ENGlobal Corporation: Closes the Midstream Deal

ENGlobal Completes Divestiture of Midstream Inspection Division

Houston, TX, Jan. 3, 2013 (GLOBE NEWSWIRE) -- ENGlobal Corporation (NASDAQ: ENG), a leading provider of energy-related engineering and automation services, announced today that it has closed the previously announced agreement to divest its Midstream Inspection division to Furmanite America, Inc. ("FAI") a subsidiary of Furmanite Corporation.  As announced in December 2012, the total value of the transaction to ENGlobal was approximately $6.5 million, consisting of cash at closing, retained working capital, and a promissory note issued with a parent company guarantee.
ENGlobal intends to use the net proceeds from this transaction to reduce outstanding debt.  The closing of this transaction completes ENGlobal's previously announced intent to divest its Field Solutions segment, which included both its Land/Right of Way and Midstream Inspection divisions, as a means of reducing outstanding bank indebtedness.

Opinion: Kind of a repeat but glad they got it closed.

ENGlobal Corporation: Reduces Operations

ENGlobal Announces Agreement to Sell its Midstream Inspection Division to Furmanite

Houston, TX, Dec. 11, 2012 (GLOBE NEWSWIRE) -- ENGlobal Corporation (NASDAQ: ENG), a leading provider of energy-related engineering and automation services, announced today that it has reached an agreement on terms under which ENGlobal's Midstream Inspection division will be divested to Furmanite America, Inc. ("FAI") a subsidiary of Furmanite Corporation.  The total value of the transaction to ENGlobal is expected to be approximately $6.5 million, consisting of cash at closing, retained working capital, and a promissory note issued with a parent company guarantee.

ENGlobal intends to use the net proceeds from this transaction to reduce outstanding debt.  The transaction is expected to close at year-end, subject to lender approval and the completion of customary conditions.

"Once closed, this sale ensures that 100% of management's attention can be applied to ENGlobal's Engineering and Automation segments," said William A. Coskey, P.E., Founder, Chairman and Chief Executive Officer. "Since August, ENGlobal has been focused on divesting our Field Solutions segment, leading improvement initiatives, and implementing an organizational restructuring that has resulted in a more efficient company."

ENGlobal announced its plan to explore divestiture options of its Field Solutions segment, which included both its Land/Right of Way and Midstream Inspection divisions, in September 2012.  The Company will complete the divestiture within both the timeline and the estimated value attributed to the segment by ENGlobal.

Opinion:

I think it is a good move; getting the house cleaning done for the 'next step'. Ensuring that 100% of management's attention on anything also sounds good to me; on core segments that can be sold - even better.

Good luck to everyone.

ENGlobal Corporation - 3Q Press Release and 10Q Analyses

Rev. 1.1

It was a record breaking quarterly report so let’s take a look.

Press Release

“ENGlobal reported a net loss of $22.3 million, or $0.83 per diluted share, for the quarter ended September 29, 2012…” Well folks, one thing we have learned about ENGlobal, they always seem to deliver more than you expect.

I am astounded. Are you guys kidding me? When you go cleaning up the books and get a number that bad it is sure sign the BOD, CEO and many others were not doing their jobs.

The next paragraph was a standard we have heard for x number of quarters (I have lost count for 3+ years). “Commenting on the results, William A. Coskey, P.E., ENGlobal's Founder, Chairman and Chief Executive Officer, said, "To a large extent, the third quarter is comprised of heritage financial items that have impacted our Company and mask some recent improving financial trends in our business.  For example, we continue to see gradual improvements across several of our working capital-related metrics. I am very pleased with current business activity in our operations, and also the progress we have made on several fronts since August 1st of this year."

Well you didn’t see gradual improvements in DOS as it appeared to increase to around 85 days for 3Q.  Wonder why ENG stopped reporting that metric?

Some facts here:

• Mr. Pagano resigned at the beginning of August. 
• He was CEO for one month of the third quarter. 

Examine "Heritage financial items". Is Mr. Coskey throwing Mr. Pagano under the bus or patting himself on the back, or maybe both? For once, I would like to see a CEO or Chairman of the Board take responsibility for results and not try to 'Pass the Buck'. Regardless, who was the Chairman of the Board during the creation of these “heritage financial items”? I am surprised it wasn't Bush's fault.

Too bad the miniscule positives don’t outweigh continuing operations' negatives, much less the every quarter “non-recurring special event”. These improvements are really just polishing the silverware on the Titanic. To explain it another way. Lets say you have stalled your aircraft and are in an unrecoverable spin with a downward velocity of 10,000 ft per minute. You eject and your upward velocity for a short period is 2,000 ft per minute. Guess what? You are still losing altitude and if you don't have enough altitude above ground level you are going to impact. 

Results were so bad ENGlobal is not even going to hold a conference call. If ever they needed a conference call it is now!  If Mr. Coskey truly believes this rhetoric he should get on the line and tell the world about all their accomplishments and provide some supportive details for the, I quote, “progress on our strategic priorities, including collaborating with our management consultant to improve financial performance, reorganizing our management team, pursuing opportunities to improve margins and reduce expenses, and completing the divestiture of our Land and Right-of-Way division of the Field Solutions segment”.  Details would be a nice change from the ongoing ‘trust us’ situation because we have seen what that got us for those x number of quarters.


10Q Analysis

From the Condensed Consolidated Balance Sheets (Unaudited):

Goodwill - $2,805,000

How does this remain?  Any Goodwill has been lost to the clients, employees, and shareholders.  They did say it was an interim assessment so there is more to come!

Long-term trade and notes receivable, net of current portion and allowances - $899,000

This looks like another SLE write-down if not collected in the forth quarter.

Current portion of debt - $29,406,000 

Almost doubled since the end of the year. The right-away sale should help reduce this amount by approx. $4.5 mil as retained AR is collected because there was no immediate cash in the deal!

Total Stockholders' Equity - $26,352,000

Lost $32.1 mil in equity in 9 months.  Book value @ approx. $0.98 per share; Tangible Net Worth (book value less Goodwill and Other Intangibles) @ $0.80 per share)


From Condensed Consolidated Statements of Cash Flows (Unaudited):

Net cash provided by (used in) operating activities for the first nine months - ($8,278,000)

Still negative cash flow for the year but positive for the 3rd quarter by $910k… a good sign!


Note 2 - Liquidity

"Although we have sold assets and reduced personnel in an attempt to improve our liquidity position, we cannot assure you that we will be successful in obtaining the cure or waiver of the defaults under the respective credit facilities. If we fail to obtain the cure or waiver of the defaults under the facilities after any forbearance period, the lenders may exercise any and all rights and remedies available to them under their respective agreements, including demanding immediate repayment of all amounts then outstanding or initiating foreclosure or insolvency proceedings. In such event and if we are unable to obtain alternative financing, our business will be materially and adversely affected, and we may be forced to sharply curtail or cease our operations. In addition, based on current conditions, it is probable that our independent registered public accounting firm will include an explanatory paragraph with respect to our ability to continue as a going concern in its report on our financial statements for the year ending December 31, 2012."


Notes to Unaudited Interim Condensed Consolidated Financial Statements:

"The Company has been unable to sell the Electrical Services group as planned and has decided to dispose of substantially all of the group’s remaining assets. During the third quarter of 2012, the Company completed the disposal of the group’s remaining assets concurrent with the completion of the last remaining lump sum project. During the third quarter, the Company incurred approximately $0.5 million of costs to complete the remaining lump sum project. Going forward, the Company will have no continuing involvement with these operations after the completion of the remaining lump sum project."

I wonder when this discontinued project will be completed? This was going to be taken care of several quarters ago.

"On September 10, 2012, the Company entered into a definitive agreement to sell its Field Solutions segment...The transaction was valued at approximately $7.5 million, consisting of approximately $4.5 million in working capital at closing to the Company [NO CASH!] and a $3 million promissory note payable to the Company over four years."

"The results of the discontinued operations are shown on the Condensed Consolidated Statements of Operations as "Loss from discontinued operations, net of taxes". During the third quarter, the Company incurred or accrued approximately $3.6 million [shows $3.717 mil in the actual table] of additional costs (which includes a loss on the sale of the Land and Right-of-Way division of approximately $1.1 million) related to the sale of these divisions."

Sounds like the Electrical Group took another $2.5 mil hit on the project.


Note 7 - Line of Credit and Debt

"Pursuant to generally accepted accounting principles, the combination of both a subjective acceleration clause and a lock-box arrangement required by the lender results in borrowings outstanding under the PNC Credit Facility being classified as short-term obligations despite the three-year term of the agreement."

Nothing like long-term being classified as short-term. Unfortunately by the same token ENGlobal finally now has long-term losses.


Notes to Unaudited Interim Condensed Consolidated Financial Statements:

"On October 30, 2012, the Forbearance Period was extended to November 15, 2012.  On November 14, 2012, the Forbearance Period was extended to November 30, 2012 (or earlier should any forbearance default occur)."

Looks like PNC is only giving ENG relief in 2-week increments. Wonder if ENG has received another 2-week extension last Friday?

"As of the result of covenant violations, including those described above, the Company is currently in default under the terms of the PNC Credit Facility. As of the date of this filing, the Agent has not taken any action with respect to the Company's defaults and the Company was actively discussing with the Agent the terms under which such defaults may be cured or waived. Although the Company is in active discussions with the Agent, if the Company is not successful in obtaining the cure or waiver of such defaults, at the end of the Forbearance Period, the Agent may exercise any and all rights and remedies available to it, including demanding immediate repayment of all amounts then outstanding or initiating foreclosure or insolvency proceedings. In such event and if we are unable to obtain alternative financing, our business will be materially and adversely affected, and we may be forced to sharply curtail or cease our operations."

Now we get the same for the Ex-Im Bank Facility.

"As of the result of covenant violations, including those described above, the Company is currently in default under the terms of the Ex-Im Bank Facility.  As of the date of this filing, Wells Fargo had not taken any action with respect to the Company's defaults and the Company was actively discussing with Wells Fargo the terms under which such defaults may be cured or waived.  Although the Company is in active discussions with Wells Fargo, if the Company is not successful in obtaining the cure or waiver of such defaults, Wells Fargo may exercise any and all rights and remedies available to it, up to and including terminating the Ex-Im Bank Facility. In such event and if we are unable to obtain an alternative facility, our business will be materially and adversely affected, and we may be forced to sharply curtail or cease our operations."


Notes to Unaudited Interim Condensed Consolidated Financial Statements, Total Assets by Segment, As of September 29, 2012:

If you subtract the discontinued operations (see the asterisk note) in the table from the Total Assets ($86,493,000) it looks like continuing operations has only $72,680,00 in assets!

Now stroll down to Net Loss ($22,330,000):

If you add back Goodwill at $14.6 mil and Discontinued Ops at $3.7 mil continuing Ops still lost $4.0 million! Consider E&C making 6.5% and Automation making 16.4% in margin with overall rate at 5.7%.  With a $6.0 million overhead they need to double revenue to just break even OR they need to double margins.


Note 12 – Subsequent Events

Notice of Delisting:

"The Company intends to consider available options to resolve the noncompliance with the minimum bid price requirement. No determination regarding the Company’s response has been made at this time. There can be no assurance that the Company will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with other NASDAQ listing criteria."

Closing of Sale of the Land and Right of Way Division of the Field Solutions Segment:

"Pursuant to the final agreement, the Company will retain approximately $4.5 million of this division's working capital at the time of closing [again, that means no cash received], in addition to receiving a $3.0 million promissory note payable over four years."

"As previously reported, the original agreement provided for the sale of substantially all of the assets of both divisions of its Field Solutions segment, the Land and Right-of-Way, and Inspection. However, the Inspection division was not sold as part of the final transaction, and ENGlobal will retain the Tulsa-based business for the foreseeable future, while actively pursuing its sale and reporting its financial position and results of operations as discontinued operations. The Company expects no changes to the personnel of its Inspection operation as a result of this transaction."

Maybe another mandate from division management and employees to ‘sell or we leave’ will prompt accelerate selling activity.


Financial Overview of Continuing Operations:

"Improving our margins on our existing work is an important area of focus.  During the recent period of industry-wide decline in demand for the types of services we provide, we reduced our rates significantly, as was required to obtain and retain business. Although the level of demand has increased, pricing in certain geographical markets is still extremely competitive and we have not yet been able to increase our margins to prior levels. We have recently engaged a management consultant to assist us in improving our profit margins."

Does that mean the remaining management cannot come up with ideas to improve margins?  Are they "energized" but just do not know what to do?


Results of Continuing Operations– Three Months ended September 29, 2012 versus September 30, 2011:

Overall comments - As noted in the summary Revenue down 5% and Gross Profit down 52%.  Concerned should be that the core business is no longer able to make margins to cover SG&A.  The drop in revenue probably comes out of in-office projects, which is making margins (as a percent of revenue) decline, as in-plant revenue becomes a bigger piece of the pie. Bad market mix for E&C. Risk of losing Caspian due to ENG’s cash issues and paying subs. A loss or delay of the next phase of the work could materially impact revenue and margins coming out of Automation. SG&A is saddled with office rents that are not easily re-negotiated and will make it difficult to downsize quickly.

Gross Profit (Loss):

"Gross profit for the three months ended September 29, 2012, as compared to the comparable 2011 period, decreased by approximately $3.5 million, or 5.8%.  As a percentage of revenue, gross profit decreased from 11.2% to 5.7% [massive] for the three months ended September 29, 2012, as compared to the same period in 2011"

"Our gross profit and gross profit margin decreased primarily due to increased direct and variable costs [wonder what their utilization rate is running, or how billable man-hours are trending?] in our E&C Segment, resulting in lower profit margins.  We continue to be affected by intense competition and pricing pressures."

This seems to be a rather lame excuse when you look at apparent growth of competition in similar markets.


Liquidity and Capital Resources

Overview:

"ENGlobal does not intend to provide updates or make any further comment regarding its exploration and evaluation of strategic alternatives unless and until the Board of Directors has approved a definitive course of action."

Based on the Board’s reactions to what appear to be critical items this could take a while for them to approve anything. This does not really surprise you, does it?

Cash Flows from Operating Activities:

"The primary changes in working capital during the nine months ended September 29, 2012 included increased Costs in Excess of Billings [not getting billings out on time] and Decreased Billings in Excess of Costs [not getting favorable contract terms to allow for positive cash flows on lump sum projects] on uncompleted contracts of $1.3 million on fixed price projects where billing milestones have not been met, partially offset by an increase in accounts receivable of $2.8 million."

Again, bad terms, or poor order-to-cash processes.


PNC Credit Facility:

"Forbearance Period was subsequently extended to November 15, 2012 and again to November 30, 2012 (or earlier should any forbearance default occur) at a cost of $17,500 for each extension."

That could get expensive at $35k per month.


Conclusions and Opinion

Glancing at the latest financials posted (November 24th) and the revenue trends certainly are an eye opener!  Revenue trends over the last 4 quarters go from approx. $150mm as December 2011, $75mm in Q1, $77mm in Q2, and then $23mm in Q3 although I suspect the December 2011 numbers may not be correct*.  The Q3 results give ENG a current continuing revenue run-rate of less than $95mm which is about where it started in 2001.  Would be interesting to look back at what level of SG&A ENG had at that time.

*(According to SEC filings ENG 2011 annual revenue was approx $313mm and the 2011 3Q revenue was approx $222mm, or a net revenue for the 4th quarter of approx $91mm.)

Back to the press release and 10Q - OK folks, it is a disaster. No profit is going to be made. So what is going to happen?

Let's look at the recent history. ENG's losses were increasing. It is obvious PNC didn't trust management anymore. A consultant was forced upon ENG through the Credit Facility by PNC to manage ENGlobal.

Then, parts of the company are/were being sold and this continues. It is a liquidation process in my honest opinion.

Now another firm comes in (Simmons) assigned to help determine the future of ENG, however, ENG is not indicating any particular avenue. Cutting through the BS, I believe they are trying to sell the company. Moreover, we are getting close to that time. Why? One, for tax reasons - before the end of the year. Two, it sure looks like they threw in everything that would be a loss into this quarter to take all problems off the balance sheet. This would clean up those books for a potential sale. Three, PNC would never extend more time to ENGlobal with their risks increasing from further company losses unless a deal is imminent.

If you own stock I think you will get something for it, either in stock trade or cash. This is better than nothing. If you have a job there you may continue to have one, adjustments will be made. Who will buy ENG? First, let me say the deeper the buyer’s pockets are the better off you will be. In addressing who would be a buyer - who wants to create or increase their presence in the Golden Triangle, someone like CDI, Jacobs or CDI.

Good luck to everyone.

ENGlobal Corporation: 3Q - OMG

HOUSTON, Nov. 19, 2012 (GLOBE NEWSWIRE) -- ENGlobal (Nasdaq:ENG), a leading provider of energy-related project delivery solutions, announced today its financial results for its third quarter ended September 29, 2012. ENGlobal reported a net loss of $22.3 million, or $0.83 per diluted share, for the quarter ended September 29, 2012, compared to a net loss of $1.3 million, or $0.05 per diluted share for the same period last year. Included in the third quarter 2012 results were one-time, non-cash charges of approximately $17.5 million, primarily relating to goodwill impairments and a write-down of the assets of the Field Solutions segment that was classified as held-for-sale at quarter end, in addition to charges on completed fixed price projects.

Commenting on the results, William A. Coskey, P.E., ENGlobal's Founder, Chairman and Chief Executive Officer, said, "To a large extent, the third quarter is comprised of heritage financial items that have impacted our Company and mask some recent improving financial trends in our business.  For example, we continue to see gradual improvements across several of our working capital-related metrics. I am very pleased with current business activity in our operations, and also the progress we have made on several fronts since August 1st of this year."

Mr. Coskey continued, "While we are disappointed in the quarterly results, we believe that the measures that are being implemented should begin to have a positive impact. During the quarter, we continued to make progress on our strategic priorities, including collaborating with our management consultant to improve financial performance, reorganizing our management team, pursuing opportunities to improve margins and reduce expenses, and completing the divestiture of our Land and Right-of-Way division of the Field Solutions segment. One thing I can say with certainty is that our management team is engaged and energized, and working hard to produce better results going forward."

Third quarter revenues decreased to $57.5 million, 5% lower than the $60.5 million for the third quarter of fiscal year 2011, primarily due to a decrease in revenue from the Gulf Coast region of the Engineering and Construction segment.

In response to the reduced activity levels expected for the remainder of 2012, the Company began reducing overhead and selling, general and administrative ("SG&A") staff levels beginning in June and has continued this effort throughout the third quarter. Overall, SG&A expenses decreased $0.5 million from $6.7 million in the three months ended September 30, 2011, to $6.2 million in the third quarter of 2012. As a percentage of revenue, SG&A expense decreased to 10.7% for the three months ended September 29, 2012, from 11.0% for the comparable prior year period.

ENGlobal continues to negotiate with its lender and work with its management consultant to restore the Company's compliance with its credit facility.

The Company's Quarterly Report on Form 10-Q for the quarter ended September 29, 2012 will be filed with the Securities and Exchange Commission today reflecting these results. The Company will not be hosting an earnings conference call for the quarter ended September 29, 2012.

ENGlobal Corporation: Some Of The Deal Finalized

ENGlobal Finalizes Divestiture of Land and Right of Way Division

Houston, TX, Nov. 5, 2012 (GLOBE NEWSWIRE) -- ENGlobal Corporation (NASDAQ: ENG), announced today that it successfully completed the divestiture of its Land and Right of Way division to Steele & Company, LP based in Tyler, Texas ("Steele"). Pursuant to the final agreement, the Company will retain approximately $4.5 million of this division's working capital at the time of closing, in addition to receiving a $3.0 million promissory note payable over four years from Steele. Subject to the agreement, the purchase price was adjusted based on the net working capital of the division at the time of closing. ENGlobal intends to use the net proceeds from this transaction to reduce outstanding debt.

As previously reported, the original agreement between ENGlobal and Steele provided for the sale of substantially all of the assets of both divisions of its Field Solutions segment, Land and Right of Way, and Inspection. However, the Inspection division was not sold as part of the final transaction, and ENGlobal will retain the Tulsa-based business for the foreseeable future. The Company expects no changes to the personnel of its Inspection operation as a result of this transaction.

Fall and Winter News and Events 2012

Rev. 4.6

ENGlobal Reaches Forbearance Agreement With Lender

HOUSTON, Oct. 1, 2012 (GLOBE NEWSWIRE) -- ENGlobal Corporation (Nasdaq:ENG), a leading provider of energy-related project delivery solutions, announced today that it has reached a forbearance agreement with its lender under the Company's senior secured revolving credit facility with respect to existing events of default and anticipated events of default. The forbearance agreement allows the Company time to hire a consultant and develop a turnaround plan by October 15, 2012. ENGlobal has hired a consultant and intends to work with them to develop a plan to restore the Company's compliance with the credit facility. The forbearance agreement extends through October 31, 2012.

Opinion 1/10

Again, you can really see who is in power, the lenders - PNC. Do they think ENG can restructure on their own? Nope.

Here is a Houston Business Journal article that is short and interesting. Apparently, they are unaware of the sale of Field Solutions:

http://www.bizjournals.com/houston/blog/drilling-down/2012/10/eng-gets-two-more-weeks-for-turnaround.html?ana=yfcpc

Take a look at the SEC filing and you will see quite a bit more information including the covenants broken. Moreover, there is one sentence that is quite different from the news release with an added keyword I will underline: "The Consultant is to be retained to provide a turnaround or exit plan, in form and substance satisfactory to Agent, by October 15, 2012 (or such later date as may be permitted by Agent in its sole discretion) and services as are reasonably necessary to facilitate Borrowers' ability to operate in compliance with the terms of the Credit Agreement."

You can see the filing here:

http://sec.gov/Archives/edgar/data/933738/000117184312003507/document.htm



ENGlobal Enters Agreement to Sell Its Field Solutions Segment

HOUSTON, Sept. 10, 2012 (GLOBE NEWSWIRE) -- ENGlobal Corporation, a leading provider of energy-related project delivery solutions, announced today that a subsidiary has entered into a definitive agreement to sell substantially all of the assets of its Field Solutions segment to Steele & Company, LP based in Tyler, Texas. ENGlobal's Field Solutions segment includes its Right of Way and Inspection divisions, primarily serving pipeline and electric power operating companies. The purchase price will be approximately $15 million, consisting of approximately $10 million in cash at closing to ENGlobal and a $5 million promissory note payable to ENGlobal over four years. In addition, the definitive agreement provides for a purchase price adjustment based on the net working capital of the business as of closing.

Once the transaction is finalized, Mr. David Sinclair, Executive Vice President of the Field Solutions segment, will become President of the newly formed entity, Steele Land & Inspection. LLC. Mr. Sinclair has over 30 years of Right of Way and land management experience in both domestic and international assignments for the pipeline industry.

"The sale of the Field Solutions segment is important to ENGlobal and serves as a win-win for all parties," said William A. Coskey, P.E., ENGlobal's Chairman and Chief Executive Officer. "Brandon Steele and his team possess a rich heritage and successful operating history in our industry. Both our valued Field Solutions clients as well as personnel in this group are going to be served by a strong, vibrant and honorable organization. Finally, for ENGlobal and our shareholders, this transaction is expected to be a positive step - both in terms of financial liquidity and for our strategic engineering and automation focus going forward."

"The acquisition of ENGlobal's Land and Inspection divisions is a solid strategic fit and allows us to undertake a variety of energy infrastructure projects across the United States," said Brandon Steele, Steele & Company's Chairman of the Board. "In addition, the continuity of the management team will enable us to continue operations with very little disruption. We are confident that the combined portfolio under the Steele name will be well positioned to capitalize on meaningful opportunities in the growing energy marketplace."

The transaction is subject to certain closing conditions, including approval of ENGlobal's lenders. Proceeds provided by the transaction would be used to repay borrowings under ENGlobal's credit facility.

Opinion 9/13

First, I'd like to say that Steele and Company, LP is a fine company. Field Services is lucky to have them as a new parent and Brandon Steele as a great CEO. David Sinclair's leadership and the group will do well there.

I have been watching the stock making new lows after ENGlobal’s Field Services segment has been sold. It does not look like the market has viewed the sale as beneficial and possibly a negative indicator. Let’s examine the sale and look at some facts. Second, let's review the final statement in the news portion of the 8K:

“The transaction is subject to certain closing conditions, including approval of ENGlobal's lenders. Proceeds provided by the transaction would be used to repay borrowings under ENGlobal's credit facility.”

Well you can really see who is in power, the lenders - PNC. Additionally, you can see where the cash is going, into the Credit Facility. This simply allows ENG to borrow more, at a percentage, to operate. We will revisit this later.

It appears this just a way to monetize AR off the Balance Sheet. The sale price is approximate 2.5 times average monthly revenue for FS which could also equal AR and Unbilled at 70-75 days sales outstanding. PNC may be forcing ENG to handle the liquidation too. As far as the FS employees being "served by strong, vibrant, and honorable organization", this will at least be a switch for those FS employees!

ENG loses 22% of their revenue and as a percent of revenue the most profitable segment in their portfolio. The sale is probably the only option within the company that could bring anything in a sale and with the $5 million note ENG discounted its AR by 30%. If the CEO got 60% of all AR he could pay off his debt but not sure he could fund operations going forward. All this appears to be is quick short-term option to pay down debt.

The cash value, if it were used for such represents about 18 days of payroll. The cash will help in one way only, it will be used to pay off debt, increasing the base formula of the CF to borrow more money while an additional percentage of borrowing debt is added. Revisiting this topic again from above, will it help? Sure short-term. But in the long-term it does not help if you don’t make money. You can't pay any debt back if you continue to lose money. Moreover, hemorrhaging valuable employees on a continual basis will only hasten the inevitable.

Comments are welcome.

• 9/10 New 5-year intraday low on ENG stock, $0.64.
• 9/11 New 5-year intraday low on ENG stock, $0.61. New 5-year closing low on ENG stock, $0.64, volume 68K shares.
• 9/13 New 5-year closing low on ENG stock, $0.62, volume 177K shares.
• 9/18 New 5-year intraday low on ENG stock, $0.60.
• 9/19 New 5-year closing low on ENG stock, $0.59.
• 9/20 New 5-year intraday low on ENG stock, and new 5-year closing low on ENG stock, $0.51, volume 174K shares.
• 9/21 New 5-year intraday low on ENG stock, $0.50.
• 10/3 ENG files Delisting Notice 8K from the NASDAQ with the SEC. 180 days timeout. :(
• 10/9 New 5-year intraday low on ENG stock, and new 5-year closing low on ENG stock, $0.45, volume 81K shares.
• 10/10 New 5-year intraday low on ENG stock, $0.32. New 5-year closing low on ENG stock, $0.33, volume 369K shares. It looks as though somebody is expecting a bad event.
• The heads of Engineering, HR and Business Development have left ENGlobal.
• 3Q Earnings are delayed - NT 10Q filed 11/13 (see post).