Argan(US:AGX)2022-06-07 16:00Financial Performance - Consolidated revenues for the three months ended April 30, 2022, were $100.3 million, a decrease of $26.0 million, or 20.6%, from $126.3 million for the same period in 2021[97] - Consolidated gross profit for the three-month period ended April 30, 2022, was $19.7 million, or 19.6% of consolidated revenues, compared to $23.7 million, or 18.8%, for the same period in 2021[99] - Net income attributable to stockholders for the three months ended April 30, 2022, was $7.5 million, or $0.50 per diluted share, down from $10.8 million, or $0.67 per diluted share, in the prior year[100] - Income from operations fell by 33.7% to $9.2 million in 2022, down from $13.8 million in 2021[135] - For the three months ended April 30, 2022, net income reported was $7.485 million, a decrease from $10.766 million in the same period of 2021, representing a decline of approximately 30.5%[163] - EBITDA attributable to stockholders of Argan, Inc. for the three months ended April 30, 2022, was $10.733 million, down from $15.644 million in 2021, reflecting a decrease of about 31.5%[163] Revenue Segments - Revenues from the power industry services segment decreased by $23.2 million to $73.9 million, representing 73.7% of consolidated revenues for the three months ended April 30, 2022[98] - Revenues from power industry services decreased by 23.9% to $73.9 million in 2022, compared to $97.2 million in 2021[135] - Revenues from the industrial fabrication and field services segment decreased by $4.2 million, or 15.6%, to $22.5 million for the three months ended April 30, 2022, compared to $26.7 million for the same period in 2021[138] - Telecommunications infrastructure services revenues increased by $1.3 million, or 52.4%, to $3.8 million for the three months ended April 30, 2022, driven by increased project activities[140] Project Backlog and Contracts - Consolidated project backlog as of April 30, 2022, was $0.7 billion, unchanged from January 31, 2022, primarily consisting of projects in the power industry services segment[102] - The company has entered into an EPC services contract for the Maple Hill Solar facility, expected to generate approximately 100 MW of electrical power, with completion scheduled for the second half of Fiscal 2023[105] - APC has secured a contract for a 2 x 330 MW natural gas-fired power plant in Northern Ireland, with project activities commenced and expected completion in the latter half of Fiscal 2024[106] - APC has entered into contracts to construct three 65 MW gas turbine power plants in Dublin, expected to operate during peak demand periods[127] Market and Industry Trends - The company anticipates continued growth in renewable energy projects, with net electricity generation from renewable sources projected to increase by over 161% by 2050[112] - The EIA projects that coal-fired generation will decline by 45% from 2022 through 2050, while natural gas-fired generation is expected to increase by 17% during the same period[109] - The company is facing uncertainties related to U.S. energy policies, including the goal of carbon-free electricity production by 2035, which may impact future project financing and development[111] - The company anticipates a shortfall in electricity supplies this summer due to the rapid retirement of traditional power plants[117] - The North American Electric Reliability Corporation warned of unprecedented risks threatening electricity generation output this summer[119] - The U.K. auction for electricity capacity cleared at a record high price, with nearly 70% of the power associated with gas-fired plants[125] - The Irish government has prioritized the development of new conventional generation, including gas-fired plants, to ensure electricity supply security[126] Financial Position and Cash Flow - Cash and cash equivalents decreased by $158.2 million to $192.3 million as of April 30, 2022, compared to $350.5 million as of January 31, 2022[147] - Net cash used in operating activities for the three months ended April 30, 2022, was $39.7 million[148] - The value of unsatisfied bonded performance obligations was approximately $187.0 million as of April 30, 2022[156] - The company invested approximately $6.3 million in limited liability companies for solar energy projects eligible for energy tax credits[158] - As of April 30, 2022, the company had no outstanding borrowings under its financing arrangements, which provide a revolving loan of up to $50 million available until May 31, 2024[167] - The weighted average annual interest rate for the company's certificates of deposit of $175 million and money market fund of $227.5 million was 0.58% as of April 30, 2022[169] Operational Challenges - The cost of revenues for power industry services was $59.0 million, a decrease of 25.0% from $78.7 million in the prior year[135] - Selling, general and administrative expenses increased by $0.7 million, or 6.9%, to $10.6 million for the three months ended April 30, 2022[143] - Income tax expense for the three months ended April 30, 2022, was approximately $2.3 million, reflecting an estimated annual effective income tax rate of 23.7%[145] - The company is subject to fluctuations in commodity prices, including steel, copper, concrete, and fuel, which may impact its results of operations due to the fixed-price nature of many contracts[172] - Global supply chain disruptions have posed challenges, potentially affecting project owners' confidence and expected revenue levels until these disruptions are resolved[173] - The company did not enter into derivative financial instruments for trading or speculation during the three months ended April 30, 2022, which would expose it to market risk[167] - There have been no material changes in the application of critical accounting policies during the three months ended April 30, 2022[165] - The transition from LIBOR to alternative reference rates is not expected to significantly affect the company's financial arrangements or reporting[168] - The company maintains a substantial amount of temporarily investable cash in certificates of deposit and a money market fund, with a weighted average maturity of 330 days[169]