ENGlobal Corporation

Good morning, and welcome to the ENG 2022 Third 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.nglobal.com. You may access the replay by dialing toll-free 877-481-4010 domestically or 919- 882-2331 internationally and referencing conference ID 46868. This replay will be available shortly after the completion of this event through 9 a.m. Eastern Time on November 15, 2022. All participants have been placed on a listen-only mode and we will open up the floor for questions and comments after the presentation. At this point, I would like to turn the call over to Rick Eisenberg, Media Relations Director with Eisenberg Communications. Rick, over to you.

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 10-K. Presenting on the call today will be Darren Spriggs, ENG's CFO, Roger Westerlund, ENG's President, and Mark Hess, ENG's CEO. Following the presentations, Darren, Roger, and Mark will be available for questions. And now I'll turn it over to Darren Spriggs. Darren?

Thanks, Rick. I would also like to extend my welcome and appreciation for those on the call today. For the quarter, we reported approximately $13.1 million in operating revenue, a 121% improvement compared to $5.9 million for the same period last year. Making this the fourth consecutive quarter, revenue has increased. Gross profit margin increased 18.8% from negative 13.7% to 5%. to a positive 5.1. This increase is attributable to the improvement in underutilized staff, which is lower by 766,000 compared to the same period last year. Our overall gross margin is driven by relative sales volumes from our different lines of business. Although our gross margin percentage may vary from quarter to quarter, depending on the composition of the segment revenue, we expect our margins to continue to improve. SG&A decreased $169,000 compared to the same period last year. We continue to keep an eye on our overhead cost. We held our fixed cost in line with previous quarters, notwithstanding the recent acquisition and the startup cost of our two new facilities. Operating loss improved by $1.7 million to $2.3 million from $3.9 million. For the quarter, we recorded a net loss of $2.3 million or a negative $0.07 per share compared to a net profit of $2.4 million or $0.07 per share last year. Last year's net income of $2.4 million included non-recurring other income of $6.4 million, which consisted of $5 million for PPP loan forgiveness and $1.4 million for an employee retention tax credit. Backlog increased by 2.9 million to 15.7 compared to 12.8 at the end of last year. It also increased by 7.3 million compared to 8.4 million at the end of the third quarter last year. The improvement in backlog is an indication that our recovery is continuing and that the key strategic initiatives we implemented last year are producing the desired results. We expect our bookings to be significantly higher in Q4 compared to the previous quarters and to carry a healthy backlog into 2023. Our bookings increased $6.3 million for the quarter to $9.6 million from $3.3 million for the same period last year. For the year, we have been awarded 106 POs for new work with an average PO value of $227,000. For the quarter, we received 35 POs for new work with an average value of $181,000, the largest being the recent $2.6 million task order from the 2020 contract with the Army Corps of Engineers. And this was the only press release issued during the quarter for new awards. For the first nine months of the year, revenue, gross profit, and operating income all improved compared to the same time period last year. Revenues increased by $2.4 million to $31.8 million from $29.4 million. Gross profit increased by $1 million to $1.3 million from $300,000. Operating loss improved by $2.3 million to $7.3 million from $9.6 million. Our working capital decreased by $9.6 million from $26.3 million to $16.7 million. The change in our working capital is primarily related to the loss for the year of $7.5 million. We are expecting to increase our working capital early next year as we generate positive cash flow when we return to profitability. We are pursuing additional financing alternatives in the event we need additional working capital to fund our current operations. We believe our 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 E&G's current operations and expected near-term growth. And now to you, Roger.