Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”)
today announced financial results for its second quarter ended July
31, 2017. 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 (unaudited)):
July
31,
2017
2016
Change
%
Change
For the Quarter Ended: Revenues $ 259,803 $ 162,495 $ 97,308
60 % Gross profit 51,407 44,012 7,395 17 Gross margins 19.8 % 27.1
% (7.3 ) (27 ) Net income attributable to the stockholders of the
Company $ 27,139 $ 19,674 $ 7,465 38 Diluted per share 1.72 1.29
0.43 33 EBITDA attributable to the stockholders of the Company
42,712 32,114 10,598 33 Diluted per share 2.71 2.10 0.61 29
For the Six Months Ended: Revenues $ 490,292 $ 292,843 $
197,449 67 % Gross profit 91,503 72,314 19,189 27 Gross margins
18.7 % 24.7 % (6.0 ) (24 ) Net income attributable to the
stockholders of the Company $ 47,764 $ 31,904 $ 15,860 50 Diluted
per share 3.03 2.09 0.94 45 EBITDA attributable to the stockholders
of the Company 75,168 52,271 22,897 44 Diluted per share 4.76 3.43
1.33 39
As of:
July
31,
2017
January
31,2017
Change
%
Change
Cash, cash equivalents and short-term investments $ 557,150 $
522,994 $ 34,156 7 % Billings in excess of costs and estimated
earnings 190,581 209,241 (18,660 ) (9 ) Backlog 676,000 1,011,000
(335,000 ) (33 )
Second Quarter Results:
Revenues increased to a quarterly record of $260 million, up 60%
compared to the prior year quarter, primarily due to Gemma Power
Systems (GPS) having reached peak construction activities on four
large, natural gas-fired power plants. The power industry services
segment continues to drive our financial results and represents 92%
of consolidated revenues for the quarter ended July 31, 2017. Gross
profit increased 17% to $51 million, primarily due to the increased
revenues, while gross margin percentage decreased from 27.1% to
19.8% compared to the prior year quarter, which primarily reflected
the achievement of the substantial completion of two natural
gas-fired power plant projects in the prior year period.
Selling, general and administrative expenses increased $3.3
million to $10.8 million, primarily due to increased incentive and
stock option compensation and human capital costs reflective of
larger operations, but decreased as a percentage of revenues to
4.2% from 4.6% in the prior year quarter. Also in the prior year
quarter, Atlantic Projects Company (APC) recorded an impairment
loss on goodwill of $2.0 million, reflecting the suspension of a
major project and other “Brexit” impacts to its operations in the
UK at that time. Net income attributable to non-controlling
interests decreased 95%, or $3.4 million, as activities on two
large power plant projects were completed last year by joint
ventures. These factors and a relatively consistent effective
income tax rate resulted in second quarter net income attributable
to our stockholders increasing 38% to $27.1 million, or $1.72 per
diluted share, compared to $19.7 million, or $1.29 per diluted
share, for the prior year quarter. EBITDA attributable to the
stockholders for the quarter ended July 31, 2017 increased 33% to
$42.7 million, or $2.71 per diluted share, from $32.1 million, or
$2.10 per diluted share, for the prior year quarter.
Six Month Results:
For the six months ended July 31, 2017, consolidated revenues
increased 67% to a record $490 million over the prior year period,
primarily due to GPS having ramped up and reached peak construction
activities on four large, natural gas-fired power plants. The power
industry services segment also represented 92% of consolidated
revenues for the six months ended July 31, 2017. Gross profit
increased 27% to $92 million, primarily due to the increased
revenues, while gross margin percentage decreased from 24.7% to
18.7% compared to the prior year period, which primarily reflected
the reason discussed above, the changes in the mix and progress of
various power plant projects and the differences in their
respective gross margins.
For the same reasons discussed above, for the six months ended
July 31, 2017, selling, general and administrative expenses
increased $5.7 million to $20.3 million and net income attributable
to non-controlling interests decreased 95%, or $5.2 million, over
the prior year period. In addition, other income from short-term
investments increased $1.9 million from the prior year period due
to higher yields and investment balances. These factors and a
relatively consistent effective income tax rate resulted in net
income attributable to our stockholders for the six months ended
July 31, 2017 increasing 50% to $47.8 million, or $3.03 per diluted
share, compared to $31.9 million, or $2.09 per diluted share, for
the prior year period. EBITDA attributable to the stockholders for
the six months ended July 31, 2017 increased 44% to $75.2 million,
or $4.76 per diluted share, from $52.3 million, or $3.43 per
diluted share, for the prior year period.
The Company’s balance sheet continues to strengthen. As of July
31, 2017, cash, cash equivalents and short-term investments totaled
$557 million and net liquidity was $288 million. The Company has no
bank debt. The work performed in the quarter reduced the contract
backlog. However, the decrease was partially offset with the
addition of the APC contract for the erection of a 299 MW biomass
boiler in Teesside, England. Contract backlog remained a healthy
$0.7 billion as of July 31, 2017.
Commenting on Argan’s results, Rainer Bosselmann, Chairman and
Chief Executive Officer, stated, “On a trailing twelve-month basis,
we have reached $872 million in revenues, $86 million in net income
and $134 million in EBITDA. This growth is a direct result of our
continued successful execution on major EPC projects due, in no
small part, to the dedication and determination of our employees.
As these projects move from peak construction to their later
stages, we are committed to maintaining the quality of performance
and customer satisfaction while creating shareholder value, and we
remain hard at work in our efforts to add new projects to the
Company backlog.”
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 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: (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
CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS
(In thousands, except per share
data)
(Unaudited)
Three Months Ended July 31, Six Months Ended July
31, 2017 2016
2017 2016
REVENUES $259,803 $162,495 $490,292 $292,843 Cost of
revenues 208,396 118,483 398,789
220,529
GROSS PROFIT 51,407 44,012 91,503 72,314 Selling,
general and administrative expenses 10,799 7,534 20,289 14,581
Impairment loss — 1,979 — 1,979
INCOME FROM OPERATIONS 40,608 34,499 71,214 55,754 Other
income, net 1,311 556 2,529 593
INCOME
BEFORE INCOME TAXES 41,919 35,055 73,743 56,347 Income tax
expense 14,601 11,756 25,676 18,928
NET
INCOME 27,318 23,299 48,067 37,419 Net income attributable to
non-controlling interests 179 3,625 303
5,515
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF
ARGAN, INC. 27,139 19,674
47,764 31,904 EARNINGS PER SHARE
ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. Basic
$ 1.75 $ 1.32 $ 3.08 $ 2.14 Diluted $
1.72 $ 1.29 $ 3.03 $ 2.09
WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING Basic 15,514 14,939
15,491 14,899 Diluted 15,787 15,278
15,788 15,231
ARGAN, INC. AND SUBSIDIARIES
Reconciliations to EBITDA
(In thousands)(Unaudited)
Three Months Ended July 31, 2017 2016
Net income $ 27,318 $ 23,299 Less EBITDA attributable to
noncontrolling interests (179 ) (3,625 ) Income tax expense 14,601
11,756 Depreciation 638 484 Amortization of purchased intangible
assets 334 200 EBITDA attributable to the
stockholders of the Company $ 42,712 $ 32,114
Six Months
Ended July 31, 2017 2016 Net income $ 48,067 $
37,419 Less EBITDA attributable to noncontrolling interests (303 )
(5,515 ) Income tax expense 25,676 18,928 Depreciation 1,210 918
Amortization of purchased intangible assets 518 521
EBITDA attributable to the stockholders of the Company $ 75,168 $
52,271
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
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share and per
share data)
July 31,2017
January 31,2017
ASSETS
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 153,225 $ 167,198 Short-term
investments 403,925 355,796 Accounts receivable 72,517 54,836 Costs
and estimated earnings in excess of billings 8,194 3,192 Prepaid
expenses and other current assets 4,766 6,927
TOTAL CURRENT ASSETS 642,627 587,949 Property, plant and
equipment, net 14,821 13,112 Goodwill 34,913 34,913 Intangible
assets, net 7,663 8,181 Deferred taxes 434 241 Other assets
514 92
TOTAL ASSETS $ 700,972 $ 644,488
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $ 131,001 $ 101,944 Accrued expenses 33,116 39,539
Billings in excess of costs and estimated earnings 190,581
209,241
TOTAL CURRENT LIABILITIES 354,698
350,724 Deferred taxes 1,206 1,195
TOTAL
LIABILITIES 355,904 351,919
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;
15,541,952 and 15,461,452 shares issued at
July 31 and January 31, 2017, respectively; 15,538,719 and
15,458,219 shares outstanding at July 31 and January 31, 2017,
respectively
2,331
2,319
Additional paid-in capital 140,182 135,426 Retained earnings
202,413 154,649 Accumulated other comprehensive income (losses)
131 (762 )
TOTAL STOCKHOLDERS’ EQUITY 345,057
291,632 Noncontrolling interests 11 937
TOTAL EQUITY 345,068 292,569
TOTAL
LIABILITIES AND EQUITY $ 700,972 $ 644,488
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170907005136/en/
Argan, Inc.Company Contact:Rainer Bosselmann,
301-315-0027orInvestor Relations Contact:David Watson,
301-315-0027
Argan (NYSE:AGX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Argan (NYSE:AGX)
Historical Stock Chart
From Apr 2023 to Apr 2024