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Aegion (AEGN) Launches a New $20M Share Buyback Program - Analyst Blog

Reflecting its continued commitment to enhance shareholder value, board of directors of Aegion Corporation AEGN authorized the repurchase of up to $20 million worth of the company’s shares. The repurchase will be completed this year itself. Following the news, Aegion’s share price edged up 1%.

In fiscal 2014, Aegion repurchased 1.3 million of its shares for an average price of $23.28 per share. Through 2011 to 2014, Aegion has repurchased approximately 2.9 million of its shares for $60 million, or an average price of $20.89 per share.

Aegion had cash and cash equivalents of $175 million at the end of 2014 compared with $158 million as of 2013-end. The company generated cash flow from operations of $85 million in 2014, flat with 2013-end. Long-term debt, excluding the current portion, was $351 million as of Dec 31, 2014, compared with $367 million as of Dec 31, 2013. Debt-to-capitalization ratio was a manageable 36.9% as of Dec 31, 2014.

Aegion’s adjusted earnings from continuing operations came in at 48 cents per share for the fourth quarter, improving 20% year over year. Earnings also surpassed the Zacks Consensus Estimate of 40 cents. For fiscal 2014, the company posted adjusted earnings of $1.37 per share, an 8% increase year over year. Earnings came ahead of the Zacks Consensus Estimate of $1.30 and came in line with the upper end of the company’s guidance range of $1.27 to $1.37.

For 2015, the company is well positioned to benefit from stability and growth within the municipal water and wastewater, commercial infrastructure and the U.S. midstream pipeline, and downstream refining end markets. In 2015, the company expects the Infrastructure Solutions platform to gain from operating income growth, particularly in North America, based on its continued focus on delivering superior customer solutions, rigorous cost management and improved market intelligence.

Aegion remains optimistic about the long-term opportunities for its technologies and services to protect, rehabilitate and strengthen urban and energy infrastructure, primarily pipelines, based on demands for aging infrastructure and the expansion of non-conventional oil and gas recovery in North America and other regions.

Aegion’s realignment efforts will help the company to better serve its clients through a more integrated sales strategy, realize significant cost savings and allow management to focus more on areas with opportunities for sustainable growth.

However, Aegion will be affected by sharp decline in crude oil prices as 15% to 20% of total revenues are contributed by the upstream energy market and there may be some exposure to the midstream market in Canada. The anticipated earnings contribution from Infrastructure Solutions and the estimated annual savings from the realignment and restructuring plan will offset, to a large extent, the likely impact that can be observed in 2015.

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

Aegion currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Trex Co. Inc. TREX, Graña y Montero SAA GRAM and Quanex Building Products Corporation NX. All of these stocks sport a Zacks Rank #1 (Strong Buy).

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