Press release

Argan, Inc. Reports First Quarter Results

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Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today announced financial results for its first quarter ended April 30, 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)

 

 

April 30,

 

 

 

 

 

 

2021

 

2020

 

Change

 

For the Quarter Ended:

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

126,341

 

$

60,148

 

$

66,193

 

Gross profit

 

 

23,714

 

 

4,009

 

 

19,705

 

Gross margin %

 

 

18.8

%

 

6.7

%

 

12.1

%

Net income (loss) attributable to the stockholders of the Company

 

$

10,766

 

$

(763)

 

$

11,529

 

Diluted per share

 

 

0.67

 

 

(0.05)

 

 

0.72

 

EBITDA attributable to the stockholders of the Company

 

 

15,644

 

 

(4,055)

 

 

19,699

 

Diluted per share

 

 

0.98

 

 

(0.26)

 

 

1.24

 

Cash dividends per share

 

 

0.25

 

 

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 30,

 

January 31,

 

 

 

As of:

 

2021

 

2021

 

Change

Cash, cash equivalents and short-term investments

 

$

466,750

 

$

456,726

 

$

10,024

 

Net liquidity (1)

 

 

275,966

 

 

270,133

 

 

5,833

 

RUPO (2)

 

 

478,743

 

 

552,531

 

 

(73,788

)


(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.

“We are continuing the momentum from Fiscal 2021 into the first quarter of Fiscal 2022 with our third 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 continue to rebound from the beginning of the COVID-19 pandemic and produce increasing revenues and profit quarter over quarter. In addition, we were pleased to announce in May the award and start of an EPC services contract to build one of the largest solar power plants in Pennsylvania, which complements our core gas-fired power plant business, where we are executing on the Guernsey Power Station, which is the largest single-phase gas-fired power plant construction project in the US.”

Consolidated revenues for the quarter ended April 30, 2021 were $126.3 million, which represented an increase of $66.2 million, or 110.1%, from consolidated revenues of $60.1 million reported for the three months ended April 30, 2020. The increase was primarily due to increasing revenues at Gemma Power Systems (“GPS”) associated with the construction of the Guernsey Power Station. Additionally, the industrial services business segment reported revenues of $26.7 million for the three months ended April 30, 2021, which represented an increase of $16.9 million, or 173.6%, from revenues of $9.7 million reported for the three months ended April 30, 2020.

Consolidated gross profit for the three-month period ended April 30, 2021 was $23.7 million, or 18.8% of the corresponding consolidated revenues, which reflected primarily the favorable impacts of the higher amount of consolidated revenues and positive contributions from all three reportable business segments. For the three-month period ended April 30, 2020, the consolidated gross profit was $4.0 million, which represented approximately 6.7% of the corresponding amount of consolidated revenues and reflected $2.7 million of subcontract loss incurred by Atlantic Projects Company (“APC”) related to the TeesREP project, for which APC has recently completed activities.

Selling, general and administrative expenses for the three months ended April 30, 2021 and 2020 were $9.9 million, or 7.8% of corresponding consolidated revenues, and $10.3 million, or 17.2% of corresponding consolidated revenues, respectively.

Due primarily to the consolidated pre-tax book income reported for the three-month period ended April 30, 2021 in the amount of $14.5 million, we reported income tax expense in the amount of $3.8 million for the period. For the three months ended April 30, 2020, we recorded an income tax benefit of $4.5 million which amount included primarily $4.2 million of carryback benefit related to the net operating loss incurred by us for the year ended January 31, 2020.

For the three months ended April 30, 2021, our improved overall operating performance resulted in net income attributable to our stockholders in the amount of $10.8 million, or $0.67 per diluted share. Last year, despite the favorable effect of the net operating loss carryback benefit, we reported a net loss attributable to our stockholders in the amount of $0.8 million, or $0.05 per dilutive share.

As of April 30, 2021, cash, cash equivalents and short-term investments totaled $467 million and net liquidity was $276 million; furthermore, the Company had no debt. The Company’s consolidated amount of RUPO was approximately $0.5 billion as of April 30, 2021.

In May 2021, we announced that GPS entered into an engineering, procurement and construction services contract with an affiliate of Competitive Power Ventures, Inc., to construct the 100 MW Maple Hill Solar facility in Pennsylvania. GPS also received Notice to Proceed with project activities immediately. The project will be added to the Company’s RUPO in the second quarter and completion is scheduled to occur during the second half of 2022.

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 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

 

 

April 30,

 

 

2021

 

2020

REVENUES

 

$

126,341

 

 

$

60,148

 

Cost of revenues

 

 

102,627

 

 

 

56,139

 

GROSS PROFIT

 

 

23,714

 

 

 

4,009

 

Selling, general and administrative expenses

 

 

9,892

 

 

 

10,344

 

INCOME (LOSS) FROM OPERATIONS

 

 

13,822

 

 

 

(6,335

)

Other income, net

 

 

712

 

 

 

1,088

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

14,534

 

 

 

(5,247

)

Income tax (expense) benefit

 

 

(3,768

)

 

 

4,454

 

NET INCOME (LOSS)

 

 

10,766

 

 

 

(793

)

Net loss attributable to non-controlling interests

 

 

 

 

 

(30

)

NET INCOME (LOSS) ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

 

 

10,766

 

 

 

(763

)

Foreign currency translation adjustments

 

 

(118

)

 

 

(246

)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

 

$

10,648

 

 

$

(1,009

)

 

 

 

 

 

 

 

NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

 

 

 

 

 

 

Basic

 

$

0.68

 

 

$

(0.05

)

Diluted

 

$

0.67

 

 

$

(0.05

)

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

 

 

 

 

 

 

Basic

 

 

15,726

 

 

 

15,643

 

Diluted

 

 

15,961

 

 

 

15,643

 

 

 

 

 

 

 

 

CASH DIVIDENDS PER SHARE

 

$

0.25

 

 

$

0.25

 

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

April 30,

 

January 31,

 

 

2021

 

2021

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

396,675

 

 

$

366,671

 

Short-term investments

 

 

70,075

 

 

 

90,055

 

Accounts receivable, net

 

 

32,379

 

 

 

28,713

 

Contract assets

 

 

26,158

 

 

 

26,635

 

Other current assets

 

 

33,744

 

 

 

34,146

 

TOTAL CURRENT ASSETS

 

 

559,031

 

 

 

546,220

 

Property, plant and equipment, net

 

 

19,944

 

 

 

20,361

 

Goodwill

 

 

27,943

 

 

 

27,943

 

Other purchased intangible assets, net

 

 

3,869

 

 

 

4,097

 

Deferred taxes

 

 

 

 

 

249

 

Right-of-use and other assets

 

 

7,185

 

 

 

3,760

 

TOTAL ASSETS

 

$

617,972

 

 

$

602,630

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

41,467

 

 

$

53,295

 

Accrued expenses

 

 

42,050

 

 

 

50,750

 

Contract liabilities

 

 

199,548

 

 

 

172,042

 

TOTAL CURRENT LIABILITIES

 

 

283,065

 

 

 

276,087

 

Deferred taxes

 

 

350

 

 

 

 

Other noncurrent liabilities

 

 

3,741

 

 

 

4,135

 

TOTAL LIABILITIES

 

 

287,156

 

 

 

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 April 30, 2021 and January 31, 2021 respectively; 15,769,440 and 15,702,969 shares outstanding at April 30, 2021 and January 31, 2021, respectively

 

 

2,366

 

 

 

2,356

 

Additional paid-in capital

 

 

154,974

 

 

 

153,282

 

Retained earnings

 

 

172,934

 

 

 

166,110

 

Accumulated other comprehensive loss

 

 

(1,199

)

 

 

(1,081

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

329,075

 

 

 

320,667

 

Non-controlling interests

 

 

1,741

 

 

 

1,741

 

TOTAL EQUITY

 

 

330,816

 

 

 

322,408

 

TOTAL LIABILITIES AND EQUITY

 

$

617,972

 

 

$

602,630

 

ARGAN, INC. AND SUBSIDIARIES

Reconciliations to EBITDA

(In thousands)(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

April 30,

 

 

2021

 

2020

Net income (loss), as reported

 

$

10,766

 

$

(793

)

Income tax expense (benefit)

 

 

3,768

 

 

(4,454

)

Depreciation

 

 

882

 

 

937

 

Amortization of purchased intangible assets

 

 

228

 

 

225

 

EBITDA

 

 

15,644

 

 

(4,085

)

EBITDA of non-controlling interests

 

 

 

 

(30

)

EBITDA attributable to the stockholders of Argan, Inc.

 

$

15,644

 

$

(4,055

)