ENGlobal Announces 1Q 2021 Financial Results
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ENGlobal Announces 1Q 2021 Financial Results

Thursday, May 6, 2021 8:00 AM
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Topic:
Earnings

Investor Conference Call Scheduled Today at 9:00 am Eastern

HOUSTON, TX / ACCESSWIRE / May 6, 2021 / ENGlobal Corporation (NASDAQ:ENG), a leading provider of complete project solutions for renewable and traditional energy, today announced that, for the first quarter of 2021 ended March 27, it achieved net income of $46,000, or $.00 per share, on revenue of $12,449,000, compared to net income of $1,101,000, or $.04 per share, on revenue of $19,260,000 in the first quarter ended March 28, 2020.

"Our company, like most others in the energy industry, has been materially affected by the reaction to the COVID-19 epidemic," said chief executive Mark A. Hess. "We were fortunate that we were able to work through the backlog in place last year when the pandemic started.

"Currently, though, we see strong indications that our top and bottom line performance should improve as the year progresses. First, we are investing heavily in our business development efforts and we expect these efforts to produce renewed business opportunities. Second, thanks to the widespread availability and utilization of COVID-19 vaccines, there has been significant progress made in controlling the spread of the pandemic. This, in turn, is allowing people to go back to in-person work, which will help increase the demand for our clients' products.

"Additionally, we see signs that our market opportunities in green energy sectors such as renewable fuels and solar are continuing to improve. And, we have made further progress in adding to our list of established technology and construction partners, which, of course, makes ENGlobal a more attractive option for prospective clients. As the year progresses, therefore, we expect to have an increased ability to attract high-value contracts."

The company's decrease in quarterly revenue was primarily due to the decline in capital and maintenance spending by its client base as a direct result of the negative economic effects upon the energy industry caused by the COVID-19 pandemic. This trend was compounded by personal interaction restrictions that significantly hampered the company's business development efforts. ENGlobal's decrease in quarterly net income was primarily due to the company's decrease in quarterly revenue, partially offset by a $1.7 million employee retention credit recorded in Q1 2021 with no comparable occurrence in Q1 2020.

"We remain highly confident," he added, "that our strategic shift toward innovative, higher-value, modular engineered process and automation project delivery positions us quite well to achieve steadily improving quarterly results, especially as the market continues to rebound."

The following is a summary of the income statement for the three months ended March 27, 2021 and March 28, 2020:

(amounts in thousands)
 
Three months ended
March 27, 2021
   
Three months ended
March 28, 2020
 
Revenue
  $ 12,449     $ 19,260  
Gross Profit
    1,004       3,260  
Selling, General and Administrative Expenses
    2,561       2,133  
Operating Income (Loss)
    (1,557 )     1,127  
Net Income
    46       1,101  

The following table illustrates the composition of the company's revenue and profitability for its operations for the three months ended March 27, 2021 and March 28, 2020:

 
  Three Months Ended     Three Months Ended  
(amounts in thousands)
  March 27, 2021     March 28, 2020  
Segment
  Total Revenue     % of Total Revenue     Gross Profit Margin     Operating Profit Margin     Total Revenue     % of Total Revenue     Gross Profit Margin     Operating Profit Margin  
 
                                               
Commercial
  $ 10,048       80.7 %     9.1 %     (3.8 )%   $ 16,510       85.7 %     17.2 %     12.2 %
Government Services
    2,401       19.3 %     3.7 %     (5.0 )%     2,750       14.3 %     15.1 %     8.9 %
Consolidated
    12,449       100.0 %     8.1 %     (12.5 )%     19,260       100.0 %     16.9 %     5.9 %

The following table presents certain balance sheet items as of March 27, 2021 and December 26, 2020:

(amounts in thousands)
 
As of
March 27, 2021
   
As of
December 26, 2020
 
Cash
  $ 13,927     $ 13,706  
Working capital
    13,021       14,039  

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

 
  For the Three Months Ended  
 
  March 27, 2021     March 28, 2020  
Operating revenues
  12,449     19,260  
Operating costs
    11,445       16,000  
Gross profit
    1,004       3,260  
 
               
Selling, general and administrative expenses
    2,561       2,133  
Operating income (loss)
    (1,557 )     1,127  
 
               
Other income (expense):
               
Other income, net
    1,684       1  
Interest expense, net
    (58 )     (5 )
Income from operations before income taxes
    69       1,123  
 
               
Provision for federal and state income taxes
    23       22  
 
               
Net income
    46       1,101  
 
               
Basic and diluted income per common share:
  0.00     0.04  
 
               
Basic and diluted weighted average shares used in computing income (loss) per share:
    27,557       27,414  
 
               

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

 
  March 27, 2021     December 26, 2020  
ASSETS
           
Current Assets:
           
Cash
  $ 13,927     $ 13,706  
Trade receivables, net of allowances of $272 and $386
    9,111       7,789  
Prepaid expenses and other current assets
    531       891  
Employee retention credit
    1,676       -  
Contract assets
    1,322       4,090  
Total Current Assets
    26,567       26,476  
Property and equipment, net
    1,223       1,263  
Goodwill
    720       720  
Other assets
               
Right of use asset
    1,539       1,628  
Deposits and other assets
    342       351  
Total Other Assets
    1,881       1,979  
Total Assets
  $ 30,391     $ 30,438  
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
 
               
Current Liabilities:
               
Accounts payable
  $ 2,151     $ 2,138  
Accrued compensation and benefits
    2,172       3,048  
Current portion of leases
    1,294       1,541  
Contract liabilities
    2,234       1,258  
Current portion of note
    4,579       3,707  
Current portion of deferred payroll tax
    519       -  
Other current liabilities
    597       745  
Total Current Liabilities
    13,546       12,437  
 
               
Deferred payroll tax
    519       1,037  
Long-term debt
    1,897       2,733  
Long-term leases
    715       608  
Total Liabilities
    16,677       16,815  
Commitments and Contingencies (Note 8)
               
Stockholders' Equity:
               
Common stock - $0.001 par value; 75,000,000 shares authorized; 27,588,389 shares issued and outstanding at March 27, 2021 and 27,560,686 shares issued and outstanding at December 26, 2020
    28       28  
Additional paid-in capital
    37,202       37,157  
Accumulated deficit
    (23,516 )     (23,562 )
Total Stockholders' Equity
    13,714       13,623  
Total Liabilities and Stockholders' Equity
  $ 30,391     $ 30,438  

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

 
  For the Three Months Ended     For the Three Months Ended  
 
  March 27, 2021     March 28, 2020  
Cash Flows from Operating Activities:
           
Net income
  $ 46     $ 1,101  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
               
Depreciation and amortization
    82       96  
Share-based compensation expense
    45       15  
Changes in current assets and liabilities:
               
Trade accounts receivable
    (1,322 )     655  
Contract assets
    2,768       (1,912 )
Other current assets
    (1,307 )     165  
Accounts payable
    13       444  
Accrued compensation and benefits
    (876 )     (408 )
Contract liabilities
    976       (1,801 )
Income taxes payable
    19       258  
Other current liabilities, net
    (167 )     (97 )
Net cash provided by (used in) operating activities
  $ 277     $ (1,484 )
 
               
Cash Flows from Investing Activities:    
Property and equipment acquired
    (57 )     (34 )
Net cash used in investing activities
  $ (57 )   $ (34 )
 
               
Cash Flows from Financing Activities:
               
Payments on finance leases
    (36 )     (20 )
Interest on PPP loan
    12       -  
Proceeds from revolving credit facility
    25       -  
Net cash provided by (used in) financing activities
  $ 1     $ (20 )
Net change in cash
    221       (1,538 )
Cash at beginning of period
    13,706       8,307  
Cash at end of period
  $ 13,927     $ 6,769  
 
               
Supplemental disclosure of cash flow information:
               
Cash paid during the period for interest
  $ 58     $ 5  
Right of use assets obtained in exchange for new operating lease liability
  $ 256     $ 963  
Cash paid during the period for income taxes (net of refunds)
  $ 1       -  

For further information on ENGlobal's first quarter 2021 financial results, please refer to its Quarterly Report on Form 10-Q 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 9:00 am EDT to discuss the company's first quarter 2021 financial results and outlook for the remainder of the year. To participate in the conference call, please dial in five to ten minutes before the call:

(Toll Free) 888-506-0062 domestically, or 973-528-0011 internationally.
Entry code: 498183

The conference call will also be broadcast live over the Internet and can be accessed at: https://www.webcaster4.com/Webcast/Page/2272/41192

The teleconference replay will be available shortly after the completion of the live event through 9:00 am Eastern time on May 13, 2021. You may access the replay by dialing (Toll Free) 877-481-4010 domestically, or 919-882-2331 internationally, and referencing conference ID 41192.

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 leading provider of complete project solutions for renewable and traditional energy throughout the United States and internationally. ENGlobal operates through two business segments: Commercial and Government Services. 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, anticipated economic or market conditions, the Company's anticipated performance, the Company's ability to produce renewed business opportunities and the Company's ability to attract and perform higher-value contracts, 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

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