Goldfield Corporation FYE 2016 Review, Valuation, and Outlook

Goldfield Corporation (NYSE: GV), is a leading provider of electrical construction and maintenance services in the energy infrastructure industry primarily in the Southeast and mid-Atlantic regions of the United States and Texas. The company specializes in installing and maintaining electrical transmission lines for a wide range of electric utilities. Goldfield is also a real estate developer of residential properties on the east coast of Florida. The Goldfield Corporation was founded in 1906 and is based in Melbourne, Florida.  The company’s Common Stock is the longest traded security on the NYSE MKT LLC and its predecessor exchanges, having commenced trading 111 years ago.

FYE and Fourth Quarter Results – December 31, 2016

The company reported record revenues for the fifth consecutive year stating revenue increased 8.2% to a record $130.4 million from $120.6 million for the previous year. The increase was attributed to continued growth in fixed-price contracts and other electrical construction work.

Additional financial highlights:

  • Income from continuing operations before taxes increased 155.0% to $20.9 million from $8.2 million, fueled by a 93.2% growth in electrical construction operations.
  • Net income grew to a record $13.0 million, or $0.51 per share, from $4.5 million, or $0.18 per share.
  • Margins on electrical construction operations income increased to 19.7% from 11.0% due to improved performance on several projects.
  • EBITDA grew to $27.6 million from $14.9 million as a result of the same factors which drove the growth in pre-tax operating income.



Goldfield’s President and Chief Executive Officer John H. Sottile said, “We are proud of our accomplishments in 2016, as revenue grew 8.2% and earnings per share improved 183% over 2015. In 2016, we also realized our fifth consecutive year of record revenues. We believe that the strategies which helped us achieve these milestones will continue to serve us well. Additionally, over the past five years our revenue has grown nearly 300 percent while earnings improved from $0.03 per share to $0.51 per share. This demonstrates our ability to grow our business, strengthen our operations and deliver results to our stockholders while successfully and safely executing projects and meeting the needs of our customers. We anticipate continuing strength in infrastructure spending, particularly in transmission construction, and believe we are well positioned to secure new projects in our markets.”

Goldfield operates in a stable industry, energy construction and maintenance. Their growing revenues and consistent margins are due mainly to its strong geographic footprint in the Southeast and mid-Atlantic regions of the United States and Texas, combined with a large modern fleet of equipment in each of its locations that maximize efficiency and minimize downtime.

While the electrical construction business remains highly competitive and fragmented, Goldfield provides services through its subsidiaries, Power Corporation of America, Southeast Power Corporation and C and C Power Line, Inc and it’s important to note that the company derives a significant portion of its electrical construction revenue from just a small group of customers. For example, for the years ended December 31, 2016 and 2015, three of its customers accounted for approximately 58% and 62% of consolidated revenue.

The company’s form 10-K shows customers including:

  • Santee Cooper (South Carolina Public Service Authority)
  • Florida Power & Light Company
  • CPS Energy
  • Lower Colorado River Authority
  • Central Electric Power Cooperative, Inc
  • Duke Energy Corporation
  • Orlando Utilities Commission
  • Lee County Electric Cooperative

Goldfield has the reputation of retaining customers and completing its projects in a timely manner, based mainly on its policy of committing only to work that the company believes it can properly supervise, equip and complete to the customer’s satisfaction. The company’s latest investor presentation shows Goldfield has a 5 year CAGR of 15% when it comes to projects awarded.




Total backlog, which includes total revenue estimated over the remaining life of a master service agreement (MSA) plus estimated revenue from fixed-price contracts, was $190.0 million as of December 31, 2016, compared to $202.9 million as of year-end 2015. This decline resulted from completion of some MSA work, not replaced by new work and the reduction in estimated work under certain MSAs.

Potential Stock Influences

In addition to its backlog, Goldfield is also positioned to capitalize on some favorable industrial trends, which include:

  • President Trump’s plan to prioritize and jumpstart infrastructure projects around the country
  • Competitive transmission solicitations spurred by FERC 1000 ruling
  • Growing need for additional transmission to deliver new generation of natural gas and renewable energy resources to load centers
  • Federal programs, including wind and solar projects, will increase infrastructure spending

Plus some region trends that include:

Duke Energy:

  • Constructing two 280-megawatt combined-cycled natural gas units in Asheville, NC to replace one 376-megawatt coal plant to be retired in 2020
  • Building a 1,640 megawatt combined-cycle natural gas plant in Florida to replace two 1960s-era coal plants

Florida Power & Light:

  • Strategically phasing out older, less efficient oil and coal-fired plants and replacing with advanced, fuel-efficient energy centers
  • Investing to increase use of zero emissions solar power with plans to install significantly more solar panels every year through at least 2020

EEI Investments

In addition to President Trump’s plan to prioritize and jumpstart infrastructure projects around the country, there’s another catalyst that should continue to drive growth for Goldfield, and that is the projected transmission investments by EEI members.

The Edison Electric Institute (EEI) is the association that represents all U.S. investor-owned electric companies. Its members provide electricity for 220 million Americans, operate in all 50 states and the District of Columbia, and directly and indirectly employ more than one million workers.

EEI member investments range from new relatively large-scale, high-voltage facilities to investments in upgrades and replacement of existing aging infrastructure to maintain reliability.

According to the EEI Actual and Planned Transmission Investments by Investor Owned Utilities (2009-2018) Oct. 2015, transmission investments are projected at $22 billion in 2017 and $21 billion in 2018 driven by the need to ensure grid reliability, integration of renewable energy, and upgrade of aging infrastructure throughout the U.S.

Balance Sheet

Goldfield has stated, it will continue to, “Evaluate targeted, niche companies typically under the radar of industry acquirers”. The company is well positioned to seek out accretive acquisitions thanks to its strong balance sheet and ability to generate free cash flows. The company’s balance sheet ending December 31, 2016 shows that the company had cash and cash equivalents of $20.6 million and total debt of $22.3 million. Goldfield has grown its cash reserves through its operations from $8 million in December 2012, while its long-term debt has increased by just $2 million compared to December 2012.

Fiscal Period (Amounts in Millions) Dec16
Cash And Cash Equivalents 20.6
Current Portion of Long-Term Debt 6.1
Long-Term Debt & Capital Lease Obligation 16.2

(Source: Company reports)


Cash Flow

A look at the company’s trailing twelve-month cash flow statements below shows Goldfield’s generated $18.1 million (ttm) in operating cash flow. At the same time, the company had just $5 million (ttm) in capex, which equates to $13.1 million (ttm) in free cash flow. With a current market cap of $136 million that means Goldfield’s has a FCF/Price yield of 10% (ttm).

Fiscal Period (Amounts in Millions) Dec16 Sep16 Jun16 Mar16
Cash Flow from Operations 7.7 6 7.1 -2.7
Capital Expenditure -2.1 -1.7 -0.7 -0.5
Free Cash Flow 5.6 4.3 6.4 -3.2

(Source: Company reports)





Goldfield Corporation is a micro-cap company that is growing and has been profitable for years. That can be a rare find in today’s seemingly overbought market. Goldfield reported record revenues for the fifth consecutive year, and has a 5 year CAGR of 15% when it comes to projects awarded.

The company has a healthy backlog and is well positioned to capitalize on some favorable industrial trends, which include President Trump’s plan to prioritize and jumpstart infrastructure projects around the country, and projected transmission investments by EEI members.

Goldfield’s has a strong balance sheet and solid free cash flows and has started to generate interest from several institutions with thirteen new institutional shareholders as of December 31, 2016.

52 week range $2.54 – $8.65

Current $4.60/share

Goldfield has strong fundamentals and will likely continue to grow EBITDA. It appears that much of this growth has not yet been priced in. Goldfield is currently trading on a Free cash flow/Price Yield of 10% (ttm), a FCF/Enterprise Value Yield of 10% (ttm). Additionally, the company’s current P/E of 10, compared to its 5Y average of 14.5, could be indicators that Goldfield is undervalued.



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