AGAN, INC. June June 2011

Transcription

1 AGAN, INC. June 2010 June 2011 September 2018

2 Safe Harbor Statement All statements in this presentation that are not historical are forwardlooking statements within the meaning of Section 21E of the Securities Exchange Act of 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 forwardlooking 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. 2

3 Company Overview NYSE: AGX Holding company for four 100% controlled subsidiaries Market capitalization (8/31/18) $0.6 billion Solid long term annual rate of return 5yr = 20%* Quarterly dividend $0.25 per share 3 Quarter Ended July 31, 2018 Revenues $ 137 $ 681 Net Income** EBITDA** (in millions) Strong balance sheet at 7/31/18 No leverage Cash & short-term investments - $362 million Net liquidity - $313 million Project backlog (7/31/18) $0.4 billion * As of 8/31/2018 ** Attributable to the Stockholders of AGX Trailing Twelve Months (TTM)

4 Business Overview Holding Company 4 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 11.2% 9.7% 1.8% 77.3%

5 $ Millions Revenues* $900 $893 $800 $700 $600 $675 $681 $500 $400 $300 $200 $279 $227 $383 $413 $100 $142 $ ** 5 With several major projects projected to be completed in the year ending January 31, 2019, we expect our revenues and several other financial metrics to decrease in Fiscal 2019 compared to Fiscal ** TTM through July 31, 2018 NOTE: Except where noted otherwise, the years presented throughout this presentation relate to Argan s fiscal year-end, which is January 31.

6 $ Millions Net Income* $80 $70 $70.3 $72.0 $60 $50 $40 $30 $40.1 $30.4 $36.3 $46.1 $20 $23.3 $10 $- $ ** 6 * Attributable to the Stockholders of AGX ** TTM through July 31, 2018

7 $ Millions EBITDA* $120 $100 $110.6 $116.1 $80 $73.5 $60 $66.3 $62.9 $40 $52.2 $37.7 $20 $12.9 $ ** 7 * Attributable to the Stockholders of AGX ** TTM through July 31, 2018

8 Book Value $30.00 Tangible Book Value* & Cumulative Dividends Per Share $25.00 $5.25 $5.75 $20.00 $4.25 $15.00 $2.55 $3.25 $10.00 $1.85 $20.34 $21.25 $5.00 $0.50 $5.87 $1.10 $7.16 $9.50 $11.29 $11.58 $16.08 $ Q Tangible Book Value Cumulative Dividends *Tangible Book Value = Total Stockholders Equity Goodwill Other Intangible Assets

9 Financial Results (in thousands, except per share data) July 31, For the Quarter Ended: Change % Change Revenues $ 136,670 $ 259,803 $ (123,133) (47.4)% Cost of revenues 105, ,396 (102,434) (49.2) Gross profit 30,708 51,407 (20,699) (40.3) Gross margins 22.5% 19.8% 2.7% 13.6 Net Income attributable to stockholders of the Company $ 16,972 $ 27,139 $ (10,167) (37.5) Diluted per share (0.63) (36.6) EBITDA attributable to stockholders of the Company 24,445 42,712 (18,267) (42.8) Diluted per share (1.15) (42.4) July 31, January 31, As of: Change % Change Cash, cash equivalents and short-term investments $ 361,742 $ 434,015 $ (72,273) (16.7)% Net Liquidity (1) 313, ,817 11, Project backlog 429, ,000 50, (1) We define Net Liquidity, or working capital, as our total current assets less our total current liabilities.

10 Financial Drivers As successful execution by GPS on four large gas-fired power plant projects are reaching the final stages, revenues saw a decline during the current quarter. Construction activities for these projects have matured from peak levels to the commissioning and start up phases. The decline in revenues at GPS was partially offset by record revenues at APC and TRC during the second quarter. Gross profits decreased reflecting primarily the reduction in consolidated revenues between periods. Our gross margin percentage increased quarter over quarter, reflecting execution on the commissioning and startup phases of the four projects above which have all recently reached substantial completion. The Tax Cuts and Jobs Act had a favorable impact on our tax rate, resulting in an estimated annual effective income tax rate of 27.5% for the current quarter, compared to 36.2% for the second quarter last year. Our balance sheet remains strong. As of July 31, 2018, our cash, cash equivalents and short-term investments totaled $362 million and adjusted net liquidity was $313 million; plus, we had no bank debt. 10 Our project backlog was $429 million as of July 31, 2018, up from $379 million at the end of the prior year, mostly due to an EPC contract entered into by GPS during the first quarter. During the second quarter, we announced that GPS has also entered into an EPC contract to construct a 1,600 MW natural gas-fired power plant, in Virginia. We do not intend to include the value of this EPC contract in project backlog until the project progresses closer to its anticipated start date in early We remain encouraged about our project pipeline as GPS has been selected by the owners of several other projects to negotiate EPC service contracts with a collective potential project value in excess of $1.5 billion and projected start dates ranging from later in 2018 through However, this transition will result in a decrease to our revenues in the coming quarters until work on new projects is secured and ramps up in accordance with the normal construction cycle of large EPC projects.

11 Overview of Gemma Power Systems 11 History acquired by Argan in December 2006 for $33 million and has generated cumulative EBITDA since acquisition of over $607 million, or ~18x cash on cash and an IRR in excess of 75% Business engineering, procurement and construction of natural gas-fired and alternative power energy facilities throughout the United States Track Record Installed and under-contract capacity for nearly 15,000 MW of mostly domestic power-generating capacity including 65 gas turbines comprising 44 projects 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 Employees Over 20% of staff employees are veterans Customers Independent power producers and utilities

12 Significant GPS Current Projects Project (1) Location Size of Facility Date FNTP Scheduled Received (2) Completion Caithness Moxie Freedom Generating Station Pennsylvania 1,040 MW Nov (3) CPV Towantic Energy Center Connecticut 785 MW Mar (3) NTE Middletown Energy Center Ohio 475 MW Oct (3) NTE Kings Mountain Energy Center North Carolina 475 MW Mar (3) Exelon West Medway II Facility Massachusetts 200 MW Apr (1) Although not GPS projects, our APC subsidiary has two significant projects in the United Kingdom: TeesREP Biomass Power Station is a 299 MW facility and InterGen Spalding OCGT Expansion Project is a 298 MW facility, both scheduled to be completed in In addition, GPS has signed two EPC contracts for projects which have not yet started. (2) 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. (3) Substantial completion achieved. 12

13 Extensive Project Portfolio 13 Power facilities combined cycle solution Caithness Moxie Freedom Generating Plant CPV Towantic Energy Center NTE Kings Mountain Energy Center NTE Middletown Energy Center Panda Liberty Energy Project Panda Patriot Energy Project 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

14 Construction Services Peer Group Stock 12 Month LTM LTM Return Price Total Market Debt/ LTM Gross EBITDA on Avg. Ticker Company Name 8 /3 1/ Return Cap Equity Revenue Margin Margin Equity AGX Argan, Inc. $39.80 % % $ X $ % 10.8 % 16.7% FLR Fluor Corporation $ $8, $19, GVA Granite Construction Incorporated $ $2, $3, JEC Jacobs Engineering Group Inc. $ $10, $13, KBR KBR, Inc. $ $2, $4, MDR McDermott International Inc. $ $3, $4, ORN Orion Group Holdings, Inc. $ $ $ TPC Tutor Perini Corporation $ $1, $4, PRIM Primoris Services Corporation $ $1, $2, TSX-SNC SNC-Lavalin Group Inc. $ $7, $7, STRL Sterling Construction Co. Inc. $ $ $1, Mean 9.2% 0.5x 12.5% 7.2% 11.1% 14 Source: Stifel - Engineering, Construction and Infrastructure Newsletter (9/4/2018)

15 Investment Summary Consistent strong operational performance Excellent safety record Large bidding pipeline Strong balance sheet - substantial liquidity and no leverage Solid long term annual rate of return 5yr = 20%* Quarterly dividend of $0.25 per share in 2018, for an annual total of $1.00 per share Experienced management team 15 *As of 8/31/2018

16 Corporate Data Investor Relations Investor Relations Corporate Headquarters Argan, Inc. One Church Street, Suite 201 Rockville, Maryland NYSE Listing Common: AGX Websites Argan, Inc. Gemma Power Systems The Roberts Company Atlantic Projects Company SMC Infrastructure Solutions 16

17 Appendix Consolidated Income Statements - Quarter (in thousands except per share amounts) 31-Jul Apr-18 Three Months Ended 31-Jan Oct Jul-17 Revenues $ 136,670 $ 141,366 $ 169,578 $ 232,945 $ 259,803 Cost of revenues 105, , , , ,396 Gross Profit 30,708 15,452 20,104 37,718 51,407 Gross Profit % 22.5% 10.9% 11.9% 16.2% 19.8% Impairment loss 584 Selling, general and administrative expenses 10,378 9,637 11,356 10,119 10,799 Income from operations 20,330 5,815 8,164 27,599 40,608 Other income, net 2, ,427 1,692 1,311 Income before income taxes 23,258 6,579 9,591 29,291 41,919 Income tax expense 6,314 1,737 2,541 12,062 14,601 Net income 16,944 4,842 7,050 17,229 27,318 Net income attributable to noncontrolling interests (28) Net income attributable to the stockholders of AGX $ 16,972 $ 4,837 $ 7,018 $ 17,229 $ 27,139 EPS attributable to the stockholders of Argan, Inc. Basic $ 1.09 $ 0.31 $ 0.45 $ 1.11 $ 1.75 Diluted $ 1.08 $ 0.31 $ 0.45 $ 1.09 $ 1.72 Weighted average number of shares outstanding Basic 15,568 15,568 15,559 15,545 15,514 Diluted 15,673 15,656 15,743 15,793 15, Cash dividends per share $ 0.25 $ 0.25 $ - $ 1.00 $ -

18 Appendix Reconciliations to EBITDA Consolidated Three Months Ended 31-Jul Apr Jan Oct Jul-17 Net income $ 16,944 $ 4,842 $ 7,050 $ 17,229 $ 27,318 Less EBITDA attributable to noncontrolling interests 28 (5) (32) (179) Interest expense Income tax expense 6,314 1,737 2,541 12,062 14,601 Depreciation Amortization of purchased intangible assets EBITDA attributable to the stockholders of Argan, Inc. $ 24,445 $ 8,147 $ 10,658 $ 30,275 $ 42,712 EBITDA per diluted share $ 1.56 $ 0.52 $ 0.68 $ 1.92 $

19 Appendix Consolidated Balance Sheets - Assets (dollars in thousands) ASSETS July 31, 2018 January 31, 2018 CURRENT ASSETS Cash and cash equivalents $ 165,766 $ 122,107 Short-term investments 195, ,908 Accounts receivable, net 46,137 24,756 Contract assets 34,792 13,847 Prepaid expenses and other current assets 10,542 12,410 TOTAL CURRENT ASSETS 453, ,028 Property, plant and equipment, net 18,882 15,299 Goodwill 34,329 34,329 Other purchased intangible assets, net 6,643 7,149 Deferred taxes Other assets TOTAL ASSETS $ 513,803 $ 542,670 19

20 Appendix Consolidated Balance Sheets Liabilities and Equity (dollars in thousands) LIABILITIES AND EQUITY July 31, 2018 January 31, 2018 CURRENT LIABILITIES Accounts payable $ 84,239 $ 100,238 Accrued expenses 31,218 35,360 Contract liabilities 24,385 47,613 TOTAL CURRENT LIABILITIES 139, ,211 Deferred taxes 2,146 1,293 TOTAL LIABILITIES 141, , STOCKHOLDERS EQUITY Common stock 2,336 2,336 Additional paid-in capital 144, ,215 Retained earnings 225, ,150 Accumulated other comprehensive income 150 1,422 TOTAL STOCKHOLDERS EQUITY 371, ,123 Noncontrolling interests TOTAL EQUITY 371, ,166 TOTAL LIABILITIES AND EQUITY $ 513,803 $ 542,670