Energy Services of America CORP 10-Q for FY2024 Q2

Energy Services of America CORP (ESOA)

10-Q 2024-05-08 For: 2024-03-31

Added on April 07, 2026

About this 10-Q

Energy Services of America CORP filed this 10-Q on May 8, 2024, covering the quarter ended March 31, 2024 (FY2024 Q2).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $71.13M; up 32.5% from $53.67M a year earlier
Diluted EPS: -$0.07; compared with -$0.11 a year earlier

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Delaware		20-4606266
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)


75 West 3^rd Ave., Huntington, West Virginia		25701
(Address of Principal Executive Office)		(Zip Code)

Title of Each Class		Trading Symbols		Name of Each Exchange On Which Registered
Common Stock, Par Value $0.0001		ESOA		The Nasdaq Stock Market LLC


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐


Part 1: Financial Information

Item 1. Financial Statements (Unaudited):

Consolidated Balance Sheets		2

Consolidated Statements of Income		3

Consolidated Statements of Cash Flows		4

Consolidated Statements of Changes in Shareholders’ Equity		5

Notes to Unaudited Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3. Quantitative and Qualitative Disclosures About Market Risk		36

Item 4. Controls and Procedures		36

Part II: Other Information

Item 1. Legal Proceedings		37

Item 1A. Risk Factors		37

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities		37

Item 5. Other Information		37

Item 6. Exhibits		38

Signatures		39



☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


	March 31,		September 30,
	2024		2023
Assets
Current assets
Cash and cash equivalents	$	12,091,466	$	16,431,572
Accounts receivable-trade		46,373,286		51,219,958
Allowance for doubtful accounts		(51,063)		(51,063)
Retainages receivable		10,101,198		7,589,749
Other receivables		847,306		516,968
Contract assets		14,648,381		15,955,220
Prepaid expenses and other		5,106,870		3,520,178
Total current assets		89,117,444		95,182,582

Property, plant and equipment, at cost		87,681,355		84,329,349
less accumulated depreciation		(50,703,501)		(47,799,840)
Total property and equipment, net		36,977,854		36,529,509

Right-of-use assets-operating lease		2,766,749		3,326,405
Intangible assets, net		3,166,815		3,383,099
Goodwill		4,087,554		4,087,554
Total assets	$	136,116,416	$	142,509,149

Liabilities and shareholders’ equity
Current liabilities
Current maturities of long-term debt	$	7,134,280	$	6,107,277
Lines of credit and short-term borrowings		22,492,890		19,847,470
Current maturities of operating lease liabilities		1,286,881		1,075,815
Accounts payable		18,669,362		22,026,639
Accrued expenses and other current liabilities		10,876,126		13,103,944
Contract liabilities		16,308,516		17,743,001
Total current liabilities		76,768,055		79,904,146

Long-term debt, less current maturities		16,087,973		18,870,529
Long-term operating lease liabilities, less current maturities		1,494,633		2,274,975
Deferred tax liability		7,201,874		6,870,510
Total liabilities		101,552,535		107,920,160

Shareholders’ equity
Common stock, $.0001 par value Authorized 50,000,000 shares, 17,896,016 issued and 16,577,586 outstanding at March 31, 2024 and 17,885,615 issued and 16,567,185 outstanding at September 30, 2023		1,790		1,789
Treasury stock, 1,318,430 shares at March 31, 2024 and September 30, 2023		(132)		(132)
Additional paid in capital		60,324,300		60,288,745
Retained deficit		(25,762,077)		(25,701,413)
Total shareholders’ equity		34,563,881		34,588,989
Total liabilities and shareholders’ equity	$	136,116,416	$	142,509,149


	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	March 31,		March 31,		March 31,		March 31,
	2024		2023		2024		2023
Revenue	$	71,127,655	$	53,673,443	$	161,290,842	$	113,716,028

Cost of revenues		64,888,101		49,772,790		144,212,327		103,829,113

Gross profit		6,239,554		3,900,653		17,078,515		9,886,915

Selling and administrative expenses		7,321,951		5,887,747		14,520,671		11,203,885
(Loss) income from operations		(1,082,397)		(1,987,094)		2,557,844		(1,316,970)

Other income (expense)
Interest income		0		124		0		196
Other nonoperating expense		(81,790)		(10,524)		(6,789)		(91,187)
Interest expense		(622,616)		(574,546)		(1,224,300)		(1,073,974)
Gain on sale of equipment		304,923		48,280		291,595		16,937
		(399,483)		(536,666)		(939,494)		(1,148,028)

(Loss) income before income taxes		(1,481,880)		(2,523,760)		1,618,350		(2,464,998)

Income tax (benefit) expense		(373,052)		(650,160)		684,983		(729,772)

Net (loss) income	$	(1,108,828)	$	(1,873,600)	$	933,367	$	(1,735,226)

Weighted average shares outstanding-basic		16,569,871		16,666,683		16,567,853		16,667,062

Weighted average shares-diluted		16,569,871		16,666,683		16,606,075		16,667,062

(Loss) earnings per share-basic	$	(0.07)	$	(0.11)	$	0.06	$	(0.10)

(Loss) earnings per share-diluted	$	(0.07)	$	(0.11)	$	0.06	$	(0.10)


										Total
	Common Stock			Additional Paid		Retained		Treasury		Shareholders’
	Shares	Amount		in Capital		Deficit		Stock		Equity
Balance at September 30, 2023	16,567,185	$	1,789	$	60,288,745	$	(25,701,413)	$	(132)	$	34,588,989

Net income	—		—		—		2,042,195		—		2,042,195

Dividends on common stock ($0.06 per share on 16,567,185 shares)	—		—		—		(994,031)		—		(994,031)

Balance at December 31, 2023	16,567,185	$	1,789	$	60,288,745	$	(24,653,249)	$	(132)	$	35,637,153

Net loss	—		—		—		(1,108,828)		—		(1,108,828)

Vested restricted stock award	10,401		1		35,555		—		—		35,556

Balance at March 31, 2024	16,577,586	$	1,790	$	60,324,300	$	(25,762,077)	$	(132)	$	34,563,881


	Three Months Ended March 31, 2024
					Electrical,
	Gas & Water		Gas & Petroleum		Mechanical, &		Total revenue
	Distribution		Transmission		General		from contracts
Lump sum contracts	$	—	$	—	$	26,943,941	$	26,943,941
Unit price contracts		14,273,691		9,044,955		448,175		23,766,821
Cost plus and T&M contracts		—		718,123		19,698,770		20,416,893
Total revenue from contracts	$	14,273,691	$	9,763,078	$	47,090,886	$	71,127,655

Earned over time	$	5,768,688	$	9,044,955	$	32,913,922	$	47,727,565
Earned at point in time		8,505,003		718,123		14,176,964		23,400,090
Total revenue from contracts	$	14,273,691	$	9,763,078	$	47,090,886	$	71,127,655


	Six Months Ended March 31, 2024
					Electrical,
	Gas &Water		Gas & Petroleum		Mechanical, &		Total revenue
	Distribution		Transmission		General		from contracts
Lump sum contracts	$	—	$	—	$	55,632,971	$	55,632,971
Unit price contracts		31,356,586		36,893,140		2,710,870		70,960,596
Cost plus and T&M contracts		—		1,433,181		33,264,094		34,697,275
Total revenue from contracts	$	31,356,586	$	38,326,321	$	91,607,935	$	161,290,842

Earned over time	$	10,141,271	$	36,893,140	$	63,141,836	$	110,176,247
Earned at point in time		21,215,315		1,433,181		28,466,099		51,114,595
Total revenue from contracts	$	31,356,586	$	38,326,321	$	91,607,935	$	161,290,842


	Three Months Ended March 31, 2023
					Electrical,
	Gas & Water		Gas & Petroleum		Mechanical, &		Total revenue
	Distribution		Transmission		General		from contracts
Lump sum contracts	$	—	$	—	$	22,467,890	$	22,467,890
Unit price contracts		13,432,107		5,334,861		1,261,641		20,028,609
Cost plus and T&M contracts		—		—		11,176,944		11,176,944
Total revenue from contracts	$	13,432,107	$	5,334,861	$	34,906,475	$	53,673,443

Earned over time	$	8,711,111	$	5,334,861	$	31,736,363	$	45,782,335
Earned at point in time		4,720,996		—		3,170,112		7,891,108
Total revenue from contracts	$	13,432,107	$	5,334,861	$	34,906,475	$	53,673,443


	Six Months Ended March 31, 2023
					Electrical,
	Gas & Water		Gas & Petroleum		Mechanical, &		Total revenue
	Distribution		Transmission		General		from contracts
Lump sum contracts	$	—	$	—	$	39,501,096	$	39,501,096
Unit price contracts		25,919,952		22,229,675		2,799,079		50,948,706
Cost plus and T&M contracts		—		—		23,266,226		23,266,226
Total revenue from contracts	$	25,919,952	$	22,229,675	$	65,566,401	$	113,716,028

Earned over time	$	13,589,758	$	22,229,675	$	61,626,511	$	97,445,944
Earned at point in time		12,330,194		—		3,939,890		16,270,084
Total revenue from contracts	$	25,919,952	$	22,229,675	$	65,566,401	$	113,716,028


	March 31, 2024		September 30, 2023		Change
Accounts receivable-trade, net of allowance for doubtful accounts	$	46,322,223	$	51,168,895	$	(4,846,672)

Contract assets
Cost and estimated earnings in excess of billings	$	14,648,381	$	15,955,220	$	(1,306,839)

Contract liabilities
Billings in excess of cost and estimated earnings	$	16,308,516	$	17,743,001	$	(1,434,485)


	March 31, 2024		September 30, 2023
Costs incurred on contracts in progress	$	403,385,426	$	287,347,650
Estimated earnings, net of estimated losses		42,599,658		38,976,895
		445,985,084		326,324,545
Less billings to date		447,645,219		328,112,326
	$	(1,660,135)	$	(1,787,781)

Costs and estimated earnings in excess of billed on uncompleted contracts	$	14,648,381	$	15,955,220

Less billings in excess of costs and estimated earnings on uncompleted contracts		16,308,516		17,743,001

	$	(1,660,135)	$	(1,787,781)


	Six Months Ended		Six Months Ended
	March 31,		March 31,
	2024		2023
Cash flows from operating activities:
Net income (loss)	$	933,367	$	(1,735,226)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Accreted interest on PPP loans		50,172		49,742
Depreciation expense		4,181,948		3,629,111
Gain on sale of equipment		(291,595)		(16,937)
Provision for deferred taxes		331,364		(729,772)
Amortization of intangible assets		216,284		265,401
Accreted interest on notes payable		30,186		21,198
Vested restricted stock award compensation expense		35,556		—
Decrease in accounts receivable		4,846,672		13,713,923
Increase in retainage receivable		(2,511,449)		(1,214,242)
Increase in other receivables		(330,338)		(309,085)
Decrease in contract assets		1,306,839		4,659,578
(Increase) decrease in prepaid expenses and other		(1,586,692)		1,791,134
Decrease in accounts payable		(3,357,277)		(6,155,465)
Decrease in accrued expenses and other current liabilities		(2,237,438)		(3,010,776)
(Decrease) increase in contract liabilities		(1,434,485)		1,016,632
Net cash provided by operating activities		183,114		11,975,216

Cash flows from investing activities:
Investment in property and equipment		(3,586,106)		(5,774,905)
Proceeds from sales of property and equipment		943,938		274,624
Net cash used in investing activities		(2,642,168)		(5,500,281)

Cash flows from financing activities:
Dividends on common stock		(994,031)		(833,360)
Treasury stock purchased		—		(71,655)
Borrowings on lines of credit and short-term debt, net of (repayments)		2,636,849		(1,618,718)
Proceeds from long-term debt		—		3,100,000
Principal payments on long-term debt		(3,523,870)		(2,883,118)
Net cash used in financing activities		(1,881,052)		(2,306,851)
(Decrease) increase in cash and cash equivalents		(4,340,106)		4,168,084
Cash and cash equivalents beginning of period		16,431,572		7,427,474
Cash and cash equivalents end of period	$	12,091,466	$	11,595,558


	March 31, 2024			September 30, 2023
Eligible borrowing base	$	21,267,302		$	23,942,868

Borrowed on line of credit		12,300,000			8,712,915

Line of credit balance available	$	8,967,302		$	15,229,953

Interest rate		8.5	%		8.5	%


	March 31, 2024		March 31, 2023		March 31, 2024		March 31, 2023
Net (loss) income	$	(1,108,828)	$	(1,873,600)	$	933,367	$	(1,735,226)

Weighted average shares outstanding-basic		16,569,871		16,666,683		16,567,853		16,667,062

Weighted average shares outstanding-diluted		16,569,871		16,666,683		16,606,075		16,667,062

(Loss) earnings per share available to common shareholders	$	(0.07)	$	(0.11)	$	0.06	$	(0.10)

(Loss) earnings per share available to common shareholders-diluted	$	(0.07)	$	(0.11)	$	0.06	$	(0.10)


	March 31, 2024		September 30, 2023
Deferred tax liabilities
Property and equipment	$	7,775,925	$	8,141,025
Other		617,218		588,632
Total deferred tax liabilities	$	8,393,143	$	8,729,657

Deferred income tax assets
Accruals & Other	$	1,005,361	$	948,704
Net operating loss carryforward		185,908		910,443
Total deferred tax assets		1,191,269		1,859,147
Total net deferred tax liabilities	$	7,201,874	$	6,870,510


	March 31, 2024		September 30, 2023
Line of credit payable to bank, monthly interest with variable rate of 8.5% at March 31, 2024, final payment due by June 28, 2024, guaranteed by certain directors of the Company.	$	12,300,000	$	8,712,915

Note payable to bank, due in monthly installments totaling $202,000, including fixed interest at 7.25%, final payment due June 2028, secured by equipment, guaranteed by certain directors of the Company.		8,712,104		8,487,085

Paycheck Protection Program loans from Small Business Administration, 1.0% simple interest, initially forgiven in the fiscal year ended September 30, 2021. Final forgiveness decision has not been determined.		10,234,492		10,184,320

Term note payable to United Bank, WV Pipeline acquisition, due in monthly installments of $64,853 with fixed interest at 4.25%, final payment due by March 25, 2026, secured by receivables and equipment, guaranteed by certain directors of the Company.		1,494,290		1,790,051

Notes payable to finance companies, due in monthly installments totaling $76,600 at March 31, 2024 and $50,000 at September 30, 2023, including interest ranging from 0.00% to 6.0%, final payments due April 2024 through August 2026, secured by equipment.		1,893,373		1,290,148

Note payable to finance company for insurance premiums financed, due in monthly installments totaling $327,000 in calendar year 2023 and $282,000 in calendar year 2022, including interest rate at 6.70%, final payment due December 2023.		—		950,235

Notes payable to bank, due in monthly installments totaling $7,848, including interest at 4.82%, final payment due November 2034 secured by building and property.		787,329		813,242

Notes payable to bank, due in monthly installments totaling $12,580, including variable interest of 9.5% at March 31, 2024, final payment due November 2025 secured by building and property, guaranteed by certain directors of the Company.		232,166		294,761

Notes payable to bank, due in monthly installments totaling $59,932, including fixed interest at 6.0%, final payment due October 2027 secured by receivables and equipment, guaranteed by certain directors of the Company.		2,317,125		2,601,404

Notes payable to David Bolton and Daniel Bolton, due in annual installments totaling $500,000, including fixed interest at 3.25%, final payment due December 31, 2026, unsecured.		925,000		1,660,000

Notes payable to bank, due in monthly installments totaling $68,150, including variable interest of 9.5% at March 31, 2024, with final payment due September 2026, secured by equipment, guaranteed by certain directors of the Company.		1,548,929		1,873,831

Term note payable to United Bank, Tri-State Paving acquisition, due in monthly installments of $129,910, fixed interest at 4.50%, final payment due by June 1, 2027, secured by receivables and equipment, guaranteed by certain directors of the Company.		5,036,626		5,698,761

Notes payable to Corns Enterprises, $1,000,000 with fair value of $936,000, due in annual installments totaling $250,000, including fixed interest at 3.50%, final payment due April 29, 2026, unsecured.		233,709		468,523

Total debt	$	45,715,143	$	44,825,276

Less current maturities		29,627,170		25,954,747

Total long term debt, less current maturities	$	16,087,973	$	18,870,529



	March 31, 2024		September 30, 2023
Beginning balance	$	4,087,554	$	4,087,554
Acquired		—		—
Ending balance	$	4,087,554	$	4,087,554


				Accumulated		Accumulated		Amortization		Amortization		Amortization		Amortization
	Remaining Life			Amortization and		Amortization and		and Impairment		and Impairment		and Impairment		and Impairment
	(in months) at			Impairment at		Impairment at		Three Months		Six Months		Three Months		Six Months		Net Book Value		Net Book Value
	March 31,			March 31,		September 30,		Ended March 31,		Ended March 31,		Ended March 31,		Ended March 31,		at March 31,		at September 30,
Intangible assets:	2024	Original Cost		2024		2023		2024		2024		2023		2023		2024		2023
West Virginia Pipeline:
Customer Relationships	81	$	2,209,724		718,145	$	607,661		55,242		110,484		65,647		120,889	$	1,491,579	$	1,602,063
Tradename	81		263,584		85,682		72,500		6,591		13,182		6,587		13,182		177,902		191,084
Non-competes	—		83,203		83,203		83,203		—		—		—		10,397		—		—

Revolt Energy:

Employment agreement/non-compete	—		100,000		100,000		100,000		—		—		4,167		8,334		—		—

Tri-State Paving:
Customer Relationships	97		1,649,159		316,089		233,631		41,229		82,458		41,178		82,458		1,333,070		1,415,528
Tradename	97		203,213		38,949		28,789		5,080		10,160		5,079		10,161		164,264		174,424
Non-competes	—		39,960		39,960		39,960		—		—		9,963		19,980		—		—

Total intangible assets		$	4,548,843	$	1,382,028	$	1,165,744	$	108,142	$	216,284	$	132,621	$	265,401	$	3,166,815	$	3,383,099


	Amortization Expense
April 2024 to March 2025	$	432,564
April 2025 to March 2026		432,564
April 2026 to March 2027		432,564
April 2027 to March 2028		432,564
April 2028 to March 2029		432,564
After		1,003,995
Total	$	3,166,815


		Present value of
		remaining
	Years left	liability		Lease end	Fiscal year end
Operating lease 1	1.0	$	86,364	3/31/2025	2025
Operating lease 2	0.2		23,636	5/31/2024	2024
Operating lease 3	3.8		2,399,040	12/31/2027	2027
Operating lease 4	0.5		63,671	9/30/2024	2024
Operating lease 5	2.0		208,803	3/31/2026	2026
		$	2,781,514

Weighted average remaining term			3.4 years


Operating Lease Maturity Schedule
April 2024 to March 2025	$	1,549,641
April 2025 to March 2026		1,267,823
April 2026 to March 2027		718,798
April 2027 to March 2028		95,200
		3,631,462
Less amounts representing interest		(849,948)
Present value of operating lease liabilities	$	2,781,514


	Three Months Ended
	March 31, 2024		% of total		March 31, 2023		% of total		Change		% Change
Gas & Water Distribution	$	14,273,691	20.1	%	$	13,432,107	25.0	%		841,584	6.3	%
Gas & Petroleum Transmission		9,763,078	13.7	%		5,334,861	9.9	%		4,428,217	83.0	%
Electrical, Mechanical, and General		47,090,886	66.2	%		34,906,475	65.0	%		12,184,411	34.9	%
Total	$	71,127,655	100.0	%	$	53,673,443	100.0	%		17,454,212	32.5	%


	Three Months Ended
	March 31, 2024		% of revenue		March 31, 2023		% of revenue		Change		Pct.
Gas & Water Distribution	$	2,401,537	16.82	%	$	2,839,950	21.14	%		(438,413)	(15.4)	%
Gas & Petroleum Transmission		230,516	2.36	%		(420,072)	(7.87)	%		650,588	(154.9)	%
Electrical, Mechanical, & General		4,715,401	10.01	%		2,415,445	6.92	%		2,299,956	95.2	%
Unallocated Shop Expense		(1,107,900)				(934,670)				(173,230)	18.5	%
Total	$	6,239,554	8.8	%	$	3,900,653	7.3	%		2,338,901	60.0	%


Accounts receivable, net of retention	at March 31, 2024		at March 31, 2023
Yates Construction	14.0	%	*
All other	86.0	%	100.0	%
Total	100.0	%	100.0	%


	March 31, 2024		September 30, 2023
Balance at beginning of period	$	51,063	$	70,310
Charged to expense		—		—
Deductions for uncollectible receivables written off, net of recoveries		—		(19,247)
Balance at end of period	$	51,063	$	51,063


31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document


Date: May 8, 2024	By:	/s/ Douglas V. Reynolds
		Douglas V. Reynolds
		Chief Executive Officer

Date: May 8, 2024	By:	/s/ Charles P. Crimmel
		Charles P. Crimmel
		Chief Financial Officer