Argan, Inc. · NYSE:AGX
Argan — Investor Presentation (July 2009)
29 slides from Argan's investor presentation, July 2009
Slide 1: Argan, Inc.
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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 3
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 4
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:A
Slide 6: Business Overview
Business Overview Gemma Power Systems, LLC (“GPS”)FYE – 2009 Revenue by Subsidiary provides engineering, procurement and SMC construction (“EPC”) services to power 3.9% VLI generation and renewable energy 4.5% markets – GPS accounted for 91.6% of total GPS revenues during the fiscal year 91.6% end
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
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 Power Construction Put in Place $100.0 $90.7 $81.0 $80.0 $73.6 $67.5 $61.4 ($ in millions) $60.0 $53.4 $40.0 $20.0 $0.0 2007 2008 2009 2010 2011 2012 Source
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 Electricity Generation Capacity Additions by Fuel Type 100% 80% 60% 40% 20% 0% 2008-2015 2016-2020 2021-202
Slide 10: Renewable Energy Growth Potential
Renewable Energy Growth Potential Biomass and wind lead projected growth in renewable generation Renewable Electricity Generation by Energy Source 500 400 (billion kilowatthours) 300 200 100 0 2007 2010 2020 2030 MSW Biomass Wind Solar Geothermal Source: Energy Information 10 Administration.
Slide 11: Federal Policies and Incentives – Renewables
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 Location of Wind Power Developments in the U.S.
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 co
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 Po
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. 14
Slide 15: Types of Projects
Types of Projects Types of projects include simple cycle Types of Projects / peaking facilities, combined cycle Pollution Biodiesel cogeneration facilities, biodiesel Control 11.5% production facilities, ethanol facilities 7.7% Ethanol and pollution control projects 3.8% Average plant size – 347
Slide 16: Extensive Project Portfolio
Extensive Project Portfolio Power facilities – simple cycle solution Power facilities – combined cycle solution – CPV Sentinel Energy Project – Colusa Generating Station – A.L. Pierce Re-powering Project – Roseville Energy Park – Vandolah Power Project – Hines PB-2 Power Project – DeSoto County
Slide 17: Current Projects
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 20
Slide 18: Current Projects
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:
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 exp
Slide 20: Wind Power Venture
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 20
Slide 21: Competitive Landscape
Competitive Landscape Larger Projects / Traditional Smaller Projects / Fuels Alternative Fuels 21
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 EBITDA for Years Ended January 31 $300.0 $40.0 $31.2 $202.3 $30.0 ($ in millions) ($ in millions) $180.4 $200.0 $134.4 $16.8 $20.0 $100.0 $
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
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, Revenue for Years Ended January 31 Internet and infomercial distributors $25.0 $20.8 $17.7 $1
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 Revenue for Years Ended January 31 Cooperative and Verizon $16.0 $14.3 $10.8 $12.0 $9.7 FY 2009 reven
Slide 26: Consolidated Financial Performance
Consolidated Financial Performance Net Revenue EBITDA $235.6 $250.0 $220.9 $25.0 $21.3 $206.8 $19.6 $200.0 $20.0 ($ in millions) ($ in millions) $150.0 $15.0 $100.0 $68.9 $10.0 $6.5 $4.0 $50.0 $5.0 $0.0 $0.0 2007 2008 2009 LTM 2007 2008 2009 LTM Diluted EPS EBITDA Margin $0.86 8.9% 9.1% $1.00 $0.78
Slide 27: 3 Months Ended April 30 Performance
3 Months Ended April 30 Performance Net Revenue EBITDA $63.1 $70.0 $6.0 $5.1 $60.0 $48.4 $5.0 ($ in millions) ($ in millions) $50.0 $3.3 $4.0 $40.0 $3.0 $30.0 $2.0 $20.0 $10.0 $1.0 $0.0 $0.0 2008 2009 2008 2009 Diluted EPS EBITDA Margin $0.25 $0.22 8.5% 8.1% $0.20 8.0% $0.14 $0.15 7.5% 6.9% $0.10 7.
Slide 28: Substantial Backlog
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 $600.0 $30.8* $500.0 $19.0* $400.0 $300.0 $456.0 $404.0 $200.0 $100.0 $171.3 $1
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 29