Executive Summary
- ESOA posted Q4 2024 revenue of $104.66 million, essentially flat versus the prior-year quarter (YoY -0.19%) and up 21.8% QoQ, signaling a strong quarterly ramp as project activity recovered in the quarter. Gross profit was $17.57 million with a gross margin of 16.8%, and EBITDA reached $11.08 million (EBITDA margin of 10.6%), underpinning a stable operating performance despite a challenging macro backdrop for capex timing in the energy infrastructure space.
- Net income was $6.66 million, or $0.40 per share, up 16.4% YoY but down sharply on a QoQ basis (-61.98% QoQ) driven by working capital movements and project phasing. The company generated negative operating cash flow of approximately $0.85 million and negative free cash flow of about $2.94 million in the quarter, highlighting working capital intensity and timing of receivables/payables in a project-based construction business.
- On the balance sheet, ESOA held $12.93 million in cash and equivalents, with total debt of $36.39 million and net debt of $23.46 million. The current ratio stood at 1.49, indicating modest near-term liquidity, while the debt burden remains manageable within the current operating environment. The company paid a modest dividend, with a payout ratio around 30% and a dividend yield of roughly 1.3% as of year-end.
- The results reflect a cyclical, regional contractor focused on utilities and energy-related construction with a leverage/working-capital profile that can swing with project mix and timing. The investment view hinges on monitoring backlog development, the pace of project award/commissioning in natural gas pipelines and related facilities, and the company’s ability to convert EBITDA strength into sustained free cash flow.