ARGAN, INC. June 2010 June 2011. 2 Disclaimer All statements in this presentation that are not...
-
Upload
harry-clarke -
Category
Documents
-
view
218 -
download
3
Transcript of ARGAN, INC. June 2010 June 2011. 2 Disclaimer All statements in this presentation that are not...
ARGAN, INC.
June 2010
June 2011
June 2011
2
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,” “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 Forms 10-K and 10-Q filed with the Securities and Exchange Commission. Argan undertakes no obligation to update publicly any forward-looking statements contained in this presentation.
3
Investment Highlights
Demonstrated track record of performance
Substantial industry growth prospects
Strong backlog and bidding pipeline
Compelling financial characteristics
Experienced management team
4
Company Overview
Year founded – 1961
Headquarters – Rockville, MD
Ticker – NYSE AMEX:AGX
Market cap (6/27/11) – $138 million
2011 revenue – $183 million
2011 EBITDA – $20 million
Employees – 400
5
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 Argan, Inc. (NYSE AMEX:AGX)
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 96% of total revenues during the twelve months ended January 31, 2011
Southern Maryland Cable, Inc. (“SMC”) – provides telecommunications data infrastructure services
FYE 2011 Revenue by Subsidiary
96%
4%
7
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 energy produced by renewable sources
Wind is expected to play a key role in the development of alternative energy, supported by a number of state and Federal policies and incentives
8
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
0%
20%
40%
60%
80%
100%
2008-2015 2016-2020 2021-2025
Coal Natural Gas Nuclear Renewables
Electricity Generation Capacity Additions by Fuel Type
Source: Energy Information Administration.
9
Renewable Energy Growth Potential
Biomass and wind lead projected growth in renewable generation
0
100
200
300
400
500
2007 2010 2020 2030
(billion
kilow
atth
ours
)
MSW Biomass Wind Solar Geothermal
Renewable Electricity Generation by Energy Source
Source: Energy Information Administration.
10
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 30 statesand the District of Columbia.
Federal Policies and Incentives
Location of Wind Power Developments in the U.S.
> 1,000 MW
100 MW – 1,000 MW
< 100 MW
AK2
CA 2,493
OR964
WA1,367 MT
165
NVUT20
AZ
WY459
CO1,067
ND517
SD187
NE73
KS465
TX6,297
MN1,377
IA1,394
AR0.0%
WI395
IL736
IN131
OH7
KY
TN 29
MS AL0.0%
GASC
NC
VA
PA323
ME42
NM496
OK689
MO163
WV
0.7%
LA0.4%
0.3%
10.4%230
NJ8
ID75 MI
55
NY707
VT6NH1 MA
5RI1
HI63
Source: American Wind Energy Association.
11
Overview of GPS
Acquired by Argan – December 2006
– Purchase price – $33.1 million
– $12.9 million in cash
– $20.2 million from issuance of 3.7 million shares
– Funded in part by $8.0 million secured four year amortizing term loan, which has been paid-in-full.
Services – engineering, procurement and construction of natural gas fired and alternative power energy facilities
Customers – utilities and independent power producers
FY 2011 revenue: $175 million
FY 2011 EBITDA: $22 million
12
Revenue and EBITDA Growth
GPS’s revenue and EBITDA have remained strong since the acquisition by Argan in December 2006
Revenue for Years Ended January 31
$48.6
$134.4
$180.4$202.3$209.8
$174.9
$0.0
$100.0
$200.0
$300.0
2006 2007 2008 2009 2010 2011
($ in m
illions)
EBITDA for Years Ended January 31
$3.8 $5.4
$16.8
$31.2
$17.2$22.2
$0.0
$10.0
$20.0
$30.0
$40.0
2006 2007 2008 2009 2010 2011
($ in
mill
ions
)
13
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
35 projects completed on an EPC basis
51 major turnkey construction projects
Power experience includes combined cycle, combustion turbines, coal/wood fueled projects, wind plants and waste recovery facilities
Renewable fuels experience includes bio-diesel and ethanol facilities
14
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.
15
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 Project
– Rocky Road Unit 4 Project
– Broad River Energy Center
– Middletown, CT Project
Pollution solution
– Brayton Point Power Station
– La Rosita SCR Project
Power facilities – combined cycle solution
– 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
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
16
Current Projects
CPV Sentinel Peaking Facility – Southern California Edison - design and construction of a natural gas fired power plant near Palm Springs, California
– 800 megawatt single cycle facility
– Contract value: $266 million
– Commenced project: Spring 2011
– Expected completion: Summer 2013
17
Current Projects
Middletown, CT Generating Station
construction of simple cycle gas fired peaking plant
- 200 megawatts
- Contract value: $55 million
- Commenced project: June 2010
- Expected completion: July 2011
18
U.S. Natural Gas Development
U.S. natural gas development by construction kickoff year displayed in Mega Watts. Nearly 9,000 MW of new gas-fired generation capacity is scheduled to begin construction in 2010. That’s about even with 2009 levels and less than 2008, but significantly ahead of 2005 and 2006 levels. Source: Industrial Info Resources and “Power.”
0
2,000
4,000
6,000
8,000
10,000
12,000
2005 2006 2007 2008 2009 2010
19
Wind Power Focus
June 2008 - Formed business partnership with Invenergy Wind Management, LLC
– Leveraged GPS’ historical expertise in wind power
Argan was the primary contractor for Invenergy sponsored construction of wind farms in the United States and Canada
– During 3Q09 GPS substantially completed the expansion of a wind farm in LaSalle County, IL
December 2009 – Gemma acquired remaining ownership of the wind power venture
– Vantage Wind Energy awarded Gemma $33 million wind project in Washington State.
November 2010 – Gemma awarded construction contract for a 200 MW project in Henry County, Illinois
20
Recent Wind Project
Henry County Illinois – design and build a wind farm
- Contract value: $51 million
- Commenced project: November 2010
- Completion: Spring 2012
21
Recent Wind Project
LaSalle County, Illinois – design and build the expansion of existing wind farm
– Contract value: $46 million
– Commenced project: August 2008
– Completion: October 2009
Vantage, Washington
- Contract value: $32 million
- Commenced project: December 2009
- Completion: September 2010
22
Competitive Landscape
Larger Projects / Traditional Fuels
Smaller Projects / Alternative Fuels
23
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 relationships throughout the industry to aggressively build backlog of traditional and renewable energy projects
24
Backlog
Argan has significant contract backlog
Historical Contract Backlog as of January 31
* Represents contract backlog associated with 50%-owned wind energy construction company.
*
25
Investment Summary
Demonstrated track record of performance
Substantial industry growth prospects
Strong backlog and bidding pipeline
Compelling financial characteristics
Experienced management team