that ENGlobal’s strategy of delivering these
systems with turnkey execution will continue to become a larger part of our business going forward. We expect that long-term
financial improvement can be realized as a result of increasing project scope which serves to better leverage our resources. Our
management is focused on eight well-defined areas of modular project execution, which we are excited about and believe have
excellent potential for growing our Business.”
Mr. Coskey continued: “We have positioned ourselves as a vertically integrated supplier and are proud to offer
our heritage of engineering and design capabilities combined with modular fabrication and automation expertise. This combination of
skills, together with our complete project support services, is a unique enhancement to our historical operation and a strategy
that is appealing to our clientele. Based on recent trends, I continue to believe that we will see an inflection point and improved
financial metrics in future quarters.”
The following is a summary of the income statement for the three months ended June 30, 2018 and July 1, 2017:
(amounts in thousands) |
Three months
ended
June 30, 2018 |
|
Three months
ended
July 1, 2017 |
Revenue |
$ |
13,872 |
|
|
$ |
15,966 |
|
Gross Profit |
|
2,253 |
|
|
|
2,513 |
|
General & Administrative Expenses |
|
2,869 |
|
|
|
3,057 |
|
Operating Loss |
|
(616 |
) |
|
|
(544 |
) |
Net loss |
|
(992 |
) |
|
|
(895 |
) |
The following table presents certain balance sheet items as of June 30, 2018 and December 30, 2017:
(amounts in thousands) |
As of June 30,
2018 |
As of December 30,
2017 |
Cash |
$ |
5,444 |
$ |
9,648 |
Working capital |
|
15,019 |
|
16,846 |
The following table illustrates the composition of the Company's revenue and profitability for its operations for the three and
six months ended June 30, 2018 and July 1, 2017:
|
|
|
|
(amounts in thousands) |
Three months ended
June 30, 2018 |
|
Three Months ended
July 1, 2017 |
|
|
% of |
Gross |
|
|
|
% of |
Gross |
|
|
|
Total |
Total |
Profit |
Operating |
|
Total |
Total |
Profit |
Operating |
|
Segment |
Revenue |
Revenue |
Margin |
Profit (Loss) |
|
Revenue |
Revenue |
Margin |
Profit (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Engineering & Construction |
$ |
6,652 |
48.0 |
% |
20.0 |
% |
$ |
799 |
|
$ |
10,018 |
62.7 |
% |
14.1 |
% |
$ |
309 |
|
Automation |
|
7,220 |
52.0 |
% |
12.8 |
% |
|
260 |
|
|
5,948 |
37.3 |
% |
16.7 |
% |
|
1,008 |
|
Consolidated |
$ |
13,872 |
100.0 |
% |
16.2 |
% |
$ |
(616 |
) |
$ |
15,966 |
100.0 |
% |
15.7 |
% |
$ |
(544 |
) |
|
|
|
|
(amounts in thousands) |
Six months ended June
30, 2018 |
|
Six Months ended July
1, 2017 |
|
|
% of |
Gross |
|
|
|
% of |
Gross |
|
|
|
Total |
Total |
Profit |
Operating |
|
Total |
Total |
Profit |
Operating |
|
Segment |
Revenue |
Revenue |
Margin |
Profit (Loss) |
|
Revenue |
Revenue |
Margin |
Profit (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Engineering & Construction |
$ |
11,747 |
43.4 |
% |
14.9 |
% |
$ |
789 |
|
$ |
11,577 |
40.7 |
% |
11.5 |
% |
$ |
234 |
|
Automation |
|
15,312 |
56.6 |
% |
12.5 |
% |
|
552 |
|
|
16,863 |
59.3 |
% |
17.3 |
% |
|
1,505 |
|
Consolidated |
$ |
27,059 |
100.0 |
% |
13.5 |
% |
$ |
(1,786 |
) |
$ |
28,440 |
100.0 |
% |
14.9 |
% |
$ |
(2,218 |
) |
The Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018 is expected to be filed
with the Securities and Exchange Commission reflecting these results by the end of the day on Thursday, August 9, 2018.
About ENGlobal
ENGlobal (Nasdaq: 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, integration and implementation of process distributed
control and analyzer systems, advanced automated data gathering systems and information technology. Within the Automation
segment, ENGlobal's Government Services group provides engineering, design, installation and operation and maintenance of various
government, public sector and international facilities, and specializes in the turnkey installation and maintenance of automation
and instrumentation systems for the U.S. Defense industry worldwide. The Engineering segment provides multi-disciplined
engineering services relating to the development, management and execution of projects requiring professional engineering and
related project management services. 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 regarding its operations and certain other 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) our ability to identify, evaluate, and complete any strategic
alternative; (2) the impact of the announcement of the review of strategic alternatives on our business, including our financial
and operating results, or our employees, suppliers and customers; (3) the effect of economic downturns and the volatility and level
of oil and natural gas prices; (4) our ability to retain existing customers and attract new customers; (5) our ability to
accurately estimate the overall risks, revenue or costs on a contract; (6) the risk of providing services in excess of original
project scope without having an approved change order; (7) our ability to execute our plan to enter into the modular solutions
market and to execute our updated business growth strategy to position the Company as a leading provider of higher value industrial
automation and Industrial Internet of Things services to its customer base; (8) our ability to attract and retain key professional
personnel; (9) our ability to fund our operations and grow our business utilizing cash on hand, internally generated funds and
other working capital; (10) our ability to obtain additional financing, including pursuant to a new credit facility, when needed:
(11) our dependence on one or a few customers; (12) the risks of internal system failures of our information technology systems,
whether caused by us, third-party service providers, intruders or hackers, computer viruses, natural disasters, power shortages or
terrorist attacks; (13) our ability to realize revenue projected in our backlog and our ability to collect accounts receivable and
process accounts payable in a timely manner; (14) the uncertainties related to the U.S. Government’s budgetary process and their
effects on our long-term U.S. Government contracts; (15) the risk of unexpected liability claims or poor safety performance; (16)
our ability to identify, consummate and integrate potential acquisitions; (17) our reliance on third-party subcontractors and
equipment manufacturers; (18) our ability to continue satisfy the continued listing standards of NASDAQ with respect to our common
stock or to cure any continued listing standard deficiency with respect thereto; and (19) 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. 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. 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.
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Contact: Mark Hess Phone: 281-878-1040 E-mail: IR@ENGlobal.com