ARGAN INC Revenue Disclosure

NOTE 2 – REVENUES FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenues

The following table presents consolidated revenues for Fiscal 2026, Fiscal 2025 and Fiscal 2024, disaggregated by the geographic area where the corresponding projects were located:

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Revenues for projects located in Ireland and the U.K. are attributed to the Power segment. The major portions of the Company’s consolidated revenues are recognized pursuant to fixed-price contracts with most of the remaining portions earned pursuant to time-and-material contracts. Consolidated revenues are disaggregated by reportable segment in Note 16 to the consolidated financial statements.

The Company’s revenues primarily are related to construction activities. During Fiscal 2026, the Company recognized approximately $2.1 million in revenues related to project development activities.

Contract Assets and Liabilities

During Fiscal 2026 and Fiscal 2025, there were no unusual or one-time adjustments to contract asset or contract liabilities balances that were material. The Company recognized the following revenues that were included in the contract liabilities balances at the beginning of the respective fiscal year:

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Contract retentions are billed amounts which, pursuant to the terms of the applicable contract, are not paid by customers until a defined phase of a contract or project has been completed and accepted. These retained amounts are reflected in contract assets or contract liabilities depending on the net contract position of the particular contract. The amounts retained by project owners and other customers under construction contracts as of January 31, 2026, and 2025 were $54.5 million and $15.8 million, respectively.

Variable Consideration

Variable consideration includes unapproved change orders where the Company has project-owner directive for additional work or other scope changes but has not yet obtained approval for the associated price or the corresponding additional effort. These amounts are included in the transaction price when it is considered probable that the applicable costs, including those for additional effort, will be recovered through a modification to the contract price. As of January 31, 2026 and 2025, the aggregate amounts of contract variations, which primarily related to an overseas project and were included in the corresponding transaction prices pending customer approvals, were $11.4 million and $8.0 million, respectively.

Remaining Unsatisfied Performance Obligations

As of January 31, 2026, the Company had RUPO of $2.9 billion. The largest portion of RUPO at any date usually relates to engineering, procurement and construction (“EPC”) services and other construction contracts with typical performance durations of one to four years. The Company estimates that it will recognize approximately 38% of RUPO as revenue during the next 12 months, with substantially all the remaining performance obligations to be recognized within 12 to 24 months thereafter. 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 as of January 31, 2026. Accordingly, RUPO may be adjusted to reflect project delays and cancellations, revisions to project scope and cost and foreign currency exchange fluctuations, or to revise estimates, as effects become known. Such adjustments to RUPO may materially reduce future revenues below Company estimates.

Contract Termination

In prior fiscal years, the U.K subsidiary of the Company recognized an estimated contract loss related to an overseas project in the amount of approximately $13.4 million, of which $3.4 million was recorded during Fiscal 2025 and the remainder was recorded in Fiscal 2024. The Company’s U.K subsidiary has significant billable receivables, unresolved contract variations and claims for extensions of time, among other issues, related to an overseas project (see Note 10).