AGX Argan Inc

Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today announces financial results for its third quarter of fiscal year 2025 ended October 31, 2024. The Company will host an investor conference call today, December 5, 2024, at 5:00 p.m. ET.

Consolidated Financial Highlights

($ in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

October 31,

 

 

 

 

For the Quarter Ended:

 

2024

 

2023

 

Change

 

Revenues

 

$

257,008

 

$

163,755

 

$

93,253

 

Gross profit

 

 

44,327

 

 

19,235

 

 

25,092

 

Gross margin %

 

 

17.2

%

 

11.7

%

 

5.5

%

Net income

 

$

28,010

 

$

5,464

 

$

22,546

 

Diluted income per share

 

 

2.00

 

 

0.40

 

 

1.60

 

EBITDA

 

 

37,509

 

 

12,180

 

 

25,329

 

Cash dividends per share

 

 

0.375

 

 

0.300

 

 

0.075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 31,

 

 

 

 

For the Nine Months Ended:

 

2024

 

2023

 

Change

 

Revenues

 

$

641,705

 

$

408,779

 

$

232,926

 

Gross profit

 

 

93,376

 

 

57,201

 

 

36,175

 

Gross margin %

 

 

14.6

%

 

14.0

%

 

0.6

%

Net income

 

$

54,090

 

$

20,340

 

$

33,750

 

Diluted income per share

 

 

3.91

 

 

1.50

 

 

2.41

 

EBITDA

 

 

74,241

 

 

33,774

 

 

40,467

 

Cash dividends per share

 

 

0.975

 

 

0.800

 

 

0.175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 31,

 

January 31,

 

 

 

 

As of:

 

2024

 

2024

 

Change

 

Cash, cash equivalents and investments

 

$

506,282

 

$

412,405

 

$

93,877

 

Net liquidity (1)

 

 

280,977

 

 

244,919

 

 

36,058

 

Share repurchase treasury stock, at cost

 

 

102,746

 

 

97,528

 

 

5,218

 

Project backlog

 

 

800,000

 

 

757,000

 

 

43,000

 

(1)

 

Net liquidity, or working capital, is defined as total current assets less total current liabilities.

David Watson, President and Chief Executive Officer of Argan, commented, “Our third quarter revenues and earnings, each the second highest in Company history, reflect strong execution across all of our businesses, which drove consolidated revenues growth of 57% to $257 million, gross margin of 17.2%, net income of $28.0 million, or $2.00 per diluted share, and EBITDA of $37.5 million. Our power industry services segment had a particularly strong quarter as evidenced by revenue growth of 75% to $212 million with gross margin of 18.3%, demonstrating our ability to drive enhanced profitability on our renewable as well as on our natural gas projects.

“Our backlog of $0.8 billion at the close of the quarter increased 6% compared to backlog entering fiscal year 2025, and includes $478 million of renewable projects, reflecting the market appeal of our energy agnostic capabilities and our ability to diversify our backlog mix. The industry is seeing strong demand for natural gas projects and we believe that our expertise, well-established industry relationships and reputation for enabling efficient and on-budget project completion provide a competitive advantage as we pursue new opportunities.

“As we move through the close of our fiscal year, we are encouraged by the strengthening pipeline of planned energy facilities as the industry prepares for the anticipated unprecedented growth in power demand driven by data centers, reshoring of manufacturing operations and increased EV charger utilization. We believe our successful track record as an effective partner in the construction of both traditional and renewable power facilities position us well to capitalize on the current and future need for high quality energy resources to support the power grid.”

Third Quarter Results

Consolidated revenues for the quarter ended October 31, 2024 were $257.0 million, an increase of $93.3 million, or 57%, from consolidated revenues of $163.8 million reported for the comparable prior year quarter. The Company achieved increased revenues with heightened quarterly construction activities at several projects, including the Midwest Solar and Battery Projects; the Trumbull Energy Center, a large combined cycle, gas-fired power plant under construction near Lordstown, Ohio; the 405 MW Midwest Solar Project; and the Louisiana LNG Facility. The overall increase in consolidated revenues between quarters was partially offset by decreased construction revenues associated with the Guernsey Power Station project, the Shannonbridge Power Project and the ESB FlexGen Peaker Plants, as those projects have been completed.

For the quarter ended October 31, 2024, Argan’s consolidated gross profit was approximately $44.3 million, or 17.2% of consolidated revenues, reflecting profit contributions from all three reportable business segments. The consolidated gross margin for the quarter reflects the changing mix of projects, strong execution and certain positive job closeouts. Last year, during the third quarter ended October 31, 2023, gross profit was negatively impacted by a loss on the Kilroot project, which reduced gross profit by approximately $10.7 million. Consolidated gross profit for the quarter ended October 31, 2023 was $19.2 million, or 11.7% of consolidated revenues.

Selling, general and administrative expenses increased by $2.6 million to $14.0 million for the quarter ended October 31, 2024, from $11.4 million in the comparable prior year quarter. However, as a percentage of revenues, these expenses declined to 5.4% in the third quarter of fiscal 2025 as compared to 6.9% in the third quarter of fiscal 2024.

Other income, net, for the three months ended October 31, 2024 was $6.6 million, which reflected income earned during the period on invested funds in the total amount of approximately $4.8 million. During the quarter ended October 31, 2024, the Company recorded income tax expense of $9.0 million, primarily due to consolidated pre-tax book income of $37.0 million. For the comparable period last year, the effective tax rate was higher primarily due to the unrecognized tax loss benefit related to the Kilroot project.

For the quarter ended October 31, 2024, Argan achieved net income of $28.0 million, or $2.00 per diluted share, compared to $5.5 million, or $0.40 per diluted share, for last year’s third quarter. EBITDA for the quarter ended October 31, 2024 increased to $37.5 million compared to $12.2 million in the same quarter of last year.

Argan maintained a substantial total balance of cash, cash equivalents and investments during the quarter. The total balances were $506.3 million and $412.4 million as of October 31 and January 31, 2024, respectively. Balance sheet net liquidity was $281.0 million at October 31, 2024 and $244.9 million at January 31, 2024; furthermore, the Company had no debt.

First Nine Months Results

Consolidated revenues for the nine months ended October 31, 2024 were $641.7 million, an increase of $232.9 million, or 57.0%, from consolidated revenues of $408.8 million reported for the comparable prior year period.

For the nine months ended October 31, 2024, consolidated gross profit increased to approximately $93.4 million, which represented a consolidated gross margin of 14.6%, compared to consolidated gross profit of $57.2 million, or consolidated gross margin of 14.0%, reported for the nine months ended October 31, 2023. The gross profit percentage increased between periods primarily due to the changing mix of projects and contract types. Additionally, during the nine-month periods ended October 31, 2024 and 2023, gross profit was negatively impacted by a loss recorded on the Kilroot Project, which reduced gross profit by approximately $2.6 million and $11.5 million, respectively.

Selling, general and administrative expenses increased by $5.4 million to $37.8 million for the nine months ended October 31, 2024, from $32.5 million in the comparable prior year period. However, as a percentage of revenues, these expenses declined to 5.9% from 7.9% between the periods.

Other income, net, for the nine months ended October 31, 2024 was $17.0 million, which reflected income earned during the period on invested funds of approximately $14.0 million, as the weighted average balances of investments are meaningfully higher this year.

The Company recorded income tax expense of $18.5 million for the nine months ended October 31, 2024 primarily due to corresponding consolidated pre-tax book income of $72.6 million. For the comparable period last year, the effective tax rate was higher primarily due to the unrecognized tax loss benefit related to the Kilroot project.

For the nine months ended October 31, 2024, Argan achieved net income of $54.1 million, or $3.91 per diluted share, versus net income of $20.3 million, or $1.50 per diluted share, for last year’s comparable period. EBITDA for the nine months ended October 31, 2024 was $74.2 million compared to $33.8 million in the same period of last year.

Conference Call and Webcast

Argan will host a conference call and webcast for investors today, December 5, 2024, at 5:00 p.m. ET.

Domestic stockholders and interested parties may participate in the conference call by dialing (888) 506-0062 and international participants should dial (973) 528-0011; all callers shall use access code: 925404.

The call and the accompanying slide deck will also be webcast at:

https://www.webcaster4.com/webcast/page/2961/51625

The conference call and slide deck may also be accessed via the Investor Center section of the Company’s website at https://arganinc.com/investor-center. Please allow extra time prior to the call to visit the site.

A replay of the teleconference will be available until December 19, 2024, and can be accessed by dialing 877-481-4010 (domestic) or 919-882-2331 (international). The replay access code is 51625. A replay of the webcast can be accessed until December 5, 2025.

About Argan

Argan’s primary business is providing a full range of construction and related services to the power industry. 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, maintenance, project development and technical consulting services, through its Gemma Power Systems and Atlantic Projects Company operations. Argan also owns The Roberts Company, which is a fully integrated industrial construction, fabrication and plant services company, and SMC Infrastructure Solutions, which provides telecommunications infrastructure services.

Non-GAAP Financial Measures

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). Within this press release, the Company makes reference to earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure. The Company believes that the non-GAAP financial measure described in this press release is important to management and investors because the measure supplements the understanding of Argan’s ongoing operating results, excluding the effects of capital structure, depreciation, amortization, and income tax rates. The non-GAAP financial measure referred to above should be considered in conjunction with, and not as a substitute for, the GAAP financial information presented in this press release. Financial tables at the end of this press release provide a reconciliation of the non-GAAP financial measures to the comparable GAAP measures.

Safe Harbor Statement

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 Company’s effectiveness in mitigating future losses related to the Kilroot loss contract. 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

 

Nine Months Ended

 

 

October 31,

 

October 31,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

REVENUES

 

$

257,008

 

 

$

163,755

 

 

$

641,705

 

 

$

408,779

 

Cost of revenues

 

 

212,681

 

 

 

144,520

 

 

 

548,329

 

 

 

351,578

 

GROSS PROFIT

 

 

44,327

 

 

 

19,235

 

 

 

93,376

 

 

 

57,201

 

Selling, general and administrative expenses

 

 

13,995

 

 

 

11,375

 

 

 

37,848

 

 

 

32,467

 

INCOME FROM OPERATIONS

 

 

30,332

 

 

 

7,860

 

 

 

55,528

 

 

 

24,734

 

Other income, net

 

 

6,646

 

 

 

3,733

 

 

 

17,044

 

 

 

7,222

 

INCOME BEFORE INCOME TAXES

 

 

36,978

 

 

 

11,593

 

 

 

72,572

 

 

 

31,956

 

Income tax expense

 

 

8,968

 

 

 

6,129

 

 

 

18,482

 

 

 

11,616

 

NET INCOME

 

 

28,010

 

 

 

5,464

 

 

 

54,090

 

 

 

20,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME, NET OF TAXES

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(957

)

 

 

(882

)

 

 

(1,933

)

 

 

(627

)

Net unrealized losses on available-for-sale securities

 

 

(659

)

 

 

(427

)

 

 

(169

)

 

 

(1,147

)

COMPREHENSIVE INCOME

 

$

26,394

 

 

$

4,155

 

 

$

51,988

 

 

$

18,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.07

 

 

$

0.41

 

 

$

4.04

 

 

$

1.52

 

Diluted

 

$

2.00

 

 

$

0.40

 

 

$

3.91

 

 

$

1.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

13,530

 

 

 

13,328

 

 

 

13,398

 

 

 

13,381

 

Diluted

 

 

14,034

 

 

 

13,559

 

 

 

13,830

 

 

 

13,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS PER SHARE

 

$

0.375

 

 

$

0.300

 

 

$

0.975

 

 

$

0.800

 

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

 

 

October 31,

 

January 31,

 

 

2024

 

 

2024

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

175,349

 

 

$

197,032

 

Investments

 

 

330,933

 

 

 

215,373

 

Accounts receivable, net

 

 

131,660

 

 

 

47,326

 

Contract assets

 

 

44,620

 

 

 

48,189

 

Other current assets

 

 

34,579

 

 

 

39,259

 

TOTAL CURRENT ASSETS

 

 

717,141

 

 

 

547,179

 

Property, plant and equipment, net

 

 

14,147

 

 

 

11,021

 

Goodwill

 

 

28,033

 

 

 

28,033

 

Intangible assets, net

 

 

1,924

 

 

 

2,217

 

Deferred taxes, net

 

 

1,254

 

 

 

2,259

 

Right-of-use and other assets

 

 

6,365

 

 

 

7,520

 

TOTAL ASSETS

 

$

768,864

 

 

$

598,229

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

87,085

 

 

$

39,485

 

Accrued expenses

 

 

78,393

 

 

 

81,721

 

Contract liabilities

 

 

270,686

 

 

 

181,054

 

TOTAL CURRENT LIABILITIES

 

 

436,164

 

 

 

302,260

 

Noncurrent liabilities

 

 

3,996

 

 

 

5,030

 

TOTAL LIABILITIES

 

 

440,160

 

 

 

307,290

 

 

 

 

 

 

 

 

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; 15,828,289 shares issued; 13,569,104 and 13,242,520 shares outstanding at October 31, 2024 and January 31, 2024, respectively

 

 

2,374

 

 

 

2,374

 

Additional paid-in capital

 

 

168,441

 

 

 

164,183

 

Retained earnings

 

 

266,334

 

 

 

225,507

 

Treasury stock, at cost – 2,259,185 and 2,585,769 shares at October 31, 2024 and January 31, 2024, respectively

 

 

(102,746

)

 

 

(97,528

)

Accumulated other comprehensive loss

 

 

(5,699

)

 

 

(3,597

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

328,704

 

 

 

290,939

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

768,864

 

 

$

598,229

 

ARGAN, INC. AND SUBSIDIARIES

RECONCILIATION TO EBITDA

(In thousands) (Unaudited)

 

 

 

Three Months Ended

 

 

October 31,

 

 

2024

 

2023

Net income, as reported

 

$

28,010

 

$

5,464

Income tax expense

 

 

8,968

 

 

6,129

Depreciation

 

 

433

 

 

489

Amortization of intangible assets

 

 

98

 

 

98

EBITDA

 

$

37,509

 

$

12,180

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

October 31,

 

 

2024

 

2023

Net income, as reported

 

$

54,090

 

$

20,340

Income tax expense

 

 

18,482

 

 

11,616

Depreciation

 

 

1,376

 

 

1,524

Amortization of intangible assets

 

 

293

 

 

294

EBITDA

 

$

74,241

 

$

33,774

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241205082200/en/

Company: David Watson 301.315.0027 Investor Relations: John Nesbett/Jennifer Belodeau IMS Investor Relations 203.972.9200 argan@imsinvestorrelations.com