ENGlobal Announces Full Year 2023 Financial and Operating Results
- ENGlobal reported revenues of $39.0 million for 2023, a decrease from the previous year.
- The net loss for 2023 was $15.2 million, with a loss of $3.03 per fully diluted share.
- The company is focused on addressing legacy project challenges and positioning itself for future engineering and automation opportunities.
- ENGlobal's total backlog as of December 30, 2023, was approximately $13.3 million.
- The company achieved various financial and operational milestones in 2023, including improved utilization and streamlined engineering services.
- ENGlobal reduced overall payroll costs by more than 50% while maintaining engineering and design professionals.
- The company recently secured new client business in engineering design and automation projects.
- Revenues decreased from the previous year.
- Net loss for 2023 was $15.2 million.
- The company experienced an impairment loss of $1.8 million in 2023.
The recent financial report from ENGlobal Corporation reveals a year-over-year decrease in revenues and a substantial net loss, although the loss narrowed from the previous year. The company's book-to-bill ratio exceeding 1 indicates a healthy pipeline of future revenue, as they have booked more business than they billed in the past year. However, the backlog of $13.3 million seems modest relative to the revenue, suggesting limited visibility into future earnings.
Investors should note the efforts to restructure operations, such as streamlining the engineering services group and improving the receivables collection process. While these measures are designed to enhance margins and liquidity, their impact on the bottom line will need to be monitored closely. The reported 50% reduction in payroll costs is significant and could lead to improved profitability if the company manages to maintain service quality and customer satisfaction.
It's important to track how the impairment loss of $1.8 million affects the company's financial health. Impairments can indicate that certain assets are no longer as valuable as once thought, which could be a red flag for investors. The company's strategy to pursue unpaid receivables from legacy projects could improve liquidity if successful, but also carries the risk of not being able to recover these funds.
ENGlobal's focus on engineering and automation within the energy sector places it within a volatile market, subject to fluctuations in oil prices and energy policies. The transition to higher-margin projects and the addition of capabilities in the fabrication of modular structures suggest a shift towards more scalable and profitable operations. The mention of strategic partnerships could signal potential for expansion and increased market share, which is a positive sign for stakeholders.
The company's efforts to optimize its labor force and improve utilization of billable resources by 15-20 percentage points could be a response to the competitive nature of the engineering services industry, where efficiency and project execution are key differentiators. Investors should consider the potential upside of these operational improvements against the backdrop of the company's recent financial performance.
It is also noteworthy that ENGlobal is maintaining its focus on public sector clients, which may provide a more stable source of revenue compared to the private sector. However, the dependency on government contracts can also lead to uncertainty due to changes in government spending and priorities.
ENGlobal's focus on the energy sector, particularly in engineering and automation, is notable given the current global shift towards renewable energy and sustainability. Their involvement in high-margin electrical power distribution centers and process analytical systems aligns with industry trends towards modernization and efficiency. However, the legacy project challenges mentioned could reflect a broader industry issue where companies are navigating the transition from traditional energy projects to newer technologies.
The mention of a decrease in legacy project obligations and the repositioning to take advantage of future opportunities suggests that the company is attempting to pivot away from older, less profitable ventures. This strategic move could be beneficial if the company successfully captures market share in emerging areas of the energy sector. However, the ability to do so will depend on the company's expertise and the effectiveness of its strategic partnerships.
Given the current market conditions and the company's performance, stakeholders should closely monitor the energy sector's regulatory environment and market trends, as these could significantly impact ENGlobal's business prospects.
HOUSTON, TX / ACCESSWIRE / March 28, 2024 / ENGlobal Corporation (NASDAQ:ENG), a provider of innovative engineering project solutions focused on the energy industry, announced that it will file its 2023 annual report on Form 10-K with the U.S. Securities and Exchange Commission for the year ended December 30, 2023 no later than Friday. The report details ENGlobal's financial and operational results.
"For ENGlobal, 2023 was both a challenging year as well as a year of transition and repositioning for the Company," said William A. Coskey, P.E., Chairman and Chief Executive Officer of ENGlobal Corporation. "While we continue to address a number of challenges from legacy projects, we have worked tirelessly to realistically reposition our business to take advantage of future engineering and automation opportunities as well as continue to service our key public sector clients. We continue to work with external stakeholders to resolve obligations related to those projects and position ENGlobal for financial and operational improvements in the coming year."
Revenues for the year ended December 30, 2023 were
The 2023 net loss included an impairment loss of
"While these results did not meet expectations, our efforts in the second-half of the year reduced the magnitude of the losses and positioned ENGlobal to take advantage of potential opportunities in the coming year," added Coskey. "We continue to consider a number of strategic opportunities to improve ENGlobal's capital and operating positions. Our staff of professionals continues to provide exceptional engineering, automation and integration services to leading energy, industrial and public sector clients from coast to coast, a solid base of commerce from which to rebuild a profitable business. The long-term durability of the ENGlobal platform has resulted in a number of discussions with potential strategic partners to extend the reach and increase the scale of our business."
ENGlobal's comprehensive financial statements can be found in the Company's annual report which will be filed no later than Friday on Form 10-K with the U.S. Securities and Exchange Commission.
ENGlobal's total backlog as of December 30, 2023 was approximately
In 2023, ENGlobal achieved a number of financial and operational milestones, including:
- Improved utilization between 15-20 percentage points of our billable resources compared to last year. This has occurred through increased business opportunities as well as optimization of our labor force.
- Streamlined the Company's engineering services group to create a more cohesive team focused on added-value project engineering with offices in Houston and Tulsa. This initiative should lead to improved-margin engineering and design projects and the ability to provide full EPC services through third-party fabrication and construction partnerships.
- Improved the Company's receivables collection process, including collecting outstanding tax credits and government project payments, which has improved liquidity. The Company continues to aggressively pursue unpaid project receivables from legacy projects which, if successful, will further improve liquidity.
- Added significant capabilities in the fabrication of modular structures in the Company's automation business focused on higher-margin electrical power distribution centers, process analytical systems and remote-instrument equipment.
- Reduced overall payroll costs by more than
50% while maintaining best-in-class engineering, design and automation professionals. Streamlined accounting, payroll, cost control and other administrative functions with the goal of significantly reducing administrative overhead expense. - Recently awarded significant new client business including an engineering design project related to a new dehydration unit for a national midstream company; automation building and integration projects for a major international diversified chemical company; and a number of new awards from long-term alliance clients.
"We still have significant work to do to reach our goals and the full potential of ENGlobal," concluded Coskey. "However, we continue to make progress each and every day and continue to work toward our goal of being a leading, profitable engineering and automation firm. I want to thank the entire ENGlobal family for their continued efforts, loyalty and unwavering dedication, I am grateful for the talent and contributions of each member of our team. I look forward to continuing to work with this exceptional group toward a profitable future."
About ENGlobal
ENGlobal Corporation (NASDAQ:ENG) is a provider of innovative, delivered project solutions primarily to the energy industry. ENGlobal operates through two reportable segments: Commercial and Government Services. The Commercial segment provides engineering, design, fabrication, construction management and integration of automated control systems. 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. Further information about the Company and its businesses is available at www.englobal.com.
For further information, please email ir@englobal.com.
Cautionary Note Regarding Forward-Looking Statements
The statements above regarding the Company's expectations, including those relating to its future results, its future 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.
SOURCE: ENGlobal
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