ROCKVILLE, Md.–(BUSINESS WIRE)–Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today
announced financial results for its first quarter ended April 30, 2019.
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):
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April 30, |
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2019 |
2018 |
Change |
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| For the Quarter Ended: | |||||||||||||||
| Revenues | $ | 49,544 | $ | 141,366 | $ | (91,822 | ) | ||||||||
| Gross (loss) profit | (21,026 | ) | 15,452 | (36,478 | ) | ||||||||||
| Gross margins | (42.4 | )% | 10.9 | % | (53.3 | )% | |||||||||
| Net (loss) income attributable to the stockholders of the Company | $ | (29,800 | ) | $ | 4,837 | $ | (34,637 | ) | |||||||
| Diluted per share | (1.91 | ) | 0.31 | (2.22 | ) | ||||||||||
| EBITDA attributable to the stockholders of the Company | (29,191 | ) | 8,147 | (37,338 | ) | ||||||||||
| Diluted per share | (1.87 | ) | 0.52 | (2.39 | ) | ||||||||||
| As of: |
April 30, |
January 31, |
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| Cash, cash equivalents and short-term investments | $ | 255,764 | $ | 296,531 | $ | (40,767 | ) | ||||||||
| Net liquidity (1) | 302,135 | 334,072 | (31,937 | ) | |||||||||||
| Project backlog | 1,093,000 | 1,094,000 | (1,000 | ) | |||||||||||
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(1) |
We define net liquidity, or working capital, as our total current |
|
Our consolidated revenues for the three months ended April 30, 2019 were
$49.5 million which represented a decline of $91.9 million from $141.4
million for the three months ended April 30, 2018. As Gemma Power
Systems (“GPS”) reached substantial completion on four gas-fired power
plant projects during the year ended January 31, 2019 and concluded
activities on a fifth gas-fired power plant early in the first quarter,
these five power plants revenues declined $94.6 million from the three
months ended April 30, 2018 to the three months ended April 30, 2019.
Until new project startups for GPS generate meaningful revenues, the
majority of consolidated revenues are expected to be contributed by our
separate businesses of The Roberts Company (“TRC”) and Atlantic Project
Company (“APC”). Together, TRC and APC contributed 75% of consolidated
revenues for the three months ended April 30, 2019.
As previously disclosed, our international subsidiary, APC has
encountered significant and escalating operational and contractual
challenges in completing a subcontract on a biomass-fired power plant
construction project in the United Kingdom. We currently estimate that
the costs for APC to complete the work that remains for the project will
exceed projected revenues by $27.6 million. This loss was fully
recognized in our operating results for the three-month period ended
April 30, 2019. Due to the limited revenues during the quarter and the
loss project at APC, we are reporting a negative gross loss and gross
loss percentage for the quarter, compared to gross profit in the prior
year quarter.
The levels of selling, general and administrative expenses were
consistent between the two quarters. Due to loss at APC mentioned above,
the Company recorded a $2.1 million impairment charge on its goodwill
for APC during the current quarter.
These factors, among others, resulted in a net loss attributable to our
stockholders of $29.8 million for the current quarter, or $1.91 loss per
diluted share, compared to a net income attributable to our stockholders
of $4.8 million, or $0.31 earnings per diluted share, for the prior year
quarter. EBITDA attributable to our stockholders for the quarter ended
April 30, 2019 decreased to $(29.2) million, or $(1.87) per diluted
share, from $8.1 million, or $0.52 per diluted share, for the prior year
quarter. The Company paid its regular quarterly cash dividend of $0.25
per share in April.
As of April 30, 2019, our cash, cash equivalents and short-term
investments totaled $256 million and net liquidity was $302 million;
plus, we had no debt. Our project backlog remained stable at $1.1
billion as of April 30, 2019 and January 31, 2019. Recently, we were
pleased to announce that GPS has entered into a contract to build the
625 MW Harrison County Power Station, a natural gas-fired power plant,
in West Virginia. Including the value of the Harrison County Power
Station project that was awarded subsequent to the end of the quarter,
the amount of our project backlog now exceeds $1.4 billion.
Commenting on Argan’s results, Rainer Bosselmann, Chairman and Chief
Executive Officer, stated, “We are disappointed with our results for the
quarter, especially as it relates to the loss we recorded on our APC
project in the United Kingdom. We are working hard to mitigate this
loss. On the other hand, we are excited about the increasing number of
projects Gemma is winning and seeing our project backlog grow to over
$1.4 billion. We are optimistic that we will receive the go-ahead to
start construction on several of these new projects and others over the
next couple of quarters and look forward to a rebound in our revenues
later in the 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 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 our future financial performance is subject to risks and
uncertainties including but not limited to: (1) the strong operational
performance of GPS; (2) the Company’s ability to mitigate losses related
to APC’s loss contract; (3) the Company’s successful addition of new
contracts to backlog and the Company’s receipt of notices to proceed
with the corresponding contract activities; and (4) the Company’s
ability to execute on 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 described from
time to time in Argan’s filings with the SEC. In addition, reference is
hereby made to the cautionary statements made by us with respect to risk
factors set forth in the Company’s most recent reports on Form 10-Q and
10-K, and other SEC filings.
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ARGAN, INC. AND SUBSIDIARIES |
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Three Months Ended |
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| 2019 | 2018 | |||||||||
| REVENUES | $ | 49,544 | $ | 141,366 | ||||||
| Cost of revenues | 70,570 | 125,914 | ||||||||
| GROSS (LOSS) PROFIT | (21,026 | ) | 15,452 | |||||||
| Selling, general and administrative expenses | 9,588 | 9,637 | ||||||||
| Impairment loss | 2,072 | — | ||||||||
| (LOSS) INCOME FROM OPERATIONS | (32,686 | ) | 5,815 | |||||||
| Other income, net | 2,252 | 764 | ||||||||
| (LOSS) INCOME BEFORE INCOME TAXES | (30,434 | ) | 6,579 | |||||||
| Income tax benefit (expense) | 521 | (1,737 | ) | |||||||
| NET (LOSS) INCOME | (29,913 | ) | 4,842 | |||||||
| Net (loss) income attributable to non-controlling interests | (113 | ) | 5 | |||||||
|
NET (LOSS) INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, |
(29,800 | ) | 4,837 | |||||||
| Foreign currency translation adjustments | (1,054 | ) | (579 | ) | ||||||
|
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF |
$ |
(30,854 |
) |
$ | 4,258 | |||||
|
(LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF |
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| Basic | $ | (1.91 | ) | $ | 0.31 | |||||
| Diluted | $ | (1.91 | ) | $ | 0.31 | |||||
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |
||||||||||
| Basic | 15,583 | 15,568 | ||||||||
| Diluted | 15,583 | 15,656 | ||||||||
| CASH DIVIDENDS PER SHARE | $ | 0.25 | $ | 0.25 | ||||||
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ARGAN, INC. AND SUBSIDIARIES |
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| Three Months Ended April 30, | ||||||||||
| 2019 | 2018 | |||||||||
| Net (loss) income | $ | (29,913 | ) | $ | 4,842 | |||||
| Less EBITDA attributable to noncontrolling interests | 115 | (5 | ) | |||||||
| Interest expense | — | 549 | ||||||||
| Income tax (benefit) expense | (521 | ) | 1,737 | |||||||
| Depreciation | 829 | 771 | ||||||||
| Amortization of purchased intangible assets | 299 | 253 | ||||||||
| EBITDA attributable to the stockholders of the Company | $ | (29,191 | ) | $ | 8,147 | |||||
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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 results of operations presented in accordance with GAAP. 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. |
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ARGAN, INC. AND SUBSIDIARIES |
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April 30, |
January 31, |
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| (Unaudited) | ||||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS | ||||||||||
| Cash and cash equivalents | $ | 132,388 | $ | 164,318 | ||||||
| Short-term investments | 123,376 | 132,213 | ||||||||
| Accounts receivable, net | 48,203 | 36,174 | ||||||||
| Contract assets | 48,536 | 58,357 | ||||||||
| Other current assets | 20,658 | 25,286 | ||||||||
| TOTAL CURRENT ASSETS | 373,161 | 416,348 | ||||||||
| Property, plant and equipment, net | 20,850 | 19,778 | ||||||||
| Goodwill | 30,766 | 32,838 | ||||||||
| Other purchased intangible assets, net | 5,838 | 6,137 | ||||||||
| Rights-of-use assets | 1,186 | — | ||||||||
| Deferred taxes | 998 | 1,257 | ||||||||
| Other assets | 362 | 290 | ||||||||
| TOTAL ASSETS | $ | 433,161 | $ | 476,648 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| CURRENT LIABILITIES | ||||||||||
| Accounts payable | $ | 34,426 | $ | 44,427 | ||||||
| Accrued expenses | 29,700 | 29,500 | ||||||||
| Contract liabilities | 6,900 | 8,349 | ||||||||
| TOTAL CURRENT LIABILITIES | 71,026 | 82,276 | ||||||||
| Lease liabilities | 645 | — | ||||||||
| TOTAL LIABILITIES | 71,671 | 82,276 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||
|
Preferred stock, par value $0.10 per share – 500,000 shares |
— |
— |
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|
Common stock, par value $0.15 per share – 30,000,000 shares |
2,346 |
2,337 |
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| Additional paid-in capital | 146,932 | 144,961 | ||||||||
| Retained earnings | 213,921 | 247,616 | ||||||||
| Accumulated other comprehensive loss | (1,400 | ) | (346 | ) | ||||||
| TOTAL STOCKHOLDERS’ EQUITY | 361,799 | 394,568 | ||||||||
| Non-controlling interests | (309 | ) | (196 | ) | ||||||
| TOTAL EQUITY | 361,490 | 394,372 | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 433,161 | $ | 476,648 | ||||||
Contacts
Company Contact:
Rainer Bosselmann
301.315.0027
Investor Relations Contact:
David Watson
301.315.0027
