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ARGAN INC (AGX)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered a material beat: revenue $232.474M, diluted EPS $2.22, EBITDA $39.259M, all driven by strong execution and favorable project mix in Power Industry Services . Versus S&P Global consensus, revenue beat by $34.974M (+17.7%) and EPS beat by $1.075 (+94.0%)*.
  • Gross margin expanded to 20.5% (vs 17.2% in Q3 and 14.4% YoY) on positive job closeouts, increased U.S.-based revenues, and mix shift; backlog grew to $1.361B with full NTPs on a 700 MW CCGT (U.S.) and a 300 MW biofuel plant (Ireland), plus an executed 1.2 GW Texas EPC contract awaiting NTP .
  • Segment mix: Power Industry Services revenue $196.9M at 21.3% margin; segment contributed 85% of Q4 revenue. Industrial Construction Services contributed 14% ($33M) and Telecommunications 1% .
  • Management signaled near-term cadence: expect a small decrease in revenue next quarter, then increasing through the year; margin uplift longer term from a greater share of gas projects and more fixed-price contracts .
  • Financial position: cash/investments $525.137M, net liquidity $301.443M, no debt; dividend maintained at $0.375 per share .

What Went Well and What Went Wrong

What Went Well

  • Strong margin and profitability: gross margin 20.5%, net income $31.369M, diluted EPS $2.22; management attributed strength to changing mix, U.S.-based revenue, and positive job closeouts . “A record of $2.22 per diluted share, and EBITDA of $39.3 million.”
  • Backlog expansion and pipeline visibility: backlog to $1.361B with NTPs on 700 MW U.S. CCGT and 300 MW biofuel Ireland; executed 1.2 GW Texas EPC awaiting NTP; management emphasized “electrification of everything” driving demand .
  • Power segment momentum: Power Industry Services revenue grew ~65% to $196.9M with 21.3% margin in Q4 . “We are one of only a handful of companies who can execute those complex [gas] projects.”

What Went Wrong

  • SG&A increased in absolute terms: Q4 SG&A $14.946M (vs $11.909M YoY), though as % revenue declined to 6.4% (vs 7.2%) .
  • Industrial Construction Services softness in Q4: revenue decreased to ~$33M in Q4 on timing; management expects rebound later in FY2026 after adding >$40M of new contracts subsequent to year-end .
  • External constraints: turbine long-lead items and supply chain present headwinds; interconnect bottlenecks improving but still a challenge; regulatory streamlining could help approvals .

Financial Results

Quarterly Performance vs Prior Quarter and Prior Year

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$227.015 $257.008 $232.474
Gross Margin %13.7% 17.2% 20.5%
EBITDA ($USD Millions)$24.842 $37.509 $39.259
Net Income ($USD Millions)$18.198 $28.010 $31.369
Diluted EPS ($USD)$1.31 $2.00 $2.22

Year-over-Year (Q4 FY2025 vs Q4 FY2024)

MetricQ4 2024Q4 2025
Revenue ($USD Millions)$164.554 $232.474
Gross Margin %14.4% 20.5%
EBITDA ($USD Millions)$17.564 $39.259
Net Income ($USD Millions)$12.018 $31.369
Diluted EPS ($USD)$0.89 $2.22

Segment Breakdown

SegmentQ3 2025Q4 2025
Power Industry Services Revenue ($USD Millions)$212.0 $196.9
Power Industry Services Gross Margin %18.3% 21.3%
Industrial Construction Services Revenue ($USD Millions)$41.3 ~$33.0
Telecommunications Infrastructure Services Revenue Mix (%)1% 1%

Key KPIs and Balance Sheet

KPIQ2 2025Q3 2025Q4 2025
Backlog ($USD Millions)$1,035 $800 $1,361
Cash, Cash Equivalents & Investments ($USD Millions)$484.682 $506.282 $525.137
Net Liquidity ($USD Millions)$259.827 $280.977 $301.443
Quarterly Dividend per Share ($USD)$0.30 $0.375 $0.375
DebtNone None None

Actuals vs S&P Global Consensus (Q4 FY2025)

MetricConsensus EstimateActualSurprise ($)Surprise (%)
Revenue ($USD Millions)$197.500*$232.474 $34.974*17.7%*
Diluted EPS ($USD)$1.145*$2.22 $1.075*94.0%*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue cadenceQ1 FY2026Not specified“Might expect a small decrease in overall revenues for the upcoming quarter… before increasing throughout the year” New qualitative commentary
Backlog outlookNext 6 monthsQ3: Expect backlog >$1B by early next year Expect to add several gas projects; backlog to tilt more heavily toward gas projects Raised/shifted mix
Project start (Texas 1.2 GW)Summer 2025LOI in Q3 EPC executed; awaiting full NTP; will enter backlog at NTP Progressed milestone
DividendOngoingIncreased to $0.375 in Sep 2024 Maintained at $0.375 in Q4 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Demand drivers (data centers, reshoring, EVs)Emphasized as key drivers; backlog included $570M renewables (Q2) and $478M renewables (Q3) “Electrification of everything” cited; strong pipeline; added 1 GW of projects to backlog in Q4 Strengthening
Segment mix (gas vs renewables)92% backlog supporting low/zero emissions in Q3; balanced pipeline Backlog ~54% natural gas and ~42% renewables; natural gas expected to be core Shift toward gas
MarginsQ3: guidance that margins likely in 14–16% range near-term Q4 margin 20.5%; management notes unique combo of positives; higher risk/higher reward gas mix and more fixed-price contracts Near-term reversion; medium-term structural uplift
Supply chain (turbines/long-leads)Noted project timing variability (Q3) Turbine/long-lead items are larger headwind; manufacturers increasing capacity Improving over time
Interconnect/regulatoryLimited prior commentaryGrid operators making progress; potential deregulation could streamline approvals Incremental improvement
Regional focusU.S.-centric pipeline with Texas nexus (Q3) Texas 1.2 GW EPC executed; multi-region U.S. pipeline Expanding U.S. footprint
Industrial Construction ServicesTTM ~$175M; backlog down, expected rebound (Q3) Subsequent to year-end added >$40M new contracts; rebound expected mid/late FY2026 Recovery expected

Management Commentary

  • “Overall, consolidated fourth quarter revenue grew 41% to $232.5 million with gross margin of 20.5% and we achieved net income of $31.4 million… and EBITDA of $39.3 million.”
  • “Backlog grew to $1.4 billion at January 31, 2025… Following the close of the fourth quarter, we executed a signed contract for a 1.2 GW… power plant project in Texas.”
  • “The ongoing ‘electrification of everything’ is creating extraordinary pressure on our power grids… We believe our runway for continued growth is substantial.”
  • “We are one of only a handful of companies who can execute those complex [combined-cycle] projects.”
  • “We might expect a small decrease in our overall revenues for the upcoming quarter here before increasing throughout the year for the overall organization.”

Q&A Highlights

  • Margin sustainability: Management highlighted mix shift (more U.S. power), avoided risks, positive closeouts, and increased fixed-price share; cautioned Q4’s 20.5% may not repeat often, but gas-heavy mix could support higher margins over time .
  • 1.2 GW Texas EPC: Executed EPC, awaiting full NTP; once NTP received, entire contract goes into backlog; construction expected to begin this summer .
  • Interconnect and supply chain: Grid operators making progress on approvals; turbine/long-leads are the bigger headwind but capacity expansion underway by manufacturers; deregulation could streamline projects .
  • Solar project cadence: 405 MW utility-scale project over ~2,000 acres progressing; renewables have flatter burn patterns vs “bell curve” gas jobs .
  • Pipeline/customer mix: Pipeline largely U.S.-based with notable Texas exposure; historically IPP-focused, but dialogues span all potential customers, including data center operators .
  • ICS outlook: Backlog dipped at FY-end; subsequent >$40M new awards (water treatment, data centers) with expected revenue rebound mid/late FY2026 .

Estimates Context

  • Q4 FY2025 results beat Wall Street consensus by wide margins: revenue $232.474M vs $197.500M*, EPS $2.22 vs $1.145*. The magnitude of the beat, backlog step-up to $1.361B, and executed EPC for 1.2 GW (awaiting NTP) suggest upward revisions to forward revenue/EPS trajectories, particularly as gas projects increase the fixed-price share and margin potential . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q4 was a high-quality beat on both revenue and EPS, underpinned by margin-rich mix, U.S. project activity, and favorable closeouts; near-term revenue cadence likely dips modestly before resuming growth through FY2026 .
  • Backlog inflected to $1.361B with gas-heavy mix emerging; watch for NTP on the 1.2 GW Texas EPC to further expand backlog and visibility .
  • Structural margin tailwinds from increased natural gas EPC exposure and selective bidding on fixed-price contracts; expect normalization from 20.5% but medium-term uplift vs prior years .
  • Strong balance sheet (no debt, $525.137M cash/investments, $301.443M net liquidity) supports execution, dividends, and potential accretive capital allocation .
  • ICS timing-related softness appears transient; >$40M of post-year-end awards point to mid/late FY2026 rebound .
  • Supply chain/turbine lead times are the principal execution risk; improving interconnect dynamics and potential regulatory streamlining could mitigate timeline risks .
  • Trading lens: near-term consolidation possible on cadence commentary; medium-term setup favorable as backlog converts and Texas EPC NTP arrives—monitor updates via 8-K/press releases and next quarter call .

Citations:

Values retrieved from S&P Global.*