Argan, Inc.

Good evening, ladies and gentlemen, and welcome to the Argon Inc. Earnings Release Conference call for the first quarter of fiscal 2026, ended April 30, 2025. This call is being recorded. All participants have been placed on a listen-only mode. Following management's remarks, the call will be opened for questions. There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast. At this time, it is my pleasure to turn the floor over to your host for today, Jennifer Belladeau 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 ended April 30, 2025. On the call today, we have David Watson, Chief Executive Officer, and Josh Bakker, Chief Financial Officer. I'll take a moment to read the Safe Harbor statements. Statements made during this conference call and presented in the presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding a 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 first quarter fiscal 2026 financial results and filed its corresponding Form 10Q report with the Securities and Exchange Commission. All right, 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 Bacher, our CFO, will go over our financial results for the first quarter ended April 30, 2025. Then we'll open up the call for a brief Q&A. We delivered a strong start to fiscal 2026 in the first quarter with consolidated revenue growth of 23%, to $193.7 million and gross margin of 19%, led by continued momentum in our power industry services segment. We also achieved enhanced profitability as demonstrated by net income of approximately $23 million, or $1.60 per diluted share, up $1.02 year over year, in EBITDA of $30.3 million, or 15.6%, as a percent of revenues. Additionally, we reported record backlog of $1.9 billion as of April 30, 2025. Our backlog reflects our receipt of full notice to proceed on our project with Sando Lakes Energy Company, or SLEC, for a 1.2 gigawatt ultra-efficient combined cycle natural gas fire plant in Texas. Our project pipeline is robust and reflects both the need for new energy resources as a large portion of natural gas fire plants reach the end of operational life and the urgency around building new infrastructure to meet the unprecedented growth in power consumption. Power demand has reached its highest level in two decades and is expected to increase further with the development of AI data centers, the onshoring of complex manufacturing, and the growing adoption of electric vehicles that need charging. Today's energy demand environment has created a substantial pipeline of project opportunities and we are seeing heightened demand for our expertise and capabilities, particularly as they relate to the construction of complex combined cycle natural gas facilities. We're energized about the demand environment, which we believe will present attractive project opportunities for the next decade and beyond. Our balance sheet remains strong with $546.5 million of cash and investments, net liquidity of $315 million, and no debt, at April 30, 2025. Our financial strength and discipline has enabled us to continue to return capital to shareholders. We paid a quarterly dividend of 37.5 cents, repurchased or net settled approximately 100,000 shares for approximately 12.9 million, and the board increased the size of the share repurchase program to 150 million. We're very pleased with the start to fiscal 2026. and remain focused on executing on our ongoing projects while also intent on winning new opportunities. Now on to the operational review. Slides four and five present our three reportable business segments. As most of you know, our power industry services segment focuses on the construction of 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 45% to $160 million in the first quarter as compared to $110 million for the first quarter of fiscal 2025. The segment represented 83% first quarter revenues and reported pre-tax book income of approximately $31 million. Our industrial construction services segment had a solid quarter Although, as we expected, due to the timing of certain projects, revenue decreased to $29 million as compared to revenue of $44 million in the first quarter of fiscal 2025. Industrial construction services contributed 15% of first quarter consolidated revenues and pre-tax book income of approximately $2 million. This segment primarily provides solutions for industrial construction projects with a concentration in agriculture, petrochemical, pulp and paper, water, and power. There is solid demand for the segment's capabilities as companies onshore or expand their U.S. manufacturing operations. The industrial construction services segment has a large footprint in the southeast region of the U.S., so they are well-situated in a high-growth region for their focus industries. One last comment on the industrial segment. I want to take a moment to congratulate Sean Terrell, who has served as president of TRC since 2023. as he was recently appointed to the additional role of Chief Executive Officer. This change came as Bobby Foyster, Jr. stepped down to take a reduced role as part of a longstanding succession plan. We thank Bobby for his many contributions to TRC's growth and progress, as well as for building a culture of operational excellence and teamwork at TRC. Finally, we have our Telecommunications Infrastructure Services Group, our smallest segment, which contributed 2% of first 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. We continue to see growing attention around the increase in energy demand driven by the widespread electrification of virtually every sector of the economy. For the first time in decades, this rising demand is coinciding with the aging and retirement of a substantial portion of the nation's natural gas infrastructure. AI data centers, complex manufacturing operations, and EV charging all require a reliable, high-quality 24-7 power supply. Looking at the composition of the current pipeline, the industry has adopted the approach that the most effective path to ensuring stable grids and reliable power generation is through a combination of traditional gas fire plants as well as renewables, and we build them all. With our energy agnostic capabilities and proven track record of success with combined cycle and simple cycle natural gas facilities, as well as solar, biofuel, and other renewable energy resources, we believe we are favorably positioned as we compete to win the construction of large and complex power facilities. Slide 7 illustrates the strength and balance of our project backlog, which is comprised of approximately 67% natural gas projects and 28% renewable, as the grid faces mounting pressure the energy industry is turning to a combination of natural gas and renewable energy resources to ensure 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 $1.9 billion at April 30 includes several power plant projects, and we expect to add more this year. During fiscal 2025, we proactively invested in our workforce and enhanced our teams to prepare for the 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 demand we're seeing for our services, particularly for the construction of traditional combined cycle natural gas power plants. Argan is one of only a few companies who have the capability to successfully execute those complex projects, and we have a track record that validates our reputation as a proven industry partner. We remain disciplined in our commitment to achieving the best outcomes for the projects we take on and believe our expertise, seasoned team, and history of on-time and on-budget project delivery positions us for continued backlog growth and financial strength. Turning to slide eight, Our consolidated project backlog was $1.9 billion at April 30, 2025, representing backlog growth of 36% from January 31, 2025. Our current backlog includes fully committed projects in both the power, industry services, and industrial construction services segments. We have a growing portion of traditional gas fire plants in the current backlog, and we believe the representation of natural gas fire facilities in our backlog will continue to increase in the near to midterm. We plan to maintain our presence in the renewable business, but our natural gas projects will be the core of our growth engine for the foreseeable future. Slide 9 highlights several major projects currently underway or expected to begin shortly. Here you'll see our Trumbull project, a 950 megawatt natural gas fire plant in Ohio that is nearing completion, as well as the SLEC 1.2 gigawatt ultra-efficient combined cycle natural gas fire plant in Texas. As I mentioned a bit earlier on the call, during the first quarter we received full notice to proceed on the SLEC project, and we expect to begin construction this summer. When completed, the facility will be capable of supplying approximately 800,000 homes within the ERCOT grid. Also highlighted here is the Tarbert Next Generation Power Stations. a 300-megawatt biofuel plant in Ireland for SSE thermal. The project kicked off earlier in the first quarter and is at a site we are familiar with and have performed work at in the past. Construction is also underway on an approximately 700-megawatt combined cycle natural gas fire plant located here in the U.S., and we recently finished the installation of five 90-megawatt gas turbines, which provide dedicated power to an LNG facility in Louisiana. In addition, our 405-megawatt utility-scale solar project in Illinois continues to make good progress, and we completed two of the three Solar Plus battery projects in Illinois during fiscal 2025 and expect to finish the third during fiscal 2026. Finally, you'll see two separate water treatment plant projects being performed by our industrial construction services segment. While we've spoken a lot about the industry's demand for natural gas projects, you'll see that our backlog reflects a broad range of capabilities in our diverse project mix. With that, I'll turn the call over to Josh Bacher to take us through the first quarter financials. Go ahead, Josh.