ST. LOUIS--(BUSINESS WIRE)--Aegion Corporation (Nasdaq Global Select Market: AEGN) today reported fourth quarter net income of $15.2 million, or $0.38 per diluted share (non-GAAP), excluding impact of acquisition-related transaction expenses of $0.6 million (pre-tax), compared to net income of $17.4 million, or $0.44 per diluted share, in the fourth quarter of 2010. For the full year, net income, exclusive of acquisition-related transaction expenses, prior debt redemption costs and restructuring charges, was $36.9 million, or $0.93 per diluted share (non-GAAP), compared to $60.5 million, or $1.54 per diluted share, in 2010. Inclusive of these one-time charges, net income for 2011 was $26.5 million, or $0.67 per diluted share.
J. Joseph Burgess, President and Chief Executive Officer, commented, “In 2011, our Company continued to invest in premium products and services through the acquisitions of Fyfe North America, CRTS and Hockway and targeted higher value international growth in Asia and the Middle East. These investments accelerated our transition from a specialty municipal sewer contractor to a Company providing a range of infrastructure protection products and services across water, energy, mining and commercial structures. For the first time, revenues in 2011 from our North American Sewer and Water Rehabilitation business were surpassed by revenues of our Energy and Mining platform. That growth was fueled by the international expansion of United Pipeline Systems, based upon expanded acceptance of its Tite Liner® technology, and continued solid growth from Corrpro.”
“I am pleased we delivered on our revised non-GAAP diluted earnings per share guidance with $0.93 per share for the full year. But clearly, we were disappointed with the performance of the North American Sewer and Water Rehabilitation business in 2011. While the market dropped off substantially in 2011, we compounded the problem with slow fixed cost reduction and, in some cases, poor estimation and execution. As previously discussed, during the second half of 2011 we right sized our crew structure, eliminated excess corporate and business unit operating expenses, and tightened our bidding discipline. We also invested in additional estimating, scheduling and project management resources that produced improved transactional controls in the current small diameter, small transaction market environment. These actions produced stable results, as we’ve seen two consecutive quarters of profit contribution. The outlook for 2012 looks more promising as a result of these changes and bid margins in our backlog that are improved over earlier in 2011, positioning us to realize operating income margins in the range of high single digits.”
With regards to our Energy and Mining segment, Burgess noted, “Energy and Mining had a very good year despite a significant decrease in large pipe coating activity at our Bayou New Iberia facility. While the decrease in coating activity and an increase in operating expenses to support international growth initiatives negatively impacted operating results in 2011, Energy and Mining delivered record revenues and operating profit in the fourth quarter and its backlog at the end of 2011 reached $256.4 million, a 75.5 percent increase over year-end 2010, indicating a very favorable outlook for 2012. Driving the increased backlog was United Pipeline Systems, which achieved record revenues and profits in 2011, surpassing the $100.0 million revenue mark for the first time at $123.0 million. International opportunities remain very robust heading into 2012, led by UPS’s $67.3 million Moroccan phosphate project, a majority of which is expected to be completed in 2012, along with other significant project opportunities. Corrpro achieved its highest revenue ever with $203.0 million in 2011, mostly from recurring business, representing 47 percent of the total Energy and Mining segment. Corrpro is well-positioned for further growth in 2012 as the business increases its presence in the Middle East and continued favorable market conditions in North America. Bayou’s 2012 outlook is very promising with $35 million in backlog at the end of 2011. This increased level of activity is primarily from off shore work in the Gulf of Mexico and strong market conditions for our Canadian operation. CRTS made a modest contribution to operating profit in 2011, but we anticipate a significant increase in profits in 2012. A few weeks ago, we received a notice cancelling approximating $18 million of the Saudi Arabia WASIT offshore gas field project. The cancellation involved the removal of certain small-diameter joint coatings from the scope of work as a cost savings measure, reducing the total contract to $30 million from $48 million. Although we are disappointed with this decision, the WASIT project remains a landmark project for CRTS supporting a solid backlog of projects for the Energy and Mining platform in 2012. We believe the successful execution of the WASIT project will drive new opportunities for CRTS’s proprietary robotics coating technology.”
Our European Sewer and Water Rehabilitation business grew revenues by 17 percent to $87.0 million in 2011 and increased operating profit by 20 percent to $6.0 million. “2011 was a successful year for our strategy, which began two years ago, to selectively participate in profitable contracting markets and focus our efforts in securing third party manufacturing sales of cured-in-place pipe in the balance of the markets,” Burgess continued. “We also improved execution in several European countries and are seeing slightly improved conditions in the United Kingdom. Our ability to compete effectively, either through our contracting services or third party manufacturing sales, gives us more flexibility to participate in these markets at an appropriate return, and we anticipate solid growth in revenues and profits for this business in 2012.”
Results in our Asia-Pacific Sewer and Water Rehabilitation segment were negatively impacted in 2011 by continued challenges and delays in India. The segment recorded a $2.5 million operating loss in 2011. “Difficulties in India overshadowed a strong market in Australia in 2011,” Burgess noted. “For 2012, we will continue our efforts to bring about more consistent profitability throughout Asia, with continued growth in Australia as we tap a solid backlog not only in Sydney, but in other major cities across the country and expansion into new markets. We also will refocus our efforts in India in order to achieve appropriate returns for the associated market risks.”
Our new Commercial and Structural segment completed its first full quarter with Aegion during the fourth quarter. Operating profit was $2.8 million (non-GAAP) in the fourth quarter, excluding $0.6 million in pre-tax acquisition-related expense, resulting in a 21 percent operating margin. “We have a tremendous opportunity with the Fyfe business,” Burgess added. “Our task in 2012 is to invest in Fyfe’s sales and marketing efforts to accelerate its 20 plus percent historical revenue growth rate while continuing to innovate and find new applications for Fibrwrap®, Fyfe’s proprietary fiber-reinforced polymer technology. We anticipate the Commercial and Structural segment will significantly contribute to earnings in 2012, not only because of having full year participation, but also from the momentum and significant growth opportunities the business enjoys today. Our focus will be to select end markets across commercial structures, pipelines, transportation and waterfront rehabilitation that have the best growth possibilities. As for Fyfe’s international markets, we closed on the acquisition of Fyfe Latin America in January and we expect to close the larger Fyfe Asia acquisition in the first quarter of 2012. Asia is a burgeoning market where Fibrwrap® has direct applicability in seismic zones and rehabilitation of aging or sub-optimally constructed structures.”
“2012 is the beginning for Aegion as a diversified growth and return-oriented company. The company we are today is not the same as the one just three short years ago. The investments we have made through acquisitions and to support organic growth have positioned our Company for sustainable growth through superior technologies and services offered in the end markets we serve. With strong growth expected from Energy and Mining, strong contributions from our new Commercial and Structural platform and improved profitability in our Sewer and Water Rehabilitation operations across the globe, we establish our 2012 annual earnings-per-share guidance at $1.40 to $1.60 per diluted share (excluding one-time, non-recurring charges and expenses). This guidance is supported by operating margins and return on invested capital each at approximately 9 percent. Our number one priority in 2012 is execution across all three platforms. I believe Aegion is positioned to deliver strong earnings and operating cash growth in 2012.”
Segment Reporting
Prior to the third quarter of 2011, we previously reported Water Rehabilitation as a separate segment. Based on an internal management reorganization, we have combined previously reported water rehabilitation results for all periods presented below, which have not been material, with the geographically separated Sewer Rehabilitation segments. Additionally, in connection with our recent acquisition of the North American operations of Fyfe Group, LLC, we have established the Commercial and Structural reportable segment.
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Energy and Mining Segment |
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(dollars in thousands) |
Increase (Decrease) |
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| 2011 | 2010 | $ | % | |||||||||||||
| Three Months Ended December 31, | ||||||||||||||||
| Revenues | $ | 123,359 | $ 105,276 | $ 18,083 | 17.2 | % | ||||||||||
| Gross profit | 34,446 | 26,842 | 7,604 | 28.3 | ||||||||||||
| Gross margin | 27.9 | % | 25.5 | % | n/a | 2.4 | ||||||||||
| Operating expenses | 19,928 | 16,198 | 3,730 | 23.0 | ||||||||||||
| Operating income | 14,518 | 10,644 | 3,874 | 36.4 | ||||||||||||
| Operating margin | 11.8 | % | 10.1 | % | n/a | 1.7 | ||||||||||
| Twelve Months Ended December 31, | ||||||||||||||||
| Revenues | $ | 433,230 | $ 382,246 | $ 50,984 | 13.3 | % | ||||||||||
| Gross profit | 109,753 | 105,309 | 4,444 | 4.2 | ||||||||||||
| Gross margin | 25.3 | % | 27.6 | % | n/a | (2.3 | ) | |||||||||
| Operating expenses | 72,982 | 65,888 | 7,094 | 10.8 | ||||||||||||
| Reversal of earnout | (1,700 | ) | (1,700 | ) | – | – | ||||||||||
| Acquisition-related expenses | 2,682 | – | 2,682 | n/m | ||||||||||||
| Restructuring charges | 778 | – | 778 | n/m | ||||||||||||
| Operating income | 35,011 | 41,121 | (6,110 | ) | (14.9 | ) | ||||||||||
| Operating margin | 8.1 | % | 10.8 | % | n/a | (2.7 | ) | |||||||||
| December 31, 2011 | September 30, 2011 | June 30, 2011 | March 31, 2011 | December 31, 2010 | ||||||
| Backlog (in millions) |
$ 256.4 |
$ 225.6 |
$ 168.1 | $ 147.6 | $ 146.1 | |||||
In the fourth quarter of 2011, our Energy and Mining segment operating income increased by $3.9 million, or 36.4 percent, compared to the fourth quarter of 2010. The increase was primarily driven by our industrial linings operation, which more than doubled its operating income in the fourth quarter of 2011 compared to the same quarter of 2010. Our industrial linings business improved across all geographic regions. Additionally, our U.S. pipe coating operations experienced dramatic improvement over the fourth quarter of 2010. For a majority of 2011, our pipe coating operations suffered from a lack of large diameter pipe coating projects; however, during the fourth quarter of 2011, we began certain new large diameter coating projects. Also, our Canadian coating operation improved over the prior year as we continued to expand our presence in that market. Finally, our fourth quarter 2011 results include financial results of our recent acquisitions of CRTS and Hockway, which contributed approximately $0.9 million to operating income during the quarter. Approximately $1.3 million of the increase in operating expenses was attributable to purchase price depreciation and amortization related to the CRTS and Hockway acquisitions, with the remainder devoted to increased expenditures to support international expansion opportunities. We expect strong global energy markets will lead to growth within existing geographies as well as new geographies, specifically in Asia, the Middle East and North Africa, supported by the recent acquisitions within our corrosion, engineering and pipe coating businesses.
Our Energy and Mining segment contract backlog increased $110.3 million, or 75.5 percent, to $256.4 million at December 31, 2011 compared to December 31, 2010. We have increased backlog levels across all product lines with the largest growth coming from our industrial linings operation. Through our United Pipeline Systems joint venture in October 2011, we were awarded a $67.3 million project in Morocco, which is the largest contract received by this segment. Additionally, backlog increased from inclusion of project backlog from the recent acquisitions of CRTS and Hockway, which contributed $44.3 million to backlog as of December 31, 2011.
We continue to believe high commodity prices as a result of healthy global energy demand will result in significant opportunities for our Energy and Mining segment for future periods, particularly as it relates to new spending in the sector.
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North American Sewer and Water Rehabilitation Segment |
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| (dollars in thousands) | Increase (Decrease) | ||||||||||||||
| 2011 | 2010 | $ | % | ||||||||||||
| Three Months Ended December 31, | |||||||||||||||
| Revenues | $ | 90,901 | $ | 106,972 | $ | (16,071 | ) | (15.0 | )% | ||||||
| Gross profit | 15,151 | 24,419 | (9,278 | ) | (38.0 | ) | |||||||||
| Gross margin | 16.7 | % | 22.8 | % | n/a | (6.1 | ) | ||||||||
| Operating expenses | 10,965 | 12,452 | (1,487 | ) | (11.9 | ) | |||||||||
| Operating income | 4,186 | 11,967 | (7,781 | ) | (65.0 | ) | |||||||||
| Operating margin | 4.6 | % | 11.2 | % | n/a | (6.6 | ) | ||||||||
| Twelve Months Ended December 31, | |||||||||||||||
| Revenues | $ | 357,507 | $ | 413,828 | $ | (56,321 | ) | (13.6 | )% | ||||||
| Gross profit | 55,443 | 93,376 | (37,933 | ) | (40.6 | ) | |||||||||
| Gross margin | 15.5 | % | 22.6 | % | n/a | (7.1 | ) | ||||||||
| Operating expenses | 48,191 | 52,545 | (4,354 | ) | (8.3 | ) | |||||||||
| Restructuring charges | 503 | – | 503 | n/m | |||||||||||
| Operating income | 6,749 | 40,831 | (34,082 | ) | (83.5 | ) | |||||||||
| Operating margin | 1.9 | % | 9.9 | % | n/a | (8.0 | ) | ||||||||
| December 31, 2011 | September 30, 2011 | June 30, 2011 | March 31, 2011 | December 31, 2010 | ||||||
| Backlog (in millions) | $ 130.0 | $ 157.5 | $ 169.5 | $ 152.6 | $ 159.5 |
In the fourth quarter of 2011, North American Sewer and Water Rehabilitation operating income decreased by $7.8 million, or 65.0 percent, compared to the fourth quarter of 2010. The 2011 fourth quarter decline compared to the prior year was primarily because of the same factors that have plagued this reporting segment throughout 2011. Those being revenue declines because of bid and project release delays, compressed gross margins resulting from project execution issues and a significant shift to lower margin small diameter projects that pressure project management and crew operations. However, we continued to see improvements in this segment throughout the second half of 2011 as a result of the actions we have taken to position the business for improved and consistent success. We expect 2012 operating margins to be vastly improved from 2011 because of our more disciplined bidding process, higher margins on work awarded and our continued focus on project execution.
Contract backlog in our North American Sewer and Water Rehabilitation segment at December 31, 2011 was $130.0 million. This represented a $29.5 million, or 18.5 percent, decrease from backlog at December 31, 2010. Overall, our lower backlog level is due to weaker market conditions in the United States and our more disciplined bid process. We expect a more stable bid table during 2012 and are seeing improving margins for projects in backlog.
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European Sewer and Water Rehabilitation Segment |
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| (dollars in thousands) | Increase (Decrease) | ||||||||||||||
| 2011 | 2010 | $ | % | ||||||||||||
| Three Months Ended December 31, | |||||||||||||||
| Revenues | $ | 20,472 | $ | 22,517 | $ | (2,045 | ) | (9.1 | )% | ||||||
| Gross profit | 6,304 | 6,459 | (155 | ) | (2.4 | ) | |||||||||
| Gross margin | 30.8 | % | 28.7 | % | n/a | 2.1 | |||||||||
| Operating expenses | 3,888 | 3,970 | (82 | ) | (2.1 | ) | |||||||||
| Operating income | 2,416 | 2,489 | (73 | ) | (2.9 | ) | |||||||||
| Operating margin | 11.8 | % | 11.1 | % | n/a | 0.7 | |||||||||
| Twelve Months Ended December 31, | |||||||||||||||
| Revenues | $ | 87,017 | $ | 74,260 | $ | 12,757 | 17.2 | % | |||||||
| Gross profit | 22,837 | 20,606 | 2,231 | 10.8 | |||||||||||
| Gross margin | 26.2 | % | 27.7 | % | n/a | (1.5 | ) | ||||||||
| Operating expenses | 16,140 | 15,593 | 547 | 3.5 | |||||||||||
| Restructuring charges | 697 | – | 697 | n/m | |||||||||||
| Operating income | 6,000 | 5,013 | 987 | 19.7 | |||||||||||
| Operating margin | 6.9 | % | 6.8 | % | n/a | 0.1 | |||||||||
| December 31, 2011 | September 30, 2011 | June 30, 2011 | March 31, 2011 | December 31, 2010 | ||||||||
| Backlog (in millions) | $ 20.7 | $ 19.2 | $ 22.2 | $ 24.0 | $ 23.3 | |||||||
In the fourth quarter of 2011, our European Sewer and Water Rehabilitation segment operating income declined approximately $0.1 million compared to the fourth quarter of 2010. The primary factor in the decrease was a 9.1% drop in revenues. However, gross profit margin increased by 210 basis points due to improvements in project execution in France and Spain and slightly improved market conditions in the United Kingdom. Improved gross margins and lower operating expenses led to an operating margin improvement of 70 basis points to 11.8 percent.
Contract backlog in this segment was $20.7 million at December 31, 2011. This represented a decrease of $2.6 million, or 11.2%, compared to December 31, 2010. Backlog has improved in France, while market conditions and increased competition have impacted backlog in the Netherlands. We expect stability in our core western European markets and growth in third-party tube sales in 2012.
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Asia-Pacific Sewer and Water Rehabilitation Segment |
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| (dollars in thousands) | Increase (Decrease) | ||||||||||||||
| 2011 | 2010 | $ | % | ||||||||||||
| Three Months Ended December 31, | |||||||||||||||
| Revenues | $ | 8,614 | $ | 11,251 | $ | (2,637 | ) | (23.4 | )% | ||||||
| Gross profit | 802 | 2,562 | (1,760 | ) | (68.7 | ) | |||||||||
| Gross margin | 9.3 | % | 22.8 | % | n/a | (13.5 | ) | ||||||||
| Operating expenses | 2,449 | 2,835 | (386 | ) | (13.6 | ) | |||||||||
| Operating loss | (1,647 | ) | (273 | ) | 1,374 | 503.3 | |||||||||
| Operating margin | (19.1 | )% | (2.4 | )% | n/a | (16.7 | ) | ||||||||
| Twelve Months Ended December 31, | |||||||||||||||
| Revenues | $ | 43,717 | $ | 44,641 | $ | 924 | 2.1 | % | |||||||
| Gross profit | 6,772 | 10,289 | (3,517 | ) | (34.2 | ) | |||||||||
| Gross margin | 15.5 | % | 23.0 | % | n/a | (7.5 | ) | ||||||||
| Operating expenses | 9,111 | 10,219 | (1,108 | ) | (10.8 | ) | |||||||||
| Restructuring charges | 173 | – | 173 | n/m | |||||||||||
| Operating income (loss) | (2,512 | ) | 70 | (2,582 | ) | (3,688.6 | ) | ||||||||
| Operating margin | (5.7 | )% | 0.2 | % | n/a | (5.9 | ) | ||||||||
| December 31, 2011 | September 30, 2011 | June 30, 2011 | March 31, 2011 | December 31, 2010 | ||||||
| Backlog (in millions) | $ 37.5 | $ 37.4 | $ 50.3 | $ 68.7 | $ 79.8 | |||||
In the fourth quarter of 2011, our Asia-Pacific Sewer and Water Rehabilitation segment operating loss increased by $1.4 million compared to the fourth quarter of 2010. The increase was primarily because of a lack of profitable projects in India and poor results in Singapore relating to cost overruns and project release delays. Partially offsetting poor results in India and Singapore was continued growth in our Australian operation. Operating expenses decreased by $0.4 million for the quarter compared to the prior year principally because of cost containment efforts throughout the region.
Contract backlog in our Asia-Pacific Sewer and Water Rehabilitation segment decreased by $42.3 million, or 53.0 percent, to $37.5 million at December 31, 2011 from $79.8 million at December 31, 2010. The decrease was largely driven by the lack of large new project awards in 2011, from continued work release delays and due to our efforts to work through backlog in Australia, Hong Kong and Singapore. Additionally, backlog from a Singapore project were adjusted downward in 2011 because of project revisions. For 2012, prospects continue to be strong in the Asia-Pacific region, outside India, for expansion, including third-party tube sales. We expect continued strong bid activity with new tenders in Sydney and elsewhere in Australia. We also expect activity to build in Malaysia where we are pursuing a number of projects in Kuala Lumpur.
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Commercial and Structural Segment |
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| (dollars in thousands) | Increase (Decrease) | ||||||||||||
| 2011 | 2010 | $ | % | ||||||||||
| Three Months Ended December 31, | |||||||||||||
| Revenues | $ | 13,449 | $ | – | $ | 13,449 | – | ||||||
| Gross profit | 6,778 | – | 6,778 | – | |||||||||
| Gross margin | 50.4 | % | – | n/a | – | ||||||||
| Operating expenses | 3,933 | – | 3,933 | – | |||||||||
| Acquisition-related expenses | 608 | – | 608 | – | |||||||||
| Operating income | 2,237 | – | 2,237 | – | |||||||||
| Operating margin | 16.6 | % | – | n/a | – | ||||||||
| Twelve Months Ended December 31, | |||||||||||||
| Revenues | $ | 17,114 | $ | – | $ | 17,114 | – | ||||||
| Gross profit | 8,319 | – | 8,319 | – | |||||||||
| Gross margin | 48.6 | % | – | n/a | – | ||||||||
| Operating expenses | 5,340 | – | 5,340 | – | |||||||||
| Acquisition-related expenses | 3,690 | – | 3,690 | – | |||||||||
| Operating income | (711 | ) | – | (711 | ) | – | |||||||
| Operating margin | (4.2 | )% | – | n/a | – | ||||||||
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December 31, 2011 |
September 30, 2011 | |||
| Backlog (in millions) | $ 19.6 | $ 17.5 | ||
The 2011 time period represents financial results from September 1, 2011, following our acquisition of the North American business of Fyfe Holdings, LLC on August, 31, 2011. Fyfe North America delivered strong fourth quarter results, as expected, because of solid execution with high gross margin pipeline projects. During 2011, we incurred $3.7 million of acquisition-related expenses for this business as well as current and former acquisition targets. In connection with the Fyfe North America acquisition we were granted exclusive negotiating rights to acquire Fyfe Group’s international operations in Latin America, Asia and Europe. In January 2012, we completed our purchase of Fyfe Latin America and we expect to close the Fyfe Asia acquisition in the first quarter of 2012. Backlog at December 31, 2011 for the Commercial and Structural segment was $19.6 million, a $2.1 million, or 12.0%, increase from September 30, 2011. Excluding acquisition-related expenses, we anticipate that the Commercial and Structural segment will generate strong earnings and revenue growth in 2012.
Cash Flow
Unrestricted cash at December 31, 2011 was $106.1 million compared to $96.7 million at September 30, 2011 and $114.8 million at December 31, 2010. Our lower operating cash flow for 2011 was primarily because of transaction costs related to recent acquisitions, along with restructuring charges, prior debt redemption costs and lower earnings from our North American Sewer and Water Rehabilitation segment. Cash flow from operating activities from September 30, 2011 through the end of the year increased significantly to $31.9 million because of higher earnings and improved working capital management. This increase was partially offset by our previously announced share repurchase program, pursuant to which we repurchased $5.0 million of our common stock during the fourth quarter of 2011. We expect to see increased cash flows in 2012 from earnings growth and continued optimization of our cash management practices.
Aegion Corporation is a global leader in infrastructure protection, providing proprietary technologies and services to protect against the corrosion of industrial pipelines and for the rehabilitation and strengthening of sewer, water, energy and mining piping systems and buildings, bridges, tunnels and waterfront structures. More information about Aegion can be found on its 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. The Company makes forward-looking statements in this news release that represent the Company’s beliefs or expectations about future events or financial performance. These forward-looking statements are based on information currently available to the Company 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on February 28, 2011 under the name Insituform Technologies, Inc., and in the Company’s subsequent Quarterly Reports on Form 10-Q. In light of these risks, uncertainties and assumptions, the forward-looking events may not occur. In addition, our actual results may vary materially from those anticipated, estimated, suggested or projected. Except as required by law, we do 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 the Company from time to time in its periodic 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 the Company in this news release are qualified by these cautionary statements.
Regulation G Statement
Aegion has presented certain information in this release excluding certain items that impacted income, expense and earnings per share. The (non-GAAP) earnings per share exclude the earnings impact of acquisition-related expenses, restructuring charges and prior debt redemption costs. Aegion management uses such non-GAAP information internally to evaluate financial performance for its operations, as the Company believes it allows the Company to more accurately compare the Company’s ongoing performance across periods.
Aegion™, the Aegion™ logo, Insituform®, the Insituform® logo, United Pipeline Systems®, Bayou Companies™, Corrpro® , Fiberwrap® and Fyfe™ are the registered and unregistered trademarks of Aegion Corporation and its affiliates.
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AEGION CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except share and per share information) |
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For the Three Months Ended |
For the Twelve Months Ended |
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenues | $ | 256,795 | $ | 246,016 | $ | 938,585 | $ | 914,975 | ||||||||
| Cost of revenues | 193,314 | 185,734 | 735,461 | 685,395 | ||||||||||||
| Gross profit | 63,481 | 60,282 | 203,124 | 229,580 | ||||||||||||
| Operating expenses | 41,163 | 35,455 | 151,764 | 144,245 | ||||||||||||
| Earnout reversal | – | – | (1,700 | ) | (1,700 | ) | ||||||||||
| Acquisition-related expenses | 608 | – | 6,372 | – | ||||||||||||
| Restructuring charges | – | – | 2,151 | – | ||||||||||||
| Operating income | 21,710 | 24,827 | 44,537 | 87,035 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (2,248 | ) | (2,487 | ) | (15,075 | ) | (8,691 | ) | ||||||||
| Interest income | 148 | 92 | 347 | 332 | ||||||||||||
| Other | 942 | (991 | ) | 1,955 | (947 | ) | ||||||||||
| Total other expense | (1,158 | ) | (3,386 | ) | (12,773 | ) | (9,306 | ) | ||||||||
| Income before taxes on income | 20,552 | 21,441 | 31,764 | 77,729 | ||||||||||||
| Taxes on income | 5,538 | 5,422 | 7,565 | 23,040 | ||||||||||||
| Income before equity in earnings of affiliated companies | 15,014 | 16,019 | 24,199 |
54,689 |
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| Equity in earnings of affiliated companies, net of tax | 940 | 1,821 | 3,471 | 7,291 | ||||||||||||
| Income before discontinued operations | 15,954 | 17,840 | 27,670 | 61,980 | ||||||||||||
| Loss from discontinued operations, net of tax | – | (7 | ) | – | (100 | ) | ||||||||||
| Net income | 15,954 | 17,833 | 27,670 | 61,880 | ||||||||||||
| Less: net income attributable to noncontrolling interests | (1,202 | ) | (419 | ) | (1,123 | ) |
(1,418 |
) |
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| Net income attributable to Aegion Corporation | $ | 14,752 | $ | 17,414 | $ | 26,547 | $ | 60,462 | ||||||||
| Earnings per share attributable to Aegion Corporation: | ||||||||||||||||
| Basic: | ||||||||||||||||
| Income from continuing operations | $ | 0.37 | $ | 0.44 | $ | 0.67 | $ | 1.55 | ||||||||
| Loss from discontinued operations | – | (0.00 | ) | – | (0.01 | ) | ||||||||||
| Net income | $ | 0.37 | $ | 0.44 | $ | 0.67 | $ | 1.54 | ||||||||
| Diluted: | ||||||||||||||||
| Income from continuing operations | $ | 0.37 | $ | 0.44 | $ | 0.67 | $ | 1.54 | ||||||||
| Loss from discontinued operations | – | (0.00 | ) | – | (0.01 | ) | ||||||||||
| Net income | $ | 0.37 | $ | 0.44 | $ | 0.67 | $ | 1.53 | ||||||||
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Basic |
39,406,355 | 39,063,200 | 39,362,138 | 39,040,386 | ||||||||||||
| Diluted | 39,649,466 | 39,493,386 | 39,698,455 | 39,413,880 | ||||||||||||
|
AEGION CORPORATION AND SUBSIDIARIES STATEMENT OF OPERATIONS RECONCILIATION For the Three Months Ended December 31, 2011 (Unaudited) (Non-GAAP) (in thousands, except share and per share information) |
||||||||||||
|
Consolidated |
Acquisition- |
Results |
||||||||||
| Revenues | $ | 256,795 | $ | – | $ | 256,795 | ||||||
| Cost of revenues | 193,314 | – | 193,314 | |||||||||
| Gross profit | 63,481 | – | 63,481 | |||||||||
| Operating expenses | 41,771 | (608 | ) | 41,163 | ||||||||
| Operating income | 21,710 | 608 | 22,318 | |||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (2,248 | ) | – | (2,248 | ) | |||||||
| Interest income | 148 | – | 148 | |||||||||
| Other | 942 | – | 942 | |||||||||
| Total other income | (1,158 | ) | – | (1,158 | ) | |||||||
| Income before taxes on income | 20,542 | 608 | 21,160 | |||||||||
| Taxes on income | 5,538 | 148 | 5,686 | |||||||||
| Income before equity in earnings of affiliated companies | 15,014 |
460 |
15,474 | |||||||||
| Equity in earnings of affiliated companies | 940 | – | 940 | |||||||||
| Net income | 15,954 | 460 | 16,414 | |||||||||
| Less: net income attributable to noncontrolling interests | (1,202 | ) |
– |
(1,202 | ) | |||||||
| Net income attributable to Aegion Corporation | $ | 14,752 |
$ |
460 |
$ | 15,212 | ||||||
| Earnings per share attributable to Aegion Corporation: | ||||||||||||
| Basic: | ||||||||||||
| Net income | $ | 0.37 | $ | 0.39 | ||||||||
| Diluted: | ||||||||||||
| Net income | $ | 0.37 | $ | 0.38 | ||||||||
| Weighted average number of shares: | ||||||||||||
| Basic | 39,406,355 | 39,406,355 | ||||||||||
| Diluted | 39,649,466 | 39,649,466 | ||||||||||
|
AEGION CORPORATION AND SUBSIDIARIES STATEMENT OF OPERATIONS RECONCILIATION For the Twelve Months Ended December 31, 2011 (Unaudited) (Non-GAAP) (in thousands, except share and per share information) |
||||||||||||||||||||
|
Consolidated |
Restructuring |
Acquisition- |
Prior Debt |
Results |
||||||||||||||||
| Revenues | $ | 938,585 | $ | – | $ | – | $ | – | $ | 938,585 | ||||||||||
| Cost of revenues | 735,461 | – | – | – | 735,461 | |||||||||||||||
| Gross profit | 203,124 | – | – | – | 203,124 | |||||||||||||||
| Operating expenses | 158,587 | (2,151 | ) | (6,372 | ) | – | 150,064 | |||||||||||||
| Operating income | 44,537 | 2,151 | 6,372 | – | 53,060 | |||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | (15,075 | ) | – | – | (6,811 | ) | (8,264 | ) | ||||||||||||
| Interest income | 347 | – | – | – | 347 | |||||||||||||||
| Other | 1,955 | – | – | – | 1,955 | |||||||||||||||
| Total other income | (12,773 | ) | – | – | (6,811 | ) | (5,962 | ) | ||||||||||||
| Income before taxes on income | 31,764 | 2,151 | 6,372 | 6,811 | 47,098 | |||||||||||||||
| Taxes on income | 7,565 | 655 | 1,669 | 2,684 | 12,573 | |||||||||||||||
| Income before equity in earnings of affiliated companies | 24,199 |
1,496 |
4,703 |
4,127 |
34,525 | |||||||||||||||
| Equity in earnings of affiliated companies | 3,471 | – | – | – | 3,471 | |||||||||||||||
| Net income | 27,670 | 1,496 | 4,703 | 4,127 | 37,996 | |||||||||||||||
| Less: net income attributable to noncontrolling interests | (1,123 | ) |
– |
– |
– |
(1,123 | ) | |||||||||||||
| Net income attributable to Aegion Corporation | 26,547 |
$ |
1,496 |
$ |
4,703 |
$ |
4,127 |
36,873 | ||||||||||||
| Earnings per share attributable to Aegion Corporation: | ||||||||||||||||||||
| Basic: | ||||||||||||||||||||
| Net income | $ | 0.67 | $ | 0.94 | ||||||||||||||||
| Diluted: | ||||||||||||||||||||
| Net income | $ | 0.67 | $ | 0.93 | ||||||||||||||||
| Weighted average number of shares: | ||||||||||||||||||||
| Basic | 39,362,138 | 39,362,138 | ||||||||||||||||||
| Diluted | 39,698,455 | 39,698,455 | ||||||||||||||||||
|
AEGION CORPORATION AND SUBSIDIARIES SEGMENT DATA (Unaudited) (In thousands) |
||||||||||||||||
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenues: | ||||||||||||||||
| Energy and Mining | $ | 123,359 | $ | 105,276 | $ | 433,230 | $ | 382,246 | ||||||||
| North American Sewer and Water Rehabilitation | 90,901 | 106,972 | 357,507 | 413,828 | ||||||||||||
| European Sewer and Water Rehabilitation | 20,472 | 22,517 | 87,017 | 74,260 | ||||||||||||
| Asia-Pacific Sewer and Water Rehabilitation | 8,614 | 11,251 | 43,717 | 44,641 | ||||||||||||
| Commercial and Structural | 13,449 | – | 17,114 | – | ||||||||||||
| Total revenues | $ | 256,795 | $ | 246,016 | $ | 938,585 | $ | 914,975 | ||||||||
| Gross profit: | ||||||||||||||||
| Energy and Mining | $ | 34,446 | $ | 26,842 | $ | 109,753 | $ | 105,309 | ||||||||
| North American Sewer and Water Rehabilitation | 15,151 | 24,419 | 55,443 | 93,376 | ||||||||||||
| European Sewer and Water Rehabilitation | 6,304 | 6,459 | 22,837 | 20,606 | ||||||||||||
| Asia-Pacific Sewer and Water Rehabilitation | 802 | 2,562 | 6,772 | 10,289 | ||||||||||||
| Commercial and Structural | 6,778 | – | 8,319 | – | ||||||||||||
| Total gross profit | $ | 63,481 | $ | 60,282 | $ | 203,124 | $ | 229,580 | ||||||||
| Operating income (loss): | ||||||||||||||||
| Energy and Mining | $ | 14,518 | $ | 10,644 | $ | 35,011 | $ | 41,121 | ||||||||
| North American Sewer and Water Rehabilitation | 4,186 | 11,967 | 6,749 | 40,831 | ||||||||||||
| European Sewer and Water Rehabilitation | 2,416 | 2,489 | 6,000 | 5,013 | ||||||||||||
| Asia-Pacific Sewer and Water Rehabilitation | (1,647 | ) | (273 | ) | (2,512 | ) | 70 | |||||||||
| Commercial and Structural | 2,237 | – | (711 | ) | – | |||||||||||
| Total operating income | $ | 21,710 | $ | 24,827 | $ | 44,537 | $ | 87,035 | ||||||||
|
AEGION CORPORATION AND SUBSIDIARIES CONTRACT BACKLOG (Unaudited) (in millions) |
|||||||||||||||
|
Backlog |
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
||||||||||
| Energy and Mining |
$ |
256.4 |
$ |
225.6 |
$ |
168.1 |
$ |
147.6 |
$ |
146.1 |
|||||
| North American Sewer and Water Rehabilitation | 130.0 | 157.5 | 169.5 | 152.6 | 159.5 | ||||||||||
| European Sewer and Water Rehabilitation |
20.7 |
19.2 | 22.2 | 24.0 | 23.3 | ||||||||||
| Asia-Pacific Sewer and Water Rehabilitation | 37.5 | 37.4 | 50.3 | 68.7 | 79.8 | ||||||||||
| Commercial and Structural | 19.6 | 17.5 | – | – | – | ||||||||||
| Total |
$ |
464.2 |
$ |
457.2 |
$ |
410.1 |
$ |
392.9 |
$ |
408.7 |
|||||
|
Contract backlog is our expectation of revenues to be generated from received, signed and uncompleted contracts, the cancellation of which is not anticipated at the time of reporting. Contract backlog excludes any term contract amounts for which there is not specific and determinable work released and projects where we have been advised that we are the low bidder, but have not formally been awarded the contract. |
|||||||||||||||
|
AEGION CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share amounts) |
||||||
|
|
|
|||||
|
December 31, |
December 31, |
|||||
|
|
||||||
|
Assets |
||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 106,129 | $ | 114,829 | ||
| Restricted cash | 82 | 745 | ||||
| Receivables, net | 228,313 | 178,994 | ||||
| Retainage | 33,933 | 28,726 | ||||
| Costs and estimated earnings in excess of billings | 67,683 | 69,544 | ||||
| Inventories | 54,540 | 42,524 | ||||
| Prepaid expenses and other assets | 27,305 | 30,031 | ||||
| Current assets of discontinued operations | – | 1,193 | ||||
| Total current assets | 517,985 | 466,586 | ||||
| Property, plant and equipment, less accumulated depreciation | 168,945 | 164,486 | ||||
| Other assets | ||||||
| Goodwill | 249,888 | 190,120 | ||||
| Identified intangible assets, less accumulated amortization | 149,655 | 73,147 | ||||
| Investments in affiliated companies | 26,680 | 27,989 | ||||
| Deferred income tax assets | 5,418 | 4,115 | ||||
| Other assets | 6,393 | 4,260 | ||||
| Total other assets | 438,034 | 299,631 | ||||
| Non-current assets of discontinued operations | – | 2,607 | ||||
| Total Assets | $ | 1,124,964 | $ | 933,310 | ||
|
Liabilities and Equity |
||||||
| Current liabilities | ||||||
| Accounts payable | $ | 72,326 | $ | 74,820 | ||
| Other accrued expenses | 69,417 | 73,035 | ||||
| Billings in excess of costs and estimated earnings | 24,435 | 12,612 | ||||
| Current maturities of long-term debt and notes payable | 26,541 | 13,028 | ||||
| Total current liabilities | 192,719 | 173,495 | ||||
| Long-term debt, less current maturities | 222,868 | 91,715 | ||||
| Deferred income tax liabilities | 38,167 | 32,330 | ||||
| Other non-current liabilities | 22,221 | 9,063 | ||||
| Total liabilities | 475,975 | 306,603 | ||||
| Stockholders’ 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 39,352,375 and 39,246,015 |
394 |
392 |
||||
| Additional paid-in capital | 260,680 | 251,578 | ||||
| Retained earnings | 373,796 | 347,249 | ||||
| Accumulated other comprehensive income | 5,862 | 18,113 | ||||
| Total stockholders’ equity before noncontrolling interests | 640,732 | 617,332 | ||||
| Noncontrolling interests | 8,257 | 9,375 | ||||
| Total equity | 648,989 | 626,707 | ||||
| Total Liabilities and Equity | $ | 1,124,964 | $ | 933,310 | ||
|
AEGION CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) |
||||||||
| 2011 | 2010 | |||||||
|
Cash flows from operating activities: |
||||||||
| Net income | $ | 27,670 | $ | 61,880 | ||||
| Loss from discontinued operations | – | 100 | ||||||
| Income from continuing operations | 27,670 | 61,980 | ||||||
| Adjustments to reconcile to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 36,039 | 30,732 | ||||||
| Equity-based compensation expense | 6,491 | 6,713 | ||||||
| Deferred income taxes | (2,320 | ) | 8,024 | |||||
| Equity in earnings of affiliated companies | (3,471 | ) | (7,291 | ) | ||||
| Earnout reversal | (1,700 | ) | (1,700 | ) | ||||
| Gain on foreign currency transactions | (1,155 | ) | 98 | |||||
| Other | 200 | (1,173 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Restricted cash | 663 | 538 | ||||||
| Return on equity method investments | 7,018 | 7,803 | ||||||
| Receivables net, retainage and costs and estimated earnings in excess of billings | (38,310 | ) | (39,214 | ) | ||||
| Inventories | (5,992 | ) | (9,677 | ) | ||||
| Prepaid expenses and other assets | 2,045 | (539 | ) | |||||
| Accounts payable and accrued expenses | (2,248 | ) | (3,781 | ) | ||||
| Other operating | (2,046 | ) | 962 | |||||
| Net cash provided by operating activities of continuing operations | 22,884 | 53,475 | ||||||
| Net cash provided by (used in) operating activities of discontinued operations | – | (446 | ) | |||||
| Net cash provided by operating activities | 22,884 | 53,029 | ||||||
|
Cash flows from investing activities: |
||||||||
| Capital expenditures | (21,554 | ) | (36,858 | ) | ||||
| Proceeds from sale of fixed assets | 755 | 482 | ||||||
| Patent expenditures | (1,130 | ) | (1,346 | ) | ||||
| Purchase of CRTS, Hockway and Fyfe NA, net of cash acquired | (144,134 | ) | – | |||||
| Purchase of Singapore licensee | – | (1,257 | ) | |||||
| Net cash used in investing activities | (166,063 | ) | (38,979 | ) | ||||
|
Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock, including tax effect of stock option exercises | 3,610 | 2,302 | ||||||
| Proceeds from issuance of common stock in connection with acquisition of Fyfe NA | 4,000 | – | ||||||
| Stock repurchase program | (5,000 | ) | – | |||||
| Distributions/dividends to noncontrolling interests | (1,661 | ) | (398 | ) | ||||
| Investments by noncontrolling interests | 546 | 2,578 | ||||||
| Proceeds from notes payable | 354 | 1,986 | ||||||
| Principal payments on notes payable | (1,499 | ) | (1,808 | ) | ||||
| Credit facility and other financing fees | (4,320 | ) | – | |||||
| Principal payments on long-term debt | (103,750 | ) | (10,000 | ) | ||||
| Proceeds from long-term debt | 250,000 | – | ||||||
| Net cash provided by (used in) financing activities | 142,280 | (5,340 | ) | |||||
| Effect of exchange rate changes on cash | (7,801 | ) | 55 | |||||
| Net increase (decrease) in cash and cash equivalents for the year | (8,700 | ) | 8,765 | |||||
| Cash and cash equivalents, beginning of year | 114,829 | 106,064 | ||||||
| Cash and cash equivalents, end of year | $ | 106,129 | $ | 114,829 | ||||