Argan, Inc. Q1 FY2025 Financial Results

Introduction

On June 7, 2024, Argan, Inc. (NYSE: AGX) announced its financial results for the first fiscal quarter ended April 30, 2024. The results reflect a robust start to fiscal year 2025, demonstrating significant growth in revenue, improved profitability, and a solid financial position.

Financial Highlights

Argan, Inc. reported significant financial achievements for Q1 FY2025:

• Total Revenue: $157.7M, representing a 52% increase year-over-year.
• Gross Profit: $17.9M, with a margin of 11.38%.
• EBITDA: $11.9M, reflecting improved operational efficiency.
• Net Income: $7.9M, equivalent to $0.58 per diluted share.
• Project Backlog: $824M, up from $757M at the end of fiscal Q4 2024.

Business Segment Performance

Argan operates across three primary segments: Power Industry Services, Industrial Construction Services, and Telecommunications Infrastructure Services.

1. Power Industry Services

This segment, comprising Gemma Power Systems and Atlantic Projects Company, saw a 57% increase in revenue to $110.3M. It represented 70% of Q1 revenues, reporting pre-tax book income of $9.2M.

2. Industrial Construction Services

Represented by The Roberts Company (TRC), this segment contributed $43.7M, 28% of consolidated revenues, and reported pre-tax book income of $4.0M, reflecting revenue growth of 44%.

3. Telecommunications Infrastructure Services

The smallest segment, contributing 2% of Q1 revenues, operates under SMC Infrastructure Solutions, providing services for utility and telecommunications sectors.

Operational Review and Projects

Key projects and updates:

• Trumbull Energy Center: Making excellent progress on this 950 MW natural gas-fired power plant, expected to complete in 2026.
• Renewable Projects in Illinois: Received full notices to proceed on all three solar and battery projects.
• APC's Kilroot Project: Encountered operational and contractual challenges. Claims exceeding $25M identified and pursued vigorously.

Financial Statements Overview

The consolidated statements of earnings for Q1 FY2025 demonstrate a strong financial performance:

• SG&A Expenses: $11.4M, a slight increase compared to Q1 FY2024.
• Interest Income: $4.5M, compared to $2.4M in Q1 FY2024.
• Cash and Cash Equivalents: Maintained a strong balance of $416M in cash investments, with no debt.

CEO's and CFO's Remarks

David Watson, CEO:

David Watson emphasized the strong start to fiscal 2025, noting the significant revenue growth and improved profitability. He highlighted the challenges faced at the Kilroot project but remained optimistic about future claim recoveries.

Hank Deily, CFO:

Hank Deily reviewed the detailed financial results, emphasizing the strong financial position, with significant cash reserves and no debt. He reiterated the company's dedication to driving long-term shareholder value.

Conclusion

Argan, Inc. has delivered a robust start to fiscal 2025 with strong revenue growth, improved profitability, and a healthy project backlog. The company's financial position remains solid, with ample liquidity and no debt, positioning it well for future opportunities in both traditional and renewable energy projects.