RESTRUCTURING

2017 Restructuring

On July 28, 2017, the Company’s board of directors approved the 2017 Restructuring. As part of the 2017 Restructuring, the Company announced plans to: (i) divest Bayou; (ii) exit all non-pipe related contract applications for the Tyfo^® system in North America; (iii) right-size the cathodic protection services operation in Canada and the CIPP businesses in Australia and Denmark; and (iv) reduce corporate and other operating costs. These decisions reflected the Company’s: (a) desire to reduce further its exposure in the North American upstream oil and gas markets; (b) assessment of its ability to drive sustainable, profitable growth in the non-pipe FRP contracting market in North America; and (c) assessment of continuing weak conditions in the Canadian oil and gas markets.

During the first six months of 2018, total pre-tax 2017 Restructuring charges recorded were $8.2 million ($7.1 million post-tax) and consisted of employee severance, retention, extension of benefits, employment assistance programs, early lease and contract termination and other restructuring costs associated with the restructuring efforts described above. Total pre-tax 2017 Restructuring and related impairment charges since inception were $118.3 million ($108.8 million post-tax), including cash charges of $18.8 million and non-cash charges of $99.5 million, of which $86.4 million relates to goodwill and long-lived asset impairment charges recorded in 2017 as part of exiting the non-pipe FRP contracting market in North America. The Company reduced headcount by approximately 320 employees as a result of these actions. Management expects total restructuring and impairment charges for previously announced actions to be approximately $120 million.

While restructuring actions in Australia have led to year-over-year improvements in operating results, an assessment of the long-term fit within the Company’s portfolio led to the decision in May 2018 to divest the Australia CIPP business. See Note 5. Additionally, the Company determined in late July 2018 to exit CIPP operations in Denmark. See Note 13.

Additional cash and non-cash charges may be incurred as a result of decisions to exit the CIPP contracting operations in Australia and Denmark and pending the outcome of management’s evaluation of remaining international operations outside of the U.S. and Canada to assess the long-term viability of each business. Additionally, as the Company looks to simplify its organizational structure and streamline its operations to best accommodate the TCJA or for other operational reasons, it could incur both cash and non-cash charges in 2018 primarily related to the combination or dissolution of certain of its existing subsidiaries, the creation of new subsidiaries, and the foreign currency impact from settlement of inter-company loans. Management expects to incur all charges related to the 2017 Restructuring by the end of 2018.

During the quarter and six months ended June 30, 2018, the Company recorded pre-tax expenses related to the 2017 Restructuring as follows (in thousands):



	Quarter Ended June 30, 2018
	Infrastructure Solutions		Corrosion Protection		Total
Severance and benefit related costs	$	1,001	$	196	$	1,197
Lease and contract termination costs	309		—		309
Relocation and other moving costs	34		—		34
Other restructuring costs ⁽¹⁾	1,210		163		1,373
Total pre-tax restructuring charges ⁽²⁾	$	2,554	$	359	$	2,913

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⁽¹⁾	Includes charges primarily related to certain wind-down costs, allowances for accounts receivable, fixed asset disposals and other restructuring-related costs in connection with exiting non-pipe-related contract applications for the Tyfo^® system in North America and right-sizing the CIPP operations in Australia and Denmark.


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



	Six Months Ended June 30, 2018
	Infrastructure Solutions		Corrosion Protection		Total
Severance and benefit related costs	$	1,866	$	402	$	2,268
Lease and contract termination costs	837		150		987
Relocation and other moving costs	74		—		74
Other restructuring costs ⁽¹⁾	3,310		1,518		4,828
Total pre-tax restructuring charges ⁽²⁾	$	6,087	$	2,070	$	8,157

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⁽¹⁾	Includes charges primarily related to certain wind-down costs, allowances for accounts receivable, fixed asset disposals and other restructuring-related costs in connection with exiting non-pipe-related contract applications for the Tyfo^® system in North America and right-sizing the CIPP operations in Australia and Denmark.


⁽²⁾	Includes $0.6 million of corporate-related restructuring charges that have been allocated to the Infrastructure Solutions and Corrosion Protection reportable segments.

2017 Restructuring costs related to severance, other termination benefit costs and early lease and contract termination costs were $1.5 million and $3.3 million for the quarter and six months ended June 30, 2018, respectively, and are reported on a separate line in the Consolidated Statements of Operations.

The following tables summarize all charges related to the 2017 Restructuring recognized in the quarter and six month period ended June 30, 2018 as presented in their affected line in the Consolidated Statements of Operations (in thousands):



	Quarter Ended June 30, 2018
	Infrastructure Solutions		Corrosion Protection		Total ⁽¹⁾
Operating expenses	$	1,210	$	163	$	1,373
Restructuring and related charges	1,344		196		1,540
Total pre-tax restructuring charges	$	2,554	$	359	$	2,913

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⁽¹⁾	Total pre-tax restructuring charges include cash charges of $2.3 million and non-cash charges of $0.6 million. Cash charges consist of charges incurred during the quarter that will be settled in cash, either during the current period or future periods.



	Six Months Ended June 30, 2018
	Infrastructure Solutions		Corrosion Protection		Total ⁽¹⁾
Operating expenses	$	3,310	$	1,518	$	4,828
Restructuring and related charges	2,777		552		3,329
Total pre-tax restructuring charges	$	6,087	$	2,070	$	8,157

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⁽¹⁾	Total pre-tax restructuring charges include cash charges of $5.2 million and non-cash charges of $3.0 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 first six months of 2018 (in thousands):



	Reserves at December 31, 2017		2018 Charge to Income		Foreign Currency Translation			Utilized in 2018				Reserves at June 30, 2018
	Reserves at December 31, 2017		2018 Charge to Income		Foreign Currency Translation			Cash⁽¹⁾		Non-Cash		Reserves at June 30, 2018
Severance and benefit related costs	$	3,864	$	2,268	$	(9	)	$	2,993	$	—	$	3,130
Lease and contract termination costs	650		987		(9		)	1,041		—		587
Relocation and other moving costs	—		74		—			74		—		—
Other restructuring costs	675		4,828		—			2,373		2,980		150
Total pre-tax restructuring charges	$	5,189	$	8,157	$	(18	)	$	6,481	$	2,980	$	3,867

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⁽¹⁾	Refers to cash utilized to settle charges during the first six months of 2018.