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AGAN, INC.
June 2010
June 2011
December 2018
2
Safe Harbor Statement
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
Company Overview
⚫ NYSE: AGX
⚫ Holding company for four 100% controlled subsidiaries
⚫ Market capitalization (12/03/18) – $0.7 billion
⚫ Solid long term annual rate of return 5yr = 17%*
⚫ Quarterly dividend $0.25 per share
⚫
⚫ Strong balance sheet at 10/31/18
– No leverage– Cash & short-term investments - $315 million– Net liquidity - $340 million
⚫ Project backlog (10/31/18) – $0.4 billion
* As of 12/3/2018
** Attributable to the Stockholders of AGX
(in millions)Quarter Ended
October 31, 2018
Trailing Twelve
Months (TTM)
Revenues $ 116 $ 564
Net Income** 32 61
EBITDA** 21 64
4
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
67.8%
2.1%
15.3%
14.8%
5
Revenues*
$142
$279 $227
$383
$413
$675
$893
$564
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2012 2013 2014 2015 2016 2017 2018 2019**
$ M
illio
ns
• 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 2018.
** TTM through October 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
Net Income*
$9.3
$23.3
$40.1
$30.4
$36.3
$70.3$72.0
$61.3
$-
$10
$20
$30
$40
$50
$60
$70
$80
2012 2013 2014 2015 2016 2017 2018 2019**
$ M
illio
ns
* Attributable to the Stockholders of AGX
** TTM through October 31, 2018
7
EBITDA*
$12.9
$37.7
$66.3
$52.2
$62.9
$110.6
$116.1
$64.3
$-
$20
$40
$60
$80
$100
$120
2012 2013 2014 2015 2016 2017 2018 2019**
$ M
illio
ns
CAGR ≅ 26%
* Attributable to the Stockholders of AGX
** TTM through October 31, 2018
8
Book Value
$5.87 $7.16
$9.50 $11.29 $11.58
$16.08
$20.34
$23.05
$0.50
$1.10
$1.85
$2.55 $3.25
$4.25
$5.25
$6.00
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
2012 2013 2014 2015 2016 2017 2018 Q32019
Tangible Book Value* & Cumulative Dividends Per Share
Tangible Book Value Cumulative Dividends
*Tangible Book Value = Total Stockholders’ Equity – Goodwill – Other Intangible Assets
9
Financial Results
(in thousands, except per share data)
(1) We define Net Liquidity, or working capital, as our total current assets less our total current liabilities.
For the Quarter Ended: 2018 2017 Change % Change
Revenues 116,459$ 232,945$ (116,486)$ (50.0)%
Cost of revenues 86,927 195,227 (108,300) (55.5)
Gross profit 29,532 37,718 (8,186) (21.7)
Gross margins 25.4% 16.2% 9.2% 56.8
Net Income attributable to stockholders of the
Company 32,434$ 17,229$ 15,205$ 88.3
Diluted per share 2.07 1.09 0.98 89.9
EBITDA attributable to stockholders of the
Company 21,025 30,275 (9,250) (30.6)
Diluted per share 1.34 1.92 (0.58) (30.2)
October 31, January 31,
As of: 2018 2018 Change % Change
Cash, cash equivalents and short-term investments 314,787$ 434,015$ (119,228)$ (27.5)%
Net Liquidity (1)
339,616 301,817 37,799 12.5
Project backlog 365,000 379,000 (14,000) (3.7)
October 31,
10
Financial Drivers
⚫ As successful execution by GPS on four large gas-fired power plant projects have reached the final stages,
revenues saw a decline during the current quarter. Construction activities for these projects have matured
from peak levels to the commissioning, start up and final activities. The decline in revenues at GPS was
partially offset by strong revenues at APC and TRC during the third quarter.
⚫ Gross profits decreased reflecting primarily the reduction in consolidated revenues between periods. Our
gross margin percentage increased quarter over quarter, reflecting favorable project close-out adjustments to
the gross profits of certain projects that have reached substantial completion.
⚫ We completed a yearlong detailed review of the activities performed by its engineering staff on major EPC
services projects in order to identify and quantify the amounts of research and development credits. Based
on this review, we booked a $16.5 million tax benefit in the current quarter.
⚫ The Tax Cuts and Jobs Act had a favorable impact on our tax rate, resulting in an estimated annual effective
income tax rate of 28% for the current quarter, compared to 37% for the second quarter last year.
⚫ Our balance sheet remains strong. As of October 31, 2018, our cash, cash equivalents and short-term
investments totaled $315 million and adjusted net liquidity was $340 million; plus, we had no bank debt.
⚫ Our project backlog was $365 million as of October 31, 2018, slightly down from $379 million at the end of
the prior year, mostly due to year-to-date work on existing backlog partially offset by an EPC contract
entered into by GPS during the first quarter. As previously reported, we remain encouraged about our
project pipeline as GPS has been selected to perform the EPC work for several new power
generation facilities with a collective potential project value over $1.5 billion with projected
start dates extending through 2019.
11
Overview of Gemma Power Systems
⚫ History – acquired by Argan in December 2006 for $33 million and
has generated cumulative EBITDA since acquisition of over $628
million, or ~19x 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
(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 2019.
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 act ivities
covered by the corresponding EPC contract.
(3) Substantial completion achieved.
(4) Based on the current schedule for this challenging project, the completion date, which was initially targeted for the end of 2018, may
move to early 2019.
Project(1) Location Size of Facility
Date FNTP
Received(2)
Scheduled
Completion
Caithness Moxie Freedom
Generating StationPennsylvania 1,040 MW Nov-15 2018
(3)
CPV Towantic Energy Center Connecticut 785 MW Mar-16 2018(3)
NTE Middletown Energy Center Ohio 475 MW Oct-15 2018(3)
NTE Kings Mountain Energy Center North Carolina 475 MW Mar-16 2018(3)
Exelon West Medway II Facility Massachusetts 200 MW Apr-17 (4)
13
Extensive Project Portfolio
⚫ 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
Source: Stifel - Engineering, Construction and Infrastructure Newsletter (11/27/2018)
Stock 12 Month LTM LTM Return
Price Total Market Debt/ LTM Gross EBITDA on Avg.
Ticker 11/2 3 /2 0 18 Return Cap Equity Revenue Margin Margin Equity
AGX $43.40 % -26.0 % $675.7 0.0 X $680.6 15.3 % 9.8 % 12.8%
FLR $40.21 -13.6 $5,656.3 0.5 $19,392.9 3.7 3.9 7.1
GVA $51.38 -20.3 $2,409.6 0.3 $3,227.4 11.8 6.9 5.8
JEC $64.69 0.8 $9,203.1 0.4 $14,984.6 18.9 5.8 3.1
KBR KBR, Inc. $17.92 -1.6 $2,524.5 0.7 $4,520.0 8.8 6.7 40.5
MDR $7.82 -64.8 $1,412.2 1.0 $5,349.8 15.1 12.7 4.1
ORN $4.28 -44.9 $124.0 0.4 $583.9 12.0 6.0 4.2
TPC $18.28 -25.1 $914.5 0.5 $4,464.4 9.6 4.6 6.8
PRIM $23.31 -12.4 $1,193.6 0.6 $2,640.8 11.0 7.0 11.9
TSX-SNC $36.95 -10.9 $6,487.4 0.7 $8,075.9 19.3 9.7 6.5
STRL $12.83 -26.8 $347.3 0.5 $1,036.4 10.4 4.4 14.5
Mean -22.3% 0.5x 12.3% 7.1% 10.5%
Sterl ing Construction Co. Inc.
Company Name
Argan, Inc.
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Tutor Perini Corporation
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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 = 17%*
⚫ Quarterly dividend of $0.25 per share in 2018, for an annual total of
$1.00 per share
⚫ Experienced management team
*As of 12/3/2018
16
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
17
AppendixConsolidated Income Statements - Quarter
(in thousands except per share amounts)
Revenues $ 116,459 $ 136,670 $ 141,366 $ 169,578 $ 232,945
Cost of revenues 86,927 105,962 125,914 149,474 195,227
Gross Profit 29,532 30,708 15,452 20,104 37,718
Gross Profit % 25.4% 22.5% 10.9% 11.9% 16.2%
Impairment loss — — — 584 —
Selling, general and administrative expenses 11,147 10,378 9,637 11,356 10,119
Income from operations 18,385 20,330 5,815 8,164 27,599
Other income, net 1,429 2,928 764 1,427 1,692
Income before income taxes 19,814 23,258 6,579 9,591 29,291
Income tax (benefit) expense (12,560) 6,314 1,737 2,541 12,062
Net income 32,374 16,944 4,842 7,050 17,229
Net income attributable to noncontrolling interests (60) (28) 5 32 —
Net income attributable to the stockholders of AGX $ 32,434 $ 16,972 $ 4,837 $ 7,018 $ 17,229
EPS attributable to the stockholders of Argan, Inc.
Basic $ 2.08 $ 1.09 $ 0.31 $ 0.45 $ 1.11
Diluted $ 2.07 $ 1.08 $ 0.31 $ 0.45 $ 1.09
Weighted average number of shares outstanding
Basic 15,569 15,568 15,568 15,559 15,545
Diluted 15,702 15,673 15,656 15,743 15,793
Cash dividends per share $ 0.25 $ 0.25 $ 0.25 $ — $ 1.00
31-Oct-18
Three Months Ended
31-Oct-1731-Jan-1831-Jul-18 30-Apr-18
18
AppendixReconciliations to EBITDA – Consolidated
31-Oct-18 31-Jul-18 30-Apr-18 31-Jan-18 31-Oct-17
Net income 32,374$ 16,944$ 4,842$ 7,050$ 17,229$
Less EBITDA attributable to noncontrolling interests 60 28 (5) (32) —
Interest expense — 110 549 — —
Income tax (benefit) expense (12,560) 6,314 1,737 2,541 12,062
Depreciation 898 796 771 843 726
Amortization of purchased intangible assets 253 253 253 256 258
EBITDA attributable to the stockholders of Argan, Inc. 21,025$ 24,445$ 8,147$ 10,658$ 30,275$
EBITDA per diluted share 1.34$ 1.56$ 0.52$ 0.68$ 1.92$
Three Months Ended
19
AppendixConsolidated Balance Sheets - Assets
(dollars in thousands)
ASSETS October 31, 2018 January 31, 2018
CURRENT ASSETS
Cash and cash equivalents $ 155,791 $ 122,107
Short-term investments 158,996 311,908
Accounts receivable, net 43,612 24,756
Contract assets 55,628 13,847
Other current assets 25,465 12,410
TOTAL CURRENT ASSETS 439,492 485,028
Property, plant and equipment, net 19,866 15,299
Goodwill 34,329 34,329
Other purchased intangible assets, net 6,390 7,149
Deferred taxes 315 439
Other assets 377 426
TOTAL ASSETS $ 500,769 $ 542,670
20
AppendixConsolidated Balance Sheets – Liabilities and Equity
(dollars in thousands)
LIABILITIES AND EQUITY October 31, 2018 January 31, 2018
CURRENT LIABILITIES
Accounts payable $ 64,987 $ 100,238
Accrued expenses 25,111 35,360
Contract liabilities 9,778 47,613
TOTAL CURRENT LIABILITIES 99,876 183,211
Deferred taxes 1,388 1,293
TOTAL LIABILITIES 101,264 184,504
STOCKHOLDERS’ EQUITY
Common stock 2,336 2,336
Additional paid-in capital 144,507 143,215
Retained earnings 253,716 211,150
Accumulated other comprehensive (loss) income (942) 1,422
TOTAL STOCKHOLDERS’ EQUITY 399,617 358,123
Noncontrolling interests (112) 43
TOTAL EQUITY 399,505 358,166
TOTAL LIABILITIES AND EQUITY $ 500,769 $ 542,670
