agan, inc. june 2010 june 2011 july 2012. 2 disclaimer all statements in this presentation that are...

AGAN, INC.

June 2010

June 2011

July 2012

2

Disclaimer

All statements in this presentation that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by words such as “believe,” “intend,” “expect,” “may,” “could,” “would,” “will,” “should,” “plan,” “project,” “contemplate,” “anticipate,” or similar statements. Because these statements reflect the current views of Argan, Inc. (“Argan” or the “Company”) concerning future events, these forward-looking statements are subject to risks and uncertainties. Argan’s actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, which are described under the caption “Risk Factors” in Argan’s most recent Forms 10-K and 10-Q filed with the Securities and Exchange Commission. Argan undertakes no obligation to update publicly any forward-looking statements contained in this presentation.

3

Investment Highlights

Demonstrated track record of performance

Substantial industry growth prospects

Strong backlog and bidding pipeline

Compelling financial characteristics

Experienced management team

4

Company Overview

Year founded – 1961

Headquarters – Rockville, MD

Ticker – NYSE AMEX:AGX

Market cap (7/12/12) – $198 million

FY 2012 Revenue – $142 million

FY 2012 EBITDA – $13 million

Q-1 (4/30/12) Revenue - $64 million

Q-1 (4/30/12) EBITDA - $7 million

Employees – 400

Backlog at 4/30/12 - $358 million

5

Senior Management Team

Rainer Bosselmann – Chairman and CEO

Arthur Trudel – Chief Financial Officer

Richard Deily – Corporate Controller

Management has an established track record of creating value for the shareholders of Jupiter National, Inc. (AMEX:JPI), Arguss Communications, Inc. (NYSE:ACX) and Argan, Inc. (NYSE MKT:AGX)

6

Senior Gemma Management Team

William F. Griffin, Jr. – Co-Founder & Chief Executive

Officer

Daniel L. Martin – President

Bill and Dan have more than 60 years combined experience in all facets of engineering, detailed design, procurement, construction management and other support services in the building of power plants and renewable energy facilities.

7

Business Overview

Gemma Power Systems, LLC (“GPS”) – provides engineering, procurement and construction (“EPC”) services to power generation and renewable energy markets

– GPS accounted for 91% of total revenues during the three months ended April 30, 2012

Southern Maryland Cable, Inc. (“SMC”) – provides telecommunications data infrastructure services

FY 2013 Q-1 Revenue by Subsidiary

91%

9%

8

Industry Growth Drivers

Substantial capacity additions will be required to meet rising electricity demand

The retirement of older and inefficient plants and coal-fired generation facilities will further drive investment in new gas fired generation capacity

Federal and state legislation, subsequent to the Fall 2012 elections, is needed to support energy produced by renewable sources. Unless tax credits are renewed or new credits are passed, the number of renewable energy projects will be substantially diminished in the short run.

9

Overview of GPS

Acquired by Argan – December 2006– Purchase price – $33.1 million– $12.9 million in cash– $20.2 million from issuance of 3.7 million

shares– Funded in part by $8.0 million secured four

year amortizing term loan, which has been paid-in-full.

Services – engineering, procurement and construction of natural gas fired and alternative power energy facilities

Customers – utilities and independent power producers

FY 2012 revenue: $133 million FY 2012 EBITDA: $16 million Q-1 FY 2013 Revenue - $58 million Q-1 FY 2013 EBITDA - $7 million Backlog at 4/30/12: $358 million

10

Revenue and EBITDA Growth

GPS’s revenue and EBITDA have remained strong since the acquisition by Argan in December 2006

Revenue for Years Ended January 31

* Represents 1st QTR FY2013 only

$48.6

$134.4

$180.4$202.3

$209.8

$174.9

$132.5

$57.7

$0.0

$100.0

$200.0

$300.0

($ in m

illions)

EBITDA for Years Ended January 31

* Represents 1st QTR FY2013 only

$3.8 $5.4

$16.8

$31.2

$17.2$22.2

$15.7

$7.3

$0.0

$10.0

$20.0

$30.0

$40.0

($ in

million

s)

11

GPS Track Record

More than 12,000 megawatts of installed power plant capacity

More than 850 megawatts of power facility development

More than 350 million gallons per year of installed renewable fuels capacity

40 projects completed on an EPC basis

51 major turnkey construction projects

Power experience includes combined cycle, combustion turbines, coal/wood fueled projects, wind plants, solar facilities and waste recovery facilities

Renewable fuels experience includes bio-diesel and ethanol facilities

12

National Footprint

GPS has the ability to provide EPC services to customers throughout the United States

Historical Project Locations

States in which GPS has completed projects.

13

Extensive Project Portfolio

Power facilities – simple cycle solution– CPV Sentinel Energy Project – A.L. Pierce Re-powering Project– Vandolah Power Project– DeSoto County Power Project– Indigo Energy Facility– Larkspur Energy Facility– Richmond County Phase I Power – Monroe Power Project – Richland Peaking Project – Rocky Road Unit 4 Project – Broad River Energy Center– Middletown, CT Project

Pollution solution– Brayton Point Power Station – La Rosita SCR Project

Biomass Power Facility - Woodville, Texas

Solar Facility - Canton, MA

Power facilities – combined cycle solution– Colusa Generating Station – Roseville Energy Park– Hines PB-2 Power Project– Rowan County Power Project– Effingham County Power Project– Richmond County Phase II Power Project

Process facilities – biodiesel– Renewable BioFuels Port Neches – Galena Park – Green Earth Fuels Houston LLC

Process facilities – ethanol– Carleton Ethanol Facility

Wind Facilities- LaSalle County, Illinois- Vantage, Washington- Henry County, Illinois- Ebensburg, Pennsylvania

14

Current Projects

CPV Sentinel Peaking Facility – Southern California Edison - design and construction of a natural gas fired power plant near Palm Springs, California

– 800 megawatt single cycle facility

– Contract value: $269 million

– Commenced project: Spring 2011

– Expected completion: Summer 2013

15

Current Projects

East Texas Electric Cooperative, Inc. (ETEC) – Woodville, Texas – engineer-procure-construct (EPC) contract to design and build a 49.9 MW biomass-fired power plant.

– Contract Value: $167 million

– Commenced Project: May 2012

– Estimated Completion: December 2014

16

U.S. Natural Gas Development

Argan is participating in Marcellus Shale Region development activities with the object of developing large-scale power plants. The approach is to take principal positions in the initial stages of development, secure the rights for an EPC contract for the large scale power plant to be built on the development site.

Argan then sells its equity interest in the site to the ultimate developer of the power plant.

17

Wind Power Focus

June 2008 - Formed business partnership with Invenergy Wind Management, LLC

– Leveraged GPS’ historical expertise in wind power

Argan was the primary contractor for Invenergy sponsored construction of wind farms in the United States and Canada

– During 3Q09 GPS substantially completed the expansion of a wind farm in LaSalle County, IL

December 2009 – Gemma acquired remaining ownership of the wind power venture

– Vantage Wind Energy awarded Gemma $33 million wind project in Washington State.

November 2010 – Gemma awarded $59 million construction contract for a 200 MW project in Henry County, Illinois

January 2012 – Gemma awarded $18 million construction contract for a 30 MW project near Ebensburg, Pennsylvania

18

Current Wind Projects

Henry County Illinois – design and build a wind farm

- Contract value: $62 million

- Commenced project: November 2010

- Completion: Summer 2012

Ebensburg, Pennsylvania – design and build a wind farm


- Commenced Project: January 2012

- Completion: December 2012

19

Recent Wind Projects

LaSalle County, Illinois – design and build the expansion of existing wind farm

– Contract value: $46 million

– Commenced project: August 2008

– Completion: October 2009

Vantage, Washington


- Commenced project: December 2009

- Completion: September 2010

20

Solar Power Focus

Canton, Massachusetts – design and build a 6 Mega Watt solar energy facility


- Commenced project: November 2011

- Completion: Summer 2012

21

Competitive Landscape

Larger Projects / Traditional Fuels

Smaller Projects / Alternative Fuels

22

Growth Strategy

Establish additional strategic alliances in the EPC space

Make additional strategic acquisitions that complement our unique market position

Partner with well capitalized investment entities to create larger service opportunities in renewable energy projects

Exploit long-term relationships throughout the industry to aggressively build backlog of traditional and renewable energy projects

Make strategic investments in power plant development projects as a means to create greater opportunities to build backlog of large scale EPC contracts.

23

Backlog

Argan has significant contract backlog Historical Contract Backlog as of January 31

April 30, 2012

* **

2007 2008 2009 2010 2011 2012 2013

24

Investment Summary

Demonstrated track record of performance

Substantial industry growth prospects

Strong backlog and bidding pipeline

Compelling financial characteristics

Experienced management team

25

FinancialsConsolidated Statements of OperationsNet revenues

Power industry services $ 57,728,000 $ 14,019,000 $ 132,519,000 $ 174,938,000

Telecommunications infrastructure services 5,962,000 1,974,000 9,331,000 7,654,000

Net revenues 63,690,000 15,993,000 141,850,000 182,592,000

Cost of revenues

Power industry services 48,984,000 10,481,000 111,193,000 146,976,000


Cost of revenues 53,589,000 12,095,000 118,748,000 153,469,000Gross profit 10,101,000 3,898,000 23,102,000 29,123,000Selling, general and administrative expenses 3,028,000 2,759,000 11,186,000 12,129,000

Income from operations 7,073,000 1,139,000 11,916,000 16,994,000Other (expense) income, net (9,000 ) 22,000 48,000 50,000

Income from continuing operations before income taxes 7,064,000 1,161,000 11,964,000 17,044,000Income tax expense 2,517,000 416,000 4,556,000 7,037,000

Income from continuing operations 4,547,000 745,000 7,408,000 10,007,000

Discontinued operationsLoss on discontinued operations (including gain on disposal of $152,000 in 2011) (405,000 ) (65,000 )Income tax benefit 120,000 (74,000 ) 1,280,000 1,324,000

Loss on discontinued operations (285,000 ) (139,000 ) 1,562,000 (2,233,000 )

Net income 4,262,000 606,000 8,970,000 7,774,000Less – Loss attributable to noncontrolling

interest (variable interest entities) 176,000 -- 302,000 --

Net income attributable to Argan, Inc.stockholders $ 4,438,000 $ 606,000 $ 9,272,000 $ 7,774,000

(unaudited)

Three Months Ended April 30, Year Ended January 31,2012 2011 2012 2011

Net revenues



Net revenues 63,690,000 15,993,000 141,850,000 182,592,000

Cost of revenues







Discontinued operationsLoss on discontinued operations (including gain on disposal of $152,000 in 2011) (405,000 ) (65,000 )Income tax benefit 120,000 (74,000 ) 1,280,000 1,324,000





(unaudited)


Net revenues



Net revenues 63,690,000 15,993,000 141,850,000 182,592,000

Cost of revenues







Discontinued operationsLoss on discontinued operations (including gain on disposal of $1,312,000 in January 2012 and$152,000 in April 2011 (405,000 ) (65,000 ) 282,000 (3,557,000 )Income tax benefit 120,000 (74,000 ) 1,280,000 1,324,000





(unaudited)


26

FinancialsConsolidated Statements of Operations, continued

Earnings (loss) per share attributable to Argan, Inc. stockholdersContinuing operationsBasic $ 0.35 $ 0.05 $ 0.57 $ 0.74Diluted $ 0.34 $ 0.05 $ 0.56 $ 0.73

Discontinued operationsBasic $ (0.02 ) $ (0.01 ) $ 0.11 $ (0.16 )Diluted $ (0.02 ) $ (0.01 ) $ 0.11 $ (0.16 )

Net incomeBasic $ 0.32 $ 0.04 $ 0.68 $ 0.57Diluted $ 0.32 $ 0.04 $ 0.67 $ 0.57

Weighted average number of shares outstandingBasic 13,663,000 13,601,000 13,612,000 13,593,000Diluted 13,950,000 13,679,000 13,792,000 13,709,000

27

FinancialsReconciliation to EBITDA, Continuing Operations

Income from continuing operations $ 4,547,000 $ 745,000Interest expense 12,000 --

Income tax expense 2,517,000 416,000

Amortization of purchased intangible assets 61,000 87,000

Depreciation and other amortization 117,000 117,000 EBITDA $ 7,254,000 $ 1,365,000

Three Months Ended April 30,

2012 2011

28

FinancialsReconciliation to EBITDA – Power Industry Services

Income before income taxes $ 7,177,000 $ 2,140,000

Interest expense 12,000 --

Amortization of purchased intangible assets 61,000 87,000

Depreciation and other amortization 58,000 49,000 EBITDA $ 7,308,000 $ 2,276,000

Three Months Ended April 30,

2012 2011

29

FinancialsConsolidated Balance Sheets – April 30, 2012 & January 31, 2012

ASSETS CURRENT ASSETS:

Cash and cash equivalents $ 175,309,000 $ 156,524,000

Accounts receivable, net of allowance for doubtful accounts 18,516,000 16,053,000

Costs and estimated earnings in excess of billings 2,466,000 2,781,000

Deferred income tax assets 784,000 691,000Prepaid expenses and other current assets 2,107,000 4,528,000

TOTAL CURRENT ASSETS 199,182,000 180,577,000

Property and equipment, net of accumulated depreciation($2,413,000 and $1,469,000 related to variable interest entities asof April 30, 2012 and January 31, 2012, respectively 3,775,000 2,761,000Goodwill 18,476,000 18,476,000

Intangible assets, net of accumulated amortization 2,513,000 2,574,000Deferred income tax and other assets 743,000 864,000

TOTAL ASSETS $ 224,689,000 $ 205,252,000

2012 2012

(Unaudited) (Note 1)

April 30, January 31,

30

FinancialsConsolidated Balance Sheets, continued – April , 2012 & January 31, 2012

LIABILITIES AND STOCKHOLDERS’ EQUITYCURRENT LIABILITIES:

Accounts payable $ 28,198,000 $ 29,524,000Accrued expenses 4,925,000 6,751,000Billings in excess of costs and estimated earnings 85,997,000 68,004,000

TOTAL CURRENT LIABILITIES 119,120,000 104,279,000Other liabilities 9,000 10,000

TOTAL LIABILITIES 119,129,000 104,289,000

STOCKHOLDERS’ EQUITYPreferred 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;13,680,098 and 13,661,098 shares issued at April 30 and January 31, 2012 respectively, 13,676,865 and 13,657,865 shares outstanding at April 30 and January 31, 2012, respectively 2,052,000 2,049,000Warrants outstanding 576,000 590,000Additional paid-in capital 90,060,000 89,714,000Retained earnings 13,381,000 8,955,000Treasury stock, at cost; 3,233 shares at April 30, 2012 and January 31, 2012 (33,000 ) (33,000 )

TOTAL STOCKHOLDERS’ EQUITY 106,037,000 101,264,000Noncontrolling interest (variable interest entities) (477,000 ) (301,000 )TOTAL EQUITY 105,560,000 100,963,000TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 224,689,000 $ 205,252,000

Note 1: The condensed consolidated balance sheet as of January 31, 2012 has been derived from audited consolidated financial statements.

agan, inc. june 2010 june 2011 july 2012. 2 disclaimer all statements in this presentation that are...

Documents