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Globe Newswire 30-Oct-2018 7:42 PM
Management now targeting adjusted EPS growth of 15% to 20% in 2018; Exiting multiple underperforming operations
ST. LOUIS, Oct. 30, 2018 (GLOBE NEWSWIRE) --
A PDF accompanying this announcement is available at
http://resource.globenewswire.com/Resource/Download/7aaf9a72-2a6f-495f-bc45-b5c83cc5ffd0
1Adjusted (non-GAAP) results exclude certain charges related to the Company's restructuring activities, acquisition and divestiture-related expenses, goodwill impairment, definite-lived intangible asset impairment and impacts from the Tax Cuts and Jobs Act. Reconciliation of adjusted results is included below.
Q3 2018 HIGHLIGHTS
"Aegion delivered Q3'18 adjusted EPS sharply above the prior year, driven by ongoing improvements from restructured businesses and exceptional execution from our coating services business within Corrosion Protection. Partly offsetting this strength, Infrastructure Solutions was impacted unfavorably by project mix both in the quarter and at the bid table, and we've seen weaker than expected top-line growth in the cathodic protection business year to date. Reflecting these impacts, we now expect earnings growth in FY'18 to be 15 to 20 percent above FY'17 results.
As we look to further streamline the company, we are exiting multiple additional international businesses. These operations, as well as Australia and Denmark, delivered combined revenues of less than 5 percent of Aegion's total, but with underperformance that has generated $5 million of adjusted pre-tax losses year to date, or $0.11 of adjusted diluted losses per share. We feel confident that exiting these businesses will drive improved focus on optimizing operations within our core markets to deliver organic growth in 2019 and beyond."
Charles R. Gordon, President and Chief Executive Officer
Selected Consolidated Financial Highlights
Quarter Ended September 30, 2018 | Quarter Ended September 30, 2017 | ||||||||||||||||||||||||
(in thousands, except earnings per share) | As Reported (GAAP) |
Adjustments (1)(2) |
As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments (3) |
As Adjusted (Non-GAAP) |
|||||||||||||||||||
Revenues | $ | 339,679 | $ | — | $ | 339,679 | $ | 341,872 | $ | — | $ | 341,872 | |||||||||||||
Cost of revenues | 267,006 | (705 | ) | 266,301 | 268,430 | — | 268,430 | ||||||||||||||||||
Gross profit | 72,673 | 705 | 73,378 | 73,442 | — | 73,442 | |||||||||||||||||||
Operating expenses | 51,386 | (3,018 | ) | 48,368 | 54,872 | (1,258 | ) | 53,614 | |||||||||||||||||
Goodwill impairment | 1,389 | (1,389 | ) | — | 45,390 | (45,390 | ) | — | |||||||||||||||||
Definite-lived intangible asset impairment | 870 | (870 | ) | — | 41,032 | (41,032 | ) | — | |||||||||||||||||
Acquisition and divestiture expenses | 4,800 | (4,800 | ) | — | 1,980 | (1,980 | ) | — | |||||||||||||||||
Restructuring and related charges | 1,219 | (1,219 | ) | — | 5,439 | (5,439 | ) | — | |||||||||||||||||
Operating income (loss) | 13,009 | 12,001 | 25,010 | (75,271 | ) | 95,099 | 19,828 | ||||||||||||||||||
Other income (expense) | (9,281 | ) | 8,951 | (330 | ) | (798 | ) | — | (798 | ) | |||||||||||||||
Net income (loss) (attributable to Aegion Corporation) |
(447 | ) | 15,365 | 14,918 | (73,498 | ) | 84,126 | 10,628 | |||||||||||||||||
Diluted earnings (loss) per share | $ | (0.01 | ) | $ | 0.46 | $ | 0.45 | $ | (2.23 | ) | $ | 2.55 | $ | 0.32 |
Net income and diluted earnings per share include non-controlling interest.
(1) Q3 2018 Non-GAAP pre-tax adjustments:
(2) Q3 2018 Non-GAAP adjustments include $1,536 of income tax reversals resulting from the Tax Cuts and Jobs Act.
(3) Q3 2017 Non-GAAP pre-tax adjustments:
Selected Segment Financial Highlights
Infrastructure Solutions
Quarter Ended September 30, 2018 | Quarter Ended September 30, 2017 | ||||||||||||||||||||||||
(in thousands) | As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments (2) |
As Adjusted (Non-GAAP) |
|||||||||||||||||||
Revenues | $ | 155,681 | $ | — | $ | 155,681 | $ | 174,161 | $ | — | $ | 174,161 | |||||||||||||
Cost of revenues | 117,546 | (138 | ) | 117,408 | 132,972 | 15 | 132,987 | ||||||||||||||||||
Gross profit | 38,135 | 138 | 38,273 | 41,189 | (15 | ) | 41,174 | ||||||||||||||||||
Gross profit margin | 24.5 | % | 24.6 | % | 23.6 | % | 23.6 | % | |||||||||||||||||
Operating expenses | 24,078 | (2,465 | ) | 21,613 | 25,284 | (1,158 | ) | 24,126 | |||||||||||||||||
Goodwill impairment | 1,389 | (1,389 | ) | — | 45,390 | (45,390 | ) | — | |||||||||||||||||
Definite-lived intangible asset impairment | 870 | (870 | ) | — | 41,032 | (41,032 | ) | — | |||||||||||||||||
Acquisition and divestiture expenses | 216 | (216 | ) | — | 118 | (118 | ) | — | |||||||||||||||||
Restructuring and related charges | 1,184 | (1,184 | ) | — | 3,390 | (3,390 | ) | — | |||||||||||||||||
Operating income (loss) | $ | 10,398 | $ | 6,262 | $ | 16,660 | $ | (74,025 | ) | $ | 91,073 | $ | 17,048 | ||||||||||||
Operating margin | 6.7 | % | 10.7 | % | (42.5 | )% | 9.8 | % |
(1) Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with severance and benefit related costs, early lease and contract termination costs, fixed asset disposals, goodwill and definite-lived intangible asset impairments and other restructuring charges; and (ii) expenses incurred in connection with the planned divestitures of the CIPP businesses in Australia and Denmark.
(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) impairment charges to goodwill and definite-lived intangible assets related to the Fyfe reporting unit; and (iii) acquisition expenses incurred primarily in connection with the Company's acquisition of Environmental Techniques.
Corrosion Protection
Quarter Ended September 30, 2018 | Quarter Ended September 30, 2017 | ||||||||||||||||||||||||
(in thousands) | As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments (2) |
As Adjusted (Non-GAAP) |
|||||||||||||||||||
Revenues | $ | 105,624 | $ | — | $ | 105,624 | $ | 102,276 | $ | — | $ | 102,276 | |||||||||||||
Cost of revenues | 79,213 | (567 | ) | 78,646 | 79,213 | (15 | ) | 79,198 | |||||||||||||||||
Gross profit | 26,411 | 567 | 26,978 | 23,063 | 15 | 23,078 | |||||||||||||||||||
Gross profit margin | 25.0 | % | 25.5 | % | 22.5 | % | 22.6 | % | |||||||||||||||||
Operating expenses | 19,344 | (553 | ) | 18,791 | 21,855 | (100 | ) | 21,755 | |||||||||||||||||
Acquisition and divestiture expenses | 4,569 | (4,569 | ) | — | 1,862 | (1,862 | ) | — | |||||||||||||||||
Restructuring and related charges | 35 | (35 | ) | — | 2,049 | (2,049 | ) | — | |||||||||||||||||
Operating income (loss) | $ | 2,463 | $ | 5,724 | $ | 8,187 | $ | (2,703 | ) | $ | 4,026 | $ | 1,323 | ||||||||||||
Operating margin | 2.3 | % | 7.8 | % | (2.6 | )% | 1.3 | % |
(1) Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with severance and benefit related costs, early lease and contract termination costs, inventory obsolescence and other restructuring charges; and (ii) expenses incurred in connection with the acquisition of Hebna and divestiture of the Bayou business.
(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; and (ii) expenses incurred in connection with the planned disposal of the Bayou business.
Energy Services
Quarter Ended September 30, 2018 | Quarter Ended September 30, 2017 | ||||||||||||||||||||||||
(in thousands) | As Reported (GAAP) |
Adjustments (1) |
As Adjusted (Non-GAAP) |
As Reported (GAAP) |
Adjustments | As Adjusted (Non-GAAP) |
|||||||||||||||||||
Revenues | $ | 78,374 | $ | — | $ | 78,374 | $ | 65,435 | $ | — | $ | 65,435 | |||||||||||||
Cost of revenues | 70,247 | — | 70,247 | 56,245 | — | 56,245 | |||||||||||||||||||
Gross profit | 8,127 | — | 8,127 | 9,190 | — | 9,190 | |||||||||||||||||||
Gross profit margin | 10.4 | % | 10.4 | % | 14.0 | % | 14.0 | % | |||||||||||||||||
Operating expenses | 7,964 | — | 7,964 | 7,733 | — | 7,733 | |||||||||||||||||||
Acquisition-related expenses | 15 | (15 | ) | — | — | — | — | ||||||||||||||||||
Operating income | $ | 148 | $ | 15 | $ | 163 | $ | 1,457 | $ | — | $ | 1,457 | |||||||||||||
Operating margin | 0.2 | % | 0.2 | % | 2.2 | % | 2.2 | % |
(1) Includes non-GAAP adjustments related to expenses incurred in connection with the acquisition of Plant Performance Services, LLC.
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, 2017, filed with the Securities and Exchange Commission on March 1, 2018, 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 preliminary estimates which are forward-looking statements and are subject to change, possibly materially. Information regarding the impacts of the Tax Cuts and Jobs Act is based on our current calculations, as well as our current interpretations, assumptions and expectations, which are subject to further change.
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 quarters and nine-month periods ended September 30, 2018 and 2017 exclude charges related to the Company's restructuring efforts, acquisition and divestiture-related activities, credit facility amendment fees, goodwill impairment, definite-lived intangible asset impairment 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®, and Tite Liner® 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 |