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ARGAN INC

ARGAN INCAGXEarnings & Financial Report

NYSE · Industrials · Construction - Special Trade Contractors

Argan Inc. is a diversified holding company that provides comprehensive engineering, construction, project management and consulting services. Its core operating segments focus on power generation, telecommunications, industrial infrastructure and renewable energy projects, primarily serving public and private sector clients across North America.

What changed in ARGAN INC's 10-K — 2024 vs 2025

Top changes in ARGAN INC's 2025 10-K

432 paragraphs added · 513 removed · 300 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

78 edited+20 added−24 removed20 unchanged
Like the U.S., Ireland and the U.K. are committed to the increase in energy consumption sourced from the sun and the wind on the pathway to net zero emissions. Other technologies will be required to support these power sources and to provide electricity when power demands exceed the amount of electricity supplied by renewable energy sources.
Like the U.S., Ireland and the U.K. are committed to the increase in energy consumption sourced from the sun and the wind on the pathway to net zero emissions. Other technologies will be required to support these renewable power sources and to provide electricity when power demands exceed the amount of electricity supplied by renewable energy sources.
Argan operates as a holding company that may make opportunistic acquisitions and/or investments by identifying companies with significant potential for profitable growth and realizable synergies with one or more of our existing businesses. However, we may have more than one industrial focus depending on the opportunity and/or needs of our customers.
Argan operates as a holding company that may make opportunistic acquisitions and/or investments by identifying companies with significant potential for profitable growth and realizable synergies with one or more of our existing construction businesses. However, we may have more than one industrial focus depending on the opportunity and/or needs of our customers.
Competition led to aggressive bidding on projects while certain contractors accepted greater risks associated with the inability to anticipate unforeseen issues and the failure to include adequate contingencies to cover lower-than expected labor productivity, unfavorable execution challenges and unusual weather events, for example.
Intense competition led to aggressive bidding on projects while certain contractors accepted greater risks associated with the inability to anticipate unforeseen issues and the failure to include adequate contingencies to cover lower-than expected labor productivity, unfavorable execution challenges and unusual weather events, for example.
For example, the Irish government’s current policy related to the security of the electricity supply in Ireland confirms the requirement for the development of new support technologies to deliver on its commitment to have 80% of the country’s electricity generated from renewables by 2030.
For example, the Irish government’s policy related to the security of the electricity supply in Ireland confirms the requirement for the development of new support technologies to deliver on its commitment to have 80% of the country’s electricity generated from renewables by 2030.
Customers For Fiscal 2024, our most significant customer relationships included three power industry services customers, which accounted for approximately 19%, 16% and 15% of consolidated revenues. For Fiscal 2023, our most significant customer relationships included two power industry services customers, which accounted for 38% and 12% of consolidated revenues.
For Fiscal 2024, our most significant customer relationships included three power industry services customers, which accounted for 19%, 16% and 15% of consolidated revenues. For Fiscal 2023, our most significant customer relationships included two power industry services customers, which accounted for 38% and 12% of consolidated revenues .
With our assistance, project owners frequently procure and supply certain major components of the power plants such as state-of-the-art natural gas turbines. We have significant experience in delivering EPC projects with the latest turbine technology and working with all three major gas-fired turbine manufacturers to meet each project owner’s specific power plant requirements. EPC project requirements may vary considerably.
With our assistance, project owners frequently procure and supply certain major components of the power plants, such as state-of-the-art natural gas turbines and transformers. We have significant experience in delivering EPC projects with the latest turbine technology and working with all major gas-fired turbine manufacturers to meet each project owner’s specific power plant requirements. EPC project requirements may vary considerably.
The Credit Agreement, as amended, 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.
The New 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.
Together, these subsidiaries enable us to serve a wide range of client needs across power generation, industrial construction, and telecommunications infrastructure, establishing its presence as a diversified provider in the construction and engineering sectors. Holding Company Structure Argan was organized as a Delaware corporation in May 1961.
Together, these subsidiaries enable us to serve a wide range of client needs across power generation, industrial construction, and telecommunications infrastructure, establishing our presence as a diversified provider in the construction and engineering sectors. Holding Company Structure Argan was organized as a Delaware corporation in May 1961.
We continue to target certain business development efforts to win projects for the erection of utility-scale solar fields, wind farms and battery facilities as well as hydrogen-based energy plants and carbon capture and storage projects. - 4 - Table of Contents Labor and Materials We perform work on job sites in different states and countries.
We continue to target certain business development efforts to win projects for the erection of utility-scale solar fields, wind farms and battery facilities as well as hydrogen-based energy plants and carbon capture and storage projects. Labor and Materials We perform work on job sites in different states and countries.
We maintain a website on the Internet at www.arganinc.com that includes access to financial data. Information on our website is not incorporated by reference into this 2024 Annual Report.
We maintain a website on the Internet at www.arganinc.com that includes access to financial data. Information on our website is not incorporated by reference into this 2025 Annual Report.
The skilled craft labor pool is unique in each region due to a variety of factors, including different employment environments, competing infrastructure projects located near our sites that utilize the same labor pool, and decreased and aging labor pools resulting from demographic trends.
The skilled craft labor pool is unique in each region due to a variety of factors, including different employment environments, competing infrastructure projects located near our sites - 4 - Table of Contents that utilize the same labor pool, and decreased and aging labor pools resulting from demographic trends.
Employees The total number of personnel employed by us is subject to the volume of construction in progress and the relative amount of work performed by subcontractors. We had 1,214 employees at January 31, 2024, substantially all of whom were full-time. We believe that our employee relations are generally good.
Employees The total number of personnel employed by us is subject to the volume of construction in progress and the relative amount of work performed by subcontractors. We had 1,595 employees at January 31, 2025, substantially all of whom were full-time. We believe that our employee relations are generally good.
The comparable backlog amount as of January 31, 2023 was approximately $0.7 billion. Our reported amount of project backlog at a point in time represents the total 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.
The comparable backlog amount as of January 31, 2024 was approximately $0.6 billion. Our reported amount of project backlog at a point in time represents the total 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.
Recent and current major customers of TRC include Nutrien Ltd., the global fertilizer company; Jacobs Solutions Inc., an international engineering and construction firm that is building a significant biotechnology manufacturing facility in the research triangle area of North Carolina; and North America’s largest forest products companies such as Weyerhaeuser - 7 - Table of Contents Company, International Paper and Domtar Corporation; and various other industrial companies.
Recent and current major customers of TRC include Nutrien Ltd., the global fertilizer company; Jacobs Solutions Inc., an international engineering and construction firm that is building a significant biotechnology manufacturing facility in the research triangle area of North Carolina; North America’s largest forest products companies such as Weyerhaeuser Company, International Paper and Domtar Corporation; water treatment facilities and various other industrial companies.
Many state and local regulations governing construction require permits and - 6 - Table of Contents licenses to be held by individuals who have passed an examination or met other requirements. We believe that we have the licenses required to conduct our current operations and that we are in substantial compliance with applicable regulatory requirements.
Many state and local regulations governing construction require permits and licenses to be held by individuals who have passed an examination or met other requirements. We believe that we have the licenses required to conduct our current operations and that we are in compliance with applicable regulatory requirements.
Typically, we include the total value of EPC services and other major construction contracts in project backlog upon receiving a notice to proceed from the project owner. When provided with only the limited notice to proceed (“LNTP”), we do not add the value of the full contract to project backlog until we receive the full notice to proceed.
Typically, we include the total value of EPC services and other major construction contracts in project backlog upon receiving a notice to proceed from the project owner. When provided with only a limited notice to proceed (“LNTP”), we generally do not add the value of the full contract to project backlog until the full notice to proceed (“FNTP”) is received.
As a result, employees from all levels of our Company have participated in projects such as Habitat for Humanity, Toys for Tots, Coats for Kids, school supply drives, clothing drives, food bank donation programs and Company-sponsored youth programs, while supporting meaningful apprenticeships and internships within our companies; and ● We provided training and issued periodic newsletters focused on diversity, equality and inclusion.
As a result, employees from all levels of our Company have participated in projects such as Habitat for Humanity, Toys for Tots, Coats for Kids, school supply drives, clothing drives, food bank donation programs and Company-sponsored youth programs, while supporting meaningful apprenticeships and internships within our companies; and ● We provided training and issued periodic newsletters focused on improving employee awareness and health.
Nevertheless, the inclusion of contract values in project backlog requires management judgement based on the facts and circumstances. The significant currently active projects of our power industry services segment include the construction of facilities which together represent approximately 4.1 gigawatts of potential electrical power and require the significant engagements of our technical, project support and project management teams.
Nevertheless, the inclusion of contract values in project backlog requires management judgment based on the facts and circumstances. The significant currently active projects of our power industry services segment include the construction of facilities which together represent approximately 2.9 gigawatts of potential electrical power and require the significant engagements of our technical, project support and project management teams.
In January 2024, we added a senior vice president of legal to our headquarters staff. Among other duties, he will contribute to and enhance our ongoing process of standardizing and minimizing the amount of commercial risk that our different operations accept in their customer contracts. His legal and operations experiences in the construction industry represent solid qualifications for this effort.
In Fiscal 2024, we added a senior vice president, legal, to our headquarters staff. Among other duties, he contributes to and enhances our ongoing process of standardizing and minimizing the amount of commercial risk that our different operations accept in their customer contracts. His legal and operations experiences in the construction industry represent solid qualifications for this effort.
Our OSHA reportable incident rates, weighted by hours worked for all of our subsidiaries, were 0.43, 0.60, 0.48, 0.55 and 0.40 for calendar years 2023, 2022, 2021, 2020 and 2019, respectively; our rates were significantly better than the national average rates in our industry (NAICS – 2379) for those years.
Our OSHA reportable incident rates, weighted by hours worked for all of our subsidiaries, were 0.56, 0.43, 0.60, 0.48 and 0.55 for calendar years 2024, 2023, 2022, 2021 and 2020, respectively; our rates were significantly lower than the national average rates in our industry (NAICS – 2379) for those years.
The power plants that we build, and other energy facilities including the pipelines required to supply natural gas fuel to them, are also subject to a myriad of federal and state laws and regulations governing environmental protection, air quality, water quality and noise and height restrictions.
Energy facilities, including the pipelines required to supply natural gas fuel to power plants, are subject to a myriad of federal and state laws and regulations governing environmental protection, air quality, water quality and noise and height restrictions.
As a result, construction and engineering companies, including some of the largest firms in the country, incurred losses related to performance on fixed-price contracts. Despite these challenges, sustained competition has supported the continuation of fixed-price contracting in the U.S., maintaining the typical volume of projects completed under these terms. The firms that remain in our market are very effective competitors.
As a result, construction and engineering companies, including some of the largest firms in the country, incurred losses related to performance on fixed-price contracts. Despite these challenges, sustained competition has supported the continuation of fixed-price contracting in the U.S., maintaining the typical volume of projects completed under these terms.
In Fiscal 2023, we purchased specialty insurance related to the full recovery of the research and development tax credits we claimed in our amended federal income tax returns for Fiscal 2022 and 2021 (see Note 12 to the accompanying consolidated financial statements).
In Fiscal 2023, we purchased specialty insurance related to the full recovery of the research and development tax credits we claimed in our amended federal income tax returns for the year ended January 31, 2022 (“Fiscal 2022”) and the year ended January 31, 2021 (“Fiscal 2021”) (see Note 12 to the accompanying consolidated financial statements).
APC currently focuses on the performance of engineering and construction services for the major electric utility in Ireland, independent power plant owners, major data center operators and original equipment manufacturers. APC’s business in Ireland and the U.K. represent this segment’s primary international operations.
APC currently focuses on the performance of engineering and construction services for the major electric utilities in Ireland, independent power plant owners, major data center operators and original equipment manufacturers. APC’s business in Ireland and the U.K. represents the Company’s primary international operations.
We are not dependent upon any one source for major equipment components, such as heat recovery steam generation units, steam turbines and air-cooled condensers, solar panels or any other construction materials we use to complete a particular power project.
We are not dependent upon any one source for major equipment components, such as heat recovery steam generation units, steam turbines and air-cooled condensers, solar panels or any other construction materials we use to complete a particular power project, although the number of suppliers providing such equipment is limited.
For Fiscal 2024, Fiscal 2023 and Fiscal 2022, the amounts of revenues earned by us and associated with renewable energy projects were 6.9%, 9.6% and 13.4%, respectively, of corresponding revenues for the power industry services segment.
For Fiscal 2025, Fiscal 2024 and Fiscal 2023, the amounts of revenues earned by us and associated with renewable energy projects were 40.1%, 6.9% and 9.6%, respectively, of corresponding revenues for the power industry services segment.
Copies of our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as our Proxy Statements, are available, as soon as reasonably practicable, after we electronically file such materials with, or furnish them to, the SEC, without charge and upon written request provided to our Corporate Secretary at Argan, Inc., One Church Street, Suite 201, Rockville, Maryland 20850.
Copies of our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as our Proxy Statements, are available, as soon as reasonably practicable, after we electronically file such materials with, or furnish them to, the SEC, without charge and upon written request provided to our Corporate Secretary at Argan, Inc., 4075 Wilson Boulevard, Suite 440, Arlington, Virginia 22203.
The substantial portions of the revenues of this reportable segment reported for these three years were derived from the performance of activities by GPS and APC under EPC services and other construction contracts with the owners of power plant projects. Project Backlog At January 31, 2024, the project backlog for this reporting segment was approximately $0.6 billion.
The substantial portions of the revenues of this reportable segment for these three years were derived from the performance of activities by GPS and APC under EPC services and other construction contracts with the owners of power plant projects. Power Industry Services Project Backlog At January 31, 2025, the project backlog for this reporting segment was over $1.3 billion.
Supply chain uncertainties may impact project owners’ confidence in commencing new work which may adversely affect our expected levels of revenues until supply chain disruptions substantially dissipate. The costs of materials needed for the completion of our projects may fluctuate from time to time.
We actively attempt to manage these risks during periods of uncertainty. Supply chain uncertainties may impact project owners’ confidence in commencing new work which may adversely affect our expected levels of revenues until supply chain disruptions substantially dissipate. The costs of materials needed for the completion of our projects may fluctuate from time to time.
The revenues of our power industry services business segment were $416.3 million, $346.0 million and $398.1 million for the fiscal years ended January 31, 2024 (“Fiscal 2024”), 2023 (“Fiscal 2023”) and 2022 (“Fiscal 2022”), respectively, or 73%, 76% and 78% of our consolidated revenues for the corresponding periods, respectively.
The revenues of our power industry services business segment were $693.0 million, $416.3 million and $346.0 million for the fiscal years ended January 31, 2025 (“Fiscal 2025”), 2024 (“Fiscal 2024”) and 2023 (“Fiscal 2023”), respectively, or 79%, 73% and 76% of our consolidated revenues for the corresponding periods, respectively.
Over the past few years, GPS has provided top management guidance and project management expertise to APC as it successfully completed certain projects and won the awards of projects to build new thermal power plants in Ireland and the U.K. In turn, APC has provided specialist resources to GPS on several of its EPC services contracts.
Over the past few years, GPS has provided top management guidance and project management expertise to APC as it successfully completed certain projects and won the awards of projects to build new thermal power plants in Ireland and the U.K.
These relationships demonstrate that TRC is a trusted industrial services provider to blue chip customers from around North America, and from countries like France, Germany, Denmark, Japan, Belgium and Australia, that are expanding or locating new production facilities in TRC’s geographic region.
These relationships demonstrate that TRC is a trusted industrial services provider to blue chip customers from around North America, and from countries around the world, that are expanding or locating new production facilities in TRC’s geographic region.
GPS, APC, TRC and SMC each has an experienced full-time safety director committed to ensuring a safe work place, as well as compliance with applicable permits, insurance and laws.
We regularly communicate with our employees to promote safety and to instill safe work habits. GPS, APC, TRC and SMC each has an experienced full-time safety director committed to ensuring a safe work place, as well as compliance with applicable permits, insurance and laws.
Typically, the scope of work for GPS includes complete plant engineering and design, the procurement of power generation and balance of plant equipment, and the full turnkey construction effort from site development through electrical interconnection and plant performance testing.
Typically, the scope of work for GPS includes complete plant engineering and design, the procurement of power generation and balance of plant equipment, and the full turnkey construction effort from site development through electrical interconnection and plant performance testing. The durations of these projects typically range between one to four years.
Development Financing We selectively participate in power plant project development and related financing activities 1) to maintain a proprietary pipeline for future EPC services contract opportunities, 2) to secure exclusive rights to EPC contracts, and 3) to generate profits through interest income and project development success fees.
Development Financing We selectively participate in power plant project development and related financing activities 1) to maintain a proprietary pipeline for future EPC services contract opportunities, 2) to secure exclusive rights to EPC contracts, and 3) to generate a return on our investment.
As of January 31, 2024, we were in compliance with the covenants of the Credit Agreement, as amended. Safety, Risk Management, Insurance and Performance Bonds We are committed to ensuring that the employees of each of our businesses perform their work in a safe environment. We regularly communicate with our employees to promote safety and to instill safe work habits.
As of January 31, 2025, we were in compliance with the financial covenants and other requirements of the New Credit Agreement. Safety, Risk Management, Insurance and Performance Bonds We are committed to ensuring that the employees of each of our businesses perform their work in a safe environment.
The existence of the necessary power reserve during the long transition period to zero emissions will require supporting conventional power generation sources, often natural gas-fired power plants.
Maintaining necessary power reserves during the long transition period to zero emissions will require reliable conventional power generation sources, often natural gas-fired power plants.
To date, we generally have managed to successfully staff each of our jobs effectively, but going forward we may be challenged by labor shortages in the construction industry due to rising wages, demographic trends and other factors. The competition for labor may also include employers outside the construction industry, which can offer the opportunity to work remotely.
To date, we generally have managed to successfully staff each of our jobs effectively, but going forward we may be challenged by labor shortages in the construction industry due to rising wages, demographic trends and other factors.
They are constructed on relatively small sites and, upon completion, do not typically disturb the surrounding areas that are often green. - 10 - Table of Contents Materials Filed with the Securities and Exchange Commission (the “SEC”) The public may read any materials that we file with the SEC at its public reference room at 100 F Street, NE, Washington, D.C. 20549.
They are constructed on relatively small sites and, once completed, typically have minimal impact on the surrounding green areas. Materials Filed with the Securities and Exchange Commission (the “SEC”) The public may read any materials that we file with the SEC at its public reference room at 100 F Street, NE, Washington, D.C. 20549.
Its charter requires it to assist our senior management in: (a) setting our general strategy relating to responsible business matters, as well as developing, implementing, and monitoring initiatives and policies for us based on that strategy; (b) overseeing communications with employees, investors, and other stakeholders with respect to responsible business matters; and (c) anticipating and monitoring developments relating to, and improving management’s understanding of, responsible business matters. - 9 - Table of Contents A summary of our responsible business accomplishments in various areas over the past three years follows: ● We made investments in solar energy funds to secure portions of the available investment tax credits and tax depreciation, which facilitated the construction and deployment of multiple solar array facilities; ● We made lighting and other energy efficiency upgrades at the office building that we own while our employees continue to participate in available recycling programs at all of our facilities; ● We executed an agreement to build a solar carport at our Glastonbury, Connecticut office, which broke ground in Fiscal 2024; ● We commenced a solicitation of recommendations from our employees by a cross-subsidiary working group in order to identify additional actionable items including coordinated community service projects.
Its charter requires it to assist our senior management in: (a) setting our general strategy relating to responsible business matters, as well as developing, implementing, and monitoring initiatives and policies for us based on that strategy; (b) overseeing communications with employees, investors, and other stakeholders with respect to responsible business matters; and (c) anticipating and monitoring developments relating to, and improving management’s understanding of, responsible business matters. - 9 - Table of Contents A summary of our responsible business accomplishments in various areas over the past three years follows: ● We committed to investments totaling $32.9 million in solar energy funds to secure portions of the available investment tax credits and tax depreciation, which facilitated the construction and deployment of multiple solar array facilities; ● Our employees continue to participate in available recycling programs at all of our facilities; ● We completed construction of a solar carport at our Glastonbury, Connecticut, office in Fiscal 2025; ● We hosted a food and supplies drive at the TRC offices in Winterville, NC, to support those impacted by Hurricane Helene in western North Carolina; ● We maintain a cross-subsidiary working group in order to identify additional actionable items including coordinated community service projects.
For Fiscal 2024, Fiscal 2023 and Fiscal 2022, TRC reported revenues of $142.8 million, $92.8 million and $97.9 million, respectively, or approximately 25%, 20% and 19% of consolidated revenues for the corresponding years, respectively.
For Fiscal 2025, Fiscal 2024 and Fiscal 2023, TRC reported revenues of $167.6 million, $142.8 million - 7 - Table of Contents and $92.8 million, respectively, or approximately 19%, 25% and 20% of consolidated revenues for the corresponding years, respectively.
We believe that we compete favorably with the other companies in our market space by emphasizing our high-quality reputation, outstanding customer base, security-cleared personnel and highly motivated work force in competing for larger and more diverse contracts.
We compete with providers ranging from regional companies to larger firms servicing multiple regions, as well as large national and multi-national contractors. We believe that we compete favorably with the other companies in our market space by emphasizing our high-quality reputation, outstanding customer base, security-cleared personnel and highly motivated work force in competing for larger and more diverse contracts.
As we go forward, there may be unscheduled delays in the delivery of materials, machinery and equipment ordered by us or a project owner or other unanticipated challenges to our ability to complete major job tasks when planned, among other impacts. We actively attempt to manage these risks during periods of uncertainty.
These constraints are causing delays in the construction timelines for new gas-fired power plants. As we go forward, there may be unscheduled delays in the delivery of materials, machinery and equipment ordered by us or a project owner or other unanticipated challenges to our ability to complete major job tasks when planned, among other impacts.
Over the last three years, other major customers have included counties and municipalities located in Maryland; certain state government agencies in Maryland; and technology-oriented government contracting firms in the Washington, D.C. metropolitan area.
Over the last three years, other major customers have included counties and municipalities located in Maryland; certain state government agencies in Maryland; and technology-oriented government contracting firms in the Washington, D.C. metropolitan area. Through an acquisition in December 2021, SMC expanded its business footprint into the Tidewater area of Virginia.
In the U.S., the Energy Information Administration illustrates that carbon emissions from the electric power sector declined by approximately 36% during the period 2005 through 2022. The primary reason for this decline was the replacement of coal-fired power plants with efficient gas-fired power plants. Natural gas is relatively clean burning, cost-effective, reliable and abundant.
In the U.S., the Energy Information Administration (“EIA”) indicates that carbon emissions from the electric power sector declined by approximately 41% during the period 2005 through 2024. The primary reason for this decline was the replacement of coal-fired power plants with efficient gas-fired power plants.
GPS and APC constitute our power industry services reportable segment, delivering a comprehensive suite of engineering, procurement, construction, commissioning, maintenance, project development and technical consulting services to the power generation market, including the renewable energy sector.
GPS and APC constitute our power industry services reportable segment, delivering a comprehensive suite of engineering, procurement, construction, commissioning, maintenance, project development and technical consulting services to the power generation market, including the renewable energy sector. The customers include primarily independent power project owners, public utilities, power plant heavy equipment suppliers and other commercial firms with significant power requirements.
Regulation Our power industry services operations are subject to various federal, state, local and foreign laws and regulations including: licensing for contractors; building codes; permitting and inspection requirements applicable to construction projects; regulations relating to worker safety and environmental protection; and special bidding, procurement and employee compensation requirements.
No other customer of this reportable segment represented greater than 10% of consolidated revenues for Fiscal 2025, Fiscal 2024 or Fiscal 2023. - 6 - Table of Contents Regulation Our power industry services operations are subject to various federal, state, local and foreign laws and regulations including: licensing for contractors; building codes; permitting and inspection requirements applicable to construction projects; regulations relating to worker safety and environmental protection; and special bidding, procurement and employee compensation requirements.
Historically, APC primarily provided turbine, boiler and large rotating equipment engineering, procurement, installation, commissioning and outage services to power plants in Ireland. Since its acquisition in 2015, APC has expanded operations to the U.K.
This reportable business segment also includes APC, a company formed in Ireland 50 years ago, and its affiliated companies, which we acquired in May 2015. Historically, APC primarily provided turbine, boiler and large rotating equipment engineering, procurement, installation, commissioning and outage services to power plants in Ireland. Since its acquisition in 2015, APC has expanded operations to the U.K.
Based on our current project backlog of renewable projects in the amount of $175 million as of January 31, 2024 and subsequent contract awards, we expect that revenues associated with the performance of renewable energy projects will grow meaningfully and will represent significant portions of our power industry services segment and consolidated revenues over the coming years.
Based on our current project backlog of renewable projects in the amount of $578 million as of January 31, 2025, we expect that revenues associated with the performance of renewable energy projects will continue to represent meaningful portions of our power industry services segment and consolidated revenues over the coming years, although it is expected to decrease as a percentage of our consolidated revenues due to the expected growth of our non-renewable revenues.
In connection with the engineering and construction of traditional power plants, biodiesel plants and other renewable energy systems, we procure materials for installation on our various projects.
Additionally, competition for the labor pool capable of building power plant projects is increasing as the demand for building power generating assets continues to grow. In connection with the engineering and construction of traditional power plants, biodiesel plants and other renewable energy systems, we procure materials for installation on our various projects.
Consistently, a major portion of SMC’s revenue-producing activity each year is performed pursuant to task or work orders issued under master agreements with SMC’s major customers such as Southern Maryland Electric Cooperative, the local electricity cooperative.
Inside premises wiring services include structured cabling, terminations and connectivity that provide the physical transport for high-speed data, voice, video and security networks. Consistently, a major portion of SMC’s revenue-producing activity each year is performed pursuant to task or work orders issued under master agreements with SMC’s major customers such as Southern Maryland Electric Cooperative, the local electricity cooperative.
Responsible Business Our on-going commitment to environmental, health and safety, corporate social responsibility, corporate governance, sustainability, and other public policy matters relevant to us is being supported by the responsible business committee of our board of directors, which was formed initially as a subcommittee in Fiscal 2021 and was elevated to full committee status in Fiscal 2023.
Responsible Business Our on-going commitment to environmental, health and safety, community outreach, corporate governance, and other public policy matters relevant to us is being supported by the responsible business committee of our board of directors.
The revenues of SMC were $14.3 million, $16.2 million and $13.4 million for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively, or approximately 2%, 4% and 3% of our consolidated revenues for the corresponding years, respectively. In Fiscal 2022, SMC acquired the business of Lee Telecommunications, Inc.
The revenues of SMC were $13.5 million, $14.3 million and $16.2 million for Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively, or approximately 2%, 2% and 4% of our consolidated revenues for the corresponding years, respectively. The combined operations of SMC operate in the fragmented and competitive telecommunication and infrastructure services industry.
Please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of currently active major projects for this reporting segment. At times, we may be awarded contracts for which commencement of project activities are delayed or cancelled.
Please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of currently active major projects for this reporting segment.
Finally, we note that the natural-gas fired plants that we build are not sprawling facilities and can be constructed closer to where power is being consumed, resulting in fewer transmission lines and line losses.
Natural gas is relatively clean burning, cost- - 10 - Table of Contents effective, reliable and abundant. Finally, we note that the natural-gas fired power plants that we build are not sprawling facilities covering hundreds of acres. They can be constructed closer to where power is consumed, leading to fewer transmission lines and reduced line losses.
During Fiscal 2024, we completed the Maple Hill Solar project, which is among the largest solar-powered energy plants in Pennsylvania, and we commenced activities on the Midwest Solar and Battery Projects in Illinois.
During Fiscal 2024, we completed the Maple Hill Solar project, which is among the largest solar-powered energy plants in Pennsylvania, and we commenced activities on three solar and battery projects in Illinois. During Fiscal 2025, we commenced activities on a 405 MW solar project, also located in Illinois, leveraging pre-existing transmission and utility infrastructure from a nearby retired coal plant.
The Credit Agreement, as amended, includes the following features, among others: a lending commitment of $50.0 million including a revolving loan and an accordion feature which allows for an additional commitment amount of $10.0 million, subject to certain conditions.
Financing Arrangements Previously, we were a party to an amended and restated credit agreement (the “Expired Credit Agreement”) that provided us a lending commitment of $50.0 million, including a revolving loan and an accordion feature which allowed for an additional commitment amount of $10.0 million, subject to certain conditions.
The track record of GPS has proven that fixed-price contracts can provide opportunities for higher margins if the corresponding projects are completed at lower-than-planned costs. We are confident that our project management teams have gained the experience necessary for successful execution on these types of contracts as we go forward although we are aware of the risks involved.
We are confident that our project management teams have gained the experience necessary for successful execution on these types of contracts as we go forward although we are aware of the risks involved.
As of January 31, 2024, the outstanding amount of bonds covering other risks, including warranty obligations related to completed activities, was not material. Not all of our projects require bonding.
As of January 31, 2025, the estimated amount of our unsatisfied bonded performance obligations, covering all of our subsidiaries, was approximately $0.7 billion. As of January 31, 2025, the outstanding amount of bonds covering other risks, including warranty obligations and contract payment retentions related to completed activities, was $25.2 million. Not all of our projects require bonding.
Each of our wholly-owned subsidiaries is operated as an independent business with strategic oversight provided by Argan to allow each to react to its own market conditions independently. Significant acquired companies will be operated in a manner that we believe will best provide long-term and enduring value for our stockholders.
Each of our wholly owned subsidiaries is operated as an independent business with strategic oversight provided by Argan to allow each to react to its own market conditions independently.
For example, we may hold quotes related to materials in our industrial construction services segment for short periods of time. For major fixed price contracts in our power industry services segment, we may mitigate material cost risks by procuring the majority of the equipment and construction supplies during the early phases of a project.
For major fixed-price contracts in our power industry services segment, we may mitigate material cost risks by procuring the majority of the equipment and construction supplies during the early phases of a project. During recent fiscal years, we believe in general that we effectively confronted the economic challenges to our active jobs represented by the inflationary surge in prices.
TRC operates within its own reportable business segment, industrial construction services. Such services typically represent the majority of TRC’s annual revenues with the remaining revenues contributed by projects consisting primarily of metal fabrication.
Industrial field service construction projects typically represent the majority of TRC’s annual revenues with the remaining revenues contributed by projects consisting primarily of metal pipe and vessel fabrication.
We are not immune to the risks of losses on major projects. Nonetheless, we try to be particularly selective in pursuing new project opportunities and are reluctant to enter into fixed-price contracts with perceived high-risk profiles that are unacceptable.
Nonetheless, we try to be particularly selective in pursuing new project opportunities and are reluctant to enter into fixed-price contracts with perceived high-risk profiles that are unacceptable. The track record of GPS has demonstrated that fixed-price contracts can be successfully executed when managed effectively, providing opportunities for strong financial performance.
GPS also has experience in the renewable energy sector providing EPC contracting and other services to owners of alternative energy facilities, including biomass plants, solar fields and wind farms.
Past projects encompass base-load combined-cycle facilities, simple-cycle peaking plants, liquefied natural gas power island installation, and boiler plant construction and renovation efforts. GPS also has experience in the renewable energy sector providing EPC contracting and other services to owners of alternative energy facilities, including biomass plants, solar fields, battery storage and wind farms.
These competitors may be multi-billion-dollar companies that have thousands of employees. We also may compete with regional construction services companies in the markets where planned projects might be located. Typically, a condition for award is that the contractor perform on a fixed-price or lump-sum contract basis; smaller elements of a contract may be billable on an allowance or cost-reimbursable basis.
Typically, a condition for award is that the contractor perform on a fixed-price or lump-sum contract basis; smaller elements of a contract may be billable on an allowance or cost-reimbursable basis.
We may also use the borrowing ability to cover other credit instruments issued by the Bank for our use in the ordinary course of business as defined in the Credit Agreement.
In addition to the base commitment, the new facility includes an accordion feature that allows for an additional commitment amount of $30.0 million, subject to certain conditions. We may use the borrowing ability to cover other credit instruments issued by the Bank for our use in the ordinary course of business as defined in the New Credit Agreement.
We maintain material amounts of cash, cash equivalents and short-term investments, and, as indicated above, we have the commitment of the Bank to issue irrevocable standby letters of credit up to an aggregate amount of $50.0 million. As of January 31, 2024, the estimated amount of our unsatisfied bonded performance obligations, covering all of its subsidiaries, was approximately $0.5 billion.
We maintain material amounts of cash, cash equivalents and short-term investments, and, as indicated above, we have the commitment of the Bank to issue irrevocable standby letters of credit up to an aggregate amount of $60.0 million under the credit facilities, with an accordion feature that would provide an additional Bank commitment of $30.0 million.
Our competition for domestic renewable energy projects like solar energy fields and land-based wind energy farms is more diverse and may include firms that are smaller than us. The competitive landscape in the EPC services market for natural gas-fired power plant construction has changed significantly over the last seven years.
Our competition for domestic renewable energy projects like solar energy fields and land-based wind energy farms is more diverse and may include firms that are smaller than us. We are not immune to the risks of losses on major projects.
Industrial Construction Services TRC was founded in 1977 and its fabrication facility and offices are located near Greenville, North Carolina. TRC is an industrial construction and field services firm with steel pipe and vessel fabrication capabilities serving industrial organizations primarily in the Southeast region of the U.S.
TRC is an industrial construction and field services firm with steel pipe and vessel fabrication capabilities serving industrial organizations primarily in the Southeast region of the U.S. During Fiscal 2023, TRC consolidated its metal fabrication plants and support structures into one industrial fabrication and warehouse facility that totals over 90,000 square feet.
During Fiscal 2023, TRC consolidated its metal fabrication plants and support structures into one industrial fabrication and warehouse facility that totals over 90,000 square feet. The consolidation reduced fixed costs and notably streamlined the business, which has permitted TRC to focus primarily on its industrial field service opportunities, which includes construction projects.
The consolidation reduced fixed costs and notably streamlined the business, which has permitted TRC to focus primarily on its industrial field service opportunities, which includes construction projects. TRC operates within its own reportable business segment, industrial construction services.
Power Industry Services GPS, which we acquired in 2006, historically provides the most significant percentage of our power industry services. As a full-service engineering, procurement and construction (“EPC”) services firm, GPS has the proven abilities of designing, building and commissioning large-scale energy projects primarily in the U.S.
As a full-service engineering, procurement and construction (“EPC”) services firm, GPS has the proven abilities of designing, building and commissioning large-scale energy projects primarily in the U.S. The extensive design, construction, project management, start-up and operating experience of GPS has expanded since its founding, with a substantial portfolio of installed power-generating capacity, primarily in the domestic market.
While the market remains dynamic, we are in an era where there are fewer competitors for new domestic gas-fired power plant EPC services project opportunities. Several major competitors have either exited the market, been acquired, or announced intentions to avoid fixed-price contracts for various reasons.
The competitive landscape in the EPC services market for natural gas-fired power plant construction has evolved significantly over the past decade. While the market remains dynamic, we are in an era where there are fewer competitors for new domestic gas-fired power plant EPC services project opportunities, especially for combined power plants.
Financing Arrangements During April 2021, we amended our Amended and Restated Replacement Credit Agreement (the “Credit Agreement”) with Bank of America, N.A. (the “Bank”), which extended the expiration date of the Credit Agreement to May 31, 2024 and reduced the borrowing rate. On March 6, 2023, we entered into the Second Amendment (the “Second Amendment”) to the Credit Agreement.
The expiration date of the Expired Credit Agreement was May 31, 2024. On May 24, 2024, we executed the Second Amended and Restated Replacement Credit Agreement with an expiration date of May 31, 2027 (the “New Credit Agreement”) with Bank of America, N.A. (the “Bank”).
In the past, we have had to navigate supply chain disruptions and other sourcing issues that have or could have impacted our projects.
In the past, we have had to navigate supply chain disruptions and other sourcing issues that have or could have impacted our projects. For example, currently there are significant supply chain constraints driven by the increased demand for power, which are affecting the availability of critical components such as gas turbines and other long lead-time equipment, such as transformers.
The customers include primarily independent power project owners, public utilities, power plant heavy equipment suppliers and other commercial firms with significant power requirements with customer projects located in the United States (the “U.S.”), the Republic of Ireland (“Ireland”) and the United Kingdom (the “U.K.”).
Projects are located in the United States (the “U.S.”), the Republic of Ireland (“Ireland”) and the United Kingdom (the “U.K.”).
The Bank’s consent is not required for acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The Bank requires that we comply with certain financial covenants at its fiscal year-end and at each of its fiscal quarter-ends.
The New Credit Agreement requires that we comply with certain financial covenants at its fiscal year-end and at each fiscal quarter-end.
During recent fiscal years, we believe in general that we effectively confronted the economic challenges to our active jobs represented by the inflationary surge in prices. C ompetition GPS and APC compete with large and well capitalized private and public firms in the construction and engineering services industry including firms that have global businesses.
C ompetition GPS and APC compete with large and well capitalized private and public firms in the construction and engineering services industry including firms that have global businesses. These competitors may be multi-billion-dollar companies that have thousands of employees. We also may compete with regional construction services companies in the markets where planned projects might be located.
More information about our sustainability accomplishments can be found in the sustainability section we recently added to our website. As an important element of our business development strategy, we are targeting a number of contract awards that will expand the amount of our renewable energy project work.
More information about our responsible business accomplishments can be found in the sustainability section of our website. Several of our recent projects reflect our ongoing contributions to renewable power generation.
Removed
The extensive design, construction, project - 3 - Table of Contents management, start-up and operating experience of GPS has grown with installed capacity exceeding 18 gigawatts of mostly domestic power-generating capacity. These projects have included base-load combined-cycle facilities, simple-cycle peaking plants and boiler plant construction and renovation efforts.
Added
Significant acquired companies will be operated in a manner that we believe will best provide long-term and enduring value for our stockholders. - 3 - Table of Contents Power Industry Services GPS, which we acquired in 2006, historically provides the most significant percentage of our power industry services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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We have been, and may be in the future, named as a defendant in legal proceedings where parties may allege breach of contract and seek recovery for damages or other remedies with respect to our projects or other matters (see Legal Proceedings in Item 3). These legal matters generally arise in the normal course of our business.
We have been, and may be in the future, named as a defendant in legal proceedings where parties may allege breach of contract and seek recovery for damages or other remedies with respect to our projects or other matters (see Item 3, Legal Proceedings). These legal matters generally arise in the normal course of our business.
In addition, Delaware law limits transactions between us and persons that acquire significant amounts of our stock without approval of our board of directors. - 23 - Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
In addition, Delaware law limits transactions between us and persons that acquire significant amounts of our stock without approval of our board of directors. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. - 23 - Table of Contents
Variations occur due to matters such as owner-caused delays or changes from the initial project scope, both of which may result in additional costs. At times, contract variation submissions can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to accurately predict when these differences will be fully resolved.
Variations occur due to matters such as owner-caused delays or changes from the initial project scope, both of which may result in additional costs. At times, contract variation submissions can be the subject of lengthy negotiation, arbitration or litigation proceedings, and it is difficult to accurately predict when these differences will be fully resolved.
Our power industry services activities in any one fiscal reporting period are concentrated on a limited number of large construction projects for which we recognize revenues over time as we transfer control of the project asset to the customer. To a substantial extent, our contract revenues are based on the amounts of costs incurred.
Our power industry services activities in any one fiscal reporting period are concentrated on a limited number of large construction projects for which we recognize revenues over time as we transfer control of the project asset to the customer. To a substantial extent, our contract revenues are based on the related amounts of costs incurred.
Intense global competition for engineering, procurement and construction contracts could reduce our market share. The competitive landscape in the EPC services market for natural gas-fired power plants was altered several years ago as several significant competitors announced their exit from the market for a variety of reasons.
Intense global competition for engineering, procurement and construction contracts could reduce our market share. 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.
Safety is a primary focus of our business and is critical to our reputation. Many of our customers require that we meet certain safety criteria to be eligible to bid on contracts. Further, regulatory changes implemented by OSHA or similar government agencies could impose additional costs on us.
Consequently, safety is a primary focus of our business and is critical to our reputation. Many of our customers require that we meet certain safety criteria to be eligible to bid on contracts. Further, regulatory changes implemented by OSHA or similar government agencies could impose additional costs on us.
Our failure to recover adequately on contract variations submitted to project owners could have a material effect on our financial results. We may submit contract variations to project owners for additional costs exceeding the contract price or for amounts not included in the original contract price.
Our failure to recover adequately on contract variations submitted to project owners could have a material effect on our financial results. We may submit contract variations to project owners for additional amounts exceeding the contract price or for amounts not included in the original contract price.
The adverse effects of the war in Ukraine have 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.
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.
In other cases, project owners may withhold retention and/or contract payments they believe they do not contractually owe us, or they believe offset amounts owed to them by us. They may even terminate the contract.
In other cases, project owners may withhold retention and/or contract payments that they believe they do not contractually owe us, or they believe offset amounts owed to them by us. They may even terminate the contract.
We believe that we have deployed industry-accepted security measures and technologies to securely maintain confidential and proprietary information retained within our information systems, including compliance with GDPR specifically at APC. However, these measures and technologies may not adequately prevent unanticipated security breaches. There can be no assurance that our efforts will prevent these threats.
We believe that we have deployed industry-accepted security measures and technologies to securely maintain confidential and proprietary information retained within our information systems, including compliance with GDPR, specifically at APC. However, these measures and technologies may not adequately prevent unanticipated security breaches. There can be no assurance that our efforts will prevent these intrusions.
Our projects generally provide our customers the right to terminate the existing contract unilaterally at their convenience as long as they compensate us for work already completed and the additional costs incurred by us to terminate corresponding subcontract and equipment orders, demobilize and vacate construction sites. These costs would most likely be meaningful.
Our projects generally provide our customers 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, terminate equipment orders, and demobilize and vacate construction sites. These costs would most likely be meaningful.
These groups of stockholders may have significant influence over 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. We may not pay cash dividends in the future.
These groups of stockholders may have meaningful influence over 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. We may not pay cash dividends in the future.
Additionally, the number of shares of our common stock that will ultimately be issued in connection with the restricted stock unit awards is not known. Any issuance will result in the dilution of the stock ownership of current stockholders. Our officers, directors and certain unaffiliated stockholders have substantial control over the Company.
Additionally, the number of shares of our common stock that will ultimately be issued in connection with the restricted stock unit awards is not known. Any issuance will result in the dilution of the stock ownership of current stockholders. Our officers, directors and certain unaffiliated stockholders have meaningful control over the Company.
In the past, 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.
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.
This section of our 2024 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 2024 Annual Report.
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.
That does not suggest that we may not be victimized by an additional breach in the future. Any significant future breach of our information security could damage our reputation, result in litigation and/or regulatory fines and penalties, or have other material adverse effects on our business, financial condition, results of operations or cash flows.
That does not - 21 - Table of Contents suggest that we may not be victimized by an additional breach in the future. Any significant future breach of our information security could damage our reputation, result in litigation and/or regulatory fines and penalties, or have other material adverse effects on our business, financial condition, results of operations or cash flows.
In particular, these types of events could shut down our construction job sites or fabrication facility for indefinite periods of time, disrupt our product supply chain or - 13 - Table of Contents 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.
In particular, these 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.
If we are required to pay such costs, the total costs of the project would likely exceed our original estimate, and we could experience reduced profits or a loss related to the applicable project. We may be involved in litigation, liability claims and contract disputes which could reduce our profits and cash flows.
If we are required to pay such costs, the total costs of the project would likely exceed our original estimate, and we could experience reduced profits or a loss related to the applicable project. - 18 - Table of Contents We may be involved in litigation, liability claims and contract disputes which could reduce our profits and cash flows.
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.
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, - 17 - Table of Contents schedule delays or even lawsuits that could be significant.
In addition, from time to time, we and/or certain of our current or former directors, officers or employees could be named as parties to other types of lawsuits. - 18 - Table of Contents Litigation can involve complex factual and legal questions, and proceedings may occur over several years.
In addition, from time to time, we and/or certain of our current or former directors, officers or employees could be named as parties to other types of lawsuits. Litigation can involve complex factual and legal questions, and proceedings may occur over several years.
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, - 14 - Table of Contents thus decreasing the overall demand for our EPC services and adversely impacting the financial outlook for our power industry services business.
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 services business.
The majority of our consolidated revenues relate to performance by the power industry services segment which represented 73%, 76% and 78% of consolidated revenues for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. GPS, the major business component of this segment, earns the substantial portion of its revenues from execution on long-term natural gas-fired EPC services contracts with project owners.
The majority of our consolidated revenues relate to performance by the power industry services segment, which represented 79%, 73% and 76% of consolidated revenues for Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively. GPS, the major business component of this segment, earns the substantial portion of its revenues from execution on long-term natural gas-fired EPC services contracts with project owners.
Even if we do complete acquisitions in the future, acquired companies may fail to achieve the results we anticipate including the expected gross profit percentages. In general, we keep each of our subsidiary operations in a self-sustaining mode.
Even if we do complete acquisitions in the future, acquired companies may fail to achieve the results we anticipate including the expected gross profit percentages. - 20 - Table of Contents In general, we keep each of our subsidiary operations in a self-sustaining mode.
Unresolved disputes with a subcontractor or supplier regarding the scope of work or performance may escalate, resulting in arbitration proceedings or legal actions. - 19 - Table of Contents Unfavorable outcomes of such disputes may also impact contract profitability in an adverse manner.
Unresolved disputes with a subcontractor or supplier regarding the scope of work or performance may escalate, resulting in arbitration proceedings or legal actions. Unfavorable outcomes of such disputes may also impact contract profitability in an adverse manner.
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 fracturing and horizontal drilling. However, the share of electricity generation provided by natural gas is particularly reactive in the short term to changing natural gas prices.
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.
We award stock options, time-based restricted stock units, market-based restricted stock units and performance-based restricted stock units to executives and other key employees (see Note 11 to the accompanying consolidated financial statements). Future exercises of options to purchase shares of common stock at prices below prevailing market prices will result in ownership dilution for current stockholders.
We award stock options and restricted stock units to directors, executives and other key employees (see Note 11 to the accompanying consolidated financial statements). Future exercises of options to purchase shares of common stock at prices below prevailing market prices will result in ownership dilution for current stockholders.
Approval delays and public opposition to new oil and gas pipelines have become major potential hurdles for the developers of gas-fired power plants and other fossil-fuel facilities. In particular, pipeline projects may be delayed by onsite protest demonstrations, indecision by local officials and lawsuits.
Approval delays and public opposition to new oil and gas pipelines have been major potential hurdles for the developers of gas-fired power plants and other fossil-fuel facilities. In particular, pipeline projects have been delayed by onsite protest demonstrations, indecision by local officials and lawsuits.
The inability to hire and retain qualified skilled employees in the future, including workers in the construction crafts, could negatively impact our ability to complete our long-term construction contracts successfully. Our dependence upon third parties to complete many of our contracts may adversely affect our performance under current and future construction contracts.
However, the inability to hire and retain qualified skilled employees in the future, including workers in the construction crafts, could negatively impact our ability to complete our long-term construction contracts successfully. - 19 - Table of Contents Our dependence upon third parties to complete many of our contracts may adversely affect our performance under current and future construction contracts.
Techniques used to attempt to obtain unauthorized access to information systems change frequently, and the rapid development of artificial intelligence poses new cybersecurity risks that we may not timely anticipate.
Techniques used to attempt to obtain unauthorized access to information systems change frequently, and the rapid development of AI poses new cybersecurity risks that we may not timely anticipate.
We may discontinue the repurchase of our common stock in the future. Under our share repurchase program, our board of directors has authorized us to repurchase shares of our common stock in the open market or through investment banking institutions, privately-negotiated transactions, or direct purchases.
Under our share repurchase program, our board of directors has authorized us to repurchase shares of our common stock in the open market or through investment banking institutions, privately negotiated transactions, or direct purchases.
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, the repeated capacity auction delays, and the shrinking annual capacity auction prices, 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.
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.
The viability of the gas-fired power plants that we build is based substantially on the availability of inexpensive natural gas supplies provided through the use of fracking combined with horizontal drilling techniques. The new supplies of natural gas generally lowered the price of natural gas in the U.S. and reduced its volatility.
The viability of the gas-fired power plants that we build is based substantially on the availability of inexpensive natural gas supplies provided through the use of hydraulic fracturing combined with horizontal drilling techniques. The increased supply of natural gas generally lowered the price of natural gas in the U.S. and reduced its volatility.
However, as a large number of these same risks exist for our other reportable segments, (1) industrial construction services, and (2) telecommunications infrastructure services, a review and assessment of the following risk factors should be performed with that in mind.
However, as a large number of these same risks exist for our other reportable segments, the industrial construction services segment and the telecommunications infrastructure services segment, a review and assessment of the following risk factors should be performed with those similarities in mind.
Expectations of customers and investors may change with respect to sustainability practices, which may impose costs or impact our ability to obtain financing. Customer and investor standards, which are ever-evolving, have become increasingly focused on environmental, social and governance practices of the companies with which they work or in which they invest.
Expectations of customers and investors may change with respect to sustainability practices, which may impose costs or impact our ability to obtain financing. Customer and investor standards, which are ever-evolving, may include a focus on environmental, social and governance practices of the companies with which they work or in which they invest.
These risks tend to be exacerbated for longer-term contracts because there is increased risk that the circumstances under which we based our original cost estimates or project schedules will change with a resulting increase in costs or delays in achieving scheduled milestones. In such events, our financial condition and results of operations could be negatively impacted.
These risks tend to be exacerbated for longer-term contracts because there is increased risk that the circumstances under which we based our original cost estimates or project schedules will change. In such events, our financial condition and results of operations could be negatively impacted.
However, the process of fracking is controversial due to concerns about the disposal of the waste water, the possible contamination of nearby water supplies and the risk of potential seismic events. Should future evidence confirm the concerns, the use of fracking may be suspended, limited, or curtailed by additional state and/or federal authorities.
However, the process of hydraulic fracturing is controversial due to concerns about wastewater disposal, the possible contamination of nearby water supplies and the risk of seismic activity. Should future evidence confirm these concerns, the use of hydraulic fracturing may be suspended, limited, or curtailed by additional state and/or federal authorities.
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 public health crises, geopolitical conflicts, terrorism and civil disturbances could disrupt our operations or the operations of one or more of our vendors or customers.
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.
When these types of events occur and unresolved matters are pending, we have used existing liquidity to cover cost overruns pending their resolution. The aggregate amounts of contract variations included in the transaction prices that were still pending customer acceptance at January 31, 2024 and 2023 were $8.4 million and $11.6 million, respectively.
When these types of events occur and unresolved matters are pending, we have used existing liquidity to cover cost overruns pending their resolution. The aggregate amount of contract variations included in the transaction prices that were still pending customer acceptance at January 31, 2025 was $8.0 million.
Even though current natural gas prices are extremely 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. Soft demand for electrical power may cause deterioration in our financial outlook.
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.
In the future, we may not be able to successfully integrate such acquired companies with our other operations without substantial costs, delays or other operational or financial problems including: ● the diversion of management’s attention from other important operational or financial matters; ● the inability to retain or maintain the focus of key personnel of acquired companies; ● the discovery of previously unidentified project costs or other liabilities; ● unforeseen difficulties encountered in the maintenance of uniform standards, controls, procedures and policies, including an effective system of internal control over financial reporting; and ● impairment losses related to acquired goodwill and other intangible assets. - 20 - Table of Contents Future acquisitions could result in issuances of equity securities that would reduce our stockholders’ ownership interests, the issuance of sizable amounts of debt and the incurrence of contingent liabilities.
In the future, we may not be able to successfully integrate such acquired companies with our other operations without substantial costs, delays or other operational or financial problems including: ● the diversion of management’s attention from other important operational or financial matters; ● the inability to retain or maintain the focus of key personnel of acquired companies; ● the discovery of previously unidentified project costs or other liabilities; ● unforeseen difficulties encountered in the maintenance of uniform standards, controls, procedures and policies, including an effective system of internal control over financial reporting; and ● impairment losses related to acquired goodwill and other intangible assets.
Our board of directors evaluates our ongoing operational and financial performance in order to determine what role strategically aligned dividends should play in creating shareholder value. We have paid regular and special cash dividends in the past.
Our board of directors evaluates our ongoing operational and financial performance in order to determine what role strategically aligned dividends should play in creating shareholder value. We have paid regular and special cash dividends in the past. Since Fiscal 2019, we have paid quarterly cash dividends (see Note 14 to the accompanying consolidated financial statements).
If we fail to accurately estimate the resources required and time necessary to complete these types of contracts, or if we fail to complete these contracts within the costs and timeframes to which we have agreed, there could be material adverse impacts on our actual financial results, the accuracy of forecasted future results, as well as our business reputation. - 17 - Table of Contents Factors not specifically discussed in these risk factors that could result in contract cost overruns, project delays or other problems for us may include: ● the impacts of inflation on fixed-price contracts; ● delays in the scheduled deliveries of machinery and equipment ordered by us or a project owner; ● unanticipated technical problems, including design or engineering issues; ● inadequate project execution tools for recording, tracking, forecasting and controlling future costs and schedules; ● unforeseen increases in the costs of labor, warranties, raw materials, components or equipment, or our failure or inability to obtain resources when needed; ● reliance on historical cost and/or execution data for estimation purposes that is not representative of current conditions; ● delays or productivity issues caused by weather conditions, or other forces majeure; ● satisfying the requirements of the Inflation Reduction Act of 2022 (the “IRA”) for our customers in order to maximize its potential benefits; ● incorrect assumptions related to labor productivity, scheduling estimates or future economic conditions; ● workmanship deficiencies resulting in delays and costs associated with the performance by us of unanticipated rework; and ● modifications to projects that create unanticipated costs or delays.
Factors that could result in contract cost overruns, project delays or other problems for us may include: ● the impacts of inflation on fixed-price contracts; ● delays in the scheduled deliveries of machinery and equipment ordered by us or a project owner; ● unanticipated technical problems, including design or engineering issues; ● inadequate project execution tools for recording, tracking, forecasting and controlling future costs and schedules; ● unforeseen increases in the costs of labor, warranties, raw materials, components or equipment, or our failure or inability to obtain resources when needed; ● reliance on historical cost and/or execution data for estimation purposes that is not representative of current conditions; ● delays or productivity issues caused by weather conditions, or other forces majeure; ● satisfying the requirements of the Inflation Reduction Act of 2022 (the “IRA”) for our customers in order to maximize its potential benefits; ● incorrect assumptions related to labor productivity, scheduling estimates or future economic conditions; ● workmanship deficiencies resulting in delays and costs associated with the performance by us of unanticipated rework; and ● modifications to projects that create unanticipated costs or delays.
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.
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. - 15 - Table of Contents Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions, increased costs and potential losses.
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.
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.
Future bonding requirements may adversely affect our ability to compete for new energy plant construction projects. 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.
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.
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; ● the determination of the fair value of stock-based incentive awards; and ● accruals for estimated liabilities, including any losses related to legal matters. - 12 - Table of Contents ​ Our actual business and financial results could differ from our estimates, which may impact future profits.
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. - 12 - Table of Contents 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; ● the determination of the fair value of stock-based incentive awards; ● the determination of the allowance for doubtful accounts; and ● accruals for estimated liabilities, including any losses related to legal matters.
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. Competing effectively in our market requires substantial financial resources, the availability of skilled personnel and equipment when needed and the effective use of technology.
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.
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.
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.
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. - 15 - Table of Contents Risks Related to the Regulatory Environment We are required to comply with environmental laws and regulations that may add unforeseen costs to our businesses.
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.
As previously disclosed, we were targeted by a complex criminal scheme in March 2023, which resulted in fraudulently-induced outbound wire transfers to a third-party account (see Note 18 to the accompanying consolidated financial statements).
As previously disclosed, we were targeted by a complex criminal scheme in Fiscal 2024, which resulted in fraudulently-induced outbound wire transfers to a third-party account (see Note 18 to the accompanying consolidated financial statements). We are unaware of any other significant security breaches at any of our business locations.
As of January 31, 2024, our executive officers and directors as a group directly owned approximately 7.3% of our voting shares. In addition, four other stockholders owned approximately 30.6% of our shares in total as of December 31, 2023.
As of January 31, 2025, our executive officers and directors as a group directly owned approximately 4.1% of our voting shares. In addition, two other stockholders owned approximately 13.5% of our shares in total as of December 31, 2024.
Risks Related to Our Market If the price of natural gas increases, the demand for our construction services could decline. 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 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 net amount of electricity generation in the U.S. provided by utility-scale solar and wind facilities continues to rise. Together, such power facilities provided approximately 12%, 13%, and 15% of the net amount of electricity generated by utility-scale power facilities in 2021, 2022 and 2023 respectively.
The net amount of electricity generation in the U.S. provided by utility-scale solar and wind facilities continues to rise.
Certain environmental laws impose substantial penalties for non-compliance and others, such as the federal Comprehensive Environmental Response, Compensation and Liability Act, impose strict, retroactive, and joint and several liability upon persons responsible for releases of hazardous substances.
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), impose strict, retroactive, and joint and several liability upon persons responsible for releases of hazardous substances.
Periodically, we provide financial support to new projects during their development phase. This aims to enhance the success of the phase and increase our chances of ultimately securing the EPC contract to build the plant.
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.
Customers may require that we meet their standards before granting us projects, which may create additional costs to us. If our sustainability practices do not ultimately meet customer expectations, we may not win projects. Investors, who may become wary of funding power services ventures with sustainability practices unacceptable to them, may decide to reallocate capital to other enterprises.
Customers may require that we meet their standards before granting us projects, which may create additional costs to us. If our sustainability practices do not ultimately meet customer expectations, we may not win projects.
However, we are a company with large balances of cash that could encourage bad actors to attempt to breach the security of our systems, possibly by using social engineering schemes. We do maintain a cybersecurity insurance policy to help protect ourselves from various types of losses relating to computer security breaches.
However, we are a company with large balances of cash that could encourage bad actors to attempt to breach the security of our systems, particularly by using social engineering schemes.
The development of a power plant construction project is expensive with a total cost that could approximate or exceed $10 million. 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 often funded by outside sources.
Unsuccessful efforts to develop energy plant projects could result in write-offs and the loss of future business. 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.
Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions, increased costs and potential losses. Our business is subject to overseas economic and political conditions that change for reasons which are beyond our control (i.e., “Brexit”). Such changes may have unfavorable consequences for us.
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.
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. As of January 31, 2024, we do not have any financial statement exposure related to outstanding power plant project development financing arrangements.
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.
Future revenues are dependent on the awards of utility-scale natural gas-fired and renewable energy EPC projects to us, the receipt of corresponding full notices-to-proceed and our ability to successfully complete the projects that we start.
Furthermore, specific economic, regulatory and market conditions affecting our clients may lead to a decrease in demand for our services, causing delays, reductions, or cancellations of projects essential to our future business forecasts. - 11 - Table of Contents Future revenues are dependent on the awards of utility-scale natural gas-fired and renewable energy EPC projects to us, the receipt of corresponding full notices-to-proceed and our ability to successfully complete the projects that we start.
Notably, in April 2024, the SEC issued an order staying implementation of the new disclosure regulations pending the resolution of certain challenges. Nonetheless, we may incur additional expenses implementing and maintaining compliance with such regulations and may divert management’s attention from other important operational or financial matters.
Notably, in April 2024, the SEC issued an order staying implementation of the new disclosure regulations pending the resolution of certain challenges. Compliance with and monitoring of these evolving requirements may result in additional costs and resource allocation, potentially diverting management’s focus from other critical operational and financial priorities.
Since Fiscal 2019, we paid a regular quarterly cash dividend of $0.25 per share of common stock, which was increased to $0.30 per share of common stock for October 2023. There can be no assurance that the evaluations of our board of directors will result in the payment of regular or special cash dividends in the future.
There can be no assurance that the evaluations of our board of directors will result in the payment of regular or special cash dividends in the future. We may discontinue the repurchase of our common stock in the future.
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.
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. - 13 - Table of Contents Our results could be adversely affected by natural disasters, human-made disasters or other catastrophic events.
The adverse financial condition of the industry could diminish our customers’ ability and willingness to fund capital expenditures or pursue significant projects in the future. Furthermore, specific economic, regulatory and market conditions affecting our clients may lead to a decrease in demand for our services, causing delays, reductions, or cancellations of projects essential to our future business forecasts.
The adverse financial condition of the industry could diminish our customers’ ability and willingness to fund capital expenditures or pursue significant projects in the future.
For example, the European Union adopted the Corporate Sustainability Reporting Directive (“CSRD”) at the end of 2022 that requires comprehensive disclosures on a broad spectrum of topics, and in October 2023, the governor of California signed into law emissions and climate risks bills that provide different and extensive reporting requirements.
For instance, the European Union adopted the Corporate Sustainability Reporting Directive (“CSRD”) in late 2022, requiring comprehensive disclosures on a broad spectrum of sustainability topics. Similarly, in October 2023, California enacted emissions and climate risk legislation with distinct and comprehensive reporting mandates.
However, the effectiveness of these protections may be limited by factors including the financial strength of the customer. The extent to which natural disasters, human-made disasters or other catastrophic events could harm us depends on the impact on our customers, supply chains, labor forces and numerous other evolving factors.
The extent to which natural disasters, human-made disasters or other catastrophic events could harm us depends on the impact on our customers, supply chains, labor forces and numerous other evolving factors. Continuing disruptions to capacity auctions and corresponding prices could reduce the demand for power plants in a primary business region.
Although we believe that the customer commitments represented by project backlog are firm, we cannot guarantee that revenues projected by us based on our project backlog will be recognized or will result in profitable operating results. Unsuccessful efforts to develop energy plant projects could result in write-offs and the loss of future business.
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.
Project backlog amounts may be uncertain indicators of future revenues as project realization may be subject to unexpected adjustments, delays and cancellations. At January 31, 2024, the total value of our project backlog for all of our business units was $0.8 billion.
Our actual business and financial results could differ from our estimates, which may impact future profits. Project backlog amounts may be uncertain indicators of future revenues as project realization may be subject to unexpected adjustments, delays and cancellations.
Additionally, the SEC’s new regulations adopted in March 2024 mandate public companies to integrate extensive climate risk disclosures in their annual reports and registration statements, where certain disclosures will be subject to phased-in assurance requirements. At this time, it is uncertain whether the SEC’s new climate disclosure rules will withstand pending and future legal challenges.
In March 2024, the SEC introduced regulations requiring public companies to incorporate detailed climate risk disclosures in their annual reports and registration statements, with certain disclosures subject to phased-in assurance requirements. However, the future of these rules remains uncertain due to ongoing legal challenges.
We may be subject to increased corporate taxes in the future. We are subject to income taxes in the U.S. and foreign jurisdictions.
We may be subject to increased corporate taxes in the future. We are subject to income taxes in the U.S. and foreign jurisdictions. A change in tax laws, treaties or regulations, or their interpretation, in any country where we operate could result in a higher tax burden or could increase our cost of tax compliance.
We began to repurchase shares of our common stock in November 2021, and we have repurchased shares of our common stock during each fiscal year since. Subsequent to January 31, 2024, we have continued to make open market purchases pursuant to the approvals of our board of directors.
We began to repurchase shares of our common stock in November 2021, and we have repurchased shares of our common stock during each fiscal year since then (see Item 5 in Part II of this 2025 Annual Report and Note 14 to the accompanying consolidated financial statements).
This entity operates a capacity market which is a process to ensure long-term grid reliability by securing the appropriate amount of power supply resources needed to meet predicted future energy demands. Capacity payments represent meaningful portions of the revenue streams of qualifying power plants.
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.
These factors could significantly impact the feasibility, costs, and timelines of new fossil-fuel projects, affecting our future operations and financial condition. - 16 - Table of Contents Future construction projects may depend on the continuing acceptability of the hydraulic fracturing process in certain states.
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. These factors collectively pose a risk to our business operations, potentially affecting project timelines, budgets, and profitability. Future construction projects may depend on the continuing acceptability of the hydraulic fracturing process in certain states.
Investors and lenders may be generally unwilling to provide capital for energy projects to increase the domestic production and transmission of oil and natural gas. The Biden Administration poses additional regulatory hurdles for fossil-fuel energy facilities. The Biden Administration’s approach to environmental regulation poses significant risks to the development and operation of fossil-fuel energy facilities.
Investors, who may become wary of funding power services ventures with sustainability practices unacceptable to them, may decide to reallocate capital to other enterprises. - 16 - Table of Contents Investors and lenders may be generally unwilling to provide capital for energy projects to increase the domestic production and transmission of oil and natural gas.
Western European nations in search of alternative supplies of oil and natural gas may find them at higher prices or through more complicated transit routes, further disrupting global supply chains. More recently, activities conducted by terrorists based in the country of Yemen have endangered the key shipping route between the Red Sea and the Indian Ocean.
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.
Also the recent bridge collapse in Baltimore has closed temporarily ship access to its major port facilities. Such unfavorable effects may adversely impact our business going forward by altering materials and equipment delivery schedules. We have protections in our contracts with major customers that provide certain relief that helps to mitigate certain financial risks.
We have protections in our contracts with major customers that provide certain relief that helps to mitigate certain financial risks. However, the effectiveness of these protections may be limited by factors including the financial strength of the customer.
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For Fiscal 2024, a majority portion of consolidated revenues related to - 11 - Table of Contents EPC services provided to three power industry services customers.
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A significant portion of our consolidated revenues each year is generally derived from EPC services provided to a small number of customers, which can vary from year to year (see Note 16 to the accompanying consolidated financial statements).
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During Fiscal 2023 and Fiscal 2022, a majority portion of consolidated revenues related to EPC services provided to a single power industry services customer on a project that achieved substantial completion during the early part of Fiscal 2024. At times, we may be awarded contracts for which commencement of project activities are delayed or cancelled.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Moreover, we quickly informed the audit committee and regularly provided them with updates during investigation and recovery efforts. As a result of the fraud loss, net with funds recovered, and professional fees incurred related to an independent forensic investigation and efforts to recover the funds, we recognized $2.7 million of loss.
Moreover, we quickly informed the audit committee and regularly provided them with updates during investigation and recovery efforts. As a - 25 - Table of Contents result of the fraud loss, net with funds recovered, and professional fees incurred related to an independent forensic investigation and efforts to recover the funds, we recognized $2.7 million of loss.
As previously disclosed, we were targeted by a complex criminal scheme in March 2023, which resulted in fraudulently-induced outbound wire transfers to a third-party account (see Note 18 to the accompanying consolidated financial statements). The Company self-discovered the fraudulent activity and promptly contacted the remitting bank, receiving bank, dispute resolution experts, and federal and local law enforcement authorities.
As previously disclosed, we were targeted by a complex criminal scheme early in Fiscal 2024, which resulted in fraudulently-induced outbound wire transfers to a third-party account (see Note 18 to the accompanying consolidated financial statements). The Company promptly self-discovered the fraudulent activity and contacted the remitting bank, receiving bank, dispute resolution experts, and federal and local law enforcement authorities.
Administered by security, information technology, and compliance professionals and managed by senior management at each of our subsidiaries, our cybersecurity program integrates into our broader enterprise risk management framework and aligns with recognized frameworks and industry standards, as applicable, and complies with various legal and regulatory requirements.
Administered by information security, information technology, and compliance professionals and managed by senior management at each of our subsidiaries, our cybersecurity program is integrated into our broader enterprise risk management process and aligns with recognized frameworks and industry standards, as applicable, and complies with various legal and regulatory requirements.
In an effort to build a comprehensive cybersecurity strategy across the organization, this committee convenes several times each year to discuss ongoing cybersecurity initiatives, emerging regulatory requirements and industry standards, and results of risk assessments.
In an effort to build a comprehensive cybersecurity strategy across the organization, this committee convenes as needed to discuss ongoing cybersecurity initiatives, emerging regulatory requirements and industry standards, and results of risk assessments.
Significant results of these assessments are reported to the audit committee and, when necessary, the board of directors, leading to adjustments in our cybersecurity approach based on their findings to ensure our defenses remain robust and effective.
Significant results and recommendations of these assessments are reported to the audit committee and, as necessary, the board of directors, leading to adjustments in our cybersecurity approach to ensure our defenses remain robust and effective.
The audit committee of our board of directors oversees cybersecurity risk and ensures timely reporting and management of these threats. Risk Management and Strategy As our business objectives and operational needs change, our cybersecurity professionals continuously evaluate and refine the measures taken to address our identified risks.
The audit committee of our board of directors oversees management’s cybersecurity program and ensures timely reporting and management of cyber incidents. Risk Management and Strategy As our business objectives and operational needs change, our cybersecurity professionals continuously evaluate and refine the measures taken to address our identified risks for each subsidiary.
Our audit committee or the board of directors is actively involved in strategic cybersecurity decisions, providing guidance and concurrence for significant or pervasive projects. This ensures that cybersecurity is seamlessly integrated into our strategic planning, aligning with our broader organizational goals.
In January 2024, our board of directors participated in a cybersecurity training session provided by our internal audit firm. Our audit committee or the board of directors is actively involved in strategic cybersecurity decisions, providing guidance and concurrence for significant or pervasive projects. This ensures that cybersecurity is seamlessly integrated into our strategic planning, aligning with our broader organizational goals.
ITEM 1C. CYBERSECURITY Our approach to managing cybersecurity risk involves a comprehensive program established at each subsidiary. This strategy intends to pinpoint subsidiary-specific risks associated with both our digital and physical assets with the objective of employing effective measures that ensure the security of our infrastructure, systems, data, business partners, customers, and financial information against potential cyber incidents.
This strategy intends to pinpoint entity-specific risks associated with both our digital and physical assets with the objective of employing effective measures that ensure the security of our infrastructure, systems, data, business partners, customers, and financial information against potential cyber incidents.
To mitigate cybersecurity risks linked to our engagement with third-party service providers, we perform security screening and review for prospective vendors that require access to our information systems. Additionally, to further protect our operations and enhance our cybersecurity risk management process, we maintain cybersecurity risk insurance obtained from industry leading underwriters.
To mitigate cybersecurity risks linked to our engagement with third-party service providers, we perform security screening and review for prospective vendors that require access to our information systems.
These engagements, which may encompass regular audits, threat assessments, vulnerability testing, and consultations on security enhancements, help us tap into specialized knowledge and stay aligned with industry best practices.
These engagements, which may encompass regular audits, risk assessments, gap assessments, social engineering and penetration testing, and consultations on security enhancements, enable us to align with industry best practices.
Recognizing the importance of human factors in cybersecurity, we provide regular employee training that emphasizes common threats, such as phishing, social engineering, sensitive data exposure, and insider risks. In addition to regular training sessions, we perform phishing simulations, post security bulletins, and provide dedicated means for employees to report attempted threats.
Recognizing the importance of human factors in cybersecurity, we prioritize conducting regular security and awareness training for employees that emphasizes common threats, such as phishing, social engineering, sensitive data exposure, and insider risks. These initiatives are designed to ensure that employees understand the latest security threats, best practices, and how to recognize potential risks.
Management provides the audit committee regular updates covering information security issues, recent - 24 - Table of Contents organizational developments and IT initiatives, vulnerability assessments, third-party evaluations, and emerging best practices.
Management provides the audit committee regular updates covering information security issues, recent organizational developments and IT initiatives, vulnerability assessments, third-party evaluations, and emerging best practices. The audit committee also engages with our internal audit firm and other external specialists about organizational risks related to cybersecurity, as well as the policies and controls designed to mitigate these risks.
Our technical measures include firewalls, intrusion detection and prevention systems, anti-malware tools, and access and configuration controls, to shield our information systems from cybersecurity incidents. Acknowledging the dynamic and complex landscape of cybersecurity threats, we engage with various external specialists to evaluate and strengthen our cybersecurity risk management practices.
Our technical measures, based on each subsidiary’s environment, may include firewalls, segmented networks, intrusion detection and prevention systems, encryption, anti-malware tools, and configuration controls, to shield our information systems from cybersecurity incidents. Additionally, we apply strong access controls, enforce multi-factor authentication, and regularly update software and patches against vulnerability exploitation.
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The audit committee also engages with our internal audit firm and other external specialists about organizational risks related to cybersecurity, as well as the policies and controls designed to mitigate these risks. In January 2024, our board of directors participated in a cybersecurity training session provided by our internal audit firm.
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ITEM 1C. CYBERSECURITY Our approach to managing cybersecurity risk involves a comprehensive program established at each subsidiary and our corporate headquarters.
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We use managed endpoint detection and response tools to proactively monitor, detect, and respond to security threats across all endpoints, including desktops, laptops, and mobile devices. These tools provide real-time visibility into endpoint activities, allowing us to identify suspicious behavior, such as malware infections, unauthorized access attempts, and abnormal system processes.
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We maintain business continuity plans that define how our critical operations will continue during disruptions, ensuring minimal downtime and seamless access to vital services. Our comprehensive disaster recovery plans include regularly testing backup systems and clear procedures for restoring critical business applications in the event of data loss, cyberattacks, or natural disasters.
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This multi-faceted approach ensures that, even in the face of unexpected incidents, our subsidiaries and organization can quickly recover, maintain operational resilience, and protect the data and services that are essential to our success. Acknowledging the dynamic and complex landscape of cybersecurity threats, we engage with various external specialists to evaluate and strengthen our information security practices and procedures.
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During Fiscal 2025, GPS hired a cybersecurity engineer whose mission is to design and implement a comprehensive cybersecurity architecture that elevates the current risk management and strategy while leveraging existing platforms, policies and best practices.
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In addition to regular training sessions, we also perform simulated exercises, such as phishing drills, to reinforce learning and test employees' ability to respond to real-world threats. Lastly, we regularly share - 24 - Table of Contents security updates and reminders through internal communications and provide dedicated means for employees to report attempted threats.
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Based on the subsidiary and the vendor, this process may include reviewing the vendor’s data protection policies, assessing their ability to meet our security requirements, and ensuring that they have adequate safeguards in place to prevent and respond to breaches.
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For our ongoing relationships with regular vendors, we may conduct annual risk assessments to re-evaluate their security posture, identify any changes or emerging risks, and ensure that they continue to meet our standards. Additionally, to further protect our operations and enhance our cybersecurity risk management process, we maintain cybersecurity risk insurance obtained from industry leading underwriters.

Item 2. Properties

Properties — owned and leased real estate

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APC also leases office space in Derby, England, and warehouse space in Billingham, England. SMC is primarily located in Tracys Landing, Maryland, and leases facilities that include approximately five acres of land, a 2,400 square foot maintenance facility and approximately 3,900 square feet of office space.
In addition, APC owns an operations support facility in Nenagh, Ireland, that includes approximately 10,663 square feet of warehouse and a small amount of office space. SMC is primarily located in Tracys Landing, Maryland, and leases facilities that include approximately five acres of land, a 2,400 square foot maintenance facility and approximately 3,900 square feet of office space.
SMC also leases office space (3,570 square feet) and warehouse space (11,460 square feet) in Hampton, Virginia. - 25 - Table of Contents We consider the Company’s owned and leased properties to be sufficient for continuation of our operations for the foreseeable future.
SMC also leases office space (3,570 square feet) and warehouse space (11,460 square feet) in Hampton, Virginia. We consider the Company’s owned and leased properties to be sufficient for continuation of our operations for the foreseeable future. Our operations in the field may require us to occupy additional facilities for project support, staging or on customer premises or job sites.
TRC owns and occupies a one-story industrial fabrication and warehouse facility (90,000 square feet), containing approximately 5,400 square feet of office space, and the underlying land (12.16 acres), located in Winterville, North Carolina. TRC also leases two offices (2,200 and 1,800 square feet) that are located close to one another in Winterville, North Carolina.
GPS owns and occupies a three-story office building (23,380 square feet) and the underlying land (1.75 acres), located in Glastonbury, Connecticut, that serves as its headquarters. TRC owns and occupies a one-story industrial fabrication and warehouse facility (90,000 square feet), containing approximately 5,400 square feet of office space, and the underlying land (12.16 acres), located in Winterville, North Carolina.
Our operations in the field may require us to occupy additional facilities for project support, staging or on customer premises or job sites. Accordingly, we may rent local office space, construction offices on or near job sites, storage yards for equipment and materials and temporary housing units; all under arrangements that are temporary or short-term in nature.
Accordingly, we may rent local office space, construction offices on or near job sites, storage yards for equipment and materials and temporary housing units; all under arrangements that are temporary or short-term in nature. These costs are expensed as incurred and are included substantially in the cost of revenues.
APC owns the top two floors (3,500 square feet) and leases an additional floor (2,000 square feet) of an office building located in Limerick, Ireland, that serves as its headquarters. In addition, APC owns an operations support facility in Nenagh, Ireland, that includes approximately 10,663 square feet of warehouse and a small amount of office space.
TRC also leases three offices (approximately 5,073 square feet in total) that are located close to one another in Winterville, North Carolina. APC owns the top two floors (3,500 square feet) and leases an additional floor (2,000 square feet) of an office building located in Limerick, Ireland, that serves as its headquarters.
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ITEM 2. PROPERTIES. We occupy our corporate headquarters in Rockville, Maryland, under a lease covering 2,521 square feet of office space. GPS owns and occupies a three-story office building (23,380 square feet) and the underlying land (1.75 acres), located in Glastonbury, Connecticut, that serves as its headquarters.
Added
ITEM 2. PROPERTIES. In February 2025, we moved our corporate headquarters to Arlington, Virginia, where we lease approximately 3,678 square feet of office space. Prior to our move, our corporate headquarters were based in Rockville, Maryland.
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These costs are expensed as incurred and are included substantially in the cost of revenues.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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It is our opinion, based on information available at this time, that any other current claim or proceeding will not have a material effect on our consolidated financial statements. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. ​ ​ - 26 - Table of Contents PART II
It is our opinion, based on information available at this time, that any current claim or proceeding will not have a material effect on our consolidated financial statements (see Note 10 to the accompanying consolidated financial statements).
ITEM 3. LEGAL PROCEEDINGS. Note 10 to the accompanying consolidated financial statements included in Item 8 of Part II of this 2024 Annual Report presents a discussion of our legal matters. In the normal course of business, we may have other pending claims and legal proceedings.
ITEM 3. LEGAL PROCEEDINGS. In the normal course of business, we may be involved in legal proceedings and other incidental matters related to pending claims.
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In March 2025, APC’s subsidiary in the U.K., Atlantic Projects Company (UK) Limited (“APC UK”), sued EP NI Energy Limited and EP UK Investment Limited (together referred to as “EP”) in the High Court of Justice, Business and Property Courts of England and Wales for EP’s breach of contract and failure to remedy various events which negatively impacted the schedule and costs of a project to construct a 2 x 330 MW natural gas-fired power plant in Carrickfergus (the “Kilroot Project”), resulting in EP receiving the benefits of the construction efforts of APC UK and the corresponding progress on the project without making payments for the value received.
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As previously disclosed, 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.
Added
APC UK has significant billable receivables, unresolved contract variations and claims for extensions of time, among other issues, related to the Kilroot Project. The project owner has asserted counterclaims that APC UK disputes. APC UK will vigorously assert its rights and claims in order to recover its lost value and collect any remaining monies owed. ITEM 4. MINE SAFETY DISCLOSURES.
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Not applicable. ​ ​ - 26 - Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The returns are calculated assuming that an investment with a value of $100 was made in our common stock and in each index at January 31, 2019, and that all dividends were reinvested in additional shares of common stock. The graph lines merely connect the measuring dates and do not reflect fluctuations between those dates.
The returns are calculated assuming that an investment with a value of $100 was made in our common stock and in each index at January 31, 2020, and that all dividends were reinvested in additional shares of common stock. The graph lines merely connect the measuring dates and do not reflect fluctuations between those dates.
Share Repurchase Program During Fiscal 2023, our board of directors authorized an increase in our share repurchase program from $100 million to $125 million. The repurchases may occur in the open market or through investment banking institutions, privately-negotiated transactions, or direct purchases.
During Fiscal 2023, our board of directors authorized an increase in our share repurchase program from $100 million to $125 million, and in June 2024, our board of directors authorized to extend the program to January 2027. The repurchases may occur in the open market or through investment banking institutions, privately negotiated transactions, or direct purchases.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Shares of our common stock trade under the symbol AGX on the New York Stock Exchange (the “NYSE”). As of April 6, 2024, we had approximately 52 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Shares of our common stock trade under the symbol AGX on the New York Stock Exchange (the “NYSE”). As of March 21, 2025, we had approximately 49 stockholders of record.
Also during the month ended January 31, 2024, we repurchased 73,000 shares of common stock in a direct purchase from a director of the Company for an aggregate price of approximately $3.2 million, or $43.50 per share. - 27 - Table of Contents Common Stock Price Performance Graph The graph presented below compares the percentage change in the cumulative total stockholder return on our common stock for the last five years with the S&P 500 , a broad market index, and the Dow Jones US Heavy Construction TSM Index, a group index of companies where their focus is limited primarily to heavy civil construction.
For the month ended January 31, 2025, we accepted 6,539 shares of our common stock at the average price per share of $170.98 for the exercise price and/or tax withholding in connection with stock option exercises and restricted stock unit settlements that occurred during the month. - 27 - Table of Contents Common Stock Price Performance Graph The graph presented below compares the percentage change in the cumulative total stockholder return on our common stock for the last five years with the S&P 500 , a broad market index, and the Dow Jones US Heavy Construction TSM Index, a group index of companies where their focus is limited primarily to heavy civil construction.
Information related to our share repurchases for the fourth quarter of Fiscal 2024 follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ Total Number of ​ Value of Shares That May Yet ​ ​ ​ ​ ​ ​ Shares Purchased as Part ​ Be Purchased under the ​ ​ Total Number of ​ Average Price per ​ of Publicly Announced ​ Plans or Programs Period Shares Repurchased Share Paid Plans or Programs (Dollars in Thousands) November 1 - 30, 2023 ​ 4,881 ​ $ 44.40 ​ 4,881 ​ $ 27,758 December 1 - 31, 2023 ​ 7,721 ​ $ 43.60 ​ 7,721 ​ $ 27,422 January 1 - 31, 2024 ​ 80,125 ​ $ 43.67 ​ 78,117 ​ $ 24,018 Total 92,727 ​ ​ ​ 90,719 ​ ​ ​ In January 2024, we accepted 2,008 shares of our common stock at the average price per share of $47.61 for the exercise price and/or tax withholding in connection with stock option exercises and/or restricted stock unit settlements that occurred during the month.
Information related to our share repurchases for the fiscal quarter ended January 31, 2025 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ Total Number of ​ Value of Shares That May Yet ​ ​ ​ ​ ​ ​ Shares Purchased as Part ​ Be Purchased under the ​ ​ Total Number of ​ Average Price per ​ of Publicly Announced ​ Plans or Programs Period Shares Repurchased Share Paid Plans or Programs (Dollars in Thousands) November 1 - 30, 2024 ​ 5,488 ​ $ 157.58 ​ — ​ $ 23,373 December 1 - 31, 2024 ​ 43,701 ​ $ 146.38 ​ 5,251 ​ $ 22,637 January 1 - 31, 2025 ​ 7,539 ​ $ 167.11 ​ 1,000 ​ $ 22,495 Total 56,728 ​ ​ ​ 6,251 ​ ​ ​ For the month ended November 30, 2024, we accepted 5,488 shares of our common stock at the average price per share of $157.58 for the exercise price and/or tax withholding in connection with stock option exercises and restricted stock unit settlements that occurred during the month.
The stock performance shown on the graph is not intended to be indicative of future stock performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended January 31, ​ 2019 2020 2021 2022 2023 2024 Argan, Inc. $ 100.00 $ 102.10 $ 112.11 $ 98.53 $ 106.37 $ 124.16 S&P 500 100.00 121.68 142.67 175.90 161.45 195.06 Dow Jones US Heavy Construction TSM 100.00 115.28 147.95 184.87 237.63 267.42 Unregistered Sales of Equity Securities and Use of Proceeds None. - 28 - Table of Contents ITEM 6. [RESERVED]
The stock performance shown on the graph is not intended to be indicative of future stock performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended January 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2024 ​ 2025 Argan, Inc. $ 100.00 $ 109.80 $ 96.50 $ 104.17 $ 121.60 $ 380.49 S&P 500 ​ 100.00 ​ 117.25 ​ 144.56 ​ 132.68 ​ 160.30 ​ 202.59 Dow Jones US Heavy Construction TSM ​ 100.00 ​ 128.34 ​ 160.36 ​ 206.13 ​ 231.97 ​ 359.19 Unregistered Sales of Equity Securities and Use of Proceeds None. - 28 - Table of Contents ITEM 6. [RESERVED]
This number does not include shareholders for whom shares were held in “street name.” Dividends In September 2023, our board of directors increased our regular quarterly cash dividend by 20% from $0.25 to $0.30 per share of common stock for the cash dividend that was paid in October 2023.
This number does not include shareholders for whom shares were held in “street name.” Dividends Since Fiscal 2019, we have paid consecutive quarterly cash dividends.
Removed
Prior to that increase and since Fiscal 2019, our board of directors declared and we paid regular quarterly cash dividends of $0.25 per share, totaling $1.00 per share for each year. During Fiscal 2021, our board of directors also declared and we paid two special cash dividends of $1.00 per share each.
Added
The regular dividend amount was increased from $0.25 per share of our common stock to $0.30 per share for the quarter ended October 31, 2023, and to $0.375 per share for the quarter ended October 31, 2024.
Removed
In our reports on Form 10-Q for the first three quarterly periods of Fiscal 2024, we disclosed the number of shares repurchased during each month of the applicable quarter and information related to the costs of the repurchase transactions.
Added
Share Repurchase Program In November 2021, we began to repurchase shares of our common stock pursuant to a program approved by our board of directors.
Added
For the month ended December 31, 2024, we accepted 38,450 shares of our common stock at the average price per share of $147.24 for the exercise price and/or tax withholding in connection with stock option exercises and restricted stock unit settlements that occurred during the month.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Other important factors and trends include low corporate state tax rates, favorable labor migration patterns, the surface transportation infrastructure and the ready access to modern seaports.
Other important factors and trends include low state corporate tax rates, favorable labor migration patterns, the surface transportation infrastructure and the ready access to modern seaports.
Income Tax Expense We recorded income tax expense for Fiscal 2024 in the net amount of approximately $16.6 million primarily due to our reporting pre-tax income for financial reporting purposes in the amount of $48.9 million for the year. Our annual effective income tax rate for Fiscal 2024 was 33.9%.
We recorded income tax expense for Fiscal 2024 in the net amount of approximately $16.6 million primarily due to our reporting pre-tax income for financial reporting purposes in the amount of $48.9 million for the year. Our annual effective income tax rate for Fiscal 2024 was 33.9%.
We believe that the benefits of natural gas as a source of power are compelling, especially as a complement to the deployment of solar and wind powered energy sources, and that the future long-term prospects for natural gas-fired power plant construction remain generally favorable as natural gas continues to be the primary source for power generation in our country.
We believe that the benefits of natural gas as a source of power are compelling, especially as a complement to the deployment of solar and wind-powered energy sources, and that the future long-term prospects for natural gas-fired power plant construction remain favorable as natural gas continues to be the primary source for power generation in our country.
We believe that cash on hand, our cash equivalents, cash that will be provided from the maturities of short-term investments and other debt securities and cash generated from our future operations, with or without funds available under our Credit Agreement, will be adequate to meet our general business needs in the foreseeable future.
We believe that cash on hand, our cash equivalents, cash that will be provided from the maturities of short-term investments and other debt securities and cash generated from our future operations, with or without funds available under our New Credit Agreement, will be adequate to meet our general business needs in the foreseeable future.
The value of future work that companies are contractually obligated to perform pursuant to active customer contracts should not be included in the disclosure of remaining unsatisfied performance obligations when the corresponding contracts include termination for convenience clauses without substantial penalties accruing to the customers upon such terminations.
The value of future work that companies are contractually obligated to perform pursuant to active customer contracts should not be included in the disclosure of remaining unsatisfied performance obligations (“RUPO”) when the corresponding contracts include termination for convenience clauses without substantial penalties accruing to the customers upon such terminations.
In the normal course of business and for certain major projects, we may be required to obtain surety or performance bonding, to provide parent company guarantees, or to cause the issuance of letters of credit (or some combination thereof) in order to provide performance assurances to clients on behalf of one of our subsidiaries.
Performance Bonds and Guarantees In the normal course of business and for certain major projects, we may be required to obtain surety or performance bonding, to provide parent company guarantees, or to cause the issuance of letters of credit (or some combination thereof) in order to provide performance assurances to clients on behalf of one of our subsidiaries.
Typically, we include the total value of EPC services and other major construction contracts in project backlog upon receiving a notice to proceed from the project owner. When provided with LNTP, we usually record only the value of the contract related to the LNTP initially.
Typically, we include the total value of EPC services and other major construction contracts in project backlog upon receiving a notice to proceed from the project owner. When provided with an LNTP, we usually record only the value of the contract related to the LNTP initially.
As our subsidiaries are wholly-owned, any actual liability related to contract performance is ordinarily reflected in the financial statement account balances determined pursuant to the Company’s accounting for contracts with customers. Any amounts that we may be required to pay in excess of the estimated costs to complete contracts in progress as of January 31, 2024 are not estimable.
As our subsidiaries are wholly owned, any actual liability related to contract performance is ordinarily reflected in the financial statement account balances determined pursuant to the Company’s accounting for contracts with customers. Any amounts that we may be required to pay in excess of the estimated costs to complete contracts in progress as of January 31, 2025 are not estimable.
The future availability of less carbon-intense, higher efficiency and inexpensive natural gas in the U.S. should be a significant factor in the economic assessment of future power generation capacity additions, although the pace of new opportunities emerging may be restrained and the starts of awarded EPC projects may be delayed or cancelled due to the challenges described above.
The future availability of less carbon-intense, higher efficiency and inexpensive natural gas in the U.S. should be a significant factor in the economic assessment of future power generation capacity additions, although the pace of new opportunities emerging may be restrained and the starts of awarded EPC projects may be delayed or canceled due to the challenges described above.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This section of our 2024 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 2024 Annual Report.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 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.
The following discussion summarizes the financial position of Argan, Inc. and its subsidiaries as of January 31, 2024, and the results of their operations for Fiscal 2024 and Fiscal 2023, and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in Item 8 of this 2024 Annual Report. Please see “Item 7.
The following discussion summarizes the financial position of Argan, Inc. and its subsidiaries as of January 31, 2025, and the results of their operations for Fiscal 2025 and Fiscal 2024, and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in Item 8 of this 2025 Annual Report. Please see “Item 7.
Outlook for Natural Gas-Fired Power Plants Despite the headwinds, we believe that the lower operating costs of natural gas-fired power plants, the higher energy generating efficiencies of modern gas turbines, and the requirements for grid resiliency should sustain the demand for modern combined cycle and simple cycle gas-fired power plants in the future.
Outlook for Natural Gas-Fired Power Plants We believe that the lower operating costs of natural gas-fired power plants, the higher energy generating efficiencies of modern gas turbines, and the requirements for grid resiliency should sustain the demand for modern combined cycle and simple cycle gas-fired power plants in the future.
The results of the process are subjected to reviews by senior management with the applicable project management personnel at each subsidiary. The intensity of the reviews may vary between projects depending on the percentage-of-completion for the projects, among other factors.
The results of the process are subjected to reviews by senior management with the applicable project management personnel at each subsidiary. The depth of the reviews may vary between projects depending on the percentage-of-completion for the projects, among other factors.
The success of this industry could reduce the climate-change fear associated with natural gas-fired power plants. We intend to execute an “all-of-the-above” approach in pursuing the construction of future facilities that support the energy transition, which we see as a continuation of our historical commitment to building cleaner energy plants.
The success of this industry could reduce the climate-change fear associated with natural gas-fired power plants. We intend to execute an “all- - 34 - Table of Contents of-the-above” approach in pursuing the construction of future facilities that support the energy transition, which we see as a continuation of our historical commitment to building cleaner energy plants.
International Power Markets The foregoing discussion in this “Market Outlook” has focused on the state of the domestic power market as the EPC services business of GPS historically provides the predominant portion of our revenues. However, overseas power markets provide important new power construction opportunities for APC especially across Ireland and the U.K.
International Power Markets The foregoing discussion in this “Market Outlook” has focused on the state of the domestic power market as the EPC services business of GPS historically provides the predominant portion of our revenues. However, overseas power markets may continue to provide important new power construction opportunities for APC, especially across Ireland and the U.K.
In general, application of the rules requires us to make important judgements and meaningful estimates that may have significant impact on the amounts of revenues recognized by us for any reporting period.
In general, application of the rules requires us to make important judgments and meaningful estimates that may have significant impact on the amounts of revenues recognized by us for any reporting period.
However, the EPC contracts of our power industry services reporting segment, and most other large contracts awarded to our other companies, are fixed-price contracts. Revenues are recognized primarily over time as performance obligations are satisfied due to the continuous transfer of control to the project owner or other customer.
However, the EPC contracts of our power - 41 - Table of Contents industry services reporting segment, and most other large contracts awarded to our other companies, are fixed-price contracts. Revenues are recognized primarily over time as performance obligations are satisfied due to the continuous transfer of control to the project owner or other customer.
Midwest Solar and Battery Projects In August 2023, GPS executed LNTPs with a customer 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.
Midwest Solar and Battery Projects 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.
We do periodically review these critical accounting policies and estimates with the audit committee of our board of directors. We consider the accounting policies related to revenue recognition on long-term construction contracts and income tax reporting to be most critical to the understanding of our financial position and results of operations.
We do periodically review these critical accounting policies and estimates with the audit committee of our board of directors. We consider the accounting policies related to revenue recognition on long-term construction contracts to be most critical to the understanding of our financial position and results of operations.
These estimates, judgments, and assumptions affect the reported amounts of assets, liabilities and equity, the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting periods.
These estimates, judgments, and assumptions affect the reported amounts of assets, liabilities and equity, the disclosure of contingent assets and liabilities at the dates of financial statements and the reported amounts of revenues and expenses during the reporting periods.
Major provisions cover the determination of which goods and services are distinct and represent - 44 - Table of Contents separate performance obligations, the appropriate treatment of variable consideration, and the evaluation of whether revenues should be recognized at a point in time or over time.
Major provisions cover the determination of which goods and services are distinct and represent separate performance obligations, the appropriate treatment of variable consideration, and the evaluation of whether revenues should be recognized at a point in time or over time.
The transaction price of a contract represents the value used to determine the amount of revenues recognized as of the balance sheet date. It may reflect amounts of variable consideration, which could be either increases or decreases to the transaction price.
The transaction price of a contract represents the value used to determine the amount of revenues recognized as of the balance sheet date. It may reflect amounts of variable consideration, which could be either increases or decreases to the - 42 - Table of Contents transaction price.
The components of our deferred taxes are presented in Note 12 to the accompanying consolidated financial statements. These amounts reflect differences in the periods in which certain transactions are recognized for financial and income tax reporting purposes.
The components of our deferred taxes are presented in Note 12 to the accompanying consolidated financial - 40 - Table of Contents statements. These amounts reflect differences in the periods in which certain transactions are recognized for financial and income tax reporting purposes.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s Annual Report on Form 10-K for the year ended January 31, 2023, that was filed with the SEC on April 17, 2023, for a discussion of financial trends, variance drivers and other significant matters for Fiscal 2023 as compared with Fiscal 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s Annual Report on Form 10-K for the year ended January 31, 2024, that was filed with the SEC on April 11, 2024, for a discussion of financial trends, variance drivers and other significant matters for Fiscal 2024 as compared with Fiscal 2023.
We believe that in substantially all cases, there would be substantial costs incurred by a customer if it terminated a contract with us for convenience including the costs of terminating subcontracts, canceling purchase orders and returning or otherwise disposing of delivered materials and equipment.
We believe that in substantially all cases, there would be substantial costs incurred by a customer if it terminated a contract with us for convenience including the costs of terminating subcontracts, canceling purchase orders, returning or otherwise disposing of delivered materials and equipment and restarting the effort with another contractor.
Market Outlook Natural Gas Power The overall 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 in the U.S. In 2010, coal-fired power plants accounted for about 45% of net electricity generation in the U.S.
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 2023, coal fueled approximately 17% 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.
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.
As we have no debt service, as our fixed asset acquisitions in a reporting period are typically low, and as our net liquidity includes our short-term investments and available-for-sale investments, our levels of working capital are not subjected to the volatility that affects our levels of cash and cash equivalents.
As we have no debt service, as our fixed asset acquisitions in a reporting period are typically low, and as our net liquidity includes our short-term investments and AFS investments, our levels of working capital are not subjected to the volatility that affects our levels of cash and cash equivalents.
Therefore, our disclosure in Note 2 of the value of remaining unsatisfied performance obligations on active customer contracts represents an amount based on contracts or orders received from customers that the Company believes are firm and where the parties are acting in accordance with their respective obligations.
Therefore, our disclosure in Note 2 of the value of RUPO on active customer contracts represents an amount based on contracts or orders received from customers that the Company believes are firm and where the parties are acting in accordance with their respective obligations.
Through TRC, the industrial construction services reportable segment provides primarily field services that support new plant construction and additions, maintenance turnarounds, shutdowns and emergency mobilizations for industrial plants primarily located in the Southeast region of the U.S. and that may include the fabrication, delivery and installation of steel components such as piping systems and pressure vessels.
Industrial Construction Services : Through TRC, we provide primarily field services that support new plant construction and additions, maintenance turnarounds, shutdowns and emergency mobilizations for industrial plants primarily located in the Southeast region of the U.S. and that may include the fabrication, delivery and installation of steel components such as piping systems and pressure vessels.
Through SMC, which conducts business as SMC Infrastructure Solutions, the telecommunications infrastructure services segment provides project management, construction, installation and maintenance services to commercial, local government and federal government customers primarily in the Mid-Atlantic region of the U.S.
Telecommunications Infrastructure Services : Through SMC, which conducts business as SMC Infrastructure Solutions, we provide project management, construction, installation and maintenance services to commercial, local government and federal government customers primarily in the Mid-Atlantic region of the U.S.
Through GPS and APC we provide a full range of engineering, procurement, construction, commissioning, maintenance, project development and technical consulting services to the power generation market, including the renewable energy sector, for a wide range of customers, including independent power project owners, public utilities, power plant heavy equipment suppliers and other commercial firms with significant power requirements in the U.S., Ireland and the U.K.
Power Industry Services : Through GPS and APC, we provide a full range of engineering, procurement, construction, commissioning, maintenance, project development and technical consulting services to the power generation market, including the renewable energy sector, for a wide range of customers, including independent power project owners, public utilities, power plant heavy equipment suppliers and other commercial firms with significant power requirements.
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 2023, representing an increase of 70% in the amount of electrical power generated by natural gas-fired power plants, which provided approximately 24% of net electricity generation for 2010.
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.
Solar and Wind 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 12%, 13% and 15% of the net amount of electricity generated by utility-scale power facilities in 2021, 2022 and 2023, respectively.
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 revenues of this business represented approximately 72.6% of consolidated revenues for Fiscal 2024 and 76.0% of consolidated revenues for the prior year. The project backlog amounts for the power industry services reportable segment as of January 31, 2024 and 2023 were $0.6 billion and $0.7 billion, respectively.
The revenues of this business represented approximately 79.3% of consolidated revenues for Fiscal 2025 and 72.6% of consolidated revenues for the prior year. The project backlog amounts for the power industry services reportable segment as of January 31, 2025 and 2024 were $1.3 billion and $0.6 billion, respectively.
In prior years, we made investments in limited liability companies that make equity investments in solar energy projects that are eligible to receive energy tax credits, for which we have received substantially all of the income tax benefits - 42 - Table of Contents associated with those investments.
Solar Energy Project Investments We make investments in limited liability companies that make equity investments in solar energy projects that are eligible to receive energy tax credits, for which we have received substantially all of the income tax benefits associated with those investments.
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 will have the capacity to generate approximately 264 MW of temporary emergency electrical power (the “Shannonbridge Power Project”).
Project completion is scheduled for the first half of Fiscal 2026. 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”).
Selling, General and Administrative Expenses Selling, general and administrative expenses were $44.4 million and $44.7 million for Fiscal 2024 and Fiscal 2023, respectively, representing 7.7% and 9.8% of consolidated revenues for the corresponding periods, respectively.
Selling, General and Administrative Expenses Selling, general and administrative expenses were $52.8 million and $44.4 million for Fiscal 2025 and Fiscal 2024, respectively, representing 6.0% and 7.7% of consolidated revenues for the corresponding periods, respectively.
Despite headwinds such as material price volatility and rising labor costs, skilled labor shortages, high interest rates and tighter lending standards, it is likely that 2024 will see a boost to construction associated with manufacturing, as well as the transportation and clean energy infrastructures, as funds from three key pieces of national legislation passed in 2021 and 2022 are expected to flow into the industry.
Despite headwinds such as rising labor costs and skilled labor shortages, it is likely that the near-term will see a boost to construction associated with manufacturing, as well as the transportation and clean energy infrastructures, as funds from three key pieces of national legislation passed in 2021 and 2022 are still expected to flow into the industry.
Accordingly, we reversed a portion of the corresponding allowance during Fiscal 2023 in the amount of $2.6 million. However, the unexpected difficulties with one construction project and the loss that was recorded by APC UK related to it caused management to reconsider the amount of work expected to be performed in the U.K. in the future.
Accordingly, we reversed a portion of the corresponding allowance during Fiscal 2023 in the amount of $2.6 million. However, the unexpected difficulties with one construction project and the loss that was recorded by APC UK related to it caused management to increase the amount of the allowance by $2.1 million in Fiscal 2024.
In addition, our EBITDA does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs.
GAAP that are included in our consolidated financial statements. In addition, our EBITDA does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs.
Declining capital costs for solar panels, wind turbines and battery storage, as well as government subsidies like those included in the Inflation Reduction Act of 2022 (the “IRA”), will result in renewables becoming increasingly cost effective compared with the alternatives when the costs of building new power capacity are considered.
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.
As stated above, the business footprint for TRC encompasses the Southeast region of the U.S. where there are many local and state governments that welcome industrial production facilities with ideal locations and with serious economic development programs and incentives.
Although TRC has worked on projects throughout the U.S., the primary business footprint for TRC encompasses the Southeast region of the U.S. where there are many local and state governments that welcome industrial production facilities with ideal locations and with serious economic development programs and incentives.
Project Backlog At January 31, 2024 and 2023, our consolidated project backlog amount of $0.8 billion consisted substantially of the projects of the power industry services reporting segment.
Project Backlog At January 31, 2025 and 2024, our consolidated project backlog amount of $1.4 billion and $0.8 billion, respectively, consisted substantially of projects within our power industry services reporting segment.
Business Description The Company is primarily a construction firm that conducts operations through its wholly-owned subsidiaries, GPS, APC, TRC and SMC.
Overview The Company is primarily a construction firm that conducts operations through its wholly owned subsidiaries, GPS, APC, TRC and SMC across three distinct reportable business segments.
The Credit Agreement, as amended, requires that we comply with certain financial covenants at our fiscal year-end and at each fiscal quarter-end, and 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.
The New 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.
In May 2023, the Biden administration proposed new rules for the Environmental Protection Agency (the “EPA”) that are 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.
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.
Telecommunications Infrastructure Services The revenues of telecommunications infrastructure services were $14.3 million for Fiscal 2024 compared with revenues of $16.2 million for Fiscal 2023. Cost of Revenues Due primarily to the increase in consolidated revenues for Fiscal 2024 compared with revenues for Fiscal 2023, consolidated cost of revenues also increased.
Telecommunications Infrastructure Services The revenues of telecommunications infrastructure services were $13.5 million for Fiscal 2025 compared with revenues of $14.3 million for Fiscal 2024. - 36 - Table of Contents Cost of Revenues Due primarily to the increase in consolidated revenues for Fiscal 2025 compared with revenues for Fiscal 2024, consolidated cost of revenues also increased.
The Kilroot Project Loss There have been a number of challenges related to the Kilroot project that have 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.
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.
These teaming arrangements are typically dissolved upon completion of the project or program. In addition, we may obtain interests in VIEs formed by its owners for a specific purpose. The evaluation of whether such interests represent our financial control of a VIE requires analysis and judgement.
In addition, we may obtain interests in VIEs formed by its owners for a specific purpose. The evaluation of whether such interests represent our financial control of a VIE requires analysis and judgment.
We recorded income tax expense for Fiscal 2023 in the net amount of approximately $11.3 million primarily due to our reporting pre-tax income for financial reporting purposes in the amount of $46.0 million for the year. Our annual effective income tax rate for Fiscal 2023 was 24.6%.
Income Tax Expense We recorded income tax expense for Fiscal 2025 in the net amount of approximately $25.7 million primarily due to our reporting pre-tax income for financial reporting purposes in the amount of $111.2 million for the year. Our annual effective income tax rate for Fiscal 2025 was 23.2%.
Our net liquidity increased by $8.7 million to $244.9 million as of January 31, 2024 from $236.2 million as of January 31, 2023, due primarily to our net income for the fiscal year, partially offset by common stock repurchases and the payment of cash dividends.
Our net liquidity increased by $56.5 million to $301.4 million as of January 31, 2025 from $244.9 million as of January 31, 2024, due primarily to our net income for the fiscal year, partially offset by the payment of cash dividends, common stock repurchases, and net cash paid for withholding taxes due to stock-based award net settlements.
The gross profit percentages of corresponding revenues for the power industry services, industrial construction services and telecommunications infrastructure services segments for Fiscal 2024 were 14.1%, 12.9% and 26.5%, respectively. For Fiscal 2023, we reported a consolidated gross profit of approximately $86.4 million, which represented a gross profit percentage of approximately 19.0% of corresponding consolidated revenues.
The gross profit percentages of corresponding revenues for the power industry services, industrial construction services and telecommunications infrastructure services segments for Fiscal 2024 were 14.1%, 12.9% and 26.5%, respectively.
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 early in the year ending January 31, 2027.
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.
The remainder of such obligations relate primarily to open service arrangements. Outstanding commitments represented by open purchase orders and subcontracts related to our construction contracts have not been included in the estimated amounts of contractual obligations as such amounts are expected to be funded through contract billings to customers.
Outstanding commitments represented by open purchase orders and subcontracts related to our construction contracts have not been included in the estimated amounts of contractual obligations as such amounts are expected to be funded through contract billings to customers. We do not have any significant obligations for materials or subcontracted services beyond those required to complete construction contracts awarded to us.
GAAP, we do not believe that this measure should be considered in isolation from, or as a substitute for, the results of our operations presented in accordance with U.S. GAAP that are included in our consolidated financial statements.
Further, we believe that EBITDA is widely used by investors and analysts as a measure of performance. However, as EBITDA is not a measure of performance calculated in accordance with U.S. GAAP, we do not believe that this measure should be considered in isolation from, or as a substitute for, the results of our operations presented in accordance with U.S.
These costs were $492.5 million and $368.7 million for Fiscal 2024 and Fiscal 2023, respectively. - 39 - Table of Contents For Fiscal 2024, we reported a consolidated gross profit of approximately $80.8 million, which represented a gross profit percentage of approximately 14.1% of corresponding consolidated revenues.
These costs were $733.2 million and $492.5 million for Fiscal 2025 and Fiscal 2024, respectively. Gross Profit For Fiscal 2025, we reported a consolidated gross profit of approximately $141.0 million, which represented a gross profit percentage of approximately 16.1% of corresponding consolidated revenues.
In general, we consider potential liquidated damages, the costs of other related items and potential mitigating factors in determining the estimates of forecasted revenues and the adequacy of our estimates of the cost to complete contracts.
In general, we consider potential liquidated damages, the costs of other related items and potential mitigating factors in determining the estimates of forecasted revenues and the adequacy of our estimates of the cost to complete contracts. - 43 - Table of Contents Recently Issued Accounting Pronouncements See Note 1 to the accompanying consolidated financial statement for discussion of recently issued accounting pronouncements.
During Fiscal 2023, APC UK continued a turnaround of its operating results such that we believed it had a stable earnings history upon which APC UK could reliably forecast future profitable operations.
During Fiscal 2020, a valuation allowance in the amount of $7.1 million was established against the deferred tax asset amount created by the NOL of APC UK. During Fiscal 2023, APC UK continued a turnaround of its operating results such that we believed it had a stable earnings history upon which APC UK could reliably forecast future profitable operations.
The existence of the necessary power reserve will require conventional generation sources, typically natural gas-fired power plants in Ireland but including nuclear power in the U.K. - 36 - Table of Contents The Irish government has issued a policy statement on the security of the electricity supply in Ireland which confirms the requirement for the development of new support technologies to deliver on its commitment to have 80% of the country’s electricity generated from renewables by 2030.
The Irish government has issued a policy statement on the security of the electricity supply in Ireland which confirms the requirement for the development of new support technologies to deliver on its commitment to have 80% of the country’s electricity generated from renewables by 2030.
We used $26.1 million cash in financing activities during Fiscal 2024, including $12.5 million used to repurchase shares of common stock pursuant to our Share Repurchase Plan and $14.7 million used for the payment of regular cash dividends. Lastly, during Fiscal 2024, we received net $1.1 million of proceeds from the settlement of share-based awards.
For Fiscal 2025, we used $26.1 million cash in financing activities, including $18.3 million used for the payment of regular cash dividends and $1.5 million used to repurchase shares of common stock pursuant to our share repurchase program.
As of January 31, 2024 and 2023, the estimated amounts of our unsatisfied bonded performance obligations, covering all of its subsidiaries, were approximately $0.5 billion and $0.6 billion, respectively. In addition, as of January 31, 2024 and 2023, the outstanding amounts of bonds covering other risks, including warranty obligations related to completed activities, were not material.
As of January 31, 2025, the estimated amount of our unsatisfied bonded performance obligations, covering all of our subsidiaries, was approximately $0.7 billion. In addition, as of January 31, 2025, the outstanding amount of bonds covering other risks, including warranty obligations and contract payment retentions related to completed activities, was $25.2 million.
We have entered into similar support arrangements with other independent parties in the past that resulted in the successful development and our construction of three separate gas-fired power plant projects. We were paid project development fees for each project and our loans to the development entities were repaid in full plus interest.
However, the project owner was unable to obtain the necessary equity financing for the project, and the special purpose entity dissolved. We have entered into similar support arrangements with other independent parties in the past that resulted in the successful development and our construction of three separate gas-fired power plant projects.
The completion of each power facility is expected to occur in early Fiscal 2025. - 31 - Table of Contents Kilroot Power Station In October 2021, APC 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 units (the “Kilroot Power Station” or the “Kilroot” project).
Contract Termination 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.
It has been stated that the scramble for electricity, regardless of source, caused by the Russian invasion of Ukraine clarified that the 100% transition to renewable energy is in the distant future and has prompted, in part, renewed interest in not only carbon capture techniques, but carbon removal technologies as well.
The current scramble for electricity, regardless of source, may indicate that the 100% transition to renewable energy is in the distant future and has prompted, in part, renewed interest in not only carbon capture techniques, but carbon removal technologies as well. Governments, including the U.S., are taking initial steps to boost this industry.
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.
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.
These cost reductions, driven by technological advancements, have led to widespread global adoption. The EIA indicated that for 2024, of the approximately 62.8 gigawatts of new utility-scale electric-generating capacity that is planned to be added to U.S. power grids, approximately 71% will come from solar and wind facilities.
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.
We consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized on a jurisdiction-by-jurisdiction basis. Our ability to realize our deferred tax assets, including those related to the past NOLs incurred in the U.K.
We consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized on a jurisdiction-by-jurisdiction basis. Our ability to realize our deferred tax assets depends primarily upon the generation of sufficient future taxable income to allow for the realization of our deductible temporary differences.
We do maintain certain Euro-based bank accounts in Ireland and certain pound sterling-based bank accounts in the U.K. in support of the operations of APC. - 41 - Table of Contents In order to monitor the actual and necessary levels of liquidity for our business, we focus on working capital, or net liquidity, in addition to our cash balances.
In order to monitor the actual and necessary levels of liquidity for our business, we focus on working capital, or net liquidity, in addition to our cash balances.
Accordingly, we believe that it is more likely than not that we will realize the benefit of significantly all of our net deferred tax assets. - 47 - Table of Contents Recently Issued Accounting Pronouncements See Note 1 to the accompanying consolidated financial statement for discussion of recently issued accounting pronouncements.
Accordingly, we believe that it is more likely than not that we will realize the benefit of significantly all of our net deferred tax assets.
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”).
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. - 30 - Table of Contents 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”).
Trumbull Energy Center 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 full notice to proceed from the project owner, Clean Energy Future-Trumbull, LLC, in November 2022.
Project completion is scheduled for the first half of the fiscal year ending January 31, 2027 (“Fiscal 2027”). Trumbull Energy Center 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”).
Contractual Obligations During Fiscal 2024, there was no significant change in the nature or amounts of our contractual obligations. We estimate that the balance of such contractual obligations as of January 31, 2024 was less than $20.0 million. The two largest items in this estimate, operating leases and deferred compensation, are amounts included as liabilities in our consolidated balance sheet.
As of January 31, 2025, we were in compliance with the covenants and other requirements of the New Credit Agreement. Contractual Obligations During Fiscal 2025, there was no significant change in the nature or amounts of our contractual obligations. We estimate that the balance of such contractual obligations as of January 31, 2025 was less than $20.0 million.
Comparison of the Results of Operations for the Years Ended January 31, 2024 and 2023 We reported net income attributable to our stockholders of $32.4 million, or $2.39 per diluted share, for Fiscal 2024. For the prior fiscal year, we reported net income attributable to our stockholders of $33.1 million, or $2.33 per diluted share.
For the prior fiscal year, we reported net income of $32.4 million, or $2.39 per diluted share.
EIA projects that new wind and photovoltaic solar capacity will continue to be added to the utility-scale power fleet in the U.S. at a brisk pace substantially attributable to declines in the amount of renewable power plant component and power storage costs, an increase in the scale of energy storage capacity (i.e., battery farms and other energy storage technologies), the availability of valuable tax credits and the overall political commitment to renewable energy. - 33 - Table of Contents The surge in renewable energy is propelled by significant factors, including a nearly 90% reduction in solar power costs and a two-thirds decrease in onshore wind costs between 2009 and 2023.
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. - 32 - Table of Contents Battery storage has become a critical component in integrating renewable energy into the grid, addressing the intermittency of solar and wind power.
In each of these cases, we deconsolidated the corresponding VIE when we were no longer the primary beneficiary.
We were paid project development fees for each project and our loans to the development entities were repaid in full plus interest. In each of these cases, we deconsolidated the corresponding VIE when we were no longer the primary beneficiary.
This tax rate differed from the statutory federal tax rate of 21% due to various factors with unfavorable income tax effects. Most significantly, the net operating loss of APC’s subsidiary in the U.K., where the loss on the Kilroot Power Station project was recorded, was not tax effected with benefit.
This tax rate differed from the statutory federal tax rate of 21% due to the net operating loss of APC’s subsidiary in the U.K. that was not tax effected with benefit. Partially offsetting this unfavorable tax effect were the benefits provided by foreign tax rate differentials.
The Bank’s consent is not required for acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met.
The Bank’s consent is not required for acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The New Credit Agreement requires that the we comply with certain financial covenants at its fiscal year-end and at each fiscal quarter-end.
The increase in revenues between years was partially offset by decreased construction activities associated with the Guernsey Power Station project, the Maple Hill Solar Facility and the Equinix data center project, as those projects are generally near or at completion .
The increase in revenues between years was partially offset by decreased construction activities associated with the Guernsey Power Station project, the ESB FlexGen Peaker Plants, the Shannonbridge Power Project and the Kilroot Project, as those projects have concluded.
We may also use the borrowing ability to cover other credit instruments issued by the Bank for our use in the ordinary course of business as defined by the Bank.
In addition to the base commitment, the new facility includes an accordion feature that allows for an additional commitment amount of $30.0 million, subject to certain conditions. We may use the borrowing ability to cover other credit instruments issued by the Bank for our use in the ordinary course of business as defined in the New Credit Agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+4 added−5 removed2 unchanged
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. In the normal course of business, our results of operations may be subject to risks related to fluctuations in interest rates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Interest Rate Risk In the normal course of business, our results of operations may be subject to risks related to fluctuations in interest rates.
In the “Risk Factors” section of this 2024 Annual Report (see Item 1A), we have included discussion of the risks to our fixed price contracts if actual contract costs rise above the estimated amounts of such costs that support corresponding contract prices.
Contract Costs Risk In the “Risk Factors” section of this 2025 Annual Report (see Item 1A), we have included discussion of the risks to our fixed-price contracts if actual contract costs rise above the estimated amounts of such costs that support corresponding contract prices.
For major fixed price contracts in our power industry services segment, we may mitigate material cost risks by procuring the majority of the equipment and construction supplies during the early phases of a project.
For major fixed-price contracts in our power industry services segment, we may mitigate material cost risks by procuring the majority of the equipment and construction supplies during the early phases of a project and include certain commercial protections - 44 - Table of Contents in our contracts.
We are subject to fluctuations in prices for commodities including steel products, copper, concrete and fuel. Although we attempt to secure firm quotes from our suppliers, we generally do not hedge against increases in prices for these commodities. Commodity price risks may have an impact on our results of operations due to the fixed-price nature of many of our contracts.
Although we attempt to secure firm quotes from our suppliers, we generally do not hedge against increases in prices for these commodities. Commodity price risks may have an impact on our results of operations due to the fixed-price nature of many of our contracts.
The effects of translation are recognized in accumulated other comprehensive loss, which is net of tax when applicable. APC remeasures transactions and subsidiary financial statements denominated in local currencies to Euros. Gains and losses on the remeasurements are recorded in the other income line of our consolidated statement of earnings.
APC remeasures transactions and financial statement amounts denominated in local currencies to Euros. Gains and losses on the remeasurements are recorded in the other income, net, line of our consolidated statement of earnings.
As of January 31, 2024, we had no outstanding borrowings under our financing arrangements with the Bank (see Note 8 to the accompanying consolidated financial statements), which provide a revolving loan with a maximum borrowing amount of $50.0 million that is available until May 31, 2024 with interest at SOFR plus 1.6%.
As of January 31, 2025, we had no outstanding borrowings under our financing arrangements with the Bank (see Note 8 to the accompanying consolidated financial statements), which provide a revolving loan with a maximum borrowing amount of $35.0 million, which also includes an accordion feature that allows for an additional commitment amount of $30.0 million subject to certain conditions, with interest at SOFR plus 1.85%.
The weighted average annual interest rate of our certificates of deposit of $105.0 million, the money market fund balance of $126.6 million, the U.S. Treasury notes face value of $95.0 million and the U.S. corporate debt security face value of $9.2 million was 5.1%.
The weighted average annual interest rate of our certificates of deposit of $150.0 million, the money market fund balance of $93.1 million and the U.S. Treasury notes with face value of $230.0 million was 4.1%.
Treasury notes and a U.S. corporate debt security (see Note 3 of the accompanying consolidated financial statements). As of January 31, 2024, the weighted average number of days remaining until maturity for the certificates of deposit, U.S. Treasury notes and U.S. corporate debt security was 393 days.
We maintain a substantial amount of our temporarily investable cash in certificates of deposit, a money market fund and U.S. Treasury notes (see Note 3 of the accompanying consolidated financial statements). As of January 31, 2025, the weighted average number of days remaining until maturity for the certificates of deposit and U.S. Treasury notes was 618 days.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See the Index to the Consolidated Financial Statements on page 55 of this 2024 Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.
The profitability of our active jobs has not suffered meaningfully from fluctuations in construction material costs. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See the Index to the Consolidated Financial Statements on page 51 of this 2025 Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.
Removed
During Fiscal 2024, Fiscal 2023 and Fiscal 2022, we did not enter into any material derivative financial instruments for trading, speculation or other purposes that would expose us to market risk. We maintain a substantial amount of our temporarily investable cash in certificates of deposit, a money market fund, U.S.
Added
Based on the current rates of our invested funds as of January 31, 2025, an increase or decrease of 100 basis points in interest rates would change our annual investment earnings by $4.7 million. Foreign Exchange Risk The majority of our operations are based in the U.S. and, accordingly, the majority of transactions are denominated in U.S. Dollars.
Removed
To illustrate the potential impact of changes in the overall interest rate associated with our investable cash balance at January 31, 2024 on our annual results of operations, we present the following hypothetical analysis.
Added
Our foreign subsidiaries operate in either the British Pound or the Euro. Changes in the value of the U.S. Dollar to these currencies will impact our operating results and the value of our balance sheet items translated from their functional currencies. The effects of translation are recognized in accumulated other comprehensive loss, which is net of tax when applicable.
Removed
It assumes that our consolidated balance sheet as of January 31, 2024 remains constant, and no further actions are taken to alter our existing interest rate sensitivity, including reinvestments (dollars in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (Decrease) in ​ Increase (Decrease) in ​ Net Increase (Decrease) in Basis Point Change Interest Income Interest Expense Income (Pre-Tax) Up 300 basis points ​ $ 10,565 ​ $ — ​ $ 10,565 Up 200 basis points ​ ​ 7,043 ​ ​ — ​ ​ 7,043 Up 100 basis points ​ 3,522 ​ — ​ 3,522 Down 100 basis points ​ ​ (3,522) ​ ​ — ​ ​ (3,522) Down 200 basis points ​ ​ (7,043) ​ ​ — ​ ​ (7,043) Down 300 basis points ​ (10,565) ​ — ​ (10,565) With the consolidation of APC, we are subject to the effects of translating the financial statements of APC from its functional currency (Euros) into our reporting currency (U.S. dollars).
Added
Recent U.S. trade policies, including increased and fluctuating tariffs on imports from Canada, Mexico, and China, have introduced uncertainty in supply chains and material costs. These tariffs, aimed at broader policy objectives, risk inflating prices for essential construction materials, such as steel and aluminum, causing import delays and disrupting project timelines.
Removed
The profitability of our active jobs has not suffered meaningfully from the periodic global surges in non-residential construction material costs. - 48 - Table of Contents Our operations have been challenged by the well-publicized global supply chain disruptions.
Added
As trade negotiations continue and policies evolve, the tariff situation remains fluid, adding further unpredictability to material costs and supply chain stability. The resulting uncertainty may deter investment in power plant and industrial construction, impacting budgets, schedules, and overall profitability. We are subject to fluctuations in prices for construction commodities including steel products, copper, concrete and fuel.
Removed
While management of the risks associated with the inability to obtain machinery, equipment and other materials when needed continues to require our best efforts, we are concerned that the supply chain uncertainties may impact project owners’ confidence in commencing new work which may adversely affect our expected levels of revenues until the supply chain disruptions substantially dissipate. ITEM 8.

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