4Q and Beyond Boost to Earnings

4Q and Beyond Boost

The damages caused by Hurricane Ike are tremendous and will take months to assess. Business operations, refineries, chemical plants and manufacturing operations are turning to companies like ENGlobal for repair and staffing to resume normal operations. This will take months, possibly years to recover as with Hurricanes Katrina and Rita. Some companies needing repair throw in expansion plans on top of return to operation efforts because restoration and construction services are not only at a premium they are just plain hard to attain when damages are widespread. Here is an example of thousands of damaged operations:

http://www.marketwatch.com/news/story/pliant-corporation-announces-product-allocations/story.aspx?guid=%7B36A3F14F-8F95-4F5B-8B09-40BFC345D030%7D&dist=hppr

I recently addressed 2Q & 3Q in a blog post:

http://t38pilot8202.blogspot.com/2008/09/englobal-2q-and-3q-analysis.html

Looking ahead to 4Q and beyond expect a major boost to ENGlobal’s top and bottom lines. This happened after Hurricanes Katrina and Rita if you examine continuing operation. You have to be a good analyst and factor out the write down problems they had during this period. However, enough information was given and some analysts were keen on this and commented during conference calls on the growth for continuing operations.

From 2Q & 3Q analysis one can see ENGlobal is hitting on all cylinders now with expected improvement in all divisions. Incremental improvement is expected in Engineering. Moderate improvement is expected in the Land Group. This group is moving into electrical transmission right of ways! Bill Coskey, ENGlobal’s CEO, predicts substantial growth in Construction and Automation. These are high margin groups. A general announcement was made for multiple contracts for Automation Group. What all this means is more profit for ENGlobal. They are operating at full capacity.

This begs a question. How do you meet the stepped up demand while operating at full capacity? Full capacity is a moving target for a growth company. ENGlobal has been very successful at it by adding employees better than its competitors. I just sent ENGlobal an employee this week for the Automation Group. You also meet demand with overtime. If you are a corporation that needs to get back to operations you are willing to pay time and a half. Think what that does for ENGlobal. You don’t have to log a whole lot of it before overtime hits the bottom line. Based on the past there looks to be plenty of it coming. Good luck to everyone.