ENGlobal Corporation: Previous Segment Sale Final, New Credit Facility

ENGlobal Finalizes Sale of Gulf Coast Operations
Enters Into New $10 Million Credit Facility

HOUSTON, Aug. 30, 2013 (GLOBE NEWSWIRE) -- ENGlobal Corporation (Nasdaq:ENG), a leading provider of energy-related engineering and automation services, announced today that it successfully completed the sale of its Gulf Coast engineering and in-plant operations to Furmanite America, Inc. ("FAI"), a subsidiary of Furmanite Corporation (NYSE:FRM) ("Furmanite"). The total consideration of the transaction to ENGlobal was approximately $20 million, consisting primarily of cash funded at closing. The Company will use the cash proceeds from the transaction to repay its outstanding debt under its existing credit facility and for working capital purposes. Further terms of the transaction were not disclosed.

ENGlobal will retain its Engineering operations and the entirety of its Automation operations located in Houston, TX, Tulsa, OK, Mobile, AL, Denver, CO, and Chicago, IL, which perform project execution services primarily to the energy industry. The Company previously announced that it intended to concentrate on its core Engineering and Automation segments in these markets and target specific engineered solutions, utilizing both in-house and third party intellectual property.

ENGlobal also announced that it has entered into a one year, $10 million credit facility with its lender, which will be used for working capital purposes, as needed, and will allow the Company additional time to analyze its long-term capital needs. 

"The completion of this transaction with Furmanite is a significant milestone for ENGlobal," said Mr. William A. Coskey, P.E., Chairman and Chief Executive Officer of ENGlobal. "Now, as a stronger company, we plan to return our attention to strategic growth. I would like to personally thank all of our employees, especially those in our Gulf Coast operations, for their patience throughout this process and commend the transition team for their efforts."

Mr. Coskey, continued. "I have great respect for Furmanite's management team and have no doubt that our Gulf Coast employees are in good hands. We look forward to working with Furmanite on future projects."

ENGlobal Corporation: 2Q 2013 Results

HOUSTON, Aug. 9, 2013 (GLOBE NEWSWIRE) -- ENGlobal (Nasdaq:ENG), a leading provider of energy-related engineering and automation services, announced today its financial results for the second quarter ended June 29, 2013.

Second Quarter 2013 Highlights Compared to Second Quarter 2012:

• $0.06 loss per share, an improvement from a loss per share of $0.37
• Revenue of $50.6 million, a decrease of 14.5%
• Gross profit margin as a percentage of revenue of 10.9%, an increase from 8.8%
• Overall SG&A decreased from $7.9 million to $6.4 million

ENGlobal reported a net loss of approximately $1.7 million, or $(0.06) per share, from both continuing and discontinued operations for the quarter ended June 29, 2013. This compares to a net loss of approximately $9.8 million, or $(0.37) per share, and a net loss from continuing operations of approximately $8.3 million, or $(0.31) per share, for the quarter ended June 30, 2012. Second quarter 2013 revenues decreased to $50.6 million, 14.5% lower than the $59.2 million for the second quarter of 2012, primarily due to lower engineering, procurement and construction (EPC) project revenues in the Engineering and Construction segment and the conclusion of several projects in the fabrication division of the Automation segment in 2012.

"The impending divestiture of our Gulf Coast engineering and in-plant operations to Furmanite will result in a major transformation of our business," said William A. Coskey, P.E., Founder and Chief Executive Officer of ENGlobal. "The transaction is expected to close by the end of August, and the corporate services transition is expected to be substantially complete by the end of 2013."

Mr. Coskey continued. "In effect, this transaction serves as a directional change for ENGlobal. We will have a fresh start and our management team will now have the freedom to pursue strategic opportunities that we believe will ultimately grow the Company. Through the balance of this year, we will firm up the new goals for our Company's future – and look forward to communicating our short- and long-term plans during that time."

The Company's gross profit margin as a percentage of revenue increased to 10.9% in the three months ended June 29, 2013 as compared to 8.8% for the three months ended June 30, 2012.  The primary reason for this increase is reduced variable costs and improved efficiencies in the Automation segment.

The following table illustrates the composition of the Company's revenue and profitability for the three months ended June 29, 2013 and June 30, 2012, respectively [see table within the link below]:

http://www.b2i.us/profiles/investor/ResLibraryView.asp?ResLibraryID=64502&BzID=702&g=541&Nav=0&LangID=1&s=30

Overall, selling, general and administrative ("SG&A") expenses decreased $1.5 million, or 19%, from $7.9 million in the three months ended June 30, 2012 to $6.4 million for the three months ended June 29, 2013. As a percentage of revenue, SG&A decreased to 12.6% for the three months ended June 29, 2013, from 13.3% for the comparable period in 2012.

The amount outstanding under the Company's credit facility was $26.8 million at December 29, 2012, $14.7 million at June 29, 2013 and $12.5 million at August 7, 2013. These decreases were primarily due to the release of restricted cash related to the expiration of the Company's Ex-Im Letter of Credit Facility and the liquidation of the working capital of its divested business units.

On July 5, 2013, the Company entered into a definitive agreement under which its Gulf Coast engineering and in-plant operations will be sold to Furmanite America, Inc., a subsidiary of Furmanite Corporation (NYSE:FRM). The total value of the transaction to ENGlobal is expected to be approximately $21.5 million, consisting primarily of cash at closing and a $3.5 million promissory note issued with a Furmanite Corporation guarantee. ENGlobal intends to use the net proceeds from this transaction to repay its outstanding debt and for working capital purposes. The transaction has been approved by the boards of directors for both companies, and is expected to close on or around August 30, 2013, subject to lender approval and the completion of customary conditions.

The Company's Quarterly Report on Form 10-Q for the quarter ended June 29, 2013 will be filed with the Securities and Exchange Commission later today reflecting these results.

ENGlobal Corporation: Awarded ~$5M Contract

ENGlobal Awarded Project from Utica East Ohio Midstream

 Houston, TX, July 23, 2013 (GLOBE NEWSWIRE) -- ENGlobal Corporation (NASDAQ: ENG), a leading provider of energy-related engineering and automation services, announced today that it has been awarded a project from Utica East Ohio Midstream LLC ("UEO"), to provide engineering and procurement support services at its Leesville cryogenic processing plant.  The value of the award to ENGlobal is approximately $5.0 million.

ENGlobal's scope consists of engineering and procurement support services for a control room, condensate stabilization unit, site grading, and design integration services for a 200 million standard cubic feet per day (MMSCFD) cryogenic unit.  The Company expects to begin work on the project immediately with project completion anticipated in the second quarter of 2014.

UEO is a joint venture between M3 Ohio Gathering LLC, Access Midstream Partners, L.P., and EV Energy Partners, L.P. and is one of the largest integrated midstream service complexes in eastern Ohio ("UEO Buckeye").  The UEO Buckeye complex currently includes 800 million cubic feet per day of natural gas processing and associated NGL fractionation, loading and terminal facilities.  The 200 million cubic feet per day Leesville facility is the second processing plant in UEO Buckeye complex, which will recover natural gas liquids (NGLs) in the liquids-rich Utica shale play, and has a design capacity of up to 600 million cubic feet per day.

"ENGlobal is pleased to be a part of building this major gas processing facility in the Utica shale development," said William A. Coskey, P.E., ENGlobal's President and Chief Executive Officer. "Having been selected for both the engineering and procurement work, ENGlobal is able to provide a greater level of responsibility throughout the scope of the project.  We would like to thank UEO for their confidence in our capabilities."

ENGlobal Corporation: Sells Engineering and In-Plant Operations to Furmanite

ENGlobal Announces Agreement to Sell Its Gulf Coast Engineering and In-Plant Operations to Furmanite

HOUSTON, July 16, 2013 (GLOBE NEWSWIRE) -- ENGlobal Corporation (Nasdaq:ENG), a leading provider of energy-related engineering and automation services, announced today that it has signed a definitive agreement under which ENGlobal's Gulf Coast engineering and in-plant operations will be sold to Furmanite America, Inc. ("FAI"), a subsidiary of Furmanite Corporation (NYSE:FRM). The total value of the transaction to ENGlobal is expected to be approximately $21.5 million, consisting primarily of cash at closing and a $3.5 million promissory note issued with a parent company guarantee.

ENGlobal's Gulf Coast engineering operations consist of its Beaumont, TX, Baton Rouge, LA, Lake Charles, LA, Deer Park, TX, and Freeport, TX offices, which primarily perform work for downstream clients across the region. The Company will retain its Engineering operations and the entirety of its Automation operations located in Houston, TX, Tulsa, OK, Mobile, AL, Denver, CO, and Chicago, IL, which primarily perform midstream and downstream related projects.

ENGlobal intends to use the net proceeds from this transaction to repay its outstanding debt. The transaction has been approved by the boards of directors for both companies, and is expected to close within 60 days, subject to lender approval and the completion of customary conditions. In addition, the companies have agreed to facilitate a smooth transition of corporate service functions and to support each company's business development efforts. Under terms of the agreement, approximately 900 employees will transfer from ENGlobal to Furmanite.

"The transaction with Furmanite, representing approximately half of our business, has stood out among all alternatives as making the most sense for our employees, clients and shareholders," said William A. Coskey, P.E., Founder, Chairman and Chief Executive Officer. "The ongoing ENGlobal operations will become strategically focused, well positioned for growth, and essentially free of bank debt. We will continue to build on the expertise of our heritage Engineering and Automation segments and also expect to target specific engineered solutions, utilizing both in-house and third party intellectual property."

Mr. Coskey continued, "We are pleased to announce that throughout our turnaround plan over the last year – and through Closing of this transaction, we will have reduced our debt and vendor obligations by approximately $50.0 million. The resulting revitalized Company with 500 employees will become the foundation from which to rebuild ENGlobal."

The Company expects that this transaction will substantially complete its review of strategic alternatives. In October 2012, ENGlobal announced its plan to explore strategic alternative options, which included raising capital, selling a portion of the Company's assets, and the possible sale or merger of ENGlobal, among other alternatives. Since that time, the Company discontinued its Electrical Services division and divested its Land/Right of Way and Midstream Inspection divisions.

Summer and Fall News and Events 2013

Rev 6.0

ENGlobal Announces Expansion of Its Department of Defense Contract

HOUSTON, Nov. 4, 2013 (GLOBE NEWSWIRE) -- ENGlobal (Nasdaq:ENG), a leading provider of energy-related engineering and automation services, today announced that its wholly-owned subsidiary, ENGlobal Government Services, Inc. based in Tulsa, Oklahoma, has been awarded an additional delivery order on one of its existing multi-year contracts from the U.S. Department of Defense. The value of the award to ENGlobal from the Space and Naval Warfare Systems Center (SSC) Atlantic is estimated to be approximately $7.0 million.

As previously reported in July 2012, ENGlobal was awarded an indefinite-delivery/indefinite-quantity (ID/IQ), cost-plus/fixed-fee contract for technical and maintenance services for automated tank gauging and automated fuel handling equipment (AFHE). Under the scope of the new delivery order, ENGlobal expects to perform engineering and design services to maintain, repair, and/or rebuild the fuel handling equipment of the Naval Supply Fleet Logistics Command Center in Pearl Harbor, Hawaii.

"We are successfully being awarded a steady mix of business, including this delivery order by the U.S. Department of Defense," said Mr. William A. Coskey, P.E., Chairman and Chief Executive Officer of ENGlobal. "The Company is focused on improving the profit mix of its operations and maintaining overhead discipline. We are excited about our growth potential after recent divestitures, together with select project opportunities. We believe this strategy, plus our strong financial condition, puts us in a good competitive position going forward."

Commentary and Notes: We will soon see the 3Q for ENG and how the above comments relate. This is a small but a positive contract addition.


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Furmanite Reports 3Q with a profit after Acquisition of ENGlobal Assets

Revenues for the three months ended September 30, 2013 were $99.5 million, an increase of $23.9 million, or 31.7%, over the $75.6 million reported for the three months ended September 30, 2012. Operating income for the three months ended September 30, 2013 was $4.4 million compared to an operating loss of $0.7 million for the three months ended September 30, 2012, an increase of $5.2 million. Net income for the 2013 third quarter was $2.1 million, or $0.06 per diluted share.

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ENGlobal Announces First Universal Master Control Station(TM) Installation Patent-Pending, Vendor-Independent Subsea Control System 

HOUSTON, Oct 15, 2013 (GLOBE NEWSWIRE via COMTEX) -- ENGlobal Corporation, a leading provider of energy-related engineering and automation services, announced today that its first patent-pending Universal Master Control Station(TM) (UMCS(TM)) has been successfully installed on an offshore platform in the Gulf of Mexico for a major international oil and gas company. The UMCS(TM) provides a standardized interface between industry available subsea production systems and topsides production facilities.

"We are pleased to reach this significant milestone and look forward to pending deployments of the UMCS(TM) technology," said William A. Coskey, P.E., ENGlobal's Chief Executive Officer. "ENGlobal intends to utilize the UMCS(TM) platform as the basis for further subsea controls integration projects, including hydraulic power and electrical systems. As a Subsea Controls Integrator (SCI), we offer added value to our customers by utilizing our execution skills to manage technically complex subsea projects."

The UMCS(TM) is a control station used primarily to monitor and control subsea production equipment, with features including:

-- Integration of multiple subsea equipment vendors within a single master control station;

-- Operable in new or existing subsea production/injection areas;

-- Scalable object-based programming software utilizing off-the-shelf commercial hardware;

-- Standardized interface to subsea communication units, distributed control systems, electrical power units, and hydraulic power units; and

-- Easily configurable operational graphics, security protection, interlocks, and shutdown sequences tailored via the UMCS Client Configuration Tool(TM).

As previously reported, the UMCS(TM) has been in development since 2006, with coordination between ENGlobal, its client and leading providers of subsea equipment and services. The Company acquired the subsea control system technology - and initiated its U.S. patent process - in 2010 in order to expand into the active offshore upstream market.


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To all the new Furmanite employees from ENGlobal. I wish all of you the best of luck and believe you are in good hands. Thanks for reading and I hope to post some positive trends for your company as they become available.

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Here is a labor lawsuit filed against ENGlobal:

http://englobalovertimecase.com/uploads/Doc._1_-_Complaint_ENGlobal.pdf

I am familiar with the attorney filing the suit. My advice is to question both sides of the case. Amplification is endemic in the legal world.

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8-K Filed 22-Jul-2013

Item 8.01 Other Events
Notice from The NASDAQ Listing Qualifications Department that ENGlobal Corporation has regained compliance with NASDAQ Marketplace Listing Rule 5550(a)(2)

As previously reported, on October 3, 2012, ENGlobal Corporation ("the Registrant") received a letter from The NASDAQ Listing Qualifications Department ("NASDAQ") notifying the Registrant that for the 30 consecutive trading days preceding the date of the letter, the bid price of the Registrant's common stock had closed below the $1.00 per share minimum required for continued inclusion on the NASDAQ Global Market pursuant to NASDAQ Marketplace Listing Rule 5450(a)(1), (the "October Letter").

On April 16, 2013, the NASDAQ approved the Registrant's application to list its common stock on the Capital Market and was granted an additional 180 calendar day period, or until September 30, 2013, to regain compliance.

On July 19, 2013, the Registrant received a letter from NASDAQ notifying the Registrant that since the closing bid price of the Registrant's common stock has been at $1.00 per share or greater for at least 10 consecutive days since the date of the October Letter, the Registrant has regained compliance with NASDAQ Marketplace Listing Rule 5550(a)(2) and NASDAQ now considers the matter closed.

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Judging by the way the stock has surged in volume on Thursday 7/11 and the price spiked to $1.54 I would say an announcement is forthcoming.

Looks like the news released today, 7/16, was a partial sale of ENG assets to Furmanite America. Opportunities will be present for all. Watch how the leaders react.

Good luck to everyone.

ENGlobal Corporation: 8K - Letters of Credit Filing

http://www.sec.gov/Archives/edgar/data/933738/000117184313002557/f8k_062013.htm


Item 8.01     Other Events


As previously reported, the Registrant’s lenders issued approximately $12.8 million in letters of credit to a client in July 2011 on the Company’s behalf to support its performance on an international Automation project (“Performance Letters of Credit”).  These Performance Letters of Credit were issued outside of the Registrant’s working capital facility with its current senior lender.


On June 17, 2013, its Performance Letters of Credit were allowed to expire.  The Registrant has proposed an alternative option to modify terms of future retention amounts to replace the Performance Letters of Credit, which is currently under consideration.


As a result, the Registrant expects its project-specific credit agreement will be terminated and approximately $7.1 million in collateral will be released to its senior lender.

Editor's Note: These Performance Letters of Credit were for the Caspian Sea Project. 

ENGlobal Corporation: 4Q and 1Q Comments

Rev. 1.1

The news has recently been quiet for ENGlobal and most everyone has been wondering what will happen next? The last credit facility expired on 30 April and we have had no news on that either. I would think some processes have already started and an event is waiting to happen.

Let’s review some of the last financial reports. For the 4Q and FY 2012 ENGlobal reported a loss from continuing operations of ($1.12). However, that wasn’t the end of the story. When you read the SEC filing the NET loss was ($1.25). An additional loss of (.13) came in from Discontinued Operations; this was a bullet point that didn’t make lead headlines.

This additional loss does not look unusual until you compare it to 1Q 2013. ENGlobal reported a profit of $.07/share. This number looked great until you see that they also reported a loss of $.04/share from Continuing Operations. Losing from Continuing Operations is bad and you are not going to get out of the hole performing like that.

In turn, this begs the question, why the profit in 1Q and what offset the loss from continuing operations? Looking into the SEC filing the answer was again Discontinued Operations (DO) but this time with a profit! So… why a loss from DO in 4Q 2012 and profit from DO in 1Q 2013? Should not the two DOs have occurred together and leveled at a ($.02) in 4Q? Those are good questions. CFO’s do have some flexibility and that is all that I can comment on as to why it happened, but one would have to think by the time they issued 4Q 2012 results they would also have known the profitable impact from the sale of DO.  Subsequently, where is the transparency and full-disclosure?  Must be a GAAP thing!

The salient issue, however, is the ongoing loss from continuing operations. This is a Black and Red issue that PNC or investment backers will not tolerate. Many months ago I proposed that ENG may be sold. Recently we saw a spike up in the stock. I think this may be an indicator of something happening. Be wise that this does not necessarily mean a sale or an associated price, however, a calculated possibility. There could be a myriad of possibilities including a stock swap. Did anyone notice that there has been no announcement of an Annual Meeting or the associated SEC filings? Logic would dictate not to expend money and energy on a moot scenario. Nevertheless, ENGlobal cannot continue to operate at loss.

Good luck to everyone.