Exhibit 99.1
ARGAN, INC. REPORTS FOURTH QUARTER AND YEAR END RESULTS
April 8, 2014 – ROCKVILLE, MD – Argan, Inc. (NYSE: AGX) today announced financial results for the three months and fiscal year ended January 31, 2014.
For the year ended January 31, 2014, revenues were $227.5 million compared to $278.6 million for the year ended January 31, 2013. Gemma Power Systems LLC and affiliates (Gemma) contributed $218.6 million, or 96% of revenues in fiscal 2014, compared to $261.3 million, or 94% of revenues in fiscal 2013.
Argan reported consolidated EBITDA (Earnings before interest, taxes, depreciation and amortization) attributable to the stockholders of Argan, Inc. of $66.3 million for the year ended January 31, 2014 compared to $37.7 million for the prior fiscal year. Gemma recorded $69.5 million in EBITDA attributable to the stockholders of Argan, Inc. for fiscal 2014 compared to $40.2 million for fiscal 2013.
Income from continuing operations for fiscal 2014 was $43.3 million, compared to income from continuing operations for fiscal 2013 of $22.1 million.
Net income attributable to shareholders of Argan, Inc. for fiscal 2014 was $40.1 million, or $2.78 per diluted share based on 14,427,000 diluted shares outstanding, compared to $23.3 million, or $1.65 per diluted share based on 14,116,000 diluted shares outstanding for fiscal 2013.
For the three months ended January 31, 2014 consolidated revenues were $59.5 million compared to $57.8 million for the three months ended January 31, 2013. Gemma contributed $58.3 million or 98% of consolidated revenues for the fourth quarter of fiscal 2014, compared to $55.0 million, or 95% of consolidated revenues for the fourth quarter of fiscal 2013.
Argan reported consolidated EBITDA (Earnings before interest, taxes, depreciation and amortization) attributable to the stockholders of Argan, Inc. of $15.8 million for the three months ended January 31, 2014 compared to $10.4 million in the fourth quarter of last fiscal year. Gemma recorded $17.6 million in EBITDA attributable to the stockholders of Argan, Inc. for the three months ended January 31, 2014 compared to $11.6 million for the three months ended January 31, 2013.
Income from continuing operations for the three months ended January 31, 2014 was $10 million, compared to income from continuing operations of $5.9 million, for the fourth quarter of fiscal 2013.
For the three months ended January 31, 2014, Argan reported net income attributable to Argan, Inc. stockholders of $9.2 million, or $0.63 per diluted share based on 14,581,000 diluted shares outstanding, compared to net income of $6.6 million or $0.46 per diluted share based on 14,186,000 diluted shares outstanding for the fourth quarter of fiscal 2013.
Argan had consolidated cash of $272 million as of January 31, 2014. During the current fiscal year, Argan used cash of $10.6 million to pay for a $0.75 dividend per share of common stock. Consolidated working capital increased during the current fiscal year to approximately $133.3 million as of January 31, 2014 from approximately $88.6 million as of January 31, 2013. Consolidated tangible net worth increased to $135.7 million at January 31, 2014 from $100.1 million at January 31, 2013.
Gemma’s backlog as of January 31, 2014 was $790 million compared to $180 million as of January 31, 2013. The substantial increase in backlog is the result of Gemma entering into EPC agreements with affiliates of Panda Power Funds to design and to build two gas fired power plants.
Commenting on Argan’s financial results, Rainer Bosselmann, Chairman and Chief Executive Officer stated, “Gemma’s execution on projects in fiscal 2014 coupled with success fees earned for the development efforts of the Panda Liberty and Panda Patriot projects contributed to record earnings during fiscal 2014. We appreciate the dedicated efforts of our Gemma associates.”
About Argan, Inc.
Argan’s primary business is designing and building energy plants through its Gemma Power Systems subsidiary. These energy plants include traditional gas as well as alternative energy including biodiesel, ethanol, and renewable energy sources such as wind and solar power. Argan also owns Southern Maryland Cable, Inc.
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 Company’s ability to achieve its business strategy while effectively managing costs and expenses; (2) the Company’s ability to successfully and profitably integrate acquisitions; and (3) the continued strong performance of the energy sector. 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 Securities and Exchange Commission. 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 |
Arthur Trudel | |
| 301.315.0027 |
301.315.9467 |
ARGAN, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
| Three Months Ended January 31, | Years Ended January 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
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| Revenues |
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| Power industry services |
$ | 58,257,000 | $ | 54,963,000 | $ | 218,649,000 | $ | 261,327,000 | ||||||||
| Telecommunications infrastructure services |
1,234,000 | 2,877,000 | 8,806,000 | 17,308,000 | ||||||||||||
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| Revenues |
59,491,000 | 57,840,000 | 227,455,000 | 278,635,000 | ||||||||||||
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| Cost of revenues |
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| Power industry services |
37,745,000 | 41,478,000 | 141,807,000 | 214,817,000 | ||||||||||||
| Telecommunications infrastructure services |
1,059,000 | 2,343,000 | 6,800,000 | 13,683,000 | ||||||||||||
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| Cost of revenues |
38,804,000 | 43,821,000 | 148,607,000 | 228,500,000 | ||||||||||||
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| Gross profit |
20,687,000 | 14,019,000 | 78,848,000 | 50,135,000 | ||||||||||||
| Selling, general and administrative expenses |
4,329,000 | 4,245,000 | 12,918,000 | 14,350,000 | ||||||||||||
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| Income from operations |
16,358,000 | 9,774,000 | 65,930,000 | 35,785,000 | ||||||||||||
| Gains on the deconsolidation of VIEs |
— | — | 2,444,000 | — | ||||||||||||
| Other income (expense), net |
134,000 | (14,000 | ) | 961,000 | (43,000 | ) | ||||||||||
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| Income from continuing operations before income taxes |
16,492,000 | 9,760,000 | 69,335,000 | 35,742,000 | ||||||||||||
| Income tax expense |
6,460,000 | 3,899,000 | 25,991,000 | 13,640,000 | ||||||||||||
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| Income from continuing operations |
10,032,000 | 5,861,000 | 43,344,000 | 22,102,000 | ||||||||||||
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| Discontinued operations |
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| Loss on discontinued operations before income taxes |
— | — | — | (405,000 | ) | |||||||||||
| Income tax benefit |
— | — | — | 120,000 | ||||||||||||
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| Loss on discontinued operations |
— | — | — | (285,000 | ) | |||||||||||
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| Net income |
10,032,000 | 5,861,000 | 43,344,000 | 21,817,000 | ||||||||||||
| Income (loss) attributable to noncontrolling |
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| Interests |
868,000 | (700,000 | ) | 3,219,000 | (1,448,000 | ) | ||||||||||
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| Net income attributable to the stockholders of Argan, Inc. |
$ | 9,164,000 | $ | 6,561,000 | $ | 40,125,000 | $ | 23,265,000 | ||||||||
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| Earnings (loss) per share attributable to the stockholders of Argan, Inc. |
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| Continuing operations |
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| Basic |
$ | 0.64 | $ | 0.47 | $ | 2.85 | $ | 1.71 | ||||||||
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| Diluted |
$ | 0.63 | $ | 0.46 | $ | 2.78 | $ | 1.67 | ||||||||
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| Discontinued operations |
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| Basic |
$ | — | $ | — | $ | — | $ | (0.02 | ) | |||||||
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| Diluted |
$ | — | $ | — | $ | — | $ | (0.02 | ) | |||||||
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| Net income |
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| Basic |
$ | 0.64 | $ | 0.47 | $ | 2.85 | $ | 1.69 | ||||||||
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| Diluted |
$ | 0.63 | $ | 0.46 | $ | 2.78 | $ | 1.65 | ||||||||
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| Weighted average number of shares outstanding |
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| Basic |
14,219,000 | 13,951,000 | 14,072,000 | 13,784,000 | ||||||||||||
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| Diluted |
14,581,000 | 14,186,000 | 14,427,000 | 14,116,000 | ||||||||||||
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| Cash dividends declared per common share |
$ | — | $ | — | $ | 0.75 | $ | 0.60 | ||||||||
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ARGAN, INC. AND SUBSIDIARIES
RECONCILIATIONS TO EBITDA (Unaudited)
Continuing Operations
| Three Months Ended January 31, | ||||||||
| 2014 | 2013 | |||||||
| Income from continuing operations |
$ | 10,032,000 | $ | 5,861,000 | ||||
| (Income) loss—noncontrolling interests |
(868,000 | ) | 700,000 | |||||
| Interest expense |
— | (266,000 | ) | |||||
| Income tax expense |
6,460,000 | 3,874,000 | ||||||
| Depreciation |
141,000 | 136,000 | ||||||
| Amortization of purchased intangible assets |
61,000 | 61,000 | ||||||
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| EBITDA attributable to the stockholders of Argan, Inc. |
$ | 15,826,000 | $ | 10,366,000 | ||||
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Power Industry Services
| Three Months Ended January 31, | ||||||||
| 2014 | 2013 | |||||||
| Income from continuing operations before income taxes |
$ | 18,324,000 | $ | 11,052,000 | ||||
| (Income) loss before income taxes—noncontrolling interests |
(868,000 | ) | 675,000 | |||||
| Interest expense |
— | (266,000 | ) | |||||
| Depreciation |
97,000 | 85,000 | ||||||
| Amortization of purchased intangible assets |
61,000 | 61,000 | ||||||
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| EBITDA attributable to the stockholders of Argan, Inc. |
$ | 17,614,000 | $ | 11,607,000 | ||||
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Continuing Operations
| Years Ended January 31, | ||||||||
| 2014 | 2013 | |||||||
| Income from continuing operations |
$ | 43,344,000 | $ | 22,102,000 | ||||
| (Income) loss—noncontrolling interests |
(3,219,000 | ) | 1,448,000 | |||||
| Interest expense |
(161,000 | ) | (688,000 | ) | ||||
| Income tax expense |
25,559,000 | 14,072,000 | ||||||
| Depreciation |
549,000 | 522,000 | ||||||
| Amortization of purchased intangible assets |
243,000 | 243,000 | ||||||
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| EBITDA attributable to the stockholders of Argan, Inc. |
$ | 66,315,000 | $ | 37,699,000 | ||||
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Power Industry Services
| Years Ended January 31, | ||||||||
| 2014 | 2013 | |||||||
| Income from continuing operations before income taxes |
$ | 72,669,000 | $ | 38,515,000 | ||||
| (Income) loss before income taxes—noncontrolling interests |
(3,651,000 | ) | 1,880,000 | |||||
| Interest expense |
(161,000 | ) | (688,000 | ) | ||||
| Depreciation |
366,000 | 290,000 | ||||||
| Amortization of purchased intangible assets |
243,000 | 243,000 | ||||||
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| EBITDA attributable to the stockholders of Argan, Inc. |
$ | 69,466,000 | $ | 40,240,000 | ||||
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\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 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 presented in the Company’s SEC filings.
ARGAN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| January 31, 2014 | January 31, 2013 | |||||||
| ASSETS |
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| CURRENT ASSETS: |
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| Cash and cash equivalents |
$ | 272,209,000 | $ | 175,142,000 | ||||
| Accounts receivable, net of allowance for doubtful accounts |
23,687,000 | 24,879,000 | ||||||
| Costs and estimated earnings in excess of billings |
527,000 | 1,178,000 | ||||||
| Deferred income tax assets |
178,000 | 1,303,000 | ||||||
| Prepaid expenses and other current assets |
1,958,000 | 1,606,000 | ||||||
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| TOTAL CURRENT ASSETS |
298,559,000 | 204,108,000 | ||||||
| Property, plant and equipment, net ($5,309,000 related to variable interest entities as of January 31, 2013) |
4,183,000 | 9,468,000 | ||||||
| Goodwill |
18,476,000 | 18,476,000 | ||||||
| Intangible assets, net of accumulated amortization |
2,088,000 | 2,331,000 | ||||||
| Deferred income tax and other assets |
— | 341,000 | ||||||
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| TOTAL ASSETS |
$ | 323,306,000 | $ | 234,724,000 | ||||
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| LIABILITIES AND EQUITY |
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| CURRENT LIABILITIES: |
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| Accounts payable |
$ | 22,589,000 | $ | 32,699,000 | ||||
| Accrued expenses |
7,911,000 | 9,488,000 | ||||||
| Billings in excess of costs and estimated earnings |
134,736,000 | 73,359,000 | ||||||
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| TOTAL CURRENT LIABILITIES |
165,236,000 | 115,546,000 | ||||||
| Deferred tax and other liabilities |
293,000 | 10,000 | ||||||
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| TOTAL LIABILITIES |
165,529,000 | 115,556,000 | ||||||
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| COMMITMENTS AND CONTINGENCIES |
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| STOCKHOLDERS’ EQUITY: |
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| 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; 14,289,134 and 13,977,560 shares issued at January 31, 2014 and 2013, respectively; 14,285,901 and 13,974,327 shares outstanding at January 31, 2014 and 2013, respectively |
2,143,000 | 2,096,000 | ||||||
| Additional paid-in capital |
100,863,000 | 95,004,000 | ||||||
| Retained earnings |
53,335,000 | 23,850,000 | ||||||
| Treasury stock, at cost – 3,233 shares at January 31, 2014 and 2013 |
(33,000 | ) | (33,000 | ) | ||||
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| TOTAL STOCKHOLDERS’ EQUITY |
156,308,000 | 120,917,000 | ||||||
| Noncontrolling interests |
1,469,000 | (1,749,000 | ) | |||||
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| TOTAL EQUITY |
157,777,000 | 119,168,000 | ||||||
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| TOTAL LIABILITIES AND EQUITY |
$ | 323,306,000 | $ | 234,724,000 | ||||
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