Argan(AGX) - 2026 Q2 - Quarterly Results

Executive Summary Consolidated Financial Highlights Argan, Inc. reported strong Q2 and H1 FY2026 results with significant growth in revenue, profit, and a record project backlog Consolidated Financial Highlights (Q2 and Six Months Ended July 31, 2025 vs 2024) | Metric | Q2 FY2026 | Q2 FY2025 | Q2 Change | 6 Months FY2026 | 6 Months FY2025 | 6 Months Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $237,743 | $227,015 | $10,728 (4.7%) | $431,403 | $384,697 | $46,706 (12.1%) | | Gross profit | $44,267 | $31,105 | $13,162 (42.3%) | $81,130 | $49,049 | $32,081 (65.4%) | | Gross margin % | 18.6% | 13.7% | 4.9% pts | 18.8% | 12.8% | 6.0% pts | | Net income | $35,275 | $18,198 | $17,077 (93.8%) | $57,825 | $26,080 | $31,745 (121.7%) | | Diluted EPS | $2.50 | $1.31 | $1.19 (90.8%) | $4.09 | $1.90 | $2.19 (115.3%) | | EBITDA | $36,225 | $24,842 | $11,383 (45.8%) | $66,524 | $36,732 | $29,792 (81.1%) | | EBITDA as % of revenues | 15.2% | 10.9% | 4.3% pts | 15.4% | 9.5% | 5.9% pts | | Cash dividends per share | $0.375 | $0.300 | $0.075 | $0.750 | $0.600 | $0.150 | Balance Sheet Highlights (As of July 31, 2025 vs January 31, 2025) | Metric | July 31, 2025 | January 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Cash, cash equivalents and investments | $572,190 | $525,137 | $47,053 | | Net liquidity | $344,462 | $301,443 | $43,019 | | Project backlog | $1,953,000 | $1,361,000 | $592,000 | CEO Commentary and Operational Highlights The CEO highlighted continued momentum in Q2 FY2026, driven by strong demand and excellent project execution - Continued momentum in Q2 FY2026 was reflected in strong consolidated revenue, gross margin, diluted EPS, and EBITDA[3] - Demand across all business segments remains strong, contributing to a record backlog of $2.0 billion[4] - Key project milestones were achieved, including the completion of an LNG project in Louisiana, first fire at Trumbull units, and significant progress on renewable projects[5] - An EPC services contract was secured for the Platin Power Station in Ireland, adding approximately 170 MW of generation capacity[5] - Argan is well-positioned to benefit from the urgent need for reliable energy resources to strengthen the power grid[6] Financial Performance Analysis Second Quarter Fiscal 2026 Results Argan's second quarter of fiscal 2026 demonstrated robust financial growth across key metrics, driven by increased project activity and improved margins Revenue and Gross Profit Analysis Q2 FY2026 consolidated revenues increased 4.7% YoY to $237.7 million, while gross profit surged 42.3% due to improved margins Q2 FY2026 Revenue and Gross Profit | Metric | July 31, 2025 | July 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $237,743 | $227,015 | $10,728 (4.7% increase) | | Gross profit | $44,267 | $31,105 | $13,162 (42.3% increase) | | Gross margin % | 18.6% | 13.7% | 4.9% pts increase | - Revenue increase was attributed to increased project activity from a growing number of current projects and contract backlog[7] - Improved gross profit margins were primarily due to the Power Industry Services segment[8] Operating Expenses and Other Income SG&A expenses increased as a percentage of revenue, while other income remained stable and income tax expense significantly decreased Q2 FY2026 Operating Expenses and Other Income | Metric | July 31, 2025 | July 31, 2024 | | :--- | :--- | :--- | | Selling, general and administrative expenses | $14,212 | $12,428 | | SG&A as % of revenues | 6.0% | 5.5% | | Other income, net | $5,581 | $5,604 | | Income tax expense | $361 | $6,083 | - Income tax expense was significantly reduced due to a meaningful benefit from favorable deductions resulting from stock option exercises[10] Net Income and Earnings Per Share Net income for Q2 FY2026 nearly doubled to $35.3 million, resulting in a record diluted EPS of $2.50 Q2 FY2026 Net Income and Diluted EPS | Metric | July 31, 2025 | July 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Net income | $35,275 | $18,198 | $17,077 (93.8% increase) | | Diluted earnings per share | $2.50 | $1.31 | $1.19 (90.8% increase) | - A record $2.50 per diluted share was achieved for the quarter[11] EBITDA Performance EBITDA for Q2 FY2026 increased by 45.8% to $36.2 million, with the corresponding margin expanding to 15.2% Q2 FY2026 EBITDA Performance | Metric | July 31, 2025 | July 31, 2024 | Change | | :--- | :--- | :--- | :--- | | EBITDA | $36,225 | $24,842 | $11,383 (45.8% increase) | | EBITDA as a % of revenues | 15.2% | 10.9% | 4.3% pts increase | Liquidity and Financial Position The company strengthened its financial position with increased cash and net liquidity, while remaining debt-free Liquidity and Financial Position (As of July 31, 2025 vs January 31, 2025) | Metric | July 31, 2025 | January 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Cash, cash equivalents and investments | $572,190 | $525,137 | $47,053 | | Net liquidity | $344,462 | $301,443 | $43,019 | - The Company had no debt as of July 31, 2025[13] First Six Months Fiscal 2026 Results The first half of FY2026 saw substantial growth in revenues, a surge in gross profit, and a doubling of net income Revenue and Gross Profit Analysis H1 FY2026 revenues grew 12.1% YoY to $431.4 million, with gross profit increasing 65.4% and margin expanding to 18.8% Six Months FY2026 Revenue and Gross Profit | Metric | July 31, 2025 | July 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $431,403 | $384,697 | $46,706 (12.1% increase) | | Gross profit | $81,130 | $49,049 | $32,081 (65.4% increase) | | Gross margin % | 18.8% | 12.8% | 6.0% pts increase | Net Income and Earnings Per Share Net income for the first six months more than doubled to $57.8 million, driving diluted EPS to $4.09 Six Months FY2026 Net Income and Diluted EPS | Metric | July 31, 2025 | July 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Net income | $57,825 | $26,080 | $31,745 (121.7% increase) | | Diluted income per share | $4.09 | $1.90 | $2.19 (115.3% increase) | EBITDA Performance EBITDA for H1 FY2026 increased by 81.1% to $66.5 million, with the margin rising to 15.4% of revenues Six Months FY2026 EBITDA Performance | Metric | July 31, 2025 | July 31, 2024 | Change | | :--- | :--- | :--- | :--- | | EBITDA | $66,524 | $36,732 | $29,792 (81.1% increase) | | EBITDA as a % of revenues | 15.4% | 9.5% | 5.9% pts increase | Project Backlog Project backlog reached a record of approximately $2.0 billion, a significant increase from January 31, 2025 Project Backlog | Metric | July 31, 2025 | January 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Project backlog | $1,953,000 | $1,361,000 | $592,000 (43.5% increase) | - Consolidated project backlog reached a record of approximately $2.0 billion[4][15] Company Overview and Strategic Outlook About Argan Argan, Inc. provides construction and related services to the power industry, specializing in EPC for power plants and renewable facilities - Argan's primary business is providing a full range of construction and related services to the power industry[18] - Service offerings focus on EPC of natural gas-fired power plants and renewable energy facilities, along with commissioning, maintenance, and consulting services[18] - Key operations include Gemma Power Systems, Atlantic Projects Company, The Roberts Company, and SMC Infrastructure Solutions[18] Strategic Focus and Market Opportunities Argan is positioned to capitalize on growing energy demand by focusing on disciplined project execution in key geographies - Argan is well-positioned to benefit from the current demand environment as the industry responds to the urgent need for reliable energy resources[6] - The ongoing electrification requires an uninterrupted supply of reliable energy, for which Argan is a proven partner in constructing large power facilities[6] - The company remains focused on a disciplined approach to pursuing and winning the right projects, with the right partners, in the right geographies[6] Supplemental Information Conference Call Details The company hosted an investor conference call on September 4, 2025, with replay options available - An investor conference call and webcast were hosted on September 4, 2025, at 5:00 p.m. ET[16] - A replay of the teleconference is available until September 18, 2025, and a webcast replay until September 4, 2026[17] Non-GAAP Financial Measures The company uses the non-GAAP measure EBITDA to supplement its operating results, excluding certain non-cash and financing effects - The Company uses Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") as a non-GAAP financial measure[19] - EBITDA supplements the understanding of Argan's ongoing operating results by excluding the effects of capital structure, depreciation, amortization, and income tax rates[20] - This non-GAAP measure should be considered in conjunction with, and not as a substitute for, GAAP financial information[20] Safe Harbor Statement The press release includes forward-looking statements subject to risks and uncertainties detailed in SEC filings - Certain matters discussed in the press release may constitute forward-looking statements within the meaning of federal securities laws[21] - Future financial performance is subject to risks and uncertainties, including the successful addition of new contracts to project backlog and the Company's ability to successfully complete projects[21] - Actual results and timing of events could differ materially from projections due to risk factors described in the Company's SEC filings[21] Company Contacts Contact information is provided for company and investor relations inquiries - Company Contact: David Watson, 301.315.0027[22] - Investor Relations Contacts: John Nesbett/Jennifer Belodeau, IMS Investor Relations, 203.972.9200, argan@imsinvestorrelations.com[22] Condensed Consolidated Financial Statements Statements of Earnings This section presents unaudited statements of earnings for the three and six months ended July 31, 2025, and 2024 ARGAN, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited) | | Three Months Ended July 31, | | Six Months Ended July 31, | | | :--- | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | REVENUES | $237,743 | $227,015 | $431,403 | $384,697 | | Cost of revenues | 193,476 | 195,910 | 350,273 | 335,648 | | GROSS PROFIT | 44,267 | 31,105 | 81,130 | 49,049 | | Selling, general and administrative expenses | 14,212 | 12,428 | 26,733 | 23,853 | | INCOME FROM OPERATIONS | 30,055 | 18,677 | 54,397 | 25,196 | | Other income, net | 5,581 | 5,604 | 11,025 | 10,398 | | INCOME BEFORE INCOME TAXES | 35,636 | 24,281 | 65,422 | 35,594 | | Income tax expense | 361 | 6,083 | 7,597 | 9,514 | | NET INCOME | 35,275 | 18,198 | 57,825 | 26,080 | | OTHER COMPREHENSIVE INCOME, NET OF TAXES | | Foreign currency translation adjustments | (251) | (186) | 3,370 | (976) | | Net unrealized (losses) gains on available-for-sale securities | (1,082) | 1,459 | 1,598 | 490 | | COMPREHENSIVE INCOME | $33,942 | $19,471 | $62,793 | $25,594 | | EARNINGS PER SHARE | | Basic | $2.57 | $1.36 | $4.23 | $1.96 | | Diluted | $2.50 | $1.31 | $4.09 | $1.90 | | WEIGHTED AVERAGE SHARES OUTSTANDING | | Basic | 13,731 | 13,403 | 13,680 | 13,331 | | Diluted | 14,131 | 13,880 | 14,122 | 13,727 | | CASH DIVIDENDS PER SHARE | $0.375 | $0.300 | $0.750 | $0.600 | Balance Sheets This section provides unaudited balance sheets as of July 31, 2025, and January 31, 2025, detailing assets, liabilities, and equity ARGAN, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) (Unaudited) | | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | ASSETS | | | | CURRENT ASSETS | | | | Cash and cash equivalents | $177,850 | $145,263 | | Investments | 394,340 | 379,874 | | Accounts receivable, net | 179,155 | 175,808 | | Contract assets | 23,741 | 28,430 | | Other current assets | 53,698 | 51,925 | | TOTAL CURRENT ASSETS | 828,784 | 781,300 | | Property, plant and equipment, net | 15,714 | 14,463 | | Goodwill | 28,033 | 28,033 | | Intangible assets, net | 1,630 | 1,826 | | Deferred taxes, net | — | 552 | | Right-of-use and other assets | 8,543 | 10,053 | | TOTAL ASSETS | $882,704 | $836,227 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | CURRENT LIABILITIES | | | | Accounts payable | $96,049 | $97,297 | | Accrued expenses | 71,453 | 83,319 | | Contract liabilities | 316,820 | 299,241 | | TOTAL CURRENT LIABILITIES | 484,322 | 479,857 | | Deferred taxes, net | 742 | — | | Noncurrent liabilities | 4,464 | 4,513 | | TOTAL LIABILITIES | 489,528 | 484,370 | | STOCKHOLDERS' EQUITY | | | | Preferred stock, par value $0.10 per share – 500,000 shares authorized; no shares issued and outstanding | — | — | | Common stock, par value $0.15 per share – 30,000,000 shares authorized; 15,828,289 shares issued; 13,811,575 and 13,634,214 shares outstanding at July 31, 2025 and January 31, 2025, respectively | 2,374 | 2,374 | | Additional paid-in capital | 166,616 | 168,966 | | Retained earnings | 340,276 | 292,698 | | Treasury stock, at cost – 2,016,714 and 2,194,075 shares at July 31, 2025 and January 31, 2025, respectively | (114,520) | (105,643) | | Accumulated other comprehensive loss | (1,570) | (6,538) | | TOTAL STOCKHOLDERS' EQUITY | 393,176 | 351,857 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $882,704 | $836,227 | Reconciliation to EBITDA This section provides a reconciliation of net income (GAAP) to the non-GAAP measure EBITDA for the reported periods ARGAN, INC. AND SUBSIDIARIES RECONCILIATION TO EBITDA (In thousands) (Unaudited) | | Three Months Ended July 31, | | Six Months Ended July 31, | | | :--- | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net income, as reported | $35,275 | $18,198 | $57,825 | $26,080 | | Income tax expense | 361 | 6,083 | 7,597 | 9,514 | | Depreciation | 491 | 463 | 906 | 943 | | Amortization of intangible assets | 98 | 98 | 196 | 195 | | EBITDA | $36,225 | $24,842 | $66,524 | $36,732 |