It has been about a month since the last earnings report for Aegion . Shares have added about 9.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Aegion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Aegion Q4 Earnings Beat, Revenues Miss Estimates
Aegion Corporation reported better-than-expected earnings and revenues for fourth-quarter 2020. Solid contributions from the Insituform North America business offset the COVID-related impacts from Energy Services and the coatings business within Corrosion Protection.
Charles R. Gordon, president and chief executive officer of Aegion, said, “Our improved performance from continuing operations in the face of unprecedented market disruption demonstrates the resiliency and commitment of our employees globally as well as the critical need for our products and services”
Notably, management has been evaluating alternatives for the Energy Services segment. In December 2020, the board of directors approved a plan to sell the Energy Services operating segment.
Recently, Aegion entered a merger agreement with the affiliates of New Mountain Capital, L.L.C. The company is to be acquired by New Mountain for $963 Million and, thereby, will become a private company. Aegion’s shares will no longer be listed on any public market.
Earnings & Revenue Discussion
Aegion reported adjusted earnings per share of 31 cents, which topped the consensus mark of 30 cents by 3.3% but declined 3.1% from the year-ago figure of 32 cents.
Meanwhile, total revenues of $205.5 million missed the consensus mark of $256.1 million by 19.8%. Also, the reported figure was down 8.6% on a year-over-year basis. COVID-related project deferrals on larger international coating projects were partially offset by the flagship Insituform North America business’ strong revenues, new orders and backlog. The Insituform North America business was driven by its leading market position, and strength and stability of municipal water as well as wastewater markets.
The quarter-end backlog was $662.6 million. Excluding the impacts of exited or to-be-exited businesses, backlog grew 0.7% year over year.
Operating Highlights
Adjusted gross margin of 25.1% expanded 60 basis points (bps) from the year-ago period. Adjusted operating margin of 8.4% also increased 150 bps from the year-ago period.
Segmental Performance
Infrastructure Solutions: Revenues in the segment declined 3.3% year over year to $142.8 million.
Adjusted gross and operating margins contracted 170 bps and 20 bps, respectively, as a result of lower revenues in the fourth quarter of 2020 from the year-ago quarter.
The segment’s backlog (excluding the impacts of exited or to-be-exited businesses) was at $291.4 million, down 3.9% year over year.
Corrosion Protection: The segment’s revenues fell 18.7% year over year to $62.6 million. The downside was due to lower Corrpro North America volumes related to the downsizing of the construction business. Also, international project delays in the Coating Services business added to the woes.
Adjusted gross and operating margins surged 501 bps and 330 bps, respectively, which can be attributed to an improved performance from the Middle East industrial linings operations, and efficiencies and cost-cutting measures taken by U.S. cathodic protection operations in response to lower revenues.
Backlog (excluding the impacts of exited or to-be-exited businesses) in the segment amounted to $121.9 million, down 4% year over year.
Financial Update
Aegion’s cash and cash equivalents as of Dec 31, 2020, were $94.8 million, up from $64.9 million at 2019-end. The company paid off its revolver borrowings in the quarter, resulting in net debt levels of $56 million.
Long-term debt, without current maturities, totaled $194 million compared with $243.6 million at 2019-end. Net cash provided by operating activities was $110.7 million for 2020 compared with $78.8 million in the year-ago period.
2020 Highlights
Total revenues were $807.8 million for 2020 compared with $885.9 million reported in 2019. IT increased 8.8% year over year.
In 2020, gross margin from continuing operations was 24.6%, increasing 70 bps from the prior year.
Adjusted earnings per share were $1.05 for 2020 compared with $1.02 reported in 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Aegion has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Aegion has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Aegion (AEGN) Up 9.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Aegion . Shares have added about 9.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Aegion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Aegion Q4 Earnings Beat, Revenues Miss Estimates
Aegion Corporation reported better-than-expected earnings and revenues for fourth-quarter 2020. Solid contributions from the Insituform North America business offset the COVID-related impacts from Energy Services and the coatings business within Corrosion Protection.
Charles R. Gordon, president and chief executive officer of Aegion, said, “Our improved performance from continuing operations in the face of unprecedented market disruption demonstrates the resiliency and commitment of our employees globally as well as the critical need for our products and services”
Notably, management has been evaluating alternatives for the Energy Services segment. In December 2020, the board of directors approved a plan to sell the Energy Services operating segment.
Recently, Aegion entered a merger agreement with the affiliates of New Mountain Capital, L.L.C. The company is to be acquired by New Mountain for $963 Million and, thereby, will become a private company. Aegion’s shares will no longer be listed on any public market.
Earnings & Revenue Discussion
Aegion reported adjusted earnings per share of 31 cents, which topped the consensus mark of 30 cents by 3.3% but declined 3.1% from the year-ago figure of 32 cents.
Meanwhile, total revenues of $205.5 million missed the consensus mark of $256.1 million by 19.8%. Also, the reported figure was down 8.6% on a year-over-year basis. COVID-related project deferrals on larger international coating projects were partially offset by the flagship Insituform North America business’ strong revenues, new orders and backlog. The Insituform North America business was driven by its leading market position, and strength and stability of municipal water as well as wastewater markets.
The quarter-end backlog was $662.6 million. Excluding the impacts of exited or to-be-exited businesses, backlog grew 0.7% year over year.
Operating Highlights
Adjusted gross margin of 25.1% expanded 60 basis points (bps) from the year-ago period. Adjusted operating margin of 8.4% also increased 150 bps from the year-ago period.
Segmental Performance
Infrastructure Solutions: Revenues in the segment declined 3.3% year over year to $142.8 million.
Adjusted gross and operating margins contracted 170 bps and 20 bps, respectively, as a result of lower revenues in the fourth quarter of 2020 from the year-ago quarter.
The segment’s backlog (excluding the impacts of exited or to-be-exited businesses) was at $291.4 million, down 3.9% year over year.
Corrosion Protection: The segment’s revenues fell 18.7% year over year to $62.6 million. The downside was due to lower Corrpro North America volumes related to the downsizing of the construction business. Also, international project delays in the Coating Services business added to the woes.
Adjusted gross and operating margins surged 501 bps and 330 bps, respectively, which can be attributed to an improved performance from the Middle East industrial linings operations, and efficiencies and cost-cutting measures taken by U.S. cathodic protection operations in response to lower revenues.
Backlog (excluding the impacts of exited or to-be-exited businesses) in the segment amounted to $121.9 million, down 4% year over year.
Financial Update
Aegion’s cash and cash equivalents as of Dec 31, 2020, were $94.8 million, up from $64.9 million at 2019-end. The company paid off its revolver borrowings in the quarter, resulting in net debt levels of $56 million.
Long-term debt, without current maturities, totaled $194 million compared with $243.6 million at 2019-end. Net cash provided by operating activities was $110.7 million for 2020 compared with $78.8 million in the year-ago period.
2020 Highlights
Total revenues were $807.8 million for 2020 compared with $885.9 million reported in 2019. IT increased 8.8% year over year.
In 2020, gross margin from continuing operations was 24.6%, increasing 70 bps from the prior year.
Adjusted earnings per share were $1.05 for 2020 compared with $1.02 reported in 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Aegion has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Aegion has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.