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ENGlobal Reports Second Quarter Results

The Company's consolidated revenues increased to $76.9 million in the three months ended June 30, 2012, an increase of 5.3% over the same period from the prior year. The primary reasons for this increase were increased in-plant placements in the Engineering and Construction ("E&C") segment and increased activity in the Fabrication and Non-Fabrication divisions in the Automation segment.

The following table illustrates the composition of the Company's revenue and profitability for the three months ended June 30, 2012 and 2011, respectively:

  Quarter Ended Quarter Ended
  June 30, 2012 June 30, 2011
  (dollars in millions)
Segment Total Revenue % of Total Revenue Gross Profit Margin Operating Profit Margin Total Revenue % of Total Revenue Gross Profit Margin Operating Profit Margin
Engineering & Construction  $ 44,816 58.3% 6.4% 0.6%  $ 43,699 59.7% 10.1% 6.8%
Automation 14,335 18.6% 10.2% 3.2% 11,383 15.6% 21.0% 12.2%
Field Solutions 17,793 23.1% 7.3% 2.2% 18,020 24.7% 6.7% 1.3%
Consolidated  $ 76,944 100.0% 7.3% (2.8)%  $ 73,102 100.0% 10.9% 1.7%

Overall, selling, general and administrative ("SG&A") expenses increased $1.1 million from $6.8 million in the three months ended June 30, 2011, to $7.8 million the same period for 2012. The increase primarily resulted from increased salary and related expenses of approximately $0.8 million incurred primarily as a result of initiatives undertaken in early 2012 in anticipation of increased activity for the remainder of the year and bad debt expense increase of approximately $0.6 million in the E&C segment, partially offset by a decrease of approximately $0.7 in facility and other expenses. As a percentage of revenue, SG&A expense increased to 10.2% for the three months ended June 30, 2012, from 9.2% for the comparable prior year period. During June, the Company began reducing overhead and staff levels in response to the reduced activity levels expected for the remainder of 2012. These staff reductions resulted in severance costs of approximately $0.2 million during the quarter. 

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