Movers and SHAKERS
Energy Services of America (ESOA)
Another Tough Quarter But Higher Backlog and PPP Loan are Positives
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.
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Another soft quarter and challenging start to fiscal year 2020 continues. 2Q2020 (March) EBITDA of negative $1.2 million was below our estimate of $1.2 million. Revenue was lower than expected, as were margins, both gross and EBITDA. Total revenue was $25.8 million, down from $38.3 million in 1Q2020. We expected some seasonality over the first two fiscal quarters, but we clearly miscalculated the impact of the measures taken to curb the spread of COVID-19 and the slow down in the energy market triggered by sharply lower crude oil prices.
Lowering FY2020 EBITDA to $3.5 million from $7.1 million to reflect lower 2Q2020 operating results and more moderate revenue and gross margin assumptions due to project cancellations/delays. No details were offered, but management stated that certain projects were cancelled and and others were delayed. At the same time, projects with revenue potential of more than $25 million are expected to start this quarter. Forecasted revenue moves down to $94.4 million from $110.1 million, with EBITDA margin of...
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*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.