ENGlobal Corporation

Good morning, and welcome to the E&G's third quarter 2021 financial results conference call. Your host for this morning's call is Chief Executive Officer Mark Hess. At the request of E&G, 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 dialing toll-free 877-481-7000. 4010 domestically or 919-882-2331 internationally and referencing conference ID 43346. This replay will be available shortly after the completion of the event through 9 a.m. Eastern Time on November 11th. I would like to inform all parties that your lines have now been placed on 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 the operator. At this point, I would like to turn the call over to Rick Eisenberg, Media Relations Director with Eisenberg Communications. Sir, the floor is yours.

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 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. 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 10K. 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. And now I'll turn it over to Darren Spriggs.

Thank you, Ray. I would also like to extend my welcome and appreciation for those on the call today. For the quarter, we reported $6 million in operating revenue and $6.7 million in direct operating costs. Included in the direct operating costs is $1.6 million related to underutilized staff and proposal costs, which has significantly increased over prior periods. During the quarter, we recorded an employee retention tax credit of 1.3 million for retaining our staff. This credit is classified as other income in accordance with GAAP. Our SG&A was 3.1 million for the quarter, which included non-recurring legal and advisory fees of 230,000, compared to 2.2 million for last year. The remaining increase is primarily related to investment in our business development staff and related activities. The PPE loan, in the amount of 4.9 million, was forgiven during the quarter and is also included in other income. Our income tax expense consists of state income taxes, primarily in states that do not use income to calculate tax, such as Texas. Our federal income tax expense is offset by an adjustment to the valuation allowance recorded against it. As a result, we recorded net income of 2.4 million, or seven cents per share for the quarter. compared to a loss of $1.1 million, or $0.04 per share, last year. For the first nine months of the year, we reported $29.4 million of operating revenue and $29.2 million of direct operating costs. Included in the direct operating costs is $4.3 million of costs related to underutilized staff and proposal costs, which has significantly increased over last year. During the first nine months of the year, we recorded employee retention tax credit of $3.1 million for maintaining our staff, which is recorded as other income. Our SG&A was $9.9 million for the first nine months of the year, which included an accounts receivable reserve of $1.4 million for one of our customers who suspended their operations, and $350,000 for non-recurring legal and advisory fees, compared to $6.6 million last year. The remaining increase is primarily related to investment or business development staff and related activities. The PPE loan, the employee tax credit from this quarter, and the employee retention tax credit from the first quarter make up essentially all of the $8.1 million in other income. Our income tax expense consists of state income taxes, primarily in states that do not use incomes to calculate tax, like Texas. Our federal income tax benefit is offset by an adjustment to the valuation allowance recorded against it. As of the end of the quarter, our entire deferred income tax asset, including our NOL, was reserved. As a result, we recorded a net loss of $1.8 million, or six cents per share, for the first nine months of the year, compared to net income of $59,000, or zero cents per share, last year. Our cash balance was $25 million as of the end of the quarter, an increase of $12 million over last year. Our working capital increased $16 million over last year to $30 million as of the end of the quarter. We believe this cash on hand, along with internally generated funds, availability under our line of credit, and other sources of working capital, will be sufficient to fund the global's current operations and expected near-term growth. And now to you, Roger. Oh, I'm sorry.