Argan, Inc. Reports First Quarter Results

Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today
announced financial results for its first quarter ended April 30, 2017.
For additional information, please read the Company’s Quarterly Report
on Form 10-Q, which the Company intends to file today with the U.S.
Securities and Exchange Commission (the “SEC”). The Quarterly Report can
be retrieved from the SEC’s website at www.sec.gov
or from the Company's website at www.arganinc.com.

Summary Information: (dollars in thousands, except per share data
(unaudited)):

		April 30,
			2017				2016			Change				% Change
For the Quarter Ended:
Revenues		$	230,489			$	130,348			$	100,141			77	%
Gross profit			40,096				28,302				11,794			42
Gross margins			17.4	%			21.7	%			(4.3	)%		(20	)
Net income attributable to the stockholders of the Company		$	20,625			$	12,230			$	8,395			69
Diluted per share			1.31				0.81				0.50			62
EBITDA attributable to the stockholders of the Company			32,456				20,157				12,299			61
Diluted per share			2.06				1.34				0.72			54
As of:		April 30, 2017				January 31, 2017				Change				% Change
Cash, cash equivalents and short-term investments		$	563,439			$	522,994			$	40,445			8	%
Billings in excess of costs and estimated earnings			234,344				209,241				25,103			12
Backlog			867,000				1,011,000				(144,000	)		(14	)

First Quarter Results:

Revenues increased to a quarterly record of $230 million, up 77%
compared to the prior year quarter, primarily due to Gemma Power Systems
(GPS) having ramped up construction activities on four large, natural
gas-fired power plants. The power industry services segment continues to
drive our financial results and represents 91% of consolidated revenues
for the quarter ended April 30, 2017. Gross profit increased 42% to $40
million, primarily due to the increased revenues, while gross margin
percentage decreased from 21.7% to 17.4% compared to the prior year
quarter, which primarily reflected changes in the mix and progress of
various power plant projects and the differences in their respective
gross margins.

Selling, general and administrative expenses increased $2.4 million to
$9.5 million, primarily due to increased incentive and stock option
compensation and human capital costs reflective of larger operations,
but decreased as a percentage of revenue to 4.1% from 5.4% in the prior
year quarter. Other income from short-term investments increased $1.2
million from the prior year quarter due to higher yields and investment
balances. Net income attributable to non-controlling interests decreased
93%, or $1.8 million, as activity on two large power plant projects was
completed by joint ventures. These factors and a relatively consistent
effective income tax rate resulted in first quarter net income
attributable to our stockholders increasing 69% to $20.6 million, or
$1.31 per diluted share, compared to $12.2 million, or $0.81 per diluted
share, for the prior year quarter. EBITDA attributable to the
stockholders for the quarter ended April 30, 2017 also increased 61% to
$32.5 million, or $2.06 per diluted share, from $20.2 million, or $1.34
per diluted share, for the prior year quarter.

The Company’s balance sheet continues to strengthen. As of April 30,
2017, cash, cash equivalents and short-term investments totaled $563
million and net liquidity was $259 million. The Company has no bank
debt. Although there were no major additions to backlog during the three
months ended April 30, 2017, the contract backlog remains healthy with
an aggregate value of approximately $867 million as of April 30, 2017.
In addition, subsequent to the end of the quarter, Atlantic Projects
Company won a contract for the erection of a 299 MW biomass boiler in
Teesside, England.

Commenting on Argan’s results, Rainer Bosselmann, Chairman and Chief
Executive Officer, stated, “This represents the eighth consecutive
quarter of increasing revenues, fourth consecutive quarter with over $18
million in net income for our shareholders and fifth consecutive quarter
of increasing net liquidity which stands at over $259 million today. As
I have noted before, this consistent growth and the Company’s record
success during these periods could not have been achieved without the
operational excellence of our employees. We are committed to maintaining
both the Company and employee successes; we are hard at work executing
on our current projects; and we are focused on adding new projects to
the 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 natural gas-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 SMC Infrastructure Solutions, which provides
telecommunications infrastructure services, and The Roberts Company,
which is a fully integrated fabrication, construction and industrial
plant services company.

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 continued strong performance of our power industry
services business; (2) the Company’s ability to successfully and
profitably integrate acquisitions; and (3) the Company’s ability to
achieve its business strategy while effectively managing costs and
expenses. 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 SEC. 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.

ARGAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
		Three Months Ended April 30,
			2017				2016
REVENUES		$	230,489			$	130,348
Cost of revenues			190,393				102,046
GROSS PROFIT			40,096				28,302
Selling, general and administrative expenses			9,489				7,047
INCOME FROM OPERATIONS			30,607				21,255
Other income, net			1,218				37
INCOME BEFORE INCOME TAXES			31,825				21,292
Income tax expense			11,076				7,172
NET INCOME			20,749				14,120
Net income attributable to noncontrolling interests			124				1,890
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.		$	20,625			$	12,230
EARNINGS PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.
Basic		$	1.33			$	0.82
Diluted		$	1.31			$	0.81
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic			15,467				14,842
Diluted			15,771				15,055

ARGAN, INC. AND SUBSIDIARIES
Reconciliations to EBITDA
(In thousands)(Unaudited)
		Three Months Ended April 30,
		2017				2016
Net income		$	20,749			$	14,120
Less EBITDA attributable to noncontrolling interests			(124	)			(1,890	)
Income tax expense			11,076				7,172
Depreciation			572				434
Amortization of purchased intangible assets			183				321
EBITDA attributable to the stockholders of the Company		$	32,456			$	20,157

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.
Consistent with the requirements of SEC Regulation G, reconciliations of
the Company’s non-GAAP financial results from net income 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
		April 30, 2017				January 31, 2017
ASSETS		(Unaudited)
CURRENT ASSETS
Cash and cash equivalents		$	167,347			$	167,198
Short-term investments			396,092				355,796
Accounts receivable, net			71,331				54,836
Costs and estimated earnings in excess of billings			4,357				3,192
Prepaid expenses and other current assets			4,544				6,927
TOTAL CURRENT ASSETS			643,671				587,949
Property, plant and equipment, net			14,434				13,112
Goodwill			34,913				34,913
Intangible assets, net			7,998				8,181
Deferred taxes			8,634				8,725
Other assets			276				92
TOTAL ASSETS		$	709,926			$	652,972
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable		$	118,077			$	101,944
Accrued expenses			32,258				39,539
Billings in excess of costs and estimated earnings			234,344				209,241
TOTAL CURRENT LIABILITIES			384,679				350,724
Deferred taxes			9,846				9,679
TOTAL LIABILITIES			394,525				360,403
COMMITMENTS AND CONTINGENCIES
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; 15,488,952 and 15,461,452 shares issued at April 30 and January 31, 2017, respectively; 15,485,719 and 15,458,219 shares outstanding at April 30 and January 31, 2017, respectively			2,323				2,319
Additional paid-in capital			137,401				135,426
Retained earnings			175,274				154,649
Accumulated other comprehensive losses			(658	)			(762	)
TOTAL STOCKHOLDERS’ EQUITY			314,340				291,632
Noncontrolling interests			1,061				937
TOTAL EQUITY			315,401				292,569
TOTAL LIABILITIES AND EQUITY		$	709,926			$	652,972

View source version on businesswire.com: http://www.businesswire.com/news/home/20170607006308/en/

Source: Business Wire
(June 7, 2017 - 4:15 PM EDT)

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