ENGlobal (NASDAQ:ENG
), a leading provider of
engineered modular solutions, today reported that for the third
quarter ended September 28, 2019, the company had a net loss of
$716,000, or $(.03) per diluted share, on revenue of $13,974,000,
compared to a net loss of $197,000, or $(.01) per diluted share, on
revenue of $14,255,000 for the same period in 2018.
The company is continuing to execute its
strategic business transition which focuses on utilizing its
resources to supply higher-value, complete modular process and
automation systems. A major factor in the company’s increased net
loss for the quarter was due to upfront proposal and staffing costs
incurred by its Engineering segment in advance of expected awards.
ENGlobal announced the first of these awards on November 8 with an
initial contract valued in excess of $20 million to supply process
modules that will be used to construct a complete hydrogen
production facility.
The Company’s Automation segment performed well
when compared to the prior year quarter – increasing revenue and
operating income by 31% and 123% respectfully. These positive
results are primarily due to the company’s performance on two large
process analytical projects that were awarded earlier in the
year.
For the first nine months of 2019, the company
had a net loss of $2,207,000, or $(.08) per diluted share, on
revenue of $39,758,000, compared to a net loss of $2,388,000, or
$(.09) per diluted share, on revenue of $41,314,000 for the first
nine months of 2018.
“ENGlobal’s path to profitability can be
realized through internal growth by securing larger jobs, such as
the major process plant award we announced last Friday,” said
Chairman and CEO William A. Coskey, P.E. “Given this major
additional business, along with a growing book of proposal
activity, I believe we have turned the corner and would expect
improved performance in our 2019 fourth quarter results.”
Mr. Coskey added that he expects the company’s
modular systems business should continue to benefit from the
business relationship it has formed with a major process technology
firm as well as from ENGlobal’s growing internal business
development program.
Looking forward to 2020, Mr. Coskey affirmed
that the company’s current transition is expected to continue and
should result in “improved revenue and earnings when compared to
2019.”
For additional information on ENGlobal's Q3 2019
performance, please refer to its Form 10-Q filing on the company
website, or at sec.gov.
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 in connection with our review of strategic
alternatives; (2) the impact of the announcement of our review of
strategic alternatives on our business, including our financial and
operating results, or our employees, suppliers and customers; (3)
our ability to increase our revenue and profitability; (4) our
ability to realize project awards or contracts on our pending
proposals, and the timing, scope and amount of any related awards
or contracts; (5) the effect of economic downturns and the
volatility and level of oil and natural gas prices; (6) our ability
to retain existing customers and attract new customers; (7) our
ability to accurately estimate the overall risks, revenue or costs
on a contract; (8) the risk of providing services in excess of
original project scope without having an approved change order; (9)
our ability to execute our expansion 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; (10) our ability to attract and retain key
professional personnel; (11) our ability to fund our operations and
grow our business utilizing cash on hand, internally generated
funds and other working capital; (12) our ability to obtain
additional financing, including pursuant to a new credit facility,
when needed: (13) our dependence on one or a few customers; (14)
the risks of internal system failures of our information technology
systems, whether caused by us, 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; (15) our ability
to realize revenue projected in our backlog and our ability to
collect accounts receivable and process accounts payable in a
timely manner; (16) the uncertainties related to the U.S.
Government's budgetary process and their effects on our long-term
U.S. Government contracts; (17) the risk of unexpected liability
claims or poor safety performance; (18) our ability to identify,
consummate and integrate potential acquisitions; (19) our reliance
on third-party subcontractors and equipment manufacturers; (20) our
ability to 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 (21) 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.
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Contacts:
Mark A. Hess, CFO (281) 878-1000 ir@ENGlobal.com
Market Makers - Investor Relations Jimmy Caplan 512-329-9505
jimmycaplan@me.com
Market Makers - Media Relations Rick Eisenberg 212-496-6828
eiscom@msn.com
ENGlobal
CorporationCondensed Consolidated Statements of
Operations(Unaudited)(amounts in
thousands, except per share data)
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
|
|
September 28, 2019 |
|
|
September 29, 2018 |
|
|
September 28, 2019 |
|
|
September 29, 2018 |
|
Operating
revenues |
|
$ |
13,974 |
|
|
$ |
14,255 |
|
|
$ |
39,758 |
|
|
$ |
41,314 |
|
Operating costs |
|
|
12,299 |
|
|
|
11,962 |
|
|
|
34,803 |
|
|
|
35,355 |
|
Gross
profit |
|
|
1,675 |
|
|
|
2,293 |
|
|
|
4,955 |
|
|
|
5,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
|
2,371 |
|
|
|
2,483 |
|
|
|
7,125 |
|
|
|
7,935 |
|
Operating
loss |
|
|
(696 |
) |
|
|
(190 |
) |
|
|
(2,170 |
) |
|
|
(1,976 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
|
7 |
|
|
|
11 |
|
|
|
48 |
|
|
|
(367 |
) |
Interest expense, net |
|
|
(5 |
) |
|
|
(1 |
) |
|
|
(12 |
) |
|
|
(14 |
) |
Loss from operations
before income taxes |
|
|
(694 |
) |
|
|
(180 |
) |
|
|
(2,134 |
) |
|
|
(2,357 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for federal and state income taxes |
|
|
22 |
|
|
|
17 |
|
|
|
73 |
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(716 |
) |
|
|
(197 |
) |
|
|
(2,207 |
) |
|
|
(2,388 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per common share: |
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average shares used in computing loss per
share: |
|
|
27,410 |
|
|
|
27,509 |
|
|
|
27,417 |
|
|
|
27,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENGlobal
CorporationCondensed Consolidated Balance
Sheets(Unaudited)(amounts in
thousands, except share amounts)
|
|
September 28, 2019 |
|
|
December 29, 2018 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current
Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,088 |
|
|
$ |
6,060 |
|
Trade receivables, net of allowances of $202 and $202 |
|
|
7,463 |
|
|
|
10,211 |
|
Prepaid expenses and other current assets |
|
|
184 |
|
|
|
1,096 |
|
Contract assets |
|
|
4,128 |
|
|
|
3,175 |
|
Total Current Assets |
|
|
17,863 |
|
|
|
20,542 |
|
Property and
equipment, net |
|
|
878 |
|
|
|
677 |
|
Goodwill |
|
|
720 |
|
|
|
720 |
|
Other
assets |
|
|
|
|
|
|
|
|
Right of use asset |
|
|
2,377 |
|
|
|
— |
|
Deposits and other assets |
|
|
300 |
|
|
|
367 |
|
Total Other Assets |
|
|
2,677 |
|
|
|
367 |
|
Total Assets |
|
$ |
22,138 |
|
|
$ |
22,306 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,944 |
|
|
$ |
3,172 |
|
Accrued compensation and benefits |
|
|
2,175 |
|
|
|
2,301 |
|
Contract portion of leases |
|
|
994 |
|
|
|
— |
|
Contract liabilities |
|
|
813 |
|
|
|
604 |
|
Other current liabilities |
|
|
293 |
|
|
|
740 |
|
Total Current Liabilities |
|
|
7,219 |
|
|
|
6,817 |
|
Long Term
Leases |
|
|
1,652 |
|
|
|
— |
|
Total Liabilities |
|
|
8,871 |
|
|
|
6,817 |
|
Commitments and
Contingencies (Note 7) |
|
|
|
|
|
|
|
|
Stockholders’
Equity: |
|
|
|
|
|
|
|
|
Common stock - $0.001 par value; 75,000,000 shares authorized;
27,413,626 and 27,487,594 shares issued and outstanding at
September 28, 2019 and December 29, 2018, respectively |
|
|
27 |
|
|
|
27 |
|
Additional paid-in capital |
|
|
36,918 |
|
|
|
36,934 |
|
Accumulated deficit |
|
|
(23,678 |
) |
|
|
(21,472 |
) |
Total Stockholders’ Equity |
|
|
13,267 |
|
|
|
15,489 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
22,138 |
|
|
$ |
22,306 |
|
ENGlobal
CorporationCondensed Consolidated Statements of
Cash Flows(Unaudited)(amounts in
thousands)
|
|
For the Nine Months Ended |
|
|
|
September 28, 2019 |
|
|
September 29, 2018 |
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,207 |
) |
|
$ |
(2,388 |
) |
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
258 |
|
|
|
386 |
|
Share-based compensation expense |
|
|
45 |
|
|
|
171 |
|
Gain on sale of asset |
|
|
— |
|
|
|
(2 |
) |
Changes in current assets and liabilities: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
2,748 |
|
|
|
(1,379 |
) |
Contract assets |
|
|
(953 |
) |
|
|
982 |
|
Other current assets |
|
|
956 |
|
|
|
678 |
|
Accounts payable |
|
|
(229 |
) |
|
|
(445 |
) |
Accrued compensation and benefits |
|
|
(126 |
) |
|
|
(453 |
) |
Contract liabilities |
|
|
209 |
|
|
|
(1,048 |
) |
Income taxes payable |
|
|
16 |
|
|
|
(58 |
) |
Other current liabilities, net |
|
|
(460 |
) |
|
|
(708 |
) |
Net cash provided by (used in) operating activities |
|
$ |
257 |
|
|
$ |
(4,264 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
|
|
|
|
|
|
Proceeds from notes receivable |
|
|
24 |
|
|
|
19 |
|
Property and equipment acquired |
|
|
(191 |
) |
|
|
(89 |
) |
Net cash used in investing activities |
|
$ |
(167 |
) |
|
$ |
(70 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows
from Financing Activities: |
|
|
|
|
|
|
|
|
Purchase of treasury stock |
|
|
(61 |
) |
|
|
— |
|
Payments on finance leases |
|
|
(1 |
) |
|
|
(62 |
) |
Net cash used in financing activities |
|
$ |
(62 |
) |
|
$ |
(62 |
) |
Net change in cash, cash equivalents and restricted cash |
|
|
28 |
|
|
|
(4,396 |
) |
Cash, cash equivalents and restricted cash, at beginning of
period |
|
|
6,060 |
|
|
|
9,648 |
|
Cash, cash equivalents and restricted cash, at end of
period |
|
$ |
6,088 |
|
|
$ |
5,252 |
|
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