Exhibit 99.1
Argan, Inc. Reports First Quarter Results
June 8, 2015 – ROCKVILLE, MD – Argan, Inc. (NYSE: AGX) today announced financial results for its first quarter ended April 30, 2015.
First Quarter Highlights:
| | • | | Revenues of $85 million for our first quarter compared to $51 million for last year’s first quarter. |
| | • | | Net income attributable to our stockholders of $7.5 million vs. $3.5 million for last year’s first quarter. |
| | • | | Diluted earnings per share of $0.50 vs. $0.24 for the prior year quarter. |
| | • | | Cash, cash equivalents and short-term investments of $331 million at current quarter-end. |
| | • | | EBITDA attributable to our stockholders was $12.5 million, a 125% increase over the prior year quarter. |
Our strong and steady performance on two large gas-fired power plant projects enhanced our operating results for the current quarter. As a result, revenues of $85 million increased 67% over the same period last year and our gross profit margin percentage increased from 20% for the quarter ended April 30, 2014 to 25% for the current quarter. Our subsidiary, Gemma Power Systems, contributed 97% to total consolidated revenues and gross profit for the current quarter.
Income from operations for the first quarter of the current year was $15.6 million compared to income from operations of $6.7 million for the quarter ended April 30, 2014. SG&A remained stable at approximately 7% of revenues for the quarters ended April 30, 2015 and 2014. Net income attributable to the stockholders of Argan, Inc. for the first quarter was $7.5 million, or $0.50 per diluted share, compared with $3.5 million, or $0.24 per diluted share a year ago.
Consolidated EBITDA attributable to the stockholders of Argan, Inc. was $12.5 million for the quarter ended April 30, 2015, a 125% increase over the same period last year.
Contract backlog declined to $347 million as of April 30, 2015 from $423 million as of January 31, 2015, as progress continued on the two Panda gas-fired power plant projects in Pennsylvania.
Commenting on Argan’s first quarter results, Rainer Bosselmann, Chairman and Chief Executive Officer, stated, “Our ability to increase revenues, while maintaining strong gross margins, is a testament to our strength in execution. While the amount of our booked business declined during the current quarter, we are seeing a significant level of bids outstanding with both new and repeat clients.”
About Argan, Inc.
Argan’s primary business is designing and building energy plants through its Gemma Power Systems subsidiary. These energy plants include single and combined cycle natural gas-fired power plants as well as alternative energy facilities including biodiesel, ethanol, and those powered by renewable energy sources such as wind and solar. 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 our power industry services business. 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.
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| Company Contact: | | Investor Relations Contact: |
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Rainer Bosselmann | | Cynthia Flanders |
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301.315.0027 | | 301.315.0027 |
ARGAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | |
| | | Three Months Ended April 30, | |
| | | 2015 | | | 2014 | |
REVENUES | | | | | | | | |
Power industry services | | $ | 82,884,000 | | | $ | 49,824,000 | |
Telecommunications infrastructure services | | | 2,604,000 | | | | 1,367,000 | |
| | | | | | | | |
Revenues | | | 85,488,000 | | | | 51,191,000 | |
| | | | | | | | |
COST OF REVENUES | | | | | | | | |
Power industry services | | | 62,379,000 | | | | 40,049,000 | |
Telecommunications infrastructure services | | | 1,942,000 | | | | 1,091,000 | |
| | | | | | | | |
Cost of revenues | | | 64,321,000 | | | | 41,140,000 | |
| | | | | | | | |
GROSS PROFIT | | | 21,167,000 | | | | 10,051,000 | |
Selling, general and administrative expenses | | | 5,540,000 | | | | 3,379,000 | |
| | | | | | | | |
INCOME FROM OPERATIONS | | | 15,627,000 | | | | 6,672,000 | |
Other income, net | | | 85,000 | | | | 22,000 | |
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | | 15,712,000 | | | | 6,694,000 | |
Income tax expense | | | 4,861,000 | | | | 1,894,000 | |
| | | | | | | | |
NET INCOME | | | 10,851,000 | | | | 4,800,000 | |
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | 3,348,000 | | | | 1,325,000 | |
| | | | | | | | |
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. | | $ | 7,503,000 | | | $ | 3,475,000 | |
| | | | | | | | |
NET INCOME PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. | | | | | | | | |
Basic | | $ | 0.51 | | | $ | 0.24 | |
| | | | | | | | |
Diluted | | $ | 0.50 | | | $ | 0.24 | |
| | | | | | | | |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | | | | | | | | |
Basic | | | 14,637,000 | | | | 14,299,000 | |
| | | | | | | | |
Diluted | | | 14,864,000 | | | | 14,683,000 | |
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ARGAN, INC. AND SUBSIDIARIES
RECONCILIATIONS TO EBITDA
(Unaudited)
Consolidated Operations
| | | | | | | | |
| | | Three Months Ended April 30, | |
| | | 2015 | | | 2014 | |
Net income, as reported | | $ | 10,851,000 | | | $ | 4,800,000 | |
Net income attributable to noncontrolling interests | | | (3,348,000 | ) | | | (1,325,000 | ) |
Interest expense | | | (68,000 | ) | | | — | |
Income tax expense | | | 4,903,000 | | | | 1,894,000 | |
Depreciation | | | 119,000 | | | | 142,000 | |
Amortization of purchased intangible assets | | | 60,000 | | | | 60,000 | |
| | | | | | | | |
EBITDA attributable to the stockholders of Argan, Inc. | | $ | 12,517,000 | | | $ | 5,571,000 | |
| | | | | | | | |
Power Industry Services
| | | | | | | | |
| | | Three Months Ended April 30, | |
| | | 2015 | | | 2014 | |
Income before income taxes | | $ | 17,001,000 | | | $ | 8,009,000 | |
Income before income taxes attributable to noncontrolling interests | | | (3,306,000 | ) | | | (1,325,000 | ) |
Interest expense | | | (68,000 | ) | | | — | |
Depreciation | | | 75,000 | | | | 96,000 | |
Amortization of purchased intangible assets | | | 60,000 | | | | 60,000 | |
| | | | | | | | |
EBITDA attributable to the stockholders of Argan, Inc. | | $ | 13,762,000 | | | $ | 6,840,000 | |
| | | | | | | | |
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
| | | | | | | | |
| | | April 30, 2015 | | | January 31, 2015 | |
| | | (Unaudited) | | | (Note 1) | |
ASSETS | | | | | | | | |
CURRENT ASSETS | | | | | | | | |
Cash and cash equivalents | | $ | 274,528,000 | | | $ | 333,691,000 | |
Short-term investments | | | 56,017,000 | | | | — | |
Accounts receivable, net of allowance for doubtful accounts | | | 34,500,000 | | | | 27,330,000 | |
Costs and estimated earnings in excess of billings | | | 595,000 | | | | 455,000 | |
Notes receivable and accrued interest | | | 2,025,000 | | | | 1,786,000 | |
Prepaid expenses and other current assets | | | 4,340,000 | | | | 1,092,000 | |
| | | | | | | | |
TOTAL CURRENT ASSETS | | | 372,005,000 | | | | 364,354,000 | |
Property, plant and equipment, net of accumulated depreciation | | | 7,606,000 | | | | 6,518,000 | |
Goodwill | | | 18,476,000 | | | | 18,476,000 | |
Intangible assets, net of accumulated amortization | | | 1,785,000 | | | | 1,845,000 | |
| | | | | | | | |
TOTAL ASSETS | | $ | 399,872,000 | | | $ | 391,193,000 | |
| | | | | | | | |
LIABILITIES AND EQUITY | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | |
Accounts payable | | $ | 29,914,000 | | | $ | 37,691,000 | |
Accrued expenses | | | 19,061,000 | | | | 15,976,000 | |
Billings in excess of costs and estimated earnings | | | 162,973,000 | | | | 161,564,000 | |
Deferred income tax liabilities | | | 462,000 | | | | 201,000 | |
| | | | | | | | |
TOTAL CURRENT LIABILITIES | | | 212,410,000 | | | | 215,432,000 | |
Deferred income tax liabilities | | | 419,000 | | | | 809,000 | |
| | | | | | | | |
TOTAL LIABILITIES | | | 212,829,000 | | | | 216,241,000 | |
| | | | | | | | |
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; 14,672,184 and 14,634,434 shares issued at April 30 and January 31, 2015, respectively; 14,668,951 and 14,631,201 shares outstanding at April 30 and January 31, 2015, respectively | | | 2,201,000 | | | | 2,195,000 | |
Additional paid-in capital | | | 110,930,000 | | | | 109,696,000 | |
Retained earnings | | | 81,117,000 | | | | 73,614,000 | |
Treasury stock, at cost – 3,233 shares at April 30 and January 31, 2015 | | | (33,000 | ) | | | (33,000 | ) |
| | | | | | | | |
TOTAL STOCKHOLDERS’ EQUITY | | | 194,215,000 | | | | 185,472,000 | |
Noncontrolling interests | | | (7,172,000 | ) | | | (10,520,000 | ) |
| | | | | | | | |
TOTAL EQUITY | | | 187,043,000 | | | | 174,952,000 | |
| | | | | | | | |
TOTAL LIABILITIES AND EQUITY | | $ | 399,872,000 | | | $ | 391,193,000 | |
| | | | | | | | |
Note 1 – The condensed consolidated balance sheet as of January 31, 2015 has been derived from audited consolidated financial statements.
