ENGlobal Reports Fourth Quarter and Fiscal Year 2016 Results
HOUSTON, TX-(Marketwired - Mar 9, 2017) - ENGlobal (NASDAQ:
ENG), a leading provider of engineering and automation services,
today announced a net loss of $2.3 million and a diluted loss per
share of $0.08 for the fiscal year ended December 31, 2016.
2016 Fiscal Year results as compared to 2015 Fiscal Year
results:
Revenue decreased to $59.2 million for the fiscal year ended
December 31, 2016, or a 25.6% decrease, from $79.6 million for the
fiscal year ended December 26, 2015. ENGlobal reported a net loss
of $2.3 million, or $0.08 per diluted share, for the fiscal year
ended December 31, 2016, compared to net income of $10.5 million,
or $0.38 per diluted share, for the prior year period. During the
fiscal year ended December 31, 2016, the Company incurred non-cash
expenses for depreciation, amortization and stock compensation of
$1.6 million as compared to $2.0 million for the comparable period
in 2015.
In April 2015, the Company's Board of Directors authorized the
repurchase of up to $2.0 million of the Company's common stock from
time to time, based on prevailing market conditions. Through
February 28, 2017, ENGlobal has repurchased and retired 1,127,894
shares of common stock at a total cost of $1,407,106 under this
program and the remaining amount authorized for repurchase under
this program was $592,894.
Management's Assessment
Mark Hess, ENGlobal's Chief Financial Officer, said: "2016 was a
challenging year for ENGlobal. With client spending on a decline,
it was difficult to keep our work force utilized, which put
downward pressure on our gross profit margins. During 2016, we
trimmed our SG&A expenses over $1.8 million by streamlining our
business processes, reducing our reliance on outside services and
reducing our capital spending. This reduction was somewhat offset
by the investments we made in people, equipment and facilities to
support our modularized solutions initiative resulting in a net
reduction in SG&A of $0.8 million from last year. While we
realize our SG&A level is higher than it could be for a company
our size, we have maintained our current overhead structure in
anticipation of higher volumes."
Mr. Hess continued, "During 2016 we were able to bill and
collect a significant portion of the retainage on the large project
we are working on in Kazakhstan and Russia, which helped increase
our cash position at the end of the year to $15.7 million. We
expect to redeploy the majority of these funds in the execution of
anticipated projects in the coming year."
William Coskey, P.E., Chairman and Chief Executive Officer of
ENGlobal, said: "After several years of turning the business around
and basically 'hunkering down' in a tough environment, I believe
ENGlobal is now better positioned than at any time in its history.
We're excited about the opportunity to engage in larger scopes of
work which is now made possible as a result of our modular project
delivery initiative. Throughout our Company, we've been making the
necessary investments in key personnel and facilities in support of
our business and our clients are responding positively. We're
seeing more and larger opportunities as a result of our
strengthened set of project capabilities. In summary, our team is
excited about the strategy and I believe we have an excellent
opportunity for renewed growth and improved results in the
future."
The following table illustrates the composition of the Company's
revenue and profitability for its operations for the fiscal years
ended December 31, 2016 and December 26, 2015:
(amounts in Year Ended Year Ended
thousands) December 31, 2016 December 26, 2015
---------------- ----------------
% of Gross Operating % of Gross Operating
Total Total Profit Profit Total Total Profit Profit
Segment Revenue Revenue Margin Margin Revenue Revenue Margin
Margin
---- ---- --- ---- ---- ---- --- ----
Engineering &
Construction $33,266 56.2% 12.1% 2.2% $49,277 61.9% 14.1%
8.6%
Automation 25,958 43.8% 23.5% 12.6% 30,328 38.1% 30.7% 22.5%
Consolidated $59,224 100.0% 17.1% (5.5)% $79,605 100.0% 20.4%
2.6%
The following table illustrates the composition of the Company's
revenue and profitability for its operations for the three months
ended December 31, 2016 and December 26, 2015:
(amounts in Three Months Ended Three Months Ended
thousands) December 31, 2016 December 26, 2015
---------------- ----------------
% of Gross Operating % of Gross Operating
Total Total Profit Profit Total Total Profit Profit
Segment Revenue Revenue Margin Margin Revenue Revenue Margin
Margin
---- ---- --- ---- ---- ---- --- ----
Engineering &
Construction $ 8,266 56.6% 13.7% 3.5% $11,103 64.4% 10.0%
4.4%
Automation 6,336 43.4% 24.8% 15.1% 6,137 35.6% 43.2% 33.4%
Consolidated 14,602 100.0% 18.5% (3.0)% 17,240 100.0% 21.8%
2.9%
The following is a summary of the Company's income statement for
the last four quarters which may be helpful in analyzing our
ongoing business:
(amounts in thousands) 2016
----------------- Fiscal Year
Q1 Q2 Q3 Q4 2016
---- ---- ---- ---- ------
Revenue $14,812 $13,842 $15,968 $14,602 $ 59,224
Gross Profit 1,673 1,853 3,881 2,705 10,112
Gross Profit Margin 11.3% 13.4% 24.3% 18.5% 17.1%
General & Administrative
Expenses 3,390 3,313 3,511 3,136 13,350
Operating Income (Loss) (1,717) (1,460) 370 (431) (3,238)
Net Income (Loss) (749) (1,603) 489 (479) (2,342)
The following table presents certain balance sheet items as of
December 31, 2016 and December 26, 2015:
As of As of
December 31, December 26,
(amounts in thousands) 2016 2015
------- -------
Cash $ 15,687 $ 7,806
Working capital 22,200 25,554
Credit facility balance - -
The Company's Annual Report on Form 10-K for the year ended
December 31, 2016 is expected to be filed with the Securities and
Exchange Commission today reflecting these results.
About ENGlobal
ENGlobal (NASDAQ: ENG) is a provider of engineering and
automation services primarily to the energy sector throughout the
United States and internationally. ENGlobal operates through two
business segments: Automation and Engineering. ENGlobal's
Automation segment provides services related to the design,
fabrication and implementation of distributed control,
instrumentation and process analytical systems. The Engineering
segment provides consulting services for the development,
management and execution of projects requiring professional
engineering, construction management, and related support services.
Within the Engineering segment, ENGlobal's Government Services
group provides engineering, design, installation and operation and
maintenance of various government, public sector and international
facilities, and specializes in the turnkey installation and
maintenance of 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
regarding its 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 including, but not limited to: (1) the effect of
economic downturns and the volatility and level of oil and natural
gas prices; (2) our ability to retain existing customers and
attract new customers; (3) our ability to accurately estimate the
overall risks, revenue or costs on a contract; (4) the risk of
providing services in excess of original project scope without
having an approved change order; (5) our ability to execute our
plan to enter into the modular solutions market; (6) our ability to
attract and retain key professional personnel; (7) our inability to
borrow under our credit facility may limit our ability to finance
operations or engage in other business activities which could have
a material impact on our financial condition; (8) our dependence on
one or a few customers; (9) the risks of internal system failures
of our information technology systems, whether caused by us,
third-party service providers, intruders or hackers, computer
viruses, natural disasters, power shortages or terrorist attacks;
(10) our ability to realize revenue projected in our backlog and
our ability to collect accounts receivable and process accounts
payable in a timely manner; (11) the uncertainties related to the
U.S. Government's budgetary process and their effects on our
long-term U.S. Government contracts; (12) operational and political
risks in Russia and Kazakhstan along the Caspian Sea; (13) the risk
of unexpected liability claims or poor safety performance; (14) our
ability to identify, consummate and integrate potential
acquisitions; (15) our reliance on third-party subcontractors and
equipment manufacturers; and (16) our ability to purchase shares
under our stock purchase program due to changes in stock price and
other considerations. 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.
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Contact Information
CONTACT: Mark A. Hess (281) 878-1040 ir@ENGlobal.com
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