ENGlobal 4Q & FY 2017

    
ENGlobal Reports Fourth Quarter and Fiscal Year 2017 Results
   
HOUSTON, March 15, 2018 (GLOBE NEWSWIRE) -- ENGlobal (Nasdaq:ENG), a leading provider of engineering and automation services, today announced a net loss of $16.3 million and a diluted loss per share of $0.59 for the fiscal year ended December 30, 2017.  The Company incurred income tax expense of $10.1 million during 2017 primarily due to the effect of the income tax rate change and a valuation allowance recorded against the Company's deferred tax assets.  The Company incurred non-cash expenses for depreciation, amortization and stock compensation of $1.6 million during 2017.
Management's Assessment

William Coskey, P.E., Chairman and Chief Executive Officer of ENGlobal said: "I am encouraged that ENGlobal's sales pipeline of near term, higher probability opportunities have recently been growing at a rapid pace.  Overall, our 2018 sales pipeline is now over three times larger than at this time two years ago, reinforcing the Company's proactive efforts to increase the utilization of its capabilities and resources.  It's also important to note that our 2018 target list of opportunities currently exhibits over 90% of these potential projects being within the Automation segment."

Mr. Coskey continued: "We have faced a certain sluggishness in the markets we serve with respect to our customers awarding work, and thus it has taken longer to turn our impressive list of opportunities into booked backlog.  However, recent activity and customer communications indicates that our business is approaching an inflection point this year."
Mr. Coskey continued:  "I could not be prouder of the men and women of ENGlobal, who are working tirelessly to rebuild our Company in a better way.  Building our backlog with higher expected margins, executing on a larger volume of business, and leveraging our lower fixed overhead structure together are expected to provide for profitable results."

Mark Hess, ENGlobal's Chief Financial Officer, said: "The Company has successfully reduced its run rate fixed overhead to under $12 million per year, significantly lower than in the recent past.  However, our reduced volume of business does not currently produce sufficient project margin for profitable results.  Working capital at December 30, 2017 was approximately $16.8 million, which, along with internally generated funds, is expected to be sufficient for our anticipated 2018 growth. We believe that increased value for our shareholders can be realized this year by executing our internal growth plan, together with potential external strategies being developed."

2017 Fiscal Year results as compared to 2016 Fiscal Year results:

Revenue decreased to $55.8 million for the fiscal year ended December 30, 2017, or a 5.8% decrease, from $59.2 million for the fiscal year ended December 31, 2016. ENGlobal reported a net loss of $16.3 million, or $0.59 per diluted share, for the fiscal year ended December 30, 2017, compared to net loss of $2.3 million, or $0.08 per diluted share, for the prior year period. The Company incurred income tax expense of $10.1 million during 2017 primarily due to the effect of the income tax rate change and a valuation allowance recorded against the Company's deferred tax assets. The Company recorded an income tax benefit of $1.0 million during 2016. The Company incurred non-cash expenses for depreciation, amortization and stock compensation of $1.6 million during both 2017 and 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 May 16, 2017, the date the program was suspended, ENGlobal had repurchased and retired 1,191,050 shares of common stock at a total cost of $1,498,409.

The following table illustrates the composition of the Company's revenue and profitability for its operations for the fiscal years ended December 30, 2017 and December 31, 2016:
We have revised our segment reporting to reflect our current management approach and recast prior periods to conform to the current segment presentation.  As a result of the change in reporting structure discussed above, effective January 1, 2017, the results of ENGlobal's Government Services group, which were previously included as part of our Engineering, Procurement and Construction Management ("EPCM"), are now reported within the Automation segment.

	Year Ended									Year Ended
(amounts in thousands)	December 30, 2017									December 31, 2016
Segment	Total Revenue		% of Total Revenue		Gross Profit Margin		Operating Profit Margin			Total Revenue		% of Total Revenue		Gross Profit Margin		Operating Profit Margin
Engineering & Construction	$ 22,595		40.5%		4.9%		(7.9 )%			$ 24,006		40.5%		10.4%		0.2%
Automation	33,170		59.5%		16.1%		6.52 %			35,218		59.5%		21.6%		11.3%
Consolidated	$ 55,765		100.0%		11.5%		(11.02)%			$ 59,224		100.0%		17.1%		(5.5)%

The following table illustrates the composition of the Company's revenue and profitability for its operations for the three months ended December 30, 2017 and December 31, 2016:

	Three Months Ended									Three Months Ended
(amounts in thousands)	December 30, 2017									December 31, 2016
Segment	Total Revenue		% of Total Revenue		Gross Profit Margin		Operating Profit Margin			Total Revenue		% of Total Revenue		Gross Profit Margin		Operating Profit Margin
Engineering & Construction	$ 5,619		38.9%		(11.3)%		(28.5 )%			$ 5,890		40.3%		12.4%		1.6%
Automation	8,811		61.1%		13.7%		5.1 %			8,712		59.7%		22.6%		13.1%
Consolidated	14,430		100.0%		4.0%		(17.4)%			14,602		100.0%		18.5%		(3.0)%

The following is a summary of the Company's statement of operations for the last four quarters which may be helpful in analyzing our ongoing business:

(amounts in thousands)	2017																	Fiscal Year
	Q1						Q2				Q3			Q4				2017
Revenue	$ 12,473						$ 15,966				$ 12,896			$ 14,430				$ 55,765
Gross Profit	1,731						2,513				1,621			573				6,438
Gross Profit Margin	13.9%						15.7%				12.6%			4.0%				11.5%
General & Administrative Expenses	3,406						3,057				3,041			3,077				12,581
Operating Loss	(1,675					)	(544			)	(1,420		)	(2,504		)		(6,143		)
Net Loss	(878					)	(895			)	(12,154		)	(2,331		)		(16,258		)

The following table presents certain balance sheet items as of December 30, 2017 and December 31, 2016:

(amounts in thousands)	As of December 30, 2017		As of December 31, 2016
Cash and restricted cash	$  9,648		$  15,687
Working capital	16,847		22,200

 

ENG 3Q 2017

ENGlobal Reports Third Quarter 2017 Results


HOUSTON, Nov. 03, 2017 (GLOBE NEWSWIRE) -- ENGlobal, a leading provider of engineering and automation services, today announced results for the third quarter ended September 30, 2017.

ENGlobal reported a net loss of $12.1 million for the third quarter of 2017 which was a $12.6 million decrease over net income of $0.5 million reported for the prior year period.  The third quarter 2017 results included the effects of a $11.3 million non-cash charge relating to a valuation allowance that was taken against the Company's deferred tax assets.   Net loss per diluted share was ($0.44) versus net income per diluted share of $0.02 for the third quarter just ended and for the third quarter of 2016, respectively.

During the second quarter of 2017, management worked closely with a strategy consultant to perform an assessment of the Company and both short term and long term market trends, which in turn assisted management in updating its long term business growth strategy. This assessment was completed in the quarter just ended and concluded that ENGlobal's market segments that are expected to experience the highest future growth rates are those relating to Industrial Controls and Automation and the Industrial Internet of Things (IIOT).

These are both areas in which the Company has extensive experience providing higher value products and services to its clients but have not been the Company's primary focus in recent years.  As a result of this strategic assessment, management has developed a multi-year plan to invest and position the Company as a leading provider of higher value industrial automation and IIOT services to its extensive customer base - an area that has historically produced higher project margins for ENGlobal.

Additionally, through previous organic initiatives, ENGlobal is now a vertically integrated service provider with expertise in project related engineering, mechanical fabrication, systems integration and automation. This positioning has allowed the Company to differentiate itself from most of its competitors as a full service provider - delivering benefits by reducing its clients' need to coordinate multiple vendors.  In addition, ENGlobal is now able to pursue larger scopes of work focused on a wide range of modularized engineered systems.  Management believes that because of the vertical integration strategy, an increasing amount of engineering, mechanical fabrication and systems integration services necessary to support the Company's strategic growth plan will be awarded to the Company.

Management's Assessment

William A. Coskey, P.E., Chairman and CEO of ENGlobal stated:  "Our management has been very busy - taking actions during the quarter to begin the implementation of ENGlobal's strategy. These first steps included the reorganization and refocusing of our business development personnel, the development of relevant marketing materials and the successful adoption of a new customer relationship management system.  In addition, during the quarter we completed the reorganization of our operations staff resulting in a senior VP responsible for the staffing, training, development and project execution of our automation business and a senior VP with the same responsibilities for our multidiscipline engineering and EPC projects business."

Mark A. Hess, ENGlobal's Chief Financial Officer stated:  "During the quarter, we continued to work through many projects that were awarded at the end of last year and early this year at relatively lower margins. Combined with our low productivity levels following hurricane Harvey, this produced lower than expected revenue and gross margin for the quarter.  While our selling, general and administrative costs continue to be rationalized and reduced, the reduction was not enough to offset the reduced gross margin. In addition, during the quarter, pursuant to standard accounting rules, we established a valuation allowance against our deferred tax assets of $11.3 million."

Mr. Hess continued: "While work as a result of our strategy assessment is in its beginning phases, we have seen encouraging early indicators that this approach is aligned with our customers' strategic focus and will be well received by our clients.  As one example, we have been developing our automation pipeline over the last few quarters resulting in a 20% increase of our automation backlog during the quarter just ended.  Proposal activity has been healthy and we are currently awaiting client decisions on a number of significant opportunities."

The following is a summary of the income statement for the three months ended September 30, 2017 and September 24, 2016:

(amounts in thousands)		Three months ended September 30, 2017				Three Months ended September 24, 2016
Revenue	$	12,896			$	15,968
Gross Profit		1,621				3,881
General & Administrative Expenses		3,041				3,511
Operating Income (Loss)		(1,420)				370
Net Income (Loss)		(12,154)				489

The following table presents certain balance sheet items as of September 30, 2017 and December 31, 2016:

(amounts in thousands)		As of September 30, 2017		As of December 31, 2016
Cash	$	10,898	$	15,687
Working capital		19,163		22,200

The following table illustrates the composition of the Company's revenue and profitability for its operations for the three and nine months ended September 30, 2017 and September 24, 2016:

(amounts in thousands)		Three months ended September 30, 2017											Three Months ended September 24, 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		$	8,573	66.5%		10.5%		0.3%						$	8,216		51.5%		17.7%		6.6%
Automation			4,323	33.5%		16.7%		4.4%							7,752		48.5%		31.3%		22.5%
Consolidated		$	12,896	100.0%		12.6%		(11.0)%						$	15,968		100.0%		24.3%		2.3%

(amounts in thousands)		Nine months ended September 30, 2017											Nine Months ended September 24, 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		$	26,833	64.9%		13.5%		3.5%						$	25,000		56.0%		11.5%		1.8%
Automation			14,503	35.1%		15.5%		4.0%							19,622		44.0%		23.1%		11.9%
Consolidated		$	41,336	100.0%		14.2%		(8.8)%						$	44,622		100.0%		16.6%		(6.3)%

ENGlobal Reports Second Quarter 2017 Results

ENGlobal Reports Second Quarter 2017 Results
   
HOUSTON, TX--(Marketwired - Aug 9, 2017) - ENGlobal, a leading provider of engineering and automation services, today announced results for the second quarter ended July 1, 2017.

Highlights for the quarter include improved financial trends, as indicated by quarterly comparisons which show sequential and year-over-year increases in Revenue and Gross Profit Margin, along with decreases in SG&A expense.

ENGlobal reported net loss of $0.9 million for the second quarter of 2017 which was a $0.7 million improvement over a net loss of $1.6 million reported for the prior year period. Net loss per diluted share was ($0.03) and ($0.06) for the second quarter just ended and for the second quarter of 2016, respectively. Revenue increased by $2.1 million to $16.0 million from $13.9 million, or a 15.3% increase, for the three months ended July 1, 2017, as compared to the three months ended June 25, 2016.

Management's Assessment

Mark Hess, ENGlobal's Chief Financial Officer stated: "It is important to note that our pre-tax loss for the quarter was $0.5 million, or a $1.0 million improvement over our pre-tax loss last year and a $1.2 million improvement over the pre-tax loss for the first quarter. Compounding the loss for the second quarter of this year was a tax provision for the quarter of $0.4 million, which increased our loss to $0.9 million after tax. This provision was unusually high and is primarily the result of stock options that expired during the quarter and a slight reduction in the expected annual income tax benefit rate."

Mr. Hess continued: "It is encouraging that the Company has shown improvement in revenue, profit margin, and SG&A for the second quarter results, as reported today. While still early, we believe these metrics are an indication that the investments made in talent and facilities to build a vertically integrated business are beginning to produce results. As expected, we have seen a shift from cash to other components of our working capital with this increase in activity. We expect this shift to continue in the near term as our volumes increase."

William A. Coskey, P.E., Chairman and CEO of ENGlobal added: "We expect that ENGlobal's strategy of delivering engineered modular systems with turnkey execution will continue to become a larger part of our business going forward. We also expect that long-term financial improvement can be realized as a result of increased project scope which serves to leverage our resources."

Mr. Coskey continued: "ENGlobal is now proud to offer a complete set of skills for modular project execution -- engineering, mechanical fabrication, automation configuration, and automaton integration. This combination of skills, together with our complete project support services, is a new message from ENGlobal that is resonating with our clientele."

The following is a summary of the income statement for the three months ended July 1, 2017 and June 25, 2016:

(amounts in thousands)		Three months ended July 1, 2017				Three Months ended June 25, 2016
Revenue		$	15,966			$	13,842
Gross Profit			2,513				1,853
General & Administrative Expenses			3,057				3,313
Operating Loss			(544	)			(1,460	)
Net loss			(895	)			(1,603	)

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

(amounts in thousands)		As of July 1, 2017			As of December 31, 2016
Cash		$	11,172		$	15,687
Working capital			20,196			22,200

The following table illustrates the composition of the Company's revenue and profitability for its operations for the three and six months ended July 1, 2017 and June 25, 2016:

(amounts in thousands)		Three months ended July 1, 2017								Three Months ended June 25, 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		$10,095		63.2%		17.6%		8.9%		$8,257		59.7%		9.6%		0.4%
Automation		5,871		36.8%		12.5%		3.5%		5,585		40.3%		19.1%		5.2%
Consolidated		$15,966		100.0%		15.7%		(3.4)%		$13,842		100.0%		13.4%		(10.5)%
(amounts in thousands)		Six months ended July 1, 2017								Six Months ended June 25, 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		$18,260		64.2%		14.9%		5.1%		$16,784		58.6%		8.5%		(0.6)%
Automation		10,180		35.8%		15.0%		3.8%		11,870		41.4%		17.7%		4.9%
Consolidated		$28,440		100.0%		14.9%		(7.8)%		$28,654		100.0%		13.4%		(11.1)%

The Company's Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2017 is expected to be filed with the Securities and Exchange Commission reflecting these results by the end of the day on Wednesday, August 9, 2017.

ENGlobal Government Services Announces Private Sector Initiative and Added Cyber Security Expertise

ENGlobal Government Services Announces Private Sector Initiative and Added Cyber Security Expertise
   
HOUSTON, TX--(Marketwired - Aug 7, 2017) - ENGlobal Government Services, Inc. (EGS), a subsidiary of ENGlobal Corporation, a leading service provider to the U.S. Department of Defense for engineering, automation and cyber security services, announced today that it is now offering its heritage services and expertise to the private sector. For over 30 years, EGS has supported the federal government in the design, installation, and maintenance of Automated Fueling Systems, Automated Tank Gauging (ATG), Supervisory Control and Data Acquisition (SCADA) development and integration, Cyber Security, and Modular Engineered Solutions. EGS has a long and respected history in the important mission of supporting the U.S. Military with fuel supply chain related services and is now positioned to provide the same high level of service to the private sector.

Additionally, and to further enhance its cyber security team, EGS is pleased to welcome Shalon Simmons as Program Manager - Cyber Security/Operational Technology (OT). Ms. Simmons holds certifications as a Certified Information Systems Security Professional (CISSP), Certified Ethical Hacker (CEH), and Computer Hacking Forensic Investigator (CHFI), and is well respected for her work both as a professor and consultant on cyber related subjects.

"With over 30 years of experience in leading edge technology development and services to the federal government and with the addition of new talent, EGS is well prepared to meet the expanded needs of the private sector and our commercial client base," said John L. Kratzert, General Manager of EGS. "We are also very excited to have Shalon Simmons join our Cyber group. She obviously has excellent credentials in this ever growing area, and brings a wealth of knowledge and opportunity to ENGlobal."