Argan, Inc. (NYSE: AGX) (the “Company”) today announced financial results for its third quarter ended October 31, 2016. 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”), and which 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)):
October 31, | |||||||||||||||
2016 | 2015 | Change | % Change | ||||||||||||
| For the Quarter Ended: | |||||||||||||||
| Revenues | $ | 175,444 | $ | 113,967 | $ | 61,477 | 54% | ||||||||
| Gross profit | 36,578 | 26,262 | 10,316 | 39 | |||||||||||
| Gross margins | 20.8% | 23.0% | (2.2%) | (10) | |||||||||||
| Net income attributable to the stockholders of the Company | $ | 18,073 | $ | 10,807 | $ | 7,266 | 67 | ||||||||
| Diluted per share | 1.16 | 0.72 | 0.44 | 61 | |||||||||||
| EBITDA attributable to the stockholders of the Company | 27,024 | 18,242 | 8,782 | 48 | |||||||||||
| Diluted per share | 1.73 | 1.21 | 0.52 | 43 | |||||||||||
| For the Nine Months Ended: | |||||||||||||||
| Revenues | $ | 468,287 | $ | 296,888 | $ | 171,399 | 58% | ||||||||
| Gross profit | 108,892 | 75,922 | 32,970 | 43 | |||||||||||
| Gross margins | 23.3% | 25.6% | (2.3%) | (9) | |||||||||||
| Net income attributable to the stockholders of the Company | $ | 49,977 | $ | 29,617 | $ | 20,360 | 69 | ||||||||
| Diluted per share | 3.23 | 1.97 | 1.26 | 64 | |||||||||||
EBITDA attributable to the stockholders of the Company | 79,295 | 50,129 | 29,166 | 58 | |||||||||||
| Diluted per share | 5.12 | 3.34 | 1.78 | 53 | |||||||||||
| As of: | October 31, | January 31, | Change | % Change | |||||||||||
| Cash, cash equivalents and short-term investments | $ | 446,320 | $ | 275,007 | $ | 171,313 | 62% | ||||||||
| Billings in excess of costs and estimated earnings | 160,985 | 105,863 | 55,122 | 52 | |||||||||||
| Backlog | 1,179,000 | 1,148,000 | 31,000 | 3 | |||||||||||
Highlights for the Quarter:
- Revenues increased 54% to a record $175 million for the quarter ended October 31, 2016 as compared to $114 million in the prior year quarter.
- Net income attributable to the stockholders of Argan increased 67% from the prior year quarter to $18.1 million, or $1.16 per diluted share, for the quarter ended October 31, 2016.
- We declared and paid $1.00 per share in cash dividends during the quarter ended October 31, 2016.
- Our liquidity (current assets less current liabilities) as of October 31, 2016, increased 29% to $209.4 million from $162.9 million as of January 31, 2016, with no debt outstanding.
- Gemma Power Systems (GPS) ramped up work on four large, gas-fired power plants and celebrated the commissioning and final completion of the two Panda power plants.
Third Quarter Results:
Consolidated revenues increased 54% to a record $175 million over the prior year quarter primarily due to GPS ramping up work on four large, gas-fired power plants and with the final completion of the two Panda power plants. Gross profit increased 39% to $36.6 million and gross margins decreased to 20.8% as compared to the prior quarter, primarily due to aforementioned increased revenues partially offset by lower margins at the non-Panda power plant projects and our two new subsidiaries, Atlantic Projects Company (APC) and The Roberts Company (TRC). The overall power industry services business continues to drive our financial results, reflecting 86% of consolidated revenues for the three months ended October 31, 2016. EBITDA attributable to our stockholders for the third quarter increased 48% to $27.0 million, or $1.73 per diluted share, from $18.2 million, or $1.21 per diluted share, for the prior year quarter. Our balance sheet continues to strengthen as of October 31, 2016, which has cash and short-term investments of $446.3 million, net liquidity of $209.4 million, and no debt.
Nine Months Ended Results:
For the nine months ended October 31, 2016, consolidated revenues increased 58% to a record $468 million over the prior year period primarily due to GPS ramping up work on four large, gas-fired power plants, the final completion of the two Panda power plants and the revenues from APC and TRC, which were acquired in May and December 2015, respectively. Gross profit increased 43% to $108.9 million as compared to the prior year period, primarily due to increased revenues, the Panda power plants achieving final completion and reaching a settlement of potential scheduled liquidated damages in the current period. EBITDA attributable to our stockholders for the nine months ended October 31, 2016 increased 58% to $79.3 million, or $5.12 per diluted share, from $50.1 million, or $3.34 per diluted share, for the prior year period.
Commenting on Argan’s third quarter results, Rainer Bosselmann, Chairman and Chief Executive Officer, stated, “We were pleased to follow up our record second quarter with our next best quarter in Company history. These sustained results could not have been achieved without the operational excellence of our employees. Their dedication to finish out projects while simultaneously ramping up on four large, gas-fired plants allowed us to post strong current quarter results and to pay our largest dividend to date - $1.00 per share. Even though we did not add any major projects to our backlog over the last several quarters, it remains over $1.1 billion and we expect continued growth in our revenues the rest of this year and into the next.”
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 and biomass-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 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 October 31, | Nine Months Ended October 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| REVENUES | ||||||||||||||||
| Power industry services | $ | 151,094 | $ | 111,592 | $ | 402,615 | $ | 287,947 | ||||||||
| Industrial fabrication and field services | 21,550 | — | 59,287 | — | ||||||||||||
| Telecommunications infrastructure services | 2,800 | 2,375 | 6,385 | 8,941 | ||||||||||||
| Revenues | 175,444 | 113,967 | 468,287 | 296,888 | ||||||||||||
| COST OF REVENUES | ||||||||||||||||
| Power industry services | 118,407 | 86,103 | 302,140 | 214,618 | ||||||||||||
| Industrial fabrication and field services | 18,386 | — | 52,491 | — | ||||||||||||
| Telecommunications infrastructure services | 2,073 | 1,602 | 4,764 | 6,348 | ||||||||||||
| Cost of revenues | 138,866 | 87,705 | 359,395 | 220,966 | ||||||||||||
| GROSS PROFIT | 36,578 | 26,262 | 108,892 | 75,922 | ||||||||||||
| Impairment loss | — | — | 1,979 | — | ||||||||||||
| Selling, general and administrative expenses | 9,848 | 5,590 | 24,429 | 15,977 | ||||||||||||
| INCOME FROM OPERATIONS | 26,730 | 20,672 | 82,484 | 59,945 | ||||||||||||
| Other income, net | 690 | 732 | 1,283 | 944 | ||||||||||||
| INCOME BEFORE INCOME TAXES | 27,420 | 21,404 | 83,767 | 60,889 | ||||||||||||
| Income tax expense | 8,194 | 7,045 | 27,122 | 19,845 | ||||||||||||
| NET INCOME | 19,226 | 14,359 | 56,645 | 41,044 | ||||||||||||
| Net income attributable to noncontrolling interests | 1,153 | 3,552 | 6,668 | 11,427 | ||||||||||||
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. | 18,073 | 10,807 | 49,977 | 29,617 | ||||||||||||
EARNINGS PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. | ||||||||||||||||
| Basic | $ | 1.19 | $ | 0.73 | $ | 3.34 | $ | 2.01 | ||||||||
| Diluted | $ | 1.16 | $ | 0.72 | $ | 3.23 | $ | 1.97 | ||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | ||||||||||||||||
| Basic | 15,137 | 14,810 | 14,974 | 14,732 | ||||||||||||
| Diluted | 15,601 | 15,066 | 15,490 | 15,004 | ||||||||||||
| CASH DIVIDENDS PER SHARE | $ | 1.00 | $ | 0.70 | $ | 1.00 | $ | 0.70 | ||||||||
| ARGAN, INC. AND SUBSIDIARIES | ||||||||||
| Reconciliations to EBITDA | ||||||||||
| Consolidated Operations | ||||||||||
| (Unaudited)(In thousands) | ||||||||||
| Three Months Ended October 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Net income | $ | 19,226 | $ | 14,359 | ||||||
| Less EBITDA attributable to noncontrolling interests | (1,153 | ) | (3,552 | ) | ||||||
| Interest expense | — | 85 | ||||||||
| Income tax expense | 8,194 | 7,045 | ||||||||
| Depreciation | 525 | 186 | ||||||||
| Amortization of purchased intangible assets | 232 | 119 | ||||||||
| EBITDA attributable to the stockholders of Argan, Inc. | $ | 27,024 | $ | 18,242 | ||||||
| Nine Months Ended October 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Net income | $ | 56,645 | $ | 41,044 | ||||||
| Less EBITDA attributable to noncontrolling interests | (6,668 | ) | (11,690 | ) | ||||||
| Interest expense | — | 203 | ||||||||
| Income tax expense | 27,122 | 19,845 | ||||||||
| Depreciation | 1,444 | 444 | ||||||||
| Amortization of purchased intangible assets | 752 | 283 | ||||||||
| EBITDA attributable to the stockholders of Argan, Inc. | $ | 79,295 | $ | 50,129 | ||||||
| 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. Pursuant to the requirements of SEC Regulation G, reconciliations between the Company’s GAAP and non-GAAP financial results 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 per share data) | ||||||||||
| October 31, 2016 | January 31, 2016 | |||||||||
ASSETS | (Unaudited) | |||||||||
CURRENT ASSETS | ||||||||||
| Cash and cash equivalents | $ | 170,775 | $ | 160,909 | ||||||
| Short-term investments | 275,545 | 114,098 | ||||||||
| Accounts receivable, net | 42,886 | 64,185 | ||||||||
| Costs and estimated earnings in excess of billings | 4,642 | 4,078 | ||||||||
| Prepaid expenses and other current assets | 6,122 | 7,342 | ||||||||
| TOTAL CURRENT ASSETS | 499,970 | 350,612 | ||||||||
| Property, plant and equipment, net | 13,435 | 12,308 | ||||||||
| Goodwill | 34,913 | 37,405 | ||||||||
| Intangible assets, net | 8,506 | 9,344 | ||||||||
| Deferred income taxes | 1,980 | — | ||||||||
| Other assets | 39 | 122 | ||||||||
| TOTAL ASSETS | $ | 558,843 | $ | 409,791 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| CURRENT LIABILITIES | ||||||||||
| Accounts payable | $ | 91,487 | $ | 46,395 | ||||||
| Accrued expenses | 38,061 | 35,454 | ||||||||
| Billings in excess of costs and estimated earnings | 160,985 | 105,863 | ||||||||
| TOTAL CURRENT LIABILITIES | 290,533 | 187,712 | ||||||||
| Deferred income taxes | — | 224 | ||||||||
| TOTAL LIABILITIES | 290,533 | 187,936 | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||
Preferred stock, par value $0.10 per share – 500 shares authorized; no shares issued and outstanding | — | — | ||||||||
Common stock, par value $0.15 per share – 30,000 shares authorized; 15,283 and 14,840 shares issued at October 31 and January 31, 2016, respectively; 15,280 and 14,836 shares outstanding at October 31 and January 31, 2016, respectively | 2,292 | 2,226 | ||||||||
| Additional paid-in capital | 129,970 | 117,274 | ||||||||
| Retained earnings | 134,298 | 99,581 | ||||||||
| Accumulated other comprehensive losses | (757 | ) | (565 | ) | ||||||
| TOTAL STOCKHOLDERS’ EQUITY | 265,803 | 218,516 | ||||||||
| Noncontrolling interests | 2,507 | 3,339 | ||||||||
| TOTAL EQUITY | 268,310 | 221,855 | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 558,843 | $ | 409,791 | ||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20161206006385/en/
Contacts:
Company Contact:
Rainer Bosselmann,
301-315-0027
or
Investor Relations Contact:
David
Watson, 301-315-0027
