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Englobal Corp (ENG) SEC Filing 10-Q Quarterly report for the period ending Saturday, March 28, 2020

Englobal Corp

CIK: 933738 Ticker: ENG
  Exhibit 99.1
 
ENGLOBAL ANNOUNCES FIRST QUARTER EARNINGS OF $1.1 MILLION, REVENUE UP 58 PERCENT VS. Q1 2019
 
Conference Call to Discuss Results at 9:00 am EDT Today
 
Houston, May 7, 2020 -- ENGlobal Corporation (Nasdaq: ENG),
a leading provider of engineered modular solutions, today announced that, for the first quarter ended March 28, 2020, it achieved net income of $1,101,000, or $.04 per share, compared to a net loss of $974,000, or $(.04) per share, in the first quarter ended March 30, 2019.
 
Added to the company’s Q4 2019 earnings of $741,000, or $.03 per share, this marks ENGlobal’s first consecutive profitable quarters since the third and fourth quarter of 2015.
 
In the first quarter of 2020, ENGlobal achieved revenue of $19,260,000, a 58 percent improvement on revenue of $12,163,000 recorded in Q1 2019. This gain was the result of a 116 percent rise in revenue from the company’s automation segment, which compiled a gross profit margin of 21 percent in Q1 2020 compared to 10 percent in last year’s first quarter. The company’s overall gross profit margin in Q1 2020 improved to 17 percent compared to 11 percent in the same quarter a year ago.
 
SG&A expenses for Q1 2020 decreased by $171,000 compared to Q1 2019, primarily due to the reduction of both salaries and facilities costs.
 
These improvements, in particular the company’s increase in quarterly gross profit, were responsible for ENGlobal’s improved bottom line performance compared to Q1 2019.
 
“We are encouraged by our first quarter results,” said CEO William A. Coskey, P.E. “Not only did our company achieve its second consecutive quarterly profit, but it also grew revenue by 58% versus the prior year quarter.”
 
Mr. Coskey added: “Today’s results serve as further validation of our strategic shift toward higher-value, modular engineered process and automation systems, as well as select, high-revenue automation commissioning work.”
 
“Going forward,” he said, “the company will continue to focus on building industry alliances and thus securing more of these targeted projects, most of which are estimated to have revenue value of between $10 to $250 million each.”
 
“Regarding the ongoing coronavirus pandemic,” added Mr. Coskey, “our company, like most others today, is in a dynamic and difficult to predict situation. We have a double dose of issues to manage through – both the pandemic as well as a difficult energy industry environment. While most of our office staff returned this week, we have experienced project execution inefficiencies and constraints on pursuing new business due to a majority of employees needing to work from home for about one month. It is tough to put a number on both of these factors.”
 
 
 
 
Mr. Coskey continued: “ENGlobal had approximately $53 million of backlog as of March 28, 2020, after giving effect for a project cancellation and we have also had one project delayed until next year. An important metric is that we currently have in excess of $100 million of proposals outstanding which are awaiting our customers’ feedback. Over a one year look back period, the company has been successful in landing approximately 39 percent of our proposals outstanding on a dollar volume basis. However, because the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain and dynamic, our ability to convert proposals into backlog, and the results of future operations continues to be difficult to predict.”
 
The following is a summary of the income statement for the three months ended March 28, 2020 and March 30, 2019:
 
(amounts in thousands)
 
Three months ended
March 28,
2020
 
 
Three months ended
March 30,
2019
 
Revenue
 $19,260 
 $12,163 
Gross Profit
  3,260 
  1,338 
Selling, General and Administrative Expenses
  2,133 
  2,304 
Operating Income (Loss)
  1,127 
  (966)
Net Income (Loss)
  1,101 
  (974)
 
The following table illustrates the composition of the company's revenue and profitability for its operations for the three months ended March 28, 2020 and March 30, 2019:
 
 
 
Three Months Ended
 
 
Three Months Ended
 
(amounts in thousands)
 
March 28, 2020
 
 
March 30, 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
 $5,122 
  26.6%
  5.4%
  (7.6)%
 $5,633 
  46.3%
  11.9%
  1.5%
Automation
  14,138 
  73.4%
  21.1%
  18.7%
  6,530 
  53.7%
  10.2%
  3.7%
Consolidated
  19,260 
  100.0%
  16.9%
  5.9%
  12,163 
  100.0%
  11.0%
  (7.9)%
   
 
 
 
The following table presents certain balance sheet items as of March 28, 2020 and December 28, 2019:
 
 
(amounts in thousands)
 
As of
March 28,
2020
 
 
As of
December 28,
2019
 
Cash and cash equivalents
 $6,769 
 $8,307 
Working capital
  11,908 
  11,289 
 
For further information on ENGlobal’s first 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 EDT to discuss the company’s Q1 2020 financial results, provide updates on contract awards, and provide 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/2272/34133
 
You may access the teleconference replay by dialing (Toll Free) 877-481-4010 domestically or 919-882-2331 internationally, referencing conference ID 34133 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 May 14, 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 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; (4) 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; (5) 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; (6) the company’s ability to increase the company’s revenue and profitability; (7) 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; (8) the company’s ability to retain existing customers and attract new customers; (9) the company’s ability to accurately estimate the overall risks, revenue or costs on a contract; (10) the risk of providing services in excess of original project scope without having an approved change order; (11) 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; (12) the company’s ability to attract and retain key professional personnel; (13) 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; (14) the company’s ability to obtain additional financing, including pursuant to a new credit facility, when needed; (15) the company’s dependence on one or a few customers; (16) 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; (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. 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
 
 
 
March 28,
2020
 
 
March 30,
2019
 
Operating revenues
 $19,260 
 $12,163 
Operating costs
  16,000 
  10,825 
Gross profit
  3,260 
  1,338 
 
    
    
Selling, general and administrative expenses
  2,133 
  2,304 
Operating income (loss)
  1,127 
  (966)
 
    
    
Other income (expense):
    
    
Other income, net
  1 
  15 
Interest expense, net
  (5)
  (3)
Income (Loss) from operations before income taxes
  1,123 
  (954)
 
    
    
Provision for federal and state income taxes
  22 
  20 
 
    
    
Net income (loss)
  1,101 
  (974)
 
    
    
Basic and diluted income (loss) per common share:
 $0.04 
 $(0.04)
 
    
    
Basic and diluted weighted average shares used in computing income (loss) per share:
  27,414 
  27,431 
 
 
 
 
 
ENGlobal Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands, except share amounts)
 
 
 
March 28,
2020
 
 
December 28,
2019
 
ASSETS
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
Cash and cash equivalents
 $6,769 
 $8,307 
Trade receivables, net of allowances of $216 and $236
  10,780 
  11,435 
Prepaid expenses and other current assets
  698 
  889 
Contract assets
  5,774 
  3,862 
Total Current Assets
  24,021 
  24,493 
Property and equipment, net
  981 
  1,033 
Goodwill
  720 
  720 
Other assets
    
    
Right of use asset
  2,733 
  2,133 
Deposits and other assets
  333 
  307 
Total Other Assets
  3,066 
  2,440 
Total Assets
 $28,788 
 $28,686 
 
    
    
LIABILITIES AND STOCKHOLDERS’ EQUITY
    
    
 
    
    
Current Liabilities:
    
    
Accounts payable
 $3,705 
 $3,261 
Accrued compensation and benefits
  2,375 
  2,783 
Current portion of leases
  1,553 
  1,041 
Contract liabilities
  3,637 
  5,438 
Other current liabilities
  843 
  681 
Total Current Liabilities
  12,113 
  13,204 
 
    
    
    Long Term Leases
  1,535 
  1,458 
Total Liabilities
  13,648 
  14,662 
Commitments and Contingencies (Note 7)
    
    
Stockholders’ Equity:
    
    
Common stock - $0.001 par value; 75,000,000 shares authorized; 27,413,626 shares issued and outstanding at March 28, 2020 and December 28, 2019
  27 
  27 
Additional paid-in capital
  36,949 
  36,934 
Accumulated deficit
  (21,836)
  (22,937)
Total Stockholders’ Equity
  15,140 
  14,024 
Total Liabilities and Stockholders’ Equity
 $28,788 
 $28,686 
 
 
 
 
ENGlobal Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)
 
 
 
For the
Three Months Ended
 
 
 
March 28,
2020
 
 
March 30,
2019
 
Cash Flows from Operating Activities:
 
 
 
 
 
 
Net income (loss)
 $1,101 
 $(974)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
    
    
Depreciation and amortization
  96 
  84 
Share-based compensation expense
  15 
  16 
Changes in current assets and liabilities:
    
    
Trade accounts receivable
  655 
  29 
Contract assets
  (1,912)
  1,175 
Other current assets
  165 
  163 
Accounts payable
  444 
  29 
Accrued compensation and benefits
  (408)
  (397)
Contract liabilities
  (1,801)
  1,406 
Income taxes payable
  258 
  20 
Other current liabilities, net
  (97)
  (253)
Net cash provided by (used in) operating activities
 $(1,484)
 $1,298 
 
    
    
Cash Flows from Investing Activities:          
    
 
     
 
Proceeds from notes receivable
   
  5 
Property and equipment acquired
  (34)
  (5)
Net cash used in investing activities
 $(34)
 $ 
 
    
    
Cash Flows from Financing Activities:
    
    
Purchase of treasury stock
   
  (60)
Payments on finance leases
  (20)
  (1)
Net cash used in financing activities
 $(20)
 $(61)
Net change in cash and cash equivalents
  (1,538)
  1,237 
Cash and cash equivalents at beginning of period
  8,307 
  6,060 
Cash and cash equivalents at end of period
 $6,769 
 $7,297 
 
    
    
Supplemental disclosure of cash flow information:
    
    
Cash paid during the period for interest
 $5 
 $5 
Right of use assets obtained in exchange for new operating lease liability
 $963 
 $209 
 
 

The following information was filed by Englobal Corp (ENG) on Thursday, May 7, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Englobal Corp's 10-Q Quarterly Report:
Ticker: ENG
CIK: 933738
Form Type: 10-Q Quarterly Report
Accession Number: 0001654954-20-005046
Submitted to the SEC: Thu May 07 2020 2:33:27 PM EST
Accepted by the SEC: Thu May 07 2020
Period: Saturday, March 28, 2020
Industry: Engineering Services

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