Exhibit 99.1
- -------------------------------------------------------------------------------
NEWS RELEASE
- -------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
[GRAPHIC OMITTED] CONTACT: Natalie S. Hairston
(281) 878-1000
ir@ENGlobal.com
ENGLOBAL REPORTS THIRD QUARTER RESULTS
Stabilizing Short Term Trends
HOUSTON, TX, November 9, 2009 - ENGlobal (NASDAQ: ENG), a leading provider of
engineering and related project services, announced today its financial results
for the third quarter ended September 30, 2009.
Third Quarter 2009 Highlights Compared to Third Quarter 2008:
- -------------------------------------------------------------
o Breakeven earnings per diluted share, a decrease from $0.13
o Revenue of $87.3 million, a decrease of 29%, with $7.6 million of the
decrease due to a reduced level of pass-through procurement revenue
o Consolidated gross profit margin as a percentage of revenue of 8.2%, a
decrease from 11.1%
o Continued strong liquidity, with positive cash flow from operations of
$4.5 million and $18.5 million for the three and nine months ended
September 30, 2009, respectively
o 65% reduction of total long-term debt to $11.8 million from $34.0
million
ENGlobal reported a third quarter net loss of $69,000, or $0.00 earnings per
diluted share, for the quarter ended September 30, 2009, a decrease from $0.13
earnings per diluted share for the quarter ended September 30, 2008. Third
quarter 2009 revenue decreased to $87.3 million, 29% lower than the $123.2
million for the third quarter of fiscal year 2008. Of this decrease, $7.6
million, or 21% of the decrease, is attributable to lower pass-through
procurement revenue in the Engineering segment, with the balance attributable to
reduced demand for services. The following table illustrates the composition of
the Company's revenue and results of operations for the three months ended
September 30, 2009 and 2008, respectively:
Quarter Ended Quarter Ended
September 30, 2009 September 30, 2008
------------------------------------------------- ----------------------------------------------
(Dollars in millions)
% of Gross Operating % of Gross Operating
Total Total Profit Profit Total Total Profit Profit
Segment Revenue Revenue Margin Margin Revenue Revenue Margin Margin
-------- -------- -------- ------- ------- ------- ------- ------ ------
Engineering $ 32.0 36.7% 4.9% (0.3)% $ 63.1 51.2% 14.0% 11.7%
Construction 28.5 32.6% 6.3% 4.6% 40.9 33.2% 6.7% 4.8%
Automation 19.5 22.4% 14.1% 8.6% 7.9 6.4% 1.9% (7.2)%
Land 7.3 8.3% 14.5% 8.0% 11.3 9.2% 16.5% 10.6%
-------- -------- -------- ------- ------- ------- ------- ------
$ 87.3 100.0% $ 123.2 100.0%
======== ======== ======== =======
~ more ~
- ------------------------------------------------------------------------------------------------------------------------
654 N. Sam Houston Parkway E. o Suite 400 o Houston, Texas 77060
www.ENGlobal.com
ENGlobal Press Release
November 9, 2009
Page 2
The Company's consolidated gross profit margin as a percent of revenue decreased
to 8.2% in the three months ended September 30, 2009 from 11.1% in the prior
year period. The primary reasons for this decrease were: (1) a general reduction
of project awards as many of our clients delayed or canceled scheduled domestic
capital projects, (2) increased variable overhead costs, and (3) increased
competition for available projects.
Management's Assessment:
Commenting on the results, ENGlobal's Chairman and Chief Executive Officer,
William A. Coskey, P.E., said, "Our breakeven financial results demonstrate the
reality of the current market and the stabilization of industry trends. ENGlobal
continues to benefit from its sustainable, although lower margin, sources of
revenue, while the majority of our higher margin and large capital work has
declined significantly. In the last two quarters, these sustainable sources of
revenue have produced sufficient margin to approximately offset our fixed
overhead expenses. This has allowed ENGlobal to keep its core business intact,
thus positioning ourselves for recovery once market conditions improve."
Mr. Coskey continued, "Recently, we have been encouraged by improving signs
within the industry, such as upward trends in our bi-weekly billable hours and
utilization percentages, and we continue to pursue opportunities that could
prove significant for our business. In summary, the current business environment
remains challenging, although prospects for new business seem to be improving.
We would like to thank our stockholders for their patience during this period."
ENGlobal's employee count increased to approximately 2,300 for the quarter ended
September 30, 2009 compared to 2,200 for the second quarter of 2009, but
decreased from 2,900 in the third quarter 2008. The Company averaged 168,000
billable hours per two-week period during the third quarter 2009, a 29% decrease
when compared to 238,000 billable hours in the same period in 2008. The third
quarter 2009 average represents a 14% increase over 147,000 billable hours in
the second quarter 2009. The Company's overall utilization percentage, inclusive
of overhead personnel, was approximately 89% for the third quarter 2009,
compared with approximately 92% for the comparable period in 2008. Since the end
of the third quarter, billable hours and utilization rates have continued to
trend upward.
Overall SG&A expenses decreased $0.5 million, or 6.3%, to $7.0 million for the
three months ended September 30, 2009, from $7.5 million for the comparable
prior-year period. The third quarter 2009 SG&A represents an increase of 3%
compared to $6.8 million in the second quarter 2009. As a percentage of revenue,
SG&A expense increased to 8.0% for the three months ended September 30, 2009,
from 6.1% for the comparable prior year period.
Regarding the Company's collections performance on accounts receivable, balances
continue to improve. Days sales outstanding decreased to 65 days at September
30, 2009, from 69 days at June 30, 2009, but increased from 64 days for the
twelve-month period ended December 31, 2008 and 61 days for the three-month
period ended September 30, 2008. Bad debt expense was approximately 0.5% and
0.0% of revenue for the quarters ended September 30, 2009 and 2008,
respectively.
Long-term debt and capital leases, net of current portion, decreased 95.8%, or
$22.9 million, from $23.9 million at December 31, 2008 to $1.0 million at
September 30, 2009. As a percentage of stockholders' equity, long-term debt
ENGlobal Press Release
November 9, 2009
Page 3
decreased to 1.3% from 31.1% over this nine-month period due primarily to a
$12.5 million payment on our line of credit, plus the reclassification of $10.0
million to a current liability. Cash on hand at September 30, 2009 totaled $0.4
million and availability under the credit facility totaled $39.4 million,
resulting in cash and previously arranged borrowing capacity to meet additional
liquidity needs of $39.8 million. At September 30, 2009, the amount outstanding
on the Company's line of credit was $10.0 million compared to $30.1 million at
September 30, 2008.
The Company will host a conference call to discuss its quarterly results today
at 11:00 a.m. EST (10:00 a.m. CST). To participate in the conference call,
please dial (877) 407-8031 (Domestic) or (201) 689-8031 (International)
approximately 10 minutes before the scheduled start time and request the
"ENGlobal Third Quarter 2009 Earnings Conference Call." If you are unable to
join the call, a replay will be available approximately three hours after the
conclusion of the call until Monday, November 23, 2009. The replay can be
accessed by dialing (877) 660-6853 (Domestic) or (201) 612-7415 (International),
Account #286, Conference ID #336230. The call will be webcast live at
www.englobal.com in the Investor Relations section, and an audio archive will be
available on the Company's website shortly after the call concludes.
The Company's Quarterly Report on Form 10-Q for the period ended September 30,
2009 will be filed with the Securities and Exchange Commission on November 9,
2009 reflecting these results.
About ENGlobal
- --------------
ENGlobal provides engineering, construction, automation, land and regulatory
services principally to the energy sector throughout the United States and
internationally. The Company has over 2,300 employees in 19 offices and occupies
about 500,000 square feet of office and fabrication space. ENGlobal has been
named one of the fastest growing engineering firms in the United States and
Canada by ZweigWhite in each of the last six years. 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 regarding third
quarter financial results 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 including,
but not limited to: (1) our ability to respond appropriately to the current
worldwide economic situation and the resulting decrease in demand for our
services and competitive pricing pressure; (2) our ability to achieve our
business strategy while effectively managing costs and expenses; (3) our ability
to collect accounts receivable in a timely manner; (4) our ability to accurately
estimate costs and fees on fixed-price contracts; (5) the effect of changes in
laws and regulations with which the Company must comply and the associated costs
of compliance with such laws and regulations, either currently or in the future,
as applicable; (6) the effect of changes in the price of oil; (7) the effect of
changes in accounting policies and practices as may be adopted by regulatory
agencies, as well as by the FASB; (8) the effect on our competitive position
within our market area in view of, among other things, increasing consolidation
currently taking place among our competitors; and (9) our ability to increase or
replace our line of credit. Actual results and the timing of certain events
could differ materially from those projected in or contemplated by the
forward-looking statements due to a number of factors detailed from time to time
in ENGlobal's filings with the Securities and Exchange Commission. In addition,
reference is hereby made to cautionary statements set forth in the Company's
most recent reports on Form 10-K and 10-Q, and other SEC filings. Also, the
information contained in this press release is subject to the risk factors
identified in the Company's most recent Form 10-K.
Click here to join our email list:
http://www.b2i.us/irpass.asp?BzID=702&to-ea&s-0.
-----------------------------------------------
~~ more ~~
ENGlobal Press Release
November 9, 2009
Page 4
FINANCIAL HIGHLIGHTS
--------------------
(in thousands, except per basic data)
Quarter Ended Nine Months Ended
September 30 September 30
------------------------- -------------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Operating Revenue $ 87,271 123,167 $ 260,639 357,344
Direct cost 80,103 109,533 235,940 309,063
--------- --------- --------- ---------
Gross Profit 7,168 13,634 24,699 48,281
Selling, general and administrative 6,980 7,449 20,838 23,376
--------- --------- --------- ---------
Operating Income 188 6,185 3,861 24,905
Other Income (Expense):
Other income 31 49 182 134
Interest income (expense), net (148) (360) (479) (1,256)
--------- --------- --------- ---------
Income before Provision for Income Taxes 71 5,874 3,564 23,783
Provision for Income Taxes 140 2,379 1,570 9,583
--------- --------- --------- ---------
Net Income $ (69) 3,495 $ 1,994 14,200
========= ========= ========= =========
Net Income Per Common Share:
Basic $ 0.00 $ 0.13 $ 0.07 $ 0.52
Diluted $ 0.00 $ 0.13 $ 0.07 $ 0.51
Weighted Average Shares Used in Computing Net
Income Per Share:
Basic 27,305 27,272 27,299 27,143
Diluted 27,305 27,956 27,573 27,704
Selected Balance Sheet Information (in thousands): As of
-------------------------------
Sep. 30, 2009 Dec. 31, 2008
------------- ------------
Cash $ 449 1,000
Working capital 37,193 $ 58,586
Property and equipment, net 6,566 5,744
Total assets 123,477 152,705
Long-term debt and leases, net of current portion 1,001 23,857
Stockholders' equity 79,222 76,766
- -------------------------------------------
###