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DATE

Wednesday, Sept. 2, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer - David Watson
• Chief Financial Officer - Josh Baugher
• Investor Relations - Jennifer Belodeau

TAKEAWAYS

• Revenue -- $384.0 million, representing 61.5% growth driven by the ramp-up of construction activities in the Power segment.
• Net Income -- $53.3 million or $3.76 per diluted share, which set a record for second quarter performance.
• Adjusted EBITDA -- $70.0 million, reflecting an adjusted EBITDA margin of 18.2% compared to 16.2% in the prior year's second quarter.
• Power Segment Revenue -- $301 million, contributing 78% of total revenue and growing 53% year over year.
• Power Segment Gross Margin -- 22.4%, reflecting a favorable shift in project mix and strong contract execution.
• Industrial Segment Revenue -- $76 million, increasing 111% through new plant construction and metal component fabrication services.
• Industrial Segment Gross Margin -- 7.3%, which fell below management expectations due to revised estimates to complete on two specific projects.
• Teledata Segment Revenue -- $7 million, a 40% increase as the company expanded services for data centers and government locations.
• Consolidated Backlog -- $2.5 billion, a decrease from $2.9 billion at the start of the fiscal year due to project burn and the timing of new contract awards.
• Cash and Investments -- $1.03 billion, providing zero-debt liquidity to support organic growth and acquisitions.
• Net Liquidity -- $440.4 million at July 31, 2026, up from $421.0 million at the start of the fiscal year.
• Dividends -- $0.50 per share, equivalent to an annual run rate of $2 per share following three consecutive years of increases.
• Capital Returns -- $51.7 million, representing the total amount returned to shareholders through buybacks and dividends during the first six months of the fiscal year.
• Share Repurchase Authorization -- $200 million, with the Board of Directors extending the expiration date through Jan. 31, 2030.
• Power Project Pipeline -- 4.1 gigawatts, encompassing four gas-fired power plants currently included in the domestic backlog.
• Data Center Contract -- $125 million, focused on the fabrication of thermal expansion and energy storage tanks for a specific data center project.
• SG&A Expense -- 4.5% of revenue, down from 6% in the comparable prior-year quarter despite a dollar-value increase to $17.4 million.
• Other Income -- $10.1 million, primarily reflecting investment income earned on the company's cash and investment balances.
• Project Count Capacity -- 10 to 12 jobs, representing the number of projects management believes the company can execute simultaneously.
• Project Portfolio Mix -- 80% natural gas, 11% renewable, and 8% industrial, based on the current backlog composition.
• Fabrication Revenue Target -- $10 million per quarter, expected from the new North Carolina facility once it becomes operational.

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RISKS

• Watson stated, "the margin profile was below our expectations," explaining that revised cost estimates for two industrial projects negatively impacted the segment's gross margin.
• Watson noted that the "backlog amount will move around from quarter-to-quarter related to the completion of certain projects and start time of pending projects," accounting for the $411 million decline in total backlog since the start of the year.

SUMMARY

Argan, Inc. (AGX -7.93%) reported record quarterly revenue driven by increased demand for energy infrastructure and power grid electrification. Management noted that the company is focusing on natural gas-fired projects, which constitute 80% of its current backlog, while maintaining capabilities in renewable energy. The company expanded its Teledata segment through the acquisition of ValCor Communications and is constructing a new fabrication facility in North Carolina to support data center opportunities. Management indicated that the balance sheet, which holds zero debt and over $1 billion in cash and investments, remains a competitive advantage for bonding capacity and project execution.

• CEO Watson stated that the company expects to add "a handful of new projects over the next 7 to 15 months."
• Management indicated that the company is "well positioned to execute on 10 to 12 jobs simultaneously" based on current staffing and training.
• The company reached final completion on the Midwest solar and battery projects ahead of schedule.
• Watson noted that the new North Carolina fabrication facility is "on track for completion later this year" in the third quarter of fiscal 2027.
• The acquisition of ValCor Communications provides a presence in New England and adds technology, defense, and aerospace clients to the Teledata segment.
• Watson reported that the demand environment remains strong despite "regulatory back and forth around data center development" in specific regions like Texas.

INDUSTRY GLOSSARY

• EPC: Engineering, procurement, and construction; a form of contracting arrangement where the contractor is responsible for all activities from design to completion.
• Combined Cycle: A power plant that uses both gas and steam turbines together to produce more electricity from the same fuel than a traditional plant.
• Teledata: Infrastructure and services related to the physical transmission of high-speed data, voice, video, and security networks.
• Gigawatt: A unit of power equal to one billion watts, used to measure the capacity of power-generating facilities.
• Backlog: The total value of fully committed projects for which the company has received a notice to proceed.
• Net Liquidity: Working capital, defined by the company as total current assets minus total current liabilities.

Full Conference Call Transcript

Operator: Good evening, ladies and gentlemen, and welcome to the Argan Inc. Earnings Conference Call for the Second Quarter of Fiscal year 2027 ended July 31, 2026. This call is being recorded. [Operator Instructions] There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast. At this time, it is my pleasure to turn the floor over to your host for today, Jennifer Belodeau of IMS Investor Relations. Please go ahead, ma'am.

Jennifer Belodeau: Thank you. Good evening, and welcome to our conference call to discuss Argan's results for the second quarter of fiscal 2027 ended July 31, 2026. On the call today, we have David Watson, Chief Executive Officer; and Josh Baugher, Chief Financial Officer. I'll take a moment to read the safe harbor statement. Statements made during this conference call and presented in the presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenues and profits. These statements are subject to known and unknown factors and risks.

The company's actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, and some of the factors and risks that could cause or contribute to such material differences have been described in this afternoon's press release and in Argan's filings with the U.S. Securities and Exchange Commission. These statements are based on information and understandings that are believed to be accurate as of today, and we do not undertake any duty to update such forward-looking statements. Earlier this afternoon, the company issued a press release announcing its second quarter fiscal 2027 financial results and filed its corresponding Form 10-Q report with the Securities and Exchange Commission. Okay.

With that out of the way, I'll turn the call over to David Watson, CEO of Argan. Please go ahead, David.

David Watson: Thanks, Jennifer, and thank you, everyone, for joining today. I'll start by reviewing some highlights of our operations and activities, and Josh Baugher, our CFO, will go over our financial results. Then we'll open up the call for questions. Our strong second quarter built on the momentum we created in the first quarter of fiscal 2027, demonstrating our operational strength across our business. Each of our operating segments recorded substantially improved revenue, contributing to our record consolidated revenue of $384 million for the quarter. Our Power and Industrial segments delivered significant revenue growth of 53% and 111%, respectively, for the quarter, with Teledata revenue growing 40%.

Our second quarter highlights include consolidated gross margin of 19.3%, record net income of $53.3 million or $3.76 per diluted share, record adjusted EBITDA of $70 million and adjusted EBITDA margin of 18.2%. We also executed at the end of the quarter on M&A with the purchase of ValCor Communications, a Connecticut-based provider of installation and repair services for information, communication and data networks. We're excited about the addition of ValCor, which strengthens our Teledata segment, giving us a presence in New England and bringing a client base of Fortune 500 technology, defense and aerospace customers from the region.

Our balance sheet remains strong with approximately $1 billion of cash and investments, net liquidity of $440 million and no debt at July 31, 2026 and we continued our practice of returning capital to our shareholders through our quarterly dividend of $0.50 per share, which is $2 per share on an annual basis. So a very strong quarter overall with a lot of progress made. Now on to the operational review. We have 3 reportable business segments: Power, Industrial and Teledata. Our Power segment is our largest, building all types of power facilities, including thermal and a variety of renewable, including solar, solar with battery energy storage systems, biofuel and biomass facilities.

Power segment revenues grew 53% and contributed $301 million or 78% of total revenue in the second quarter of fiscal 2027 with pretax book income of $66 million. The Industrial segment provides field services supporting new plant construction and additions for industrial facilities and fabricates metal components like piping systems and pressure vessels in its fabrication facility. Revenue increased by 111% to $76 million in the second quarter or 20% of consolidated revenue with pretax book income of approximately $4 million. Backlog for the Industrial segment was $210 million at July 31, 2026, and construction on our second fabrication facility is progressing well.

Finally, revenue in our Teledata segment grew 40% to $7 million in the second quarter of fiscal 2027 and contributed 2% of consolidated revenue. Teledata provides project management and construction services across power distribution and information, communications and data networks for commercial and industrial customers. The segment works with data centers as well as with federal government locations and military installations requiring high-level security clearance. As I just mentioned, we expect that our recent acquisition of ValCor will expand and extend our reach as a provider of Teledata services. Turning to our backlog. Our consolidated backlog of fully committed projects is $2.5 billion at July 31, 2026, a decrease from $2.9 billion at the start of fiscal 2027.

As you all know, we take a conservative approach to reporting backlog and typically only include the value of the contract in backlog when we've received a notice to proceed. Because of that, our backlog amount will move around from quarter-to-quarter related to the completion of certain projects and start time of pending projects. Our pipeline remains exceptionally strong, reflecting the demand for the reliable 24/7 energy resources needed to power an economy that is increasingly reliant on electrification. Demand for our capabilities across all 3 operating segments is high, particularly in our Power segment, where our current backlog includes 4 gas-fired power plants in the United States totaling over 4.1 gigawatts.

Our Industrial segment is also seeing strong demand, highlighted by a data center contract we were awarded in November 2025 for the fabrication of thermal expansion and energy storage tanks. As we discussed on last quarter's call, we are currently building an additional fabrication facility in North Carolina to support this project and to better position the company to address new opportunities. The new facility is on track for completion later this year. As we move forward, we remain confident in our expectation that we will add a handful of new projects over the next 7 to 15 months.

With the timing of our projects and the teams we have in place as well as those that are in training, we believe we are well positioned to execute on 10 to 12 jobs simultaneously. There continues to be a great deal of media and industry coverage around the significant increase in power demand due to the electrification of our economy. This dynamic includes the onshoring of domestic manufacturing, the use of EVs and the building of data centers, all of which are driving urgency around the build cycle for additional energy infrastructure to support an already stressed power grid.

Gas-fired plants are widely recognized as the ideal solution for delivering reliable, uninterrupted power, and there are a limited number of firms, including Argan, who have the capabilities to successfully execute these complex construction projects. Despite some recent regulatory back and forth around data center development that's been in the news, the demand environment for our services remains very strong, and that, combined with our proven track record, is allowing us to remain selective in pursuing the right projects in the right locations with the right partners. Our backlog is currently composed of approximately 80% natural gas projects, 11% renewable and 8% industrial.

With the current demand of natural gas-fired facilities and our core competencies in building these types of projects, we expect complex combined cycle projects, which will represent the majority of our backlog for the near and midterm. Renewable energy still plays an important role as a power resource, and we subscribe to an all-of-the-above approach when it comes to power generation. We plan to maintain our renewable capabilities so that we remain competitively positioned to meet market demand and customer needs, but our core activities will center around natural gas builds. Slide 7 highlights a selection of our major projects currently underway or recently awarded.

As you know, during the first quarter, we reached substantial completion ahead of schedule on the final project of our 3-part Midwest solar and battery projects, and now that project has reached final completion. In addition, we expect to reach substantial completion ahead of schedule for our 405-megawatt Midwest solar project later this month. Given the complexity of our projects, our ability to reach early completion milestones shows the high level proficiency of our teams in staying on task and on schedule, delivering excellent execution throughout a multiyear project.

In Texas, our 1.2 gigawatt ultra-efficient combined cycle natural gas-fired plant for SLEC is moving forward as expected and construction is ramping at our 2 other gas-fired projects in Texas, the 1.4 gigawatt project with CPV and our 860-megawatt project. We're also making good progress on our 700-megawatt combined cycle natural gas-fired power plant in the U.S. Looking internationally, our 2 projects in Ireland, the Tarbert Next Generation Power Station, a 300-megawatt biofuel plant for SSE Thermal and our 170-megawatt thermal facility are progressing well. As I mentioned earlier, our Industrial segment has a $125 million data center project underway and is also working on a recycling and water treatment plant in Alabama.

Our project portfolio is diverse in terms of scope, scale, complexity and location, but all of our teams approach each project with the highest commitment to excellent execution and our reputation as a reliable partner is a testament to that diligent approach. With that, I'll turn the call over to Josh Baugher to take us through the financials for the second quarter and first 6 months of 2027. Go ahead, Josh.

Joshua Baugher: Thanks, David, and good evening, everyone. On Slide 8, we present our consolidated earnings for the second quarter and first 6 months of fiscal 2027 ended July 31, 2026. As David mentioned, we delivered record second quarter revenues of $384 million, an increase of 62% as compared to $237.7 million in the second quarter of fiscal 2026. The increase is primarily due to the activity ramp of certain projects in our Power segment. For the second quarter, Argan reported consolidated gross profit of approximately $74.2 million or a gross margin of 19.3%. Consolidated gross profit for the comparative quarter last fiscal year was $44.3 million, representing a gross margin of 18.6%.

The increase in gross profit and improvement in gross margin for the recently ended quarter was primarily driven by our Power segment, reflecting a shift in project and contract mix and strong project execution. Gross margins for our Power, Industrial and Teledata segments were 22.4%, 7.3% and 16.6%, respectively, for the second quarter of fiscal 2027. Consolidated gross margin has stepped down over the past 3 quarters from 25% in the fourth quarter of fiscal 2026 to 21% in Q1 of fiscal 2027 and now 19.3% in the second quarter. As you know, our margins will vary from quarter-to-quarter depending on several factors, including project mix and where our projects sit in their construction cycle.

When we complete projects early, we typically have the opportunity to realize some margin benefit. We saw that dynamic with the early completion of a couple of our projects in the fourth quarter of fiscal 2026 and Q1 of fiscal 2027, which favorably impacted consolidated margin. In the second quarter, our consolidated margin reflects earlier stage revenues for our current projects in the Power segment. As projects ramp and get into their second and third year of construction, we expect to see higher revenues and with successful execution, we have the opportunity to enhance margin.

Selling, general and administration expense of $17.4 million for the second quarter of fiscal 2027 increased as compared to SG&A of $14.2 million for the comparable prior year period. However, as a percentage of revenue, SG&A decreased to 4.5% compared to 6% in the comparable quarter. Other income net for the 3 months ended July 31, 2026, was $10.1 million, which primarily reflected investment income earned during the period. Net income for the second quarter of fiscal 2027 was a record $53.3 million or $3.76 per diluted share compared to $35.3 million or $2.50 per diluted share for last year's comparable quarter.

Adjusted EBITDA in the second quarter of fiscal 2027 was $70 million or an adjusted EBITDA margin of 18.2% compared to adjusted EBITDA of $38.5 million or an adjusted EBITDA margin of 16.2%. Looking at our year-to-date performance, revenue for the first 6 months of fiscal 2027 increased by 56.5% to $674.9 million as compared to revenues of $431.4 million for the prior year period. Our consolidated gross margin of 20.1% for the first half of fiscal 2027 increased as compared to gross margin of 18.8% for the first 6 months of fiscal 2026 primarily due to the same reasons described for the quarter.

SG&A expenses increased to $33.1 million for the first 6 months of fiscal 2027 as compared to $26.7 million for the first 6 months of fiscal 2026, but decreased as a percentage of revenues to 4.9% as compared to 6.2% in the first half of last fiscal year. Net income for the 6 months of the fiscal year was $99.4 million or $7.01 per diluted share compared to $57.8 million or $4.09 per diluted share for the first 6 months of last fiscal year.

Adjusted EBITDA was $126.5 million or an adjusted EBITDA margin of 18.7% for the first half of fiscal 2027 compared with adjusted EBITDA of $70 million or an adjusted EBITDA margin of 16.2% for the first half of fiscal 2026. With that, I'll turn the call back to David.

David Watson: Thanks, Josh. Our balance sheet remains strong with approximately $1 billion in cash and investments, generating meaningful investment yields at July 31, 2026. Our net liquidity was $440 million and we had no debt. We believe that our balance sheet is a competitive advantage as it supports our growing operations organically and inorganically, expands bonding capacity and provides customers a reliable and bankable EPC partner. Stockholders' equity was over $0.5 billion at July 31, 2026. This liquidity bridge demonstrates that our business model ordinarily requires a low level of capital expenditures.

Our net liquidity of $440 million at July 31, 2026, an increase of $19 million compared to net liquidity of $421 million at January 31, 2026, as we returned $51.7 million of capital to our shareholders during the first 6 months of fiscal 2027. Our capital allocation strategy is disciplined and focused on 4 core areas. First, we invest organically in the business. That means developing and retaining our people and adding headcount to make sure we are staffed to execute on our projects. It also means expanding our capabilities such as building a new fabrication facility in North Carolina to position ourselves for anticipated data center customer demand.

Second, the company pays a quarterly dividend, which we increased 33% to $0.50 per common share in September 2025, bringing us to an annual dividend run rate of $2 per share. The increase represented our third consecutive year of raising our quarterly dividend, which cumulatively has increased by 100%, reflecting the strength of our business and our commitment to returning shareholder value. We have had a share buyback program in place since November of 2021. And during the first quarter of this fiscal year, our Board increased the total repurchase authorization to $200 million and extended the expiration date through January 31, 2030.

Since the program's inception, we have returned a total of approximately $123.8 million to shareholders through the repurchase program. Finally, we seek M&A opportunities that could be additive or complementary to our current platform. Our acquisition of ValCor Communications is a great illustration of that strategy, giving us a presence in New England and expanding our client base to include the Fortune 500 technology, defense and aerospace companies in that region. We're excited about this addition and its anticipated contributions. We are energized by the demand we're seeing for our capabilities across all 3 business segments.

With our skill set and excellent track record of execution, Argan is well positioned to capitalize on the opportunities presented by the urgent need for power infrastructure after a prolonged period of underinvestment and unprecedented increases in demand for power. While we are energy agnostic and believe renewable will always have a role in power generation, gas-fired plants are integral to the reliable delivery of the uninterrupted 24/7 energy needed to power our economy. The demand pipeline for complex combined cycle natural gas-fired plants is substantial and we are one of only a few companies with the construction capabilities and proven track record of exceptional execution in building these facilities.

We are excited for what lies ahead and intently focused on leveraging our teams, our solid financial position and our excellent reputation in the marketplace to expand our leadership position as a premier builder of industrial and energy infrastructure. As always, I'd like to thank our entire team for their hard work and dedication to operational excellence. They are the core driver of our company's growth and success. I also thank our shareholders for their continued support and confidence in our company. With that, operator, let's open it up for questions.

Operator: [Operator Instructions] The first question is from Rob Brown with Lake Street Capital Markets.

Robert Brown: Congratulations on all the progress. First, I wanted to talk a little bit about the pipeline. It looks like your commentary was about maybe a more near-term kind of execution pipeline. But could you kind of characterize the activity there and the number of projects or a sense of the projects that you're looking at?

David Watson: Absolutely, Rob, and thanks for the question. We have historically, as you know, been very conservative about predicting where our backlog can go, and we're going to stick with that approach. We did say we expect to add a handful of new projects over the next 7 to 15 months, and that reflects the current demand for natural gas-fired facilities, and we expect these complex buying cycle projects will represent the majority of our backlog for the near and midterm, but there will also be simple cycles as well.

As you know, we constantly are evaluating projects that meet the right time, conditions and best fit for our organization, and we have a significant number of inbound requests for our services. So I can't give a precise guideline at this time on new jobs. The reality is our next job could come next quarter or a year from now. And as you know, backlog performance can vary quarter-to-quarter depending on the timing of new projects. 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.

And I think it's important to note that we were able to offset some of that backlog burn with $260-plus million of additions through scope increases on existing jobs, adding new smaller jobs across our organization in intra-quarter revenues.

Robert Brown: Okay. Great. And then on the new facility build-out, I think you talked about some data center kind of market opportunity that, that opens up to you. Could you give us a sense of what sort of the revenue capacity is of that new facility and maybe some of the markets you're going after with that?

David Watson: Absolutely. Just to the construction on that facility is going really well, and we expect to have that complete in Q3, which to me is a pretty significant acceleration and quick time line for building a new fabrication facility. Right now, it's primarily geared towards supporting that $125 million data center project that we're fabricating thermal expansion tanks and energy storage tanks. And we expect a number of follow-on opportunities with that customer and frankly, expect that this facility will position the company for additional demand that we're seeing across our space.

So right now, obviously, there isn't any revenue coming out of that facility as it's still in construction phase, but we do expect for it to have a meaningful uptick in revenues for our industrial group later this year and into the next year around $10-plus million a quarter.

Operator: The next question comes from Chris Moore with CJS Securities.

Christopher Moore: Congrats on another great quarter. So one of the things you've talked about previously with respect to expanding capacity capabilities is just the need for Gemma to keep hiring and training new people. So just trying to get a sense in terms of maybe where you are today from a Gemma employee count perspective versus perhaps a year ago? And where do you expect to be a year from now?

David Watson: Chris, I appreciate the question. Gemma is every month breaking new records of the number of employees that they have. It is a constant process to add and train to the organization to train folks in the Gemma way, and we constantly are adding folks. I think one of your questions might relate to what's our capacity of the number of jobs that we can take on. I'm still going to guide that capacity to 10 to 12 jobs at any one time. Keep in mind, a 2-gigawatt job is not the same as, say, a 500-megawatt job. So there could be some variability there ultimately. But we continue to gear towards expanding that organization.

Frankly, we're expanding all of our organizations in all of our business segments, and our headcount is at record levels and meaningfully above where they were a year ago.

Christopher Moore: Got you. I appreciate that. Industrial gross margin was 7.3%. So maybe you could talk about that and certainly below kind of normal levels. Is there some cost from the expansion that's embedded in there? Or just what happened this quarter and kind of a more normalized level?

David Watson: Yes. I mean revenue grew -- it's obviously a record quarter in revenue, north of $70 million. I mean it grew year-over-year 111%. But you're correct. The margin profile was below our expectations. And frankly, there were a couple of projects unrelated to our data center work where the estimates to complete became below where we initially estimated at project inception, which impacted our gross margins during the quarter. 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.

We're working hard to improve the economics of these projects as we expect strong execution across our teams regardless of the project challenges they face. Beyond that, we see a lot of exciting opportunities in our Industrial segment, similar to what I said to Rob, especially in the data center market and frankly, in the power market for industrial as well as pairing that with our fabrication capabilities. And we'll remain focused on selecting the right projects and executing them profitably. So we're working through a couple.

Christopher Moore: Got it. And maybe just the last one for me. I think you kind of referenced this and certainly, demand looks really strong. I mean the Texas Governor, Greg Abbott, recently talked about halting 1,800 data center projects if their grid requests for, I don't know, 5x all-time peak demand. I guess the question is, any impact that you're seeing in Texas and just overall and any impact at all from kind of some more on the political side?

David Watson: Chris, 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. It's still a matter of the developer being able to achieve all those milestones that we've talked about, right, such as getting power purchase agreements in place with an end user such as the hyperscaler, air permits, access to gas, water permits, turbines, financing, et cetera. And we continue to work with several developers often through service arrangements on early activities as we anticipate kicking off some new projects over the next 7 to 15 months.

So there is news out there, but we're not seeing a change in behavior and expect to be -- obviously expect to add more to our backlog in the future here.

Operator: The next question is from Michael Fairbanks with JPMorgan.

Mark W. Strouse: This is Mark Strouse on for Michael. David, I believe you said earlier this year, just kind of thinking about revenue sequencing. Earlier this year, I believe you said that you were expecting kind of sequential increases throughout the year. Just given the strength that you saw in 2Q, do you still think that you're going to grow during the second half of the year compared to 2Q?

David Watson: Mark, great question. Thanks for jumping on for Michael. It's our -- clearly, it's our expectation that we will be meaningfully higher than fiscal year '26. We were able to achieve greater revenues than anticipated in Q2 across all of our business segments and especially in power. As such, that some of this pull forward in Q2 may result in limited quarter over consecutive quarter growth in Q3, especially since we anticipate decreased industrial revenues compared to Q2 for the rest of the year. So as you know, and as I've mentioned before, our revenues do move around related to where we are in the various construction phases of our projects underway.

So we will see an impact from the timing of new project starts, completion of projects and where we are in existing projects. So again, fiscal year '27 is expected to be significantly above fiscal year '26. The pace of revenue growth, it's tough to tell. But you are correct. We did pull forward -- we did have a really strong revenue quarter in Q2.

Mark W. Strouse: Okay. And then just as a follow-up, I wanted to ask about your latest thoughts on pricing, specifically within the Gemma business. So the combined cycle gas turbine OEMs are still talking about pricing increasing. Curious what you can say, either specific to your own business or kind of what you're seeing across the industry, that would be helpful?

David Watson: It still comes down to the type of contract. It comes down to the location. Certain labor locations are much more significant than others when it comes to cost and getting the labor. So we believe our approach is appropriate as we take into consideration the market. We take in consideration inflation, labor cost, other risk factors in the contract type. And we typically do fixed price contracts, as you know, Mark. So price -- I mean, our margin profile that we've recorded over the last 3 quarters is in power has been north of 22%, and we expect for our contracts in the future to have meaningful pricing based off of the current market.

But I wouldn't say that there is an ability to command higher pricing just because the market is evolving. But I do think we're able to get the right prices.

Operator: The next question comes from [ Alexa Bruno ] with Goldman Sachs.

Unknown Analyst: We wanted to ask on the power margins. The strength we saw this quarter, how should we think about it? Was it driven by project execution milestones? Or is this more normalized baseline expectations? What are some of the moving pieces there?

David Watson: Alexa, thanks for the question, and thanks for joining us on the call. Our margins will vary from quarter-to-quarter depending on several factors, including project mix, where we are in projects, where the projects sit in the construction cycle. So we just completed power margins in Q2 of 22.4%. In Q1, they were 23.6%. So again, healthy north of 22% in both of those quarters. And some of that relates to completing some projects early. And so that's been beneficial when you're not incurring additional costs due to the length of the project that can be beneficial.

But our overall margin outside of power was a little bit less than we were expecting but we remain confident in our ability to continue executing on our projects and capitalizing on the opportunities in our pipeline to drive continued strong margins.

Unknown Analyst: Okay. That's very helpful. And then just a follow-up on the ValCor acquisition. Can you talk about the opportunity set there? And then how should we think about the potential for any further bolt-on M&A?

David Watson: Yes. We clearly have not done a lot of M&A over the last 10 years. So we were pleased to get ValCor to the finish line and to enhance our Teledata segment because we believe there will be synergies. And with organic growth and the synergies of ValCor and the progression on our strategic plan, it should result in significant increase in our revenue run rate for Teledata and frankly, which we expect to potentially double revenues from fiscal year '26 and drive EBITDA growth over the next couple of quarters and beyond. There's obviously -- with any M&A, there's a risk of integration and continued execution of the Teledata strategy.

And then, of course, as in everything, ensuring execution excellence. But we are excited about that business segment and how it can diversify our revenues and enhance shareholder value. And this success with this, while it's -- albeit that it's a small acquisition, is a reminder to the investing public that Argan does do M&A, though we are very stringent and picky as to when we do that but it is definitely one of our core capital allocation pillars in addition to buybacks and dividends and more importantly, investing in organic growth.

Operator: We have no further questions in queue. I would now like to turn the floor back over to David Watson for closing remarks.

David Watson: Well, none of this was made possible without all the hard work that all of our teams in the field, all of our teams in the segments and the companies that are doing all this hard work. So I want to again thank each and every one of you for all of your efforts. And I also want to thank all those participating in today's call, and we look forward to speaking with you again when we report third quarter fiscal 2027 results. Have a great evening.

Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.