- Declares Regular Quarterly Dividend of $0.25 Per
Share
Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today
announces financial results for its fourth quarter and fiscal year
ended January 31, 2023. The Company will host an investor
conference call today, April 12, 2023, at 5 p.m. ET.
Consolidated Financial Highlights
($ in thousands, except per share data)
January 31,
2023
2022
Change
For the Quarter Ended:
Revenues
$
118,778
$
125,570
$
(6,792
)
Gross profit
20,028
22,231
(2,203
)
Gross margin %
16.9
%
17.7
%
(0.8
)%
Net income attributable to the
stockholders of the Company
$
13,633
$
2,215
$
11,418
Diluted per share
1.00
0.14
0.86
EBITDA attributable to the stockholders of
the Company
11,227
3,340
7,887
Cash dividends per share
0.25
0.25
—
For the Fiscal Year Ended:
Revenues
$
455,040
$
509,370
$
(54,330
)
Gross profit
86,361
99,732
(13,371
)
Gross margin %
19.0
%
19.6
%
(0.6
)%
Net income attributable to the
stockholders of the Company
$
33,098
$
38,244
$
(5,146
)
Diluted per share
2.33
2.40
(0.07
)
EBITDA attributable to the stockholders of
the Company
48,109
53,837
(5,728
)
Cash dividends per share
1.00
1.00
—
January 31,
As of:
2023
2022
Change
Cash, cash equivalents and short-term
investments
$
325,458
$
440,498
$
(115,040
)
Net liquidity (1)
236,199
284,257
(48,058
)
Share repurchase treasury stock, at
cost
88,641
20,405
68,236
Project backlog
822,000
714,000
108,000
(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, “Fiscal 2023 was a year of solid progress for Argan, and
we’re pleased to close the year with a project backlog now
exceeding $0.8 billion and continued strength in our balance sheet.
Our topline performance for the fourth quarter and full year was
impacted by the timing of certain projects in our power industry
services division as certain projects neared completion while
others are just getting started. As we head into fiscal 2024, we
have a strong backlog and robust portfolio of ongoing projects that
are currently progressing toward peak activity, which we anticipate
will favorably impact our revenue performance as we move through
the year. As worldwide demand for power resources continues to
increase, we believe our leadership role as a respected and
reliable power plant builder and our broader capabilities
addressing the needs of three complementary end markets, position
us well to attract more customer contracts and effectively leverage
the electrification occurring in our markets to deliver continued
growth and profitability moving forward.”
Fourth Quarter Results
Consolidated revenues for the quarter ended January 31, 2023
were $118.8 million, a decrease of $6.8 million, or 5.4%, from
consolidated revenues of $125.6 million reported for the comparable
prior year period. The reduction is primarily related to decreased
revenues from the Guernsey Power Station, the Maple Hill Solar
energy and the Equinix data center projects compared to the
comparable prior year quarter, partially offset by increasing
revenues at several projects including the Kilroot Power Station,
the ESB FlexGen peaker plants and the Trumbull Energy Center.
For the quarter ended January 31, 2023, the Company reported
consolidated gross profit of approximately $20.0 million, or gross
margin of 16.9% compared to gross margin of 17.7% for the fourth
quarter of the prior fiscal year.
Selling, general and administrative expenses declined by $5.0
million to $10.5 million for the quarter ended January 31, 2023
from $15.5 million for the comparable prior year quarter, primarily
due to decreased cash incentive expenses and certain write offs and
liability accruals associated with business development investments
and other activities in the prior year quarter.
Other income increased primarily due to the favorable effects of
increased interest rates on our cash and short-term investments.
The Company recorded an income tax benefit of $3.2 million in the
quarter ended January 31, 2023 even though the consolidated pre-tax
book income was $12.0 million, primarily due to the favorable
recognition of tax benefits related to research and development
credits and the partial reversal of certain deferred tax valuation
allowances.
For the quarter ended January 31, 2023, Argan achieved net
income of $13.6 million, or $1.00 per diluted share, compared to
$2.2 million, or $0.14 per diluted share, for last year’s
comparable quarter. EBITDA (earnings before interest, taxes,
depreciation and amortization) for the quarter ended January 31,
2023 increased to $11.2 million from $3.3 million for last year’s
comparable period.
Fiscal Year 2023 Results
Consolidated revenues for the fiscal year ended January 31, 2023
(“Fiscal 2023”) were $455.0 million, a decrease of $54.3 million,
or 10.7%, from consolidated revenues of $509.4 million reported for
the fiscal year ended January 31, 2022 (“Fiscal 2022”).
Consolidated revenues in the Company’s power industry services
segment decreased by $52.1 million as the construction activities
associated with the Guernsey Power Station project and the Maple
Hill Solar energy facility are winding down. The reduction in
revenues between the fiscal years was partially offset by increased
revenues at several projects including the Kilroot Power Station,
the ESB FlexGen peaker plants and the Trumbull Energy Center.
Argan’s consolidated project backlog was approximately $0.8 billion
as of January 31, 2023.
For Fiscal 2023, the Company reported consolidated gross profit
of approximately $86.4 million, or a gross margin of 19.0%. Gross
margin in our power industry services, industrial services and
telecommunications infrastructure segments remained relatively
consistent at 19.8%, 15.9% and 18.4%, respectively, for Fiscal
2023. The corresponding gross profit percentages for Fiscal 2022
were 20.3%, 16.9% and 17.0%, respectively.
Selling, general and administrative expenses for Fiscal 2023 and
Fiscal 2022, were $44.7 million and $47.3 million, respectively,
representing a decrease of 5.6%, or $2.6 million, between the
fiscal years. The decrease was primarily due to the same reasons
described above for the quarter, partially offset by the impact of
inflationary pressures on our expenses during the current year.
The Company recorded income tax expense in the amount of $11.3
million for the year, primarily due to consolidated pre-tax book
income in the amount of $46.0 million reported for Fiscal 2023. For
Fiscal 2022, consolidated pre-tax book income was $47.1 million and
income tax expense was $11.4 million.
For Fiscal 2023, Argan reported net income of $33.1 million, or
$2.33 per diluted share, compared to net income of $38.2 million,
or $2.40 per diluted share, for the prior fiscal year. EBITDA for
Fiscal 2023 decreased to $48.1 million from $53.8 million for the
prior fiscal year. The Company paid its regular quarterly cash
dividend of $0.25 per share in January 2023.
As of January 31, 2023, cash, cash equivalents and short-term
investments totaled $325.5 million and net liquidity was $236.2
million; furthermore, the Company had no debt. The $115.0 million
reduction in cash, cash equivalents and short-term investments from
January 31, 2022 reflected the expected cash flow cycles of two
significant projects, net income, the payment of dividends and the
repurchase of shares. However, during the fourth quarter, cash,
cash equivalents and short-term investments increased by $38.8
million.
Dividend Declaration and Share Repurchase Program
On April 10, 2023, the Board of Directors of Argan declared a
regular quarterly cash dividend in the amount of $0.25 per share of
common stock, payable April 28, 2023 to stockholders of record at
the close of business on April 20, 2023. The Company paid quarterly
cash dividends of $0.25 per share of common stock for a total of
$1.00 per share during Fiscal 2023 and Fiscal 2022,
respectively.
During Fiscal 2023, the Company repurchased 1,855,714 shares of
common stock at a cost of $68.2 million, including the repurchase
of 134,699 shares of common stock at a cost of $5.0 million during
the three months ended January 31, 2023. Since the first
repurchases in November 2021, the Company has repurchased 2,459,221
shares of common stock, or approximately 15% of its outstanding
shares, at a cost of approximately $91.6 million under the now
$125.0 million share repurchase program authorization.
Conference Call and Webcast
Argan, Inc. will host a conference call and webcast for
investors today, April 12, 2023, at 5:00 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:
447273. The call and the accompanying slide deck will also be
webcast at:
https://www.webcaster4.com/Webcast/Page/2961/47896
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 April 26,
2023, and can be accessed by dialing 877-481-4010 (domestic) or
919-882-2331 (international). The replay access code is 47896. A
replay of the webcast can be accessed on the Investor Center
section of the Company’s website until April 12, 2024.
About Argan
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, 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
CONSOLIDATED STATEMENTS OF
EARNINGS
(In thousands, except per
share data)
Three Months Ended
Fiscal Year Ended
January 31,
January 31,
2023
2022
2023
2022
REVENUES
$
118,778
$
125,570
$
455,040
$
509,370
Cost of revenues
98,750
103,339
368,679
409,638
GROSS PROFIT
20,028
22,231
86,361
99,732
Selling, general and administrative
expenses
10,466
15,508
44,692
47,321
Impairment loss
—
7,901
—
7,901
INCOME (LOSS) FROM OPERATIONS
9,562
(1,178
)
41,669
44,510
Other income, net
2,463
983
4,331
2,552
INCOME (LOSS) BEFORE INCOME
TAXES
12,025
(195
)
46,000
47,062
Income tax benefit (expense)
3,214
(128
)
(11,296
)
(11,356
)
NET INCOME (LOSS)
15,239
(323
)
34,704
35,706
Net income (loss) attributable to
non-controlling interest
1,606
(2,538
)
1,606
(2,538
)
NET INCOME ATTRIBUTABLE TO THE
STOCKHOLDERS OF ARGAN, INC.
13,633
2,215
33,098
38,244
Foreign currency translation
adjustments
2,176
(642
)
(425
)
(1,370
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO
THE STOCKHOLDERS OF ARGAN, INC.
$
15,809
$
1,573
$
32,673
$
36,874
NET INCOME PER SHARE ATTRIBUTABLE TO
THE STOCKHOLDERS OF ARGAN, INC.
Basic
$
1.01
$
0.14
$
2.35
$
2.43
Diluted
$
1.00
$
0.14
$
2.33
$
2.40
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
Basic
13,535
15,590
14,083
15,715
Diluted
13,625
15,713
14,176
15,913
CASH DIVIDENDS PER SHARE
$
0.25
$
0.25
$
1.00
$
1.00
ARGAN, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
JANUARY 31,
(In thousands, except share
and per share data)
2023
2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
173,947
$
350,472
Short-term investments
151,511
90,026
Accounts receivable, net
50,132
26,978
Contract assets
24,778
4,904
Other current assets
38,334
34,904
TOTAL CURRENT ASSETS
438,702
507,284
Property, plant and equipment, net
10,430
10,460
Goodwill
28,033
28,033
Other purchased intangible assets, net
2,609
3,322
Deferred taxes, net
3,689
457
Right-of-use and other assets
6,024
4,029
TOTAL ASSETS
$
489,487
$
553,585
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable
$
56,375
$
41,822
Accrued expenses
49,867
53,315
Contract liabilities
96,261
127,890
TOTAL CURRENT LIABILITIES
202,503
223,027
Noncurrent liabilities
6,087
4,963
TOTAL LIABILITIES
208,590
227,990
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 and 15,788,673 shares
issued at January 31, 2023 and 2022, respectively; 13,441,590 and
15,257,688 shares outstanding at January 31, 2023 and 2022,
respectively
2,374
2,368
Additional paid-in capital
162,208
158,190
Retained earnings
207,832
188,690
Less treasury stock, at cost – 2,386,699
and 530,985 shares at January 31, 2023 and 2022, respectively
(88,641
)
(20,405
)
Accumulated other comprehensive loss
(2,876
)
(2,451
)
TOTAL STOCKHOLDERS’ EQUITY
280,897
326,392
Non-controlling interest
—
(797
)
TOTAL EQUITY
280,897
325,595
TOTAL LIABILITIES AND EQUITY
$
489,487
$
553,585
ARGAN, INC. AND
SUBSIDIARIES
Reconciliations to
EBITDA
(In
thousands)(Unaudited)
Three Months Ended
January 31,
2023
2022
Net income (loss), as reported
$
15,239
$
(323
)
Income tax (benefit) expense
(3,214
)
128
Depreciation
687
807
Amortization of purchased intangible
assets
121
190
EBITDA
12,833
802
EBITDA of the non-controlling interest
1,606
(2,538
)
EBITDA attributable to the stockholders of
Argan, Inc.
$
11,227
$
3,340
Fiscal Year Ended
January 31,
Net income, as reported
$
34,704
$
35,706
Income tax expense
11,296
11,356
Depreciation
2,983
3,367
Amortization of purchased intangible
assets
732
870
EBITDA
49,715
51,299
EBITDA of the non-controlling interest
1,606
(2,538
)
EBITDA attributable to the stockholders of
Argan, Inc.
$
48,109
$
53,837
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230412005725/en/
Company Contact: David Watson 301.315.0027
Argan (NYSE:AGX)
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