AGX Argan Inc

Declares Regular Quarterly Dividend of $0.30 Per Share

Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today announces financial results for its fourth quarter and fiscal year ended January 31, 2024. The Company will host an investor conference call today, April 11, 2024, at 5:00 p.m. ET.

Consolidated Financial Highlights

($ in thousands, except per share data)

 

 

 

 

 

 

 

 

 

January 31,

 

 

For the Quarter Ended:

 

2024

 

2023

 

Change

Revenues

 

$

164,554

 

 

$

118,778

 

 

$

45,776

 

Gross profit

 

 

23,633

 

 

 

20,028

 

 

 

3,605

 

Gross margin %

 

 

14.4

%

 

 

16.9

%

 

 

(2.5

)%

Net income attributable to the stockholders of the Company

 

$

12,018

 

 

$

13,633

 

 

$

(1,615

)

Diluted per share

 

 

0.89

 

 

 

1.00

 

 

 

(0.11

)

EBITDA attributable to the stockholders of the Company

 

 

17,564

 

 

 

11,227

 

 

 

6,337

 

Cash dividends per share

 

 

0.30

 

 

 

0.25

 

 

 

0.05

 

 

 

 

 

 

 

 

 

 

January 31,

 

 

For the Fiscal Year Ended:

 

2024

 

2023

 

Change

Revenues

 

$

573,333

 

 

$

455,040

 

 

$

118,293

 

Gross profit

 

 

80,834

 

 

 

86,361

 

 

 

(5,527

)

Gross margin %

 

 

14.1

%

 

 

19.0

%

 

 

(4.9

)%

Net income attributable to the stockholders of the Company

 

$

32,358

 

 

$

33,098

 

 

$

(740

)

Diluted per share

 

 

2.39

 

 

 

2.33

 

 

 

0.06

 

EBITDA attributable to the stockholders of the Company

 

 

51,338

 

 

 

48,109

 

 

 

3,229

 

Cash dividends per share

 

 

1.10

 

 

 

1.00

 

 

 

0.10

 

 

 

 

 

 

 

 

 

 

January 31,

 

 

As of:

 

2024

 

2023

 

Change

Cash, cash equivalents and investments

 

$

412,405

 

 

$

325,458

 

 

$

86,947

 

Net liquidity (1)

 

 

244,919

 

 

 

236,199

 

 

 

8,720

 

Share repurchase treasury stock, at cost

 

 

97,528

 

 

 

88,641

 

 

 

8,887

 

Project backlog

 

 

757,000

 

 

 

822,000

 

 

 

(65,000

)

(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 solid fourth quarter performance closed out a strong fiscal 2024 for our Company, highlighted by a 26% increase in consolidated revenues to $573.3 million and a 7% increase in annual EBITDA to $51.3 million. Fourth quarter 2024 project backlog grew to $757.0 million sequentially, as compared to backlog of $730.0 million at the close of the third quarter. Backlog levels have remained relatively consistent since fiscal 2022 despite significant revenue growth in the same timeframe. We are energized about the opportunities we’re seeing in the market and our growing project pipeline, which includes several contracts secured after year-end for renewable, natural gas-fired and industrial projects that are in various stages of development and are expected to begin this year. The demand for reliable energy resources is only increasing as the power grid meets the needs of an expanding installed base of data centers, as the increased adoption of EVs and their charging requirements drives energy consumption, and as renewable power solutions require back-up sources. Argan’s capabilities and expertise are suited to the construction and support of all types of energy facilities, and with our established reputation as a proven partner, we’re excited about the marketplace interest we are seeing for our services.”

“While our fiscal 2024 results were strong, as we’ve previously discussed, our international subsidiary, Atlantic Projects Company (“APC”), was impacted during the year by operational and contractual challenges related to its Kilroot Power Station project in Northern Ireland (the “Kilroot” project). As a result of these challenges, during the fourth quarter and fiscal 2024 we recorded loss amounts of approximately $2.1 million and $13.6 million, respectively, associated with the Kilroot project. APC has substantially completed the scope of their work and turned over one of the two power units to the owner, which achieved first fire in March. We’ve identified and submitted claims in excess of the amount of our recorded loss and will vigorously pursue those claims.”

“Our progress during fiscal 2024 illustrates the underlying strength of our business as we continue to grow our solid reputation as a full-service construction and project management partner with extensive capabilities for the support of both traditional and renewable power facilities as well as industrial projects. As we move through fiscal 2025, we’re focused on leveraging our strong reputation to continue to capitalize on the opportunities we’re seeing.”

Fourth Quarter Results

Consolidated revenues for the quarter ended January 31, 2024 were $164.6 million, an increase of $45.8 million, or 38.5%, from consolidated revenues of $118.8 million reported for the comparable prior year period. The Company experienced increased revenues at several projects, including the Shannonbridge Power Project; the Trumbull Energy Center, a large combined cycle, gas-fired power plant under construction near Lordstown, Ohio; and the three ESB FlexGen Peaker Plants being built in Dublin, Ireland. The increase in revenues was partially offset by decreased revenues at the Guernsey Power Station and Kilroot project as the projects were at or near completion during the current quarter.

For the quarter ended January 31, 2024, Argan’s consolidated gross profit was approximately $23.6 million, or 14.4% of consolidated revenues, reflecting positive contributions across all three reportable business segments. However, the consolidated gross profit for the quarter was adversely impacted by the loss related to the Kilroot project. Consolidated gross profit for the quarter ended January 31, 2023 was $20.0 million, or 16.9% of consolidated revenues.

Selling, general and administrative expenses increased by $1.4 million, to $11.9 million for the quarter ended January 31, 2024, from $10.5 million in the comparable prior year period. However, as a percentage of revenues, these expenses declined to 7.2% from 8.8% between the same periods.

Other income increased by $2.8 million primarily due to the favorable effects of increased interest rates on the Company’s cash, cash equivalents and investments. During the quarter ended January 31, 2024, the Company recorded income tax expense of $5.0 million primarily due to consolidated pre-tax book income of $17.0 million. For the comparable period last year, Argan recorded an income tax benefit of $3.2 million on consolidated pre-tax book income of $12.0 million, primarily due to the favorable recognition of tax benefits related to research and development credits.

For the quarter ended January 31, 2024, Argan achieved net income of $12.0 million, or $0.89 per diluted share, compared to $13.6 million, or $1.00 per diluted share, for last year’s comparable quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter ended January 31, 2024 increased to $17.6 million compared to $11.2 million in the same period of last year.

Fiscal Year 2024 Results

Power Industry Services

Revenues from the power industry services business increased by 20.3%, or $70.2 million, to $416.3 million for the year ended January 31, 2024 (“Fiscal 2024”) compared with revenues of $346.0 million for the year ended January 31, 2023 (“Fiscal 2023”), largely due to an increase in construction activities at the Trumbull Energy Center, the Shannonbridge Power Project, the ESB FlexGen Peaker Plants and the Midwest Solar and Battery Projects. The revenues increase was partially offset by decreased construction activities associated with the Guernsey Power Station project, the Maple Hill Solar facility and the Equinix data center project, as those projects are generally near or at completion. Revenues from power industry services represented approximately 72.6% of consolidated revenues for Fiscal 2024. The project backlog amounts for the power industry services reportable segment as of January 31, 2024 and 2023 were $0.6 billion and $0.7 billion, respectively.

Industrial Construction Services

Revenues from industrial construction services increased by $50.0 million, or 53.9%, to $142.8 million for Fiscal 2024 compared with revenues of $92.8 million for Fiscal 2023, and represented approximately 24.9% of consolidated revenues for Fiscal 2024 and 20.4% of consolidated revenues for the prior fiscal year. The Company’s focused business development efforts in a growing regional business environment have led to new customer project awards and an expansion of larger initiatives, with the industrial construction services segment increasing its revenues while maintaining its project backlog at $127.5 million as of January 31, 2024 as compared to $123.5 million as of January 31, 2023.

Consolidated Operating Results

Consolidated revenues for Fiscal 2024 were $573.3 million, which represented an increase of $118.3 million, or 26.0%, from consolidated revenues of $455.0 million reported for Fiscal 2023. For Fiscal 2024, the Company reported a consolidated gross profit of approximately $80.8 million, which represented a gross profit percentage of approximately 14.1% of corresponding consolidated revenues. The gross profit for Fiscal 2024 primarily reflected the profit contributions of efficient construction activities related to the major projects of the power industry services reporting segment, which was adversely impacted by the loss recorded in Fiscal 2024 related to the Kilroot project. The gross profit percentages of corresponding revenues for the power industry services, industrial construction services and telecommunications infrastructure services segments for Fiscal 2024 were 14.1%, 12.9% and 26.5%, respectively.

Selling, general and administrative expenses were $44.4 million and $44.7 million for Fiscal 2024 and Fiscal 2023, respectively, representing 7.7% and 9.8% of consolidated revenues for the corresponding periods, respectively.

For Fiscal 2024 and Fiscal 2023, the amounts of other income, net, were $12.5 million and $4.3 million, respectively, representing an increase of 188.0% that was primarily due to meaningful increases in investment yields and average balances of invested funds between periods.

The Company recorded income tax expense of $16.6 million for Fiscal 2024, primarily due to consolidated pre-tax book income in the amount of $48.9 million. For Fiscal 2023, consolidated pre-tax book income was $46.0 million and the income tax expense was $11.3 million.

For Fiscal 2024, Argan reported net income of $32.4 million, or $2.39 per diluted share, compared to net income of $33.1 million, or $2.33 per diluted share, for the prior fiscal year. EBITDA for Fiscal 2024 increased to $51.3 million from $48.1 million for the prior fiscal year. The Company paid its regular quarterly cash dividend of $0.30 per share in January 2024.

As of January 31, 2024, cash and liquid investments totaled $412.4 million and balance sheet net liquidity was $244.9 million; furthermore, the Company had no debt.

Dividend Declaration and Share Repurchase Program

On April 10, 2024, the Argan Board of Directors declared a regular quarterly cash dividend of $0.30 per share of common stock, payable April 30, 2024 to stockholders of record at the close of business on April 22, 2024. The Company increased its quarterly cash dividend by 20% from $0.25 to $0.30 per share of common stock in October 2023 and paid a total of $1.10 per common stock share during Fiscal 2024. During Fiscal 2023, the Company paid quarterly cash dividends of $0.25 per common stock share for a total of $1.00 per share.

During Fiscal 2024, the Company repurchased 303,160 shares of common stock at a cost of $12.5 million, including the repurchase of 90,719 shares of common stock at a cost of $4.0 million during the three months ended January 31, 2024.

Conference Call and Webcast

Argan will host a conference call and webcast for investors today, April 11, 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: 802786. The call and the accompanying slide deck will also be webcast at:

https://www.webcaster4.com/Webcast/Page/2961/50203

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 April 25, 2024, and can be accessed by dialing 877-481-4010 (domestic) or 919-882-2331 (international). The replay access code is 50203. A replay of the webcast can be accessed until April 11, 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 generally accepted accounting principles (“GAAP”). Within this press release, the Company may make reference to EBITDA (earnings before interest, taxes, depreciation, and amortization), 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 and amortization, and 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 measure to its comparable GAAP measure.

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, and the Company’s ability to successfully complete the projects that it obtains. 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

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

January 31,

 

January 31,

 

 

2024

 

2023

 

2024

 

2023

 

 

(Unaudited)

 

 

 

 

 

 

REVENUES

 

$

164,554

 

 

$

118,778

 

 

$

573,333

 

 

$

455,040

 

Cost of revenues

 

 

140,921

 

 

 

98,750

 

 

 

492,499

 

 

 

368,679

 

GROSS PROFIT

 

 

23,633

 

 

 

20,028

 

 

 

80,834

 

 

 

86,361

 

Selling, general and administrative expenses

 

 

11,909

 

 

 

10,466

 

 

 

44,376

 

 

 

44,692

 

INCOME FROM OPERATIONS

 

 

11,724

 

 

 

9,562

 

 

 

36,458

 

 

 

41,669

 

Other income, net

 

 

5,253

 

 

 

2,463

 

 

 

12,475

 

 

 

4,331

 

INCOME BEFORE INCOME TAXES

 

 

16,977

 

 

 

12,025

 

 

 

48,933

 

 

 

46,000

 

Income tax expense (benefit)

 

 

4,959

 

 

 

(3,214

)

 

 

16,575

 

 

 

11,296

 

NET INCOME

 

 

12,018

 

 

 

15,239

 

 

 

32,358

 

 

 

34,704

 

Net income attributable to non-controlling interest

 

 

—

 

 

 

1,606

 

 

 

—

 

 

 

1,606

 

NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

 

 

12,018

 

 

 

13,633

 

 

 

32,358

 

 

 

33,098

 

Foreign currency translation adjustments

 

 

(293

)

 

 

2,176

 

 

 

(920

)

 

 

(425

)

Net unrealized gains on available-for-sale securities

 

 

1,346

 

 

 

—

 

 

 

199

 

 

 

—

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

 

$

13,071

 

 

$

15,809

 

 

$

31,637

 

 

$

32,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.90

 

 

$

1.01

 

 

$

2.42

 

 

$

2.35

 

Diluted

 

$

0.89

 

 

$

1.00

 

 

$

2.39

 

 

$

2.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

13,319

 

 

 

13,535

 

 

 

13,365

 

 

 

14,083

 

Diluted

 

 

13,548

 

 

 

13,625

 

 

 

13,548

 

 

 

14,176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS PER SHARE

 

$

0.30

 

 

$

0.25

 

 

$

1.10

 

 

$

1.00

 

ARGAN, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

January 31,

 

 

2024

 

2023

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

197,032

 

 

$

173,947

 

Investments

 

 

215,373

 

 

 

151,511

 

Accounts receivable, net

 

 

47,326

 

 

 

50,132

 

Contract assets

 

 

48,189

 

 

 

24,778

 

Other current assets

 

 

39,259

 

 

 

38,334

 

TOTAL CURRENT ASSETS

 

 

547,179

 

 

 

438,702

 

Property, plant and equipment, net

 

 

11,021

 

 

 

10,430

 

Goodwill

 

 

28,033

 

 

 

28,033

 

Intangible assets, net

 

 

2,217

 

 

 

2,609

 

Deferred taxes, net

 

 

2,259

 

 

 

3,689

 

Right-of-use and other assets

 

 

7,520

 

 

 

6,024

 

TOTAL ASSETS

 

$

598,229

 

 

$

489,487

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

39,485

 

 

$

56,375

 

Accrued expenses

 

 

81,721

 

 

 

49,867

 

Contract liabilities

 

 

181,054

 

 

 

96,261

 

TOTAL CURRENT LIABILITIES

 

 

302,260

 

 

 

202,503

 

Noncurrent liabilities

 

 

5,030

 

 

 

6,087

 

TOTAL LIABILITIES

 

 

307,290

 

 

 

208,590

 

 

 

 

 

 

 

 

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; 13,242,520 and 13,441,590 shares outstanding at January 31, 2024 and 2023, respectively

 

 

2,374

 

 

 

2,374

 

Additional paid-in capital

 

 

164,183

 

 

 

162,208

 

Retained earnings

 

 

225,507

 

 

 

207,832

 

Less treasury stock, at cost – 2,585,769 and 2,386,699 shares at January 31, 2024 and 2023, respectively

 

 

(97,528

)

 

 

(88,641

)

Accumulated other comprehensive loss

 

 

(3,597

)

 

 

(2,876

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

290,939

 

 

 

280,897

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

598,229

 

 

$

489,487

 

ARGAN, INC. AND SUBSIDIARIES

RECONCILIATIONS TO EBITDA

(In thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

January 31,

 

 

2024

 

2023

Net income, as reported

 

$

12,018

 

$

15,239

 

Income tax expense (benefit)

 

 

4,959

 

 

(3,214

)

Depreciation

 

 

489

 

 

687

 

Amortization of intangible assets

 

 

98

 

 

121

 

EBITDA

 

 

17,564

 

 

12,833

 

EBITDA of non-controlling interest

 

 

—

 

 

1,606

 

EBITDA attributable to the stockholders of Argan, Inc.

 

$

17,564

 

$

11,227

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

January 31,

 

 

2024

 

2023

Net income, as reported

 

$

32,358

 

$

34,704

Income tax expense

 

 

16,575

 

 

11,296

Depreciation

 

 

2,013

 

 

2,983

Amortization of intangible assets

 

 

392

 

 

732

EBITDA

 

 

51,338

 

 

49,715

EBITDA of non-controlling interest

 

 

—

 

 

1,606

EBITDA attributable to the stockholders of Argan, Inc.

 

$

51,338

 

$

48,109

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240411873945/en/

Company Contact: David Watson 301.315.0027

Investor Relations Contacts: John Nesbett/Jennifer Belodeau IMS Investor Relations 203.972.9200