- Crew scheduling and production across Aegion’s operations were more challenging in the month of December compared to prior years mainly due to severe winter weather conditions in much of the United States and Canada, especially with respect to municipal cured-in-place pipe installations, and the unexpected customer-driven delays of several key pressure pipe projects. The estimated impact to consolidated fourth quarter revenues was approximately $10 million with a corresponding impact to gross margins because of the reduction in volume to cover fixed costs. The Company will assess any potential impact to 2017, as the deferred activity will likely be scheduled throughout the year, while balancing other project activity and achieving optimal crew utilization.
- Pipe insulation coating for the large deep-water project progressed as planned and was a significant contributor to fourth quarter earnings with expectations for continued strong earnings contributions through much of 2017.
- In December, the Company settled two longstanding lawsuits related to the December 2012 departure of several key leaders in sales and operations for the Tyfo® Fibrwrap® technology, which is part of the Infrastructure Solutions platform. Under the settlement, Aegion will receive $6.63 million with an initial $3.63 million cash payment made in December and the remainder to be paid in $750,000 installments over the next four years.
ST. LOUIS, Jan. 10, 2017 (GLOBE NEWSWIRE) -- “The scheduling and production impacts in December do not affect the favorable outlook we continue to expect in 2017. The North American municipal pipeline rehabilitation market remains strong. A key area of focus for 2017 will be to grow our presence in the pressure pipe rehabilitation market using a dedicated sales team to promote our portfolio of solutions. We anticipate growth in the North America midstream pipeline market for our cathodic protection services in part by more broadly offering an internally developed asset integrity management tools for pipeline inspections. Finally, we successfully renewed a large maintenance contract for a California refinery with our trade union operation, which is a positive development in a solid market for refinery services on the U.S. West Coast.
“We believe these positive indicators coupled with the expected contributions from the large deep-water pipe coating project, improved stability in the energy markets and a continuous focus on productivity improvements form a foundation for significant earnings growth in 2017.”
Charles R. Gordon
Aegion President and Chief Executive Officer
The Company has not completed its financial close. Fourth quarter and full year 2016 financial results as well as additional details with respect to the 2017 outlook will be provided in early March.
About Aegion (NASDAQ:AEGN)
Aegion combines innovative technologies with market-leading expertise to maintain, rehabilitate and strengthen infrastructure around the world. Since 1971, the Company has played a pioneering role in finding transformational solutions to rehabilitate aging infrastructure, primarily pipelines in the wastewater, water, energy, mining and refining industries. Aegion also maintains the efficient operation of refineries and other industrial facilities and provides innovative solutions for the strengthening of buildings, bridges and other structures. Aegion is committed to Stronger. Safer. Infrastructure.® More information about Aegion can be found at www.aegion.com.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Aegion’s forward-looking statements in this news release represent its beliefs or expectations about future events or financial performance. These forward-looking statements are based on information currently available to Aegion and on management’s beliefs, assumptions, estimates or projections and are not guarantees of future events or results. When used in this document, the words “anticipate,” “estimate,” “believe,” “plan,” “intend, “may,” “will” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to in the “Risk Factors” section of Aegion’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on February 29, 2016, and in subsequently filed documents. In light of these risks, uncertainties and assumptions, the forward-looking events may not occur. In addition, Aegion’s actual results may vary materially from those anticipated, estimated, suggested or projected. Except as required by law, Aegion does not assume a duty to update forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, review additional disclosures made by Aegion from time to time in Aegion’s filings with the Securities and Exchange Commission. Please use caution and do not place reliance on forward-looking statements. All forward-looking statements made by Aegion in this news release are qualified by these cautionary statements.
Aegion® and its associated logo are the registered trademarks of Aegion Corporation and its affiliates.
CONTACT: Aegion Corporation David A. Martin, Executive Vice President and Chief Financial Officer (636) 530-8000