[Management View]
Argan reported consolidated revenue of $193.7 million, a 23% increase driven by growth in the power industry services segment. The gross margin improved to 19% from 11.4% the previous year, reflecting a changing mix of projects and contract types. Net income rose to $22.6 million, or $1.60 per diluted share, up from $7.9 million, or $0.58 per share. The company achieved a record backlog of $1.9 billion, with expectations to exceed $2 billion later this year.

[Outlook]
Management provided performance guidance indicating strong demand for power infrastructure, particularly combined cycle natural gas facilities. The company plans to add several power industrial jobs over the next six months, aiming to significantly increase the backlog. Argan's financial strength, with $546.5 million in cash and investments and no debt, supports organic investments and potential M&A opportunities.

[Financial Performance]
Year-over-year, Argan's revenue increased by 23%, with a significant rise in gross margin from 11.4% to 19%. EBITDA also improved to $30.3 million, representing 15.6% of revenues, compared to 7.5% in the prior year. The power industry services segment saw a 45% revenue increase, while industrial construction services experienced a decline.

[Q&A Highlights]
Question 1: Rob Brown asked about the pipeline visibility and potential backlog growth for the rest of the year.
Answer: David Watson expressed optimism about the pipeline, expecting to add several power industrial jobs, potentially increasing the backlog significantly over $2 billion. He noted the long-term demand visibility, with OEMs filling 2030 gas turbine spots.

Question 2: Rob Brown inquired about the capacity to handle the backlog and the potential percentage of completion.
Answer: Watson confirmed the guidance of significantly over $2 billion in backlog, highlighting the company's capacity to manage multiple renewable and gas projects, including recent starts like the 700-megawatt power plant and Tarbert.

Question 3: Rob Brown asked about the outlook for the industrial business segment.
Answer: Watson acknowledged a slight contraction but emphasized strong interest in TRS due to increased onshoring of US manufacturing. He expects revenues to increase meaningfully over the next several quarters.

Question 4: Chris Moore questioned the excess margin from projects like Trumbull.
Answer: Watson attributed strong gross margins to continued execution and changing project mix, expecting to exceed last year's margin profile.

Question 5: Chris Moore asked about the optimal backlog level and the impact of natural gas projects.
Answer: Watson explained the backlog fluctuates with new contracts and project execution, expressing excitement about long-term opportunities.

Question 6: Chris Moore inquired about the timeline for gas projects and potential changes.
Answer: Watson noted the current three to four-year timeline is primarily supply chain driven, with smaller jobs potentially shorter.

[Sentiment Analysis]
Analysts expressed positive sentiment, congratulating Argan on a strong quarter and showing interest in future growth prospects. Management maintained a confident tone, emphasizing robust demand and strategic execution.

[Quarterly Comparison]
| Metric | Q1 FY2026 | Q1 FY2025 |
|--------|-----------|-----------|
| Revenue | $193.7M | $157.5M |
| Gross Margin | 19% | 11.4% |
| Net Income | $22.6M | $7.9M |
| EBITDA | $30.3M | $11.9M |
| Backlog | $1.9B | $1.4B |

[Risks and Concerns]
Potential risks include supply chain challenges affecting project timelines and execution. The dependency on large gas-fired power projects could concentrate earnings and expose the company to market fluctuations.

[Final Takeaway]
Argan's Q1 FY2026 results demonstrate strong growth in the power industry services segment, supported by a record backlog and improved profitability. The company's strategic focus on combined cycle natural gas facilities positions it well for future demand. Management's confidence in the pipeline and financial flexibility suggests continued growth potential, although supply chain risks remain a concern. Investors should monitor Argan's ability to execute on its robust project pipeline and manage potential challenges in the evolving energy market.