Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”)
today announced financial results for its fiscal year and fourth
quarter ended January 31, 2017. For additional information, please
read the Company’s Annual Report on Form 10-K, which the Company
intends to file today with the U.S. Securities and Exchange
Commission (the “SEC”). The Annual 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):
January
31,
2017
2016
Change
%
Change
For the Fiscal Year Ended: Revenues $ 675,047 $ 413,275 $
261,772 63% Gross profit 146,711 99,465 47,246 48 Gross margins
21.7% 24.1% (2.4)% (10) Net income attributable to the stockholders
of the Company $ 70,328 $ 36,345 $ 33,983 94 Diluted per share 4.50
2.42 2.08 86 EBITDA attributable to the stockholders of the Company
110,640 62,905 47,735 76 Diluted per share 7.09 4.19 2.90 69
For the Quarter Ended (unaudited): Revenues $ 206,760 $
116,386 $ 90,374 78% Gross profit 37,819 23,543 14,276 61 Gross
margins 18.3% 20.2% (1.9)% (9) Net income attributable to the
stockholders of the Company $ 20,351 $ 6,728 $ 13,623 202 Diluted
per share 1.29 0.45 0.84 190 EBITDA attributable to the
stockholders of the Company 31,344 12,777 18,567 145 Diluted per
share 1.99 0.85 1.14 135
As of: Cash, cash
equivalents and short-term investments $ 522,994 $ 275,007 $
247,987 90% Billings in excess of costs and estimated earnings
209,241 105,863 103,378 98 Backlog 1,011,000 1,163,000 (152,000)
(13)
2017 Fiscal Year Results:
Revenues increased to an annual record $675 million, up 63%
compared to the prior year, primarily due to Gemma Power Systems
(GPS) ramping up work on four large, gas-fired power plants and the
final completion of two large power plants. The increase also
reflects a full year of revenues from Atlantic Projects Company
(APC) and The Roberts Company (TRC), which were acquired in May and
December 2015, respectively.
The power industry services segment continues to drive our
financial results and represents 87% of consolidated revenues for
the year ended January 31, 2017 (Fiscal 2017), a diversification
improvement compared to 94% in the prior year. Gross profit
increased 47% to $147 million, primarily due to the increased
revenues, while gross margin percentage decreased from 24.1% to
21.7% compared to the prior year, which reflected primarily the
changes in the mix and progress of our various power plant projects
and the differences in their respective gross margins during the
two comparative years, as well as lower margins contributed by our
two new subsidiaries, APC and TRC.
Selling, general and administrative expenses increased $7
million to $32 million, primarily due to a full year of expenses
related to APC and TRC, but decreased as a percentage of revenue to
4.8% from 6.1% in the prior year. Net income attributable to
non-controlling interests decreased 49% to $7 million as activity
wound down on two large power plant projects completed by joint
ventures. These factors and a relatively consistent effective
income tax rate result in net income attributable to our
stockholders for Fiscal 2017 increasing 94% to $70 million, or
$4.50 per diluted share, from $36 million, or $2.42 per diluted
share, compared to the prior year. EBITDA attributable to our
stockholders for Fiscal 2017 also increased 76% to $111 million, or
$7.09 per diluted share, from $63 million, or $4.19 per diluted
share, for the prior year.
Our balance sheet continues to strengthen. As of January 31,
2017, our cash, cash equivalents and short-term investments totaled
$523 million and net liquidity was $237 million; plus, we had no
bank debt. Our contract backlog was $1.0 billion as of January 31,
2017.
Fourth Quarter Results:
Revenues increased 78% over the prior year’s fourth quarter to a
quarterly record $207 million, primarily due to the ramp up of
construction work on four large, gas-fired power plants by GPS.
Gross profit increased 61% to $38 million while gross margin
percentage decreased from 21.2% to 18.3% compared to the prior
year’s fourth quarter, reflecting lower margins at the power plant
projects in progress and at our two new subsidiaries, APC and
TRC.
Other factors contributing to an increased bottom line between
the fourth quarter of Fiscal 2017 and the prior year’s fourth
quarter included a reduced amount of net income shared with
non-controlling interests ($2 million), a lower effective income
tax rate ($1.5 million), reduced selling, general and
administrative expenses ($1 million) and increased other income
($0.8 million). As a result, net income attributable to our
stockholders for the three months ended January 31, 2017 increased
202% to $20 million, or $1.29 per diluted share, compared to $7
million, or $0.45 per diluted share, for the prior year’s fourth
quarter. EBITDA attributable to our stockholders for the fourth
quarter increased 145% to $31 million, or $1.99 per diluted share,
from $13 million, or $0.85 per diluted share, for the prior year’s
fourth quarter.
Commenting on Argan’s results, Rainer Bosselmann, Chairman and
Chief Executive Officer, stated, “The record success of the Company
during the year could not have been achieved without the
operational excellence of our employees. Our continuing focus on
safety and quality, cost containment, investing in our employees
and ensuring the satisfaction of our customers is enabling us to
progressively grow our business and to continue to post strong
financial results. We believe we are well positioned for the future
given our liquidity, strong balance sheet and project backlog of
$1.0 billion.”
About Argan, Inc.
Argan’s primary business is providing a full range of services
to the power industry including the engineering, procurement and
construction of 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
Southern Maryland Cable, 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: (1) the continued strong
performance of our power industry services business; (2) the
Company’s ability to successfully and profitably integrate
acquisitions; and (3) the Company’s ability to achieve its
business strategy while effectively managing costs and expenses.
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 Form
10-K and 10-Q, and other SEC filings.
ARGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS
(In thousands, except per share
data)
Three Months Ended January 31, Fiscal Year
Ended January 31, 2017 2016 2017
2016 (Unaudited) (Unaudited)
REVENUES Power industry
services $ 184,013 $ 99,688 $ 586,628 $ 387,636 Industrial
fabrication and field services 19,707 15,260 78,994 15,260
Telecommunications infrastructure services 3,040
1,438 9,425 10,379 Revenues 206,760
116,386 675,047 413,275
COST OF REVENUES Power
industry services 150,459 76,204 452,599 290,823 Industrial
fabrication and field services 15,863 15,527 68,354 15,527
Telecommunications infrastructure services 2,619
1,112 7,383 7,460 Cost of revenues 168,941
92,843 528,336 313,810
GROSS PROFIT
37,819 23,543 146,711 99,465 Selling, general and administrative
expenses 8,049 9,082 32,478 25,060 Impairment loss —
— 1,979 —
INCOME FROM OPERATIONS 29,770 14,461
112,254 74,405 Other income, net 995 156 2,278
1,101
INCOME BEFORE INCOME TAXES 30,765 14,617
114,532 75,506 Income tax expense 9,984 5,457
37,106 25,302
NET INCOME 20,781 9,160 77,426 50,204
Net income attributable to noncontrolling interests 430
2,432 7,098 13,859
NET INCOME ATTRIBUTABLE TO THE
STOCKHOLDERS OF ARGAN, INC.
$ 20,351 $ 6,728 $ 70,328
$ 36,345
EARNINGS PER SHARE ATTRIBUTABLE TO THE
STOCKHOLDERS OF ARGAN, INC.
Basic $ 1.33 $ 0.45 $ 4.67 $ 2.46 Diluted $ 1.29 $ 0.45 $ 4.50 $
2.42
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
Basic 15,340 14,829 15,066 14,757
Diluted 15,731 15,063 15,625 15,024
CASH DIVIDENDS PER SHARE — — $ 1.00 $
0.70
ARGAN, INC. AND SUBSIDIARIES
Reconciliations to EBITDA
(Unaudited)(In thousands)
Three Months Ended January 31,
2017 2016 Net income $ 20,781 $ 9,160
Less EBITDA attributable to noncontrolling interests (430 ) (2,432
) Interest expense — 9 Income tax expense 9,984 5,458 Depreciation
599 334 Amortization of purchased intangible assets 410
248 EBITDA attributable to the stockholders of
Argan, Inc. $ 31,344 $ 12,777
Fiscal
Year Ended January 31, 2017 2016 Net income $
77,426 $ 50,204 Less EBITDA attributable to noncontrolling
interests (7,098 ) (13,859 ) Interest expense — (8 ) Income tax
expense 37,106 25,258 Depreciation 2,043 779 Amortization of
purchased intangible assets 1,163 531
EBITDA attributable to the stockholders of Argan, Inc. $ 110,640
$ 62,905
Management uses EBITDA, a non-GAAP financial measure, for
planning purposes, including the preparation of operating budgets
and the determination of appropriate levels of operating and
capital investments. Management believes that EBITDA provides
additional insight for analysts and investors in evaluating the
Company's financial and operational performance and in assisting
investors in comparing the Company’s financial performance to those
of other companies in the Company’s industry. However, EBITDA is
not intended to be an alternative to financial measures prepared in
accordance with GAAP and should not be considered in isolation from
the Company’s GAAP results of operations. Consistent with the
requirements of SEC Regulation G, reconciliations of the Company’s
non-GAAP financial results from net income are included in the
presentations above and investors are advised to carefully review
and consider this information as well as the GAAP financial results
that are presented in the Company’s SEC filings.
ARGAN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per
share data)
As of January 31, 2017
2016 ASSETS CURRENT
ASSETS Cash and cash equivalents $ 167,198 $ 160,909 Short-term
investments 355,796 114,098 Accounts receivable, net 54,836 64,185
Costs and estimated earnings in excess of billings 3,192 4,078
Prepaid expenses and other current assets 6,927
7,342
TOTAL CURRENT ASSETS 587,949 350,612
Property, plant and equipment, net 13,112 12,308 Goodwill 34,913
37,405 Intangible assets, net 8,181 9,344 Other assets 92
122
TOTAL ASSETS $ 644,247 $
409,791
LIABILITIES AND EQUITY
CURRENT LIABILITIES Accounts payable $ 101,944 $ 46,395
Accrued expenses 39,539 35,454 Billings in excess of costs and
estimated earnings 209,241 105,863
TOTAL CURRENT LIABILITIES 350,724 187,712 Deferred income
taxes 954 224
TOTAL LIABILITIES
351,678 187,936
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; 15,461,452 and 14,839,702 shares
issued at January 31, 2017 and 2016, respectively; 15,458,219 and
14,836,469 shares outstanding at January 31, 2017 and 2016,
respectively
2,319
2,226
Additional paid-in capital 135,426 117,274 Retained earnings
154,649 99,581 Accumulated other comprehensive loss (762 )
(565 )
TOTAL STOCKHOLDERS’ EQUITY 291,632 218,516
Noncontrolling interests 937 3,339
TOTAL EQUITY 292,569 221,855
TOTAL LIABILITIES AND EQUITY $ 644,247 $ 409,791
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version on businesswire.com: http://www.businesswire.com/news/home/20170410006105/en/
Argan, Inc.Company Contact:Rainer Bosselmann,
301-315-0027orInvestor Relations Contact:David Watson,
301-315-0027
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