Results in line with expectations; Management reaffirms 2019 guidance
ST. LOUIS, May 01, 2019 (GLOBE NEWSWIRE) --
A PDF accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/580272ae-d8e0-4c4f-850b-83dcac6423e8
- Q1'19 loss per diluted share was $0.13 compared to a loss per diluted share of $0.06 in Q1'18. Q1'19 adjusted (non-GAAP)1 earnings per diluted share were $0.06, compared to $0.13 in Q1'18.
- Revenues for Q1'19 were $277 million, declining 15 percent from the prior year. Excluding exited or to be exited operations, revenues on a same-store basis declined 8 percent, primarily driven by the expected reduction in large coating project contributions at Corrosion Protection and turnaround activity at Energy Services.
- Adjusted gross margins increased 20 basis points to 19.1 percent, led by improved productivity in North American and international CIPP operations within Infrastructure Solutions.
- Restructuring and cost containment efforts drove a $6 million, or 12 percent, decline in adjusted operating expenses. Reductions were realized across all segments as well as corporate spending, which is now reported separately for improved visibility into segment profitability.
1Adjusted (non-GAAP) results exclude certain charges related to the Company's restructuring activities, acquisition and divestiture-related activities, project warranty accruals, credit facility amendment fees and impacts from the Tax Cuts and Jobs Act. Reconciliation of adjusted results is included below.
Q1'19 HIGHLIGHTS
- Infrastructure Solutions nearly doubled adjusted operating income on significant improvements in adjusted gross margins and adjusted operating margins of 370 basis points and 450 basis points, respectively.
- Corrosion Protection delivered adjusted gross margins of 20 percent, despite seasonal weakness from weather and customer-driven delays in work releases that negatively impacted results for the quarter.
- Energy Services' results declined due to expected reductions in turnaround services following Q1'18 record quarterly revenues.
- Adjusted results exclude a $4.4 million project warranty reserve for remediation costs associated with a large-diameter CIPP wastewater project that was substantially completed in FY'17.
"Aegion delivered first quarter adjusted results largely in line with expectations. Infrastructure Solutions achieved sharp improvements in both productivity and profitability compared to the prior year which helped to offset seasonal weakness and lower large project contributions from Corrosion Protection as well as an expected decline in turnaround revenues from Energy Services.
We continue to advance multiple technology initiatives to drive differentiation in the markets we serve. Additionally, we are on track to substantially complete remaining restructuring activities in the next few months.
We are confident in our target for modest growth in adjusted earnings per share in 2019, driven by our solid backlog position and strong market outlook for our core businesses. We expect activity to pick up significantly in Q2'19 as we enter our seasonally stronger construction cycle."
Charles R. Gordon, President and Chief Executive Officer
Selected Consolidated Financial Highlights
| Quarter Ended March 31, 2019 | Quarter Ended March 31, 2018 | |||||||||||||||||||||||||
| (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 | $ | 276,904 | $ | — | $ | 276,904 | $ | 324,861 | $ | — | $ | 324,861 | ||||||||||||||
| Cost of revenues | 228,609 | (4,503 | ) | 224,106 | 263,357 | — | 263,357 | |||||||||||||||||||
| Gross profit | 48,295 | 4,503 | 52,798 | 61,504 | — | 61,504 | ||||||||||||||||||||
| Operating expenses | 47,870 | (1,570 | ) | 46,300 | 56,142 | (3,455 | ) | 52,687 | ||||||||||||||||||
| Acquisition and divestiture expenses | 113 | (113 | ) | — | 392 | (392 | ) | — | ||||||||||||||||||
| Restructuring and related charges | 1,086 | (1,086 | ) | — | 1,789 | (1,789 | ) | — | ||||||||||||||||||
| Operating income (loss) | (774 | ) | 7,272 | 6,498 | 3,181 | 5,636 | 8,817 | |||||||||||||||||||
| Interest expense | (3,590 | ) | — | (3,590 | ) | (5,443 | ) | 1,725 | (3,718 | ) | ||||||||||||||||
| Other income (expense) | (674 | ) | 176 | (498 | ) | (262 | ) | — | (262 | ) | ||||||||||||||||
| Net income (loss) (attributable to Aegion Corporation) | (4,001 | ) | 5,971 | 1,970 | (2,069 | ) | 6,251 | 4,182 | ||||||||||||||||||
| Diluted earnings (loss) per share | $ | (0.13 | ) | $ | 0.19 | $ | 0.06 | $ | (0.06 | ) | $ | 0.19 | $ | 0.13 | ||||||||||||
Net income and diluted earnings per share includes non-controlling interest.
(1) 2019 Non-GAAP pre-tax adjustments:
- Restructuring: Charges for cost of revenues of $74 primarily related to inventory write offs; charges for operating expenses of $1,530 primarily related to wind-down expenses, reserves for potentially uncollectible receivables, fixed asset disposals and other restructuring-related charges; charges of $1,086 related to employee severance, extension of benefits, employment assistance programs and early lease and contract termination costs; and charges for other expense of $176 related to losses on disposal of certain restructured operations and the release of cumulative currency translation adjustments.
- Acquisition and Divestiture Expenses: Expenses of $113 incurred in connection with the Company's planned divestiture of the CIPP operation in Australia and the Corrosion Protection joint ventures in Saudi Arabia and South Africa.
- Project Warranty Accruals: Charges of $4,429 for estimated project remediation charges related to a cured-in-place pipe project in the North American operations of Infrastructure Solutions.
- Tax Cuts and Jobs Act: Expenses of $40 related to professional fees resulting from the Tax Cuts and Jobs Act.
(2) 2018 Non-GAAP pre-tax adjustments:
- Restructuring: Charges for operating expenses of $3,455 primarily related to wind-down and other restructuring-related charges; 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 divestiture of Bayou.
- Credit Facility Fees: Expenses of $1,725 related to certain out-of-pocket expenses and acceleration of certain unamortized fees associated with amending the Company's credit facility.
Selected Segment Financial Highlights
(in thousands)
| Quarter Ended March 31, 2019 | Quarter Ended March 31, 2018 | ||||||||||||||||||||||
| As Reported (GAAP) | Adjustments (1) | As Adjusted (Non-GAAP) | As Reported (GAAP) | Adjustments (2) | As Adjusted (Non-GAAP) | ||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Infrastructure Solutions | $ | 131,543 | $ | — | $ | 131,543 | $ | 134,427 | $ | — | $ | 134,427 | |||||||||||
| Corrosion Protection | 64,498 | — | 64,498 | 98,105 | — | 98,105 | |||||||||||||||||
| Energy Services | 80,863 | — | 80,863 | 92,329 | — | 92,329 | |||||||||||||||||
| Total Revenues | $ | 276,904 | $ | — | $ | 276,904 | $ | 324,861 | $ | — | $ | 324,861 | |||||||||||
| Gross Profit: | |||||||||||||||||||||||
| Infrastructure Solutions | $ | 26,586 | $ | 4,404 | $ | 30,990 | $ | 26,709 | — | $ | 26,709 | ||||||||||||
| Gross Profit Margin | 20.2 | % | 23.6 | % | 19.9 | % | 19.9 | % | |||||||||||||||
| Corrosion Protection | 12,873 | 99 | 12,972 | 23,576 | — | 23,576 | |||||||||||||||||
| Gross Profit Margin | 20.0 | % | 20.1 | % | 24.0 | % | 24.0 | % | |||||||||||||||
| Energy Services | 8,836 | — | 8,836 | 11,219 | — | 11,219 | |||||||||||||||||
| Gross Profit Margin | 10.9 | % | 10.9 | % | 12.2 | % | 12.2 | % | |||||||||||||||
| Total Gross Profit | $ | 48,295 | $ | 4,503 | $ | 52,798 | $ | 61,504 | — | $ | 61,504 | ||||||||||||
| Gross Profit Margin | 17.4 | % | 19.1 | % | 18.9 | % | 18.9 | % | |||||||||||||||
| Operating Income (Loss): | |||||||||||||||||||||||
| Infrastructure Solutions | $ | 5,715 | $ | 6,582 | $ | 12,297 | $ | 3,237 | $ | 3,239 | $ | 6,476 | |||||||||||
| Operating Margin | 4.3 | % | 9.3 | % | 2.3 | % | 4.8 | % | |||||||||||||||
| Corrosion Protection | (1,760 | ) | 262 | (1,498 | ) | 4,962 | 1,497 | 6,459 | |||||||||||||||
| Operating Margin | (2.7 | )% | (2.3 | )% | 5.0 | % | 6.6 | % | |||||||||||||||
| Energy Services | 1,115 | 34 | 1,149 | 3,127 | — | 3,127 | |||||||||||||||||
| Operating Margin | 1.4 | % | 1.4 | % | 3.3 | % | 3.3 | % | |||||||||||||||
| Corporate | (5,844 | ) | 394 | (5,450 | ) | (8,145 | ) | 900 | (7,245 | ) | |||||||||||||
| Total Operating Income | $ | (774 | ) | $ | 7,272 | $ | 6,498 | $ | 3,181 | $ | 5,636 | $ | 8,817 | ||||||||||
| Operating Margin | (0.3 | )% | 2.3 | % | 1.0 | % | 2.7 | % | |||||||||||||||
_________________________________
(1) Includes non-GAAP adjustments related to:
Infrastructure Solutions - (i) pre-tax restructuring charges associated with severance and benefit related costs, early lease and contract termination costs and other restructuring charges; (ii) acquisition and divestiture expenses; and (iii) project warranty accrual.
Corrosion Protection - (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.
Energy Services - pre-tax restructuring charges associated with severance and benefit related costs and other restructuring charges.
Corporate - (i) pre-tax restructuring charges primarily associated with severance and benefit related costs and legal expenses; and (ii) acquisition and divestiture expenses.
(2) Includes non-GAAP adjustments related to:
Infrastructure Solutions - (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.
Corrosion Protection - (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 acquisition of Hebna and divestiture of the Bayou business.
Corporate - (i) pre-tax restructuring charges primarily associated with severance and benefit related costs and legal expenses; and (ii) acquisition and divestiture expenses.
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, 2018, filed with the Securities and Exchange Commission on March 1, 2019, 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 estimates which are forward looking and subject to change. We anticipate additional guidance, both at the federal and state level, to be forthcoming in 2019. As such, the impacts of the legislation may differ from our current estimates, interpretations and assumptions, possibly materially, and the amount of the impact on the Company may accordingly be adjusted over the course of 2019.
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 first quarters ended March 31, 2019 and 2018 exclude charges related to the Company's restructuring activities, acquisition and divestiture-related activities, project warranty accruals, credit facility amendment fees and impacts related to the Tax Cuts and Jobs Act.
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®, Fyfe®, Fusible PVC®, Tite Liner®, Tyfo® and Stronger. Safer. Infrastructure.® and the associated logos are the registered trademarks of Aegion Corporation and its affiliates. (AEGN-ER)
| CONTACT: | Aegion Corporation |
| David F. Morris, Executive Vice President and Chief Financial Officer | |
| (636) 530-8000 |
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