ENGlobal Announces 2020 Financial Results
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ENGlobal Announces 2020 Financial Results

Thursday, March 11, 2021 8:00 AM
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Earnings

Investor Conference Call Scheduled Today at 9:00 am Eastern

HOUSTON, TX / ACCESSWIRE / March 11, 2021 / ENGlobal Corporation (NASDAQ:ENG), a leading provider of complete project solutions for renewable and traditional energy, today announced that, for the year ended December 26, 2020, the company posted a net loss of $625,000, or $(.02) per share, on revenue of $64,449,000, compared with a net loss of $1,466,000, or $(.05) per share, on revenue of $56,446,000 for the year ended December 28, 2019.

The company's $8.0 million, or 14.2 percent, improvement in revenue compared to the prior year was primarily the result of an increase in revenue from the Engineering, Procurement, Construction Management (EPCM) segment of $6.5 million, or 33.5 percent, to $25.9 million for 2020 as compared with $19.4 million in 2019. ENGlobal's continued performance on designing and delivering a complete modular hydrogen plant was largely responsible for this growth in revenue when compared to the prior year.

The company's reduced annual loss - an improvement of 57 percent over 2019 - was primarily the result of the increase in revenue and higher margin projects from the company's EPCM segment as well as a decrease of $0.5 million in SG&A expense year-over-year. However, COVID-related project delays and resulting inefficiencies experienced by the Company during the latter half of 2020 served to partially offset these improvements.

"I believe that ENGlobal is in a strong market position as we enter 2021", said newly appointed CEO Mark Hess. "First, we have extensive expertise in building renewable fuel process plants and facilities as well as over 35 years' experience in project execution in all sectors of the traditional oil and gas industry. Second, the company has successfully transitioned to vertically integrated project execution and delivery - including engineering and design to modular fabrication and automation integration. Third, despite the challenges posed by COVID in 2020, we made excellent progress in adding to our list of established technology and construction partners during the year. This accomplishment, in turn, has added to our differentiated capabilities - all of which we believe makes ENGlobal a more attractive, single source option for our clients' changing needs."

Mr. Hess continued: "Overall, we expect to have an increased ability to attract and perform the higher-value contracts that we are targeting, including the many attractive green and renewable energy projects in the $10 to $250 million range. As one metric of how our newly organized business model is just beginning to perform, the Company is now seeing a significant uptick in proposal activity with improving market conditions, with $278 million in proposals in process or issued to our clients already this year."

"During the latter half of 2020, many businesses were shut down, airlines were not flying and demand for many of our clients' products dwindled. Consequently, our business development efforts in many of our markets were severely hampered. Our backlog suffered as a result and we ended the year at about $24 million. Our focus the first part of this year is to rebuild our backlog as quickly as possible and we are investing heavily in our business development efforts to accomplish this goal."

At December 26, 2020, ENGlobal had cash on hand of $13.7 million compared to $8.3 million at December 28, 2019. The company's December 26, 2020 cash on hand included the proceeds from its previously disclosed $4.9 million PPP loan and borrowings of $1.5 million from its $6.0 million Revolving Credit Facility. The company expects the PPP loan to be entirely forgiven, and if so, only the Revolving Credit Facility would remain as debt.

The following table illustrates the composition of the Company's revenue and profitability for its operations for the fiscal years ended December 26, 2020 and December 28, 2019:

 
  Year Ended     Year Ended  
(amounts in thousands)
  December 26, 2020     December 28, 2019  
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
  25,929       40.2 %     9.1 %     (0.3 )%   19,436       34.4 %     8.4 %     (4.3 )%
Automation
    38,520       59.8 %     15.8 %     11.7 %     37,010       65.6 %     17.0 %     12.4 %
Consolidated
  64,449       100.0 %     13.1 %     (0.6 )%   56,446       100.0 %     14.0 %     (2.5 )%
 
                                                               

The following table illustrates the composition of the Company's revenue and profitability for its operations for the three months ended December 26, 2020 and December 28, 2019:

 
  Three Months Ended     Three Months Ended  
(amounts in thousands)
  December 26, 2020     December 28, 2019  
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
  6,158       53.2 %     17.5 %     1.7 %   3,888       23.3 %     1.5 %     (14.9 )%
Automation
    5,419       46.8 %     23.3 %     8.6 %     12,800       76.7 %     22.7 %     19.2 %
Consolidated
    11,577       100.0 %     20.2 %     (5.3 )%     16,688       100.0 %     17.7 %     4.6 %
 
                                                               

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)

2020

Fiscal Year

 

Q1

Q2

Q3

Q4

2020

Revenue

$19,260

$17,882

$15,729

$11,578

$64,449

Gross Profit

3,260

2,453

1,144

1,594

8,451

Gross Profit Margin

16.9%

13.7%

7.3%

13.8%

13.1%

General & Administrative Expenses

2,133

2,314

2,174

2,213

8,834

Operating Income (Loss)

1,127

139

(1,030)

(619)

(383)

Net Income (Loss)

1,101

68

(1,110)

(684)

(625)

The following table presents certain balance sheet items as of December 26, 2020 and December 28, 2019:

(amounts in thousands)
 
As of
December 26, 2020
   
As of
December 28, 2019
 
Cash and restricted cash
  13,706     8,307  
Working capital
    14,039       11,289  
 
               
 
               

ENGLOBAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)

 
  Year Ended December 26,     Year Ended December 28,  
 
  2020     2019  
 
           
Operating revenues
  64,449     56,446  
Operating costs
    55,998       48,530  
Gross profit
    8,451       7,916  
Operating costs and expenses:
               
Selling, general, and administrative expenses
    8,834       9,317  
Operating loss
    (383 )     (1,401 )
Other income (expense)
               
Interest expense, net
    (153 )     (31 )
Other income, net
    14       49  
Loss before income taxes
    (522 )     (1,383 )
 
               
Provision for federal and state income taxes
    (103 )     (83 )
 
               
Net loss
  (625 )   (1,466 )
 
               
Basic and diluted loss per common share
  (0.02 )   (0.05 )
 
               
Basic and diluted weighted average shares used in computing loss per share:
    27,474       27,414  
 
               

ENGLOBAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share amounts)

 
  December 26, 2020     December 28, 2019  
ASSETS
           
Current Assets:
           
Cash
  13,706     8,307  
Trade receivables, net of allowances of $386 and $236
    7,789       11,435  
Prepaid expenses and other current assets
    891       889  
Contract assets
    4,090       3,862  
Total Current Assets
    26,476       24,493  
Property and equipment, net
    1,263       1,033  
Goodwill
    720       720  
Other assets
               
Right of use asset
    1,628       2,133  
Deposits and other assets
    351       307  
Total Other Assets
    1,979       2,440  
Total Assets
  30,438     28,686  
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
 
               
Current Liabilities:
               
Accounts payable
  2,138     3,261  
Accrued compensation and benefits
    3,048       2,783  
Current portion of leases
    1,541       1,041  
Contract liabilities
    1,258       5,438  
Current portion of note
    3,707       -  
Other current liabilities
    745       681  
Total Current Liabilities
    12,437       13,204  
Deferred payroll tax
    1,037       -  
Long term debt
    2,733       -  
Long term leases
    608       1,458  
Total Liabilities
    16,815       14,662  
Commitments and Contingencies (Note 15)
               
Stockholders' Equity:
               
Common stock - $0.001 par value; 75,000,000 shares authorized; 27,560,686 and 27,413,626 shares issued and outstanding at December 26, 2020 and December 28, 2019, respectively
    28       27  
Additional paid-in capital
    37,157       36,934  
Accumulated deficit
    (23,562 )     (22,937 )
Total Stockholders' Equity
    13,623       14,024  
Total Liabilities and Stockholders' Equity
  30,438     28,686  
 
               

ENGLOBAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)

 
  Year Ended December 26, 2020     Year Ended December 28, 2019  
Cash Flows from Operating Activities:
           
Net loss
  (625 )   (1,466 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
               
Depreciation and amortization
    449       389  
Share-based compensation expense
    223       61  
Changes in current assets and liabilities:
               
Trade accounts receivable
    3,646       (1,224 )
Contract assets
    (228 )     (689 )
Other current assets
    (46 )     245  
Accounts payable
    (1,123 )     89  
Accrued compensation and benefits
    1,301       482  
Contract liabilities
    (4,180 )     4,834  
Income taxes payable
    (57 )     84  
Other current liabilities, net
    121       (140 )
Net cash provided by (used in) operating activities
  (519 )   2,665  
 
               
Cash Flows from Investing Activities:
               
Proceeds from notes receivable
    -       24  
Property and equipment acquired
    (428 )     (345 )
Net cash used in investing activities
  (428 )   (321 )
 
               
Cash Flows from Financing Activities:
               
Purchase of stock
    -       (61 )
Payments on finance leases
    (93 )     (36 )
Proceeds from PPP loan
    4,949       -  
Proceeds from revolving credit facility
    1,490       -  
Net cash provided by (used in) financing activities
  6,346     (97 )
Net change in cash
    5,399       2,247  
Cash at beginning of year
    8,307       6,060  
Cash at end of year
  13,706     8,307  
 
               
Supplemental disclosure of cash flow information:
               
Cash paid during the period for interest
  153     33  
Right of use assets obtained in exchange for new operating lease liability
  963     2,854  
Leased assets obtained in exchange for new finance lease liabilities
  219     351  
Cash paid during the period for income taxes (net of refunds)$
    86     26  


For further information on ENGlobal's 2020 financial results, please refer to its Annual Report on Form 10-K to be filed with the SEC later today and included on the company's website at www.englobal.com, or on the SEC's website at www.sec.gov.

Conference Call

Management will host a conference call today at 9:00am EST to discuss the company's 2020 financial results and outlook for 2021. To participate in the conference call, please dial in 5 to 10 minutes before the call:

(Toll Free) 888-506-0062 domestically, or 973-528-0011 internationally
Entry code: 441526

The conference call will also be broadcast live over the Internet and can be accessed at: https://www.webcaster4.com/Webcast/Page/2272/40284

The teleconference replay will be available shortly after the completion of the live event through 9:00am EST on March 18, 2021. You may access the replay by dialing (Toll Free) 877-481-4010 domestically, or 919-882-2331 internationally, and referencing conference ID 40284.

You may also access the replay by visiting the company's web site:

https://www.englobal.com/investors/events-and-presentations/

About ENGlobal

ENGlobal (NASDAQ:ENG) is a provider of engineering and automation services primarily to the energy sector throughout the United States and internationally. ENGlobal operates through two business segments: Automation and Engineering. ENGlobal's Automation segment provides services related to the design, fabrication and implementation of distributed control, instrumentation and process analytical systems. The Engineering segment provides consulting services for the development, management and execution of projects requiring professional engineering, construction management, and related support services. Within ENGlobal's Automation segment, ENGlobal Government Services, Inc. provides engineering, design, installation, operations, and maintenance of various government, public sector, and international facilities, specializing in turnkey automation and instrumentation systems for the U.S. Defense industry worldwide. Further information about the Company and its businesses is available at www.ENGlobal.com.

Safe Harbor for Forward-Looking Statements

The statements above regarding the Company's expectations, its operations and certain other matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks and uncertainties. All statements, other than statements of historical facts, included herein concerning, among other things, the Company's ability to attract and perform the higher-value contracts that it is targeting, the Company's ability to realize project awards or contracts on its pending proposals, and the anticipated forgiveness of the Company's PPP loan, are forward-looking statements. For a discussion of risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ENGlobal's filings with the Securities and Exchange Commission, including the Company's most recent reports on Form 10-K and 10-Q, and other SEC filings.

Click here to join our email list: https://www.englobal.com/investors/email-alerts/

CONTACT:

Mark A. Hess
Phone: (281) 878-1000
E-mail: [email protected]

Market Makers - Investor Relations
Jimmy Caplan
512-329-9505
Email: [email protected]

Market Makers - Media Relations
Rick Eisenberg
212-496-6828
Email: [email protected]

SOURCE: ENGlobal

ENGlobal
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