EXHIBIT 99.1
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NEWS RELEASE
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FOR IMMEDIATE RELEASE
ENGlobal Corporation
CONTACT: Natalie S. Hairston
(281) 878-1000
ir@ENGlobal.com
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ENGLOBAL CORPORATION REPORTS FIRST QUARTER RESULTS
HOUSTON, TX, MAY 10, 2006 - ENGlobal Corporation (AMEX: ENG), a leading provider
of engineering and systems services, today reported earnings for the three month
period ended March 31, 2006, including record first quarter revenue and net
income. ENGlobal recorded net income of $1.2 million, or $0.05 per diluted share
for the three months ended March 31, 2006, compared to net income of $921,000,
or $0.04 per diluted share for the corresponding period in 2005.
First Quarter Highlights:
- - Revenue increased 49% over the first quarter of fiscal 2005
- - Gross profit increased 44% over the first quarter of fiscal 2005
- - Net income in the first quarter of fiscal 2006 increased 34% over the first
quarter of 2005
- - Working capital increased 139% over the first quarter of fiscal 2005, to
$26.1 million
- - Stockholders' equity increased 97% over the first quarter of fiscal 2005,
to $41.3 million
ENGlobal's revenue increased 49% to $66.6 million in the quarter ended March 31,
2006 compared to $44.6 million in the same quarter in 2005. The following table
illustrates the composition of the Company's revenue for the quarter ended March
31, 2006:
Quarter Ended
March 31, 2006
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Revenue % of Total
($ in millions) Revenue
1. Detailed-design engineering $ 34.3 51%
2. Design-build fixed price 5.2 8%
3. Non-labor procurement and 6.6 10%
construction
4. Field services and inspection 16.5 25%
5. Systems 4.0 6%
The Company adopted SFAS No. 123(R) on January 1, 2006, resulting in $85,305 of
expense related to stock options in the first quarter, to be included in
selling, general and administrative ("SG&A") expenses. Total SG&A expenses as a
percent of revenue, including depreciation and amortization, increased 0.1% to
9.2% in the first quarter of 2006 compared to 9.1% in the same period in 2005.
~ more ~
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654 N. Sam Houston Parkway E. o Suite 400 o Houston, Texas 77060
www.ENGlobal.com
ENGlobal Corporation Press Release
May 10, 2006
Page 2
Long-term debt on March 31, 2006, as compared to December 31, 2005, increased by
$4.7 million. In the first quarter of 2006, the Company increased its
outstanding line of credit by $4.3 million for working capital needs, as well as
financing the acquisition of Analyzer Technology International, Inc., which was
completed in January 2006.
Commenting on the Company's performance, Michael L. Burrow, P.E., President and
Chief Executive Officer of ENGlobal, said, "ENGlobal's first quarter results
were improved from the prior year period and we are still seeing promising
business development opportunities. Given this activity, we believe our results
for the balance of the year can be improved in several ways."
"In addition to our active business development program, ENGlobal's growth
strategy includes acquiring or organically building businesses that establish
new geographical markets and capabilities. Future acquisitions are expected to
be larger in scope, although some smaller acquisitions may still be used to add
critical mass or strategic capabilities to existing business units. Since our
specialty segments are likely to provide better margins, we will focus on
building revenues in those segments. Our internal initiatives - automation,
polymers, sulfur recovery and renewable fuels - are expected to be profitable in
2006, and we are bidding on a considerable number of projects across North
America and internationally."
"For example, automation continues to be an exciting market. ENGlobal Automation
Group is already working on several projects, and given our clients' continuing
need for original as well as replacement control systems, we see this as a
promising opportunity for many years. Similarly, refiners are being driven to
expand their use of heavy crude, which combined with ongoing environmental
mandates, should provide for a robust sulfur recovery market in the coming
years," added Mr. Burrow.
"Management is focused on areas of improvement, specifically our operating
margins and cash flows from operating activities. We believe that a combination
of our industry's strength and ENGlobal's expertise will drive our business
segments to even better results."
The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006
will be filed with the Securities and Exchange Commission on or before May 15,
2006 reflecting these results.
About ENGlobal Corporation
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ENGlobal Corporation provides engineering and systems services principally to
the petroleum refining, petrochemical, pipeline, production, and process
industries throughout the United States and internationally. ENGlobal's
multi-disciplinary engineering group develops projects from the initial planning
stage through detailed design, procurement, and construction management. The
systems group designs, fabricates, and supports control, instrumentation and
analyzer systems utilized in various energy and process-related industries. The
Company, with its subsidiaries, now employs over 1,800 employees in 15 offices
and occupies over 300,000 square feet of office and manufacturing space. In 2005
and 2004, the Company was named the #1 fastest growing engineering firm in the
United States by ZweigWhite and was ranked #2 in 2003. Further information about
the Company and its subsidiaries is available at www.ENGlobal.com.
ENGlobal Corporation Press Release
May 10, 2006
Page 3
Safe Harbor for Forward-Looking Statements
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Certain 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) the Company's ability
to achieve its business strategy while effectively managing costs and expenses;
(2) the Company's ability to secure future contract awards and/or perform work
under the contracts efficiently; and (3) the continued strong performance of the
energy sector. 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.
ENGlobal Corporation Press Release
May 10, 2006
Page 4
FINANCIAL HIGHLIGHTS
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Consolidated Statements of Income (in thousands, except per share data):
For the Three Months Ended
March 31,
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2006 2005
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Operating Revenue $ 66,627 $ 44,629
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Operating Expenses:
Direct cost 58,405 38,931
Selling, general and administrative 5,698 3,789
Depreciation and amortization 403 280
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Total operating expenses 64,506 43,000
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Operating income 2,121 1,629
Other Income (Expense):
Other income 22 29
Interest income (expense), net (162) (197)
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Income before Provision for Income Taxes 1,981 1,461
Provision for Income Taxes 747 540
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Net Income $ 1,234 $ 921
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Net Income Per Common Share:
Basic $ 0.05 $ 0.04
Diluted $ 0.05 $ 0.04
Weighted Average Shares Used in Computing
Net Income Per Share:
Basic 26,332,602 23,500,064
Diluted 27,246,347 24,012,375
Selected Balance Sheet Information (in thousands):
As of
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Mar. 31, 2006 Dec. 31, 2005
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Cash $ 20 $ 159
Working capital 26,062 21,826
Property and equipment, net 6,964 6,861
Total assets 80,474 75,936
Long-term debt, net of current portion 9,910 5,228
Stockholders' equity 41,314 39,865
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