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| 8-K - FORM 8-K - ARGAN INC | c09543e8vk.htm |
Exhibit 99.1
ARGAN, INC. REPORTS NINE MONTHS REVENUES OF $158.6 MILLION; EBITDA OF $12.1 MILLION
December 9, 2010 — ROCKVILLE, MD — Argan, Inc. (NYSE AMEX: AGX) today announced financial results
for the nine months and three months ended October 31, 2010.
For the nine months ended October 31, 2010, net revenues were $158.6 million compared to $189.2
million in the nine months ended October 31, 2009. Gemma Power Systems (Gemma) contributed $144.5
million, or 91% of net revenues in the first nine months of fiscal 2011, compared to $172.0
million, or 91% of net revenues in the first nine months of fiscal 2010. Combined net revenues from
Argan’s other wholly-owned subsidiaries decreased to $14.1 million, or 9% of net revenues for the
nine months ended October 31, 2010, compared to $17.2 million, or 9% of net revenues during the
same period last year.
The Company reported consolidated EBITDA (Earnings before interest, taxes, depreciation and
amortization) of $12.1 million for the nine months ended October 31, 2010. Gemma, for its segment,
recorded $17.9 million in EBITDA for the first nine months of fiscal 2011.
Net income for the first nine months of fiscal 2011 was $6.9 million, or $0.50 per diluted share
based on 13,714,000 diluted shares outstanding, compared to net income of $7.6 million, or $0.55
per diluted share based on 13,765,000 diluted shares outstanding for the first nine months in
fiscal 2010.
For the three months ended October 31, 2010, net revenues were $48.2 million compared to $60.7
million in the previous year. Gemma contributed $42.7 million, or 89% of net revenues for the
third quarter of fiscal 2011, compared to $54.2 million, or 89% of net revenues for the third
quarter of fiscal 2010. Combined net revenues from Argan’s other wholly-owned subsidiaries
decreased to $5.5 million, or 11% of net revenues for the three months ended October 31, 2010,
compared to $6.5 million, or 11% of net revenues during the same period last year.
Despite the decrease in net revenues for the quarter, gross profit percentage increased to 14.9%
compared to 11.3% in the quarter ended October 31, 2009. Gross profit in the third quarter of
fiscal 2011 was favorably impacted by projects which were in their final phases of construction.
The Company reported consolidated EBITDA (Earnings before interest, taxes, depreciation and
amortization) of $3.1 million for the three months ended October 31, 2010. Gemma, for its segment,
reported $5.1 million in EBITDA for the three months ended October 31, 2010.
Net income for the third quarter of fiscal 2011 was $1.5 million, or $0.11 per diluted share based
on 13,669,000 diluted shares outstanding, compared to net income of $2.0 million, or $0.14 per
diluted share based on 13,763,000 diluted shares outstanding in the third quarter of fiscal 2010.
Argan had consolidated cash and cash equivalents of $76.4 million and restricted cash of $1.6
million as of October 31, 2010. Consolidated working capital increased during the nine months ended
October 31, 2010 to approximately $71.8 million from approximately $63.4 million as of January 31,
2010.
Gemma’s backlog as of October 31, 2010 was $253.3 million.
Commenting on Argan’s results, Rainer Bosselmann, Chairman and Chief Executive Officer stated, “For
the first nine months of fiscal 2011, despite challenging economic times, Gemma continues to show
strong cash flow performance. We expect continued challenges in the coming year. Nevertheless,
Gemma continues to drive our success. As electric utilities and independent power producers look
to diversify their power generation options, we see continued interest in gas-fired plants, which
are more efficient and produce fewer emissions than coal fired plants.”
“In addition to the completion of a wind farm project during the most recent quarter, Gemma
Renewable Power was awarded, subsequent to quarter end, a contract to design and build a 200 MW
wind power facility which will be substantially completed during the next fiscal year. Gemma’s wide
range of construction experience and power industry expertise position the Company well as a market
leader for both traditional and alternative energy projects.”
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. and Vitarich Laboratories, 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
Consolidated Statements of Operations
Consolidated Statements of Operations
| Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Net revenues |
||||||||||||||||
Power industry services |
$ | 42,706,000 | $ | 54,164,000 | $ | 144,475,000 | $ | 172,003,000 | ||||||||
Nutritional products |
2,931,000 | 4,266,000 | 7,817,000 | 10,536,000 | ||||||||||||
Telecommunications infrastructure services |
2,523,000 | 2,237,000 | 6,308,000 | 6,693,000 | ||||||||||||
Net revenues |
48,160,000 | 60,667,000 | 158,600,000 | 189,232,000 | ||||||||||||
Cost of revenues |
||||||||||||||||
Power industry services |
35,999,000 | 48,378,000 | 122,568,000 | 153,465,000 | ||||||||||||
Nutritional products |
3,139,000 | 3,715,000 | 8,213,000 | 9,435,000 | ||||||||||||
Telecommunications infrastructure services |
1,850,000 | 1,727,000 | 5,281,000 | 5,102,000 | ||||||||||||
Cost of revenues |
40,988,000 | 53,820,000 | 136,062,000 | 168,002,000 | ||||||||||||
Gross profit |
7,172,000 | 6,847,000 | 22,538,000 | 21,230,000 | ||||||||||||
Selling, general and administrative expenses |
4,346,000 | 4,015,000 | 11,285,000 | 10,417,000 | ||||||||||||
Income from operations |
2,826,000 | 2,832,000 | 11,253,000 | 10,813,000 | ||||||||||||
Interest income (expense), net |
22,000 | (26,000 | ) | 29,000 | (66,000 | ) | ||||||||||
Equity in the earnings of the unconsolidated
subsidiary |
— | 325,000 | — | 1,343,000 | ||||||||||||
Income before income taxes |
2,848,000 | 3,131,000 | 11,282,000 | 12,090,000 | ||||||||||||
Income tax expense |
1,313,000 | 1,167,000 | 4,423,000 | 4,475,000 | ||||||||||||
Net income |
$ | 1,535,000 | $ | 1,964,000 | $ | 6,859,000 | $ | 7,615,000 | ||||||||
Earnings per share |
||||||||||||||||
Basic |
$ | 0.11 | $ | 0.14 | $ | 0.50 | $ | 0.56 | ||||||||
Diluted |
$ | 0.11 | $ | 0.14 | $ | 0.50 | $ | 0.55 | ||||||||
Weighted average number of shares outstanding |
||||||||||||||||
Basic |
13,596,000 | 13,579,000 | 13,591,000 | 13,506,000 | ||||||||||||
Diluted |
13,669,000 | 13,763,000 | 13,714,000 | 13,765,000 | ||||||||||||
ARGAN, INC. AND SUBSIDIARIES
Reconciliations to Consolidated EBITDA (Unaudited)
| Three Months Ended October 31, | ||||||||
| 2010 | 2009 | |||||||
Net income, as reported |
$ | 1,535,000 | $ | 1,964,000 | ||||
Interest expense |
7,000 | 41,000 | ||||||
Income tax expense |
1,313,000 | 1,167,000 | ||||||
Amortization of purchased intangible assets |
87,000 | 88,000 | ||||||
Depreciation and other amortization |
144,000 | 163,000 | ||||||
EBITDA |
$ | 3,086,000 | $ | 3,423,000 | ||||
Reconciliations to EBITDA (Unaudited)
Power Industry Services
Power Industry Services
| Three Months Ended October 31, | ||||||||
| 2010 | 2009 | |||||||
Income before income taxes, as reported |
$ | 4,915,000 | $ | 3,990,000 | ||||
Interest expense |
7,000 | 40,000 | ||||||
Amortization of purchased intangible assets |
88,000 | 87,000 | ||||||
Depreciation and other amortization |
64,000 | 48,000 | ||||||
EBITDA |
$ | 5,074,000 | $ | 4,165,000 | ||||
Reconciliations to Consolidated EBITDA (Unaudited)
| Nine Months Ended October 31, | ||||||||
| 2010 | 2009 | |||||||
Net income, as reported |
$ | 6,859,000 | $ | 7,615,000 | ||||
Interest expense |
32,000 | 155,000 | ||||||
Income tax expense |
4,423,000 | 4,475,000 | ||||||
Amortization of purchased intangible assets |
262,000 | 267,000 | ||||||
Depreciation and other amortization |
508,000 | 459,000 | ||||||
EBITDA |
$ | 12,084,000 | $ | 12,971,000 | ||||
Reconciliations to EBITDA (Unaudited)
Power Industry Services
Power Industry Services
| Nine Months Ended October 31, | ||||||||
| 2010 | 2009 | |||||||
Income before income taxes, as reported |
$ | 17,347,000 | $ | 15,444,000 | ||||
Interest expense |
32,000 | 144,000 | ||||||
Amortization of purchased intangible assets |
262,000 | 263,000 | ||||||
Depreciation and other amortization |
229,000 | 143,000 | ||||||
EBITDA |
$ | 17,870,000 | $ | 15,994,000 | ||||
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
Condensed Consolidated Balance Sheets
| October 31, | January 31, | |||||||
| 2010 | 2010 | |||||||
| (Unaudited) | (Note 1) | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 76,420,000 | $ | 66,009,000 | ||||
Restricted cash |
1,620,000 | 5,002,000 | ||||||
Accounts receivable, net of allowance for doubtful accounts |
22,684,000 | 4,979,000 | ||||||
Costs and estimated earnings in excess of billings |
4,902,000 | 12,931,000 | ||||||
Inventories, net of obsolescence reserve |
1,130,000 | 2,010,000 | ||||||
Deferred income tax assets |
2,223,000 | 1,603,000 | ||||||
Prepaid expenses and other current assets |
683,000 | 2,697,000 | ||||||
TOTAL CURRENT ASSETS |
109,662,000 | 95,231,000 | ||||||
Property and equipment, net of accumulated depreciation |
1,596,000 | 1,540,000 | ||||||
Goodwill |
18,476,000 | 18,476,000 | ||||||
Intangible assets, net of accumulated amortization |
2,996,000 | 3,258,000 | ||||||
Deferred income tax assets |
1,506,000 | 1,628,000 | ||||||
Other assets |
59,000 | 140,000 | ||||||
TOTAL ASSETS |
$ | 134,295,000 | $ | 120,273,000 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 12,672,000 | $ | 17,906,000 | ||||
Accrued expenses |
9,700,000 | 10,254,000 | ||||||
Billings in excess of costs and estimated earnings |
15,112,000 | 1,874,000 | ||||||
Current portion of long-term debt |
333,000 | 1,833,000 | ||||||
TOTAL CURRENT LIABILITIES |
37,817,000 | 31,867,000 | ||||||
Other liabilities |
33,000 | 38,000 | ||||||
TOTAL LIABILITIES |
37,850,000 | 31,905,000 | ||||||
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;
13,599,727 and 13,585,727 shares issued at 10/31/10 and 1/31/10, and
13,596,494 and 13,582,494 shares outstanding at 10/31/10 and 1/31/10, respectively |
2,040,000 | 2,038,000 | ||||||
Warrants outstanding |
601,000 | 613,000 | ||||||
Additional paid-in capital |
88,276,000 | 87,048,000 | ||||||
Accumulated deficit |
5,561,000 | (1,298,000 | ) | |||||
Treasury stock, at cost; 3,233 shares at 10/31/10 and 1/31/10 |
(33,000 | ) | (33,000 | ) | ||||
TOTAL STOCKHOLDERS’ EQUITY |
96,445,000 | 88,368,000 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 134,295,000 | $ | 120,273,000 | ||||
| Note 1 - | The condensed consolidated balance sheet as of January 31, 2010 has been derived from
audited financial statements. |