Aegion Corporation Reports 2018 First Quarter Financial Results

Management reaffirms outlook for adjusted EPS growth of more than 30 percent in 2018

ST. LOUIS, May 02, 2018 (GLOBE NEWSWIRE) -- A PDF accompanying this announcement is available at http://resource.globenewswire.com/Resource/Download/2b4eb7d5-af24-4c92-ac66-b1dc43e84411 

  • Revenues of $325 million in Q1’18 were on par with Q1’17, as record quarterly Energy Services revenues mitigated the lost contribution from the large deepwater pipe coating and insulation project, which was substantially completed during FY’17.

  • Q1’18 loss per diluted share was $0.06 compared to earnings per diluted share of $0.17 in Q1’17. Q1’18 adjusted (non-GAAP)1 earnings per diluted share were $0.13 compared to $0.18 in Q1’17.

  • Contract backlog as of March 31, 2018 was $718 million, an increase of $58 million, or 9 percent, from contract backlog at March 31, 2017, each excluding backlog for the large deepwater pipe coating and insulation project. New orders grew 1 percent compared to Q1’17 to $353 million, overcoming the impact of exiting the Fyfe North America structural construction business in FY’17.

1Adjusted (non-GAAP) results exclude certain charges related to the Company’s restructuring activities, acquisition and divestiture-related expenses and credit facility amendment fees.  Reconciliation of adjusted results is included below.

Q1 2018 HIGHLIGHTS

  • Infrastructure Solutions' adjusted operating income declined from Q1’17 primarily due to weather impacts of more than $3 million, or $0.08 per share.

  • Corrosion Protection delivered results in line with expectations, with declines primarily attributed to lost contributions from the large deepwater project that was substantially completed in FY’17.

  • Energy Services delivered record quarterly revenues of $92 million and more than doubled operating income due to stronger than expected Q1’18 turnaround activity.

  • Q1’18 results benefited from favorable discrete tax adjustments of approximately $0.03 per share.  Management expects the full-year adjusted effective tax rate to be between 23 and 24 percent.

“Aegion delivered solid first quarter results, despite the impact of severe winter weather that affected parts of the U.S. and Canada for the first four months of the year. Order intake growth remained robust, overcoming the impacts of exiting the Fyfe North America structural construction business. We also ended the first quarter with a strong backlog position of $718 million.

As we look forward, we are working to recover lost Q1’18 volumes within the Infrastructure Solutions segment and we are starting to see positive momentum in our U.S. and Canada cathodic protection businesses. We remain confident in our outlook for adjusted diluted earnings per share growth of more than 30 percent in 2018.”

Charles R. Gordon, President and Chief Executive Officer

 

Selected Consolidated Financial Highlights

Quarter Ended March 31, 2018 Quarter Ended March 31, 2017
(in thousands, except earnings per share) As Reported
(GAAP)
Adjustments
(1)
As Adjusted
(Non-GAAP)
As Reported
(GAAP)
Adjustments
(2)
As Adjusted
(Non-GAAP)
Revenues $ 324,861 $ $ 324,861 $ 325,175 $ $ 325,175
Cost of revenues 263,357 263,357 257,763 (168 ) 257,595
Gross profit 61,504 61,504 67,412 168 67,580
Operating expenses 56,142 (3,455 ) 52,687 52,746 251 52,997
Acquisition and divestiture expenses 392 (392 ) 533 (533 )
Restructuring and related charges 1,789 (1,789 )
Operating income 3,181 5,636 8,817 14,133 450 14,583
Net income (loss)
(attributable to Aegion Corporation)
(2,069 ) 6,251 4,182 5,871 195 6,066
Diluted earnings (loss) per share $ (0.06 ) $ 0.19 $ 0.13 $ 0.17 $ 0.01 $ 0.18

Net income and diluted earnings per share includes non-controlling interest.

(1)    Q1 2018 Non-GAAP pre-tax adjustments:

  • Restructuring: Charges for operating expenses of $3,455 primarily related to wind-down expenses, reserves for potentially uncollectible receivables and other restructuring-related charges; and charges of $1,789 related to employee severance, extension of benefits, employment assistance programs and early lease and contract termination costs.

  • Acquisition and Divestiture Expenses: Expenses of $392 incurred in connection with the Company’s planned divestiture of Bayou.

  • Credit Facility Fees: Charges related to certain out-of-pocket expenses and acceleration of certain unamortized fees associated with amending the Company’s credit facility.

(2)  Q1 2017 Non-GAAP pre-tax adjustments:

  • Restructuring: Charges for cost of revenues of $168 related to the write-off of certain other assets; and pre-tax restructuring charges for operating expenses of $(251) primarily related to the reversal of reserves for potentially uncollectible receivables, net of wind-down and other restructuring-related charges.

  • Acquisition-Related Expenses: Expenses of $533 related to expenses incurred in connection with the Company’s acquisition of Environmental Techniques and other potential acquisition activity pursued by the Company during the quarter.

Selected Segment Financial Highlights

Infrastructure Solutions

Quarter Ended March 31, 2018 Quarter Ended March 31, 2017
(in thousands) As Reported
(GAAP)
Adjustments
(1)
As Adjusted
(Non-GAAP)
As Reported
(GAAP)
Adjustments
(2)
As Adjusted
(Non-GAAP)
Revenues $ 134,427 $ $ 134,427 $ 128,868 $ $ 128,868
Cost of revenues 107,718 107,718 97,617 (168 ) 97,449
Gross profit 26,709 26,709 31,251 168 31,419
Gross profit margin 19.9 % 19.9 % 24.3 % 24.4 %
Operating expenses 25,592 (2,100 ) 23,492 25,108 251 25,359
Acquisition and divestiture expenses 33 (33 ) 533 (533 )
Restructuring and related charges 1,433 (1,433 )
Operating income (loss) $ (349 ) $ 3,566 $ 3,217 $ 5,610 $ 450 $ 6,060
Operating margin (0.3 )% 2.4 % 4.4 % 4.7 %

(1)      Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with severance and benefit related costs, early lease and contract termination costs and other restructuring charges; and (ii) acquisition and divestiture expenses.

(2)     Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with the write-off of certain other assets, reversal of reserves for potentially uncollectible receivables, wind-down and other restructuring charges; and (ii) acquisition expenses incurred primarily in connection with the Company’s acquisition of Environmental Techniques.

Corrosion Protection

Quarter Ended March 31, 2018 Quarter Ended March 31, 2017
(in thousands) As Reported
(GAAP)
Adjustments
(1)
As Adjusted
(Non-GAAP)
As Reported
(GAAP)
Adjustments As Adjusted
(Non-GAAP)
Revenues $ 98,105 $ $ 98,105 $ 123,390 $ $ 123,390
Cost of revenues 74,529 74,529 95,427 95,427
Gross profit 23,576 23,576 27,963 27,963
Gross profit margin 24.0 % 24.0 % 22.7 % 22.7 %
Operating expenses 22,039 (1,355 ) 20,684 20,751 20,751
Acquisition and divestiture expenses 359 (359 )
Restructuring and related charges 356 (356 )
Operating income $ 822 $ 2,070 $ 2,892 $ 7,212 $ $ 7,212
Operating margin 0.8 % 2.9 % 5.8 % 5.8 %

(1)      Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with severance and benefit related costs, early lease and contract termination costs and other restructuring charges; and (ii) expenses incurred in connection with the planned disposal of the Bayou business and certain acquisition activity currently being pursued by the Company.

Energy Services

Quarter Ended March 31, 2018 Quarter Ended March 31, 2017
(in thousands) As Reported
(GAAP)
Adjustments As Adjusted
(Non-GAAP)
As Reported
(GAAP)
Adjustments As Adjusted
(Non-GAAP)
Revenues $ 92,329 $ $ 92,329 $ 72,917 $ $ 72,917
Cost of revenues 81,110 81,110 64,719 64,719
Gross profit 11,219 11,219 8,198 8,198
Gross profit margin 12.2 % 12.2 % 11.2 % 11.2 %
Operating expenses 8,511 8,511 6,887 6,887
Operating income $ 2,708 $ $ 2,708 $ 1,311 $ $ 1,311
Operating margin 2.9 % 2.9 % 1.8 % 1.8 %

 

About Aegion(NASDAQ:AEGN)

Aegion combines innovative technologies with market-leading expertise to maintain, rehabilitate and strengthen infrastructure around the world. Since 1971, 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, 2017, filed with the Securities and Exchange Commission on March 1, 2018, and in subsequently filed documents. 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 preliminary estimates which are forward-looking statements and are subject to change, possibly materially. Information regarding the impacts of the Tax Cuts and Jobs Act is based on our current calculations, as well as our current interpretations, assumptions and expectations, which are subject to further change. 

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 ended March 31, 2018 and 2017 exclude charges related to the Company’s restructuring efforts, acquisition and divestiture-related activities and credit facility amendment fees.

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®, Tyfo®, Fyfe® and Fusible PVC® 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