Argan Inc reports revenue growth but faces challenges with Kilroot project

ROCKVILLE – Argan , Inc. (NYSE:) has reported an increase in revenues for the third quarter of 2023, although its gross profit margins have seen a decline, primarily due to difficulties encountered with the Kilroot project. The engineering and construction services company announced on Wednesday that its third-quarter revenues rose by 39% to $163.8 million, yet gross profit margins dropped to 11.7%. Net income also fell to $5.5 million from the previous year’s $7.8 million.

The Kilroot project, managed by Argan’s subsidiary Atlantic Projects Company (APC), has been a significant factor in this downturn, incurring a pre-tax loss of about $10 million. This loss was attributed to supply chain delays and other challenges, as detailed by President and CEO David Watson during an investor call on Wednesday.

Despite these setbacks, Argan has experienced overall growth over the past nine months, with revenues climbing to $408.8 million from last year’s $336.3 million. Net income saw a slight increase to $20.3 million, up from $19.5 million reported in the same period last year.

Argan maintains a strong financial position with nearly $397 million in cash reserves and no debt. The company has also announced a 20% increase in its quarterly dividend and continues to implement a share buyback initiative valued at up to $125 million.

Looking ahead, Argan’s backlog remains robust at over $700 million, with expectations for further growth supported by projects like Dublin’s ESB FlexGen peaker plants. The company’s executives have discussed future plans for Argan’s growth trajectory during the recent conference call with investors.

InvestingPro Insights

Argan, Inc. has shown resilience despite challenges in its latest quarterly results, as seen in the reported revenue increase and the company’s robust financial position. The InvestingPro data reflects this strength, showcasing a market capitalization of $635.83 million and a P/E ratio standing at 19.15, which adjusts to a more attractive 17.5 based on last twelve months’ data as of Q2 2024.

InvestingPro Tips highlight that Argan holds more cash than debt on its balance sheet, which aligns with the company’s announcement of nearly $397 million in cash reserves. This strong liquidity position is further emphasized by the fact that liquid assets exceed short-term obligations, providing the company with financial flexibility. Additionally, analysts anticipate sales growth in the current year, which could be a driving factor behind the company’s robust backlog and future growth prospects.

For investors looking for more insights, there are additional InvestingPro Tips available, including the company’s low price volatility and its consistent dividend payments for 13 consecutive years, which may be appealing for those seeking stability in their investments. To access these insights and more, consider subscribing to InvestingPro, now available at a special Cyber Monday sale with discounts of up to 60%. Plus, use the coupon code sfy23 to get an additional 10% off a 2-year InvestingPro+ subscription. There are a total of 9 additional InvestingPro Tips listed for AGX that can help investors make more informed decisions.

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