Argan(US:AGX)2021-09-06 16:00Financial Performance - Consolidated revenues for the three months ended July 31, 2021, were $133.0 million, an increase of $45.5 million, or 52.0%, from $87.5 million for the same period in 2020[110]. - Consolidated revenues for the six months ended July 31, 2021, were $259.3 million, a 75.7% improvement from the same period in 2020[114]. - Net income attributable to stockholders for the three months ended July 31, 2021, was $12.9 million, or $0.81 per diluted share, up from $5.6 million, or $0.36 per diluted share in 2020[113]. - Net income for the six months ended July 31, 2021, was reported at $23,636 million, a significant increase from $4,806 million in the same period of 2020, representing a growth of approximately 392%[196]. - EBITDA for the six months ended July 31, 2021, was $33,789 million, compared to $4,058 million for the same period in 2020, indicating an increase of about 733%[198]. Revenue Segmentation - Revenues from the power industry services segment increased by $30.0 million to $99.0 million, representing 74.4% of consolidated revenues for the three months ended July 31, 2021, down from 78.9% in 2020[111]. - The industrial services business reported revenues of $56.8 million for the six months ended July 31, 2021, an increase of $30.4 million, or 114.9%, from $26.4 million in 2020[114]. - Revenues for the power industry services segment increased by 66.7%, or $78.5 million, to $196.2 million for the six months ended July 31, 2021, representing approximately 75.6% of consolidated revenues[166]. - Telecommunications infrastructure services revenues reached $6.4 million for the six months ended July 31, 2021, compared to $3.6 million for the same period in 2020[169]. Profitability Metrics - Consolidated gross profit for the three months ended July 31, 2021, was $27.7 million, or 20.8% of revenues, compared to $15.6 million, or 17.9% in 2020[112]. - The consolidated gross profit for the six months ended July 31, 2021, was approximately $51.4 million, representing a gross profit percentage of 19.8%, up from 13.3% in the prior year[171][172]. - Selling, General and Administrative Expenses were $20.2 million for the six-month period ended July 31, 2021, representing 7.8% of consolidated revenues, a decrease from 13.2% in the previous year[173]. Project Backlog and Contracts - Project backlog for the power industry services segment was approximately $0.7 billion as of July 31, 2021, down from $0.8 billion in January 2021[120]. - The aggregate rated electrical output for signed EPC services contracts is approximately 6.4 gigawatts, with an initial contract value of approximately $3.0 billion and an unrealized contract value of approximately $2.5 billion as of July 31, 2021[125]. - GPS entered into an EPC services contract with CPV Maple Hill Solar, LLC to construct the Maple Hill Solar facility, expected to generate approximately 100 MW of electrical power, with completion scheduled for the second half of calendar year 2022[127]. Cash Flow and Liquidity - Cash and cash equivalents as of July 31, 2021, were $451.4 million, an increase from $366.7 million as of January 31, 2021[180]. - Net cash provided by operating activities for the six months ended July 31, 2021, was $47.2 million, with net income adjusted for non-cash items contributing $30.6 million[181]. - The company had no outstanding borrowings under its financing arrangements as of July 31, 2021, with a maximum borrowing capacity of $50 million available until May 31, 2024[202]. Market and Economic Conditions - The first capacity auction conducted by PJM in over three years cleared over 5.6 GW of new combined cycle, gas-fired power plants, representing over 75% of all new capacity units[129]. - Natural gas-fired power plants accounted for approximately 39% of electricity generated by utility-scale power plants in the US in 2020, a 64% increase from 2010[134]. - The EIA projects that coal-fired generation will decline to only 11% of the electricity generation mix by 2050, while natural gas-fired plants are expected to supply 36% of net electricity generation[134]. - The share of electricity generation from renewable sources is projected to increase by more than 175%, reaching over 42% by 2050 according to the EIA[138]. Strategic Initiatives - The company plans to pursue additional acquisitions and investments to enhance profitable growth and synergies with existing businesses[109]. - The company plans to adopt integrated green hydrogen solutions in two of its contracted natural gas-fired power plant projects, enhancing power-generation flexibility[144]. Tax and Regulatory Matters - Income tax expense for the three months ended July 31, 2021, was approximately $4.2 million, with an effective income tax rate of 24.6%[161]. - Income tax expense for the six-month period ended July 31, 2021, was approximately $8.0 million, with an effective tax rate of 25.2%, compared to an income tax benefit of $3.1 million in the same period last year[177][178]. Risk Management - The company is subject to fluctuations in commodity prices, including steel, copper, concrete, and fuel, which may impact its results due to the fixed-price nature of many contracts[205]. - The company has not entered into derivative financial instruments for trading or speculation purposes, thus avoiding additional market risk exposure[202]. - The transition from LIBOR to alternative reference rates is expected to have minimal effects on the company's financial arrangements[203]. - The company may mitigate material cost risks by procuring equipment and construction supplies early in project phases, particularly for major fixed-price contracts[207].