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What changed in Energy Services of America CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Energy Services of America CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+179 added−193 removedSource: 10-K (2024-12-19) vs 10-K (2024-01-16)

Top changes in Energy Services of America CORP's 2024 10-K

179 paragraphs added · 193 removed · 148 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest change(“Ryan Construction” or “RCS”), a wholly owned subsidiary of Energy Services, formed in August 2022 in connection with the acquisition of substantially all the assets of Ryan Environmental, LLC and Ryan Environmental Transport, LLC (collectively “Ryan Environmental”), provides directional drilling services for broadband service providers along with offering natural gas distribution services, cathodic protection and corrosion prevention services, and civil construction services.
Biggest change(“Ryan Construction” or “RCS”), a wholly owned subsidiary of Energy Services, provides directional drilling services for broadband service providers along with offering natural gas distribution services, cathodic protection and corrosion prevention services, and civil construction services. Ryan Construction operates primarily in West Virginia and Pennsylvania. The employees of RCS are non-union and are managed independently of the Company’s union subsidiaries.
The SBA could revisit its forgiveness decision and determine that the Company does not qualify in whole or in part for loan forgiveness and demand repayment of the loans. In addition, it is unknown what type of penalties could be assessed against the Company if the SBA disagrees with the Company’s certification.
The SBA could revisit its forgiveness decision and determine that the Company does not qualify in whole or in part for loan forgiveness and demand repayment of the loans. In addition, it is unknown 5 Table of Contents what type of penalties could be assessed against the Company if the SBA disagrees with the Company’s certification.
Any penalties in addition to the potential repayment of the PPP Loans could negatively impact the Company’s business, financial condition and results of operations and prospects. 5 Table of Contents Backlog/New Business The Company’s backlog represents contracts for services that have been entered into, but which have not yet been completed.
Any penalties in addition to the potential repayment of the PPP Loans could negatively impact the Company’s business, financial condition and results of operations and prospects. Backlog/New Business The Company’s backlog represents contracts for services that have been entered into, but which have not yet been completed.
Employees and Human Capital Resources Energy Services of America believes the Company’s greatest asset is its employees. The Company’s emphasis on the health and safety of its employees is an important factor in maintaining its experienced workforce and attracting new talent. As of September 30, 2023, the Company had 1,282 employees including 339 full-time non-union employees.
Employees and Human Capital Resources Energy Services of America believes the Company’s greatest asset is its employees. The Company’s emphasis on the health and safety of its employees is an important factor in maintaining its experienced workforce and attracting new talent. As of September 30, 2024, the Company had 1,396 employees including 490 full-time non-union employees.
At September 30, 2023, Energy Services had a backlog of $229.8 million of work to be completed on existing contracts. At September 30, 2022, the Company had a backlog of $142.3 million.
At September 30, 2024, Energy Services had a backlog of $243.2 million of work to be completed on existing contracts. At September 30, 2023, the Company had a backlog of $229.8 million.
The Company had consolidated operating revenues of $197.6 million for the fiscal year ended September 30, 2022, of which 43.5% was attributable to electrical, mechanical, and general contract services, 29.5% to gas and petroleum transmission projects, and 27.0% to gas & water distributions services.
The Company had consolidated operating revenues of $351.9 million for the fiscal year ended September 30, 2024, of which 53.2% was attributable to electrical, mechanical, and general contract services, 23.5% to gas and petroleum transmission projects, and 23.3% to gas & water distributions services.
(“TSP” or “Tri-State Paving”), a wholly owned subsidiary of Energy Services, completed the acquisition of substantially all the assets of Tri-State Paving & Sealcoating, LLC (“Tri-State Paving, LLC”) on April 29, 2022. Tri-State Paving provides utility paving services to water distribution customers in the Charleston, West Virginia, Lexington, Kentucky, and Chattanooga, Tennessee markets.
(“TSP” or “Tri-State Paving”), a wholly owned subsidiary of Energy Services, provides utility paving services to water distribution customers in the Charleston, West Virginia, Lexington, Kentucky, and Chattanooga, Tennessee markets. The employees of TSP are non-union and are managed independently of the Company’s union subsidiaries. Ryan Construction Services Inc.
Removed
The employees of TSP are non-union and are managed independently of the Company’s union subsidiaries. Ryan Construction Services Inc.
Added
The Company’s website address is www.energyservicesofamerica.com . Information on our website is not part of this Annual Report on Form 10-K unless otherwise stated. 4 Table of Contents The Securities and Exchange Commission (the “SEC”) maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding the Company.
Removed
Ryan Construction operates primarily in West Virginia and Pennsylvania. The employees of RCS are non-union and are managed independently of the Company’s union subsidiaries.
Added
The Company makes available free of charge through its website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
Removed
The Company’s website address is www.energyservicesofamerica.com. 4 Table of Contents COVID-19 Response For the fiscal year ended September 30, 2023, the Company did not have significant issues with COVID-19 exposure among its employees and did not experience any significant COVID-19 related impacts on construction projects.
Added
These items are available as soon as reasonably practicable after we electronically file or furnish such material with the SEC. These materials are also available free of charge by written request to: Charles Crimmel, Chief Financial Officer and Corporate Secretary, Energy Services of America Corporation, 75 West 3 rd Ave., Huntington, West Virginia 25701.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur directors beneficially own a significant portion of our common stock and have substantial influence over us. Our directors, as a group, beneficially owned approximately 33.1% of our outstanding shares of common stock as of September 30, 2023.
Biggest changeAccordingly, stockholders may not be able to sell their shares of our common stock at the volumes, prices, or times that they desire. 14 Table of Contents Our directors beneficially own a significant portion of our common stock and have substantial influence over us.
Acquisitions involve many risks, including the following: ● an acquisition may negatively affect the Company’s results of operations, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; 9 Table of Contents ● the Company may encounter difficulties or unforeseen expenditures in integrating the operations of any company that it acquires, particularly if key personnel of the acquired company decide not to work for us; ● an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; ● an acquisition may involve the entry into geographic or business markets in which the Company has little or no prior experience or where competitors have stronger market positions; ● if the Company incurs debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; and ● to the extent that the Company issues a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.
Acquisitions involve many risks, including the following: ● an acquisition may negatively affect the Company’s results of operations, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; ● the Company may encounter difficulties or unforeseen expenditures in integrating the operations of any company that it acquires, particularly if key personnel of the acquired company decide not to work for us; ● an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; ● an acquisition may involve the entry into geographic or business markets in which the Company has little or no prior experience or where competitors have stronger market positions; ● if the Company incurs debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; and ● to the extent that the Company issues a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.
While the Company believes estimates on project performance are materially correct at September 30, 2023, there can be no assurance that actual results will not differ from those estimates. 13 Table of Contents Risk Related to Law and Regulatory Compliance During the ordinary course of business, we may become subject to lawsuits or indemnity claims, which could materially and adversely affect our business and results of operations.
While the Company believes estimates on project performance are materially correct at September 30, 2024, there can be no assurance that actual results will not differ from those estimates. 13 Table of Contents Risk Related to Law and Regulatory Compliance During the ordinary course of business, we may become subject to lawsuits or indemnity claims, which could materially and adversely affect our business and results of operations.
Any limitation on the availability of materials or equipment or failure to complete work on a timely basis by subcontractors in a quality fashion could lead to added costs and therefore lower profitability for the Company. We face cybersecurity risk including breach of confidential personal information, Company or customer intellectual properties, and delays related to data loss.
Any limitation on the availability of materials or equipment or failure to complete work on a timely basis by subcontractors in a quality fashion could lead to added costs and therefore lower profitability for the Company. 10 Table of Contents We face cybersecurity risk including breach of confidential personal information, Company or customer intellectual properties, and delays related to data loss.
On fixed price contracts our profits could be curtailed or eliminated by unanticipated pricing increases associated with the contract. A portion of our business depends on our ability to provide surety bonds. We may be unable to compete on certain projects if we are not able to obtain the necessary surety bonds.
On fixed price contracts our profits could be curtailed or eliminated by unanticipated pricing increases associated with the contract. 9 Table of Contents A portion of our business depends on our ability to provide surety bonds. We may be unable to compete on certain projects if we are not able to obtain the necessary surety bonds.
The line of credit has a variable interest rate equal to the “Wall Street Journal” Prime Rate with a floor of 4.5%, which was 8.5% at September 30, 2023. The Company believes this line of credit will provide enough operating capital for future projects.
The line of credit has a variable interest rate equal to the “Wall Street Journal” Prime Rate with a floor of 4.5%, which was 8.0% at September 30, 2024. The Company believes this line of credit will provide enough operating capital for future projects.
Inflation risk is the risk that the value of assets or income will be worth less in the future as inflation decreases the value of money. Recently, there have been market indicators of a pronounced rise in inflation and the Federal Reserve has raised certain benchmark interest rates to combat inflation.
Inflation risk is the risk that the value of assets or income will be worth less in the future as inflation decreases the value of money. Over the last several years, there have been market indicators of a pronounced rise in inflation and the Federal Reserve has raised certain benchmark interest rates to combat inflation.
This influence may also have the effect of delaying or preventing changes of control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our Company.
The interests of our directors may not be consistent with your interests as a stockholder. This influence may also have the effect of delaying or preventing changes of control or changes in management or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our Company.
These could include disruptions or restrictions on our ability to travel or to complete our projects, as well as temporary closures of our facilities or the facilities of our suppliers or customers. Any disruption of our suppliers or customers would likely impact our operating results.
These could include disruptions or restrictions on our ability to travel or to complete our projects, as well as temporary closures of our facilities or the facilities of our suppliers or customers.
Energy Services maintains a banking relationship with two regional banks and has lines of credit and borrowing facilities with these institutions. On January 19, 2023, the Company agreed to an amendment to a loan agreement which increased its line of credit to $30.0 million with a maturity date of June 28, 2023.
Energy Services maintains a banking relationship with two regional banks and has lines of credit and borrowing facilities with these institutions. On August 8, 2024, the Company renewed its $30.0 million line of credit with a maturity date of June 28, 2026.
Although we paid an annual cash dividend in calendar 2023, we have no obligation to continue paying dividends.
Although we paid an annual cash dividend in calendar 2024 and have initiated a regular quarterly cash dividend in fiscal 2025, we have no obligation to continue paying dividends.
On June 1, 2023, the agreement was renewed through June 28, 2024. The line of credit is limited to a borrowing base calculation, which was approximately $23.9 million at September 30, 2023. The outstanding balance on the line of credit was $8.7 million at September 30, 2023.
The line of credit is limited to a borrowing base calculation, which was approximately $25.1 million at September 30, 2024. The outstanding balance on the line of credit was $4.5 million at September 30, 2024.
Our backlog may not be realized. Our backlog could be reduced due to the cancellation of projects by customers and/or reductions in scope of the projects.
Our backlog may not be realized. Our backlog could be reduced due to the cancellation of projects by customers and/or reductions in scope of the projects. Should this occur, our anticipated revenues would be reduced unless we are able to replace those contracts.
Should this occur, our anticipated revenues would be reduced unless we are able to replace those contracts. 10 Table of Contents We extend credit to customers for purchases of our services and therefore have risk that they may not be able to repay us.
We extend credit to customers for purchases of our services and therefore have risk that they may not be able to repay us.
Management also cannot predict the extent to which an active public market for our common stock will develop or be sustained in the future. Accordingly, stockholders may not be able to sell their shares of our common stock at the volumes, prices, or times that they desire.
Management also cannot predict the extent to which an active public market for our common stock will develop or be sustained in the future.
Future acquisitions could disrupt the Company’s business and adversely affect our results of operations, financial condition and cash flows. In fiscal 2022, the Company completed the acquisitions of Tri-State Paving and Ryan Construction. The Company may choose to expand by making additional acquisitions that could be material to its business, results of operations, financial condition and cash flows.
The Company may continue to expand by making additional acquisitions that could be material to its business, results of operations, financial condition and cash flows.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. ​ ITEM 1B.
As a result of this level of ownership, our directors have the ability, by taking coordinated action, to exercise significant influence over our affairs and policies. The interests of our directors may not be consistent with your interests as a stockholder.
Our directors, as a group, beneficially owned approximately 32.4% of our outstanding shares of common stock as of September 30, 2024. As a result of this level of ownership, our directors have the ability, by taking coordinated action, to exercise significant influence over our affairs and policies.
In addition, the continued outbreak of COVID-19 could continue to adversely affect the economies of the states that we operate in resulting in a long-term economic downturn that could impact our operating results. ​ 14 Table of Contents Risks Relating to Ownership of Our Common Stock Our common stock is not heavily traded, and the stock price may fluctuate significantly.
Any disruption of our suppliers or customers would likely impact our operating results. ​ Risks Relating to Ownership of Our Common Stock Our common stock is not heavily traded, and the stock price may fluctuate significantly.
Removed
The restatement of certain of our historical consolidated financial statements may have an adverse effect on us . As disclosed in Amendment No. 1 to the Annual Report on Form 10-K/A for the fiscal year ended September 30, 2022 filed with the SEC on May 31, 2023, the Company restated certain of its audited consolidated financial statements (the “Restatement”).
Added
Future acquisitions could disrupt the Company’s business and adversely affect our results of operations, financial condition and cash flows. On December 2, 2024, the Company completed the acquisition of the assets of Tribute Contracting & Consultants, LLC. In fiscal 2022, the Company completed the acquisitions of Tri-State Paving and Ryan Construction.
Removed
Management has assessed the effect of the Restatement on the Company’s internal control over financial reporting and its disclosure controls and procedures, all as described in Part II, Item 9A, “Controls and Procedures” of the Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
Removed
As of the date of the filing of the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, we had completed our remediation plan for the material weakness we identified in relation to the Restatement of our financial statements.
Removed
While management believes that the remedial efforts have resolved the identified material weakness, there is no assurance that such remedial efforts will ultimately have the intended effects or that additional remedial actions will not be necessary.
Removed
If we identify any new material weakness in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements.
Removed
In such case, we may be unable to maintain compliance with securities law requirements regarding accurate and timely filing of periodic reports and with applicable NASDAQ listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result.
Removed
We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
Removed
Additionally, as a result of the material weakness we have identified in our internal controls over financial reporting for the Restatement, as well as other matters raised or that may in the future be raised by the SEC, we may in the future be exposed to litigation or other disputes concerning, among others, claims invoking the federal and state securities laws, SBA claims or other claims arising from the Restatement and the material weakness in our internal control over financial reporting and the preparation of our financial statements.
Removed
Any such litigation or dispute, regardless of its outcome, could have a material adverse effect on our business, operations, financial condition, results of operations and share price.
Removed
As a result of the Restatement, we may become subject to a number of significant risks, which could have an adverse effect on our business, financial condition and results of operations, including: we may be subject to potential civil litigation, including shareholder class action lawsuits and derivative claims made on behalf of us, and regulatory proceedings or actions, the defense of which may require us to devote significant management attention and to incur significant legal expense and which litigation, proceedings or actions, if decided against us, could require us to pay substantial judgments, settlements or other penalties.
Removed
New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. ​ ITEM 1B. ​ ​ Unresolved Staff Comments None.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeRyan Construction leases its office space and is located at 5793 W. Veterans Memorial Highway, Bridgeport, WV 26330. The Company’s management 15 Table of Contents believes that its properties are adequate for the business it conducts. Please see “Liquidity and Capital Resources” for a description of the mortgages and leases on these properties.
Biggest changeRyan Construction leases its office space and is located at 5793 W. Veterans Memorial Highway, Bridgeport, WV 26330. The Company’s management believes that its properties are adequate for the business it conducts. Please see “Liquidity and Capital Resources” for a description of the mortgages and leases on these properties. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. ​ ​ Legal Proceedings In February 2018, the Company filed a lawsuit against a former customer in the United States District Court for the Western District of Pennsylvania. The lawsuit is related to a dispute over work performed on a pipeline construction project.
Biggest changeITEM 3. Legal Proceedings ​ As previously disclosed, in February 2018, the Company filed a lawsuit against a customer in the United States District Court for the Western District of Pennsylvania (the “District Court”). The lawsuit was related to a dispute over work performed on a pipeline construction project.
The Company has expensed all $164,000 in payments made through September 30, 2022 and does not expect any future liabilities related to this claim. The Company did not make any payments during the twelve months ended September 30, 2023.
The Company has expensed all $164,000 in payments made through September 30, 2022 and does not expect any future liabilities related to this claim. The Company did not make any payments during the twelve months ended September 30, 2023 or 2024.
Other than described above, at September 30, 2023, the Company was not involved in any legal proceedings other than in the ordinary course of business. The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.
Other than described above, at September 30, 2024, the Company was not involved in any legal proceedings other than in the ordinary course of business. The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.
At September 30, 2023, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows. ITEM 4. ​ ​ Mine Safety Disclosures None. PART II
At September 30, 2024, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows. ​ 17 Table of Contents ITEM 4. Mine Safety Disclosures ​ None. PART II ​
The Company must comply with the demand under federal pension law; however, the Company firmly believes no withdrawal liability exists. The Company is in negotiations with the pension fund to resolve the matter and all future payments have been suspended as part of the negotiation.
The Company complied with the demand according to federal pension law; however, the Company firmly believes no withdrawal liability exists. The Company is in negotiations with the pension fund to resolve the matter and all future payments have been suspended as part of the negotiation.
Removed
On November 21, 2022, a Judgment Order was issued, and the Company was awarded $13.1 million, of which $5.8 million was the jury award, $1.6 million was for attorney’s fees, and $5.7 million was for penalties and interest. The amounts awarded by the Judgment Order have not been recognized in the Company’s consolidated financial statements as of September 30, 2023.
Added
On November 21, 2022, the District Court issued a judgment in favor of the Company. On April 17, 2024, the United States Court of Appeals for the Third Circuit (the “Appeals Court”) affirmed the decision of the District Court. In May 2024, the Appeals Court denied petitions for a rehearing.
Removed
The Company’s attorney’s fees have been expensed as incurred. The case has been appealed to the United States Court of Appeals for the Third Circuit and is expected to be heard within the next 12 months.
Added
This upheld the award granted by the District Court in November 2022. The Company received an approximately $15.6 million payment related to the lawsuit. The Company recognized the payment in its consolidated financial statements for the third fiscal quarter ended June 30, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Program does not obligate the Company to purchase any number of shares, and there is no guarantee as to the exact number of shares to be repurchased by the Company. The Company did not repurchase any shares of its common stock during the three months ended September 30, 2023. 16 Table of Contents ITEM 6. ​ ​ Reserved
Biggest changeThe Program does not obligate the Company to purchase any number of shares, and there is no guarantee as to the exact number of shares to be repurchased by the Company. The Company did not repurchase any shares of its common stock during the three months ended September 30, 2024. ​ ITEM 6. Reserved ​
As of January 16, 2024, there were 27 holders of record of our common stock. Certain shares of the Company’s common stock are held in “nominee” or “street” name and accordingly the number of beneficial owners of common stock is not included in the number of record holders.
As of September 30, 2024, there were 24 holders of record of our common stock. Certain shares of the Company’s common stock are held in “nominee” or “street” name and accordingly the number of beneficial owners of common stock is not included in the number of record holders.
Added
The Company paid an annual cash dividend of $0.06 per share in fiscal 2024 and has initiated a quarterly cash dividend of $0.03 per share for fiscal 2025.
Added
Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements, financial condition, future prospects, and other factors that our board of directors may deem relevant.
Added
Our ability to pay dividends to our stockholders will continue to be subject to, and limited by, certain legal restrictions. Further, any lenders making loans to us may impose financial covenants that may be more restrictive with respect to dividend payments than our legal requirements.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA table of the Company’s intangible assets subject to amortization is below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated Accumulated Amortization and Amortization and ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization and ​ Amortization and ​ Impairment ​ Impairment ​ Net Book ​ ​ Remaining Life at ​ ​ ​ ​ Impairment at ​ Impairment at ​ Twelve Months Ended ​ Twelve Months Ended ​ Value ​ ​ September 30, ​ Original ​ September 30, ​ September 30, ​ September 30, ​ September 30, ​ September 30, Intangible assets: ​ 2023 ​ Cost ​ 2023 ​ 2022 ​ 2023 ​ 2022 ​ 2023 West Virginia Pipeline: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer Relationships ​ 87 months ​ $ 2,209,724 ​ $ 607,661 ​ $ 386,693 ​ $ 220,968 ​ $ 220,968 ​ $ 1,602,063 Tradename ​ 87 months ​ ​ 263,584 ​ ​ 72,500 ​ ​ 46,136 ​ ​ 26,364 ​ ​ 26,364 ​ ​ 191,084 Non-competes - months ​ ​ 83,203 ​ ​ 83,203 ​ ​ 72,806 ​ ​ 10,397 ​ ​ 41,604 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolt Energy: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employment agreement/non-compete - months ​ 100,000 ​ 100,000 ​ 77,779 ​ 22,221 ​ ​ 63,890 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tri-State Paving: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer Relationships ​ 103 months ​ ​ 1,649,159 ​ ​ 233,631 ​ ​ 66,781 ​ ​ 166,850 ​ ​ 66,781 ​ ​ 1,415,528 Tradename ​ 103 months ​ ​ 203,213 ​ ​ 28,789 ​ ​ 8,368 ​ ​ 20,421 ​ ​ 8,368 ​ ​ 174,424 Non-competes ​ - months ​ ​ 39,960 ​ ​ 39,960 ​ ​ 16,590 ​ ​ 23,370 ​ ​ 16,590 ​ ​ — Total intangible assets ​ $ 4,548,843 ​ $ 1,165,744 ​ $ 675,153 ​ $ 490,591 ​ $ 444,565 ​ $ 3,383,099 ​ Depreciation and Amortization The purpose of depreciation and amortization is to represent an accurate value of assets on the books.
Biggest changeA table of the Company’s intangible assets subject to amortization is below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ Accumulated ​ Amortization and ​ Amortization and ​ ​ ​ ​ ​ ​ ​ ​ Remaining Life ​ ​ ​ ​ Amortization and ​ Amortization and ​ Impairment ​ Impairment ​ Net Book ​ Net Book ​ ​ (in months) at ​ ​ ​ ​ Impairment at ​ Impairment at ​ Twelve Months Ended ​ Twelve Months Ended ​ Value at ​ Value at ​ ​ September 30, ​ Original ​ September 30, ​ September 30, ​ September 30, ​ September 30, ​ September 30, ​ September 30, Intangible assets: 2024 Cost 2024 2023 2024 2023 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ West Virginia Pipeline: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships ​ 75 ​ $ 2,209,724 ​ ​ 828,630 ​ $ 607,661 ​ ​ 220,969 ​ ​ 220,968 ​ $ 1,381,094 ​ $ 1,602,063 Tradename ​ 75 ​ ​ 263,584 ​ ​ 98,863 ​ ​ 72,500 ​ ​ 26,363 ​ ​ 26,364 ​ ​ 164,721 ​ ​ 191,084 Non-competes — ​ ​ 83,203 ​ ​ 83,203 ​ ​ 83,203 ​ ​ — ​ ​ 10,397 ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolt Energy: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employment agreement/non-compete — ​ 100,000 ​ 100,000 ​ 100,000 ​ — ​ ​ 22,221 ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Heritage Painting ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships ​ 57 ​ ​ 121,100 ​ ​ 6,054 ​ ​ — ​ ​ 6,054 ​ ​ — ​ ​ 115,046 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tri-State Paving: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships ​ 91 ​ ​ 1,649,159 ​ ​ 398,547 ​ ​ 233,631 ​ ​ 164,916 ​ ​ 166,850 ​ ​ 1,250,612 ​ ​ 1,415,528 Tradename ​ 91 ​ ​ 203,213 ​ ​ 49,110 ​ ​ 28,789 ​ ​ 20,321 ​ ​ 20,421 ​ ​ 154,103 ​ ​ 174,424 Non-competes ​ — ​ ​ 39,960 ​ ​ 39,960 ​ ​ 39,960 ​ ​ — ​ ​ 23,370 ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total intangible assets ​ ​ $ 4,669,943 ​ $ 1,604,367 ​ $ 1,165,744 ​ $ 438,623 ​ $ 490,591 ​ $ 3,065,576 ​ $ 3,383,099 ​ Depreciation and Amortization The purpose of depreciation and amortization is to represent an accurate value of assets on the books.
Leases The Company leases office space for SQP for $1,500 per month. The lease, which was originally signed on March 25, 2021, is for a period of two years with five one-year renewals available immediately following the end of the base term. The Company has only committed to a one-year renewal and is evaluating whether to renew for additional periods.
Leases The Company leases office space for SQP for $1,500 per month. The lease, which was originally signed on March 25, 2021, is for a period of two years with five one-year renewals available immediately following the end of the base term. The Company has only committed to one-year renewals and is evaluating whether to renew for additional periods.
There have been no other material events during the period, other than noted above, that would either impact the results reflected in the report or the Company’s results going forward. ​ ITEM 7A. ​ ​ Quantitative and Qualitative Disclosures about Market Risk Not required for smaller reporting companies.
There have been no other material events during the period, other than noted above, that would either impact the results reflected in the report or the Company’s results going forward. ​ ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk ​ Not required for smaller reporting companies. ​ ITEM 8.
The Company has recorded a short-term borrowing due to the SBA for the full $9.8 million, plus accrued interest. During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review.
The Company has recorded a short-term borrowing due to the SBA inquiry for the full $9.8 million, plus accrued interest. During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review.
ITEM 8. ​ ​ Financial Statements and Supplementary Data Financial Statements are included at page F-1 of this Annual Report on Form 10-K. ITEM 9. ​ ​ Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Financial Statements and Supplementary Data ​ Financial Statements are included at page F-1 of this Annual Report on Form 10-K. ​ ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ​ None. ​
Significant changes in cost estimates, particularly in our larger, more complex projects could have a significant effect on our profitability. 28 Table of Contents Our contract assets include cost and estimated earnings in excess of billings that represent amounts earned and reimbursable under contracts, including claim recovery estimates, but have a conditional right for billing and payment such as achievement of milestones or completion of the project.
Significant changes in cost estimates, particularly in our larger, more complex projects could have a significant effect on our profitability. 30 Table of Contents Our contract assets include cost and estimated earnings in excess of billings that represent amounts earned and reimbursable under contracts, including claim recovery estimates, but have a conditional right for billing and payment such as achievement of milestones or completion of the project.
This loan has monthly installment payments of $60,000 and has a fixed interest rate of 6.0%. The loan is collateralized by the Company’s equipment and receivables. As of September 30, 2023, the Company had made principal payments of $499,000. On June 1, 2023, the Company entered into a $9.3 million Non-Revolving Note agreement with United Bank.
This loan has monthly installment payments of $60,000 and has a fixed interest rate of 6.0%. The loan is collateralized by the Company’s equipment and receivables. As of September 30, 2024, the Company had made principal payments of $1.1 million. On June 1, 2023, the Company entered into a $9.3 million Non-Revolving Note agreement with United Bank.
Some projects will have greater margins while others that are extremely competitive in bidding may have narrower margins. 17 Table of Contents Service and Maintenance versus Installation . In general, installation work has a higher gross margin than maintenance work. This is because installation work usually is of a fixed price nature and therefore has higher risks involved.
Some projects will have greater margins while others that are extremely competitive in bidding may have narrower margins. 18 Table of Contents Service and Maintenance versus Installation . In general, installation work has a higher gross margin than maintenance work. This is because installation work usually is of a fixed price nature and therefore has higher risks involved.
Under the current guidance, companies can first choose to assess any impairment based on qualitative factors (Step 0). If a company fails this test or decides to bypass this step, it must proceed with a quantitative assessment of goodwill impairment. The Company did not have a goodwill impairment at September 30, 2023.
Under the current guidance, companies can first choose to assess any impairment based on qualitative factors (Step 0). If a company fails this test or decides to bypass this step, it must proceed with a quantitative assessment of goodwill impairment. The Company did not have a goodwill impairment at September 30, 2024.
Materially incorrect estimates of bad debt reserves could result in an unexpected loss in profitability for the Company. Additionally, frequently changing reserves could be an indication of risky or unreliable customers. At September 30, 2023, management review deemed that the allowance for doubtful accounts was adequate.
Materially incorrect estimates of bad debt reserves could result in an unexpected loss in profitability for the Company. Additionally, frequently changing reserves could be an indication of risky or unreliable customers. At September 30, 2024, management review deemed that the allowance for doubtful accounts was adequate.
At September 30, 2023, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows.
At September 30, 2024, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows.
Letters of Credit Certain of our customers or vendors may require letters of credit to secure payments that the vendors are making on our behalf or to secure payments to subcontractors, vendors, etc. on various customer projects. At September 30, 2023, the Company did not have any outstanding letters of credit .
Letters of Credit Certain of our customers or vendors may require letters of credit to secure payments that the vendors are making on our behalf or to secure payments to subcontractors, vendors, etc. on various customer projects. At September 30, 2024, the Company did not have any outstanding letters of credit .
The Company must reimburse the insurer for any expenses or outlays it is required to make. ​ 25 Table of Contents Currently, the Company has an agreement with a surety company to provide bonding which will suit the Company’s immediate needs.
The Company must reimburse the insurer for any expenses or outlays it is required to make. ​ 27 Table of Contents Currently, the Company has an agreement with a surety company to provide bonding which will suit the Company’s immediate needs.
Other than described above, at September 30, 2023, the Company was not involved in any legal proceedings other than in the ordinary course of business. The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.
Other than described above, at September 30, 2024, the Company was not involved in any legal proceedings other than in the ordinary course of business. The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.
Conversely, periods of dry weather with moderate temperatures can positively impact revenues and margins due to the opportunity for increased production and efficiencies. Revenue Mix . The mix of revenues between customer types and types of work for various customers will impact gross margins.
Conversely, periods of dry weather with moderate temperatures can positively impact revenues and margins due to the opportunity for increased production and efficiency. Revenue Mix . The mix of revenues between customer types and types of work for various customers will impact gross margins.
The cost of revenues increase was primarily related to increased mechanical and electrical maintenance services performed and an increase in new construction opportunities during the fiscal year ended September 30, 2023, as compared to the prior fiscal year.
The cost of revenues increase was primarily related to increased mechanical and electrical maintenance services performed and an increase in new construction opportunities during the fiscal year ended September 30, 2024, as compared to the prior fiscal year.
Acquired intangible assets subject to amortization are amortized on a straight-line basis, which approximates the pattern in which the economic benefit of the respective intangible assets is realized, over their respective estimated useful lives. The definite-lived 30 Table of Contents identifiable intangible assets recognized as part of the Company’s business combinations are initially recorded at their estimated fair value.
Acquired intangible assets subject to amortization are amortized on a straight-line basis, which approximates the pattern in which the economic benefit of the respective intangible assets is realized, over their respective estimated useful lives. The definite-lived identifiable intangible assets recognized as part of the Company’s business combinations are initially recorded at their estimated fair value.
As part of the $6.35 million acquisition price, the Company paid $3.5 million in cash in addition to the note. The unsecured five-year term note requires annual payments of at least $500,000 with a fixed interest rate of 3.25% on the $3.0 million sellers’ note, which equates to 5.35% on the carrying value of the note.
As part of the $6.35 million acquisition price, the Company paid $3.5 million in cash in addition to the note. The unsecured five-year term note requires annual payments of at least 24 Table of Contents $500,000 with a fixed interest rate of 3.25% on the $3.0 million sellers’ note, which equates to 5.35% on the carrying value of the note.
The Company is currently assessing the effect that ASU 2021-08 will have on their results of operations, financial position and cash flows; however, the Company does not expect a significant impact.
The Company is currently assessing the effect that ASU 2021-08 will have on its results of operations, financial position and cash flows; however, the Company does not expect a significant impact.
The total net present value at inception was $236,000 with a carrying value of $133,000 at September 30, 2023. SQP made an equity investment of $156,000 in 1030 Quarrier Development, LLC (“Development”) in August 2022. Development is a variable interest entity (“VIE”) that is 75% owned by 1030 Quarrier Ventures, LLC (“Ventures”) and 25% owned by SQP.
The total net present value at inception was $236,000 with a carrying value of $46,000 at September 30, 2024. SQP made an equity investment of $156,000 in 1030 Quarrier Development, LLC (“Development”) in August 2022. Development is a variable interest entity (“VIE”) that is 75% owned by 1030 Quarrier Ventures, LLC (“Ventures”) and 25% owned by SQP.
The requested information was subsequently provided to the SBA through the Lender. The Company recognizes that there is a possibility that the SBA could reverse its previous determination on the forgiveness of the PPP Loans. As a result of this uncertainty, the Company restated the previously issued audited financial statements for the fiscal years ended September 30, 2022 and 2021.
The requested information was subsequently provided to the SBA through the Lender. The Company recognizes that there is a possibility that the SBA could reverse its previous determination on the forgiveness of the PPP Loans. As a result of this uncertainty, the Company restated the previously issued audited financial statements of the Company for fiscal 2022 and 2021.
The Company has two right-of-use operating leases acquired on April 29, 2022, as part of the Tri-State Paving, LLC transaction. The first operating lease, for the Hurricane, West Virginia facility, had a net present value of $236,000 at inception, and a carrying value of $133,000 at September 30, 2023.
The Company has two right-of-use operating leases acquired on April 29, 2022, as part of the Tri-State Paving, LLC transaction. The first operating lease, for the Hurricane, West Virginia facility, had a net present value of $236,000 at inception, and a carrying value of $46,000 at September 30, 2024.
The Company has made $500,000 in principal payments on this note as of September 30, 2023. On October 10, 2022, the Company entered into a $3.1 million promissory note agreement with United Bank. This five-year agreement financed the previous cash value of equipment purchased in the Ryan Construction acquisition.
The Company has made $750,000 in principal payments on this note as of September 30, 2024. On October 10, 2022, the Company entered into a $3.1 million promissory note agreement with United Bank. This five-year agreement financed the previous cash value of equipment purchased in the Ryan Construction acquisition.
The Company’s provision for income taxes is computed by applying a federal rate of 21.0% and a state rate of 6.0% to taxable income or loss after consideration of non-taxable and non-deductible items.
The Company’s provision for income taxes is computed by applying a federal rate of 21.0% and a blended state rate of approximately 5% to 6.0% to taxable income or loss after consideration of non-taxable and non-deductible items.
The Company has expensed all $164,000 in payments made through September 30, 2022 and 26 Table of Contents does not expect any future liabilities related to this claim. The Company did not make any payments during the twelve months ended September 30, 2023.
The Company has expensed all $164,000 in payments made through September 30, 2022 and 28 Table of Contents does not expect any future liabilities related to this claim. The Company did not make any payments during the twelve months ended September 30, 2023 or 2024.
The revenue increase was primarily related to increased mechanical and electrical maintenance services performed and an increase in new construction opportunities during the fiscal year ended September 30, 2023, as compared to the prior fiscal year. 18 Table of Contents Cost of Revenues .
The revenue increase was primarily related to increased mechanical and electrical maintenance services performed and an increase in new construction opportunities during the fiscal year ended September 30, 2024, as compared to the prior fiscal year. 19 Table of Contents Cost of Revenues .
Please see the tables below for customers that represent 10.0% or more of the Company’s revenue or accounts receivable, net of retention as of or for the fiscal years ended September 30, 2023, and 2022: ​ ​ ​ ​ ​ ​ Revenue FY 2023 FY 2022 TransCanada Corporation 13.9 % 16.6 % NiSource and subsidiaries 17.5 % * % All other 68.6 % 83.4 % Total 100.0 % 100.0 % ​ * Less than 10.0% and included in “All other” if applicable ​ ​ ​ ​ ​ ​ Accounts receivable, net of retention FY 2023 FY 2022 NiSource and subsidiaries 11.8 % * % TransCanada Corporation ​ * % 11.6 % All other 88.2 % 88.4 % Total 100.0 % 100.0 % ​ * Less than 10.0% and included in “All other” if applicable Virtually all work performed for major customers was awarded under competitive bid fixed price or unit price arrangements.
Please see the tables below for customers that represent 10.0% or more of the Company’s revenue or accounts receivable, net of retention as of or for the fiscal years ended September 30, 2024, and 2023: ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended Twelve Months Ended Revenue ​ September 30, 2024 ​ September 30, 2023 ​ TransCanada Corporation 10.4 % 13.9 % NiSource and subsidiaries * ​ 17.5 % All other 89.6 % 68.6 % Total 100.0 % 100.0 % * Less than 10.0% and included in “All other” if applicable ​ ​ ​ ​ ​ ​ Accounts receivable, net of retention at September 30, 2024 at September 30, 2023 NiSource and subsidiaries * ​ 11.8 % All other 100.0 % 88.2 % Total 100.0 % 100.0 % * Less than 10.0% and included in “All other” if applicable Virtually all work performed for major customers was awarded under competitive bid fixed price or unit price arrangements.
Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year. The Company has made $500,000 in principal payments on this note as of September 30, 2023.
Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year. The Company has made $750,000 in principal payments on this note as of September 30, 2024.
The Company has the right to purchase the equipment at the expiration of the leases by applying the two-month deposit paid. The related assets and finance lease obligations associated with these lease agreements are included in the consolidated balance sheets within property, plant and equipment and long-term debt.
The Company exercised the right to purchase the equipment at the expiration of the leases by applying the two-month deposit paid. The related assets and finance lease obligations associated with these lease agreements had been included in the consolidated balance sheets within property, plant and equipment and long-term debt.
Results of Operations for the Fiscal Year Ended September 30, 2023, Compared to the Fiscal Year Ended September 30, 2022. Revenue .
Results of Operations for the Fiscal Year Ended September 30, 2024, Compared to the Fiscal Year Ended September 30, 2023. Revenue .
As of September 30, 2023, the Company had made principal payments of $387,000. The loan is collateralized by the building purchased under this agreement. The note is currently held by Peoples Bank, Inc.
As of September 30, 2024, the Company had made principal payments of $437,000. The loan is collateralized by the building purchased under this agreement. The note is currently held by Peoples Bank, Inc.
Please see the allowance for doubtful accounts table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ Balance at beginning of year $ 70,310 $ 70,310 Charged to expense ​ — ​ — Deductions for uncollectible receivables written off, net of recoveries ​ (19,247) ​ — Balance at end of year ​ $ 51,063 ​ $ 70,310 ​ 29 Table of Contents Impairment of goodwill and intangible assets The Company follows the guidance of Accounting Standards Codification (“ASC”) 350-20-35-3 “Intangibles-Goodwill and Other (Topic 350)” which requires a company to record an impairment charge based on the excess of a reporting unit’s carrying amount of goodwill over its fair value.
Please see the allowance for doubtful accounts table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 September 30, 2023 ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 51,063 ​ $ 70,310 Charged to expense ​ 687,463 ​ — Deductions for uncollectible receivables written off, net of recoveries ​ — ​ (19,247) Balance at end of period ​ $ 738,526 ​ $ 51,063 ​ 31 Table of Contents Impairment of goodwill and intangible assets The Company follows the guidance of Accounting Standards Codification (“ASC”) 350-20-35-3 “Intangibles-Goodwill and Other (Topic 350)” which requires a company to record an impairment charge based on the excess of a reporting unit’s carrying amount of goodwill over its fair value.
The Company must comply with the demand under federal pension law; however, the Company firmly believes no withdrawal liability exists. The Company is in negotiations with the pension fund to resolve the matter and all future payments have been suspended as part of the negotiation.
The Company complied with the demand according to federal pension law; however, the Company firmly believes no withdrawal liability exists. The Company is in negotiations with the pension fund to resolve the matter and all future payments have been suspended as part of the negotiation.
This increase was due to increased billings in excess of costs and earnings when computing earned revenue on construction projects at September 30, 2023, as compared to at September 30, 2022.
This decrease was due to increased billings in excess of costs and earnings when computing earned revenue on construction projects at September 30, 2024, as compared to at September 30, 2023.
The effective income tax rate for the fiscal year ended September 30, 2023 was 28.7%, as compared to 37.6% for the prior fiscal year. Effective income tax rates are estimates and may vary from period to period due to changes in the amount of taxable income or loss, non-taxable and non-deductible expenses.
The effective income tax rate for the fiscal year ended September 30, 2024 was 25.1%, as compared to 28.7% for the prior fiscal year. Effective income tax rates are estimates and may vary from period to period due to changes in the amount of taxable income or loss, non-taxable and non-deductible expenses.
Unallocated shop expenses totaled $1.2 million for the fiscal year ended September 30, 2023, a $1.7 million increase from ($505,000) for the fiscal year ended September 30, 2022. The increase in unallocated shop expenses was primarily due to decreased internal equipment charges to projects for the fiscal year ended September 30, 2023, as compared to the prior fiscal year.
Unallocated shop expenses totaled $1.6 million for the fiscal year ended September 30, 2024, a $444,000 increase from $1.2 million for the fiscal year ended September 30, 2023. The increase in unallocated shop expenses was primarily due to decreased internal equipment charges to projects for the fiscal year ended September 30, 2024, as compared to the prior fiscal year.
Hughes, Contractors Rental and Nitro, entered into separate PPP notes effective April 7, 2020, with its Lender in an aggregate principal amount of $13.1 million pursuant to the PPP Loans.
On April 15, 2020, the Company and its subsidiaries, C.J. Hughes, Contractors Rental and Nitro, entered into separate PPP notes effective April 7, 2020, with its Lender in an aggregate principal amount of $13.1 million pursuant to the PPP Loans.
The Company has a right-of-use operating lease with Enterprise acquired on August 11, 2022, as part of the Ryan Environmental acquisition. This lease agreement was initially for thirty-one vehicles with a net present value of $1.2 million. The Company subsequently netted forty-one additional leased vehicles with a net present value of $2.4 million.
The Company has a right-of-use operating lease with Enterprise acquired on August 11, 2022, as part of the Ryan Environmental acquisition. This lease agreement was initially for thirty-one vehicles with a net present value of $1.2 million. The Company subsequently netted forty-three additional leased vehicles. The right-of-use operating lease had a carrying value of $2.2 million at September 30, 2024.
Posting these letters or other collateral will reduce our borrowing capabilities. The Company does not anticipate any claims in the foreseeable future. At September 30, 2023, the Company had $72.0 million in performance bonds outstanding.
Posting these letters or other collateral will reduce our borrowing capabilities. The Company does not anticipate any claims in the foreseeable future. At September 30, 2024, the Company had $117.6 million in performance bonds outstanding.
The income tax expense for the fiscal year ended September 30, 2023 was $3.0 million as compared to $2.3 million for the fiscal year ended September 30, 2022. The increase was due to an increase in taxable income in the fiscal year ended September 30, 2023, as compared to the prior fiscal year.
The income tax expense for the fiscal year ended September 30, 2024 was $8.4 million as compared to $3.0 million for the fiscal year ended September 30, 2023. The increase was due to an increase in taxable income in the fiscal year ended September 30, 2024, as compared to the prior fiscal year.
Rental expense, which is included in cost of goods sold on the consolidated statements of income, was $12.1 million and $9.8 million for the twelve months ended September 30, 2023, and 2022, respectively.
Rental expense, which is included in cost of goods sold on the consolidated statements of income, was $16.3 million and $12.1 million for the twelve months ended September 30, 2024, and 2023, respectively.
The income tax expense for the fiscal year ended September 30, 2023 was $3.0 million as compared to $2.3 million for the fiscal year ended September 30, 2022. The increase was due to an increase in taxable income for the fiscal year ended September 30, 2023, as compared to the fiscal year ended September 30, 2022.
The income tax expense for the fiscal year ended September 30, 2024 was $8.4 million as compared to $3.0 million for the fiscal year ended September 30, 2023. The increase was due to an increase in taxable income for the fiscal year ended September 30, 2024, as compared to the fiscal year ended September 30, 2023.
Net income for the fiscal year ended September 30, 2023 was $7.4 million compared to $3.8 million for the fiscal year ended September 30, 2022. The increase was due to the items mentioned above. Comparison of Financial Condition at September 30, 2023 Compared to September 30, 2022.
Net income for the fiscal year ended September 30, 2024 was $25.1 million compared to $7.4 million for the fiscal year ended September 30, 2023. The increase was due to the items mentioned above. Comparison of Financial Condition at September 30, 2024 Compared to September 30, 2023.
The Company’s depreciation expense for the twelve months ended September 30, 2023 and 2022 was $7.3 million and $5.6 million, respectively. In general, depreciation is included in “cost of revenues” on the Company’s consolidated statements of income. The Company’s amortization expense for the twelve months ended September 30, 2023 and 2022 were $490,591 and $444,565, respectively.
The Company’s depreciation expense for the twelve months ended September 30, 2024 and 2023 was $8.5 million and $7.3 million, respectively. In general, depreciation is included in “cost of revenues” on the Company’s consolidated statements of income. The Company’s amortization expense for the twelve months ended September 30, 2024 and 2023 were $438,623 and $490,591, respectively.
The gross profit decrease was primarily due to decreased internal equipment charges to projects for the fiscal year ended September 30, 2023, as compared to the prior fiscal year. Selling and administrative expenses .
The gross loss increase was primarily due to decreased internal equipment charges to projects for the fiscal year ended September 30, 2024, as compared to the prior fiscal year. Selling and administrative expenses .
Electrical, Mechanical, & General services and construction revenues totaled $148.4 million for the fiscal year ended September 30, 2023, a $62.4 million increase from $86.0 million for the fiscal year ended September 30, 2022.
Electrical, Mechanical, & General services and construction revenues totaled $188.4 million for the fiscal year ended September 30, 2024, a $40.0 million increase from $148.4 million for the fiscal year ended September 30, 2023.
Corns continued his role as President of the Company’s Tri-State Paving Subsidiary. This four-year agreement requires $250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning April 29, 2022. Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year.
This four-year agreement requires $250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning April 29, 2022. Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year.
Electrical, Mechanical, & General services and construction cost of revenues totaled $137.8 million for the fiscal year ended September 30, 2023, a $58.6 million increase from $79.1 million for the fiscal year ended September 30, 2022.
Electrical, Mechanical, & General services and construction cost of revenues totaled $167.6 million for the fiscal year ended September 30, 2024, a $29.8 million increase from $137.8 million for the fiscal year ended September 30, 2023.
The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $144,000 at inception, and a carrying value of $57,000 at September 30, 2023. The 4.5% interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception.
The 4.5% interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception. The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $144,000 at inception, and expired on August 31, 2024.
The effective income tax rate for the fiscal year ended September 30, 2023 was 28.7%, as compared to an effective income tax rate of 37.6% for the fiscal year ended September 30, 2022.
The effective income tax rate for the fiscal year ended September 30, 2024 was 25.1%, as compared to an effective income tax rate of 28.7% for the fiscal year ended September 30, 2023.
The 2024 dividend was paid on January 2, 2024 to holders of record as of December 15, 2023. While this is expected to be an annual dividend, factors such as income from operations, cash flows, and overall financial outlook may affect future dividend payments. Management has evaluated all subsequent events for accounting and disclosure.
The dividend will be paid on January 2, 2025 to holders of record as of December 13, 2024. While this is expected to be a quarterly cash dividend, factors such as income from operations, cash flows, and overall financial outlook may affect future dividend payments. 33 Table of Contents Management has evaluated all subsequent events for accounting and disclosure.
Contract assets totaled $16.0 million at September 30, 2023, a decrease of $154,000 from the prior fiscal year-end balance of $16.1 million. This decrease was primarily due to the timing of project billings and related costs and estimated earnings in excess of billings at September 30, 2023 as compared to at September 30, 2022.
Contract assets totaled $24.6 million at September 30, 2024, an increase of $8.6 million from the prior fiscal year-end balance of $16.0 million. This increase was primarily due to the timing of project billings and related costs and estimated earnings in excess of billings at September 30, 2024, as compared to at September 30, 2023.
Net property, plant and equipment totaled $36.5 million at September 30, 2023, an increase of $3.9 million from the prior fiscal year-end balance of $32.7 million. Property, plant and equipment acquisitions totaled $11.8 million for the fiscal year 2023 while depreciation expense was $7.3 million, and the net impact of disposals was $614,000.
Net property, plant and equipment totaled $38.1 million at September 30, 2024, an increase of $1.6 million from the prior fiscal year-end balance of $36.5 million. Property, plant and equipment acquisitions totaled $10.9 million for the fiscal year 2024 while depreciation expense was $8.5 million, and the net impact of disposals was $797,000.
The Company has two lease agreements for construction equipment with a combined amount of $160,000. The leases have a term of twenty-two months with a stated interest rate of 0%, combined monthly installment payments of $6,645 and are cancellable at any time without penalty.
The Company had two lease agreements for construction equipment with a combined amount of $160,000 that were paid in full as of September 30, 2024. The leases had a term of twenty-two months with a stated interest rate of 0%, combined monthly installment payments of $6,645 and were cancellable at any time without penalty.
The increase was primarily related to a net $21.1 million provided by operating activities, partially offset by a net $10.2 million investment in property and equipment and a net $1.9 million used in financing activities.
The decrease was primarily related to a net $7.9 million investment in property and equipment and a net $14.2 million used in financing activities, partially offset by a net $18.6 million provided by operating activities.
Income Taxes The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid. Significant judgments and estimates are required in the determination of the consolidated income tax expense.
A material overvaluation could result in impairment charges and reduced profitability for the Company. Income Taxes The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid. Significant judgments and estimates are required in the determination of the consolidated income tax expense.
The right-of-use operating lease has a carrying value of $2.9 million at September 30, 2023. Each vehicle leased under the master lease program has its own implicit rate. 24 Table of Contents The Company has a right-of-use operating lease with RICA Developers, LLC acquired on August 12, 2022, as part of the Ryan Environmental acquisition.
Each vehicle leased under the master lease program has its own implicit rate. The Company had a right-of-use operating lease with RICA Developers, LLC acquired on August 12, 2022, as part of the Ryan Environmental acquisition.
The Company’s lender has agreed to omit the effect of the PPP loan restatement from the Company’s covenant compliance calculations while a final decision on PPP loan forgiveness remains in question. Thus, the Company was in compliance with all covenants at September 30, 2023.
The Company’s lender has agreed to omit the effect of the PPP loan restatement from the Company’s covenant compliance calculations while a final decision on PPP loan forgiveness remains in question.
Where allowed by contract, the Company will address fuel cost increases with customers. Significant inflation or supply chain issues could cause customers to delay or cancel planned projects; however, inflation did not have a significant effect on our results for the twelve months ended September 30, 2023, and 2022.
Significant inflation or supply chain issues could cause customers to delay or cancel planned projects; however, inflation did not have a significant effect on our results for the twelve months ended September 30, 2024, and 2023.
As part of the review, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits. The requested information was subsequently provided to the SBA through the Lender. Understanding Gross Margins Our gross margin is gross profit expressed as a percentage of revenues.
As part of the review, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits. The requested information was subsequently provided to the SBA through the Lender.
This five-year agreement was used to finance the purchase of Tri-State Paving and has monthly payments of $129,910 with a fixed interest rate of 4.25%.
This five-year agreement was used to finance the purchase of Tri-State Paving and has monthly payments of $129,910 with a fixed interest rate of 4.25%. As of September 30, 2024, the Company had made principal payments of $3.1 million.
This five-year agreement gave the Company access to a $3.0 million line of credit (“Equipment Line of Credit 2021”), specifically for the purchase of equipment, for a period of twelve months with a variable interest rate initially established at 4.25% as based on the Prime Rate as published by The Wall Street Journal .
This five-year agreement gave the Company access to a $5.0 million equipment line of credit, specifically for the purchase of equipment, for a period of twelve months with a variable interest rate based on the “ Wall Street Journal ” Prime Rate (the index) and initially at 8.5%.
The aggregate balance of current maturities of long-term debt and long-term debt totaled $25.0 million at September 30, 2023, an increase of $7.4 million from the prior fiscal year-end balance of $17.6 million.
The aggregate balance of current maturities of long-term debt and long-term debt totaled $23.6 million at September 30, 2024, a decrease of $1.4 million from the prior fiscal year-end balance of $25.0 million.
The Company has a right-of-use operating lease acquired on March 28, 2023. This lease, for the Winchester, Kentucky facility, had a net present value of $290,000 at inception and a carrying value of $262,000 at September 30, 2023. The 7.75% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.
This lease, for the Winchester, Kentucky facility, had a net present value of $290,000 at inception and a carrying value of $161,000 at September 30, 2024. The 7.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.
The loan is collateralized by the Company’s equipment and receivables. As of September 30, 2023, the Company had made principal payments of $1.7 million. On April 29, 2022, the Company entered into a $7.5 million Non-Revolving Note agreement with United Bank.
This loan has monthly installment payments of $64,853 and has a fixed interest rate of 4.25%. The loan is collateralized by the Company’s equipment and receivables. As of September 30, 2024, the Company had made principal payments of $2.4 million. On April 29, 2022, the Company entered into a $7.5 million Non-Revolving Note agreement with United Bank.
In general, amortization is included in “cost of revenues” on the Company’s consolidated statements of income. Materially incorrect estimates of depreciation and amortization and/or the useful lives of assets could significantly impact the value of long-lived assets on the Company’s consolidated financial statements. A material overvaluation could result in impairment charges and reduced profitability for the Company .
In general, amortization is included in “cost of revenues” on the Company’s consolidated statements of income. 32 Table of Contents Materially incorrect estimates of depreciation and amortization and/or the useful lives of assets could significantly impact the value of long-lived assets on the Company’s consolidated financial statements.
Gross loss attributed to unallocated shop operations totaled $1.2 million for the fiscal year ended September 30, 2023, a $1.7 million decrease from a gross profit of $505,000 for the fiscal year ended September 30, 2022.
Gross loss attributed to unallocated shop operations totaled $1.6 million for the fiscal year ended September 30, 2024, a $444,000 increase from $1.2 million for the fiscal year ended September 30, 2023.
On November 12, 2021, the Company received a withdrawal liability claim from a pension plan to which the Company made pension contributions for union construction employees performing covered work in a particular jurisdiction.
The Company recognized the payment in its consolidated financial statements for the third fiscal quarter ended June 30, 2024. On November 12, 2021, the Company received a withdrawal liability claim from a pension plan to which the Company made pension contributions for union construction employees performing covered work in a particular jurisdiction.
Litigation In February 2018, the Company filed a lawsuit against a former customer in the United States District Court for the Western District of Pennsylvania. The lawsuit is related to a dispute over work performed on a pipeline construction project.
Litigation As previously disclosed, in February 2018, the Company filed a lawsuit against a customer in the United States District Court for the Western District of Pennsylvania (the “District Court”). The lawsuit was related to a dispute over work performed on a pipeline construction project. On November 21, 2022, the District Court issued a judgment in favor of the Company.
The Company had total assets of $142.5 million at September 30, 2023, an increase of $29.9 million from the prior fiscal year-end balance of $112.6 million.
The Company had total assets of $158.2 million at September 30, 2024, an increase of $15.7 million from the prior fiscal year-end balance of $142.5 million.
On April 2, 2021, the Company entered into a $3.5 million Non-Revolving Note agreement with United Bank. This five-year agreement repaid the outstanding $3.5 million line of credit that was used for the down payment on the West Virginia Pipeline acquisition. This loan has monthly installment payments of $64,853 and has a fixed interest rate of 4.25%.
As of September 30, 2024, the Company had repaid this loan in full. On April 2, 2021, the Company entered into a $3.5 million Non-Revolving Note agreement with United Bank. This five-year agreement repaid the outstanding $3.5 million line of credit that was used for the down payment on the West Virginia Pipeline acquisition.
As of September 30, 2023, the Company had made annual installment payments of $1,250,000. On January 4, 2021, the Company entered into a $3.0 million Non-Revolving Note agreement with United Bank.
As of September 30, 2024, the Company had made annual installment payments of $2,000,000. On January 4, 2021, the Company entered into a $3.0 million Non-Revolving Note agreement with United Bank. This five-year agreement gave the Company access to a $3.0 million line of credit for the purchase of equipment.
On November 13, 2015, the Company entered into a 10-year $1.1 million loan agreement with United Bank to purchase the fabrication shop and property Nitro had previously been leasing. The variable interest rate on the loan agreement is 9.5% at September 30, 2023 with monthly payments of $12,580.
On November 13, 2015, the Company entered into a 10-year $1.1 million loan agreement with United Bank to purchase the fabrication shop and property Nitro had previously been leasing. As of September 30, 2024, the Company had repaid this loan in full.
Goodwill and acquired intangible assets totaled $7.5 million at September 30, 2023, a $491,000 decrease from the prior fiscal year end balance of $8.0 million and was the result of intangible asset amortization expense of $491,000 for the fiscal year ended September 30, 2023.
Goodwill and acquired intangible assets totaled $7.2 million at September 30, 2024, a $318,000 decrease from the prior fiscal year end balance of $7.5 million and was the result of intangible asset amortization expense of $438,000 for the fiscal year ended September 30, 2024, partially offset by $121,000 related to the acquisition of Heritage Painting.
Gas & Petroleum Transmission gross profit totaled $12.7 million for the fiscal year ended September 30, 2023, a $9.2 million increase from $3.4 million for the fiscal year ended September 30, 2022.
Gas & Petroleum Transmission gross profit totaled $11.6 million for the fiscal year ended September 30, 2024, a $1.1 million decrease from $12.7 million for the fiscal year ended September 30, 2023.
The Company has made principal payments of $1.8 million on this note as of September 30, 2023. 23 Table of Contents On April 29, 2022, the Company entered into a $1.0 million promissory note agreement with Corns Enterprises, a related party, as partial consideration for the purchase of Tri-State Paving. David E.
On April 29, 2022, the Company entered into a $1.0 million promissory note agreement with Corns Enterprises, a related party, as partial consideration for the purchase of Tri-State Paving. David E. Corns continued his role as President of the Company’s Tri-State Paving Subsidiary.
The maturities of the Company’s operating lease liabilities are as follows: ​ ​ ​ ​ ​ 2024 $ 1,205,658 2025 ​ 1,097,808 2026 ​ 969,003 2027 ​ 326,022 ​ ​ 3,598,491 Less amounts representing interest ​ (247,701) Present value of operating lease liabilities ​ $ 3,350,790 ​ Off-Balance Sheet Transactions Due to the nature of our industry, we often enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected on our balance sheets.
The maturities of the Company’s operating lease liabilities are as follows: ​ ​ ​ ​ ​ 2025 $ 1,110,028 2026 ​ 1,004,022 2027 ​ 804,467 2028 ​ 129,749 ​ ​ 3,048,266 Less amounts representing interest ​ (515,339) Present value of operating lease liabilities ​ $ 2,532,927 ​ Off-Balance Sheet Transactions Due to the nature of our industry, we often enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected on our balance sheets.
After six months, all borrowings against the Equipment Line of Credit 2023 will convert to a fifty-four-month term note agreement with a fixed interest rate of 7.25%. The loan is collateralized by the equipment purchased under this agreement.
After six months, all borrowings against the Equipment Line of Credit 2023 converted to a fifty-four-month term note agreement with a fixed interest rate of 7.25%. The loan is collateralized by the equipment purchased under this agreement. As of September 30, 2024, the Company had borrowed $9.3 million against this line of credit and made $1.5 million in principal payments.
At September 30, 2023 and September 30, 2022, the remaining balance of the insurance premiums was $950,000 and $580,000, respectively. Paycheck Protection Program Loans Due to the economic uncertainties created by COVID-19 and limited operating funds available, the Company applied for loans under the PPP. On April 15, 2020, the Company and its subsidiaries, C.J.
These insurance policies include workers’ compensation, general liability, automobile, umbrella, and equipment policies. At September 30, 2024 and September 30, 2023, the remaining balance of the insurance premiums was $0 and $950,000, respectively. Paycheck Protection Program Loans Due to the economic uncertainties created by COVID-19 and limited operating funds available, the Company applied for loans under the PPP.
The aggregate balance of accounts receivable, retainages receivable, allowance for doubtful accounts and other receivables totaled $59.3 million at September 30, 2023, an increase of $16.4 million from the combined prior fiscal year-end balance of $42.9 million. The increase was primarily due to increased work in the fiscal year 2023 as compared to 2022.
The aggregate balance of accounts receivable, retainages receivable, allowance for doubtful accounts and other receivables totaled $68.8 million at September 30, 2024, an increase of $9.5 million from the combined prior fiscal year-end balance of $59.3 million.

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