Argan, Inc. · NYSE:AGX
Argan — Investor Presentation (June 2016)
29 slides from Argan's investor presentation, June 2016
Slide 1: Argan, Inc.
AGAN, INC. June 2010 June 2011 June 2016
Slide 2: Disclaimer
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,”
Slide 3: Investment Highlights
Investment Highlights Consistent strong operational performance Strong backlog and bidding pipeline Compelling financial results Strong balance sheet - substantial liquidity and no leverage Strong annual rate of return 5yr/3yr/1yr = 38%/40%/9%* Annual dividend of $0.70 per share Substa
Slide 4: Company Overview
Company Overview Year founded – 1961 Headquarters – Rockville, MD NYSE: AGX Holding company for four 100% controlled subsidiaries Market capitalization (6/13/16) – $630 million For the quarter ended 4/30/16 – Revenues – $130 million – EBITDA (attributable to stockholders of AGX) – $20 mi
Slide 5: Senior Management Team
Senior Management Team Argan Rainer Bosselmann – Chairman and CEO David Watson– SVP & CFO Richard Deily – VP & Corporate Controller Argan management has an established track record of creating value for the shareholders of Jupiter National, Inc. (AMEX:JPI), Arguss Communications, Inc. (NYSE:AC
Slide 6: Business Overview – Holding Company
Business Overview – Holding Company Gemma Power Systems (“GPS”) provides Q1 2017 Revenues by Subsidiary engineering, procurement and construction (“EPC”) services to power generation and renewable energy markets 15.7% The Roberts Company (“Roberts”) was acquired in December 2015 and is principal
Slide 7: Growing Revenues
Growing Revenues $600 $500 $521 $400 $413 $383 $ Millions $300 $279 $200 $227 $142 $100 $- 2012 2013 2014 2015 2016 2017* 7 *Annualized
Slide 8: Growing EBITDA
Growing EBITDA $90 35% EBITDA CAGR ≅ 45% $80 $80.6 30% $70 25% $60 $66.3 $62.9 20% $ Millions $50 $52.2 $40 15% $30 $36.6 10% $20 5% $10 $12.8 $- 0% 2012 2013 2014 2015 2016 2017* EBITDA EBITDA Margins 8 *Annualized
Slide 9: Growing Backlog
Growing Backlog $1,400 $1,463 $1,200 $1,000 $1,148 $ Millions $800 $790 $600 $400 $415 $423 $200 $180 $0 2012 2013 2014 2015 2016 4/30/2016 As of January 31, 9
Slide 10: Growing Book Value
Growing Book Value Tangible Book Value* & Cumulative Dividends Per Diluted Share $16.00 $14.00 $3.25 $3.25 $2.55 $12.00 $1.85 $10.00 $12.56 $8.00 $1.10 $11.29 $11.58 $9.50 $6.00 $0.50 $7.16 $5.87 $4.00 2012 2013 2014 2015 2016 Q12017 Tangible Book Value Cumulative Dividends 10 *Tangible Book Value =
Slide 11: Growing Share Price
Growing Share Price $600 $519 $500 $372 $376 $400 $340 $300 $217 $200 $183 $162 $169 $168 $148 $122 $104 $100 $119 $102 $85 $83 $93 $78 $- 1/31/11 1/31/12 1/31/13 1/31/14 1/31/15 1/31/16 6/9/16 Argan, Inc. S&P 500 Dow Jones US Heavy Construction TSM 11
Slide 12: Overview of Gemma Power Systems
Overview of Gemma Power Systems History – acquired by Argan in December 2006 for $33 million and has generated cumulative EBITDA since acquisition of $363 million, or ~11x cash on cash and an IRR in excess of 70% Business – engineering, procurement and construction of natural gas-fired and alter
Slide 13: Industry Growth Drivers
Industry Growth Drivers Electricity generated in the US by natural gas-fired power plants comprised 32.7% of total generation in 2015, which reflected an 18.5% annual increase in megawatt hours provided by these plants The amount of natural gas used for power generation during calendar year 2015
Slide 14: GPS Track Record
GPS Track Record More than 14,000 megawatts of generating capacity installed and under contract on an EPC basis More than 435 megawatts of wind power facility development 40 major turnkey engineering, procurement and construction projects Power experience includes combined and simple-cycle,
Slide 15: National Footprint
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 or is working projects. 15
Slide 16: Extensive Project Portfolio
Extensive Project Portfolio Power facilities – simple cycle solution Power facilities – combined cycle solution – Exelon West Medway II Facility – Panda Liberty Energy Project – CPV Sentinel Energy Project – Panda Patriot Energy Project – A.L. Pierce Re-powering Project – Caithness Moxie Freedom
Slide 17: Significant Current Projects
Significant Current Projects Contract Date FNTP Scheduled Project Location Size of Facility (1) Value Received Completion Panda Liberty Power Project Pennsylvania 829 MW ~$390M Aug-13 2016 Panda Patriot Power Project Pennsylvania 829 MW ~$390M Dec-13 2016 Caithness Moxie Freedom Generating Station P
Slide 18: Development Activities
Development Activities Purpose – Gemma opportunistically participates in developmental and related financing activities to 1) develop a proprietary pipeline for future EPC activities, 2) secure exclusive rights to EPC contracts, and 3) generate profits through interest and success fees. Marcellu
Slide 19: Renewable Energy
Renewable Energy Wind & Solar – Gemma Renewable Power (GRP) is well positioned to respond to our clients’ needs for the installation of wind and solar projects throughout North America. GRP has the unique capability to self-perform the construction work associated with our projects. This approach
Slide 20: Competitive Landscape
Competitive Landscape Larger Projects / Traditional Fuels Smaller Projects / Alternative Fuels 20
Slide 21: Growth Strategy
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 c
Slide 22: Investment Summary
Investment Summary Consistent strong operational performance Strong backlog and bidding pipeline Compelling financial results Strong balance sheet - substantial liquidity and no leverage Strong annual rate of return 5yr/3yr/1yr = 38%/40%/9%* Annual dividend of $0.70 per share Substanti
Slide 23: Financials: Income Statements - Quarter
Financials Income Statements - Quarter (dollars in thousands except per share amounts) Three Months Ended 30-Apr-16 31-Jan-16 31-Oct-15 31-Jul-15 Revenues $ 130,348 $ 116,386 $ 113,967 $ 97,434 Cost of revenues 102,046 92,843 87,705 68,941 Gross Profit 28,302 23,543 26,262 28,493 Gross Profit % 21.7
Slide 24: Reconciliations to EBITDA – Consolidated
Financials Reconciliations to EBITDA – Consolidated (dollars in thousands) Three Months Ended 30-Apr-16 31-Jan-16 31-Oct-15 31-Jul-15 Net income $ 14,120 $ 9,160 $ 14,359 $ 15,834 Less net income attributable to noncontrolling interests (1,890) (2,432) (3,552) (4,527) Interest expense (income) - 9 8
Slide 25: Financials: Balance Sheets - Assets
Financials Balance Sheets - Assets (dollars in thousands) ASSETS April 30, 2016 January 31, 2016 CURRENT ASSETS Cash and cash equivalents $ 191,430 $ 160,909 Short-term investments 128,225 114,098 Accounts receivable, net 70,903 64,185 Costs and estimated earnings in excess of billings 4,077 4,078 D
Slide 26: Financials: Balance Sheets – Liabilities and Equity
Financials Balance Sheets – Liabilities and Equity (dollars in thousands) LIABILITIES AND EQUITY April 30, 2016 January 31, 2016 CURRENT LIABILITIES Accounts payable $ 50,804 $ 46,395 Accrued expenses 32,928 35,454 Billings in excess of costs and estimated earnings 134,621 105,863 TOTAL CURRENT LIAB
Slide 27: Financials: Net Liquidity
Financials Net Liquidity (dollars in thousands) April 30, 2016 January 31, 2016 Cash and cash equivalents $ 191,430 $ 160,909 Short-term investments 128,225 114,098 Less: Billings in excess of costs and estimated earnings (134,621) (105,863) Less: JV adjustment (7,854) (5,555) 177,180 163,589 Less:
Slide 28: Infrastructure Services Peer Group
Infrastructure Services Peer Group Stock 12 Month LTM LTM Return Price Total Market Debt/ LTM Gross EBITDA on Avg. Ticker Company Name 6 / 10 / 2 0 16 Return Cap Equity Revenue Margin Margin Equity AGX Argan, Inc. $42.96 14.8 % $638.3 0.0 X $413.3 24.1 % 18.4 % 18.3% FLR Fl uor Corpora tion $52.11 -
Slide 29: Corporate Data
Corporate Data Investor Relations Websites Investor Relations Argan, Inc. 301-315-0027 www.arganinc.com [email protected] Gemma Power Systems www.gemmapower.com Corporate Headquarters The Roberts Company Argan, Inc. www.robertscompany.com One Church Street, Suite 201 Rockville, Maryland 20850 Atlant