ENGlobal Reports First Quarter 2017 Results

ENGlobal Reports First Quarter 2017 Results
   
HOUSTON, TX--(Marketwired - May 11, 2017) - ENGlobal, a leading provider of engineering and automation services, today announced results for the first quarter ended April 1, 2017.

ENGlobal reported a net loss of $0.9 million for the first quarter of 2017 which was an increase in net loss of $0.1 million as compared to the net loss reported for the prior year period. Net loss per diluted share was ($0.03) for both the first quarter just ended and for the first quarter of 2016. Revenue decreased $2.3 million to $12.5 million from $14.8 million, or a 15.8% decrease, for the three months ended April 1, 2017, as compared to the three months ended March 26, 2016.

In April 2015, the Company's Board of Directors authorized the repurchase of up to $2.0 million of the Company's common stock from time to time, based on prevailing market conditions. Through April 1, 2017, ENGlobal has repurchased and retired approximately 1,127,894 shares of common stock at a cost of $1.4 million under this program. As of April 1, 2017, the remaining amount authorized for repurchase under this program was $0.6 million.

Management's Assessment

Mark Hess, ENGlobal's Chief Financial Officer stated: "We continue to maintain a strong balance sheet. We have no bank debt and have terminated our credit facility that was scheduled to expire in September 2017. We currently have working capital of over $20 million, which, along with internally generated funds is expected to provide for our near term operations and growth. We are working with potential lenders in preparation for the time when a new credit facility may be needed."

Mr. Hess continued: "We continue to rationalize our overhead structure and costs and have made significant changes to both during and subsequent to the first quarter. As a result, we expect to lower our ongoing cost structure by over $4 million annually."

William A. Coskey, P.E., Chairman and CEO of ENGlobal added: "Business has remained somewhat sluggish in the sectors of the energy market ENGlobal has historically served. However, all indications are that we have seen the bottom and should trend upward from here. We remain excited about larger opportunities the Company is currently pursuing as we continue to make good progress on our multi-year goal of reshaping the Company."

Mr. Coskey continued: "We have positioned ourselves to take advantage of increasing activity in our proposal pipeline by being vertically integrated from engineering and fabrication to automation and integration. With the recent addition of key personnel and infrastructure, ENGlobal now has the internal resources to deliver engineered, modularized solutions to our clients, which should be larger in scope and size than our heritage projects."

The following is a summary of the income statement for the three months ended April 1, 2017 and March 26, 2016:

(amounts in thousands)	Three months ended April 1, 2017			Three Months ended March 26, 2016
Revenue	$	12,473		$	14,812
Gross Profit		1,731			1,673
General & Administrative Expenses		3,406			3,390
Operating Loss		(1,675)			(1,717)
Net Loss		(878)			(749)

The following table presents certain balance sheet items as of April 1, 2017 and December 31, 2016:

(amounts in thousands)	As of April 1, 2017			As of December 31, 2016
Cash	$	14,373		$	15,687
Working capital		20,462			22,200

The following table illustrates the composition of the Company's revenue and profitability for its operations for the three months ended April 1, 2017 and March 26, 2016:

(amounts in thousands)		Three months ended April 1, 2017									Three Months ended March 26, 2016
					% of		Gross		Operating					% of		Gross		Operating
		Total			Total		Profit		Profit		Total			Total		Profit		Profit
Segment		Revenue			Revenue		Margin		Margin		Revenue			Revenue		Margin		Margin
Engineering & Construction		$	8,165		65.5%		11.5%		0.3%		$	8,527		57.6%		7.4%		(1.6)%
Automation			4,308		34.5%		18.3%		4.2%			6,285		42.4%		16.5%		4.7%
Consolidated		$	12,473		100.0%		13.9%		(13.4)%		$	14,812		100.0%		11.3%		(11.6)%

The Company's Quarterly Report on Form 10-Q for the quarterly period ended April 1, 2017 is expected to be filed with the Securities and Exchange Commission reflecting these results by the end of the day on Thursday, May 11, 2017.