ENG 2Q 2019 Report

ENGlobal Reports Improved Results for Second Quarter 2019

Houston, Aug. 13, 2019 (GLOBE NEWSWIRE) -- ENGlobal (NASDAQ:ENG), a leading provider of engineered modular solutions, today reported that for the second quarter ended June 29, 2019, the company had a net loss of $517,000, or $(.02) per diluted share, on revenue of $13,621,000, compared to a net loss of $992,000, or $(.04) per diluted share, on revenue of $13,872,000 for the same period in 2018.

The company's Q2 2019 revenue grew 12% over Q1 2019, and its net loss was reduced by $457,000 over the same sequential periods. The sequential revenue improvement was primarily the result of the company's ongoing strategic business transition from that as an engineering design services and staffing provider to a supplier of higher-value, complete modular systems.

For the first six months of 2019, the company had a net loss of $1,491,000, or $(.05) per diluted share, on revenue of $25,784,000, compared to a net loss of $2,192,000, or $(.08) per diluted share, on revenue of $27,059,000 for the first half of 2018.

A major factor in the company's reduced net loss in the three- and six-month 2019 periods was reductions in SG&A expenses of 15 percent and 13 percent, respectively.

Chairman and CEO William A. Coskey, P.E., said, "ENGlobal's complete modular systems not only create numerous efficiencies for our customers but also utilize all of our Company's internal skills and resources. We are benefiting from business alliances previously formed with major process technology and construction firms, but also have a growing business development program of our own. As a result of these efforts, we are optimistic that one or more of our larger modular system proposals will be successful before the end of the year."

The CEO added, "The key to success for ENGlobal is additional scale for our business. We expect to enjoy improved revenue growth in the second half of the year due to our growing success in performing services on larger, higher-revenue projects than in the past. Effectively, we are transitioning from our historical work on thousands of engineering-only projects per year that averaged around $50,000 in revenue each, toward working on much larger scopes of work."

Mr. Coskey also said that the recent hiring of former Honeywell UOP executive Michael Clark, as well as several prominent in-house process engineers, designers and project managers, is expected to help the company fuel the increased revenue growth expected in the second half of this year and beyond.

Looking forward to 2020, Mr. Coskey said he believed that the current transition "has the potential to significantly increase our revenue while creating more favorable profit margins and improved earnings compared to 2019."

Additional remarks by the CEO are available in four recent news stories published by the Houston Business Journal at https://finance.yahoo.com/quote/ENG?p=ENG&.tsrc=fin-srch

For additional information on ENGlobal's Q2 2019 performance, please refer to its Form 10-Q filing on the company website, or at sec.gov.

ENGlobal Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(amounts in thousands, except per share data)

		For the Three Months Ended								For the Six Months Ended
		June 29, 2019				June 30, 2018				June 29, 2019				June 30, 2018
Operating revenues		$	13,621			$	13,872			$	25,784			$	27,059
Operating costs			11,679				11,619				22,504				23,394
Gross profit			1,942				2,253				3,280				3,665
Selling, general and administrative expenses			2,450				2,869				4,755				5,451
Operating loss			(508	)			(616	)			(1,475	)			(1,786	)
Other income (expense):
Other income (expense), net			26				(373	)			41				(378	)
Interest expense, net			(4	)			(5	)			(6	)			(14	)
Loss from operations before income taxes			(486	)			(994	)			(1,440	)			(2,178	)
Provision (benefit) for federal and state income taxes			31				(2	)			51				14
Net loss			(517	)			(992	)			(1,491	)			(2,192	)
Basic and diluted loss per common share:		$	(0.02	)		$	(0.04	)		$	(0.05	)		$	(0.08	)
Basic and diluted weighted average shares used in computing loss per share:			27,408				27,510				27,420				27,512

ENGlobal Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands, except share amounts)

		June 29, 2019				December 29, 2018
ASSETS
Current Assets:
Cash and cash equivalents		$	9,896			$	6,060
Trade receivables, net of allowances of $202 and $202			8,189				10,211
Prepaid expenses and other current assets			725				1,096
Contract assets			2,190				3,175
Total Current Assets			20,945				20,542
Property and equipment, net			604				677
Goodwill			720				720
Other assets
Right of use asset			2,619				-
Deposits and other assets			296				367
Total Other Assets			2,915				367
Total Assets		$	25,184			$	22,306
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$	3,156			$	3,172
Accrued compensation and benefits			2,493				2,301
Contract liabilities			2,650				604
Other current liabilities			1,196				740
Total Current Liabilities			9,495				6,817
Long Term Leases			1,718				-
Total Liabilities			11,213				6,817
Commitments and Contingencies (Note 8)
Stockholders' Equity:
Common stock - $0.001 par value; 75,000,000 shares authorized; 27,404,469 and 27,487,594 shares issued and outstanding at June 29, 2019 and December 29, 2018, respectively			27				27
Additional paid-in capital			36,906				36,934
Accumulated deficit			(22,962	)			(21,472	)
Total Stockholders' Equity			13,971				15,489
Total Liabilities and Stockholders' Equity		$	25,184			$	22,306

ENGlobal Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)

		For the Six Months Ended
		June 29, 2019					June 30, 2018
Cash Flows from Operating Activities:
Net loss		$	(1,491	)			$	(2,192	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			177					289
Share-based compensation expense			32					122
Changes in current assets and liabilities:
Trade accounts receivable			2,022					(845	)
Contract assets			985					(1,720	)
Prepaid expenses and Other current assets			492					396
Accounts payable			(16	)				869
Accrued compensation and benefits			192					68
Contract liabilities			2,046					(417	)
Income taxes payable			(430	)				(60	)
Other current liabilities			(44	)				(589	)
Net cash provided by (used in) operating activities		$	3,965				$	(4,079	)
Cash Flows from Investing Activities:
Proceeds from notes receivable			5					14
Property and equipment acquired			(72	)				(65	)
Net cash used in investing activities		$	(67	)			$	(51	)
Cash Flows from Financing Activities:
Purchase of treasury stock			(61	)				-
Payments on capitalized leases			(1	)				(74	)
Net cash used in financing activities		$	(62	)			$	(74	)
Net change in cash, cash equivalents and restricted cash			3,836					(4,204	)
Cash, cash equivalents and restricted cash, at beginning of period			6,060					9,648
Cash, cash equivalents and restricted cash, at end of period		$	9,896				$	5,44

ENGlobal Wins Prime Spot on $124 Million Automated Fuels Handling Contract

9:00 am ET June 13, 2019

ENGlobal, a leading provider of engineered modular solutions, today announced that its wholly-owned subsidiary, ENGlobal Government Services, Inc. (EGS), has won one of three prime contractor spots on a U.S. Military $124 million Automated Fuel Handling Equipment multiple-award, indefinite-delivery, indefinite-quantity contract.

As part of its participation in this contract, EGS will compete for task orders to support the Defense Logistics Agency's Automated Fuel Handling Program, which provides the fuel monitoring and control systems capabilities that strengthen the mission of all military services. These task orders will include technology upgrades and refreshes of existing systems, new system design and installation, and life cycle maintenance of new and existing systems.

This contract has a five-year period of performance, and its work will be conducted around the world. It follows a previous five year U.S. Military contract covering similar projects of which ENG received task orders of approximately $52 million. Only awarded task orders are included in ENG's backlog.

Commenting on the new award, ENGlobal Chairman and CEO William A. Coskey, P.E., said, "We are extremely proud to have been selected to support our military with innovative and cutting edge fuel handling technology. For over fifteen years, ENGlobal has been honored to provide wide-ranging global solutions for our Military's fueling requirements, and through this new selection, we look forward to providing these services for many years to come."

ENGlobal Government Services specializes in the turn-key installation and maintenance of automation and instrumentation systems for the U.S. defense industry worldwide.

ENGlobal Granted 2nd Extension to Avoid Delisting

ENGlobal Corporation Granted 180-Day Extension by NASDAQ to Regain Compliance with Minimum Bid Price Rule

HOUSTON, May 30, 2019 (GLOBE NEWSWIRE) -- ENGlobal Corporation, a leading provider of engineered modular solutions, today announced it had received notification from the NASDAQ Stock Market indicating that the Company will have an additional 180-day grace period, or until November 25, 2019, to regain compliance with NASDAQ's $1.00 minimum bid requirement.

The notification indicated that the Company did not regain compliance during the initial 180-day grace period provided under the rule. In accordance with NASDAQ Marketplace Rule 5810(c)(3)(A), the Company is eligible for the additional grace period because it meets the initial listing requirements for the NASDAQ Capital Market, except for the bid price, and the provision of written notice to NASDAQ of ENGlobal's intention to cure the deficiency during the additional grace period by effecting a reverse stock split, if necessary.

If, at any time during this additional grace period, the closing bid price of the Company's common stock is at least $1 per share for a minimum of 10 consecutive business days, NASDAQ will provide the Company with written confirmation of compliance and the matter will be closed. If the Company chooses to implement a reverse stock split, however, it must complete the split no later than 10 business days prior to the expiration of the additional grace period in order to timely regain compliance.

If ENGlobal does not meet the minimum bid requirement during the additional 180-day grace period, NASDAQ will provide written notification to the Company that its common stock will be subject to delisting. At that time, the Company can request NASDAQ for a hearing to present a plan to regain compliance.

This NASDAQ notification does not impact ENGlobal's listing on the NASDAQ Capital Market at this time, and the Company's common stock will continue to trade under its current symbol "ENG" during the additional 180-day compliance period.

ENGlobal 1Q Results - Another Loss

ENGlobal Reports First Quarter 2019 Results

HOUSTON, May 13, 2019 (GLOBE NEWSWIRE) -- ENGlobalCorporation, a leading provider of engineered modular solutions, today announced results for the first quarter ended March 30, 2019.

The company reported a net loss of $1.0 million, or $0.04 per diluted share, for the first quarter just ended compared to a net loss of $1.2 million, or $0.04 per diluted share, for the first quarter of 2018.

Management's Assessment

Mark Hess, ENGlobal's Chief Financial Officer, said: "Operating results have improved modestly with reduced losses on both a year-over-year and sequential quarterly basis. Much of this improvement can be attributed to management's attention to fixed overhead expense, which is approximately 10% lower than during the first quarter of last year, notwithstanding additions of key overhead personnel to support strategic initiatives."

Mr. Hess continued: "It is also important to note that our operations produced cash of $1.2 million during the most recent quarter, which ended with a cash balance of approximately $7.3 million."

William Coskey, P.E., Chairman and Chief Executive Officer, said: "We are encouraged by ENGlobal's new business opportunities and current high level of proposal activity. Our booked backlog was approximately $30 million at the end of the first quarter. Year-to-date through April 30, 2019, ENGlobal had submitted new proposals totaling $102 million, with $90 million of these proposals outstanding and awaiting a customer decision. The company's win rate has improved significantly this year, due primarily to our estimating and proposal organization that was strengthened in the fourth quarter of 2018."

Mr. Coskey continued: "While ENGlobal has not yet achieved consistent profitability primarily due to lack of scale, we remain a debt free company and are continuing to evaluate strategic opportunities aimed at increasing shareholder value."

ENGlobal also announced it has been engaged to perform various levels of work on three separate natural gas liquids facilities that are planned for Texas and Louisiana. The company has received a Limited Notice to Proceed on early engineering activities for an LPG Export Terminal, as this work is deemed critical in meeting the scheduled on-stream date in the first half of 2021. This export terminal will include refrigeration and storage for propane, butane and iso-butane products for loading on VLGC ships for international transport. Additionally, the company is performing an early FEED study for a second propane/butane export facility, as well as a remote tank farm facility with storage and ancillary equipment for the same products. For commercial reasons, the dollar values of these current engineering awards and potential extensions are not being disclosed.

TABLES

The following is a summary of the income statement for the three months ended March 30, 2019 and March 31, 2018:

(amounts in thousands)	Three months ended March 30, 2019				Three months ended March 31, 2018
Revenue	$	12,163			$	13,188
Gross Profit		1,338				1,413
General & Administrative Expenses		2,304				2,582
Operating Loss		(966	)			(1,169	)
Net loss		(974	)			(1,200	)

The following table presents certain balance sheet items as of March 30, 2019 and December 29, 2018:

(amounts in thousands)	As of March 30, 2019		As of December 29, 2018
Cash	$	7,297	$	6,060
Working capital		12,337		13,725

The following table illustrates the composition of the Company's revenue and profitability for its operations for the three months ended March 30, 2019 and March 31, 2018:

	Three months ended									Three months ended
(amounts in thousands)	March 30, 2019									March 31, 2018
Segment	Total Revenue		% of Total Revenue		Gross Profit Margin		Operating Profit (Loss) Margin			Total Revenue		% of Total Revenue		Gross Profit Margin		Operating Profit (Loss) Margin
Engineering & Construction	$	5,633	46.3	%	11.9	%	1.5	%		$	5,095	38.6	%	8.2	%	(0.2	)%
Automation		6,530	53.7	%	10.2	%	3.7	%			8,093	61.4	%	12.3	%	3.6	%
Consolidated	$	12,163	100.0	%	11.0	%	(7.9	)%		$	13,188	100.0	%	10.7	%	(8.9	)%

The Company's Quarterly Report on Form 10-Q for the first quarter ended March 30, 2019 is expected to be filed with the Securities and Exchange Commission today reflecting these results by the end of the day on Monday, May 13, 2019.
For additional information on ENGlobal's Q1 2019 performance, please refer to its Form 10-Q filing on the company website, or at sec.gov.