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Aegion Corporation Reports 2016 Full Year and Fourth Quarter Financial Results

The Company expects strong earnings per share growth in 2017

/EIN News/ -- ST. LOUIS, Feb. 28, 2017 (GLOBE NEWSWIRE) --

  • Q4’16 diluted EPS were $0.52 compared to a loss of $0.91 in Q4’15. Adjusted (non-GAAP)1 Q4’16 diluted EPS were $0.44 compared to $0.36 in Q4’15.
  • Full year 2016 diluted EPS were $0.84 compared to a loss of $0.22 in 2015. Adjusted (non-GAAP)1 full year 2016 diluted EPS were $1.10 compared to $1.28 in 2015.
  • 2016 cash flow from operating activities and free cash flow were 189 percent and 89 percent of adjusted net income, respectively, demonstrating efficient cash generation.
  • Contract backlog at December 31, 2016 was $689.6 million, 11 percent and 7 percent below the prior year-end and prior quarter-end, respectively, primarily due to the start and progress of the deepwater pipe coating and insulation project.

1 Adjusted (non-GAAP) results exclude certain charges related to the Company’s restructuring efforts, reversal of a contingency reserve, a legal settlement and acquisition-related expenses. The reconciliation of adjusted results can be found on pages 2 and 3.

Q4 2016 HIGHLIGHTS

  • Infrastructure Solutions delivered strong performance in the North American CIPP market, which partially offset reduced activity for Fusible PVC® pipe and the Tyfo® Fibrwrap® technology in North America and a more difficult European CIPP market.
  • Corrosion Protection benefited from the large deepwater pipe coating and insulation project as well as improved performance for U.S. midstream pipe protection services, both of which overcame other challenges in the energy markets.
  • Energy Services expanded operating margins on the path toward the 300 to 400 basis point cumulative improvement expected over the next three years.

“We made investments in 2016 to position the Company for sustainable organic growth in our core North American municipal and midstream pipeline markets. Overshadowed by energy market challenges in 2016, Infrastructure Solutions had record performance in the North American CIPP market and Corrosion Protection saw improved results for its midstream cathodic protection services in the U.S.

“For 2017, we expect higher top line and operating income across all three platforms to result in strong earnings per share growth, greater cash generation and increasing ROIC. This positive outlook reflects our assessment of growing end markets, including an improving environment for oil & gas infrastructure, the expected completion of the large deepwater pipe coating and insulation project and continued execution of our long-term growth strategy.”

Charles R. Gordon
Aegion President and Chief Executive Officer

A PDF accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/9d32495d-f18d-4e93-b701-2e37d5462a69

Selected Q4’16 Consolidated Financial Highlights

    Quarter Ended December 31, 2016   Quarter Ended December 31, 2015  
(in thousands)   As Reported
(GAAP)
  Adjustments
(1)
  As Adjusted
(Non-GAAP)
  As Reported
(GAAP)
  Adjustments
(2)
  As Adjusted
(Non-GAAP)
 
           
Revenues   $ 321,802     $     $ 321,802     $ 330,713     $     $ 330,713    
Gross profit   71,242     158     71,400     67,423     74     67,497    
Operating expenses   50,291     (836 )   49,455     51,513     (5,851 )   45,662    
Operating income (loss)   26,315     (4,370 )   21,945     (28,640 )   50,475     21,835    
Net income (loss)
(attributable to Aegion Corporation)
  17,791     (2,747 )   15,044     (32,860 )   46,021     13,161    
Diluted earnings (loss) per share   $ 0.52     $ (0.08 )   $ 0.44     $ (0.91 )   $ 1.27     $ 0.36    

Net income and diluted earnings per share includes non-controlling interest.
_________________________________
(1)  2016 Non-GAAP pre-tax adjustments:

  • Restructuring: Charges for cost of revenues of $158 related to the write-off of certain other assets; charges for operating expenses of $836 related to wind-down and other restructuring-related charges; charges of $624 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.  The vast majority of restructuring charges relate to the 2016 Restructuring.
  • Acquisition-Related Expenses: Expenses of $637 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.
  • Litigation Settlement: $6,625 gain on settlement of two lawsuits related to the December 2012 departure of several key leaders in sales and operations for the Tyfo® Fibrwrap® technology.

(2)  2015 Non-GAAP pre-tax adjustments:

  • Restructuring: Charges for cost of revenues of $74 related to the write-off of certain other assets; charges for operating expenses of $197 related to other restructuring-related charges; charges of $66 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 $46 related to the write-off of certain other assets.
  • Goodwill Impairment: Charges recorded for goodwill impairment totaling $43,484 for the CRTS ($9,957) and Energy Services ($33,527) reporting units.
  • Credit Facility Fees: Expenses of $3,377 related to certain out-of-pocket expenses and acceleration of certain unamortized fees associated with the refinancing of the Company’s credit facility.
  • Acquisition-Related Expenses: Expenses of $1,132 related to costs incurred in connection with the Company's acquisition of Underground Solutions and other potential acquisition activity pursued by the Company during the quarter.
  • Divestiture Activity: Charges of $801 related to losses on the sale of Bayou Perma-Pipe Canada, Ltd. and Fibrwrap Construction Peru S.A.C.
  • Litigation Settlement: Charges of $2,771 related to reserves for the settlement of a disputed matter within the Infrastructure Solutions segment.
  • Reserves for Long-Dated Accounts Receivable: Charges of $2,883 related to reserves for accounts receivable associated with long-dated receivables within the Corrosion Protection segment.

 

Selected Q4’16 Segment Financial Highlights
Infrastructure Solutions

    Quarter Ended December 31, 2016   Quarter Ended December 31, 2015  
(in thousands)   As Reported
(GAAP)
  Adjustments
(1)
  As Adjusted
(Non-GAAP)
  As Reported
(GAAP)
  Adjustments
(2)
  As Adjusted
(Non-GAAP)
 
           
Revenues   $ 137,028     $     $ 137,028     $ 135,064     $     $ 135,064    
Gross profit   32,196     69     32,265     33,821     74     33,895    
Operating expenses   22,129     (266 )   21,863     21,590     (2,968 )   18,622    
Operating income   16,055     (5,653 )   10,402     11,165     4,108     15,273    

(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; (ii) gain on litigation settlement; and (iii) 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: (i) 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; (ii) reserves for the settlement of a disputed matter; and (iii) acquisition expenses incurred primarily in connection with the Company’s acquisition of Underground Solutions.

Corrosion Protection

    Quarter Ended December 31, 2016   Quarter Ended December 31, 2015  
(in thousands)   As Reported
(GAAP)
  Adjustments
(1)
  As Adjusted
(Non-GAAP)
  As Reported
(GAAP)
  Adjustments
(2)
  As Adjusted
(Non-GAAP)
 
           
Revenues   $ 119,529     $     $ 119,529     $ 108,764     $     $ 108,764    
Gross profit   30,593     89     30,682     22,909         22,909    
Operating expenses   20,599     (45 )   20,554     23,045     (2,883 )   20,162    
Operating income   9,435     693     10,128     (10,093 )   12,840     2,747    

(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: (i) reserves for accounts receivable associated with long-dated receivables; and (ii) impairment of goodwill for the CRTS reporting unit.

Energy Services

    Quarter Ended December 31, 2016   Quarter Ended December 31, 2015  
(in thousands)   As Reported
(GAAP)
  Adjustments
(1)
  As Adjusted
(Non-GAAP)
  As Reported
(GAAP)
  Adjustments
(2)
  As Adjusted
(Non-GAAP)
 
           
Revenues   $ 65,245     $     $ 65,245     $ 86,885     $     $ 86,885    
Gross profit   8,453         8,453     10,693         10,693    
Operating expenses   7,563     (525 )   7,038     6,878         6,878    
Operating income   825     590     1,415     (29,712 )   33,527     3,815    

(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.

(2)  Includes non-GAAP adjustments related to impairment of goodwill for the Energy Services reporting unit.

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 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, 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 fourth quarter and year ended December 31, 2016 exclude certain charges related to the Company’s restructuring efforts, acquisition-related activities, litigation settlement and the release of reserves related to pre-acquisition matters related to Brinderson L.P. The adjusted earnings per share in the fourth quarter and year ended December 31, 2015 exclude certain charges related to the Company’s restructuring efforts, the impairment of goodwill, refinancing costs, litigation settlement, acquisition-related expenses, divestiture activity and reserves for certain long-dated accounts receivable.

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®, Fibrwrap®, Fusible PVC®, Tyfo® and the associated logos are the registered trademarks of Aegion Corporation and its affiliates.  (AEGN-ER)

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

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