Argan (AGX) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01Demand for our services may decrease during economic downturns or unpredictable economic cycles, which would most likely affect our businesses adversely
2. 02Future revenues are dependent on the awards of utility-scale natural gas-fired and renewable energy EPC projects to us, the receipt of corresponding full notices-to-proceed and our ability to successfully complete the projects that we start
3. 03Our dependence on large construction contracts may result in uneven financial results
4. 04Actual results could differ from the assumptions and estimates used to prepare our consolidated financial statements
5. 05Project backlog amounts may be uncertain indicators of future revenues as project realization may be subject to unexpected adjustments, delays and cancellations
6. 06Unsuccessful efforts to develop energy plant projects could result in write-offs and the loss of future business
7. 07Future bonding requirements may adversely affect our ability to compete for new energy plant construction projects
8. 08Our results could be adversely affected by natural disasters, human-made disasters or other catastrophic events
9. 09Continuing disruptions to capacity auctions and corresponding prices could reduce the demand for power plants in a primary business region
10. 10Artificial intelligence poses risks that could adversely affect our business, results of operations, and financial condition

Risks Related to Our Market

1. 11If the price of natural gas increases, the demand for our construction services could decline
2. 12Soft demand for electrical power may cause deterioration in our financial outlook
3. 13Intense global competition for engineering, procurement and construction contracts could reduce our market share
4. 14The continuous rise in renewables could possibly reduce the number of future gas-fired power plant projects
5. 15Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions, increased costs and potential losses

Risks Related to the Regulatory Environment

1. 16We are required to comply with environmental laws and regulations that may add unforeseen costs to our businesses
2. 17Expectations of customers and investors may change with respect to sustainability practices, which may impose costs or impact our ability to obtain financing
3. 18The imposition of tariffs by the Trump Administration may impact the construction of power plants or other construction projects of our subsidiaries
4. 19Future construction projects may depend on the continuing acceptability of the hydraulic fracturing process in certain states
5. 20The inability of power project developers to receive or to avoid delay in receiving the applicable regulatory approvals relating to energy projects, including new natural gas pipelines, may result in lost or postponed revenues for us
6. 21Work stoppages, union negotiations and other labor problems could adversely affect us

Risks Related to Our Operational Execution

1. 22We may experience reduced profits or incur losses under fixed-price contracts if costs increase above estimates
2. 23These risks tend to be exacerbated for longer-term contracts because there is increased risk that the circumstances under which we based our original cost estimates or project schedules will change. In such events, our financial condition and results of operations could be negatively impacted
3. 24If we guarantee the timely completion or the performance of a project, we could incur additional costs to fulfill such obligations
4. 25We may be involved in litigation, liability claims and contract disputes which could reduce our profits and cash flows
5. 26Our failure to recover adequately on contract variations submitted to project owners could have a material effect on our financial results
6. 27The shortage of skilled craft labor may negatively impact our ability to execute on our long-term construction contracts
7. 28Our dependence upon third parties to complete many of our contracts may adversely affect our performance under current and future construction contracts
8. 29Failure to maintain safe work sites could result in significant losses as we work on projects that are inherently dangerous
9. 30Future acquisitions and/or investments may not occur, which could limit the growth of our business, and the integration of acquired companies may not be successful
10. 31Our failure to protect our management information systems against security breaches could adversely affect our business and results of operations
11. 32We may be subject to increased corporate taxes in the future
12. 33Certain of our tax positions may be successfully challenged by tax authorities which could result in additional income tax expense
13. 34We could be adversely affected by violations of the Foreign Corrupt Practices Act and similar anti-bribery laws
14. 35Our continued success requires us to retain and hire talented personnel

Risks Related to an Investment in Our Securities

1. 36Our acquisition strategy may result in dilution to our stockholders
2. 37Future stock option exercises and restricted stock issuances will dilute the ownership of the Company’s current stockholders
3. 38Our officers, directors and certain unaffiliated stockholders have meaningful control over the Company
4. 39We may not pay cash dividends in the future
5. 40We may discontinue the repurchase of our common stock in the future
6. 41Provisions of our certificate of incorporation and Delaware law could deter takeover attempts