a little GV hodge-podge stuff from filings. Kinda piece-meal as I read thru things here and there.
I'll try to get some tangible questions together for the CEO next week or so and call him to run some things by him.
Operating margins on electrical construction operations increased to 3.8% for the three months ended March 31, 2008, from (2.6)% for the three months ended March 31, 2007. The increase in operating margins for the three month period ended March 31, 2008 was largely the result of improved productivity on several jobs in the current period compared to the prior year period.
Looks to be a trend with last Phase I project coming in under biudget and ahead of sched.
Our primary cash needs have been for working capital and capital expenditures. Our primary sources of cash have been cash flow from operations and borrowings under our lines of credit. As of March 31, 2008, we had cash and cash equivalents of $4.3 million and working capital of $12.7 million, as compared to cash and cash equivalents of $4.0 million and working capital of $13.8 million as of December 31, 2007. In addition, we have $3.0 million in unused revolving lines of credit as of March 31, 2008. We anticipate that this cash on hand, our credit facilities and our future cash flows from operating activities will provide sufficient cash to enable us to meet our future operating needs and debt requirements, as well as to ensure our ability to grow.
Since September 17, 2002, we have had a stock repurchase plan which, as last amended by the Board of Directors on May 31, 2007, permits the purchase of up to 3,500,000 shares until September 30, 2008. We did not purchase any of our Common Stock during the three months ended March 31, 2008 or 2007. As of March 31, 2008, we have a maximum of 1,154,940 shares that may be purchased under our publicly announced stock repurchase plan. Since the inception of the repurchase plan, we have repurchased 2,345,060 shares of our Common Stock at a cost of $1,289,467 (average cost of $0.55 per share). We may repurchase our shares either in the open market or through private transactions. The volume of the shares to be repurchased is contingent upon market conditions and other factors.
++ Apparently eventually expecting to be profitable in order to use up the $3.1 mill deferred tax asset/ AMT credit, but who knows on that end:
As of March 31, 2008, our deferred tax assets were largely comprised of an AMT credit carryforward and inventory adjustments as condominium units are sold. Based on historical experience and assumptions with respect to forecasts of future taxable income and tax planning, among others, we anticipate being able to generate sufficient taxable income to utilize the AMT credit carryforward, which has no expiration date, and recognize the inventory adjustments as condominium units are sold. Therefore, we have not recorded a valuation allowance against the deferred tax assets. The minimum amount of future taxable income required to be generated to fully realize the deferred tax assets is approximately $3.1 million.
++ Paid down debt in latest Q even with the loss reported (decreased ARs and increased accts payable to do that I think so working capital decreased):
As of March 31, 2008, the Company, the Company’s wholly owned subsidiaries, Southeast Power, Bayswater, Pineapple House and Oak Park, and the Bank, are parties to a loan agreement and a series of related ancillary
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agreements for a revolving line of credit loan for a maximum principal amount of $14.0 million to be used by Pineapple House to fund the construction of residential condominium units (the “Pineapple House Mortgage”). Interest is payable monthly at an annual rate equal to the monthly LIBOR rate plus one and eighty-five one-hundredths percent (4.96% and 7.09% as of March 31, 2008 and December 31, 2007, respectively). The maturity date of the Pineapple House Mortgage is November 18, 2008, unless extended by the Bank at its discretion. At the Bank’s option, the loan may be extended for two eighteen-month periods upon payment of a fee to the Bank in connection with each extension. These extensions do not necessarily provide for future advances, but solely for extension and preservation of the commitment related to the construction of a second and third building on the Pineapple House site. Borrowings outstanding under this agreement were $3.9 million
and $4.3 million as of March 31, 2008 and December 31, 2007, respectively. The loan is secured by a Mortgage and Security Agreement.
As of March 31, 2008, the Company, the Company’s wholly owned subsidiary, Southeast Power, and the Bank, had a loan agreement and other related ancillary agreements for a revolving line of credit loan for a maximum principal amount of $3.5 million to be used by Southeast Power for durable equipment purchases. The Company agreed to guarantee Southeast Power’s obligations under the loan agreement. Interest is payable monthly at an annual rate equal to the monthly LIBOR rate plus one and eight-tenths percent (4.91% and 7.04% as of March 31, 2008 and December 31, 2007, respectively). The maturity date of the loan is December 13, 2010. Southeast Power made monthly payments of interest to the Bank in arrears on the principal balance outstanding until July 2007, and thereafter, Southeast Power pays monthly installments of principal and interest of $94,605, until maturity. Borrowings outstanding under this loan agreement were $2.9 million and $3.1 million as
of March 31, 2008 and December 31, 2007, respectively. The loan is secured by the grant of a continuing security interest in all equipment purchased with the proceeds of the loan, and any replacements, accessions, or substitutions thereof and all cash and non-cash proceeds thereof.
The Company’s debt arrangements contain various financial and other covenants, all of which the Company was in compliance with as of March 31, 2008.
> For both the quarters ended March 31, 2008 and 2007, our DSO
> for accounts receivable was 67, and our DSO for costs and
> estimated earnings in excess of billings on uncompleted
> contracts were 22 and 34, respectively. As of April 30,
> 2008, we have received approximately 72.7% of our March 31,
> 2008 outstanding trade accounts receivable balance. In
> addition as of April 30, 2008, we have invoiced our
> customers for approximately 72.2% of the balance in costs
> and estimated earnings in excess of billings as of March
> 31, 2008.
++ As far as being a huruicane play (mainly Fla):
When disaster strikes, Southeast Power continues to
rise to the challenge. Our personnel and our extensive fleet are prepared to mobilize immediately and operate under the most adverse conditions while ensuring the critical time constraints of our customers are met. Our crews have played a major role in storm restoration activities in and around the Southeast for every major hurricane to strike the
region in recent years.
++ CEO skipped bonus (he should BTW, with the performance of the company IMO):
Annual Incentive Compensation Earned in 2007. The
Compensation Committee recommended to the Board o Directors, and the Board of Directors approved, an annual
cash bonus award in the amount of $34,944.81 for Mr. Jones and $29,625 for Mr. Wherry, in each case earned during 2007 and paid in 2008, pursuant to The Goldfield Corporation Performance-Based Bonus Plan. Mr. Sottile requested that the Compensation Committee forego granting him a bonus award for 2007 and the Compensation Committee acceded to
his request. The bonus awards approved for Messrs. Jones and Wherry were earned based upon the Compensation Committee's assessment of the level of performance of each of these officers with respect to the performance measures established in and for 2007. These bonuses are subject to increase or decrease based on audit adjustments made, if any, in connection with the finalization of the Company's year-end financial statements.
++ Still lots of units available but not a lot of overhead with them being vacant. Company seems content holding them for better or worse:
As of March 31, 2008, in addition to the seventeen remaining units of Phase I of Pineapple House, we own vacant property on which we plan to build two condominium buildings, which will comprise Phase II and Phase III of the Pineapple House project. Although we have delayed the sales and construction of new projects, we believe the real estate market in our area will ultimately improve and we will resume our plans for this vacant property. However, we can provide no assurance about the real estate market or our future plans. Additionally, we have three units in Oak Park, located in Cape Canaveral, Florida, in inventory. Oak Park was completed in the third quarter of 2006.
Looking forward with respect to our real estate development operations, we continue to see weak, and perhaps deteriorating, market conditions, which may continue to have an adverse impact on the sales and pricing of our condominium units, the commencement and development of new projects (including a delay in the commencement of Phase II of the Pineapple House project) and on the results of our real estate development operations. We cannot predict whether the Florida condominium market will improve, or when any such improvement may take place. However, we have completed the first phase of the Pineapple House project on budget and in a timely manner, and we believe the project is attractive and of high quality. Furthermore, we will no longer be incurring construction costs with respect to this phase and our share of the maintenance costs on the unsold units is expected to be no more than $100,000 annually.
++ Some stuff on the SEPCO subsid performance in last Q report:
Electrical construction revenues decreased $522,000, or 7.1%, to $6.8 million for the three months ended March 31, 2008 from $7.4 million for the three months ended March 31, 2007. The decrease in revenue for the three month period ending March 31, 2008, when compared to the same period in 2007 was primarily due to a continued slowdown in demand for our electrical construction services and a reduction in the number of projects in process, resulting from the availability of fewer profitable projects.
The varying magnitude and duration of electrical construction projects may result in substantial fluctuation in the Company’s backlog from time to time. Backlog represents the uncompleted portion of services to be performed under project-specific contracts and the estimated value of future services that we expect to provide under our existing service agreements, including new contractual agreements on which work has not begun. In many instances, our customers are not contractually committed to specific volumes of services and many of our contracts may be terminated with notice, therefore we do not consider any portion of our backlog to be firm. However, our customers become obligated once we provide the services they have requested. Our service agreements are typically multi-year agreements, and we include in our backlog the amount of services projected to be performed over the terms of the contracts based on our historical relationships with these customers. Our estimates of a customer’s requirements during a particular future period may not be accurate at any point in time. As of March 31, 2008, the electrical construction operation’s backlog was approximately $12.2 million, which included approximately $2.0 million from fixed price contracts for which revenue is recognized using percentage-of-completion and approximately $10.2 million from service agreement contracts for which revenue is recognized as work is performed. Of our total backlog, we expect approximately 49% to be completed within the current fiscal year. This compares to a backlog of $7.4 million at March 31, 2007, of which approximately $6.3 million represented backlog from fixed price contracts and approximately $1.1 million represented service agreement backlog.
++ Not selling their 20 units, just keeping them for now with the low annual maintenance on them:
Real estate construction revenues decreased by 79.9% to $492,000 for the three months ended March 31, 2008 from $2.5 million for the like period in 2007.
The decrease in revenues for the three months ended March 31, 2008, compared to 2007, was mainly due to the fact
that we had no projects under construction during the quarter ended March 31, 2008. In the quarter ended March 31, 2008, we closed on the sale of one Pineapple House condominium unit. In the quarter ended March 31, 2007, we recognized
revenue under the percentage-of-completion method on 21 units
under contract for sale (a portion of which was reversed in the second quarter of 2007). As of March 31, 2008, our real estate development operation had no backlog.
Revenues and results of operations in our electrical construction business can be subject to seasonal variations. These variations are influenced by weather, customer spending patterns and system loads. The Company primarily performs work in the southeastern United States. Electric utility customers normally perform their system upgrades and maintenance work during off-peak seasons when the demand for electrical power is reduced,
which is in the first two quarters of the year in the southeast region of the United States. This pattern is apparent by the reduction in the number of active projects in the third quarter. However, since hurricane season normally peaks during this period, this pattern can be offset with storm restoration work resulting from hurricane damage.
++ Here's the stuff from the recent backlog PR (wanting to clarify if all this backlog is in excess of the backlog at March 31 and if so, how much other bidding they are doing actively right now since they came in under budget and ahead of schedule on their Phase I project- and margins are improving with SEPCO- these are turnaround signs IMO but may be slow to develop as Sottile points out with Q3 traditionally being a weak SEPCO Q unless storms hit Fla):
The contracts include installation of 105 miles of optical ground wire (OPGW) in central Colorado; 6.5 miles of 161 kV transmission line in western Tennessee (contract subject to final regulatory approval); 40 miles of OPGW near Birmingham, Alabama; and a small tie line in northern Texas. In addition, Goldfield has been awarded Phase II of the previously announced multi phase upgrade of 46.2 miles of high voltage (230 kV) transmission line to support load growth in the central Florida area. Phase II consists of 11 miles of 230 kV rebuild. Phase I of this project was completed in May 2008 ahead of schedule and below budget. Southeast Power, Goldfield’s electrical construction subsidiary, is the “preferred contracting partner” for the remaining segments.
John H. Sottile, President of The Goldfield Corporation, commented “For several years, Southeast Power has been working towards expanding our customer and geographic base to include the western parts of the United States. These new projects represent an important initial step in implementing our business plan.”
Mr. Sottile also commented, “With aggressive competition for the fewer available electrical construction jobs, work is expected to remain slow throughout the summer. The challenging economic environment, which has impacted Southeast Power over the past few quarters, is expected to continue into our third quarter, but we are encouraged by this growth in new business and new territories.”
