Exhibit 99.1
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NEWS RELEASE
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FOR IMMEDIATE RELEASE
ENGlobal
CONTACT: Natalie S. Hairston
(281) 878-1000
ir@ENGlobal.com
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ENGLOBAL REPORTS SECOND QUARTER RESULTS
Outlines Positive Short-term Trends
HOUSTON, TX, August 7, 2009 - ENGlobal (NASDAQ: ENG), a leading provider of
engineering and related project services, announced today its financial results
for the second quarter ended June 30, 2009.
Second Quarter 2009 Highlights Compared to Second Quarter 2008:
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o Breakeven earnings per diluted share, a decrease from $0.24
o Revenue of $79.9 million, a decrease of 41%, with $17.4 million of the
decrease due to a reduced level of pass-through procurement revenue
o Consolidated gross profit margin as a percentage of revenue of 8.8%, a
decrease from 14.9%
o Continued strong liquidity, with positive cash flow from operations of
$5.7 million and $14.0 million for the three and six months ended June
30, 2009, respectively
o 41% reduction in long-term debt for the six months ended June 30, 2009
ENGlobal reported second quarter net income of $50,000, or $0.00 earnings per
diluted share, for the quarter ended June 30, 2009, a decrease from $0.24
earnings per diluted share for the quarter ended June 30, 2008, which
represented record revenue and earnings for the Company. Second quarter 2009
revenue decreased to $79.9 million, 41% lower than the $136.0 million for the
second quarter of fiscal year 2008. Of this decrease, $17.4 million or 31% of
the decrease is attributable to lower pass-through procurement revenue in the
Engineering segment, with the balance attributable to reduced demand for
services. The following table illustrates the composition of the Company's
revenue and results of operations for the three months ended June 30, 2009 and
2008, respectively:
Quarter Ended Quarter Ended
June 30, 2009 June 30, 2008
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(Dollars in millions)
% of Gross Operating % of Gross Operating
Total Total Profit Profit Total Total Profit Profit
Segment Revenue Revenue Margin Margin Revenue Revenue Margin Margin
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Engineering $ 33.5 41.9% 8.2% 3.3% $ 77.5 57.0% 16.5% 13.6%
Construction 22.4 28.1% 8.0% 6.1% 35.7 26.2% 11.2% 9.1%
Automation 15.6 19.5% 7.8% 1.8% 11.0 8.1% 12.3% 5.5%
Land 8.4 10.5% 15.3% 11.0% 11.8 8.7% 18.3% 10.9%
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$ 79.9 100.0% $ 136.0 100.0%
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654 N. Sam Houston Parkway E. * Suite 400 * Houston, Texas 77060
www.ENGlobal.com
ENGlobal Press Release
August 7, 2009
Page 2
The Company's consolidated gross profit margin as a percent of revenue decreased
to 8.8% in the three months ended June 30, 2009 from 14.9% in the prior year
period. The primary reasons for this decrease were: (1) a general reduction of
project awards as many of our clients delayed or canceled scheduled domestic
capital projects, (2) increased variable overhead costs, and (3) increased
competition for available projects.
Management's Assessment:
Commenting on the results, ENGlobal's Chairman and Chief Executive Officer,
William A. Coskey, P.E., said, "Our second quarter results reflect the decline
in U.S. energy-related project spending, which has led to a contraction in our
business, lower margins and a competitive pricing environment. We are encouraged
that we are beginning to see signs of recovery in our business, based on
significant increases in proposal activity and a recent improvement in billable
hour trends. However, we expect the pace of any recovery will be gradual
throughout the remainder of this year."
Mr. Coskey, continued, "We are positioning ENGlobal to navigate the current
environment by: (1) reducing costs, (2) focusing on existing and valued
long-term client relationships, and (3) expanding our business development
efforts into new and active markets. In addition, we have reinitiated our
strategic acquisition program, as represented by our announcement this morning.
The program is designed to expand our business base with accretive acquisitions
that will provide our clients with added services."
ENGlobal's employee count was steady at approximately 2,200 for the quarter
ended June 30, 2009. The Company averaged 147,000 billable hours per two-week
period during the second quarter 2009, a 37% decrease when compared to 235,000
billable hours in the same period in 2008. The second quarter 2009 average
represents a 14% decrease over 171,000 billable hours in the first quarter 2009.
The Company's overall utilization percentage, inclusive of overhead personnel,
was approximately 86% for the second quarter 2009, compared with approximately
92% for the comparable period of 2008. Short-term trends for these metrics are
positive. Since the end of the second quarter, billable hours and utilization
rates have trended upward.
Overall SG&A expenses decreased $1.9 million, or 21.8%, to $6.8 million for the
three months ended June 30, 2009, from $8.7 million for the comparable
prior-year period. The second quarter 2009 SG&A represents a decrease of 4%
compared to $7.1 million in the first quarter 2009. As a percentage of revenue,
SG&A expense increased 2.1 percentage points to 8.5% for the three months ended
June 30, 2009, from 6.4% for the comparable period in 2008.
Regarding the Company's collections performance on accounts receivable, balances
continue to improve. The days sales outstanding decreased to 69 days at June 30,
2009, from 72 days at March 31, 2009, but increased from 64 days for the
twelve-month period ended December 31, 2008 and 61 days for the three-month
period ended June 30, 2008. Bad debt expense was approximately (0.1%) and 1.0%
of revenue for the quarters ended June 30, 2009 and 2008, respectively.
Long-term debt and capital leases, net of current portion, decreased 40.6%, or
$9.7 million, from $23.9 million at December 31, 2008 to $14.2 million at June
30, 2009. As a percentage of stockholders' equity, long-term debt decreased to
18.0% from 31.1% at these dates. The decrease in long-term debt primarily
ENGlobal Press Release
August 7, 2009
Page 3
relates to a $9.3 million pay down on our line of credit. Cash on hand at June
30, 2009 totaled $0.8 million and availability under the credit facility totaled
$36.7 million, resulting in cash and previously arranged borrowing capacity to
meet additional liquidity needs of $37.5 million. At June 30, 2009, the amount
outstanding on the Company's line of credit was $13.2 million compared to $25.5
million at June 30, 2008.
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 Second
Quarter 2009 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 Friday, August 21, 2009. The replay can be accessed by dialing (877)
660-6853 (Domestic) or (201) 612-7415 (International), Account #286, Conference
ID #329867. 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 period ended June 30, 2009
will be filed with the Securities and Exchange Commission on August 10, 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 2,200 employees in 19 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 six 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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The statements above regarding the Company's expectations regarding third
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 and the resulting decrease in demand for our
services and competitive pricing pressure; (2) our ability to achieve our
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 changes 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 our market area in view of, among other things, increasing consolidation
currently taking place among our competitors; and (9) our ability to increase or
replace 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.
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ENGlobal Press Release
August 7, 2009
Page 4
FINANCIAL HIGHLIGHTS
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(in thousands, except per basic data)
Quarter Ended Six Months Ended
June 30 June 30
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2009 2008 2009 2008
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Operating Revenue $ 79,879 $ 136,011 $ 173,368 $ 234,177
Direct cost 72,832 115,710 155,837 199,530
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Gross Profit 7,047 20,301 17,531 34,647
Selling, general and administrative 6,751 8,701 13,858 15,927
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Operating Income 296 11,600 3,673 18,720
Other Income (Expense):
Other income (113) 59 151 85
Interest income (expense), net (120) (413) (331) (896)
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Income before Provision for Income Taxes 63 11,246 3,493 17,909
Provision for Income Taxes 13 4,544 1,430 7,204
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Net Income $ 50 $ 6,702 $ 2,063 $ 10,705
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Net Income Per Common Share:
Basic $ 0.00 $ 0.25 $ 0.08 $ 0.40
Diluted $ 0.00 $ 0.24 $ 0.07 $ 0.39
Weighted Average Shares Used in
Computing Net Income Per Share:
Basic 27,298 27,096 27,297 27,078
Diluted 27,585 27,641 27,542 27,576
Selected Balance Sheet Information (in thousands): As of
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Jun. 30, 2009 Dec. 31, 2008
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Cash $ 849 $ 1,000
Working capital 50,904 58,586
Property and equipment, net 6,914 5,744
Total assets 124,181 152,705
Long-term debt, net of current portion 14,196 23,857
Stockholders' equity 79,117 76,766
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