ARGAN INC (AGX) Business

ITEM 1. 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.”).

The 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.

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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. While the inclusion of contract values in project backlog involves management judgment based on the facts and circumstances, we typically include the value of the contract in project backlog upon receiving a notice to proceed from the project owner. In making the determination of project backlog, management may consider several factors, including terms of the contract, the degree of project financing and permitting, and historical experience with similar contracts. The start of new projects is primarily controlled by project owners and delays may occur that are beyond our control. Refer to “Item 7. 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

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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.

Competition

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. Through the Power segment, we provide a full range of competitively priced development, consulting, engineering, procurement, construction, commissioning and maintenance services to project owners. We can react quickly to their requirements while bringing a strong, experienced team to help navigate through difficult technical, scheduling and construction issues. We believe that the culture of our Power segment encourages motivated, creative, high-energy and customer-focused teams that deliver results. Our projects are directed by dedicated field project management teams, and our project owner customers have direct access to the business segment’s senior management.

The competitive landscape for EPC services demands the ability to understand specific project design requirements, current pricing dynamics, labor availability, and the development cycle of a project. For domestic gas-fired power plant EPC work, particularly combined-cycle projects, the number of capable competitors has declined  over the past decade as several major firms have exited the market, been acquired, or moved away from fixed-price contracts. However, growing demand for new gas-fired generation may attract new entrants or prompt former competitors to re-engage. The firms that remain active in this space continue to be highly capable and competitive. Our competition for domestic renewable energy projects, such as solar, is more diverse.

Customers

For Fiscal 2026, our most significant customer relationships included three Power segment customers, which accounted for approximately 23%, 16% and 11% of consolidated revenues. For Fiscal 2025, our most significant customer relationships included three Power segment customers, which accounted for 28%, 13% and 10% of consolidated revenues. For Fiscal 2024, our most significant customer relationships included three Power segment customers, which accounted

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for 19%, 16% and 15% of consolidated revenues. No other customer of this reportable segment represented greater than 10% of consolidated revenues for Fiscal 2026, Fiscal 2025 or Fiscal 2024.

Regulation

Our Power segment operations are subject to various federal, state, local and foreign laws and regulations including: licensing for contractors; building codes; permitting and inspection requirements applicable to construction projects; regulations relating to worker safety and environmental protection; and special bidding, procurement and employee compensation requirements. Many state and local regulations governing construction require permits and licenses to be held by individuals who have passed an examination or met other requirements. We believe that we have the licenses required to conduct our current operations and that we are in compliance with applicable regulatory requirements. We continue to monitor these requirements and acquire additional licenses and adjust to regulatory changes as needed.

Energy facilities, including the pipelines required to supply natural gas fuel to power plants, are subject to a myriad of federal and state laws and regulations governing environmental protection, air quality, water quality and noise and height restrictions. Recently, evolving regulatory frameworks, including permitting reforms and policy adjustments, are generally creating a more favorable environment for the continued development of natural gas-fired power plants, while still allowing renewable energy facility development.

Development Financing

We selectively participate in power plant project development and related financing activities. EPC contractors in our industry also periodically execute certain contracts jointly with third parties through joint ventures, limited partnerships, and limited liability companies for the purpose of completing a project or program for a project owner. These special purpose entities are generally dissolved upon completion of the corresponding project or program. Not all such business development endeavors are successful, and we have recorded impairment losses as a result in the past.

Industrial Segment

Our Industrial segment provides industrial construction and field services and also operates a pipe and vessel fabrication facility. The segment serves industrial customers primarily in the Southeastern United States. Its fabrication facility and warehouse, which totals over 90,000 square feet, and offices are located near Greenville, North Carolina.

For the recent fiscal years, industrial field service construction projects typically represent most of the segment’s annual revenues, with the remaining revenues contributed by projects consisting primarily of pipe and vessel fabrication. The revenues of our Industrial segment were $167.6 million, $167.6 million, and $142.8 million for Fiscal 2026, Fiscal 2025, and Fiscal 2024, respectively, representing approximately 17.7%, 19.2%, and 24.9% of our consolidated revenues for the corresponding fiscal years. Over the last several years, the segment’s business development efforts have emphasized the pursuit and award of larger field service construction projects and long-term fabrication projects.

Recent and current major customers of the Industrial segment include leading companies in the aluminum rolling and recycling industry, datacenter development, electric vehicle manufacturing, fertilizer and other specialty chemicals, and engineering and construction services supporting large-scale industrial development. The Industrial segment also serves major pulp and paper companies, water and wastewater treatment facilities, and a variety of other industrial customers. Many of these customers are large multinational organizations with significant global operations and capital investment programs. These customer relationships demonstrate that the segment is a trusted industrial services provider to large, well-capitalized customers from across North America and other international markets that are expanding or locating new production facilities within the segment’s geographic region.

The Industrial segment’s operations require a workforce consisting of project leadership, skilled craft labor, and administrative and support staff. Depending on project requirements, the segment supplements its permanent workforce with temporary labor, subcontractors, and specialty trades. The availability of qualified craft labor and experienced project personnel can affect project scheduling and costs, particularly during periods of strong industrial construction activity. The segment maintains training and safety programs designed to support workforce development, compliance with applicable regulatory standards, and safe work practices. In Fiscal 2026, we promoted the segment’s then-president to also serve as chief executive officer of the segment as part of our long-term succession planning.

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Projects performed by the Industrial segment require a variety of materials and equipment, including structural steel, pipe, fittings, pressure vessels, fabricated components, and specialized construction equipment. These materials are generally sourced from multiple domestic and international suppliers and distributors. While supply chain disruptions or price volatility in certain materials can occur from time to time, the segment generally has been able to obtain required materials in the normal course of business. The segment’s fabrication facility provides additional flexibility by allowing certain pipe and vessel fabrication work to be performed internally.

The markets served by the Industrial segment are competitive and include a range of regional and national industrial construction contractors, specialty mechanical contractors, and fabrication companies. Competition is based on factors including technical expertise, safety performance, project execution capability, reputation, cost competitiveness, customer relationships, and the ability to deliver projects on schedule. The segment generally competes for projects through a combination of negotiated contracts, repeat business with existing customers, and competitive bidding processes.

Teledata Segment

Our Teledata segment provides utility construction services and comprehensive technology wiring solutions to customers primarily in the Mid-Atlantic region of the U.S., with additional operations in markets across New England and the Southeast. The segment strengthens and modernizes both outside plant and inside plant infrastructure supporting information technology, operational technology, IoT connectivity, and power infrastructure.

Services provided to our outside premises customers include trenchless directional boring and excavation for underground communication and power networks, aerial cable services, and the installation of buried cable, high and low voltage electric lines, and private area outdoor lighting systems. Inside premises wiring services include structured cable installations, terminations and connectivity that provide the physical transport for high-speed data, voice, video and security networks.

Consistently, a major portion of the segment’s revenue-producing activity each year is performed pursuant to task or work orders issued under master agreements with major customers. Over recent years, major customers have included electricity cooperatives, counties and municipalities, various state government agencies, and technology-oriented government contracting firms. Through an acquisition in December 2021, the segment expanded its business footprint into the Tidewater area of Virginia. In Fiscal 2025, we hired a new chief executive officer for the segment with over 25 years of industry experience who will focus on expanding the market presence of the business segment.

Teledata segment revenues were $20.6 million, $13.5 million and $14.3 million for Fiscal 2026, Fiscal 2025, and Fiscal 2024, respectively, representing approximately 2.2%, 1.5%, and 2.5% of our consolidated revenues for the corresponding fiscal years.

The segment operates in the fragmented and competitive telecommunication and infrastructure services industry. We compete with providers ranging from regional companies to larger firms servicing multiple regions, as well as large national and multi-national contractors. We believe that we compete favorably with the other companies in our market space by emphasizing our high-quality reputation, outstanding customer base, security-cleared personnel and highly motivated work force in competing for larger and more diverse contracts.

Employees

The total number of personnel employed by us at any one time is subject to the volume and nature of construction in progress and the relative amount of work performed by subcontractors. Our skilled craft workforce typically expands and contracts based on the number of active projects and the stage of the project cycle. However, our non-craft workforce is currently at its highest level as we continue to support growth across all of our business segments. As of January 31, 2026, we had 1,409 employees, which includes craft and non-craft labor, substantially all of whom were full-time. We believe that our employee relations are generally good. We are committed to maintaining a stable and experienced workforce, and we consider employee retention to be an important factor in our ability to execute projects efficiently, meet customer expectations, and manage safety and quality performance. Our efforts to support employee retention include competitive compensation and benefits, regular communication between management and employees, training and professional development initiatives, and programs designed to promote workplace safety, employee engagement, and a culture of accountability.

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Financing Arrangements

On May 24, 2024, we executed the Second Amended and Restated Replacement Credit Agreement with an expiration date of May 31, 2027 (the “Credit Agreement”) with Bank of America, N.A. (the “Bank”), which was amended on October 23, 2025. The Credit Agreement has a base lending commitment amount of $35.0 million and establishes the interest rate for revolving loans at the Secured Overnight Financing Rate (“SOFR”) plus 1.85%. In addition to the base commitment, the credit facility includes an accordion feature that allows for an additional commitment amount of $30.0 million, subject to certain conditions. We may use the borrowing ability to cover other credit instruments issued by the Bank for our use in the ordinary course of business as defined in the Credit Agreement. Further, on May 31, 2024, we entered a companion facility, in the amount of $25.0 million, pursuant to which an overseas subsidiary of the Company may cause the Bank’s European entity to issue letters of credit on its behalf that will be secured by a blanket parent company guarantee that was issued by Argan to the Bank.

As of January 31, 2026 and 2025, we did not have any borrowings outstanding under the Credit Agreement. However, the Bank has issued a letter of credit in the amount of $0.3 million as of January 31, 2026. As of January 31, 2025, there were no outstanding letters of credit issued under the credit facilities.

We have pledged most of the Company’s assets to secure its financing arrangements. The Bank’s consent is not required for acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The Credit Agreement requires that we comply with certain financial covenants at each fiscal year-end and fiscal quarter-end. The Credit Agreement includes other terms, covenants and events of default that are customary for a credit facility of its size and nature, including a requirement to achieve positive adjusted earnings before interest, taxes, depreciation and amortization, as defined, over each rolling twelve-month measurement period. As of January 31, 2026, we were in compliance with the covenants and other requirements of the Credit Agreement.

Safety, Risk Management, Insurance and Performance Bonds

We are committed to ensuring that our employees perform their work in a safe environment. We regularly communicate with our employees to promote safety and to instill safe work habits. Each of our business segments has experienced full-time safety staff committed to ensuring a safe workplace, as well as compliance with applicable permits, insurance and laws. Our reportable incident rates using OSHA methodology, weighted by hours worked by our subsidiaries, were 0.45, 0.56, 0.43, 0.60, and 0.48 for calendar years 2025, 2024, 2023, 2022, and 2021, respectively. For calendar years 2024, 2023, 2022, and 2021, our rates were significantly lower than the national average rates in our industry (NAICS – 2379); the national average rate for calendar year 2025 has not yet been published by the Bureau of Labor Statistics.

In Fiscal 2024, we added a senior vice president, legal, to our headquarters staff. Among other duties, he contributes to and enhances our ongoing process of standardizing and minimizing the amount of commercial risk that our different operations accept in their customer contracts.

We retain qualified insurance brokerage assistance in the regular evaluation of the adequacy of insurance coverage amounts and the annual negotiation of premium amounts in the areas of property and casualty insurance, general liability, umbrella coverage, director and officer insurance, cybersecurity insurance and other specialty coverages. In a prior fiscal year, we purchased specialty insurance related to the full recovery of the research and development tax credits we claimed in our amended federal income tax returns for the year ended January 31, 2022 (“Fiscal 2022”) and the year ended January 31, 2021 (“Fiscal 2021”) (see Note 12 to the accompanying consolidated financial statements). We believe that our insurance coverage amounts are adequate, but not excessive, and provide the proper amounts of coverage where we believe insurable risks may exist.

Contracts with customers in each of our reportable business segments may require performance bonds, payment bonds, or other means of financial assurance to secure contractual performance. We maintain material amounts of cash, cash equivalents and short-term investments, and, as indicated above, we have the commitment of the Bank to issue irrevocable standby letters of credit up to an aggregate amount of $60.0 million under the credit facilities, with an accordion feature that would provide an additional Bank commitment of $30.0 million.

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Responsible Business

Our on-going commitment to environmental, health and safety, community outreach, corporate governance, and other relevant public policy matters is supported by the responsible business committee of our board of directors. Its charter requires it to assist our senior management in: (a) setting our general strategy relating to responsible business matters, as well as developing, implementing, and monitoring initiatives and policies for us based on that strategy; (b) overseeing communications with employees, investors, and other stakeholders with respect to responsible business matters; and (c) anticipating and monitoring developments relating to, and improving management’s understanding of, responsible business matters.

More information about our responsible business accomplishments can be found in the sustainability section of our website.

Materials Filed with the Securities and Exchange Commission (the “SEC”)

The public may read any materials that we file with the SEC at its public reference room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including us, at http://www.sec.gov.

We maintain a website on the Internet at www.arganinc.com that includes access to financial data. Information on our website is not incorporated by reference into this 2026 Annual Report. Copies of our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as our Proxy Statements, are available, as soon as reasonably practicable, after we electronically file such materials with, or furnish them to, the SEC, without charge and upon written request provided to our Corporate Secretary at Argan, Inc., 4075 Wilson Boulevard, Suite 440, Arlington, Virginia 22203.