) declared that its Canadian subsidiary, Insituform Technologies
Limited (Insituform Canada) has been awarded a $13.4 million
contract from the City of Montreal, Quebec, Canada for the
rehabilitation of old pipelines. Aegion's shares gained 1.34% from
the news to close at $22.76.
Per the contract, Insituform Canada will rehabilitate up to
130-year old pipelines located mainly in residential areas in
municipalities throughout the city. The scope of work entails
rehabilitation of around 11 miles of egg-shaped brick pipelines and
10-inch to 42-inch diameter combined sewer system pipelines.
Insituform will use its air inversion steam cure installation
method which reduces energy usage during installation by
approximately 95%. Insituform Canada will also internally reinstate
approximately 3,400 service laterals using robotic cutters.
Work on the project will begin immediately and is expected to be
completed by May 2015. Insituform plans to add up to three new
positions at its Montreal wet out plant for the project.
For over three decades, Insituform has been a leader in the
development and installation of proprietary technologies and
services for rehabilitating sewer, water and other underground
piping systems without digging or disruption. Over the past 4
years, Insituform Canada has been awarded 9 contracts from the City
of Montreal with a total value of around $33 million. The company
has already rehabilitated over 16 miles of pipelines throughout the
city and its municipalities.
Earlier this month, Aegion lowered its second-quarter and fiscal
2014 guidance at its investor day in New York. The company expects
second-quarter earnings of 34-36 cents, lower than the previous
guidance of 39 to 41 cents. The guidance was lowered due to a
slower ramp-up of project activity in the second quarter and weaker
margins for parts of the Energy and Mining segment.
While the Water and Wastewater segment is performing in line with
expectations, the Commercial and Structural segment will likely
disappoint. On a positive note, the Commercial and Structural
segment is expected to pick up steam and perform better in the
second half of 2014. Consequently, the guidance for fiscal 2014
earnings per share had been lowered to a range of $1.50 to $1.65
from the previous $1.50 to $1.70 range.
Aegion has set long-term earnings per share growth target of 15%.
The company expects to increase its cash flow from operating
activities at the same rate of earnings per share growth or higher.
The expected earnings per share growth also lays the foundation for
an over 100 basis point annual improvement in return on invested
capital with the goal of achieving 10-12% in 2017. Conditions in
the energy, mining, wastewater pipeline and commercial
infrastructure industries remain favorable for Aegion.
Chesterfield, MO-based Aegion is a diversified building and
construction company which provides infrastructure protection,
proprietary technologies and facilities. It also offers services
related to the rehabilitation and improvement of sewer, water,
energy and mining piping systems.
Aegion currently carries a Zacks Rank #3 (Hold). Some better-ranked
stocks in the sector include
Simpson Manufacturing Co., Inc.
Gibraltar Industries, Inc.
United Rentals, Inc.
). While Simpson Manufacturing and Gibraltar Industries sport a
Zacks Rank #1 (Strong Buy), United Rentals holds a Zacks Rank #2
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