After experiencing losses from operations, EnGlobal (Nasdaq: ENG), an engineering and automation company, has divested non-core assets, cured defaults on its credit facility and increased gross profit margins.
"Our remaining business is largely reflected in our fourth quarter 2013 results, which show an increase in our gross profit margins from approximately 10 percent to approximately 19 percent when comparing the 2012 and 2013 periods," says EnGlobal CFO Mark Hess in a March 14 statement.
Houston-based EnGlobal provides engineering and professional services to the energy industry. The group has gone through a long period of restructuring after experiencing a downturn in operations in 2011 that led to significant losses and defaults on the company's credit facilities, the company says in filings with the U.S. Securities and Exchange Commission.
In the fourth quarter of 2012, the company implemented a plan that included the divestiture of non-core assets. EnGlobal also discontinued the electrical services division and sold the field solutions segment. In 2012, the company's losses and defaults on credit facilities raised substantial doubts about its ability to continue as a going concern, or without the threat of liquidation.
In August 2013, the company sold part of the engineering and construction business, which is a reason why revenue decreased to about $169 million in 2013 from $227.9 million in 2012. The sales allowed EnGlobal to pay off all of its bank debt and cure defaults, and contributed to a decrease in the company's net loss, to $2.3 million in 2013 from $30.1 million in 2012. EnGlobal says it believes the company has stabilized operations and won't need to make further divestitures in 2014.
The company has also reduced headcount significantly, starting with 1,700 employees in December 2012 and ending with about 430 employees in December 2013.
The company has $10 million available under a PNC credit facility, which it says helps position the company for growth. Currently, EnGlobal consists of engineering and automation operations, which provide services primarily to the energy industry.
For last week's edition of Turnaround Tuesday, see "Cyber Security Group ISC8 Needs to Raise Funds."
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