Q1 2020 Earnings Call
Thank you for holding ladies and gentlemen, you are currently in line for the Englobal first quarter 2020 financial results Conference call.
This time, we are stuck adding additional participants we will get started momentarily. We thank you for your patience and I say, please continue to halt.
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Good morning, and welcome to the N. call. Both first quarter 2020 financial results Conference call. Your House. This morning, our Chief Executive Officer, Bell, Koskey, and Chief Financial Officer Mark has.
At the request of in global today's call is being recorded and will be available for replay on the Investor Relations section of the company's corporate website and global Dot com.
You May also access the teleconference replay by dialing toll free 877481, 401 zero domestically.
Or 919882 to three three wine internationally referencing conference I.D. 34133.
The refunding will be available shortly after the completion of this event through nine A.M. eastern on May 14th 2020.
I would like to now in form all parties that airlines have been placed analyst and only mode until the questions and answers segment of this call begins to ask a question that segment you will receive instructions from the operator.
At this point I would like to turn the call ever and Eric Eisenberg Media relations tractor with Eisenberg communication.
Thank you operator in thanks, everyone for joining us on this calls before we begin I'd like to redo our forward looking statements supervision.
During today's conference call Company Representatives may make forward looking statements any statements made in this presentation about future operating results are rather future events or forward looking statements under the safe Harbor provisions up the private Securities Litigation Reform Act of 1995. Please.
No that actual results achieved by the company may differ materially from such forward looking statements discussion the factors that could cause such differences appears in the risk factors sections of the company's 10 K.
No in global C.E.O., Bill Koskey will present, an analysis of the company's performance in the first quarter of 2020.
Provide some outlooks for the rest of that year Bill.
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During every one of them like you two are investor for joining our costs, let's call. This morning.
It's been exactly six weeks since I left conference call. It I thought you would be interested in knowing how in global has an operating in the midst of the corolla virus pandemic.
Like most other serving the broad energy industry, we are deemed to be a critical supplier above the department of homeland security.
For all of our facility located in Texas, Oklahoma in Colorado.
<unk> throughout the various state or local government stay at home orders.
That's being said activity at our free offices has been very limited most of our office staff.
Working from home for about four weeks.
According to leave this past Monday, most of our office staff in Houston in Tulsa.
Able to return to work.
And we have implemented many additional protective measures to keep our people.
In contrast to our office style.
Both are mechanical fabrication shopping Henderson, Texas.
In our automation integration shop, and <unk> have been fully staffed and functioning throughout this time I <unk> procedures being observed.
The biggest some high car company during their stay at home Oh, I didn't have done some beneficial so using executing design work.
And also constraints on selling new best lists.
It's difficult at this time to quantify the impact from these two items.
Overall, though I'm very proud of how we are the company helped manage through this dynamic it on certain time.
And the level of productivity, our offices and fabrications shops as my favorite <unk>.
Congratulations to all of our team here in global Great job everyone.
Now to a summary of our financial results as you may have read in our press release. This morning in our first quarter ended March 28th 2020, the company recorded earnings at $1.1 million or four cents per share compared to Los a $1 billion or four sets of course share in the first quarter.
Last year.
I was going global also reported positive net income in the fourth quarter of last year three cents per share.
This means we have now achieved our second consecutive profitable core.
It's been a little over four years since our company, while accomplished consecutive profitable quarters.
So it's a success worthy of loading.
Also on the first quarter of this year, our company gritty revenue to like $2.3 million, which is a 58% improvement.
Over revenue of 12.2 million on the first quarter or 2000 and like to.
At the same time, we have improved our gross profit margin significantly to 17% compared to 11% and the fourth quarter of last year.
In a few minutes, our chief Financial Officer, Mark House will provide more details all these results.
I can tell you know in our view these numbers today provide additional evidence that I'll revise strategy of pursuing larger.
Modular project is gaining further traction and helping to reshape our company's feature.
So to recap of strategy.
Global history isn't that a lot of working on hundreds and thousands of relatively small consulting it probably looks each year.
Our business in the past countered all employs thousands of people in Arkansas consulting staffing services were primarily build all the time and materials Reimbursable basis.
It's a day or is that we're focused on supply mentioning larger modular process automation system bought a turkey basis.
With largest also work that can be valued from $10 billion to $200 million.
Doing business in this way, we are best able to leverage the talents of a core group of people.
Now that we have a much smaller staff. It is also much easier to build our company <unk> company around what we called 18.
By attracting and retaining the best holiday in the industry.
We've all built the business model that vertically integrated capabilities ranging from engineering detail custom design.
Technical fabrication two automation systems integration.
<unk> was to deliver our solution bother, telling key basis and a glowing share of our work is now perform in this way.
My belief marks as well.
Is that in global New business model is largely responsible for our last two profitable quarters.
Are increase in quarterly revenue.
Well was are healthy backlog, what's currently puddles around $53 million.
Now looking at a broad view of the energy industry. It's certainly true that the industry as a whole has experienced a significant contraction up like.
However, we believe that in global as well positioned to benefit from our nation's accelerating dependence on renewable energy.
And also I continued need for automation systems.
Although we perform much of our business for Dallas related projects, such as refineries and petrochemical processing plant.
Which is more active than upstream exploration and production at present.
From our vantage point, we have not yet.
Insane much of a letter and our main areas of activity.
While in global have third well is the best with so far this year.
We all know that the severity underwrites you know the called the 19 pandemic and the difficult M.G.M.D. industry environment.
Impossible to put it.
Therefore, while we might give you are best <unk> relating to what we expect for this here it is impossible for us as management to make any projections of our feature financial performance with any degree of certainty.
However, we do fully expect that the strategic relationships. Our company has built over the past several years.
Continue to provide us with good opportunities for your business.
These alliances process technology firms original equipment manufacturers engineering and construction problems.
And users such as pipeline refinery and petrochemical plant operators.
Elegant number and we believe this trend will continue throughout this year.
At this point I'd like to turn over the discussion <unk>.
Rock greater details on our first quarter financial performance Mark.
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As you mentioned our revenues in the first quarter 2020 increased by 58% to 19.3 million a 7.1 million dollar improvement on revenues of 12.2 million in the first quarter of last year.
This increase is due to 160% increase in revenue from our automation segment.
Which contributed 14.1 million compared to 6.5 million for the first quarter of 2019.
As a result of favorable mix of projects being executed currently are automation segment has had a gross profit margin of 21% compared to 10% and in the first quarter last year.
Revenue from our engineering procurement construction management segment decreased point 5 million 5.1 million for the first three months of 2021 of the gross profit margin of 5% compared to 12% for this segment in the first quarter of 2019.
Should be noted that unlike our automation segment clients, who are primarily in the down screen or processing sector of the market.
R.D.P.C.M. segment clients are in all three market sectors of the oil and gas.
Meaning that they're spending decisions will be much more dependent on the price of those commodity and has resulted in an in they significant reduction in revenue from the upstream clients.
The current depressed price of oil and gas contributed to a decrease in revenue and gross profit in R.E.P.C.M. segment, which was someone offset by the 22 million dollar downstream renewable diesel project that is currently underway.
Overall, they're poor due to the increase in gross profit margin and she buyer automation segments in global overall gross profit margin in Q1, 2020 improved to 17% compared to 11% on the same quarter a year ago.
And thanks for our time control over S.D.N.A. expenses, Perky, 120, 20, S.G.N.A. decrease by $171000 compared to Q1 a year ago.
I merely due to the reduction in both salaries and facility call.
As a result are bottom line had over 2 million dollar positive swing from last year's first quarter to this year's first quarter.
We ended the corner with $6.8 million in cash.
During the quarter are working capital increased by approximately $1.2 million, excluding adjustments for Lisa County.
And currently is that 11.9 million.
In addition in April.
Applied for a more granted alone under the cares that commonly referred to as a P.P.P. long.
And the amount of $4.9 million.
There's been a lot of discussion in the media lately about the need for a P.P.P. long by a public company. So I thought I would address our position and recently.
First of all has you know not all public companies hard to sign.
Because our relatively small size lack of volume in our stock and are depressed stock price, we simply do not have the same access to capital markets as larger public companies do.
Also we do not have a financial sponsor to provide access to funds when needed.
Because of these factors we are in many ways more like that I small privately held companies in a public company.
Additionally.
We have almost 300 employees with families over 1200 shareholders in hundreds if not thousands of vendors.
We have a responsibility to all those down to do everything we can to ensure the financial stability of the company.
We did not know the full impact recalled with 19 on our current and future business at the time, nor how long its impact would be felt.
We still do not know today, the full and Pat what the full impact will be.
So I'm in packs of already cross in global to suffer any <unk> <unk>.
These include the diminish the ability of our business development personnel to sell new business due to their need to work from home.
As well as our need to pay significant premiums to those workers obligated to work in a beetle.
We have also experienced postponement and loss of business.
The severity of to reduce demand for oil as a result of code 19 is very concerning.
And the effective will have on our customer base is also not fully now.
Pleats effects are likely to go likely to be long lasting possibly much longer than the term of this long.
Access to the P.P.D. capital.
I was hoping for a very short period of time plus access other capital may not be available in the future if needed.
Therefore, it is isn't it was in the best interest of our employees are vendors and our shareholders to take advantage of the availability of the P.P.P. fun when the opportunity presented itself.
We understand these loans are highly scrutinize been companies that receive more than $2 million in loans, maybe <unk>.
However, we stand firm in our belief that we are using these funds for the purpose in which they were intended and are prepared for those discussions if necessary.
We expect a portion of the long to be forgiven and fully intend to repay the remaining bonds within the terms of alone.
At some point I'd like to turn the discussion back the Bill afterwards will be happy to take your questions.
Thanks Mark.
We all live for guys I'm sure you do for the day when the current pandemic will be behind us in our families loved ones that are work will return to normal.
In closing I'd like to fight each of you.
And the rest of our loyal and patient shareholders for your support.
That marking are happy to take her questions that I'll turn it over to the operator.
Thank you ladies and gentlemen, if you had a question or comment it is star one on your telephone keypad using a speaker phone. We ask that you pick up your hand handsets provide the best sound quality again star one for any questions or comments at this time.
[laughter], so far do not have any signal just to find out where minder star one for any questions or comments.
[laughter] without question holding I'll turn the conference back to Mr. Koskey for any additional are closing comments.
Like forget every one for joining US home today is called please know that we're always here to answer your question, which you can direct to me Mark Yeah, I <unk> <unk> in global Dot Com.
Stay well and have a great. Thank you.
Ladies and gentlemen that will conclude today's calling you may disconnect at this time and have a great Dane.
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