8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report

(Date of earliest event reported):  February 29, 2016

AEGION CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	001-35328	45-3117900
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

17988 Edison Avenue, Chesterfield, Missouri	63005
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (636) 530-8000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

Aegion Corporation (the “Company”) issued an earnings release (the “Earnings Release”) on February 29, 2016 to announce its financial results for the quarter ended December 31, 2015. A copy of the Earnings Release is furnished herewith as Exhibit 99.1. On March 1, 2016, the Company held a conference call in connection with the Earnings Release. A transcript of the conference call is furnished herewith as Exhibit 99.2.

The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01.	Financial Statements and Exhibits.
	(d)	The following exhibits are filed as part of this report:

Exhibit Number	Description
99.1	Earnings Release of Aegion Corporation dated February 29, 2016, filed herewith.
99.2	Transcript of Aegion Corporation’s March 1, 2016 conference call, filed herewith.

*     *     *

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AEGION CORPORATION
By:	/s/ David F. Morris
	David F. Morris
	Executive Vice President, General Counsel and Chief Administrative Officer

Date: March 4, 2016

INDEX TO EXHIBITS

These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

Exhibit	Description
99.1	Earnings Release of Aegion Corporation dated February 29, 2016.
99.2	Transcript of Aegion Corporation’s March 1, 2016 conference call.

EX-99.1

Exhibit 99.1

AEGION CORPORATION REPORTS

2015 FINANCIAL RESULTS

• Adjusted (non-GAAP) 2015 full year earnings were $1.28 per diluted share from continuing operations compared to adjusted earnings of $1.37 per diluted share in 2014. On a GAAP basis, the 2015 loss was $0.22 per diluted share from continuing operations compared to a loss of $0.88 per diluted share in 2014.

• Adjusted (non-GAAP) 2015 fourth quarter earnings per diluted share from continuing operations were $0.36 compared to adjusted earnings of $0.48 per diluted share in the fourth quarter of 2014. On a GAAP basis, the fourth quarter 2015 loss was $0.91 per diluted share compared to a loss of $0.90 per diluted share in the prior year quarter.

• Consolidated cash and cash equivalents at December 31, 2015 were a record $211.7 million, a $36.7 million increase from December 31, 2014. Cash flow from operating activities for the year ended December 31, 2015 was $132.0 million, a $51.2 million increase over the prior year.

• Consolidated contract backlog at December 31, 2015 was $776.6 million, a 2.4 percent increase from December 31, 2014.

• Strengthening of the Unites States dollar against various international currencies caused a negative reporting translation, which impacted consolidated revenues by $51.8 million and after-tax operating income by $4.2 million, or $0.12 per diluted share, compared to 2014.

St. Louis, MO - February 29, 2016 - Aegion Corporation (Nasdaq Global Select Market: AEGN) today reported financial results from continuing operations for the full year and fourth quarter 2015. For the full year 2015, GAAP loss from continuing operations was $8.1 million, or $0.22 per diluted share, compared to a loss of $33.3 million, or $0.88 per diluted share in 2014. The losses in 2014 and 2015 were the result of expenses and charges associated with Aegion’s strategic realignment and restructuring plan announced in October 2014 (the “2014 Restructuring”) and the restructuring plan announced in January 2016 (the “2016 Restructuring”). 2015 adjusted earnings were $47.2 million, or $1.28 per diluted share, compared to $52.2 million, or $1.37 per diluted share, in 2014.

For the fourth quarter of 2015, the reported GAAP loss was $32.9 million, or $0.91 per diluted share, compared to loss of $33.7 million, or $0.90 per diluted share, in the prior year. Adjusted earnings from continuing operations were $13.2 million, or $0.36 per diluted share, compared to $18.2 million, or $0.48 per diluted share, for the fourth quarter of 2014.

Adjusted full year and fourth quarter earnings in 2015 and 2014 are defined as GAAP results excluding (where appropriate) restructuring charges, impact from losses on divestitures, long-lived asset and

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goodwill impairment, acquisition-related expenses, credit facility fees, litigation settlement, reserves for long-dated accounts receivable, and an escrow settlement related to the July 1, 2013 Brinderson acquisition.

Charles R. Gordon, Aegion’s President and Chief Executive Officer, commented, “Aegion successfully managed through the impact from a steep decline in oil prices and a sharp rise of the U.S. dollar in 2015 to deliver solid earnings, a strong balance sheet and record operating cash flows. We took advantage of favorable end markets within Infrastructure Solutions, Energy Services’ downstream business and portions of the midstream pipeline market for Corrosion Protection while realizing the benefits from the 2014 Restructuring.

“In 2016, we expect to benefit from another year of stable market conditions across many of the Company’s end markets. In addition, given our estimation for a prolonged and challenging energy market, we have reduced our exposure in certain North American high cost extraction oil regions and are lowering annual operating costs by approximately $15 million. Despite the difficult energy environment, we expect 2016 adjusted earnings per share to be in line with the result achieved in 2015. Our outlook includes an anticipated contribution in the fourth quarter from a significant multi-year pipe coating and insulation contract.

“Looking forward, we are pursuing strategic initiatives to expand our presence in the rehabilitation of pressure pipelines, invest in new tools and process to expand our capabilities in midstream pipelines and add higher margin services to broaden our portfolio of solutions for customers. The recently completed acquisition of Underground Solutions underscores our progress in the pressure pipe market. In 2016, we also are launching a company-wide continuous improvement initiative to enhance productivity and are investing to further enhance our sales efforts to accelerate organic growth. We remain confident these are the right actions to achieve long term and sustainable growth.”

CONTRACT BACKLOG

(Unaudited, in millions)

The following table sets forth consolidated backlog by segment (in millions):

	December 31,
	2015		2014		2013
Infrastructure Solutions (1)	$	311.2	$	337.5	$	329.9
Corrosion Protection	272.5		176.0		160.8
Energy Services (2) (3)	192.8		244.5		268.3
Total backlog	$	776.5	$	758.0	$	759.0

_________________________________

⁽¹⁾  December 31, 2015, 2014 and 2013 included backlog from restructured entities of $0.8 million, $3.7 million and $19.2 million, respectively.

⁽²⁾  December 31, 2015, 2014 and 2013 included upstream-related backlog of $41.1 million, $96.5 million and $109.1 million, respectively.

⁽³⁾  Represents expected unrecognized revenues to be realized under long-term Master Service Agreements and other signed contracts. If the remaining term of these arrangements exceeds 12 months, the unrecognized revenues attributable to such arrangements included in backlog are limited to only the next 12 months of expected revenues.

Consolidated contract backlog at December 31, 2015 increased 2.4 percent to $776.5 million compared to December 31, 2014. The backlog comparison includes an $11.1 million adverse impact from currency translation as a result of the strength of the United States dollar in 2015 and a significant reduction in

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upstream backlog for Energy Services and Corrosion Protection related to the current oil and gas market environment and the Company’s response through the previously announced strategic actions.

Infrastructure Solutions’ backlog declined 7.8 percent to $311.2 million at December 31, 2015 compared to December 31, 2014 as a result of three primary factors. The combination of adverse currency translation effects, coupled with the exit from certain international markets, accounted for $9.9 million, or 38 percent of the decline. In addition, a large pressure pipe rehabilitation project for the nuclear industry was in contract backlog at December 31, 2014 and was fully performed in 2015, which accounted for the remainder of the decrease year-over-year.

Corrosion Protection backlog increased 54.8 percent to $272.5 million at December 31, 2015 compared to December 31, 2014 because of the Company's execution of an offshore, deepwater pipe coating and insulation contract, which is valued at over$130 million, during the fourth quarter of 2015. The Company’s sale of its 51 percent stake in Bayou Perma-Pipe Canada, Ltd, further reductions in capital and maintenance expenditures by upstream customers and, to a lesser extent, for certain midstream customers, partially offset the increase in reported backlog. There was a $4.9 million adverse currency translation impact due to the strength of the United States dollar.

Energy Services backlog declined 21.1 percent to $192.8 million at December 31, 2015 compared to December 31, 2014 as a result of a significant decline in upstream backlog associated with the non-renewal in late 2015 of two long-term upstream maintenance contracts in Central California. Downstream backlog increased low single digits to remain at record levels as market conditions continue to be favorable.

Aegion Realignment and Restructuring

2016 Restructuring

On January 4, 2016, Aegion announced a restructuring plan to reposition Energy Services’ upstream operations in California, right-size the Corrosion Protection platform to compete more effectively in the energy markets and reduce corporate and other operating expenses. These actions were in response to the dramatic decline in oil prices and the Company’s assessment that the current low price environment would persist for the foreseeable future. Management intends to complete the cost reductions and record the majority of the estimated $7 to $9 million in pre-tax charges, most of which are cash charges, during the first quarter of 2016. The pre-tax charges relate to employee severance, extension of benefits, employment assistance programs, early lease termination and other non-cash costs associated with the restructuring. In addition to the actions taken to mitigate the upstream exposure, the restructuring initiative is expected to reduce consolidated annual operating expenses by approximately $15 million, most of which is to be realized in 2016.

2014 Restructuring

On October 6, 2014, Aegion announced a realignment and restructuring plan to exit low-return CIPP contracting markets within Infrastructure Solutions, right-size Corrosion Protection’s Bayou pipe coating facility in Louisiana and reduce the size of the Company’s overhead structure for the purpose of improving gross margins and profitability over the long term. In 2014, pre-tax charges were $49.5 million ($36.2 million after-tax, or $0.95 per diluted share). On a pre-tax basis, non-cash and cash charges were $43.8 million and $5.7 million, respectively. In 2015, the Company recorded pre-tax charges of $11.0 million ($8.7 million after-tax), or $0.24 per diluted share, related to the loss on the sale of Insituform’s

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contracting businesses in France and Switzerland, severance, retention and other cash items related to the shutdown of contracting operations in Hong Kong, Singapore and Malaysia and the combination of the Fyfe/Fibrwrap business with Insituform. There was a modest pre-tax charge of $0.3 million in the fourth quarter of 2015 related to trailing costs primarily associated with the shutdown of Insituform’s contracting operation in Hong Kong. On a pre-tax basis, non-cash and cash charges in 2015 were $4.7 million and $6.3 million, respectively. The 2014 Restructuring achieved its objective of generating pre-tax savings of $10.8 million, or $0.20 per diluted share, which was fully realized in 2015.

Consolidated Highlights

Fourth Quarter 2015 versus Fourth Quarter 2014

The Company reports its results on a GAAP and adjusted (non-GAAP) basis. Adjusted measures exclude certain pre-tax charges and are reconciled to the most directly comparable GAAP measures beginning on page 10.

Consolidated revenues declined $21.5 million, or 6.1 percent, to $330.7 million. The strength of the United States dollar resulted in a $14.9 million negative impact to consolidated revenues. Additionally, the Company’s October 2014 decision to exit several international contract installation markets in Infrastructure Solutions accounted for $6.3 million of the negative variance. The 2014 Restructuring and the negative currency translation impact were the primary reasons for the $9.9 million, or 6.8 percent, revenue decline to $135.1 million for Infrastructure Solutions. Excluding the currency translation impact, the North America water and wastewater business benefited from favorable weather and a healthy backlog position to match the equally strong performance in the prior year quarter. Revenues for Fyfe/Fibrwrap were primarily due to the completion of several larger projects in the prior year quarter. Revenues for Corrosion Protection declined $18.6 million, or 14.6 percent, to $108.8 million. Currency translation accounted for $9.8 million of the variance with the remainder the result of market challenges in the upstream market and deferral of certain projects in the North America midstream market. Energy Services grew revenues $7.0 million, or 8.8 percent, to $86.9 million because of continued strong performance in the West Coast downstream refining market, which more than offset the expected revenue decline in the challenging Central California upstream market.

Consolidated adjusted gross profit decreased $16.3 million, or 19.5 percent, to $67.5 million. Infrastructure Solutions’ adjusted gross profit declined 16.5 percent to $33.9 million and adjusted gross margins declined 290 basis points to 25.1 percent. Gross margins for the North American water and wastewater business were 24.8 percent, in line with the strong results in the prior year. The reasons for the margin percentage decline were weak economic conditions in the European contracting business, the exit of certain international contracting markets in 2015 and the successful close out of several large, high-margin, projects for Fyfe/Fibrwrap in the prior year. Corrosion Protection adjusted gross profit declined 29.0 percent to $22.9 million and adjusted gross margins contracted 430 basis points to 21.1 percent. Two factors accounted for the decline in adjusted gross profit. First, there was a significant reduction in higher margin activity because of the dramatic drop in oil prices, which resulted in, among other things, a mix shift to lower margin construction activity for the cathodic protection business in the midstream market. Second, we experienced project deferrals across the platform. Gross profit for Energy Services declined 2.4 percent to $10.7 million and gross margins declined 140 basis points to 12.3 percent as strong performance in the downstream market was offset by the impact of low oil prices on the North America upstream market. Foreign currency translation adversely impacted Infrastructure Solutions and Corrosion Protection gross profit by approximately $0.9 million and $1.8 million, respectively.

Consolidated adjusted operating expenses declined $9.4 million, or 17.0 percent, to $45.7 million. As a percent of revenues, the consolidated operating expense ratio declined 180 basis points to 13.8 percent.

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Adjusted operating expenses for Infrastructure Solutions decreased 24.8 percent to $18.6 million as a result of savings from the 2014 Restructuring and further cost containment efforts, primarily in North America. Adjusted operating expenses for Corrosion Protection declined 9.3 percent to $20.2 million because of cost reduction efforts to address current market conditions. Energy Services’ adjusted operating expense decreased 14.9 percent to $6.9 million because of similar cost reduction efforts in light of the challenging upstream market environment.

Consolidated adjusted operating income declined 24.1 percent to $21.8 million. Infrastructure Solutions’ adjusted operating income declined 3.5 percent to $15.3 million despite continued strong performance in the North American water and wastewater business. Excluding the exit from certain international water and wastewater contract installation markets, adjusted operating income increased by 1.0 percent due to strong performance in the North American water and wastewater business and cost containment efforts.Corrosion Protection’s adjusted operating income declined $7.3 million to $2.7 million because of challenging conditions in the North American upstream market as well as some project deferrals and a mix shift to lower margin construction services in the North American midstream market. Based on strong downstream performance and reduction in operating expenses, adjusted operating income for Energy Services increased $0.9 million to $3.8 million. Adjusted operating margins for Infrastructure Solutions, Corrosion Protection and Energy Services were 11.3 percent, 2.5 percent and 4.4 percent, respectively. Foreign currency translation negatively impacted adjusted operating income by $1.7 million, which mostly affected Corrosion Protection and to a lesser extent Infrastructure Solutions.

The adjusted effective tax rate increased by 400 basis points to 28.3 percent because of a higher proportion of earnings in higher tax jurisdictions, primarily the United States. On a GAAP basis, the effective tax rate was 6.8 percent compared to 19.8 percent in 2014. The effective tax rate in 2015 was unfavorably impacted by significant pre-tax charges, primarily related to goodwill impairment, which are not deductible for tax purposes, United States income and foreign withholding taxes on the repatriation of foreign earnings, and the impact of establishing valuation allowances on deferred tax assets in jurisdictions where we are unlikely to recognize these benefits.

Cash Flow

Net cash flow provided by continuing operations was $132.0 million in 2015 compared to $81.9 million provided in 2014. Net changes in working capital was a $35.5 million source of cash compared to a $17.9 million use of cash in the prior year. There was an increase in accounts payable from strong business volume, while receivables were down significantly as a result of a concerted effort to instill greater billing and collection discipline across the Company. Days sales outstanding on receivables decreased approximately 15 days from the prior year period. Additionally, several large deposits related to pipe coating projects were received during 2015, which accounted for a portion of the decrease in days sales outstanding.

Net cash flow used by investing activities was $39.1 million in 2015 compared to $23.2 million used in 2014. The Company used $6.7 million, net of cash acquired, for the acquisition of Schultz Mechanical Contractors, Inc. in early 2015. Capital expenditures were $29.5 million in 2015 compared to $32.9 million in the prior year. Capital expenditures were lower in 2015 as a result of management efforts to control spending in response to challenging market conditions in the energy sector. In the first quarter 2014, the Company received proceeds of $9.1 million for the sale of the Company’s 49 percent interest in Bayou Coating, L.L.C., following the majority partner’s exercise of its buy-out right.

Net cash flows from financing activities used $50.2 million in 2015 compared to $34.6 million used in the

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prior year. During 2015, the Company used cash of $25.3 million to repurchase approximately 1.5 million shares of Company common stock through open market purchases and in connection with the Company’s equity compensation programs. The Company also made net payments of $24.0 million related to long-term debt, including $4.4 million in fees associated with the refinancing of its $650 million credit facility in October 2015. During 2014, the Company used net cash of $22.5 million to repurchase stock and $11.5 million to pay down the principal balance on its long-term debt.

Net cash flow for 2015 was an inflow of $36.7 million, which included a $6.0 million negative impact from currency exchange rate changes. This compares to a cash inflow of $16.9 million in 2014.

Other Items Affecting Fourth Quarter 2015 Earnings

In the fourth quarter of 2015, the Company conducted its annual review of goodwill and determined an impairment charge was required for Corrosion Protection’s CRTS business due to expectations for reduced shallow water offshore pipeline installation activity for its interior pipe weld inspection and coating services. As a result of contract losses in the Central California upstream energy market and the Company’s decision to reduce Aegion’s exposure in the upstream market, the Company conducted a separate review of goodwill for the Energy Services reporting unit and concluded an impairment was also necessary. Pre-tax, non-cash charges of $43.5 million ($35.7 million post-tax) related to the impairment of goodwill for these two businesses was recorded during the fourth quarter of 2015.

The Company recently reached a tentative settlement with an Infrastructure Solutions’ customer to forgo its accounts receivable claim and pay $2.8 million (inclusive of legal fees) to settle a long-term legal dispute. The $2.8 million litigation settlement amount was recorded in Infrastructure Solutions’ fourth quarter operating expense.

The Company recorded a $2.9 million pre-tax reserve related to certain long-dated accounts receivable related to its Mexican operation, which has been deemed uncollectible due primarily to multiple reorganizations by the customer. The reserve was included in the reported fourth quarter operating expense for Corrosion Protection.

The Company recognized in “Other Income (expense)” a loss totaling $0.8 million on the February 2016 sale of its 51 percent stake in Bayou Perma-Pipe Canada, Ltd. (“BPPC”) and the sale of the Fyfe Peru business entity. There was a USD $0.6 million loss on the sale of BPPC as a result of the foreign currency translation of Company’s share of recorded book value in the joint venture compared to the sale price of USD $9.6 million.

In October 2015, the Company refinanced its $650 million credit facility, which resulted in a $3.4 million charge to interest expense for third-party arranging fees, up-front lending fees and acceleration of unamortized fees from the prior credit facility.

The Company incurred acquisition-related expenses of $1.1 million within Infrastructure Solutions, primarily with respect to the purchase of Underground Solutions, Inc. and the pending acquisition of Fyfe Europe’s operations.

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About Aegion

Aegion Corporation is a global leader in infrastructure protection and maintenance, providing proprietary technologies and services: (i) to protect against the corrosion of industrial pipelines; (ii) to rehabilitate and strengthen water, wastewater, energy and mining piping systems and buildings, bridges, tunnels and waterfront structures; and (iii) to utilize integrated professional services in engineering, procurement, construction, maintenance and turnaround services for a broad range of energy related industries. Aegion’s business activities include manufacturing, distribution, maintenance, construction, installation, coating and insulation, cathodic protection, research and development and licensing. More information about Aegion can be found on our internet site at www.aegion.com.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Aegion’s forward-looking statements in this news release represent its beliefs or expectations about future events or financial performance. These forward-looking statements are based on information currently available to Aegion and on management’s beliefs, assumptions, estimates or projections and are not guarantees of future events or results. When used in this document, the words “anticipate,” “estimate,” “believe,” “plan,” “intend, “may,” “will” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to in the “Risk Factors” section of Aegion’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on February 29, 2016, and in subsequently filed documents. In light of these risks, uncertainties and assumptions, the forward-looking events may not occur. In addition, Aegion’s actual results may vary materially from those anticipated, estimated, suggested or projected. Except as required by law, Aegion does not assume a duty to update forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, review additional disclosures made by Aegion from time to time in Aegion’s filings with the Securities and Exchange Commission. Please use caution and do not place reliance on forward-looking statements. All forward-looking statements made by Aegion in this news release are qualified by these cautionary statements.

About Non-GAAP Financial Measures

Aegion has presented certain information in this release excluding certain items that impacted income, expense and earnings per share from continuing operations. The adjusted earnings per share in the fourth quarter and year ended December 31, 2015 exclude certain charges related to the 2014 Restructuring, the impairment of goodwill, refinancing costs, litigation settlement, acquisition-related expenses and reserves for certain long-dated accounts receivable. The adjusted earnings per share in the fourth quarter and year ended December 31, 2014 exclude certain charges related to the 2014 Restructuring Plan, the impairment of goodwill, the write-down of long-lived assets, the impairment of definite-lived intangible assets, acquisition-related expenses, reserves for certain long-dated accounts receivable, the Brinderson escrow settlement and the loss on sale of the Company’s 49 percent interest in Bayou Coating, L.L.C. and losses from discontinued operations.

Aegion management uses such non-GAAP information internally to evaluate financial performance for Aegion’s operations because Aegion’s management believes such non-GAAP information allows management to more accurately compare Aegion’s ongoing performance across periods. As such, Aegion’s management believes that providing non-GAAP financial information to Aegion’s investors is

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useful because it allows investors to evaluate Aegion’s performance using the same methodology and information used by Aegion management.

Aegion^®, the Aegion^® logo, Insituform^®, Fibrwrap^®, Fyfe^®, Brinderson^® and Underground Solutions^® are registered trademarks of Aegion Corporation and its affiliates. (AEGN-ER)

CONTACT:	Aegion Corporation
	David A. Martin, Executive Vice President and Chief Financial Officer
	(636) 530-8000

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AEGION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except share and per share information)

	For the Quarters Ended December 31,						For the Years Ended December 31,
	2015			2014			2015			2014
Revenues	$	330,713		$	352,181		$	1,333,570		$	1,331,421
Cost of revenues	263,290			269,118			1,057,783			1,051,438
Gross profit	67,423			83,063			275,787			279,983
Operating expenses	51,513			64,439			209,477			234,105
Goodwill impairment	43,484			51,512			43,484			51,512
Definite-lived intangible asset impairment	—			1,220			—			12,116
Acquisition-related expenses	1,132			836			1,912			1,375
Restructuring charges	(66		)	687			968			687
Operating income (loss)	(28,640		)	(35,631		)	19,946			(19,812		)
Other income (expense):
Interest expense	(6,679		)	(3,250		)	(16,044		)	(12,943		)
Interest income	(11		)	154			218			633
Other	(545		)	(2,023		)	(2,905		)	(3,853		)
Total other expense	(7,235		)	(5,119		)	(18,731		)	(16,163		)
Income (loss) before taxes on income	(35,875		)	(40,750		)	1,215			(35,975		)
Taxes (benefit) on income (loss)	(2,442		)	(8,057		)	9,205			(3,840		)
Loss before equity in earnings of affiliated companies	(33,433		)	(32,693		)	(7,990		)	(32,135		)
Equity (loss) in earnings of affiliated companies	—			(107		)	—			570
Loss from continuing operations	(33,433		)	(32,800		)	(7,990		)	(31,565		)
Loss from discontinued operations	—			(3,221		)	—			(3,847		)
Net loss	(33,433		)	(36,021		)	(7,990		)	(35,412		)
Non-controlling interests	573			(875		)	(77		)	(1,755		)
Net loss attributable to Aegion Corporation	$	(32,860	)	$	(36,896	)	$	(8,067	)	$	(37,167	)
Earnings per share attributable to Aegion Corporation:
Basic:
Loss from continuing operations	$	(0.91	)	$	(0.90	)	$	(0.22	)	$	(0.88	)
Loss from discontinued operations	—			(0.09		)	—			(0.10		)
Net loss	$	(0.91	)	$	(0.99	)	$	(0.22	)	$	(0.98	)
Diluted:
Loss from continuing operations	$	(0.91	)	$	(0.90	)	$	(0.22	)	$	(0.88	)
Loss from discontinued operations	—			(0.09		)	—			(0.10		)
Net loss	$	(0.91	)	$	(0.99	)	$	(0.22	)	$	(0.98	)
Weighted average shares outstanding - Basic	36,209,836			37,351,846			36,554,437			37,651,492
Weighted average shares outstanding - Diluted	36,209,836			37,351,846			36,554,437			37,651,492

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AEGION CORPORATION AND SUBSIDIARIES

STATEMENT OF OPERATIONS RECONCILIATION

(Unaudited) (Non-GAAP)

(in thousands, except share and per share information)

For the Quarter Ended December 31, 2015

	As Reported (GAAP)			2014 Restructuring			Goodwill Impairment			Credit Facility Fees		Acquisition- Related Expenses			Divestiture Activity			Litigation Settlement			Reserves for Long-Dated Accounts Receivable			As Adjusted (Non-GAAP)
				(1)			(2)			(3)		(4)			(5)			(6)			(7)
Affected Line Items:
Cost of revenues	$	263,290		$	(74	)	$	—		$	—	$	—		$	—		$	—		$	—		$	263,216
Gross profit	67,423			74			—			—		—			—			—			—			67,497
Operating expenses	51,513			(197		)	—			—		—			—			(2,771		)	(2,883		)	45,662
Goodwill impairment	43,484			—			(43,484		)	—		—			—			—			—			—
Acquisition-related expenses	1,132			—			—			—		(1,132		)	—			—			—			—
Restructuring charges	(66		)	66			—			—		—			—			—			—			—
Operating income (loss)	(28,640		)	205			43,484			—		1,132			—			2,771			2,883			21,835
Other income (expense):
Interest expense	(6,679		)	14			—			3,377		—			—			—			—			(3,288		)
Other	(545		)	32			—			—		—			801			—			—			288
Income (loss) before taxes on income	(35,875		)	251			43,484			3,377		1,132			801			2,771			2,883			18,824
Taxes (benefit) on income (loss)	(2,442		)	351			7,773			1,354		(3,058		)	(626		)	1,111			865			5,328
Net income (loss)	(33,433		)	(100		)	35,711			2,023		4,190			1,427			1,660			2,018			13,496
Non-controlling interests	573			—			—			—		—			—			—			(908		)	(335		)
Income from continuing operations attributable to Aegion Corporation (8)	(32,860		)	(100		)	35,711			2,023		4,190			1,427			1,660			1,110			13,161
Diluted earnings per share:
Income from continuing operations attributable to Aegion Corporation (8)	$	(0.91	)	$	—		$	0.98		$	0.06	$	0.11		$	0.04		$	0.05		$	0.03		$	0.36

_________________________________

⁽¹⁾  Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of $74 related to the write-off of certain other assets; (ii) pre-tax restructuring charges for operating expenses of $197 related to early lease termination costs and other restructuring charges; (iii) pre-tax restructuring charges of $66 related to severance and benefit related costs in accordance with ASC 420, Exit or Disposal Cost Obligations, and recorded as “Restructuring charges” in the Consolidated Statements of Operations; and (iv) pre-tax restructuring charges of $46 related to the write-off of certain other assets.

⁽²⁾  Includes non-GAAP adjustments related to pre-tax charges recorded for goodwill impairment totaling $43,484 for the CRTS ($9,957) and Energy Services ($33,527) reporting units.

⁽³⁾  Includes non-GAAP adjustments related to certain out-of-pocket expenses and acceleration of certain unamortized fees associated with the refinancing of the Company’s credit facility during the period.

⁽⁴⁾  Includes non-GAAP adjustments related to expenses incurred in connection with: (i) the Company’s acquisition of Underground Solutions, Inc.; and (ii) other potential acquisition activity pursued by the Company during the period.

⁽⁵⁾  Includes non-GAAP adjustments for losses on the sale of Bayou Perma-Pipe Canada, Ltd. and Fibrwrap Construction Peru S.A.C.

⁽⁶⁾  Includes non-GAAP adjustments related to reserves for the tentative settlement of a disputed matter within the Infrastructure Solutions segment.

⁽⁷⁾  Includes non-GAAP adjustments related to reserves for accounts receivable associated with long-dated receivables within the Corrosion Protection segment.

⁽⁸⁾  Includes non-controlling interests.

10

AEGION CORPORATION AND SUBSIDIARIES

STATEMENT OF OPERATIONS RECONCILIATION

(Unaudited) (Non-GAAP)

(in thousands, except share and per share information)

For the Quarter Ended December 31, 2014

	As Reported (GAAP)			2014 Restructuring			Long-Lived Asset and Goodwill Impairments			Acquisition-Related Expenses			Reserves for Long-Dated Accounts Receivable			Brinderson Escrow Settlement			As Adjusted (Non-GAAP)
				(1)			(2)			(3)			(4)			(5)
Affected Line Items:
Cost of revenues	$	269,118		$	(754	)	$	—		$	—		$	—		$	—		$	268,364
Gross profit	83,063			754			—			—			—			—			83,817
Operating expenses	64,439			(6,430		)	—			—			(7,465		)	4,500			55,044
Goodwill impairment	51,512			—			(51,512		)	—			—			—			—
Definite-lived intangible asset impairment	1,220			—			(1,220		)	—			—			—			—
Acquisition-related expenses	836			—			—			(836		)	—			—			—
Restructuring charges	687			(687		)	—			—			—			—			—
Operating income (loss)	(35,631		)	7,871			52,732			836			7,465			(4,500		)	28,773
Other income (expense):
Interest expense	(3,250		)	199			—			—			—			—			(3,051		)
Other	(2,023		)	1,495			—			—			—			—			(528		)
Income (loss) before taxes on income	(40,750		)	9,565			52,732			836			7,465			(4,500		)	25,348
Taxes (benefit) on income (loss)	(8,057		)	6,448			6,119			333			2,971			(1,656		)	6,158
Income (loss) from continuing operations attributable to Aegion Corporation (6)	(33,675		)	3,117			46,613			503			4,494			(2,844		)	18,208
Diluted earnings per share:
Income (loss) from continuing operations attributable to Aegion Corporation (6)	$	(0.90	)	$	0.08		$	1.25		$	0.01		$	0.12		$	(0.08	)	$	0.48

_________________________________

⁽¹⁾  Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of $754 related to impairment of fixed assets, inventory obsolescence and write-off of certain other assets; (ii) pre-tax restructuring charges for operating expenses of $6,430 related to bad debt expenses, impairment of fixed assets, write-off of certain other assets and accrued expenses, and other restructuring charges; (iii) pre-tax restructuring charges of $687 related to severance and benefit related costs in accordance with ASC 420, Exit or Disposal Cost Obligations, and recorded as “Restructuring charges” in the Consolidated Statements of Operations (GAAP); and (iv) pre-tax restructuring charges of $1,694 related to the write-off of certain other assets, including the loss on the sale of the CIPP contracting operation in Switzerland.

⁽²⁾  Includes non-GAAP adjustments related to pre-tax charges related to: (i) goodwill impairment totaling $51,512 for the following reporting units: $29,735 for Bayou, $16,069 for Fyfe and $5,708 for CRTS; and (ii) definite-lived intangible asset impairment totaling $1,220 for Fyfe Latin America.

⁽³⁾  Includes non-GAAP adjustments related to expenses incurred in connection with acquisition activity pursued by the Company during the period.

⁽⁴⁾  Includes non-GAAP adjustments related to reserves for accounts receivable associated with long-dated receivables, some of which were in litigation or dispute, within the Infrastructure Solutions segment.

⁽⁵⁾  Represents non-GAAP adjustments related to proceeds received in connection with the settlement of escrow claims related to the purchase of Brinderson. The total amount of the proceeds was $5,500, of which $1,000 relates to working capital and was recorded as a purchase price adjustment and the remaining $4,500 was recorded as an offset to Operating expenses in the Consolidated Statements of Operations.

⁽⁶⁾  Includes non-controlling interests.

11

AEGION CORPORATION AND SUBSIDIARIES

STATEMENT OF OPERATIONS RECONCILIATION

(Unaudited) (Non-GAAP)

(in thousands, except share and per share information)

For the Year Ended December 31, 2015

	As Reported (GAAP)			2014 Restructuring			Goodwill Impairment			Credit Facility Fees		Acquisition-Related Expenses			Divestiture Activity			Litigation Settlement			Reserves for Long-Dated Accounts Receivable			As Adjusted (Non-GAAP)
				(1)			(2)			(3)		(4)			(5)			(6)			(7)
Affected Line Items:
Cost of revenues	$	1,057,783		$	(2,717	)	$	—		$	—	$	—		$	—		$	—		$	—		$	1,055,066
Gross profit	275,787			2,717			—			—		—			—			—			—			278,504
Operating expenses	209,477			(4,387		)	—			—		—			—			(2,771		)	(2,883		)	199,436
Goodwill impairment	43,484			—			(43,484		)	—		—			—			—			—			—
Acquisition-related expenses	1,912			—			—			—		(1,912		)	—			—			—			—
Restructuring charges	968			(968		)	—			—		—			—			—			—			—
Operating income	19,946			8,072			43,484			—		1,912			—			2,771			2,883			79,068
Other income (expense):
Interest expense	(16,044		)	140			—			3,377		—			—			—			—			(12,527		)
Other	(2,905		)	2,768			—			—		—			801			—			—			664
Income before taxes on income	1,215			10,980			43,484			3,377		1,912			801			2,771			2,883			67,423
Taxes on income	9,205			2,268			7,773			1,354		(2,745		)	(626		)	1,111			865			19,205
Net income (loss)	(7,990		)	8,712			35,711			2,023		4,657			1,427			1,660			2,018			48,218
Non-controlling interests	(77		)	—			—			—		—			—			—			(908		)	(985		)
Income from continuing operations attributable to Aegion Corporation (8)	(8,067		)	8,712			35,711			2,023		4,657			1,427			1,660			1,110			47,233
Diluted earnings per share:
Income from continuing operations attributable to Aegion Corporation (8)	$	(0.22	)	$	0.24		$	0.97		$	0.05	$	0.13		$	0.04		$	0.04		$	0.03		$	1.28

_________________________________

⁽¹⁾  Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of $2,717 related to the write-off of certain other assets; (ii) pre-tax restructuring charges for operating expenses of $4,387 related to reserves for potentially uncollectable receivables, early lease termination costs, and other restructuring charges; (iii) pre-tax restructuring charges of $968 related to severance and benefit related costs in accordance with ASC 420, Exit or Disposal Cost Obligations, and recorded as “Restructuring charges” in the Consolidated Statements of Operations; and (iv) pre-tax restructuring charges of $2,908 related to the write-off of certain other assets, including the loss on the sale of the CIPP contracting operation in France.

⁽²⁾  Includes non-GAAP adjustments related to pre-tax charges recorded for goodwill impairment totaling $43,484 for the CRTS ($9,957) and Energy Services ($33,527) reporting units.

⁽³⁾  Includes non-GAAP adjustments related to certain out-of-pocket expenses and acceleration of certain unamortized fees associated with the refinancing of the Company’s credit facility during the year.

⁽⁴⁾  Includes non-GAAP adjustments related to expenses incurred in connection with: (i) the Company’s acquisition of Schultz Mechanical Contractors, Inc.; (ii) the Company’s acquisition of Underground Solutions, Inc.; and (iii) other potential acquisition activity pursued by the Company during the year.

⁽⁵⁾  Includes non-GAAP adjustments for losses on the sale of Bayou Perma-Pipe Canada, Ltd. and Fibrwrap Construction Peru S.A.C.

⁽⁶⁾  Includes non-GAAP adjustments related to reserves for the tentative settlement of a disputed matter within the Infrastructure Solutions segment.

⁽⁷⁾  Includes non-GAAP adjustments related to reserves for accounts receivable associated with long-dated receivables within the Corrosion Protection segment.

⁽⁸⁾  Includes non-controlling interests.

12

AEGION CORPORATION AND SUBSIDIARIES

STATEMENT OF OPERATIONS RECONCILIATION

(Unaudited) (Non-GAAP)

(in thousands, except share and per share information)

For the Year Ended December 31, 2014

	As Reported (GAAP)			2014 Restructuring			Long-Lived Asset and Goodwill Impairments			Acquisition-Related Expenses			Divestiture Activity		Reserves for Long-Dated Accounts Receivable			Brinderson Escrow Settlement			As Adjusted (Non-GAAP)
				(1)			(2)			(3)			(4)		(5)			(6)
Affected Line Items:
Cost of revenues	$	1,051,438		$	(15,694	)	$	—		$	—		$	—	$	—		$	—		$	1,035,744
Gross profit	279,983			15,694			—			—			—		—			—			295,677
Operating expenses	234,105			(20,547		)	—			—			—		(7,465		)	4,500			210,593
Goodwill impairment	51,512			—			(51,512		)	—			—		—			—			—
Definite-lived intangible asset impairment	12,116			(10,896		)	(1,220		)	—			—		—			—			—
Acquisition-related expenses	1,375			—			—			(1,375		)	—		—			—			—
Restructuring charges	687			(687		)	—			—			—		—			—			—
Operating income (loss)	(19,812		)	47,824			52,732			1,375			—		7,465			(4,500		)	85,084
Other income (expense):
Interest expense	(12,943		)	199			—			—			—		—			—			(12,744		)
Other	(3,853		)	1,495			—			—			472		—						(1,886		)
Income (loss) before taxes on income	(35,975		)	49,518			52,732			1,375			472		7,465			(4,500		)	71,087
Taxes (benefit) on income (loss)	(3,840		)	13,365			6,119			547			194		2,971			(1,656		)	17,700
Income (loss) from continuing operations attributable to Aegion Corporation (4)	(33,320		)	36,153			46,613			828			278		4,494			(2,844		)	52,202
Diluted earnings per share:
Income (loss) from continuing operations attributable to Aegion Corporation (4)	$	(0.88	)	$	0.95		$	1.23		$	0.02		$	0.01	$	0.11		$	(0.07	)	$	1.37

_________________________________

⁽¹⁾  Includes the following non-GAAP adjustments: (i) pre-tax restructuring charges for cost of revenues of $15,694 associated with the write-down of long-lived assets, impairment of fixed assets, inventory obsolescence and write-off of certain other assets; (ii) pre-tax restructuring charges for operating expenses of $20,547 related to the write-down of long-lived assets, bad debt expenses, impairment of fixed assets, write-off of certain other assets and accrued expenses, and other restructuring charges; (iii) pre-tax restructuring charges for the impairment of definite-lived intangible assets of $10,896 related to Bayou’s reporting unit; (iv) pre-tax restructuring charges of $687 related to severance and benefit related costs in accordance with ASC 420, Exit or Disposal Cost Obligations, and recorded as “Restructuring charges” in the Consolidated Statements of Operations; and (v) pre-tax restructuring charges of $1,694 related to the write-off of certain other assets, including the loss on the sale of the CIPP contracting operation in Switzerland.

⁽²⁾  Includes non-GAAP adjustments related to pre-tax charges related to: (i) goodwill impairment totaling $51,512 for the following reporting units: $29,735 for Bayou, $16,069 for Fyfe and $5,708 for CRTS; and (ii) definite-lived intangible asset impairment totaling $1,220 for Fyfe Latin America.

⁽³⁾  Includes non-GAAP adjustments related to expenses incurred in connection with (i) the Company’s 2012 acquisition of Fyfe Group LLC’s Asian operations; (ii) the Company’s 2013 acquisition of Brinderson, L.P.; and (iii) other potential acquisition activity pursued by the Company during the year.

⁽⁴⁾  Includes non-GAAP adjustments relating to a loss on the sale of the Company’s 49 percent interest in Bayou Coating, L.L.C. The difference between the Company’s recorded gross equity in earnings of affiliated companies of approximately $1,200 and the final equity distribution settlement of $700 resulted in a loss of approximately $500.

⁽⁵⁾  Includes non-GAAP adjustments related to reserves for accounts receivable associated with long-dated receivables, some of which were in litigation or dispute, within the Infrastructure Solutions segment.

⁽⁶⁾  Represents proceeds received in connection with the settlement of escrow claims related to the purchase of Brinderson. The total amount of the proceeds was $5,500, of which $1,000 relates to working capital and was recorded as a purchase price adjustment and the remaining $4,500 was recorded as an offset to Operating expenses in the Consolidated Statements of Operations.

⁽⁷⁾  Includes non-controlling interests and equity in earnings of affiliated companies.

13

Segment Reporting

Infrastructure Solutions

(in thousands)	Quarter Ended December 31, 2015									Quarter Ended December 31, 2014
	As Reported (GAAP)			Adjustments (1)			As Adjusted (Non-GAAP)			As Reported (GAAP)			Adjustments (2)			As Adjusted (Non-GAAP)
Revenues	$	135,064		$	—		$	135,064		$	144,994		$	—		$	144,994
Cost of revenues	101,243			(74		)	101,169			105,175			(754		)	104,421
Gross profit	33,821			74			33,895			39,819			754			40,573
Gross profit margin	25.0		%				25.1		%	27.5		%				28.0		%
Operating expenses	21,590			(2,968		)	18,622			38,642			(13,895		)	24,747
Goodwill impairment	—			—			—			16,069			(16,069		)	—
Definite-lived intangible asset impairment	—			—			—			1,220			(1,220		)	—
Acquisition-related expenses	1,132			(1,132		)	—			—			—			—
Restructuring charges	(66		)	66			—			687			(687		)	—
Operating income (loss)	11,165			4,108			15,273			(16,799		)	32,625			15,826
Operating margin	8.3		%				11.3		%	(11.6		)%				10.9		%

_________________________________

⁽¹⁾  Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with the write-off of certain other assets, early lease termination costs, severance and benefit related costs, and other restructuring charges; (ii) reserves for the tentative settlement of a disputed matter; and (iii) acquisition expenses incurred primarily in connection with the Company’s acquisition of Underground Solutions, Inc.

⁽²⁾  Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with inventory obsolescence, reserves for potentially uncollectable receivables, write-off of certain other assets and accrued expenses, and other restructuring charges; (ii) impairment of goodwill for the Fyfe reporting unit; and (iii) impairment of definite-lived intangible assets for Fyfe Latin America.

Corrosion Protection

(in thousands)	Quarter Ended December 31, 2015									Quarter Ended December 31, 2014
	As Reported (GAAP)			Adjustments (1)			As Adjusted (Non-GAAP)			As Reported (GAAP)			Adjustments (2)			As Adjusted (Non-GAAP)
Revenues	$	108,764		$	—		$	108,764		$	127,320		$	—		$	127,320
Cost of revenues	85,855			—			85,855			95,033			—			95,033
Gross profit	22,909			—			22,909			32,287			—			32,287
Gross profit margin	21.1		%				21.1		%	25.4		%				25.4		%
Operating expenses	23,045			(2,883		)	20,162			22,218			—			22,218
Goodwill impairment	9,957			(9,957		)	—			35,443			(35,443		)	—
Acquisition-related expenses	—			—			—			522			(522		)	—
Operating income (loss)	(10,093		)	12,840			2,747			(25,896		)	35,965			10,069
Operating margin	(9.3		)%				2.5		%	(20.3		)%				7.9		%

_________________________________

⁽¹⁾  Includes non-GAAP adjustments related to: (i) reserves for accounts receivable associated with long-dated receivables; and (ii) impairment of goodwill for the CRTS reporting unit.

⁽²⁾  Includes non-GAAP adjustments related to: (i) impairment of goodwill for the Bayou and CRTS reporting units; and (ii) expenses incurred in conjunction with potential acquisition activity pursued by the Company during the quarter.

14

Energy Services

(in thousands)	Quarter Ended December 31, 2015									Quarter Ended December 31, 2014
	As Reported (GAAP)			Adjustments (1)			As Adjusted (Non-GAAP)			As Reported (GAAP)			Adjustments (2)			As Adjusted (Non-GAAP)
Revenues	$	86,885		$	—		$	86,885		$	79,867		$	—		$	79,867
Cost of revenues	76,192			—			76,192			68,910			—			68,910
Gross profit	10,693			—			10,693			10,957			—			10,957
Gross profit margin	12.3		%				12.3		%	13.7		%				13.7		%
Operating expenses	6,878			—			6,878			3,579			4,500			8,079
Goodwill impairment	33,527			(33,527		)	—			—			—			—
Acquisition-related expenses	—			—			—			314			(314		)	—
Operating income (loss)	(29,712		)	33,527			3,815			7,064			(4,186		)	2,878
Operating margin	(34.2		)%				4.4		%	8.8		%				3.6		%

_________________________________

⁽¹⁾  Includes non-GAAP adjustments related to impairment of goodwill for the Energy Services reporting unit.

⁽²⁾  Includes non-GAAP adjustments related to: (i) proceeds received in connection with the settlement of escrow claims related to the purchase of Brinderson; and (ii) expenses incurred in conjunction with the Company’s acquisition of Schultz Mechanical Contractors, Inc. in March 2015.

15

Infrastructure Solutions

(in thousands)	Year Ended December 31, 2015									Year Ended December 31, 2014
	As Reported (GAAP)			Adjustments (1)			As Adjusted (Non-GAAP)			As Reported (GAAP)			Adjustments (2)			As Adjusted (Non-GAAP)
Revenues	$	556,234		$	—		$	556,234		$	567,205		$	—		$	567,205
Cost of revenues	416,339			(2,717		)	413,622			431,322			(4,356		)	426,966
Gross profit	139,895			2,717			142,612			135,883			4,356			140,239
Gross profit margin	25.2		%				25.6		%	24.0		%				24.7		%
Operating expenses	90,928			(7,158		)	83,770			124,101			(28,012		)	96,089
Goodwill impairment	—			—			—			16,069			(16,069		)	—
Definite-lived intangible asset impairment	—			—			—			1,220			(1,220		)	—
Acquisition-related expenses	1,132			(1,132		)	—			—			—			—
Restructuring charges	968			(968		)	—			687			(687		)	—
Operating income (loss)	46,867			11,975			58,842			(6,194		)	50,344			44,150
Operating margin	8.4		%				10.6		%	(1.1		)%				7.8		%

_________________________________

⁽¹⁾  Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with the write-off of certain other assets, reserves for potentially uncollectable receivables, early lease termination costs, severance and benefit related costs, and other restructuring charges; (ii) reserves for the tentative settlement of a disputed matter; and (iii) acquisition expenses incurred primarily in connection with the Company’s acquisition of Underground Solutions, Inc.

⁽²⁾  Includes non-GAAP adjustments related to: (i) pre-tax restructuring charges associated with inventory obsolescence, reserves for potentially uncollectable receivables, write-down of long-lived assets, impairment of fixed assets, write-off of certain other assets and accrued expenses, and other restructuring charges; (ii) impairment of goodwill for the Fyfe reporting unit; and (iii) impairment of definite-lived intangible assets for Fyfe Latin America.

Corrosion Protection

(in thousands)	Year Ended December 31, 2015									Year Ended December 31, 2014
	As Reported (GAAP)			Adjustments (1)			As Adjusted (Non-GAAP)			As Reported (GAAP)			Adjustments (2)			As Adjusted (Non-GAAP)
Revenues	$	437,921		$	—		$	437,921		$	458,409		$	—		$	458,409
Cost of revenues	344,701			—			344,701			359,105			(11,338		)	347,767
Gross profit	93,220			—			93,220			99,304			11,338			110,642
Gross profit margin	21.3		%				21.3		%	21.7		%				24.1		%
Operating expenses	84,577			(2,883		)	81,694			83,256			—			83,256
Goodwill impairment	9,957			(9,957		)	—			35,443			(35,443		)	—
Definite-lived intangible asset impairment	—			—			—			10,896			(10,896		)	—
Acquisition-related expenses	457			(457		)	—			719			(719		)	—
Operating income (loss)	(1,771		)	13,297			11,526			(31,010		)	58,396			27,386
Operating margin	(0.4		)%				2.6		%	(6.8		)%				6.0		%

_________________________________

⁽¹⁾  Includes non-GAAP adjustments related to: (i) reserves for accounts receivable associated with long-dated receivables; (ii) impairment of goodwill for the CRTS reporting unit; and (iii) expenses incurred in conjunction with potential acquisition activity pursued by the Company during the year.

⁽²⁾  Includes non-GAAP adjustments related to: (i) pre-tax restructuring and impairment-related charges for Bayou’s operation for the write-down of long-lived assets and the impairment of definite-lived intangible assets; (ii) impairment of goodwill for the Bayou and CRTS reporting units; and (iii) expenses incurred in conjunction with potential acquisition activity pursued by the Company during the year.

16

Energy Services

(in thousands)	Year Ended December 31, 2015									Year Ended December 31, 2014
	As Reported (GAAP)			Adjustments (1)			As Adjusted (Non-GAAP)			As Reported (GAAP)			Adjustments (2)			As Adjusted (Non-GAAP)
Revenues	$	339,415		$	—		$	339,415		$	305,807		$	—		$	305,807
Cost of revenues	296,743			—			296,743			261,011			—			261,011
Gross profit	42,672			—			42,672			44,796			—			44,796
Gross profit margin	12.6		%				12.6		%	14.6		%				14.6		%
Operating expenses	33,972			—			33,972			26,748			4,500			31,248
Goodwill impairment	33,527			(33,527		)	—			—			—			—
Acquisition-related expenses	323			(323		)	—			656			(656		)	—
Operating income (loss)	(25,150		)	33,850			8,700			17,392			(3,844		)	13,548
Operating margin	(7.4		)%				2.6		%	5.7		%				4.4		%

_________________________________

⁽¹⁾  Includes non-GAAP adjustments related to: (i) impairment of goodwill for the Energy Services reporting unit; and (ii) expenses incurred in conjunction with the Company’s acquisition of Schultz Mechanical Contractors, Inc. during the year.

⁽²⁾  Includes non-GAAP adjustments related to: (i) proceeds received in connection with the settlement of escrow claims related to the purchase of Brinderson; and (ii) expenses incurred in conjunction with the Company’s acquisitions of Brinderson, L.P. and Schultz Mechanical Contractors, Inc.

17

AEGION CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share amounts)

	December 31,
	2015			2014
Assets
Current assets
Cash and cash equivalents	$	209,253		$	174,965
Restricted cash	5,796			2,075
Receivables, net of allowances of $14,524 and $19,307, respectively	200,883			227,481
Retainage	37,285			38,318
Costs and estimated earnings in excess of billings	89,141			94,045
Inventories	47,779			59,192
Prepaid expenses and other current assets	66,999			42,046
Assets held for sale	21,060			—
Total current assets	678,196			638,122
Property, plant & equipment, less accumulated depreciation	144,833			168,213
Other assets
Goodwill	249,120			293,023
Identified intangible assets, less accumulated amortization	174,118			182,273
Deferred income tax assets	2,130			3,334
Other assets	9,910			10,708
Total other assets	435,278			489,338
Total Assets	$	1,258,307		$	1,295,673
Liabilities and Equity
Current liabilities
Accounts payable	$	72,732		$	83,285
Accrued expenses	112,951			111,617
Billings in excess of costs and estimated earnings	87,475			43,022
Current maturities of long-term debt and line of credit	17,648			26,399
Liabilities held for sale	6,961			—
Total current liabilities	297,767			264,323
Long-term debt, less current maturities	337,774			351,076
Deferred income tax liabilities	19,386			22,913
Other non-current liabilities	8,824			12,276
Total liabilities	663,751			650,588
Equity
Preferred stock, undesignated, $.10 par – shares authorized 2,000,000; none outstanding	—			—
Common stock, $.01 par – shares authorized 125,000,000; shares issued and outstanding 36,053,499 and 37,360,515, respectively	361			374
Additional paid-in capital	199,951			217,289
Retained earnings	425,574			433,641
Accumulated other comprehensive loss	(47,861		)	(24,669		)
Total stockholders’ equity	578,025			626,635
Non-controlling interests	16,531			18,450
Total equity	594,556			645,085
Total Liabilities and Equity	$	1,258,307		$	1,295,673

18

AEGION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (in thousands)

	For the Year Ended December 31,
	2015			2014
Cash flows from operating activities:
Net loss	$	(7,990	)	$	(35,412	)
Loss from discontinued operations	—			3,847
	(7,990		)	(31,565		)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	43,791			44,312
Gain on sale of fixed assets	(929		)	(310		)
Equity-based compensation expense	7,987			5,073
Deferred income taxes	924			(16,816		)
Equity in earnings of affiliated companies	—			(570		)
Non-cash restructuring charges	1,816			20,592
Fixed asset impairment	—			11,870
Definite-lived intangible asset impairment	—			12,116
Goodwill impairment	43,484			51,512
(Gain) loss on sale of businesses	3,414			988
Debt issuance costs	3,377			157
Loss on foreign currency transactions	80			627
Other	(168		)	1,279
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash related to operating activities	(382		)	(454		)
Return on equity of affiliated companies	—			590
Receivables net, retainage and costs and estimated earnings in excess of billings	12,283			(41,211		)
Inventories	6,984			(5,286		)
Prepaid expenses and other assets	(28,895		)	3,465
Accounts payable and accrued expenses	(582		)	5,997
Billings in excess of costs and estimated earnings	45,700			19,100
Other operating	1,129			402
Net cash provided by operating activities of continuing operations	132,023			81,868
Net cash used in operating activities of discontinued operations	—			(1,045		)
Net cash provided by operating activities	132,023			80,823
Cash flows from investing activities:
Capital expenditures	(29,454		)	(32,899		)
Proceeds from sale of fixed assets	3,173			1,547
Patent expenditures	(1,503		)	(1,923		)
Restricted cash related to investing activities	(3,538		)	(1,153		)
Purchase of Schultz Mechanical Contractors, Inc.	(6,662		)	—
Purchase of Fyfe Asia, net of cash acquired	(1,098		)	—
Purchase of Brinderson, net of cash acquired	—			1,000
Proceeds from sale of interests in Bayou Coating, L.L.C.	—			9,065
Proceeds from sale of Ka-te Insituform AG	—			1,123
Net cash used in investing activities of continuing operations	(39,082		)	(23,240		)
Net cash provided by investing activities of discontinued operations	—			1,045
Net cash used in investing activities	(39,082		)	(22,195		)

19

Cash flows from financing activities:
Proceeds from issuance of common stock upon stock option exercises, including tax effects	2,466			8,615
Repurchase of common stock	(27,804		)	(31,085		)
Sale of non-controlling interest	239			—
Purchase of or distributions to non-controlling interest	(472		)	(617		)
Payment of earnout related to acquisition of CRTS, Inc.	(684		)	—
Credit facility financing fees	(4,360		)	(783		)
Proceeds from notes payable	1,505			1,284
Principal payments on notes payable	(1,875		)	—
Proceeds from line of credit	26,000			18,000
Payments on line of credit	(71,500		)	(8,000		)
Proceeds from long-term debt	350,000			—
Principal payments on long-term debt	(323,750		)	(22,039		)
Net cash used in financing activities	(50,235		)	(34,625		)
Effect of exchange rate changes on cash	(5,975		)	(7,083		)
Net increase in cash and cash equivalents for the year	36,731			16,920
Cash and cash equivalents, beginning of year	174,965			158,045
Cash and cash equivalents, end of year	211,696			174,965
Cash and cash equivalents associated with assets held for sale, end of year	(2,443		)	—
Cash and cash equivalents from continuing operations, end of year	$	209,253		$	174,965

20

EX-99.2

Exhibit 99.2

AEGION CORPORATION

March 1, 2016

9:30 a.m. ET

Operator: This is conference 41999292.

Good morning, and welcome to the Aegion Corporation 2015 fourth-quarter and full-year earnings call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this event is being recorded.

It is my pleasure to turn the call over to your host, Ruben Mella, Vice President of Investor Relations. Ruben, you may proceed.

Ruben Mella: Good morning, and thank you for joining us today. On the line with me are Chuck Gordon, President and Chief Executive Officer; David Martin, Executive Vice President and Chief Financial Officer; and David Morris, Executive Vice President and General Counsel.

We have posted a presentation that will be used as a reference during the prepared remarks on our website at Aegion.com/investors. You will find our Safe Harbor statement in the Presentation and Press Release. During this call and in the Presentation materials, the Company will make forward-looking statements, which are inherently subject to risk and uncertainty. The Company does not assume the duty to update forward-looking statements.

I will now turn the call over to Chuck Gordon.

Charles Gordon: Thank you, Ruben, and good morning to all of you joining us on the line and webcast. As we review 2015 and discuss the outlook we expect for this year, there are three takeaways I'd like you to remember, as you can see on slide 1.

First, we are pleased with how we successfully managed an unprecedented collapse in oil prices in 2015 to deliver solid earnings and record cash flow.

Second, we've taken steps to reposition our upstream exposure and streamline costs with the goal to weather an even more challenging energy market environment in 2016.

Finally, the strategic actions we announced in January underscored our strategy and action to enhance our growth prospects.

Let me begin my remarks with the last point on slide 2. We recently closed the acquisition of Underground Solutions and welcomed their senior management team, who average more than 20 years of industry experience. These individuals now form an expanded team within our Infrastructure Solutions platform dedicated to growing our presence in the pressure pipeline rehabilitation market. We paid approximately $85 million for Underground Solutions, with an additional $5.3 million from the discounted value of tax benefits associated with existing net operating loss carryforwards.

Turning to slide 3. We expect Underground Solutions earnings contribution in 2016 to be accretive based on a strong backlog position early in 2016, which gives us confidence they can deliver full-year revenues of $50 million within their historical mid to high-single digit growth rate. They have a successful business model focused on the sale of their patented fusible PVC technologies and their proprietary pipe fusion capabilities, generating gross margins of 40% or better, and operating margins in excess of 10%.

This is a well-run and profitable business. We are excited to have them on board.

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Our approach today is to build a diverse portfolio of pressure pipe technologies to offer customers the best transfer solution across the diameter and pipeline pressure spectrum. With our Insituform, Fibrwrap, and Underground Solutions customer offers, we have a strong base of nearly $90 million in expected 2016 revenues from which to grow in this attractive end market.

The estimated addressable North American trenchless waterpipe rehab market is over $1 billion, growing at a mid- to high-single digit annual rate, as you can see on slide 4. We also have promising R&D initiatives underway to approve our Cured-In-Place Pipe Rehabilitation Solutions with InsituGuard and InsituMain, largely focused on extending our footprint in the medium and, in some cases, smaller, diameter segments.

We have an effort currently underway to develop an innovative solution to rehabilitate small diameter water pressure pipes, which often require service reinstatement. There isn't one single technical trenchless pressure pipe solution that best addresses all of our customers' needs. Rather, we believe a portfolio of alternative technologies is the best way for Aegion to provide optimal solutions to solve our customers' particular problems. I believe we are taking the right approach to have a renewed but focused effort to grow in the pressure pipe market.

Turning to slide 5. In our Corrosion Protection Group, we launched a new initiative to further improve how Corrpro approaches the midstream market with one of the most important -- with one of their most important services, close interval integral surveys on pipelines. Today, our teams are walking pipelines, collecting readings from the cathodic protection systems we install. Our engineers in turn process the information to help our customers identify areas where there may be issues with corrosion.

The objective for the Asset Integrity Management Initiative is to increase the accuracy of the data we collect, upgrade how we share this valuable information with customers, and create a systems-based infrastructure to support potential future pipeline asset management services that we may add to expand our capabilities. We plan to use geospatial mapping software to show our close interval survey results, and interface those results with the database systems most of our large customers use.

We are also creating a robust data base repository to help other customers to manage their pipeline integrity data. We also believe the technology will be applicable in Infrastructure Solutions. We are investing in this effort despite today's challenging energy markets because our customers need to better understand the state of their pipeline assets, and to also address growing regulatory requirements for proactive pipeline integrity management. At a minimum, we expect this effort will expand our business with existing customers as we continue to be easier to do business with.

While we are investing to enhance future growth, we had to address the current energy market environment. In January, we announced proactive steps to best position us in what we believe will be a sustained period of relatively low oil prices, as you can see on slide 6.

First, we reduced our exposure in the high-cost oil extraction market in Canada by selling our stake in the Bayou Perma-Pipe joint venture for $9.6 million. We believe the best way for us to succeed going forward is to provide a differentiated technological solution, and ideally to have mobile field operations with modest overhead to maximize operating margins. Bayou Canada's fixed site location, without differentiated coating technologies, in a high-cost oil production area, led to our decision to sell the operation.

Second, we downsized but not exited our operations in Central California as a result of losing one large upstream maintenance contract and seeing a significant scope reduction on a second contract. Both were long-term clients where the bids we submitted at margins we deemed appropriate to sustain the long-term health of our operations were not sufficient to win, as customers in the region significantly reduced costs in 2016. The annual value of those combined contracts was in the $70 million range.

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Third, the low oil price environment has increased the risk of project delays and the possibility for cancellation of new midstream construction projects in 2016. While about 20% of Corrpro's revenues comes from new pipeline construction, we felt it was necessary to improve our competitive position in a more volatile environment by reducing costs. Longer-term, we remain confident there will be significant investments in pipeline infrastructure, especially in North America where asset integrity management should play a critical role.

These actions are expected to reduce our annual upstream revenues to less than 10% of expected consolidated revenues in 2016, a reduction of approximately $100 million, as shown on slide 7. The restructuring plan announced in January has already accomplished the downsizing actions.

We've quickly moved to reduce costs across the Company, and we expect to achieve our goal of reducing annual costs by $15 million. We expect to recognize a $7 million to $9 million pretax charge, most of which will be recorded in the first quarter of 2016.

Let's turn to the outlook for 2016. As you can see on slide 8, the Corrosion Protection platform will face greater pressure this year from the difficult energy markets. Backlog at December 31, 2015, excluding the Appomattox contract, was down approximately 16%, primarily because of a further reduction in upstream project activity. While all of our upstream services will be affected, our coating operations in Louisiana will have the biggest

impact, which means a loss in 2016 until pipe coating insulation production begins with for the Appomattox contract.

The midstream market is also off to a slow start primarily in the US and Canada, which is reflected in backlog. For the full year, we expect revenues for Corrosion Protection to be in line with what we achieved in 2015, assuming the Appomattox project begins as we expect in the fourth quarter. Under this scenario, and with the expected benefits of the cost reduction efforts, we estimated operating income in 2016 to be in line with what we achieved in 2015.

There is a lot of activity at our facility in Louisiana with the construction of a state-of-the-art insulation facility for the Appomattox project. We expect to complete construction, certification and testing before the fourth quarter.

We are working with our material vendor to ready their proprietary thermosetting polymer material for production application. Their insulation coating material provides an innovative robust thermal barrier at extreme temperature ranges. The insulation coating is also stable and incompressible in extreme pressure environments like those found in ultra-deepwater applications. The total value of the multiyear Appomattox contract is over $130 million.

Let's turn to the Energy Services platform on slide 10. Energy Services backlog is down $52 million to $193 million. The downsizing in Central California resulted in a decline in backlog of approximately $70 million. We expect a favorable West Coast downstream market in 2016. Demand remains high for refined petroleum products, which indicates high-capacity utilization, and the need for reliable and safe mechanical maintenance, small capital construction, and turnaround services.

There are no contracts up for renewal in 2016. I will point out Energy Services benefited last year from increased billable hours during the USW strike and cleanup and repair efforts after the Torrance refinery incident. We are concluding a couple of large turnaround projects in the first quarter, which gets us off to a good start this year. The pullback in the upstream market, the one-time events last year, and uncertainty with the turnaround market, leads us to expect annual revenues of approximately $250 million, with operating margins in line with 2015.

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Let me conclude the outlook with Infrastructure Solutions, excluding the contribution from Underground Solutions, on slide 11. Infrastructure Solutions had an excellent year in 2015. Market conditions were favorable, and we successfully repositioned our international strategy with our restructuring.

The Fyfe business made a strong recovery aided by a large nuclear pipeline rehabilitation project. NAR's backlog was relatively flat year-over-year when adjusting for the translation impact of Canadian currency, and it provides a strong position for the business going into 2016.

Our assessment of the market for 2016 remains favorable. We expect the CIPP market in North America to grow low-single digits, giving us the opportunity to grow in line with the market. We also see favorable market conditions in Fyfe's fiber reinforced polymer market. We don't expect a replacement for the large project I just mentioned, but we do expect to overcome that headwind and modestly grow revenues and profits.

Because of a strong close to 2015 and timing with respect to project awards, backlog at December 31 was down 8% to $311 million from the end of 2014. We've had a good month in January for bookings, which gives me confidence we are starting 2016 on the right track for Infrastructure Solutions to conclude 2016 with low-single digit revenue and profit growth, again excluding contribution from Underground Solutions.

We traditionally generate the majority of earnings in the second half of the year, and that will be the case this year, but even more so due to the scheduled production of Bayou. In 2015, our Bayou operations started very strong with a number of large coating projects in Louisiana as well as a good Q1 in the Bayou Canadian operation, which has now been divested. In 2016, we anticipate a slower start for Bayou, due to a lack of workable backlog. But unlike 2015, we expect a strong close to 2016 due to the Appomattox project.

The first quarter is our smallest for earnings generation, and this year we expect non-GAAP earnings-per-share to be below what we achieved in the first quarter of 2015. Infrastructure Solutions is expected to have a good quarter, assuming typical weather for our crews in North America during March. We believe Energy Services will perform in line with last year, because of the turnaround activity underway, and the year-over-year offset between actions taken to make our Permian operations profitable, and the downsizing of Central California this year.

The challenge will be with Corrosion Protection due to a difficult market in Canada, limited workable backlog for a Bayou pipe coatings facility in Louisiana, and continued weak market conditions for United Pipeline. The expected variance in contribution from these operations, compared to Q1 of 2015, could be as much as $0.07 to $0.09 per diluted share. Our cost reduction efforts, coupled with the contribution from Underground Solutions, should partially offset the shortfall.

We've taken the right actions to best position Aegion for the market conditions we anticipate in 2016. As we've demonstrated in the past, we will continue to evaluate our portfolio to ensure we react to market changes with the objective of delivering sustained growth at appropriate returns. The acquisition of Underground Solutions is one example of how we are taking action to enhance our growth prospects by expanding in the growing pressure pipe market.

The majority of our business enjoys favorable market conditions in water and wastewater, downstream refining, and the midstream market with some added risk. Despite the slow start we anticipate in 2016, we believe our performance will improve as the year progresses, so that we can largely balance the positive actions we've taken with the market challenges we face, and deliver full-year non-GAAP earnings in line with what we achieved in 2015, including what we expect will be a fourth-quarter contribution from the Appomattox project.

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During the early part of 2016, we have seen increased challenges in the energy markets. The increased challenges are expected to be offset by our growing confidence in meeting the schedule for Appomattox.

Aegion has continued to improving as a Company in charting the right course for future growth. Two of our core values calls for every employee to solve problems and improve to be better. We will soon begin a company-wide initiative to implement a continuous improvement culture, driven at the employee level in a supportive team environment. We plan to examine processes internally and externally, and to create a relentless drive to improve effectiveness, reduce accidents, and eliminate wasted time, errors, and defects.

We've also named Joe Foley as Aegion's Chief Sales Officer. Joe has a long history as a sales executive in both the industrial and municipal markets. Our focus on continued improvement and sales excellence is required for Aegion to produce organic growth in the face of challenging markets.

I'm pleased with the resiliency that our operating results demonstrated in 2015. 2016 will be another challenging year in the energy markets. We've moved quickly to offset those challenges. And while we do not expect further restructuring, we will continue to assess the position of our portfolio across all our markets. We expect that the Infrastructure Solutions and Energy Services businesses will be stable in 2016, and we expect those businesses to successfully offset the continued challenges in the upstream energy market.

Let me turn the call over to David for his perspective on our fourth-quarter performance.

David Martin: Thank you, Chuck, and good morning, everyone. The release yesterday provided detail about the results for the quarter and the year, so I intend to just hit some high points and drivers of performance in the fourth-quarter and full-year.

Let's start with our cash generation on slide 12. In 2015, cash flow from operating activities provided $132 million of cash compared to $81 million in 2014. I commend our operating teams for their efforts to improve our cash conversion efficiency, which resulted in a record cash balance of $212 million at the end of the year, an increase of $37 million from the end of 2014.

In the fourth quarter, cash flow from operations provided $63 million of cash compared to $72 million in the fourth quarter of 2014. The majority of the favorable variance came from the increased cash collections in the quarter.

On a year-over-year basis, DSOs ended at 79 days, a three-day decline from the end of 2014. I've excluded certain prepayments on our large coating projects in Louisiana, which would drive DSOs down by another 12 days. We've made a lot of progress since 2013 when DSOs were over 90 days, and I still believe we can achieve or surpass our objective to reduce DSOs to 75 days or less on a sustainable basis in the near-term.

We will be very focused in 2016 on delivering strong operating cash flow results. Our uses of cash in 2015 included capital expenditures of $29 million compared to $33 million in 2014. I anticipate CapEx for 2016 will be in the range of $35 million, as we have some capital requirements to replace equipment in our Infrastructure Solutions business, including modest amounts for Underground Solutions.

This amount does exclude the capital necessary for our new coating projects in Louisiana, which are substantially funded through customer deposits I mentioned earlier.

We spent $25 million in 2015 to repurchase approximately 1.5 million shares at an average price of $18.50. We have about 15% of the current $20 million Board authorization remaining in effect, and we anticipate that it will be exhausted within the next month or so. By the terms of our new credit facility, we have the ability to repurchase up to an additional $40 million of our stock in 2016 beyond the current authorization.

5

For 2015, we paid down a net $24 million in debt repayments, as you parse through the repayment of the debt in the previous credit facility and the term debt under the new agreement. We have scheduled debt repayments of nearly $18 million for 2016.

The record cash balance allowed us to fund approximately $60 million of the purchase price for Underground Solutions. The remainder was funded through our revolving line of credit that will be paid down with future free cash flow from the business.

Now let me address a few highlights from the fourth-quarter financial results starting on slide 13. We performed slightly better than expected with non-GAAP EPS of $0.36, notwithstanding consolidated revenues declining by 6% to $331 million. This $21 million variance is the result of a negative $15 million in foreign currency translation and a $6 million reduction in revenues from our decision to exit several international CIPP markets last year.

For the full-year of 2015, the stronger US dollar impacted our translated earnings results by approximately $0.12, as you can see on slide 14. Insituform's business in North America performed very well in the quarter, matching the strong performance they achieved last year because of a healthy backlog position and favorable weather during much of the quarter. The 7% decline in revenues to $135 million for the segment was mostly a result of the reduction in international revenues I just mentioned, and a $5 million negative impact from currency translation.

The challenges in the energy market significantly impacted Corrosion Protection, as revenues declined nearly 15%, with about half of the variance due to lower currency translation.

Energy Services grew revenues by 9% to $87 million, mainly because of strong performance in the West Coast downstream market.

Our adjusted non-GAAP gross profit declined approximately 20% to $67.5 million, while gross margins contracted 340 basis points to 20.4%. Margin compression, primarily as a result of the upstream market conditions, was the story for the quarter.

Now let me add some additional color on the gross margin performance for each segment, which is summarized on slide 15. Gross margins for Infrastructure Solutions declined 290 basis points to 25.1%, still a very strong result. About half that variance came from the successful closeout of the projects I mentioned for Fyfe/Fibrwrap last year in 2014 that resulted in gross margins well above typical levels.

The remaining half of the gross margin variance was due to low margins in the international markets, primarily in Europe, from greater competition and continued weak economic conditions. Insituform North America's margin was about 25%, a strong result because of continued solid execution and the benefits of lower fuel, resin, and fiber costs.

Turning to Corrosion Protection, gross margins declined 430 basis points to 21.1%. With the exception of Bayou Louisiana, margins contracted across the platform because of more difficult upstream market conditions, and in the midstream sector, where there was more price competition in the quarter and a greater mix of lower-margin construction services.

Finally, Energy Services' gross margins declined 140 basis points to 12.3% for two reasons. First, upstream gross margins were down significantly as customers reduced spending on maintenance and other services, and we wound down on the two largest contracts in Central California.

Second, we incurred early preparation costs as we ready the operation for heightened turnaround activity in the first quarter, and to transition an upstream contract to our Schultz Mechanical trade union business in Southern California. Despite the costs incurred for the

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turnarounds currently underway, downstream gross margins increased by 180 basis points to 14%, due to robust activity in the quarter and good execution. We expect this trend to continue in 2016.

As you can clearly see, our adjusted non-GAAP operating expenses for the fourth quarter were down $9.3 million or 17% from a year ago. The majority of the decrease came from cost-containment efforts and the savings from our restructuring plan within our Infrastructure Solutions segment. We also drove operating cost savings in Corrosion Protection and Energy Services as we made the appropriate cuts in response to challenging market conditions in the energy sector. This trend will also continue in 2016, as we took further cost reduction and restructuring steps, as we announced on January 4.

Let me briefly review a few additional items on slide 16. The effective tax rate on a GAAP basis was 6.8% compared to 19.8% in the fourth quarter of 2014. Excluding restructuring and all of the other charges, the non-GAAP tax rate was about 28% compared to 24% last year, due to a higher portion of income coming from higher tax jurisdictions, most notably the United States. I anticipate the tax rate for 2016 will be closer to 30% on a non-GAAP basis, due to expected increase in income from the US.

Chuck reviewed the actions we have taken to address the upstream market, including the restructuring. Based on our assessments of the energy markets and expectations of the continued low oil price environment that will persist for some time, the annual test for the value of intangible assets included a $10 million impairment to goodwill was necessary for our CRTS business within Corrosion Protection.

The loss of the two long-term maintenance contracts in our upstream business at the end of 2015 caused a triggering event for goodwill impairment review. We also made the decision to downsize Energy Services presence in Central California. Our review concluded with an impairment of $34 million related to the Energy Services businesses. The adjusted goodwill is reflected in our 10-K that was filed yesterday.

Our adjusted EBITDA, debt to EBITDA, as defined by our new credit facility, was just under 2.9 times at December 31, 2015 -- a comfortable place for us under the terms of our new credit facility with regard to leverage. We ended 2015 with a record $103 million of free cash flow, which represents about 8% of consolidated revenues -- our strongest annual result by far.

Our return on invested capital ended at -- of the year at 7.7%, a 20 basis point improvement over the return at -- for 2014 on the strength of our Infrastructure Solutions platform, and a reduction in invested capital from improved working capital, and the reduction in goodwill.

From my vantage point as CFO, we've strengthened our balance sheet through better working capital management, which generated record cash in a very difficult energy market. We judicially used a portion of our cash to advance our strategic initiatives and returning cash to stockholders. The new credit facility allows us to lock in favorable long-term interest rates and provide a greater flexibility to support future growth. We accomplished quite a bit in 2015, and I believe that puts us in a strong financial position for 2016 and beyond.

That concludes our prepared remarks, so I'll turn over the call to the operator to begin the Q&A session.

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Operator: Thank you. Ladies and gentlemen, if you have a question at this time, please press the star then the number one key on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key.

Thank you. And our question comes from the line of Craig Bibb with CJS Securities. Your line is open. Please go ahead.

Craig Bibb: You are continuing to make great progress. It looks like the worst thing that ever happened to Flint, Michigan could be the best thing that ever happened at Aegion. Are you --

Charles Gordon: I'm sorry, you faded out a little bit.

David Martin: I can't hear you.

Craig Bibb: I'm wondering with what's going on in Flint and maybe urgency to replace more pressure water pipes, what steps are you guys taking to make sure you get your fair share of that?

Charles Gordon: Well, I think the Underground Solutions demonstrates our commitment to the market. And remember that Insituform has the largest sales force in North America for CIPP, and we are combining that with a very experienced sales force for Underground Solutions.

We believe the combination of the sales force provides great sales coverage to find all the opportunities. We do think the pressure pipe market will continue to grow. As we look at Flint, it's a one-off. It's a very unusual situation where they, I think, inadvertently distributed low-pH water through their distribution system, which has certainly caused them a lot of problems, both with their water mains and with their service lines.

We are watching that situation very carefully. We are engaged up there. I think it remains to be seen exactly how the required rehabilitation is going to be funded. But we are certainly, I think, positioned and very actively participating in trying to sell our solutions there.

Craig Bibb: Great. Okay. And then maybe you could give us an example of the additional services that would be possible with your Asset Integrity Management system and data?

Charles Gordon: Sure. So, when we take -- when we do a close interval survey, we walk miles and miles of pipelines, taking data every few feet in a lot of cases. It's a lot of data. And what we're going to be able to do with that data is very, very efficiently transmit it to a database, and then be able, again, to review it very carefully to make sure that we've -- that the data has the integrity we want, and then also transmit it to a customer, so that they can look at it in a much easier way.

In the past, we've given it to them in reports, and they've had to transmit the data from our reports into their databases. So the whole digitalization of that process will make the process not only more efficient but also, I think, certainly far more accurate.

We see a lot of opportunities with the way we'll be handling data and with the way that we are going to be interacting with our customers to do more business with our existing customer base. This process -- it's going to be -- it will be an investment for us. But this process is going to make us much easier to do business with than we have been in the past. And we are really excited about that. We think that it will increase our share of wallet with our existing customer base.

Craig Bibb: Okay, great. And a last one for David. Just -- you made great progress this year pulling capital out of your balance sheet into the working capital line. Are there any more ancient or disputed receivables? Or is that all cleaned up at this point?

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David Martin: I certainly believe we are in really good shape with our balance sheet and with our receivables, and really no significant -- anything, really, at all, relative to our customers. So, we've made all the necessary provisions, as we always do at every quarter and every year. And so, we are in very, very good shape.

And I'll also just add to that is that with these processes that we are improving across the business, and including billings on the front-end and getting accuracy, some of this digitalization effort can help us in that regard. And I think that will also improve our ability to collect faster. And that's one of the efforts that we have. So the DSO improvements that we've seen so far, I think there's still a good amount of opportunity beyond what we've already done.

Craig Bibb: Great, thanks a lot, guys.

Operator: Thank you. And our next question comes from the line of Mike Shlisky with Seaport Global. Your line is open. Please go ahead.

Mike Shlisky: I've got a bunch of questions but maybe I should start with a brief housekeeping one first. Does your outlook for 2016, that you put out there for relatively flat EPS, include or exclude the $6 million to $9 million charge?

Charles Gordon: It excludes --

David Martin: It excludes it, yes.

Charles Gordon: It's on a non-GAAP basis, yes.

Mike Shlisky: Okay. Thanks, great. I also wanted to ask just a few brief questions at Underground. Your last call back in January, there were some questions that we couldn't answer at the time. Could you maybe give us just a view of a dollar amount of Underground's backlog? And secondly, can you quantify for us what you might see for accretion this year overall from Underground?

Charles Gordon: So what we've -- they had backlog at the end of the calendar year that was in the $10 million to $20 million range. They also, from a profitability standpoint, like I mentioned, we expect them to generate 2015 revenues in the -- or 2016 revenues, rather, I'm sorry -- in the $50 million range, and we expect a 10% operating margin on that business.

Mike Shlisky: Okay. All right, great.

Charles Gordon: And the operating margin obviously is net of all the purchase price accounting. The EBITDA is much higher for the business.

Mike Shlisky: Okay. I also wanted to ask about your new head of sales, and how you mentioned earlier how you have different solutions to sell for individualized corrosion projects. Is there going to be just some additional emphasis on cross-selling in 2016? Or additional emphasis on approaching the customer with multiple brands in 2016, depending upon what you think they might need?

Or do you come at a customer with individual solution in mind, based on what you kind of know and hope to win? I guess just a little more color on how Joe might change the sales process.

Charles Gordon: That's a great question. We absolutely expect more cross-selling. We've already seen some opportunities with that UGS sales force has uncovered for, as an example, United Pipeline Systems.

And one of our challenges is, as we get to know the -- their sales force better, and we certainly understand our North American rehab sales force, is the combination of those, we

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want to make sure that we're covering every opportunity. We also want to stay focused. But we absolutely believe that there is a big cross-selling opportunity, particularly in the Pressure Pipe segment.

Mike Shlisky: Okay, great. Great quarter, guys. Thank you.

David Martin: Thanks.

Charles Gordon: Thank you.

Operator: Thank you. And our next question comes from the line of Eric Stine with Craig-Hallum. Your line is open. Please go ahead.

Eric Stine: Morning everyone. Thanks for all the color on the business.

Charles Gordon: Morning, Eric.

David Martin: Morning.

Eric Stine: Thanks for all the details. Maybe just on the cash flow outlook, clearly very good year there; a lot of it working capital. How do you think about that in 2016, given that it's a flat year? I mean you've got some initiatives to get more out of the balance sheet. How should we think about that?

David Martin: Well, certainly it was a really strong year that -- and it surprised me in some ways, but I commend everybody on the operating teams really making a strong effort. The -- I think there's some opportunity again to improve.

But from an operating cash flow perspective, it could certainly be a little bit less potentially. But if we are able to make the same kind of progress that we made this year, we can have an equal chance of having the same operating cash flow. And then a similar amount of capital expenditures as well, so, free cash flow will be strong again.

I will be cautiously optimistic at this point in terms of giving any kind of guidance there. But I think we, as we said, really good prospects in that regard.

Charles Gordon: And I would echo what David said, but also add that, from my perspective as a -- and background as an Operations person, DSO is a quality metric. If we are doing a good job with our customers, and we are invoicing accurately and providing the quality of work that we've contracted to, we very rarely have a DSO problem.

And so, what I challenge the operating guys with -- and it's certainly part of their bonus program -- is that I expect lower DSOs. Because I think the opportunity is there from an operating perspective. As we continually focus on quality and focus on how we administer the business, there is -- there remains opportunity to reduce our AR further.

Eric Stine: Okay. Great to hear. Well, it's well-done in 2015. Maybe then just turning to Appomattox. I may have missed it. Did you give a quantity or quantify what you think the impact could be in the fourth quarter?

And then secondly, I know you might be limited as to what you can say, but any thoughts on how this may roll out the rest of it in 2017 and 2018?

Charles Gordon: So, the contract is -- like I mentioned, is the revenue expectation is slightly north of $130 million. The -- we would expect startup to start early in the fourth quarter. Certainly, we'll be in the startup mode as we go through that. We'd expect increasing production as we go through the quarter.

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The agreement that we have is that we will conclude production by the end of the first quarter of 2018, and we would expect that we would probably be finished before that by at least a quarter. But that's the schedule that we have with the customer. We control how much we want to produce during the time period up to first-quarter 2018.

So, as I look at the forecast for Q4, we do not have the usual project risk of delays because of other things the customer is doing. If there's -- the risk that we have is on us to manage the construction of the facility and the startup of the facility, which we feel good about, based on the current schedule.

We have not, nor will we, give any kind of gross margin on the project. Typically, I think what we see in that facility is gross margins around 25%, but we have not commented on this project. Large project. We are excited about it. And that's the information that I'd give on it.

Eric Stine: Okay. No, that's great. Thanks a lot for that. Maybe lastly, just on Sewer or Infrastructure Solutions, just the international piece, I know you've gotten out of many of these unprofitable markets and been focused on third-party tube sales. So maybe just how that process is going on the third-party tube sale front; whether it's multiyear agreements, relationships, clarity would be great. Thanks.

Charles Gordon: So, MTC is our entity that does tube sales across the world, and they had a really nice year in 2015. Really, really pleased with the progress they made, both on the gross margin line and in terms of revenue growth. We saw revenue growth sort of across the board.

I would also add that we struggled a bit in Europe. I think it's a sign of the economy over there. But we had a really nice year in our Asia-Pacific business. Really nice year. We were very pleased with that business. Both Fyfe Fibrwrap and also Insituform had really -- and MTC -- had really good, really solid years across APAC. So we're really, really pleased about that.

I think we have some challenges in Europe. I think a lot of it has -- are economy-related, but we are certainly focused on that as we go forward. But overall, the tube sales were good last year. Third-party tube sales were good across the globe.

Eric Stine:        Okay, thanks a lot.

Operator: Thank you. And our next question comes from the line of David Rose with Wedbush Securities. Your line is open. Please go ahead.

David Rose: I was wondering if we can just clarify from a housekeeping perspective your comments about the variance in Q1? Did I understand it was a $0.07 to $0.09 variance?

Charles Gordon: What I said was that we expect the upstream businesses to be down by $0.07 to $0.09 in the first quarter. That would be partially offset by our cost reduction activity and obviously the UGSI incremental earnings that we'll get.

David Rose: Okay. So, down but not to that magnitude. Okay, that's helpful. Thank you. And then, as it relates to your full-year outlook, in January, when you made the announcement of Underground Solutions, you had talked about that your guidance for 2016 did not include Appomattox, but now your guidance does. You also mentioned, I think at that time, that you would start -- you expected to start in the fourth quarter. So what changed in the guidance?

Charles Gordon: I think what we've seen is more headwinds over the last couple of months in the upstream market than we went in -- than we finished the year with. I think part of that, we've seen customers push projects back. We've seen some project cancellations. I think part of it could well be some of the economic news has been challenging. That's for sure.

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So I think what we've seen is just probably more conservatism on our customers than we expected. But I would couple that with also saying that, every month, we get more confident in what -- in the Appomattox contract, and the timing of the revenue and profit from that contract. So, I think it's both situations. We have more confidence in Appomattox, but certainly, I believe we have seen some slowness in the upstream market that we didn't anticipate late last year.

David Rose: So as we -- and I guess that's the biggest risk to the guidance, is really the fourth quarter and Appomattox. And I think we were trying to quantify it -- maybe the last question. Can you give us a --?

Charles Gordon: I'm sorry, David?

David Rose: Well, I'm just trying to -- if you can kind of maybe bracket, give us a sense of what that Appomattox piece might be in the fourth quarter? Just so we have an idea of what the potential risk is for an earnings push-out?

Charles Gordon: Well, I think what we believe is that Appomattox will -- I want you to remember two things. We went into Q1 of 2015 in a fairly strong position, because UPS and Bayou both had pretty solid backlog. We also owned Bayou Canada. But they had pretty strong backlog that was sort of a remnant of before oil prices dropped. So our Q1 last year for those businesses was fairly strong.

Certainly, that tailed off dramatically entering into Q2. And so we had sort of a first-quarter phenomenon in 2015, which certainly didn't -- we -- didn't repeat itself going into 2016 nor did we expect it to. I would say that as you -- what we believe is that Appomattox will offset the challenges we've seen in Q1, and they sort of offset each other. We had a great Q1 in 2015. We had a very challenging Q4 with the upstream businesses in 2015. And now we are going to see it reverse itself in 2016. That's about as far as I'll go on guidance.

David Rose: No, that's actually very helpful. I appreciate it. And then just two last ones, if I may. The guidance for the margins on the Energy Services, if I recall, was similar to 2015, but your exit rate for the fourth quarter was better than I think many of us expected, or certainly I did. And it's above your average for the year.

So what drove the upside? And why is it coming back down in 2016 versus that fourth-quarter exit rate? Or did I misunderstand that?

David Martin: No, I think you got it right. It was a good quarter from an overall turnaround perspective, and we expect that to continue in Q1. I think that it will be a good quarter for the business.

As we get out past that into the middle part of the year and even third-quarter, there is less turnaround activity. And I think we are trying to be cautious about where margins overall can be in the business beyond that.

David Rose: Okay. And then the last one is just to get a better sense in terms of the tailwinds or headwinds you may have on a materials cost perspective. I think you benefited in 2015 from resin costs. Can you give us a perspective of the magnitude of that benefit? And what your thoughts are for 2016 of potential tailwinds or headwinds on resin?

David Martin: Overall from the input perspective for resin, fiber, and other materials and other chemicals, it's really steady right now. We -- certainly we do see a little bit of here and there, but it's been -- we have really good strong relationships with all of our vendors. And we've locked in pretty favorable pricing.

We also -- we do a, I think, a very good job in terms of making sure that we are not calling down the road with respect to how we bid now, and then execute jobs down the road. And so, we think we've locked in pretty well.

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Obviously, if there is a big spike in oil prices, there's a little bit of a lag, if you will, in terms of how that impacts our overall pricing. But for our expectations from the vendors and what we've seen so far is another steady year before that. We won't see this same kind of -- we saw a pretty nice decline during 2015 that we obviously won't see continue to drop, we don't think. But as far as we -- how we've been projecting the business and what our expectations for margins are, it's steady.

David Rose: Okay, great. That's helpful. Thank you, David.

Charles Gordon: Thank you, David.

Operator: Thank you. And our next question comes from the line of John Rogers, D.A. Davidson. Your line is open. Please go ahead.

John Rogers: Chuck, just a little bit of follow-up on the Corrosion Protection business. Can you talk a little bit about any opportunities that you have relative to some of the onshore buildout plans that are being reported in the press? And how significant is that for you? Especially if it sounds like maybe the offshore beyond the Appomattox project, I mean, is at risk of slowing out into 2017 and 2018? Or did I misunderstand your comments?

Charles Gordon: Oh, sure. Corrpro, which is the corrosion protection and assessment business that we have in North America, has about 20% of its revenues are related to new construction. Certainly all the pipelines, all the new pipelines, we're very involved in selling those and chasing those. We have what we believe is that the Canadian market in particular will be more difficult this year than it was last year for new construction.

But we -- as we go through the year, Corrpro certainly has opportunity. And we are certainly very engaged in all those projects.

John Rogers: Okay. And are those bookings that we would see in 2016? Or is it -- or that you've already started to get?

Charles Gordon: Well, some of them are already in backlog. Some of them we are anticipating. It's a mix.

John Rogers: Okay. Okay. Thank you. And then just on the acquisition front, I mean, given what looks like a great combination with Underground Solutions, are there other opportunities out there? I mean, are you seeing more?

Charles Gordon: There are other opportunities out there. I would say that we continually assess acquisition opportunities, both within Corrosion Protection and within Infrastructure Solutions. We take a very careful look to make sure that we think we can integrate them correctly, and that we can provide leverage for growth and their future success. But there are opportunities and our team -- our strategy team is continually looking at opportunities for M&A.

John Rogers: Okay. But over the next -- I don't know, two to three years, I mean, should we assume more on the Underground Solutions type work or is --?

Charles Gordon: I would assume that we would do more acquisitions over the next two or three years, probably both in Corrosion Protection and in Infrastructure Solutions.

John Rogers: Okay, great. Thank you.

Charles Gordon: Thank you.

Operator: Thank you. And I'm showing no further questions at this time. I'd like to turn the call back to Mr. Gordon for closing remarks.

Charles Gordon: Thank you for joining us this morning. We are proceeding with investments to enhance our growth prospects while addressing the new reality with respect to oil prices. 2016 will

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present its challenges, but I believe with strong execution and a focus on adding value to our customers, we will come through with a company that is better positioned for growth going into 2017.

Thank you. Thanks for joining the call.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.

END

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