Exhibit 99.1
ENGlobal Corporation
ENGlobal 654 N. Sam Houston Parkway E., Suite 400
Houston, TX 77060-5914
281-878-1000
281-878-1010 fax
www.englobal.com
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William A. Coskey Direct Dial: 281-878-1020
Founder, Chairman of the Board and Direct Fax: 281-878-1011
Chief Executive Officer bill.coskey@englobal.com
October 29, 2008
Dear ENGlobal Employees, Stockholders, Clients and Vendors:
During the past few months, we have all been inundated with gloomy financial
news about what the future might hold. With this open letter, I do not intend to
bother you with my impression of how our country's financial situation got to
where it is today, because we have all heard the same news and can form our own
views. To me, in its simplest terms, the economy currently lacks a critical
ingredient - and that's confidence.
When consumers like you and me are confident, we willingly spend money on a
variety of wants and needs, and this one factor makes up about two-thirds of all
economic activity. When businesses are confident about future prospects, they
readily make investments in anticipation of a future return on their investment.
When banks are healthy and confident about getting repaid, they loan money,
which is crucial to making the other two functions work.
I read this morning that consumer confidence has now "plunged" to the lowest
level on record. So, in case there was any doubt left, any sense of optimism our
nation has about the future, at least for now, has been replaced by another
emotion - fear. While some part of this fear is being driven by reality and
current events, I believe that we are all affected in a significant way by a
steady stream of negative news. In somewhat of a self-fulfilling prophesy, we
can all blame what's going on as a "bad economy," but the crisis we really face
is one of confidence.
My mission with this correspondence is not to be an economic reporter - there
are already more than enough folks covering that subject. But, I felt it was
timely and important to share my optimistic perspective about our industry and
our Company, especially given the times we now live in. Please consider the
following ten factors, and why I believe they will serve as positive influences
for ENGlobal's business going forward:
1. ENGlobal is fortunate to have served many of our valued clients over a
long period of time, and these strong alliance relationships are the
foundation of our business.
2. Our business relies on small to mid-sized projects, many of which fall
into the "run and maintain" category. We are not nearly as dependent
on huge grass roots capital projects as most others in our industry.
3. Our In-Plant staff remains a strong part of our Company, and not only
provides valuable services for our clients, but is also a daily
point-of-contact with them. This dedicated group has historically
provided a steady source of business for ENGlobal.
4. Many of the projects we work on are not economically motivated, but
instead are required for our clients to comply with various government
regulations. We expect that regulatory oversight of our clients'
industries will continue to increase over time, with some examples of
these projects being: Process Safety Management (OSHA), Environmental
Mandates (EPA), and Pipeline Integrity (DOT).
Open Letter to ENGlobal Employees, Stockholders, Clients and Vendors
October 29, 2008
Page 2
5. A significant part of our Automation Group's work is driven by our
clients' need to replace aging and obsolete distributed control system
(DCS) and analytical equipment. While at times these expenditures can
be deferred, the need to replace DCS and other equipment has provided
a reliable and recurring source of projects. We are focusing our
efforts on improving operational efficiencies that will allow us to
fully capitalize on these opportunities.
6. With the help of an acquisition by our Construction Group, ENGlobal is
building a great reputation for its planning and implementation work
on process plant turnarounds, another source of recurring business. We
are currently investing in the future of this business and, coupled
with this acquisition, we have greatly expanded the level of service
we are able to provide on engineering, procurement, and construction
(EPC) projects.
7. Three of our larger clients have publicly expressed that their
spending plans for 2009 are basically unchanged from 2008 if, as their
forecasts assume, the price of crude continues at around its current
$65 level. I expect that this same "very little has changed" attitude
will be heard from many of our other large midstream and downstream
clients over the near term.
8. I believe our country has finally grown tired of being held captive to
foreign sources of energy (as well we should). Both political parties
have expressed their commitment to making energy independence a top
priority. While there have been many false promises in the past, I
anticipate that any real progress in this area will create work for
ENGlobal.
9. About half of the states in the U.S. have enacted Renewable Portfolio
Standards, which mandate a timeline and percentage for electricity
generation from renewable sources such as wind, solar, geothermal, and
biomass. Also, the Investment Tax Credit for these renewable energy
projects was due to expire on December 31, 2008, but was extended as
part of the recent "bailout" legislation. I believe these two factors,
working together, will serve to drive demand for alternative energy
projects in the future.
10. It is a fact that facilities in the energy industry, as well as in
many other industries, are aging. No grass roots refinery has been
built in the U.S. since 1976, and many of the country's large
pipelines were installed over 50 years ago. Maintaining and rebuilding
this aging infrastructure - an ENGlobal core competency - is going to
be a future necessity that will benefit our Company.
As a result of these and other factors, ENGlobal has had recent success in
continuing to land new work, in spite of the economic conditions you read about
in the news. Even with our success and our belief that we have excellent
prospects, we are not totally immune to the economic turmoil that may lie ahead.
But my main message to you should be obvious: We firmly believe our Company is
well positioned to ride-out any storms.
As always, our employees can help by being totally committed to quality and
client satisfaction. My goal for ENGlobal is not just to meet our clients'
expectations, but to look for ways to totally impress them by always going the
extra mile. As a start, we need to be continuously asking questions in order to
understand what our clients want. Next, we need to look for ways to give them
positive surprises, which they don't often expect from service providers. I can
guarantee that delivering on this one simple but important concept will be more
effective for our business than 1,000+ PowerPoint presentations.
Open Letter to ENGlobal Employees, Stockholders, Clients and Vendors
October 29, 2008
Page 3
In closing, we want you to know that we expect continued success going forward,
including a record level of performance and financial results from operations
during the current year and a strong potential for 2009. I hope you will
consider joining me by not running with the fearful crowd, but instead by
showing the world some confidence. It will definitely be a breath of fresh air
for those around you.
Thank you for your continued support of ENGlobal.
Sincerely,
/s/ William A. Coskey
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William A. Coskey, P.E.
Certain matters discussed in this letter constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities and Exchange Act of 1934, as amended. Some of the
forward-looking statement can be identified by the use of forward-looking words
such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "estimates", "anticipates," and the
negative of those words or other comparable terminology. The discussion of
financial trends, strategy, plans or operational intentions may also include
forward-looking statement 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, including acquisitions by the Construction group; (3) the
Company's ability to retain clients and employees, while sustaining alliances
and project quality;(4) continued government oversight, regulatory requirements,
and incentives, such as applicability of OSHA, EPA, and DOT regulations,
enactment of renewable portfolio standards and the availability of investment
tax credits; (5) the price of oil; (6) the continued strong performance of the
energy sector, (7) the country's focus on achieving energy independence from
foreign sources; (8) the successful financial performance of each business unit,
including the deployment of In-Plant staff; and (9) continued need to replace
obsolete distributed control systems and implementation of process plant
turnarounds. Forward looking statement involve risks and uncertainties that
could cause actual events and results to differ materially from those projected.
These included, but are not limited to, the factors discussed in the Company's
2007 Annual Report on Form 10-K.