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Aegion Declares Preliminary '17 Results, '18 Guidance Upbeat

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Aegion Declares Preliminary '17 Results, '18 Guidance Upbeat

Aegion's (AEGN) ongoing efforts to focus and simplify business, along with strong backlog, continued strength across key markets will lead to significantly improved 2018 earnings.

Aegion Corporation AEGN announced preliminary results for 2017 wherein revenues and adjusted earnings are expected to be around $1.359 billion and $1.03 per share, respectively. From 2016 levels, revenues are anticipated to increase 11.2% while adjusted earnings will decline 6%.

Earnings are expected to be lower in 2017 due to higher-than-anticipated losses in the businesses being restructured. This along with operational challenges in the Corrosion Protection segment’s U.S. cathodic protection business will negate the impact of record revenues and higher operating income in the Energy Services and Corrosion Protection segments as well as North American CIPP (Cured-in-place-pipe) operations.

Including one-time items, the company expects to report a loss per share of $2.08 per share against an income of 84 cents per share in the prior year. Aegion is scheduled to release fourth-quarter 2017 financial results after market close on Feb 28, 2018.

For 2017, the Zacks Consensus Estimate for revenues is currently pegged at $1.34 billion, reflecting year-over-year growth of 8%. The estimate for earnings is at $1.09, a projected 1% drop from $1.10 reported in 2016.

Aegion Corporation Price
 

Aegion Corporation Price

Aegion Corporation price | Aegion Corporation Quote

Notably, the preliminary results are based on management's current review of its results for 2017. It is subject to change pursuant to completion of the company's financial closing process and year-end audit.

Upbeat View for 2018

As of Dec 31, 2017, Aegion’s contract backlog improved 16.2% year over year to $689 million. Backed by strong backlog along with continued strength in key markets, improved results from restructured operations and the lower effective tax rates due to recent tax law changes will lead to a year-over-year improvement of more than 30% in earnings in 2018.

The company has completed an initial assessment of the impact of the Tax Cuts and Jobs Act of 2017.  The company expects 2018 effective tax rate to be between 23% and 24%. 

Restructuring Actions to Drive Growth

In August 2017, Aegion announced a series of strategic actions targeted to generate more predictable and sustainable long-term earnings growth. Consequently, the company recorded total restructuring and impairment charges of $110 million in 2017. This included an impairment charge of $86 million recorded in the third quarter related to the exit of the Infrastructure Solutions segment’s North America activity for non-pressure pipe contract applications of the Tyfo Fibrwrap system.

Total costs associated with the restructuring and related impairments are now estimated to be between $115 million and $120 million, of which approximately $19 to $21 million are expected to be cash charges. Aegion anticipates annual cost savings more than $20 million, most of which is expected to be fully realized in 2018.

 

 

Aegion outperformed the industry in the past six months. It advanced 20%, compared with the industry's growth of 19%.

 

Aegion currently has a Zacks Rank #4 (Sell).

 

Some better-ranked stocks in the sector include Boise Cascade Company BCC, MasTec, Inc. MTZ and Lennar Corporation LEN. While Boise Cascade Company flaunts a Zacks Rank #1 (Strong Buy), MasTec and Lennar carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Boise Cascade has an expected long-term earnings growth rate of 18.5%. Its shares have surged 45% in the past six months.

 

MasTec has an expected long-term earnings growth rate of 14.0%. Its shares have gone up 31% over the past six months.

 

Lennar Corporation has an expected long-term earnings growth rate of 18.3%. Its shares have advanced 14% in the last six months.

 

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