Argan, Inc. Stock

Good evening, ladies and gentlemen, and welcome to the Argan Inc. Earnings Conference Call for the Second Quarter of Fiscal Year 2027 ended July 31, 2026. This call is being recorded.

[Operator Instructions]

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 Arden's results for the second quarter of fiscal 2027 ended July 31, 2026. On the call today, we have David Watson, Chief Executive Officer; and Josh Baugher, Chief Financial Officer. I'll take a moment to read the safe harbor 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 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 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 its second quarter fiscal 2027 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 today. I'll start by reviewing some highlights of our operations and activities in Josh Baugher our CFO will go over our financial results, then we'll open up the call for questions. Our strong second quarter built on the momentum we created in the first quarter of fiscal 2027, demonstrating our operational strength across our business. Each of our operating segments recorded substantially improved revenue, contributing to our record consolidated revenue of $384 million for the quarter.

Our Power and Industrial segments delivered significant revenue growth of 53% and 111%, respectively, for the quarter, with Teladata revenue growing 40%. Our second quarter highlights include consolidated gross margin of 19.3%, record net income of $53.3 million or $3.76 per diluted share record adjusted EBITDA of $70 million and adjusted EBITDA margin of 18.2%.

We also executed at the end of the quarter on M&A with the purchase of Valcore Communications a Connecticut-based provider of installation and repair services for information, communication and data networks. We're excited about the addition of ValCor, which strengthens our Tele data segment giving us a presence in New England and bringing a client base of Fortune 500 technology, defense and aerospace customers from the region.

Our balance sheet remains strong with approximately $1 billion of cash and investments, net liquidity of $440 million and no debt at July 31, 2026, and we continued our practice of returning capital to our shareholders through our quarterly dividend of $0.50 per share, which is $2 per share on an annual basis. So a very strong quarter overall with a lot of progress made.

Now on to the operational review. We have 3 reportable business segments: power, industrial and tele data. Our Power segment is our largest, building all types of power facilities, including thermal and a variety of renewables, including solar, solar with battery energy storage systems, biofuel and biomass facilities. Power segment revenues grew 53% and contributed $301 million or 78% of total revenue in the second quarter of fiscal 2027 with pretax book income of $66 million.

The Industrial segment provides field services supporting new plant construction and additions for industrial facilities and fabricated metal components like piping systems and pressure vessels in its fabrication facility. Revenue increased by 111% to $76 million in the second quarter or 20% of consolidated revenue with pretax book income of approximately $4 million. Backlog for the Industrial segment was $210 million at July 31, 2026, and construction on our second fabrication facility is progressing well.

Finally, revenue in our Tele data segment grew 40% to $7 million in the second quarter of fiscal 2027 and contributed 2% of consolidated revenue. Tele data provides project management and construction services across power distribution and information, communications and data networks for commercial and industrial customers. The segment works with data centers as well as with federal government locations and military installations requiring high-level security clearance.

As I just mentioned, we expect that our recent acquisition of Valcor will expand and extend our reach as a provider of Teledata services.

Turning to our backlog. Our consultant backlog of fully committed projects is $2.5 billion at July 31, 2026, and a decrease from $2.9 billion at the start of fiscal 2027. As you all know, we take a conservative approach to reporting backlog and typically only include the value of a contract and backlog when we've received a notice to proceed. Because of that, our backlog amount will move around from quarter-to-quarter related to the completion of certain projects and start time of pending projects.

Our pipeline remains exceptionally strong, reflecting the demand for the reliable 24/7 energy resources needed to power an economy that is increasingly reliant on electrification. Demand for our capabilities across all 3 operating segments is high, particularly in our Power segment, where our current backlog includes 4 gas-fired power plants in the United States, totaling over 4.1 gigawatts.

Our Industrial segment is also seeing strong demand, highlighted by a data center contract we were awarded in November 2025 for the fabrication of thermal expansion and energy storage tanks. As we discussed on last quarter's call, we are currently building an additional fabrication facility in North Carolina to support this project and to better position the company to address new opportunities. The new facility is on track for completion later this year.

As we move forward, we remain confident in our expectation that we will add a handful of new projects over the next 7 to 15 months. With the timing of our projects and the teams we have in place as well as those that are in training, we believe we are well positioned to execute on 10 to 12 jobs simultaneously. There continues to be a great deal of media and industry coverage around a significant increase in power demand due to the electrification of our economy. This dynamic includes the onshoring of domestic manufacturing, the use of EVs and the building of data centers, all of which are driving urgency around the build cycle for additional energy infrastructure to support an already stressed power grid.

Gas-fired plants are widely recognized as the ideal solution for delivering reliable, uninterrupted power and there are a limited number of firms, including Argan, who have the capabilities to successfully execute these complex construction projects. Despite some recent regulatory back and forth around data center development that's been in the news, the demand environment for our services remains very strong and that, combined with our proven track record is allowing us to remain selective in pursuing the right projects in the right locations with the right partners.

Our backlog is currently composed of approximately 80% natural gas projects, 11% renewable and 8% industrial. With the current demand of natural gas-fired facilities and our core competencies in building these types of projects, we expect complex combined cycle projects, which will represent the majority of our backlog for the near and midterm.

Renewable energy still plays an important role as a power resource. And we subscribe to an all of the above approach when it comes to power generation. We plan to maintain our renewable capabilities so that we remain competitively positioned to meet market demand and customer needs, but our core activities will center around natural gas builds.

Slide 7 highlights the selection of our major projects currently underway or recently awarded. As you know, during the first quarter, we reached substantial completion ahead of schedule on the final project of our 3-part Midwest solar and battery projects and now that project has reached final completion. In addition, we expect to reach substantial completion ahead of schedule for our 405-megawatt Midwest solar project later this month. Given the complexity of our projects, our ability to reach early completion milestone shows the high level proficiency of our teams and staying on task and on schedule, delivering excellent execution throughout a multiyear project.

In Texas, our 1.2-gigawatt ultra-efficient combined cycle natural gas fire plant for SLEC is moving forward as expected, and construction is ramping at our 2 other gas-fired projects in Texas the 1.4 gigawatt project with CPV and our 86-megawatt project. We're also making good progress on our 700-megawatt combined cycle natural gas fired power plant in the U.S.

Looking internationally, our 2 projects in Ireland, the Tarbert next-generation power station, a 300-megawatt biofuel plant for SSE Thermal and our 170-megawatt thermal facility are progressing well. As I mentioned earlier, our Industrial segment has a $125 million data center project underway and is also working on the recycling and water treatment plant in Alabama.

Our project portfolio is diverse in terms of scope, scale, complexity and location, but all of our teams approach each project with the highest commitment to excellent execution and our reputation as a reliable partner is a testament to that diligent approach.

With that, I'll turn the call over to Josh Baugher to take us through the financials for the second quarter and first 6 months of 2027. Go ahead, Josh.

Thanks, David, and good evening, everyone. On Slide 8, we present our consolidated earnings for the second quarter and first 6 months of fiscal 2027 ended July 31, 2026. As David mentioned, we delivered record second quarter revenues of $384 million, an increase of 62% as compared to $237.7 million in the second quarter of fiscal 2026. The increase is primarily due to the activity ramp of certain projects in our Power segment. For the second quarter, Argan reported consolidated gross profit of approximately $74.2 million or a gross margin of 19.3% and Consolidated gross profit for the comparative quarter last fiscal year was $44.3 million, representing a gross margin of 18.6%.

The increase in gross profit and improvement in gross margin for the recently ended quarter was primarily driven by our Power segment, reflecting a shift in project and contract mix and strong project execution. Gross margins for our Power, Industrial and Tele segments were 22.4%, 7.3% and 16.6%, respectively, for the second quarter of fiscal 2027.

Consolidated gross margin has stepped down over the past 3 quarters from 25% in the fourth quarter of fiscal 2026 to 21% in Q1 of fiscal 2027 and now 19.3% in the second quarter. As you know, our margins will vary from quarter-to-quarter depending on several factors, including project mix and where our projects sit in their construction cycle. When we complete projects early, we typically have an opportunity to realize some margin benefit. We saw that dynamic with the early completion of a couple of our projects in the fourth quarter of fiscal 2026 and Q1 of fiscal 2027, which favorably impacted consolidated margin.

In the second quarter, our consolidated margin reflects earlier stage revenues for our current projects in the Power segment. As projects ramp and get into the second and third year of construction, we expect to see higher revenues and with successful execution, we have the opportunity to enhance margin.

Selling, general and administration expense of $17.4 million for the second quarter of fiscal 2027 and increase as compared to SG&A of $14.2 million for the comparable prior year period. However, as a percentage of revenue, SG&A decreased to 4.5% compared to 6% in the comparable quarter. Other income net for the 3 months ended July 31, 2026, was 10.1%, which primarily reflected investment income earned during the period. Net income for the second quarter of fiscal 2027 and was a record $53.3 million or $3.76 per diluted share compared to $35.3 million or $2.50 per diluted share for last year's comparable quarter.

Adjusted EBITDA in the second quarter of fiscal 2027 was $70 million or an adjusted EBITDA margin of 18.2% compared to adjusted EBITDA of $38.5 million or an adjusted EBITDA margin of 16.2%. Looking at our year-to-date performance, revenue for the first 6 months of fiscal 2027 increased by 56.5% to $674.9 million as compared to revenues of $431.4 million for the prior year period. Our consolidated gross margin of 20.1% for the first half of fiscal 2027 and increase as compared to gross margin of 18.8% for the first 6 months of fiscal 2026 primarily due to the same reasons described for the quarter.

SG&A expenses increased to $33.1 million for the first 6 months of fiscal 2027 as compared to $26.7 million for the first 6 months of fiscal 2026 and but decreased as a percentage of revenues to 4.9% as compared to 6.2% in the first half of last fiscal year. Net income for the 6 months of the fiscal year was $99.4 million or $7.01 per diluted share compared to $57.8 million of $4.09 per diluted share for the first 6 months of last fiscal year.

Adjusted EBITDA was $126.5 million or an adjusted EBITDA margin of 18.7% for the first half of fiscal 2027 and compared with adjusted EBITDA of $70 million or an adjusted EBITDA margin of 16.2% for the first half of fiscal 2026.

With that, I'll turn the call back to David.

Thanks, Josh. Our balance sheet remains strong with approximately $1 billion in cash and investments, generating meaningful investment yields at July 31, 2026. Our net liquidity was $440 million, and we had no debt. We believe that our balance sheet is a competitive advantage as it supports our growing operations organically and inorganically, expands bonding capacity and provides customers a reliable and bankable EPC partner.

Stockholders' equity was over $0.5 billion at July 31, 2026. This liquidity bridge demonstrates that our business model ordinarily requires a low level of capital expenditures. Our net liquidity of $440 million at July 31, 2026, an increase of $19 million compared to net liquidity of $421 million at January 31, 2026, as we returned $51.7 million of capital to our shareholders during the first 6 months of fiscal 2027.

Our capital allocation strategy is disciplined and focused on 4 core areas. First, we invest organically in the business. That means developing and retaining our people and adding headcount to make sure we were staffed to execute on our projects. It also means expanding our capabilities, such as building a new fabrication facility in North Carolina to position ourselves for anticipated data center customer demand.

Second, the company pays a quarterly dividend, which we increased 33% to $0.50 per common share in September 2025, bringing us to an annual dividend run rate of $2 per share. The increase represented our third consecutive year of raising our quarterly dividend, which cumulatively has increased by 100%, reflecting the strength of our business and our commitment to returning shareholder value. We have had a share buyback program in place since November of 2021. And during the first quarter of this fiscal year, our board increased the total repurchase authorization to $200 million and extend its expiration date through January 31, 2030. Since the program's inception, we have returned a total of approximately $123.8 million to shareholders through the repurchase program.

Finally, we seek M&A opportunities that could be additive or complementary to our current platform. Our acquisition of Valcor Communications is a great illustration of that strategy, giving us a presence in New England and expanding our client base to include the Fortune 500 technology, defense and aerospace companies in that region. We're excited about this addition and its anticipated contributions. We are energized by the demand we're seeing for our capabilities across all 3 business segments.

With our skill set and excellent track record of execution, Argan is well positioned to capitalize on the opportunities presented by the urgent need for power infrastructure after a prolonged period of underinvestment and unprecedented increases in the demand for power. While we are energy agnostic and believe renewable will always have a role in power generation, gas-fired plants are integral to the reliable delivery of the uninterrupted 24/7 energy needed to power our economy.

The demand pipeline for complex combined cycle natural gas fire plants is substantial and we are one of only a few companies with the construction capabilities and proven track record of exceptional execution in building these facilities. We are excited for what lies ahead and intently focused on leveraging our teams, our solid financial position and our excellent reputation in the marketplace to expand our leadership position as a premier builder of industrial and energy infrastructure.

As always, I'd like to thank our entire team for their hard work and dedication to operational excellence. They are the core driver of our company's growth and success. I also thank our shareholders for their continued support and confidence in our company. With that, operator, let's open it up for questions.

[Operator Instructions]

The first question is from Rob Brown with Lake Street Capital Markets.

Congrats on all the progress. First wanted to talk a little bit the pipeline looks like your commentary was about maybe a more near-term kind of execution pipeline. But could you kind of characterize the activity there and the number of projects or a sense of the projects that you're looking at?

Absolutely, Rob, and thanks for the question. We have, historically, as you know, have been very conservative about predicting where our backlog can go and we're going to stick with that approach. We did say we expect to add a handful of new projects over the next 7 to 15 months and that reflects the current demand for natural gas-fired facilities. And we expect these complex buying cycle projects will represent the majority of our backlog for the near and midterm, but there will also be simple cycles as well.

As you know, we constantly are evaluating projects that meet the right time, conditions and best fit for our organization, and we have a significant number of inbound requests for our services. So I can't give a precise guideline at this time on new jobs. The reality is our next job could come next quarter or a year from now. And as you know, backlog performance can vary quarter-to-quarter depending on the timing of your projects.

We are pleased to keep the backlog over $2.5 billion despite not adding any major power projects in the quarter, given that we generated $675 million of revenue during the first 6 months. And I think it's important to note that we're able to offset some of that backlog burn with $260-plus million of additions through scope increases on existing jobs, adding new smaller jobs across the organization and intra-quarter revenues?

Okay. Great. And then on the new facility build-out, I think you talked about some data center kind of market opportunity that, that opens up to you. Could you give us a sense of what sort of the revenue capacity is in that new facility and maybe some of the markets you're going after with it?

Absolutely. Just the construction on that facility is going really well, and we expect to have that complete in Q3, which, to me, is a pretty significant acceleration and quick time line for building a new fabrication facility. Right now, it's primarily geared towards supporting that $125 million data center project that we're fabricating thermal expansion and entry storage change, and we expect a number of follow-on opportunities with that customer and frankly, expect that this facility will position the company for additional demand that we're seeing across our space.

So right now, obviously, there is any revenue coming out of that facility as it's still in construction phase, but we do expect for it to have a meaningful uptick in revenues for our industrial group later this year and into the next year around $10-plus million a quarter.

The next question comes from Chris Moore with CJS Securities.

Congrats on another great quarter. a couple. So one of the things you've talked about previously with respect to expanding and capacity capabilities is just the need for to keep hiring and training new people. So I'm just trying to get a sense in terms of maybe where you are today from a employee account perspective versus perhaps a year ago? And where do you expect to be a year from now?

Chris, appreciate the question. Jim is every month breaking new records of the number of employees that they have. It is a constant process to add and train to the organization to train folks in the away, and we constantly are adding folks. I think one of your questions might relate to what's our capacity of the number of jobs that we can take on. I'm still going to guide that capacity to 10 to 12 jobs at any one time, keep in mind a 2-gigawatt job is not the same as, say, a 500-megawatt job. So there could be some variability there ultimately.

But we continue to gear towards expanding that organization. Frankly, we're expanding all of our organizations in all of our business segments and our headcount is at record levels and meaningfully above where they were a year ago.

Got you. I appreciate that. Industrial gross margin was 7.3%. Is there -- maybe you could talk about that and certainly below kind of normal levels. Is there some cost from the expansion that's embedded in there? Or just what happened this quarter and kind of a more normalized level?

Yes. I mean revenue grew -- it's obviously a record quarter in revenue, north of $70 million. I mean it grew year-over-year, 11%. A -- but you're correct. The margin profile was below our expectations. And frankly, there were a couple of projects unrelated to our data center work where the estimates to complete became below where we initially estimated at the project inception, which impacted our gross margins during the quarter. We expect to finish these projects over the next 6 months.

So industrial margins may run below historical norms for a quarter or 2 as these projects wind down. We're working hard to improve the economics of these projects as we expect strong execution across our teams regardless of the project challenges they face. Beyond that, we see a lot of exciting opportunities in our Industrial segment similar to what I said to Rob, especially in the data center market and frankly, in the power market for industrial as well as pairing that with our fabrication capabilities. And we'll remain focused on selecting the right projects and executing them profitably. So we're working through a couple.

Got it. And maybe just the last one for me. I think you kind of referenced this, and certainly, demand looks really strong. I mean the Texas governor, Greg abetrecently talked about halting 1,800 data center projects if there are grid requests for, I don't know, 5x all-time peak demand. I guess the question is any impact that you're seeing in Texas and just overall and any impact at all from kind of some -- more on the political side.

Chris, there is still an urgency to get data centers and power plants built. And you're correct, there has been a lot of news lately with pauses and pushbacks on data centers. But there has really been no change in terms of developer behavior. It's still a matter of the developer being able to achieve all those milestones that we've talked about, right, such as getting power purchase agreements in place with an end user such as a hyperscaler, air permits access to gas, water permits, turbines, financing, et cetera.

We continue to work with several developers often through service arrangements on early activities as we anticipate kicking off some new projects over the next 7 to 15 months. So the there new there, but we're not seeing a change in behavior. -- and expect to be -- obviously, expect to add more backlog in the future here.

Sounds good. I will leave it there. I appreciate it.

Thanks, Chris.

The next question is from Michael Fairbanks with JPMorgan.

This is Mark Strouse on for Michael. David, I believe you said earlier this year, I'm just kind of thinking about revenue sequencing earlier this year, I believe you said that you were expecting kind of sequential increases throughout the year. Just given the strength that you saw in 2Q, do you still think that you're going to grow during the second half of the year compared to 2Q?

Mark, great question. Thanks for jumping on for Michael. It's clearly, it's our expectation that we will be meaningfully higher than fiscal year '26. We were able to achieve greater revenues than anticipated in Q2 across all of our business segments and especially in Power as such that some of this pull forward in Q2 may result in limited quarter over consecutive quarter growth in Q3, especially since we anticipate decreased industrial revenues compared to Q2, the rest of the year.

So as you know and as I've mentioned before, our revenues do move around related to where we are in the various construction phases of our projects underway. So we will see an impact from the timing of new project starts completion of projects and where we are in existing projects. So again, fiscal year '27 is expected to be significantly above fiscal year '26. The pace of revenue growth it's tough to tell, but you are correct. We did pull forward -- we did have a really strong revenue quarter in Q2.

Okay. And then just as a follow-up, I wanted to ask about your latest thoughts on pricing. -- specifically within the Gema business. So the combined cycle gas turbine OEMs are still talking about pricing increasing. Curious what you can say either specific to your own business or kind of what you're seeing across the industry, that would be helpful.

It still comes down to the type of contract comes down to the location, certain labor locations are much more significant than others when it comes to cost and getting the labor. So we believe our approach is appropriate as we take into consideration the market, we take in consideration inflation, labor costs, other risk factors in the contract type.

We typically do fixed-price contracts, as you know, Merck. So price -- I mean our margin profile that we've recorded over the last 3 quarters as Empower has been north of 2% and we expect for our contracts in the future to have meaningful pricing based off of the current market. But I wouldn't say that there is an ability to command higher pricing just because the market is evolving, but I do think we're able to get the right prices.

The next question comes from Alexa Bruno with Goldman Sachs.

We wanted to ask on the power margins. The strength we saw this quarter -- how should we think about it? Was it driven by project execution milestones? Or is this more normalized baseline expectations? What are some of the moving pieces there?

Alexa, thanks for the question, and thanks for joining us on the call. Our margins will vary from quarter-to-quarter depending on several factors including project mix, where we are in projects, where the projects sit in the construction cycle. We just completed power margins in Q2 or 22.4%. In Q1, they were 23.6%. So again, healthy north of 22% in both of those quarters. And some of that relates to completing some projects early. And so that's been beneficial when you're not incurring additional cost with due to the length of the project that can be beneficial.

But our overall margin outside of power was a little bit less than we were expecting but we remain confident in our ability to continue executing on our projects and capitalizing on opportunities in our pipeline to drive continued strong margins.

Okay. That's very helpful. And then just a follow-up on the Valcor acquisition. Can you talk about the opportunity set there? And then how should we think about the potential for any further bolt-on M&A?

Yes. We clearly have not done a lot of M&A over the last 10 years. So we were pleased to get Valcor to the finish line and to enhance our Tele data segment because we believe there will be synergies. And with organic growth and the synergies of Valcor and the progression on our strategic plan, it should result in a significant increase in our revenue run rate for Tele data, and frankly, which we expect to potentially double revenues from fiscal year '26 and drive EBITDA growth over the next couple of quarters and beyond.

There's obviously, with any M&A, there's risk of integration and continued execution of the Teledata strategy. And then, of course, as in everything, ensuring execution excellence. But we are excited about that business segment and how we can diversify our revenues and enhance shareholder value. And this success with this while it's albeit that it's a small acquisition as a reminder to the investing public that Argan does do M&A, though we are very stringent and picky as to when we do that but it is definitely one of our core capital allocation pillars in addition to buybacks and dividends and more importantly, investing in organic growth?

That's very helpful. We'll turn it back.

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

Well, none of this was made possible without all the hard work that all of our teams in the field, all of our teams in the segments and the companies that are doing all this hard work. So I want to, again, thank each and every one of you for all of your efforts. And I also want to thank all of those participating in today's call. and we look forward to speaking with you again when we report third quarter fiscal 2027 results. Have a great evening.

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

Good evening, ladies and gentlemen, and welcome to the Argan Inc. Earnings Conference Call for the First Quarter of Fiscal Year 2027 ended April 30, 2026. This call is being recorded. [Operator Instructions] 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 first quarter of fiscal 2027 ended April 30, 2026. On the call today, we have David Watson, Chief Executive Officer; and Josh 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, 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 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 the first quarter fiscal 2027 financial results and filed its corresponding Form 10-Q report with the Securities and Exchange Commission. 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 today. I'll start by reviewing some highlights of our operations and activities, and Josh Baugher, our CFO, will go over our financial results. Then we'll open up the call for Q&A. Our strong first quarter fiscal 2027 results reflect exceptional execution across our business with all 3 of our operating segments achieving significant revenue growth and maintained healthy backlog. First quarter highlights included record revenue of $291 million, improved gross margins of 21%, increased net income of $46 million or $3.24 per diluted share and improved adjusted EBITDA of $56.4 million.

During the quarter, as expected, we saw significant revenue growth in our Power segment, driven by the continued ramp-up of construction activities on our most recently awarded projects. Additionally, we reached substantial completion ahead of schedule at the third and final project of the Midwest solar and battery projects, and we reached final completion on the 950-megawatt Trumbull Energy Center in Ohio. Our balance sheet remains strong, and we generated substantial cash flow in the first quarter.

At April 30, 2026, we had $974 million of cash and investments, net liquidity of $421 million and no debt. Our commitment to returning capital to shareholders is a priority as demonstrated by our quarterly dividend of $0.50 per share or $2 per share on an annual basis. We have an active and opportunistic buyback program in place, which we increased during the first quarter to $200 million from $150 million, while also extending the program's expiration date through January 31, 2030. Backlog of $2.8 billion decreased slightly from $2.9 billion at the end of the last quarter. As we've noted before, backlog can move around from quarter-to-quarter as projects are completed. While we are always pursuing new opportunities, there will at times be a gap between the completion of one job and the announcement of new jobs.

Our project pipeline remains robust, and we continue to see heightened demand for our capabilities and expertise as the industry urgently seeks to build energy infrastructure in an environment where power demand is growing exponentially and a generation of power facilities reaches the end of useful life. As I discussed on our last call, we expect to add a handful of new projects over the next 10 to 18 months. With teams we have in place and the cadence of our projects, we believe we are well positioned to execute on 10 to 12 jobs simultaneously.

Now on to the operational review. As most of you already know, we have 3 reportable business segments. Our Power segment builds all types of power facilities, including thermal and a variety of renewable, including solar, solar with battery energy, storage systems, biofuel and biomass facilities. Power segment revenues contributed $227 million or 78% of total revenues in the first quarter of 2027. Pretax book income was $52 million, and the Power segment had backlog of $2.5 billion at the close of the first quarter.

The Industrial segment provides field services supporting new plant construction and additions for industrial facilities and fabricates metal components like piping systems and pressure vessels in its fabrication facility. Revenue increased to $58 million and contributed 20% of consolidated revenues with pretax book income of approximately $5 million. Backlog for the Industrial segment was $225 million at April 30, 2026. Finally, revenue in our Teledata segment was $6 million in the first quarter of fiscal 2027 and contributed 2% of consolidated revenue. The segment exited the first quarter with backlog of $8 million.

Teledata provides project management and construction services across power distribution and information, communications and data networks for commercial and industrial customers. The segment works with data centers as well as with federal government locations and military installations requiring high-level security clearance. Our consolidated project backlog consists of fully committed projects across our Power, Industrial and Teledata segments and totaled $2.8 billion at April 30, 2026. Demand for our capabilities across all 3 operating segments is high, particularly in our Power segment, where our current backlog includes 4 gas-fired power plants in the United States totaling over 4.1 gigawatts.

Our Industrial segment is also experiencing increased demand, highlighted by a data center contract we were awarded in November of 2025 for the fabrication of thermal expansion and energy storage tanks. In support of this project and to better position the company to address new opportunities, we have begun construction on an additional fabrication facility in North Carolina, which we expect to complete later this year. The electrification of the economy, including the onshoring of domestic manufacturing, the use of EVs and the proliferation of data centers is creating urgent demand for additional energy infrastructure to support a power grid that is under tremendous pressure. Gas-fired plants remain the ideal solution for delivering reliable, uninterrupted power and only a limited number of firms, including Argan, are able to successfully execute these complex projects.

The robust demand environment, coupled with our proven track record allows us a disciplined approach in choosing the right projects in the right locations with the right partners. Our backlog is currently composed of approximately 79% natural gas projects, 13% renewable and 8% industrial. With the current demand for natural gas-fired facilities, we expect these complex combined cycle projects will represent the majority of our backlog for the near and midterm. Renewable resources still play a valuable role as a power resource. And while demand for these has softened, we subscribe to an all-of-the-above approach when it comes to power generation. With that in mind, we plan to maintain renewable capabilities so we remain competitively positioned to meet market demand and the needs of our customers going forward.

Slide 7 highlights a selection of major projects currently underway or recently awarded. As you know, we reached substantial completion on our 950-megawatt Trumbull Energy Center project in December 2025, ahead of schedule, and the project has now reached final completion. Additionally, during the first quarter, we reached substantial completion also ahead of schedule on the final project of our three-part Midwest solar and battery projects. Our projects are complex in nature and our ability to reach early completion milestones is a testament to our project management capabilities and delivering excellent execution.

In Texas, our 1.2 gigawatt ultra-efficient combined cycle natural gas-fired plant for SLEC is progressing well, and we're beginning to see construction ramp at our two other gas-fired projects in Texas, the 1.4 gigawatt project with CPV and our 860-megawatt project. We are also moving forward as expected on our 700-megawatt combined cycle natural gas-fired power plant in the U.S. Looking internationally, we continue to make good progress on the Tarbert Next Generation Power Station, a 300-megawatt biofuel plant for SSE Thermal and on a 170-megawatt thermal facility, both of which are in Ireland.

As I mentioned earlier, our Industrial segment has a $125 million data center project underway and is working on a recycling and water treatment plant in Alabama. While the scope, scale and complexity of our projects is diverse, each of our segments share a commitment to execution excellence throughout every project we undertake. With that, I'll turn the call over to Josh Baugher to take us through the first quarter 2027 financials. Go ahead, Josh.

Thanks, David, and good evening, everyone. On Slide 8, we present our consolidated statements of earnings for the first quarter of fiscal 2027 ended April 30, 2026. First quarter revenues increased 50% to $291 million as compared to $194 million for the first quarter of fiscal 2026, primarily due to the timing of certain projects in our Power segment as activity began to ramp at certain recently awarded projects. For the first quarter, Argan reported consolidated gross profit of approximately $61.1 million or a gross margin of 21%. Consolidated gross profit for the comparative quarter last fiscal year was $36.9 million, representing a gross margin of 19%.

The increase in gross profit and improvement in gross margin for the recently ended quarter was primarily driven by our Power segment, reflecting a shift in project and contract mix, strong project execution, the achievement of substantial completion ahead of schedule on the final Midwest solar and battery project and completion of the Trumbull Energy Center. Gross margins for our Power segment, our Industrial segment and our Teledata segment were 23.6%, 11.8% and 11%, respectively, for the first quarter of fiscal 2027. Selling, general and administrative expenses of $15.7 million for the first quarter of fiscal 2027 increased as compared to SG&A of $12.5 million for the comparable prior year period.

As a percentage of revenue, SG&A decreased to 5.4% compared to 6.5% in the first quarter of fiscal 2026. Other income net for the 3 months ended April 30, 2026, was $8.4 million, which primarily reflected investment income earned during the period. Net income for the first quarter of fiscal 2027 was $46.1 million or $3.24 per diluted share compared to $22.6 million or $1.60 per diluted share for last year's comparable quarter. Adjusted EBITDA for the first quarter of fiscal 2027 increased to $56.4 million or an adjusted EBITDA margin of 19.4% as compared to $31.5 million or an adjusted EBITDA margin of 16.3% in the first quarter of fiscal 2026. With that, I'll turn the call back to David.

Thanks, Josh. We further strengthened our balance sheet during the first quarter, recording approximately $974 million in cash, cash equivalents and investments, generating meaningful investment yields at April 30, 2026. Our net liquidity was $421 million, and we had no debt. The strength of our balance sheet is a competitive advantage as it supports our growing operations, expands bonding capacity, provides customers a reliable and bankable EPC partner. Stockholders' equity was $474 million at April 30, 2026. This liquidity bridge demonstrates that our business model ordinarily requires a low level of capital expenditures. Our net liquidity of $421 million at April 30, 2026, is consistent with net liquidity at January 31, 2026, as we returned $33.6 million of capital to our shareholders during the first quarter of fiscal 2027.

We employ a disciplined approach to our capital allocation strategy, primarily focused on 4 core areas. First, we invest organically to develop and retain our people as well as adding to our headcount in order to ensure that we are well positioned to staff and execute our projects. Additionally, as Josh mentioned, we are expanding our fabrication capabilities to meet data center customer demand. Second, the company pays a quarterly dividend, which we increased 33% to $0.50 per common share in September 2025, creating an annual dividend run rate of $2 per share. The increase represented our third consecutive year of raising our quarterly dividend, which cumulatively has increased by 100%, reflecting the strength of our business and our commitment to returning shareholder value.

We have had a share buyback program in place since November of 2021. And during the first quarter of fiscal year 2027, our Board increased the total repurchase authorization to $200 million and extended the expiration date through January 31, 2030. Since the program's inception, we have returned a total of approximately $116.7 million to shareholders through the repurchase program.

Finally, we continue to thoughtfully evaluate M&A opportunities that could be additive or complementary to our current capabilities or enhance our geographic footprint. We are in a very exciting and busy time for our industry and our company. While the electrification of the economy promotes growth and progress, the associated tremendous increase in power demand is also severely taxing the power grid. Gas-fired plants remain the ideal solution for delivering the reliable, uninterrupted power that is needed to fuel the economy. As a result, the project pipeline for complex combined cycle natural gas facilities is robust with only a handful of companies who can successfully execute this type of build.

As we move through our 20th year constructing energy infrastructure, Argan is competitively positioned with the diverse capabilities, disciplined risk management, proven track record of exceptional execution and strong balance sheet to continue expanding our role as a partner of choice for the industry. With our current visibility of the landscape, we expect to leverage this favorable demand environment for the build-out of energy and industrial infrastructure through the near and midterm. Importantly, we remain dedicated to maintaining a disciplined approach as we select the projects we believe are best suited to our capabilities are a good fit with our existing project commitments and strengthen our ability to drive long-term growth and profitability.

As always, I'd like to thank our entire team for their hard work and dedication to operational excellence. They are the core driver of our company's growth and success. I also thank our shareholders for their continued support and confidence in our company, and we hope to see some of you at our annual meeting next week. With that, operator, let's open it up for questions.

[Operator Instructions] The first question comes from Chris Moore with CJS Securities.

Congrats on another strong quarter. Right. It looks like demand is certainly not the issue. It feels like it's all about capacity and margins these days. Maybe we could talk a little bit more about capacity. Certainly, understanding, given the increased cost, increased pricing means that $2 billion in revenue in a few years doesn't mean twice the labor that it took to generate $1 billion in revenue, say, today or a couple of years ago. When you think about kind of capacity, you think that Argan would have the capacity to do $2 billion in revenue a few years out?

Yes. So a number of points there to digest. One, as we've stated in the past, our capacity is still 10 to 12 jobs. But to your point about revenue, the amount of revenue that is generated in any given job is going to change as you move through the job from year 1 to year 2 to year 3 to year 4. And so when we think about our jobs, we think about where we are in the schedule, are we on schedule and how are we executing, the revenues will come. We always know the revenues will come. And so you're correct in stating that the price for jobs, given inflation, given the market, given all of these factors that are part of it is resulting in each build being a bigger job from a revenue standpoint and from a cost standpoint.

So we currently have 8 power jobs underway right now, Chris, 6 thermal and 2 renewables, and we expect to add more over the next 10 to 18 months. But at the end of the day, we continue to -- we're -- our teams are growing with training and experience, and we do plan to grow our capacity in the future. But the hiring of people, training people both in-house and in the field takes time. I mean Gemma hasn't had a lost job since we acquired them. I mean there is a Gemma way of doing things, and that is important to train people in, and that takes time. So we're not going to provide guidance as to what our capacity growth is going to be and when. But to your point about is $2 billion of revenue achievable in the future with the growth of our platform. And the answer is yes down the road.

Got it. Fair enough. So in terms of -- as you made the point a couple of times, there's only so many players that can -- are willing to do fixed price can handle the combined cycle. When you look at -- I'm just trying to distinguish between the independent power producers and the utilities. My understanding is the IPPs really have to go kind of on the fixed price route because they can't get the bank financing. Otherwise, utilities have a little bit more leeway. So perhaps from a competitive standpoint, there may be more players in there. I guess the question is, is the pricing that you see generally from an IPP much different from a utility-backed project because of the fact that IPPs -- there's a smaller subset of competitors that can be involved in that process?

I think the way to approach this question, Chris, is really it's about the project itself and whether it's being developed by an IPP or whether it's being developed by utility, it depends on the scope. It depends on the complexity, it depends on the size. And I wouldn't state that the price pursuant to an IPP customer versus a public utility customer is going to be meaningfully different. It really comes down to the project, the location, et cetera. But you -- typically, you are correct. IPPs typically do utilize the fixed price contract, which we are very happy to take on and frankly, have 20 years of proving that we can execute on fixed price contracts. And utilities have fixed price contracts and non-fixed price contracts. And we've worked with both types of customers, and we look forward to working with both types of customers going forward.

The next question comes from Ati Modak with Goldman Sachs.

David, you mentioned a handful of new projects in 10 to 18 months. Can you talk about that expectation a little bit more in terms of nature of the conversations with the time it is taking? And how does that compare with industry-level orders for other players? We're just wondering what the competitive dynamics look like there?

So, Ati. Great. Thanks for calling in. And our visibility is -- you know we've historically been very conservative about predicting where our backlog can go, and we'll always kind of stick to that approach. And so we're typically looking at opportunities that are on the bigger side of things, though we're not shy to consider smaller projects as well. And so I think that there's only a handful of folks that can do the gigawatt-plus types of jobs. And so the competitive set for that is maybe a little smaller than, say, going after 100 to 200 to 300-megawatt type size jobs.

So as it relates to timing for us, we're sticking to the same guidance that we gave, right? 10 to 18 months is a couple -- just with the passage of time is a little bit shorter than where we were at the year-end earnings call. And it's just a matter of working with these opportunities and these customers and helping them get to the finish line of their development so that we can kick them off.

That's very helpful. And then on the margins, can you talk about the impact that the early completion of the Midwest projects had in this quarter and the otherwise structural efficiency element to margins as we look forward?

Yes. Margins in general, Ati. I mean, we were really pleased to have a quarter on a blended rate of 21%. And yes, when you're able to achieve early substantial completion on your jobs like we did last quarter with Trumbull and then this quarter with the Midwest Solar project. And we also achieved final completion on Trumbull this quarter. So a lot of good data points. And the other data point to consider is we feel like we're in a good spot from an execution standpoint on all of our jobs. And that's really important because execution is what matters that enables us to potentially achieve outsized returns. So we're encouraged by the margin strength we've seen in this and recent quarters, again, driven by that strong execution.

And so -- but the other part of it, Ati, is we're in the early phases of a number of major jobs with a lot of outstanding risks to account for. So visibility into where ultimate margins end up is dependent on a lot of factors. And therefore, it's a little too early to tell. But similar to the last couple of years, in general, our consolidated blended rates tend to be in the high teens and low 20s and can have meaningful variations for the reasons I described earlier. So we're pretty excited about what we just completed. Frankly, we've been pretty excited about the margins we've achieved over the last 7 quarters. And again, it comes down to execution and doing our thing.

Our next question comes from Rob Brown with Lake Street Capital Markets.

Congratulations on all the progress. Just wanted to follow up on kind of the expansion of the fabrication in North Carolina, I guess, in the Industrial segment. What's sort of the additional capacity you bring in? I guess, I assume what's driving that is additional demand, but could you characterize kind of the pipeline of activity there that led you to increase capacity?

Yes. I mean it's largely -- we're really excited about what the Industrial segment has been doing over the last couple of quarters in the last couple of years. I mean, so record revenue this quarter for them, and they're still maintaining $225 million of backlog. And we've seen a lot of opportunity with working on some of these thermal expansion tanks for data centers and see a multiyear runway for opportunities there in addition to what we typically fabricate.

So I was out in late April down in North Carolina for the groundbreaking. It's exciting about the progress that we've already achieved on getting the facility constructed and ultimately expect to -- in a short period of time to actually have this thing producing these tanks later this year. So it's an aggressive timeline. I think we can get there. And honestly, it's there to support us as we have our current contracts, but also with the expectation of continued work. So pretty exciting time for us for that group.

Okay. Great. And then just a little bit back to the pipeline of power projects, and I know you gave a discussion on the 10 to 18 months. But just want to get a sense in the industry, are you seeing things -- any changes to the timeline there in terms of acceleration for that pipeline of power projects and willingness of customers to kind of make decisions and move forward?

No real changes, Rob, from where it's been. It's just a matter of being able to achieve all the developmental milestones between the air permits, the access to gas, the water permits, the turbines, the financing, et cetera. So we're not really seeing anything that would consider a change in the market and the developers' behavior. And we're honestly just there to support them and ultimately enter into the right EPC contracts with the right customers to make it happen. So we're continuing to provide the same guidance, that 10 to 18 months.

And I guess I'd also mention while we've converted $550 million in revenues over the last couple of quarters. We've been able to add $215 million in Q4 and over $125 million in Q1 from the regular cadence of new and add-on jobs in our Industrial and Teledata segments as well as various change orders across the businesses. So we've been pretty happy, and I just wanted to point out that there is a meaningful backlog growth outside of the major jobs that we add periodically that unfortunately, is often controlled by the project owners.

Our next question comes from Michael Fairbanks with JPMorgan..

This is Mark Strouse on for Michael. I just want to follow up on Rob's question about the fabrication facility. Can you talk about the kind of the CapEx requirement that would be required there and how to think about kind of what that opens up as far as an annual revenue opportunity or any other kind of capacity metrics that you think would be relevant?

Yes, Mark, thanks for calling in. The CapEx -- as you know, and as our net liquidity bridge has always shown, we're a very light CapEx business. And so this is one of the few times where we actually have sat down to make a meaningful PP&E investment. We're estimating that the investment is in the 10-plus -- $10 million to $13 million range or so. So not a meaningful but not a massive investment, so to speak. So what does that mean from expanding our revenue cadence? We've currently got a facility running right now, full bore. And this -- the nice thing about this new facility is it's 20-plus miles -- it's about 20 miles away from the existing facility, which we believe is going to give us a leg up to be able to -- it's not just about standing it up and building it, but also staffing it up and getting the right folks in there, and we're going to be able to utilize existing resources at our current facility over there to accelerate that process.

So that should allow us to be able to add. I don't have an estimate as to the amount of additional revenue. But as you can see with the industrial group, our expectation is that we meaningfully exceed the revenue that we did in the previous year.

Okay. And your balance sheet continues to improve here. In the past, you talked about kind of the amount of backlog that could be supported by a given balance sheet. I'm just curious if you could update there with your most recent balance sheet.

Sure. So net liquidity remained consistent at $421 million. And so that clearly supports a book of business of $2.8 billion in backlog. And clearly, it's our expectation that, that will be able to support several billion more in backlog over time, again, depending on timing and all of that good stuff. So we feel pretty good about where we stand on that. And it's -- it really comes down to adding these new jobs over the next 10 to 18 months.

Okay. We have no further questions in the queue. I would now like to turn the floor 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 second quarter fiscal 2027 results. Have a great evening, everybody.

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

Good evening, ladies and gentlemen, and welcome to the Argan, Inc. earnings release conference call for the fourth quarter and fiscal year ended January 31, 2026. This call is being recorded. [Operator Instructions] There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast.

At this time, it's my pleasure to turn the floor over to your host for today, John Nesbett and Jennifer Belodeau of IMS Investor Relations. Please go ahead.

Thank you. Good evening, and welcome to our conference call to discuss Argan's results for the fourth quarter and fiscal year ended January 31, 2026. On the call today, we have David Watson, Chief Executive Officer; and Josh Baugher, Chief Financial Officer.

I'll take a moment to read the safe harbor statement. 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 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 its fourth quarter and full year fiscal 2026 financial results and filed its corresponding Form 10-K report with the Securities and Exchange Commission.

Okay. I'll now turn the call over to David Watson, CEO of Argan. Please go ahead, David.

Thanks, Jennifer, and thank you, everyone, for joining today. I'll start by reviewing some highlights of our operations and activities, and Josh Baugher, our CFO, will go over our financial results, and then we'll open up the call for Q&A.

Our fourth quarter continued the strong execution we achieved across the company throughout fiscal 2026, resulting in record top and bottom line performance for both the quarter and the year. Josh will provide the details of the quarter and full fiscal year in a moment. But in summary, we had record revenue of $262.1 million in the fourth quarter and record revenue of $944.6 million for fiscal 2026. Fourth quarter gross margin of 25% and full year gross margin of 20.5%. Record net income of $49.2 million or $3.47 per diluted share in the fourth quarter and record net income of $137.8 million or $9.74 per diluted share for fiscal 2026. Record EBITDA of $56 million or an EBITDA margin of 21.4% for the fourth quarter and record EBITDA of $162.8 million or an EBITDA margin of 17.2% for fiscal 2026.

During fiscal 2026, we added $2.5 billion in new contract value, increasing our consolidated project backlog to more than $2.9 billion at the close of the year. Our balance sheet remains strong, and we generated significant cash flow in the fourth quarter. We have $895 million of cash and investments, net liquidity of $421 million and no debt at January 31, 2026.

Finally, we remain committed to returning capital to shareholders. And during the third quarter of fiscal 2026, we raised our quarterly dividend to $0.50 per share or an annual run rate of $2. This represents our third consecutive dividend increase in the past 3 years.

This is truly an exciting time for our company, and we are energized by the strong pipeline of opportunities we're seeing. As we've noted on previous earnings calls, our power grid is under increasing strength, rapid growth in AI and data centers, electrification of everything, the need to replace aging power facilities and years of underinvestment in power infrastructure are driving urgent demand for new, reliable power generation capacity. With our capabilities, long-standing customer base, proven track record of execution and industry-leading experience building large complex power projects, Argan is uniquely positioned to meet this demand for the construction of high-quality 24/7 energy resources.

With our strong backlog of ongoing projects and robust pipeline of opportunities to build large complex gas-fired power facilities, we're optimistic about the continuing demand environment for our expertise and capabilities. Similar to what I mentioned on our last call, we expect to add a handful of new projects over the next 12 to 20 months. With the teams we have in place and the cadence of our projects, we remain confident in our ability to execute on 10 to 12 jobs simultaneously.

Now on to the operational review. Slides 4 and 5 present our three reportable business segments. Our Power segment has the capability to build all types of power facilities, including thermal and a variety of renewable, including solar, solar with battery energy storage systems, biofuel and biomass facilities. Power segment revenues were $204 million in the fourth quarter as compared to $197 million for the fourth quarter of fiscal 2025 and represented 78% of consolidated revenues. Pretax book income was $55 million, and the Power segment closed the year with backlog of $2.7 billion.

The Industrial segment provides field services supporting new plant construction and additions for industrial facilities and fabricates metal components like piping systems and pressure vessels. Revenue in this segment increased to $53 million compared to revenue of $33 million in the fourth quarter of 2025 and contributed 20% consolidated revenues with pretax book income of approximately $4 million. Backlog for the Industrial segment was $253 million at January 31, 2026.

Finally, revenue in our Teledata segment was $5 million in the fourth quarter of fiscal 2026 compared to $3 million in the fourth quarter of fiscal 2025 and contributed 2% consolidated revenue. The segment closed fiscal 2026 with backlog of $8.4 million. Teledata provides project management, construction services across power distribution and information communications and data networks for commercial and industrial customers. The segment also works with federal government locations and military installations requiring high-level security clearance as well as data centers.

The rapid electrification of everything is driving unprecedented demand for power. At the same time, decades of underinvestment in energy infrastructure has created a critical imbalance between the high demand for energy and the constrained capabilities of the power grid. Much of the nation's thermal power infrastructure is aging out, potentially constraining the supply of reliable, high-quality 24/7 energy that's necessary to run data centers, manufacturing facilities and EV charging infrastructure. Only a handful of companies, including Argan, are capable of building the large, complex combined-cycle facilities necessary to power the electric economy.

With our specialized capabilities, long-standing customer and vendor relationships and proven track record of success, we are seeing heightened demand for our services. We remain dedicated to employing a disciplined approach to selecting the projects we believe are best suited to our capabilities, are a good fit within our existing portfolio of projects and strengthen our ability to drive long-term growth and profitability.

Our consolidated project backlog at January 31, 2026, totaled $2.9 billion, reflecting the addition of $2.5 billion in new contract value over the course of the year, including three gas-fired power plants in the United States totaling over 3.4 gigawatts. Our current backlog includes fully committed projects across our Power, Industrial and Teledata segments. We are seeing strong demand for our capabilities across all three operating segments.

As I mentioned a moment ago, the rapid electrification of the economy is straining our power grid and driving demand for complex combined-cycle projects. We are one of the select few companies with the expertise to successfully execute these projects, and we bring a well-recognized reputation for operational excellence and a proven track record of success. This highly favorable demand environment enables us to take a disciplined approach in selecting the right projects with the right partners in the right geographies.

Our backlog is currently composed of approximately 77% natural gas projects, 14% renewable and 9% industrial. With the demand levels we are currently seeing for the new gas-fired facilities, we believe natural gas projects will continue to represent a substantial portion of our backlog for the near and midterm. That said, we remain committed to maintaining our renewable capabilities as we believe grid reliability can benefit from a combination of renewable and thermal resources.

Slide 9 highlights a selection of major projects currently underway or recently awarded. We're pleased to share that during December 2025, we reached substantial completion on our 950-megawatt Trumbull Energy Center project. Delivering a project of Trumbull's size and complexity is a significant accomplishment, and I'm especially proud of our team for reaching substantial completion ahead of schedule.

We continue to make progress on our 1.2 gigawatt ultra-efficient combined-cycle natural gas-fired plant for SLEC in Texas and began early work on our two additional gas-fired projects in Texas, the 1.4 gigawatt project with CPV and our 860-megawatt project. Work on our 700-megawatt combined-cycle natural gas-fired power plant in the U.S. is also progressing well. In addition to our thermal projects, our renewable projects in the U.S. are moving forward as expected.

Overseas, our two projects in Ireland, the Tarbert Next Generation Power Station, a 300-megawatt biofuel plant for SSE Thermal and the 170-megawatt thermal facility continue to make solid progress.

Finally, you'll see some of our highlighted projects underway in the Industrial segment, including a data center project valued at $125 million as well as work on a recycling and water treatment plant in Alabama and a water treatment plant in North Carolina. Our backlog reflects the diversity of our capabilities, and we remain intently focused on execution excellence as we move through each project's construction cycle.

With that, I'll turn the call over to Josh Baugher to take us through the fourth quarter financials. Go ahead, Josh.

Thanks, David, and good evening, everyone. On Slide 10, we present our consolidated statements of earnings for the fourth quarter and fiscal year ended January 31, 2026.

Fourth quarter revenues increased 13% to $262.1 million, primarily due to the timing of certain projects in our Power segment. The Trumbull Energy Center reached substantial completion during the quarter and activity began to ramp up at other recently awarded projects.

For the fourth quarter, Argan reported consolidated gross profit of approximately $65.6 million or a gross margin of 25%. Consolidated gross profit for the comparative quarter last fiscal year was $47.6 million, representing a gross margin of 20.5%. The increase in gross profit and improvement in gross margin for the recently ended quarter were primarily driven by our Power segment, reflecting strong project execution, including the achievement of substantial completion ahead of schedule at the Trumbull Energy Center. Gross margins for our Power segment, our Industrial segment and our Teledata segment were 29%, 11% and 14.2%, respectively, for the fourth quarter of fiscal 2026.

Selling, general and administrative expenses of $17.9 million for the fourth quarter of fiscal 2026 increased as compared to SG&A of $14.9 million for the comparable quarter prior year.

Other income, net, for the 3 months ended January 31, 2026, was $7.7 million, which primarily reflected investment income earned during the period.

Net income for the fourth quarter of fiscal 2026 was $49.2 million or $3.47 per diluted share compared to $31.4 million or $2.22 per diluted share for last year's comparable quarter. EBITDA for the quarter ended January 31, 2026, increased to $56 million compared to $39.3 million for the same period of last year. EBITDA as a percent of revenue increased to 21.4% for the fourth quarter of this fiscal year compared to 16.9% for the fourth quarter of last fiscal year.

Looking at our full year performance, revenues for fiscal year 2026 increased by 8.1% to $944.6 million as compared to revenues of $874.2 million for the prior fiscal year. Our consolidated gross margin of 20.5% for fiscal 2026 increased as compared to gross margin of 16.1% for fiscal 2025, primarily due to the same reasons described for the quarter.

SG&A expenses increased to $59 million for fiscal 2026 as compared to $52.8 million for fiscal 2025, but remain consistent as a percentage of revenues.

Net income for fiscal year 2026 was $137.8 million or $9.74 per diluted share compared to $85.5 million or $6.15 per diluted share in the last fiscal year. EBITDA was $162.8 million for fiscal 2026 compared to EBITDA of $113.5 million in fiscal 2025.

With that, I'll turn the call back to David.

Thanks, Josh. We further strengthened our balance sheet during the fourth quarter. At January 31, 2026, we had approximately $895 million in cash, cash equivalents and investments, generating meaningful investment yields. Our net liquidity was $421 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 $462 million at January 31, 2026.

This liquidity bridge demonstrates that our business model ordinarily requires a low level of capital expenditures. Our net liquidity of $421 million at January 31, 2026, has increased $120 million compared with net liquidity of $301 million at January 31, 2025. During fiscal 2026, we returned $43 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 $0.50 per common share in September 2025, creating an annual dividend run rate of $2 per share. Of note, that increase 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 $114 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 footprint.

Our company is dedicated to driving long-term value creation for shareholders. Our backlog and pipeline is stronger than it has ever been. And since 2007, we have increased our tangible book value and cumulative dividends per share to record levels.

As I mentioned at the start of the call, these are truly exciting times for our company. With our proven success building complex combined-cycle natural gas facilities, we are uniquely positioned to benefit from industry urgency around the construction of energy infrastructure. Our backlog is strong, and our balance sheet is attractive to potential customers, both existing and new. We are seeing a robust pipeline of opportunities and with our visibility today, we are confident that demand for our expertise and services as a partner of choice to the energy infrastructure industry will continue through the near and midterm.

To close, we remain focused on our long-term growth strategy, leveraging our core competencies to capitalize on existing and emerging market opportunities, maintaining disciplined risk management, the goal of improving our project management effectiveness and minimizing costly project overruns, strengthening 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, driving organic growth while also being open to acquisition opportunities that make sense for our business through thoughtful capital allocation.

As we begin fiscal 2027, we remain committed to capitalizing on the strong demand we are seeing for our services with a disciplined focus on pursuing the right projects with the right partners in the right geographies. Likewise, we are intent upon driving executional excellence throughout our project portfolio. 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, and I thank our shareholders for their continued support.

With that, operator, let's open it up for questions.

[Operator Instructions] Your first question is coming from Rob Brown from State Street (sic) [ Lake Street. ]

First question, I just wanted to discuss kind of the regions you're seeing demand or interest in your pipeline. What are sort of the regional activities that you're seeing?

Rob, great -- question. I appreciate the call. We're seeing a number of opportunities across the country. Obviously, we've had a fair amount of work that we're doing in Texas right now. We've done a lot of work in the PJM over the years. And we're really -- we go where the jobs are. So we really aren't constrained as to where we go to build projects and the amount of opportunities are really across the board. So no real specific region to point out for you.

Okay. Great. And then you talked a lot about sort of an increasing pipeline. What are you seeing in terms of the -- I guess, the pricing dynamics in terms of projects and the margins on those? Are those staying consistent? Are those going up with the demand growth?

We remain disciplined in our approach to every project with our focus being the successful completion of the project, right, ensuring the facility comes online, on time and on budget.

Also, as you know, Rob, we have long-standing customer relationships that we value greatly, and we want those relationships to continue through this busy time and beyond. We've been in this business a long time, and we have learned how to anticipate supply chain and other items that may impact the project. And we price our contracts accordingly. Right now, there's enough work for everyone, and our pricing model remains the same as it always has, taking into account today's market, inflation, labor and other various risks.

So there is no one-size-fits-all pricing approach as scope, complexity such as combined cycle versus simple cycle, risks that are taken on and other factors can vary different from contract to contract. So we're working very closely with our customers from the start of any contract in a collaborative way in order to drive successful outcomes for them and for us.

Congratulations on all the progress.

Your next question is coming from Chris Moore from CJS Securities.

Maybe one more on pricing and margins. Just trying to get a sense in terms of what '27 would look like. Obviously, the '26 number, 20.5%, that's got a lot of excess margin from Trumbull in there. If you look at the '26, it was 20.5%. If you look at '25, 16.1%. From where you sit today, is the gross margin for '27 likely somewhere between those two? Just any thoughts you might have on where the gross margin is going to be for the year?

Chris, thanks for joining in on this call and a great question, and you gave some good color behind that -- all that, right? Because over the last 2 years, I think we've had quarterly margins between 11.4% to 25%. So they do bounce around, as you're kind of alluding to.

That being said, our margin cadence has trended on the higher side in the current year, just completed. And obviously, we'd like to continue to build on that. But there are a significant number of factors, right, execution, contract type, risk taken on, segment mix, et cetera, that can impact that margin positively or negatively. And as you also know, having covered us for quite some time that we are intentionally conservative with our directional guidance given the -- and due to the lumpy nature of the construction industry.

So given the recent awards and the changing mix of projects, contract types and relative percentage of each business segment. It's a little too early to tell where fiscal year '27 will end up from a gross margin standpoint. But we are really encouraged by the makeup of our backlog and our progress to date on the projects underway.

Got it. You got a few pretty significant projects just getting going. You talked about adding potentially some new projects over the next 12 to 20 months. Just trying to get a sense, how many new large natural gas projects, say, bigger than $500 million, do you have the capacity to close and actually begin construction on in calendar 2026? Would that be maybe one additional one or -- just trying to get a sense as to what capacity looks like actually for calendar '26 beyond where you already are for CP Basin (sic) [ CPV Basin ] is going to be ramping, Sandow, et cetera?

Sure. And you're right to point out that -- we've added a number of recent projects, and we did say that we think that there's -- we expect to add a handful of jobs over the next 8 to 20 months, which kind of follows my guidance from the previous call. But it goes back to what I've cited in the past, which it comes down to project capacity, right, 10 to 12 jobs at one time. Right now, we have 9 underway, 7 thermal and 2 renewable, though I will note that Trumbull just reached substantial completion in December, and so we're getting to the tail end of that.

So that means we do have capacity to take on additional jobs this year. And it could be a number of jobs. There's no -- again, it's the 10 to 12 number that is the key, and we're not at that number at this time.

Got it. And last one for me. Nice bounce-back quarter for Roberts, $53 million. Backlog looks good there. Is that -- $50 million level, is that sustainable? Or is that a little aggressive if I'm thinking about that moving forward?

Yes. We're really encouraged to see the revenue growth over the course of the year. I mean on the revenue front, it started out from $29 million in Q1 and ended up at $53 million in Q4, while the revenue was relatively flat from the prior year to fiscal year '26, you're right to point out that we've been on a trajectory of increasing revenues. We have increased our backlog $200 million from $53 million at the beginning of the year to $253 million at the end of the fiscal year. And that also includes adding a pretty meaningful object, $125 million project that relates to the data center market.

So the revenue momentum, the record backlog outside of some potential seasonality here and there, we look forward to increased year-over-year growth for this business. And of course, we remain continued -- our focus is always on job execution and profitability.

Your next question is coming from Ati Modak from Goldman Sachs.

I guess on the first one, can you give us any sort of update -- status update almost on the hurdles that the various components of the value chain are at between labor, turbine availabilities? Just give us a sense of where the market stands as of today.

So you're -- I assume you're referring to our pipeline and how things are coming -- pushing forward?

Yes. I mean the market in general, and that helps us think about what that pipeline for you specifically would do as well. Any kind of color to help us think about what the sense of urgency looks like and where the various components are as of today?

We remain extremely confident. As you know, our current backlog of $2.9 billion is -- it's fully committed jobs with customers and it will be translated into revenues over the next 3-plus years.

The -- our confidence of seeing other projects get into our backlog, I've continued to maintain that we expect those to come in over the next 8 to 20 months, could be next quarter, it could be 3 quarters from now. Again, as a reminder to the listeners, we don't get to control when projects start or not. But from a supply chain standpoint, from a turbine standpoint, interconnection standpoint, there's a fair amount of improving conditions there as the supply chain tries to catch up and meet up with the increased demand, not just in the United States, but globally. And we are seeing that. So hopefully, that answers your question, Ati.

Yes, that's helpful. And then I think if you can give us a sense on the expansion of the number of teams and how that, in general, is progressing per your expectations. I'm just trying to think of the time line and if there's any reason to believe -- and you kind of suggested things are improving a little bit. Any reason to believe that, that gets pulled forward? How should we think about that?

Yes. It's tough for me to give a specific time line on that. I mean, as you know, the constraints, it's people at all levels, including project leadership, craft and back office. And as you know, we're focused on retention, training and adding head count. In fact, our non-craft workforce is at the highest level it's ever been, and we continue to add folks.

So all these things put together, we will continue to optimize our current workforce and continue to add. And ideally, it's -- we're 10 to 12 jobs right now. Hopefully, I have a different answer for you down the road.

Sounds good. And if I can squeeze in one more. In the 10-K, you sort of had some comments on behind-the-meter solutions and sort of requiring additional flexible dispatch and that sort of leading into gas plants. Can you talk about that dynamic? We're getting a lot of inbounds on how that impacts or competes with your business. Would love to hear your perspective on it.

Sure. I'm impressed you've already got through the 10-K. It's not a short document.

I just read that section, to be fair.

We're always being asked to participate in behind-the-meter projects. And as I've always stated, it comes down to the right job, the right contract, the right price, the right customer, the right location and what fits best in our portfolio of projects. So it remains a robust opportunity. But the classic opportunities remain robust, and it's across the board. It's a continually evolving market and we continue to participate.

Your next question is coming from Michael Fairbanks from JPMorgan.

Maybe just on margins for the quarter. I think you showed 29% gross margins on Power. Can you maybe talk about the driver of that specifically in 4Q? And is that largely driven by the project wrapping up at Trumbull? Or is this more of a broad-based margin strength?

Sure thing, Michael. It really comes down to execution. That fundamentally is driving a lot of that success. I mean there is a slight rotation in the mix of our projects as we move into more of a gas-heavy part of our backlog versus renewable side. But it's execution across the board, which I think I mentioned earlier on an answer that we feel pretty good about how we're progressing across the board. And also, clearly reaching early substantial completion on the Trumbull job gave us the opportunity to not incur certain costs. You're not sitting on the job site for an extra 2 months. So that was very beneficial from a margin standpoint as well.

Great. And then maybe as a follow-up, following up on Rob's question from earlier. Can you talk about the opportunity that you see specifically in the PJM region, especially around this emergency capacity auction and maybe just what the conversations with customers are like in that region?

Yes. I mean, to be honest with you, the short answer is it's still a little bit of TBD, right? The emergency capacity procurement auction really hasn't been finalized as to how that's going to look and feel. And clearly, we are going to be monitoring this closely because we've built a lot of power plants in the PJM. I mean it certainly has the potential to have that TEF effect that happened in Texas, right, the Texas Energy Fund that pulled forward a number of opportunities in Texas. It could have that same effect in the PJM, and that's exciting. So we continue to closely monitor it.

That concludes our Q&A session. I will now hand the conference back to David Watson for closing remarks. Please go ahead.

Thank you, all of you for participating in today's call. We look forward to speaking with you again when we report first quarter fiscal 2027 results. Have a great evening.

Good evening, ladies and gentlemen, and welcome to the Argan Inc. Earnings Release Conference Call for the Third Quarter of Fiscal 2026 ended October 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 open 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 October 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 statement. 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 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 its 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 Josh Baugher, our CFO, and go over our financial results for the third quarter and 9 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 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 86-megawatt project also in Texas. Our current backlog represents over 6 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 in the onshore 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 very 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 starting can sometimes be more staggered than we prefer. You'll see that dynamic illustrated in our third quarter revenue performance, which while strong at $251 million decreased slightly as compared to revenue of $257 million in the third quarter of fiscal 2025. The decrease is primarily related to our completion of the LNG project in Louisiana and the near completion of Trumbull Energy Center, both of which generated significant revenues in the prior year period, coupled with limited revenues on several of our recently awarded projects in the current quarter.

As many of you know, the early days of any project typically generate limited revenue which begins to ramp as we have more activity and more people on site. Sequentially, we were pleased to see revenue growth of 6% from $238 million in the second quarter of fiscal 2026.

Along with delivering a solid revenue number, we achieved enhanced gross margin and strong profitability. Josh will go into the details of the quarter and first 9 months in a moment. But in summary, we had improved gross margins of 18.7% compared to 17.2% in the third quarter of fiscal 2025, net income of $31 million or $2.17 per diluted share, EBITDA of $40 million or an EBITDA margin of 16%; record backlog of approximately $3 billion, which includes the 2 new projects I just mentioned, the approximately 1.4 gigawatt Basin Ranch project with CPV as well as the 816-megawatt facility. Our balance sheet remains strong as we continue to generate significant cash flow. We have $727 million of cash and investments, net liquidity of $377 million and no debt at October 31, 2025.

Finally, we remain committed to returning capital to shareholders, and we're pleased to raise our quarterly dividend to $0.50 and or an annual run rate of $2, representing our third consecutive dividend increase in the past 3 years.

Now on to the operational review. Slides 4 and 5 present our 3 reportable business segments. In our Power Industry Services segment, we have the capability to build multiple types of power facilities, including efficient gas-fired power plants, solar energy fields, biomass facilities and battery energy storage systems in the U.S., the U.K. and in Ireland. Power Industry Services revenues decreased 8% to $196 million in the third quarter as compared to $212 million for the third quarter of fiscal 2025. The revenue decline in the quarter was primarily related to timing as certain projects are nearing completion and other newer projects are in the early stages of on-site activity as discussed earlier. The segment represented 78% of third quarter revenues and reported pretax book income of approximately $37 million.

Revenue increased to $49 million in our Industrial Construction Services segment, a 19% increase compared to revenue of $41 million in the third quarter of 2025. Industrial Construction Services contributed 20% consolidated revenues with pretax book income of approximately $5 million in the third quarter of 2026. This segment primarily provides solutions for industrial construction projects with a concentration in agriculture, petrochemical, pulp and paper, water, data centers and power and has seen solid demand for its capabilities closing the quarter with backlog of $159 million.

Finally, revenue in our Telecommunications Infrastructure Services group grew 76% to $6.3 million in the third quarter of fiscal 2026 compared to $3.6 million in the third quarter of fiscal 2025. Telecommunications Infrastructure Services is our smallest segment and contributed 2% of third quarter revenues. The Telecommunications segment provides outside construction services for the utility and telecommunications sectors as well as inside the premises, wire and services, primarily for federal government locations and military installations requiring high-level security clearance as well as data centers. We're excited about the growth we're seeing in this segment expect to drive continued year-over-year growth.

There has been a great deal of industry and news coverage detailing the increase in energy demand across almost every sector of the economy as the electrification of everything continues to expand. We are in a unique and concerning environment where a substantial portion of the nation's natural gas infrastructure is reaching the end of its useful life at the same time, energy use is increasing for the first time in decades. The ability for AI data centers, complex manufacturing operations and EV charging to operate without interruption is contingent upon the 24/7 supply of reliable, high-quality energy that primarily comes from a combination of traditional gas-fired and renewable infrastructure. Argan, along with just a few others in our industry, has the capabilities to build the large complex combined cycle facilities necessary to power the electric economy.

We are energized by the current demand environment and believe that our energy agnostic capabilities, long-standing customer and vendor relationships, proven track record of success and disciplined approach in the market opportunities in front of us positions us well for continued long-term growth and profitability.

Slide 7 illustrates the strength of our project backlog which is comprised of approximately 79% natural gas projects and 16% renewable. As I just mentioned, we believe grid reliability going forward will benefit from a combination of natural gas and renewable energy resources. And as you can see from this portion of our backlog that the demand for new natural gas facilities is significant and growing. We will continue to maintain our presence in the renewable space, but we expect gas-fired and other thermal power facilities to represent the substantial portion of our backlog in the near and midterm.

As I mentioned a moment ago, Argan is one of only a few companies who have the capability to successfully execute the complex combined cycle projects and make up a significant portion of the projects currently coming to market. We have established a reputation for operational excellence and a proven track record of success for our customers by employing a disciplined approach to pursuing and winning the right projects with the right partners in the right geographies. We're excited about the market landscape and the demand we're seeing for our expertise and services.

Turning to Slide 8. Our consolidated project backlog at October 31, 2025 was a record at approximately $3 billion, reflecting the strength of our offerings at all 3 operating segments. Our current backlog includes fully committed projects in both the power industry services, in Industrial Construction Services segments as well as in our Telecom segment. We're pleased with the demand we're seeing across all segments.

Slide 9 highlights select major projects currently underway or recently awarded. Our Trumbull project, a 950-megawatt natural gas-fired plant in Ohio is nearing completion with first fire achieved at both units of the facility in late summer. The project is currently in the later stages of commissioning activity. Construction began on our 1.2-gigawatt ultra efficient combined cycle natural gas fire plant for SLEC in Texas. And during the quarter, we added 2 additional gas-fired projects in Texas, CPV Basin Ranch an approximately 1.4 gigawatt project as well as an 860-megawatt project. During the third quarter, we continue to make progress on an approximately 700-megawatt combined cycle natural gas-fired power plant located in the U.S. as well as meaningfully advancing several renewable projects as we took advantage of cooperative summer and fall weather.

Additionally, we are progressing on the Tarbert next-generation power station, a 300-megawatt biofuel plant for SSE Thermal and the 170-megawatt thermal facility, both located in Ireland. I'd like to take a minute to point out that both the Ireland projects are categorized as renewal because they are biofuel, but the construction cadence and profile is more consistent than gas build than a renewable build. Finally, you'll see 2 separate water treatment plant projects being performed by our Industrial Construction Services segment as well as a new recycling and water treatment plant that we are building in Alabama.

As we move through the final quarter of fiscal 2026, we remain focused on executing the important and diverse projects in our project backlog. With that, I'll turn the call over to Josh Baugher to take us through the third quarter financials. Go ahead, Josh.

Thanks, David, and good evening, everyone. On Slide 10, we present our consolidated statement of earnings for the third quarter and 9 months ended October 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, which 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 the second quarter of fiscal 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 was 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 segment were 19.8%, 13.9% and 21.2%, respectively, for the third quarter of fiscal 2026 as compared to 18.3%, 11.1% and 26.1%, respectively, for the third quarter of fiscal 2025.

Selling, general and administrative expenses of $14.3 million for the third quarter of fiscal 2026 increased slightly as compared to SG&A of $14 million for the comparable prior year period. Other income net for the 3 months ended October 31, 2025, was $7.1 million, which primarily reflected investment income earned during the period. During the quarter ended October 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 of 22.6%. For the comparable period last year, Argan recorded a provision of income taxes of $9 million on pretax book income of $37 million, which represented an effective tax rate of 24.3%.

Net income for the third quarter of fiscal 2026 was $30.7 million or $2.17 per diluted share compared to $28 million or $2.17 per diluted share for last year's comparable quarter. EBITDA, earnings before interest, taxes, depreciation and amortization for the quarter ended October 31, 2025, increased to $40.3 million, compared to $37.5 million for the same period of last year. EBITDA as a percent of revenue increased to 16% for the third quarter of this fiscal year compared to 14.6% for the third quarter of last fiscal year.

Looking at our year-to-date performance, revenues for the first 9 months of fiscal 2026 increased by 6% to $682.6 million as compared to revenues of $641.7 million for the prior year period. Our consolidated gross margin of 18.8% for the first 9 months of fiscal 2026 increased as compared to gross margin of 14.6% for the first 9 months of fiscal 2025, primarily due to the same reasons described for the quarter. SG&A expenses increased to $41 million for the first 9 months of fiscal 2026 as compared to $37.8 million for the first 9 months of fiscal 2025, but remain consistent as a percentage of revenues.

Net income for the first 9 months of the fiscal year was $88.6 million or $6.27 per diluted share compared to $54.1 million or $3.91 per diluted share for the first 9 months of last fiscal year. EBITDA was $106.8 million for the first 9 months of fiscal 2026 compared with EBITDA of $74.2 million for the first 9 months of fiscal 2025. With that, I'll turn the call back to David.

Thanks, Josh. With strong cash flow, we further strengthened our balance sheet during the third quarter. At October 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 October 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 October 31, 2025, has increased $76 million compared with net liquidity of $301 million at January 31, 2025.

During the first 9 months of fiscal 2026, we have 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 $0.50 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 $0.375 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 footprint.

Our company is dedicated to driving long-term value creation for shareholders. Our backlog and pipeline are stronger than they have ever been. And since 2008, we have increased our tangible book value and cumulative dividends per share to record levels.

As I mentioned at the start of the call, the unprecedented growth in power consumption, coupled with the replacement cycle for natural gas facilities that have reached or are near the end of their useful life are driving significant demand for Argan construction capabilities and expertise. We are one of only a few companies who have a proven success rate building both complex combined cycle natural gas facilities and renewable energy resources and our track record of on-time, on-budget completion is unmatched among our competitors. The build-out of large gas-fired plants is necessary for the continuation of the 24/7 reliability of the power grid and Argan is uniquely positioned to expand our role as a market leader in the construction 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. 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 the 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.

[Operator Instructions] The first question today is coming from Chris Moore from CJS Securities.

Congrats on a solid quarter. It looks like you're set up exception as 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, 2 to 3 years ago?

Chris, yes, we haven't disclosed our pricing on our gas projects, but our pricing model remains the same as it always has taken 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 at scope, complexity, whether it's a 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 3 quarters has been good, and we're looking to continue that run.

Got it. I appreciate that. Maybe I'll ask it a little differently. Just in terms of a sustainable gross margin moving forward. Is that 18% range? Is that a reasonable target for fiscal '27 and '28. Or just any thoughts around that?

Yes. 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 exceeded that, and we're proud that we've been able to execute to do that. And so given all these recent awards and the changing overall mix of projects, contract types, frankly, the relative percentage of each of our business segments, I think, it's a little too early to tell where fiscal year '27 gross margins will go. But I mean, we really remain excited about the opportunities in front of us and look to continue to impress.

Fair enough. Maybe just 1 last one. Just obviously, you can have multiple significant natural gas projects running at the same time in calendar '26 and beyond. I'm just -- can you talk a little bit about the required manpower challenges there? Are there specific skill sets that are exceptional, which needs to be shared across the different projects?

There are. I mean, procurement, engineering, there's a number commissioning. There's a number of skill sets that you allocate to multiple jobs at any given time. Labor is always a challenge. It's been so for years, and there's no change there as in the past. And we're always keeping a close eye on that. But I think you're kind of driving that what's our project capacity, Chris, in last quarter, I kind of given that range of $10 million to $12 million -- and we're going to remain consistent with that guidance. As our teams employees grow with training and experience, we'll strive to grow that capacity in the future. And as you know, we've intentionally been adding headcount. We're at our largest head count in the history to be able to take on this bulge work and a lot of this work for the foreseeable future.

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

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 kind of awarded here. Do you expect kind of a similar rate in 2016? 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 6 to 12 months?

Well, we're catching our breath Rob. As you know, we've historically been pretty conservative about predicting where our backlog can go, and we're going to stick to that approach. But we've successfully added 4.6 gigawatts or 6 major power jobs to our backlog over the past 12 months. And so we've 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 12 to 24 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 the right time, conditions and best fit for our 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 a precise guidance as to the time of new jobs. The reality is, our next job could be next quarter or a year from now. And 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 -- have you seen sort of changes in the competitive environment? I know on your script, you talked about one of the few that can kind of do these large jobs. But what's sort of the competitive environment changes here with all the demand?

Yes. As you know, after the gas that 2015, 2018 time period, just a little bit going back in history here, 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 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 of projects.

The next question will be from Michael Fairbanks from JPMorgan.

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 '27? And then also, just like within that, how many teams could you potentially have working on CCGT project at one time? And then also just curious to hear, like how hard is it to expand that team count further?

All good questions. And as you know, this is not an easy business that we're in. I mean, do the math, we're currently working on around 7 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 kind of 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 12-plus months. So I guess that answers part of your question.

There's also a number of ways for us to deploy our talent, where 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 -- there's a lot of thought and strategic decisions that are made around that. And again, always focused on growing our teams, growing assistant project managers, assistant engineers, et cetera, so that we can seed -- 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 risks that you're taking?

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 got to ensure that you're getting paid for the risk that you take on, and if you're able to enter into a an agreement that meets both your needs as the EPC as well as the customers' needs and for that customer to be able to get financing or 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.

And the next question will be from Ati Modak from Goldman Sachs.

David, I think on the handful of opportunities that you mentioned into calendar '27, I'm curious what the size ranges are? Are the projects getting larger on average? Is it going to be similar? Any color you can provide there would be helpful.

Sure. I mean it's interesting if you kind of do the math, there are 5 U.S. jobs right now, they average over 1 gigawatt each. So that is very sizable. And as you know, in the past, we've worked on the 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 -- 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 we continue to -- 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 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 we -- again, we're always evaluating each opportunity to see what works best for us and what can potentially work with that potential customer. Again, it comes down to the right job, the right contract, the right price, et cetera. 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.

The next question will be from Austin Ling from JLG Research.

Maybe if we could just kind of 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 1 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-mega watt Texas project. Again, 2 projects that we're excited about when it comes to puts and takes. It just depends. 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? Are you 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 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 2 additional successful projects here.

No, that's great. Maybe if we could just get your thoughts on the opportunity set broader broadly for gas gen like geographically, where are you seeing the most smoke here? Because obviously, this plate 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 working in that state. But historically, we've worked everywhere. And as you know, Austin, we spent a fair amount of time in the PJM finish up on the 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 PJM is in the middle of an auction right now. So they are demonstrating in the last couple anyways, some improved pricing and thus potentially encouraging further development of gas plants, and that's we're very familiar with and would be very, very pleased to continue working in.

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.

Good evening, ladies and gentlemen, and welcome to the Argan Inc. Earnings Release Conference Call for the Second Quarter of Fiscal 2026 ended July 31, 2025. This call is being recorded. [Operator Instructions]. 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 second quarter ended July 31, 2025. On the call today, we have David Watson, Chief Executive Officer; and Josh Baugher, Chief Financial Officer. I'll take a moment to read the safe harbor statement. 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 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 its 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. 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 Josh Baugher, our CFO, will go over our financial results for the second quarter and 6 months ended July 31, 2025. Then we'll open up the call for a brief Q&A. We achieved significantly strong results in the second quarter of fiscal 2026, reflecting excellent execution in the quarter as we delivered solid revenue growth, enhanced gross margins and record net income.

Josh 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 the first quarter of fiscal 2026. Improved gross margins of 18.6% compared to 13.7% in the second quarter of fiscal 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 Platin Power Station, a 170-megawatt thermal facility in Ireland as well as a significant new industrial services contract for a recycling and 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 reached the end of operational life in the midst of unprecedented growth in power consumption.

The 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 as we continue to generate significant cash flow. We have $572 million of cash and investments, net liquidity of $344 million and no debt at July 31, 2025.

Finally, we remain committed to returning capital to shareholders and paid a quarterly dividend of $0.375 in the quarter. Now on to the operational review. Slides 4 and 5 present our 3 reportable business segments. In our Power Industry Services segment, we have the capability to build multiple types of power facilities, including efficient gas-fired power plants, solar energy fields, biomass facilities and battery energy storage systems in the U.S., the U.K. and in Ireland. Power Industry Services revenues increased 13% to $197 million in the second quarter as compared to $174 million for the second quarter of fiscal 2025.

The segment represented 83% of second quarter revenues and reported pretax book income of approximately $35 million. As we expected, due to the timing of certain projects and contract awards, revenue decreased in our Industrial Construction Services segment to $36 million in the second quarter compared to $50 million in the second quarter of fiscal 2025. The segment achieved sequential revenue growth of $7 million or 23% compared to revenue of $29 million during the first quarter of fiscal 2026. Industrial construction services contributed 15% of consolidated revenue with pretax book income of approximately $3 million in the second quarter of 2026.

This segment primarily provides solutions for industrial construction projects with a concentration in agriculture, petrochemical, pulp and paper, water and power and is seeing solid demand for its capabilities, closing the quarter with record backlog of $189 million. New projects in this segment include several scopes of work for a recycling plant in Alabama as well as increased orders for vessel fabrication for a number of data centers. We're excited about the record backlog, opportunities and engagement we're seeing for our industrial segment and expect to see significantly increased revenues in the second half of this year.

Finally, we have our Telecommunications Infrastructure Services group, our smallest segment, which contributed 2% of second quarter revenues. The Telecommunications segment provides outside construction services for the utility and telecommunications sectors as well as inside the premises, wiring services primarily for federal government locations and military installations requiring high-level security clearance. The business achieved record backlog in the quarter, and we expect to drive continued growth as we move through the balance of the year. The increase in energy demand driven by the widespread electrification of virtually every sector of the economy has been well documented.

For the first time in decades, not only are we encountering rising power demand, but at the same time, a substantial portion of the nation's natural gas infrastructure is aging out. Reliable, high-quality 24/7 energy is a non-negotiable requirement in the support of AI data centers, complex manufacturing operations and EV charging and that energy is supplied by both the traditional gas-fired and renewable infrastructure that we and a handful of others are capable of building.

With our energy-agnostic capabilities, long-standing customers and vendor relationships and proven track record of success, we believe Argan is very well positioned to benefit in the current demand environment for large and complex power facilities. Slide 7 illustrates the strength and balance of our project backlog, which is comprised of approximately 61% natural gas projects and 29% renewable.

The energy industry is turning to a combination of natural gas and renewable energy resources to ensure grid reliability. Given the aging natural gas infrastructure, we expect to see heightened demand for gas-fired and other thermal power plants for several years to come as the industry seeks to increase the number of reliable and high-quality power sources. Our backlog of approximately $2 billion at July 31 includes several power plant projects, and we expect to add more through the balance of this year. During fiscal 2025, we proactively invested in our workforce and enhanced our teams to prepare for this increased project load and to position Argan to continue to deliver excellent on-time execution for our customers as we support the electric economy.

We're excited about the market interest we're receiving for our services, especially for our capabilities around the construction of complex combined cycle natural gas power plants. As I mentioned a moment ago, Argan is one of only a few companies who have the capabilities to successfully execute those complex projects, and we have established a reputation for operational excellence and a proven track record of success. We're energized by the opportunities in the pipeline and remain focused on our disciplined approach to pursuing and winning the right projects with the right partners in the right geographies.

Turning to Slide 8. Our consolidated project backlog was approximately $2 billion at July 31, 2025, representing backlog growth of 5% from April 30, 2025. And as I mentioned, we expect to add a couple of more projects before the end of the fiscal year. Our current backlog includes fully committed projects in both the Power Industry Services and Industrial Construction Services segments as well as in our Telecom segment. In fact, each of our business segments has achieved record backlog as we generate significant organic growth across the entire Argan platform.

Of note, we have a growing portion of traditional gas-fired plants in the current backlog, and we believe the representation of natural gas-fired facilities in our backlog will continue to increase in the near to midterm. We will maintain our presence in the renewable business, but anticipate that our natural gas projects will be our growth driver for the foreseeable future. Slide 9 highlights selected major projects currently underway or expected to begin shortly. Our Trumbull project, a 950-megawatt natural gas-fired plant in Ohio, achieved first fire at 1 unit during the second quarter and achieved first fire at its second unit in August. We're really pleased with that development as we move through the later stages of the Trumbull project.

We've started construction on our 1.2 gigawatt ultra-efficient combined cycle natural gas-fired plant for SLEC in Texas, but we are in early days on that one. Our Target Next-generation power station, a 300-megawatt biofuel plant in Ireland for SSE thermal is underway, and you'll also see highlighted here the previously mentioned and recently awarded 170-megawatt thermal facility in Ireland that will provide power generation during periods of high demand and supply shortfall. During the second quarter, we continue to make progress on an approximately 700-megawatt combined cycle natural gas-fired power plant located in the U.S. as well as meaningfully advancing several renewable projects as we took advantage of cooperative summer weather to drive significant progress.

Finally, you'll see 2 separate water treatment plant projects being performed by our Industrial Construction Services segment as well as a new recycling and water treatment plant that we are building in Alabama. So we are busy. There's a lot of attention given to the industry's demand for natural gas projects, but we believe our diverse backlog demonstrates our broad range of capabilities and the wide scope of our project mix. With that, I'll turn the call over to Josh Baugher to take us through the second quarter financials. Go ahead, Josh.

Thanks, David, and good evening, everyone. On Slide 10, we present our consolidated statements of earnings for the second quarter and 6 months ended July 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 the second quarter of fiscal 2025. For the quarter ended July 31, 2025, Argan 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 Industry 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 the second quarter of fiscal 2026 as compared to 13.5%, 13% and 31.4%, respectively, in the second quarter of fiscal 2025.

Selling, general and administrative expenses of $14.2 million for the second quarter of fiscal 2026 increased as compared to SG&A of $12.4 million for the comparable prior year period. Other income net for the 3 months ended July 31, 2025, was $5.6 million, which primarily reflected investment income earned during the period. During the quarter ended July 31, 2025, the company recorded income tax expense of $0.4 million 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 recorded income tax expense of $6.1 million on pretax book income of $24.3 million. Net income for the second quarter of fiscal 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 July 31, 2025, increased to $36.2 million compared to $24.8 million for the same period of last year. EBITDA as a percent of revenue increased to 15.2% for the second quarter of this fiscal year compared to 10.9% for the second quarter of last fiscal year.

Looking at our year-to-date performance, revenues for the first 6 months of fiscal 2026 increased by 12.1% to $431.4 million as compared to revenues of $384.7 million for the prior year period. Our consolidated gross margin of 18.8% for the first 6 months of fiscal 2026 increased as compared to gross margin of 12.8% for the first 6 months of fiscal 2025, primarily due to the same reasons described for the quarter. SG&A expense increased to $26.7 million for the first 6 months of fiscal 2026 as compared to $23.9 million for the first 6 months of fiscal 2025, but remain consistent as a percentage of revenues.

Net income for the first 6 months of this fiscal year was $57.8 million or $4.09 per diluted share compared to $26.1 million or $1.90 per diluted share for the first 6 months of last fiscal year. EBITDA was $66.5 million for the first half of fiscal 2026 compared with EBITDA of $36.7 million for the first half of fiscal 2025. With that, I'll turn the call back to David.

Thanks, Josh. With strong cash flow, we further strengthened our balance sheet during the second quarter. At July 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 July 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 July 31, 2025, has increased $43 million compared with net liquidity at January 31, 2025. During the first 6 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 and execute our projects. Second, the company pays a quarterly dividend, which we increased 25% to $0.375 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 raised our dividend to $0.30 per share in September of 2023. Together, these 2 increases represent an aggregate 50% increase in our annual dividend run rate in less than 2 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 2008, we have increased our tangible book value and cumulative dividends per share to record levels.

There is no doubt that the electrification of everything that is driving unprecedented power consumption is contributing to the heightened demand for Argan'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 long-standing 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 3- to 4-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 time line 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.

[Operator Instructions]. The first question comes from Chris Moore with CJS Securities.

Congrats on another nice quarter. Maybe we will just start with. What is left there? And what's a reasonable time line?

Chris, could you repeat that question again?

Yes. So just trying to understand, you had first fire at Trumbull in Q2 and second in August. Just trying to understand what is left at Trumbull to complete? And what's a reasonable time line when you'll be totally finished?

Yes, 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 the 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 in the first half of next year.

Got it. Appreciate that. Gross margin was a strong 18.6%. Is it -- I always trying to figure out, are there some meaningful onetime gains in there? I don't know whether that be Trumbull or somebody else. I assume the 18.6% is not necessarily -- even though it's a little below Q1, it's 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 -- and frankly, the last 3 quarters, there's just been significant execution excellence, especially in the power sector, right, between the reaching first fire on the units at Kilroot to finishing out the LNG job early this past quarter, to favorable weather, allowing us to achieve a lot of progress on some of our renewable projects.

So 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 the businesses, that continues to be our expectation. 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, the halfway point this year and expect to continue to achieve our main goal, which is to bring each of our customers another successful project.

Terrific. Maybe just the last one for me is it sounds like there are a bunch of potential projects out there that some you could add in fiscal '26. The range of the scale could be anywhere from $100 million to a big traditional gas plant in the $600 million range. Just any thoughts in terms of the types of things you're looking at?

Yes. No, we're obviously really pleased to have record backlog, frankly, at all of our business segments as of 7/31, and we remain very bullish on being able to continue to add to the backlog. As it relates to the Power segment, as you know, Chris, right, it takes several years for developers to get to the point where they're ready to sign an EPC contract.

So while our visibility for opportunities is good, the specific timing of the contract is difficult to pinpoint. I mean though over the last 3 quarters, we've had a 1.2 gigawatt power plant, a 700-megawatt job in the U.S. and a 300-megawatt and 170-megawatt job in Ireland. So that's a huge testament to the hard work of the power teams that they're putting in to get the right contracts. And to your point, they're not finished.

We expect over the rest of the current fiscal year to add a few more power jobs, which should put us significantly over $2 billion in backlog. The size of those, 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 I don't know if that answers your question, but we have the range to do it all.

The next question comes from Rob Brown with Lake Street Capital Markets.

Just following up on kind of the pipeline discussion. Have you noticed sort of any -- sort of what changes in the pipeline have you sort of noticed? Is it accelerating now that the demand environment is good? And are you starting to see 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 have been in play for the last 6 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.

The fundamentals, electricity consumption is expected to increase 4% annually through 2027 for 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 '26, '27 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. On the industrial business side, I think you talked about a couple of big project wins there. How is the pipeline there? And I think that business is recovering off a bottom, but what's the opportunity that, that segment can get to? And what's the trend line there in terms of backlog growth we should expect?

Yes. It was just a couple of calls ago where the backlog was meaningfully down, and I was indicating to the market that we were going to be in for a couple of 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 -- 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.

[Operator Instructions] The next question comes from Drew Chamberlain with JPMorgan.

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 what you said last quarter, and that's probably the formal guidance. But can you talk a little bit about maybe what's changed in the last 3 months since the last call? I mean, do you think the projects 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 3 months, we see -- continue to see milestones getting achieved and gives us greater clarity and certainty that we expect those jobs to kick 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 going to get there.

Okay. And then moving to the margin discussion. I mean, obviously, appreciate the difficulties of guiding to gross margin here and obviously, why you 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 20 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 and the supply of us is probably 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 going to be a mix of project types. But you're also talking about 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 this cycle? And maybe is it more appealing to do it organically or through M&A?

Excellent. Thank you. We've intentionally added headcount over the last 18 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 historically focused on organic growth, and that continues today.

Okay. 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.