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Aegion's Insituform Wins Water Pipelines Rehabilitation Deal

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Aegion Corporation’s (AEGN - Free Report) subsidiary — Insituform Technologies USA, LLC — has received a contract to rehabilitate more than 7,000 linear feet of pressurized water pipelines in Portsmouth, VA.

Under the project, which is slated to begin this fall and conclude by 2021-end, Insituform Technologies will rehabilitate 3,525 linear feet of 8-inch cast iron fire-suppression system pipeline; 1,700 linear feet of 8-inch cast iron drain lines; along with 1,464 linear feet of 8-inch cast iron drain lines in maintenance tunnels under a tunnel roadway.

For the project, Insituform will employ Aegion’s proprietary, high-tenacity, polyester-reinforced liner — Thermopipe.

Aegion’s Flagship Insituform North America Business a Boon

Aegion’s flagship Insituform North America business’ leading market position, and strength and stability of municipal water as well as wastewater markets have been benefiting the company over the last few quarters. The unit has been generating strong revenues, new orders and backlog, underpinned by significant exposure to more stable and resilient North American municipal water as well as wastewater markets.

Aegion remains well positioned for 2020 with five months’ work in backlog for the Insituform North America business. Also, it continues to see strong municipal order trends.

Backlog at the end of second-quarter 2020 amounted to $669 million. Excluding the impact of exited or to-be-exited businesses, backlog grew 4% year over year on the back of segmental growth.

Although the company’s second-quarter revenues declined due to COVID-19-related disruptions and softness across the majority of the business, the flagship Insituform North America business generated strong revenues as well as new orders.

However, Aegion’s shares have underperformed the industry over the past three months. Although the company reported better-than-expected earnings for second-quarter 2020, it expects Q3 earnings to decline from a year ago. Aegion expects revenues to decline across all businesses, except the Infrastructure Solutions unit, in the third quarter due to COVID-19 disruptions. Also, it expects adjusted EPS within 25-35 cents, indicating a decline from 40 cents reported a year ago. This might have dented investors’ sentiment to some extent.



Nevertheless, bottom-line estimates for 2020 have been trending upward over the past 60 days, depicting analysts’ optimism over the company’s earnings growth potential. Its exceptional Infrastructure Solutions performance, continuous contract wins and strong cost-and-cash management across the business bode well.

Zacks Rank

Aegion — which shares space with TopBuild Corp. (BLD - Free Report) , Gibraltar Industries, Inc. (ROCK - Free Report) and Installed Building Products, Inc. (IBP - Free Report) in the same industry — currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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