0001104659-26-070536
SEC filingArgan reports strong Q1 FY27 revenue growth of 50.2% to $291M, driven by Power segment, with net income doubling to $46.1M, highlighting robust demand for power generation construction.
For the three months ended April 30, 2026, Argan reported exceptional results. Revenue surged 50.2% to $290.95 million from $193.66 million in the prior-year quarter, driven primarily by the Power segment, which saw a 41.4% increase as construction activities ramped up on multiple large-scale thermal projects (1.4 GW, 700 MW, Sandow Lakes, 860 MW). Gross profit rose 65.8% to $61.11 million, with gross margin expanding to 21.0% from 19.0% due to a favorable project mix and strong execution on the final Midwest Solar and Battery Project. Operating income increased 86.5% to $45.40 million, and operating margin improved to 15.6% from 12.6%. Net income nearly doubled to $46.06 million, driven by operating leverage and a lower effective tax rate. Diluted EPS rose to $3.24 from $1.60.
Total assets increased to $1.29 billion from $1.19 billion as of January 31, 2026. Cash and cash equivalents rose to $355.8 million, and total investments (short-term and available-for-sale securities) reached $617.7 million, providing substantial liquidity. The company had no borrowings under its $35 million revolving credit facility (with an additional $30 million accordion feature). Contract liabilities (deferred revenue) grew to $565.8 million from $514.0 million, reflecting strong advance payments on new projects. Stockholders' equity increased to $473.5 million from $462.3 million, driven by net income partially offset by dividends and share repurchases.
Operating cash flow was robust at $113.4 million, significantly exceeding net income of $46.1 million, primarily due to increases in contract liabilities ($51.8 million) and accounts payable/accrued expenses ($17.5 million), along with decreases in contract assets and accounts receivable. Capital expenditures were $2.4 million, resulting in free cash flow of $111.0 million. Investing activities used $67.5 million, mainly for purchases of available-for-sale securities and certificates of deposit. Financing activities used $33.7 million, including $23.7 million for share-based award settlements, $7.0 million for dividends, and $3.0 million for share repurchases. The company ended the quarter with $355.8 million in cash, up from $339.5 million.
Management attributed the strong results to increased construction activity on several large natural gas-fired power plants and the Industrial segment's growth in field services and vessel fabrication. The backlog stood at $2.8 billion, with 42% expected to be recognized in the next 12 months and substantially all within 12-24 months thereafter. Key projects include the 860 MW ERCOT project (completion 2028), 1.4 GW Texas plant (2029), 170 MW Ireland plant (2028), Sandow Lakes 1.2 GW (2028), Tarbert 300 MW biofuel plant (2027), and 700 MW combined-cycle project (2028). Management noted risks from trade policy/tariffs on material costs and potential delays, but expressed confidence in the demand for reliable power generation.
The Power segment accounted for 77.9% of consolidated revenue (down from 82.8% due to Industrial growth). Industrial segment revenue nearly doubled to $58.3 million, driven by increased field services and a pressure vessel fabrication contract for data center thermal storage. Teledata revenue grew 45.2% but remained modest. Customer concentration was notable: three Power customers represented 15%, 13%, and 12% of revenue. The effective tax rate dropped sharply to 14.3% due to stock-based compensation windfall. The company repurchased 6,450 shares for $3.0 million and increased the buyback authorization by $50 million to a total of $200 million. A legal dispute with EP over a U.K. project continues, with a $9.9 million letter of credit draw included in accounts receivable as disputed.