Aegion Corporation’s (AEGN - Free Report) unit, Insituform Technologies, LLC has received a contract from the City of Lawrence, MA, related to the Wastewater Rehabilitation Project in the state. The project is expected to start in April 2019 and slated to be completed within two years.
Under the 10.6-million contract, Insituform will rehabilitate nearly 8 miles of 8- to 54-inch wastewater pipelines located in residential, commercial and industrial areas, alongside the Merrimack River. Insituform, acting as the general contractor on the project, will manage the installation of its Insituform cured-in-place pipe (“CIPP”) along with all other aspects of the project. This usage of CIPP will evade troublesome excavations and sewer shutdowns in high-traffic areas, as well as the riverfront.
The majority of the project, about 60%, will be carried out by recognized local subcontractors that include National Water Main, P. Gioioso & Sons, Ted Berry Company and Tasco Construction.
Aegion remains committed in maintaining its market leadership position in the rehabilitation of wastewater pipelines in North America using CIPP technology, which is the largest contributor to the company’s consolidated revenues. Notably, Aegion’s Infrastructure Solutions business accounted for 44.5% of revenues in 2018. The company offers a diverse portfolio of solutions in a highly fragmented and growing market.
The company’s adjusted earnings grew 17% in 2018 despite nearly 2% decrease in consolidated revenues. The upside was mainly attributable to solid contribution from its Infrastructure Solutions segment, significant top and bottom-line growth from Energy Services, as well as strong execution on multiple coating projects within Corrosion Protection. Infrastructure Solutions backlog at 2018-end, excluding exited or to-be-exited businesses, advanced 5% year over year, driven by increases within North America CIPP.
However, owing to an unfavorable mix in the North America CIPP business in fourth-quarter 2018, the company’s Infrastructure Solutions’ revenues declined 4.7% year over year. Again, 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%. Nevertheless, after adjusting for exited or to-be-exited businesses, 2019 consolidated revenues are expected to grow 2-4% from the 2018 level. This has resulted in a significant 18.4% share price decline, following its fourth-quarter results. Over the past three months, Aegion’s shares have declined 7.3% against 15.1% growth of its industry.
Nonetheless, in 2019, the company anticipates top-line and profitability improvements in Infrastructure Solutions, Energy Services and the cathodic protection business within Corrosion Protection.
Zacks Rank & Key Picks
Aegion currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Construction sector include Arcosa, Inc. (ACA - Free Report) , Altair Engineering Inc. (ALTR - Free Report) and Jacobs Engineering Group Inc. (JEC - Free Report) , each carrying a Zacks Rank #2 (Buy).
Arcosa has a three to five year expected EPS growth rate of 13.1%.
Altair Engineering and Jacobs’ earnings for the current year are expected to grow 58.6% and 15%, respectively.
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