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| 8-K - FORM 8-K - ARGAN INC | d740972d8k.htm |
Exhibit 99.1
ARGAN, INC. REPORTS FIRST QUARTER RESULTS
June 5 , 2014 – ROCKVILLE, MD – Argan, Inc. (NYSE: AGX) today announced financial results for the three months ended April 30, 2014.
For the quarter ended April 30, 2014, revenues were $51.2 million compared to $46.6 million for the three months ended April 30, 2013. Gemma Power Systems LLC and affiliates (Gemma) contributed $49.8 million, or 97% of revenues in the first quarter of fiscal 2015, compared to $43.8 million, or 94% of revenues in the first quarter of fiscal 2014.
Argan reported consolidated EBITDA (Earnings before interest, taxes, depreciation and amortization) associated with the stockholders of Argan, Inc. of $5.6 million for the quarter ended April 30, 2014 compared to $10.0 million for the quarter ended April 30, 2013. Gemma recorded $6.8 million in EBITDA associated with the stockholders of Argan, Inc. for the first quarter of fiscal 2015 compared to $11.1 million for the first quarter of fiscal 2014.
Net income attributable to the stockholders of Argan, Inc. for the first quarter of fiscal 2015 was $3.5 million, or $0.24 per diluted share based on 14,683,000 diluted shares outstanding, compared to net income attributable to the shareholders of Argan, Inc. for the first quarter of fiscal 2014 of $6.4 million, or $0.45 per diluted share based on 14,127,000 diluted shares outstanding.
Gemma’s backlog as of April 30, 2014 was $742 million. The April 30, 2014 backlog includes two large gas fired power plants being constructed for Panda Power Funds in Pennsylvania and a biomass-fired plant in Texas.
Commenting on Argan’s financial results, Rainer Bosselmann, Chairman and Chief Executive Officer stated, “Gemma’s performance on the initial phases of the two gas fired power plants being constructed in Pennsylvania has been excellent. Despite adverse winter weather conditions, we are pleased with the progress made to date. Construction activity will increase significantly over the next several quarters.”
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.
| 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)
| Three Months Ended April 30, | ||||||||
| 2014 | 2013 | |||||||
| REVENUES |
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| Power industry services |
$ | 49,824,000 | $ | 43,769,000 | ||||
| Telecommunications infrastructure services |
1,367,000 | 2,879,000 | ||||||
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| Revenues |
51,191,000 | 46,648,000 | ||||||
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| Cost of revenues |
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| Power industry services |
40,049,000 | 31,246,000 | ||||||
| Telecommunications infrastructure services |
1,091,000 | 2,374,000 | ||||||
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| Cost of revenues |
41,140,000 | 33,620,000 | ||||||
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| GROSS PROFIT |
10,051,000 | 13,028,000 | ||||||
| Selling, general and administrative expenses |
3,379,000 | 3,443,000 | ||||||
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| Income from operations |
6,672,000 | 9,585,000 | ||||||
| Other income, net |
22,000 | 155,000 | ||||||
| Gain on deconsolidation of variable interest entity |
— | 1,120,000 | ||||||
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| INCOME BEFORE INCOME TAXES |
6,694,000 | 10,860,000 | ||||||
| Income tax expense |
1,894,000 | 3,920,000 | ||||||
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| NET INCOME |
4,800,000 | 6,940,000 | ||||||
| INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
1,325,000 | 530,000 | ||||||
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| NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. |
$ | 3,475,000 | $ | 6,410,000 | ||||
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| NET INCOME PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. |
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| Basic |
$ | 0.24 | $ | 0.46 | ||||
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| Diluted |
$ | 0.24 | $ | 0.45 | ||||
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| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |
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| Basic |
14,299,000 | 13,974,000 | ||||||
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| Diluted |
14,683,000 | 14,127,000 | ||||||
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ARGAN, INC. AND SUBSIDIARIES
RECONCILIATIONS TO EBITDA (Unaudited)
Consolidated Operations
| Three Months Ended April 30, | ||||||||
| 2014 | 2013 | |||||||
| Net income, as reported |
$ | 4,800,000 | $ | 6,940,000 | ||||
| (Income) - noncontrolling interests |
(1,325,000 | ) | (530,000 | ) | ||||
| Interest expense |
— | (161,000 | ) | |||||
| Income tax expense |
1,894,000 | 3,591,000 | ||||||
| Depreciation |
142,000 | 129,000 | ||||||
| Amortization of purchased intangible assets |
60,000 | 61,000 | ||||||
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| EBITDA associated with the stockholders of Argan, Inc. |
$ | 5,571,000 | $ | 10,030,000 | ||||
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Power Industry Services
| Three Months Ended April 30, | ||||||||
| 2014 | 2013 | |||||||
| Income before income taxes |
$ | 8,009,000 | $ | 11,982,000 | ||||
| (Income) - noncontrolling interests |
(1,325,000 | ) | (859,000 | ) | ||||
| Interest expense |
— | (161,000 | ) | |||||
| Depreciation |
96,000 | 83,000 | ||||||
| Amortization of purchased intangible assets |
60,000 | 61,000 | ||||||
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| EBITDA associated with the stockholders of Argan, Inc. |
$ | 6,840,000 | $ | 11,106,000 | ||||
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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
| April 30, 2014 | January 31, 2014 | |||||||
| (Unaudited) | (Note 1) | |||||||
| ASSETS |
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| CURRENT ASSETS: |
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| Cash and cash equivalents |
$ | 313,761,000 | $ | 272,209,000 | ||||
| Accounts receivable, net of allowance for doubtful accounts |
28,684,000 | 23,687,000 | ||||||
| Costs and estimated earnings in excess of billings |
200,000 | 527,000 | ||||||
| Prepaid expenses |
2,749,000 | 1,581,000 | ||||||
| Deferred income tax assets |
— | 178,000 | ||||||
| Other current assets |
2,312,000 | 377,000 | ||||||
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| TOTAL CURRENT ASSETS |
347,706,000 | 298,559,000 | ||||||
| Property, plant and equipment, net of accumulated depreciation |
4,107,000 | 4,183,000 | ||||||
| Goodwill |
18,476,000 | 18,476,000 | ||||||
| Intangible assets, net of accumulated amortization |
2,028,000 | 2,088,000 | ||||||
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| TOTAL ASSETS |
$ | 372,317,000 | $ | 323,306,000 | ||||
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| LIABILITIES AND EQUITY |
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| CURRENT LIABILITIES: |
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| Accounts payable |
$ | 25,677,000 | $ | 22,589,000 | ||||
| Accrued expenses |
3,630,000 | 7,911,000 | ||||||
| Deferred income tax liabilities |
819,000 | — | ||||||
| Billings in excess of costs and estimated earnings |
177,517,000 | 134,736,000 | ||||||
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| TOTAL CURRENT LIABILITIES |
207,643,000 | 165,236,000 | ||||||
| Deferred income tax liabilities |
372,000 | 293,000 | ||||||
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| TOTAL LIABILITIES |
208,015,000 | 165,529,000 | ||||||
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| COMMITMENTS AND CONTINGENCIES |
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| STOCKHOLDERS’ EQUITY: |
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| 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; 14,372,634 and 14,289,134 shares issued at April 30 and January 31, 2014, respectively; 14,369,401 and 14,285,901 shares outstanding at April 30 and January 31, 2014, respectively |
2,156,000 | 2,143,000 | ||||||
| Additional paid-in capital |
102,575,000 | 100,863,000 | ||||||
| Retained earnings |
56,810,000 | 53,335,000 | ||||||
| Treasury stock, at cost – 3,233 shares at April 30 and January 31, 2014 |
(33,000 | ) | (33,000 | ) | ||||
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| TOTAL STOCKHOLDERS’ EQUITY |
161,508,000 | 156,308,000 | ||||||
| Noncontrolling interests |
2,794,000 | 1,469,000 | ||||||
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| TOTAL EQUITY |
164,302,000 | 157,777,000 | ||||||
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| TOTAL LIABILITIES AND EQUITY |
$ | 372,317,000 | $ | 323,306,000 | ||||
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Note 1 – The condensed consolidated balance sheet as of January 31, 2014 has been derived from audited consolidated financial statements.