Q2 2020 Goldfield Corp Earnings Call
Second quarter 2020 conference call.
At this time all participants are in listen only mode question answer session will follow the formal presentation.
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As a reminder, this conference call is being recorded.
I would now like to turn the conference over to Christine Wall Suck up the effective corporate communications. Thank you you may begin.
Thank you and good morning, everyone I'd like to welcome you to the Gulf Feel Corporation conference call to discuss the company's second quarter results for 2020, which reported yesterday.
If you did not receive yesterday's press release.
Please call me, it's really want to 890 307, too and we will send you a copy well go to Goldfields website, where copy is available under the Investor Relations Yeah.
A replay of today's webcast will be available on the company's website under the Investor Relations tab.
Before we begin I want to remind you just discussion may contain forward looking statements, but then the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
You can identify these statements I was looking words, such as they will expect anticipate believes estimates plan and continue or similar words.
Any forward looking statements are based upon Goldfields management.
Current expectations about future events and Goldfields assumes no obligation to update.
We're looking statements except as required by law.
These forward looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward looking statements.
Accordingly. These forward looking statements are no guarantee future performance.
These risks and uncertainties are discussed in the company's form 10-Q put the quarterly period ended June Thirtyth 2020.
Also certain non-GAAP financial information will be discussed on the call today.
Conciliation of its non-GAAP information to the most comparable GAAP measure is set forth in yesterday's press release, which can be found on the investor section of the company's website.
With that said, let me turn the call over two or asking co CEO and Chief Financial Officer, Steve worry.
Thank you Christine and good morning, we appreciate you joining us for your continued interest in the gold feel Corporation.
Our CTO Johnston terribly such as apologies for not being on our call today as previously disclosed Mr. So it's really just currently hospitalized being treated for in uncoated related respiratory conditions, we will not be commenting further on Mr son to lose condition at this time.
With me today is Jason Spidey, who serves as acting co CEO and president of our wholly owned subsidiary Power Corporation of America.
Jason has more than 30 years' experience in electrical construction industry.
Demand for our services during the second quarter remain strong amid the extraordinary Hilton economic environment in which we are operating.
Several key metrics we achieved include.
Successful service line expansion.
Which is beginning to pay dividends by opening doors to new customers and providing additional projects with existing customers and contributed to a 19% increase in electrical construction revenue quarter over quarter.
Prove all your projects at higher margins.
Which group electrical construction margin 420 basis points year over year, and 340 basis points over the first quarter.
Increased it must say project activity.
Driven by or near record backlog, which should continue to provide strong opportunities during the second half.
2020.
Most importantly, I want to sincerely. Thank all of our gold feel employees for their commitment and resilience during these challenging times.
Our existing pandemic plan, including measures implemented to protect employees in the field and our work from home policies, where appropriate have been effective. Additionally, we continue to work in cooperation with our customers to meet their requirements for the safety of their employees and the general public.
To date, we have not experienced any material adverse impacts on the availability of our workforce or key personnel as a result of cobot 19.
The ability of our crews to continue to operate safely through the past several months in this difficult environment is one of our core competencies.
I will now move to a review of our financials, which I will review, our second quarter results as compared to the prior year.
Consolidated revenue for the second quarter of 2020 was $47.8 million, an increase of $3.4 million or 7.7%.
Compared to the same period last year.
The increase in total revenue was attributable to improved electrical construction operations project activity offset by lower real estate development activity.
Electrical construction revenue into 2022nd quarter was $46.7 million, it increased $7.5 million or 19% from $39.2 million for the same period in 2019.
This improvement was primarily due to a $5.8 million increase imaginary projects awarded and work completed in the southeast region.
And they 5 million dollar increase in Miss a transmission projects volume can service line expansion into Texas Southwest region.
These increases were partially offset by $3.7 million decrease in M.S.A. customer project activity in the mid Atlantic region.
Revenue from real estate development operations decreased to $1.1 billion for three months ended June 32020 from $5.2 million into same period in 2019.
Primarily due to the number of units sold and the timing of completion of units.
Available for sale.
Gross margin on electrical construction operations increased 420 basis points to 18.7%.
Compared to 14.5% for the same period in 2019.
This improvement was mainly due to the increase in transmission project activity at a higher margin in the Texas Southwest region.
Which provided improved absorption of fixed cost.
Comparing year over year second quarter results, depreciation and amortization expenses increased approximately $263000 or 9.6% to $3 million.
This increase was mainly due to higher capital expenditures to support revenue growth in electrical construction operations.
Selling general and administrative expenses remained level at $2.3 million.
Operating income was $3.8 million into 2022nd quarter compared to $1.6 million in the same 2019 period.
This increase was mainly due to higher electrical construction gross profit, partially offset by lower real estate development gross profit and higher depreciation expenses.
In the second quarter of 2020, I provision for income taxes was $1.1 million compared to 482.4.
Thousand dollars in the same period last year.
Our current effective tax rate for the second quarter was 31.6% compared to 37.1 person.
The second quarter effective tax rate.
In 2019 was higher due to permanent differences in relation to expected income.
Net income increased to $2.5 billion or 10 cents per share for the 2022nd quarter from $819000 or three cents per share. The same period of 2019, primarily due to the increase in electrical construction activity, partially offset by.
Lower real estate development activity.
Cash provided by our operating activities and the period ended June 32020 totaled $3 million compared to cash provided by operations of $11.5 million in 2019.
The decrease in operating cash flows is primarily attributable to the timing of electrical construction projects.
EBITDA for the second quarter ended June 32020, improved 54.2% to $6.9 million compared to $4.5 billion for the same period of 2019.
This increase was primarily due to improved electrical construction gross profit, partially offset by the decline in real estate development operations gross profit.
Total backlog at June 32020 increased 109.2% to $417.3 million compared to $199.5 million a year ago.
This improvement is primarily attributable to the award of four new assays.
At the end of the second quarter of 2020.
Our 12 month total electrical construction backlog increased 60.5% to $171.2 million compared to $106.7 million one year ago.
Mainly due to the increase it from M.S.A. project activity as well as an increase in the amount of estimated in lets say were attributable to the award of new M. assays.
At June 32020, we had approximately $27.7 million of cash cash equivalents.
$42.5 billion a funded debt.
And a $23 million revolving line of credit, which $12.3 million was available for borrowing.
Total capital expenditures for the six months ended June 30.
2020 was $9 million compared to $14.3 million in the same period a year ago.
This decrease was due to the mix of assets purchased it versus lease in the comparable quarters for electrical construction operations.
Our capex projection for the full year 2020 is $15.7 million.
This concludes our prepared remarks, operator, please open the call to questions.
Thank you.
Ladies and gentlemen at this time, we will conduct our question and answer session.
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Our first question comes from Stephen Brand Center with email investments. Please state your question.
Good morning, gentlemen.
Are there any large.
Oh and other any large contracts that you're bidding on that could possibly be sign in the near future.
We're always open to the.
Pursuing contracts from all shapes and sizes all across the country, but are there isn't rumors or be some large ones coming on the screen, we just haven't seen them yet.
Okay very good there was some room or online that you might consider a name change that accompany from goldfield to power Corporation of America to more I guess accurately reflect what type of business you're doing.
Is there anything that you guys are considering on that front.
Oh, we thought about it in a board considers it will a reason that too to the board for their consideration again.
Very good I have a great they John.
Thank you David.
Our next question comes from Sam Rebotsky with I see our asset management. Please state your question.
Yeah, Good morning, Steven Jason and John get that as soon as well looking forward to getting better it's Steven the.
Profit margins improved significantly.
And John had spoken of this improvement in the previous conference call. The one thing I noticed the backlog the backlog had gone down from 473 to 417 on the long term <unk>.
Oh, I assume when bidding on jobs to get the backlog I know I did the jobs that were bidding or they are significant and dollar amounts.
As we of course, we increased our quarter of ammonia <unk> million a quarter of a billion dollars last time.
Yes, there Sam so some of that large increase was due to their recent awarded for new M. S Phase and as you know as as we we burned through we burn through the backlog as we report our revenue. There can also be an adjustment as each quarters, we evaluate backlog, we have to make projections and asked.
And that's based on discussions with customers based on.
Okay.
Based on discussions internally and looking at our work workflow and you experience with that customer. So I was trying to say so.
That's that's the biggest reason there but.
It helps.
The larger increases Joe with the.
With the addition of new am essays, but we're okay, we're continuing to bid and add work.
Okay, and then profit margins improved significantly as John talked about do we expect a profit margins to maintain no or improve going forward.
Sam we.
We expect to you know we targeted mid to high teens and just remember is as John is as has always said.
Don't look at goldfield quarter to quarter basis, you Gotta look at it over a longer period of time, but.
We're we're encouraged by the improved margins and the hard work of our teammates.
Oh, Okay, and the stock and improve the very significantly and I guess, the it's a very significant.
Disappointment about John being in the hospital.
But do we.
We expect a you know.
The I guess hopefully the has there been more people that are coming around and talking to gold fields are interested in what company from various different aspects as didn't been more I our no.
Yeah.
Oh.
Yes, yes, yes are there has been an up tick in that and.
We've reached out to more investors, so and potential investors.
Well, that's very good that's very good.
And Oh right.
All right I'll step back in home, probably there other people that walk the talk.
And Oh poorly we could maintain the profitability and they improve in backlog of course I know the other companies in the industry their backlogs improves significantly their profits in the utility business improved so good luck.
Okay, and best of luck to John and get better quick.
Yes, Sir Thank you Sam Sam.
That could just a reminder to ask a question press star one on your telephone keypad tear move yourself from the Q press start to once again ask the question Press Star one on your telephone keypad.
Our next question comes from Ashok method. Please go ahead.
Yes, Hi, I'm I'm not sure I understood the comment about the backlog.
You know it improved year over year as compared to the prior years, you know comparable quarter, but just compare to the ended the year I noticed that lets see out so I know that it can estimates can vary et cetera, but I just was curious.
I mean is our sort of pipeline of new business better than at the end of the year or I'm just trying to.
Sort of reconcile that backlog number being down person we ended the year.
Well a couple large projects have burned off some revenue as previously disclosed and you know we do change estimates, but we're constantly.
We're constantly bidding new work, adding new jobs those get those good at it in.
Through our backlog.
So I would you consider our pipeline of new business pretty robust I guess, a you know I mean, we've had a lot of growth.
And the last you know 18 months or so I'm, just kind of curious as compare to.
Level, so far how how are we ranking in that kinda area.
Well, we look at our backlog you know, it's still significant compared to our historical levels and we do Oh, we do see see the opportunity for for the growth through new customers. We continue to gain momentum through our expanded service lines.
And that's been very helpful. You know.
We expanded our service lines in Texas, and actually we expanded in the substation and distribution areas as I'm sure, you're aware, which which led us to additional transmission work with one of our significant customer so.
Hope that answers your question.
Okay. Thanks also just on the real estate.
I know, we have a lot of love a year or this year on that how how does it look I think there were supposed to be some new projects coming on in 2021 on so can you provide any comment on that.
Yes. It as you know we completed the other projects we had under construction. So those and we have one coming out of the ground now with several more following and a significant project. We're trying to we're trying to rollout so it'll be a revenue will roll in and we increased back up.
And a 21 and then increase higher into.
Okay.
That sounds good.
Oh, that's I guess I'll get back into queue. Thank you.
Yes, Sir thank you.
Our next question comes from George Gasper. Please state your question.
Yes can you hear me.
Yes, yes, George we can hear you okay.
Good morning Tee off.
Could you highlight I got three areas here, but that that Texas growth out line can you give us a little more color and how you're progressing in Texas.
George a we ever service line expansion that's opened the doors are in Texas to continue.
To allow us to pursuant to new customers with Oh different service lines. Because there is a we're we're pleased with the expansion the results of Texas, a year to date and looking out to continue that momentum for the rest of the year.
Okay. All right are you a broadening your geographical outlined there.
Yeah.
Yes George.
We're continuing to broaden that I mean is as we've always said John has always said you know.
We're looking to expand in filling the gaps between between Virginia in West, Texas, and we're looking to add more customers in Texas and also let me point out that we were able to service multiple states out of that Texas region.
We've gone into as we've stated before Arkansas in Oklahoma, Louisiana.
Louisiana.
Okay, and a and then just a and on top of what your last comment you made about Oklahoma in Arkansas.
Now you were adding Kentucky to an operation space.
Is there anything you can say about that.
Kentucky is going well.
The transmission work over there and distribution has opened the doors up for a foundation area to come in and provide a new customer to them as well. So we're very pleased with Uh huh.
Continue expansion effort in the mid Atlantic Rick.
Okay, all right and a and then I know I've asked this question and.
The past.
Conference calls about Fiveg work or you are you into trying to get some of that work off of towers and on down from there.
Our foundation side is looking to any foundation that would regard and putting in those towers, but we are oh, we have not been approach to to install any of the the cell towers associated with Fiveg. Yet we are if the opportunity presents itself, we will definitely I think George.
Oh, Okay, alright, okay, I'm going to get back into queue then thanks.
Thank you George.
Thank you and once again to ask a question press star one on your Touchtone phone. Thank you.
Next question comes from Stephen Brand Center with a B L investments. Please state your question.
Steven brand side of your line is open.
Hello.
Hi, Stephen.
Yes, it seems that investors believe Europe since your backlogs gone down from Q1 Q2 that you forward revenue lines are going to start going down.
Could you more explain how these I'm essays are signed every several years every three years four years five years, and then they're not replenished until they're done so investors can get a better get more clarity on you know.
Where are your revenue line might be next quarter or the next several quarters out.
Oh, absolutely Steven.
These in let's say, it's come in lumps there their multi year. They maybe a one year I must say a they go up to seven years. So we make an estimate.
Based on the the as I've said the discussion with the customers they experience with the run rate with the customer and currently our arguments say the oldest one goes out to or the longest.
When we have goes out to 2025.
As well as his life go ahead go ahead. So would you think it's more accurate the focus on the 12 month backlog is up more you know it shows a nice increase from last year. So going forward should we be looking for a nice increase from last year based on the 12 month backlog.
Yes.
Yes, historically, we beat that 12 month backlog, but that is.
That is a good number to look at.
And I mean, well pay somebody anymore, it's coming in.
That more accurately not not that it's a it's line by line, but it's more accurately reflects where the next 12 months, we're heading compared to the previous 12 months.
Yes, Sir this or that is correct, okay as the company the not the guys on the field, obviously, but the people who work in the office at any working for home one day working in the office these days.
We're covering both of that we have some that were from the office in some of the work at home, we presented opportunity, but is working out well.
Okay and are there any of the big contracts that you signed I guess, the I must say work was big and I. I think you had a 50 million dollar contract signed at some point earlier this year or late last year or any of those starting soon that I'm gonna start adding revenue to the you know going forward.
There are under progress now Oh, we're working on that as we speak.
Okay, great. Thank you gentlemen.
Thanks, David.
Thank you. Our next question comes from George Gasper. Please go ahead.
Okay. Thank you I just want additional can you talk a little bit about other than mainline repair and installed.
They are substation repair activity can you give us a idea the outlook and is there anything going on in substation.
Install that is coming about potentially because of the increasing demand.
For at this type of equipment can you give us some view on that.
Yes, George right, we have both secured maintenance and and new construction work in a substation inside a across our geographical area.
Okay is there anything <unk> can you detect.
Hey, any increase in.
Demand in store for substation.
Yes, especially in the Greenfield areas are there the green energy, we're seeing a lot more those.
And then okay areas.
And with population is growing.
No, we're seeing a influx as well.
Good good well, okay just that.
I I know you guys are going through tough times.
From a couple of with different.
Situations at this point in time, but it looks like you really got yourself, I'm upbeat well and and in this expansion that your accomplishing along the way throughout.
From the South east of the southwest.
Is that should be assuring you have the ability to increase your activity ROE and hopefully a increase your backlog and build up your volumes. So good luck to you're going forward.
Thank you George Thank you George.
Thank you I see no further questions at this time I'll turn it back to management for closing remarks. Thank you.
Yes. Thank you I would like to thank everyone for joining us on our conference call. Today also I would like to express my sincere thanks to our shareholders for their continued support.
Thank you. This concludes todays conference all parties may disconnect have a good day.