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Argan, Inc. Reports First Quarter Fiscal 2024 Results

Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today announces financial results for its first quarter of fiscal year 2024, ended April 30, 2023. The Company will host an investor conference call today, June 8, 2023, at 5 p.m. ET.

Consolidated Financial Highlights

($ in thousands, except per share data)

   

 

 

April 30, 

 

 

 

 

   

For the Quarter Ended:

    

2023

    

2022

    

Change

   

Revenues

 

$

 103,675

 

$

 100,277

 

$

 3,398

 

 

   

Gross profit

 

 

 14,224

 

 

 19,738

 

 

 (5,514

)

 

   

Gross margin %

 

 

 13.7

%  

 

 19.7

%  

 

 (6.0

)%

   

Net income

 

$

 2,109

 

$

 7,485

 

$

 (5,376

)

 

   

Diluted per share

 

 

 0.16

 

 

 0.50

 

 

 (0.34

)

 

   

EBITDA

 

 

 3,649

 

 

 10,733

 

 

 (7,084

)

 

   

Cash dividends per share

 

 

 0.25

 

 

 0.25

 

 

 —

 

 

     
   

 

    

April 30, 

 

January 31, 

    

 

 

 

   

As of:

 

2023

 

2023

 

Change 

   

Cash, cash equivalents, short-term investments and available-for-sale securities

 

$

 316,937

 

$

 325,458

 

$

 (8,521

)

 

   

Net liquidity (1)

 

 

 232,604

 

 

 236,199

 

 

 (3,595

)

 

   

Share repurchase treasury stock, at cost

 

 

 89,883

 

 

 88,641

 

 

 1,242

 

 

   

Project backlog

 

 

 806,000

 

 

 822,000

 

 

 (16,000

)

 

     
(1)    Net liquidity, or working capital, is defined as total current assets less total current liabilities.

David Watson, President and Chief Executive Officer of Argan, commented, “During our first quarter, we reached substantial completion on the Guernsey Power Station, the largest single-phase gas fired project in U.S. history, a tremendous achievement by our talented employees and evidence of their commitment to completing complex projects. We continue to maintain strength and diversity in our backlog. Our backlog of $0.8 billion is consistent with year-end fiscal 2023 levels, without the addition of any major power-plant projects, which reflects our ability to drive incremental revenue growth by winning smaller projects to augment our larger jobs. Our financial performance can be impacted quarter to quarter by the timing of certain power industry projects, depending on where they are in the construction timeline. However, as demand for reliable energy and grid stability increases, we believe our core competencies and proven track record as a reliable construction partner and project manager position us well to take advantage of the robust pipeline of opportunities in the marketplace.”

First Quarter Results

Consolidated revenues for the quarter ended April 30, 2023 were $103.7 million, an increase of $3.4 million, or 3.4%, from consolidated revenues of $100.3 million reported for the comparable prior year period. The Company experienced increased revenues at several projects, including the Kilroot Power Station under construction near Belfast in Northern Ireland; the three ESB FlexGen peaker plants being built in Dublin, Ireland; and the Trumbull Energy Center, a large combined cycle, gas-fired power plant near Lordstown, Ohio. The increase in revenues were partially offset by decreased revenues at the Guernsey Power Station, the Maple Hill Solar energy project and Equinix data center project, as these projects are generally near or at completion.

Due meaningfully to this change in the mix of major projects for the quarter ended April 30, 2023, the Company’s consolidated gross profit declined to approximately $14.2 million, which reflected a consolidated gross margin of 13.7%, compared to consolidated gross profit of $19.7 million reported for the first quarter of the prior fiscal year, which reflected a gross margin of 19.7%.

Selling, general and administrative expenses remained consistent at $10.6 million for the quarter ended April 30, 2023 as compared to the same prior year period.

For the quarter ended April 30, 2023, Argan achieved net income of $2.1 million, or $0.16 per diluted share, compared to $7.5 million, or $0.50 per diluted share, for last year’s comparable quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter ended April 30, 2023 was $3.6 million compared to $10.7 million in the same period of last year. These results were primarily affected by the reduction in gross profit between periods and the previously reported loss related to fraudulently-induced wire transfers.

As of April 30, 2023, our cash and liquid investments totaled $317 million and balance sheet net liquidity was $233 million; furthermore, the Company had no debt.

Share Repurchase Program

During the quarter ended April 30, 2023, the Company repurchased 92,656 shares of common stock at a cost of $3.7 million. Since the share repurchase program began in November 2021, the Company has repurchased approximately 2.5 million shares of common stock, or approximately 15% of its outstanding shares, at a cost of approximately $92.4 million under the $125.0 million share repurchase plan authorized by the Company’s board of directors.

Conference Call and Webcast

Argan, Inc. will host a conference call and webcast for investors today, June 8, 2023, at 5 p.m. ET.

Stockholders and interested parties may participate in the conference call by dialing (888) 506-0062 and international participants should dial (973) 528-0011 and use access code: 796707. The call and the accompanying slide deck will also be webcast at:

https://www.webcaster4.com/Webcast/Page/2961/48475

The conference call and slide deck may also be accessed via the Investor Center section of the Company’s website at https://arganinc.com/investor-center/. Please allow extra time prior to the call to visit the site.

A replay of the teleconference will be available until June 22, 2023, and can be accessed by dialing 877-481-4010 (domestic) or 919-882-2331 (international). The replay access code is 48475. A replay of the webcast can be accessed until June 8, 2024.

About Argan

Argan’s primary business is providing a full range of construction and related services to the power industry, including the renewable energy sector. Argan’s service offerings focus on the engineering, procurement and construction of natural gas-fired power plants and renewable energy facilities, along with related commissioning, maintenance, project development and technical consulting services, through its Gemma Power Systems and Atlantic Projects Company operations. Argan also owns The Roberts Company, which is a fully integrated fabrication, construction and industrial plant services company, and SMC Infrastructure Solutions, which provides telecommunications infrastructure services.

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws. Reference is hereby made to the cautionary statements made by the Company with respect to risk factors set forth in its most recent reports on Form 10-K, Forms 10-Q and other SEC filings. The Company’s future financial performance is subject to risks and uncertainties including, but not limited to, the successful addition of new contracts to project backlog, the receipt of corresponding notices to proceed with contract activities, and the Company’s ability to successfully complete the projects that it obtains. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to the risk factors highlighted above and described regularly in the Company’s SEC filings.

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

April 30,

 

 

2023

 

2022

REVENUES

 

$

103,675

 

 

$

100,277

 

Cost of revenues

 

 

89,451

 

 

 

80,539

 

GROSS PROFIT

 

 

14,224

 

 

 

19,738

 

Selling, general and administrative expenses

 

 

10,591

 

 

 

10,575

 

INCOME FROM OPERATIONS

 

 

3,633

 

 

 

9,163

 

Other (loss) income, net

 

 

(629

)

 

 

595

 

INCOME BEFORE INCOME TAXES

 

 

3,004

 

 

 

9,758

 

Income tax expense

 

 

895

 

 

 

2,273

 

NET INCOME

 

 

2,109

 

 

 

7,485

 

Foreign currency translation adjustments

 

 

440

 

 

 

(1,264

)

Net unrealized losses on available-for-sale securities

 

 

(37

)

 

 

 

COMPREHENSIVE INCOME

 

$

2,512

 

 

$

6,221

 

 

 

 

 

 

 

 

NET INCOME PER SHARE

 

 

 

 

 

 

Basic

 

$

0.16

 

 

$

0.50

 

Diluted

 

$

0.16

 

 

$

0.50

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

 

 

 

 

 

 

Basic

 

 

13,413

 

 

 

14,910

 

Diluted

 

 

13,546

 

 

 

14,992

 

 

 

 

 

 

 

 

CASH DIVIDENDS PER SHARE

 

$

0.25

 

 

$

0.25

 

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

April 30,

 

January 31,

 

 

2023

 

2023

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

195,947

 

 

$

173,947

 

Short-term investments

 

 

90,614

 

 

 

151,511

 

Available-for-sale securities

 

 

30,376

 

 

 

 

Accounts receivable, net

 

 

60,774

 

 

 

50,132

 

Contract assets

 

 

4,914

 

 

 

24,778

 

Other current assets

 

 

42,376

 

 

 

38,334

 

TOTAL CURRENT ASSETS

 

 

425,001

 

 

 

438,702

 

Property, plant and equipment, net

 

 

10,665

 

 

 

10,430

 

Goodwill

 

 

28,033

 

 

 

28,033

 

Intangible assets, net

 

 

2,511

 

 

 

2,609

 

Deferred taxes, net

 

 

3,606

 

 

 

3,689

 

Right-of-use and other assets

 

 

5,878

 

 

 

6,024

 

TOTAL ASSETS

 

$

475,694

 

 

$

489,487

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

36,334

 

 

$

56,375

 

Accrued expenses

 

 

44,755

 

 

 

49,867

 

Contract liabilities

 

 

111,308

 

 

 

96,261

 

TOTAL CURRENT LIABILITIES

 

 

192,397

 

 

 

202,503

 

Noncurrent liabilities

 

 

5,348

 

 

 

6,087

 

TOTAL LIABILITIES

 

 

197,745

 

 

 

208,590

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Preferred stock, par value $0.10 per share – 500,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Common stock, par value $0.15 per share – 30,000,000 shares authorized; 15,828,289 shares issued; 13,414,404 and 13,441,590 shares outstanding at April 30, 2023 and January 31, 2023, respectively

 

 

2,374

 

 

 

2,374

 

Additional paid-in capital

 

 

161,347

 

 

 

162,208

 

Retained earnings

 

 

206,584

 

 

 

207,832

 

Less treasury stock, at cost – 2,413,885 and 2,386,699 shares at April 30, 2023 and January 31, 2023, respectively

 

 

(89,883

)

 

 

(88,641

)

Accumulated other comprehensive loss

 

 

(2,473

)

 

 

(2,876

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

277,949

 

 

 

280,897

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

475,694

 

 

$

489,487

 

ARGAN, INC. AND SUBSIDIARIES

RECONCILIATION TO EBITDA

(In thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

April 30,

 

 

2023

 

2022

Net income, as reported

 

$

2,109

 

$

7,485

Income tax expense

 

 

895

 

 

2,273

Depreciation

 

 

547

 

 

809

Amortization of intangible assets

 

 

98

 

 

166

EBITDA

 

$

3,649

 

$

10,733

 

Contacts

Company Contact:

David Watson

301.315.0027

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