It has been about a month since the last earnings report for Aegion . Shares have lost about 2.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Aegion due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Aegion Q4 Earnings Meet, Revenues Beat Estimates
Aegion Corporation reported fourth-quarter 2018 results, wherein earnings met the Zacks Consensus Estimate but revenues beat the same.
Adjusted earnings of 27 cents per share were in line with the consensus estimate. Nevertheless, earnings increased 35% from the prior-year figure of 20 cents, backed by improvement in restructured businesses and better-than-expected execution of coating services business within the Corrosion Protection segment.
Total revenues of $334 million topped the consensus mark of $311 million by 7.4%. However, the reported figure declined 1% on year-over-year basis.
Operating Highlights
Cost of revenues decreased 0.4% to $272.3 million from $273.3 million recorded a year ago. Adjusted cost of revenues came in at $268.3 million in the quarter.
Gross profit declined slightly by 3.9% from a year ago to $61.7 million in the reported quarter. Adjusted gross profit came in at $65.7 million.
Adjusted operating expenses were up 4.1% year over year to $52.7 million. Adjusted operating income decreased 4.6% year over year to $12.9 million.
Segmental Performance
Infrastructure Solutions’ revenues decreased 4.7% year over year to $153.3 million, mainly due to an unfavorable mix in the North America CIPP business. Adjusted gross margins grew 20 bps but adjusted operating margins were down 100 bps in the quarter.
Corrosion Protection’s revenues were down 8.9% from the prior-year level to $93.6 million in the reported quarter. Adjusted gross margin expanded 170 bps in the quarter to 22.7%, fueled by robust performance on several large Middle East coating projects and operational improvements within the cathodic protection business. However, adjusted operating margin declined 30 bps in the quarter.
Energy Services segment revenues grew 17.8% year over year to $87.1 million. The segment’s adjusted gross and operating margin expanded 180 bps and 190 bps, respectively, from the year-ago level, backed by higher revenues, and high maintenance and construction activities.
Full-Year 2018 Highlights
Adjusted earnings came in at $1.19 per share, reflecting an increase of 17% from the 2017 level, given solid contributions from the Infrastructure Solutions segment, continued growth in Energy Services and strong execution of the large Middle East coating projects within Corrosion Protection.
However, revenues declined 2% from a year ago to $1.3 billion.
Financial Update
Cash and cash equivalents as of Dec 31, 2018 were $83.5 million, down from $105.7 million at the end of 2017. Net cash provided by operations was $39.7 million in 2018 compared with $63.6 million recorded a year ago.
Aegion’s consolidated backlog came in at $669 million as of Dec 31, 2018, down 3% from the corresponding period of 2017.
Update on Strategic Actions
In 2017, Aegion had embarked on a series of strategic actions targeted to generate more predictable and sustainable long-term earnings growth.
As part of those initiatives, the company completed the divestment of Bayou in August 2018 and Denmark CIPP business in November 2018. The company is in discussion with a prospective buyer for the divestment of CIPP business in Australia. Upon customary approvals, the transaction is expected to be completed during the first half of 2019. Planned divestitures and its exit from the remaining international businesses are also expected to be completed by the end of first-half 2019.
The company expects additional cash and non-cash charges from the announced actions to be approximately $15-$19 million in 2019.
2019 Guidance
Due to the absence of a large project to replace the contribution from Middle East coating projects, overall revenues are expected to decline within 2-4%. However, after adjusting for exited or to-be-exited businesses, 2019 consolidated revenues are expected to grow 2-4% from 2018.
For 2019, Aegion expects a modest improvement in adjusted EPS. It anticipates top-line and profitability improvements in Infrastructure Solutions, Energy Services and the cathodic protection business within Corrosion Protection.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -39.53% due to these changes.
VGM Scores
Currently, Aegion has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 these revisions indicates a downward shift. It's no surprise Aegion has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Aegion (AEGN) Down 2.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Aegion . Shares have lost about 2.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Aegion due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Aegion Q4 Earnings Meet, Revenues Beat Estimates
Aegion Corporation reported fourth-quarter 2018 results, wherein earnings met the Zacks Consensus Estimate but revenues beat the same.
Adjusted earnings of 27 cents per share were in line with the consensus estimate. Nevertheless, earnings increased 35% from the prior-year figure of 20 cents, backed by improvement in restructured businesses and better-than-expected execution of coating services business within the Corrosion Protection segment.
Total revenues of $334 million topped the consensus mark of $311 million by 7.4%. However, the reported figure declined 1% on year-over-year basis.
Operating Highlights
Cost of revenues decreased 0.4% to $272.3 million from $273.3 million recorded a year ago. Adjusted cost of revenues came in at $268.3 million in the quarter.
Gross profit declined slightly by 3.9% from a year ago to $61.7 million in the reported quarter. Adjusted gross profit came in at $65.7 million.
Adjusted operating expenses were up 4.1% year over year to $52.7 million. Adjusted operating income decreased 4.6% year over year to $12.9 million.
Segmental Performance
Infrastructure Solutions’ revenues decreased 4.7% year over year to $153.3 million, mainly due to an unfavorable mix in the North America CIPP business. Adjusted gross margins grew 20 bps but adjusted operating margins were down 100 bps in the quarter.
Corrosion Protection’s revenues were down 8.9% from the prior-year level to $93.6 million in the reported quarter. Adjusted gross margin expanded 170 bps in the quarter to 22.7%, fueled by robust performance on several large Middle East coating projects and operational improvements within the cathodic protection business. However, adjusted operating margin declined 30 bps in the quarter.
Energy Services segment revenues grew 17.8% year over year to $87.1 million. The segment’s adjusted gross and operating margin expanded 180 bps and 190 bps, respectively, from the year-ago level, backed by higher revenues, and high maintenance and construction activities.
Full-Year 2018 Highlights
Adjusted earnings came in at $1.19 per share, reflecting an increase of 17% from the 2017 level, given solid contributions from the Infrastructure Solutions segment, continued growth in Energy Services and strong execution of the large Middle East coating projects within Corrosion Protection.
However, revenues declined 2% from a year ago to $1.3 billion.
Financial Update
Cash and cash equivalents as of Dec 31, 2018 were $83.5 million, down from $105.7 million at the end of 2017. Net cash provided by operations was $39.7 million in 2018 compared with $63.6 million recorded a year ago.
Aegion’s consolidated backlog came in at $669 million as of Dec 31, 2018, down 3% from the corresponding period of 2017.
Update on Strategic Actions
In 2017, Aegion had embarked on a series of strategic actions targeted to generate more predictable and sustainable long-term earnings growth.
As part of those initiatives, the company completed the divestment of Bayou in August 2018 and Denmark CIPP business in November 2018. The company is in discussion with a prospective buyer for the divestment of CIPP business in Australia. Upon customary approvals, the transaction is expected to be completed during the first half of 2019. Planned divestitures and its exit from the remaining international businesses are also expected to be completed by the end of first-half 2019.
The company expects additional cash and non-cash charges from the announced actions to be approximately $15-$19 million in 2019.
2019 Guidance
Due to the absence of a large project to replace the contribution from Middle East coating projects, overall revenues are expected to decline within 2-4%. However, after adjusting for exited or to-be-exited businesses, 2019 consolidated revenues are expected to grow 2-4% from 2018.
For 2019, Aegion expects a modest improvement in adjusted EPS. It anticipates top-line and profitability improvements in Infrastructure Solutions, Energy Services and the cathodic protection business within Corrosion Protection.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -39.53% due to these changes.
VGM Scores
Currently, Aegion has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 these revisions indicates a downward shift. It's no surprise Aegion has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.