ARGAN INC (AGX)

Business overview

BUSINESS. Argan, Inc. (“Argan”) is primarily an engineering and construction firm that conducts its operations through its wholly-owned subsidiaries across three distinct reportable business segments: Power, Industrial, and Teledata. Argan and these consolidated subsidiaries are hereinafter collectively referred to as the “Company.” Through the Power segment, we provide a full range of engineering, procurement, construction, commissioning, maintenance, project development, and technical consulting services to the power generation market. The customers include primarily independent power producers, public utilities, power plant equipment suppliers and other commercial firms with significant power requirements.

Customer projects are located in the United States (the “U. S.”) , the Republic of Ireland (“Ireland”) and the United Kingdom (the “U. K.”) T he Industrial segment provides on-site services that support new plant construction and additions, maintenance turnarounds, shutdowns and emergency mobilizations for industrial operations primarily located in the Southeast region of the U. S.

and that may include the fabrication, delivery and installation of metal components such as piping systems and pressure vessels. The Teledata segment provides project management, construction, installation, maintenance, repair, and emergency response services across power distribution and information, communications, and data networks. The segment’s customers include commercial and industrial organizations, as well as state and federal government agencies, primarily throughout the Mid-Atlantic region of the U. S. Together, these segments enable us to serve a wide range of client needs across power generation, industrial construction, and teledata infrastructure, establishing our presence as a diversified provider in the construction and engineering sectors. Holding Company Structure Argan was organized as a Delaware corporation in May 1961.

Argan operates as a holding company that may make opportunistic acquisitions and/or investments by identifying companies with significant potential for profitable growth and realizable synergies with one or more of our existing construction businesses. However, we may have more than one industrial focus depending on the opportunity and/or needs of our customers. Each of our wholly-owned subsidiaries is operated by us as an independent business with strategic oversight provided by Argan to allow each to react to its own market conditions independently. Acquired companies will be operated in a manner that we believe will best provide long-term and enduring value for our stockholders. - 3 - Power Segment The Power segment historically represents a significant portion of our operations.

As a full-service engineering, procurement and construction (“EPC”) services provider, this segment has proven capabilities in designing, building, and commissioning large-scale energy projects, primarily in the U. S. The segment’s extensive design, construction, project management, start-up and operating experience has expanded over time, supported by a substantial portfolio of installed power-generating capacity. Past projects include combined-cycle facilities, simple-cycle peaking plants, biofuel plants, biomass plants, solar fields, solar fields with battery storage and wind farms. The customers include primarily independent power producers, public utilities, and other commercial firms with significant power requirements. Typically, the scope of work for the segment includes complete plant engineering and design, procurement of power generation and balance of plant equipment, and full turnkey construction from site development through electrical interconnection and plant performance testing.

The durations of these projects typically range between one to four years. The segment also conducts operations internationally in Ireland and the U. K. , which represent our primary international operations. The international operations of the Power segment focus on the performance of engineering and construction services for major electric utilities in Ireland, independent power plant owners, major data center operators, and original equipment manufacturers. Additionally, the international operations of the segment provides turbine, boiler and large rotating equipment engineering, procurement, installation, commissioning and outage services to power plants.

The revenues of our Power business segment were $756. 5 million, $693. 0 million and $416. 3 million for the fiscal years ended January 31, 2026 (“Fiscal 2026”), 2025 (“Fiscal 2025”) and 2024 (“Fiscal 2024”), respectively, or 80. 1%, 79. 3% and 72.

6% of our consolidated revenues for the corresponding periods, respectively. The substantial portions of the revenues of this reportable segment for these three years were derived from the performance of activities under EPC services and other construction contracts with the owners of power plant projects. Power Segment Project Backlog As of January 31, 2026, the project backlog for this reporting segment was over $2. 7 billion. The comparable backlog amount as of January 31, 2025, was approximately $1. 3 billion. Our reported amount of project backlog at a point in time represents the expected revenue from the remaining work on projects where scope is sufficiently defined and contract value can be reasonably estimated. […]

Management discussion and analysis

Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of currently active major projects for this reporting segment. Labor and Materials Our Power segment is supported by a workforce of project leadership, skilled craft labor, and administrative and support staff. We perform work on job sites in different states and countries. The skilled craft labor pool is unique in each region due to a variety of factors, including different employment environments, competing infrastructure projects located near our sites that utilize the same labor pool, and decreased and aging labor pools resulting from demographic trends. These dynamics have contributed to rising wages for craft labor. As such, we take a carefully considered and tailored approach at each job site to acquire and retain the required personnel resources when we need them, especially craft labor, and to maintain optimum productivity on each of our projects.

Depending on the project, we may utilize direct hires, subcontractors, existing internal personnel, or a combination of the three. We generally have managed to successfully staff each of our jobs effectively. In connection with the engineering and construction of traditional power plants, biofuel plants, and other renewable energy systems, we procure materials for installation on our various projects. We are not dependent upon any one source for major equipment components or any other construction materials we use to complete a particular power project, although in certain cases the number of suppliers providing such equipment is limited. Project owners may also directly procure and supply certain major components of the power plants, at times with our assistance.

We have significant experience in delivering EPC projects with the latest turbine technology and working with the major gas-fired turbine manufacturers in - 4 - our markets to meet each project owner’s specific power plant requirements. EPC project requirements may vary considerably. In the past, we have had to navigate supply chain disruptions and other sourcing issues that have or could have impacted our projects. Supply chain constraints may cause delays in the construction timelines for new power plants or, in some cases, lead project owners to defer or forgo new projects altogether. As we go forward, there may be unscheduled delays in the delivery of materials, machinery and equipment ordered by us or by a project owner or other unanticipated challenges to our ability to complete major job tasks when planned, among other impacts.

We actively attempt to manage these risks during periods of uncertainty. The costs of materials needed to complete our projects may fluctuate from time to time. During periods of increased price volatility, we may take steps to reduce our exposure, including limiting the duration of pricing quotes and, for major fixed-price contracts, procuring much of the equipment and construction supplies during the early phases of a project. In recent fiscal years, we believe we have effectively managed the economic challenges affecting our active projects, including inflationary pressures. In addition, supply chain constraints and trade policy developments, including the imposition of tariffs and other import restrictions, may adversely affect the availability and pricing of construction materials and certain power plant equipment.

Tariffs or similar measures affecting imported materials, including steel and aluminum, could increase project costs and create uncertainty in budgeting, contract negotiations and project scheduling. While we generally seek commercial terms that seek to limit these risks, we also work closely with our customers to navigate the evolving tariff landscape and assess potential impacts on procurement, project planning and cost management; however, delays in the delivery of critical materials and equipment may extend project timelines and increase costs. The scope, timing and duration of such trade measures, and any potential retaliatory actions by trading partners, remain uncertain. C ompetition Our Power segment competes with large and well capitalized private and public firms in the construction and engineering services industry including firms that have global businesses.

We also may compete with regional construction services companies in the markets where planned projects might be located. To compete with these firms, we emphasize our proven track record as a value-add choice for the design, build and commissioning of natural gas-fired and alternative energy power systems. Our successful experience includes the efficient completion and maintenance of natural gas-fired combined-cycle and simple cycle power plants, biomass plants, solar fields, wind farms, and biofuel processing facilities, most performed on an EPC services contract basis. […]

Key risk disclosures

RISK FACTORS. Our business is challenged by a changing environment that involves many known and unknown risks and uncertainties. The risks described below discuss factors that have affected and/or could affect us in the future. There may be others. We may be affected by risks that are currently unknown to us or are immaterial at this time. If any such events did occur, our business, financial condition and results of operations could be adversely affected in a material manner.

Our future results may also be impacted by other risk factors listed from time to time in our future filings with the SEC, including, but not limited to, our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q. As the most significant portion of our consolidated entity is represented by the Power segment, the risk factor discussions included below are focused on that business. However, as many of these same risks exist for our other reportable segments, the Industrial segment and the Teledata segment, a review and assessment of the following risk factors should be performed with those similarities in mind. Risks Related to Our Business Demand for our services may decrease during economic downturns or unpredictable economic cycles, which could affect our businesses adversely.

Substantial portions of the revenues and profits earned by our reportable business segments are generated from construction-type projects, the awarding and/or funding of which we do not directly control. The engineering and construction industry is subject to cyclical fluctuations due to economic conditions, project owners’ business cycles, labor and materials constraints, subcontractor pricing, interest rate changes, and regulatory or political developments. During periods of reduced economic activity, customers may delay, reduce, or cancel projects, including new construction, maintenance, repairs, and outage work. In addition, adverse industry conditions may reduce our customers’ ability or willingness to fund capital expenditures. These conditions could result in delays, reductions, or cancellations of projects that are important to our business and future results.

- 9 - Future revenues are dependent on the awards of utility-scale natural gas-fired and renewable energy EPC projects to us, the receipt of corresponding full notices-to-proceed, and our ability to successfully complete the projects that we start. Most of our consolidated revenues are generated by the Power segment, which represented 80. 1%, 79. 3% and 72. 6% of consolidated revenues for Fiscal 2026, Fiscal 2025 and Fiscal 2024, respectively. The Power segment earns most of its revenues from long-term natural gas-fired EPC services contracts.

In addition, a significant portion of our consolidated revenues in any given year may be derived from a limited number of customers, and customer concentration may vary from year to year . Contracts may be delayed or canceled after award, and project commencement is often subject to receipt of a notice to proceed. Failure to secure future EPC project awards, obtain notices to proceed, or successfully complete awarded projects could adversely affect our future revenues, profitability, and cash flows. Our financial results may fluctuate due to the timing of large construction projects. Our Power segment performs work on a limited number of large construction projects during any given fiscal reporting period.

Revenue for these projects is generally recognized over time based on progress toward completion, which is often measured using costs incurred. The timing of equipment purchases, subcontractor services, and other project activities may vary over the life of a contract, which can result in fluctuations in quarterly or annual revenues and operating results. In addition, the timing of project commencements and completions may contribute to variability in reported results between periods. As a result, our consolidated revenues, cash flows from operations, net income and earnings per share may vary from period to period. Actual results could differ from the assumptions and estimates used to prepare our consolidated financial statements. The preparation of consolidated financial statements in conformity with U.

S. GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures. For fixed-price customer contracts, we recognize revenues over time based on the proportion of costs incurred to date relative to total estimated costs. We review and update estimated costs monthly. Contract results may also be affected by estimates related to change orders and the resolution of contract disputes. Changes in contract values or estimated costs may result in cumulative catch-up adjustments to revenue and profit, which could be material. Actual contract values and costs may differ from estimates, which could reduce or reverse previously recognized revenues and profits. […]

Source and methodology

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