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.

During 2018, the Company’s board of directors approved additional actions with respect to the 2017 Restructuring, which included the decisions to: (i) divest the Australia and Denmark CIPP businesses; (ii) take actions to further optimize operations within North America, including measures to reduce consolidated operating costs; and (iii) divest or otherwise exit multiple additional international businesses, including: (a) the Company’s cathodic protection installation activities in the Middle East, including Corrpower; (b) United Pipeline de Mexico S.A. de C.V., the Company’s Tite Liner^® joint venture in Mexico; (c) the Company’s Tite Liner^® businesses in Brazil and Argentina; (d) Aegion South Africa; and (e) the Company’s CIPP contract installation operations in England.

Total pre-tax 2017 Restructuring and related impairment charges since inception were $142.5 million ($128.5 million post-tax) and consisted of cash charges totaling $28.9 million and non-cash charges totaling $113.6 million. Cash charges included employee severance, retention, extension of benefits, employment assistance programs and other restructuring costs associated with the restructuring efforts described above. Non-cash charges included (i) $86.4 million related to goodwill and long-lived asset impairment charges recorded in 2017 as part of exiting the non-pipe FRP contracting market in North America, and (ii) $27.2 million related to allowances for accounts receivable, write-offs of inventory and long-lived assets, impairment of definite-lived intangible assets, as well as net losses on the disposal of both domestic and international entities. The Company reduced headcount by approximately 440 employees as a result of these actions.

The Company expects to incur additional cash and non-cash charges of $12 million to $16 million during 2019. The identified charges are primarily focused in the international operations of both Infrastructure Solutions and Corrosion Protection, but will also include certain charges in Energy Services to a lesser extent. The Company expects to reduce headcount by an additional 50 employees as a result of these further actions.

During the quarters ended March 31, 2019 and 2018, the Company recorded pre-tax expenses related to the 2017 Restructuring as follows (in thousands):



	Quarter Ended March 31, 2019
	Infrastructure Solutions		Corrosion Protection			Energy Services		Corporate		Total
Severance and benefit related costs	$	282	$	170		$	34	$	9	$	495
Lease and contract termination costs	425		17			—		98		540
Relocation and other moving costs	51		—			—		—		51
Other restructuring costs ⁽¹⁾	1,744		(211		)	—		247		1,780
Total pre-tax restructuring charges	$	2,502	$	(24	)	$	34	$	354	$	2,866

__________________________


⁽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 the CIPP operations in the UK, exiting the cathodic protection operations in the Middle East and other cost savings initiatives.



	Quarter Ended March 31, 2018
	Infrastructure Solutions		Corrosion Protection		Energy Services		Corporate		Total
Severance and benefit related costs	$	780	$	121	$	—	$	170	$	1,071
Lease and contract termination costs	528		—		—		150		678
Relocation and other moving costs	40		—		—		—		40
Other restructuring costs ⁽¹⁾	1,868		1,344		—		243		3,455
Total pre-tax restructuring charges	$	3,216	$	1,465	$	—	$	563	$	5,244

__________________________


⁽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.

2017 Restructuring costs related to severance, other termination benefit costs and early lease and contract termination costs were $1.1 million and $1.8 million for the quarters ended March 31, 2019 and 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 quarters ended March 31, 2019 and 2018 as presented in their affected line in the Consolidated Statements of Operations (in thousands):



	Quarter Ended March 31, 2019
	Infrastructure Solutions			Corrosion Protection			Energy Services		Corporate		Total ⁽¹⁾
Cost of revenues	$	(25	)	$	99		$	—	$	—	$	74
Operating expenses	1,346			(63		)	—		247		1,530
Restructuring and related charges	758			187			34		107		1,086
Other expense	423			(247		)	—		—		176
Total pre-tax restructuring charges	$	2,502		$	(24	)	$	34	$	354	$	2,866

__________________________


⁽¹⁾	Total pre-tax restructuring charges include cash charges of $3.1 million and non-cash charges of $(0.2) million. Cash charges consist of charges incurred during the quarter that will be settled in cash, either during the current period or future periods.



	Quarter Ended March 31, 2018
	Infrastructure Solutions		Corrosion Protection		Energy Services		Corporate		Total ⁽¹⁾
Operating expenses	$	1,868	$	1,344	$	—	$	243	$	3,455
Restructuring and related charges	1,348		121		—		320		1,789
Total pre-tax restructuring charges	$	3,216	$	1,465	$	—	$	563	$	5,244

__________________________


⁽¹⁾	Total pre-tax restructuring charges include cash charges of $2.8 million and non-cash charges of $2.4 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 tables summarize the 2017 Restructuring activity during the first quarters of 2019 and 2018 (in thousands):



	Reserves at December 31, 2018		2019 Charge to Income		Foreign Currency Translation			Utilized in 2019					Reserves at March 31, 2019
	Reserves at December 31, 2018		2019 Charge to Income		Foreign Currency Translation			Cash⁽¹⁾		Non-Cash			Reserves at March 31, 2019
Severance and benefit related costs	$	1,742	$	495	$	(5	)	$	1,102	$	—		$	1,130
Lease and contract termination costs	359		540		3			310		—			592
Relocation and other moving costs	—		51		—			—		—			51
Other restructuring costs	311		1,780		(2		)	1,852		(151		)	388
Total pre-tax restructuring charges	$	2,412	$	2,866	$	(4	)	$	3,264	$	(151	)	$	2,161

__________________________


⁽¹⁾	Refers to cash utilized to settle charges during the first quarter of 2019.



	Reserves at December 31, 2017		2018 Charge to Income		Foreign Currency Translation		Utilized in 2018				Reserves at March 31, 2018
	Reserves at December 31, 2017		2018 Charge to Income		Foreign Currency Translation		Cash⁽¹⁾		Non-Cash		Reserves at March 31, 2018
Severance and benefit related costs	$	3,864	$	1,071	$	20	$	2,305	$	—	$	2,650
Lease and contract termination costs	650		678		—		793		—		535
Relocation and other moving costs	—		40		—		40		—		—
Other restructuring costs	675		3,455		—		1,272		2,408		450
Total pre-tax restructuring charges	$	5,189	$	5,244	$	20	$	4,410	$	2,408	$	3,635

__________________________


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