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| 8-K - 8-K - ARGAN INC | a15-19313_18k.htm |
EXHIBIT 99.1
Argan, Inc. Reports Second Quarter Results
September 8, 2015 — ROCKVILLE, MD — Argan, Inc. (NYSE: AGX) today announced financial results for its second quarter and six month period ended July 31, 2015.
Second Quarter 2015 Highlights:
· Revenues of $97.4 million for the current quarter vs. $85.5 million in the first quarter ended April 30th.
· Revenues of $182.9 million for the six months ended July 31, 2015 vs. $153.2 million for the six months ended July 31, 2014.
· Net income attributable to our stockholders was $11.3 million and $18.8 million for the quarter and six months ended July 31, 2015 vs. $8.6 million and $12.0 million for the quarter and six months ended July 31, 2014.
· EBITDA attributable to our stockholders was $19.4 million for the current quarter and $31.9 million for the six months ended July 31, 2015.
· Cash, cash equivalents and short-term investments totaled just under $300 million at quarter-end.
Our continued strong management of two large, gas-fired power plant projects has resulted in increased revenues and gross profit for the six months ending July 31, 2015 vs. the same period in 2014. Year to date revenues increased by $29.7 million to $182.9 million for the six months ended July 31, 2015. Our year to date gross profit increased to $49.7 million, or 27% of corresponding revenues, from $31.6 million, or 21% of corresponding revenues, for the six month period July 31, 2014. For the current quarter, revenues declined slightly to $97.4 million. However, our gross profit for the current quarter increased to $28.5 million, or 29% of corresponding revenues, from $21.6 million, or 21% of corresponding revenues, for last year’s second quarter.
Due primarily to the strong performance of the power industry services business, net income attributable to our stockholders for the second quarter was $11.3 million, or $0.75 per diluted share, compared with net income attributable to our stockholders of $8.6 million, or $0.58 per diluted share for the second quarter last year. Net income attributable to our stockholders for the six months ended July 31, 2015 was $18.8 million, or $1.26 per diluted share, and was $12.0 million, or $0.82 per diluted share, for the comparable period last year.
Likewise, consolidated EBITDA attributable to our stockholders increased by $5.5 million to $19.4 million for the current quarter, and increased by $12.5 million to $31.9 million for the six months ended July 31, 2015.
Contract backlog increased during the current quarter to $660 million from $345 million at the end of the first quarter due to the addition of our recently announced EPC contract with Moxie Freedom. Subsequent to the quarter ended July 31, 2015, we added contract value of approximately $650 million to our backlog as a result of three EPC contracts; a $100 million contract with Exelon and 2 contracts totaling $550 million with NTE Energy.
Commenting on Argan’s second quarter results, Rainer Bosselmann, Chairman and Chief Executive Officer, stated, “Our effective management of large gas-fired power projects has resulted in consistently strong revenues and gross margins. We look forward to the next three to five years, given our strong and improved backlog.”
About Argan, Inc.
Argan’s primary business is providing a full range of services to the power industry including the engineering, procurement and construction of gas-fired and biomass-fired power plants, along with related commissioning, operations management, maintenance, project development and consulting services, through its Gemma Power Systems and Atlantic Projects Company operations. Argan also owns Southern Maryland Cable, which provides telecommunications infrastructure services.
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: |
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Investor Relations Contact: |
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Rainer Bosselmann |
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Cynthia Flanders |
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301.315.0027 |
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301.315.0027 |
ARGAN, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
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Three Months Ended July 31, |
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Six Months Ended July 31, |
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2015 |
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2014 |
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2015 |
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2014 |
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REVENUES |
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Power industry services |
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$ |
93,471,000 |
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$ |
100,418,000 |
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$ |
176,355,000 |
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$ |
150,242,000 |
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Telecommunications infrastructure services |
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3,963,000 |
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1,612,000 |
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6,566,000 |
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2,979,000 |
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Revenues |
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97,434,000 |
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102,030,000 |
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182,921,000 |
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153,221,000 |
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COST OF REVENUES |
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Power industry services |
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66,136,000 |
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79,261,000 |
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128,515,000 |
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119,311,000 |
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Telecommunications infrastructure services |
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2,805,000 |
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1,205,000 |
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4,746,000 |
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2,296,000 |
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Cost of revenues |
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68,941,000 |
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80,466,000 |
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133,261,000 |
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121,607,000 |
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GROSS PROFIT |
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28,493,000 |
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21,564,000 |
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49,660,000 |
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31,614,000 |
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Selling, general and administrative expenses |
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4,848,000 |
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4,481,000 |
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10,387,000 |
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7,859,000 |
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INCOME FROM OPERATIONS |
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23,645,000 |
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17,083,000 |
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39,273,000 |
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23,755,000 |
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Other income, net |
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128,000 |
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41,000 |
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212,000 |
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63,000 |
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INCOME BEFORE INCOME TAXES |
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23,773,000 |
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17,124,000 |
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39,485,000 |
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23,818,000 |
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Income tax expense |
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7,939,000 |
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5,104,000 |
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12,800,000 |
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6,997,000 |
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NET INCOME |
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15,834,000 |
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12,020,000 |
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26,685,000 |
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16,821,000 |
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Net income attributable to noncontrolling interests |
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4,527,000 |
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3,470,000 |
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7,875,000 |
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4,796,000 |
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NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. |
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$ |
11,307,000 |
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$ |
8,550,000 |
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$ |
18,810,000 |
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$ |
12,025,000 |
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EARNINGS PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC. |
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Basic |
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$ |
0.77 |
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$ |
0.59 |
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$ |
1.28 |
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$ |
0.84 |
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Diluted |
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$ |
0.75 |
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$ |
0.58 |
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$ |
1.26 |
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$ |
0.82 |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |
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Basic |
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14,747,000 |
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14,399,000 |
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14,693,000 |
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14,350,000 |
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Diluted |
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15,003,000 |
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14,655,000 |
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14,952,000 |
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14,641,000 |
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ARGAN, INC. AND SUBSIDIARIES
Reconciliations to EBITDA
Consolidated Operations (Unaudited)
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Three Months Ended July 31, |
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2015 |
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2014 |
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Net income |
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$ |
15,834,000 |
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$ |
12,020,000 |
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Less net income attributable to noncontrolling interests |
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(4,527,000 |
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(3,470,000 |
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Interest expense |
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(34,000 |
) |
— |
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Income tax expense |
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7,852,000 |
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5,104,000 |
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Depreciation |
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140,000 |
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141,000 |
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Amortization of purchased intangible assets |
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104,000 |
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61,000 |
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EBITDA attributable to the stockholders of Argan, Inc. |
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$ |
19,369,000 |
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$ |
13,856,000 |
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Power Industry Services (Unaudited)
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Three Months Ended July 31, |
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2015 |
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2014 |
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Income before income taxes |
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$ |
24,787,000 |
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$ |
18,428,000 |
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Less pre-tax income attributable to noncontrolling interests |
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(4,614,000 |
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(3,470,000 |
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Interest expense |
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(34,000 |
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— |
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Depreciation |
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95,000 |
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96,000 |
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Amortization of purchased intangible assets |
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104,000 |
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61,000 |
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EBITDA attributable to the stockholders of Argan, Inc. |
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$ |
20,338,000 |
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$ |
15,115,000 |
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Consolidated Operations (Unaudited)
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Six Months Ended July 31, |
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2015 |
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2014 |
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Net income |
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$ |
26,685,000 |
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$ |
16,821,000 |
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Less net income attributable to noncontrolling interests |
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(7,875,000 |
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(4,796,000 |
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Interest expense |
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(101,000 |
) |
— |
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Income tax expense |
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12,756,000 |
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6,997,000 |
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Depreciation |
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258,000 |
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283,000 |
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Amortization of purchased intangible assets |
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164,000 |
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121,000 |
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EBITDA attributable to the stockholders of Argan, Inc. |
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$ |
31,887,000 |
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$ |
19,426,000 |
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Power Industry Services (Unaudited)
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Six Months Ended July 31, |
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2015 |
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2014 |
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Income before income taxes |
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$ |
41,787,000 |
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$ |
26,437,000 |
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Less pre-tax income attributable to noncontrolling interests |
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(7,919,000 |
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(4,796,000 |
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Interest expense |
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(101,000 |
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— |
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Depreciation |
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170,000 |
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192,000 |
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Amortization of purchased intangible assets |
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164,000 |
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121,000 |
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EBITDA attributable to the stockholders of Argan, Inc. |
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$ |
34,101,000 |
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$ |
21,954,000 |
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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, reconciliations between the Company’s GAAP and non-GAAP financial results are included in the presentations 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
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July 31, 2015 |
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January 31, 2015 |
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(Unaudited) |
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(Note 1) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
182,136,000 |
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$ |
333,691,000 |
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Short-term investments |
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117,064,000 |
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— |
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Accounts receivable, net of allowance for doubtful accounts |
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38,839,000 |
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27,330,000 |
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Costs and estimated earnings in excess of billings |
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2,943,000 |
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455,000 |
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Notes receivable and accrued interest |
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6,281,000 |
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1,786,000 |
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Prepaid expenses and other current assets |
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2,856,000 |
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1,092,000 |
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TOTAL CURRENT ASSETS |
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350,119,000 |
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364,354,000 |
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Property, plant and equipment, net of accumulated depreciation |
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5,189,000 |
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6,518,000 |
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Goodwill |
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22,887,000 |
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18,476,000 |
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Intangible assets, net of accumulated amortization |
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1,863,000 |
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1,845,000 |
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TOTAL ASSETS |
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$ |
380,058,000 |
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$ |
391,193,000 |
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LIABILITIES AND EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
32,392,000 |
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$ |
37,691,000 |
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Accrued expenses |
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24,022,000 |
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15,976,000 |
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Billings in excess of costs and estimated earnings |
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114,587,000 |
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161,564,000 |
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Deferred income tax liabilities |
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656,000 |
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201,000 |
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TOTAL CURRENT LIABILITIES |
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171,657,000 |
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215,432,000 |
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Deferred income tax liabilities |
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821,000 |
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809,000 |
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TOTAL LIABILITIES |
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172,478,000 |
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216,241,000 |
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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 |
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— |
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— |
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Common stock, par value $0.15 per share — 30,000,000 shares authorized; 14,792,702 and 14,634,434 shares issued at July 31 and January 31, 2015, respectively; 14,789,469 and 14,631,201 shares outstanding at July 31 and January 31, 2015, respectively |
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2,219,000 |
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2,195,000 |
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Additional paid-in capital |
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115,621,000 |
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109,696,000 |
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Retained earnings |
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92,418,000 |
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73,614,000 |
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Treasury stock, at cost — 3,233 shares at July 31 and January 31, 2015 |
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(33,000 |
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(33,000 |
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TOTAL STOCKHOLDERS’ EQUITY |
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210,225,000 |
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185,472,000 |
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Noncontrolling interests |
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(2,645,000 |
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(10,520,000 |
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TOTAL EQUITY |
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207,580,000 |
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174,952,000 |
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TOTAL LIABILITIES AND EQUITY |
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$ |
380,058,000 |
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$ |
391,193,000 |
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Note 1 — The condensed consolidated balance sheet as of January 31, 2015 has been derived from audited consolidated financial statements.