ENGLOBAL CORP (ENG)·Q3 2024 Earnings Summary

Executive Summary

• Q3 revenue declined to $5.7M from $9.5M y/y as the company continues to reposition away from low-margin fabrication/field services; headline net loss improved to $0.5M from $0.7M y/y despite lower revenue .
• Adjusted view shows underlying improvement: excluding a $0.9M lease impairment in Q3’24 and a $1.5M non‑recurring revenue adjustment in Q3’23, gross margin rose to 8.4% from 4.5% and SG&A fell to $1.8M from $2.5M .
• Year-to-date (9M) revenue was $18.4M (vs. $32.4M y/y) while net loss improved by $8.3M to $3.1M, reflecting cost cuts and a narrower scope focused on core engineering/automation and government services .
• No formal quantitative guidance; management reiterated focus on operational efficiency, strategic partnerships and liquidity, citing a path to scale and value creation as a key driver of future equity value .

What Went Well and What Went Wrong

• What Went Well

  • Operating efficiency improved: “gross margin percentage improved and we reduced SG&A costs for the third consecutive quarter” (CEO) .
  • Adjusted profitability trajectory: excluding one‑time items, gross margin rose to 8.4% and SG&A fell to $1.8M, reducing the adjusted quarterly net loss to $1.4M from $2.2M y/y .
  • Multi‑quarter cost discipline: Q2 SG&A down 52% y/y to $1.9M; Q1 SG&A fell to $2.0M (down $2.4M y/y) .

• What Went Wrong

  • Revenue pressure persisted: Q3 revenue fell to $5.7M (vs. $9.5M y/y), following Q2 at $6.1M and Q1 at $6.5M, reflecting the strategic exit of unprofitable self-perform activities and softer backlog trends .
  • One-time headwinds: Q3 included a $0.9M lease impairment; the prior-year comp included a $1.5M non-recurring revenue benefit, complicating GAAP comparisons .
  • Backlog contracted earlier in the year: backlog declined from $10.8M as of Q1 to $7.7M as of Q2; Q3 provided no backlog update, underscoring the need for bookings acceleration .

Financial Results

P&L snapshot (oldest → newest)

Select operating metrics

SG&A trajectory (quarterly)

Backlog and bookings (where disclosed)

Segment context (company-defined)

Note: No Q3 segment revenue breakout disclosed in press materials .

Guidance Changes

Earnings Call Themes & Trends

Note: We did not locate a Q3 2024 earnings call transcript in our document set; themes below reflect company press communications.

Management Commentary

• “We continue to make sequential improvements in operating efficiency as our gross margin percentage improved and we reduced SG&A costs for the third consecutive quarter.” — William A. Coskey, P.E., Founder, Chairman and CEO .
• “We continue to work toward strategic opportunities to gain scale and find partnerships that will provide value for ENGlobal shareholders.” — William A. Coskey .
• “The conclusion of legacy, money losing projects; our continued acute focus on corporate efficiency; and new, higher margin business opportunities should provide us a path to reach run rate profitability by year-end.” — William A. Coskey (Q2) .
• “We continue to explore options to improve our cash position as well as strategic growth opportunities.” — William A. Coskey (Q2) .
• “We are encouraged by our ongoing discussions with potential strategic partners that could be transformational for ENGlobal and its shareholders.” — William A. Coskey (Q1) .

Q&A Highlights

• No Q3 2024 earnings call transcript was located in the filings/press materials reviewed; no Q&A to summarize.

Estimates Context

• Wall Street consensus (S&P Global) for Q3 2024 revenue and EPS was unavailable for ENG at the time of analysis; therefore, a beat/miss determination versus consensus is not possible at this time.
• Given limited small-cap coverage and the company’s restructuring, estimate sets may be sparse or non-existent.

Key Takeaways for Investors

• Sequential operating improvement despite revenue pressure: GAAP net loss narrowed to $0.5M y/y and adjusted gross margin improved meaningfully; SG&A fell for a third straight quarter, indicating cost actions are flowing through .
• Revenue trough dynamics tied to portfolio reset: Q2 commentary confirmed the exit of unprofitable self-perform activities; rebuilding backlog and mix toward higher-margin engineering/automation and government work remains the central execution vector .
• Cash and scale remain gating factors: Management continues to prioritize liquidity and strategic partnerships; any credible partnership/financing update is likely to be a key stock catalyst .
• Emerging vertical exposure: The Q2 MSA aimed at power infrastructure for data centers introduces a potentially accretive growth lane if converted to backlog in H1’25 .
• Near-term focus: Monitor bookings/backlog rebuild, margin sustainability absent one-time items, and any updates on run-rate profitability timing; lack of consensus coverage may amplify stock moves on incremental company disclosures.
• Medium-term thesis: If cost discipline holds and higher-margin mix scales (government services, automation, power infrastructure), operating leverage could drive breakeven-to-profitable transition off a leaner base .

Supporting citations:

• Q3 2024 press (Form 8-K, Exhibit 99.1): revenue, net loss, adjustments, SG&A, management commentary .
• Q2 2024 press (Form 8-K, Exhibit 99.1): revenue, net loss, gross profit, SG&A, backlog/bookings, strategy, data center MSA, liquidity and profitability targets .
• Q1 2024 press (Form 8-K, Exhibit 99.1): revenue, net loss, EPS, gross profit, SG&A, backlog/bookings, strategic partner commentary .