Goldfield Announces 2018 Fourth-Quarter and Full-Year Results

Company Achieves Record Annual Revenues

MELBOURNE, Fla., March 12, 2019 (GLOBE NEWSWIRE) -- The Goldfield Corporation (NYSE American: GV), a leading provider of electrical construction services for the utility industry and industrial customers, today announced its financial results for the three months and full year ended December 31, 2018. Through its subsidiaries, Power Corporation of America, C and C Power Line, Inc., Southeast Power Corporation and Precision Foundations, Inc., Goldfield provides electrical construction services primarily in the Southeast, mid-Atlantic, and Texas-Southwest regions of the United States. To a lesser extent, Goldfield is also engaged in real estate operations focused on the development of residential properties on the east coast of Central Florida.

President and Chief Executive Officer John H. Sottile said, “In 2018 Goldfield achieved record revenue of $138.1 million, an increase of 21.2% from 2017. While we are encouraged by our strong revenue growth, our results were impacted by lower profit margins resulting from escalating costs and competitive pressures in our electrical construction segment. We are in the process of bidding certain substantial MSA contracts with some of our largest customers with the goal of improving future profit margins.”

Sottile concluded, “As we look ahead to 2019, we see the potential for significant growth in both our customer base and services across our Texas-Southwest and mid-Atlantic regions, with particular focus on increasing EPC (engineering, procurement and construction) opportunities. Our labor force remains strong, and we believe we have the right team in place to execute our projects and to build on our momentum in 2019. In our real estate development operations, we expect to see a positive impact on both revenue and profit in the first half of 2019 associated with the closing of sales from recently completed real estate projects.”

Year Ended December 31, 2018

For the year ended December 31, 2018, compared to 2017:

  • Consolidated revenue increased 21.2% to a record $138.1 million from $114.0 million, attributable to increased electrical construction operations.

  • Electrical construction revenue increased 25.1% to $136.5 million from $109.2 million primarily due to increases in both master service agreements (“MSA”) and non-MSA customer project activity.

  • Real estate development revenue decreased to $1.6 million from $4.8 million mainly due to the reduced number of completed units available for sale through year-end.

  • Gross margin on electrical construction decreased to 16.5% from 20.6%, attributable to a change in project mix, resulting in a higher volume of lower margin projects mainly due to increased competition.

  • Gross margin on real estate development was 37.6% compared to 34.4%.

  • Operating income decreased to $7.6 million from $10.2 million, mainly due to an increase in depreciation expense, a decrease in real estate development activity and lower margins on electrical construction projects.

  • Net income decreased to $5.0 million, or $0.20 per share, compared to $8.3 million, or $0.33 per share.

  • EBITDA (a non-GAAP measure)(1) was $16.1 million compared to $17.1 million. This decrease was primarily due to the decrease in real estate development segment margin, and higher SG&A expenses, partially offset by an increase in gain on sale of property and equipment.

Quarter Ended December 31, 2018

For the quarter ended December 31, 2018, compared to the same period in 2017:

  • Total revenue increased 23.9% to $36.7 million from $29.6 million, due to the increases in electrical construction operations.

  • Electrical construction revenue increased 34.4% to $36.7 million from $27.3 million, primarily due to increases in both MSA and storm work project activity.

  • Real estate development revenue was not significant for the quarter ended December 31, 2018. In 2017 such revenue was $2.3 million. The decrease in revenue was due to the reduced number of completed units available for sale through year-end.

  • Gross margin on electrical construction decreased to 13.4% from 15.7%, attributable to a change in project mix, resulting in a higher volume of lower margin projects mainly due to increased competition.

  • Gross margin on real estate development was (32.0)% compared to 37.4%, mainly due to the decline in the number of completed units available for sale through year-end.

  • Operating income decreased to $853,000 from $1.6 million, mainly due to a decrease in real estate development activity and an increase in depreciation expense.

  • Net income decreased to $664,000, or $0.03 per share, from $3.3 million, or $0.13 per share. Net income for the three months ended December 31, 2017, included a one-time $2.5 million, or $0.10 per share, income tax benefit primarily due to the enactment of the Tax Cuts and Jobs Act in 2017.

  • EBITDA (a non-GAAP measure)(1) was $3.3 million compared to $3.2 million. This increase was primarily due to higher gross margin for electrical construction and an increase in gain on sale of property and equipment, partially offset by lower gross margin in our real estate development.

Backlog

At December 31, 2018, total backlog of $214.5 million remained approximately unchanged from December 31, 2017. Total backlog includes total revenue estimated over the remaining life of the MSAs plus estimated revenue from fixed-price contracts.

The Company’s 12-month electrical construction backlog decreased 7.6% to $101.8 million from $110.2 million in 2017, mainly due to MSA backlog run-off and adjustments to existing MSA backlog estimates. The impact of future projects awarded under MSAs cannot be determined with certainty and revenue from such contracts may vary substantially from current estimates.

Backlog is estimated at a particular point in time and is not determinative of total revenue in any particular period. It does not reflect future revenue from a significant number of short-term projects undertaken and completed between the estimated dates.

Stock Buy Back Program

The Company’s Board of Directors has extended the Company’s Stock Repurchase plan from September 30, 2019 until September 30, 2020 and has increased the number of shares available for purchase under the plan. The plan previously authorized the repurchase of up to 3,500,000 shares, of which 3,273,880 have been repurchased to date. The revised plan will permit an additional 2,500,000 shares to be repurchased, increasing the amount available for repurchase to 2,726,120 shares.

Stock repurchases may be made through a variety of methods, including open market or privately negotiated transactions. The timing and number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. Goldfield’s stock repurchase program does not obligate it to repurchase any specific dollar value or number of shares of stock, and may be suspended, increased, extended, or discontinued by the Company’s Board of Directors at any time.

Conference Call

The Company’s President and Chief Executive Officer John H. Sottile and Chief Financial Officer Stephen R. Wherry will host a conference call and webcast to discuss results at 10 a.m. Eastern time on Wednesday, March 13, 2019. To participate in the conference call via telephone, please dial (866) 373-3407 (domestic) or (412) 902-1037 (international) at least five minutes prior to the start of the event. Goldfield will also webcast the conference call live via the internet. Interested parties may access the webcast at https://78449.themediaframe.com/dataconf/productusers/gv/mediaframe/28407/indexl.html or through the Investor Relations section of the Company’s website at http://www.goldfieldcorp.com. Please access the website at least 15 minutes prior to the start of the call to register and download and install any necessary audio software. The webcast will be archived at this link or through the Investor Relations section of the Company’s website for six months.

About Goldfield
Goldfield is a leading provider of electrical construction services engaged in the construction of electrical infrastructure for the utility industry and industrial customers, primarily in the Southeast,
mid-Atlantic and Texas-Southwest regions of the United States. For additional information on our fourth-quarter 2018 results, please refer to our report on Form 10-K being filed with the Securities and Exchange Commission and visit the Company’s website at http://www.goldfieldcorp.com.

_________________

(1) Represents Non-GAAP Financial Measure - The non-GAAP financial measure used in this earnings release is more fully described in the accompanying supplemental data and reconciliation of the non-GAAP financial measure to the reported GAAP measure. The non-GAAP measure in this press release and on The Goldfield Corporation’s website is provided to enable investors and analysts to evaluate the Company’s performance excluding the effects of certain items that impact the comparability of operating results between reporting periods and compare the Company’s operating results with those of its competitors. This measure should be used to supplement, and not in lieu of, results prepared in conformity with GAAP. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly-titled measures of other companies.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995 throughout this document.  You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” and “continue” or similar words. We have based these statements on our current expectations about future events. Although we believe that our expectations reflected in or suggested by our forward-looking statements are reasonable, we cannot assure you that these expectations will be achieved. Our actual results may differ materially from what we currently expect. Factors that may affect the results of our operations include, among others: the level of construction activities by public utilities; the concentration of revenue from a limited number of utility customers; the loss of one or more significant customers; the timing and duration of construction projects for which we are engaged; our ability to estimate accurately with respect to fixed price construction contracts; and heightened competition in the electrical construction field, including intensification of price competition. Other factors that may affect the results of our operations include, among others: adverse weather; natural disasters; effects of climate changes; changes in generally accepted accounting principles; ability to obtain necessary permits from regulatory agencies; our ability to maintain or increase historical revenue and profit margins; general economic conditions, both nationally and in our region; adverse legislation or regulations; availability of skilled construction labor and materials and material increases in labor and material costs; and our ability to obtain additional and/or renew financing. Other important factors which could cause our actual results to differ materially from the forward-looking statements in this press release are detailed in the Companys Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operation sections of our Annual Report on Form 10-K and Goldfields other filings with the Securities and Exchange Commission, which are available on Goldfields website: http://www.goldfieldcorp.com. We may not update these forward-looking statements, even in the event that our situation changes in the future, except as required by law.

For further information, please contact:
The Goldfield Corporation
Robert Winters or Josh Littman
Phone: (312) 445-2870
Email:  gv@alpha-ir.com


The Goldfield Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)

  Three Months Ended   Twelve Months Ended
  December 31,   December 31,
  2018   2017   2018   2017
Revenue              
Electrical construction $ 36,683,860     $ 27,284,989     $ 136,526,511     $ 109,154,476  
Real estate development 2,300     2,327,569     1,622,331     4,799,043  
     Total revenue 36,686,160     29,612,558     138,148,842     113,953,519  
Costs and expenses              
Electrical construction 31,783,364     22,995,464     113,976,157     86,714,412  
Real estate development 3,037     1,456,189     1,012,098     3,147,791  
Selling, general and administrative 1,662,970     1,651,533     7,336,475     6,611,315  
Depreciation and amortization 2,405,545     1,831,537     8,436,972     7,217,901  
(Gain) loss on sale of property and equipment (21,501 )   46,652     (176,564 )   76,810  
     Total costs and expenses 35,833,415     27,981,375     130,585,138     103,768,229  
          Total operating income 852,745     1,631,183     7,563,704     10,185,290  
Other income (expense), net              
Interest income 23,427     8,187     52,288     31,696  
Interest expense, net of amount capitalized (273,144 )   (190,756 )   (875,646 )   (665,268 )
Other income, net 23,856     12,376     84,351     57,654  
     Total other expense, net (225,861 )   (170,193 )   (739,007 )   (575,918 )
Income before income taxes 626,884     1,460,990     6,824,697     9,609,372  
Income tax provision (36,854 )   (1,982,864 )   1,796,946     1,035,997  
Income from continuing operations 663,738     3,443,854     5,027,751     8,573,375  
Loss from discontinued operations, net of income tax
benefit of $0, $102,679, $0 and $164,235, respectively
    (172,137 )       (275,624 )
Net income $ 663,738     $ 3,271,717     $ 5,027,751     $ 8,297,751  
Net income per share of common stock — basic and diluted              
Continuing operations $ 0.03     $ 0.14     $ 0.20     $ 0.34  
Discontinued operations     (0.01 )       (0.01 )
Net income per share of common stock — basic and diluted $ 0.03     $ 0.13     $ 0.20     $ 0.33  
Weighted average shares outstanding — basic and diluted 25,293,725     25,451,354     25,411,623     25,451,354  


The Goldfield Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

  December 31,   December 31,
  2018   2017
ASSETS      
Current assets      
Cash and cash equivalents $ 11,376,373     $ 18,529,757  
Accounts receivable and accrued billings, net 22,236,071     21,566,842  
Costs and estimated earnings in excess of billings on uncompleted contracts 12,030,000     6,074,346  
Income taxes receivable 1,220,527     619,552  
Residential properties under construction 8,244,995     2,412,202  
Prepaid expenses 634,069     993,668  
Other current assets 1,835,743     1,532,110  
 Total current assets 57,577,778     51,728,477  
       
Property, buildings and equipment, at cost, net 48,927,055     36,072,300  
Deferred charges and other assets 6,043,642     5,831,163  
Total assets $ 112,548,475     $ 93,631,940  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities      
Accounts payable and accrued liabilities $ 15,999,157     $ 9,379,535  
Current portion of notes payable, net 7,161,890     6,099,787  
Accrued remediation costs 60,101     87,553  
Other current liabilities 1,278,857     166,268  
 Total current liabilities 24,500,005     15,733,143  
       
Deferred income taxes 6,061,042     4,698,720  
Accrued remediation costs, less current portion 436,982     434,164  
Notes payable, less current portion, net 21,731,024     16,151,567  
Other accrued liabilities 213,990     66,033  
Total liabilities 52,943,043     37,083,627  
Commitments and contingencies      
Stockholders’ equity      
Common stock 2,781,377     2,781,377  
Capital surplus 18,481,683     18,481,683  
Retained earnings 41,621,191     36,593,440  
Common stock in treasury, at cost (3,278,819 )   (1,308,187 )
 Total stockholders’ equity 59,605,432     56,548,313  
Total liabilities and stockholders’ equity $ 112,548,475     $ 93,631,940  


The Goldfield Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

EBITDA, a non-GAAP performance measure used by management, is defined as net income (loss) plus: interest expense, provision (benefit) for income taxes and depreciation and amortization, as shown in the table below. EBITDA, a non-GAAP financial measure, does not purport to be an alternative to net income (loss) as a measure of operating performance. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly-titled measures of other companies. We use, and we believe investors benefit from the presentation of, EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.

    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
EBITDA   2018   2017   2018   2017
Net income (GAAP as reported)   $ 663,738     $ 3,271,717     $ 5,027,751     $ 8,297,751  
Interest expense, net of amount capitalized   273,144     190,756     875,646     665,268  
Provision for income taxes, net (1)   (36,854 )   (2,085,543 )   1,796,946     871,762  
Depreciation and amortization (2)   2,405,545     1,831,537     8,436,972     7,217,901  
EBITDA   $ 3,305,573     $ 3,208,467     $ 16,137,315     $ 17,052,682  
___________                
(1) Provision for income tax, net is equal to the total amount of tax provision, which includes the tax benefit for discontinued operations.

(2) Depreciation and amortization include depreciation on property, plant and equipment and amortization of finite-lived intangible assets.

 

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Source: The Goldfield Corporation