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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

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20210608006072/en/

Contacts

Company:
Rainer Bosselmann
301.315.0027

Investor Relations:
David Watson
301.315.0027

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