ENG - Earnings call 3 2021

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Operator

Good morning, and welcome to the ENG Third Quarter 2021 Financial Results Conference Call.

Your host for this morning's call is Chief Executive Officer, Mark Hess.

At the request of ENG, today's call is being recorded and will be available for replay on the Investor Relations section of the company's corporate website, www.englobal.com.

You may access the replay by dialing toll-free (877) 481-4010 domestically or (919) 882-2331 internationally and referencing conference ID 4336. This replay will be available shortly after the completion of the event through 9 a.m. XX. November on Time Eastern [Operator Instructions]

yours. this would call Communications. to is the I to At Sir, Rick floor Eisenberg like over with Eisenberg, turn Director point, Media the Relations

Rick Eisenberg

joining Thank us you, thanks, operator, everyone, on call. and this for

our Before statements to provision. forward-looking we like begin, I'd review

Act in Reform other safe conference made Litigation future Private forward-looking under company note materially the events provisions by Any call, such such future of Securities of about Please XX-K. today's may make the of are presentation company During statements. operating harbor the forward-looking representatives forward-looking the statements company's this could the in that discussion achieved XXXX. Risk results or results actual statements that of Factors A may cause from differ appears factors section differences statements.

be call Darren ENG's the ENG's CFO; Westerlind, on today and President. Spriggs, Roger Presenting will

and CEO, presentations, Hess, the be Following Mark Roger; for available Darren; questions. ENG's will

over Spriggs. And Darren Darren? turn I'll it now to

Darren Spriggs

extend like Thank and you, would those I appreciation Rick. like -- my the today. for welcome on call to also

$X costs, over we related Included $X.X costs. and in the operating million significantly quarter, has and revenue operating operating million the staff proposal is underutilized in $X.X direct to direct costs prior million periods. which increased in For reported

with reported accordance the GAAP. staff. million for This tax During retaining we an in credit quarter, our other as credit retention employee of income $X.X is classified

during of in ] advisory fees and $X.X related The remaining is compared also was income. for loan amount included The the [ to the included $XXX,XXX million legal the staff (sic) of and $X.X activities. in PPP development business SG&A and $X.X which investment related quarter our Our million primarily last million quarter, to was forgiven other in is increase PPE year. for nonrecurring

income such in calculate Our taxes income that Texas. use not to as expense of states tax income do primarily state consists tax

against allowance Our adjustment an to federal valuation is expense tax it. the income recorded offset by

$X.XX $X.X of share recorded compared year. a loss the net quarter a As million share income to for or per or we result, per million last $X.XX $X.X of

months $XX.X $X.X For costs, Included to of reported we of over X direct costs and underutilized last is direct costs increased of the revenue first $XX.X staff of related which has operating year, million operating operating costs. million in and the the million significantly year. proposal

credit the months maintaining During staff, year, X recorded first million the is recorded of for tax retention we employee which $X.X other of as our income.

customers million quarter and related $XXX,XXX the fees from for staff employee $X.X legal remaining credit all was million SG&A The the for the million included months receivable this $X.X in $X.X of increase which an million loan, first one Our of X who investment the year, is our accounts to and $X.X their related credit our to first primarily tax and from suspended other development activities. last The operations year. of reserve the compared tax of income. advisory make retention and employee quarter nonrecurring PPE business the for essentially in up

states that in not calculate income like Our tax do Texas. primarily state income income of expense use consists taxes tax to

tax income adjustment allowance an is benefit federal Our against recorded offset to it. the valuation by

deferred of the asset entire our end of our was NOL income tax quarter, including As the reserved.

loss net per last net million months of income year $X.XX a or share of per first for recorded we share to X $X.XX the result, a year. As of the $X.X $XX,XXX or compared

was end over last balance cash $XX the $XX the an of of Our of year. million increase quarter, million as

our sources generated and sufficient will funds, to ENGlobal's and availability as growth. year with $XX last fund be over capital, of million million of quarter. along operations on the credit hand, of $XX increased end line current of believe other this capital the to under We working Our expected cash working near-term internally

sorry. I'm oh, -- Roger you, to now And

Mark Hess

services Hess. Mark quarter, changing make -- where a this statements. a is company from company. we process engineering suite going our a undertaken to better next I'll of primarily the the improvement of in talk to are our that these ENGlobal have about initiatives We're is company to the Last number in marketplace. short-term long-term about At a full This goals. we position that of EPC we initiatives an and strategy supports center spoke

information last During oil our gas. markets: shared and services renewables, automation, target and call, we about traditional our government

focus. market history collective these experience, the decision markets and Our supports relationships in and

candidates with We and areas, about our targeting in develop even seasoned are selected of the clients. EPF ties these help current each will seeing solid stronger markets which each in leaders of recurring markets. We in recruiting experience relationships key leaders for activity significant spoke EPC us with -- by increases seasoned and further

relocation surrounding rebranding to better The the relocation that is in last now new the you seeking all to and is our ENG, overall opportunities to better together. important website, noticeably our applicants is with launched, and and new and improved. during career fully This content excitement and has strategy This the of clients. office the online the us. campaign strategy we with current how communicate our We logo, talked capabilities our resulted expand about of this something our shared rebranding call is

now the construction with construction The on-site small strategy of execution self-performed addition for ENGlobal has offers recent projects. continued services.

integration, small of consists of suite construction execution project of and projects. and services, capital fabrication now now services automation, Our engineering full

may clients this seen You project the topic. EPC addition, have execution. press full, we our self-performed With on offer this release

midstream X quickly positively companies. we small clients, different awarded expansion positioned projects. were and X construction project our are Because pipeline ENGlobal These projects for this awards major with generated to by

will addition confirmation this to and We on additional soon. information strategy providing releasing our be more

updated has Energy everyone facility opportunities evaluating. to our in -- group Henderson, plant currently on We bidding our hydrogen this and/or delivered from in we Texas the that completed Seaboard given quarter, similar we to Last successfully Kansas. birth is renewables project

combined drive Paris increase Accord's reduction plan. the this Nations current X,XXX $XXX renewable activity. happening will will anticipates infrastructure towards In diesel jet the needed meet billion IEA be Climate our committed United greenhouse the by XXXX The This, addition, gas with has and in transition fuel plants an Summit energy to new commitments. administration over the now,

Our authority to group is of in of this opportunities exposure reflection exposure market. inquiries receiving. these this is has our further new as positioned involvement significant a and leadership This an in by this number the level ENG in of space. is strength group the confirmed And

that initiatives the been markets With serve. we have position the we have our improved pursuing, in we

our have part equipment increasing and services of We our facility making in structural in more located strategy a overall efficient This Henderson, equipment fabrication critical significant is for a fabrication Texas. made investment its capacity. our

of the for orders in existing new form of signs tangible upstream seeing successful strategy are purchase and We clients. a

The a integration in industry validation of our an in increase is division are in for far the our our revenue We seeing trend growth similar the from than segment. client automation base. opportunities It's existing these orders significance greater that and they an with represent.

awards project we from accelerating chance QX an our also of Our winning the and clients above-average in are purchase above opportunities IOC -- larger several recent orders where major -- stand with stand that pipeline.

exceeded in uptick business of already our our bookings result in strategy and This with is account activity increase the a an QX. have We development market. so combined key far QX

and saw metrics. key XX%, to Received We increases increase September up XX% seeing another September in RFQs October. August we are are to from

and our and in of In we pipeline the development about September. submitted is we of currently This number opportunities metrics year. billion the activity the our increased of a early business in have part the Our opportunities in working million $X also I has $XXX evidence $XXX have total under seeing. the just over in proposals in increased million and wins in of total, the are in pipeline. opportunities identified am we optimistic increase by

continue update continual paramount is to a for shared enable -- met gave this A commitment a safety when about last quarter. ENG to clients. commitment is safety First. ZERO this our and we to of and we First also not reflects us, update we employees gave an fact. strong Safety and will priority focus. our program, is but where Things And for This for work focus our only IMPACT an I

been our very time, balance and to At happy it we have strong. to am same the is sheet, report improving you that today I

no if implemented. projects. it We almost them an to that but that our as provides we capital access their the for facility have is customers aggressive with important complex have We believe assurance fact capital greater markets, strategy complete our and with working and realistic. This debt. to chosen the necessary, in have It strength financial we is

We adjust necessary. our progress are where to meeting weekly monitor and

real seeing to We to directly these momentum efforts, are extremely be now results strategic this We of ENG. about the and prove will continue future positive to optimistic related believe successful. are we

and be as focus. being XXXX report strategy We so to to far very that have continue must in accomplished working. we urgency amount significant to we approaches, pleased said, work quickly is XXXX. with And a That our able are

now over turn I'd to This the for operator concludes my like remarks. prepared call to questions. the And

Operator

[Operator first Jeffrey coming is Instructions] Your Campbell. question from

Jeffrey Campbell

the Global us of where Jeff were type most is contracts on renewed with that any could is This I just COVID-XX Mark, the Partners. quarter disruption? Campbell to give creating color the of was wondering, to third Alliance you provide not some begin, during sense

Mark Hess

is XXXX. had of see our backlog what take XXXX, though We significant about meet folks go COVID with we XXXX Well, back go we our million, as through. into us we development then out we to business and we a through Even even not and March backlog where well, started step a think had the saw as play I XXXX, in carry -- entered -- at of able end to you'll of $XX came let's When and worked clients. to that. back were

working were from They from working home. Our weren't clients office. the

decreased We of oil which in decrease had price, of significantly in the markets. added our the all the impact activity

-- many we the beginning of reduced then end the backlog simply that are to clients our the just of not and back getting end are reduced had this point of XXXX the of so at to the at -- at office. now because then XXXX And has

oil both the increases actually to on again, we are and price work, uptick on proposal activity the seeing getting awards. the so with And side people back and the in in

that placing smaller this to inventory Although say at point, that backlog a in they before of the -- had needed awards equipment of been when I been clients there's our through quite bit a orders. new there's work quite bit are backlog,

both that renewable plant hydrogen the on working are we we've backlog. that on -- those the projects not been on larger working side And the those side, -- and we've our with the ones that replaced, that were government those projects. yet So through

Jeffrey Campbell

And flip are remarks prepared your in earlier? that -- there your and so specific mind, And there. see then gas like already you it. that's offerings that areas from oil With recovering that in now sounds Okay. let's it apparent

Mark Hess

Yes.

be the to Roger going as we're see the to in we're it's market opine this. to that's on the think I upstream want going is the in upstream where market market. upstream But piece wildest. primarily come of in the sector. the the swings And is that back quickest what usual, seeing, may

So when really is is upstream slow. really low, upstream is is activity and high, when high, activity

leading the in So marketplace. the that's indicator kind of

Jeffrey Campbell

sense. Right. That makes

the you're capability, projects Regarding can the of time? this to at size new willing qualify on-site you complete that construction

Roger Westerlind

going carefully. Yes. to start We're

few So a thousand this between think looking we're million I time. at X up what maybe for to projects somewhere is hundred

Jeffrey Campbell

to about And what's and Great. solution to to turn available industry? currently let's how going ENG now from sequestration. is the successful, If the the Okay. it's carbon announcement recent the capture then differ

Roger Westerlind

to is so Friday -- I X days. leading we went conference, which last Francisco Williams, that's -- for -- week, San of a a Wednesday, Friday us, group, Thursday, over think I our X-day guess renewables few Thursday, Bruce

is And FID I think to go the really us that activity current the versus what's need. troubling to

take to there XX to only million, So to and is expected airplane you if is that down of you that fulfill comes go out the needs fuel, translates gallons that, up need number translate to a production we a huge current what if plants. plus sustainable of that XX million

of lot a about people talking that's this. There's

to follow here FID. ones trick get the as succeed and us to really that's to is whole going think the for to a I the industry

partners, working hard sort So really to our to come. right? technology hard we're with with It's our it out, construction partners. it And is

need just we how we be to think I budget for XXXX. careful

Jeffrey Campbell

for to there Okay. that today lot applications the question And now is, unit you're might just XX which talking diesel renewable I'm project lot wondering, diesel. a besides on is XX renewable production the any then jet But market. my fuel, focus are HPU we about a the reasonably specifically final an hydrogen other the for you attract in think end months? next modular additional

Roger Westerlind

and up to the one cleaning fuel. to we what there's our produce whole I You COX cetera. have do I to capturing, et then mean planet many think the whole, submarkets cleaner

many I there So avenues. think is

Topsoe, of our you Haldor have If around look one wide area. at a provider, this processes range they of technology

is as the to owned much manage, really we see So us. have and in what's plant as fabricate, it we matter way that engineer, doesn't capability I think really the to long procure this

to We it's understand doesn't capabilities It have right? cetera. renewable projects. et that I one if to have said that we the is process diesel, these much, fuel, the So what as build knowledge the I to need really airplane sustainable earlier, really execute matter think

In addition quick know to they should IOCs some major maybe question of The is start the that the do on this. said also pressure ones be how We the will to this, move. moving.

really IOC and But we now some have of personal with every view my we what probably think is than seeking I number quicker of do. should calls investors them others. both week that succeed will

Not point of, is of a diligent I what see need very And a we But about XXXX. think in. just is my sure to now? activities engage lot be now I ourselves that. think we in So lot it will in really, we

Operator

[Operator Instructions] queue. to further in questions appear no And be there

Mark Hess

well. operator. Thank Very you,

Roger Westerlind

Thank you.

Mark Hess

you, Thank us. joining for everyone,

great all day. You a have

Operator

does gentlemen. conclude call. and ladies you, This conference Thank today's

have phone You lines your for at Thank day. this a disconnect time, you wonderful and may participation. your

Englobal (ENGC) 4 Nov 212021 Q3 Earnings call transcript