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| 8-K - FORM 8-K - ARGAN INC | c22497e8vk.htm |
Exhibit 99.1
ARGAN, INC. REPORTS SECOND QUARTER RESULTS
September 14, 2011 — ROCKVILLE, MD — Argan, Inc. (NYSE AMEX: AGX) today announced financial
results for the three and six months ended July 31, 2011.
For the quarter ended July 31, 2011, net revenues were $26.3 million compared to $52.3 million
during the quarter ended July 31, 2010. Gemma Power Systems (Gemma) contributed $24.4 million or
93% of net revenues from continuing operations in the second quarter of fiscal 2012, compared to
$50.4 million or 96% of net revenues from continuing operations in the second 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.
For the six months ended July 31, 2011, net revenues were $42.3 million compared to $105.6 million
during the six months ended July 31, 2010. Gemma contributed $38.4 million or 91% of net revenues
from continuing operations in the first six months of fiscal 2012 compared to $101.8 million or 96%
of net revenues from continuing operations in the first six months of fiscal 2011.
The Company reported EBITDA (Earnings before interest, taxes, depreciation and amortization) from
continuing operations of $2.5 million for the quarter ended July 31, 2011 compared to $6.5 million
for the same prior year period. Gemma, for its segment, recorded $3.1 million in EBITDA for the
second quarter of fiscal 2012 compared to $7.4 million in the second quarter of fiscal 2011. The
Company reported EBITDA from continuing operations of $3.9 million for the six months ended July
31, 2011 compared to $10.5 million for the same prior year period. Gemma, for its segment,
recorded $5.4 million in EBITDA for the first six months of fiscal 2012 compared to $12.8 million
for the first six months of fiscal 2011.
In the second quarter of fiscal 2012, the Company reported income from continuing operations before
income taxes of $2.3 million compared to income from continuing operations before income taxes of
$6.2 million in the second quarter of 2011.
For the first six months of fiscal 2012, the Company reported income from continuing operations
before income taxes of $3.5 million compared to income from continuing operations before income
taxes of $9.9 million for the first six months of fiscal 2011.
Net income for the quarter ended July 31, 2011 was $2.1 million or $0.15 per diluted share based on
13,717,000 diluted shares outstanding, compared to net income of $3.3 million or $0.24 per diluted
share based on 13,699,000 diluted shares outstanding for the quarter ended July 31, 2010.
Net income for the six months ended July 31, 2011 was $2.7 million or $0.20 per diluted share based
on 13,699,000 shares outstanding compared to net income of $5.3 million or $0.39 per diluted share
based on 13,736,000 diluted shares outstanding for the six months ended July 31, 2010.
In March 2011, Vitarich Laboratories, Inc. (VLI), a wholly owned subsidiary of Argan, sold
substantially all of its assets to NBTY, Florida, Inc. As a result, Argan is reporting VLI’s
results for the three and six months ended July 31, 2011 and 2010 as discontinued operations.
Current results include the net proceeds of the sale transaction.
Argan realized income on discontinued operations for the current quarter of $550,000 compared to a
loss of $656,000 on discontinued operations in the same quarter in the preceding year. Argan
realized income on discontinued operations for the first six months of fiscal 2012 of $411,000
compared to a loss of $988,000 on discontinued operations in the first six months of the preceding
year.
Argan had consolidated cash of $106.9 million as of July 31, 2011 and was debt free. Consolidated
working capital increased during the current quarter to approximately $77.1 million as of July 31,
2011.
Gemma’s backlog as of July 31, 2011 was $300 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 $253 million at July 31, 2011.
Commenting on Argan’s results, Rainer Bosselmann and Chief Executive Officer stated, “Our Gemma net
revenues continued to be soft during the first six months of our fiscal year due to completion of a
large multi-year project during the first quarter of our fiscal year. For the remainder of the
year, we should experience the positive impact on net revenues of our commencing the initial phases
of construction activity from an 800 MW peaking plant in Southern California.”
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 301.315.0027 |
Arthur Trudel 301.315.9467 |
ARGAN, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Consolidated Statements of Operations
(unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net revenues |
||||||||||||||||
Power industry services |
$ | 24,390,000 | $ | 50,373,000 | $ | 38,409,000 | $ | 101,769,000 | ||||||||
Telecommunications infrastructure services |
1,952,000 | 1,947,000 | 3,926,000 | 3,785,000 | ||||||||||||
Net revenues |
26,342,000 | 52,320,000 | 42,335,000 | 105,554,000 | ||||||||||||
Cost of revenues
Power industry services |
20,078,000 | 41,902,000 | 30,559,000 | 86,569,000 | ||||||||||||
Telecommunications infrastructure services |
1,617,000 | 1,638,000 | 3,231,000 | 3,431,000 | ||||||||||||
Cost of revenues |
21,695,000 | 43,540,000 | 33,790,000 | 90,000,000 | ||||||||||||
Gross profit |
4,647,000 | 8,780,000 | 8,545,000 | 15,554,000 | ||||||||||||
Selling, general and administrative expenses |
2,374,000 | 2,604,000 | 5,133,000 | 5,638,000 | ||||||||||||
Income from operations |
2,273,000 | 6,176,000 | 3,412,000 | 9,916,000 | ||||||||||||
Other income, net |
29,000 | 9,000 | 51,000 | 7,000 | ||||||||||||
Income from continuing operations before income
taxes |
2,302,000 | 6,185,000 | 3,463,000 | 9,923,000 | ||||||||||||
Income tax expense |
782,000 | 2,228,000 | 1,198,000 | 3,611,000 | ||||||||||||
Income from continuing operations |
1,520,000 | 3,957,000 | 2,265,000 | 6,312,000 | ||||||||||||
Discontinued operations |
||||||||||||||||
Income (loss) on discontinued operations
(including gains on disposal of
$1,076,000 and $1,228,000 for the
three and six months ended July 31, 2011) |
874,000 | (963,000 | ) | 809,000 | (1,489,000 | ) | ||||||||||
Income tax (expense) benefit |
(324,000 | ) | 307,000 | (398,000 | ) | 501,000 | ||||||||||
Income (loss) on discontinued operations |
550,000 | (656,000 | ) | 411,000 | (988,000 | ) | ||||||||||
Net income |
$ | 2,070,000 | $ | 3,301,000 | $ | 2,676,000 | $ | 5,324,000 | ||||||||
Earnings (loss) per share: |
||||||||||||||||
Continuing operations |
||||||||||||||||
Basic |
$ | 0.11 | $ | 0.29 | $ | 0.17 | $ | 0.46 | ||||||||
Diluted |
$ | 0.11 | $ | 0.29 | $ | 0.17 | $ | 0.46 | ||||||||
Discontinued operations |
||||||||||||||||
Basic |
$ | 0.04 | $ | (0.05 | ) | $ | 0.03 | $ | (0.07 | ) | ||||||
Diluted |
$ | 0.04 | $ | (0.05 | ) | $ | 0.03 | $ | (0.07 | ) | ||||||
Net income |
||||||||||||||||
Basic |
$ | 0.15 | $ | 0.24 | $ | 0.20 | $ | 0.39 | ||||||||
Diluted |
$ | 0.15 | $ | 0.24 | $ | 0.20 | $ | 0.39 | ||||||||
Weighted average number of shares outstanding |
||||||||||||||||
Basic |
13,603,000 | 13,593,000 | 13,602,000 | 13,589,000 | ||||||||||||
Diluted |
13,717,000 | 13,699,000 | 13,699,000 | 13,736,000 | ||||||||||||
ARGAN, INC. AND SUBSIDIARIES
Reconciliations to EBITDA
Continuing Operations (unaudited)
Reconciliations to EBITDA
Continuing Operations (unaudited)
| Three Months Ended July 31, | ||||||||
| 2011 | 2010 | |||||||
Income from continuing operations |
$ | 1,520,000 | $ | 3,957,000 | ||||
Interest expense |
— | 11,000 | ||||||
Income tax expense |
782,000 | 2,228,000 | ||||||
Amortization of purchased intangible assets |
87,000 | 88,000 | ||||||
Depreciation and other amortization |
114,000 | 196,000 | ||||||
EBITDA |
$ | 2,503,000 | $ | 6,480,000 | ||||
Reconciliations to EBITDA
Power Industry Services (unaudited)
Power Industry Services (unaudited)
| Three Months Ended July 31, | ||||||||
| 2011 | 2010 | |||||||
Income before income taxes |
$ | 3,004,000 | $ | 7,153,000 | ||||
Interest expense |
— | 11,000 | ||||||
Amortization of purchased intangible assets |
87,000 | 88,000 | ||||||
Depreciation and other amortization |
51,000 | 98,000 | ||||||
EBITDA |
$ | 3,142,000 | $ | 7,350,000 | ||||
Reconciliations to EBITDA
Continuing Operations (unaudited)
Continuing Operations (unaudited)
| Six Months Ended July 31, | ||||||||
| 2011 | 2010 | |||||||
Income from continuing operations |
$ | 2,265,000 | $ | 6,312,000 | ||||
Interest expense |
— | 25,000 | ||||||
Income tax expense |
1,198,000 | 3,611,000 | ||||||
Amortization of purchased intangible assets |
175,000 | 175,000 | ||||||
Depreciation and other amortization |
231,000 | 364,000 | ||||||
EBITDA |
$ | 3,869,000 | $ | 10,487,000 | ||||
Reconciliations to EBITDA
Power Industry Services (unaudited)
Power Industry Services (unaudited)
| Six Months Ended July 31, | ||||||||
| 2011 | 2010 | |||||||
Income before income taxes |
$ | 5,144,000 | $ | 12,432,000 | ||||
Interest expense |
— | 25,000 | ||||||
Amortization of purchased intangible assets |
175,000 | 175,000 | ||||||
Depreciation and other amortization |
100,000 | 164,000 | ||||||
EBITDA |
$ | 5,419,000 | $ | 12,796,000 | ||||
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
| July 31, | January 31 | |||||||
| 2011 | 2011 | |||||||
ASSETS |
(unaudited) | (Note 1) | ||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 106,890,000 | $ | 83,292,000 | ||||
Restricted cash |
— | 1,243,000 | ||||||
Accounts receivable, net of allowance for doubtful accounts |
11,367,000 | 13,099,000 | ||||||
Costs and estimated earnings in excess of billings |
560,000 | 1,443,000 | ||||||
Deferred income tax assets |
— | 91,000 | ||||||
Prepaid expenses and other current assets |
3,344,000 | 520,000 | ||||||
Assets held for sale |
695,000 | 6,354,000 | ||||||
TOTAL CURRENT ASSETS |
122,856,000 | 106,042,000 | ||||||
Property and equipment, net of accumulated depreciation |
1,306,000 | 1,478,000 | ||||||
Goodwill |
18,476,000 | 18,476,000 | ||||||
Intangible assets, net of accumulated amortization and impairment losses |
2,733,000 | 2,908,000 | ||||||
Deferred income tax assets |
923,000 | 999,000 | ||||||
Other assets |
27,000 | 14,000 | ||||||
Assets held for sale |
204,000 | 625,000 | ||||||
TOTAL ASSETS |
$ | 146,525,000 | $ | 130,542,000 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 14,700,000 | $ | 8,555,000 | ||||
Accrued expenses |
4,914,000 | 13,035,000 | ||||||
Billings in excess of costs and estimated earnings |
26,122,000 | 9,916,000 | ||||||
Liabilities related to assets held for sale |
44,000 | 1,362,000 | ||||||
TOTAL CURRENT LIABILITIES |
45,780,000 | 32,868,000 | ||||||
Other liabilities |
27,000 | 29,000 | ||||||
TOTAL LIABILITIES |
45,807,000 | 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;
13,610,227 and 13,602,227 shares issued at July 31 and January 31, 2011,
and 13,606,994 and 13,598,994 shares outstanding at July 31 and January
31, 2011 |
2,042,000 | 2,040,000 | ||||||
Warrants outstanding |
590,000 | 601,000 | ||||||
Additional paid-in capital |
88,967,000 | 88,561,000 | ||||||
Retained earnings |
9,152,000 | 6,476,000 | ||||||
Treasury stock, at cost; 3,233 shares at July 31 and January 31, 2011 |
(33,000 | ) | (33,000 | ) | ||||
TOTAL STOCKHOLDERS’ EQUITY |
100,718,000 | 97,645,000 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 146,525,000 | $ | 130,542,000 | ||||
Note 1 — The condensed consolidated balance sheet as of January 31, 2011 has been derived from
audited financial statements.