Argan, Inc.

Good evening, ladies and gentlemen, and welcome to the Oregon Inc. Earnings Release Conference call for the third quarter of fiscal 2026, ended October 31st, 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 Belladeau of INS Investor Relations. Please go ahead, ma'am.

Thank you. Good evening and welcome to our conference call to discuss Oregon's results for the third quarter ended October 31, 2025. On the call today, we have David Watson, Chief Executive Officer, and Josh Bakker, 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 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 Bockert, our CFO, will go over our financial results for the third quarter and nine months ended October 31st, 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 860 megawatt project also in Texas. Our current backlog represents over six gigawatts of new thermal and renewable power plants. Demand for our capabilities has been steadily growing as the industry addresses the urgent need for new power resources to support the grid as the electrification of everything, the growth in AI and data centers, and the onshoring of manufacturing pressure the current capacity of existing facilities. As we've mentioned, the current urgency in the demand environment is amplified by the aging and retirement of many natural gas-fired and coal plants. The strength of the Opportunity Pipeline we're seeing for our expertise and capabilities is providing excellent visibility looking out for the next several years. As we move through next year and into calendar 2027, we expect to continue to add a handful of projects. We are optimistic about our project cadence and expect to reach our capacity of approximately 10 to 12 jobs for the foreseeable future. That said, as you know, on a quarter-over-quarter basis, our revenue and backlog performance can at times vary related to the timing of projects. While we do our best to sequence our projects, ultimately the project start dates are determined by the developers, and the timing of one project ending and another starting can sometimes be more staggered than we'd 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 nine 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 two 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 in 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, or an annual run rate of $2, representing our third consecutive dividend increase in the past three years. Now on to the operational review. Slides 4 and 5 present our three 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 of as compared to $212 million for the third quarter 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 pre-tax 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 pre-tax 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, petrochemicals, pulp and paper, water, data centers, and power, and is seeing 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 wiring 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 Expected 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 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, longstanding 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. As you can see from this portion of our backlog, 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 mid-term. 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 eight, our consolidated project backlog at October 31, 2025, was a record at approximately $3 billion, reflecting the strength of our offerings at all three operating segments. 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. We're pleased with the demand we're seeing across all segments. Slide nine highlights select major projects currently underway or recently awarded. Our Trumbull project, a 950 megawatt natural gas fire 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 two additional gas fire projects in Texas, CPV Basin Ranch, an approximate 1.4 gigawatt project, as well as an 860 megawatt project. During the third quarter, we continued 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 a 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 renewable because they are biofuel, but the construction cadence and profile is more consistent with a gas build than a renewable build. Finally, you'll see two 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 Bacher to take us through the third quarter financials. Go ahead, Josh.