ENGlobal: Fourth Quarter and FY 2014 Results

ENGlobal Reports Fourth Quarter and Fiscal Year 2014 Results

HOUSTON, March 12, 2015 (GLOBE NEWSWIRE) -- ENGlobal, a leading provider of engineering and automation services, today announced its financial results for the fourth quarter and fiscal year ended December 27, 2014.

2014 Fourth Quarter Highlights for Continuing Operations as compared to 2013 Fourth Quarter results:

• Revenue of $26.9 million, a 6.3% increase
• Gross profit margin of 20.4%, an increase of 140 basis points
• Net income of $0.8 million, an increase in net income of $0.4 million
• Earnings of $0.03 per diluted share, an increase from $0.02 per diluted share

On a comparable basis, revenue from the continuing businesses increased to $26.9 million or a 6.3% increase from $25.3 million in the fourth quarter of 2013. ENGlobal reported net income from continuing operations of $0.8 million, or $0.03 per diluted share, for the quarter ended December 27, 2014, compared to income of $0.4 million, or $0.02 per diluted share, for the quarter ended December 28, 2013. During the quarter ended December 27, 2014, the company incurred non-cash expenses for depreciation, amortization and stock compensation of $0.6 million as compared to $0.7 million for the comparable period in 2013.

2014 Fiscal Year Highlights for Continuing Operations as compared to 2013 Fiscal Year results:

• Revenue of $107.9 million, a 21.1% increase
• Gross profit margin of 21.7%, an increase of 530 basis points
• Net income of $6.0 million, an increase from a net loss of $2.3 million
• Earnings of $0.22 per diluted share, an increase from a loss of $0.08 per diluted share

On a comparable basis, revenue from the continuing businesses increased to $107.9 million for the fiscal year ended December 27, 2014, or a 21.1% increase from $89.1 million for the fiscal year ended December 28, 2013. The sale of the Gulf Coast EPCM business in August of 2013 had contributed $79.8 million of revenues for the year ended December 28, 2013. ENGlobal reported net income from continuing operations of $6.0 million, or $0.22 per diluted share, for the fiscal year ended December 27, 2014, compared to a loss of $2.3 million from continuing operations, or a loss of $0.08 per diluted share, for the fiscal year ended December 28, 2013. During the fiscal year ended December 27, 2014, the company incurred non-cash expenses for depreciation, amortization and stock compensation of $2.7 million as compared to $2.2 million for the comparable period in 2013.

Management's Assessment

Mark Hess, ENGlobal's Chief Financial Officer, said: "We are proud to have exceeded our financial targets for 2014, which was driven by an increase in margins, consistent project execution, as well as internal growth. We maintained a substantial cash balance and had no borrowings from our working capital lines during 2014. We also successfully replaced our credit facility with a similar three-year facility that will help provide the working capital needed to further our growth."

William Coskey, P.E., Chairman and Chief Executive Officer of ENGlobal added: "I would like to sincerely congratulate the outstanding men and women of ENGlobal for their contributions toward a successful 2014. We will not be immune to some industry headwinds during 2015, but are currently encouraged by the continued level of spending by our largely midstream and downstream clientele. Having regained our footing once again, we now expect to explore acquisition opportunities for external growth."

The following table illustrates the composition of the company's revenue and profitability for its operations for the fiscal years ended December 27, 2014 and December 28, 2013: Click Here

Congratulations to ENGlobal on their continuing improvement. The proof is in the numbers. With margins increasing and revenue growing I like what I am seeing. These are margin levels that ENGlobal hasn't experienced in the past. Selling off lower margin operations and moving into areas with more profit such as offshore work and Automation have enabled this change. This is good helmsmanship from management working like a team.

Take another look at the comments above by Mark Hess and Bill Coskey. Mark points out good news including "...no borrowings from our working capital lines during 2014." and replacing a credit facility with a better one. Bill Coskey notes, "We will not be immune to some industry headwinds during 2015, but are currently encouraged by the continued level of spending by our largely midstream and downstream clientele. Having regained our footing once again, we now expect to explore acquisition opportunities for external growth." This is realistic honesty you don't see very much in public company reports. I like it and it is overall good news. With the higher margins they can weather the normal economic bumps better. The trend is improving and I believe ENGlobal is a Buy. Good Luck to everyone.