Argan Inc 10-Q for FY2025 Q1

Argan Inc (AGX)

10-Q 2024-06-06 For: 2024-04-30

Added on April 04, 2026

About this 10-Q

Argan Inc filed this 10-Q on June 6, 2024, covering the quarter ended April 30, 2024 (FY2025 Q1).

Headline figures

Quarter ended April 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $157.68M; up 52.1% from $103.68M a year earlier
Net income: $7.88M; up 273.7% from net income of $2.11M a year earlier
Diluted EPS: $0.58; up 262.5% from $0.16 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, $0.15 par value	AGX	New York Stock Exchange


	Three Months Ended
	April 30,
	2024		2023
REVENUES	$	157,682	$	103,675
Cost of revenues		139,738		89,451
GROSS PROFIT		17,944		14,224
Selling, general and administrative expenses		11,425		10,591
INCOME FROM OPERATIONS		6,519		3,633
Other income (loss), net		4,794		(629)
INCOME BEFORE INCOME TAXES		11,313		3,004
Income tax expense		3,431		895
NET INCOME	$	7,882	$	2,109

OTHER COMPREHENSIVE INCOME, NET OF TAXES
Foreign currency translation adjustments		(790)		440
Net unrealized losses on available-for-sale securities		(969)		(37)
COMPREHENSIVE INCOME	$	6,123	$	2,512

NET INCOME PER SHARE
Basic	$	0.59	$	0.16
Diluted	$	0.58	$	0.16

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		13,257		13,413
Diluted		13,572		13,546

CASH DIVIDENDS PER SHARE	$	0.30	$	0.25


	April 30,		January 31,
	2024		2024
	(Unaudited)		(Note 1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	207,738	$	197,032
Investments		208,618		215,373
Accounts receivable, net		59,960		47,326
Contract assets		54,385		48,189
Other current assets		43,625		39,259
TOTAL CURRENT ASSETS		574,326		547,179
Property, plant and equipment, net		10,825		11,021
Goodwill		28,033		28,033
Intangible assets, net		2,120		2,217
Deferred taxes, net		2,305		2,259
Right-of-use and other assets		6,799		7,520
TOTAL ASSETS	$	624,408	$	598,229

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	66,448	$	39,485
Accrued expenses		60,721		81,721
Contract liabilities		200,429		181,054
TOTAL CURRENT LIABILITIES		327,598		302,260
Noncurrent liabilities		3,655		5,030
TOTAL LIABILITIES		331,253		307,290

COMMITMENTS AND CONTINGENCIES (see Notes 8 and 9)

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; 13,350,180 and 13,242,520 shares outstanding at April 30, 2024 and January 31, 2024, respectively		2,374		2,374
Additional paid-in capital		164,501		164,183
Retained earnings		229,364		225,507
Less treasury stock, at cost – 2,478,109 and 2,585,769 shares at April 30, 2024 and January 31, 2024, respectively		(97,728)		(97,528)
Accumulated other comprehensive loss		(5,356)		(3,597)
TOTAL STOCKHOLDERS’ EQUITY		293,155		290,939
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	624,408	$	598,229


	Common Stock			Additional						Accumulated Other
	Outstanding	Par		Paid-in		Retained		Treasury		Comprehensive		Total
	Shares	Value		Capital		Earnings		Stock		Loss		Equity
Balances, February 1, 2024	13,242,520	$	2,374	$	164,183	$	225,507	$	(97,528)	$	(3,597)	$	290,939
Net income	—		—		—		7,882		—		—		7,882
Foreign currency translation loss	—		—		—		—		—		(790)		(790)
Net unrealized losses on available-for-sale securities	—		—		—		—		—		(969)		(969)
Stock compensation expense	—		—		1,211		—		—		—		1,211
Stock option exercises and restricted stock unit settlements, net of shares withheld for exercise price and withholding taxes	113,260		—		(893)		—		(13)		—		(906)
Common stock repurchases	(5,600)		—		—		—		(187)		—		(187)
Cash dividends	—		—		—		(4,025)		—		—		(4,025)
Balances, April 30, 2024	13,350,180	$	2,374	$	164,501	$	229,364	$	(97,728)	$	(5,356)	$	293,155

Balances, February 1, 2023	13,441,590	$	2,374	$	162,208	$	207,832	$	(88,641)	$	(2,876)	$	280,897
Net income	—		—		—		2,109		—		—		2,109
Foreign currency translation gain	—		—		—		—		—		440		440
Net unrealized losses on available-for-sale securities	—		—		—		—		—		(37)		(37)
Stock compensation expense	—		—		1,034		—		—		—		1,034
Stock option exercises and restricted stock unit settlements	65,470		—		(1,895)		—		2,439		—		544
Common stock repurchases	(92,656)		—		—		—		(3,681)		—		(3,681)
Cash dividends	—		—		—		(3,357)		—		—		(3,357)
Balances, April 30, 2023	13,414,404	$	2,374	$	161,347	$	206,584	$	(89,883)	$	(2,473)	$	277,949


☑	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


	Three Months Ended April 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	7,882	$	2,109
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Changes in accrued interest on investments		3,544		1,081
Stock compensation expense		1,211		1,034
Lease expense		647		439
Depreciation		480		547
Deferred income tax expense		263		147
Amortization of intangible assets		97		98
Other		(38)		57
Changes in operating assets and liabilities
Accounts receivable		(12,636)		(10,642)
Contract assets		(6,196)		19,864
Other assets		(4,422)		(4,089)
Accounts payable and accrued expenses		7,479		(26,940)
Contract liabilities		19,375		15,047
Net cash provided by (used in) operating activities		17,686		(1,248)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments		(57,500)		(90,000)
Maturities of short-term investments		80,000		149,750
Purchases of available-for-sale securities		(29,824)		(30,355)
Maturities of available-for-sale securities		9,230		—
Purchases of property, plant and equipment		(322)		(645)
Investments in solar energy projects		(3,312)		—
Net cash (used in) provided by investing activities		(1,728)		28,750

CASH FLOWS FROM FINANCING ACTIVITIES
Common stock repurchases		(187)		(3,681)
Payments of cash dividends		(4,025)		(3,357)
Proceeds from share-based award settlements, net of withholding taxes paid		(906)		544
Net cash used in financing activities		(5,118)		(6,494)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(134)		992
NET INCREASE IN CASH AND CASH EQUIVALENTS		10,706		22,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		197,032		173,947
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	207,738	$	195,947

NON-CASH INVESTING AND FINANCING ACTIVITIES
Right-of-use assets obtained in exchange for lease obligations	$	542	$	293
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes, net of refunds	$	3,312	$	513
Cash paid for operating leases	$	651	$	444


	April 30, 2024
			Allowance for		Gross		Gross		Estimated
	Amortized		Credit		Unrealized		Unrealized		Fair
	Cost		Losses		Gains		Losses		Value
U.S. Treasury notes:
Due within one year	$	15,032	$	—	$	—	$	167	$	14,865
Due in one to two years		50,557		—		—		456		50,101
Due in two to three years		50,004		—		—		405		49,599
U.S. corporate debt security:
Due in two to three years		10,046		—		—		22		10,024
Totals	$	125,639	$	—	$	—	$	1,050	$	124,589


	January 31, 2024
			Allowance for		Gross		Gross		Estimated
	Amortized		Credit		Unrealized		Unrealized		Fair
	Cost		Losses		Gains		Losses		Value
U.S. Treasury notes:
Due in one to two years	$	50,634	$	—	$	305	$	102	$	50,837
Due in two to three years		45,583		—		263		128		45,718
U.S. corporate debt security:
Due in two to three years		9,406		—		—		77		9,329
Totals	$	105,623	$	—	$	568	$	307	$	105,884


	April 30, 2024						January 31, 2024
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	Inputs		Inputs		Inputs		Inputs		Inputs		Inputs
Cash equivalents:
Money market fund	$	144,895	$	—	$	—	$	126,646	$	—	$	—
Available-for-sale securities:
U.S. Treasury notes		—		114,565		—		—		96,555		—
U.S. corporate debt security		—		10,024		—		—		9,329		—
Totals	$	144,895	$	124,589	$	—	$	126,646	$	105,884	$	—


	Amortization
Years ending January 31,	Expense
2025 (remainder)	$	294
2026		376
2027		300
2028		300
2029		300
Thereafter		550
Total	$	2,120


				Weighted-	Weighted-
		Weighted-		Average	Average
		Average Exercise		Remaining	Grant-Date
		Price		Contractual	Fair Value
	Shares	Per Share		Term (years)	Per Share
Outstanding, February 1, 2024	1,365	$	44.95	4.67	$	10.43
Granted	6	$	61.22
Exercised	(249)	$	41.58
Forfeited	(4)	$	60.07
Outstanding, April 30, 2024	1,118	$	45.73	4.47	$	10.63
Exercisable, April 30, 2024	1,047	$	46.13	4.19	$	10.81
Vested or expected to vest, April 30, 2024	1,118	$	45.73	4.47	$	10.63


Three Months Ended	Power		Industrial		Telecom
April 30, 2024	Services		Services		Services		Other		Totals
Revenues	$	110,266	$	43,699	$	3,717	$	—	$	157,682
Cost of revenues		98,992		37,879		2,867		—		139,738
Gross profit		11,274		5,820		850		—		17,944
Selling, general and administrative expenses		6,128		1,873		610		2,814		11,425
Income (loss) from operations		5,146		3,947		240		(2,814)		6,519
Other income, net		4,061		1		—		732		4,794
Income (loss) before income taxes	$	9,207	$	3,948	$	240	$	(2,082)		11,313
Income tax expense										3,431
Net income									$	7,882

Amortization of intangibles	$	—	$	97	$	—	$	—	$	97
Depreciation		137		245		97		1		480
Property, plant and equipment additions		272		32		18		—		322

Current assets	$	416,117	$	54,170	$	3,844	$	100,195	$	574,326
Current liabilities		293,979		29,642		1,372		2,605		327,598
Goodwill		18,476		9,467		90		—		28,033
Total assets		443,920		70,792		6,516		103,180		624,408


					Approximate Dollar
				Total Number of	Value of Shares That May Yet
				Shares Purchased as Part	Be Purchased under the
	Total Number of	Average Price per		of Publicly Announced	Plans or Programs
Period	Shares Repurchased	Share Paid		Plans or Programs	(Dollars in Thousands)
February 1 - 29, 2024	5,600	$	44.87	5,600	$	23,767
March 1 - 31, 2024	4,299	$	49.97	—	$	23,767
April 1 - 30, 2024	181,055	$	60.90	—	$	23,767
Total	190,954			5,600


	Three Months Ended April 30,
	2024		2023
United States	$	124,331	$	65,244
Republic of Ireland		28,891		24,856
United Kingdom		4,460		13,575
Consolidated Revenues	$	157,682	$	103,675


		April 30, 2024						January 31, 2024
	Estimated	Gross		Accumulated		Net		Gross		Accumulated		Net
	Useful Life	Amounts		Amortization		Amounts		Amounts		Amortization		Amounts
Trade name	15 years	$	4,499	$	2,524	$	1,975	$	4,499	$	2,450	$	2,049
Customer relationships	10 years		916		771		145		916		748		168
Totals		$	5,415	$	3,295	$	2,120	$	5,415	$	3,198	$	2,217


	Three Months Ended April 30,
	2024		2023		$ Change		% Change
REVENUES
Power industry services	$	110,266	$	70,176	$	40,090	57.1	%
Industrial construction services		43,699		30,307		13,392	44.2
Telecommunications infrastructure services		3,717		3,192		525	16.4
Revenues		157,682		103,675		54,007	52.1
COST OF REVENUES
Power industry services		98,992		60,335		38,657	64.1
Industrial construction services		37,879		26,562		11,317	42.6
Telecommunications infrastructure services		2,867		2,554		313	12.3
Cost of revenues		139,738		89,451		50,287	56.2
GROSS PROFIT		17,944		14,224		3,720	26.2
Selling, general and administrative expenses		11,425		10,591		834	7.9
INCOME FROM OPERATIONS		6,519		3,633		2,886	79.4
Other income (loss), net		4,794		(629)		5,423	NM
INCOME BEFORE INCOME TAXES		11,313		3,004		8,309	276.6
Income tax expense		3,431		895		2,536	283.4
NET INCOME	$	7,882	$	2,109	$	5,773	273.7	%


	ARGAN, INC.

June 6, 2024	By:	/s/ David H. Watson
		David H. Watson
		President and Chief Executive Officer

June 6, 2024	By:	/s/ Richard H. Deily
		Richard H. Deily
		Senior Vice President, Chief Financial Officer,
		Treasurer and Corporate Secretary


Exhibit No.		Title
3.1		Certificate of Incorporation, as amended. Incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K filed on April 10, 2019.
3.2		Bylaws. Incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed on April 15, 2009.
10.1		Second Amended and Restated Replacement Credit Agreement, dated May 24, 2024, among Argan, Inc. and certain subsidiaries of Argan, Inc., as borrowers, and Bank of America, N.A., as the lender. Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 31, 2024.
10.2		Master Issuance and Indemnity Agreement, dated May 31, 2024, between Atlantic Projects Company Limited and Bank of America, N.A. Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 31, 2024.
10.3		Guarantee of Payment Agreement, dated May 24, 2024, between Argan, Inc. and Bank of America, N.A. Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 31, 2024.
31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934.
31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934.
32.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350. *
32.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350. *
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.
101.SCH		Inline XBRL Taxonomy Extension Schema.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase.
101.LAB		Inline XBRL Taxonomy Label Linkbase.
101.PRE		Inline XBRL Taxonomy Presentation Linkbase.
101.DEF		Inline XBRLTaxonomy Extension Definition Document.
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.


Date: June 6, 2024	By:	/s/ David H. Watson
		David H. Watson
		President and Chief Executive Officer
		(Principal Executive Officer)