Energy Services of America CORP

Previous wording

Within Energy Services’ (as defined below) consolidated financial statements and this Annual Report on Form 10-K, there are included statements reflecting assumptions, expectations, projections, intentions, or beliefs about future events that are intended as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “project,” “forecast,” “may,” “will,” “should,” “could,” “expect,” “believe,” “intend” and other words of similar meaning.

Current wording

Within Energy Services’ (as defined below) consolidated financial statements and this Quarterly Report on Form 10-Q, there are included statements reflecting assumptions, expectations, projections, intentions, or beliefs about future events that are intended as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “project,” “forecast,” “may,” “will,” “should,” “could,” “expect,” “believe,” “intend” and other words of similar meaning.

Previous wording

The majority of the Company’s customers are in West Virginia, Virginia, Ohio, Pennsylvania, and Kentucky. However, the Company also performs work in other states including Alabama, Michigan, Illinois, Tennessee, and Indiana.

Current wording

The majority of the Company’s customers are in West Virginia, Virginia, Ohio, Pennsylvania, and Kentucky. However, the Company also performs work in other states including Alabama, Michigan, Illinois, Tennessee, North Carolina, and Indiana.

Previous wording

Three Months Ended December 31, 2023 and 2022 Overview

Current wording

Three and Six Months Ended March 31, 2024 and 2023 Overview

Previous wording

The following is an overview of results from operations for the three months ended December 31, 2023 and 2022:

Current wording

The following is an overview of results from operations for the three and six months ended March 31,2024 and 2023:

Previous wording

Results of Operations for the Three Months Ended December 31, 2023 Compared to the Three Months Ended December 31, 2022

Current wording

Results of Operations for the Three and Six Months Ended March 31, 2024 Compared to the Three and Six Months Ended March 31, 2023

Previous wording

Revenues. A table comparing the Company’s revenues for the three months ended December 31, 2023 compared to the three months ended December 31, 2022, is below:

Current wording

Revenues. A table comparing the Company’s revenues for the three and six months ended March 31, 2024 compared to the three and six months ended March 31, 2023 is below:

Previous wording

Total revenues increased by $30.1 million to $90.1 million for the three months ended December 31, 2023, as compared to $60.0 million for the three months ended December 31, 2022. The increase was a result of increased work in all categories of business.

Current wording

Total revenues increased by $17.5 million to $71.1 million for the three months ended March 31, 2024, as compared to $53.7 million for the three months ended March 31, 2023. Total revenues increased by $47.6 million to $161.3 million for the six months ended March 31, 2024, as compared to $113.7 million for the six months ended March 31, 2023. The increases were a result of increased work in all categories of business.

Previous wording

Gas & Petroleum Transmission revenues totaled $28.6 million for the three months ended December 31, 2023, an $11.7 million increase from $16.8 million for the three months ended December 31, 2022. The revenue increase was primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into the first quarter of fiscal year 2024.

Current wording

Gas & Petroleum Transmission revenues totaled $9.8 million for the three months ended March 31, 2024, a $4.5 million increase from $5.3 million for the three months ended March 31, 2023. Gas & Petroleum Transmission revenues totaled $38.3 million for the six months ended March 31, 2024, a $16.1 million increase from $22.2 million for the six months ended March 31, 2023. The revenue increases were primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into fiscal year 2024.

Previous wording

Electrical, Mechanical, & General construction services revenues totaled $44.5 million for the three months ended December 31, 2023, a $13.7 million increase from $30.8 million for the three months ended December 31, 2022. The revenue increase was primarily related to an increase in general contracting and electrical services performed during the three months ended December 31, 2023, as compared to the same period in the prior year.

Current wording

Electrical, Mechanical, & General construction services revenues totaled $47.1 million for the three months ended March 31, 2024, a $12.2 million increase from $34.9 million for the three months ended March 31, 2023. Electrical, Mechanical, & General construction services revenues totaled $91.6 million for the six months ended March 31, 2024, a $26.0 million increase from $65.6 million for the six months ended March 31, 2023. The revenue increases were primarily related to an increase in general contracting and electrical services performed during the three and six months ended March 31, 2024, as compared to the same period in the prior year.

Previous wording

Cost of Revenues. A table comparing the Company’s costs of revenues for the three months ended December 31, 2023, compared to the three months ended December 31, 2022, is below:

Current wording

Cost of Revenues. A table comparing the Company’s costs of revenues for the three and six months ended March 31, 2024, compared to the three and six months ended March 31, 2023, is below:

Previous wording

Total cost of revenues increased by $25.3 million to $79.3 million for the three months ended December 31, 2023, as compared to $54.1 million for the three months ended December 31, 2022. The cost of revenues increase was a result of increased work in all categories of business, partially offset by less unallocated shop expenses.

Current wording

Total cost of revenues increased by $15.1 million to $64.9 million for the three months ended March 31, 2024, as compared to $49.8 million for the three months ended March 31, 2023. Total cost of revenues increased by $40.4 million to $144.2 million for the six months ended March 31, 2024, as compared to $103.8 million for the six months ended March 31, 2023. The cost of revenues increases were a result of increased work in all categories of business, partially offset by less unallocated shop expenses for the three and six months ended March 31, 2024 as compared to the same period in 2023.

Previous wording

Gas & Water Distribution cost of revenues totaled $13.1 million for the three months ended December 31, 2023, a $2.5 million increase from $10.6 million for the three months ended December 31, 2022. The cost of revenue increase was primarily related to increased paving services performed on water projects and increased gas and water distribution work.

Current wording

Gas & Water Distribution cost of revenues totaled $11.9 million for the three months ended March 31, 2024, a $1.3 million increase from $10.6 million for the three months ended March 31, 2023. Gas & Water Distribution cost of revenues totaled $25.0 million for the six months ended March 31, 2024, a $3.7 million increase from $21.3 million for the six months ended March 31, 2023. The cost of revenues increases were primarily related to increased paving and gas and water distribution services performed during the six months ended March 31, 2024, as compared to the same periods in 2023.

Previous wording

Gas & Petroleum Transmission cost of revenues totaled $25.2 million for the three months ended December 31, 2023, an $11.1 million increase from $14.0 million for the three months ended December 31, 2022. The cost of revenue increase was primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into the first quarter of fiscal year 2024.

Current wording

Gas & Petroleum Transmission cost of revenues totaled $9.5 million for the three months ended March 31, 2024, a $3.8 million increase from $5.8 million for the three months ended March 31, 2023. Gas & Petroleum Transmission cost of revenues totaled $34.7 million for the six months ended March 31, 2024, a $14.9 million increase from $19.8 million for the six months ended March 31, 2023. The cost of revenues increases were primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into fiscal year 2024.

Previous wording

Electrical, Mechanical, & General construction services cost of revenues totaled $41.1 million for the three months ended December 31, 2023, an $11.9 million increase from $29.2 million for the three months ended December 31, 2022. The cost of revenue increase was primarily related to an increase in general contracting and electrical services performed during the three months ended December 31, 2023, as compared to the same period in the prior year.

Current wording

Electrical, Mechanical, & General construction services cost of revenues totaled $42.4 million for the three months ended March 31, 2024, a $9.9 million increase from $32.5 million for the three months ended March 31, 2023. Electrical, Mechanical, & General construction services cost of revenues totaled $83.4 million for the six months ended March 31, 2024, a $21.9 million increase from $61.5 million for the six months ended March 31, 2023. The cost of revenues increases were primarily related to an increase in general contracting and electrical services performed during the three and six months ended March 31, 2024, as compared to the same period in the prior year.

Previous wording

Unallocated shop expenses totaled $5,500 for the three months ended December 31, 2023, a $291,000 decrease from $296,000 for the three months ended December 31, 2022. The decrease in unallocated shop expenses was due to increased internal equipment charges to projects for the three months ended December 31, 2023, as compared to the same period in the prior year.

Current wording

Unallocated shop expenses totaled $1.1 million for the three months ended March 31, 2024, a $173,000 increase from $935,000 for the three months ended March 31, 2023. Unallocated shop expenses totaled $1.1 million for the six months ended March 31, 2024, a $118,000 decrease from $1.2 million for the six months ended March 31, 2023. The changes in unallocated shop expenses were due to changes in the amount of internal equipment charged to projects for the three and six months ended March 31, 2024, as compared to the same period in the prior year.

Previous wording

Gross Profit (Loss). A table comparing the Company’s gross profit for the three months ended December 31, 2023, compared to the three months ended December 31, 2022, is below:

Current wording

Gross Profit (Loss). A table comparing the Company’s gross profit (loss) for the three and six months ended March 31, 2024, compared to the three and six months ended March 31, 2023, is below:

Previous wording

Gas & Water Distribution gross profit totaled $4.0 million for the three months ended December 31, 2023, a $2.2 million increase from $1.8 million for the three months ended December 31, 2022. The gross profit increase was primarily related to increased paving services provided for water projects and increase water distribution services performed during the three months ended December 31, 2023 as compared to the same period in the prior year.

Current wording

Gas & Water Distribution gross profit totaled $2.4 million for the three months ended March 31, 2024, a $438,000 decrease from $2.8 million for the three months ended March 31, 2023. The gross profit decrease was primarily due to inclement weather conditions and training and certification expenses incurred during the three months ended March 31, 2024. Gas & Water Distribution gross profit totaled $6.4 million for the six months ended March 31, 2024, a $1.7 million increase from $4.7 million for the six months ended March 31, 2023. The gross profit increase was primarily related to increased paving and gas and water distribution services performed during the six months ended March 31, 2024, as compared to the same period in 2023.

Previous wording

Gas & Petroleum Transmission gross profit totaled $3.4 million for the three months ended December 31, 2023, a $583,000 increase from $2.8 million for the three months ended December 31, 2022. The gross profit increase was primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into the first quarter of fiscal year 2024.

Current wording

Gas & Petroleum Transmission gross profit totaled $231,000 for the three months ended March 31, 2024, a $651,000 increase from ($420,000) for the three months ended March 31, 2023. Gas & Petroleum Transmission gross profit totaled $3.6 million for the six months ended March 31, 2024, a $1.2 million increase from $2.4 million for the six months ended March 31, 2023. The gross profit increases were primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into fiscal year 2024.

Previous wording

Electrical, Mechanical, & General construction services gross profit totaled $3.5 million for the three months ended December 31, 2023, a 1.8 million increase from $1.7 million for the three months ended December 31, 2022. The increase was primarily related to an increase in general contracting and electrical services performed during the three months ended December 31, 2023, as compared to the same period in the prior year.

Current wording

Electrical, Mechanical, & General construction services gross profit totaled $4.7 million for the three months ended March 31, 2024, a $2.3 million increase from $2.4 million for the three months ended March 31, 2023. Electrical, Mechanical, & General construction services gross profit totaled $8.2 million for the six months ended March 31, 2024, a $4.1 million increase from $4.1 million for the six months ended March 31, 2023. The gross profit increases were primarily related to an increase in general contracting and electrical services performed during the three and six months ended March 31, 2024, as compared to the same periods in the prior year.

Previous wording

Gross loss attributable to unallocated shop expenses totaled $5,500 for the three months ended December 31, 2023, a $291,000 decrease from $296,000 for the three months ended December 31, 2022. The decrease in unallocated shop expenses was due to increased internal equipment charges to projects for the three months ended December 31, 2023, as compared to the same period in the prior year.

Current wording

Gross loss attributable to unallocated shop expenses totaled $1.1 million for the three months ended March 31, 2024, a $173,000 increase from $935,000 for the three months ended March 31, 2023. Gross loss attributable to unallocated shop expenses totaled $1.1 million for the six months ended March 31, 2024, a $118,000 decrease from $1.2 million for the six months ended March 31, 2023. The changes in unallocated shop expenses were due to changes in the amount of internal equipment charged to projects for the three and six months ended March 31, 2024, as compared to the same periods in the prior year.

Previous wording

Selling and administrative expenses. Total selling and administrative expenses increased by $1.9 million to $7.2 million for the three months ended December 31, 2023, as compared to $5.3 million for the same period in the prior year. The increase was primarily related to additional personnel hired to secure and manage work for expected growth.

Current wording

Selling and administrative expenses. Total selling and administrative expenses increased by $1.4 million to $7.3 million for the three months ended March 31, 2024, as compared to $5.9 million for the same period in the prior year. Total selling and administrative expenses increased by $3.3 million to $14.5 million for the six months ended March 31, 2024, as compared to $11.2 million for the same period in the prior year. The increase was primarily related to additional personnel hired to secure and manage work for expected growth.

Previous wording

Other nonoperating income (expense). Other nonoperating income totaled $75,000 for the three months ended December 31, 2023, as compared to a nonoperating expense of ($81,000) for the same period in the prior year. The change was primarily related to an immaterial legal settlement that recouped costs expended in a prior period.

Current wording

Other nonoperating income (expense). Other nonoperating expenses totaled $81,000 for the three months ended March 31, 2024, as compared to $11,000 for the same period in the prior year. The change was primarily related to an increase in charitable contributions. Other nonoperating expenses totaled $6,000 for the six months ended March 31, 2024, as compared to $91,000 for the same period in the prior year. The change was primarily related to an immaterial legal settlement that recouped costs expended in a prior period.

Previous wording

Interest expense. Interest expense totaled $602,000 for the three months ended December 31, 2023, an increase of $102,000 from $499,000 for the same period in the prior year. The increase in interest expense was primarily due to interest paid for equipment financing added in late fiscal year 2023 and an increase in interest rates.

Current wording

Interest expense. Interest expense totaled $623,000 for the three months ended March 31, 2024, an increase of $48,000 from $575,000 for the same period in the prior year. Interest expense totaled $1.2 million for the six months ended March 31, 2024, an increase of $150,000 from $1.1 million for the same period in the prior year. The increase in interest expense was primarily due to interest paid for equipment financing added in late fiscal year 2023 and an increase in interest rates.

Previous wording

Loss Gain on sale of equipment. Loss on sale of equipment totaled $13,000 for the three months ended December 31, 2023, a decrease of $18,000 from $31,000 for the same period in the prior year. The Company sold certain underutilized or non-working pieces of equipment during the three months ended December 31, 2023, with no comparable sale occurring during the three months ended December 31, 2022.

Current wording

Gain on sale of equipment. Gain on sale of equipment totaled $305,000 for the three months ended March 31, 2024, an increase of $257,000 from $48,000 for the same period in the prior year. Gain on sale of equipment totaled $292,000 for the six months ended March 31, 2024, an increase of $275,000 from $17,000 for the same period in the prior year. The Company sold certain underutilized or non-working pieces of equipment during the three and six months ended March 31, 2024, with no comparable sale occurring during the three and six months ended March 31, 2023.

Previous wording

Net income. Income before income taxes was $3.1 million for the three months ended December 31, 2023, as compared to $59,000 for the same period in the prior year. The increase was primarily related to the items mentioned above.

Current wording

Net income (loss). Loss before income taxes was $1.5 million for the three months ended March 31, 2024, as compared to $2.5 million for the same period in the prior year. Income before income taxes was $1.6 million for the six months ended March 31, 2024, as compared to a loss before income taxes of $2.5 million for the same period in the prior year. The increases were primarily related to the items mentioned above.

Previous wording

Income tax expense for the three months ended December 31, 2023, was $1.1 million compared to an income tax benefit of ($80,000) for the same period in the prior year. The increase in income tax expense was due to the increase in taxable income for the three months ended December 31, 2023, as compared to the prior period.

Current wording

Income tax benefit for the three months ended March 31, 2024, was $373,000 compared to $650,000 for the same period in the prior year. The decrease in income tax benefit was due to the increase in taxable income for the three months ended March 31, 2024, as compared to the prior period. Income tax expense for the six months ended March 31, 2024, was $685,000 compared to an income tax benefit of $730,000 for the same period in the prior year. The increase in income tax expense was due to the increase in taxable income for the six months ended March 31, 2024, as compared to the prior year period.

Previous wording

The Company had total assets of $136.4 million at December 31, 2023, a decrease of $6.1 million from the prior fiscal year end balance of $142.5 million.

Current wording

The Company had total assets of $136.1 million at March 31, 2024, a decrease of $6.4 million from the prior fiscal year end balance of $142.5 million.

Previous wording

Accounts receivable, net of allowance for doubtful accounts, totaled $43.2 million at December 31, 2023, a decrease of $8.0 million from the prior fiscal year end balance of $51.2 million. The decrease was primarily due to the timing of cash collections and project invoicing since September 30, 2023.

Current wording

Accounts receivable, net of allowance for doubtful accounts, totaled $46.4 million at March 31, 2024, a decrease of $4.8 million from the prior fiscal year end balance of $51.2 million. The decrease was primarily due to the timing of cash collections and project invoicing since September 30, 2023.

Previous wording

Cash and cash equivalents totaled $11.3 million at December 31, 2023, an increase of $5.2 million from the prior fiscal year end balance of $16.4 million. The decrease was primarily due to a net $2.9 million provided from operating activities, partially offset by a net $1.0 million investment in equipment, and $7.0 million in net short-term and long-term debt repayments.

Current wording

Cash and cash equivalents totaled $12.1 million at March 31, 2024, a decrease of $4.3 million from the prior fiscal year end balance of $16.4 million. The decrease was primarily due to a net $2.6 million investment in equipment, and a net $1.9 million used in financing activities, partially offset by a net $183,000 provided from operating activities.

Previous wording

Contract assets totaled $21.8 million at December 31, 2023, an increase of $5.8 million from the prior fiscal year end balance of $16.0 million. The increase was due to a difference in the timing of project billings at December 31, 2023, compared to September 30, 2023.

Current wording

Contract assets totaled $14.6 million at March 31, 2024, a decrease of $1.3 million from the prior fiscal year end balance of $16.0 million. The decrease was due to a difference in the timing of project billings at March 31, 2024, compared to September 30, 2023.

Previous wording

Right-of-use assets totaled $2.9 million at December 31, 2023, a decrease of $409,000 from the prior fiscal year end balance of $3.3 million. The decrease was primarily due to the amortization of operating leases during the three months ended December 31, 2023, partially offset by a net increase in leased vehicles.

Current wording

Right-of-use assets totaled $2.8 million at March 31, 2024, a decrease of $560,000 from the prior fiscal year end balance of $3.3 million. The decrease was primarily due to the amortization of operating leases during the six months ended March 31, 2024, partially offset by a net increase in leased vehicles.

Previous wording

Intangible assets, net totaled $3.3 million at December 31, 2023, a decrease of $108,000 from the prior fiscal year end balance of $3.4 million. The decrease was due to the amortization of intangible assets during the three months ended December 31, 2023.

Current wording

Intangible assets, net totaled $3.2 million at March 31, 2024, a decrease of $216,000 from the prior fiscal year end balance of $3.4 million. The decrease was due to the amortization of intangible assets during the six months ended March 31, 2024.

Previous wording

Retainage receivable totaled $9.7 million at December 31, 2023, an increase of $2.1 million from the prior fiscal year end balance of $7.6 million. The increase was primarily due to more current year projects that require retainages to be withheld.

Current wording

Retainage receivable totaled $10.1 million at March 31, 2024, an increase of $2.5 million from the prior fiscal year end balance of $7.6 million. The increase was primarily due to more current year projects that require retainages to be withheld.

Previous wording

Prepaid expenses and other totaled $2.7 million at December 31, 2023, a decrease of $833,000 from the prior fiscal year end balance of $3.5 million. The decrease was primarily due to expensing prepaid insurance during the three months ended December 31, 2023.

Current wording

Prepaid expenses and other totaled $5.1 million at March 31, 2024, an increase of $1.6 million from the prior fiscal year end balance of $3.5 million. The increase was primarily due to an increase in prepaid insurance that will be expense throughout fiscal year 2024.

Previous wording

The Company had net property, plant and equipment of $36.3 million at December 31, 2023, a decrease of $248,000 from the prior fiscal year end balance of $36.5 million. The decrease was due to $2.2 million in asset additions, partially offset by $2.1 million in depreciation and net equipment disposals of $379,000.

Current wording

The Company had net property, plant and equipment of $37.0 million at March 31, 2024, an increase of $448,000 from the prior fiscal year end balance of $36.5 million. The increase was due to $5.3 million in asset additions, partially offset by $4.2 million in depreciation and net equipment disposals of $652,000.

Previous wording

The Company had total liabilities of $100.7 million at December 31, 2023, a decrease of $7.2 million from the prior fiscal year end balance of $107.9 million.

Current wording

The Company had total liabilities of $101.6 million at March 31, 2024, a decrease of $6.4 million from the prior fiscal year end balance of $107.9 million.

Previous wording

Accounts payable totaled $22.3 million at December 31, 2023, an increase of approximately $0.2 million from the prior fiscal year end balance of $22.0 million. The increase was due to the timing of accounts payable payments as compared to September 30, 2023.

Current wording

Accounts payable totaled $18.7 million at March 31, 2024, a decrease of approximately $3.3 million from the prior fiscal year end balance of $22.0 million. The decrease was due to the timing of accounts payable payments as compared to September 30, 2023.

Previous wording

Accrued expenses and other current liabilities totaled $11.6 million at December 31, 2023, a decrease of $1.5 million from the prior fiscal year end balance of $13.1 million. The decrease was due to the timing of accrued expense payments, as compared to September 30, 2023.

Current wording

Accrued expenses and other current liabilities totaled $10.9 million at March 31, 2024, a decrease of $2.2 million from the prior fiscal year end balance of $13.1 million. The decrease was due to the timing of accrued expense payments, as compared to September 30, 2023.

Previous wording

Long-term debt totaled $23.8 million at December 31, 2023, a decrease of $1.2 million from the prior fiscal year end balance of $25.0 million. The decrease in long-term debt was primarily due to $2.1 million in payments on long-term debt, partially offset by $813,000 in new equipment financing.

Current wording

Long-term debt totaled $23.2 million at March 31, 2024, a decrease of $1.8 million from the prior fiscal year end balance of $25.0 million. The decrease in long-term debt was primarily due to $3.5 million in payments on long-term debt, partially offset by $1.8 million in new equipment financing.

Previous wording

Contract liabilities totaled $17.7 million at December 31, 2023, a decrease of $79,000 from the prior fiscal year end balance of $17.7 million. The decrease was due to a difference in the timing of project billings at December 31, 2023, as compared to September 30, 2023.

Current wording

Contract liabilities totaled $16.3 million at March 31, 2024, a decrease of $1.4 million from the prior fiscal year end balance of $17.7 million. The decrease was due to a difference in the timing of project billings at March 31, 2024, as compared to September 30, 2023.