ENGlobal Reports Third Quarter Results

Third Quarter 2008 Highlights Compared to Third Quarter 2007:

-- Revenue increased 27.3% to $123.2 million from $96.8 million

-- Gross profit margin decreased to 11.0% from 16.8%

-- Operating profit margin decreased to 5.0% from 8.0%

-- Net income decreased 12.5%, to $3.5 million compared to $4.0 million

-- Bi-weekly billable hours averaged 241,000 hours, up 20%, compared to 201,000 hours

-- 100% of quarter-over-quarter revenue increase attributable to organic or non-acquisition growth

The following table illustrates the composition of the Company's revenue for the three months ended September30,2008 and 2007, respectively:

Quarter Ended Quarter Ended September 30, 2008 September 30, 2007 (Dollars in millions) Segment Total % of Gross Operating Total % of Gross Operating Revenue Total Profit Profit Revenue Total Profit Profit Revenue Margin Margin(1) Revenue Margin Margin(1) Engineering $ 63.1 51 % 7.2 % 6.0 % 61.7 64 % 11.2 % 5.7 % Construction 40.9 33 % 2.3 % 1.6 % 19.0 19 % 3.8 % 2.0 % Automation 7.9 7 % 0.1 % (0.5 )% 8.5 9 % 0.8 % 0.1 % Land 11.3 9 % 1.5 % 1.0 % 7.6 8 % 1.1 % 0.4 % $ 123.2 100 % $ 96.8 100 % (1)Operating profit margin calculated prior to allocation of corporate overhead.

Revenue for the quarter totaled $123.2million, an increase of approximately $26.4 million, or 27.3%, compared to the third quarter of 2007. The Company estimates its current backlog is approximately 15% higher than the $298 million reported for the fiscal year ended December31,2007.

The decline in net income during the three months ended September 30, 2008 was due in part to Hurricanes Gustav and Ike, which impacted Gulf Coast operations in September 2008. In addition, the Company was negatively affected by: (1) higher labor burden resulting from improved employee benefits; (2) project losses in the Automation segment; (3) higher overhead costs in the Construction segment, in anticipation of future business, and higher mix of lower margin inspection revenue; and (4) lower margin from procurement pass-through revenue.

ENGlobal benefited from a decrease in selling, general and administrative ("SG&A") expenses during the third quarter. As a percentage of revenue, SG&A decreased to 2.9% for the three months ended September 30, 2008 from 5.0% for the comparable period in 2007. Total SG&A expense decreased $1.2 million, or 14.0%, to $3.6 million for the three months ended September 30, 2008, from $4.8 million for the comparable prior-year period. SG&A is in line with the Company's targeted baseline of $7.5 million per quarter and $30million for the year ended December31,2008.

On average, the Company's days sales outstanding remained 61 days at September 30, 2008, consistent with 61 days at December31,2007, but lower than 66 days for the three-month period ended September30,2007.

Long-term debt, net of current portion, increased 9.6%, or $2.8 million, from $29.3 million at December 31, 2007 to $32.1 million at September 30, 2008. As a percentage of stockholders' equity, long-term debt decreased to 44.4% from 52.5% at these dates. The increase in long-term debt primarily relates to $1.9 million in notes payable issued as a part of the consideration paid for the acquisition of Advanced Control Engineering and a $2.3 million increase in amounts drawn on our line of credit, offset by note payments.

At September 30, 2008, the amount outstanding on the line of credit was $30.1 million compared to $25.5million at June 30, 2008. This increase in debt is primarily related to $2.5 million paid on September 29, 2008, for the acquisition of Advanced Control Engineering.

The Company's estimated effective tax rate was 40.5% for the three months ended September 30, 2008, compared to 42.0% for the comparable prior-year period. The Company expects its full year 2008 tax rate to be approximately 40%.

Management's Assessment:

ENGlobal's Chairman and Chief Executive Officer, William A. Coskey, P.E., said, "While the third quarter financial results were impacted due to the storms, they were also impacted by an increase in employee benefit costs and operational issues in our Automation and Construction segments. All of these issues resulted in a reduction of approximately 10 to 12 cents in earnings per share during the quarter. The Company has already begun implementing a plan to make improvements in these areas."

ENGlobal's employee count remained steady at approximately 2,900 for the quarter ended September 30, 2008. Of this amount, approximately 2,750 employees are billable to clients. ENGlobal averaged 241,000 billable hours per two-week period during the third quarter 2008, a 20%increase, when compared to 201,000 billable hours in the same period in 2007. The third quarter 2008 average represents a 2% increase over 237,000 billable hours in the second quarter 2008. The Company's overall utilization percentage, inclusive of overhead personnel, is approximately 92% for the third quarter 2008 compared to 91% for the comparable period of 2007. ENGlobal has calculated its overall utilization percentage at approximately 90% since 2004.

The Company will host a conference call to discuss its quarterly results at 11:00 a.m. EST (10:00 a.m. CST). To participate in the conference call, please dial (866) 524-3160 (Domestic) or (412) 317-6760 (International) approximately 10 minutes before the scheduled start time and request the "ENGlobal Third 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 Friday, November 21,2008 at 8:00 a.m. Central Standard Time. The replay can be accessed by dialing (877) 344-7529 (Domestic) or (412) 317-0088 (International), Account #425107. 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 September 30, 2008 will be filed with the Securities and Exchange Commission on or before November 10, 2008 reflecting these results.

About ENGlobal

ENGlobal provides engineering, construction, automation, land and regulatory services principally to the energy sector throughout the United States and internationally. The Company has over 2,900 employees in 22 offices and occupies over 500,000 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

The statements above regarding the Company's expectations regarding third quarter financial results and certain other 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; (3) the Company's ability to retain its employees while reducing benefits; (4) the continued strong performance of the energy sector; and (5) the impact from Hurricanes Ike and Gustav and the timing of that impact. 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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FINANCIAL HIGHLIGHTS (in thousands, except per basic data) Quarter Ended Nine Months Ended September 30 September 30 2008 2007 2008 2007 Operating Revenue $ 123,167 $ 96,825 $ 357,344 $ 268,060 Direct cost 109,533 80,486 309,063 224,225 Gross Profit 13,634 16,339 48,281 43,835 Selling, general and administrative 7,449 8,603 23,376 23,636 Operating Income 6,185 7,736 24,905 20,199 Other Income (Expense): Other income (expense) 49 (53 ) 134 462 Interest income (expense), net (360 ) (636 ) (1,256 ) (1,896 ) Income before Provision for Income Taxes 5,874 7,047 23,783 18,765 Provision for Income Taxes 2,379 3,072 9,583 7,722 Net Income (Loss) 3,495 3,975 14,200 11,043 Net Income Per Common Share: Basic 0.13 0.15 0.52 0.41 Diluted 0.13 0.14 0.51 0.40 Weighted Average Shares Used in Computing Net Income Per basic: In thousands Basic 27,272 26,953 27,143 26,877 Diluted 27,956 27,417 27,704 27,278 Selected Balance Sheet Information (in thousands): As of Sept. 30, 2008 Dec. 31, 2007 Cash $ 1,370 908 Working capital 61,516 42,915 Property and equipment, net 6,106 6,472 Total assets 140,191 119,590 Long-term debt, net of current portion 32,115 29,318 Stockholders' Equity 72,312 48,583

SOURCE: ENGlobal

ENGlobal Natalie S. Hairston, 281-878-1000 ir@ENGlobal.com