Argan, Inc. · NYSE:AGX
Argan — Investor Presentation (July 2009)
29 slides from Argan's investor presentation, Jul 17, 2009
Slide 1: Argan, Inc. July 2009
ARGAN, INC. JULY 2009
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 Demonstrated track record of performance Substantial industry growth prospects Very strong backlog and bidding pipeline Compelling financial characteristics Experienced management team
Slide 4: Company Overview
Company Overview Headquarters - Rockville, MD Ticker - NYSE-AMEX:AGX Recently added to Russell 2000 Index Market cap (7/15/09) - $208.7 million LTM revenue - $235.6 million LTM EBITDA - $21.3 million LTM diluted EPS - $0.86 Employees - More than 600
Slide 5: Senior Management Team
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
Slide 6: Business Overview
SMC VLI GPS East 3.9 4.5 91.6 Business Overview Gemma Power Systems, LLC ("GPS") - provides engineering, procurement and construction ("EPC") services to power generation and renewable energy markets GPS accounted for 91.6% of total revenues during the fiscal year ended January 31, 2009 Vitarich Lab
Slide 7: Industry Growth Drivers
Industry Growth Drivers Substantial capacity additions will be required to meet rising electricity demand The retirement of older, inefficient plants will further drive investment in new generation capacity Federal and state government legislation is expected to lead to a greater percentage of energ
Slide 8: Increasing Construction Activity
Increasing Construction Activity U.S. power plant construction activity is expected to experience steady growth during the next several years Source: Energy Information Administration. 2007 2008 2009 2010 2011 2012 Demand 53.371 61.377 67.514 73.591 80.95 90.664 Power Construction Put in Place
Slide 9: Expected Generation Capacity Additions
Expected Generation Capacity Additions Natural gas and renewables are expected to represent the majority of new capacity additions during the next 20 years, as coal fired plants are replaced 2008-2015 2016-2020 2021-2025 Coal 17.84 1.75 2.46 Nautrual Gas 30.35 21.54 55.01 Nuclear 1.18 3.32 0 Renewab
Slide 10: Renewable Energy Growth Potential
Renewable Energy Growth Potential Biomass and wind lead projected growth in renewable generation 2007 2010 2020 2030 MSW 16.43 22.05 22.7 22.93 Biomass 38.51 56.26 164.99 231.25 Wind 32.2 80.55 92.57 129.82 Solar 1.29 3.91 18.39 22.45 Geothermal 14.84 17.78 19.11 21.8 Renewable Electricity Generatio
Slide 11: Federal Policies and Incentives - Renewables
Approximately $70 billion in tax and spending provisions is set aside for energy-related programs in President Obama's stimulus package Renewable Electricity Standards have now been enacted in 28 states Federal Policies and Incentives - Renewables Location of Wind Power Developments in the U.S. > 1,
Slide 12: Overview of GPS
Overview of GPS Acquired by Argan - December 2006 Purchase price - $25.0 million Consideration paid in cash and stock ($3.75 per share) $10.7 million in additional equity ($3.75 per share) raised to support bonding and working capital requirements Services - engineering, procurement and construction
Slide 13: GPS Track Record
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 33 projects completed on an EPC basis 50 major turnkey construction projects Power experien
Slide 14: 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 projects.
Slide 15: Types of Projects
Types of Projects Types of projects include simple cycle / peaking facilities, combined cycle cogeneration facilities, biodiesel production facilities, ethanol facilities and pollution control projects Average plant size - 347 megawatts Average project size - $71 million Biodiesel Ethanol Combined C
Slide 16: Extensive Project Portfolio
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 Proj
Slide 17: Current Projects: Colusa Generating Station
Current Projects Colusa Generating Station - Pacific Gas & Electric Company - design and construction of a natural gas fired power plant in Colusa, California 640 megawatt combined cycle facility Contract value: $368 million Commenced project: November 2007 Expected completion: November 2010 Contrac
Slide 18: Current Projects: Sentinel Power Project
Current Projects Sentinel Power Project - design and construction of eight simple cycle gas fired peaking plants in Desert Hot Springs, California 850 megawatts Contract value: $211 million Awaiting final regulatory approval Expected contract duration: Over two years Contract structure: Unit pricing
Slide 19: Wind Power Venture
Wind Power Venture June 2008 - Formed business partnership with Invenergy Wind Management, LLC Argan is the primary contractor for Invenergy sponsored construction of wind farms in the United States and Canada Provides access to supply pipeline of wind turbines Leverages GPS's historical expertise i
Slide 20: Wind Power Venture: LaSalle County, Illinois
Wind Power Venture LaSalle County, Illinois - design and build the expansion of existing wind farm Contract value: $45 million Commenced project: September 2008 Expected completion: September 2009
Slide 21: Competitive Landscape
Competitive Landscape Larger Projects / Traditional Fuels Smaller Projects / Alternative Fuels
Slide 22: Revenue and EBITDA Growth
Revenue and EBITDA Growth GPS's revenue and EBITDA have grown significantly since the acquisition by Argan in December 2006 Revenue for Years Ended January 31 2006 2007 2008 2009 Full Time 48.6 134.4 180.4 202.3 EBITDA for Years Ended January 31 2006 2007 2008 2009 Full Time 3.8 5.4 16.8 31.2 Note:
Slide 23: Growth Strategy
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 relation
Slide 24: Overview of VLI
Overview of VLI Acquired by Argan - August 2004 Products - premium nutritional supplements, vitamins and whole-food dietary supplements Customers - brand merchandisers, network marketers and catalog, Internet and infomercial distributors FY 2009 revenue: $10.1 million Revenue for Years Ended January
Slide 25: Overview of SMC
Overview of SMC Acquired by Argan - July 2003 Services - structuring, cabling, terminations and connectivity solutions Customers - Electronic Data Systems Corp., Southern Maryland Electrical Cooperative and Verizon FY 2009 revenue: $8.6 million Revenue for Years Ended January 31 2006 2007 2008 2009
Slide 26: Consolidated Financial Performance
Consolidated Financial Performance Net Revenue 2007 2008 2009 LTM Full Time 68.9 206.8 220.9 235.6 EBITDA 2007 2008 2009 LTM Full Time 4 6.5 19.6 21.3 Diluted EPS EBITDA Margin 2007 2008 2009 LTM Full Time -0.02 -0.29 0.78 0.86 2007 2008 2009 LTM Full Time 0.058 0.031 0.089 0.091
Slide 27: Months Ended April Performance
3 Months Ended April 30 Performance Net Revenue 2008 2009 Full Time 48.4 63.1 EBITDA 2008 2009 Full Time 3.3 5.1 Diluted EPS EBITDA Margin 2008 2009 Full Time 0.0689 0.081 2008 2009 Full Time 0.14 0.22
Slide 28: Substantial Backlog
1/31/07 1/31/08 1/31/09 4/30/09 Full Time 171.3 122 456 404 30.8 19 Substantial Backlog GPS has achieved significant growth in contract backlog during the past three years GPS is currently tracking over $3.5 billion in new project revenue opportunities GPS Historical Contract Backlog * Represents co
Slide 29: Investment Highlights
Investment Highlights Demonstrated track record of performance Substantial industry growth prospects Very strong backlog and bidding pipeline Compelling financial characteristics Experienced management team