Business Wire | Sep 7, 2021 04:15PM EDT

Argan, Inc. Reports Second Quarter Results

Sep. 07, 2021

ROCKVILLE, Md.--(BUSINESS WIRE)--Sep. 07, 2021--Argan, Inc. (NYSE: AGX) ("Argan" or the "Company") today announced financial results for its second quarter ended July 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)



July 31,

2021 2020 Change

For the Quarter Ended:

Revenues $ 133,008 $ 87,492 $ 45,516

Gross profit 27,652 15,630 12,022

Gross margin % 20.8 % 17.9 % 2.9 %

Net income attributable to the stockholders $ 12,870 $ 5,609 $ 7,261 of the Company

Diluted per share 0.81 0.36 0.45

EBITDA attributable to the stockholders of 18,145 8,153 9,992 the Company

Diluted per share 1.14 0.52 0.62

Cash dividends per share 0.25 1.25 ^ (1.00) (1)

July 31,

January 31,

As of:

2021

2021

Change

Cash, cash equivalents and short-term investments

$

491,480

$

456,726

$

34,754

Net liquidity (2)

290,309

270,133

20,176

RUPO (3)

467,877

552,531

(84,654)



July 31, January 31,

As of: 2021 2021 Change

Cash, cash equivalents and short-term $ 491,480 $ 456,726 $ 34,754investments

Net liquidity ^(2) 290,309 270,133 20,176

RUPO ^(3) 467,877 552,531 (84,654)

^ The Company declared and paid a $1.00 per share special dividend during(1) the three months ended July 31, 2020.

^ Net liquidity, or working capital, is defined as total current assets(2) less total current liabilities.

^ The amount of remaining unsatisfied performance obligations ("RUPO")(3) represents the project backlog related to active contracts with customers, as determined under revenue recognition rules.

"We are pleased to announce our most profitable quarter since 2018 with $0.81 in earnings per share, which is our fourth consecutive quarter of earnings per share equal to or in excess of $0.60," Rainer Bosselmann, Chairman and Chief Executive Officer of Argan, said. "All of our business segments generated gross profit margins in excess of 20% and we are on pace to generate over $0.5 billion in revenues for the fiscal year. These successes during the ongoing COVID-19 pandemic reflect the talent and adaptability of our employees. We have reached peak construction on the Guernsey Power Station, which is the largest single-phase gas-fired power plant construction project in the US. Additionally, we started work on an EPC services contract to build one of the largest solar power plants in Pennsylvania, which complements our core gas-fired power plant business."

Consolidated revenues for the quarter ended July 31, 2021 were $133.0 million, which represented an increase of $45.5 million, or 52.0%, from consolidated revenues of $87.5 million reported for the three months ended July 31, 2020. The increase was primarily due to increasing revenues at Gemma Power Systems associated with the ongoing construction of the Guernsey Power Station and the initial construction activities on the Maple Hill solar energy facility which began in May 2021. The combined revenues associated with these two projects represented 67.3% of consolidated revenues for the three months ended July 31, 2021. Additionally, revenues at The Roberts Company, our industrial fabrication and field services segment, increased by $13.5 million, or 80.7%, to $30.2 million for the period compared to revenues of $16.7 million for the three months ended July 31, 2020. Our businesses were adversely impacted by the COVID-19 outbreak during the three months ended July 31, 2020; the effects were minimized during the current quarter.

Consolidated gross profit for the three-month period ended July 31, 2021 was $27.7 million, which is primarily a reflection of increased consolidated revenues. The gross profit percentages of corresponding revenues for the power industry services, industrial services and the telecommunications infrastructure segments were 20.7%, 20.9% and 21.8%, respectively, for the quarter ended July 31, 2021.

Selling, general and administrative expenses for the three months ended July 31, 2021 and 2020 were $10.3 million, or 7.8% of corresponding consolidated revenues, and $9.1 million, or 10.4% of corresponding consolidated revenues, respectively.

Due primarily to the consolidated pre-tax book income reported for the three-month period ended July 31, 2021 in the amount of $17.1 million, we reported income tax expense in the amount of $4.2 million, which represents an effective income tax rate of 24.6% for the period. For the three-month period ended July 31, 2020, we recorded an income tax expense of $1.4 million which represented an effective income tax rate of approximately 20.0% for the three-month period.

For the three months ended July 31, 2021, our improved overall operating performance resulted in net income attributable to our stockholders in the amount of $12.9 million, or $0.81 per diluted share, compared to $5.6 million, or $0.36 per diluted share, in the prior year quarter.

For the six months ended July 31, 2021, our improved overall operating performance resulted in net income attributable to our stockholders in the amount of $23.6 million, or $1.48 per diluted share, compared to $4.8 million, or $0.31 per diluted share, in the prior year period.

As of July 31, 2021, cash, cash equivalents and short-term investments totaled $491 million and net liquidity was $290 million; furthermore, the Company had no debt. The Company's consolidated amount of RUPO was approximately $0.5 billion as of July 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 the Delta variant. 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 Six Months Ended

July 31, July 31,

2021 2020 2021 2020

REVENUES $ 133,008 $ 87,492 $ 259,349 $ 147,640

Cost of revenues 105,356 71,862 207,983 128,001

GROSS PROFIT 27,652 15,630 51,366 19,639

Selling, generaland 10,331 9,085 20,223 19,429administrativeexpenses

INCOME FROM 17,321 6,545 31,143 210OPERATIONS

Other (expense) (260) 451 452 1,539income, net

INCOME BEFORE 17,061 6,996 31,595 1,749INCOME TAXES

Income tax (expense) (4,191) (1,397) (7,959) 3,057benefit

NET INCOME 12,870 5,599 23,636 4,806

Net lossattributable to - (10) - (40)non-controllinginterests

NET INCOMEATTRIBUTABLE TO 12,870 5,609 23,636 4,846THE STOCKHOLDERSOF ARGAN, INC.

Foreign currencytranslation (139) (83) (257) (329)adjustments

COMPREHENSIVEINCOMEATTRIBUTABLE TO $ 12,731 $ 5,526 $ 23,379 $ 4,517THE STOCKHOLDERSOF ARGAN, INC.



NET INCOME PERSHAREATTRIBUTABLE TO THE STOCKHOLDERSOF ARGAN, INC.

Basic $ 0.82 $ 0.36 $ 1.50 $ 0.31

Diluted $ 0.81 $ 0.36 $ 1.48 $ 0.31



WEIGHTED AVERAGENUMBER OF SHARES OUTSTANDING

Basic 15,769 15,653 15,748 15,648

Diluted 15,982 15,788 15,978 15,767



CASH DIVIDENDS $ 0.25 $ 1.25 $ 0.50 $ 1.50PER SHARE

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

July 31,

January 31,

2021

2021

(Unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

451,415

$

366,671

Short-term investments

40,065

90,055

Accounts receivable, net

43,120

28,713

Contract assets

25,377

26,635

Other current assets

37,679

34,146

TOTAL CURRENT ASSETS

597,656

546,220

Property, plant and equipment, net

19,209

20,361

Goodwill

27,943

27,943

Other purchased intangible assets, net

3,644

4,097

Deferred taxes

-

249

Right-of-use and other assets

3,537

3,760

TOTAL ASSETS

$

651,989

$

602,630

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable

$

44,317

$

53,295

Accrued expenses

49,308

50,750

Contract liabilities

213,722

172,042

TOTAL CURRENT LIABILITIES

307,347

276,087

Deferred taxes

751

-

Other noncurrent liabilities

3,356

4,135

TOTAL LIABILITIES

311,454

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; 15,772,673 and 15,706,202 shares issued at July 31, 2021 and January 31, 2021, respectively; 15,769,440 and 15,702,969 shares outstanding at July 31, 2021 and January 31, 2021, respectively

2,366

2,356

Additional paid-in capital

155,904

153,282

Retained earnings

181,862

166,110

Accumulated other comprehensive loss

(1,338)

(1,081)

TOTAL STOCKHOLDERS' EQUITY

338,794

320,667

Non-controlling interests

1,741

1,741

TOTAL EQUITY

340,535

322,408

TOTAL LIABILITIES AND EQUITY

$

651,989

$

602,630

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

July 31, January 31,

2021 2021

(Unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 451,415 $ 366,671

Short-term investments 40,065 90,055

Accounts receivable, net 43,120 28,713

Contract assets 25,377 26,635

Other current assets 37,679 34,146

TOTAL CURRENT ASSETS 597,656 546,220

Property, plant and equipment, net 19,209 20,361

Goodwill 27,943 27,943

Other purchased intangible assets, net 3,644 4,097

Deferred taxes - 249

Right-of-use and other assets 3,537 3,760

TOTAL ASSETS $ 651,989 $ 602,630



LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable $ 44,317 $ 53,295

Accrued expenses 49,308 50,750

Contract liabilities 213,722 172,042

TOTAL CURRENT LIABILITIES 307,347 276,087

Deferred taxes 751 -

Other noncurrent liabilities 3,356 4,135

TOTAL LIABILITIES 311,454 280,222



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; 15,772,673 and15,706,202 shares issued at July 31, 2021and January 31, 2021, respectively; 2,366 2,35615,769,440 and 15,702,969 shares outstandingat July 31, 2021 and January 31, 2021,respectively

Additional paid-in capital 155,904 153,282

Retained earnings 181,862 166,110

Accumulated other comprehensive loss (1,338) (1,081)

TOTAL STOCKHOLDERS' EQUITY 338,794 320,667

Non-controlling interests 1,741 1,741

TOTAL EQUITY 340,535 322,408

TOTAL LIABILITIES AND EQUITY $ 651,989 $ 602,630

ARGAN, INC. AND SUBSIDIARIES

Reconciliation to EBITDA

(In thousands) (Unaudited)

Three Months Ended

July 31,

2021

2020

Net income, as reported

$

12,870

$

5,599

Income tax expense

4,191

1,397

Depreciation

859

921

Amortization of purchased intangible assets

225

226

EBITDA

18,145

8,143

EBITDA of non-controlling interests

-

(10)

EBITDA attributable to the stockholders of Argan, Inc.

$

18,145

$

8,153

View source version on businesswire.com: https://www.businesswire.com/news/home/20210907005858/en/

CONTACT: Company: Rainer Bosselmann 301.315.0027

CONTACT: Investor Relations: David Watson 301.315.0027