Aegion Corporation
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(Exact name of registrant as specified in its charter)
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Delaware
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45-3117900
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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17988 Edison Avenue, Chesterfield, Missouri
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63005-1195
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (636) 530-8000
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 4A.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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i.
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On October 30, 2018, we executed a sale agreement for substantially all of the fixed assets and inventory from our CIPP operations in Denmark. In connection with the sale, we entered into a five-year exclusive tube-supply agreement whereby the buyers will exclusively purchase our Insituform
®
CIPP liners. The buyers will also be entitled to use the Insituform
®
trade name based on a trademark license granted for the same five-year time period.
|
ii.
|
On August 31, 2018, we sold substantially all of the assets of Bayou and our ownership interest in Bayou Wasco Insulation LLC, which collectively had been held for sale as part of the 2017 Restructuring and reflected our desire to reduce further our exposure in the North American upstream oil and gas markets.
|
iii.
|
On May 14, 2018, our board of directors approved plans to divest the assets and liabilities of our CIPP operations in Australia. While restructuring actions in Australia led to year-over-year improvements in operating results in 2018, an assessment of the long-term fit within Aegion’s portfolio led to the decision to divest the business. A sales process is under way and management expects that a sale will occur in the first half of 2019.
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iv.
|
In February 2016, we sold our fifty-one percent (51%) interest in BPPC to our joint venture partner, Perma-Pipe, Inc. BPPC served as our pipe coating and insulation operation in Canada. The sale of our interest in BPPC was part of a broader effort to reduce our exposure in the North American upstream market.
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v.
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During the first quarter of 2019, we entered into discussions with prospective buyers regarding the sale of our interests in Corrpower International Limited and Aegion South Africa Proprietary Limited. If the discussions are successful, we expect to close the transactions in the first half of 2019.
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•
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Diversion of management time and focus from operating our business to acquisition integration challenges.
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•
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Failure to successfully operate and further develop the acquired business or technology.
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•
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Implementation or remediation of controls, procedures and policies at the acquired company.
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•
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Integration of the acquired company’s accounting, human resource and other administrative systems, and coordination of product, engineering and sales and marketing functions.
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•
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Transition of operations, users and customers onto our existing platforms.
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•
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Failure to obtain required approvals or consents on a timely basis, if at all, including from governmental authorities or contractual counter-parties, or conditions placed upon approval or consent, including under competition and antitrust laws, which could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of an acquisition.
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•
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In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries.
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•
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Cultural challenges associated with integrating employees from the acquired company into our organization, and retention of key employees from the businesses we acquire.
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•
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Liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities.
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•
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Assumption of contracts with terms, including, without limitation, terms relating to liability, waiver of damages and indemnification, that are not consistent with our normal contracting practices.
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•
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Litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
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•
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market prices of mined minerals, oil and natural gas and expectations about future prices;
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•
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cost of producing mined minerals, oil and natural gas;
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•
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the level of mining, drilling and production activity;
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•
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the discovery rate of new oil and gas reserves;
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•
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mergers, consolidations and downsizing among our clients;
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•
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coordination by various oil-producing countries, including the Organization of Petroleum Exporting Countries (OPEC);
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•
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the output and willingness to export of certain oil-producing countries;
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•
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the impact of commodity prices on the expenditure levels of our clients;
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•
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financial condition of our client base and their ability to fund capital and maintenance expenditures;
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•
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political instability in oil-producing countries;
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•
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tax incentives, including for alternative energy sources;
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•
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domestic and worldwide economic conditions;
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•
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adverse weather conditions, including those that can affect mining, oil or natural gas operations over a wide area;
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•
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availability of energy sources other than oil and gas;
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•
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level of consumption of minerals, oil, natural gas and petrochemicals by consumers, including the effects of increased regulation, conservation measures and technological advances affecting energy consumption; and
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•
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availability of services and materials for our clients to grow their capital expenditures.
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•
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all subject workers must be paid the applicable prevailing wage rate;
|
•
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all subject workers must be either “skilled journeymen” or “registered apprentices”; and
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•
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at least 60% of skilled journeypersons on the project must be graduates of certified apprenticeship programs.
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•
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difficulties in enforcing agreements, collecting receivables and resolving disputes through some foreign legal systems;
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•
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foreign customers with longer payment cycles than customers in the United States;
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•
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difficulties in enforcing intellectual property rights or weaker intellectual property right protections in some countries;
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•
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tax rates in certain foreign countries that exceed those in the United States and foreign earnings subject to withholding requirements;
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•
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tax laws that restrict our ability to use tax credits, offset gains or repatriate funds;
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•
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tax laws that impose additional taxes on our operations, including the implementation of value added tax in certain countries in the Middle East;
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•
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sanctions, tariffs, exchange controls, trade disputes (including so-called “trade wars”) or other trade restrictions, including transfer pricing restrictions, when products produced in one country are sold to an affiliated entity in another country;
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•
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difficulties with regard to, or taxes imposed on, the movement of cash between countries, including the repatriation of cash back to the United States;
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•
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abrupt changes in foreign government policies and regulations;
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•
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unsettled political conditions;
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•
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acts of terrorism or criminality;
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•
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kidnapping of employees;
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•
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nationalization or privatization of companies with which we do business;
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•
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protectionist policies in certain foreign countries, including those in the Middle East, that disfavor foreign companies operating in such countries;
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•
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forced negotiation or modification of contracts;
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•
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increased governmental ownership and regulation of markets in which we operate;
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•
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the financial instability of, and the related inability or unwillingness to timely pay for our services by, national oil companies and other foreign customers resulting from, and/or exacerbated by, depressed oil prices;
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•
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hostility from local populations, particularly in the Middle East;
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•
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tenuous, unstable or hostile relationships between countries that are interconnected in our operations; and
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•
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difficulties associated with compliance with a variety of laws and regulations governing international trade, including the Foreign Corrupt Practices Act.
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•
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supervising the bidding process, including providing estimates of significant cost components, such as material and equipment needs, and the size, productivity and composition of the workforce;
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•
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negotiating contracts;
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•
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supervising project performance, including performance by our employees, subcontractors and other third-party suppliers and vendors;
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•
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estimating costs for completion of contracts that is used to estimate amounts that can be reported as revenues and earnings on the contract under the percentage-of-completion method of accounting;
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•
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negotiating requests for change orders and the final terms of approved change orders; and
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•
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determining and documenting claims by us for increased costs incurred due to the failure of customers, subcontractors and other third-party suppliers of equipment and materials to perform on a timely basis and in accordance with contract terms.
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•
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our estimate of the headcount requirements for various units based on our forecast of the demand for our products and services;
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•
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our ability to maintain our talent base and manage attrition;
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•
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our ability to schedule our portfolio of projects to efficiently utilize our employees and minimize downtime between project assignments; and
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•
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our need to invest time and resources into functions such as training, business development, employee recruiting, and sales that are not chargeable to customer projects.
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•
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actual or perceived disruption of service or reduction in service standards to customers;
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•
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the failure to preserve supplier relationships and distribution, sales and other important relationships and to resolve conflicts that may arise;
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•
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attrition beyond our intended reduction in headcount and reduced employee morale, which may cause our employees who were not affected by the 2017 Restructuring to seek alternate employment;
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•
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increased risk of employment litigation; and
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•
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diversion of management attention from ongoing business activities.
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•
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actual or anticipated variations in quarterly operating results;
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•
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changes in financial estimates by securities analysts that cover our stock or our failure to meet these estimates;
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•
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conditions or trends in the U.S. wastewater rehabilitation market;
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•
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conditions or trends in mined materials, oil and natural gas markets;
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•
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changes in municipal and corporate spending practices;
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•
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a downturn of the municipal bond market or lending markets generally;
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•
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changes in the federal or state governments that impact regulation and spending regarding energy and infrastructure;
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•
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changes in market valuations of other companies operating in our industries;
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•
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announcements by us or our competitors of a significant acquisition or divestiture; and
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•
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additions or departures of key personnel.
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Charles R. Gordon
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61
|
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President and Chief Executive Officer
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David F. Morris
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57
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Executive Vice President and Chief Financial Officer
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Stephen P. Callahan
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52
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Senior Vice President, Human Resources
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Mark A. Menghini
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46
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Senior Vice President, General Counsel and Secretary
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Kenneth L. Young
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67
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Senior Vice President, Corporate Controller, Chief Accounting Officer and Treasurer
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Plan Category
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Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
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Weighted-average exercise price of outstanding options, warrants and rights
(b)
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Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in
column (a))
(c)
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Equity compensation plans approved by security holders
(1)
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1,483,338
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$
|
22.60
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2,820,947
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Equity compensation plans not approved by security holders
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—
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|
—
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—
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Total
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1,483,338
|
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$
|
22.60
|
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2,820,947
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(1)
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The number of securities to be issued upon exercise of granted/awarded options, warrants and rights includes: (i)
52,783
stock options; (ii)
1,143,205
restricted stock, restricted stock units and restricted performance units; and (iii)
287,350
deferred stock units outstanding at
December 31, 2018
.
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Total Number of Shares (or Units) Purchased
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Average Price Paid per Share (or Unit)
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Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
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Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
|
||||||||
January 2018
(1) (2)
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76,148
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$
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25.61
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|
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69,300
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$
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28,227,784
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February 2018
(1) (2)
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325,904
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|
|
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24.13
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|
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124,035
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25,237,042
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March 2018
(1) (2)
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169,528
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|
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22.75
|
|
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160,496
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21,585,486
|
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April 2018
(1) (2)
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|
68,059
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|
|
|
23.30
|
|
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|
68,059
|
|
|
20,000,035
|
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May 2018
(1) (2)
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|
78,167
|
|
|
|
24.88
|
|
|
|
71,942
|
|
|
18,205,419
|
|
||
June 2018
(1) (2)
|
|
54,366
|
|
|
|
25.79
|
|
|
|
54,366
|
|
|
16,803,327
|
|
||
July 2018
(2)
|
|
726
|
|
|
|
25.69
|
|
|
|
—
|
|
|
16,803,327
|
|
||
August 2018
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
16,803,327
|
|
||
September 2018
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
16,803,327
|
|
||
October 2018
|
|
—
|
|
|
|
—
|
|
|
|
|
|
16,803,327
|
|
|||
November 2018
(1) (2)
|
|
152,527
|
|
|
|
18.95
|
|
|
|
149,570
|
|
|
13,970,661
|
|
||
December 2018
(1) (2)
|
|
252,107
|
|
|
|
16.91
|
|
|
|
251,696
|
|
|
(3)
|
|||
Total
|
|
1,177,532
|
|
|
|
$
|
21.89
|
|
|
|
949,464
|
|
|
|
(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 an amendment to our Credit Facility. Any shares repurchased were pursuant to one or more 10b5-1 plans. We began repurchasing shares under this program in January 2018 and ceased on December 31, 2018 due to expiration of the program. Once repurchased, we promptly retired 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. During 2018, zero shares were surrendered in connection with stock swap transactions and
228,068
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 retired the shares.
|
(3)
|
In December 2018, our board of directors authorized the open market repurchase of up to two million shares of our common stock beginning January 1, 2019. Any shares repurchased will be pursuant to one or more 10b5-1 plans. The program will expire on the earlier of the repurchase by the Company of two million shares of common stock pursuant to the program or the board of directors’ termination of the program. In December 2018, we amended our senior secured credit facility, which limits the open market repurchase of our common stock to be made during 2019 to $32.0 million.
|
Actuant Corporation
|
Matrix Service Company
|
Barnes Group, Inc.
|
McDermott International Inc.
|
CIRCOR International, Inc.
|
Mistras Group, Inc.
|
Dril-Quip, Inc.
|
Newpark Resources, Inc.
|
Forum Energy Technologies, Inc.
|
Oil States International Inc.
|
Granite Construction Incorporated
|
Team, Inc.
|
Helix Energy Solutions Group, Inc.
|
Tetra Tech, Inc.
|
Kennametal, Inc.
|
Valmont Industries, Inc.
|
MasTec, Inc.
|
Willbros Group, Inc.
|
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
Aegion Corporation
|
|
$
|
100.00
|
|
|
$
|
85.02
|
|
|
$
|
88.21
|
|
|
$
|
108.27
|
|
|
$
|
116.17
|
|
|
$
|
74.55
|
|
S&P 500 Total Returns
|
|
100.00
|
|
|
113.69
|
|
|
115.26
|
|
|
129.05
|
|
|
157.22
|
|
|
150.33
|
|
||||||
Peer Group
|
|
100.00
|
|
|
78.45
|
|
|
59.17
|
|
|
85.22
|
|
|
89.48
|
|
|
63.51
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(In thousands, except per share amounts)
|
|
2018
(1)
|
|
2017
(2)
|
|
2016
(3)
|
|
2015
(4)
|
|
2014
(5)
|
||||||||||
STATEMENT OF OPERATIONS DATA:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,333,568
|
|
|
$
|
1,359,019
|
|
|
$
|
1,221,920
|
|
|
$
|
1,333,570
|
|
|
$
|
1,331,421
|
|
Operating income (loss)
|
|
29,647
|
|
|
(43,520
|
)
|
|
50,791
|
|
|
17,729
|
|
|
(20,715
|
)
|
|||||
Income (loss) from continuing operations
(6)
|
|
2,928
|
|
|
(69,401
|
)
|
|
29,453
|
|
|
(10,284
|
)
|
|
(34,223
|
)
|
|||||
Loss from discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,847
|
)
|
|||||
Net income (loss)
(6)
|
|
2,928
|
|
|
(69,401
|
)
|
|
29,453
|
|
|
(10,284
|
)
|
|
(38,070
|
)
|
|||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) from continuing operations
(6)
|
|
0.09
|
|
|
(2.09
|
)
|
|
0.85
|
|
|
(0.28
|
)
|
|
(0.91
|
)
|
|||||
Loss from discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.10
|
)
|
|||||
Net income (loss)
(6)
|
|
0.09
|
|
|
(2.09
|
)
|
|
0.85
|
|
|
(0.28
|
)
|
|
(1.01
|
)
|
|||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) from continuing operations
(6)
|
|
0.09
|
|
|
(2.09
|
)
|
|
0.84
|
|
|
(0.28
|
)
|
|
(0.91
|
)
|
|||||
Loss from discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.10
|
)
|
|||||
Net income (loss)
(6)
|
|
0.09
|
|
|
(2.09
|
)
|
|
0.84
|
|
|
(0.28
|
)
|
|
(1.01
|
)
|
|||||
BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
$
|
83,527
|
|
|
$
|
105,717
|
|
|
$
|
129,500
|
|
|
$
|
209,253
|
|
|
$
|
174,965
|
|
Working capital, net of cash
|
|
178,690
|
|
|
219,673
|
|
|
172,136
|
|
|
171,176
|
|
|
198,834
|
|
|||||
Current assets
(7)
|
|
481,867
|
|
|
587,064
|
|
|
532,237
|
|
|
678,196
|
|
|
638,122
|
|
|||||
Property, plant and equipment, net
|
|
107,059
|
|
|
109,040
|
|
|
156,747
|
|
|
144,833
|
|
|
168,213
|
|
|||||
Goodwill
|
|
260,633
|
|
|
260,715
|
|
|
298,619
|
|
|
249,120
|
|
|
293,023
|
|
|||||
Identified intangible assets, net
|
|
119,696
|
|
|
132,345
|
|
|
194,911
|
|
|
174,118
|
|
|
182,273
|
|
|||||
Total assets
(7)
|
|
992,417
|
|
|
1,107,099
|
|
|
1,193,582
|
|
|
1,254,013
|
|
|
1,291,133
|
|
|||||
Total long-term debt
|
|
311,472
|
|
|
344,795
|
|
|
370,620
|
|
|
351,128
|
|
|
372,935
|
|
|||||
Total liabilities
(7)
|
|
522,230
|
|
|
602,043
|
|
|
617,399
|
|
|
659,457
|
|
|
646,048
|
|
|||||
Total stockholders’ equity
|
|
462,737
|
|
|
494,246
|
|
|
568,500
|
|
|
578,025
|
|
|
626,635
|
|
(1)
|
2018 results include pre-tax charges of $29.5 million related to our restructuring efforts, $7.0 million in acquisition and divestiture expenses related primarily to our divestiture of Bayou and two small acquisitions, $2.8 million in non-cash charges related to estimates for inventory obsolescence, $2.2 million related to amending our Credit Facility and a $7.0 million loss on the sale of Bayou. Results also include a tax benefit of $1.9 million related to certain adjustments from the
TCJA
.
|
(2)
|
2017 results include pre-tax charges of $24.0 million related to our restructuring efforts, $86.4 million related to certain goodwill and definite-lived intangible asset impairments, and $3.1 million in acquisition and divestiture expenses related to our acquisition of Environmental Techniques and our planned divestiture of Bayou. Results also include tax expenses of $2.4 million related to impacts from the
TCJA
.
|
(3)
|
2016 results include pre-tax charges of $15.9 million related to our restructuring efforts and $2.7 million in acquisition expenses related to our acquisitions of Underground Solutions, Fyfe Europe, Concrete Solutions, LMJ and diligence on other targets. Results also include a pre-tax gain of $6.6 million in connection with the settlement of two longstanding lawsuits.
|
(4)
|
2015 results include pre-tax charges of $11.0 million related to our restructuring efforts, $43.5 million related to certain goodwill impairments, and $1.9 million in acquisition expenses related to our acquisitions of Schultz, Underground Solutions and diligence on other targets. Results also include pre-tax charges of $3.4 million related to issuing our Credit Facility.
|
(5)
|
2014 results include pre-tax charges of $49.5 million related to our restructuring efforts, $52.7 million related to certain goodwill and definite-lived intangible asset impairments, and $1.4 million in acquisition expenses related to our acquisition of Brinderson and diligence on other targets. Results also include $4.5 million in pre-tax proceeds received in connection with the settlement of escrow claims related to the purchase of Brinderson.
|
(6)
|
All periods presented include amounts attributable to Aegion Corporation.
|
(7)
|
2014 amounts also include certain components of discontinued operations.
|
i.
|
On November 1, 2018, we sold substantially all of the fixed assets and inventory from our CIPP operations in Denmark. In connection with the sale, we entered into a five-year exclusive tube-supply agreement whereby the buyers will exclusively purchase our Insituform
®
CIPP liners. The buyers will also be entitled to use the Insituform
®
trade name based on a trademark license granted for the same five-year time period.
|
ii.
|
On August 31, 2018, we sold substantially all of the assets of Bayou and our ownership interest in Bayou Wasco Insulation LLC, which collectively had been held for sale as part of the 2017 Restructuring and reflected our desire to reduce further our exposure in the North American upstream oil and gas markets.
|
iii.
|
On May 14, 2018, our board of directors approved plans to divest the assets and liabilities of our CIPP operations in Australia. While restructuring actions in Australia led to year-over-year improvements in operating results in 2018, an assessment of the long-term fit within Aegion’s portfolio led to the decision to divest the business. We are currently in discussions with a third party and, if those discussions are successful, we expect to close a transaction in the first half of 2019.
|
iv.
|
In February 2016, we sold our fifty-one percent (51%) interest in BPPC to our joint venture partner, Perma-Pipe, Inc. BPPC served as our pipe coating and insulation operation in Canada. The sale of our interest in BPPC was part of a broader effort to reduce our exposure in the North American upstream market.
|
v.
|
During the first quarter of 2019, we entered into discussions with prospective buyers regarding the sale of our interests in Corrpower International Limited and Aegion South Africa Proprietary Limited. If the discussions are successful, we expect to close the transactions in the first half of 2019.
|
|
|
|
|
|
|
|
2018 vs 2017
|
|
2017 vs 2016
|
||||||||||||||||
(dollars in thousands)
|
Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
$
|
1,333,568
|
|
|
$
|
1,359,019
|
|
|
$
|
1,221,920
|
|
|
$
|
(25,451
|
)
|
|
(1.9
|
)%
|
|
$
|
137,099
|
|
|
11.2
|
%
|
Gross profit
|
266,926
|
|
|
284,812
|
|
|
253,927
|
|
|
(17,886
|
)
|
|
(6.3
|
)
|
|
30,885
|
|
|
12.2
|
|
|||||
Gross profit margin
|
20.0
|
%
|
|
21.0
|
%
|
|
20.8
|
%
|
|
N/A
|
|
|
(100
|
)bp
|
|
N/A
|
|
|
20
|
bp
|
|||||
Operating expenses
|
219,823
|
|
|
226,173
|
|
|
197,897
|
|
|
(6,350
|
)
|
|
(2.8
|
)
|
|
28,276
|
|
|
14.3
|
|
|||||
Goodwill impairment
|
1,389
|
|
|
45,390
|
|
|
—
|
|
|
(44,001
|
)
|
|
(96.9
|
)
|
|
45,390
|
|
|
N/M
|
|
|||||
Definite-lived intangible asset impairment
|
2,169
|
|
|
41,032
|
|
|
—
|
|
|
(38,863
|
)
|
|
(94.7
|
)
|
|
41,032
|
|
|
N/M
|
|
|||||
Gain on litigation settlement
|
—
|
|
|
—
|
|
|
(6,625
|
)
|
|
—
|
|
|
N/M
|
|
|
6,625
|
|
|
N/M
|
|
|||||
Acquisition and divestiture expenses
|
7,004
|
|
|
2,923
|
|
|
2,696
|
|
|
4,081
|
|
|
139.6
|
|
|
227
|
|
|
8.4
|
|
|||||
Restructuring and related charges
1
|
6,894
|
|
|
12,814
|
|
|
9,168
|
|
|
(5,920
|
)
|
|
(46.2
|
)
|
|
3,646
|
|
|
39.8
|
|
|||||
Operating income (loss)
|
29,647
|
|
|
(43,520
|
)
|
|
50,791
|
|
|
73,167
|
|
|
168.1
|
|
|
(94,311
|
)
|
|
(185.7
|
)
|
|||||
Operating margin
|
2.2
|
%
|
|
(3.2
|
)%
|
|
4.2
|
%
|
|
N/A
|
|
|
540
|
bp
|
|
N/A
|
|
|
(740
|
)bp
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss) attributable to Aegion Corporation
|
2,928
|
|
|
(69,401
|
)
|
|
29,453
|
|
|
72,329
|
|
|
104.2
|
|
|
(98,854
|
)
|
|
(335.6
|
)
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Infrastructure Solutions
(1)
|
$
|
323.3
|
|
|
$
|
328.9
|
|
|
$
|
283.4
|
|
Corrosion Protection
(2)
|
127.9
|
|
|
155.7
|
|
|
213.4
|
|
|||
Energy Services
|
218.2
|
|
|
207.8
|
|
|
192.8
|
|
|||
Total backlog
(3)
|
$
|
669.4
|
|
|
$
|
692.4
|
|
|
$
|
689.6
|
|
(1)
|
December 31, 2018, 2017 and 2016 included backlog from exited or to-be exited operations of
$10.0 million
,
$29.6 million
and
$21.8 million
, respectively.
|
(2)
|
December 31, 2018, 2017 and 2016 included backlog from exited or to-be exited operations of
$11.6 million
,
$45.7 million
and
$117.1 million
, respectively.
|
(3)
|
Total backlog for December 31, 2018, 2017 and 2016 included backlog from exited or to-be exited operations of
$21.6 million
,
$75.3 million
and
$138.9 million
, respectively.
|
|
|
|
|
|
|
|
2018 vs 2017
|
|
2017 vs 2016
|
||||||||||||||||
(dollars in thousands)
|
Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
$
|
604,121
|
|
|
$
|
612,154
|
|
|
$
|
571,551
|
|
|
$
|
(8,033
|
)
|
|
(1.3
|
)%
|
|
$
|
40,603
|
|
|
7.1
|
%
|
Gross profit
|
132,411
|
|
|
140,823
|
|
|
142,444
|
|
|
(8,412
|
)
|
|
(6.0
|
)
|
|
(1,621
|
)
|
|
(1.1
|
)
|
|||||
Gross profit margin
|
21.9
|
%
|
|
23.0
|
%
|
|
24.9
|
%
|
|
N/A
|
|
|
(110
|
)bp
|
|
N/A
|
|
|
(190
|
)bp
|
|||||
Operating expenses
|
100,349
|
|
|
106,834
|
|
|
89,844
|
|
|
(6,485
|
)
|
|
(6.1
|
)
|
|
16,990
|
|
|
18.9
|
|
|||||
Goodwill impairment
|
1,389
|
|
|
45,390
|
|
|
—
|
|
|
(44,001
|
)
|
|
N/M
|
|
|
45,390
|
|
|
N/M
|
|
|||||
Definite-lived intangible asset impairment
|
870
|
|
|
41,032
|
|
|
—
|
|
|
(40,162
|
)
|
|
N/M
|
|
|
41,032
|
|
|
N/M
|
|
|||||
Gain on litigation settlement
|
—
|
|
|
—
|
|
|
(6,625
|
)
|
|
—
|
|
|
N/M
|
|
|
6,625
|
|
|
N/M
|
|
|||||
Acquisition and divestiture expenses
|
814
|
|
|
651
|
|
|
2,696
|
|
|
163
|
|
|
25.0
|
|
|
(2,045
|
)
|
|
(75.9
|
)
|
|||||
Restructuring and related charges
1
|
5,306
|
|
|
9,160
|
|
|
2,630
|
|
|
(3,854
|
)
|
|
(42.1
|
)
|
|
6,530
|
|
|
248.3
|
|
|||||
Operating income (loss)
|
23,683
|
|
|
(62,244
|
)
|
|
53,899
|
|
|
85,927
|
|
|
138.0
|
|
|
(116,143
|
)
|
|
(215.5
|
)
|
|||||
Operating margin
|
3.9
|
%
|
|
(10.2
|
)%
|
|
9.4
|
%
|
|
N/A
|
|
|
1,410
|
bp
|
|
N/A
|
|
|
(1,960
|
)bp
|
|
|
|
|
|
|
|
2018 vs 2017
|
|
2017 vs 2016
|
||||||||||||||||
(dollars in thousands)
|
Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
$
|
393,740
|
|
|
$
|
456,139
|
|
|
$
|
401,469
|
|
|
$
|
(62,399
|
)
|
|
(13.7
|
)%
|
|
$
|
54,670
|
|
|
13.6
|
%
|
Gross profit
|
92,968
|
|
|
108,240
|
|
|
83,269
|
|
|
(15,272
|
)
|
|
(14.1
|
)
|
|
24,971
|
|
|
30.0
|
|
|||||
Gross profit margin
|
23.6
|
%
|
|
23.7
|
%
|
|
20.7
|
%
|
|
N/A
|
|
|
(10
|
)bp
|
|
N/A
|
|
|
300
|
bp
|
|||||
Operating expenses
|
86,017
|
|
|
89,868
|
|
|
78,008
|
|
|
(3,851
|
)
|
|
(4.3
|
)
|
|
11,860
|
|
|
15.2
|
|
|||||
Acquisition and divestiture expenses
|
6,165
|
|
|
2,272
|
|
|
—
|
|
|
3,893
|
|
|
171.3
|
|
|
2,272
|
|
|
N/M
|
|
|||||
Restructuring and related charges
1
|
1,354
|
|
|
3,654
|
|
|
3,803
|
|
|
(2,300
|
)
|
|
(62.9
|
)
|
|
(149
|
)
|
|
(3.9
|
)
|
|||||
Operating income (loss)
|
(1,867
|
)
|
|
12,446
|
|
|
1,458
|
|
|
(14,313
|
)
|
|
(115.0
|
)
|
|
10,988
|
|
|
753.6
|
|
|||||
Operating margin
|
(0.5
|
)%
|
|
2.7
|
%
|
|
0.4
|
%
|
|
N/A
|
|
|
(320
|
)bp
|
|
N/A
|
|
|
230
|
bp
|
|
|
|
|
|
|
|
2018 vs 2017
|
|
2017 vs 2016
|
||||||||||||||||
(dollars in thousands)
|
Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenues
|
$
|
335,707
|
|
|
$
|
290,726
|
|
|
$
|
248,900
|
|
|
$
|
44,981
|
|
|
15.5
|
%
|
|
$
|
41,826
|
|
|
16.8
|
%
|
Gross profit
|
41,547
|
|
|
35,749
|
|
|
28,214
|
|
|
5,798
|
|
|
16.2
|
|
|
7,535
|
|
|
26.7
|
|
|||||
Gross profit margin
|
12.4
|
%
|
|
12.3
|
%
|
|
11.3
|
%
|
|
N/A
|
|
|
10
|
bp
|
|
N/A
|
|
|
100
|
bp
|
|||||
Operating expenses
|
33,457
|
|
|
29,471
|
|
|
30,045
|
|
|
3,986
|
|
|
13.5
|
|
|
(574
|
)
|
|
(1.9
|
)
|
|||||
Acquisition and divestiture expenses
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
N/M
|
|
|
—
|
|
|
N/M
|
|
|||||
Restructuring and related charges
1
|
234
|
|
|
—
|
|
|
2,735
|
|
|
234
|
|
|
N/M
|
|
|
(2,735
|
)
|
|
N/M
|
|
|||||
Operating income (loss)
|
7,831
|
|
|
6,278
|
|
|
(4,566
|
)
|
|
1,553
|
|
|
24.7
|
|
|
10,844
|
|
|
(237.5
|
)
|
|||||
Operating margin
|
2.3
|
%
|
|
2.2
|
%
|
|
(1.8
|
)%
|
|
N/A
|
|
|
10
|
bp
|
|
N/A
|
|
|
400
|
bp
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
83,527
|
|
|
$
|
105,717
|
|
Restricted cash
|
1,359
|
|
|
1,839
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
Cash Obligations
(1) (2) (3) (4) (5)
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||||
Long-term debt and notes payable
|
$
|
314,219
|
|
|
$
|
29,469
|
|
|
$
|
32,033
|
|
|
$
|
25,060
|
|
|
$
|
30,844
|
|
|
$
|
196,813
|
|
|
$
|
—
|
|
Interest on long-term debt
|
49,533
|
|
|
14,078
|
|
|
12,674
|
|
|
11,317
|
|
|
10,015
|
|
|
1,449
|
|
|
—
|
|
|||||||
Operating leases
|
67,069
|
|
|
19,843
|
|
|
15,055
|
|
|
11,492
|
|
|
8,111
|
|
|
5,365
|
|
|
7,203
|
|
|||||||
Total contractual cash obligations
|
$
|
430,821
|
|
|
$
|
63,390
|
|
|
$
|
59,762
|
|
|
$
|
47,869
|
|
|
$
|
48,970
|
|
|
$
|
203,627
|
|
|
$
|
7,203
|
|
(1)
|
Cash obligations are not discounted. See Notes 8 and 12 to the consolidated financial statements contained in this Report regarding our long-term debt and amended Credit Facility and commitments and contingencies, respectively.
|
(2)
|
Interest on long-term debt was calculated using the current annualized rate on our long-term debt as discussed in Note 8 to the consolidated financial statements contained in this Report.
|
(3)
|
Liabilities related to FASB ASC 740,
Income Taxes,
have not been included in the table above because we are uncertain as to if or when such amounts may be settled. As of December 31, 2018, we had income tax receivable and income tax payable of $6.6 million and $1.4 million, respectively, recorded on our consolidated balance sheet.
|
(4)
|
There were no material purchase commitments at
December 31, 2018
.
|
(5)
|
Amounts exclude approximately $7.0 million of cash charges expected to be incurred in 2019 related to the 2017 Restructuring.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Charles R. Gordon
|
|
Charles R. Gordon
President and Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ David F. Morris
|
|
David F. Morris
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
$
|
1,333,568
|
|
|
$
|
1,359,019
|
|
|
$
|
1,221,920
|
|
Cost of revenues
|
1,066,642
|
|
|
1,074,207
|
|
|
967,993
|
|
|||
Gross profit
|
266,926
|
|
|
284,812
|
|
|
253,927
|
|
|||
Operating expenses
|
219,823
|
|
|
226,173
|
|
|
197,897
|
|
|||
Goodwill impairment
|
1,389
|
|
|
45,390
|
|
|
—
|
|
|||
Definite-lived intangible asset impairment
|
2,169
|
|
|
41,032
|
|
|
—
|
|
|||
Gain on litigation settlement
|
—
|
|
|
—
|
|
|
(6,625
|
)
|
|||
Acquisition and divestiture expenses
|
7,004
|
|
|
2,923
|
|
|
2,696
|
|
|||
Restructuring and related charges
|
6,894
|
|
|
12,814
|
|
|
9,168
|
|
|||
Operating income (loss)
|
29,647
|
|
|
(43,520
|
)
|
|
50,791
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(17,327
|
)
|
|
(16,001
|
)
|
|
(15,029
|
)
|
|||
Interest income
|
516
|
|
|
145
|
|
|
166
|
|
|||
Other
|
(9,881
|
)
|
|
(2,201
|
)
|
|
(694
|
)
|
|||
Total other expense
|
(26,692
|
)
|
|
(18,057
|
)
|
|
(15,557
|
)
|
|||
Income (loss) before taxes on income
|
2,955
|
|
|
(61,577
|
)
|
|
35,234
|
|
|||
Taxes (benefit) on income (loss)
|
(132
|
)
|
|
5,005
|
|
|
6,109
|
|
|||
Net income (loss)
|
3,087
|
|
|
(66,582
|
)
|
|
29,125
|
|
|||
Non-controlling interests (income) loss
|
(159
|
)
|
|
(2,819
|
)
|
|
328
|
|
|||
Net income (loss) attributable to Aegion Corporation
|
$
|
2,928
|
|
|
$
|
(69,401
|
)
|
|
$
|
29,453
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share attributable to Aegion Corporation:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.09
|
|
|
$
|
(2.09
|
)
|
|
$
|
0.85
|
|
Diluted
|
$
|
0.09
|
|
|
$
|
(2.09
|
)
|
|
$
|
0.84
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income (loss)
|
$
|
3,087
|
|
|
$
|
(66,582
|
)
|
|
$
|
29,125
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Currency translation adjustments
|
(14,651
|
)
|
|
20,839
|
|
|
(6,343
|
)
|
|||
Deferred gain (loss) on hedging activity, net of tax
(1)
|
(1,621
|
)
|
|
1,402
|
|
|
746
|
|
|||
Pension activity, net of tax
(2)
|
(654
|
)
|
|
93
|
|
|
(8
|
)
|
|||
Total comprehensive income (loss)
|
(13,839
|
)
|
|
(44,248
|
)
|
|
23,520
|
|
|||
Comprehensive (income) loss attributable to non-controlling interests
|
(1
|
)
|
|
(3,040
|
)
|
|
294
|
|
|||
Comprehensive income (loss) attributable to Aegion Corporation
|
$
|
(13,840
|
)
|
|
$
|
(47,288
|
)
|
|
$
|
23,814
|
|
(1)
|
Amounts presented net of tax of
$(48)
,
$930
and
$496
for the years ended December 31, 2018, 2017 and 2016, respectively.
|
(2)
|
Amounts presented net of tax of
$(134)
,
$22
and
$(2)
for the years ended December 31, 2018, 2017 and 2016, respectively.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
83,527
|
|
|
$
|
105,717
|
|
Restricted cash
|
1,359
|
|
|
1,839
|
|
||
Receivables, net of allowances of $9,695 and $5,775, respectively
|
204,541
|
|
|
201,570
|
|
||
Retainage
|
33,572
|
|
|
33,002
|
|
||
Contract assets
|
62,467
|
|
|
75,371
|
|
||
Inventories
|
56,437
|
|
|
63,969
|
|
||
Prepaid expenses and other current assets
|
32,172
|
|
|
35,282
|
|
||
Assets held for sale
|
7,792
|
|
|
70,314
|
|
||
Total current assets
|
481,867
|
|
|
587,064
|
|
||
Property, plant & equipment, less accumulated depreciation
|
107,059
|
|
|
109,040
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
260,633
|
|
|
260,715
|
|
||
Intangible assets, less accumulated amortization
|
119,696
|
|
|
132,345
|
|
||
Deferred income tax assets
|
1,561
|
|
|
1,666
|
|
||
Other assets
|
21,601
|
|
|
16,269
|
|
||
Total other assets
|
403,491
|
|
|
410,995
|
|
||
Total Assets
|
$
|
992,417
|
|
|
$
|
1,107,099
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
64,562
|
|
|
$
|
70,611
|
|
Accrued expenses
|
88,020
|
|
|
92,011
|
|
||
Contract liabilities
|
32,339
|
|
|
51,597
|
|
||
Current maturities of long-term debt
|
29,469
|
|
|
26,555
|
|
||
Liabilities held for sale
|
5,260
|
|
|
20,900
|
|
||
Total current liabilities
|
219,650
|
|
|
261,674
|
|
||
Long-term debt, less current maturities
|
282,003
|
|
|
318,240
|
|
||
Deferred income tax liabilities
|
8,361
|
|
|
9,211
|
|
||
Other non-current liabilities
|
12,216
|
|
|
12,918
|
|
||
Total liabilities
|
522,230
|
|
|
602,043
|
|
||
|
|
|
|
||||
(See Commitments and Contingencies: Note 12)
|
|
|
|
|
|
||
|
|
|
|
||||
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 31,922,409 and 32,462,542, respectively
|
319
|
|
|
325
|
|
||
Additional paid-in capital
|
122,818
|
|
|
140,749
|
|
||
Retained earnings
|
379,890
|
|
|
376,694
|
|
||
Accumulated other comprehensive loss
|
(40,290
|
)
|
|
(23,522
|
)
|
||
Total stockholders’ equity
|
462,737
|
|
|
494,246
|
|
||
Non-controlling interests
|
7,450
|
|
|
10,810
|
|
||
Total equity
|
470,187
|
|
|
505,056
|
|
||
Total Liabilities and Equity
|
$
|
992,417
|
|
|
$
|
1,107,099
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Non-
Controlling
Interests
|
|
Total
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
BALANCE, December 31, 2015
|
36,053,499
|
|
|
$
|
361
|
|
|
$
|
200,255
|
|
|
$
|
416,642
|
|
|
$
|
(39,996
|
)
|
|
$
|
16,531
|
|
|
$
|
593,793
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
29,453
|
|
|
—
|
|
|
(328
|
)
|
|
29,125
|
|
||||||
Issuance of common stock upon stock option exercises, including tax benefit
|
114,307
|
|
|
1
|
|
|
1,817
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,818
|
|
||||||
Issuance of shares pursuant to restricted stock units
|
141,507
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Issuance of shares pursuant to deferred stock unit awards
|
39,660
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Forfeitures of restricted shares
|
(42,775
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares repurchased and retired
|
(2,349,894
|
)
|
|
(23
|
)
|
|
(44,431
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,454
|
)
|
||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
10,059
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,059
|
|
||||||
Sale of non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,278
|
)
|
|
(7,278
|
)
|
||||||
Distributions to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,276
|
)
|
|
(1,276
|
)
|
||||||
Currency translation adjustment and derivative transactions, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,639
|
)
|
|
34
|
|
|
(5,605
|
)
|
||||||
BALANCE, December 31, 2016
|
33,956,304
|
|
|
$
|
340
|
|
|
$
|
167,700
|
|
|
$
|
446,095
|
|
|
$
|
(45,635
|
)
|
|
$
|
7,683
|
|
|
$
|
576,183
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,401
|
)
|
|
—
|
|
|
2,819
|
|
|
(66,582
|
)
|
||||||
Issuance of common stock upon stock option exercises, including tax benefit
|
43,573
|
|
|
—
|
|
|
822
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
822
|
|
||||||
Issuance of shares pursuant to restricted stock units
|
95,510
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Issuance of shares pursuant to performance units
|
49,672
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of shares pursuant to deferred stock unit awards
|
30,559
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Forfeitures of restricted shares
|
(1,084
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares repurchased and retired
|
(1,711,992
|
)
|
|
(16
|
)
|
|
(37,833
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,849
|
)
|
||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
10,060
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,060
|
|
||||||
Investments from non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158
|
|
|
158
|
|
||||||
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71
|
)
|
|
(71
|
)
|
||||||
Currency translation adjustment and derivative transactions, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,113
|
|
|
221
|
|
|
22,334
|
|
||||||
BALANCE, December 31, 2017
|
32,462,542
|
|
|
$
|
325
|
|
|
$
|
140,749
|
|
|
$
|
376,694
|
|
|
$
|
(23,522
|
)
|
|
$
|
10,810
|
|
|
$
|
505,056
|
|
Cumulative effect adjustment (see Revenues: Note 3)
|
—
|
|
|
—
|
|
|
—
|
|
|
268
|
|
|
—
|
|
|
—
|
|
|
268
|
|
||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,928
|
|
|
—
|
|
|
159
|
|
|
3,087
|
|
||||||
Issuance of shares pursuant to restricted stock units
|
312,182
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Issuance of shares pursuant to performance units
|
296,909
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Issuance of shares pursuant to deferred stock unit awards
|
28,308
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares repurchased and retired
|
(1,177,532
|
)
|
|
(12
|
)
|
|
(25,769
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,781
|
)
|
||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
7,838
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,838
|
|
||||||
Sale of non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,361
|
)
|
|
(3,361
|
)
|
||||||
Currency translation adjustment and derivative transactions, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,768
|
)
|
|
(158
|
)
|
|
(16,926
|
)
|
||||||
BALANCE, December 31, 2018
|
31,922,409
|
|
|
$
|
319
|
|
|
$
|
122,818
|
|
|
$
|
379,890
|
|
|
$
|
(40,290
|
)
|
|
$
|
7,450
|
|
|
$
|
470,187
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
3,087
|
|
|
$
|
(66,582
|
)
|
|
$
|
29,125
|
|
|
|
|
|
|
|
||||||
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
37,855
|
|
|
44,419
|
|
|
46,719
|
|
|||
(Gain) loss on sale of fixed assets
|
143
|
|
|
(59
|
)
|
|
(1,916
|
)
|
|||
Equity-based compensation expense
|
7,838
|
|
|
10,060
|
|
|
10,059
|
|
|||
Deferred income taxes
|
(648
|
)
|
|
(9,376
|
)
|
|
1,772
|
|
|||
Non-cash restructuring charges
|
13,814
|
|
|
10,080
|
|
|
300
|
|
|||
Non-cash portion of litigation settlement
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
|||
Goodwill impairment
|
1,389
|
|
|
45,390
|
|
|
—
|
|
|||
Definite-lived intangible asset impairment
|
2,169
|
|
|
41,032
|
|
|
—
|
|
|||
Loss on sale of businesses
|
7,048
|
|
|
—
|
|
|
—
|
|
|||
Loss on foreign currency transactions
|
623
|
|
|
2,152
|
|
|
911
|
|
|||
Other
|
1,278
|
|
|
(1,562
|
)
|
|
(1,044
|
)
|
|||
Changes in operating assets and liabilities (net of acquisitions):
|
|
|
|
|
|
||||||
Receivables net, retainage and contract assets
|
(6,821
|
)
|
|
(29,847
|
)
|
|
52,774
|
|
|||
Inventories
|
2,306
|
|
|
(1,926
|
)
|
|
(2,569
|
)
|
|||
Prepaid expenses and other assets
|
614
|
|
|
8,732
|
|
|
16,759
|
|
|||
Accounts payable and accrued expenses
|
(7,339
|
)
|
|
18,803
|
|
|
(50,022
|
)
|
|||
Contract liabilities
|
(24,144
|
)
|
|
(5,924
|
)
|
|
(27,761
|
)
|
|||
Other operating
|
457
|
|
|
(1,798
|
)
|
|
(946
|
)
|
|||
Net cash provided by operating activities
|
39,669
|
|
|
63,594
|
|
|
71,161
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(30,514
|
)
|
|
(30,830
|
)
|
|
(38,760
|
)
|
|||
Proceeds from sale of fixed assets
|
3,036
|
|
|
707
|
|
|
3,310
|
|
|||
Patent expenditures
|
(299
|
)
|
|
(379
|
)
|
|
(1,043
|
)
|
|||
Purchase of Underground Solutions, Inc., net of cash acquired
|
—
|
|
|
—
|
|
|
(84,740
|
)
|
|||
Other acquisition activity, net of cash acquired
|
(9,000
|
)
|
|
(9,045
|
)
|
|
(11,567
|
)
|
|||
Sale of Bayou, net of cash disposed
|
37,942
|
|
|
—
|
|
|
—
|
|
|||
Sale of interest in Bayou Perma-Pipe Canada, Ltd., net of cash disposed
|
—
|
|
|
—
|
|
|
6,599
|
|
|||
Net cash provided by (used in) investing activities
|
1,165
|
|
|
(39,547
|
)
|
|
(126,201
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Revenues
|
|
Net Loss
|
|
Revenues
|
|
Net Loss
|
|
Revenues
|
|
Net Loss
|
||||||||||||
Underground Solutions
(1)
|
$
|
45,738
|
|
|
$
|
(790
|
)
|
|
$
|
32,063
|
|
|
$
|
(3,778
|
)
|
|
$
|
29,425
|
|
|
$
|
(2,694
|
)
|
Other acquisitions
(2)(3)
|
17,315
|
|
|
(555
|
)
|
|
14,845
|
|
|
(5,225
|
)
|
|
7,588
|
|
|
(1,811
|
)
|
(1)
|
The reported net loss in 2018 includes a pre-tax allocation of corporate expenses of
$5.0 million
. The reported net loss in 2017 includes a pre-tax allocation of corporate expenses of
$4.5 million
.
The reported net loss in 2016 includes a pre-tax charge for inventory step-up of
$3.6 million
, recognized as part of the accounting for business combinations, and a pre-tax allocation of corporate expenses of
$3.2 million
.
|
(2)
|
The reported net loss in 2018 and 2017 includes pre-tax restructuring charges of
$4.8 million
and
$0.1 million
, respectively.
|
(3)
|
The reported net loss in 2017 includes a pre-tax impairment charge of
$2.2 million
allocated from goodwill impairments in the Fyfe reporting unit (see Note 2).
|
|
Years Ended December 31,
|
||||||
|
2017
(1)
|
|
2016
(2)
|
||||
Revenues
|
$
|
1,359,901
|
|
|
$
|
1,238,730
|
|
Net income (loss)
(3)
|
(69,574
|
)
|
|
29,924
|
|
||
Diluted earnings (loss) per share
|
$
|
(2.10
|
)
|
|
$
|
0.85
|
|
(1)
|
Includes pro-forma results related to Environmental Techniques, Hebna and P2S. 2018 contributions related to Hebna and P2S were immaterial.
|
(2)
|
Includes pro-forma results related to Environmental Techniques, Underground Solutions, Fyfe Europe, LMJ and Concrete Solutions.
|
(3)
|
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.
|
|
Underground
Solutions
|
|
Other Acquisitions
(1)
|
||||
Cash
|
$
|
3,630
|
|
|
$
|
—
|
|
Receivables and contract assets
|
6,339
|
|
|
2,270
|
|
||
Inventories
|
12,629
|
|
|
2,642
|
|
||
Prepaid expenses and other current assets
|
671
|
|
|
111
|
|
||
Property, plant and equipment
|
2,755
|
|
|
5,216
|
|
||
Identified intangible assets
|
33,370
|
|
|
8,523
|
|
||
Deferred income tax assets
|
13,282
|
|
|
124
|
|
||
Other assets
|
90
|
|
|
—
|
|
||
Accounts payable
|
(4,653
|
)
|
|
(1,862
|
)
|
||
Accrued expenses
|
(5,900
|
)
|
|
(335
|
)
|
||
Contract liabilities
|
(2,943
|
)
|
|
—
|
|
||
Deferred tax liabilities
|
(14,562
|
)
|
|
(895
|
)
|
||
Total identifiable net assets
|
$
|
44,708
|
|
|
$
|
15,794
|
|
|
|
|
|
||||
Total consideration recorded
|
$
|
88,370
|
|
|
$
|
29,674
|
|
Less: total identifiable net assets
|
44,708
|
|
|
15,794
|
|
||
Final purchase price goodwill
|
$
|
43,662
|
|
|
$
|
13,880
|
|
(1)
|
Total includes P2S, Hebna, Environmental Techniques, Fyfe Europe, LMJ and Concrete Solutions.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Currency translation adjustments
(1)
|
$
|
(41,107
|
)
|
|
$
|
(26,614
|
)
|
Derivative hedging activity
|
1,715
|
|
|
3,336
|
|
||
Pension activity
|
(898
|
)
|
|
(244
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(40,290
|
)
|
|
$
|
(23,522
|
)
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Weighted average number of common shares used for basic EPS
|
32,345,382
|
|
|
33,150,949
|
|
|
34,713,937
|
|
Effect of dilutive stock options and restricted and deferred stock unit awards
|
652,621
|
|
|
—
|
|
|
496,493
|
|
Weighted average number of common shares and dilutive potential common stock used in dilutive EPS
|
32,998,003
|
|
|
33,150,949
|
|
|
35,210,430
|
|
Balance sheet data
|
December 31, 2018
|
|
December 31,
2017 (1) |
||||
Cash and cash equivalents
|
$
|
83,527
|
|
|
$
|
105,717
|
|
Restricted cash
|
1,359
|
|
|
1,839
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
84,886
|
|
|
$
|
107,556
|
|
(1)
|
Amounts exclude
$1.0 million
of cash and cash equivalents classified as held for sale at December 31, 2017 (see Note 6).
|
•
|
significant underperformance of a segment relative to expected, historical or forecasted operating results;
|
•
|
significant negative industry or economic trends;
|
•
|
significant changes in the strategy for a segment including extended slowdowns in the segment’s market;
|
•
|
a decrease in market capitalization below the Company’s book value; and
|
•
|
a significant change in regulations.
|
•
|
determine whether the entity meets the criteria to qualify as a VIE; and
|
•
|
determine whether the Company is the primary beneficiary of the VIE.
|
•
|
the design of the entity, including the nature of its risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders;
|
•
|
the nature of the Company’s involvement with the entity;
|
•
|
whether control of the entity may be achieved through arrangements that do not involve voting equity;
|
•
|
whether there is sufficient equity investment at risk to finance the activities of the entity; and
|
•
|
whether parties other than the equity holders have the obligation to absorb expected losses or the right to receive residual returns.
|
•
|
whether the entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance; and
|
•
|
whether the entity has the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.
|
|
December 31,
|
||||||
Balance sheet data
|
2018
|
|
2017
(1)
|
||||
Current assets
|
$
|
33,066
|
|
|
$
|
42,732
|
|
Non-current assets
|
6,466
|
|
|
26,346
|
|
||
Current liabilities
|
12,953
|
|
|
12,449
|
|
||
Non-current liabilities
|
8,780
|
|
|
30,675
|
|
(1)
|
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 6.
|
|
Years Ended December 31,
|
||||||||||
Statement of operations data
|
2018
|
|
2017
(1)
|
|
2016
|
||||||
Revenue
|
$
|
49,809
|
|
|
$
|
91,947
|
|
|
$
|
61,205
|
|
Gross profit
|
9,898
|
|
|
15,194
|
|
|
5,760
|
|
|||
Net income (loss)
|
(1,374
|
)
|
|
3,432
|
|
|
(3,075
|
)
|
(1)
|
During 2017, increases were primarily driven from: (i) our joint venture in Louisiana, which completed its work on a large deepwater pipe coating and insulation project; and (ii) the formation of our new joint venture in South Africa.
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Primary geographic region:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
430,187
|
|
|
$
|
200,397
|
|
|
$
|
335,707
|
|
|
$
|
966,291
|
|
Canada
|
62,292
|
|
|
71,320
|
|
|
—
|
|
|
133,612
|
|
||||
Europe
|
54,567
|
|
|
12,227
|
|
|
—
|
|
|
66,794
|
|
||||
Other foreign
|
57,075
|
|
|
109,796
|
|
|
—
|
|
|
166,871
|
|
||||
Total revenues
|
$
|
604,121
|
|
|
$
|
393,740
|
|
|
$
|
335,707
|
|
|
$
|
1,333,568
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Primary geographic region:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
437,944
|
|
|
$
|
299,643
|
|
|
$
|
290,726
|
|
|
$
|
1,028,313
|
|
Canada
|
60,675
|
|
|
79,059
|
|
|
—
|
|
|
139,734
|
|
||||
Europe
|
58,520
|
|
|
13,319
|
|
|
—
|
|
|
71,839
|
|
||||
Other foreign
|
55,015
|
|
|
64,118
|
|
|
—
|
|
|
119,133
|
|
||||
Total revenues
|
$
|
612,154
|
|
|
$
|
456,139
|
|
|
$
|
290,726
|
|
|
$
|
1,359,019
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Primary geographic region:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
425,990
|
|
|
$
|
249,690
|
|
|
$
|
248,900
|
|
|
$
|
924,580
|
|
Canada
|
47,587
|
|
|
81,704
|
|
|
—
|
|
|
129,291
|
|
||||
Europe
|
45,046
|
|
|
15,192
|
|
|
—
|
|
|
60,238
|
|
||||
Other foreign
|
52,928
|
|
|
54,883
|
|
|
—
|
|
|
107,811
|
|
||||
Total revenues
|
$
|
571,551
|
|
|
$
|
401,469
|
|
|
$
|
248,900
|
|
|
$
|
1,221,920
|
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Contract type:
|
|
|
|
|
|
|
|
||||||||
Fixed fee
|
$
|
556,642
|
|
|
$
|
296,217
|
|
|
$
|
16,134
|
|
|
$
|
868,993
|
|
Time and materials
|
—
|
|
|
58,372
|
|
|
319,573
|
|
|
377,945
|
|
||||
Product sales
|
45,030
|
|
|
39,151
|
|
|
—
|
|
|
84,181
|
|
||||
License fees
|
2,449
|
|
|
—
|
|
|
—
|
|
|
2,449
|
|
||||
Total revenues
|
$
|
604,121
|
|
|
$
|
393,740
|
|
|
$
|
335,707
|
|
|
$
|
1,333,568
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Contract type:
|
|
|
|
|
|
|
|
||||||||
Fixed fee
|
$
|
569,701
|
|
|
$
|
353,480
|
|
|
$
|
9,225
|
|
|
$
|
932,406
|
|
Time and materials
|
—
|
|
|
56,288
|
|
|
281,501
|
|
|
337,789
|
|
||||
Product sales
|
41,878
|
|
|
46,371
|
|
|
—
|
|
|
88,249
|
|
||||
License fees
|
575
|
|
|
—
|
|
|
—
|
|
|
575
|
|
||||
Total revenues
|
$
|
612,154
|
|
|
$
|
456,139
|
|
|
$
|
290,726
|
|
|
$
|
1,359,019
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Contract type:
|
|
|
|
|
|
|
|
||||||||
Fixed fee
|
$
|
524,311
|
|
|
$
|
301,114
|
|
|
$
|
14,838
|
|
|
$
|
840,263
|
|
Time and materials
|
—
|
|
|
52,240
|
|
|
234,062
|
|
|
286,302
|
|
||||
Product sales
|
47,232
|
|
|
48,115
|
|
|
—
|
|
|
95,347
|
|
||||
License fees
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Total revenues
|
$
|
571,551
|
|
|
$
|
401,469
|
|
|
$
|
248,900
|
|
|
$
|
1,221,920
|
|
|
December 31,
2018 (1) |
|
December 31,
2017
(2)
|
||||
Contract assets – current
|
$
|
62,467
|
|
|
$
|
75,371
|
|
Contract liabilities – current
(3)
|
(32,339
|
)
|
|
(51,597
|
)
|
||
Net contract assets
|
$
|
30,128
|
|
|
$
|
23,774
|
|
(1)
|
Amounts exclude contract assets of
$1.8 million
and contract liabilities of less than
$0.1 million
that were classified as held for sale at December 31, 2018 (see Note 6).
|
(2)
|
Amounts exclude contract assets of
$1.3 million
and contract liabilities of
$5.5 million
that were classified as held for sale at December 31, 2017 (see Note 6).
|
(3)
|
Decrease primarily due to the timing of billing and advance deposits received on certain projects in the Company’s coating services operation in the Middle East.
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Severance and benefit related costs
|
$
|
3,124
|
|
|
$
|
1,178
|
|
|
$
|
234
|
|
|
$
|
4,536
|
|
Lease and contract termination costs
|
1,999
|
|
|
175
|
|
|
—
|
|
|
2,174
|
|
||||
Relocation and other moving costs
|
184
|
|
|
—
|
|
|
—
|
|
|
184
|
|
||||
Other restructuring costs
(1)
|
14,036
|
|
|
8,400
|
|
|
156
|
|
|
22,592
|
|
||||
Total pre-tax restructuring charges
(2)
|
$
|
19,343
|
|
|
$
|
9,753
|
|
|
$
|
390
|
|
|
$
|
29,486
|
|
(1)
|
Includes charges primarily related to certain wind-down costs, allowances for accounts receivable, fixed asset disposals and other restructuring-related costs in connection with exiting non-pipe-related contract applications for the Tyfo
®
system in North America, divesting the CIPP operations in Australia and Denmark, and exiting the cathodic protection operations in the Middle East. Amounts also include goodwill and definite-lived intangible asset impairments related to Denmark and definite-lived intangible asset impairments related to the cathodic protection operations in the Middle East.
|
(2)
|
Includes
$1.6 million
of corporate-related restructuring charges that have been allocated to the reportable segments.
|
|
Year Ended December 31, 2017
|
||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Total
|
||||||
Severance and benefit related costs
|
$
|
4,587
|
|
|
$
|
2,758
|
|
|
$
|
7,345
|
|
Lease and contract termination costs
|
4,545
|
|
|
775
|
|
|
5,320
|
|
|||
Relocation and other moving costs
|
26
|
|
|
121
|
|
|
147
|
|
|||
Other restructuring costs
(1)
|
8,668
|
|
|
2,263
|
|
|
10,931
|
|
|||
Total pre-tax restructuring charges
(2)
|
$
|
17,826
|
|
|
$
|
5,917
|
|
|
$
|
23,743
|
|
(1)
|
Includes charges primarily related to exiting non-pipe-related applications for the Tyfo
®
system in North America and right-sizing the cathodic protection services operation in Canada, inclusive of wind-down costs, professional fees, patent write offs, fixed asset disposals and certain other restructuring and related charges.
|
(2)
|
Includes
$1.3 million
of corporate-related restructuring charges that have been allocated to the Infrastructure Solutions and Corrosion Protection reportable segments.
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
(1)
|
||||||||
Cost of revenues
|
$
|
1,282
|
|
|
$
|
599
|
|
|
$
|
—
|
|
|
$
|
1,881
|
|
Operating expenses
|
7,976
|
|
|
5,187
|
|
|
156
|
|
|
13,319
|
|
||||
Goodwill impairment
|
1,389
|
|
|
—
|
|
|
—
|
|
|
1,389
|
|
||||
Definite-lived intangible asset impairment
|
910
|
|
|
1,124
|
|
|
—
|
|
|
2,034
|
|
||||
Restructuring and related charges
|
5,306
|
|
|
1,354
|
|
|
234
|
|
|
6,894
|
|
||||
Other expense
(2)
|
2,480
|
|
|
1,489
|
|
|
—
|
|
|
3,969
|
|
||||
Total pre-tax restructuring charges
|
$
|
19,343
|
|
|
$
|
9,753
|
|
|
$
|
390
|
|
|
$
|
29,486
|
|
(1)
|
Total pre-tax restructuring charges include cash charges of
$12.1 million
and non-cash charges of
$17.4 million
. Cash charges consist of charges incurred during the year that will be settled in cash, either during the current period or future periods.
|
(2)
|
Includes charges related to the loss on disposal of restructured entities, including the release of cumulative currency translation adjustments resulting from those disposals.
|
|
Year Ended December 31, 2017
|
||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Total
(1)
|
||||||
Cost of revenues
|
$
|
30
|
|
|
$
|
15
|
|
|
$
|
45
|
|
Operating expenses
|
8,636
|
|
|
2,248
|
|
|
10,884
|
|
|||
Restructuring and related charges
|
9,160
|
|
|
3,654
|
|
|
12,814
|
|
|||
Total pre-tax restructuring charges
|
$
|
17,826
|
|
|
$
|
5,917
|
|
|
$
|
23,743
|
|
(1)
|
Total pre-tax restructuring charges include cash charges of
$13.6 million
and non-cash charges of
$10.1 million
. Cash charges consist of charges incurred during the year 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
December 31, 2018 |
||||||||||||||
|
|
|
|
Cash
(1)
|
|
Non-Cash
|
|
||||||||||||||||
Severance and benefit related costs
|
$
|
3,864
|
|
|
$
|
4,536
|
|
|
$
|
(69
|
)
|
|
$
|
6,589
|
|
|
$
|
—
|
|
|
$
|
1,742
|
|
Lease and contract termination costs
|
650
|
|
|
2,174
|
|
|
(19
|
)
|
|
2,446
|
|
|
—
|
|
|
359
|
|
||||||
Relocation and other moving costs
|
—
|
|
|
184
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
—
|
|
||||||
Other restructuring costs
|
675
|
|
|
22,592
|
|
|
(3
|
)
|
|
5,581
|
|
|
17,372
|
|
|
311
|
|
||||||
Total pre-tax restructuring charges
|
$
|
5,189
|
|
|
$
|
29,486
|
|
|
$
|
(91
|
)
|
|
$
|
14,800
|
|
|
$
|
17,372
|
|
|
$
|
2,412
|
|
(1)
|
Refers to cash utilized to settle charges during 2018.
|
|
2017
Charge to Income |
|
Utilized in 2017
|
|
Reserves at
December 31, 2017 |
||||||||||
|
|
Cash
(1)
|
|
Non-Cash
|
|
||||||||||
Severance and benefit related costs
|
$
|
7,345
|
|
|
$
|
3,481
|
|
|
$
|
—
|
|
|
$
|
3,864
|
|
Lease and contract termination costs
|
5,320
|
|
|
2,706
|
|
|
1,964
|
|
|
650
|
|
||||
Relocation and other moving costs
|
147
|
|
|
147
|
|
|
—
|
|
|
—
|
|
||||
Other restructuring costs
|
10,931
|
|
|
2,140
|
|
|
8,116
|
|
|
675
|
|
||||
Total pre-tax restructuring charges
|
$
|
23,743
|
|
|
$
|
8,474
|
|
|
$
|
10,080
|
|
|
$
|
5,189
|
|
(1)
|
Refers to cash utilized to settle charges during 2017.
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Severance and benefit related costs
|
$
|
2,249
|
|
|
$
|
3,588
|
|
|
$
|
1,559
|
|
|
$
|
7,396
|
|
Lease termination costs
|
—
|
|
|
154
|
|
|
983
|
|
|
1,137
|
|
||||
Relocation and other moving costs
|
307
|
|
|
62
|
|
|
193
|
|
|
562
|
|
||||
Other restructuring costs
(1)
|
808
|
|
|
761
|
|
|
5,436
|
|
|
7,005
|
|
||||
Total pre-tax restructuring charges
(2)
|
$
|
3,364
|
|
|
$
|
4,565
|
|
|
$
|
8,171
|
|
|
$
|
16,100
|
|
(1)
|
For Energy Services, includes charges primarily related to downsizing the Company’s upstream operations in California, inclusive of wind-down costs, professional fees, fixed asset disposals and certain other restructuring charges.
|
(2)
|
Includes
$1.4 million
of corporate-related restructuring charges that have been allocated to the Infrastructure Solutions, Corrosion Protection and Energy Services reportable segments.
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
Infrastructure
Solutions |
|
Corrosion
Protection |
|
Energy
Services |
|
Total
(1)
|
||||||||
Cost of revenues
|
$
|
—
|
|
|
$
|
278
|
|
|
$
|
—
|
|
|
$
|
278
|
|
Operating expenses
|
559
|
|
|
483
|
|
|
5,436
|
|
|
6,478
|
|
||||
Restructuring and related charges
|
2,557
|
|
|
3,803
|
|
|
2,735
|
|
|
9,095
|
|
||||
Other expense
|
249
|
|
|
—
|
|
|
—
|
|
|
249
|
|
||||
Total pre-tax charges
|
$
|
3,365
|
|
|
$
|
4,564
|
|
|
$
|
8,171
|
|
|
$
|
16,100
|
|
(1)
|
Total pre-tax restructuring charges include cash charges of
$15.3 million
and non-cash charges of
$0.8 million
for in 2016. Cash charges consist of charges incurred during the period that will be settled in cash, either during the current period or future periods.
|
|
Reserves at
December 31,
2016
|
|
2017
Charge to Income |
|
Utilized in 2017
|
|
Reserves at
December 31, 2017 |
||||||||||||
|
|
|
Cash
(1)
|
|
Non-Cash
|
|
|||||||||||||
Severance and benefit related costs
|
$
|
645
|
|
|
$
|
—
|
|
|
$
|
645
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Lease termination costs
|
125
|
|
|
—
|
|
|
125
|
|
|
—
|
|
|
—
|
|
|||||
Relocation and other moving costs
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|||||
Other restructuring costs
|
120
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
—
|
|
|||||
Total pre-tax restructuring charges
|
$
|
900
|
|
|
$
|
—
|
|
|
$
|
900
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Refers to cash utilized to settle charges during 2017.
|
|
2016
Charge to Income |
|
Utilized in 2016
|
|
Reserves at
December 31, 2016 |
||||||||||
|
|
Cash
(1)
|
|
Non-Cash
|
|
||||||||||
Severance and benefit related costs
|
$
|
7,396
|
|
|
$
|
6,751
|
|
|
$
|
—
|
|
|
$
|
645
|
|
Lease termination costs
|
1,137
|
|
|
1,012
|
|
|
—
|
|
|
125
|
|
||||
Relocation and other moving costs
|
562
|
|
|
552
|
|
|
—
|
|
|
10
|
|
||||
Other restructuring costs
|
7,005
|
|
|
6,120
|
|
|
765
|
|
|
120
|
|
||||
Total pre-tax restructuring charges
|
$
|
16,100
|
|
|
$
|
14,435
|
|
|
$
|
765
|
|
|
$
|
900
|
|
(1)
|
Refers to cash utilized to settle charges during 2016.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance, beginning of year
|
$
|
5,775
|
|
|
$
|
6,098
|
|
|
$
|
14,524
|
|
Bad debt expense
(1)
|
8,188
|
|
|
3,155
|
|
|
1,083
|
|
|||
Write-offs and adjustments
(2)
|
(4,268
|
)
|
|
(3,478
|
)
|
|
(9,509
|
)
|
|||
Balance, end of year
|
$
|
9,695
|
|
|
$
|
5,775
|
|
|
$
|
6,098
|
|
(1)
|
The Company recorded bad debt expense (reversals) of
$5.3 million
,
$0.4 million
and
$(0.6) million
in 2018, 2017 and 2016, respectively, as part of the restructuring efforts (see Note 4) and was primarily due to the exiting of certain low-return businesses mainly in foreign locations.
|
(2)
|
2016 includes the write-off of a
$7.5 million
reserve related to long-dated receivables, which were in litigation or dispute, within Infrastructure Solutions.
|
|
December 31,
|
||||||
|
2018
(1)
|
|
2017
|
||||
Raw materials and supplies
|
$
|
29,343
|
|
|
$
|
30,265
|
|
Work-in-process
|
2,510
|
|
|
3,246
|
|
||
Finished products
|
15,205
|
|
|
13,596
|
|
||
Construction materials
|
9,379
|
|
|
16,862
|
|
||
Total
|
$
|
56,437
|
|
|
$
|
63,969
|
|
(1)
|
During 2018, the Company incurred non-cash charges of
$2.8 million
related to estimates for inventory obsolescence within its cathodic protection operations. The charges were recorded to cost of revenues in the Consolidated Statement of Operations.
|
|
Estimated
Useful Lives (Years) |
|
December 31,
|
||||||||
|
|
2018
|
|
2017
|
|||||||
Land and land improvements
|
|
|
$
|
10,521
|
|
|
$
|
10,258
|
|
||
Buildings and improvements
|
5
|
—
|
40
|
|
47,430
|
|
|
47,725
|
|
||
Machinery and equipment
|
4
|
—
|
10
|
|
147,918
|
|
|
159,626
|
|
||
Furniture and fixtures
|
3
|
—
|
10
|
|
37,471
|
|
|
35,149
|
|
||
Autos and trucks
|
3
|
—
|
10
|
|
51,129
|
|
|
54,039
|
|
||
Construction in progress
|
|
|
|
|
14,626
|
|
|
8,424
|
|
||
|
|
|
|
|
309,095
|
|
|
315,221
|
|
||
Less – Accumulated depreciation
|
|
|
|
|
(202,036
|
)
|
|
(206,181
|
)
|
||
Property, plant & equipment, less accumulated depreciation
|
|
|
|
|
$
|
107,059
|
|
|
$
|
109,040
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Vendor and other accrued expenses
|
$
|
35,450
|
|
|
$
|
35,193
|
|
Estimated casualty and healthcare liabilities
|
17,419
|
|
|
14,772
|
|
||
Job costs
|
9,878
|
|
|
9,585
|
|
||
Accrued compensation
|
23,882
|
|
|
27,901
|
|
||
Income taxes payable
|
1,391
|
|
|
4,560
|
|
||
Total
|
$
|
88,020
|
|
|
$
|
92,011
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Assets held for sale:
|
Australia
|
|
Bayou
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
989
|
|
Receivables, net
|
1,309
|
|
|
6,368
|
|
||
Retainage
|
15
|
|
|
—
|
|
||
Contract assets
|
1,777
|
|
|
1,299
|
|
||
Inventories
|
2,123
|
|
|
3,727
|
|
||
Prepaid expenses and other current assets
|
300
|
|
|
827
|
|
||
Total current assets
|
5,524
|
|
|
13,210
|
|
||
Property, plant & equipment, less accumulated depreciation
|
2,268
|
|
|
53,887
|
|
||
Identified intangible assets, less accumulated amortization
|
—
|
|
|
3,217
|
|
||
Total assets held for sale
|
$
|
7,792
|
|
|
$
|
70,314
|
|
|
|
|
|
||||
Liabilities held for sale:
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
1,331
|
|
|
$
|
5,763
|
|
Accrued expenses
|
3,891
|
|
|
1,805
|
|
||
Contract liabilities
|
38
|
|
|
5,478
|
|
||
Total current liabilities
|
5,260
|
|
|
13,046
|
|
||
Long-term debt
|
—
|
|
|
7,757
|
|
||
Other non-current liabilities
|
—
|
|
|
97
|
|
||
Total liabilities held for sale
|
$
|
5,260
|
|
|
$
|
20,900
|
|
|
Infrastructure
Solutions
|
|
Corrosion
Protection
|
|
Energy
Services
|
|
Total
|
||||||||
Balance, December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
$
|
239,494
|
|
|
$
|
73,875
|
|
|
$
|
80,246
|
|
|
$
|
393,615
|
|
Accumulated impairment losses
|
(16,069
|
)
|
|
(45,400
|
)
|
|
(33,527
|
)
|
|
(94,996
|
)
|
||||
Goodwill, net
|
223,425
|
|
|
28,475
|
|
|
46,719
|
|
|
298,619
|
|
||||
2017 Activity:
|
|
|
|
|
|
|
|
||||||||
Acquisitions
(1)
|
3,355
|
|
|
—
|
|
|
—
|
|
|
3,355
|
|
||||
Impairments
(2)
|
(45,390
|
)
|
|
—
|
|
|
—
|
|
|
(45,390
|
)
|
||||
Foreign currency translation
|
3,637
|
|
|
494
|
|
|
—
|
|
|
4,131
|
|
||||
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:
|
|
|
|
|
|
|
|
||||||||
Acquisitions
(3)
|
—
|
|
|
2,715
|
|
|
1,258
|
|
|
3,973
|
|
||||
Impairments
(4)
|
(1,389
|
)
|
|
—
|
|
|
—
|
|
|
(1,389
|
)
|
||||
Foreign currency translation
|
(1,965
|
)
|
|
(701
|
)
|
|
—
|
|
|
(2,666
|
)
|
||||
Balance, December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
244,521
|
|
|
76,383
|
|
|
81,504
|
|
|
402,408
|
|
||||
Accumulated impairment losses
|
(62,848
|
)
|
|
(45,400
|
)
|
|
(33,527
|
)
|
|
(141,775
|
)
|
||||
Goodwill, net
|
$
|
181,673
|
|
|
$
|
30,983
|
|
|
$
|
47,977
|
|
|
$
|
260,633
|
|
(1)
|
During 2017, the Company recorded goodwill of
$3.4 million
related to the acquisition of Environmental Techniques (see Note 1).
|
(2)
|
During 2017, the Company recorded a
$45.4 million
goodwill impairment to its Fyfe reporting unit (see Note 2).
|
(3)
|
During 2018, the Company recorded goodwill of
$2.7 million
and
$1.3 million
related to the acquisitions of Hebna and P2S, respectively (see Note 1).
|
(4)
|
During 2018, the Company recorded a
$1.4 million
goodwill impairment related to restructuring activities in Denmark (see Note 4).
|
|
December 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
(3)
|
1.6
|
|
$
|
3,894
|
|
|
$
|
(3,716
|
)
|
|
$
|
178
|
|
|
$
|
4,497
|
|
|
$
|
(3,623
|
)
|
|
$
|
874
|
|
Leases
|
2.0
|
|
864
|
|
|
(689
|
)
|
|
175
|
|
|
796
|
|
|
(534
|
)
|
|
262
|
|
||||||
Trademarks
(2)(3)
|
9.8
|
|
15,751
|
|
|
(6,202
|
)
|
|
9,549
|
|
|
15,464
|
|
|
(6,184
|
)
|
|
9,280
|
|
||||||
Non-competes
(1)(2)
|
4.3
|
|
2,529
|
|
|
(1,229
|
)
|
|
1,300
|
|
|
1,197
|
|
|
(1,048
|
)
|
|
149
|
|
||||||
Customer relationships
(1)(2)(3)
|
8.9
|
|
159,719
|
|
|
(66,753
|
)
|
|
92,966
|
|
|
160,423
|
|
|
(56,907
|
)
|
|
103,516
|
|
||||||
Patents and acquired technology
|
5.6
|
|
38,338
|
|
|
(22,810
|
)
|
|
15,528
|
|
|
39,285
|
|
|
(21,021
|
)
|
|
18,264
|
|
||||||
|
|
|
$
|
221,095
|
|
|
$
|
(101,399
|
)
|
|
$
|
119,696
|
|
|
$
|
221,662
|
|
|
$
|
(89,317
|
)
|
|
$
|
132,345
|
|
(1)
|
During 2018, the Company recorded non-competes of
$1.1 million
and customer relationships of
$1.3 million
related to the acquisition of Hebna (see Note 1).
|
(2)
|
During 2018, the Company recorded trademarks of
$0.3 million
, non-competes of
$0.2 million
and customer relationships of
$0.7 million
related to the acquisition of P2S (see Note 1).
|
(3)
|
During 2018, the Company recorded intangible asset impairments related to restructuring activities in Denmark of
$0.5 million
for license agreements,
$0.1 million
for trademarks, and
$0.3 million
for customer relationships (see Note 4).
|
Year
|
|
Amount
|
||
2019
|
|
$
|
13,641
|
|
2020
|
|
13,603
|
|
|
2021
|
|
13,400
|
|
|
2022
|
|
13,400
|
|
|
2023
|
|
13,270
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Term note, due February 27, 2023, annualized rates of 4.59% and 3.60%, respectively
|
$
|
282,188
|
|
|
$
|
308,437
|
|
Line of credit, 4.45% and 3.50%, respectively
|
31,000
|
|
|
38,000
|
|
||
Other notes with interest rates from 3.3% to 7.8%
|
1,031
|
|
|
875
|
|
||
Subtotal
|
314,219
|
|
|
347,312
|
|
||
Less – Current maturities and notes payable
|
29,469
|
|
|
26,555
|
|
||
Less – Unamortized loan costs
|
2,747
|
|
|
2,517
|
|
||
Total
|
$
|
282,003
|
|
|
$
|
318,240
|
|
Year
|
|
Amount
|
||
2019
|
|
$
|
29,469
|
|
2020
|
|
32,033
|
|
|
2021
|
|
25,060
|
|
|
2022
|
|
30,844
|
|
|
2023
|
|
196,813
|
|
|
Thereafter
|
|
—
|
|
|
Total
|
|
$
|
314,219
|
|
•
|
Consolidated financial leverage ratio, as amended, compares consolidated funded indebtedness to amended Credit Facility defined income with a maximum amount not to exceed
3.5
to 1.00. At
December 31, 2018
, the Company’s consolidated financial leverage ratio was
2.94
to 1.00 and, using the amended Credit Facility defined income, the Company had the capacity to borrow up to
$61.6 million
of additional debt.
|
•
|
Consolidated fixed charge coverage ratio, as amended, compares amended Credit Facility defined income to amended Credit Facility defined fixed charges with a minimum permitted ratio of not less than
1.25
to 1.00. At
December 31, 2018
, the Company’s fixed charge ratio was
1.42
to 1.00.
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average Exercise Price |
|
Shares
|
|
Weighted
Average Exercise Price |
|||||||||
Outstanding, beginning of year
|
126,680
|
|
|
$
|
23.06
|
|
|
170,253
|
|
|
$
|
21.99
|
|
|
288,383
|
|
|
$
|
21.73
|
|
Exercised
|
—
|
|
|
—
|
|
|
(43,573
|
)
|
|
18.87
|
|
|
(114,307
|
)
|
|
21.33
|
|
|||
Canceled/Expired
|
(73,897
|
)
|
|
26.60
|
|
|
—
|
|
|
—
|
|
|
(3,823
|
)
|
|
22.24
|
|
|||
Outstanding, end of year
|
52,783
|
|
|
$
|
18.11
|
|
|
126,680
|
|
|
$
|
23.06
|
|
|
170,253
|
|
|
$
|
21.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Exercisable, end of year
|
52,783
|
|
|
$
|
18.11
|
|
|
126,680
|
|
|
$
|
23.06
|
|
|
170,253
|
|
|
$
|
21.99
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Amount collected from stock option exercises
|
$
|
—
|
|
|
$
|
822
|
|
|
$
|
306
|
|
Total intrinsic value of stock option exercises
|
—
|
|
|
370
|
|
|
47
|
|
|||
Tax benefit of stock option exercises recorded in income tax expense
(1)
|
1,556
|
|
|
63
|
|
|
—
|
|
|||
Tax benefit of stock option exercises recorded in additional paid-in-capital
(1)
|
—
|
|
|
—
|
|
|
315
|
|
|||
Aggregate intrinsic value of outstanding stock options
|
—
|
|
|
386
|
|
|
102
|
|
|||
Aggregate intrinsic value of exercisable stock options
|
—
|
|
|
386
|
|
|
102
|
|
(1)
|
As of January 1, 2017, the Company adopted FASB Accounting Standards Update No. 2016-09,
Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
, which, among other items, changed the accounting for the tax benefit of stock option exercises so that it is now recorded as part of current earnings rather than additional paid-in capital. Prior period balances were not retrospectively adjusted.
|
(2)
|
In 2018 and 2017 there were
no
expenses related to stock options as all issued stock options were fully vested at December 31, 2017 and expire in 2019.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(4,765
|
)
|
|
$
|
3,764
|
|
|
$
|
(636
|
)
|
Foreign
|
6,025
|
|
|
7,512
|
|
|
3,585
|
|
|||
State
|
(651
|
)
|
|
3,351
|
|
|
175
|
|
|||
Subtotal
|
609
|
|
|
14,627
|
|
|
3,124
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
947
|
|
|
(8,706
|
)
|
|
2,158
|
|
|||
Foreign
|
(1,531
|
)
|
|
(1,099
|
)
|
|
475
|
|
|||
State
|
(157
|
)
|
|
183
|
|
|
352
|
|
|||
Subtotal
|
(741
|
)
|
|
(9,622
|
)
|
|
2,985
|
|
|||
Total tax provision
|
$
|
(132
|
)
|
|
$
|
5,005
|
|
|
$
|
6,109
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Income taxes (benefit) at U.S. federal statutory tax rate
|
$
|
621
|
|
|
$
|
(21,552
|
)
|
|
$
|
12,332
|
|
Increase (decrease) in taxes resulting from:
|
|
|
|
|
|
||||||
Change in the balance of the valuation allowance for deferred tax assets allocated to foreign income tax expense
|
590
|
|
|
4,598
|
|
|
1,364
|
|
|||
Change in the balance of the valuation allowance for deferred tax assets allocated to domestic income tax expense
|
(944
|
)
|
|
12,755
|
|
|
(4,202
|
)
|
|||
State income taxes, net of federal income tax benefit
|
(798
|
)
|
|
2,270
|
|
|
342
|
|
|||
Divestitures
|
2,133
|
|
|
—
|
|
|
271
|
|
|||
Meals and entertainment
|
517
|
|
|
785
|
|
|
736
|
|
|||
Changes in taxes previously accrued
|
(536
|
)
|
|
(1,339
|
)
|
|
23
|
|
|||
Foreign tax rate differences
|
1,301
|
|
|
913
|
|
|
(2,559
|
)
|
|||
Share-based compensation
|
(1,427
|
)
|
|
131
|
|
|
(90
|
)
|
|||
Goodwill impairment
|
291
|
|
|
6,359
|
|
|
—
|
|
|||
Recognition of uncertain tax positions
|
(218
|
)
|
|
(62
|
)
|
|
85
|
|
|||
Deemed mandatory repatriation
|
(842
|
)
|
|
10,406
|
|
|
—
|
|
|||
Release of deferred tax liability on foreign earnings
|
—
|
|
|
(7,051
|
)
|
|
—
|
|
|||
Domestic Production Activities deduction
|
—
|
|
|
(1,921
|
)
|
|
(1,017
|
)
|
|||
Other matters
|
(820
|
)
|
|
(1,287
|
)
|
|
(1,176
|
)
|
|||
Total tax provision
|
$
|
(132
|
)
|
|
$
|
5,005
|
|
|
$
|
6,109
|
|
Effective tax rate
|
(4.5
|
)%
|
|
(8.1
|
)%
|
|
17.3
|
%
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Deferred income tax assets:
|
|
|
|
||||
Foreign tax credit carryforwards
|
$
|
507
|
|
|
$
|
466
|
|
Net operating loss carryforwards
|
22,909
|
|
|
23,216
|
|
||
Accrued expenses
|
12,987
|
|
|
12,107
|
|
||
Other
|
8,652
|
|
|
4,707
|
|
||
Total gross deferred income tax assets
|
45,055
|
|
|
40,496
|
|
||
Less valuation allowance
|
(28,451
|
)
|
|
(29,782
|
)
|
||
Net deferred income tax assets
|
16,604
|
|
|
10,714
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Property, plant and equipment
|
(6,038
|
)
|
|
(9,482
|
)
|
||
Intangible assets
|
(10,609
|
)
|
|
(2,201
|
)
|
||
Other
|
(6,757
|
)
|
|
(6,576
|
)
|
||
Total deferred income tax liabilities
|
(23,404
|
)
|
|
(18,259
|
)
|
||
Net deferred income tax liabilities
|
$
|
(6,800
|
)
|
|
$
|
(7,545
|
)
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Noncurrent deferred income tax assets, net
|
$
|
1,561
|
|
|
$
|
1,666
|
|
Noncurrent deferred income tax liabilities, net
|
(8,361
|
)
|
|
(9,211
|
)
|
||
Net deferred income tax liabilities
|
$
|
(6,800
|
)
|
|
$
|
(7,545
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance, at beginning of year
|
$
|
29,782
|
|
|
$
|
15,428
|
|
|
$
|
18,897
|
|
Additions
|
1,879
|
|
|
19,260
|
|
|
3,095
|
|
|||
Reversals
|
(2,102
|
)
|
|
(183
|
)
|
|
(4,984
|
)
|
|||
Remeasurement of U.S. deferred tax balances
|
—
|
|
|
(5,141
|
)
|
|
—
|
|
|||
Other adjustments
|
(1,108
|
)
|
|
418
|
|
|
(1,580
|
)
|
|||
Balance, at end of year
|
$
|
28,451
|
|
|
$
|
29,782
|
|
|
$
|
15,428
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance, at beginning of year
|
$
|
2,229
|
|
|
$
|
2,465
|
|
|
$
|
2,410
|
|
Additions for tax positions of prior years related to acquisitions
|
—
|
|
|
—
|
|
|
148
|
|
|||
Additions for tax positions of prior years
|
8
|
|
|
12
|
|
|
10
|
|
|||
Lapse in statute of limitations
|
(264
|
)
|
|
(274
|
)
|
|
(83
|
)
|
|||
Foreign currency translation
|
(18
|
)
|
|
26
|
|
|
(20
|
)
|
|||
Balance, at end of year, total tax provision
|
$
|
1,955
|
|
|
$
|
2,229
|
|
|
$
|
2,465
|
|
Year
|
|
Minimum Lease Payments
|
||
2019
|
|
$
|
19,843
|
|
2020
|
|
15,055
|
|
|
2021
|
|
11,492
|
|
|
2022
|
|
8,111
|
|
|
2023
|
|
5,365
|
|
|
Thereafter
|
|
7,203
|
|
|
Total
|
|
$
|
67,069
|
|
|
Position
|
|
Notional
Amount
|
|
Weighted
Average
Remaining
Maturity
In Years
|
|
Average
Exchange
Rate
|
||
USD/British Pound
|
Sell
|
|
£
|
1,962,900
|
|
|
0.3
|
|
1.28
|
EURO/British Pound
|
Sell
|
|
£
|
2,568,300
|
|
|
0.3
|
|
1.11
|
Interest Rate Swap
|
|
|
$
|
211,640,625
|
|
|
4.0
|
|
|
•
|
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.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Infrastructure Solutions
|
$
|
604,121
|
|
|
$
|
612,154
|
|
|
$
|
571,551
|
|
Corrosion Protection
|
393,740
|
|
|
456,139
|
|
|
401,469
|
|
|||
Energy Services
|
335,707
|
|
|
290,726
|
|
|
248,900
|
|
|||
Total revenues
|
$
|
1,333,568
|
|
|
$
|
1,359,019
|
|
|
$
|
1,221,920
|
|
|
|
|
|
|
|
||||||
Gross profit:
|
|
|
|
|
|
||||||
Infrastructure Solutions
|
$
|
132,411
|
|
|
$
|
140,823
|
|
|
$
|
142,444
|
|
Corrosion Protection
|
92,968
|
|
|
108,240
|
|
|
83,269
|
|
|||
Energy Services
|
41,547
|
|
|
35,749
|
|
|
28,214
|
|
|||
Total gross profit
|
$
|
266,926
|
|
|
$
|
284,812
|
|
|
$
|
253,927
|
|
|
|
|
|
|
|
||||||
Operating income (loss):
|
|
|
|
|
|
||||||
Infrastructure Solutions
(1)
|
$
|
23,683
|
|
|
$
|
(62,244
|
)
|
|
$
|
53,899
|
|
Corrosion Protection
(2)
|
(1,867
|
)
|
|
12,446
|
|
|
1,458
|
|
|||
Energy Services
(3)
|
7,831
|
|
|
6,278
|
|
|
(4,566
|
)
|
|||
Total operating income (loss)
|
29,647
|
|
|
(43,520
|
)
|
|
50,791
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(17,327
|
)
|
|
(16,001
|
)
|
|
(15,029
|
)
|
|||
Interest income
|
516
|
|
|
145
|
|
|
166
|
|
|||
Other
|
(9,881
|
)
|
|
(2,201
|
)
|
|
(694
|
)
|
|||
Total other expense
|
(26,692
|
)
|
|
(18,057
|
)
|
|
(15,557
|
)
|
|||
Income (loss) before taxes on income
|
$
|
2,955
|
|
|
$
|
(61,577
|
)
|
|
$
|
35,234
|
|
|
|
|
|
|
|
||||||
Total assets:
|
|
|
|
|
|
||||||
Infrastructure Solutions
|
$
|
500,977
|
|
|
$
|
531,746
|
|
|
$
|
584,425
|
|
Corrosion Protection
|
279,106
|
|
|
329,848
|
|
|
424,007
|
|
|||
Energy Services
|
163,109
|
|
|
152,416
|
|
|
147,171
|
|
|||
Corporate
|
41,432
|
|
|
22,775
|
|
|
37,979
|
|
|||
Assets held for sale
|
7,793
|
|
|
70,314
|
|
|
—
|
|
|||
Total assets
|
$
|
992,417
|
|
|
$
|
1,107,099
|
|
|
$
|
1,193,582
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
Infrastructure Solutions
|
$
|
12,730
|
|
|
$
|
16,680
|
|
|
$
|
19,834
|
|
Corrosion Protection
|
9,754
|
|
|
8,603
|
|
|
14,393
|
|
|||
Energy Services
|
3,053
|
|
|
2,713
|
|
|
2,514
|
|
|||
Corporate
|
4,977
|
|
|
2,834
|
|
|
2,019
|
|
|||
Total capital expenditures
|
$
|
30,514
|
|
|
$
|
30,830
|
|
|
$
|
38,760
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
Infrastructure Solutions
|
$
|
16,758
|
|
|
$
|
18,731
|
|
|
$
|
17,547
|
|
Corrosion Protection
|
11,874
|
|
|
15,598
|
|
|
18,792
|
|
|||
Energy Services
|
7,111
|
|
|
6,726
|
|
|
7,067
|
|
|||
Corporate
|
2,112
|
|
|
3,364
|
|
|
3,313
|
|
|||
Total depreciation and amortization
|
$
|
37,855
|
|
|
$
|
44,419
|
|
|
$
|
46,719
|
|
(1)
|
Operating income for 2018 includes: (i)
$16.9 million
of restructuring charges (see Note 4); and (ii)
$0.8 million
of cost incurred related to the disposition of Denmark. Operating loss for 2017 includes: (i)
$18.1 million
of restructuring charges (see Note 4); (ii)
$45.4 million
of goodwill impairment charges (see Note 2); (iii)
$41.0 million
of definite-lived intangible asset impairment charges (see Note 2); and (iv)
$0.7 million
of costs incurred related to the acquisition of Environmental Techniques. Operating income for 2016 includes: (i)
$2.9 million
of restructuring charges (see Note 4); (ii)
$2.7 million
of costs incurred related to the acquisitions of Underground Solutions, Fyfe Europe, LMJ and Concrete Solutions; (iii) inventory step up expense of
$3.6 million
recognized as part of the accounting for business combinations; and (iv) a gain of
$6.6 million
in connection with the settlement of
two
longstanding lawsuits (see Note 12).
|
(2)
|
Operating income for 2018 includes: (i)
$8.3 million
of restructuring charges (see Note 4); and (ii)
$6.2 million
of costs incurred related to the divestiture of Bayou. Operating income for 2017 includes
$5.9 million
of restructuring charges (see Note 4) and (ii)
$2.3 million
of costs incurred related to the planned divestiture of Bayou. Operating income for 2016 includes
$4.6 million
of 2016 Restructuring charges (see Note 4).
|
(3)
|
Operating income for 2018 includes
$0.4 million
of restructuring charges (see Note 4). Operating loss for 2016 includes
$8.2 million
of 2016 Restructuring charges.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
(1)
|
|
|
|
|
|
||||||
United States
|
$
|
966,291
|
|
|
$
|
1,028,313
|
|
|
$
|
924,580
|
|
Canada
|
133,612
|
|
|
139,734
|
|
|
129,291
|
|
|||
Europe
|
66,794
|
|
|
71,839
|
|
|
60,238
|
|
|||
Other foreign
|
166,871
|
|
|
119,133
|
|
|
107,811
|
|
|||
Total revenues
|
$
|
1,333,568
|
|
|
$
|
1,359,019
|
|
|
$
|
1,221,920
|
|
|
|
|
|
|
|
||||||
Gross profit:
|
|
|
|
|
|
||||||
United States
|
$
|
178,024
|
|
|
$
|
226,026
|
|
|
$
|
194,079
|
|
Canada
|
22,823
|
|
|
31,173
|
|
|
28,047
|
|
|||
Europe
|
8,379
|
|
|
11,997
|
|
|
11,605
|
|
|||
Other foreign
|
57,700
|
|
|
15,616
|
|
|
20,196
|
|
|||
Total gross profit
|
$
|
266,926
|
|
|
$
|
284,812
|
|
|
$
|
253,927
|
|
|
|
|
|
|
|
||||||
Operating income (loss):
|
|
|
|
|
|
||||||
United States
|
$
|
174
|
|
|
$
|
(33,583
|
)
|
|
$
|
28,013
|
|
Canada
|
9,482
|
|
|
12,220
|
|
|
16,156
|
|
|||
Europe
|
(10,599
|
)
|
|
(3,771
|
)
|
|
1,089
|
|
|||
Other foreign
|
30,590
|
|
|
(18,386
|
)
|
|
5,533
|
|
|||
Total operating income (loss)
|
$
|
29,647
|
|
|
$
|
(43,520
|
)
|
|
$
|
50,791
|
|
|
|
|
|
|
|
||||||
Long-lived assets:
(1)(2)
|
|
|
|
|
|
||||||
United States
|
$
|
105,978
|
|
|
$
|
93,472
|
|
|
$
|
140,099
|
|
Canada
|
7,725
|
|
|
8,816
|
|
|
9,464
|
|
|||
Europe
|
8,295
|
|
|
13,435
|
|
|
7,575
|
|
|||
Other foreign
|
6,662
|
|
|
9,586
|
|
|
8,829
|
|
|||
Total long-lived assets
|
$
|
128,660
|
|
|
$
|
125,309
|
|
|
$
|
165,967
|
|
(1)
|
Revenues and long-lived assets 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.
|
(2)
|
Long-lived assets as of
December 31, 2018
,
2017
and
2016
do not include intangible assets, goodwill or deferred tax assets.
|
|
First
Quarter (1) |
|
Second
Quarter (2) |
|
Third
Quarter (3) |
|
Fourth
Quarter (4) |
||||||||
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
324,861
|
|
|
$
|
335,030
|
|
|
$
|
339,679
|
|
|
$
|
333,998
|
|
Gross profit
|
61,504
|
|
|
71,053
|
|
|
72,673
|
|
|
61,696
|
|
||||
Operating income (loss)
|
3,181
|
|
|
14,459
|
|
|
13,009
|
|
|
(1,002
|
)
|
||||
Net income (loss)
|
(1,476
|
)
|
|
7,198
|
|
|
141
|
|
|
(2,776
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share attributable to Aegion Corporation:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.06
|
)
|
|
$
|
0.24
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.08
|
)
|
Diluted
|
$
|
(0.06
|
)
|
|
$
|
0.24
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.08
|
)
|
(1)
|
Includes pre-tax expenses of
$5.2 million
related to our restructuring efforts (see Note 4).
|
(2)
|
Includes pre-tax expenses of
$2.9 million
related to our restructuring efforts (see Note 4).
|
(3)
|
Includes pre-tax expenses of
$7.4 million
related to our restructuring efforts (see Note 4).
|
(4)
|
Includes pre-tax expenses of
$13.9 million
related to our restructuring efforts (see Note 4).
|
|
First
Quarter
(1)
|
|
Second
Quarter
(2)
|
|
Third
Quarter
(3)
|
|
Fourth
Quarter
(4)
|
||||||||
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues
|
$
|
325,175
|
|
|
$
|
354,473
|
|
|
$
|
341,872
|
|
|
$
|
337,499
|
|
Gross profit
|
67,412
|
|
|
79,768
|
|
|
73,442
|
|
|
64,190
|
|
||||
Operating income (loss)
|
14,212
|
|
|
21,495
|
|
|
(75,271
|
)
|
|
(3,956
|
)
|
||||
Net income (loss)
|
7,832
|
|
|
12,014
|
|
|
(74,044
|
)
|
|
(12,384
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share attributable to Aegion Corporation:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.18
|
|
|
$
|
0.33
|
|
|
$
|
(2.23
|
)
|
|
$
|
(0.39
|
)
|
Diluted
|
$
|
0.17
|
|
|
$
|
0.32
|
|
|
$
|
(2.23
|
)
|
|
$
|
(0.39
|
)
|
(1)
|
Includes pre-tax expense reversals of
$(0.1) million
related to our restructuring efforts (see Note 4).
|
(2)
|
Includes pre-tax expenses of
$0.3 million
related to our restructuring efforts (see Note 4).
|
(3)
|
Includes pre-tax expenses of
$6.7 million
related to our restructuring efforts (see Note 4); pre-tax goodwill impairment charges of
$45.4 million
(see Note 2); and pre-tax definite-lived intangible asset impairment charges of
$41.0 million
(see Note 2).
|
(4)
|
Includes pre-tax expenses of
$17.1 million
related to our restructuring efforts (see Note 4).
|
Dated: March 1, 2019
|
AEGION CORPORATION
|
|
|
|
|
|
|
|
By:
|
/s/ Charles R. Gordon
|
|
|
|
Charles R. Gordon
|
|
|
|
President and Chief Executive Officer
|
|
Signature
|
Title
|
Date
|
|
|
|
/s/ Charles R. Gordon
|
Principal Executive Officer and
|
March 1, 2019
|
Charles R. Gordon
|
Director
|
|
|
|
|
/s/ David F. Morris
|
Principal Financial Officer
|
March 1, 2019
|
David F. Morris
|
|
|
|
|
|
/s/ Kenneth L. Young
|
Principal Accounting Officer
|
March 1, 2019
|
Kenneth L. Young
|
|
|
|
|
|
/s/ Stephen P. Cortinovis
|
Director
|
March 1, 2019
|
Stephen P. Cortinovis
|
|
|
|
|
|
/s/ Stephanie A. Cuskley
|
Director
|
March 1, 2019
|
Stephanie A. Cuskley
|
|
|
|
|
|
/s/ Walter J. Galvin
|
Director
|
March 1, 2019
|
Walter J. Galvin
|
|
|
|
|
|
/s/ Rhonda Germany Ballintyn
|
Director
|
March 1, 2019
|
Rhonda Germany Ballintyn
|
|
|
|
|
|
/s/ Juanita H. Hinshaw
|
Director
|
March 1, 2019
|
Juanita H. Hinshaw
|
|
|
|
|
|
/s/ M. Richard Smith
|
Director
|
March 1, 2019
|
M. Richard Smith
|
|
|
|
|
|
/s/ Alfred L. Woods
|
Director
|
March 1, 2019
|
Alfred L. Woods
|
|
|
|
|
|
/s/ Phillip D. Wright
|
Director
|
March 1, 2019
|
Phillip D. Wright
|
|
|
10.13
|
|
|
|
10.14
|
|
|
|
10.15
|
|
|
|
10.16
|
|
|
|
10.17
|
|
|
|
10.18
|
|
|
|
10.19
|
|
|
|
10.20
|
|
|
|
10.21
|
|
|
|
10.22
|
|
|
|
10.23
|
|
|
|
10.24
|
|
|
|
10.25
|
|
|
|
10.26
|
|
|
|
10.27
|
|
|
|
10.28
|
|
|
10.29
|
|
|
|
10.30
|
21
|
|
|
|
23
|
|
|
|
24
|
Power of Attorney (set forth on signature page).
|
|
|
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*
|
(1)
|
The Company’s current, quarterly and annual reports are filed with the Securities and Exchange Commission under file no. 001-35328.
|
(2)
|
Management contract or compensatory plan or arrangement.
|
(a)
|
“
Agreement
” means this Officer Change in Control Severance Agreement, as it may be amended from time to time.
|
(b)
|
“
Base Salary
” means, at any time, the then regular annual rate of pay which the Officer is receiving as annual salary, excluding amounts: (i) received under short-term or long-term incentive or other bonus plans, regardless of whether or not the amounts are deferred, or (ii) designated by the Company as payment toward reimbursement of expenses.
|
(c)
|
“
Beneficial Owner
” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
|
(d)
|
“
Board
” means the Board of Directors of the Company.
|
(e)
|
“
Cause
” shall be determined solely by the Board in the exercise of good faith and reasonable judgment, and shall mean the occurrence of any one or more of the following:
|
(i)
|
breaching any employment, confidentiality, noncompete, nonsolicitation or other agreement with the Company, any written Company policy relating to compliance with laws (during employment); or
|
(ii)
|
causing, inducing, requesting or advising, or attempting to cause, induce, request or advise, any employee, representative, consultant or other similar person to terminate his/her relationship, or breach any agreement, with the Company; or
|
(iii)
|
causing, inducing, requesting or advising, or attempting to cause, induce, request or advise, any customer, supplier or other Company business contact to withdraw, curtail or cancel its business with the Company; or
|
(iv)
|
the Officer’s willful and continued failure to substantially perform the Officer’s duties with the Company (other than any such failure resulting from the Officer’s Disability), after a written demand for substantial performance is delivered to the Officer that specifically identifies the manner in which the Board believes that the Officer has not substantially performed his duties, and the Officer has failed to remedy the situation within fifteen (15) business days of such written notice from the Company; or
|
(v)
|
the Officer’s conviction of a felony; or
|
(vi)
|
the Officer’s willful engagement in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise. Under this standard, no act or failure to act on the Officer’s part shall be deemed “willful” unless done, or omitted to be done, by the Officer not in good faith and without reasonable belief that the action or omission was in the best interests of the Company.
|
(f)
|
“
Change in Control
” of the Company shall mean the occurrence of any one (1) or more of the following events:
|
(i)
|
the acquisition by one person, or more than one person acting as a group, in a transaction or series of related transactions, of ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 30% of the total fair market value or total voting power of the stock of the Company; and/or
|
(ii)
|
a majority of the members of the Company’s board of directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election; and/or
|
(iii)
|
the consummation of a merger or consolidation of the Company other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; and/or
|
(iv)
|
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is a consummated sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
|
(g)
|
“
Code
” means the Internal Revenue Code of 1986, as amended.
|
(h)
|
“
Committee
” means the Compensation Committee of the Board of Directors of the Company, or, if no Compensation Committee exists, then the full Board of Directors of the Company, or a committee of Board members, as appointed by the full Board to administer this Agreement.
|
(i)
|
“
Company
” means Aegion Corporation, a Delaware corporation (including any and all subsidiaries and affiliates), or any successor thereto as provided in Section 8.1 herein.
|
(j)
|
“
Disability
” or “
Disabled
” shall mean that the Officer is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.
|
(k)
|
“
Effective Date
” means the date this Agreement is approved by the Committee, or such other date as the Committee shall designate in its resolution approving this Agreement, and as specified in the opening sentence of this Agreement.
|
(l)
|
“
Effective Date of Termination
” means the date on which a Qualifying Termination occurs, as provided in Section 2.2 herein, which triggers the payment of Severance Benefits hereunder.
|
(m)
|
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
|
(n)
|
“
Good Reason
” means, without the Officer’s express written consent, the occurrence after a Change in Control of the Company of any one (1) or more of the following:
|
(i)
|
a material reduction or alteration in the nature or status of the Officer’s authorities, duties, or responsibilities from those in effect as of 90 calendar days prior to the Change
in
Control, other than an insubstantial and inadvertent act that is remedied by the Company or the acquiring company promptly after receipt of notice thereof given by the Officer;
|
(ii)
|
the Company’s or the acquiring company’s requiring the Officer to be based at a location in excess of 50 miles from the location of the Officer’s principal job location or office in effect as of 90 calendar days prior to the Change
in
Control
,
except for required travel on the Company’s business to an extent substantially consistent with the Officer’s then present business travel obligations;
|
(iii)
|
a reduction by the Company or the acquiring company of the Officer’s base salary in effect as of 90 calendar days prior to the Change in Control that is greater than the lesser of: (A) ten percent (10%) of such base salary; and (B) the average percentage reduction applicable to all other Officers of the Company;
|
(iv)
|
the failure of the Company or the acquiring company to continue in effect any of the Company’s short- and long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices, or other compensation arrangements in which the Officer participates taken as a whole unless such failure to continue the plan, policy, practice, or arrangement pertains to all plan participants generally; or the failure by the Company or the acquiring company to continue the Officer’s participation therein on substantially the same basis, both in terms of the amount of benefits provided and the level of the Officer’s participation relative to other participants, as existed 90 calendar days prior to the Change
in
Control;
|
(v)
|
the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Company’s obligations under this Agreement, as contemplated in Section 8.1 herein; and
|
(vi)
|
a material breach of this Agreement by the Company which is not remedied by the Company within thirty (30) business days of receipt of written notice of such breach delivered by the Officer to the Company.
|
(r)
|
“
Qualifying Termination
” means the Officer’s separation from service (as defined in Section 409A of the Code and the applicable regulations) with the Company due to any of the events described in Section 2.2 herein, the occurrence of which triggers the payment of Severance Benefits hereunder.
|
(s)
|
“
Severance Benefits
” means the payment of amounts and benefits upon the Officer’s separation from service (as defined in Section 409A of the Code and applicable regulations) as provided in Section 2.3 herein.
|
(a)
|
A lump-sum amount equal to the Officer’s accrued but unpaid Base Salary, accrued vacation pay, unreimbursed business expenses, and all other items earned by and owed to the Officer through and including the Effective Date of Termination.
|
(b)
|
A
lump-sum amount: (i) if the Effective Date of Termination is between January 1 and June 30, equal to the Officer’s then current annual target bonus opportunity; or (ii) if the Effective Date of Termination is between July 1 and December 31, equal to the greater of (A) the Officer’s then current annual target bonus opportunity or (B) the actual annual bonus payable to the Officer based on the Company’s performance up to and including the Effective Date of Termination, as such target and actual amounts are established or computed under the annual bonus plan in which the Officer is then participating, for the bonus plan year in which the Officer’s Effective Date of Termination occurs, and multiplied by a fraction the numerator of which is the number of days in the year from January 1 through the Effective Date of Termination, and the denominator of which is three hundred sixty-five (365). This payment will be in lieu of any other payment to be made to the Officer under the annual bonus plan in which the Officer is then participating for the plan year in which the Effective Date of Termination occurs.
|
(c)
|
A lump-sum amount equal to
1.99
multiplied by the sum of the following: (i) the higher of: (A) the Officer’s annual rate of Base Salary in effect upon the Effective Date of Termination, or (B) the Officer’s annual rate of Base Salary in effect on the date of the Change in Control; and (ii) the higher of: (A) the Officer’s annual target bonus opportunity established under the annual bonus plan in which the Officer is then participating for the bonus plan year in which the Officer’s Effective Date of Termination occurs, or (B) the Officer’s annual target bonus opportunity established under the annual bonus plan in which the Officer is participating for the bonus plan year in which the Change in Control occurs.
|
(d)
|
Continuation for twenty-four (24) months of the Officer’s health, dental and vision insurance coverage. The benefit shall be provided by the Company to the Officer beginning immediately upon the Effective Date of Termination. Such benefit shall be provided to the Officer at the same coverage level as in effect immediately prior to the Change in Control and the Company (or the acquirer as the case may be) shall pay the amounts that the Company would have been required to pay for health, dental and vision benefits for Officer and Officer’s eligible family members had Officer remained an employee of the Company following the Effective Date of Termination (Officer shall be responsible for the portion of health, dental and vision premiums that would be paid by an employee of the Company receiving comparable benefits). Any COBRA health benefit continuation coverage provided to Officer shall run concurrently with the aforementioned twenty-four (24) month period.
|
(e)
|
The Company agrees to pay on the Officer’s behalf up to $15,000 in Officer outplacement services to one or more firms chosen by Officer and acceptable to the Company, provided that such services are incurred no later the first anniversary of the Officer’s Effective Date of Termination. Such expenses shall be reimbursed by the Company as soon as practical after an expense report is completed and submitted to the Company for approval, provided such expense report must be received by the Company no later than the second anniversary of the Officer’s Effective Date of Termination.
|
(a)
|
Notwithstanding anything to the contrary set forth in this Agreement, any Severance Benefits paid (i) within 2-½ months of the end of the Company’s taxable year containing the Officer’s separation from service with the Company, or (ii) within 2-½ months of the Officer’s taxable year containing the separation from service from employment by the Company shall be exempt from the requirements of Section 409A of the Code, and shall be paid in accordance with this Article 3. Severance Benefits subject to this Section 3.2(a) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Section 409A of the Code and the regulations thereunder.
|
(b)
|
To the extent Severance Benefits are not exempt from Section 409A under Section 3.2(a) above, any Severance Benefits paid in the first six (6) months following the Officer’s separation from service with the Company that are equal to or less than the lesser of the amounts described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and (2) shall be exempt from Section 409A and shall be paid in accordance with this Article 3. Severance Benefits subject to this Section 3.2(b) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Section 409A of the Code and the regulations thereunder.
|
(c)
|
To the extent Severance Benefits are not exempt from Section 409A under Sections 3.2(a) or (b) above, any Severance Benefits paid equal to or less than the applicable dollar amount under Section 402(g)(1)(B) of the Code for the year of separation from service with the Company shall be exempt from Section 409A in accordance with Treasury Regulation Section 1.409A-1(b)(9)(v)(D) and shall be paid in accordance with this Article 3. Severance Benefits subject to this Section 3.2(c) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Section 409A of the Code and the regulations thereunder.
|
(d)
|
To the extent Severance Benefits are not exempt from Section 409A pursuant to Sections 3.2(a), (b) or (c) above, and to the extent the Officer is a “specified employee” (as defined below), payments due to the Officer under Section 3 shall begin no sooner than six (6) months after the Officer’s separation from service with the Company (other than for death); provided, however, that any payments not made during the six (6) month period described in this Section 3.2(d) due to the six (6) month delay period required under Treasury Regulation Section 1.409A-3(i)(2) shall be made in a single lump sum as soon as administratively practicable after the expiration of such six (6) month period and the balance of all other payments required under this Agreement shall be made as otherwise scheduled in this Agreement. Notwithstanding anything herein to the contrary, and subject to Code Section 409A, to the extent the following rules should apply to the Officer in connection with a payment made hereunder, such payment shall not be made or commence as a result of the Officer’s Effective Date of Termination if the Officer is a key employee (as set forth below) before the date that is not less than six (6) months after the Officer’s Effective Date of Termination. For this purpose, a key employee includes a “specified employee” (as defined in Code Section 409A(a)(2)(B)) during the entire twelve (12) month period determined by the Company ending with the annual date upon which key employees are identified by the Company, and also includes any Officer identified by the Company in good faith with respect to any distribution as belonging to the group of identified key employees, to a maximum of 200 such key employees, regardless of whether such Officer is subsequently determined by the Company, any governmental agency, or a court not to be a key employee. The identification date for determining key employees shall be each December 31 (and the new key employee list shall be updated and effective each subsequent April 1).
|
(e)
|
For purposes of this Agreement, the term “specified employee” shall have the meaning set forth in Treasury Reg. Section 1.409A-1(i). The determination of whether the Officer is a “specified employee” shall be made by the Company in good faith applying the applicable Treasury regulations.
|
(i)
|
operating results and/or losses associated with the write-down of assets of a subsidiary, business unit or division that has been designated by the Board of Directors as a discontinued business operation or to be liquidated;
|
(ii)
|
gains or losses on the sale of any subsidiary, business unit or division, or the assets or business thereof;
|
(iii)
|
gains or losses from the disposition of material capital assets (other than in a transaction described in subsection (ii)) or the refinancing of indebtedness, including, among other things, any make-whole payments and prepayment fees;
|
(iv)
|
losses associated with the write-down of goodwill or other intangible assets of the Company due to the determination under applicable accounting standards that the assets have been impaired;
|
(v)
|
gains or losses from material property casualty occurrences or condemnation awards, taking into account the proceeds paid by insurance companies and other third parties in connection with the casualty or condemnation;
|
(vi)
|
any income statement effect resulting from a change in tax laws, accounting principles (including, without limitation, generally accepted accounting principles), regulations, or other laws regulations affecting reported results, except, in each case, to the extent the effect of such a change is already reflected in the target EBT amount;
|
(vii)
|
reorganization or restructuring charges and acquisition- or divestiture-related transaction expenses and costs;
|
(viii)
|
any gains or losses from unusual nonrecurring or extraordinary items;
|
(ix)
|
operating results of any entity or business acquired or disposed of during the Plan Year, except, in the case of an acquisition, to the extent such entity or business was included in the Company’s operating business plan for the Plan Year or, in the case of a disposition, to the extent such entity or business was not included in the Company’s operating business plan for the Plan Year;
|
(x)
|
any gain or loss resulting from currency fluctuations or translations as set forth in the Aegion Corporation Foreign Exchange Rate Policy for Annual Incentive Plan and Long-Term Incentive Plan;
|
(xi)
|
any material income or loss item the realization of which is not directly attributable to the actions of current senior management of the Company; and
|
(xii)
|
the income taxes (benefits) of any of the above-designated gains or losses.
|
1.
|
If Actual EBT equals the EBT Target, the portion of the Consolidated Company Financial Performance Pool related to EBT shall be equal to the portion Company Target Funding Amount related to EBT, subject to the additional terms specified in Exhibit A.
|
2.
|
If Actual EBT exceeds or falls below the EBT Target, the portion of Consolidated Company Financial Performance Pool related to EBT shall be determined in accordance with the chart in Exhibit A (using interpolation for Actual EBT levels as specified therein), and subject to the additional terms specified therein.
|
3.
|
If Actual EBT is less than the threshold percentage of the EBT Target specified in the chart in Exhibit A, the maximum amount funded to the Consolidated Company Financial Performance Pool shall be equal to $500,000; provided, however, that (i) such amount shall only be awarded to individual Participants for extraordinary performance, as determined by the Company’s Chief Executive Officer in his sole discretion (subject to the review and approval by the Compensation Committee of any awards to executive officers of the Company); (ii) such amount shall be reduced such that any funding under this paragraph and the similar mechanism in Section F(13) of the Management Annual Incentive Plan for Business Unit Employees shall together not exceed $500,000.
|
4.
|
If Actual Bookings equals the Bookings Target, the portion of the Consolidated Company Financial Performance Pool related to Bookings shall be equal to the portion of Company Target Funding Amount related to Bookings, subject to the additional terms specified in Exhibit B.
|
5.
|
If Actual Bookings exceeds or falls below the Bookings Target, the portion of the Consolidated Company Financial Performance Pool related to Bookings shall be determined in accordance with the chart in Exhibit B (using interpolation for Actual Bookings levels as specified therein), and subject to the additional terms specified therein.
|
6.
|
If Actual Bookings are less than the threshold percentage of the Bookings Target (after the threshold percentage has been determined by the Chief Executive Officer in his sole discretion, per Exhibit B), the amount funded to the Consolidated Company Financial Performance Pool shall be equal to $0.
|
Company Name
|
Jurisdiction of Formation
|
Aegion Coating Services, LLC
|
Texas
|
Aegion Corrosion Protection Holdings Limited
|
England & Wales
|
Aegion Cyprus Limited
|
Cyprus
|
Aegion Energy Services, LLC
|
Delaware
|
Aegion Holding Company, LLC
|
Delaware
|
Aegion International Holdings Limited
|
England & Wales
|
Aegion International Limited
|
England & Wales
|
Aegion International Services, Inc.
|
Delaware
|
Aegion Rehabilitation Services Limited
|
England & Wales
|
Aegion Saudi Arabia Company
|
Saudi Arabia
|
Aegion South Africa (Pty) Ltd
1
|
South Africa
|
AllSafe Services, Inc.
|
Delaware
|
Brinderson Constructors, Inc.
|
California
|
Brinderson, LLC
|
California
|
Building Chemical Supplies Limited
|
New Zealand
|
Concrete Solutions Limited
|
New Zealand
|
Corrpower International Limited
2
|
Saudi Arabia
|
Corrpro Canada Holdings, Inc.
|
Delaware
|
Corrpro Canada, Inc.
|
Alberta, Canada
|
Corrpro Companies Engineering Limited
|
England & Wales
|
Corrpro Companies Europe Ltd.
|
England & Wales
|
Corrpro Companies International, Inc.
|
Nevada
|
Corrpro Companies, Inc.
|
Ohio
|
Corrpro Holdings, LLC
|
Delaware
|
DEH Services, LLC
|
Louisiana
|
Environmental Techniques Limited
|
Northern Ireland
|
Fibrwrap Construction (M) Sdn Bhd
|
Malaysia
|
Fibrwrap Construction Colombia S.A.S.
|
Colombia
|
Fibrwrap Construction Pte Ltd
|
Singapore
|
Fibrwrap Construction Services Ltd.
|
British Columbia, Canada
|
Fibrwrap Construction Services USA, Inc.
|
Delaware
|
Fibrwrap Construction Services, Inc.
|
Delaware
|
Fyfe - Latin America S.A.
|
Panama
|
Fyfe (Hong Kong) Limited
|
Hong Kong
|
Fyfe Asia Pte. Ltd.
|
Singapore
|
Fyfe Borneo Sdn Bhd
3
|
Brunei
|
Fyfe Co. LLC
|
Delaware
|
Fyfe International Holdings B.V.
|
Netherlands
|
Fyfe Japan Co. Ltd.
|
Japan
|
Hockway Middle East FZE
|
Dubai Silicon Oasis, UAE
|
INA Acquisition Corp.
|
Delaware
|
Infrastructure Group Holdings, LLC
|
Delaware
|
Wilson Walton (Portugal) Anti Corrosivos Ltd.
|
Portugal
|
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)
|
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-K 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-K 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-K 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-K 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)
|
Mine or Operating Name / MSHA Identification Number
|
Section 104 S&S Citations
(#)
|
Section 104(b) Orders
(#)
|
Section 104(d) Citations and Orders
(#)
|
Section 110(b)(2) Violations
(#)
|
Section 107(a) Orders
(#)
|
Total Dollar Value of MSHA Assessments Proposed
($)
|
Total Number of Mining Related Fatalities
(#)
|
Received Notice of Pattern of Violations Under Section 104(e)
(yes/no)
|
Received Notice of Potential to Have Pattern Under Section 104(e)
(yes/no)
|
Legal Actions Pending as of 12/31/2018
(#)
|
Legal Actions Initiated during 2018
(#)
|
Legal Actions Resolved During 2018
(#)
|
Barrick Goldstrike Mines Inc./ 2601089
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
no
|
no
|
0
|
0
|
0
|
Genesis Alkali, LLC /
4800152
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
no
|
no
|
0
|
0
|
0
|