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Argan, Inc. Reports Robust Second Quarter Results

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.

ARGAN, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
 
  Three Months Ended July 31, Six Months Ended July 31,  
2012 2011 2012 2011
Net revenues
Power industry services $ 78,109,000 $ 24,390,000 $ 135,837,000 $ 38,409,000
Telecommunications infrastructure services   4,510,000   1,952,000   10,472,000   3,926,000
Net revenues   82,619,000   26,342,000   146,309,000   42,335,000
Cost of revenues
Power industry services 66,182,000 20,078,000 115,166,000 30,559,000
Telecommunications infrastructure services   3,558,000 1,617,000   8,163,000   3,231,000
Cost of revenues   69,740,000 21,695,000   123,329,000   33,790,000
Gross profit 12,879,000 4,647,000 22,980,000 8,545,000
Selling, general and administrative expenses   3,297,000   2,374,000   6,325,000   5,133,000
Income from operations 9,582,000 2,273,000 16,655,000 3,412,000
Other (expense) income, net   (10,000 )   29,000   (19,000 )   51,000
Income from continuing operations before income taxes 9,572,000 2,302,000 16,636,000 3,463,000
Income tax expense   3,591,000   782,000   6,108,000   1,198,000
Income from continuing operations   5,981,000   1,520,000   10,528,000   2,265,000
Discontinued operations
Income (loss) on discontinued operations (including gains on disposal of
$1,076,000 and $1,228,000 for the
three and six months ended July 31, 2011) -- 874,000 (405,000 ) 809,000
Income tax (expense) benefit   --   (324,000 )   120,000   (398,000 )
Income (loss) on discontinued operations   --   550,000   (285,000 )   411,000
Net income 5,981,000 2,070,000 10,243,000 2,676,000
Add – Loss attributable to noncontrolling interest   220,000   --   396,000   --
Net income attributable to the stockholders of Argan $ 6,201,000 $ 2,070,000 $ 10,639,000 $ 2,676,000
 
Earnings (loss) per share attributable to the
stockholders of Argan:
Continuing operations
Basic $ 0.45 $ 0.11 $ 0.80 $ 0.17
Diluted $ 0.45 $ 0.11 $ 0.78 $ 0.17
 
Discontinued operations
Basic $ -- $ 0.04 $ (0.02 ) $ 0.03
Diluted $ -- $ 0.04 $ (0.02 ) $ 0.03
 
Net income
Basic $ 0.45 $ 0.15 $ 0.78 $ 0.20
Diluted $ 0.45 $ 0.15 $ 0.76 $ 0.20
 
Weighted average number of shares outstanding
Basic   13,697,000   13,603,000   13,680,000   13,602,000
Diluted   13,935,000   13,717,000   13,952,000   13,699,000
 
ARGAN, INC. AND SUBSIDIARIES
Reconciliations to EBITDA
Continuing Operations (Unaudited)
 
Three Months Ended July 31,
2012   2011
Income from continuing operations $ 5,981,000 $ 1,520,000
Interest expense 15,000 --
Income tax expense 3,591,000 782,000
Amortization of purchased intangible assets 61,000 87,000
Depreciation and other amortization   132,000   114,000
EBITDA $ 9,780,000 $ 2,503,000
 
Reconciliations to EBITDA
Power Industry Services (Unaudited)
 
Three Months Ended July 31,
2012   2011
Income before income taxes $ 9,984,000 $ 3,004,000
Interest expense 15,000 --
Amortization of purchased intangible assets 61,000 87,000
Depreciation and other amortization   69,000   51,000
EBITDA $ 10,129,000 $ 3,142,000
 
Reconciliations to EBITDA
Continuing Operations (Unaudited)
 

 

Six Months Ended July 31,
2012   2011
Income from continuing operations $ 10,528,000 $ 2,265,000
Interest expense 27,000 --
Income tax expense 6,108,000 1,198,000
Amortization of purchased intangible assets 121,000 175,000
Depreciation and other amortization   249,000   231,000
EBITDA $ 17,033,000 $ 3,869,000
 
Reconciliations to EBITDA
Power Industry Services (Unaudited)
 
Six Months Ended July 31,
2012   2011
Income before income taxes $ 17,160,000 $ 5,144,000
Interest expense 27,000 --
Amortization of purchased intangible assets 121,000 175,000
Depreciation and other amortization   127,000   100,000
EBITDA $ 17,435,000 $ 5,419,000
 

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, 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
   
July 31, January 31,
2012 2012
(Unaudited) (Note 1)
ASSETS

 

CURRENT ASSETS:

Cash and cash equivalents $ 186,834,000 $ 156,524,000
Accounts receivable, net 22,065,000 16,053,000
Costs and estimated earnings in excess of billings 4,790,000 2,781,000
Deferred income tax assets 739,000 691,000
Prepaid expenses and other current assets   3,106,000     4,528,000  
TOTAL CURRENT ASSETS 217,534,000 180,577,000
Property and equipment, net ($2,985,000 and $1,469,000 related to variable
interest entities as of July 31 and January 31, 2012, respectively) 6,269,000 2,761,000
Goodwill 18,476,000 18,476,000
Intangible assets, net 2,453,000 2,574,000
Deferred income tax and other assets   731,000     864,000  
TOTAL ASSETS $ 245,463,000   $ 205,252,000  

LIABILITIES AND EQUITY

 

CURRENT LIABILITIES:

Accounts payable $ 44,579,000 $ 29,524,000
Accrued expenses 8,180,000 6,751,000
Billings in excess of costs and estimated earnings   80,279,000     68,004,000  
TOTAL CURRENT LIABILITIES 133,038,000 104,279,000
Other liabilities   11,000     10,000  
TOTAL LIABILITIES   133,049,000     104,289,000  
 
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; 13,744,598 and 13,661,098 shares issued at July 31 and January 31, 2012, respectively; 13,741,365 and 13,657,865 shares outstanding at July 31 and January 31, 2012, respectively

 

 

 

2,062,000

 

 

2,049,000

Warrants outstanding 354,000 590,000
Additional paid-in capital 91,145,000 89,714,000
Retained earnings 19,583,000 8,944,000
Treasury stock, at cost – 3,233 shares at July 31 and January 31, 2012   (33,000 )   (33,000 )
TOTAL STOCKHOLDERS’ EQUITY 113,111,000 101,264,000
Noncontrolling interest (variable interest entities)   (697,000 )   (301,000 )
TOTAL EQUITY   112,414,000     100,963,000  
TOTAL LIABILITIES AND EQUITY $ 245,463,000   $ 205,252,000  
 

Note 1 – The condensed consolidated balance sheet as of January 31, 2012 has been derived from audited financial statements.





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