GlobeNewswire Inc | May 10, 2021 04:05PM EDT

May 10, 2021

Pending Transaction with New Mountain on Track to Close Shortly Following Anticipated Stockholder Approval at May 14 Special Meeting of Stockholders

ST. LOUIS, May 10, 2021 (GLOBE NEWSWIRE) -- Aegion Corporation (NASDAQ: AEGN), a leading provider of infrastructure maintenance, rehabilitation and protection solutions, today announced financial results for the quarter ended March 31, 2021.

First Quarter 2021 Financial Highlights

-- Q121 loss per diluted share from continuing operations was $0.04 compared to a loss per diluted share of $0.09 in Q120. Q121 adjusted (non-GAAP)1 earnings per diluted share from continuing operations were $0.08 compared to $0.01 in Q120. -- Q121 revenues from continuing operations were $181 million. Declines from the prior year were primarily due to the impact of exited or restructured businesses, while core Insituform North America revenues remained on par with prior year levels despite weather challenges during the quarter. -- Q121 adjusted1 gross profit margins from continuing operations were 23.6%, increasing 290 basis points from the prior year. Q121 adjusted1 operating margins from continuing operations were 3.3%, increasing 180 basis points from the prior year. Results were driven by significant profitability improvements from the Corrosion Protection segment, primarily from the Corrpro North America business. -- Q121 adjusted1 operating income from continuing operations of $6 million doubled prior year results and resulted in positive operating cash flow generation compared to historical first-quarter cash usage trends. -- Contract backlog from continuing operations as of March 31, 2021, increased $14 million, or 3%, from prior year levels, primarily driven by strong order intake led by the Insituform North America business.

1Adjusted (non-GAAP) results exclude certain charges related to the Companys restructuring and divestiture-related activities. Reconciliation of adjusted results is included below.

Aegion delivered solid first quarter results that reflect the ongoing strength of our core Insituform business as well as significant profitability improvements from our Corrosion Protection businesses, said Charles R. Gordon, Aegion President and Chief Executive Officer. We remain focused on continuing to drive strong results as we advance efforts toward the close of our previously announced transaction with New Mountain.

New Mountain TransactionOn February 16, 2021, the Company announced that it had entered into a definitive merger agreement to be acquired by affiliates of New Mountain Capital, L.L.C., a leading growth-oriented investment firm headquartered in New York, in an all-cash transaction. On March 13, 2021 and April 13, 2021, the Company entered into amendments to such definitive merger agreement which, among other things, increased the consideration payable to the Companys stockholders upon closing of the transaction from $26.00 per share in cash to $30.00 per share in cash, in each case less any applicable withholding taxes. As a result of the increase in the merger consideration, the transaction is now valued at $1.1 billion. Upon close of the transaction, Aegion will become a private company. The transaction is expected to close on May 17, 2021, and is subject to Aegion stockholder approval and other customary closing conditions. The Aegion Board of Directors unanimously recommends that stockholders vote FOR the proposal to adopt the merger agreement at the upcoming Special Meeting of Stockholders on May 14, 2021. Aegion stockholders who have questions about the merger or the Special Meeting, or who wish to obtain copies of the proxy statement, proxy cards or other documents relating to the Special Meeting, may contact Innisfree M&A Incorporated, Aegions proxy solicitor, by calling toll-free at (877) 687-1874, if located in the U.S. or Canada, or +1 (412) 232-3651, if located elsewhere.

In light of the proposed transaction, Aegion will not host a conference call to discuss earnings results or provide a financial outlook.

AEGION CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(in thousands, except per share amounts)

Quarters Ended March 31, 2021 2020Revenues $ 181,191 $ 196,312 Cost of revenues 138,473 156,025 Gross profit 42,718 40,287 Operating expenses 36,986 39,023 Acquisition and divestiture expenses 4,971 852 Restructuring and related charges (reversals) (25 ) 1,192 Operating income (loss) 786 (780 )Other income (expense): Interest expense (2,034 ) (2,519 )Interest income 306 228 Other 219 425 Total other expense (1,509 ) (1,866 )Loss before tax benefit (723 ) (2,646 )Tax benefit on loss (58 ) (110 )Loss from continuing operations (665 ) (2,536 )Income from discontinued operations 2,026 1,233 Net income (loss) 1,361 (1,303 )Non-controlling interests income (524 ) (329 )Net income (loss) attributable to Aegion $ 837 $ (1,632 )Corporation Earnings (loss) per share attributable to Aegion Corporation:Basic: Loss from continuing operations $ (0.04 ) $ (0.09 )Income from discontinued operations 0.07 0.04 Net income (loss) $ 0.03 $ (0.05 )Diluted: Loss from continuing operations $ (0.04 ) $ (0.09 )Income from discontinued operations 0.07 0.04 Net income (loss) $ 0.03 $ (0.05 )

AEGION CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited)(in thousands, except share amounts)

March 31, December 2021 31, 2020Assets Current assets Cash and cash equivalents $ 93,275 $ 94,848 Restricted cash 761 765 Receivables, net of allowances of $4,051 and $4,004, 126,967 133,394 respectivelyRetainage 30,355 32,807 Contract assets 46,924 44,026 Inventories 46,655 44,889 Prepaid expenses and other current assets 18,788 33,675 Assets held for sale 105,609 92,850 Total current assets 469,334 477,254 Property, plant & equipment, less accumulated 90,800 92,900 depreciationOther assets Goodwill 210,125 210,665 Intangible assets, less accumulated amortization 56,510 58,869 Operating lease assets 52,703 52,421 Deferred income tax assets 451 448 Other non-current assets 9,033 8,890 Total other assets 328,822 331,293 Total Assets $ 888,956 $ 901,447 Liabilities and Equity Current liabilities Accounts payable $ 48,328 $ 51,469 Accrued expenses 54,406 59,664 Operating lease liabilities 14,047 14,147 Contract liabilities 32,344 37,569 Current maturities of long-term debt 28,991 25,811 Liabilities held for sale 41,556 36,148 Total current liabilities 219,672 224,808 Long-term debt, less current maturities 186,585 193,988 Other liabilities Operating lease liabilities 39,089 38,724 Deferred income tax liabilities 10,143 10,344 Other non-current liabilities 23,752 25,218 Total other liabilities 72,984 74,286 Total liabilities 479,241 493,082 Equity Preferred stock, undesignated, $0.10 par ? shares ? ? authorized 2,000,000; none outstandingCommon stock, $0.01 par ? shares authorized125,000,000; shares issued and outstanding 307 306 30,741,907 and 30,640,150, respectivelyAdditional paid-in capital 101,548 102,001 Retained earnings 327,974 327,137 Accumulated other comprehensive loss (29,334 ) (29,847 )Total stockholders? equity 400,495 399,597 Non-controlling interests 9,220 8,768 Total equity 409,715 408,365 Total Liabilities and Equity $ 888,956 $ 901,447

AEGION CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(in thousands)

Quarters Ended March 31, 2021 2020 Cash flows from operating activities: Net income (loss) $ 1,361 $ (1,303 )Income from discontinued operations (2,026 ) (1,233 ) (665 ) (2,536 )Adjustments to reconcile to net cash provided by (used in) operating activities:Depreciation and amortization 7,120 7,226 Gain on sale of fixed assets (119 ) (32 )Equity-based compensation expense 2,038 2,000 Deferred income taxes (176 ) (866 ) Non-cash restructuring charges (110 ) 463 Gain on sale of businesses (230 ) (436 ) (Gain) loss on foreign currency transactions 107 (588 ) Other 389 145 Changes in operating assets and liabilities: Receivables net, retainage and contract assets 5,813 (54 ) Inventories (1,777 ) 4,431 Prepaid expenses and other assets 6,512 (1,649 ) Accounts payable (3,596 ) (1,710 )Accrued expenses (5,909 ) (12,327 )Operating lease liabilities (130 ) 706 Contract liabilities (5,287 ) 2,357 Other operating (202 ) (420 ) Net cash provided by (used in) operating activities of 3,778 (3,290 )continuing operations Net cash used in operating activities of discontinued (2,585 ) (4,829 )operations Net cash provided by (used in) operating activities 1,193 (8,119 ) Cash flows from investing activities: Capital expenditures (2,748 ) (5,457 )Proceeds from sale of fixed assets 285 125 Patent expenditures (50 ) (86 )Proceeds from sale of businesses, net of cash disposed 8,444 3,358 Net cash provided by (used in) investing activities of 5,931 (2,060 )continuing operationsNet cash used in investing activities of discontinued (1,628 ) (677 )operationsNet cash provided by (used in) investing activities 4,303 (2,737 ) Cash flows from financing activities: Repurchase of common stock (2,490 ) (5,045 )Proceeds from notes payable 1,257 ? Proceeds from line of credit, net ? 34,000 Principal payments on long-term debt (5,783 ) (8,750 )Net cash provided by (used in) financing activities (7,016 ) 20,205 Effect of exchange rate changes on cash (57 ) (1,291 ) Net increase (decrease) in cash, cash equivalents and (1,577 ) 8,058 restricted cash for the period Cash, cash equivalents and restricted cash, beginning 95,613 66,222 of yearCash, cash equivalents and restricted cash, end of $ 94,036 $ 74,280 period

Statement of Operations Reconciliation(Unaudited) (Non-GAAP)

For the Quarter Ended March 31, 2021

(in thousands, Income Taxes Income (Loss) Dilutedexcept Gross Operating Operating (Loss) Before (Benefit) from Earnings (Loss)earnings per Profit Expenses Income Taxes on Income Continuing per Share fromshare) (Benefit) (Loss) Operations Continuing OperationsAs Reported $ 42,718 $ 36,986 $ 786 $ (723 ) $ (58 ) $ (665 ) $ )(GAAP) (0.04ItemsAffecting Comparability:Restructuring 8 ) 202 99 16 83 ? Charges^(1) (219DivestitureRelated ? ? 4,971 4,742 1,120 3,622 0.12 Expenses^(^2^)As Adjusted $ 42,726 $ 36,767 $ 5,959 $ 4,118 $ 1,078 $ 3,040 $ 0.08 (Non-GAAP)



Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of $8 primarily related to inventory write offs; (ii) pre-tax restructuring charges for operating expenses of $219 primarily related to wind-down expenses, patent disposals and other(1) restructuring-related charges; (iii) pre-tax restructuring and related recoveries of $25 related to employee severance and the reversal of employment assistance program costs; and (iv) pre-tax restructuring credits for other expense of $103 related to the release of cumulative currency translation adjustments and net gains on disposal of certain restructured operations. Includes the following non-GAAP adjustments: (i) pre-tax expenses of(2) $4,971 incurred primarily in connection with the sale of Aegion and the Company?s planned divestiture of Energy Services; and (ii) a pre-tax gain of $229 primarily related to the divestiture of Bayou.

For the Quarter Ended March 31, 2020

(in thousands, Income Taxes Income (Loss) Dilutedexcept Gross Operating Operating (Loss) Before (Benefit) from Earnings (Loss)earnings per Profit Expenses Income Taxes on Income Continuing per Share fromshare) (Loss) (Benefit) (Loss) Operations Continuing OperationsAs Reported $ 40,287 $ 39,023 $ (780 ) $ ) $ ) $ ) $ )(GAAP) (2,646 (110 (2,536 (0.09ItemsAffecting Comparability:Restructuring 323 ) 2,896 3,527 564 2,963 0.09 Charges^(1) (1,381DivestitureRelated ? ? 852 416 48 368 0.01 Expenses^(^2^)As Adjusted $ 40,610 $ 37,642 $ 2,968 $ 1,297 $ 502 $ 795 $ 0.01 (Non-GAAP)



Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of $323 primarily related to inventory write offs; (ii) pre-tax restructuring charges for operating expenses of $1,381 primarily related to wind-down expenses, fixed asset disposals and other(1) restructuring-related charges; (iii) pre-tax restructuring and related charges of $1,192 related to employee severance, extension of benefits, employment assistance programs and early contract termination costs; and (iv) pre-tax restructuring charges for other expense of $631 related to net losses on disposal of certain restructured operations and the release of cumulative currency translation adjustments. Includes the following non-GAAP adjustments: (i) pre-tax expenses of $852 incurred primarily in connection with the Company?s divestiture of(2) Australia and Spain and its planned divestiture of its held for sale operations; and (ii) net gains of $436 on the divestitures of Australia and Spain.

Selected Segment Financial Highlights(Unaudited) (Non-GAAP)

Quarter Ended March 31, 2021 Quarter Ended March 31, 2020(in thousands) As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted (GAAP) ^(1) (Non-GAAP) (GAAP) ^(2) (Non-GAAP)Revenues: Infrastructure $ 126,562 $ ? $ 126,562 $ 130,244 $ ? $ 130,244 SolutionsCorrosion 54,629 ? 54,629 66,068 ? 66,068 ProtectionTotal Revenues $ 181,191 $ ? $ 181,191 $ 196,312 $ ? $ 196,312 Gross Profit: Infrastructure $ 29,483 $ ? $ 29,483 $ 31,370 $ 17 $ 31,387 SolutionsGross Profit 23.3 % 23.3 % 24.1 % 24.1 %MarginCorrosion 13,235 8 13,243 8,917 306 9,223 ProtectionGross Profit 24.2 % 24.2 % 13.5 % 14.0 %MarginTotal Gross $ 42,718 $ 8 $ 42,726 $ 40,287 $ 323 $ 40,610 ProfitGross Profit 23.6 % 23.6 % 20.5 % 20.7 %Margin Operating Income (Loss):Infrastructure $ 11,926 $ 10 $ 11,936 $ 13,555 $ 629 $ 14,184 SolutionsOperating 9.4 % 9.4 % 10.4 % 10.9 %MarginCorrosion (115 ) (10 ) (125 ) (6,447 ) 1,774 (4,673 )ProtectionOperating (0.2 ) (0.2 ) (9.8 ) (7.1 )Margin % % % %Corporate (11,025 ) 5,173 (5,852 ) (7,888 ) 1,345 (6,543 )Operating (6.1 ) (3.2 ) (4.0 ) (3.3 )Margin % % % %TotalOperating $ 786 $ 5,173 $ 5,959 $ (780 ) $ 3,748 $ 2,968 Income (Loss)Operating 0.4 % 3.3 % (0.4 ) 1.5 %Margin %

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(1)Includes non-GAAP adjustments related to:

-- Infrastructure Solutions - pre-tax restructuring charges associated with wind-down costs and other restructuring charges. -- Corrosion Protection - pre-tax restructuring charges associated with severance and benefit related costs, inventory write offs and other restructuring charges. -- Corporate - (i) pre-tax restructuring charges primarily associated with legal expenses and other restructuring charges; (ii) divestiture expenses related to the sale of Aegion and the Companys planned divestiture of Energy Services.

(2)Includes non-GAAP adjustments related to:

-- Infrastructure Solutions - (i) pre-tax restructuring charges associated with wind-down costs, fixed asset disposals and other restructuring charges; (ii) expenses incurred in connection with the divestitures of Australia and Spain. -- Corrosion Protection - pre-tax restructuring charges associated with severance and benefit related costs, early contract termination costs, inventory write offs and other restructuring charges. -- Corporate - (i) pre-tax restructuring charges primarily associated with severance and benefit related costs and legal expenses; (ii) divestiture expenses related to held for sale entities.

About Aegion Corporation (NASDAQ: AEGN)Aegion combines innovative technologies with market-leading expertise to maintain, rehabilitate and strengthen infrastructure around the world. For 50 years, the Company has played a pioneering role in finding innovative solutions to rehabilitate aging infrastructure, primarily pipelines in the wastewater, water, energy, mining and refining industries. Aegion also maintains the efficient operation of refineries and other industrial facilities. Aegion is committed to Stronger. Safer. Infrastructure. More information about Aegion can be found at www.aegion.com.

Forward-Looking StatementsThis communication contains forward-looking statements within the meaning of the U.S. federal securities laws. Such statements include statements concerning anticipated future events and expectations that are not historical facts. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Forward-looking statements are typically identified by words such as believe, expect, anticipate, intend, target, estimate, continue, positions, plan, predict, project, forecast, guidance, goal, objective, prospects, possible or potential, by future conditional verbs such as assume, will, would, should, could or may, or by variations of such words or by similar expressions or the negative thereof. Actual results may vary materially from those expressed or implied by forward-looking statements based on a number of factors, including, without limitation: (1) risks related to the consummation of the merger, including the risks that (a) the merger may not be consummated within the anticipated time period, or at all, (b) the parties may fail to obtain stockholder approval of the merger agreement, (c) the parties may fail to secure the termination or expiration of any waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (d) other conditions to the consummation of the merger under the merger agreement may not be satisfied, and (e) the significant limitations on remedies contained in the merger agreement may limit or entirely prevent the Company from specifically enforcing the obligations of Carter Intermediate, Inc. (Parent) and its wholly owned subsidiary, Carter Acquisition, Inc. (Merger Sub), under the merger agreement or recovering damages for any breach by Parent or Merger Sub; (2) the effects that any termination of the merger agreement may have on the Company or its business, including the risks that (a) the Companys stock price may decline significantly if the merger is not completed, (b) the merger agreement may be terminated in circumstances requiring the Company to pay Parent a termination fee, or (c) the circumstances of the termination, including the possible imposition of a 12-month tail period during which the termination fee could be payable upon certain subsequent transactions, may have a chilling effect on alternatives to the merger; (3) the effects that the announcement or pendency of the merger may have on the Companys and its business, including the risks that as a result (a) the Companys business, operating results or stock price may suffer, (b) the Companys current plans and operations may be disrupted, (c) the Companys ability to retain or recruit key employees may be adversely affected, (d) the Companys business relationships (including, customers, franchisees and suppliers) may be adversely affected, or (e) the Companys managements or employees attention may be diverted from other important matters; (4) the effect of limitations that the merger agreement places on the Companys ability to operate its business, return capital to stockholders or engage in alternative transactions; (5) the nature, cost and outcome of pending and future litigation and other legal proceedings, including any such proceedings related to the merger and instituted against the Company and others; (6) the risk that the merger and related transactions may involve unexpected costs, liabilities or delays; (7) other economic, business, competitive, legal, regulatory, and/or tax factors; and (8) other factors described under the heading Risk Factors in Part I, Item 1A of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as updated or supplemented by subsequent reports that the Company has filed or files with the SEC. Potential investors, stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Neither Parent nor the Company assumes any obligation to publicly update any forward-looking statement after it is made, whether as a result of new information, future events or otherwise, except as required by law.

About Non-GAAP Financial MeasuresAegion has presented certain information in this release excluding certain items that impacted income, expense and earnings per share. The adjusted earnings per share from continuing operations in the quarters ended March 31, 2021 and 2020 exclude charges related to the Companys restructuring and divestiture-related activities.

Aegion management uses such non-GAAP information internally to evaluate financial performance for Aegions operations because Aegions management believes such non-GAAP information allows management to more accurately compare Aegions ongoing performance across periods. As such, Aegions management believes that providing non-GAAP financial information to Aegions investors is useful because it allows investors to evaluate Aegions performance using the same methodology and information used by Aegion management.

Aegion and Stronger. Safer. Infrastructure. and the associated logos are the registered trademarks of Aegion Corporation and its affiliates.

For more information, contact:

Aegion Corporation Katie CasonSenior Vice President, Strategy and Communications636-530-8000kcason@aegion.com