Energy Services of America Announces Financial Results for the Three and Nine Months Ended June 30, 2021

Rhea-AI Summary

Energy Services of America Corporation (OTC QB: ESOA) reported strong financial results for the three and nine months ended June 30, 2021. Revenues reached $25.3 million and $82.9 million, with net income available to common shareholders at $9.2 million for three months, up from $9.2 million loss in the same period last year. Gross profit margin improved to 10.7% and 9.0% versus 9.2% and 7.0% in 2020. However, a decrease in demand for gas and petroleum transmission services raised concerns. The backlog increased to $73.1 million.

Positive

• Revenues increased from $74.7 million to $82.9 million year-over-year.
• Net income rose to $9.2 million for the three months ended June 30, 2021.
• Gross profit margin improved to 10.7% for the three months compared to 9.2% in 2020.
• Backlog increased to $73.1 million, indicating potential future growth.

Negative

• Net loss from operations of $502,253 in the three months ended June 30, 2021.
• Decrease in demand for gas and petroleum transmission services due to fewer projects.

HUNTINGTON, W.Va., Aug. 16, 2021 /PRNewswire/ -- Energy Services of America Corporation (the "Company" or "Energy Services") (OTC QB: ESOA) announced financial results for the three and nine months ended June 30, 2021.  Energy Services generated revenues of $25.3 million and $82.9 million for the three and nine months ended June 30, 2021, respectively. Net income available to common shareholders was $9.2 million and $7.1 million with an adjusted EBITDA of $731,626 and $264,309 for the three and nine months ended June 30, 2021, respectively.  Forgiveness on PPP loans accounted for $9.8 million in nonoperating income for the three and nine months ended June 30, 2021.  Gross profit percentage increased from 9.2% to 10.7% and from 7.0% to 9.0% for the three and nine months ended June 30, 2021, as compared to 2020, respectively.   

Douglas Reynolds, President, commented on the announcement.  "Our increased focus on both organic and inorganic growth in gas and water distribution services led to year-over-year improvement in revenue and gross profit in these areas when compared to the same periods in 2020.  However, offsetting these gains, we saw a decrease in the demand for our gas and petroleum transmission services due to fewer transmission projects available to bid along with greater competition."  Reynolds continued, "We expect our efforts to increase distribution revenues and profit along with modest improvement in transmission awards and expanded electrical, mechanical, and general construction services to result in improved results in our fiscal fourth quarter. Our backlog at June 30, 2021, was $73.1 million as compared to $61.2 million at March 31, 2021, with an additional $13.0 million in general construction contracts awarded subsequent to June 30, 2021."

Below is a comparison of the Company's unaudited operating results for the three and nine months ended June 30, 2021, and 2020: 

			Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
			June 30,		June 30,		June 30,		June 30,
			2021		2020		2021		2020
Revenue			$                25,285,951		$           30,762,725		$       82,901,159		$       74,678,432
Cost of revenues			22,580,340		27,936,548		75,478,966		69,425,044
	Gross profit		2,705,611		2,826,177		7,422,193		5,253,388
Selling and administrative expenses			3,207,864		2,532,141		10,627,607		7,473,422
	(Loss) income from operations		(502,253)		294,036		(3,205,414)		(2,220,034)
Other nonoperating income (expense)
	Interest income		108		83		151,877		53,332
	PPP loan forgiveness		9,799,100		-		9,799,100		-
	Other nonoperating expense		(35,833)		(53,793)		(121,343)		(130,472)
	Interest expense		(136,995)		(101,335)		(356,505)		(400,197)
	Gain on sale of equipment		135,269		43,296		627,580		563,062
			9,761,649		(111,749)		10,100,709		85,725
	Income (loss) before income taxes		9,259,396		182,287		6,895,295		(2,134,309)
	Income tax (benefit) expense		(53,844)		200,242		(458,812)		(347,629)
	Net income (loss)		9,313,240		(17,955)		7,354,107		(1,786,680)
	Dividends on preferred stock		77,250		77,250		231,750		231,750
Income (loss) available to common shareholders			$                  9,235,990		$                 (95,205)		$         7,122,357		$       (2,018,430)
	Weighted average shares outstanding-basic		13,621,406		13,627,293		13,621,406		13,844,340
	Weighted average shares-diluted		17,089,722		13,627,293		17,089,722		13,844,340
	Earnings (loss) per share
		available to common shareholders	$                         0.678		$                   (0.007)		$                0.523		$              (0.146)
	Earnings (loss) per share-diluted
		available to common shareholders	$                         0.540		$                   (0.007)		$                0.417		$              (0.146)

Please refer to the table below that reconciles adjusted EBITDA with net income (loss) available to common shareholders:

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	Unaudited		Unaudited		Unaudited		Unaudited
Net income (loss) available to
common shareholders	$          9,235,990		$             (95,205)		$          7,122,357		$        (2,018,430)
Less: Income tax (benefit) expense	(53,844)		200,242		(458,812)		(347,629)
Add: Dividends on preferred stock	77,250		77,250		231,750		231,750
Add:  Interest expense	136,995		101,335		356,505		400,197
Less: Non-operating (income) expense	(9,898,644)		10,414		(10,457,214)		(485,922)
Add: Depreciation expense	1,233,879		1,097,750		3,469,723		3,315,541
Adjusted EBITDA	$             731,626		$          1,391,786		$             264,309		$          1,095,507

Certain statements contained in the release, including without limitation statements including the words "believes," "anticipates," "intends," "expects" or words of similar import, constitute "forward-looking statements" within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements of the Company expressed or implied by such forward-looking statements. Such factors include, among others, general economic and business conditions, changes in business strategy or development plans and other factors referenced in this release. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

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SOURCE Energy Services of America

FAQ

What were the financial results of ESOA for the three months ended June 30, 2021?

Energy Services of America Corporation reported revenues of $25.3 million and net income available to common shareholders of $9.2 million for the three months ended June 30, 2021.

How did ESOA's gross profit margin change compared to 2020?

The gross profit margin increased to 10.7% for the three months ended June 30, 2021, up from 9.2% in the same period in 2020.

What is the current backlog for ESOA as of June 30, 2021?

The backlog for Energy Services of America Corporation was $73.1 million as of June 30, 2021.

How much did ESOA receive from PPP loan forgiveness?

Energy Services of America Corporation recorded $9.8 million in nonoperating income from PPP loan forgiveness during the three and nine months ended June 30, 2021.