Argan Q2 Earnings Call Highlights

Argan reported record fiscal Q2 2027 results: Revenue rose 62% year over year to $384 million, net income increased to $53.3 million, and adjusted EBITDA climbed to $70 million, with the margin expanding to 18.2%. The power segment drove performance , generating 78% of revenue as activity increased across several large natural-gas and renewable projects. However, consolidated backlog declined to approximately $2.5 billion, and management cautioned that project mix could limit sequential growth in Q3. Argan maintained a strong financial position with about $1 billion in cash and investments, $440 million in net liquidity and no debt. The company returned $51.7 million to shareholders in the first half through dividends and share repurchases. Argan reported record second-quarter results for fiscal 2027, with revenue, net income and adjusted EBITDA rising sharply as activity increased across its power, industrial and Teledata segments. For the quarter ended July 31, 2026, revenue increased 62% year over year to $384 million. Net income reached a record $53.3 million, or $3.76 per diluted share, compared with $35.3 million, or $2.50 per diluted share, in the prior-year quarter. Adjusted EBITDA rose to a record $70 million from $38.5 million, while adjusted EBITDA margin expanded to 18.2% from 16.2%. Each of our operating segments recorded substantially improved revenue,” Watson said, citing 53% growth in power revenue, 111% growth in industrial revenue and 40% growth in Teledata revenue. The power segment remained Argan’s largest business, generating $301 million in quarterly revenue, or 78% of consolidated revenue. Segment revenue increased 53% from the comparable period last year, and the business reported pre-tax book income of $66 million. Argan’s consolidated gross margin was 19.3%, up from 18.6% a year earlier, while the power segment’s gross margin was 22.4%. The improvement in gross profit and margin was primarily driven by the power segment, including project and contract mix and project execution. However, consolidated margins have declined from 25% in the fourth quarter of fiscal 2026 and 21% in the first quarter of fiscal 2027. He attributed the sequential movement to project mix and the stages of construction of current projects. Earlier completion of certain jobs benefited margins in prior periods, while second-quarter revenue included earlier-stage work on current power projects. Argan’s power backlog includes four U.S. gas-fired plants totaling more than 4.1 gigawatts. The company’s backlog at July 31 was approximately 80% natural gas projects, 11% renewable projects and 8% industrial work. He said complex combined-cycle projects are expected to represent most of the backlog in the near and medium term, although the company intends to maintain its renewable-energy capabilities. Among projects in progress, Argan said its 1.2-gigawatt combined-cycle natural-gas plant for Sandow Lakes Energy Company in Texas is advancing as expected. Construction is also ramping at a 1.4-gigawatt Texas project with Competitive Power Ventures and an 860-megawatt Texas project. The company is also working on a 700-megawatt U.S. combined-cycle plant, a 300-megawatt biofuel plant in Ireland for SSE Thermal, and a 170-megawatt thermal facility in Ireland. Watson said the company expects to reach substantial completion ahead of schedule on a 405-megawatt Midwest solar project later in ...