Conference Call to Discuss Results at 9:00 am EDT Today
HOUSTON, TX / ACCESSWIRE / August 5, 2021 / ENGlobal Corporation (NASDAQ:ENG), a leading provider of innovative, project delivery solutions for the energy industry, today reported the achievement of key objectives in its strategic transformation.
Mark A. Hess, CEO stated: "While segments of the broader energy industry have begun recovering from the effects of the COVID-19 pandemic, ENGlobal's business - which traditionally lags behind that of the broader energy market by as much as nine months - had not improved by the end of the second quarter. We are, however, taking steps to better position the company to take advantage of the expected increase in business activity in our markets. We have been transitioning ENGlobal from an engineering consulting firm to a vertically integrated project delivery company for some time and, because of the recent changes in senior management, we have accelerated that transformation. Some of the key objectives we achieved this year include:
- Enhancing our management and business development teams with six key hires,
- Redefining our market focus and strategic growth plans,
- Rebranding the company with a new, more progressive logo,
- Enhancing the company's marketing program to include, among other things, social media, and
- Redesigning our website to better describe the company's safety record, product offerings, market focus and accomplishments.
Therefore, as an extension of our rebranding efforts, we now refer to the company as ENG."
Mr. Hess continued, "We are also taking steps to further improve our financial strength. Thus far this year we have:
- Filed a shelf registration statement with the SEC to assist with the company's capital raising activities,
- Raised approximately $19 million through a registered direct offering under the registration statement, and
- Implemented a facility, also under the registration statement, known as an ATM, where we may sell, from time to time, up to $25 million of common stock into the market at the then market price.
"As a result of these activities, the company's cash-on-hand was approximately $29 million at the end of Q2 2021. Also, ENG's PPP loan of approximately $4.9 million was completely forgiven in July, which leaves the company with very little debt and a very healthy balance sheet. This is important to our current and prospective clients as it provides them with greater comfort and puts us in an excellent position to execute on the many opportunities in our pipeline that may be awarded, including those in the expanding renewables and green energy sectors," added Mr. Hess.
"These opportunities, plus the continued energy industry recovery from the COVID pandemic, will, we believe, produce improved results for our company for the remainder of this year and beyond," Mr. Hess concluded.
ENG also announced that, for the second quarter ended June 26, 2021, it had a net loss of $4,256,000, or $(.14) per share, on revenue of $11,079,000, compared with net income of $68,000, or $.00 per share, on revenue of $17,882,000 for the second quarter ended June 27, 2020.
For the six months ended June 26, 2021, the company had a net loss of $4,210,000, or $(.15) per share, on revenue of $23,528,000, compared with net income of $1,169,000, or $.04 per share, on revenue of $37,142,000 for the six months ended June 27, 2020.
The decrease in the company's second quarter revenue compared with the same period last year was primarily due to the continuing COVID-related delays in securing government services and other projects intended to replace those projects completed by the company since Q2 2020. The decline in bottom line performance in Q2 2021, compared with the same period last year, was primarily a result of this decrease in revenue, an investment in essential personnel which, among other things, decreased gross margin to 1% from 14%, an investment of $0.5 million in business development personnel and other costs intended to enhance marketing and sales efforts, and a bad debt reserve of $1.4 million stemming from a commercial customer that suspended operations during the quarter and, subsequently, filed for bankruptcy.
The decrease in six-month revenue compared with the same period last year was primarily due to the continuing COVID-related delays in securing government services and other projects intended to replace those projects completed by the company since Q2 2020. The decline in bottom line performance for the first six months of 2021 compared with the same period in 2020 resulted primarily from this decrease in revenue, an investment in essential personnel which, among other things, decreased gross margin to 5% from 15%, an investment of $0.9 million in business development personnel and other costs intended to enhance marketing and sales efforts, and the bad debt reserve of $1.4 million. These effects were partially offset by an employee retention credit of $1.7 million recorded in the first quarter.
The following is a summary of the income statements for the three- and six-months periods ended June 26, 2021 and June 27, 2020:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 26, 2021 | June 27, 2020 | June 26, 2021 | June 27, 2020 | |||||||||||||
Revenue | $ | 11,079 | $ | 17,882 | $ | 23,528 | $ | 37,142 | ||||||||
Gross profit | 82 | 2,453 | 1,086 | 5,713 | ||||||||||||
Selling, general and administrative expenses | 4,264 | 2,314 | 6,825 | 4,447 | ||||||||||||
Operating profit (loss) | (4,182 | ) | 139 | (5,739 | ) | 1,266 | ||||||||||
Net income (loss) | (4,256 | ) | 68 | (4,210 | ) | 1,169 | ||||||||||
The following table illustrates the composition of the company's revenue and profitability for its operations for the three- and six-months periods ended June 26, 2021 and June 27, 2020:
Three Months Ended | Three Months Ended | |||||||
| (amounts in thousands) | June 26, 2021 | June 27, 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 | $9,157 | 82.7% | (2.2)% | (32.9)% | $14,803 | 82.8% | 12.9% | 7.3% |
| Government Services | 1,922 | 17.3% | 14.7% | 4.9% | 3,079 | 17.2% | 17.6% | 12.8% |
| Consolidated | 11,079 | 100.0% | 0.7% | (37.7)% | 17,882 | 100.0% | 13.7% | 0.8% |
| Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
(amounts in thousands) | June 26, 2021 | June 27, 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 | $ | 19,206 | 81.6 | % | 3.7 | % | (17.7 | )% | $ | 31,313 | 84.3 | % | 15.2 | % | 9.9 | % | ||||||||||||||||
Government Services | 4,322 | 18.4 | % | 8.6 | % | (0.6 | )% | 5,829 | 15.7 | % | 16.4 | % | 10.9 | % | ||||||||||||||||||
Consolidated | 23,528 | 100.0 | % | 4.6 | % | (24.4 | )% | 37,142 | 100.0 | % | 15.4 | % | 3.4 | % | ||||||||||||||||||
The following table presents certain balance sheet items as of June 26, 2021 and December 26, 2020:
(amounts in thousands) | As of June 26, 2021 | As of December 26, 2020 | ||||||
Cash | $ | 29,175 | $ | 13,706 | ||||
Working capital | 28,691 | 14,039 | ||||||
ENGlobal Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(amounts in thousands, except per share data)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 26, 2021 | June 27, 2020 | June 26, 2021 | June 27, 2020 | |||||||||||||
Operating revenues | $ | 11,079 | $ | 17,882 | $ | 23,528 | $ | 37,142 | ||||||||
Operating costs | 10,997 | 15,429 | 22,442 | 31,429 | ||||||||||||
Gross profit | 82 | 2,453 | 1,086 | 5,713 | ||||||||||||
Selling, general and administrative expenses | 4,264 | 2,314 | 6,825 | 4,447 | ||||||||||||
Operating profit (loss) | (4,182 | ) | 139 | (5,739 | ) | 1,266 | ||||||||||
Other income (expense): | ||||||||||||||||
Other income, net | 6 | 1 | 1,690 | 2 | ||||||||||||
Interest expense, net | (57 | ) | (36 | ) | (115 | ) | (41 | ) | ||||||||
Income (loss) from operations before income taxes | (4,233 | ) | 104 | (4,164 | ) | 1,227 | ||||||||||
Provision for federal and state income taxes | 23 | 36 | 46 | 58 | ||||||||||||
Net income (loss) | (4,256 | ) | 68 | (4,210 | ) | 1,169 | ||||||||||
Basic and diluted income (loss) per common share: | $ | (0.14 | ) | $ | 0.00 | $ | (0.15 | ) | $ | 0.04 | ||||||
Basic and diluted weighted average shares used in computing income (loss) per share: | 29,599 | 27,413 | 28,573 | 27,413 | ||||||||||||
ENGlobal Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands, except share and per share amounts)
| June 26, 2021 | December 26, 2020 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 29,175 | $ | 13,706 | ||||
Trade receivables, net of allowances of $1,636 and $386 | 6,572 | 7,789 | ||||||
Prepaid expenses and other current assets | 398 | 891 | ||||||
Payroll taxes receivable | 1,676 | - | ||||||
Contract assets | 2,900 | 4,090 | ||||||
Total Current Assets | 40,721 | 26,476 | ||||||
Property and equipment, net | 1,135 | 1,263 | ||||||
Goodwill | 720 | 720 | ||||||
Other assets | ||||||||
Right of use asset | 1,210 | 1,628 | ||||||
Deposits and other assets | 402 | 351 | ||||||
Total Other Assets | 1,612 | 1,979 | ||||||
Total Assets | $ | 44,188 | $ | 30,438 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 1,974 | $ | 2,138 | ||||
Accrued compensation and benefits | 2,479 | 3,048 | ||||||
Current portion of leases | 1,180 | 1,541 | ||||||
Contract liabilities | 560 | 1,258 | ||||||
Current portion of note | 4,974 | 3,707 | ||||||
Current portion of deferred payroll tax | 519 | - | ||||||
Other current liabilities | 344 | 745 | ||||||
Total Current Liabilities | 12,030 | 12,437 | ||||||
Deferred payroll tax | 519 | 1,037 | ||||||
Long-term debt | 1,600 | 2,733 | ||||||
Long-term leases | 467 | 608 | ||||||
Total Liabilities | 14,616 | 16,815 | ||||||
Commitments and Contingencies (Note 8) | ||||||||
Stockholders' Equity: | ||||||||
Common stock - $0.001 par value; 75,000,000 shares authorized; 35,134,564 shares issued and outstanding at June 26, 2021 and 27,560,686 shares issued and outstanding at December 26, 2020 | 35 | 28 | ||||||
Additional paid-in capital | 57,309 | 37,157 | ||||||
Accumulated deficit | (27,772 | ) | (23,562 | ) | ||||
Total Stockholders' Equity | 29,572 | 13,623 | ||||||
Total Liabilities and Stockholders' Equity | $ | 44,188 | $ | 30,438 | ||||
ENGlobal Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)
| For the Six Months Ended | ||||||||
| June 26, 2021 | June 27, 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | (4,210 | ) | $ | 1,169 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 187 | 205 | ||||||
Share-based compensation expense | 107 | 132 | ||||||
Changes in current assets and liabilities: | ||||||||
Trade accounts receivable | 1,217 | 1,569 | ||||||
Contract assets | 1,190 | (1,256 | ) | |||||
Other current assets | (1,234 | ) | 344 | |||||
Accounts payable | (164 | ) | (166 | ) | ||||
Accrued compensation and benefits | (569 | ) | 977 | |||||
Contract liabilities | (698 | ) | (3,109 | ) | ||||
Income taxes payable | (54 | ) | 219 | |||||
Other current liabilities, net | (347 | ) | (192 | ) | ||||
Net cash used in operating activities | $ | (4,575 | ) | $ | (108 | ) | ||
Cash Flows from Investing Activities: | ||||||||
Property and equipment acquired | (88 | ) | (126 | ) | ||||
Net cash used in investing activities | $ | (88 | ) | $ | (126 | ) | ||
Cash Flows from Financing Activities: | ||||||||
Issuance of common stock, net | 20,052 | - | ||||||
Payments on finance leases | (55 | ) | (42 | ) | ||||
Proceeds from PPP loan | - | 4,925 | ||||||
Interest on PPP loan | 25 | - | ||||||
Proceeds from revolving credit facility | 110 | 1,445 | ||||||
Net cash provided by (used in) financing activities | $ | 20,132 | $ | 6,328 | ||||
Net change in cash | 15,469 | 6,094 | ||||||
Cash at beginning of period | 13,706 | 8,307 | ||||||
Cash at end of period | $ | 29,175 | $ | 14,401 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for interest | $ | 115 | $ | 12 | ||||
Right of use assets obtained in exchange for new operating lease liability | $ | 256 | $ | 1,182 | ||||
Cash paid during the period for income taxes (net of refunds) | $ | 151 | $ | 86 | ||||
Debt issuance costs | $ | - | $ | 131 | ||||
For further information on ENG's second quarter 2021 financial results, please refer to its Form 10-Q filing 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 at 9:00 am Eastern time today to discuss the company's second quarter 2021 financial results, provide updates on potential contract awards, and discuss the company's growth outlook for the remainder of 2021.
To participate in the conference call, please dial in five to ten minutes before the call:
(Toll Free) 888-506-0062 domestically, or 973-528-001 internationally. Entry code: 624859
The conference call will also be broadcast live over the Internet and can be accessed at: https://www.webcaster4.com/Webcast/Page/2272/42162
The teleconference replay will be available shortly after the completion of the live event through 9:00 am Eastern time on August 12, 2021. You may access the replay by dialing (Toll Free) 877-481-4010 domestically, or 919-882-2331internationally, and referencing conference ID 42162.
You may also access the replay by visiting the company's web site: https://www.englobal.com/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. The Commercial segment provides engineering, design, fabrication, and integration of automated control systems as a complete packaged solution for our clients. The Government Services segment 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, including those relating to its future results, 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. 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/
CONTACT:
Market Makers - Investor Relations
Jimmy Caplan
512-329-9505
Email: jimmycaplan@me.com
Market Makers - Media Relations
Rick Eisenberg
212-496-6828
Email: eiscom@msn.com
SOURCE: ENGlobal
View source version on accesswire.com:
https://www.accesswire.com/658484/ENGlobal-Announces-2021-Strategic-Update-and-Q2-Financial-Results
