Visionary Holdings Inc.
Q2 2020 Earnings Call Transcript

Published: 9 Aug 2020

[Operator:]

Good day, ladies and gentlemen, and welcome to The Goldfield Corporation Second Quarter 2020 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Kristine Walczak of Effective Corporate Communications. Thank you. You may begin.

[Kristine Walczak:]

Thank you and good morning, everyone. I'd like to welcome you to The Goldfield Corporation conference call to discuss the company's second quarter results for 2020, which were reported yesterday. If you did not receive yesterday's press release, please call me at [phone], and we will send you a copy, or go to Goldfield's website where a copy is available under the Investor Relations tab. 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 this discussion may contain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as may, will, expect, anticipate, believe, estimate, plan and continue or similar words. Any forward-looking statements are based upon Goldfield's management's current expectations about future events, and Goldfield assumes no obligation to update any such forward-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 of future performance. These risks and uncertainties are discussed in the company's Form 10-Q for the quarterly period ended June 30, 2020. Also, certain non-GAAP financial information will be discussed on the call today. A reconciliation of this non-GAAP information to the most comparable GAAP measure is set forth in yesterday's press release, which can be found on the Investors section of the company's website. With this said, let me turn the call over to our Acting Co-CEO and Chief Financial Officer, Steve Wherry.

[Stephen Wherry:]

Thank you, Kristine, and good morning. We appreciate you joining us and for your continued interest in The Goldfield Corporation. Our CEO, John Sottile, sends his apologies for not being on our call today. As previously disclosed, Mr. Sottile is currently hospitalized and being treated for a non-COVID related respiratory condition. We will not be commenting further on Mr. Sottile's condition at this time. With me today is Jason Spivey, 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 the electrical construction industry. Demand for our services during the second quarter remained strong amid the extraordinary health and economic environment in which we are operating. Several key metrics we achieved include

[Operator:]

Thank you. Ladies and gentlemen, at this time we'll conduct our question-and-answer session. [Operator Instructions] Our first question comes from Stephen Branstetter with ABL Investments. Please state your question.

[Stephen Branstetter:]

Good morning, gentlemen. Are there any large contracts that you're bidding on that could possibly be signed in the near future?

[Jason Spivey:]

We're always open to the pursuing contracts from all shapes and sizes all across the country. But there's rumors there'd be some large ones coming on the Street. We just haven't seen them yet.

[Stephen Branstetter:]

Okay, very good. There was some rumor online that you might consider a name change of the company 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?

[Stephen Wherry:]

We've thought about it and the board considers it, and we'll resend that to the board for their consideration again.

[Stephen Branstetter:]

Very good, have a great day gentleman.

[Stephen Wherry:]

Thanks Stephen.

[Jason Spivey:]

Thank you.

[Operator:]

Thank you. Our next question comes from Sam Rebotsky with SER Asset Management. Please state your question.

[Sam Rebotsky:]

Yeah. Good morning Stephen and Jason. And John, get better soon. We're looking forward to you getting better. Stephen, the profit margins improved significantly, and John had spoken of this improvement in the previous conference call. The one thing I notice, the backlog had gone down from $473 million to $417 million on the long term. I assume we're bidding on jobs to get the backlog up? And are the jobs that we're bidding, are they significant in dollar amounts as we - of course we increased $0.25 billion the last time.

[Stephen Wherry:]

Yes sir. Sam, some of that large increase was due to a recent award of 4 new MSAs. As you know, as we - we burn through the backlog as we report our revenue. There can also be an adjustment as each quarter as we evaluate backlog, we have to make projections and estimates. And that's based on discussions with customers, based on discussions internally and looking at our workflow and the experience with that customer, is what I was trying to say. So that's the biggest reason there. But it helps the larger increases jump with the addition of new MSAs. We're continuing to bid and add work.

[Sam Rebotsky:]

Okay. And the profit margins improved significantly, as John had talked about. Do we expect our profit margins to maintain or improve going forward?

[Stephen Wherry:]

Sam, we expect to - we target mid to high teens. And just remember, as John has always said, don't look at Goldfield on a quarter-to-quarter basis. You got to look at it over a longer period of time. But we're encouraged by the improved margins and the hard work of our teammates.

[Sam Rebotsky:]

Okay. And the stock had improved very significantly. And I guess the - it's a very significant disappointment about John being in the hospital. But do we expect the - I guess hopefully the - has there been more people that are coming around and talking to Goldfield are interested in the company from various different aspects? Has there been more IR calls?

[Stephen Wherry:]

Yes, sir, there has been an uptick in that. And we've reached out to more investors and potential investors.

[Sam Rebotsky:]

Well, that's very good. That's very good. And all right. All right, I will step back in. Hopefully there are other people that will talk. And hopefully we could maintain the profitability and the improvement in backlog. Of course, I know the other companies in the industry, their backlogs improved significantly. Their profits in the utility business improved, so good luck and best of luck to John. Get better quick.

[Stephen Wherry:]

Yes, Sir. Thank you so much Sam.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from Ashok Mehta. Please go ahead.

[Unidentified Analyst:]

Yes, hi. I'm not sure I understood the comment about the backlog. Improved year-over-year as compared to the prior year's comparable quarter, but just compared to the end of the year, I noticed that it was down. So I know that estimates can vary, et cetera. But I just was curious, I mean, is there a 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 versus the end of the year.

[Stephen Wherry:]

Well, a couple of large projects have burned off some revenue as previously disclosed, and we do change estimates. But we're constantly bidding new work, adding new jobs. Those get added in to our backlog.

[Unidentified Analyst:]

Okay. So would you consider our pipeline of new business pretty robust, I guess? We've had a lot of growth in the last 18 months or so. I'm just kind of curious as compared to levels so far, how are we ranking in that kind of area?

[Stephen Wherry:]

Well, we look - our backlog is still significant compared to our historical levels. And we do see the opportunity for the growth through new customers. We continue to gain momentum through our expanded service lines, and that's been very helpful. 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 led us to additional transmission work with one of our significant customers. So I hope that answers your question.

[Unidentified Analyst:]

Okay. Yes. Thanks. Also, just on the real estate, I know we have a lull of a year this year on that. How does it look? I think there were supposed to be some new projects coming on in 2021, so can you provide any comment on that?

[Stephen Wherry:]

Yes. As you know, we completed the other projects we had under construction, sold those. And we have one coming out of the ground now with several more following and a significant project we're trying to roll out. So it'll be - revenue will roll in and increase back up in 2021 and then increase higher in two.

[Unidentified Analyst:]

Okay. No, that sounds good. I guess I'll get back in the queue. Thank you.

[Stephen Wherry:]

Yes, sir. Thank you.

[Jason Spivey:]

Thank you.

[Operator:]

Our next question comes from George Gaspar. Please state your question.

[Unidentified Analyst:]

Yes, can you hear me?

[Stephen Wherry:]

Yes George, we can hear you. Good morning.

[Unidentified Analyst:]

Okay, good morning to you all. Could you highlight - I got three areas here - but the Texas growth outline, can you give us a little more color on how you're progressing in Texas?

[Jason Spivey:]

George, we on our service line expansion that's opened up doors in Texas to continue, to allow us to pursue new customers with different service lines in those areas. We're pleased with the expansion and the results of Texas year to date, and we can hope to continue that momentum for the rest of the year.

[Unidentified Analyst:]

Okay. All right, are you broadening your geographical outline there?

[Stephen Wherry:]

Yes, George. We're continuing to broaden that. I mean, as we've always said, John's always said, we're looking to expand and fill in the gaps between Virginia and 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. So we've gone into, as we've stated before, Arkansas and Oklahoma. Louisiana.

[Unidentified Analyst:]

Okay. And then just on top of what the last comments you made about Oklahoma and Arkansas. Now you were adding Kentucky to the operation space. Is there anything you can say about that?

[Jason Spivey:]

Kentucky is going well. The transmission work over there and distribution has opened the doors up for our foundation area to come in and provide a new customer to them as well. So we're very pleased with the continued expansion effort in the Mid-Atlantic region.

[Unidentified Analyst:]

Okay. All right and then I know I've asked this question in the past conference calls about 5G work. Are you into trying to get some of that work off of towers and on down from there?

[Jason Spivey:]

Our foundation side is looking at any foundation that would regard in putting in those towers, but we are - we have not been approached to install any of the cell towers associated with 5G yet. We are - if the opportunity presents itself, we will definitely entertain it, George.

[Unidentified Analyst:]

Okay. All right, okay, I'm going to get back in the queue. Again, thanks.

[Stephen Wherry:]

Thank you, George.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from Stephen Branstetter with ABL Investments. Stephen Branstetter your line is open. Please state your question.

[Stephen Branstetter:]

Hello.

[Stephen Wherry:]

Hi, Stephen.

[Stephen Branstetter:]

Yes. It seems that investors believe your - since your backlog's gone down from Q1 to Q2 that your forward revenue lines are going to start going down. Could you more explain how these MSAs 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 where your revenue line might be next quarter or the next several quarters out?

[Stephen Wherry:]

Absolutely, Stephen. These MSAs come in lumps. They're multiyear. They may be a 1-year MSA. They go up to seven years. So we make an estimate based on the, as I've said, the discussion with the customers, the experience with the run rate with the customer. And currently, our MSA, the oldest one goes out to - or the longest one we have goes out to 2025. As I - go ahead.

[Stephen Branstetter:]

So would you think it's more accurate to focus on the 12-month backlog? Is that more - 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?

[Stephen Wherry:]

Historically, we beat that 12-month backlog. But that is a good number to look at. And I mean, we're - it's coming in.

[Stephen Branstetter:]

That more accurately - not that it's line by line, but it's more accurately reflects where the next 12 months are heading compared to the previous 12 months.

[Stephen Wherry:]

Yes, sir.

[Jason Spivey:]

Yes, sir.

[Stephen Branstetter:]

That is correct. Okay. Is the company - not the guys on the field, obviously, but the people who work in the office, are they working from home or are they working in the office these days?

[Stephen Wherry:]

We're covering both of that. We have some that work from the office and some that work at home. We present that opportunity. But it's working out well.

[Stephen Branstetter:]

Okay. And are there any of the big contracts that you signed? I guess the MSA work was big, and I think you had a $50 million contract signed at some point early this year or late last year. Are any of those starting soon that are going to start adding revenue to the - going forward?

[Jason Spivey:]

They're under progress now. We're working on them as we speak.

[Stephen Branstetter:]

Okay, great. Thank you, gentlemen.

[Jason Spivey:]

Thanks, sir.

[Stephen Wherry:]

Thank you, Stephen.

[Operator:]

Thank you. Our next question comes from George Gaspar. Please go ahead.

[Unidentified Analyst:]

Okay, thank you. Can you talk a little bit about, other than mainline repair and install, their substation repair activity? Can you give us an idea of the outlook? And is there anything going on in substation install that is coming about potentially because of the increasing demand for this type of equipment? Can you give us some view on that?

[Jason Spivey:]

Yes, George, right. We have both secured maintenance and new construction work in the substation side across our geographical area.

[Unidentified Analyst:]

Okay. Is there anything - can you detect an increase in demand install for substations?

[Jason Spivey:]

Yes. Especially in the greenfield areas or the green energy, we're seeing a lot more of those. And in areas with populations growing, we're seeing that influx as well.

[Unidentified Analyst:]

Good, good. Well, okay. I know you guys are going through a tough time from a couple of different situations at this point in time. But it looks like you really got yourself a base well. And in this expansion that you're accomplishing along the way throughout the - from the Southeast to the Southwest is - should be assuring you of ability to increase your activity role and hopefully increase your backlog and build up your volume, so good luck to you going forward.

[Jason Spivey:]

Thank you, George.

[Stephen Wherry:]

Thank you, George.

[Operator:]

Thank you. I see no further questions at this time. I'll turn it back to management for closing remarks. Thank you.

[Stephen Wherry:]

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.

[Operator:]

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.