Aegion Corporation’s AEGN subsidiary — Insituform Technologies, LLC — has inked a $6.9-million contract to rehabilitate more than 26 miles of 8-36 inche diameter wastewater pipelines in Miami-Dade County in Florida. The company will carry out the rehabilitation with cured-in-place pipe (CIPP) technology. The work is scheduled to begin in late 2019 and is expected to be completed within the two-year period. The contract also includes an option for additional two-year renewal.
Aegion provides solutions to rehabilitate, maintain and strengthen infrastructure across the world. Since 1971, the company has been providing trenchless solutions, particularly in residential areas. It replaces the conventional dig-and-replace method with the help of CIPP technology.
Aegion’s Contract Winnings Spree Continues
In September, the company inked a $15.7-million deal to rehabilitate more than 22 miles of small, medium and large-diameter wastewater pipelines in Georgia. It also inked a $9.1-million deal to renovate Michigan’s wastewater pipelines that are approximately 11,000 feet and 30-72 inch in diameter.
Aegion’s Infrastructure Solutions, which contributed 48.8% to second-quarter 2019 revenues, has completed several large wastewater pipeline projects. The company has held the annual contract for CIPP in Miami-Dade for the past four years and has completed a majority of its installation work in the area for the past five years.
Infrastructure Solutions business — the largest contributor to Aegion’s top line — registered solid margin expansion in the last reported quarter. The upside can be attributed to solid growth in the North America CIPP business and the exit of underperforming international CIPP operations. Notably, the segment’s adjusted gross and operating margins increased 260 basis points (bps) and 310 bps, respectively, during the second quarter 2019.
Notably, for the Infrastructure Solutions business, Aegion predicts 2019 revenue growth in the range of 2-4% after adjusting for the effect of exited or to-be-exited operations. The upside will be supported by improvements in crew productivity and project mix within North America CIPP.
Notably, Aegion’s shares have gained 5.5% in the past six months compared with the industry’s growth of 3.6%. A series of contract wins is expected to generate higher revenues in the upcoming quarters and boost price performance.
Zacks Rank and Other Key Picks
Aegion currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the same space are Construction Partners, Inc ROAD, Quanex Building Products Corporation NX and Advanced Drainage Systems, Inc WMS. While Construction Partners and Quanex flaunt a Zacks Rank #1 (Strong Buy), Advanced Drainage System carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here
Construction Partners’ earnings for third-quarter 2019 are expected to grow 20.7%.
Quanex’s earnings are expected to rally 46.2% for the current year.
Advanced Drainage Systems’ return on equity is pegged at 34.9% compared with the industry’s 12.7%.
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