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Aegion Corporation (Nasdaq Global Select Market: AEGN) expects diluted earnings per share for the first quarter of 2013 to be in the range of $0.04 to $0.08, below previous expectations as a result of project delays associated with adverse weather conditions in the quarter as well as customer directed delays for several scheduled contracts for the Energy & Mining and Commercial & Structural platforms. These transitional issues impacting the first quarter do not alter full year expectations for diluted earnings per share in the range of $1.60 to $1.80.
J. Joseph Burgess, President and Chief Executive Officer, commented, “Historically, the first quarter represents the smallest in our earnings cycle, approximately 10 percent of total earnings for the year, because of the increased probability of delays caused by weather and the seasonal low period for many of our businesses. Because of this, project timing can have a disproportionate impact on earnings per share in the first quarter and that’s been the case this year. We are confident in our ability to recover during the remainder of 2013 from this unusually slow start as the outlook for the markets we serve across all the three platforms remains favorable.”
Severe weather during the entire quarter affected parts of Canada as well as the Midwest and Eastern United States resulting in delays for contracting and manufacturing activities associated with the North America Water & Wastewater business and in completing projects for the Commercial & Structural platform. In addition, several domestic and international contracts for Energy & Mining and Commercial & Structural expected to begin or be completed by the end of March have now been pushed further into the calendar year. A contributing factor for the lower than anticipated earnings in the quarter was an unexpected slowdown in the pace of pipeline construction by the prime contractor for the Tite Liner
® project in Morocco during the month of March. This does not impact the original schedule for completing the lining work this summer. In the Canadian Oil Sands, soft ground conditions have delayed overall pipeline construction activity impacting the schedule in the first quarter for Bayou’s pipe coating projects.
Mr. Burgess continued, “We’ve thoroughly reassessed the outlook for the remainder of 2013 across all of our businesses based on the visibility we have for the backlog at this time. We remain committed to our guidance for diluted earnings per share in the range of $1.60 to $1.80, with cash flow from operating activities in excess of $100 million, and return on invested capital in the range of 9 percent to 10 percent. Our confidence for maintaining this growth outlook comes from the record size and diverse composition of our backlog at the start of 2013, a robust bid table supporting the opportunity for securing additional projects this year, and a revised risk adjustment analysis for the timing of key projects in our current backlog. All of these factors justify the broad range for our diluted earnings per share guidance and acknowledges the expectations for greater earnings contributions in the second half of 2013.”