x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For the quarterly period ended
March 31, 2018
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For the transition period from
to
|
Aegion Corporation
|
(Exact name of registrant as specified in its charter)
|
Large accelerated filer
x
|
|
Accelerated filer
¨
|
|
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
|
|
|
|
|
Emerging growth company
¨
|
PART I—FINANCIAL INFORMATION
|
|
|
|
Item 1. Financial Statements (Unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PART II—OTHER INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenues
|
$
|
324,861
|
|
|
$
|
325,175
|
|
Cost of revenues
|
263,357
|
|
|
257,763
|
|
||
Gross profit
|
61,504
|
|
|
67,412
|
|
||
Operating expenses
|
56,142
|
|
|
52,746
|
|
||
Acquisition and divestiture expenses
|
392
|
|
|
533
|
|
||
Restructuring and related charges
|
1,789
|
|
|
—
|
|
||
Operating income
|
3,181
|
|
|
14,133
|
|
||
Other income (expense):
|
|
|
|
||||
Interest expense
|
(5,443
|
)
|
|
(4,047
|
)
|
||
Interest income
|
47
|
|
|
49
|
|
||
Other
|
(262
|
)
|
|
(387
|
)
|
||
Total other expense
|
(5,658
|
)
|
|
(4,385
|
)
|
||
Income (loss) before taxes on income
|
(2,477
|
)
|
|
9,748
|
|
||
Taxes (benefit) on income (loss)
|
(1,001
|
)
|
|
1,995
|
|
||
Net income (loss)
|
(1,476
|
)
|
|
7,753
|
|
||
Non-controlling interests income
|
(593
|
)
|
|
(1,882
|
)
|
||
Net income (loss) attributable to Aegion Corporation
|
$
|
(2,069
|
)
|
|
$
|
5,871
|
|
|
|
|
|
||||
Earnings (loss) per share attributable to Aegion Corporation:
|
|
|
|
||||
Basic
|
$
|
(0.06
|
)
|
|
$
|
0.17
|
|
Diluted
|
$
|
(0.06
|
)
|
|
$
|
0.17
|
|
|
For the Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income (loss)
|
$
|
(1,476
|
)
|
|
$
|
7,753
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Currency translation adjustments
|
2,228
|
|
|
3,869
|
|
||
Deferred gain on hedging activity, net of tax
(1)
|
494
|
|
|
483
|
|
||
Pension activity, net of tax
(2)
|
(7
|
)
|
|
(5
|
)
|
||
Total comprehensive income
|
1,239
|
|
|
12,100
|
|
||
Comprehensive income attributable to non-controlling interests
|
(646
|
)
|
|
(1,869
|
)
|
||
Comprehensive income attributable to Aegion Corporation
|
$
|
593
|
|
|
$
|
10,231
|
|
(1)
|
Amounts presented net of tax of
$177
and
$321
for the quarters ended
March 31, 2018
and
2017
, respectively.
|
(2)
|
Amounts presented net of tax of
$(2)
and
$(1)
for the quarters ended
March 31, 2018
and
2017
, respectively.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
87,173
|
|
|
$
|
105,717
|
|
Restricted cash
|
1,858
|
|
|
1,839
|
|
||
Receivables, net of allowances of $7,034 and $5,775, respectively
|
177,364
|
|
|
201,570
|
|
||
Retainage
|
31,327
|
|
|
33,002
|
|
||
Contract assets
|
81,052
|
|
|
75,371
|
|
||
Inventories
|
66,263
|
|
|
63,969
|
|
||
Prepaid expenses and other current assets
|
30,037
|
|
|
35,282
|
|
||
Assets held for sale
|
72,683
|
|
|
70,314
|
|
||
Total current assets
|
547,757
|
|
|
587,064
|
|
||
Property, plant & equipment, less accumulated depreciation
|
108,045
|
|
|
109,040
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
261,018
|
|
|
260,715
|
|
||
Intangible assets, less accumulated amortization
|
128,821
|
|
|
132,345
|
|
||
Deferred income tax assets
|
1,725
|
|
|
1,666
|
|
||
Other assets
|
17,179
|
|
|
16,269
|
|
||
Total other assets
|
408,743
|
|
|
410,995
|
|
||
Total Assets
|
$
|
1,064,545
|
|
|
$
|
1,107,099
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
61,361
|
|
|
$
|
70,611
|
|
Accrued expenses
|
83,460
|
|
|
92,011
|
|
||
Contract liabilities
|
45,139
|
|
|
51,597
|
|
||
Current maturities of long-term debt
|
26,557
|
|
|
26,555
|
|
||
Liabilities held for sale
|
14,731
|
|
|
20,900
|
|
||
Total current liabilities
|
231,248
|
|
|
261,674
|
|
||
Long-term debt, less current maturities
|
315,629
|
|
|
318,240
|
|
||
Deferred income tax liabilities
|
9,214
|
|
|
9,211
|
|
||
Other non-current liabilities
|
13,403
|
|
|
12,918
|
|
||
Total liabilities
|
569,494
|
|
|
602,043
|
|
||
|
|
|
|
||||
(See Commitments and Contingencies: Note 10)
|
|
|
|
|
|
||
|
|
|
|
||||
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 32,467,823 and 32,462,542, respectively
|
325
|
|
|
325
|
|
||
Additional paid-in capital
|
129,237
|
|
|
140,749
|
|
||
Retained earnings
|
384,207
|
|
|
386,008
|
|
||
Accumulated other comprehensive loss
|
(30,174
|
)
|
|
(32,836
|
)
|
||
Total stockholders’ equity
|
483,595
|
|
|
494,246
|
|
||
Non-controlling interests
|
11,456
|
|
|
10,810
|
|
||
Total equity
|
495,051
|
|
|
505,056
|
|
||
Total Liabilities and Equity
|
$
|
1,064,545
|
|
|
$
|
1,107,099
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Non-
Controlling
Interests
|
|
Total
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
BALANCE, December 31, 2016
|
33,956,304
|
|
|
$
|
340
|
|
|
$
|
166,598
|
|
|
$
|
455,062
|
|
|
$
|
(53,500
|
)
|
|
$
|
7,683
|
|
|
$
|
576,183
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
5,871
|
|
|
—
|
|
|
1,882
|
|
|
7,753
|
|
||||||
Issuance of shares pursuant to restricted stock units
|
62,279
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Issuance of shares pursuant to performance units
|
49,672
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Forfeitures of restricted shares
|
(1,084
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares repurchased and retired
|
(462,317
|
)
|
|
(5
|
)
|
|
(10,503
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,508
|
)
|
||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
3,096
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,096
|
|
||||||
Currency translation adjustment and derivative transactions, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,360
|
|
|
(13
|
)
|
|
4,347
|
|
||||||
BALANCE, March 31, 2017
|
33,604,854
|
|
|
$
|
336
|
|
|
$
|
159,191
|
|
|
$
|
460,933
|
|
|
$
|
(49,140
|
)
|
|
$
|
9,552
|
|
|
$
|
580,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
BALANCE, December 31, 2017
|
32,462,542
|
|
|
$
|
325
|
|
|
$
|
140,749
|
|
|
$
|
386,008
|
|
|
$
|
(32,836
|
)
|
|
$
|
10,810
|
|
|
$
|
505,056
|
|
Cumulative effect adjustment (see Revenues: Note 3)
|
—
|
|
|
—
|
|
|
—
|
|
|
268
|
|
|
—
|
|
|
—
|
|
|
268
|
|
||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,069
|
)
|
|
—
|
|
|
593
|
|
|
(1,476
|
)
|
||||||
Issuance of shares pursuant to restricted stock units
|
275,384
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Issuance of shares pursuant to performance units
|
296,909
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Issuance of shares pursuant to deferred stock unit awards
|
4,568
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares repurchased and retired
|
(571,580
|
)
|
|
(6
|
)
|
|
(13,670
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,676
|
)
|
||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
2,158
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,158
|
|
||||||
Currency translation adjustment and derivative transactions, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,662
|
|
|
53
|
|
|
2,715
|
|
||||||
BALANCE, March 31, 2018
|
32,467,823
|
|
|
$
|
325
|
|
|
$
|
129,237
|
|
|
$
|
384,207
|
|
|
$
|
(30,174
|
)
|
|
$
|
11,456
|
|
|
$
|
495,051
|
|
|
For the Quarters Ended
March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(1,476
|
)
|
|
$
|
7,753
|
|
Adjustments to reconcile to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
9,554
|
|
|
11,852
|
|
||
Gain on sale of fixed assets
|
(105
|
)
|
|
(116
|
)
|
||
Equity-based compensation expense
|
2,158
|
|
|
3,096
|
|
||
Deferred income taxes
|
(38
|
)
|
|
5,533
|
|
||
Non-cash restructuring charges
|
2,408
|
|
|
42
|
|
||
Loss on foreign currency transactions
|
315
|
|
|
378
|
|
||
Other
|
561
|
|
|
(62
|
)
|
||
Changes in operating assets and liabilities (net of acquisitions):
|
|
|
|
||||
Receivables net, retainage and contract assets
|
16,584
|
|
|
(30,257
|
)
|
||
Inventories
|
(2,223
|
)
|
|
(3,491
|
)
|
||
Prepaid expenses and other assets
|
6,657
|
|
|
5,351
|
|
||
Accounts payable and accrued expenses
|
(24,729
|
)
|
|
(9,988
|
)
|
||
Contract liabilities
|
(8,860
|
)
|
|
(18,078
|
)
|
||
Other operating
|
470
|
|
|
300
|
|
||
Net cash provided by (used in) operating activities
|
1,276
|
|
|
(27,687
|
)
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(5,189
|
)
|
|
(3,907
|
)
|
||
Proceeds from sale of fixed assets
|
284
|
|
|
165
|
|
||
Patent expenditures
|
(48
|
)
|
|
(289
|
)
|
||
Other acquisition activity, net of cash acquired
|
—
|
|
|
(9,045
|
)
|
||
Net cash used in investing activities
|
(4,953
|
)
|
|
(13,076
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Repurchase of common stock
|
(13,670
|
)
|
|
(10,508
|
)
|
||
Payment of contingent consideration
|
—
|
|
|
(500
|
)
|
||
Credit facility amendment fees
|
(1,093
|
)
|
|
—
|
|
||
Principal payments on notes payable
|
(568
|
)
|
|
—
|
|
||
Proceeds from line of credit, net
|
5,000
|
|
|
10,000
|
|
||
Principal payments on long-term debt
|
(6,563
|
)
|
|
(4,375
|
)
|
||
Net cash used in financing activities
|
(16,894
|
)
|
|
(5,383
|
)
|
||
Effect of exchange rate changes on cash
|
1,870
|
|
|
929
|
|
||
Net decrease in cash, cash equivalents and restricted cash for the period
|
(18,701
|
)
|
|
(45,217
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of year
|
108,545
|
|
|
134,392
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
89,844
|
|
|
89,175
|
|
||
Cash, cash equivalents and restricted cash associated with assets held for sale, end of period
|
(813
|
)
|
|
—
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
89,031
|
|
|
$
|
89,175
|
|
|
Quarter Ended
March 31, 2017
|
||
Revenues
|
$
|
326,057
|
|
Net income attributable to Aegion Corporation
(1)
|
5,698
|
|
|
Diluted earnings per share
|
$
|
0.17
|
|
(1)
|
Includes pro-forma adjustments for depreciation and amortization associated with acquired tangible and intangible assets, as if those assets were recorded at the beginning of the year preceding the acquisition date.
|
|
Environmental
Techniques
|
||
Receivables and cost and estimated earnings in excess of billings
|
$
|
801
|
|
Inventories
|
1,281
|
|
|
Prepaid expenses and other current assets
|
93
|
|
|
Property, plant and equipment
|
2,147
|
|
|
Identified intangible assets
|
1,869
|
|
|
Deferred income tax assets
|
124
|
|
|
Accounts payable
|
(1,025
|
)
|
|
Accrued expenses
|
(186
|
)
|
|
Deferred income tax liabilities
|
(413
|
)
|
|
Total identifiable net assets
|
$
|
4,691
|
|
|
|
||
|
|
||
Total consideration recorded
|
$
|
8,046
|
|
Less: total identifiable net assets
|
4,691
|
|
|
Final purchase price goodwill
|
$
|
3,355
|
|
|
March 31, 2018
|
|
December 31,
2017
|
||||
Currency translation adjustments
|
$
|
(33,928
|
)
|
|
$
|
(35,928
|
)
|
Derivative hedging activity
|
4,007
|
|
|
3,336
|
|
||
Pension activity
|
(253
|
)
|
|
(244
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(30,174
|
)
|
|
$
|
(32,836
|
)
|
|
Quarters Ended March 31,
|
||||
|
2018
|
|
2017
|
||
Weighted average number of common shares used for basic EPS
|
32,483,963
|
|
|
33,819,331
|
|
Effect of dilutive stock options and restricted and deferred stock unit awards
|
—
|
|
|
685,257
|
|
Weighted average number of common shares and dilutive potential common stock used in dilutive EPS
|
32,483,963
|
|
|
34,504,588
|
|
Balance sheet data
|
March 31,
2018 |
|
December 31,
2017 |
||||
Cash and cash equivalents
(1)
|
$
|
87,173
|
|
|
$
|
105,717
|
|
Restricted cash
|
1,858
|
|
|
1,839
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
89,031
|
|
|
$
|
107,556
|
|
(1)
|
Amounts exclude
$0.8 million
and
$1.0 million
of cash and cash equivalents classified as held for sale at March 31, 2018 and December 31, 2017, respectively.
|
Balance sheet data
|
March 31,
2018 (1) |
|
December 31,
2017 (2) |
||||
Current assets
|
$
|
41,877
|
|
|
$
|
42,732
|
|
Non-current assets
|
26,725
|
|
|
26,346
|
|
||
Current liabilities
|
12,275
|
|
|
12,449
|
|
||
Non-current liabilities
|
28,371
|
|
|
30,675
|
|
(1)
|
Amounts include
$25.2 million
of assets and
$9.3 million
of liabilities classified as held for sale relating to our pipe coating and insulation joint venture in Louisiana, Bayou Wasco Insulation, LLC. See Note 5.
|
(2)
|
Amounts include
$25.4 million
of assets and
$9.8 million
of liabilities classified as held for sale relating to our pipe coating and insulation joint venture in Louisiana, Bayou Wasco Insulation, LLC. See Note 5.
|
|
Quarters Ended March 31,
|
||||||
Income statement data
(1)
|
2018
|
|
2017
(1)
|
||||
Revenue
|
$
|
16,051
|
|
|
$
|
34,061
|
|
Gross profit
|
3,310
|
|
|
5,530
|
|
||
Net income attributable to Aegion Corporation
|
1,248
|
|
|
1,272
|
|
(1)
|
During the first quarter of 2017, increased activity was primarily driven from our joint venture in Louisiana, which performed work on a large deepwater pipe coating and insulation project.
|
|
Quarter Ended March 31, 2018
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Primary geographic region:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
93,845
|
|
|
$
|
63,858
|
|
|
$
|
92,329
|
|
|
$
|
250,032
|
|
Canada
|
12,269
|
|
|
16,570
|
|
|
—
|
|
|
28,839
|
|
||||
Europe
|
13,143
|
|
|
2,866
|
|
|
—
|
|
|
16,009
|
|
||||
Other foreign
|
15,170
|
|
|
14,811
|
|
|
—
|
|
|
29,981
|
|
||||
Total revenues
|
$
|
134,427
|
|
|
$
|
98,105
|
|
|
$
|
92,329
|
|
|
$
|
324,861
|
|
|
Quarter Ended March 31, 2017
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Primary geographic region:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
93,904
|
|
|
$
|
90,903
|
|
|
$
|
72,917
|
|
|
$
|
257,724
|
|
Canada
|
10,817
|
|
|
16,010
|
|
|
—
|
|
|
26,827
|
|
||||
Europe
|
12,960
|
|
|
3,185
|
|
|
—
|
|
|
16,145
|
|
||||
Other foreign
|
11,187
|
|
|
13,292
|
|
|
—
|
|
|
24,479
|
|
||||
Total revenues
|
$
|
128,868
|
|
|
$
|
123,390
|
|
|
$
|
72,917
|
|
|
$
|
325,175
|
|
|
Quarter Ended March 31, 2018
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Contract type:
|
|
|
|
|
|
|
|
||||||||
Fixed fee
|
$
|
125,263
|
|
|
$
|
77,901
|
|
|
$
|
5,757
|
|
|
$
|
208,921
|
|
Time and materials
|
—
|
|
|
13,107
|
|
|
86,572
|
|
|
99,679
|
|
||||
Product sales
|
9,144
|
|
|
7,097
|
|
|
—
|
|
|
16,241
|
|
||||
License fees
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total revenues
|
$
|
134,427
|
|
|
$
|
98,105
|
|
|
$
|
92,329
|
|
|
$
|
324,861
|
|
|
Quarter Ended March 31, 2017
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Contract type:
|
|
|
|
|
|
|
|
||||||||
Fixed fee
|
$
|
118,998
|
|
|
$
|
98,520
|
|
|
$
|
1,507
|
|
|
$
|
219,025
|
|
Time and materials
|
—
|
|
|
11,476
|
|
|
71,410
|
|
|
82,886
|
|
||||
Product sales
|
9,714
|
|
|
13,394
|
|
|
—
|
|
|
23,108
|
|
||||
License fees
|
156
|
|
|
—
|
|
|
—
|
|
|
156
|
|
||||
Total revenues
|
$
|
128,868
|
|
|
$
|
123,390
|
|
|
$
|
72,917
|
|
|
$
|
325,175
|
|
|
March 31,
2018
|
|
December 31,
2017
|
||||
Contract assets – current
|
$
|
81,052
|
|
|
$
|
75,371
|
|
Contract assets – noncurrent
(1)
|
11
|
|
|
—
|
|
||
Contract liabilities – current
|
(45,139
|
)
|
|
(51,597
|
)
|
||
Net contract assets (liabilities)
|
$
|
35,924
|
|
|
$
|
23,774
|
|
(1)
|
Included in “Other assets” on the Consolidated Balance Sheets.
|
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Total
|
||||||
Severance and benefit related costs
|
$
|
865
|
|
|
$
|
206
|
|
|
$
|
1,071
|
|
Lease and contract termination costs
|
528
|
|
|
150
|
|
|
678
|
|
|||
Relocation and other moving costs
|
40
|
|
|
—
|
|
|
40
|
|
|||
Other restructuring costs
(1)
|
2,100
|
|
|
1,355
|
|
|
3,455
|
|
|||
Total pre-tax restructuring charges
(2)
|
$
|
3,533
|
|
|
$
|
1,711
|
|
|
$
|
5,244
|
|
(1)
|
Includes charges primarily related to certain wind-down costs, allowances for accounts receivable and other restructuring-related costs in connection with exiting non-pipe-related contract applications for the Tyfo
®
system in North America.
|
(2)
|
Includes
$0.6 million
of corporate-related restructuring charges that have been allocated to the Infrastructure Solutions and Corrosion Protection reportable segments.
|
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Total
(1)
|
||||||
Operating expenses
|
$
|
2,100
|
|
|
$
|
1,355
|
|
|
$
|
3,455
|
|
Restructuring and related charges
|
1,433
|
|
|
356
|
|
|
1,789
|
|
|||
Total pre-tax restructuring charges
|
$
|
3,533
|
|
|
$
|
1,711
|
|
|
$
|
5,244
|
|
(1)
|
Total pre-tax restructuring charges include cash charges of
$2.8 million
and non-cash charges of
$2.4 million
. Cash charges consist of charges incurred during the quarter that will be settled in cash, either during the current period or future periods.
|
|
Reserves at
December 31,
2017
|
|
2018
Charge to Income |
|
Foreign Currency Translation
|
|
Utilized in 2018
|
|
Reserves at
March 31, 2018 |
||||||||||||||
|
|
|
|
Cash
(1)
|
|
Non-Cash
|
|
||||||||||||||||
Severance and benefit related costs
|
$
|
3,864
|
|
|
$
|
1,071
|
|
|
$
|
20
|
|
|
$
|
2,305
|
|
|
$
|
—
|
|
|
$
|
2,650
|
|
Lease and contract termination costs
|
650
|
|
|
678
|
|
|
—
|
|
|
793
|
|
|
—
|
|
|
535
|
|
||||||
Relocation and other moving costs
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
||||||
Other restructuring costs
|
675
|
|
|
3,455
|
|
|
—
|
|
|
1,272
|
|
|
2,408
|
|
|
450
|
|
||||||
Total pre-tax restructuring charges
|
$
|
5,189
|
|
|
$
|
5,244
|
|
|
$
|
20
|
|
|
$
|
4,410
|
|
|
$
|
2,408
|
|
|
$
|
3,635
|
|
(1)
|
Refers to cash utilized to settle charges during the first quarter of 2018.
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
Assets held for sale:
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
813
|
|
|
$
|
989
|
|
Receivables, net
|
8,143
|
|
|
6,368
|
|
||
Contract assets
|
1,371
|
|
|
1,299
|
|
||
Inventories
|
3,541
|
|
|
3,727
|
|
||
Prepaid expenses and other current assets
|
763
|
|
|
827
|
|
||
Total current assets
|
14,631
|
|
|
13,210
|
|
||
Property, plant & equipment, less accumulated depreciation
|
54,835
|
|
|
53,887
|
|
||
Identified intangible assets, less accumulated amortization
|
3,217
|
|
|
3,217
|
|
||
Total assets held for sale
|
$
|
72,683
|
|
|
$
|
70,314
|
|
|
|
|
|
||||
Liabilities held for sale:
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
2,249
|
|
|
$
|
5,763
|
|
Accrued expenses
|
1,543
|
|
|
1,805
|
|
||
Contract liabilities
|
3,076
|
|
|
5,478
|
|
||
Total current liabilities
|
6,868
|
|
|
13,046
|
|
||
Long-term debt
|
7,757
|
|
|
7,757
|
|
||
Other non-current liabilities
|
106
|
|
|
97
|
|
||
Total liabilities held for sale
|
$
|
14,731
|
|
|
$
|
20,900
|
|
|
Infrastructure
Solutions |
|
Corrosion
Protection |
|
Energy
Services |
|
Total
|
||||||||
Balance, December 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
$
|
246,486
|
|
|
$
|
74,369
|
|
|
$
|
80,246
|
|
|
$
|
401,101
|
|
Accumulated impairment losses
|
(61,459
|
)
|
|
(45,400
|
)
|
|
(33,527
|
)
|
|
(140,386
|
)
|
||||
Goodwill, net
|
185,027
|
|
|
28,969
|
|
|
46,719
|
|
|
260,715
|
|
||||
2018 Activity:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
572
|
|
|
(269
|
)
|
|
—
|
|
|
303
|
|
||||
Balance, March 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
247,058
|
|
|
74,100
|
|
|
80,246
|
|
|
401,404
|
|
||||
Accumulated impairment losses
|
(61,459
|
)
|
|
(45,400
|
)
|
|
(33,527
|
)
|
|
(140,386
|
)
|
||||
Goodwill, net
|
$
|
185,599
|
|
|
$
|
28,700
|
|
|
$
|
46,719
|
|
|
$
|
261,018
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||
|
Weighted
Average
Useful Lives
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
License agreements
|
10.8
|
|
$
|
4,511
|
|
|
$
|
(3,667
|
)
|
|
$
|
844
|
|
|
$
|
4,497
|
|
|
$
|
(3,623
|
)
|
|
$
|
874
|
|
Leases
|
2.8
|
|
796
|
|
|
(556
|
)
|
|
240
|
|
|
796
|
|
|
(534
|
)
|
|
262
|
|
||||||
Trademarks
|
10.2
|
|
15,494
|
|
|
(6,508
|
)
|
|
8,986
|
|
|
15,464
|
|
|
(6,184
|
)
|
|
9,280
|
|
||||||
Non-competes
|
2.0
|
|
1,201
|
|
|
(1,075
|
)
|
|
126
|
|
|
1,197
|
|
|
(1,048
|
)
|
|
149
|
|
||||||
Customer relationships
|
9.7
|
|
160,543
|
|
|
(59,638
|
)
|
|
100,905
|
|
|
160,423
|
|
|
(56,907
|
)
|
|
103,516
|
|
||||||
Patents and acquired technology
|
6.0
|
|
39,100
|
|
|
(21,380
|
)
|
|
17,720
|
|
|
39,285
|
|
|
(21,021
|
)
|
|
18,264
|
|
||||||
|
|
|
$
|
221,645
|
|
|
$
|
(92,824
|
)
|
|
$
|
128,821
|
|
|
$
|
221,662
|
|
|
$
|
(89,317
|
)
|
|
$
|
132,345
|
|
2018
|
|
$
|
13,770
|
|
2019
|
|
13,572
|
|
|
2020
|
|
13,518
|
|
|
2021
|
|
13,335
|
|
|
2022
|
|
13,335
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Term note, due February 27, 2023, annualized rates of 3.98% and 3.60%, respectively
|
$
|
301,875
|
|
|
$
|
308,437
|
|
Line of credit, 3.82% and 3.50%, respectively
|
43,000
|
|
|
38,000
|
|
||
Other notes with interest rates from 3.3% to 7.8%
|
330
|
|
|
875
|
|
||
Subtotal
|
345,205
|
|
|
347,312
|
|
||
Less – Current maturities of long-term debt
|
26,557
|
|
|
26,555
|
|
||
Less – Unamortized loan costs
|
3,019
|
|
|
2,517
|
|
||
Total
|
$
|
315,629
|
|
|
$
|
318,240
|
|
•
|
Consolidated financial leverage ratio compares consolidated funded indebtedness to amended Credit Facility defined income with a maximum amount not to exceed
3.75
to 1.00. At
March 31, 2018
, the Company’s consolidated financial leverage ratio was
3.15
to 1.00 and, using the amended Credit Facility defined income, the Company had the capacity to borrow up to
$68.2 million
of additional debt.
|
•
|
Consolidated fixed charge coverage ratio compares amended Credit Facility defined income to amended Credit Facility defined fixed charges with a minimum permitted ratio of not less than
1.15
to 1.00. At
March 31, 2018
, the Company’s fixed charge ratio was
1.44
to 1.00.
|
|
Quarter Ended
March 31, 2018 |
|||||
|
Stock Awards
|
|
Weighted
Average
Award Date
Fair Value
|
|||
Outstanding at December 31, 2017
|
1,428,878
|
|
|
$
|
21.53
|
|
Restricted stock units awarded
|
245,886
|
|
|
24.12
|
|
|
Performance stock units awarded
|
219,943
|
|
|
23.25
|
|
|
Restricted stock units distributed
|
(275,384
|
)
|
|
17.29
|
|
|
Performance stock units distributed
|
(296,909
|
)
|
|
21.55
|
|
|
Restricted stock units forfeited
|
(12,207
|
)
|
|
19.73
|
|
|
Performance stock units forfeited
|
(11,801
|
)
|
|
25.83
|
|
|
Outstanding at March 31, 2018
|
1,298,406
|
|
|
$
|
23.19
|
|
|
Quarter Ended
March 31, 2018 |
|||||
|
Deferred
Stock
Units
|
|
Weighted
Average
Award Date
Fair Value
|
|||
Outstanding at December 31, 2017
|
269,977
|
|
|
$
|
20.14
|
|
Awarded
|
1,900
|
|
|
25.40
|
|
|
Distributed
|
(4,568
|
)
|
|
22.33
|
|
|
Outstanding at March 31, 2018
|
267,309
|
|
|
$
|
20.14
|
|
|
Quarter Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
Aggregate intrinsic value of outstanding stock options
|
$
|
253
|
|
|
$
|
444
|
|
Aggregate intrinsic value of exercisable stock options
|
253
|
|
|
444
|
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenues:
|
|
|
|
||||
Infrastructure Solutions
|
$
|
134,427
|
|
|
$
|
128,868
|
|
Corrosion Protection
|
98,105
|
|
|
123,390
|
|
||
Energy Services
|
92,329
|
|
|
72,917
|
|
||
Total revenues
|
$
|
324,861
|
|
|
$
|
325,175
|
|
|
|
|
|
||||
Gross profit:
|
|
|
|
||||
Infrastructure Solutions
|
$
|
26,709
|
|
|
$
|
31,251
|
|
Corrosion Protection
|
23,576
|
|
|
27,963
|
|
||
Energy Services
|
11,219
|
|
|
8,198
|
|
||
Total gross profit
|
$
|
61,504
|
|
|
$
|
67,412
|
|
|
|
|
|
||||
Operating income (loss):
|
|
|
|
||||
Infrastructure Solutions
(1)
|
$
|
(349
|
)
|
|
$
|
5,610
|
|
Corrosion Protection
(2)
|
822
|
|
|
7,212
|
|
||
Energy Services
|
2,708
|
|
|
1,311
|
|
||
Total operating income
|
3,181
|
|
|
14,133
|
|
||
Other income (expense):
|
|
|
|
||||
Interest expense
|
(5,443
|
)
|
|
(4,047
|
)
|
||
Interest income
|
47
|
|
|
49
|
|
||
Other
|
(262
|
)
|
|
(387
|
)
|
||
Total other expense
|
(5,658
|
)
|
|
(4,385
|
)
|
||
Income (loss) before taxes on income
|
$
|
(2,477
|
)
|
|
$
|
9,748
|
|
(1)
|
Operating loss in the first quarter of 2018 includes
$3.5 million
of 2017 Restructuring charges (see Note 4). Operating income in the first quarter of 2017 includes
$0.5 million
of costs incurred primarily related to the acquisition of Environmental Techniques.
|
(2)
|
Operating income in the first quarter of 2018 includes
$1.7 million
of 2017 Restructuring charges (see Note 4) and
$0.4 million
of costs incurred primarily related to the planned divestiture of Bayou.
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenues
(1)
:
|
|
|
|
||||
United States
|
$
|
250,032
|
|
|
$
|
257,724
|
|
Canada
|
28,839
|
|
|
26,827
|
|
||
Europe
|
16,009
|
|
|
16,145
|
|
||
Other foreign
|
29,981
|
|
|
24,479
|
|
||
Total revenues
|
$
|
324,861
|
|
|
$
|
325,175
|
|
|
|
|
|
||||
Gross profit:
|
|
|
|
||||
United States
|
$
|
49,562
|
|
|
$
|
56,032
|
|
Canada
|
4,775
|
|
|
4,514
|
|
||
Europe
|
1,134
|
|
|
3,159
|
|
||
Other foreign
|
6,033
|
|
|
3,707
|
|
||
Total gross profit
|
$
|
61,504
|
|
|
$
|
67,412
|
|
|
|
|
|
||||
Operating income (loss):
|
|
|
|
||||
United States
|
$
|
4,913
|
|
|
$
|
12,517
|
|
Canada
|
1,153
|
|
|
1,460
|
|
||
Europe
|
(2,445
|
)
|
|
408
|
|
||
Other foreign
|
(440
|
)
|
|
(252
|
)
|
||
Total operating income
|
$
|
3,181
|
|
|
$
|
14,133
|
|
(1)
|
Revenues are attributed to the country of origin for the Company’s legal entities. For a significant majority of its legal entities, the country of origin relates to the country or geographic area that it services.
|
|
Position
|
|
Notional
Amount
|
|
Weighted
Average
Remaining
Maturity
In Years
|
|
Average
Exchange
Rate
|
||
USD/British Pound
|
Sell
|
|
£
|
1,761,800
|
|
|
0.3
|
|
1.41
|
EURO/British Pound
|
Sell
|
|
£
|
2,568,300
|
|
|
0.3
|
|
1.14
|
USD/South African Rand
|
Sell
|
|
R
|
5,747,262
|
|
|
0.1
|
|
0.08
|
Interest Rate Swap
|
|
|
$
|
226,406,250
|
|
|
4.8
|
|
|
•
|
Level 1 – defined as quoted prices in active markets for identical instruments;
|
•
|
Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable;
|
•
|
Level 3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
|
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Infrastructure Solutions
|
$
|
349.2
|
|
|
$
|
328.9
|
|
|
$
|
317.1
|
|
Corrosion Protection
(1)
|
155.6
|
|
|
155.7
|
|
|
188.9
|
|
|||
Energy Services
(2)
|
215.6
|
|
|
207.8
|
|
|
206.3
|
|
|||
Total backlog
(1)
|
$
|
720.4
|
|
|
$
|
692.4
|
|
|
$
|
712.3
|
|
(1)
|
March 31, 2018
, December 31, 2017 and
March 31, 2017
included backlog from our large, domestic deepwater pipe coating and insulation contract of
$2.0 million
,
$3.5 million
and
$51.7 million
, respectively.
|
(2)
|
Represents expected unrecognized revenues to be realized under long-term MSAs and other signed contracts. If the remaining term of these arrangements exceeds 12 months, the unrecognized revenues attributable to such arrangements included in backlog are limited to only the next 12 months of expected revenues.
|
(dollars in thousands)
|
Quarters Ended March 31,
|
|
Increase (Decrease)
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
Revenues
|
$
|
98,105
|
|
|
$
|
123,390
|
|
|
$
|
(25,285
|
)
|
|
(20.5
|
)%
|
Gross profit
|
23,576
|
|
|
27,963
|
|
|
(4,387
|
)
|
|
(15.7
|
)
|
|||
Gross profit margin
|
24.0
|
%
|
|
22.7
|
%
|
|
N/A
|
|
|
130
|
bp
|
|||
Operating expenses
|
22,039
|
|
|
20,751
|
|
|
1,288
|
|
|
6.2
|
|
|||
Acquisition and divestiture expenses
|
359
|
|
|
—
|
|
|
359
|
|
|
N/M
|
|
|||
Restructuring and related charges
|
356
|
|
|
—
|
|
|
356
|
|
|
N/M
|
|
|||
Operating income
|
822
|
|
|
7,212
|
|
|
(6,390
|
)
|
|
(88.6
|
)
|
|||
Operating margin
|
0.8
|
%
|
|
5.8
|
%
|
|
N/A
|
|
|
(500
|
)bp
|
(dollars in thousands)
|
Quarters Ended March 31,
|
|
Increase (Decrease)
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
Revenues
|
$
|
92,329
|
|
|
$
|
72,917
|
|
|
$
|
19,412
|
|
|
26.6
|
%
|
Gross profit
|
11,219
|
|
|
8,198
|
|
|
3,021
|
|
|
36.9
|
|
|||
Gross profit margin
|
12.2
|
%
|
|
11.2
|
%
|
|
N/A
|
|
|
100
|
bp
|
|||
Operating expenses
|
8,511
|
|
|
6,887
|
|
|
1,624
|
|
|
23.6
|
|
|||
Operating income
|
2,708
|
|
|
1,311
|
|
|
1,397
|
|
|
106.6
|
|
|||
Operating margin
|
2.9
|
%
|
|
1.8
|
%
|
|
N/A
|
|
|
110
|
bp
|
(in thousands)
|
March 31, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
87,173
|
|
|
$
|
105,717
|
|
Restricted cash
|
1,858
|
|
|
1,839
|
|
|
|
Total Number of Shares (or Units) Purchased
|
|
Average Price Paid per Share (or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
|
||||||||
January 2018
(1) (2)
|
|
76,148
|
|
|
|
$
|
25.61
|
|
|
|
69,300
|
|
|
$
|
28,227,784
|
|
February 2018
(1) (2)
|
|
325,904
|
|
|
|
24.13
|
|
|
|
124,035
|
|
|
25,237,042
|
|
||
March 2018
(1) (2)
|
|
169,528
|
|
|
|
22.75
|
|
|
|
160,496
|
|
|
21,585,486
|
|
||
Total
|
|
571,580
|
|
|
|
$
|
23.92
|
|
|
|
353,831
|
|
|
|
(1)
|
In October 2017, our board of directors authorized the open market repurchase of up to $40.0 million of our common stock to be made during 2018. That authorization was reduced to $30.0 million in 2018 in connection with the recent amendment to our Credit Facility. Any shares repurchased will be pursuant to one or more 10b5-1 plans. The program will expire on the earlier of: (i) December 31, 2018; (ii) the repurchase by the Company of $30.0 million of common stock pursuant to the program; or (iii) the board of director’s termination of the program. We began repurchasing shares under this program in January 2018. Once repurchased, we promptly retire the shares.
|
(2)
|
In connection with approval of our credit facility, our board of directors approved the purchase of up to $10.0 million of our common stock in each calendar year in connection with our equity compensation programs for employees and directors. The number of shares purchased includes shares surrendered to us to pay the exercise price and/or to satisfy tax withholding obligations in connection with “net, net” exercises of employee stock options and/or the vesting of restricted stock, restricted stock units or performance units issued to employees. For the quarter ended
March 31, 2018
,
217,749
shares were surrendered in connection with restricted stock unit and performance unit transactions. The deemed price paid was the closing price of our common stock on the Nasdaq Global Select Market on the date that the restricted stock units or performance units vested. Once repurchased, we promptly retire the shares.
|
|
AEGION CORPORATION
|
|
|
Date: May 3, 2018
|
/s/ David F. Morris
|
|
David F. Morris
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
10.6
|
|
|
|
10.7
|
|
|
|
10.8
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
95
|
|
|
|
101.INS
|
XBRL Instance Document*
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
*
|
In accordance with Rule 406T under Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed “furnished” and not “filed”.
|
|
|
Name:
Award Date:
Deferred Stock Units:
|
|
By:
|
|
(Name)
|
|
Mark A. Menghini, Senior Vice President,
Interim General Counsel and Secretary
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Aegion Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
/s/ Charles R. Gordon
|
Charles R. Gordon
President and Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Aegion Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
/s/ David F. Morris
|
David F. Morris
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
(1)
|
the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Charles R. Gordon
|
Charles R. Gordon
President and Chief Executive Officer
(Principal Executive Officer)
|
(1)
|
the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ David F. Morris
|
David F. Morris
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |