8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): June 11, 2018

ARGAN, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-31756	13-1947195
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Church Street, Suite 201, Rockville, MD	20850
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (301) 315-0027

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth companyo

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Acto

Item 2.02.  Results of Operations and Financial Condition.

On June 11, 2018, Argan, Inc. (“Argan”) issued a press release announcing its financial results for the three months ended April 30, 2018. A copy of Argan’s press release is attached to this report as Exhibit 99.1 and is incorporated herein by reference.

In addition, Argan reports that as of April 24, 2018 the weighted average remaining term of outstanding options to purchase shares of its common stock was 7.91 years.

Item 9.01.  Financial Statements and Exhibits.

(d)Exhibits

Exhibit No.	Description
99.1	Press Release issued by Argan on June 11, 2018

2

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued by Argan on June 11, 2018

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ARGAN, INC.
Date: June 11, 2018	By:	/s/ David H. Watson
		David H. Watson
		Senior Vice President, Chief Financial Officer, Treasurer and Secretary

3

EX-99.1

Exhibit 99.1

Argan, Inc.  Reports First Quarter Results

June 11, 2018 — ROCKVILLE, MD — Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today announced financial results for its first quarter ended April 30, 2018. For additional information, please read the Company’s Quarterly Report on Form 10-Q, which the Company intends to file today with the U.S. Securities and Exchange Commission (the “SEC”). The Quarterly Report 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)):

	April 30,
For the Quarter Ended:	2018			2017			Change			% Change
Revenues	$	141,366		$	230,489		$	(89,123	)	(39	)%
Gross profit	15,452			40,096			(24,644		)	(61	)
Gross margins	10.9		%	17.4		%	(6.5		)%	(37	)
Net income attributable to the stockholders of the Company	$	4,837		$	20,625		$	(15,788	)	(77	)
Diluted per share	0.31			1.31			(1.00		)	(76	)
EBITDA attributable to the stockholders of the Company	8,147			32,456			(24,309		)	(75	)
Diluted per share	0.52			2.06			(1.54		)	(75	)

As of:	April 30, 2018		January 31, 2018		Change			% Change
Cash, cash equivalents and short-term investments	$	365,581	$	434,015	$	(68,434	)	(16	)%
Net liquidity (1)	300,319		301,817		(1,498		)	—
Project Backlog	524,000		379,000		145,000			38

(1)We define net liquidity, or working capital, as our total current assets less our total current liabilities.

First Quarter Results:

As successful construction progress by Gemma Power Systems (“GPS”) continued on four large gas-fired power plants, revenues saw a decline during the quarter to $141.4 million compared to $230.5 million in the prior year quarter, primarily due to the construction activities moving from peak levels to the commissioning and start up phases. Gross profits decreased by 61% to $15.5 million from $40.1 million for the prior year, reflecting primarily the reduction in consolidated revenues between periods. Our gross margin percentage decreased to 10.9% from 17.4% for the prior year quarter, reflecting the effects of increased labor and subcontractor cost estimates for certain projects over the past three quarters, one-time costs recorded related to the resolution of a dispute with a former subcontractor and the changes in the mix, progress and gross margin levels of multiple power plant projects.

Selling, general and administrative expenses were consistent between the two quarters. The recent Tax Cuts and Jobs Act had a favorable impact on our tax rate, resulting in an estimated annual effective income tax rate of 26.4% for the current quarter, compared to an income tax rate of 34.8% for the first quarter last year.

These factors resulted in net income attributable to our stockholders decreasing 77% to $4.8 million, or $0.31 per diluted share, from $20.6 million, or $1.31 per diluted share, for the prior year quarter. EBITDA attributable to our stockholders for three months ended April 30, 2018, decreased 75% to $8.1 million, or $0.52 per diluted share, from $32.5 million, or $2.06 per diluted share, for the prior year quarter. We paid our first regular quarterly cash dividend of $0.25 per share in April.

Our balance sheet continues to be strong. As of April 30, 2018, our cash, cash equivalents and short-term investments totaled $366 million and net liquidity was $300 million; plus, we had no bank debt. Our project backlog was $524 million as of April 30, 2018, up from $379 million at the end of the prior year, mostly due to an EPC contract entered into by GPS during the quarter. We remain encouraged about our project pipeline as GPS has been selected to perform the EPC work for several new power generation facilities with a collective potential project value over $1.5 billion and projected start dates ranging from later in 2018 through 2019.

Commenting on Argan’s results, Rainer Bosselmann, Chairman and Chief Executive Officer, stated, “We are pleased to report that we have achieved substantial completion on two key power plant projects.  Despite the challenges of constructing multiple simultaneous projects with very complex technologies, we delivered state of the art power facilities to our customers that exceeded all performance guarantees.  We are proud of the diligent performance of our employees in completing these projects. However, we were disappointed with the approximately $5.2 million arbitration award in favor of a former subcontractor that negatively impacted our financials.  As we finish up our other large GPS projects in the coming quarters, we are focused on rebuilding our backlog and are cautiously optimistic that we will add several more projects this year. Nonetheless, as we previously reported to you, this transition will result in a decrease to our revenues in the coming quarters until work on new projects is secured and ramps up in accordance with the normal construction cycle of large EPC projects.”

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 natural gas-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 SMC Infrastructure Solutions, which provides telecommunications infrastructure services, and The Roberts Company, which is a fully integrated fabrication, construction and industrial 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 operational performance of our power industry services business; (2) the Company’s successful addition of new contracts to backlog and the Company’s receipt of notices to proceed with the corresponding contract activities; and (3) the Company’s ability to execute on 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 described from time to time in Argan’s filings with the SEC. In addition, reference is hereby made to the cautionary statements made by us 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

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended April 30,
	2018			2017
REVENUES	$	141,366		$	230,489
Cost of revenues	125,914			190,393
GROSS PROFIT	15,452			40,096
Selling, general and administrative expenses	9,637			9,489
INCOME FROM OPERATIONS	5,815			30,607
Other income, net	764			1,218
INCOME BEFORE INCOME TAXES	6,579			31,825
Income tax expense	1,737			11,076
NET INCOME	4,842			20,749
Net income attributable to non-controlling interests	5			124
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.	4,837			20,625
Foreign currency translation adjustments	(579		)	104
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.	$	4,258		$	20,729
EARNINGS PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.
Basic	$	0.31		$	1.33
Diluted	$	0.31		$	1.31
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic	15,568			15,467
Diluted	15,656			15,771
CASH DIVIDENDS PER SHARE	$	0.25		$	—

ARGAN, INC. AND SUBSIDIARIES

Reconciliations to EBITDA

(Unaudited)(In thousands)

	Three Months Ended April 30,
	2018			2017
Net income	$	4,842		$	20,749
Less EBITDA attributable to noncontrolling interests	(5		)	(124		)
Interest expense	549			—
Income tax expense	1,737			11,076
Depreciation	771			572
Amortization of purchased intangible assets	253			183
EBITDA attributable to the stockholders of Argan, Inc.	$	8,147		$	32,456

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. Consistent with the requirements of SEC Regulation G, reconciliations of the Company’s non-GAAP financial results from net income 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

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	April 30, 2018		January 31, 2018
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	151,523	$	122,107
Short-term investments	214,058		311,908
Accounts receivable, net	35,623		24,756
Contract assets	50,579		13,847
Prepaid expenses and other current assets	13,849		12,410
TOTAL CURRENT ASSETS	465,632		485,028
Property, plant and equipment, net	18,175		15,299
Goodwill	34,329		34,329
Other intangible assets, net	6,896		7,149
Deferred taxes	435		439
Other assets	411		426
TOTAL ASSETS	$	525,878	$	542,670
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	97,453	$	100,238
Accrued expenses	37,397		35,360
Contract liabilities	30,463		47,613
TOTAL CURRENT LIABILITIES	165,313		183,211
Deferred taxes	1,460		1,293
TOTAL LIABILITIES	166,773		184,504
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.10 per share — 500,000 shares authorized; no shares issued and outstanding	—		—
Common stock, par value $0.15 per share — 30,000,000 shares authorized; 15,570,952 shares issued at April 30 and January 31, 2018, respectively; 15,567,719 shares outstanding at April 30 and January 31, 2018, respectively	2,336		2,336
Additional paid-in capital	143,783		143,215
Retained earnings	212,095		211,150
Accumulated other comprehensive income	843		1,422
TOTAL STOCKHOLDERS’ EQUITY	359,057		358,123
Non-controlling interests	48		43
TOTAL EQUITY	359,105		358,166
TOTAL LIABILITIES AND EQUITY	$	525,878	$	542,670