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ARGAN INC (AGX)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 delivered robust execution: revenue $193.66M (+23% YoY), gross margin 19.0%, EPS $1.60, EBITDA $30.30M; record backlog reached ~$1.86B as of April 30, 2025 .
  • EPS materially beat consensus while revenue was essentially in-line: $1.60 vs $1.09 EPS estimate; $193.66M vs $193.75M revenue estimate; prior two quarters were also beats, underscoring momentum in execution and margin profile (S&P Global data)*.
  • Management highlighted a decade-long power demand upcycle driven by AI data centers, onshoring and EV charging; mix shifting toward combined-cycle natural gas facilities alongside renewables, with backlogs expected to go “significantly over $2B” later this year .
  • Capital returns remain a supporting pillar: quarterly dividend maintained at $0.375 and buyback authorization increased to $150M; balance sheet strength preserved with $546.46M cash and investments, $315.13M net liquidity, and no debt .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and earnings quality: gross margin improved to 19.0% (vs 11.4% LY), EPS $1.60, EBITDA $30.3M, reflecting changing project mix and strong execution; prior-year period had overseas project loss .
  • Strategic backlog growth: record backlog of ~$1.86B, with full notice to proceed for 1.2GW Sandow Lakes combined-cycle plant; pipeline robust amid rising power demand .
  • Segment strength led by Power Industry Services: ~$160M revenue (+45% YoY), segment margin ~20.6%; diversified portfolio includes gas, biofuel, solar and battery projects across U.S., UK, Ireland .
    • Quote: “We are favorably positioned as we compete to win the construction of large and complex power facilities.”

What Went Wrong

  • Industrial Construction Services softness: revenue $29M (vs $44M LY) due to project timing; segment margin compressed to 10.8% (vs 13.3% LY) .
  • Telecom contribution remains small at ~2% of revenue; margin declined to 18% (vs 22.9% LY), highlighting limited scale and sensitivity to mix .
  • Limited formal guidance and ramp cadence: revenue growth expected over the year but combined-cycle projects now typically 3–4 years (supply-chain driven), reducing near-term visibility on quarterly step-ups .

Financial Results

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$257.01 $232.47 $193.66
Diluted EPS ($)$2.00 $2.22 $1.60
Gross Margin (%)17.2% 20.5% 19.0%
EBITDA ($USD Millions)$37.51 $39.26 $30.30
EBITDA Margin (%)14.6% implied (EBITDA/Rev) 16.9% implied (EBITDA/Rev) 15.6%
Estimates vs ActualsQ3 2025Q4 2025Q1 2026
Revenue Consensus ($USD Millions)225.60*197.50*193.75*
Revenue Actual ($USD Millions)257.01 232.47 193.66
EPS Consensus ($)1.26*1.145*1.09*
EPS Actual ($)2.00 2.22 1.60
# of EPS Estimates2*2*2*
# of Revenue Estimates2*2*2*

S&P Global disclaimer: *Values retrieved from S&P Global.

Segment breakdown (Q1 FY2026):

SegmentRevenueMix of Consolidated RevenueSegment Gross Margin
Power Industry Services~$160M ~83% 20.6%
Industrial Construction Services$29M ~15% 10.8%
Telecommunications Infrastructure ServicesN/A~2% 18.0%

KPIs:

KPIQ3 2025Q4 2025Q1 2026
Project Backlog ($USD Millions)$800 $1,361 $1,856
Cash, Cash Equivalents & Investments ($USD Millions)$506.28 $525.14 $546.46
Net Liquidity ($USD Millions)$280.98 $301.44 $315.13
Dividend per Share ($)0.375 0.375 0.375

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Backlog outlookFY2026N/A“Significantly over $2B later this year” Raised (qualitative)
Revenue cadenceFY2026N/ARevenues to increase from Q1 over course of year Raised (qualitative)
Project durationMulti-year2.5–3.0 years (historical commentary)3–4 years typical; primarily supply-chain driven Extended
DividendOngoing$0.375/qtr $0.375/qtr confirmed (next payable July 31, 2025) Maintained
Share repurchase authorizationOngoingIncreased to $150M (April) Active; returned ~$109.4M since 2021 Expanded

Note: Company did not issue formal quantitative revenue/EPS margin guidance ranges; commentary focused on backlog trajectory, revenue ramp, and project timelines .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2025)Previous Mentions (Q4 FY2025)Current Period (Q1 FY2026)Trend
AI/data center-driven demandPreparing for unprecedented growth in power demand Electrification of everything driving need for reliable 24/7 power AI data centers a core demand driver; pipeline robust Strengthening
Supply chain timelinesN/ACombined-cycle projects 3–4 years noted across releases 3–4 years typical, primarily supply-chain driven Persisting elongation
Backlog trajectoryBacklog $0.8B Backlog $1.36B; NTPs on 700MW and 300MW; signed 1.2GW post-Q4 Backlog $1.86B; expectation “significantly over $2B” Rising
Segment mix (gas vs renewables)Renewables strong; diversified mix NTPs for CCGT and biofuel; signed new CCGT Backlog ~67% natural gas, ~28% renewables Tilting to gas
Margins/executionGM 17.2%; strong execution GM 20.5%; positive closeouts GM 19.0%; segment margins: Gas 20.6% Above historical
Industrial onshoringN/AIndustrial segment growth (FY) Near-term dip; backlog $91M; expected revenue increase over next several quarters Near-term pause, medium-term up

Management Commentary

  • “Our first quarter results reflect a strong start to fiscal 2026... record backlog of $1.9 billion as of April 30, 2025.” — David Watson, CEO .
  • “Energy demand is rising... immediate need for the development of new energy resources... energy-agnostic capabilities position us well.” .
  • “Power industry services revenues increased 45% to $160 million... segment represented 83%... pre-tax book income of approximately $31 million.” .
  • “Backlog... represents growth of 36% from January 31, 2025... natural gas projects will be the core of our growth engine for the foreseeable future.” .
  • “Quarterly dividend increased to $0.375... buyback authorization to $150 million... returned ~$109.4 million since 2021.” .

Q&A Highlights

  • Backlog trajectory and capacity: Expectation to surpass $2B backlog in 2H CY2025; capacity to run 10+ jobs across gas and renewables; start times are customer-dependent .
  • Industrial segment outlook: Near-term contraction expected; TRC backlog at $91M; revenues to increase meaningfully over several quarters .
  • Gross margins sustainability: Q1 GM 19% above expectations; reflects mix and execution; expected to exceed last year’s margin profile through FY2026 .
  • Revenue ramp and project duration: Gas jobs ramp over time; revenues expected to increase from Q1 over the year; combined-cycle timelines now typically 3–4 years, mainly supply-chain driven .

Estimates Context

  • Q1 FY2026: EPS $1.60 vs $1.09 consensus; revenue $193.66M vs $193.75M consensus (EPS beat; revenue essentially in-line) (S&P Global)*.
  • Q4 FY2025: EPS $2.22 vs $1.145 consensus; revenue $232.47M vs $197.50M (both beats) (S&P Global)*.
  • Q3 FY2025: EPS $2.00 vs $1.26 consensus; revenue $257.01M vs $225.60M (both beats) (S&P Global)*.

S&P Global disclaimer: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution and margin profile remain strong; EPS upside continues to surprise vs consensus amid improved project mix and disciplined risk management .
  • Structural power demand tailwinds (AI, reshoring, EV charging) and aging gas infrastructure support a multi-year construction cycle; AGX’s combined-cycle capability is a strategic advantage .
  • Backlog momentum is a principal stock catalyst; management’s expectation to exceed $2B later this year increases visibility and underpins revenue growth trajectory .
  • Near-term revenue cadence: expect increases from Q1 through the year, but ramp is project-timing dependent; timelines extend to 3–4 years given supply-chain realities, tempering quarter-to-quarter precision .
  • Capital allocation remains supportive: $0.375 quarterly dividend sustained; expanded buyback authorization to $150M; strong net liquidity and zero debt provide defense and optionality .
  • Segment mix tilting toward natural gas with healthy renewables presence; segment margins suggest continued profitability in core power industry services .
  • Watch for additional NTPs and contract wins (incl. gas plants) as key upside catalysts; monitor industrial segment recovery over next several quarters for incremental support .