SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 12, 2003
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ENGLOBAL CORPORATION
(Exact name of registrant as specified in its chapter)
Nevada 001-14217 88-0322261
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Century Plaza Drive, Building 140, Houston, Texas 77073-6033
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 281 821-3200
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(Former name or former address, if changed since last report)
Item 9. Regulation FD Disclosure
On November 12, 2003, ENGlobal Corporation issued a press release, a copy of
which is set forth below. In accordance with General Instructions B.2. Form 8-K,
the following information shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, except as shall be expressly set forth by specific reference in such a
filing.
ENGlobal Reports Third Quarter Financial Highlights
HOUSTON--(BUSINESS WIRE)--Nov. 12, 2003--ENGlobal Corporation
(AMEX: ENG), a leading provider of engineering services and systems
engineering, today reported financial results for its third quarter
2003 that included the following highlights:
-- Record revenues of $36 million, a 52.7% increase over the
prior year period, and sequentially a 20% increase in
quarterly revenues, primarily resulting from an increase in
project procurement activity.
-- Operating income for the quarter was a record and exceeded the
year ago period by 25%, in spite of significantly increased
expenditures for sales and marketing incurred during the
current year.
-- Earnings per common share of $0.02, level with both the prior
year period and with prior quarters of this year.
-- A 30% increase in Stockholders' Equity thus far this year, due
in large part to the conversion of all of the Company's
previously outstanding Preferred Stock to Common Stock.
-- Sale of an unoccupied building in Baton Rouge that provided
$555K for the repayment of debt but resulted in a one-time,
non-operating loss of $312K.
Financial comparisons on a year-to-date basis are also favorable,
with 2003 revenues for the nine months outpacing 2002 by 33%. The
nine-month comparisons for Operating Income and Net Income also showed
increases in excess of 16%. ENGlobal's results continue to be driven
primarily by its Engineering Services segment, resulting from the
award of new projects and the continuation of previously awarded work.
The Company's revenue growth has been offset by increased sales and
marketing expenses during 2003, which exceed 2002 expenditures by
approximately $820K in the nine months year-to-date. Overall, we
expect full year earnings to be between $0.08 and $0.09, which is
short of the previously stated projections.
ENGlobal is beginning to show signs of an improving business
environment. One key indicator of this activity is in the Engineering
Services segment where placements of personnel for In-Plant and
Inspection assignments continue to climb and are at an all-time high.
Another positive is that four of the six engineering offices are
adding staff as the result of new project awards - with Beaumont
continuing to operate at a high level and with Tulsa, Baton Rouge and
Lake Charles showing improvement. In the Systems Engineering segment
(referred to in prior reports as "Engineered Systems"), a large number
of proposals are outstanding and have not yet resulted in orders.
Thus, results in this segment have been below expectations. While
sales and marketing expenditures have dampened the Company's earnings
this year, we have been able to maintain our position during a tough
market and should see the benefit of this investment in an improving
market.
Mike Burrow, Chairman and CEO, said, "While our third quarter
earnings of $0.02 per share fell short of expectations, a closer
examination reveals reasons for optimism going forward. For example,
if our earnings per share are evaluated by operating division, after
applying corporate overhead proportionate to revenues produced, it is
clear that our Systems Engineering and Manufacturing divisions
together have lost approximately $0.02 per share year-to-date. In
contrast, our largest division, which produces 85% of our revenues -
Engineering Services - has produced record earnings of $0.08 per share
year-to-date. Obviously, if our Systems Engineering and Manufacturing
segments were performing at expected levels, we would be producing
well within the $0.10 to $0.14 EPS range originally predicted. We have
taken actions to remedy this situation, including a substantial
reduction in force and other cost-cutting measures in our shop
facilities within the Houston area. Additionally, we have transferred
the design group that had been part of the Systems Engineering segment
to our ENGlobal Engineering office in Houston, a move that is expected
to improve productivity. The Company is studying additional prospects
for consolidation of the System's facilities within the Houston area."
Mr. Burrow continued, "As we continue to build the infrastructure
needed to support our plans for rapid top-line growth through
acquisitions, our overhead has also gone up. While this has a
short-term, negative impact on earnings, it is essential to insuring
our ability to control and integrate planned acquisitions. While there
is no guarantee that acquisitions will be completed, the Company has
reviewed a number of acquisition candidates, several of which are now
under serious consideration. Two acquisitions have been completed -
Senftleber and Associates and Petro-Chem Engineering Inc., which,
based on past performance, have the potential to add roughly $6
million to the Company's revenues. The Company is in serious
negotiations with three additional acquisition candidates, which, if
consummated, and based on past performance of the acquisition
candidates, also have the potential to increase revenues
significantly. The Company's goal is to complete these acquisitions on
terms that will be accretive to earnings per share and that will not
substantially impact loan debt ratios. Thus, we continue to remain
excited about the future of our Company and the prospects for future
growth and improved stock values."
WEBCAST AND FORM 10-Q AVAILABLE ON ENGLOBAL'S WEBSITE
A webcast featuring management's overview of the third quarter and
nine-month results and business highlights will be available on the
Company's website at http://www.englobal.com following the filing of
the Form 10-Q with the Securities and Exchange Commission on or about
Thursday, November 13th and will be archived on the Company's website
for ninety (90) days.
The following is selected financial data (unaudited, except for
the Dec. 31, 2002 data) as reported for the periods shown:
Comparative Analysis
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Income Statement Data: Three months Nine months ended
ended Sept. 30, Sept. 30,
(in 000's except per share data) 2003 2002 2003 2002
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Net Sales $35,910 $23,509 $89,408 $67,027
Operating Income $1,160 $927 $3,255 $2,546
Net Income Before Taxes $652 $695 $2,297 $2,018
Net Income $382 $462 $1,424 $1,227
Net Income After Accrued Preferred
Dividends $355 $410 $1,293 $1,070
Earnings Per Common Share (Basic) $0.02 $0.02 $0.06 $0.05
Balance Sheet Data (in 000's) Sept. 30, 2003 Dec 31, 2002
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Working capital $8,491 $8,955
Property and equipment, net 5,298 5,758
Total assets 41,288 40,068
Long-term debt, net of current portion 10,020 12,580
Capital leases, net of current portion 64 104
Stockholders' equity 17,437 13,389
About ENGlobal Corporation "ENGlobal"
ENGlobal Corporation provides engineering services and engineered
systems principally to the petroleum refining, petrochemical, and
pipeline and process industries throughout the United States and
across the globe. ENGlobal's multi-discipline engineering and design
staff develops projects from the initial planning stage through
detailed design, procurement, and construction management. The
Engineered Systems Group develops, manufactures, installs, and
services control and instrumentation systems utilized in various
energy and processing related industries while its Technologies
Division provides services and products that support the advanced
automation and environmental technology fields. The Constant Power
Division fabricates industrial grade uninterruptible electrical power
systems and battery chargers. Further information about the Company
and its subsidiaries is available at www.englobal.com.
Safe Harbor for Forward-Looking Statements
Certain 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, the Company's ability to achieve its business
strategy while effectively managing costs and expenses. 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. Reference is hereby made
to cautionary statements set forth in the Company's Form 10-K for the
year ended December 31, 2002, Form 10-Q's for the quarters ended March
31, 2003, June 30, 2003 and September 20, 2003, current Forms 8-K, and
other SEC filings. Moreover, the discussion in this press release of
the Company's proposed acquisitions is subject to risks which include
the fact that such acquisitions may not close, may close on less
favorable terms than desired, or may close but not be successfully and
profitably integrated by the Company.
CONTACT: ENGlobal Corporation, Houston
Hulda Coskey, 281-821-3200 or 281-209-2409 fax
ENGlobal@ENGlobal.com
www.ENGlobal.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENGlobal Corporation
Date November 12, 2003 /s/ Hulda L. Coskey
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Hulda L. Coskey, Chief Governance Officer
and Secretary