Argan Inc 10-Q for FY2022 Q3

Argan Inc (AGX)

10-Q 2021-12-08 For: 2021-10-31

Added on April 04, 2026

About this 10-Q

Argan Inc filed this 10-Q on December 8, 2021, covering the quarter ended October 31, 2021 (FY2022 Q3).

Headline figures

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

Revenue: $124.45M; down 2.3% from $127.33M a year earlier
Net income: $12.39M; up 31.1% from net income of $9.45M a year earlier
Diluted EPS: $0.78; up 30.0% from $0.60 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				Nine Months Ended
	October 31,				October 31,
	2021		2020		2021		2020
REVENUES	$	124,451	$	127,331	$	383,800	$	274,971
Cost of revenues		98,316		106,988		306,299		234,989
GROSS PROFIT		26,135		20,343		77,501		39,982
Selling, general and administrative expenses		11,590		9,398		31,813		28,827
INCOME FROM OPERATIONS		14,545		10,945		45,688		11,155
Other income, net		1,117		175		1,569		1,714
INCOME BEFORE INCOME TAXES		15,662		11,120		47,257		12,869
Income tax (expense) benefit		(3,269)		(1,666)		(11,228)		1,391
NET INCOME		12,393		9,454		36,029		14,260
Net loss attributable to non-controlling interests		—		—		—		(40)
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.		12,393		9,454		36,029		14,300
Foreign currency translation adjustments		(471)		(321)		(728)		(650)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.	$	11,922	$	9,133	$	35,301	$	13,650

NET INCOME PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.
Basic	$	0.79	$	0.60	$	2.29	$	0.91
Diluted	$	0.78	$	0.60	$	2.25	$	0.91

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		15,774		15,680		15,757		15,659
Diluted		15,963		15,833		15,980		15,795

CASH DIVIDENDS PER SHARE	$	0.25	$	0.25	$	0.75	$	1.75


	October 31,		January 31,
	2021		2021
	(Unaudited)		(Note 1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	391,563	$	366,671
Short-term investments		90,001		90,055
Accounts receivable		35,793		28,713
Contract assets		9,908		26,635
Other current assets (Note 10)		32,454		34,146
TOTAL CURRENT ASSETS		559,719		546,220
Property, plant and equipment, net		18,385		20,361
Goodwill		27,943		27,943
Other purchased intangible assets, net		3,417		4,097
Deferred taxes		—		249
Right-of-use and other assets		3,689		3,760
TOTAL ASSETS	$	613,153	$	602,630

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	39,959	$	53,295
Accrued expenses		42,672		50,750
Contract liabilities		176,414		172,042
TOTAL CURRENT LIABILITIES		259,045		276,087
Deferred taxes		133		—
Other noncurrent liabilities		4,180		4,135
TOTAL LIABILITIES		263,358		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; 15,787,673 and 15,706,202 shares issued at October 31, 2021 and January 31, 2021, respectively; 15,784,440 and 15,702,969 shares outstanding at October 31, 2021 and January 31, 2021, respectively		2,368		2,356
Additional paid-in capital		157,187		153,282
Retained earnings		190,308		166,110
Accumulated other comprehensive loss		(1,809)		(1,081)
TOTAL STOCKHOLDERS’ EQUITY		348,054		320,667
Non-controlling interests		1,741		1,741
TOTAL EQUITY		349,795		322,408
TOTAL LIABILITIES AND EQUITY	$	613,153	$	602,630


	Common Stock			Additional				Accumulated
	Outstanding	Par		Paid-in		Retained		Other Comprehensive		Non-controlling		Total
	Shares	Value		Capital		Earnings		Loss		Interests		Equity
Balances, August 1, 2021	15,769,440	$	2,366	$	155,904	$	181,862	$	(1,338)	$	1,741	$	340,535
Net income	—		—		—		12,393		—		—		12,393
Foreign currency translation loss	—		—		—		—		(471)		—		(471)
Stock compensation expense	—		—		913		—		—		—		913
Stock option exercises	15,000		2		370		—		—		—		372
Cash dividends	—		—		—		(3,947)		—		—		(3,947)
Balances, October 31, 2021	15,784,440	$	2,368	$	157,187	$	190,308	$	(1,809)	$	1,741	$	349,795

Balances, August 1, 2020	15,669,969	$	2,351	$	150,847	$	170,653	$	(1,445)	$	1,741	$	324,147
Net income	—		—		—		9,454		—		—		9,454
Foreign currency translation loss	—		—		—		—		(321)		—		(321)
Stock compensation expense	—		—		786		—		—		—		786
Stock option exercises	20,000		3		516		—		—		—		519
Cash dividends	—		—		—		(3,921)		—		—		(3,921)
Balances, October 31, 2020	15,689,969	$	2,354	$	152,149	$	176,186	$	(1,766)	$	1,741	$	330,664

Balances, February 1, 2021	15,702,969	$	2,356	$	153,282	$	166,110	$	(1,081)	$	1,741	$	322,408
Net income	—		—		—		36,029		—		—		36,029
Foreign currency translation loss	—		—		—		—		(728)		—		(728)
Stock compensation expense	—		—		2,521		—		—		—		2,521
Stock option exercises and other share-based award settlements	81,471		12		1,384		—		—		—		1,396
Cash dividends	—		—		—		(11,831)		—		—		(11,831)
Balances, October 31, 2021	15,784,440	$	2,368	$	157,187	$	190,308	$	(1,809)	$	1,741	$	349,795

Balances, February 1, 2020	15,634,969	$	2,346	$	148,713	$	189,306	$	(1,116)	$	1,781	$	341,030
Net income (loss)	—		—		—		14,300		—		(40)		14,260
Foreign currency translation loss	—		—		—		—		(650)		—		(650)
Stock compensation expense	—		—		2,199		—		—		—		2,199
Stock option exercises	55,000		8		1,237		—		—		—		1,245
Cash dividends	—		—		—		(27,420)		—		—		(27,420)
Balances, October 31, 2020	15,689,969	$	2,354	$	152,149	$	176,186	$	(1,766)	$	1,741	$	330,664


☑	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


	Nine Months Ended October 31,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	36,029	$	14,260
Adjustments to reconcile net income to net cash provided by operating activities
Lease expense		3,017		1,318
Depreciation		2,560		2,798
Stock compensation expense		2,521		2,199
Amortization of purchased intangible assets		680		677
Deferred income tax expense		383		8,366
Other		390		593
Changes in operating assets and liabilities
Accounts receivable		(7,084)		6,585
Contract assets		16,727		6,156
Other assets		2,070		(15,976)
Accounts payable and accrued expenses		(19,966)		27,725
Contract liabilities		4,372		87,859
Net cash provided by operating activities		41,699		142,560

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of short-term investments		90,000		170,000
Purchases of short-term investments		(90,000)		(100,000)
Investment in solar energy projects		(4,085)		—
Purchases of property, plant and equipment		(1,123)		(1,412)
Net cash (used in) provided by investing activities		(5,208)		68,588

CASH FLOWS FROM FINANCING ACTIVITIES
Payments of cash dividends		(11,831)		(27,420)
Proceeds from the exercise of stock options		1,396		1,245
Net cash used in financing activities		(10,435)		(26,175)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(1,164)		877
NET INCREASE IN CASH AND CASH EQUIVALENTS		24,892		185,850
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		366,671		167,363
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	391,563	$	353,213

SUPPLEMENTAL CASH FLOW INFORMATION (Notes 7 and 10)


	Three Months Ended October 31,				Nine Months Ended October 31,
	2021		2020		2021		2020
United States	$	110,196	$	109,241	$	349,066	$	241,616
Republic of Ireland		9,698		8,331		21,947		10,760
United Kingdom		4,496		9,759		12,283		22,595
Other		61		—		504		—
Consolidated Revenues	$	124,451	$	127,331	$	383,800	$	274,971


		October 31, 2021						January 31,
	Estimated	Gross		Accumulated		Net		2021, (net
	Useful Life	Amounts		Amortization		Amounts		amounts)
Trade names
TRC	15 years	$	4,499	$	1,775	$	2,724	$	2,949
GPS	15 years		3,643		3,617		26		208
Process certifications	7 years		1,897		1,604		293		497
Customer relationships	10 years		916		542		374		443
Totals		$	10,955	$	7,538	$	3,417	$	4,097


Years Ending January 31,
Remainder of 2022	$	755
2023		1,020
2024		368
2025		214
2026		111
Thereafter		537
Total lease payments		3,005
Less interest portion		93
Present value of lease payments		2,912
Less current portion (included in accrued expenses)		1,665
Non-current portion (included in other noncurrent liabilities)	$	1,247


		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	(41)	$	34.05
Forfeited	(15)	$	50.21
Outstanding, October 31, 2021	1,381	$	44.64	6.32	$	10.46
Exercisable, October 31, 2021	1,053	$	45.51	5.66	$	11.18

Outstanding, October 31, 2020	1,364	$	44.14	6.96	$	10.52
Exercisable, October 31, 2020	865	$	46.40	5.97	$	11.76


	Shares	Fair Value
Non-vested, February 1, 2021	467	$	8.01
Granted	32	$	11.12
Vested	(163)	$	8.43
Forfeitures	(8)	$	7.05
Non-vested, October 31, 2021	328	$	8.13

Non-vested, October 31, 2020	499	$	8.35


Three Months Ended	Power		Industrial		Telecom
October 31, 2021	Services		Services		Services		Other		Totals
Revenues	$	99,560	$	21,402	$	3,489	$	—	$	124,451
Cost of revenues		76,517		18,703		3,096		—		98,316
Gross profit		23,043		2,699		393		—		26,135
Selling, general and administrative expenses		6,770		2,158		558		2,104		11,590
Income (loss) from operations		16,273		541		(165)		(2,104)		14,545
Other income, net		1,116		—		—		1		1,117
Income (loss) before income taxes	$	17,389	$	541	$	(165)	$	(2,103)		15,662
Income tax expense										(3,269)
Net income									$	12,393

Amortization of intangibles	$	61	$	166	$	—	$	—	$	227
Depreciation		145		564		109		1		819
Property, plant and equipment additions		36		60		223		2		321

Current assets	$	374,370	$	24,029	$	3,329	$	157,991	$	559,719
Current liabilities		247,693		9,015		1,696		641		259,045
Goodwill		18,476		9,467		—		—		27,943
Total assets		406,261		42,833		5,765		158,294		613,153


	Increase (Decrease) in		Increase (Decrease) in		Net Increase (Decrease) in
Basis Point Change	Interest Income		Interest Expense		Income (pre-tax)
Up 300 basis points	$	9,850	$	—	$	9,850
Up 200 basis points		6,566		—		6,566
Up 100 basis points		3,283		—		3,283
Down 7 basis points		(186)		—		(186)


	Nine Months Ended October 31,
	2021		2020		$ Change		% Change
REVENUES
Power industry services	$	295,736	$	227,363	$	68,373	30.1	%
Industrial fabrication and field services		78,213		42,163		36,050	85.5
Telecommunications infrastructure services		9,851		5,445		4,406	80.9
Revenues		383,800		274,971		108,829	39.6
COST OF REVENUES
Power industry services		233,682		192,583		41,099	21.3
Industrial fabrication and field services		64,519		38,096		26,423	69.4
Telecommunications infrastructure services		8,098		4,310		3,788	87.9
Cost of revenues		306,299		234,989		71,310	30.3
GROSS PROFIT		77,501		39,982		37,519	93.8
Selling, general and administrative expenses		31,813		28,827		2,986	10.4
INCOME FROM OPERATIONS		45,688		11,155		34,533	309.6
Other income, net		1,569		1,714		(145)	(8.5)
INCOME BEFORE INCOME TAXES		47,257		12,869		34,388	267.2
Income tax (expense) benefit		(11,228)		1,391		(12,619)	NM
NET INCOME	$	36,029	$	14,260	$	21,769	152.7	%


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.

December 8, 2021	By:	/s/ Rainer H. Bosselmann
		Rainer H. Bosselmann
		Chairman of the Board and Chief Executive Officer

December 8, 2021	By:	/s/ David H. Watson
		David H. Watson
		Senior Vice President, Chief Financial Officer,
		Treasurer and Secretary


Date: December 8, 2021	By:	/s/ Rainer H. Bosselmann
		Rainer H. Bosselmann
		Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)