NEW YORK (AP) â¿¿ Aegion's stock declined Thursday after the company said that its first-quarter earnings would widely miss expectations due to project delays linked to bad weather and the postponement of several contracts until later in the year.
THE SPARK: Aegion Corp. provides technology and services to help companies and cities protect against the corrosion of industrial pipelines and to repair and strengthen water, wastewater, energy and mining piping systems and buildings, bridges, tunnels and waterfront structures. The company said severe weather in Canada as well as the Midwest and eastern U.S. delayed some contracting and manufacturing jobs. And several domestic and international contracts for the energy and mining industries and commercial and structural segments that were expected to begin or be completed by the end of March have now been pushed later into the year.
The company also said that an unexpected slowdown in the pace of pipeline construction by the main contractor for the Tite Liner project in Morocco this month contributed to the lower-than-expected quarterly earnings, but that the lining work is still on track to be completed this summer. Because of these issues, Aegion is forecasting first-quarter earnings between 4 cents and 8 cents per share â¿¿ far below the 22 cents expected by analysts polled by FactSet.
THE ANALYSIS: President and CEO J. Joseph Burgess said the first quarter is typically Aegion's smallest, making up only about 10 percent of total earnings for the year, because of the likelihood of delays caused by weather and seasonal slowness for many of its businesses. He added that project timing had a disproportionate impact on the first quarter's earnings per share. But Burgess said he is confident in Aegion's ability to recover during the rest of the year from this unusually slow start, and reaffirmed full-year profit guidance in a range of $1.60 to $1.80 per share. Analysts have forecast earnings of $1.68 per share, on average.