{"url_path":"/sec/agx/10-k/2026/item-7a","section_key":"item-7a","section_title":"Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-03-26","source_url":"https://www.sec.gov/Archives/edgar/data/100591/0001104659-26-035216-index.html","accession_number":"0001104659-26-035216","cik":"0000100591","ticker":"AGX","issuer_name":"ARGAN INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/100591/0001104659-26-035216-index.html","primary_entity_key":"0000100591","primary_entity_name":"ARGAN INC"},"word_count":595,"has_tables":true,"body_markdown":"**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**\n\n**Interest Rate Risk**\n\nIn the normal course of business, our results of operations may be subject to risks related to fluctuations in interest rates.\n\nWe maintain a substantial amount of our temporarily investable cash in certificates of deposit, money market funds, and U.S. Treasury notes (see Note 3 of the accompanying consolidated financial statements). As of January 31, 2026, the weighted average number of days remaining until maturity for the certificates of deposit and U.S. Treasury notes was 963 days. The weighted average annual interest rate of our certificates of deposit of $150.0 million, the money market funds balance of $149.6 million, and the U.S. Treasury notes with face value of $402.5 million was 3.7%. Based on the current rates of our invested funds as of January 31, 2026, an increase or decrease of 100 basis points in interest rates would change our annual investment earnings by $7.0 million.\n\nIn addition, our Credit Agreement provides for a credit facility subject to a variable interest rate of SOFR plus 1.85%. As of January 31, 2026 and 2025, we had no outstanding borrowings under our financing arrangements with the Bank (see Note 8 to the accompanying consolidated financial statements). A hypothetical change in the interest rate of our credit facility by 100 basis points would not have a material impact to our net income.  \n\n**Foreign Exchange Risk**\n\nMost of our operations are based in the U.S. and, accordingly, most of our transactions are denominated in U.S. Dollars. Our foreign subsidiaries operate in either the British Pound or the Euro. Changes in the value of the U.S. Dollar to these currencies will impact our operating results and the value of our balance sheet items translated from their functional currencies.\n\n- 35 -\n\n[Table of Contents](#TOC)\n\nThe effects of translation are recognized in accumulated other comprehensive income, which is presented net of tax when applicable. Our foreign subsidiaries remeasure transactions and financial statement amounts denominated in local currencies to Euros or British Pounds. Gains and losses on the remeasurements are recorded in the other income, net, line of our consolidated statement of earnings.\n\n**Contract Costs Risk**\n\nAs discussed in “Risk Factors” (see Item 1A), our fixed-price contracts expose us to the risk that actual costs may exceed estimates used to price the work. Cost overruns and schedule impacts may result from, among other factors, delays in the delivery of machinery and equipment, increases in labor or material costs, warranty costs, or the failure to obtain required resources when needed.\n\nRecent changes in U.S. trade policy, including new or increased tariffs, have increased cost and supply chain uncertainty for certain construction materials and equipment. Tariffs may increase material costs and lead times, contribute to delivery delays, and adversely affect project costs and schedules. Because trade policy remains fluid, the ultimate impact is uncertain. We continue to monitor developments closely, as prolonged or expanded trade restrictions could negatively affect project costs, timing, and customer demand.\n\nWe are also subject to fluctuations in commodity prices, including steel products, copper, concrete, and fuel. While we seek firm supplier quotes, we generally do not hedge commodity price risk. Given the fixed-price nature of many of our contracts, commodity price volatility may adversely affect results of operations. We seek to mitigate these risks through bid assumptions, procurement strategies (including early procurement for major fixed-price projects), shortened quote periods in certain cases, and contractual protections where available. To date, fluctuations in construction material costs have not had a meaningful impact on the profitability of our active projects."}