Shares of Aegion Corporation
) dipped to its 52-week low of $19.67 and then closed at $20.37
on Dec 18, falling 7% in a day as the company lowered its fiscal
2013 earnings outlook. The guidance cut was due to a lower
workable backlog, inaccurate cost estimates for several key
projects and the postponement of new projects.
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Aegion has slashed its fiscal 2013 adjusted earnings guidance to
a range of $1.27 and $1.32 per share from its earlier guidance of
$1.53 to $1.60 a share. This is much below the current Zacks
Consensus Estimate of $1.45, which projects year-over-year
increase of 3.57%. Compared to the earnings of $1.40 in fiscal
2012, the guidance reflects a decline of 9% to 6%.
For the fourth quarter, Aegion expects its adjusted earnings per
share to be in the range of 40 cents to 45 cents. The Zacks
Consensus Estimate is currently pegged at 58 cents, depicting a
48.21% year over year growth. Compared to the year-ago quarter's
earnings of 38 cents, the guidance reflects an increase of 5% to
The revised fourth quarter outlook reflects a shift in project
activity into 2014 for several businesses. Aegion stated that the
Canadian construction season is proceeding at an abnormally slow
pace, affecting United Pipeline Systems' and Bayou's Canadian
operations. The pace for offshore pipe welding by the general
contractor for the Saudi Arabia Wasit gas field project is below
predicted levels and is not expected to improve in December.
Several important projects for the Asia-Pacific water and
wastewater business also did not commence as scheduled in the
Majority of the cutdown in the yearly guidance is due to the
expected weak results in the Commercial and Structural segment.
Aegion stated that the North American business of its Commercial
and Structural segment continued to struggle during the last two
months due to lower workable backlog from a stall in sales
activity and project performance issues from inadequate cost
estimation on several key projects in late 2012. Furthermore,
customers are taking more time to finalize awarding new contracts
and issue work releases. Delays in the setup of new projects in
hand have made matters worse for the segment.
Aegion is taking steps to enhance the sales organization to
properly resource and align the organization in its primary end
markets - pipelines, buildings and transportation. Aegion is
instituting best-in-class project management to ensure
consistency in execution on all projects. These efforts are
expected to lead to improved sales acquisitions and project
execution in 2014.
Nevertheless, Aegion is witnessing strong performance from North
America Water and Wastewater and anticipates backlog for this
business to be at record levels at the end of this year. Corrpro
and United Pipeline Systems have supportive end markets in North
America and the Middle East. The Brinderson acquisition is also
expected to boost Aegion's earnings per share
Based on the success from the investments in sales, project
management and operational execution in the Commercial and
Structural platform, 2014 should be a year of recovery for
Aegion. During the year, the company will execute projects
deferred from 2013, as well as build backlog and improve
execution throughout the year.
Chesterfield, Missouri-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 #5 (Strong Sell). Some
better-ranked stocks in the sector include
CaesarStone Sdot-Yam Ltd.
James Hardie Industries plc
Simpson Manufacturing Co., Inc.
). While CaesarStone and James Hardie carry a Zacks Rank #1
(Strong Buy), Simpson Manufacturing holds a Zacks Rank #2