Business Wire | Dec 8, 2021 04:15PM EST

Argan, Inc. Reports Third Quarter Results

Dec. 08, 2021

ROCKVILLE, Md.--(BUSINESS WIRE)--Dec. 08, 2021--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)



October January 31, 31,

As of: 2021 2021 Change

Cash, cash equivalents and short-term $ 481,564 $ 456,726 $ 24,838investments

Net liquidity ^(1) 300,674 270,133 30,541

RUPO ^(2) 491,559 552,531 (60,972)

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

^ The amount of remaining unsatisfied performance obligations ("RUPO")(2) 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 11,590 9,398 31,813 28,827 administrative expenses

INCOME FROM OPERATIONS 14,545 10,945 45,688 11,155

Other income, net 1,117 175 1,569 1,714

INCOME BEFORE INCOME 15,662 11,120 47,257 12,869 TAXES

Income tax (expense) (3,269 ) (1,666 ) (11,228 ) 1,391 benefit

NET INCOME 12,393 9,454 36,029 14,260

Net loss attributableto non-controlling - - - (40 )interests

NET INCOME ATTRIBUTABLETO THE STOCKHOLDERS OF 12,393 9,454 36,029 14,300 ARGAN, INC.

Foreign currency (471 ) (321 ) (728 ) (650 )translation adjustments

COMPREHENSIVE INCOMEATTRIBUTABLE TO THE $ 11,922 $ 9,133 $ 35,301 $ 13,650 STOCKHOLDERS OF ARGAN,INC.



NET INCOME PER SHAREATTRIBUTABLE 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 $ 0.25 $ 0.25 $ 0.75 $ 1.75 SHARE

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

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 and15,706,202 shares issued at October 31, 2021 and 2,368 2,356 January 31, 2021, respectively; 15,784,440 and15,702,969 shares outstanding at October 31, 2021and January 31, 2021, respectively

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/

CONTACT: Company Contact: Rainer Bosselmann 301.315.0027

CONTACT: Investor Relations Contact: David Watson 301.315.0027