Argan (NYSE:AGX) reported record fiscal first-quarter revenue and sharply higher earnings, as construction activity accelerated across its power projects and the company benefited from improved project execution and margins.
On the company’s earnings call for the first quarter of fiscal 2027, ended April 30, 2026, Chief Executive Officer David Watson said results reflected “exceptional execution across our business,” with all three operating segments posting significant revenue growth and maintaining what he described as healthy backlog.
Power Segment Drives Growth
Watson said the company’s power segment was the primary contributor to the quarter’s growth, driven by the continued ramp-up of construction activity on recently awarded projects. Power segment revenue totaled $227 million, or 78% of consolidated revenue, with pre-tax book income of $52 million. The segment ended the quarter with backlog of $2.5 billion.
The company said it reached substantial completion ahead of schedule on the third and final project of its Midwest Solar and Battery projects during the quarter. It also reached final completion on the 950-megawatt Trumbull Energy Center in Ohio, after previously achieving substantial completion ahead of schedule.
Watson said the company currently has eight power projects underway, including six thermal projects and two renewable projects. Major projects highlighted on the call include a 1.2-gigawatt combined-cycle natural gas-fired plant in Texas for SLEC, a 1.4-gigawatt Texas project with CPV, an 860-megawatt project in Texas, and a 700-megawatt combined-cycle natural gas-fired plant in the U.S. Internationally, the company continues work on the 300-megawatt Tarbert Next Generation Power Station biofuel plant for SSE Thermal and a 170-megawatt thermal facility, both in Ireland.
Watson said demand remains strong for the company’s power construction capabilities, particularly for natural gas-fired plants. He said Argan’s backlog is currently composed of approximately 79% natural gas projects, 13% renewable projects and 8% industrial work.
Margins Improve on Execution and Project Mix
Chief Financial Officer Joshua Baugher said consolidated gross profit increased to $61.1 million, or a 21% gross margin, from $36.9 million, or a 19% margin, in the prior-year quarter. He attributed the improvement primarily to the power segment, citing project and contract mix, strong execution, the early substantial completion of the final Midwest Solar and Battery project and the completion of the Trumbull Energy Center.
Gross margins were 23.6% in the power segment, 11.8% in the industrial segment and 11% in the teledata segment during the quarter.
In response to an analyst question about margins, Watson said the company was pleased with the quarter’s blended margin rate, but noted that several major jobs remain in their early phases and still carry execution risks. He said consolidated blended margins have generally been in the high teens to low 20s in recent quarters and can vary meaningfully based on project execution and timing.
Industrial Segment Expands Fabrication Capacity
Argan’s industrial segment generated $58 million in revenue, or 20% of consolidated revenue, and approximately $5 million of pre-tax book income. The segment ended the quarter with backlog of $225 million.
Watson said the industrial segment is seeing increased demand, including from a data center contract awarded in November 2025 for the fabrication of thermal expansion and energy storage tanks. To support that work and position the company for new opportunities, Argan has begun construction on an additional fabrication facility in North Carolina, which it expects to complete later this year.
During the Q&A portion of the call, Watson said the company sees a “multi-year runway” for opportunities related to thermal expansion tanks for data centers. He said the new facility is located about 20 miles from the company’s existing facility, which should help with staffing and startup. In response to a question about capital spending, he estimated the investment at roughly $10 million to $13 million.
The teledata segment reported $6 million in revenue, or 2% of consolidated revenue, and ended the quarter with $8 million of backlog. Watson said the segment provides project management and construction services for power distribution, communications and data networks, including work for data centers, federal government locations and military installations requiring high-level security clearance.
Backlog Slips Slightly, Pipeline Remains Active
Total consolidated backlog was $2.8 billion at April 30, down slightly from $2.9 billion at the end of the prior quarter. Watson said backlog can fluctuate as projects are completed and new projects are added, and he reiterated that the company expects to add “a handful of new projects” over the next 10 to 18 months.
He said the company believes it is positioned to execute on 10 to 12 jobs simultaneously. In response to a question about longer-term revenue capacity, Watson said $2 billion in revenue is achievable “down the road” as the company’s platform grows, though he emphasized that hiring and training personnel takes time.
Watson said the broader demand environment is being driven by rising power needs tied to electrification, onshoring of manufacturing, electric vehicles and data center growth. He said gas-fired power plants remain well suited for reliable power generation and that only a limited number of firms can execute complex combined-cycle projects.
Balance Sheet Remains Debt-Free
Argan ended the quarter with $974 million in cash, cash equivalents and investments, net liquidity of $421 million and no debt. Stockholders’ equity was $474 million at April 30.
Watson said the company’s balance sheet is a competitive advantage because it supports operations, expands bonding capacity and provides customers with a reliable engineering, procurement and construction partner. He said net liquidity remained consistent with the prior quarter even as the company returned $33.6 million of capital to shareholders during the quarter.
The company pays a quarterly dividend of $0.50 per share, or $2 per share annually. Watson said the dividend was increased 33% in September 2025, marking the third consecutive year of increases. Argan also increased its share repurchase authorization during the quarter to $200 million from $150 million and extended the program’s expiration date to Jan. 31, 2030. Since the program began in November 2021, the company has returned approximately $116.7 million to shareholders through repurchases.
Watson said Argan continues to evaluate potential acquisitions that could add to its capabilities or expand its geographic footprint, while maintaining a disciplined approach to capital allocation and project selection.
About Argan (NYSE:AGX)
Argan, Inc (NYSE: AGX) is a holding company that provides professional technical and management services to the power generation and renewable energy industries. Through its wholly owned subsidiaries, the company delivers engineering, procurement and construction management (EPCM), commissioning and operations and maintenance (O&M) services for a broad range of energy facilities. Argan focuses on projects for utility, industrial and municipally owned clients, helping to bring efficient thermal and renewable energy plants into operation and maintain optimal performance over the asset life cycle.
The company’s principal subsidiaries include Gemma Power Systems, which specializes in turnkey construction of combined-cycle, simple-cycle, cogeneration and renewable energy plants; Atlantic Projects Company, which provides electrical balance-of-plant, control systems, instrumentation and commissioning services; and Infrastructure Solutions, which offers industrial maintenance, outage support and modification services.
