Argan, Inc. Reports First Quarter Results

ROCKVILLE, Md.–(BUSINESS WIRE)–Argan, Inc. (NYSE: AGX) (“Argan” or the “Company”) today
announced financial results for its first quarter ended April 30, 2017.
For additional information, please read the Company’s Quarterly Report
on Form 10-Q, which the Company intends to file today with the U.S.
Securities and Exchange Commission (the “SEC”). The Quarterly Report can
be retrieved from the SEC’s website at www.sec.gov
or from the Company’s website at www.arganinc.com.

Summary Information: (dollars in thousands, except per share data
(unaudited)):

First Quarter Results:

Revenues increased to a quarterly record of $230 million, up 77%
compared to the prior year quarter, primarily due to Gemma Power Systems
(GPS) having ramped up construction activities on four large, natural
gas-fired power plants. The power industry services segment continues to
drive our financial results and represents 91% of consolidated revenues
for the quarter ended April 30, 2017. Gross profit increased 42% to $40
million, primarily due to the increased revenues, while gross margin
percentage decreased from 21.7% to 17.4% compared to the prior year
quarter, which primarily reflected changes in the mix and progress of
various power plant projects and the differences in their respective
gross margins.

Selling, general and administrative expenses increased $2.4 million to
$9.5 million, primarily due to increased incentive and stock option
compensation and human capital costs reflective of larger operations,
but decreased as a percentage of revenue to 4.1% from 5.4% in the prior
year quarter. Other income from short-term investments increased $1.2
million from the prior year quarter due to higher yields and investment
balances. Net income attributable to non-controlling interests decreased
93%, or $1.8 million, as activity on two large power plant projects was
completed by joint ventures. These factors and a relatively consistent
effective income tax rate resulted in first quarter net income
attributable to our stockholders increasing 69% to $20.6 million, or
$1.31 per diluted share, compared to $12.2 million, or $0.81 per diluted
share, for the prior year quarter. EBITDA attributable to the
stockholders for the quarter ended April 30, 2017 also increased 61% to
$32.5 million, or $2.06 per diluted share, from $20.2 million, or $1.34
per diluted share, for the prior year quarter.

The Company’s balance sheet continues to strengthen. As of April 30,
2017, cash, cash equivalents and short-term investments totaled $563
million and net liquidity was $259 million. The Company has no bank
debt. Although there were no major additions to backlog during the three
months ended April 30, 2017, the contract backlog remains healthy with
an aggregate value of approximately $867 million as of April 30, 2017.
In addition, subsequent to the end of the quarter, Atlantic Projects
Company won a contract for the erection of a 299 MW biomass boiler in
Teesside, England.

Commenting on Argan’s results, Rainer Bosselmann, Chairman and Chief
Executive Officer, stated, “This represents the eighth consecutive
quarter of increasing revenues, fourth consecutive quarter with over $18
million in net income for our shareholders and fifth consecutive quarter
of increasing net liquidity which stands at over $259 million today. As
I have noted before, this consistent growth and the Company’s record
success during these periods could not have been achieved without the
operational excellence of our employees. We are committed to maintaining
both the Company and employee successes; we are hard at work executing
on our current projects; and we are focused on adding new projects to
the backlog.”

About Argan, Inc.

Argan’s primary business is providing a full range of services to the
power industry including the engineering, procurement and construction
of natural gas-fired power plants, along with related commissioning,
operations management, maintenance, project development and consulting
services, through its Gemma Power Systems and Atlantic Projects Company
operations. Argan also owns SMC Infrastructure Solutions, which provides
telecommunications infrastructure services, and The Roberts Company,
which is a fully integrated fabrication, construction and industrial
plant services company.

Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of the federal securities
laws and are subject to risks and uncertainties including, but not
limited to: (1) the continued strong performance of our power industry
services business; (2) the Company’s ability to successfully and
profitably integrate acquisitions; and (3) the Company’s ability to
achieve its business strategy while effectively managing costs and
expenses. Actual results and the timing of certain events could differ
materially from those projected in or contemplated by the
forward-looking statements due to a number of factors detailed from time
to time in Argan’s filings with the SEC. In addition, reference is
hereby made to cautionary statements with respect to risk factors set
forth in the Company’s most recent reports on Form 10-K and 10-Q, and
other SEC filings.

Management uses EBITDA, a non-GAAP financial measure, for planning
purposes, including the preparation of operating budgets and the
determination of appropriate levels of operating and capital
investments. Management believes that EBITDA provides additional insight
for analysts and investors in evaluating the Company’s financial and
operational performance and in assisting investors in comparing the
Company’s financial performance to those of other companies in the
Company’s industry. However, EBITDA is not intended to be an alternative
to financial measures prepared in accordance with GAAP and should not be
considered in isolation from the Company’s GAAP results of operations.
Consistent with the requirements of SEC Regulation G, reconciliations of
the Company’s non-GAAP financial results from net income are included in
the presentations above and investors are advised to carefully review
and consider this information as well as the GAAP financial results that
are presented in the Company’s SEC filings.

Contacts

Argan, Inc.
Company Contact:
Rainer Bosselmann,
301-315-0027
or
Investor Relations Contact:
David
Watson, 301-315-0027