- Non-GAAP second quarter 2015 diluted
earnings per share from continuing operations, excluding
restructuring and acquisition-related expenses, were $0.35 compared
to $0.34 in the second quarter of 2014. On a GAAP basis, second
quarter 2015 earnings per diluted share from continuing operations
were $0.24 compared to $0.33 in the second quarter of 2014.
- Consolidated cash and cash equivalents
at June 30, 2015 were $173.1 million, a $37.1 million increase from
March 31, 2015.
- Second quarter 2015 pre-tax benefits
from the October 2014 restructuring were approximately $2.5
million, or $0.05 per diluted share, in line with
expectations.
- Strengthening of the United States
dollar against various international currencies negatively impacted
second quarter 2015 revenues by $10.6 million and operating income
results by $0.8 million (pre-tax), or $0.02 per diluted share,
compared to the second quarter of 2014.
- Consolidated contract backlog at June
30, 2015 was $760.3 million, a decline of 8.3 percent from June 30,
2014. Excluding contract backlog from the exit of several
international contracting markets and a large Corrosion Protection
contract canceled in the third quarter of 2014, consolidated
contract backlog at June 30, 2015 was $756.9 million, a decline of
3.4 percent from June 30, 2014.
Aegion Corporation (Nasdaq Global Select Market: AEGN) today
reported GAAP earnings from continuing operations of $8.7 million,
or $0.24 per diluted share, compared to $12.8 million, or $0.33 per
diluted share, in the second quarter of 2014. On a non-GAAP basis,
earnings from continuing operations, excluding restructuring and
acquisition-related expenses, were $13.1 million, or $0.35 per
diluted share, compared to $13.1 million, or $0.34 per diluted
share, in the prior year quarter.
For the first six months of 2015, reported GAAP earnings from
continuing operations were $10.0 million, or $0.27 per diluted
share, compared to $17.3 million, or $0.45 per diluted share, in
the prior year period. On a non-GAAP basis, earnings from
continuing operations for the first six months of 2015, excluding
restructuring and acquisition-related expenses, were $17.9 million,
or $0.48 per diluted share, compared to $17.9 million, or $0.47 per
diluted share, for the first six months of 2014.
Charles R. Gordon, Aegion’s President and Chief Executive
Officer, commented, “Our second quarter 2015 financial results
demonstrate Aegion’s diversified businesses can generate strong
results even when our upstream energy business is under pressure
this year from lower oil prices. Infrastructure Solutions and the
downstream portion of Energy Services delivered strong results in
the quarter. Our financial position remains healthy, with strong
first half operating cash flow, and near record cash balances at
the end of June. We estimate the negative impact on second quarter
earnings from certain of our businesses with the most exposure to
the upstream energy sector, was approximately $0.09 per diluted
share, as compared to the prior year.
Our 2014 restructuring efforts remain on track to be
substantially complete by the end of the third quarter of 2015 with
approximately $2 million remaining in trailing cash costs. We
recognized $0.17 per diluted share of savings from the start of the
initiative through June 30, 2015. We remain on track to recognize
annualized savings of approximately $11 million, or $0.20 per
diluted share, at the high-end of our original expectation.
It is becoming more apparent that the low price range for oil
and gas may continue for some time. As a result, we are evaluating
how we may adapt our upstream technologies and services to better
meet this evolving new reality.
Looking at the balance of the year, which is the seasonally
strongest for a majority of our businesses, we expect the areas of
strength that carried us in the first half of the year will do so
again in the second half. Infrastructure Solutions is on track for
record revenues and profits in 2015 from strong execution and
backlog, which is at an historic high level because of favorable
end markets. We also are benefiting from robust activity in Energy
Services’ downstream refining market due to an increase in refinery
maintenance billable hours and the scheduled execution of
previously delayed turnaround projects. There were positive
developments in the last 90 days for Corrosion Protection’s
midstream market, including the award of several large projects. In
particular, Corrpro’s orders have increased significantly, which is
a positive indicator for an expected strong second half of the
year. For the full year, we believe the positive factors driving
performance in 2015 can largely offset the financial impact from
the challenges in the upstream energy market.”
2015 Outlook
Infrastructure Solutions
The Infrastructure Solutions platform is benefiting from
increased expenditures for municipal wastewater pipeline
rehabilitation in the United States, revenue and profit growth from
Fyfe/Fibrwrap, the 2014 restructuring and realignment of the
international segment and improved project execution across the
platform. Backlog at June 30, 2015 was $362.9 million, a slight
decrease over the prior year period, including the negative effect
of currency translation. However, excluding backlog for the
restructured international markets where Insituform is exiting
contract installation operations, backlog increased 1.9 percent
compared to June 30, 2014. Municipal expenditures for wastewater
pipeline rehabilitation remain at attractive levels led by improved
financial health and several large EPA consent decree enforcement
actions in the United States. Contract backlog for Insituform North
America was at a record level with solid orders during the second
quarter. Opportunities in the North American fiber-reinforced
polymer market remain favorable, reinforcing the outlook for growth
in Fyfe/Fibrwrap for 2015. Restructuring efforts in the six
affected international markets continue to proceed ahead of plan
and position the Europe and Asia-Pacific operations for significant
profit growth in 2015. Long-term product supply agreements have
been secured in France, Switzerland, Hong Kong and Singapore. While
Infrastructure Solutions expects only modest revenue growth, taking
into account the revenue decline due to exiting several
international markets, operating income is expected to be at a
record level in 2015 due to gross margin expansion, both
domestically and internationally.
Corrosion Protection
While the mix of revenues and profits for Corrosion Protection
favor the midstream segment, the expected reduction in capital and
maintenance spending within the upstream market has had a
significant impact on platform financial results, which will likely
continue in the second half of 2015. Backlog at June 30, 2015,
which was $173.4 million, represented a 19.5 percent decline
compared to June 30, 2014. Excluding the third quarter 2014
cancellation of a $34.0 million onshore pipe coating project in the
United States, June 30, 2015 backlog declined 4.7 percent compared
to June 30, 2014, which includes the negative effect of currency
translation. Pipe orders for the upcoming Canadian construction
season were down significantly indicating a sharp contraction in
the upstream market after record activity in the 2014/2015
construction season. Market conditions for the upstream pipe
linings business remain under pressure as customers reduce
expenditures and competition has intensified for available
projects. The North American midstream market remains favorable as
new orders for the cathodic protection business increased sharply
in June and July. Corrosion Protection backlog includes $32.0
million of recently announced new awards for midstream pipe coating
projects in the United States Gulf Coast and the Caspian Sea
region, although the timing for project activity in the Middle East
remains a concern due to the impact from lower oil prices. Not
included in reported June 30, 2015 backlog is a large midstream
Canadian project, signed in July 2015, valued at over $10.0 million
for alternating electrical current pipe corrosion mitigation. The
reported backlog and recent awards in the midstream market support
a favorable outlook for the seasonally strong second half of the
year. While 2015 should end with a modest increase in revenues for
Corrosion Protection, a contraction in gross margins will likely
result in lower operating income compared to what was achieved in
2014.
Energy Services
The West Coast downstream refining market continues to be
largely unaffected by the decline in oil prices as demand remains
high for refined petroleum products. This market represents
approximately 60 percent of Energy Services’ revenues, mostly for
recurring time and material maintenance activities, and the outlook
for the second half of the year remains favorable. However, the
refinery shutdown turnaround market has been more volatile than
expected this year as several, but not all, planned refinery
shutdowns for Energy Services have been postponed until 2016 to
maximize capacity given strong market conditions.
Energy Services’ first half upstream results in the Central
California region declined due to customer-driven cost reductions
as a result of reduced maintenance and capital spending, which will
likely continue for the remainder of the year. Energy Services
operations in the Permian Basin are expected to break-even over the
remainder of 2015 as a result of securing additional small capital
construction projects and operating expense management compared to
operating losses during the first half of the year. As a result of
these conflicting market dynamics, backlog for Energy Services
declined 9.7 percent to $224.0 million as of June 30, 2015 compared
to June 30, 2014. Energy Services is expected to end 2015 with
modest revenue growth due to the strength of the downstream
segment; however, because of lower gross margins during the first
half of the year and less work in the higher margin upstream
market, there will likely be a decline in operating income compared
to 2014. Current planned scheduled maintenance hours, turnaround
activity, small capital construction projects and other services in
the second half of 2015 offer the opportunity for gross margin
improvement more in line with the 15% run rate achieved in
2014.
CONTRACT BACKLOG
(Unaudited, in millions)
The following table sets forth our
consolidated backlog by segment (in millions):
June 30, March 31, December 31, June
30, 2015 2015 2014 2014
Infrastructure Solutions (1)
$ 362.9 $ 354.2 $ 337.5 $ 365.7
Corrosion Protection (2)
173.4 159.3 176.0 215.4
Energy Services (3)
224.0 238.2 244.5 248.1 Total backlog $ 760.3
$ 751.7 $ 758.0 $ 829.2
______________________
(1) June 30, 2015, March 31, 2015,
December 31, 2014 and June 30, 2014 included backlog from
restructured entities of $3.3 million, $7.9 million, $3.7 million
and $12.2 million, respectively
(2) June 30, 2014 included $34.0 million
related to an onshore pipe coating project that was canceled in the
third quarter of 2014.
(3) Represents expected unrecognized
revenues to be realized under long-term Master Service Agreements
and other signed contracts. If the remaining term of
these arrangements exceeds 12 months, the unrecognized revenues
attributable to such arrangements included in backlog are limited
to only the next 12 months of expected revenues.
Realignment and Restructuring
Plan
On October 6, 2014, Aegion announced a restructuring plan (“2014
Restructuring”) to exit low-return CIPP contracting businesses and
reduce the size and cost of the Company’s overhead structure to
improve gross margins and profitability over the long term.
In 2014, pre-tax charges were $49.5 million ($36.2 million
after-tax, or $0.95 per diluted share). During the first quarter of
2015, the Company recorded pre-tax charges of $3.5 million ($3.3
million after-tax), or $0.09 per diluted share, related to the loss
on the sale of Insituform’s contracting business in France,
severance, retention and other cash items related to the remaining
affected contracting markets and the combination of Fyfe/Fibrwrap
with Insituform.
A pre-tax charge of $5.7 million ($4.4 million after-tax), or
$0.11 per diluted share, was recorded in the second quarter of 2015
to substantially complete the shutdown of contracting operations in
Hong Kong, Singapore and Malaysia. Non-cash charges totaling $2.6
million were primarily associated with allowances for the risk of
uncollectible receivables. Cash charges totaling $3.1 million
consisted of employee severance, extension of benefits, employment
assistance programs and other employment-related costs, as well as
other restructuring costs.
The 2014 Restructuring was substantially completed in the second
quarter of 2015, with approximately $2.0 million in trailing cash
costs expected in the third quarter of 2015, which will result in
total cash charges for the 2014 Restructuring at approximately
$14.0 million, within our previously announced range.
The 2014 Restructuring is expected to generate annualized
savings of approximately $11.0 million, or $0.20 per diluted share,
on a GAAP basis. Pre-tax restructuring savings in the second
quarter of 2015 were $2.5 million, or $0.05 per diluted share. For
the six months ended June 30, 2015, pre-tax savings were $5.0
million, or $0.10 per diluted share, on track to achieve the
high-end of the expected annual savings run rate.
Consolidated Highlights
Second Quarter 2015 versus Second Quarter 2014(Non-GAAP;
excludes pre-tax charges for restructuring and acquisition-related
expenses)
Consolidated revenues increased 4.4 percent to $337.1 million
due to revenue growth in all three platforms. Infrastructure
Solutions increased revenues by 1.2 percent to $149.1 million.
Revenues for the North America water and wastewater business grew
low single digits, while revenues for the international water and
wastewater segment declined more than 20 percent, primarily as a
result of exiting several international contracting markets. The
Fyfe/Fibrwrap business increased revenues by 30 percent, primarily
due to a large industrial project in North America and growth in
Asia. Revenues for Corrosion Protection were $106.0 million, a 3.0
percent increase, as opportunities in the midstream market were
partially offset by revenue declines in the upstream segment,
especially in Canada for pipeline linings and coatings. Energy
Services grew revenues 12.8 percent to $81.9 million on the
strength of the West Coast refining downstream segment, which
offset a revenue decline in the Central California upstream market,
which was directly impacted by lower oil prices. Adverse foreign
currency translation rates accounted for a $10.7 million decrease
in consolidated revenues, which affected Infrastructure Solutions
and Corrosion Protection, primarily in Canada and Europe.
Consolidated gross profit increased 1.5 percent to $73.0
million. Gross margins at Infrastructure Solutions expanded by 240
basis points to 26.8 percent due to strong execution in the water
and wastewater business and Fyfe/Fibrwrap businesses in North
America. Gross profit for Infrastructure Solutions increased 11.3
percent to $40.0 million. Corrosion Protection gross margins
contracted by 370 basis points to 20.6 percent, resulting in a 12.6
percent decline in gross profit to $21.9 million. Three factors
accounted for the decline in gross profit. First, the impact to
revenues and margins from the dramatic drop in oil prices. Second,
the absence of the large and high-margin Saudi Aramco Wasit
project, completed in 2014. Third, lower than expected labor
utilization rates for the cathodic protection business from a
slower ramp-up of project activity in the quarter. The impact of
low oil prices on the North America upstream segment accounted for
the 140 basis point reduction in gross margins to 13.6 percent for
Energy Services. Foreign currency translation adversely impacted
Corrosion Protection and Infrastructure Solutions resulting in a
$2.1 million decrease in consolidated gross profit.
Consolidated operating expense increased $2.1 million, or 4.1
percent, to $52.8 million. As a percent of revenues, the
consolidated operating expense ratio was 15.7 percent, the same as
in the second quarter of 2014. There are a number of factors
driving the increase from the prior year. First, long-term equity
compensation expense increased by $1.2 million primarily due to the
reversal of compensation costs in the prior year quarter related to
management changes. Second, an allowance for doubtful accounts of
$0.6 million was recorded in the second quarter of 2015 related to
certain long dated receivable in dispute with a customer in the
Corrosion Protection segment. A favorable legal judgment was
secured against the creditor but its financial ability to pay the
full judgment amount is now in question. Third, severance-related
costs of $0.7 million were incurred for recent organizational
leadership changes in the Energy Services segment. Excluding the
items above, consolidated operating expense decreased by $0.4
million, or 1.0 percent. This decrease was primarily driven by
savings from the 2014 Restructuring, totaling $1.9 million, as
certain under-performing European and Asia-Pacific locations were
exited and overhead was decreased from integrating the North
American Fyfe/Fibrwrap operations with the Insituform operations
within the Infrastructure Solutions segment. Partially offsetting
the decreases were increased sales expenses and administrative
costs to support growth in certain operations within the Corrosion
Protection and Energy Services segments and increased corporate
related costs including information technology investments to
better integrate the platforms.
Consolidated operating income declined 4.6 percent to $20.2
million as strong performance in the Infrastructure Solutions
platform was offset by declines in Corrosion Protection and Energy
Services. Operating income for Infrastructure Solutions grew 38.1
percent to $17.8 million. Again, strong performance for the North
America water and wastewater business, a $3.9 million increase in
operating income from Fyfe/Fibrwrap, benefits from the 2014
Restructuring and ongoing cost containment efforts accounted the
favorable result. The challenges in the upstream segment were the
primary factor for the reduction in operating income for Corrosion
Protection and Energy Services. Operating income declined $4.5
million to $0.9 million for Corrosion Protection and declined $1.3
million to $1.5 million for Energy Services. Foreign currency
translation reduced operating income by $0.8 million affecting
Corrosion Protection and Infrastructure Solutions.
Cash Flow
Net cash flow provided by continuing operations was $58.4
million in the first six months of 2015 compared to $19.0 million
provided in prior year period. Net changes in working capital was a
$19.5 million source of cash compared to a $26.6 million use of
cash in the prior year period. There was an increase in future
vendor payments from strong business volume, while receivables were
down significantly as a result of a concerted effort to increase
cash collections. Days sales outstanding on receivables decreased
by more than 15 days from the prior year. Additionally, during the
first half of 2015, we received several large deposits on pipe
coating projects, which accounted for a portion of the decrease in
days sales outstanding.
Net cash flow used by investing activities was $19.4 million in
the first six months of 2015, compared to $5.6 million used in the
same period in 2014. The Company used $6.9 million, net of cash
acquired, for the acquisition of Schultz Mechanical Contractors,
Inc. earlier this year. Capital expenditures were $12.1 million in
the first six months of 2015 compared to $13.8 million in the prior
year period. In the first quarter of 2014, the Company received
proceeds of $9.1 million for the sale of the Company’s 49%
ownership interest in Bayou Coating, L.L.C. following the majority
partner’s exercise of its buy-out right.
Net cash flows from financing activities used $34.6 million in
the first six months of 2015 compared to $25.2 million used in the
prior year period. During the first half of 2015, the Company used
$21.9 million to repurchase approximately 1.1 million shares of
common stock through open market purchases and to repurchase shares
in connection with the Company’s equity compensation programs. The
Company also made $13.1 million in scheduled principal payments on
its long-term debt during the first six months of 2015.
Net cash flow for the first six months of 2015 was an outflow of
$1.9 million, which included a $6.4 million negative impact from
currency exchange rate changes. This compares to an outflow of
$11.9 million in the first half of 2014.
About Aegion
Aegion Corporation is a global leader in infrastructure
protection and maintenance, providing proprietary technologies and
services: (i) to protect against the corrosion of industrial
pipelines; (ii) to rehabilitate and strengthen water, wastewater,
energy and mining piping systems and buildings, bridges, tunnels
and waterfront structures; and (iii) to utilize integrated
professional services in engineering, procurement, construction,
maintenance and turnaround services for a broad range of energy
related industries. Aegion’s business activities include
manufacturing, distribution, maintenance, construction,
installation, coating and insulation, cathodic protection, research
and development and licensing. More information about Aegion can be
found on our internet site 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, 2014, as filed with
the Securities and Exchange Commission on March 2, 2015, 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 non-GAAP earnings per
share in the quarter and first six months of 2015 exclude certain
charges related to the 2014 Restructuring and acquisition-related
expenses. The non-GAAP earnings per share in the quarter and first
six months of 2014 exclude the loss on sale of the 49 percent
interest in Bayou Coating, L.L.C., losses from discontinued
operations and acquisition-related expenses. 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®, the Aegion® logo, Insituform®, Fibrwrap®, Fyfe® and
Brinderson® are registered trademarks of Aegion Corporation and its
affiliates.
AEGION CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(in thousands, except share and per
share information)
For the Quarters Ended For the Six Months
Ended June 30, June 30, 2015
2014 2015 2014 Revenues $
337,096 $ 322,868 $ 646,262 $ 629,102 Cost of
revenues 265,043 250,950 515,019
496,121
Gross profit 72,053 71,918 131,243 132,981
Operating expenses 57,326 50,760 106,410 102,689
Acquisition-related expenses — 539 323 539 Restructuring charges
204 — 862 —
Operating
income 14,523 20,619 23,648 29,753
Other income
(expense): Interest expense (2,989 ) (3,320 ) (6,221 ) (6,435 )
Interest income 78 125 204 377 Other 778 (687 )
(2,001 ) (1,463 )
Total other expense (2,133 )
(3,882 ) (8,018 ) (7,521 )
Income before taxes on
income 12,390 16,737 15,630 22,232
Taxes on income 3,542
3,961 5,410 5,573
Income before equity in earnings of affiliated companies
8,848 12,776 10,220 16,659
Equity in earnings of affiliated
companies — — — 677
Income from continuing operations 8,848 12,776 10,220 17,336
Loss from discontinued operations — (364 ) —
(496 )
Net income 8,848 12,412 10,220 16,840
Non-controlling interests (164 ) (26 ) (177 )
(57 )
Net income attributable to Aegion Corporation $ 8,684
$ 12,386 $ 10,043 $ 16,783
Earnings per share attributable to Aegion
Corporation: Basic: Income from continuing operations $
0.24 $ 0.34 $ 0.27 $ 0.46 Loss from discontinued operations —
(0.01 ) — (0.01 ) Net income $ 0.24 $
0.33 $ 0.27 $ 0.45
Diluted: Income from continuing
operations $ 0.24 $ 0.33 $ 0.27 $ 0.45 Loss from discontinued
operations — (0.01 ) — (0.01 ) Net
income $ 0.24 $ 0.32 $ 0.27 $ 0.44
Weighted
average shares outstanding - Basic 36,468,374 37,893,170
36,886,777 37,928,548
Weighted average shares outstanding -
Diluted 36,783,171 38,250,198 37,153,171 38,306,647
AEGION CORPORATION AND
SUBSIDIARIES
STATEMENT OF OPERATIONS
RECONCILIATION
(Unaudited) (Non-GAAP)
(in thousands, except share and per
share information)
For the Quarter Ended June 30,
2015
Restructuring-
As Reported
Related
As Adjusted (GAAP)
Charges (1)
(Non-GAAP) Affected Line Items: Cost of revenues $
265,043 $ (968 ) $ 264,075 Gross profit 72,053 968 73,021 Operating
expenses 57,326 (4,500 ) 52,826 Restructuring charges 204 (204 ) —
Operating income 14,523 5,672 20,195 Other income (expense):
Interest expense (2,989 ) 42 (2,947 ) Other 778 (20 ) 758 Income
before taxes on income 12,390 5,694 18,084 Taxes on income 3,542
1,327 4,869 Income from continuing operations attributable
to Aegion Corporation (2) 8,684 4,367 13,051
Diluted
earnings per share: Income from continuing operations
attributable to Aegion Corporation (2) $ 0.24 $ 0.11 $ 0.35
_________________________________
(1) Includes the following non-GAAP
adjustments: (i) pre-tax restructuring charges for cost of revenues
of $968 related to the write-off of certain other assets; (ii)
pre-tax restructuring charges for operating expenses of $4,500
related to reserves for potentially uncollectable receivables,
early lease termination costs, and other restructuring charges;
(iii) pre-tax restructuring charges of $204 related to severance
and benefit related costs in accordance with ASC 420, Exit or
Disposal Cost Obligations, and recorded as “Restructuring charges”
in the Consolidated Statements of Operations; and (iv) charges of
$22 related to the write-off of certain other assets.
(2) Includes non-controlling
interests.
AEGION CORPORATION AND
SUBSIDIARIES
STATEMENT OF OPERATIONS
RECONCILIATION
(Unaudited) (Non-GAAP)
(in thousands, except share and per
share information)
For the Quarter Ended June 30,
2014
Acquisition-
As Reported
Related
As Adjusted (GAAP)
Expenses (1)
(Non-GAAP) Affected Line Items: Acquisition-related
expenses $ 539 $ (539 ) $ — Operating income 20,619 539 21,158
Income before taxes on income 16,737 539 17,276 Taxes on income
3,961 208 4,169 Income from continuing operations
attributable to Aegion Corporation (2) 12,750 331 13,081
Diluted earnings per share:
Income from continuing operations
attributable to Aegion Corporation (2)
$ 0.33 $ 0.01 $ 0.34
_________________________________
(1) Includes the following non-GAAP
adjustments: (i) expenses incurred in connection with the 2013
acquisition of Brinderson, L.P.; and (ii) other potential
acquisition activity pursued by the Company during the period.
(2) Includes non-controlling
interests.
AEGION CORPORATION AND
SUBSIDIARIES
STATEMENT OF OPERATIONS
RECONCILIATION
(Unaudited) (Non-GAAP)
(in thousands, except share and per
share information)
For the Six Months Ended June 30,
2015
Restructuring-
Acquisition-
As Reported
Related
Related
As Adjusted (GAAP)
Charges (1)
Expenses (2)
(Non-GAAP) Affected Line Items: Cost of
revenues $ 515,019 $ (982 ) $ — $ 514,037 Gross profit 131,243 982
— 132,225 Operating expenses 106,410 (4,632 ) — 101,778
Acquisition-related expenses 323 — (323 ) — Restructuring charges
862 (862 ) — — Operating income 23,648 6,476 323 30,447 Other
income (expense): Interest expense (6,221 ) 84 — (6,137 ) Other
(2,001 ) 2,672 — 671 Income before taxes on income 15,630 9,232 323
25,185 Taxes on income 5,410 1,592 128 7,130 Income from
continuing operations attributable to Aegion Corporation (3) 10,043
7,640 195 17,878
Diluted earnings per share: Income
from continuing operations attributable to Aegion Corporation (3) $
0.27 $ 0.21 $ — $ 0.48
_________________________________
(1) Includes the following non-GAAP
adjustments: (i) pre-tax restructuring charges for cost of revenues
of $982 related to the write-off of certain other assets; (ii)
pre-tax restructuring charges for operating expenses of $4,632
related to reserves for potentially uncollectable receivables,
early lease termination costs, and other restructuring charges;
(iii) pre-tax restructuring charges of $862 related to severance
and benefit related costs in accordance with ASC 420, Exit or
Disposal Cost Obligations, and recorded as “Restructuring charges”
in the Consolidated Statements of Operations; and (iv) charges of
$2,756 related to the write-off of certain other assets, including
the loss on the sale of the CIPP contracting operation in
France.
(2) Includes non-GAAP adjustments related
to expenses incurred in connection with the Company’s acquisition
of Schultz Mechanical Contractors, Inc. during the period.
(3) Includes non-controlling
interests.
AEGION CORPORATION AND
SUBSIDIARIES
STATEMENT OF OPERATIONS
RECONCILIATION
(Unaudited) (Non-GAAP)
(in thousands, except share and per
share information)
For the Six Months Ended June 30,
2014
Acquisition-
Loss on Sale
As Reported
Related
of Bayou
As Adjusted (GAAP)
Expenses (1)
Coating (2)
(Non-GAAP) Affected Line Items: Acquisition-related
expenses $ 539 $ (539 ) $ — $ — Operating income 29,753 539 —
30,292 Other income (expense): Other (1,463 ) — 472 (991 ) Income
before taxes on income 22,232 539 472 23,243 Taxes on income 5,573
208 194 5,975 Income from continuing operations attributable
to Aegion Corporation (3) 17,279 331 278 17,888
Diluted
earnings per share: Income from continuing operations
attributable to Aegion Corporation (3) $ 0.45 $ 0.01 $ 0.01 $ 0.47
_________________________________
(1) Includes the following non-GAAP
adjustments: (i) expenses incurred in connection with the 2013
acquisition of Brinderson, L.P.; and (ii) other potential
acquisition activity pursued by the Company during the period.
(2) Includes non-GAAP adjustments related
to a loss on the sale of the Company’s 49 percent interest in Bayou
Coating, L.L.C. The difference between the Company’s recorded gross
equity in earnings of affiliated companies of approximately $1,200
and the final equity distribution settlement of $700 resulted in a
loss of approximately $500.
(3) Includes non-controlling interests and
equity in earnings of affiliated companies.
Segment Reporting
Infrastructure Solutions
(in thousands)
Quarter Ended June 30, 2015 Quarter
Ended June 30, 2014
As
As
As
As
Reported
Adjustments
Adjusted
Reported
Adjusted
(GAAP)
(1)
(Non-GAAP)
(GAAP)
Adjustments
(Non-GAAP)
Revenues $ 149,091 $ — $ 149,091 $ 147,260 $ — $ 147,260 Cost of
revenues 110,060 (968 ) 109,092 111,309 — 111,309 Gross profit
39,031 968 39,999 35,951 — 35,951
Gross profit margin 26.2 % 26.8 % 24.4 % 24.4
%
Operating expenses 26,712 (4,500 ) 22,212 23,075 — 23,075
Restructuring charges 204 (204 ) —
—
—
—
Operating income 12,115 5,672 17,787 12,876 — 12,876 Operating
margin 8.1 % 11.9 % 8.7 % 8.7 %
_________________________________
(1) Includes non-GAAP adjustments related
to pre-tax restructuring charges associated with bad debt expenses,
early lease termination costs, severance and benefit related costs,
and other restructuring charges.
Corrosion Protection
(in thousands)
Quarter Ended June 30, 2015 Quarter
Ended June 30, 2014
As
As
As
As
Reported
Adjusted
Reported
Adjustments
Adjusted
(GAAP)
Adjustments
(Non-GAAP)
(GAAP)
(1)
(Non-GAAP)
Revenues $ 106,022 $ — $ 106,022 $ 102,923 $ — $ 102,923 Cost of
revenues 84,135 — 84,135 77,889 — 77,889 Gross profit 21,887 —
21,887 25,034 — 25,034 Gross profit margin 20.6 % 20.6 % 24.3 %
24.3 % Operating expenses 20,951 — 20,951 19,560 — 19,560
Acquisition-related expenses — — — 197 (197 ) — Operating income
936 — 936 5,277 197 5,474 Operating margin 0.9 % 0.9 % 5.1 % 5.3 %
_________________________________
(1) Includes non-GAAP adjustments related
to expenses incurred in conjunction with potential acquisition
activity pursued by the Company during the period.
Energy Services
(in thousands)
Quarter Ended June 30, 2015 Quarter
Ended June 30, 2014
As
As
As
As
Reported
Adjusted
Reported
Adjustments
Adjusted
(GAAP)
Adjustments
(Non-GAAP)
(GAAP)
(1)
(Non-GAAP)
Revenues $ 81,983 $ — $ 81,983 $ 72,685 $ — $ 72,685 Cost of
revenues 70,848 — 70,848 61,752 — 61,752 Gross profit 11,135 —
11,135 10,933 — 10,933 Gross profit margin 13.6 % 13.6 % 15.0 %
15.0 % Operating expenses 9,663 — 9,663 8,125 — 8,125
Acquisition-related expenses — — — 342 (342 ) — Operating income
1,472 — 1,472 2,466 342 2,808 Operating margin 1.8 % 1.8 % 3.4 %
3.9 %
_________________________________
(1) Includes non-GAAP adjustments related
to expenses incurred in conjunction with the Company’s acquisition
of Brinderson, L.P. during the period.
Infrastructure Solutions
(in thousands)
Six Months Ended June 30, 2015 Six
Months Ended June 30, 2014
As
As
As
As
Reported
Adjustments
Adjusted
Reported
Adjusted
(GAAP)
(1)
(Non-GAAP)
(GAAP)
Adjustments
(Non-GAAP)
Revenues $ 271,564 $ — $ 271,564 $ 269,584 $ — $ 269,584 Cost of
revenues 203,918 (982 ) 202,936 208,079 — 208,079 Gross profit
67,646 982 68,628 61,505 — 61,505 Gross profit margin 24.9 % 25.3 %
22.8 % 22.8 % Operating expenses 47,337 (4,632 ) 42,705 47,171 —
47,171 Restructuring charges 862 (862 ) — — — — Operating income
19,447 6,476 25,923 14,334 — 14,334 Operating margin 7.2 % 9.5 %
5.3 % 5.3 %
_________________________________
(1) Includes non-GAAP adjustments related
to pre-tax restructuring charges associated with reserves for
potentially uncollectable receivables, early lease termination
costs, severance and benefit related costs, and other restructuring
charges.
Corrosion Protection
(in thousands)
Six Months Ended June 30, 2015 Six
Months Ended June 30, 2014
As
As
As
As
Reported
Adjusted
Reported
Adjustments
Adjusted
(GAAP)
Adjustments
(Non-GAAP)
(GAAP)
(1)
(Non-GAAP)
Revenues $ 207,765 $ — $ 207,765 $ 210,931 $ — $ 210,931 Cost of
revenues 165,049 — 165,049 161,756 — 161,756 Gross profit 42,716 —
42,716 49,175 — 49,175 Gross profit margin 20.6 % 20.6 % 23.3 %
23.3 % Operating expenses 41,280 — 41,280 40,010 — 40,010
Acquisition-related expenses — — — 197 (197 ) — Operating income
1,436 — 1,436 8,968 197 9,165 Operating margin 0.7 % 0.7 % 4.3 %
4.3 %
_________________________________
(1) Includes non-GAAP adjustments related
to expenses incurred in conjunction with potential acquisition
activity pursued by the Company during the period.
Energy Services
(in thousands)
Six Months Ended June 30, 2015 Six
Months Ended June 30, 2014
As
As
As
As
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
(GAAP)
(1)
(Non-GAAP)
(GAAP)
(2)
(Non-GAAP)
Revenues $ 166,933 $ — $ 166,933 $ 148,587 $ — $ 148,587 Cost of
revenues 146,052 — 146,052 126,286 — 126,286 Gross profit 20,881 —
20,881 22,301 — 22,301 Gross profit margin 12.5 % 12.5 % 15.0 %
15.0 % Operating expenses 17,793 — 17,793 15,508 — 15,508
Acquisition-related expenses 323 (323 ) — 342 (342 ) — Operating
income 2,765 323 3,088 6,451 342 6,793 Operating margin 1.7 % 1.8 %
4.3 % 4.6 %
_________________________________
(1) Includes non-GAAP adjustments related
to expenses incurred in conjunction with the Company’s acquisition
of Schultz Mechanical Contractors, Inc. during the period.
(2) Includes non-GAAP adjustments related
to expenses incurred in conjunction with the Company’s acquisition
of Brinderson, L.P. during the period.
AEGION CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share
amounts)
June 30, December 31, 2015 2014
Assets Current assets Cash and cash equivalents $
173,072 $ 174,965 Restricted cash 3,175 2,075
Receivables, net of allowances of $18,484 and $19,307, respectively
216,490 227,481 Retainage 36,592 38,318 Costs and estimated
earnings in excess of billings 103,384 94,045 Inventories 56,974
59,192 Prepaid expenses and other current assets 40,643
42,046
Total current assets 630,330 638,122
Property, plant & equipment, less accumulated
depreciation 162,592 168,213
Other assets
Goodwill 294,492 293,023 Identified intangible assets, less
accumulated amortization 180,482 182,273 Deferred income tax assets
3,029 3,334 Other assets 9,913 10,708
Total other
assets 487,916 489,338
Total Assets
$ 1,280,838 $
1,295,673 Liabilities and Equity
Current liabilities Accounts payable $ 90,380 $ 83,285
Accrued expenses 105,912 111,617 Billings in excess of costs and
estimated earnings 63,406 43,022 Current maturities of long-term
debt and line of credit 26,399 26,399
Total
current liabilities 286,097 264,323
Long-term debt, less
current maturities 336,812 351,076
Deferred income tax
liabilities 24,287 22,913
Other non-current liabilities
12,655 12,276
Total liabilities 659,851
650,588
Equity Preferred stock, undesignated,
$.10 par – shares authorized 2,000,000; none outstanding — — Common
stock, $.01 par – shares authorized 125,000,000; shares issued and
outstanding 36,277,841 and 37,360,515, respectively 362 374
Additional paid-in capital 201,078 217,289 Retained earnings
443,684 433,641 Accumulated other comprehensive loss (41,450 )
(24,669 )
Total stockholders’ equity 603,674 626,635
Non-controlling interests 17,313 18,450
Total
equity 620,987 645,085
Total Liabilities and
Equity $ 1,280,838 $
1,295,673
AEGION CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
(in thousands)
For the Six Months Ended June 30, 2015
2014
Cash flows from
operating activities:
Net income $ 10,220 $ 16,840
Loss from
discontinued operations
—
496 10,220 17,336
Adjustments to reconcile to net
cash provided by operating activities: Depreciation and
amortization 21,097 21,894 Gain on sale of fixed assets (970 ) (8 )
Equity-based compensation expense 4,582 3,120 Deferred income taxes
2,001 (434 ) Equity in earnings of affiliated companies — (677 )
Non-cash restructuring charges 1,212 — Loss on sale of Video
Injection - Insituform SAS 2,864 — Loss on sale of interests in
Bayou Coating, LLC — 472 Loss on foreign currency transactions 424
134 Other (1,391 ) 2,243
Changes in operating assets and
liabilities (net of acquisitions):
Restricted cash related to operating activities (1,128 ) (92 )
Return on equity of affiliated companies — 684
Receivables net, retainage and costs and
estimated earnings in excess of billings
(6,410 ) (26,771 ) Inventories 1,377 (1,605 ) Prepaid expenses and
other assets (221 ) (345 ) Accounts payable and accrued expenses
3,702 (765 ) Billings in excess of costs and estimated earnings
21,021 2,855 Other operating 49 984
Net cash
provided by operating activities of continuing operations
58,429 19,025
Net cash used in operating activities of
discontinued operations — (90 )
Net cash provided by
operating activities 58,429 18,935
Cash flows from
investing activities:
Capital expenditures (12,087 ) (13,784 ) Proceeds from sale of
fixed assets 1,186 829 Patent expenditures (1,576 ) (1,730 )
Purchase of Schultz Mechanical Contractors, Inc. (6,878 ) —
Proceeds from sale of interests in Bayou Coating, L.L.C. — 9,065
Fyfe Asia final working capital settlements, net (5 ) —
Net cash used in investing activities of continuing
operations (19,360 ) (5,620 )
Net cash provided by investing
activities of discontinued operations — 90
Net
cash used in investing activities (19,360 ) (5,530 )
Cash flows from
financing activities:
Proceeds from issuance of common stock upon stock option exercises,
including tax effects 1,299 5,013 Repurchase of common stock
(21,926 ) (20,661 ) Purchase of non-controlling interest — (617 )
Proceeds on notes payable 1,505 — Principal payments on notes
payable (1,875 ) — Proceeds from line of credit 26,000 — Principal
payments on long-term debt (39,593 ) (8,915 )
Net cash used in
financing activities (34,590 ) (25,180 )
Effect of exchange
rate changes on cash (6,372 ) (124 )
Net decrease in cash
and cash equivalents for the period (1,893 ) (11,899 )
Cash
and cash equivalents, beginning of year 174,965 158,045
Cash and cash equivalents, end of period $
173,072 $ 146,146
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729006884/en/
Aegion CorporationDavid A. Martin, 636-530-8000Executive Vice
President and Chief Financial Officer
Aegion (NASDAQ:AEGN)
Historical Stock Chart
From Apr 2024 to May 2024
Aegion (NASDAQ:AEGN)
Historical Stock Chart
From May 2023 to May 2024