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Form 8-K ARGAN INC For: Jun 08

June 8, 2022 4:31 PM EDT

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Exhibit 99.1

Graphic

Argan, Inc. Reports First Quarter Results

June 8, 2022 – ROCKVILLE, MD – Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today announces financial results for its first quarter ended April 30, 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)

April 30, 

 

    

2022

    

2021

    

Change

 

For the Quarter Ended:

  

  

  

Revenues

$

100,277

$

126,341

$

(26,064)

Gross profit

 

19,738

 

23,714

 

(3,976)

Gross margin %

 

19.7

%  

 

18.8

%  

 

0.9

%

Net income

$

7,485

$

10,766

$

(3,281)

Diluted per share

 

0.50

 

0.67

 

(0.17)

EBITDA

10,733

15,644

(4,911)

Cash dividends per share

 

0.25

 

0.25

 

    

April 30, 

January 31, 

    

 

As of:

2022

2022

Change

 

Cash, cash equivalents and short-term investments

$

367,484

$

440,498

$

(73,014)

Net liquidity (1)

 

261,317

 

284,257

 

(22,940)

RUPO (2)

 

339,162

 

397,023

 

(57,861)


(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 continue to be pleased with the current execution on all of our major projects despite the well-publicized global supply chain disruptions, current inflationary challenges and continued COVID-19 pandemic impacts. These successes for all of our stakeholders reflect the talent and adaptability of our employees,” Rainer Bosselmann, Chairman and Chief Executive Officer of Argan, said. “Earlier today, our international efforts continued to expand, as we announced entering into three new engineering and construction contracts for 195 MW power projects in Ireland. Our sales efforts continue to be a major priority, and we believe there are a number of meaningful projects that will start this year for each of our subsidiaries. Our earnings per share of $0.50 for the first quarter is a reasonable start to the year and we look forward to building on it throughout Fiscal 2023.”  

Consolidated revenues for the quarter ended April 30, 2022 were $100.3 million. The primary revenue drivers were the post peak construction activities associated with the Guernsey Power Station project in


Ohio, early construction activities on the Kilroot power project in Northern Ireland and an overall sustained level of activity at each business segment. Additionally, during the quarter, the Maple Hill solar energy project revenues were adversely affected by the market disruption in the supply of photovoltaic panels. Consolidated revenues for the quarter ended April 30, 2021 reflected primarily the peak construction activities associated with the Guernsey Power Station project.

For the three-month period ended April 30, 2022, we reported a consolidated gross profit of approximately $19.7 million which represented a gross profit percentage of approximately 19.7% of corresponding consolidated revenues.  The gross profit percentages of corresponding revenues for the power industry services, industrial services and the telecommunications infrastructure segments were 20.2%, 17.0% and 26.2%, respectively, for the quarter ended April 30, 2022.

Selling, general and administrative expenses for the three months ended April 30, 2022 and 2021, were $10.6 million and $9.9 million, respectively. For three months ended April 30, 2022, net income attributable to our stockholders was $7.5 million, or $0.50 per diluted share. For the three months ended April 30, 2021, we reported net income attributable to our stockholders in the amount of $10.8 million, or $0.67 per diluted share.

As of April 30, 2022, cash, cash equivalents and short-term investments totaled $367 million and net liquidity was $261 million; furthermore, the Company had no debt. The $73 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 April 30, 2022, the Company repurchased 710,879 shares of common stock at a cost of $27 million.   To date, the Company has repurchased 1,621,808 shares of common stock, or approximately 10% of its outstanding shares, at a cost of approximately $61.7 million under the $75 million share repurchase program authorization. The Company’s consolidated amount of RUPO was approximately $339 million as of April 30, 2022.

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, 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.


Company Contact:

    

Investor Relations Contact:

Rainer Bosselmann

 

David Watson

301.315.0027

 

301.315.0027


ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

April 30, 

    

2022

    

2021

REVENUES

$

100,277

$

126,341

Cost of revenues

 

80,539

 

102,627

GROSS PROFIT

 

19,738

 

23,714

Selling, general and administrative expenses

 

10,575

 

9,892

INCOME FROM OPERATIONS

 

9,163

 

13,822

Other income, net

 

595

 

712

INCOME BEFORE INCOME TAXES

 

9,758

 

14,534

Income tax expense

 

(2,273)

 

(3,768)

NET INCOME

 

7,485

 

10,766

Net income attributable to the non-controlling interest

 

 

NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

7,485

10,766

Foreign currency translation adjustments

(1,264)

(118)

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

$

6,221

$

10,648

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

 

  

 

  

Basic

$

0.50

$

0.68

Diluted

$

0.50

$

0.67

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

 

  

 

  

Basic

 

14,910

 

15,726

Diluted

 

14,992

 

15,961

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, 

    

2022

    

2022

(Unaudited)

ASSETS

 

  

 

  

CURRENT ASSETS

 

  

 

  

Cash and cash equivalents

$

192,255

$

350,472

Short-term investments

 

175,229

 

90,026

Accounts receivable, net

 

36,047

 

26,978

Contract assets

 

6,880

 

4,904

Other current assets

 

37,180

 

34,904

TOTAL CURRENT ASSETS

 

447,591

 

507,284

Property, plant and equipment, net

 

9,936

 

10,460

Goodwill

 

28,033

 

28,033

Other purchased intangible assets, net

 

3,175

 

3,322

Right-of-use, deferred tax and other assets

 

4,075

 

4,486

TOTAL ASSETS

$

492,810

$

553,585

LIABILITIES AND EQUITY

 

  

 

  

CURRENT LIABILITIES

 

  

 

  

Accounts payable

$

39,942

$

41,822

Accrued expenses

 

39,365

 

53,315

Contract liabilities

 

106,967

 

127,890

TOTAL CURRENT LIABILITIES

 

186,274

 

223,027

Noncurrent liabilities

 

4,523

 

4,963

TOTAL LIABILITIES

 

190,797

 

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 April 30, 2022 and January 31, 2022, respectively; 14,585,908 and 15,257,688 shares outstanding at April 30, 2022 and January 31, 2022, respectively

 

2,374

 

2,368

Additional paid-in capital

 

159,170

 

158,190

Retained earnings

 

192,463

 

188,690

Less treasury stock, at cost – 1,241,864 and 530,985 shares at April 30, 2022 and January 31, 2022, respectively

(47,482)

(20,405)

Accumulated other comprehensive loss

 

(3,715)

 

(2,451)

TOTAL STOCKHOLDERS’ EQUITY

 

302,810

 

326,392

Non-controlling interest

 

(797)

 

(797)

TOTAL EQUITY

 

302,013

 

325,595

TOTAL LIABILITIES AND EQUITY

$

492,810

$

553,585


ARGAN, INC. AND SUBSIDIARIES

Reconciliation to EBITDA

(In thousands)(Unaudited)

Three Months Ended

April 30, 

    

2022

2021

Net income, as reported

$

7,485

$

10,766

Income tax expense

 

2,273

 

3,768

Depreciation

 

809

 

882

Amortization of purchased intangible assets

 

166

 

228

EBITDA

10,733

15,644

EBITDA of the non-controlling interest

 

 

EBITDA attributable to the stockholders of Argan, Inc.

$

10,733

$

15,644


Exhibit 99.2

Graphic

Argan, Inc.’s Wholly Owned Subsidiary Atlantic Projects Company

Enters into Engineering and Construction Contracts for

195 MW Power Projects in Ireland.

June 8, 2022 – ROCKVILLE, MD – Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) announces that its wholly owned subsidiary, Atlantic Projects Company (“APC”), recently entered into engineering and construction services contracts with the Electricity Supply Board (“ESB”) to construct three 65 MW aero-derivative gas turbine flexible generation power plants in and around Dublin, Ireland. Two of the power plants, Poolbeg and Ringsend FlexGen Power Plants, will be located on the Poolbeg Peninsula, and the Corduff FlexGen Power Plant is to be built in Goddamendy, Dublin. All three projects cleared the SEM 2024/2025 T-3 Capacity auction earlier this year and are expected to operate intermittently during peak periods of electricity demand and as back-up supply options when renewable electricity generation is limited. A full notice to proceed has been received and project activities have commenced. The completion of each power plant is expected in the latter half of 2023.

“These are major investments by ESB as they phase out coal and peat power plants and maintain the long-term stability of the electricity system in Ireland as increasing levels of intermittent renewables are added.  We are delighted to have been chosen by ESB, a long-term customer of ours, to provide engineering and construction services for these strategic projects and we look forward to successful delivery of three power plants,” said Billy Nolan, Managing Director, Atlantic Projects Company.  

Argan will add the value of these contracts to its project backlog immediately.

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 primarily on the engineering, procurement and construction of natural gas-fired power plants, 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 SMC Infrastructure Solutions, which provides telecommunications infrastructure services, and The Roberts Company, which is a fully integrated fabrication, construction and industrial plant services company.

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks and uncertainties including, but not limited to, the Company’s successful addition of new contracts to project backlog, the Company’s 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 entered into several EPC contracts that have not started and may not start as planned due to market and other circumstances out of the Company’s 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 a number of factors detailed from time to time in Argan’s filings with the SEC. In addition, reference is hereby made to cautionary statements with


respect to risk factors set forth in the Company’s most recent reports on Forms 10-K and 10-Q, and in other SEC filings.

Company Contact:

    

Investor Relations Contact:

Rainer Bosselmann

 

David Watson

301.315.0027

 

301.315.0027




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