Aegion Corporation Reports 2017 First Quarter Financial Results
The Company remains well positioned for strong earnings per share growth in 2017
ST. LOUIS, May 02, 2017 (GLOBE NEWSWIRE) --
A PDF accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/4bb40db9-a733-493b-9d68-7d1ce0412fe4
- Q1’17 diluted EPS were $0.17 compared to a loss of $0.11 in Q1’16. Adjusted (non-GAAP)1 Q1’17 diluted EPS were $0.18 compared to $0.12 in Q1’16.
- Cash flow from operating activities used $26 million of cash in a seasonally low quarter for cash generation, which included a higher than normal increase in receivables because of the deepwater pipe coating and insulation project and several turnaround events.
- New orders increased in all three platforms during Q1’17 compared to Q1’16 by a total of 29 percent to $333 million.
- Contract backlog at March 31, 2017 was $712 million, 6 percent below contract backlog at March 31, 2016 due to execution of the large deepwater pipe coating and insulation project. Excluding the deepwater project, backlog increased 6 percent to $661 million.
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.
Q1 2017 HIGHLIGHTS
- Infrastructure Solutions’ operating income declined because of limited activity in certain regions and planned investments for future growth. Strong execution resulted in revenue and profit growth in the key North American wastewater CIPP market.
- Corrosion Protection delivered strong growth driven by execution of the large deepwater pipe coating and insulation project.
- Energy Services delivered revenues, operating income and operating margins in line with expectations.
“With an improving backlog position and strong orders in our core end markets during the first quarter, we expect higher organic revenue and operating income in all three platforms to result in significant adjusted EPS growth in 2017. We are also making investments in sales resources, market expansion and R&D to advance our long-term strategy for sustainable organic growth and to position the Company to achieve our three-year financial objectives.”
Charles R. Gordon
Aegion President and Chief Executive Officer
Selected Q1’17 Consolidated Financial Highlights
| Quarter Ended March 31, 2017 | Quarter Ended March 31, 2016 | ||||||||||||||||||||||||
| (in thousands) |
As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments (2) |
As Adjusted (Non-GAAP) |
|||||||||||||||||||
| Cost of revenues | $ | 257,763 | $ | (168 | ) | $ | 257,595 | $ | 239,494 | $ | (1,244 | ) | $ | 238,250 | |||||||||||
| Gross profit | 67,412 | 168 | 67,580 | 54,414 | 1,244 | 55,658 | |||||||||||||||||||
| Operating expenses | 52,746 | 251 | 52,997 | 50,725 | (2,730 | ) | 47,995 | ||||||||||||||||||
| Acquisition-related expenses | 533 | (533 | ) | — | 1,031 | (1,031 | ) | — | |||||||||||||||||
| Restructuring charges | — | — | — | 6,797 | (6,797 | ) | — | ||||||||||||||||||
| Operating income (loss) | 14,133 | 450 | 14,583 | (4,139 | ) | 11,802 | 7,663 | ||||||||||||||||||
| Net income (loss) (attributable to Aegion Corporation) |
5,871 | 195 | 6,066 | (3,792 | ) | 8,109 | 4,317 | ||||||||||||||||||
| Diluted earnings (loss) per share | $ | 0.17 | $ | 0.01 | $ | 0.18 | $ | (0.11 | ) | $ | 0.23 | $ | 0.12 | ||||||||||||
Net income and diluted earnings per share includes non-controlling interest.
_________________________________
(1) 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. All restructuring charges relate to the 2014 Restructuring.
- 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.
(2) 2016 Non-GAAP pre-tax adjustments:
-
Restructuring: Charges for cost of revenues of $35 related to the write-off of certain other assets; pre-tax restructuring charges for operating expenses of $2,730 related to wind-down and other restructuring-related charges; and pre-tax restructuring charges of $6,797 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: Expense of $1,209 for cost of revenues recognized as part of the accounting for business combinations in connection with the Company’s acquisition of Underground Solutions; and expenses of $1,031 incurred in connection with the Company’s acquisition of Underground Solutions and other potential acquisition activity pursued by the Company during the quarter.
Selected Q1’17 Segment Financial Highlights
Infrastructure Solutions
| Quarter Ended March 31, 2017 | Quarter Ended March 31, 2016 | ||||||||||||||||||||||||
| (in thousands) |
As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments (2) |
As Adjusted (Non-GAAP) |
|||||||||||||||||||
| Revenues | $ | 128,868 | $ | — | $ | 128,868 | $ | 125,762 | $ | — | $ | 125,762 | |||||||||||||
| Cost of revenues | 97,617 | (168 | ) | 97,449 | 96,018 | (1,244 | ) | 94,774 | |||||||||||||||||
| Gross profit | 31,251 | 168 | 31,419 | 29,744 | 1,244 | 30,988 | |||||||||||||||||||
| Gross profit margin | 24.3 | % | 24.4 | % | 23.7 | % | 24.6 | % | |||||||||||||||||
| Operating expenses | 25,108 | 251 | 25,359 | 20,926 | 41 | 20,967 | |||||||||||||||||||
| Acquisition-related expenses | 533 | (533 | ) | — | 1,031 | (1,031 | ) | — | |||||||||||||||||
| Restructuring charges | — | — | — | 1,979 | (1,979 | ) | — | ||||||||||||||||||
| Operating income | $ | 5,610 | $ | 450 | $ | 6,060 | $ | 5,808 | $ | 4,213 | $ | 10,021 | |||||||||||||
| Operating margin | 4.4 | % | 4.7 | % | 4.6 | % | 8.0 | % | |||||||||||||||||
(1) 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 and other potential acquisition activity pursued by the Company during the quarter.
(2) 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) inventory step up expense recognized in connection with the Company’s acquisition of Underground Solutions; and (iii) acquisition expenses incurred primarily in connection with the Company’s acquisition of Underground Solutions.
Corrosion Protection
| Quarter Ended March 31, 2017 | Quarter Ended March 31, 2016 | ||||||||||||||||||||||||
| (in thousands) | As Reported (GAAP) |
Adjustments | As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
|||||||||||||||||||
| Revenues | $ | 123,390 | $ | — | $ | 123,390 | $ | 92,446 | $ | — | $ | 92,446 | |||||||||||||
| Cost of revenues | 95,427 | — | 95,427 | 75,247 | — | 75,247 | |||||||||||||||||||
| Gross profit | 27,963 | — | 27,963 | 17,199 | — | 17,199 | |||||||||||||||||||
| Gross profit margin | 22.7 | % | 22.7 | % | 18.6 | % | 18.6 | % | |||||||||||||||||
| Operating expenses | 20,751 | — | 20,751 | 20,449 | (317 | ) | 20,132 | ||||||||||||||||||
| Restructuring charges | — | — | — | 2,420 | (2,420 | ) | — | ||||||||||||||||||
| Operating income | $ | 7,212 | $ | — | $ | 7,212 | $ | (5,670 | ) | $ | 2,737 | $ | (2,933 | ) | |||||||||||
| Operating margin | 5.8 | % | 5.8 | % | (6.1 | )% | (3.2 | )% | |||||||||||||||||
(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.
Energy Services
| Quarter Ended March 31, 2017 | Quarter Ended March 31, 2016 | ||||||||||||||||||||||||
| (in thousands) | As Reported (GAAP) |
Adjustments | As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
|||||||||||||||||||
| Revenues | $ | 72,917 | $ | — | $ | 72,917 | $ | 75,700 | $ | — | $ | 75,700 | |||||||||||||
| Cost of revenues | 64,719 | — | 64,719 | 68,229 | — | 68,229 | |||||||||||||||||||
| Gross profit | 8,198 | — | 8,198 | 7,471 | — | 7,471 | |||||||||||||||||||
| Gross profit margin | 11.2 | % | 11.2 | % | 9.9 | % | 9.9 | % | |||||||||||||||||
| Operating expenses | 6,887 | — | 6,887 | 9,350 | (2,454 | ) | 6,896 | ||||||||||||||||||
| Restructuring charges | — | — | — | 2,398 | (2,398 | ) | — | ||||||||||||||||||
| Operating income | $ | 1,311 | $ | — | $ | 1,311 | $ | (4,277 | ) | $ | 4,852 | $ | 575 | ||||||||||||
| Operating margin | 1.8 | % | 1.8 | % | (5.6 | )% | 0.8 | % | |||||||||||||||||
(1) Includes non-GAAP adjustments related to 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.
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, 2016, filed with the Securities and Exchange Commission on March 1, 2017, 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 quarter ended March 31, 2017 and 2016 exclude charges related to the Company’s restructuring efforts and acquisition-related activities.
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 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
