Goldfield Corp has a market cap of $10.4 million; its shares were traded at around $0.41 with and P/S ratio of 0.4. GV is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Electrical construction revenue decreased $1.3 million, or 14.2%, to $7.6 million for the three months ended March 31, 2010, from $8.9 million for the three months ended March 31, 2009. The decrease in electrical construction revenue for the three months ended March 31, 2010, when compared to the same quarter in the prior year is primarily due to a decrease in storm restoration work, which resulted from the January 2009 ice storms in Missouri.
The varying magnitude and duration of electrical construction projects may result in substantial fluctuations in our 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 customers requirements during a particular future period may not be accurate at any point in time. As of March 31, 2010, the electrical construction operations backlog was approximately $11.5 million, which included approximately $6.7 million from fixed price contracts for which revenue is recognized using percentage-of-completion and approximately $4.8 million from service agreement contracts for which revenue is recognized as work is performed. Of our total backlog, we expect approximately 92% to be completed within the current fiscal year. This compares to a backlog of $11.2 million at March 31, 2009, of which approximately $3.2 million represented backlog from fixed price contracts and approximately $8.0 million represented service agreement backlog.
Total operating income was $146,000 for the three months ended March 31, 2010, compared to an operating income of $446,000 for the like period in 2009. Electrical construction operations had operating income of $595,000 during the three months ended March 31, 2010, compared to an operating income of $1.3 million during the three months ended March 31, 2009, a decrease of $714,000. Operating margins on electrical construction operations decreased to 7.8% for the three months ended March 31, 2010, from 14.7% for the three months ended March 31, 2009. The decrease in operating margins is mainly due to the aforementioned decrease in revenue from higher margin storm restoration projects, when comparing the three months ended March 31, 2010, to the same period in the prior year.
Electrical construction cost of goods sold decreased to $6.3 million in the three months ended March 31, 2010, from $6.8 million in the three months ended March 31, 2009, a decrease of $498,000. The decrease in costs reflects the decrease in our storm work activity and corresponds to our decrease in revenue in the current period.
Depreciation expense was $717,000 in the three months ended March 31, 2010, compared to $760,000 in the three months ended March 31, 2009, a decrease of $43,000 or 5.7%. The decrease in depreciation expense is mainly due to the timing of assets becoming fully depreciated, primarily within the electrical construction segment.
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, 2010, we had cash and cash equivalents of $2.7 million and working capital of $6.9 million, as compared to cash and cash equivalents of $3.5 million and working capital of $7.1 million as of December 31, 2009. In addition, we have $2.5 million available in a revolving line of credit as of March 31, 2010. 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. The Pineapple House Mortgage loan is due and payable on May 18, 2010, however based on current discussions with the lender, we expect to be able renew this loan on substantially similar terms to those currently in effect, subject to a minimum rate of 3.5% and a lower principal balance commensurate with our current lower outstanding balance.
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