Argan, Inc.

Good evening, ladies and gentlemen, and welcome to the R&A earnings for this conference call for the second quarter of fiscal 2024, which ends July 31, 2023. This call is not recorded. All participants have been placed on listen-only mode. Following management's remarks, the call will be open for questions. It is my pleasure to turn the floor over to your host for today, John Nesbitt of IMS Investor Relations. Please go ahead, sir.

Good evening and welcome to our conference call to discuss Oregon's results for the second quarter of fiscal year 2024, ended July 31, 2023. On the call today, we have David Watson, Chief Executive Officer. and Hank Diley, 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 its second quarter financial results and filed its second quarter form 10-Q with the Securities and Exchange Commission. With that out of the way, I'll turn the call over to David Watson, CEO of Argan. Go ahead, David.

Thanks, Jen, and thank you, everyone, for joining today. I'll start by reviewing some of the highlights of our operations and activities, and Hank Tiley, our CFO, will go over our financial results for the second quarter of fiscal 2024, ended July 31, 2023. Then we'll open up the call for a brief Q&A. We made great progress during the second quarter as evidenced by revenue growth of approximately 20% to $141 million, with significantly improved bottom line profitability and continued strength in our balance sheet. We were also pleased during the quarter to see consolidated gross margin improve sequentially as compared to the first quarter of 2024, coming in at 16.8%, which is generally in line with our expectations based on a diversified mix of revenues. Additionally, we marked our third consecutive quarter maintaining backlog in excess of $0.8 billion. Our current backlog includes the Shannon Bridge Power Project in Ireland, which is a power plant that will ensure reliable electricity supply during critical situations and emergencies. It also includes the value of the limited notices to proceed that we received for three solar plus battery power facilities in Illinois with Vistra Energy. and our balance sheet remains strong with $346 million of cash and investments and net liquidity of $240 million at July 31, 2023. Lastly, we carry no debt. During the second quarter, we repurchased approximately 77,000 shares of our common stock for a total spend of approximately $3 million, or $39.24 per share. Reviewing our three reportable business segments, Power Industry Services represented 75% of our second quarter revenues and reported pre-tax book income of $16.3 million. Revenues and income both increased for the segment during the second quarter by 15.3% and 12.3% respectively, as compared to the amounts reported for the comparable quarter last year. The segment is comprised of our Gemma Power System and Atlantic Projects Company operating units, and focuses on the construction of all types of power facilities, including efficient gas-fired power plants, solar energy fields, biomass facilities, and wind farms. As I just mentioned, following the quarter's close, APC received a full notice to proceed on the Shannon Bridge project in Ireland, and GEMMA received limited notices to proceed on the solar and battery projects for Vistra Energy. The Industrial Construction Services, which is represented by the Roberts Company, had a strong quarter and contributed 23% of our second quarter revenue. It reported pre-tax book income of $3.2 million. Revenues and income both increased for this segment during the second quarter by 42.3% and 81.1% respectively, as compared to the amounts reported for the comparable quarter last year. Roberts provides solutions to mostly industrial and manufacturing clients They focus on agriculture, petrochemical, pulp and paper, water, and power industries, as well as other newer industries adding to or expanding the number of production facilities in the southeast. The segment focuses on construction projects, provides other field services like plant maintenance turnarounds, shutdowns, and emergency mobilization, as well as pipe and vessel fabrication. Lastly, we have our telecommunications infrastructure services group, our smallest segment, which contributed 2% of our second quarter revenues. SMC Infrastructure Solutions is our operating brand in this segment, provides outside construction services for the utility and telecommunications sectors, as well as inside the premises wiring services for federal government locations and military installations requiring high-level security clearance. We believe Argan is strongly positioned as the energy landscape transitions from coal power to cleaner alternatives like natural gas and renewables. The anticipated future decline in coal-fired power generation is significant, with coal-fired power generation in the U.S. expected to drop by an additional 70% to represent only 5% of net electricity generation by 2050. And while the move to more environmentally friendly power resources is important, the ability to provide reliable power generation is paramount. We have the capabilities and a track record of proven success in assisting our power partners as they address and balance increasing levels of power consumption with the demand for cleaner energy supply. Our business is already playing a leadership role in this transition, as you'll see on slide six, where we've highlighted the details of our recent limited notices to proceed on a project with Vistra Energy. Jimma will work with Vistra to complete three facilities located in Illinois to provide solar power plus battery storage capability, representing 160 megawatts of power on 22 megawatts of energy storage. We're excited to work with Vistra to drive the move to cleaner electrical power generation, and specifically the growth of our solar power. We look forward to executing another successful project with another new customer in the renewable energy space. On slide seven, we provide the details of the Shannon Bridge Power Project in Ireland. APC recently received full notes to proceed on the EPC services project for a 264 megawatt power plant. We're excited to have the opportunity to combine the expertise of APC and GEMMA for oversight of this project's life cycle, including design, procurement, construction, and commissioning. This project, for which we began work earlier this year in a limited capacity, demonstrates our ability to dynamically work with our customers on a compressed schedule as we target completion for early next year. The Shannon Bridge project is expected to strengthen the region's power infrastructure and enhance reliable electricity supply during times of high utilization or emergencies. As the industry shifts to new power generation technologies, it's important to note that 83% of our current backlog of over $0.8 billion represents projects that support lower carbon emissions, demonstrating our commitment and our leadership role in the transition to cleaner power generation. Now, I'll hand the call over to Hank Diley to go over our financial performance.