Argan, Inc. Q4 FY2026 earnings call

Good evening, welcome to the call. David Watson starts by highlighting record top and bottom line performance for the quarter and year. Fourth quarter revenue $262.1M, full year $944.6M. Gross margin 25% in Q4, 20.5% full year. Record net income and EBITDA. Added $2.5B in new contract value, backlog over $2.9B. Balance sheet strong, no debt, $895M cash and investments. Dividend increased to 50 cents per share. Power segment can build all types of power facilities, industrial provides field services and fabricates components, teledata provides project management. Highlighted major projects like Trumbull Energy Center reaching substantial completion, progress on other projects. Backlog composition: 77% natural gas, 14% renewable, 9% industrial.

Our three reportable business segments: Power segment revenues were $204 million in the fourth quarter, representing 78% consolidated revenues, pre-tax book income was $55 million, and closed the year with a backlog of $2.7 billion. Industrial segment revenue increased to $53 million compared to $33 million in the fourth quarter of 2025, contributed 20% consolidated revenues with pre-tax book income of approximately $4 million, and backlog was $253 million at January 31, 2026. Teledata segment revenue was $5 million in the fourth quarter of fiscal 2026, contributed 2% consolidated revenue, and closed fiscal 2026 with backlog of $8.4 million.

Expect to add a handful of new projects over next 12 to 20 months. Confident in ability to execute on 10 to 12 jobs simultaneously. For fiscal 2027, while 2026 had strong margins due to Trumbull, margin cadence can vary based on execution, contract type, etc., and it's too early to tell exact 2027 gross margin but encouraged by backlog and progress. Expect to continue adding jobs as current backlog allows capacity.

Q: Discuss regional activities in pipeline.

A: Seeing opportunities across the country, including Texas and PJM, no specific region constrained.

Q: Pricing dynamics and margins.

A: Disciplined approach, price contracts considering market, inflation, labor, etc., no one-size-fits-all, collaborative with customers.

Q: 2027 margins.

A: Margin cadence can vary, factors like execution, contract type impact, too early to tell exact 2027 gross margin.

Q: Capacity for new jobs.

A: Have capacity to take on additional jobs this year, currently 9 projects underway, 10-12 jobs at one time.

Q: Industrial segment revenue.

A: Encouraged by revenue growth, backlog increased, looking forward to increased year-over-year growth.

Q: Update on value chain hurdles.

A: Confident, supply chain conditions improving.

Q: Expansion of teams.

A: Focused on retention, training, adding headcount, non-craft workforce at highest level.

Q: Behind-the-meter solutions.

A: Robust opportunity, depends on right job, contract, etc.

Q: Power segment margin driver.

A: Execution, slight mix rotation, early substantial completion on Trumbull beneficial.

Q: PJM region opportunity.

A: Monitoring emergency capacity auction, potential TEF effect like in Texas