Energy Services Of America Corporation · NASDAQ:ESOA
Energy Services Of America — Energy Services Acquisition — SPAC Merger (June 2008)
31 slides from Energy Services Of America's SPAC merger presentation, Jun 27, 2008
Slide 1: Energy Services Acquisition Corp. July 2008
Strictly Private and Confidential Energy Services Acquisition Corp. July 2008
Slide 2: Disclaimer: Forward Looking Statements
Disclaimer Forward Looking Statements Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a futur
Slide 3: Table of Contents
Table of Contents I. Overview of Energy Services Acquisition Corp. II. Industry Overview III. Acquisition Overview IV. Financial Overview V. Transaction Timing
Slide 4: Overview of Energy Services Acquisition Corp.
Overview of Energy Services Acquisition Corp. SECTION I
Slide 5: Overview
Overview . Energy Services Acquisition Corp. (“ESAC,” “Energy Services,” or the “Company”) raised $51.6 million through an IPO in August 2006 via a special purpose acquisition company (“SPAC”) . Trust Fund balance totaled ~$51.4 million at the end of April 2008 ($5.97/share) . Energy Services announ
Slide 6: Timeline of Events
Timeline of Events August 2006 -Energy Services Acquisition Corp. IPO January 2008 - -Acquisition 2006 2007 2008 of ST Pipeline February 2008 - -Acquisition May 2007 -C.J. Hughes of C.J. Hughes acquires Nitro Electric
Slide 7: ESA Common Stock Price Performance
ESA Common Stock Price Performance $5.00 $5.10 $5.20 $5.30 $5.40 $5.50 $5.60 $5.70 $5.80 $5.90 $6.00 Price ($/share) 1 2 3 ESAC Key Events Related Key Events 1. October 2006: Separate trading of Common Shares August 2006: Energy Services IPO and Warrants commences May 2007: C.J. Hughes acquires Nitr
Slide 8: Key Investment Highlights
Key Investment Highlights . Both companies have experienced management teams with track records of growing and maintaining strong businesses . Pipeline construction industry continues to enjoy favorable demand due to high energy prices and lack of experienced engineering and construction firms – Str
Slide 9: Key Management
Key Management Marshall T. Reynolds – CEO & Chairman . Significant Investor/Board Member of numerous other companies: – Chairman of Champion Industries – Chairman of Portec Rail Products – Former Chairman of Key Centurion Bancshares, Inc. – Former Chairman of C.J. Hughes Construction (underground ut
Slide 10: Key Management
Key Management . James Shafer (ST Pipeline Management) -Involved in pipeline construction and service business for 40+ years -Participated in building Alaska pipeline in the 1970’s -Founded ST Pipeline in 1984 -Proven management abilities . Edsel Burns (C.J. Hughes Management) -President of C.J. Hug
Slide 11: Industry Overview
Industry Overview SECTION II
Slide 12: Industry Overview
Industry Overview .Significant energy demand growth based on increasing global population . Power plants increasingly being built to run on clean natural gas . High commodity prices leading to E&Ps increasing their focus on unconventional gas plays (such as Appalachia ) . E&P companies will require
Slide 13: Industry Overview
Industry Overview . Natural gas pipeline construction business divided into three distinct segments: (1) Small bore pipeline: typically <12” diameter, used in gathering systems connecting natural gas wells to gas facilities and lateral networks (2) Medium diameter pipeline: typically found in latera
Slide 14: Industry Overview: Capital Requirements, Competitive Landscape
Industry Overview Capital Requirements Competitive Landscape . Medium / large bore pipeline business requires extensive equipment – Both companies have strong inventories of required equipment . Energy demands have created a strong backlog and short lead times for work to be performed . Availability
Slide 15: Industry Overview – Appalachian Basin
Industry Overview – Appalachian Basin . The Appalachian Basin (“Appalachia”) stretches from Alabama to New York Appalachian Basin Property Map . Appalachia has been producing oil & natural gas since 1859 – Cumulative production of ~5 billion barrels of oil and 50 Tcf (1) . Appalachian Basin contains
Slide 16: Industry Overview – Appalachian Basin
Industry Overview – Appalachian Basin .. Major producers in the Appalachian basin include: .. Several major interstate pipelines provide takeaway capacity to Appalachian producers .. Pipelines serve major end markets including New York , Boston , Philadelphia , Baltimore/Washington D.C., Chicago , D
Slide 17: Acquisition Overview
Acquisition Overview SECTION III
Slide 18: ST Pipeline, Inc.
ST Pipeline, Inc. . Founded in 1984 by James Shafer . Focuses on the repair and installation of transmission gas pipelines, primarily in the Appalachian Basin – Current project example: Building 69 miles of 20” pipeline for Equitrans in Kentucky . Partial list of customers:
Slide 19: ST Pipeline, Inc. Summary of Earnings
ST Pipeline, Inc. Summary of Earnings ($ in millions) Annual Results Quarterly Results 2008E 2007 2006 Q1 2008 Q1 2007 Revenues $60.0 $100.4 $49.8 $14.5 $17.9 Net Income Before Taxes 10.0 27.9 3.3 3.0 4.1 Pro Forma After Tax Net Income $6.0 $16.8 $2.0 $1.8 $2.4 EBITDA $29.2 $4.5 $3.3 $4.4 Backlog $5
Slide 20: C.J. Hughes Construction, Inc.
C.J. Hughes Construction, Inc. . Transaction includes C.J. Hughes and its wholly owned subsidiary Nitro Electric (purchased in May 2007) . C.J. Hughes business – Performs repairs and installation of gas pipelines in the Appalachian basin – Provides electrical services to various commercial and indus
Slide 21: C.J. Hughes Construction, Inc. Summary of Earnings
C.J. Hughes Construction, Inc. Summary of Earnings ($ in millions) Annual Results Quarterly Results 2008E 2007 2006 Q1 2008 Q1 2007 Revenues $110.0 $75.3 $31.6 $21.7 $7.1 Net Income Before Taxes 8.0 2.8 (0.1) 0.5 (0.5) Pro Forma After Tax Net Income $4.8 $1.6 N/M $0.3 N/M EBITDA $5.1 $1.2 $1.2 ($0.2
Slide 22: Transaction Summary
Transaction Summary . ~$51.4 million (1) held in the trust account will be used in the following manner and priority: – Up to ~$10.3 million to holders of initial public offering shares who elect to have their shares redeemed – Up to $1.0 million to pay the underwriters for the deferred non-accounta
Slide 23: Implied P/E Assessment
Implied P/E Assessment ($ in millions) 2008E Earnings2008E P/E Multiples Value with Warrants ST Pipeline C.J. Hughes $6.0 $4.8 9.5 x 9.5 x $57.0 $45.6 Total $102.6 Excess Cash $3.7 Warrant Cash 101.4 Assumed Debt (15.1) Energy Services Equity Value $192.6 Fully Diluted Shares (1) 32.3 Implied Equity
Slide 24: Financial Overview
Financial Overview SECTION IV
Slide 25: Pro Forma Financial Summary
Pro Forma Financial Summary (US$ in millions) Five Months Ended May 31, 2008 ST Pipeline C.J. Hughes Total Revenues $25.2 $48.2 $73.3 Cost of Revenues 19.5 44.0 63.5 Gross margin $5.7 $4.2 $9.8 Administrative expenses 0.6 1.7 2.3 Operating Income $5.1 $2.4 $7.5 Net Income before taxes $5.0 $2.0 $7.1
Slide 26: Pro Forma & Post-Acquisition Financial Statement
Pro Forma & Post-Acquisition Financial Statement Revenue (US$ in millions) ST Pipeline C.J. Hughes Total 2005 $22.9 $29.4 $52.3 2006 49.8 31.6 81.4 2007 100.4 75.3 175.7 2008E 60.0 110.0 170.0 Earnings (US$ in millions) ST Pipeline C.J. Hughes Total 2005 $1.0 $1.1 $2.1 2006 2.0 (0.0) 2.0 2007 16.8 1
Slide 27: Pro Forma Financial Information
Pro Forma Financial Information ($ and shares in millions) Balance Sheet - March 31, 2008 Total Current Assets $55.2 $44.9 Total Assets 111.0 100.8 Short-Term Debt 10.3 10.3 Total Current Liabilities 26.0 26.0 Long-Term Debt 9.6 9.6 Total Liabilities 43.3 43.3 Total Equity 67.7 57.5 Total Liabilitie
Slide 28: Excess Cash Calculation
Excess Cash Calculation Excess Cash ($ in millions) Held in Trust (April 30, 2008) $51.4 Redemption (10.3) Fees (1.0) Consideration (36.2) Loan Repayment (0.2) Excess Cash $3.7 Note: Numbers may not be exact due to rounding.
Slide 29: Outstanding Shares Data
Outstanding Shares Data (shares in millions) No Redemption Maximum Redemption Public Shares Outstanding 8.6 6.9 Insider Shares 2.2 2.2 10.8 9.0 Shares Issued to CJH 3.0 3.0 Shares Outstanding 13.7 12.0 Insider Warrants 3.1 3.1 Public Warrants 17.2 17.2 Fully Diluted Shares Outstanding 34.0 32.3 Note
Slide 30: Transaction Timing
Transaction Timing SECTION V
Slide 31: Preliminary Transaction Timing
Preliminary Transaction Timing . Record date: June 6, 2008 . Initial meeting date: July 17, 2008 . Proxy solicitor should determine Institutional shareholdings within 3 days or so . Mailing of Proxies occurred June 16, 2008 . Company meetings with selected fundamental accounts . Shareholders meeting
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