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Aegion Unit Wins $10M U.S. Army Contract

Zacks Equity Research

Corrpro Companies, Inc., a unit of Aegion Corp. (NASD:AEGN), has secured a three-year fixed price and quantity contract valued at $10 million from the US Army Corps of Engineers for cathodic protection and corrosion control services.

Corrpro Companies provides extensive corrosion engineering services and cathodic protection materials for steel reinforced concrete structures including bridges, parking garages, buildings and marine structures such as piers and wharves.

As per the contract, Corrpro Companies will provide engineering services including the assessment, design and installation of cathodic protection systems at military installations worldwide.

In addition, the company will offer corrosion studies, training of base personnel and field consulting during construction. The deal also involves system evaluation through post construction services.

Aegion will benefit from its strong backlog as of the third quarter-end. Furthermore, these contract wins and the scope for Aegion to win other future projects from Metro Water Services bode well for the company.

On the flipside, 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. Most of the downward revision in the yearly guidance was due to the expected weak results in the Commercial and Structural segment.

Nevertheless, Aegion is witnessing strong performance from North America Water and Wastewater and anticipates backlog for this business to be at record levels at the end of this year. Corrpro and United Pipeline Systems have supportive end markets in North America and the Middle East.

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

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


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