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Aegion Bolsters Insituform Unit With $11.9M Restoration Deal

Zacks Equity Research
·3 min read

In a bid to restore wastewater pipelines in the City of Springfield, MO, Aegion Corporation’s AEGN subsidiary — Insituform Technologies USA, LLC — has received a $11.9-million contract.

Per the contract, Insituform will rehabilitate approximately 550,000 linear feet of sanitary sewer pipelines (equivalent to more than 104 miles), using 8 to 36-inch cured-in-place (CIPP) pipe. Also, it will inspect and clean the pipelines through closed-circuit TV or CCTV.

The restoration work is expected to begin within this year’s early fall and will likely be completed by 2022-end.

Since 2011, the company has been serving the City of Springfield with more than $30 million pipeline contracts. With the help of this large-scale project, Aegion will help the city restore the vital infrastructure systems with best-in-class trenchless solutions.

Aegion’s World Class CIPP Technology a Boon

Over the past several years, Aegion’s Infrastructure Solutions business — under which it performs municipal water and wastewater pipeline works — has completed several large projects within the city. The business — which accounted for nearly 49% of 2019 revenues — is the largest contributor to top-line growth and remains committed to maintain its market leadership position in the rehabilitation of pipelines.

In first-quarter 2020, the segment’s revenues (excluding exited or to-be-exited businesses) grew 8% year over year. Adjusted gross and operating margins also rose 50 basis points (bps) and 160 bps, respectively, from the prior-year period. The upside mainly stemmed from strong improvement in the North America CIPP business and the exit of underperforming international operations.

Aegion’s shares have outperformed the industry over a month. Investors’ sentiments might have got a boost on improving construction market scenario and the company’s solid contract wins. Recently, the company received a $6-million mainline sewer rehabilitation contract — one of the highest-valued contracts in South Carolina — in East Richland County.

Although its first-quarter margins suffered from larger-than-expected losses from Corrosion Protection due to COVID-19-related project delays, contract wins like the latest one are expected to somewhat offset the woes.

Zacks Rank

Aegion — which shares space with TopBuild Corp. BLD, Gibraltar Industries, Inc. ROCK and Installed Building Products, Inc. IBP in the same industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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