AGX Argan Inc

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.

   

ARGAN, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

  Three Months Ended January 31, Years Ended January 31, 2014   2013 2014   2013 (Unaudited) Revenues 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   Revenues   59,491,000   57,840,000     227,455,000   278,635,000   Cost of revenues 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   Cost of revenues   38,804,000   43,821,000     148,607,000   228,500,000   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   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 ) 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   Income from continuing operations   10,032,000   5,861,000     43,344,000   22,102,000   Discontinued operations

Loss on discontinued operations before income taxes

-- -- -- (405,000 ) Income tax benefit   --   --     --   120,000   Loss on discontinued operations   --   --     --   (285,000 ) Net income 10,032,000 5,861,000 43,344,000 21,817,000

Income (loss) attributable to noncontrolling interests

  868,000   (700,000 )   3,219,000   (1,448,000 )

Net income attributable to the stockholders of Argan, Inc.

$ 9,164,000 $ 6,561,000   $ 40,125,000 $ 23,265,000    

Earnings (loss) per share attributable to the stockholders of Argan, Inc.

Continuing operations Basic $ 0.64 $ 0.47   $ 2.85 $ 1.71   Diluted $ 0.63 $ 0.46   $ 2.78 $ 1.67     Discontinued operations Basic $ -- $ --   $ -- $ (0.02 ) Diluted $ -- $ --   $ -- $ (0.02 )   Net income Basic $ 0.64 $ 0.47   $ 2.85 $ 1.69   Diluted $ 0.63 $ 0.46   $ 2.78 $ 1.65     Weighted average number of shares outstanding Basic   14,219,000   13,951,000     14,072,000   13,784,000   Diluted   14,581,000   14,186,000     14,427,000   14,116,000     Cash dividends declared per common share $ -- $ --   $ 0.75 $ 0.60            

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  

EBITDA attributable to the stockholders of Argan, Inc.

$ 15,826,000   $ 10,366,000    

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  

EBITDA attributable to the stockholders of Argan, Inc.

$ 17,614,000   $ 11,607,000    

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  

EBITDA attributable to the stockholders of Argan, Inc.

$ 66,315,000   $ 37,699,000    

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  

EBITDA attributable to the stockholders of Argan, Inc.

$ 69,466,000   $ 40,240,000     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

CONSOLIDATED BALANCE SHEETS

  January 31, 2014 January 31, 2013 ASSETS   CURRENT ASSETS: 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   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   TOTAL ASSETS $ 323,306,000   $ 234,724,000  

LIABILITIES AND EQUITY

 

CURRENT LIABILITIES:

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   TOTAL CURRENT LIABILITIES 165,236,000 115,546,000 Deferred tax and other liabilities   293,000     10,000   TOTAL LIABILITIES   165,529,000     115,556,000     COMMITMENTS AND CONTINGENCIES   STOCKHOLDERS’ EQUITY:

Preferred stock, par value $0.10 per share – 500,000 shares authorized; no shares issued and outstanding

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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 ) TOTAL STOCKHOLDERS’ EQUITY 156,308,000 120,917,000 Noncontrolling interests   1,469,000     (1,749,000 ) TOTAL EQUITY   157,777,000     119,168,000   TOTAL LIABILITIES AND EQUITY $ 323,306,000   $ 234,724,000    

Argan, Inc.Company Contact:Rainer Bosselmann, 301-315-0027orInvestor Relations Contact:Arthur Trudel, 301-315-9467