Argan(US:AGX)2025-09-04 22:00Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2026 was $238 million, reflecting a 5% increase year-over-year and a 23% sequential increase from Q1 2026 [4][17] - Gross margins improved to 18.6% compared to 13.7% in Q2 2025, with record net income of $35.3 million or $2.50 per diluted share [5][19] - EBITDA for Q2 2026 was $36.3 million, representing an EBITDA margin of 15.2%, up from 10.9% in the same quarter last year [5][19] Business Line Data and Key Metrics Changes - Power industry services segment revenues increased 13% to $197 million, accounting for 83% of total revenues [7] - Industrial construction services segment revenues decreased to $36 million from $50 million year-over-year but saw a 23% sequential growth from Q1 2026 [7][8] - Telecommunications infrastructure services contributed 2% of total revenues, with a record backlog achieved [9] Market Data and Key Metrics Changes - The backlog reached a record $2 billion, with significant contributions from new projects in the power industry and industrial services [5][12] - The company noted increasing demand for energy infrastructure due to the electrification of various sectors and aging natural gas infrastructure [10][11] Company Strategy and Development Direction - The company is focused on capitalizing on the growing demand for power generation facilities, particularly natural gas and renewable energy projects [10][24] - A disciplined capital allocation strategy is in place, emphasizing investments in workforce, dividends, and potential M&A opportunities [22][23] - The company aims to maintain its leadership role in energy infrastructure construction while driving organic growth [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market demand for energy infrastructure and the company's ability to execute projects on time and within budget [26][27] - The company anticipates continued growth in backlog and project opportunities, particularly in the power sector [24][26] Other Important Information - The company has $572 million in cash and investments, with net liquidity of $344 million and no debt as of July 31, 2025 [6][22] - A quarterly dividend of $0.375 was paid, reflecting a 50% increase in the annual dividend run rate over two years [23] Q&A Session Summary Question: What is left to complete at the Trumbull project and the timeline? - Management indicated that the project is on track for completion in the first half of next year following recent milestones [32] Question: Are there any one-time gains affecting the gross margin? - Management noted that while execution has been strong, they do not provide specific guidance on gross margins due to the nature of the business [33] Question: What types of projects are being considered for the backlog? - Management confirmed a variety of project sizes are being pursued, with expectations to exceed $2 billion in backlog by the end of the fiscal year [36] Question: Is there an acceleration in the pipeline due to demand? - Management stated that while there is a strong demand environment, the pipeline remains consistent with previous trends [41] Question: What is the outlook for the industrial business segment? - Management reported a record backlog of $189 million and expects improved performance in the second half of the year [43]