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 ANNOUNCES RECORD QUARTERLY RESULTS
HOUSTON, TX, AUGUST 7, 2007 - ENGlobal Corporation (AMEX: ENG), a leading
provider of engineering and professional services, today reported net income of
$3.9 million, or $0.15 per basic share, for the quarter ended June 30, 2007.
Operating profit margin increased to 7.7% during the second quarter 2007, an
increase of 2.9 percentage points from 4.8% recorded during the prior year
period. For comparison purposes, during the first quarter 2007, the Company
earned $0.12 per basic share with an operating margin of 6.8%. These results
show that ENGlobal increased its cumulative net income to $0.26 per share
(rounded) in the six months ended June 30, 2007, compared to $0.14 per share for
the same period in 2006.
Second Quarter 2007 Highlights Compared to Second Quarter 2006:
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o Earnings per share increased to $0.15 from $0.09
o Gross profit margin increased to 15.9% from 14.3%
o Operating profit margin increased to 7.7% from 4.8%
o Revenue increased 19% to a record $89.6 million
o Bi-weekly billable hours averaged 189,000 hours, up 39%, compared to
136,000 hours
Revenue for the quarter totaled $89.6 million, an increase of approximately
$14.5 million, or 19%, compared to the second quarter of 2006. This revenue
increase can primarily be attributed to an increased level of cost-plus billable
work in the Company's engineering segment, with field and inspection services
achieving the largest quarter-over-quarter growth. Also, revenue in the quarter
sequentially increased 10% when compared to $81.7 million in the first quarter
of 2007. The following table illustrates the composition of the Company's
revenue for the quarters ended June 30, 2007 and 2006, respectively:
Quarter Ended Quarter Ended
(Dollars in millions)* June 30, 2007 June 30, 2006
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Revenue % of Total Revenue % of Total
Revenue Revenue
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Engineering Segment
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Detail-design $ 36.1 40% $ 28.4 38%
Field services and inspection 38.2 43% 25.0 33%
Procurement and construction 5.5 6% 6.3 8%
Design-build fixed price 4.2 5% 10.1 14%
Systems Segment 5.6 6% 5.3 7%
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$ 89.6 100% $ 75.1 100%
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* Some numbers may vary slightly from other published reports due to rounding.
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654 N. Sam Houston Parkway E. o Suite 400 o Houston, Texas 77060-5914
www.ENGlobal.com
ENGlobal Corporation Press Release
August 7, 2007
Page 2
As a percentage of revenue, selling, general and administrative ("SG&A")
expenses decreased 1.3 percentage points to 8.2% for the three months ended June
30, 2007 from 9.5% for both the comparable period in 2006 and the first quarter
2007, respectively. During the quarter, the Company was able to successfully
leverage overhead expenses given current revenue growth combined with a $454,000
reduction in overhead expenses when compared to the first quarter 2007.
Commenting on the results, William A. Coskey, P.E., ENGlobal's Chairman and
Chief Executive Officer, said, "We are pleased to report another quarter of
improved financial performance for the Company, with solid top line growth along
with an increased level of operating profit margin. ENGlobal has continued to
benefit from an upward trend in cost-plus billable work in its engineering
segment that resulted in revenue and net income setting new quarterly records.
In summary, many measures undertaken to improve performance during the first
half of 2007 have proven to be successful, and we expect that the near term
trends in our business will continue to be positive."
ENGlobal averaged 189,000 billable hours per two-week period during the second
quarter 2007, a 39% increase, when compared to 136,000 billable hours in the
same period in 2006. The second quarter 2007 average represents a 9% increase
over 174,000 billable hours in the first quarter 2007. The Company's overall
utilization percentage, inclusive of overhead personnel, is approximately 91%
for the second quarter 2007 compared to 88% for the comparable period of 2006,
and up one percentage point from 90% during the first quarter 2007.
On average, ENGlobal's accounts receivable days outstanding was 70 days for the
three month period ended June 30, 2007, a decrease from 71 days in the first
quarter 2007. A factor contributing to an increased overall level in days
outstanding has been the conversion of WRC Corporation to the Company's billing
system. Excluding both the revenue and accounts receivable balances attributable
to this acquisition, ENGlobal's average days outstanding would have been reduced
to 67 days for the quarter ended June 30, 2007. The Company continues to work
toward improving billing and collection processes.
The outstanding balance on the line of credit as of June 30, 2007 was $30.9
million, with remaining borrowings available of $4.1 million. As of August 2,
2007, the outstanding balance on the line of credit was $28.7 million, with
remaining borrowings available of $6.3 million.
On August 6, 2007, ENGlobal entered into a new credit agreement with its current
lending institution as the lead bank. The new credit agreement provides for a
three-year, $50 million senior secured revolving credit facility, with
additional availability of $15 million under similar terms and conditions of the
previous $35 million credit facility. The Company believes the resulting
increase in its borrowing capacity under this new line of credit will
accommodate its continued growth and expansion.
In accordance with the provisions of SFAS No. 123(R), total stock-based
compensation expense in the amount of $222,143 and $405,894 was recorded during
the three month period ended June 30, 2007 and 2006, respectively. The total
stock-based compensation expense was recorded in SG&A expenses.
The Company will host a conference call to discuss its quarterly results at
11:00 a.m. EDT (10:00 a.m. CDT). To participate in the conference call, please
dial (877) 407-0782 (Domestic) or (201) 689-8567 (International) approximately
10 minutes before the scheduled start time and request the "ENGlobal Second
Quarter 2007 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 Tuesday, August 21, 2007. The replay can be accessed by dialing (877)
660-6853 (Domestic) or (201) 612-7415 (International), Account #286, Conference
ID # 250194. 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.
ENGlobal Corporation Press Release
August 7, 2007
Page 3
The Company's Quarterly Report on Form 10-Q for the quarter year ended June 30,
2007 will be filed with the Securities and Exchange Commission on or before
August 9, 2007 reflecting these results.
About ENGlobal Corporation
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ENGlobal Corporation provides engineering, automation systems, field inspection,
and land management and regulatory services principally to the petroleum
refining, petrochemical, pipeline, production, and process industries throughout
the United States and internationally. The Company, with its subsidiaries, now
employs over 2,400 employees in 18 offices and occupies over 450,000 square feet
of office and manufacturing space. In 2004 and 2005, the Company was named the
#1 fastest growing engineering firm in the United States and Canada by
ZweigWhite and was ranked #2 in 2006 and 2003. Further information about the
Company and its subsidiaries is available at www.ENGlobal.com.
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 shift its contracting strategy in a manner that will prevent future charges;
(2) the Company's ability to mitigate its losses; (3) general economic
conditions that impact the cost of labor and materials; (4) the Company's
ability to achieve its business strategy while effectively managing costs and
expenses; (5) the Company's ability to estimate exact project completion dates;
(6) the Company's ability to successfully and profitably integrate acquisitions;
and (7) 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.
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ENGlobal Corporation Press Release
August 7, 2007
Page 4
FINANCIAL HIGHLIGHTS
Consolidated Statements of Income (in thousands, except per share data)*:
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Quarter Ended Six Months Ended
June 30 June 30
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2007 2006 2007 2006
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Operating Revenue $ 89,576 $ 75,066 $ 171,235 $ 141,693
Operating Expenses:
Direct cost 75,357 64,337 143,738 122,742
Selling, general and administrative 6,570 6,813 13,616 12,510
Depreciation and amortization 720 354 1,418 757
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Total operating expenses 82,647 71,504 158,772 136,009
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Operating income 6,929 3,562 12,463 5,684
Other Income (Expense):
Other income 515 387 515 409
Interest income (expense), net (700) (253) (1,260) (415)
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Income before Provision for Income Taxes 6,744 3,696 11,718 5,678
Provision for Income Taxes 2,831 1,365 4,650 2,112
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Net Income $ 3,913 $ 2,331 $ 7,068 $ 3,566
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Net Income Per Common Share:
Basic $ 0.15 $ 0.09 $ 0.26 $ 0.14
Diluted $ 0.14 $ 0.09 $ 0.26 $ 0.13
Weighted Average Shares Used in
Computing Net Income Per Share:
Basic 26,864,358 26,444,185 26,839,184 26,388,702
Diluted 27,290,047 27,191,617 27,208,578 27,218,982
Selected Balance Sheet Information (in thousands)*:
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As of
June 30, 2007 Dec. 31, 2006
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Cash $ 2,325 $ 1,403
Working capital 48,707 35,187
Property and equipment, net 6,929 8,725
Total assets 120,213 106,227
Long-term debt, net of current portion 33,318 27,162
Stockholders' equity 48,583 40,862
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* Some numbers may vary slightly from other published reports due to rounding.
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