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 REPORTS FIRST QUARTER 2008 EARNINGS
HOUSTON, TX, May 5, 2008 - ENGlobal (NASDAQ: ENG), a leading provider of
engineering and related project services, today reported net income of $0.15 per
diluted share for the three months ended March 31, 2008. The Company also
reported that its first quarter 2008 revenue increased 20% to a record $98.2
million, and net income increased 27% to approximately $4.0 million, when
compared to the prior year period.
First Quarter 2008 Highlights Compared to First Quarter 2007:
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o Revenue increased 20% to a record $98.2 million.
o Operating profit margin improved to 7.4%, from 6.8%.
o Net income increased 27% to approximately $4.0 million.
o 100% of quarter-over-quarter revenue increase is attributable to
organic or non-acquisition related growth.
o Bi-weekly billable hours averaged 208,000 hours, up 20%, compared to
174,000 hours.
o Employee count increased 8% to approximately 2,600.
The following table illustrates the Company's revenue and gross profit margin
for the quarters ended March 31, 2008 and 2007, respectively:
Three Months Ended March 31,
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2008 2007
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($ in millions) Revenue % of Total Gross Profit Revenue % of Total Gross Profit
Revenue Margin Revenue Margin
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Engineering $ 52.0 53.0 19.0% $ 51.5 63.0 17.8%
Construction 26.9 27.4 7.5% 13.8 16.9 15.1%
Automation 10.4 10.6 10.0% 9.5 11.7 8.2%
Land 8.8 9.0 15.8% 6.9 8.4 18.2%
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$ 98.1 100 $ 81.7 100
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The Company's gross profit margin decreased 1.6 points from 16.3% for the three
months ended March 31, 2007 to 14.7% for the quarter ended March 31, 2008. The
decrease in gross profit margin was primarily related to a shift in revenue mix
quarter-over-quarter resulting from a 119% increase in lower margin Inspection
revenue within the Construction segment.
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654 N. Sam Houston Parkway E. * Suite 400 * Houston, Texas 77060
www.ENGlobal.com
ENGlobal Corporation Press Release
May 5, 2008
Page 2
More than offsetting the decrease in gross profit margin, however, was a
reduction in the Company's absolute selling, general and administrative (SG&A)
expense. As a percentage of revenue, SG&A expense decreased 2.2 points to 7.3%
for the three months ended March 31, 2008 from 9.5% for the comparable prior
year period. The Company's SG&A for the first quarter 2008 was $7.2 million, a
decrease of more than $0.5 million from the first quarter 2007. The
quarter-over-quarter reduction in SG&A expense came from approximately $0.6
million in lower costs within Operating SG&A, primarily related to $0.3 million
in employee and associated costs re-classified to direct expense, $0.2 million
in non-recurring costs associated with closing the Dallas office during the
quarter ended March 31, 2007, and $0.1 million in lower bad debt expense. These
reductions in Operating SG&A were offset by an increase of approximately $0.1
million in Corporate SG&A costs.
Commenting on the results, William A. Coskey, P.E., ENGlobal's Chairman and
Chief Executive Officer, said, "It is exciting to be able to report this solid
start to 2008. The first quarter for our business ended much stronger than it
began, and steady profit improvement as the quarter progressed is an encouraging
trend going forward. Another positive indicator is that since year-end, our
staffing level has increased by approximately 150 employees, or 6%, to
approximately 2,600 at March 31, 2008. Overall, these financial results deliver
on most of the goals we established going into 2008."
On average, ENGlobal's day's sales outstanding increased to 62 days for the
three-month period ended March 31, 2008, from 61 days at December 31, 2007 but
decreased from 71 days for the comparable three-month period in 2007. For the
first quarter of 2008, the Company produced positive cash from operations of
$0.4 million, compared with consuming $4.9 million cash in the first quarter of
2007. The Company's cash flow from operations during the quarter was affected by
an increase in trade receivables and a decrease in accounts payable, primarily
related to approximately $1.9 million in scheduled vendor and sub-contractor
payments related work on an ethanol project which terminated during the third
quarter of 2007.
Long-term debt, net of current portion, increased 5.5%, or $1.6 million, from
$29.3 million at December 31, 2007 to $30.9 million at March 31, 2008. However,
as a percentage of stockholders' equity, long-term debt decreased to 51.3% from
52.5% at these same dates. The increase in long-term debt is primarily related
to the $1.9 million increase in the Company's line of credit to support its
growth and the timing difference between meeting short-term bi-weekly payroll
obligations and collections of associated trade receivables. Total liquidity,
which includes cash plus availability under the Company's Credit Facility, was
$22.1 million and $22.8 million for the respective periods ended March 31. 2008
and December 31, 2007. The outstanding balance on the Company's line of credit
as of March 31, 2008 was $29.7 million, with remaining borrowings available of
$20.1 million.
ENGlobal averaged 208,000 billable hours per two-week period during the first
quarter 2008, a 20% increase, when compared to 174,000 billable hours in the
same period in 2007. The Company's overall utilization percentage, inclusive of
overhead personnel, is approximately 92% for the first quarter 2008 compared to
90% for the comparable period of 2007.
The Company will host a conference call to discuss its quarterly results at
11:00 a.m. EDT (10:00 a.m. CDT) on May 5, 2008. To participate in the conference
call, please dial (877) 407-0782 (Domestic) or (201) 689-8567 (International)
ENGlobal Corporation Press Release
May 5, 2008
Page 3
approximately 10 minutes before the scheduled start time and request the
"ENGlobal First Quarter 2008 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, May 19, 2008. The replay can be accessed by
dialing (877) 660-6853 (Domestic) or (201) 612-7415 (International), Account
#286, Conference ID # 283750. 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 quarter ended March 31, 2008
will be filed with the Securities and Exchange Commission on or about May 6,
2008.
About ENGlobal
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ENGlobal provides engineering, automation, construction, land and regulatory
services principally to the energy sector throughout the United States and
internationally. The Company employs approximately 2,600 employees in 20 offices
and occupies over 450,000 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 five years. Further information
about the Company and its businesses 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 achieve its business strategy while effectively managing costs and expenses;
(2) the Company's ability to successfully and profitably integrate acquisitions;
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.
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ENGlobal Corporation Press Release
May 5, 2008
Page 4
FINANCIAL HIGHLIGHTS
Consolidated Statements of Income (in thousands, except per share data):
For the Three Months Ended
March 31,
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2008 2007
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Operating Revenue $ 98,166 $ 81,659
Direct cost 83,820 68,382
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Gross Profit 14,346 13,277
Selling, general and administrative 7,226 7,744
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Operating income 7,120 5,533
Other Income (Expense):
Other income 26 --
Interest income (expense), net (483) (560)
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Income before Provision for Income Taxes 6,663 4,973
Provision for Federal and State Income Taxes 2,660 1,818
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Net Income $ 4,003 $ 3,155
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Net Income Per Common Share:
Basic $ 0.15 $ 0.12
Diluted $ 0.15 $ 0.12
Weighted Average Shares Used in Computing Net
Income Per Share:
Basic 27,060 26,809
Diluted 27,527 27,260
Selected Balance Sheet Information (in thousands):
Cash $ 2,019 $ 950
Working capital 49,317 44,215
Property and equipment, net 6,220 8,474
Total assets 122,715 111,201
Long-term debt, net of current portion 30,884 32,474
Stockholders' equity $ 60,162 $ 44,321
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