8-K: Energy Services of America Completes $24 Million Acquisition of Tribute Contracting & Consultants

Energy Services of America has finalized the acquisition of Tribute Contracting & Consultants for $22 million in cash and $2 million in stock, expanding its underground utility contracting business.

Summary

• Energy Services of America Corporation has completed the acquisition of Tribute Contracting & Consultants, an underground utility contractor, on December 2, 2024.
• The acquisition was made through a newly formed subsidiary, Tribute Acquisition Company, Inc.
• The purchase price was $22.0 million in cash, subject to working capital adjustments, and $2.0 million in Energy Services common stock.
• The cash portion of the acquisition was funded by a $16.0 million loan from United Bank, West Virginia, with the remainder paid by the company.
• Tribute employs approximately 90 construction workers and specializes in water and wastewater system installations in Ohio, Kentucky, and West Virginia.
• As part of the deal, the sellers, Todd Harrah and Tommy Enyart, each received $1.0 million in Energy Services common stock, totaling 134,772 shares based on the agreement's market value calculation.
• Todd Harrah and Tommy Enyart will continue their employment with the company's new subsidiary.

Sentiment

Score: 7

Explanation: The acquisition is a positive development for the company, expanding its market presence and capabilities. However, the debt taken on to finance the deal introduces some risk.

Positives

• The acquisition expands Energy Services of America's presence in the underground utility contracting market.
• Tribute brings a team of 90 experienced construction workers.
• The acquisition provides access to new markets in Ohio, Kentucky, and West Virginia.
• The sellers, Todd Harrah and Tommy Enyart, will continue their employment with the company, ensuring continuity.

Risks

• The company has taken on a $16 million loan to fund part of the acquisition, which increases its debt burden.
• The integration of Tribute's operations and employees into Energy Services may present challenges.

Future Outlook

The company will integrate Tribute's operations and employees into its new subsidiary.

Industry Context

The acquisition reflects a trend of consolidation in the utility contracting sector, as companies seek to expand their geographic reach and service offerings.

Comparison to Industry Standards

• The acquisition of a company with 90 employees for $24 million is within the typical range for similar deals in the utility contracting industry.
• Comparable acquisitions in the sector often involve a mix of cash and stock, similar to this transaction.
• The geographic focus on Ohio, Kentucky, and West Virginia is common for regional utility contractors.

Stakeholder Impact

• Shareholders may view the acquisition positively due to the potential for increased revenue and market share.
• Employees of Tribute will become part of Energy Services of America.
• Customers of Tribute will now be served by Energy Services of America.

Next Steps

• The company will integrate Tribute's operations and employees into its new subsidiary.
• The company will manage the working capital adjustment related to the acquisition.

Key Dates

Keywords

acquisition, underground utility, contracting, water, wastewater, construction, energy services, tribute