AGX 10-K & 10-Q changes, risk factors and insider trading
Argan Inc. · NYSE · Construction - Special Trade Contractors · CIK 100591 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our financial results may fluctuate due to the timing of large construction projects.”
New heading “Disruptions or unfavorable changes in power market economics, including reductions in spark spreads or changes in capacity market pricing, could reduce demand for new power generation projects in certain regions.”
New heading “Changes in U.S. trade policy, including the imposition of tariffs, could increase our costs, disrupt supply chains, and reduce demand for construction projects.”
New heading “Delays or failures in obtaining required regulatory approvals, including permits, interconnection agreements, and pipeline approvals, could delay or prevent energy projects and adversely affect our results.”
New heading “Our continued success depends on our ability to attract, hire and retain talented personnel.”
New heading “Changes in tax laws or tax rates could increase our tax expense.”
Removed heading “Our dependence on large construction contracts may result in uneven financial results.”
Removed heading “Continuing disruptions to capacity auctions and corresponding prices could reduce the demand for power plants in a primary business region.”
Removed heading “Expectations of customers and investors may change with respect to sustainability practices, which may impose costs or impact our ability to obtain financing.”
Removed heading “The imposition of tariffs by the Trump Administration may impact the construction of power plants or other construction projects of our subsidiaries.”
Removed heading “Future construction projects may depend on the continuing acceptability of the hydraulic fracturing process in certain states.”
Removed heading “The inability of power project developers to receive or to avoid delay in receiving the applicable regulatory approvals relating to energy projects, including new natural gas pipelines, may result in lost or postponed revenues for us.”
Removed heading “We may be subject to increased corporate taxes in the future.”
Removed heading “Our continued success requires us to retain and hire talented personnel.”
Largest changes
“We are subject to privacy and data protection laws and regulations in the United States and internationally, including the General Data Protection Regulation (“GDPR”) in the European Union, as well as contractual obligations requiring the protection of confidential and proprietary information. Although we have implemented security measures and technologies intended to protect sensitive information and support regulatory compliance, these measures may not prevent all security incidents. …”see in full comparison
The U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to officials or others for the purpose of obtaining or retaining business.see in full comparisonWhileWewemaintainbelievepolicies,that our policiesprocedures andoversightinternalincontrolsthisdesignedareatoarepromotecomprehensivecomplianceandwitheffective,these laws. However, we cannot provideassurancesassurance that ourinternalcontrols and proceduresalwayswillprotectpreventus from the possible reckless or criminal acts committedviolations by our employees orothers.byIfthirdwepartiesareactingfound to be liable for anti-bribery law violations (either due toon ourown acts or our inadvertence, or due to the acts or inadvertence of othersbehalf, includingourpartners, subcontractors orsuppliers), we could suffer from criminal or civil penalties or other sanctions, including contract cancellations or debarment, and damage to our reputation, any of which could have a material adverse effect on our business. Litigation or investigations relating to alleged or suspected violations of anti-bribery laws, even if such litigation or investigations demonstrate ultimately that we did not violate anti-bribery laws, could be costly and could divert management’s attention away from other aspects of our business.suppliers.
“If we are found to be liable for anti-bribery law violations (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others including our partners, subcontractors or suppliers), we could suffer from criminal or civil penalties or other sanctions, including contract cancellations or debarment, and damage to our reputation, any of which could have a material adverse effect on our business. …”see in full comparison
As previously disclosed, we weresee in full comparisontargetedthebytarget of a complex criminal scheme in Fiscal2024,2024whichthat resulted in fraudulently-induced outbound wire transfers to a third-party account (see Note1817 to the accompanying consolidated financial statements).WeAlthough we areunawarenot aware of any othersignificantmaterialsecuritycybersecuritybreaches at any of our business locations. That does not suggest thatincidents, we maynotbevictimizedsubjectbytoanfutureadditionalattacksbreachorinsecuritythe future.breaches. Anysignificantsuchfuture breach of our information securityincident coulddamageadversely affect our reputation,resultbusinessin litigation and/or regulatory fines and penalties, or have other material adverse effects on our business,relationships, financial condition, results of operations or cash flows.
“The use of artificial intelligence, machine learning, data science, and similar technologies (collectively, “AI”) in our business presents risks and challenges that could have a material adverse effect on our business, results of operations, and financial condition. Currently, our use of AI is limited, but we may expand its integration into our business processes and solutions in the future. AI, including third-party AI tools, may be used in areas such as knowledge retention, risk detection, and virtual assistance. …”see in full comparison
“AI creates data security, confidentiality, and privacy risks. Unauthorized or improper use of AI tools by employees, vendors, or third parties could result in the disclosure of sensitive or proprietary information, including customer information, pricing, contract terms, and other confidential business data. In addition, we may have limited control over how third-party AI tools process, store, or protect data, even where contractual protections are in place. …”see in full comparison
Full comparison: every changed paragraph (133)
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 industry services reportable businessPower segment, the risk factor discussions included below are focused on that business. However, as a large numbermany of these same risks exist for our other reportable segments, the industrial construction servicesIndustrial segment and the telecommunications infrastructure servicesTeledata segment, a review and assessment of the following risk factors should be performed with those similarities in mind.
This section of our 2025 Annual Report may include projections, assumptions and beliefs that are intended to be “forward-looking statements.” They should be read in light of our cautionary statement regarding “forward-looking statements” presented at the beginning of this 2025 Annual Report.
Demand for our services may decrease during economic downturns or unpredictable economic cycles, which would most likelycould 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 pronesubject to cyclical fluctuations influenceddue by factors such asto economic recessions, downturns inconditions, project owners’ business cycles, materiallabor shortages,and materials constraints, subcontractor price hikes,pricing, interest rate changes, and regulatory andor political change, and other external economic factors.developments.
WhenDuring the general levelperiods of reduced economic activityactivity, deteriorates,customers uncertaintymay aboutdelay, future business prospects increases, prompting clients to potentially delayreduce, or cancel projects.projects, This includesincluding new constructionconstruction, projections,maintenance, maintenancerepairs, on major power plant components, repairs to damaged or worn equipment or other plantand outage work. TheIn addition, adverse financial condition of the industry couldconditions diminishmay reduce our customers’ ability andor willingness to fund capital expendituresexpenditures. or pursue significant projects in the future. Furthermore, specific economic, regulatory and marketThese conditions affectingcould our clients may lead to a decreaseresult in demand for our services, causing delays, reductions, or cancellations of projects essentialthat are important to our business and future business forecasts.results.
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-proceednotices-to-proceed, and our ability to successfully complete the projects that we start.
The majorityMost of our consolidated revenues relateare to performancegenerated by the power industry servicesPower segment, which represented 79%,80.1%, 73%79.3% and 76%72.6% of consolidated revenues for Fiscal 2025,2026, Fiscal 20242025 and Fiscal 2023,2024, respectively. GPS,The thePower major business component of this segment,segment earns the substantial portionmost of its revenues from execution on long-term natural gas-fired EPC services contractscontracts. withIn projectaddition, owners. Aa significant portion of our consolidated revenues eachin any given year ismay generallybe derived from EPC services provided to a smalllimited number of customers, whichand cancustomer concentration may vary from year to year (see Note 16 to the accompanying consolidated financial statements).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.
We have successfully built utility-scale solar and wind farms, biomass-fueled power plants and biodiesel energy facilities in the past, and we have renewed the pursuit of renewable energy projects that will complement our natural gas-fired EPC services projects, which will remain the core business development focus going forward.
At times, we may be awarded contracts for which commencement of project activities are delayed or canceled. Our ability to sustain revenues depends on many factors including the ability of the power industry services business to not only win the awards of significant new EPC projects, but to obtain the corresponding full notices-to-proceed and to complete its projects successfully. Failure to obtain future awards for the construction of utility-scale energy facilities and the corresponding notices to proceed with contract activities, as well as any failure to successfully complete such projects, would have adverse effects on our future revenues, profits and cash flows.
Our dependence on large construction contracts may result in uneven financial results.
Our powerPower industrysegment servicesperforms activities in any one fiscal reporting period are concentratedwork on a limited number of large construction projects during any given fiscal reporting period. Revenue for whichthese weprojects recognizeis revenuesgenerally recognized over time as we transfer control of the project asset to the customer. To a substantial extent, our contract revenues are based on theprogress relatedtoward amountscompletion, ofwhich is often measured using costs incurred. As theThe timing of equipment purchases, subcontractor servicesservices, and other contractproject eventsactivities may not be evenly distributedvary over the termslife of oura contracts,contract, thewhich amountcan ofresult totalin contractfluctuations costs may vary from quarter to quarter, creating uneven amounts ofin quarterly and/or annual consolidatedrevenues revenues.and operating results. In addition, the timing of contractproject commencements and completions may exacerbatecontribute theto unevenvariability pattern.in reported results between periods. As a resultresult, of the foregoing, future reported amounts ofour consolidated revenues, cash flowflows from operations, net income and earnings per share may vary in uneven patterns and may not be indicative of the operating results expected for any other fiscalfrom period; thus, rendering consecutive quarter comparisons of our consolidated operating results a less meaningful way to assess the growth of our business.period.
ToThe preparepreparation of consolidated financial statements in conformity with accountingU.S. principlesGAAP generallyrequires accepted in the U.S., we are requiredmanagement to make estimates, assumptionsassumptions, and judgments as of the date of such financial statements, whichthat affect the reported valuesamounts of assets and liabilities, revenues and expenses, and disclosuresrelated of contingent assets and liabilities.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.
For each of our fixed-price customer contracts, we recognize revenues over the life of the contract as performance obligations are completed by us based on the proportion of costs incurred to date compared with the total costs estimated to be incurred for the entire project, and by using the resulting percentage to update the recorded amounts of project-to-date revenues. We review and make necessary revisions to the amounts of estimated future costs on a monthly basis. In addition, contract results may be impacted by our estimates of the amounts of change orders that we expect to receive and our assessment of any contract disputes that may arise. The effects on revenues of changes to the amounts of contract values and estimated costs are recorded as catch-up adjustments when the amounts are known and can be reasonably estimated. These revisions can occur at any time and could be material. Given the uncertainties associated with the types of customer contracts that we are awarded, it is possible for contract values and actual costs to vary from estimates previously made, which may result in reductions or reversals of previously recorded revenues and profits. Our disclosures of Critical Accounting Policies and Estimates (see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations) include an expanded discussion of the estimates, judgments and assumptions that our revenue recognition accounting may require.
Project cancellations or scope modifications may occur that could reduce the amount of our project backlog and the associated revenues and profits that we actually earn. Our projects generally provide our customers with the right to terminate existing contracts unilaterally at their convenience as long as they compensate us for work already completed and compensate us for the additional costs incurred by us to terminate corresponding subcontract,subcontracts, terminate equipment orders, and demobilize and vacate construction sites. These costs would most likely be meaningful. Should any unexpected delay, suspension or termination of the work under such projects occur, our results of operations may be materially and adversely affected. Although we believe that the customer commitments represented by project backlog are firm, we cannot guarantee that amounts in project backlog will be recognized as future revenues or will result in profitable operating results.
The development of a power plant construction project is expensive. The developers of power projects may form single purpose entities, such as limited liability companies, limited partnerships or joint ventures, to perform the development activities, which are typically funded by external sources. Periodically, we provide financial support to new projects during their development phase to improve their viability and enhance our likelihood of securing the EPC contract for power plant construction. While some of these initiatives have yielded positive results and success fees, others have not, resulting in the write-off of loan and interest balances and the loss of potential construction projects.
We have provided funding to special-purpose entities for gas-fired power plant projects during the development phase, leading to the return of our initial investment, the awarding of EPC contracts with authorization to start construction, and the receipt of success fees. While some of these initiatives have yielded positive results, others have not, resulting in the write-off of loan and interest balances and the loss of potential construction projects. In Fiscal 2025, we funded a loan to a special purpose entity in the amount of $5.0 million to support the development phase of a natural gas-fired power plant project (see Note 18 to the accompanying consolidated financial statements).
Future bonding requirements may adversely affect our ability to compete for new energy plant constructioncertain projects.
Our construction contracts frequently require payment and/or performance bonds from surety companies as a condition of contract award. Although we have historically maintained sufficient bonding capacity, sureties typically issue bonds on a project-by-project basis and may require additional collateral or adjust bonding terms. Changes in market conditions, our financial position, project size, or a surety’s assessment of risk could affect the availability or cost of bonding. If bonding capacity were to become more limited, we could seek bonding from other surety providers, pursue joint ventures, increase work with clients that do not require bonds, or provide other forms of project security, such as letters of credit or cash. However, if adequate bonding or alternative arrangements were not available, our ability to compete for certain projects could be affected.
Our construction contracts frequently require that we obtain payment and/or performance bonds from surety companies on behalf of project owners as a condition to the contract award. Historically, we have had a strong bonding capacity. Under standard terms, surety companies issue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing any bonds. Not all of our projects require bonding.
Market conditions, changes in our performance or financial position, changes in our surety’s assessment of its own operating and financial risk, or larger future projects could cause our surety company to decline to issue, or substantially reduce, the amount of bonding available for our work and/or could increase our bonding costs. These actions can be taken on short notice. If our surety company were to limit or eliminate our access to new bonds, our alternatives would include seeking bonding capacity from other surety companies, joint venturing with other construction firms, increasing business with clients that do not require bonds or posting other forms of collateral for project performance, such as letters of credit or cash. We may be unable to make alternative arrangements in a timely manner, on acceptable terms, or at all. Accordingly, if we were to experience an interruption, reduction or other alteration in the availability of bonding capacity, we may be unable to compete for or work on certain projects.
Natural disasters, such as hurricanes, tornadoes, blizzards, floods and other adverse weather conditions; or other catastrophic events such as fires, public health crises, pandemics, geopolitical conflicts, terrorism and civil disturbances could disrupt our operations or the operations of one or more of our vendors or customers. In particular, theseThese types of events could shut down our construction job sites or fabrication facility for indefinite periods of time, disrupt our product supply chain or could cause our customers to delay or cancel projects. To the extent any of these events occur, our operations and financial results could be adversely affected.
Geopolitical conflicts and related global disruptions may also adversely affect energy markets and supply chains. For example, the war in Ukraine and other international conflicts have contributed to volatility in global energy supply and pricing, increased transportation costs, shipping disruptions, and delays in the delivery of materials and equipment. In addition, escalation of military conflict involving Iran could disrupt global oil and liquefied natural gas (“LNG”) markets, including potential impacts to shipping through key transit routes. These conditions may increase project costs, delay schedules, or reduce demand for certain projects.
The adverse effects of the war in Ukraine spread globally. The prolonged disruption by Russia of the supply and prices of oil and natural gas provided to Western European nations adversely affected the economies of those countries. Western European nations were forced to search for alternative supplies of oil and natural gas at higher prices or through more complicated transit routes, further disrupting global supply chains. Many resorted to seeking alternative energy sources, such as liquefied natural gas (“LNG”), which involves infrastructure challenges and elevated costs. In addition to energy supply disruptions, activities conducted by Yemen-based terrorist groups significantly endangered the key shipping route between the Red Sea and the Indian Ocean. These actions led to rerouting shipping vessels, longer transit times, and increased freight costs, compounding global supply chain challenges.
We have protections inAlthough our contracts with majorcertain customers thatinclude provisions intended to provide certainlimited relief thatfrom helpssome toof mitigatethese certain financial risks. However,risks, the effectiveness of thesesuch protectionsprotection may bedepend limited byon factors outside our control, including the financial strengthcondition of theour customer.customers. The extentultimate toimpact whichof natural disasters, human-made disastersdisasters, or other catastrophic events could harm us depends on the impactseverity, duration, and geographic scope of the event, as well as its effects on our customers, supply chains, labor forcesavailability, and numerousbroader othereconomic evolvingconditions. factors.Any of these factors could adversely affect our business, financial condition, and results of operations.
Disruptions or unfavorable changes in power market economics, including reductions in spark spreads or changes in capacity market pricing, could reduce demand for new power generation projects in certain regions.
Historically, a portion of our EPC business has been driven by the development of utility-scale power generation projects. In many regions, the economic viability of new generation projects depends on the expected margin between wholesale electricity prices and the cost of fuel and operations, commonly referred to as the spark spread. In certain wholesale markets, project economics may depend in part on revenues from capacity markets that compensate power generators for maintaining available capacity to support grid reliability. Declines in spark spreads resulting from lower power prices, higher fuel costs, or other market conditions, as well as decreases in capacity market prices or changes to capacity market rules that reduce expected revenues, could reduce the expected returns on new power generation projects and discourage or delay project development. If fewer projects are developed in regions important to our business, our revenues, profitability, and cash flows could be adversely affected.
Continuing disruptions to capacity auctions and corresponding prices could reduce the demand for power plants in a primary business region.
Historically, a number of our EPC service contracts related to the construction of natural gas-fired power plants located within the Mid-Atlantic geographic footprint of the electric power system operated by PJM Interconnection LLC (“PJM”). This entity operates a capacity market to ensure long-term grid reliability by securing the appropriate amount of power supply resources needed to meet forecasted energy demands. Capacity payments represent meaningful portions of the revenue streams of qualifying power plants. As a result of delays and changes to the capacity auction process, energy prices resulting from the auctions have fluctuated. The PJM capacity auction process continues to change due to inputs from various stakeholders and the Federal Energy Regulatory Commission (“FERC”). Uncertainty in this market, including the difficulties experienced by PJM in implementing a capacity auction design that all of its stakeholders consider to be fair, may discourage potential power plant owners from commencing the development of new power plants in this area, thereby reducing potential new business opportunities for us.
Artificial intelligence poses risks that could adversely affect our business, financial condition, and results of operations, and financial condition.operations.
We may use artificial intelligence, machine learning, and similar technologies (“AI”), including AI-enabled features in third-party products, to support our business processes. Although our current use of AI is limited, we may expand our use of these technologies over time.
AI creates data security, confidentiality, and privacy risks. Unauthorized or improper use of AI tools by employees, vendors, or third parties could result in the disclosure of sensitive or proprietary information, including customer information, pricing, contract terms, and other confidential business data. In addition, we may have limited control over how third-party AI tools process, store, or protect data, even where contractual protections are in place. AI-related laws, regulations, and contractual requirements are evolving and may impose additional compliance costs, restrict our use of AI, or expose us to regulatory investigations, litigation, or liability. Any of these risks could adversely affect our business, financial condition, and results of operations.
The use of artificial intelligence, machine learning, data science, and similar technologies (collectively, “AI”) in our business presents risks and challenges that could have a material adverse effect on our business, results of operations, and financial condition. Currently, our use of AI is limited, but we may expand its integration into our business processes and solutions in the future. AI, including third-party AI tools, may be used in areas such as knowledge retention, risk detection, and virtual assistance. While these technologies have the potential to enhance efficiency and decision-making, they also pose significant risks, including reliability issues, data security concerns, regulatory challenges, and unintended consequences. AI algorithms may be flawed or biased. As a result, the content, analysis, or recommendations generated by these tools may be inaccurate, incomplete, or misleading. Unauthorized or improper use of AI tools—whether by employees, vendors, or third parties—could lead to breaches of confidentiality, data privacy violations, or the loss of proprietary information, potentially resulting in competitive harm, reputational damage, regulatory investigations, and legal liability. Additionally, we may have limited control or visibility into how third-party AI tools and AI-powered features in third-party products process and protect our data, even where we have sought contractual protections. As our reliance on AI evolves, we will continue to assess and mitigate these risks accordingly.
If the price of natural gas increases,increases or becomes more volatile, the demand for our construction services could decline.
A significant portion of our power construction business has historically been supported by the development of combined-cycle natural gas-fired power plants. The economics of these projects, and the willingness of developers and lenders to finance them, are sensitive to natural gas prices and related market expectations. If natural gas prices increase or become more volatile, developers may delay, reduce, or cancel new natural gas-fired generation projects or may be unable to obtain construction or permanent financing on acceptable terms.
Natural gas prices may be affected by a variety of factors, including changes in domestic supply and demand dynamics, increased U.S. LNG exports, and regulatory developments affecting natural gas production. A significant portion of U.S. natural gas supply is produced using hydraulic fracturing and horizontal drilling, which remain subject to evolving federal, state, and local regulation and public opposition. If these or other factors limit natural gas production or increase price volatility, the economic attractiveness of natural gas-fired power plants could decline. Any reduction in the development of new natural gas-fired power plants could reduce demand for our EPC services and adversely affect our revenues, profitability, and cash flows.
The growth of our power business has been substantially based on the number of combined cycle gas-fired power plants built by us, as many coal-fired plants have been shut down. The use of coal as a power source has been adversely affected significantly by the plentiful supply of inexpensive natural gas that is available through the combined use of hydraulic fracturing and horizontal drilling. However, the share of electricity generated by natural gas is particularly reactive in the short term to changing natural gas prices. Even though current natural gas prices are generally low, higher than expected natural gas prices in the future, even for just the short term, could have adverse effects on the ability of independent power producers to obtain construction and permanent financing for new natural gas-fired power plants. Additionally, the increasing exports of LNG from the U.S. to global markets may impact the overall price of natural gas domestically. As LNG exports grow to meet international demand, the domestic supply of natural gas could tighten, potentially driving up prices and increasing market volatility. Such price increases could further affect the economic feasibility of new domestic natural gas-fired power plants.
Forecasts generally indicate a significant surgeincrease in electricity demand in the United States for the foreseeable future, driven largely by the expansion in the number of data centers, the increase in electric vehicle sales, and the onshoring of manufacturing facilities. We believe that these trends have resulted in increased demandsdemand for our EPC contract services. However, future softness in the demand for electrical power in the U.S. could result in the delay, curtailment or cancellation of future gas-fired power plant projects, thus decreasing the overall demand for our EPC services and adversely impacting the financial outlook for our power industry servicesPower business.
Intense global competition for engineering, procurementprocurement, and construction contracts could reduce our market share.
The EPC market for utility-scale power generation projects is highly competitive and subject to changes in participant strategies over time. While certain competitors have reduced their participation in this market or limited their willingness to enter fixed-price contracts, other competitors remain well-capitalized and have significant personnel, equipment, and operating scale. In addition, as utilities and developers pursue new generation capacity, additional firms may re-enter or expand their participation in the market.
The competitive landscape in the EPC services market for natural gas-fired power plants was altered several years ago as certain significant competitors announced their exit from the market for a variety of reasons. Others have announced intentions to avoid entering into fixed-price contracts citing the disproportionate financial risks borne by contractors. However, the market remains dynamic, and remaining competitors include committed multi-billion-dollar companies with thousands of employees. As utilities and developers seek to expand generation capacity, more firms may re-enter the market, either by restarting their EPC operations, expanding their capabilities, or shifting their contracting strategies to re-engage in bidding.
CompetingOur ability to compete effectively independs ouron marketfactors requires substantialincluding financial resources,strength, theaccess availability ofto skilled personnellabor and equipmentequipment, whenexecution neededperformance, and the effective use of technology. MeaningfulCompetitive competitionpressures ismay expectedrequire us to continueaccept inlower themargins, domesticassume market,greater andcontractual couldrisk, increaseor inoffer themore Irishfavorable and U.K markets, presenting us with significant challengesterms to our achieving strong growth rates and acceptable profit margins.customers. If we are unable to meetcompete these competitive challengessuccessfully and to win the awards of new projects thaton provideacceptable desirable margins,terms, we could lose market share to our competitors,share, experience overall reductions in futurereduced revenues and profitsprofitability, or incur losses.losses on individual projects.
The continuous riseChanges in renewableselectricity generation resource mix could possiblyaffect reducedemand thefor numbernew of futurenatural gas-fired power plant projects.
Electricity generation from utility-scale renewable resources, including solar and wind, continues to increase in the United States. This growth has been supported by regulatory and policy initiatives, tax incentives, declining technology and storage costs, and increasing energy storage capacity. As a result, utilities and developers may place greater emphasis on renewable and storage solutions when planning future generation capacity. If the development of renewable energy and energy storage accelerates faster than anticipated, or if power markets shift away from baseload generation toward alternative generation or peak-load solutions, the number or size of new natural gas-fired power plant projects could decline. Any such reduction in demand could adversely affect our future revenues, profitability, and cash flow.
The net amount of electricity generation in the U.S. provided by utility-scale solar and wind facilities continues to rise. Impetus for this growth has been provided by various factors including laws and regulations that discourage new fossil-fuel burning power plants, federal support for new carbon-reduction technologies, environmental activism, income tax advantages that promote the growth of solar and wind power, the decline in the costs of renewable power plant components and power storage, and the increase in the scale of energy storage capacity. Should the pace of development for renewable energy facilities, including solar and wind power plants, accelerate at faster rates than projected or drive a faster migration from base load to peak load power plants, the number and/or value of future natural gas-fired construction project opportunities for us may fall, which could adversely affect our future revenues, profits and cash flows.
Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions, increased costs and potential losses.
A portion of our business is conducted outside the United States, primarily in Ireland and the U.K. Our international operations are subject to economic, political, regulatory, and social conditions that may change rapidly and are outside our control. These risks include:
Our business is subject to overseas economic and political conditions that change for reasons which are beyond our control. Such changes may have unfavorable consequences for us. Operating in the European marketplace, which for us exists primarily in Ireland and the U.K., may expose us to a number of risks including:
Our level of exposure to these risks will vary onfor each significant project we perform overseas, depending on the location and the particular stage of the project. To the extent that our international business is affected by unexpected and adverse foreign economic changes, including trade retaliation from certain countries, we may experience project disruptions and losses which could significantly reduce our consolidated revenues and profits, or could cause losses reflected at the consolidated level.
Our operations are subject to compliance with federal, state and local environmental laws and regulations, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste, and the cleanup of properties affected by hazardous substances. Certain environmental laws impose substantial penalties for non-compliance and others, such as the U.S. Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),others impose strict, retroactive, and joint and several liability upon persons responsible for releases of hazardous substances. WeCompliance continuallyobligations evaluateand whetherenforcement wepriorities mustmay takechange additionalover stepstime, to ensureand compliance withcosts environmentalcould laws; however, there can be no assurance that these requirements will not changeincrease and that compliance will not add costs to our projects that could adversely affect our operating results inof the future.operations.
In addition, regulations and stakeholder expectations relating to greenhouse gas emissions disclosures and sustainability reporting are evolving and vary by jurisdiction. In the jurisdictions we operate, governments and regulatory bodies vary in their support of or opposition to sustainability matters, leading to rapid shifts in reporting obligations. New or expanded reporting requirements, including those adopted or proposed in the U.S., the European Union, and certain states, may require us to collect additional data, enhance internal controls, obtain third-party assurance, and devote significant management time and resources. These requirements may also be subject to legal, regulatory, or political changes that create uncertainty and additional compliance burdens.
Compliance with and monitoring of these evolving requirements may increase our costs, require significant resource allocation, and divert management’s attention from other operational and financial priorities.
Changes in U.S. trade policy, including the imposition of tariffs, could increase our costs, disrupt supply chains, and reduce demand for construction projects.
Changes in U.S. trade policy, including the imposition or expansion of tariffs, trade restrictions, export controls, or other regulatory measures affecting imports or international supply chains, could increase the cost or reduce the availability of materials, equipment, and components used in our projects. Such measures may also result in import delays, longer lead times, or supply chain disruptions. Responding to changes in trade policies and supply chain conditions may also require increased management attention and result in additional administrative costs.
Higher costs or supply constraints could increase project costs or affect project schedules. Although our contracts may include provisions that address certain changes in project costs or inputs, such provisions may not fully mitigate the effects of tariffs, supply disruptions, or other trade-related developments. In addition, uncertainty regarding trade policies or global supply conditions may cause customers to delay, reduce, or cancel planned construction projects. If these conditions occur, our business, financial condition, and results of operations could be adversely affected.
Delays or failures in obtaining required regulatory approvals, including permits, interconnection agreements, and pipeline approvals, could delay or prevent energy projects and adversely affect our results.
The commencement and execution of projects performed by our Power segment depend on obtaining numerous regulatory approvals, including environmental, construction, and operating permits. These approvals may be delayed, challenged, or denied due to regulatory review public opposition, litigation, or other factors outside our control. In addition, projects may be delayed or terminated if developers are unable to secure timely interconnection agreements with transmission organizations. The development of new natural gas-fired power plants may also depend on the availability of fuel supply, which in some cases requires the construction of new natural gas pipelines. Delays, opposition, or legal challenges affecting pipeline projects could further delay or prevent the development of power plants.
If required approvals are not obtained, or are delayed beyond expected timelines, construction projects may be postponed or canceled, which could adversely affect our revenues, profitability, and cash flows.
Management's Discussion & Analysis (MD&A)
New heading “860 MW Thermal Project”
New heading “1.4 GW Thermal Project”
New heading “170 MW Thermal Project”
New heading “Sandow Lakes Power Station”
New heading “Teledata Market Outlook”
New heading “NM – not meaningful”
New heading “Teledata Segment”
Removed heading “Shannonbridge Power Project”
Removed heading “ESB FlexGen Peaker Plants”
Removed heading “Other Activity Subsequent to Year-end”
Removed heading “Growing Power Demand”
Removed heading “Natural Gas Power”
Removed heading “Solar, Wind, and Battery Power”
Removed heading “The Regulatory Landscape”
Removed heading “Behind-the-Meter Power Generation”
Removed heading “Outlook for Natural Gas-Fired Power Plants”
Removed heading “Results of Operations”
Removed heading “Telecommunications Infrastructure Services”
Largest changes
“Changes in U.S. trade policy, particularly the introduction of higher and fluctuating tariffs, have created economic uncertainty, raising concerns in the construction sector about material price inflation and delivery delays. In January 2025, the U.S. announced new tariffs on imports from several nations, including Mexico, Canada, and China. Some of these tariffs were later postponed or modified. …”see in full comparison
“In August 2022, President Biden signed the IRA, a bill that funds hundreds of billions of dollars in tax subsidies intended to combat climate change among other measures, with the receipt of the majority of the tax subsidies conditioned on the extent that taxpayers “buy American” and/or pay prevailing wages, among other requirements. Existing supply chains and skilled labor pools could lack the capacity to meet the demand that the incentives were intended to create. …”see in full comparison
“Since 2007, total annual U.S. electricity demand has fluctuated, where eight of the years during that period experienced year-over-year decreases in energy consumption. However, U.S. electricity demand has since reached its highest level in two decades, reflecting a surge in consumption driven by emerging technologies and economic shifts. One prominent driver of this surge in energy demand is the rapid increase in the number of data centers, which are expanding to support the growing adoption of AI technologies. …”see in full comparison
“President Donald Trump's decision to withdraw the United States from the Paris Climate Agreement in January 2025 has significantly influenced the nation's energy production landscape. This move, coupled with a series of executive orders, has shifted federal policies to favor fossil fuel industries, impacting both renewable energy initiatives and the broader energy market. On his first day in office, President Trump declared a national energy emergency, aiming to boost domestic oil and gas production. …”see in full comparison
“In October 2021, APC UK was contracted to construct a 2 x 330 MW natural gas-fired power plant in Carrickfergus that is near Belfast, Northern Ireland, in an existing structure that was initially designed to enclose coal-fired power plant units. As previously disclosed, there were a number of challenges related to the Kilroot Project that adversely impacted our ability to execute as expected, including supply chain delays, material changes to the project, the COVID-19 omicron outbreak, the war in Ukraine and extreme weather. …”see in full comparison
“While the industrial construction market continues to face headwinds such as rising labor costs, skilled labor availability constraints, and supply chain volatility, near-term activity levels are expected to remain supported by continued investment in manufacturing, data centers, infrastructure, and energy-related facilities. We believe the Industrial segment’s geographic footprint, project execution experience, and ability to support industrial customers across multiple end markets position it to compete effectively for projects within its core regions.”see in full comparison
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This section of our 20252026 Annual Report may include projections, assumptions and beliefs that are intended to be “forward-looking statements.” They should be read inwhile light ofconsidering our cautionary statement regarding “forward-looking statements” presented at the beginning of this 20252026 Annual Report. The following discussion summarizes the financial position of Argan, Inc. and its subsidiaries as of January 31, 2025,2026, and the results of their operations for Fiscal 20252026 and Fiscal 2024,2025, and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in Item 8 of this 20252026 Annual Report.
PleaseRefer seeto “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,Operations” in the Company’s Annual Report on Form 10-K for the year ended January 31, 2024,2025, that was filed with the SEC on AprilMarch 11,27, 2024,2025, for a discussion of financial trends, variance drivers and other significant matters for Fiscal 20242025 as compared with Fiscal 2023.2024.
The Company is primarily a construction firm that conducts operations through its whollywholly-owned owned subsidiaries, GPS, APC, TRC and SMCsubsidiaries across three distinct reportable business segments.
Power: Our Power Industrysegment Services: Through GPS and APC, we provideprovides a full range of engineering, procurement, construction, commissioning, maintenance, project development and technical consulting services to the power generation market,market. includingThe thecustomers renewableinclude energy sector, for a wide range of customers, includingprimarily independent power project owners,producers, public utilities, power plant heavy equipment suppliers and other commercial firms with significant power requirements. ProjectsCustomer projects are located in the U.S., Ireland and the U.K.
Industrial: Our Industrial Constructionsegment Services: Through TRC, we provide primarilyprovides field services that supportsupporting new plant construction and additions,plant maintenance turnarounds, shutdowns and emergency mobilizationsadditions for industrial plantsfacilities primarily located in the Southeast region of the U.S. andThe thatsegment mayalso includefabricates, the fabrication, deliverydelivers, and installationinstalls ofmetal steelcomponents, components such asincluding piping systems and pressure vessels.vessels, and performs maintenance turnarounds, shutdowns, and emergency mobilizations.
Telecommunications Infrastructure ServicesTeledata: ThroughOur SMC,Teledata whichsegment conducts business as SMC Infrastructure Solutions, we provideprovides project management, construction, installationinstallation, maintenance, repair, and maintenanceemergency response services toacross commercial,power localdistribution governmentand information, communications, and data networks. The segment’s customers include commercial and industrial organizations, as well as state and federal government customersagencies, primarily inthroughout the Mid-Atlantic region of the U.S.
AtAs of January 31, 20252026 and 2024,2025, our consolidated project backlog amount of $1.4$2.9 billion and $0.8$1.4 billion, respectively, consisted substantially of projects within our power industry services reportingPower segment.
Our reportedThe amount of our project backlog reported at a point in time represents the totalexpected revenues from the remaining work on projects where the scope is sufficiently defined and the 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 projects awarded to us that we consider to be firm as of that date less the amounts of revenues recognized to date on the corresponding projects. Typically, we include the total value of EPC services and other major construction contractscontract in project backlog upon receiving a notice to proceed from the project owner. WhenIn provided with an LNTP, we usually record onlymaking the valuedetermination of project backlog, management may consider several factors, including terms of the contract related tocontract, the LNTP initially. Nevertheless, the inclusiondegree of contract values in project backlog may require management judgment based on the factsfinancing and circumstances.permitting, Itand ishistorical importantexperience towith notesimilar thatcontracts. theThe start of new projects is primarily controlled by project owners and that delays may occur that are beyond our control.
We are committed to the construction of state-of-the-art, natural gas-fired power plants, as important elements of our country’s electricity-generation mix now and in the future. We target natural gas-fired power plant,plants, renewable energy plantplants, energy storage, and industrial construction opportunities in the U.S., and natural gas-fired power plants and biomass power plants in Ireland and the U.K. Our vision is to safely contribute to the construction of the energy infrastructure and state-of-the-art industrial facilities that are essential to future economic prosperity in the areas where we operate. We intend to realize this vision with motivated, creative, high-energy and customer-driven teams that are committed to delivering the best possible project results each and every time.
860 MW Thermal Project
In October 2025, we entered an EPC services contract and received the corresponding full notice to proceed (“FNTP”) for the construction of an approximately 860 MW natural gas-fired power plant located in the ERCOT market. Construction began during the fourth quarter of Fiscal 2026, and the project has an expected completion date in calendar year 2028.
1.4 GW Thermal Project
In October 2025, we received FNTP on an EPC services contract for a 1.4 GW combined-cycle natural gas-fired power plant in Ward County, Texas. Construction began during the fourth quarter of Fiscal 2026, and the project has an expected completion date in calendar year 2029.
170 MW Thermal Project
In July 2025, we entered an EPC services contract for the construction of a power plant with a planned electricity generation capacity of approximately 170 MW in County Meath, Ireland. Project activity commenced in the third quarter of Fiscal 2026. The project has an expected project completion date in calendar year 2028.
Sandow Lakes Power Station
In April 2025, we received a notice to proceed on an EPC services contract to build a 1.2 GW combined-cycle natural gas-fired power plant in Lee County, Texas. Project activity commenced in the second quarter of Fiscal 2026. The project has an expected completion date in calendar year 2028.
In January 2025, APCwe entered into an EPC services contract forto build an approximately 300 MW biofuel power plant located in County Kerry, Ireland. The Tarbert Next Generation Power Station will consist of Ansaldo Energia’s AE94.3A turbine that will run on 100% sustainable biofuels, specifically hydrotreated vegetable oil,oil. withProject activity commenced in the potentialfirst toquarter convertof toFiscal hydrogen.2026. The flexibleproject powerhas generatedan at the Tarbert Next Generation Power Station will help to support Ireland’s energy security while delivering a renewables-led system. Enabling works are now underway ahead of full construction commencing Fiscal 2026 with plannedexpected completion date towards the end of calendar year 2027.
In December 2024, GPSwe entered into an EPC services contract and received the corresponding FNTP withto a customer forbuild an approximately 700 MW combined-cycle natural gas-fired power plant located in the United States.U.S. Project activity commenced in the fourth quarter of Fiscal 2025. Project completion is scheduled for calendar year 2028.
In June 2024, we entered a subcontract and received FNTP for the installation of five 90 MW gas turbines for the dedicated supply of power to a LNG facility in Louisiana. This project, led by our Power segment, was a collaboration with our Industrial segment. Project work was completed during the first half of Fiscal 2026.
In August 2024, we received FNTP on an EPC services contract to construct a utility-scale solar field in Illinois with the capacity to provide 405 MW of electrical power. Project completion is scheduled for Fiscal 2027.
Between January and early May 2024, we received FNTPs for three state-of-the-art solar energy and battery energy storage facilities in Illinois. The three projects will cumulatively represent 160 MW of electrical power and 22 MW of energy storage. Two of these projects were completed in Fiscal 2025. Completion of the final project, which has experienced certain regulatory delays, is expected to occur within the first half of Fiscal 2027.
In April 2024, GPS executed an LNTP with a customer to construct a utility-scale solar field in Illinois with the capacity to provide 405 MW of electrical power (the “405 MW Midwest Solar Project”). In August 2024, GPS received a full release for the activities on the EPC contract. The unique, multi-phased project includes solar-tracking panels that can be stowed by remote command for expected adverse weather events and will use pre-existing transmission and utility infrastructure from a nearby retired coal power plant. Project completion is scheduled for the first half of the fiscal year ending January 31, 2027 (“Fiscal 2027”).
In October 2022, GPS added to project backlog the EPC services contract value of the Trumbull Energy Center, a 950 MW natural gas-fired power plant now under construction in Lordstown, Ohio (the “Trumbull Energy Center”). We received the FNTP from the project owner, Clean Energy Future-Trumbull, LLC, in November 2022. This combined cycle power station will consist of two Siemens Energy SGT6-8000H gas-fired, high efficiency, combustion turbines with two heat recovery steam generators and a single steam turbine. Project completion is scheduled for the first quarter of Fiscal 2027.
In August 2023, GPS executed LNTPs for three solar and battery projects in Illinois (the “Midwest Solar and Battery Projects”). Under the LNTPs, GPS commenced early engineering and design activities as well as procurement of major equipment for construction of state-of-the-art solar energy and battery energy storage facilities. Between January and early May 2024, GPS received FNTPs on all three of the solar and battery projects. The three projects will cumulatively represent 160 MW of electrical power and 22 MW of energy storage. Two of these projects were completed in the fourth quarter of Fiscal 2025. Completion of the final project is expected in Fiscal 2026.
In JuneNovember 2024,2022, GPS entered into a subcontract andwe received FNTP forrelated theto installationan ofEPC fiveservices 90 MW gas turbinescontract for the dedicated supplyconstruction of power to a liquified950 MW combined-cycle natural gasgas-fired (“LNG”)power facilityplant in Louisiana.Lordstown, ThisOhio. project,Substantial ledcompletion byof GPS,the isproject awas collaborationreached withduring TRCthe andfourth APC.quarter of Fiscal 2026. Project completion is scheduled for the first half of Fiscal 2026.2027.
Shannonbridge Power Project
APC entered into an EPC services contract with GE Vernova for the construction and commissioning of an open-cycle thermal power facility in County Offaly, Ireland, that has the capacity to generate approximately 264 MW of temporary emergency electrical power (the “Shannonbridge Power Project”). In August 2023, APC received the FNTP on this project. Substantial completion of this project, that is defined in the corresponding contract as system turnover for commissioning, occurred in March 2024, and as of January 31, 2025, no amounts related to this project remained in project backlog.
ESB FlexGen Peaker Plants
In May 2022, APC entered into engineering and construction services contracts with the ESB to construct three 65 MW aero-derivative gas turbine flexible generation power plants in and around the city of Dublin, Ireland (“ESB FlexGen Peaker Plants”). Two of the power plants, the Poolbeg and Ringsend FlexGen Power Plants, are located on the Poolbeg Peninsula, and the Corduff FlexGen Power Plant is located in nearby Goddamendy. Substantial completion of each power facility occurred during the third quarter of Fiscal 2025, and as of January 31, 2024, no amounts related to these projects remained in project backlog.
TRCIndustrial Segment Project Backlog
As of January 31, 2026, our Industrial segment’s project backlog was approximately $253.0 million as compared to $53.2 million on January 31, 2025. During Fiscal 2026, the Industrial segment added contracts to its project backlog related to an automotive plant, data centers, an aluminum rolling and recycling facility, a water treatment plant, and facilities related to certain other industries.
As of January 31, 2025, TRC’s project backlog was approximately $53.2 million as compared to $127.5 million on January 31, 2024. For Fiscal 2025 and Fiscal 2024, TRC generated $167.6 million and $142.8 million in revenues, respectively. The increase in revenues for the current year from the comparative prior period highlights the results of our successful business development efforts in recent years with both new and recurring clients, particularly in securing larger industrial field service construction projects. Despite the decrease in the amount of TRC’s project backlog during the current year, we are encouraged by the number and size of opportunities in our project pipeline, and we expect the TRC project backlog will grow in Fiscal 2026.
Other Activity Subsequent to Year-end
In February 2025, an EPC services contract was awarded to GPS by Sandow Lakes Energy Company, LLC for a 1.2 GW ultra-efficient natural gas-fired power plant in Lee County, Texas. This project will be added to backlog upon receipt of a FNTP. Construction of this plant, which will be powered by two gas-fired turbines supplied by Siemens Energy, is scheduled to commence later this year and the project owner expects to commence power generation in 2028.
In October 2021, APC UK was contracted to construct a 2 x 330 MW natural gas-fired power plant in Carrickfergus that is near Belfast, Northern Ireland, in an existing structure that was initially designed to enclose coal-fired power plant units. As previously disclosed, there were a number of challenges related to the Kilroot Project that adversely impacted our ability to execute as expected, including supply chain delays, material changes to the project, the COVID-19 omicron outbreak, the war in Ukraine and extreme weather. Unresolved variations and claims disrupted the execution and harmed the cash flow of this project.
APC UK provided 14 days’ notice to terminate as a result of project owner breaches of the contract. Those breaches were not resolved during that 14-day period, as a result of which the contract terminated on May 3, 2024. Subsequently, the project owner made a draw for the full amount of a $9.2 million irrevocable letter of credit, or on-demand performance bond, issued by the Company’s bank. This amount is now part of the open and disputed claims related to this project because APC UK and the Company believe the project owner initiated the draw without cause and, therefore, the amount should be refunded. This amount is included in accounts receivable as of January 31, 2025.
WeIn haveprior fiscal years, our U.K subsidiary recognized an estimated contract loss related to thean Kilrootoverseas Projectproject in the amount of approximately $13.4 million, of which $3.4 million was recorded during Fiscal 2025 and the remainder was recorded in theFiscal prior2024. fiscalOur year.U.K APC UKsubsidiary has significant billable receivables, unresolved contract variations and claims for extensions of time, among other issues, related to thean Kilroot Project. Theoverseas project owner has asserted counterclaims that APC UK disputes. APC UK will continue to pursue all of its rights under the contract (see Note 10 to the accompanying consolidated financial statements).
Growing Power Demand
Since 2007, total annual U.S. electricity demand has fluctuated, where eight of the years during that period experienced year-over-year decreases in energy consumption. However, U.S. electricity demand has since reached its highest level in two decades, reflecting a surge in consumption driven by emerging technologies and economic shifts. One prominent driver of this surge in energy demand is the rapid increase in the number of data centers, which are expanding to support the growing adoption of AI technologies. These facilities require substantial amounts of electricity to power advanced computing infrastructure, positioning them as a major contributor to future electricity demand. Technology companies with AI ambitions have begun exploring deals to bring more power to the grid in order to secure long-term power contracts to address their significant electricity demand. However, advancements in AI efficiency—as highlighted by DeepSeek, a generative AI model—could reduce the power required per computation, potentially moderating the overall anticipated surge in electricity demand. If these efficiency gains outpace current expectations, the anticipated expansion of data center power needs might be significantly lower than forecasted.
Other factors contributing to the projected growth of electricity demand in the U.S. are the accelerating shift toward electric vehicles (“EVs”) and the trend of onshoring manufacturing facilities. As more drivers transition to EVs, the need for electricity to power charging networks will grow significantly, further straining grid capacity. Meanwhile, companies relocating production to the U.S. to enhance supply chain resilience are increasing the energy requirements of industrial operations. Combined, these factors underscore a growing imperative for the U.S. energy sector to adapt to rising electricity demands in the coming decades.
Keeping up with growing energy demand is further challenged by the aging fleet of traditional power facilities that are at or nearing the end of their operational life. Throughout the U.S., the risk of electricity shortages grows as the retirement of traditional power plants outpaces their replacement. While renewable energy sources like solar and wind are expanding, they often cannot provide the same level of consistent, around-the-clock power generation as the retiring fossil-fuel plants. Electric-grid operators are warning that power-generating capacity is struggling to keep up with demand, a gap that could lead to additional rolling blackouts during heat waves or other peak power periods. As demand for electricity continues to surge—driven by factors such as an increase in data center development, industrial expansion, and the increasing electrification of transportation—these closures could place even greater strain on an already burdened grid, heightening reliability concerns across multiple regions.
Natural Gas Power
The overall growth of our power business has been substantially based on the number of combined cycle and simple cycle gas-fired power plants built by us, as many coal-fired plants have been shut down in the U.S. In 2010, coal-fired power plants accounted for about 45% of net electricity generation in the U.S. For 2024, coal fueled approximately 16% of net electricity generation. It has been reported that the average age of the active plants in the coal-fired fleet approximates 45 years old with an average life span of 50 years; the last coal-fired power plant built in the U.S. was constructed in 2015. On the other hand, natural-gas fired power plants provided approximately 42% of the electricity generated by utility-scale power plants in the U.S. in 2024, representing an increase of 70% in the amount of electrical power generated by natural gas-fired power plants since 2010. Natural gas-fired power plants provided approximately 24% of net electricity generation in 2010.
There exist certain headwinds confronting a significant resurgence in the pace of planning new developments of gas-fired power plants. Persistent supply chain constraints, which delay critical equipment delivery, and interconnect challenges that complicate grid integration delay project timelines and strain the availability of project financing. In addition, various cities, counties and states have adopted clean energy and carbon-free goals or objectives with achievement expected by a certain future date, typically 10 to 30 years out.
However, there appears to be a growing realization that such carbon-free goals present risks to the reliability of the electricity grids. For example, in November 2023, Texas voters approved the $10 billion Texas Energy Fund (“TEF”), thereby establishing a pool of funds intended to provide financing to projects that will enhance grid reliability and incentivize new dispatchable power generation projects, with a significant focus on natural gas-fired power plants. Shortly thereafter, the Public Utility Commission of Texas selected 17 natural gas-fired generation projects, totaling nearly 10 GW, to advance through a due diligence review, representing $5.4 billion in potential state-backed loans. Initial disbursements for the projects are expected to begin in late 2025, with construction on several sites already underway.
Solar, Wind, and Battery Power
The net amount of electricity generation in the U.S. provided by utility-scale solar photovoltaic and wind facilities continues to rise. Together, such power facilities provided approximately 16%, 15% and 13% of the net amount of electricity generated by utility-scale power facilities in 2024, 2023 and 2022, respectively. The EIA projected that new renewable power capacity will continue to be added to the utility-scale power fleet in the U.S. at a brisk pace, attributable to declines in costs of components for renewable power plants and power storage, an increase in the scale of energy storage capacity (i.e., battery farms and other energy storage technologies), and the availability of valuable tax credits.
Battery storage has become a critical component in integrating renewable energy into the grid, addressing the intermittency of solar and wind power. In 2024, U.S. battery storage capacity nearly doubled, with developers adding 14.3 GW to the existing 15.5 GW. This rapid expansion enhances grid reliability and flexibility, allowing excess energy generated during peak production periods to be stored and used when demand is high or production is low. The integration of battery storage systems not only supports the stability of the power grid but also contributes to the economic viability of renewable energy projects.
Declining capital costs for solar panels, wind turbines and battery storage, as well as government subsidies like those included in the IRA, were projected to result in renewables becoming increasingly cost effective compared with the alternatives when the costs of building new power capacity were considered. The EIA indicated that for 2024, of the approximately 62.8 gigawatts of new utility-scale electric-generating capacity that was planned to be added to U.S. power grids, approximately 58% was expected to come from solar facilities, and 23% from battery storage.
Nuclear Power
Over the last several decades, the number of operating nuclear reactors has declined, with only four reactors entering commercial operation in the past 30 years—the most recent being Vogtle Units 3 and 4 in Georgia, which became operational in July 2023 and April 2024, respectively. These projects faced significant cost overruns—more than twice their initial estimates—and substantial delays, prompting the industry to shift its focus toward smaller, more economical designs such as small modular reactors. There is growing interest in expanding nuclear power production due to its minimal carbon footprint, but the limited industry activity over the past three decades has created challenges in ramping up development. As a result, it is widely expected that it could take up to a decade before the nuclear sector begins actively adding new plants to the power grid at scale.
The Regulatory Landscape
President Donald Trump's decision to withdraw the United States from the Paris Climate Agreement in January 2025 has significantly influenced the nation's energy production landscape. This move, coupled with a series of executive orders, has shifted federal policies to favor fossil fuel industries, impacting both renewable energy initiatives and the broader energy market. On his first day in office, President Trump declared a national energy emergency, aiming to boost domestic oil and gas production. This declaration has led to the suspension of certain environmental regulations, expedited approvals for fossil fuel projects, and the lifting of moratoriums on offshore drilling. The administration also established the National Energy Dominance Council to further streamline energy infrastructure projects and reduce regulatory barriers. These actions are intended to enhance energy independence and stimulate economic growth within traditional energy sectors. However, regulatory changes under the current administration are occurring at a rapid pace, which poses risks that the industry is unable to adapt in a timely manner.
In August 2022, President Biden signed the IRA, a bill that funds hundreds of billions of dollars in tax subsidies intended to combat climate change among other measures, with the receipt of the majority of the tax subsidies conditioned on the extent that taxpayers “buy American” and/or pay prevailing wages, among other requirements. Existing supply chains and skilled labor pools could lack the capacity to meet the demand that the incentives were intended to create. Therefore, the subsidies may not have provided the economic incentives to renewable and other energy project owners to the extent that was expected. Upon taking office in January 2025, President Trump initiated a 90-day review of aspects of the IRA and the Infrastructure Investment and Jobs Act. This action has paused disbursements of certain funds, including grants and loans, pending a review to ensure alignment with the new administration’s energy policies. This pause introduces additional uncertainty for ongoing and planned projects that rely on IRA incentives.
In May 2023, the Biden administration proposed new rules for the Environmental Protection Agency (the “EPA”) that were intended to drastically reduce greenhouse gases from coal- and gas-fired power plants that officials admit will cost such plants billions of dollars to comply fully by 2042. In April 2024, the EPA issued final rules that require coal-fired power plants that are expected to operate beyond 2039 to reduce their carbon emissions by 90% prior to 2032. For new gas-fired power plants, the rules require a sliding scale of carbon capture up to 90% based on the operational load of the individual power plant. Rules for existing natural gas power plants have been delayed until 2025 in response to concern that such rules could affect grid reliability. President Trump has expressed strong opposition to the EPA’s emissions-regulating rules and has pledged to abolish them.
In June 2023, President Biden signed a bill that included reforms for certain elements of the permitting process for energy projects. Following the 2024 presidential election, President Trump has taken more significant steps to modify the permitting process. In January 2025, he signed executive orders prioritizing oil, gas, nuclear, coal, hydropower, biofuel, and critical mineral projects, while notably excluding wind and solar initiatives. These orders aim to expedite permitting for specific energy sectors by proposing changes to the National Environmental Policy Act (“NEPA”) to facilitate faster approvals.
In May 2024, the Biden administration launched the Federal-State Modern Grid Deployment Initiative, a collaborative measure between the federal government and twenty-one states intended to prioritize efforts that support the adoption of modern grid solutions to expand grid capacity and build modern grid capabilities for both new and existing transmission and distribution lines.
Changes in U.S. trade policy, particularly the introduction of higher and fluctuating tariffs, have created economic uncertainty, raising concerns in the construction sector about material price inflation and delivery delays. In January 2025, the U.S. announced new tariffs on imports from several nations, including Mexico, Canada, and China. Some of these tariffs were later postponed or modified. While intended to support broader policy objectives, these tariffs could disrupt supply chains, impact trade agreements, and increase costs while limiting access to materials essential for project execution. As trade negotiations continue and new policies are introduced, the tariff situation remains fluid, adding to the unpredictability of material costs and supply chain stability. The uncertainty surrounding trade policies may deter investment in new power plant or industrial construction projects, as stakeholders assess the financial viability amid fluctuating costs.
Behind-the-Meter Power Generation
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10–Q, carefully consider the factors discussed in Part I, Item 1A Risk Factors in our Annual Report on Form 10–K, which could materially affect our business, financial condition, or future results.
Largest changes
“In addition to the other information set forth in this Quarterly Report on Form 10–Q, carefully consider the factors discussed in Part I, Item 1A Risk Factors in our Annual Report on Form 10–K, which could materially affect our business, financial condition, or future results.”see in full comparison
“There have been no material changes to the risk factors disclosed in our Annual Report.”see in full comparison
Full comparison: every changed paragraph (2)
In addition to the other information set forth in this Quarterly Report on Form 10–Q, carefully consider the factors discussed in Part I, Item 1A Risk Factors in our Annual Report on Form 10–K, which could materially affect our business, financial condition, or future results.
There have been no material changes to the risk factors disclosed in our Annual Report.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the Results of Operations for the Six Months Ended July 31, 2026 and 2025”
New heading “Industrial Segment”
New heading “Teledata Segment”
New heading “Cost of Revenues”
New heading “Selling, General and Administrative Expenses”
New heading “Other Income, Net”
New heading “Provision for Income Taxes”
New heading “Deferred Tax Assets and Liabilities”
Largest changes
“Comparison of the Results of Operations for the Six Months Ended July 31, 2026 and 2025”see in full comparison
The pace of new power generation development continues to be constrained by a limited number of experienced EPC contractors, equipment supply limitations, interconnection delays, and specialized labor availability. Lead times for large gas turbines, transformers, and other grid equipment have extended meaningfully beyond historical norms as manufacturer order books have expanded, and equipment costs have risen accordingly. Competition for skilled craft labor has also intensified, as data center, semiconductor, liquefied natural gas, and industrial construction activity often draw from the same regional labor pools. These dynamics have contributed to a supply-constrained environment for large-scale power generation construction, which we believe supports a strong pipeline of project opportunities for contractors with demonstrated execution experience. Our backlog growth over the past year reflects these conditions and the continued demand for experienced contractors capable of executing complex power generation projects. However, the timing and extent of future project awards remain subject to a variety of factors, including regulatory developments, financing conditions, permitting timelines, equipment availability, and broader economic conditions, any of which could affect the pace at which new power generation projects move forward. For example, community opposition to new large-scale data center development has contributed to moratoria and other restrictions recently adopted or proposed in several states and localities, which could moderate the pace of load growth in affected markets, although these measures are directed at data center development rather than power generation.see in full comparison
“In connection with the ValCor acquisition, we may be required to pay contingent consideration in cash over the three-year period following the closing upon the satisfaction of specified conditions, and to pay additional cash and issue shares of our common stock under a three-year deferred compensation arrangement with a key employee of ValCor upon the achievement of specified performance targets. The purchase price also remains subject to customary post-closing adjustments, including those related to net working capital and indemnification obligations. …”see in full comparison
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The following discussion summarizes the financial position of Argan, Inc. and its subsidiaries as of AprilJuly 30,31, 2026, and the results of their operations for the three and six months ended AprilJuly 30,31, 2026 and 2025, and should be read in conjunction with (i) the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (ii) the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for Fiscal 2026 that was filed with the SEC on March 26, 2026 (the “Annual Report”).
These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable when made, we cannot guarantee future results, levels of activity, performance, or achievements.
Our forward-looking statements, financial position and results of operations, are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for existing operations that do not include the potential impacts of any future acquisitions.
There are a number of important factors that could cause our actual results to differ materially from the results anticipated by our forward-looking statements, which include, but are not limited to:
Additional factors include those described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, including under the captions Risk Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Business, in our quarterly reports on Form 10-Q, including under the captions Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in our subsequent filings with the SEC.
There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligation to update or revise any forward-looking statements except as required by law. You should not place undue reliance on any forward-looking statements that we may make.
Our forward-looking statements, by their nature, involve significant risks and uncertainties (some of which are beyond our control) and assumptions. They are subject to change based upon various factors including, but not limited to, the risks and uncertainties described in this Quarterly Report on Form 10-Q and our Annual Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, actual results may vary in material respects from those projected in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Industrial: Our 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. andThe thatsegment mayalso includefabricates, the fabrication, delivery,delivers, and installation ofinstalls metal components such as piping systems and pressure vessels. Its customers include datacenter developers and companies in the power, petrochemical, biopharmaceutical, pulp and paper, and specialty chemical industries, among other industrial end markets.
Teledata: Our 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 regionand New England regions of the U.S.
Acquisition
On July 31, 2026, we acquired all of the membership interests of ValCor for total consideration of approximately $9.4 million, consisting of $8.0 million in cash, $0.5 million of our common stock issued from treasury, and $0.9 million for the acquisition-date fair value of contingent consideration. ValCor is reported within our Teledata segment. See Note 14 to the accompanying condensed consolidated financial statements.
The acquisition extends the geographic reach of our Teledata segment into New England and adds a customer base of defense and aerospace organizations that complements the segment’s existing commercial, industrial, and government customers. Because the acquisition closed on the last day of the quarter, ValCor did not contribute revenues or earnings to our results of operations for the three and six months ended July 31, 2026. The acquisition was not material to our condensed consolidated financial statements, and we do not expect it to have a material effect on our consolidated results of operations or financial condition.
Most of our consolidated revenues relate to performance in the U.S. by the Power segment, which provides EPC services to design, build, and commission large-scale energy projects. In the U.S., electricity demand has reached its highest level in two decades, driven by the build-out of data centers supporting artificial intelligence technologies, the adoption of electric vehicles, and the reshoring of manufacturing activities. Keeping up with growing energy demand is further challenged by the aging fleet of traditional power facilities that are at or nearing the end of their operational lives. Throughout the U.S., the risk of electricity shortages is rising as the retirement of traditional power plants outpaces their replacements. Grid operators have emphasized the need for additional dispatchable, reliable power sources to support system stability, particularly during periods of peak demand or reduced renewable output. Natural gas-fired power plants are expected to remain a key component of future capacity additions due to their cost-effectiveness, reliability, and ability to support intermittent energy sources.
Throughout the U.S., the risk of electricity shortages is rising as the retirement of traditional power plants outpaces their replacements. Grid operators have emphasized the need for additional dispatchable, reliable power sources to support system stability, particularly during periods of peak demand or reduced renewable output. Natural gas-fired power plants are expected to remain a key component of future capacity additions due to their cost-effectiveness, reliability, and ability to support intermittent energy sources.
The pace of new power generation development continues to be constrained by a limited number of experienced EPC contractors, equipment supply limitations, interconnection delays, and specialized labor availability. Lead times for large gas turbines, transformers, and other grid equipment have extended meaningfully beyond historical norms as manufacturer order books have expanded, and equipment costs have risen accordingly. Competition for skilled craft labor has also intensified, as data center, semiconductor, liquefied natural gas, and industrial construction activity often draw from the same regional labor pools. These dynamics have contributed to a supply-constrained environment for large-scale power generation construction, which we believe supports a strong pipeline of project opportunities for contractors with demonstrated execution experience. Our backlog growth over the past year reflects these conditions and the continued demand for experienced contractors capable of executing complex power generation projects. However, the timing and extent of future project awards remain subject to a variety of factors, including regulatory developments, financing conditions, permitting timelines, equipment availability, and broader economic conditions, any of which could affect the pace at which new power generation projects move forward. For example, community opposition to new large-scale data center development has contributed to moratoria and other restrictions recently adopted or proposed in several states and localities, which could moderate the pace of load growth in affected markets, although these measures are directed at data center development rather than power generation.
As of AprilJuly 30,31, 2026 and January 31, 2026, our consolidated project backlog amounts of $2.8$2.5 billion and $2.9 billion, respectively, consisted substantially of projects within our Power segment.
Sandow Lakes Power Station (“1.2 GW Power Station”)
In August 2024, we received FNTP on an EPC services contract to construct a utility-scale solar field in Illinois with the capacity to provide 405 MW of electrical power. ProjectThe project is expected to reach substantial completion is scheduled forduring the fiscal yearquarter ending JanuaryOctober 31, 2027 (“Fiscal 2027”).2026.
Between January and early May 2024, we received FNTPs for three state-of-the-art solar energy and battery energy storage facilities in Illinois. The three projects will cumulatively represent 160 MW of electrical power and 22 MW of energy storage. Two of these projects were completed in Fiscal 2025. Substantial completion for the remaining project was achieved during the first quarter of the fiscal year ending January 31, 2027 (“Fiscal 2027.2027”), and final completion was achieved subsequent to July 31, 2026.
As of AprilJuly 30,31, 2026, the Industrial segment’s project backlog was approximately $225.5$209.6 million as compared to $253.0 million on January 31, 2026. In November 2025, we were awarded a contract for the fabrication of approximately 2,000 horizontal pressure vessels intended for use in thermal energy storage and chilled water buffer cooling systems at the customer's data center facilities. To support execution of this contract,contract and future orders, we purchased land in Farmville, North Carolina for construction of an additional fabrication facility, which is expected to be completed during the third quarter of Fiscal 2027.
Comparison of the Results of Operations for the Three Months Ended AprilJuly 30,31, 2026 and 2025
The following schedule compares our operating results for the three months ended AprilJuly 30,31, 2026 and 2025 (dollars in thousands):
The revenues of the Power segment increased by 41.4%,52.9%, or $66.3$104.3 million, to $226.7$301.2 million for the three months ended AprilJuly 30,31, 2026 compared with revenues of $160.4$196.9 million for the three months ended AprilJuly 30,31, 2025 as the quarterly construction activities increased for the 1.4 GW Thermal Project, the 700 MW Combined-Cycle Project, the Sandow1.2 LakesGW Power Station, and the 860 MW Thermal Project. The increaseprimary indrivers for this segment’s revenues betweenfor quartersthe wasthree partiallymonths offsetended byJuly decreased31, 2025, were the construction activitiesof associatedthe with405 MW Midwest Solar Project, the Midwest Solar and Battery Projects, and the Trumbull Energy Center. The revenues of this business segment represented approximately 77.9%78.4% of consolidated revenues for the quarter ended AprilJuly 30,31, 2026 and 82.8% of consolidated revenues for the corresponding prior year quarter.
The primary drivers for this segment’s revenues for the three months ended April 30, 2025, were the construction of the Trumbull Energy Center and the 405 MW Midwest Solar Project.
The revenues of the Industrial segment increased by $29.1$40.1 million, or 99.8%,111.2%, to $58.3$76.2 million for the three months ended AprilJuly 30,31, 2026 compared to revenues of $29.2$36.1 million for the three months ended AprilJuly 30,31, 2025, as the amounts of field services construction activities and vessel fabrication work increased between periods. For the three months ended AprilJuly 30,31, 2026 and 2025, the revenues of this segment represented 20.0%19.8% and 15.1%15.2% of consolidated revenues for the corresponding periods, respectively.
The revenues of the Teledata segment were $6.0$6.6 million for the three months ended AprilJuly 30,31, 2026, compared with revenues of $4.1$4.7 million for the three months ended AprilJuly 30,31, 2025.
Due primarily to the increase in consolidated revenues for the three months ended AprilJuly 30,31, 2026 compared with revenues for the three months ended AprilJuly 30,31, 2025, consolidated cost of revenues also increased. These costs were $229.8$309.8 million and $156.8$193.5 million for the three-month periods ended AprilJuly 30,31, 2026 and 2025, respectively.
For the three-month period ended AprilJuly 30,31, 2026, we reported a consolidated gross profit of approximately $61.1$74.2 million, which represented a gross profit percentage of approximately 21.0%19.3% of corresponding consolidated revenues. For the three-month period ended AprilJuly 30,31, 2025, we reported a consolidated gross profit of approximately $36.9$44.3 million, which represented a gross profit percentage of approximately 19.0%18.6% of corresponding consolidated revenues. The gross profit percentage increased between periods primarily due to the changing mix of projects and contract types,types as well asand strong execution in our Power segment. The increase in gross profit percentage was partially offset by decreased performance on thecertain finalprojects Midwestin Solarour Industrial and BatteryTeledata Project, which enabled us to reach substantial completion ahead of schedule.segments. The gross profit percentages of corresponding revenues for the Power, Industrial, and the Teledata segments were 23.6%,22.4%, 11.8%7.3% and 11.0%,16.6%, respectively, for the quarter ended AprilJuly 30,31, 2026. The gross profit percentages of corresponding revenues for the Power, Industrial, and the Teledata segments were 20.6%,19.6%, 10.8%12.5% and 18.0%,24.7%, respectively, for the quarter ended AprilJuly 30,31, 2025.
These costs were $15.7$17.4 million and $12.5$14.2 million for the three months ended AprilJuly 30,31, 2026 and 2025, respectively, and represented 5.4%4.5% and 6.5%6.0% of corresponding consolidated revenues, respectively.
For the three months ended AprilJuly 30,31, 2026 and 2025, the net amounts of other income were $8.4$10.1 million and $5.4$5.6 million, respectively, which primarily reflected income earned during the periods on investments, cash and cash equivalent balances. The increase in other income, net, period-over-period was driven by higher average balances of cash and invested funds, partially offset by a lower weighted average annual yield during the three months ended AprilJuly 30,31, 2026 compared to the same period in the prior year.
We recorded income tax expense for the three months ended AprilJuly 30,31, 2026 in the net amount of approximately $7.7$13.6 million. Our effective income tax rate for the three months ended AprilJuly 30,31, 2026 was 14.3%.20.3%. This effective tax rate differed from the U.S. federal statutory rate of 21% due primarily to the favorable tax benefitsbenefit resulting from the vesting of restricted stock units and stock option exercises and other share-based award settlements during the period.
We recorded income tax expense for the three months ended AprilJuly 30,31, 2025 in the net amount of approximately $7.2$0.4 million. Our effective income tax rate for the three months ended AprilJuly 30,31, 2025 was 24.3%.1.0%, This effective tax ratewhich differed from the U.S. federal statutory rate of 21% due primarily to the typicallyfavorable unfavorabletax estimatedbenefit effectsresulting offrom statestock incomeoption taxes.exercises during the period.
Comparison of the Results of Operations for the Six Months Ended July 31, 2026 and 2025
The following schedule compares our operating results for the six months ended July 31, 2026 and 2025 (dollars in thousands):
Power Segment
The revenues of the Power segment increased by 47.7%, or $170.6 million, to $527.9 million for the six months ended July 31, 2026 compared with revenues of $357.3 million for the six months ended July 31, 2025 as the construction activities increased for the 1.4 GW Thermal Project, the 700 MW Combined-Cycle Project, the 1.2 GW Power Station, and the 860 MW Thermal Project. The primary drivers for this segment’s revenues for the six months ended July 31, 2025, were the construction of the 405 MW Midwest Solar Project and the 700 MW Combined-Cycle Project. The revenues of this business segment represented approximately 78.2% of consolidated revenues for the six months ended July 31, 2026 and 82.8% of consolidated revenues for the corresponding prior year period.
Industrial Segment
The revenues of the Industrial segment increased by $69.2 million, or 106.1%, to $134.5 million for the six months ended July 31, 2026 compared to revenues of $65.2 million for the six months ended July 31, 2025, as the amounts of field services construction activities and vessel fabrication work increased between periods. For the six months ended July 31, 2026 and 2025, the revenues of this segment represented 19.9% and 15.1% of consolidated revenues for the corresponding periods, respectively.
Teledata Segment
The revenues of the Teledata segment were $12.6 million for the six months ended July 31, 2026, compared with revenues of $8.9 million for the six months ended July 31, 2025.
Cost of Revenues
Due primarily to the increase in consolidated revenues for the six months ended July 31, 2026 compared with revenues for the six months ended July 31, 2025, consolidated cost of revenues also increased. These costs were $539.6 million and $350.3 million for the six-month periods ended July 31, 2026 and 2025, respectively.
For the six-month period ended July 31, 2026, we reported a consolidated gross profit of approximately $135.3 million, which represented a gross profit percentage of approximately 20.1% of corresponding consolidated revenues. For the six-month period ended July 31, 2025, we reported a consolidated gross profit of approximately $81.1 million, which represented a gross profit percentage of approximately 18.8% of corresponding consolidated revenues. The gross profit percentage increased between periods primarily due to the changing mix of projects and contract types and strong execution in our Power segment. The increase in gross profit percentage was partially offset by decreased performance on certain projects in our Industrial and Teledata segments. The gross profit percentages of corresponding revenues for the Power, Industrial, and the Teledata segments were 23.0%, 9.2% and 13.9%, respectively, for the six months ended July 31, 2026. The gross profit percentages of corresponding revenues for the Power, Industrial, and the Teledata segments were 20.0%, 11.8% and 21.6%, respectively, for the six months ended July 31, 2025.
Selling, General and Administrative Expenses
These costs were $33.1 million and $26.7 million for the six months ended July 31, 2026 and 2025, respectively, and represented 4.9% and 6.2% of corresponding consolidated revenues, respectively.
Other Income, Net
For the six months ended July 31, 2026 and 2025, the net amounts of other income were $18.5 million and $11.0 million, respectively, which primarily reflected income earned during the periods on investments, cash and cash equivalent balances. The increase in other income, net, period-over-period was driven by higher average balances of cash and invested funds, partially offset by a lower weighted average annual yield during the six months ended July 31, 2026 compared to the same period in the prior year.
Provision for Income Taxes
We recorded income tax expense for the six months ended July 31, 2026 in the net amount of approximately $21.3 million. Our effective income tax rate for the six months ended July 31, 2026 was 17.6%. This effective tax rate differed from the U.S. federal statutory rate of 21% due primarily to the favorable tax benefit resulting from stock option exercises and other share-based award settlements during the period.
We recorded income tax expense for the six months ended July 31, 2025 in the net amount of approximately $7.6 million. Our effective income tax rate for the six months ended July 31, 2025 was 11.6%, which differed from the U.S. federal statutory rate due primarily to the favorable tax benefit resulting from stock option exercises during the period.
Liquidity and Capital Resources as of AprilJuly 30,31, 2026
As of AprilJuly 30,31, 2026 and January 31, 2026, our balances of cash and cash equivalents were $355.8$364.5 million and $339.5 million, respectively, which represented an increase of $16.3$25.0 million during the current fiscal quarter.year.
The net amount of cash provided by operating activities for the threesix months ended AprilJuly 30,31, 2026 was $113.4$210.4 million. Our net income for the threesix months ended AprilJuly 30,31, 2026, adjusted favorably by the net amount of non-cash income and expense items, represented a source of cash in the total amount of $49.4$106.6 million. The increase in contract liabilities of $51.8$113.1 million and the increase in the combined level of accounts payable and accrued expenses in the amount of $17.5$41.1 million represented sources of cash during the period. The decrease in contract assets of $6.5 million and the decrease in accounts receivable in the amount of $2.9$7.8 million also represented sourcesa source of cash during the period. The increase in accounts receivable of $44.5 million and the increase in other assets in the amount of $14.6$13.7 million represented uses of cash during the period.
During the threesix months ended AprilJuly 30,31, 2026, we used $67.5$130.7 million for investing activities, including $45.0$85.1 million, net of maturities, to invest in AFS securities consisting of U.S. Treasury notes. We also used $20.0$30.0 million, net of maturities, to invest in CDs issued by the bank.CDs. We also used $2.4$7.7 million for purchases of property, plant, and equipment. We also used $8.0 million, net of cash acquired, for the acquisition of ValCor.
For the threesix months ended AprilJuly 30,31, 2026, we used $33.7$51.7 million in cash for financing activities, including $23.7$28.1 million for share-based award settlements, which represented payments for withholding taxes reimbursed by shares of common stock, net of proceeds received from stock option exercises. We also used $7.0$14.0 million for the payment of regular cash dividends and $3.0$9.6 million used to repurchase shares of common stock pursuant to our share purchase program. As of AprilJuly 30,31, 2026, there were no restrictions with respect to intercompany payments between the holding company and all subsidiaries.
In connection with the ValCor acquisition, we may be required to pay contingent consideration in cash over the three-year period following the closing upon the satisfaction of specified conditions, and to pay additional cash and issue shares of our common stock under a three-year deferred compensation arrangement with a key employee of ValCor upon the achievement of specified performance targets. The purchase price also remains subject to customary post-closing adjustments, including those related to net working capital and indemnification obligations. We do not expect these amounts to have a material effect on our liquidity or capital resources.
As of AprilJuly 30,31, 2026, certain amounts of our cash equivalents were invested in money market funds with assets invested in cash, U.S. Treasury obligations, other obligations issued by U.S. Government agencies and sponsored enterprises, and repurchase agreements secured by such obligations. Most of our operating bank account balances are maintained with the Bank. We do maintain certain Euro-basedeuro-based bank accounts in Ireland and certain pound sterling-based bank accounts in the U.K. in support of our overseas operations.
In order to monitor the actual and necessary levels of liquidity for our business, we focus on net liquidity, or working capital, in addition to our cash balances. During the threesix months ended AprilJuly 30,31, 2026, our net liquidity increased by $0.4$19.4 million to $421.4$440.4 million from $421.0 million as of January 31, 2026, due primarily to our net income, partially offset by the payment of cash for the ValCor acquisition, payment of cash dividends, common stock repurchases, and settlements of share-based awards, net of withholding taxes paid. Our working capital levels are less subject to the volatility that affects our cash and cash equivalents because we carry no debt service obligations, fixed asset acquisitions in a reporting period are typically low, and our net liquidity includes short-term investments and AFS investments.
As of AprilJuly 30,31, 2026, we did not have any outstanding borrowings under the Credit Agreement. However, the Bank has issued a letter of credit in the total outstanding amount of $0.5 million as of AprilJuly 30,31, 2026. The comparable outstanding total amount of lettersthe letter of credit at January 31, 2026 was $0.3 million.
We have pledged the majority 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 its fiscal year-end and at each 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 AprilJuly 30,31, 2026, we were in compliance with the covenants and other requirements of the Credit Agreement.
AGX insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 17 filings (10 insiders, 15 trade dates, 185,379 shares, about $122.7M). Net open-market shares: -185,379 (purchases minus sales); net value about -$122.7M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-22 | Getsinger Peter W |
Option exercise | 895 | $40.15 | $35.9K |
| 2026-07-31 | Jeffrey John Ronald Jr. |
Open-market sale | 5,716 | $579.64 | $3.3M |
| 2026-06-30 | Jeffrey John Ronald Jr. |
Option exercise | 4,772 | $35.72 | $170.5K |
| 2026-06-30 | Jeffrey John Ronald Jr. |
Option exercise | 944 | $43.70 | $41.3K |
| 2026-06-22 | Griffin William F Jr |
Open-market sale | 20,000 | $760.43 | $15.2M |
| 2026-06-18 | Griffin William F Jr |
Open-market sale | 30,000 | $725.85 | $21.8M |
| 2026-06-17 | Baugher Joshua Scott |
Open-market sale | 455 | $732.83 | $333.4K |
| 2026-06-17 | Baugher Joshua Scott |
Option exercise | 455 | $61.22 | $27.9K |
| 2026-06-17 | Baugher Joshua Scott |
Open-market sale | 305 | $734.00 | $223.9K |
| 2026-06-17 | Sweeney Karen |
Open-market sale | 300 | $705.00 | $211.5K |
| 2026-06-17 | Getsinger Peter W |
Open-market sale | 2,000 | $699.00 | $1.4M |
| 2026-06-16 | Getsinger Peter W |
Open-market sale | 4,728 | $708.65 | $3.4M |
| 2026-06-16 | Watson David Hibbert |
Open-market sale | 1,880 | $707.35 | $1.3M |
| 2026-06-16 | Watson David Hibbert |
Option exercise | 430 | $148.72 | $63.9K |
| 2026-06-16 | Watson David Hibbert |
Option exercise | 588 | $61.22 | $36.0K |
| 2026-06-16 | Watson David Hibbert |
Option exercise | 862 | $39.47 | $34.0K |
| 2026-06-15 | Getsinger Peter W |
Option exercise | 4,728 | $35.72 | $168.9K |
| 2026-06-15 | Flanders Cynthia |
Open-market sale | 2,596 | $666.31 | $1.7M |
| 2026-06-15 | Watson David Hibbert |
Open-market sale | 9,993 | $651.22 | $6.5M |
| 2026-06-12 | Griffin William F Jr |
Open-market sale | 50,000 | $643.46 | $32.2M |
| 2026-06-10 | Flanders Cynthia |
Option exercise | 533 | — | — |
| 2026-06-10 | Flanders Cynthia |
Gift | 1,000 | — | — |
| 2026-06-10 | Sweeney Karen |
Option exercise | 533 | — | — |
| 2026-06-10 | Leimkuhler William F. |
Option exercise | 533 | — | — |
| 2026-06-10 | Jeffrey John Ronald Jr. |
Option exercise | 533 | — | — |
| 2026-06-10 | Getsinger Peter W |
Option exercise | 533 | — | — |
| 2026-06-10 | Larroque Alexander Lisa |
Option exercise | 533 | — | — |
| 2026-06-10 | Quinn James W |
Option exercise | 533 | — | — |
| 2026-04-29 | Getsinger Peter W |
Gift | 500 | — | — |
| 2026-04-29 | Getsinger Peter W |
Open-market sale | 3,000 | $628.36 | $1.9M |
| 2026-04-29 | Larroque Alexander Lisa |
Open-market sale | 350 | $630.58 | $220.7K |
| 2026-04-28 | Leimkuhler William F. |
Open-market sale | 400 | $618.61 | $247.4K |
| 2026-04-28 | Leimkuhler William F. |
Open-market sale | 400 | $621.14 | $248.5K |
| 2026-04-28 | Leimkuhler William F. |
Open-market sale | 5,000 | $617.41 | $3.1M |
| 2026-04-27 | Jeffrey John Ronald Jr. |
Open-market sale | 2,698 | $664.84 | $1.8M |
| 2026-04-21 | Collins Charles Edwin Iv |
Option exercise | 5,235 | $33.81 | $177.0K |
| 2026-04-21 | Collins Charles Edwin Iv |
Option exercise | 5,000 | $36.78 | $183.9K |
| 2026-04-21 | Collins Charles Edwin Iv |
Option exercise | 500 | $61.22 | $30.6K |
| 2026-04-21 | Collins Charles Edwin Iv |
Option exercise | 333 | $148.72 | $49.5K |
| 2026-04-21 | Collins Charles Edwin Iv |
Open-market sale | 11,068 | $621.61 | $6.9M |
| 2026-04-21 | Jeffrey John Ronald Jr. |
Option exercise | 4,698 | $37.13 | $174.4K |
| 2026-04-21 | Jeffrey John Ronald Jr. |
Open-market sale | 3,636 | $615.40 | $2.2M |
| 2026-04-20 | Collins Charles Edwin Iv |
Option exercise | 2,500 | $39.47 | $98.7K |
| 2026-04-20 | Collins Charles Edwin Iv |
Open-market sale | 2,500 | $610.00 | $1.5M |
| 2026-04-17 | Collins Charles Edwin Iv |
Option exercise | 937 | — | — |
| 2026-04-17 | Collins Charles Edwin Iv |
Option exercise | 2,531 | — | — |
| 2026-04-17 | Collins Charles Edwin Iv |
Option exercise | 1,125 | — | — |
| 2026-04-17 | Collins Charles Edwin Iv |
Option exercise | 2,813 | — | — |
| 2026-04-17 | Watson David Hibbert |
Option exercise | 2,302 | — | — |
| 2026-04-17 | Watson David Hibbert |
Open-market sale | 19,310 | $602.11 | $11.6M |
| 2026-04-17 | Watson David Hibbert |
Option exercise | 5,756 | — | — |
| 2026-04-17 | Watson David Hibbert |
Option exercise | 11,513 | — | — |
| 2026-04-17 | Baugher Joshua Scott |
Option exercise | 305 | — | — |
| 2026-04-16 | Collins Charles Edwin Iv |
Option exercise | 548 | — | — |
| 2026-04-16 | Collins Charles Edwin Iv |
Option exercise | 270 | — | — |
| 2026-04-16 | Collins Charles Edwin Iv |
Option exercise | 730 | — | — |
| 2026-04-16 | Collins Charles Edwin Iv |
Option exercise | 360 | — | — |
| 2026-04-16 | Watson David Hibbert |
Option exercise | 1,869 | — | — |
| 2026-04-16 | Watson David Hibbert |
Option exercise | 736 | — | — |
| 2026-04-16 | Baugher Joshua Scott |
Open-market sale | 600 | $605.60 | $363.4K |
Well-known investors holding AGX (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 648,379 | $517.8M | 0.71% | Added 6% |
| Lone Pine Capital (Stephen Mandel) | 2026-06-30 | 368,673 | $294.4M | 1.8% | Reduced 6% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 88,152 | $70.4M | 0.02% | Reduced 17% |
| Coatue Management (Philippe Laffont) | 2026-06-30 | 36,101 | $28.8M | 0.06% | New position |
| Millennium Management (Israel Englander) | 2026-06-30 | 21,031 | $16.8M | 0.01% | Added 62% |
| Polen Capital Management | 2026-06-30 | 10,214 | $8.2M | 0.07% | Reduced 43% |
| Bridgewater Associates | 2026-06-30 | 10,050 | $8.0M | 0.03% | Reduced 28% |
| Two Sigma Investments | 2026-06-30 | 7,360 | $5.9M | 0.0% | Reduced 70% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 7,355 | $5.9M | 0.0% | Reduced 89% |
| D. E. Shaw & Co. | 2026-06-30 | 3,710 | $3.0M | 0.0% | Reduced 70% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 1,691 | $1.4M | 0.0% | Added 24% |