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TO OUR SHAREHOLDERS 
 

In 2015, we achieved strong growth in revenue and significantly improved our operating margin over 2014. This resulted from higher demand for our electrical construction services, as well as our focus on promoting operating efficiencies and securing well-qualified labor. Additionally, the completion of unprofitable Texas projects in the second quarter allowed us to concentrate on seeking projects from both new and existing customers.

Comparing 2015 to 2014:

· Revenue increased 22.6% to $120.6 million from $98.4 million attributable to strong growth in master service agreements and other electrical construction work.

· Income from continuing operations before taxes increased almost ten-fold to $8.2 million from $778,000, despite losses recognized in the first two quarters of 2015 on the now completed Texas projects. This increase was fueled by over 212% growth in electrical construction operations income before income taxes (a non-GAAP measure) (1) resulting from sharply higher revenues and improved margins. Margins on electrical construction operations operating income increased to 11.0% from 4.9% (a non-GAAP measure). (1)

· Net income grew to $4.5 million ($0.18 per share), from a net loss of $319,000 ($0.01 loss per share).

· Our twelve month electrical construction backlog remained steady. At year-end 2015, backlog expected to be realized within the next twelve months was $84.7 million compared to $85.3 million at year-end 2014.

The results we achieved in 2015 represented a major turnaround for our electrical construction operations, with significant strides in both growing our business and strengthening our operations. The foundation we built in 2015 should position us well for 2016. We believe Goldfield has solid market opportunity, a sound business model and strong operations.

I continue to appreciate the support of so many Goldfield shareholders over the years and am grateful to our employees who are dedicated to moving Goldfield forward.

2014 was a year of both significant accomplishments—and disappointments. On the positive side:

·         Our acquisition of C and C Power Line, Inc. (C&C) in January 2014 made a positive contribution to the year’s results—representing approximately 24% of our electrical construction revenues.

·         Our revenue increased 10.3% to $98.4 million from $89.2 million in the prior year—attributable to both C&C and growth in construction under master service agreements (MSAs).

·         Our estimated construction backlog at year end almost quadrupled to $275.0 million from $74.5 million in the prior year—largely through growth in our MSAs. About $85.3 million of our MSA and project-specific backlog at year end is expected to be recognized in 2015—compared to about $38.2 million at prior year end.

On the negative side, our pretax income from continuing operations declined 90.0% to $778,000 from $7.8 million in the prior year. This decline largely resulted from losses aggregating $5.0 million on projects for two Texas utilities recognized in the fourth quarter—attributable to a combination of factors, including start-up delays in material procurement and adverse weather conditions which negatively impacted allocation of labor and equipment resources. As a result, we incurred a net loss for the year of $(319,000), or $(0.01) loss per share, compared to net income of $3.8 million, or $0.15 per share, in the prior year.

The platform for our electrical construction operations remains stronger than ever, notwithstanding the problems experienced on certain of our Texas projects. Our challenge going forward is to reduce—to the extent possible—the risk of adverse operational surprises of the nature encountered on these projects. We believe that management and operational changes we have made should permit us to achieve this objective.

I appreciate the support of so many Goldfield shareholders over the years and am grateful to our employees who are dedicated to moving Goldfield forward.

  

JOHN H. SOTTILE
President and Chief Executive Officer
April 27, 2016

(1) The non-GAAP financial measures used herein, and the reconciliation of such measures to the reported GAAP measures, are more fully described under the heading “Results of Operations - Operating Results” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this report, to which reference is hereby made. This letter to shareholders should be read in conjunction with the information more fully set forth elsewhere in this report (including “Forward-Looking Statements” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and in our Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission.

    

 

 
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