Argan, Inc. Reports Third Quarter Results

Contract backlog as of October 31, 2011 was $431 million compared to $291 million as of January 31, 2011. Subsequent to quarter end, Gemma added an additional $17 million to backlog for a solar project in Massachusetts.

Commenting on Argan’s results, Rainer Bosselmann, Chairman and Chief Executive Officer stated, “Our net revenues have increased sequentially during each quarter of our fiscal year. Over the next several quarters, due to commencement of two large multi-year projects, we should see continued increases in net revenues.”

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 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.

ARGAN, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
		Three Months Ended October 31,								Nine Months Ended October 31,
		2011				2010				2011				2010
Net revenues
Power industry services		$	41,269,000			$	42,706,000			$	79,678,000			$	144,475,000
Telecommunications infrastructure services			2,328,000				2,523,000				6,254,000				6,308,000
Net revenues			43,597,000				45,229,000				85,932,000				150,783,000
Cost of revenues
Power industry services			35,248,000				35,999,000				65,807,000				122,568,000
Telecommunications infrastructure services			1,882,000				1,850,000				5,113,000				5,281,000
Cost of revenues			37,130,000				37,849,000				70,920,000				127,849,000
Gross profit			6,467,000				7,380,000				15,012,000				22,934,000
Selling, general and administrative expenses			2,735,000				3,121,000				7,868,000				8,759,000
Income from operations			3,732,000				4,259,000				7,144,000				14,175,000
Other income, net			33,000				22,000				84,000				29,000
Income from continuing operations before income taxes			3,765,000				4,281,000				7,228,000				14,204,000
Income tax expense			1,460,000				1,821,000				2,658,000				5,432,000
Income from continuing operations			2,305,000				2,460,000				4,570,000				8,772,000
Discontinued operations
Income (loss) on discontinued operations (including gains on disposal of $58,000 and $1,286,000 for the three and nine months ended October 31, 2011, respectively)			(365,000	)			(1,433,000	)			444,000				(2,922,000	)
Income tax (expense) benefit			72,000				508,000				(326,000	)			1,009,000
Income (loss) on discontinued operations			(293,000	)			(925,000	)			118,000				(1,913,000	)
Net income		$	2,012,000			$	1,535,000			$	4,688,000			$	6,859,000
Earnings (loss) per share:
Continuing operations
Basic		$	0.17			$	0.18			$	0.34			$	0.65
Diluted		$	0.17			$	0.18			$	0.33			$	0.64
Discontinued operations
Basic		$	(0.02	)		$	(0.07	)		$	0.01			$	(0.14	)
Diluted		$	(0.02	)		$	(0.07	)		$	0.01			$	(0.14	)
Net income
Basic		$	0.15			$	0.11			$	0.34			$	0.50
Diluted		$	0.15			$	0.11			$	0.34			$	0.50
Weighted average number of shares outstanding
Basic			13,609,000				13,596,000				13,605,000				13,591,000
Diluted			13,744,000				13,669,000				13,715,000				13,714,000
Cash dividend declared per common share		$	0.50			$	--			$	0.50			$	--

ARGAN, INC. AND SUBSIDIARIES
Reconciliations to EBITDA
Continuing Operations (unaudited)
		Three Months Ended October 31,
		2011					2010
Income from continuing operations		$	2,305,000				$	2,460,000
Interest expense			--					7,000
Income tax expense			1,460,000					1,821,000
Amortization of purchased intangible assets			87,000					88,000
Depreciation and other amortization			112,000					143,000
EBITDA		$	3,964,000				$	4,519,000

Reconciliations to EBITDA
Power Industry Services (unaudited)
		Three Months Ended October 31,
		2011					2010
Income before income taxes		$	4,533,000				$	4,915,000
Interest expense			--					7,000
Amortization of purchased intangible assets			87,000					88,000
Depreciation and other amortization			53,000					64,000
EBITDA		$	4,673,000				$	5,074,000

Reconciliations to EBITDA
Continuing Operations (unaudited)
		Nine Months Ended October 31,
		2011					2010
Income from continuing operations		$	4,570,000				$	8,772,000
Interest expense			--					32,000
Income tax expense			2,658,000					5,432,000
Amortization of purchased intangible assets			262,000					262,000
Depreciation and other amortization			344,000					507,000
EBITDA		$	7,834,000				$	15,005,000

Reconciliations to EBITDA
Power Industry Services (unaudited)
		Nine Months Ended October 31,
		2011					2010
Income before income taxes		$	9,678,000				$	17,347,000
Interest expense			--					32,000
Amortization of purchased intangible assets			262,000					262,000
Depreciation and other amortization			153,000					228,000
EBITDA		$	10,093,000				$	17,869,000

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 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
Condensed Consolidated Balance Sheets
		October 31,				January 31,
		2011				2011
ASSETS		(unaudited)				(Note 1)
CURRENT ASSETS:
Cash and cash equivalents		$	138,048,000			$	83,292,000
Restricted cash			--				1,243,000
Accounts receivable, net of allowance for doubtful accounts			17,185,000				13,099,000
Costs and estimated earnings in excess of billings			5,661,000				1,443,000
Deferred income tax assets			292,000				91,000
Prepaid expenses and other current assets			4,882,000				520,000
Assets held for sale			383,000				6,354,000
TOTAL CURRENT ASSETS			166,451,000				106,042,000
Property and equipment, net of accumulated depreciation			1,268,000				1,478,000
Goodwill			18,476,000				18,476,000
Intangible assets, net of accumulated amortization			2,646,000				2,908,000
Deferred income tax assets			817,000				999,000
Other assets			26,000				14,000
Assets held for sale			--				625,000
TOTAL ASSETS		$	189,684,000			$	130,542,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	26,733,000			$	8,555,000
Accrued expenses			6,217,000				13,035,000
Billings in excess of costs and estimated earnings			53,855,000				9,916,000
Dividend payable			6,804,000				--
Liabilities related to assets held for sale			--				1,362,000
TOTAL CURRENT LIABILITIES			93,609,000				32,868,000
Other liabilities			10,000				29,000
TOTAL LIABILITIES			93,619,000				32,897,000
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; 13,612,060 and 13,602,227 shares issued at October 31 and January 31, 2011, respectively; and 13,608,827 and 13,598,994 shares outstanding at October 31 and January 31, 2011, respectively			2,042,000				2,040,000
Warrants outstanding			590,000				601,000
Additional paid-in capital			89,106,000				88,561,000
Retained earnings			4,360,000				6,476,000
Treasury stock, at cost; 3,233 shares at October 31 and January 31, 2011			(33,000	)			(33,000	)
TOTAL STOCKHOLDERS’ EQUITY			96,065,000				97,645,000
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	189,684,000			$	130,542,000

Note 1 – The condensed consolidated balance sheet as of January 31, 2011 has been derived from audited financial statements.

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