Utilities upgrade cycle lifts Energy Services of America backlog, strengthens FY2026 outlook

Utilities upgrade cycle lifts Energy Services’ project pipeline

Distribution and transmission backlog fuels fiscal 2026 outlook

Energy Services of America reports a significant sequential backlog increase of about $41.7 million, a development management says underpins revenue visibility and margin expansion for fiscal 2026. The company attributes the rise to robust demand across multiple end markets, with municipalities and private utilities accelerating replacement and upgrade cycles in Gas & Water Distribution.

Gas & Water Distribution revenue is rising about 30% year‑over‑year, while Gas & Petroleum Transmission benefits from two new projects awarded during the quarter, the company says. Electrical, Mechanical and General project revenue shows a modest year‑over‑year decline, but backlog in that segment grows by roughly $7 million sequentially, signalling continued large‑project demand and a more diversified project mix.

Management says the strengthened backlog, combined with an active bidding pipeline in distribution and transmission, supports its expectation of improved margins through the remainder of fiscal 2026. The company also reports workforce optimization for seasonally slower winter months, and says the sales mix is a key factor lifting gross margin to 12.3%.

Quarterly results show improved profitability

For the quarter ended Dec. 31, 2025, Energy Services records revenue of $114.1 million, up 13.4% from $100.6 million a year earlier, and gross profit of $14.0 million versus $10.3 million. Net income rises to $2.7 million, or $0.16 per diluted share, compared with $854,000, or $0.05 per diluted share, in the prior‑year quarter. Adjusted EBITDA increases to $8.3 million from $4.3 million, reflecting higher margins and a stronger project mix.

Acquisition effects and operating costs

Selling and administrative expenses are $9.1 million, up from $8.6 million a year earlier, which the company attributes mainly to integration and operating costs stemming from its December acquisition of Tribute. Management notes these costs represent a full‑quarter contribution and says it expects seasonal variation in expenses while continuing to pursue bids across its core segments.