Aegion Corporation Reports 2020 Fourth Quarter and Full Year Financial Results
Aegion Corporation (NASDAQ:AEGN) reported improved financial results for Q4 and FY 2020, showcasing a Q4 earnings per diluted share of $0.26 compared to a loss of $0.50 in Q4 2019. FY 2020 earnings per diluted share rose to $0.75 from a loss of $0.82 in FY 2019. Total revenues for FY 2020 were $808 million, with 6% revenue growth in the core Insituform North America business. Adjusted gross profit margins increased to 24.6%. The company also announced a $963 million acquisition plan, transitioning Aegion into a private entity, expected to close in Q2 2021.
- Q4'20 earnings per diluted share of $0.26 vs. $(0.50) in Q4'19.
- FY'20 earnings per diluted share of $0.75 vs. $(0.82) in FY'19.
- Revenues of $808 million for FY'20, with a 6% growth in Insituform North America.
- Adjusted gross profit margin of 24.6%, up 70 basis points year-over-year.
- Operating cash flows increased 40% to $111 million.
- Debt paydown of $56 million due to improved cash flows.
- Total revenue decline from $885 million in FY'19 to $808 million in FY'20.
- Discontinued operations due to planned divestiture of Energy Services segment.
- Net loss attributable to Aegion increased to $(5.6) million in Q4'20.
ST. LOUIS, March 10, 2021 (GLOBE NEWSWIRE) -- Aegion Corporation (NASDAQ:AEGN), a leading provider of infrastructure maintenance, rehabilitation and protection solutions, today announced financial results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter and Full Year 2020 Financial Highlights
- Q4’20 earnings per diluted share from continuing operations were
$0.26 compared to a loss per diluted share of$0.50 in Q4’19. Q4’20 adjusted (non-GAAP)1 earnings per diluted share from continuing operations were$0.31 compared to$0.32 in Q4’19. - FY’20 earnings per diluted share from continuing operations were
$0.75 compared to a loss per diluted share of$0.82 in FY’19. FY’20 adjusted (non-GAAP)1 earnings per diluted share from continuing operations were$1.05 compared to$1.02 in FY’19. - FY’20 revenues from continuing operations were
$808 million . The core Insituform North America business grew revenues by6% year over year, helping to offset declines primarily related to business exits as well as COVID-related project deferrals on larger international coating projects. - FY’20 adjusted1 gross profit margins from continuing operations were
24.6% , increasing 70 basis points from the prior year, primarily driven by improved profitability in the North America Insituform and Corrpro businesses. - FY’20 adjusted1 operating expenses from continuing operations declined
11% as a result of cost reductions across both operating segments and corporate spending. - FY’20 adjusted1 operating income from continuing operations of
$57 million increased7% year over year, driven by a 100 basis-point increase in adjusted operating margins. - Full-year operating cash flows of
$111 million were40% higher than the prior year, enabling$56 million of debt paydown.
1 Adjusted (non-GAAP) results exclude certain charges related to the Company’s restructuring activities, divestiture-related activities, impairment of assets held for sale, project warranty accruals, credit facility amendment fees and impacts from the Tax Cuts and Jobs Act. Reconciliation of adjusted results is included below.
“Our improved performance from continuing operations in the face of unprecedented market disruption demonstrates the resiliency and commitment of our employees globally as well as the critical need for our products and services,” said Charles R. Gordon, Aegion President and Chief Executive Officer.
“It’s also a testament to the strength of our cornerstone Insituform business, which celebrates 50 years of market leadership this year and continues to be an innovator and thought leader in the trenchless municipal pipeline rehabilitation market. As we move forward, we are continuing to advance our strategy of providing differentiated pipeline rehabilitation and protection technologies for the benefit of public health and the environment.”
Energy Services Segment Planned Divestiture
In December 2020, the Company’s board of directors approved a plan to sell its Energy Services segment. As a result, the operating results of the former Energy Services segment are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for the quarters and years ended December 31, 2020 and 2019, respectively.
New Mountain Transaction
On February 16, 2021, the Company announced that it had entered into a definitive merger agreement to be acquired by affiliates of New Mountain Capital, L.L.C., a leading growth-oriented investment firm headquartered in New York, in an all-cash transaction valued at approximately
In light of the proposed transaction, Aegion will not host a conference call to discuss earnings results or be providing a financial outlook.
Additional information on Aegion’s 2020 full year financial results can be found in the Form 10-K once it has been filed with the Securities and Exchange Commission.
AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
| Quarters Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Revenues | $ | 205,481 | $ | 224,822 | $ | 807,764 | $ | 885,887 | |||||||
| Cost of revenues | 153,877 | 171,644 | 611,305 | 680,886 | |||||||||||
| Gross profit | 51,604 | 53,178 | 196,459 | 205,001 | |||||||||||
| Operating expenses | 36,184 | 43,896 | 147,523 | 168,778 | |||||||||||
| Impairment of assets held for sale | 830 | 11,481 | 172 | 23,427 | |||||||||||
| Acquisition and divestiture expenses | 1,425 | 616 | 3,614 | 3,375 | |||||||||||
| Restructuring and related charges | 298 | 2,807 | 4,162 | 8,188 | |||||||||||
| Operating income (loss) | 12,867 | (5,622 | ) | 40,988 | 1,233 | ||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense | (2,729 | ) | (2,742 | ) | (12,483 | ) | (11,358 | ) | |||||||
| Interest income | 424 | 224 | 1,125 | 1,038 | |||||||||||
| Other | (1,197 | ) | (3,968 | ) | 437 | (10,893 | ) | ||||||||
| Total other expense | (3,502 | ) | (6,486 | ) | (10,921 | ) | (21,213 | ) | |||||||
| Income (loss) before taxes (benefit) | 9,365 | (12,108 | ) | 30,067 | (19,980 | ) | |||||||||
| Taxes (benefit) on income (loss) | 716 | 2,324 | 5,267 | 4,010 | |||||||||||
| Income (loss) from continuing operations | 8,649 | (14,432 | ) | 24,800 | (23,990 | ) | |||||||||
| Income (loss) from discontinued operations | (13,804 | ) | 773 | (55,156 | ) | 4,542 | |||||||||
| Net loss | (5,155 | ) | (13,659 | ) | (30,356 | ) | (19,448 | ) | |||||||
| Non-controlling interests income | (456 | ) | (902 | ) | (1,505 | ) | (1,444 | ) | |||||||
| Net loss attributable to Aegion Corporation | $ | (5,611 | ) | $ | (14,561 | ) | $ | (31,861 | ) | $ | (20,892 | ) | |||
| Earnings (loss) per share attributable to Aegion Corporation: | |||||||||||||||
| Basic: | |||||||||||||||
| Income (loss) from continuing operations | $ | 0.27 | $ | (0.50 | ) | $ | 0.76 | $ | (0.82 | ) | |||||
| Income (loss) from discontinued operations | (0.45 | ) | 0.03 | (1.80 | ) | 0.15 | |||||||||
| Net loss | $ | (0.18 | ) | $ | (0.47 | ) | $ | (1.04 | ) | $ | (0.67 | ) | |||
| Diluted: | |||||||||||||||
| Income (loss) from continuing operations | $ | 0.26 | $ | (0.50 | ) | $ | 0.75 | $ | (0.82 | ) | |||||
| Income (loss) from discontinued operations | (0.44 | ) | 0.03 | (1.77 | ) | 0.15 | |||||||||
| Net loss | $ | (0.18 | ) | $ | (0.47 | ) | $ | (1.02 | ) | $ | (0.67 | ) | |||
AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts)
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 94,848 | $ | 64,874 | ||||
| Restricted cash | 765 | 1,348 | ||||||
| Receivables, net of allowances of | 133,394 | 153,484 | ||||||
| Retainage | 32,807 | 33,103 | ||||||
| Contract assets | 44,026 | 42,973 | ||||||
| Inventories | 44,889 | 57,193 | ||||||
| Prepaid expenses and other current assets | 33,675 | 31,329 | ||||||
| Assets held for sale | 92,850 | 168,799 | ||||||
| Total current assets | 477,254 | 553,103 | ||||||
| Property, plant & equipment, less accumulated depreciation | 92,900 | 94,886 | ||||||
| Other assets | ||||||||
| Goodwill | 210,665 | 208,858 | ||||||
| Intangible assets, less accumulated amortization | 58,869 | 67,875 | ||||||
| Operating lease assets | 52,421 | 60,246 | ||||||
| Deferred income tax assets | 448 | 1,216 | ||||||
| Other non-current assets | 8,890 | 9,329 | ||||||
| Total other assets | 331,293 | 347,524 | ||||||
| Total Assets | $ | 901,447 | $ | 995,513 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 51,469 | $ | 54,100 | ||||
| Accrued expenses | 59,664 | 67,852 | ||||||
| Operating lease liabilities | 14,147 | 14,204 | ||||||
| Contract liabilities | 37,569 | 37,517 | ||||||
| Current maturities of long-term debt | 25,811 | 32,803 | ||||||
| Liabilities held for sale | 36,148 | 37,900 | ||||||
| Total current liabilities | 224,808 | 244,376 | ||||||
| Long-term debt, less current maturities | 193,988 | 243,629 | ||||||
| Other liabilities | ||||||||
| Operating lease liabilities | 38,724 | 46,059 | ||||||
| Deferred income tax liabilities | 10,344 | 11,254 | ||||||
| Other non-current liabilities | 25,218 | 15,102 | ||||||
| Total other liabilities | 74,286 | 72,415 | ||||||
| Total liabilities | 493,082 | 560,420 | ||||||
| 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 30,640,150 and 30,715,959, respectively | 306 | 307 | ||||||
| Additional paid-in capital | 102,001 | 101,148 | ||||||
| Retained earnings | 327,137 | 358,998 | ||||||
| Accumulated other comprehensive loss | (29,847 | ) | (32,694 | ) | ||||
| Total stockholders’ equity | 399,597 | 427,759 | ||||||
| Non-controlling interests | 8,768 | 7,334 | ||||||
| Total equity | 408,365 | 435,093 | ||||||
| Total Liabilities and Equity | $ | 901,447 | $ | 995,513 | ||||
AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| Years Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | (30,356 | ) | $ | (19,448 | ) | $ | 3,087 | ||||
| (Income) loss from discontinued operations | 55,156 | (4,542 | ) | (5,859 | ) | |||||||
| 24,800 | (23,990 | ) | (2,772 | ) | ||||||||
| Adjustments to reconcile to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 28,702 | 28,673 | 30,744 | |||||||||
| (Gain) loss on sale of fixed assets | (349 | ) | (662 | ) | 177 | |||||||
| Equity-based compensation expense | 9,919 | 7,751 | 7,838 | |||||||||
| Deferred income taxes | (1,001 | ) | 3,146 | (648 | ) | |||||||
| Non-cash restructuring charges | 1,202 | 12,717 | 13,814 | |||||||||
| Goodwill impairment | — | — | 1,389 | |||||||||
| Definite-lived intangible asset impairment | — | — | 2,169 | |||||||||
| Impairment of assets held for sale | 1,259 | 23,427 | — | |||||||||
| (Gain) loss on sale of businesses | (14 | ) | — | 7,048 | ||||||||
| Loss on foreign currency transactions | 844 | 503 | 623 | |||||||||
| Other | 457 | (744 | ) | 733 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Receivables net, retainage and contract assets | 22,454 | 7,549 | 8,202 | |||||||||
| Inventories | 9,999 | (3,413 | ) | 2,306 | ||||||||
| Prepaid expenses and other assets | (2,481 | ) | 4,642 | 1,866 | ||||||||
| Accounts payable, accrued expenses and operating lease liabilities | (10,313 | ) | (5,755 | ) | (6,324 | ) | ||||||
| Contract liabilities | (289 | ) | 5,302 | (22,728 | ) | |||||||
| Other operating | 6,997 | 763 | 290 | |||||||||
| Net cash provided by operating activities of continuing operations | 92,186 | 59,909 | 44,727 | |||||||||
| Net cash provided by (used in) operating activities of discontinued operations | 18,529 | 18,905 | (5,058 | ) | ||||||||
| Net cash provided by operating activities | 110,715 | 78,814 | 39,669 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Capital expenditures | (16,559 | ) | (25,335 | ) | (27,461 | ) | ||||||
| Proceeds from sale of fixed assets | 1,565 | 1,332 | 3,014 | |||||||||
| Patent expenditures | (299 | ) | (293 | ) | (299 | ) | ||||||
| Sale of businesses, net of cash disposed | 3,602 | — | 37,942 | |||||||||
| Other acquisition activity | — | — | (6,000 | ) | ||||||||
| Net cash provided by (used in) investing activities of continuing operations | (11,691 | ) | (24,296 | ) | 7,196 | |||||||
| Net cash used in investing activities of discontinued operations | (2,972 | ) | (3,430 | ) | (6,031 | ) | ||||||
| Net cash provided by (used in) investing activities | (14,663 | ) | (27,726 | ) | 1,165 | |||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from issuance of common stock upon stock option exercises | — | 956 | — | |||||||||
| Repurchase of common stock | (9,071 | ) | (30,393 | ) | (25,775 | ) | ||||||
| Investments from non-controlling interest | 131 | — | — | |||||||||
| Distributions to non-controlling interests | (153 | ) | (1,609 | ) | — | |||||||
| Credit facility amendment fees | (1,995 | ) | — | (1,657 | ) | |||||||
| Proceeds from (payments on) notes payable, net | — | (273 | ) | 234 | ||||||||
| Payments on line of credit, net | (24,000 | ) | (7,000 | ) | (7,000 | ) | ||||||
| Principal payments on long-term debt | (32,033 | ) | (28,438 | ) | (26,250 | ) | ||||||
| Net cash used in financing activities | (67,121 | ) | (66,757 | ) | (60,448 | ) | ||||||
| Effect of exchange rate changes on cash | 460 | (2,995 | ) | (4,045 | ) | |||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash for the year | 29,391 | (18,664 | ) | (23,659 | ) | |||||||
| Cash, cash equivalents and restricted cash, beginning of year | 66,222 | 84,886 | 108,545 | |||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 95,613 | $ | 66,222 | $ | 84,886 | ||||||
Statement of Operations Reconciliation
(Unaudited) (Non-GAAP)
For the Quarter Ended December 31, 2020
| (in thousands, except earnings per share) | Gross Profit | Operating Expenses | Operating Income | Income Before Taxes | Taxes on Income | Income from Continuing Operations | Diluted Earnings per Share from Continuing Operations | |||||||||
| As Reported (GAAP) | $ | 51,604 | $ | 36,184 | $ | 12,867 | $ | 9,365 | $ | 716 | $ | 8,649 | $ | 0.26 | ||
| Items Affecting Comparability: | ||||||||||||||||
| Restructuring Charges(1) | (53 | ) | (1,838 | ) | 2,083 | 2,999 | 1,815 | 1,184 | 0.04 | |||||||
| Divestiture Related Expenses(2) | — | — | 2,255 | 2,350 | 1,924 | 426 | 0.01 | |||||||||
| Credit Facility Fees(3) | — | — | — | 19 | 5 | 14 | — | |||||||||
| As Adjusted (Non-GAAP) | $ | 51,551 | $ | 34,346 | $ | 17,205 | $ | 14,733 | $ | 4,460 | $ | 10,273 | $ | 0.31 | ||
(1) Includes the following non-GAAP adjustments: (i) pre-tax restructuring credits for cost of revenues of
(2) Includes the following non-GAAP adjustments: (i) pre-tax charges of
(3) Includes pre-tax non-GAAP adjustments of
For the Quarter Ended December 31, 2019
| (in thousands, except earnings per share) | Gross Profit | Operating Expenses | Operating Income (Loss) | Income (Loss) Before Taxes | Taxes (Benefit) on Income (Loss) | Income (Loss) from Continuing Operations | Diluted Earnings (Loss) per Share from Continuing Operations | |||||||||||||
| As Reported (GAAP) | $ | 53,178 | $ | 43,896 | $ | (5,622 | ) | $ | (12,108 | ) | $ | 2,324 | $ | (14,432 | ) | $ | (0.50 | ) | ||
| Items Affecting Comparability: | ||||||||||||||||||||
| Restructuring Charges(1) | 1,901 | (4,394 | ) | 9,102 | 12,870 | (595 | ) | 13,465 | 0.44 | |||||||||||
| Divestiture Related Expenses(2) | — | — | 12,097 | 12,097 | 115 | 11,982 | 0.38 | |||||||||||||
| As Adjusted (Non-GAAP) | $ | 55,079 | $ | 39,502 | $ | 15,577 | $ | 12,859 | $ | 1,844 | $ | 11,015 | $ | 0.32 | ||||||
(1) Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of
(2) Includes the following non-GAAP adjustments: (i) pre-tax charges of
Statement of Operations Reconciliation
(Unaudited) (Non-GAAP)
For the Year Ended December 31, 2020
| (in thousands, except earnings per share) | Gross Profit | Operating Expenses | Operating Income | Income Before Taxes | Taxes on Income | Income from Continuing Operations | Diluted Earnings per Share from Continuing Operations | ||||||||
| As Reported (GAAP) | $ | 196,459 | $ | 147,523 | $ | 40,988 | $ | 30,067 | $ | 5,267 | $ | 24,800 | $ | 0.75 | |
| Items Affecting Comparability: | |||||||||||||||
| Restructuring Charges(1) | 2,021 | (5,950 | ) | 12,133 | 11,279 | 3,297 | 7,982 | 0.24 | |||||||
| Divestiture Related Expenses(2) | — | — | 3,786 | 3,772 | 2,212 | 1,560 | 0.05 | ||||||||
| Credit Facility Fees(3) | — | — | — | 688 | 150 | 538 | 0.01 | ||||||||
| As Adjusted (Non-GAAP) | $ | 198,480 | $ | 141,573 | $ | 56,907 | $ | 45,806 | $ | 10,926 | $ | 34,880 | $ | 1.05 | |
(1) Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of
(2) Includes the following non-GAAP adjustments: (i) pre-tax charges of
(3) Includes pre-tax non-GAAP adjustments of
For the Year Ended December 31, 2019
| (in thousands, except earnings per share) | Gross Profit | Operating Expenses | Operating Income | Income (Loss) Before Taxes | Taxes on Income (Loss) | Income (Loss) from Continuing Operations | Diluted Earnings (Loss) per Share from Continuing Operations | |||||||||||
| As Reported (GAAP) | $ | 205,001 | $ | 168,778 | $ | 1,233 | $ | (19,980 | ) | $ | 4,010 | $ | (23,990 | ) | $ | (0.82 | ) | |
| Items Affecting Comparability: | ||||||||||||||||||
| Restructuring Charges(1) | 2,338 | (9,924 | ) | 20,450 | 30,680 | 2,219 | 28,461 | 0.91 | ||||||||||
| Divestiture Related Expenses(2) | — | — | 26,802 | 26,802 | 702 | 26,100 | 0.83 | |||||||||||
| Warranty Accrual(3) | 4,429 | — | 4,429 | 4,429 | 1,169 | 3,260 | 0.10 | |||||||||||
| Tax Cuts and Jobs Act(4) | — | (63 | ) | 63 | 63 | 17 | 46 | — | ||||||||||
| As Adjusted (Non-GAAP) | $ | 211,768 | $ | 158,791 | $ | 52,977 | $ | 41,994 | $ | 8,117 | $ | 33,877 | $ | 1.02 | ||||
(1) Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of
(2) Includes the following non-GAAP adjustments: (i) pre-tax charges of
(3) Includes non-GAAP adjustments for estimated project remediation charges related to a cured-in-place pipe project in the North American operations of Infrastructure Solutions.
(4) Includes non-GAAP adjustments related to professional fees resulting from the Tax Cuts and Jobs Act.
Selected Segment Financial Highlights
(in thousands)
| Quarter Ended December 31, 2020 | Quarter Ended December 31, 2019 | ||||||||||||||||||||
| As Reported (GAAP) | Adjustments (1) | As Adjusted (Non-GAAP) | As Reported (GAAP) | Adjustments (2) | As Adjusted (Non-GAAP) | ||||||||||||||||
| Revenues: | |||||||||||||||||||||
| Infrastructure Solutions | $ | 142,833 | $ | — | $ | 142,833 | $ | 147,728 | $ | — | $ | 147,728 | |||||||||
| Corrosion Protection | 62,648 | — | 62,648 | 77,094 | — | 77,094 | |||||||||||||||
| Total Revenues | $ | 205,481 | $ | — | $ | 205,481 | $ | 224,822 | $ | — | $ | 224,822 | |||||||||
| Gross Profit: | |||||||||||||||||||||
| Infrastructure Solutions | $ | 35,818 | $ | — | $ | 35,818 | $ | 39,048 | $ | 591 | $ | 39,639 | |||||||||
| Gross Profit Margin | 25.1 | % | 25.1 | % | 26.4 | % | 26.8 | % | |||||||||||||
| Corrosion Protection | 15,786 | (53 | ) | 15,733 | 14,130 | 1,310 | 15,440 | ||||||||||||||
| Gross Profit Margin | 25.2 | % | 25.1 | % | 18.3 | % | 20.0 | % | |||||||||||||
| Total Gross Profit | $ | 51,604 | $ | (53 | ) | $ | 51,551 | $ | 53,178 | $ | 1,901 | $ | 55,079 | ||||||||
| Gross Profit Margin | 25.1 | % | 25.1 | % | 23.7 | % | 24.5 | % | |||||||||||||
| Operating Income (Loss): | |||||||||||||||||||||
| Infrastructure Solutions | $ | 20,042 | $ | (617 | ) | $ | 19,425 | $ | 8,868 | $ | 11,564 | $ | 20,432 | ||||||||
| Operating Margin | 14.0 | % | 13.6 | % | 6.0 | % | 13.8 | % | |||||||||||||
| Corrosion Protection | 972 | 1,905 | 2,877 | (2,374 | ) | 3,386 | 1,012 | ||||||||||||||
| Operating Margin | 1.6 | % | 4.6 | % | (3.1 | )% | 1.3 | % | |||||||||||||
| Corporate | (8,147 | ) | 3,050 | (5,097 | ) | (12,116 | ) | 6,249 | (5,867 | ) | |||||||||||
| Operating Margin | (4.0 | )% | (2.5 | )% | (5.4 | )% | (2.6 | )% | |||||||||||||
| Total Operating Income (Loss) | $ | 12,867 | $ | 4,338 | $ | 17,205 | $ | (5,622 | ) | $ | 21,199 | $ | 15,577 | ||||||||
| Operating Margin | 6.3 | % | 8.4 | % | (2.5 | )% | 6.9 | % | |||||||||||||
_________________________________
(1) Includes non-GAAP adjustments related to:
- Infrastructure Solutions - (i) pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs, fixed asset disposals and other restructuring charges; (ii) acquisition and divestiture expenses; and (iii) recoveries of previously reserved customer receivables in our held for sale operations.
- Corrosion Protection - pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs and other restructuring charges.
- Corporate - (i) pre-tax restructuring charges primarily associated with severance and benefit related costs, legal expenses and other restructuring charges; (ii) divestiture expenses related to held for sale entities; and (iii) impairment of assets held for sale.
(2) Includes non-GAAP adjustments related to:
- Infrastructure Solutions - (i) pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs, fixed asset disposals and other restructuring charges; (ii) acquisition and divestiture expenses; and (iii) impairment of assets held for sale.
- Corrosion Protection - (i) pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs, inventory write offs and other restructuring charges; (ii) acquisition and divestiture expenses; and (iii) impairment of assets held for sale.
- Corporate - (i) pre-tax restructuring charges primarily associated with severance and benefit related costs, legal expenses and other restructuring charges; (ii) divestiture expenses related to held for sale entities; and (iii) impairment of assets held for sale.
Selected Segment Financial Highlights
(in thousands)
| Year Ended December 31, 2020 | Year Ended December 31, 2019 | ||||||||||||||||||||
| As Reported (GAAP) | Adjustments (1) | As Adjusted (Non-GAAP) | As Reported (GAAP) | Adjustments (2) | As Adjusted (Non-GAAP) | ||||||||||||||||
| Revenues: | |||||||||||||||||||||
| Infrastructure Solutions | $ | 562,571 | $ | — | $ | 562,571 | $ | 590,797 | $ | — | $ | 590,797 | |||||||||
| Corrosion Protection | 245,193 | — | 245,193 | 295,090 | — | 295,090 | |||||||||||||||
| Total Revenues | $ | 807,764 | $ | — | $ | 807,764 | $ | 885,887 | $ | — | $ | 885,887 | |||||||||
| Gross Profit: | |||||||||||||||||||||
| Infrastructure Solutions | $ | 144,213 | $ | 69 | $ | 144,282 | $ | 144,074 | $ | 4,898 | $ | 148,972 | |||||||||
| Gross Profit Margin | 25.6 | % | 25.6 | % | 24.4 | % | 25.2 | % | |||||||||||||
| Corrosion Protection | 52,246 | 1,952 | 54,198 | 60,927 | 1,869 | 62,796 | |||||||||||||||
| Gross Profit Margin | 21.3 | % | 22.1 | % | 20.6 | % | 21.3 | % | |||||||||||||
| Total Gross Profit | $ | 196,459 | $ | 2,021 | $ | 198,480 | $ | 205,001 | $ | 6,767 | $ | 211,768 | |||||||||
| Gross Profit Margin | 24.3 | % | 24.6 | % | 23.1 | % | 23.9 | % | |||||||||||||
| Operating Income (Loss): | |||||||||||||||||||||
| Infrastructure Solutions | $ | 78,098 | $ | (748 | ) | $ | 77,350 | $ | 42,079 | $ | 30,647 | $ | 72,726 | ||||||||
| Operating Margin | 13.9 | % | 13.7 | % | 7.1 | % | 12.3 | % | |||||||||||||
| Corrosion Protection | (6,133 | ) | 9,543 | 3,410 | (5,635 | ) | 10,754 | 5,119 | |||||||||||||
| Operating Margin | (2.5 | )% | 1.4 | % | (1.9 | )% | 1.7 | % | |||||||||||||
| Corporate | (30,977 | ) | 7,124 | (23,853 | ) | (35,211 | ) | 10,343 | (24,868 | ) | |||||||||||
| Operating Margin | (3.8 | )% | (3.0 | )% | (4.0 | )% | (2.8 | )% | |||||||||||||
| Total Operating Income | $ | 40,988 | $ | 15,919 | $ | 56,907 | $ | 1,233 | $ | 51,744 | $ | 52,977 | |||||||||
| Operating Margin | 5.1 | % | 7.0 | % | 0.1 | % | 6.0 | % | |||||||||||||
_________________________________
(1) Includes non-GAAP adjustments related to:
- Infrastructure Solutions - (i) pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs, fixed asset disposals and other restructuring charges; (ii) acquisition and divestiture expenses; and (iii) recoveries of previously reserved customer receivables in our held for sale operations.
- Corrosion Protection - pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs, inventory write offs and other restructuring charges.
- Corporate - (i) pre-tax restructuring charges primarily associated with severance and benefit related costs, legal expenses and other restructuring charges; (ii) divestiture expenses related to held for sale entities; and (iii) impairment of assets held for sale.
(2) Includes non-GAAP adjustments related to:
- Infrastructure Solutions - (i) pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs, fixed asset disposals and other restructuring charges; (ii) acquisition and divestiture expenses; (iii) project warranty accrual; and (iv) impairment of assets held for sale.
- Corrosion Protection - (i) pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs, inventory write offs and other restructuring charges; (ii) acquisition and divestiture expenses; and (iii) impairment of assets held for sale.
- Corporate - (i) pre-tax restructuring charges primarily associated with severance and benefit related costs, legal expenses and other restructuring charges; (ii) divestiture expenses related to held for sale entities; and (iii) impairment of assets held for sale.
About Aegion Corporation (NASDAQ: AEGN)
Aegion combines innovative technologies with market-leading expertise to maintain, rehabilitate and strengthen infrastructure around the world. For 50 years, 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
This communication contains “forward-looking statements” within the meaning of the U.S. federal securities laws. Such statements include statements concerning anticipated future events and expectations that are not historical facts. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may,” or by variations of such words or by similar expressions or the negative thereof. Actual results may vary materially from those expressed or implied by forward-looking statements based on a number of factors, including, without limitation: (1) risks related to the consummation of the merger, including the risks that (a) the merger may not be consummated within the anticipated time period, or at all, (b) the parties may fail to obtain stockholder approval of the merger agreement, (c) the parties may fail to secure the termination or expiration of any waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (d) other conditions to the consummation of the merger under the merger agreement may not be satisfied, and (e) the significant limitations on remedies contained in the merger agreement may limit or entirely prevent the Company from specifically enforcing the obligations of Carter Intermediate, Inc. (Parent) and its wholly owned subsidiary, Carter Acquisition, Inc. (Merger Sub), under the merger agreement or recovering damages for any breach by Parent or Merger Sub; (2) the effects that any termination of the merger agreement may have on the Company or its business, including the risks that (a) the Company’s stock price may decline significantly if the merger is not completed, (b) the merger agreement may be terminated in circumstances requiring the Company to pay Parent a termination fee, or (c) the circumstances of the termination, including the possible imposition of a 12-month tail period during which the termination fee could be payable upon certain subsequent transactions, may have a chilling effect on alternatives to the merger; (3) the effects that the announcement or pendency of the merger may have on the Company’s and its business, including the risks that as a result (a) the Company’s business, operating results or stock price may suffer, (b) the Company’s current plans and operations may be disrupted, (c) the Company’s ability to retain or recruit key employees may be adversely affected, (d) the Company’s business relationships (including, customers, franchisees and suppliers) may be adversely affected, or (e) the Company’s management’s or employees’ attention may be diverted from other important matters; (4) the effect of limitations that the merger agreement places on the Company’s ability to operate its business, return capital to stockholders or engage in alternative transactions; (5) the nature, cost and outcome of pending and future litigation and other legal proceedings, including any such proceedings related to the merger and instituted against the Company and others; (6) the risk that the merger and related transactions may involve unexpected costs, liabilities or delays; (7) other economic, business, competitive, legal, regulatory, and/or tax factors; and (8) other factors described under the heading “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated or supplemented by subsequent reports that the Company has filed or files with the SEC. Potential investors, stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Neither Parent nor the Company assumes any obligation to publicly update any forward-looking statement after it is made, whether as a result of new information, future events or otherwise, except as required by law.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication may be deemed to be solicitation material in respect of the proposed merger between Merger Sub and the Company. In connection with the proposed transaction, the Company plans to file a proxy statement with the SEC. STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE THEREIN) AND OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT THE COMPANY WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Stockholders and investors will be able to obtain free copies of the proxy statement and other relevant materials (when they become available) and other documents filed by the Company at the SEC’s website at www.sec.gov. Copies of the proxy statement (when they become available) and the filings that will be incorporated by reference therein may also be obtained, without charge, by contacting the Company’s Investor Relations at kcason@aegion.com or 1.800.325.1159.
Participants in Solicitation
The Company and its directors, executive officers and certain employees, may be deemed, under SEC rules, to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding the Company’s directors and executive officers is available in its proxy statement filed with the SEC on March 6, 2020. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC (when they become available). These documents can be obtained free of charge from the sources indicated above.
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 from continuing operations in the quarters and years ended December 31, 2020 and 2019 exclude charges related to the Company’s restructuring activities, acquisition and divestiture-related expenses, impairment of assets held for sale, 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® and Stronger. Safer. Infrastructure.® and the associated logos are the registered trademarks of Aegion Corporation and its affiliates.
For more information, contact:
Aegion Corporation
Katie Cason
Senior Vice President, Strategy and Communications
636-530-8000
kcason@aegion.com
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