Attached files
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| 8-K - FORM 8-K - ENGLOBAL CORP | eng_8k.htm |
Exhibit
99.1
ENGlobal Announces 2021 Strategic Update and Q2 Financial
Results
Conference Call to Discuss Results at 9:00 am EDT
Today
HOUSTON, TX, August 5, 2021 -- ENGlobal Corporation
(Nasdaq:ENG), a leading
provider of innovative, project delivery solutions for the energy
industry, today reported the achievement of key objectives in its
strategic transformation.
Mark A. Hess, CEO stated: "While segments of the broader energy
industry have begun recovering from the effects of the COVID-19
pandemic, ENGlobal’s business – which traditionally
lags behind that of the broader energy market by as much as nine
months – had not improved by the end of the second quarter.
We are, however, taking steps to better position the company to
take advantage of the expected increase in business activity in our
markets. We have been transitioning ENGlobal from an engineering
consulting firm to a vertically integrated project delivery company
for some time and, because of the recent changes in senior
management, we have accelerated that transformation. Some of the
key objectives we achieved this year include:
●
Enhancing
our management and business development teams with six key
hires,
●
Redefining
our market focus and strategic growth plans,
●
Rebranding
the company with a new, more progressive logo,
●
Enhancing
the company’s marketing program to include, among other
things, social media, and
●
Redesigning
our website to better describe the company’s safety record,
product offerings, market focus and accomplishments.
Therefore, as an extension of our rebranding efforts, we now refer
to the company as ENG.”
Mr. Hess continued, "We are also taking steps to further improve
our financial strength. Thus far this year we have:
●
Filed
a shelf registration statement with the SEC to assist with the
company’s capital raising activities,
●
Raised
approximately $19 million through a registered direct offering
under the registration statement, and
●
Implemented
a facility, also under the registration statement, known as an ATM,
where we may sell, from time to time, up to $25 million of common
stock into the market at the then market price.
“As a result of these activities, the company’s
cash-on-hand was approximately $29 million at the end of Q2
2021. Also, ENG’s PPP loan of
approximately $4.9 million was completely forgiven in July, which
leaves the company with very little debt and a very healthy balance
sheet. This is important to our current and prospective clients as
it provides them with greater comfort and puts us in an excellent
position to execute on the many opportunities in our pipeline that
may be awarded, including those in the expanding renewables and
green energy sectors,” added Mr. Hess.
“These opportunities, plus the continued energy industry
recovery from the COVID pandemic, will, we believe, produce
improved results for our company for the remainder of this year and
beyond,” Mr. Hess concluded.
ENG also announced that, for
the second quarter ended June 26, 2021, it had a net loss of
$4,256,000, or $(.14) per share, on revenue of $11,079,000,
compared with net income of $68,000, or $.00 per share, on revenue
of $17,882,000 for the second quarter ended June 27,
2020.
For the six months ended June 26, 2021, the company had a net loss
of $4,210,000, or $(.15) per share, on revenue of $23,528,000,
compared with net income of $1,169,000, or $.04 per share, on
revenue of $37,142,000 for the six months ended June 27,
2020.
The
decrease in the company’s second quarter revenue compared
with the same period last year was primarily due to the continuing
COVID-related delays in securing government services and other
projects intended to replace those projects completed by the
company since Q2 2020. The decline in bottom line performance in Q2
2021, compared with the same period last year, was primarily a result of this decrease
in revenue, an investment in essential personnel which, among other
things, decreased gross margin to 1% from 14%, an investment of
$0.5 million in business development personnel and other
costs intended to
enhance marketing and sales efforts, and a bad debt reserve of $1.4
million stemming from a commercial customer that suspended
operations during the quarter and, subsequently, filed for
bankruptcy.
The
decrease in six-month revenue compared with the same period last
year was primarily due to the continuing COVID-related delays in
securing government services and other projects intended to replace
those projects completed by the company since Q2 2020. The decline
in bottom line performance for the first six months of 2021
compared with the same period in 2020 resulted primarily from this
decrease in revenue, an investment in essential personnel which,
among other things, decreased gross margin to 5% from 15%, an
investment of $0.9 million in business development personnel and
other costs intended to enhance marketing and sales efforts, and
the bad debt reserve of
$1.4 million. These effects were partially offset by an
employee retention credit of $1.7 million recorded in the first
quarter.
The following is a summary of the income statements for the three-
and six-months periods ended June 26, 2021 and June 27,
2020:
|
|
For
the Three Months Ended
|
For
the Six Months Ended
|
||
|
|
June
26, 2021
|
June
27, 2020
|
June
26, 2021
|
June
27, 2020
|
|
Revenue
|
$11,079
|
$17,882
|
$23,528
|
$37,142
|
|
Gross
profit
|
82
|
2,453
|
1,086
|
5,713
|
|
Selling, general
and administrative expenses
|
4,264
|
2,314
|
6,825
|
4,447
|
|
Operating profit
(loss)
|
(4,182)
|
139
|
(5,739)
|
1,266
|
|
Net income
(loss)
|
(4,256)
|
68
|
(4,210)
|
1,169
|
The following table illustrates the composition of the company's
revenue and profitability for its operations for the three- and
six-months periods ended June 26, 2021 and June 27,
2020:
|
|
Three
Months Ended
|
Three
Months Ended
|
||||||
|
(amounts in
thousands)
|
June
26, 2021
|
June
27, 2020
|
||||||
|
Segment
|
Total
Revenue
|
% of
Total Revenue
|
Gross
Profit Margin
|
Operating
Profit Margin
|
Total
Revenue
|
% of
Total Revenue
|
Gross
Profit Margin
|
Operating
Profit Margin
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
$9,157
|
82.7%
|
(2.2)%
|
(32.9)%
|
$14,803
|
82.8%
|
12.9%
|
7.3%
|
|
Government
Services
|
1,922
|
17.3%
|
14.7%
|
4.9%
|
3,079
|
17.2%
|
17.6%
|
12.8%
|
|
Consolidated
|
11,079
|
100.0%
|
0.7%
|
(37.7)%
|
17,882
|
100.0%
|
13.7%
|
0.8%
|
|
|
Six
Months Ended
|
Six
Months Ended
|
||||||
|
(amounts in
thousands)
|
June
26, 2021
|
June
27, 2020
|
||||||
|
Segment
|
Total
Revenue
|
% of
Total Revenue
|
Gross
Profit Margin
|
Operating
Profit Margin
|
Total
Revenue
|
% of
Total Revenue
|
Gross
Profit Margin
|
Operating
Profit Margin
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
$19,206
|
81.6%
|
3.7%
|
(17.7)%
|
$31,313
|
84.3%
|
15.2%
|
9.9%
|
|
Government
Services
|
4,322
|
18.4%
|
8.6%
|
(0.6)%
|
5,829
|
15.7%
|
16.4%
|
10.9%
|
|
Consolidated
|
23,528
|
100.0%
|
4.6%
|
(24.4)%
|
37,142
|
100.0%
|
15.4%
|
3.4%
|
The following table presents certain balance sheet items as of June
26, 2021 and December 26, 2020:
|
(amounts in
thousands)
|
As
of
June
26, 2021
|
As
of
December
26, 2020
|
|
Cash
|
$29,175
|
$13,706
|
|
Working
capital
|
28,691
|
14,039
|
ENGlobal Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(amounts in thousands, except per share data)
|
|
For
the Three Months Ended
|
For
the Six Months Ended
|
||
|
|
June
26, 2021
|
June
27, 2020
|
June
26, 2021
|
June
27, 2020
|
|
Operating
revenues
|
$11,079
|
$17,882
|
$23,528
|
$37,142
|
|
Operating
costs
|
10,997
|
15,429
|
22,442
|
31,429
|
|
Gross
profit
|
82
|
2,453
|
1,086
|
5,713
|
|
|
|
|
|
|
|
Selling, general
and administrative expenses
|
4,264
|
2,314
|
6,825
|
4,447
|
|
Operating
profit (loss)
|
(4,182)
|
139
|
(5,739)
|
1,266
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
Other income,
net
|
6
|
1
|
1,690
|
2
|
|
Interest expense,
net
|
(57)
|
(36)
|
(115)
|
(41)
|
|
Income
(loss) from operations before income taxes
|
(4,233)
|
104
|
(4,164)
|
1,227
|
|
|
|
|
|
|
|
Provision
for federal and state income taxes
|
23
|
36
|
46
|
58
|
|
|
|
|
|
|
|
Net
income (loss)
|
(4,256)
|
68
|
(4,210)
|
1,169
|
|
|
|
|
|
|
|
Basic
and diluted income (loss) per common share:
|
$(0.14)
|
$0.00
|
$(0.15)
|
$0.04
|
|
|
|
|
|
|
|
Basic
and diluted weighted average shares used in computing income (loss)
per share:
|
29,599
|
27,413
|
28,573
|
27,413
|
ENGlobal Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands, except share and per share
amounts)
|
|
June
26, 2021
|
December
26, 2020
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash
|
$29,175
|
$13,706
|
|
Trade receivables,
net of allowances of $1,636 and $386
|
6,572
|
7,789
|
|
Prepaid expenses
and other current assets
|
398
|
891
|
|
Payroll taxes
receivable
|
1,676
|
—
|
|
Contract
assets
|
2,900
|
4,090
|
|
Total Current
Assets
|
40,721
|
26,476
|
|
Property
and equipment, net
|
1,135
|
1,263
|
|
Goodwill
|
720
|
720
|
|
Other
assets
|
|
|
|
Right of use
asset
|
1,210
|
1,628
|
|
Deposits and other
assets
|
402
|
351
|
|
Total Other
Assets
|
1,612
|
1,979
|
|
Total
Assets
|
$44,188
|
$30,438
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$1,974
|
$2,138
|
|
Accrued
compensation and benefits
|
2,479
|
3,048
|
|
Current portion of
leases
|
1,180
|
1,541
|
|
Contract
liabilities
|
560
|
1,258
|
|
Current portion of
note
|
4,974
|
3,707
|
|
Current portion of
deferred payroll tax
|
519
|
—
|
|
Other current
liabilities
|
344
|
745
|
|
Total Current
Liabilities
|
12,030
|
12,437
|
|
|
|
|
|
Deferred
payroll tax
|
519
|
1,037
|
|
Long-term
debt
|
1,600
|
2,733
|
|
Long-term
leases
|
467
|
608
|
|
Total
Liabilities
|
14,616
|
16,815
|
|
Commitments
and Contingencies (Note 8)
|
|
|
|
Stockholders’
Equity:
|
|
|
|
Common stock -
$0.001 par value; 75,000,000
shares authorized; 35,134,564 shares issued and outstanding at June
26, 2021 and 27,560,686 shares issued and outstanding at December
26, 2020
|
35
|
28
|
|
Additional paid-in
capital
|
57,309
|
37,157
|
|
Accumulated
deficit
|
(27,772)
|
(23,562)
|
|
Total
Stockholders’ Equity
|
29,572
|
13,623
|
|
Total Liabilities
and Stockholders’ Equity
|
$44,188
|
$30,438
|
ENGlobal Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)
|
|
For
the Six Months Ended
|
|
|
|
June
26, 2021
|
June
27, 2020
|
|
Cash
Flows from Operating Activities:
|
|
|
|
Net income
(loss)
|
$(4,210)
|
$1,169
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
Depreciation and
amortization
|
187
|
205
|
|
Share-based
compensation expense
|
107
|
132
|
|
Changes in current
assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
1,217
|
1,569
|
|
Contract
assets
|
1,190
|
(1,256)
|
|
Other current
assets
|
(1,234)
|
344
|
|
Accounts
payable
|
(164)
|
(166)
|
|
Accrued
compensation and benefits
|
(569)
|
977
|
|
Contract
liabilities
|
(698)
|
(3,109)
|
|
Income taxes
payable
|
(54)
|
219
|
|
Other current
liabilities, net
|
(347)
|
(192)
|
|
Net cash used in
operating activities
|
$(4,575)
|
$(108)
|
|
|
|
|
|
Cash
Flows from Investing Activities:
|
||
|
Property and
equipment acquired
|
(88)
|
(126)
|
|
Net cash used in
investing activities
|
$(88)
|
$(126)
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
Issuance of common
stock, net
|
20,052
|
—
|
|
Payments on finance
leases
|
(55)
|
(42)
|
|
Proceeds from PPP
loan
|
—
|
4,925
|
|
Interest on PPP
loan
|
25
|
—
|
|
Proceeds from
revolving credit facility
|
110
|
1,445
|
|
Net cash provided
by (used in) financing activities
|
$20,132
|
$6,328
|
|
Net change in
cash
|
15,469
|
6,094
|
|
Cash
at beginning of period
|
13,706
|
8,307
|
|
Cash
at end of period
|
$29,175
|
$14,401
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Cash paid during
the period for interest
|
$115
|
$12
|
|
Right of use assets
obtained in exchange for new operating lease liability
|
$256
|
$1,182
|
|
Cash paid during
the period for income taxes (net of refunds)
|
$151
|
$86
|
|
Debt issuance
costs
|
$—
|
$131
|
For further information on ENG's second quarter 2021 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 at 9:00 am Eastern time
today to discuss the company's second quarter 2021 financial
results, provide updates on potential contract awards, and discuss
the company's growth outlook for the remainder of
2021.
To participate in the conference call, please dial in five to ten
minutes before the call:
(Toll Free) 888-506-0062 domestically, or 973-528-001
internationally. Entry code: 624859
The conference call will also be broadcast live over the Internet
and can be accessed at: https://www.webcaster4.com/Webcast/Page/2272/42162
The teleconference replay will be available shortly after the
completion of the live event through 9:00 am Eastern time on August
12, 2021. You may access the replay by dialing (Toll Free)
877-481-4010 domestically, or 919-882-2331internationally, and
referencing conference ID 42162.
You may also access the replay by visiting the company's web
site: https://www.englobal.com/events-and-presentations/
About ENGlobal
ENGlobal (NASDAQ:ENG) is a leading provider of complete project
solutions for renewable and traditional energy throughout the
United States and internationally. ENGlobal operates through two
business segments: Commercial and Government Services. The
Commercial segment provides engineering, design, fabrication, and
integration of automated control systems as a complete packaged
solution for our clients. The Government Services segment 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,
including those relating to its future results, 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.
For a discussion of risks and uncertainties, which could cause
actual results to differ from those contained in the
forward-looking statements, 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.
Click here to join our email list: https://www.englobal.com/investors/
CONTACT:
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