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Aegion Bolsters Insituform With Two-Year Restoration Deal

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Aegion Corporation announced that its subsidiary, Insituform Technologies has received a two-year, $5-million wastewater pipelines rehabilitation contract in Western Canada.

Per the contract, this trenchless technology will restore more than 80,000 linear feet or approximately 15 miles of sanitary wastewater pipelines. As part of the project, Insituform will install a mix of small-, medium- and large-diameter cured-in-place pipe (CIPP) on wastewater pipelines, including full bypass.

The project, which began this summer, is expected to finish in late 2021.

Aegion’s Insituform Business a Boon

Aegion’s flagship Insituform North America business — under which it performs municipal water and wastewater pipeline work — has completed several large projects. Notably, its trenchless technology — which is also known as no-dig — reduces overall project costs and minimizes disruptions to residents. The business — which accounts for nearly 49% of revenues — is the largest contributor to top-line growth and remains committed to maintain its market leadership position in the rehabilitation of pipelines.

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.

However, Aegion’s shares have underperformed the industry over the past three months. The company 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.

Nevertheless, its exceptional Infrastructure Solutions performance, continuous contract wins and strong cost-and-cash management across the business bode well.

Zacks Rank

Aegion currently carries a Zacks Rank #3 (Hold). The company shares space with TopBuild Corp. (BLD - Free Report) , Advanced Drainage Systems, Inc. (WMS - Free Report) and Installed Building Products, Inc. (IBP - Free Report) — each sporting a Zacks Rank #1 (Strong Buy) — in the Zacks Building Products - Miscellaneous industry.

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