Good evening, ladies and gentlemen, and welcome to the Argan, Inc. Earnings release conference call for the fiscal fourth quarter and year ended January 31, 2025. This call is being recorded. All participants have been placed on a listen-only mode. Following management's remarks, the call will be opened for questions. There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast. At this time, it is my pleasure to turn the floor over to your host for today, Jennifer Belodeau, of IMS Investor Relations. Please go ahead. Thank you.

Evening, and welcome to our conference call to discuss Argan's results for the fourth quarter and fiscal year ended January 31, 2025. On the call today, we have David Watson, Chief Executive Officer, and Josh Bakr, Chief Financial Officer. I'll take a moment to read the safe harbor statements. Statements made during this conference call and presented in the presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenues and profits. These statements are subject to known and unknown factors and risks. The company's actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements, and some of the factors and risks that could cause or contribute to such material differences have been described in this afternoon's press release and in Argan's filings with the U.S. Securities and Exchange Commission. These statements are based on information and understanding that are believed to be accurate as of today, and we do not undertake any duty to update such forward-looking statements. Earlier this afternoon, the company issued a press release announcing its fourth quarter and fiscal 2025 financial results and filed its corresponding Form 10-K report with the Securities and Exchange Commission. Okay. With that out of the way, I'll turn the call over to David Watson, CEO of Argan.

Thanks, Jennifer, and thank you everybody for joining today. I'll start by reviewing some of the highlights of our operations and activities, and Josh Bakr, our CFO, will go over our financial results for the fourth quarter and full year ended January 31, 2025. Then we'll open up the call for a brief Q&A. Our fourth quarter performance continued the momentum we built throughout fiscal 2025, delivering a strong close to a year characterized by exceptional execution across all of our businesses. The focus and dedication of our team resulted in consolidated revenue growth fiscal 2025 of 52% to $874 million, full year gross margin of 16.1%, record full year diluted EPS of $6.15, and EBITDA of $113.5 million. Our growth in the year was led by significantly increased revenue from our Power Industries Services segment and strong revenue performance in our Industrial Construction Services business. We exited the fiscal year with a project backlog of approximately $1.4 billion at January 31, 2025, an 80% increase compared to a backlog of $757 million at January 31, 2024. In today's energy demand environment, characterized by increasing pressure on the power grid and an urgent need for additional resources, we are seeing a tremendous pipeline of project opportunities. In fact, during the fourth quarter, we added one gigawatt of power projects to our backlog. The two new projects include an approximately 700-megawatt combined cycle natural gas-powered project in the US and a 300-megawatt biofuel plant in Ireland. Further, we believe the heightened demand for our capabilities will continue for the next decade and beyond. We're very optimistic about a demand environment and the runway for our continued growth in the near, mid, and long term. Our balance sheet remains strong with $525 million of cash and investments, net liquidity of $301 million,…

Thanks, David, and good evening, everyone. On slide twelve, we present our consolidated statements of earnings for the fourth quarter and year-end fiscal 2025. Fourth quarter revenues increased 41% to $232.5 million reflecting particularly strong performance in our power industry services segment and solid growth in our Industrial Construction Services segment, as compared to the fourth quarter of fiscal 2024 as David detailed earlier. Project-wise, the increase in revenues primarily related to increased quarterly construction activities for the Midwest solar and battery projects, the Trumbull Energy Center, the 405-megawatt Midwest solar project, and the Louisiana LNG facility. For the three-month period ended January 31, 2025, Argan reported consolidated gross profit of approximately $47.6 million, which represented a gross margin of approximately 20.5% and reflected contributions from all three reportable business segments. Consolidated gross profit for the comparative quarter last fiscal year was $23.6 million representing a gross margin of 14.4%. The increased gross profit and the improved gross margin for the recently ended quarter reflects the changing mix of projects including increased U.S.-based revenues, strong execution, and certain positive job closeouts. Selling, general, and administrative expenses of $14.9 million for the fourth quarter of fiscal 2025 increased as compared to SG&A of $11.9 million for the comparable prior year period. But these expenses decreased as a percentage of revenues to 6.4% in the fourth quarter of fiscal 2025 as compared to 7.2% in last year's fourth quarter. Net income for the fourth quarter of the fiscal year was $31.4 million or $2.22 per diluted share. Compared to $12 million or $0.89 per diluted share for last year's comparable quarter. EBITDA earnings before interest, taxes, depreciation, and amortization, for the quarter ended January 31, 2025, increased to $39.3 million compared to $17.6 million for the same period of last year. Looking…

Thanks, Josh. Turning to slide thirteen, our consolidated project backlog was $1.4 billion at January 31, 2025, representing backlog growth of 80% compared to the prior fiscal year-end. As I said earlier in the call, the project pipeline is robust and growing. Our current backlog includes fully committed projects in both the power industry services and industrial services segments including a strong representation of renewable projects. However, with the marketplace demand for natural gas facilities, we anticipate that our backlog will be comprised of a larger portion of traditional gas-powered projects in the coming years. We plan to sustain and continue to nurture our renewable business, our natural gas projects will be the core of our growth engine for the foreseeable future. Slide fourteen highlights certain major projects currently underway or expected to begin in the near term. Earlier, I touched on several projects listed here, such as Trumbull, the 405-megawatt utility-scale solar project, and two of our new contract wins, SLEC, and Tarbert. Additionally, during the fourth quarter, we entered into an EPC contract and received the corresponding full notice to proceed with the customer for an approximately 700-megawatt combined cycle natural gas-fired power plant located in the United States. This large project is already underway and fully reflected in our year-end backlog. Other significant projects include a subcontract to install five 90-megawatt gas turbines, to provide dedicated power to an LNG facility in Louisiana which we are expected to finish during the first half of this year. We have also completed two of the three solar plus battery projects in Illinois, during fiscal 2025, and expect to finish the third during fiscal 2026. Finally, you'll see two separate water treatment plant projects being performed by TRC. The industry is seeing strong demand, particularly for natural gas projects. Our…

Certainly. Ladies and gentlemen, the floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. While asking your question to provide optimal sound quality. And the first question today is coming from Chris Moore from CJS Securities. Chris, your line is live. Please go ahead.

Alright. Wow. Congrats, guys. That's a great quarter and outlook just keeps getting better. Could you maybe break down the 20.5% gross margin a bit further? I know Josh went into it a little bit, but anything else? It sounds like there's some job closeouts in there. I don't know if you're close enough on Trumbull to be getting anything from there. Just anything that could help me better understand that, you know, such a big number.

Chris, good evening, and great question. On the margins. I knew that this would kinda jump out to you and other folks. And it really comes down to the fundamentals that we put in place here at Argan, strong execution across all the businesses, higher margins are reflecting the shifting project mix, you know, part of which includes more US-based and power revenues for the quarter versus in the past. We were able to avoid certain risk-related costs and close out a number of jobs in our power and industrial segments positively. I mean, keep in mind, the prior year's fourth quarter had some margin degradation from the Killroot project. May not see margins reflecting this quarter's levels often where a lot of things went right all at the same time, but we would expect our consolidated gross margin in general to benefit with the expected increase of gas projects which are frankly, higher risk, higher reward type jobs. So and also along those lines, Chris, our project backlog, if you might recall earlier in the prior year, had more T&M versus fixed price, and now we have a larger portion of fixed price contracts today. And, also, if I've noted in the past, we are generally in a good market, which allows us to be selective and focus on jobs that are best for our organization.

Got it. Yeah. That's where I was going next. It sounds like given the number of new projects out there, the relatively few number of firms capable of doing them, I would guess just in general, the level of margin would go up a little bit just from that as well. The 1.2-gigawatt project, what exactly has to happen, David, to get that into backlog?

Yeah. So getting the full notice to proceed we feel very confident that that project's gonna start sometime this summer, and that's what we put in our press release. So once we get released on that job, we'll put the whole contract into project backlog. So it's not reflected in our current backlog, which is $1.4 billion.

Right. What about on the interconnect side? Any reason to think the new administration can have a positive impact there? Any other positive drivers that, you know, give you a little more comfort that interconnect piece of this equation is getting better?

Yeah. I honestly, I think there's been a fair amount of progress over the last year or so by the grid operators themselves. I think they've been able to get through some of those bottlenecks. There's still some that are there. And it's always a constant challenge for the industry, but we are seeing a little bit greater progress for getting jobs approved. Frankly, Chris, though, I think the larger headwind is more related to kinda getting your turbines, getting the long lead supply chain, which should over time, abate given that the manufacturers are in overdrive trying to increase their capacity. I think the other thing to keep in mind in general is, you know, to the extent there's general deregulation with the current administration that might be able to streamline projects getting approved and getting through all the various things that they have to do to be able to break ground.

Got it. Perfect. Maybe just last one for me. I'm just trying to get a sense of the pace on this 405-megawatt solar project. So it's you're talking about completing that sometime in calendar 2026?

Yes. I mean, that is a massive two thousand acre project that we are executing really well similar to all of our other projects, which is reflected in our gross profit margin.

Got it. Are you at kind of peak run rate at this point in time or is that still ramping?

I mean, keep in mind, renewables aren't as their run rates don't get they don't peak as much as gas jobs do. They're a little bit flatter in nature. But, yes, it is we're in the midst of things there.

Perfect. Alright. I'll leave it there. Thanks, guys.

Sure, Chris. Thank you.

Your next question is coming from Rob Brown from Lake Street Capital. Rob, your line is live. Please go ahead.

Hi, David. Congratulations on a strong quarter.

Thanks, Rob.

On the project pipeline, I know you talked a lot about it, but could you give us a sense of how many projects are sort of in that pipeline and maybe the regions that are active and maybe, you know, sort of sense of how those you see those kind of falling in over the next eighteen months?

Yeah. I mean, the pipeline is largely US-based. Largely, you know, and when I speak to the pipeline, I'm referring to, you know, pipeline over the next six months, but also the pipeline in the years down the road. As well, given that we are, again, said earlier in the call in the early innings of this build-out. No surprise. Texas is a meaningful area for us but also throughout the United States. As it relates to, you know, we mentioned that we plan to be adding to our project backlog over the next six months from where we are as of January 31. And that's, you know, we're pretty excited about that. And that's obviously just gonna drive our opportunity for more revenues over the next four years.

Okay. Great. And in terms of the customers that you're pursuing, has that changed over time or is that still the independent power producers? And it's kind of the same set of people that you know or the new kind of potential customers like directly to data center operators coming into the mix?

Great question. I mean, we're talking to all potential customers, to be clear. Have we historically worked primarily with independent power producers that is historically accurate? And so at the end of the day though, we are looking to build the right jobs in the right place with the right contract, with the right customer, and that includes everybody. But currently, it's primarily been with IPPs.

Okay. Great. And then mostly in the industrial business that was down a little bit year over year on project timing, how do you see the trend line there playing out over the next year? Is that sort of picking up or is there sort of stability there at this point?

Yeah. No. Good. I'm glad you asked that question because it did have a little bit of drop in its backlog as of January 31. But we're seeing really strong demand for TRC and, frankly, subsequent to year-end, we've added over $40 million in new contracts related to water treatment plant and some data center activities. So we believe TRC will grow its revenue come middle of the year or later in the year. And continue to grow like it's been growing over the last several years. I mean, in general, kind of looking forward, you know, all these additions we've made to project backlog, in the power space, it takes time for those revenues to start generating in earnest. So, you know, from a revenue cadence standpoint, you know, we might expect a small decrease in our overall revenues for the upcoming quarter here before increasing throughout the year for the overall organization. Again, we are in a significant growth phase, and looking forward to it.

Okay. Thank you.

Thank you. This does conclude today's Q&A session. I would now like to turn the floor back to David Watson for closing remarks.

Thank you all for participating in today's call. Our first in our new offices here in Arlington, Virginia. As a reminder, please join us for our first investor day in New York on April 8, and you're always welcome to come visit us here in Virginia. We look forward to speaking with you again when we report our first quarter fiscal 2026 results. Have a great evening.

Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you once again for your participation.