Movers and SHAKERS
Energy Services of America (ESOA)
Acquisition Adds Confidence to FY2021 Outlook
Energy Services of America Corporation is engaged in providing contracting services for energy-related companies. The company is primarily engaged in the construction, replacement, and repair of natural gas pipelines and storage facilities for utility companies and private natural gas companies. It services the gas, petroleum, power, chemical and automotive industries, and does incidental work such as water and sewer projects. Energy Service's other services include liquid pipeline construction, pump station construction, production facility construction, water and sewer pipeline installations, various maintenance and repair services and other services related to pipeline construction.
Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Attractive acquisition announced. WV Pipeline, Inc., located in Princeton, West Virginia, will be acquired for $6.5 million, including cash of $3.5 million and a note of $3.0 million. The expected closing is December 31st, and WV Pipeline will become a new sub, with management remaining in place (David Bolton as President and Daniel Bolton as VP). The company, which has a long operating history in WV, meets a strategy goal of extending and bolstering services to gas and water distribution utilities. While financials for WV Pipeline were not disclosed, we believe that the multiple was attractive, or not much higher than the current EV/EBITDA multiple in the ~3-4x range), and the impact on FY2021 margins should be positive.
Acquisition adds confidence to FY2021 EBITDA estimate of $10.8 million. EBITDA growth in the 30% range reflects the strong finish to FY2020 and sustained higher profitability due to the shift in the business model. Forecasted revenue of $122.5 million is a slight 3% improvement from FY2020 revenue of $119.2 million and EBITDA of $10.8 million is about $2.7 million higher than $8.1 million in ...
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.