AGAN, INC.
June 2010
June 2011
December 2017
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 Form 10-K
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
Consistent strong operational performance
Large bidding pipeline
Compelling financial results
Strong balance sheet - substantial liquidity and no leverage
Solid long term annual rate of return 5yr/3yr = 28%/24%*
Annual regular dividend of $1.00 per share in 2017, with quarterly
dividend of $0.25 per share beginning in 2018
Experienced management team
*As of 12/5/2017
4
Company Overview
Headquarters – Rockville, MD
NYSE: AGX
Holding company for four 100% controlled subsidiaries
Market capitalization (12/5/17) – $0.9 billion
Strong balance sheet at 10/31/17
– No leverage
– Cash & short-term investments - $484 million
– Adjusted net liquidity - $291 million
Backlog (10/31/17) – $0.5 billion
*Attributable to the Stockholders of AGX
Quarter Ended Trailing Twelve
October 31, 2017 Months (TTM)
Revenues $ 233 $ 930
Net Income* 17 85
EBITDA* 30 137
(in millions)
5
Business Overview – Holding Company
Gemma Power Systems (“GPS”) provides
engineering, procurement and construction
(“EPC”) services to power generation and
renewable energy markets
The Roberts Company (“TRC”) is
principally an industrial steel fabricator and
field services provider serving both light and
heavy industrial organizations
Atlantic Projects Company (“APC”)
provides turbine, boiler, large rotating
equipment installation, commissioning and
outage services to the global power industry
SMC Infrastructure Solutions (“SMC”)
provides telecommunications data
infrastructure services
TTM Revenues by Subsidiary
88.5%
1.4%
2.6%
7.5%
6
Growing Revenues
$142
$279
$227
$383 $413
$675
$930
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2012 2013 2014 2015 2016 2017 2018**
$ M
illio
ns
*TTM through October 31, 2017
NOTE: Except where noted otherwise, the years presented throughout this presentation relate to Argan’s fiscal
year-end, which is January 31.
7
Growing Net Income*
$9.3
$23.3
$40.1
$30.4
$36.3
$70.3
$85.3
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
2012 2013 2014 2015 2016 2017 2018**
$ M
illio
ns
* Attributable to the Stockholders of AGX
** TTM through October 31, 2017
8
Growing EBITDA*
$12.9
$37.7
$66.3
$52.2
$62.9
$110.6
$136.8
0%
5%
10%
15%
20%
25%
30%
35%
$-
$20
$40
$60
$80
$100
$120
$140
$ M
illio
ns
EBITDA EBITDA Margins
EBITDA CAGR ≅ 48%
2012 2013 2014 2015 2016 2017 2018**
* Attributable to the Stockholders of AGX
** TTM through October 31, 2017
9
Growing Book Value
$5.87 $7.16
$9.50 $11.29 $11.58
$16.08
$19.67
$0.50
$1.10
$1.85
$2.55 $3.25
$4.25
$5.25
$-
$5.00
$10.00
$15.00
$20.00
$25.00
2012 2013 2014 2015 2016 2017 10/31/2017
Tangible Book Value* & Cumulative Dividends Per Share
Tangible Book Value Per Share Cumulative Dividends Per Share
*Tangible Book Value = Total Stockholders’ equity – Goodwill – Other Intangible assets
10
Superior Long Term Return
What $100 invested on 1/31/2012 would be now
$100
$134
$210 $230
$232
$579
$461
$100 $117
$142 $162 $161
$193
$224
$120 $139
$98 $91
$130 $132
$-
$100
$200
$300
$400
$500
$600
1/31/12 1/31/13 1/31/14 1/31/15 1/31/16 1/31/17 12/5/17
Argan, Inc. S&P 500 Dow Jones US Heavy Construction
11
Quarter Financial Highlights
(in thousands, except per share data)2017 2016 Change % Change
For the Quarter Ended:
Revenues 232,945$ 175,444$ 57,501$ 32.8%
Cost of revenues 195,227 138,866 56,361 40.6
Gross profit 37,718 36,578 1,140 3.1
Gross margins 16.2% 20.8% (4.6%) (22.1)
Net Income attributable to stockholders of the
Company 17,229$ 18,073$ (844)$ (4.7)
Diluted per share 1.09 1.16 (0.07) (6.0)
EBITDA attributable to stockholders of the
Company 30,275 27,024 3,251 12.0
Diluted per share 1.92 1.73 0.19 11.0
October 31, January 31,
2017 2017
As of:
Cash, cash equivalents and short-term investments 483,681$ 522,994$ (39,313)$ (7.5)%
Billings in excess of costs and estimated earnings 146,863 209,241 (62,378) (29.8)
Backlog 509,000 1,011,000 (502,000) (49.7)
October 31,
12
Quarterly Financial Drivers
Revenues of $233 million as GPS reached peak and post-peak construction
activities on four large, natural gas-fired power plants. However, revenues for each
of GPS’s four major projects will decline over the next several quarters as they
progress beyond peak construction in their project life-cycles.
Gross profit increased 3% to $38 million, primarily due to the increased revenues,
while gross margin percentage decreased from 20.8% to 16.2% compared to the
prior year quarter, which primarily reflected the achievement of final completion of
two natural gas-fired power plant projects in the prior year period, as well as the
effects of increased labor and subcontractor cost estimates in the current period for
certain projects.
Taxes increased due to a 1.5% increase in the estimated annual effective tax rate to
36.7% driven by a decrease in non-controlling interests as compared to the prior
year quarter and unfavorable adjustments.
Our balance sheet remains strong. As of October 31, 2017, our cash, cash
equivalents and short-term investments totaled $484 million and adjusted net
liquidity was $291 million; plus, we had no bank debt.
13
Overview of Gemma Power Systems
History – acquired by Argan in December 2006 for $33 million and
has generated cumulative EBITDA since acquisition of over $565
million, or ~17x cash on cash and an IRR in excess of 75%
Business – engineering, procurement and construction of natural
gas-fired and alternative power energy facilities
Employees – Over 20% of staff employees are veterans
Customers – Independent power producers and utilities
Safety Record – In seven of the past ten years, Gemma has incurred
no lost time injuries and Gemma’s OSHA recordable injury rate is
significantly below the national average
14
Industry Drivers
Gas Powered Electricity Growing - Over the last 10 years, the amount of electricity generated by
natural gas-fired power sources increased by 69%; the amount of electric power generated by coal-
fired plants declined by 38%.
Cheap Gas - Major advances in horizontal drilling and the practice of hydraulic fracturing have led
to the boom in natural gas supply. The abundant availability of cheap, less carbon-intense and
higher efficiency natural gas should continue to be a significant factor in power capacity additions.
Clean, Cheap and Reliable Electricity - Natural gas and renewable energy sources will still be the
top choices for new electricity generation plants in the future significantly due to low natural gas
prices in the United States. Announcements by electric utilities of the retirement of coal-fired and
nuclear power plants continue, citing the availability of cheap natural gas, environmental
regulations and the significant costs of refurbishment and relicensing.
Modest Power Demand - Demand for electrical power remains modest, as government forecast
project an annual increase in power generation of less than 1% per year for the next 25 years.
Transition Will Take Time - The retirement of older and inefficient plants and coal-fired generation
facilities (average age 39 years) and nuclear plants (36 years) will continue to drive future investment
in new gas-fired generation capacity. The amount of natural gas used for power generation during
2016 reached an all-time high; however, the transition from coal to natural gas will take time.
15
GPS Track Record
More than 14,500 megawatts of generating capacity installed and under contract on an EPC basis
40 major turnkey engineering, procurement and construction projects
Power experience includes combined and simple cycle, combustion turbines, coal/wood fueled projects, wind plants, solar facilities and waste recovery facilities
Project development support of 2,600 megawatts of natural gas-fired generating capacity
Project development support of 240 megawatts of biomass-fired power plants
Renewable fuels experience includes bio-diesel, biomass and environmental facilities
More than 435 megawatts of wind power facility development
More than 370 million gallons per year of installed renewable fuels capacity
16
National Footprint
GPS has the ability to provide EPC services to customers
throughout the United States
Project Locations
States in which GPS has current or completed projects.
17
Extensive Project Portfolio
Power facilities – combined cycle solution
– Panda Liberty Energy Project
– Panda Patriot Energy Project
– Caithness Moxie Freedom Generating Plant
– CPV Towantic Energy Center
– NTE Kings Mountain Energy Center
– NTE Middletown Energy Center
– 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
– Dighton Power Project
Pollution solutions
– Brayton Point Power Station
– La Rosita SCR Project
Biomass power facilities
- Woodville, Texas
Solar facilities
- Canton, MA
- Carver, MA
- Beaumont Solar
Power facilities – simple cycle solution
– Exelon West Medway II Facility
– 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
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
18
Significant Current Projects
(1) Full Notice to Proceed (“FNTP”) represents the formal notice provided by the project owner instructing us to commence
the activities covered by the corresponding EPC contract.
Project Location Size of FacilityDate FNTP
Received(1)
Scheduled
Completion
Caithness Moxie Freedom
Generating StationPennsylvania 1,040 MW Nov-15 2018
CPV Towantic Energy Center Connecticut 785 MW Mar-16 2018
NTE Middletown Energy Center Ohio 475 MW Oct-15 2018
NTE Kings Mountain Energy Center North Carolina 475 MW Mar-16 2018
Exelon West Medway II Facility Massachusetts 200 MW Apr-17 2018
19
Development Activities
Purpose – Gemma opportunistically participates in power plant
project development and related financing activities to 1) solidify
a proprietary pipeline for future EPC activities, 2) secure
exclusive rights to EPC contracts, and 3) generate profits through
interest and success fees.
Marcellus Shale Region – Gemma has partnered with Moxie
Energy to take principal positions in the initial stages of
development for three projects in the Marcellus Shale Region.
All three developmental efforts have successfully been executed
resulting in Gemma securing the rights for EPC contracts for
large scale power plants. Project development efforts were
successfully completed for the Panda Liberty Project and the
Panda Patriot Project in 2013 and most recently, the Caithness
Moxie Freedom Project in 2015. Success fees related to these
three projects totaled ~$31 million.
20
Renewable Energy
Wind & Solar – Gemma Renewable Power (GRP) has installed
wind and solar projects throughout North America. GRP has the
unique capability to self-perform the construction work associated
with our projects. This approach ensures direct control of labor,
safety, quality and schedule for each project. GRP provides state-of-
the-art technology coupled with advanced project management tools
to ensure every job is completed on-time, within budget, and to the
highest standards of excellence.
– GRP has constructed more than 435MW of wind power
facility capacity.
– GRP has successfully completed the design coordination,
procurement and installation of ground mounted photovoltaic
panels supporting 12MW of solar power facilities.
Alternative Fuels – Gemma Power Systems (GPS) has accepted
assignments to design and build facilities to produce alternative
fuels. To date, GPS has performed the process design, detail
engineering, procurement and construction of more than 370 million
gallons per year of installed alternative fuels capacity.
21
Competitive Landscape
Larger Projects / Natural Gas Smaller Projects / AlternativeFuels
22
Growth Strategy
Capitalize on 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
Make additional strategic acquisitions that complement our
unique market position
23
Investment Summary
Consistent strong operational performance
Large bidding pipeline
Compelling financial results
Strong balance sheet - substantial liquidity and no leverage
Solid long term annual rate of return 5yr/3yr = 28%/24%*
Annual regular dividend of $1.00 per share in 2017, with quarterly
dividend of $0.25 per share beginning in 2018
Experienced management team
*As of 12/5/2017
24
FinancialsConsolidated Income Statements - Quarter
(in thousands except per share amounts)
Revenues $ 232,945 $ 259,803 $ 230,489 $ 206,760 $ 175,444
Cost of revenues 195,227 208,396 190,393 168,941 138,866
Gross Profit 37,718 51,407 40,096 37,819 36,578
Gross Profit % 16.2% 19.8% 17.4% 18.3% 20.8%
Selling, general and administrative expenses 10,119 10,799 9,489 8,049 9,848
Income from operations 27,599 40,608 30,607 29,770 26,730
Other income, net 1,692 1,311 1,218 995 690
Income before income taxes 29,291 41,919 31,825 30,765 27,420
Income tax expense 12,062 14,601 11,076 9,984 8,194
Net income 17,229 27,318 20,749 20,781 19,226
Net income attributable to noncontrolling interests - 179 124 430 1,153
Net income attributable to the stockholders of AGX $ 17,229 $ 27,139 $ 20,625 $ 20,351 $ 18,073
EPS attributable to the stockholders of Argan, Inc.
Basic $ 1.11 $ 1.75 $ 1.33 $ 1.33 $ 1.19
Diluted $ 1.09 $ 1.72 $ 1.31 $ 1.29 $ 1.16
Weighted average number of shares outstanding
Basic 15,545 15,514 15,467
Diluted 15,793 15,787 15,771
Cash dividends per share $ 1.00 $ - $ - $ - $ 1.00
15,738
31-Jan-17 31-Oct-16
15,137
15,601
31-Oct-17
Three Months Ended
31-Jul-17
15,340
30-Apr-17
25
FinancialsReconciliations to EBITDA – Consolidated
(dollars in thousands)
31-Oct-17 31-Jul-17 30-Apr-17 31-Jan-17 31-Oct-16
Net income 17,229$ 27,318$ 20,749$ 20,781$ 19,226$
Less EBITDA attributable to noncontrolling interests - (179) (124) (430) (1,153)
Income tax expense 12,062 14,601 11,076 9,984 8,194
Depreciation 726 638 572 600 525
Amortization of purchased intangible assets 258 334 183 410 232
EBITDA attributable to the stockholders of Argan, Inc. 30,275$ 42,712$ 32,456$ 31,345$ 27,024$
EBITDA per diluted share 1.92$ 2.71$ 2.06$ 1.99$ 1.73$
Three Months Ended
26
FinancialsConsolidated Balance Sheets - Assets
(dollars in thousands)
ASSETS October 31, 2017 January 31, 2017
CURRENT ASSETS
Cash and cash equivalents $ 149,708 $ 167,198
Short-term investments 333,973 355,796
Accounts receivable, net 83,681 54,836
Costs and estimated earnings in excess of billings 10,197 3,192
Prepaid expenses and other current assets 6,236 6,927
TOTAL CURRENT ASSETS 583,795 587,949
Property, plant and equipment, net 15,257 13,112
Goodwill 34,913 34,913
Other Intangible assets, net 7,405 8,181
Deferred taxes 383 241
Other assets 548 92
TOTAL ASSETS $ 642,301 $ 644,488
27
FinancialsConsolidated Balance Sheets – Liabilities and Equity
(dollars in thousands)
LIABILITIES AND EQUITY October 31, 2017 January 31, 2017
CURRENT LIABILITIES
Accounts payable $ 114,448 $ 101,944
Accrued expenses 31,005 39,539
Billings in excess of costs and estimated earnings 146,863 209,241
TOTAL CURRENT LIABILITIES 292,316 350,724
Deferred taxes 1,788 1,195
TOTAL LIABILITIES 294,104 351,919
STOCKHOLDERS’ EQUITY
Common stock 2,333 2,319
Additional paid-in capital 141,766 135,426
Retained earnings 204,095 154,649
Accumulated other comprehensive loss (8) (762)
TOTAL STOCKHOLDERS’ EQUITY 348,186 291,632
Noncontrolling interests 11 937
TOTAL EQUITY 348,197 292,569
TOTAL LIABILITIES AND EQUITY $ 642,301 $ 644,488
28
FinancialsAdjusted Net Liquidity
(dollars in thousands) 10/31/2017 7/31/2017 4/30/2017 1/31/2017 10/31/2016
Cash and cash equivalents 149,708$ 153,225$ 167,347$ 167,198$ 170,775$
Short-term investments 333,973 403,925 396,092 355,796 275,545
Less: Billings in excess of costs and
estimated earnings (146,863) (190,581) (234,344) (209,241) (160,985)
Less: JV adjustment (27) (27) (2,023) (1,770) (5,510)
336,791 366,542 327,072 311,983 279,825
Less: Current working capital adjustments (45,339) (78,640) (70,103) (76,528) (75,898)
Adjusted Net Liquidity 291,452$ 287,902$ 256,969$ 235,455$ 203,927$
Quarterly Liquidity Growth 3,550$ 30,933$ 21,514$ 31,528$
Quarterly Liquidity Growth % 1.2% 12.0% 9.1% 15.5%
29
Construction Services Peer Group
Source: Stifel - Engineering, Construction and Infrastructure Newsletter (11/28/2017)
Stock 12 Month LTM LTM Return
Price Total Market Debt/ LTM Gross EBITDA on Avg.
Ticker 11/2 4 /2 0 17 Return Cap Equity Revenue Margin Margin Equity
AGX $59.80 % -6.4 % $929.5 0.0 X $872.5 19.0 % 15.0 % 28.6%
FLR $46.89 -12.0 $6,558.8 0.5 $19,308.5 2.4 2.9 3.4
GVA $64.37 6.1 $2,565.2 0.3 $2,855.1 10.3 4.9 5.7
JEC $63.29 3.7 $7,624.3 0.1 $10,009.5 17.3 6.4 5.2
KBR KBR, Inc. $18.26 8.8 $2,557.9 0.6 $4,463.0 2.0 0.2 NEG
MDR $7.32 12.8 $2,078.9 0.3 $2,508.4 15.6 12.1 4.5
ORN $7.85 -21.7 $221.4 0.4 $584.5 11.0 5.3 NEG
TPC $23.30 -13.5 $1,159.9 0.5 $4,944.2 9.1 5.1 6.7
PRIM $26.74 14.8 $1,375.7 0.5 $2,302.4 11.2 7.1 9.5
TSX-SNC $44.21 1.1 $7,757.2 0.2 $6,281.6 14.3 6.6 6.9
STRL $17.35 119.3 $469.3 0.7 $773.8 7.7 3.0 NEG
Mean 10.3% 0.4x 10.9% 6.2% 6.0%
Sterl ing Construction Co. Inc.
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30
Corporate Data
Websites
NYSE Listing
Common: AGX
Investor Relations
Investor Relations
301-315-0027
Argan, Inc.
www.arganinc.com
Gemma Power Systems
www.gemmapower.com
The Roberts Company
www.robertscompany.com
Atlantic Projects Company
www.atlanticprojects.com
SMC Infrastructure Solutions
www.smcinc.biz
Corporate Headquarters
Argan, Inc.
One Church Street, Suite 201
Rockville, Maryland 20850
301-315-0027
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