• Revenue: Fiscal 2025 revenue increased 52% to $874 million.
• Gross Margin: Full year gross margin was 16.1%.
• Diluted EPS: Record full year diluted EPS of $6.15.
• EBITDA: Fiscal 2025 EBITDA was $113.5 million.
• Project Backlog: Increased 80% to $1.4 billion as of January 31, 2025.
• Cash and Investments: $525 million with no debt as of January 31, 2025.
• Fourth Quarter Revenue: Increased 41% to $232.5 million.
• Fourth Quarter Gross Margin: Approximately 20.5%.
• Fourth Quarter Net Income: $31.4 million or $2.22 per diluted share.
• Fourth Quarter EBITDA: $39.3 million.
• Annual Dividend Rate: Increased to $1.50 per common share.

• Warning! GuruFocus has detected 9 Warning Signs with AIR.

Release Date: March 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Argan Inc (NYSE:AGX) reported a 52% increase in consolidated revenue for fiscal 2025, reaching $874 million.
• The company achieved a record full-year diluted EPS of $6.15 and EBITDA of $113.5 million.
• Argan Inc (NYSE:AGX) ended the fiscal year with a project backlog of approximately $1.4 billion, an 80% increase from the previous year.
• The Power Industry Services segment saw a 65% increase in revenue for the current quarter, contributing significantly to the company's growth.
• Argan Inc (NYSE:AGX) maintains a strong balance sheet with $525 million in cash and investments, net liquidity of $301 million, and no debt.

Negative Points

• Industrial Construction Services segment experienced a decrease in revenue to $33 million compared to $41 million in the previous year's fourth quarter.
• Selling, general, and administrative expenses increased to $14.9 million for the fourth quarter, although they decreased as a percentage of revenue.
• The Telecommunications Infrastructure Services segment remains the smallest, contributing only 1% of fourth-quarter revenues.
• The company faces challenges related to supply chain issues, particularly in obtaining turbines and other long-lead items.
• There is ongoing uncertainty regarding the interconnect process and regulatory environment, which could impact project timelines.

Q & A Highlights

Q: Could you break down the 20.5% gross margin further? Are there specific factors contributing to this figure? A: David Watson, CEO: The higher margins reflect strong execution across all businesses and a shift in project mix, including more US-based and power revenues. We closed out several jobs positively in our Power and Industrial segments. The prior year's fourth quarter had margin degradation from the Kilroot project. While we may not often see margins at this level, we expect our consolidated gross margin to benefit from the increase in gas projects, which are higher risk/higher reward jobs.

Q: What needs to happen for the 1.2 gigawatt project to be added to the backlog? A: David Watson, CEO: We need to receive the full notice to proceed. We are confident that the project will start this summer. Once released, the entire contract will be added to our project backlog, which currently stands at $1.4 billion.

Q: Is there any progress on the interconnect side, and could the new administration have a positive impact? A: David Watson, CEO: There has been progress by grid operators in overcoming bottlenecks, though challenges remain. The larger headwind is related to obtaining turbines and managing the supply chain. Deregulation could streamline project approvals and facilitate breaking ground.

Q: Can you provide an update on the 405-megawatt solar project? A: David Watson, CEO: The project is progressing well and is expected to be completed in calendar 2026. It is a massive 2,000-acre project, and we are executing it effectively, as reflected in our gross profit margin.

Q: How is the project pipeline looking, and what regions are active? A: David Watson, CEO: The pipeline is largely US-based, with Texas being a significant area. We plan to add to our project backlog over the next six months, which will drive revenue opportunities over the next four years.

Q: Are there any changes in the types of customers you are pursuing? A: David Watson, CEO: We are open to all potential customers, though historically, we have worked primarily with independent power producers. We aim to build the right jobs with the right contracts and customers.

Q: What is the outlook for the Industrial Construction Services segment, given the recent drop in backlog? A: David Watson, CEO: We see strong demand for TRC, and subsequent to year-end, we added over $40 million in new contracts. We expect TRC to grow its revenue in the middle to later part of the year, continuing its growth trajectory.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.