Argan, Inc. Q2 FY2026 earnings call

• Achieved consolidated revenue of $238 million in Q2 2026, up 5% Y/Y and 23% Q/Q. Improved gross margin to 18.6% from 13.7% in 2025. Record net income of $35.3 million and EBITDA of $36.3 million.
• Power Industry Services revenues up 13% to $197M, Industrial Construction Services revenues down to $36M but with record backlog of $189M, Telecommunications segment contributed 2% of revenues and achieved record backlog.
• Key projects: Trumbull project first fire at units, 1.2-gigawatt plant in Texas started, Tarbert power station in Ireland underway, and various water treatment projects.
• Strong balance sheet: $572M cash and investments, $344M net liquidity, no debt, and quarterly dividend of 37.5¢ paid.

Power Industry Services: Revenues increased 13% to $197 million in the second quarter of 2026, representing 83% of second quarter revenues and reporting pretax book income of approximately $35 million. Industrial Construction Services: Revenues decreased to $36 million in the second quarter of 2026 from $50 million in 2025, contributing 15% of consolidated revenue with pretax book income of approximately $3 million. Telecommunications Infrastructure Services: Contributed 2% of second quarter revenues and achieved record backlog in the quarter.

• Expect to add more projects before end of fiscal year, with natural gas projects expected to be the growth driver.
• Confident in continued strong execution and maintaining or improving gross margins.
• Capital allocation strategy includes returning capital to shareholders via dividends, share buybacks (board increased authorization to $150M), and evaluating M&A opportunities.

Q: Chris Moore asked about the timeline for completing the Trumbull project, gross margin sustainability, and project size range.

A: David Watson responded that Trumbull is on track to complete in the first half of next year, gross margin expectations are tied to execution excellence, and projects range from 170MW to 1.2GW.

Q: Rob Brown inquired about pipeline acceleration, industrial business pipeline, backlog update, margin pricing, and capacity.

A: David Watson discussed pipeline dynamics, industrial business record backlog, backlog expectations to be over $2B by year-end, margin pricing discipline based on customer relationships, and capacity planned organically with 10-12 jobs in power business.

Q: Drew Chamberlain asked about backlog changes, margin pricing dynamics, and capacity and M&A.

A: David Watson responded that backlog projects continue to progress, margin pricing is disciplined based on long-term customer relationships, and capacity is being nurtured organically.