RESTRUCTURING

2017 Restructuring

On July 28, 2017, the Company’s board of directors approved the 2017 Restructuring to: (i) divest the Company’s pipe coating and insulation businesses in Louisiana, The Bayou Companies, LLC and Bayou Wasco Insulation, LLC (collectively “Bayou”); (ii) exit all non-pipe related contract applications for the Tyfo^® Fibrwrap^® system in North America; (iii) right-size the cathodic protection services operation in Canada; and (iv) reduce corporate and other operating costs. These decisions reflect the Company’s: (i) desire to further reduce its exposure in the North American upstream oil and gas markets; (ii) assessment of its ability to drive sustainable, profitable growth in the non-pipe FRP contracting market in North America; and (iii) assessment of continuing weak conditions in the Canadian oil and gas markets. During the third quarter of 2017, the Company also completed a detailed assessment of the Infrastructure Solutions businesses in Australia and Denmark, which resulted in additional restructuring actions in both countries.

During the third quarter of 2017, total pre-tax 2017 Restructuring charges recorded were $6.7 million ($5.7 million after tax) and consisted of employee severance, retention, extension of benefits, employment assistance programs, early lease termination and other restructuring costs associated with the restructuring efforts described above. The Company expects to incur charges of $12 million to $15 million, most of which are expected to be cash charges and incurred in the second half of 2017 and the first quarter of 2018. These charges are mainly in the Infrastructure Solutions segment and, to a lesser extent, the Corrosion Protection segment. The Company expects to reduce headcount by approximately 300 employees as a result of these actions.

During the quarter ended September 30, 2017, the Company recorded pre-tax expenses related to the 2017 Restructuring as follows (in thousands):



	Infrastructure Solutions		Corrosion Protection		Total
Severance and benefit related costs	$	3,140	$	1,930	$	5,070
Lease termination costs	250		90		340
Relocation and other moving costs	—		29		29
Other restructuring costs ⁽¹⁾	1,183		115		1,298
Total pre-tax restructuring charges ⁽²⁾	$	4,573	$	2,164	$	6,737

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⁽¹⁾	Includes charges primarily related to exiting non-pipe related contract applications for the Tyfo^® Fibrwrap^® system in North America and right-sizing the cathodic protection services operation in Canada, inclusive of wind-down costs, professional fees, fixed asset disposals and certain other restructuring and related charges.


⁽²⁾	Includes $0.8 million of corporate-related restructuring charges that have been allocated to the reportable segments.

2017 Restructuring costs related to severance, other termination benefit costs and early lease termination costs were $5.4 million for the quarter ended September 30, 2017 and are reported on a separate line in the Consolidated Statements of Operations.

The following table summarizes all charges related to the 2017 Restructuring recognized in the quarter ended September 30, 2017 as presented in their affected line in the Consolidated Statements of Operations (in thousands):



	Infrastructure Solutions		Corrosion Protection		Total ⁽¹⁾
Cost of revenues	$	30	$	15	$	45
Operating expenses	1,153		100		1,253
Restructuring and related charges	3,390		2,049		5,439
Total pre-tax restructuring charges	$	4,573	$	2,164	$	6,737

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⁽¹⁾	Total pre-tax restructuring charges include cash charges of $6.6 million and non-cash charges of $0.1 million. Cash charges consist of charges incurred during the quarter that will be settled in cash, either during the current period or future periods.

The following table summarizes the 2017 Restructuring activity during the quarter ended September 30, 2017 (in thousands):



	2017 Charge to Income		Utilized in 2017				Reserves at September 30, 2017
	2017 Charge to Income		Cash⁽¹⁾		Non-Cash		Reserves at September 30, 2017
Severance and benefit related costs	$	5,070	$	1,639	$	—	$	3,431
Lease termination costs	340		264		—		76
Relocation and other moving costs	29		29		—		—
Other restructuring costs	1,298		521		77		700
Total pre-tax restructuring charges	$	6,737	$	2,453	$	77	$	4,207

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⁽¹⁾	Refers to cash utilized to settle charges during the third quarter of 2017.

2016 Restructuring

On January 4, 2016, the Company’s board of directors approved the 2016 Restructuring to reduce its exposure to the upstream oil markets and to reduce consolidated expenses. During 2016, the Company completed its restructuring, which included repositioning Energy Services’ upstream operations in California, reducing Corrosion Protection’s upstream exposure by divesting its interest in a Canadian pipe coating joint venture, right-sizing Corrosion Protection to compete more effectively and reducing corporate and other operating costs. Cost savings were achieved primarily through office closures and headcount reductions of 964 employees, or 15.5% of the Company’s total workforce as of December 31, 2015.

Total pre-tax 2016 Restructuring charges recorded since inception were $16.1 million ($10.3 million after tax) and consisted of employee severance, retention, extension of benefits, employment assistance programs, early lease termination and other restructuring costs associated with the restructuring efforts described above. The majority of 2016 Restructuring costs were cash charges.

There were no expenses incurred in the first nine months of 2017 related to the 2016 Restructuring. During the quarter and nine months ended September 30, 2016, the Company recorded pre-tax expenses related to the 2016 Restructuring as follows (in thousands):



	Quarter Ended September 30, 2016
	Infrastructure Solutions			Corrosion Protection		Energy Services		Total
Severance and benefit related costs	$	—		$	48	$	98	$	146
Relocation and other moving costs	—			—		66		66
Other restructuring costs ⁽¹⁾	(31		)	130		976		1,075
Total pre-tax restructuring charges (reversals) ⁽²⁾	$	(31	)	$	178	$	1,140	$	1,287

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⁽¹⁾	Includes charges primarily related to downsizing the Company’s upstream operations in California, inclusive of wind-down costs, professional fees, fixed asset disposals and certain other restructuring charges.


⁽²⁾	Includes less than $0.1 million of corporate-related restructuring charges that have been allocated to the reportable segments.



	Nine Months Ended September 30, 2016
	Infrastructure Solutions		Corrosion Protection		Energy Services		Total
Severance and benefit related costs	$	2,256	$	3,182	$	1,501	$	6,939
Lease termination costs	—		—		969		969
Relocation and other moving costs	307		62		200		569
Other restructuring costs ⁽¹⁾	777		628		4,909		6,314
Total pre-tax restructuring charges ⁽²⁾	$	3,340	$	3,872	$	7,579	$	14,791

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⁽¹⁾	Includes charges primarily related to downsizing the Company’s upstream operations in California, inclusive of wind-down costs, professional fees, fixed asset disposals and certain other restructuring charges.


⁽²⁾	Includes $1.2 million of corporate-related restructuring charges that have been allocated to the reportable segments.

2016 Restructuring costs related to severance, other termination benefit costs and early lease termination costs were zero and $0.2 million for the quarters ended September 30, 2017 and 2016, respectively, and zero and $8.5 million for the nine months ended September 30, 2017 and 2016, respectively, and are reported on a separate line in the Consolidated Statements of Operations.

The following tables summarize all charges related to the 2016 Restructuring recognized in the quarter and nine months ended September 30, 2016 as presented in their affected line in the Consolidated Statements of Operations (in thousands):



	Quarter Ended September 30, 2016									Nine Months Ended September 30, 2016
	Infrastructure Solutions			Corrosion Protection		Energy Services		Total ⁽¹⁾		Infrastructure Solutions		Corrosion Protection		Energy Services		Total ⁽¹⁾
Cost of revenues	$	—		$	130	$	—	$	130	$	—	$	189	$	—	$	189
Operating expenses	(31		)	—		976		945		528		439		4,909		5,876
Restructuring and related charges				48		164		212		2,563		3,244		2,670		8,477
Other expense	—			—		—		—		249		—		—		249
Total pre-tax charges	$	(31	)	$	178	$	1,140	$	1,287	$	3,340	$	3,872	$	7,579	$	14,791

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⁽¹⁾

Total pre-tax restructuring charges include cash charges of $1.0 million and non-cash charges of $0.3 million for the quarter ended September 30, 2016 and cash charges of $14.0 million and non-cash charges of $0.8 million for the nine months ended September 30, 2016. Cash charges consist of charges incurred during the period that will be settled in cash, either during the current period or future periods.

The following tables summarize the 2016 Restructuring activity during the nine months ended September 30, 2017 and 2016 (in thousands):



	Reserves at December 31, 2016		Cash Utilized in 2017 ⁽¹⁾		Reserves at September 30, 2017
	Reserves at December 31, 2016		Cash Utilized in 2017 ⁽¹⁾		Reserves at September 30, 2017
Severance and benefit related costs	$	645	$	549	$	96
Lease termination costs	125		125		—
Relocation and other moving costs	10		10		—
Other restructuring costs	120		66		54
Total pre-tax restructuring charges	$	900	$	750	$	150

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⁽¹⁾	Refers to cash utilized to settle charges that were reserved at December 31, 2016.



	2016 Charge to Income		Utilized in 2016				Reserves at September 30, 2016
	2016 Charge to Income		Cash⁽¹⁾		Non-Cash		Reserves at September 30, 2016
Severance and benefit related costs	$	6,939	$	5,835	$	—	$	1,104
Lease termination costs	969		969		—		—
Relocation and other moving costs	569		569		—		—
Other restructuring costs	6,314		5,549		765		—
Total pre-tax restructuring charges	$	14,791	$	12,922	$	765	$	1,104

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⁽¹⁾	Refers to cash utilized to settle charges during the first nine months of 2016.