Attached files
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| 8-K - FORM 8-K - ARGAN INC | c18725e8vk.htm |
Exhibit 99.1
ARGAN, INC. REPORTS FIRST QUARTER RESULTS
June 13, 2011 — ROCKVILLE, MD — Argan, Inc. (NYSE AMEX: AGX) (Company) today announced financial
results for the first quarter ended April 30, 2011 of its fiscal year 2012.
For the quarter ended April 30, 2011, net revenues were $16.0 million compared to $53.2 million
during the quarter ended April 30, 2010. Gemma Power Systems (Gemma) contributed $14.0 million or
87.7% of net revenues from continuing operations in the first quarter of fiscal 2012, compared to
$51.4 million, or 96.5% of net revenues from continuing operations in the first quarter of fiscal
2011. The reduction in net revenues was due primarily to the completion of the construction of a
large gas fired power plant in Northern California in the first quarter. In May 2011, Gemma
received full notice to proceed on a new 800 MW project near Desert Hot Springs, California.
The Company reported EBITDA (Earnings before interest, taxes, depreciation and amortization) from
continuing operations of $1.4 million for the quarter ended April 30, 2011 compared to $4.0 million
for the same prior year period. Gemma, for its segment, recorded $2.3 million in EBITDA for the
first quarter of fiscal 2012 compared to $5.4 million in the first quarter of fiscal 2011.
During the quarter, Argan sold the assets of its wholly-owned subsidiary, Vitarich Laboratories,
Inc., to NBTY, Florida, Inc. As a result, VLI is classified as a discontinued operation for
financial reporting purposes. Argan realized a net loss on discontinued operations for the quarter
of $139,000 compared to a net loss of $332,000 from discontinued operations in the same quarter in
the preceding year.
In the first quarter of fiscal 2011, the Company reported income from continuing operations before
income taxes of $1.2 million compared to income from continuing operations before income taxes of
$3.7 million in the first quarter of 2011.
Net income for the quarter ended April 30, 2011 was $606,000, or $0.04 per diluted share based on
13,679,000 diluted shares outstanding, compared to net income of $2.0 million, or $0.15 per diluted
share based on 13,790,000 diluted shares outstanding for the quarter ended April 30, 2010.
Argan had consolidated cash of $78.9 million as of April 30, 2011 and was debt free. Consolidated
working capital increased during the current quarter to approximately $74.6 million as of April 30,
2011.
Gemma’s backlog as of April 30, 2011 was $293 million. Gemma received a full notice to proceed on
the project to construct an 800 MW peaking plant energy facility in Southern California, which is
included in our backlog with the value of $237 million at April 30, 2011.
Commenting on Argan’s results, Rainer Bosselmann, Chairman and Chief Executive Officer stated, “Our
Gemma net revenues were soft during the first quarter, primarily due to the completion of the major
power plant project in Northern California. Gemma was able to maintain its backlog of
approximately $300 million and as the fiscal year progresses will show improved net revenues from
the 800 MW peaking plant project which is in its initial phases of construction activity.”
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.
Company Contact:
|
Investor Relations Contact: | |
Rainer Bosselmann
|
Arthur Trudel | |
301.315.0027
|
301-315-9467 |
ARGAN, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
Condensed Consolidated Statements of Operations
(unaudited)
| Three Months Ended April 30, | ||||||||
| 2011 | 2010 | |||||||
Net revenues |
||||||||
Power industry services |
$ | 14,019,000 | $ | 51,396,000 | ||||
Telecommunications infrastructure services |
1,974,000 | 1,838,000 | ||||||
Net revenues |
15,993,000 | 53,234,000 | ||||||
Cost of revenues |
||||||||
Power industry services |
10,481,000 | 44,667,000 | ||||||
Telecommunications infrastructure services |
1,614,000 | 1,793,000 | ||||||
Cost of revenues |
12,095,000 | 46,460,000 | ||||||
Gross profit |
3,898,000 | 6,774,000 | ||||||
Selling, general and administrative expenses |
2,759,000 | 3,034,000 | ||||||
| 1,139,000 | 3,740,000 | |||||||
Interest expense |
— | (14,000 | ) | |||||
Investment income |
22,000 | 12,000 | ||||||
Income from continuing operations before income taxes |
1,161,000 | 3,738,000 | ||||||
Income tax expense |
416,000 | 1,383,000 | ||||||
Income from continuing operations |
745,000 | 2,355,000 | ||||||
Discontinued operations |
||||||||
Loss on discontinued operations (including gain on disposal
of $152,000 in 2011) |
(65,000 | ) | (526,000 | ) | ||||
Income tax (expense) benefit |
(74,000 | ) | 194,000 | |||||
Loss on discontinued operations |
(139,000 | ) | (332,000 | ) | ||||
Net income |
$ | 606,000 | $ | 2,023,000 | ||||
Earnings per share: |
||||||||
Continuing operations |
||||||||
Basic |
$ | 0.05 | $ | 0.17 | ||||
Diluted |
$ | 0.05 | $ | 0.17 | ||||
Discontinued operations |
||||||||
Basic |
$ | (0.01 | ) | $ | (0.02 | ) | ||
Diluted |
$ | (0.01 | ) | $ | (0.02 | ) | ||
Net income |
||||||||
Basic |
$ | 0.04 | $ | 0.15 | ||||
Diluted |
$ | 0.04 | $ | 0.15 | ||||
Weighted average number of shares outstanding: |
||||||||
Basic |
13,601,000 | 13,584,000 | ||||||
Diluted |
13,679,000 | 13,790,000 | ||||||
ARGAN, INC. AND SUBSIDIARIES
Reconciliations to EBITDA
Continuing Operations
(unaudited)
Continuing Operations
(unaudited)
| Three Months Ended April 30, | ||||||||
| 2011 | 2010 | |||||||
Income from continuing operations |
$ | 745,000 | $ | 2,355,000 | ||||
Interest expense |
— | 14,000 | ||||||
Income tax expense |
416,000 | 1,383,000 | ||||||
Amortization of purchased intangible assets |
87,000 | 87,000 | ||||||
Depreciation and other amortization |
117,000 | 168,000 | ||||||
EBITDA |
$ | 1,365,000 | $ | 4,007,000 | ||||
Reconciliations to EBITDA
Power Industry Services
(unaudited)
Power Industry Services
(unaudited)
| Three Months Ended April 30, | ||||||||
| 2011 | 2010 | |||||||
Income before income taxes |
$ | 2,140,000 | $ | 5,279,000 | ||||
Interest expense |
— | 14,000 | ||||||
Amortization of purchased intangible assets |
87,000 | 87,000 | ||||||
Depreciation and other amortization |
49,000 | 67,000 | ||||||
EBITDA |
$ | 2,276,000 | $ | 5,447,000 | ||||
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
from continuing operations. Pursuant to the requirements of SEC Regulation G, the 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 disclosed in the Company’s SEC filings.
ARGAN, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets
| April 30, | January 31 | |||||||
| 2011 | 2011 | |||||||
| (unaudited) | (Note 1) | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 78,906,000 | $ | 83,292,000 | ||||
Restricted cash |
— | 1,243,000 | ||||||
Accounts receivable, net of allowance for doubtful accounts |
5,712,000 | 13,099,000 | ||||||
Costs and estimated earnings in excess of billings |
421,000 | 1,443,000 | ||||||
Deferred income tax assets |
417,000 | 91,000 | ||||||
Prepaid expenses and other current assets |
1,364,000 | 520,000 | ||||||
Assets held for sale |
780,000 | 6,354,000 | ||||||
TOTAL CURRENT ASSETS |
87,600,000 | 106,042,000 | ||||||
Property and equipment, net of accumulated depreciation |
1,370,000 | 1,478,000 | ||||||
Goodwill |
18,476,000 | 18,476,000 | ||||||
Intangible assets, net of accumulated amortization and impairment losses |
2,821,000 | 2,908,000 | ||||||
Deferred income tax assets |
995,000 | 999,000 | ||||||
Other assets |
20,000 | 14,000 | ||||||
Assets held for sale |
226,000 | 625,000 | ||||||
TOTAL ASSETS |
$ | 111,508,000 | $ | 130,542,000 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 5,513,000 | $ | 8,555,000 | ||||
Accrued expenses |
4,878,000 | 13,035,000 | ||||||
Billings in excess of costs and estimated earnings |
2,566,000 | 9,916,000 | ||||||
Liabilities related to assets held for sale |
43,000 | 1,362,000 | ||||||
TOTAL CURRENT LIABILITIES |
13,000,000 | 32,868,000 | ||||||
Other liabilities |
28,000 | 29,000 | ||||||
TOTAL LIABILITIES |
13,028,000 | 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;
13,605,227 and 13,602,227 shares issued at April 30 and January 31, 2011,
and 13,601,994 and 13,598,994 shares outstanding at April 30 and January
31, 2011 |
2,041,000 | 2,040,000 | ||||||
Warrants outstanding |
601,000 | 601,000 | ||||||
Additional paid-in capital |
88,789,000 | 88,561,000 | ||||||
Retained earnings |
7,082,000 | 6,476,000 | ||||||
Treasury stock, at cost; 3,233 shares at April 30 and January 31, 2011 |
(33,000 | ) | (33,000 | ) | ||||
TOTAL STOCKHOLDERS’ EQUITY |
98,480,000 | 97,645,000 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 111,508,000 | $ | 130,542,000 | ||||
Note 1 — The condensed consolidated balance sheet as of January 31, 2011 has been derived from
audited financial statements.