Evening, and welcome to our conference call to discuss Argan, Inc.'s results for the second quarter ended 07/31/2025. On the call today, we have David Watson, Chief Executive Officer, and Joshua Baugher, 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 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, Inc.'s filings with the U.S. Securities and Exchange Commission. These statements are based on information and understandings 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 second quarter fiscal 2026 financial results and filed its corresponding Form 10-Q 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, Inc. Please go ahead, David.

Thanks, Jennifer, and thank you, everyone, for joining today. I'll start by reviewing some of the highlights of our operations and activities, and Joshua Baugher, our CFO, will go over our financial results for the second quarter and six months ended 07/31/2025. Then we'll open up the call for a brief Q&A. We achieved significantly strong results in 2026, reflecting excellent execution in the quarter, as we delivered solid revenue growth, enhanced gross margins, and record net income. Joshua will go into the details of the quarter and first half in a moment, but highlights of our second quarter results included consolidated revenue of $238 million, reflecting growth of 5% compared to last year's second quarter and a sequential increase of 23% compared to 2026. Improved gross margins of 18.6% compared to 13.7% in 2025. Enhanced profitability with record net income of $35.3 million or $2.50 per diluted share. EBITDA of $36.3 million or an EBITDA margin of 15.2%. And record backlog of $2 billion, which includes the addition of the Platton Power Station, a 170-megawatt thermal facility in Ireland, as well as a significant new industrial services contract for a recycling water treatment plant in Alabama. As I've mentioned on previous calls, we have been seeing increasing demand for our capabilities as the power industry mobilizes to bring new facilities online as a large portion of natural gas-fired plants reach the end of operational life in the midst of unprecedented growth in power consumption. Electrification of everything, coupled with the anticipated expanded development of facilities to power AI data centers, is creating a strong market for our expertise and capabilities, and we're energized about the opportunities we're seeing not only in the near term but looking out for the next several years and beyond. Our balance sheet remains strong…

Thanks, David, and good evening, everyone. On slide 10, we present our consolidated statements of earnings for the second quarter and six months ended 07/31/2025. Second quarter revenues increased 5% to $237.7 million, primarily reflecting strong revenue growth in our Power Industry Services segment as compared to 2025. For the quarter ended 07/31/2025, Argan, Inc. reported consolidated gross profit of approximately $44.3 million or a gross margin of 18.6%. Consolidated gross profit for the comparative quarter last fiscal year was $31.1 million, representing a gross margin of 13.7%. The increased gross profit and improved gross margin for the recently ended quarter is primarily due to the improved gross profit margins for the Power Industries Services segment. Gross margins for our Power Industry Services segment, our Industrial Construction Services segment, and our Telecommunications Infrastructure Services segment were 19.6%, 12.5%, and 24.7% respectively, for 2026 as compared to 13.5%, 13%, and 31.4% respectively, in 2025. Selling, general, and administrative expenses of $14.2 million for 2026 increased as compared to SG&A of $12.4 million for the comparable prior year period. Other income net for the three months ended 07/31/2025 was $5.6 million, which primarily reflected investment income earned during the period. During the quarter ended 07/31/2025, the company recorded income tax expense of $400,000 on pretax book income of $35.6 million, which reflects a meaningful benefit from the favorable deductions resulting from stock option exercises during the period. For the comparable period last year, Argan, Inc. recorded income tax expense of $6.1 million on pretax book income of $24.3 million. Net income for 2026 was $35.3 million or $2.50 per diluted share, which represents record quarterly EPS, compared to $18.2 million or $1.31 per diluted share for last year's comparable quarter. EBITDA, earnings before interest, taxes, depreciation, and amortization, for the quarter ended…

With strong cash flow, we further strengthened our balance sheet during the second quarter. At 07/31/2025, we had approximately $572 million in cash, cash equivalents, and investments generating meaningful investment yields. Our net liquidity was $344 million, and we had no debt. Stockholders' equity was $393 million at 07/31/2025. This liquidity bridge demonstrates that our business model ordinarily requires a low level of capital expenditures. Our net liquidity of $344 million at 07/31/2025 has increased $43 million compared with net liquidity at 01/31/2025. During the first six months of fiscal 2026, we returned $25 million of capital to our shareholders. We have a disciplined capital allocation strategy, which focuses on our core commitments. First, we invest in our people to ensure we are appropriately prepared to staff our projects. Second, the company pays a quarterly dividend, which we increased 25% to 37.5¢ per common share in September 2024, creating an annual dividend run rate of $1.50 per share. Of note, that increase came just a year after we'd raised our dividend to 30¢ per share in September 2023. Together, these two increases represent an aggregate 50% increase in our annual dividend run rate in less than two years, reflecting the strength of our business.

Third,

since November 2021, when we began our share buyback program, we have returned a total of approximately $109.6 million to shareholders. Additionally, in April, our board increased the authorization of the share repurchase program to $150 million. And finally, we will continue to evaluate and consider M&A opportunities that could be additive or complementary to our current capabilities or enhance our geographic footprint. Our company is dedicated to driving long-term value creation for shareholders. Our pipeline is stronger than it has ever been, and since 02/2008, we have increased our tangible book value and cumulative dividends per share to record levels. There is no doubt that electrification of everything that is driving unprecedented power consumption is contributing to the heightened demand for Argan, Inc.'s diverse construction capabilities and expertise. As one of only a few companies who have a proven success rate building both complex combined cycle natural gas facilities as well as renewable energy resources, we are optimistic that our market position in an environment where the ongoing reliability of the power grid is dependent on the continued build-out of this infrastructure. We believe we are well positioned with the capabilities, financial flexibility, industry relationships, and longstanding customer base to strengthen our leadership role as a partner of choice for the build-out of energy infrastructure. To close, we remain focused on our long-term growth strategy. Leverage our core competencies to capitalize on existing and emerging market opportunities, maintain disciplined risk management, with the goal of improving our project management effectiveness and minimizing costly project overruns. Strengthen our position as a partner of choice in the construction of power generation

facilities,

that power the electric economy and maintain grid reliability. And last but not least, drive organic growth while also being alert for acquisition opportunities that make sense for our business through thoughtful capital allocation. As we move beyond the midway point of fiscal 2026, we are excited about the new projects we have announced so far this year, and energized by the opportunities we are seeing to further increase our backlog. Our project pipeline is robust, and with the three to four-year duration of our combined cycle projects, our visibility today gives us confidence that our teams will be busy for several years to come. That said, we have always taken a disciplined approach when pursuing any project, and that approach remains in place today. We are focused on winning the right projects with the right partners in the right geographies. The most important metric in our business is our ability to complete power facilities on time and on budget so that our partners can deliver power to the grid within the timeline they guaranteed. Our success in that capability is unmatched. This is an exciting time for our company, and we are optimistic about our near and long-term growth opportunities as our project backlog continues to strengthen in response to the significant market demand for diverse energy infrastructure to provide the reliable, high-quality supply needed to meet the unprecedented and growing demand for energy. We couldn't do this without our employees, and I'd like to thank our entire team for their hard work and dedication to operational excellence. Likewise, I thank our shareholders for their continued support. With that, operator, let's open it up for questions.

Thank you. At this time, we will be conducting a question

and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Once again, please press 1 if you have a question or a comment. The first question comes from Chris Moore with CJS Securities. Please proceed.

Good afternoon, guys. Congrats on another nice quarter.

Maybe we will just start with what is left there, and what's a reasonable timeline? Hey, Chris. Could you repeat that question again? Yeah. So just trying to understand. I noticed you had First Fire at Trumbull, Q2 and second in August. Just trying to understand, you know, what is left at Trumbull to complete and what's a reasonable timeline when you'll be, you know, totally finished. Yeah. Absolutely. We were thrilled with achieving first fire at the end of the quarter and then on the second unit right afterwards. Which, as you know, is a meaningful

accomplishment

in the project life cycle of a gas-fired power plant. And also a moment when some of the risk starts to come off the table. We're still tracking towards completing that project on time and on budget for the customer, and that should happen up, you know, in the first half of next year. Got it. Appreciate that. Gross margin was a strong, you know, 18.6%. I was trying to figure out if there are some meaningful one-time gains in there? I don't know. Would that be Trumbull or somebody else? I assume the 18.6% is not necessarily, even though it's a little below Q1, not necessarily sustainable. Just any thoughts on gross margin? Yes. It's really hard to provide any kind of particular guidance on our gross margins. I mean, this quarter, there's clear and frankly, the last three quarters, there's just been significant execution excellence, especially in the power sector, right, between reaching first fire on the unit at Kilrood to, you know, finishing out that LNG job early, you know, early this past quarter. You know, too favorable weather, allowing us to achieve a lot of progress on some more renewable projects. So, you know, as you know, on our last earnings call, I indicated that we expect to exceed last year's fiscal year's gross profit margin as a percent of revenues. And with continued strong execution across businesses, that continues to be our expectation. Know? As you know, we are unapologetically conservative in all things that we do here. Given the lumpy nature of this business, especially this construction business, which is one of the reasons why we don't provide revenue and EPS guidance. So we're pleased with the margins to halfway point this year and expect to continue to, you know, achieve our main goal.…

contracts.

To your point, you know, they're not finished. You know, we expect over the rest of the current fiscal year to add a few more power jobs. Should put us significantly over $2 billion in backlog. The size of those, you know, I just mentioned. Right? We've done jobs from 170 earlier this year to 1.2 gigawatts. So it's not unfair to assume that we'll have a variety of sizes. And because there really is no upward bound for us given, as you know, the Guernsey job was the largest single-phase power plant built in the United States, and that's what we did. So don't know if that answers your question, but we have the range to do it all. Alright. I will leave it there. Thanks, guys.

Absolutely. Question the next question comes from Rob Brown with Lake Street Capital Markets. Please proceed. Hi, David.

Just following up on kind of the pipeline discussion. Have you noticed sort of any so what changes in the pipeline have you sort of noticed? Is it accelerating now that the demand environment is

is good? And are you starting to see, you know, acceleration there, or what's sort of the dynamic on the pipeline? In the last few months? I think a lot of the Rob, a lot of the factors that had been in play for the last six months remain. I don't know if I would call it an acceleration. It was already a meaningful acceleration to that point. And obviously, the huge data points there are the OEMs who build the gas turbines have been are sold out for many years, which clearly confirms that there's an abundance of opportunities. Yeah. And, you know, the fundamentals, electricity consumption is expected to increase 4% annually through 2027 per the IEA. And then the recent capacity auction results in the PJM, which is the largest grid operator in the U.S., hit record levels of $329 per megawatt per day, for the 2627 delivery year. So, again, that's confirming that there's the need for new power and that there's the willingness to pay for it. So all of these data points and what we're seeing as we evaluate opportunities suggest an elevated level of opportunities.

Okay. Thank you.

On the industrial business side, I think you talked about a couple of big project wins there. How's the pipeline there? And I think that business is, you know, off recovering off a bottom, but what's the opportunity that segment can get to? And

what's the

trend line there in terms of backlog growth we should expect? Yeah. It was just a couple calls ago where, you know, the backlog was meaningfully down, and I was indicating to the market that we were gonna be in for a couple lower revenue quarters, and that's exactly what happened. Though, we're super pleased that we've climbed to record backlog of $189 million at the end of the quarter, and we expect to see improved performance in the second half of the year as we convert that backlog to revenues. So it's, you know, the TRC's markets continue to expand. Including a fair amount of work in the water treatment space and the data center spaces. So it's a lot of positive momentum there. And, again, as is our focus here at Argan, it comes down to execution.

Alright. Thank you. Turn it over. Congrats on the strong results.

Thanks, Rob.

Next question comes from Drew Chamberlain with JPMorgan. Please proceed.

Yes. Thank you. Good afternoon, team. Thanks for taking the questions.

First one, I just want to follow-up on the backlog discussion. I think I heard you say, David, that the backlog you expect to be significantly over $2 billion at the end of the year, which is, I guess, the same as we said last quarter. That's the formal guidance. But can you talk a little bit about maybe what's changed in the last three months since the last call? I mean, are you you think the products are coming in faster than expected, slower than expected? I mean, just really any difference.

Drew, great question. And at the end of the day, they continue to progress. And after another three months, we see, continue to see, milestones getting achieved. And gives us greater clarity and certainty that we expect those jobs to off later this year. So we haven't seen any pullback or any hesitation from the partners and potential customers that we're speaking to or working with. And given us a lot of confidence that we're gonna get there.

Okay. Thanks. And then and then

moving to the margin discussion. I mean, obviously, appreciate

the difficulties of guiding to gross margin here and, obviously, why you know, really choose to shy away from it. But can you talk a little bit about what you're seeing from a pricing dynamic in the market, and especially on the incremental contracts? Like where do you think those are shaking out versus historic levels?

Drew, another great question. I mean, we've been disciplined in our approach to every project. With our focus being successful completion of the project, ensuring the facility comes online, on time and on budget. Our approach to kind of winning and dynamically pricing projects has been consistent for the past twenty years. And we really don't pay attention to what others may be doing. We also really are focused on long-standing customer relationships that we value greatly, and we want those relationships to continue through this busy time and beyond. So, clearly, there is a meaningful demand in the market for EPCs that can build these power plants in the supply of us. Is probably, you know, less than the demand, and so that does create some opportunities.

Okay. Makes sense. And then just last one real quick for me. Thoughts on capacity. I mean, I think you've been pretty clear that you have double-digit capacity today. That's gonna be a mix of project types. But you're also talking about visit obviously, great longer-term demand here, fundamentals are there. And really improving visibility with that. I mean, can you talk about how you think about your need to add capacity over, you know, this cycle and maybe, you know, was it more appealing to do it organically or through M&A? Thank you.

Excellent. Thank you. The you know, we've intentionally added headcount over the last eighteen months to position ourselves for this currently very strong demand environment. In the past, I've said 10 plus jobs, a mix of renewables and gas, and, again, that all depends on size and cadence of our projects. And I would say we believe we have the capacity to handle 10 to 12 jobs in our power business. So we continue to nurture and grow our teams. Obviously, Argan, Inc. historically focused on organic growth, and that continues today.

Perfect. Thank you very much, guys.

Absolutely.

We have no further questions in queue. I'd like to turn the floor back to David Watson for closing remarks.

Great. Thanks, John. Thank you all for participating in today's call. And I look forward to speaking with you again when we report our third quarter fiscal 2026 results later this year. Have a great evening.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.