Argan Inc 10-Q for FY2022 Q2

Argan Inc (AGX)

10-Q 2021-09-07 For: 2021-07-31

Added on April 04, 2026

About this 10-Q

Argan Inc filed this 10-Q on September 7, 2021, covering the quarter ended July 31, 2021 (FY2022 Q2).

Headline figures

Quarter ended July 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $133.01M; up 52.0% from $87.49M a year earlier
Net income: $12.87M; up 129.5% from net income of $5.61M a year earlier
Diluted EPS: $0.81; up 125.0% from $0.36 a year earlier

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Delaware		13-1947195
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $.15 par value	AGX	New York Stock Exchange


	Three Months Ended				Six Months Ended
	July 31,				July 31,
	2021		2020		2021		2020
REVENUES	$	133,008	$	87,492	$	259,349	$	147,640
Cost of revenues		105,356		71,862		207,983		128,001
GROSS PROFIT		27,652		15,630		51,366		19,639
Selling, general and administrative expenses		10,331		9,085		20,223		19,429
INCOME FROM OPERATIONS		17,321		6,545		31,143		210
Other (expense) income, net		(260)		451		452		1,539
INCOME BEFORE INCOME TAXES		17,061		6,996		31,595		1,749
Income tax (expense) benefit		(4,191)		(1,397)		(7,959)		3,057
NET INCOME		12,870		5,599		23,636		4,806
Net loss attributable to non-controlling interests		—		(10)		—		(40)
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.		12,870		5,609		23,636		4,846
Foreign currency translation adjustments		(139)		(83)		(257)		(329)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.	$	12,731	$	5,526	$	23,379	$	4,517

NET INCOME PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.
Basic	$	0.82	$	0.36	$	1.50	$	0.31
Diluted	$	0.81	$	0.36	$	1.48	$	0.31

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		15,769		15,653		15,748		15,648
Diluted		15,982		15,788		15,978		15,767

CASH DIVIDENDS PER SHARE	$	0.25	$	1.25	$	0.50	$	1.50


	July 31,		January 31,
	2021		2021
	(Unaudited)		(Note 1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	451,415	$	366,671
Short-term investments		40,065		90,055
Accounts receivable		43,120		28,713
Contract assets		25,377		26,635
Other current assets (Note 10)		37,679		34,146
TOTAL CURRENT ASSETS		597,656		546,220
Property, plant and equipment, net		19,209		20,361
Goodwill		27,943		27,943
Other purchased intangible assets, net		3,644		4,097
Deferred taxes		—		249
Right-of-use and other assets		3,537		3,760
TOTAL ASSETS	$	651,989	$	602,630

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	44,317	$	53,295
Accrued expenses		49,308		50,750
Contract liabilities		213,722		172,042
TOTAL CURRENT LIABILITIES		307,347		276,087
Deferred taxes		751		—
Other noncurrent liabilities		3,356		4,135
TOTAL LIABILITIES		311,454		280,222

COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)

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; 15,772,673 and 15,706,202 shares issued at July 31, 2021 and January 31, 2021, respectively; 15,769,440 and 15,702,969 shares outstanding at July 31, 2021 and January 31, 2021, respectively		2,366		2,356
Additional paid-in capital		155,904		153,282
Retained earnings		181,862		166,110
Accumulated other comprehensive loss		(1,338)		(1,081)
TOTAL STOCKHOLDERS’ EQUITY		338,794		320,667
Non-controlling interests		1,741		1,741
TOTAL EQUITY		340,535		322,408
TOTAL LIABILITIES AND EQUITY	$	651,989	$	602,630


	Common Stock			Additional				Accumulated
	Outstanding	Par		Paid-in		Retained		Other Comprehensive		Non-controlling		Total
	Shares	Value		Capital		Earnings		Loss		Interests		Equity
Balances, May 1, 2021	15,769,440	$	2,366	$	154,974	$	172,934	$	(1,199)	$	1,741	$	330,816
Net income	—		—		—		12,870		—		—		12,870
Foreign currency translation loss	—		—		—		—		(139)		—		(139)
Stock compensation expense	—		—		930		—		—		—		930
Cash dividends	—		—		—		(3,942)		—		—		(3,942)
Balances, July 31, 2021	15,769,440	$	2,366	$	155,904	$	181,862	$	(1,338)	$	1,741	$	340,535

Balances, May 1, 2020	15,644,969	$	2,347	$	149,531	$	184,633	$	(1,362)	$	1,751	$	336,900
Net income (loss)	—		—		—		5,609		—		(10)		5,599
Foreign currency translation loss	—		—		—		—		(83)		—		(83)
Stock compensation expense	—		—		772		—		—		—		772
Stock option exercises	25,000		4		544		—		—		—		548
Cash dividends	—		—		—		(19,589)		—		—		(19,589)
Balances, July 31, 2020	15,669,969	$	2,351	$	150,847	$	170,653	$	(1,445)	$	1,741	$	324,147

Balances, February 1, 2021	15,702,969	$	2,356	$	153,282	$	166,110	$	(1,081)	$	1,741	$	322,408
Net income	—		—		—		23,636		—		—		23,636
Foreign currency translation loss	—		—		—		—		(257)		—		(257)
Stock compensation expense	—		—		1,609		—		—		—		1,609
Stock option exercises and other share-based award settlements	66,471		10		1,013		—		—		—		1,023
Cash dividends	—		—		—		(7,884)		—		—		(7,884)
Balances, July 31, 2021	15,769,440	$	2,366	$	155,904	$	181,862	$	(1,338)	$	1,741	$	340,535

Balances, February 1, 2020	15,634,969	$	2,346	$	148,713	$	189,306	$	(1,116)	$	1,781	$	341,030
Net income (loss)	—		—		—		4,846		—		(40)		4,806
Foreign currency translation loss	—		—		—		—		(329)		—		(329)
Stock compensation expense	—		—		1,414		—		—		—		1,414
Stock option exercises	35,000		5		720		—		—		—		725
Cash dividends	—		—		—		(23,499)		—		—		(23,499)
Balances, July 31, 2020	15,669,969	$	2,351	$	150,847	$	170,653	$	(1,445)	$	1,741	$	324,147


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT


	Six Months Ended July 31,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	23,636	$	4,806
Adjustments to reconcile net income to net cash provided by operating activities
Lease expense		1,938		793
Depreciation		1,741		1,858
Stock compensation expense		1,609		1,414
Deferred income tax expense		1,001		8,536
Amortization of purchased intangible assets		453		451
Other		229		399
Changes in operating assets and liabilities
Accounts receivable		(14,407)		7,532
Contract assets		1,258		6,856
Other assets		(3,161)		(17,781)
Accounts payable and accrued expenses		(8,793)		4,714
Contract liabilities		41,680		83,323
Net cash provided by operating activities		47,184		102,901

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of short-term investments		50,000		145,000
Purchase of short-term investment		—		(10,000)
Investment in solar energy projects		(4,085)		—
Purchases of property, plant and equipment		(1,011)		(1,133)
Net cash provided by investing activities		44,904		133,867

CASH FLOWS FROM FINANCING ACTIVITIES
Payments of cash dividends		(7,884)		(23,499)
Proceeds from the exercise of stock options		1,023		725
Net cash used in financing activities		(6,861)		(22,774)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(483)		1,067
NET INCREASE IN CASH AND CASH EQUIVALENTS		84,744		215,061
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		366,671		167,363
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	451,415	$	382,424

SUPPLEMENTAL CASH FLOW INFORMATION (Notes 7 and 10)


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
United States	$	123,380	$	83,510	$	238,871	$	132,375
Republic of Ireland		7,998		1,442		12,691		2,429
United Kingdom		1,630		2,540		7,787		12,836
Consolidated Revenues	$	133,008	$	87,492	$	259,349	$	147,640


		July 31, 2021						January 31,
	Estimated	Gross		Accumulated		Net		2021, (net
	Useful Life	Amounts		Amortization		Amounts		amounts)
Trade names
TRC	15 years	$	4,499	$	1,700	$	2,799	$	2,949
GPS	15 years		3,643		3,557		86		208
Process certifications	7 years		1,897		1,535		362		497
Customer relationships	10 years		916		519		397		443
Totals		$	10,955	$	7,311	$	3,644	$	4,097


Years Ending January 31,
Remainder of 2022	$	1,438
2023		743
2024		283
2025		132
2026		20
Total lease payments		2,616
Less interest portion		233
Present value of lease payments		2,383
Less current portion (included in accrued expenses)		1,776
Non-current portion (included in other noncurrent liabilities)	$	607


		Exercise		Remaining
	Shares	Price		Term (years)	Fair Value
Outstanding, February 1, 2021	1,405	$	44.17	6.90	$	10.39
Granted	32	$	54.60
Exercised	(26)	$	39.37
Forfeited	(13)	$	52.26
Outstanding, July 31, 2021	1,398	$	44.42	6.51	$	10.41
Exercisable, July 31, 2021	1,022	$	45.34	5.76	$	11.20

Outstanding, July 31, 2020	1,392	$	44.04	7.15	$	10.51
Exercisable, July 31, 2020	843	$	46.38	6.00	$	11.87


	Shares	Fair Value
Non-vested, February 1, 2021	467	$	8.01
Granted	32	$	11.12
Vested	(117)	$	8.06
Forfeitures	(6)	$	7.41
Non-vested, July 31, 2021	376	$	8.27

Non-vested, July 31, 2020	549	$	8.44


Three Months Ended	Power		Industrial		Telecom
July 31, 2021	Services		Services		Services		Other		Totals
Revenues	$	99,004	$	30,153	$	3,851	$	—	$	133,008
Cost of revenues		78,496		23,847		3,013		—		105,356
Gross profit		20,508		6,306		838		—		27,652
Selling, general and administrative expenses		5,751		1,977		484		2,119		10,331
Income (loss) from operations		14,757		4,329		354		(2,119)		17,321
Other (expense) income, net		(262)		—		—		2		(260)
Income (loss) before income taxes	$	14,495	$	4,329	$	354	$	(2,117)		17,061
Income tax expense										(4,191)
Net income									$	12,870

Amortization of intangibles	$	61	$	164	$	—	$	—	$	225
Depreciation		153		593		112		1		859
Property, plant and equipment additions		35		7		123		2		167

Current assets	$	389,998	$	29,084	$	3,751	$	174,823	$	597,656
Current liabilities		293,002		12,099		1,563		683		307,347
Goodwill		18,476		9,467		—		—		27,943
Total assets		422,902		48,655		5,274		175,158		651,989


	Increase (Decrease) in		Increase (Decrease) in		Net Increase (Decrease) in
Basis Point Change	Interest Income		Interest Expense		Income (pre-tax)
Up 300 basis points	$	9,506	$	—	$	9,506
Up 200 basis points		6,338		—		6,338
Up 100 basis points		3,169		—		3,169
Down 6 basis points		(136)		—		(136)


Exhibit No.		Title
Exhibit 31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934.
Exhibit 31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934.
Exhibit 32.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350. *
Exhibit 32.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350. *

Exhibit 101: Exhibit 101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH		Inline XBRL Taxonomy Extension Schema.
Exhibit 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase.
Exhibit 101.LAB		Inline XBRL Taxonomy Label Linkbase.
Exhibit 101.PRE		Inline XBRL Taxonomy Presentation Linkbase.
Exhibit 101.DEF		Inline XBRLTaxonomy Extension Definition Document.
Exhibit 104		Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


	ARGAN, INC.

September 7, 2021	By:	/s/ Rainer H. Bosselmann
		Rainer H. Bosselmann
		Chairman of the Board and Chief Executive Officer

September 7, 2021	By:	/s/ David H. Watson
		David H. Watson
		Senior Vice President, Chief Financial Officer,
		Treasurer and Secretary


Date: September 7, 2021	By:	/s/ Rainer H. Bosselmann
		Rainer H. Bosselmann
		Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)


Date: September 7, 2021	By:	/s/ David H. Watson
		David H. Watson
		Senior Vice President, Chief Financial Officer, Treasurer and Secretary
		(Principal Financial Officer)