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Englobal Corp (ENG) SEC Filing 8-K Material Event for the period ending Thursday, August 5, 2021

Englobal Corp

CIK: 933738 Ticker: ENG
 
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
 

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Ticker: ENG
CIK: 933738
Form Type: 8-K Corporate News
Accession Number: 0001654954-21-008535
Submitted to the SEC: Thu Aug 05 2021 8:00:36 AM EST
Accepted by the SEC: Thu Aug 05 2021
Period: Thursday, August 5, 2021
Industry: Engineering Services
Events:
  1. Earnings Release
  2. Financial Exhibit

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