Attached files
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| 8-K - CURRENT REPORT - ENGLOBAL CORP | eng_8k.htm |
Exhibit
99.1
ENGlobal Corporation Announces
Q3 2020 Results
Conference Call To Discuss Results at 9:00 am EST
Today
HOUSTON, TX, November 5, 2020 -- ENGlobal Corporation
(NASDAQ:ENG), a leading
provider of engineered modular solutions, today announced that for
the third quarter ended September 26, 2020, it achieved revenue of
$15,729,000, a 13 percent improvement on revenue of $13,974,000
recorded in the third quarter ended September 28, 2019. This gain
was due to a net $3.8 million, or 88 percent, increase in revenue
from the company’s Engineering, Procurement and Construction
Management (EPCM) segment after COVID-related project decreases,
partially offset by a COVID-related $2.0 million, or 21 percent,
decrease in revenue from ENGlobal’s Automation
segment.
The company recorded a net loss in Q3 2020 of $1,110,000, or $(.04)
per share, compared with a net loss of $716,000, or $(.03) per
share, in the like year-ago quarter. This increased net loss
was primarily the result of the COVID-related revenue decrease from
the Automation segment while maintaining our staffing at levels
required by the PPP Loan program for full loan
forgiveness.
For the first nine months ended September 26, 2020, ENGlobal
achieved revenue of $52,871,000, a 33 percent improvement on
revenue of $39,758,000 recorded in the first nine months ended
September 28, 2019. This gain was due to an $8.9 million, or 37
percent, increase in revenue from the company’s Automation
segment and a $4.2 million, or 27 percent, increase in revenue from
its EPCM segment.
The company had net income for the first nine months of 2020 of
$59,000, or $.00 per share, compared with a net loss of $2,207,000,
or $(.08) per share, in the comparable year-ago period. This
improvement was primarily the result of the aforementioned increase
in company revenue, a 7 percent decrease in overall SG&A
expense, and a 1.6 percentage point improvement in gross profit
margin from the Automation segment.
"Although our ENGlobal team successfully grew consolidated revenue
13 percent in the third quarter, we were not immune to the ongoing
COVID pandemic and its adverse effects on the energy industry,"
said ENGlobal CEO William A. Coskey, P.E. "As a result of these
conditions, we experienced certain project delays, temporary
facility closures, together with our customers delaying decisions
on new awards.
”We are hopeful, however, that the excellent strategic
relationships and capabilities we have built for modular engineered
process plants and renewable fuel facilities – areas not
totally subject to current COVID-affected oil and gas economics
– will soon bear fruit. Currently, we estimate that the total
value of our potential opportunities in this sector, including
projects we are actively bidding on, exceeds $321
million.”
The CEO said he plans to expand on these projects on today’s
investor conference call.
The following is a summary of the income statements for the three-
and nine-months periods ended September 26, 2020 and September 28,
2019:
|
(amounts in
thousands)
|
For the Three
Months Ended
|
For the Nine
Months Ended
|
||
|
|
September 26,
2020
|
September 28,
2019
|
September 26,
2020
|
September 28,
2019
|
|
Revenue
|
$15,729
|
$13,974
|
$52,871
|
$39,758
|
|
Gross
profit
|
1,144
|
1,675
|
6,857
|
4,955
|
|
Selling, general
and administrative expenses
|
2,174
|
2,371
|
6,621
|
7,125
|
|
Operating profit
(loss)
|
(1,030)
|
(696)
|
236
|
(2,170)
|
|
Net income
(loss)
|
(1,110)
|
(716)
|
59
|
(2,207)
|
The following table illustrates the composition of the company's
revenue and profitability for its operations for the three- and
nine-months periods ended September 26, 2020 and September 28,
2019:
|
|
Three Months
Ended
|
Three Months
Ended
|
||||||
|
(amounts in
thousands)
|
September 26,
2020
|
September 28,
2019
|
||||||
|
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
|
$8,016
|
51.0%
|
9.4%
|
2.2%
|
$4,256
|
30.5%
|
1.8%
|
(13.5)%
|
|
Automation
|
7,713
|
49.0%
|
5.1%
|
(0.4)%
|
9,718
|
69.5%
|
16.5%
|
12.1%
|
|
Consolidated
|
15,729
|
100.0%
|
7.3%
|
(6.5)%
|
13,974
|
100.0%
|
12.0%
|
(5.0)%
|
|
|
Nine
Months Ended
|
Nine
Months Ended
|
||||||
|
(amounts in
thousands)
|
September 26,
2020
|
September 28,
2019
|
||||||
|
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
|
$19,771
|
37.4%
|
8.5%
|
(0.9)%
|
$15,548
|
39.1%
|
10.1%
|
(1.6)%
|
|
Automation
|
33,100
|
62.6%
|
15.6%
|
12.3%
|
24,210
|
60.9%
|
14.0%
|
8.8%
|
|
Consolidated
|
52,871
|
100.0%
|
13.0%
|
0.4%
|
39,758
|
100.0%
|
12.5%
|
(5.5)%
|
The following table presents certain balance sheet items as of
September 26, 2020 and December 28, 2019:
|
(amounts in
thousands)
|
As
of
September 26,
2020
|
As
of
December 28,
2019
|
|
Cash and cash
equivalents
|
$12,699
|
$8,307
|
|
Working
capital
|
15,052
|
11,289
|
For further information on ENGlobal's third 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 EST to
discuss the company's Q3 2020 financial results, provide updates on
contract awards, and provide outlook for the rest of 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/2272/38422
You may
access the teleconference replay by dialing (Toll Free)
877-481-4010 domestically or 919-882-2331 internationally,
referencing conference ID 38422. This replay will be
available shortly after the completion of the live event through
9:00am EST on November 12, 2020. You may also access the replay by
visiting the company's web site at https://www.englobal.com/investors/events-and-presentations/
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 Automation 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 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; (2) 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; (3) 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; (4) the company's ability to increase the company's
backlog, revenue and profitability; (5) 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; (6) the company's ability to retain existing
customers and attract new customers; (7) the company's ability to
attract and retain key professional personnel; (8) the company's
ability to obtain additional financing when needed; (9) the
company's dependence on one or a few customers; (10) 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; (11) the
uncertainties related to the U.S. Government's budgetary process
and their effects on the company's long-term U.S. Government
contracts; (12) the risk of unexpected liability claims or poor
safety performance; (13) the company's reliance on third-party
subcontractors and equipment manufacturers; (14) 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 (15) 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 our 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
|
For the Nine
Months Ended
|
||
|
|
September
26,
2020
|
September
28,
2019
|
September
26,
2020
|
September
28,
2019
|
|
Operating
revenues
|
$15,729
|
$13,974
|
$52,871
|
$39,758
|
|
Operating
costs
|
14,585
|
12,299
|
46,014
|
34,803
|
|
Gross
profit
|
1,144
|
1,675
|
6,857
|
4,955
|
|
|
|
|
|
|
|
Selling, general
and administrative expenses
|
2,174
|
2,371
|
6,621
|
7,125
|
|
Operating
profit (loss)
|
(1,030)
|
(696)
|
236
|
(2,170)
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
Other income,
net
|
4
|
7
|
6
|
48
|
|
Interest expense,
net
|
(62)
|
(5)
|
(103)
|
(12)
|
|
Income
(loss) from operations before income taxes
|
(1,088)
|
(694)
|
139
|
(2,134)
|
|
|
|
|
|
|
|
Provision
for federal and state income taxes
|
22
|
22
|
80
|
73
|
|
|
|
|
|
|
|
Net
income (loss)
|
(1,110)
|
(716)
|
59
|
(2,207)
|
|
|
|
|
|
|
|
Basic
and diluted income (loss) per common share:
|
$(0.04)
|
$(0.03)
|
$0.00
|
$(0.08)
|
|
|
|
|
|
|
|
Basic
and diluted weighted average shares used in computing income (loss)
per share:
|
27,507
|
27,410
|
27,529
|
27,417
|
ENGlobal Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands, except share amounts)
|
|
September
26,
2020
|
December
28,
2019
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash
|
$12,699
|
$8,307
|
|
Trade receivables,
net of allowances of $270 and $236
|
12,703
|
11,435
|
|
Prepaid expenses
and other current assets
|
185
|
889
|
|
Contract
assets
|
3,055
|
3,862
|
|
Total Current
Assets
|
28,642
|
24,493
|
|
Property
and equipment, net
|
1,193
|
1,033
|
|
Goodwill
|
720
|
720
|
|
Other
assets
|
|
|
|
Right of use
asset
|
1,999
|
2,133
|
|
Deposits and other
assets
|
391
|
307
|
|
Total Other
Assets
|
2,390
|
2,440
|
|
Total
Assets
|
$32,945
|
$28,686
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$3,084
|
$3,261
|
|
Accrued
compensation and benefits
|
2,875
|
2,783
|
|
Current portion of
leases
|
1,613
|
1,041
|
|
Contract
liabilities
|
2,732
|
5,438
|
|
Current portion of
note
|
3,042
|
—
|
|
Other current
liabilities
|
244
|
681
|
|
Total Current
Liabilities
|
13,590
|
13,204
|
|
Deferred payroll
tax
|
791
|
—
|
|
Long-term
debt
|
3,371
|
—
|
|
Long-term
leases
|
932
|
1,458
|
|
Total
Liabilities
|
18,684
|
14,662
|
|
Commitments
and Contingencies (Note 8)
|
|
|
|
Stockholders’
Equity:
|
|
|
|
Common stock -
$0.001 par value; 75,000,000
shares authorized; 27,560,686 shares issued and outstanding at
September 26, 2020 and 27,413,626 shares issued and outstanding at
December 28, 2019
|
28
|
27
|
|
Additional paid-in
capital
|
37,111
|
36,934
|
|
Accumulated
deficit
|
(22,878)
|
(22,937)
|
|
Total
Stockholders’ Equity
|
14,261
|
14,024
|
|
Total Liabilities
and Stockholders’ Equity
|
$32,945
|
$28,686
|
ENGlobal Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)
|
|
For the Nine
Months Ended
|
|
|
|
September
26,
2020
|
September
28,
2019
|
|
Cash
Flows from Operating Activities:
|
|
|
|
Net income
(loss)
|
$59
|
$(2,207)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
Depreciation and
amortization
|
313
|
258
|
|
Share-based
compensation expense
|
177
|
45
|
|
Changes in current
assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
(1,268)
|
2,748
|
|
Contract
assets
|
807
|
(953)
|
|
Prepaids and other
current assets
|
620
|
956
|
|
Accounts
payable
|
(177)
|
(229)
|
|
Accrued
compensation and benefits
|
883
|
(126)
|
|
Contract
liabilities
|
(2,706)
|
209
|
|
Income taxes
payable
|
(76)
|
16
|
|
Other current
liabilities, net
|
(361)
|
(460)
|
|
Net cash provided
by (used in) operating activities
|
$(1,729)
|
$257
|
|
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
|
Proceeds from notes
receivable
|
—
|
24
|
|
Property and
equipment acquired
|
(228)
|
(191)
|
|
Net cash used in
investing activities
|
$(228)
|
$(167)
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
Purchase of common
stock
|
—
|
(61)
|
|
Proceeds from PPP
loan
|
4,937
|
—
|
|
Proceeds from
revolving credit facility
|
1,476
|
—
|
|
Payments on finance
leases
|
(64)
|
(1)
|
|
Net cash provided
by (used in) financing activities
|
$6,349
|
$(62)
|
|
Net change in
cash
|
4,392
|
28
|
|
Cash
at beginning of period
|
8,307
|
6,060
|
|
Cash
at end of period
|
$12,699
|
$6,088
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Cash paid during
the period for interest
|
$103
|
$12
|
|
Right of use assets
obtained in exchange for new operating lease liability
|
$963
|
$2,377
|
|
Cash paid during
the period for income taxes (net of refunds)
|
$16
|
$—
|
|
Debt issuance
costs
|
$140
|
$—
|
|
Leased assets
obtained in exchange for new finance lease liabilities
|
$219
|
$236
|