Argan Inc. Earnings Call Highlights: Strong Growth and Record Backlog

Argan Inc ((AGX)) has held its Q1 earnings call. Read on for the main highlights of the call.

Argan Inc. Reports Strong Start to Fiscal 2026 with Revenue Growth and Record Backlog

The recent earnings call for Argan Inc. revealed a positive sentiment, highlighting a strong start to fiscal 2026. The company reported significant revenue growth, a record backlog, and increased net income, despite facing challenges in the industrial construction services segment and rising SG&A expenses. Overall, the positives significantly outweighed the negatives, showcasing a robust project pipeline and a strong financial position.

Strong Revenue Growth

Argan Inc. reported a 23% increase in consolidated revenue, reaching $193.7 million, with a gross margin of 19% for the first quarter of fiscal 2026. This growth underscores the company’s strong performance and ability to capitalize on market opportunities.

Record Backlog

The company achieved a record backlog of $1.9 billion as of April 30, 2025. This includes significant projects like the SLEC 1.2-gigawatt ultra-efficient combined cycle natural gas-fired plant in Texas, indicating a healthy pipeline of future work.

Increased Net Income and Earnings

Net income saw a substantial increase, rising to approximately $23 million or $1.60 per diluted share, up $1.02 year over year. This improvement reflects the company’s effective management and operational efficiency.

Robust Project Pipeline

Argan Inc. expects to exceed $2 billion in backlog later this year, driven by strong demand for power industry services. This projection highlights the company’s strategic positioning in the market.

Strong Balance Sheet

The company reported a strong balance sheet with $546.5 million in cash and investments, net liquidity of $315 million, and no debt as of April 30, 2025. This financial stability provides a solid foundation for future growth.

Power Industry Services Growth

Revenues for the power industry services segment increased by 45% to $160 million, representing 83% of first-quarter revenues. This growth underscores the company’s focus on expanding its presence in the power industry.

Decline in Industrial Construction Services Revenue

The industrial construction services segment experienced a decline in revenue, decreasing to $29 million from $44 million in the first quarter of fiscal 2025. This was attributed to project timing issues.

Increased SG&A Expenses

Selling, general, and administrative expenses rose to $12.5 million for the first quarter of fiscal 2026, up from $11.4 million in the prior year. This increase highlights the company’s investment in its operational infrastructure.

Forward-Looking Guidance

During the earnings call, CEO David Watson and CFO Joshua Baugher emphasized the company’s strategic focus on leveraging its capabilities in natural gas and renewable energy projects to address the rising demand for reliable power infrastructure. With a record backlog and strong financial performance, Argan Inc. is well-positioned to capitalize on future opportunities.

In summary, Argan Inc.’s earnings call presented a positive outlook for fiscal 2026, with significant revenue growth, a record backlog, and increased net income. Despite challenges in the industrial construction services segment and rising SG&A expenses, the company’s strong project pipeline and financial stability position it well for future success.