ENGlobal Profile

• $0.07 earnings per share, an increase from a loss per share of $0.01
• Revenue of $49.8 million, a decrease of 15.9%
• Gross profit margin as a percentage of revenue of 11.7%, an increase from 11.1%
• Corporate SG&A decreased from $4.0 million to $3.4 million

ENGlobal reported net income of approximately $1.9 million, or $0.07 per share, and a net loss from continuing operations of approximately $1.0 million, or $0.04 per share for the quarter ended March 30, 2013. This compares to a net loss of approximately $0.1 million, or $0.01 per share, and a net loss from continuing operations of approximately $0.9 million, or $0.03 per share, for the quarter ended March 31, 2012. First quarter 2013 revenues decreased to $49.8 million, 15.9% lower than the $59.2 million for the first quarter of fiscal year 2012, primarily due to lower engineering, procurement and construction (EPC) project revenues in the Engineering and Construction segment and the conclusion of several projects in the fabrication division of the Automation segment in 2012. Although the Company’s borrowings under our credit facility have been reduced, interest expense, fees, and consulting services associated with the credit facility were approximately $520,000 higher during the first quarter of 2013 when compared to the first quarter of 2012.

Management’s Assessment:
“We are pleased to see the anticipated financial impact of the strategic divesture of the land and inspection divisions in late 2012,” said William A. Coskey, P.E., ENGlobal’s Chairman and Chief Executive Officer. “We continue to evaluate alternatives for improving our financial condition and further paying down debt. Operationally, we are making good progress on increasing profit margins under both new and existing master service agreements. It is important to note that we have been successful in landing several significant contracts from new clients in various geographical regions as well negotiating contract extensions from a number of long-term clients, which indicates the viability of our business development efforts.” Mark A. Hess, ENGlobal’s Chief Financial Officer, added. “We have been focused on our core engineering and automation businesses since the first of the year, greatly reducing exposure to EPC projects. As of March 30, 2013, project backlog was approximately $205 million, which was roughly unchanged from December 29, 2012. During the first quarter, we produced cash from operations that was used to pay down our credit facility.” The Company’s gross profit margin as a percentage of revenue increased to 11.7% in the three months ended March 30, 2013 as compared to 11.1% for the three months ended March 31, 2012. The primary reason for this increase is reduced variable costs and improved efficiencies in the Automation segment.