On September 5, 2024, Argan Inc (AGX, Financial) released its 8-K filing reporting financial results for the second quarter of fiscal year 2025, which ended on July 31, 2024. Argan Inc is a United States-based construction firm that operates through its wholly-owned subsidiaries, GPS, APC, TRC, and SMC. The company provides a full range of engineering, procurement, construction, commissioning, maintenance, project development, and technical consulting services to the power generation market, including the renewable energy sector.
Performance Overview
Argan Inc (AGX, Financial) reported consolidated revenues of $227.0 million for the quarter, a 60.6% increase from the $141.3 million reported in the same quarter last year. This figure significantly exceeds the analyst estimate of $183.55 million. The company's net income for the quarter was $18.2 million, or $1.31 per diluted share, compared to $12.8 million, or $0.94 per diluted share, in the prior year. This also surpasses the analyst estimate of $1.22 per share.
Key Financial Achievements
Argan Inc's gross profit for the quarter was $31.1 million, representing a gross margin of 13.7%. Although the gross margin decreased from 16.8% in the same quarter last year, the overall gross profit increased by $7.4 million. The company's EBITDA for the quarter was $24.8 million, up from $17.9 million in the prior year, marking the highest quarterly EBITDA level since 2017.
David Watson, President and Chief Executive Officer of Argan, commented, “We are seeing continued momentum across our business as we move through fiscal 2025, as demonstrated by a 61% increase in consolidated revenues to $227 million during the second quarter, significantly enhanced profitability of $18.2 million, or $1.31 per diluted share, and EBITDA of approximately $25 million – our highest quarterly EBITDA level since 2017.”
Income Statement Highlights
| For the Quarter Ended | July 31, 2024 | July 31, 2023 | Change |
|---|---|---|---|
| Revenues | $227,015 | $141,349 | $85,666 |
| Gross Profit | $31,105 | $23,742 | $7,363 |
| Gross Margin % | 13.7% | 16.8% | (3.1%) |
| Net Income | $18,198 | $12,767 | $5,431 |
| Diluted Income per Share | $1.31 | $0.94 | $0.37 |
| EBITDA | $24,842 | $17,945 | $6,897 |
| Cash Dividends per Share | $0.30 | $0.25 | $0.05 |
Balance Sheet and Cash Flow
As of July 31, 2024, Argan Inc maintained a substantial total balance of cash, cash equivalents, and investments amounting to $484.7 million, up from $412.4 million as of January 31, 2024. The company's net liquidity was $259.8 million, compared to $244.9 million at the beginning of the fiscal year. Notably, Argan Inc had no debt during this period.
Project Backlog and Future Outlook
Argan Inc closed the second quarter with a project backlog of $1.0 billion, reflecting an increase of approximately $210 million from the previous quarter. This backlog includes $570 million of renewable projects, highlighting the company's strong position in the renewable energy sector.
David Watson further stated, “The Company closed the second quarter with backlog of $1.0 billion, which reflects an increase from last quarter of approximately $210 million, and includes $570 million of renewable projects. We believe that the addition of high energy demand data centers, the onshoring of manufacturing operations and the expansion of electric vehicle use are primary drivers of the increasing forecasts of future electrical power demands and the robust pipeline of new business opportunities.”
Conclusion
Argan Inc (AGX, Financial) has demonstrated robust financial performance in the second quarter of fiscal 2025, significantly surpassing analyst estimates for both revenue and earnings per share. The company's strong project backlog and substantial cash reserves position it well for continued growth, particularly in the renewable energy sector. For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Argan Inc for further details.
