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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