Energy Services of America CORP 10-Q for FY2024 Q3

Energy Services of America CORP (ESOA)

10-Q 2024-08-12 For: 2024-06-30

Added on April 07, 2026

About this 10-Q

Energy Services of America CORP filed this 10-Q on August 12, 2024, covering the quarter ended June 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $85.92M; up 0.5% from $85.53M a year earlier
Diluted EPS: $1.06; up 404.8% from $0.21 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		20

Item 3. Quantitative and Qualitative Disclosures About Market Risk		37

Item 4. Controls and Procedures		37

Part II: Other Information

Item 1. Legal Proceedings		38

Item 1A. Risk Factors		38

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities		39

Item 5. Other Information		39

Item 6. Exhibits		40

Signatures		41



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


	June 30,		September 30,
	2024		2023
Assets
Current assets
Cash and cash equivalents	$	14,537,867	$	16,431,572
Accounts receivable-trade		50,173,780		51,219,958
Allowance for doubtful accounts		(51,063)		(51,063)
Retainages receivable		10,279,019		7,589,749
Other receivables		1,122,220		516,968
Contract assets		21,046,114		15,955,220
Prepaid expenses and other		4,245,892		3,520,178
Total current assets		101,353,829		95,182,582

Property, plant and equipment, at cost		90,554,178		84,329,349
less accumulated depreciation		(52,703,476)		(47,799,840)
Total property and equipment, net		37,850,702		36,529,509

Right-of-use assets-operating leases		2,497,162		3,326,405
Intangible assets, net		3,058,673		3,383,099
Goodwill		4,087,554		4,087,554
Total assets	$	148,847,920	$	142,509,149

Liabilities and shareholders’ equity
Current liabilities
Current maturities of long-term debt	$	7,177,071	$	6,107,277
Lines of credit and short-term borrowings		10,259,700		19,847,470
Current maturities of operating lease liabilities		1,114,734		1,075,815
Accounts payable		19,445,674		22,026,639
Accrued expenses and other current liabilities		12,021,416		13,103,944
Contract liabilities		17,944,618		17,743,001
Income tax payable		5,691,264		—
Total current liabilities		73,654,477		79,904,146

Long-term debt, less current maturities		14,502,286		18,870,529
Long-term operating lease liabilities, less current maturities		1,372,062		2,274,975
Deferred tax liability		7,282,967		6,870,510
Total liabilities		96,811,792		107,920,160

Shareholders’ equity
Common stock, $.0001 par value Authorized 50,000,000 shares, 17,896,016 issued and 16,570,685 outstanding at June 30, 2024 and 17,885,615 issued and 16,567,185 outstanding at September 30, 2023		1,790		1,789
Treasury stock, 1,325,331 shares at June 30, 2024 and 1,318,430 shares at September 30, 2023		(133)		(132)
Additional paid in capital		60,282,921		60,288,745
Retained deficit		(8,248,450)		(25,701,413)
Total shareholders’ equity		52,036,128		34,588,989
Total liabilities and shareholders’ equity	$	148,847,920	$	142,509,149


	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	June 30,		June 30,		June 30,		June 30,
	2024		2023		2024		2023
Revenue	$	85,923,760	$	85,529,892	$	247,214,602	$	199,245,920

Cost of revenues		70,615,936		74,650,897		214,828,263		178,480,010

Gross profit		15,307,824		10,878,995		32,386,339		20,765,910

Selling and administrative expenses		6,815,191		5,283,617		21,335,862		16,487,502
Income from operations		8,492,633		5,595,378		11,050,477		4,278,408

Other income (expense)
Interest income		—		—		—		196
Other nonoperating expense		(27,446)		(72,338)		(33,935)		(163,525)
Income from lawsuit judgement		15,634,499		—		15,634,499		—
Interest expense		(546,960)		(639,888)		(1,771,560)		(1,713,862)
Gain on sale of equipment		571		30,136		292,166		47,073
		15,060,664		(682,090)		14,121,170		(1,830,118)

Income before income taxes		23,553,297		4,913,288		25,171,647		2,448,290

Income tax expense		6,039,670		1,497,742		6,724,653		767,970

Net income	$	17,513,627	$	3,415,546	$	18,446,994	$	1,680,320

Weighted average shares outstanding-basic		16,565,827		16,602,556		16,567,034		16,659,169

Weighted average shares-diluted		16,597,982		16,602,556		16,602,903		16,659,169

Earnings per share-basic	$	1.06	$	0.21	$	1.11	$	0.10

Earnings per share-diluted	$	1.06	$	0.21	$	1.11	$	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

Net income	—		—		—		17,513,627		—		17,513,627

Treasury stock purchased by company	(6,901)		—		(41,379)		—		(1)		(41,380)

Balance at June 30, 2024	16,570,685	$	1,790	$	60,282,921	$	(8,248,450)	$	(133)	$	52,036,128


	Three Months Ended June 30, 2024
					Electrical,
	Gas & Water		Gas & Petroleum		Mechanical, &		Total revenue
	Distribution		Transmission		General		from contracts
Lump sum contracts	$	—	$	—	$	30,678,722	$	30,678,722
Unit price contracts		22,536,366		16,687,458		579,567		39,803,391
Cost plus and T&M contracts		—		451,348		14,990,299		15,441,647
Total revenue from contracts	$	22,536,366	$	17,138,806	$	46,248,588	$	85,923,760

Earned over time	$	605,362	$	16,687,458	$	32,717,660	$	50,010,480
Earned at point in time		21,931,004		451,348		13,530,928		35,913,280
Total revenue from contracts	$	22,536,366	$	17,138,806	$	46,248,588	$	85,923,760


	Nine Months Ended June 30, 2024
					Electrical,
	Gas &Water		Gas & Petroleum		Mechanical, &		Total revenue
	Distribution		Transmission		General		from contracts
Lump sum contracts	$	—	$	—	$	86,311,693	$	86,311,693
Unit price contracts		53,892,952		53,580,598		3,290,437		110,763,987
Cost plus and T&M contracts		—		1,884,529		48,254,393		50,138,922
Total revenue from contracts	$	53,892,952	$	55,465,127	$	137,856,523	$	247,214,602

Earned over time	$	10,746,633	$	53,580,598	$	95,859,496	$	160,186,727
Earned at point in time		43,146,319		1,884,529		41,997,027		87,027,875
Total revenue from contracts	$	53,892,952	$	55,465,127	$	137,856,523	$	247,214,602


	Three Months Ended June 30, 2023
					Electrical,
	Gas & Water		Gas & Petroleum		Mechanical, &		Total revenue
	Distribution		Transmission		General		from contracts
Lump sum contracts	$	—	$	—	$	29,132,537	$	29,132,537
Unit price contracts		17,906,005		28,488,329		1,568,962		47,963,296
Cost plus and T&M contracts		—		—		8,434,059		8,434,059
Total revenue from contracts	$	17,906,005	$	28,488,329	$	39,135,558	$	85,529,892

Earned over time	$	7,738,419	$	28,488,329	$	35,991,934	$	72,218,682
Earned at point in time		10,167,586		—		3,143,624		13,311,210
Total revenue from contracts	$	17,906,005	$	28,488,329	$	39,135,558	$	85,529,892


	Nine Months Ended June 30, 2023
					Electrical,
	Gas & Water		Gas & Petroleum		Mechanical, &		Total revenue
	Distribution		Transmission		General		from contracts
Lump sum contracts	$	—	$	—	$	68,633,633	$	68,633,633
Unit price contracts		43,825,957		50,718,004		4,368,041		98,912,002
Cost plus and T&M contracts		—		—		31,700,285		31,700,285
Total revenue from contracts	$	43,825,957	$	50,718,004	$	104,701,959	$	199,245,920

Earned over time	$	21,328,177	$	50,718,004	$	97,618,445	$	169,664,626
Earned at point in time		22,497,780		—		7,083,514		29,581,294
Total revenue from contracts	$	43,825,957	$	50,718,004	$	104,701,959	$	199,245,920


	June 30, 2024		September 30, 2023		Change
Accounts receivable-trade, net of allowance for doubtful accounts	$	50,122,717	$	51,168,895	$	(1,046,178)

Contract assets
Cost and estimated earnings in excess of billings	$	21,046,114	$	15,955,220	$	5,090,894

Contract liabilities
Billings in excess of cost and estimated earnings	$	17,944,618	$	17,743,001	$	201,617


	June 30, 2024		September 30, 2023
Costs incurred on contracts in progress	$	347,023,673	$	287,347,650
Estimated earnings, net of estimated losses		55,753,948		38,976,895
		402,777,621		326,324,545
Less billings to date		399,676,125		328,112,326
	$	3,101,496	$	(1,787,781)

Costs and estimated earnings in excess of billed on uncompleted contracts	$	21,046,114	$	15,955,220

Less billings in excess of costs and estimated earnings on uncompleted contracts		17,944,618		17,743,001

	$	3,101,496	$	(1,787,781)


	Nine Months Ended		Nine Months Ended
	June 30,		June 30,
	2024		2023
Cash flows from operating activities:
Net income	$	18,446,994	$	1,680,320

Adjustments to reconcile net income to net cash provided by operating activities:
Accreted interest on PPP loans		75,380		74,613
Depreciation expense		6,338,224		5,356,166
Gain on sale of equipment		(292,166)		(47,073)
Provision for deferred taxes		412,457		699,932
Amortization of intangible assets		324,426		401,221
Accreted interest on notes payable		53,977		31,200
Vested restricted stock award compensation expense		35,556		—
Decrease (increase) in accounts receivable		1,046,178		(9,369,616)
Increase in retainage receivable		(2,689,270)		(2,881,285)
Increase in other receivables		(605,252)		(556,165)
(Increase) decrease in contract assets		(5,090,894)		3,910,675
(Increase) decrease in prepaid expenses and other		(725,714)		2,907,881
Decrease in accounts payable		(2,580,965)		(1,480,418)
Increase (decrease) in accrued expenses and other current liabilities		4,573,985		(969,652)
Increase in contract liabilities		201,617		10,548,603
Net cash provided by operating activities		19,524,533		10,306,402

Cash flows from investing activities:
Investment in property and equipment		(6,666,139)		(8,498,746)
Proceeds from sales of property and equipment		995,324		546,672
Net cash used in investing activities		(5,670,815)		(7,952,074)

Cash flows from financing activities:
Dividends on common stock		(994,031)		(833,360)
Treasury stock purchased		(41,380)		(219,615)
Borrowings on lines of credit and short-term debt, net of (repayments)		(9,663,150)		1,197,792
Proceeds from long-term debt		—		3,100,000
Principal payments on long-term debt		(5,048,862)		(3,988,057)
Net cash used in financing activities		(15,747,423)		(743,240)
(Decrease) increase in cash and cash equivalents		(1,893,705)		1,611,088
Cash and cash equivalents beginning of period		16,431,572		7,427,474
Cash and cash equivalents end of period	$	14,537,867	$	9,038,562


	June 30, 2024			September 30, 2023
Eligible borrowing base	$	18,971,952		$	23,942,868

Borrowed on line of credit		—			8,712,915

Line of credit balance available	$	—		$	15,229,953

Interest rate		8.5	%		8.5	%


	June 30, 2024		September 30, 2023
Deferred tax liabilities
Property and equipment	$	7,681,483	$	8,141,025
Other		619,558		588,632
Total deferred tax liabilities	$	8,301,041	$	8,729,657

Deferred income tax assets
Accruals & Other	$	1,018,074	$	948,704
Net operating loss carryforward		—		910,443
Total deferred tax assets	$	1,018,074	$	1,859,147

Total net deferred tax liabilities	$	7,282,967	$	6,870,510


	June 30, 2024		September 30, 2023
Line of credit payable to bank, monthly interest at 8.5%, final payment due by June 28, 2024, guaranteed by certain directors of the Company.	$	—	$	8,712,915

Equipment line of credit with a total of $9.3 million and $8.5 million of $9.3 million available borrowed at June 30, 2024 and September 30, 2023, respectively, fixed interest at 7.25% of outstanding balance due in monthly installments between June 1, 2023 and December 1, 2023. Payments of $202,809 due in monthly installments, including fixed interest at 7.25%, beginning January 2024 with final payment due February 2028, secured by equipment, guaranteed by certain directors of the Company.		8,260,545		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.		10,259,700		10,184,320

Term note payable to United Bank, WV Pipeline acquisition, due in monthly installments of $64,853 interest at 4.25%, final payment due by March 25, 2026, secured by receivables and equipment, guaranteed by certain directors of the Company.		1,315,129		1,790,051

Notes payable to finance companies, due in monthly installments totaling $77,000 at June 30, 2024 and $50,000 at September 30, 2023, including interest ranging from 0.00% to 6.0%, final payments due July 2024 through August 2026, secured by equipment.		1,696,086		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.		774,680		813,242

Notes payable to bank, due in monthly installments totaling $12,580, including interest at 9.5%, final payment due November 2025 secured by building and property, guaranteed by certain directors of the Company.		199,782		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.		2,172,105		2,601,404

Notes payable to David Bolton and Daniel Bolton, due in annual installments totaling $500,000, including interest at 3.25%, final payment due December 31, 2026, unsecured.		932,500		1,660,000

Notes payable to bank, interest at 4.25% of outstanding balance due in monthly installments between January 2021 and January 2022 with note payments beginning February 2022. Payments due in monthly installments totaling $68,150, including interest at 9.5%, final payment due January 2026, secured by equipment, guaranteed by certain directors of the Company.		1,380,317		1,873,831

Term note payable to United Bank, Tri-State Paving acquisition, due in monthly installments of $129,910, including interest at 4.50%, final payment due by June 1, 2027, secured by receivables and equipment, guaranteed by certain directors of the Company.		4,698,213		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 interest at 3.50%, final payment due April 29, 2026, unsecured.		250,000		468,523

Total debt	$	31,939,057	$	44,825,276

Less current maturities		17,436,771		25,954,747

Total long term debt, less current maturities	$	14,502,286	$	18,870,529



	June 30, 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		Nine Months		Three Months		Nine Months		Net Book Value		Net Book Value
	June 30,			June 30,		September 30,		Ended June 30,		Ended June 30,		Ended June 30,		Ended June 30,		at June 30,		at September 30,
Intangible assets:	2024	Original Cost		2024		2023		2024		2024		2023		2023		2024		2023
West Virginia Pipeline:
Customer Relationships	78	$	2,209,724		773,387	$	607,661		55,242		165,726		65,643		186,532	$	1,436,337	$	1,602,063
Tradename	78		263,584		92,273		72,500		6,591		19,773		6,591		19,773		171,311		191,084
Non-competes	—		83,203		83,203		83,203		—		—		—		10,397		—		—

Revolt Energy:
Employment agreement/non-compete	—		100,000		100,000		100,000		—		—		13,887		22,221		—		—

Tri-State Paving:
Customer Relationships	94		1,649,159		357,318		233,631		41,229		123,687		41,229		123,687		1,291,841		1,415,528
Tradename	94		203,213		44,029		28,789		5,080		15,240		5,080		15,241		159,184		174,424
Non-competes	—		39,960		39,960		39,960		—		—		3,390		23,370		—		—

Total intangible assets		$	4,548,843	$	1,490,170	$	1,165,744	$	108,142	$	324,426	$	135,820	$	401,221	$	3,058,673	$	3,383,099


	Amortization Expense
July 2024 to June 2025	$	432,564
July 2025 to June 2026		432,564
July 2026 to June 2027		432,564
July 2027 to June 2028		432,564
July 2028 to June 2029		432,564
After		895,853
Total	$	3,058,673


		Present value of
		remaining
	Years left	liability		Lease end	Fiscal year end
Operating lease 1	0.8	$	68,835	3/31/2025	2025
Operating lease 2	0.1		5,593	7/31/2024	2024
Operating lease 3	3.5		2,221,690	12/31/2027	2028
Operating lease 4	0.3		21,373	9/30/2024	2024
Operating lease 5	1.8		169,305	3/31/2026	2026
		$	2,486,796

Weighted average remaining term			3.3 years


Operating Lease Maturity Schedule
July 2024 to June 2025	$	1,355,573
July 2025 to June 2026		818,791
July 2026 to June 2027		748,595
July 2027 to June 2028		374,298
		3,297,257
Less amounts representing interest		(810,461)
Present value of operating lease liabilities	$	2,486,796


	Three Months Ended
	June 30, 2024		% of total		June 30, 2023		% of total		Change		% Change
Gas & Water Distribution	$	22,536,366	26.2	%	$	17,906,005	20.9	%		4,630,361	25.9	%
Gas & Petroleum Transmission		17,138,806	19.9	%		28,488,329	33.3	%		(11,349,523)	-39.8	%
Electrical, Mechanical, and General		46,248,588	53.8	%		39,135,558	45.8	%		7,113,030	18.2	%
Total	$	85,923,760	100.0	%	$	85,529,892	100.0	%		393,868	0.5	%


	Three Months Ended
	June 30, 2024		% of revenue		June 30, 2023		% of revenue		Change		Pct.
Gas & Water Distribution	$	6,394,637	28.37	%	$	4,649,388	25.97	%		1,745,249	37.5	%
Gas & Petroleum Transmission		4,589,300	26.78	%		3,971,227	13.94	%		618,073	15.6	%
Electrical, Mechanical, & General		6,028,632	13.04	%		2,507,820	6.41	%		3,520,812	140.4	%
Unallocated Shop Expense		(1,704,745)				(249,440)				(1,455,305)	583.4	%
Total	$	15,307,824	17.8	%	$	10,878,995	12.7	%		4,428,829	40.7	%


Accounts receivable, net of retention	at June 30, 2024		at September 30, 2023
Walbridge Aldinger	11.1	%		*
All other	88.9	%	100.0	%
Total	100.0	%	100.0	%


	June 30, 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


				Value of Shares		Maximum Number of
				Purchased as Part of		Shares That May Yet Be
	Total Number of Shares	Average Price		Publicly Announced		Purchased Under the
Period	Purchased	Paid Per Share		Plans or Programs (1)		Plans or Programs
April 2024	—		—		—	934,478
May 2024	6,901	$	6.00	$	41,379	893,099
June 2024	—		—		—	893,099
Total	6,901	$	6.00	$	41,379	893,099


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: August 12, 2024	By:	/s/ Douglas V. Reynolds
		Douglas V. Reynolds
		Chief Executive Officer

Date: August 12, 2024	By:	/s/ Charles P. Crimmel
		Charles P. Crimmel
		Chief Financial Officer