ENGlobal Announces $15 Million Contract Addition

ENGLOBAL ANNOUNCES $15 MILLION IN GOVERNMENT AWARDS
   

HOUSTON, TX, May 24, 2018 (GLOBE NEWSWIRE) -- ENGlobal Corp. (NASDAQ: ENG) announced today that its ENGlobal Government Services subsidiary (EGS) has received two modifications to existing contracts totaling approximately $15 million from the U.S. Department of Defense.  The first modification will increase the Company's scope of work by approximately $3 million and the second modification for approximately $12 million will extend certain ongoing capital and maintenance projects for two years.

William A. Coskey, P.E., Chairman and CEO of ENGlobal stated: "This significant increase in scope of work from our government client is a result of the ongoing exceptional performance provided by the EGS team.  We at ENGlobal greatly value our long history of providing the U.S. Military with fuel supply chain and IT related services."

For over 30 years, EGS has provided the federal government with design, installation, and maintenance of Automated Fueling Systems, Automated Tank Gauges (ATG), Supervisory Control and Data Acquisition (SCADA) development and integration, cyber security, and modular engineered solutions.

ENG 1 Q Results

    

ENGlobal Reports First Quarter 2018 Results
   

HOUSTON, May 10, 2018 (GLOBE NEWSWIRE) -- ENGlobal a leading provider of engineering and automation services, today announced results for the first quarter ended March 31, 2018.

ENGlobal reported a net loss of $1.2 million for the first quarter of 2018 which was an increase in net loss of $0.3 million as compared to the prior year period. Net loss per diluted share was $0.04 for the first quarter just ended as compared to a net loss of $0.03 for the first quarter of 2017. ENGlobal reported an improved loss from operations, which was $1.2 million for the first quarter of 2018, a decrease of $0.5 million as compared to the $1.7 million operating loss for the prior year period.

Revenue increased $0.7 million to $13.2 million, or a 5.7% increase, from $12.5 million for the three months ended March 31, 2018, as compared to the three months ended April 1, 2017. Overall, SG&A expenses declined by $0.8 million for the three months ended March 31, 2018 as compared to the prior year period.

Management's Assessment

William A. Coskey, P.E., Chairman and CEO of ENGlobal stated: "I continue to believe that 2018 will prove to be an inflection year whereby our Company returns to profitability. There are several factors that appear to be coming together - the most important of which are recent project awards and the growing level of higher probability, targeted opportunities in our proposal pipeline. A good leading indicator is that we are now hiring for our operations again, after several years of downsizing staff. We also expect both our mechanical fabrication and automation integration operations to be very busy with new work during the second and third quarters of this year."

Mr. Coskey continued: "ENGlobal's formula for success is straightforward and achievable: 1) increasing our volume of work and utilization of resources in an improving industry environment, 2) incrementally improving margins given increased demand and higher value service mix, 3) excellence in project execution, and 4) achieving significant leverage on our reduced fixed overhead structure. Obviously, the recovery in our business and in our marketplace has taken much longer than anyone desires, including myself. I would like to thank our shareholders for their patience during this time, as we expect to be able to deliver improving results in future quarters."

Mark Hess, ENGlobal's Chief Financial Officer stated: "We continue to operate our Business with a clean capital structure. The Company continues to have no bank debt, and at quarter end had approximately $16 million of working capital which is expected to provide for our near-term operations and growth. We have previously recorded a $11.3 million valuation allowance against our deferred tax assets and therefore these assets are fully reserved and are no longer reflected as a net asset on the Balance Sheet. There was no dilution to ENGlobal common stockholders during the first quarter - as our shares outstanding remained constant at approximately 27.5 million during the quarter."

ENGlobal Corporation provides its engineering and professional expertise principally to the energy industry through two segments: Engineering, Procurement and Construction Management ("EPCM") which includes mechanical fabrication, and Automation engineering and integrated products ("Automation").

The extension of ENGlobal's service offerings into fabrication has positioned the Company as a vertically integrated service provider capable of engineering, project execution, mechanical fabrication, automation engineering and automation related systems integration. This positioning as a full-service provider provides a differentiating factor, which reduces clients' coordination of multiple vendors and improves control of their schedules. This strategy and positioning has also allowed the Company to pursue larger scopes of work centered around many different types of modularized engineered systems.

The Company has also started a multi-year strategic initiative to significantly strengthen its Automation capabilities in the areas of distributed control systems design and replacement, advanced data capture design, human machine interface design, machine learning, cyber security, and artificial intelligence. One result of these strategies is that ENGlobal's proposal pipeline continues to increase both for its EPCM and Automation services. Many of these proposals have not been awarded and have exceeded our expected award timing, which would imply that many customers will release awards when they are more comfortable that commodity prices have stabilized at a sufficient level.

The following is a summary of the income statement for the three months ended March 31, 2018 and April 1, 2017:

(amounts in thousands)		Three months ended March 31, 2018					Three Months ended April 1, 2017
Revenue			$	13,188				$	12,473
Gross Profit				1,413					1,731
General & Administrative Expenses				2,582					3,406
Operating Loss				(1,169	)				(1,675	)
Net Loss				(1,200	)				(878	)

The following table presents certain balance sheet items as of March 31, 2018 and December 30, 2017:

(amounts in thousands)		As of March 31, 2018					As of December 30, 2017
Cash			$	6,767				$	9,648
Working capital				15,888					16,846

The following table illustrates the composition of the Company's revenue and profitability for its operations for the three months ended March 31, 2018 and April 1, 2017:

(amounts in thousands)		Three months ended March 31, 2018																	Three Months ended April 1, 2017
							% 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			$	5,095				38.6	%			8.2	%			(0.2	)%			$	5,629				45.1	%			8.8	%			(1.3	)%
Automation				8,093				61.4	%			12.3	%			3.6	%				6,844				54.9	%			18.1	%			7.3	%
Consolidated			$	13,188				100.0	%			10.7	%			(8.9	)%			$	12,473				100.0	%			13.9	%			(13.4	)%

The Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 is expected to be filed with the Securities and Exchange Commission reflecting these results by the end of the day on Thursday, May 10, 2018.