Argan’s Q2 2026 slides reveal record earnings, $2 billion backlog as electricity demand accelerates

Introduction & Market Context

Argan Inc. (NYSE:AGX) presented its second quarter fiscal 2026 results on September 4, 2025, highlighting record performance and strategic positioning to capitalize on surging electricity demand. The company’s stock rose 4.76% in after-hours trading following the earnings release, reaching $229.55, as investors responded positively to results that significantly exceeded analyst expectations.

The presentation emphasized Argan’s focus on the "Electrification of Everything" trend, driven by AI and data centers, electric vehicles, and renewable energy infrastructure. With electricity consumption expected to increase 4% annually through 2027, the company is strategically positioned to benefit from this growing demand.

Quarterly Performance Highlights

Argan reported impressive financial results for Q2 2026, with revenues increasing 5% year-over-year to $237.7 million and 23% sequentially. The company achieved record Q2 earnings per diluted share of $2.50, a substantial increase from $1.31 in the same period last year and significantly exceeding analyst expectations of $1.64.

Gross margin improved to 18.6%, up from 13.7% in Q2 2025, while EBITDA reached $36 million, representing 15.2% of revenue compared to 10.9% in the prior year. These improvements reflect Argan’s operational efficiency and strategic project execution.

As shown in the following consolidated financial results table:

The company’s Power Industry Services segment continues to be the primary revenue driver, accounting for 83% of total revenue with $197 million and generating $35 million in pre-tax income. Industrial Construction Services contributed 15% of revenue ($36 million), while Telecommunications Infrastructure Services represented the remaining 2% ($5 million).

Strategic Positioning in the Power Sector

Argan’s presentation highlighted several key industry drivers that are creating significant opportunities for the company. These include growing demand for reliable and affordable electricity, massive infrastructure replacement needs, and the retirement of aging power plants. The company noted that 78 GW of planned retirements are expected, with a 65% jump in plant retirements and 12.3 GW set to retire in 2025 alone.

The company’s backlog composition reflects its strategic focus on the electric economy, with 90% of projects supporting this trend – 61% in natural gas, 29% in renewable energy, and 10% in industrial projects.

During the earnings call, CEO David Watson emphasized, "The electrification of everything is driving unprecedented power consumption," highlighting the company’s strategic positioning to capitalize on this trend. The presentation specifically noted the impact of AI and data centers, with AI power demand projected to grow at an average of 70% through 2027, as well as electric vehicle adoption expected to grow 20-fold by 2040.

Project Backlog and Growth Drivers

A standout feature of Argan’s presentation was its record project backlog of $2.0 billion as of July 31, 2025, representing significant growth from $757 million in FY 2024. This growth trajectory demonstrates the company’s successful business development efforts and increasing market demand.

The backlog includes several major projects across diverse geographies and sectors, including the 950 MW Trumbull Energy Center in Ohio, the 1,200 MW Sandow Lakes Power Station in Texas, and multiple renewable energy projects in the Midwest. Recent additions to the backlog include a 170 MW thermal power plant in Ireland and an industrial segment contract for a recycling and water treatment plant in Alabama.

During the Q&A session of the earnings call, analysts inquired about the completion timeline for the Trumbull project, which is expected in the first half of next year. Questions also focused on Argan’s conservative approach to project pricing and sustained demand in the power infrastructure market.

Financial Position and Capital Allocation

Argan continues to maintain a strong balance sheet with $572 million in cash, cash equivalents, and investments as of July 31, 2025, up from $525 million on January 31, 2025. The company operates with no debt and reported a record net liquidity position of $344 million, providing significant bonding capacity to support future growth.

The company’s disciplined capital allocation strategy includes investing in organic growth, increasing shareholder returns through dividends, opportunistic share repurchases, and strategic M&A to complement existing capabilities. Argan increased its quarterly dividend to $0.375 per common share during Fiscal Year 2025 and has returned $109.6 million to shareholders through share repurchases since November 2021.

The presentation also highlighted Argan’s long-term value creation, showing consistent growth in tangible book value per share, which reached $26.32 in Q2 2026, alongside cumulative dividends per share of $15.45.

Forward-Looking Statements

Looking ahead, Argan expressed confidence in its growth strategy and market positioning. The company remains focused on leveraging its core platform, maintaining disciplined risk management, and pursuing organic growth opportunities. Management expects to add more projects in FY2026 and anticipates the backlog to continue exceeding $2 billion.

Despite the positive outlook, potential risks include supply chain disruptions that could impact project timelines, market saturation in certain regions, macroeconomic pressures such as inflation affecting project costs, regulatory changes in energy policies, and competition from other energy infrastructure companies.

Argan’s presentation emphasized its role as a partner of choice for innovative energy solutions, particularly in the low-carbon economy, and its strong positioning to capitalize on multiple industry growth drivers. With electricity consumption expected to increase significantly in the coming years, the company appears well-positioned to benefit from these trends while maintaining its disciplined approach to project selection and execution.

Full presentation:

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