ENERGY SERVICES OF AMERICA COMPLETES ACQUISITION

Rhea-AI Summary

Energy Services of America (Nasdaq: ESOA) has completed the acquisition of Tribute Contracting & Consultants, an underground utility contractor specializing in water and wastewater system installations across Ohio, Kentucky, and West Virginia. The transaction, valued at $24 million, consists of $22 million in cash (subject to debt and working capital adjustments) and $2 million in ESOA common stock. Tribute brings approximately 90 construction workers to Energy Services, strengthening the company's presence in water distribution and wastewater sectors.

Positive

• Strategic acquisition expanding water and wastewater service capabilities
• Addition of 90 skilled construction workers to workforce
• Geographic expansion in Ohio, Kentucky, and West Virginia markets
• Majority cash-based transaction ($22M) indicating strong liquidity position

Negative

• Potential shareholder dilution from $2M stock issuance component
• Assumption of Tribute's debt (unspecified amount)
• Integration costs and risks associated with merging operations

Insights

Financial Analyst

This $24 million acquisition marks a strategic expansion for Energy Services of America into the water utility sector. The deal structure, combining $22 million cash with $2 million in stock, maintains healthy liquidity while aligning management interests. With Tribute's 90 workers and established presence in three states, this acquisition represents roughly 10.4% of ESOA's market cap.

The water and wastewater infrastructure market presents significant growth opportunities, backed by aging infrastructure and increased federal funding. This acquisition diversifies ESOA's revenue streams beyond its traditional energy services and positions it to capture market share in the expanding water utility sector. The retention of key management suggests operational continuity and smooth integration potential.

Market Research Analyst

The strategic value of this acquisition lies in its regional market dynamics. The tri-state operational footprint in Ohio, Kentucky and West Virginia represents a compelling growth opportunity in underserved markets with aging water infrastructure. The water utility sector benefits from stable, regulated returns and essential service characteristics, providing recession-resistant revenue streams.

The addition of Tribute's specialized workforce addresses the industry-wide skilled labor shortage and provides immediate operational capability in the water infrastructure segment. This move aligns with broader industry consolidation trends where larger players are acquiring regional specialists to expand service offerings and geographical reach.

HUNTINGTON, W.Va., Dec. 2, 2024 /PRNewswire/ -- Energy Services of America Corporation (the "Company" or "Energy Services") (Nasdaq: ESOA) has completed the previously announced purchase of Tribute Contracting & Consultants, LLC ("Tribute"), an underground utility contractor that employs approximately 90 construction workers and primarily specializes in water and wastewater system installations in Ohio, Kentucky, and West Virginia. 

As previously noted, Energy Services purchased substantially all of the assets of Tribute for $22 million in cash, less any assumed debt and working capital adjustments, and $2.0 million of Energy Services' common stock.

Todd Harrah and Tommy Enyart will continue their employment with Energy Services' new subsidiary and commented on the announcement, "We are excited to join forces with Energy Services and look forward to contributing to the company's continued success."

Douglas Reynolds, President, commented on the announcement. "We are excited to add Tribute to the Energy Services team. This acquisition is consistent with our strategy of buying companies that are familiar to us and further enhances our presence in the water distribution and wastewater categories."

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 1,200+ 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. 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 Corporation

FAQ

What is the total value of Energy Services of America's acquisition of Tribute Contracting?

The total acquisition value is $24 million, comprising $22 million in cash (subject to debt and working capital adjustments) and $2 million in Energy Services of America common stock.

How many employees does Tribute Contracting bring to ESOA through the acquisition?

Tribute Contracting brings approximately 90 construction workers to Energy Services of America.

What are the primary service areas for Tribute Contracting under ESOA?

Tribute Contracting operates primarily in Ohio, Kentucky, and West Virginia, specializing in water and wastewater system installations.

What is the strategic rationale behind ESOA's acquisition of Tribute?

The acquisition enhances Energy Services of America's presence in the water distribution and wastewater categories, aligning with their strategy of acquiring familiar companies in their sector.