Energy Services of America (ESOA) 2024 Southwest IDEAS Conference summary

Industry trends and market drivers

• Increased focus on water infrastructure since the 2014 Flint crisis and subsequent government investment, including COVID relief and the Infrastructure Act, has driven growth in water and wastewater projects.

• Utilities and municipalities are prioritizing environmental goals, local labor, and safety, creating demand for specialized contractors.

• Outsourcing of maintenance and construction services by large utilities and industrial clients is a growing trend, providing steady opportunities.

• The company is shifting its business mix, with water and wastewater expected to surpass gas as the largest segment.

• Expansion into electrical, mechanical, and broadband services aligns with broader infrastructure and industrial trends.

Financial performance and growth

• Fiscal 2023 revenue reached $301 million with $20.8 million in adjusted EBITDA; trailing 12-month revenue is $340–$350 million and adjusted EBITDA is $28.8 million.

• Backlog has grown from $142 million in 2022 to $251 million as of June 2024, reflecting strong demand and successful project wins.

• Growth in revenue and EBITDA is attributed to acquisitions, organic expansion, and diversification of services.

• Employee count stands at approximately 1,200, supporting operations across multiple states and industries.

• Dividend was recently doubled to $0.12 per share and will now be paid quarterly; share repurchase program remains active.

Strategic acquisitions and integration

• Recent acquisitions include West Virginia Pipeline, Tri-State Paving, SQP Construction, Ryan Construction, and the pending $24 million Tribute deal, the largest to date.

• Acquisitions have expanded capabilities in water, wastewater, paving, broadband, and public works, with Tribute adding significant wastewater expertise.

• Integration focuses on accounting, safety standards, and SOX compliance, while allowing subsidiaries operational autonomy to preserve customer relationships.

• Acquired companies are brought onto a common IT and ERP stack, with safety integration being a top priority.

• Growth in backlog, revenue, and margins is closely tied to successful integration and performance of acquired entities.