Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today
announced financial results for its third quarter ended October 31,
2021. For additional information, please read the Company’s
Quarterly Report on Form 10-Q, which the Company intends to file
today with the U.S. Securities and Exchange Commission (the “SEC”).
The Quarterly Report can be retrieved from the SEC’s website at
www.sec.gov or from the Company’s website at www.arganinc.com.
Summary Information (dollars in thousands, except per
share data)
October 31,
2021
2020
Change
For the Quarter Ended:
Revenues
$
124,451
$
127,331
$
(2,880)
Gross profit
26,135
20,343
5,792
Gross margin %
21.0
%
16.0
%
5.0
%
Net income
$
12,393
$
9,454
$
2,939
Diluted per share
0.78
0.60
0.18
EBITDA
16,708
12,286
4,422
Diluted per share
1.05
0.78
0.27
Cash dividends per share
0.25
0.25
—
October 31,
January 31,
As of:
2021
2021
Change
Cash, cash equivalents and short-term
investments
$
481,564
$
456,726
$
24,838
Net liquidity (1)
300,674
270,133
30,541
RUPO (2)
491,559
552,531
(60,972)
(1)
Net liquidity, or working capital, is
defined as total current assets less total current liabilities.
(2)
The amount of remaining unsatisfied
performance obligations (“RUPO”) represents the project backlog
related to active contracts with customers, as determined under
revenue recognition rules.
“During the quarter, we were delighted to announce our second
major contract signing and project start this year,” Rainer
Bosselmann, Chairman and Chief Executive Officer of Argan, said.
“In May, Gemma Power Systems started a contract to build one of the
largest solar power plants in Pennsylvania. In October, Atlantic
Projects Company started a contract to construct a 2 x 330 MW
natural gas-fired power plant in Carrickfergus, Belfast, Northern
Ireland. These awards reflect our efforts to expand our business
development activities to target our core gas-fired power plant
business as well as the complementary renewable power sector
business. We are disappointed that certain other awarded projects
have taken longer to start than initially anticipated. However, we
are pleased with the current execution on all of our major projects
despite the well-publicized global supply chain disruptions and
current inflationary challenges. As a result, we are happy to
announce earnings of $12.4 million, or $0.78 in earnings per share
for the quarter ended October 31, 2021, which is our fifth
consecutive quarter of earnings per share equal to or in excess of
$0.60.”
Consolidated revenues for the quarter ended October 31, 2021
were $124.5 million, which represented a decrease of $2.9 million,
or 2.3%, from consolidated revenues of $127.3 million reported for
the three months ended October 31, 2020. The primary drivers of
revenues for the three months ended October 31, 2021 related to the
construction of the Guernsey Power Station, which has passed peak
construction levels, the performance of construction activities on
the new Maple Hill solar energy project and new Atlantic Projects
Company projects, and increased revenues of $7.3 million in
aggregate at our other business segments.
Consolidated gross profit for the three-month period ended
October 31, 2021 was $26.1 million, which represented a gross
profit percentage of 21.0% of corresponding consolidated revenues.
The gross profit for the period reflected the profit contributions
of the construction activities related to the major projects of the
power industry services segment, the recovery of the industrial
services segment from its low level of activity last year during
the early months of the COVID-19 pandemic and the revenues recorded
for the current quarter related to the settlement of a legal
matter.
Selling, general and administrative expenses for the three
months ended October 31, 2021 and 2020 were $11.6 million and $9.4
million, respectively, primarily reflecting increased costs for the
current quarter associated with business development activities,
incentive compensation and other personnel costs.
Due primarily to the consolidated pre-tax book income reported
for the three-month period ended October 31, 2021 in the amount of
$15.7 million, we reported income tax expense in the amount of $3.3
million, which represents an effective income tax rate of 20.9% for
the period. For the three-month period ended October 31, 2020, we
recorded income tax expense in the amount of $1.7 million which
represented an effective income tax rate of approximately 15.0% for
the three-month period.
For the three months ended October 31, 2021, our improved
overall operating performance resulted in net income attributable
to our stockholders in the amount of $12.4 million, or $0.78 per
diluted share, compared to $9.5 million, or $0.60 per diluted
share, in the prior year quarter.
For the nine months ended October 31, 2021, our improved overall
operating performance resulted in net income attributable to our
stockholders in the amount of $36.0 million, or $2.25 per diluted
share, compared to $14.3 million, or $0.91 per diluted share, in
the prior year period, a 153% increase.
As of October 31, 2021, cash, cash equivalents and short-term
investments totaled $482 million and net liquidity was $301
million; furthermore, the Company had no debt. The Company’s
consolidated amount of RUPO was approximately $0.5 billion as of
October 31, 2021.
About Argan, Inc.
Argan’s primary business is providing a full range of 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, operations
management, maintenance, project development and 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, the Company’s ability to successfully complete the
projects that it obtains and the resurgence of the COVID-19
pandemic due to the spread of various variants. The Company has
several signed EPC contracts that have not started and may not
start as forecasted due to market and other circumstances beyond
its control. 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
Nine Months Ended
October 31,
October 31,
2021
2020
2021
2020
REVENUES
$
124,451
$
127,331
$
383,800
$
274,971
Cost of revenues
98,316
106,988
306,299
234,989
GROSS PROFIT
26,135
20,343
77,501
39,982
Selling, general and administrative
expenses
11,590
9,398
31,813
28,827
INCOME FROM OPERATIONS
14,545
10,945
45,688
11,155
Other income, net
1,117
175
1,569
1,714
INCOME BEFORE INCOME TAXES
15,662
11,120
47,257
12,869
Income tax (expense) benefit
(3,269
)
(1,666
)
(11,228
)
1,391
NET INCOME
12,393
9,454
36,029
14,260
Net loss attributable to non-controlling
interests
—
—
—
(40
)
NET INCOME ATTRIBUTABLE TO THE
STOCKHOLDERS OF ARGAN, INC.
12,393
9,454
36,029
14,300
Foreign currency translation
adjustments
(471
)
(321
)
(728
)
(650
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO
THE STOCKHOLDERS OF ARGAN, INC.
$
11,922
$
9,133
$
35,301
$
13,650
NET INCOME PER SHARE ATTRIBUTABLE TO
THE STOCKHOLDERS OF ARGAN, INC.
Basic
$
0.79
$
0.60
$
2.29
$
0.91
Diluted
$
0.78
$
0.60
$
2.25
$
0.91
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
Basic
15,774
15,680
15,757
15,659
Diluted
15,963
15,833
15,980
15,795
CASH DIVIDENDS PER SHARE
$
0.25
$
0.25
$
0.75
$
1.75
ARGAN, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
October 31,
January 31,
2021
2021
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
391,563
$
366,671
Short-term investments
90,001
90,055
Accounts receivable, net
35,793
28,713
Contract assets
9,908
26,635
Other current assets
32,454
34,146
TOTAL CURRENT ASSETS
559,719
546,220
Property, plant and equipment, net
18,385
20,361
Goodwill
27,943
27,943
Other purchased intangible assets, net
3,417
4,097
Deferred taxes
—
249
Right-of-use and other assets
3,689
3,760
TOTAL ASSETS
$
613,153
$
602,630
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable
$
39,959
$
53,295
Accrued expenses
42,672
50,750
Contract liabilities
176,414
172,042
TOTAL CURRENT LIABILITIES
259,045
276,087
Deferred taxes
133
—
Other noncurrent liabilities
4,180
4,135
TOTAL LIABILITIES
263,358
280,222
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; 15,787,673 and 15,706,202 shares
issued at October 31, 2021 and January 31, 2021, respectively;
15,784,440 and 15,702,969 shares outstanding at October 31, 2021
and January 31, 2021, respectively
2,368
2,356
Additional paid-in capital
157,187
153,282
Retained earnings
190,308
166,110
Accumulated other comprehensive loss
(1,809
)
(1,081
)
TOTAL STOCKHOLDERS’ EQUITY
348,054
320,667
Non-controlling interests
1,741
1,741
TOTAL EQUITY
349,795
322,408
TOTAL LIABILITIES AND EQUITY
$
613,153
$
602,630
ARGAN, INC. AND
SUBSIDIARIES
Reconciliation to
EBITDA
(In
thousands)(Unaudited)
Three Months Ended
October 31,
2021
2020
Net income, as reported
$
12,393
$
9,454
Income tax expense
3,269
1,666
Depreciation
819
940
Amortization of purchased intangible
assets
227
226
EBITDA
$
16,708
$
12,286
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211208006041/en/
Company Contact: Rainer Bosselmann 301.315.0027
Investor Relations Contact: David Watson 301.315.0027
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