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December 2, 2016

IME

Argan, Inc.

Current Price: $62.10 Price Target: $80.60


Ticker: AGX Rating: Outperform

Action Recommended: Retain


Investment Thesis
Key Statistics
Argan has a large cash balance, no debt obligations, contract backlog of $1.3
52 Week Price Range $28.03 - $66.45
billion, and five substantial projects with completion dates in 2018. For these
50-Day Moving Average $57.92 reasons, Argan is due for continued growth and is currently trading at a
discount.
Estimated Beta 1.17
With the recent presidential election, demand for oil and gas exploration is
Dividend Yield 0.00% set to increase which will allow Argan to secure the contracts they need to
Market Capitalization (M) $1,040,011 maintain their growth.

3-Year Revenue CAGR 22.02% Argan has an experienced management team that knows how to make
strategic acquisitions that fuel their growth.
Trading Statistics
Their recent acquisitions of Atlantic Projects Company Limited and The
Diluted Shares Outstanding (M)
16,096 Roberts Company will allow Argan to penetrate international markets and
Average Volume (3-Month) diversify their current holdings.
232,542
Institutional Ownership 81.30% One-Year Stock Chart

$70.00 900000
Insider Ownership 13.08%
800000
$60.00
EV/EBITDA 2017E 6.11x
700000
$50.00
Margins and Ratios 600000

$40.00 500000
Gross Margin (2017E) 24.55%
$30.00 400000
EBITDA Margin (2017E) 19.69%
300000
$20.00
Net Margin (2017E) 14.07% 200000
$10.00
Debt to Enterprise Value - 100000

$0.00 0
Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16
Covering Analyst:
Covering Volume Adjusted Close 50-Day Avg 200-Day Avg
Nick Miller Analysts: Name
nmiller9@uoregon.edu
1 University of Oregon Investment Group

University of Oregon Investment Group December 2, 2016

Overview
Argan, Inc. (Argan) is a holdings company that was incorporated in 1961 in
Figure 1: Revenue Growth Projections Delaware. Argan currently conducts operations through its subsidiaries Gemma
Power Systems, LLC and affiliates (GPS), Atlantic Projects Company Limited
(APC), Southern Maryland Cable, Inc. (SMC) and The Roberts Company
(TRC). Argan has approximately 1,188 employees and currently trades on the
New York Stock Exchange under the ticker AGX. Their headquarters are in
1200000 Rockville, MD and they conduct operations in over thirty countries across the
world. In order to expand their business, Argan uses strategic acquisitions and
investments in other companies that match their goals for future growth.
1000000

Business Segments
800000
Thousands($)

Power Industry Services 85.9%


600000
The Power Industry Services segment comprises a large majority of Argans
current holdings. Through its subsidiary Gemma Power Systems, LLC (GPS)
400000 they are able to provide full service engineering, procurement, and construction
(EPC) contracting services. GPS designs, builds, and commissions large-scale
energy projects in the United States. GPS has grown vastly in the last twelve
200000 months and now has the under-contract capacity for more than 76 facilities
representing over 14,000 MW of power-generating capacity. Their projects
include base-load combined-cycle facilities, simple-cycle peaking plants and
0 boiler plant construction and renovation efforts. GPS has broadened their
experience into the renewable energy industry by providing EPC contracting
services to the owners of alternative energy facilities, including biomass plants,
wind farms, and solar fields. Typically, the scope of work for GPS includes
complete plant design and construction from site development through electrical
Source: Argan 10-K and UOIG Spreads interconnection and plant testing. The durations of their construction projects are
typically one to three years.

GPS recently completed and commissioned two major projects, the Panda
Liberty Power Project and the Panda Patriot Power Project. These Pennsylvania
projects began in 2013 and are each capable of generating 829 MW of power.
GPS has five projects that are all scheduled to be completed in 2018. These
Figure 2: Subsidiaries projects are the Caithness Moxie Freedom Generating Station, the CPV
Towantic Energy Center, the NTE Middletown Energy Center, the NTE Kings
Mountain Energy Center, and the Excelon West Medway II Facility. GPS
receives revenues based on various completion stages of projects, and then
receives the remainder when the projects are completed. Contract backlog is
currently $1.3 billion.

On May 29, 2015, Argan acquired Atlantic Projects Company Limited, (APC)
a private company formed in Dublin in the Republic of Ireland over 40 years
ago, and its affiliated companies. APC provides turbine, boiler and large rotating
equipment installation, commissioning and outage services to original
equipment manufacturers, global construction firms and plant owners
worldwide. APC has successfully completed projects in more than 30 countries
on six continents. APC has allowed Argan to expand into international markets,
as they have a strong presence in Ireland, Hong Kong, and Singapore.


Source: Subsidiary Websites


UOIG 2
University of Oregon Investment Group December 2, 2016
Industrial Fabrication and Field Services 12.9%

Argan acquired The Roberts Company (TRC) on December 4, 2015 and this
company comprises all of Argans revenues in this segment. TRC was founded
in 1977 and is headquartered near Greenville, North Carolina. TRC is an
industrial fabricator, and constructor serving both light and heavy industrial
organizations primarily in the southern United States. Their clients include pulp
and paper, petrochemical and power companies, among others. Argan paid
Figure 3: Revenues by Subsidiary $500,000 to acquire TRC and assumed $16 million in debts, which they paid off
upon the acquisition closing date. TRC has historically been a very profitable
company but reported a net loss in the eleven month and four-day period ended
December 4, 2015. This was due to the company taking on large contracts that
1.20% resulted in significant losses. In order to get the company back on track, Argan
2.30% has reengaged the companys founder, John Roberts, and has substantially
12.90% completed the loss contracts. Argan management believes that TRC is in a
GPS position to succeed in the future with profitable operations. Management also
believes that TRC can provide fabrication of piping and pressure vessels for
APC
other subsidiaries, including GPS and APC.
SMC
Telecommunications Infrastructure Services 1.2%
TRC 83.60%
Through Southern Maryland Cable, Inc. (SMC), Argan is able to provide
comprehensive technology wiring and utility construction solutions to customers
in the mid-Atlantic region. SMC performs both outside plant and inside plant
cabling. Services provided to outside premises customers include trench-less
directional boring and excavation for underground communication and power
Source: Argan Investor Presentation networks, aerial cabling services, and the installation of buried cable, high and
low voltage electric lines, and private area outdoor lighting systems. The outside
premises services are primarily provided to state and local government agencies,
regional communications service providers, electric utilities and other
commercial customers.

Figure 4: SMC Revenues vs. Cost of Revenues The wide range of inside premises wiring services that SMC provides to
customers includes the structuring, cabling, terminations and connectivity that
provide the physical transport for high speed data, voice, video and security
networks. These services are provided primarily to federal government facilities,
20000 including cleared facilities, on a direct and subcontract basis. Such facilities
18000 typically require regular upgrades to their wiring systems in order to
16000 accommodate improvements in security, telecommunications and network
14000 capabilities. Some of SMCs major past customers have included Maryland
Thousands($)

12000 Transit Administration, Howard County, Maryland, EDS, and Southern


Maryland Electric Cooperative.
10000
8000
6000
Industry
4000
2000
Overview
0
Argan operates in the Industrial, Materials, and Energy sector and in the Heavy
2010A 2012A 2014A 2016A
Engineering Construction industry in the United States. The 19,688 businesses
Revenues Cost of Revenues in this industry provide a wide range of services, including power plant
construction, mass transit construction, marine construction, tunnel construction,
Source: Argan 10-K conservation and development construction, harbor and port facilities
construction, and other services. Competition in this industry is moderate and
the industrys annual revenue for 2016 was $27 billion. The industry has grown
2.9% in last five years and employees over 100,000 people.




UOIG 3
University of Oregon Investment Group December 2, 2016
Over the past five years the industry has fared well due to federal government
Figure 5: U.S. Natural Gas Consumption assistance and increased private investment. Though, the federal government has
3500000 been spending lower amounts of money on the industry than usual and, as a
result, businesses in the industry have relied more heavily on private investment.
The industry is in the mature stage of its economic life cycle and its growth is
3000000 typically in line with the overall economy.
Consumption (MMcf)

2500000 Competition in this industry is moderate because the operations these business
partake in are extensive and complicated. The success of a project is determined
by the companys ability to procure the necessary materials and complete
2000000 projects in a timely manner within the outlined budget. Most businesses receive
project revenues at various stages throughout the project, with a large portion of
1500000 the total revenues being received upon project competition. This means that
firms in the industry obtain future projects if they have proven that they can
finish their work on time. Acquisitions are popular in this industry because these
1000000 businesses are very specialized and the simplest way to expand and grow
organically is to acquire other specialized companies.

Businesses in the Heavy Engineering Construction industry are subject to


constant technological advancement and use this in order to compete with each
Source: U.S. Energy Information Administration
other. There have been considerable amounts of technological advancement in
Figure 6: U.S. Alternative Energy Consumption electricity generation in the last five years as the demand for renewable energy
sources increases greatly. Clients who are considering firms in this industry
often weigh the firms reputation for updating their technology to the latest
10000
advancements in the respective fields. Technological advancements also allow
firms to directly compete with each other because advancements can lower costs
and completion times for their projects, which provides firms with competitive
Consumption (Trillion BTU)

8000
edges.

6000 The Heavy Engineering Construction industry is subject to high amounts of


regulation due to the nature of the work in the field. Firms are subject to various
4000 federal, state, local and foreign laws and regulations including: licensing for
contractors, building codes, permitting and inspection requirements, regulations
relating to worker safety and environmental protection, special bidding,
2000 procurement, employee compensation, and security clearance requirements.

0 Macro Factors
2000 2002 2004 2006 2008 2010 2012 2014
Renewable Biomass Energy Consumption in the U.S.

The demand for energy in the United States influences Argans business
Source: U.S. Energy Information Administration operations, specifically through GPS. For the past five years, energy
consumption demand has steadily increased and analysts from the U.S. Energy
Figure 7: U.S. Economic Growth Information Agency expect this trend to continue for the foreseeable future. As
20000 demand for energy increases, the demand for power plants increases
simultaneously which means that there will be increased demand for projects
18000
from GPS and its competitors.

U.S. Economic Growth


GDP (Billions $)

16000
Firms are significantly more inclined to purchase the services of any of Argans
14000 subsidiaries when the economy is growing well. This is because the firms that
employ Argans subsidiaries will pay for these services when they see potential
12000 growth in their businesses, and if the economy is not expected to grow well then
they will likely not expect their businesses to grow either. Currently the U.S. is
10000 expected to maintain its current healthy levels of economic growth which is a


8000

UOIG 4
Source: U.S. Bureau of Economic Analysis
University of Oregon Investment Group December 2, 2016
good sign for Argan because the vast majority of Argans operations are in the
Figure 8: U.S. Natural Gas Spot Prices U.S. Global economic conditions are not as certain which makes it difficult to
project the success of APC who operates in several different countries across the
globe.

3.5 President-Elect Donald Trump

The recent election has sparked an increase in demand for oil and natural gas
3
companies due to Trumps promises to increase the exploration of these
Dollars per Million Btu

resources throughout the country. This is beneficial to Argan because an


2.5 increased demand for natural gas would lead to an increased demand for the
services of GPS.
2
Natural Gas Prices and Demand
1.5
Natural gas prices tend to fluctuate and this leads to changes in the demand for
the services of firms that supply natural gas services, like GPS. The demand for
1
natural gas is increasing, despite decreasing prices, because more utility services
are incorporating the use of natural gas as a fuel source. There are opportunities
for Argan to update existing natural gas plants because many plants are old and
outdated and GPS can improve these plants. This would provide GPS with
simpler and smaller contracts that could generate considerable amounts of
revenue.
Source: U.S. Energy Information Administration
Competition

The success of firms in the Heavy Engineering Construction industry is


determined by their ability to make technological advancements, complete
Figure 9: Argan Competitive Landscape projects in a timely manner, hiring high skilled employees, and make realistic
budgets that are followed throughout the duration of their projects. All of these
traits are weighed by potential clients when considering which firm to choose
for their projects. All of these traits must be fulfilled consistently across all
clients because word of mouth reputation is crucial in a firms ability to receive
contracts.

The overall competition for Argans three segments is moderate. In the Power
Industry Services segment there are four main competitors: Skanska AB, Fluor
Corp., Bechtel Corp., and Kiewet Corp. These firms all provide energy facility
engineering and design services and all four companies are well capitalized.
Argan obtains sufficient amounts of contracts because they consistently have a
reputation for being a cost effective and time efficient firm. Clients rarely cancel
Source: Argan Investor Presentation projects and almost all projects are completed in a timely manner, which
provides the basis for their positive reputation in the industry.

Strategic Positioning
Figure 10: Panda Patriot Power Project
Argan has seen huge amounts of growth in the last twelve months primarily due
to its projects in the Power Industry Services segment. GPS recognized revenues
for two substantial projects, Panda Liberty Power Project and Panda Patriot
Power Project, during this time period and these projects accounted for a great
amount of their overall revenues. GPS is basing its revenue growth on
aggressively searching for projects and they have seen the benefits from this
strategy this past year. Management believes that this will be a successful long
term strategy, as they have five major projects in progress that can be seen in
their current $1.3 billion contract backlog.




UOIG 5
Source: Gemma Power Systems Website
University of Oregon Investment Group December 2, 2016
Through Argans recent acquisition of APC they are positioning themselves to
broaden their operations beyond the United States. Since APC operates in over
30 countries, they are gaining exposure to international markets which has
shown to assist in their growth. Through Argans acquisition of TRC they are
expanding their business segments into fabrication and field services which is
likely to assist in their top line growth.
Figure 11: Acquisitions Projections
Business Growth Strategies

17500 Acquisitions are the key to Argans growth strategy. They make acquisitions and
investments by identifying companies with significant potential for profitable
15000 growth. Although they are diversifying their holdings by acquiring companies
that are not only in the Power Industry Services segment, they maintain their
12500 focus on industrial acquisitions. Argan rarely finance their acquisitions with debt
Thousands($)

and instead maintains a high balance of cash in order to increase their


10000 purchasing power. This allows them to have the ability to acquire the companies
they see as potentially profitable and not have to take on large amounts of debt
7500
or drain their cash balance. As mentioned before, broadening their operations
5000 into international markets will also be a great driver of future revenues as they
will be able to serve a considerably larger market.
2500
Argan is due for considerable amounts of growth in the next two years because
0 they have high amounts of contract backlog and five substantial projects that are
expected to be completed in 2018. These projects are diversified, as some are
standard natural gas plants and some are newer renewable energy plants. By
continuing to obtain projects in renewable energy plants they are gaining
experience in the field which will help them receive future contracts. Their
Source: UOIG Spreads operations are focused on clean energy alternatives which poises the company
for high levels of growth in the coming years.

Management and Employee Relations


Figure 12: Current Projects
Rainer Bosselmann Chairman and CEO
Scheduled
Project Location Size Completion
Rainer Bosselmann is currently the Chairman and CEO and has been with Argan
Caithness
Moxie Freedom for over thirteen years. He took over as CEO in October, 2003 and took over as
Generating 1,040 Chairman of the Board in May, 2003. Mr. Bosselmann previously worked for
Station Pennsylvania MW 2018 Arguss Communications, Inc. and Jupiter National, Inc. before that. Mr.
CPV Towantic 785 Bosselmann's long tenure as CEO and Chairman positions him to contribute to
Energy Center Connecticut MW 2018 the Board his extensive knowledge of the Company, its history and
NTE development, and to provide critical continuity to the Board of Directors.
Middletown 475
Energy Center Ohio MW 2018
NTE Kings David Watson, CPA CFO and Senior Vice President
Mountain North 475
Energy Center Carolina MW 2018 David Watson is currently the CFO and Senior Vice President and brings over
Exelon West
Medway II 200 fifteen years of senior financial leadership experience to Argan. He most
Facility Massachusetts MW 2018 recently held the position of CFO and Treasurer of Gladstone Investment
Corporation and Gladstone Capital Corporation. Mr. Watson received his MBA
from the University of Maryland Robert H. Smith School of Business and holds
Source: Argan Investor Presentation CPA certification.




UOIG 6
University of Oregon Investment Group December 2, 2016

Management Guidance
Argans management does not provide guidance for their future financial
performance. They provide contract backlog at the end of every financial period
which provides a good indication of where the companys revenues are headed.

Figure 13: Capital Expenditures Projections


Portfolio Strategy

Currently, Argan is held in the Tall Firs portfolio and the Alumni Fund
10000 portfolio. In Tall Firs, 600 shares were purchased at a price of $30.78 a share on
February 12, 2016. In the Alumni Fund, 108 shares were purchased at a price of
$30.78 a share on February 12, 2016.
8000

Recent News
6000
Thousands($)

Gemma Power Systems Celebrates Commissioning for Panda


4000 Patriot Generating Station BusinessWire November 16, 2016
On November 16, 2016 GPS celebrated the competition of the final stage in the
2000 construction process for a substantial project, the Panda Patriot Power Project.
The construction of this facility was completed in June of 2016 and the power
plant is capable of generating 829 MW of natural gas-fired energy. This stage in
0 the process is always looked on positively by shareholders and, in this case, the
commissioning corresponded with a 7% increase in Argans price per share.

Catalysts
Source: UOIG Spreads Upside
With the recent election results, President-Elect Donald Trumps proposed
policies will increase the potential future revenues for energy companies
like Gemma Power Systems.

Argan will see more projects as old and outdated natural gas energy plants
Figure 14: Historical Contract Backlog are in need of remodel and repair.

With contract backlog of $1.3 billion, Argan will be recognizing large


1200000
amounts of revenues in the near future.

There are five substantial projects that are expected to be completed in 2018
1000000 that will continue Argans revenue growth.

800000 After acquiring The Roberts Company and Atlantic Projects Company
Argan will be able to diversify their holdings and penetrate international
Thousands($)

markets.
600000

Downside
400000

Although contract backlog represents the total amount of revenues that they
200000 are firmly expected to receive, these revenues are not guaranteed as
cancellations and reductions can occur which would reduce the backlog and
thus future revenues that were expected to be received.
0
2010A 2011A 2012A 2013A 2014A 2015A 2016A


Source: Argan 10-K


UOIG 7
University of Oregon Investment Group December 2, 2016
Argan might not be able to consistently obtain projects which could prove
devastating to the company as a small number of projects represents a huge
amounts of the companys revenues.

Any future increase in power industry services regulations could increase


costs dramatically and compress Argans margins significantly.

Acquisitions that are attractively priced and match Argans needs are
difficult to find and, as a result, growth might stagnate in the future.

Comparable Analysis
Figure 15: MYR Group Logo Comparable companies in the Heavy Engineering Construction industry were
screened for growth rates, operating segments, risk, and market capitalization.
The five companies that were chosen best represent Argans services and goals.
Since Argan has experienced huge amounts of growth in the last twelve months,
this valuation was difficult. Argan is also virtually absent in the eyes of most
investors. For these reasons, in the final valuation comparable analysis was
given weighting of only 10%.

MYR Group, Inc. (MYRG) (30%)


MYR Group Inc., through its subsidiaries, provides electrical construction
services in the United States and Canada. It operates through two segments,
Source: MYR Group Website Transmission and Distribution, and Commercial and Industrial. The
Transmission and Distribution segment offers a range of services on electric
transmission and distribution networks, and substation facilities, including
design, engineering, procurement, construction, upgrade, maintenance, and
repair services with primary focus on construction, maintenance, and repair to
customers in the electric utility and the renewable energy industries. Its services
comprise construction and maintenance of high voltage transmission lines,
Figure 16: EMCOR Group Logo substations, and lower voltage underground and overhead distribution systems;
and storm restoration services in response to hurricane, ice, or other storm
related damages.Yahoo Finance

MYR Group Inc. was weighted 30% because it best represents Argans business
strategy. Like Argan, MYRG is a holding company and generates revenues
solely through its subsidiaries. Importantly, they are like Argan recently and do
not assume any debt when making acquisitions which makes MYRG a good fit
for comparable analysis.

EMCOR Group, Inc. (EME) (25%)


Source: EMCOR Group Website EMCOR Group, Inc. provides electrical and mechanical construction and
facilities services to commercial, industrial, utility, and institutional customers
primarily in the United States. The company engages in the design, integration,
installation, start-up, operation, and maintenance of electrical and mechanical
systems, including electric power transmission and distribution systems, such as
power cables, conduits, distribution panels, transformers, generators,
uninterruptible power supply systems, and related switch gear and controls;
premises electrical and lighting systems, including fixtures and controls; low-
voltage systems; voice and data communications systems; roadway and transit
lighting and fiber-optic lines; heating, ventilation, air conditioning, refrigeration,
and clean-room process ventilation systems; fire protection systems; plumbing,
processing, and piping systems; controls and filtration systems; water and



UOIG 8
University of Oregon Investment Group December 2, 2016
wastewater treatment systems; central plant heating and cooling systems; cranes
and rigging; millwrighting; and steel fabrication, erection, and welding
systems.Yahoo Finance

EMCOR Group, Inc. was weighted 25% because they have a similar beta and
have similar growth metrics. Like Argan, the majority of EMEs operations are
the United States and they provide lighting systems procurement which is
similar to Southern Maryland Cable, Inc.

Aegion Corp. (AEGN) (20%)


Figure 17: Aegion Corp. Logo Aegion Corporation engages in the research and development, manufacture,
maintenance, construction, installation, coating and insulation, cathodic
protection, distribution, and licensing of proprietary technologies and services
for the protection and maintenance of infrastructure worldwide. The company
operates through three segments: Infrastructure Solutions, Corrosion Protection,
and Energy Services. It provides technologies and services to protect against the
corrosion of industrial pipelines; rehabilitate and strengthen water, wastewater,
energy and mining piping systems and buildings, bridges, tunnels, and other
commercial and industrial structures; and utilize integrated professional services
Source: Aegion Corp. Website in engineering, procurement, construction, maintenance, and turnaround services
for various energy related industries Yahoo Finance

Aegion, Corp. was weighted 20% because their energy services segment is
similar to Argans power industry services segment and its beta is very close to
Argans as well. Their market capitalization is also similar.

Tutor Perini Corp. (TPC) (15%)


Figure 18: Tutor Perini Corp. Logo
Tutor Perini Corporation, incorporated on January 5, 1918, is a construction
company engaged in providing general contracting, construction management
and design-build services to private customers and public agencies around the
world. The Company offers general contracting, pre-construction planning and
project management services, including the planning and scheduling of the
manpower, equipment, materials and subcontractors required for a project. It
also offers selfperformed construction services, including site work, concrete
Source: Tutor Perini Corp. Website forming and placement, steel erection, electrical, mechanical, plumbing, and
heating, ventilation and air conditioning (HVAC). The Company operates
through three segments: Civil, Building, and Specialty Contractors. Google
Finance

Although TPC assumes a lot of debt in comparison to Argan, as their debt to
enterprise value ratio is 0.41, they are an adequate comparable company because
of their market capitalization and revenue growth rates.

Figure 19: MasTec Logo MasTec, Inc. (MTZ) (10%)


MasTec, Inc., an infrastructure construction company, provides engineering,
building, installation, maintenance, and upgrade services for communications,
energy, and utility infrastructure in the United States and internationally. The
company builds underground and overhead distribution systems, including
trenches, conduits, cable, and power lines, which provide wireless and
wireline/fiber communications; natural gas, crude oil, and refined product
transport pipelines; electrical power generation, transmission, and distribution
systems; power generation infrastructure, such as renewable energy; heavy

Source: MasTec Website





UOIG 9
University of Oregon Investment Group December 2, 2016
industrial plants; and compressor and pump stations, and treatment plants.
Yahoo Finance

MasTec was chosen because they offer both oil and gas services and
telecommunications services, like Argan. They were weighted the lowest of the
companies because of their low revenue growth projections for 2017E and the
Figure 20: Gross Margin Projections following years. Their beta is also considerably higher than Argans.

Discounted Cash Flow Analysis


40.00%

35.00% Revenue Model


30.00% Argans income statement breaks down revenue into the three segments
25.00%
mentioned earlier: Power Industry Services, Industrial Fabrication and Field
Services, and Telecommunications Infrastructure Services. Historical revenue
20.00% figures were seldom used for projections because their revenues are based on a
small number of contracts and they have had far fewer substantial projects in the
15.00% past. The only form of guidance that the company offers is through their
10.00% contract backlog for the Power Industry Services segment. However, this is not
a guarantee of revenue growth because projects can be reduced or cancelled
5.00% after the contract signing date. Revenues for the fourth quarter of 2017E were
projected based off analyst expectations. Revenues for 2018E were projected
0.00%
based on the completion of Gemma Power Systems five substantial projects.
Revenues for 2019E through the terminal year were projected based off of
analyst expectations and percentage of revenues for the segment. It is expected
to decrease as TRC plays a larger role in the companys success.
Source: UOIG Spreads
Industrial Fabrication and Field services revenues were projected based off of
analyst expectations and management beliefs that TRC will play a large role in
Argans future. The fourth quarter of 2017E was projected based off of
historical revenues. The revenues of 2018E through the terminal year were
projected based off of the percentage of total revenue of this segment increasing
slightly and this percentage was smoothed into the terminal year.
Figure 21: SG&A Expense Projections
Telecommunications Infrastructure Services revenues were projected in part on
the historical averages of revenue performance as well as maintaining about a
70000 9.00%
percentage of total revenues of about 1%. A linear regression model was used to
project growth rates for this segment. This percentage is less than historical
8.00%
60000 percentages in order to accommodate the acquisition and potential growth of
7.00% TRC.
50000
6.00% Cost of Revenues Model
Thousands($)

40000 5.00% Argans costs of revenues are comprised of the tools and labor costs that are
required for their projects and services across their three business segments. For
30000 4.00%
projections, percentages of revenues were used in most cases. Based on
3.00% historical figures and analyst expectations, Argan is likely to increase their
20000 margins by keeping costs from growing as fast as their revenues. This is
2.00% especially important in the Power Industry Services Segment, where costs have
10000 been historically high as a percentage of revenues and have been able to
1.00% decrease. However, there is potential for increased regulations that could lead to
higher costs, as regulations can affect efficiency. Argan will also have to assume
0 0.00%
higher costs for technological advancement to keep up with their competitors.
2010A

2012A

2014A

2016A

2018E

2020E

2022E

2024E

For these reasons, cost of revenues as a percentage of segment revenues were


Selling, General, and Administrative % of Revenue
slightly increased through the terminal year.

Source: UOIG Spreads





UOIG 10
University of Oregon Investment Group December 2, 2016

Beta
Figure 22: Beta Table
Argans estimated beta is 1.17. This was derived from three separate
regressions. The 1-year daily, 3-year daily, and 5-year daily adjusted closing
prices were regressed against the S&P 500. The 1-year daily beta was weighted
to accommodate the high growth that Argan experienced in this time period. The
3-year daily and 5-year daily betas were weighted because the standard error
values were low and those time periods reflect Argans historical growth as it
relates to its future growth well.

Depreciation and Amortization

D&A was projected based off of the percentage of revenues. The last two
realized quarters of 2017A were high in comparison to historical averages. In
order to accommodate this, the percentages were smoothed into the terminal
year closer to the historical averages.

Net Working Capital


Source: UOIG Spreads Current assets and current liabilities were mostly projected based off of
historical averages of days outstanding. Most were trended down, as days
outstanding were particularly high in the most recent recognized quarters. Costs
and Estimated Earnings in Excess of Billings was trended up to line up with
historical averages and Billings in Excess of Costs and Estimated Earnings were
trended down for the same reason.
Figure 23: Implied Price Beta Sensitivity Table
Capital Expenditures and Acquisitions
CAPEX was projected based on historical averages and revenue growth.
Although Argan is likely to make acquisitions every three to four years,
acquisitions are impossible to predict in terms of the size and timing of the
acquisition. There would also be dramatic changes in cash flow that could affect
the validity of the valuation. For these reasons, a constant percentage of total
revenues was used. This percentage took into account the historical averages of
acquisitions over a long period of time.
Source: UOIG Spreads
Recommendation
Despite Argans significant jump in price per share in the last six months, there
Figure 24: Final Valuation is still upside potential. Demand for energy will continue to increase and Argan
will be able to continue their large expansion throughout the U.S. and
international markets. Argan will continue to make strategic acquisitions that
support the companys growth and positioning desires which will further
Argans expansion. With the implementation of President-Elect Donald Trumps
policies, overall demand for oil and gas exploration will support Argans
continued growth. With an enormous cash balance and recent acquisitions that
are poised for growth, Argan remains at a discount. Weighting discounted cash
flow analysis 90% and comparable analysis 10%, an implied price of $80.60
Source: UOIG Spreads was reached and is therefore a HOLD is recommended for the Tall Firs and
Alumni Fund portfolios.




UOIG 11
University of Oregon Investment Group December 2, 2016

Appendix 1 Comparable Analysis

Comparables Analysis AGX MYRG EME AEGN TPC MTZ

($ in thousands) Argan, Inc. MYR Group, Inc. EMCOR Group, Inc. Aegion Corp. Tutor Perini Corp. MasTec, Inc.
Stock Characteristics Max Min Median Weight Avg. 30.00% 25.00% 20.00% 15.00% 10.00%
Current Price $69.09 $24.24 $32.05 $29.84 $62.10 $38.32 $69.09 $24.24 $26.20 $37.90
Beta 1.60 0.87 1.41 0.91 1.17 0.87 1.05 1.30 1.60 1.52
Size
Short-Term Debt 108,897.00 0.00 44,607.50 31,612.85 0.00 888.00 18,848.00 17,648.00 108,897.00 70,367.00
Long-Term Debt 684,202.00 0.00 593,795.00 395,876.10 0.00 23,665.00 503,388.00 337,774.00 684,202.00 998,440.00
Cash and Cash Equivalent 504,585.00 584.00 217,259.00 202,952.20 383,182.00 584.00 504,585.00 215,049.00 219,469.00 8,758.00
Non-Controlling Interest 16,531.00 0.00 2,897.00 4,080.90 1,354.00 0.00 1,302.00 16,531.00 0.00 4,492.00
Preferred Stock - - - - - - - - - -
Diluted Basic Shares 61,002.75 15,658.70 55,337.27 37,648.41 15,658.70 16,456.55 61,002.75 33,488.32 49,671.79 82,492.85
Market Capitalization 4,214,680.18 630,615.14 2,213,939.95 1,723,879.47 972,405.52 630,615.14 4,214,680.18 811,756.98 1,301,400.84 3,126,479.07
Enterprise Value 4,233,633.18 590,577.52 3,033,025.45 1,952,497.12 590,577.52 654,584.14 4,233,633.18 968,660.98 1,875,030.84 4,191,020.07
Growth Expectations
% Revenue Growth 2017E 57.52% 3.04% 4.36% 2.90% 57.52% 5.56% 3.89% 4.84% 3.04% 5.00%
% Revenue Growth 2018E 14.94% 1.72% 3.63% 3.46% 14.94% 14.91% 1.72% 10.64% 3.55% 3.70%
% EBITDA Growth 2017E 56.84% (1.21%) 15.50% 9.86% 56.84% (1.21%) 5.66% 21.18% 21.52% 9.83%
% EBITDA Growth 2018E 17.76% (28.95%) 4.66% 2.64% (28.95%) 17.76% .73% 8.59% (1.11%) 9.06%
% EPS Growth 2017E 87.91% (12.50%) 12.44% 13.61% 63.95% .94% 2.88% (12.50%) 87.91% 22.00%
% EPS Growth 2018E 21.10% (38.54%) 6.53% 4.91% (38.54%) 21.10% 5.92% 7.14% 4.68% 13.00%
Profitability Margins
Gross Margin 25% 9.82% 13.86% 10.65% 24.55% 11.31% 14.20% 21.37% 9.82% 13.52%
EBIT Margin 19% 4.09% 5.38% 3.70% 19.14% 4.09% 4.61% 6.18% 4.69% 6.07%
EBITDA Margin 20% 5.35% 7.41% 5.12% 19.69% 6.32% 5.89% 9.77% 5.35% 8.92%
Net Margin 14% 1.12% 2.93% 1.85% 14.07% 2.32% 2.85% 3.36% 1.12% 3.01%
Credit Metrics
Interest Expense $40,000.00 - $27,250.00 $16,025.00 - $750.00 $9,100.00 $14,500.00 $40,000.00 $48,500.00
Debt/EV 0.42 - 0.31 0.19 - 0.04 0.12 0.37 0.42 0.26
Leverage Ratio 2.93 - 2.50 1.53 - 0.34 1.27 2.78 2.93 2.22
Interest Coverage Ratio 96.13 - 9.38 15.07 - 96.13 45.16 8.83 6.78 9.94
Operating Results
Revenue $6,980,000.00 $650,982.24 $5,235,000.00 $3,307,600.00 $650,982.24 $1,140,000.00 $6,980,000.00 $1,310,500.00 $5,070,000.00 $5,400,000.00
Gross Profit $991,000.00 $128,900.00 $614,000.00 $451,450.00 $159,823.59 $128,900.00 $991,000.00 $280,000.00 $498,000.00 $730,000.00
EBIT $322,000.00 $46,650.00 $280,000.00 $165,200.00 $124,613.13 $46,650.00 $322,000.00 $81,000.00 $238,000.00 $328,000.00
EBITDA $411,000.00 $72,098.00 $341,000.00 $217,190.00 $128,206.89 $72,098.00 $411,000.00 $128,000.00 $271,000.00 $481,900.00
Net Income $199,000.00 $26,500.00 $109,750.00 $83,350.00 $91,624.57 $26,500.00 $199,000.00 $44,000.00 $57,000.00 $162,500.00
Capital Expenditures $71,000.00 $5,112.77 $53,500.00 $39,550.00 $5,112.77 $49,000.00 $36,000.00 $32,000.00 $71,000.00 $135,000.00
Multiples
EV/Revenue 0.91x 0.37x 0.67x 0.43x 0.91x 0.57x 0.61x 0.74x 0.37x 0.78x
EV/Gross Profit 5.08x 3.46x 4.02x 2.90x 3.70x 5.08x 4.27x 3.46x 3.77x 5.74x
EV/EBIT 14.03x 4.74x 12.37x 8.14x 4.74x 14.03x 13.15x 11.96x 7.88x 12.78x
EV/EBITDA 10.30x 4.61x 8.13x 6.00x 4.61x 9.08x 10.30x 7.57x 6.92x 8.70x
EV/(EBITDA-Capex) 28.34x 4.80x 10.69x 7.45x 4.80x 28.34x 11.29x 10.09x 9.38x 12.08x
Market Cap/Net Income = P/E 23.80x 10.61x 20.21x 14.33x 10.61x 23.80x 21.18x 18.45x 22.83x 19.24x

Multiple Implied Price Weight


EV/Revenue $42.37 0.00%
EV/Gross Profit $53.97 0.00%
EV/EBIT $89.15 0.00%
EV/EBITDA $73.48 100.00%
EV/(EBITDA-Capex) $82.99 0.00%
Market Cap/Net Income = P/E $83.87 0.00%

Price Target
Current Price
$73.48
$62.10
Undervalued 18.32%


UOIG 12
University of Oregon Investment Group December 2, 2016

Appendix 2 Discounted Cash Flows Valuation




UOIG 13
University of Oregon Investment Group December 2, 2016

Appendix 3 Revenue Model


Revenue Model
($ in thousands) 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
Power Industry Services $209,814.00 $174,938.00 $132,519.00 $261,327.00 $218,649.00 $376,676.00 $387,636.00 $567,847.35 $653,024.45 $698,736.16 $742,057.81 $783,118.34 $821,230.10 $855,721.76 $881,393.41 $934,277.02
% Growth 103.72% (16.62%) (24.25%) 97.20% (16.33%) 72.27% 2.91% 46.49% 15.00% 7.00% 6.20% 5.53% 4.87% 4.20% 3.00% 6.00%
% of Total Revenue 96.10% 95.81% 93.42% 93.79% 96.13% 98.32% 93.80% 87.23% 87.28% 86.51% 85.74% 84.99% 84.28% 83.61% 82.92% 82.78%
Telecommunications Infrastructure $8,517.00 $7,654.00 $9,331.00 $17,308.00 $8,806.00 $6,434.00 $10,379 $8,137 $8,951.20 $9,807.95 $10,704.68 $11,637.52 $12,601.77 $13,591.91 $14,601.59 $15,623.70
% Growth (.42%) (10.13%) 21.91% 85.49% (49.12%) (26.94%) 61.31% (21.60%) 10.00% 9.57% 9.14% 8.71% 8.29% 7.86% 7.43% 7.00%
% of Total Revenue 3.90% 4.19% 6.58% 6.21% 3.87% 1.68% 2.51% 1.25% 1.20% 1.21% 1.24% 1.26% 1.29% 1.33% 1.37% 1.38%
Industrial Fabrication and Field Services - - - - - - $15,260.00 $74,997.44 $86,247.06 $99,184.11 $112,739.28 $126,643.79 $140,574.60 $154,163.48 $167,010.44 $178,701.17
% Growth 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 391.46% 15.00% 15% 13.67% 12.33% 11.00% 9.67% 8.33% 7.00%
% of Total Revenue 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.69% 11.52% 11.53% 12.28% 13.03% 13.74% 14.43% 15.06% 15.71% 15.83%
Contract Backlog at End of Period $300,000.00 $291,000.00 $415,000.00 $180,000.00 $790,000.00 $423,000.00 $1,000,000.00
% Growth (34.21%) (3.00%) 42.61% (56.63%) 338.89% (46.46%) 136.41%
% of Power Industry Services Revenue 142.98% 166.34% 313.16% 68.88% 361.31% 112.30% 0.00%
Total Revenue $218,331.00 $182,592.00 $141,850.00 $278,635.00 $227,455.00 $383,110.00 $413,275.00 $650,982.24 $748,222.70 $807,728.23 $865,501.76 $921,399.64 $974,406.47 $1,023,477.15 $1,063,005.44 $1,128,601.89
% Growth 3.55% (16.37%) (22.31%) 96.43% (18.37%) 68.43% 7.87% 57.52% 14.94% 7.95% 7.15% 6.46% 5.75% 5.04% 3.86% 6.17%
102325.00

Cost of Revenues Model


($ in thousands) 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
Power Industry Services $188,983.00 $146,976.00 $111,193.00 $214,817.00 $141,807.00 $294,643.00 $341,316.65 $436,794.08 $542,010.30 $573,961.85 $603,186.99 $629,850.89 $653,464.52 $673,575.27 $686,227.73 $719,393.30
% Growth 11.79% (22.23%) (24.35%) 93.19% (33.99%) 107.78% 15.84% 131.13% 24.09% 5.90% 5.09% 4.42% 3.75% 3.08% 1.88% 4.83%
% of Power Industry Services Revenue 90.07% 84.02% 83.91% 82.20% 64.86% 78.22% 88.05% 76.92% 83.00% 82.14% 81.29% 80.43% 79.57% 78.71% 77.86% 77.00%
% of Total Cost of Revenues 96.61% 95.77% 93.64% 94.01% 95.42% 98.38% 93.69% 85.36% 86.70% 86.13% 85.41% 84.53% 83.49% 82.25% 80.71% 79.45%
Telecommunications Infrastructure $6,629.00 $6,493.00 $7,555.00 $13,683.00 $6,800.00 $4,864.00 $7,460 $6,590 $7,237.78 $7,918.51 $8,629.36 $9,367.08 $10,127.76 $10,906.85 $11,699.17 $12,498.96
% Growth (6.99%) (24.09%) (11.67%) 59.98% (20.50%) (43.13%) 53.37% (11.67%) 9.83% 9.41% 8.98% 8.55% 8.12% 7.69% 7.26% 6.84%
% of Telecommunications Infrastructure Revenue 77.83% 84.83% 80.97% 79.06% 77.22% 75.60% 71.88% 80.98% 80.86% 80.74% 80.61% 80.49% 80.37% 80.25% 80.12% 80.00%
% of Total Cost of Revenues 3.39% 4.23% 6.36% 5.99% 4.58% 1.62% 2.05% 1.29% 1.16% 1.19% 1.22% 1.26% 1.29% 1.33% 1.38% 1.38%
Industrial Fabrication and Field Services - - - - - - $15,527.00 $68,353.56 $75,872.46 $84,502.95 $94,432.04 $105,881.93 $119,117.17 $134,453.51 $152,268.60 $173,586.20
% Growth - - - - - - 100.00% 340.22% 11.00% 11.38% 11.75% 12.13% 12.50% 12.88% 13.25% 14.00%
% of Industrial Fabrication and Field Services Revenue - - - - - - 4.26% 91.14% 87.97% 85.20% 83.76% 83.61% 84.74% 87.21% 91.17% 97.14%
% of Total Cost of Revenues - - - - - - 101.75% 13.36% 12.14% 12.68% 13.37% 14.21% 15.22% 16.42% 17.91% 19.17%
Total Cost of Revenues $195,612.00 $153,469.00 $118,748.00 $228,500.00 $148,607.00 $299,507.00 $364,303.65 $511,737.42 $625,120.53 $666,383.31 $706,248.40 $745,099.90 $782,709.45 $818,935.63 $850,195.50 $905,478.47
% Growth 11.03% (21.54%) (22.62%) 92.42% (34.96%) 101.54% 21.63% 161.61% 22.16% 6.60% 5.98% 5.50% 5.05% 4.63% 3.82% 6.50%
% of Total Revenue 89.59% 84.05% 83.71% 82.01% 65.33% 78.18% 88.15% 78.61% 83.55% 82.50% 81.60% 80.87% 80.33% 80.02% 79.98% 80.23%




UOIG 14
University of Oregon Investment Group December 2, 2016

Appendix 4 Working Capital Model


Working Capital Model
($ in thousands) 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
Total Revenue $218,331.00 $182,592.00 $141,850.00 $278,635.00 $227,455.00 $383,110.00 $413,275.00 $650,982.24 $748,222.70 $807,728.23 $865,501.76 $921,399.64 $974,406.47 $1,023,477.15 $1,063,005.44 $1,128,601.89

Current Assets
Accounts Receivable 2,698.00 13,099.00 16,053.00 24,879.00 23,687.00 27,330.00 64,185.00 59,900.00 77,256.56 82,709.16 87,884.00 92,517.59 97,273.80 101,296.20 104,298.31 109,468.22
Days Sales Outstanding A/R 4.51 26.18 41.31 32.68 38.01 26.04 56.69 33.59 37.69 37.38 37.06 36.75 36.44 36.13 35.81 35.50
% of Revenue 1.24% 7.17% 11.32% 8.93% 10.41% 7.13% 15.53% 9.20% 10.33% 10.24% 10.15% 10.04% 9.98% 9.90% 9.81% 9.70%
Costs and Estimated Earnings in Excess of Billings 12,931.00 1,443.00 2,781.00 1,178.00 527.00 455.00 4,078.00 3,364.83 2,618.78 2,827.05 3,029.26 3,224.90 3,410.42 3,582.17 3,720.52 3,950.11
% of Revenue 5.92% 0.79% 1.96% 0.42% 0.23% 0.12% 0.99% 0.52% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
Prepaid Expenses 2,064.00 520.00 4,528.00 1,606.00 1,754.00 1,092.00 5,368.00 5,904.80 6,866.70 7,828.60 8,790.50 9,752.40 10,714.30 11,676.20 12,638.10 13,600.00
% of Revenue 0.95% 0.28% 3.19% 0.58% 0.77% 0.29% 1.30% 0.91% 0.92% 0.97% 1.02% 1.06% 1.10% 1.14% 1.19% 1.21%
Notes Receivable and Accrued Interest - - - - 204.00 1,786.00 1,974.00 - 1,870.56 2,019.32 2,163.75 2,303.50 2,436.02 2,558.69 2,657.51 2,821.50
% of Revenue - - - - 0.09% 0.47% 0.48% - 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Deferred Income Tax Assets 598.00 91.00 691.00 1,303.00 178.00 - 1,111.00 - 748.22 807.73 865.50 921.40 974.41 1,023.48 1,063.01 1,128.60
% of Revenue 0.27% 0.05% 0.49% 0.47% 0.08% - 0.27% - 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
Assets Held for Sale 5,785.00 6,354.00 - - - - - - - - - - - - - -
% of Revenue 2.65% 3.48% - - - - - - - - - - - - - -
Total Current Assets $24,076.00 $21,507.00 $24,053.00 $28,966.00 $26,350.00 $30,663.00 $76,716.00 $69,169.63 $89,360.82 $96,191.86 $102,733.01 $108,719.78 $114,808.94 $120,136.74 $124,377.45 $130,968.43
% of Revenue 11.03% 11.78% 16.96% 10.40% 11.58% 8.00% 18.56% 10.63% 11.94% 11.91% 11.87% 11.80% 11.78% 11.74% 11.70% 11.60%
Long Term Assets
Net PP&E Beginning 1,214.00 1,540.00 1,478.00 2,761.00 9,468.00 4,183.00 6,325.00 12,308.00 29,721.06 43,796.82 56,084.52 69,692.37 84,396.02 99,885.71 115,772.19 131,563.46
Capital Expenditures 190.00 487.00 1,738.00 7,263.00 1,136.00 2,936.00 3,118.00 5,112.77 5,876.49 6,343.84 6,797.59 7,236.61 7,652.92 8,038.32 8,348.77 8,863.96
Acquisitions 5,981.00 - - - - - 17,379.00 - 3,741.11 4,038.64 4,327.51 4,607.00 4,872.03 5,117.39 5,315.03 5,643.01
Depreciation and Amortization 971.00 992.00 789.00 765.00 792.00 794.00 1,310.00 3,593.76 4,458.16 5,943.85 6,810.26 7,467.04 7,836.77 7,848.16 7,442.50 6,578.17
Net PP&E Ending 1,540.00 1,478.00 2,761.00 9,468.00 4,183.00 6,325.00 12,308.00 21,014.53 43,796.82 56,084.52 69,692.37 84,396.02 99,885.71 115,772.19 131,563.46 147,005.59
Total Current Assets & Net PP&E $25,616.00 $22,985.00 $26,814.00 $38,434.00 $30,533.00 $36,988.00 $89,024.00 $90,184.16 $133,157.64 $152,276.37 $172,425.38 $193,115.80 $214,694.65 $235,908.93 $255,940.90 $277,974.02
% of Revenue 11.73% 12.59% 18.90% 13.79% 13.42% 9.65% 21.54% 13.85% 17.80% 18.85% 19.92% 20.96% 22.03% 23.05% 24.08% 24.63%
Current Liabilities
Accounts Payable 17,083.00 8,555.00 29,524.00 32,699.00 22,589.00 37,691.00 46,395.00 55,674.00 84,295.77 88,017.55 91,435.12 94,292.84 97,352.86 99,838.86 101,592.14 100,696.48
Days Payable Outstanding 32.03 20.48 91.36 52.55 55.78 46.05 55.26 50.50 49.57 48.64 47.72 46.79 45.86 44.93 44.00 41.00
% of Revenue 7.82% 4.69% 20.81% 11.74% 9.93% 9.84% 11.23% 8.55% 11.27% 10.90% 10.56% 10.23% 9.99% 9.75% 9.56% 8.92%
Accrued Expenses 9,609.00 13,035.00 6,751.00 9,488.00 7,912.00 15,976.00 35,454.00 35,733.98 40,614.17 43,350.21 45,921.58 48,323.91 50,508.02 52,425.67 53,800.35 56,430.09
% of Revenue 4.40% 7.14% 4.76% 3.41% 3.48% 4.17% 8.58% 5.49% 5.43% 5.37% 5.31% 5.24% 5.18% 5.12% 5.06% 5.00%
Billings in Excess of Costs and Estimated Earnings 1,874.00 9,916.00 68,004.00 73,359.00 134,736.00 161,564.00 105,863.00 133,545.83 145,530.79 148,507.97 149,918.49 149,794.30 148,041.01 144,603.28 138,874.37 135,432.23
% of Revenue 0.86% 5.43% 47.94% 26.33% 59.24% 42.17% 25.62% 20.51% 19.45% 18.39% 17.32% 16.26% 15.19% 14.13% 13.06% 12.00%
Deferred Income Tax Liabilities - - - - - 201.00 - - 748.22 959.18 1,190.06 1,439.69 1,705.21 1,982.99 2,258.89 2,821.50
% of Revenue - - - - - 0.05% - - 0.10% 0.12% 0.14% 0.16% 0.18% 0.19% 0.21% 0.25%
Other Current Liabilities 1,468.00 1,362.00 - - - - - - - - - - - - - -
% of Revenue 0.67% 0.75% - - - - - - - - - - - - - -
Total Current Liabilities $28,566.00 $31,506.00 $104,279.00 $115,546.00 $165,237.00 $215,432.00 $187,712.00 $224,953.81 $271,188.96 $280,834.90 $288,465.26 $293,850.73 $297,607.10 $298,850.80 $296,525.75 $295,380.31
% of Revenue 13.08% 17.25% 73.51% 41.47% 72.65% 56.23% 45.42% 34.56% 36.24% 34.77% 33.33% 31.89% 30.54% 29.20% 27.90% 26.17%




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University of Oregon Investment Group December 2, 2016

Appendix 5 Discounted Cash Flows Valuation Assumptions





UOIG 16
University of Oregon Investment Group December 2, 2016

Appendix 6 Sensitivity Analysis




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University of Oregon Investment Group December 2, 2016

Appendix 7 Sources
Argan Investor Presentations
BusinessWire
FactSet
Google Finance
IBIS World
Morningstar
S&P Capital IQ
Company SEC Filings
U.S. Bureau of Economic Analysis
U.S. Energy Information Administration
Yahoo! Finance




UOIG 18

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