EX-99.1 2 a16-18120_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Argan, Inc.  Reports Record Second Quarter Results

 

September 6, 2016 — ROCKVILLE, MD — Argan, Inc. (NYSE: AGX) (the “Company”) today announced financial results for its second quarter ended July 31, 2016. Please read the Company’s Quarterly Report on Form 10-Q, which the Company expects to file tomorrow with the U.S. Securities and Exchange Commission (the “SEC”), which can be retrieved from the SEC’s website at www.sec.gov or from the Company’s website at www.arganinc.com.

 

Summary Information: (dollars in thousands, except per share data (unaudited)):

 

 

 

July 31,

 

April 30,

 

 

 

 

 

 

 

2016

 

2016

 

Change

 

% Change

 

For the Quarter Ended:

 

 

 

 

 

 

 

 

 

Revenues

 

$

162,495

 

$

130,348

 

$

32,147

 

25

%

Cost of revenues

 

118,483

 

102,046

 

16,437

 

16

 

Gross profit

 

44,012

 

28,302

 

15,710

 

56

 

Gross margins

 

27.1

%

21.7

%

5.4

%

25

 

Net income attributable to the stockholders of the Company

 

$

19,674

 

$

12,230

 

$

7,444

 

61

 

Diluted per share

 

1.29

 

0.81

 

0.48

 

59

 

EBITDA attributable to the stockholders of the Company

 

32,114

 

20,157

 

11,957

 

59

 

Diluted per share

 

2.10

 

1.34

 

0.76

 

57

 

 

 

 

 

 

 

 

 

 

 

As of:

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and short-term investments

 

$

383,152

 

$

319,655

 

$

63,497

 

20

%

Billings in excess of costs and estimated earnings

 

121,130

 

134,621

 

(13,491

)

(10

)

Backlog

 

1,317,000

 

1,463,000

 

(146,000

)

(10

)

 

Highlights for the Quarter:

 

·                  Revenues increased 25% to $162 million for the quarter ended July 31, 2016 as compared to $130 million in the prior quarter.

·                  Net income attributable to the stockholders of Argan increased 61% to $19.7 million, or $1.29 per diluted share, for the quarter ended July 31, 2016.

 


 

·                  Our liquidity (current assets less current liabilities) as of July 31, 2016 increased 10% to $200.2 million from $182.8 million as of April 30, 2016, with no debt outstanding.

·                  Gemma Power Systems (GPS) reached substantial completion on two large, gas-fired power plants in April and June 2016, respectively.

·                  GPS reached a settlement related to $12.9 million in potential scheduled liquidated damages, which are no longer outstanding.

·                  Atlantic Projects Company (APC) incurred impairment on goodwill of $2.0 million reflecting the suspension of a major project and other “Brexit” near term impacts to its operations in the UK.

 

Second Quarter Results:

 

Revenue increased 25% to $162 million over last quarter primarily due to GPS ramping up work on five new projects and with the increased efforts to reach substantial completion on two large, gas-fired power plants in April and June 2016, respectively.  Gross profit increased 56% to a record $44.0 million as compared to the prior quarter, primarily due to these increased revenues but also due to reaching a settlement of potential scheduled liquidated damages, which are no longer outstanding.  The overall power industry services business continues to drive our financial results, reflecting 88% of consolidated revenues for the three months ended July 31, 2016.  Net income attributable to our stockholders for the second quarter increased 61% to $19.7 million, or $1.29 per diluted share, from $12.2 million, or $0.81 per diluted share, for the prior quarter.  Likewise, EBITDA attributable to our stockholders for the second quarter increased 59% to $32.1 million, or $2.10 per diluted share, from $20.2 million, or $1.34 per diluted share, for the prior quarter.  Despite our record earnings, we did experience decreased performance at our non-GPS subsidiaries, and in the case of APC, recognized an impairment loss of $2.0 million reflecting the suspension of a major project and other “Brexit” near term impacts to its operations in the UK.  Our balance sheet continues to strengthen as of July 31, 2016, which has cash and short-term investments of $383.2 million, net liquidity of $200.2 million, and no debt.

 

Commenting on Argan’s second quarter results, Rainer Bosselmann, Chairman and Chief Executive Officer, stated, “These record results could not have been achieved without the operational excellence of our employees.  Their dedication to finish out projects and overcome hurdles was especially reflected in our reaching substantial completion on both Panda power plant projects, which were the largest drivers of our financial results this quarter.  With the successful substantial completion of those projects, we are focusing on ramping up our other five major EPC projects, sales efforts, and improving performance at our non-Gemma subsidiaries.  Even though we did not add any major projects to our backlog during the quarter, it remains over $1.3 billion and we expect continued growth in our revenues the rest of this year and into the next.”

 

About Argan, Inc.

 

Argan’s primary business is providing a full range of services to the power industry including the engineering, procurement and construction of gas-fired and biomass-fired power plants, along with related commissioning, operations management, maintenance, project development and consulting services, through its Gemma Power Systems and Atlantic Projects Company operations. Argan also owns Southern Maryland Cable, which provides telecommunications infrastructure services, and The Roberts Company, which is a fully integrated fabrication, construction and plant services company.

 


 

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks and uncertainties including, but not limited to: (1) the continued strong performance of our power industry services business; (2) the Company’s ability to successfully and profitably integrate acquisitions; and (3) the Company’s ability to achieve its business strategy while effectively managing costs and expenses. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors detailed from time to time in Argan’s filings with the SEC. In addition, reference is hereby made to cautionary statements with respect to risk factors set forth in the Company’s most recent reports on Form 10-K and 10-Q, and other SEC filings.

 

Company Contact:

Investor Relations Contact:

 

 

Rainer Bosselmann

David Watson

 

 

301.315.0027

301.315.0027

 


 

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2016

 

2015

 

2016

 

2015

 

REVENUES

 

 

 

 

 

 

 

 

 

Power industry services

 

$

143,422

 

$

93,471

 

$

251,521

 

$

176,355

 

Industrial fabrication and field services

 

17,327

 

—

 

37,737

 

—

 

Telecommunications infrastructure services

 

1,746

 

3,963

 

3,585

 

6,566

 

Revenues

 

162,495

 

97,434

 

292,843

 

182,921

 

COST OF REVENUES

 

 

 

 

 

 

 

 

 

Power industry services

 

100,035

 

66,136

 

183,733

 

128,515

 

Industrial fabrication and field services

 

17,117

 

—

 

34,105

 

—

 

Telecommunications infrastructure services

 

1,331

 

2,805

 

2,691

 

4,746

 

Cost of revenues

 

118,483

 

68,941

 

220,529

 

133,261

 

GROSS PROFIT

 

44,012

 

28,493

 

72,314

 

49,660

 

Impairment loss

 

1,979

 

—

 

1,979

 

—

 

Selling, general and administrative expenses

 

7,534

 

4,848

 

14,581

 

10,387

 

INCOME FROM OPERATIONS

 

34,499

 

23,645

 

55,754

 

39,273

 

Other income, net

 

556

 

128

 

593

 

212

 

INCOME BEFORE INCOME TAXES

 

35,055

 

23,773

 

56,347

 

39,485

 

Income tax expense

 

11,756

 

7,939

 

18,928

 

12,800

 

NET INCOME

 

23,299

 

15,834

 

37,419

 

26,685

 

Net income attributable to noncontrolling interests

 

3,625

 

4,527

 

5,515

 

7,875

 

NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

 

$

19,674

 

$

11,307

 

$

31,904

 

$

18,810

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

 

 

 

 

 

 

 

 

 

Basic

 

$

1.32

 

$

0.77

 

$

2.14

 

$

1.28

 

Diluted

 

$

1.29

 

$

0.75

 

$

2.09

 

$

1.26

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

Basic

 

14,939

 

14,747

 

14,899

 

14,693

 

Diluted

 

15,278

 

15,003

 

15,231

 

14,952

 

 


 

ARGAN, INC. AND SUBSIDIARIES

Reconciliations to EBITDA

Consolidated Operations

(Unaudited)(In thousands)

 

 

 

Three Months Ended

 

 

 

July 31, 2016

 

April 30, 2016

 

Net income

 

$

23,299

 

$

14,120

 

Less net income attributable to noncontrolling interests

 

(3,625

)

(1,890

)

Income tax expense

 

11,756

 

7,172

 

Depreciation

 

484

 

434

 

Amortization of purchased intangible assets

 

200

 

321

 

EBITDA attributable to the stockholders of Argan, Inc.

 

$

32,114

 

$

20,157

 

 

Management uses EBITDA, a non-GAAP financial measure, for planning purposes, including the preparation of operating budgets and the determination of appropriate levels of operating and capital investments. Management believes that EBITDA provides additional insight for analysts and investors in evaluating the Company’s financial and operational performance and in assisting investors in comparing the Company’s financial performance to those of other companies in the Company’s industry. However, EBITDA is not intended to be an alternative to financial measures prepared in accordance with GAAP and should not be considered in isolation from the Company’s GAAP results of operations. Pursuant to the requirements of SEC Regulation G, reconciliations between the Company’s GAAP and non-GAAP financial results are included in the presentations above and investors are advised to carefully review and consider this information as well as the GAAP financial results that are presented in the Company’s SEC filings.

 


 

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

 

July 31, 2016

 

January 31, 2016

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

162,855

 

$

160,909

 

Short-term investments

 

220,297

 

114,098

 

Accounts receivable, net

 

32,706

 

64,185

 

Costs and estimated earnings in excess of billings

 

3,052

 

4,078

 

Prepaid expenses and other current assets

 

5,004

 

7,342

 

TOTAL CURRENT ASSETS

 

423,914

 

350,612

 

Property, plant and equipment, net

 

13,122

 

12,308

 

Goodwill

 

34,780

 

37,405

 

Intangible assets, net

 

8,738

 

9,344

 

Deferred income taxes

 

435

 

—

 

Other assets

 

105

 

122

 

TOTAL ASSETS

 

$

481,094

 

$

409,791

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable

 

$

60,207

 

$

46,395

 

Accrued expenses

 

42,362

 

35,454

 

Billings in excess of costs and estimated earnings

 

121,130

 

105,863

 

TOTAL CURRENT LIABILITIES

 

223,699

 

187,712

 

Deferred income taxes

 

—

 

224

 

TOTAL LIABILITIES

 

223,699

 

187,936

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Preferred stock, par value $0.10 per share — 500 shares authorized; no shares issued and outstanding

 

—

 

—

 

Common stock, par value $0.15 per share — 30,000 shares authorized; 15,035 and 14,840 shares issued at July 31 and January 31, 2016, respectively; 15,032 and 14,836 shares outstanding at July 31 and January 31, 2016, respectively

 

2,255

 

2,226

 

Additional paid-in capital

 

122,732

 

117,274

 

Retained earnings

 

131,485

 

99,581

 

Accumulated other comprehensive losses

 

(431

)

(565

)

TOTAL STOCKHOLDERS’ EQUITY

 

256,041

 

218,516

 

Noncontrolling interests

 

1,354

 

3,339

 

TOTAL EQUITY

 

257,395

 

221,855

 

TOTAL LIABILITIES AND EQUITY

 

$

481,094

 

$

409,791