Argan, Inc

Legal and litigation · Contractual disputes and claims

The nature of our business may result in contract disputes and claims by project owners, subcontractors, and vendors, including claims relating to costs, schedule delays, workmanship, change orders, withheld retention or contract payments, offsets, or contract termination. Disputes with subcontractors, manufacturers, or suppliers regarding scope, performance, or payment may result in arbitration or litigation and could increase costs.

Legal and litigation · Product liability and warranty claims

We construct large and complex energy facilities, where design, construction, or systems failures could result in personal injury, property damage, or other losses. Claims may result in significant damages, settlement payments, or other remedies, and even when we prevail, these matters may divert management attention and harm our reputation.

Legal and litigation · Litigation and legal proceedings

We may be involved in litigation, liability claims, and contract disputes which could reduce our profits and cash flows. We construct large and complex energy facilities, where design, construction, or systems failures could result in personal injury, property damage, or other losses. In addition, the nature of our business may result in contract disputes and claims by project owners, subcontractors, and vendors, including claims relating to costs, schedule delays, workmanship, change orders, withheld retention or contract payments, offsets, or contract termination.

Industry regulation · Licensing and permits

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.

Industry regulation · Regulatory compliance and changes

We are required to comply with environmental laws and regulations that may add unforeseen costs to our businesses. 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.

Tax and financial reporting · Tax compliance and changes in tax law

Changes in tax laws or tax rates could increase our tax expense. We are subject to income taxes in the U.S. and in foreign jurisdictions. Changes in tax laws, tax treaties or regulations, or in their interpretation or enforcement, in any jurisdiction where we operate could increase our effective tax rate, increase our tax liabilities, or increase our costs of tax compliance.

Capital structure and performance · Financial reporting and accounting risks

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures. For fixed-price customer contracts, we recognize revenues over time based on the proportion of costs incurred to date relative to total estimated costs. Changes in contract values or estimated costs may result in cumulative catch-up adjustments to revenue and profit, which could be material.

Market and investment · Market volatility and economic cycles

Our financial results may fluctuate due to the timing of large construction projects. Our Power segment performs work on a limited number of large construction projects during any given fiscal reporting period. The timing of equipment purchases, subcontractor services, and other project activities may vary over the life of a contract, which can result in fluctuations in quarterly or annual revenues and operating results.

Market and investment · Asset valuation and impairment

Among the other areas that could require significant estimates by our management are the following: the assessment of the value of goodwill and recoverability of other intangible assets; the determination of provisions for income taxes, the accounting for uncertain income tax positions and the establishment of valuation allowances associated with deferred income tax assets.

Strategic execution · Merger acquisition and divestiture risks

Future acquisitions or investments may not occur, and any acquisitions we complete may not be successfully integrated, which could limit our growth and adversely affect our results. We may pursue opportunistic acquisitions or strategic investments to support growth, expand capabilities, or create synergies with our existing businesses. However, suitable acquisition targets may be difficult to identify, negotiations may be protracted or unsuccessful, and due diligence may identify issues that prevent us from completing transactions on acceptable terms, or at all.

Market position and competition · Market cyclicality and demand volatility

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.

Market position and competition · Disruptive competitors and new market entrants

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.

Customer and revenue · Changing customer preferences and behavior

Changes in electricity generation resource mix could affect demand for new natural gas-fired power plant projects. Electricity generation from utility-scale renewable resources, including solar and wind, continues to increase in the United States. 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.

Human capital and workforce · Labor relations and union negotiations

Work stoppages, union negotiations and other labor problems could adversely affect us. The performance of certain large-scale construction contracts may result in our hiring of employees in the U.S. and overseas who are represented by labor unions. A lengthy strike or the occurrence of other work disputes, slowdowns or stoppages at any of our current or future construction project sites could have an adverse effect on us, resulting in cost overruns, schedule delays or even lawsuits that could be significant.

Core operations · Safety incidents and operational accidents

Failure to maintain safe work sites could result in significant losses as we work on projects that are inherently dangerous. Our project sites can place our employees and others near large and/or mechanized equipment, high voltage electrical equipment, moving vehicles, dangerous processes or highly regulated materials, and in challenging environments. If we fail to implement appropriate safety procedures and/or if our procedures fail, our employees or others may suffer injuries or illness.

Project and contract management · Large contract concentration

Our Power segment performs work on a limited number of large construction projects during any given fiscal reporting period. Revenue for these projects is generally recognized over time based on progress toward completion, which is often measured using costs incurred. The timing of project commencements and completions may contribute to variability in reported results between periods.

Human capital and workforce · Skills shortage and training requirements

The shortage of skilled craft labor may negatively impact our ability to execute on our long-term construction contracts. Increased infrastructure spending and general economic expansion may increase the demand for employees with the types of skills needed for the completion of our projects. There is a risk that our construction project schedules become unachievable or that labor expenses will increase unexpectedly due to a shortage in the available supply of skilled personnel.

Corporate governance · Shareholder rights and activism

Our officers, directors and certain unaffiliated stockholders may have meaningful control over the Company. As of January 31, 2026, our executive officers and directors as a group directly owned approximately 2.7% of our voting shares. In addition, as of December 31, 2025, two other stockholders beneficially owned, in the aggregate, approximately 12.2% of our shares. As a result, these stockholders may be able to influence corporate actions such as the election of directors, amendments to our certificate of incorporation, the consummation of any merger, the sale of all or substantially all of our assets, or other actions requiring stockholder approval.

Cybersecurity and data protection · Data privacy and protection regulations

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.

Natural and catastrophic events · Natural disasters and extreme weather

Our results could be adversely affected by natural disasters, human-made disasters or other catastrophic events. 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.