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MarketScreener Homepage  >  Equities  >  OTC Bulletin Board - Other OTC  >  Energy Services of America Corp.    ESOA

ENERGY SERVICES OF AMERICA CORP.

(ESOA)
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Energy Services of America : Files Quarterly Report

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08/11/2017 | 03:01pm EDT

HUNTINGTON, W.Va., Aug. 11, 2017 /PRNewswire/ -- Energy Services of America (the "Company" or "Energy Services") (OTC QB: ESOA), parent company of C.J. Hughes Construction Company and Nitro Electric Company, announced the filing of the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2017. Energy Services earned revenues of $35.7 million and $98.6 million for the three and nine months ended June 30, 2017, respectively. Gross loss was $1.4 million for the three months ended June 30, 2017, while gross profit was $4.8 million for the nine months ended June 30, 2017. Net loss available to common shareholders was $1.9 million and $1.2 million for the three and nine months ended June 30, 2017, respectively. The Company had a negative adjusted EBITDA of $2.2 million (($0.15) per share) for the three months ended June 30, 2017 and an adjusted EBITDA of $1.3 million ($0.09 per share) for the nine months ended June 30, 2017. The backlog at June 30, 2017 was $68.2 million.

Below is a comparison of the Company's operating results for the three and nine months ended June 30, 2017 and 2016:

                                                                             Three Months Ended              Three Months Ended              Nine Months Ended                Nine Months Ended

                                                                                  June 30,                        June 30,                       June 30,                         June 30,

                                                                                                       2017                            2016                             2017                              2016
                                                                                                       ----                            ----                             ----                              ----



    Revenue                                                                                      $35,686,215                     $43,370,975                      $98,554,692                      $105,750,087


    Cost of revenues                                                                           37,124,756                      39,391,420                       93,796,294                        96,436,182
                                                                                               ----------                      ----------                       ----------                        ----------


                            Gross profit (loss)                                                 (1,438,541)                      3,979,555                        4,758,398                         9,313,905


    Selling and administrative expenses                                                         1,600,454                       1,588,076                        5,735,342                         5,646,252
                                                                                                ---------                       ---------                        ---------                         ---------

                            Income (loss) from operations                                       (3,038,995)                      2,391,479                        (976,944)                        3,667,653


    Other income (expense)

                            Other nonoperating income (expense)                                       5,112                        (48,358)                       (106,548)                         (72,420)

                            Interest expense                                                      (183,583)                      (204,491)                       (558,098)                        (636,412)

                            Gain on sale of equipment                                                26,431                          24,136                           95,262                           137,657
                            -----------------

                                                                                                  (152,040)                      (228,713)                       (569,384)                        (571,175)


                             Income (loss) from continuing operations before
                             income taxes                                                       (3,191,035)                      2,162,766                      (1,546,328)                        3,096,478


                            Income tax expense (benefit)                                        (1,323,887)                      1,085,541                        (605,298)                        1,530,632


                            Income (loss) from continuing operations                            (1,867,148)                      1,077,225                        (941,030)                        1,565,846


                            Dividends on preferred stock                                             77,250                          77,250                          231,750                           231,750


                            Income (loss) from continuing operations

                               available to common shareholders                                 (1,944,398)                        999,975                      (1,172,780)                        1,334,096


                            Income from discontinued operations

                                 net of tax expense                                                       -                              -                               -                                -



    Net income (loss) available to common shareholders                                       $(1,944,398)                       $999,975                     $(1,172,780)                       $1,334,096
                                                                                              ===========                        ========                      ===========                        ==========


                            Weighted average shares outstanding-basic                            14,239,836                      14,239,836                       14,239,836                        14,239,836


                            Weighted average shares-diluted                                      14,239,836                      17,673,169                       14,239,836                        17,673,169

                             Earnings (loss) per share from continuing
                             operations

                            available to common shareholders                                       $(0.137)                         $0.070                         $(0.082)                           $0.094
                                                                                                    =======                          ======                          =======                            ======


                             Earnings (loss) per share from continuing
                             operations-diluted

                            available to common shareholders                                       $(0.137)                         $0.057                         $(0.082)                           $0.075
                                                                                                    =======                          ======                          =======                            ======


                            Earnings (loss) per share

                            available to common shareholders                                       $(0.137)                         $0.070                         $(0.082)                           $0.094
                                                                                                    =======                          ======                          =======                            ======


                            Earnings (loss) per share-diluted

                            available to common shareholders                                       $(0.137)                         $0.057                         $(0.082)                           $0.075
                                                                                                    =======                          ======                          =======                            ======

The Company has two pipeline projects ("Project A" and "Project B"), both started in April 2017, that have recognized an estimated $5.8 million combined loss at June 30, 2017. The Company believes the total amount of expected loss has been recorded at June 30, 2017. Project A had an estimated contract value of $9.5 million to install 19,000 feet of 24" pipe, 3,400 feet of 16" pipe, and 600 feet of 8" pipe. At June 30, 2017, the Company had recognized a $3.3 million loss on this project. Project B had an estimated contract value of $4.5 million to install 14,600 feet of 16" steel pipe. At June 30, 2017, the Company had recognized a $2.5 million loss on this project. Losses on both projects are primarily due to daily production significantly below historical results. The inefficient production was due to a shortage of qualified labor during an extremely busy time in the pipeline industry and more inclement weather than was estimated for the projects. This led to greater labor expense and longer project schedules than was estimated on the projects. These projects will be substantially complete during the fourth quarter of fiscal year 2017 with final cleanup scheduled for February 2018.

A summary of the projects for the three months ended June 30, 2017 is below:

              Earned              Cost of            Gross

              Revenue            Revenues             Loss

    Project A         $1,986,986          $5,246,336       $(3,259,350)

    Project B          1,788,448           4,257,789        (2,469,341)

    Total             $3,775,434          $9,504,125       $(5,728,691)
                      ==========          ==========        ===========

Douglas Reynolds, President, commented on the announcement. "Obviously, this was a rough quarter for the Company. We have projects that are performing well, but these two pipeline projects had a huge negative effect on the quarter ended June 30, 2017 financial report. The Company is committed to completing these projects in the most efficient manner possible while maintaining our emphasis on working safely." Reynolds further explained, "There is a large amount of work going on in the natural gas industry. While that would seem to be a good thing for our Company, it created a situation where it has been difficult to attract and retain the skilled personnel necessary to meet our production expectations. These projects were bid consistent with other projects we completed in the same general areas in previous years, however; the current labor market conditions will require us to adjust our production expectations in bidding future projects."

Please refer to the table below that reconciles adjusted EBITDA and adjusted EBITDA per share:

                                         Three Months Ended              Three Months Ended             Nine Months Ended               Nine Months Ended

                                              June 30,                        June 30,                       June 30,                        June 30,

                                                                    2017                           2016                            2017                           2016
                                                                    ----                           ----                            ----                           ----


    Net income (loss) available to

      common shareholders                                   $(1,944,398)                      $999,975                    $(1,172,780)                    $1,334,096


    Add: Income tax expense (benefit)                        (1,323,887)                     1,085,541                       (605,298)                     1,530,632


    Add: Dividends on preferred stock                             77,250                         77,250                         231,750                        231,750


    Add:  Interest expense                                       183,583                        204,491                         558,098                        636,412


    Less: Non-operating expense (income)                        (31,543)                        24,222                          11,286                       (65,237)


    Add: Depreciation expense                                    880,467                        637,884                       2,286,618                      1,863,496


    Adjusted EBITDA                                         $(2,158,528)                    $3,029,363                      $1,309,674                     $5,531,149

    Common shares outstanding                                 14,239,836                     14,239,836                      14,239,836                     14,239,836

    Adjusted EBITDA per common share                             $(0.15)                         $0.21                           $0.09                          $0.39
                                                                  ======                          =====                           =====                          =====

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.

View original content:http://www.prnewswire.com/news-releases/energy-services-of-america-files-quarterly-report-300503321.html

SOURCE Energy Services of America

© PRNewswire 2017

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