HOUSTON, TX / ACCESSWIRE / November 4, 2021 / ENG (NASDAQ:ENG), a leading provider of innovative, project delivery solutions for the energy industry, today announced that, for the third quarter ended September 25, 2021, it reported net income of $2,401,000, or $.07 per share, on revenue of $5,921,000, compared with a net loss of $1,110,000, or $(.04) per share, on revenue of $15,729,000 for the third quarter ended September 26, 2020.
ENG's $3.5 million improvement in third quarter bottom line performance compared to the same period last year was primarily the result of a Q3 2021 Other Income contribution of $6.4 million, consisting of a $5.0 million forgiveness of the company's PPP loan obtained in April 2020 and a $1.4 million employee retention credit. Both of these items were used to cover payroll costs in order to maintain our essential workforce. The credits were partially offset by Q3 2021 decreases in revenue and gross margin, in addition to increased business development costs within the company's Commercial segment, compared to Q3 last year.
The $9.8 million decrease in the company's third quarter revenue - and $23.5 million decrease in nine-month revenue - compared with the same periods last year were due primarily to the COVID-19-related non-renewal of several large commercial segment projects, as well as ongoing delays in certain government services projects due to COVID-19-related base closures and travel restrictions. These factors were partially offset by revenue contributed by one large project that did continue into the third quarter of 2021.
For the nine months ended September 25, 2021, the company had a net loss of $1,809,000, or $(.06) per share, on revenue of $29,449,000, compared with net income of $59,000, or $.00 per share, on revenue of $52,871,000 for the nine months ended September 26, 2020.
ENG's $1.9 million decrease in nine month bottom line performance compared with the same period in 2020 was primarily a result of decreases in revenue and gross margin, in addition to increased business development costs and bad debt reserve within the company's Commercial segment. These factors were partially offset by employee retention credits in the first and third quarters of 2021 and the PPP loan forgiveness.
"While it's clear that ENG's business in the third quarter of 2021 was still being adversely affected by the lingering disruption of the energy industry from the effects of COVID-19," said ENG CEO Mark A. Hess, "ENG is strongly positioned today to take advantage of the anticipated increase in business activity in our markets. First, we have recently added on-site construction to our suite of client services, a move we are confident will attract additional business that is expected to boost our revenue and earnings starting in this current quarter.
"Second, earlier this week we announced our partnering with a leading university to build a prototype CO2 sequestration reactor intended to capture the carbon dioxide formed during power generation and other industrial processes and storing it so that it is not released into the atmosphere. This project potentially provides us with yet another source of near and long-term revenue growth.
"Third, thanks to our recent stock offerings we have a strong balance sheet with nearly $25 million cash on hand and less than $1.4 million in long-term debt. This financial stability not only gives our current and prospective clients added comfort, but also provides ENG with far greater ability to execute on many of the opportunities before us, including those in the expanding renewables and green energy sectors.
"These opportunities, plus the continued energy industry recovery from the COVID pandemic, will, we believe, produce improved results for our company for the remainder of this year and into 2022," Mr. Hess concluded.
The following is a summary of the income statements for the three- and nine-month periods ended September 25, 2021 and September 26, 2020:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||
| September 25, 2021 | September 26, 2020 | September 25, 2021 | September 26, 2020 | |||||||||||
Revenue | $ | 5,921 | $ | 15,729 | $ | 29,449 | $ | 52,871 | ||||||
Gross profit (loss) | (814 | ) | 1,144 | 272 | 6,857 | |||||||||
Selling, general and administrative expenses | 3,089 | 2,174 | 9,914 | 6,621 | ||||||||||
Operating profit (loss) | (3,903 | ) | (1,030 | ) | (9,642 | ) | 236 | |||||||
Net income (loss) | 2,401 | (1,110 | ) | (1,809 | ) | 59 | ||||||||
The following table illustrates the composition of the company's revenue and profitability for its operations for the three- and nine-month periods ended September 25, 2021 and September 26, 2020:
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
(amounts in thousands) | September 25, 2021 | September 26, 2020 | ||||||||||||||||||||||
Segment | Total Revenue | % of Total Revenue | Gross Profit (Loss) Margin | Operating Loss Margin | Total Revenue | % of Total Revenue | Gross Profit Margin | Operating Profit (Loss) Margin | ||||||||||||||||
Commercial | $ | 3,935 | 66.5% | (27.7)% | (66.7)% | $ | 13,867 | 88.2% | 7.1% | 1.1% | ||||||||||||||
Government Services | 1,986 | 33.5% | 13.8% | (0.3)% | 1,862 | 11.8% | 8.5% | (0.3)% | ||||||||||||||||
Consolidated | 5,921 | 100.0% | (13.7)% | (65.9)% | 15,729 | 100.0% | 7.3% | (6.5)% | ||||||||||||||||
| Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||
(amounts in thousands) | September 25, 2021 | September 26, 2020 | |||||||||||||||||||||
Segment | Total Revenue | % of Total Revenue | Gross Profit (Loss) Margin | Operating Profit (Loss) Margin | Total Revenue | % of Total Revenue | Gross Profit Margin | Operating Profit Margin | |||||||||||||||
Commercial | $ | 23,141 | 78.6% | (1.6)% | (26.0)% | $ | 45,180 | 85.5% | 12.7% | 7.2% | |||||||||||||
Government Services | 6,308 | 21.4% | 10.3% | (0.5)% | 7,691 | 14.5% | 14.5% | 8.2% | |||||||||||||||
Consolidated | 29,449 | 100.0% | 0.9% | (32.7)% | 52,871 | 100.0% | 13.0% | 0.4% | |||||||||||||||
The following table presents certain balance sheet items as of September 25, 2021 and December 26, 2020:
(amounts in thousands) | As of September 25, 2021 | As of December 26, 2020 | ||||
Cash | $ | 24,699 | $ | 13,706 | ||
Working capital | 30,980 | 14,039 | ||||
| ENGlobal Corporation Condensed Consolidated Statements of Operations (Unaudited) (amounts in thousands, except per share data) | |||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
| September 25, 2021 | September 26, 2020 | September 25, 2021 | September 26, 2020 | ||||||||||||
Operating revenues | $ | 5,921 | $ | 15,729 | $ | 29,449 | $ | 52,871 | |||||||
Operating costs | 6,735 | 14,585 | 29,177 | 46,014 | |||||||||||
Gross profit | (814 | ) | 1,144 | 272 | 6,857 | ||||||||||
Selling, general and administrative expenses | 3,089 | 2,174 | 9,914 | 6,621 | |||||||||||
Operating profit (loss) | (3,903 | ) | (1,030 | ) | (9,642 | ) | 236 | ||||||||
Other income (expense): | |||||||||||||||
Other income, net | 6,371 | 4 | 8,061 | 6 | |||||||||||
Interest expense, net | (46 | ) | (62 | ) | (161 | ) | (103 | ) | |||||||
Income (loss) from operations before income taxes | 2,422 | (1,088 | ) | (1,742 | ) | 139 | |||||||||
Provision for federal and state income taxes | 21 | 22 | 67 | 80 | |||||||||||
Net income (loss) | 2,401 | (1,110 | ) | (1,809 | ) | 59 | |||||||||
Basic and diluted income (loss) per common share: | $ | 0.07 | $ | (0.04 | ) | $ | (0.06 | ) | $ | 0.00 | |||||
Basic and diluted weighted average shares used in computing income (loss) per share: | 35,159 | 27,507 | 30,776 | 27,529 | |||||||||||
| ENGlobal Corporation Condensed Consolidated Balance Sheets (Unaudited) (amounts in thousands, except share and per share amounts) | |||||||
| September 25, 2021 | December 26, 2020 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash | $ | 24,699 | $ | 13,706 | |||
Trade receivables, net of allowances of $1,673 and $386 | 5,310 | 7,789 | |||||
Prepaid expenses and other current assets | 217 | 891 | |||||
Payroll taxes receivable | 3,065 | - | |||||
Contract assets | 3,655 | 4,090 | |||||
Total Current Assets | 36,946 | 26,476 | |||||
Property and equipment, net | 1,117 | 1,263 | |||||
Goodwill | 720 | 720 | |||||
Other assets | |||||||
Right of use asset | 3,179 | 1,628 | |||||
Deposits and other assets | 375 | 351 | |||||
Total Other Assets | 3,554 | 1,979 | |||||
Total Assets | $ | 42,337 | $ | 30,438 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 1,439 | $ | 2,138 | |||
Accrued compensation and benefits | 1,963 | 3,048 | |||||
Current portion of leases | 1,126 | 1,541 | |||||
Contract liabilities | 664 | 1,258 | |||||
Current portion of note | - | 3,707 | |||||
Current portion of deferred payroll tax | 519 | - | |||||
Other current liabilities | 255 | 745 | |||||
Total Current Liabilities | 5,966 | 12,437 | |||||
Deferred payroll tax | 519 | 1,037 | |||||
Long-term debt | 1,377 | 2,733 | |||||
Long-term leases | 2,502 | 608 | |||||
Total Liabilities | 10,364 | 16,815 | |||||
Commitments and Contingencies (Note 8) | |||||||
Stockholders' Equity: | |||||||
Common stock - $0.001 par value; 75,000,000 shares authorized; 35,208,061 shares issued and outstanding at September 25, 2021 and 27,560,686 shares issued and outstanding at December 26, 2020 | 35 | 28 | |||||
Additional paid-in capital | 57,309 | 37,157 | |||||
Accumulated deficit | (25,371 | ) | (23,562 | ) | |||
Total Stockholders' Equity | 31,973 | 13,623 | |||||
Total Liabilities and Stockholders' Equity | $ | 42,337 | $ | 30,438 | |||
| ENGlobal Corporation Condensed Consolidated Statements of Cash Flows (Unaudited) (amounts in thousands) | |||||||
| For the Nine Months Ended | |||||||
| September 25, 2021 | September 26, 2020 | ||||||
Cash Flows from Operating Activities: | |||||||
Net income (loss) | $ | (1,809 | ) | $ | 59 | ||
Adjustments to reconcile net income (loss) to net cash (used in) operating activities: | |||||||
Depreciation and amortization | 355 | 313 | |||||
Share-based compensation expense | 166 | 177 | |||||
Forgiveness of PPP Loan | (4,974 | ) | - | ||||
Changes in current assets and liabilities: | |||||||
Trade accounts receivable | 2,479 | (1,268 | ) | ||||
Contract assets | 435 | 807 | |||||
Other current assets | (2,415 | ) | 620 | ||||
Accounts payable | (699 | ) | (177 | ) | |||
Accrued compensation and benefits | (1,085 | ) | 883 | ||||
Contract liabilities | (594 | ) | (2,706 | ) | |||
Income taxes payable | (32 | ) | (76 | ) | |||
Other current liabilities, net | (458 | ) | (361 | ) | |||
Net cash used in operating activities | $ | (8,631 | ) | $ | (1,729 | ) | |
Cash Flows from Investing Activities: | |||||||
Property and equipment acquired | (187 | ) | (228 | ) | |||
Net cash used in investing activities | $ | (187 | ) | $ | (228 | ) | |
Cash Flows from Financing Activities: | |||||||
Issuance of common stock, net | 19,993 | - | |||||
Payments on finance leases | (94 | ) | (64 | ) | |||
Proceeds from PPP loan | - | 4,937 | |||||
Interest on PPP loan | 25 | - | |||||
Proceeds (payments) from revolving credit facility | (113 | ) | 1,476 | ||||
Net cash provided by financing activities | $ | 19,811 | $ | 6,349 | |||
Net change in cash | 10,993 | 4,392 | |||||
Cash at beginning of period | 13,706 | 8,307 | |||||
Cash at end of period | $ | 24,699 | $ | 12,699 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | 155 | $ | 103 | |||
Right of use assets obtained in exchange for new operating lease liability | $ | 2,613 | $ | 963 | |||
Cash paid during the period for income taxes (net of refunds) | $ | 151 | $ | 16 | |||
Debt issuance costs | $ | - | $ | 140 | |||
Leased assets obtained in exchange for new finance lease liabilities | $ | - | $ | 219 | |||
Non-cash transaction: PPP loan forgiveness | $ | 4,974 | $ | - | |||
For further information on ENG's third quarter 2021 financial results, please refer to its Form 10-Q filing on the company's website at www.englobal.com, or on the SEC's website at www.sec.gov.
Conference Call
Management will host a conference call at 9:00 am Eastern time today to discuss the company's third quarter 2021 financial results, provide updates on potential contract awards, and discuss the company's growth outlook for the remainder of 2021.
To participate in the conference call, please dial in five to ten minutes before the call: (Toll Free) 888-506-0062 domestically, or 973-528-0011 internationally.
Entry code: 220367
The conference call will also be broadcast live over the Internet and can be accessed at: https://www.webcaster4.com/Webcast/Page/2272/43346
The teleconference replay will be available shortly after the completion of the live event through 9:00 am Eastern time on November 11, 2021. You may access the replay by dialing (Toll Free) 877-481-4010 domestically, or 919-882-2331 internationally, and referencing conference ID 43346.
You may also access the replay by visiting the company's web site: https://www.englobal.com/about-eng/events-and-presentations/
About ENG
ENGlobal (NASDAQ:ENG) is a leading provider of complete project solutions for renewable and traditional energy throughout the United States and internationally. ENGlobal operates through two business segments: Commercial and Government Services. The Commercial segment provides engineering, design, fabrication, construction and integration of automated control systems as a complete packaged solution for our clients. The Government Services segment provides engineering, design, installation, operations, and maintenance of various government, public sector, and international facilities, specializing in turnkey automation and instrumentation systems for the U.S. Defense industry worldwide. Further information about the Company and its businesses is available at www.ENGlobal.com.
Safe Harbor for Forward-Looking Statements
The statements above regarding the Company's expectations, including those relating to its future results, operations 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. For a discussion of risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ENGlobal's filings with the Securities and Exchange Commission, including the Company's most recent reports on Form 10-K and 10-Q, and other SEC filings.
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CONTACT:
Market Makers - Investor Relations
Jimmy Caplan
512-329-9505
Email: [email protected]
Market Makers - Media Relations
Rick Eisenberg
212-496-6828
Email: [email protected]
SOURCE: ENGlobal