What a difference a couple months can make. In March, the world was in tumult of epic proportion due to Covid-19, oil prices were spiraling, and countries were shutting down in droves. Now, lockdown restrictions are expiring, oil prices have rebounded sharply, and the Nasdaq Composite is back to within about 5% of an all-time high.
ENGlobal Corp. (NASDAQ:ENG) has recouped all its losses from the market fallout in March. In fact, the Houston-based provider of engineered modular solutions is up marginally from where it ended 2019 and building momentum.
On Wednesday, ENGlobal had its highest volume trading day in over six months, attracting attention with another strong piece of news signaling its shift in 2018 away from a low-margin consultation model to a higher-margin modular engineered process and automation systems model. As it turns out, this strategic shift was timed perfectly with an energy market ripe for innovation.
During Q4 2019, ENGlobal had its first profitable quarter in over three years. That was followed in Q1 2020 by a 58% jump in revenue to $19.3 million and a second straight profitable quarter with net income of $1.1 million, or 4 cents per share.
The tailwinds are continuing to blow as measured by ENGlobal saying Wednesday morning that it has secured $8.3 million in new business already in the second quarter. The contracts are comprised of both new purchase orders and additional scope on existing agreements. The revenue from these orders is expected to be realized throughout the course of 2020.
These new sales align with ENG CEO William Coskey sharing earlier this month that the company had in excess of $100 million in proposals outstanding. Furthermore, ENGlobal ended Q1 with about $53 million in backlog, despite market sluggishness owing to coronavirus.
While names are generally kept anonymous for competitive reasons, management disclosed that the new awards featured a $2.8 million addition to the current scope of work at a Midwestern U.S. renewable diesel facility and a $2.1 million extension for analytical equipment and support services at a major refinery.
The company also received two purchase orders worth a combined $900,000 to design and supply analytical buildings for a petrochemical plant in Louisiana and a subsea controls contract valued at $500,000 for technical support services on its proprietary Universal Master Control Station.
Pleased with the mix of additional revenue, Mr. Coskey conveyed that management keeps pursuing “much larger modular automation systems and process plant awards that would significantly add to ENGlobal’s backlog.” Coskey has said earlier that these projects, when landed, will likely yield revenue of from $10 million to $250 million each.
Investors should be on the lookout throughout the year for updates regarding this new work, as well as other new jobs as economies continue to re-open and companies begin spending again, particularly on improving efficiencies, which is exactly what ENGlobal brings to the table.