0001104659-26-035216
SEC filingRevenue grew 8.1% to $944.6M, driven by Power segment; net income surged 61.2% on margin expansion and backlog doubled to $2.9B.
Argan, Inc. describes itself as primarily an engineering and construction firm that conducts operations through wholly-owned subsidiaries. It is organized as a holding company and may make opportunistic acquisitions. The company operates across three distinct reportable segments: Power, Industrial, and Teledata.
Power Segment: This segment is the largest, generating 80.1% of consolidated revenues in Fiscal 2026. It provides a full range of engineering, procurement, construction, commissioning, maintenance, project development, and technical consulting services to the power generation market. Customers include independent power producers, public utilities, and commercial firms. Projects include combined-cycle, simple-cycle, biofuel, biomass, solar (with battery storage), and wind farms. The segment operates in the U.S., Ireland, and the U.K. Project backlog as of January 31, 2026, was over $2.7 billion. The segment relies on a workforce of project leadership, skilled craft labor, and administrative staff, and procures materials from multiple suppliers.
Industrial Segment: This segment contributed 17.7% of consolidated revenues in Fiscal 2026. It provides on-site services for new plant construction, maintenance turnarounds, shutdowns, and emergency mobilizations, along with fabrication, delivery, and installation of metal components such as piping systems and pressure vessels. The segment serves industrial customers primarily in the Southeastern U.S. and operates a fabrication facility near Greenville, North Carolina. Major customers include leading companies in aluminum rolling, datacenter development, electric vehicle manufacturing, fertilizer, and specialty chemicals.
Teledata Segment: This segment accounted for 2.2% of consolidated revenues in Fiscal 2026. It provides project management, construction, installation, maintenance, repair, and emergency response services across power distribution and information, communications, and data networks. The segment primarily serves the Mid-Atlantic region, with additional operations in New England and the Southeast. A major portion of revenue comes from task orders under master agreements with major customers including electricity cooperatives, municipalities, state agencies, and technology-oriented government contractors. In Fiscal 2025, the segment hired a new CEO to expand market presence.
Argan does not market specific branded products but executes a range of project types. Key offerings include combined-cycle power plants, simple-cycle peaking plants, biofuel plants, biomass plants, solar fields (with battery storage), wind farms, pipe and vessel fabrication, utility construction services (outside plant and inside plant wiring), and technology wiring solutions.
Argan sells directly to customers. Power segment customers are primarily independent power producers, public utilities, and commercial firms. For Fiscal 2026, three Power segment customers represented 23%, 16%, and 11% of consolidated revenues. Industrial segment customers are large multinational organizations in various industries. Teledata segment customers are government agencies and commercial entities. Contracts are typically awarded through competitive bidding or negotiated agreements, with Teledata relying on master agreements with task orders.
The Power segment competes with large, well-capitalized global firms and regional companies. The filing notes that the number of capable competitors for domestic gas-fired EPC work has declined. Industrial segment competition includes regional and national industrial contractors and specialty mechanical firms. Teledata operates in a fragmented industry with competitors ranging from regional to national contractors. Argan differentiates on reputation, experience, safety performance, and customer relationships.
Argan's strategy includes pursuing opportunistic acquisitions and investments, operating subsidiaries independently with strategic oversight, and emphasizing a proven track record in power systems. The company aims to react quickly to customer needs and maintain experienced teams. In Teledata, the focus is on expanding market presence. Safety and responsible business practices are supported by a board committee.
As of January 31, 2026, Argan had 1,409 employees, substantially all full-time. The skilled craft workforce fluctuates with project activity, while non-craft staff is at its highest level. The company emphasizes competitive compensation, training, safety, and employee retention. OSHA incident rates for 2025 were 0.45, significantly below industry averages.
Fiscal 2026 revenues increased 8.1% to $944.6 million from $874.2 million, driven primarily by the Power segment (+9.2%) and Teledata (+52.0%), while Industrial was essentially flat. Gross profit surged 37.4% to $193.7 million, with gross margin expanding 440 basis points to 20.5% from 16.1%. The margin improvement was attributable to a favorable project mix, strong international execution, and disciplined cost management—most notably on the Trumbull Energy Center, which reached substantial completion ahead of schedule. Operating income rose 52.7% to $134.7 million, and operating margin improved to 14.3% from 10.1%. Net income climbed 61.2% to $137.8 million ($9.74 per diluted share) from $85.5 million ($6.15 per share), benefiting from higher operating income and a lower effective tax rate of 14.2% versus 23.2% in the prior year. The tax rate decrease was driven by a windfall benefit from stock-based compensation and a change in valuation allowance for NOLs.
The Power segment remained the dominant revenue driver, accounting for 80.1% of consolidated revenue. Revenue grew 9.2% to $756.5 million, supported by increased activity on the 405 MW Midwest Solar Project, the 700 MW Combined-Cycle Project, and the start of several new gas-fired projects, partially offset by the wind-down of older projects. Power gross margin improved sharply to 22.4% from 16.7%, reflecting better contract mix and international profitability. Power backlog more than doubled to $2.7 billion, underpinned by four major EPC awards in Fiscal 2026, including the 1.4 GW Ward County project and the 860 MW ERCOT project. The Industrial segment posted flat revenue of $167.6 million, as growth in field services was offset by reduced vessel fabrication. Gross margin contracted slightly to 12.1% from 13.3%. However, backlog surged to $253.0 million from $53.2 million, driven by contracts for an automotive plant, data centers, and other industrial facilities, signaling a strong pipeline for coming periods. The Teledata segment grew revenue 52.0% to $20.6 million, benefitting from increased demand for telecommunications and data infrastructure. Gross margin fell to 19.5% from 23.8%, likely due to project mix. Backlog more than doubled to $8.4 million.
Management highlighted a robust market outlook, noting that U.S. electricity demand has reached the highest levels in two decades, driven by data centers, electrification, and reshoring. The limited number of EPC contractors and supply constraints are expected to continue supporting pricing and award activity for large gas-fired power plants. The backlog of $2.9 billion provides multi-year visibility, with major projects scheduled for completion between calendar 2027 and 2029. Key catalyst projects include the 1.4 GW Ward County plant (completion 2029), the 860 MW ERCOT plant (2028), and the 405 MW Midwest Solar project (Fiscal 2027). The Industrial segment’s backlog jump suggests accelerating non-power construction. Management did not provide specific numeric guidance but expressed confidence in continued demand and disciplined execution. Capital allocation priorities include funding growth, returning capital via dividends and share repurchases (combined $34.2M in Fiscal 2026), and selectively evaluating development financing opportunities. The company remains debt-free with $339.5M in cash and $421.0M in net liquidity, positioning it to pursue new awards and maintain bonding capacity.
Argan’s balance sheet remains fortress-like. Cash and cash equivalents surged to $339.5 million, up from $145.3 million a year earlier, while investments in CDs and U.S. Treasury notes reached $555.5 million. Combined liquid assets of $895 million dwarf total liabilities of $724 million. The company has no outstanding debt under its $35 million credit facility, and the facility includes an additional $30 million accordion. Contract liabilities (deferred revenue) grew to $514 million, reflecting strong advance payments on large projects.
Remaining unsatisfied performance obligations (RUPO) stood at $2.9 billion as of January 31, 2026, with 38% expected to be recognized as revenue in the next 12 months. Operating lease commitments total $7.1 million (undiscounted), with weighted average remaining term of 38 months. The company also has outstanding performance bonds of approximately $0.5 billion and $44.7 million in other surety bonds. No material purchase commitments beyond normal procurement were disclosed.
Argan returned $34.2 million to shareholders in fiscal 2026: $24.3 million in dividends and $9.9 million in share repurchases. The quarterly dividend was raised 33% to $0.50 per share in September 2025. The board also increased the share repurchase authorization by $25 million to a cumulative $150 million, with $9.9 million utilized during the year. Capital expenditures were modest at $3.9 million (0.4% of sales), primarily for equipment and facilities. STC investments (solar tax credits) consumed $11.5 million, reported as cash paid for income taxes.
The Power segment dominates, generating $756.5 million (80.1% of total revenue) and $136.0 million in operating income (18.0% margin). Revenue grew 9.2% year-over-year, driven by U.S. and overseas projects. The Industrial segment contributed $167.6 million (17.7% of revenue) with a 7.8% margin, essentially flat. Teledata revenue jumped 52% to $20.6 million, though margins remain thin (1.1%). Geographically, U.S. projects accounted for $852.2 million (90.2%), with Ireland ($65.0M) and UK ($27.4M) making up the rest. Segment income before income taxes for Power was $157.0 million, Industrial $13.1 million, Teledata $0.3 million, with corporate expenses of $9.9 million.
Overall, the risk factors emphasize vulnerability to macroeconomic cycles, project-specific execution risks, and regulatory shifts. The most material risks are those tied to fixed-price contracts and the natural gas power generation market, given the segment's dominance.