Argan Annual Report 2023

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FY2023 Annual Report · Argan

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Arga , I c.

22002233

ANNUAL
REPORT

One Church Street

Suite 201

Rockville, Maryland 20850

www.arganinc.com

A ATLANTIC
PROJECTS
pt_ COMPANY

•••

Front Cover: Employees of Gemma Power Systems, Atlan�c Projects Company and The Roberts Company at construc�on sites in the United States, Ireland and the United Kingdom.
Front Cover: Employees of Gemma Power Systems, Atlan�c Projects Company and The Roberts Company at construc�on sites in the United States, Ireland and the United Kingdom.

Inside Front Cover: Employees from Gemma Power Systems erect solar panels at the Maple Hill Solar facility in Portage Township, Pennsylvania. Located on a 480-acre site, the facility is being constructed using
Inside Front Cover: Employees from Gemma Power Systems erect solar panels at the Maple Hill Solar facility in Portage Township, Pennsylvania. Located on a 480-acre site, the facility is being constructed using
over 235,000 photovoltaic modules to generate 100 MW of electric power to the electricity grid.
over 235,000 photovoltaic modules to generate 100 MW of electric power to the electricity grid.

Inside Back Cover: A night view of the Nutrien Pelican Project in Aurora, North Carolina, where The Roberts Company provides construc�on, steel fabrica�on and other field services.
Inside Back Cover: A night view of the Nutrien Pelican Project in Aurora, North Carolina, where The Roberts Company provides construc�on, steel fabrica�on and other field services.

• ••

ABOUT US

EXECUTIVE MANAGEMENT

David H. Watson

President, Chief Execu�ve Officer

Richard H. Deily

Senior Vice President, Chief Financial Officer,

Treasurer and Corporate Secretary

DIRECTORS

Rainer H. Bosselmann

Cynthia A. Flanders

Peter W. Getsinger

William F. Griffin

Dear Fellow Stockholders:

John R. Jeffrey

Mano S. Koilpillai

William F. Leimkuhler

TRANSFER AGENT

New York, New York

Con�nental Stock Transfer & Trust Company

ANNUAL MEETING

One Church Street

The 2023 Annual Mee�ng of Argan, Inc. will be

Suite 201

held on June 20, 2023 at 11:00 a.m. at One Church

Rockville, MD 20850

Street, Room 104, Rockville, Maryland 20850.

301-315-0027

fax 301-315-0064

www.arganinc.com

STOCKHOLDER INFORMATION

Our common stock is listed on the NYSE under the

May 10, 2023

symbol AGX.

Copies of the Annual Report on Form 10-K as filed

with the Securi�es and Exchange Commission are

Our recent fiscal year ended January 31, 2023 (“Fiscal 2023”) was a year of marked progress and

available without charge to Stockholders of record

W.G. Champion Mitchell

high achievement for Argan, as we wrapped up major projects, embarked on new opportunities,

as of April 26, 2023 upon request to Corporate

and grew our project backlog to exceed $0.8 billion. Looking back over Fiscal 2023, we enjoyed

Headquarters.

the success of completing first fire for all three turbines of the Guernsey Power Station, the

James W. Quinn

David H. Watson

largest single-phase gas-fired power plant project in the United States. Likewise, the Maple Hill

SUBSIDIARIES

Solar facility, a sizable representation of our capabilities in the renewable space, also neared

completion. We reported consolidated revenues of $455 million for Fiscal 2023, reflecting

Gemma Power Systems

AUDITORS

meaningful revenue contributions from these two projects, as well as our overseas power and

www.gemmapower.com

Grant Thornton LLP

Arlington, Virginia

industrial field services businesses.

COUNSEL

The Roberts Company

www.robertscompany.com

New York, New York

Culhane Meadows PLLC

We concluded Fiscal 2023 with a strong financial foundation. As of January 31, 2023, our net

liquidity was approximately $236 million, buoyed by over $325 million of cash, cash

Atlan�c Projects Company

equivalents, and short-term investments. Our complementary businesses maintained relatively

consistent gross margins from the prior year, with our power industry services, industrial

SMC Infrastructure Solu�ons

INVESTOR RELATIONS

services, and telecommunications infrastructure services segments achieving gross margins of

www.smcis.com

IMS Investor Rela�ons

approximately 20%, 16%, and 18%, respectively. Our consolidated gross margin was 19%.

New Canaan, Connec�cut

www.atlan�cprojects.com

Looking forward, we are excited about the early stages of the construction of the Trumbull

Energy Center, a 950 MW natural gas-fired power plant that we are building in Lordstown, Ohio.

The activity on this project is expected to ramp up pointedly over the course of the new fiscal

year. The Kilroot power station in Northern Ireland and the ESB FlexGen peaker power plants in

Dublin, Ireland, are currently at or near peak construction activity. Additionally, we are in the

early developmental stages for several projects in both the traditional gas-fired power plant and

the renewable power project spaces that we believe will result in full notices to proceed.

As the energy transition continues to gain momentum to more environmentally friendly options

like natural gas and renewable energy plants, we are poised to leverage our experience,

capabilities, market recognition and relationships to capture market share. Approximately 85%

of projects in our current backlog of $0.8 billion support a low-carbon emissions economy.

One Church Street
One Church Street
Suite 201
Suite 201
Rockville, MD 20850
Rockville, MD 20850
301-315-0027
301-315-0027
fax 301-315-0064
www.arganinc.com
fax 301-315-0064
www.arganinc.com

May 10, 2023

Dear Fellow Stockholders:

William F. Griffin
William F. Griffin
John R. Jeffrey
John R. Jeffrey
Mano S. Koilpillai
Mano S. Koilpillai
William F. Leimkuhler
William F. Leimkuhler
W.G. Champion Mitchell
W.G. Champion Mitchell
James W. Quinn
James W. Quinn
David H. Watson
David H. Watson

Copies of the Annual Report on Form 10-K as filed
Copies of the Annual Report on Form 10-K as filed
with the Securi�es and Exchange Commission are
with the Securi�es and Exchange Commission are
available without charge to Stockholders of record
available without charge to Stockholders of record
as of April 26, 2023 upon request to Corporate
as of April 26, 2023 upon request to Corporate
Headquarters.
Headquarters.

Our recent fiscal year ended January 31, 2023 (“Fiscal 2023”) was a year of marked progress and
high achievement for Argan, as we wrapped up major projects, embarked on new opportunities,
and grew our project backlog to exceed $0.8 billion. Looking back over Fiscal 2023, we enjoyed
the success of completing first fire for all three turbines of the Guernsey Power Station, the
largest single-phase gas-fired power plant project in the United States. Likewise, the Maple Hill
Solar facility, a sizable representation of our capabilities in the renewable space, also neared
AUDITORS
AUDITORS
completion. We reported consolidated revenues of $455 million for Fiscal 2023, reflecting
Grant Thornton LLP
Grant Thornton LLP
meaningful revenue contributions from these two projects, as well as our overseas power and
Arlington, Virginia
Arlington, Virginia
industrial field services businesses.

Gemma Power Systems
Gemma Power Systems
www.gemmapower.com
www.gemmapower.com

SUBSIDIARIES
SUBSIDIARIES

The Roberts Company
The Roberts Company
www.robertscompany.com
www.robertscompany.com

COUNSEL
COUNSEL
We concluded Fiscal 2023 with a strong financial foundation. As of January 31, 2023, our net
Culhane Meadows PLLC
Culhane Meadows PLLC
liquidity was approximately $236 million, buoyed by over $325 million of cash, cash
New York, New York
New York, New York
equivalents, and short-term investments. Our complementary businesses maintained relatively
consistent gross margins from the prior year, with our power industry services, industrial
INVESTOR RELATIONS
INVESTOR RELATIONS
services, and telecommunications infrastructure services segments achieving gross margins of
IMS Investor Rela�ons
IMS Investor Rela�ons
approximately 20%, 16%, and 18%, respectively. Our consolidated gross margin was 19%.
New Canaan, Connec�cut
New Canaan, Connec�cut

SMC Infrastructure Solu�ons
SMC Infrastructure Solu�ons
www.smcis.com
www.smcis.com

Atlan�c Projects Company
Atlan�c Projects Company
www.atlan�cprojects.com
www.atlan�cprojects.com

Looking forward, we are excited about the early stages of the construction of the Trumbull
Energy Center, a 950 MW natural gas-fired power plant that we are building in Lordstown, Ohio.
The activity on this project is expected to ramp up pointedly over the course of the new fiscal
year. The Kilroot power station in Northern Ireland and the ESB FlexGen peaker power plants in
Dublin, Ireland, are currently at or near peak construction activity. Additionally, we are in the
early developmental stages for several projects in both the traditional gas-fired power plant and
the renewable power project spaces that we believe will result in full notices to proceed.

As the energy transition continues to gain momentum to more environmentally friendly options
like natural gas and renewable energy plants, we are poised to leverage our experience,
capabilities, market recognition and relationships to capture market share. Approximately 85%
of projects in our current backlog of $0.8 billion support a low-carbon emissions economy.

Front Cover: Employees of Gemma Power Systems, Atlan�c Projects Company and The Roberts Company at construc�on sites in the United States, Ireland and the United Kingdom.

over 235,000 photovoltaic modules to generate 100 MW of electric power to the electricity grid.

Inside Back Cover: A night view of the Nutrien Pelican Project in Aurora, North Carolina, where The Roberts Company provides construc�on, steel fabrica�on and other field services.

Additionally, our backlog reflects a stronger project profile with mostly longer-term, fully
committed projects. We are excited about the diversity of the projects in our backlog, and
Additionally, our backlog reflects a stronger project profile with mostly longer-term, fully
anticipate that with efficient operational execution, these projects will provide a solid base from
committed projects. We are excited about the diversity of the projects in our backlog, and
which to drive revenues upward during the year ending January 31, 2024.
anticipate that with efficient operational execution, these projects will provide a solid base from
which to drive revenues upward during the year ending January 31, 2024.
We continue to prioritize delivering value to our customers and stockholders by investing in our
business and people while also returning capital to our stockholders. Since our first share
We continue to prioritize delivering value to our customers and stockholders by investing in our
repurchases in November 2021, we have repurchased approximately 2.5 million shares, or
business and people while also returning capital to our stockholders. Since our first share
approximately 15% of the shares outstanding at the beginning of the program, and returned
repurchases in November 2021, we have repurchased approximately 2.5 million shares, or
approximately $92 million to stockholders. Reinforcing its commitment to the program, our
approximately 15% of the shares outstanding at the beginning of the program, and returned
Board of Directors increased the share repurchase program by an additional $25 million to $125
approximately $92 million to stockholders. Reinforcing its commitment to the program, our
million in the final quarter of Fiscal 2023. Also, we continued to issue regular quarterly cash
Board of Directors increased the share repurchase program by an additional $25 million to $125
dividends during Fiscal 2023, returning an additional $14 million in value to stockholders.
million in the final quarter of Fiscal 2023. Also, we continued to issue regular quarterly cash
dividends during Fiscal 2023, returning an additional $14 million in value to stockholders.
We reported net income attributable to our stockholders of $33.1 million, or $2.33 per diluted
share, for the year ended January 31, 2023.
We reported net income attributable to our stockholders of $33.1 million, or $2.33 per diluted
share, for the year ended January 31, 2023.
We are energized by the positive momentum we are feeling at all of our companies as they move
forward into the new fiscal year. They are invigorated by new leadership and growing
We are energized by the positive momentum we are feeling at all of our companies as they move
opportunities in our end markets. We believe that our construction expertise, our project
forward into the new fiscal year. They are invigorated by new leadership and growing
capabilities and our commitment to deliver the best possible project results, each and every time,
opportunities in our end markets. We believe that our construction expertise, our project
are becoming more well known in our markets as reflected in our Fiscal 2023 operating results
capabilities and our commitment to deliver the best possible project results, each and every time,
and current project backlog. We are confident in the strength of our organizations and the
are becoming more well known in our markets as reflected in our Fiscal 2023 operating results
abilities of our teams to execute on contracts that are difficult. Consequently, we look forward to
and current project backlog. We are confident in the strength of our organizations and the
new growth and success in the coming year.
abilities of our teams to execute on contracts that are difficult. Consequently, we look forward to
new growth and success in the coming year.
Importantly, I’d like to recognize our employees for their hard work and accomplishments in
Fiscal 2023, and thank our stockholders for their continued loyalty and support of Argan.
Importantly, I’d like to recognize our employees for their hard work and accomplishments in
Fiscal 2023, and thank our stockholders for their continued loyalty and support of Argan.

Sincerely,

David H. Watson
President and Chief Executive Officer
David H. Watson
President and Chief Executive Officer

- 2 -

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the Fiscal Year Ended January 31, 2023

Washington, D.C. 20549

FORM 10-K

For the Fiscal Year Ended January 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File Number 001-31756

ARGAN, INC.

(Exact Name of Registrant as Specified in its Charter)

ARGAN, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation or Organization)

One Church Street, Suite 201, Rockville, Maryland

(Address of Principal Executive Offices)

One Church Street, Suite 201, Rockville, Maryland

(Address of Principal Executive Offices)

(301) 315-0027

(Issuer’s Telephone Number, Including Area Code)

(301) 315-0027

Securities registered under Section 12(b) of the Exchange Act:

(Issuer’s Telephone Number, Including Area Code)

(IRS Employer Identification No.)

20850

13-1947195

(Zip Code)

20850

(Zip Code)

Title of Each Class

Securities registered under Section 12(b) of the Exchange Act:

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, $0.15 par value

Title of Each Class

AGX

Trading Symbol

The New York Stock Exchange (“NYSE”)

Name of Each Exchange on Which Registered

Securities registered under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”): None

Common Stock, $0.15 par value

AGX

The New York Stock Exchange (“NYSE”)

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes ☐ No 

Securities registered under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”): None

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes ☐ No 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. 

such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T

such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes  No 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth

during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes  No 

company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth

company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company ☐ Emerging growth company ☐

Act.

Large accelerated filer 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised

Accelerated filer 

Non-accelerated filer 

Smaller reporting company ☐ Emerging growth company ☐

financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial

financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the

reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the

correction of an error to previously issued financial statements. ☐

registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 

registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

The aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $303,182,532 on July 29, 2022 (the last business day of the

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 

Registrant’s second fiscal quarter), based upon the closing price on the NYSE as reported for that date. Shares of common stock held by each officer and director and by each

The aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $303,182,532 on July 29, 2022 (the last business day of the

person who owns 5% or more of the outstanding common shares have been excluded because such persons may be deemed to be affiliates. The determination of affiliate

Registrant’s second fiscal quarter), based upon the closing price on the NYSE as reported for that date. Shares of common stock held by each officer and director and by each

status is not necessarily a conclusive determination for other purposes.

person who owns 5% or more of the outstanding common shares have been excluded because such persons may be deemed to be affiliates. The determination of affiliate

Number of shares of common stock outstanding as of April 11, 2023: 13,395,835 shares.

status is not necessarily a conclusive determination for other purposes.

Number of shares of common stock outstanding as of April 11, 2023: 13,395,835 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders to be held on June 20, 2023 are incorporated by reference in Part III.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders to be held on June 20, 2023 are incorporated by reference in Part III.

Additionally, our backlog reflects a stronger project profile with mostly longer-term, fully

committed projects. We are excited about the diversity of the projects in our backlog, and

Additionally, our backlog reflects a stronger project profile with mostly longer-term, fully

anticipate that with efficient operational execution, these projects will provide a solid base from

committed projects. We are excited about the diversity of the projects in our backlog, and

which to drive revenues upward during the year ending January 31, 2024.

anticipate that with efficient operational execution, these projects will provide a solid base from

which to drive revenues upward during the year ending January 31, 2024.

We continue to prioritize delivering value to our customers and stockholders by investing in our

business and people while also returning capital to our stockholders. Since our first share

We continue to prioritize delivering value to our customers and stockholders by investing in our

repurchases in November 2021, we have repurchased approximately 2.5 million shares, or

business and people while also returning capital to our stockholders. Since our first share

approximately 15% of the shares outstanding at the beginning of the program, and returned

repurchases in November 2021, we have repurchased approximately 2.5 million shares, or

approximately $92 million to stockholders. Reinforcing its commitment to the program, our

approximately 15% of the shares outstanding at the beginning of the program, and returned

Board of Directors increased the share repurchase program by an additional $25 million to $125

approximately $92 million to stockholders. Reinforcing its commitment to the program, our

million in the final quarter of Fiscal 2023. Also, we continued to issue regular quarterly cash

Board of Directors increased the share repurchase program by an additional $25 million to $125

dividends during Fiscal 2023, returning an additional $14 million in value to stockholders.

million in the final quarter of Fiscal 2023. Also, we continued to issue regular quarterly cash

dividends during Fiscal 2023, returning an additional $14 million in value to stockholders.

We reported net income attributable to our stockholders of $33.1 million, or $2.33 per diluted

share, for the year ended January 31, 2023.

We reported net income attributable to our stockholders of $33.1 million, or $2.33 per diluted

share, for the year ended January 31, 2023.

We are energized by the positive momentum we are feeling at all of our companies as they move

forward into the new fiscal year. They are invigorated by new leadership and growing

We are energized by the positive momentum we are feeling at all of our companies as they move

opportunities in our end markets. We believe that our construction expertise, our project

forward into the new fiscal year. They are invigorated by new leadership and growing

capabilities and our commitment to deliver the best possible project results, each and every time,

opportunities in our end markets. We believe that our construction expertise, our project

are becoming more well known in our markets as reflected in our Fiscal 2023 operating results

capabilities and our commitment to deliver the best possible project results, each and every time,

and current project backlog. We are confident in the strength of our organizations and the

are becoming more well known in our markets as reflected in our Fiscal 2023 operating results

abilities of our teams to execute on contracts that are difficult. Consequently, we look forward to

and current project backlog. We are confident in the strength of our organizations and the

new growth and success in the coming year.

abilities of our teams to execute on contracts that are difficult. Consequently, we look forward to

new growth and success in the coming year.

Importantly, I’d like to recognize our employees for their hard work and accomplishments in

Fiscal 2023, and thank our stockholders for their continued loyalty and support of Argan.

Importantly, I’d like to recognize our employees for their hard work and accomplishments in

Fiscal 2023, and thank our stockholders for their continued loyalty and support of Argan.

Sincerely,

David H. Watson

President and Chief Executive Officer

David H. Watson

President and Chief Executive Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
UNITED STATES
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FORM 10-K

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the Fiscal Year Ended January 31, 2023

or
For the Fiscal Year Ended January 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

For the transition period from to
Commission File Number 001-31756

Commission File Number 001-31756

Argan, Inc.
ARGAN, INC.
ARGAN, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of Incorporation or Organization)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
One Church Street, Suite 201, Rockville, Maryland
(Address of Principal Executive Offices)
One Church Street, Suite 201, Rockville, Maryland
(Address of Principal Executive Offices)

13-1947195
(IRS Employer Identification No.)
13-1947195
(IRS Employer Identification No.)
20850
(Zip Code)
20850
(Zip Code)

(301) 315-0027
(Issuer’s Telephone Number, Including Area Code)
(301) 315-0027
Securities registered under Section 12(b) of the Exchange Act:
(Issuer’s Telephone Number, Including Area Code)

Title of Each Class
Common Stock, $0.15 par value
Title of Each Class
Common Stock, $0.15 par value

Securities registered under Section 12(b) of the Exchange Act:
Trading Symbol
AGX
Trading Symbol
AGX

Name of Each Exchange on Which Registered
The New York Stock Exchange (“NYSE”)
Name of Each Exchange on Which Registered
The New York Stock Exchange (“NYSE”)

Accelerated filer 

Large accelerated filer 

Non-accelerated filer 

Securities registered under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”): None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes ☐ No 
Securities registered under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”): None
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. 
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes ☐ No 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. 
such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes  No 
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth
during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes  No 
company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth
Act.
company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange
Smaller reporting company ☐ Emerging growth company ☐
Act.
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised
Smaller reporting company ☐ Emerging growth company ☐
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised
Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒
Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒
correction of an error to previously issued financial statements. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
correction of an error to previously issued financial statements. ☐
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
The aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $303,182,532 on July 29, 2022 (the last business day of the
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 
Registrant’s second fiscal quarter), based upon the closing price on the NYSE as reported for that date. Shares of common stock held by each officer and director and by each
The aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $303,182,532 on July 29, 2022 (the last business day of the
person who owns 5% or more of the outstanding common shares have been excluded because such persons may be deemed to be affiliates. The determination of affiliate
Registrant’s second fiscal quarter), based upon the closing price on the NYSE as reported for that date. Shares of common stock held by each officer and director and by each
status is not necessarily a conclusive determination for other purposes.
person who owns 5% or more of the outstanding common shares have been excluded because such persons may be deemed to be affiliates. The determination of affiliate
Number of shares of common stock outstanding as of April 11, 2023: 13,395,835 shares.
status is not necessarily a conclusive determination for other purposes.
Number of shares of common stock outstanding as of April 11, 2023: 13,395,835 shares.
Portions of the Registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders to be held on June 20, 2023 are incorporated by reference in Part III.

DOCUMENTS INCORPORATED BY REFERENCE

Non-accelerated filer 

Accelerated filer 

DOCUMENTS INCORPORATED BY REFERENCE

- 2 -

Portions of the Registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders to be held on June 20, 2023 are incorporated by reference in Part III.

ARGAN, INC. AND SUBSIDIARIES
2023 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

ITEM 1. BUSINESS.

PART I

ITEM 1. BUSINESS
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2.
PROPERTIES
ITEM 3. LEGAL PROCEEDINGS

PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT, AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS
SIGNATURES

PART IV

PAGE

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- 2 -

Argan, Inc. (“Argan”) conducts operations through its wholly owned subsidiaries, Gemma Power Systems, LLC and

affiliates (“GPS”), Atlantic Projects Company Limited and affiliates (“APC”), The Roberts Company, Inc. (“TRC”) and

Southern Maryland Cable, Inc. (“SMC”) (together referred to as the “Company,” “we,” “us,” or “our”). GPS and APC

represent our power industry services reportable segment that provides 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. The wide range of customers includes independent power project owners,

public utilities, power plant heavy equipment suppliers and other commercial firms with significant power requirements.

Projects are located in the United States (the “U.S.”), the Republic of Ireland (“Ireland”) and the United Kingdom (the

“U.K.”). Through TRC, the industrial fabrication and field services reportable segment provides primarily on-site 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.

Holding Company Structure

Argan was organized as a Delaware corporation in May 1961. We may make additional 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. Significant acquired companies will be operated in a manner that we believe will best

provide long-term and enduring value for our stockholders. Argan is primarily a construction firm with current investments

in GPS, APC, TRC and SMC.

Power Industry Services

The most significant percentage of our power industry services has been performed by GPS which is a full-service

engineering, procurement and construction (“EPC”) services firm that we have operated for over sixteen years since it was

acquired in 2006. 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 grown with installed capacity exceeding 16 gigawatts of mostly domestic power-generating capacity. Our power

projects have included base-load combined-cycle facilities, simple-cycle peaking plants and boiler plant construction and

renovation efforts. GPS also has experience in the renewable energy sector by providing EPC contracting and other

services to the owners of alternative energy facilities, including biomass plants, wind farms and solar fields. Typically, the

scope of work for GPS includes complete plant engineering and design, the procurement of equipment and construction

from site development through electrical interconnection and plant testing. The durations of our construction projects

typically range between one to three years. However, the length of certain significant construction projects may exceed

three years.

This reportable business segment also includes APC, a company formed in Ireland over 45 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

the acquisition of APC in 2015, it has expanded operations to the U.K. and more recently focused 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. With its primary presence in Ireland and the U.K., APC leads this

segment’s international focus.

The revenues of our power industry services business segment were $346.0 million, $398.1 million and $319.4 million for

the fiscal years ended January 31, 2023 (“Fiscal 2023”), 2022 (“Fiscal 2022”) and 2021 (“Fiscal 2021”), respectively, or

76%, 78% and 81% of our consolidated revenues for the corresponding periods, respectively. 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.

- 3 -

ARGAN, INC. AND SUBSIDIARIES

2023 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

ITEM 1. BUSINESS.

PART I

ITEM 1. BUSINESS

ITEM 1A. RISK FACTORS

ITEM 1B. UNRESOLVED STAFF COMMENTS

ITEM 2.

PROPERTIES

ITEM 3. LEGAL PROCEEDINGS

PART I

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES

ITEM 9B. OTHER INFORMATION

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT, AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS

SIGNATURES

PART IV

PAGE

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- 49 -

- 50 -

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Argan, Inc. (“Argan”) conducts operations through its wholly owned subsidiaries, Gemma Power Systems, LLC and
affiliates (“GPS”), Atlantic Projects Company Limited and affiliates (“APC”), The Roberts Company, Inc. (“TRC”) and
Southern Maryland Cable, Inc. (“SMC”) (together referred to as the “Company,” “we,” “us,” or “our”). GPS and APC
represent our power industry services reportable segment that provides 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. The wide range of customers includes independent power project owners,
public utilities, power plant heavy equipment suppliers and other commercial firms with significant power requirements.
Projects are located in the United States (the “U.S.”), the Republic of Ireland (“Ireland”) and the United Kingdom (the
“U.K.”). Through TRC, the industrial fabrication and field services reportable segment provides primarily on-site 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.

Holding Company Structure

Argan was organized as a Delaware corporation in May 1961. We may make additional 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. Significant acquired companies will be operated in a manner that we believe will best
provide long-term and enduring value for our stockholders. Argan is primarily a construction firm with current investments
in GPS, APC, TRC and SMC.

Power Industry Services

The most significant percentage of our power industry services has been performed by GPS which is a full-service
engineering, procurement and construction (“EPC”) services firm that we have operated for over sixteen years since it was
acquired in 2006. 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 grown with installed capacity exceeding 16 gigawatts of mostly domestic power-generating capacity. Our power
projects have included base-load combined-cycle facilities, simple-cycle peaking plants and boiler plant construction and
renovation efforts. GPS also has experience in the renewable energy sector by providing EPC contracting and other
services to the owners of alternative energy facilities, including biomass plants, wind farms and solar fields. Typically, the
scope of work for GPS includes complete plant engineering and design, the procurement of equipment and construction
from site development through electrical interconnection and plant testing. The durations of our construction projects
typically range between one to three years. However, the length of certain significant construction projects may exceed
three years.

This reportable business segment also includes APC, a company formed in Ireland over 45 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
the acquisition of APC in 2015, it has expanded operations to the U.K. and more recently focused 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. With its primary presence in Ireland and the U.K., APC leads this
segment’s international focus.

The revenues of our power industry services business segment were $346.0 million, $398.1 million and $319.4 million for
the fiscal years ended January 31, 2023 (“Fiscal 2023”), 2022 (“Fiscal 2022”) and 2021 (“Fiscal 2021”), respectively, or
76%, 78% and 81% of our consolidated revenues for the corresponding periods, respectively. 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.

- 2 -

- 3 -

Project Backlog

ESB FlexGen Peaker Plants

At January 31, 2023, the project backlog for this reporting segment was approximately $0.7 billion. The comparable
backlog amount as of January 31, 2022 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.

Typically, we include the total value of EPC services and other major construction contracts in project backlog when we
receive a corresponding notice to proceed from the project owner. However, we may include the value of an EPC services
contract prior to the receipt of a notice to proceed if we believe that it is probable that the project will commence within a
reasonable timeframe, among other factors. Projects that are awarded to us may remain included in our backlog for
extended periods of time as customers experience project delays.

Major Projects

The significant currently active projects of our power industry services segment include the construction of the facilities
described below, which together represent nearly 3.8 gigawatts of potential electrical power and require the significant
engagements of our technical, project support and project management teams.

Guernsey Power Station

In January 2019, GPS entered into an EPC services contract to construct an 1,875 MW natural gas-fired power plant in
Guernsey County, Ohio (the “Guernsey Power Station”). Caithness Energy, L.L.C. (“Caithness”) led the development of
this project. After receiving a full notice-to-proceed, GPS commenced substantial activities for this project in August 2019,
which remains the largest, single-phase, gas-fired, power plant construction project in the U.S. For Fiscal 2023, Fiscal
2022 and Fiscal 2021, this project represented significant portions of consolidated revenues. The substantial completion
milestones have been achieved for all three of this plant’s natural gas-fired turbines. GPS expects to achieve the final
completion of this project during the third quarter of the year ending January 31, 2024 (“Fiscal 2024”).

Guernsey County is located in southeastern Ohio in the heart of the state’s Utica and Marcellus shale gas development
area. Using state-of-the-art combined cycle technology and air-cooling system, the Guernsey Power Station will be a cost-
efficient, fuel-efficient, electricity generating power plant that protects air quality and conserves water with the capability
to satisfy the electricity needs of approximately one million homes.

The combined cycle design of this plant utilizes three power trains, with each one including a gas-fired turbine, a heat
recovery steam generator and a steam turbine, that will enable this plant to generate significantly more power from the
equivalent amount of fuel than a traditional gas-fired power plant. The Guernsey Power Station will also use dry cooling
technology to reduce water usage by as much as 95% compared to a water-cooled power plant. Because of its advanced
design, the power plant will achieve extremely low emission levels from a gas-fired power plant of its type.

Trumbull Energy Center

In November 2022, we announced that we received the full notice to proceed with EPC activities for the Trumbull Energy
Center, a 950 MW natural gas-fired power plant to be built in Lordstown, Ohio, from Clean Energy Future-Trumbull,
LLC. We began contract activities immediately. 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. Contract completion is scheduled currently to occur by the end of the year ending January 31, 2026 (“Fiscal
2026”).

Kilroot Power Station

In October 2021, APC entered into an engineering and construction services contract with EPUKI London, U.K., to
construct a 2 x 330 MW natural gas-fired power plant in Carrickfergus, a location that is near Belfast, Northern Ireland.
The “Kilroot” project was developed by EPNI Energy Limited. Full project activities are underway; the overall completion
of this project is expected to occur by the end of Fiscal 2024.

- 4 -

In May 2022, APC entered into engineering and construction services contracts with Ireland’s Electricity Supply Board

(“ESB”) to construct three 65 MW aero-derivative gas turbine flexible generation power plants in and around the city of

Dublin, Ireland. Two of the power plants, the Poolbeg and Ringsend FlexGen Power Plants, will be located on the Poolbeg

Peninsula, and the Corduff FlexGen Power Plant will be built in nearby Goddamendy. All three projects cleared the

applicable capacity auction in calendar 2022 and are expected to operate intermittently during peak periods of electricity

demand and as back-up supply options when renewable electricity generation is limited. A full notice to proceed has been

received and project activities have commenced. The completion of each power plant is expected to occur by the end of

Fiscal 2024.

Maple Hill Solar

In May 2021, we announced that GPS entered into an EPC services contract with CPV Maple Hill Solar, LLC, an affiliate

of Competitive Power Ventures, Inc. (“CPV”), to construct the Maple Hill Solar facility, which we believe will be among

the largest solar-powered energy plants in Pennsylvania. Pursuant to an extension to the project schedule that was

coordinated with the project owner, the completion of this effort is currently scheduled to occur during the second half of

Fiscal 2024. The unique Maple Hill Solar project, which is located in Cambria County, Pennsylvania, is being constructed

using over 235,000 photovoltaic modules to generate up to approximately 100 MW alternating current electrical power.

Other Construction Works

Recently, APC was provided with limited notices to proceed with EPC contract activities for an open-cycle gas turbine

power facility in central Ireland that will have the capacity to generate approximately 264 MW of temporary emergency

electrical power. GPS is teaming with APC in the performance of this contract. The staff at GPS has also begun efforts

pursuant to limited notices to proceed with contract activities for the conversion of three coal-fired power plants to solar

energy facilities, with supporting battery-storage, while exclusive negotiations are conducted between GPS and a large

integrated retail electricity and power generation company for the corresponding EPC services contract.

During Fiscal 2023, the Irish operations of APC substantially completed the design and build of a dedicated power plant

within a major data center. The size and configuration of the facility, consisting of nine gas-fired turbines, is a first-of-a-

kind within the Irish data center market. During Fiscal 2023, the Irish operations also completed construction activities for

a major chip manufacturer. Both of these facilities are located near Dublin. Finally, during Fiscal 2023, the U.K. operations

of APC completed the installation of a synchronized condenser for the combined cycle, gas-fired power plant located at

the Isle of Grain site in the Kent region of the U.K.

On the other hand, in May 2019, GPS entered into an EPC services contract to construct a 625 MW power plant in Harrison

County, West Virginia. As a limited notice to proceed with certain preliminary activities was received from the owner of

this project at the time (a repeat customer), the value of the contract was added to our project backlog. However,

meaningful milestones were not achieved and management concluded that the value of this power plant should be removed

from project backlog during Fiscal 2023.

Over the past five years, GPS was awarded six EPC service contracts, which represented gas-fired power plant projects

with electricity generating capacity exceeding 5 gigawatts for which the commencement of project activities has been

delayed or cancelled, including the project described above. None of these projects are in our project backlog as of January

31, 2023.

We have maintained that the delays in the construction starts of these projects and the awards of new business awards to

GPS relate to a variety of factors, especially in the northeastern and Mid-Atlantic regions of the U.S. where the largest

electricity grid is run by PJM Interconnection LLC (“PJM”). Certain projects in development are confronting difficulties

in obtaining the necessary permits for construction and operation, in securing the delivery of fuel to the power plant site

and in establishing the necessary power connection to the electricity grid. Currently, we also believe that the ability of the

owners of fully developed gas-fired power plant projects to close on equity and permanent debt financing is challenged by

uncertainty in the capital markets caused by multiple factors including delayed capacity auctions, mounting public and

political opposition to fossil-fuel energy projects and rising interest rates.

- 5 -

Project Backlog

ESB FlexGen Peaker Plants

At January 31, 2023, the project backlog for this reporting segment was approximately $0.7 billion. The comparable

backlog amount as of January 31, 2022 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.

Typically, we include the total value of EPC services and other major construction contracts in project backlog when we

receive a corresponding notice to proceed from the project owner. However, we may include the value of an EPC services

contract prior to the receipt of a notice to proceed if we believe that it is probable that the project will commence within a

reasonable timeframe, among other factors. Projects that are awarded to us may remain included in our backlog for

extended periods of time as customers experience project delays.

The significant currently active projects of our power industry services segment include the construction of the facilities

described below, which together represent nearly 3.8 gigawatts of potential electrical power and require the significant

engagements of our technical, project support and project management teams.

Major Projects

Guernsey Power Station

In January 2019, GPS entered into an EPC services contract to construct an 1,875 MW natural gas-fired power plant in

Guernsey County, Ohio (the “Guernsey Power Station”). Caithness Energy, L.L.C. (“Caithness”) led the development of

this project. After receiving a full notice-to-proceed, GPS commenced substantial activities for this project in August 2019,

which remains the largest, single-phase, gas-fired, power plant construction project in the U.S. For Fiscal 2023, Fiscal

2022 and Fiscal 2021, this project represented significant portions of consolidated revenues. The substantial completion

milestones have been achieved for all three of this plant’s natural gas-fired turbines. GPS expects to achieve the final

completion of this project during the third quarter of the year ending January 31, 2024 (“Fiscal 2024”).

Guernsey County is located in southeastern Ohio in the heart of the state’s Utica and Marcellus shale gas development

area. Using state-of-the-art combined cycle technology and air-cooling system, the Guernsey Power Station will be a cost-

efficient, fuel-efficient, electricity generating power plant that protects air quality and conserves water with the capability

to satisfy the electricity needs of approximately one million homes.

The combined cycle design of this plant utilizes three power trains, with each one including a gas-fired turbine, a heat

recovery steam generator and a steam turbine, that will enable this plant to generate significantly more power from the

equivalent amount of fuel than a traditional gas-fired power plant. The Guernsey Power Station will also use dry cooling

technology to reduce water usage by as much as 95% compared to a water-cooled power plant. Because of its advanced

design, the power plant will achieve extremely low emission levels from a gas-fired power plant of its type.

In November 2022, we announced that we received the full notice to proceed with EPC activities for the Trumbull Energy

Center, a 950 MW natural gas-fired power plant to be built in Lordstown, Ohio, from Clean Energy Future-Trumbull,

LLC. We began contract activities immediately. 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. Contract completion is scheduled currently to occur by the end of the year ending January 31, 2026 (“Fiscal

Trumbull Energy Center

2026”).

Kilroot Power Station

In October 2021, APC entered into an engineering and construction services contract with EPUKI London, U.K., to

construct a 2 x 330 MW natural gas-fired power plant in Carrickfergus, a location that is near Belfast, Northern Ireland.

The “Kilroot” project was developed by EPNI Energy Limited. Full project activities are underway; the overall completion

of this project is expected to occur by the end of Fiscal 2024.

In May 2022, APC entered into engineering and construction services contracts with Ireland’s Electricity Supply Board
(“ESB”) to construct three 65 MW aero-derivative gas turbine flexible generation power plants in and around the city of
Dublin, Ireland. Two of the power plants, the Poolbeg and Ringsend FlexGen Power Plants, will be located on the Poolbeg
Peninsula, and the Corduff FlexGen Power Plant will be built in nearby Goddamendy. All three projects cleared the
applicable capacity auction in calendar 2022 and are expected to operate intermittently during peak periods of electricity
demand and as back-up supply options when renewable electricity generation is limited. A full notice to proceed has been
received and project activities have commenced. The completion of each power plant is expected to occur by the end of
Fiscal 2024.

Maple Hill Solar

In May 2021, we announced that GPS entered into an EPC services contract with CPV Maple Hill Solar, LLC, an affiliate
of Competitive Power Ventures, Inc. (“CPV”), to construct the Maple Hill Solar facility, which we believe will be among
the largest solar-powered energy plants in Pennsylvania. Pursuant to an extension to the project schedule that was
coordinated with the project owner, the completion of this effort is currently scheduled to occur during the second half of
Fiscal 2024. The unique Maple Hill Solar project, which is located in Cambria County, Pennsylvania, is being constructed
using over 235,000 photovoltaic modules to generate up to approximately 100 MW alternating current electrical power.

Other Construction Works

Recently, APC was provided with limited notices to proceed with EPC contract activities for an open-cycle gas turbine
power facility in central Ireland that will have the capacity to generate approximately 264 MW of temporary emergency
electrical power. GPS is teaming with APC in the performance of this contract. The staff at GPS has also begun efforts
pursuant to limited notices to proceed with contract activities for the conversion of three coal-fired power plants to solar
energy facilities, with supporting battery-storage, while exclusive negotiations are conducted between GPS and a large
integrated retail electricity and power generation company for the corresponding EPC services contract.

During Fiscal 2023, the Irish operations of APC substantially completed the design and build of a dedicated power plant
within a major data center. The size and configuration of the facility, consisting of nine gas-fired turbines, is a first-of-a-
kind within the Irish data center market. During Fiscal 2023, the Irish operations also completed construction activities for
a major chip manufacturer. Both of these facilities are located near Dublin. Finally, during Fiscal 2023, the U.K. operations
of APC completed the installation of a synchronized condenser for the combined cycle, gas-fired power plant located at
the Isle of Grain site in the Kent region of the U.K.

On the other hand, in May 2019, GPS entered into an EPC services contract to construct a 625 MW power plant in Harrison
County, West Virginia. As a limited notice to proceed with certain preliminary activities was received from the owner of
this project at the time (a repeat customer), the value of the contract was added to our project backlog. However,
meaningful milestones were not achieved and management concluded that the value of this power plant should be removed
from project backlog during Fiscal 2023.

Over the past five years, GPS was awarded six EPC service contracts, which represented gas-fired power plant projects
with electricity generating capacity exceeding 5 gigawatts for which the commencement of project activities has been
delayed or cancelled, including the project described above. None of these projects are in our project backlog as of January
31, 2023.

We have maintained that the delays in the construction starts of these projects and the awards of new business awards to
GPS relate to a variety of factors, especially in the northeastern and Mid-Atlantic regions of the U.S. where the largest
electricity grid is run by PJM Interconnection LLC (“PJM”). Certain projects in development are confronting difficulties
in obtaining the necessary permits for construction and operation, in securing the delivery of fuel to the power plant site
and in establishing the necessary power connection to the electricity grid. Currently, we also believe that the ability of the
owners of fully developed gas-fired power plant projects to close on equity and permanent debt financing is challenged by
uncertainty in the capital markets caused by multiple factors including delayed capacity auctions, mounting public and
political opposition to fossil-fuel energy projects and rising interest rates.

- 4 -

- 5 -

Along with our commitment to the construction of state-of-the-art, natural gas-fired power plants that will serve as
important elements of our country’s electricity-generation mix in the future, we are targeting certain business development
efforts to win projects for the erection of utility-scale wind farms and solar fields, as well as the construction of other
renewable energy projects. We are also pursuing hydrogen-based energy plants and carbon capture and storage projects.
We have successfully completed certain of these types of projects in the past and we are renewing efforts to obtain new
work in the renewable power sector that will complement our natural gas-fired EPC services projects going forward, like
the Maple Hill Solar energy project as well as the three utility-scale solar and battery energy storage facilities in the
Midwest for which we recently received limited notices to proceed.

Special Purpose Entities

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. EPC contractors in our industry also periodically
execute certain contracts jointly with third parties through joint ventures, limited partnerships and limited liability
companies for the purpose of completing a project or program for a project owner. These special purpose entities are
generally dissolved upon completion of the corresponding project or program.

For example, through variable interest entities, we entered into support arrangements with independent parties in the past
that resulted in the successful development and our construction of three separate gas-fired power plant. We were paid
project development fees for each project and our loans to the development entities were repaid in full plus interest. To
complete two of these construction projects, we entered into joint venture arrangements in order to secure greater bonding
capacity. These arrangements were dissolved upon the successful completion of the corresponding EPC service contracts.

However, not all such business development endeavors are successful. In January 2018, we determined that we were the
primary beneficiary of a variable interest entity that was performing the project development activities related to the
construction of the Chickahominy Power Station. GPS provided financing to the entity for the development efforts
pursuant to promissory notes. Ultimately, the project owner was unable to obtain the necessary equity financing for the
project, and GPS ceased providing project development funding. During the fourth quarter of Fiscal 2022, we recorded an
impairment loss related to all of the capitalized project development costs in the amount of $7.9 million, of which $2.5
million was attributed to the non-controlling interest.

Labor and Materials

We perform work on job sites in different states and countries. The skilled craft labor pool is unique in each region due to
a variety of factors, including different employment environments, competing infrastructure projects located near our sites
that utilize the same labor pool as us, and decreased and aging labor pools resulting from demographic trends. As such,
we take a carefully considered and tailored approach at each job site to acquire and retain the required personnel resources
when we need them, especially craft labor, and to maintain optimum productivity on each of our projects. Depending on
the project, we may utilize direct hires, subcontractors, existing internal personnel, or a combination of the three. To date,
we have managed generally to staff each of our jobs safely and effectively.

However, in staffing each new project with the skilled craft labor needed to complete each job successfully, we may be
challenged by labor shortages in the construction industry, rising wages, demographic trends and other factors. Going
forward, competition for labor may include employers outside the construction industry that can offer the one job benefit
that construction companies cannot, which is the opportunity to work remotely. In short, labor shortages may persist into
the next fiscal year as inflation drives wages upwards.

Overall, employment in the domestic construction industry has surpassed the pre-pandemic high. The industry’s
unemployment rate has dropped to 6.6% for February 2023. The number of unemployed job seekers with construction
experience has declined by about 4.6% over the last year. The rising employment has been accompanied by higher wages
that have risen by approximately 5.3% over the last year as well.

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. 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,
or any other construction materials that we use to complete a particular power project.

- 6 -

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.

For example, we sourced certain supplies, materials and equipment from countries stricken by the global COVID-19

pandemic, as did certain of the major original equipment manufacturers (“OEMs”) for major components of natural gas-

fired power plants. Disruptions to these supply chains could have significantly affected the completion schedules for

certain projects in an unfavorable manner. However, by working closely with project owners, OEMs and other equipment

suppliers, we were able to minimize major adverse effects on project delivery schedules. As was well publicized, the

supply of solar panels to projects in the U.S was slowed during Fiscal 2023 when China was accused of circumventing

import restrictions by diverted deliveries through other countries. However, the U.S. government intervened in a manner

that resumed deliveries. In the meantime, we obtained the delivery of solar panels from other sources that maintained

productive activity on our Maple Hill Solar project for most of Fiscal 2023.

In addition, we believe that we have protections in our contracts with major customers that provide certain relief that helps

to mitigate certain financial risks. These protections could be limited depending on the underlying issues and the financial

challenges of our customers.

As we go forward, there may be unscheduled delays in the delivery of materials 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,

none of which are quantifiable at this time. We actively attempted to manage these risks during the period of uncertainty

relating to the COVID-19 outbreak and other threats to efficient operations. During Fiscal 2023, the management of the

risks associated with the inability to obtain machinery, equipment and other materials when needed continued to require

our best efforts. However, we are concerned that the supply chain uncertainties may be impacting project owners’

confidence in commencing new work which may adversely affect our expected levels of revenues until the supply chain

disruptions substantially dissipate.

The costs of materials needed for the completion of our projects may fluctuate from time to time. For example, in January

2023, inflation rose by 0.5% for the month and 6.4% over the prior year, according to the consumer price index data

released by the U.S. Bureau of Labor Statistics. In times of increased volatility similar to those being experienced currently,

we take steps to reduce our risks. For example, we may hold quotes related to materials in our industrial fabrication and

field services segment for only three days. 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 Fiscal 2023, we believe in general that we effectively confronted the economic challenges to our active

jobs represented by the inflationary surge in prices.

Competition

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. 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. As explained

below, there are risks of unrecovered costs, among other features, associated with these types of contracts.

To compete with these firms, we emphasize our proven track record as a value-add choice for the design, build and

commissioning of natural gas-fired and alternative energy power systems. Our successful experience includes the efficient

completion and maintenance of natural gas-fired combined cycle and simple cycle power plants, wood/coal-fired plants,

waste-to-energy plants, wind farms, solar fields and biofuel processing facilities, most performed on an EPC contract basis.

Through the power industry services segment, we provide a full range of competitively priced development, consulting,

engineering, procurement, construction, commissioning and maintenance services to project owners. We are able to react

quickly to their requirements while bringing a strong, experienced team to help navigate through difficult technical,

scheduling and construction issues. We believe that the cultures of GPS and APC encourage motivated, creative, high

energy and customer-focused teams that deliver results. Our projects are directed by dedicated on-site project management

teams and our project owner customers have direct access to our senior management at these companies.

- 7 -

Along with our commitment to the construction of state-of-the-art, natural gas-fired power plants that will serve as

important elements of our country’s electricity-generation mix in the future, we are targeting certain business development

efforts to win projects for the erection of utility-scale wind farms and solar fields, as well as the construction of other

renewable energy projects. We are also pursuing hydrogen-based energy plants and carbon capture and storage projects.

We have successfully completed certain of these types of projects in the past and we are renewing efforts to obtain new

work in the renewable power sector that will complement our natural gas-fired EPC services projects going forward, like

the Maple Hill Solar energy project as well as the three utility-scale solar and battery energy storage facilities in the

Midwest for which we recently received limited notices to proceed.

Special Purpose Entities

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. EPC contractors in our industry also periodically

execute certain contracts jointly with third parties through joint ventures, limited partnerships and limited liability

companies for the purpose of completing a project or program for a project owner. These special purpose entities are

generally dissolved upon completion of the corresponding project or program.

For example, through variable interest entities, we entered into support arrangements with independent parties in the past

that resulted in the successful development and our construction of three separate gas-fired power plant. We were paid

project development fees for each project and our loans to the development entities were repaid in full plus interest. To

complete two of these construction projects, we entered into joint venture arrangements in order to secure greater bonding

capacity. These arrangements were dissolved upon the successful completion of the corresponding EPC service contracts.

However, not all such business development endeavors are successful. In January 2018, we determined that we were the

primary beneficiary of a variable interest entity that was performing the project development activities related to the

construction of the Chickahominy Power Station. GPS provided financing to the entity for the development efforts

pursuant to promissory notes. Ultimately, the project owner was unable to obtain the necessary equity financing for the

project, and GPS ceased providing project development funding. During the fourth quarter of Fiscal 2022, we recorded an

impairment loss related to all of the capitalized project development costs in the amount of $7.9 million, of which $2.5

million was attributed to the non-controlling interest.

Labor and Materials

We perform work on job sites in different states and countries. The skilled craft labor pool is unique in each region due to

a variety of factors, including different employment environments, competing infrastructure projects located near our sites

that utilize the same labor pool as us, and decreased and aging labor pools resulting from demographic trends. As such,

we take a carefully considered and tailored approach at each job site to acquire and retain the required personnel resources

when we need them, especially craft labor, and to maintain optimum productivity on each of our projects. Depending on

the project, we may utilize direct hires, subcontractors, existing internal personnel, or a combination of the three. To date,

we have managed generally to staff each of our jobs safely and effectively.

However, in staffing each new project with the skilled craft labor needed to complete each job successfully, we may be

challenged by labor shortages in the construction industry, rising wages, demographic trends and other factors. Going

forward, competition for labor may include employers outside the construction industry that can offer the one job benefit

that construction companies cannot, which is the opportunity to work remotely. In short, labor shortages may persist into

the next fiscal year as inflation drives wages upwards.

Overall, employment in the domestic construction industry has surpassed the pre-pandemic high. The industry’s

unemployment rate has dropped to 6.6% for February 2023. The number of unemployed job seekers with construction

experience has declined by about 4.6% over the last year. The rising employment has been accompanied by higher wages

that have risen by approximately 5.3% over the last year as well.

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. 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,

or any other construction materials that we use to complete a particular power project.

- 6 -

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.

For example, we sourced certain supplies, materials and equipment from countries stricken by the global COVID-19
pandemic, as did certain of the major original equipment manufacturers (“OEMs”) for major components of natural gas-
fired power plants. Disruptions to these supply chains could have significantly affected the completion schedules for
certain projects in an unfavorable manner. However, by working closely with project owners, OEMs and other equipment
suppliers, we were able to minimize major adverse effects on project delivery schedules. As was well publicized, the
supply of solar panels to projects in the U.S was slowed during Fiscal 2023 when China was accused of circumventing
import restrictions by diverted deliveries through other countries. However, the U.S. government intervened in a manner
that resumed deliveries. In the meantime, we obtained the delivery of solar panels from other sources that maintained
productive activity on our Maple Hill Solar project for most of Fiscal 2023.

In addition, we believe that we have protections in our contracts with major customers that provide certain relief that helps
to mitigate certain financial risks. These protections could be limited depending on the underlying issues and the financial
challenges of our customers.

As we go forward, there may be unscheduled delays in the delivery of materials 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,
none of which are quantifiable at this time. We actively attempted to manage these risks during the period of uncertainty
relating to the COVID-19 outbreak and other threats to efficient operations. During Fiscal 2023, the management of the
risks associated with the inability to obtain machinery, equipment and other materials when needed continued to require
our best efforts. However, we are concerned that the supply chain uncertainties may be impacting project owners’
confidence in commencing new work which may adversely affect our expected levels of revenues until the supply chain
disruptions substantially dissipate.

The costs of materials needed for the completion of our projects may fluctuate from time to time. For example, in January
2023, inflation rose by 0.5% for the month and 6.4% over the prior year, according to the consumer price index data
released by the U.S. Bureau of Labor Statistics. In times of increased volatility similar to those being experienced currently,
we take steps to reduce our risks. For example, we may hold quotes related to materials in our industrial fabrication and
field services segment for only three days. 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 Fiscal 2023, we believe in general that we effectively confronted the economic challenges to our active
jobs represented by the inflationary surge in prices.

Competition

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. 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. As explained
below, there are risks of unrecovered costs, among other features, associated with these types of contracts.

To compete with these firms, we emphasize our proven track record as a value-add choice for the design, build and
commissioning of natural gas-fired and alternative energy power systems. Our successful experience includes the efficient
completion and maintenance of natural gas-fired combined cycle and simple cycle power plants, wood/coal-fired plants,
waste-to-energy plants, wind farms, solar fields and biofuel processing facilities, most performed on an EPC contract basis.
Through the power industry services segment, we provide a full range of competitively priced development, consulting,
engineering, procurement, construction, commissioning and maintenance services to project owners. We are able to react
quickly to their requirements while bringing a strong, experienced team to help navigate through difficult technical,
scheduling and construction issues. We believe that the cultures of GPS and APC encourage motivated, creative, high
energy and customer-focused teams that deliver results. Our projects are directed by dedicated on-site project management
teams and our project owner customers have direct access to our senior management at these companies.

- 7 -

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 five years. 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 exited the market
for a variety of reasons or have been acquired. Others have announced intentions to avoid entering into fixed-price
contracts. 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. As a result,
construction and engineering companies incurred losses related to performance on fixed-price contracts, including some
of the largest firms in the country.

However, fixed-price contracting in the U.S. has continued to occur due to competition that has sustained the number of
projects typically completed on a fixed-price basis. The firms that remain in our market are very effective competitors.

We are not immune to the risks of losses on major projects. As described extensively in prior year reports, including
primarily our Annual Report on Form 10-K for the year ended January 31, 2020 (“Fiscal 2020”), APC incurred a
meaningful loss in connection with the performance of the fixed price portion of our subcontract for the Teesside
Renewable Energy Plant project, located in the northeast region of England. 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.
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.

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 award of the project to build a new gas-fired power plant in Northern
Ireland. In turn, APC has provided manpower to GPS on several of its EPC services contracts. These recent experiences
have demonstrated that the two companies can combine resources effectively. As a result, GPS and APC currently are
working as a team under limited notices to proceed with project activities related to an emergency gas-fired power plant
in the central region of Ireland. We believe that GPS and APC working together provides a competitive advantage as we
pursue emerging new business opportunities in Ireland and the U.K., based on the strength of the reputation of GPS for
successfully completing large gas-fired power plant projects in the U.S. and the growing recognition in the power
community in Ireland and the U.K. that APC is committed to and capable of tackling larger and more complex power
projects.

Customers

For Fiscal 2023, Fiscal 2022 and Fiscal 2021, our most significant customer was Guernsey Power Station LLC, the owner
of the Guernsey Power Station project, which accounted for approximately 38%, 57% and 67% of our consolidated
revenues for the corresponding years. Additionally, during Fiscal 2023, EPNI Energy Limited, the developer of the Kilroot
Power Station, accounted for approximately 12% of our consolidated revenues.

No other customer of this reportable segment represented greater than 10% of consolidated revenues for Fiscal 2023, Fiscal
2022 or Fiscal 2021.

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. 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 substantial compliance with applicable regulatory
requirements.

- 8 -

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. The growing preference for renewable energy sources and the elimination

of fossil-fueled power plants by the governments of the U.S., Ireland and the U.K. may result in such restrictions becoming

more severe in the future. The consequences may result in fewer gas-fired power plants being constructed in the future

than are currently forecast offset by an increased number of renewable power facility opportunities.

Industrial Fabrication and Field Services

TRC was founded in 1977 and its fabrication facility and offices are located near Greenville, North Carolina. TRC is a

construction and field services firm with steel pipe and vessel fabrication capabilities serving industrial organizations

primarily in the Southeast region of the U.S. In April 2022, John Roberts, the then chief executive officer and the founder

of TRC, retired from the business and was succeeded by Bobby Foister, longtime employee and the president of TRC

since 2019, who was promoted to be the chief executive officer of TRC. Additionally, during Fiscal 2023, TRC

consolidated its metal fabrication plants and support structures into one industrial fabrication and warehouse facility that

includes over 90,000 square feet. The consolidation reduced fixed costs and notably streamlined the business, which has

permitted TRC to primarily focus on its field service opportunities. TRC operates within its own reportable business

segment, industrial fabrication and field services. Industrial field services typically represent over 75% of TRC’s annual

revenues with the remaining revenues contributed by projects consisting solely of metal fabrication.

The major customers of TRC currently include Nutrien Ltd., the global fertilizer company; Livent Corporation, a global

lithium technology 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; OceanaGold Corporation,

a gold-mining company located in South Carolina; Air Liquide S.A., a world-leading supplier of industrial gases; as well

as Weyerhaeuser Company and Domtar Corporation, two of North America’s largest forest products companies; and

various other industrial companies. For Fiscal 2023, Fiscal 2022 and Fiscal 2021, TRC reported revenues of $92.8 million,

$97.9 million and $65.3 million, respectively, or approximately 20%, 19% and 17% of consolidated revenues for the

corresponding years, respectively.

TRC has achieved positive earnings before interest, taxes, depreciation and amortization (“EBITDA”), for each of the past

seven years of operations, and in particular, has achieved an EBITDA margin as a percent of revenue in excess of 10%

over the most recent couple of years. Based on the current backlog and number of new business opportunities, we expect

that TRC will report favorable results again for the newly commenced fiscal year.

The project backlog of TRC has grown by over 175% since January 31, 2022 to approximately $123.5 million as of January

31, 2023, reflecting a business development emphasis on the award of larger industrial construction projects. The recent

emphasis on these field services opportunities influenced the strategic decision to consolidate the pipe and vessel

fabrication facilities to reduce fixed costs, streamline operations and better support a growing and scalable business model.

Telecommunications Infrastructure Services

SMC represents our telecommunications infrastructure services reportable business segment and conducts business as

SMC Infrastructure Solutions, which provides utility construction services and comprehensive technology wiring solutions

to customers primarily in the Mid-Atlantic region of the U.S. SMC performs both outside and inside plant cabling.

Services provided to our outside premises customers include trenchless directional boring and excavation for underground

communication and power networks, aerial cabling services, and the installation of buried cable, high and low voltage

electric lines, and private area outdoor lighting systems. The outside premises services are primarily provided to the area’s

electricity cooperative, state and local government agencies, regional communications service providers and other

commercial customers. The wide range of inside premises wiring services provided to SMC’s customers include structured

cabling, terminations and connectivity that provide the physical transport for high-speed data, voice, video and security

networks. These services are provided primarily to contractors, other commercial firms and federal government

installations, including cleared facilities, on a direct and subcontract basis. Customer facilities typically require regular

upgrades to their wiring systems in order to accommodate improvements in security, telecommunications and network

capabilities.

- 9 -

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 five years. 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 exited the market

for a variety of reasons or have been acquired. Others have announced intentions to avoid entering into fixed-price

contracts. 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. As a result,

construction and engineering companies incurred losses related to performance on fixed-price contracts, including some

of the largest firms in the country.

However, fixed-price contracting in the U.S. has continued to occur due to competition that has sustained the number of

projects typically completed on a fixed-price basis. The firms that remain in our market are very effective competitors.

We are not immune to the risks of losses on major projects. As described extensively in prior year reports, including

primarily our Annual Report on Form 10-K for the year ended January 31, 2020 (“Fiscal 2020”), APC incurred a

meaningful loss in connection with the performance of the fixed price portion of our subcontract for the Teesside

Renewable Energy Plant project, located in the northeast region of England. 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.

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.

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 award of the project to build a new gas-fired power plant in Northern

Ireland. In turn, APC has provided manpower to GPS on several of its EPC services contracts. These recent experiences

have demonstrated that the two companies can combine resources effectively. As a result, GPS and APC currently are

working as a team under limited notices to proceed with project activities related to an emergency gas-fired power plant

in the central region of Ireland. We believe that GPS and APC working together provides a competitive advantage as we

pursue emerging new business opportunities in Ireland and the U.K., based on the strength of the reputation of GPS for

successfully completing large gas-fired power plant projects in the U.S. and the growing recognition in the power

community in Ireland and the U.K. that APC is committed to and capable of tackling larger and more complex power

For Fiscal 2023, Fiscal 2022 and Fiscal 2021, our most significant customer was Guernsey Power Station LLC, the owner

of the Guernsey Power Station project, which accounted for approximately 38%, 57% and 67% of our consolidated

revenues for the corresponding years. Additionally, during Fiscal 2023, EPNI Energy Limited, the developer of the Kilroot

Power Station, accounted for approximately 12% of our consolidated revenues.

No other customer of this reportable segment represented greater than 10% of consolidated revenues for Fiscal 2023, Fiscal

projects.

Customers

2022 or Fiscal 2021.

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. 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 substantial compliance with applicable regulatory

requirements.

- 8 -

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. The growing preference for renewable energy sources and the elimination
of fossil-fueled power plants by the governments of the U.S., Ireland and the U.K. may result in such restrictions becoming
more severe in the future. The consequences may result in fewer gas-fired power plants being constructed in the future
than are currently forecast offset by an increased number of renewable power facility opportunities.

Industrial Fabrication and Field Services

TRC was founded in 1977 and its fabrication facility and offices are located near Greenville, North Carolina. TRC is a
construction and field services firm with steel pipe and vessel fabrication capabilities serving industrial organizations
primarily in the Southeast region of the U.S. In April 2022, John Roberts, the then chief executive officer and the founder
of TRC, retired from the business and was succeeded by Bobby Foister, longtime employee and the president of TRC
since 2019, who was promoted to be the chief executive officer of TRC. Additionally, during Fiscal 2023, TRC
consolidated its metal fabrication plants and support structures into one industrial fabrication and warehouse facility that
includes over 90,000 square feet. The consolidation reduced fixed costs and notably streamlined the business, which has
permitted TRC to primarily focus on its field service opportunities. TRC operates within its own reportable business
segment, industrial fabrication and field services. Industrial field services typically represent over 75% of TRC’s annual
revenues with the remaining revenues contributed by projects consisting solely of metal fabrication.

The major customers of TRC currently include Nutrien Ltd., the global fertilizer company; Livent Corporation, a global
lithium technology 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; OceanaGold Corporation,
a gold-mining company located in South Carolina; Air Liquide S.A., a world-leading supplier of industrial gases; as well
as Weyerhaeuser Company and Domtar Corporation, two of North America’s largest forest products companies; and
various other industrial companies. For Fiscal 2023, Fiscal 2022 and Fiscal 2021, TRC reported revenues of $92.8 million,
$97.9 million and $65.3 million, respectively, or approximately 20%, 19% and 17% of consolidated revenues for the
corresponding years, respectively.

TRC has achieved positive earnings before interest, taxes, depreciation and amortization (“EBITDA”), for each of the past
seven years of operations, and in particular, has achieved an EBITDA margin as a percent of revenue in excess of 10%
over the most recent couple of years. Based on the current backlog and number of new business opportunities, we expect
that TRC will report favorable results again for the newly commenced fiscal year.

The project backlog of TRC has grown by over 175% since January 31, 2022 to approximately $123.5 million as of January
31, 2023, reflecting a business development emphasis on the award of larger industrial construction projects. The recent
emphasis on these field services opportunities influenced the strategic decision to consolidate the pipe and vessel
fabrication facilities to reduce fixed costs, streamline operations and better support a growing and scalable business model.

Telecommunications Infrastructure Services

SMC represents our telecommunications infrastructure services reportable business segment and conducts business as
SMC Infrastructure Solutions, which provides utility construction services and comprehensive technology wiring solutions
to customers primarily in the Mid-Atlantic region of the U.S. SMC performs both outside and inside plant cabling.

Services provided to our outside premises customers include trenchless directional boring and excavation for underground
communication and power networks, aerial cabling services, and the installation of buried cable, high and low voltage
electric lines, and private area outdoor lighting systems. The outside premises services are primarily provided to the area’s
electricity cooperative, state and local government agencies, regional communications service providers and other
commercial customers. The wide range of inside premises wiring services provided to SMC’s customers include structured
cabling, terminations and connectivity that provide the physical transport for high-speed data, voice, video and security
networks. These services are provided primarily to contractors, other commercial firms and federal government
installations, including cleared facilities, on a direct and subcontract basis. Customer facilities typically require regular
upgrades to their wiring systems in order to accommodate improvements in security, telecommunications and network
capabilities.

- 9 -

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, a local
electricity cooperative. 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.

The revenues of SMC were $16.2 million, $13.4 million and $7.6 million for Fiscal 2023, Fiscal 2022 and Fiscal 2021,
respectively, or approximately 4%, 3% and 2% of our consolidated revenues for the corresponding years, respectively.

Late in Fiscal 2022, SMC acquired the business of Lee Telecommunications, Inc. (“LTI”) for consideration of $0.6 million
in cash, which expanded the business footprint of SMC into the Tidewater area of Virginia. LTI provides a suite of inside
premises, communications infrastructure services similar to those provided by SMC. The largest customer of LTI is
Newport News Shipbuilding, a division of Huntington Ingalls Industries, to which it has been providing services since
1995.

The combined operations of SMC operate in the fragmented and competitive telecommunication and infrastructure
services industry. We compete with providers ranging from regional companies to larger firms servicing multiple regions,
as well as large national and multi-national contractors. We believe that we compete favorably with the other companies
in our market space by emphasizing our high-quality reputation, outstanding customer base, security-cleared personnel
and highly motivated work force in competing for larger and more diverse contracts. Based on its reputation and quality
performance, SMC was selected on a sole source basis to perform outside premises and structured cabling work at several
secure overseas locations during Fiscal 2022 and Fiscal 2021.

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 985 employees at January 31, 2023, substantially all of whom were full-
time. We believe that our employee relations are generally good.

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”). The amendment extended the expiration date of the Credit Agreement to May
31, 2024 and reduced the borrowing rate. The Credit Agreement includes the following features, among others: a lending
commitment of $50.0 million including a revolving loan with a floating interest rate plus 1.6% (reduced from 2.0%), and
an accordion feature which allows for an additional commitment amount of $10.0 million, subject to certain conditions.
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.

On March 6, 2023, we entered into the Second Amendment (the “Second Amendment”) to the Credit Agreement. The
Second Amendment modifies the Credit Amendment to, among other things, replace the interest pricing from the 30-day
LIBOR plus 1.6% to the Secured Overnight Financing Rate (“SOFR”) plus 1.6% and adds SOFR successor rate language.
The Credit Agreement, as amended, continues to include customary terms, covenants and events of default for a credit
facility of its size and nature.

At January 31, 2023, the Company did not have any borrowings outstanding under the Credit Agreement. However, the
Bank has issued letters of credit in the total outstanding amount of $8.8 million at January 31, 2023, in support of the
activities of APC under existing customer contracts.

The Company has pledged the majority of its assets to secure its financing arrangements. The Bank’s consent is not
required for acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The
Bank requires that the Company comply with certain financial covenants at its fiscal year-end and at each of its fiscal
quarter-ends. 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. As of January 31,
2023, the Company was in compliance with the covenants of the Credit Agreement, as amended.

- 10 -

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. 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 local and environmental laws. Our OSHA reportable incident rates, weighted by hours

worked for all of our subsidiaries, were 0.60, 0.48, 0.55, 0.40 and 0.54 for calendar years 2022, 2021, 2020, 2019 and

2018, respectively; our rates were significantly better than the national average rates in our industry (NAICS – 2379) for

those years.

We retain qualified insurance brokerage assistance in the regular evaluation of the adequacy of insurance coverage

amounts and the annual negotiation of premium amounts in the areas of property and casualty insurance, general liability,

umbrella coverage, director and officer insurance, cybersecurity insurance and other specialty coverages. Recently, we

purchased uncertain tax position insurance related to the research and development tax credits we claimed in our amended

federal income tax returns for Fiscal 2022 and 2021 (see Note 13 to the accompanying consolidated financial statements).

We believe that our insurance coverage amounts are adequate, but not excessive, and provide the proper amounts of

coverage where we believe insurable risks may exist.

Contracts with customers in each of our reportable business segments may require performance bonds or other means of

financial assurance to secure contractual performance. We maintain material amounts of cash, cash equivalents and short-

term investments, and, as indicated above, we have the commitment of the Bank to issue irrevocable standby letters of

credit up to an aggregate amount of $50.0 million in support of our bonding collateral and other business requirements.

As of January 31, 2023, the estimated amount of the Company’s unsatisfied bonded performance obligations, covering all

of its subsidiaries, was approximately $0.6 billion. As of January 31, 2023, the outstanding amount of bonds covering

other risks, including warranty obligations related to completed activities, was not material. Not all of our projects requires

bonding.

Environmental, Social, and Governance (“ESG”) Matters

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 ESG subcommittee of our board of

directors, which was formed in Fiscal 2021 and elevated to full committee status in Fiscal 2023. Its charter requires it to

assist our senior management in: (a) setting our general strategy relating to ESG 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 ESG matters; and (c) anticipating and monitoring

developments relating to, and improving management’s understanding of, ESG matters.

A summary of our ESG 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 arrays;

• 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 is expected to

break ground in the summer of 2023; and

• We commenced a solicitation of recommendations from our employees by an ESG cross-subsidiary working

group in order to identify additional actionable items including coordinated community service projects. As a

result, employees from all levels of our Company have participated in projects such as Habitat for Humanity,

Toys for Tots, school supply drives and Company-sponsored youth programs, while supporting meaningful

apprenticeships and internships within our companies.

More information about our sustainability accomplishments can be found in the sustainability section we recently added

to our website.

- 11 -

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, a local

electricity cooperative. 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.

The revenues of SMC were $16.2 million, $13.4 million and $7.6 million for Fiscal 2023, Fiscal 2022 and Fiscal 2021,

respectively, or approximately 4%, 3% and 2% of our consolidated revenues for the corresponding years, respectively.

Late in Fiscal 2022, SMC acquired the business of Lee Telecommunications, Inc. (“LTI”) for consideration of $0.6 million

in cash, which expanded the business footprint of SMC into the Tidewater area of Virginia. LTI provides a suite of inside

premises, communications infrastructure services similar to those provided by SMC. The largest customer of LTI is

Newport News Shipbuilding, a division of Huntington Ingalls Industries, to which it has been providing services since

The combined operations of SMC operate in the fragmented and competitive telecommunication and infrastructure

services industry. We compete with providers ranging from regional companies to larger firms servicing multiple regions,

as well as large national and multi-national contractors. We believe that we compete favorably with the other companies

in our market space by emphasizing our high-quality reputation, outstanding customer base, security-cleared personnel

and highly motivated work force in competing for larger and more diverse contracts. Based on its reputation and quality

performance, SMC was selected on a sole source basis to perform outside premises and structured cabling work at several

secure overseas locations during Fiscal 2022 and Fiscal 2021.

1995.

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 985 employees at January 31, 2023, substantially all of whom were full-

time. We believe that our employee relations are generally good.

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”). The amendment extended the expiration date of the Credit Agreement to May

31, 2024 and reduced the borrowing rate. The Credit Agreement includes the following features, among others: a lending

commitment of $50.0 million including a revolving loan with a floating interest rate plus 1.6% (reduced from 2.0%), and

an accordion feature which allows for an additional commitment amount of $10.0 million, subject to certain conditions.

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.

On March 6, 2023, we entered into the Second Amendment (the “Second Amendment”) to the Credit Agreement. The

Second Amendment modifies the Credit Amendment to, among other things, replace the interest pricing from the 30-day

LIBOR plus 1.6% to the Secured Overnight Financing Rate (“SOFR”) plus 1.6% and adds SOFR successor rate language.

The Credit Agreement, as amended, continues to include customary terms, covenants and events of default for a credit

facility of its size and nature.

At January 31, 2023, the Company did not have any borrowings outstanding under the Credit Agreement. However, the

Bank has issued letters of credit in the total outstanding amount of $8.8 million at January 31, 2023, in support of the

activities of APC under existing customer contracts.

The Company has pledged the majority of its assets to secure its financing arrangements. The Bank’s consent is not

required for acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The

Bank requires that the Company comply with certain financial covenants at its fiscal year-end and at each of its fiscal

quarter-ends. 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. As of January 31,

2023, the Company was in compliance with the covenants of the Credit Agreement, as amended.

- 10 -

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. 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 local and environmental laws. Our OSHA reportable incident rates, weighted by hours
worked for all of our subsidiaries, were 0.60, 0.48, 0.55, 0.40 and 0.54 for calendar years 2022, 2021, 2020, 2019 and
2018, respectively; our rates were significantly better than the national average rates in our industry (NAICS – 2379) for
those years.

We retain qualified insurance brokerage assistance in the regular evaluation of the adequacy of insurance coverage
amounts and the annual negotiation of premium amounts in the areas of property and casualty insurance, general liability,
umbrella coverage, director and officer insurance, cybersecurity insurance and other specialty coverages. Recently, we
purchased uncertain tax position insurance related to the research and development tax credits we claimed in our amended
federal income tax returns for Fiscal 2022 and 2021 (see Note 13 to the accompanying consolidated financial statements).
We believe that our insurance coverage amounts are adequate, but not excessive, and provide the proper amounts of
coverage where we believe insurable risks may exist.

Contracts with customers in each of our reportable business segments may require performance bonds or other means of
financial assurance to secure contractual performance. We maintain material amounts of cash, cash equivalents and short-
term investments, and, as indicated above, we have the commitment of the Bank to issue irrevocable standby letters of
credit up to an aggregate amount of $50.0 million in support of our bonding collateral and other business requirements.

As of January 31, 2023, the estimated amount of the Company’s unsatisfied bonded performance obligations, covering all
of its subsidiaries, was approximately $0.6 billion. As of January 31, 2023, the outstanding amount of bonds covering
other risks, including warranty obligations related to completed activities, was not material. Not all of our projects requires
bonding.

Environmental, Social, and Governance (“ESG”) Matters

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 ESG subcommittee of our board of
directors, which was formed in Fiscal 2021 and elevated to full committee status in Fiscal 2023. Its charter requires it to
assist our senior management in: (a) setting our general strategy relating to ESG 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 ESG matters; and (c) anticipating and monitoring
developments relating to, and improving management’s understanding of, ESG matters.

A summary of our ESG 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 arrays;

• 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 is expected to

break ground in the summer of 2023; and

• We commenced a solicitation of recommendations from our employees by an ESG cross-subsidiary working
group in order to identify additional actionable items including coordinated community service projects. As a
result, employees from all levels of our Company have participated in projects such as Habitat for Humanity,
Toys for Tots, school supply drives and Company-sponsored youth programs, while supporting meaningful
apprenticeships and internships within our companies.

More information about our sustainability accomplishments can be found in the sustainability section we recently added
to our website.

- 11 -

A significant amount of effort was spent by senior and project management to ensure the safety of our employees during
the COVID-19 pandemic while we continued to satisfy our customer obligations. While our pro-active efforts varied
depending on the particular job or office location, and other factors including the severity of the outbreak, we implemented
a number of different safety measures, including COVID-19 on-site testing at major job sites, remote work, staggered
shifts in various offices, contract tracing and quarantines.

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. In May 2021, GPS commenced activities pursuant to the EPC
services contract to construct the Maple Hill Solar facility, which we believe will be among the largest solar-powered
energy plants in Pennsylvania. In addition, we have received limited notices to proceed for three utility-scale solar and
battery energy storage facilities in the Midwestern region of the U.S. For Fiscal 2023, Fiscal 2022 and Fiscal 2021, the
amounts of revenues earned by us and associated with renewable energy projects were 9.6%, 13.4% and 10.8%,
respectively, of corresponding revenues for the power industry services segment. We expect that revenues associated with
the performance of renewable energy projects will continue to contribute meaningfully to our power industry services
segment and consolidated revenues over the coming years.

Meanwhile, we believe that our gas-fired power plant construction business is valuable to the achievement of the net
carbon emission reduction goals of the U.S., Ireland and the U.K. as we are recognized as an accomplished, dependable
and cost-effective provider of construction services to gas-fired power plant owners.

Like the U.S., Ireland and the U.K. are committed to the increase in energy consumption sourced from wind and the sun
on the pathway to net zero emissions. In those countries, there appears to be recognition that these sources of electrical
power are inherently variable. 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. 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.

For example, 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 report emphasizes that this will require a combination
of conventional generation (typically powered by natural gas), interconnection to other jurisdictions, demand flexibility
and other technologies such as energy storage (i.e., batteries) and generation from renewable gases (i.e., biomethane and/or
hydrogen produced from renewable sources). The Irish government has announced that the development of new
conventional generation (including gas-fired generation) is a national priority and should be permitted and supported in
order to ensure the security of electricity supply while supporting the growth of renewable electricity generation.

In the U.S., the Energy Information Administration illustrates that power plant carbon emissions declined by 20% 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.

Finally, we note that the natural-gas fired plants that we build are not sprawling facilities. They are constructed on relatively
small sites and, upon completion, do not typically disturb the surrounding areas that are often green. As an important
element of our final completion and demobilization efforts on each project, we typically landscape the property in an
appropriate manner.

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

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

We maintain a website on the Internet at www.arganinc.com that includes access to financial data. Information on our
website is not incorporated by reference into this Annual Report on Form 10-K for the fiscal year ended January 31, 2023
(the “2023 Annual Report”). Copies of our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our
Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the

- 12 -

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.

ITEM 1A. RISK FACTORS.

Our business is challenged by a changing environment that involves many known and unknown risks and uncertainties.

The risks described below discuss factors that have affected and/or could affect us in the future. There may be others. We

may be affected by risks that are currently unknown to us or are immaterial at this time. If any such events did occur, our

business, financial condition and results of operations could be adversely affected in a material manner. Our future results

may also be impacted by other risk factors listed from time to time in our future filings with the SEC, including, but not

limited to, our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q. As the most significant portion of

our consolidated entity is represented by the power industry services reportable business segment, the risk factor

discussions included below are focused on that business. However, as a large number of these same risks exist for our

other reportable segments, (1) industrial fabrication and field services, and (2) telecommunications infrastructure services,

a review and assessment of the following risk factors should be performed with that in mind.

This section of our 2023 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” that

is presented in Item 7 of this 2023 Annual Report.

Risks Related to Our Business

Demand for our services may decrease during economic downturns or unpredictable economic cycles, which would most

likely affect our businesses adversely.

Substantial portions of the revenues and profits earned by our reportable business segments are generated from

construction-type projects, the awarding and/or funding of which we do not directly control. The engineering and

construction industry historically has experienced cyclical fluctuations in the levels of construction activity due to

economic recessions, downturns in the business cycles of project owners, material shortages, price increases by

subcontractors, interest rate fluctuations, and other economic factors beyond our control. When the general level of

economic activity deteriorates, the level of uncertainty about future business prospects rises. Accordingly, customers may

delay or cancel new projects, maintenance on major power plant components, repairs to damaged or worn equipment or

other plant outage work. The adverse financial condition of the industry could negatively affect our customers and their

willingness to fund capital expenditures or other major projects in the future. Economic, regulatory and market conditions

affecting our specific customers may adversely impact the demand for our services, resulting in the delay, reduction or

cancellation of certain projects on which our forecasts of future business may depend.

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.

The majority of our consolidated revenues relate to performance by the power industry services segment which represented

76%, 78% and 81% of consolidated revenues for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. Due primarily to

the generally favorable operating results of GPS, the major business component of this segment, we have generated

consolidated net income for twelve of the last thirteen years. GPS earns the substantial portion of its revenues from

execution on long-term natural gas-fired EPC services contracts with project owners.

For Fiscal 2023, Fiscal 2022 and Fiscal 2021, a majority portion of consolidated revenues related to EPC services provided

to a single power industry services customer on a project that achived substantial completion during the early part of Fiscal

2024. As we have discussed at previous reporting dates, GPS has been awarded six contracts totaling over 5 gigawatts

over the past 5 years for which commencement of project activities have been delayed or cancelled.

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.

We are directing a meaningful portion of our business development efforts to winning projects for the erection of utility-

scale wind farms and solar fields and for the construction of other renewable energy projects. We have successfully built

- 13 -

A significant amount of effort was spent by senior and project management to ensure the safety of our employees during

the COVID-19 pandemic while we continued to satisfy our customer obligations. While our pro-active efforts varied

depending on the particular job or office location, and other factors including the severity of the outbreak, we implemented

a number of different safety measures, including COVID-19 on-site testing at major job sites, remote work, staggered

shifts in various offices, contract tracing and quarantines.

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. In May 2021, GPS commenced activities pursuant to the EPC

services contract to construct the Maple Hill Solar facility, which we believe will be among the largest solar-powered

energy plants in Pennsylvania. In addition, we have received limited notices to proceed for three utility-scale solar and

battery energy storage facilities in the Midwestern region of the U.S. For Fiscal 2023, Fiscal 2022 and Fiscal 2021, the

amounts of revenues earned by us and associated with renewable energy projects were 9.6%, 13.4% and 10.8%,

respectively, of corresponding revenues for the power industry services segment. We expect that revenues associated with

the performance of renewable energy projects will continue to contribute meaningfully to our power industry services

segment and consolidated revenues over the coming years.

Meanwhile, we believe that our gas-fired power plant construction business is valuable to the achievement of the net

carbon emission reduction goals of the U.S., Ireland and the U.K. as we are recognized as an accomplished, dependable

and cost-effective provider of construction services to gas-fired power plant owners.

Like the U.S., Ireland and the U.K. are committed to the increase in energy consumption sourced from wind and the sun

on the pathway to net zero emissions. In those countries, there appears to be recognition that these sources of electrical

power are inherently variable. 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. 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.

For example, 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 report emphasizes that this will require a combination

of conventional generation (typically powered by natural gas), interconnection to other jurisdictions, demand flexibility

and other technologies such as energy storage (i.e., batteries) and generation from renewable gases (i.e., biomethane and/or

hydrogen produced from renewable sources). The Irish government has announced that the development of new

conventional generation (including gas-fired generation) is a national priority and should be permitted and supported in

order to ensure the security of electricity supply while supporting the growth of renewable electricity generation.

In the U.S., the Energy Information Administration illustrates that power plant carbon emissions declined by 20% 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.

Finally, we note that the natural-gas fired plants that we build are not sprawling facilities. They are constructed on relatively

small sites and, upon completion, do not typically disturb the surrounding areas that are often green. As an important

element of our final completion and demobilization efforts on each project, we typically landscape the property in an

appropriate manner.

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

The public may read any materials that we file with the SEC at its public reference room at 100 F Street, NE, Washington,

D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-

800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other

information regarding issuers that file electronically with the SEC, including us, at http://www.sec.gov.

We maintain a website on the Internet at www.arganinc.com that includes access to financial data. Information on our

website is not incorporated by reference into this Annual Report on Form 10-K for the fiscal year ended January 31, 2023

(the “2023 Annual Report”). Copies of our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our

Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the

- 12 -

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.

ITEM 1A. RISK FACTORS.

Our business is challenged by a changing environment that involves many known and unknown risks and uncertainties.
The risks described below discuss factors that have affected and/or could affect us in the future. There may be others. We
may be affected by risks that are currently unknown to us or are immaterial at this time. If any such events did occur, our
business, financial condition and results of operations could be adversely affected in a material manner. Our future results
may also be impacted by other risk factors listed from time to time in our future filings with the SEC, including, but not
limited to, our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q. As the most significant portion of
our consolidated entity is represented by the power industry services reportable business segment, the risk factor
discussions included below are focused on that business. However, as a large number of these same risks exist for our
other reportable segments, (1) industrial fabrication and field services, and (2) telecommunications infrastructure services,
a review and assessment of the following risk factors should be performed with that in mind.

This section of our 2023 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” that
is presented in Item 7 of this 2023 Annual Report.

Risks Related to Our Business

Demand for our services may decrease during economic downturns or unpredictable economic cycles, which would most
likely affect our businesses adversely.

Substantial portions of the revenues and profits earned by our reportable business segments are generated from
construction-type projects, the awarding and/or funding of which we do not directly control. The engineering and
construction industry historically has experienced cyclical fluctuations in the levels of construction activity due to
economic recessions, downturns in the business cycles of project owners, material shortages, price increases by
subcontractors, interest rate fluctuations, and other economic factors beyond our control. When the general level of
economic activity deteriorates, the level of uncertainty about future business prospects rises. Accordingly, customers may
delay or cancel new projects, maintenance on major power plant components, repairs to damaged or worn equipment or
other plant outage work. The adverse financial condition of the industry could negatively affect our customers and their
willingness to fund capital expenditures or other major projects in the future. Economic, regulatory and market conditions
affecting our specific customers may adversely impact the demand for our services, resulting in the delay, reduction or
cancellation of certain projects on which our forecasts of future business may depend.

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.

The majority of our consolidated revenues relate to performance by the power industry services segment which represented
76%, 78% and 81% of consolidated revenues for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. Due primarily to
the generally favorable operating results of GPS, the major business component of this segment, we have generated
consolidated net income for twelve of the last thirteen years. GPS earns the substantial portion of its revenues from
execution on long-term natural gas-fired EPC services contracts with project owners.

For Fiscal 2023, Fiscal 2022 and Fiscal 2021, a majority portion of consolidated revenues related to EPC services provided
to a single power industry services customer on a project that achived substantial completion during the early part of Fiscal
2024. As we have discussed at previous reporting dates, GPS has been awarded six contracts totaling over 5 gigawatts
over the past 5 years for which commencement of project activities have been delayed or cancelled.

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.

We are directing a meaningful portion of our business development efforts to winning projects for the erection of utility-
scale wind farms and solar fields and for the construction of other renewable energy projects. We have successfully built

- 13 -

utility-scale wind and solar farms, biomass fueled power plants and biodiesel energy facilities in the past, and we have
renewed the pursuit of renewable energy projects that will complement our natural gas-fired EPC services projects which
will remain the core business development focus going forward. Failure to obtain future awards for the construction of
utility-scale energy facilities and the corresponding notices to proceed with contract activities, as well as any failure to
successfully complete such projects, would have adverse effects on our future revenues, profits and cash flows.

Our dependence on large construction contracts may result in uneven financial results.

Our 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. As the timing of equipment
purchases, subcontractor services and other contract events may not be evenly distributed over the terms of our contracts,
the amount of total contract costs may vary from quarter to quarter, creating uneven amounts of quarterly and/or annual
consolidated revenues. In addition, the timing of contract commencements and completions may exacerbate the uneven
pattern. As a result of the foregoing, future reported amounts of consolidated revenues, cash flow from operations, net
income and earnings per share may vary in an uneven pattern and may not be indicative of the operating results expected
for any other fiscal period, thus rendering consecutive quarter comparisons of our consolidated operating results a less
meaningful way to assess the growth of our business.

Actual results could differ from the assumptions and estimates used to prepare our consolidated financial statements.

To prepare consolidated financial statements in conformity with accounting principles generally accepted in the U.S., we
are required to make estimates, assumptions and judgments as of the date of such financial statements, which affect the
reported values of assets and liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. For
each of our fixed price customer contracts, we recognize revenues over the life of the contract as performance obligations
are completed by us based on the proportion of costs incurred to date compared to the total costs estimated to be incurred
for the entire project, and by using the resulting percentage to update the recorded amounts of project-to-date revenues.
We review and make necessary revisions to the amounts of estimated future costs on a monthly basis. In addition, contract
results may be impacted by our estimates of the amounts of change orders that we expect to receive and our assessment of
any contract disputes that may arise.

The effects on revenues of changes to the amounts of contract values and estimated costs typically will be recorded as
catch-up adjustments when the amounts are known and can be reasonably estimated. These revisions can occur at any time
and could be material. Given the uncertainties associated with the types of customer contracts that we are awarded, it is
possible for contract values and actual costs to vary from estimates previously made, which may result in reductions or
reversals of previously recorded revenues and profits.

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 purchased 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.

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.

At January 31, 2023, the total value of our project backlog for all of our business units was $0.8 billion. Project
cancellations or scope modifications may occur that could reduce the amount of our project backlog and the associated
revenues and profits that we actually earn. Our projects generally provide our customers 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. To the best of management’s knowledge, this has not happened to us. Projects that are awarded to us may remain
included in our backlog for extended periods of time as customers experience project delays.

- 14 -

Should any unexpected delay, suspension or termination of the work under such contracts 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 revenues projected by us based on our project backlog at January 31, 2023 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.

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. We

periodically see business opportunities where we consider providing financial support to the ownership of a new project,

typically during the development phase, in order to enhance the likelihood that the development phase will be successful

and to ensure that the EPC contract is awarded to us.

In the past, we have been successful in lending funds to single purpose entities formed to develop gas-fired power plants.

Each successful involvement resulted in repayment of the loans to us and, more critically, the award to us of the EPC

contracts and instructions to proceed fully with the construction of the corresponding plant. In addition, the completed

development efforts resulted in our receipt of success fees. There can be no assurances that we will benefit from the

participation in such project development efforts in the future.

Certain project development support efforts have not been successful, resulting in the write-off of loan and interest

balances, and the loss of the potential construction project. For example, during the fourth quarter of Fiscal 2022, we

recorded an impairment loss related to the capitalized project development costs of a project in the amount of $7.9 million,

of which $2.5 million was attributed to a non-controlling interest.

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.

However, under standard terms, surety companies issue bonds on a project-by-project basis and can decline to issue bonds

at any time or require the posting of additional collateral as a condition to issuing any bonds. Not all of our projects require

bonding. As of January 31, 2023, the estimated value of future work covered by outstanding performance bonds was

approximately $0.6 billion.

Market conditions, changes in our performance or financial position, changes in our surety’s assessment of its own

operating and financial risk or larger future projects could cause our surety company to decline to issue, or substantially

reduce, the amount of bonding available for our work and/or could increase our bonding costs. These actions can be taken

on short notice. If our surety company were to limit or eliminate our access to new bonds, our alternatives would include

seeking bonding capacity from other surety companies, joint venturing with other construction firms, increasing business

with clients that do not require bonds and posting other forms of collateral for project performance, such as letters of credit

or cash. We may be unable to make alternative arrangements in a timely manner, on acceptable terms, or at all.

Accordingly, if we were to experience an interruption, reduction or other alteration in the availability of bonding capacity,

we may be unable to compete for or work on certain projects.

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

Natural disasters, such as hurricanes, tornadoes, floods and other adverse weather conditions; or other catastrophic events

such as global pandemics could disrupt our operations, or the operations of one or more of our vendors or customers. In

particular, these types of events could shut-down our construction job sites or fabrication facility for indefinite periods of

time, break our product supply chain from the impacted region or could cause our customers to delay or cancel projects,

which could impact our ability to operate. To the extent any of these events occur, our operations and financial results

could be adversely affected.

The adverse effects of the war in Ukraine have spread globally. The prolonged interruption of the supply of oil and natural

gas by Russia to Western European nations has adversely affected the economies of those countries and may further disrupt

global supply chains. Such unfavorable effects may adversely impact our business.

- 15 -

utility-scale wind and solar farms, biomass fueled power plants and biodiesel energy facilities in the past, and we have

renewed the pursuit of renewable energy projects that will complement our natural gas-fired EPC services projects which

will remain the core business development focus going forward. Failure to obtain future awards for the construction of

utility-scale energy facilities and the corresponding notices to proceed with contract activities, as well as any failure to

successfully complete such projects, would have adverse effects on our future revenues, profits and cash flows.

Our dependence on large construction contracts may result in uneven financial results.

Our 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. As the timing of equipment

purchases, subcontractor services and other contract events may not be evenly distributed over the terms of our contracts,

the amount of total contract costs may vary from quarter to quarter, creating uneven amounts of quarterly and/or annual

consolidated revenues. In addition, the timing of contract commencements and completions may exacerbate the uneven

pattern. As a result of the foregoing, future reported amounts of consolidated revenues, cash flow from operations, net

income and earnings per share may vary in an uneven pattern and may not be indicative of the operating results expected

for any other fiscal period, thus rendering consecutive quarter comparisons of our consolidated operating results a less

meaningful way to assess the growth of our business.

Actual results could differ from the assumptions and estimates used to prepare our consolidated financial statements.

To prepare consolidated financial statements in conformity with accounting principles generally accepted in the U.S., we

are required to make estimates, assumptions and judgments as of the date of such financial statements, which affect the

reported values of assets and liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. For

each of our fixed price customer contracts, we recognize revenues over the life of the contract as performance obligations

are completed by us based on the proportion of costs incurred to date compared to the total costs estimated to be incurred

for the entire project, and by using the resulting percentage to update the recorded amounts of project-to-date revenues.

We review and make necessary revisions to the amounts of estimated future costs on a monthly basis. In addition, contract

results may be impacted by our estimates of the amounts of change orders that we expect to receive and our assessment of

any contract disputes that may arise.

The effects on revenues of changes to the amounts of contract values and estimated costs typically will be recorded as

catch-up adjustments when the amounts are known and can be reasonably estimated. These revisions can occur at any time

and could be material. Given the uncertainties associated with the types of customer contracts that we are awarded, it is

possible for contract values and actual costs to vary from estimates previously made, which may result in reductions or

reversals of previously recorded revenues and profits.

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 purchased 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.

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.

At January 31, 2023, the total value of our project backlog for all of our business units was $0.8 billion. Project

cancellations or scope modifications may occur that could reduce the amount of our project backlog and the associated

revenues and profits that we actually earn. Our projects generally provide our customers 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. To the best of management’s knowledge, this has not happened to us. Projects that are awarded to us may remain

included in our backlog for extended periods of time as customers experience project delays.

- 14 -

Should any unexpected delay, suspension or termination of the work under such contracts 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 revenues projected by us based on our project backlog at January 31, 2023 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.

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. We
periodically see business opportunities where we consider providing financial support to the ownership of a new project,
typically during the development phase, in order to enhance the likelihood that the development phase will be successful
and to ensure that the EPC contract is awarded to us.

In the past, we have been successful in lending funds to single purpose entities formed to develop gas-fired power plants.
Each successful involvement resulted in repayment of the loans to us and, more critically, the award to us of the EPC
contracts and instructions to proceed fully with the construction of the corresponding plant. In addition, the completed
development efforts resulted in our receipt of success fees. There can be no assurances that we will benefit from the
participation in such project development efforts in the future.

Certain project development support efforts have not been successful, resulting in the write-off of loan and interest
balances, and the loss of the potential construction project. For example, during the fourth quarter of Fiscal 2022, we
recorded an impairment loss related to the capitalized project development costs of a project in the amount of $7.9 million,
of which $2.5 million was attributed to a non-controlling interest.

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.
However, under standard terms, surety companies issue bonds on a project-by-project basis and can decline to issue bonds
at any time or require the posting of additional collateral as a condition to issuing any bonds. Not all of our projects require
bonding. As of January 31, 2023, the estimated value of future work covered by outstanding performance bonds was
approximately $0.6 billion.

Market conditions, changes in our performance or financial position, changes in our surety’s assessment of its own
operating and financial risk or larger future projects could cause our surety company to decline to issue, or substantially
reduce, the amount of bonding available for our work and/or could increase our bonding costs. These actions can be taken
on short notice. If our surety company were to limit or eliminate our access to new bonds, our alternatives would include
seeking bonding capacity from other surety companies, joint venturing with other construction firms, increasing business
with clients that do not require bonds and posting other forms of collateral for project performance, such as letters of credit
or cash. We may be unable to make alternative arrangements in a timely manner, on acceptable terms, or at all.
Accordingly, if we were to experience an interruption, reduction or other alteration in the availability of bonding capacity,
we may be unable to compete for or work on certain projects.

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

Natural disasters, such as hurricanes, tornadoes, floods and other adverse weather conditions; or other catastrophic events
such as global pandemics could disrupt our operations, or the operations of one or more of our vendors or customers. In
particular, these types of events could shut-down our construction job sites or fabrication facility for indefinite periods of
time, break our product supply chain from the impacted region or could cause our customers to delay or cancel projects,
which could impact our ability to operate. To the extent any of these events occur, our operations and financial results
could be adversely affected.

The adverse effects of the war in Ukraine have spread globally. The prolonged interruption of the supply of oil and natural
gas by Russia to Western European nations has adversely affected the economies of those countries and may further disrupt
global supply chains. Such unfavorable effects may adversely impact our business.

- 15 -

As the COVID-19 outbreak became a global pandemic during Fiscal 2021, it challenged our ability to conduct operations
normally in the U.S., Ireland and the U.K., because sustained labor productivity at our job sites is essential to the
achievement of successful projects. In addition, the Company and certain of our major original equipment manufacturers
source certain supplies, materials and equipment from countries that were afflicted by the outbreak. Future project
interruptions or delays in the delivery of major power plant components that are related to a renewed spreading of an
existing or mutated strain of the COVID-19 virus or other contagion could impact our schedules, thereby affecting our
ability to complete our fixed-price contract projects in accordance with established schedules. 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. The extent to
which pandemics will 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 our
primary business region.

Most of our recently completed and awarded EPC service contracts relate to the construction of natural gas-fired power
plants located within the Mid-Atlantic geographic footprint of the electric power system operated by PJM, which includes
all or part of thirteen states and the District of Columbia. 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. Capacity auction for a particular delivery year were usually held during the month of May, three years prior to the
actual delivery year. However, the 2023/2024 auction, scheduled for December 2021, was postponed until January 2022
and then was postponed again until June 2022. The auction results included increased capacity powered by nuclear, solar
and natural gas energy sources, and decreased capacity provided by coal and wind energy sources. However, prices for
the 2023/2024 and 2024/2025 delivery years were significantly lower than each previous auction. Capacity auction prices
are scheduled to be posted for 2025-2026 in June 2023. However, PJM recently informed stakeholders that it will seek to
delay this auction, which would require the approval of the Federal Energy Regulatory Commission, so that market design
rule changes proposed by stakeholders might be implemented for all future auctions.

Uncertainty in this market, including the difficulties experienced by PJM in perfecting 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.

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. In 2010, coal-fired power plants accounted for about 45% of
total electricity generation in the U.S. For 2022, coal accounted for approximately 20% of net electricity generation. On
the other hand, natural-gas fired power plants provided approximately 39% of the electricity generated by utility-scale
power plants in the U.S. in 2022, representing an increase of 69% from the amount of electrical power generated by natural
gas-fired power plants in 2010, which was approximately 24% of net electricity generation in that year.

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. Higher than
expected natural gas prices, 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.

The recently published government reference-case energy outlook for the U.S. projects steady increases to utility-scale
electricity generation from 2023 through 2050. For calendar year 2022, the total amount of electricity generated by utility-
scale power plants increased by 2.8% as the U.S. economy continued to recover from the worst effects of the COVID-19
pandemic.

Any 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.

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 changed significantly several

years ago as several significant competitors announced their exit from the market for a variety of reasons. Others have

announced intentions to avoid entering into fixed-price contracts citing the disproportionate financial risks borne by

contractors. However, the market remains dynamic, and remaining competitors include committed multi-billion-dollar

companies with thousands of employees. Competing effectively in our market requires substantial financial resources, the

availability of skilled personnel and equipment when needed and the effective use of technology. Meaningful competition

is expected to continue in the domestic market, and could increase in the Irish and U.K markets, presenting us with

significant challenges to our achieving strong growth rates and acceptable profit margins. If we are unable to meet these

competitive challenges and to win the awards of new projects that provide desirable margins, we could lose market share

to our competitors, experience overall reductions in future revenues and profits or incur losses.

The continuous rise in renewables could reduce the number of future gas-fired power plant projects.

The net amount of electricity generation in the U.S. provided by utility-scale wind and solar photovoltaic facilities

continues to rise. Together, such power facilities provided approximately 10.6%, 11.9% and 13.2% of the net amount of

electricity generated by utility-scale power facilities in 2020, 2021 and 2022 respectively. In the reference case of the

Energy Information Administration (“EIA”) Energy Outlook for 2023, net electricity generation from all renewable power

sources is expected to represent approximately 63% of such generation by 2050. Impetus for this growth has been provided

by various factors including laws and regulations that discourage new fossil-fuel burning power plants, environmental

activism, income tax advantages that promote the growth of wind and solar power, the decline in the costs of renewable

power plant components and power storage, and the increase in the scale of energy storage capacity. An expanded series

of cases in the 2023 report project that the share of natural gas-fired electricity generation decreasing from 39% in 2022

to a range between 22% and 32% in 2050. Should the pace of development for renewable energy facilities, including wind

and solar power plants, accelerate at faster rates as projected, the number of future natural gas-fired construction project

opportunities for us may fall, which could adversely affect our future revenues, profits and cash flows.

Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions, increased

costs and potential losses.

Our business is subject to overseas economic and political conditions that change for reasons which are beyond our control.

Such changes may have unfavorable consequences for us. Operating in the European marketplace, which for us exists

primarily in Ireland and the U.K., may expose us to a number of risks including:

• abrupt changes in domestic and/or foreign government policies, laws, treaties (including those impacting trade),

regulations or leadership;

• embargoes or other trade restrictions, including sanctions;

•

restrictions on currency movement;

tax or tariff increases;

• currency exchange rate fluctuations;

• changes in labor conditions and difficulties in staffing and managing overseas operations; and

• other social, political and economic instability.

Our level of exposure to these risks will vary on each significant project we perform overseas, depending on the location

and the particular stage of the project. To the extent that our international business is affected by unexpected and adverse

foreign economic changes, including trade retaliation from certain countries, we may experience project disruptions and

losses which could significantly reduce our consolidated revenues and profits, or could cause losses reflected at the

consolidated level.

- 16 -

- 17 -

As the COVID-19 outbreak became a global pandemic during Fiscal 2021, it challenged our ability to conduct operations

normally in the U.S., Ireland and the U.K., because sustained labor productivity at our job sites is essential to the

achievement of successful projects. In addition, the Company and certain of our major original equipment manufacturers

source certain supplies, materials and equipment from countries that were afflicted by the outbreak. Future project

interruptions or delays in the delivery of major power plant components that are related to a renewed spreading of an

existing or mutated strain of the COVID-19 virus or other contagion could impact our schedules, thereby affecting our

ability to complete our fixed-price contract projects in accordance with established schedules. 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. The extent to

which pandemics will harm us depends on the impact on our customers, supply chains, labor forces and numerous other

Continuing disruptions to capacity auctions and corresponding prices could reduce the demand for power plants in our

evolving factors.

primary business region.

Most of our recently completed and awarded EPC service contracts relate to the construction of natural gas-fired power

plants located within the Mid-Atlantic geographic footprint of the electric power system operated by PJM, which includes

all or part of thirteen states and the District of Columbia. 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. Capacity auction for a particular delivery year were usually held during the month of May, three years prior to the

actual delivery year. However, the 2023/2024 auction, scheduled for December 2021, was postponed until January 2022

and then was postponed again until June 2022. The auction results included increased capacity powered by nuclear, solar

and natural gas energy sources, and decreased capacity provided by coal and wind energy sources. However, prices for

the 2023/2024 and 2024/2025 delivery years were significantly lower than each previous auction. Capacity auction prices

are scheduled to be posted for 2025-2026 in June 2023. However, PJM recently informed stakeholders that it will seek to

delay this auction, which would require the approval of the Federal Energy Regulatory Commission, so that market design

rule changes proposed by stakeholders might be implemented for all future auctions.

Uncertainty in this market, including the difficulties experienced by PJM in perfecting 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.

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. In 2010, coal-fired power plants accounted for about 45% of

total electricity generation in the U.S. For 2022, coal accounted for approximately 20% of net electricity generation. On

the other hand, natural-gas fired power plants provided approximately 39% of the electricity generated by utility-scale

power plants in the U.S. in 2022, representing an increase of 69% from the amount of electrical power generated by natural

gas-fired power plants in 2010, which was approximately 24% of net electricity generation in that year.

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. Higher than

expected natural gas prices, 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.

The recently published government reference-case energy outlook for the U.S. projects steady increases to utility-scale

electricity generation from 2023 through 2050. For calendar year 2022, the total amount of electricity generated by utility-

scale power plants increased by 2.8% as the U.S. economy continued to recover from the worst effects of the COVID-19

pandemic.

- 16 -

Any 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.

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 changed significantly several
years ago as several significant competitors announced their exit from the market for a variety of reasons. Others have
announced intentions to avoid entering into fixed-price contracts citing the disproportionate financial risks borne by
contractors. However, the market remains dynamic, and remaining competitors include committed multi-billion-dollar
companies with thousands of employees. Competing effectively in our market requires substantial financial resources, the
availability of skilled personnel and equipment when needed and the effective use of technology. Meaningful competition
is expected to continue in the domestic market, and could increase in the Irish and U.K markets, presenting us with
significant challenges to our achieving strong growth rates and acceptable profit margins. If we are unable to meet these
competitive challenges and to win the awards of new projects that provide desirable margins, we could lose market share
to our competitors, experience overall reductions in future revenues and profits or incur losses.

The continuous rise in renewables could reduce the number of future gas-fired power plant projects.

The net amount of electricity generation in the U.S. provided by utility-scale wind and solar photovoltaic facilities
continues to rise. Together, such power facilities provided approximately 10.6%, 11.9% and 13.2% of the net amount of
electricity generated by utility-scale power facilities in 2020, 2021 and 2022 respectively. In the reference case of the
Energy Information Administration (“EIA”) Energy Outlook for 2023, net electricity generation from all renewable power
sources is expected to represent approximately 63% of such generation by 2050. Impetus for this growth has been provided
by various factors including laws and regulations that discourage new fossil-fuel burning power plants, environmental
activism, income tax advantages that promote the growth of wind and solar power, the decline in the costs of renewable
power plant components and power storage, and the increase in the scale of energy storage capacity. An expanded series
of cases in the 2023 report project that the share of natural gas-fired electricity generation decreasing from 39% in 2022
to a range between 22% and 32% in 2050. Should the pace of development for renewable energy facilities, including wind
and solar power plants, accelerate at faster rates as projected, the number of future natural gas-fired construction project
opportunities for us may fall, which could adversely affect our future revenues, profits and cash flows.

Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions, increased
costs and potential losses.

Our business is subject to overseas economic and political conditions that change for reasons which are beyond our control.
Such changes may have unfavorable consequences for us. Operating in the European marketplace, which for us exists
primarily in Ireland and the U.K., may expose us to a number of risks including:

• abrupt changes in domestic and/or foreign government policies, laws, treaties (including those impacting trade),

regulations or leadership;

restrictions on currency movement;
tax or tariff increases;

• embargoes or other trade restrictions, including sanctions;
•
•
• currency exchange rate fluctuations;
• changes in labor conditions and difficulties in staffing and managing overseas operations; and
• other social, political and economic instability.

Our level of exposure to these risks will vary on each significant project we perform overseas, depending on the location
and the particular stage of the project. To the extent that our international business is affected by unexpected and adverse
foreign economic changes, including trade retaliation from certain countries, we may experience project disruptions and
losses which could significantly reduce our consolidated revenues and profits, or could cause losses reflected at the
consolidated level.

- 17 -

Risks Related to the Regulatory Environment

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

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 federal Comprehensive Environmental Response, Compensation and Liability Act, impose strict,
retroactive, and joint and several liability upon persons responsible for releases of hazardous substances. We continually
evaluate whether we must take additional steps to ensure compliance with environmental laws, however, there can be no
assurance that these requirements will not change and that compliance will not add costs to our projects that could
adversely affect our operating results in the future.

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. 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.
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 election of President Biden resulted in additional regulatory hurdles for fossil-fuel energy facilities.

A significant headwind for future gas-fired power plant developments relates to the policies of President Biden, who
proposes to make the electricity production in the U.S. carbon free by 2035 and to put the country on the path to achieve
net zero carbon emissions by 2050. Soon after taking office, President Biden caused the U.S. to re-join the Paris climate
agreement. He revoked the permit for the Keystone Pipeline to cross the U.S.-Canadian border. Early in his presidency,
he also issued an executive order temporarily suspending new oil and gas leasing on federal lands, which faced legal
challenges. While oil and gas leasing on federal lands has continued under his presidency, the number of federal acres
leased is much reduced from previous administrations. In March 2023, the Biden administration did approve a major and
controversial oil-drilling plan in Alaska led by a major oil company that will be allowed to develop three well pads. This
announcement was made the day after the administration unveiled protections for more than 16 million acres of land and
water in the region, including declaring the Arctic Ocean off-limits to oil and gas leasing. In addition, the leading oil
company will relinquish drilling rights to about 68,000 acres of existing leases in the area. Nonetheless, the announcement
disappointed environmental groups who pledged to continue to fight the plan. Despite this recent decision by the
administration, the election of President Biden, in part, does represent an indication of the growing popular sentiment
against fossil-fuel sourced energy, which may create future obstacles for fossil fuel-based energy facility developers to
obtain the permits necessary for the start of construction activities.

Future construction projects may depend on the continuing acceptability of the hydraulic fracturing process in certain
states.

business reputation.

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. 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.

As a result, the supply of inexpensive natural gas may not be available in the future and the economic viability of gas-fired
power plants that we build may be jeopardized.

- 18 -

The inability of power project developers to receive or to avoid delay in receiving the applicable regulatory approvals

relating to energy projects, including new natural gas pipelines, may result in lost or postponed revenues for us.

The commencement and/or execution of the types of projects performed by our power industry services reporting segment

are subject to numerous regulatory permitting processes. Applications for the variety of clean air, water purity and

construction permits may be opposed by individuals or environmental groups, resulting in delays and possible denial of

the permits. There are no assurances that our project owner customers will obtain the necessary permits for these projects,

or that the necessary permits will be obtained in order to allow construction work to proceed as scheduled. More

importantly, a project may confront difficulties in securing an interconnection service commitment from a transmission

organization establishing a connection to the electricity grid. Without such a commitment, the project might be delayed or

even terminated.

The viability of new natural gas-fired power plants depends on the availability of nearby sources of natural gas for fuel

which may require the construction of new pipelines for the delivery of natural gas to a power plant location. 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. The slowdown in permitting processes is due, at least in part, to the

increase in environmental activism that garners media attention and fosters public skepticism about new projects which

generally result in political opposition to any fossil-fuel project. In particular, pipeline projects are delayed by onsite protest

demonstrations, indecision by local officials and lawsuits.

Failure to commence or complete construction work as anticipated could have material adverse impacts on our future

revenues, profits and cash flows.

Work stoppages, union negotiations and other labor problems could adversely affect us.

The performance of certain large-scale construction contracts results in the hiring of employees represented by labor

unions. We do make sincere efforts to maintain favorable relationships and conduct good-faith negotiations with union

officials. However, there can be no assurances that such efforts will eliminate the possibilities of unfavorable conflicts in

the future. 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. In addition, labor incidents could result in negative publicity for us thereby damaging

our business reputation and perhaps harming our prospects for the receipt of future construction contract awards in certain

locales.

Risks Related to Our Operational Execution

We may experience reduced profits or incur losses under fixed price contracts if costs increase above estimates.

Primarily, our business is performed under long-term, fixed price contracts at prices that reflect our estimates of

corresponding costs and schedules. Inaccuracies in these estimates may lead to cost overruns that may not be paid by our

project owner customers. 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

Factors not discussed above 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 (i.e., supply

chain disruptions);

schedules;

unanticipated technical problems, including design or engineering issues;

inadequate project execution tools for recording, tracking, forecasting and controlling future costs and

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 that is not representative of current conditions;

delays or productivity issues caused by weather conditions, or other forces majeure (i.e., pandemics);

•

- 19 -

Risks Related to the Regulatory Environment

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

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 federal Comprehensive Environmental Response, Compensation and Liability Act, impose strict,

retroactive, and joint and several liability upon persons responsible for releases of hazardous substances. We continually

evaluate whether we must take additional steps to ensure compliance with environmental laws, however, there can be no

assurance that these requirements will not change and that compliance will not add costs to our projects that could

adversely affect our operating results in the future.

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. 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.

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 election of President Biden resulted in additional regulatory hurdles for fossil-fuel energy facilities.

A significant headwind for future gas-fired power plant developments relates to the policies of President Biden, who

proposes to make the electricity production in the U.S. carbon free by 2035 and to put the country on the path to achieve

net zero carbon emissions by 2050. Soon after taking office, President Biden caused the U.S. to re-join the Paris climate

agreement. He revoked the permit for the Keystone Pipeline to cross the U.S.-Canadian border. Early in his presidency,

he also issued an executive order temporarily suspending new oil and gas leasing on federal lands, which faced legal

challenges. While oil and gas leasing on federal lands has continued under his presidency, the number of federal acres

leased is much reduced from previous administrations. In March 2023, the Biden administration did approve a major and

controversial oil-drilling plan in Alaska led by a major oil company that will be allowed to develop three well pads. This

announcement was made the day after the administration unveiled protections for more than 16 million acres of land and

water in the region, including declaring the Arctic Ocean off-limits to oil and gas leasing. In addition, the leading oil

company will relinquish drilling rights to about 68,000 acres of existing leases in the area. Nonetheless, the announcement

disappointed environmental groups who pledged to continue to fight the plan. Despite this recent decision by the

administration, the election of President Biden, in part, does represent an indication of the growing popular sentiment

against fossil-fuel sourced energy, which may create future obstacles for fossil fuel-based energy facility developers to

obtain the permits necessary for the start of construction activities.

Future construction projects may depend on the continuing acceptability of the hydraulic fracturing process in certain

states.

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. 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.

As a result, the supply of inexpensive natural gas may not be available in the future and the economic viability of gas-fired

power plants that we build may be jeopardized.

The inability of power project developers to receive or to avoid delay in receiving the applicable regulatory approvals
relating to energy projects, including new natural gas pipelines, may result in lost or postponed revenues for us.

The commencement and/or execution of the types of projects performed by our power industry services reporting segment
are subject to numerous regulatory permitting processes. Applications for the variety of clean air, water purity and
construction permits may be opposed by individuals or environmental groups, resulting in delays and possible denial of
the permits. There are no assurances that our project owner customers will obtain the necessary permits for these projects,
or that the necessary permits will be obtained in order to allow construction work to proceed as scheduled. More
importantly, a project may confront difficulties in securing an interconnection service commitment from a transmission
organization establishing a connection to the electricity grid. Without such a commitment, the project might be delayed or
even terminated.

The viability of new natural gas-fired power plants depends on the availability of nearby sources of natural gas for fuel
which may require the construction of new pipelines for the delivery of natural gas to a power plant location. 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. The slowdown in permitting processes is due, at least in part, to the
increase in environmental activism that garners media attention and fosters public skepticism about new projects which
generally result in political opposition to any fossil-fuel project. In particular, pipeline projects are delayed by onsite protest
demonstrations, indecision by local officials and lawsuits.

Failure to commence or complete construction work as anticipated could have material adverse impacts on our future
revenues, profits and cash flows.

Work stoppages, union negotiations and other labor problems could adversely affect us.

The performance of certain large-scale construction contracts results in the hiring of employees represented by labor
unions. We do make sincere efforts to maintain favorable relationships and conduct good-faith negotiations with union
officials. However, there can be no assurances that such efforts will eliminate the possibilities of unfavorable conflicts in
the future. 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. In addition, labor incidents could result in negative publicity for us thereby damaging
our business reputation and perhaps harming our prospects for the receipt of future construction contract awards in certain
locales.

Risks Related to Our Operational Execution

We may experience reduced profits or incur losses under fixed price contracts if costs increase above estimates.

Primarily, our business is performed under long-term, fixed price contracts at prices that reflect our estimates of
corresponding costs and schedules. Inaccuracies in these estimates may lead to cost overruns that may not be paid by our
project owner customers. 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.

Factors not discussed above 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 (i.e., supply
chain disruptions);
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 that is not representative of current conditions;
delays or productivity issues caused by weather conditions, or other forces majeure (i.e., pandemics);

- 18 -

- 19 -

•

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.

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.

We try to mitigate these risks by reflecting in our overall cost estimates the reasonable possibility that a number of different
and potentially unfavorable outcomes might occur. There are no assurances that our estimates will be sufficient. If not, our
misjudgments may lead to decreased profits or losses. In some cases, as certain risk scenarios are eliminated or our
concerns regarding certain potential cost and/or schedule issues diminish, we may estimate that the likelihood of an
unforeseen cost overrun has reduced and, accordingly, we may increase the estimated gross margin on the project by
decreasing the remaining overall cost estimate.

If we guarantee the timely completion or the performance of a project, we could incur additional costs to fulfill such
obligations.

In many of our fixed price long-term contracts, we guarantee that we will complete a project by a scheduled date. We
sometimes provide that the project, when completed, will also achieve certain performance standards. Subsequently, we
may fail to complete the project on time or equipment that we install may not meet guaranteed performance standards. In
those cases, we may be held responsible for costs incurred by the customer resulting from any delay or any modification
to the plant made in order to achieve the performance standards, generally in the form of contractually agreed-upon
liquidated damages or obligations to re-perform substandard work. 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.

We build large and complex energy plants where design, construction or systems failures can result in substantial injury
or damage to third parties. In addition, the nature of our business results in project owners, subcontractors and vendors
occasionally presenting claims against us for recovery of costs that they incurred in excess of what they expected to incur,
or for which they believe they are not contractually liable. In other cases, project owners may withhold retention and/or
contract payments, for which they believe they do not contractually owe us or based on their interpretation of the contract,
or even terminate the contract. We have been, are, 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.
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. As a result, it
is typically not possible to predict the likely outcome of legal actions with certainty, but it is likely that any significant
lawsuit or other claim against us that involves lengthy legal maneuvering may have a material adverse effect on us
regardless of the outcome. Any claim that is successfully asserted against us could result in our payment of significant
sums for damages and other losses. Even if we were to prevail, any litigation may be costly and time-consuming, and
would likely divert the attention of our management and key personnel from our business operations over multi-year
periods. Either outcome may result in adverse effects on our financial condition, results of operations, cash flows and our
reputation.

In accordance with customary industry practices, we maintain insurance coverage against some, but not all, potential losses
in order to protect against the risks we face. When it is determined that we have liability, we may not be covered by
insurance or, if covered, the dollar amount of any liability may exceed our policy limits or self-insurance reserves.

- 20 -

Further, we may elect not to carry insurance related to particular risks if our management believes that the cost of available

insurance is excessive relative to the risks presented. In addition, we cannot insure fully against pollution and

environmental risks. Our management liability insurance policies are on a “claims-made” basis covering only claims

actually made during the policy period currently in effect. In addition, even where insurance is maintained for such

exposures, the policies have deductibles resulting in our assuming exposure for a layer of coverage with respect to any

such claims. Any liability not covered by our insurance, in excess of our insurance limits and self-insurance reserves or, if

covered by insurance but subject to a high deductible, could result in a significant loss for us, which claims may reduce

our future profits and cash available for operations.

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. 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. 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, 2023 and 2022 were $11.6 million and $7.5 million,

respectively. A failure to promptly recover on these types of customer submissions could have a negative impact on our

revenues, liquidity and profitability in the future.

The shortage of skilled craft labor may negatively impact our ability to execute on our long-term construction contracts.

Increased infrastructure spending and general economic expansion may increase the demand for employees with the types

of skills needed for the completion of our projects. There is a risk that our construction project schedules become

unachievable or that labor expenses will increase unexpectedly as a result of a shortage in the supply of skilled personnel

available to us. Labor shortages, productivity decreases or increased labor costs could impair our ability to maintain our

business or grow our revenues. 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.

and future construction contracts.

Our dependence upon third parties to complete many of our contracts may adversely affect our performance under current

Certain of the work performed under our energy plant construction contracts is actually performed by third-party

subcontractors we hire. We also rely on third-party manufacturers or suppliers to provide much of the equipment and most

of the materials (such as copper, concrete and steel) needed to complete our construction projects. If we are unable to hire

qualified subcontractors or to find qualified equipment manufacturers or suppliers, our ability to successfully complete a

project could be adversely impacted. If the price we are required to pay for subcontractors or equipment and supplies

exceeds the corresponding amount that we have estimated, we may suffer a reduction in the anticipated amount of gross

profit or even a loss on the contract. If a supplier, manufacturer or subcontractor fails to provide supplies, equipment or

services as required under a negotiated contract for any reason, we may be required to self-perform unexpected work or

obtain these supplies, equipment or services on an expedited basis or at a higher price than anticipated from a substitute

source, which could 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. In addition, if a

subcontractor fails to pay its subcontractors, suppliers or employees, liens may be placed on our project requiring us to

incur the costs of reimbursing such parties in order to have the liens removed or to commence litigation.

Failure to maintain safe work sites could result in significant losses as we work on projects that are inherently dangerous.

Our project sites can place our employees and others near large and/or mechanized equipment, high voltage electrical

equipment, moving vehicles, dangerous processes or highly regulated materials, and in challenging environments.

Safety is a primary focus of our business and is critical to our reputation. Often, we are responsible for safety on the project

sites where we work. Many of our customers require that we meet certain safety criteria to be eligible to bid on contracts.

- 21 -

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.

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.

obligations.

We try to mitigate these risks by reflecting in our overall cost estimates the reasonable possibility that a number of different

and potentially unfavorable outcomes might occur. There are no assurances that our estimates will be sufficient. If not, our

misjudgments may lead to decreased profits or losses. In some cases, as certain risk scenarios are eliminated or our

concerns regarding certain potential cost and/or schedule issues diminish, we may estimate that the likelihood of an

unforeseen cost overrun has reduced and, accordingly, we may increase the estimated gross margin on the project by

decreasing the remaining overall cost estimate.

If we guarantee the timely completion or the performance of a project, we could incur additional costs to fulfill such

In many of our fixed price long-term contracts, we guarantee that we will complete a project by a scheduled date. We

sometimes provide that the project, when completed, will also achieve certain performance standards. Subsequently, we

may fail to complete the project on time or equipment that we install may not meet guaranteed performance standards. In

those cases, we may be held responsible for costs incurred by the customer resulting from any delay or any modification

to the plant made in order to achieve the performance standards, generally in the form of contractually agreed-upon

liquidated damages or obligations to re-perform substandard work. 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.

We build large and complex energy plants where design, construction or systems failures can result in substantial injury

or damage to third parties. In addition, the nature of our business results in project owners, subcontractors and vendors

occasionally presenting claims against us for recovery of costs that they incurred in excess of what they expected to incur,

or for which they believe they are not contractually liable. In other cases, project owners may withhold retention and/or

contract payments, for which they believe they do not contractually owe us or based on their interpretation of the contract,

or even terminate the contract. We have been, are, 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.

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. As a result, it

is typically not possible to predict the likely outcome of legal actions with certainty, but it is likely that any significant

lawsuit or other claim against us that involves lengthy legal maneuvering may have a material adverse effect on us

regardless of the outcome. Any claim that is successfully asserted against us could result in our payment of significant

sums for damages and other losses. Even if we were to prevail, any litigation may be costly and time-consuming, and

would likely divert the attention of our management and key personnel from our business operations over multi-year

periods. Either outcome may result in adverse effects on our financial condition, results of operations, cash flows and our

reputation.

In accordance with customary industry practices, we maintain insurance coverage against some, but not all, potential losses

in order to protect against the risks we face. When it is determined that we have liability, we may not be covered by

insurance or, if covered, the dollar amount of any liability may exceed our policy limits or self-insurance reserves.

- 20 -

Further, we may elect not to carry insurance related to particular risks if our management believes that the cost of available
insurance is excessive relative to the risks presented. In addition, we cannot insure fully against pollution and
environmental risks. Our management liability insurance policies are on a “claims-made” basis covering only claims
actually made during the policy period currently in effect. In addition, even where insurance is maintained for such
exposures, the policies have deductibles resulting in our assuming exposure for a layer of coverage with respect to any
such claims. Any liability not covered by our insurance, in excess of our insurance limits and self-insurance reserves or, if
covered by insurance but subject to a high deductible, could result in a significant loss for us, which claims may reduce
our future profits and cash available for operations.

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. 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. 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, 2023 and 2022 were $11.6 million and $7.5 million,
respectively. A failure to promptly recover on these types of customer submissions could have a negative impact on our
revenues, liquidity and profitability in the future.

The shortage of skilled craft labor may negatively impact our ability to execute on our long-term construction contracts.

Increased infrastructure spending and general economic expansion may increase the demand for employees with the types
of skills needed for the completion of our projects. There is a risk that our construction project schedules become
unachievable or that labor expenses will increase unexpectedly as a result of a shortage in the supply of skilled personnel
available to us. Labor shortages, productivity decreases or increased labor costs could impair our ability to maintain our
business or grow our revenues. 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.

Certain of the work performed under our energy plant construction contracts is actually performed by third-party
subcontractors we hire. We also rely on third-party manufacturers or suppliers to provide much of the equipment and most
of the materials (such as copper, concrete and steel) needed to complete our construction projects. If we are unable to hire
qualified subcontractors or to find qualified equipment manufacturers or suppliers, our ability to successfully complete a
project could be adversely impacted. If the price we are required to pay for subcontractors or equipment and supplies
exceeds the corresponding amount that we have estimated, we may suffer a reduction in the anticipated amount of gross
profit or even a loss on the contract. If a supplier, manufacturer or subcontractor fails to provide supplies, equipment or
services as required under a negotiated contract for any reason, we may be required to self-perform unexpected work or
obtain these supplies, equipment or services on an expedited basis or at a higher price than anticipated from a substitute
source, which could 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. In addition, if a
subcontractor fails to pay its subcontractors, suppliers or employees, liens may be placed on our project requiring us to
incur the costs of reimbursing such parties in order to have the liens removed or to commence litigation.

Failure to maintain safe work sites could result in significant losses as we work on projects that are inherently dangerous.

Our project sites can place our employees and others near large and/or mechanized equipment, high voltage electrical
equipment, moving vehicles, dangerous processes or highly regulated materials, and in challenging environments.

Safety is a primary focus of our business and is critical to our reputation. Often, we are responsible for safety on the project
sites where we work. Many of our customers require that we meet certain safety criteria to be eligible to bid on contracts.

- 21 -

Further, regulatory changes implemented by OSHA or similar government agencies could impose additional costs on us.
We maintain programs with the primary purpose of implementing effective health, safety and environmental procedures
throughout our Company. If we fail to implement appropriate safety procedures and/or if our procedures fail, our
employees or others may suffer injuries or illness. The failure to comply with such procedures, client contracts or
applicable regulations could subject us to losses and liability, and adversely impact our ability to complete awarded
projects as planned or to obtain projects in the future. Our OSHA reportable incident rates, weighted by hours worked for
all of our subsidiaries, were 0.60, 0.48, 0.55, 0.40 and 0.54 for the calendar years 2022, 2021, 2020, 2019 and 2018,
respectively. Our actual rates were significantly better than the national average rates in our industry (NAICS – 2379) for
those years.

Future acquisitions and/or investments may not occur which could limit the growth of our business, and the integration of
acquired companies may not be successful.

Argan is primarily a construction company with current investments in GPS, APC, TRC and SMC. We may make
additional 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. Significant acquired companies will be
operated in a manner that we believe will best provide long-term and enduring value for our stockholders. However,
additional companies meeting these criteria and that provide products and/or services in growth industries and that are
available for purchase at attractive prices are difficult to find. Discussions with the principal(s) of potential acquisition
targets may be protracted and ultimately terminated for a variety of reasons. Further, due diligence investigations of
attractive target companies may uncover unfavorable data, and the negotiation and consummation of acquisition
agreements may not be successful.

We cannot readily predict the timing or size of any future acquisitions or the capital we will need for these transactions.
However, it is likely that any potential future acquisition or strategic investment transaction would require the use of cash
and/or shares of our common stock as components of the purchase price. Using cash for acquisitions may limit our financial
flexibility and make us more likely to seek additional capital through future debt or equity financings. Our ability to obtain
such additional financing in the future may depend upon prevailing capital market conditions, the strength of our future
operating results and financial condition as well as conditions in our business, and the amount of outside financing sought
by us. These factors may affect our efforts to arrange additional financing on terms that are acceptable to us. Our ability
to use shares of our common stock as future acquisition consideration may be limited by a variety of factors, including the
future market price of shares of our common stock and a potential seller’s assessment of the liquidity of our common
stock. If adequate funds or the use of our common stock are not available to us, or are not available on acceptable terms,
we may not be able to take advantage of desirable acquisitions or other investment opportunities that would benefit our
business. 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. However, we do attempt to integrate
certain aspects to drive synergies and cost reductions, as well as to share best practices, processes and procedures. 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.

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. Further, we may conclude that the
divestiture of a troubled business will satisfy the best interests of our stockholders. Any divesting transaction could result
in a material loss for us.

- 22 -

In summary, integrating acquired companies may involve unique and significant risks. Our failure to overcome such risks

could materially and adversely affect our business, financial condition and future results of operations, and could cause

damage to our Company’s reputation.

and results of operations.

Our failure to protect our management information systems against security breaches could adversely affect our business

Our computer systems face the threat of unauthorized access, computer hackers, viruses, malicious code, cyberattacks,

phishing and other security incursions and system disruptions, including attempts to improperly access our confidential

and proprietary information as well as the confidential and proprietary information of our customers and other business

partners. A party who circumvents our security measures, or those of our clients, contractors or other vendors, could

misappropriate confidential or proprietary information, improperly manipulate data, or cause damage or interruptions to

systems.

delays.

Furthermore, we are heavily reliant on computer, information and communications technology and related systems, some

of which are hosted by third party providers. We may experience system availability disruptions. Unplanned interruptions

could delay or prevent necessary operations. While we believe that our reasonable safeguards will protect us from serious

disruptions in the availability of our information technology assets, these safeguards may not be sufficient. We may also

be required to expend significant resources to protect against or alleviate damage caused by systems interruptions and

Various privacy and security laws in the U.S. and abroad, including the General Data Protection Regulation (“GDPR”) in

the European Union, require us to protect sensitive and confidential information and data from disclosure and we are bound

by our client and other contracts, as well as our own business practices, to protect confidential and proprietary information

and data (whether it be ours or a third party’s information entrusted to us) from unauthorized disclosure. We believe that

we have deployed industry-accepted security measures and technology to securely maintain confidential and proprietary

information retained within our information systems, including compliance with GDPR specifically at APC. However,

these measures and technology may not adequately prevent unanticipated security breaches. There can be no assurance

that our efforts will prevent these threats. Further, as these security threats continue to evolve, we may be required to

devote additional resources to protect, prevent, detect and respond against such threats. We do believe that our business

represents a low value target for cyberterrorists as we are not a company in the high technology space and we do not

maintain large files of sensitive or confidential personal information. However, we do maintain a cybersecurity insurance

policy to help protect ourselves from various types of losses relating to computer security breaches.

As disclosed in our Current Report on Form 8-K that we filed on March 10, 2023, we were targeted by a complex criminal

scheme earlier in the month, which resulted in fraudulently-induced outbound wire transfers to a third-party account. We

anticipate recording a one-time pre-tax charge of approximately $3.0 million for the unrecovered fraudulent wire transfers

in the first quarter of Fiscal 2024, of which up to $0.2 million, net of the applicable deductible, may be recovered through

an insurance claim. We are unaware of any other significant security breaches at any of our business locations. 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.

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.

Higher corporate taxes for us could result from the Global Minimum Tax, a recent global agreement to ensure that certain

large corporations pay income tax at a minimum rate of 15%. Under this scheme, governments could still set whatever

corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could “top-

off” their taxes to the 15% minimum.

In any event, we will pay higher U.S. income taxes going forward due to the impact of the Global Intangible Low Tax

Income (“GILTI”) provision. GILTI is a federal tax calculation that determines the amount of the current earnings of

foreign subsidiaries that are included in the computation of the corporate tax of U.S. parent companies. In the past, we

- 23 -

Further, regulatory changes implemented by OSHA or similar government agencies could impose additional costs on us.

We maintain programs with the primary purpose of implementing effective health, safety and environmental procedures

throughout our Company. If we fail to implement appropriate safety procedures and/or if our procedures fail, our

employees or others may suffer injuries or illness. The failure to comply with such procedures, client contracts or

applicable regulations could subject us to losses and liability, and adversely impact our ability to complete awarded

projects as planned or to obtain projects in the future. Our OSHA reportable incident rates, weighted by hours worked for

all of our subsidiaries, were 0.60, 0.48, 0.55, 0.40 and 0.54 for the calendar years 2022, 2021, 2020, 2019 and 2018,

respectively. Our actual rates were significantly better than the national average rates in our industry (NAICS – 2379) for

those years.

Future acquisitions and/or investments may not occur which could limit the growth of our business, and the integration of

acquired companies may not be successful.

Argan is primarily a construction company with current investments in GPS, APC, TRC and SMC. We may make

additional 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. Significant acquired companies will be

operated in a manner that we believe will best provide long-term and enduring value for our stockholders. However,

additional companies meeting these criteria and that provide products and/or services in growth industries and that are

available for purchase at attractive prices are difficult to find. Discussions with the principal(s) of potential acquisition

targets may be protracted and ultimately terminated for a variety of reasons. Further, due diligence investigations of

attractive target companies may uncover unfavorable data, and the negotiation and consummation of acquisition

agreements may not be successful.

We cannot readily predict the timing or size of any future acquisitions or the capital we will need for these transactions.

However, it is likely that any potential future acquisition or strategic investment transaction would require the use of cash

and/or shares of our common stock as components of the purchase price. Using cash for acquisitions may limit our financial

flexibility and make us more likely to seek additional capital through future debt or equity financings. Our ability to obtain

such additional financing in the future may depend upon prevailing capital market conditions, the strength of our future

operating results and financial condition as well as conditions in our business, and the amount of outside financing sought

by us. These factors may affect our efforts to arrange additional financing on terms that are acceptable to us. Our ability

to use shares of our common stock as future acquisition consideration may be limited by a variety of factors, including the

future market price of shares of our common stock and a potential seller’s assessment of the liquidity of our common

stock. If adequate funds or the use of our common stock are not available to us, or are not available on acceptable terms,

we may not be able to take advantage of desirable acquisitions or other investment opportunities that would benefit our

business. 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. However, we do attempt to integrate

certain aspects to drive synergies and cost reductions, as well as to share best practices, processes and procedures. 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.

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. Further, we may conclude that the

divestiture of a troubled business will satisfy the best interests of our stockholders. Any divesting transaction could result

in a material loss for us.

- 22 -

In summary, integrating acquired companies may involve unique and significant risks. Our failure to overcome such risks
could materially and adversely affect our business, financial condition and future results of operations, and could cause
damage to our Company’s reputation.

Our failure to protect our management information systems against security breaches could adversely affect our business
and results of operations.

Our computer systems face the threat of unauthorized access, computer hackers, viruses, malicious code, cyberattacks,
phishing and other security incursions and system disruptions, including attempts to improperly access our confidential
and proprietary information as well as the confidential and proprietary information of our customers and other business
partners. A party who circumvents our security measures, or those of our clients, contractors or other vendors, could
misappropriate confidential or proprietary information, improperly manipulate data, or cause damage or interruptions to
systems.

Furthermore, we are heavily reliant on computer, information and communications technology and related systems, some
of which are hosted by third party providers. We may experience system availability disruptions. Unplanned interruptions
could delay or prevent necessary operations. While we believe that our reasonable safeguards will protect us from serious
disruptions in the availability of our information technology assets, these safeguards may not be sufficient. We may also
be required to expend significant resources to protect against or alleviate damage caused by systems interruptions and
delays.

Various privacy and security laws in the U.S. and abroad, including the General Data Protection Regulation (“GDPR”) in
the European Union, require us to protect sensitive and confidential information and data from disclosure and we are bound
by our client and other contracts, as well as our own business practices, to protect confidential and proprietary information
and data (whether it be ours or a third party’s information entrusted to us) from unauthorized disclosure. We believe that
we have deployed industry-accepted security measures and technology to securely maintain confidential and proprietary
information retained within our information systems, including compliance with GDPR specifically at APC. However,
these measures and technology may not adequately prevent unanticipated security breaches. There can be no assurance
that our efforts will prevent these threats. Further, as these security threats continue to evolve, we may be required to
devote additional resources to protect, prevent, detect and respond against such threats. We do believe that our business
represents a low value target for cyberterrorists as we are not a company in the high technology space and we do not
maintain large files of sensitive or confidential personal information. However, we do maintain a cybersecurity insurance
policy to help protect ourselves from various types of losses relating to computer security breaches.

As disclosed in our Current Report on Form 8-K that we filed on March 10, 2023, we were targeted by a complex criminal
scheme earlier in the month, which resulted in fraudulently-induced outbound wire transfers to a third-party account. We
anticipate recording a one-time pre-tax charge of approximately $3.0 million for the unrecovered fraudulent wire transfers
in the first quarter of Fiscal 2024, of which up to $0.2 million, net of the applicable deductible, may be recovered through
an insurance claim. We are unaware of any other significant security breaches at any of our business locations. 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.

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.

Higher corporate taxes for us could result from the Global Minimum Tax, a recent global agreement to ensure that certain
large corporations pay income tax at a minimum rate of 15%. Under this scheme, governments could still set whatever
corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could “top-
off” their taxes to the 15% minimum.

In any event, we will pay higher U.S. income taxes going forward due to the impact of the Global Intangible Low Tax
Income (“GILTI”) provision. GILTI is a federal tax calculation that determines the amount of the current earnings of
foreign subsidiaries that are included in the computation of the corporate tax of U.S. parent companies. In the past, we

- 23 -

avoided this incremental taxation created by the Tax Cuts and Jobs Act (the “Tax Act”) because our foreign operations
were incurring mostly losses since the enactment of the Tax Act in late 2017 and for several years thereafter. However,
GILTI has become an unfavorable permanent component of our federal taxable income in the U.S. as the overseas
operations have become profitable, and it may become more meaningfully unfavorable to us if our operations in Ireland
and the U.K. increase their profitability in the future.

As disclosed below, we have been systematically repurchasing shares of our common stock primarily in open market
transactions. Effective January 1, 2023, these types of transactions became subject to a 1% tax on the repurchase price,
and the Presidential administration has proposed that the tax be raised to 4%. Although we estimate that the amount of tax
owed for transactions that occurred in January 2023 is not material, we cannot predict the amount of such taxes that we
will owe in the future, which could alter our plans to continue the repurchase program.

Certain of our tax positions may be successfully challenged by tax authorities which could result in additional income tax
expense.

Significant judgment is required in order to determine our worldwide provision for income taxes for each quarterly and
annual reporting period. In the ordinary course of our business, there are many transactions and calculations where the
ultimate tax determination is uncertain. Our tax estimates and tax positions could be materially affected by many factors
including the final outcome of tax audits and related appeals, the introduction of new tax accounting standards, legislation,
regulations and related interpretations, our global mix of earnings, the realization of deferred tax assets, changes in
uncertain tax positions and changes in our tax strategies.

The results of current or future income tax return examinations could result in unfavorable adjustments to the amounts of
income taxes previously recorded and/or paid. Any such future event or determination related to income taxes could have
a material impact on our net earnings and cash flows from operations.

During the year ended January 31, 2019 (“Fiscal 2019”), we completed a detailed review of the activities of our engineering
staff on major EPC services projects in order to identify and quantify the amounts of estimated research and development
tax credits that were available to reduce prior year income taxes. This study focused on project costs incurred during the
three-year period ended January 31, 2018. Based on the detailed review, we identified and estimated significant amounts
of income tax benefits that were not previously recognized in our operating results for any prior year reporting period. As
a result, we recorded an income tax benefit in the net amount of $16.6 million related to the research and development tax
credits during Fiscal 2019, which was subsequently reduced by $0.4 million. The research and development tax credits
were included in amendments to our consolidated federal income tax returns for the year ended January 31, 2016 (“Fiscal
2016”) and the year ended January 31, 2017 (“Fiscal 2017”), that were filed in January 2019, and our consolidated federal
income tax return for the year ended January 31, 2018 (“Fiscal 2018”), that was filed in November 2018.

In January 2021, the Internal Revenue Service (the “IRS”) issued its final revenue agents reports that disagreed with our
treatment of a substantial amount of the costs that supported tax credits claimed. In March 2021, we submitted a formal
protest to the findings of the IRS examiner and requested an appeal hearing. At the conclusion of the hearing, we agreed
to accept a settlement offer from the IRS in the amount of approximately $7.9 million, before interest. As a result, we
made an unfavorable adjustment to our liability for uncertain income tax positions of approximately $6.2 million, which
we recorded in income tax expense in Fiscal 2023.

In a manner similar to the process described above, during Fiscal 2023, GPS completed a detailed review of the activities
of its engineering staff on major EPC services projects in order to identify and quantify the amounts of research and
development tax credits that may have been available to reduce federal income taxes for Fiscal 2022 and Fiscal 2021. As
a result, we have filed amended federal income tax returns for those years, including research and development tax credits
in the total amount of $5.8 million. Net of a corresponding reduction to reflect uncertain income tax return positions, the
tax benefit recorded in Fiscal 2023 for these tax credits was approximately $3.4 million. These income tax returns may be
subject to future examinations by the IRS which may result in lower recovery on our research and development claims
than we expect, or no recovery at all. Subsequent to January 31, 2023, we obtained an insurance policy covering our tax
position in the event that we would suffer a loss related to our research and development claims.

- 24 -

We could be adversely affected by violations of the Foreign Corrupt Practices Act and similar anti-bribery laws.

The U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar anti-bribery laws in other jurisdictions

generally prohibit companies and their intermediaries from making improper payments to officials or others for the purpose

of obtaining or retaining business. While we believe that our policies and oversight in this area are strong, we cannot

provide assurances that our internal controls and procedures always will protect us from the possible reckless or criminal

acts committed by our employees or others. If we are found to be liable for anti-bribery law violations (either due to our

own acts or our inadvertence, or due to the acts or inadvertence of others including our partners, subcontractors or

suppliers), we could suffer from criminal or civil penalties or other sanctions, including contract cancellations or

debarment, and damage to our reputation, any of which could have a material adverse effect on our business. Litigation or

investigations relating to alleged or suspected violations of anti-bribery laws, even if such litigation or investigations

demonstrate ultimately that we did not violate anti-bribery laws, could be costly and could divert management’s attention

away from other aspects of our business.

Our continued success requires us to retain and hire talented personnel.

Undoubtedly, unforeseen future changes in our management will occur. Therefore, we cannot be certain that any key

executive or manager will continue in such capacity while performing at a high level for any particular period of time, nor

can we be certain that events will permit us to complete smooth management transitions should they occur. Our ability to

operate productively and profitably, particularly in the power industry, is dependent on our ability to attract, employ, retain

and train skilled personnel necessary to meet our future requirements. We cannot be certain that we will be able to maintain

experienced management teams and adequately skilled groups of employees necessary to execute our long-term

construction contracts successfully and to support our future growth strategy. The loss of key personnel, the inability to

complete management transitions without significant loss of effectiveness, or the inability to hire and retain qualified

employees in the future could negatively impact our ability to manage our business in the future.

Risks Related to an Investment in Our Securities

Our acquisition strategy may result in dilution to our stockholders.

We may make future acquisitions of other businesses that require the use of cash and issuances of common stock. To the

extent that we intend to use cash for any acquisition, we may be required to raise additional equity and/or obtain debt

financing. Stock issuances and financing, if obtained, may not be on terms favorable to us and could result in substantial

dilution to our stockholders at the time(s) of these transactions.

Future stock option exercises and restricted stock issuances will dilute the ownership of the Company’s current

We award stock options, time-based restricted stock units and performance-based restricted stock units to executives and

other key employees (see Note 12 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. 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.

As of January 31, 2023, our executive officers and directors as a group owned approximately 7.3% of our voting shares.

In addition, four (4) other stockholders owned approximately 34.6% of our shares in total as of December 31, 2022. 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.

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. Starting in Fiscal 2019, we have paid regular

quarterly cash dividends in the amount of $0.25 per share of common stock. We also made special cash dividend payments

- 25 -

avoided this incremental taxation created by the Tax Cuts and Jobs Act (the “Tax Act”) because our foreign operations

were incurring mostly losses since the enactment of the Tax Act in late 2017 and for several years thereafter. However,

GILTI has become an unfavorable permanent component of our federal taxable income in the U.S. as the overseas

operations have become profitable, and it may become more meaningfully unfavorable to us if our operations in Ireland

and the U.K. increase their profitability in the future.

As disclosed below, we have been systematically repurchasing shares of our common stock primarily in open market

transactions. Effective January 1, 2023, these types of transactions became subject to a 1% tax on the repurchase price,

and the Presidential administration has proposed that the tax be raised to 4%. Although we estimate that the amount of tax

owed for transactions that occurred in January 2023 is not material, we cannot predict the amount of such taxes that we

will owe in the future, which could alter our plans to continue the repurchase program.

Certain of our tax positions may be successfully challenged by tax authorities which could result in additional income tax

expense.

Significant judgment is required in order to determine our worldwide provision for income taxes for each quarterly and

annual reporting period. In the ordinary course of our business, there are many transactions and calculations where the

ultimate tax determination is uncertain. Our tax estimates and tax positions could be materially affected by many factors

including the final outcome of tax audits and related appeals, the introduction of new tax accounting standards, legislation,

regulations and related interpretations, our global mix of earnings, the realization of deferred tax assets, changes in

uncertain tax positions and changes in our tax strategies.

The results of current or future income tax return examinations could result in unfavorable adjustments to the amounts of

income taxes previously recorded and/or paid. Any such future event or determination related to income taxes could have

a material impact on our net earnings and cash flows from operations.

During the year ended January 31, 2019 (“Fiscal 2019”), we completed a detailed review of the activities of our engineering

staff on major EPC services projects in order to identify and quantify the amounts of estimated research and development

tax credits that were available to reduce prior year income taxes. This study focused on project costs incurred during the

three-year period ended January 31, 2018. Based on the detailed review, we identified and estimated significant amounts

of income tax benefits that were not previously recognized in our operating results for any prior year reporting period. As

a result, we recorded an income tax benefit in the net amount of $16.6 million related to the research and development tax

credits during Fiscal 2019, which was subsequently reduced by $0.4 million. The research and development tax credits

were included in amendments to our consolidated federal income tax returns for the year ended January 31, 2016 (“Fiscal

2016”) and the year ended January 31, 2017 (“Fiscal 2017”), that were filed in January 2019, and our consolidated federal

income tax return for the year ended January 31, 2018 (“Fiscal 2018”), that was filed in November 2018.

In January 2021, the Internal Revenue Service (the “IRS”) issued its final revenue agents reports that disagreed with our

treatment of a substantial amount of the costs that supported tax credits claimed. In March 2021, we submitted a formal

protest to the findings of the IRS examiner and requested an appeal hearing. At the conclusion of the hearing, we agreed

to accept a settlement offer from the IRS in the amount of approximately $7.9 million, before interest. As a result, we

made an unfavorable adjustment to our liability for uncertain income tax positions of approximately $6.2 million, which

we recorded in income tax expense in Fiscal 2023.

In a manner similar to the process described above, during Fiscal 2023, GPS completed a detailed review of the activities

of its engineering staff on major EPC services projects in order to identify and quantify the amounts of research and

development tax credits that may have been available to reduce federal income taxes for Fiscal 2022 and Fiscal 2021. As

a result, we have filed amended federal income tax returns for those years, including research and development tax credits

in the total amount of $5.8 million. Net of a corresponding reduction to reflect uncertain income tax return positions, the

tax benefit recorded in Fiscal 2023 for these tax credits was approximately $3.4 million. These income tax returns may be

subject to future examinations by the IRS which may result in lower recovery on our research and development claims

than we expect, or no recovery at all. Subsequent to January 31, 2023, we obtained an insurance policy covering our tax

position in the event that we would suffer a loss related to our research and development claims.

We could be adversely affected by violations of the Foreign Corrupt Practices Act and similar anti-bribery laws.

The U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar anti-bribery laws in other jurisdictions
generally prohibit companies and their intermediaries from making improper payments to officials or others for the purpose
of obtaining or retaining business. While we believe that our policies and oversight in this area are strong, we cannot
provide assurances that our internal controls and procedures always will protect us from the possible reckless or criminal
acts committed by our employees or others. If we are found to be liable for anti-bribery law violations (either due to our
own acts or our inadvertence, or due to the acts or inadvertence of others including our partners, subcontractors or
suppliers), we could suffer from criminal or civil penalties or other sanctions, including contract cancellations or
debarment, and damage to our reputation, any of which could have a material adverse effect on our business. Litigation or
investigations relating to alleged or suspected violations of anti-bribery laws, even if such litigation or investigations
demonstrate ultimately that we did not violate anti-bribery laws, could be costly and could divert management’s attention
away from other aspects of our business.

Our continued success requires us to retain and hire talented personnel.

Undoubtedly, unforeseen future changes in our management will occur. Therefore, we cannot be certain that any key
executive or manager will continue in such capacity while performing at a high level for any particular period of time, nor
can we be certain that events will permit us to complete smooth management transitions should they occur. Our ability to
operate productively and profitably, particularly in the power industry, is dependent on our ability to attract, employ, retain
and train skilled personnel necessary to meet our future requirements. We cannot be certain that we will be able to maintain
experienced management teams and adequately skilled groups of employees necessary to execute our long-term
construction contracts successfully and to support our future growth strategy. The loss of key personnel, the inability to
complete management transitions without significant loss of effectiveness, or the inability to hire and retain qualified
employees in the future could negatively impact our ability to manage our business in the future.

Risks Related to an Investment in Our Securities

Our acquisition strategy may result in dilution to our stockholders.

We may make future acquisitions of other businesses that require the use of cash and issuances of common stock. To the
extent that we intend to use cash for any acquisition, we may be required to raise additional equity and/or obtain debt
financing. Stock issuances and financing, if obtained, may not be on terms favorable to us and could result in substantial
dilution to our stockholders at the time(s) of these transactions.

Future stock option exercises and restricted stock issuances will dilute the ownership of the Company’s current
stockholders.

We award stock options, time-based restricted stock units and performance-based restricted stock units to executives and
other key employees (see Note 12 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. 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.

As of January 31, 2023, our executive officers and directors as a group owned approximately 7.3% of our voting shares.
In addition, four (4) other stockholders owned approximately 34.6% of our shares in total as of December 31, 2022. 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.

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. Starting in Fiscal 2019, we have paid regular
quarterly cash dividends in the amount of $0.25 per share of common stock. We also made special cash dividend payments

- 24 -

- 25 -

in the amount of $1.00 per share of common stock in July 2020 and December 2020, and we paid regular and special cash
dividends during earlier years. 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 began to repurchase shares of our common stock on the open market in November 2021. During Fiscal 2023, we
repurchased 1,855,714 shares at an aggregate price of approximately $68.2 million, or $36.77 per share. Since year-end,
we have continued to make open market purchases pursuant to the approvals of our board of directors. Such approvals,
which permits privately negotiated transactions as well as open market purchases, was recently increased from $100
million to $125 million during December 2022 by our board of directors. We can provide no guarantee that we will
continue to make common stock repurchases up to the approved amount of $125 million.

Provisions of our certificate of incorporation and Delaware law could deter takeover attempts.

Provisions of our certificate of incorporation and Delaware law could delay, prevent, or make more difficult a merger,
tender offer or proxy contest involving us. Among other things, our board of directors may issue up to 500,000 shares of
our preferred stock and may determine the price, rights, preferences, privileges and restrictions, including voting and
conversion rights, of these shares. The issuance of preferred stock by us could adversely affect the rights of holders of
common stock by, among other factors, establishing dividend rights, liquidation rights and voting rights that are superior
to the rights of the holders of the common stock. 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.

ITEM 2. PROPERTIES.

We occupy our corporate headquarters in Rockville, Maryland, under a lease that expires on May 31, 2024 covering 2,521
square feet of office space.

Share Repurchase Program

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. TRC also leases two offices (2,200 and 1,800 square feet) that are located close to one another in Winterville,
North Carolina, with terms that run through August 2024, at a total annual rent of $39,600.

APC owns and occupies the top two floors of an office building (3,500 square feet) located in Limerick, Ireland, that serves
as its headquarters, and an operations support facility in Nenagh, Ireland, that includes approximately 10,663 square feet
of warehouse and a small amount office space. APC also leases office space in Derby, England, with a term that runs
through August 2024 at an annual rent of approximately $50,000, and warehouse space in Billingham, England, with a
term that runs through January 2025 at an annual rent of approximately $35,000.

SMC is primarily located in Tracys Landing, Maryland, occupying facilities under a lease that expires in October 2026,
which automatically renews for a total of up to five additional years, with a current annual rent of $88,800. The SMC
facility includes 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 under a lease that commenced on December 31, 2021, at a current annual rent of $111,900, with a term
that covers five years and that includes a tenant option for one additional five-year period.

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. 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.

- 26 -

ITEM 3. LEGAL PROCEEDINGS.

Note 11 to the accompanying consolidated financial statements included in Item 8 of Part II of this 2023 Annual Report

presents a discussion of the legal proceedings that were settled in September 2021. In the normal course of business, we

may have other pending claims and legal proceedings. 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.

PART II

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

10, 2023, we had approximately 57 stockholders of record.

Dividends

Since Fiscal 2019, our board of directors has declared and we have 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, and we issued a statement expressing confidence in the future of our

business and satisfaction with the opportunity to return a portion of our accumulated earnings to the stockholders during a

year marked by the challenges presented by the COVID-19 pandemic. The statement cited our strong balance sheet with

significant liquidity and no debt and, at that time, the increased ramp-up of construction on the Guernsey Power Station,

the largest project in our history.

Each quarter, our board of directors evaluates the Company’s ongoing operational and financial performance in

determining the amount of the regular dividend and any special dividend. There can be no assurance that these evaluations

will result in the payments of cash dividends in the future.

On December 14, 2022, we made a filing on Current Report Form 8-K announcing that 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, and the timing

and amount of stock repurchase transactions will depend on market and business conditions, applicable legal and credit

requirements and other corporate considerations. In accordance with the SEC’s Rule 10b5-1, and pursuant to the Share

Repurchase Plan, we have allowed, and may in the future allow, the repurchase of common stock during trading blackout

periods by an investment banking firm or other institution agent acting on our behalf pursuant to predetermined parameters.

In our quarterly reports on Form 10-Q for the first three quarterly periods of Fiscal 2023, we provided the required

disclosures of the number of shares repurchased during each month of the applicable quarter and the related information

related to the costs of the repurchase transactions. Information related to our share repurchases for the fourth quarter of

Fiscal 2023 follows:

Total Number of

Value of Shares That May Yet

Shares Purchased as Part of

Be Purchased under the

Approximate Dollar

Period

November 1 - 30, 2022

December 1 - 31, 2022

January 1 - 31, 2023

Total

Total Number of

Average Price per

Publicly Announced

Shares Repurchased

Share Paid

Plans or Programs

(Dollars in Thousands)

— $

67,074 $

67,625 $

134,699

—

36.36

37.50

— $

67,074 $

67,625 $

134,699

16,376

38,937

36,402

Subsequent to January 31, 2023, we continued to repurchase shares of our common stock pursuant to the Share Repurchase

Plan through April 11, 2023. As of April 11, 2023, we had repurchased 75,755 shares since year-end, all on the open

market, for an aggregate price of approximately $3.0 million, or $39.60 per share, exclusive of share repurchase excise

tax.

- 27 -

ITEM 3. LEGAL PROCEEDINGS.

Note 11 to the accompanying consolidated financial statements included in Item 8 of Part II of this 2023 Annual Report
presents a discussion of the legal proceedings that were settled in September 2021. In the normal course of business, we
may have other pending claims and legal proceedings. 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.

PART II

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
10, 2023, we had approximately 57 stockholders of record.

Dividends

Since Fiscal 2019, our board of directors has declared and we have 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, and we issued a statement expressing confidence in the future of our
business and satisfaction with the opportunity to return a portion of our accumulated earnings to the stockholders during a
year marked by the challenges presented by the COVID-19 pandemic. The statement cited our strong balance sheet with
significant liquidity and no debt and, at that time, the increased ramp-up of construction on the Guernsey Power Station,
the largest project in our history.

Each quarter, our board of directors evaluates the Company’s ongoing operational and financial performance in
determining the amount of the regular dividend and any special dividend. There can be no assurance that these evaluations
will result in the payments of cash dividends in the future.

We occupy our corporate headquarters in Rockville, Maryland, under a lease that expires on May 31, 2024 covering 2,521

Share Repurchase Program

On December 14, 2022, we made a filing on Current Report Form 8-K announcing that 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, and the timing
and amount of stock repurchase transactions will depend on market and business conditions, applicable legal and credit
requirements and other corporate considerations. In accordance with the SEC’s Rule 10b5-1, and pursuant to the Share
Repurchase Plan, we have allowed, and may in the future allow, the repurchase of common stock during trading blackout
periods by an investment banking firm or other institution agent acting on our behalf pursuant to predetermined parameters.

In our quarterly reports on Form 10-Q for the first three quarterly periods of Fiscal 2023, we provided the required
disclosures of the number of shares repurchased during each month of the applicable quarter and the related information
related to the costs of the repurchase transactions. Information related to our share repurchases for the fourth quarter of
Fiscal 2023 follows:

in the amount of $1.00 per share of common stock in July 2020 and December 2020, and we paid regular and special cash

dividends during earlier years. 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 began to repurchase shares of our common stock on the open market in November 2021. During Fiscal 2023, we

repurchased 1,855,714 shares at an aggregate price of approximately $68.2 million, or $36.77 per share. Since year-end,

we have continued to make open market purchases pursuant to the approvals of our board of directors. Such approvals,

which permits privately negotiated transactions as well as open market purchases, was recently increased from $100

million to $125 million during December 2022 by our board of directors. We can provide no guarantee that we will

continue to make common stock repurchases up to the approved amount of $125 million.

Provisions of our certificate of incorporation and Delaware law could deter takeover attempts.

Provisions of our certificate of incorporation and Delaware law could delay, prevent, or make more difficult a merger,

tender offer or proxy contest involving us. Among other things, our board of directors may issue up to 500,000 shares of

our preferred stock and may determine the price, rights, preferences, privileges and restrictions, including voting and

conversion rights, of these shares. The issuance of preferred stock by us could adversely affect the rights of holders of

common stock by, among other factors, establishing dividend rights, liquidation rights and voting rights that are superior

to the rights of the holders of the common stock. 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.

ITEM 2. PROPERTIES.

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.

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, with terms that run through August 2024, at a total annual rent of $39,600.

APC owns and occupies the top two floors of an office building (3,500 square feet) located in Limerick, Ireland, that serves

as its headquarters, and an operations support facility in Nenagh, Ireland, that includes approximately 10,663 square feet

of warehouse and a small amount office space. APC also leases office space in Derby, England, with a term that runs

through August 2024 at an annual rent of approximately $50,000, and warehouse space in Billingham, England, with a

term that runs through January 2025 at an annual rent of approximately $35,000.

SMC is primarily located in Tracys Landing, Maryland, occupying facilities under a lease that expires in October 2026,

which automatically renews for a total of up to five additional years, with a current annual rent of $88,800. The SMC

facility includes 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 under a lease that commenced on December 31, 2021, at a current annual rent of $111,900, with a term

that covers five years and that includes a tenant option for one additional five-year period.

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. 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.

- 26 -

Subsequent to January 31, 2023, we continued to repurchase shares of our common stock pursuant to the Share Repurchase
Plan through April 11, 2023. As of April 11, 2023, we had repurchased 75,755 shares since year-end, all on the open
market, for an aggregate price of approximately $3.0 million, or $39.60 per share, exclusive of share repurchase excise
tax.

- 27 -

— $
67,074 $
67,625 $

134,699

—
36.36
37.50

— $
67,074 $
67,625 $

134,699

16,376
38,937
36,402

Period
November 1 - 30, 2022
December 1 - 31, 2022
January 1 - 31, 2023

Total

Approximate Dollar
Value of Shares That May Yet
Be Purchased under the
Plans or Programs
(Dollars in Thousands)

Total Number of
Shares Purchased as Part of
Publicly Announced
Plans or Programs

Total Number of
Shares Repurchased

Average Price per
Share Paid

Common Stock Price Performance Graph

Equity Compensation Plan Information

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. 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, 2018, 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 stock performance shown on the graph is not
intended to be indicative of future stock performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Argan, Inc., the S&P 500 Index
and the Dow Jones US Heavy Construction TSM Index

$200

$180

$160

$140

$120

$100

$80

$60

$40

$20

1/18

1/19

1/20

1/21

1/22

1/23

~Argan,

Inc.

-.\-S&P

500

~Dow

Jones US Heavy Construction lSM

*$100 invested on 1/31/18 in stock or index, including reinvestment of dividends.
Fiscal year ending January 31

2018

2019

2020

2021

2022

2023

Years Ended January 31,

In June 2011, the stockholders approved the adoption of the Argan, Inc. 2011 Stock Plan (the “2011 Plan”) including

500,000 shares of our common stock reserved for issuance thereunder. The stockholders approved a succession of

amendments to the 2011 Plan, a ten-year plan, in subsequent years increasing the number of shares of common stock

reserved for issuance thereunder to 2,750,000. On June 23, 2020, our stockholders approved the adoption of the Argan,

Inc. 2020 Stock Plan (the “2020 Plan”), and the allocation of 500,000 shares of the Company’s common stock for issuance

thereunder. The Company’s board of directors may make share-based awards under the 2020 Plan to officers, directors

and key employees. The 2020 Plan succeeds the 2011 Stock Plan as our authority to make awards pursuant to the 2011

Plan expired in July 2021. The features of the 2020 Plan are similar to those included in the 2011 Plan. Together, the 2020

Plan and the 2011 Plan are hereinafter referred to as the “Stock Plans.”

Awards under the 2020 Plan may include nonqualified stock options, incentive stock options, and restricted or unrestricted

stock. The specific provisions for each award are documented in a written agreement between the Company and the

awardee. All stock options awarded under the 2020 Plan shall have an exercise price per share at least equal to the common

stock’s market value on the date of grant. Stock options shall have terms no longer than ten years. Typically, stock options

are awarded with one-third of each stock option vesting on each of the first three anniversaries of the corresponding award

date.

The following table sets forth certain information, as of January 31, 2023, concerning securities authorized for issuance

under options to purchase our common stock.

Number of Securities

Weighted Average Exercise Number of Securities

Issuable under Outstanding

Price of Outstanding

Remaining Available for

Options

Future Awards (1)

Equity Compensation Plans Approved by the

Equity Compensation Plans Not Approved by

Stockholders (2)

the Stockholders

Totals

1,439,668 $

—

1,439,668 $

43.84

—

43.84

188,879

—

188,879

(1) Represents the number of shares of common stock reserved for future stock awards, including restricted stock unit

awards.

(2) Approved plans include the Company’s Stock Plans.

The number of issuable shares of our common stock under outstanding stock options presented in the chart above does not

include an estimated 309,672 shares of our common stock covered by awards of restricted stock units made to members

of our board of directors, our chief executive officer, our chief financial officer and other key employees since April 2019

pursuant to the terms of the Stock Plans. See Note 12 to the accompanying consolidated financial statements included in

Item 8 of Part II of this 2023 Annual Report for a description of the restricted stock units including the various vesting

terms related to the awards.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

OPERATIONS.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

The following discussion summarizes the financial position of Argan, Inc. and its subsidiaries as of January 31, 2023, and

the results of their operations for Fiscal 2023 and Fiscal 2022, and should be read in conjunction with the consolidated

financial statements and notes thereto included elsewhere in Item 8 of this 2023 Annual Report.

Please see “Item 7. 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, 2022, that was filed with the SEC on April 13,

2022, for a discussion of financial trends, variance drivers and other significant matters for Fiscal 2022 as compared to

Fiscal 2021.

- 29 -

$ 100.00 $ 99.30 $ 101.39 $ 111.32 $ 97.84 $ 105.62
157.71
186.64

Argan, Inc.
S&P 500
Dow Jones US Heavy Civil Construction TSM

139.37 171.83
116.20 145.20

118.87
90.54

100.00
100.00

97.69
78.54

- 28 -

Common Stock Price Performance Graph

Equity Compensation Plan Information

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. 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, 2018, 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 stock performance shown on the graph is not

intended to be indicative of future stock performance.

In June 2011, the stockholders approved the adoption of the Argan, Inc. 2011 Stock Plan (the “2011 Plan”) including
500,000 shares of our common stock reserved for issuance thereunder. The stockholders approved a succession of
amendments to the 2011 Plan, a ten-year plan, in subsequent years increasing the number of shares of common stock
reserved for issuance thereunder to 2,750,000. On June 23, 2020, our stockholders approved the adoption of the Argan,
Inc. 2020 Stock Plan (the “2020 Plan”), and the allocation of 500,000 shares of the Company’s common stock for issuance
thereunder. The Company’s board of directors may make share-based awards under the 2020 Plan to officers, directors
and key employees. The 2020 Plan succeeds the 2011 Stock Plan as our authority to make awards pursuant to the 2011
Plan expired in July 2021. The features of the 2020 Plan are similar to those included in the 2011 Plan. Together, the 2020
Plan and the 2011 Plan are hereinafter referred to as the “Stock Plans.”

Awards under the 2020 Plan may include nonqualified stock options, incentive stock options, and restricted or unrestricted
stock. The specific provisions for each award are documented in a written agreement between the Company and the
awardee. All stock options awarded under the 2020 Plan shall have an exercise price per share at least equal to the common
stock’s market value on the date of grant. Stock options shall have terms no longer than ten years. Typically, stock options
are awarded with one-third of each stock option vesting on each of the first three anniversaries of the corresponding award
date.

The following table sets forth certain information, as of January 31, 2023, concerning securities authorized for issuance
under options to purchase our common stock.

Number of Securities
Issuable under Outstanding
Options

Weighted Average Exercise Number of Securities

Price of Outstanding
Options

Remaining Available for
Future Awards (1)

Equity Compensation Plans Approved by the
Stockholders (2)
Equity Compensation Plans Not Approved by
the Stockholders

Totals

1,439,668 $

—

1,439,668 $

43.84

—
43.84

188,879

—
188,879

(1) Represents the number of shares of common stock reserved for future stock awards, including restricted stock unit

awards.

(2) Approved plans include the Company’s Stock Plans.

The number of issuable shares of our common stock under outstanding stock options presented in the chart above does not
include an estimated 309,672 shares of our common stock covered by awards of restricted stock units made to members
of our board of directors, our chief executive officer, our chief financial officer and other key employees since April 2019
pursuant to the terms of the Stock Plans. See Note 12 to the accompanying consolidated financial statements included in
Item 8 of Part II of this 2023 Annual Report for a description of the restricted stock units including the various vesting
terms related to the awards.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

The following discussion summarizes the financial position of Argan, Inc. and its subsidiaries as of January 31, 2023, and
the results of their operations for Fiscal 2023 and Fiscal 2022, and should be read in conjunction with the consolidated
financial statements and notes thereto included elsewhere in Item 8 of this 2023 Annual Report.

Please see “Item 7. 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, 2022, that was filed with the SEC on April 13,
2022, for a discussion of financial trends, variance drivers and other significant matters for Fiscal 2022 as compared to
Fiscal 2021.

- 28 -

- 29 -

Argan, Inc.

S&P 500

Dow Jones US Heavy Civil Construction TSM

Years Ended January 31,

2018

2019

2020

2021

2022

2023

$ 100.00 $ 99.30 $ 101.39 $ 111.32 $ 97.84 $ 105.62

100.00

97.69

78.54

118.87

139.37 171.83

90.54

116.20 145.20

157.71

186.64

Cautionary Statement Regarding Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. We
have made statements in this Item 7 and elsewhere in this 2023 Annual Report that may constitute “forward-looking
statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “foresee,” “should,” “would,”
“could,” or other similar expressions are intended to identify forward-looking statements. Our forward-looking statements,
financial position and results of operations, are based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no assurance that future developments affecting us will be
those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on
our forecasts for existing operations and do not include the potential impact of any future acquisitions.

Our forward-looking statements, by their nature, involve significant risks and uncertainties (some of which are beyond our
control) and assumptions. They are subject to change based upon various factors including, but not limited to, the risks
and uncertainties described in Item 1A of this 2023 Annual Report. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove to be incorrect, actual results may vary in material respects from those
projected in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.

Business Description

The Company is primarily a construction firm that conducts operations through its wholly-owned subsidiaries, GPS, APC,
SMC and TRC. GPS and APC represent our power industry services reportable segment that provides 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. The wide range of customers includes
independent power project owners, public utilities, power plant heavy equipment suppliers and other commercial firms
with significant power requirements. Projects are located in the U.S., Ireland and the U.K. Through TRC, the industrial
fabrication and field services reportable segment provides primarily on-site 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 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.

We may make additional 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. Significant acquired companies will
be operated in a manner that we believe will best provide long-term and enduring value for our stockholders.

Overview

Operating Results

Consolidated revenues for Fiscal 2023 were $455.0 million, which represented a decrease of $54.4 million, or 10.7%, from
consolidated revenues of $509.4 million reported for Fiscal 2022.

The revenues of the power industry services segment decreased by $52.1 million to $346.0 million for Fiscal 2023 from
$398.1 million reported for Fiscal 2022. The revenues of this reportable segment of our business represented 76.0% of
consolidated revenues for Fiscal 2023. For Fiscal 2022, the percentage share of consolidated revenues represented by this
reportable segment was 78.2%. The industrial fabrication and field services business reported revenues of $92.8 million
for Fiscal 2023. This amount represented a decrease of $5.1 million, or 5.2%, from revenues of $97.9 million reported for
Fiscal 2022. Revenues provided by this reportable business segment represented 20.4% and 19.2% of corresponding
consolidated revenues for Fiscal 2023 and Fiscal 2022, respectively. The telecommunications infrastructure services
business increased its revenues to $16.2 million for Fiscal 2023 from revenues of $13.4 million for Fiscal 2022,
representing an increase of 20.9%. Revenues provided by this reportable segment represented 3.6% and 2.6% of
corresponding consolidated revenues for Fiscal 2023 and Fiscal 2022, respectively.

- 30 -

Consolidated gross profit declined by $13.4 million, or 13.4%, to $86.4 million for Fiscal 2023, or 19.0% of the

corresponding consolidated revenues. The amount of consolidated gross profit reported for Fiscal 2022 was $99.7 million,

or 19.6% of the corresponding consolidated revenues. The slight year-over-year decline in gross profit margins reflected

primarily the unfavorable impacts of lower gross profit contributions from the power industry services and industrial

fabrication and field services segments.

Selling, general and administrative expenses for Fiscal 2023 and Fiscal 2022 were $44.7 million, or 9.8% of corresponding

consolidated revenues, and $47.3 million, or 9.3% of corresponding consolidated revenues, respectively. Additionally, due

to the unsuccessful project development efforts by our variable interest entity (“VIE”), we recorded an impairment loss

related to the capitalized project development costs of the corresponding power plant in the amount of $7.9 million during

Fiscal 2022, of which $2.5 million was attributed to the non-controlling interest. During Fiscal 2023, due to the receipt of

an unexpected refund payment from PJM related to this project, we reversed approximately $2.0 million of prior year

impairment loss, with $1.6 million attributed to the non-controlling interest.

Due primarily to the consolidated pre-tax book income reported for Fiscal 2023 in the amount of $46.0 million, we reported

income tax expense in the amount of $11.3 million for the year. For Fiscal 2022, we reported consolidated pre-tax book

income of $47.1 million and recorded income tax expense in the amount of $11.4 million.

For Fiscal 2023, our overall operating performance resulted in net income attributable to our stockholders in the amount

of $33.1 million, or $2.33 per diluted share. For Fiscal 2022, our overall operating performance resulted in net income

attributable to our stockholders in the amount of $38.2 million, or $2.40 per diluted share.

The primary reasons for the reduction in operating results for Fiscal 2023 were the declining revenues associated with the

post-peak construction activities of the Guernsey Power Station and the Maple Hill Solar projects; partially offset by

increased revenues associated with the Kilroot Power Station and the ESB FlexGen peaker plants.

Project Backlog

At January 31, 2023, our consolidated project backlog amount of $0.8 billion consisted substantially of the projects of the

power industry services reporting segment. The comparable backlog amount as of January 31, 2022 was $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.

Typically, we include the total value of EPC services and other major construction contracts in project backlog when we

receive a corresponding notice to proceed from the project owner. However, we may include the value of an EPC services

contract prior to the receipt of a notice to proceed if we believe that it is probable that the project will commence within a

reasonable timeframe, among other factors. Projects that are awarded to us may remain included in our backlog for

extended periods of time as customers experience project delays. However, cancellations or reductions may occur that

would reduce project backlog and that could adversely affect our expected future revenues.

In October 2022, GPS added the EPC services contract value of the Trumbull Energy Center, a 950 MW natural gas-fired

power plant to be built in Lordstown Ohio, to our project backlog as we had a fully executed EPC service contract and we

expected contract activities to commence imminently. We received the full notice to proceed with the project from the

owner, Clean Energy Future-Trumbull, LLC, in November 2022. We have since commenced activities for the project.

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, and contract completion is

scheduled for the end of Fiscal 2026.

On the other hand, in May 2019, GPS entered into an EPC services contract to construct a 625 MW power plant in Harrison

County, West Virginia. As a limited notice to proceed with certain preliminary activities was received from the owner of

this project at the time (a repeat customer), the value of the contract was added to our project backlog. However,

meaningful development milestones were not achieved and management concluded that the value of this power plant

should be removed from project backlog as of January 31, 2023.

A portion of consolidated project backlog at January 31, 2023 relates to the Guernsey Power Station as GPS completes

the commissioning process for this project, the largest single-phase, gas-fired, power plant under construction in the U.S.

The substantial completion milestones have been achieved for all three of this plant’s natural gas-fired turbines.

- 31 -

Cautionary Statement Regarding Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. We

have made statements in this Item 7 and elsewhere in this 2023 Annual Report that may constitute “forward-looking

statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “foresee,” “should,” “would,”

“could,” or other similar expressions are intended to identify forward-looking statements. Our forward-looking statements,

financial position and results of operations, are based on our current expectations and beliefs concerning future

developments and their potential effects on us. There can be no assurance that future developments affecting us will be

those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on

our forecasts for existing operations and do not include the potential impact of any future acquisitions.

Our forward-looking statements, by their nature, involve significant risks and uncertainties (some of which are beyond our

control) and assumptions. They are subject to change based upon various factors including, but not limited to, the risks

and uncertainties described in Item 1A of this 2023 Annual Report. Should one or more of these risks or uncertainties

materialize, or should any of our assumptions prove to be incorrect, actual results may vary in material respects from those

projected in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking

statements, whether as a result of new information, future events or otherwise.

Business Description

The Company is primarily a construction firm that conducts operations through its wholly-owned subsidiaries, GPS, APC,

SMC and TRC. GPS and APC represent our power industry services reportable segment that provides 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. The wide range of customers includes

independent power project owners, public utilities, power plant heavy equipment suppliers and other commercial firms

with significant power requirements. Projects are located in the U.S., Ireland and the U.K. Through TRC, the industrial

fabrication and field services reportable segment provides primarily on-site 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 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.

We may make additional 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. Significant acquired companies will

be operated in a manner that we believe will best provide long-term and enduring value for our stockholders.

Overview

Operating Results

Consolidated revenues for Fiscal 2023 were $455.0 million, which represented a decrease of $54.4 million, or 10.7%, from

consolidated revenues of $509.4 million reported for Fiscal 2022.

The revenues of the power industry services segment decreased by $52.1 million to $346.0 million for Fiscal 2023 from

$398.1 million reported for Fiscal 2022. The revenues of this reportable segment of our business represented 76.0% of

consolidated revenues for Fiscal 2023. For Fiscal 2022, the percentage share of consolidated revenues represented by this

reportable segment was 78.2%. The industrial fabrication and field services business reported revenues of $92.8 million

for Fiscal 2023. This amount represented a decrease of $5.1 million, or 5.2%, from revenues of $97.9 million reported for

Fiscal 2022. Revenues provided by this reportable business segment represented 20.4% and 19.2% of corresponding

consolidated revenues for Fiscal 2023 and Fiscal 2022, respectively. The telecommunications infrastructure services

business increased its revenues to $16.2 million for Fiscal 2023 from revenues of $13.4 million for Fiscal 2022,

representing an increase of 20.9%. Revenues provided by this reportable segment represented 3.6% and 2.6% of

corresponding consolidated revenues for Fiscal 2023 and Fiscal 2022, respectively.

- 30 -

Consolidated gross profit declined by $13.4 million, or 13.4%, to $86.4 million for Fiscal 2023, or 19.0% of the
corresponding consolidated revenues. The amount of consolidated gross profit reported for Fiscal 2022 was $99.7 million,
or 19.6% of the corresponding consolidated revenues. The slight year-over-year decline in gross profit margins reflected
primarily the unfavorable impacts of lower gross profit contributions from the power industry services and industrial
fabrication and field services segments.

Selling, general and administrative expenses for Fiscal 2023 and Fiscal 2022 were $44.7 million, or 9.8% of corresponding
consolidated revenues, and $47.3 million, or 9.3% of corresponding consolidated revenues, respectively. Additionally, due
to the unsuccessful project development efforts by our variable interest entity (“VIE”), we recorded an impairment loss
related to the capitalized project development costs of the corresponding power plant in the amount of $7.9 million during
Fiscal 2022, of which $2.5 million was attributed to the non-controlling interest. During Fiscal 2023, due to the receipt of
an unexpected refund payment from PJM related to this project, we reversed approximately $2.0 million of prior year
impairment loss, with $1.6 million attributed to the non-controlling interest.

Due primarily to the consolidated pre-tax book income reported for Fiscal 2023 in the amount of $46.0 million, we reported
income tax expense in the amount of $11.3 million for the year. For Fiscal 2022, we reported consolidated pre-tax book
income of $47.1 million and recorded income tax expense in the amount of $11.4 million.

For Fiscal 2023, our overall operating performance resulted in net income attributable to our stockholders in the amount
of $33.1 million, or $2.33 per diluted share. For Fiscal 2022, our overall operating performance resulted in net income
attributable to our stockholders in the amount of $38.2 million, or $2.40 per diluted share.

The primary reasons for the reduction in operating results for Fiscal 2023 were the declining revenues associated with the
post-peak construction activities of the Guernsey Power Station and the Maple Hill Solar projects; partially offset by
increased revenues associated with the Kilroot Power Station and the ESB FlexGen peaker plants.

Project Backlog

At January 31, 2023, our consolidated project backlog amount of $0.8 billion consisted substantially of the projects of the
power industry services reporting segment. The comparable backlog amount as of January 31, 2022 was $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.

In October 2022, GPS added the EPC services contract value of the Trumbull Energy Center, a 950 MW natural gas-fired
power plant to be built in Lordstown Ohio, to our project backlog as we had a fully executed EPC service contract and we
expected contract activities to commence imminently. We received the full notice to proceed with the project from the
owner, Clean Energy Future-Trumbull, LLC, in November 2022. We have since commenced activities for the project.
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, and contract completion is
scheduled for the end of Fiscal 2026.

On the other hand, in May 2019, GPS entered into an EPC services contract to construct a 625 MW power plant in Harrison
County, West Virginia. As a limited notice to proceed with certain preliminary activities was received from the owner of
this project at the time (a repeat customer), the value of the contract was added to our project backlog. However,
meaningful development milestones were not achieved and management concluded that the value of this power plant
should be removed from project backlog as of January 31, 2023.

A portion of consolidated project backlog at January 31, 2023 relates to the Guernsey Power Station as GPS completes
the commissioning process for this project, the largest single-phase, gas-fired, power plant under construction in the U.S.
The substantial completion milestones have been achieved for all three of this plant’s natural gas-fired turbines.

- 31 -

Final completion of this project is currently expected to occur during the third quarter of Fiscal 2024 after all punch-list
items, other commissioning tasks and demobilization efforts have been completed.

Market Outlook

We are committed to the construction of state-of-the-art, natural gas-fired power plants, which represents our core business,
as important elements of our country’s electricity-generation mix in the future. In addition, we have been directing certain
business development efforts to winning projects for the erection of utility-scale wind farms and solar fields and for the
construction of hydrogen-based energy and other industrial projects in order to diversify the sources of revenues. We have
successfully completed renewable energy projects in the past and we have renewed efforts to obtain new work in other
sectors of the power market that will complement our natural gas-fired EPC services projects going forward.

These efforts led to the award of an EPC services contract to us by CPV Maple Hill Solar, LLC, an affiliate of Competitive
Power Ventures, Inc., to construct the Maple Hill Solar facility, which we believe will be among the largest solar-powered
energy plants in Pennsylvania. Project completion is currently scheduled to occur during the second half of Fiscal 2024.
The unique Maple Hill Solar project, which is located in Cambria County, is being constructed using over 235,000
photovoltaic modules to generate approximately 100 MW of electrical power.

Together, the Guernsey Power Station, the Maple Hill Solar facility and the Trumbull Energy Center, represent nearly 3.0
gigawatts of potential electrical power and require the significant engagement of the technical, project support and project
management teams of GPS while they team with APC on a new project in Ireland and assist APC with certain other current
projects and business development efforts.

The business development efforts conducted by our APC operations have resulted in a significant increase in the project
backlog of this business, which amounted to approximately $154 million as of January 31, 2023. A significant award
occurred in October 2021 as APC entered into an engineering and construction services contract with EPUKI London,
U.K., to construct a 2 x 330 MW natural gas-fired power plant in Carrickfergus that is near Belfast, Northern Ireland, in a
structure that was initially designed to enclose coal-fired units. Our project, referred to as the “Kilroot” project, is being
developed by EPNI Energy Limited. Full project activities are underway; the overall completion of this project is expected
to occur in the latter half of Fiscal 2024.

In May 2022, APC entered into engineering and construction services contracts with Ireland’s Electricity Supply Board
(“ESB”) to construct three 65 MW aero-derivative gas turbine flexible generation power plants in and around the city of
Dublin, Ireland. Two of the power plants, the Poolbeg and Ringsend FlexGen Power Plants, will be located on the Poolbeg
Peninsula, and the Corduff FlexGen Power Plant will be built in nearby Goddamendy. All three projects cleared the
applicable capacity auction earlier this year and are expected to operate intermittently during peak periods of electricity
demand and as back-up supply options when renewable electricity generation is limited. A full notice to proceed has been
received and project activities were commenced. The completion of each power facility is expected to occur near the end
of Fiscal 2024.

Most recently, APC was provided with limited notices to proceed with EPC project activities for an open-cycle gas turbine
power facility in central Ireland that will have the capacity to generate approximately 264 MW of temporary emergency
electrical power. GPS is teaming with APC in performance of this contract.

The project backlog of TRC has been increased by over 175% since January 31, 2022 to approximately $124 million as
of January 31, 2023, reflecting a business development emphasis on the award of larger industrial field service construction
projects. The recent emphasis on construction opportunities influenced the strategic decision to consolidate the pipe and
vessel fabrication facilities to reduce fixed costs, streamline operations and better support a growing and scalable business
model.

It is important to note that the start of new projects is primarily controlled by project owners and that delays may occur
that are beyond our control. However, we continue to pursue natural gas-fired power plant, renewable energy plant and
industrial construction opportunities in the U.S., Ireland and the U.K. Our vision is to safely contribute to the construction
of the energy infrastructure and state-of-the-art industrial facilities that are essential to future economic prosperity in the
areas where we operate. We intend to realize this vision with motivated, creative, high-energy and customer-driven teams
that are committed to delivering the best possible project results each and every time.

- 32 -

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 2010, coal-fired power plants accounted for about

45% of net electricity generation in the U.S. For 2022, coal fueled approximately 20% of net electricity generation. It has

been reported that the average age of the active plants in the coal-fired fleet approximates 45 years old with an average

life span of 50 years; the last coal-fired power plant built in the U.S. was constructed in 2015. On the other hand, natural-

gas fired power plants provided approximately 39% of the electricity generated by utility-scale power plants in the U.S. in

2022, representing an increase of 69% from the amount of electrical power generated by natural gas-fired power plants in

2010, which provided approximately 24% of net electricity generation for 2010. The average age of utility-scale natural

gas-fired power plants in the U.S. is approximately 22 years old with an average life span of 30 years.

Major advances in the safe combination of horizontal drilling techniques and hydraulic fracturing led to the boom in natural

gas supplies which have been available generally at consistently low and stable prices. However, reductions in production

levels during the pandemic and an increase in the amount of liquid natural gas exports, among other factors including the

Russian invasion of Ukraine, strained domestic natural gas supplies and forced prices upwards. As a result, the price of

natural gas in the U.S. increased meaningfully during the 2022 calendar year. However, significant spot price declines are

forecast to occur during 2023 before rising again in calendar year 2024. When sudden power needs emerge and natural

gas prices are relatively high, power producers often choose to increase coal-fired power to satisfy the short term demands

for electricity.

In the reference case of its Annual Energy Outlook 2023, the Energy Information Administration (“EIA”) projects that

economic growth paired with increasing electrification in end-user sectors will result in the stable growth of electricity

demand in the U.S. through 2050. Declining capital costs for solar panels, wind turbines and battery storage, as well as

government subsidies like those included in the Inflation Reduction Act (the “IRA”) will result in renewables becoming

increasingly cost effective compared with the alternatives when the costs of building new power capacity are considered.

Renewables are increasingly meeting power demand through 2050 as they outcompete natural gas, coal and nuclear power.

Uncertainty in natural gas prices leads to different unfavorable projections for combined cycle units in the short term, but

in the long term, natural gas demand from the electric power sector stabilizes. As a result of the renewables growth, U.S.

coal-fired generation capacity will decline sharply to about 54% of current levels by 2030, with a gradual decline thereafter.

The historic decline in the use of coal as a power source in the U.S. was caused, to a significant extent, by the plentiful

supply of domestic and generally inexpensive natural gas which made it the fuel of choice for power plant developers over

this period. The pace of the historic increase in the preference for natural gas as an electricity generating fuel source also

was energized, in part, by environmental activism and restrictive regulations targeting coal-fired power plants. Now, the

environmentalist opposition against coal-fired power generation has expanded meaningfully to target all fossil fuel energy

projects, including both power plants and pipelines, and has evolved into powerful support for renewable energy sources.

Protests against fossil-fuel related energy projects garner media attention and stir public skepticism about new projects

which have resulted in delays due to onsite protest demonstrations, indecision by local officials and lawsuits. Various

cities, counties and states have adopted clean energy and carbon-free goals or objectives with achievement expected by a

certain future date, typically 10 to 30 years out. These aspirational goals may increase the risk of a new power plant

becoming a stranded asset long before the end of its otherwise useful economic life, which is a risk that potential equity

capital providers may be unwilling to take. The difficulty in obtaining project equity financing and the other factors

identified above, may be adversely impacting the planning and initial phases for the construction of new natural gas-fired

power plants. Lenders, who have become more wary of funding oil-related ventures as environmental, social and

governance ideals influence investment decisions, may be generally unwilling to provide capital for energy projects to

increase the domestic production and transmission of oil and natural gas. In addition, a recent announcement by Chubb

Insurance may signal new difficulties for certain oil and gas projects. In particular, the insurance underwriter will require

oil and gas industry clients to implement plans to reduce methane emissions, that are among the most severe greenhouse

gases, and will not provide insurance coverage for oil and gas projects in government-protected conservation areas that do

not allow for sustainable use.

- 33 -

Final completion of this project is currently expected to occur during the third quarter of Fiscal 2024 after all punch-list

Market Outlook

items, other commissioning tasks and demobilization efforts have been completed.

We are committed to the construction of state-of-the-art, natural gas-fired power plants, which represents our core business,

as important elements of our country’s electricity-generation mix in the future. In addition, we have been directing certain

business development efforts to winning projects for the erection of utility-scale wind farms and solar fields and for the

construction of hydrogen-based energy and other industrial projects in order to diversify the sources of revenues. We have

successfully completed renewable energy projects in the past and we have renewed efforts to obtain new work in other

sectors of the power market that will complement our natural gas-fired EPC services projects going forward.

These efforts led to the award of an EPC services contract to us by CPV Maple Hill Solar, LLC, an affiliate of Competitive

Power Ventures, Inc., to construct the Maple Hill Solar facility, which we believe will be among the largest solar-powered

energy plants in Pennsylvania. Project completion is currently scheduled to occur during the second half of Fiscal 2024.

The unique Maple Hill Solar project, which is located in Cambria County, is being constructed using over 235,000

photovoltaic modules to generate approximately 100 MW of electrical power.

Together, the Guernsey Power Station, the Maple Hill Solar facility and the Trumbull Energy Center, represent nearly 3.0

gigawatts of potential electrical power and require the significant engagement of the technical, project support and project

management teams of GPS while they team with APC on a new project in Ireland and assist APC with certain other current

projects and business development efforts.

The business development efforts conducted by our APC operations have resulted in a significant increase in the project

backlog of this business, which amounted to approximately $154 million as of January 31, 2023. A significant award

occurred in October 2021 as APC entered into an engineering and construction services contract with EPUKI London,

U.K., to construct a 2 x 330 MW natural gas-fired power plant in Carrickfergus that is near Belfast, Northern Ireland, in a

structure that was initially designed to enclose coal-fired units. Our project, referred to as the “Kilroot” project, is being

developed by EPNI Energy Limited. Full project activities are underway; the overall completion of this project is expected

to occur in the latter half of Fiscal 2024.

In May 2022, APC entered into engineering and construction services contracts with Ireland’s Electricity Supply Board

(“ESB”) to construct three 65 MW aero-derivative gas turbine flexible generation power plants in and around the city of

Dublin, Ireland. Two of the power plants, the Poolbeg and Ringsend FlexGen Power Plants, will be located on the Poolbeg

Peninsula, and the Corduff FlexGen Power Plant will be built in nearby Goddamendy. All three projects cleared the

applicable capacity auction earlier this year and are expected to operate intermittently during peak periods of electricity

demand and as back-up supply options when renewable electricity generation is limited. A full notice to proceed has been

received and project activities were commenced. The completion of each power facility is expected to occur near the end

of Fiscal 2024.

Most recently, APC was provided with limited notices to proceed with EPC project activities for an open-cycle gas turbine

power facility in central Ireland that will have the capacity to generate approximately 264 MW of temporary emergency

electrical power. GPS is teaming with APC in performance of this contract.

The project backlog of TRC has been increased by over 175% since January 31, 2022 to approximately $124 million as

of January 31, 2023, reflecting a business development emphasis on the award of larger industrial field service construction

projects. The recent emphasis on construction opportunities influenced the strategic decision to consolidate the pipe and

vessel fabrication facilities to reduce fixed costs, streamline operations and better support a growing and scalable business

model.

It is important to note that the start of new projects is primarily controlled by project owners and that delays may occur

that are beyond our control. However, we continue to pursue natural gas-fired power plant, renewable energy plant and

industrial construction opportunities in the U.S., Ireland and the U.K. Our vision is to safely contribute to the construction

of the energy infrastructure and state-of-the-art industrial facilities that are essential to future economic prosperity in the

areas where we operate. We intend to realize this vision with motivated, creative, high-energy and customer-driven teams

that are committed to delivering the best possible project results each and every time.

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 2010, coal-fired power plants accounted for about
45% of net electricity generation in the U.S. For 2022, coal fueled approximately 20% of net electricity generation. It has
been reported that the average age of the active plants in the coal-fired fleet approximates 45 years old with an average
life span of 50 years; the last coal-fired power plant built in the U.S. was constructed in 2015. On the other hand, natural-
gas fired power plants provided approximately 39% of the electricity generated by utility-scale power plants in the U.S. in
2022, representing an increase of 69% from the amount of electrical power generated by natural gas-fired power plants in
2010, which provided approximately 24% of net electricity generation for 2010. The average age of utility-scale natural
gas-fired power plants in the U.S. is approximately 22 years old with an average life span of 30 years.

Major advances in the safe combination of horizontal drilling techniques and hydraulic fracturing led to the boom in natural
gas supplies which have been available generally at consistently low and stable prices. However, reductions in production
levels during the pandemic and an increase in the amount of liquid natural gas exports, among other factors including the
Russian invasion of Ukraine, strained domestic natural gas supplies and forced prices upwards. As a result, the price of
natural gas in the U.S. increased meaningfully during the 2022 calendar year. However, significant spot price declines are
forecast to occur during 2023 before rising again in calendar year 2024. When sudden power needs emerge and natural
gas prices are relatively high, power producers often choose to increase coal-fired power to satisfy the short term demands
for electricity.

In the reference case of its Annual Energy Outlook 2023, the Energy Information Administration (“EIA”) projects that
economic growth paired with increasing electrification in end-user sectors will result in the stable growth of electricity
demand in the U.S. through 2050. Declining capital costs for solar panels, wind turbines and battery storage, as well as
government subsidies like those included in the Inflation Reduction Act (the “IRA”) will result in renewables becoming
increasingly cost effective compared with the alternatives when the costs of building new power capacity are considered.
Renewables are increasingly meeting power demand through 2050 as they outcompete natural gas, coal and nuclear power.
Uncertainty in natural gas prices leads to different unfavorable projections for combined cycle units in the short term, but
in the long term, natural gas demand from the electric power sector stabilizes. As a result of the renewables growth, U.S.
coal-fired generation capacity will decline sharply to about 54% of current levels by 2030, with a gradual decline thereafter.

The historic decline in the use of coal as a power source in the U.S. was caused, to a significant extent, by the plentiful
supply of domestic and generally inexpensive natural gas which made it the fuel of choice for power plant developers over
this period. The pace of the historic increase in the preference for natural gas as an electricity generating fuel source also
was energized, in part, by environmental activism and restrictive regulations targeting coal-fired power plants. Now, the
environmentalist opposition against coal-fired power generation has expanded meaningfully to target all fossil fuel energy
projects, including both power plants and pipelines, and has evolved into powerful support for renewable energy sources.

Protests against fossil-fuel related energy projects garner media attention and stir public skepticism about new projects
which have resulted in delays due to onsite protest demonstrations, indecision by local officials and lawsuits. Various
cities, counties and states have adopted clean energy and carbon-free goals or objectives with achievement expected by a
certain future date, typically 10 to 30 years out. These aspirational goals may increase the risk of a new power plant
becoming a stranded asset long before the end of its otherwise useful economic life, which is a risk that potential equity
capital providers may be unwilling to take. The difficulty in obtaining project equity financing and the other factors
identified above, may be adversely impacting the planning and initial phases for the construction of new natural gas-fired
power plants. Lenders, who have become more wary of funding oil-related ventures as environmental, social and
governance ideals influence investment decisions, may be generally unwilling to provide capital for energy projects to
increase the domestic production and transmission of oil and natural gas. In addition, a recent announcement by Chubb
Insurance may signal new difficulties for certain oil and gas projects. In particular, the insurance underwriter will require
oil and gas industry clients to implement plans to reduce methane emissions, that are among the most severe greenhouse
gases, and will not provide insurance coverage for oil and gas projects in government-protected conservation areas that do
not allow for sustainable use.

- 32 -

- 33 -

We believe that significant uncertainty relates to the policies of the current U.S. Presidential administration. President
Biden proposes to make the electricity production in the U.S. carbon free by 2035 and to put the country on the path to
achieve net zero carbon emissions by 2050. These policy stances continued during the invasion of Ukraine and the
concurrent rise in oil prices as the administration made appeals to other countries to increase oil production while domestic
production is challenged by supply chain and labor issues and the maintenance of restrictive regulations. Meanwhile,
delays continue for the construction of pipelines needed to transport natural gas to liquid natural gas export facilities for
shipment to Western Europe.

In August 2022, President Biden signed the IRA, a climate and healthcare bill that imposes new taxes on corporations with
net profits for financial reporting in excess of $1.0 billion, spends billions over a decade on new workers and technology
at the Internal Revenue Service (the “IRS”), and funds hundreds of billions in tax subsidies intended to combat climate
change among other measures. According to certain commentary, the legislation will cause investment in technologies
needed for leaner production and use of fuel types, including hydrogen, nuclear, renewables and fossil fuels. However, it
appears that receipt of the tax subsidies will be conditioned on the extent that taxpayers “buy American” and/or pay
prevailing wages, among other requirements. Existing supply chains may lack the capacity to meet the demand that the
incentives are intended to create. Therefore, the subsidies may not provide the intended economic incentives to renewable
and other energy project owners. It is not clear that the legislation, for which the rules and regulations have not yet been
finalized, will provide assistance to current and future project owners of fossil-fuel power projects as intended.

Regarding emissions, it is important to note that in its 2023 reference case, EIA projects that U.S. energy-related carbon
dioxide emissions will decline by a little over 30% below the 2005 emissions level by 2030. We believe that a significant
portion of the reduction related to the shift from coal-fired to natural gas-fired power generation that has already occurred
as described above. It appears that from 2005 to 2022, the energy-related emissions declined by approximately 20%. The
EIA credits the impacts of the IRA, updates to technology costs and performance across the energy system and changes in
the macroeconomic outlook with maintaining the reduction percentage versus the 2005 level of emissions at approximately
30% through 2050. In addition, the EIA indicates that further emissions reductions are limited by longer-term growth in
U.S. transportation and industrial activity. The EIA in its report does not include emissions from the power industry among
the reasons for the lack of further emission reductions from 2030 through 2050.

Most of our recently completed and awarded EPC service contracts relate to the construction of natural gas-fired power
plants located within the Mid-Atlantic geographic footprint of PJM, which as indicated above operates a capacity market
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. The capacity auction for a particular delivery year was usually held during the month of May, three years prior to
the actual delivery year. However, the 2023/2024 auction, scheduled for December 2021, was postponed until January
2022 and then was postponed again until June 2022. The auction results included increased capacity powered by nuclear,
solar and natural gas energy sources, and decreased capacity provided by coal and wind energy sources. However, prices
for the 2023/2024 and 2024/2025 delivery years were significantly lower than each previous auction. Capacity auction
prices are scheduled to be posted for 2025-2026 in June 2023. However, PJM recently informed stakeholders that it will
seek to delay this auction, which would require the approval of the Federal Energy Regulatory Commission, so that market
design rule changes proposed by stakeholders might be implemented for all future auctions.

- 34 -

Uncertainty in this market, including the difficulties experienced by PJM in perfecting 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.

In February 2023, PJM released a position paper that supported the growing concern that the reliability of power grids is

being eroded by the rush to renewable power. While acknowledging the reality of the power transition in the PJM system,

it warned that its research highlighted four trends that present increasing reliability risks during the transition due to a

potential timing mismatch between load growth, resource retirements and the pace of new electricity generating plant

additions.

The paper indicates that the growth rate of electricity demand in the PJM footprint is likely to increase from electrification

(i.e., shifts to electric-powered automobiles, electric appliances, etc.) coupled with the proliferation of high-demand data

centers in the region. Coal-fired and old gas-fired power generation facilities are retiring at a rapid pace due to government

and private sector policies as well as economics. The risk is that these retirements may outpace the construction of new

power-generating facilities as PJM’s interconnection queue includes primarily intermittent and limited-duration renewable

energy resources. Given the operating characteristics of these types of facilities, PJM will need multiple megawatts of

renewable power and accompanying battery storage to replace a single megawatt of thermal generation.

In summary, throughout the U.S., the risk of electricity shortages is rising as traditional power plants are being retired

more quickly than they can be replaced by renewable energy and battery storage. Power grids are feeling the strain as the

U.S. makes the historic transition from conventional power plants fueled by coal and natural gas to cleaner forms of energy

such as wind and solar power, and aging nuclear plants are slated for retirement. Electric-grid operators are warning that

power-generating capacity is struggling to keep up with demand, a gap that could lead to additional rolling blackouts

during heat waves or other peak power periods.

In the U.S., local electricity grids are connected to form larger networks and to improve reliability and economic efficiency

and are known as Regional Transmission Operators (“RTOs”) and Independent System Operators (“ISOs”). They are

members of three main interconnections, the Eastern Interconnection, the Western Interconnection and the Electric

Reliability Council of Texas. These interconnectors cover wide swaths of the U.S. Although the three interconnections

operate independently of each other and have very limited transfers of power between them, the operation of

interconnections is conducted by balancing authorities, which ensures that power supply and demand are balanced to

maintain the reliability of applicable power system. All RTOs, including PJM, and ISOs in the U.S. are balancing

authorities. Consequently, reliability threats to individual RTOs and ISOs represent threats to entire interconnection

organizations.

The challenge is that wind and solar farms do not produce electricity at all times and they need large batteries to store their

output for later use. While large battery storage capacity is under development, regional grid operators have warned that

the pace may not be fast enough to offset the closures of traditional power plants that can work around the clock.

Accelerating the build-out of renewable energy sources and batteries has become an especially difficult proposition amid

supply-chain challenges and inflation. For example, during Fiscal 2023, the highly publicized probe by the U.S. Commerce

Department into whether Chinese solar manufacturers were circumventing trade tariffs on solar panels had the effect of

halting imports of key components needed to build new solar farms and effectively brought most of the U.S. solar industry

to a temporary standstill.

Additionally, solar and wind energy plant developers continue to confront the problems caused by grid congestion, often

unsuccessfully. Many of these projects have been canceled because renewable plants need to be sited where the resources

are optimal, often in remote locations where the transmission systems are not robust as power is consumed substantially

in urban areas. The costs associated with the necessary grid upgrades may be prohibitive.

U.S. offshore wind projects progress inconsistently, facing challenges in the areas of environmental and fishery impacts,

grid connection complexities, transmission planning and federal permitting processes. Further, U.S. projects are confronted

- 35 -

We believe that significant uncertainty relates to the policies of the current U.S. Presidential administration. President

Biden proposes to make the electricity production in the U.S. carbon free by 2035 and to put the country on the path to

achieve net zero carbon emissions by 2050. These policy stances continued during the invasion of Ukraine and the

concurrent rise in oil prices as the administration made appeals to other countries to increase oil production while domestic

production is challenged by supply chain and labor issues and the maintenance of restrictive regulations. Meanwhile,

delays continue for the construction of pipelines needed to transport natural gas to liquid natural gas export facilities for

shipment to Western Europe.

In August 2022, President Biden signed the IRA, a climate and healthcare bill that imposes new taxes on corporations with

net profits for financial reporting in excess of $1.0 billion, spends billions over a decade on new workers and technology

at the Internal Revenue Service (the “IRS”), and funds hundreds of billions in tax subsidies intended to combat climate

change among other measures. According to certain commentary, the legislation will cause investment in technologies

needed for leaner production and use of fuel types, including hydrogen, nuclear, renewables and fossil fuels. However, it

appears that receipt of the tax subsidies will be conditioned on the extent that taxpayers “buy American” and/or pay

prevailing wages, among other requirements. Existing supply chains may lack the capacity to meet the demand that the

incentives are intended to create. Therefore, the subsidies may not provide the intended economic incentives to renewable

and other energy project owners. It is not clear that the legislation, for which the rules and regulations have not yet been

finalized, will provide assistance to current and future project owners of fossil-fuel power projects as intended.

Regarding emissions, it is important to note that in its 2023 reference case, EIA projects that U.S. energy-related carbon

dioxide emissions will decline by a little over 30% below the 2005 emissions level by 2030. We believe that a significant

portion of the reduction related to the shift from coal-fired to natural gas-fired power generation that has already occurred

as described above. It appears that from 2005 to 2022, the energy-related emissions declined by approximately 20%. The

EIA credits the impacts of the IRA, updates to technology costs and performance across the energy system and changes in

the macroeconomic outlook with maintaining the reduction percentage versus the 2005 level of emissions at approximately

30% through 2050. In addition, the EIA indicates that further emissions reductions are limited by longer-term growth in

U.S. transportation and industrial activity. The EIA in its report does not include emissions from the power industry among

the reasons for the lack of further emission reductions from 2030 through 2050.

The net amount of electricity generation in the U.S. provided by utility-scale wind and solar photovoltaic 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 2020, 2021 and 2022, respectively. 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.

Most of our recently completed and awarded EPC service contracts relate to the construction of natural gas-fired power

plants located within the Mid-Atlantic geographic footprint of PJM, which as indicated above operates a capacity market

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. The capacity auction for a particular delivery year was usually held during the month of May, three years prior to

the actual delivery year. However, the 2023/2024 auction, scheduled for December 2021, was postponed until January

2022 and then was postponed again until June 2022. The auction results included increased capacity powered by nuclear,

solar and natural gas energy sources, and decreased capacity provided by coal and wind energy sources. However, prices

for the 2023/2024 and 2024/2025 delivery years were significantly lower than each previous auction. Capacity auction

prices are scheduled to be posted for 2025-2026 in June 2023. However, PJM recently informed stakeholders that it will

seek to delay this auction, which would require the approval of the Federal Energy Regulatory Commission, so that market

design rule changes proposed by stakeholders might be implemented for all future auctions.

In February 2023, PJM released a position paper that supported the growing concern that the reliability of power grids is
being eroded by the rush to renewable power. While acknowledging the reality of the power transition in the PJM system,
it warned that its research highlighted four trends that present increasing reliability risks during the transition due to a
potential timing mismatch between load growth, resource retirements and the pace of new electricity generating plant
additions.

The paper indicates that the growth rate of electricity demand in the PJM footprint is likely to increase from electrification
(i.e., shifts to electric-powered automobiles, electric appliances, etc.) coupled with the proliferation of high-demand data
centers in the region. Coal-fired and old gas-fired power generation facilities are retiring at a rapid pace due to government
and private sector policies as well as economics. The risk is that these retirements may outpace the construction of new
power-generating facilities as PJM’s interconnection queue includes primarily intermittent and limited-duration renewable
energy resources. Given the operating characteristics of these types of facilities, PJM will need multiple megawatts of
renewable power and accompanying battery storage to replace a single megawatt of thermal generation.

In summary, throughout the U.S., the risk of electricity shortages is rising as traditional power plants are being retired
more quickly than they can be replaced by renewable energy and battery storage. Power grids are feeling the strain as the
U.S. makes the historic transition from conventional power plants fueled by coal and natural gas to cleaner forms of energy
such as wind and solar power, and aging nuclear plants are slated for retirement. Electric-grid operators are warning that
power-generating capacity is struggling to keep up with demand, a gap that could lead to additional rolling blackouts
during heat waves or other peak power periods.

In the U.S., local electricity grids are connected to form larger networks and to improve reliability and economic efficiency
and are known as Regional Transmission Operators (“RTOs”) and Independent System Operators (“ISOs”). They are
members of three main interconnections, the Eastern Interconnection, the Western Interconnection and the Electric
Reliability Council of Texas. These interconnectors cover wide swaths of the U.S. Although the three interconnections
operate independently of each other and have very limited transfers of power between them, the operation of
interconnections is conducted by balancing authorities, which ensures that power supply and demand are balanced to
maintain the reliability of applicable power system. All RTOs, including PJM, and ISOs in the U.S. are balancing
authorities. Consequently, reliability threats to individual RTOs and ISOs represent threats to entire interconnection
organizations.

The challenge is that wind and solar farms do not produce electricity at all times and they need large batteries to store their
output for later use. While large battery storage capacity is under development, regional grid operators have warned that
the pace may not be fast enough to offset the closures of traditional power plants that can work around the clock.

Accelerating the build-out of renewable energy sources and batteries has become an especially difficult proposition amid
supply-chain challenges and inflation. For example, during Fiscal 2023, the highly publicized probe by the U.S. Commerce
Department into whether Chinese solar manufacturers were circumventing trade tariffs on solar panels had the effect of
halting imports of key components needed to build new solar farms and effectively brought most of the U.S. solar industry
to a temporary standstill.

Additionally, solar and wind energy plant developers continue to confront the problems caused by grid congestion, often
unsuccessfully. Many of these projects have been canceled because renewable plants need to be sited where the resources
are optimal, often in remote locations where the transmission systems are not robust as power is consumed substantially
in urban areas. The costs associated with the necessary grid upgrades may be prohibitive.

U.S. offshore wind projects progress inconsistently, facing challenges in the areas of environmental and fishery impacts,
grid connection complexities, transmission planning and federal permitting processes. Further, U.S. projects are confronted

- 34 -

- 35 -

by shipping regulations that may limit the ability of developers to replicate successful European erection models.
Proponents of clean energy also face political challenges from constituencies who oppose the impacts to wildlife and the
environment that may be caused by clean energy infrastructure projects.

Electricity generation from commercial nuclear power plants in the U.S. began in 1958. At the end of 2021, the U.S. had
93 operating commercial nuclear reactors at 55 nuclear power plants in 28 states. The average age of these nuclear reactors
is about 40 years old with most plants authorized to operate for another 20 years. The newest reactor in the fleet entered
service in 2016, which was twenty years after the previous one to begin operation. There are two new reactors under
construction in the U.S., Vogtle Units 3 and 4. The completion of these two units is many years behind schedule and the
units are billions of dollars in excess of their initial estimated cost.

Renewed interest in nuclear power could result in the construction of new nuclear powered, carbon-free, electricity
generation stations in the U.S. that would use smaller and more economical nuclear reactors. The deployment of small
modular reactors could mean lower construction and electricity costs through the use of simpler power plant designs,
standardized components and passive safety measures. Such plants could be built in less time than larger plants, utilize
less space and represent a viable choice for reliable power to offset the intermittencies of renewable power sources. The
increase by the U.S. in its use of nuclear power for electricity generation could have unfavorable effects on the demand
for new natural gas-fired and additional renewable energy facilities in the future.

Nevertheless, 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. Natural gas is relatively clean burning, generally
cost-effective, reliable and abundant. New gas-fired power plants incorporate major advances in gas-fired turbine
technologies that have provided increased power plant efficiencies while providing the quick starting capabilities and the
reliability that are necessary to balance the inherent intermittencies of wind and solar power plants.

We believe that the benefits of natural gas as a source of power are compelling, especially as a complement to the
deployment of wind and solar 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. The future availability of less carbon-intense and higher efficiency 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.

We also believe that it is also important to note that the plans for certain natural gas-fired power plant projects include the
integration of hydrogen-burning capabilities. While the plants will initially burn natural gas alone, it is planned by the
respective project owners that the plants will eventually burn a mixture of natural gas and green hydrogen, thereby
establishing power-generation flexibility for these plants. We believe this is a winning combination that provides
inexpensive and efficient power, enhances grid reliability and addresses clean-air concerns. The building of state-of-the-
art power plants with flex-fuel capability replaces coal-fired power plants in the short term with relatively clean gas-fired
electricity generation. Further, such additions to the power generation fleet provide the potential for the plants to burn
100% green hydrogen gas, which would provide both base load power and long duration backup power, when the sun is
not shining or the wind is not blowing, for extended periods of time and without certain harmful air emissions.

It has been stated that the current scramble for electricity, regardless of source, caused by the Russian invasion of Ukraine
has 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. Carbon capture processes grab carbon
from smokestacks and other sources of dense greenhouse gases, thereby reducing harmful emissions. Carbon-removal
technologies are more demanding as they remove carbon out of the more diffuse open air in order to store it for centuries.
Governments, including the U.S., are taking initial steps to boost this industry. The success of this industry could reduce
the climate-change fear associated with natural gas-fired power plants.

- 36 -

The business footprint for TRC encompasses the southeast region of the U.S. where there are many business-friendly local

and state governments that welcome industrial production facilities. It is notable that significant events like the COVID-

19 pandemic and the commitment to renewable energy in the U.S. are resulting in meaningful new business opportunities

for TRC in its region. The national focus on infrastructure improvements, biotechnology advancements and energy storage

have resulted in firms that are focused on these trends recently choosing TRC to participate in major construction projects

in the region.

The foregoing discussion in this “Market Outlook” does focus on the state of the domestic power market as the EPC

services business of GPS provides the predominant amount of our revenues. However, overseas power markets provide

important new power construction opportunities for us especially across Ireland and the U.K.

While both of these countries are committed to the increase in energy consumption sourced from wind and the sun on the

pathway to net zero emissions, there is a recognition that these sources of electrical power are inherently variable. Other

technologies will be required to support these power sources and to provide electricity when power demands exceed the

amount of electricity supplied by these renewables. The existence of the necessary power reserve will require conventional

generation sources, typically natural gas-fired power plants. APC was awarded the significant Kilroot project late in Fiscal

2022 to build a clean burning natural gas-fired power plant in Northern Ireland so that existing coal-fired power sources

there can be replaced.

The U.K. usually holds auctions for power capacity about four years in advance of the delivery date and another auction

for a smaller amount of capacity around a year before delivery. Evidence of the power production realities in the U.K. are

reflected in the results for Britain’s auction to ensure enough electricity capacity for 2022/2023 that were released in 2022.

Capacity cleared at a record high price unlike the results for the most recent PJM capacity auctions. A total of nearly 5

gigawatts of capacity was procured in this auction, with nearly 70% of the power associated with gas-fired plants.

Last year, the Irish government 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 report emphasizes that this will require a combination of

conventional generation (typically powered by natural gas), interconnection to other jurisdictions, demand flexibility and

other technologies such as battery storage and generation from renewable gases. The Irish government has approved that

the development of new conventional generation (including gas-fired and gasoil distillate-fired generation) is a national

priority and should be permitted and supported in order to ensure the security of electricity supply while supporting the

growth of renewable electricity generation.

As noted above, APC entered into engineering and construction services contracts during Fiscal 2023 with the ESB to

construct three 65 MW aero-derivative gas turbine flexible generation power plants around the city of Dublin, Ireland. All

three projects are expected to operate intermittently during peak periods of electricity demand and as back-up supply

options when renewable electricity generation is limited. A full notice to proceed was received and project activities were

commenced.

Further, the Irish government has recognized that the successful development of data centers in the country is a key aspect

in promoting Ireland as a digital economy hot-spot in Europe. The stewards of the electricity supply in Ireland recognize

that the large increase in electricity demand presented by the growth of the data center industry represents an evolving,

significant risk to the security of the supply. Accordingly, guidelines have been published with the intent to protect both

electricity consumers and the security of supply while continuing to allow data centers to connect to the electricity system.

Assessment criteria for applications of data centers to obtain grid connections include, among other items, the ability of

data center applicants to bring onsite dispatchable power generation (and/or storage) equivalent to or greater than their

demand in order to support the security of supply. It is expected that any dispatchable on-site generation that uses fossil

fuel sources developed by data center operators will use natural gas as the fuel source. APC recently completed a project

to install natural gas-fired power generation for a major data center in the Dublin area.

APC is actively pursuing other new business opportunities in both the renewable and support sectors with its existing and

new clients. The governments of Ireland and the U.K. have already made funds available to develop and support specific

- 37 -

by shipping regulations that may limit the ability of developers to replicate successful European erection models.

Proponents of clean energy also face political challenges from constituencies who oppose the impacts to wildlife and the

environment that may be caused by clean energy infrastructure projects.

Electricity generation from commercial nuclear power plants in the U.S. began in 1958. At the end of 2021, the U.S. had

93 operating commercial nuclear reactors at 55 nuclear power plants in 28 states. The average age of these nuclear reactors

is about 40 years old with most plants authorized to operate for another 20 years. The newest reactor in the fleet entered

service in 2016, which was twenty years after the previous one to begin operation. There are two new reactors under

construction in the U.S., Vogtle Units 3 and 4. The completion of these two units is many years behind schedule and the

units are billions of dollars in excess of their initial estimated cost.

Renewed interest in nuclear power could result in the construction of new nuclear powered, carbon-free, electricity

generation stations in the U.S. that would use smaller and more economical nuclear reactors. The deployment of small

modular reactors could mean lower construction and electricity costs through the use of simpler power plant designs,

standardized components and passive safety measures. Such plants could be built in less time than larger plants, utilize

less space and represent a viable choice for reliable power to offset the intermittencies of renewable power sources. The

increase by the U.S. in its use of nuclear power for electricity generation could have unfavorable effects on the demand

for new natural gas-fired and additional renewable energy facilities in the future.

Nevertheless, 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. Natural gas is relatively clean burning, generally

cost-effective, reliable and abundant. New gas-fired power plants incorporate major advances in gas-fired turbine

technologies that have provided increased power plant efficiencies while providing the quick starting capabilities and the

reliability that are necessary to balance the inherent intermittencies of wind and solar power plants.

We believe that the benefits of natural gas as a source of power are compelling, especially as a complement to the

deployment of wind and solar 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. The future availability of less carbon-intense and higher efficiency 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.

We also believe that it is also important to note that the plans for certain natural gas-fired power plant projects include the

integration of hydrogen-burning capabilities. While the plants will initially burn natural gas alone, it is planned by the

respective project owners that the plants will eventually burn a mixture of natural gas and green hydrogen, thereby

establishing power-generation flexibility for these plants. We believe this is a winning combination that provides

inexpensive and efficient power, enhances grid reliability and addresses clean-air concerns. The building of state-of-the-

art power plants with flex-fuel capability replaces coal-fired power plants in the short term with relatively clean gas-fired

electricity generation. Further, such additions to the power generation fleet provide the potential for the plants to burn

100% green hydrogen gas, which would provide both base load power and long duration backup power, when the sun is

not shining or the wind is not blowing, for extended periods of time and without certain harmful air emissions.

It has been stated that the current scramble for electricity, regardless of source, caused by the Russian invasion of Ukraine

has 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. Carbon capture processes grab carbon

from smokestacks and other sources of dense greenhouse gases, thereby reducing harmful emissions. Carbon-removal

technologies are more demanding as they remove carbon out of the more diffuse open air in order to store it for centuries.

Governments, including the U.S., are taking initial steps to boost this industry. The success of this industry could reduce

the climate-change fear associated with natural gas-fired power plants.

- 36 -

The business footprint for TRC encompasses the southeast region of the U.S. where there are many business-friendly local
and state governments that welcome industrial production facilities. It is notable that significant events like the COVID-
19 pandemic and the commitment to renewable energy in the U.S. are resulting in meaningful new business opportunities
for TRC in its region. The national focus on infrastructure improvements, biotechnology advancements and energy storage
have resulted in firms that are focused on these trends recently choosing TRC to participate in major construction projects
in the region.

The foregoing discussion in this “Market Outlook” does focus on the state of the domestic power market as the EPC
services business of GPS provides the predominant amount of our revenues. However, overseas power markets provide
important new power construction opportunities for us especially across Ireland and the U.K.

While both of these countries are committed to the increase in energy consumption sourced from wind and the sun on the
pathway to net zero emissions, there is a recognition that these sources of electrical power are inherently variable. Other
technologies will be required to support these power sources and to provide electricity when power demands exceed the
amount of electricity supplied by these renewables. The existence of the necessary power reserve will require conventional
generation sources, typically natural gas-fired power plants. APC was awarded the significant Kilroot project late in Fiscal
2022 to build a clean burning natural gas-fired power plant in Northern Ireland so that existing coal-fired power sources
there can be replaced.

The U.K. usually holds auctions for power capacity about four years in advance of the delivery date and another auction
for a smaller amount of capacity around a year before delivery. Evidence of the power production realities in the U.K. are
reflected in the results for Britain’s auction to ensure enough electricity capacity for 2022/2023 that were released in 2022.
Capacity cleared at a record high price unlike the results for the most recent PJM capacity auctions. A total of nearly 5
gigawatts of capacity was procured in this auction, with nearly 70% of the power associated with gas-fired plants.

Last year, the Irish government 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 report emphasizes that this will require a combination of
conventional generation (typically powered by natural gas), interconnection to other jurisdictions, demand flexibility and
other technologies such as battery storage and generation from renewable gases. The Irish government has approved that
the development of new conventional generation (including gas-fired and gasoil distillate-fired generation) is a national
priority and should be permitted and supported in order to ensure the security of electricity supply while supporting the
growth of renewable electricity generation.

As noted above, APC entered into engineering and construction services contracts during Fiscal 2023 with the ESB to
construct three 65 MW aero-derivative gas turbine flexible generation power plants around the city of Dublin, Ireland. All
three projects are expected to operate intermittently during peak periods of electricity demand and as back-up supply
options when renewable electricity generation is limited. A full notice to proceed was received and project activities were
commenced.

Further, the Irish government has recognized that the successful development of data centers in the country is a key aspect
in promoting Ireland as a digital economy hot-spot in Europe. The stewards of the electricity supply in Ireland recognize
that the large increase in electricity demand presented by the growth of the data center industry represents an evolving,
significant risk to the security of the supply. Accordingly, guidelines have been published with the intent to protect both
electricity consumers and the security of supply while continuing to allow data centers to connect to the electricity system.
Assessment criteria for applications of data centers to obtain grid connections include, among other items, the ability of
data center applicants to bring onsite dispatchable power generation (and/or storage) equivalent to or greater than their
demand in order to support the security of supply. It is expected that any dispatchable on-site generation that uses fossil
fuel sources developed by data center operators will use natural gas as the fuel source. APC recently completed a project
to install natural gas-fired power generation for a major data center in the Dublin area.

APC is actively pursuing other new business opportunities in both the renewable and support sectors with its existing and
new clients. The governments of Ireland and the U.K. have already made funds available to develop and support specific

- 37 -

projects. The engineering and construction teams of APC are engaged in continuous discussions with particular
stakeholders in certain of these other projects and APC’s management believes that it will be part of their eventual
execution.

Over the past few years, GPS has provided top management guidance and project management expertise to APC as it
completed its subcontract efforts for a biomass-burning power plant and won the awards of the projects to build new gas-
fired power plant units near Belfast and Dublin. APC has provided project management manpower to GPS on several of
its EPC services contracts. These recent experiences have demonstrated that the two companies can combine resources
effectively. We believe that GPS and APC working together is a competitive advantage as we pursue emerging new
business opportunities in Ireland and the U.K., based on the strength of the reputation of GPS for successfully completing
large gas-fired power plant projects in the U.S. and the growing recognition in the power community in Ireland and the
U.K. that APC is positioned and has the capability to build larger and more complex power projects. Most recently, APC
was provided with limited notices to proceed with EPC contract activities for an open-cycle gas turbine power facility to
be built in central Ireland that will have the capacity to generate approximately 264 MW of temporary emergency electrical
power. GPS is teaming with APC in the performance of this contract.

We are committed to the rational pursuit of new construction projects, including those with overseas locations and unique
deployments of power-generation turbines, and the future growth of our revenues. This may result in additional decisions
to make investments in the development and/or ownership of new projects. Because we believe in the strength of our
balance sheet, we are willing to consider certain opportunities that include reasonable and manageable risks in order to
assure the award of the related engineering, procurement, construction or equipment installation services contracts to us.

The competitive landscape for our core EPC services business related to natural gas-fired power plants in the U.S. remains
dynamic, although there are fewer competitors for new gas-fired power plant EPC services project opportunities. Several
major competitors have exited the market for a variety of reasons or have been acquired. Others have announced intentions
to avoid entering into fixed-price contracts. Nonetheless, the competition for new utility-scale gas-fired power plant
construction opportunities is fierce and still includes multiple global firms. We believe that the Company has a reputation
as an accomplished, dependable and cost-effective provider of EPC and other large project construction contracting
services. With the proven ability to deliver completed power facilities, particularly combined cycle, natural gas-fired power
plants, we are focused on expanding our position in the power markets of the U.S., Ireland and the U.K. where we expect
investments to be made based on forecasts of electricity demand covering decades into the future. We believe that our
expectations are valid and that our plans for the future continue to be based on reasonable assumptions.

- 38 -

Comparison of the Results of Operations for the Years Ended January 31, 2023 and 2022

We reported net income attributable to our stockholders of $33.1 million, or $2.33 per diluted share, for Fiscal 2023. For

the prior year, we reported net income attributable to our stockholders of $38.2 million, or $2.40 per diluted share. The

following schedule compares our operating results for Fiscal 2023 and Fiscal 2022 (dollars in thousands):

Years Ended January 31,

2023

2022

$ Change

% Change

$ 346,033 $ 398,089 $ (52,056)

(13.1) %

92,774

16,233

97,890

13,391

(5,116)

2,842

455,040

509,370

(54,330)

277,402

317,130

78,034

13,243

81,391

11,117

368,679

409,638

86,361

44,692

—

41,669

4,331

46,000

11,296

34,704

1,606

99,732

47,321

7,901

44,510

2,552

47,062

11,356

35,706

(2,538)

(39,728)

(3,357)

2,126

(40,959)

(13,371)

(2,629)

(7,901)

(2,841)

1,779

(1,062)

(60)

(1,002)

4,144

(5.2)

21.2

(10.7)

(12.5)

(4.1)

19.1

(10.0)

(13.4)

(5.6)

(6.4)

69.7

(2.3)

(0.5)

(2.8)

(100.0)

REVENUES

Power industry services

Industrial fabrication and field services

Telecommunications infrastructure services

Revenues

COST OF REVENUES

Power industry services

Industrial fabrication and field services

Telecommunications infrastructure services

Cost of revenues

GROSS PROFIT

Impairment loss

Selling, general and administrative expenses

INCOME FROM OPERATIONS

Other income, net

INCOME BEFORE INCOME TAXES

Income tax expense

NET INCOME

NM – Not meaningful.

Revenues

Power Industry Services

Net income (loss) attributable to non-controlling interest

NET INCOME ATTRIBUTABLE TO THE

STOCKHOLDERS OF ARGAN, INC.

33,098 $

38,244 $

(5,146)

(13.5) %

The revenues of the power industry services business decreased by 13.1%, or $52.1 million, to $346.0 million for Fiscal

2023 compared with revenues of $398.1 million for Fiscal 2022. The revenues of this business represented approximately

76.0% of consolidated revenues for Fiscal 2023 and 78.2% of consolidated revenues for the prior year. The primary reasons

for the decline in revenues by this reportable segment for Fiscal 2023 were decreased revenues associated with the post

peak construction activities of the Guernsey Power Station and the Maple Hill Solar energy facility, partially offset by

increased revenues associated with the construction of the Kilroot Power Station, the ESB FlexGen Peaker plants and the

Trumbull Energy Center. Due to the decrease in construction activities during Fiscal 2023, the combined revenues

associated with the Guernsey Power Station and the Maple Hill Solar energy facility represented 45.3% of consolidated

revenues for Fiscal 2023 compared to 66.7% of consolidated revenues in the prior year during peak construction activity

phases. The project backlog amount for the power industry services reportable segment as of January 31, 2023 and 2022

was $0.7 billion.

Industrial Fabrication and Field Services

The revenues of industrial fabrication and field services decreased by $5.1 million, or 5.2%, to $92.8 million for Fiscal

2023 compared with revenues of $97.9 million for Fiscal 2022. The revenues of this business represented approximately

20.4% of consolidated revenues for Fiscal 2023 and 19.2% of consolidated revenues for the prior year. Although revenues

declined slightly during the current year, project backlog increased by $79.0 million to $123.5 million as of January 31,

2023 as a result of business development efforts that have been effective at winning project awards from new customers

and increasing the size of awards.

- 39 -

projects. The engineering and construction teams of APC are engaged in continuous discussions with particular

stakeholders in certain of these other projects and APC’s management believes that it will be part of their eventual

execution.

Over the past few years, GPS has provided top management guidance and project management expertise to APC as it

completed its subcontract efforts for a biomass-burning power plant and won the awards of the projects to build new gas-

fired power plant units near Belfast and Dublin. APC has provided project management manpower to GPS on several of

its EPC services contracts. These recent experiences have demonstrated that the two companies can combine resources

effectively. We believe that GPS and APC working together is a competitive advantage as we pursue emerging new

business opportunities in Ireland and the U.K., based on the strength of the reputation of GPS for successfully completing

large gas-fired power plant projects in the U.S. and the growing recognition in the power community in Ireland and the

U.K. that APC is positioned and has the capability to build larger and more complex power projects. Most recently, APC

was provided with limited notices to proceed with EPC contract activities for an open-cycle gas turbine power facility to

be built in central Ireland that will have the capacity to generate approximately 264 MW of temporary emergency electrical

power. GPS is teaming with APC in the performance of this contract.

We are committed to the rational pursuit of new construction projects, including those with overseas locations and unique

deployments of power-generation turbines, and the future growth of our revenues. This may result in additional decisions

to make investments in the development and/or ownership of new projects. Because we believe in the strength of our

balance sheet, we are willing to consider certain opportunities that include reasonable and manageable risks in order to

assure the award of the related engineering, procurement, construction or equipment installation services contracts to us.

The competitive landscape for our core EPC services business related to natural gas-fired power plants in the U.S. remains

dynamic, although there are fewer competitors for new gas-fired power plant EPC services project opportunities. Several

major competitors have exited the market for a variety of reasons or have been acquired. Others have announced intentions

to avoid entering into fixed-price contracts. Nonetheless, the competition for new utility-scale gas-fired power plant

construction opportunities is fierce and still includes multiple global firms. We believe that the Company has a reputation

as an accomplished, dependable and cost-effective provider of EPC and other large project construction contracting

services. With the proven ability to deliver completed power facilities, particularly combined cycle, natural gas-fired power

plants, we are focused on expanding our position in the power markets of the U.S., Ireland and the U.K. where we expect

investments to be made based on forecasts of electricity demand covering decades into the future. We believe that our

expectations are valid and that our plans for the future continue to be based on reasonable assumptions.

Comparison of the Results of Operations for the Years Ended January 31, 2023 and 2022

We reported net income attributable to our stockholders of $33.1 million, or $2.33 per diluted share, for Fiscal 2023. For
the prior year, we reported net income attributable to our stockholders of $38.2 million, or $2.40 per diluted share. The
following schedule compares our operating results for Fiscal 2023 and Fiscal 2022 (dollars in thousands):

2023

Years Ended January 31,
$ Change

2022

% Change

REVENUES

Power industry services
Industrial fabrication and field services
Telecommunications infrastructure services

Revenues

COST OF REVENUES
Power industry services
Industrial fabrication and field services
Telecommunications infrastructure services

Cost of revenues

GROSS PROFIT
Selling, general and administrative expenses
Impairment loss
INCOME FROM OPERATIONS
Other income, net
INCOME BEFORE INCOME TAXES
Income tax expense
NET INCOME
Net income (loss) attributable to non-controlling interest
NET INCOME ATTRIBUTABLE TO THE
STOCKHOLDERS OF ARGAN, INC.

NM – Not meaningful.

Revenues

Power Industry Services

$ 346,033 $ 398,089 $ (52,056)
(5,116)
2,842
(54,330)

92,774
16,233
455,040

97,890
13,391
509,370

277,402
78,034
13,243
368,679
86,361
44,692
—
41,669
4,331
46,000
11,296
34,704
1,606

317,130
81,391
11,117
409,638
99,732
47,321
7,901
44,510
2,552
47,062
11,356
35,706
(2,538)

(39,728)
(3,357)
2,126
(40,959)
(13,371)
(2,629)
(7,901)
(2,841)
1,779
(1,062)
(60)
(1,002)
4,144

(13.1) %
(5.2)
21.2
(10.7)

(12.5)
(4.1)
19.1
(10.0)
(13.4)
(5.6)
(100.0)
(6.4)
69.7
(2.3)
(0.5)
(2.8)
NM

33,098 $

38,244 $

(5,146)

(13.5) %

The revenues of the power industry services business decreased by 13.1%, or $52.1 million, to $346.0 million for Fiscal
2023 compared with revenues of $398.1 million for Fiscal 2022. The revenues of this business represented approximately
76.0% of consolidated revenues for Fiscal 2023 and 78.2% of consolidated revenues for the prior year. The primary reasons
for the decline in revenues by this reportable segment for Fiscal 2023 were decreased revenues associated with the post
peak construction activities of the Guernsey Power Station and the Maple Hill Solar energy facility, partially offset by
increased revenues associated with the construction of the Kilroot Power Station, the ESB FlexGen Peaker plants and the
Trumbull Energy Center. Due to the decrease in construction activities during Fiscal 2023, the combined revenues
associated with the Guernsey Power Station and the Maple Hill Solar energy facility represented 45.3% of consolidated
revenues for Fiscal 2023 compared to 66.7% of consolidated revenues in the prior year during peak construction activity
phases. The project backlog amount for the power industry services reportable segment as of January 31, 2023 and 2022
was $0.7 billion.

Industrial Fabrication and Field Services

The revenues of industrial fabrication and field services decreased by $5.1 million, or 5.2%, to $92.8 million for Fiscal
2023 compared with revenues of $97.9 million for Fiscal 2022. The revenues of this business represented approximately
20.4% of consolidated revenues for Fiscal 2023 and 19.2% of consolidated revenues for the prior year. Although revenues
declined slightly during the current year, project backlog increased by $79.0 million to $123.5 million as of January 31,
2023 as a result of business development efforts that have been effective at winning project awards from new customers
and increasing the size of awards.

- 38 -

- 39 -

Telecommunications Infrastructure Services

Income Tax Expense

The revenues of telecommunications infrastructure services were $16.2 million for Fiscal 2023 compared with revenues
of $13.4 million for Fiscal 2022. The increase in revenues from the prior year primarily related to new revenues provided
by the customers of LTI, which was acquired in December 2021.

Cost of Revenues

Due primarily to the decrease in consolidated revenues for Fiscal 2023 compared with revenues for Fiscal 2022,
consolidated cost of revenues also decreased. These costs were $368.7 million and $409.6 million for Fiscal 2023 and
Fiscal 2022, 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 for the period reflected
primarily the profit contributions of efficient construction activities related to the major projects of the power industry
services reporting segment. The gross profit percentages of corresponding revenues for the power industry services,
industrial fabrication and field services and telecommunications infrastructure services segments for Fiscal 2023 were
19.8%, 15.9% and 18.4%, respectively.

For Fiscal 2022, we reported a consolidated gross profit of approximately $99.7 million, which represented a gross profit
percentage of approximately 19.6% of corresponding consolidated revenues. The gross profit percentages of
the
corresponding revenues for
telecommunications infrastructure segments for Fiscal 2022 were 20.3%, 16.9% and 17.0% respectively.

industrial fabrication and field services and

the power industry services,

Selling, General and Administrative Expenses

These costs were $44.7 million and $47.3 million for Fiscal 2023 and Fiscal 2022, respectively, representing 9.8% and
9.3% of consolidated revenues for the corresponding periods, respectively. The 5.6% decrease in these expenses between
years was primarily due to decreased cash incentive expenses and a gain of $1.6 million, which was attributed to the non-
controlling interest and related to the VIE settling on amounts owed for certain previously impaired development costs.
See Note 3 to the accompanying consolidated financial statements. Partially offsetting these decreases were the impact of
inflationary pressures on our expenses. The costs for Fiscal 2022 also included the provision for credit losses in the amount
of $2.4 million; the amount of the provision for credit losses for Fiscal 2023 was insignificant.

Impairment Loss

During Fiscal 2022, we recorded an impairment loss related to the capitalized project development costs of the
Chickahominy Power Station project in the amount of $7.9 million, of which $2.5 million was attributed to the non-
controlling interest. We did not record any goodwill or other intangible asset impairment losses during Fiscal 2023 or
Fiscal 2022.

Other Income, Net

For Fiscal 2023 and Fiscal 2022, the net amounts of other income were $4.3 million and $2.6 million, respectively, which
represented an increase of 69.7% between the comparable periods. For Fiscal 2023 and Fiscal 2022, this line item included
income in the amounts of $3.0 million and $0.2 million, respectively, earned on funds maintained in money market
accounts and interest income earned on CDs, as interest rates have increased meaningfully between periods. For Fiscal
2023 and Fiscal 2022, the weighted average annual interest rates of the CDs and the money market funds during the
corresponding years were 1.5% and 0.1%, respectively.

During Fiscal 2023 and Fiscal 2022, APC recorded research and development awards from the U.K. government related
to certain qualifying works performed in the total amounts of approximately $0.7 million and $1.7 million, respectively.
In addition, during Fiscal 2022, APC received a cash payment for COVID-19 relief from the Irish government in the
amount of approximately $1.1 million.

This line item also includes our share of the net income reported a solar fund investment in the amount of $1.1 million for
Fiscal 2023; this amount for Fiscal 2022 was a net loss of $0.4 million. See Note 13 to the accompanying financial
statements.

- 40 -

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%. This tax rate differed from the statutory federal tax rate of 21% due primarily

to the effects of state income taxes and nondeductible executive compensation, and the unfavorable effects of our

settlement with the IRS related to research and development credits at an amount lower than we had previously recorded;

partially offset by the favorable recognition of tax benefits related to research and development tax credits recognized in

the current year and the partial reversal of a valuation allowance of deferred tax assets related to prior year NOLs of APC’s

subsidiary in the U.K. See Note 13 to the accompanying consolidated financial statements.

For Fiscal 2022, we recorded income tax expense of approximately $11.4 million primarily due to our reporting pre-tax

income for financial reporting purposes in the amount of $47.1 million for the year. Our annual effective income tax rate

for Fiscal 2022 was 24.1%. This tax rate differed from the statutory federal tax rate of 21% due primarily to the effects of

state income taxes and nondeductible executive compensation.

Net Income (Loss) Attributable to Non-Controlling Interest

As discussed above, due to the gain of $1.6 million related to the VIE settling on amounts owed for certain previously

impaired development costs during Fiscal 2023 and the $2.5 million of impairment loss that was attributed to the non-

controlling interest in the prior year, net income attributable to the non-controlling interest increased by $4.1 million

between fiscal years. See Note 3 to the accompanying consolidated financial statements.

Liquidity and Capital Resources as of January 31, 2023

At January 31, 2023 and 2022, our balances of cash and cash equivalents were $173.9 million and $350.5 million,

respectively, which represented a decrease of $176.6 million between years.

The net amount of cash used in operating activities for Fiscal 2023 was $30.1 million. However, our net income for Fiscal

2023, adjusted favorably by the net amount of non-cash income and expense items, represented a source of cash in the

total amount of $39.0 million. The increases in accounts receivable, contract assets and other assets in the amounts of

$23.2 million, $19.9 million and $3.3 million, respectively, represented uses of cash during the year. Additionally, the

reduction in the balance of contract liabilities in the amount of $31.6 million represented a use of cash during the year to

fund, on a net basis, the satisfaction of performance obligations on certain of our contracts. These unfavorable balance

sheet account changes primarily related to the decline in the construction activity of the Guernsey Power Station project,

partially offset by increases in contract liabilities related to the Trumbull Energy Center and several APC projects. The

increase in the combined level of accounts payable and accrued expenses in the amount of $9.1 million, represented a

source of cash for the year.

Non-operating activities during Fiscal 2023 used cash to increase the level of our short-term investments, which consist

entirely of CDs issued by the Bank, by $59.8 million and to make capital expenditures in the amount of $3.4 million. We

also used $82.8 million cash in financing activities during Fiscal 2023, including $68.2 million used to repurchase shares

of common stock pursuant to our Share Repurchase Plan (see Item 5 in Part II of this Annual Report), and $14.0 million

used for the payment of regular cash dividends. As of January 31, 2023, there were no restrictions with respect to

intercompany payments between GPS, TRC, APC, SMC and the holding company.

During Fiscal 2022, our balance of cash and cash equivalents declined by a net amount of $16.2 million.

The net amount of cash provided by operating activities for Fiscal 2022 was $28.4 million. Our net income for Fiscal 2022,

adjusted favorably by the net amount of non-cash income and expense items, represented a source of cash in the total

amount of $57.3 million. The sources of cash from operations for Fiscal 2022 also included a decrease in the balance of

contract assets of $21.7 million, primarily due to the settlement of a legal matter by GPS (see Note 11 of the accompanying

consolidated financial statements). Reductions in the balances of contract liabilities and accounts payables and accrued

expenses, in the amounts of $44.2 million and $5.7 million, respectively, represented uses of cash during Fiscal 2022.

Non-operating activities used cash during Fiscal 2022, including $20.4 million used to repurchase shares of our common

stock pursuant to our share repurchase program. Additionally, we used cash in the amount of $15.7 million for the payment

of regular cash dividends. Our investment in solar energy projects used cash in the amount of $5.0 million and capital

- 41 -

Telecommunications Infrastructure Services

Income Tax Expense

The revenues of telecommunications infrastructure services were $16.2 million for Fiscal 2023 compared with revenues

of $13.4 million for Fiscal 2022. The increase in revenues from the prior year primarily related to new revenues provided

by the customers of LTI, which was acquired in December 2021.

Cost of Revenues

Fiscal 2022, respectively.

Due primarily to the decrease in consolidated revenues for Fiscal 2023 compared with revenues for Fiscal 2022,

consolidated cost of revenues also decreased. These costs were $368.7 million and $409.6 million for Fiscal 2023 and

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 for the period reflected

primarily the profit contributions of efficient construction activities related to the major projects of the power industry

services reporting segment. The gross profit percentages of corresponding revenues for the power industry services,

industrial fabrication and field services and telecommunications infrastructure services segments for Fiscal 2023 were

19.8%, 15.9% and 18.4%, respectively.

For Fiscal 2022, we reported a consolidated gross profit of approximately $99.7 million, which represented a gross profit

percentage of approximately 19.6% of corresponding consolidated revenues. The gross profit percentages of

corresponding revenues for

the power industry services,

industrial fabrication and field services and

the

telecommunications infrastructure segments for Fiscal 2022 were 20.3%, 16.9% and 17.0% respectively.

Selling, General and Administrative Expenses

These costs were $44.7 million and $47.3 million for Fiscal 2023 and Fiscal 2022, respectively, representing 9.8% and

9.3% of consolidated revenues for the corresponding periods, respectively. The 5.6% decrease in these expenses between

years was primarily due to decreased cash incentive expenses and a gain of $1.6 million, which was attributed to the non-

controlling interest and related to the VIE settling on amounts owed for certain previously impaired development costs.

See Note 3 to the accompanying consolidated financial statements. Partially offsetting these decreases were the impact of

inflationary pressures on our expenses. The costs for Fiscal 2022 also included the provision for credit losses in the amount

of $2.4 million; the amount of the provision for credit losses for Fiscal 2023 was insignificant.

During Fiscal 2022, we recorded an impairment loss related to the capitalized project development costs of the

Chickahominy Power Station project in the amount of $7.9 million, of which $2.5 million was attributed to the non-

controlling interest. We did not record any goodwill or other intangible asset impairment losses during Fiscal 2023 or

Impairment Loss

Fiscal 2022.

Other Income, Net

For Fiscal 2023 and Fiscal 2022, the net amounts of other income were $4.3 million and $2.6 million, respectively, which

represented an increase of 69.7% between the comparable periods. For Fiscal 2023 and Fiscal 2022, this line item included

income in the amounts of $3.0 million and $0.2 million, respectively, earned on funds maintained in money market

accounts and interest income earned on CDs, as interest rates have increased meaningfully between periods. For Fiscal

2023 and Fiscal 2022, the weighted average annual interest rates of the CDs and the money market funds during the

corresponding years were 1.5% and 0.1%, respectively.

During Fiscal 2023 and Fiscal 2022, APC recorded research and development awards from the U.K. government related

to certain qualifying works performed in the total amounts of approximately $0.7 million and $1.7 million, respectively.

In addition, during Fiscal 2022, APC received a cash payment for COVID-19 relief from the Irish government in the

amount of approximately $1.1 million.

This line item also includes our share of the net income reported a solar fund investment in the amount of $1.1 million for

Fiscal 2023; this amount for Fiscal 2022 was a net loss of $0.4 million. See Note 13 to the accompanying financial

statements.

- 40 -

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%. This tax rate differed from the statutory federal tax rate of 21% due primarily
to the effects of state income taxes and nondeductible executive compensation, and the unfavorable effects of our
settlement with the IRS related to research and development credits at an amount lower than we had previously recorded;
partially offset by the favorable recognition of tax benefits related to research and development tax credits recognized in
the current year and the partial reversal of a valuation allowance of deferred tax assets related to prior year NOLs of APC’s
subsidiary in the U.K. See Note 13 to the accompanying consolidated financial statements.

For Fiscal 2022, we recorded income tax expense of approximately $11.4 million primarily due to our reporting pre-tax
income for financial reporting purposes in the amount of $47.1 million for the year. Our annual effective income tax rate
for Fiscal 2022 was 24.1%. This tax rate differed from the statutory federal tax rate of 21% due primarily to the effects of
state income taxes and nondeductible executive compensation.

Net Income (Loss) Attributable to Non-Controlling Interest

As discussed above, due to the gain of $1.6 million related to the VIE settling on amounts owed for certain previously
impaired development costs during Fiscal 2023 and the $2.5 million of impairment loss that was attributed to the non-
controlling interest in the prior year, net income attributable to the non-controlling interest increased by $4.1 million
between fiscal years. See Note 3 to the accompanying consolidated financial statements.

Liquidity and Capital Resources as of January 31, 2023

At January 31, 2023 and 2022, our balances of cash and cash equivalents were $173.9 million and $350.5 million,
respectively, which represented a decrease of $176.6 million between years.

The net amount of cash used in operating activities for Fiscal 2023 was $30.1 million. However, our net income for Fiscal
2023, adjusted favorably by the net amount of non-cash income and expense items, represented a source of cash in the
total amount of $39.0 million. The increases in accounts receivable, contract assets and other assets in the amounts of
$23.2 million, $19.9 million and $3.3 million, respectively, represented uses of cash during the year. Additionally, the
reduction in the balance of contract liabilities in the amount of $31.6 million represented a use of cash during the year to
fund, on a net basis, the satisfaction of performance obligations on certain of our contracts. These unfavorable balance
sheet account changes primarily related to the decline in the construction activity of the Guernsey Power Station project,
partially offset by increases in contract liabilities related to the Trumbull Energy Center and several APC projects. The
increase in the combined level of accounts payable and accrued expenses in the amount of $9.1 million, represented a
source of cash for the year.

Non-operating activities during Fiscal 2023 used cash to increase the level of our short-term investments, which consist
entirely of CDs issued by the Bank, by $59.8 million and to make capital expenditures in the amount of $3.4 million. We
also used $82.8 million cash in financing activities during Fiscal 2023, including $68.2 million used to repurchase shares
of common stock pursuant to our Share Repurchase Plan (see Item 5 in Part II of this Annual Report), and $14.0 million
used for the payment of regular cash dividends. As of January 31, 2023, there were no restrictions with respect to
intercompany payments between GPS, TRC, APC, SMC and the holding company.

During Fiscal 2022, our balance of cash and cash equivalents declined by a net amount of $16.2 million.

The net amount of cash provided by operating activities for Fiscal 2022 was $28.4 million. Our net income for Fiscal 2022,
adjusted favorably by the net amount of non-cash income and expense items, represented a source of cash in the total
amount of $57.3 million. The sources of cash from operations for Fiscal 2022 also included a decrease in the balance of
contract assets of $21.7 million, primarily due to the settlement of a legal matter by GPS (see Note 11 of the accompanying
consolidated financial statements). Reductions in the balances of contract liabilities and accounts payables and accrued
expenses, in the amounts of $44.2 million and $5.7 million, respectively, represented uses of cash during Fiscal 2022.

Non-operating activities used cash during Fiscal 2022, including $20.4 million used to repurchase shares of our common
stock pursuant to our share repurchase program. Additionally, we used cash in the amount of $15.7 million for the payment
of regular cash dividends. Our investment in solar energy projects used cash in the amount of $5.0 million and capital

- 41 -

expenditures totaled $1.4 million during Fiscal 2022. Partially offsetting these uses of cash, we received cash proceeds
related to the exercise of stock options during Fiscal 2022 in the amount of $1.4 million.

We have also provided a financial guarantee in the amount of $3.6 million to support certain project developmental efforts.

A liability was established for the estimated loss related to this guarantee during Fiscal 2022.

At January 31, 2023, a portion of our balance of cash and cash equivalents was invested in government and money market
funds with most of their total assets invested in cash, U.S. Treasury obligations and repurchase agreements secured by
U.S. Treasury obligations. The major portion of our domestic operating bank account balances are maintained with the
Bank. 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. We do not believe that the combined amount of the CDs and the cash deposited
with the Bank and cash balances maintained at financial institutions in Ireland and the U.K., in excess of government-
insured levels, represent material risks.

In order to monitor the actual and necessary levels of liquidity for our business, we focus on net liquidity, or working
capital, in addition to our cash balances. Our net liquidity decreased by $48.1 million to $236.2 million as of January 31,
2023 from $284.3 million as of January 31, 2022, due primarily to common stock repurchases and cash dividends, partially
offset by net income. As we have no debt service, our fixed asset acquisitions in a reporting period are typically low, and
net liquidity includes our short-term investments, our levels of working capital are not subjected to the volatility that affects
our levels of cash and cash equivalents.

The term of our Amended and Restated Replacement Credit Agreement with the Bank, as amended in April 2021, was
scheduled to expire on May 31, 2024 (the “Credit Agreement”) and included the following features, among others: a
lending commitment of $50.0 million including a revolving loan with interest at the 30-day LIBOR plus 1.6% (reduced
from 2.0%), and an accordion feature which allows for an additional commitment amount of $10.0 million, subject to
certain conditions. On March 6, 2023, we entered into the Second Amendment (the “Second Amendment”) to the Credit
Agreement, which modifies the Credit Amendment to, among other things, replace the interest pricing from the 30-day
LIBOR plus 1.6% to the Secured Overnight Financing Rate (“SOFR”) plus 1.6% and adds SOFR successor rate language.
The Credit Agreement, as newly amended, continues to include customary terms, covenants and events of default for a
credit facility of its size and nature.

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. At January 31, 2023, we had no outstanding borrowings, however the Bank has
issued letters of credit in the total outstanding amount of $8.8 million in support of the activities of APC under new
customer contracts.

We have pledged the majority of our assets to secure the financing arrangements. The Bank’s consent is not required for
acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The Credit
Agreement, 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. At January 31, 2023, we were compliant
with the covenants of the Credit Agreement, as amended.

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.

If our services under a guaranteed project would not be completed or would be determined to have resulted in a material
defect or other material deficiency, then we could be responsible for monetary damages or other legal remedies. As is
typically required by any surety bond, we would be obligated to reimburse the issuer of any surety bond issued on behalf
of a subsidiary for any cash payments made thereunder. The commitments under performance bonds generally end
concurrently with the expiration of the related contractual obligation. Not all of our projects require bonding.

As of January 31, 2023 and 2022, the estimated amounts of the Company’s unsatisfied bonded performance obligations,
covering all of its subsidiaries, were approximately $0.6 billion and $0.2 billion, respectively. In addition, as of January
31, 2023 and 2022, the outstanding amounts of bonds covering other risks, including warranty obligations related to
completed activities, were not material. Not all of our projects require bonding.

- 42 -

When sufficient information about claims related to performance on projects would be available and monetary damages

or other costs or losses would be determined to be probable, we would record such losses. 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, 2023 are not estimable.

Returns on money market instruments and certificates of deposit were limited for some time due to market conditions.

With the desire to increase the amount of return on its available cash, the Company made prior year investments of

approximately $6.3 million in limited liability companies that make equity investments in solar energy projects that are

eligible to receive energy tax credits. It is likely that we will evaluate opportunities to make other solar energy investments

of this type in the future.

We believe that cash on hand, our cash equivalents, cash that will be provided from the maturities of short-term investments

and cash generated from our future operations, with or without funds available under our Credit Agreement, as amended,

will be adequate to meet our general business needs in the foreseeable future. In general, we maintain significant liquid

capital in our consolidated balance sheet to ensure the maintenance of our bonding capacity and to provide parent company

performance guarantees for EPC and other construction projects.

However, any significant future acquisition, investment or other unplanned cost or cash requirement, may require us to

raise additional funds through the issuance of debt and/or equity securities. There can be no assurance that such financing

will be available on terms acceptable to us, or at all.

Contractual Obligations

During Fiscal 2023, 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, 2023 was less than $10 million. The two largest items in

this estimate, operating leases and deferred compensation, are amounts included as liabilities in our consolidated balance

sheet. 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. We do not have any significant obligations for materials or subcontracted services beyond those required to

complete construction contracts awarded to us.

Special Purpose Entities

As is common in our industry, EPC contractors and third parties form joint ventures, limited partnerships and limited

liability companies for purposes of executing a project or program for a project owner. 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 January 2018, we concluded that we

were the primary beneficiary of a VIE formed by an independent firm for the purpose of developing a natural gas-fired

power plant in Virginia. As a result, the VIE was included in our consolidated financial statements until the fourth quarter

of Fiscal 2023, when we determined that we were no longer the primary beneficiary and we deconsolidated the entity.

During Fiscal 2022, as described in Note 3 to the accompanying consolidated financial statements, we recorded an

impairment loss related to the development costs associated with the project in the amount of $7.9 million, of which $2.5

million was attributed to the non-controlling interest. Prior to deconsolidation, however, the VIE settled on amounts owed

for certain impaired development costs and recognized a gain of $1.6 million, all of which was attributed to the non-

controlling interest.

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. In each of these cases, we

deconsolidated the corresponding VIE when we were no longer the primary beneficiary.

- 43 -

expenditures totaled $1.4 million during Fiscal 2022. Partially offsetting these uses of cash, we received cash proceeds

related to the exercise of stock options during Fiscal 2022 in the amount of $1.4 million.

We have also provided a financial guarantee in the amount of $3.6 million to support certain project developmental efforts.
A liability was established for the estimated loss related to this guarantee during Fiscal 2022.

At January 31, 2023, a portion of our balance of cash and cash equivalents was invested in government and money market

funds with most of their total assets invested in cash, U.S. Treasury obligations and repurchase agreements secured by

U.S. Treasury obligations. The major portion of our domestic operating bank account balances are maintained with the

Bank. 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. We do not believe that the combined amount of the CDs and the cash deposited

with the Bank and cash balances maintained at financial institutions in Ireland and the U.K., in excess of government-

insured levels, represent material risks.

In order to monitor the actual and necessary levels of liquidity for our business, we focus on net liquidity, or working

capital, in addition to our cash balances. Our net liquidity decreased by $48.1 million to $236.2 million as of January 31,

2023 from $284.3 million as of January 31, 2022, due primarily to common stock repurchases and cash dividends, partially

offset by net income. As we have no debt service, our fixed asset acquisitions in a reporting period are typically low, and

net liquidity includes our short-term investments, our levels of working capital are not subjected to the volatility that affects

our levels of cash and cash equivalents.

The term of our Amended and Restated Replacement Credit Agreement with the Bank, as amended in April 2021, was

scheduled to expire on May 31, 2024 (the “Credit Agreement”) and included the following features, among others: a

lending commitment of $50.0 million including a revolving loan with interest at the 30-day LIBOR plus 1.6% (reduced

from 2.0%), and an accordion feature which allows for an additional commitment amount of $10.0 million, subject to

certain conditions. On March 6, 2023, we entered into the Second Amendment (the “Second Amendment”) to the Credit

Agreement, which modifies the Credit Amendment to, among other things, replace the interest pricing from the 30-day

LIBOR plus 1.6% to the Secured Overnight Financing Rate (“SOFR”) plus 1.6% and adds SOFR successor rate language.

The Credit Agreement, as newly amended, continues to include customary terms, covenants and events of default for a

credit facility of its size and nature.

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. At January 31, 2023, we had no outstanding borrowings, however the Bank has

issued letters of credit in the total outstanding amount of $8.8 million in support of the activities of APC under new

customer contracts.

We have pledged the majority of our assets to secure the financing arrangements. The Bank’s consent is not required for

acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The Credit

Agreement, 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. At January 31, 2023, we were compliant

with the covenants of the Credit Agreement, as amended.

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.

If our services under a guaranteed project would not be completed or would be determined to have resulted in a material

defect or other material deficiency, then we could be responsible for monetary damages or other legal remedies. As is

typically required by any surety bond, we would be obligated to reimburse the issuer of any surety bond issued on behalf

of a subsidiary for any cash payments made thereunder. The commitments under performance bonds generally end

concurrently with the expiration of the related contractual obligation. Not all of our projects require bonding.

As of January 31, 2023 and 2022, the estimated amounts of the Company’s unsatisfied bonded performance obligations,

covering all of its subsidiaries, were approximately $0.6 billion and $0.2 billion, respectively. In addition, as of January

31, 2023 and 2022, the outstanding amounts of bonds covering other risks, including warranty obligations related to

completed activities, were not material. Not all of our projects require bonding.

- 42 -

When sufficient information about claims related to performance on projects would be available and monetary damages
or other costs or losses would be determined to be probable, we would record such losses. 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, 2023 are not estimable.

Returns on money market instruments and certificates of deposit were limited for some time due to market conditions.
With the desire to increase the amount of return on its available cash, the Company made prior year investments of
approximately $6.3 million in limited liability companies that make equity investments in solar energy projects that are
eligible to receive energy tax credits. It is likely that we will evaluate opportunities to make other solar energy investments
of this type in the future.

We believe that cash on hand, our cash equivalents, cash that will be provided from the maturities of short-term investments
and cash generated from our future operations, with or without funds available under our Credit Agreement, as amended,
will be adequate to meet our general business needs in the foreseeable future. In general, we maintain significant liquid
capital in our consolidated balance sheet to ensure the maintenance of our bonding capacity and to provide parent company
performance guarantees for EPC and other construction projects.

However, any significant future acquisition, investment or other unplanned cost or cash requirement, may require us to
raise additional funds through the issuance of debt and/or equity securities. There can be no assurance that such financing
will be available on terms acceptable to us, or at all.

Contractual Obligations

During Fiscal 2023, 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, 2023 was less than $10 million. The two largest items in
this estimate, operating leases and deferred compensation, are amounts included as liabilities in our consolidated balance
sheet. 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. We do not have any significant obligations for materials or subcontracted services beyond those required to
complete construction contracts awarded to us.

Special Purpose Entities

As is common in our industry, EPC contractors and third parties form joint ventures, limited partnerships and limited
liability companies for purposes of executing a project or program for a project owner. 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 January 2018, we concluded that we
were the primary beneficiary of a VIE formed by an independent firm for the purpose of developing a natural gas-fired
power plant in Virginia. As a result, the VIE was included in our consolidated financial statements until the fourth quarter
of Fiscal 2023, when we determined that we were no longer the primary beneficiary and we deconsolidated the entity.
During Fiscal 2022, as described in Note 3 to the accompanying consolidated financial statements, we recorded an
impairment loss related to the development costs associated with the project in the amount of $7.9 million, of which $2.5
million was attributed to the non-controlling interest. Prior to deconsolidation, however, the VIE settled on amounts owed
for certain impaired development costs and recognized a gain of $1.6 million, all of which was attributed to the non-
controlling interest.

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. In each of these cases, we
deconsolidated the corresponding VIE when we were no longer the primary beneficiary.

- 43 -

We may enter into other support arrangements in the future in connection with power plant development opportunities
when they arise and when we are confident that providing early financial support for the projects will lead to the award of
the corresponding EPC contracts to us.

Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”)

We believe that EBITDA is a meaningful presentation that enables us to assess and compare our operating performance
on a consistent basis by removing from our operating results the impacts of our capital structure, the effects of the
accounting methods used to compute depreciation and amortization and the effects of operating in different income tax
jurisdictions. 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 US 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.

The following table presents the determinations of EBITDA for Fiscal 2023 and Fiscal 2022, respectively (amounts in
thousands).

Net income, as reported
Income tax expense
Depreciation
Amortization of purchased intangible assets
EBITDA
EBITDA of non-controlling interest
EBITDA attributable to the stockholders of Argan, Inc.

2023

2022

$ 34,704 $ 35,706
11,356
3,367
870
51,299
(2,538)
$ 48,109 $ 53,837

11,296
2,983
732
49,715
1,606

Critical Accounting Policies and Estimates

We consider the accounting policies discussed below related to revenue recognition on long-term construction contracts;
income tax reporting; and the financial reporting associated with any significant claims or legal matters to be most critical
to the understanding of our financial position and results of operations.

Critical accounting policies are those related to the areas where we have made what we consider to be particularly
subjective or complex judgments in arriving at estimates and where these estimates can significantly impact our financial
results under different assumptions and conditions.

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. We base our estimates on historical experience and various other assumptions that we believe
are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value
of assets, liabilities and equity that are not readily apparent from other sources. Actual results and outcomes could differ
from these estimates and assumptions. We do periodically review these critical accounting policies and estimates with the
audit committee of our board of directors.

Revenue Recognition

Our revenues are primarily derived from construction contracts that can span several quarters or years. We enter into EPC
and other long-term construction contracts principally on the basis of competitive bids or in conjunction with our support
of the development of power plant projects. The types of contracts may vary. 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. The accuracy of our revenues and profit recognition in a given
period depends on the accuracy of our estimates of the forecasted contract value, or transaction price, and the cost to
complete the work for each project.

- 44 -

Central to accounting for revenues from contracts with customers is a five-step revenue recognition model that requires

reporting entities to:

Identify the contract,

Identify the performance obligations of the contract,

3. Determine the transaction price of the contract,

4. Allocate the transaction price to the performance obligations, and

5. Recognize revenue.

The guidance focuses on the transfer of the control of the goods and/or services to the customer, as opposed to the transfer

of risk and rewards. 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. 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.

Revenues from fixed price contracts, including a portion of estimated profit, are recognized over time, based on costs

incurred and estimated total contract costs using the percentage-of-completion method. The cost and profit estimates are

re-forecasted monthly for all significant contracts pursuant to a detailed “bottoms-up” determination and review process.

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 percentage-of-completion method measures the ratio of costs

incurred and accrued to date for each contract to the estimated, or forecasted, total cost for each contract at completion.

This requires us to prepare on-going estimates of the forecasted cost to complete each contract as the project progresses.

In preparing these estimates, we make significant judgments and assumptions about our significant costs, including

materials, labor and equipment, and we evaluate contingencies based on possible schedule variances, major equipment

delivery delays, construction delays, weather or other productivity factors.

Actual costs may vary from the costs we estimate. Variations from estimated contract costs, along with other risks inherent

in fixed-price contracts, may result in actual revenues and gross profits differing from those we estimate and could result

in losses on projects or other significant unfavorable impacts on our operating results for any fiscal quarter or year. If a

current estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full when determined,

without regard to the percentage of completion. There are a number of factors that can contribute to changes in estimated

contract costs, revenues and profitability. The most significant of these are identified in the first item included in the Risks

Related to our Operational Execution section of Part I, Item 1A. of this Annual Report entitled Risk Factors.

Crucial to the compliance with the accounting standard covering the recognition of revenues on contracts with customers

is the identification of the promises made to the customer by us that are included in the contract. If a promise is distinct,

as that concept is defined in the accounting standard, it represents a separate performance obligation. Contracts may have

multiple promises. The amounts of revenue associated with each promise are recognized when, or as, the performance

obligations are satisfied. However, complex contracts may include only one performance obligation if the multiple

promises are not distinct within the context of the contract. For example, if the promises that could be considered distinct

are interrelated or require us to perform integration so that the customer receives a complete product, the contract is

considered to include only one performance obligation. Most of our long-term contracts have a single performance

obligation as the promises to transfer individual goods or services are not separately identifiable from other promises

within the context of the contract. Our EPC contracts require us to deliver a complete and functioning power plant, not

just functioning components.

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. These adjustments can be made from time-to-time during the period of contract performance as

circumstances evolve related to such items as variations in the scope and price of contracts, claims, incentives and

liquidated damages.

The Company may include an estimated amount of variable consideration in the transaction price to the extent it is probable

that a significant reversal of cumulative revenues recognized on the particular contract will not occur when the uncertainty

- 45 -

We may enter into other support arrangements in the future in connection with power plant development opportunities

when they arise and when we are confident that providing early financial support for the projects will lead to the award of

Central to accounting for revenues from contracts with customers is a five-step revenue recognition model that requires
reporting entities to:

the corresponding EPC contracts to us.

Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”)

We believe that EBITDA is a meaningful presentation that enables us to assess and compare our operating performance

on a consistent basis by removing from our operating results the impacts of our capital structure, the effects of the

accounting methods used to compute depreciation and amortization and the effects of operating in different income tax

jurisdictions. 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 US 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

The following table presents the determinations of EBITDA for Fiscal 2023 and Fiscal 2022, respectively (amounts in

needs.

thousands).

Net income, as reported

Income tax expense

Depreciation

Amortization of purchased intangible assets

EBITDA

EBITDA of non-controlling interest

2023

2022

$ 34,704 $ 35,706

11,296

11,356

2,983

732

49,715

1,606

3,367

870

51,299

(2,538)

EBITDA attributable to the stockholders of Argan, Inc.

$ 48,109 $ 53,837

Critical Accounting Policies and Estimates

We consider the accounting policies discussed below related to revenue recognition on long-term construction contracts;

income tax reporting; and the financial reporting associated with any significant claims or legal matters to be most critical

to the understanding of our financial position and results of operations.

Critical accounting policies are those related to the areas where we have made what we consider to be particularly

subjective or complex judgments in arriving at estimates and where these estimates can significantly impact our financial

results under different assumptions and conditions.

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. We base our estimates on historical experience and various other assumptions that we believe

are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value

of assets, liabilities and equity that are not readily apparent from other sources. Actual results and outcomes could differ

from these estimates and assumptions. We do periodically review these critical accounting policies and estimates with the

audit committee of our board of directors.

Revenue Recognition

Our revenues are primarily derived from construction contracts that can span several quarters or years. We enter into EPC

and other long-term construction contracts principally on the basis of competitive bids or in conjunction with our support

of the development of power plant projects. The types of contracts may vary. 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. The accuracy of our revenues and profit recognition in a given

period depends on the accuracy of our estimates of the forecasted contract value, or transaction price, and the cost to

complete the work for each project.

- 44 -

Identify the contract,
Identify the performance obligations of the contract,

1.
2.
3. Determine the transaction price of the contract,
4. Allocate the transaction price to the performance obligations, and
5. Recognize revenue.

The guidance focuses on the transfer of the control of the goods and/or services to the customer, as opposed to the transfer
of risk and rewards. 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. 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.

Revenues from fixed price contracts, including a portion of estimated profit, are recognized over time, based on costs
incurred and estimated total contract costs using the percentage-of-completion method. The cost and profit estimates are
re-forecasted monthly for all significant contracts pursuant to a detailed “bottoms-up” determination and review process.
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 percentage-of-completion method measures the ratio of costs
incurred and accrued to date for each contract to the estimated, or forecasted, total cost for each contract at completion.
This requires us to prepare on-going estimates of the forecasted cost to complete each contract as the project progresses.
In preparing these estimates, we make significant judgments and assumptions about our significant costs, including
materials, labor and equipment, and we evaluate contingencies based on possible schedule variances, major equipment
delivery delays, construction delays, weather or other productivity factors.

Actual costs may vary from the costs we estimate. Variations from estimated contract costs, along with other risks inherent
in fixed-price contracts, may result in actual revenues and gross profits differing from those we estimate and could result
in losses on projects or other significant unfavorable impacts on our operating results for any fiscal quarter or year. If a
current estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full when determined,
without regard to the percentage of completion. There are a number of factors that can contribute to changes in estimated
contract costs, revenues and profitability. The most significant of these are identified in the first item included in the Risks
Related to our Operational Execution section of Part I, Item 1A. of this Annual Report entitled Risk Factors.

Crucial to the compliance with the accounting standard covering the recognition of revenues on contracts with customers
is the identification of the promises made to the customer by us that are included in the contract. If a promise is distinct,
as that concept is defined in the accounting standard, it represents a separate performance obligation. Contracts may have
multiple promises. The amounts of revenue associated with each promise are recognized when, or as, the performance
obligations are satisfied. However, complex contracts may include only one performance obligation if the multiple
promises are not distinct within the context of the contract. For example, if the promises that could be considered distinct
are interrelated or require us to perform integration so that the customer receives a complete product, the contract is
considered to include only one performance obligation. Most of our long-term contracts have a single performance
obligation as the promises to transfer individual goods or services are not separately identifiable from other promises
within the context of the contract. Our EPC contracts require us to deliver a complete and functioning power plant, not
just functioning components.

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. These adjustments can be made from time-to-time during the period of contract performance as
circumstances evolve related to such items as variations in the scope and price of contracts, claims, incentives and
liquidated damages.

The Company may include an estimated amount of variable consideration in the transaction price to the extent it is probable
that a significant reversal of cumulative revenues recognized on the particular contract will not occur when the uncertainty

- 45 -

associated with the variable consideration is resolved. The Company’s determination of the amount of variable
consideration to be included in the transaction price of a particular contract is based largely on an assessment of the
Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available.
The effect of any revisions to the transaction price on the amount of previously recognized revenues that is due to the
addition or reduction of variable consideration is recorded currently as an adjustment to revenues on a cumulative catch-
up basis. In the event that any amounts of variable consideration that are reflected in the transaction price of a contract are
not resolved in the Company’s favor, there could be reductions in, or reversals of, previously recognized revenues. In most
significant instances, modifications to our contracts do not represent the addition of new performance obligations.

Contract results may be impacted by estimates of the amounts of contract variations that we expect to receive. The effects
of any resulting revisions to revenues and estimated costs can be determined at any time and they could be material. As of
January 31, 2023 and 2022, the aggregate amounts of contract variations reflected in estimated transaction prices were
$11.6 million and $7.5 million, respectively.

Substantially all of our customer contracts include the right for customers to terminate contracts for convenience as
disclosed in Note 4 to the consolidated financial statements. Current accounting guidance indicates that 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. In the application
of this guidance, we assess whether the nature of the work being performed under contract is largely service-based and
repetitive and should be considered a succession of one-month contracts for the duration of the identified term of the
contract. Predominantly, our customers contract with us to construct assets, to fabricate materials or to perform emergency
maintenance or outage services where we believe a substantial penalty or cost would be incurred upon a termination for
convenience. 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. Further, to the best of management’s
knowledge, the Company has never had a customer terminate a contract with us for convenience. Therefore, our disclosure
in Note 4 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.

Our long-term contracts typically have schedule dates and other performance obligations that, if not achieved, could
subject us to liquidated damages. These contract requirements generally relate to specified activities that must be
completed by an established date or by achievement of a specified level of output or efficiency. Each contract defines the
conditions under which a project owner may make a claim for liquidated damages. The amounts of liquidated damages
owed to a project owner pursuant to the terms of a contract would represent reductions of the transaction price of the
corresponding contract.

At the outset of each of the Company’s contracts, the potential amounts of liquidated damages typically are not subtracted,
from the transaction price as the Company believes that it has included activities in its contract plan, and has reflected the
associated costs in its forecasts of completed contract costs, that will be effective in preventing such damages. Of course,
circumstances may change as the Company executes the corresponding contract. The transaction price is reduced by an
applicable amount when the Company no longer considers it probable that a future reversal of revenues will not occur
when the matter is resolved. 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.

Uncertain Income Tax Positions

As we have disclosed in the “Research and Development Tax Credits” section of Note 13 to the accompanying
consolidated financial statements, during Fiscal 2019, we completed a detailed review of the activities of our engineering
staff on major EPC services projects in order to identify and quantify the amounts of research and development credits
available to reduce prior year income taxes. This extensive study focused on the costs incurred on specific projects during
the three-year period ended January 31, 2018. Based on the results of the study, we identified and estimated significant
amounts of income tax benefits that were not previously recognized in our financial results for any prior year reporting
period.

- 46 -

Under current professional accounting guidance, income tax positions must meet a more-likely-than-not recognition

threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are

recognized in the first subsequent financial reporting period in which that threshold is met. Fiscal 2019 was the initial

reporting period in which we had sufficient data on which to make an evaluation and to reach a conclusion on the amount

of income tax credit benefits related to prior year project costs that, more likely than not, qualified as research and

development costs under the Internal Revenue Code and the rules and regulations of certain states. The net amount of the

credits that we recognized in income taxes during Fiscal 2019 was $16.2 million, as subsequently reduced by $0.4 million.

Based on our judgement, the amount of income tax benefits related to identified research and development income tax

credits that we assessed as not meeting the threshold criteria for recognition was $5.0 million. Most of this liability was

included in accrued expenses as of January 31, 2022.

The research and development credits were included in amendments to our consolidated federal income tax returns for

Fiscal 2016 and Fiscal 2017, that were filed in January 2019, and our consolidated federal income tax return for Fiscal

2018, that was filed in November 2018. In January 2021, the IRS issued its final revenue agents reports that disagreed

with our treatment of a substantial amount of the costs that supported our claims. In March 2021, we submitted a formal

protest of the findings of the IRS examiner and requested an appeal hearing.

At the conclusion of the hearing that occurred in May 2022, we agreed to accept a settlement offer from the IRS in the

amount of approximately $7.9 million, before interest, which was approximately 42% of the total of our claims. As a

result, during the three-month period ended July 31, 2022, we made an unfavorable adjustment to income tax expense for

Fiscal 2023 in the amount of $6.2 million.

In a manner similar to the process described above, we completed a detailed review of the activities of our engineering

staff on major EPC services projects in order to identify and quantify the amounts of research and development tax credits

that may have been available to reduce federal income taxes for Fiscal 2022 and Fiscal 2021. As a result, we filed amended

federal income tax returns for those years, including research and development tax credits in the total amount of $5.8

million. Based on our judgment, the amount of income tax benefits related to these identified research and development

income tax credits that we assessed as not meeting the threshold criteria for accounting recognition was approximately

$2.4 million. Subsequent to January 31, 2023, we obtained an insurance policy covering our tax position in the event that

we would suffer a loss related to our research and development claims.

Deferred Tax Assets and Liabilities

Our consolidated balance sheet as of January 31, 2023 includes net deferred tax assets in the amount of approximately

$3.7 million. The components of our deferred taxes are presented in Note 13 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.

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. (that applicable income tax rules will allow us to use in order to offset future amounts of applicable

taxable income), depends primarily upon the generation of sufficient future taxable income to allow for the realization of

our deductible temporary differences. If such estimates and assumptions regarding income amounts change in the future,

we may be required to record additional valuation allowances against some or all of the deferred tax assets resulting in

additional income tax expense in our consolidated statement of earnings. 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’s subsidiary in

the U.K. (“APC UK”) for Fiscal 2020. During Fiscal 2023, APC UK continued a turnaround of its operating results such

that we believe it has a stable earnings history upon which APC UK can reliably forecast future profitable operations.

Based on the forecast that rests on the belief that meaningful investments will be made in the power infrastructure of the

U.K. for the foreseeable future, we now believe it is more likely than not that a certain portion of the deferred tax asset

will be realized. Accordingly, we reversed a portion of the corresponding allowance during Fiscal 2023 in the amount of

$2.6 million.

A deferred tax asset in the amount of $8.3 million was recorded as of January 31, 2020 associated with the income tax

benefit of our domestic NOL for Fiscal 2020 without any corresponding valuation allowance. Among other changes, the

CARES Act re-established a carryback period for certain losses to five years. The NOLs eligible for carryback under the

CARES Act include our domestic loss for Fiscal 2020, which was approximately $39.5 million. The carryback provided

- 47 -

associated with the variable consideration is resolved. The Company’s determination of the amount of variable

consideration to be included in the transaction price of a particular contract is based largely on an assessment of the

Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available.

The effect of any revisions to the transaction price on the amount of previously recognized revenues that is due to the

addition or reduction of variable consideration is recorded currently as an adjustment to revenues on a cumulative catch-

up basis. In the event that any amounts of variable consideration that are reflected in the transaction price of a contract are

not resolved in the Company’s favor, there could be reductions in, or reversals of, previously recognized revenues. In most

significant instances, modifications to our contracts do not represent the addition of new performance obligations.

Contract results may be impacted by estimates of the amounts of contract variations that we expect to receive. The effects

of any resulting revisions to revenues and estimated costs can be determined at any time and they could be material. As of

January 31, 2023 and 2022, the aggregate amounts of contract variations reflected in estimated transaction prices were

$11.6 million and $7.5 million, respectively.

Substantially all of our customer contracts include the right for customers to terminate contracts for convenience as

disclosed in Note 4 to the consolidated financial statements. Current accounting guidance indicates that 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. In the application

of this guidance, we assess whether the nature of the work being performed under contract is largely service-based and

repetitive and should be considered a succession of one-month contracts for the duration of the identified term of the

contract. Predominantly, our customers contract with us to construct assets, to fabricate materials or to perform emergency

maintenance or outage services where we believe a substantial penalty or cost would be incurred upon a termination for

convenience. 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. Further, to the best of management’s

knowledge, the Company has never had a customer terminate a contract with us for convenience. Therefore, our disclosure

in Note 4 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.

Our long-term contracts typically have schedule dates and other performance obligations that, if not achieved, could

subject us to liquidated damages. These contract requirements generally relate to specified activities that must be

completed by an established date or by achievement of a specified level of output or efficiency. Each contract defines the

conditions under which a project owner may make a claim for liquidated damages. The amounts of liquidated damages

owed to a project owner pursuant to the terms of a contract would represent reductions of the transaction price of the

corresponding contract.

At the outset of each of the Company’s contracts, the potential amounts of liquidated damages typically are not subtracted,

from the transaction price as the Company believes that it has included activities in its contract plan, and has reflected the

associated costs in its forecasts of completed contract costs, that will be effective in preventing such damages. Of course,

circumstances may change as the Company executes the corresponding contract. The transaction price is reduced by an

applicable amount when the Company no longer considers it probable that a future reversal of revenues will not occur

when the matter is resolved. 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.

Uncertain Income Tax Positions

As we have disclosed in the “Research and Development Tax Credits” section of Note 13 to the accompanying

consolidated financial statements, during Fiscal 2019, we completed a detailed review of the activities of our engineering

staff on major EPC services projects in order to identify and quantify the amounts of research and development credits

available to reduce prior year income taxes. This extensive study focused on the costs incurred on specific projects during

the three-year period ended January 31, 2018. Based on the results of the study, we identified and estimated significant

amounts of income tax benefits that were not previously recognized in our financial results for any prior year reporting

period.

- 46 -

Under current professional accounting guidance, income tax positions must meet a more-likely-than-not recognition
threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are
recognized in the first subsequent financial reporting period in which that threshold is met. Fiscal 2019 was the initial
reporting period in which we had sufficient data on which to make an evaluation and to reach a conclusion on the amount
of income tax credit benefits related to prior year project costs that, more likely than not, qualified as research and
development costs under the Internal Revenue Code and the rules and regulations of certain states. The net amount of the
credits that we recognized in income taxes during Fiscal 2019 was $16.2 million, as subsequently reduced by $0.4 million.
Based on our judgement, the amount of income tax benefits related to identified research and development income tax
credits that we assessed as not meeting the threshold criteria for recognition was $5.0 million. Most of this liability was
included in accrued expenses as of January 31, 2022.

The research and development credits were included in amendments to our consolidated federal income tax returns for
Fiscal 2016 and Fiscal 2017, that were filed in January 2019, and our consolidated federal income tax return for Fiscal
2018, that was filed in November 2018. In January 2021, the IRS issued its final revenue agents reports that disagreed
with our treatment of a substantial amount of the costs that supported our claims. In March 2021, we submitted a formal
protest of the findings of the IRS examiner and requested an appeal hearing.

At the conclusion of the hearing that occurred in May 2022, we agreed to accept a settlement offer from the IRS in the
amount of approximately $7.9 million, before interest, which was approximately 42% of the total of our claims. As a
result, during the three-month period ended July 31, 2022, we made an unfavorable adjustment to income tax expense for
Fiscal 2023 in the amount of $6.2 million.

In a manner similar to the process described above, we completed a detailed review of the activities of our engineering
staff on major EPC services projects in order to identify and quantify the amounts of research and development tax credits
that may have been available to reduce federal income taxes for Fiscal 2022 and Fiscal 2021. As a result, we filed amended
federal income tax returns for those years, including research and development tax credits in the total amount of $5.8
million. Based on our judgment, the amount of income tax benefits related to these identified research and development
income tax credits that we assessed as not meeting the threshold criteria for accounting recognition was approximately
$2.4 million. Subsequent to January 31, 2023, we obtained an insurance policy covering our tax position in the event that
we would suffer a loss related to our research and development claims.

Deferred Tax Assets and Liabilities

Our consolidated balance sheet as of January 31, 2023 includes net deferred tax assets in the amount of approximately
$3.7 million. The components of our deferred taxes are presented in Note 13 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.

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. (that applicable income tax rules will allow us to use in order to offset future amounts of applicable
taxable income), depends primarily upon the generation of sufficient future taxable income to allow for the realization of
our deductible temporary differences. If such estimates and assumptions regarding income amounts change in the future,
we may be required to record additional valuation allowances against some or all of the deferred tax assets resulting in
additional income tax expense in our consolidated statement of earnings. 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’s subsidiary in
the U.K. (“APC UK”) for Fiscal 2020. During Fiscal 2023, APC UK continued a turnaround of its operating results such
that we believe it has a stable earnings history upon which APC UK can reliably forecast future profitable operations.
Based on the forecast that rests on the belief that meaningful investments will be made in the power infrastructure of the
U.K. for the foreseeable future, we now believe it is more likely than not that a certain portion of the deferred tax asset
will be realized. Accordingly, we reversed a portion of the corresponding allowance during Fiscal 2023 in the amount of
$2.6 million.

A deferred tax asset in the amount of $8.3 million was recorded as of January 31, 2020 associated with the income tax
benefit of our domestic NOL for Fiscal 2020 without any corresponding valuation allowance. Among other changes, the
CARES Act re-established a carryback period for certain losses to five years. The NOLs eligible for carryback under the
CARES Act include our domestic loss for Fiscal 2020, which was approximately $39.5 million. The carryback provided

- 47 -

a favorable rate benefit for us as the loss, which was incurred in a year where the statutory federal tax rate was 21%, has
been carried back to tax years where the tax rate was higher. The net amount of this additional income tax benefit, which
we recorded in Fiscal 2021, was $4.4 million. We have made the appropriate filing with the IRS requesting carryback
refunds of income taxes paid in prior years. With the enactment of the CARES Act, the asset amount, which totals $12.7
million, was moved to income taxes receivable representing a complete utilization of the NOL within one year of its
occurrence. The IRS has not completed the processing of our refund request.

At this time, we believe that the historically strong earnings performance of our power industry services segment will
provide sufficient income during the years when most of our other deferred tax assets become deductible in the U.S. in
order for us to realize the applicable temporary income tax differences. 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.

Legal Contingencies

We do become involved in legal matters where litigation has been initiated or claims have been made against us. At this
time, we do not believe that any material loss is probable related to any current matters. We do maintain accrued expense
balances for the estimated amounts of legal costs expected to be billed related to any significant matter. We review the
status of each matter and assess the adequacy of the accrued expense balances at the end of each fiscal quarter, and make
adjustments to the balances if necessary. Should our assessments of the outcomes of outstanding legal matters change,
significant losses or additional costs may be recorded.

During Fiscal 2022, the significant legal matter described below, for which we had been providing regular disclosure in
our filings, was settled.

In January 2019, GPS filed a lawsuit against Exelon West Medway II, LLC and Exelon Generation Company, LLC
(together referred to as “Exelon”) for Exelon’s breach of contract and failure to remedy various conditions which
negatively impacted the schedule and the costs associated with the construction by GPS of a gas-fired power plant for
Exelon in Massachusetts. Subsequently, Exelon provided GPS with a notice intending to terminate the EPC contract under
which GPS had been providing services to Exelon and served us with contractual notice requiring GPS to vacate the
construction site. At that time, the construction project was nearly complete and both of the power generation units included
in the plant had successfully reached first fire. The completion of various prescribed performance tests and the clearance
of punch-list items were the primary tasks necessary to be accomplished by GPS in order to achieve substantial completion
of the power plant. Exelon asserted that GPS failed to fulfill certain obligations under the contract and was in default,
withholding payments from GPS on invoices rendered to Exelon in accordance with the terms of the contract between the
parties.

Our firm belief that Exelon received the benefits of the construction efforts of GPS and the corresponding progress made
on the project without making payments to GPS for the value received was reflected in our accounting for the project that
we maintained throughout the duration of the dispute. There were outstanding invoices billed to Exelon and unbilled costs
incurred on the project, with substantial balances included in both accounts receivable and contract assets as of January
31, 2021. The final settlement of all outstanding claims between the parties resulting in Exelon making a payment to GPS
in the amount of $27.5 million, which amount was in excess of the total carrying amount of the related accounts receivable
and contract assets. The excess amount was included in revenues for Fiscal 2022.

Recently Issued Accounting Pronouncements

There are no other recently issued accounting pronouncements that have not yet been adopted that we consider material to
our consolidated financial statements.

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.
As of January 31, 2023, we had no outstanding borrowings under our financing arrangements with the Bank as amended
(see Note 9 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 and that charged interest at 30-day LIBOR plus
1.6% until March 6, 2023, when the Credit Agreement was amended to replace the interest pricing with SOFR plus 1.6%
going forward.

- 48 -

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, we did not enter into 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 and in government money

market funds (see Note 5 of the accompanying consolidated financial statements). As of January 31, 2023, the weighted

average number of days until maturity for the short-term investments and money market funds was 302 days. The weighted

average annual interest rate of our certificates of deposit of $149.8 million, which are classified as short-term investments,

and the money market fund balance of $68.6 million was 2.97%. To illustrate the potential impact of changes in interest

rates on our results of operations, we present the following hypothetical analysis, which assumes that our consolidated

balance sheet as of January 31, 2023 remains constant, and no further actions are taken to alter our existing interest rate

sensitivity, including reinvestments. As the blended weighted average interest rate was 2.97% at January 31, 2023, the

largest decrease in the interest rates presented below is 297 basis points (dollars in thousands).

Basis Point Change

Up 300 basis points

Up 200 basis points

Up 100 basis points

Down 100 basis points

Down 200 basis points

Down 297 basis points

Increase (Decrease) in Increase (Decrease) in Net Increase (Decrease) in

Interest Income

Interest Expense

Income (Pre-Tax)

2,632

1,754

877

(877)

(1,685)

(2,448)

—

2,632

1,754

877

(877)

(1,685)

(2,448)

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). For example, the amounts of cash, revenues and

backlog reported for APC in our consolidated financial statements declined during Fiscal 2023 as the Euro has depreciated

versus the U.S. dollar. 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.

In the “Risk Factors” section of this 2023 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. Identified as factors that could cause contract cost overruns, project delays or other unfavorable effects on

our contracts, among other circumstances and events, are delays in the scheduled deliveries of machinery and equipment

ordered by us or project owners, unforeseen inflationary increases in the costs of labor, warranties, raw materials,

components or equipment or the failure or inability to obtain resources when needed.

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. We attempt to include the anticipated amounts of price increases or decreases in the costs of our

bids. In times of increased supply cost volatility, we may take other steps to reduce our risks. For example, we may hold

quotes related to materials in our industrial fabrication and field services segment for very short periods. 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. The profitability of our active jobs has not

suffered meaningfully from the periodic global surges in non-residential construction material costs.

Our operations have been challenged by the well-publicized global supply chain disruptions. While the 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 be impacting project owners’ confidence in

commencing new work which may adversely affect our expected levels of revenues until the supply chain disruptions

further dissipate.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See the Index to the Consolidated Financial Statements on page 55 of this 2023 Annual Report.

- 49 -

a favorable rate benefit for us as the loss, which was incurred in a year where the statutory federal tax rate was 21%, has

been carried back to tax years where the tax rate was higher. The net amount of this additional income tax benefit, which

we recorded in Fiscal 2021, was $4.4 million. We have made the appropriate filing with the IRS requesting carryback

refunds of income taxes paid in prior years. With the enactment of the CARES Act, the asset amount, which totals $12.7

million, was moved to income taxes receivable representing a complete utilization of the NOL within one year of its

occurrence. The IRS has not completed the processing of our refund request.

At this time, we believe that the historically strong earnings performance of our power industry services segment will

provide sufficient income during the years when most of our other deferred tax assets become deductible in the U.S. in

order for us to realize the applicable temporary income tax differences. 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.

Legal Contingencies

We do become involved in legal matters where litigation has been initiated or claims have been made against us. At this

time, we do not believe that any material loss is probable related to any current matters. We do maintain accrued expense

balances for the estimated amounts of legal costs expected to be billed related to any significant matter. We review the

status of each matter and assess the adequacy of the accrued expense balances at the end of each fiscal quarter, and make

adjustments to the balances if necessary. Should our assessments of the outcomes of outstanding legal matters change,

significant losses or additional costs may be recorded.

During Fiscal 2022, the significant legal matter described below, for which we had been providing regular disclosure in

our filings, was settled.

In January 2019, GPS filed a lawsuit against Exelon West Medway II, LLC and Exelon Generation Company, LLC

(together referred to as “Exelon”) for Exelon’s breach of contract and failure to remedy various conditions which

negatively impacted the schedule and the costs associated with the construction by GPS of a gas-fired power plant for

Exelon in Massachusetts. Subsequently, Exelon provided GPS with a notice intending to terminate the EPC contract under

which GPS had been providing services to Exelon and served us with contractual notice requiring GPS to vacate the

construction site. At that time, the construction project was nearly complete and both of the power generation units included

in the plant had successfully reached first fire. The completion of various prescribed performance tests and the clearance

of punch-list items were the primary tasks necessary to be accomplished by GPS in order to achieve substantial completion

of the power plant. Exelon asserted that GPS failed to fulfill certain obligations under the contract and was in default,

withholding payments from GPS on invoices rendered to Exelon in accordance with the terms of the contract between the

parties.

Our firm belief that Exelon received the benefits of the construction efforts of GPS and the corresponding progress made

on the project without making payments to GPS for the value received was reflected in our accounting for the project that

we maintained throughout the duration of the dispute. There were outstanding invoices billed to Exelon and unbilled costs

incurred on the project, with substantial balances included in both accounts receivable and contract assets as of January

31, 2021. The final settlement of all outstanding claims between the parties resulting in Exelon making a payment to GPS

in the amount of $27.5 million, which amount was in excess of the total carrying amount of the related accounts receivable

and contract assets. The excess amount was included in revenues for Fiscal 2022.

Recently Issued Accounting Pronouncements

There are no other recently issued accounting pronouncements that have not yet been adopted that we consider material to

our consolidated financial statements.

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.

As of January 31, 2023, we had no outstanding borrowings under our financing arrangements with the Bank as amended

(see Note 9 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 and that charged interest at 30-day LIBOR plus

1.6% until March 6, 2023, when the Credit Agreement was amended to replace the interest pricing with SOFR plus 1.6%

going forward.

- 48 -

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, we did not enter into 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 and in government money
market funds (see Note 5 of the accompanying consolidated financial statements). As of January 31, 2023, the weighted
average number of days until maturity for the short-term investments and money market funds was 302 days. The weighted
average annual interest rate of our certificates of deposit of $149.8 million, which are classified as short-term investments,
and the money market fund balance of $68.6 million was 2.97%. To illustrate the potential impact of changes in interest
rates on our results of operations, we present the following hypothetical analysis, which assumes that our consolidated
balance sheet as of January 31, 2023 remains constant, and no further actions are taken to alter our existing interest rate
sensitivity, including reinvestments. As the blended weighted average interest rate was 2.97% at January 31, 2023, the
largest decrease in the interest rates presented below is 297 basis points (dollars in thousands).

Basis Point Change

Up 300 basis points
Up 200 basis points
Up 100 basis points
Down 100 basis points
Down 200 basis points
Down 297 basis points

Increase (Decrease) in Increase (Decrease) in Net Increase (Decrease) in

Interest Income

Interest Expense

Income (Pre-Tax)

2,632
1,754
877
(877)
(1,685)
(2,448)

—
—
—
—
—
—

2,632
1,754
877
(877)
(1,685)
(2,448)

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). For example, the amounts of cash, revenues and
backlog reported for APC in our consolidated financial statements declined during Fiscal 2023 as the Euro has depreciated
versus the U.S. dollar. 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.

In the “Risk Factors” section of this 2023 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. Identified as factors that could cause contract cost overruns, project delays or other unfavorable effects on
our contracts, among other circumstances and events, are delays in the scheduled deliveries of machinery and equipment
ordered by us or project owners, unforeseen inflationary increases in the costs of labor, warranties, raw materials,
components or equipment or the failure or inability to obtain resources when needed.

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. We attempt to include the anticipated amounts of price increases or decreases in the costs of our
bids. In times of increased supply cost volatility, we may take other steps to reduce our risks. For example, we may hold
quotes related to materials in our industrial fabrication and field services segment for very short periods. 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. The profitability of our active jobs has not
suffered meaningfully from the periodic global surges in non-residential construction material costs.

Our operations have been challenged by the well-publicized global supply chain disruptions. While the 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 be impacting project owners’ confidence in
commencing new work which may adversely affect our expected levels of revenues until the supply chain disruptions
further dissipate.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See the Index to the Consolidated Financial Statements on page 55 of this 2023 Annual Report.

- 49 -

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Attached as exhibits to this 2023 Annual Report are certifications of our Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 of the Exchange Act. This “Controls and
Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications
and a reference to the report of Grant Thornton LLP, our independent registered public accounting firm, regarding its audit
of our internal control over financial reporting. This section should be read in conjunction with the certifications and the
report of Grant Thornton LLP for a more complete understanding of the topics presented.

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures
(“Disclosure Controls”) as of the end of the year covered by this 2023 Annual Report. The controls evaluation was
conducted under the supervision and with the participation of management, including our CEO and CFO. Disclosure
Controls are controls and procedures designed to reasonably assure that information required to be disclosed in our reports
filed under the Exchange Act, such as this 2023 Annual Report, is recorded, processed, summarized, and reported within
the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed to reasonably assure that
such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to
allow timely decisions regarding required disclosure. Our quarterly evaluation of Disclosure Controls includes an
evaluation of some components of our internal control over financial reporting, which is separately evaluated on an annual
basis for purposes of providing the management report that is set forth below.

Based on the controls evaluation, our CEO and CFO have concluded that, as of the end of the year covered by this 2023
Annual Report, our Disclosure Controls were effective to provide reasonable assurance that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified
by the SEC, and the material information related to Argan and its consolidated subsidiaries is made known to management,
including the CEO and CFO, particularly during the period when our periodic reports are being prepared.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to
provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with authorizations of management and directors
of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial
statements.

Management assessed our internal control over financial reporting as of January 31, 2023, the end of the fiscal year, based
on assessment criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Management’s assessment included evaluation of elements such
as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies,
and our overall control environment.

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of
the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external reporting purposes in accordance with U.S. GAAP. We reviewed the results of
management’s assessment with the audit committee of our board of directors. In addition, on a quarterly basis, we will
evaluate any changes to our internal control over financial reporting to determine if material change occurred.

Attestation Report of the Independent Registered Public Accounting Firm

The effectiveness of our internal control over financial reporting as of January 31, 2023 has been audited by Grant Thornton

LLP, our independent registered public accounting firm, who also audited our consolidated financial statements included

in this 2023 Annual Report, as stated in their reports which appear with our accompanying consolidated financial

statements.

Changes in Internal Controls

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange

Act) occurred during the fiscal quarter ended January 31, 2023 that has materially affected, or is reasonably likely to

materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

The Company’s management, including the CEO and CFO, does not expect that our Disclosure Controls or our internal

control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well

designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be

met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls

must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation

of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues

and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that

judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls

can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management

override of the controls.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and

there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may

become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or

ITEM 9B. OTHER INFORMATION.

procedures.

Not Applicable.

PART III

The information required by the items of the 2023 Annual Report, Part III, that are identified below will be incorporated

by reference to our 2023 Proxy Statement relating to the election of directors and other matters, which is expected to be

filed by us pursuant to Regulation 14A, within 120 days after the close of our fiscal year.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

ITEM 11. EXECUTIVE COMPENSATION.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND

RELATED STOCKHOLDER MATTERS.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

- 50 -

- 51 -

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

Attestation Report of the Independent Registered Public Accounting Firm

FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Attached as exhibits to this 2023 Annual Report are certifications of our Chief Executive Officer (“CEO”) and Chief

Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 of the Exchange Act. This “Controls and

Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications

and a reference to the report of Grant Thornton LLP, our independent registered public accounting firm, regarding its audit

of our internal control over financial reporting. This section should be read in conjunction with the certifications and the

report of Grant Thornton LLP for a more complete understanding of the topics presented.

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures

(“Disclosure Controls”) as of the end of the year covered by this 2023 Annual Report. The controls evaluation was

conducted under the supervision and with the participation of management, including our CEO and CFO. Disclosure

Controls are controls and procedures designed to reasonably assure that information required to be disclosed in our reports

filed under the Exchange Act, such as this 2023 Annual Report, is recorded, processed, summarized, and reported within

the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed to reasonably assure that

such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to

allow timely decisions regarding required disclosure. Our quarterly evaluation of Disclosure Controls includes an

evaluation of some components of our internal control over financial reporting, which is separately evaluated on an annual

basis for purposes of providing the management report that is set forth below.

Based on the controls evaluation, our CEO and CFO have concluded that, as of the end of the year covered by this 2023

Annual Report, our Disclosure Controls were effective to provide reasonable assurance that information required to be

disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified

by the SEC, and the material information related to Argan and its consolidated subsidiaries is made known to management,

including the CEO and CFO, particularly during the period when our periodic reports are being prepared.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to

provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements

for external purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and

procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the

transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded

as necessary to permit preparation of financial statements in accordance with authorizations of management and directors

of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized

acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial

statements.

Management assessed our internal control over financial reporting as of January 31, 2023, the end of the fiscal year, based

on assessment criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of

Sponsoring Organizations of the Treadway Commission. Management’s assessment included evaluation of elements such

as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies,

and our overall control environment.

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of

the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation

of financial statements for external reporting purposes in accordance with U.S. GAAP. We reviewed the results of

management’s assessment with the audit committee of our board of directors. In addition, on a quarterly basis, we will

evaluate any changes to our internal control over financial reporting to determine if material change occurred.

- 50 -

The effectiveness of our internal control over financial reporting as of January 31, 2023 has been audited by Grant Thornton
LLP, our independent registered public accounting firm, who also audited our consolidated financial statements included
in this 2023 Annual Report, as stated in their reports which appear with our accompanying consolidated financial
statements.

Changes in Internal Controls

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) occurred during the fiscal quarter ended January 31, 2023 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

The Company’s management, including the CEO and CFO, does not expect that our Disclosure Controls or our internal
control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be
met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls
can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management
override of the controls.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may
become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or
procedures.

ITEM 9B. OTHER INFORMATION.

Not Applicable.

PART III

The information required by the items of the 2023 Annual Report, Part III, that are identified below will be incorporated
by reference to our 2023 Proxy Statement relating to the election of directors and other matters, which is expected to be
filed by us pursuant to Regulation 14A, within 120 days after the close of our fiscal year.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

ITEM 11. EXECUTIVE COMPENSATION.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND
RELATED STOCKHOLDER MATTERS.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

- 51 -

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS.

PART IV

(a) Financial Statements: Our consolidated financial statements together with the report of our independent registered

public accounting firm on those consolidated financial statements are filed as part of this 2023 Annual Report.

(b) Financial Statement Schedules: We have omitted all financial statement schedules because they are not applicable
or not in amounts sufficient to require submission or because we have included the necessary information in our
consolidated financial statements or related notes.

Exhibit No.
3.1

3.2

Certificate of Incorporation, as amended. Incorporated by reference to Exhibit 3.1 to the Registrant’s

Annual Report on Form 10-K filed on April 10, 2019.

Bylaws. Incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K

filed on April 15, 2009.

Description

Description of Registrant’s Securities. Incorporated by reference to Exhibit 4 to the Registrant’s

Annual Report on Form 10-K filed on April 14, 2020.

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

Argan, Inc. 2011 Stock Plan (Revised as of 4-10-18). Incorporated by reference to the Registrant’s

Proxy Statement filed on Schedule 14A on May 7, 2018. (b)

Argan, Inc. 2020 Stock Plan. Incorporated by reference to the Registrant’s Proxy Statement filed on
Schedule 14A on May 6, 2020. (b)

Third Amended and Restated Employment Agreement, dated November 15, 2019, by and among
Gemma Power Systems, LLC, Gemma Power, Inc., Gemma Power Systems California, Inc.,
Gemma Power Hartford, LLC, Gemma Renewable Power, LLC, Gemma Power Operations, LLC
and William F. Griffin, Jr. Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly
Report on Form 10-Q filed on December 10, 2019. (b)

Employment Agreement, dated November 15, 2019, by and among Gemma Power Systems, LLC,
Gemma Power, Inc., Gemma Power Systems California, Inc., Gemma Power Hartford, LLC,
Gemma Renewable Power, LLC, Gemma Power Operations, LLC and Charles Collins IV.
Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed
on December 10, 2019. (b)

Amended and Restated Replacement Credit Agreement, dated May 15, 2017, among Argan, Inc.
and certain subsidiaries of Argan, Inc., as borrowers, and Bank of America, N.A., as the lender.
Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on
May 17, 2017.

First Amendment to the Amended and Restated Replacement Credit Agreement, dated April 30,
2021, among Argan, Inc. and certain subsidiaries of Argan, Inc., as borrowers, and Bank of
America, N.A., as the lender. Incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed on May 4, 2021.

Second Amendment to the Amended and Restated Replacement Credit Agreement, dated March 6,
2023, among Argan, Inc. and certain subsidiaries of Argan, Inc., as borrowers, and Bank of
America, N.A., as the lender. Incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed on March 8, 2023.

Deferred Compensation Plan, adopted by Gemma Power Systems, LLC, effective as of April 6,

2017. Incorporated by reference to Exhibit 10.7 of the Registrant’s Annual Report on Form 10-K
filed on April 11, 2017. (b)

Exhibit No.

10.9

Amendment No. 2020-1 to the Gemma Power Systems, LLC Deferred Compensation Plan.

Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed

on December 9, 2020. (b)

Description

10.10

Retirement Agreement, dated as of August 16, 2022, by and between Argan, Inc. and Rainer H.

Bosselmann. Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form

8-K filed on August 18, 2022. (b)

10.11

Employment Agreement dated as of October 13, 2015 by and between Argan, Inc. and David H.

Watson. Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-

Q filed on December 10, 2015. (b)

10.12

Employment Agreement, dated September 8, 2022, by and between Argan, Inc. and David H.

Watson. Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-

Q filed on September 8, 2022 (replaced the Employment Agreement included as Exhibit 10.11). (b)

10.13

Employment Agreement, dated September 8, 2022, by and between Argan, Inc. and Richard H.

Deily. Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q

filed on September 8, 2022. (b)

on April 27, 2004.

Code of Ethics. Incorporated by reference to the Registrant’s Annual Report on Form 10-KSB filed

Argan, Inc. Code of Conduct, effective December 10, 2020. Incorporated by reference to Exhibit 14

to the Registrant’s Current Report on Form 8-K filed on December 10, 2020.

Subsidiaries of the Company. Incorporated by reference to Exhibit 21 to the Registrant’s Annual

Report on Form 10-K filed on April 14, 2021.

Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm. (a)

Certification of CEO required by Section 302 of the Sarbanes-Oxley Act of 2002. (a)

Certification of CFO required by Section 302 of the Sarbanes-Oxley Act of 2002. (a)

Certification of CEO required by Section 906 of the Sarbanes-Oxley Act of 2002. (a)

Certification of CFO required by Section 906 of the Sarbanes-Oxley Act of 2002. (a)

101.INS

XBRL Instance Document – the instance document does not appear in the Interactive Data File

because its XBRL tags are embedded within the Inline XBRL document.

14.1

14.2

23.1

31.1

31.2

32.1

32.2

101.SCH

Inline XBRL Taxonomy Extension Schema.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase.

101.LAB

Inline XBRL Taxonomy Label Linkbase.

101.PRE

Inline XBRL Taxonomy Presentation Linkbase.

101.DEF

Inline XBRLTaxonomy Extension Definition Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension

information contained in Exhibits 101).

(a) Filed herewith.

(b) Management contract or compensatory plan, contract or arrangement.

- 52 -

- 53 -

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS.

PART IV

(a) Financial Statements: Our consolidated financial statements together with the report of our independent registered

public accounting firm on those consolidated financial statements are filed as part of this 2023 Annual Report.

(b) Financial Statement Schedules: We have omitted all financial statement schedules because they are not applicable

or not in amounts sufficient to require submission or because we have included the necessary information in our

consolidated financial statements or related notes.

Exhibit No.

3.1

3.2

Certificate of Incorporation, as amended. Incorporated by reference to Exhibit 3.1 to the Registrant’s

Annual Report on Form 10-K filed on April 10, 2019.

Bylaws. Incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K

filed on April 15, 2009.

Description

Description of Registrant’s Securities. Incorporated by reference to Exhibit 4 to the Registrant’s

Annual Report on Form 10-K filed on April 14, 2020.

10.1

10.2

10.3

10.4

Argan, Inc. 2011 Stock Plan (Revised as of 4-10-18). Incorporated by reference to the Registrant’s

Proxy Statement filed on Schedule 14A on May 7, 2018. (b)

Argan, Inc. 2020 Stock Plan. Incorporated by reference to the Registrant’s Proxy Statement filed on

Schedule 14A on May 6, 2020. (b)

Third Amended and Restated Employment Agreement, dated November 15, 2019, by and among

Gemma Power Systems, LLC, Gemma Power, Inc., Gemma Power Systems California, Inc.,

Gemma Power Hartford, LLC, Gemma Renewable Power, LLC, Gemma Power Operations, LLC

and William F. Griffin, Jr. Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly

Report on Form 10-Q filed on December 10, 2019. (b)

Employment Agreement, dated November 15, 2019, by and among Gemma Power Systems, LLC,

Gemma Power, Inc., Gemma Power Systems California, Inc., Gemma Power Hartford, LLC,

Gemma Renewable Power, LLC, Gemma Power Operations, LLC and Charles Collins IV.

Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed

on December 10, 2019. (b)

10.5

Amended and Restated Replacement Credit Agreement, dated May 15, 2017, among Argan, Inc.

and certain subsidiaries of Argan, Inc., as borrowers, and Bank of America, N.A., as the lender.

Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on

May 17, 2017.

10.6

First Amendment to the Amended and Restated Replacement Credit Agreement, dated April 30,

2021, among Argan, Inc. and certain subsidiaries of Argan, Inc., as borrowers, and Bank of

America, N.A., as the lender. Incorporated by reference to Exhibit 10.1 to the Registrant’s Current

Report on Form 8-K filed on May 4, 2021.

10.7

Second Amendment to the Amended and Restated Replacement Credit Agreement, dated March 6,

2023, among Argan, Inc. and certain subsidiaries of Argan, Inc., as borrowers, and Bank of

America, N.A., as the lender. Incorporated by reference to Exhibit 10.1 to the Registrant’s Current

Report on Form 8-K filed on March 8, 2023.

10.8

Deferred Compensation Plan, adopted by Gemma Power Systems, LLC, effective as of April 6,

2017. Incorporated by reference to Exhibit 10.7 of the Registrant’s Annual Report on Form 10-K

filed on April 11, 2017. (b)

- 52 -

Exhibit No.
10.9

10.10

10.11

10.12

10.13

14.1

14.2

23.1

31.1

31.2

32.1

32.2

Description

Amendment No. 2020-1 to the Gemma Power Systems, LLC Deferred Compensation Plan.
Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed
on December 9, 2020. (b)

Retirement Agreement, dated as of August 16, 2022, by and between Argan, Inc. and Rainer H.
Bosselmann. Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on August 18, 2022. (b)

Employment Agreement dated as of October 13, 2015 by and between Argan, Inc. and David H.
Watson. Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-
Q filed on December 10, 2015. (b)

Employment Agreement, dated September 8, 2022, by and between Argan, Inc. and David H.
Watson. Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-
Q filed on September 8, 2022 (replaced the Employment Agreement included as Exhibit 10.11). (b)

Employment Agreement, dated September 8, 2022, by and between Argan, Inc. and Richard H.
Deily. Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q
filed on September 8, 2022. (b)

Code of Ethics. Incorporated by reference to the Registrant’s Annual Report on Form 10-KSB filed

on April 27, 2004.

Argan, Inc. Code of Conduct, effective December 10, 2020. Incorporated by reference to Exhibit 14

to the Registrant’s Current Report on Form 8-K filed on December 10, 2020.

Subsidiaries of the Company. Incorporated by reference to Exhibit 21 to the Registrant’s Annual
Report on Form 10-K filed on April 14, 2021.

Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm. (a)
Certification of CEO required by Section 302 of the Sarbanes-Oxley Act of 2002. (a)
Certification of CFO required by Section 302 of the Sarbanes-Oxley Act of 2002. (a)
Certification of CEO required by Section 906 of the Sarbanes-Oxley Act of 2002. (a)
Certification of CFO required by Section 906 of the Sarbanes-Oxley Act of 2002. (a)

101.INS

XBRL Instance Document – the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase.

101.LAB

Inline XBRL Taxonomy Label Linkbase.

101.PRE

Inline XBRL Taxonomy Presentation Linkbase.

101.DEF

Inline XBRLTaxonomy Extension Definition Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension
information contained in Exhibits 101).

(a) Filed herewith.
(b) Management contract or compensatory plan, contract or arrangement.

- 53 -

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

ARGAN, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2023

April 17, 2023

ARGAN, INC.

By: /s/ Richard H. Deily
Richard H. Deily

Senior Vice President, Chief Financial Officer,
Treasurer and Corporate Secretary
(Principal Accounting and Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name

Title

Date

/s/ David H. Watson
David H. Watson

/s/ William F. Leimkuhler
William F. Leimkuhler

President and Chief Executive Officer,
Director
(Principal Executive Officer)

April 17, 2023

Consolidated Statements of Cash Flows for the years ended January 31, 2023, 2022 and 2021

Chairman of the Board of Directors

April 17, 2023

Notes to Consolidated Financial Statements

The following financial statements (including the notes thereto and the Reports of Independent Registered Public

Accounting Firm with respect thereto), are filed as part of this 2023 Annual Report.

Reports of Grant Thornton LLP, Independent Registered Public Accounting Firm (PCAOB ID Number 248)

- 56-

Consolidated Statements of Earnings for the years ended January 31, 2023, 2022 and 2021

Consolidated Balance Sheets as of January 31, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the years ended January 31, 2023, 2022 and 2021

Page

Number

- 59-

- 60-

- 61-

- 62-

- 63-

/s/ Rainer H. Bosselmann
Rainer H. Bosselmann

Director

/s/ Cynthia A. Flanders
Cynthia A. Flanders

/s/ Peter W. Getsinger
Peter W. Getsinger

/s/ William F. Griffin
William F. Griffin

/s/ John R. Jeffrey
John R. Jeffrey

/s/ Mano Koilpillai
Mano Koilpillai

Director

/s/ W. G. Champion Mitchell
W. G. Champion Mitchell

Director

/s/ James W. Quinn
James W. Quinn

Director

April 17, 2023

- 54 -

- 55 -

ARGAN, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2023

The following financial statements (including the notes thereto and the Reports of Independent Registered Public
Accounting Firm with respect thereto), are filed as part of this 2023 Annual Report.

Page
Number

Reports of Grant Thornton LLP, Independent Registered Public Accounting Firm (PCAOB ID Number 248)

- 56-

Consolidated Statements of Earnings for the years ended January 31, 2023, 2022 and 2021

Consolidated Balance Sheets as of January 31, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the years ended January 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended January 31, 2023, 2022 and 2021

Notes to Consolidated Financial Statements

- 59-

- 60-

- 61-

- 62-

- 63-

- 55 -

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our audit procedures related to the auditing of fixed-price contract revenues included, among others:

• We evaluated the design and tested the operating effectiveness of internal controls over the estimation process

that affects estimates of variable consideration and costs to complete utilized in the estimation process in

determining revenue on fixed-price contracts.

• We tested a sample of revenue recognized on fixed-price contracts and inspected contract agreements, related

amendments, and change orders. We also tested underlying contractual and financial data for completeness and

accuracy. In addition, we tested estimates to complete by evaluating significant assumptions, taking into account

the stage of the Company’s progress towards completion of the subject project.

• We agreed a sample of costs charged to contracts to supporting documentation and recalculated revenues

recognized based on the percentage of completion. We also attended a sample of monthly project review

meetings, and, where applicable, obtained supporting documentation for estimates of project contingencies

impacting both estimates to complete and the transaction price. In addition, we performed retrospective review

procedures for a sample of revenue contracts to compare management’s estimated margins in prior year to the

current year margins in order to assess management’s ability to estimate the transaction price and costs to

complete.

/s/ GRANT THORNTON LLP

Arlington, Virginia

April 17, 2023

We have served as the Company’s auditor since 2006.

Board of Directors and Stockholders
Argan, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Argan, Inc. (a Delaware corporation) and subsidiaries
(the “Company”) as of January 31, 2023 and 2022, the related consolidated statements of earnings, stockholders’ equity,
and cash flows for each of the three years in the period ended January 31, 2023, and the related notes (collectively referred
to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of January 31, 2023 and 2022, and the results of its operations and its cash flows for each of
the three years in the period ended January 31, 2023, in conformity with accounting principles generally accepted in the
United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of January 31, 2023, based on criteria
established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”), and our report dated April 17, 2023 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.

Revenue recognition for fixed-price contracts

As described in Notes 1 and 4 to the consolidated financial statements, the Company recognizes revenues for fixed-price
contracts over time using a cost-to-cost input method in which the extent of progress is measured based on the ratio of
costs incurred to date to the total estimated costs at completion. In addition, the revenue recognition process requires the
Company to determine the transaction price representing the amount of consideration to which the Company expects to
be entitled, which can require estimation of variable consideration related to matters surrounding change orders, claims,
bonuses and penalties.

The principal consideration for our determination that revenue recognition for fixed-price contracts is a critical audit matter
is that the estimation of total costs at completion and of the total transaction price is subject to considerable management
judgment which can be challenging, subjective and complex to audit. In addition, future results may vary significantly
from past estimates due to changes in facts and circumstances.

- 56 -

- 57 -

Board of Directors and Stockholders

Argan, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Argan, Inc. (a Delaware corporation) and subsidiaries

(the “Company”) as of January 31, 2023 and 2022, the related consolidated statements of earnings, stockholders’ equity,

and cash flows for each of the three years in the period ended January 31, 2023, and the related notes (collectively referred

to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial

position of the Company as of January 31, 2023 and 2022, and the results of its operations and its cash flows for each of

the three years in the period ended January 31, 2023, in conformity with accounting principles generally accepted in the

United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (“PCAOB”), the Company’s internal control over financial reporting as of January 31, 2023, based on criteria

established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission (“COSO”), and our report dated April 17, 2023 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion

on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB

and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,

whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of

the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such

procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well

as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for

our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements

that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or

disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex

judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements,

taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the

critical audit matter or on the accounts or disclosures to which it relates.

Revenue recognition for fixed-price contracts

As described in Notes 1 and 4 to the consolidated financial statements, the Company recognizes revenues for fixed-price

contracts over time using a cost-to-cost input method in which the extent of progress is measured based on the ratio of

costs incurred to date to the total estimated costs at completion. In addition, the revenue recognition process requires the

Company to determine the transaction price representing the amount of consideration to which the Company expects to

be entitled, which can require estimation of variable consideration related to matters surrounding change orders, claims,

bonuses and penalties.

The principal consideration for our determination that revenue recognition for fixed-price contracts is a critical audit matter

is that the estimation of total costs at completion and of the total transaction price is subject to considerable management

judgment which can be challenging, subjective and complex to audit. In addition, future results may vary significantly

from past estimates due to changes in facts and circumstances.

- 56 -

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our audit procedures related to the auditing of fixed-price contract revenues included, among others:

• We evaluated the design and tested the operating effectiveness of internal controls over the estimation process
that affects estimates of variable consideration and costs to complete utilized in the estimation process in
determining revenue on fixed-price contracts.

• We tested a sample of revenue recognized on fixed-price contracts and inspected contract agreements, related
amendments, and change orders. We also tested underlying contractual and financial data for completeness and
accuracy. In addition, we tested estimates to complete by evaluating significant assumptions, taking into account
the stage of the Company’s progress towards completion of the subject project.

• We agreed a sample of costs charged to contracts to supporting documentation and recalculated revenues
recognized based on the percentage of completion. We also attended a sample of monthly project review
meetings, and, where applicable, obtained supporting documentation for estimates of project contingencies
impacting both estimates to complete and the transaction price. In addition, we performed retrospective review
procedures for a sample of revenue contracts to compare management’s estimated margins in prior year to the
current year margins in order to assess management’s ability to estimate the transaction price and costs to
complete.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2006.

Arlington, Virginia
April 17, 2023

- 57 -

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Argan, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Argan, Inc. (a Delaware corporation) and subsidiaries (the
“Company”) as of January 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023,
based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended January 31, 2023,
and our report dated April 17, 2023 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

Arlington, Virginia
April 17, 2023

ARGAN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE YEARS ENDED JANUARY 31,

(In thousands, except per share data)

REVENUES

Cost of revenues

GROSS PROFIT

Impairment loss

Selling, general and administrative expenses

INCOME FROM OPERATIONS

Other income, net

INCOME BEFORE INCOME TAXES

Income tax expense

NET INCOME

Net income (loss) attributable to non-controlling interest

NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF

ARGAN, INC.

Foreign currency translation adjustments

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE

STOCKHOLDERS OF ARGAN, INC.

NET INCOME PER SHARE ATTRIBUTABLE TO THE

STOCKHOLDERS OF ARGAN, INC.

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

Basic

Diluted

Basic

Diluted

2023

2022

2021

$ 455,040 $ 509,370 $ 392,206

368,679

409,638

330,139

86,361

44,692

99,732

62,067

47,321

39,041

—

7,901

—

41,669

4,331

46,000

11,296

34,704

1,606

44,510

23,026

2,552

1,859

47,062

24,885

11,356

1,074

35,706

23,811

(2,538)

(40)

33,098

(425)

38,244

(1,370)

23,851

$ 32,673 $ 36,874 $ 23,886

2.35 $

2.43 $

2.33 $

2.40 $

1.52

1.51

14,083

14,176

15,715

15,668

15,913

15,825

CASH DIVIDENDS PER SHARE

1.00 $

3.00

The accompanying notes are an integral part of these consolidated financial statements.

- 58 -

- 59 -

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Argan, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Argan, Inc. (a Delaware corporation) and subsidiaries (the

“Company”) as of January 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the

Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023,

based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended January 31, 2023,

and our report dated April 17, 2023 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its

assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s

Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal

control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are

required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the

applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained

in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,

assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal

control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with

generally accepted accounting principles. A company’s internal control over financial reporting includes those policies

and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded

as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,

and that receipts and expenditures of the company are being made only in accordance with authorizations of management

and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of

unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial

statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

Arlington, Virginia

April 17, 2023

- 58 -

ARGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED JANUARY 31,
(In thousands, except per share data)

REVENUES
Cost of revenues
GROSS PROFIT
Selling, general and administrative expenses
Impairment loss
INCOME FROM OPERATIONS
Other income, net
INCOME BEFORE INCOME TAXES
Income tax expense
NET INCOME
Net income (loss) attributable to non-controlling interest
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF
ARGAN, INC.
Foreign currency translation adjustments
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE
STOCKHOLDERS OF ARGAN, INC.

NET INCOME PER SHARE ATTRIBUTABLE TO THE
STOCKHOLDERS OF ARGAN, INC.

Basic
Diluted

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

Basic
Diluted

2023

2021

2022
$ 455,040 $ 509,370 $ 392,206
330,139
409,638
368,679
62,067
99,732
86,361
39,041
47,321
44,692
—
7,901
—
23,026
44,510
41,669
1,859
2,552
4,331
24,885
47,062
46,000
1,074
11,356
11,296
23,811
35,706
34,704
(40)
(2,538)
1,606

33,098
(425)

38,244
(1,370)

23,851
35

$ 32,673 $ 36,874 $ 23,886

$
$

2.35 $
2.33 $

2.43 $
2.40 $

1.52
1.51

14,083
14,176

15,715
15,913

15,668
15,825

CASH DIVIDENDS PER SHARE

1.00 $

3.00

The accompanying notes are an integral part of these consolidated financial statements.

- 59 -

ARGAN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31,
(Dollars in thousands, except per share data)

ASSETS
CURRENT ASSETS

Cash and cash equivalents
Short-term investments
Accounts receivable, net
Contract assets
Other current assets

TOTAL CURRENT ASSETS
Property, plant and equipment, net
Goodwill
Other purchased intangible assets, net
Deferred taxes, net
Right-of-use and other assets
TOTAL ASSETS

LIABILITIES AND EQUITY
CURRENT LIABILITIES

Accounts payable
Accrued expenses
Contract liabilities

TOTAL CURRENT LIABILITIES
Noncurrent liabilities
TOTAL LIABILITIES

2023

2022

—

)

(

)

(

)

(

)

(

$ 173,947 $ 350,472
90,026
26,978
4,904
34,904
507,284
10,460
28,033
3,322
457
4,029
489,487 $ 553,585

151,511
50,132
24,778
38,334
438,702
10,430
28,033
2,609
3,689
6,024

56,375 $
49,867
96,261
202,503
6,087
208,590

41,822
53,315
127,890
223,027
4,963
227,990

COMMITMENTS AND CONTINGENCIES (see Notes 10 and 11)

STOCKHOLDERS’ EQUITY

Preferred stock, par value $0.10 per share – 500,000 shares authorized; no shares issued
and outstanding
Common stock, par value $0.15 per share – 30,000,000 shares authorized; 15,828,289
and 15,788,673 shares issued at January 31, 2023 and 2022, respectively; 13,441,590
and 15,257,688 shares outstanding at January 31, 2023 and 2022, respectively
Additional paid-in capital
Retained earnings
Less treasury stock, at cost – 2,386,699 and 530,985 shares at January 31, 2023 and
2022, respectively
Accumulated other comprehensive loss
TOTAL STOCKHOLDERS’ EQUITY

Non-controlling interest

TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY

—

2,374
162,208
207,832

2,368
158,190
188,690

(88,641)
(2,876)
280,897
—
280,897

(20,405)
(2,451)
326,392
(797)
325,595
$ 489,487 $ 553,585

The accompanying notes are an integral part of these consolidated financial statements.

- 60 -

)

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(

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ARGAN, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JANUARY 31,

(Dollars in thousands, except per share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Contract assets

Other current assets

TOTAL CURRENT ASSETS

Property, plant and equipment, net

Goodwill

Other purchased intangible assets, net

Deferred taxes, net

Right-of-use and other assets

TOTAL ASSETS

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable

Accrued expenses

Contract liabilities

TOTAL CURRENT LIABILITIES

Noncurrent liabilities

TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES (see Notes 10 and 11)

STOCKHOLDERS’ EQUITY

and outstanding

Preferred stock, par value $0.10 per share – 500,000 shares authorized; no shares issued

Common stock, par value $0.15 per share – 30,000,000 shares authorized; 15,828,289

and 15,788,673 shares issued at January 31, 2023 and 2022, respectively; 13,441,590

and 15,257,688 shares outstanding at January 31, 2023 and 2022, respectively

Less treasury stock, at cost – 2,386,699 and 530,985 shares at January 31, 2023 and

Additional paid-in capital

Retained earnings

2022, respectively

Accumulated other comprehensive loss

TOTAL STOCKHOLDERS’ EQUITY

Non-controlling interest

TOTAL EQUITY

TOTAL LIABILITIES AND EQUITY

The accompanying notes are an integral part of these consolidated financial statements.

- 60 -

2023

2022

$ 173,947 $ 350,472

151,511

50,132

24,778

38,334

438,702

10,430

28,033

2,609

3,689

6,024

90,026

26,978

4,904

34,904

507,284

10,460

28,033

3,322

457

4,029

489,487 $ 553,585

56,375 $

49,867

96,261

202,503

6,087

208,590

41,822

53,315

127,890

223,027

4,963

227,990

—

2,374

162,208

207,832

2,368

158,190

188,690

(88,641)

(2,876)

280,897

—

(20,405)

(2,451)

326,392

(797)

280,897

325,595

$ 489,487 $ 553,585

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1
6

ARGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 31,
(Dollars in thousands)

ARGAN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2023, 2022 AND 2021

(Tabular amounts in thousands, except per share data)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash (used in) provided by operating
activities

2023

2022

2021

NOTE 1 – DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

34,704 $ 35,706 $

23,811

Description of the Business

Stock compensation expense
Depreciation
Deferred income tax (benefit) expense
Lease expense
Changes in accrued interest on short-term investments
Equity in (income) loss of solar energy investments
Amortization of purchased intangible assets
Provisions for credit losses
Impairment loss
Other

Changes in operating assets and liabilities

Accounts receivable
Contract assets
Other assets
Accounts payable and accrued expenses
Contract liabilities

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of short-term investments
Maturities of short-term investments
Purchases of property, plant and equipment
Investments in solar energy projects
Acquisition of Lee Telecom, Inc.

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Common stock repurchases
Payments of cash dividends
Distribution to non-controlling interest
Proceeds from the exercise of stock options
Net cash used in financing activities

3,958
2,983
(3,232)
2,554
(1,735)
(1,113)
732
92
—
7

3,459
3,367
(208)
3,391
29
466
870
2,381
7,901
(71)

2,938
3,715
7,645
1,820
444
—
904
16
—
181

(23,246)
(19,874)
(3,346)
9,084
(31,629)
(30,061)

(480)
21,741
(241)
(5,742)
(44,154)
28,415

8,463
6,744
(11,467)
31,442
99,357
176,013

(249,750)
190,000
(3,372)
—
—
(63,122)

(90,000)
90,000
(1,422)
(5,016)
(600)
(7,038)

(100,000)
170,000
(1,697)
(1,333)
—
66,970

(68,236)
(13,956)
(677)
66
(82,803)

(20,372)
(15,664)
—
1,428
(34,608)

—
(47,047)
—
1,641
(45,406)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD

(539)
(176,525)
350,472

1,731
(2,968)
199,308
(16,199)
167,363
366,671
$ 173,947 $ 350,472 $ 366,671

SUPPLEMENTAL CASH FLOW INFORMATION (see Notes 10 and 13)

The accompanying notes are an integral part of these consolidated financial statements.

- 62 -

Argan, Inc. (“Argan”) conducts operations through its wholly owned subsidiaries, Gemma Power Systems, LLC and

affiliates (“GPS”); The Roberts Company, Inc. (“TRC”); Atlantic Projects Company Limited and affiliates (“APC”) and

Southern Maryland Cable, Inc. (“SMC”). Argan and these consolidated subsidiaries are hereinafter collectively referred

to as the “Company.”

Through GPS and APC, the Company provides 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. The wide range of customers includes primarily independent power producers, public utilities,

power plant equipment suppliers and other commercial firms with significant power requirements with projects located in

the United States (the “U.S.”), the Republic of Ireland (“Ireland”) and the United Kingdom (the “U.K.”). GPS and APC

represent the Company’s power industry services reportable segment. Through TRC, the industrial fabrication and field

services reportable segment provides primarily on-site services that support new plant construction and additions,

maintenance turnarounds, shutdowns and emergency mobilizations for industrial operations primarily located in the

Southeast region of the U.S. and that may include the fabrication, delivery and installation of 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.

Basis of Presentation and Significant Accounting Policies

The Company’s fiscal year ends on January 31 of each year. The consolidated financial statements include the accounts

of Argan, its wholly owned subsidiaries, and its controlled variable interest entity (“VIE”) prior to its deconsolidation in

the fourth quarter of the year ended January 31, 2023 (see Note 3). All significant inter-company balances and transactions

have been eliminated in consolidation. In Note 17, the Company has provided certain financial information relating to the

operating results and assets of its reportable segments based on the manner in which management disaggregates the

Company’s financial reporting for purposes of making internal operating decisions.

Use of Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally

accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities, revenues, expenses, and certain financial statement disclosures.

Management believes that the estimates, judgments and assumptions upon which it relies are reasonable based upon

information available to it at the time that these estimates, judgments and assumptions are made. Estimates are used for,

but are not limited to, the Company’s accounting for revenues, the valuation of assets with long and indefinite lives

including goodwill, the valuation of restricted stock units and options to purchase shares of the Company’s common stock,

the evaluation of contingent obligations and uncertain income tax return positions, the valuation of deferred taxes, and the

determination of the allowance for doubtful accounts. Actual results could differ from these estimates.

Property, Plant and Equipment – Property, plant and equipment are stated at cost less accumulated depreciation. Such

assets acquired in a business combination are initially included in the Company’s consolidated balance sheet at fair values.

The Company capitalizes the power plant project development costs incurred by consolidated variable interest entities.

Depreciation amounts are determined using the straight-line method over the estimated useful lives of the assets, other

than land, which are generally from five to thirty-nine years. Building and leasehold improvements are amortized on a

straight-line basis over the shorter of the estimated useful life of the related asset or the lease term, as applicable. The costs

of maintenance and repairs are expensed as incurred and major improvements are capitalized. When an asset is sold or

retired, the cost and related accumulated depreciation amounts are removed from the accounts and the resulting gain or

loss is included in earnings.

- 63 -

ARGAN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JANUARY 31,

(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash (used in) provided by operating

Net income

activities

Stock compensation expense

Depreciation

Deferred income tax (benefit) expense

Lease expense

Changes in accrued interest on short-term investments

Equity in (income) loss of solar energy investments

Amortization of purchased intangible assets

Provisions for credit losses

Impairment loss

Other

Changes in operating assets and liabilities

Accounts receivable

Contract assets

Other assets

Accounts payable and accrued expenses

Contract liabilities

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of short-term investments

Maturities of short-term investments

Purchases of property, plant and equipment

Investments in solar energy projects

Acquisition of Lee Telecom, Inc.

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Common stock repurchases

Payments of cash dividends

Distribution to non-controlling interest

Proceeds from the exercise of stock options

Net cash used in financing activities

3,958

2,983

(3,232)

2,554

(1,735)

(1,113)

732

—

3,459

3,367

(208)

3,391

466

870

2,381

7,901

(71)

2,938

3,715

7,645

1,820

444

—

904

—

181

(23,246)

(19,874)

(3,346)

9,084

(31,629)

(30,061)

(480)

21,741

(241)

(5,742)

(44,154)

8,463

6,744

(11,467)

31,442

99,357

28,415

176,013

(249,750)

(90,000)

(100,000)

190,000

(3,372)

—

(63,122)

90,000

(1,422)

(5,016)

(600)

(7,038)

170,000

(1,697)

(1,333)

—

66,970

(68,236)

(13,956)

(20,372)

(15,664)

(677)

—

1,428

—

(47,047)

—

1,641

(82,803)

(34,608)

(45,406)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH

(539)

(2,968)

1,731

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(176,525)

(16,199)

199,308

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS, END OF PERIOD

350,472

366,671

167,363

$ 173,947 $ 350,472 $ 366,671

SUPPLEMENTAL CASH FLOW INFORMATION (see Notes 10 and 13)

The accompanying notes are an integral part of these consolidated financial statements.

2023

2022

2021

NOTE 1 – DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

34,704 $ 35,706 $

23,811

Description of the Business

ARGAN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2023, 2022 AND 2021
(Tabular amounts in thousands, except per share data)

Argan, Inc. (“Argan”) conducts operations through its wholly owned subsidiaries, Gemma Power Systems, LLC and
affiliates (“GPS”); The Roberts Company, Inc. (“TRC”); Atlantic Projects Company Limited and affiliates (“APC”) and
Southern Maryland Cable, Inc. (“SMC”). Argan and these consolidated subsidiaries are hereinafter collectively referred
to as the “Company.”

Through GPS and APC, the Company provides 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. The wide range of customers includes primarily independent power producers, public utilities,
power plant equipment suppliers and other commercial firms with significant power requirements with projects located in
the United States (the “U.S.”), the Republic of Ireland (“Ireland”) and the United Kingdom (the “U.K.”). GPS and APC
represent the Company’s power industry services reportable segment. Through TRC, the industrial fabrication and field
services reportable segment provides primarily on-site services that support new plant construction and additions,
maintenance turnarounds, shutdowns and emergency mobilizations for industrial operations primarily located in the
Southeast region of the U.S. and that may include the fabrication, delivery and installation of 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.

Basis of Presentation and Significant Accounting Policies

The Company’s fiscal year ends on January 31 of each year. The consolidated financial statements include the accounts
of Argan, its wholly owned subsidiaries, and its controlled variable interest entity (“VIE”) prior to its deconsolidation in
the fourth quarter of the year ended January 31, 2023 (see Note 3). All significant inter-company balances and transactions
have been eliminated in consolidation. In Note 17, the Company has provided certain financial information relating to the
operating results and assets of its reportable segments based on the manner in which management disaggregates the
Company’s financial reporting for purposes of making internal operating decisions.

Use of Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, revenues, expenses, and certain financial statement disclosures.
Management believes that the estimates, judgments and assumptions upon which it relies are reasonable based upon
information available to it at the time that these estimates, judgments and assumptions are made. Estimates are used for,
but are not limited to, the Company’s accounting for revenues, the valuation of assets with long and indefinite lives
including goodwill, the valuation of restricted stock units and options to purchase shares of the Company’s common stock,
the evaluation of contingent obligations and uncertain income tax return positions, the valuation of deferred taxes, and the
determination of the allowance for doubtful accounts. Actual results could differ from these estimates.

Property, Plant and Equipment – Property, plant and equipment are stated at cost less accumulated depreciation. Such
assets acquired in a business combination are initially included in the Company’s consolidated balance sheet at fair values.
The Company capitalizes the power plant project development costs incurred by consolidated variable interest entities.
Depreciation amounts are determined using the straight-line method over the estimated useful lives of the assets, other
than land, which are generally from five to thirty-nine years. Building and leasehold improvements are amortized on a
straight-line basis over the shorter of the estimated useful life of the related asset or the lease term, as applicable. The costs
of maintenance and repairs are expensed as incurred and major improvements are capitalized. When an asset is sold or
retired, the cost and related accumulated depreciation amounts are removed from the accounts and the resulting gain or
loss is included in earnings.

- 62 -

- 63 -

Goodwill – On November 1 of each year, the Company reviews the carrying value of goodwill amounts for impairment.
Each goodwill impairment assessment is performed using the quantitative business valuation process except in those
circumstances when a qualitative approach performed by management results in a conclusion that it is unlikely that an
impairment of the applicable goodwill amount has occurred. The Company also evaluates amounts of goodwill for
impairment at any time when events or changes in circumstances indicate that goodwill value may be impaired.

The Company identifies a potential impairment loss by comparing the fair value of a reporting unit with the reporting
unit’s carrying amount, including goodwill. In the quantitative approach, the fair value of the reporting unit is estimated
using various market-based and income-based valuation techniques as applicable in the particular circumstances. If the
fair value of the reporting unit exceeds the related carrying amount, goodwill of the reporting unit is not deemed to be
impaired. If the carrying amount of the reporting unit exceeds its fair value, a goodwill impairment loss is recorded in an
amount equal to the excess of the unit’s carrying value over its fair value, not to exceed the amount of goodwill allocated
to the reporting unit.

An alternative method allows the Company to first assess qualitative factors to decide whether it is necessary to perform
the quantitative goodwill impairment test. It is not required to calculate the fair value of a reporting unit unless management
concludes, based on a qualitative assessment, that it is more likely than not that its fair value may be less than the
corresponding carrying amount. The professional guidance for this evaluation identifies the types of factors which the
Company should consider in conducting the qualitative assessment including macroeconomic, industry, market and entity-
specific factors.

Long-Lived Assets – Long-lived assets (other than goodwill), consisting primarily of purchased intangible assets with
definite lives, property, plant and equipment, are subject to review for impairment whenever events or changes in
circumstances indicate that a carrying amount should be assessed. In such circumstances, the Company would compare
the carrying value of the long-lived asset to the undiscounted future cash flows expected to result from the use of the asset.
In the event that the Company would determine that the carrying value of the asset is not recoverable, a loss would be
recognized based on the amount by which the carrying value exceeds the fair value of the asset. Fair value would be
determined by using quoted market prices or valuation techniques such as the present value of expected future cash flows,
appraisals, or other pricing models as appropriate. The useful lives and amortization of purchased intangible assets are
described in Note 7.

Revenue Recognition – The Company’s accounting for revenues on contracts with customers is based on a single
comprehensive five-step model that requires reporting entities to:

Identify the contract,
Identify the performance obligations of the contract,

1.
2.
3. Determine the transaction price of the contract,
4. Allocate the transaction price to the performance obligations, and
5. Recognize revenue.

The Company focuses on the transfer of the contractor’s control of the goods and/or services to the customer, as opposed
to the transfer of risk and rewards. Major provisions of the current guidance cover the determination of which goods and
services are distinct and represent separate performance obligations, the appropriate treatments for variable consideration,
and the evaluation of whether revenues should be recognized at a point in time or over time.

When a performance obligation is satisfied over time, the related revenues are recognized over time. The Company’s
revenues are recognized primarily under various types of long-term construction contracts, including those for which
revenues are based on either a fixed-price or a time-and-materials basis, and primarily over time as performance obligations
are satisfied due to the continuous transfer of control to the project owner or other customer.

Revenues from fixed-price contracts, including portions of estimated gross profit, are recognized as services are provided,
based on costs incurred and estimated total contract costs using the cost-to-cost approach. If, at any time, the estimate of
contract profitability indicates an anticipated loss on a contract, the Company will recognize the total loss in the reporting
period in which it is identified and the loss amount becomes estimable. Revenues from time-and-materials contracts are
recognized when the related services are provided to the customer.

- 64 -

Predominantly all of the Company’s fixed-price contracts are considered to have a single performance obligation.

Although multiple promises to transfer individual goods or services may exist, they are not typically distinct within the

context of such contracts because contract promises included therein are interrelated or the contracts require the Company

to perform critical integration so that the customer receives a completed project. Warranties provided under the Company’s

contracts with customers are assurance-type primarily and are recorded as the corresponding contract work is performed.

The transaction price for a customer contract represents the value of the contract awarded to the Company that is 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. These adjustments can be made from time-to-time

during the period of contract performance as circumstances evolve related to such items as changes in the scope and price

of contracts, claims, incentives and liquidated damages.

The Company’s timing of revenues recognition may not be consistent with its rights to bill and collect cash from project

owners and other customers. Most contracts require payments as the corresponding work progresses that are determined

in the manner described therein. Those rights are generally dependent upon advance billing terms, milestone billings based

on the completion of certain phases of work or when services are performed. On most of our large contracts, milestone

billings that occur early in the corresponding contract terms typically are made in advance of certain significant and related

costs being incurred. This results in typically larger contract liability balances early in contract lives that decline over the

terms of the corresponding contracts. During the fiscal year ended January 31, 2023, there were no unusual or one-time

adjustments to contract liabilities.

The balances of the Company’s accounts receivable represent amounts billed to customers that have yet to be collected

and represent an unconditional right to cash from its customers. Contract assets include amounts that represent the rights

to receive payment for goods or services that have been transferred to the customer, with the rights conditional upon

something other than the passage of time. Contract liabilities include amounts that reflect obligations to provide goods or

services for which payment has been received. The amounts of revenues recognized during the years ended January 31,

2023 (“Fiscal 2023”) and 2022 (“Fiscal 2022”) that were included in the balances of contract liabilities as of January 31,

2022 and 2021, were approximately $131.0 million and $67.4 million, respectively.

Contract retentions are billed amounts which, pursuant to the terms of the applicable contract, are not paid by customers

until a defined phase of a contract or project has been completed and accepted. These retained amounts are reflected in

contract assets or contract liabilities depending on the net contract position of the particular contract. Retention amounts

and the length of retention periods may vary. Retainage amounts related to active contracts are considered current

regardless of the term of the applicable contract; such amounts are generally collected by the completion of the applicable

contract. The amounts retained by project owners and other customers under construction contracts at January 31, 2023,

and 2022 were $49.1 million and $40.4 million, respectively.

Income Taxes – Deferred taxes are recognized using enacted tax rates for the effects of temporary differences between the

book and tax bases of assets and liabilities. If management believes that it is more likely than not that some portion or all

of a deferred tax asset will not be realized, the carrying value will be reduced by a valuation allowance.

The Company accounts for uncertain tax positions in accordance with current accounting guidance which prescribes a

recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to

be taken, on the income tax returns of the Company. Management evaluates and the Company records the effect of any

uncertain tax position based on the amount that management deems is more likely than not (i.e., greater than a 50%

probability) to be sustained upon examination and ultimate settlement with the tax authorities in the applicable tax

jurisdiction.

Interest incurred related to overdue income taxes is included in income tax expense; franchise taxes and income tax

penalties are included in selling, general and administrative expenses.

Share-Based Payments – The Company measures and recognizes compensation expense for all stock-based awards granted

to employees and directors based upon estimates of fair value determined at the grant date of the award. The compensation

expense for each stock option is recognized on a straight-line basis over the corresponding vesting period which is typically

three years. The fair value amounts associated with restricted stock unit awards, which are determined on the dates of

award, are being recorded in stock compensation expense over the three-year contractual lapsing periods for the

- 65 -

Goodwill – On November 1 of each year, the Company reviews the carrying value of goodwill amounts for impairment.

Each goodwill impairment assessment is performed using the quantitative business valuation process except in those

circumstances when a qualitative approach performed by management results in a conclusion that it is unlikely that an

impairment of the applicable goodwill amount has occurred. The Company also evaluates amounts of goodwill for

impairment at any time when events or changes in circumstances indicate that goodwill value may be impaired.

The Company identifies a potential impairment loss by comparing the fair value of a reporting unit with the reporting

unit’s carrying amount, including goodwill. In the quantitative approach, the fair value of the reporting unit is estimated

using various market-based and income-based valuation techniques as applicable in the particular circumstances. If the

fair value of the reporting unit exceeds the related carrying amount, goodwill of the reporting unit is not deemed to be

impaired. If the carrying amount of the reporting unit exceeds its fair value, a goodwill impairment loss is recorded in an

amount equal to the excess of the unit’s carrying value over its fair value, not to exceed the amount of goodwill allocated

to the reporting unit.

An alternative method allows the Company to first assess qualitative factors to decide whether it is necessary to perform

the quantitative goodwill impairment test. It is not required to calculate the fair value of a reporting unit unless management

concludes, based on a qualitative assessment, that it is more likely than not that its fair value may be less than the

corresponding carrying amount. The professional guidance for this evaluation identifies the types of factors which the

Company should consider in conducting the qualitative assessment including macroeconomic, industry, market and entity-

specific factors.

Long-Lived Assets – Long-lived assets (other than goodwill), consisting primarily of purchased intangible assets with

definite lives, property, plant and equipment, are subject to review for impairment whenever events or changes in

circumstances indicate that a carrying amount should be assessed. In such circumstances, the Company would compare

the carrying value of the long-lived asset to the undiscounted future cash flows expected to result from the use of the asset.

In the event that the Company would determine that the carrying value of the asset is not recoverable, a loss would be

recognized based on the amount by which the carrying value exceeds the fair value of the asset. Fair value would be

determined by using quoted market prices or valuation techniques such as the present value of expected future cash flows,

appraisals, or other pricing models as appropriate. The useful lives and amortization of purchased intangible assets are

described in Note 7.

Revenue Recognition – The Company’s accounting for revenues on contracts with customers is based on a single

comprehensive five-step model that requires reporting entities to:

Identify the contract,

Identify the performance obligations of the contract,

3. Determine the transaction price of the contract,

4. Allocate the transaction price to the performance obligations, and

5. Recognize revenue.

The Company focuses on the transfer of the contractor’s control of the goods and/or services to the customer, as opposed

to the transfer of risk and rewards. Major provisions of the current guidance cover the determination of which goods and

services are distinct and represent separate performance obligations, the appropriate treatments for variable consideration,

and the evaluation of whether revenues should be recognized at a point in time or over time.

When a performance obligation is satisfied over time, the related revenues are recognized over time. The Company’s

revenues are recognized primarily under various types of long-term construction contracts, including those for which

revenues are based on either a fixed-price or a time-and-materials basis, and primarily over time as performance obligations

are satisfied due to the continuous transfer of control to the project owner or other customer.

Revenues from fixed-price contracts, including portions of estimated gross profit, are recognized as services are provided,

based on costs incurred and estimated total contract costs using the cost-to-cost approach. If, at any time, the estimate of

contract profitability indicates an anticipated loss on a contract, the Company will recognize the total loss in the reporting

period in which it is identified and the loss amount becomes estimable. Revenues from time-and-materials contracts are

recognized when the related services are provided to the customer.

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Predominantly all of the Company’s fixed-price contracts are considered to have a single performance obligation.
Although multiple promises to transfer individual goods or services may exist, they are not typically distinct within the
context of such contracts because contract promises included therein are interrelated or the contracts require the Company
to perform critical integration so that the customer receives a completed project. Warranties provided under the Company’s
contracts with customers are assurance-type primarily and are recorded as the corresponding contract work is performed.

The transaction price for a customer contract represents the value of the contract awarded to the Company that is 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. These adjustments can be made from time-to-time
during the period of contract performance as circumstances evolve related to such items as changes in the scope and price
of contracts, claims, incentives and liquidated damages.

The Company’s timing of revenues recognition may not be consistent with its rights to bill and collect cash from project
owners and other customers. Most contracts require payments as the corresponding work progresses that are determined
in the manner described therein. Those rights are generally dependent upon advance billing terms, milestone billings based
on the completion of certain phases of work or when services are performed. On most of our large contracts, milestone
billings that occur early in the corresponding contract terms typically are made in advance of certain significant and related
costs being incurred. This results in typically larger contract liability balances early in contract lives that decline over the
terms of the corresponding contracts. During the fiscal year ended January 31, 2023, there were no unusual or one-time
adjustments to contract liabilities.

The balances of the Company’s accounts receivable represent amounts billed to customers that have yet to be collected
and represent an unconditional right to cash from its customers. Contract assets include amounts that represent the rights
to receive payment for goods or services that have been transferred to the customer, with the rights conditional upon
something other than the passage of time. Contract liabilities include amounts that reflect obligations to provide goods or
services for which payment has been received. The amounts of revenues recognized during the years ended January 31,
2023 (“Fiscal 2023”) and 2022 (“Fiscal 2022”) that were included in the balances of contract liabilities as of January 31,
2022 and 2021, were approximately $131.0 million and $67.4 million, respectively.

Contract retentions are billed amounts which, pursuant to the terms of the applicable contract, are not paid by customers
until a defined phase of a contract or project has been completed and accepted. These retained amounts are reflected in
contract assets or contract liabilities depending on the net contract position of the particular contract. Retention amounts
and the length of retention periods may vary. Retainage amounts related to active contracts are considered current
regardless of the term of the applicable contract; such amounts are generally collected by the completion of the applicable
contract. The amounts retained by project owners and other customers under construction contracts at January 31, 2023,
and 2022 were $49.1 million and $40.4 million, respectively.

Income Taxes – Deferred taxes are recognized using enacted tax rates for the effects of temporary differences between the
book and tax bases of assets and liabilities. If management believes that it is more likely than not that some portion or all
of a deferred tax asset will not be realized, the carrying value will be reduced by a valuation allowance.

The Company accounts for uncertain tax positions in accordance with current accounting guidance which prescribes a
recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to
be taken, on the income tax returns of the Company. Management evaluates and the Company records the effect of any
uncertain tax position based on the amount that management deems is more likely than not (i.e., greater than a 50%
probability) to be sustained upon examination and ultimate settlement with the tax authorities in the applicable tax
jurisdiction.

Interest incurred related to overdue income taxes is included in income tax expense; franchise taxes and income tax
penalties are included in selling, general and administrative expenses.

Share-Based Payments – The Company measures and recognizes compensation expense for all stock-based awards granted
to employees and directors based upon estimates of fair value determined at the grant date of the award. The compensation
expense for each stock option is recognized on a straight-line basis over the corresponding vesting period which is typically
three years. The fair value amounts associated with restricted stock unit awards, which are determined on the dates of
award, are being recorded in stock compensation expense over the three-year contractual lapsing periods for the

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corresponding restrictions. Forfeitures are recognized when they occur. Share-based compensation expense is included in
selling, general and administrative expenses.

For each exercise of a stock option or each vesting of a restricted stock unit, the Company determines whether the
difference between the deduction for income tax reporting purposes created at that time and the related compensation
expense previously recorded for financial reporting purposes results in either an excess income tax benefit or an income
tax deficiency which is recognized, accordingly, as income tax benefit or expense in the corresponding consolidated
statement of earnings.

Fair Values – Current professional accounting guidance applies to all assets and liabilities that are being measured and
reported on a fair value basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date in the principal or most
advantageous market. The carrying value amounts presented in the consolidated balance sheets for the Company’s current
assets, which primarily include cash and cash equivalents, short-term investments, accounts receivable and contract assets,
and its current liabilities are reasonable estimates of their fair values due to the short-term nature of these items.

The fair value amounts of reporting units (as needed for purposes of identifying goodwill impairment losses) are
determined by averaging valuations that are calculated using market-based and income-based approaches deemed
appropriate in the circumstances.

Foreign Currency Translation – The accompanying consolidated financial statements are presented in the currency of the
United States (“U.S. Dollars”). The effects of translating the financial statements of APC from its functional currency
(Euros) into the Company’s reporting currency (U.S. Dollars) are recognized as translation adjustments in accumulated
other comprehensive loss. There are no applicable income taxes. The translation of assets and liabilities to U.S. Dollars is
made at the exchange rate in effect at the consolidated balance sheet date, while equity accounts are translated at historical
rates. The translation of the statement of earnings amounts is made monthly based generally on the average currency
exchange rate for the month. Net foreign currency transaction gains and losses are included in other income, net, in the
consolidated statements of earnings. For Fiscal 2023, Fiscal 2022 and the year ended January 31, 2021 (“Fiscal 2021”),
such amounts were not material.

NOTE 2 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

There are no recently issued accounting pronouncements that have not yet been adopted that the Company considers
material to its consolidated financial statements.

NOTE 3 – VARIABLE INTEREST ENTITY

In January 2018, the Company was deemed to be the primary beneficiary of the VIE that was performing the project
development activities related to the planned construction of a new natural gas-fired power plant. Consideration for the
Company’s engineering and financial support provided to the project included the right to build the power plant pursuant
to a turnkey engineering, procurement and construction (“EPC”) services contract that was negotiated and announced.

In the fourth quarter of Fiscal 2023, the Company was deemed to no longer be the primary beneficiary of the VIE, and
accordingly the VIE was deconsolidated. Prior to deconsolidation, the account balances of the VIE had been included in
the Company’s consolidated financial statements, including capitalized development costs that were included in property,
plant and equipment.

GPS had provided financing for development efforts pursuant to loans made to the VIE. The project owner was unable to
obtain the necessary equity financing for the project, and GPS ceased providing project development funding. During the
fourth quarter of Fiscal 2022, the Company recorded an impairment loss related to the capitalized development costs of
this project in the amount of $7.9 million, of which $2.5 million was attributed to the non-controlling interest. In March
2022, the project owner publicly announced the cancellation of this power plant project. In December 2022, prior to
deconsolidation, the VIE settled on amounts owed for certain impaired development costs and recognized a gain of $1.6
million recorded in selling, general and administrative expenses, all of which was attributed to the non-controlling interest.
The VIE distributed $0.7 million to the non-controlling interest. Subsequent to deconsolidation, the VIE provided payment
to GPS of $0.4 million for previously written off promissory notes. This loss reversal is included in selling, general and
administrative expenses in the consolidated statements of earnings.

- 66 -

NOTE 4 – REVENUES FROM CONTRACTS WITH CUSTOMERS

Variable Consideration

Amounts for contract variations for which the Company has project-owner directive for additional work or other scope

change, but not for the price associated with the corresponding additional effort, are included in the transaction price when

it is considered probable that the applicable costs will be recovered through a modification to the contract price. The effects

of any revision to a transaction price can be determined at any time and they could be material. The Company includes in

the corresponding transaction price an estimate of the amount that it expects to receive from a claim based on

management’s judgement regarding all reasonably available information. Once a final amount has been determined, the

transaction price may be revised again to reflect the final resolution. At January 31, 2023 and 2022, the aggregate amounts

of such contract variations included in the transaction prices that were still pending customer acceptance were $11.6

million and $7.5 million, respectively. Variations related to the Company’s contracts typically represent modifications to

the existing contracts and performance obligations and do not represent new performance obligations. Actual costs related

to any changes in the scope of the corresponding contract are expensed as they are incurred. Changes to total estimated

contract costs and losses, if any, are reflected in operating results for the period in which they are determined.

The Company’s long-term contracts typically have schedule dates and other performance objectives that if not achieved

could subject the Company to liquidated damages. These contract requirements generally relate to specified activities that

must be completed by an established date or by the achievement of a specified level of output or efficiency. Each applicable

contract defines the conditions under which a project owner may be entitled to any liquidated damages. At the outset of

each of the Company’s contracts, the potential amounts of liquidated damages typically are not subtracted from the

transaction price as the Company believes that it has included activities in its contract plan, and the associated forecasted

contract costs, that will be effective in preventing such damages. Of course, circumstances may change as the Company

executes the corresponding contract. The transaction price is reduced by an applicable amount when the Company no

longer considers it probable that a future reversal of revenues will not occur when the matter is resolved. The Company

considers potential liquidated damages, the costs of other related items and potential mitigating factors in determining the

adequacy of its regularly updated estimates of the amounts of gross profit expected to be earned on active projects.

In other cases, the Company may have the grounds to assert liquidated damages against subcontractors, suppliers, project

owners or other parties related to a project. Such circumstances may arise when the Company’s activities and progress are

adversely affected by delayed or damaged materials, challenges with equipment performance or other events out of the

Company’s control where the Company has rights to recourse, typically in the form of liquidated damages. In general, the

Company does not adjust the corresponding contract accounting until it is probable that the favorable cost relief will be

realized. Such adjustments have been and could be material.

The Company records adjustments to revenues and profits on contracts, including those associated with contract variations

and estimated cost changes, using a cumulative catch-up method. Under this method, the impact of an adjustment to the

amount of revenues recognized to date is recorded in the period that the adjustment is identified. Estimated variable

consideration amounts are determined by the Company based primarily on the single most likely amount in the range of

possible consideration amounts. Revenues and profits in future periods of contract performance are recognized using the

adjusted amounts of transaction price and estimated contract costs.

Remaining Unsatisfied Performance Obligations (“RUPO”)

Substantially all of the Company’s customer contracts include the right for customers to terminate contracts for

convenience. Current accounting guidance indicates that 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 RUPO when the

corresponding contracts include termination for convenience clauses without substantial penalties accruing to the

customers upon such terminations. In the application of this guidance, management assesses whether the nature of the

work being performed under contract is largely service-based and repetitive and should be considered a succession of one-

month contracts for the duration of the identified term of the contract. Predominantly, the Company’s customers contract

with the Company to construct assets, to fabricate materials or to perform emergency maintenance or outage services

where management believes a substantial penalty or cost would be incurred upon a termination for convenience.

Management believes that in substantially all cases, there would be substantial costs incurred by a customer if it terminated

a contract with the Company for convenience including the costs of terminating subcontracts, canceling purchase orders

- 67 -

corresponding restrictions. Forfeitures are recognized when they occur. Share-based compensation expense is included in

NOTE 4 – REVENUES FROM CONTRACTS WITH CUSTOMERS

selling, general and administrative expenses.

For each exercise of a stock option or each vesting of a restricted stock unit, the Company determines whether the

difference between the deduction for income tax reporting purposes created at that time and the related compensation

expense previously recorded for financial reporting purposes results in either an excess income tax benefit or an income

tax deficiency which is recognized, accordingly, as income tax benefit or expense in the corresponding consolidated

statement of earnings.

Fair Values – Current professional accounting guidance applies to all assets and liabilities that are being measured and

reported on a fair value basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a

liability in an orderly transaction between market participants at the measurement date in the principal or most

advantageous market. The carrying value amounts presented in the consolidated balance sheets for the Company’s current

assets, which primarily include cash and cash equivalents, short-term investments, accounts receivable and contract assets,

and its current liabilities are reasonable estimates of their fair values due to the short-term nature of these items.

The fair value amounts of reporting units (as needed for purposes of identifying goodwill impairment losses) are

determined by averaging valuations that are calculated using market-based and income-based approaches deemed

appropriate in the circumstances.

Foreign Currency Translation – The accompanying consolidated financial statements are presented in the currency of the

United States (“U.S. Dollars”). The effects of translating the financial statements of APC from its functional currency

(Euros) into the Company’s reporting currency (U.S. Dollars) are recognized as translation adjustments in accumulated

other comprehensive loss. There are no applicable income taxes. The translation of assets and liabilities to U.S. Dollars is

made at the exchange rate in effect at the consolidated balance sheet date, while equity accounts are translated at historical

rates. The translation of the statement of earnings amounts is made monthly based generally on the average currency

exchange rate for the month. Net foreign currency transaction gains and losses are included in other income, net, in the

consolidated statements of earnings. For Fiscal 2023, Fiscal 2022 and the year ended January 31, 2021 (“Fiscal 2021”),

such amounts were not material.

NOTE 2 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

There are no recently issued accounting pronouncements that have not yet been adopted that the Company considers

material to its consolidated financial statements.

NOTE 3 – VARIABLE INTEREST ENTITY

In January 2018, the Company was deemed to be the primary beneficiary of the VIE that was performing the project

development activities related to the planned construction of a new natural gas-fired power plant. Consideration for the

Company’s engineering and financial support provided to the project included the right to build the power plant pursuant

to a turnkey engineering, procurement and construction (“EPC”) services contract that was negotiated and announced.

In the fourth quarter of Fiscal 2023, the Company was deemed to no longer be the primary beneficiary of the VIE, and

accordingly the VIE was deconsolidated. Prior to deconsolidation, the account balances of the VIE had been included in

the Company’s consolidated financial statements, including capitalized development costs that were included in property,

plant and equipment.

GPS had provided financing for development efforts pursuant to loans made to the VIE. The project owner was unable to

obtain the necessary equity financing for the project, and GPS ceased providing project development funding. During the

fourth quarter of Fiscal 2022, the Company recorded an impairment loss related to the capitalized development costs of

this project in the amount of $7.9 million, of which $2.5 million was attributed to the non-controlling interest. In March

2022, the project owner publicly announced the cancellation of this power plant project. In December 2022, prior to

deconsolidation, the VIE settled on amounts owed for certain impaired development costs and recognized a gain of $1.6

million recorded in selling, general and administrative expenses, all of which was attributed to the non-controlling interest.

The VIE distributed $0.7 million to the non-controlling interest. Subsequent to deconsolidation, the VIE provided payment

to GPS of $0.4 million for previously written off promissory notes. This loss reversal is included in selling, general and

administrative expenses in the consolidated statements of earnings.

- 66 -

Variable Consideration

Amounts for contract variations for which the Company has project-owner directive for additional work or other scope
change, but not for the price associated with the corresponding additional effort, are included in the transaction price when
it is considered probable that the applicable costs will be recovered through a modification to the contract price. The effects
of any revision to a transaction price can be determined at any time and they could be material. The Company includes in
the corresponding transaction price an estimate of the amount that it expects to receive from a claim based on
management’s judgement regarding all reasonably available information. Once a final amount has been determined, the
transaction price may be revised again to reflect the final resolution. At January 31, 2023 and 2022, the aggregate amounts
of such contract variations included in the transaction prices that were still pending customer acceptance were $11.6
million and $7.5 million, respectively. Variations related to the Company’s contracts typically represent modifications to
the existing contracts and performance obligations and do not represent new performance obligations. Actual costs related
to any changes in the scope of the corresponding contract are expensed as they are incurred. Changes to total estimated
contract costs and losses, if any, are reflected in operating results for the period in which they are determined.

The Company’s long-term contracts typically have schedule dates and other performance objectives that if not achieved
could subject the Company to liquidated damages. These contract requirements generally relate to specified activities that
must be completed by an established date or by the achievement of a specified level of output or efficiency. Each applicable
contract defines the conditions under which a project owner may be entitled to any liquidated damages. At the outset of
each of the Company’s contracts, the potential amounts of liquidated damages typically are not subtracted from the
transaction price as the Company believes that it has included activities in its contract plan, and the associated forecasted
contract costs, that will be effective in preventing such damages. Of course, circumstances may change as the Company
executes the corresponding contract. The transaction price is reduced by an applicable amount when the Company no
longer considers it probable that a future reversal of revenues will not occur when the matter is resolved. The Company
considers potential liquidated damages, the costs of other related items and potential mitigating factors in determining the
adequacy of its regularly updated estimates of the amounts of gross profit expected to be earned on active projects.

In other cases, the Company may have the grounds to assert liquidated damages against subcontractors, suppliers, project
owners or other parties related to a project. Such circumstances may arise when the Company’s activities and progress are
adversely affected by delayed or damaged materials, challenges with equipment performance or other events out of the
Company’s control where the Company has rights to recourse, typically in the form of liquidated damages. In general, the
Company does not adjust the corresponding contract accounting until it is probable that the favorable cost relief will be
realized. Such adjustments have been and could be material.

The Company records adjustments to revenues and profits on contracts, including those associated with contract variations
and estimated cost changes, using a cumulative catch-up method. Under this method, the impact of an adjustment to the
amount of revenues recognized to date is recorded in the period that the adjustment is identified. Estimated variable
consideration amounts are determined by the Company based primarily on the single most likely amount in the range of
possible consideration amounts. Revenues and profits in future periods of contract performance are recognized using the
adjusted amounts of transaction price and estimated contract costs.

Remaining Unsatisfied Performance Obligations (“RUPO”)

Substantially all of the Company’s customer contracts include the right for customers to terminate contracts for
convenience. Current accounting guidance indicates that 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 RUPO when the
corresponding contracts include termination for convenience clauses without substantial penalties accruing to the
customers upon such terminations. In the application of this guidance, management assesses whether the nature of the
work being performed under contract is largely service-based and repetitive and should be considered a succession of one-
month contracts for the duration of the identified term of the contract. Predominantly, the Company’s customers contract
with the Company to construct assets, to fabricate materials or to perform emergency maintenance or outage services
where management believes a substantial penalty or cost would be incurred upon a termination for convenience.
Management believes that in substantially all cases, there would be substantial costs incurred by a customer if it terminated
a contract with the Company for convenience including the costs of terminating subcontracts, canceling purchase orders

- 67 -

recorded by APC related to COVID-19 and research and development cost reimbursement payments received from the

Irish and U.K. governments totaled approximately $2.8 million.

The Company has a substantial portion of its cash on deposit in the U.S. with the Bank. The Company also maintains

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. Management does not believe that the combined amount of the CDs and the cash deposited with the

Bank and cash balances maintained at financial institutions in Ireland and the U.K., in excess of government-insured levels,

represent material risks.

NOTE 6 – ACCOUNTS RECEIVABLE

The Company generally extends credit to a customer based on an evaluation of the customer’s financial condition without

requiring tangible collateral. Typically, invoices presented to domestic owners of EPC projects are paid within the same

month as the billing. Customer payments on other construction, fabrication and field service contracts are generally due

within 30 to 60 days of billing, depending on the negotiated terms of the corresponding contract. Exposure to losses on

accounts and notes receivable is expected to differ due to the varying financial condition of each customer. The Company

monitors its exposure to credit losses and may establish an allowance for credit losses based on management’s estimate of

the loss that is expected to occur over the remaining life of the particular financial asset. For Fiscal 2022, the amount of

the provision for credit losses expected by management was $2.4 million. The amounts of the provision for credit losses

for Fiscal 2023 and Fiscal 2021 were insignificant. The amounts of the allowance for credit losses as of January 31, 2023

and 2022, were $1.9 million and $2.4 million, respectively.

NOTE 7 – PURCHASED INTANGIBLE ASSETS

The Company used a qualitative approach to assess the goodwill of the GPS reporting unit, which is included in the power

industry services segment, as of November 1, 2022 and 2021. At each date, the Company concluded that it was more likely

than not that the fair value of the reporting unit exceeded the corresponding carrying value by a substantial margin.

Therefore, completion of the quantitative impairment assessment was considered to be unnecessary in each case.

Similarly, the Company used a qualitative approach to assess the goodwill of the TRC reporting unit, which represents the

industrial fabrication and field services segment, as of November 1, 2022 and concluded that it was more likely than not

that the fair value of the reporting unit exceeded the corresponding carrying value by a substantial margin. Therefore, the

completion of the quantitative impairment assessment was considered to be unnecessary. The Company performed a

goodwill impairment assessment for the reporting unit as of November 1, 2021 with the assistance of a professional

business valuation firm. It was determined that the fair value exceeded the corresponding carrying value at the assessment

date; accordingly, there was no impairment loss recorded as of that date.

During Fiscal 2022, the Company completed the acquisition of Lee Telecom, Inc. (“LTI”), which is located in Hampton,

Virginia. The results of operations of LTI are included in the Company’s telecommunications infrastructure services

segment. The acquisition represented a purchase of the assets of LTI, for which the Company paid $0.6 million cash,

including customer contracts and goodwill.

and returning or otherwise disposing of delivered materials and equipment. The value of RUPO on 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.

RUPO may differ from disclosed amounts of project backlog. As project backlog includes amounts of revenues that the
Company expects to recognize in the future under its EPC and other construction services contracts, RUPO represents the
unrecognized revenue value of these types of active contracts with customers as determined under the revenue recognition
rules of U.S. GAAP. The Company believes that its reported RUPO amount as of January 31, 2023 related to current
contracts is firm. The cancellation or termination of contracts for the convenience of customers has not had a material
adverse effect on our consolidated financial statements.

At January 31, 2023, the Company had RUPO of $0.8 billion. The largest portion of RUPO at any date usually relates to
EPC services and other construction contracts with typical performance durations of one to three years. However, the
length of certain significant construction projects may exceed three years. The Company estimates that approximately
54% of the RUPO amount at January 31, 2023 will be included in the amount of consolidated revenues that will be
recognized during the year ending January 31, 2024 (“Fiscal 2024”). Most of the remaining amount of the RUPO amount
at January 31, 2023 is expected to be recognized in revenues during the fiscal years ending January 31, 2025 (“Fiscal
2025”) and 2026 (“Fiscal 2026”).

It is important to note that estimates may be changed in the future and that cancellations, deferrals or scope adjustments
may occur related to work included in the amount of RUPO at January 31, 2023. Accordingly, RUPO may be adjusted to
reflect project delays and cancellations, revisions to project scope and cost and foreign currency exchange fluctuations, or
to revise estimates, as effects become known. Such adjustments to RUPO may materially reduce future revenues below
Company estimates.

Disaggregation of Revenues

The following table presents consolidated revenues for Fiscal 2023, Fiscal 2022 and Fiscal 2021, disaggregated by the
geographic area where the corresponding projects were located:

2023

2022

2021

United States
Republic of Ireland
United Kingdom
Other

Consolidated Revenues

$ 328,850 $ 456,211 $ 340,615
13,638
37,836
117
$ 455,040 $ 509,370 $ 392,206

68,242
57,948
—

35,044
17,521
594

Revenues for projects located in Ireland and the U.K. are attributed to the power industry services segment. The major
portions of the Company’s consolidated revenues are recognized pursuant to fixed-price contracts with most of the
remaining portions earned pursuant to time-and-material contracts. Consolidated revenues are disaggregated by reportable
segment in Note 17 to the consolidated financial statements.

NOTE 5 – CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

At January 31, 2023 and 2022, certain amounts of cash equivalents were invested in money market funds with net assets
invested in high-quality money market instruments. Such investments include U.S. Treasury obligations; obligations of
U.S. government agencies, authorities, instrumentalities or sponsored enterprises; and repurchase agreements secured by
U.S. government obligations. The Company considers all liquid investments with original maturities of three months or
less at the time of purchase to be cash equivalents.

Short-term investments as of January 31, 2023 and 2022 consisted solely of certificates of deposit purchased from Bank
of America (the “Bank”) with weighted average initial maturities of less than one year (the “CDs”). The Company has the
intent and ability to hold the CDs until they mature, and they are carried at cost plus accrued interest. At January 31, 2023
and 2022, the weighted average annual interest rates of the outstanding CDs were 2.5% and 0.1%, respectively.

Dividend income related to our money market investments and interest income on CDs is recorded when earned. Together,
the amounts represent the major portions of the net amount of other income except in Fiscal 2022 where other income

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and returning or otherwise disposing of delivered materials and equipment. The value of RUPO on customer contracts

represents an amount based on contracts or orders received from customers that the Company believes are firm and where

recorded by APC related to COVID-19 and research and development cost reimbursement payments received from the
Irish and U.K. governments totaled approximately $2.8 million.

the parties are acting in accordance with their respective obligations.

RUPO may differ from disclosed amounts of project backlog. As project backlog includes amounts of revenues that the

Company expects to recognize in the future under its EPC and other construction services contracts, RUPO represents the

unrecognized revenue value of these types of active contracts with customers as determined under the revenue recognition

rules of U.S. GAAP. The Company believes that its reported RUPO amount as of January 31, 2023 related to current

contracts is firm. The cancellation or termination of contracts for the convenience of customers has not had a material

adverse effect on our consolidated financial statements.

At January 31, 2023, the Company had RUPO of $0.8 billion. The largest portion of RUPO at any date usually relates to

EPC services and other construction contracts with typical performance durations of one to three years. However, the

length of certain significant construction projects may exceed three years. The Company estimates that approximately

54% of the RUPO amount at January 31, 2023 will be included in the amount of consolidated revenues that will be

recognized during the year ending January 31, 2024 (“Fiscal 2024”). Most of the remaining amount of the RUPO amount

at January 31, 2023 is expected to be recognized in revenues during the fiscal years ending January 31, 2025 (“Fiscal

2025”) and 2026 (“Fiscal 2026”).

It is important to note that estimates may be changed in the future and that cancellations, deferrals or scope adjustments

may occur related to work included in the amount of RUPO at January 31, 2023. Accordingly, RUPO may be adjusted to

reflect project delays and cancellations, revisions to project scope and cost and foreign currency exchange fluctuations, or

to revise estimates, as effects become known. Such adjustments to RUPO may materially reduce future revenues below

Company estimates.

Disaggregation of Revenues

The following table presents consolidated revenues for Fiscal 2023, Fiscal 2022 and Fiscal 2021, disaggregated by the

geographic area where the corresponding projects were located:

United States

Republic of Ireland

United Kingdom

Other

2023

2022

2021

$ 328,850 $ 456,211 $ 340,615

68,242

57,948

—

35,044

17,521

594

13,638

37,836

117

Consolidated Revenues

$ 455,040 $ 509,370 $ 392,206

Revenues for projects located in Ireland and the U.K. are attributed to the power industry services segment. The major

portions of the Company’s consolidated revenues are recognized pursuant to fixed-price contracts with most of the

remaining portions earned pursuant to time-and-material contracts. Consolidated revenues are disaggregated by reportable

segment in Note 17 to the consolidated financial statements.

NOTE 5 – CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

At January 31, 2023 and 2022, certain amounts of cash equivalents were invested in money market funds with net assets

invested in high-quality money market instruments. Such investments include U.S. Treasury obligations; obligations of

U.S. government agencies, authorities, instrumentalities or sponsored enterprises; and repurchase agreements secured by

U.S. government obligations. The Company considers all liquid investments with original maturities of three months or

less at the time of purchase to be cash equivalents.

Short-term investments as of January 31, 2023 and 2022 consisted solely of certificates of deposit purchased from Bank

of America (the “Bank”) with weighted average initial maturities of less than one year (the “CDs”). The Company has the

intent and ability to hold the CDs until they mature, and they are carried at cost plus accrued interest. At January 31, 2023

and 2022, the weighted average annual interest rates of the outstanding CDs were 2.5% and 0.1%, respectively.

Dividend income related to our money market investments and interest income on CDs is recorded when earned. Together,

the amounts represent the major portions of the net amount of other income except in Fiscal 2022 where other income

- 68 -

The Company has a substantial portion of its cash on deposit in the U.S. with the Bank. The Company also maintains
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. Management does not believe that the combined amount of the CDs and the cash deposited with the
Bank and cash balances maintained at financial institutions in Ireland and the U.K., in excess of government-insured levels,
represent material risks.

NOTE 6 – ACCOUNTS RECEIVABLE

The Company generally extends credit to a customer based on an evaluation of the customer’s financial condition without
requiring tangible collateral. Typically, invoices presented to domestic owners of EPC projects are paid within the same
month as the billing. Customer payments on other construction, fabrication and field service contracts are generally due
within 30 to 60 days of billing, depending on the negotiated terms of the corresponding contract. Exposure to losses on
accounts and notes receivable is expected to differ due to the varying financial condition of each customer. The Company
monitors its exposure to credit losses and may establish an allowance for credit losses based on management’s estimate of
the loss that is expected to occur over the remaining life of the particular financial asset. For Fiscal 2022, the amount of
the provision for credit losses expected by management was $2.4 million. The amounts of the provision for credit losses
for Fiscal 2023 and Fiscal 2021 were insignificant. The amounts of the allowance for credit losses as of January 31, 2023
and 2022, were $1.9 million and $2.4 million, respectively.

NOTE 7 – PURCHASED INTANGIBLE ASSETS

The Company used a qualitative approach to assess the goodwill of the GPS reporting unit, which is included in the power
industry services segment, as of November 1, 2022 and 2021. At each date, the Company concluded that it was more likely
than not that the fair value of the reporting unit exceeded the corresponding carrying value by a substantial margin.
Therefore, completion of the quantitative impairment assessment was considered to be unnecessary in each case.

Similarly, the Company used a qualitative approach to assess the goodwill of the TRC reporting unit, which represents the
industrial fabrication and field services segment, as of November 1, 2022 and concluded that it was more likely than not
that the fair value of the reporting unit exceeded the corresponding carrying value by a substantial margin. Therefore, the
completion of the quantitative impairment assessment was considered to be unnecessary. The Company performed a
goodwill impairment assessment for the reporting unit as of November 1, 2021 with the assistance of a professional
business valuation firm. It was determined that the fair value exceeded the corresponding carrying value at the assessment
date; accordingly, there was no impairment loss recorded as of that date.

During Fiscal 2022, the Company completed the acquisition of Lee Telecom, Inc. (“LTI”), which is located in Hampton,
Virginia. The results of operations of LTI are included in the Company’s telecommunications infrastructure services
segment. The acquisition represented a purchase of the assets of LTI, for which the Company paid $0.6 million cash,
including customer contracts and goodwill.

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The changes in the balances of the Company’s goodwill by reportable segment for Fiscal 2023 and Fiscal 2022 were as
follows:

NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following at January 31, 2023 and 2022:

Power

Industrial

Telecom

Services Services Services Totals

Goodwill as of February 1, 2021

$ 18,476 $ 9,467 $

Impairment losses
Acquisition of LTI

Goodwill as of January 31, 2022

Impairment losses

—
—
18,476
—

—
—
9,467
—

Goodwill as of January 31, 2023

$ 18,476 $ 9,467 $

— $ 27,943
—
—
90
90
28,033
90
—
—
90 $ 28,033

Balances, January 31, 2023:

Goodwill
Accumulated impairment losses
Goodwill as of January 31, 2023

$ 22,525 $ 14,365 $

(4,049)

(4,898)

$ 18,476 $ 9,467 $

90 $ 36,980
—
(8,947)
90 $ 28,033

As of January 31, 2023, the accumulated impairment losses for the power industry services segment relate solely to the
APC reporting unit.

For income tax reporting purposes, goodwill related to acquisitions in the approximate amount of $16.5 million is being
amortized on a straight-line basis over periods of 15 years. The other amounts of the Company’s goodwill are not
amortizable for income tax reporting purposes.

Purchased intangible assets, other than goodwill, consisted of the following elements as of January 31, 2023 and 2022:

Estimated
Useful Life Amounts Amortization Amounts Amounts Amortization Amounts

Gross

Net

January 31, 2023
Accumulated

January 31, 2022
Accumulated

Trade names
Process certifications
Customer relationships
Customer contracts

Totals

15 years $ 4,499 $
7 years
10 years
< 1 year

1,897
916
114
$ 7,426 $

2,150 $ 2,349 $ 8,142 $
—
1,897
260
656
—
114
4,817 $ 2,609 $ 11,050 $

1,897
916
95

5,492 $ 2,650
226
1,671
351
565
95
—
7,728 $ 3,322

The Company determined the fair values of the trade names using a relief-from-royalty methodology. The amounts related
to the trade name that become fully amortized during Fiscal 2023 was removed from the table. The Company believes that
the useful life of the remaining trade name represents the remaining number of years that such intangible asset is expected
to contribute to future cash flows. In order to value the process certifications, the Company applied a reproduction cost
method that required the estimation of the costs to replace the assets with certifications that would have the same
functionality or utility as the acquired assets. The fair value of the customer relationships was determined at the time of
the acquisition by discounting cash flows expected from existing significant customer relationships. Other than the addition
to customer contracts related to the acquisition of LTI, there were no additions to other purchased intangible assets during
Fiscal 2023 or Fiscal 2022. In addition, there were no impairment losses related to the assets for Fiscal 2023, Fiscal 2022
or Fiscal 2021. Amortization expense related to purchased intangible assets for Fiscal 2023, Fiscal 2022 and Fiscal 2021
were $0.7 million, $0.9 million and $0.9 million, respectively.

The future amounts of amortization related to purchased intangibles are presented below for the years ending January 31,

2024
2025
2026
2027
2028
Thereafter
Total

391
392
376
300
300
850
$ 2,609

- 70 -

Land and improvements

Building and improvements

Furniture, machinery and equipment

Trucks, trailers and other vehicles

Less - accumulated depreciation

Property, plant and equipment, net

United States

Republic of Ireland

United Kingdom

Property, plant and equipment, net

2023

2022

863 $

863

7,558

5,763

17,219

18,924

6,042

5,895

31,682

31,445

21,252

20,985

$ 10,430 $ 10,460

2023

2022

$ 8,522 $ 9,495

1,614

294

647

318

$ 10,430 $ 10,460

The following table presents property, plant and equipment, net, disaggregated by geographic area as of January 31, 2023

and 2022:

Depreciation for property, plant and equipment was $3.0 million, $3.4 million and $3.7 million for Fiscal 2023, Fiscal

2022 and Fiscal 2021, respectively, which amounts were charged substantially to selling, general and administrative

expenses in each year. The costs of maintenance and repairs were $2.4 million, $2.1 million and $1.9 million for Fiscal

2023, Fiscal 2022 and Fiscal 2021, respectively, which amounts were charged substantially to selling, general and

administrative expenses each year as well.

NOTE 9 – FINANCING ARRANGEMENTS

During April 2021, the Company amended its Amended and Restated Replacement Credit Agreement with the Bank (the

“Credit Agreement”). The amendment extended the expiration date of the Credit Agreement to May 31, 2024 and reduced

the borrowing rate. The Credit Agreement includes the following features, among others: a lending commitment of $50.0

million including a revolving loan with interest at the 30-day LIBOR plus 1.6% (reduced from 2.0%), and an accordion

feature which allows for an additional commitment amount of $10.0 million, subject to certain conditions. Subsequent to

January 31, 2023, the Company entered into the Second Amendment to the Credit Agreement with the Bank (see Note

19).

contracts.

The Company may also use the borrowing ability to cover other credit instruments issued by the Bank for the Company’s

use in the ordinary course of business as defined in the Credit Agreement. At January 31, 2023, the Company did not have

any borrowings outstanding under the Credit Agreement. However, the Bank has issued letters of credit in the total

outstanding amount of $8.8 million at January 31, 2023, in support of the activities of APC under existing customer

The Company has pledged the majority of its assets to secure its financing arrangements. The Bank’s consent is not

required for acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The

Bank requires that the Company comply with certain financial covenants at its fiscal year-end and at each of its fiscal

quarter-ends. The Credit Agreement includes other terms, covenants and events of default that are customary for a credit

facility of its size and nature, including a requirement to achieve positive adjusted earnings before interest, taxes,

depreciation and amortization, as defined, over each rolling twelve-month measurement period. As of January 31, 2023,

the Company was in compliance with the covenants of the Credit Agreement.

NOTE 10 – COMMITMENTS

Leases

The Company’s leases are primarily operating leases that cover office space, expiring on various dates through December

2031, and certain equipment used by the Company in the performance of its construction services contracts. Some of these

- 71 -

follows:

Goodwill as of February 1, 2021

Impairment losses

Acquisition of LTI

Goodwill as of January 31, 2022

Impairment losses

Balances, January 31, 2023:

Goodwill

Accumulated impairment losses

Goodwill as of January 31, 2023

Power

Industrial

Telecom

Services Services Services Totals

$ 18,476 $ 9,467 $

— $ 27,943

—

18,476

9,467

28,033

—

$ 22,525 $ 14,365 $

(4,049)

(4,898)

90 $ 36,980

—

(8,947)

$ 18,476 $ 9,467 $

90 $ 28,033

Goodwill as of January 31, 2023

$ 18,476 $ 9,467 $

90 $ 28,033

As of January 31, 2023, the accumulated impairment losses for the power industry services segment relate solely to the

APC reporting unit.

For income tax reporting purposes, goodwill related to acquisitions in the approximate amount of $16.5 million is being

amortized on a straight-line basis over periods of 15 years. The other amounts of the Company’s goodwill are not

amortizable for income tax reporting purposes.

Purchased intangible assets, other than goodwill, consisted of the following elements as of January 31, 2023 and 2022:

Estimated

Gross

Accumulated

Net

Gross

Accumulated

Net

Useful Life Amounts Amortization Amounts Amounts Amortization Amounts

January 31, 2023

January 31, 2022

Trade names

Process certifications

Customer relationships

Customer contracts

Totals

15 years $ 4,499 $

2,150 $ 2,349 $ 8,142 $

5,492 $ 2,650

7 years

1,897

10 years

< 1 year

916

114

1,897

656

114

—

1,897

260

—

916

1,671

565

—

226

351

$ 7,426 $

4,817 $ 2,609 $ 11,050 $

7,728 $ 3,322

The Company determined the fair values of the trade names using a relief-from-royalty methodology. The amounts related

to the trade name that become fully amortized during Fiscal 2023 was removed from the table. The Company believes that

the useful life of the remaining trade name represents the remaining number of years that such intangible asset is expected

to contribute to future cash flows. In order to value the process certifications, the Company applied a reproduction cost

method that required the estimation of the costs to replace the assets with certifications that would have the same

functionality or utility as the acquired assets. The fair value of the customer relationships was determined at the time of

the acquisition by discounting cash flows expected from existing significant customer relationships. Other than the addition

to customer contracts related to the acquisition of LTI, there were no additions to other purchased intangible assets during

Fiscal 2023 or Fiscal 2022. In addition, there were no impairment losses related to the assets for Fiscal 2023, Fiscal 2022

or Fiscal 2021. Amortization expense related to purchased intangible assets for Fiscal 2023, Fiscal 2022 and Fiscal 2021

were $0.7 million, $0.9 million and $0.9 million, respectively.

The future amounts of amortization related to purchased intangibles are presented below for the years ending January 31,

2024

2025

2026

2027

2028

Thereafter

Total

391

392

376

300

850

$ 2,609

- 70 -

The changes in the balances of the Company’s goodwill by reportable segment for Fiscal 2023 and Fiscal 2022 were as

NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following at January 31, 2023 and 2022:

2023

2022

Land and improvements
Building and improvements
Furniture, machinery and equipment
Trucks, trailers and other vehicles

Less - accumulated depreciation

Property, plant and equipment, net

863 $

863
5,763
18,924
5,895
31,445
20,985
$ 10,430 $ 10,460

7,558
17,219
6,042
31,682
21,252

The following table presents property, plant and equipment, net, disaggregated by geographic area as of January 31, 2023
and 2022:

United States
Republic of Ireland
United Kingdom

Property, plant and equipment, net

2023

2022

$ 8,522 $ 9,495
647
318
$ 10,430 $ 10,460

1,614
294

Depreciation for property, plant and equipment was $3.0 million, $3.4 million and $3.7 million for Fiscal 2023, Fiscal
2022 and Fiscal 2021, respectively, which amounts were charged substantially to selling, general and administrative
expenses in each year. The costs of maintenance and repairs were $2.4 million, $2.1 million and $1.9 million for Fiscal
2023, Fiscal 2022 and Fiscal 2021, respectively, which amounts were charged substantially to selling, general and
administrative expenses each year as well.

NOTE 9 – FINANCING ARRANGEMENTS

During April 2021, the Company amended its Amended and Restated Replacement Credit Agreement with the Bank (the
“Credit Agreement”). The amendment extended the expiration date of the Credit Agreement to May 31, 2024 and reduced
the borrowing rate. The Credit Agreement includes the following features, among others: a lending commitment of $50.0
million including a revolving loan with interest at the 30-day LIBOR plus 1.6% (reduced from 2.0%), and an accordion
feature which allows for an additional commitment amount of $10.0 million, subject to certain conditions. Subsequent to
January 31, 2023, the Company entered into the Second Amendment to the Credit Agreement with the Bank (see Note
19).

The Company may also use the borrowing ability to cover other credit instruments issued by the Bank for the Company’s
use in the ordinary course of business as defined in the Credit Agreement. At January 31, 2023, the Company did not have
any borrowings outstanding under the Credit Agreement. However, the Bank has issued letters of credit in the total
outstanding amount of $8.8 million at January 31, 2023, in support of the activities of APC under existing customer
contracts.

The Company has pledged the majority of its assets to secure its financing arrangements. The Bank’s consent is not
required for acquisitions, divestitures, cash dividends or significant investments as long as certain conditions are met. The
Bank requires that the Company comply with certain financial covenants at its fiscal year-end and at each of its fiscal
quarter-ends. The Credit Agreement includes other terms, covenants and events of default that are customary for a credit
facility of its size and nature, including a requirement to achieve positive adjusted earnings before interest, taxes,
depreciation and amortization, as defined, over each rolling twelve-month measurement period. As of January 31, 2023,
the Company was in compliance with the covenants of the Credit Agreement.

NOTE 10 – COMMITMENTS

Leases

The Company’s leases are primarily operating leases that cover office space, expiring on various dates through December
2031, and certain equipment used by the Company in the performance of its construction services contracts. Some of these

- 71 -

equipment leases may be embedded in broader agreements with subcontractors or construction equipment suppliers. The
Company has no material finance leases. None of the operating leases includes significant amounts for incentives, rent
holidays or price escalations. Under certain leases, the Company is obligated to pay property taxes, insurance, and
maintenance costs. For leases that contain both lease and non-lease components, fixed and variable payments are allocated
to each component relative to observable or estimated standalone prices.

Operating lease right-of-use assets and associated lease liabilities are recorded in the balance sheet at the lease
commencement date based on the present value of future minimum lease payments to be made over the expected lease
term. As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s
incremental borrowing rate at the commencement date in determining the present value of future payments. The expected
lease term includes any option to extend or to terminate the lease when it is reasonably certain the Company will exercise
such option. Right-of-use assets at January 31, 2023 and 2022, were $4.8 million and $3.6 million, respectively.

Operating lease expense amounts are recorded on a straight-line basis over the expected lease terms. Operating lease
expenses for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $2.6 million, $3.4 million and $1.8 million, respectively.
Operating lease payments for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $2.6 million, $3.3 million and $2.0 million,
respectively.

The following is a schedule of future minimum lease payments for the operating leases that were recognized in the
consolidated balance sheet as of January 31, 2023:

Years Ending January 31,

2024
2025
2026
2027
2028
Thereafter

Total lease payments

Less: imputed interest

Present value of lease payments

Less current portion (included in accrued expenses)

Non-current portion (included in noncurrent liabilities)

$ 1,653
1,205
999
231
213
816
5,117
335
4,782
1,567
$ 3,215

For operating leases as of January 31, 2023, the weighted average lease term and weighted average discount rate was 58
months and 3.7%, respectively. For operating leases as of January 31, 2022, the weighted average lease term and weighted
average discount rate was 46 months and 2.5%, respectively. The aggregate amounts of operating lease right-of-use assets
added in exchange for lease obligations during Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $3.7 million, $3.5 million
and $3.0 million, respectively.

The Company also uses equipment and occupies other facilities under short-term rental agreements. The Company
classifies as short-term leases any lease with an initial noncancellable term of twelve months or less that does not include
an option to purchase the underlying asset that the Company is reasonably certain to exercise. Rent expense amounts
incurred under short-term rentals were $11.3 million, $9.6 million and $6.1 million for Fiscal 2023, Fiscal 2022 and Fiscal
2021, respectively. Right-of-use assets and lease liabilities related to short-term leases are excluded from the consolidated
balance sheets.

Performance Bonds and Guarantees

In the normal course of business and for certain major projects, the Company may be required to obtain surety or
performance bonding, to cause the issuance of letters of credit, or to provide parent company guarantees (or some
combination thereof) in order to provide performance assurances to clients on behalf of its contractor subsidiaries. As these
subsidiaries are wholly-owned, any actual liability is ordinarily reflected in the financial statement account balances
determined pursuant to the Company’s accounting for contracts with customers. When sufficient information about claims
on guaranteed or bonded projects would be available and monetary damages or other costs or losses would be determined
to be probable, the Company would record such losses. Any such amounts that may be required to be paid in excess of the

estimated costs to complete contracts in progress as of January 31, 2023 are not estimable. Surety bonds are considered to

be prepaid costs and such costs are amortized to cost of revenues using the straight-line method over the term of the project.

As of January 31, 2023, the estimated amount of the Company’s unsatisfied bonded performance obligations, covering all

of its subsidiaries, was approximately $0.6 billion. As of January 31, 2023, the outstanding amount of bonds covering

other risks, including warranty obligations related to completed activities, was not material. Not all of our projects require

As of January 31, 2023, the Company had also provided a financial guarantee, subject to certain terms and conditions, in

the amount of $3.6 million in support of certain business development efforts. A liability was established for the estimated

loss related to this guarantee during Fiscal 2022.

bonding.

Warranties

The Company generally provides assurance-type warranties for work performed under its construction contracts. The

warranties cover defects in equipment, materials, design or workmanship, and most warranty periods typically run from

nine to twenty-four months after the completion of construction on a particular project. Because of the nature of the

Company’s projects, including project owner inspections of the work both during construction and prior to substantial

completion, the Company has not experienced material unexpected warranty costs in the past. Warranty costs are estimated

based on experience with the type of work and any known risks relative to each completed project. The accruals of

liabilities, which are established to cover estimated future warranty costs, are recorded as the contracted work is performed,

and they are included in the amounts of accrued expenses in the consolidated balances sheets. The liability amounts may

be periodically adjusted to reflect changes in the estimated size and number of expected warranty claims.

Employee Benefit Plans

The Company maintains 401(k) savings plans pursuant to which the Company makes discretionary contributions for the

eligible and participating employees. The Company’s expense amounts related to these defined contribution plans were

approximately $2.7 million, $2.3 million and $1.9 million for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. The

Company also maintains nonqualified plans whereunder the payments of certain amounts of incentive compensation

earned by key employees are deferred for periods of four to seven years; payments are conditioned on continuous

employment.

NOTE 11 – LEGAL CONTINGENCIES

In the normal course of business, the Company may have pending claims and legal proceedings. In the opinion of

management, based on information available at this time, there are no current claims and proceedings that could have a

material adverse effect on the consolidated financial statements as of January 31, 2023. During Fiscal 2022, GPS settled

major litigation as described below.

In January 2019, GPS filed a lawsuit against Exelon West Medway II, LLC and Exelon Generation Company, LLC

(together referred to as “Exelon”) in the U.S. District Court for the Southern District of New York for Exelon’s breach of

contract and failure to remedy various conditions which negatively impacted the schedule and the costs associated with

the construction by GPS of a gas-fired power plant for Exelon in Massachusetts. In March 2019, Exelon provided GPS

with a notice intending to terminate the EPC contract under which GPS had been providing services to Exelon. At that

time, the construction project was nearly complete and both of the power generation units included in the plant had

successfully reached first fire. Nevertheless, and among other actions, Exelon provided contractual notice requiring GPS

to vacate the construction site. Exelon asserted that GPS failed to fulfill certain obligations under the contract and was in

default, withholding payments from GPS on invoices rendered to Exelon in accordance with the terms of the contract

between the parties.

In September 2021, GPS reached a final settlement of all outstanding claims between the parties resulting in Exelon making

a payment to GPS in the amount of $27.5 million, which was in excess of the previously reported total amount of

receivables and contract assets. The excess amount was included in revenues for Fiscal 2022.

- 72 -

- 73 -

equipment leases may be embedded in broader agreements with subcontractors or construction equipment suppliers. The

Company has no material finance leases. None of the operating leases includes significant amounts for incentives, rent

holidays or price escalations. Under certain leases, the Company is obligated to pay property taxes, insurance, and

maintenance costs. For leases that contain both lease and non-lease components, fixed and variable payments are allocated

to each component relative to observable or estimated standalone prices.

Operating lease right-of-use assets and associated lease liabilities are recorded in the balance sheet at the lease

commencement date based on the present value of future minimum lease payments to be made over the expected lease

term. As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s

incremental borrowing rate at the commencement date in determining the present value of future payments. The expected

lease term includes any option to extend or to terminate the lease when it is reasonably certain the Company will exercise

such option. Right-of-use assets at January 31, 2023 and 2022, were $4.8 million and $3.6 million, respectively.

Operating lease expense amounts are recorded on a straight-line basis over the expected lease terms. Operating lease

expenses for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $2.6 million, $3.4 million and $1.8 million, respectively.

Operating lease payments for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $2.6 million, $3.3 million and $2.0 million,

respectively.

The following is a schedule of future minimum lease payments for the operating leases that were recognized in the

consolidated balance sheet as of January 31, 2023:

Years Ending January 31,

2024

2025

2026

2027

2028

Thereafter

Total lease payments

Less: imputed interest

Present value of lease payments

Less current portion (included in accrued expenses)

Non-current portion (included in noncurrent liabilities)

$ 1,653

1,205

999

231

213

816

5,117

335

4,782

1,567

$ 3,215

For operating leases as of January 31, 2023, the weighted average lease term and weighted average discount rate was 58

months and 3.7%, respectively. For operating leases as of January 31, 2022, the weighted average lease term and weighted

average discount rate was 46 months and 2.5%, respectively. The aggregate amounts of operating lease right-of-use assets

added in exchange for lease obligations during Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $3.7 million, $3.5 million

and $3.0 million, respectively.

The Company also uses equipment and occupies other facilities under short-term rental agreements. The Company

classifies as short-term leases any lease with an initial noncancellable term of twelve months or less that does not include

an option to purchase the underlying asset that the Company is reasonably certain to exercise. Rent expense amounts

incurred under short-term rentals were $11.3 million, $9.6 million and $6.1 million for Fiscal 2023, Fiscal 2022 and Fiscal

2021, respectively. Right-of-use assets and lease liabilities related to short-term leases are excluded from the consolidated

balance sheets.

Performance Bonds and Guarantees

In the normal course of business and for certain major projects, the Company may be required to obtain surety or

performance bonding, to cause the issuance of letters of credit, or to provide parent company guarantees (or some

combination thereof) in order to provide performance assurances to clients on behalf of its contractor subsidiaries. As these

subsidiaries are wholly-owned, any actual liability is ordinarily reflected in the financial statement account balances

determined pursuant to the Company’s accounting for contracts with customers. When sufficient information about claims

on guaranteed or bonded projects would be available and monetary damages or other costs or losses would be determined

to be probable, the Company would record such losses. Any such amounts that may be required to be paid in excess of the

- 72 -

estimated costs to complete contracts in progress as of January 31, 2023 are not estimable. Surety bonds are considered to
be prepaid costs and such costs are amortized to cost of revenues using the straight-line method over the term of the project.

As of January 31, 2023, the Company had also provided a financial guarantee, subject to certain terms and conditions, in
the amount of $3.6 million in support of certain business development efforts. A liability was established for the estimated
loss related to this guarantee during Fiscal 2022.

Warranties

The Company generally provides assurance-type warranties for work performed under its construction contracts. The
warranties cover defects in equipment, materials, design or workmanship, and most warranty periods typically run from
nine to twenty-four months after the completion of construction on a particular project. Because of the nature of the
Company’s projects, including project owner inspections of the work both during construction and prior to substantial
completion, the Company has not experienced material unexpected warranty costs in the past. Warranty costs are estimated
based on experience with the type of work and any known risks relative to each completed project. The accruals of
liabilities, which are established to cover estimated future warranty costs, are recorded as the contracted work is performed,
and they are included in the amounts of accrued expenses in the consolidated balances sheets. The liability amounts may
be periodically adjusted to reflect changes in the estimated size and number of expected warranty claims.

Employee Benefit Plans

The Company maintains 401(k) savings plans pursuant to which the Company makes discretionary contributions for the
eligible and participating employees. The Company’s expense amounts related to these defined contribution plans were
approximately $2.7 million, $2.3 million and $1.9 million for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. The
Company also maintains nonqualified plans whereunder the payments of certain amounts of incentive compensation
earned by key employees are deferred for periods of four to seven years; payments are conditioned on continuous
employment.

NOTE 11 – LEGAL CONTINGENCIES

In the normal course of business, the Company may have pending claims and legal proceedings. In the opinion of
management, based on information available at this time, there are no current claims and proceedings that could have a
material adverse effect on the consolidated financial statements as of January 31, 2023. During Fiscal 2022, GPS settled
major litigation as described below.

In January 2019, GPS filed a lawsuit against Exelon West Medway II, LLC and Exelon Generation Company, LLC
(together referred to as “Exelon”) in the U.S. District Court for the Southern District of New York for Exelon’s breach of
contract and failure to remedy various conditions which negatively impacted the schedule and the costs associated with
the construction by GPS of a gas-fired power plant for Exelon in Massachusetts. In March 2019, Exelon provided GPS
with a notice intending to terminate the EPC contract under which GPS had been providing services to Exelon. At that
time, the construction project was nearly complete and both of the power generation units included in the plant had
successfully reached first fire. Nevertheless, and among other actions, Exelon provided contractual notice requiring GPS
to vacate the construction site. Exelon asserted that GPS failed to fulfill certain obligations under the contract and was in
default, withholding payments from GPS on invoices rendered to Exelon in accordance with the terms of the contract
between the parties.

In September 2021, GPS reached a final settlement of all outstanding claims between the parties resulting in Exelon making
a payment to GPS in the amount of $27.5 million, which was in excess of the previously reported total amount of
receivables and contract assets. The excess amount was included in revenues for Fiscal 2022.

- 73 -

NOTE 12 – STOCK-BASED COMPENSATION

On June 23, 2020, the Company’s stockholders approved the adoption of the 2020 Stock Plan (the “2020 Plan”), and the
allocation of 500,000 shares of the Company’s common stock for issuance thereunder. The Company’s board of directors
may make share-based awards under the 2020 Plan to officers, directors and key employees. The 2020 Plan replaced the
2011 Stock Plan (the “2011 Plan”); the Company’s authority to make awards pursuant to the 2011 Plan expired on July
19, 2021. Together, the 2020 Plan and the 2011 Plan are hereinafter referred to as the “Stock Plans.”

The features of the 2020 Plan are similar to those included in the 2011 Plan. Awards may include nonqualified stock
options, incentive stock options, and restricted or unrestricted stock. The specific provisions for each award are
documented in a written agreement between the Company and the awardee. All stock options awarded under Stock Plans
have exercise prices per share at least equal to the market value per share of the Company’s common stock on the date of
grant. Stock options have terms no longer than ten years. Typically, stock options are awarded with one-third of each stock
option vesting on each of the first three anniversaries of the corresponding award date.

As of January 31, 2023, there were 1,938,219 shares of common stock reserved for issuance under the Stock Plans; this
number includes 188,879 shares of common stock available for future awards under the 2020 Plan.

Stock Options

A summary of stock option activity under the Company’s approved Stock Plans for Fiscal 2023, Fiscal 2022 and Fiscal
2021, along with corresponding weighted average per share amounts, are presented below (shares in thousands):

Weighted
Average

Weighted
Remaining Average

Weighted

Outstanding, February 1, 2020

Granted
Exercised
Forfeited

Outstanding, January 31, 2021

Granted
Exercised
Forfeited

Outstanding, January 31, 2022

Granted
Exercised
Forfeited

Outstanding, January 31, 2023

Average Exercise Contractual Grant Date
Term (years) Fair Value
7.18 $ 11.06

Price

Shares
1,271 $
242 $
(68) $
(40) $
1,405 $
67 $
(42) $
(25) $
1,405 $
73 $
(2) $
(36) $
1,440 $

44.83
37.26
24.17
57.44
44.17
45.47
34.01
54.28
44.35
36.27
32.68
48.70
43.84

6.90 $ 10.39

6.17 $ 10.31

5.46 $ 10.11

The changes in the number of non-vested options to purchase shares of common stock for Fiscal 2023, Fiscal 2022 and

Fiscal 2021, and the weighted average fair value per share for each number, are presented below (shares in thousands):

Non-vested, February 1, 2020

Non-vested, January 31, 2021

Non-vested, January 31, 2022

Granted

Vested

Forfeitures

Granted

Vested

Forfeitures

Granted

Vested

Forfeitures

Non-vested, January 31, 2023

Weighted

Average

Grant Date

Shares Fair Value

448 $

242 $

(207) $

(16) $

467 $

67 $

(231) $

(8) $

295 $

73 $

(174) $

— $

194 $

9.74

6.53

9.98

8.52

8.01

8.54

8.46

7.05

7.80

7.19

8.15

5.68

7.27

The total intrinsic value amounts of the stock options exercised during Fiscal 2022 and Fiscal 2021 were $0.6 million and

$1.5 million, respectively; the corresponding amount during Fiscal 2023 was insignificant. At January 31, 2023, the

aggregate market value amounts of the shares of common stock subject to outstanding and exercisable stock options that

were “in-the-money” exceeded the aggregate exercise prices of such options by $3.3 million and $2.7 million, respectively.

Restricted Stock Units

The Company awards restricted stock units to senior executives, members of the Company’s board of directors and certain

other employees. Awardees earn the right to receive shares of common stock as certain performance goals are achieved

and/or service periods are satisfied. Each restricted stock unit expires on the three-year anniversary of the award.

During Fiscal 2023, the Company awarded performance-based restricted stock units covering 52,000 shares of common

stock, renewable energy performance-based restricted stock units covering 7,500 shares of common stock, time-based

restricted stock units covering 84,750 shares of common stock, and 2,621 shares based on the amount of cash dividends

deemed paid on shares earned pursuant to the awards. During Fiscal 2022, the Company awarded 49,000 performance-

based restricted stock units, 10,000 renewable energy performance-based restricted stock units, 82,250 time-based

restricted stock units and 4,471 shares based on the amount of cash dividends deemed paid on shares earned pursuant to

the awards. During Fiscal 2021, the Company awarded 45,000 performance-based restricted stock units to senior

executives.

Exercisable, January 31, 2022
Exercisable, January 31, 2023

1,110 $
1,246 $

45.19
44.62

5.56 $ 10.98
4.99 $ 10.56

- 74 -

- 75 -

The changes in the number of non-vested options to purchase shares of common stock for Fiscal 2023, Fiscal 2022 and
Fiscal 2021, and the weighted average fair value per share for each number, are presented below (shares in thousands):

Non-vested, February 1, 2020

Granted
Vested
Forfeitures

Non-vested, January 31, 2021

Granted
Vested
Forfeitures

Non-vested, January 31, 2022

Granted
Vested
Forfeitures

Non-vested, January 31, 2023

Weighted
Average
Grant Date
Shares Fair Value
9.74
6.53
9.98
8.52
8.01
8.54
8.46
7.05
7.80
7.19
8.15
5.68
7.27

448 $
242 $
(207) $
(16) $
467 $
67 $
(231) $
(8) $
295 $
73 $
(174) $
— $
194 $

The total intrinsic value amounts of the stock options exercised during Fiscal 2022 and Fiscal 2021 were $0.6 million and
$1.5 million, respectively; the corresponding amount during Fiscal 2023 was insignificant. At January 31, 2023, the
aggregate market value amounts of the shares of common stock subject to outstanding and exercisable stock options that
were “in-the-money” exceeded the aggregate exercise prices of such options by $3.3 million and $2.7 million, respectively.

Outstanding, February 1, 2020

1,271 $

7.18 $ 11.06

Restricted Stock Units

The Company awards restricted stock units to senior executives, members of the Company’s board of directors and certain
other employees. Awardees earn the right to receive shares of common stock as certain performance goals are achieved
and/or service periods are satisfied. Each restricted stock unit expires on the three-year anniversary of the award.

During Fiscal 2023, the Company awarded performance-based restricted stock units covering 52,000 shares of common
stock, renewable energy performance-based restricted stock units covering 7,500 shares of common stock, time-based
restricted stock units covering 84,750 shares of common stock, and 2,621 shares based on the amount of cash dividends
deemed paid on shares earned pursuant to the awards. During Fiscal 2022, the Company awarded 49,000 performance-
based restricted stock units, 10,000 renewable energy performance-based restricted stock units, 82,250 time-based
restricted stock units and 4,471 shares based on the amount of cash dividends deemed paid on shares earned pursuant to
the awards. During Fiscal 2021, the Company awarded 45,000 performance-based restricted stock units to senior
executives.

NOTE 12 – STOCK-BASED COMPENSATION

On June 23, 2020, the Company’s stockholders approved the adoption of the 2020 Stock Plan (the “2020 Plan”), and the

allocation of 500,000 shares of the Company’s common stock for issuance thereunder. The Company’s board of directors

may make share-based awards under the 2020 Plan to officers, directors and key employees. The 2020 Plan replaced the

2011 Stock Plan (the “2011 Plan”); the Company’s authority to make awards pursuant to the 2011 Plan expired on July

19, 2021. Together, the 2020 Plan and the 2011 Plan are hereinafter referred to as the “Stock Plans.”

The features of the 2020 Plan are similar to those included in the 2011 Plan. Awards may include nonqualified stock

options, incentive stock options, and restricted or unrestricted stock. The specific provisions for each award are

documented in a written agreement between the Company and the awardee. All stock options awarded under Stock Plans

have exercise prices per share at least equal to the market value per share of the Company’s common stock on the date of

grant. Stock options have terms no longer than ten years. Typically, stock options are awarded with one-third of each stock

option vesting on each of the first three anniversaries of the corresponding award date.

As of January 31, 2023, there were 1,938,219 shares of common stock reserved for issuance under the Stock Plans; this

number includes 188,879 shares of common stock available for future awards under the 2020 Plan.

Stock Options

A summary of stock option activity under the Company’s approved Stock Plans for Fiscal 2023, Fiscal 2022 and Fiscal

2021, along with corresponding weighted average per share amounts, are presented below (shares in thousands):

Weighted

Average

Weighted

Remaining Average

Average Exercise Contractual Grant Date

Price

Term (years) Fair Value

Granted

Exercised

Forfeited

Granted

Exercised

Forfeited

Granted

Exercised

Forfeited

242 $

(68) $

(40) $

67 $

(42) $

(25) $

1,405 $

73 $

(2) $

(36) $

1,440 $

44.83

37.26

24.17

57.44

44.17

45.47

34.01

54.28

44.35

36.27

32.68

48.70

43.84

Outstanding, January 31, 2021

1,405 $

6.90 $ 10.39

Outstanding, January 31, 2022

6.17 $ 10.31

Outstanding, January 31, 2023

5.46 $ 10.11

Exercisable, January 31, 2022

Exercisable, January 31, 2023

1,110 $

1,246 $

45.19

44.62

5.56 $ 10.98

4.99 $ 10.56

- 74 -

- 75 -

The changes in the maximum number of shares of common stock issuable pursuant to outstanding restricted stock units
for Fiscal 2023, Fiscal 2022 and Fiscal 2021 and the weighted average fair value per share for each restricted stock unit,
are presented below (shares in thousands):

NOTE 13 – INCOME TAXES

Reconciliations of Income Tax Expense

Outstanding, February 1, 2020

Awarded

Outstanding, January 31, 2021

Awarded
Issued

Outstanding, January 31, 2022

Awarded
Issued
Forfeited

Outstanding, January 31, 2023

Weighted
Average
Grant Date
Shares Fair Value
72 $ 19.44
45 $ 14.95
117 $ 17.71
145 $ 39.52
(40) $ 20.64
222 $ 31.48
147 $ 29.26
(37) $ 23.44
(22) $ 22.88
310 $ 30.80

Fair Value

The fair value amounts of stock options and restricted stock units are recorded as stock compensation expense on a straight-
line basis over the terms of the corresponding awards. Expense amounts related to stock awards were $4.0 million, $3.5
million and $2.9 million for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. At January 31, 2023, there was $6.7
million in unrecognized compensation cost related to outstanding stock awards that the Company expects to expense over
the next three years.

The Company estimates the weighted average fair value of stock options on the date of award using a Black-Scholes option
pricing model. The Company believes that its past stock option exercise activity is sufficient to provide it with a reasonable
basis upon which to estimate the expected life of newly awarded stock options. Risk-free interest rates are determined by
blending the rates for three-to-five-year U.S. Treasury notes. The dividend yield is based on the Company’s current annual
regular dividend amount. The calculations of the expected volatility factors are based on the monthly closing prices of the
Company’s common stock for the five-year periods preceding the dates of the corresponding awards.

The fair value amounts for the performance-based restricted stock units have been determined by using the per share
market price of the common stock on the dates of award and by assigning equal probabilities to the thirteen possible payout
outcomes at the end of each three-year term, and by computing the weighted average of the outcome amounts. For each
award, the estimated fair value amount was calculated to be 88.5% of the aggregate market value of the target number
(which is 50% of the maximum number) of shares on the award date. For the renewable performance-based restricted
stock units, the fair value of each award was determined as the aggregate market price for the number of shares deemed to
be probable of vesting based on the performance criteria. For the time-based restricted stock units, the fair value of each
award equals the aggregate market price for the number of shares covered by each award on the date of award.

- 76 -

The components of the amounts of income tax expense for Fiscal 2023, Fiscal 2022 and Fiscal 2021 are presented below:

Current:

Federal

State

Foreign

Deferred:

Federal

State

Foreign

Income tax expense

2023

2022

2021

$ 12,776 $ 10,921 $ (6,805)

1,012

740

643

—

151

14,528

11,564

(6,571)

(803)

(2,452)

(3,232)

(341)

7,732

133

—

(75)

(12)

(208)

7,645

$ 11,296 $ 11,356 $ 1,074

The amounts of interest and penalties related to income taxes that were incurred by the Company during Fiscal 2023,

Fiscal 2022 and Fiscal 2021 were not material.

The Company’s income tax expense amounts differed from corresponding amounts computed by applying the federal

corporate income tax rate of 21% to the income before income taxes for Fiscal 2023, Fiscal 2022 and Fiscal 2021 as

presented below:

Computed expected income tax expense

Difference resulting from:

State income taxes, net of federal tax effect

Research and development credits adjustment (see

discussion below)

(see discussion below)

Recognition of research and development credit benefits

Recognition of foreign net operating loss benefits (see

discussion below)

Excess executive compensation

Bad debt loss

Foreign tax rate differential

2023

2022

2021

$ 9,660 $ 9,883 $ 5,226

860

614

—

1,296

425

(352)

—

420

(160)

(173)

—

(4,392)

(510)

146

6,181

(3,430)

(2,574)

1,397

(167)

(441)

—

(190)

Net operating loss carryback benefit (see discussion below)

Other permanent differences and adjustments, net

Income tax expense

$ 11,296 $ 11,356 $ 1,074

Net Operating Loss (“NOL”) Carryback

In an effort to combat the adverse economic impacts of the COVID-19 crisis, the U.S. Congress passed the Coronavirus,

Aid, Relief, and Economic Security Act (the “CARES Act”) that was signed into law on March 27, 2020. This wide-

ranging legislation was an emergency economic stimulus package that included spending and tax breaks aimed at

strengthening the U.S. economy and funding a nationwide effort to curtail the effects of the outbreak of COVID-19.

The tax changes of the CARES Act included a temporary suspension of the limitations on the future utilization of certain

NOLs and re-established a carryback period for certain losses to five years. The NOLs eligible for carryback under the

CARES Act include the Company’s domestic NOL for Fiscal 2020, which was approximately $39.5 million. The Company

made an initial filing with the Internal Revenue Service (“IRS”) requesting carryback refunds of income taxes paid for the

years ended January 31, 2016 and 2015 in the total amount of approximately $12.7 million during Fiscal 2021 and an

updated filing was made subsequent to the end of Fiscal 2023; the IRS has not completed the processing of the Company’s

refund request.

- 77 -

The changes in the maximum number of shares of common stock issuable pursuant to outstanding restricted stock units

for Fiscal 2023, Fiscal 2022 and Fiscal 2021 and the weighted average fair value per share for each restricted stock unit,

are presented below (shares in thousands):

NOTE 13 – INCOME TAXES

Reconciliations of Income Tax Expense

The components of the amounts of income tax expense for Fiscal 2023, Fiscal 2022 and Fiscal 2021 are presented below:

2023

2022

2021

Current:
Federal
State
Foreign

Deferred:
Federal
State
Foreign

Income tax expense

$ 12,776 $ 10,921 $ (6,805)
83
151
(6,571)

643
—
11,564

1,012
740
14,528

(803)
23
(2,452)
(3,232)

7,732
(75)
(12)
7,645
$ 11,296 $ 11,356 $ 1,074

(341)
133
—
(208)

The amounts of interest and penalties related to income taxes that were incurred by the Company during Fiscal 2023,
Fiscal 2022 and Fiscal 2021 were not material.

The Company’s income tax expense amounts differed from corresponding amounts computed by applying the federal
corporate income tax rate of 21% to the income before income taxes for Fiscal 2023, Fiscal 2022 and Fiscal 2021 as
presented below:

Computed expected income tax expense
Difference resulting from:

2023

2022
$ 9,660 $ 9,883 $ 5,226

2021

Outstanding, February 1, 2020

Outstanding, January 31, 2021

Outstanding, January 31, 2022

Awarded

Issued

Awarded

Issued

Forfeited

Outstanding, January 31, 2023

Weighted

Average

Grant Date

Shares Fair Value

72 $ 19.44

45 $ 14.95

117 $ 17.71

145 $ 39.52

(40) $ 20.64

222 $ 31.48

147 $ 29.26

(37) $ 23.44

(22) $ 22.88

310 $ 30.80

Fair Value

The fair value amounts of stock options and restricted stock units are recorded as stock compensation expense on a straight-

line basis over the terms of the corresponding awards. Expense amounts related to stock awards were $4.0 million, $3.5

million and $2.9 million for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. At January 31, 2023, there was $6.7

million in unrecognized compensation cost related to outstanding stock awards that the Company expects to expense over

the next three years.

The Company estimates the weighted average fair value of stock options on the date of award using a Black-Scholes option

pricing model. The Company believes that its past stock option exercise activity is sufficient to provide it with a reasonable

basis upon which to estimate the expected life of newly awarded stock options. Risk-free interest rates are determined by

blending the rates for three-to-five-year U.S. Treasury notes. The dividend yield is based on the Company’s current annual

regular dividend amount. The calculations of the expected volatility factors are based on the monthly closing prices of the

Company’s common stock for the five-year periods preceding the dates of the corresponding awards.

The fair value amounts for the performance-based restricted stock units have been determined by using the per share

market price of the common stock on the dates of award and by assigning equal probabilities to the thirteen possible payout

outcomes at the end of each three-year term, and by computing the weighted average of the outcome amounts. For each

award, the estimated fair value amount was calculated to be 88.5% of the aggregate market value of the target number

(which is 50% of the maximum number) of shares on the award date. For the renewable performance-based restricted

stock units, the fair value of each award was determined as the aggregate market price for the number of shares deemed to

be probable of vesting based on the performance criteria. For the time-based restricted stock units, the fair value of each

award equals the aggregate market price for the number of shares covered by each award on the date of award.

State income taxes, net of federal tax effect
Research and development credits adjustment (see
discussion below)
Recognition of research and development credit benefits
(see discussion below)
Recognition of foreign net operating loss benefits (see
discussion below)
Excess executive compensation
Bad debt loss
Foreign tax rate differential
Net operating loss carryback benefit (see discussion below)
Other permanent differences and adjustments, net

(2,574)
1,397
(167)
(441)
—
(190)

—
420
(160)
(173)
(4,392)
146
$ 11,296 $ 11,356 $ 1,074

—
1,296
425
(352)
—
(510)

860

614

6,181

(3,430)

—

Income tax expense

Net Operating Loss (“NOL”) Carryback

In an effort to combat the adverse economic impacts of the COVID-19 crisis, the U.S. Congress passed the Coronavirus,
Aid, Relief, and Economic Security Act (the “CARES Act”) that was signed into law on March 27, 2020. This wide-
ranging legislation was an emergency economic stimulus package that included spending and tax breaks aimed at
strengthening the U.S. economy and funding a nationwide effort to curtail the effects of the outbreak of COVID-19.

The tax changes of the CARES Act included a temporary suspension of the limitations on the future utilization of certain
NOLs and re-established a carryback period for certain losses to five years. The NOLs eligible for carryback under the
CARES Act include the Company’s domestic NOL for Fiscal 2020, which was approximately $39.5 million. The Company
made an initial filing with the Internal Revenue Service (“IRS”) requesting carryback refunds of income taxes paid for the
years ended January 31, 2016 and 2015 in the total amount of approximately $12.7 million during Fiscal 2021 and an
updated filing was made subsequent to the end of Fiscal 2023; the IRS has not completed the processing of the Company’s
refund request.

- 76 -

- 77 -

The carryback provided a favorable rate benefit for the Company as the loss, which was incurred in a year where the
statutory federal tax rate was 21%, has been carried back to tax years where the tax rate was higher. The net amount of
this additional income tax benefit, approximately $4.4 million, was recorded in Fiscal 2021.

Research and Development Tax Credit Adjustments

During Fiscal 2019, the Company completed a detailed review of the activities of its engineering staff on major EPC
services projects in order to identify and quantify the amounts of research and development tax credits that may have been
available to reduce prior year income taxes. This study focused on project costs incurred during the three-year period
ended January 31, 2018. Based on the results of the study, management identified and estimated significant amounts of
income tax benefits that were not previously recognized in the Company’s operating results for any prior year reporting
period. The net amount of federal and state research and development tax credit benefit recognized in Fiscal 2019 was
$16.6 million. During Fiscal 2020, deferred tax assets related to the research and development tax credits were reduced by
$0.4 million. The Company recorded a corresponding liability for uncertain income tax return positions related to identified
but unrecognized research and development tax credit benefits in the amount of $5.0 million.

During Fiscal 2021, the IRS concluded examinations of the Company’s consolidated federal income tax returns for the
year ending January 31, 2016, as amended; the year ending January 31, 2017, as amended; and the year ended January 31,
2018 with its focus on the research and development tax credits included therein.

In January 2021, the IRS issued its final revenue agents reports that documented its understanding of the facts, attempted
to summarize the Company’s arguments in support of the research and development claims and stated its position which
disagreed with the Company’s treatment of a substantial amount of the costs that supported the Company’s claims. In
March 2021, the Company submitted a formal protest of the findings of the Internal Revenue Service (“IRS”) examiner
and requested an appeal hearing.

At the conclusion of the hearing that occurred in May 2022, the Company agreed to accept a settlement offer from the IRS
in the amount of approximately $7.9 million, before interest. As a result, during the three-month period ended July 31,
2022, the Company made an unfavorable adjustment to income tax expense in the approximate amount of $6.2 million;
the accounting for this adjustment reduced the contra-asset balance by approximately $4.4 million.

The Company has also formally protested the conclusions reached by two states, where the Company filed tax returns
reflecting the benefits of certain research and development credits, that the credits are not allowable. The Company expects
that any unfavorable adjustments related to the ultimate settlement of the income tax disputes with the states will not be
significant.

Research and Development Credits

In a manner similar to the process described above, the Company completed a detailed review of the activities of its
engineering staff on major EPC services projects in order to identify and quantify the amounts of research and development
tax credits that may have been available to reduce federal income taxes for Fiscal 2022 and Fiscal 2021. As a result, the
Company has filed amended federal income tax returns for those years, including research and development tax credits in
the total amount of $5.8 million. Net of a corresponding reduction to reflect uncertain income tax return positions in the
amount of $2.4 million, the tax benefit recorded in Fiscal 2023 for these tax credits was approximately $3.4 million.

Recognition of Foreign NOL Income Tax Benefits

The Company has deferred tax assets in a total amount of approximately $7.9 million related to prior year NOLs of its
foreign subsidiaries, primarily the operation of APC located in the U.K (“APC UK). The Company has established a
valuation allowance against a substantial portion of these NOLs. For Fiscal 2023, APC UK continued a turnaround of its
operating results such that the Company believes that it has a stable earnings history upon which APC UK can reliably
forecast future profitable operations. Based on the forecast that rests on the belief that meaningful investments will be
made in the power infrastructure of the U.K. for the foreseeable future, the Company now believes that it is more likely
than not that a certain portion of the deferred tax assets will be realized. Accordingly, the Company reversed a portion of
the corresponding allowance during Fiscal 2023 in the amount of $2.6 million.

- 78 -

Unrecognized Income Tax Benefits

As a result of the activity described above primarily, the balances of the contra-asset established for uncertain income tax

return positions were $2.9 million, $4.9 million and $4.9 million as of January 31, 2023, 2022 and 2021, respectively. No

other material adjustment or transaction has affected the balance of this account since January 31, 2020.

Income Tax Refunds

Deferred Taxes

following:

As of January 31, 2023 and 2022, the balances of other current assets in the consolidated balance sheet included total

income tax refunds receivable and prepaid income taxes in the amounts of approximately $15.3 million and $29.5 million,

respectively. The balance as of January 31, 2023 includes primarily the amount expected to be received from the IRS upon

its processing of the Company’s NOL carryback refund request discussed above.

The tax effects of temporary differences that are reflected in deferred taxes as of January 31, 2023 and 2022 included the

Assets:

Net operating loss carryforwards

Stock awards

Accrued expenses

Lease liabilities

Research and development costs deferral

Research and development credit carryforwards

Other

Liabilities:

Purchased intangibles

Property and equipment

Construction contracts

Right-of-use assets

Other

Valuation allowances

Deferred tax assets, net

2023

2022

$ 13,964 $ 14,360

2,726

1,480

1,189

1,015

269

337

2,325

515

772

—

269

1,332

20,980

19,573

(3,674)

(3,533)

(1,033)

(1,334)

(1,229)

(1,034)

(1,184)

(431)

(768)

(43)

(7,551)

(6,712)

(9,740)

(12,404)

$ 3,689 $

457

Taxpayers are now required to capitalize and amortize research and experimental expenses over five or 15 years for tax

years beginning in 2022 or later. Accordingly, for the Company’s fiscal year that commenced on February 1, 2022, the

Company did determine an estimated amount of such expenses which resulted in the deferred tax asset balance of $1.0

million presented in the table above as of January 31, 2023. Of course, due to the effective date of this tax change, there is

no comparable balance as of January 31, 2022.

The Company acquired unused NOLs for federal income tax reporting purposes from TRC that are subject to limitations

imposed by Section 382 of the Internal Revenue Code of 1986, as amended. These losses are subject to annual limits that

reduce the aggregate amount of NOLs available to the Company in the future to approximately $5.5 million. These NOLs

are available to offset future taxable income and, if not utilized, begin expiring during 2032. The NOL carryforwards

related to APC UK do not expire. The Company also has certain NOLs that will be available to the Company for state

income tax reporting purposes that are substantially similar to the federal NOLs.

The Company’s ability to realize deferred tax assets, including those related to the NOLs discussed above, depends

primarily upon the generation of sufficient future taxable income to allow for the Company’s use of temporarily deferred

deductions and tax planning strategies. If such estimates and assumptions change in the future, the Company may be

required to record additional valuation allowances against some or all of its deferred tax assets resulting in additional

income tax expense in the future. At this time, based substantially on the strong earnings performance of the Company’s

- 79 -

The carryback provided a favorable rate benefit for the Company as the loss, which was incurred in a year where the

statutory federal tax rate was 21%, has been carried back to tax years where the tax rate was higher. The net amount of

this additional income tax benefit, approximately $4.4 million, was recorded in Fiscal 2021.

Research and Development Tax Credit Adjustments

During Fiscal 2019, the Company completed a detailed review of the activities of its engineering staff on major EPC

services projects in order to identify and quantify the amounts of research and development tax credits that may have been

available to reduce prior year income taxes. This study focused on project costs incurred during the three-year period

ended January 31, 2018. Based on the results of the study, management identified and estimated significant amounts of

income tax benefits that were not previously recognized in the Company’s operating results for any prior year reporting

period. The net amount of federal and state research and development tax credit benefit recognized in Fiscal 2019 was

$16.6 million. During Fiscal 2020, deferred tax assets related to the research and development tax credits were reduced by

$0.4 million. The Company recorded a corresponding liability for uncertain income tax return positions related to identified

but unrecognized research and development tax credit benefits in the amount of $5.0 million.

During Fiscal 2021, the IRS concluded examinations of the Company’s consolidated federal income tax returns for the

year ending January 31, 2016, as amended; the year ending January 31, 2017, as amended; and the year ended January 31,

2018 with its focus on the research and development tax credits included therein.

In January 2021, the IRS issued its final revenue agents reports that documented its understanding of the facts, attempted

to summarize the Company’s arguments in support of the research and development claims and stated its position which

disagreed with the Company’s treatment of a substantial amount of the costs that supported the Company’s claims. In

March 2021, the Company submitted a formal protest of the findings of the Internal Revenue Service (“IRS”) examiner

and requested an appeal hearing.

At the conclusion of the hearing that occurred in May 2022, the Company agreed to accept a settlement offer from the IRS

in the amount of approximately $7.9 million, before interest. As a result, during the three-month period ended July 31,

2022, the Company made an unfavorable adjustment to income tax expense in the approximate amount of $6.2 million;

the accounting for this adjustment reduced the contra-asset balance by approximately $4.4 million.

The Company has also formally protested the conclusions reached by two states, where the Company filed tax returns

reflecting the benefits of certain research and development credits, that the credits are not allowable. The Company expects

that any unfavorable adjustments related to the ultimate settlement of the income tax disputes with the states will not be

significant.

Research and Development Credits

In a manner similar to the process described above, the Company completed a detailed review of the activities of its

engineering staff on major EPC services projects in order to identify and quantify the amounts of research and development

tax credits that may have been available to reduce federal income taxes for Fiscal 2022 and Fiscal 2021. As a result, the

Company has filed amended federal income tax returns for those years, including research and development tax credits in

the total amount of $5.8 million. Net of a corresponding reduction to reflect uncertain income tax return positions in the

amount of $2.4 million, the tax benefit recorded in Fiscal 2023 for these tax credits was approximately $3.4 million.

Recognition of Foreign NOL Income Tax Benefits

The Company has deferred tax assets in a total amount of approximately $7.9 million related to prior year NOLs of its

foreign subsidiaries, primarily the operation of APC located in the U.K (“APC UK). The Company has established a

valuation allowance against a substantial portion of these NOLs. For Fiscal 2023, APC UK continued a turnaround of its

operating results such that the Company believes that it has a stable earnings history upon which APC UK can reliably

forecast future profitable operations. Based on the forecast that rests on the belief that meaningful investments will be

made in the power infrastructure of the U.K. for the foreseeable future, the Company now believes that it is more likely

than not that a certain portion of the deferred tax assets will be realized. Accordingly, the Company reversed a portion of

the corresponding allowance during Fiscal 2023 in the amount of $2.6 million.

- 78 -

Unrecognized Income Tax Benefits

As a result of the activity described above primarily, the balances of the contra-asset established for uncertain income tax
return positions were $2.9 million, $4.9 million and $4.9 million as of January 31, 2023, 2022 and 2021, respectively. No
other material adjustment or transaction has affected the balance of this account since January 31, 2020.

Income Tax Refunds

As of January 31, 2023 and 2022, the balances of other current assets in the consolidated balance sheet included total
income tax refunds receivable and prepaid income taxes in the amounts of approximately $15.3 million and $29.5 million,
respectively. The balance as of January 31, 2023 includes primarily the amount expected to be received from the IRS upon
its processing of the Company’s NOL carryback refund request discussed above.

Deferred Taxes

The tax effects of temporary differences that are reflected in deferred taxes as of January 31, 2023 and 2022 included the
following:

Assets:

Net operating loss carryforwards
Stock awards
Accrued expenses
Lease liabilities
Research and development costs deferral
Research and development credit carryforwards
Other

Liabilities:

Purchased intangibles
Property and equipment
Construction contracts
Right-of-use assets
Other

Valuation allowances

Deferred tax assets, net

2023

2022

$ 13,964 $ 14,360
2,325
515
772
—
269
1,332
19,573

2,726
1,480
1,189
1,015
269
337
20,980

(3,674)
(1,033)
(1,229)
(1,184)
(431)
(7,551)
(9,740)
$ 3,689 $

(3,533)
(1,334)
(1,034)
(768)
(43)
(6,712)
(12,404)
457

Taxpayers are now required to capitalize and amortize research and experimental expenses over five or 15 years for tax
years beginning in 2022 or later. Accordingly, for the Company’s fiscal year that commenced on February 1, 2022, the
Company did determine an estimated amount of such expenses which resulted in the deferred tax asset balance of $1.0
million presented in the table above as of January 31, 2023. Of course, due to the effective date of this tax change, there is
no comparable balance as of January 31, 2022.

The Company acquired unused NOLs for federal income tax reporting purposes from TRC that are subject to limitations
imposed by Section 382 of the Internal Revenue Code of 1986, as amended. These losses are subject to annual limits that
reduce the aggregate amount of NOLs available to the Company in the future to approximately $5.5 million. These NOLs
are available to offset future taxable income and, if not utilized, begin expiring during 2032. The NOL carryforwards
related to APC UK do not expire. The Company also has certain NOLs that will be available to the Company for state
income tax reporting purposes that are substantially similar to the federal NOLs.

The Company’s ability to realize deferred tax assets, including those related to the NOLs discussed above, depends
primarily upon the generation of sufficient future taxable income to allow for the Company’s use of temporarily deferred
deductions and tax planning strategies. If such estimates and assumptions change in the future, the Company may be
required to record additional valuation allowances against some or all of its deferred tax assets resulting in additional
income tax expense in the future. At this time, based substantially on the strong earnings performance of the Company’s

- 79 -

power industry services reporting segment, management believes that it is more likely than not that the Company will
realize the benefit of significantly all of its deferred tax assets, net of valuation allowances.

Income Tax Returns

The Company is subject to federal and state income taxes in the U.S., and income taxes in Ireland and the U.K. Tax
treatments within each jurisdiction are subject to the interpretation of the related tax laws and regulations which require
significant judgment to apply. The Company is no longer subject to income tax examinations by authorities for its fiscal
years ended on or before January 31, 2019, except for several notable exceptions including Ireland, the U.K. and several
states where the open periods are one year longer.

Solar Energy Projects

During Fiscal 2022 and Fiscal 2021, the Company invested approximately $5.0 million and $1.3 million, respectively, in
limited liability companies that make equity investments in solar energy projects that are eligible to receive energy tax
credits. The passive investments have been accounted for under the equity method; the balances are included in other
assets in our consolidated balance sheets. Each tax credit, when recognized, is recorded as a reduction of the corresponding
investment balance with an offsetting reduction in the balance of accrued taxes payable in accordance with the deferral
method. Investment tax credits in the approximate amounts of $4.5 million and $1.1 million were recognized during Fiscal
2022 and Fiscal 2021, respectively. As of January 31, 2023, the Company’s had no remaining cash investment
commitments related to these projects. At January 31, 2023 and 2022, the investment account balances were $1.2 million
and $0.2 million, respectively. These investments are expected to provide positive overall returns over their six-year
expected lives.

During Fiscal 2023, the investment balance was adjusted to reflect the Company’s share of the income of the investment
entities in the amount of approximately $1.1 million, which amount has been included as other income in the Company’s
consolidated statement of earnings for the corresponding period. During Fiscal 2022, the investment balance was adjusted
to reflect the Company’s share of the losses of the investment entities in the amount of $0.4 million, which was included
as other expense in the Company’s consolidated statement of earnings.

Supplemental Cash Flow Information

The amounts of cash paid for income taxes during Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $6.7 million, $14.0
million and $5.5 million, respectively, including the solar energy investments identified above. During Fiscal 2023, Fiscal
2022 and Fiscal 2021, the Company received cash refunds of previously paid income taxes from various taxing authorities
in the total amounts of $0.3 million, $0.2 million and $1.0 million, respectively.

NOTE 14 – NET INCOME PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN

Basic and diluted net income per share amounts for Fiscal 2023, Fiscal 2022 and Fiscal 2021 are computed as follows
(shares in thousands except in note (1) below the chart):

Net income

2023

2022
$ 33,098 $ 38,244 $ 23,851

2021

Weighted average number of shares outstanding – basic

Effect of stock awards (1)

Weighted average number of shares outstanding – diluted

14,083
93
14,176

15,715
198
15,913

15,668
157
15,825

Net income per share attributable to the stockholders of
Argan, Inc.
Basic
Diluted

$
$

2.35 $
2.33 $

2.43 $
2.40 $

1.52
1.51

(1) The weighted average numbers of shares determined on a dilutive basis for Fiscal 2023, Fiscal 2022 and Fiscal 2021 exclude the
effects of antidilutive stock options covering 978,834, 570,167 and 638,001 shares of common stock, respectively, as the options
had exercise prices per share in excess of the average market price per share for the applicable year.

- 80 -

- 81 -

NOTE 15 – CASH DIVIDENDS AND COMMON STOCK REPURCHASES

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, the Company made regular quarterly cash dividend payments of $0.25

per share of common stock. The Company also made special cash dividend payments in the amount of $1.00 per share of

common stock in July 2020 and December 2020.

Pursuant to authorizations provided by the Company’s board of directors, the Company began to repurchase shares of its

common stock in November 2021. During Fiscal 2023, the Company repurchased 1,855,714 shares of common stock,

most on the open market, for an aggregate price of approximately $68.2 million, or $36.77 per share. During Fiscal 2022,

the Company repurchased 527,752 shares of common stock, all on the open market, for an aggregate price of

approximately $20.4 million, or $38.60 per share.

In August 2022, the Inflation Reduction Act was signed into law, which introduced a 1% excise tax on shares repurchased

after December 31, 2022. For Fiscal 2023, the excise tax was not material.

NOTE 16 – CUSTOMER CONCENTRATIONS

The majority of the Company’s consolidated revenues relate to performance by the power industry services segment which

provided 76%, 78% and 81% of consolidated revenues for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. For

Fiscal 2023, Fiscal 2022 and Fiscal 2021, the Company’s industrial fabrication and field services segment represented

20%, 19% and 17% of consolidated revenues, respectively.

For Fiscal 2023, the Company’s most significant customer relationships included two power industry services customers,

which accounted for 38% and 12% of consolidated revenues. For Fiscal 2022, the Company’s most significant customer

relationship included one power industry services customer which accounted for 57% of consolidated revenues. For Fiscal

2021, the Company’s most significant customer relationship included one power industry services customer which

accounted for 67% of consolidated revenues.

The accounts receivable balances from three major customers represented 36%, 12% and 12% of the corresponding

consolidated balance as of January 31, 2023 and accounts receivable balances from three major customers represented

22%, 15% and 12% of the corresponding consolidated balance as of January 31, 2022. The contract asset balance related

to one major customer represented 70% of the corresponding consolidated balance as of January 31, 2023. Contract asset

balances related to two major customers represented 31% and 13% of the corresponding consolidated balance as of January

31, 2022.

NOTE 17 – SEGMENT REPORTING

Segments represent components of an enterprise for which discrete financial information is available that is evaluated

regularly by the Company’s chief executive officer, who is the chief operating decision maker, in determining how to

allocate resources and in assessing performance. The Company’s reportable segments recognize revenues and incur

expenses, are organized in separate business units with different management teams, customers, talents and services, and

may include more than one operating segment.

Intersegment revenues and the related cost of revenues, are netted against the corresponding amounts of the segment

receiving the intersegment services. For Fiscal 2023, 2022 and 2021, intersegment revenues totaled approximately $0.6

million, $2.8 million and $4.3 million, respectively. Intersegment revenues for the aforementioned periods primarily

related to services provided by the industrial fabrication and field services segment to the power industry services segment

and were based on prices negotiated by the parties.

power industry services reporting segment, management believes that it is more likely than not that the Company will

NOTE 15 – CASH DIVIDENDS AND COMMON STOCK REPURCHASES

realize the benefit of significantly all of its deferred tax assets, net of valuation allowances.

Income Tax Returns

The Company is subject to federal and state income taxes in the U.S., and income taxes in Ireland and the U.K. Tax

treatments within each jurisdiction are subject to the interpretation of the related tax laws and regulations which require

significant judgment to apply. The Company is no longer subject to income tax examinations by authorities for its fiscal

years ended on or before January 31, 2019, except for several notable exceptions including Ireland, the U.K. and several

states where the open periods are one year longer.

Solar Energy Projects

During Fiscal 2022 and Fiscal 2021, the Company invested approximately $5.0 million and $1.3 million, respectively, in

limited liability companies that make equity investments in solar energy projects that are eligible to receive energy tax

credits. The passive investments have been accounted for under the equity method; the balances are included in other

assets in our consolidated balance sheets. Each tax credit, when recognized, is recorded as a reduction of the corresponding

investment balance with an offsetting reduction in the balance of accrued taxes payable in accordance with the deferral

method. Investment tax credits in the approximate amounts of $4.5 million and $1.1 million were recognized during Fiscal

2022 and Fiscal 2021, respectively. As of January 31, 2023, the Company’s had no remaining cash investment

commitments related to these projects. At January 31, 2023 and 2022, the investment account balances were $1.2 million

and $0.2 million, respectively. These investments are expected to provide positive overall returns over their six-year

expected lives.

During Fiscal 2023, the investment balance was adjusted to reflect the Company’s share of the income of the investment

entities in the amount of approximately $1.1 million, which amount has been included as other income in the Company’s

consolidated statement of earnings for the corresponding period. During Fiscal 2022, the investment balance was adjusted

to reflect the Company’s share of the losses of the investment entities in the amount of $0.4 million, which was included

as other expense in the Company’s consolidated statement of earnings.

Supplemental Cash Flow Information

The amounts of cash paid for income taxes during Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $6.7 million, $14.0

million and $5.5 million, respectively, including the solar energy investments identified above. During Fiscal 2023, Fiscal

2022 and Fiscal 2021, the Company received cash refunds of previously paid income taxes from various taxing authorities

in the total amounts of $0.3 million, $0.2 million and $1.0 million, respectively.

NOTE 14 – NET INCOME PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN

Basic and diluted net income per share amounts for Fiscal 2023, Fiscal 2022 and Fiscal 2021 are computed as follows

(shares in thousands except in note (1) below the chart):

2023

2022

2021

$ 33,098 $ 38,244 $ 23,851

Weighted average number of shares outstanding – basic

14,083

15,715

15,668

Effect of stock awards (1)

198

157

Weighted average number of shares outstanding – diluted

14,176

15,913

15,825

Net income per share attributable to the stockholders of

Net income

Argan, Inc.

Basic

Diluted

2.35 $

2.43 $

2.33 $

2.40 $

1.52

1.51

(1) The weighted average numbers of shares determined on a dilutive basis for Fiscal 2023, Fiscal 2022 and Fiscal 2021 exclude the

effects of antidilutive stock options covering 978,834, 570,167 and 638,001 shares of common stock, respectively, as the options

had exercise prices per share in excess of the average market price per share for the applicable year.

- 80 -

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, the Company made regular quarterly cash dividend payments of $0.25
per share of common stock. The Company also made special cash dividend payments in the amount of $1.00 per share of
common stock in July 2020 and December 2020.

Pursuant to authorizations provided by the Company’s board of directors, the Company began to repurchase shares of its
common stock in November 2021. During Fiscal 2023, the Company repurchased 1,855,714 shares of common stock,
most on the open market, for an aggregate price of approximately $68.2 million, or $36.77 per share. During Fiscal 2022,
the Company repurchased 527,752 shares of common stock, all on the open market, for an aggregate price of
approximately $20.4 million, or $38.60 per share.

In August 2022, the Inflation Reduction Act was signed into law, which introduced a 1% excise tax on shares repurchased
after December 31, 2022. For Fiscal 2023, the excise tax was not material.

NOTE 16 – CUSTOMER CONCENTRATIONS

The majority of the Company’s consolidated revenues relate to performance by the power industry services segment which
provided 76%, 78% and 81% of consolidated revenues for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. For
Fiscal 2023, Fiscal 2022 and Fiscal 2021, the Company’s industrial fabrication and field services segment represented
20%, 19% and 17% of consolidated revenues, respectively.

For Fiscal 2023, the Company’s most significant customer relationships included two power industry services customers,
which accounted for 38% and 12% of consolidated revenues. For Fiscal 2022, the Company’s most significant customer
relationship included one power industry services customer which accounted for 57% of consolidated revenues. For Fiscal
2021, the Company’s most significant customer relationship included one power industry services customer which
accounted for 67% of consolidated revenues.

The accounts receivable balances from three major customers represented 36%, 12% and 12% of the corresponding
consolidated balance as of January 31, 2023 and accounts receivable balances from three major customers represented
22%, 15% and 12% of the corresponding consolidated balance as of January 31, 2022. The contract asset balance related
to one major customer represented 70% of the corresponding consolidated balance as of January 31, 2023. Contract asset
balances related to two major customers represented 31% and 13% of the corresponding consolidated balance as of January
31, 2022.

NOTE 17 – SEGMENT REPORTING

Segments represent components of an enterprise for which discrete financial information is available that is evaluated
regularly by the Company’s chief executive officer, who is the chief operating decision maker, in determining how to
allocate resources and in assessing performance. The Company’s reportable segments recognize revenues and incur
expenses, are organized in separate business units with different management teams, customers, talents and services, and
may include more than one operating segment.

Intersegment revenues and the related cost of revenues, are netted against the corresponding amounts of the segment
receiving the intersegment services. For Fiscal 2023, 2022 and 2021, intersegment revenues totaled approximately $0.6
million, $2.8 million and $4.3 million, respectively. Intersegment revenues for the aforementioned periods primarily
related to services provided by the industrial fabrication and field services segment to the power industry services segment
and were based on prices negotiated by the parties.

- 81 -

Summarized below are certain operating results and financial position data of the Company’s reportable business segments
for Fiscal 2023, Fiscal 2022 and Fiscal 2021. The “Other” column in each summary includes the Company’s corporate
expenses.

Year Ended
January 31, 2023

Power
Services

Industrial

Services

Telecom
Services

Other

Totals

Revenues
Cost of revenues
Gross profit
Selling, general and administrative expenses
Income (loss) from operations
Other income, net
Income (loss) before income taxes
Income tax expense
Net income

$ 346,033 $ 92,774 $ 16,233 $
78,034
14,740
7,900
6,840
—

277,402
68,631
22,635
45,996
3,829

13,243
2,990
3,353
(363)
3

$ 49,825 $ 6,840 $

— $ 455,040
368,679
—
86,361
—
44,692
10,804
41,669
(10,804)
4,331
499
46,000
(360) $ (10,305)
11,296
$ 34,704

Amortization of intangibles
Depreciation
Property, plant and equipment additions

— $

618 $

567
1,450

1,978
1,717

114 $
434
189

— $
4
16

732
2,983
3,372

Current assets
Current liabilities
Goodwill
Total assets

Year Ended
January 31, 2022

Revenues
Cost of revenues
Gross profit
Selling, general and administrative expenses
Impairment loss
Income (loss) from operations
Other income, net
Income (loss) before income taxes
Income tax expense
Net income

$ 307,742 $ 42,488 $ 3,900 $ 84,572 $ 438,702
202,503
28,033
489,487

170,164
18,476
334,593

1,472
—
87,703

29,550
9,467
60,038

1,317
90
7,153

Industrial

Services

Telecom
Services

Power
Services
$ 398,089 $ 97,890 $ 13,391 $
81,391
16,499
8,167
—
8,332
—

317,130
80,959
28,323
7,901
44,735
2,545

11,117
2,274
2,146
—
128
—

$ 47,280 $ 8,332 $

128 $

Other

Totals

— $ 509,370
409,638
—
99,732
—
47,321
8,685
7,901
—
44,510
(8,685)
2,552
7
47,062
(8,678)
11,356
$ 35,706

Amortization of intangibles
Depreciation
Property, plant and equipment additions

208 $
605
713

662 $

— $

2,325
107

433
597

— $
4
5

870
3,367
1,422

Current assets
Current liabilities
Goodwill
Total assets

$ 322,448 $ 25,681 $ 2,957 $ 156,198 $ 507,284
223,027
28,033
553,585

1,748
—
156,886

209,829
18,476
345,956

9,534
9,467
44,002

1,916
90
6,741

- 82 -

Year Ended

January 31, 2021

Power

Industrial

Telecom

Services

Other

Totals

$ 319,353 $ 65,263 $ 7,590 $

— $ 392,206

Revenues

Cost of revenues

Gross profit

Selling, general and administrative expenses

Income (loss) from operations

Other income, net

Income (loss) before income taxes

Income tax expense

Net income

266,993

57,257

52,360

21,795

30,565

1,777

8,006

7,358

648

—

5,889

1,701

1,987

(286)

—

$ 32,342 $

648 $

(286) $

(7,819)

—

7,901

(7,901)

330,139

62,067

39,041

23,026

1,859

24,885

1,074

$ 23,811

Amortization of intangibles

Depreciation

Property, plant and equipment additions

242 $

662 $

— $

904

704

1,043

2,592

338

414

316

—

3,715

1,697

Current assets

Current liabilities

Goodwill

Total assets

$ 360,552 $ 22,014 $

1,959 $ 161,695 $ 546,220

261,030

13,119

18,476

9,467

953

—

985

276,087

—

27,943

394,014

42,998

3,406

162,212

602,630

NOTE 18 – SUPPLEMENTAL BALANCE SHEET INFORMATION

Other current assets consisted of the following at January 31, 2023 and 2022:

Prepaid income taxes and refunds receivable

Raw materials inventory

Prepaid expenses

Other

Total other current assets

Accrued expenses consisted of the following at January 31, 2023 and 2022:

Accrued compensation

Project costs

Lease liabilities

Other

Total accrued expenses

NOTE 19 – SUBSEQUENT EVENTS

2023

2022

$ 15,327 $ 29,451

11,903

4,541

6,563

738

2,954

1,761

$ 38,334 $ 34,904

2023

2022

$ 18,286 $ 18,615

17,448

19,921

1,567

1,367

12,566

13,412

$ 49,867 $ 53,315

Subsequent to January 31, 2023, the Company continued to repurchase shares of its common stock pursuant to the Share

Repurchase Plan. As of April 11, 2023, the date of the last subsequent transaction, the Company had repurchased 75,755

shares since year-end, all on the open market, for an aggregate price of approximately $3.0 million, or $39.60 per share,

exclusive of share repurchase excise tax.

On March 6, 2023, the Company entered into the Second Amendment (the “Second Amendment”) to the Credit

Agreement. The Second Amendment modifies the Credit Amendment to, among other things, replace the interest pricing

from the 30-day LIBOR plus 1.6% to the Secured Overnight Financing Rate (“SOFR”) plus 1.6% and adds SOFR

successor rate language. The Credit Agreement, as amended, continues to include customary terms, covenants and events

of default for a credit facility of its size and nature.

- 83 -

Summarized below are certain operating results and financial position data of the Company’s reportable business segments

for Fiscal 2023, Fiscal 2022 and Fiscal 2021. The “Other” column in each summary includes the Company’s corporate

expenses.

Revenues

Cost of revenues

Gross profit

Year Ended

January 31, 2023

Selling, general and administrative expenses

Income (loss) from operations

Other income, net

Income (loss) before income taxes

Income tax expense

Net income

Power

Industrial

Telecom

Services

Other

Totals

$ 346,033 $ 92,774 $ 16,233 $

— $ 455,040

277,402

78,034

13,243

368,679

68,631

22,635

45,996

3,829

14,740

7,900

6,840

—

2,990

3,353

10,804

(363)

(10,804)

499

$ 49,825 $ 6,840 $

(360) $ (10,305)

86,361

44,692

41,669

4,331

46,000

11,296

$ 34,704

Amortization of intangibles

Depreciation

Property, plant and equipment additions

— $

618 $

114 $

— $

732

567

1,450

1,978

1,717

434

189

2,983

3,372

$ 307,742 $ 42,488 $ 3,900 $ 84,572 $ 438,702

170,164

29,550

1,317

1,472

202,503

18,476

9,467

—

28,033

334,593

60,038

7,153

87,703

489,487

Year Ended

January 31, 2022

Power

Industrial

Telecom

Services

Other

Totals

$ 398,089 $ 97,890 $ 13,391 $

— $ 509,370

317,130

81,391

11,117

409,638

Selling, general and administrative expenses

Income (loss) from operations

Other income, net

Income (loss) before income taxes

Income tax expense

Net income

80,959

28,323

7,901

44,735

2,545

16,499

8,167

—

8,332

—

2,274

2,146

—

128

—

$ 47,280 $ 8,332 $

128 $

(8,678)

—

8,685

—

(8,685)

99,732

47,321

7,901

44,510

2,552

47,062

11,356

$ 35,706

Amortization of intangibles

Depreciation

Property, plant and equipment additions

208 $

662 $

— $

870

605

713

2,325

107

433

597

3,367

1,422

Current assets

Current liabilities

Goodwill

Total assets

$ 322,448 $ 25,681 $ 2,957 $ 156,198 $ 507,284

209,829

18,476

9,534

9,467

1,916

1,748

223,027

—

28,033

345,956

44,002

6,741

156,886

553,585

Current assets

Current liabilities

Goodwill

Total assets

Revenues

Cost of revenues

Gross profit

Impairment loss

Year Ended
January 31, 2021

Revenues
Cost of revenues
Gross profit
Selling, general and administrative expenses
Income (loss) from operations
Other income, net
Income (loss) before income taxes
Income tax expense
Net income

Industrial

Services

Telecom
Services

Power
Services
$ 319,353 $ 65,263 $ 7,590 $
57,257
8,006
7,358
648
—
648 $

5,889
1,701
1,987
(286)
—
(286) $

266,993
52,360
21,795
30,565
1,777

$ 32,342 $

Other

Totals

— $ 392,206
330,139
—
62,067
—
39,041
7,901
23,026
(7,901)
1,859
82
24,885
(7,819)
1,074
$ 23,811

Amortization of intangibles
Depreciation
Property, plant and equipment additions

242 $
704
1,043

662 $

— $

2,592
338

414
316

— $
5
—

904
3,715
1,697

Current assets
Current liabilities
Goodwill
Total assets

$ 360,552 $ 22,014 $

261,030
18,476
394,014

13,119
9,467
42,998

1,959 $ 161,695 $ 546,220
276,087
985
953
27,943
—
—
602,630
162,212
3,406

NOTE 18 – SUPPLEMENTAL BALANCE SHEET INFORMATION

Other current assets consisted of the following at January 31, 2023 and 2022:

Prepaid income taxes and refunds receivable
Raw materials inventory
Prepaid expenses
Other

Total other current assets

Accrued expenses consisted of the following at January 31, 2023 and 2022:

Accrued compensation
Project costs
Lease liabilities
Other

Total accrued expenses

NOTE 19 – SUBSEQUENT EVENTS

2023

2022

$ 15,327 $ 29,451
738
2,954
1,761
$ 38,334 $ 34,904

11,903
4,541
6,563

2023

2022

$ 18,286 $ 18,615
19,921
1,367
13,412
$ 49,867 $ 53,315

17,448
1,567
12,566

Subsequent to January 31, 2023, the Company continued to repurchase shares of its common stock pursuant to the Share
Repurchase Plan. As of April 11, 2023, the date of the last subsequent transaction, the Company had repurchased 75,755
shares since year-end, all on the open market, for an aggregate price of approximately $3.0 million, or $39.60 per share,
exclusive of share repurchase excise tax.

On March 6, 2023, the Company entered into the Second Amendment (the “Second Amendment”) to the Credit
Agreement. The Second Amendment modifies the Credit Amendment to, among other things, replace the interest pricing
from the 30-day LIBOR plus 1.6% to the Secured Overnight Financing Rate (“SOFR”) plus 1.6% and adds SOFR
successor rate language. The Credit Agreement, as amended, continues to include customary terms, covenants and events
of default for a credit facility of its size and nature.

- 82 -

- 83 -

On March 7, 2023, the Company determined that it had been a victim of a complex criminal scheme, which resulted in
fraudulently-induced outbound wire transfers to a third-party account. As a result of the event, and if no additional
recoveries of transferred funds occur, the Company expects to record a one-time pre-tax charge of approximately $3.0
million for the unrecovered fraudulent wire transfer in the first quarter of the fiscal year ending January 31, 2024, of which
up to $0.2 million, net of the applicable deductible, may be recovered through an insurance claim. See our Current Report
on Form 8-K dated March 7, 2023.

On April 10, 2023, the Company announced that its Board of Directors declared a regular quarterly cash dividend in the
amount of $0.25 per share of common stock, payable on April 28, 2023 to stockholders of record at the close of business
on April 20, 2023.

(This page intentionally left blank)

- 84 -

On March 7, 2023, the Company determined that it had been a victim of a complex criminal scheme, which resulted in

fraudulently-induced outbound wire transfers to a third-party account. As a result of the event, and if no additional

recoveries of transferred funds occur, the Company expects to record a one-time pre-tax charge of approximately $3.0

million for the unrecovered fraudulent wire transfer in the first quarter of the fiscal year ending January 31, 2024, of which

up to $0.2 million, net of the applicable deductible, may be recovered through an insurance claim. See our Current Report

on Form 8-K dated March 7, 2023.

On April 10, 2023, the Company announced that its Board of Directors declared a regular quarterly cash dividend in the

amount of $0.25 per share of common stock, payable on April 28, 2023 to stockholders of record at the close of business

on April 20, 2023.

(This page intentionally left blank)

- 84 -

- 85 -

ABOUT US

EXECUTIVE MANAGEMENT

David H. Watson

President, Chief Execu�ve Officer

Richard H. Deily

Senior Vice President, Chief Financial Officer,

Treasurer and Corporate Secretary

DIRECTORS

Rainer H. Bosselmann

Cynthia A. Flanders

Peter W. Getsinger

William F. Griffin

John R. Jeffrey

Mano S. Koilpillai

William F. Leimkuhler

W.G. Champion Mitchell

James W. Quinn

David H. Watson

AUDITORS

Grant Thornton LLP

Arlington, Virginia

COUNSEL

Culhane Meadows PLLC

New York, New York

INVESTOR RELATIONS

IMS Investor Rela�ons

New Canaan, Connec�cut

Con�nental Stock Transfer & Trust Company

TRANSFER AGENT

New York, New York

ANNUAL MEETING

The 2023 Annual Mee�ng of Argan, Inc. will be

held on June 20, 2023 at 11:00 a.m. at One Church

Street, Room 104, Rockville, Maryland 20850.

STOCKHOLDER INFORMATION

Our common stock is listed on the NYSE under the

symbol AGX.

Copies of the Annual Report on Form 10-K as filed

with the Securi�es and Exchange Commission are

available without charge to Stockholders of record

as of April 26, 2023 upon request to Corporate

Headquarters.

SUBSIDIARIES

Gemma Power Systems

www.gemmapower.com

The Roberts Company

www.robertscompany.com

Atlan�c Projects Company

www.atlan�cprojects.com

SMC Infrastructure Solu�ons

www.smcis.com

(This page intentionally left blank)

Front Cover: Employees of Gemma Power Systems, Atlan�c Projects Company and The Roberts Company at construc�on sites in the United States, Ireland and the United Kingdom.

Inside Back Cover: A night view of the Nutrien Pelican Project in Aurora, North Carolina, where The Roberts Company provides construc�on, steel fabrica�on and other field services.

- 86 -

ABOUT US

EXECUTIVE MANAGEMENT
David H. Watson
President, Chief Execu�ve Officer

Richard H. Deily
Senior Vice President, Chief Financial Officer,
Treasurer and Corporate Secretary

DIRECTORS
Rainer H. Bosselmann
Cynthia A. Flanders
Peter W. Getsinger
William F. Griffin
John R. Jeffrey
Mano S. Koilpillai
William F. Leimkuhler
W.G. Champion Mitchell
James W. Quinn
David H. Watson

AUDITORS
Grant Thornton LLP
Arlington, Virginia

COUNSEL
Culhane Meadows PLLC
New York, New York

INVESTOR RELATIONS
IMS Investor Rela�ons
New Canaan, Connec�cut

TRANSFER AGENT
Con�nental Stock Transfer & Trust Company
New York, New York

ANNUAL MEETING
The 2023 Annual Mee�ng of Argan, Inc. will be
held on June 20, 2023 at 11:00 a.m. at One Church
Street, Room 104, Rockville, Maryland 20850.

STOCKHOLDER INFORMATION
Our common stock is listed on the NYSE under the
symbol AGX.

Copies of the Annual Report on Form 10-K as filed
with the Securi�es and Exchange Commission are
available without charge to Stockholders of record
as of April 26, 2023 upon request to Corporate
Headquarters.

SUBSIDIARIES

Gemma Power Systems
www.gemmapower.com

The Roberts Company
www.robertscompany.com

Atlan�c Projects Company
www.atlan�cprojects.com

SMC Infrastructure Solu�ons
www.smcis.com

(This page intentionally left blank)

Front Cover: Employees of Gemma Power Systems, Atlan�c Projects Company and The Roberts Company at construc�on sites in the United States, Ireland and the United Kingdom.

Inside Back Cover: A night view of the Nutrien Pelican Project in Aurora, North Carolina, where The Roberts Company provides construc�on, steel fabrica�on and other field services.

over 235,000 photovoltaic modules to generate 100 MW of electric power to the electricity grid.

22002233

ANNUAL

REPORT

One Church Street

Suite 201

Rockville, Maryland 20850