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AEGN - Aegion News Story

$25.72 -0.1  -0.3%

Last Trade - 03/03/21

Sector
Industrials
Size
Mid Cap
Market Cap £569.0m
Enterprise Value £682.1m
Revenue £801.1m
Position in Universe 3015th / 6642

Aegion Corporation Reports 2020 Third Quarter Financial Results

Wed 28th October, 2020 8:46pm
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Management evaluating strategic alternatives for Energy Services; Focused on
growing water and wastewater market presence

ST. LOUIS, Oct. 28, 2020 (GLOBE NEWSWIRE) --

A PDF accompanying this release is available
at: http://ml.globenewswire.com/Resource/Download/f38a396c-11e4-4cb8-9b96-6b17a82d42ec
* Q3’20 loss per diluted share was $0.93 compared to earnings per diluted
share of $0.19 in Q3’19, reflecting a $39 million pre-tax non-cash goodwill
impairment charge for Energy Services. Q3’20 adjusted (non-GAAP)(1) earnings
per diluted share were $0.32 compared to $0.40 in the prior year. Q3’20
adjusted results were at the high end of guidance expectations, driven by
continued strength from the Insituform North America business.
* Revenues in the quarter were $276 million. The Insituform North America
business grew revenues by 10% year over year, helping to offset COVID-related
impacts from Energy Services and the coatings business within Corrosion
Protection.
* Strong ending cash and net debt levels at September 30, 2020, position
Aegion well for organic and inorganic growth.
* Management focused on capitalizing on strong balance sheet and industry
leading position to grow the North America water and wastewater business. BofA
Securities engaged to review strategic alternatives for the Energy Services
segment.
* Q4’20 adjusted earnings are expected to be slightly below Q3’20 results,
primarily reflecting typical seasonal revenue reductions in Infrastructure
Solutions.
((1)Adjusted (non-GAAP) results exclude certain charges related to the
Company’s restructuring activities, acquisition and divestiture-related
expenses, goodwill and indefinite-lived intangible asset impairment,
impairment of assets held for sale, project warranty accruals, credit facility
amendment fees and impacts from the Tax Cuts and Jobs Act. Reconciliation of
adjusted results is included below.)

Q3’20 HIGHLIGHTS
* Top-line reductions drove a 6% decline in adjusted operating income.
However, strong Insituform performance and a sharp improvement in the Corrpro
North America business drove increases in both adjusted gross margins and
adjusted operating margins.
* Ending cash of $77 million increased 40% over the prior year, and
year-to-date operating cash flows of $79 million exceeded the full-year
performance in each of the last five years. The Company paid off its revolver
borrowings in Q3’20, resulting in ending net debt levels of $150 million.
* Contract backlog as of September 30, 2020, was $678 million. Excluding
exited or to-be-exited businesses, backlog increased 2% compared to prior year
levels.
“Our performance in the quarter and outlook as we close out the year reflect
our continued success navigating unprecedented near-term challenges.

Looking forward, we are advancing a strategy to better leverage our
differentiated pipeline rehabilitation and protection technologies for the
benefit of public health and the environment. A core element of the strategy
is to focus on meaningful growth opportunities in the water and wastewater
space to capitalize on the strength of our largest and most profitable
business.

The evaluation of strategic alternatives for the Energy Services business
reflects a deliberate multi-year shift to simplify and drive a narrower focus
on our core markets. Our performance today and plans moving forward position
us well to create significant long-term value for our shareholders.”

Charles R. Gordon, President and Chief Executive Officer, Aegion

Selected Consolidated Financial Highlights

                                                         Quarter Ended September 3 0 , 2020                                                  Quarter Ended September 3 0 , 2019                                               
 (in thousands, except earnings per shar e )             As Reported (GAAP)         Adjustments ((1))        As Adjusted (Non-GAAP)          As Reported (GAAP)         Adjustments ((2))       As Adjusted (Non-GAAP)        
 Revenues                                                $        275,884           $       —                $         275,884               $        308,789           $       —               $         308,789             
 Cost of revenues                                                 215,624                   (1,830   )                 213,794                        241,997                   33                        242,030             
 Gross profit                                                     60,260                    1,830                      62,090                         66,792                    (33     )                 66,759              
 Operating expenses                                               45,055                    (1,546   )                 43,509                         48,866                    (1,860  )                 47,006              
 Goodwill impairment                                              39,430                    (39,430  )                 —                              —                         —                         —                   
 Acquisition and divestiture expenses                             680                       (680     )                 —                              1,842                     (1,842  )                 —                   
 Restructuring and related charges                                2,335                     (2,335   )                 —                              1,435                     (1,435  )                 —                   
 Operating income (loss)                                          (27,240  )                45,821                     18,581                         14,649                    5,104                     19,753              
 Other income (expense)                                           (3,785   )                (897     )                 (4,682    )                    (8,414   )                5,345                     (3,069    )         
 Income (loss) before taxes (benefit)                             (31,025  )                44,924                     13,899                         6,235                     10,449                    16,684              
 Taxes (benefit) on income (loss)                                 (3,131   )                6,118                      2,987                          (114     )                3,905                     3,791               
 Net Income (loss) (attributable to Aegion Corporation)           (28,474  )                38,551                     10,077                         6,036                     6,468                     12,504              
 Diluted earnings (loss) per share                       $        (0.93    )        $       1.25             $         0.32                  $        0.19              $       0.21            $         0.40                

Net income (loss) and diluted earnings (loss) per share includes
non-controlling interest

((1)  )Q3’20 non-GAAP pre-tax adjustments:
* Restructuring: Charges to cost of revenues of $1,830 primarily related to
inventory write offs; charges for operating expenses of $1,546 primarily
related to wind-down costs, fixed asset disposals and other
restructuring-related charges; charges of $2,335 related to employee
severance, extension of benefits, employment assistance programs and contract
termination costs; income for other income/expense of $1,468 related to net
gains on disposal of certain restructured operations and the release of
cumulative currency translation adjustments; and adjustments to
non-controlling interests income of $255.
* Goodwill Impairment: Charges of $39,430 related to goodwill impairments in
Energy Services.
* Acquisition and Divestiture Expenses: Expenses of $680 incurred primarily in
connection with the Company’s divestitures of Australia and Spain and its
planned divestiture of its held for sale operations; and losses of $571
related to the divestiture of Australia.
((2)  )Q3’19 non-GAAP pre-tax adjustments:
* Restructuring: Gains for cost of revenues of $33 primarily related to
recoveries of inventory write offs; charges for operating expenses of $1,860
primarily related to wind-down expenses, reserves for potentially
uncollectible receivables, fixed asset disposals and other
restructuring-related charges; charges of $1,435 related to employee
severance, extension of benefits, employment assistance programs and contract
termination costs; charges for other expense of $5,345 related to net losses
on disposal of certain restructured operations and the release of cumulative
currency translation adjustments; and an income tax return-to-provision
true-up of $1,683 related to foreign tax credits.
* Acquisition and Divestiture Expenses: Charges of $1,842 incurred primarily
in connection with the divestiture of the Company’s business in Australia
and other held for sale operations.
Selected Segment Financial Highlights

                                Quarter Ended September 3 0 , 2020                                                  Quarter Ended September 3 0 , 20 19                                              
 (in thousands)                 As Reported (GAAP)          Adjustments ((1))       As Adjusted (Non-GAAP)          As Reported (GAAP)         Adjustments ((2))       As Adjusted (Non-GAAP)        
 Revenues:                                                                                                                                                                                           
 Infrastructure Solutions       $        152,102            $       —               $         152,102               $        156,087           $       —               $         156,087             
 Corrosion Protection                    60,986                     —                         60,986                         75,901                    —                         75,901              
 Energy Services                         62,796                     —                         62,796                         76,801                    —                         76,801              
 Total Revenues                 $        275,884            $       —               $         275,884               $        308,789           $       —               $         308,789             
                                                                                                                                                                                                     
 Gross Profit:                                                                                                                                                                                       
 Infrastructure Solutions       $        41,358             $       —               $         41,368                $        39,569            $       (30     )       $         39,539              
 Gross Profit Margin                     2 7 . 2   %                                          2 7 . 2   %                    2 5 . 4  %                                          2 5 . 3   %         
 Corrosion Protection                    13,432                     1,830                     15,262                         17,232                    (3      )                 17,229              
 Gross Profit Margin                     2 2 . 0   %                                          25 . 0    %                    2 2 . 7  %                                          2 2 . 7   %         
 Energy Services                         5,470                      —                         5,470                          9,991                     —                         9,991               
 Gross Profit Margin                     8 . 7     %                                          8 . 7     %                    1 3 . 0  %                                          1 3 . 0   %         
 Total Gross Profit             $        60,260             $       1,830           $         62,090                $        66,792            $       (33     )       $         66,759              
 Gross Profit Margin                     21 . 8    %                                          2 2 . 5   %                    21 . 6   %                                          21 . 6    %         
                                                                                                                                                                                                     
 Operating Income (Loss):                                                                                                                                                                            
 Infrastructure Solutions       $        23,497             $       (175    )       $         23,322                $        18,376            $       1,710           $         20,086              
 Operating Margin                        1 5 . 4   %                                          1 5 . 3   %                    11 . 8   %                                          12 . 9    %         
 Corrosion Protection                    (1,357    )                4,520                     3,163                          2,362                     834                       3,196               
 Operating Margin                        (2 . 2    ) %                                        5 . 2     %                    3 . 1    %                                          4 . 2     %         
 Energy Services                         (41,701   )                40,299                    (1,402    )                    2,257                     139                       2,396               
 Operating Margin                        ( 66 . 4  ) %                                        ( 2 . 2   ) %                  2 . 9    %                                          3 . 1     %         
 Corporate                               (7,679    )                1,177                     (6,502    )                    (8,346   )                2,421                     (5,925    )         
 Operating Margin                        ( 2 . 8   ) %                                        ( 2 . 4   ) %                  (2. 7    ) %                                        ( 1 . 9   )%        
 Total Operating Income (Loss)  $        (27,240   )        $       45,821          $         18,581                $        14,649            $       5,104           $         19,753              
 Operating Margin                        (9 . 9    ) %                                        6 . 7     %                    4 . 7    %                                          6 . 4     %         

((1))  Includes non-GAAP adjustments related to:
* Infrastructure Solutions - (i) pre-tax restructuring charges associated with
severance and benefit related costs, wind-down costs and other restructuring
charges; and (ii) expenses incurred in connection with the divestitures of
Australia and Spain.
* Corrosion Protection - pre-tax restructuring charges associated with
severance and benefit related costs, contract termination costs, wind-down
costs, fixed asset disposals and other restructuring charges.
* Energy Services - (i) pre-tax restructuring charges associated with
severance and benefit related costs, contract termination costs, fixed asset
disposals and other restructuring charges; and (ii) goodwill impairment
charges.
* Corporate - (i) pre-tax restructuring charges primarily associated with
severance and benefit related costs and legal expenses; and (ii) divestiture
expenses related to Australia and Spain and other acquisition and divestiture
activities.
((2))  Includes non-GAAP adjustments related to:
* Infrastructure Solutions - (i) pre-tax restructuring charges associated with
severance and benefit related costs, contract termination costs and other
restructuring charges; and (ii) expenses incurred in connection with the
divestiture of the CIPP business in Australia.
* Corrosion Protection - (i) pre-tax restructuring charges associated with
severance and benefit related costs, contract termination costs and other
restructuring charges, and (ii) acquisition and divestiture expenses.
* Energy Services - pre-tax restructuring charges associated with severance
and benefit related costs and other restructuring charges.
* Corporate - (i) pre-tax restructuring charges primarily associated with
severance and benefit related costs and legal expenses; and (ii) acquisition
and divestiture expenses related to held for sale entities.
About Aegion Corporation (NASDAQ: AEGN)

Aegion combines innovative technologies with market-leading expertise to
maintain, rehabilitate and strengthen infrastructure around the world. For
nearly 50 years, the Company has played a pioneering role in finding
innovative solutions to rehabilitate aging infrastructure, primarily pipelines
in the wastewater, water, energy, mining and refining industries. Aegion also
maintains the efficient operation of refineries and other industrial
facilities. Aegion is committed to Stronger. Safer. Infrastructure.(®) More
information about Aegion can be found at www.aegion.com.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe
harbor” for forward-looking statements. Aegion’s forward-looking
statements in this news release represent its beliefs or expectations about
future events or financial performance. These forward-looking statements are
based on information currently available to Aegion and on management’s
beliefs, assumptions, estimates or projections and are not guarantees of
future events or results. When used in this document, the words
“anticipate,” “estimate,” “believe,” “plan,” “intend,
“may,” “will” and similar expressions are intended to identify
forward-looking statements but are not the exclusive means of identifying such
statements. Such statements are subject to known and unknown risks,
uncertainties and assumptions, including those referred to in the “Risk
Factors” section of Aegion’s Annual Report on Form 10-K for the year ended
December 31, 2019, filed with the Securities and Exchange Commission on March
2, 2020, and in subsequently filed documents, and, in particular, the impact
of the current COVID virus outbreak and the evolving response thereto both on
the Company generally and on other risks described therein. In light of these
risks, uncertainties and assumptions, the forward-looking events may not
occur. In addition, Aegion’s actual results may vary materially from those
anticipated, estimated, suggested or projected. Except as required by law,
Aegion does not assume a duty to update forward-looking statements, whether as
a result of new information, future events or otherwise. Investors should,
however, review additional disclosures made by Aegion from time to time in
Aegion’s filings with the Securities and Exchange Commission. Please use
caution and do not place reliance on forward-looking statements. All
forward-looking statements made by Aegion in this news release are qualified
by these cautionary statements.

Information regarding the impact of the Tax Cuts and Jobs Act consists of
estimates which are forward looking and subject to change. The Company
anticipates additional guidance, both at the federal and state level, to be
forthcoming in 2020.  As such, the impacts of the legislation may differ from
current estimates, interpretations and assumptions, possibly materially, and
the amount of the impact on the Company may accordingly be adjusted over the
course of 2020.

About Non-GAAP Financial Measures

Aegion has presented certain information in this release excluding certain
items that impacted income, expense and earnings per share. The adjusted
earnings per share in the quarters and nine months ended September 30, 2020
and 2019 exclude charges related to the Company’s restructuring activities,
acquisition and divestiture-related expenses, goodwill and indefinite-lived
intangible asset impairment, impairment of assets held for sale, project
warranty accruals, credit facility amendment fees and impacts related to the
Tax Cuts and Jobs Act.

Aegion management uses such non-GAAP information internally to evaluate
financial performance for Aegion’s operations because Aegion’s management
believes such non-GAAP information allows management to more accurately
compare Aegion’s ongoing performance across periods. As such, Aegion’s
management believes that providing non-GAAP financial information to
Aegion’s investors is useful because it allows investors to evaluate
Aegion’s performance using the same methodology and information used by
Aegion management.

Aegion(®) and Stronger. Safer. Infrastructure.(®) and the associated logos
are the registered trademarks of Aegion Corporation and its affiliates.

CONTACT:        
Aegion Corporation
David F. Morris, Executive Vice President and Chief Financial Officer
(636) 530-8000



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