ST. LOUIS--(BUSINESS WIRE)--Aegion Corporation (Nasdaq Global Select Market: AEGN):
The Company expects strong Q4’16 performance and significant earnings growth in 2017.
- Q3’16 earnings per diluted share were $0.34 compared to $0.40 in Q3’15. Adjusted (non-GAAP)1 Q3’16 earnings per diluted share were $0.32 compared to $0.44 in Q3’15.
- Year-to-date operating cash flow was 333 percent of net income reflecting strong cash generation consistent with the Company’s long-term objective.
- Contract backlog was $743.9 million at September 30, 2016, which was in line with the prior year period.
1 Adjusted (non-GAAP) results exclude certain charges related to the Company’s restructuring efforts, reversal of a contingency reserve and acquisition-related expenses. The reconciliation of adjusted results can be found in the Financial Highlights below.
Q3 2016 HIGHLIGHTS
- Infrastructure Solutions delivered record revenue and operating income due to record results in the North American CIPP market and strong performance in the Asia-Pacific region.
- Corrosion Protection’s results for cathodic protection services improved year-over-year, but not enough to offset an approximate $7 million decline in operating income in other portions of the platform, primarily from weakness in the upstream markets.
- Energy Services returned to profitability after completing the downsizing of its upstream operation in 1H’16.
- Construction of the insulation coating facility was completed and pipe insulation commenced for the large deepwater pipe coating and insulation project.
“We continue to expect strong performance in the fourth quarter of 2016, resulting in expected second half adjusted earnings per share largely in line with our results from the same period in 2015.
“The initial outlook for 2017 indicates favorable conditions in our core markets for North American municipal pipe rehabilitation, midstream pipeline cathodic protection services and U.S. West Coast refinery maintenance, as well as our expectation to successfully complete the large deepwater pipe coating and insulation project. The projected strength of these markets combined with expected increased stability in the upstream oil and gas market provide a solid foundation for achieving progress towards the financial targets we outlined in our long term strategy.”
Charles R. Gordon
Aegion President and Chief
Executive Officer
Selected Q3’16 Consolidated Financial Highlights |
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Quarter Ended September 30, 2016 |
Quarter Ended September 30, 2015 |
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(in thousands) |
As Reported
(GAAP) |
Adjustments
(1) |
As Adjusted
(Non-GAAP) |
As Reported
(GAAP) |
Adjustments
(2) |
As Adjusted
(Non-GAAP) |
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Revenues | $ | 308,524 | $ | — | $ | 308,524 | $ | 356,595 | $ | — | $ | 356,595 | ||||||||||||||||||
Gross profit | 66,318 | 130 | 66,448 | 77,121 | 1,661 | 78,782 | ||||||||||||||||||||||||
Operating expenses | 45,277 | 1,752 | 47,029 | 51,554 | 443 | 51,997 | ||||||||||||||||||||||||
Operating income | 20,505 | (1,086 | ) | 19,419 | 24,938 | 1,847 | 26,785 | |||||||||||||||||||||||
Income from continuing operations
(attributable to Aegion Corporation) |
12,067 | (787 | ) | 11,280 | 14,750 | 1,446 | 16,196 | |||||||||||||||||||||||
Adjusted diluted EPS | $ | 0.34 | $ | (0.02 | ) | $ | 0.32 | $ | 0.40 | $ | 0.04 | $ | 0.44 | |||||||||||||||||
Income from continuing operations and diluted earnings per share includes non-controlling interest. |
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(1) 2016 Non-GAAP pre-tax
adjustments:
- Restructuring: Charges for cost of revenues of $130 related to the write-off of certain other assets; charges for operating expenses of $584 related to wind-down and other restructuring-related charges; charges of $212 related to employee severance, extension of benefits, employment assistance programs and early lease termination costs in accordance with ASC 420, Exit or Disposal Cost Obligations, and recorded as “Restructuring charges” in the Consolidated Statements of Operations; and charges for other expense of $1 related to the release of cumulative currency translation adjustments. The vast majority of restructuring charges relate to the 2016 Restructuring.
- Acquisition-Related Expenses: Expenses of $324 related to costs incurred in connection with the Company’s acquisitions of Underground Solutions, selected assets of Fyfe Europe, the CIPP business of Leif M. Jensen A/S and Concrete Solutions, and other potential acquisition activity pursued by the Company during the quarter.
- Reversal of Contingency Reserve: $2,336 reversal of contingency reserves established as part of the opening balance sheet for the acquisition of Brinderson L.P.
(2) 2015 Non-GAAP pre-tax adjustments:
- Restructuring: Charges for cost of revenues of $1,661 related to the write-off of certain other assets; charges for operating expenses of $(443) related to the reversal of reserves for potentially uncollectible receivables and other restructuring-related charges; charges of $172 related to employee severance, extension of benefits, employment assistance programs and early lease termination costs in accordance with ASC 420, Exit or Disposal Cost Obligations, and recorded as “Restructuring charges” in the Consolidated Statements of Operations; and charges for other expense of $108 related to the write-off of certain other assets.
- Acquisition-Related Expenses: Expenses of $457 related to costs incurred in connection with potential acquisition activity pursued by the Company during the quarter.
Selected Q3’16 Segment Financial Highlights |
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Infrastructure Solutions |
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Quarter Ended September 30, 2016 |
Quarter Ended September 30, 2015 |
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(in thousands) |
As Reported
(GAAP) |
Adjustments
(1) |
As Adjusted
(Non-GAAP) |
As Reported
(GAAP) |
Adjustments
(2) |
As Adjusted
(Non-GAAP) |
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Revenues | $ | 158,562 | $ | — | $ | 158,562 | $ | 149,606 | $ | — | $ | 149,606 | ||||||||||||||||||
Gross profit | 40,566 | — | 40,566 | 38,428 | 1,661 | 40,089 | ||||||||||||||||||||||||
Operating expenses | 21,646 | 416 | 22,062 | 22,001 | 443 | 22,444 | ||||||||||||||||||||||||
Operating income | 18,573 | (69 | ) | 18,504 | 16,255 | 1,390 | 17,645 |
(1) Includes non-GAAP adjustments related to: (i) pre-tax
restructuring charges associated with the write-off of certain other
assets, severance and benefit related costs, and other restructuring
charges; and (ii) acquisition expenses incurred primarily in connection
with the Company’s acquisitions of Underground Solutions, selected
assets of Fyfe Europe, the CIPP business of Leif M. Jensen A/S and
Concrete Solutions.
(2) Includes non-GAAP adjustments
related to pre-tax restructuring charges associated with the write-off
of certain other assets, reversal of reserves for potentially
uncollectible receivables, early lease termination costs, severance and
benefit related costs, and other restructuring charges.
Corrosion Protection |
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Quarter Ended September 30, 2016 |
Quarter Ended September 30, 2015 |
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(in thousands) |
As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments (2) |
As Adjusted (Non-GAAP) |
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Revenues | $ | 95,084 | $ | — | $ | 95,084 | $ | 121,392 | $ | — | $ | 121,392 | ||||||||||||||||||
Gross profit | 18,374 | 130 | 18,504 | 27,595 | — | 27,595 | ||||||||||||||||||||||||
Operating expenses | 17,842 | (28 | ) | 17,814 | 20,252 | — | 20,252 | |||||||||||||||||||||||
Operating income | 513 | 177 | 690 | 6,886 | 457 | 7,343 |
(1) Includes non-GAAP adjustments related to pre-tax restructuring
charges associated with the write-off of certain other assets, severance
and benefit related costs, and other restructuring charges.
(2)
Includes non-GAAP adjustments related to expenses incurred in connection
with potential acquisition activity pursued by the Company during the
quarter.
Energy Services |
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Quarter Ended September 30, 2016 |
Quarter Ended September 30, 2015 |
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(in thousands) |
As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments |
As Adjusted (Non-GAAP) |
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Revenues | $ | 54,878 | $ | — | $ | 54,878 | $ | 85,597 | $ | — | $ | 85,597 | ||||||||||||||||||
Gross profit | 7,378 | — | 7,378 | 11,098 | — | 11,098 | ||||||||||||||||||||||||
Operating expenses | 5,789 | 1,364 | 7,153 | 9,301 | — | 9,301 | ||||||||||||||||||||||||
Operating income | 1,419 | (1,194 | ) | 225 | 1,797 | — | 1,797 |
(1) Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with the write-off of certain other assets, early lease termination costs, severance and benefit related costs, and other restructuring charges; and (ii) reversal of a pre-tax contingency reserve established as part of the opening balance sheet for the acquisition of Brinderson L.P.
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 transformational 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 and provides innovative solutions for the strengthening of buildings, bridges and other structures. 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, 2015, as filed with the Securities and Exchange Commission on February 29, 2016, 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.
About Non-GAAP Financial Measures
Aegion has presented certain information in this release excluding certain items that impacted income, expense and earnings per share from continuing operations. The adjusted earnings per share in the quarters and nine-month periods ended September 30, 2016 and 2015 exclude certain charges and benefits related to the Company’s restructuring efforts, acquisition-related expenses and the release of reserves related to pre-acquisition matters related to Brinderson L.P.
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 the associated logo are registered trademarks of Aegion Corporation and its affiliates. (AEGN-ER)