ENGlobal Corporation

Good morning and welcome to the ENG's 2022 First Quarter Financial Results Conference Call. 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 dialing toll-free 877-481-4010 domestically or 919-882-2331 internationally, and referencing conference ID 44765. This replay will be available shortly after the completion of the event through 9 a.m. Eastern on May the 5th. 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. At this point, I would like to turn the call over to Rick Eisenberg, Media Relations Director with Eisenberg Communications.

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 Factor section of the company's 10-K. 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. Darren?

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 cost. Included in the direct operating cost is $426,000 related to underutilized staff, which is lower by $369,000 compared to the same period last year. Our current staffing level is necessary to maintain our central workforce. Also included in direct costs is $829,000 of proposal costs, which has significantly increased over the same period last year due to the increase in volume of proposals. Our SG&A increased $282,000 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, 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 consists of state income tax, primarily in states that do not use net income to calculate tax like Texas. Our federal income tax expense is offset by an adjustment to the valuation allowance recorded against it. 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. 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. As of the end of last year, it 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. As a reminder, last year we completed a 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. Roger will elaborate more on the positive signs we're 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 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. 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 Englobo's current operations and expect a near-term growth. And now to you, Roger.