Aegion's Contract Wins Continue

Zacks Equity Research
January 22, 2014

Aegion Corp. (AEGN) declared that its unit, Insituform Pacific Pty. Ltd., has received a five-year contract from Barwon Water in Victoria, Australia, worth around $24.7 million.

Barwon Water is Victoria’s largest regional urban water corporation and provides water and wastewater services to more than 295,000 permanent residents. In 2013, Barwon Water implemented its five-year Water Plan in order to improve the delivery of quality services.

Insituform, a global leader in the development and installation of proprietary technologies and services for reconstructing sewer, water and other underground piping systems, will manage the cleaning and inspection.

Insituform will use its Cured-in-Place Pipe (:CIPP) technology to install 5,000 square miles of wastewater pipelines in the city ranging from 6–9 inches in diameter. In addition to the indirect employment of subcontractors and suppliers in the region, Insituform expects to add around 16 new positions.

Additionally, Insituform will provide a community contact number, establishing and maintaining customer contact details, notifications for all works and daily notifications to Barwon Water’s contracts team and customer call center.

Recently, Aegion secured a contract from the Metropolitan St. Louis Sewer District (MSD) worth around $5.2 million to provide rehabilitation with CIPP. The company also won a three-year fixed price and quantity contract valued at $10 million from the U.S. Army Corps of Engineers for cathodic protection and corrosion control services.

Chesterfield, Mo.-based Aegion is a diversified building and construction company that provides infrastructure protection, proprietary technologies and services. Aegion also offers services related to the rebuilding and improvement of sewer, water, energy and mining piping systems.

Aegion slashed its fiscal 2013 adjusted earnings guidance to the range of $1.27 to $1.32 per share from its earlier guidance of $1.53 to $1.60. The downward revision in the yearly guidance was largely due to the expected weak results in the Commercial and Structural segment.

However, Aegion will benefit from its strong backlog. Furthermore, the company’s contract wins in the past as well as its scope to gain more such deals in the future bode well for the company.

Currently, Aegion carries a Zacks Rank #5 (Strong Sell). However, some better-ranked stocks in the sector include United Rentals, Inc. (URI), Chicago Bridge & Iron Co. N.V. (CBI) and Fluor Corp. (FLR). All of these have a Zacks Rank #2 (Buy).

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