Q1 2022 ENGlobal Corp Earnings Call
[music].
Good morning and welcome to the ENG's 2022 First Quarter Financial Results Conference call.
Good morning, and welcome to the <unk> 2022 first quarter financial results conference call at the request of EMG. Today's call is being recorded and will be available for replay on the Investor Relations section of the company's corporate website, www dot and global Dot com.
At the request of ENG, today's call is being recorded and will be available for replay on the investor relations section of the company's corporate website www.englobal.com
You may access the replay by dialling toll free 877 481 4010 domestically or 919 882 double 3 1 international.
You may access the replay by dialing toll free eight double 74814010 domestically.
<unk> 9198822, double III, one internationally and referencing conference I'd be double for 765.
and referencing conference ID 44765.
This replay will be available shortly after the completion of the event through 9am Eastern on May 10th.
This replay will be available shortly after the completion of the event to nine a M. Eastern on May two.
I would like to inform all parties that your lines have now been placed in a listen-only mode until the question and answer segment of this call begins. To ask a question in that segment, you will receive instructions from myself.
I would like to inform all parties that your lines have now been placed in a listen only mode until the question answer segment of this call begins to ask a question in that segment you will receive instructions for myself.
At this point, I would like to turn the call over to Rick Eisenberg, Media Relations Director with Eisenberg Communications. Rick. Thank you, operator, and thanks everyone for joining us on this call. Before we begin, I'd like to review our forward-looking statements provision.
At this point I would like to turn the call over to Rick Eisenberg Media Relations director with Eisenberg communication, Rick. Thank you operator, and thanks, everyone for joining us on this call.
Before we begin I'd like to review our forward looking statements provision.
During today's conference call, company representatives may make forward-looking statements.
During today's conference call Company Representatives may make forward looking statements any statements made in this presentation about future operating results or other future events are forward looking statements under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements made in this presentation about future operating results or other future events are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Five.
Please note that actual results achieved by the company may differ materially from such forward-looking statements.
Please note that actual results achieved by the company may differ materially from such forward looking statements.
A discussion of factors that could cause such differences appears in the risk factors section of the company's 10-K.
The factors that could cause such differences appears in the risk factors section of the company's 10-K.
Presenting on the call today will be Darren <unk>, CFO and Roger Westerlund Eog's President following the presentations, Darren Roger and Marc Hess EOG CEO will be available for questions and now I'll turn it over to Darren Sprague's Darrin.
Presenting on the call today will be Darren Spriggs, ENG's CFO , and Roger Westerlund, ENG's president. Following the presentations, Darren, Roger, and Mark Hess, ENG's CEO , will be available for questions.
Now I'll turn it over to Darren Spriggs. Darren?
Thank you, Rick. I would also like to extend my welcome and appreciation for those on the call today.
Thank you Rick I would also like to extend my welcome and appreciation for those on the call today.
For the quarter, we reported approximately $7.4 million in operating revenue and $8 million in direct operating costs.
For the quarter, we reported approximately seven 4 million in operating revenue.
$8 million in direct operating cost.
Included in the direct operating costs is $426,000 related to underutilized staff.
Included in the direct operating cost is 426000 related to underutilized staff.
which is lower by 369,000 compared to the same period last year.
Which is lower by 369000 compared to the same period last year.
Our current staffing level is necessary to maintain our essential work.
Our current staffing levels as necessary to maintain our essential workforce.
Also included in direct costs is $829,000, the proposal cost.
Also include indirect cost is 829000 and proposal costs.
Which has significantly increased over the same period last year due to the increase in volume of proposals.
Which has significantly increased over the same period last year due to the increase in volume of proposed.
Our SG&A increased 282,000 compared to the same period last year.
Our SG&A increased 282000 compared to the same period last year.
which included non-recurring legal fees of $70,000. The remaining increase is primarily related to the investment in our business leaders and an increase in T&E.
Which included nonrecurring legal fees of 70000.
Remaining increase is primarily related to the investment in our business leaders and an increase in <unk>.
Now that our clients are more accessible with the lifting of travel and office restrictions.
Now that our clients are more accessible with the lifting of travel and office restrictions.
The success of our client relationships is driven by personal interaction with our customers, which has suffered since the beginning of the pandemic. Our income tax expense
The success of our client relationships has driven by personal interaction with our customers.
Which has suffered since the beginning of the thing the index.
Our income tax expense consists of state income tax.
Primarily in states that do not use net income to calculate tax like Texas
Primarily in states that do not use net income to calculate tax like Texas are.
Our federal income tax expense is offset by an adjustment to the Valuational Allowance recorded against...
Federal income tax expenses offset by an adjustment to the valuation allowance recorded against it.
We recorded a net loss of $3 6 million or negative <unk> 10 per share for the year compared to the net profit of 46000 or zero cents per share last year.
We recorded a net loss of $3.6 million, or a negative $0.10 per share, for the year, compared to the net profit of $46,000, or $0.00 per share, last year.
Our backlog increased by $500,000 to $13.3 million, compared to $12.8 million at the end of last year.
Our backlog increased by 500000 to.
$13 3 million compared to $12 8 million at the end of last year.
This is the second consecutive quarter our backlog has increased.
This is the second consecutive quarter, our backlog has increased.
The backlog as of the end of third quarter of 2021 was 8.4 million.
Backlog as of the end of the third quarter of 2021 was $8 4 million.
As of the end of last year, it was $12.8 million, and this quarter it was $13.3 million.
As of the end of last year was $12 8 million and this quarter. It was $13 3 million.
This increase in backlog is an indication that the investments we made last year are starting to pay off.
This increase in backlog is an indication that the investments we made last year are starting to pay off.
As a reminder, last year we completed a rebranding campaign, relocated our corporate office to be closer to our client base.
As a reminder.
Last year, we completed.
Our rebranding campaign relocated our corporate office to be closer to our client base.
redesigned our website, hired key business development personnel, with strong relationships to clients in our industry.
Redesigned our website.
Our key business development personnel with strong relationships to clients in our industry.
Roger, we'll elaborate more on the positive signs. We're starting to see you later in the call.
Roger will elaborate more on the positive signs are starting to see later in the call.
Our cash balance was $17.7 million as of the end of the quarter, a decrease of $1.5 million over last year's balance of $19.2 million.
Our cash balance was $17 7 million as of the end of the quarter.
A decrease of $1 5 million over last year's balance of $19 2 million.
Our working capital decreased $3.5 million from $26.3 million to $22.8 million.
Our working capital decreased $3 5 million from $26 3 million to $22 8 million.
The change in our working capital is primarily related to the $3.6 million loss for the quarter, but it also included an employee retention tax credit refund of $1 million.
The change in working capital is primarily related to the $3 6 million loss for the quarter, but it also included.
<unk> also included employee retention tax credit refund of $1 million.
We believe this cash on hand, along with internally generated funds, availability under the company's revolving credit facility, and other sources of working capital will be sufficient to fund Englevo's current operations and expect a near-term growth.
We believe this cash on hand, along with internally generated funds availability under the company's revolving credit facility and.
And other sources of working capital will be sufficient to fund the globals current operations and expected near term growth.
And now to you Roger.
Thanks, Darren, and good morning, everybody. As Darren indicated, the strategy which we have spoken about before starts to pay off.
Thanks, Darren and good morning, everybody as Darin indicated the strategy, which we have spoken about before stock too.
Payoffs.
Our bookings in April actually exceeded the bookings in first quarter, which we think is a great indication that all the things we have done have started to pay off. A few highlights, as we announced a few weeks ago, we have been awarded another sustainable airplane fuel plant to be built up, built in the U.S.
Our bookings in April it actually exceeded the book couldn't see in first quarter, which we think is a great indication that those are the things. We have done is starting to pay off.
Few highlights desk.
<unk>.
Now just a few weeks ago, we have been awarded.
Retained sustainable airplane fueled plants to be built up in the U S. We expect that work to.
We expect that work to turn over and be completed the first phase mid-year, and then we will start the EPC phase.
<unk> completed the first phase mid year, then we will start the EPC phase.
As also announced, we opened a construction group in West Texas, as I will come back to a little bit later, we also have a number of bookings in our government.
As also announced we opened the construction group in West Tex Us.
That will come back to a little bit later, we also have a number of bookings in our government group.
So to reiterate the things we have done, which we then again believe to pay off. We have a great new office. We have increased our fabrication capabilities by investing in Anderson. We have implemented a customer relation system, which is a great tool to managing our business. We have a new construction division.
Doreen take rate the things, we have done which means again believes to pay off we have a great <unk> office, we have increased.
What we say.
Application capabilities by investing in ambition.
We have.
Implemented a customer relation.
System, which is a great tool to managing our business, we have a new construction division.
Continue working with a high-value, low-cost engineering center in Brazil, which is key to execute the work we are bidding.
Continued working with our high value low cost Engineering center in Brazil, which is key to execute the work we are bidding.
We have rebranded our company, which we think is very successful.
We have rebound rebranded our company, which we think is very successful.
We have engaged in a big marketing campaign on social media, LinkedIn, etc.
We have.
Engaged in a big marketing campaign on social media linked DNS cetera.
We're working on a key account strategy for the clients now we have entertained for the last 12 months.
We are working on the key account strategy for the clients now we have.
<unk> for the last 12 months.
We have.
We have a new management team which has now been in place for over six months.
A new management team, which has now been in place for over six six months.
We look at the number of opportunities across a lot of industries, our alliance partners is in place and works nicely, and as we discussed before, we have strategies broken down in place for the segment we work in.
We look at the number of of the June it is across a lot of the industries. Our alliance partners is in place on works nicely.
Yes.
We have discussed before we have strategies broken down in place for the segment we working in.
So a few specific highlights, as the press release we sent out a few weeks ago, we're going to build another modularized, standardized, sustainable airplane fuel for a client up in northern U.S.
So a few specific highlights for us the press release, we sent out a few weeks ago, we're going to build another module is standardized.
Sustainable airplane fueling product lines up in Northern U S.
This will be our second project. We think this is a very, very good example of our strategy forward. We have a number of these projects.
This is will be our second project. We think this is a very very good.
<unk> sample of our strategy for <unk>.
A number of these projects.
And we expect the value frame global to be in excess of $100 million. We're also expanding on that group, so it will be labeled from here on energy and renewables, and in the energy side, we have a number of projects.
And we expect the value brand globally to be in excess of $100 million. We're also expanding on that group will be labor from here on and NGL renewables in the energy side, we have a number of projects.
For our engineering and project services, we have four awards, two for Chevron, one for Exxon, and one for Oxy. Again, illustrates that our hard work starts finally to pay off.
For our engineering and project services, we have.
<unk> rewards June for Chevron long for Exxon and one for oxy.
Illustrates that our hard work start to finally to pay off.
In the government group, we have over $120 million in outstanding quotes. In our automation group, we have a significant amount as well. In that, as I already said, we have won a number of contracts for SCADA systems, automation system, for the DOD.
In the government group, we have over $120 million in outstanding quotes.
The mainstream group.
A significant amount as well.
In <unk>, we have won a number of contracts for escaped us systems automation system.
For the Dod.
In our.
In our oil, gas, and petrochemicals, we have over 150 million identified opportunities where we are actively bidding almost 100 million in a spread from Oxy, Conoco, XTO, P66, Western Midstream, etc. Obviously, with a high oil price, we expect a great business here as well.
Oil gas and petrochemicals, we have over $150 million of them.
Identified opportunities, we are actively bidding almost $100 million in the spread from Oxy Carmichael.
<unk> P 66, western midstream et cetera.
Obviously with the high oil price, we expect a great business here as well.
Jenny Thank you.
Ladies and gentlemen, the floor is now open for questions.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time.
Any questions or comments. Please press star one on your phone at this time, we also while posing your question. Please pickup your handset is listing on a speaker phone to provide optimum sound quality. Please hold while we poll for questions.
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Thank you. Your first question is coming from Geoffrey Campbell. Please announce your affiliation and pose your question.
Thank you. Your first question is coming from Jeffrey Campbell, Please announce your affiliation and pose your question.
Hi, this is Jeff Campbell from Alliance Global Partners. My 1st question begins with an observation that potentially expanded scope. Of the renewable jet fuel diesel project awaiting FID is obviously. A huge vote of confidence and global. I was wondering what factors do you think went into expanding. Scope in this project versus the 1st 1 that you. That you did the renewable diesel.
Hi, This is Jeff Campbell from Alliance Global partners.
First question begins with an observation that potentially expanded scope.
The renewable jet fuel diesel projects awaiting is obviously.
A huge vote of confidence.
And global.
Wondering what factors do you think went into expanding.
Scope in this project versus the personal in nature.
That you did the renewable diesel.
Well, I think we were able to demonstrate our expertise both on the hydrogen unit as well as the RDU, which is the Renewable Diesel Unit.
Well I think we were able to demonstrate our expertise both on hydrogen.
Unit.
As well as the <unk>, which is the renewable diesel unit.
And so, you know, we have been investing in developing a standard 6,500 barrel per day plant both on the, you know, a complete plant which would include hydrogen and the RDU.
And so we have been.
Vesting in developing a standard 65 to 100 barrel per day.
Plant both on the complete plant, which would include hydrogen in the <unk>.
So we were able to demonstrate that to the client, that we had that expertise, and we had the package
So we were able to demonstrate that to the client that we had that.
Expertise and we have the.
Package.
Pre designed to a certain extent and so.
Pre-designed to a certain extent and so that's that's I think what brought them on board. Additionally they were
Yes.
So I think what brought them onboard. Additionally.
They were.
We were recommended to them by our technology partner, Albert Topso. And so I think that's a great vote of confidence from our technology partner.
We were recommended to them by our technology partner, our top so and so I think thats a great vote of confidence from our technology partner.
And following up on that, Mark, how is this 6,500 barrel form factor arrived at? Is this kind of the volume that you're seeing in the various customer discussions and maybe even in the bids? Is it some sort of a technological
And following up on that Mark.
How is the 6500 barrel.
One factor arrived at is is this.
Kind of the volume that Youre seeing.
Yes.
Customer discussions and maybe even the bids is it some sort of a technological.
Sweet spot, is it based on the feedstock that's out there? Just some color on why you settled on that as your standard.
Sweet spot is that based on the feedstock that's out there just some color on why why you settled on that is your standard.
Well, I think the answer to that is that's what has been requested most in the marketplace.
Well I think the answer to that is that's what has been requested most in the marketplace.
Yes.
Uh, Haldor has a standard 6,500 barrel a day, um, uh, hydrogen, uh, bridge.
<unk> has a standard 6500 barrel a day.
Hydrogen.
Bridge.
Sure.
you know, product and so we just kind of...
Product.
And so we just kind of.
Built onto their <unk>.
Standard unit.
Yeah, that makes sense. Uh, Roger was making allusions to a lot of, uh, sound like a lot of interesting stuff going on out in the base. And I was just wondering if you could.
Standard processes.
Yes that makes sense.
Roger was making at Lowe's and so a lot of sounds like a lot of interesting stuff going on out in the Permian Basin I was just wondering if you could.
Give us some general comments on the kind of projects that you're seeing growth in and and if I if there was a number as to how much is being bid on I missed it. So if you could give us a sense of the size of the bids out there collectively that would be helpful.
Give us some general comments on the kind of.
Projects that you are seeing growth in.
If there was a number.
How much.
Being bid on I missed it. So if you could give us a sense of the size of the bids out there collectively that'd be helpful.
I think.
I think where we are truly is, I think we have enough in a way, there is never enough per se, but I think we have enough in the funnel, and we need to change the approach which we have to close what we now have, and I think the one we just talked about is a great example.
I think where we are it truly is I think we have enough.
Not in a way there is never enough per se, but I think we have enough in the funnel and we need to change to approach, which we have to close what we now have and I think the one we just talked about is a great example, they'd probably 120 D.
other renewable diesel and sustainable airplane fuel, which we see out there right now. The big question then, which one will really happen? But I think it's really across. The same in oil and gas, the same in renewables, the same in our government group. I think, I know it doesn't show in the figures yet, it will. We just need to continue and trust the play we are. I'm convinced.
Other renewable diesel unsustainable airplanes, which we see out there right now the big question that which one would really happen, but I think it is really across the same in in oil and gas the same in renewables. The same in our government group, but I think.
I know it doesn't show in the figures yet it will.
We just need to continue that trust to play we are.
Yes.
I'm convinced.
We will succeed.
And I think the example I gave is just a few.
And I think <unk> is just a few.
Okay.
In the past, we've talked about automation from the standpoint of customer solutions. And when I went back and reread the Permian Expansion Press release, it touched on automate, it seemed to touch on automation initiatives within Aang itself. So, I was wondering if you could just give a little color on where you've targeted automation within your business to.
In the past, we've talked about automation from the standpoint of customer solutions I want I went back and reread the Permian expansion press release I touched on automotive.
Touch on automation initiatives within <unk> itself. So I was wondering if you could.
Just give a little color on where you've targeted automation within your.
Business too great improvement.
The first thing we need to continue doing is use the phrase which I picked up in ABB which was ABB contacts, E&G contacts. If you take...
And the first thing we need to continue doing it.
As.
You used the phrase which are picked up in ABB, which was ABB content <unk> content. So if you take.
If you think the sustainable airplane fuel as an example, where we then engineer fabricate et cetera, but you're also going to populate it with Maxim and global context, meaning controlling system buildings and everything else. We can do so so we used the company we have so long down for us.
If you take the sustainable airplane fuel as an example, where we then engineer, we fabricate, et cetera. We're also going to populate it with maximum and global content, meaning control system, buildings, and everything else we could do. So we use the company we have. So one down for automation is, if you like, the internal sail. The external sail, we are surrounding.
Imation HTC, if you liked into internal sales the start on site. We are surrounded by by if you're here in Houston right. So we have signed that or re signed I shouldn't say a number of msas.
by, if you're here in Houston, right? So we have signed that, or re-signed, I should say, a number of MSAs.
with ConocoP66, a number, which is part of this process. And if we see the funnel for any of these, if you stick to automation, obviously, there is a big drive, for example, in the shale, to demand both from a cost and a safety point of view. And we are part of that, and we're going to build on that even further.
It cannot go P 66 number.
As part of this process.
We see the funnel for.
For any of these if you stick to automation, obviously, there is a big drive for example in the shale demand boost from a cost on the safety point of view.
Part of that we're.
Youre going to build on that.
Even further if that answer your question Gary.
Okay, yeah that's helpful and I guess my last question is it was mentioned in the press release that the on-site construction initiative seems to be getting some momentum so I just thought I'd ask what sort of businesses or what sort of business is this adding to the AIM book that was lacking prior to the
Okay.
Yes, that's helpful and I guess my last question is it was mentioned in the press release that the onsite construction initiative seems to be getting some momentum. So I just thought I'd ask what sort of businesses.
What sort of businesses this adding to the book that was lacking prior to the effort.
What the client wants is a one-stop shop for the smaller EPC project, and we're talking a few millions, maybe five million.
What the clients wants is a one stop shop for the smaller EPC project down with talking a few millions maybe $5 million.
So what we have decided here in that request is to obviously listen to our clients and offer that one-stop shop. It's a little hard for a smaller job simply to subcontract, let's say, half the scope and do margins on margins. So what we are following is the script.
So what we have decided here in that request is to obviously listen to our clients.
Offer that one stop shop, it's a little hard for a smaller job simply to subcontract, let's say half the scope.
Do the margins on module. So what we are following is the script.
that was developed a long time ago by AECOM before they exited the oil and gas sector. So Doug Fieldgate, which was with AECOM then, is that.
That was developed long time to go buy a car before they exited.
I guess so.
Doug Field gate, which won't be take on that is that.
is doing that. And that is then one of the legs we're going to stand on, is to deliver fully EPC self-performed for the smaller project. That has nothing to do with a plan like we just talked about for sustainable.
He is doing that.
That is one of the links between the Standalone.
Delivered full EPC, it's outperformed for the smaller project that has nothing to do with the plants like like we just talked about for sustainability.
Okay. Good I appreciate that clarity well again congratulations on that.
Okay, good. Yeah, I appreciate that clarity. Well, again, congratulations on all the hard work last year and we're looking forward to seeing the fruits of all that labor as this year goes on.
All of our hard work last year, and we're looking forward to seeing the fruits of all that labor as this year goes on.
Thank you so much thank you.
Thank you. Your next question is coming from Victor Nostas of the Nostas Group. Victor, over to you. Yes, hi. I just wanted to know how long do you think it will take to get the final investment decision?
Thank you. Your next question is coming from Victor No staff of the milk that's great victory.
Yes, Hi, I just wanted to know how long do you think it will take.
The final investment decision.
I mean the plan, which is shared by the end user with us, the goal is to close by end of July .
Okay.
The plan, which is <unk> by the end user with us that the goal is to close by.
By end of July .
As I'm sure you realize, there is a lot of moving pieces, but it's well advanced, let's put it that way.
As I'm sure you realize that there is a lot of moving pieces, but.
<unk>.
Well does that let's put it that way.
When it's appropriate, we can disclose more, but so far, it's on schedule. Thank you.
When it's appropriate we will we can disclose more but so far.
It's on schedule.
Thank you.
Youre welcome.
As a reminder, if there are any remaining questions or comments, please press star 1 on your phone at this time.
As a reminder, if there are any remaining questions or comments. Please press star one on your phone at this time.
Okay, there appear to be no further questions in the queue. Would you like me to hand back for closing? Yes.
Okay. There appear to be no further questions in the queue would you like me to hand back for closing.
Yes.
Yes, Danny please.
I'll hand back over to Rick for final remarks.
Well, I have no further remarks. Operator, I think we can end the call.
Well I have no further remarks, operator, I think we can.
And the call.
Okay, perfect. Well, thank you so much, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
Okay perfect. Thank you so much ladies and gentlemen. This does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Okay.