UNITED STATES

~~UNITED STATES~~

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

x~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the Quarterly Period Ended October 31, ~~2017~~2021


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

o~~TTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT~~

For the Transition Period from to

Commission File Number 001-31756

(Exact Name of Registrant as Specified in Its Charter)


Delaware		13-1947195
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)

One Church Street, Suite 201, Rockville, Maryland20850

(Address of Principal Executive Offices) (Zip Code)

~~(301)~~ (301) 315-0027

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed since Last Report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for 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 xþ No o☐

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit ~~and post~~ such files). Yes xþ No o☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, ~~or a~~ smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” ”, “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange ~~Act (check one).~~Act.

Large accelerated filer o☐ Accelerated filer xþ Non-accelerated filer o☐Smaller reporting company o☐ Emerging growth company o☐

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

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


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $.15 par value	AGX	New York Stock Exchange

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Common stock, $0.15 par value: ~~15,548,719~~15,714,745 shares as of December ~~1, 2017.~~7, 2021.

ARGAN, INC. AND SUBSIDIARIES

~~FORM 10-Q QUARTERLY REPORT~~

~~OCTOBER 31, 2017~~

~~INDEX~~

		~~Page No.~~

~~PART I.~~	~~FINANCIAL INFORMATION~~	3

~~Item 1.~~	~~Financial Statements~~	3

	~~Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended October 31, 2017 and 2016~~	3

	~~Condensed Consolidated Balance Sheets as of October 31, 2017 and January 31, 2017~~	4

	~~Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2017 and 2016~~	5

	~~Notes to Condensed Consolidated Financial Statements~~	6

~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	17

~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~	29

~~Item 4.~~	~~Controls and Procedures~~	29

~~PART II.~~	~~OTHER INFORMATION~~	29

~~Item 1.~~	~~Legal Proceedings~~	29

~~Item 1A.~~	~~Risk Factors~~	30

~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	30

~~Item 3.~~	~~Defaults upon Senior Securities~~	30

~~Item 4.~~	~~Mine Safety Disclosures (not applicable to the Registrant)~~	30

~~Item 5.~~	~~Other Information~~	30

~~Item 6.~~	~~Exhibits~~	30

~~SIGNATURES~~		31

~~CERTIFICATIONS~~

~~ARGAN, INC. AND SUBSIDIARIES~~

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	October 31,				October 31,
	2021		2020		2021		2020
REVENUES	$	124,451	$	127,331	$	383,800	$	274,971
Cost of revenues		98,316		106,988		306,299		234,989
GROSS PROFIT		26,135		20,343		77,501		39,982
Selling, general and administrative expenses		11,590		9,398		31,813		28,827
INCOME FROM OPERATIONS		14,545		10,945		45,688		11,155
Other income, net		1,117		175		1,569		1,714
INCOME BEFORE INCOME TAXES		15,662		11,120		47,257		12,869
Income tax (expense) benefit		(3,269)		(1,666)		(11,228)		1,391
NET INCOME		12,393		9,454		36,029		14,260
Net loss attributable to non-controlling interests		—		—		—		(40)
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.		12,393		9,454		36,029		14,300
Foreign currency translation adjustments		(471)		(321)		(728)		(650)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.	$	11,922	$	9,133	$	35,301	$	13,650

NET INCOME PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.
Basic	$	0.79	$	0.60	$	2.29	$	0.91
Diluted	$	0.78	$	0.60	$	2.25	$	0.91

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		15,774		15,680		15,757		15,659
Diluted		15,963		15,833		15,980		15,795

CASH DIVIDENDS PER SHARE	$	0.25	$	0.25	$	0.75	$	1.75

The accompanying notes are an integral part of these condensed consolidated financial statements.

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Three Months Ended October 31,

Nine Months Ended October 31,

2017

2016

2017

2016

REVENUES

$
232,945

$
175,444

$
723,237

$
468,287

Cost of revenues

195,227

138,866

594,016

359,395

GROSS PROFIT

37,718

36,578

129,221

108,892

Selling, general and administrative expenses

10,119

9,848

30,408

24,429

Impairment loss (Note 7)

—

—

—

1,979

INCOME FROM OPERATIONS

27,599

26,730

98,813

82,484

Other income, net

1,692

690

4,221

1,283

INCOME BEFORE INCOME TAXES

29,291

27,420

103,034

83,767

Income tax expense

12,062

8,194

37,738

27,122

NET INCOME

17,229

19,226

65,296

56,645

Net income attributable to non-controlling interests

—

1,153

303

6,668

NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

17,229

18,073

64,993

49,977

Foreign currency translation adjustments, net of tax

(139
)
(326
)
754

(192
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

$
17,090

$
17,747

$
65,747

$
49,785

EARNINGS PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

Basic

$
1.11

$
1.19

$
4.19

$
3.34

Diluted

$
1.09

$
1.16

$
4.11

$
3.23

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

Basic

15,545

15,137

15,509

14,974

Diluted

15,793

15,601

15,796

15,490

CASH DIVIDENDS PER SHARE (Note 11)

$
1.00

$
1.00

$
1.00

$
1.00

(Dollars in thousands, except per share data)


	October 31,		January 31,
	2021		2021
	(Unaudited)		(Note 1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	391,563	$	366,671
Short-term investments		90,001		90,055
Accounts receivable		35,793		28,713
Contract assets		9,908		26,635
Other current assets (Note 10)		32,454		34,146
TOTAL CURRENT ASSETS		559,719		546,220
Property, plant and equipment, net		18,385		20,361
Goodwill		27,943		27,943
Other purchased intangible assets, net		3,417		4,097
Deferred taxes		—		249
Right-of-use and other assets		3,689		3,760
TOTAL ASSETS	$	613,153	$	602,630

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	39,959	$	53,295
Accrued expenses		42,672		50,750
Contract liabilities		176,414		172,042
TOTAL CURRENT LIABILITIES		259,045		276,087
Deferred taxes		133		—
Other noncurrent liabilities		4,180		4,135
TOTAL LIABILITIES		263,358		280,222

COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)

STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.10 per share – 500,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock, par value $0.15 per share – 30,000,000 shares authorized; 15,787,673 and 15,706,202 shares issued at October 31, 2021 and January 31, 2021, respectively; 15,784,440 and 15,702,969 shares outstanding at October 31, 2021 and January 31, 2021, respectively		2,368		2,356
Additional paid-in capital		157,187		153,282
Retained earnings		190,308		166,110
Accumulated other comprehensive loss		(1,809)		(1,081)
TOTAL STOCKHOLDERS’ EQUITY		348,054		320,667
Non-controlling interests		1,741		1,741
TOTAL EQUITY		349,795		322,408
TOTAL LIABILITIES AND EQUITY	$	613,153	$	602,630

The accompanying notes are an integral part of these condensed consolidated financial statements.

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2021 AND 2020

(Dollars in thousands)

(Unaudited)


	Common Stock			Additional				Accumulated
	Outstanding	Par		Paid-in		Retained		Other Comprehensive		Non-controlling		Total
	Shares	Value		Capital		Earnings		Loss		Interests		Equity
Balances, August 1, 2021	15,769,440	$	2,366	$	155,904	$	181,862	$	(1,338)	$	1,741	$	340,535
Net income	—		—		—		12,393		—		—		12,393
Foreign currency translation loss	—		—		—		—		(471)		—		(471)
Stock compensation expense	—		—		913		—		—		—		913
Stock option exercises	15,000		2		370		—		—		—		372
Cash dividends	—		—		—		(3,947)		—		—		(3,947)
Balances, October 31, 2021	15,784,440	$	2,368	$	157,187	$	190,308	$	(1,809)	$	1,741	$	349,795

Balances, August 1, 2020	15,669,969	$	2,351	$	150,847	$	170,653	$	(1,445)	$	1,741	$	324,147
Net income	—		—		—		9,454		—		—		9,454
Foreign currency translation loss	—		—		—		—		(321)		—		(321)
Stock compensation expense	—		—		786		—		—		—		786
Stock option exercises	20,000		3		516		—		—		—		519
Cash dividends	—		—		—		(3,921)		—		—		(3,921)
Balances, October 31, 2020	15,689,969	$	2,354	$	152,149	$	176,186	$	(1,766)	$	1,741	$	330,664

Balances, February 1, 2021	15,702,969	$	2,356	$	153,282	$	166,110	$	(1,081)	$	1,741	$	322,408
Net income	—		—		—		36,029		—		—		36,029
Foreign currency translation loss	—		—		—		—		(728)		—		(728)
Stock compensation expense	—		—		2,521		—		—		—		2,521
Stock option exercises and other share-based award settlements	81,471		12		1,384		—		—		—		1,396
Cash dividends	—		—		—		(11,831)		—		—		(11,831)
Balances, October 31, 2021	15,784,440	$	2,368	$	157,187	$	190,308	$	(1,809)	$	1,741	$	349,795

Balances, February 1, 2020	15,634,969	$	2,346	$	148,713	$	189,306	$	(1,116)	$	1,781	$	341,030
Net income (loss)	—		—		—		14,300		—		(40)		14,260
Foreign currency translation loss	—		—		—		—		(650)		—		(650)
Stock compensation expense	—		—		2,199		—		—		—		2,199
Stock option exercises	55,000		8		1,237		—		—		—		1,245
Cash dividends	—		—		—		(27,420)		—		—		(27,420)
Balances, October 31, 2020	15,689,969	$	2,354	$	152,149	$	176,186	$	(1,766)	$	1,741	$	330,664

The accompanying notes are an integral part of these condensed consolidated financial statements.

ARGAN, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended October 31,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	36,029	$	14,260
Adjustments to reconcile net income to net cash provided by operating activities
Lease expense		3,017		1,318
Depreciation		2,560		2,798
Stock compensation expense		2,521		2,199
Amortization of purchased intangible assets		680		677
Deferred income tax expense		383		8,366
Other		390		593
Changes in operating assets and liabilities
Accounts receivable		(7,084)		6,585
Contract assets		16,727		6,156
Other assets		2,070		(15,976)
Accounts payable and accrued expenses		(19,966)		27,725
Contract liabilities		4,372		87,859
Net cash provided by operating activities		41,699		142,560

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of short-term investments		90,000		170,000
Purchases of short-term investments		(90,000)		(100,000)
Investment in solar energy projects		(4,085)		—
Purchases of property, plant and equipment		(1,123)		(1,412)
Net cash (used in) provided by investing activities		(5,208)		68,588

CASH FLOWS FROM FINANCING ACTIVITIES
Payments of cash dividends		(11,831)		(27,420)
Proceeds from the exercise of stock options		1,396		1,245
Net cash used in financing activities		(10,435)		(26,175)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(1,164)		877
NET INCREASE IN CASH AND CASH EQUIVALENTS		24,892		185,850
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		366,671		167,363
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	391,563	$	353,213

SUPPLEMENTAL CASH FLOW INFORMATION (Notes 7 and 10)

The accompanying notes are an integral part of these condensed consolidated financial statements.

ARGAN, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(In thousands, except share and per share data)~~

October 31, 2017

January 31, 2017

(Unaudited)

(Note 1)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$
149,708

$
167,198

Short-term investments

333,973

355,796

Accounts receivable

83,681

54,836

Costs and estimated earnings in excess of billings

10,197

3,192

Prepaid expenses and other current assets

6,236

6,927

TOTAL CURRENT ASSETS

583,795

587,949

Property, plant and equipment, net

15,257

13,112

Goodwill

34,913

34,913

Other intangible assets, net

7,405

8,181

Deferred taxes

383

241

Other assets

548

92

TOTAL ASSETS

$
642,301

$
644,488

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable

$
114,448

$
101,944

Accrued expenses

31,005

39,539

Billings in excess of costs and estimated earnings

146,863

209,241

TOTAL CURRENT LIABILITIES

292,316

350,724

Deferred taxes

1,788

1,195

TOTAL LIABILITIES

294,104

351,919

COMMITMENTS AND CONTINGENCIES (Notes 8 and 9)

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; 15,551,952 and 15,461,452 shares issued at October 31, 2017 and January 31, 2017, respectively; 15,548,719 and 15,458,219 shares outstanding at October 31, 2017 and January 31, 2017, respectively

2,333

2,319

Additional paid-in capital

141,766

135,426

Retained earnings

204,095

154,649

Accumulated other comprehensive loss

(8
)
(762
)
TOTAL STOCKHOLDERS’ EQUITY

348,186

291,632

Non-controlling interests

11

937

TOTAL EQUITY

348,197

292,569

TOTAL LIABILITIES AND EQUITY

$
642,301

$
644,488

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~ARGAN, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(In thousands)~~

~~(Unaudited)~~

Nine Months Ended October 31,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$
65,296

$
56,645

Adjustments to reconcile net income to net cash (used in) provided by operating activities

Stock option compensation expense

3,573

1,774

Depreciation

1,936

1,444

Amortization of purchased intangible assets

776

752

Deferred income tax expense (benefit)

475

(1,693
)
Other

(317
)
(119
)
Impairment loss

—

1,979

Changes in operating assets and liabilities

Accounts receivable

(31,453
)
21,304

Prepaid expenses and other assets

758

(1,432
)
Accounts payable and accrued expenses

5,600

50,099

Billings in excess of costs and estimated earnings, net

(69,383
)
54,558

Net cash (used in) provided by operating activities

(22,739
)
185,311

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of short-term investments

(462,500
)
(375,000
)
Maturities of short-term investments

485,000

214,000

Purchases of property, plant and equipment

(4,006
)
(2,481
)
Loans made under notes receivable

(200
)
—

Net cash provided by (used in) investing activities

18,294

(163,481
)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash dividends paid

(15,548
)
(15,260
)
Proceeds from the exercise of stock options

2,781

10,988

Distributions to joint venture partners

(1,229
)
(7,500
)
Net cash used in financing activities

(13,996
)
(11,772
)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH

951

(192
)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(17,490
)
9,866

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

167,198

160,909

CASH AND CASH EQUIVALENTS, END OF PERIOD

$
149,708

$
170,775

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for income taxes

$
36,922

$
26,364

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~ARGAN, INC. AND SUBSIDIARIES~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~October 31, ~~2017~~2021

(Tabular dollar amounts in thousands, except per share data)

(Unaudited)

NOTE 1 —– DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Description of the Business

~~The condensed consolidated financial statements include the accounts of~~ Argan, Inc. (“Argan”)~~, its wholly owned subsidiaries and its financially controlled joint ventures. Argan~~ conducts operations through its ~~wholly owned~~wholly-owned subsidiaries, Gemma Power Systems, LLC and affiliates (“GPS”)~~, which provided 89% and 83% of consolidated revenues for the nine months ended October 31, 2017 and 2016, respectively;~~; 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 ~~cumulatively~~collectively referred to as the “Company.”

Through GPS and APC, the Company provides a full range of engineering, procurement, construction, commissioning, operations management, maintenance, project development, technical and other consulting services to the power generation ~~and~~market, including the renewable energy ~~markets for a~~sector. The wide range of customers ~~including~~includes independent power ~~project owners,~~producers, public utilities, power plant equipment suppliers and global energy plant construction ~~firms.~~firms with projects located in the United States (the “US”), the Republic of Ireland (“Ireland”) and the United Kingdom (the “UK”). Including a consolidated variable interest entity (“VIE”), GPS ~~including its consolidated joint ventures,~~ and APC represent ~~our~~the Company’s power industry services reportable segment. Through TRC, the industrial fabrication and field services reportable segment provides on-site services that support maintenance turnarounds, shutdowns and emergency mobilizations for industrial plants primarily located in the ~~southern United States~~southeastern region of the US and that are based on its expertise in producing, delivering and installing fabricated ~~steel~~metal components such as piping systems and pressure ~~vessels, heat exchangers and piping systems.~~vessels. Through SMC, ~~conducting~~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.~~

region of the US.

Basis of Presentation and Significant Accounting Policies

The condensed consolidated financial statements include the accounts of Argan, its wholly-owned subsidiaries and its financially controlled VIE. All significant inter-company balances and transactions have been eliminated in consolidation.

In Note ~~15,~~14, 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. All significant inter-company balances and transactions have been eliminated in consolidation. The deferred tax amounts included in the comparative balance sheet were reclassified to conform to the current year presentation.

The Company’s fiscal year ends on January 31 of each year.

The condensed consolidated balance sheet as of October 31, 2021, the condensed consolidated statements of earnings and stockholders’ equity for the three and nine months ended October 31, 2021 and 2020, and the condensed consolidated statements of cash flows for the nine months ended October 31, 2021 and 2020 are unaudited. The condensed consolidated balance sheet as of January 31, 2021 has been derived from audited financial statements. These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the US Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The accompanying condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements, the notes thereto, ~~(including the summary of significant accounting policies),~~ and the independent registered public accounting firm’s report thereon, that are included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, ~~2017.~~2021 (“Fiscal 2021”).

The condensed consolidated balance sheet as of October 31, 2017, the condensed consolidated statements of earnings for the three and nine months ended October 31, 2017 and 2016, and the condensed consolidated statements of cash flows for the nine months ended October 31, 2017 and 2016 are unaudited. The condensed consolidated balance sheet as of January 31, 2017 has been derived from audited financial statements. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, considered necessary to present fairly the financial position of the Company as of October 31, ~~2017,~~2021, and its earnings and cash flows for the interim periods presented. The results of operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for a full fiscal year.

Accounting Policies

6Income Taxes

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, which, among other changes, eliminates the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the expected loss for the entire year. In these instances, the estimated annual effective income tax rate shall be used to calculate the tax without limitation. The new standard also requires the recognition of a franchise (or similar) tax that is partially based on income as an income-based tax and the recording of any incremental tax that is incurred by the Company as a non-income based tax. The Company’s adoption of this new guidance, which was effective on February 1, 2021, did not alter the Company’s accounting for income taxes.

There are no other recently issued accounting pronouncements that have not yet been adopted that the Company considers material to its condensed consolidated financial statements.

Fair Values

The carrying value amounts presented in the condensed 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.

Variable Interest Entity

In January 2018, the Company was deemed to be the primary beneficiary of a VIE that is performing the project development activities related to the planned construction of a new natural gas-fired power plant. Consequently, the account balances of the VIE are included in the Company’s condensed consolidated financial statements, including development costs incurred by the VIE during the project development period. The total amount of the project development costs included in the balances for property, plant and equipment as of October 31, 2021 and January 31, 2021 was $7.5 million at both dates. Consideration for the Company’s engineering and financial support provided to the project includes the right to build the power plant pursuant to a turnkey engineering, procurement and construction (“EPC”) services contract that has been negotiated and announced.

Currently, the most significant project development hurdle for the project owner is the establishment of a fuel-supply source for the plant. The understanding of GPS is that there are viable gas supply alternatives under development by the project owner and others. Recovery of the Company’s investment in this project will depend on the successful completion of all project development efforts, which should lead to the arrangement of financing for the construction of the corresponding power plant, or the sale of the project. As currently contemplated, such financing or sale would provide cash flow sufficient for the project developer to repay the funds borrowed from GPS in full. Such repayment would represent a full recovery of GPS’s investment in the project.

NOTE 2 – REVENUES FROM CONTRACTS WITH CUSTOMERS

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,

Determine the transaction price of the contract,

Allocate the transaction price to the performance obligations, and

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.

~~Revenue Recognition~~ ~~— Revenues~~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,~~fixed-price or a time-and-materials basis, and primarily over time ~~and materials~~as performance obligations are satisfied due to the continuous transfer of control to the project owner or ~~cost-plus-fee basis, with typical durations of one month to three years.~~ other customer.

Revenues from ~~fixed price~~fixed-price contracts, including ~~a portion~~portions of estimated gross profit, are recognized as services are provided, based on costs incurred and estimated total contract costs using the ~~percentage~~cost-to-cost approach. If, at any time, the estimate of ~~completion method.~~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~~time-and-materials contracts are recognized when the related services are provided to the customer. ~~Revenues from cost-plus-fee construction~~

Almost 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 and are recorded as the corresponding contract work is performed.

The transaction price for a contract represents the value of the contract awarded to the Company that is used to determine the amount of revenues recognized onas of the ~~basis~~balance sheet date. It may reflect amounts of ~~costs incurred~~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 ~~plus the amount~~ of ~~fee earned. Changes~~contract performance as circumstances evolve related to ~~total estimated contract costs or losses, if any, are recognized~~such items as changes in the ~~period~~scope and price of contracts, claims, incentives and liquidated damages.

Contract assets include amounts that represent the rights to receive payment for goods or services that have been transferred to the project owner, 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. Contract retentions are billed amounts which, pursuant to the terms of the applicable contract, are not paid by project owners until a defined phase of a contract or project has been completed and accepted. These retained amounts are reflected in ~~which they~~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 ~~determined.~~considered current regardless of the term of the applicable contract; such amounts are generally collected by the completion of the applicable contract. The total of amounts retained by project owners under construction contracts at October 31, 2021 and January 31, 2021 were $41.3 million and $36.8 million, respectively.

Variable Consideration

~~Unpriced change orders, which represent~~Amounts for contract variations for which the Company has ~~project owner~~project-owner directive for additional work or ~~authorization for~~other scope ~~changes~~change, but not for the price associated with the corresponding ~~change,~~additional effort, are ~~reflected~~included in ~~revenues~~the transaction price when it is considered probable that the applicable costs will be recovered through a ~~change in~~modification to the contract price. There were no significant unpriced change orders included in the total contract value amounts used to determine revenues as of October 31, 2017. Amounts of identified change orders that are not yet considered probable as of the corresponding balance sheet date are excluded from forecasted revenues. Actual costs related to change orders are expensed as they are incurred. Contract results may be impacted by estimates of the amounts of change orders that we expect to receive. The effects of any ~~resulting revisions~~revision to ~~revenues and estimated costs~~a transaction price can be determined at any time and they could be material. ~~In general, contract claims are reflected~~The Company may include in ~~revenues only when an agreement on~~the corresponding transaction price a portion of the amount claimed in a dispute that it expects to receive from a project owner. Once a settlement of the dispute has been reached with the project ~~owner.~~owner, the transaction price may be revised again to reflect the final resolution. The aggregate amount of such contract variations included in the transaction prices that were used to determine project-to-date revenues at October 31, 2021 and January 31, 2021 were $6.8 million and $16.6 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 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.

~~Fair Values~~ — 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 ~~carrying value~~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 ~~presented~~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.

Accounting for the Subcontract Loss

Construction activities that were performed by APC on the mechanical installation of the boiler for a biomass-fired power plant under construction in Teesside, England, the Tees Renewable Energy Plant (“TeesREP”), were suspended in March 2020 due to the COVID-19 pandemic, pending preparations being made by the contractors and subcontractors to comply with new and evolving government guidance concerning public health protocols. At the time of the suspension of work on the TeesREP project, APC had completed approximately 90% of its subcontracted work.

APC entered into an amendment to the subcontract with its customer, effective June 1, 2020, covering the various terms and conditions for completion of the installation of the boiler. The agreement represented a global settlement of past commercial differences with both parties making significant concessions, and converted the billing arrangements for the remaining work to a time-and-materials basis. During October 2020, APC and its customer agreed to additional contractual changes that effectively recognized APC’s completion of the single performance obligation and that established a time-and-materials contractual arrangement covering any additional works requested by APC’s customer until completion of APC’s engagement which occurred during the current year.

The accounting for the subcontract, as amended, resulted in reductions to the subcontract loss that were recorded during the three and nine months ended October 31, 2020, in the approximate amounts of $2.8 million and $4.1 million, respectively. Accordingly, the final amount of the TeesREP subcontract loss was $29.5 million, and the remaining subcontract loss reserve balance was eliminated as of October 31, 2020. The total amounts of accounts receivable and contract assets related to the TeesREP project and included in the condensed consolidated balance sheets ~~for~~were less than $0.1 million as of October 31, 2021 and were $4.7 million as of January 31, 2021.

Remaining Unsatisfied Performance Obligations (“RUPO”)

The amount of RUPO represents the ~~Company’s cash and cash equivalents, short-term investments, accounts receivable and accounts payable are reasonable estimates~~unrecognized revenue value of ~~their fair values due~~active contracts with customers as determined under the revenue recognition rules of US GAAP. Increases to RUPO during a reporting period represent the transaction prices associated with new contracts, as well as additions to the ~~short-term nature~~transaction prices of ~~these instruments.~~existing contracts. The ~~fair value~~ amounts of such changes may vary significantly each reporting ~~units (as needed for purposes~~period based on the timing of ~~identifying indications~~major new contract awards and the occurrence and assessment of ~~impairment~~contract variations.

At October 31, 2021, the Company had RUPO of $491.6 million. The largest portion of RUPO at any date usually relates to ~~goodwill) are determined by averaging valuations~~EPC service 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 ~~are calculated using several market-based and income-based approaches deemed appropriate~~approximately 25% of the RUPO amount at October 31, 2021 will be included in the ~~circumstances.~~

~~NOTE 2 — RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

~~There is no recently issued accounting guidance that has not yet been adopted that the Company considers material to its condensed~~amount of consolidated ~~financial statements except for the following:~~

~~Revenue Recognition~~

~~In May 2014, the Financial Accounting Standards Board (the “FASB”) issued a new standard on revenue recognition, Accounting Standards Update 2014-09,~~ ~~Revenue from Contracts with Customers~~ (“ASU 2014-09”), in order to create a principles-based revenue recognition framework that may affect nearly every revenue-generating entity. ASU 2014-09 and a series of related amending pronouncements issued by the FASB become effective for public companies for fiscal years beginning after December 15, 2017. As a result, the Company will be required to adopt the new standard effective February 1, 2018.

The Company is completing its evaluation of the impacts of ASU 2014-09, as amended, on its consolidated financial statements. The Company expects to adopt the new standard using the allowable modified retrospective method which will result in a cumulative effect adjustment as of February 1, 2018. To date, the Company has examined an engineering, procurement and construction (“EPC”) contract of GPS that it believes is representative of the four other active EPC contracts of GPS, significant contracts that were awarded to TRC during the current year that the Company believes are representative of the large customer contractsrevenues that will be ~~in place at the date of adoption, and the largest contract awarded to APC~~recognized during the current year. Based on these reviews, it has come to preliminary conclusions on the impact of the new standard on the revenues of the Company using the 5-step process prescribed by ASU 2014-09, as amended. The Company does not believe that the adoption of the standard will have a significant impact on the revenue recognition patterns for its long-term contracts as compared to revenues recognized under the existing revenue guidance, assuming that contract structures similar to those in place are in effect at the time of the Company’s adoption. The Company expects that most of its future revenues will continue to be recognized over time utilizing the cost-to-cost measure of progress similar to current practice. However, there are certain industry-specific implementation issues that are still unresolved and, depending on the resolution of these matters, conclusions on the impact on the Company’s revenue recognition patterns could change. Through the date of adoption, the Company will continue to evaluate the impacts of ASU 2014-09, as amended, on its large EPC and its smaller long-term contracts to ensure that its preliminary conclusions continue to remain accurate for future revenues. Additionally, the Company is continuing its assessment of the impact of ASU 2014-09, as amended, on its financial statement disclosures which are expected to be more extensive based on the requirements of the new standard.

~~Leases~~

~~In February 2016, the FASB issued Accounting Standards Update 2016-02,~~ ~~Leases,~~ which amends the existing guidance and which will require recognition of operating leases with lease terms of more than twelve months on the balance sheet. For these leases, companies will record assets for the rights and liabilities for the obligations that are created by the leases. The pronouncement will require disclosures that provide qualitative and quantitative information for the lease assets and liabilities presented in the financial statements. Although the adoption of this pronouncement, which is effective for fiscal years beginning after December 15, 2018, will affect the Company’s condensed consolidated financial statements, the Company has not yet determined the complete extent or significance of the changes.

~~Goodwill~~

~~In January 2017, the FASB issued Accounting Standards Update 2017-04,~~ ~~Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment~~. Current guidance requires a public entity to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. The amendments in the new pronouncement remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment.

As early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017, the Company intends to use the new guidance in the determination of any goodwill impairment loss determined in connection with the Company’s annual testing as of November 1, 2017, and in the future. The effect of the adoption of this new standard is not expected to be material to the Company’s consolidated financial statements.

~~NOTE 3 — CONSTRUCTION JOINT VENTURES~~

GPS assigned its EPC contracts for two natural gas-fired power plants to two separate joint ventures that were formed in order to perform the work for the applicable project and to spread the bonding risk of each project. The joint venture partner for both projects is a large civil contracting firm. The corresponding joint venture agreements, as amended, provide that GPS has the majority interest in any profits, losses, assets and liabilities resulting from the performance of the contracts. Final contractual completion of the two projects was achieved in October 2016 and December 2016, respectively. GPS has no significant remaining commitments under these arrangements except for the provision of services under the related warranty obligations.

Due to the financial control by GPS, the accounts of the joint ventures have been included in the Company’s condensed consolidated financial statements since the commencement of contract activities (near the endremainder of the fiscal year ~~ended~~ending January 31, ~~2014). The shares~~2022. Most of the ~~profits~~remaining amount of RUPO at October 31, 2021 is expected to be recognized in revenues during the fiscal year ending January 31, 2023.

Revenues for future periods will also include amounts related to customer contracts awarded subsequent to October 31, 2021. 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 October 31, 2021. 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 may materially reduce future revenues below Company estimates.

Disaggregation of Revenues

The following table presents consolidated revenues for the three and nine months ended October 31, 2021 and 2020, disaggregated by the geographic area where the corresponding projects were located:


	Three Months Ended October 31,				Nine Months Ended October 31,
	2021		2020		2021		2020
United States	$	110,196	$	109,241	$	349,066	$	241,616
Republic of Ireland		9,698		8,331		21,947		10,760
United Kingdom		4,496		9,759		12,283		22,595
Other		61		—		504		—
Consolidated Revenues	$	124,451	$	127,331	$	383,800	$	274,971

The major portion of the ~~joint ventures have been determined based on~~Company’s consolidated revenues are recognized pursuant to fixed-price contracts with most of the ~~percentages~~remaining portions earned pursuant to time-and-material contracts. Consolidated revenues are disaggregated by ~~which~~reportable segment in Note 14 to the ~~Company believes profits will ultimately be shared by the joint venture partners.~~

condensed consolidated financial statements.

NOTE ~~4 —~~3 – CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

At October 31, 2021 and January 31, 2021, significant amounts of cash equivalents were invested in government and prime money market funds with net assets invested in high-quality money market instruments. Such investments include US Treasury obligations; obligations of US government agencies, authorities, instrumentalities or sponsored enterprises; and repurchase agreements secured by US government obligations. Due to market conditions, returns on money market instruments are currently minimal. 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 October 31, ~~2017~~2021 and January 31, ~~2017~~2021 consisted solely of certificates of deposit purchased from Bank of America (the “Bank”) with weighted average initial maturities of ~~269 days and 185 days, respectively (the “CDs”).~~less than one year. The Company has the intent and ability to hold ~~these securities~~the CDs until they mature, and they are carried at cost plus accrued interest which approximates fair value. ~~The total carrying value amounts as of October 31, 2017 and January 31, 2017 included accrued interest of $1.5 million and $0.8 million, respectively.~~ Interest income is recorded when earned and is included in other income. ~~As of~~At October 31, ~~2017~~2021 and January 31, ~~2017,~~2021, the weighted average annual interest rates of the outstanding CDs ~~classified as short-term investments~~ were ~~1.36%~~0.1% and ~~1.13%~~0.2%, respectively.

The Company has a substantial portion of its cash on deposit in ~~excess~~the US. The Company also maintains certain Euro-based bank accounts in Ireland and certain pound sterling-based bank accounts in the UK in support of ~~federally insured limits at~~ the ~~Bank, has purchased CDs from the Bank, and has liquid mutual fund investments through an arrangement with the Bank.~~operations of APC. Management does not believe that ~~maintaining substantially all such assets~~the combined amount of the CD investments and the cash deposited with the Bank and financial institutions in Ireland and the UK, in excess of government-insured levels, represents a material risk.

NOTE ~~5 —~~4 – ACCOUNTS AND NOTES RECEIVABLE

Amounts retained by project owners under construction contracts and included in accounts receivable as of October 31, 2017 and January 31, 2017 were $65.0 million and $36.2 million, respectively. Such retainage amounts represent funds withheld by project owners untilThe Company generally extends credit to a ~~defined phase of a contract or project has been completed and accepted by the project owner. Retention amounts and the length of retention periods may vary. Most~~customer based on an evaluation of the ~~amount outstanding as~~customer’s financial condition without requiring tangible collateral. Exposure to losses on accounts and notes receivable is expected to differ due to the varying financial condition of October 31, 2017 will not be collected until the fiscal year ending January 31, 2019. Retainage amounts related to active contracts are classified as current assets regardless of the term of the applicable contract and amounts are generally collected by the completion of the applicable contract.

each customer. The Company monitors its exposure to credit losses and ~~maintains~~may establish an allowance

for ~~anticipated~~credit losses ~~considered necessary under the circumstances~~ based on ~~historical experience with uncollected accounts and a review of its currently outstanding accounts and notes receivable. The amount~~management’s estimate of the ~~allowance~~loss that is expected to occur over the remaining life of the particular financial asset. The amounts of the provisions for uncollectible accounts as of October 31, 2017 and January 31, 2017 was approximately $2.5 million and $1.9 million, respectively, and it related primarily to project development loans made in prior years. The provision amounts for uncollectible accountscredit losses for the three and nine months ended October 31, ~~2017~~2021 and 2020 were ~~$0.1 million and $0.4 million, respectively.~~insignificant. The ~~Company did not record a provision~~allowances for ~~uncollectible accounts for the three and nine months ended October 31, 2016.~~

~~NOTE 6 — COSTS, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS~~

The table below sets forth the aggregate amounts of costs charged to and earnings accrued on uncompleted contracts compared with the billings on those contracts through October 31, 2017 and January 31, 2017.

October 31,
2017

January 31,
2017

Costs charged to uncompleted contracts

$
1,074,974

$
485,629

Estimated accrued earnings

177,065

78,708

1,252,039

564,337

Less - billings to date

1,388,705

770,386

$
(136,666
)
$
(206,049
)

~~Amounts above are included in the accompanying condensed consolidated balance sheets under the following captions:~~

October 31,
2017

January 31,
2017

Costs and estimated earnings in excess of billings

$
10,197

$
3,192

Billings in excess of costs and estimated earnings

146,863

209,241

$
(136,666
)
$
(206,049
)

~~Costs charged to contracts include amounts billed to the Company for delivered goods and services where payments have been retained from subcontractors and suppliers. Retained amounts~~credit losses as of October 31, ~~2017~~2021 and January 31, ~~2017, which~~2021 were ~~included~~also insignificant.

As of October 31, 2021 and January 31, 2021, there were past due notes receivables from a project developer in the ~~Company’s balance~~aggregate amount of ~~accounts payable as of those dates, totaled $34.6~~$1.8 million, ~~and $17.2 million, respectively. Generally, such amounts are expected to be paid prior to~~for which full receipt will most likely depend on the ~~completion~~successful financing of the ~~applicable~~related project. The Company placed these notes receivables on a non-accrual status during Fiscal 2021.

NOTE ~~7 —~~5 – PURCHASED INTANGIBLE ASSETS

At both October 31, ~~2017,~~2021 and January 31, 2021, the goodwill balances ~~included in the condensed consolidated balance sheets~~ related to the acquisitions of GPS ~~TRC~~ and ~~APC~~TRC were $18.5 million ~~$14.4 million~~ and ~~$2.0~~$9.5 million, respectively. ~~TRC’s management recently completed a reforecasting of its future financial results which provides essential data for the required annual goodwill~~Management does not believe that any events or circumstances that have occurred or arisen since January 31, 2021 require an updated assessment of TRC as of November 1, 2017. The new forecast presents a less favorable outlook for TRC, which represents the Company’s Industrial Fabrication and Field Services reportable business segment, than in the past. With this new information and using preliminary valuation analyses, including discounted net after tax cash flow estimates, management determined that the goodwill associated with this business may be impaired. Based on this currently available data, management estimates that the amount of possible loss ranges from an immaterial amount to $5.5 million, with the estimated federal income tax rate representing the most significant variable affecting the range. Depending on the completion of the goodwill ~~assessment including the resolution~~balances of this uncertainty, the Company may be required to record an impairment loss related to the goodwill of TRC in the fourth quarter of the current year up to an amount of $5.5 million. However, the completion of the full valuation of the business of TRC could materially change this outcome. Last year, APC recorded a goodwill impairment loss during the nine months ended October 31, 2016 of approximately $2.0 million.

either GPS or TRC.

The ~~other~~Company’s purchased intangible assets, other than goodwill, consisted of the following elements as of October 31, ~~2017~~2021 and January 31, ~~2017.~~2021:

October 31, 2017

January 31,

Estimated
Useful Life

Gross
Amount

Accumulated
Amortization

Net
Amount

2017 (net
amount)

Trade names -

GPS/TRC

15 years

$
8,142

$
3,221

$
4,921

$
5,328

SMC

indefinite

181

—

181

181

Process certifications -

TRC

7 years

1,897

520

1,377

1,581

Customer relationships -

TRC/APC

4-10 years

1,346

423

923

1,072

Other intangibles

various

46

43

3

19

Totals

$
11,612

$
4,207

$
7,405

$
8,181


		October 31, 2021						January 31,
	Estimated	Gross		Accumulated		Net		2021, (net
	Useful Life	Amounts		Amortization		Amounts		amounts)
Trade names
TRC	15 years	$	4,499	$	1,775	$	2,724	$	2,949
GPS	15 years		3,643		3,617		26		208
Process certifications	7 years		1,897		1,604		293		497
Customer relationships	10 years		916		542		374		443
Totals		$	10,955	$	7,538	$	3,417	$	4,097

NOTE ~~8 —~~6 – FINANCING ARRANGEMENTS

~~The~~During April 2021, the Company ~~maintains financing arrangements with the Bank that are described in an~~amended its Amended and Restated Replacement Credit Agreement with the Bank (the “Credit Agreement”)~~, dated~~. The amendment extended the expiration date of the Credit Agreement to May ~~15, 2017, which superseded~~31, 2024 and reduced the ~~Company’s prior arrangements with the Bank.~~borrowing rate. The Credit Agreement, ~~provides~~as amended, includes the following features, among others: a lending commitment of $50.0 million including a revolving loan ~~with a maximum borrowing amount of $50.0 million that is available until May 31, 2021~~ with interest at the 30-day LIBOR plus ~~2.00%.~~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. 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. The~~business as defined in the Credit Agreement.

At October 31, 2021, the Company ~~has approximately $14.9 million~~did not have any borrowings or outstanding letters of credit ~~outstanding~~issued under the Credit Agreement. However, subsequent to October 31, 2021, the Bank issued letters of credit in the total amount of $19.9 million in support of the activities of APC under a new customer contract. In connection with the current project development activities of the VIE that is described in Note 1, the Bank issued a letter of credit, outside the scope of the Credit Agreement, ~~but no borrowings.~~

in the approximate amount of $3.4 million as of October 31, 2021 and January 31, 2021 for which the Company has provided cash collateral.

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.~~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 October 31, 2021 and January 31, ~~2017,~~2021, the Company was ~~compliant~~in compliance with the ~~financial~~ covenants of ~~its financing arrangements.~~the Credit Agreement.

NOTE 7 – COMMITMENTS

~~NOTE 9 — LEGAL MATTERS~~Leases

The Company’s operating leases primarily cover office space that expire on various dates through September 2031 and certain equipment used by the Company in the performance of its construction services contracts. Some of these equipment leases are 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 lease agreements, the Company is obligated to pay property taxes, insurance, and maintenance costs.

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 (currently LIBOR plus 1.6%) 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.

Operating lease expense amounts are recorded on a straight-line basis over the expected lease terms and were $1.1 million and $3.0 million for the three and nine months ended October 31, 2021, respectively, and were $0.5 million and $1.3 million for the three and nine months ended October 31, 2020, respectively. Operating lease payments for the three and nine months ended October 31, 2021 were $1.1 million and $3.0 million, respectively, and were $0.3 million and $1.2 million for the three and nine months ended October 31, 2020, respectively. For operating leases as of October 31, 2021, the weighted average lease term is 41 months and the weighted average discount rate is 2.5%.

The Company also uses equipment and occupies other facilities under short-term rental agreements. Rent expense amounts incurred under operating leases and short-term rental agreements (including portions of the lease expense amounts disclosed above) and included in costs of revenues for the three and nine months ended October 31, 2021 were $2.8 million and $9.0 million, respectively. Rent expense incurred under these types of arrangements and included in costs of revenues for the three and nine months ended October 31, 2020 was $2.3 million and $4.2 million, respectively. Rent expense incurred under these types of arrangements (including portions of the lease expense amounts disclosed above) and included in selling, general and administrative expenses for the three and nine months ended October 31, 2021 was $0.3 million and $0.7 million, respectively. Rent expense incurred under these types of arrangements and included in selling, general and administrative expenses for the three and nine months ended October 31, 2020 was $0.2 million and $0.7 million, respectively.

The aggregate amounts of operating leases added during the nine months ended October 31, 2021 and 2020 were $2.4 million and $2.3 million, respectively. The following is a schedule of future minimum lease payments for the operating leases that were recognized in the condensed consolidated balance sheet as of October 31, 2021.


Years Ending January 31,
Remainder of 2022	$	755
2023		1,020
2024		368
2025		214
2026		111
Thereafter		537
Total lease payments		3,005
Less interest portion		93
Present value of lease payments		2,912
Less current portion (included in accrued expenses)		1,665
Non-current portion (included in other noncurrent liabilities)	$	1,247

The future minimum lease payments presented above include amounts due under a long-term lease covering the primary offices and plant for TRC with the founder and current chief executive officer of TRC at an annual rate of $0.3 million with a term extending through April 30, 2022.

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 amounts that may be required to be paid in excess of the estimated costs to complete contracts in progress as of October 31, 2021 are not estimable.

As of October 31, 2021, the value of the Company’s unsatisfied bonded performance obligations, covering all of its subsidiaries, was approximately $272.4 million. In addition, as of October 31, 2021, there were bonds outstanding in the aggregate amount of approximately $0.8 million covering other risks including warranty obligations related to completed activities; these bonds expire at various dates over the next twelve months. Not all of our projects require bonding.

As of October 31, 2021, the Company has also provided a financial guarantee, subject to certain terms and conditions, on behalf of GPS to an original equipment manufacturer in the amount of $3.6 million in support of business development efforts. The Company believes that the fair value of this guarantee as of October 31, 2021 is not material.

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 condensed consolidated balances sheets. The liability amounts may be periodically adjusted to reflect changes in the estimated size and number of expected warranty claims.

NOTE 8 – LEGAL CONTINGENCIES

In the normal course of business, the Company may have pending claims and legal proceedings. ~~It is~~In the opinion of management, based on information available at this time, ~~that~~ there are no current claims and proceedings that could have a material adverse effect on the ~~Company’s~~ condensed consolidated financial statements ~~other than the one discussed~~as of October 31, 2021. During September 2021, GPS settled major litigation as described below. ~~The material amounts of any legal fees expected~~

In January 2019, GPS filed a lawsuit against Exelon West Medway II, LLC and Exelon Generation Company, LLC (together referred to ~~be incurred in connection with legal matters are accrued when such amounts are estimable.~~

~~On February 1, 2016, TRC was sued in Person County, North Carolina, by a subcontractor, PPS Engineers, Inc. (“PPS”~~as “Exelon”)~~, in an attempt to force TRC to pay invoices for services rendered~~ in the ~~total amount~~US District Court for the Southern District of ~~$2.3 million. PPS has placed liens on~~New York for Exelon’s breach of contract and failure to remedy various conditions which negatively impacted the ~~property~~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 ~~customers~~power generation units included in ~~several states where work~~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 ~~performed by PPS and it has also filed~~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, Argan’s wholly owned subsidiary, GPS, reached a ~~claim against~~final settlement of all outstanding claims between the ~~bond issued on behalf of TRC relating~~parties resulting in Exelon making a payment to ~~one significant project located in Tennessee~~GPS in the amount of ~~$2.5 million. On March 4, 2016, TRC filed responses to~~$27.5 million which was in excess of the ~~claims~~previously reported amount of ~~PPS.~~receivables and contract assets. The positions of TRC are that PPS failed to deliver a number of items required by the applicable contract between the parties and that the invoices rendered by PPS covering the disputed services will not be paid until such deliverables are supplied. Further, TRC maintains that certain sums are owed to it by PPS for services, furniture, fixtures, equipment, and software that were supplied by TRC on behalf of PPS that total approximately $2.2 million. The amounts invoiced by PPS are accrued by TRC and the corresponding liabilityexcess amount was included in ~~accounts payable in~~revenues.

NOTE 9 – STOCK-BASED COMPENSATION

On June 23, 2020, the ~~condensed consolidated balance sheets as of October 31, 2017 and January 31, 2017. TRC has not recorded an account receivable for~~Company’s stockholders approved the ~~amounts it believes are owed to it by PPS. A mediation effort was attempted in 2016 but it was unproductive and an impasse was declared.~~

~~The Company intends to continue to defend against the claim of PPS and to pursue its claims against PPS. Due to the uncertainty~~adoption of the ~~ultimate outcomes~~2020 Stock Plan (the “2020 Plan”), and the allocation of ~~these legal proceedings, assurance cannot be provided by the Company that TRC will be successful in these efforts. Management does not believe that resolution~~500,000 shares of the ~~matters discussed above will result in additional loss with material negative effect on the~~ Company’s ~~consolidated operating results in a future reporting period.~~

~~NOTE 10 — STOCK-BASED COMPENSATION~~

common stock for issuance thereunder. The Company’s board of directors may make share-based awards under ~~its 2011 Stock~~the 2020 Plan ~~(the “Stock Plan”)~~ to officers, directors and key employees. The 2020 Plan replaces 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 ~~incentive stock options (“ISOs”) or~~ nonqualified stock options, ~~(“NSOs”),~~incentive stock options, and restricted or unrestricted ~~common~~ stock. ~~ISOs granted~~The specific provisions for each award made pursuant to the terms of the 2020 Plan are documented in a written agreement between the Company and the awardee. All stock options awarded under the ~~Stock~~2020 Plan shall have an exercise price per share at least equal to the common stock’s market value ~~per share at~~on the date of ~~grant,~~grant. Stock options shall have ~~a term~~terms no longer than ten ~~years, and typically become fully exercisable~~ years. Typically, stock options are awarded with one ~~year from~~-third of each stock option vesting on each of the ~~date~~first three anniversaries of ~~grant. NSOs may be granted at an exercise price per share that differs from~~ the ~~common stock’s market value per share at the date of grant, may have up to a ten-year term, and typically become exercisable one year from the date of award.~~

corresponding award date.

As of October 31, ~~2017,~~2021, there were ~~1,061,650~~2,046,068 shares of ~~the Company’s~~ common stock reserved for issuance under the ~~Company’s stock option plans (including the~~ Stock ~~Plan and an expired predecessor plan), including 330,000~~Plans; this number includes 459,500 shares of ~~the Company’s~~ common stock available for future awards under the ~~Stock~~2020 Plan.

Stock Options

~~Summaries~~A summary of stock option activity under the Company’s ~~stock option plans~~approved Stock Plans for the nine months ended October 31, ~~2017~~2021 and ~~2016,~~2020, along with corresponding weighted average per share amounts, ~~are~~is presented below (shares in thousands):

	Shares		Exercise Price		Remaining Term (years)	Fair Value
Outstanding, February 1, 2017	707		$	39.04	7.82	$	10.22

									Exercise		Remaining
								Shares	Price		Term (years)	Fair Value
Outstanding, February 1, 2021								1,405	$	44.17	6.90	$	10.39
Granted	125		$	63.58				32	$	54.60
Exercised	(90	)	$	30.74				(41)	$	34.05
Forfeited	(10	)	$	71.75				(15)	$	50.21
Outstanding, October 31, 2017	732		$	43.81	7.59	$	11.61
Exercisable, October 31, 2017	452		$	28.75	6.52	$	7.76
Outstanding, October 31, 2021								1,381	$	44.64	6.32	$	10.46
Exercisable, October 31, 2021								1,053	$	45.51	5.66	$	11.18

Outstanding, October 31, 2020								1,364	$	44.14	6.96	$	10.52
Exercisable, October 31, 2020								865	$	46.40	5.97	$	11.76

Shares

Exercise
Price

Remaining
Term (years)

Fair Value

Outstanding, February 1, 2016

1,064

$
26.38

6.36

$
6.91

Granted

105

$
36.09

Exercised

(444
)
$
24.77

Forfeited

(5
)
$
36.73

Outstanding, October 31, 2016

720

$
28.71

7.21

$
7.62

Exercisable, October 31, 2016

555

$
27.13

6.55

$
7.16

The changes in the number of non-vested options to purchase shares of common stock for the nine months ended October 31, ~~2017~~2021 and ~~2016,~~2020, and the weighted average fair value per share for each number, are presented below (shares in thousands):


	Shares	Fair Value
Non-vested, February 1, 2021	467	$	8.01
Granted	32	$	11.12
Vested	(163)	$	8.43
Forfeitures	(8)	$	7.05
Non-vested, October 31, 2021	328	$	8.13

Non-vested, October 31, 2020	499	$	8.35

Shares

Fair Value

Non-vested, February 1, 2017

270

$
14.93

Granted

125

$
16.19

Vested

(105
)
$
9.66

Forfeited

(10
)
$
19.14

Non-vested, October 31, 2017

280

$
17.83

Shares

Fair Value

Non-vested, February 1, 2016

300

$
8.97

Granted

105

$
9.66

Vested

(240
)
$
7.63

Non-vested, October 31, 2016

165

$
9.17

Compensation expense amounts related to stock options were $1.3 million and $0.5 million for the three months ended October 31, 2017 and 2016, respectively, and were $3.6 million and $1.8 million for the nine months ended October 31, 2017 and 2016, respectively. At October 31, 2017, there was $1.5 million in unrecognized compensation cost related to outstanding stock options. The Company expects to recognize the compensation expense for these awards over the next twelve months. The total intrinsic ~~values~~value amounts of the stock options exercised during the nine months ended October 31, ~~2017~~2021 and ~~2016~~2020 were ~~$3.1~~$0.6 million and ~~$10.9~~$1.2 million, respectively. At October 31, ~~2017,~~2021, the aggregate market ~~values~~value amounts of the shares of common stock subject to outstanding and exercisable stock options that were “in-the-money” ~~as of October 31, 2017~~ exceeded the aggregate exercise prices of such options by ~~$18.7~~$4.3 million and ~~$18.1~~$3.4 million, respectively.

Restricted Stock Units

~~For companies with limited~~The changes in the maximum number of restricted stock ~~option exercise experience, guidance provided by~~units for the ~~SEC permits~~nine months ended October 31, 2021, and the ~~use of a “simplified method”~~weighted average fair value per share for each number, are presented below (shares in ~~developing~~thousands):


	Shares	Fair Value
Outstanding, February 1, 2021	117	$	17.71
Awarded	128	$	39.84
Issued	(40)	$	20.64
Outstanding, October 31, 2021	205	$	31.00

Outstanding, October 31, 2020	117	$	17.71

Performance-Based Restricted Stock Units

Pursuant to the ~~estimate~~terms of the ~~expected term~~Stock Plans and as described in the corresponding agreements with the executives, the Company awarded performance-based restricted stock units to 4 senior executives in April 2021 and 2 senior executives in April 2020, covering up to 49,000 and 45,000 maximum total numbers of shares of common stock, respectively, plus a ~~“plain-vanilla’’ share option,~~number of shares to be determined based on the ~~average~~amount of cash dividends deemed paid on shares earned pursuant to the awards. The issuance of the number of shares earned under the agreements, free of related restrictions, depends on the total return performance of the Company’s common stock measured against the performance of a peer-group of common stocks over three-year periods.

During the nine months ended October 31, 2021, the three-year vesting period for the restricted stock units awarded in April 2018 concluded and it was determined that 40,471 shares of common stock, including shares attributable to cash dividends, were earned pursuant to the performance criteria and other terms of the 2011 Plan and the ~~option term, which~~applicable award agreements. These shares were issued to the awardees in April 2021.

Renewable Performance-Based Restricted Stock Units

In April 2021, the Company ~~used~~awarded renewable energy project performance-based restricted stock units to ~~estimate~~2 senior executives at GPS as described in the ~~expected~~corresponding agreements with the executives. Each award covers 5,000 shares of the Company’s common stock plus a number of shares to be determined based on the amount of cash dividends deemed paid on shares earned pursuant to the awards. The issuance of the shares, free of restrictions, shall be based on the success of GPS in increasing the amount of RUPO related to renewable energy projects, as defined, during certain periods within the three-year term of each award. The awards establish RUPO hurdle amounts for separate periods of time defined in the awards, and assign a certain portion of the award shares to each hurdle. If a RUPO hurdle is exceeded (each is mutually exclusive), the number of shares earned based on the achievement of the applicable hurdle will be issued to the executives at the end of the corresponding period. If a RUPO hurdle amount is not achieved within the period of time defined in the awards, the award shares assigned to the hurdle are forfeited.

Time-Based Restricted Stock Units

During the nine months ended October 31, 2021, the Company also awarded time-based restricted stock units covering a total of 65,000 shares of common stock to senior executives and other employees pursuant to the terms of ~~its~~the Stock Plans and as described in the corresponding agreements with each awardee. Most of the shares will vest in equal installments on each of the first 3 anniversaries of the award date. Accordingly, at each vesting date, one-third of the award shares plus a number of shares to be determined based on the amount of cash dividends deemed paid on shares earned pursuant to the awards will be issued to each awardee. Of the 15,500 shares awarded in September 2021, most of these shares will vest on the three-year anniversary of award.

Fair Value

The fair value amounts of stock options ~~awarded~~and restricted stock units are recorded as stock compensation expense over the terms of the corresponding awards. Expense amounts related to stock awards were $0.9 million and $0.8 million for the three months ended October 31, 2021 and 2020, respectively. Expense amounts related to stock awards were $2.5 million and $2.2 million for the nine months ended October 31, 2021 and 2020, respectively.

At October 31, 2021, there was $6.2 million in ~~prior~~unrecognized compensation cost related to outstanding stock awards that the Company expects to expense over the next three years. ~~However,~~

The Company estimates the ~~Company’s~~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 ~~has become~~is sufficient to provide it with a reasonable basis onupon which to estimate the expected life of newly awarded stock options. ~~Accordingly,~~Risk-free interest rates are determined by blending the rates for three to five year US 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 Company’s common stock on the dates of award and the target number of shares for the awards (50% of the maximum number), 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 ~~expected life used~~fair value amount was calculated to be 88.5% of the aggregate market value of the target number of shares on the award date. For the renewable performance-based restricted stock units, which were awarded for the first time in April 2021, the determination of stock options awarded so far in calendar year 2017 was 3.35 years. The simplified method would have resulted in the use of 5.50 years as the estimated expected life of each of these stock options.

~~As a result, the aggregate~~ fair value of ~~this group of stock options~~each award was ~~reduced by $1.2 million, or approximately 19%. The effect~~determined to be 50% of the ~~change on~~aggregate market value of the amount of stock option compensation expense recorded during the three and nine months ended October 31, 2017 were reductions of $0.3 million and $0.8 million, respectively. The fair values of each stock option granted in the nine-month periods ended October 31, 2017 and 2016 were estimated on the corresponding dates of award using the Black-Scholes option-pricing model based on the following weighted average assumptions:

Nine Months Ended October 31,

2017

2016

Dividend yield

1.1
%
2.0
%
Expected volatility

36.0
%
33.9
%
Risk-free interest rate

1.6
%
1.4
%
Expected life (in years)

3.4

5.5

~~NOTE 11 — CASH DIVIDENDS~~

~~In September 2017, the Company’s board of directors declared a regular cash dividend of $1.00 per share~~shares of common stock ~~which was paid~~covered by the award on ~~October 31, 2017 to stockholders~~the date of ~~record at~~ the ~~close~~award. For the time-based restricted stock units, the fair value of ~~business~~each award equals the aggregate market price for the number of shares covered by each award on ~~October 20, 2017. In addition,~~ the ~~Company announced that its board~~date of directors intends to declare a regular quarterly cash dividend of $0.25 per share of common stock starting in the first quarter of its fiscal year ending January 31, 2019. In September 2016, the Company’s board of directors declared regular and special cash dividends of $0.70 and $0.30 per share of common stock, respectively, which were paid on October 28, 2016 to stockholders of record at the close of business on October 18, 2016.award.

NOTE ~~12 —~~10 – INCOME TAXES

Income Tax Expense Reconciliation

The Company’s income tax ~~expense~~ amounts for the nine months ended October 31, ~~2017~~2021 and ~~2016~~2020 differed from corresponding amounts computed by applying the federal corporate income tax rate of ~~35%~~ 21%to the ~~amounts of~~ income before income taxes for the periods as ~~shown~~presented below:


	Nine Months Ended October 31,
	2021		2020
Computed expected income tax expense	$	(9,924)	$	(2,702)
Difference resulting from:
State income taxes, net of federal tax effect		(1,015)		(40)
Net operating loss carryback benefit (see discussion below)		—		4,390
Adjustments and other differences		(289)		(257)
Income tax (expense) benefit	$	(11,228)	$	1,391

Foreign income tax expense for the nine months ended October 31, 2021 was $0.5 million; the foreign tax expense amount for the nine months ended October 31, 2020 was not material.

During the nine months ended October 31, 2021, the Company wrote-off previously established deferred tax assets in the ~~table below.~~amount of $0.3 million based on the estimated non-deductible portion of stock option compensation.

Nine Months Ended October 31,

2017

2016

Computed expected income tax expense

$
36,062

$
29,318

Increase (decrease) resulting from:

State income taxes, net of federal tax benefit

4,633

3,296

Domestic production activities deduction

(3,036
)
(2,345
)
Stock option exercises

(866
)
(2,807
)
Exclusion of non-controlling interests

(106
)
(2,334
)
Adjustments and other differences

1,051

1,994

$
37,738

$
27,122

Net Operating Loss (“NOL”) Carryback

AsIn an effort to combat the adverse economic impacts of ~~October~~the COVID-19 crisis, the US 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 US 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 the year ended January 31, 2020 (“Fiscal 2020”), which was approximately $39.5 million. The Company made the appropriate filing with the Internal Revenue Service (the “IRS”) requesting carryback refunds of income taxes paid for the years ended January 31, 2017 (“Fiscal 2017”), 2016 (“Fiscal 2016”) and 2015 (“Fiscal 2015”).

A deferred tax asset in the amount of $8.3 million was recorded as of January 31, ~~2017,~~2020 associated with the income tax benefit of the NOL for the year then ended. With the enactment of the CARES Act, the asset was moved to income taxes receivable (included in other current assets in the condensed consolidated balance sheets ~~included prepaid~~as of October 31, 2021 and January 31, 2021) where the value was increased to approximately $12.7 million. 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 substantial portion of the net amount of this additional income ~~taxes~~tax benefit, estimated at the time to be approximately $4.2 million, was recorded in the nine-month period ended October 31, 2020.

Research and Development Tax Credits

During the year ended January 31, 2019 (“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 ~~$3.5~~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 amount of 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. As described below, the IRS has concluded examinations of the Company’s consolidated federal income tax returns for Fiscal 2016 and Fiscal 2017, as amended to include research and development tax credits, and has commenced an examination of the Company’s consolidated federal income tax return for the year ended January 31, 2018 (“Fiscal 2018”) with an expressed intent to focus on the research and development tax credit included therein. All of the aforementioned filings were made prior to January 31, 2019.

The amount of identified but unrecognized income tax benefits related to research and development tax credits as of October 31, 2021 is $5.0 million, for which the Company has established a liability for uncertain income tax return positions, most of which is included in accrued expenses as of October 31, 2021 and ~~$3.9 million, respectively.~~January 31, 2021. The final outcome of these uncertain tax positions is not yet determinable. However, the Company does not expect that the amount of unrecognized tax benefits will significantly change due to any expiration of statutes of limitation over the next 12 months. However, it is possible that the disputes with the IRS related to the Company’s federal research and development tax credits (see discussion of income tax returns below) could be resolved within the next twelve months depending on the scheduling of an appeals hearing and/or the results of negotiations with the IRS. If resolution of the disputes occurs, it would result in the Company’s elimination of at least a substantial portion of the amount of the liability for uncertain income tax positions discussed above. As of October 31, ~~2017,~~2021, the Company does not believe that it has any other material uncertain income tax positions reflected in its accounts.

As of October 31, 2021 and January 31, 2021, the balances of other current assets in the condensed consolidated balance sheet included income tax refunds receivable and prepaid income taxes in the total amounts of approximately $25.9 million and $26.9 million, respectively. The income tax refunds include the amounts expected to be received from the IRS upon completion of the tax return examination appeals process identified below and the amount expected to be received from the IRS upon its processing of the Company’s NOL carryback refund request discussed above.

Income Tax Returns

The Company is subject to federal and state income taxes in the ~~United States of America,~~US, and income taxes in Ireland and the ~~Republic of Ireland, the United Kingdom and various other state and foreign jurisdictions.~~UK. Tax ~~regulations~~treatments within each jurisdiction are subject to the interpretation of the related tax laws and regulations ~~and~~which require significant judgment to apply. The Company is no longer subject to income tax examinations by ~~tax~~ authorities for its fiscal years ended on or before January 31, ~~2014~~2018 except for ~~a few~~several notable exceptions ~~relevant to the Company~~ including ~~the Republic of~~ Ireland, the ~~United Kingdom, California~~UK and ~~Texas~~several states where the open periods are one year longer.

The ~~Company received notice from Internal Revenue Service on November 7, 2017 that its~~IRS conducted an examination of the Company’s original federal consolidated income tax return for ~~the tax year ended January 31, 2016 has been selected for audit. At this time,~~Fiscal 2016. The IRS reported to the Company that no unfavorable adjustment items were noted during this examination. However, the Company consented to an extension of the audit timeline which enabled the IRS to also examine the amendment to the income tax return, which included the research and development credit for the year. In addition, the IRS opened an examination of the Company’s amended consolidated income tax return for Fiscal 2017. In substance, these efforts evolved into simultaneously conducted examinations of the research and development credits claimed in each year.

In January 2021, the IRS issued its final revenue agents report that documents its understanding of the facts, attempts to summarize the Company’s arguments in support of the research and development claims and states its position which disagrees with the Company’s treatment of a substantial amount of the costs that support the Company’s claims for Fiscal 2016 and Fiscal 2017. The Company believes that its arguments are sound and that the report does not ~~have reason~~present any new facts relating to ~~expect~~the issues or make any ~~material changes~~new arguments that would cause it to make any adjustments to its accounting for the research and development claims as of October 31, 2021. In March 2021, the Company submitted a formal protest of the findings of the IRS examiner and is pursuing its income tax ~~liability resulting from~~position with the ~~outcome~~IRS through the established protest and appeals process. The Company expects that the ultimate settlement of ~~this audit.~~the income tax dispute will be resolved on a basis favorable to the Company.

In November 2020, the Company was notified by the IRS that it intends to examine the consolidated income tax return for Fiscal 2018, with an expressed focus on the research and development tax credit claimed therein. By the time the appeals process commences, our protest may dispute the results of the examinations of the tax returns for all three years.

Solar Energy Projects

During the nine months ended October 31, 2021, the Company invested approximately $4.1 million in a limited liability company that makes equity investments in solar energy projects that are eligible to receive energy tax credits. The passive investment has been accounted for under the equity method and reported within other assets in our condensed consolidated balance sheet. 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 amount of $3.3 million were recognized during the nine months ended October 31, 2021. As of October 31, 2021, the Company’s remaining cash investment commitment was approximately $0.9 million.

At October 31, 2021, the corresponding investment balance was adjusted to reflect its share of the loss of the investment entity in the amount of approximately $0.4 million, which has been included as other expense in the Company’s condensed consolidated statement of earnings for the nine months ended October 31, 2021. The Company has also established deferred taxes related to the difference in the book and tax bases of the investments. This investment is expected to provide a positive overall return over the six-year expected life of the investment.

Supplemental Cash Flow Information

The amounts of cash paid for income taxes during the nine months ended October 31, 2021 and 2020 were $9.6 million (including $3.3 million in solar energy investment tax credits) and $3.8 million, respectively. During the nine months ended October 31, 2020, the Company received cash refunds of previously paid income taxes from various taxing authorities in the total amount of $0.9 million. The amount of income tax refunds received during the nine months ended October 31, 2021 was not material.

NOTE ~~13 — EARNINGS~~11 – NET INCOME PER SHARE ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN ~~INC.~~

~~Reconciliations of the number of weighted average basic shares outstanding to the number of weighted average diluted shares outstanding and the computations of basic~~Basic and diluted ~~earnings~~net income per share ~~for~~amounts are computed as follows (shares in thousands except in the notes):


	Three Months Ended October 31,
	2021		2020

Net income attributable to the stockholders of Argan	$	12,393	$	9,454

Weighted average number of shares outstanding – basic		15,774		15,680
Effect of stock awards ⁽¹⁾		189		153
Weighted average number of shares outstanding – diluted		15,963		15,833

Net income per share attributable to the stockholders of Argan
Basic	$	0.79	$	0.60
Diluted	$	0.78	$	0.60

(1)

For the three months ended October 31, 2021 and 2020, the weighted average numbers of shares determined on a dilutive basis exclude the effects of antidilutive stock options covering an aggregate of 579,167 and 506,501 shares of common stock, respectively.


	Nine Months Ended October 31,
	2021		2020

Net income attributable to the stockholders of Argan	$	36,029	$	14,300

Weighted average number of shares outstanding – basic		15,757		15,659
Effect of stock awards ⁽¹⁾		223		136
Weighted average number of shares outstanding – diluted		15,980		15,795

Net income per share attributable to the stockholders of Argan
Basic	$	2.29	$	0.91
Diluted	$	2.25	$	0.91

(1)

For the nine months ended October 31, 2021 and 2020, the weighted average numbers of shares determined on a dilutive basis exclude the effects of antidilutive stock options covering an aggregate of 366,500 and 688,000 shares of common stock, respectively.

NOTE 12 – CASH DIVIDENDS

On September 9, 2021, the Company’s board of directors declared a regular quarterly cash dividend in the amount of $0.25 per share of common stock, which was paid on October 29, 2021 to stockholders of record at the close of business on October 21, 2021. On June 24, 2021, the Company’s board of directors declared a regular quarterly cash dividend in the amount of $0.25 per share of common stock, which was paid on July 30, 2021 to stockholders of record at the close of business on July 22, 2021. On April 14, 2021, the Company’s board of directors declared a regular quarterly cash dividend in the amount of $0.25 per share of common stock, which was paid on April 30, 2021. During the nine months ended October 31, ~~2017 and 2016 are as follows (shares~~2020, the board of directors declared three regular quarterly cash dividends, each in ~~thousands):~~

Three Months Ended October 31,

2017

2016

Net income attributable to the stockholders of Argan, Inc.

$
17,229

$
18,073

Weighted average number of shares outstanding - basic

15,545

15,137

Effect of stock options (1)

248

464

Weighted average number of shares outstanding - diluted

15,793

15,601

Net income per share attributable to the stockholders of Argan, Inc.

Basic

$
1.11

$
1.19

Diluted

$
1.09

$
1.16

Nine Months Ended October 31,

2017

2016

Net income attributable to the stockholders of Argan, Inc.

$
64,993

$
49,977

Weighted average number of shares outstanding - basic

15,509

14,974

Effect of stock options (1)

287

516

Weighted average number of shares outstanding - diluted

15,796

15,490

Net income per share attributable to the stockholders of Argan, Inc.

Basic

$
4.19

$
3.34

Diluted

$
4.11

$
3.23

~~(1)~~ ~~Antidilutive shares excluded from~~ the ~~diluted computations~~amount of $0.25 per share of common stock, which were ~~155,000 for the three and nine months ended~~paid to stockholders on October 31, ~~2017.~~2020, July 31, 2020 and April 30, 2020, respectively. The ~~comparable numbers for~~Company also paid a special cash dividend in the ~~prior year were not material.~~amount of $1.00 per share of common stock on July 31, 2020.

NOTE ~~14 —~~13 – CUSTOMER CONCENTRATIONS ~~OF REVENUES AND ACCOUNTS RECEIVABLE~~

~~During the three and nine months ended October 31, 2017 and 2016, the~~The majority of the Company’s consolidated revenues ~~related~~relate to performance by the power industry services segment which provided ~~91%~~80% and 86% of consolidated revenues for the three months ended October 31, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~92%~~77% and ~~86%~~83% of consolidated revenues for the nine months ended October 31, ~~2017~~2021 and ~~2016,~~2020, respectively.

The ~~Company’s significant customer relationships~~industrial services segment represented 17% and 12% of consolidated revenues for the three months ended October 31, ~~2017 included three power industry service customers which accounted for approximately 36%, 24%~~2021 and ~~13%~~2020, respectively, and 20% and 15% of consolidated revenues for the nine months ended October 31, 2021 and 2020, respectively.

The Company’s most significant customer ~~relationships~~relationship for the three months ended October 31, ~~2016~~2021 included ~~four customers~~1 power industry service customer, which accounted for ~~approximately 21%, 19%, 18% and 15%~~56% of consolidated ~~revenues, respectively.~~

revenues. The Company’s most significant customer relationship for the three months ended October 31, 2020 included 1 power industry service customer, which accounted for 70% of consolidated revenues. The Company’s most significant customer relationships for the nine months ended October 31, ~~2017~~2021 included ~~four~~1 power industry service ~~customers~~customer and 1 industrial services customer, which accounted for ~~approximately 29%, 27%, 16%~~61% and ~~14%~~11% of consolidated revenues, respectively. The Company’s most significant customer ~~relationships~~relationship for the nine months ended October 31, ~~2016~~2020 included ~~five customers~~1 power industry service customer, which accounted for ~~approximately 17%, 16%, 16%, 14% and 14%~~69% of consolidated ~~revenues, respectively.~~revenues.

~~Accounts~~The accounts receivable balances from ~~four~~2 major customers ~~as of October 31, 2017~~ represented ~~22%, 22%, 16%~~25% and ~~15%~~21% of the corresponding ~~condensed~~ consolidated balance as of October 31, ~~2017, and accounts~~2021. Accounts receivable balances from ~~four~~3 major customers represented ~~18%~~26%, ~~17%, 17%~~11% and 11% of the corresponding consolidated balance as of January 31, ~~2017.~~

2021. The contract asset balances from 2 major customers represented 30% and 12% of the corresponding consolidated balance as of October 31, 2021. Contract asset balances from 2 major customers represented 64% and 12% of the corresponding consolidated balance as of January 31, 2021.

NOTE ~~15 —~~14 – SEGMENT REPORTING

~~Operating segments are defined as~~Segments represent components of an enterprise ~~about~~for which ~~separate~~discrete financial information is available that is evaluated regularly by the Company’s chief executive officer, who is the chief operating decision maker, ~~or decision making group,~~ in ~~deciding~~determining how to allocate resources and in assessing performance. The Company’s reportable segments ~~power industry services, industrial fabrication~~recognize revenues and ~~field services, and telecommunications infrastructure services,~~incur expenses, are organized in separate business units with different management teams, customers, talents and services, and may include more than ~~one~~1 operating segment. ~~The intersegment~~Intersegment revenues ~~of our operations,~~ and the related cost of revenues are netted against the corresponding amounts of the segment receiving the intersegment services. For the ~~three and~~ nine months ended October 31, ~~2017,~~2021, intersegment revenues totaled approximately ~~$0.2 million and $1.8 million, respectively.~~$2.7 million; such revenues for the three months ended October 31, 2021 were not material. For the three and nine months ended October 31, ~~2016,~~2020, intersegment revenues ~~were insignificant.~~totaled approximately $0.5 million and $1.4 million, respectively. Intersegment revenues for the aforementioned periods primarily related to services provided by ~~our~~the industrial fabrication and field services segment to ~~our~~the power industry services ~~segment.~~segment and were based on prices negotiated by the parties.

~~Presented~~

Summarized below are ~~summarized~~certain operating results and ~~certain~~ financial position data of the Company’s reportable business segments for the three and nine months ended October 31, ~~2017~~2021 and ~~2016.~~2020. The “Other” column in each summary includes the Company’s corporate ~~and unallocated~~ expenses.


Three Months Ended	Power		Industrial		Telecom
October 31, 2021	Services		Services		Services		Other		Totals
Revenues	$	99,560	$	21,402	$	3,489	$	—	$	124,451
Cost of revenues		76,517		18,703		3,096		—		98,316
Gross profit		23,043		2,699		393		—		26,135
Selling, general and administrative expenses		6,770		2,158		558		2,104		11,590
Income (loss) from operations		16,273		541		(165)		(2,104)		14,545
Other income, net		1,116		—		—		1		1,117
Income (loss) before income taxes	$	17,389	$	541	$	(165)	$	(2,103)		15,662
Income tax expense										(3,269)
Net income									$	12,393

Amortization of intangibles	$	61	$	166	$	—	$	—	$	227
Depreciation		145		564		109		1		819
Property, plant and equipment additions		36		60		223		2		321

Current assets	$	374,370	$	24,029	$	3,329	$	157,991	$	559,719
Current liabilities		247,693		9,015		1,696		641		259,045
Goodwill		18,476		9,467		—		—		27,943
Total assets		406,261		42,833		5,765		158,294		613,153

Three Months Ended October 31, 2017	Power Services		Industrial Services		Telecom Services		Other			Totals

Three Months Ended												Power		Industrial		Telecom
October 31, 2020												Services		Services		Services		Other		Totals
Revenues	$	212,493	$	16,574	$	3,878	$	—		$	232,945	$	109,712	$	15,730	$	1,889	$	—	$	127,331
Cost of revenues	178,472		13,797		2,958		—			195,227			91,263		14,218		1,507		—		106,988
Gross profit	34,021		2,777		920		—			37,718			18,449		1,512		382		—		20,343
Selling, general and administrative expenses	5,464		1,638		452		2,565			10,119			5,096		1,828		489		1,985		9,398
Income (loss) from operations	28,557		1,139		468		(2,565		)	27,599			13,353		(316)		(107)		(1,985)		10,945
Other income, net	1,623		—		—		69			1,692			172		—		—		3		175
Income (loss) before income taxes	$	30,180	$	1,139	$	468	$	(2,496	)	29,291		$	13,525	$	(316)	$	(107)	$	(1,982)		11,120
Income tax expense										12,062											(1,666)
Net income										$	17,229									$	9,454

Amortization of purchased intangible assets	$	87	$	171	$	—	$	—		$	258

Amortization of intangibles												$	62	$	164	$	—	$	—	$	226
Depreciation	226		425		71		4			726			178		654		106		2		940
Property, plant and equipment additions	476		463		265		—			1,204			164		34		81		—		279


Current assets	$	488,122	$	17,549	$	4,008	$	74,116		$	583,795	$	392,954	$	25,404	$	1,704	$	118,758	$	538,820
Current liabilities	280,538		9,546		1,525		707			292,316			245,808		13,762		709		751		261,030
Goodwill	20,548		14,365		—		—			34,913			18,476		9,467		—		—		27,943
Total assets	515,783		46,854		5,242		74,422			642,301			425,909		47,356		3,190		119,045		595,500

Three Months Ended
October 31, 2016

Power
Services

Industrial
Services

Telecom
Services

Other

Totals

Revenues

$
151,094

$
21,550

$
2,800

$
—

$
175,444

Cost of revenues

118,407

18,386

2,073

—

138,866

Gross profit

32,687

3,164

727

—

36,578

Selling, general and administrative expenses

6,391

1,410

316

1,731

9,848

Income (loss) from operations

26,296

1,754

411

(1,731
)
26,730

Other income, net

654

—

—

36

690

Income (loss) before income taxes

$
26,950

$
1,754

$
411

$
(1,695
)
27,420

Income tax expense

8,194

Net income

$
19,226

Amortization of purchased intangible assets

$
135

$
97

$
—

$
—

$
232

Depreciation

169

302

51

3

525

Property, plant and equipment additions

101

481

286

—

868

Current assets

$
410,143

$
19,269

$
2,649

$
67,909

$
499,970

Current liabilities

275,052

13,336

1,006

1,139

290,533

Goodwill

20,548

14,365

—

—

34,913

Total assets

435,208

50,363

3,297

69,975

558,843


Nine Months Ended	Power		Industrial		Telecom
October 31, 2021	Services		Services		Services		Other		Totals
Revenues	$	295,736	$	78,213	$	9,851	$	—	$	383,800
Cost of revenues		233,682		64,519		8,098		—		306,299
Gross profit		62,054		13,694		1,753		—		77,501
Selling, general and administrative expenses		17,976		6,017		1,528		6,292		31,813
Income (loss) from operations		44,078		7,677		225		(6,292)		45,688
Other income, net		1,564		—		—		5		1,569
Income (loss) before income taxes	$	45,642	$	7,677	$	225	$	(6,287)		47,257
Income tax expense										(11,228)
Net income									$	36,029

Amortization of intangibles	$	183	$	497	$	—	$	—	$	680
Depreciation		464		1,764		329		3		2,560
Property, plant and equipment additions		464		76		578		5		1,123


Nine Months Ended	Power		Industrial		Telecom
October 31, 2020	Services		Services		Services		Other		Totals
Revenues	$	227,363	$	42,163	$	5,445	$	—	$	274,971
Cost of revenues		192,583		38,096		4,310		—		234,989
Gross profit		34,780		4,067		1,135		—		39,982
Selling, general and administrative expenses		15,892		5,664		1,447		5,824		28,827
Income (loss) from operations		18,888		(1,597)		(312)		(5,824)		11,155
Other income, net		1,634		—		—		80		1,714
Income (loss) before income taxes	$	20,522	$	(1,597)	$	(312)	$	(5,744)		12,869
Income tax benefit								��		1,391
Net income									$	14,260

Amortization of intangibles	$	182	$	495	$	—	$	—	$	677
Depreciation		522		1,967		305		4		2,798
Property, plant and equipment additions		857		338		217		—		1,412

Nine Months Ended
October 31, 2017

Power
Services

Industrial
Services

Telecom
Services

Other

Totals

Revenues

$
662,131

$
50,203

$
10,903

$
—

$
723,237

Cost of revenues

540,986

44,634

8,396

—

594,016

Gross profit

121,145

5,569

2,507

—

129,221

Selling, general and administrative expenses

16,804

5,041

1,163

7,400

30,408

Income (loss) from operations

104,341

528

1,344

(7,400
)
98,813

Other income, net

4,043

—

—

178

4,221

Income (loss) before income taxes

$
108,384

$
528

$
1,344

$
(7,222
)
103,034

Income tax expense

37,738

Net income

$
65,296

Amortization of purchased intangible assets

$
262

$
514

$
—

$
—

$
776

Depreciation

580

1,144

202

10

1,936

Property, plant and equipment additions

691

2,800

513

2

4,006

Nine Months Ended
October 31, 2016

Power
Services

Industrial
Services

Telecom
Services

Other

Totals

Revenues

$
402,615

$
59,287

$
6,385

$
—

$
468,287

Cost of revenues

302,140

52,491

4,764

—

359,395

Gross profit

100,475

6,796

1,621

—

108,892

Selling, general and administrative expenses

13,688

4,532

944

5,265

24,429

Impairment loss

1,979

—

—

—

1,979

Income (loss) from operations

84,808

2,264

677

(5,265
)
82,484

Other income, net

1,192

—

—

91

1,283

Income (loss) before income taxes

$
86,000

$
2,264

$
677

$
(5,174
)
83,767

Income tax expense

27,122

Net income

$
56,645

Amortization of purchased intangible assets

$
385

$
367

$
—

$
—

$
752

Depreciation

459

841

135

9

1,444

Property, plant and equipment additions

944

1,082

453

2

2,481

ITEM 2. 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 October 31, ~~2017,~~2021, and the results of their operations for the three and nine ~~months~~month periods ended October 31, ~~2017~~2021 and ~~2016,~~2020, and should be read in conjunction with (i) the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (ii) the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for ~~the fiscal year ended January 31, 2017~~Fiscal 2021 that was filed with the SEC on April ~~11, 2017.~~

14, 2021 (the “Annual Report”).

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 2 and elsewhere in this Quarterly Report on Form 10-Q that may constitute “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements. ~~These~~Our forward-looking statements, including those relating to the potential effects of the COVID-19 pandemic on our business, 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 ~~our~~ 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 Part II of~~ this Quarterly Report on Form 10-Q and ~~Item 1A of Part I of~~ our Annual ~~Report on Form 10-K for the year ended January 31, 2017.~~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

Argan ~~Inc.~~ is a holding company that conducts operations through its wholly-owned subsidiaries, GPS, APC, SMC and TRC. Through GPS and APC, we provide a full range of engineering, procurement, construction, commissioning, operations management, maintenance, development, technical and consulting services to the power generation ~~and~~market, including the renewable energy ~~markets~~sector, for a wide range of customers, including independent power project owners, public utilities, ~~power plant~~ equipment suppliers and global energy plant construction firms. GPS ~~including its consolidated joint ventures,~~ and APC represent our power industry services reportable segment. Through TRC, the industrial fabrication and field services reportable segment provides on-site services that support maintenance turnarounds, shutdowns and emergency mobilizations for industrial plants primarily located in the ~~southern United States~~southeastern region of the US and that are based on its expertise in producing, delivering and installing fabricated steel components such as piping systems and pressure ~~vessels, heat exchangers and piping systems.~~vessels. Through ~~SMC, now conducting 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.~~region of the US.

~~At the holding company level, we~~We intend to make additional opportunistic acquisitions of and/or investments inby identifying companies with significant potential for profitable ~~growth. We~~growth and realizable synergies with one or more of our existing businesses. However, we may have more than one industrial ~~focus.~~focus depending on the opportunity. We expect that significant acquired companies will be ~~held~~maintained in separate subsidiaries that will be operated in a manner that best provides cash flows for the Company and value for our stockholders.

Overview

~~Overview~~Operating Results

~~Highlights for the current year include the following:~~

· Current year-to-date results for revenues, gross profit, income before income taxes and net income attributable to our stockholders for the nine months ended October 31, 2017 are strong as they increased by 54%, 19%, 23% and 30%, respectively, from the corresponding amounts in the prior year period. The gross profit percentage was 17.9% for the current year-to-date period.

· ~~EBITDA(1) attributable to the stockholders of Argan increased 33% to $105.4 million for the nine months ended October 31, 2017 as compared to $79.3 million for the corresponding prior year period.~~

· Our international subsidiary, APC, has begun to capitalize on the opportunities foreseen when we acquired this business in 2015. During the current year, it has been awarded two large construction-type contracts related to power plants in the United Kingdom with a combined contract value in excess of $109 million.

· During the third quarter, we declared and paid a regular cash dividend of $1.00 per share to our stockholders. In addition, we announced our intent to declare and pay a regular quarterly cash dividend of $0.25 per share, starting in the first quarter ending April 30, 2018.

· ~~Our tangible net worth(2) increased 23% to $305.9 million as of October 31, 2017 from $248.5 million as of January 31, 2017.~~

· ~~Our liquidity, or working capital(3), increased 23% to $291.5 million as of October 31, 2017 from $237.2 million as of January 31, 2017.~~

~~(1)~~ ~~EBITDA, or earnings before interest, taxes, depreciation and amortization, is a measure not recognized under US GAAP.~~

~~(2)~~ ~~We define tangible net worth as our total stockholders’ equity less goodwill and other intangible assets, net.~~

~~(3)~~ ~~We define working capital as our total current assets less our total current liabilities.~~

~~Our~~Consolidated revenues for the three months ended October 31, ~~2017 increased~~2021 were $124.5 million, which represented a slight decrease of $2.8 million, or 2.3%, from consolidated revenues of $127.3 million reported for the three months ended October 31, 2020.

The revenues of the power industry services segment decreased by ~~33%~~$10.1 million to ~~$232.9 million from $175.4~~$99.6 million for the three months ended October 31, ~~2016, providing EBITDA attributable to our stockholders for the current quarter of $30.3~~2021, from $109.7 million ~~or 13% of corresponding revenues. Gross profits~~reported for the three months ended October 31, ~~2017 increased~~2020. The revenues of this reportable segment of our business represented 80.0% of consolidated revenues for the three months ended October 31, 2021. For the three months ended October 31, 2020, the percentage share of consolidated revenues represented by ~~3% to $37.7 million from $36.6~~this reportable segment was 86.2%. The industrial services business reported revenues of $21.4 million for the three months ended October 31, ~~2016. However, our~~2021. This amount represented an increase of $5.7 million, or 36.1%, from revenues of $15.7 million reported by TRC for the three months ended October 31, 2020. Revenues provided by this reportable business segment represented 17.2% and 12.4% of corresponding consolidated revenues for the three months ended October 31, 2021 and 2020, respectively.

Consolidated gross profit ~~percentage declined~~for the three-month period ended October 31, 2021 was $26.1 million, or 21.0% of the corresponding consolidated revenues, which reflected primarily favorable contributions from the power industry services and industrial servicessegments. For the three-month period ended October 31, 2020, the consolidated gross profit was $20.3 million, which represented approximately 16.0% of the corresponding amount of consolidated revenues.

Selling, general and administrative expenses for the three months ended October 31, 2021 and 2020 were $11.6 million, or 9.3% of corresponding consolidated revenues, and $9.4 million, or 7.4% of corresponding consolidated revenues, respectively.

Due primarily to ~~16.2%~~the increase in consolidated pre-tax book income to $15.7 million for the three months ended October 31, 2021 from ~~20.8% as~~$11.1 million for the three months ended October 31, 2020, we ~~increased our estimated costs to complete certain EPC projects due to, primarily, increased labor and subcontractor costs. The corresponding reduction~~reported income tax expense in the amount of ~~forecasted gross margins had an unfavorable effect on gross profit~~$3.3 million for the current ~~quarter which caused, in part, our consolidated gross profit percentage to decrease to 17.9% for the nine months ended October 31, 2017 from 23.3% for the nine-month period ended October 31, 2016.~~

As explained below, the decline in the amount of income attributable to our joint venture partner and unfavorable discrete items for the current quarter caused our effective income tax rates to increase for current year periods compared with the corresponding periods last year.period. Income tax expense for the three months ended October 31, ~~2017~~2020 was ~~$12.1~~$1.7 million.

For the three months ended October 31, 2021, our favorable overall operating profit performance resulted in net income attributable to our stockholders in the amount of $12.4 million, or ~~41.0%~~$0.78 per diluted share. For the comparable period last year, we reported net income attributable to our stockholders in the amount of ~~income before income taxes. As~~$9.5 million, or $0.60 per dilutive share.

Consolidated revenues for the nine-month period ended October 31, 2021 were $383.8 million; this amount represented a ~~result, income tax expense~~39.6% improvement from the amount of revenues for the nine months ended October 31, ~~2017 was pushed upwards~~2020. The revenues of the power industry services segment increased by $68.3 million to ~~$37.7~~$295.7 million for the nine months ended October 31, 2021, from $227.4 million reported for the nine months ended October 31, 2020. The revenues of the power industry services segment represented 77.1% and 82.7% of consolidated revenues for the nine months ended October 31, 2021 and 2020, respectively. The industrial services business reported revenues of $78.2 million for the nine months ended October 31, 2021. This amount represented an increase of $36.0 million, or ~~36.6%~~85.5%, from revenues of $42.2 million reported by this business for the nine months ended October 31, 2020. Revenues provided by this reportable business segment represented 20.4% and 15.3% of corresponding consolidated revenues for the nine months ended October 31, 2021 and 2020, respectively.

Consolidated gross profit for the nine months ended October 31, 2021 was $77.5 million, or 20.2% of the corresponding consolidated revenues, which reflected primarily the favorable impact of higher consolidated revenues. For the nine months ended October 31, 2020, our consolidated gross profit was $40.0 million, or 14.5% of corresponding consolidated revenues for the period.

Selling, general and administrative expenses were $31.8 million and $28.8 million for the nine months ended October 31, 2021 and 2020, respectively, or 8.3% and 10.5% of revenues for the corresponding periods, respectively.

Due primarily to the consolidated pre-tax book income reported for the nine months ended October 31, 2021 in the amount of ~~income before income taxes. Last year, the~~$47.3 million, we reported income tax ~~rates~~expense in the amount of $11.2 million for the ~~comparable periods were 29.9% and 32.4%, respectively.~~period. For the nine months ended October 31, 2020, we recorded an income tax benefit in the amount of $1.4 million which reflected primarily a net operating loss carryback benefit of $4.4 million, most of which was recorded in the first quarter last year.

~~A decrease in gross profit percentage and an increase in income taxes, partially offset by increased revenues, were~~For the ~~primary causes of the decline~~nine months ended October 31, 2021, our improved overall operating performance resulted in net income attributable to our stockholders ~~to $17.2~~in the amount of $36.0 million, or ~~$1.09~~$2.25 per diluted ~~share,~~share. For the comparable period last year, we reported net income attributable to our stockholders in the amount of $14.3 million, or $0.91 per dilutive share.

The primary drivers of our strong financial performance for the three and nine months ended October 31, ~~2017 from $18.1 million, or $1.16 per diluted share,~~2021 were the revenues and gross margin contributions associated with the construction projects of GPS. These projects represented the major portion of our business for the ~~three~~periods.

We believe that all of our businesses have been adversely impacted, to some degree, by difficulties presented by the COVID-19 pandemic, especially last year when the outbreak commenced. For example, the results for APC were hurt by the slow resumption of postponed Irish works projects and the suspension and restart of construction activities on a certain major project. The challenges of managing the continuing activities of the Guernsey Power Station project during the periods of various health and safety restrictions have resulted in modifications to construction plans and schedules. In addition, our consolidated revenues for the nine months ended October 31, ~~2016,~~2020 in particular suffered from the effects of project delays by customers of both TRC and SMC attributable to the restrictive work environments caused by the pandemic.

We believe that all of our operating companies have managed the challenges presented by this ongoing pandemic with relative success so far. A significant amount of effort has been 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 ~~reduction~~number of ~~4.7%.~~

~~Execution on Contract Backlog~~

Atdifferent safety measures, including COVID-19 testing onsite at a major job site, remote work, staggered shifts in various offices, contract tracing and quarantines. Meanwhile, our commitment to the maintenance of our operations and support teams, and the dedication to performance that our employees maintained during the crisis, positioned us well to satisfy the performance requirements of our customers as general business conditions improved during the nine months ended October 31, ~~2017,~~2021. However, the recent resurgence of new COVID-19 virus variants represents uncertainty regarding our ~~contract backlog was $509 million. The following table summarizes our large power plant projects:~~

~~Current Project~~	~~Location~~	~~Facility Size~~	~~FNTP Received(1)~~	~~Scheduled Completion~~
~~Caithness Moxie Freedom Generating Station~~	~~Pennsylvania~~	~~1,040 MW~~	~~November 2015~~	~~2018~~
~~CPV Towantic Energy Center~~	~~Connecticut~~	~~785 MW~~	~~March 2016~~	~~2018~~
~~NTE Middletown Energy Center~~	~~Ohio~~	~~475 MW~~	~~October 2015~~	~~2018~~
~~NTE Kings Mountain Energy Center~~	~~North Carolina~~	~~475 MW~~	~~March 2016~~	~~2018~~
~~Exelon West Medway II Facility~~	~~Massachusetts~~	~~200 MW~~	~~April 2017~~	~~2018~~
~~TeesREP Biomass Power Station~~	~~Teesside (England)~~	~~299 MW~~	~~May 2017~~	~~2019~~
~~InterGen Spalding OCGT Expansion Project~~	~~Spalding (England)~~	~~298 MW~~	~~November 2017~~	~~2019~~

~~(1)~~ ~~Full Notice to Proceed (“FNTP”) represents~~realizing expected financial results for the ~~formal notice provided by~~remainder of the ~~customer instructing us to commence the activities covered by the corresponding contract.~~

Contract backlog represents the total value of projects awarded less the amounts of revenues recognized to date on those contracts at a specific point in time. We believe contract backlog is an indicator of future revenues and earnings potential. Although contract backlog reflects business that we consider to be firm, cancellations or reductions may occur and may reduce contract backlog and our expected future revenues. Despiteyear if the new ~~awards to APC that are identified above,~~outbreak prevents our work crews from completing project work as scheduled.

Engineering, Procurement and Construction Service Contracts

While the ~~total~~

value of our contract backlog has declined by half during the current year which substantially reflects the amounts of revenues earned by GPS due to its performance on the first four projects identified above. New opportunities have been pursued and negotiations continue for several projects.

~~The first four projects identified in the chart above, all EPC contracts, were the most significant drivers of our~~positive financial results for the three and nine months ended October 31, ~~2017, which together~~2021 have been encouraging to us, third quarter events that may affect the level of future business have been mixed.

At October 31, 2021, the project backlog for the power industry services reporting segment was approximately $0.8 billion. The comparable backlog amount as of January 31, 2021 was also $0.8 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 (project backlog is larger than the value of remaining unsatisfied performance obligations, or RUPO, on active contracts; see Note 2 to the accompanying consolidated financial statements).

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.

A meaningful amount of the project backlog amount at October 31, 2021 was represented ~~approximately 82% and 87%~~by the Guernsey Power Station. The ramp-up of activity on this project since August 2019 has favorably impacted our consolidated operating results since then. Substantial completion of this project is currently scheduled to occur during the second half of the fiscal year ending January 31, 2023.

Despite our commitment to the construction of state-of-the-art, natural gas-fired power plants as important elements of our ~~consolidated revenues~~country’s electricity-generation mix in the future, we have been directing certain business development efforts to winning projects for the ~~three~~erection of utility-scale wind farms and ~~nine months ended~~solar fields and for the construction of hydrogen-based and other renewable energy projects. We have successfully completed these types of projects in the past and we renewed efforts to obtain new work in the renewable power sector that will complement our natural gas-fired EPC services projects going forward. During Fiscal 2021, GPS began exclusive negotiations with the owners of several significant renewable projects in anticipation of beginning the corresponding EPC services contract activities during the fiscal year ending January 31, 2022 (“Fiscal 2022”) and beyond.

Our efforts led to our announcement in May 2021 that GPS entered into an EPC services contract with 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 activities were begun by GPS immediately. Project completion is currently scheduled to occur during the second half of calendar year 2022. The unique Maple Hill Solar project, which is located in Cambria County, will be constructed using over 235,000 photovoltaic modules to generate approximately 100 MW of electrical power.

The business development efforts conducted by our APC subsidiary have resulted in an increase in the project backlog of this business from $13.8 million at January 31, 2021 to $124.2 million as of October 31, ~~2017, respectively. Revenues~~2021. The most significant award occurred in October 2021 as APC entered into an engineering and construction services contract with EPUKI London, UK, to construct a 2 x 330 MW natural gas-fired power plant in Carrickfergus, Belfast, Northern Ireland that will replace coal-fired units at the site. The power trains will be provided by Siemens Energy which will utilize SGT5-4000F gas turbines. The facility is being developed by EPNI Energy Limited. A notice to proceed was received and project activities have commenced. The overall project completion date is expected in the latter half of calendar 2023.

As discussed at previous reporting dates, GPS has been awarded certain EPC services contracts where the commencement of the projects has been delayed.

In January 2020, GPS entered into an EPC services contract with Harrison Power, LLC (“Harrison Power”) to construct a 1,085 MW natural gas-fired power plant in the Village of Cadiz, Harrison County, Ohio. The project is being developed by EmberClear, the parent company of Harrison Power, and Advanced Power Services (NA) Inc. We anticipate adding the value of this new contract to project backlog closer to its financial close and expected start date. Previously, we anticipated that the start of construction activities for ~~each~~this project would occur before the end of ~~these~~Fiscal 2022. However, delays continue and we cannot predict with certainty when the project will commence. As with most projects, the start dates for construction are generally controlled by the project owners.

On March 12, 2020, we announced that GPS had entered into an EPC services contract with NTE Connecticut, LLC to construct the Killingly Energy Center, a 650 MW natural gas-fired power plant, in Killingly, Connecticut. The facility is being developed by NTE Energy, LLC (“NTE”). However, in November 2021, the New England electricity grid operator requested that the Federal Energy Regulatory Commission (“FERC”) grant it permission to terminate its capacity supply contract with NTE because it does not believe that NTE will ~~decline~~meet its critical path schedule milestones as required. Such termination would jeopardize the future of this project.

As announced in Fiscal 2019, GPS entered into an EPC services contract to construct the Chickahominy Power Station, a 1,740 MW natural gas-fired power plant, in Charles City County, Virginia. Even though we have been providing financial and technical support to the project development effort through a consolidated VIE and significant project development milestones have been achieved, we have not included the value of this contract in our project backlog. Due to several factors that have interrupted the pace of the development of this project, including additional costs and time being required to secure the fuel-supply for the plant and to obtain the necessary equity financing, we currently cannot predict when construction will commence, if at all.

In May 2019, GPS entered into an EPC services contract to construct a 625 MW power plant in Harrison County, West Virginia. Caithness is partnered with ESC Harrison County Power, LLC to develop this project. As a limited notice to proceed with certain preliminary activities was received from the owner of this project at the time, the value of the contract was added to our project backlog. However, meaningful project development activities for the facility appear to have been discontinued, including the lapse of the project owner’s option to purchase the land for the plant. If development milestones are not achieved over the next several quarters, ~~as they progress beyond peak construction~~our evaluation will most likely result in ~~their~~the removal of the value of this power plant from project ~~life-cycles. In August 2017,~~backlog.

We have maintained that the delays in new business awards to GPS and the project ~~owner provided us with~~construction starts of certain previously awarded projects relate to a variety of factors, especially in the necessary authorization under the turnkey EPC contract to start construction of a dual-fuel, simple cycle power plant in Medway, Massachusetts. The new facility will feature two 100 MW combustion turbine generators with state-of-the-art noise mitigating improvements.

In May 2017, APC announced that it has received from Técnicas Reunidas, S.A. (“TR”) a contract for the erection of a biomass boiler, a critical component of a new power plant being constructed in Teesside, which is near the northeast coast of England. Work began this summer with completion scheduled in 2019. TR is a Spain-based global general contractor. In addition, in October 2017, APC was awarded a contract to perform certain engineering, procurementnortheastern and ~~construction services for InterGen, a company that develops, constructs and operates power projects around the world. The Spalding Energy Expansion plan includes APC’s project for the expansion~~mid-Atlantic regions of the existing gas-fired power station in Spalding (located in the East Midlands region of England) with an open cycle gas turbine unit with a planned capacity of 298 MW. Substantial completion for this project is also scheduled for 2019.

~~Despite these positive developments,~~US. Currently, we believe that the ~~uncertainty surrounding the level of regulatory support for coal as part~~ability of the owners of fully developed gas-fired power plant projects to close on equity and permanent debt financing was challenged by uncertainty in the capital markets caused by multiple factors including delayed capacity auctions and mounting public and political opposition to fossil-fuel energy ~~mix,~~projects.

The current year announcement by the PJM of a new capacity auction schedule may remove some amount of uncertainty for project developers in forecasting future streams of revenues. In fact, the results of the first capacity auction conducted by PJM in over 3 years were announced on May 2, 2021. Even though pricing was significantly lower than in prior years, over 5.6 GW of new combined cycle, gas-fired power plants cleared the auction, representing over 75% of all new capacity units. The remaining new capacity was comprised of solar and wind powered energy plants. Despite these results, new gas-fired power plant EPC projects may continue to be delayed until the visibility regarding future capacity revenue streams is further restored with the results of the next capacity auction for the PJM region, that has been rescheduled to January 25, 2022.

Other headwinds for future gas-fired power plant developments remain including an increase in the amount of power generating capacity provided by renewable energy assets, improvements and ~~the improvements~~decreasing prices in renewable energy storage solutions including battery resources, increased environmental activism and the results of the 2020 presidential election in the US.

Protests against fossil-fuel related energy projects continue to garner media attention and stir public skepticism about new projects resulting in delays due to onsite protest demonstrations, indecision by local officials and lawsuits. In the New England and mid-Atlantic regions of the US, power plant operators are challenged by the requirements of the Regional Greenhouse Gas Initiative, or “RGGI,” which is a cooperative effort by states in these regions to cap and reduce power sector carbon dioxide emissions. In addition, various cities, counties and states have adopted clean energy and carbon-free goals or objectives with achievement expected by a certain future date, typically 10 to 30 years out. 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 ~~initiation~~initial phases for the construction of new natural gas-fired power plants which continue to be ~~delayed~~deferred by project owners. ~~Other unfavorable factors may include~~

Perhaps the ~~potential for future volatility~~most significant uncertainty relates to the policies of President Biden who is proposing to make the electricity production in ~~natural gas prices that appears~~the US carbon free by 2035 and to ~~be giving~~put the country on the path to achieve net zero carbon emissions by 2050. Mr. Biden caused the US to re-join the Paris Climate Agreement and he has cancelled the permit allowing the Keystone XL Pipeline to cross the border from Canada into the US. In addition, Mr. Biden ordered a ~~short-term boost to coal-fired power generation and disappointing energy auctions during~~pause on the ~~current year for new power generating assets.~~

~~In the current year, we have also seen approval delays and public opposition to~~US government entering into new oil and natural gas ~~pipelines develop as hurdles for gas-fired power plant developers. Interstate pipelines require~~leases on public lands or offshore waters to the ~~approval of~~extent possible, the ~~Federal Energy Regulatory Commission (“FERC”), whose members require a quorum to act. The lack~~launch of a ~~quorum for a period~~rigorous review of ~~six months earlier this year left FERC unable~~all existing leasing and permitting practices related to ~~provide approval decisions~~fossil fuel development on ~~major~~public lands and waters, and the identification of steps that can be taken to double renewable energy ~~projects. New members have~~production from offshore wind by 2030.

Market Outlook

The overall growth of our power business has been ~~appointed and approved, but progress in reducing~~based substantially on the number of pending decisions has been slow. In addition, a continued increase in environmental activism has garnered media attention and public skepticism about new pipelines resulting in project delays due to onsite protest demonstrations, indecision by local officials and lawsuits. Pipeline approval delays may jeopardize projects that are needed to bring supplies of natural gas to potentially newcombined cycle gas-fired power ~~plant sites thereby increasing~~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. By 2020, coal accounted for less than 20% of total electricity generation. On the ~~risk~~other hand, natural-gas fired power plants provided approximately 39% of the electricity generated by utility-scale power ~~plant project delays or cancellations.~~

~~Possible Impairment Loss~~

TRC’s management recently completed a reforecasting of its future financial results which provides essential data for the required annual goodwill assessment of TRC as of November 1, 2017. The new forecast presents a less favorable outlook for TRC, which represents our Industrial Fabrication and Field Services reportable business segment, thanplants in the past. With this new information and using preliminary valuation analyses including discounted net after tax cash flow estimates, management determined that the goodwill associated with this business may be impaired. Based on this currently available data, management estimates thatUS in 2020, representing an increase of 64% from the amount of ~~possible loss ranges from an immaterial amount to $5.5 million, with~~electrical power generated by natural gas-fired power plants in 2010, which provided approximately 24% of net electricity generation for 2010. In the ~~estimated federal income tax rate representing~~reference case of its Annual Energy Outlook 2021, the most significant variable. Depending on the completion of the goodwill assessment including the resolution of this uncertainty, we may be required to record an impairment loss related to the goodwill of TRC in the fourth quarter of the current year up to an amount of $5.5 million. However, the completion of the full valuation of the business of TRC could materially change this outcome.

~~Outlook~~

~~Transition from Coal to Natural Gas Will Take Time~~

~~The U.S.~~ Energy Information Administration ~~(the “EIA”~~(“EIA”) ~~expects the share of total~~projects average increases to utility-scale electricity generation in the ~~United States from natural gas will fall from an average~~US of 34% in 2016 to about 31% in 2017 as a result of higher natural gas prices and increased generation from renewables and coal. Coal’s generation share is forecast to rise from 30% last year to 31% in 2017. This reversal of the relative electricity generation share position for coal and natural gas is forecast to be short lived. The projected annual generation shares for natural gas and coal in 2018 are predicted to be 32% and 31%, respectively. In 2016, natural gas overtook coal as the leading source of power generation in the United States. Electricity generation from renewable energy sources other than hydropower is predicted to grow from 8% in 2016 to about 9% in 2017 and 10% in 2018. Generation from nuclear energy accounts for almost 20% of total generation in each year from 2016 through 2018.

~~The Demand for Electrical Power Remains Modest~~

~~Government forecasts project an annual increase in power generation of~~slightly less than 1% per year from 2021 through 2050. It projects that coal-fired generation will continue to decline through 2050, and will represent only 11% of the electricity generation mix by 2050. The projection for natural gas-fired plants is that they will supply 36% of the larger net electricity generation amount in the US for 2050. Undoubtedly, the long-term historic decline in the use of coal as a power source in the US has been 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.

However, the share of electricity generation provided by natural gas is particularly reactive in the short term to changing natural gas prices. The EIA has explained that natural gas prices have risen recently primarily because of growth in liquified natural gas exports while the production of natural gas has not kept the same pace. The increased natural gas prices in the US prompted certain firms controlling electricity generation facilities to switch fuel sources from gas to coal. The EIA reports that coal-fired electrical power generation increased by nearly 27% in the US during the first eight months of calendar year 2021 compared with the same period in 2020 and accounted for 23% of total generation during the period compared with 19% for the ~~next 25 years. However, our industry sector has not fully recovered~~same period in 2020. Natural gas-fired power generation declined by 5% in the US during the first eight months of calendar 2021 and accounted for 38% of total utility-scale net electricity generation during the first eight months of 2021; down from a 41% share during the same period in calendar 2020.

Depleted supplies of natural gas may have dangerous consequences. The North American Electric Reliability Corp. (NERC) recently warned that much of the central US, from the ~~recessionary~~Great Lakes region to southern Texas, may face critical power shortages during extreme weather conditions this winter as natural gas supply disruptions and low hydropower conditions could also imperil power reliability in New England and the western US.

Average natural gas spot prices for all of calendar 2021 are expected to remain high for the remainder of calendar 2021, then generally decline through 2022. Nonetheless, a long-term rise in natural gas prices and the resulting reduction in the demand for natural gas-fired electricity generation, could have adverse effects on the ability of independent power producers to obtain construction and permanent financing for new natural gas-fired power plants.

The pace of the ten-year increase in the ~~United States. For both calendar years 2016~~preference for natural gas as an electricity generating fuel source was energized by environmental activism and ~~2015,~~restrictive regulations targeting coal-fired power plants. Now, the environmentalist opposition against coal-fired power generation has expanded meaningfully and effectively to target all fossil fuel energy projects, including power plants and pipelines, and has evolved into powerful support for renewable energy sources.

The share of electricity generation in the US provided by utility-scale wind and solar photovoltaic facilities continues to rise meaningfully. Together, such power facilities provided approximately 8.8% and 10.6% of the total amount of electricity generated by utility-scale power facilities in ~~the United States was approximately 98% of the peak power generation level of 2007. Total electric power~~calendar 2019 and calendar 2020, respectively. In EIA’s 2021 reference case, net electricity generation from all renewable power sources ~~has decreased slightly during three of the last five years, with only a slight~~is expected to increase ~~in 2016. For 2017, EIA forecasts that total generation will decline again~~ by ~~approximately 1.5%, before increasing by 1.7% in 2018.~~

~~Natural Gas-Fired Power Positioned to Fill the Gap~~

~~Since the year 2000,~~ more than ~~53 GW~~175%, representing over 42% of ~~coal-fired capacity~~such generation, by 2050. Impetus for this growth is provided by public concerns about climate change and favorable economic factors.

Environmental activism has ~~been retired; most~~resulted in the passage of the retired plants were older, smaller, less efficient coal-fired power plants. However, announcements by electric utilities of the retirement of coal-fired power plants continue, citing the availability of cheap natural gas, existing environmental regulationslaws and the ~~significant costs~~establishment of ~~refurbishment and relicensing. Almost 5 GW of nuclear capacity has been retired over the last four to five years. The future of~~regulations that discourage new nuclear power plant construction has been further clouded with the bankruptcy of Westinghouse, one of the few major nuclear providers of fuel, services, technology, plant design and equipment, and the decisions by several utilities to either abandon construction or development of nuclear projects, leaving just one site under construction today (the Vogtle plant units 3 and 4) in the United States. The retirements of coal and nuclear plants typically result in the need for new capacity, and new natural gas-fired plants are relatively cheaper to build than coal, nuclear, or renewable plants, they are substantially more environmentally friendly than conventional coal-firedfossil-fuel burning power plants and ~~they represent~~provide income tax advantages that promote the ~~most economical way to meet base loads~~growth of wind and ~~peak demands. Relatively~~solar power. Declines in the amount of renewable power plant component and power storage costs and an increase in the scale of energy storage capacity (i.e., battery farms) have also occurred. Should the pace of development for renewable energy facilities, including wind and solar power plants, accelerate at faster rates than projected, the number of future natural gas-fired construction project opportunities may fall.

Nonetheless, we believe that relatively low natural gas prices will persist over the long-term. Together with 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, cost-effective and ~~reliable, the~~reliable. We believe that its benefits ~~of natural gas~~ as a source of power ~~generation~~ are ~~undeniable. As~~compelling, especially as a complement to the ~~use of coal declines, the use of nuclear energy stalls, the integration of increasing amounts~~growing deployment of wind and solar ~~power into~~powered energy ~~grids continues, power providers should continue to value gas-fired electricity generation, especially when needed to support intermittent renewable energy supplies.~~

Current projections of future power generation assume the sustained increase in domestic natural gas production, which should lead to stable natural gas prices continuing into the future including the near term. The availability of competitively priced natural gas, the significant increases in the efficiency of combined cycle power plants, the existence of certain programs encouraging renewable fuel use, and the implementation of a series of environmental rules, primarily directed toward the reductions of air pollution and the emissions of greenhouse gases, should further reduce future coal use and continue to increase the shares of the power generation mix represented by natural gas-fired power plants, wind farms and solar fields. Even without the implementation of the Clean Power Plan, natural gas and renewable energy sources are still predicted to be the top choices for new electricity generation plants in the future primarily due to low natural gas prices.

sources. We continue to believe that the future long-term prospects for natural gas-fired power plant construction ~~are~~remain generally favorable as natural gas ~~has generally become~~continues to be the primary source for power generation in our country. 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.

It has been reported that renewables currently provide approximately 36% of electricity generation in California. Yet, last summer’s experience is that the increasing dependence on intermittent renewable energy sources, especially solar, is making it harder to ensure reliable power in California as millions of its residents lost power during a late summer heat wave. Analysis of the causes of this past winter’s widespread power outages in Texas during a frigid stretch of weather is complex. The residents of Texas suffered as the severe cold froze wind turbines and the lack of sun diminished the power contributions of solar powered facilities. However, natural gas-fired power plants in Texas were forced offline as well primarily due to frozen well-site equipment and the decisions by regulators to prioritize natural gas for residential use, which caused interruptions to the supply of natural gas to the plants.

However, in both states, the significant amount of renewable power capacity failed to rise to the occasion. A diversity lesson from both power crises may be that fossil-fuel electricity generation sources remain critical elements of the power generation mix in order to assure grid reliability and the avoidance of power outages. With hopes of preventing future rolling blackouts in California, regulators there approved the acquisition of five emergency natural gas-fueled electricity generators with an aggregate power output of approximately 150 MW.

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. The costs associated with the necessary grid upgrades may be prohibitive. US offshore wind projects progress inconsistently, facing challenges in the areas of environmental and fishery impacts, grid connection and capability and federal permitting processes. Further, projects are confronted by shipping regulations in the US that may limit the ability of developers to replicate successful European construction and installation models. Proponents of clean energy also face political challenges. Recently, voters in the state of Maine were energized by local residents seeking to preserve pristine woodlands and rejected a project that would transmit hydropower from Canada into New England.

Major advances in the safe combination of horizontal drilling techniques and ~~the practice of~~ hydraulic fracturing ~~have~~ led to the boom in natural gas ~~supply.~~supplies which have been available generally at consistently low prices. The abundant availability of cheap, less carbon-intense and higher efficiency natural gas in the US should continue to be a significant factor in the economic assessment of future power generation capacity additions. As indicated above, the demand for electric power in this country is expected to grow slowly but steadily over the long term. Demands for electricity, the ample supply of natural gas, and the continuing retirement of inefficient and old coal and nuclear energy plants, should result in natural gas-fired and renewable energy plants representing the substantial majority of new power generation additions ~~in the future and an increased share of the power generation mix.~~

~~In summary, the development of natural gas-fired and renewable power generation facilities in the United States should continue to provide construction opportunities for us,~~ although the pace of new opportunities emerging may ~~decrease~~be restrained and the starts of awarded EPC projects may be delayed.

We believe that it is also important to note that the plans for certain natural gas-fired power plant projects include the adoption of integrated green hydrogen solution packages. 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 the clean-air concerns of environmentalists. The building of state-of-the-art power plants with flex-fuel capability replaces coal-fired power plants in the ~~near term. We~~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 and the wind is not blowing, for extended periods of time and without certain harmful air emissions.

The foregoing discussion of our 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, we cannot ignore the possibilities that overseas power markets may provide important new power construction opportunities for us in the future. The management of APC has growing enthusiasm for opportunities in the electricity generation markets across Ireland and the UK. While both of these countries are ~~encouraged~~committed to the increase in energy consumption sourced from wind and the sun on the pathway to net zero emissions by 2050, 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 these renewables. The existence of the necessary power reserve will require conventional power generation sources, typically natural gas-fired power plants. As discussed above, APC was awarded a significant contract during the quarter ended October 31, 2021 to build a clean burning natural gas-fired power plant in Northern Ireland so that existing coal-fired power sources there can be shut-down.

The Irish government recently 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 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.

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. In the absence of data centers, Ireland would be experiencing much more modest electricity demand growth, consistent with population growth and the general development of industrial demand. However, the stewards of the electricity supply in Ireland recognize that the large increase in electricity demand presented by the ~~results~~growth of the ~~business development activities conducted by APC since its acquisition by us that have lead~~data center industry represents an evolving, significant risk to ~~new power industry construction contracts outside~~the security of ~~this country.~~the supply.

~~We Are Positioned to Succeed~~

WeAccordingly, guidelines have been ~~successful~~published recently 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; again, natural gas is considered to be a transitional fuel in Ireland’s efforts to meet its climate action plan targets. Earlier this year, APC was awarded a project to install natural gas-fired power generation for a major data center in the ~~completion~~Dublin area.

APC is actively pursuing new business opportunities in both the renewable and support sectors with its existing and new clients. The governments of ~~our EPC~~both countries have already made funds available to develop and ~~other projects. Our four largest EPC~~support specific projects ~~continue to progress beyond~~with notable announcements in the ~~peak~~north east region of the UK. The engineering and construction ~~phases~~teams of APC are engaged in continuous discussions with particular stakeholders in certain of these projects and they are confident that APC will be part of their project life-cycles and toward completion. Consequently, the level of revenues associated with each one will continue to decline. While we are disappointed that we have not added a new major EPC contract to our backlog so far this year due, in part, to the intensely competitive business environment, weeventual execution.

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 our decision 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 ~~EPC contract~~engineering, procurement, construction or equipment installation services contracts to us. ~~With~~The competitive landscape for our core EPC services business related to natural gas-fired power plants has changed significantly over the last five years. While the market remains dynamic, we are moving into an era where there may be fewer competitors for new gas-fired power plant EPC services project opportunities. Several major competitors have exited the market for a ~~growing~~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 and with~~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 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 ~~plans~~ continue to be based on reasonable assumptions. Our performance on current projects should provide a stable base of business activity through the next fiscal year as we pursue new opportunities that should continue to emerge for all of our businesses.

~~Possible Changes to the United States Income Tax Code (the “US Tax Code”)~~

The United States Congress is considering sweeping revisions to the US Tax Code which would, among other changes, reduce the corporate income tax rate to as low as 20% from 35%, change international business tax rules and temporarily lower individual taxes. A final, reconciled bill would require passage by both the House and Senate before it would be presented to the President for signature. The outcome of this legislation is unknown, and the final impacts of it on our business have not been determined, although we would expect them to be favorable.

Comparison of the Results of Operations for the Three Months Ended October 31, ~~2017~~2021 and ~~2016~~2020

We reported net income attributable to our stockholders of ~~$17.2~~$12.4 million, or ~~$1.09~~$0.78 per diluted share, for the three months ended October 31, ~~2017.~~2021. For the ~~three months ended October 31, 2016,~~comparable period of the prior year we reported ~~a comparable~~ net income ~~amount~~attributable to our stockholders of ~~$18.1~~approximately $9.5 million, or ~~$1.16~~$0.60 per diluted share.

The following schedule compares our operating results for the three months ended October 31, ~~2017~~2021 and ~~2016~~2020 (dollars in thousands).:

Three Months Ended October 31,

2017

2016

$ Change

% Change

REVENUES

Power industry services

$
212,493

$
151,094

$
61,399

40.6
%
Industrial fabrication and field services

16,574

21,550

(4,976
)
(23.1
)
Telecommunications infrastructure services

3,878

2,800

1,078

38.5

Revenues

232,945

175,444

57,501

32.8

COST OF REVENUES

Power industry services

178,472

118,407

60,065

50.7

Industrial fabrication and field services

13,797

18,386

(4,589
)
(25.0
)
Telecommunications infrastructure services

2,958

2,073

885

42.7

Cost of revenues

195,227

138,866

56,361

40.6

GROSS PROFIT

37,718

36,578

1,140

3.1

Selling, general and administrative expenses

10,119

9,848

271

2.8

INCOME FROM OPERATIONS

27,599

26,730

869

3.3

Other income, net

1,692

690

1,002

145.2

INCOME BEFORE INCOME TAXES

29,291

27,420

1,871

6.8

Income tax expense

12,062

8,194

3,868

47.2

NET INCOME

17,229

19,226

(1,997
)
(10.4
)
Net income attributable to non-controlling interests

—

1,153

(1,153
)
(100.0
)
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

$
17,229

$
18,073

$
(844
)
(4.7
)%


	Three Months Ended October 31,
	2021		2020		$ Change		% Change
REVENUES
Power industry services	$	99,560	$	109,712	$	(10,152)	(9.3)	%
Industrial fabrication and field services		21,402		15,730		5,672	36.1
Telecommunications infrastructure services		3,489		1,889		1,600	84.7
Revenues		124,451		127,331		(2,880)	(2.3)
COST OF REVENUES
Power industry services		76,517		91,263		(14,746)	(16.2)
Industrial fabrication and field services		18,703		14,218		4,485	31.5
Telecommunications infrastructure services		3,096		1,507		1,589	105.4
Cost of revenues		98,316		106,988		(8,672)	(8.1)
GROSS PROFIT		26,135		20,343		5,792	28.5
Selling, general and administrative expenses		11,590		9,398		2,192	23.3
INCOME FROM OPERATIONS		14,545		10,945		3,600	32.9
Other income, net		1,117		175		942	538.3
INCOME BEFORE INCOME TAXES		15,662		11,120		4,542	40.8
Income tax expense		(3,269)		(1,666)		(1,603)	(96.2)
NET INCOME	$	12,393	$	9,454	$	2,939	31.1	%

Revenues

Power Industry Services

The revenues of the power industry services ~~business increased~~segment, representing the businesses of GPS and APC, decreased by ~~41%~~9.3%, or ~~$61.4~~$10.2 million, to ~~$212.5~~$99.6 million for the three months ended October 31, ~~2017~~2021 compared with revenues of ~~$151.1~~$109.7 million for the three months ended October 31, ~~2016.~~2020 as the quarterly revenues associated with the Guernsey Power Station project have passed peak levels and APC completed its construction activities associated with the TeesREP project earlier this year. These reductions in revenues between the quarters were substantially offset by revenues associated with the new Maple Hill solar energy project, new projects at APC and the settlement of a legal matter. The revenues of this business represented approximately ~~91%~~80.0% of consolidated revenues for the ~~current~~ quarter ended October 31, 2021 and ~~approximately 86%~~86.2% of consolidated revenues for the prior year quarter.

The ~~current quarter increase in revenues~~primary drivers for the ~~power industry services~~revenues of this segment primarily reflected the peak and post-peak construction activities of four EPC projects, which together represented approximately 82% of consolidated revenues for the current quarter. The percent-complete for these four projects ranged from 76% to 87% as of October 31, 2017. As these projects continue to progress beyond peak construction in their life-cycles, the level of quarterly revenues associated with each project will continue to decline. All four jobs are currently scheduled to be completed during the fiscal year ending January 31, 2019.

Last year, the combined revenues associated with these four natural gas-fired power plant projects, which were all in earlier phases of construction, represented approximately 73% of consolidated revenues for the third quarter. Additionally, construction activity related to two other natural gas-fired power plant projects that were completed last year represented 9% of consolidated revenues for the three months ended October 31, ~~2016.~~2020 were the revenues associated with the construction of the Guernsey Power Station project and the TeesREP project. Each of these projects reported significant quarterly revenues for last year’s third quarter. Together, the revenues associated with these two projects represented approximately 78.8% of consolidated revenues for the three-month period ended October 31, 2020.

Industrial Fabrication and Field Services

The revenues of ~~the~~our industrial fabrication and field services ~~business~~segment (representing the business of TRC) ~~decreased~~increased by ~~23%~~$5.7 million, or 36.1%, ~~or $5.0~~to $21.4 million for the period compared to ~~$16.6~~revenues of $15.7 million for the three months ended October 31, ~~2017 compared with revenues of $21.6 million for~~2020. For the three months ended October 31, ~~2016. The largest portion~~2021 and 2020, the revenues of this segment represented 17.2% and 12.4% of consolidated revenues for the corresponding periods. TRC’s strong performance for the three-month period ended October 31, 2021 reflected a significant rise in revenues ~~continue to be provided by industrial~~earned on field services ~~which included $7.3 million in revenue from~~projects during the period. However, we expect the revenues of TRC to decline over the remainder of the current fiscal year as TRC recently completed a ~~large mining company in the prior year period. TRC’s~~number of major projects. The major customers of TRC include some of North America’s largest fertilizer producers, as well as other chemical, mining, forest products, construction and energy companies with plants, facilities and ~~fertilizer producers.~~other sites located primarily in the southeastern region of the US. The project backlog amounts for TRC as of October 31, 2021 and January 31, 2021 were $51.1 million and $54.0 million, respectively.

Telecommunications Infrastructure Services

The ~~revenues~~revenue results of this business segment (representing the business of SMC) ~~increased by approximately 39%, or $1.1 million, to $3.9~~were $3.5 million for the three-month period ended October 31, 2021, an increase of $1.6 million, or 84.7%, from the amount of revenues earned during the three months ended October 31, ~~2017 compared with~~2020. The improvement in revenues ~~of $2.8 million for~~between the ~~three months ended October 31, 2016, as SMC has been successful in increasing the revenues~~quarters related to increased project activities for both ~~outside premises~~inside-premises and ~~inside premises projects.~~

outside-premises customers.

Cost of Revenues

~~Due primarily to~~With the ~~substantial increase~~decrease in consolidated revenues for the three months ended October 31, ~~2017~~2021 compared with last year’s third quarter ended October 31, 2020, the ~~corresponding~~ consolidated cost of revenues also ~~increased.~~decreased between the quarters. These costs were ~~$195.2~~$98.3 million and ~~$138.9~~$107.0 million for the three month periods ended October 31, 2021 and 2020, respectively, representing an decrease of approximately 8.1%.

For the three month period ended October 31, 2021, we reported a consolidated gross profit of approximately $26.1 million which represented a gross profit percentage of approximately 21.0% of corresponding consolidated revenues. Most significantly, the gross profit for the period reflected the profit contributions of the construction activities related to the major projects of the power industry services segment, the recovery of TRC’s business from its low level of activity last year during the early months of the COVID-19 pandemic and the revenues recorded for the current quarter related to the settlement of the legal matter identified above. The gross profit percentages of corresponding revenues for the power industry services, industrial services and the telecommunications infrastructure segments were 23.1%, 12.6% and 11.3%, respectively, for the quarter ended October 31, 2021.

Our consolidated gross profit reported for the three-month period ended October 31, 2020 was $20.3 million, which represented a gross profit percentage of approximately 16.0% of corresponding consolidated revenues. The gross profit for the three months ended October 31, 2020 included the profit contribution of the construction activities related to the Guernsey Power Station. It was also favorably impacted by the profit contributions of APC, which reflected the final significant change to the contractual arrangements covering the construction activities of the TeesREP Project subcontract. For the three months ended October 31, 2020, the gross profit percentages of corresponding revenues for the power industry services, industrial services and the telecommunications infrastructure segments were 16.8%, 9.6% and 20.2%, respectively.

Selling, General and Administrative Expenses

These costs were $11.6 million and $9.4 million for the three months ended October 31, ~~2017~~2021 and ~~2016, respectively. Gross profit amounts~~2020, respectively, representing a 23.3% increase between the quarters which occurred within each of our reporting segments due primarily to increased personnel and associated costs, including cash incentive and stock compensation expenses, and increased business development costs.

Other Income, Net

We reported other income, net, in the amount of $1.1 million for the three months ended October 31, 2017 and 2016 were $37.7 million and $36.6 million, respectively. Our overall gross profit percentage of 16.2% of consolidated revenues was lower in the current quarter compared to a percentage of 20.8% for the prior year quarter,2021 which reflected primarily a cost reimbursement grant from the ~~favorable achievement of contractual final completion of two natural gas-fired power plant projects last year. These achievements eliminated a number of significant risks and~~Irish government related to the ~~related estimated costs associated with them, resulting in increased gross margins.~~

The current quarter gross profit percentage reflected continued execution on the peak and post-peak construction activities of four natural gas-fired power plant projects of GPS. However, while all of these projects are progressing, certain of the natural gas-fired power plant projects have experienced increased labor and subcontractor costs to amounts greater than originally estimated. The increase in forecasted costs to complete these contracts and the corresponding reductions in the amount of forecasted gross margins resulted in a reduction to consolidated gross profit being realized in the current quarter. The aggregate gross profit percentage of the combined revenues of TRC, APC and SMC increased between the periods.

COVID-19 pandemic.

~~Selling, General and Administrative Expenses~~Income Taxes

~~These costs~~We reported income tax expense for the three months ended October 31, ~~2017 and 2016 represented~~2021 in the amount of approximately ~~4.3% and 5.6%~~$3.3 million, which represents an effective income tax rate of ~~consolidated revenues~~20.9% for the ~~corresponding periods, respectively. In general, the increase in costs is reflective of a larger organization necessary to support increased operations and to expand into new markets.~~

~~Income Tax Expense~~

~~For the quarter ended October 31, 2017, we recorded income tax expense of $12.1 million reflecting an estimated~~period. We estimate that our annual effective income tax rate ~~of approximately 36.7% (before~~for the ~~tax effect of~~year ending January 31, 2022, before discrete items, ~~for the current quarter), or $10.8 million, the catch-up effect in the current quarter of increasing the~~will approximate 23.3%. This estimated ~~rate from 36.2%, or $0.4 million, and the unfavorable effect of discrete adjustments to the income tax provision for the current quarter in the net amount of $0.9 million. The estimated annual income~~ tax rate ~~is higher than~~differs from the statutory federal ~~income~~ tax rate of ~~35%~~21% due primarily to the ~~estimated~~ unfavorable ~~effect~~effects of state income taxes ~~offset partially by the domestic production activities deduction.~~

and permanent differences, including primarily certain nondeductible executive compensation and overseas income deemed to be Global Intangible Low-Taxes Income (“GILTI”).

For the three months ended October 31, ~~2016,~~2020, we recorded income tax expense in the amount of ~~$8.2~~approximately $1.7 million, ~~reflecting~~which reflected an annual effective income tax rate ~~(before~~of approximately 23.9% for the ~~tax effect of~~year, before discrete items, ~~for the prior quarter)~~that was estimated at the ~~time~~time. This tax rate differed from the statutory federal tax rate of 21% due primarily to ~~be approximately 35.2%. The estimated~~the unfavorable ~~effect of state income taxes were substantially offset by the favorable~~ effects of the estimated amounts of permanent differences. Income tax expense for the third quarter last year also reflected the treatment of the excess income tax benefits associated with the large number of stock options exercised during the quarter as discrete items which reduced income tax expense by $2.0 million.

The current year estimated annual effective income tax rate is higher than the prior year estimated annual rate primarily due to a slight increase in the effective state tax rate as well as the significant decrease in the income tax impact of our joint ventures. As the construction joint ventures that are discussed below are treated as partnerships for income tax reporting purposes, we report only our share of the taxable income of the entities. For financial reporting purposes, the excluded income amounts attributable to the joint venture partner are treated as permanent differences, between income before income taxes and taxable income resulting in a favorable effect on our effective income tax rate. The net income attributable to non-controlling interests (the joint venture partner) last year was significant.including certain nondeductible executive compensation.

~~Net Income Attributable to Non-controlling Interests~~

As discussed in Note 3 to the accompanying condensed consolidated financial statements, we entered separate construction joint ventures related to two power plant construction projects. Because we have financial control, the joint ventures are included in our condensed consolidated financial statements. Our joint venture partner’s share of the earnings is reflected in the line item captioned net income attributable to non-controlling interests included in the accompanying statements of earnings for the three months ended October 31, 2016 in the amount of $1.2 million. There were no amounts of net income attributable to non-controlling interest for the current quarter. The reduction in the amount between quarters primarily reflects the contractual completion of the projects last year, with the provision of warranty services being the primary remaining obligations of the joint ventures.

Comparison of the Results of Operations for the Nine Months Ended October 31, ~~2017~~2021 and ~~2016~~2020

We reported net income attributable to our stockholders of ~~$65.0~~$36.0 million, or ~~$4.11~~$2.25 per diluted share, for the nine months ended October 31, ~~2017.~~2021. For the nine months ended October 31, ~~2016,~~2020, we reported ~~a comparable~~ net income ~~amount~~attributable to our stockholders of ~~$50.0~~$14.3 million, or ~~$3.23~~$0.91 per diluted share.

The following schedule compares our operating results for the nine months ended October 31, ~~2017~~2021 and ~~2016~~2020 (dollars in thousands).:


	Nine Months Ended October 31,
	2021		2020		$ Change		% Change
REVENUES
Power industry services	$	295,736	$	227,363	$	68,373	30.1	%
Industrial fabrication and field services		78,213		42,163		36,050	85.5
Telecommunications infrastructure services		9,851		5,445		4,406	80.9
Revenues		383,800		274,971		108,829	39.6
COST OF REVENUES
Power industry services		233,682		192,583		41,099	21.3
Industrial fabrication and field services		64,519		38,096		26,423	69.4
Telecommunications infrastructure services		8,098		4,310		3,788	87.9
Cost of revenues		306,299		234,989		71,310	30.3
GROSS PROFIT		77,501		39,982		37,519	93.8
Selling, general and administrative expenses		31,813		28,827		2,986	10.4
INCOME FROM OPERATIONS		45,688		11,155		34,533	309.6
Other income, net		1,569		1,714		(145)	(8.5)
INCOME BEFORE INCOME TAXES		47,257		12,869		34,388	267.2
Income tax (expense) benefit		(11,228)		1,391		(12,619)	NM
NET INCOME	$	36,029	$	14,260	$	21,769	152.7	%

Nine Months Ended October 31,

2017

2016

$ Change

% Change

REVENUES

Power industry services

$
662,131

$
402,615

$
259,516

64.5
%
Industrial fabrication and field services

50,203

59,287

(9,084
)
(15.3
)
Telecommunications infrastructure services

10,903

6,385

4,518

70.8

Revenues

723,237

468,287

254,950

54.4

COST OF REVENUES

Power industry services

540,986

302,140

238,846

79.1

Industrial fabrication and field services

44,634

52,491

(7,857
)
(15.0
)
Telecommunications infrastructure services

8,396

4,764

3,632

76.2

Cost of revenues

594,016

359,395

234,621

65.3

GROSS PROFIT

129,221

108,892

20,329

18.7

Selling, general and administrative expenses

30,408

24,429

5,979

24.5

Impairment loss

—

1,979

(1,979
)
(100.0
)
INCOME FROM OPERATIONS

98,813

82,484

16,329

19.8

Other income, net

4,221

1,283

2,938

229.0

INCOME BEFORE INCOME TAXES

103,034

83,767

19,267

23.0

Income tax expense

37,738

27,122

10,616

39.1

NET INCOME

65,296

56,645

8,651

15.3

Net income attributable to non-controlling interests

303

6,668

(6,365
)
(95.5
)
NET INCOME ATTRIBUTABLE TO THE STOCKHOLDERS OF ARGAN, INC.

$
64,993

$
49,977

$
15,016

30.0
%

NM – Not meaningful.

Revenues

Power Industry Services

The revenues of the power industry services ~~business~~segment increased by ~~65%~~30.1%, or ~~$259.5~~$68.4 million, to ~~$662.1~~$295.7 million for the nine months ended October 31, ~~2017~~2021, compared with revenues of ~~$402.6~~$227.4 million for the nine months ended October 31, ~~2016.~~2020. The revenues of this ~~business~~segment represented approximately ~~92%~~77.1% of consolidated revenues for the ~~current~~ nine-month period ended October 31, 2021, and approximately ~~86%~~82.7% of consolidated revenues for the ~~corresponding prior year period.~~ nine-month period ended October 31, 2020.

The ~~increase in revenues~~primary drivers for the ~~power industry services~~strong performance by this reportable segment ~~primarily reflected~~for the ~~ramped-up, peak~~nine months ended October 31, 2021 were increased revenues associated with the construction of the Guernsey Power Station and ~~post-peak construction activities of four natural gas-fired power plant construction projects,~~the new Maple Hill solar energy facility, which together represented ~~approximately 87%~~66.8% of consolidated ~~revenues for the current nine-month period.~~revenues. Last year, the ~~combined~~revenues of this segment included primarily revenues associated with ~~these four~~the construction of the Guernsey Power Station project, the TeesREP project and other projects ~~which were all in their earlier phases,~~of APC. Together, the revenues related to the Guernsey power station and the TeesREP project represented ~~approximately 62%~~77.4% of consolidated revenues for the nine months ended October 31, 2016. Construction activity related to two other natural-gas fired power plant projects that were completed last year represented 20% of consolidated revenues for the nine months ended October 31, 2016.2020.

Industrial Fabrication and Field Services

The revenues of ~~the~~our industrial fabrication and field services segment ~~decreased by 15%~~provided 20.4% of consolidated revenues for the nine-month period ended October 31, 2021, which reflected an increase in revenues of $36.1 million, or 85.5%, ~~or $9.1~~to $78.2 million compared to ~~$50.2~~revenues of $42.2 million for the ~~nine months~~nine-month period ended October 31, ~~2017 compared with revenues of $59.3 million for the nine months ended October 31, 2016.~~2020. The ~~largest portion of TRC’s revenues were provided by industrial field services. The decrease in revenues is primarily attributable to revenues included in the prior~~improved current year ~~period associated with large loss projects with former customers that were in-process on the date of our acquisition~~business of TRC ~~and which were~~reflects increased project activity for several customers, primarily ~~completed during the nine months ended October 31, 2016.~~in field services.

Telecommunications Infrastructure Services

The revenues of this business segment ~~increased by approximately 71%, or $4.5 million, to $10.9~~were $9.9 million for the ~~nine months~~nine-month period ended October 31, ~~2017~~2021 compared with revenues of ~~$6.4~~$5.4 million for the ~~nine months~~nine-month period ended October 31, ~~2016, as SMC has been successful in increasing~~2020, which represented an increase of 80.9% between the ~~revenues related to~~periods and which reflected strong performance by both ~~outside premises, including $4.7 million related to a fiber-to-the-home project for a municipal customer,~~the inside-premises and ~~inside premises projects.~~

outside-premises groups.

Cost of Revenues

~~Due primarily to~~With the ~~substantial~~ increase in consolidated revenues for the ~~nine months~~nine-month period ended October 31, ~~2017~~2021 compared with last year’s ~~comparable~~corresponding period, the ~~corresponding~~ consolidated cost of revenues also ~~increased.~~increased between the periods by 30.3%. These costs were ~~$594.0~~$306.3 million and ~~$359.4~~$235.0 million for the ~~nine months~~nine-month periods ended October 31, ~~2017~~2021 and ~~2016,~~2020, respectively. ~~Gross~~

For the nine-month period ended October 31, 2021, we reported a consolidated gross profit ~~amounts for the corresponding nine-month periods were $129.2~~of approximately $77.5 million, ~~and $108.9 million, respectively. Our overall~~which represented a gross profit percentage of ~~17.9%~~approximately 20.2% of corresponding consolidated ~~revenues was lower~~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 and the settlement of a legal matter in the current period compared to a percentage of 23.3% for the prior year nine-month period, which primarily reflected the favorable achievement of the contractual final completion of two power plant projects as identified above. Current periodthird quarter. The gross profit percentages ~~substantially reflected continued execution~~ of ~~construction activities on four EPC natural gas-fired~~corresponding revenues for the power ~~plant projects of GPS~~industry services, industrial services and the ~~gross margin reduction realized in the current quarter that is discussed above. The aggregate gross profit percentage of the combined revenues of TRC, APC~~telecommunications infrastructure segments were 21.0%, 17.5% and ~~SMC increased between the periods.~~

~~Selling, General and Administrative Expenses~~

~~These costs were $30.4 million and $24.4 million~~17.8%, respectively, for the ~~nine months~~nine-month period ended October 31, 2017 and 2016, respectively, representing approximately 4.2% and 5.2% of consolidated revenues for the corresponding periods, respectively. Approximately $3.8 million of the increase between the periods was due to an overall increase in incentive compensation costs and salary expense. In addition, stock option compensation expense for the nine months ended October 31, 2017 increased by approximately $1.8 million between the periods, driven primarily by the increased market price of our common stock.

~~Impairment Loss~~

Last year, the revenues of APC declined and it reported operating losses. In July 2016, work was suspended on APC’s largest project at the time, which represented over 90% of APC’s contract backlog. Additionally, APC’s primary market is in the United Kingdom, which voted to leave the European Union on June 23, 2016 (“Brexit”). The resulting pound sterling drop, financial market uncertainty and recessionary pressures were thought to likely impact the availability of financing for future power plant developments. Given these circumstances at the time, analyses were performed mid-year in order to determine whether an impairment loss related to goodwill had been incurred. Using income and market approaches, the assessment analysis indicated that the carrying value of the business exceeded its fair value. As a result, APC recorded an impairment loss during the nine months ended October 31, 2016 of approximately $2.0 million.

~~Income Tax Expense~~

2021.

For the nine months ended October 31, ~~2017,~~2020, we ~~recorded income tax expense of $37.7 million reflecting the estimated annual effective income tax rate~~reported a consolidated gross profit of approximately ~~36.7% (before~~$40.0 million which represented a gross profit percentage of approximately 14.5% of corresponding consolidated revenues which was adversely affected primarily by the ~~income tax effect~~low level of ~~discrete items~~revenues reported by TRC for the ~~current period) that is identified above.~~period. The ~~net favorable effect~~gross profit percentages of ~~discrete items on income tax expense~~corresponding revenues for the ~~nine months~~power industry services, industrial services and the telecommunications infrastructure segments were 15.3%, 9.6% and 20.8%, respectively, for the nine-month period ended October 31, ~~2017 was not significant.~~2020.

Selling, General and Administrative Expenses

These costs were $31.8 million and $28.8 million for the nine-month periods ended October 31, 2021 and 2020, respectively, which represented an increase of approximately $3.0 million, or 10.4%, between the periods, and which occurred substantially during the third quarter of the current year as identified above.

Other Income, Net

For the nine months ended October 31, ~~2016, we recorded~~2021 the amount of other income, net, was approximately $1.6 million, due substantially to two transactions related to APC. As disclosed above, APC received COVID-19 relief from the Irish government, which amounted to approximately $1.1 million, that was recognized during the third quarter of the current year. In April 2021, APC received a research and development credit payment from the government of the UK related to certain qualifying works performed during Fiscal 2019. Net of associated costs, the payment amount of $0.7 million, much like a grant, was included in other income for the nine-month period ended October 31, 2021. This line item also included our share of the net loss reported by the solar fund investment for the nine months ended October 31, 2021 in the amount of $0.4 million that is discussed in Note 10 to the accompanying condensed consolidated financial statements.

Typically, the amounts reported on this line include primarily income earned on funds maintained in money market accounts and interest income earned on CDs. Adverse economic reactions to the uncertainties of the COVID-19 pandemic commenced during the middle of last year’s first quarter ended April 30, 2020, including sharp reductions in investment interest rates. Other income from earnings on our temporary investments of excess cash for the nine-month period ended October 31, 2021 was insignificant although the aggregate amount of invested funds increased between the periods. For the nine-month period ended October 31, 2020, the net amount of other income of $1.7 million included primarily earnings on our temporary investments of excess cash before the pandemic.

Income Taxes

We reported income tax expense for the nine-month period ended October 31, 2021 in the amount of ~~$27.1~~approximately $11.2 million, ~~reflecting~~which represents an ~~estimated~~actual effective income tax rate of 23.8%. As indicated above, we estimate that our annual effective income tax rate ~~of approximately 35.2%. In addition,~~for the ~~net effect of~~year ending January 31, 2022, before discrete items, ~~last year reduced~~will approximate 23.3%. The estimated annual effective tax rate differs from the statutory federal tax rate of 21% due primarily to the unfavorable effects of state income taxes and permanent differences, including certain nondeductible executive compensation and overseas income deemed to be GILTI.

For the nine-month period ended October 31, 2020, we recorded an income tax ~~expense by $2.4 million for the period primarily due to the treatment of the excess income tax benefits associated with the large number of stock options exercised during the period as discrete items.~~

~~Net Income Attributable to Non-controlling Interests~~

~~Our joint venture partner’s share amounts of the earnings of the construction joint ventures were $0.3 million and $6.7 million, respectively. The reduction~~benefit in the amount ~~between periods~~of approximately $1.4 million, which reflected primarily ~~reflected~~ the ~~contractual completion~~net operating loss carryback benefit amount of $4.4 million discussed in Note 10 to the ~~projects last year. Current year activity relates to changes in estimated costs to fulfill warranty obligations.~~

accompanying condensed consolidated financial statements.

Liquidity and Capital Resources as of October 31, ~~2017~~2021

~~As of~~At October 31 ~~2017~~ and January 31, ~~2017,~~2021, our balances of cash and cash equivalents were ~~$149.7~~$391.6 million and ~~$167.2~~$366.7 million, respectively. During ~~this same period,~~the nine months between these dates, our working capital increased by ~~$54.3~~$30.5 million to ~~$291.5~~$300.7 million as of October 31, ~~2017~~2021 from ~~$237.2~~$270.1 million as of January 31, ~~2017.~~

2021.

The net amount of cash ~~used~~provided by operating activities for the nine months ended October 31, ~~2017~~2021 was ~~$22.7~~$41.7 million. ~~Even though~~Our net income for the ~~period, including~~nine months ended October 31, 2021, adjusted favorably by the ~~favorable adjustments related to~~net amount of non-cash income and expense items, ~~provided~~represented a source of cash in the total amount of ~~$71.7 million,~~$45.6 million. The sources of cash ~~use exceeded this amount primarily due to our four major EPC projects. Because these projects are well past~~from operations for the ~~peak of their respective milestone billing schedules, we experienced net decreases during the period~~nine months ended October 31, 2021 also included a decrease in the ~~amounts~~balance of ~~billings on current projects in excess of corresponding costs and estimated earnings, which represented a use of cash~~contract assets in the amount of ~~$69.4~~$16.7 million. ~~In general, we expect this unfavorable cash-flow trend to continue until~~A reduction in the ~~projects are completed~~combined level of accounts payable and ~~new EPC projects are added to the backlog. Primarily due to increasing project owner retainage amounts on current construction contracts,~~accrued expenses and an increase in accounts receivable during the nine-month period ended October 31, 2021, in the respective amounts of $20.0 million and $7.1 million, represented uses of cash for the period. Contract liabilities increased by $4.4 million during the nine months ended October 31, ~~2017, which represented~~2021, representing a source of cash. It is important to note that the amount of contract liabilities related to the Guernsey Power Station are expected to decline during the remainder of the current fiscal year, representing a use of cash, inas the project moves past the peak level of construction activities. The amount of ~~$31.5 million. On the~~prepaid expenses and other ~~hand, we experienced a net increase~~assets decreased by $2.1 million during the ~~period in the amounts of accounts payable and accrued expenses,~~nine months ended October 31, 2021, which also represented a source of cash for the period.

Another source of cash for the nine months ended October 31, 2021 were the proceeds associated with the exercise of stock options in the amount of ~~$5.6~~$1.4 million.

~~Our primary source of this~~ Non-operating activities used cash during the nine months ended October 31, ~~2017 was~~2021, including the ~~net maturity~~payment of ~~CDs~~regular cash dividends in the amount of ~~$22.5 million. In addition, the exercise of options~~$11.8 million, investment payments made to ~~purchase 90,500 shares of our common stock provided us with cash proceeds in the approximate amount of $2.8 million. Non-operating activity cash uses included the declaration and payment of~~ a cash dividend of $15.5 million during the current period, and we also used cash as our consolidated joint ventures made distributions to our joint venture partner in the total amount of $1.2 million. Our operating subsidiaries used cash during the current periodsolar energy fund in the amount of ~~$4.0~~$4.1 million ~~for~~and capital ~~expenditures.~~

During the nine months ended October 31, 2016, our combined balance of cash and cash equivalents increased by $9.9 million to $170.8 million as of October 31, 2016 from a balance of $160.9 million as of January 31, 2016. During this same period, our working capital increased by $46.5 million to $209.4 million as of October 31, 2016 from $162.9 million as of January 31, 2016. Net income for the nine months ended October 31, 2016, including the favorable adjustments related to noncash expense items, provided cash in the total amount of $60.8 million. In addition, we experienced a net decrease of $21.3 million in accounts receivable during the period primarily due to the receipt of retainages on two other natural gas-fired power plant projects as we achieved final completion during the prior year period. We had a net increase of $54.6 millionexpenditures in the amount of ~~billings on current projects that temporarily exceeded the corresponding amounts~~$1.1 million. As of costs and estimated earnings, which primarily reflected the early-stage activities of GPS on its four significant EPC contracts which were new at that time. Our net accounts payable and accrued expenses were also impacted with increased early-stage activities related to several of our subcontractors and suppliers, increasing this balance by $50.1 million during the nine months ended October 31, ~~2016. Primarily due~~2021, there were no restrictions with respect to ~~these factors,~~inter-company payments between GPS, TRC, APC, SMC and the holding company. However, certain loans made by Argan to APC have been determined to be uncollectible.

The net amount of cash provided by operating activities for the ~~nine-month period~~nine months ended October 31, ~~2016~~2020 was ~~$185.3~~$142.6 million. ~~The exercise~~Our net income for the nine months ended October 31, 2020, adjusted favorably by the net amount of ~~stock options during~~non-cash income and expense items, represented a source of cash in the total amount of $30.2 million. However, the sources of cash from operations for the prior year ~~nine-month~~ period ~~provided us~~included primarily a temporary increase in the balance of contract liabilities associated with ~~cash proceeds~~the early phases of the Guernsey Power Station construction and new project awards at TRC in the amount of ~~$11.0~~$87.9 million. Reductions in the balances of accounts receivable and contract assets, primarily at the TRC and APC operations, provided cash in the amounts of $6.6 million and $6.2 million, respectively. In addition, the combined level of accounts payable and accrued expenses increased by $27.7 million during the nine months ended October 31, 2020, a source of cash for the period.

~~Our~~As discussed above, our income tax accounting for the nine months ended October 31, 2020 reflected an entry to record the carryback of our net operating loss incurred for the year ended January 31, 2020 to prior income tax years. The loss carryback should result in a refund of federal income taxes in the amount of $12.7 million. This tax refund receivable was included in the balance of other current assets as of October 31, 2020, which was the primary cause of the increase in this balance of $16.0 million during the period, a use of ~~this~~cash.

Primary sources of cash for the nine months ended October 31, 2020 were the net maturities of short-term investments, certificates of deposit issued by the Bank, in the amount of $70.0 million. Non-operating activities used cash during the nine months ended October 31, ~~2016 was~~2020, including the ~~net purchase of CDs in the amount of $161.0 million. Other non-operating activity cash uses during the prior year period included the declaration and~~ payment of aregular and special cash ~~dividend of $15.3 million and the distribution of cash to our joint venture partner~~dividends in the total amount of ~~$7.5 million. Our operating subsidiaries used cash during the prior year period~~$27.4 million and capital expenditures in the amount of ~~$2.5 million for capital expenditures.~~$1.4 million. Partially offsetting these uses of cash, we received cash proceeds related to the exercise of stock options during the nine months ended October 31, 2020 in the amount of $1.2 million.

At October 31, 2021, most of our balance of cash and cash equivalents was invested in government and prime money market funds with most of their total assets invested in cash, US Treasury obligations and repurchase agreements secured by US 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 UK in support of the operations of APC.

~~On May 15, 2017, we entered into the~~The original term of our Amended and Restated Replacement Credit Agreement with the Bank was scheduled to expire on May 31, 2021. During April 2021, the Company and the Bank agreed to an amendment to the Credit Agreement which extended the expiration date of the Credit Agreement to May 31, 2024 and reduced the borrowing rate. The Credit Agreement, as amended, includes the ~~lender, which replaced~~following features, among others: a ~~predecessor agreement by modifying its features to, among other things:~~

· ~~increase the Bank’s~~ lending commitment ~~amount from $10 million to $50~~of $50.0 million including a revolving loan with interest at the ~~30-day~~30 day LIBOR plus ~~2.00%;~~

· ~~add~~1.6% (reduced from 2.0%), and an accordion feature which allows for an additional commitment amount of ~~$10~~$10.0 million, subject to certain ~~conditions; and~~

· ~~extend~~conditions. We may also use the ~~maturity date three years from May 31, 2018~~borrowing ability to ~~May~~cover other credit instruments issued by the Bank for our use in the ordinary course of business as defined by the Bank. At October 31, 2021, ~~which effectively provided~~we had no outstanding borrowings, however, subsequent to October 31, 2021, the Bank issued letters of credit in the total amount of $19.9 million in support of the activities of APC under a ~~four-year credit commitment.~~

Asnew customer contract. In connection with the ~~predecessor agreement,~~current project development activities of the VIE, the Bank issued a letter of credit, outside the scope of the Credit Agreement, in the approximate amount of $3.4 million for which we have provided cash collateral.

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 ~~Bank will continue to require~~Credit Agreement, as amended, requires that we comply with certain financial covenants at our fiscal year-end and at each ~~of our~~ fiscal ~~quarter-ends. The Credit Agreement~~quarter-end, and includes other terms, covenants and events of default that are customary for a credit facility of its size and ~~nature. As of~~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 October 31, ~~2017~~2021 and January 31, ~~2017,~~2021, we were compliant with the ~~financial~~ covenants of the Credit Agreement, ~~and predecessor agreement, respectively.~~as amended.

~~We may use~~In the ~~borrowing ability to cover other credit issued by the Bank for our use in the ordinary~~normal course of ~~business.~~ 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 contractor 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 October 31, ~~2017, we had~~2021, the value of the Company’s unsatisfied bonded performance obligations, covering all of its subsidiaries, was approximately ~~$14.9 million~~$272.4 million. In addition, as of ~~credit outstanding under the Credit Agreement although we had no outstanding borrowings.~~

At October 31, ~~2017, most~~2021, there were bonds outstanding in the aggregate amount of approximately $0.8 million covering other risks including warranty obligations related to completed activities; these bonds expire at various dates over the next twelve (12) months.

We have also provided a financial guarantee on behalf of GPS to an original equipment manufacturer in the amount of $3.6 million to support project developmental efforts.

When sufficient information about claims related to our 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 October 31, 2021 are not estimable.

As noted above, returns on money market instruments and certificates of deposit are currently minimal due to market conditions. With the desire to increase the amount of return on its available cash, the Company invested approximately $4.1 million during the nine months ended October 31, 2021 in a limited liability company that makes equity investments in solar energy projects that are eligible to receive energy tax credits. During Fiscal 2021, we made a similar investment in the amount of $1.3 million. The current year investment is expected to provide an overall return of approximately 20% over the six-year expected life of our ~~balance~~investment. It is likely that we will evaluate opportunities to make larger solar energy investments of cash and cash equivalents was invested in a high-quality money market fund with at least 80% of its net assets invested in U.S. Treasury obligations and repurchase agreements secured by United States Treasury obligations. Most of our domestic operating bank accounts are maintained with the Bank. We do maintain certain Euro-based bank accountsthis type in the ~~Republic of Ireland and insignificant bank accounts in other countries in support of the operations of APC.~~

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 ~~line of credit,~~Credit Agreement, will be adequate to meet our general business needs in the foreseeable future. In ~~particular,~~general, we maintain significant liquid capital onin our balance sheet to ~~help~~ ensure the maintenance of our ~~ability to maintain and obtain~~ bonding capacity ~~for current~~ and ~~future~~to provide parent company performance guarantees for EPC and other construction projects. ~~Any~~

However, any significant future ~~acquisitions,~~acquisition, investment or other ~~significant~~ 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.

Earnings before Interest, Taxes, Depreciation and Amortization ~~(Non-GAAP Measurement)~~(“EBITDA”)

We believe that EBITDA is a meaningful presentation that ~~is widely used by investors and analysts as a measure of performance. It~~ enables us to assess and compare our operating cash flow 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.

The table following ~~tables present~~immediately below presents the determinations of EBITDA for the three and nine months ended October 31, ~~2017~~2021 and ~~2016,~~2020, respectively (amounts in thousands).


	Three Months Ended
	October 31,
	2021		2020
Net income, as reported	$	12,393	$	9,454
Income tax expense		3,269		1,666
Depreciation		819		940
Amortization of purchased intangible assets		227		226
EBITDA		16,708		12,286
EBITDA of non-controlling interests		—		—
EBITDA attributable to the stockholders of Argan, Inc.	$	16,708	$	12,286

	Three Months Ended October 31,
	2017		2016

					Nine Months Ended
					October 31,
					2021		2020
Net income, as reported	$	17,229	$	19,226	$	36,029	$	14,260
Income tax expense	12,062		8,194
Income tax expense (benefit)						11,228		(1,391)
Depreciation	726		525			2,560		2,798
Amortization of purchased intangible assets	258		232			680		677
EBITDA	30,275		28,177			50,497		16,344
Less EBITDA attributable to non-controlling interests	—		1,153
EBITDA of non-controlling interests						—		(40)
EBITDA attributable to the stockholders of Argan, Inc.	$	30,275	$	27,024	$	50,497	$	16,384

Nine Months Ended October 31,

2017

2016

Net income, as reported

$
65,296

$
56,645

Income tax expense

37,738

27,122

Depreciation

1,936

1,444

Amortization of purchased intangible assets

776

752

EBITDA

105,746

85,963

Less EBITDA attributable to non-controlling interests

303

6,668

EBITDA attributable to the stockholders of Argan, Inc.

$
105,443

$
79,295

As we believe that our net cash flow provided by operations is the most directly comparable performance measure determined in accordance with US GAAP, the following table reconciles the amounts of EBITDA for the applicable periods,However, as presented above, to the corresponding amounts of net cash flows (used in) provided by operating activities that are presented in our condensed consolidated statements of cash flows for the nine months ended October 31, 2017 and 2016 (amounts in thousands).

Nine Months Ended October 31,

2017

2016

EBITDA

$
105,746

$
85,963

Current income tax expense

(37,263
)
(28,815
)
Impairment loss

—

1,979

Stock option compensation expense

3,573

1,774

Other noncash items

(317
)
(119
)
(Increase) decrease in accounts receivable

(31,453
)
21,304

(Decrease) increase in billings in excess of costs and estimated earnings, net

(69,383
)
54,558

Decrease (increase) in prepaid expenses and other assets

758

(1,432
)
Increase in accounts payable and accrued expenses

5,600

50,099

Net cash (used in) provided by operating activities

$
(22,739
)
$
185,311

As EBITDA is not a measure of performance calculated in accordance with US GAAP, we do not believe that this measure should be considered in isolation from, or as a substitute for, the results of our operations presented in accordance with US GAAP that are included in our condensed 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.

As we believe that our net cash flow provided by operations is the most directly comparable performance measure determined in accordance with US GAAP, the table below reconciles the amounts of EBITDA for the applicable periods to the corresponding amounts of net cash flows provided by operating activities that are presented in our condensed consolidated statements of cash flows for the nine months ended October 31, 2021 and 2020 (amounts in thousands).


	Nine Months Ended
	October 31,
	2021		2020
EBITDA	$	50,497	$	16,344
Current income tax (expense) benefit		(10,845)		9,757
Stock compensation expense		2,521		2,199
Other non-cash items		3,407		1,911
(Increase) decrease in accounts receivable		(7,084)		6,585
Decrease (increase) in other assets		2,070		(15,976)
(Decrease) increase in accounts payable and accrued expenses		(19,966)		27,725
Change in contracts in progress, net		21,099		94,015
Net cash provided by operating activities	$	41,699	$	142,560

Critical Accounting Policies

We consider the accounting policies related to revenue recognition on long-term construction contracts; the accounting for business combinations, the subsequent valuation of goodwill, other indefinite-lived assets and long-lived assets; the valuation of employee stock options; income tax reporting and the financial reporting associated with any significant legal matters to be most critical to the understanding of our financial position and results of operations, as well as the accounting and reporting for special purpose entities including joint ventures and variable interest entities. 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, ~~and~~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 consider the accounting policies related to revenue recognition on long-term construction contracts; income tax reporting; the accounting for business combinations; the subsequent valuation of goodwill, other indefinite-lived assets and long-lived assets; the valuation of employee common stock-based awards; 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, as well as the accounting and reporting for special purpose entities including joint ventures and variable interest entities. An expanded discussion of our critical accounting policies is included in Item 7 of Part II of our Annual ~~Report on Form 10-K for the year ended January 31, 2017.~~Report. During the ~~nine-month period~~nine months ended October 31, ~~2017,~~2021, there have been no material changes in the way we apply the critical accounting policies described therein.

Recently Issued Accounting Pronouncements

~~Note 2~~In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which, among other changes, eliminates the exception to the ~~accompanying condensed consolidated financial statements presents descriptions~~general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the expected loss for the entire year. In these instances, the estimated annual effective income tax rate shall be used to calculate the tax without limitation. The new standard also requires the recognition of ~~pending accounting pronouncements issued~~a franchise (or similar) tax that is partially based on income as an income-based tax and the recording of any incremental tax that is incurred by ~~the FASB that are relevant to our future financial reporting. These include Accounting Standards Update (ASU) 2014-09,~~ ~~Revenue from Contracts with Customers~~~~, which was issued in May 2014 and which has been amended multiple times, ASU 2016-02,~~ ~~Leases~~~~, which was issued in February 2016 and ASU 2017-04,~~ ~~Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment~~~~. ASU 2014-09 represents an effort to create~~us as a non-income based tax. Our adoption of this new ~~principles-based revenue recognition framework for all companies that will be adopted by us~~guidance, effective on February 1, ~~2018. ASU 2016-02, which will be~~2021, did not alter our accounting for income taxes.

There are no other recently issued accounting pronouncements that have not yet been adopted by us on February 1, 2019, will require the recognition on the balance sheet of all operating leases with terms greater than one year. ASU 2017-04 removes the second step in the goodwill impairment test, andthat we ~~intend~~consider material to ~~use the new guidance, if applicable, for~~ our ~~annual testing as of November 1, 2017.~~consolidated financial statements.

ITEM 3. 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 October 31, ~~2017,~~2021, we had no outstanding borrowings under our financing arrangements with the Bank as amended (see Note 86 to the accompanying condensed consolidated financial statements), which ~~provides~~provide a revolving loan with a

maximum borrowing amount of ~~$50~~$50.0 million that is available until May 31, ~~2021~~2024 with interest at 30-day LIBOR plus ~~2.00%~~1.6% going forward. During the nine months ended October 31, 2021 and 2020, we did not enter into derivative financial instruments for trading, speculation or other purposes that would expose us to market risk.

Financial markets around the globe are preparing for the discontinuation of LIBOR at the end of 2021, which is the widely used indicator of basis for short-term lending rates. The transition from LIBOR is market-driven, not a change required by regulation. The US and other countries are currently working to replace LIBOR with alternative reference rates. We do not expect that the replacement of LIBOR as the basis for the determination of our short-term borrowing rate will have significant effects on the financial arrangements with the Bank, as amended, or our financial reporting.

We maintain a substantial amount of our temporarily investable cash in certificates of deposit and in government and prime money market funds (see Note 3 of the accompanying condensed consolidated financial statements). The weighted average number of days until maturity for the short-term investments and money market funds is 341 days. As of October 31, ~~2017,~~2021, the weighted average annual interest rate of our ~~balance~~certificates of deposit of $90.0 million, which are classified as short-term investments, ~~which consisted entirely~~and money market funds of ~~CDs,~~$262.5 million was ~~$333 million (excluding accrued interest) with a weighted average initial maturity term~~0.07%. To illustrate the potential impact of ~~269 days. This exposes us to a certain amount of risk should~~changes in interest rates ~~suddenly rise. However,~~on our results of operations, we ~~believe~~present the following hypothetical analysis, which assumes that ~~this risk is minimal, and mitigated somewhat by the manner in which we have scheduled the future maturity dates. As~~our condensed consolidated balance sheet as of October 31, ~~2017,~~2021 remains constant, and no further actions are taken to alter our existing interest rate sensitivity, including reinvestments. As the blended weighted average interest rate ~~on our CDs~~ was ~~1.36%~~0.07% at October 31, 2021, the largest decrease in the interest rates presented below is 7 basis points (dollars in thousands).


	Increase (Decrease) in		Increase (Decrease) in		Net Increase (Decrease) in
Basis Point Change	Interest Income		Interest Expense		Income (pre-tax)
Up 300 basis points	$	9,850	$	—	$	9,850
Up 200 basis points		6,566		—		6,566
Up 100 basis points		3,283		—		3,283
Down 7 basis points		(186)		—		(186)

~~The accompanying condensed consolidated financial statements~~With the consolidation of APC, we are ~~presented in US Dollars. The financial results reported by APC and included in our condensed consolidated financial statements are affected by foreign currency volatility. The~~subject to the effects of translating the financial statements of APC from its functional currency (Euros) into ~~the Company’s~~our reporting currency (US ~~Dollars)~~dollars). Such effects are recognized ~~as translation adjustments~~ in accumulated other comprehensive ~~loss. When~~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 ~~US Dollar depreciates against~~remeasurements are recorded as other income or expense in our condensed consolidated statement of earnings.

In our Annual Report, we included a discussion of risks to our fixed price contracts if actual contract costs rise above the ~~Euro, the reported assets, liabilities, revenues,~~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 ~~earnings of APC, after translation into US Dollars,~~events, are ~~greater than what they would have been had the value of the US Dollar appreciated against the Euro or if there had been no change~~delays in the ~~exchange rate. During~~scheduled deliveries of machinery and equipment ordered by us or project owners, unforeseen increases in the ~~nine-month period ended October 31, 2017,~~costs of labor, warranties, raw materials, components or equipment or the ~~US Dollar depreciated against the Euro. We generally do not hedge our exposure~~failure or inability to ~~potential foreign currency translation adjustments.~~obtain resources when needed.

~~Another form of exposure to fluctuating exchange rates relates to the effects of transacting in currencies other than those of our entity’s functional currencies.~~ We do not engage in currency speculation, and we generally do not utilize foreign currency exchange rate derivatives on an ongoing basis to hedge against certain foreign currency related operating exposures. We incurred a net foreign currency transaction loss for the nine months ended October 31, 2017 that was insignificant.

~~In addition, we~~ are subject to fluctuations in prices for commodities including steel products, copper, concrete ~~steel products~~ and fuel. Although we attempt to secure firm quotes from our suppliers, we generally do not hedge against increases in prices for ~~copper, concrete, steel or fuel.~~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 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. The profitability of our active jobs has not suffered meaningfully from the periodic global surges in non-residential construction material costs.

For the current year, 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 include 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 dissipate.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of October 31, ~~2017.~~2021. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of October 31, ~~2017,~~2021, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective ~~at the~~to provide reasonable assurance ~~level.~~

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 the Company and its consolidated subsidiaries is made known to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure in the reports.

Changes in internal controls over financial reporting. There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) during the fiscal quarter ended October 31, ~~2017~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

~~PART II~~

ITEM 1. LEGAL PROCEEDINGS

Included in Note 98 to the condensed consolidated financial statements that are included in Item 1 of Part I of this Quarterly Report on Form 10-Q is athe discussion of ~~specific~~the status of the legal ~~proceedings for the nine-month period ended October 31, 2017.~~proceeding that was settled in September 2021. In the normal course of business, ~~the Company~~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 condensed consolidated financial statements.

ITEM 1A.RISK FACTORS

There have been no material changes ~~from our~~to the risk factors as disclosed in our Annual ~~Report on Form 10-K for the year ended January 31, 2017.~~Report.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 24, 2020, we made a filing on Current Report Form 8-K announcing that our board of directors authorized the repurchase of up to $25.0 million of our issued and outstanding common stock through June 2022 (the “Repurchase Plan”). 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 repurchased will depend on market and business conditions, applicable legal and credit requirements and other corporate considerations.

~~None~~In accordance with the SEC’s Rule 10b5-1, we have allowed, and may in the future allow, the repurchase of our common stock during trading blackout periods by an investment banking firm or other institution agent acting on our behalf pursuant to predetermined parameters.

Subsequent to October 31, 2021, we made our initial repurchases of common stock pursuant to the Repurchase Plan. As of December 7, 2021, we had repurchased approximately 70,000 shares for an aggregate price of approximately $2.8 million.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.MINE SAFETY DISCLOSURES (not ~~applicable to us)~~applicable)

ITEM 5.OTHER INFORMATION

None

ITEM 6.EXHIBITS

~~Exhibit No.~~		~~Title~~
Exhibit No.
~~Exhibit 10.1~~		~~Separation Agreement, dated as of November 7, 2017, by and between Daniel L. Martin and Gemma Power Systems, LLC, its subsidiaries and affiliate entities and its parent company, Argan, Inc.~~Title
Exhibit 31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of ~~1934~~1934.
Exhibit 31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of ~~1934~~1934.
Exhibit 32.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section ~~1350~~1350. *
Exhibit 32.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section ~~1350~~1350. *

Exhibit ~~101.INS#~~101: Exhibit 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.
Exhibit ~~101.SCH#~~101.SCH		Inline XBRL ~~Schema Document~~Taxonomy Extension Schema.
Exhibit ~~101.CAL#~~101.CAL		Inline XBRL Taxonomy Extension Calculation ~~Linkbase Document~~Linkbase.
Exhibit ~~101.LAB#~~101.LAB		Inline XBRL ~~Labels Linkbase Document~~Taxonomy Label Linkbase.
Exhibit ~~101.PRE#~~101.PRE		Inline XBRL Taxonomy Presentation ~~Linkbase Document~~Linkbase.
Exhibit ~~101.DEF#~~101.DEF		Inline XBRLTaxonomy Extension Definition Document.
Exhibit 104		Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL ~~Definition Linkbase Document~~tags are embedded within the Inline XBRL document.

*	The certification is being furnished and shall not be considered filed as part of this report.

SIGNATURES

Pursuant to the requirements 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.

	~~ARGAN, INC.~~
	ARGAN, INC.

December ~~6, 2017~~8, 2021	By:	/s/ Rainer H. Bosselmann
		Rainer H. Bosselmann
		Chairman of the Board and Chief Executive Officer


December ~~6, 2017~~8, 2021	By:	/s/ David H. Watson
		David H. Watson
		Senior Vice President, Chief Financial Officer,
		Treasurer and Secretary