EX-99.1 2 v117254_ex99-1.htm Unassociated Document
Ex. 99.1
 
Argan
 
NEWS – FOR IMMEDIATE RELEASE

ARGAN, INC. ANNOUNCES RECORD FIRST QUARTER PROFITS

June 12, 2008 — Rockville, MD — Argan, Inc. (Amex: AGX) today announced financial results for the first quarter of its fiscal year 2009 ended April 30, 2008.

Net sales for the three months ended April 30, 2008 were $48.4 million compared to $50.4 million for the three months ended April 30, 2007. Argan’s wholly-owned subsidiary, Gemma Power Systems, contributed $44 million, or 91% of total revenues for the quarter ended April 30, 2008 compared to $43.3 million or 86% of total revenues for the quarter ended April 30, 2007. Combined revenues for the quarter ended April 30, 2008 at Argan’s other wholly-owned subsidiaries decreased to $4.4 million or 9% of total revenues from $7.1 million or 14% of total revenues in the quarter ended April 30, 2007.

Commenting on the revenues for the quarter, Rainer Bosselmann, Chairman and Chief Executive Officer stated, “Revenues at Gemma were negatively affected in the first quarter by a contract to construct an ethanol facility that was suspended during the first quarter. While it slowed our short term sales growth, we anticipate strong second quarter revenue from Gemma. Furthermore, subsequent to the close of the first quarter, two major corporate developments occurred which should have a positive impact on our business during the remainder of 2008 and beyond. We announced an engineering, procurement and construction agreement with Pacific Gas & Electric Company in the amount of $340 million for the design and construction of a natural gas-fired power plant in Colusa, California. The Colusa facility will be a 640 megawatt combined cycle facility and construction is expected to be completed during the summer of 2010. Gemma realized some revenues from this project in the first quarter under the interim notice to proceed that it received in December, and expects revenue from this project to substantially increase in the second and third quarters.”

Mr. Bosselmann continued, “Subsequent to the quarter end, we also announced our new partnership with Invenergy Wind Management LLC for the design and construction of wind farms located from the Mid-Western region of the United States into Canada. This partnership significantly enhances our positioning in the alternative energy space and provides a significant new potential earnings stream.”

The Company believes that its Non-GAAP Measurement of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) provides investors with a valuable supplemental measure of our operating performance. EBITDA for the quarter ended April 30, 2008 was $3.7 million, or 7.7% of sales, compared to an EBITDA loss of $348,000 million for the fiscal quarter ended April 30, 2007.

Mr. Bosselmann continued, “We are moderately pleased with our margin performance for the quarter. Higher gross margins due to strong project performances and lower SG&A as a percentage of sales helped drive improved EBITDA to over 7% of sales, with Gemma reporting an 11% EBITDA margin on a stand alone basis.”
 

Mr. Bosselmann concluded, “We are enthusiastic about the breadth and size of business opportunities that lie ahead of us. We have replenished our backlog with the large Colusa contract which is now ramping up, and the Invenergy partnership is an extremely exciting long term opportunity for us.”
 
About Argan, Inc.

Argan is a publicly traded holding company focusing on companies that provide products and services to growth industries. Argan’s primary business is designing and building energy plants for the rapidly growing alternative energy sector through its Gemma Power Systems subsidiary. Argan has two other subsidiaries: Southern Maryland Cable, which provides inside premise wiring services to the federal government including military installations and government office sites requiring high-level security clearance and also provides underground and aerial construction services and splicing to major telecommunications and utilities customers; and Vitarich Laboratories, a vertically integrated private label manufacturer that manufactures, packages and distributes premium nutraceutical products, including nutritional and whole food dietary supplements and other personal healthcare products.
 
This press release contains forward-looking statements. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." Argan’s financial and operational results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the Company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to: rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the Securities and Exchange Commission.
 
Investor Relations Contacts:
Rainer Bosselmann/Arthur Trudel
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
 
203.972.9200

TABLES TO FOLLOW
 

ARGAN, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
 
 
  
Quarter ended April 30,  
 
 
 
(unaudited)
 
 
 
2008
 
2007
  
Net sales
          
Power industry services
  
$
44,008,000
 
$
43,354,000
  
Nutritional products
    
2,399,000
   
4,949,000
  
Telecommunication infrastructure services
    
1,999,000
   
2,129,000
 
Net sales
    
48,406,000
   
50,432,000
 
Cost of sales
          
Power industry services
    
38,576,000
   
43,245,000
  
Nutritional products
    
2,323,000
   
4,166,000
  
Telecommunication infrastructure services
    
1,774,000
   
1,843,000
  
Cost of sales
    
42,673,000
    
49,254,000
  
Gross profit
    
5,733,000
   
1,178,000
 
Selling, general and administrative expenses
    
4,011,000
   
4,561,000
  
Income (loss) from operations
    
1,722,000
   
(3,383,000
)
Interest expense
    
(120,000
)
  
(204,000
)
Interest income
   
504,000
    
633,000
  
Income (loss) from operations before income taxes
    
2,106,000
   
(2,954,000
)
Income tax (expense) benefit
   
(551,000
)
  
939,000
  
Net income (loss)
  
$
1,555,000
 
$
(2,015,000
)
 
          
Basic and diluted income (loss) per share
  
$
0.14
  
$
(0.18
)
Weighted average number of shares outstanding:
              
Basic
    
11,118,000
   
11,094,000
 
Diluted
    
11,429,000
    
11,094,000
  

Reconciliation to EBITDA

   
  
Quarter ended April 30,  
 
 
 
(unaudited)
 
   
 
2008
 
2007
  
 
  
   
  
   
  
Net income (loss), as reported  
  
$
1,555,000
  
$
(2,015,000
)
Interest expense  
    
120,000
   
204,000
 
Income tax expense (benefit)  
    
551,000
    
(939,000
)
Amortization of purchased intangible assets
    
772,000
    
2,064,000
  
Depreciation and other amortization
    
339,000
    
324,000
  
Stock option compensation expense
    
397,000
    
14,000
  
               
EBITDA  
  
$
3,734,000
  
$
(348,000
)

Management uses EBITDA, a non-GAAP financial measure, for planning purposes, including the preparation of operating budgets and to determine 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 our GAAP results of operations. Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between the Company's GAAP and non-GAAP financial results is provided above and investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company's SEC filings.
 

ARGAN, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

 
 
April 30, 
 
January 31,
  
 
2008
 
2008
  
ASSETS              
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
66,645,000
 
$
66,827,000
 
Escrowed cash
    
10,315,000
   
14,398,000
  
Accounts receivable, net of allowance for doubtful accounts
    
31,053,000
   
30,239,000
 
Estimated earnings in excess of billings
    
329,000
   
242,000
 
Inventories, net of reserve for obsolescence
    
2,921,000
   
2,808,000
 
Current deferred tax assets
    
913,000
   
406,000
  
Prepaid expenses and other current assets
    
1,419,000
   
1,330,000
 
TOTAL CURRENT ASSETS
    
113,595,000
   
116,250,000
 
Property and equipment, net of accumulated depreciation
    
2,706,000
   
2,892,000
 
Goodwill
    
20,337,000
   
20,337,000
  
Other purchased intangible assets, net of accumulated amortization
    
4,524,000
   
5,296,000
  
Deferred tax assets
    
1,372,000
    
828,000
  
Other assets
    
230,000
   
260,000
 
TOTAL ASSETS
  
$
142,764,000
 
$
145,863,000
 
 
          
         
CURRENT LIABILITIES:
          
Accounts payable
  
$
34,687,000
 
$
35,483,000
 
Accrued expenses
    
6,782,000
   
9,370,000
 
Billings in excess of cost and earnings
    
51,217,000
   
52,313,000
 
Current portion of long-term debt
    
2,566,000
   
2,581,000
 
TOTAL CURRENT LIABILITIES
    
95,252,000
   
99,747,000
 
Long-term debt
    
3,503,000
   
4,134,000
  
Other liabilities
    
93,000
   
116,000
 
TOTAL LIABILITIES
    
98,848,000
    
103,997,000
 
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; 11,123,259 and 11,113,534 shares issued at 4/30/08 and 1/31/08, and  11,120,026 and 11,110,301 shares outstanding at 4/30/08 and 1/31/08, respectively
    
1,668,000
   
1,667,000
 
Warrants outstanding
    
834,000
   
834,000
 
Additional paid-in capital
    
58,331,000
   
57,861,000
 
Accumulated other comprehensive loss
    
(83,000
)
  
(107,000
)
Accumulated deficit
    
(16,801,000
)
  
(18,356,000
)
Treasury stock, at cost; 3,233 shares at 4/30/08 and 1/31/08
    
(33,000
)
  
(33,000
)
TOTAL STOCKHOLDERS' EQUITY
    
43,916,000
   
41,866,000
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
142,764,000
 
$
145,863,000