Argan, Inc. Delivers Strong Financial Performance in Q2 2026

Argan, Inc., a leading engineering and construction firm, has reported impressive financial results for the second quarter of fiscal year 2026. The company’s diversified business model, which spans the power, industrial, and teledata sectors, has enabled it to capitalize on growing demand across multiple industries.

Revenue Growth Driven by Power Segment Argan’s consolidated revenues for the three months ended July 31, 2026 increased by 61.5% to $384.0 million, compared to $237.7 million in the prior year period. This growth was primarily driven by the company’s Power segment, which saw revenues increase by 52.9% to $301.2 million.

The Power segment’s strong performance was fueled by increased construction activities on several major projects, including the 1.4 GW Thermal Project, the 700 MW Combined-Cycle Project, the 1.2 GW Power Station, and the 860 MW Thermal Project. In contrast, the prior year quarter was primarily driven by the 405 MW Midwest Solar Project, the Midwest Solar and Battery Projects, and the Trumbull Energy Center.

The Industrial segment also delivered impressive results, with revenues increasing by 111.2% to $76.2 million, as field services construction activities and vessel fabrication work expanded. The Teledata segment saw more modest revenue growth of 39.5% to $6.6 million.

Improved Profitability and Margins Argan’s consolidated gross profit for the second quarter of fiscal 2026 was $74.2 million, representing a gross profit margin of 19.3%. This was an improvement from the prior year period, when gross profit was $44.3 million, or 18.6% of revenues.

The increase in gross profit margin was primarily attributable to the changing mix of projects and contract types, as well as strong execution in the Power segment. The Power segment’s gross profit margin increased to 22.4%, up from 19.6% in the prior year quarter. However, the Industrial and Teledata segments saw declines in their respective gross profit margins.

Selling, general, and administrative (SG&A) expenses increased to $17.4 million, or 4.5% of revenues, compared to $14.2 million, or 6.0% of revenues, in the prior year period. This increase was due to the overall growth in the business.

As a result of the higher revenues and improved profitability, Argan’s income from operations increased by 89.0% to $56.8 million, and net income grew by 51.1% to $53.3 million. The company’s diluted earnings per share for the quarter was $3.76, up from $2.50 in the prior year period.

Robust Project Backlog and Outlook Argan’s consolidated project backlog as of July 31, 2026 was $2.5 billion, down slightly from $2.9 billion at the end of the prior fiscal year. The majority of this backlog is concentrated in the Power segment, which has secured several large-scale natural gas-fired and renewable energy projects.

Notable projects in Argan’s backlog include:

• 860 MW Thermal Project in Texas, with an expected completion date in 2028
• 1.4 GW Thermal Project in Texas, with an expected completion date in 2029
• 170 MW Thermal Project in Ireland, with an expected completion date in 2028
• 1.2 GW Power Station in Texas, with an expected completion date in 2028
• 300 MW Biofuel Power Station in Ireland, with an expected completion date in 2027
• 405 MW Midwest Solar Project in Illinois, with an expected completion in 2026

The company’s market outlook remains positive, driven by growing electricity demand in the U.S. and the need to replace aging power generation infrastructure. Natural gas-fired power plants are expected to play a key role in supporting the grid’s stability, particularly as renewable energy sources continue to expand. However, the pace of new power generation development remains constrained by factors such as limited EPC contractor capacity, equipment supply chain challenges, and labor shortages.

Liquidity and Capital Resources Argan’s balance sheet remains strong, with $364.5 million in cash and cash equivalents as of July 31, 2026, up from $339.5 million at the end of the prior fiscal year. The company generated $210.4 million in cash from operating activities during the first six months of fiscal 2026, which was used to fund investing and financing activities, including the $9.4 million acquisition of ValCor.

Argan maintains a $35 million credit facility with the Bank, which includes an accordion feature that allows for an additional $30 million in commitments. As of July 31, 2026, the company had no outstanding borrowings under this facility, although it had $0.5 million in letters of credit issued.

The company’s net liquidity, or working capital, increased to $440.4 million as of July 31, 2026, up from $421.0 million at the end of the prior fiscal year. Argan believes its current liquidity and cash flow from operations will be sufficient to meet its general business needs in the foreseeable future, although it may need to raise additional funds through debt or equity financing for any significant future acquisitions or investments.

Acquisition and Investments During the quarter, Argan acquired ValCor, a Teledata segment company, for $9.4 million. This acquisition extends the geographic reach of the Teledata segment into New England and adds a customer base of defense and aerospace organizations.

Argan also continues to selectively participate in power plant project development and related financing activities, providing development financing to special purpose entities formed to advance natural gas-fired power plant projects. As of July 31, 2026, there were no outstanding development financing loans.

Outlook and Risks Argan’s strong financial performance in the second quarter of fiscal 2026 reflects its ability to capitalize on the growing demand for power generation, industrial construction, and teledata infrastructure services. The company’s diversified business model and focus on project execution have enabled it to deliver consistent results.

However, the company faces several risks that could impact its future performance, including:

• Decreased demand during economic downturns or unpredictable cycles
• Concentration of revenues in a limited number of customers and projects
• Disruptions or changes in power market economics
• Delays or cancellations of projects due to regulatory, financing, or permitting issues
• Inflation and increases in the cost of labor, materials, and equipment
• Supply chain disruptions and tariffs on imported materials
• Cybersecurity threats and other catastrophic events

To mitigate these risks, Argan will need to continue to diversify its customer base, maintain a strong project backlog, and effectively manage its cost structure and liquidity. The company’s proven track record of execution and its focus on operational excellence position it well to navigate the challenges ahead.

Overall, Argan’s second quarter results demonstrate the company’s ability to deliver consistent financial performance and create value for its shareholders. The company’s diversified business model, strong project pipeline, and healthy balance sheet provide a solid foundation for continued growth and success in the years to come.