Exhibit 99.1
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NEWS RELEASE
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FOR IMMEDIATE RELEASE
ENGlobal(R)
CONTACT: Natalie S. Hairston
(281) 878-1000
ir@ENGlobal.com
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ENGLOBAL REPORTS FOURTH QUARTER AND RECORD FISCAL YEAR 2008 RESULTS
HOUSTON, TX, March 16, 2009 - ENGlobal (NASDAQ: ENG), a leading provider of
engineering and related project services, announced today its financial results
for the fourth quarter and fiscal year ended December 31, 2008.
o Record $0.66 earnings per diluted share for the year, an increase of
47%
o Record $0.15 earnings per diluted share for any fourth quarter, an
increase of 200%
o Record revenue for the year of $493.3 million, an increase of 36%
o Record revenue for any fourth quarter of $136.0 million, an increase
of 43%
o Positive cash flow from operations of $8.4 million for the year
o 97% of year-over-year revenue increase attributable to organic or
non-acquisition growth
o Total backlog at December 31 increased 13% year-over-year to $326
million
ENGlobal reported fourth quarter net income of $4.1 million, or $0.15 per
diluted earnings per share, for the quarter ended December 31, 2008. This
represents an increase of 186% over net income of $1.4 million and an increase
of 200% over diluted earnings per share of $0.05 for the same period last year.
Fourth-quarter revenue increased to a record $136.0 million, 43% higher than the
$95.2 million for the fourth quarter of fiscal year 2007. The following table
illustrates the composition of the Company's revenue and profitability for the
three months ended December 31, 2008 and 2007, respectively:
Quarter Ended Quarter Ended
December 31, 2008 December 31, 2007
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(Dollars in millions)
Gross Operating Gross Operating
Total % of Total Profit Profit Total % of Total Profit Profit
Segment Revenue Revenue Margin Margin Revenue Revenue Margin Margin
------- ------- ------- ------ ------ ------- ------- ------ ------
Engineering $ 59.1 43.4% 12.4% 9.0% $ 51.7 54.3% 20.1% 9.9%
Construction 35.9 26.4% 4.7% 2.5% 24.4 25.7% 5.3% 3.3%
Automation 30.4 22.4% 16.1% 10.9% 10.2 10.7% 6.9% -3.9%
Land 10.6 7.8% 15.1% 8.5% 8.9 9.3% 14.6% 6.8%
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$ 136.0 100.0% $ 95.2 100.0%
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~ more ~
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654 N. Sam Houston Parkway E. * Suite 400 * Houston, Texas 77060
www.ENGlobal.com
ENGlobal Press Release
March 16, 2009
Page 2
For the full fiscal year 2008, ENGlobal reported net income of $18.3 million and
earnings per diluted share from continuing operations of $0.66. This represents
an increase of 46% over net income of $12.5 million and an increase of 47% over
earnings per diluted share of $0.45 for the same period in 2007. Non-GAAP net
income for the year 2008 was $0.73 per diluted share. Non-GAAP adjustments for
the full year 2008 consisted of the exclusion of $1.8 million in amortization
expense for acquired intangibles related to acquisitions, and $1.2 million in
non-cash share-based compensation expenses.
Revenue for fiscal year 2008 was a record $493.3 million - 36% higher than
fiscal year 2007. The following table illustrates the composition of the
Company's revenue for the fiscal year ended December 31, 2008 and 2007,
respectively:
Year Ended Year Ended
December 31, 2008 December 31, 2007
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(Dollars in millions)
Gross Operating Gross Operating
Total % of Total Profit Profit Total % of Total Profit Profit
Segment Revenue Revenue Margin Margin Revenue Revenue Margin Margin
------- ------- ------- ------ ------ ------- ------- ------ ------
Engineering $ 251.7 51.0% 15.4% 12.6% $ 221.8 61.0% 18.0% 12.8%
Construction 139.4 28.3% 7.5% 5.4% 73.2 20.2% 13.3% 9.7%
Automation 59.7 12.1% 12.6% 6.3% 37.8 10.4% 9.0% -0.2%
Land 42.5 8.6% 16.5% 9.7% 30.5 8.4% 14.9% 6.9%
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$ 493.3 100.0% $ 363.2 100.0%
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The Company estimates its current backlog, $326 million as of December 31, 2008,
is approximately 13% higher than the $289 million reported for the same prior
year period.
ENGlobal benefited from a decrease in selling, general and administrative
("SG&A") expenses during the year. Overall SG&A expenses decreased $2.6 million,
or 7.5%, from $34.8 million in 2007 to $32.2 million for the twelve months ended
December 31, 2008. As a percentage of revenue, SG&A decreased from 9.6% in 2007
to 6.5% in 2008. SG&A finished the year relatively in line with the Company's
targeted baseline of $7.5 million per quarter and $30 million for the year ended
December 31, 2008.
Due to a general slowing in accounts receivable collections, the Company's days
of sales outstanding increased to 64 days at December 31, 2008, from 61 days at
December 31, 2007. Bad debt expense was approximately .03% and .08% of revenue
for the years ended December 31, 2008 and 2007, respectively.
Long-term debt, net of current portion, decreased 20%, or $5.1 million, from
$23.6 million at December 31, 2007 to $29.3 million at December 31, 2008. As a
percentage of stockholders' equity, long-term debt decreased to 31% from 53% at
these dates. The decrease in long-term debt primarily relates to timing on final
bi-weekly payroll payments. Cash on hand at December 31, 2008 totaled $1.0
million and availability under the Company's credit facility totaled $27.1
million resulting in total liquidity of $28.1 million. At December 31, 2008, the
amount outstanding on the line of credit was $22.5 million compared to $30.1
million at September 30, 2008.
ENGlobal Press Release
March 16, 2009
Page 3
Management's Assessment:
Commenting on the quarter and year end results, ENGlobal's Chairman and Chief
Executive Officer, William A. Coskey, P.E., said, "Our stockholders should be
pleased with our record 2008 results, especially given the economic and industry
downturn that began late in the year. It's impressive that our net income grew
46% year-over-year - and faster than our 36% revenue growth rate. It's also
impressive that all four of our operating groups participated to some degree, as
each recorded growth in both revenue and operating income for the full year.
"Our business, like most others in the current environment, is facing the
headwind of reduced spending by our clients. While about 75% of ENGlobal's new
work is currently coming from sources not tied to large capital projects, our
billable hours thus far in 2009 have trended down from fourth quarter 2008
levels. However, I expect that conditions will improve as the year progresses,
and remain optimistic about the potential positive impact from a number of large
project opportunities."
ENGlobal's employee count decreased to approximately 2,300 for the quarter ended
December 31, 2008. Of this amount, approximately 2,200 employees are billable to
clients. ENGlobal averaged 221,000 billable hours per two-week period during the
fourth quarter 2008, a 14% increase, when compared to 193,000 billable hours in
the same period in 2007. The fourth quarter 2008 average represents an 8%
decrease over 239,000 billable hours in the third quarter 2008. The Company's
overall utilization percentage, inclusive of overhead personnel, was
approximately 90% for the fourth quarter 2008, compared with approximately 91%
for the comparable period of 2007. ENGlobal has calculated its overall
utilization percentage at approximately 90% since 2004.
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) 407-8031 (Domestic) or (201) 689-8031 (International) approximately
10 minutes before the scheduled start time and request the "ENGlobal Fourth
Quarter and Fiscal Year 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, March 30, 2009. The replay can be accessed
by dialing (877) 660-6853 (Domestic) or (201) 612-7415 (International), Account
#286, Conference ID #311616. 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 Annual Report on Form 10-K for the year ended December 31, 2008
will be filed with the Securities and Exchange Commission on March 16, 2009
reflecting these results.
About ENGlobal
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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 20 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 five years. Further information about
the Company and its businesses is available at www.ENGlobal.com.
ENGlobal Press Release
March 16, 2009
Page 4
Safe Harbor for Forward-Looking Statements
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The statements above regarding the Company's expectations regarding fourth
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; (2) our ability to achieve its 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 increases and decreases 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 its market area in view of, among other things, the increasing
consolidation with its services industries; and (9) our ability to increase or
renew 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.
This press release includes certain non-generally accepted accounting principle
("non-GAAP") financial measures. The accompanying information provide
reconciliations of these non-GAAP financial measures to their most directly
comparable financial measure calculated and presented in accordance with
accounting principles generally accepted in the United States of America
("GAAP"). The Company's non-GAAP financial measures should not be considered as
alternatives to GAAP measures such as net income, operating income, cash flow
from operating activities or any other GAAP measure of liquidity or financial
performance.
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ENGlobal Press Release
March 16, 2009
Page 5
FINANCIAL HIGHLIGHTS
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(in thousands, except per basic data)
Quarter Ended Year Ended
December 31 December 31
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2008 2007 2008 2007
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Operating Revenue $ 135,988 $ 95,167 $ 493,332 $ 363,227
Direct cost 120,462 81,385 429,525 305,610
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Gross Profit 15,526 13,782 63,807 57,617
Selling, general and administrative 8,832 11,138 32,208 34,774
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Operating Income $ 6,694 $ 2,644 $ 31,599 $ 22,843
Other Income (Expense):
Other income (expense) (73) (118) 60 344
Interest income (expense), net (380) (619) (1,636) (2,514)
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Income before Provision for Income Taxes $ 6,240 $ 1,907 $ 30,023 $ 20,673
Provision for Income Taxes 2,181 486 11,765 8,209
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Net Income $ 4,059 $ 1,421 $ 18,258 $ 12,464
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Net Income Per Common Share:
Basic $ 0.15 $ 0.05 $ 0.67 $ 0.46
Diluted $ 0.15 $ 0.05 $ 0.66 $ 0.45
Weighted Average Shares Used in
Computing Net Income Per basic:
Basic 27,293 27,034 27,180 26,916
Diluted 27,576 27,903 27,672 27,435
Selected Balance Sheet Information (in thousands):
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As of
Dec. 31, 2008 Dec. 31, 2007
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Cash $ 1,000 $ 908
Working capital 58,586 42,915
Property and equipment, net 5,744 6,472
Total assets 152,705 119,590
Long-term debt, net of current portion 23,614 29,318
Stockholders' Equity 76,766 55,797
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