Energy Services of America Reports Fiscal Second Quarter 2025 Results
MWN-AI** Summary
Energy Services of America Corporation (Nasdaq: ESOA) reported its fiscal second quarter results for the period ending March 31, 2025, showcasing both challenges and growth potential. The company achieved revenue of $76.7 million, which represents an 8% increase compared to the same quarter in the previous year. However, the gross profit significantly declined to $78,000 from $6.2 million, resulting in a net loss of $6.8 million or $0.41 per share, compared to a net loss of $1.1 million or $0.07 in Q2 of fiscal 2024.
The decline in profitability is attributed to adverse weather conditions that negatively impacted fixed cost coverage, particularly in the C.J. Hughes business segment. President Doug Reynolds noted that the second quarter is traditionally the weakest for revenue due to seasonal factors, but he remains optimistic about future growth. The backlog increased to $280.7 million, up from $222.8 million the previous year and indicating a recovery in demand, especially in water distribution.
Reynolds highlighted strong demand from private utility companies for water distribution projects that had been deferred, suggesting a favorable outlook for the second half of fiscal 2025 and beyond. The company is focused on securing projects with favorable margins and is assessing potential acquisitions to enhance its service capabilities.
Despite the challenges faced in the latest quarter, Energy Services is strategically positioned to leverage market demand for the remainder of the fiscal year, and management remains committed to generating long-term value for shareholders as they navigate these operational hurdles.
MWN-AI** Analysis
In analyzing Energy Services of America Corporation's (ESOA) fiscal second quarter 2025 results, several key indicators warrant investor attention. The company's reported revenue increased by 8% year-over-year to $76.7 million, primarily driven by its Gas & Water Distribution segment. However, the gross profit plummeted to $78,000, significantly down from $6.2 million in the previous year, yielding a gross margin of just 0.1%—a stark contrast to the previous quarter’s 8.8%. This decline is largely attributed to adverse weather conditions, which restricted operations and impacted fixed cost coverage.
Further complicating matters, ESOA recorded a net loss of $6.8 million, or $0.41 per share, a marked increase from a net loss of $1.1 million or $0.07 per share in the same quarter last year. Despite these challenges, the company reported a backlog of $280.7 million, up from $222.8 million a year earlier. This increased backlog suggests pent-up demand, especially in water distribution services, potentially positioned for recovery in the upcoming quarters as favorable weather conditions could support a rebound in revenue and gross margins.
Looking forward, ESOA’s management expressed optimism regarding the second half of fiscal 2025 into fiscal 2026, fueled by ongoing demand from private utility companies. Investors should focus on the implications of this backlog and the management's commitment to selectively pursue projects with favorable margins and potential acquisitions.
Given the recent downturn in profitability and the company's historical cyclicality, investors should adopt a cautious stance, monitoring the company's performance in the historically stronger spring and summer months while assessing how effectively it can convert its robust backlog into revenue and regain profitability.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
PR Newswire
HUNTINGTON, W.Va. , May 12, 2025 /PRNewswire/ -- Energy Services of America Corporation (the "Company" or "Energy Services") (Nasdaq: ESOA), today announced its results for its fiscal second quarter ended March 31, 2025 .
Second Quarter Summary (1)
- Revenue of $76.7 million , an 8% increase
- Gross profit of $78,000 , compared to $6.2 million
- Net loss of $6.8 million , or ($0.41) per share
- Backlog of $280.7 million compared to $222.8 million as of March 31, 2025 and 2024, respectively.
(1) All comparisons are versus the comparable prior year period, unless otherwise stated.
"Our second quarter is typically our lowest revenue period due to weather. This quarter was impacted more than usual by unfavorable conditions, reducing our fixed cost coverage particularly within our C.J. Hughes business," said Doug Reynolds , President of Energy Services. "We are encouraged by the $37 million sequential increase in our backlog from September 30, 2024 to March 31, 2025 , and expect our revenue and profitability to improve as we enter the historically stronger spring and summer months."
"We believe the prospects for our business remain very favorable for the second half of fiscal 2025 and into fiscal 2026. We continue to experience strong demand for water distribution, particularly from private utility companies as they catch up on pipe replacement projects that have been deferred for many years and from the acquisition of Tribute last December. We remain focused on selecting projects that have a more favorable margin profile and attracting and managing the necessary crews for this work and continue to evaluate potential acquisition opportunities that complement our existing portfolio or offer additional capabilities. Overall, we believe we are well-positioned to deliver growth thanks to the current tailwinds within our industries, and generate value for our shareholders," Mr. Reynolds concluded.
Second Quarter Fiscal 2025 Financial Results
Total revenues for the period equaled $76.7 million , compared to $71.1 million in the second quarter of fiscal 2024. The year-over-year increase was primarily driven by increased work within the Gas & Water Distribution business line, which more than offset the decline in Gas & Petroleum Transmission.
Gross profit was $78.000 , compared to $6.2 million in the prior-year quarter. Gross margin was 0.1% of revenues, compared to 8.8% of revenues in the second quarter of fiscal 2024. The decrease is related to worse than normal weather conditions resulting in less fixed cost coverage.
Selling and administrative expenses were $8.2 million , compared to $7.3 million in the prior-year quarter. The increase is primarily related to additional personnel hired to secure and manage work for expected growth and the acquisition of Tribute in December 2024 .
Net loss was $6.8 million , or ($0.41) per share, compared to net loss of $1.1 million or ($0.07) per share in the second quarter of fiscal 2024.
Backlog as of March 31, 2025 was $280.7 million , compared to $243.2 million as of September 30, 2024 and $222.8 million as of March 31, 2024 .
Below is a comparison of the Company's operating results for the three and six months ended March 31, 2025 and 2024 (unaudited):
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | ||||||
March 31, | March 31, | March 31, | March 31, | ||||||
2025 | 2024 | 2025 | 2024 | ||||||
Revenue | 76,679,151 | 71,127,655 | 177,325,265 | 161,290,842 | |||||
Cost of revenues | 76,601,291 | 64,888,101 | 166,983,823 | 144,212,327 | |||||
Gross profit | 77,860 | 6,239,554 | 10,341,442 | 17,078,515 | |||||
Selling and administrative expenses | 8,170,087 | 7,321,951 | 16,787,708 | 14,520,671 | |||||
(Loss) income from operations | (8,092,227) | (1,082,397) | (6,446,266) | 2,557,844 | |||||
Other income (expense) | |||||||||
Other nonoperating expense | (20,616) | (81,790) | (68,878) | (6,789) | |||||
Interest expense | (875,770) | (622,616) | (1,359,488) | (1,224,300) | |||||
(Loss) gain on sale of equipment | (16,540) | 304,923 | 179,242 | 291,595 | |||||
(912,926) | (399,483) | (1,249,124) | (939,494) | ||||||
(Loss) income before income taxes | (9,005,153) | (1,481,880) | (7,695,390) | 1,618,350 | |||||
Income tax (benefit) expense | (2,206,735) | (373,052) | (1,750,705) | 684,983 | |||||
Net (loss) income | (6,798,418) | (1,108,828) | (5,944,685) | 933,367 | |||||
Weighted average shares outstanding-basic | 16,716,809 | 16,569,871 | 16,630,245 | 16,567,853 | |||||
Weighted average shares-diluted | 16,716,809 | 16,569,871 | 16,630,245 | 16,606,075 | |||||
(Loss) earnings per share-basic | (0.41) | (0.07) | (0.36) | 0.06 | |||||
(Loss) earnings per share-diluted | (0.41) | (0.07) | (0.36) | 0.06 |
Please refer to the table below that reconciles adjusted EBITDA with net income (unaudited):
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||
March 31, | March 31, | March 31, | March 31, | |||||
2025 | 2024 | 2025 | 2024 | |||||
Net (loss) income | (6,798,418) | (1,108,828) | (5,944,685) | 933,367 | ||||
(Less) add: Income tax (benefit) expense | (2,206,735) | (373,052) | (1,750,705) | 684,983 | ||||
Add: Interest expense, net of interest income | 875,770 | 622,616 | 1,359,488 | 1,224,300 | ||||
Add: Non-operating expense | 20,616 | 81,790 | 68,878 | 6,789 | ||||
Add (less): (Loss) gain on sale of equipment | 16,540 | (304,923) | (179,242) | (291,595) | ||||
Add: Depreciation and intangible asset amortization expense | 3,182,462 | 2,005,327 | 5,881,290 | 4,181,948 | ||||
Adjusted EBITDA | (4,909,765) | 922,930 | (564,976) | 6,739,792 | ||||
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures. The reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures and other information relating to these measures are included herein. We include these measurements to enhance the understanding of our operating performance. We believe that Adjusted EBITDA as presented herein, considered along with net income (loss), is a relevant indicator of trends relating to the cash generating activity of our operations. We believe that excluding the costs herein provides a consistent comparison of the cash generating activity of our operations. We believe that Adjusted EBITDA is useful to investors as they facilitate a comparison of our operating performance to other companies who also use Adjusted EBITDA as supplemental operating measures. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
About Energy Services
Energy Services of America Corporation (NASDAQ: ESOA), headquartered in Huntington, WV , is a contractor and service company that operates primarily in the mid-Atlantic and Central regions of the United States and provides services to customers in the natural gas, petroleum, water distribution, automotive, chemical, and power industries. Energy Services employs 1,000+ employees on a regular basis. The Company's core values are safety, quality, and production.
Certain statements contained in the release including, without limitation, 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, the integration of acquired business and other factors referenced in this release, risks and uncertainties related to the restatement of certain of our historical consolidated financial statements. 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.
SOURCE Energy Services of America Corporation
FAQ**
What specific factors contributed to the significant increase in backlog for Energy Services of America Corporation (ESOA) from $222.8 million in Q2 FY 2024 to $280.7 million in Q2 FY 2025?
How does Energy Services of America Corporation (ESOA) plan to address the decline in gross profit margin from 8.8% to 0.1% in fiscal Q2 2025, particularly in light of adverse weather conditions?
Can Energy Services of America Corporation (ESOA) elaborate on the expected impact of strong demand for water distribution projects from private utility companies on their financial outlook for the second half of fiscal 2025?
What strategies is Energy Services of America Corporation (ESOA) implementing to manage the challenges related to increased selling and administrative expenses, which rose to $8.2 million in fiscal Q2 2025 compared to $7.3 million in the prior year?
**MWN-AI FAQ is based on asking OpenAI questions about Energy Services of America Corporation (NASDAQ: ESOA).
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