Aegion Corporation (AEGN) lowered its first quarter 2013 earnings per share guidance to the range of 4 cents to 8 cents, citing project delays due to adverse weather conditions as well as postponement of several contracts. The news led to a $1.55 or 6% drop in Aegion shares.
Aegion, however, confirmed that its prior full-year 2013 guidance range of $1.60 to $1.80 per share remains intact. Cash flow from operating activities is expected to be over $100 million, and return on invested capital is projected to be in range of 9% to 10%.
Aegion had reported earnings per share of 18 cents in the first quarter of 2012. Compared to this, the earnings guidance for the first quarter of 2013 projects a decline of 56% to 78%.
During the quarter, adverse weather affected parts of Canada as well as the Midwest and Eastern United States, which led to delays for contracting and manufacturing activities associated with the North America Water & Wastewater business and in completing projects for the Commercial & Structural platform. Furthermore, several domestic and international contracts for Energy & Mining and Commercial and Structural, which were slated to begin or completed by March end have been postponed.
An unexpected slowdown in the pace of pipeline construction by the prime contractor for the Tite Liner project in Morocco during the month of March was also a reason for the reduction in earnings expectation for the quarter. In the Canadian Oil Sands, soft ground conditions deferred overall pipeline construction activity, impacting the schedule in the first quarter for Bayou’s pipe coating projects.
Normally, Aegion’s first quarter ranks lowest in terms of earnings with a meager contribution of 10% of total earnings for the year, due to delays caused by weather and the seasonal low period for many of its businesses. Given the favorable outlook of its markets, Aegion expects to make up for this slow start to the year during the balance of 2013 on the back of its strong backlog at the start of 2013, a robust bid table supporting the opportunity for securing additional projects this year.
Aegion Corporation provides proprietary technologies and services to protect against the corrosion of industrial pipelines and for the rehabilitation and strengthening of water, wastewater, energy and mining piping systems and buildings, bridges, tunnels and waterfront structures. Aegion currently holds a Zacks Rank # 3(Hold). Other stocks with a favorable Zacks Rank in the same industry are James Hardie Industries plc (JHX), Masco Corporation (MAS) and Trex Co. Inc. (TREX) with Zacks Rank #2 (Buy).
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