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Exclusive: ENGlobal CFO On The Benefits Of Shift Towards Green Energy

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Exclusive: ENGlobal CFO On The Benefits Of Shift Towards Green Energy

ENGlobal (NASDAQ: ENG) is a provider of engineering and automation services mostly to the energy sectors, including hydrogen and green power.

On Wednesday, ENGlobal CEO Mark Hess was a guest on Benzinga's "Power Hour" show hours ahead of President Joe Biden's rollout of a $2-trillion infrastructure initiative. 

Infrastructure Bill: The economy continues to transition away from carbon energy and into hydrogen and other sources of clean energy, and a company like ENGlobal is well-positioned to assist its clients to make the transition, Hess told Benzinga. 

As an example, ENGlobal is working on building a hydrogen plant in Texas, although it will be shipped and installed in Kansas, he said. 

"We are the people that make it happen." 

Client Transition: Hydrogen energy is more popular today than it ever has been in the past. Renewable diesel is also in heavy demand, and the company is working on multiple projects in that area, Hess said. 

"I would probably rate the renewable diesel and the hydrogen production equally," he said.

Renewable plans can easily switch over from carbon-based diesel to renewable diesel by adding components to the plants, he said.

Meanwhile, there is still "a lot of interest" in solar projects, the CEO said. 

This marks a contrast from ENGlobal's traditional clients over many years within the oil and gas sectors.

Companies around the world are shifting gears towards clean technology to adhere to more sustainable business practices. Check out Benzinga's Cleantech Small Cap Conference on April 22 to learn more!

ENGlobal's Stock Performance: ENGlobal's stock was trading below $1 per share in November 2020 and peaked at $9.40 in early 2021.

Management is not aware of any single fundamental catalyst to justify the move, Hess said.

The company's increasing exposure to green energy could have contributed to some of the gains, the CEO said. 

"We have got 300 employees here that come in every day and work very hard for our shareholders," he said. "And we keep our nose down and try to provide earnings for our shareholders."

The company filed an S-3 form three weeks ago, and this gives it the ability to raise additional capital if needed, Hess said. 

"We are looking at some opportunities."

Typical ROI Timeline: In a question from the chat during the CEO's interview, Mike Sande asked: "What does the typical ROI timeline look like on a hydrogen plant for your customers?"

The CEO said the answer depends on the "amount of effort" that has to go into converting or expanding their existing infrastructure. Some customers already have hydrogen power on sight, so an ROI timeline is shorter, as it depends on expanding capacity, he said. 

"I hesitate to give a number because it could be so broad."

Related Link: Lithium And Hydrogen Trades: 5 Battery-Related Stocks To Watch

Robust Pipeline: The second question comes courtesy of Chris Kyrou. Chris asked about the company's pipeline of new contracts.

Hess said he constantly has contracts in the pipeline. ENGlobal has a "very robust" pipeline today, especially within the renewable energy area, the CEO said. 

Intellectual Property: Leonard Dorr asks if ENGlobal has anything proprietary.

ENGlobal uses the intellectual property of its technology partners, and the company builds intellectual property around that in its delivery system, the CEO said.

ENG Price Action: ENGlobal shares gained 7.11% Wednesday, closing at $4.52. 

 

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