Executive Summary
Argan Inc (AGX) posted a strong start to fiscal 2026 with consolidated revenue of $193.7 million, up 23% year over year, and a gross margin of 19%, led by momentum in the Power Industry Services segment. Net income reached approximately $22.6 million ($1.60 per diluted share), and EBITDA was $30.3 million (15.6% of revenue). The quarter featured a record backlog of $1.9 billion and a materially strengthened balance sheet: roughly $546.5 million in cash and investments, net liquidity of $315 million, and no debt. The mix shift toward higher-margin power projects, ongoing project execution, and appetite for large gas-fired and renewable facilities underpin the favorable earnings trajectory. Argan also signaled an active capital-allocation stance, including a quarterly dividend of $0.375, a roughly $12.9 million buyback (100k shares), and an expanded buyback authorization to $150 million. Management expressed confidence in a multi-year, high-demand energy-infrastructure cycle driven by aging gas infrastructure, AI data-center growth, and EV charging, with a backlog outlook that could push meaningfully above $2 billion by year-end. The company’s strategy remains anchored in leveraging its gas-fired and renewable capabilities, expanding capacity through selective M&A, and sustaining disciplined financial management to fund growth without debt.
Key Performance Indicators
QoQ: -16.70% | YoY:22.82%
QoQ: -22.58% | YoY:111.08%
QoQ: -25.48% | YoY:273.40%
QoQ: -28.11% | YoY:186.09%
QoQ: -28.57% | YoY:179.66%
Key Insights
Revenue: $193.66 million (YoY +22.82%, QoQ -16.70%)
Gross profit: $36.87 million (Gross margin 19.0%; YoY +111.08%, QoQ -22.58%)
Operating income: $24.34 million (margin ~12.57%)
EBITDA: $30.93 million (EBITDA margin 15.6%)
Net income: $22.55 million (net margin 11.64%; YoY +186.09%, QoQ -28.11%)
EPS (diluted): $1.60 (YoY +179.66%, QoQ -28.57%)
Backlog: $1.9 billion as of 2025-04-30 (backlog up 36% versus 2025-01-31)
Segments (Q1 2026): Power Industry Services 83% of revenue; Industrial Construc...
Financial Highlights
Revenue: $193.66 million (YoY +22.82%, QoQ -16.70%)
Gross profit: $36.87 million (Gross margin 19.0%; YoY +111.08%, QoQ -22.58%)
Operating income: $24.34 million (margin ~12.57%)
EBITDA: $30.93 million (EBITDA margin 15.6%)
Net income: $22.55 million (net margin 11.64%; YoY +186.09%, QoQ -28.11%)
EPS (diluted): $1.60 (YoY +179.66%, QoQ -28.57%)
Backlog: $1.9 billion as of 2025-04-30 (backlog up 36% versus 2025-01-31)
Segments (Q1 2026): Power Industry Services 83% of revenue; Industrial Construction Services 15%; Telecommunications Infrastructure Services 2%.
Segment margins (Q1 2026): Power 20.6%; Industrial 10.8%; Telecom 18.0%
Cash/liq and leverage: Cash and investments ~$546.5 million; net liquidity ~$315 million; no debt
Shareholder returns: Quarterly dividend $0.375; repurchased ~100k shares for ~$12.9 million; buyback authorization raised to $150 million.
Liquidity/Capital discipline: Net liquidity rose by $14 million in the quarter; SG&A as percentage of revenue declined to 6.5% from 7.2% prior year.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
193.66M |
22.82% |
-16.70% |
| Gross Profit |
36.86M |
111.08% |
-22.58% |
| Operating Income |
24.34M |
273.40% |
-25.48% |
| Net Income |
22.55M |
186.09% |
-28.11% |
| EPS |
1.65 |
179.66% |
-28.57% |
Management Commentary
- Growth drivers and backlog: Management emphasized a robust demand environment and a record backlog of $1.9 billion, underscoring visibility into the power project pipeline. Quote: “We delivered a strong start to fiscal 2026 in the first quarter with consolidated revenue growth of 23% to $193.7 million and a gross margin of 19%, led by continued momentum in our power industry services segment.” (David Watson, CEO) The team also highlighted the Sand O’Lakes (SLEC) project and a pipeline that could push backlog meaningfully above $2B later in the year. Quote: “The pipeline remains strong… we expect to add several power industrial jobs over the course of the next six months, which should put us significantly over $2 billion in backlog later this year.” (David Watson)
- Margin and mix: Margin performance benefited from project mix and execution. Segment margins in Q1 2026 were Power 20.6%, Industrial 10.8%, Telecom 18.0%, contributing to an overall gross margin of 19%. This reflects ongoing project mix shifts and improved execution, despite prior-year charges that weighed on comparables. (David Baugher, CFO)
- Capital allocation and balance sheet strength: Argan reiterated a debt-free balance sheet with substantial liquidity and a disciplined capital-return plan. Management noted: no debt, net liquidity of $315M, and a quarterly dividend run rate of $1.50 per share, alongside a buyback program increased to $150M. Quote: “Our balance sheet remains strong with $546 million of cash and investments, net liquidity of $315 million, and no debt.” (David Watson)
- Market conditions and strategy: The company framed demand as broad-based across traditional gas-fired and renewables, with a strategy to execute complex gas and renewable projects to support grid reliability and electrification. They also highlighted a potential longer-term growth path via selective M&A to strengthen geographic and capability footprints. Quote: “We believe we are well-positioned with the capabilities, financial flexibility, industry relationships, and long-standing customer base to strengthen our leadership role as a partner of choice for the build-out of energy infrastructure.” (David Watson)
“We delivered a strong start to fiscal 2026 in the first quarter with consolidated revenue growth of 23% to $193.7 million and a gross margin of 19%, led by continued momentum in our power industry services segment.”
— David Watson, Chief Executive Officer
“Our backlog of $1.9 billion at April 30 includes fully committed projects in both the power industry services and industrial construction services segments. We expect to begin the construction this summer.”
— David Watson, Chief Executive Officer
Forward Guidance
- Backlog trajectory: Management indicated the backlog is likely to exceed $2B by year-end, reflecting continued awarding of gas-fired and renewable projects. They stated, “the backlog … should put us significantly over $2 billion in backlog later this year.” This implies continued revenue visibility into the medium term, subject to project starts.
- Revenue and earnings trajectory: While current quarter revenue rose 23% YoY, management signaled that revenue would continue to increase through the year as newer gas-fired and renewable projects ramp, though they cautioned that gas project work follows a 3–4 year cadence and revenue ramp can be gradual.
- Margin outlook: The company’s margin profile benefited from favorable mix and execution; management expects to maintain or possibly improve margins as backlog converts, though ongoing project scheduling and supply-chain dynamics could affect timing.
- Capital allocation and balance sheet: With no debt and ample liquidity, Argan has flexibility to fund growth, pay dividends, and pursue selective acquisitions to augment capabilities and geographic reach. Key monitoring factors include project-start timing, execution efficiency, commodity energy prices, and the pace of new awards.
- Key factors for investors to monitor: (1) Backlog progression toward and beyond $2B, (2) project-start timing and revenue ramp for large gas-fired and renewable programs, (3) segment mix and margin stability, (4) capital allocation decisions (dividend policy and potential acquisitions), and (5) any shifts in energy demand drivers (AI/data center growth, EV charging, and grid modernization).