Good evening, ladies and gentlemen, and welcome to the Argan, Inc. Earnings Release Conference Call for the 2026Q3 ended 10/31/2025. 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, ma'am. Thank you. Good evening, and welcome to our conference call to discuss Argan's results for the third quarter ended 10/31/2025. On the call today, we have David Watson, Chief Executive Officer, and Joshua Baugher, Chief Financial Officer. I will 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. 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 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 third 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. Please go ahead, David.

Thanks, Jennifer, and thank you, everyone, for joining us today. I'll start by reviewing some highlights of our operations and activities, and Joshua Baugher, our CFO, will go over our financial results for the third quarter and nine months ended October 31, 2025. Then we'll open up the call for a brief Q&A. We delivered a solid third quarter highlighted by a record backlog of approximately $3 billion. We added several new projects to our backlog during the third quarter, including the 1.4 gigawatt CPB Basin Ranch project, and another 816 megawatt project also in Texas. Our current backlog represents over six gigawatts of new thermal and renewable power plants. Demand for our capabilities has been steadily growing, as the industry addresses the urgent need for new power resources to support the grid as the electrification of everything, the growth in AI and data centers, and the onshoring of manufacturing pressure the current capacity of existing facilities. As we've mentioned, the current urgency in the demand environment is amplified by the aging and retirement of many natural gas-fired and coal plants. The strength of the opportunity pipeline we're seeing for our expertise and capabilities is providing excellent visibility looking out for the next several years as we move through next year and into calendar 2027 we expect to continue to add a handful of projects. We are optimistic about our project cadence and expect to reach our capacity of approximately 10 to 12 jobs for the foreseeable future. That said, as you know, on a quarter-over-quarter basis, our revenue and backlog performance can, at times, vary related to the timing of projects. While we do our best to sequence our projects, ultimately, the project start dates are determined by the developers and the timing of one project ending and another…

Thanks, David, and good evening, everyone. On slide 10, we present our consolidated statements of earnings for the third quarter and nine months ended 10/31/2025. Third quarter revenues decreased 2% to $251.2 million primarily due to the timing of certain projects in our Power Industry Services segment. The revenue decline compared to last year's third quarter was related to decreased activity at Trumbull Energy Center which is near completion, the Louisiana LNG facility, was completed earlier this year, and the Midwest Solar and Battery projects. Additionally, certain recently awarded projects are progressing through early construction stages while last year's third quarter included peak execution activity at several large projects. Sequentially, consolidated revenue increased 6% as compared to 2026. For our recently ended third quarter, Argan reported consolidated gross profit of approximately $46.9 million or a gross margin of 18.7%. Consolidated gross profit for the comparative quarter last fiscal year was $44.3 million representing a gross margin of 17.2%. 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 Industry Services segment and the Industrial Construction Services segment. Gross margins for power industry services, our industrial construction services, and our telecommunications infrastructure services segments were 19.8%, 13.9%, and 21.2% respectively, for 2026. As compared to 18.3%, 11.1%, and 26.1% respectively, for 2025. Selling, general and administrative expenses of $14.3 million for 2026 increased slightly as compared to SG&A of $14 million for the comparable prior year period. Other income net for the three months ended 10/31/2025 was $7.1 million which primarily reflected investment income earned during the period. During the quarter ended 10/31/2025, the company recorded a provision for income taxes of $9 million on pretax book income of $39.7 million. Reflecting an effective tax rate…

Thanks, Josh. With strong cash flow, we further strengthened our balance sheet during the third quarter. At 10/31/2025, we had approximately $727 million in cash, cash equivalents, and investments, generating meaningful investment yields. Our net liquidity was $377 million and we had no debt. The strength of our balance sheet is a competitive advantage as it supports our increasing operations, expands bonding capacity, and provides customers a reliable and bankable EPC partner. Stockholders' equity was $420 million at 10/31/2025. The liquidity bridge demonstrates that our business model ordinarily requires a low level of capital expenditures. Our net liquidity of $377 million at 10/31/2025, has increased $76 million compared with net liquidity of $301 million at 01/31/2025. During the first nine months of fiscal 2026, we returned $32 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 and execute our projects. Second, the company pays a quarterly dividend which we increased 33% to 50¢ per common share in September 2025 creating an annual dividend run rate of $2 per share. Of note, that increase came just a year after we raised our dividend to 37.5¢ per share in September 2024 and represents our third consecutive year of raising our quarterly dividend reflecting the strength of our business and our commitment to returning shareholder value. 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 2025, 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…

We are energized by the strong opportunity pipeline and the demand for our expertise and capabilities. The power industry has a significant need for large combined cycle natural gas plants to support an already strained grid as demand for energy increases and Argan is one of only a few providers with the ability to build these facilities. As we move through the close of fiscal 2026, and into fiscal 2027, we remain committed to our disciplined approach to capitalizing on the strong demand we are seeing for our services with a focus on pursuing the right projects with the right partners in the right geographies. We remain optimistic about our growth opportunities and our prospects for adding projects to our backlog in this high-demand environment over the coming years. I'd like to thank our entire team for their hard work and dedication to operational excellence. They are the engine behind our company's growth and success. Likewise, I thank our shareholders for their continued support. With that, operator, let's open it up for questions.

Certainly. At this time, we'll be conducting a question and answer session. Pressing the star keys. One moment, while we poll for questions. And the first question today is coming from Chris Moore from CJS Securities. Chris, your line is live.

Hey. Good afternoon, guys. Congrats on a solid quarter. It looks like you're set up exceptionally well for next year and fiscal '28. Maybe just trying to get a better sense in terms of margins moving forward. Obviously, another good quarter for gross margins move around a little bit depending on mix and where you are with certain projects. I guess maybe just we'll start on large natural gas projects. Pricing on those, is it much different today than it was, say, two to three years ago? Hey, Chris, and, good evening to you. Yep. You know, we haven't disclosed our pricing on our gas projects, but our pricing model remains the same as it always has, taking into account today's market inflation, labor, and other various risks into consideration. As you know, there's really no one size fits all on pricing. Approach here as scope, complexity, whether it's combined cycle or simple. Risks that are taken, and other factors can be very different from contract to contract. So, we're thrilled with our $3 billion in backlog, and we're also really pleased with what we've been able to do with our gas business and, obviously, our margin profile over the past three quarters has been good, and we're looking to continue that run. Got it. And I appreciate that. Maybe I'll ask it a little differently. Just in terms of the sustainable gross margin moving forward, is the 18% range, is that a reasonable target you know, for '26 fiscal twenty-seven and '28 or just any thoughts around that? Yeah. You know that we remain intentionally conservative with our directional guidance on margins and we gave, I think, earlier this year, kind of that 16 plus percent benchmark. And, clearly, over the year to date, we're at 18.8%. So we've…

Thank you. The next question will be from Rob Brown from Lake Street Capital Markets.

Hi. Good afternoon. Congratulations on all the progress. Just in terms of the pipeline and maybe the cadence of the pipeline after having a couple of large projects, kind of awarded here. Do you expect kind of a similar rate in '26? Or is there a bit of a pause or do you sort of what's the cadence of activity you expect here in the next six to twelve months?

Well, we're catching our breath, Rob. You know, as you know, we historically have been pretty conservative about predicting where our backlog can go. And we'll we're gonna stick to that approach. But we've successfully added 4.6 gigawatts or six major power jobs to our backlog over the past twelve months. So we got a lot of work to do in front of us. And so as we balance that capacity, our capacity in the new work, we ultimately do expect to add a handful of jobs. Over the next twelve to twenty-four months, but it's difficult to predict when we will be able to add those jobs, especially since as you know, we don't control when the new jobs start. We're constantly evaluating projects that meet, you know, the right time conditions, and best fit for the organization. And we frankly have a significant number of inbound requests for our service at any given time. So I can't really give you precise guidance, as to the time of new jobs. The reality is our next job could be next quarter or a year from now. As you know, backlog performance can vary quarter to quarter. But at the end of the day, we're excited with our $3 billion in backlog. And we're excited about adding future jobs over the next couple of years.

Okay. Okay. Great. And then if you have seen sort of changes in the competitive environment? I know on your script, you talked about one of the few that can kinda do these large jobs. But what's sort of the competitive environment changes here, with all the demand? Yeah. As you know,

after the dash of gas in that 2015-2018 time period, just a little bit going back in history here, you know, we had a lot of competition that left the field, strategically. And today, for the larger complex combined cycle projects, there's really only a handful of us that are able to compete. To do those. And, you know, there are more folks competing for simple cycle also known as peakers, and we expect to see more folks enter the market over time. But the reality is there is enough work right now for everybody and we focus on getting the right jobs with the right contract and customer as we build out our portfolio projects.

Okay. Great. Thank you. I'll turn it over.

Thanks, Rob.

Thank you. The next question will be from Michael Fairbanks from JPMorgan.

Hi. Thanks for taking our questions. I got another question on labor. So David, you talked about 10 to 12 teams. I guess I'm curious to hear if you expect to be at that level in fiscal twenty-seven. And then also just, like, within that, how many teams could you potentially have working on that CCGT project at one time? And then also just curious to hear, like, how hard is it to expand that team count further? Thank you.

All good questions, and as you know, this is not an easy business that we're in. I mean, you do the math. We're currently working on around seven gas/biofuel projects and a couple of renewable projects. So simply looking at that, there's a little capacity with a little additional capacity to add another gas or renewable. And also, the Trumbull job is kinda getting close to the end of its completion stage, which could free up some more opportunity for us. So again, that 10 to 12 capacity, we do have capacity to add to that. And that is our intent over the next twelve plus months. So I guess that answers part of your question. There's also a number of ways for us to deploy our talent, we're able to potentially optimize certain leaders over multiple jobs versus just one. And so we're being very creative in being able to stretch our capabilities to take on the right projects and be able to meet our customers' needs. So there's a lot of thought and strategic decisions that are made around that, and again, we're always focused on growing our teams, growing assistant project managers, assistant engineers, etcetera, so that we can put the seeds in place for future expansion of capacity.

Great. And then just as a follow-up, you talked about being selective on new projects. I guess I'm curious, like, what kinds of projects and customers are you looking for and has there been any notable shift in your conversations around contract structure or terms or the risk that you're taking? Thank you.

Sure. We have always remained a flexible partner with current customers and future customers at the end of the day. When it comes to contract terms, you just gotta ensure that you're getting paid for the risk that you take on. And if you're able to enter into an agreement that meets both your needs as the EPC as well as the customer's needs and for that customer to be able to financing and whatever else they have to do to be able to get that project to go. So as it relates to terms, they're all negotiable. And there's really no standard set of terms that exist. No one size fits all. As it relates to our type of customers, obviously, we're looking to build out our portfolio of projects. We do find that with repeat customers, they know how we work. And we know how they work. And so there is a natural cadence, which in my mind does reduce the risk on that type of project. But we're also very excited about the new customers or potential customers that we're talking to. And we work both with IPPs and utilities. And so I would say we're not closed for business with any type of customer.

Great. Thank you. Sure thing.

Thank you. And the next question will be from Adi Modek from Goldman Sachs. Adi, your line is live.

Hi. Good evening, guys. David, I think on the opportunities that you mentioned into calendar '27, I'm curious what the size ranges are. Are the projects getting larger on? Is it gonna be similar? Any color you can provide there would be helpful.

Sure. I mean, it's interesting if you kinda do the math. There are five U.S. jobs right now. They average over one gigawatt each. So that is very sizable. And as you know, in the past, we've worked on a job that was almost 1.9 gigawatts. The Guernsey job in Ohio. So we don't have any size limitations as to what we're looking to consider. We will, you know, I think there's opportunities that are even greater than that size, and then there's opportunities that are on the lower end. Again, it's about meeting the right place in our cadence of jobs, that works for us and fits in our schedule. And so I think there is a tendency for us to do larger jobs. And I think that's a bit of a sweet spot for us. But that doesn't mean any other job is off the table for us.

That's helpful, David. And then, on the opportunities from private players or hyperscalers for dedicated CCGT plants, are you seeing anything? What's your outlook there? And what's your competitive position for something like that where, you know, it's a nontraditional customer? But we're starting to hear conversations around that. Any thoughts you can provide?

Well, we're always being asked to participate in behind-the-meter type projects. And again, we're always evaluating each opportunity to see what works best for us and what could potentially work with that potential customer. Again, it comes down to the right job, the right contract, the right price, etcetera. And I think if you look at our history, we've worked with all different types of project owners and developers. And so having that flexibility and we are a lean team that has shown an ability to be flexible. That bodes well for those types of opportunities as well.

Great. Thank you.

Thank you. The next question will be from Austin Lang from JLG Research. Austin, your line is live.

Hi, guys. Congrats on the gas mandate. Maybe if we could just kinda break apart the quarter's bookings qualitatively. I know you can't disclose too much here, but maybe it would be great to kind of understand some of the puts and takes, that kind of define this tranche of bookings. And then I have one more question before I'm happy to turn it back.

Austin, great to hear from you. And, I assume you're specifically asking about the CPV Basin Ranch opportunity as well as the 860 megawatt Texas project. Again, two projects that we're excited about. When it comes to puts and takes. You know, it just depends. You know, we are always as I've stated before, you look at the risk that you take on. Are you wrapping the job? Are you not wrapping the job? How much of the equipment are you buying versus the customer? So it's really difficult to, again, have that one size fits all pricing for on a per KW basis for any particular type of job, not knowing the details of the contract and what's in there. So we're really excited about how we have historically performed. And how we have historically priced our projects, and we're looking forward to generating two additional successful projects here.

No. That's great. Maybe if we could just get your thoughts on the opportunity set broader. Broadly for GasGen. Like, geographically, where are you seeing the most smoke? Because, obviously, you know, this slate of Texas projects has been really exciting. But maybe anything more West Virginia or Eastern Seaboard?

Sure. I mean, clearly, we've added a number of jobs in Texas, and we're very excited about work in that state. But, historically, we've worked everywhere. And as you know, Austin, we spend a fair amount of time in the PJM, finishing up on a job in Ohio. We've built several jobs in Ohio, several jobs in Pennsylvania. Yes. There are opportunities in West Virginia and throughout the PJM, and I think the PJM's in the middle of an auction right now. So, they are demonstrating the last couple anyway, some improved pricing and thus, potentially encouraging further development of gas plants, and that's a region we're very familiar with and would be very pleased to continue working in.

Amazing. Really excited for you guys. I'll hand it back.

Sure thing.

Thank you. And that does conclude our Q&A session for today. I would now like to hand the call back to David Watson for closing remarks.

Thank you all for participating in today's call. We look forward to speaking with you again when we report fourth quarter and year-end fiscal 2026 results. Have a great evening, everyone.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.