ENGlobal Reports Record Second Quarter Results.

HOUSTON -- ENGlobal (NASDAQ:ENG), a leading provider of engineering and related project services, today reported record net income of $6.7 million, or $0.24 per diluted share, for the quarter ended June 30, 2008. The Company's 71% increase in net income, when compared to the prior year quarter, was primarily achieved through a combination of 52% organic revenue growth and improved operating profitability. ENGlobal increased its cumulative net income to $0.39 per diluted share in the six months ended June 30, 2008, compared to $0.26 per diluted share for the same period in 2007.

Second Quarter 2008 Highlights Compared to Second Quarter 2007:

* Revenue increased 52% to a record $136 million.

* Net income increased 71% to $6.7 million.

* Operating profit margin improved to 8.5% from 7.7%.

* 100% of quarter-over-quarter revenue increase is attributable to organic or non-acquisition related growth.

* Bi-weekly billable hours averaged 235,000 hours, up 24%, compared to 189,000 hours.

* Employee count increased 17% to approximately 2,900.

The following table illustrates the Company's total revenue by segment for the quarters ended June 30, 2008 and 2007, respectively:

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Revenue increased $46.4 million, or 51.8%, to $136.0 million for the three months ended June 30, 2008, from $89.6 million for the comparable prior-year period, comprised entirely of internal growth initiatives. Gross profit margin decreased one percentage point from 15.9% for the three months ended June 30, 2007, to 14.9% for the three months ended June 30, 2008. The decrease in gross profit margin primarily relates to a quarter-over-quarter shift in revenue mix.

Substantially all of the Company's revenue growth can be attributed to quarter-over-quarter increases in the following operations:

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Of these, inspection revenue in the Construction segment and procurement services pass-through revenue in the Engineering segment have historically produced lower gross profit margins than the Company's consolidated average.

ENGlobal's selling, general and administrative ("SG&A") expense for the second quarter 2008 was $8.7 million, an increase of $1.4 million from the second quarter 2007, and a $1.5 million increase from the first quarter 2008. The Company's SG&A expense target is $7.5 million per quarter, but exceeded this amount in the second quarter due to $1.3 million in bad debt expense and reserves against project claims, the majority of which is expected to be a non-recurring charge.

William A. Coskey, P.E., ENGlobal's Chairman and Chief Executive Officer, said, "Today's excellent report is a direct result of ENGlobal meeting many of its previously stated financial goals and objectives. I am especially pleased that we achieved our 8% target for operating profitability and demonstrated an impressive rate of organic growth that significantly exceeded our 25% compounded annual target."

Mr. Coskey, continued, "We are encouraged by a robust level of project activity from an increasingly broad client mix. Management's expectation for the second half of 2008 is that our Engineering, Construction, Automation and Land businesses will all continue on a similar strong track, with consolidated profits from continuing operations expected to meet or exceed those produced during the first half."

On average, the day's sales outstanding decreased to 61 days at June 30, 2008, from 62 days at March 31, 2008 and from 70 days at June 30, 2007. During the second quarter of 2008, the Company produced positive cash from operations of $4.1 million, compared with $524,000 in the second quarter of 2007.

Long-term debt, net of current portion, decreased 9.6%, or $2.8 million, from $29.3 million at December 31, 2007 to $26.5 million at June 30, 2008. The decrease in long-term debt is primarily related to the $2.3 million decrease in the Company's line of credit resulting from improved collections of associated trade receivables. Cash on hand at June 30, 2008 was $2.3 million and $24.2 million was available under the Company's credit facility, resulting in total liquidity of $26.5 million. ENGlobal's interest expense during the second quarter was $413,000, a decrease of approximately $287,000, or 41%, from the prior year period.

ENGlobal averaged 235,000 billable hours per two-week period during the second quarter 2008, a 24% increase, when compared to 189,000 billable hours in the same period in 2007. The Company's overall utilization percentage, inclusive of overhead personnel, is approximately 93% for the second quarter 2008 compared to 91% for the comparable period of 2007. The Company has calculated its overall utilization percentage, inclusive of overhead personnel, at approximately 90% since 2004.

The Company will host a conference call to discuss its quarterly results at 11:00 a.m. EDT (10:00 a.m. CDT) today, August 7, 2008. To participate in the conference call, please dial [phone] (Domestic) or [phone] (International) approximately 10 minutes before the scheduled start time and request the "ENGlobal Second Quarter 2008 Earnings Conference Call". If you are unable to join the call, a replay will be available approximately three hours after the conclusion of the call until Thursday, August 21, 2008. The replay can be accessed by dialing [phone] (Domestic) or [phone] (International), Account #286, Conference ID # 293030. The call will be webcast live at www.englobal.com in the Investor Relations section, and an audio archive will be available on the Company's website shortly after the call concludes.

The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 will be filed with the Securities and Exchange Commission on or about August 11, 2008.

About ENGlobal

ENGlobal provides engineering, construction, automation, land and regulatory services principally to the energy sector throughout the United States and internationally. The Company employs approximately 2,900 employees in 20 offices and occupies over 490,000 square feet of office and fabrication space. ENGlobal has been named one of the fastest growing engineering firms in the United States and Canada by ZweigWhite in each of the last five years. Further information about the Company and its businesses is available at www.ENGlobal.com.

Safe Harbor for Forward-Looking Statements 

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks and uncertainties including, but not limited to; (1) the Company's ability to achieve its business strategy while effectively managing costs and expenses; (2) the Company's ability to successfully and profitably integrate acquisitions; and (3) the continued strong performance of the energy sector. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors detailed from time to time in ENGlobal's filings with the Securities and Exchange Commission. In addition, reference is hereby made to cautionary statements set forth in the Company's most recent reports on Form 10-K and 10-Q, and other SEC filings. Also, the information contained in this press release is subject to the risk factors identified in the Company's most recent Form 10-K.

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