Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today
announces financial results for its third quarter ended October 31,
2022. 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,
2022
2021
Change
For the Quarter Ended:
Revenues
$
117,875
$
124,451
$
(6,576)
Gross profit
22,208
26,135
(3,927)
Gross margin %
18.8
%
21.0
%
(2.2)
%
Net income
$
7,758
$
12,393
$
(4,635)
Diluted per share
0.56
0.78
(0.22)
EBITDA
11,261
16,708
(5,447)
Cash dividends per share
0.25
0.25
—
October 31,
January 31,
As of:
2022
2022
Change
Cash, cash equivalents and short-term
investments
$
286,631
$
440,498
$
(153,867)
Net liquidity (1)
230,423
284,257
(53,834)
Share repurchase treasury stock, at
cost
83,657
20,405
63,252
Project backlog
839,000
714,000
125,000
(1)
Net liquidity, or working capital, is
defined as total current assets less total current liabilities.
“We were pleased to announce last month that our Gemma Power
Systems subsidiary received full notice to proceed on an
engineering, procurement and construction (“EPC”) services contract
to build the Trumbull Energy Center, a 950 MW natural gas-fired
power plant in Lordstown, Ohio, which increased our project backlog
to exceed $0.8 billion,” David Watson, President and Chief
Executive Officer of Argan, said. “All of our companies are
generally experiencing increasing amounts of project backlogs this
year and continue to see significant opportunities in their
markets. We believe this increase is a reflection, in part, on our
ability to execute effectively and efficiently for our customers.
For example, the Guernsey Power Station, the largest single-phase,
gas-fired, power plant project in the U.S. has been under
construction throughout the entire COVID-19 pandemic with limited
schedule delays to date and recently reached first fire on all
three units, major milestones for the project. Due to increased
project backlog and market opportunities, our dedicated and
talented employees and our strong balance sheet, we are positioned
to finish out the year strong and for growth into the future.”
Consolidated revenues for the quarter ended October 31, 2022
were $117.9 million, which represented a decrease of $6.6 million,
or 5.3%, from consolidated revenues of $124.5 million reported for
the three months ended October 31, 2021. Consolidated revenues of
our power industry services segment decreased by $8.9 million as
the quarterly construction activities associated with the Guernsey
Power Station project and the Equinix data center project have
passed peak levels. The reduction in revenues between the quarters
was partially offset by increasing revenues at several projects
including the Kilroot Power Station, the ESB FlexGen peaker plants
and the Maple Hill Solar energy facility. The Company’s
consolidated project backlog was approximately $839 million as of
October 31, 2022.
For the quarter ended October 31, 2022, we reported a
consolidated gross profit of approximately $22.2 million which
represented a gross profit percentage of approximately 18.8% of
corresponding consolidated revenues. The gross profit percentages
of corresponding revenues for the power industry services,
industrial services and the telecommunications infrastructure
segments were 19.8%, 15.4% and 16.8%, respectively, for the current
quarter.
Selling, general and administrative expenses for the three
months ended October 31, 2022 and 2021, were $12.7 million and
$11.6 million, respectively, representing an increase of $1.1
million between the quarters, or 9.3%, which was due primarily to
the accrual of costs associated with the retirement of the
Company’s former chief executive officer in August 2022.
For the three months ended October 31, 2022, net income was $7.8
million, or $0.56 per diluted share. For the three months ended
October 31, 2021, we reported net income in the amount of $12.4
million, or $0.78 per diluted share. EBITDA for the quarter ended
October 31, 2022 decreased to $11.3 million from $16.7 million for
the prior year quarter. The Company paid its regular quarterly cash
dividend of $0.25 per share in October 2022.
For the nine months ended October 31, 2022, we reported net
income in the amount of $19.5 million, or $1.36 per diluted share,
compared to $36.0 million of net income, or $2.25 per diluted
share, in the prior year period. EBITDA for the nine months ended
October 31, 2022 decreased to $36.9 million from $50.5 million for
the prior year period.
As of October 31, 2022, cash, cash equivalents and short-term
investments totaled $287 million and net liquidity was $230
million; furthermore, the Company had no debt. The $154 million
reduction in cash, cash equivalents and short-term investments from
January 31, 2022 reflected the expected cash flow cycle of two
significant projects, the payment of dividends and the repurchase
of shares. During the three months ended October 31, 2022, the
Company repurchased 308,423 shares of common stock at a cost of $10
million. Since last November, the Company has repurchased 2,248,767
shares of common stock, or approximately 14% of its outstanding
shares, at a cost of approximately $84 million under the now $100
million share repurchase program authorization.
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, 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, and the Company’s ability to successfully complete the
projects that it obtains. 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,
2022
2021
2022
2021
REVENUES
$
117,875
$
124,451
$
336,262
$
383,800
Cost of revenues
95,667
98,316
269,929
306,299
GROSS PROFIT
22,208
26,135
66,333
77,501
Selling, general and administrative
expenses
12,667
11,590
34,226
31,813
INCOME FROM OPERATIONS
9,541
14,545
32,107
45,688
Other income, net
768
1,117
1,868
1,569
INCOME BEFORE INCOME TAXES
10,309
15,662
33,975
47,257
Income tax expense
(2,551)
(3,269)
(14,510)
(11,228)
NET INCOME
7,758
12,393
19,465
36,029
Foreign currency translation
adjustments
(650)
(471)
(2,601)
(728)
COMPREHENSIVE INCOME
$
7,108
$
11,922
$
16,864
$
35,301
NET INCOME PER SHARE
Basic
$
0.56
$
0.79
$
1.36
$
2.29
Diluted
$
0.56
$
0.78
$
1.36
$
2.25
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
Basic
13,781
15,774
14,268
15,757
Diluted
13,812
15,963
14,350
15,980
CASH DIVIDENDS PER SHARE
$
0.25
$
0.25
$
0.75
$
0.75
ARGAN, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
October 31,
January 31,
2022
2022
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
136,065
$
350,472
Short-term investments
150,566
90,026
Accounts receivable, net
37,899
26,978
Contract assets
11,551
4,904
Other current assets
28,884
34,904
TOTAL CURRENT ASSETS
364,965
507,284
Property, plant and equipment, net
10,504
10,460
Goodwill
28,033
28,033
Other purchased intangible assets, net
2,730
3,322
Right-of-use, deferred tax and other
assets
4,671
4,486
TOTAL ASSETS
$
410,903
$
553,585
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable
$
45,268
$
41,822
Accrued expenses
40,243
53,315
Contract liabilities
49,031
127,890
TOTAL CURRENT LIABILITIES
134,542
223,027
Noncurrent liabilities
4,621
4,963
TOTAL LIABILITIES
139,163
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; 15,827,772 and 15,788,673 shares
issued at October 31, 2022 and January 31, 2022, respectively;
13,575,772 and 15,257,688 shares outstanding at October 31, 2022
and January 31, 2022, respectively
2,374
2,368
Additional paid-in capital
161,305
158,190
Retained earnings
197,567
188,690
Less treasury stock, at cost – 2,252,000
and 530,985 shares at October 31, 2022 and January 31, 2022,
respectively
(83,657)
(20,405)
Accumulated other comprehensive loss
(5,052)
(2,451)
TOTAL STOCKHOLDERS’ EQUITY
272,537
326,392
Non-controlling interest
(797)
(797)
TOTAL EQUITY
271,740
325,595
TOTAL LIABILITIES AND EQUITY
$
410,903
$
553,585
ARGAN, INC. AND
SUBSIDIARIES
Reconciliations to
EBITDA
(In
thousands)(Unaudited)
Three Months Ended
October 31,
2022
2021
Net income, as reported
$
7,758
$
12,393
Income tax expense
2,551
3,269
Depreciation
740
819
Amortization of purchased intangible
assets
212
227
EBITDA
$
11,261
$
16,708
Nine Months Ended
October 31,
2022
2021
Net income, as reported
$
19,465
$
36,029
Income tax expense
14,510
11,228
Depreciation
2,296
2,560
Amortization of purchased intangible
assets
611
680
EBITDA
$
36,882
$
50,497
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221207005713/en/
Company Contact: David Watson 301.315.0027
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