Argan, Inc. Revenues Increase 41% in Second Quarter; Backlog Exceeds $500 Million.

ROCKVILLE, Md. -- Argan, Inc. (Amex:AGX) today announced financial results for the second quarter of its fiscal year 2009 ended July 31, 2008.

Net sales for the three months ended July 31, 2008 were $75 million compared to $53 million for the three months ended July 31, 2007, an increase of 41.3%. Argan's wholly-owned subsidiary, Gemma Power Systems, contributed $70.6 million, or 94.1% of total revenues, for the quarter ended July 31, 2008 compared to $45.6 million, or 85.8% of total revenues, for the quarter ended July 31, 2007. Combined revenues for the quarter ended July 31, 2008 at Argan's other wholly-owned subsidiaries decreased to $4.5 million or 5.9% of total revenues, from $7.5 million, or 14.2% of total revenues, in the quarter ended July 31, 2007.

The Company reported consolidated EBITDA (Earnings before interest, taxes, depreciation and amortization) of $5.1 million and $8.8 million, respectively, for the quarter and six month periods ended July 31, 2008. On a stand alone basis, Gemma reported EBITDA of $6.6 million for the quarter ended July 31, 2008 and EBITDA of $11.4 million for the first six months ended July 31, 2008.

Net income for the quarter ended July 31, 2008 was $806,000, or $0.07 per fully diluted share based on 12,226,000 fully diluted shares outstanding, compared to $1,334,000, or $0.12 per fully diluted share based on 11,196,000 fully diluted shares outstanding, in the quarter ended July 31, 2007. Net income for the quarter was adversely affected by the underperformance of Argan's Vitarich Laboratories (VLI) subsidiary, which recorded impairment losses encompassing substantially all of its remaining goodwill, other purchased intangible assets and fixed assets in the amounts of $921,000, $86,000 and $939,000, respectively.

For the six months ended July 31, 2008, net sales were $123.5 million compared to $103.6 million in the six months ended July 31, 2007. Gemma contributed $114.6 million, or 92.8% of total revenues, in the first six months of fiscal 2009 compared to $89 million, or 85.9% of total revenues, in the first six months of fiscal 2008. Combined revenues from Argan's other wholly-owned subsidiaries decreased to $8.9 million, or 7.2% of total revenues, in the first six months of fiscal 2009 compared to $14.6 million, or 14.1% of total revenues, in the first six months of fiscal 2008. Net income for the first six months ended July 31, 2008 was $2,361,000, or $0.20 per fully diluted share based on 11,854,000 fully diluted shares outstanding, compared to a net loss of $681,000, or $0.06 per fully diluted share based on 11,094,000 fully diluted shares outstanding, for the first six months ended July 31, 2007.

Argan's cash position increased to $104 million as of July 31, 2008. Net cash provided by operations for the six months ended July 31, 2008 was approximately $15.7 million. Argan's backlog as of July 31, 2008 was $530 million.

Included in the backlog is Gemma's engineering, procurement and construction agreement with Pacific Gas & Electric Company (PG&E), signed in May and originally valued at $336 million, for a natural gas-fired power plant in Colusa, California. The plant will be a 640 megawatt combined cycle facility. Additionally, the Company announced in late July that it signed an engineering, procurement and construction agreement and received a limited notice to proceed from Competitive Power Ventures to design and build the Sentinel Power Project in southern California, a contract valued at $211 million. The two-phase project consists of eight simple cycle gas-fired peaking plants with a total power rating of 800 megawatts. The first phase of this project includes the construction of five units and the second phase comprises the construction of the three remaining units.

Commenting on the quarter, Rainer Bosselmann, Chairman and Chief Executive Officer stated, "We are very pleased with the results of the second quarter which marked solid revenue growth and EBITDA performance. As expected, Gemma's contribution to total revenues continued to grow during the quarter and Gemma showed significant gains in EBITDA for both the quarter and first six months. Likewise, our contract backlog has grown substantially to exceed $500 million and we expect revenues to increase as these contracts evolve from the engineering and procurement stage to the construction stage of execution."

Mr. Bosselmann continued, "Also during the quarter we announced our new partnership with Invenergy Wind Management LLC for the design and construction of wind farms located in the United States and Canada. This endeavor will enhance our participation in the alternative energy space and creates a diverse source of earnings."

"While the company's consolidated performance was strong for the quarter, our VLI subsidiary performed below our expectations and as a result, net income in the quarter was negatively impacted. VLI is actively pursuing opportunities to increase the volume of business with existing customers and to add new customers, but has been experiencing significant challenges to its performance in recent quarters."

Mr. Bosselmann concluded, "We believe the proven performance of Gemma, combined with our robust backlog of traditional engineering and construction contracts and opportunities associated with our Invenergy partnership position us well for continued growth and strong cash flow."

About Argan, Inc.

Argan's primary business is designing and building energy plants through its Gemma Power Systems subsidiary. These energy plants include traditional gas as well as alternative energy including biodiesel, ethanol, and renewable energy sources such as wind power and solar. Argan also owns Southern Maryland Cable, Inc. and Vitarich Laboratories, Inc.

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 Company's ability to achieve its business strategy while effectively managing costs and expenses; (2) the Company's ability to successfully and profitably integrate acquisitions; and (3) the continued strong performance of the energy sector. 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 Securities and Exchange Commission. 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.

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Management uses EBITDA, a non-GAAP financial measure, for planning purposes, including the preparation of operating budgets and to determine 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 our GAAP results of operations. Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between the Company's GAAP and non-GAAP financial results is provided above and investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company's SEC filings.

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