• NYSE: AGX• Current Price: $37.72• Market Cap: 550.45 Million• P/E: 14.95• Beta: 1.08• Profit Margin: 9.10%• Sales Y/Y: 1.684%

• Argan is an undervalued company that will be on the leading end of the natural gas industry. Further, as a natural gas plant construction company, Argan will realize an increase in contracts in their backlog given aging infrastructure.

• Argan Inc. is a holding company that provides engineering, procurement, and construction services for the power and renewable energy sector.

• The company primarily specializes in developing natural gas power plants in addition to alternative fuels (ethanol, biodiesel) and renewable energy (biomass, wind, solar).

• Argan operates through its subsidiaries Gemma Power System, Atlantic Projects Company, and Southern Maryland Cable.

SEGMENT BREAKDOWN

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• Power Generation - constructed 80 facilities with 11,000 MW power generating capacity (EPC).

• Alternative Fuels - installed more than 370 million gallons per year of installed alternative fuel capacity.

• Renewable Energy - installed more than 435 MW wind power facilities, 12 MW solar power facility capacity.

GEMMA POWER SYSTEMS

● Gas-fired power plant designer and builder with experience in alternative fuel and renewable energy.

● Development, consulting, engineering, procurement, construction, commissioning, and maintenance services.

● EPC of 80 facilities: 11,000 MW power generating capacity.

● Technology Agnostic Approach - Adaptable● Backlog: renewable energy and alternative energy

projects.

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GPS NATURAL GAS DEVELOPMENT

● July, 2015 - GPS was given limited-notice-to-proceed with the construction of a 1,000 MW combined cycle power plant in Pennsylvania (Moxie Freedom).

● Marcellus Shale Region - 104,000 square miles

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GPS MAP

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ATLANTIC PROJECTS COMPANY

● Services: Engineering, Procurement, & Construction (EPC), Original Equipment Manufacturer (OEM).

● Installation of gas and steam turbines (300), compressors, generators, large electric motors, boilers, and piping systems in power plants and refineries.

● Sectors: Power Generation, Oil & Gas, Industrial & Process

● International Scope: Iceland, Singapore, Ireland, Kuwait. ● Clients:

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SOUTHERN MARYLAND CABLE• Provides technology wiring for power plants, government,

defense contractors, and telecommunication companies. • Sectors: Power Industry and Telecommunication

Infrastructure Services. • Directional Boring Drills: steerable and trenchless cable

installation technique with minimal ground disturbance.

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• Gemma Power Systems: 94.5% (Domestic)• Southern Maryland Cable 3.6% (Domestic)• Atlantic Projects Company 1.9% (International)

VALUE THESIS

• The demand for new gas-fired generation capacity plants due to retirement of older and inefficient plants

• GPS acquired 2 construction service contracts in August.

• Strong backlog - 660 M • Below average EV/EBITDA

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• Low Demand for electrical power may deteriorate financial outlook

• Revenue is not directly controlled • Awarded through contracts

• Dependence on one or a few customers• Dependence on large contracts result in uneven

revenues

● Industrial and residential/commercial sector are increasing demand for electricity○ Industrial: Manufacture goods to

accommodate growing middle class. Advanced manufacturing, automation and control technology

○ Residential/commercial: Rising living standards create higher electricity consumption.

• Retirement of coal/gas plants due to age drives further investment in new gas-fired technology

• Clean Power Act: EPA finalized the Clean Power Plan to cut carbon pollution from existing power plants

• Closing down of plants due to regulation.

Pounds per million Btu

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