Aegion (AEGN) Wins $6M Restoration Deal in South Carolina
Insituform Technologies, LLC, a subsidiary of Aegion Corporation AEGN, has received a $6-million mainline sewer rehabilitation contract in East Richland County, SC. Notably, this large-diameter pipeline rehabilitation work is one of the highest-valued contracts in South Carolina.
Per the contract, Insituform will restore more than 8,900 linear feet of sewer pipelines using 54-inch, cured-in-place (CIPP) pipe. Also, it will offer cleaning and closed-circuit TV activities, manhole rehabilitation, service lateral lining and bypass pumping. The work also includes several “over-the-hole” CIPP installations, and erosion control and restoration of grasses around a private golf course as well as temporary construction entrances. Importantly, the restoration work is expected to begin in summer and will likely be completed by 2020-end.
Solid Rehabilitation Projects to Aid Top Line
Over the past several years, Aegion’s Infrastructure Solutions business — under which it performs municipal water and wastewater pipeline works — has completed several large projects within the city. The business — which accounted for nearly 49% of 2019 revenues — is the largest contributor to top-line growth and remains committed to maintain its market leadership position in the rehabilitation of pipelines.
In first-quarter 2020, the segment’s revenues (excluding exited or to-be-exited businesses) grew 8% year over year. Adjusted gross and operating margins also rose 50 basis points (bps) and 160 bps, respectively, from the prior-year period. The upside mainly stemmed from strong improvements in the North America CIPP business and the exit of underperforming international operations.
The segment’s backlog (excluding the impact of exited or to-be-exited businesses) rose 4.2% year over year.
However, Aegion’s shares have underperformed the industry so far this year. The company's first-quarter adjusted gross profit and operating margins suffered from larger-than-expected losses from Corrosion Protection due to COVID-19-related project delays, mainly in the Coatings Services business. It projects sales decline in the second quarter owing to these headwinds.
Nonetheless, contract wins like the latest one are expected to somewhat offset the estimated decline.
Zacks Rank
Aegion, which share space with TopBuild Corp. BLD, Gibraltar Industries, Inc. ROCK and Installed Building Products, Inc. IBP in the same industry, currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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