Earnings Recap — Q2 FY2027
CY Q3 2026 · Reported September 2, 2026 · Beat 7 of last 7 quarters
Argan, Inc. reported Q2 FY2027 revenue of $384M, a beat of 27.8% against consensus, and EPS of $3.76, a beat of 42.4%.
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Argan's record revenue and strong backlog underscore the sustained demand for gas-fired power generation to support AI-driven electrification. The company's expansion into data center tank fabrication and the ValCor acquisition highlight its strategy to capture adjacent AI infrastructure opportunities. Management's confidence in adding new projects over the next year signals continued momentum in the power buildout.
Argan delivered record second-quarter revenue of $384 million, up 62% year-over-year, with Power segment revenue up 53%, Industrial up 111%, and Teledata up 40%. Consolidated gross margin was 19.3%, down from 21% in Q1, reflecting earlier-stage project mix and lower Industrial margins. The company completed the acquisition of ValCor Communications, a Connecticut-based telecom services provider, to expand its Teledata segment. Backlog declined to $2.5 billion from $2.9 billion at the start of the fiscal year, but management noted $260+ million of additions from scope increases and smaller jobs during the quarter.
Management expects to add a handful of new projects over the next 7 to 15 months, with complex combined-cycle natural gas projects representing the majority of near- and mid-term backlog. The new North Carolina fabrication facility is on track to complete in Q3 and is expected to contribute over $10 million per quarter in Industrial revenue later this year and into next year. Management also noted that the demand environment remains strong despite regulatory headlines around data centers, with no change in developer behavior.
“We are pleased to keep the backlog over $2.5 billion despite not adding any major power projects in the quarter, given that we generated $675 million of revenue during the first 6 months.”
on Backlog resilience
“There is still an urgency to get data centers and power plants built. And you're correct, there has been a lot of news lately with pauses and pushbacks on data centers. But there has really been no change in terms of developer behavior.”
on Data center demand
“We expect to finish these projects over the next 6 months. So industrial margins may run below historical norms for a quarter or 2 as these projects wind down.”
on Industrial margin pressure
Could you characterize the activity and number of projects you're looking at in the pipeline?
Management reiterated a conservative approach, expecting to add a handful of new projects over the next 7 to 15 months. They noted a significant number of inbound requests and that the next job could come next quarter or a year from now. Backlog remained above $2.5 billion despite $675 million of revenue in the first half, offset by $260+ million of scope increases and smaller jobs.
Industrial gross margin was 7.3%, below normal levels. What happened and what is a normalized level?
Management attributed the margin shortfall to a couple of projects unrelated to data center work where estimates to complete deteriorated. These projects are expected to wind down over the next 6 months, so Industrial margins may remain below historical norms for a quarter or two. They remain focused on selecting the right projects and executing profitably.
Given the strength in Q2, do you still expect sequential revenue growth in the second half?
Management said Q2 benefited from pull-forward, so Q3 sequential growth may be limited, especially with expected lower Industrial revenues. Fiscal 2027 revenue is still expected to be significantly above fiscal 2026, but the pace of growth is uncertain.