HOUSTON, TX, Nov. 08, 2018 (GLOBE NEWSWIRE) -- ENGlobal (NASDAQ: ENG), a leading provider of engineered modular
solutions, today announced results for the third quarter ended September 29, 2018.
ENGlobal reported a net loss of $197 thousand, or $0.01 per diluted share, for the third quarter just ended
compared to $12.2 million, or $0.44 per diluted share, for the third quarter of 2017. Adjusted for non-recurring litigation
expenses of $146 thousand and before non-cash charges for depreciation, amortization and stock compensation expense of $145
thousand, earnings for the quarter ended September 29, 2018 would have been $94 thousand, an indicator of adjusted cash earnings,
which management believes is helpful to its investors to understand the earnings of our core business.
Revenue increased by $1.4 million to $14.3 million for the three months ended September 29, 2018 from $12.9
million for the three months ended September 30, 2017 while gross profit margins increased to 16.1% for the quarter ended September
29, 2018 as compared to 12.6% for the quarter ended September 30, 2017.
Management's Assessment
Mark Hess, ENGlobal's Chief Financial Officer stated: “We continue to see financial progress as represented by
the sequential net income improvement reported for each of the three quarters this year, together with the positive adjusted
earnings reported for this third quarter. Our cash and working capital are holding steady. Our working capital at the end of the
quarter was $14.9 million, which we feel is sufficient to provide for near-term growth.”
Mr. Hess continued: “Another positive is the significant reduction in SG&A expense on a year over year
basis. For the quarter, adjusted for non-recurring litigation services expense, SG&A expense was $2.3 million, or a $9.2
million annual run rate. This SG&A result is a significant improvement when compared to $3.0 million, or a $12.0 million annual
run rate in the year ago period. I’m also pleased to report that ENGlobal’s firm and contracted backlog at the end of the third
quarter of 2018 was approximately $33 million, which is the highest level achieved by the Company since early 2015.”
William A. Coskey, P.E., Chairman and CEO of ENGlobal added: “Our mission for the near to midterm is
straightforward and about growth – this being for our Company to generate significant internal revenue and margin growth while
holding overhead costs down. We plan to accomplish this goal by leveraging our talents and resources to take on larger scopes of
work, primarily for turnkey, engineered modular solutions which have technological differentiation. We are now developing larger
opportunities for our vertically integrated business model - engineering, mechanical fabrication, automation design, systems
integration and project support services, as clients desire for their projects to be supported by a single source supplier.”
Mr. Coskey continued: “Given the above mission, our management team has defined seven business strategies, each
with its own internal champion and execution plan. These seven areas of focus cover the range of upstream, midstream and downstream
energy-related systems, and all fit very well with our engineering, automation and project execution heritage and experience. I
look forward to reporting on the Company’s progress regarding these initiatives.”
The following is a summary of the income statement for the three months ended September 29, 2018 and September 30, 2017:
| (amounts in thousands) |
Three months
ended
September 29, 2018 |
|
Three months
ended
September 30, 2017 |
| Revenue |
$ |
14,255 |
|
|
$ |
12,896 |
|
| Gross Profit |
|
2,293 |
|
|
|
1,621 |
|
| General & Administrative Expenses |
|
2,483 |
|
|
|
3,041 |
|
| Operating Loss |
|
(190 |
) |
|
|
(1,420 |
) |
| Net loss |
|
(197 |
) |
|
|
(12,154 |
) |
The following table presents certain balance sheet items as of September 29, 2018 and December 30, 2017:
| (amounts in thousands) |
As of September 29,
2018 |
As of December 30,
2017 |
| Cash |
$ |
5,252 |
$ |
9,648 |
| Working capital |
|
14,942 |
|
16,846 |
The following table illustrates the composition of the Company's revenue and profitability for its operations for the three and
nine
months ended September 29, 2018 and September 30, 2017:
| |
|
|
|
| (amounts in thousands) |
Three months ended
September 29, 2018 |
|
Three Months
ended September 30, 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 |
$ |
6,821 |
47.9 |
% |
16.6 |
% |
$ |
664 |
|
$ |
5,399 |
41.9 |
% |
7.6 |
% |
$ |
(105 |
) |
|
| Automation |
|
7,434 |
52.1 |
% |
15.6 |
% |
|
527 |
|
|
7,497 |
58.1 |
% |
16.1 |
% |
|
511 |
|
|
| Consolidated |
$ |
14,255 |
100.0 |
% |
16.1 |
% |
$ |
(190 |
) |
$ |
12,896 |
100.0 |
% |
12.6 |
% |
$ |
(1,420 |
|
) |
| |
|
|
|
| (amounts in thousands) |
Nine months ended
September 29, 2018 |
|
Nine Months ended
September 30, 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 |
$ |
18,568 |
44.9 |
% |
15.5 |
% |
$ |
1,453 |
|
$ |
16,976 |
41.1 |
% |
10.3 |
% |
$ |
128 |
|
| Automation |
|
22,746 |
55.1 |
% |
13.5 |
% |
|
1,079 |
|
|
24,360 |
58.9 |
% |
16.9 |
% |
|
2,017 |
|
| Consolidated |
$ |
41,314 |
100.0 |
% |
14.4 |
% |
$ |
(1,976 |
) |
$ |
41,336 |
100.0 |
% |
14.2 |
% |
$ |
(3,638 |
) |
The Company's Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2018 is expected to be
filed with the Securities and Exchange Commission reflecting these results by the end of the day on Thursday, November 8, 2018.
About ENGlobal
ENGlobal (Nasdaq: ENG) is a leading provider of engineered modular solutions 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: 281-878-1000
E-mail: IR@ENGlobal.com
