UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
For the quarterly period ended |
or
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
For the transition period from to |
Commission File Number:
Aegion Corporation |
(Exact name of registrant as specified in its charter) |
|
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
|
|
|
(Address of principal executive offices) |
(Zip Code) |
|
|
( |
|
(Registrant’s telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
Accelerated filer ☐ |
|
|
|
Non-accelerated filer ☐ |
|
Smaller reporting company ☐ |
|
|
|
|
|
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
|
|
There were
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Quarters Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Revenues |
$ | $ | $ | $ | ||||||||||||
Cost of revenues |
||||||||||||||||
Gross profit |
||||||||||||||||
Operating expenses |
||||||||||||||||
Impairment of assets held for sale | ||||||||||||||||
Acquisition and divestiture expenses |
||||||||||||||||
Restructuring and related charges |
||||||||||||||||
Operating income (loss) |
( |
) | ||||||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest income |
||||||||||||||||
Other |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total other expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income (loss) before taxes on income |
( |
) | ( |
) | ||||||||||||
Taxes on income (loss) |
||||||||||||||||
Net income (loss) |
( |
) | ( |
) | ||||||||||||
Non-controlling interests (income) loss |
( |
) | ( |
) | ||||||||||||
Net income (loss) attributable to Aegion Corporation |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Earnings (loss) per share attributable to Aegion Corporation: |
||||||||||||||||
Basic |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Diluted |
$ | ( |
) | $ | $ | ( |
) | $ |
The accompanying notes are an integral part of the consolidated financial statements.
AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)
Quarters Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Net income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Other comprehensive income (loss): |
||||||||||||||||
Currency translation adjustments |
( |
) | ( |
) | ||||||||||||
Deferred gain (loss) on hedging activity, net of tax (1) |
( |
) | ( |
) | ||||||||||||
Pension activity, net of tax (2) |
||||||||||||||||
Total comprehensive income (loss) |
( |
) | ( |
) | ||||||||||||
Comprehensive (income) loss attributable to non-controlling interests |
( |
) | ( |
) | ||||||||||||
Comprehensive income (loss) attributable to Aegion Corporation |
$ | ( |
) | $ | $ | ( |
) | $ |
(1) |
Amounts presented net of tax of $91 and $245 for the quarters ended June 30, 2019 and 2018, respectively, and $150 and $422 for the six months ended June 30, 2019 and 2018, respectively. |
(2) |
Amounts presented net of tax of $6 and $3 for the quarters ended June 30, 2019 and 2018, respectively, and $1 and $1 for the six months ended June 30, 2019 and 2018, respectively. |
The accompanying notes are an integral part of the consolidated financial statements.
AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts)
June 30, 2019 |
December 31, 2018 |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Receivables, net of allowances of $9,043 and $9,695, respectively |
||||||||
Retainage |
||||||||
Contract assets |
||||||||
Inventories |
||||||||
Prepaid expenses and other current assets |
||||||||
Assets held for sale |
||||||||
Total current assets |
||||||||
Property, plant & equipment, less accumulated depreciation |
||||||||
Other assets |
||||||||
Goodwill |
||||||||
Intangible assets, less accumulated amortization |
||||||||
Operating lease assets |
||||||||
Deferred income tax assets |
||||||||
Other assets |
||||||||
Total other assets |
||||||||
Total Assets |
$ | $ | ||||||
Liabilities and Equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued expenses |
||||||||
Contract liabilities |
||||||||
Current maturities of long-term debt |
||||||||
Liabilities held for sale |
||||||||
Total current liabilities |
||||||||
Long-term debt, less current maturities |
||||||||
Operating lease liabilities |
||||||||
Deferred income tax liabilities |
||||||||
Other non-current liabilities |
||||||||
Total liabilities |
||||||||
(See Commitments and Contingencies: Note 11) |
||||||||
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 30,941,394 and 31,922,409, respectively |
||||||||
Additional paid-in capital |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total stockholders’ equity |
||||||||
Non-controlling interests |
||||||||
Total equity |
||||||||
Total Liabilities and Equity |
$ | $ |
The accompanying notes are an integral part of the consolidated financial statements.
AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(in thousands, except number of shares)
|
Quarters Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Common Stock - Shares |
||||||||||||||||
Balance, beginning of period |
||||||||||||||||
Issuance of common stock upon stock option exercises |
||||||||||||||||
Issuance of shares pursuant to restricted stock units |
||||||||||||||||
Issuance of shares pursuant to performance units |
||||||||||||||||
Issuance of shares pursuant to deferred stock units |
||||||||||||||||
Shares repurchased and retired |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Balance, end of period |
||||||||||||||||
Common Stock - Amount |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Issuance of common stock upon stock option exercises |
||||||||||||||||
Issuance of shares pursuant to restricted stock units |
||||||||||||||||
Issuance of shares pursuant to performance units |
||||||||||||||||
Issuance of shares pursuant to deferred stock units |
||||||||||||||||
Shares repurchased and retired |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Additional Paid-In Capital |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Issuance of common stock upon stock option exercises |
||||||||||||||||
Shares repurchased and retired |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Equity-based compensation expense |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Retained Earnings |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Cumulative effect adjustment (see Revenues: Note 3) |
||||||||||||||||
Net income (loss) attributable to Aegion Corporation |
( |
) | ( |
) | ||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Accumulated Other Comprehensive Loss |
||||||||||||||||
Balance, beginning of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Currency translation adjustment and derivative transactions, net | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Balance, end of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Non-Controlling Interests |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Net income (loss) |
( |
) | ( |
) | ||||||||||||
Distributions to non-controlling interests |
( |
) | ( |
) | ||||||||||||
Currency translation adjustment, net |
( |
) | ( |
) | ||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Total Equity |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Cumulative effect adjustment (See Revenues: Note 3) |
||||||||||||||||
Net income (loss) |
( |
) | ( |
) | ||||||||||||
Issuance of common stock upon stock option exercises |
||||||||||||||||
Issuance of shares pursuant to restricted stock units |
||||||||||||||||
Issuance of shares pursuant to performance units |
||||||||||||||||
Issuance of shares pursuant to deferred stock units | ||||||||||||||||
Shares repurchased and retired |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Equity-based compensation expense |
||||||||||||||||
Distributions to non-controlling interests |
( |
) | ( |
) | ||||||||||||
Currency translation adjustment and derivative transactions, net | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Balance, end of period |
$ | $ | $ | $ |
The accompanying notes are an integral part of the consolidated financial statements.
AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended June 30, |
||||||||
2019 |
2018 |
|||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | ( |
) | $ | ||||
Adjustments to reconcile to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
||||||||
Gain on sale of fixed assets |
( |
) | ( |
) | ||||
Equity-based compensation expense |
||||||||
Deferred income taxes |
||||||||
Non-cash restructuring charges |
||||||||
Impairment of assets held for sale | ||||||||
Loss on foreign currency transactions |
||||||||
Other |
( |
) | ||||||
Changes in operating assets and liabilities (net of acquisitions): |
||||||||
Receivables net, retainage and contract assets |
( |
) | ( |
) | ||||
Inventories |
( |
) | ( |
) | ||||
Prepaid expenses and other assets |
||||||||
Accounts payable and accrued expenses |
( |
) | ( |
) | ||||
Contract liabilities |
( |
) | ( |
) | ||||
Other operating |
( |
) | ||||||
Net cash provided by operating activities |
||||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
( |
) | ( |
) | ||||
Proceeds from sale of fixed assets |
||||||||
Patent expenditures |
( |
) | ( |
) | ||||
Other acquisition activity | ( |
) | ||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of common stock upon stock option exercises |
||||||||
Repurchase of common stock |
( |
) | ( |
) | ||||
Distributions to non-controlling interests |
( |
) | ||||||
Credit facility amendment fees |
( |
) | ||||||
Payments on notes payable, net |
( |
) | ( |
) | ||||
Proceeds from line of credit, net |
||||||||
Principal payments on long-term debt |
( |
) | ( |
) | ||||
Net cash used in financing activities |
( |
) | ( |
) | ||||
Effect of exchange rate changes on cash |
( |
) | ||||||
Net decrease in cash, cash equivalents and restricted cash for the period |
( |
) | ( |
) | ||||
Cash, cash equivalents and restricted cash, beginning of year |
||||||||
Cash, cash equivalents and restricted cash, end of period |
||||||||
Cash, cash equivalents and restricted cash associated with assets held for sale, end of period |
( |
) | ( |
) | ||||
Cash, cash equivalents and restricted cash, end of period |
$ | $ |
The accompanying notes are an integral part of the consolidated financial statements.
AEGION CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. |
GENERAL |
The accompanying unaudited consolidated financial statements of Aegion Corporation and its subsidiaries (collectively, “Aegion” or the “Company”) reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. All significant intercompany related accounts and transactions have been eliminated in consolidation.
The Consolidated Balance Sheet as of December 31, 2018, which is derived from the audited consolidated financial statements, and the interim unaudited consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the requirements of Form 10-Q and Article 10 of Regulation S-X and, consequently, do not include all information or footnotes required by GAAP for complete financial statements or all the disclosures normally made in an Annual Report on Form 10-K. Accordingly, the unaudited consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2019.
Acquisitions/Strategic Initiatives/Divestitures
2017 Restructuring
On July 28, 2017, the Company’s board of directors approved a realignment and restructuring plan (the “2017 Restructuring”). As part of the 2017 Restructuring, the Company announced plans 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® system in North America; (iii) right-size the cathodic protection services operation in Canada and the cured-in-place pipe (“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. During the second quarter of 2019, the Company initiated plans to exit additional international businesses. See further discussion in Note 4.
Infrastructure Solutions Segment (“Infrastructure Solutions”)
During 2018, the Company’s board of directors approved a plan to divest the Company’s CIPP business in Australia (“Insituform Australia”). While restructuring actions in Insituform Australia led to improvements in operating results, an assessment of the long-term fit within the Company’s portfolio led to the decision to divest the business. Accordingly, the Company has classified Insituform Australia’s assets and liabilities as held for sale on the Consolidated Balance Sheet at June 30, 2019 and December 31, 2018. See Note 5.
During the second quarter of 2019, the Company initiated plans to sell its CIPP contracting businesses in Europe: Insituform Rioolrenovatietechnicken B.V. (“Insituform Netherlands”); Insituform Technologies Iberica SA (“Insituform Spain”); and Environmental Techniques Limited (“Environmental Techniques”). Accordingly, the Company has classified the assets and liabilities of these businesses as held for sale on the Consolidated Balance Sheet at June 30, 2019. See Note 5.
Corrosion Protection Segment (“Corrosion Protection”)
During the first quarter of 2019, the Company initiated plans to sell its interest in its cathodic protection materials manufacturing and production joint venture in Saudi Arabia, Corrpower International Limited (“Corrpower”), and its interest in its Titeliner® and CIPP joint venture in South Africa, Aegion South Africa Proprietary Limited (“Aegion South Africa”). During the second quarter of 2019, the Company began negotiating with a prospective buyer for its interest in its Titeliner® joint venture in Mexico, United Pipeline de Mexico S.A. de C.V. (“United Mexico”). Accordingly, the Company has classified the assets and liabilities of these businesses as held for sale on the Consolidated Balance Sheet at June 30, 2019. See Note 5.
On May 4, 2018, the Company acquired the operations of Hebna Inc., Hebna Canada Inc. and Hebna Corporation (collectively “Hebna”), for a total purchase price of $
2. |
ACCOUNTING POLICIES |
On January 1, 2019, the Company adopted FASB ASC 842, Leases (“FASB ASC 842”). See Note 6 for further information. Other than the adoption of FASB ASC 842, there were no material changes in accounting policies from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
Accumulated Other Comprehensive Loss
As set forth below, the Company’s accumulated other comprehensive loss is comprised of three main components: (i) currency translation; (ii) derivatives; and (iii) gains and losses associated with the Company’s defined benefit plan in the United Kingdom (in thousands):
June 30, 2019 |
December 31, 2018 |
|||||||
Currency translation adjustments |
$ | ( |
) | $ | ( |
) | ||
Derivative hedging activity |
( |
) | ||||||
Pension activity |
( |
) | ( |
) | ||||
Total accumulated other comprehensive loss |
$ | ( |
) | $ | ( |
) |
For the Company’s international subsidiaries, the local currency is generally the functional currency. Assets and liabilities of these subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates. The cumulative translation adjustment resulting from changes in exchange rates are included in the Consolidated Balance Sheets as a component of “Accumulated other comprehensive loss” in total stockholders’ equity. A net foreign exchange transaction gain of $
Taxation
The Company provides for estimated income taxes payable or refundable on current year income tax returns as well as the estimated future tax effects attributable to temporary differences and carryforwards, based upon enacted tax laws and tax rates, and in accordance with FASB ASC 740, Income Taxes (“FASB ASC 740”). FASB ASC 740 also requires that a valuation allowance be recorded against any deferred tax assets that are not likely to be realized in the future. The determination is based on the Company’s ability to generate future taxable income and, at times, is dependent on its ability to implement strategic tax initiatives to ensure full utilization of recorded deferred tax assets. Should the Company not be able to implement the necessary tax strategies, it may need to record valuation allowances for certain deferred tax assets, including those related to foreign income tax benefits. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowances recorded against net deferred tax assets.
Earnings per Share
Earnings per share have been calculated using the following share information:
Quarters Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Weighted average number of common shares used for basic EPS |
||||||||||||||||
Effect of dilutive stock options and restricted and deferred stock unit awards |
||||||||||||||||
Weighted average number of common shares and dilutive potential common stock used for dilutive EPS |
The Company excluded
Cash, Cash Equivalents and Restricted Cash
The Company classifies highly liquid investments with original maturities of 90 days or less as cash equivalents. Recorded book values are reasonable estimates of fair value for cash and cash equivalents.
Cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows are as follows (in thousands):
Balance sheet data |
June 30, 2019 |
December 31, 2018 |
||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Cash, cash equivalents and restricted cash |
$ | $ |
Restricted cash held in escrow primarily relates to funds reserved for legal requirements, deposits made in lieu of retention on specific projects performed for municipalities and state agencies, or advance customer payments and compensating balances for bank undertakings in Europe. Restricted cash related to operations is similar to retainage, and is, therefore, classified as a current asset, consistent with the Company’s policy on retainage.
Investments in Variable Interest Entities
The Company evaluates all transactions and relationships with variable interest entities (“VIE”) to determine whether the Company is the primary beneficiary of the entities in accordance with FASB ASC 810, Consolidation. There were no changes in the Company’s VIEs during the quarter ended June 30, 2019.
Financial data for consolidated variable interest entities are summarized in the following tables (in thousands):
Balance sheet data |
June 30, 2019 (1) |
December 31, 2018 |
||||||
Current assets |
$ | $ | ||||||
Non-current assets |
||||||||
Current liabilities |
||||||||
Non-current liabilities |
(1) |
Includes $ |
Quarters Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
Statement of operations data | 2019 | 2018 (1) | 2019 | 2018 (1) | ||||||||||||
Revenue |
$ | $ | $ | $ | ||||||||||||
Gross profit |
||||||||||||||||
Net income attributable to Aegion Corporation |
( |
) | ( |
) | ( |
) |
(1) |
Includes activity from our pipe coating and insulation joint venture in Louisiana, which was sold during the third quarter of 2018. |
Newly Issued Accounting Pronouncements
In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The guidance is effective for the Company’s fiscal year beginning January 1, 2020, including interim periods within that fiscal year. The adoption of this standard is not expected to have a material impact on its consolidated financial statements.
In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits a company to reclassify the income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive income to retained earnings. Companies may adopt the new guidance using one of two transition methods: (i) retrospective to each period (or periods) in which the income tax effects are recognized, or (ii) at the beginning of the period of adoption. The Company adopted this standard effective January 1, 2019 and elected not to reclassify the tax effects due to the immaterial impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the way in which entities estimate and present credit losses for most financial assets, including accounts receivable. The guidance is effective for the Company’s fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early adoption is permitted, although the Company does not intend to do so. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), which requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases with lease terms longer than twelve months. The Company adopted this standard, effective January 1, 2019, using the adoption-date transition provision, which recognizes and measures leases existing at January 1, 2019 but without retrospective application. See Note 6.
3. |
REVENUES |
On January 1, 2018, the Company adopted FASB ASC 606 for all contracts that were not completed using the modified retrospective transition method. The Company recognized the cumulative effect of initially applying FASB ASC 606 as a net reduction to opening retained earnings of $
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in FASB ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts in which construction, engineering and installation services are provided, there is generally a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The bundle of goods and services represents the combined output for which the customer has contracted. For product sales contracts with multiple performance obligations where each product is distinct, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good in the contract. For royalty license agreements whereby intellectual property is transferred to the customer, there is a single performance obligation as the license is not separately identifiable from the other goods and services in the contract.
The Company’s performance obligations are satisfied over time as work progresses or at a point in time. Revenues from products and services transferred to customers over time accounted for
On June 30, 2019, the Company had $
Contract Estimates
Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, the Company estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract, and recognizes that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that sometimes span multiple years. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer.
The Company’s contracts do not typically contain variable consideration or other provisions that increase or decrease the transaction price. In rare situations where the transaction price is not fixed, the Company estimates variable consideration at the most likely amount to which it expects to be entitled. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. For royalty license agreements, the Company applies the sales-based and usage-based royalty exception and recognizes royalties at the later of: (i) when the subsequent sale or usage occurs; or (ii) the satisfaction or partial satisfaction of the performance obligation to which some or all of the sales-or usage-based royalty has been allocated. For contracts in which a portion of the transaction price is retained and paid after the good or service has been transferred to the customer, the Company does not recognize a significant financing component. The primary purpose of the retainage payment is often to provide the customer with assurance that the Company will perform its obligations under the contract, rather than to provide financing to the customer.
The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available.
Revenue by Category
The following tables summarize revenues by segment and geography (in thousands):
Quarter Ended June 30, 2019 |
Quarter Ended June 30, 2018 |
|||||||||||||||||||||||||||||||
Infrastructure |
Corrosion |
Energy |
Total |
Infrastructure |
Corrosion |
Energy |
Total |
|||||||||||||||||||||||||
Geographic region: |
||||||||||||||||||||||||||||||||
United States |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Canada |
||||||||||||||||||||||||||||||||
Europe |
||||||||||||||||||||||||||||||||
Other foreign |
||||||||||||||||||||||||||||||||
Total revenues |
$ | $ | $ | $ | $ | $ | $ | $ |
Six Months Ended June 30, 2019 |
Six Months Ended June 30, 2018 |
|||||||||||||||||||||||||||||||
Infrastructure |
Corrosion |
Energy |
Total |
Infrastructure |
Corrosion |
Energy |
Total |
|||||||||||||||||||||||||
Geographic region: |
||||||||||||||||||||||||||||||||
United States |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Canada |
||||||||||||||||||||||||||||||||
Europe |
||||||||||||||||||||||||||||||||
Other foreign |
||||||||||||||||||||||||||||||||
Total revenues |
$ | $ | $ | $ | $ | $ | $ | $ |
The following tables summarize revenues by segment and contract type (in thousands):
Quarter Ended June 30, 2019 |
Quarter Ended June 30, 2018 |
|||||||||||||||||||||||||||||||
Infrastructure |
Corrosion |
Energy |
Total |
Infrastructure |
Corrosion |
Energy |
Total |
|||||||||||||||||||||||||
Contract type: |
||||||||||||||||||||||||||||||||
Fixed fee |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Time and materials |
||||||||||||||||||||||||||||||||
Product sales |
||||||||||||||||||||||||||||||||
License fees |
||||||||||||||||||||||||||||||||
Total revenues |
$ | $ | $ | $ | $ | $ | $ | $ |
Six Months Ended June 30, 2019 |
Six Months Ended June 30, 2018 |
|||||||||||||||||||||||||||||||
Infrastructure |
Corrosion |
Energy |
Total |
Infrastructure |
Corrosion |
Energy |
Total |
|||||||||||||||||||||||||
Contract type: |
||||||||||||||||||||||||||||||||
Fixed fee |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Time and materials |
||||||||||||||||||||||||||||||||
Product sales |
||||||||||||||||||||||||||||||||
License fees |
||||||||||||||||||||||||||||||||
Total revenues |
$ | $ | $ | $ | $ | $ | $ | $ |
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets and contract liabilities on the Consolidated Balance Sheets. Contract assets represent work performed that could not be billed either due to contract stipulations or the required contractual documentation has not been finalized. Substantially all unbilled amounts are expected to be billed and collected within one year.
For fixed fee and time-and-materials based contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. For some royalty license arrangements, minimum amounts are billed over the license term as quarterly royalty amounts are determined. This results in contract assets as the Company recognizes revenue for the license when the license is transferred to the customer at contract inception. The Company’s contract liabilities consist of advance payments, billings in excess of revenue recognized and deferred revenue.
The Company’s contract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Advance payments, billings in excess of revenue recognized and deferred revenue are each classified as current.
Net contract assets (liabilities) consisted of the following (in thousands):
June 30, 2019(1) |
December 31, 2018(2) |
|||||||
Contract assets – current |
$ | $ | ||||||
Contract liabilities – current |
( |
) | ( |
) | ||||
Net contract assets |
$ | $ |
(1) | Amounts exclude contract assets of $ |
(2) | Amounts exclude contract assets of $ |
Substantially all of the $
Impairment losses recognized on receivables and contract assets were not material during the first six months of 2019 and 2018.
4. |
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 and the first quarter of 2019, 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. During the second quarter of 2019, as part of the 2017 Restructuring, the Company initiated plans to exit additional international businesses, including Insituform Netherlands, Insituform Spain and Environmental Techniques.
Total pre-tax 2017 Restructuring and related impairment charges since inception were $
The Company expects to incur additional cash charges of less than $
During the quarters and six months ended June 30, 2019 and 2018, the Company recorded pre-tax expenses related to the 2017 Restructuring as follows (in thousands):
Quarter Ended June 30, 2019 |
Quarter Ended June 30, 2018 |
|||||||||||||||||||||||||||||||||||
Infrastructure |
Corrosion |
Energy |
Corporate |
Total |
Infrastructure |
Corrosion |
Corporate |
Total |
||||||||||||||||||||||||||||
Severance and benefit related costs |
$ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Contract termination costs |
( |
) | ||||||||||||||||||||||||||||||||||
Relocation and other moving costs |
||||||||||||||||||||||||||||||||||||
Other restructuring costs (1) |
||||||||||||||||||||||||||||||||||||
Total pre-tax restructuring charges |
$ | $ | $ | $ | $ | $ | $ | $ | $ |
(1) |
For the quarter ended June 30, 2019, 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 Europe, exiting the cathodic protection operations in the Middle East and other cost savings initiatives. For the quarter ended June 30, 2018, 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 applications for the Tyfo® systems in North America and right-sizing the CIPP operations in Australia and Denmark. |
Six Months Ended June 30, 2019 |
Six Months Ended June 30, 2018 |
|||||||||||||||||||||||||||||||||||
Infrastructure Solutions |
Corrosion Protection |
Energy Services |
Corporate |
Total |
Infrastructure Solutions |
Corrosion Protection |
Corporate |
Total |
||||||||||||||||||||||||||||
Severance and benefit related costs |
$ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Contract termination costs |
||||||||||||||||||||||||||||||||||||
Relocation and other moving costs |
||||||||||||||||||||||||||||||||||||
Other restructuring costs (1) |
||||||||||||||||||||||||||||||||||||
Total pre-tax restructuring charges |
$ | $ | $ | $ | $ | $ | $ | $ | $ |
(1) |
For the six months ended June 30, 2019, 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 Europe, exiting the cathodic protection operations in the Middle East and other cost savings initiatives. For the six months ended June 30, 2018, 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 applications for the Tyfo® systems 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 contract termination costs were $
The following tables summarize all charges related to the 2017 Restructuring recognized in the quarters and six months ended June 30, 2019 and 2018 as presented in their affected line in the Consolidated Statements of Operations (in thousands):
Quarter Ended June 30, 2019 |
Quarter Ended June 30, 2018 |
|||||||||||||||||||||||||||||||||||
Infrastructure |
Corrosion |
Energy |
Corporate |
Total (1) |
Infrastructure |
Corrosion |
Corporate |
Total (2) |
||||||||||||||||||||||||||||
Cost of revenues |
$ | ( |
) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Operating expenses |
||||||||||||||||||||||||||||||||||||
Restructuring and related charges |
||||||||||||||||||||||||||||||||||||
Other expense |
||||||||||||||||||||||||||||||||||||
Total pre-tax restructuring charges |
$ | $ | $ | $ | $ | $ | $ | $ | $ |
(1) |
Total pre-tax restructuring charges for the quarter ended June 30, 2019, include cash charges of $ |
(2) |
Total pre-tax restructuring charges for the quarter ended June 30, 2018, include cash charges of $ |
Six Months Ended June 30, 2019 |
Six Months Ended June 30, 2018 |
|||||||||||||||||||||||||||||||||||
Infrastructure |
Corrosion |
Energy |
Corporate |
Total (1) |
Infrastructure |
Corrosion |
Corporate |
Total (2) |
||||||||||||||||||||||||||||
Cost of revenues |
$ | ( |
) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Operating expenses |
||||||||||||||||||||||||||||||||||||
Restructuring and related charges |
||||||||||||||||||||||||||||||||||||
Other expense |
( |
) | ||||||||||||||||||||||||||||||||||
Total pre-tax restructuring charges |
$ | $ | $ | $ | $ | $ | $ | $ | $ |
(1) |
Total pre-tax restructuring charges include cash charges of $ |
(2) |
Total pre-tax restructuring charges include cash charges of $ |
The following tables summarize the 2017 Restructuring activity during the first six months of 2019 and 2018 (in thousands):
Utilized in 2019 |
||||||||||||||||||||||||
Reserves at December 31, 2018 |
2019 |
Foreign Currency |
Cash(1) |
Non-Cash |
Reserves at June 30, 2019 |
|||||||||||||||||||
Severance and benefit related costs |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
Contract termination costs |
( |
) | ||||||||||||||||||||||
Relocation and other moving costs |
( |
) | ||||||||||||||||||||||
Other restructuring costs |
( |
) | ||||||||||||||||||||||
Total pre-tax restructuring charges |
$ | $ | $ | ( |
) | $ | $ | $ |
(1) |
Refers to cash utilized to settle charges during the first six months of 2019. |
Utilized in 2018 |
||||||||||||||||||||||||
Reserves at December 31, 2017 |
2018 |
Foreign Currency |
Cash(1) |
Non-Cash |
Reserves at June 30, 2018 |
|||||||||||||||||||
Severance and benefit related costs |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
Contract termination costs |
( |
) | ||||||||||||||||||||||
Relocation and other moving costs |
||||||||||||||||||||||||
Other restructuring costs |
||||||||||||||||||||||||
Total pre-tax restructuring charges |
$ | $ | $ | ( |
) | $ | $ | $ |
(1) |
Refers to cash utilized to settle charges during the first six months of 2018. |
5. |
ASSETS AND LIABILITIES HELD FOR SALE |
During the first half of 2019, the Company initiated plans to sell several entities as part of its ongoing strategic actions intended to generate more predictable and sustainable long-term earnings growth. Within Infrastructure Solutions, the Company plans to divest its CIPP contracting businesses in Europe: Insituform Netherlands, Insituform Spain and Environmental Techniques. Within Corrosion Protection, the Company plans to divest its interests in Corrpower, Aegion South Africa and United Mexico. The Company is currently in various stages of discussions with third parties for each of the entities and believes that it is probable that a sale of each entity will occur in the second half of 2019.
During 2018, the Company’s board of directors approved a plan to divest the assets and liabilities of Insituform Australia. During the second quarter of 2019, the Company ended its negotiations with a potential third-party acquirer and began discussions with another third party. Because of these new negotiations, management believes that it is probable that a sale will occur in the second half of 2019.
The relevant asset and liability balances at June 30, 2019 and December 31, 2018 are accounted for as held for sale and measured at the lower of carrying value or fair value less cost to sell. Based on management’s current expectation of fair value less cost to sell, the Company recorded an impairment of assets held for sale of $
The following table provides the components of assets and liabilities held for sale (in thousands):
June 30, 2019(1) |
December 31, 2018(2) |
|||||||
Assets held for sale: |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash | ||||||||
Receivables, net |
||||||||
Retainage |
||||||||
Contract assets |
||||||||
Inventories |
||||||||
Prepaid expenses and other current assets |
||||||||
Total current assets |
||||||||
Property, plant & equipment, less accumulated depreciation |
||||||||
Goodwill | ||||||||
Intangible assets, less accumulated amortization | ||||||||
Operating lease assets |
||||||||
Deferred income tax assets | ||||||||
Other assets | ||||||||
Impairment of assets held for sale | ( |
) | ||||||
Total assets held for sale |
$ | $ | ||||||
Liabilities held for sale: |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued expenses |
||||||||
Contract liabilities |
||||||||
Current maturities of long-term debt |
||||||||
Total current liabilities |
||||||||
Operating lease liabilities |
||||||||
Other non-current liabilities |
||||||||
Total liabilities held for sale |
$ | $ |
(1) |
Includes Insituform Australia, Insituform Netherlands, Insituform Spain, Environmental Techniques, Corrpower, Aegion South Africa and United Mexico. |
(2) |
Includes Insituform Australia. |
6. |
LEASES |
Effective January 1, 2019, the Company adopted FASB ASC 842 using the adoption-date transition provision rather than at the earliest comparative period presented in the financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019 but without retrospective application. The Company also elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components. The Company also made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes. The impact of FASB ASC 842 on the Consolidated Balance Sheet beginning January 1, 2019 was through the recognition of operating lease assets and corresponding operating lease liabilities of $
The Company’s operating lease portfolio includes operational field locations, administrative offices, equipment, vehicles and information technology equipment. The majority of the Company’s leases have remaining lease terms of
Operating lease assets and liabilities are recognized based on the present value of lease payments over the lease term at inception. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 1, 2019. A portion of the Company’s real estate, equipment and vehicle leases is subject to periodic changes in the Consumer Price Index, LIBOR or other market index. The changes to these indexes are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. Because most leases do not provide an explicit rate of return, the Company utilizes its incremental secured borrowing rate on a lease-by-lease basis in determining the present value of lease payments at the commencement date of the lease.
The following table presents the components of lease expense (in thousands):
Quarter Ended June 30, 2019 |
Six Months Ended June 30, 2019 |
|||||||
Operating lease cost |
$ | $ | ||||||
Short-term lease cost |
||||||||
Total lease cost |
$ | $ |
Supplemental cash flow information related to leases was as follows (in thousands):
Quarter Ended June 30, 2019 |
Six Months Ended June 30, 2019 |
|||||||
Cash paid for amounts included in the measurement of lease liabilities: |
||||||||
Operating cash flows from operating leases |
$ | $ | ||||||
Right-of-use assets obtained in exchange for lease obligations: |
||||||||
Operating leases |
$ | $ |
Supplemental balance sheet information related to leases was as follows (in thousands):
June 30, 2019(1) |
||||
Operating leases: |
||||
Operating lease assets |
$ | |||
Accrued expenses |
$ | |||
Other liabilities |
||||
Total operating lease liabilities |
$ | |||
Weighted-average remaining lease term (in years) |
||||
Weighted-average discount rate |
% |
(1) |
Amounts exclude operating lease assets of $ |
Operating lease liabilities under non-cancellable leases were as follows (in thousands):
June 30, 2019 |
||||
Six months ended December 31, 2019 |
$ | |||
2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
Thereafter |
||||
Total undiscounted operating lease liability |
||||
Less: Imputed interest |
( |
) | ||
Total discounted operating lease liability |
$ |
Minimum rental commitments under non-cancellable leases as of December 31, 2018 for years 2019 through 2023 were $
7. |
GOODWILL AND INTANGIBLE ASSETS |
Goodwill
The following table presents a reconciliation of the beginning and ending balances of goodwill (in thousands):
Infrastructure Solutions |
Corrosion |
Energy |
Total |
|||||||||||||
Balance, December 31, 2018 |
||||||||||||||||
Goodwill, gross |
$ | $ | $ | $ | ||||||||||||
Accumulated impairment losses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Goodwill, net |
||||||||||||||||
2019 Activity: |
||||||||||||||||
Foreign currency translation |
( |
) | ||||||||||||||
Reclassification to assets held for sale (1) | ( |
) | ( |
) |
||||||||||||
Balance, June 30, 2019 |
||||||||||||||||
Goodwill, gross |
||||||||||||||||
Accumulated impairment losses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Goodwill, net |
$ | $ | $ | $ |
|
(1) |
During the second quarter of 2019, the Company classified certain assets of its CIPP contracting operation in Europe as held for sale. See Note 5. |
Intangible Assets
Intangible assets consisted of the following (in thousands):
June 30, 2019 |
December 31, 2018 |
||||||||||||||||||||||||||
Weighted |
Gross |
Accumulated |
Net |
Gross |
Accumulated |
Net |
|||||||||||||||||||||
License agreements |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Leases |
( |
) | ( |
) | |||||||||||||||||||||||
Trademarks |
( |
) | ( |
) | |||||||||||||||||||||||
Non-competes |
( |
) | ( |
) | |||||||||||||||||||||||
Customer relationships |
( |
) | ( |
) | |||||||||||||||||||||||
Patents and acquired technology |
( |
) | ( |
) | |||||||||||||||||||||||
Total intangible assets |
— | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ |
Amortization expense was $
2019 |
$ | |||
2020 |
||||
2021 |
||||
2022 |
||||
2023 |
8. |
LONG-TERM DEBT AND CREDIT FACILITY |
Long-term debt consisted of the following (in thousands):
June 30, 2019 |
December 31, 2018 |
|||||||
Term note, due February 27, 2023, annualized rates of 4.38% and 4.59%, respectively |
$ | $ | ||||||
Line of credit, 4.40% and 4.45%, respectively |
||||||||
Other notes with interest rates from 3.3% to 7.8% |
||||||||
Subtotal |
||||||||
Less – Current maturities of long-term debt |
||||||||
Less – Unamortized loan costs |
||||||||
Total |
$ | $ |
In October 2015, the Company entered into an amended and restated $
In 2018, the Company paid expenses of $
Generally, interest is charged on the principal amounts outstanding under the amended Credit Facility at the British Bankers Association LIBOR rate plus an applicable rate ranging from
The Company’s indebtedness at June 30, 2019 consisted of $
As of June 30, 2019, the Company had $
The Company’s indebtedness at December 31, 2018 consisted of $
At June 30, 2019 and December 31, 2018, the estimated fair value of the Company’s long-term debt was approximately $
In October 2015, the Company entered into an interest rate swap agreement for a notional amount of $
On March 12, 2018, the Company entered into an interest rate swap forward agreement that begins in October 2020 and expires in February 2023 to coincide with the amortization period of the amended Credit Facility. The swap will require the Company to make a monthly fixed rate payment of
The amended Credit Facility is subject to certain financial covenants, including a consolidated financial leverage ratio and consolidated fixed charge coverage ratio. Subject to the specifically defined terms and methods of calculation as set forth in the amended Credit Facility’s credit agreement, the financial covenant requirements, as of each quarterly reporting period end, are defined as follows:
• |
Consolidated financial leverage ratio compares consolidated funded indebtedness to amended Credit Facility defined income with a maximum amount not to exceed |
• |
Consolidated fixed charge coverage ratio compares amended Credit Facility defined income to amended Credit Facility defined fixed charges with a minimum permitted ratio of not less than |
At June 30, 2019, the Company was in compliance with all of its debt and financial covenants as required under the amended Credit Facility.
9. |
STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION |
Share Repurchase Plan
In December 2018, the Company’s board of directors authorized the open market repurchase of up to
The Company is also authorized to repurchase up to $
During the first six months of 2019, the Company acquired
During the first six months of 2018, the Company acquired
Equity-Based Compensation Plans
In April 2016, the Company’s stockholders approved the 2016 Employee Equity Incentive Plan, which was amended in 2017 by the First Amendment to the 2016 Employee Equity Incentive Plan (as amended, the “2016 Employee Plan”). In April 2018, the Company’s stockholders approved the Second Amendment to the 2016 Employee Equity Incentive Plan, which increased by
In April 2016, the Company’s stockholders approved the 2016 Non-Employee Director Equity Incentive Plan (the “2016 Director Plan”), which replaced the 2011 Non-Employee Director Equity Incentive Plan. In April 2019, the Company’s stockholders approved an amendment and restatement of the 2016 Director Plan, which among other things, increased by
Stock Awards
Stock awards, which include shares of restricted stock, restricted stock units and performance stock units, are awarded from time to time to executive officers and certain key employees of the Company. Stock award compensation is recorded based on the award date fair value and charged to expense ratably through the requisite service period. The forfeiture of unvested restricted stock, restricted stock units and performance stock units causes the reversal of all previous expense to be recorded as a reduction of current period expense.
A summary of the stock award activity is as follows:
Six Months Ended June 30, 2019 |
||||||||
Stock Awards |
Weighted |
|||||||
Outstanding at December 31, 2018 |
$ | |||||||
Restricted stock units awarded |
||||||||
Performance stock units awarded |
||||||||
Restricted stock units distributed |
( |
) | ||||||
Performance stock units distributed |
( |
) | ||||||
Restricted stock units forfeited |
( |
) | ||||||
Performance stock units forfeited |
( |
) | ||||||
Outstanding at June 30, 2019 |
$ |
Expense associated with stock awards was $
Deferred Stock Unit Awards
Deferred stock units are generally awarded to directors of the Company and represent the Company’s obligation to transfer one share of the Company’s common stock to the grantee at a future date. Historically, awards were fully vested, and fully expensed, on the date of grant. Beginning in April 2019, as a result of the amendment and restatement of the 2016 Director Plan discussed above, the expense related to the issuance of deferred stock units is based on the award date fair value and charged to expense ratably through the requisite service period, which is generally
A summary of deferred stock unit activity is as follows:
Six Months Ended June 30, 2019 |
||||||||
Deferred |
Weighted |
|||||||
Outstanding at December 31, 2018 |
$ | |||||||
Awarded |
||||||||
Distributed |
( |
) | ||||||
Outstanding at June 30, 2019 |
$ |
Expense associated with deferred stock unit awards was $
Stock Options
Stock options on the Company’s common stock were previously awarded from time to time to executive officers and certain key employees of the Company. Stock options granted generally had a term of
10. |
TAXES ON INCOME |
The Company’s effective tax rate in the quarter and six-month period ended June 30, 2019 was (
The Company’s effective tax rate in the quarter and six-month period ended June 30, 2018 was
11. |
COMMITMENTS AND CONTINGENCIES |
Litigation
The Company is involved in certain litigation incidental to the conduct of its business and affairs. Management, after consultation with legal counsel, does not believe that the outcome of any such litigation, individually or in the aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.
Purchase Commitments
The Company had no material purchase commitments at June 30, 2019.
Guarantees
The Company has many contracts that require the Company to indemnify the other party against loss from claims, including claims of patent or trademark infringement or other third-party claims for injuries, damages or losses. The Company has agreed to indemnify its surety against losses from third-party claims of subcontractors. The Company has not previously experienced material losses under these provisions and, while there can be no assurances, currently does not anticipate any future material adverse impact on its consolidated financial position, results of operations or cash flows.
The Company regularly reviews its exposure under all its engagements, including performance guarantees by contractual joint ventures and indemnification of its surety. As a result of the most recent review, the Company has determined that the risk of material loss is remote under these arrangements and has not recorded a liability for these risks at June 30, 2019 on its Consolidated Balance Sheet.
12. |
SEGMENT REPORTING |
The Company has
The following disaggregated financial results have been prepared using a management approach that is consistent with the basis and manner with which management internally disaggregates financial information for the purpose of making internal operating decisions. The Company evaluates performance based on stand-alone operating income (loss), which includes acquisition and divestiture expenses and restructuring charges, if applicable.
In 2019, the Company began reporting Corporate expenses separately rather than allocating those costs to the operating segments. The reported information for the quarter and six months ended June 30, 2018 has been revised to conform to the current period presentation.
Financial information by segment was as follows (in thousands):
Quarters Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Revenues: |
||||||||||||||||
Infrastructure Solutions |
$ | $ | $ | $ | ||||||||||||
Corrosion Protection |
||||||||||||||||
Energy Services |
||||||||||||||||
Total revenues |
$ | $ | $ | $ | ||||||||||||
Gross profit: |
||||||||||||||||
Infrastructure Solutions |
$ | $ | $ | $ | ||||||||||||
Corrosion Protection |
||||||||||||||||
Energy Services |
||||||||||||||||
Total gross profit |
$ | $ | $ | $ | ||||||||||||
Operating income (loss): |
||||||||||||||||
Infrastructure Solutions (1) |
$ | $ | $ | $ | ||||||||||||
Corrosion Protection (2) |
( |
) | ( |
) | ||||||||||||
Energy Services |
||||||||||||||||
Corporate (3) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total operating income (loss) |
( |
) | ||||||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest income |
||||||||||||||||
Other (4) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total other expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income (loss) before taxes on income |
$ | ( |
) | $ | $ | ( |
) | $ |
(1) |
Operating income in the second quarter of 2019 and 2018 includes $ |
(2) |
Operating income (loss) in the second quarter of 2019 and 2018 includes $ |
(3) |
Operating loss in the second quarter of 2019 and 2018 includes $ |
(4) |
Other expense in the second quarter and first six months of 2019 includes $
|
|
The following table summarizes revenues and gross profit by geographic region (in thousands):
Quarters Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Revenues: (1) |
||||||||||||||||
United States |
$ | $ | $ | $ | ||||||||||||
Canada |
||||||||||||||||
Europe |
||||||||||||||||
Other foreign |
||||||||||||||||
Total revenues |
$ | $ | $ | $ | ||||||||||||
Gross profit: (1) |
||||||||||||||||
United States |
$ | $ | $ | $ | ||||||||||||
Canada |
||||||||||||||||
Europe |
||||||||||||||||
Other foreign |
||||||||||||||||
Total gross profit |
$ | $ | $ | $ |
(1) |
Revenues and gross profit are attributed to the country of origin |
13. |
DERIVATIVE FINANCIAL INSTRUMENTS |
As a matter of policy, the Company uses derivatives for risk management purposes, and does not use derivatives for speculative purposes. From time to time, the Company may enter into foreign currency forward contracts to hedge foreign currency cash flow transactions. For cash flow hedges, a gain or loss is recorded in the Consolidated Statements of Operations upon settlement of the hedge. All of the Company’s hedges that are designated as hedges for accounting purposes were highly effective; therefore, no notable amounts of hedge ineffectiveness were recorded in the Company’s Consolidated Statements of Operations for either the settlement of cash flow hedges or the outstanding hedged balance. At June 30, 2019, the Company’s cash flow hedges were in a net deferred loss position of $
The Company also engages in regular inter-company trade activities and receives royalty payments from certain of its wholly-owned entities, paid in local currency, rather than the Company’s functional currency, U.S. dollars. The Company utilizes foreign currency forward exchange contracts to mitigate the currency risk associated with the anticipated future payments from certain of its international entities. During the first six months of 2019 and 2018, a loss of $
In October 2015, the Company entered into an interest rate swap agreement for a notional amount of $
On March 12, 2018, the Company entered into an interest rate swap forward agreement that begins in October 2020 and expires in February 2023 to coincide with the amortization period of the amended Credit Facility. The swap will require the Company to make a monthly fixed rate payment of
The following table summarizes the Company’s derivative positions at June 30, 2019:
Position |
Notional |
Weighted |
Average |
|||||||||||
USD/British Pound |
Sell |
£ | ||||||||||||
EURO/British Pound |
Sell |
£ | ||||||||||||
Interest Rate Swap |
— | $ | — |
The following table provides a summary of the fair value amounts of our derivative instruments, all of which are Level 2 inputs as defined below (in thousands):
Designation of Derivatives |
Balance Sheet Location |
June 30, 2019 |
December 31, 2018 |
||||||
Derivatives Designated as Hedging Instruments: |
|||||||||
Interest Rate Swaps |
Other non-current assets |
$ | $ | ||||||
Total Assets |
$ | $ | |||||||
Interest Rate Swaps |
Other non-current liabilities |
$ | $ | ||||||
Total Liabilities |
$ | $ | |||||||
Derivatives Not Designated as Hedging Instruments: |
|||||||||
Forward Currency Contracts |
Prepaid expenses and other current assets |
$ | $ | ||||||
Total Assets |
$ | $ | |||||||
Forward Currency Contracts |
Accrued expenses |
$ | $ | ||||||
Total Liabilities |
$ | $ | |||||||
Total Derivative Assets |
$ | $ | |||||||
Total Derivative Liabilities |
|||||||||
Total Net Derivative Asset (Liability) |
$ | ( |
) | $ |
FASB ASC 820, Fair Value Measurements (“FASB ASC 820”), defines fair value and establishes a framework for measuring and disclosing fair value instruments. The guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
• |
Level 1 – defined as quoted prices in active markets for identical instruments; |
• |
Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; |
• |
Level 3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
In accordance with FASB ASC 820, the Company determined that the value of all of its derivative instruments, which are measured at fair value on a recurring basis, are derived from significant observable inputs, referred to as Level 2 inputs.
The Company had no transfers between Level 1, 2 or 3 inputs during the quarter ended June 30, 2019. Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, the Company does not believe any such changes would have a material impact on its financial condition, results of operations or cash flows. Other financial instruments including cash and cash equivalents and short-term borrowings, including notes payable, are recorded at cost, which approximates fair value, which is based on Level 2 inputs as previously defined.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is management’s discussion and analysis of certain significant factors that have affected our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited consolidated financial statements. This discussion should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2018.
We believe that certain accounting policies could potentially have a more significant impact on our consolidated financial statements, either because of the significance of the consolidated financial statements to which they relate or because they involve a higher degree of judgment and complexity. A summary of such critical accounting policies can be found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2018 and in Note 2 to the consolidated financial statements contained in this report.
Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. We make forward-looking statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Quarterly Report on Form 10-Q that represent our beliefs or expectations about future events or financial performance. These forward-looking statements are based on information currently available to us and on management’s beliefs, assumptions, estimates and projections and are not guarantees of future events or results. When used in this report, 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 our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 1, 2019, and in our subsequent filed reports, including this report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. In addition, our actual results may vary materially from those anticipated, estimated, suggested or projected. Except as required by law, we do 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 us from time to time in our 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 us in this report are qualified by these cautionary statements.
Executive Summary
Aegion combines innovative technologies with market leading expertise to maintain, rehabilitate and strengthen pipelines and other infrastructure around the world. Since 1971, we have played a pioneering role in finding innovative solutions to rehabilitate aging infrastructure, primarily pipelines in the wastewater, water, energy, mining and refining industries. We also maintain the efficient operation of refineries and other industrial facilities and provide innovative solutions for the strengthening of buildings, bridges and other structures. We are committed to Stronger. Safer. Infrastructure®. We believe the depth and breadth of our products and services make us a leading provider for the world’s infrastructure rehabilitation and protection needs.
Our Segments
We have three operating segments, which are also our reportable segments: Infrastructure Solutions, Corrosion Protection and Energy Services. Our operating segments correspond to the Company’s management organizational structure.
Infrastructure Solutions – The majority of our work is performed in the municipal water and wastewater pipeline sector and, while the pace of growth is primarily driven by government funding and spending, overall demand due to required infrastructure improvements in our core markets should result in a long-term stable growth opportunity for our market leading products, Insituform® CIPP, the Tyfo® system and Fusible PVC® pipe.
Corrosion Protection – Corrosion Protection is positioned to capture the benefits of continued oil and natural gas pipeline infrastructure developments across North America and internationally, as producers and midstream pipeline companies transport their product from onshore and offshore oil and gas fields to regional demand centers. The segment has a broad portfolio of technologies, products and services to protect, maintain, rehabilitate, assess and monitor pipelines from the effects of corrosion, including cathodic protection, interior pipe linings, interior and exterior pipe coatings and inspection and repair capabilities, as well as an increasing offering of data management capabilities related to these services. We provide solutions to customers to enhance the safety, environmental integrity, reliability and compliance of their pipelines in the global transmission and distribution network, especially in the oil and gas markets.
Energy Services – We offer a unique value proposition based on our world-class safety and labor productivity programs, which allow us to provide cost-effective construction, maintenance, turnaround and specialty services at customers’ refineries as well as chemical and other industrial facilities. We understand the demands and the level of critical planning required to ensure a successful turnaround or shutdown and offer a full range of services as part of our facility maintenance solutions, while maintaining a reputation for being safe, professional and providing predictable value.
In 2019, we began reporting Corporate expenses separately rather than allocating those costs to the operating segments. The reported information for the quarter and six months ended June 30, 2018 has been revised to conform to the current period presentation.
Our Long-Term Strategy
We are committed to being a valued partner to our customers, with a constant focus on expanding those relationships by solving complex infrastructure problems, enhancing our capabilities and improving execution while also developing or acquiring innovative technologies and comprehensive services. We are pursuing three key strategic initiatives:
Municipal Pipeline Rehabilitation – The fundamental driver in the global municipal pipeline rehabilitation market is the growing gap between the need and current spend. While we do not expect the spending gap to close any time soon, the increasing need for pipeline rehabilitation supports a long-term sustainable market for the technologies and services offered by our Infrastructure Solutions segment. We are committed to maintaining our market leadership position in the rehabilitation of wastewater pipelines in North America using our CIPP technology, the largest contributor to Aegion’s consolidated revenues. We have a diverse portfolio of trenchless technologies to rehabilitate aging and damaged municipal pipelines. The focus today is growing our presence in the rehabilitation of pressure pipelines through both internal development and acquisitions. Our pressure pipe portfolio includes Fusible PVC®, InsituMain® CIPP, Tyfo® fiber-reinforce polymer (“FRP”) and Tite Liner® high-density polyethylene (“HDPE”) systems. As part of our pressure pipe strategy, we have continued to invest in the development of a mechanical services reinstatement for pressure pipe lateral connections. We believe this new technology will allow Aegion to become a leading provider in the North American pressure pipe rehabilitation market, with the offering being ready for commercialization during the second half of 2019. Our international strategy is to use a blend of third-party product sales as well as FRP contract installation operations in select markets. A key to the success of this strategy is a continuing focus on improving productivity to reduce costs and increase efficiencies across the entire value chain from engineering, manufacturing and installation of our technology-based solutions.
Pipeline Integrity and Corrosion Management – There are over one million miles of regulated pipelines in North America, which remain the safest and most cost-effective mode of oil and gas transmission. Within our Corrosion Protection segment, the design and installation of cathodic protection systems to help prevent pipeline corrosion have historically represented a large portion of the revenues and profits for the segment. We also provide inspection services to monitor these systems and detect early signs of corrosion. In 2017, we launched a new asset integrity management program designed to increase the efficiency and accuracy of the pipeline corrosion assessment data we collect as well as upgrade how we share this valuable information with customers. Through this program, we seek to improve customer regulatory compliance and add new services in the areas of data gathering and validation, advanced analytics and predictive maintenance.
Downstream Oil Refining and Industrial Facility Maintenance – We have long-term relationships with oil refinery and industrial customers on the United States West Coast through our Energy Services segment. Our objective is to leverage those relationships to expand the services we provide in mechanical maintenance, electrical and instrumentation services, small capital construction, shutdown and turnaround maintenance activity and specialty services. We also continue to promote our safety and scaffolding services. There are opportunities in other industries on the West Coast such as oil and oil product terminals, chemicals, industrial gas and power to leverage our experience in maintenance and construction services. In addition, we are looking to expand our turnaround and specialty services beyond the West Coast.
Business Outlook
We believe a positive commercial outlook and the progress made over the last several years to simplify and position the Company in markets with favorable scale and earnings profiles will lead to modest earnings growth in 2019, despite a projected decline in consolidated revenues due to the lack of large project contributions during the year. Longer term, we believe our core businesses can generate annual revenue growth in the low to mid-single digit range, which should result in double-digit annual earnings per share growth.
Infrastructure Solutions
One of the most attractive areas for growth is in the rehabilitation of municipal wastewater and pressure pipelines, primarily in North America. We offer a diverse portfolio of solutions in a highly fragmented and growing market. We made investments in 2018 to expand the use of Insituform® CIPP in several regions currently underserved by Insituform in the North American wastewater pipeline market. Outside North America, we also have an attractive market in Asia-Pacific for large-diameter pressure pipe strengthening, and we are continuing to pursue a strategy of growing third-party product sales around the globe. Our objective is to maintain growth and our share in a large and mature market through a continued focus on productivity and offering customer-driven solutions through technological differentiation.
Over the last few years, we completed a research and development effort that significantly reduced material and installation costs for the Tyfo® system while maintaining the superior material properties and quality of the technology. We also improved our InsituMain® CIPP technology to give customers a more robust solution. In 2019, we are focused on two key technology initiatives to serve the pressure pipe and wastewater rehabilitation business. We are in final development and field testing for a robotic system to mechanically and effectively seal the service connection between a CIPP pressurized water main line to residential lines into homes. Success with this development initiative could address a weak point in current commercially available small-diameter pressure pipe rehabilitation systems today. We also recently introduced the application of ultraviolet light technology to cure felt CIPP tubes, which has the potential to reduce the environmental and equipment footprint that is currently required for the curing process. Any new technology takes time to penetrate the market, but we believe both initiatives represent long-term growth levers for the segment.
Corrosion Protection
Over 50 percent of Corrosion Protection’s revenues come from cathodic protection services for midstream oil and gas pipelines in North America, an attractive and growing market that we believe justifies further investment to outpace market growth. To that end, we continue to promote our new asset integrity management program for pipeline corrosion assessments. This new service improves data accuracy and processing efficiency, customizes the data transfer format (including geospatial mapping) and provides faster access to the information by customers. Corrosion Protection’s pipeline assessment services are expected to create a multiplier effect for our other capabilities in direct pipeline assessments, engineering, cathodic protection system installation and pipeline corrosion remediation. Our objective is to expand the relationships with our top customers, who are the leading pipeline owners in North America, to accelerate revenue growth.
With oil prices trading in a more stable range, we have seen improved demand for our Tite Liner® lining pipeline protection system and our field pipe coatings applications, both in our North America market as well as overseas. We are focused on capturing additional opportunities in the Middle East, where we see a robust sales funnel over the next several years as national energy companies look to increase production through multiple major onshore and offshore gas and oil field development and expansion projects.
Energy Services
We expect Energy Services to continue to build on the momentum achieved in 2018 and the first half of 2019. The outlook for day-to-day downstream refinery maintenance remains robust based on long-term contracts and our position as the lead outsourced provider of maintenance services at refineries on the United States West Coast. We have an effort underway to expand our services to those customers in mechanical maintenance, turnaround service, electrical and instrumentation maintenance, scaffolding services and small capital construction activities.
Strategic Initiatives/Divestiture
2017 Restructuring
On July 28, 2017, our board of directors approved the 2017 Restructuring. As part of the 2017 Restructuring, we announced plans to: (i) divest our 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® 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, our 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) our cathodic protection installation activities in the Middle East, including Corrpower International Limited, our cathodic protection materials manufacturing and production joint venture in Saudi Arabia; (b) United Pipeline de Mexico S.A. de C.V., our Tite Liner® joint venture in Mexico; (c) our Tite Liner® businesses in Brazil and Argentina; (d) Aegion South Africa Proprietary Limited, our Tite Liner® and CIPP joint venture in the Republic of South Africa; and (e) our CIPP contract installation operations in England.
We divested our Bayou and Denmark CIPP businesses in 2018. Discussions are underway with a prospective buyer for the sale of the Australia CIPP business and we believe that it is probable that a sale will occur in the second half of 2019. During the first quarter of 2019, we also initiated plans to sell our cathodic protection joint venture in Saudi Arabia, Corrpower International Limited (“Corrpower”), and our Tite Liner® and CIPP joint venture in South Africa, Aegion South Africa Proprietary Limited (“Aegion South Africa”). During the second quarter of 2019, we initiated plans to exit additional international businesses, including our remaining CIPP contracting businesses in Europe: Insituform Rioolrenovatietechnicken B.V. (“Insituform Netherlands”); Insituform Technologies Iberica SA (“Insituform Spain”); and Environmental Techniques Limited (“Environmental Techniques”). Planned divestitures and exits of all international businesses are expected to be substantially complete by December 31, 2019.
Total pre-tax 2017 Restructuring charges recorded during the first six months of 2019 were $9.4 million ($10.0 million post-tax) and consisted of employee severance, retention, extension of benefits, employment assistance programs, early 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 $149.0 million ($135.9 million post-tax), including cash charges of $34.3 million and non-cash charges of $114.7 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.
We expect to incur additional cash charges of less than $5 million related to the 2017 Restructuring. We could also incur additional non-cash charges primarily associated with the release of cumulative currency translation adjustments and losses on the closure or liquidation of international entities. 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 and Corporate to a lesser extent. We expect to reduce headcount by an additional 30 employees as a result of these further actions.
See Note 4 to the consolidated financial statements contained in this Report for a detailed discussion regarding our restructuring efforts.
Divestitures – Planned and Completed
Through our restructuring efforts to exit higher risk, low return markets and streamline our operations, we have divested, or planned to divest, certain businesses in our Infrastructure Solutions and Corrosion Protection segments during 2019 and 2018:
i. |
During the first quarter of 2019, we entered into discussions with prospective buyers regarding the sale of our interests in Corrpower and Aegion South Africa. During the second quarter of 2019, we initiated plans to sell our interests in United Mexico, Insituform Netherlands, Insituform Spain and Environmental Techniques. We currently believe it is probable that sales will occur in the second half of 2019. |
ii. |
During the third quarter of 2018, we sold substantially all of the fixed assets and inventory from our CIPP operations in Denmark. In connection with the sale, we entered into a five-year exclusive tube-supply agreement whereby the buyers will exclusively purchase our Insituform® CIPP liners. The buyers will also be entitled to use the Insituform® trade name based on a trademark license granted for the same five-year time period. |
iii. |
During the third quarter of 2018, we sold substantially all of the assets of Bayou and our ownership interest in Bayou Wasco Insulation LLC, which collectively had been held for sale as part of the 2017 Restructuring and reflected our desire to reduce further our exposure in the North American upstream oil and gas markets. |
iv. |
During the second quarter of 2018, our board of directors approved plans to divest the assets and liabilities of our CIPP operations in Australia (“Insituform Australia”). During the second quarter of 2019, we ended our negotiations with a potential third-party acquirer and began discussions with another third party. Because of these new negotiations, we believe that it is probable that we will close a transaction in the second half of 2019. |
See Notes 1 and 5 to the consolidated financial statements contained in this Report for additional information.
Results of Operations – Quarters and Six-Month Periods Ended June 30, 2019 and 2018
Significant Events
2017 Restructuring – As part of the 2017 Restructuring, we recorded pre-tax charges of $9.4 million ($10.0 million post-tax) and $8.2 million ($7.1 million post-tax) during the first six months of 2019 and 2018, respectively. Restructuring charges primarily impacted the Infrastructure Solutions and Corrosion Protection reportable segments. See Note 4 to the consolidated financial statements contained in this Report.
Impairment of Assets Held for Sale – During the second quarter of 2019, we recorded a loss on assets held for sale of $11.9 million based on our current expectation of fair value less cost to sell. Charges impacted the Infrastructure Solutions and Corrosion Protection reportable segments.
Acquisition and Divestiture Expenses – We recorded pre-tax expenses of $0.9 million ($0.8 million post-tax) and $1.2 million ($0.9 million post-tax) during the first six months of 2019 and 2018, respectively, related primarily to the planned divestitures of Insituform Australia, Insituform Netherlands, Insituform Spain, Environmental Techniques, Corrpower, Aegion South Africa and United Mexico in 2019 and the Bayou divestiture and Hebna acquisition in 2018. Expenses primarily impacted the Infrastructure Solutions and Corrosion Protection reportable segments.
Warranty Reserve – In the first quarter of 2019, we recorded a pre-tax estimated project warranty reserve of $4.4 million ($3.3 million post-tax) related to a CIPP wastewater project in our North American operation of Infrastructure Solutions. The project was originally awarded in 2016 and construction was substantially completed during 2017. Recent inspections of the installed liners revealed structural failures due to extreme environmental conditions at the time of the installation. Replacement work is being performed during 2019 to remediate the warranty issues.
Consolidated Operating Results
Key financial data for consolidated operations was as follows:
(dollars in thousands) |
Quarters Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
$ | % |
|||||||||||||
Revenues |
$ | 318,740 | $ | 335,030 | $ | (16,290 | ) | (4.9 | )% | |||||||
Gross profit |
67,437 | 71,053 | (3,616 | ) | (5.1 | )% | ||||||||||
Gross profit margin |
21.2 | % | 21.2 | % | N/A | —bp |
||||||||||
Operating expenses |
51,254 | 54,222 | (2,968 | ) | (5.5 | )% | ||||||||||
Impairment of assets held for sale |
11,946 | — | 11,946 | N/M |
||||||||||||
Acquisition and divestiture expenses |
804 | 832 | (28 | ) | (3.4 | )% | ||||||||||
Restructuring and related charges |
2,974 | 1,540 | 1,434 | 93.1 | % | |||||||||||
Operating income |
459 | 14,459 | (14,000 | ) | (96.8 | )% | ||||||||||
Operating margin |
0.1 | % | 4.3 | % | N/A | (420)bp |
||||||||||
Net income (loss) attributable to Aegion Corporation |
(8,366 | ) | 7,921 | (16,287 | ) | (205.6 | )% |
(dollars in thousands) |
Six Months Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
$ | % |
|||||||||||||
Revenues |
$ | 595,644 | $ | 659,891 | $ | (64,247 | ) | (9.7 | )% | |||||||
Gross profit |
115,732 | 132,557 | (16,825 | ) | (12.7 | )% | ||||||||||
Gross profit margin |
19.4 | % | 20.1 | % | N/A | (70)bp |
||||||||||
Operating expenses |
99,124 | 110,364 | (11,240 | ) | (10.2 | )% | ||||||||||
Impairment of assets held for sale |
11,946 | — | 11,946 | N/M |
||||||||||||
Acquisition and divestiture expenses |
917 | 1,224 | (307 | ) | (25.1 | )% | ||||||||||
Restructuring and related charges |
4,060 | 3,329 | 731 | 22.0 | % | |||||||||||
Operating income (loss) |
(315 | ) | 17,640 | (17,955 | ) | (101.8 | )% | |||||||||
Operating margin |
(0.1 | )% | 2.7 | % | N/A | (280)bp |
||||||||||
Net income (loss) attributable to Aegion Corporation |
(12,367 | ) | 5,852 | (18,219 | ) | (311.3 | )% |
“N/A” represents not applicable.
“N/M” represents not meaningful.
Revenues
Revenues decreased $16.3 million, or 4.9%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease in revenues was due to an $18.8 million decrease in Corrosion Protection primarily from the sale of our pipe coating and insulation operation in 2018 and lower revenues in our Middle East coating services operation, and a $5.3 million decrease in Infrastructure Solutions primarily due to decreased international revenues from our CIPP contracting installation services operations as we exit or divest non-core operations as part of the 2017 Restructuring. Partially offsetting these decreases was a $7.8 million increase in Energy Services due to an increase in maintenance services activities.
Revenues decreased $64.2 million, or 9.7%, in the first six months of 2019 compared to the first six months of 2018. The decrease in revenues was primarily due to a $52.4 million decrease in Corrosion Protection, driven by the sale of our pipe coating and insulation operation in 2018 and lower revenues in our Middle East coating services operation, an $8.2 million decrease in Infrastructure Solutions from decreased international revenues from our CIPP contracting installation services operations as discussed above, and a $3.7 million decrease in Energy Services mainly due to a decrease in turnaround and construction services activities.
Gross Profit and Gross Profit Margin
Gross profit decreased $3.6 million, or 5.1%, in the second quarter of 2019 compared to the second quarter of 2018. As part of our restructuring efforts, we recognized charges of $0.4 million in the second quarter of 2019. Excluding restructuring charges, gross profit decreased $3.2 million, or 4.5%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease in gross profit was due to a $7.8 million decrease in Corrosion Protection primarily from lost gross profit related to our divested pipe coating and insulation operation and lower gross margins associated with our Middle East coating services operation as larger projects were completed in the prior year. Partially offsetting this decrease was: (i) a $2.9 million increase in Infrastructure Solutions primarily due to improved productivity related to CIPP contracting installation services activity in our North American operation and loss avoidance from the divestiture of the Denmark CIPP operation in 2018; and (ii) a $1.3 million increase in Energy Services mainly due to higher revenues associated with maintenance service activities and an improved mix of higher margin services.
Gross profit margin remained consistent at 21.2% in the second quarters of 2019 and 2018, but for offsetting factors. Infrastructure Solutions gross profit margin improved 260 basis points due to productivity improvements in North American CIPP contracting activity and loss avoidance from Denmark noted above. Offsetting this improvement was a 400 basis point decrease in gross profit margin in Corrosion Protection primarily from lower gross margins associated with our Middle East coating services operation.
Gross profit decreased $16.8 million, or 12.7%, and gross profit margin declined 70 basis points in the first six months of 2019 compared to the first six months of 2018. During the first six-months of 2019, we recorded a $4.4 million charge for estimated project warranty costs in Infrastructure Solutions and $0.5 million of restructuring charges. Excluding warranty costs and restructuring charges, gross profit decreased $11.9 million, or 9.0%, but gross profit margin improved 20 basis points in the first half of 2019 compared to the same period in the prior year. The decrease in gross profit was due to: (i) an $18.0 million decrease in Corrosion Protection driven by decreased gross profit from our divested pipe coating and insulation operation and lower gross profit from our Middle East coating services operation; and (ii) a $1.1 million decrease in Energy Services primarily from a lower mix of higher-margin turnaround projects and lower revenues from decreased construction activities. Offsetting the decreases was a $7.1 million increase in Infrastructure Solutions primarily due to greater execution efficiencies related to CIPP contracting installation services activity in our North American operation and loss avoidance due to the divestiture of Denmark in 2018. Gross profit margin increased primarily due to the improvements noted in Infrastructure Solutions.
Operating Expenses
Operating expenses decreased $3.0 million, or 5.5%, in the second quarter of 2019 compared to the second quarter of 2018. As part of our restructuring efforts, we recognized charges of $2.2 million and $1.4 million in the second quarters of 2019 and 2018, respectively. Excluding restructuring charges, operating expenses decreased $3.8 million, or 7.2%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease in operating expenses was due to: (i) a $2.4 million decrease in Corrosion Protection primarily due to our divested pipe coating and insulation operation and cost savings achieved in connection with our 2017 Restructuring actions; and (ii) a $1.4 million decrease in Infrastructure Solutions primarily from exiting CIPP contracting installation services in certain international locations in Europe and Asia, and achieved cost savings in North America in connection with our 2017 Restructuring actions.
Operating expenses as a percentage of revenues were 16.1% in the second quarter of 2019 compared to 16.2% in the second quarter of 2018. Excluding restructuring charges, operating expenses as a percentage of revenues were 15.4% in the second quarter of 2019 compared to 15.8% in the second quarter of 2018.
Operating expenses decreased $11.2 million, or 10.2%, in the first six months of 2019 compared to the first six months of 2018. As part of our restructuring efforts, we recognized charges of $3.7 million and $4.8 million in the first six months of 2019 and 2018, respectively. Excluding restructuring charges, operating expenses decreased $10.1 million, or 9.6%, in the first six months of 2019 compared to the same period in the prior year. The decrease in operating expenses was mainly due to the same factors impacting the changes in operating expenses in the second quarter of 2019 compared to the second quarter of 2018. Additionally, Corporate expenses were reduced by $1.5 million from decreased spending and other cost reduction initiatives and lower medical and prescription drug expenses as a result of improved claims history and changes to the structure of our medical plan to reduce costs.
Operating expenses as a percentage of revenues were 16.6% in the first six months of 2019 compared to 16.7% in the first six months of 2018. Excluding restructuring charges, operating expenses as a percentage of revenues were 16.0% in both periods.
Consolidated Net Income (Loss)
Consolidated net loss was $8.4 million in the second quarter of 2019 compared to income of $7.9 million in the second quarter of 2018.
Included in consolidated net income (loss) were the following pre-tax items: (i) restructuring charges of $6.5 million and $2.9 million in the second quarters of 2019 and 2018, respectively, related to employee severance, retention, extension of benefits, employee assistance programs, wind-down and other related restructuring costs; (ii) acquisition and divestiture expenses of $0.8 million in each of the second quarters of 2019 and 2018; (iii) impairment charges of $11.9 million related to assets held for sale in the second quarter of 2019; and (iv) a $2.1 million charge in the second quarter of 2019 for foreign withholding taxes on the repatriation of foreign earnings.
Excluding the after-tax effect of the above items, consolidated net income was $11.7 million in the second quarter of 2019, an increase of $0.6 million, or 5.3%, from $11.1 million in the second quarter of 2018. The increase was primarily due to: (i) increased contributions from Infrastructure Solutions related to higher profitability from our North American CIPP operation and loss avoidance from the Denmark sale in 2018; and (ii) increased maintenance service activities and an improved mix of higher margin services at Energy Services. Partially offsetting the increase in consolidated net income was lower operating income in Corrosion Protection due to the divestiture of our pipe coating and insulation operation and lower contributions from the high-margin, large projects in our Middle East coating services operation. Consolidated net income in the second quarter of 2019, as compared to the second quarter of 2018, was also positively impacted by lower interest expense and fewer charges related to foreign currency transaction losses.
Consolidated net loss was $12.4 million in the first six months of 2019, a decrease of $18.2 million from income of $5.9 million in the first six months of 2018.
Included in consolidated net income (loss) were the following pre-tax items; (i) restructuring charges of $9.4 million and $8.2 million in the first six months of 2019 and 2018, respectively, related to employee severance, retention, extension of benefits, employee assistance programs, wind-down and other related restructuring costs; (ii) acquisition and divestiture expenses of $0.9 million and $1.2 million in the first six months of 2019 and 2018, respectively; (iii) warranty reserve charges of $4.4 million related to a CIPP wastewater project in our North American operation of Infrastructure Solutions in the first six months of 2019; (iv) impairment charges of $11.9 million related to assets held for sale in the first six months of 2019 and (v) a $2.1 million charge in the first six months of 2019 for foreign withholding taxes on the repatriation of foreign earnings.
Excluding the after-tax effect of the above items, consolidated net income was $13.6 million for the six months ended June 30, 2019, a decrease of $1.6 million, or 10.6%, from $15.3 million during the first six months of 2018. This decrease was due to lower operating income in Corrosion Protection, as noted above, and a decrease in Energy Services due to decreased turnaround and construction services as compared to record activities achieved in the prior year. Partially offsetting these decreases was an increase in operating income related to Infrastructure Solutions, as noted above, and decreased spending at Corporate. Consolidated net loss in the first six months of 2019, as compared to the first six months of 2018, was also negatively impacted by higher non-controlling interest income and a higher tax rate due to the minimal benefit received from restructuring and impairment charges recorded during the first half of 2019 combined with certain discrete tax benefits recorded during the first half of 2018.
Contract Backlog
Contract backlog is our expectation of revenues to be generated from received, signed and uncompleted contracts, the cancellation of which is not anticipated at the time of reporting. We assume that these signed contracts are funded. For government or municipal contracts, our customers generally obtain funding through local budgets or pre-approved bond financing. We have not undertaken a process to verify funding status of these contracts and, therefore, cannot reasonably estimate what portion, if any, of our contracts in backlog have not been funded. However, we have little history of signed contracts being canceled due to the lack of funding. Contract backlog excludes any term contract amounts for which there are not specific and determinable work releases or values beyond a renewal date in the forward 12-month period. Projects whereby we have been advised that we are the low bidder, but have not formally been awarded the contract, are not included. Although backlog represents only those contracts and Master Service Agreements (“MSAs”) that are considered to be firm, there can be no assurance that cancellation or scope adjustments will not occur with respect to such contracts.
The following table sets forth our consolidated backlog by segment (in millions):
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
June 30, 2018 |
|||||||||||||
Infrastructure Solutions (1) |
$ | 310.0 | $ | 305.2 | $ | 323.3 | $ | 376.3 | ||||||||
Corrosion Protection (2) |
141.4 | 130.7 | 127.9 | 161.3 | ||||||||||||
Energy Services |
218.5 | 218.4 | 218.2 | 199.9 | ||||||||||||
Total backlog (3) |
$ | 669.9 | $ | 654.3 | $ | 669.4 | $ | 737.5 |
(1) |
Included backlog from exited or to-be exited operations of $19.0 million, $31.6 million, $32.3 million and $32.6 million at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018, respectively. |
(2) |
Included backlog from exited or to-be exited operations of $7.1 million, $8.0 million, $11.6 million and $29.1 million at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018, respectively. |
(3) |
Total backlog for June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018 included backlog from exited or to-be exited operations of $26.1 million, $39.6 million, $43.9 million and $61.7 million, respectively. |
Included within backlog for Energy Services are amounts that represent expected revenues to be realized under long-term MSAs 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. Although backlog represents only those contracts and MSAs that are considered to be firm, there can be no assurance that cancellation or scope adjustments will not occur with respect to such contracts.
Within our Infrastructure Solutions and Corrosion Protection segments, certain contracts are performed through our variable interest entities, in which we own a controlling portion of the entity. As of June 30, 2019, 0.1% and 16.1% of our Infrastructure Solutions backlog and Corrosion Protection backlog, respectively, related to these variable interest entities. A substantial majority of our contracts in these two segments are fixed price contracts with individual private businesses and municipal and federal government entities across the world. Energy Services generally enters into cost reimbursable contracts that are based on costs incurred at agreed upon contractual rates.
Consolidated customer orders, net of cancellations (“New orders”), decreased $25.0 million, or 7.1%, to $327.2 million in the second quarter of 2019 compared to $352.2 million in the second quarter of 2018. New orders decreased $113.0 million, or 16.0%, to $592.0 million in the six months ended June 30, 2019 compared to $705.0 million in the six months ended June 30, 2018.
Infrastructure Solutions Segment
Key financial data for Infrastructure Solutions was as follows:
(dollars in thousands) |
Quarters Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
$ | % |
|||||||||||||
Revenues |
$ | 155,439 | $ | 160,732 | $ | (5,293 | ) | (3.3 | )% | |||||||
Gross profit |
38,871 | 35,949 | 2,922 | 8.1 | % | |||||||||||
Gross profit margin |
25.0 | % | 22.4 | % | N/A | 260bp |
||||||||||
Operating expenses |
19,869 | 21,472 | (1,603 | ) | (7.5 | )% | ||||||||||
Impairment of assets held for sale | 8,996 | — | 8,996 | N/M | ||||||||||||
Acquisition and divestiture expenses |
427 | 217 | 210 | 96.8 | % | |||||||||||
Restructuring and related charges |
459 | 1,344 | (885 | ) | (65.8 | )% | ||||||||||
Operating income |
9,120 | 12,916 | (3,796 | ) | (29.4 | )% | ||||||||||
Operating margin |
5.9 | % | 8.0 | % | N/A | (210)bp |
(dollars in thousands) |
Six Months Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
$ | % |
|||||||||||||
Revenues |
$ | 286,982 | $ | 295,159 | $ | (8,177 | ) | (2.8 | )% | |||||||
Gross profit |
65,457 | 62,658 | 2,799 | 4.5 | % | |||||||||||
Gross profit margin |
22.8 | % | 21.2 | % | N/A | 160bp |
||||||||||
Operating expenses |
39,908 | 43,573 | (3,665 | ) | (8.4 | )% | ||||||||||
Impairment of assets held for sale | 8,996 | — | 8,996 | N/M | ||||||||||||
Acquisition and divestiture expenses |
501 | 240 | 261 | 108.8 | % | |||||||||||
Restructuring and related charges |
1,217 | 2,692 | (1,475 | ) | (54.8 | )% | ||||||||||
Operating income |
14,835 | 16,153 | (1,318 | ) | (8.2 | )% | ||||||||||
Operating margin |
5.2 | % | 5.5 | % | N/A | (30)bp |
“N/A” represents not applicable.
“N/M” represents not meaningful.
Revenues
Revenues decreased $5.3 million, or 3.3%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease in revenues was primarily due to: (i) decreased international revenues from our CIPP contracting installation services operations as we exit or divest non-core operations as part of the 2017 Restructuring; and (ii) decreased CIPP contracting installation services activity due to the impact of heavy rains and flooding in the second quarter of 2019. Additionally, Fusible PVC® project activity in our North American operation decreased during the second quarter of 2019 following a strong comparable period in the prior year.
Revenues decreased $8.2 million, or 2.8%, in the first six months of 2019 compared to the first six months of 2018. The decrease in revenues was primarily due to: (i) decreased international revenues from our CIPP contracting installation services operations as discussed above; and (ii) decreased Fusible PVC® project activity in our North American operation. Partially offsetting the decrease in revenues was an increase in FRP project activity in our North American operation and CIPP contracting installation services activity in North America as a result of improved crew productivity following labor, equipment and productivity challenges in the first half of 2018.
Gross Profit and Gross Profit Margin
Gross profit increased $2.9 million, or 8.1%, in the second quarter of 2019 compared to the second quarter of 2018. The increase in gross profit was primarily due to: (i) greater execution efficiencies related to CIPP contracting installation services activity in our North American operation; and (ii) loss avoidance due to the divestiture of Denmark in 2018. Partially offsetting the increases were decreased contributions from our exited international CIPP contracting installation services operations. Gross profit margin improved 260 basis points in the second quarter of 2019 compared to the second quarter of 2018 mainly due to the same factors that improved gross profit above.
Gross profit increased $2.8 million, or 4.5%, and gross profit margin improved 160 basis points in the first six months of 2019 compared to the first six months of 2018. During the first half of 2019, we recorded a $4.4 million charge for estimated project warranty costs related to one CIPP contracting installation project in our North American operation. Excluding this charge, gross profit increased $7.2 million, or 11.5%, in the first six months of 2019 compared to the first six months of 2018. The increases in gross profit and gross profit margin were primarily due to the same factors impacting the changes in gross profit in the second quarter of 2019 compared to the second quarter of 2018.
Operating Expenses
Operating expenses decreased $1.6 million, or 7.5%, in the second quarter of 2019 compared to the second quarter of 2018. As part of our restructuring efforts, we recognized charges of $1.0 million and $1.2 million in the second quarters of 2019 and 2018, respectively. Excluding restructuring charges, operating expenses decreased $1.4 million, or 6.9%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease in operating expenses was primarily due to exiting CIPP contracting installation services in certain international locations in Europe and Asia, and achieved cost savings in North America in connection with our 2017 Restructuring actions.
Operating expenses as a percentage of revenues were 12.8% in the second quarter of 2019 compared to 13.4% in the second quarter of 2018. Excluding restructuring charges, operating expenses as a percentage of revenues were 12.2% in the second quarter of 2019 compared to 12.6% in the second quarter of 2018.
Operating expenses decreased $3.7 million, or 8.4%, in the first six months of 2019 compared to the first six months of 2018. As part of our restructuring efforts, we recognized charges of $2.3 million and $3.1 million in the first six months of 2019 and 2018, respectively. Excluding restructuring charges, operating expenses decreased $2.9 million, or 7.2%, in the first six months of 2019 compared to the first six months of 2018. The decrease in operating expenses was primarily due to the same factors impacting the changes in operating expenses in the second quarter of 2019 compared to the second quarter of 2018.
Operating expenses as a percentage of revenues were 13.9% for the first six months of 2019 compared to 14.8% in the first six months of 2018. Excluding restructuring charges, operating expenses as a percentage of revenues were 13.1% in the first six months of 2019 compared to 13.7% in the first six months of 2018.
Operating Income and Operating Margin
Operating income decreased $3.8 million, or 29.4%, to $9.1 million in the second quarter of 2019 compared to $12.9 million in the second quarter of 2018. Operating margin declined to 5.9% in the second quarter of 2019 compared to 8.0% in the second quarter of 2018.
Included in operating income are the following items: (i) restructuring charges of $1.4 million and $2.5 million in the second quarters of 2019 and 2018, respectively, related to employee severance, retention, extension of benefits, employee assistance programs, wind-down and other related restructuring costs; (ii) acquisition and divestiture related expenses of $0.4 million and $0.2 million in the second quarters of 2019 and 2018, respectively; and (iii) impairment charges of $9.0 million in the second quarter of 2019 related to assets held for sale.
Excluding the above items, operating income increased $4.2 million, or 26.9%, to $19.8 million in the second quarter of 2019 compared to $15.6 million in the second quarter of 2018, and operating margin improved 310 basis points to 12.8% in the second quarter of 2019 compared to 9.7% in the second quarter of 2018. Operating income increased primarily due to: (i) improved profitability from our North American CIPP operation due to crew productivity improvement; (ii) loss avoidance from the divestiture of Denmark in 2018; and (iii) achieved cost savings from our 2017 Restructuring actions.
Operating income decreased $1.3 million, or 8.2%, to $14.8 million in the first six months of 2019 compared to $16.2 million in the first six months of 2018. Operating margin decreased 30 basis points to 5.2% in the first six months of 2019 compared to 5.5% in the first six months of 2018.
Included in operating income are the following items: (i) restructuring charges of $3.4 million and $5.7 million in the first six months of 2019 and 2018, respectively; (ii) acquisition and divestiture related expenses of $0.5 million and $0.2 million in the first six months of 2019 and 2018, respectively; (iii) a $4.4 million charge in the first six months of 2019 for estimated project warranty costs related to one CIPP contracting installation project in our North American operation; and (iv) impairment charges of $9.0 million in the first six months of 2019 related to assets held for sale.
Excluding the above items, operating income increased $10.0 million, or 45.5%, to $32.2 million in the first six months of 2019 compared to $22.1 million in the first six months of 2018. Operating margin increased 370 basis points to 11.2% for the six months ended June 30, 2019 compared to 7.5% for the six months ended June 30, 2018. The increase in operating income was primarily due to the same factors impacting the improvement in operating income in the second quarter of 2019 compared to the second quarter of 2018.
Corrosion Protection Segment
Key financial data for Corrosion Protection was as follows:
(dollars in thousands) |
Quarters Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
$ | % |
|||||||||||||
Revenues |
$ | 77,597 | $ | 96,389 | $ | (18,792 | ) | (19.5 | )% | |||||||
Gross profit |
16,692 | 24,537 | (7,845 | ) | (32.0 | )% | ||||||||||
Gross profit margin |
21.5 | % | 25.5 | % | N/A | (400)bp |
||||||||||
Operating expenses |
15,077 | 17,254 | (2,177 | ) | (12.6 | )% | ||||||||||
Impairment of assets held for sale | 2,950 | — | 2,950 | N/M | ||||||||||||
Acquisition and divestiture expenses |
19 | 134 | (115 | ) | (85.8 | )% | ||||||||||
Restructuring and related charges |
2,509 | 196 | 2,313 | 1180.1 | % | |||||||||||
Operating income (loss) |
(3,863 | ) | 6,953 | (10,816 | ) | (155.6 | )% | |||||||||
Operating margin |
(5.0 | )% | 7.2 | % | N/A | (1220)bp |
(dollars in thousands) |
Six Months Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
$ | % |
|||||||||||||
Revenues |
$ | 142,095 | $ | 194,494 | $ | (52,399 | ) | (26.9 | )% | |||||||
Gross profit |
29,565 | 48,113 | (18,548 | ) | (38.6 | )% | ||||||||||
Gross profit margin |
20.8 | % | 24.7 | % | N/A | (390)bp |
||||||||||
Operating expenses |
29,484 | 35,715 | (6,231 | ) | (17.4 | )% | ||||||||||
Impairment of assets held for sale | 2,950 | — | 2,950 | N/M | ||||||||||||
Acquisition and divestiture expenses |
58 | 166 | (108 | ) | (65.1 | )% | ||||||||||
Restructuring and related charges |
2,696 | 317 | 2,379 | 750.5 | % | |||||||||||
Operating income (loss) |
(5,623 | ) | 11,915 | (17,538 | ) | (147.2 | )% | |||||||||
Operating margin |
(4.0 | )% | 6.1 | % | N/A | (1010)bp |
“N/A” represents not applicable.
“N/M” represents not meaningful.
Revenues
Revenues decreased $18.8 million, or 19.5%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease was primarily due to: (i) a $6.2 million decrease in revenues related to our pipe coating and insulation operation, which was divested in the third quarter of 2018; (ii) decreased revenue from our coating services operation, which benefited in the second quarter of 2018 from large project activity in the Middle East; (iii) decreased project activities in our North American cathodic protection operations, primarily in Canada; and (iv) decreased international revenues from our cathodic protection operations as we exit or divest non-core operations as part of the 2017 Restructuring. Offsetting the decreases was an increase in revenues from our industrial linings operations, primarily related to increased activities in the U.S. and Middle East.
Revenues decreased $52.4 million, or 26.9%, in the first six months of 2019 compared to the first six months of 2018. The decrease was primarily due to the same factors impacting the changes in the second quarter of 2019 compared to the second quarter of 2018. The decrease in revenues related to our divested pipe coating and insulation operation was $17.8 million.
Gross Profit and Gross Profit Margin
Gross profit decreased $7.8 million, or 32.0%, and gross profit margin declined 400 basis points in the second quarter of 2019 compared to the second quarter of 2018. As part of our restructuring efforts, we recognized charges of $0.4 million in the second quarter of 2019. Excluding restructuring charges, gross profit decreased $7.4 million, or 30.1%, in the second quarter of 2019 compared to the second quarter of 2018 primarily due to: (i) a $1.6 million decrease in gross profit related to our divested pipe coating and insulation operation; and (ii) lower revenues and gross margins associated with our coating services operation, most notably in the Middle East, as larger projects contributing to the prior year results were completed.
Gross profit decreased $18.5 million, or 38.6%, and gross profit margin declined 390 basis points in the first six months of 2019 compared to the first six months of 2018. As part of our restructuring efforts, we recognized charges of $0.5 million in the first six months of 2019. Excluding restructuring charges, gross profit decreased $18.0 million, or 37.4%, in the first six months of 2019 compared to the same period in 2018 primarily due to: (i) a $4.7 million decrease in gross profit related to our divested pipe coating and insulation operation; (ii) lower revenues and gross margins associated with our coating services operation, as noted above; and (iii) decreased gross profit from certain international industrial linings and cathodic protection operations as we exit or divest non-core operations as part of the 2017 Restructuring. Gross profit and gross profit margin were also negatively impacted by our North American cathodic protection operations, which experienced lower revenues and project delays, but were largely offset by increased revenues and strong operational performance from the U.S. and Middle East industrial linings operations as noted above.
Operating Expenses
Operating expenses decreased $2.2 million, or 12.6%, in the second quarter of 2019 compared to the second quarter of 2018. As part of our restructuring efforts, we recognized charges of $0.3 million and $0.1 million in the second quarters of 2019 and 2018, respectively. Excluding restructuring charges, operating expenses decreased $2.4 million, or 13.8%, in the second quarter of 2019 compared to the second quarter of 2018. Operating expenses decreased primarily due to: (i) a $1.5 million decrease related to our divested pipe coating and insulation operation; (ii) cost savings achieved in connection with our 2017 Restructuring actions; and (iii) lower incentive compensation expense.
Operating expenses as a percentage of revenues were 19.4% in the second quarter of 2019 compared to 17.9% in the second quarter of 2018. Excluding restructuring charges, operating expenses as a percentage of revenues were 19.0% in the second quarter of 2019 compared to 17.8% in the second quarter of 2018. The increase, as a percentage of revenues, was primarily driven by the lower revenues generated from our coating services operation during the second quarter of 2019, as compared to the same period in 2018.
Operating expenses decreased $6.2 million, or 17.4%, in the first six months of 2019 compared to the first six months of 2018. As part of our restructuring efforts, we recognized charges of $0.3 million and $1.5 million in the first six months of 2019 and 2018, respectively. Excluding restructuring charges, operating expenses decreased $5.0 million, or, 14.7% in the first six months of 2019 compared to the first six months of 2018. Operating expenses decreased mainly due to the same factors impacting the changes in operating expenses in the second quarter of 2019 compared to the second quarter of 2018. Operating expenses as a percentage of revenues were 20.7% in the first six months of 2019 compared to 18.4% in the first six months of 2018. Excluding restructuring charges, operating expenses as a percentage of revenues were 20.6% in the first six months of 2019 compared to 17.6% in the first six months of 2018. The increase, as a percentage of revenues, was primarily driven by the lower revenues generated from our coating services operation, as noted above.
Operating Income (Loss) and Operating Margin
Operating income decreased $10.8 million to a loss of $3.9 million in the second quarter of 2019 compared to income of $7.0 million in the second quarter of 2018. Operating margin declined to (5.0)% in the second quarter of 2019 compared to 7.2% in the first quarter of 2018. Included in operating income (loss) are (i) restructuring charges of $3.3 million and $0.3 million in the second quarters of 2019 and 2018, respectively, related to employee severance, retention, extension of benefits, employee assistance programs, wind-down and other related restructuring costs; (ii) acquisition and divestiture related expenses of less than $0.1 million in the second quarter of 2019 and $0.1 in the second quarter of 2018; and (iii) impairment charges of $2.9 million in the second quarter of 2019 related to assets held for sale.
Excluding the above items, operating income decreased $5.0 million to $2.4 million in the second quarter of 2019 compared to $7.4 million in the second quarter of 2018 and operating margin declined to 3.1% in the second quarter of 2019 compared to 7.7% in the second quarter of 2018. The decreases in operating income and operating margin were primarily the result of: (i) lower revenues and related gross profit generated from our coating service operation in the Middle East; and (ii) decreased contributions from certain international industrial linings and cathodic protection operations as we exit or divest non-core operations as part of the 2017 Restructuring.
Operating income decreased $17.5 million to a loss of $5.6 million in the first six months of 2019 compared to income of $11.9 million in the first six months of 2018. Operating margin declined to (4.0)% in the first six months of 2019 compared to 6.1% in the first six months of 2018. Included in operating income are (i) restructuring charges of $3.5 million and $1.8 million in the first six months of 2019 and 2018, respectively; (ii) acquisition and divestiture related expenses of $0.1 million and $0.2 million in the first six months of 2019 and 2018, respectively; and (iii) impairment charges of $2.9 million in the six months ended June 30, 2019 related to assets held for sale.
Excluding the above items, operating income decreased $13.0 million, or 93.4%, to $0.9 million in the first six months of 2019 compared to $13.9 million in the first six months of 2018 and operating margin declined to 0.6% in the first six months of 2019 compared to 7.1% in the first six months of 2018. The decreases in operating income and operating margin were primarily the result of: (i) lower revenues and related gross profit generated from our coating service operation in the Middle East; (ii) lower revenues and decreased project performance in our North American cathodic protection operations; and (iii) decreased contributions from certain international industrial linings and cathodic protection operations as we exit or divest non-core operations as part of the 2017 Restructuring. These decreases were partially offset by increased revenues and strong operational performance from the U.S. and Middle East industrial linings operations.
Energy Services Segment
Key financial data for Energy Services was as follows:
(dollars in thousands) |
Quarters Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
$ |
% |
|||||||||||||
Revenues |
$ | 85,704 | $ | 77,909 | $ | 7,795 | 10.0 | % | ||||||||
Gross profit |
11,874 | 10,567 | 1,307 | 12.4 | % | |||||||||||
Gross profit margin |
13.9 | % | 13.6 | % | N/A | 30 | bp | |||||||||
Operating expenses |
7,761 | 8,069 | (308 | ) | (3.8 | )% | ||||||||||
Restructuring and related charges | 6 | — | 6 | 0.0 | % | |||||||||||
Operating income |
4,107 | 2,498 | 1,609 | 64.4 | % | |||||||||||
Operating margin |
4.8 | % | 3.2 | % | N/A | 160 | bp |
(dollars in thousands) |
Six Months Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
$ |
% |
|||||||||||||
Revenues |
$ | 166,567 | $ | 170,238 | $ | (3,671 | ) | (2.2 | )% | |||||||
Gross profit |
20,710 | 21,786 | (1,076 | ) | (4.9 | )% | ||||||||||
Gross profit margin |
12.4 | % | 12.8 | % | N/A | (40 | )bp | |||||||||
Operating expenses |
15,448 | 16,161 | (713 | ) | (4.4 | )% | ||||||||||
Restructuring and related charges | 40 | — | 40 | 0.0 | % | |||||||||||
Operating income |
5,222 | 5,625 | (403 | ) | (7.2 | )% | ||||||||||
Operating margin |
3.1 | % | 3.3 | % | N/A | (20 | )bp |
“N/A” represents not applicable.
“N/M” represents not meaningful.
Revenues
Revenues increased $7.8 million, or 10.0%, in the second quarter of 2019 compared to the second quarter of 2018. The increase was due to a higher volume of maintenance services activity and increased labor rates at refineries that were transitioned last year to comply with California labor laws as well as higher volumes related to emergency refinery repair work executed during the quarter. This increase was partially offset by decreased construction activities from reduced customer demand and a more competitive bidding environment and, to a lesser extent, lower turnaround activity.
Revenues decreased $3.7 million, or 2.2%, in the first six months of 2019 compared to the first six months of 2018. The decrease was due primarily to lower turnaround and construction activities compared to the record revenues achieved in the prior year period. These decreases were partially offset by a higher volume of maintenance services activity as described above.
Gross Profit and Gross Profit Margin
Gross profit increased $1.3 million, or 12.4%, in the second quarter of 2019 compared to the second quarter of 2018 and gross profit margin improved 30 basis points in the second quarter of 2019 compared to the second quarter of 2018. The increases in gross profit and gross profit margin were primarily due to higher revenues associated with maintenance service activities and an improved mix of higher margin services. In addition, despite lower revenues from turnaround services, gross profit margin associated with these services improved from the prior year period due to increased project efficiencies.
Gross profit decreased $1.1 million, or 4.9%, and gross profit margin declined 40 basis points in the first six months of 2019 compared to the first six months of 2018. The decreases in gross profit and gross profit margin were primarily due to a lower mix of higher-margin turnaround projects and lower revenues from decreased construction activities compared to the prior year period. Offsetting these declines were increased gross profit and gross profit margin from maintenance services activity.
Operating Expenses
Operating expenses decreased $0.3 million, or 3.8%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease was primarily due to lower variable costs associated with decreased turnaround and construction activity as well as higher prior year costs to support the labor transitions at refineries to comply with labor laws in California. Operating expenses as a percentage of revenues were 9.1% in the second quarter of 2019 compared to 10.4% in the second quarter of 2018.
Operating expenses in the first six months of 2019 decreased $0.7 million, or 4.4%, compared to the first six months of 2018. The decrease was primarily due to the same factors impacting impacting the changes in the second quarter of 2019 compared to the second quarter of 2018. Operating expenses as a percentage of revenues were 9.3% in the first six months of 2019 compared to 9.5% in the first six months of 2018.
Operating Income and Operating Margin
Operating income increased $1.6 million, or 64.4%, to $4.1 million in the second quarter of 2019 compared to $2.5 million in the second quarter of 2018, primarily due to the increased maintenance activities and improved gross profit margins discussed above. Operating margin improved to 4.8% in the second quarter of 2019 compared to 3.2% in the second quarter of 2018.
Operating income decreased $0.4 million, or 7.2%, to $5.2 million in the first six months of 2019 compared to $5.6 million in the first six months of 2018. Operating margin fell to 3.1% in the first six months of 2019 compared to 3.3% in the first six months of 2018. The decreases in operating income and operating margin were driven by decreased turnaround and construction services activities, largely offset by increased maintenance services activities and lower operating expenses discussed above.
Corporate
Key financial data for Corporate was as follows:
(dollars in thousands) |
Quarter Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
% |
||||||||||||||
Revenues |
$ | — | $ | — | $ | — | — | % | ||||||||
Gross profit |
— | — | — | — | ||||||||||||
Gross profit margin |
N/A | N/A | N/A | N/A | ||||||||||||
Operating expenses |
8,547 | 7,427 | 1,120 | 15.1 | % | |||||||||||
Acquisition and divestiture expenses |
358 | 481 | (123 | ) | (25.6 | )% | ||||||||||
Restructuring and related charges | — | — | — | — | ||||||||||||
Operating loss |
(8,905 | ) | (7,908 | ) | (997 | ) | 12.6 | % | ||||||||
Operating margin |
N/A | N/A | N/A | N/A |
(dollars in thousands) |
Six Months Ended June 30, |
Increase (Decrease) |
||||||||||||||
2019 |
2018 |
% |
||||||||||||||
Revenues |
$ | — | $ | — | $ | — | — | % | ||||||||
Gross profit |
— | — | — | — | ||||||||||||
Gross profit margin |
N/A | N/A | N/A | N/A | ||||||||||||
Operating expenses |
14,284 | 14,915 | (631 | ) | (4.2 | )% | ||||||||||
Acquisition and divestiture expenses |
358 | 818 | (460 | ) | (56.2 | )% | ||||||||||
Restructuring and related charges |
107 | 320 | (213 | ) | (66.6 | )% | ||||||||||
Operating loss |
(14,749 | ) | (16,053 | ) | 1,304 | (8.1 | )% | |||||||||
Operating margin |
N/A | N/A | N/A | N/A |
“N/A” represents not applicable.
Operating Expenses
Operating expenses increased $1.1 million, or 15.1%, in the second quarter of 2019 compared to the second quarter of 2018. As part of our restructuring efforts, we recognized charges of $0.9 million and less than $0.1 million in the second quarters of 2019 and 2018, respectively. Excluding restructuring charges, operating expenses increased $0.3 million, or 3.7%, in the second quarter of 2019 compared to the second quarter of 2018. This increase was primarily due to higher incentive compensation expense, partially offset by cost reduction initiatives and lower medical and prescription drug expenses as a result of improved claims history and changes to the structure of our medical plan to reduce costs. Corporate operating expenses as a percentage of consolidated revenues were 2.7% in the second quarter of 2019 compared to 2.2% in the second quarter of 2018.
Operating expenses in the first six months of 2019 decreased $0.6 million, or 4.2% compared to the first six months of 2018. As part of our restructuring efforts, we recognized charges of $1.1 million and $0.3 million in the first six months of 2019 and 2018, respectively. Excluding restructuring charges, operating expenses decreased $1.5 million, or 10.2%, in the first six months of 2019 compared to the same period in 2018. The decrease in operating expenses was primarily due to: (i) reduced spending and other cost reduction initiatives as a result of the 2017 Restructuring; and (ii) lower medical and prescription drug expenses described above. Corporate operating expenses as a percentage of consolidated revenues were 2.4% in the first six months of 2019 compared to 2.3% in the first six months of 2018.
Other Income (Expense)
Interest Income and Expense
Interest income increased $0.2 million in the second quarter of 2019 compared to the prior year quarter primarily due to interest received on the $8.0 million note receivable acquired in the Bayou sale during the third quarter of 2018. Interest expense decreased $0.4 million in the second quarter of 2019 compared to the prior year quarter primarily due to reduced loan principal balances during the second quarter of 2019 compared to the second quarter of 2018, partially offset by higher LIBOR-based borrowing costs under our Credit Facility.
Interest income increased $0.4 million in the first six months of 2019 compared to the prior year period primarily due to interest received on the note receivable mentioned above. Interest expense decreased $2.2 million in the first six months of 2019 compared to the same period in the prior year. During the first six months of 2018, we recognized expenses of $1.8 million related to certain arrangement and other fees associated with amending our credit facility as well as the write-off of previously unamortized deferred financing costs. Excluding these expenses, interest expense decreased as compared to same period in the prior year due to reduced loan principal balances, partially offset by higher LIBOR-based borrowing costs under our Credit Facility.
Other Expense
Other expense was $1.0 million and $0.5 million in the quarters ended June 30, 2019 and 2018, respectively. As part of our restructuring efforts, we recognized charges of $0.9 million in the second quarter of 2019 related to the dissolution of certain restructured entities including the release of cumulative currency translation adjustments resulting from those disposals. The remaining expenses primarily consisted of foreign currency transaction losses. For the quarter ended June 30, 2018, the balance primarily consisted of foreign currency transaction losses.
Other expense was $1.7 million and $0.8 million in the six months ended June 30, 2019 and 2018, respectively. We recognized charges of $1.1 million in the first six months of 2019 related to the dissolution of certain restructured entities including the release of cumulative currency translation adjustments resulting from those disposals. The remaining expenses primarily consisted of foreign currency transaction losses. For the six months ended June 30, 2018, the balance primarily consisted of foreign currency transaction losses.
Taxes on Income (Loss)
Tax expense on the pre-tax loss in the second quarter of 2019 was $4.3 million compared to tax expense of $2.9 million on pre-tax income in the second quarter of 2018. Our effective tax rate was (111.0)% on a pre-tax loss in the quarter ended June 30, 2019 compared to 28.7% on pre-tax income in the quarter ended June 30, 2018. The effective rate for the second quarter of 2019 was negatively impacted by: (i) significant pre-tax charges primarily related to impairments of held for sale assets and currency translation adjustments, which were not deductible for tax purposes; (ii) a $2.1 million charge for foreign withholding taxes on the repatriation of foreign earnings; and (iii) valuation allowances recorded on certain net operating losses in foreign jurisdictions for which no income tax benefits are expected to be recognized. During the second quarter of 2018, the effective tax rate was negatively impacted by valuation allowances recorded on certain net operating losses in foreign jurisdictions for which no income tax benefits are expected to be recognized.
Tax expense on the pre-tax loss in the first six months of 2019 was $3.5 million compared to tax expense of $1.9 million on pre-tax income in the first six months of 2018. Our effective tax rate was (40.9)% on a pre-tax loss in the six months ended June 30, 2019 compared to 24.9% on pre-tax income in the six months ended June 30, 2018. The effective tax rates for the six months ended June 30, 2019 and 2018 were impacted by the same factors impacting the effective tax rate in the second quarter of 2019. Additionally, the effective tax rate for the six months ended June 30, 2018 was also positively impacted by a $1.5 million net tax benefit, or 19.5% benefit to the effective tax rate, related to employee share-based payments vested during the first six months of 2018.
Non-controlling Interests
Income attributable to non-controlling interests was $0.2 million in the quarter ended June 30, 2019 compared to loss of $0.7 million in the quarter ended June 30, 2018. In the second quarter of 2019, income was primarily driven from our Corrosion Protection joint venture in Oman and our Infrastructure Solutions joint ventures in Asia, partially offset by losses from our Corrosion Protection joint ventures in South Africa, Mexico and Saudi Arabia. In the second quarter of 2018, losses were primarily driven from our Corrosion Protection joint ventures in Louisiana and Mexico, partially offset by income from our joint venture in Oman.
Income attributable to non-controlling interests was $0.2 million in the first six months of 2019 compared to a loss of $0.1 million in the comparable period of 2018. In the six months ended June 30, 2019, income from our joint ventures in Oman and Asia were partially offset by losses from our joint ventures in South Africa and Mexico. In the six months ended June 30, 2018, losses from our joint ventures in Mexico and Louisiana were partially offset by profitability from our joint venture in Oman.
Liquidity and Capital Resources
Cash and Cash Equivalents
(in thousands) |
June 30, 2019 |
December 31, 2018 |
||||||
Cash and cash equivalents |
$ | 51,338 | $ | 83,527 | ||||
Restricted cash |
759 | 1,359 |
Restricted cash held in escrow primarily relates to funds reserved for legal requirements, deposits made in lieu of retention on specific projects performed for municipalities and state agencies, or advance customer payments and compensating balances for bank undertakings in Europe.
Sources and Uses of Cash
We expect the principal operational use of funds for the foreseeable future will be for capital expenditures, working capital, debt service and share repurchases.
During the first six months of 2019, capital expenditures were primarily used to: (i) support our Infrastructure Solutions North American CIPP business and expand our Corrosion Protection businesses in the Middle East; and (ii) boost our information systems platform with upgrades to our enterprise resource planning system. For 2019, we anticipate that we will spend approximately $25.0 to $30.0 million for capital expenditures, which is slightly below that in 2018.
In December 2018, our board of directors authorized the open market repurchase of up to two million shares of our common stock. The program did not establish a time period in which the repurchases had to be made. That authorization is now limited to $32.0 million in 2019 due to the December 2018 amendment to our Credit Facility. The shares are repurchased from time to time in the open market, subject to cash availability, market conditions and other factors, and in accordance with applicable regulatory requirements. We are not obligated to acquire any particular amount of common stock and, subject to applicable regulatory requirements, may commence, suspend or discontinue purchases at any time without notice or authorization. During the fist six months of 2019, we acquired 1,274,086 shares of our common stock for $22.0 million ($17.28 average price per share) through the open market repurchase program discussed above. In addition, we repurchased 153,630 shares of our common stock for $3.1 million ($20.48 average price per share) in connection with the satisfaction of tax obligations in connection with the vesting of restricted stock units and performance units. Any shares repurchased during 2019 are expected to be funded primarily through available cash. Once repurchased, we promptly retire such shares.
As part of our 2017 Restructuring, we utilized cash of $5.9 million during the first six months of 2019 and $29.2 million in cumulative cash payments since 2017 related to employee severance, extension of benefits, employment assistance programs, early lease and contract termination and other restructuring related costs as we exit our non-pipe related contract applications for the Tyfo® system in North America, right-size our cathodic protection services operations in North America, take actions to further optimize operations within North America, including measures to reduce consolidated operating costs, and divest or otherwise exit multiple additional international businesses. Cumulatively, we have incurred both cash and non-cash charges of $149.0 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. We expect to incur additional cash charges of less than $5 million related to the 2017 Restructuring. We could also incur additional non-cash charges primarily associated with the release of cumulative currency translation adjustments and losses on the closure or liquidation of international entities.
At June 30, 2019, our cash balances were located worldwide for working capital and support needs. Approximately $20.3 million, or 38.9%, of our cash was denominated in currencies other than the United States dollar as of June 30, 2019. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements; however, those balances are generally available without legal restrictions to fund ordinary business operations. At this time, we do not intend to distribute earnings in a taxable manner, and therefore, intend to limit distributions to: (i) earnings previously taxed in the U.S.; (ii) earnings that would qualify for the 100 percent dividends received deduction provided in the Tax Cuts and Jobs Act; or (iii) earnings that would not result in significant foreign taxes. As a result, we did not recognize a deferred tax liability on any remaining undistributed foreign earnings at June 30, 2019.
Our primary source of cash is operating activities. We occasionally borrow under our line of credit’s available capacity to fund operating activities, including working capital investments. Our operating activities include the collection of accounts receivable as well as the ultimate billing and collection of contract assets. At June 30, 2019, we believed our net accounts receivable and our contract assets, as reported on our Consolidated Balance Sheet, were fully collectible and a significant portion of the receivables will be collected within the next twelve months. From time to time, we have net receivables recorded that we believe will be collected but are being disputed by the customer in some manner. Disputes of this nature could meaningfully impact the timing of receivable collection or require us to invoke our contractual or legal rights in a lawsuit or alternative dispute resolution proceeding. If in a future period we believe any of these receivables are no longer collectible, we would increase our allowance for bad debts through a charge to earnings.
Cash Flows from Operations
Cash flows from operating activities provided $14.2 million in the first six months of 2019 compared to $10.2 million provided in the first six months of 2018. The increase in operating cash flow from the prior year period was primarily due to working capital usage as we used $9.0 million of cash during the first six months of 2019 compared to $24.7 million used in the first six months of 2018. Cash flows during the six months ended June 30, 2019 and 2018 were negatively impacted by $5.9 million and $6.5 million, respectively, in cash payments related to our restructuring activities.
Cash Flows from Investing Activities
Cash flows from investing activities used $13.6 million during the first six months of 2019 compared to $16.2 million used during the first six months of 2018. We used $14.3 million in cash for capital expenditures in the first six months of 2019 compared to $13.6 million in the prior year period. In the first six months of 2019 and 2018, $1.0 million of non-cash capital expenditures were included in accounts payable and accrued expenses in both periods. Capital expenditures in the first six months of 2019 and 2018 were partially offset by $1.0 million and $0.6 million, respectively, in proceeds received from asset disposals. During the first six months of 2018, we also used $3.0 million to acquire Hebna.
Cash Flows from Financing Activities
Cash flows from financing activities used $31.9 million during the first six months of 2019 compared to $23.8 million used in the first six months of 2018. During the first six months of 2019 and 2018, we used net cash of $24.2 million and $18.6 million, respectively, to repurchase 1,427,716 and 772,172 shares, respectively, of our common stock through open market purchases and in connection with our equity compensation programs as discussed in Note 9 to the consolidated financial statements contained in this report. During the first six months of 2019, we had net borrowings of $7.0 million on our line of credit to fund domestic working capital needs. Additionally, during the first six months of 2019, we used cash of $13.1 million to pay down the principal balance of our term loans. During the first six months of 2018, we had net borrowings of $9.0 million from our line of credit primarily to fund domestic working capital needs, and we used cash of $13.1 million to pay down the principal balance of our term loan and used cash of $2.5 million to amend our original credit facility, as discussed in Note 8 to the consolidated financial statements contained in this report.
Long-Term Debt
In October 2015, the Company entered into an amended and restated $650.0 million senior secured credit facility with a syndicate of banks. In February 2018 and December 2018, the Company amended this facility (the “amended Credit Facility”). Following the sale of Bayou, the amended Credit Facility consists of a $275.0 million five-year revolving line of credit and a $308.4 million five-year term loan facility, each with a maturity date in February 2023.
Our indebtedness at June 30, 2019 consisted of $269.1 million outstanding from the term loan under the amended Credit Facility and $38.0 million on the line of credit under the amended Credit Facility. Additionally, the Company had $0.9 million of debt held by its joint ventures (representing funds loaned by its joint venture partners) listed as held for sale at June 30, 2019 related to the planned sales of Corrpower and Aegion South Africa.
As of June 30, 2019, we had $23.6 million in letters of credit issued and outstanding under the amended Credit Facility. Of such amount, $12.3 million was collateral for the benefit of certain of our insurance carriers and $11.3 million was for letters of credit or bank guarantees of performance or payment obligations of foreign subsidiaries.
In October 2015, we entered into an interest rate swap agreement for a notional amount of $262.5 million, which is set to expire in October 2020. The notional amount of this swap mirrors the amortization of a $262.5 million portion of our $350.0 million term loan drawn from the Credit Facility. The swap requires us to make a monthly fixed rate payment of 1.46% calculated on the amortizing $262.5 million notional amount, and provides for us to receive a payment based upon a variable monthly LIBOR interest rate calculated on the same amortizing $262.5 million notional amount. The receipt of the monthly LIBOR-based payment offsets a variable monthly LIBOR-based interest cost on a corresponding $262.5 million portion of our term loan from the Credit Facility. This interest rate swap is used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement and is accounted for as a cash flow hedge.
On March 12, 2018, we entered into an interest rate swap forward agreement that begins in October 2020 and expires in February 2023 to coincide with the amortization period of the amended Credit Facility. The swap will require us to make a monthly fixed rate payment of 2.937% calculated on the then amortizing $170.6 million notional amount, and provides for us to receive a payment based upon a variable monthly LIBOR interest rate calculated on the same amortizing $170.6 million notional amount. The receipt of the monthly LIBOR-based payment will offset the variable monthly LIBOR-based interest cost on a corresponding $170.6 million portion of our term loan from the amended Credit Facility. This interest rate swap will be used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement and accounted for as a cash flow hedge.
The amended Credit Facility is subject to certain financial covenants including a consolidated financial leverage ratio and consolidated fixed charge coverage ratio. We were in compliance with all covenants at June 30, 2019 and expect continued compliance for the foreseeable future.
We believe that we have adequate resources and liquidity to fund future cash requirements and debt repayments with cash generated from operations, existing cash balances and additional short- and long-term borrowing capacity for the next 12 months.
See Note 8 to the consolidated financial statements contained in this report for additional information and disclosures regarding our long-term debt.
Disclosure of Contractual Obligations and Commercial Commitments
There were no material changes in contractual obligations and commercial commitments from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018. See Note 11 to the consolidated financial statements contained in this report for further discussion regarding our commitments and contingencies.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk
We are exposed to the effect of interest rate changes and of foreign currency and commodity price fluctuations. We currently do not use derivative contracts to manage commodity risks. From time to time, we may enter into foreign currency forward contracts to fix exchange rates for net investments in foreign operations to hedge our foreign exchange risk.
Interest Rate Risk
The fair value of our cash and short-term investment portfolio at June 30, 2019 approximated carrying value. Given the short-term nature of these instruments, market risk, as measured by the change in fair value resulting from a hypothetical 100 basis point change in interest rates, would not be material.
Our objectives in managing exposure to interest rate changes are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we maintain fixed rate debt whenever favorable; however, the majority of our debt at June 30, 2019 was variable rate debt. We substantially mitigate our interest rate risk through interest rate swap agreements, which are used to hedge the volatility of monthly LIBOR rate movement of our debt. We currently utilize interest rate swap agreements with a notional amount that mirrors approximately 75% of our outstanding borrowings from the term loan under our amended Credit Facility.
At June 30, 2019, the estimated fair value of our long-term debt was approximately $315.8 million. Fair value was estimated using market rates for debt of similar risk and maturity and a discounted cash flow model. Market risk related to the potential increase in fair value resulting from a hypothetical 100 basis point increase in our debt specific borrowing rates at June 30, 2019 would result in a $0.8 million increase in interest expense.
Foreign Exchange Risk
We operate subsidiaries and are associated with licensees and affiliated companies operating solely outside of the United States and in foreign currencies. Consequently, we are inherently exposed to risks associated with the fluctuation in the value of the local currencies compared to the U.S. dollar. At June 30, 2019, a substantial portion of our cash and cash equivalents was denominated in foreign currencies, and a hypothetical 10% change in currency exchange rates could result in an approximate $5.0 million impact to our equity through accumulated other comprehensive income (loss).
In order to help mitigate this risk, we may enter into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations. We do not engage in hedging transactions for speculative investment reasons. There can be no assurance that our hedging operations will eliminate or substantially reduce risks associated with fluctuating currencies. At June 30, 2019, there were no material foreign currency hedge instruments outstanding. See Note 13 to the consolidated financial statements contained in this report for additional information and disclosures regarding our derivative financial instruments.
Commodity Risk
We have exposure to the effect of limitations on supply and changes in commodity pricing relative to a variety of raw materials that we purchase and use in our operating activities, most notably resin, chemicals, staple fiber, fuel, metals and pipe. We manage this risk by entering into agreements with certain suppliers utilizing a request for proposal, or RFP, format and purchasing in bulk, and advantageous buying on the spot market for certain metals, when possible. We also manage this risk by continuously updating our estimation systems for bidding contracts so that we are able to price our products and services appropriately to our customers. However, we face exposure on contracts in process that have already been priced and are not subject to any cost adjustments in the contract. This exposure is potentially more significant on our longer-term projects.
We obtain a majority of our global resin requirements, one of our primary raw materials, from multiple suppliers in order to diversify our supplier base and thus reduce the risks inherent in concentrated supply streams. We have qualified a number of vendors in North America, Europe and Asia that can deliver, and are currently delivering, proprietary resins that meet our specifications.
The primary products and raw materials used by our infrastructure rehabilitation operations in the manufacture of fiber reinforced polymer composite systems are carbon, glass, resins, fabric and epoxy raw materials. Fabric and epoxies are the largest materials purchased, which are currently purchased through a select group of suppliers, although we believe these and the other materials are available from a number of vendors. The price of epoxy historically is affected by the price of oil. In addition, a number of factors such as worldwide demand, labor costs, energy costs, import duties and other trade restrictions may influence the price of these raw materials.
We rely on a select group of third-party extruders to manufacture our Fusible PVC® pipe products.
Item 4. Controls and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of June 30, 2019. Based upon and as of the date of this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act (a) is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission’s rules and forms and (b) is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
In the first quarter of 2019, we implemented new controls as part of our efforts to adopt FASB ASC 842. These new controls relate to: (i) gathering, monitoring and assessing the necessary lease data; and (ii) a new third-party software as a system to capture, calculate and properly account for leases under FASB ASC 842. There were no other changes in our internal control over financial reporting that occurred during the six months ended June 30, 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in certain actions incidental to the conduct of our business and affairs. Management, after consultation with legal counsel, does not believe that the outcome of any such actions, individually and in the aggregate, will have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Item 1A. Risk Factors
There have been no material changes to the risk factors described in Items 1A in our Annual Report on Form 10-K for the year ended December 31, 2018.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Total Number of Shares (or Units) Purchased |
Average Price Paid per Share (or Unit) |
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be PurchasedUnder the Plans or Programs |
|||||||||||||
January 2019 (1) (2) |
232,134 | $ | 17.96 | 222,901 | 1,777,099 | |||||||||||
February 2019 (1) (2) |
280,640 | 19.86 | 137,107 | 1,639,992 | ||||||||||||
March 2019 (1) (2) |
262,215 | 17.07 | 262,035 | 1,377,957 | ||||||||||||
April 2019 (1) (2) | 184,846 | 19.09 | 184,162 | 1,193,795 | ||||||||||||
May 2019 (1) (2) | 286,721 | 15.84 | 286,721 | 907,074 | ||||||||||||
June 2019 (1) (2) | 181,160 | 15.88 | 181,160 | 725,914 | ||||||||||||
Total |
1,427,716 | $ | 17.63 | 1,274,086 | — |
(1) |
In December 2018, our board of directors authorized the open market repurchase of up to two million shares of our common stock beginning January 1, 2019. Any shares repurchased are pursuant to one or more 10b5-1 plans. The program expires on the earlier of the repurchase by the Company of two million shares of common stock pursuant to the program or the board of directors’ termination of the program. In December 2018, we amended our senior secured credit facility, which limits the open market repurchase of our common stock to be made during 2019 to $32.0 million. We began repurchasing shares under this program in January 2019. Once repurchased, we promptly retired the shares. |
(2) |
In connection with approval of our credit facility, our board of directors approved the purchase of up to $10.0 million of our common stock in each calendar year in connection with our equity compensation programs for employees. The number of shares purchased includes shares surrendered to us to pay the exercise price and/or to satisfy tax withholding obligations in connection with “net, net” exercises of employee stock options and/or the vesting of restricted stock, restricted stock units or performance units issued to employees. During the six months ended June 30, 2019, 48,409 shares were surrendered in connection with stock swap transactions and 153,630 shares were surrendered in connection with restricted stock unit and performance unit transactions. The deemed price paid was the closing price of our common stock on the Nasdaq Global Select Market on the date that the restricted stock units or performance units vested. Once repurchased, we promptly retired the shares. |
Item 4. Mine Safety Disclosures.
Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of SEC Regulation S-K is included in Exhibit 95 to this quarterly report on Form 10-Q.
Item 6. Exhibits
The exhibits required to be filed as part of this Quarterly Report on Form 10-Q are listed on the Index to Exhibits attached hereto.
SIGNATURE
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 thereunto duly authorized.
|
AEGION CORPORATION |
|
|
Date: August 2, 2019 |
/s/ David F. Morris |
|
David F. Morris |
|
Executive Vice President and Chief Financial Officer |
|
(Principal Financial Officer) |
INDEX TO EXHIBITS
These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
10.1 | Form of Change in Control Severance Agreement, dated June 24, 2019, between Aegion Corporation and John L. Heggemann, filed herewith. (1) | ||
|
|
||
31.1 |
|||
|
|
||
31.2 |
|||
|
|
||
32.1 |
|||
|
|
||
32.2 |
|||
|
|
||
95 |
|||
|
|
||
101.INS |
XBRL Instance Document* |
||
|
|
||
101.SCH |
XBRL Taxonomy Extension Schema Document* |
||
|
|
||
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document* |
||
|
|
||
101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document* |
||
|
|
||
101.LAB |
XBRL Taxonomy Extension Label Linkbase Document* |
||
|
|
||
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document* |
* In accordance with Rule 406T under Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed “furnished” and not “filed”.
(1) |
Management contract or compensatory plan, contract or arrangement. |
51
Exhibit 10.1
AEGION CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT is made, entered into, and is effective this 24th day of June 2019 (hereinafter referred to as the “Effective Date”), by and between Aegion Corporation (the “Company”), a Delaware corporation, and John L. Heggemann (the “Officer”).
WHEREAS, the Officer is employed by the Company (as defined in Article 1) and has and will develop considerable experience and knowledge of the business and affairs of the Company concerning its policies, methods, personnel, and operations; and
WHEREAS, the Company is desirous of assuring insofar as possible, that it will continue to have the benefit of the Officer’s services, and the Officer is desirous of having such assurances; and
WHEREAS, the Company recognizes that circumstances may arise in which a Change in Control (as defined in Article 1) of the Company occurs, through acquisition or otherwise, thereby causing uncertainty of employment without regard to the Officer’s competence or past contributions. Such uncertainty may result in the loss of the valuable services of the Officer to the detriment of the Company and its stockholders; and
WHEREAS, both the Company and the Officer are desirous that any proposal for a Change in Control will be executed by the Officer objectively and with reference only to the business interests of the Company and its stockholders; and
WHEREAS, the Officer will be in a better position to consider the Company’s best interests if the Officer is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such Change in Control.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set forth in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
Article 1. Definitions
Wherever used in this Agreement, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:
(a) “Agreement” means this Officer Change in Control Severance Agreement, as it may be amended from time to time.
(b) “Base Salary” means, at any time, the then regular annual rate of pay which the Officer is receiving as annual salary, excluding amounts: (i) received under short-term or long-term incentive or other bonus plans, regardless of whether or not the amounts are deferred, or (ii) designated by the Company as payment toward reimbursement of expenses.
(c) “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
(d) “Board” means the Board of Directors of the Company.
(e) “Cause” shall be determined solely by the Board in the exercise of good faith and reasonable judgment, and shall mean the occurrence of any one or more of the following:
i. breaching any employment, confidentiality, noncompete, nonsolicitation or other agreement with the Company, any written Company policy relating to compliance with laws (during employment); or
ii. |
causing, inducing, requesting or advising, or attempting to cause, induce, request or advise, any employee, representative, consultant or other similar person to terminate his/her relationship, or breach any agreement, with the Company; or |
iii. |
causing, inducing, requesting or advising, or attempting to cause, induce, request or advise, any customer, supplier or other Company business contact to withdraw, curtail or cancel its business with the Company; or |
iv. |
the Officer's willful and continued failure to substantially perform the Officer’s duties with the Company (other than any such failure resulting from the Officer’s Disability), after a written demand for substantial performance is delivered to the Officer that specifically identifies the manner in which the Board believes that the Officer has not substantially performed his duties, and the Officer has failed to remedy the situation within fifteen (15) business days of such written notice from the Company; or |
v. |
the Officer's conviction of a felony; or |
vi. |
the Officer's willful engagement in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise. Under this standard, no act or failure to act on the Officer's part shall be deemed "willful" unless done, or omitted to be done, by the Officer not in good faith and without reasonable belief that the action or omission was in the best interests of the Company. |
(f) “Change in Control” of the Company shall mean the occurrence of any one (1) or more of the following events:
i. |
the acquisition by one person, or more than one person acting as a group, in a transaction or series of related transactions, of ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 30% of the total fair market value or total voting power of the stock of the Company; and/or |
ii. |
a majority of the members of the Company’s board of directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election; and/or |
iii. |
the consummation of a merger or consolidation of the Company other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; and/or |
iv. |
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is a consummated sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. |
For purposes hereof, “person” shall mean any person, entity or “group” within the meaning of Section 13(d)(3) of the Exchange Act, except that such term shall not include (i) the Company or any of its affiliates; (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportion as their ownership of stock of the Company, or (v) a person or group as used in Rule 13d-1(b) under the Exchange Act.
(g) “Code” means the Internal Revenue Code of 1986, as amended.
(h) “Committee” means the Compensation Committee of the Board of Directors of the Company, or, if no Compensation Committee exists, then the full Board of Directors of the Company, or a committee of Board members, as appointed by the full Board to administer this Agreement.
(i) “Company” means Aegion Corporation, a Delaware corporation (including any and all subsidiaries and affiliates), or any successor thereto as provided in Section 8.1 herein.
(j) “Disability” or “Disabled” shall mean that the Officer is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.
(k) “Effective Date” means the date this Agreement is approved by the Committee, or such other date as the Committee shall designate in its resolution approving this Agreement, and as specified in the opening sentence of this Agreement.
(l) “Effective Date of Termination” means the date on which a Qualifying Termination occurs, as provided in Section 2.2 herein, which triggers the payment of Severance Benefits hereunder.
(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(n) “Good Reason” means, without the Officer’s express written consent, the occurrence after a Change in Control of the Company of any one (1) or more of the following:
i. |
duties, or responsibilities from those in effect as of 90 calendar days prior to the Change in Control, other than an insubstantial and inadvertent act that is remedied by the Company or the acquiring company promptly after receipt of notice thereof given by the Officer; |
ii. |
the Company’s or the acquiring company’s requiring the Officer to be based at a location in excess of 50 miles from the location of the Officer’s principal job location or office in effect as of 90 calendar days prior to the Change in Control, except for required travel on the Company’s business to an extent substantially consistent with the Officer’s then present business travel obligations; |
iii. |
a reduction by the Company or the acquiring company of the Officer’s base salary in effect as of 90 calendar days prior to the Change in Control that is greater than the lesser of: (A) ten percent (10%) of such base salary; and (B) the average percentage reduction applicable to all other Officers of the Company; |
iv. |
the failure of the Company or the acquiring company to continue in effect any of the Company’s short- and long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices, or other compensation arrangements in which the Officer participates taken as a whole unless such failure to continue the plan, policy, practice, or arrangement pertains to all plan participants generally; or the failure by the Company or the acquiring company to continue the Officer’s participation therein on substantially the same basis, both in terms of the amount of benefits provided and the level of the Officer’s participation relative to other participants, as existed 90 calendar days prior to the Change in Control; |
v. |
the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Company’s obligations under this Agreement, as contemplated in Section 8.1 herein; and |
vi. |
a material breach of this Agreement by the Company which is not remedied by the Company within thirty (30) business days of receipt of written notice of such breach delivered by the Officer to the Company. |
The Officer must notify the Company within ninety (90) days of its first occurrence of the existence of the Good Reason condition, and the Company shall have thirty (30) days to remedy the conditions. Unless the Officer becomes Disabled, the Officer’s right to terminate employment for Good Reason shall not be affected by the Officer’s incapacity due to physical or mental illness.
(o) “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Officer’s employment under the provision so indicated.
(p) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d).
(q) “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
i. |
the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; |
ii. |
the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; |
iii. |
any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company); or |
iv. |
the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. |
(r) “Qualifying Termination” means the Officer’s separation from service (as defined in Section 409A of the Code and the applicable regulations) with the Company due to any of the events described in Section 2.2 herein, the occurrence of which triggers the payment of Severance Benefits hereunder.
(s) “Severance Benefits” means the payment of amounts and benefits upon the Officer’s separation from service (as defined in Section 409A of the Code and applicable regulations) as provided in Section 2.3 herein.
Article 2. Severance Benefits
2.1 Right to Severance Benefits. The Officer shall be entitled to receive from the Company Severance Benefits as described in Section 2.3 herein, if there has been a Change in Control of the Company and, if within twenty-four (24) calendar months thereafter the Officer’s employment with the Company shall end for any reason specified in Section 2.2 herein as being a Qualifying Termination.
The Officer shall not be entitled to receive Severance Benefits if the Officer is terminated for Cause, or if the Officer’s employment with the Company ends due to death, Disability, or a voluntary termination of employment by the Officer for reasons other than Good Reason.
The Officer shall not be entitled to receive severance benefits under any other Company-related plans or programs that are duplicative of the Severance Benefits payable under this Agreement, if additional benefits are triggered under such other Company-related plans or programs.
2.2 Qualifying Termination. The separation from service (as defined in Section 409A of the Code and applicable regulations) of the Officer with the Company within twenty-four (24) calendar months after a Change in Control of the Company shall constitute a Qualifying Termination and shall trigger the payment of Severance Benefits to the Officer under this Agreement under the following circumstances:
(a) The Company’s involuntary termination of the Officer’s employment without Cause; and
(b) The Officer’s voluntary termination of the Officer’s employment for Good Reason.
For purposes of this Agreement, a Qualifying Termination shall not include a termination of employment by reason of death, Disability, or the Officer’s voluntary termination of employment for reasons other than Good Reason, or the Company’s involuntary termination for Cause.
2.3 Description of Severance Benefits. In the event the Officer becomes entitled to receive Severance Benefits upon a Qualifying Termination, as provided in Sections 2.1 and 2.2 herein, the Company shall pay to the Officer and provide the Officer with the following Severance Benefits, subject to the limitations set forth in Section 3.3 herein:
(a) A lump-sum amount equal to the Officer’s accrued but unpaid Base Salary, accrued vacation pay, unreimbursed business expenses, and all other items earned by and owed to the Officer through and including the Effective Date of Termination.
(b) A lump-sum amount: (i) if the Effective Date of Termination is between January 1 and June 30, equal to the Officer’s then current annual target bonus opportunity; or (ii) if the Effective Date of Termination is between July 1 and December 31, equal to the greater of (A) the Officer’s then current annual target bonus opportunity or (B) the actual annual bonus payable to the Officer based on the Company’s performance up to and including the Effective Date of Termination, as such target and actual amounts are established or computed under the annual bonus plan in which the Officer is then participating, for the bonus plan year in which the Officer’s Effective Date of Termination occurs, and multiplied by a fraction the numerator of which is the number of days in the year from January 1 through the Effective Date of Termination, and the denominator of which is three hundred sixty-five (365). This payment will be in lieu of any other payment to be made to the Officer under the annual bonus plan in which the Officer is then participating for the plan year in which the Effective Date of Termination occurs.
(c) A lump-sum amount equal to 1.0 multiplied by the sum of the following: (i) the higher of: (A) the Officer’s annual rate of Base Salary in effect upon the Effective Date of Termination, or (B) the Officer’s annual rate of Base Salary in effect on the date of the Change in Control; and (ii) the higher of: (A) the Officer’s annual target bonus opportunity established under the annual bonus plan in which the Officer is then participating for the bonus plan year in which the Officer’s Effective Date of Termination occurs, or (B) the Officer’s annual target bonus opportunity established under the annual bonus plan in which the Officer is participating for the bonus plan year in which the Change in Control occurs.
(d) Continuation for twelve (12) months of the Officer’s health, dental and vision insurance coverage. The benefit shall be provided by the Company to the Officer beginning immediately upon the Effective Date of Termination. Such benefit shall be provided to the Officer at the same coverage level as in effect immediately prior to the Change in Control and the Company (or the acquirer as the case may be) shall pay the amounts that the Company would have been required to pay for health, dental and vision benefits for Officer and Officer’s eligible family members had Officer remained an employee of the Company following the Effective Date of Termination (Officer shall be responsible for the portion of health, dental and vision premiums that would be paid by an employee of the Company receiving comparable benefits). Any COBRA health benefit continuation coverage provided to Officer shall run concurrently with the aforementioned twelve (12) month period.
The value of such health insurance coverage shall be treated as taxable income to Officer to the extent necessary to comply with Sections 105(h) and 409A of the Code. For purposes of 409A of the Code, any payments of continued health benefits that are made during the applicable COBRA continuation period (even if the Officer does not actually receive COBRA coverage for the entire applicable period), are exempt from the requirements of Code Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v)(B). The right to continue coverage beyond the applicable COBRA continuation period is not subject to liquidation or exchange for another benefit. Notwithstanding the above, this health insurance benefit shall be discontinued prior to the end of the stated continuation period in the event the Officer receives a substantially similar benefit from a subsequent employer, as determined solely by the Committee in good faith. For purposes of enforcing this offset provision, the Officer shall be deemed to have a duty to keep the Company informed as to the terms and conditions of any subsequent employment and any corresponding benefit earned from such employment, and shall provide, or cause to provide, to the Company in writing correct, complete, and timely information concerning the same.
(e) The Company agrees to pay on the Officer’s behalf up to $15,000 in Officer outplacement services to one or more firms chosen by Officer and acceptable to the Company, provided that such services are incurred no later the first anniversary of the Officer’s Effective Date of Termination. Such expenses shall be reimbursed by the Company as soon as practical after an expense report is completed and submitted to the Company for approval, provided such expense report must be received by the Company no later than the second anniversary of the Officer’s Effective Date of Termination.
2.4 Termination for Total and Permanent Disability. Following a Change in Control, if the Officer has a separation from service (as defined in Section 409A of the Code and the applicable regulations) with the Company due to Disability, the Officer’s benefits shall be determined in accordance with the Company’s retirement, insurance, and other applicable plans and programs relating to Disability then in effect.
2.5 Termination for Death. Following a Change in Control, if the Officer has a separation from service (as defined in Section 409A of the Code and the applicable regulations) with the Company due to the Officer’s death, the Officer’s benefits shall be determined in accordance with the Company’s retirement, survivor’s benefits, insurance, and other applicable programs relating to an employee’s death then in effect.
2.6 Termination for Cause or by the Officer Other Than for Good Reason. Following a Change in Control, if the Officer has a separation from service (as defined in Section 409A of the Code and the applicable regulations) with the Company either due to: (i) termination by the Company for Cause; or (ii) voluntary termination by the Officer for reasons other than for Good Reason, the Company shall pay the Officer the Officer’s accrued but unpaid Base Salary at the rate then in effect, accrued vacation, and other items earned by and owed to the Officer through the Officer’s separation from service, plus all other amounts to which the Officer is entitled under any compensation plans of the Company at the time such payments are due, and the Company shall have no further obligations to the Officer under this Agreement.
2.7 Notice of Termination. Any termination of the Officer’s employment by the Company for Cause or by the Officer for Good Reason shall be communicated by Notice of Termination to the other party.
Article 3. Terms and Conditions for Payment of Severance Benefits; Alternative Payments in Event of Excise Tax
3.1 Form and Timing of Severance Benefits. The Severance Benefits described in Sections 2.3(a), 2.3(b), and 2.3(c) herein shall be paid in cash to the Officer in a single lump sum as soon as practicable following the Effective Date of Termination.
3.2 Internal Revenue Code Section 409A. This Agreement is intended to comply with the American Jobs Creation Act of 2004, Code Section 409A, and related guidance.
(a) Notwithstanding anything to the contrary set forth in this Agreement, any Severance Benefits paid (i) within 2-½ months of the end of the Company’s taxable year containing the Officer’s separation from service with the Company, or (ii) within 2-½ months of the Officer’s taxable year containing the separation from service from employment by the Company shall be exempt from the requirements of Section 409A of the Code, and shall be paid in accordance with this Article 3. Severance Benefits subject to this Section 3.2(a) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Section 409A of the Code and the regulations thereunder.
(b) To the extent Severance Benefits are not exempt from Section 409A under Section 3.2(a) above, any Severance Benefits paid in the first six (6) months following the Officer’s separation from service with the Company that are equal to or less than the lesser of the amounts described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and (2) shall be exempt from Section 409A and shall be paid in accordance with this Article 3. Severance Benefits subject to this Section 3.2(b) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Section 409A of the Code and the regulations thereunder.
(c) To the extent Severance Benefits are not exempt from Section 409A under Sections 3.2(a) or (b) above, any Severance Benefits paid equal to or less than the applicable dollar amount under Section 402(g)(1)(B) of the Code for the year of separation from service with the Company shall be exempt from Section 409A in accordance with Treasury Regulation Section 1.409A-1(b)(9)(v)(D) and shall be paid in accordance with this Article 3. Severance Benefits subject to this Section 3.2(c) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Section 409A of the Code and the regulations thereunder.
(d) To the extent Severance Benefits are not exempt from Section 409A pursuant to Sections 3.2(a), (b) or (c) above, and to the extent the Officer is a “specified employee” (as defined below), payments due to the Officer under Section 3 shall begin no sooner than six (6) months after the Officer’s separation from service with the Company (other than for death); provided, however, that any payments not made during the six (6) month period described in this Section 3.2(d) due to the six (6) month delay period required under Treasury Regulation Section 1.409A-3(i)(2) shall be made in a single lump sum as soon as administratively practicable after the expiration of such six (6) month period and the balance of all other payments required under this Agreement shall be made as otherwise scheduled in this Agreement. Notwithstanding anything herein to the contrary, and subject to Code Section 409A, to the extent the following rules should apply to the Officer in connection with a payment made hereunder, such payment shall not be made or commence as a result of the Officer’s Effective Date of Termination if the Officer is a key employee (as set forth below) before the date that is not less than six (6) months after the Officer’s Effective Date of Termination. For this purpose, a key employee includes a “specified employee” (as defined in Code Section 409A(a)(2)(B)) during the entire twelve (12) month period determined by the Company ending with the annual date upon which key employees are identified by the Company, and also includes any Officer identified by the Company in good faith with respect to any distribution as belonging to the group of identified key employees, to a maximum of 200 such key employees, regardless of whether such Officer is subsequently determined by the Company, any governmental agency, or a court not to be a key employee. The identification date for determining key employees shall be each December 31 (and the new key employee list shall be updated and effective each subsequent April 1).
(e) For purposes of this Agreement, the term “specified employee” shall have the meaning set forth in Treasury Reg. Section 1.409A-1(i). The determination of whether the Officer is a “specified employee” shall be made by the Company in good faith applying the applicable Treasury regulations.
3.3 Best Net Determination in Event of Total Payments Exceeding Excise Tax Limits. In the event that the vesting of Severance Benefits along with all other payments and the value of any benefits received or to be received by the Officer (including the acceleration of vesting or exercisability of any equity- or cash-based long-term incentive awards) (the “Total Payments”) would result in all or a portion of such Total Payments being subject to the excise tax under Section 4999 of the Code (the “Excise Tax”), then the Officer’s Total Payments shall be either: (i) the full amount of such Total Payments, or (ii) such lesser amount that would result in no portion of the Total Payments being subject to excise tax under Section 4999 of the Code; whichever of the foregoing alternatives, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Tax, results in the receipt by the Officer, on an after-tax basis, of the largest value of payments and benefits notwithstanding that all or some portion of the payments and benefits may be subject to the Excise Tax under Section 4999 of the Code. Solely to the extent that the Officer is placed in a better after-tax position as a result of the reduction of the Total Payments, such benefits shall be reduced or eliminated, as determined by the Company, in the following order: (i) any cash payments, (ii) any taxable benefits, (iii) any nontaxable benefits, and (iv) any vesting or accelerated delivery of equity awards in each case in reverse order beginning with the payments or benefits that are to be paid the farthest in time from the date that triggers the applicable Excise Tax.
All determinations required to be made under this Section 3.3 shall be made by PricewaterhouseCoopers LLP, or any other nationally recognized outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax (the “Accounting Firm”). The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Officer. All fees and expenses of the Accounting Firm in making the determinations required to be made under this Section 3.3 shall be borne solely by the Company. The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code). For purposes of all calculations under Section 280G of the Code and the application of this Section 3.3, all determinations as to present value shall be made using 120 percent of the applicable federal rate (determined under Section 1274(d) of the Code) compounded semiannually, as in effect of the date of the Change in Control of the Company.
3.4 Withholding of Taxes. The Company shall withhold from any amounts payable under this Agreement all federal, state, city, or other taxes as legally shall be required.
3.5 Conditions to Payment of Severance Benefits. Within 45 days after the Officer’s Effective Date of Termination, to be eligible to receive (and continue to receive) and retain the payments and benefits described in Sections 2.3 (b), (c), (d) and (e), the Officer must comply with the terms of Article 4, and must execute and deliver to the Company (without subsequent revocation) a mutually acceptable agreement, in form and substance reasonably satisfactory to both the Officer and the Company, effectively releasing and giving up all claims the Officer may have against the Company and its subsidiaries, stockholders, successors and affiliates (and each of their respective employees, officers, plans and agents) arising out of or based upon any facts or conduct occurring prior to that date with the exception of (i) all payment of Severance Benefits, vested stock, deferred compensation and other benefits provided under the terms of this Agreement, (ii) the Officer’s right to continued indemnification to the fullest extent provided under the Company By-laws by reason of any act or omission performed or omitted by the Officer during the Officer’s employment, and (iii) the Officer’s rights to enforce the terms of this Agreement and sue for its breach. Such agreement will also require the Officer to reaffirm and agree to comply with the terms of this Agreement and any other agreement signed by the Officer in favor of the Company or any of its subsidiaries or affiliates that is still in effect. To the extent that any severance benefits described in Section 2.3(b) or (c) are not exempt from Section 409A of the Code, payment of such benefit shall not be made until the 60th day following the Officer’s Effective Date of Termination.
Article 4. Noncompetition and Confidentiality
In the event of a Change in Control, the following shall apply:
4.1 Noncompetition. During the term of this Agreement and, if longer, for a period of twenty-four (24) months after the Effective Date of Termination, the Officer shall not: (i) directly or indirectly act in concert or conspire with any person employed by the Company in order to engage in or prepare to engage in or to have a financial or other interest in any business or any activity which the Officer knows (or reasonably should have known) to be directly competitive with any business of the Company as then being carried on, or (ii) serve as an employee, agent, partner, stockholder, director or consultant for, or in any other capacity participate, engage, or have a financial or other interest in any business or any activity which the Officer knows (or reasonably should have known) to be directly competitive with the business of the Company as then being carried on (provided, however, that notwithstanding anything to the contrary contained in this Agreement, the Officer may own up to two percent (2%) of the outstanding shares of the capital stock of a company whose securities are registered under Section 12 of the Exchange Act).
4.2 Confidentiality. The Company has advised the Officer and the Officer acknowledges that it is the policy of the Company to maintain as secret and confidential all Protected Information (as defined below), and that Protected Information has been and will be developed at substantial cost and effort to the Company. All Protected Information shall remain confidential permanently and the Officer shall not at any time, directly or indirectly, divulge, furnish, or make accessible to any person, firm, corporation, association, or other entity (otherwise than as may be required in the regular course of the Officer’s employment with the Company), nor use in any manner, either during the term of employment or after termination, at any time, for any reason, any Protected Information, or cause any such information of the Company to enter the public domain.
4.3 Nonsolicitation. During the term of this Agreement and, if longer, for a period of twenty-four (24) months after the Effective Date of Termination, the Officer shall not: (a) employ or retain or solicit for employment or arrange to have any other person, firm, or other entity employ or retain or solicit for employment or otherwise participate in the employment or retention of any person who is an employee or consultant of the Company; or (b) solicit customers of the Company for a venture or business of any kind that competes with, or is a competitor of, the Company.
4.4 Cooperation. The Officer agrees to cooperate with the Company and its attorneys in connection with any and all lawsuits, claims, investigations, or similar proceedings that have been or could be asserted at any time arising out of or related in any way to the Officer’s employment by the Company.
4.5 Nondisparagement. At all times, the Officer agrees not to disparage the Company, its directors, officers or other representatives or otherwise make comments harmful to any of the foregoing party’s reputation.
4.6 Judicial Interpretation. It is expressly understood and agreed that although the Officer and the Company consider the restrictions contained in this Article 4 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that any restriction contained in this Agreement is an unenforceable restriction against the Officer, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply to the maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.
4.7 Injunctive Relief and Additional Remedy. The covenants in this Article 4 are in addition to and not in lieu of covenants and agreements in any other agreement signed or delivered by Officer in connection with Officer’s employment with the Company, including, without limitation, any agreement signed or delivered in connection with any incentive plans, equity grants or other compensatory arrangements. The Officer acknowledges that the injury that would be suffered by the Company as a result of a breach of the provisions of this Agreement would be irreparable and that an award of monetary damages to the Company for such a breach would be an inadequate remedy. Consequently, the Company will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Agreement, and the Company will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s rights under this Article 4 or any other remedies of the Company, if the Officer breaches any of the provisions of this Article, the Company will have the right to recover any amounts paid to the Officer under Section 2.3(c) of this Agreement.
Article 5. The Company’s Payment Obligation
5.1 Payment Obligations Absolute. Except as set forth in Sections 2.3(d), 3.3, 4.7 and 9.6 or otherwise required by law, the Company’s obligation to make the payments and the arrangements provided for herein shall be absolute and unconditional, and shall not be affected by any circumstances including, without limitation, any offset, counterclaim, recoupment, defense, or other right which the Company may have against the Officer or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final, and the Company shall not seek to recover all or any part of such payment from the Officer or from whomsoever may be entitled thereto, for any reasons whatsoever.
The Officer shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make the payments and arrangements required to be made under this Agreement, except to the extent provided in Section 2.3(d) herein.
5.2 Contractual Rights to Benefits. This Agreement establishes and vests in the Officer a contractual right to the benefits to which the Officer is entitled hereunder. However, nothing herein contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company to segregate, earmark, or otherwise set aside any funds or other assets, in trust or otherwise, to provide for any payments to be made or required hereunder.
Article 6. Term of Agreement
The Company reserves the right, except as hereinafter provided, at any time and from time to time, to amend, modify, change or terminate this Agreement; provided, however, that upon the earlier to occur of (i) a Change in Control or (ii) a Potential Change in Control, no such amendment, modification, change or termination that adversely affects the rights of the Officer under this Agreement may be made without the written consent of the Officer for a period of not less than twenty-four (24) months beyond the month in which the triggering Change in Control or Potential Change in Control occurred.
Article 7. Dispute Resolution
Any dispute or controversy between the parties arising under or in connection with this Agreement shall be settled by arbitration.
The arbitration proceeding shall be conducted before a panel of three (3) arbitrators sitting in a location selected by the Officer within fifty (50) miles from the location of the Officer’s principal place of employment, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the award of the arbitrators in any court having competent jurisdiction.
Each party shall be responsible for (i) its own expenses of such arbitration, including the reasonable fees and expenses of its legal representative(s), and necessary costs and disbursements incurred as a result of such dispute or legal proceeding and (ii) one-half of the fees and expenses of the arbitrators and the fees associated with arbitration filing; provided, however, that in the event the Officer prevails with respect to at least a majority of the issues in dispute, the Company shall bear all such expenses (including the fees and expense of Officer’s legal representative(s)), costs, disbursements and prejudgment interest.
Article 8. Successors
8.1 Successors to the Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, reorganization (including the formation of a holding company structure), consolidation, acquisition of property or stock, liquidation, or otherwise) of all or a significant portion of the business or assets of the Company, including, without limitation, a successor resulting from a Change in Control, by agreement, in form and substance reasonably satisfactory to the Officer, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any successor in accordance with the operation of law and such successor shall be deemed the “Company” for purposes of this Agreement.
8.2 Assignment by the Officer. This Agreement shall inure to the benefit of and be enforceable by the Officer’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Officer dies while any amount would still be payable to the Officer hereunder had the Officer continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Officer’s devisee, legatee, or other designee, or if there is no such designee, to the Officer’s beneficiary designated under the Company’s life insurance plan, or, if there is no such beneficiary, to the Officer’s estate.
Article 9. Miscellaneous
9.1 Employment Status. This Agreement is not, and nothing herein shall be deemed to create, an employment contract between the Officer and the Company or any of its subsidiaries. The Officer acknowledges that the rights of the Company remain wholly intact to change or reduce at any time and from time to time the Officer’s compensation, title, responsibilities, location, and all other aspects of the employment relationship, or to discharge the Officer, prior to a Change in Control.
9.2 Entire Agreement. Except as provided in the first sentence of Section 4.7 and the first sentence of Section 9.5, this Agreement contains the entire understanding of the Company and the Officer with respect to the subject matter hereof. In addition, the payments provided for under this Agreement in the event of the Officer’s separation from service with the Company shall be in lieu of any severance benefits payable under any severance plan, program, or policy of the Company to which the Officer might otherwise be entitled.
9.3 Notices. All notices, requests, demands, and other communications hereunder shall be sufficient if in writing and shall be deemed to have been duly given if delivered by hand or if sent by registered or certified mail to the Officer at the last address the Officer has filed in writing with the Company or, in the case of the Company, at its principal offices.
9.4 Execution in Counterparts. This Agreement may be executed by the parties hereto in counterparts, each of which shall be deemed to be original, but all such counterparts shall constitute one and the same instrument, and all signatures need not appear on any one counterpart.
9.5 Conflicting Agreements. Except as may be provided in any award agreement between the Company and Officer relating to any equity- or cash-based long-term incentive award, this Agreement completely supersedes any and all prior change in control agreements, provisions or understandings, oral or written, entered into by and between the Company and the Officer, with respect to the subject matter hereof, and all amendments thereto, in their entirety. Further, the Officer hereby represents and warrants to the Company that the Officer’s entering into this Agreement, and the obligations and duties undertaken by the Officer hereunder, will not conflict with, constitute a breach of, or otherwise violate the terms of, any other employment or other agreement to which the Officer is a party, except to the extent any such conflict, breach, or violation under any such agreement has been disclosed to the Board in writing in advance of the signing of this Agreement.
Notwithstanding any other provisions of this Agreement to the contrary, if there is any inconsistency between the terms and provisions of this Agreement and the terms and provisions of Company-sponsored compensation and welfare plans and programs, this Agreement’s terms and provisions shall completely supersede and replace the conflicting terms of the Company-sponsored compensation and welfare plans and programs, where applicable.
9.6 Severability. Except as provided in Section 4.6, in the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. Further, the captions of this Agreement are not part of the provisions hereof and shall have no force and effect.
Notwithstanding any other provisions of this Agreement to the contrary, the Company shall have no obligation to make any payment to the Officer hereunder to the extent, but only to the extent, that such payment is prohibited by the terms of any final order of a federal or state court or regulatory agency of competent jurisdiction; provided, however, that such an order shall not affect, impair, or invalidate any provision of this Agreement not expressly subject to such order.
9.7 Modification. No provision of this Agreement may be modified, waived, or discharged unless such modification, waiver, or discharge is agreed to in writing and signed by the Officer and by a member of the Board, as applicable, or by the respective parties’ legal representatives or successors.
9.8 Applicable Law. To the extent not preempted by the laws of the United States, the laws of Missouri shall be the controlling law in all matters relating to this Agreement without giving effect to principles of conflicts of laws.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement on this 24th day of June 2019.
AEGION CORPORATION
/s/ Phillip D. Wright
By: Phillip D. Wright, Chair of Compensation Committee
/s/ John L. Heggemann
John L. Heggemann
Exhibit 31.1
CERTIFICATIONS
I, Charles R. Gordon, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Aegion Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 2, 2019
/s/ Charles R. Gordon |
Charles R. Gordon President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, David F. Morris, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Aegion Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 2, 2019
/s/ David F. Morris |
David F. Morris |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Aegion Corporation (the “Company”) for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Charles R. Gordon, President and Chief Executive Officer of the Company, hereby certify as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 2, 2019
/s/ Charles R. Gordon |
Charles R. Gordon President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Aegion Corporation (the “Company”) for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, David F. Morris, Executive Vice President and Chief Financial Officer of the Company, hereby certify as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Form 10-Q fully complies with the requirements of section 13(a) or the Securities Exchange Act of 1934; and
(2) information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 2, 2019
/s/ David F. Morris |
David F. Morris |
Exhibit 95
Mine Safety and Health Disclosure
Mine Safety and Health Administration Contractor Identification Number VBW
The operation of mines located in the U.S. is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). Under the Mine Act, an independent contractor who provides onsite services to a mine is deemed to be an “operator” of the mine. United Pipeline Systems, Inc., a wholly-owned subsidiary of the Company, performs services or construction at mines in the U.S. from time to time. As such, we are providing this report pursuant to section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of SEC Regulation S-K.
The table below sets forth, by mining complex, the total number of citations and/or orders issued by MSHA, under the indicated provisions of the Mine Act, to the Company during quarter ended June 30, 2019 that require disclosure, together with the total dollar value of proposed MSHA assessments. Section references are to sections of MSHA. The table below also sets forth information with respect to legal actions for the quarter ended June 30, 2019.
Mine or Operating Name / MSHA Identification Number |
Section 104 S&S Citations (#) |
Section 104(b) Orders (#) |
Section 104(d) Citations and Orders (#) |
Section 110(b)(2) Violations (#) |
Section 107(a) Orders (#) |
Total Dollar Value of MSHA Assessments Proposed ($) |
Total Number of Mining Related Fatalities (#) |
Received Notice of Pattern of Violations Under Section 104(e) (yes/no) |
Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no) |
Legal Actions Pending (#) |
Legal Actions Initiated (#) |
Legal Actions Resolved (#) |
Barrick Goldstrike Mines, Inc. 2601089 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
no |
no |
0 |
0 |
0 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
||||||
Revenues | [1] | $ 318,740,000 | $ 335,030,000 | $ 595,644,000 | $ 659,891,000 | ||||
Cost of revenues | 251,303,000 | 263,977,000 | 479,912,000 | 527,334,000 | |||||
Gross profit | [1] | 67,437,000 | 71,053,000 | 115,732,000 | 132,557,000 | ||||
Operating expenses | 51,254,000 | 54,222,000 | 99,124,000 | 110,364,000 | |||||
Impairment of assets held for sale | 11,946,000 | 0 | 11,946,000 | 0 | |||||
Acquisition and divestiture expenses | 804,000 | 832,000 | 917,000 | 1,224,000 | |||||
Restructuring and related charges | 2,974,000 | 1,540,000 | 4,060,000 | 3,329,000 | |||||
Operating income (loss) | 459,000 | 14,459,000 | (315,000) | 17,640,000 | |||||
Other income (expense): | |||||||||
Interest expense | (3,566,000) | (3,923,000) | (7,156,000) | (9,366,000) | |||||
Interest income | 261,000 | 62,000 | 546,000 | 109,000 | |||||
Other | [2] | (1,015,000) | (506,000) | (1,689,000) | (768,000) | ||||
Total other expense | (4,320,000) | (4,367,000) | (8,299,000) | (10,025,000) | |||||
Income (loss) before taxes on income | (3,861,000) | 10,092,000 | (8,614,000) | 7,615,000 | |||||
Taxes on income (loss) | 4,286,000 | 2,894,000 | 3,524,000 | 1,893,000 | |||||
Net income (loss) | (8,147,000) | 7,198,000 | (12,138,000) | 5,722,000 | |||||
Non-controlling interests (income) loss | (219,000) | 723,000 | (229,000) | 130,000 | |||||
Net income (loss) attributable to Aegion Corporation | $ (8,366,000) | $ 7,921,000 | $ (12,367,000) | $ 5,852,000 | |||||
Earnings (loss) per share attributable to Aegion Corporation: | |||||||||
Basic (in dollars per share) | $ (0.27) | $ 0.24 | $ (0.39) | $ 0.18 | |||||
Diluted (in dollars per share) | $ (0.27) | $ 0.24 | $ (0.39) | $ 0.18 | |||||
|
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
||||||
Net income (loss) | $ (8,147) | $ 7,198 | $ (12,138) | $ 5,722 | |||||
Other comprehensive income (loss): | |||||||||
Currency translation adjustments | 1,204 | (6,510) | 3,066 | (4,282) | |||||
Deferred gain (loss) on hedging activity, net of tax (1) | [1] | (3,553) | 684 | (5,699) | 1,178 | ||||
Pension activity, net of tax (2) | [2] | 24 | 12 | 3 | 5 | ||||
Total comprehensive income (loss) | (10,472) | 1,384 | (14,768) | 2,623 | |||||
Comprehensive (income) loss attributable to non-controlling interests | (326) | 1,023 | (249) | 377 | |||||
Comprehensive income (loss) attributable to Aegion Corporation | $ (10,798) | $ 2,407 | $ (15,017) | $ 3,000 | |||||
|
Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Deferred gain (loss) on hedging activity, tax | $ 91 | $ 245 | $ 150 | $ 422 |
Pension activity, tax | $ 1 | $ 3 | $ 6 | $ 1 |
Consolidated Balance Sheets (Current Period Unaudited) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
||||||
---|---|---|---|---|---|---|---|---|
Current assets | ||||||||
Cash and cash equivalents | $ 51,338,000 | $ 83,527,000 | ||||||
Restricted cash | 759,000 | 1,359,000 | ||||||
Receivables, net of allowances of $9,043 and $9,695, respectively | 198,757,000 | 204,541,000 | ||||||
Retainage | 31,441,000 | 33,572,000 | ||||||
Contract assets | 56,661,000 | [1] | 62,467,000 | [2] | ||||
Inventories | 57,424,000 | 56,437,000 | ||||||
Prepaid expenses and other current assets | 24,571,000 | 32,172,000 | ||||||
Assets held for sale | 32,161,000 | 7,792,000 | ||||||
Total current assets | 453,112,000 | 481,867,000 | ||||||
Property, plant & equipment, less accumulated depreciation | 105,018,000 | 107,059,000 | ||||||
Other assets | ||||||||
Goodwill | 256,773,000 | 260,633,000 | ||||||
Intangible assets, less accumulated amortization | 111,695,000 | 119,696,000 | ||||||
Operating lease assets | 69,057,000 | 0 | ||||||
Deferred income tax assets | 1,087,000 | 1,561,000 | ||||||
Other assets | 18,726,000 | 21,601,000 | ||||||
Total other assets | 457,338,000 | 403,491,000 | ||||||
Total Assets | 1,015,468,000 | 992,417,000 | ||||||
Current liabilities | ||||||||
Accounts payable | 56,535,000 | 64,562,000 | ||||||
Accrued expenses | 99,556,000 | 88,020,000 | ||||||
Contract liabilities | 25,387,000 | [1] | 32,339,000 | [2] | ||||
Current maturities of long-term debt | 32,810,000 | 29,469,000 | ||||||
Liabilities held for sale | 17,392,000 | 5,260,000 | ||||||
Total current liabilities | 231,680,000 | 219,650,000 | ||||||
Long-term debt, less current maturities | 271,832,000 | 282,003,000 | ||||||
Operating lease liabilities | 53,739,000 | 0 | ||||||
Deferred income tax liabilities | 9,281,000 | 8,361,000 | ||||||
Other non-current liabilities | 14,913,000 | 12,216,000 | ||||||
Total liabilities | 581,445,000 | 522,230,000 | ||||||
(See Commitments and Contingencies: Note 11) | ||||||||
Equity | ||||||||
Preferred stock, undesignated, $.10 par – shares authorized 2,000,000; none outstanding | 0 | 0 | ||||||
Common stock, $.01 par – shares authorized 125,000,000; shares issued and outstanding 30,941,394 and 31,922,409, respectively | 309,000 | 319,000 | ||||||
Additional paid-in capital | 102,841,000 | 122,818,000 | ||||||
Retained earnings | 367,523,000 | 379,890,000 | ||||||
Accumulated other comprehensive loss | (42,940,000) | (40,290,000) | ||||||
Total stockholders’ equity | 427,733,000 | 462,737,000 | ||||||
Non-controlling interests | 6,290,000 | 7,450,000 | ||||||
Total equity | 434,023,000 | 470,187,000 | ||||||
Total Liabilities and Equity | $ 1,015,468,000 | $ 992,417,000 | ||||||
|
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Allowance for doubtful accounts receivable | $ 9,043 | $ 9,695 |
Preferred stock, undesignated, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Preferred stock, undesignated, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, undesignated, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 125,000,000 | 125,000,000 |
Common stock, shares issued (in shares) | 30,941,394 | 31,922,409 |
Common stock, shares outstanding (in shares) | 30,941,394 | 31,922,409 |
Note 1 - General |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 | |||
Notes to Financial Statements | |||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
The accompanying unaudited consolidated financial statements of Aegion Corporation and its subsidiaries (collectively, “Aegion” or the “Company”) reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. All significant intercompany related accounts and transactions have been eliminated in consolidation.
The Consolidated Balance Sheet as of December 31, 2018, which is derived from the audited consolidated financial statements, and the interim unaudited consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the requirements of Form 10-Q and Article 10 of Regulation S-X and, consequently, do not include all information or footnotes required by GAAP for complete financial statements or all the disclosures normally made in an Annual Report on Form 10-K. Accordingly, the unaudited consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2019.
Acquisitions/Strategic Initiatives/Divestitures
2017 Restructuring
On July 28, 2017, the Company’s board of directors approved a realignment and restructuring plan (the “2017 Restructuring”). As part of the 2017 Restructuring, the Company announced plans 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® system in North America; (iii) right-size the cathodic protection services operation in Canada and the cured-in-place pipe (“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. During the second quarter of 2019, the Company initiated plans to exit additional international businesses. See further discussion in Note 4.
Infrastructure Solutions Segment (“Infrastructure Solutions”)
During 2018, the Company’s board of directors approved a plan to divest the Company’s CIPP business in Australia (“Insituform Australia”). While restructuring actions in Insituform Australia led to improvements in operating results, an assessment of the long-term fit within the Company’s portfolio led to the decision to divest the business. Accordingly, the Company has classified Insituform Australia’s assets and liabilities as held for sale on the Consolidated Balance Sheet at June 30, 2019 and December 31, 2018. See Note 5.
During the second quarter of 2019, the Company initiated plans to sell its CIPP contracting businesses in Europe: Insituform Rioolrenovatietechnicken B.V. (“Insituform Netherlands”); Insituform Technologies Iberica SA (“Insituform Spain”); and Environmental Techniques Limited (“Environmental Techniques”). Accordingly, the Company has classified the assets and liabilities of these businesses as held for sale on the Consolidated Balance Sheet at June 30, 2019. See Note 5.
Corrosion Protection Segment (“Corrosion Protection”)
During the first quarter of 2019, the Company initiated plans to sell its interest in its cathodic protection materials manufacturing and production joint venture in Saudi Arabia, Corrpower International Limited (“Corrpower”), and its interest in its Titeliner® and CIPP joint venture in South Africa, Aegion South Africa Proprietary Limited (“Aegion South Africa”). During the second quarter of 2019, the Company began negotiating with a prospective buyer for its interest in its Titeliner® joint venture in Mexico, United Pipeline de Mexico S.A. de C.V. (“United Mexico”). Accordingly, the Company has classified the assets and liabilities of these businesses as held for sale on the Consolidated Balance Sheet at June 30, 2019. See Note 5.
On May 4, 2018, the Company acquired the operations of Hebna Inc., Hebna Canada Inc. and Hebna Corporation (collectively “Hebna”), for a total purchase price of $6.0 million ($3.0 million was paid during the second quarter of 2018 and $3.0 million was paid during the third quarter of 2018). The transaction was funded from a combination of domestic and international cash balances, with fifty percent (50%) of the purchase price being paid by the Company’s joint venture in Oman, in which the Company is a fifty-one percent (51%) partner. Hebna provided pipeline lining services, including compressed-fit lining, slip-lining, liner and free-standing pipe fusing, pipeline assessment and integrity management, pipeline pigging and calibration, and roto-lining services primarily in the United States, Canada and Middle East.
|
Note 2 - Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] |
On January 1, 2019, the Company adopted FASB ASC 842, Leases (“FASB ASC 842”). See Note 6 for further information. Other than the adoption of FASB ASC 842, there were no material changes in accounting policies from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
Accumulated Other Comprehensive Loss
As set forth below, the Company’s accumulated other comprehensive loss is comprised of three main components: (i) currency translation; (ii) derivatives; and (iii) gains and losses associated with the Company’s defined benefit plan in the United Kingdom (in thousands):
For the Company’s international subsidiaries, the local currency is generally the functional currency. Assets and liabilities of these subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates. The cumulative translation adjustment resulting from changes in exchange rates are included in the Consolidated Balance Sheets as a component of “Accumulated other comprehensive loss” in total stockholders’ equity. A net foreign exchange transaction gain of $0.1 million and a loss of $0.5 million in the second quarters of 2019 and 2018, respectively, and losses of $0.7 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively, are included in “Other expense” in the Consolidated Statements of Operations.
Taxation
The Company provides for estimated income taxes payable or refundable on current year income tax returns as well as the estimated future tax effects attributable to temporary differences and carryforwards, based upon enacted tax laws and tax rates, and in accordance with FASB ASC 740, Income Taxes (“FASB ASC 740”). FASB ASC 740 also requires that a valuation allowance be recorded against any deferred tax assets that are not likely to be realized in the future. The determination is based on the Company’s ability to generate future taxable income and, at times, is dependent on its ability to implement strategic tax initiatives to ensure full utilization of recorded deferred tax assets. Should the Company not be able to implement the necessary tax strategies, it may need to record valuation allowances for certain deferred tax assets, including those related to foreign income tax benefits. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowances recorded against net deferred tax assets.
Earnings per Share
Earnings per share have been calculated using the following share information:
The Company excluded 449,156 and 498,315 restricted and deferred stock units for the quarter and six-month period ended June 30, 2019, respectively, from the diluted earnings per share calculation for the Company’s common stock because of the reported net loss for the periods.
Cash, Cash Equivalents and Restricted Cash
The Company classifies highly liquid investments with original maturities of 90 days or less as cash equivalents. Recorded book values are reasonable estimates of fair value for cash and cash equivalents.
Cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows are as follows (in thousands):
Restricted cash held in escrow primarily relates to funds reserved for legal requirements, deposits made in lieu of retention on specific projects performed for municipalities and state agencies, or advance customer payments and compensating balances for bank undertakings in Europe. Restricted cash related to operations is similar to retainage, and is, therefore, classified as a current asset, consistent with the Company’s policy on retainage.
Investments in Variable Interest Entities
The Company evaluates all transactions and relationships with variable interest entities (“VIE”) to determine whether the Company is the primary beneficiary of the entities in accordance with FASB ASC 810, Consolidation. There were no changes in the Company’s VIEs during the quarter ended June 30, 2019.
Financial data for consolidated variable interest entities are summarized in the following tables (in thousands):
Newly Issued Accounting Pronouncements
In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The guidance is effective for the Company’s fiscal year beginning January 1, 2020, including interim periods within that fiscal year. The adoption of this standard is not expected to have a material impact on its consolidated financial statements.
In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits a company to reclassify the income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive income to retained earnings. Companies may adopt the new guidance using one of two transition methods: (i) retrospective to each period (or periods) in which the income tax effects are recognized, or (ii) at the beginning of the period of adoption. The Company adopted this standard effective January 1, 2019 and elected not to reclassify the tax effects due to the immaterial impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the way in which entities estimate and present credit losses for most financial assets, including accounts receivable. The guidance is effective for the Company’s fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early adoption is permitted, although the Company does not intend to do so. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), which requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases with lease terms longer than twelve months. The Company adopted this standard, effective January 1, 2019, using the adoption-date transition provision, which recognizes and measures leases existing at January 1, 2019 but without retrospective application. See Note 6.
|
Note 3 - Revenues |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Text Block] |
On January 1, 2018, the Company adopted FASB ASC 606 for all contracts that were not completed using the modified retrospective transition method. The Company recognized the cumulative effect of initially applying FASB ASC 606 as a net reduction to opening retained earnings of $0.3 million as of January 1, 2018 due to the cumulative impact of adopting FASB ASC 606, with the impact primarily related to royalty license fee revenues.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in FASB ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts in which construction, engineering and installation services are provided, there is generally a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The bundle of goods and services represents the combined output for which the customer has contracted. For product sales contracts with multiple performance obligations where each product is distinct, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good in the contract. For royalty license agreements whereby intellectual property is transferred to the customer, there is a single performance obligation as the license is not separately identifiable from the other goods and services in the contract.
The Company’s performance obligations are satisfied over time as work progresses or at a point in time. Revenues from products and services transferred to customers over time accounted for 92.3% and 93.4% of revenues for the quarters ended June 30, 2019 and 2018, respectively, and 91.7% and 94.2% of revenues for the six months ended June 30, 2019 and 2018, respectively. Revenues from construction, engineering and installation services are recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress toward satisfying performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, overhead and, when appropriate, general and administrative expenses. Revenues from maintenance contracts are structured such that the Company has the right to consideration from a customer in an amount that corresponds directly with the performance completed to date. Therefore, the Company utilizes the practical expedient in FASB ASC 606-55-255, which allows the Company to recognize revenue in the amount to which it has the right to invoice. Applying this practical expedient, the Company is not required to disclose the transaction price allocated to remaining performance obligations under these agreements. Revenues from royalty license arrangements are recognized either at contract inception when the license is transferred or when the royalty has been earned, depending on whether the contract contains fixed consideration. Revenues from stand-alone product sales are recognized at a point in time, when control of the product is transferred to the customer. Revenues from these types of contracts accounted for 7.7% and 6.6% of revenues for the quarters ended June 30, 2019 and 2018, respectively, and 8.3% and 5.8% for the six months ended June 30, 2019 and 2018, respectively.
On June 30, 2019, the Company had $480.9 million of remaining performance obligations from construction, engineering and installation services. The Company estimates that approximately $436.0 million, or 90.7%, of the remaining performance obligations at June 30, 2019 will be realized as revenues in the next 12 months.
Contract Estimates
Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, the Company estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract, and recognizes that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that sometimes span multiple years. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer.
The Company’s contracts do not typically contain variable consideration or other provisions that increase or decrease the transaction price. In rare situations where the transaction price is not fixed, the Company estimates variable consideration at the most likely amount to which it expects to be entitled. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. For royalty license agreements, the Company applies the sales-based and usage-based royalty exception and recognizes royalties at the later of: (i) when the subsequent sale or usage occurs; or (ii) the satisfaction or partial satisfaction of the performance obligation to which some or all of the sales-or usage-based royalty has been allocated. For contracts in which a portion of the transaction price is retained and paid after the good or service has been transferred to the customer, the Company does not recognize a significant financing component. The primary purpose of the retainage payment is often to provide the customer with assurance that the Company will perform its obligations under the contract, rather than to provide financing to the customer.
The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available. Revenue by Category
The following tables summarize revenues by segment and geography (in thousands):
The following tables summarize revenues by segment and contract type (in thousands):
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets and contract liabilities on the Consolidated Balance Sheets. Contract assets represent work performed that could not be billed either due to contract stipulations or the required contractual documentation has not been finalized. Substantially all unbilled amounts are expected to be billed and collected within one year.
For fixed fee and time-and-materials based contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. For some royalty license arrangements, minimum amounts are billed over the license term as quarterly royalty amounts are determined. This results in contract assets as the Company recognizes revenue for the license when the license is transferred to the customer at contract inception. The Company’s contract liabilities consist of advance payments, billings in excess of revenue recognized and deferred revenue.
The Company’s contract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Advance payments, billings in excess of revenue recognized and deferred revenue are each classified as current.
Net contract assets (liabilities) consisted of the following (in thousands):
Substantially all of the $32.3 million and $51.6 million contract liabilities balances at December 31, 2018 and December 31, 2017, respectively, were recognized in revenues during the first six months of 2019 and 2018, respectively.
Impairment losses recognized on receivables and contract assets were not material during the first six months of 2019 and 2018.
|
Note 4 - Restructuring |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring, Impairment, and Other Activities Disclosure [Text Block] |
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 and the first quarter of 2019, 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. During the second quarter of 2019, as part of the 2017 Restructuring, the Company initiated plans to exit additional international businesses, including Insituform Netherlands, Insituform Spain and Environmental Techniques.
Total pre-tax 2017 Restructuring and related impairment charges since inception were $149.0 million ($135.9 million post-tax) and consisted of cash charges totaling $34.3 million and non-cash charges totaling $114.7 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) $28.4 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 480 employees as a result of these actions.
The Company expects to incur additional cash charges of less than $5 million related to the 2017 Restructuring. Also, the Company could incur additional non-cash charges primarily associated with the release of cumulative currency translation adjustments and losses on the closure or liquidation of international entities. 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 and Corporate to a lesser extent. The Company expects to reduce headcount by an additional 30 employees as a result of these further actions.
During the quarters and six months ended June 30, 2019 and 2018, the Company recorded pre-tax expenses related to the 2017 Restructuring as follows (in thousands):
2017 Restructuring costs related to severance, other termination benefit costs and early contract termination costs were $3.0 million and $1.5 million for the quarters ended June 30, 2019 and 2018, respectively, and $4.1 and $3.3 million for the six months ended June 30, 2019 and 2018, respectively, 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 and six months ended June 30, 2019 and 2018 as presented in their affected line in the Consolidated Statements of Operations (in thousands):
The following tables summarize the 2017 Restructuring activity during the first six months of 2019 and 2018 (in thousands):
|
Note 5 - Assets and Liabilities Held for Sale |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] |
During the first half of 2019, the Company initiated plans to sell several entities as part of its ongoing strategic actions intended to generate more predictable and sustainable long-term earnings growth. Within Infrastructure Solutions, the Company plans to divest its CIPP contracting businesses in Europe: Insituform Netherlands, Insituform Spain and Environmental Techniques. Within Corrosion Protection, the Company plans to divest its interests in Corrpower, Aegion South Africa and United Mexico. The Company is currently in various stages of discussions with third parties for each of the entities and believes that it is probable that a sale of each entity will occur in the second half of 2019.
During 2018, the Company’s board of directors approved a plan to divest the assets and liabilities of Insituform Australia. During the second quarter of 2019, the Company ended its negotiations with a potential third-party acquirer and began discussions with another third party. Because of these new negotiations, management believes that it is probable that a sale will occur in the second half of 2019.
The relevant asset and liability balances at June 30, 2019 and December 31, 2018 are accounted for as held for sale and measured at the lower of carrying value or fair value less cost to sell. Based on management’s current expectation of fair value less cost to sell, the Company recorded an impairment of assets held for sale of $11.9 million in the Consolidated Statement of Operations during the quarter ended June 30, 2019. Impairment charges of $5.1 million and $3.9 million were recorded for Insituform Australia and Insituform Netherlands, respectively, which are reported within the Infrastructure Solutions reportable segment, and $1.1 million and $1.8 million were recorded for Corrpower and United Mexico, respectively, which are reported within the Corrosion Protection reportable segment. In the event the Company is unable to sell the assets and liabilities or sells them at a price or on terms that are less favorable, or at a higher cost than currently anticipated, the Company could incur additional impairment charges or a loss on disposal.
The following table provides the components of assets and liabilities held for sale (in thousands):
|
Note 6 - Leases |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Leases [Text Block] |
Effective January 1, 2019, the Company adopted FASB ASC 842 using the adoption-date transition provision rather than at the earliest comparative period presented in the financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019 but without retrospective application. The Company also elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components. The Company also made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes. The impact of FASB ASC 842 on the Consolidated Balance Sheet beginning January 1, 2019 was through the recognition of operating lease assets and corresponding operating lease liabilities of $70.5 million. No impact was recorded to the Consolidated Statement of Operations or beginning retained earnings.
The Company’s operating lease portfolio includes operational field locations, administrative offices, equipment, vehicles and information technology equipment. The majority of the Company’s leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases for 5 years or more. Right-of-use assets are presented within “Operating lease assets” on the Consolidated Balance Sheet. The current portion of operating lease liabilities are presented within “Accrued expenses”, and the non-current portion of operating lease liabilities are presented within “Operating lease liabilities” on the Consolidated Balance Sheet.
Operating lease assets and liabilities are recognized based on the present value of lease payments over the lease term at inception. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 1, 2019. A portion of the Company’s real estate, equipment and vehicle leases is subject to periodic changes in the Consumer Price Index, LIBOR or other market index. The changes to these indexes are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. Because most leases do not provide an explicit rate of return, the Company utilizes its incremental secured borrowing rate on a lease-by-lease basis in determining the present value of lease payments at the commencement date of the lease.
The following table presents the components of lease expense (in thousands):
Supplemental cash flow information related to leases was as follows (in thousands):
Supplemental balance sheet information related to leases was as follows (in thousands):
Operating lease liabilities under non-cancellable leases were as follows (in thousands):
Minimum rental commitments under non-cancellable leases as of December 31, 2018 for years 2019 through 2023 were $19.8 million, $15.1 million, $11.5 million, $8.1 million and $5.4 million, respectively, and $7.2 million thereafter. |
Note 7 - Goodwill and Intangible Assets |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] |
Goodwill
The following table presents a reconciliation of the beginning and ending balances of goodwill (in thousands):
Intangible Assets
Intangible assets consisted of the following (in thousands):
Amortization expense was $3.4 million and $3.5 million for the quarters ended June 30, 2019 and 2018, respectively, and $6.9 million and $7.0 million for the six months ended June 30, 2019 and 2018, respectively. Estimated amortization expense by year is as follows (in thousands):
|
Note 8 - Long-term Debt and Credit Facility |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] |
Long-term debt consisted of the following (in thousands):
In October 2015, the Company entered into an amended and restated $650.0 million senior secured credit facility with a syndicate of banks. In February 2018 and December 2018, the Company amended this facility (the “amended Credit Facility”). The amended Credit Facility consists of a $275.0 million 5-year revolving line of credit and a $308.4 million 5-year term loan facility, each with a maturity date in February 2023.
In 2018, the Company paid expenses of $2.5 million associated with the amended Credit Facility, $0.9 million related to up-front lending fees and $1.6 million related to third-party arranging fees and expenses, the latter of which was recorded in “Interest expense” in the Consolidated Statement of Operations during the first six months of 2018. In addition, the Company had $2.4 million in unamortized loan costs associated with the original Credit Facility, of which $0.2 million was written off and recorded in “Interest expense” in the Consolidated Statement of Operations during the first six months of 2018.
Generally, interest is charged on the principal amounts outstanding under the amended Credit Facility at the British Bankers Association LIBOR rate plus an applicable rate ranging from 1.25% to 2.25% depending on the Company’s consolidated leverage ratio. The Company can also opt for an interest rate equal to a base rate (as defined in the credit documents) plus an applicable rate, which also is based on the Company’s consolidated leverage ratio. The applicable LIBOR borrowing rate (LIBOR plus Company’s applicable rate) as of June 30, 2019 was approximately 4.38%.
The Company’s indebtedness at June 30, 2019 consisted of $269.1 million outstanding from the term loan under the amended Credit Facility and $38.0 million on the line of credit under the amended Credit Facility. Additionally, the Company had $0.9 million of debt held by its joint ventures (representing funds loaned by its joint venture partners) listed as held for sale at June 30, 2019 related to the planned sales of Corrpower and Aegion South Africa. During the first six months of 2019, the Company had net borrowings of $7.0 million on the line of credit for domestic working capital needs.
As of June 30, 2019, the Company had $23.6 million in letters of credit issued and outstanding under the amended Credit Facility. Of such amount, $12.3 million was collateral for the benefit of certain of our insurance carriers and $11.3 million was for letters of credit or bank guarantees of performance or payment obligations of foreign subsidiaries.
The Company’s indebtedness at December 31, 2018 consisted of $282.2 million outstanding from the term loan under the amended Credit Facility, $31.0 million on the line of credit under the amended Credit Facility and $1.0 million of third-party notes and bank debt.
At June 30, 2019 and December 31, 2018, the estimated fair value of the Company’s long-term debt was approximately $315.8 million and $307.7 million, respectively. Fair value was estimated using market rates for debt of similar risk and maturity and a discounted cash flow model, which are based on Level 2 inputs as defined in Note 13.
In October 2015, the Company entered into an interest rate swap agreement for a notional amount of $262.5 million, which is set to expire in October 2020. The notional amount of this swap mirrors the amortization of a $262.5 million portion of the Company’s $350.0 million term loan drawn from the original Credit Facility. The swap requires the Company to make a monthly fixed rate payment of 1.46% calculated on the amortizing $262.5 million notional amount, and provides for the Company to receive a payment based upon a variable monthly LIBOR interest rate calculated on the same amortizing $262.5 million notional amount. The receipt of the monthly LIBOR-based payment offsets a variable monthly LIBOR-based interest cost on a corresponding $262.5 million portion of the Company’s term loan from the original Credit Facility. After considering the impact of the interest rate swap agreement, the effective borrowing rate on the Company’s term note as of June 30, 2019 was approximately 3.68%. This interest rate swap is used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement and is accounted for as a cash flow hedge. See Note 13.
On March 12, 2018, the Company entered into an interest rate swap forward agreement that begins in October 2020 and expires in February 2023 to coincide with the amortization period of the amended Credit Facility. The swap will require the Company to make a monthly fixed rate payment of 2.937% calculated on the then amortizing $170.6 million notional amount, and provides for the Company to receive a payment based upon a variable monthly LIBOR interest rate calculated on the same amortizing $170.6 million notional amount. The receipt of the monthly LIBOR-based payment will offset the variable monthly LIBOR-based interest cost on a corresponding $170.6 million portion of the Company’s term loan from the amended Credit Facility. This interest rate swap will be used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement and accounted for as a cash flow hedge. See Note 13.
The amended Credit Facility is subject to certain financial covenants, including a consolidated financial leverage ratio and consolidated fixed charge coverage ratio. Subject to the specifically defined terms and methods of calculation as set forth in the amended Credit Facility’s credit agreement, the financial covenant requirements, as of each quarterly reporting period end, are defined as follows:
At June 30, 2019, the Company was in compliance with all of its debt and financial covenants as required under the amended Credit Facility.
|
Note 9 - Stockholders' Equity and Equity Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] |
Share Repurchase Plan
In December 2018, the Company’s board of directors authorized the open market repurchase of up to two million shares of the Company’s common stock. The program did not establish a time period in which the repurchases had to be made. In December 2018, the Company amended its Credit Facility, which limits the open market share repurchases to $32.0 million for 2019. Once repurchased, the Company promptly retires such shares.
The Company is also authorized to repurchase up to $10.0 million of the Company’s common stock in each calendar year in connection with the Company’s equity compensation programs for employees. The participants in the Company’s equity plans may surrender shares of common stock in satisfaction of tax obligations arising from the vesting of restricted stock, restricted stock unit awards and performance unit awards under such plans and in connection with the exercise of stock option awards. The deemed price paid is the closing price of the Company’s common stock on the Nasdaq Global Select Market on the date that the restricted stock, restricted stock unit or performance unit vests or the shares of the Company’s common stock are surrendered in exchange for stock option exercises. With regard to stock option awards, the option holder may elect a “net, net” exercise in connection with the exercise of employee stock options such that the option holder receives a number of shares equal to the built-in gain in the option shares divided by the market price of the Company’s common stock on the date of exercise, less a number of shares equal to the taxes due upon the exercise of the option divided by the market price of the Company’s common stock on the date of exercise. The shares of common stock surrendered for taxes due on the exercise of the option are deemed repurchased by the Company.
During the first six months of 2019, the Company acquired 1,274,086 shares of the Company’s common stock for $22.0 million ($17.28 average price per share) through the open market repurchase program discussed above, 153,630 shares of the Company’s common stock for $3.1 million ($20.48 average price per share) in connection with the satisfaction of tax obligations in connection with the vesting of restricted stock units and performance units, and 48,409 shares of the Company’s common stock in connection with “net, net” exercises of employee stock options. Once repurchased, the Company immediately retired all such shares.
During the first six months of 2018, the Company acquired 548,198 shares of the Company’s common stock for $13.2 million ($24.07 average price per share) through the open market repurchase program discussed above and 223,974 shares of the Company’s common stock for $5.4 million ($24.14 average price per share) in connection with the satisfaction of tax obligations in connection with the vesting of restricted stock, restricted stock units and performance units. Once repurchased, the Company immediately retired all such shares. The Company did not acquire any of the Company’s common stock in connection with “net, net” exercises of employee stock options during the first six months of 2018.
Equity-Based Compensation Plans
In April 2016, the Company’s stockholders approved the 2016 Employee Equity Incentive Plan, which was amended in 2017 by the First Amendment to the 2016 Employee Equity Incentive Plan (as amended, the “2016 Employee Plan”). In April 2018, the Company’s stockholders approved the Second Amendment to the 2016 Employee Equity Incentive Plan, which increased by 1,700,000 the number of shares of the Company’s common stock reserved and available for issuance in connection with awards issued under the 2016 Employee Plan. The 2016 Employee Plan, which replaced the 2013 Employee Equity Incentive Plan, provides for equity-based compensation awards, including restricted shares of common stock, performance awards, stock options, stock units and stock appreciation rights. The 2016 Employee Plan is administered by the Compensation Committee of the board of directors, which determines eligibility, timing, pricing, amount and other terms or conditions of awards. As of June 30, 2019, 1,948,756 shares of the Company’s common stock were available for issuance under the 2016 Employee Plan.
In April 2016, the Company’s stockholders approved the 2016 Non-Employee Director Equity Incentive Plan (the “2016 Director Plan”), which replaced the 2011 Non-Employee Director Equity Incentive Plan. In April 2019, the Company’s stockholders approved an amendment and restatement of the 2016 Director Plan, which among other things, increased by 300,000 the number of shares of the Company’s common stock reserved and available for issuance in connection with awards issued under the 2016 Director Plan. The 2016 Director Plan provides for equity-based compensation awards, including non-qualified stock options and stock units. The board of directors administers the 2016 Director Plan and has the authority to establish, amend and rescind any rules and regulations related to the 2016 Director Plan. As of June 30, 2019, 326,533 shares of the Company’s common stock were available for issuance under the 2016 Director Plan.
Stock Awards
Stock awards, which include shares of restricted stock, restricted stock units and performance stock units, are awarded from time to time to executive officers and certain key employees of the Company. Stock award compensation is recorded based on the award date fair value and charged to expense ratably through the requisite service period. The forfeiture of unvested restricted stock, restricted stock units and performance stock units causes the reversal of all previous expense to be recorded as a reduction of current period expense.
A summary of the stock award activity is as follows:
Expense associated with stock awards was $2.0 million for each of the quarters ended June 30, 2019 and 2018, and $4.0 and $4.1 million for the six months ended June 30, 2019 and 2018, respectively. Unrecognized pre-tax expense of $14.6 million related to stock awards is expected to be recognized over the weighted average remaining service period of 2.10 years for awards outstanding at June 30, 2019.
Deferred Stock Unit Awards
Deferred stock units are generally awarded to directors of the Company and represent the Company’s obligation to transfer one share of the Company’s common stock to the grantee at a future date. Historically, awards were fully vested, and fully expensed, on the date of grant. Beginning in April 2019, as a result of the amendment and restatement of the 2016 Director Plan discussed above, the expense related to the issuance of deferred stock units is based on the award date fair value and charged to expense ratably through the requisite service period, which is generally 1 year. The forfeiture of unvested deferred stock units causes the reversal of all previous expense to be recorded as a reduction of current period expense.
A summary of deferred stock unit activity is as follows:
Expense associated with deferred stock unit awards was $0.2 million and $0.9 million for the quarters ended June 30, 2019 and 2018, respectively, and $0.2 million and $1.0 million for the six months ended June 30, 2019 and 2018, respectively.
Stock Options
Stock options on the Company’s common stock were previously awarded from time to time to executive officers and certain key employees of the Company. Stock options granted generally had a term of 7 to 10 years and an exercise price equal to the market value of the underlying common stock on the date of grant. There were 52,783 stock options exercised during the six months ended June 30, 2019 with a weighted average exercise price of $18.11 per share. There were no stock options outstanding at June 30, 2019.
|
Note 10 - Taxes on Income |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 | |||
Notes to Financial Statements | |||
Income Tax Disclosure [Text Block] |
The Company’s effective tax rate in the quarter and six-month period ended June 30, 2019 was (111.0)% and (40.9)%, respectively. The effective rates for both periods were negatively impacted by: (i) significant pre-tax charges primarily related to impairments of held for sale assets and currency translation adjustments, which were not deductible for tax purposes; (ii) a $2.1 million charge for foreign withholding taxes on the repatriation of foreign earnings; and (iii) valuation allowances recorded on certain net operating losses in foreign jurisdictions for which no income tax benefits are expected to be recognized.
The Company’s effective tax rate in the quarter and six-month period ended June 30, 2018 was 28.7% and 24.9%, respectively. These effective rates were negatively impacted, as compared to U.S. federal statutory tax rates, by valuation allowances recorded on certain net operating losses in foreign jurisdictions for which no income tax benefits are expected to be recognized. The effective tax rate for the six months ended June 30, 2018 was positively impacted by a $1.5 million net tax benefit, or 19.5% benefit to the effective tax rate, related to employee share-based payments vested during the first six months of 2018.
|
Note 11 - Commitments and Contingencies |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 | |||
Notes to Financial Statements | |||
Commitments and Contingencies Disclosure [Text Block] |
Litigation
The Company is involved in certain litigation incidental to the conduct of its business and affairs. Management, after consultation with legal counsel, does not believe that the outcome of any such litigation, individually or in the aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.
Purchase Commitments
The Company had no material purchase commitments at June 30, 2019.
Guarantees
The Company has many contracts that require the Company to indemnify the other party against loss from claims, including claims of patent or trademark infringement or other third-party claims for injuries, damages or losses. The Company has agreed to indemnify its surety against losses from third-party claims of subcontractors. The Company has not previously experienced material losses under these provisions and, while there can be no assurances, currently does not anticipate any future material adverse impact on its consolidated financial position, results of operations or cash flows.
The Company regularly reviews its exposure under all its engagements, including performance guarantees by contractual joint ventures and indemnification of its surety. As a result of the most recent review, the Company has determined that the risk of material loss is remote under these arrangements and has not recorded a liability for these risks at June 30, 2019 on its Consolidated Balance Sheet.
|
Note 12 - Segment Reporting |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] |
The Company has three operating segments, which are also its reportable segments: Infrastructure Solutions; Corrosion Protection and Energy Services. The Company’s operating segments correspond to its management organizational structure. Each operating segment has leadership that reports to the chief operating decision manager (“CODM”). The operating results and financial information reported by each segment are evaluated separately, regularly reviewed and used by the CODM to evaluate segment performance, allocate resources and determine management incentive compensation.
The following disaggregated financial results have been prepared using a management approach that is consistent with the basis and manner with which management internally disaggregates financial information for the purpose of making internal operating decisions. The Company evaluates performance based on stand-alone operating income (loss), which includes acquisition and divestiture expenses and restructuring charges, if applicable.
In 2019, the Company began reporting Corporate expenses separately rather than allocating those costs to the operating segments. The reported information for the quarter and six months ended June 30, 2018 has been revised to conform to the current period presentation.
Financial information by segment was as follows (in thousands):
The following table summarizes revenues and gross profit by geographic region (in thousands):
|
Note 13 - Derivative Financial Instruments |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
As a matter of policy, the Company uses derivatives for risk management purposes, and does not use derivatives for speculative purposes. From time to time, the Company may enter into foreign currency forward contracts to hedge foreign currency cash flow transactions. For cash flow hedges, a gain or loss is recorded in the Consolidated Statements of Operations upon settlement of the hedge. All of the Company’s hedges that are designated as hedges for accounting purposes were highly effective; therefore, no notable amounts of hedge ineffectiveness were recorded in the Company’s Consolidated Statements of Operations for either the settlement of cash flow hedges or the outstanding hedged balance. At June 30, 2019, the Company’s cash flow hedges were in a net deferred loss position of $4.1 million compared to a net deferred gain position of $1.8 million at December 31, 2018. The change during the period was due to unfavorable movements in short-term interest rates relative to the hedged position. The Company presents derivative instruments in the consolidated financial statements on a gross basis. Deferred gains and losses were recorded in other non-current assets and other non-current liabilities, respectively, and other comprehensive income on the Consolidated Balance Sheets. The net periodic change of the Company’s cash flow hedges was recorded on the foreign currency translation adjustment and derivative transactions line of the Consolidated Statements of Equity.
The Company also engages in regular inter-company trade activities and receives royalty payments from certain of its wholly-owned entities, paid in local currency, rather than the Company’s functional currency, U.S. dollars. The Company utilizes foreign currency forward exchange contracts to mitigate the currency risk associated with the anticipated future payments from certain of its international entities. During the first six months of 2019 and 2018, a loss of $0.3 million each, was recorded upon settlement of foreign currency forward exchange contracts. Gains and losses of this nature are recorded to “Other income (expense)” in the Consolidated Statements of Operations.
In October 2015, the Company entered into an interest rate swap agreement for a notional amount of $262.5 million, which is set to expire in October 2020. The notional amount of this swap mirrored the amortization of a $262.5 million portion of the Company’s $350.0 million term loan drawn from the original Credit Facility. The swap requires the Company to make a monthly fixed rate payment of 1.46% calculated on the amortizing $262.5 million notional amount and provides for the Company to receive a payment based upon a variable monthly LIBOR interest rate calculated by amortizing the $262.5 million same notional amount. The receipt of the monthly LIBOR-based payment offsets a variable monthly LIBOR-based interest cost on a corresponding $262.5 million portion of the Company’s term loan from the original Credit Facility. This interest rate swap is used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement and is accounted for as a cash flow hedge.
On March 12, 2018, the Company entered into an interest rate swap forward agreement that begins in October 2020 and expires in February 2023 to coincide with the amortization period of the amended Credit Facility. The swap will require the Company to make a monthly fixed rate payment of 2.937% calculated on the then amortizing $170.6 million notional amount, and provides for the Company to receive a payment based upon a variable monthly LIBOR interest rate calculated on the same amortizing $170.6 million notional amount. The receipt of the monthly LIBOR-based payment will offset the variable monthly LIBOR-based interest cost on a corresponding $170.6 million portion of the Company’s term loan from the amended Credit Facility. This interest rate swap will be used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement and accounted for as a cash flow hedge.
The following table summarizes the Company’s derivative positions at June 30, 2019:
The following table provides a summary of the fair value amounts of our derivative instruments, all of which are Level 2 inputs as defined below (in thousands):
FASB ASC 820, Fair Value Measurements (“FASB ASC 820”), defines fair value and establishes a framework for measuring and disclosing fair value instruments. The guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
In accordance with FASB ASC 820, the Company determined that the value of all of its derivative instruments, which are measured at fair value on a recurring basis, are derived from significant observable inputs, referred to as Level 2 inputs.
The Company had no transfers between Level 1, 2 or 3 inputs during the quarter ended June 30, 2019. Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, the Company does not believe any such changes would have a material impact on its financial condition, results of operations or cash flows. Other financial instruments including cash and cash equivalents and short-term borrowings, including notes payable, are recorded at cost, which approximates fair value, which is based on Level 2 inputs as previously defined.
|
Significant Accounting Policies (Policies) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Policy [Policy Text Block] | Accumulated Other Comprehensive Loss
As set forth below, the Company’s accumulated other comprehensive loss is comprised of three main components: (i) currency translation; (ii) derivatives; and (iii) gains and losses associated with the Company’s defined benefit plan in the United Kingdom (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax, Policy [Policy Text Block] | Taxation
The Company provides for estimated income taxes payable or refundable on current year income tax returns as well as the estimated future tax effects attributable to temporary differences and carryforwards, based upon enacted tax laws and tax rates, and in accordance with FASB ASC 740, Income Taxes (“FASB ASC 740”). FASB ASC 740 also requires that a valuation allowance be recorded against any deferred tax assets that are not likely to be realized in the future. The determination is based on the Company’s ability to generate future taxable income and, at times, is dependent on its ability to implement strategic tax initiatives to ensure full utilization of recorded deferred tax assets. Should the Company not be able to implement the necessary tax strategies, it may need to record valuation allowances for certain deferred tax assets, including those related to foreign income tax benefits. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowances recorded against net deferred tax assets. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share, Policy [Policy Text Block] | Earnings per Share
Earnings per share have been calculated using the following share information:
The Company excluded 449,156 and 498,315 restricted and deferred stock units for the quarter and six-month period ended June 30, 2019, respectively, from the diluted earnings per share calculation for the Company’s common stock because of the reported net loss for the periods. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Cash, Cash Equivalents and Restricted Cash
The Company classifies highly liquid investments with original maturities of 90 days or less as cash equivalents. Recorded book values are reasonable estimates of fair value for cash and cash equivalents.
Cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows are as follows (in thousands):
Restricted cash held in escrow primarily relates to funds reserved for legal requirements, deposits made in lieu of retention on specific projects performed for municipalities and state agencies, or advance customer payments and compensating balances for bank undertakings in Europe. Restricted cash related to operations is similar to retainage, and is, therefore, classified as a current asset, consistent with the Company’s policy on retainage. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation, Variable Interest Entity, Policy [Policy Text Block] | Investments in Variable Interest Entities
The Company evaluates all transactions and relationships with variable interest entities (“VIE”) to determine whether the Company is the primary beneficiary of the entities in accordance with FASB ASC 810, Consolidation. There were no changes in the Company’s VIEs during the quarter ended June 30, 2019.
Financial data for consolidated variable interest entities are summarized in the following tables (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements, Policy [Policy Text Block] | Newly Issued Accounting Pronouncements
In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The guidance is effective for the Company’s fiscal year beginning January 1, 2020, including interim periods within that fiscal year. The adoption of this standard is not expected to have a material impact on its consolidated financial statements.
In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits a company to reclassify the income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive income to retained earnings. Companies may adopt the new guidance using one of two transition methods: (i) retrospective to each period (or periods) in which the income tax effects are recognized, or (ii) at the beginning of the period of adoption. The Company adopted this standard effective January 1, 2019 and elected not to reclassify the tax effects due to the immaterial impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the way in which entities estimate and present credit losses for most financial assets, including accounts receivable. The guidance is effective for the Company’s fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early adoption is permitted, although the Company does not intend to do so. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), which requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases with lease terms longer than twelve months. The Company adopted this standard, effective January 1, 2019, using the adoption-date transition provision, which recognizes and measures leases existing at January 1, 2019 but without retrospective application. See Note 6. |
Note 2 - Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restrictions on Cash and Cash Equivalents [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities [Table Text Block] |
|
Note 3 - Revenues (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Asset and Liability [Table Text Block] |
|
Note 4 - Restructuring (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost [Table Text Block] |
|
Note 5 - Assets and Liabilities Held for Sale (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations [Table Text Block] |
|
Note 6 - Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Supplemental Financial Statement Disclosures, Balance Sheet [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Liability, Maturity [Table Text Block] |
|
Note 7 - Goodwill and Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] |
|
Note 8 - Long-term Debt and Credit Facility (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] |
|
Note 9 - Stockholders' Equity and Equity Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement, Outstanding Award, Activity, Excluding Option [Table Text Block] |
|
Note 12 - Segment Reporting (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] |
|
Note 13 - Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] |
|
Note 1 - General (Details Textual) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
May 04, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
|
OMAN | Company Joint Venture [Member] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 50.00% | ||
OMAN | Aegion International [Member] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 51.00% | ||
Hebna [Member] | |||
Business Combination, Consideration Transferred, Total | $ 6 | $ 3 | $ 3 |
Note 2 - Accounting Policies (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Foreign Currency Transaction Gain (Loss), Realized | $ 100 | $ (500) | $ (701) | $ (824) |
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | ||||
Disposal Group, Including Discontinued Operation, Assets, Total | 12,900 | 12,900 | ||
Disposal Group, Including Discontinued Operation, Liabilities, Total | $ 11,300 | $ 11,300 | ||
Restricted and Deferred Stock Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 449,156 | 498,315 |
Note 2 - Accounting Policies - Accumulated Other Comprehensive Income Loss (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Currency translation adjustments | $ (38,061) | $ (41,107) |
Derivative hedging activity | (3,984) | 1,715 |
Pension activity | (895) | (898) |
Total accumulated other comprehensive loss | $ (42,940) | $ (40,290) |
Note 2 - Accounting Policies - Earnings Per Share (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Weighted average number of common shares used for basic EPS (in shares) | 31,216,886 | 32,378,260 | 31,459,557 | 32,430,819 |
Effect of dilutive stock options and restricted and deferred stock unit awards (in shares) | 0 | 628,600 | 0 | 668,426 |
Weighted average number of common shares and dilutive potential common stock used for dilutive EPS (in shares) | 31,216,886 | 33,006,860 | 31,459,557 | 33,099,245 |
Note 2 - Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
---|---|---|---|
Cash and cash equivalents | $ 51,338 | $ 83,527 | |
Restricted cash | 759 | 1,359 | |
Cash, cash equivalents and restricted cash | $ 52,097 | $ 84,886 | $ 76,192 |
Note 2 - Accounting Policies - Investments in Variable Interest Entities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
[2] | Jun. 30, 2019 |
Jun. 30, 2018 |
[2] | Dec. 31, 2018 |
|||||||
Current assets | $ 26,457 | [1] | $ 26,457 | [1] | $ 33,066 | ||||||||
Non-current assets | 7,442 | [1] | 7,442 | [1] | 6,466 | ||||||||
Current liabilities | 11,948 | [1] | 11,948 | [1] | 12,953 | ||||||||
Non-current liabilities | 6,522 | [1] | 6,522 | [1] | $ 8,780 | ||||||||
Revenue | 7,519 | $ 6,723 | 13,444 | $ 22,773 | |||||||||
Gross profit | 2,416 | 434 | 4,051 | 3,744 | |||||||||
Net income attributable to Aegion Corporation | $ (652) | $ (1,188) | $ (619) | $ 60 | |||||||||
|
Note 3 - Revenues (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
|
Disposal Group, Including Discontinued Operation, Contract Assets, Current | $ 8.3 | $ 8.3 | $ 1.8 | ||||
Disposal Group, Including Discontinued Operation, Contract Liabilities, Current | $ 2.1 | $ 2.1 | 0.1 | ||||
Contract with Customer, Liability, Total | $ 32.3 | $ 51.6 | |||||
Product and Services [Member] | |||||||
Revenue Recognized, Percent | 92.30% | 93.40% | 91.70% | 94.20% | |||
Product [Member] | |||||||
Revenue Recognized, Percent | 7.70% | 6.60% | 8.30% | 5.80% | |||
Construction, Engineering and Installation Services [Member] | |||||||
Revenue, Remaining Performance Obligation, Amount | $ 480.9 | $ 480.9 | |||||
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | |||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ (0.3) |
Note 3 - Revenues 2 (Details Textual) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Revenue, Remaining Performance Obligation, Amount | $ 436 |
Revenue, Remaining Performance Obligation, Percentage | 90.70% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 years |
Note 3 - Revenue - Disaggregation of Revenue (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
||||||||||
Revenues | [1] | $ 318,740,000 | $ 335,030,000 | $ 595,644,000 | $ 659,891,000 | ||||||||
Fixed-price Contract [Member] | |||||||||||||
Revenues | 190,558,000 | 219,481,000 | 352,965,000 | 428,401,000 | |||||||||
Time-and-materials Contract [Member] | |||||||||||||
Revenues | 101,696,000 | 93,383,000 | 196,616,000 | 193,063,000 | |||||||||
Product Sales [Member] | |||||||||||||
Revenues | 26,442,000 | 22,153,000 | 45,869,000 | 38,394,000 | |||||||||
License Fees [Member] | |||||||||||||
Revenues | 44,000 | 13,000 | 194,000 | 33,000 | |||||||||
Infrastructure Solutions [Member] | |||||||||||||
Revenues | 155,440,000 | 160,732,000 | 286,983,000 | 295,159,000 | |||||||||
Infrastructure Solutions [Member] | Fixed-price Contract [Member] | |||||||||||||
Revenues | 136,212,000 | 149,532,000 | 255,127,000 | 274,794,000 | |||||||||
Infrastructure Solutions [Member] | Time-and-materials Contract [Member] | |||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||
Infrastructure Solutions [Member] | Product Sales [Member] | |||||||||||||
Revenues | 19,184,000 | 11,187,000 | 31,662,000 | 20,332,000 | |||||||||
Infrastructure Solutions [Member] | License Fees [Member] | |||||||||||||
Revenues | 44,000 | 13,000 | 194,000 | 33,000 | |||||||||
Corrosion Protection [Member] | |||||||||||||
Revenues | 77,596,000 | 96,389,000 | 142,094,000 | 194,494,000 | |||||||||
Corrosion Protection [Member] | Fixed-price Contract [Member] | |||||||||||||
Revenues | 53,055,000 | 63,982,000 | 95,628,000 | 141,883,000 | |||||||||
Corrosion Protection [Member] | Time-and-materials Contract [Member] | |||||||||||||
Revenues | 17,283,000 | 21,441,000 | 32,259,000 | 34,549,000 | |||||||||
Corrosion Protection [Member] | Product Sales [Member] | |||||||||||||
Revenues | 7,258,000 | 10,966,000 | 14,207,000 | 18,062,000 | |||||||||
Corrosion Protection [Member] | License Fees [Member] | |||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||
Energy Services [Member] | |||||||||||||
Revenues | 85,704,000 | 77,909,000 | 166,567,000 | 170,238,000 | |||||||||
Energy Services [Member] | Fixed-price Contract [Member] | |||||||||||||
Revenues | 1,291,000 | 5,967,000 | 2,210,000 | 11,724,000 | |||||||||
Energy Services [Member] | Time-and-materials Contract [Member] | |||||||||||||
Revenues | 84,413,000 | 71,942,000 | 164,357,000 | 158,514,000 | |||||||||
Energy Services [Member] | Product Sales [Member] | |||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||
Energy Services [Member] | License Fees [Member] | |||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||
UNITED STATES | |||||||||||||
Revenues | 239,987,000 | [1] | 253,699,000 | [1] | 448,762,000 | [2] | 490,231,000 | [1] | |||||
UNITED STATES | Infrastructure Solutions [Member] | |||||||||||||
Revenues | 110,957,000 | 117,580,000 | 208,848,000 | 211,425,000 | |||||||||
UNITED STATES | Corrosion Protection [Member] | |||||||||||||
Revenues | 43,326,000 | 58,210,000 | 73,347,000 | 108,568,000 | |||||||||
UNITED STATES | Energy Services [Member] | |||||||||||||
Revenues | 85,704,000 | 77,909,000 | 166,567,000 | 170,238,000 | |||||||||
CANADA | |||||||||||||
Revenues | [1] | 33,392,000 | 30,426,000 | 57,460,000 | 59,265,000 | ||||||||
CANADA | Infrastructure Solutions [Member] | |||||||||||||
Revenues | 18,934,000 | 15,607,000 | 29,545,000 | 27,876,000 | |||||||||
CANADA | Corrosion Protection [Member] | |||||||||||||
Revenues | 14,458,000 | 14,819,000 | 27,915,000 | 31,389,000 | |||||||||
CANADA | Energy Services [Member] | |||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||
Europe [Member] | |||||||||||||
Revenues | [1] | 17,381,000 | 15,846,000 | 33,384,000 | 31,855,000 | ||||||||
Europe [Member] | Infrastructure Solutions [Member] | |||||||||||||
Revenues | 12,888,000 | 12,996,000 | 25,413,000 | 26,140,000 | |||||||||
Europe [Member] | Corrosion Protection [Member] | |||||||||||||
Revenues | 4,493,000 | 2,850,000 | 7,971,000 | 5,715,000 | |||||||||
Europe [Member] | Energy Services [Member] | |||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||
Other Foreign Countries [Member] | |||||||||||||
Revenues | [1] | 27,980,000 | 35,059,000 | 56,038,000 | 78,540,000 | ||||||||
Other Foreign Countries [Member] | Infrastructure Solutions [Member] | |||||||||||||
Revenues | 12,661,000 | 14,549,000 | 23,177,000 | 29,718,000 | |||||||||
Other Foreign Countries [Member] | Corrosion Protection [Member] | |||||||||||||
Revenues | 15,319,000 | 20,510,000 | 32,861,000 | 48,822,000 | |||||||||
Other Foreign Countries [Member] | Energy Services [Member] | |||||||||||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||
|
Note 3 - Revenues- Contract Assets (Liabilities) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
[1] | Dec. 31, 2018 |
[2] | ||||
---|---|---|---|---|---|---|---|---|
Contract assets – current | $ 56,661 | $ 62,467 | ||||||
Contract liabilities – current | (25,387) | (32,339) | ||||||
Net contract assets | $ 31,274 | $ 30,128 | ||||||
|
Note 4 - Restructuring (Details Textual) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | 23 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Jun. 30, 2019
USD ($)
|
|||||||||||||||||
Restructuring Charges, Total | $ 3,000 | $ 1,500 | $ 4,100 | $ 3,300 | ||||||||||||||||||
Restructuring Charges, Non-Cash | 1,409 | 2,980 | ||||||||||||||||||||
Restructuring 2017 [Member] | ||||||||||||||||||||||
Restructuring Charges Pre Tax | $ 149,000 | |||||||||||||||||||||
Restructuring Charges, Net of Tax | 135,900 | |||||||||||||||||||||
Payments for Restructuring | $ 5,942 | [1] | 6,481 | [2] | 34,300 | |||||||||||||||||
Restructuring Reserve, Settled without Cash | 114,700 | |||||||||||||||||||||
Goodwill and Intangible Asset Impairment, Total | $ 86,400 | |||||||||||||||||||||
Accounts Receivable, Allowance for Credit Loss, Writeoff | $ 28,400 | |||||||||||||||||||||
Restructuring and Related Cost, Expected Number of Positions Eliminated | 480 | |||||||||||||||||||||
Restructuring and Related Cost, Expected Number of Additional Positions Eliminated | 30 | |||||||||||||||||||||
Restructuring Charges, Total | 6,516 | [3] | 2,913 | [4] | $ 9,382 | [5] | 8,157 | [6] | ||||||||||||||
Restructuring Charges, Cash | 5,400 | 2,300 | 8,500 | 5,200 | ||||||||||||||||||
Restructuring Charges, Non-Cash | 1,100 | $ 600 | 900 | $ 2,980 | ||||||||||||||||||
Restructuring 2017 [Member] | Minimum [Member] | ||||||||||||||||||||||
Restructuring and Related Cost, Expected Cost, Total | 5,000 | 5,000 | $ 5,000 | |||||||||||||||||||
Restructuring 2017 [Member] | Maximum [Member] | ||||||||||||||||||||||
Restructuring and Related Cost, Expected Cost, Total | $ 5,000 | $ 5,000 | $ 5,000 | |||||||||||||||||||
|
Note 4 - Restructuring - Recognized Cost Restructuring Activities (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 23 Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
|||||||||||||||||||||
Restructuring charges | $ 3,000,000.0 | $ 1,500,000 | $ 4,100,000 | $ 3,300,000 | |||||||||||||||||||||
Non-cash restructuring charges | 1,409,000 | 2,980,000 | |||||||||||||||||||||||
Restructuring 2017 [Member] | |||||||||||||||||||||||||
Restructing reserve, balance | 2,412,000 | 5,189,000 | |||||||||||||||||||||||
Restructuring charges | 6,516,000 | [1] | 2,913,000 | [2] | 9,382,000 | [3] | 8,157,000 | [4] | |||||||||||||||||
Restructing reserve, foreign currency translation | (27,000) | (18,000) | |||||||||||||||||||||||
Restructing reserve, settled with cash | 5,942,000 | [5] | 6,481,000 | [6] | $ 34,300,000 | ||||||||||||||||||||
Restructing reserve, settled without cash | 1,409,000 | ||||||||||||||||||||||||
Restructing reserve, balance | 4,416,000 | 3,867,000 | 4,416,000 | 3,867,000 | 4,416,000 | ||||||||||||||||||||
Non-cash restructuring charges | 1,100,000 | 600,000 | 900,000 | 2,980,000 | |||||||||||||||||||||
Employee Severance [Member] | Restructuring 2017 [Member] | |||||||||||||||||||||||||
Restructing reserve, balance | 1,742,000 | 3,864,000 | |||||||||||||||||||||||
Restructuring charges | 2,132,000 | 1,197,000 | 2,627,000 | 2,268,000 | |||||||||||||||||||||
Restructing reserve, foreign currency translation | (10,000) | (9,000) | |||||||||||||||||||||||
Restructing reserve, settled with cash | 1,860,000 | [5] | 2,993,000 | [6] | |||||||||||||||||||||
Restructing reserve, settled without cash | 0 | ||||||||||||||||||||||||
Restructing reserve, balance | 2,499,000 | 3,130,000 | 2,499,000 | 3,130,000 | 2,499,000 | ||||||||||||||||||||
Non-cash restructuring charges | 0 | ||||||||||||||||||||||||
Contract Termination [Member] | Restructuring 2017 [Member] | |||||||||||||||||||||||||
Restructing reserve, balance | 359,000 | 650,000 | |||||||||||||||||||||||
Restructuring charges | 698,000 | 309,000 | 1,238,000 | 987,000 | |||||||||||||||||||||
Restructing reserve, foreign currency translation | (13,000) | (9,000) | |||||||||||||||||||||||
Restructing reserve, settled with cash | 606,000 | [5] | 1,041,000 | [6] | |||||||||||||||||||||
Restructing reserve, settled without cash | 0 | ||||||||||||||||||||||||
Restructing reserve, balance | 978 | 587,000 | 978 | 587,000 | 978 | ||||||||||||||||||||
Non-cash restructuring charges | 0 | ||||||||||||||||||||||||
Employee Relocation [Member] | Restructuring 2017 [Member] | |||||||||||||||||||||||||
Restructing reserve, balance | 0 | 0 | |||||||||||||||||||||||
Restructuring charges | 144,000 | 34,000 | 195,000 | 74,000 | |||||||||||||||||||||
Restructing reserve, foreign currency translation | (1,000) | 0 | |||||||||||||||||||||||
Restructing reserve, settled with cash | 26,000 | [5] | 74,000 | [6] | |||||||||||||||||||||
Restructing reserve, settled without cash | 0 | ||||||||||||||||||||||||
Restructing reserve, balance | 168,000 | 0 | 168,000 | 0 | 168,000 | ||||||||||||||||||||
Non-cash restructuring charges | 0 | ||||||||||||||||||||||||
Other Restructuring [Member] | Restructuring 2017 [Member] | |||||||||||||||||||||||||
Restructing reserve, balance | 311,000 | 675,000 | |||||||||||||||||||||||
Restructuring charges | 3,542,000 | [7] | 1,373,000 | [7] | 5,322,000 | [8] | 4,828,000 | [8] | |||||||||||||||||
Restructing reserve, foreign currency translation | (3,000) | 0 | |||||||||||||||||||||||
Restructing reserve, settled with cash | 3,450,000 | [5] | 2,373,000 | [6] | |||||||||||||||||||||
Restructing reserve, settled without cash | 1,409,000 | ||||||||||||||||||||||||
Restructing reserve, balance | $ 771,000 | $ 150,000 | $ 771,000 | 150,000 | $ 771,000 | ||||||||||||||||||||
Non-cash restructuring charges | $ 2,980,000 | ||||||||||||||||||||||||
|
Note 5 - Assets and Liabilities Held for Sale (Details Textual) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Impairment of Long-Lived Assets to be Disposed of | $ 11,946,000 | $ 0 | $ 11,946,000 | $ 0 |
Insituform Australia [Member] | Infrastructure Solutions [Member] | ||||
Impairment of Long-Lived Assets to be Disposed of | 5,100,000 | |||
Insituform Netherlands [Member] | Infrastructure Solutions [Member] | ||||
Impairment of Long-Lived Assets to be Disposed of | 3,900,000 | |||
Corrpower [Member] | Corrosion Protection [Member] | ||||
Impairment of Long-Lived Assets to be Disposed of | 1,100,000 | |||
United Mexico [Member] | Corrosion Protection [Member] | ||||
Impairment of Long-Lived Assets to be Disposed of | $ 1,800,000 |
Note 5 - Assets and Liabilities Held for Sale - Assets and Liabilities Held for Sale (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
||||||||
Disposal Group, Including Discontinued Operation, Contract Assets, Current | $ 8,300,000 | $ 8,300,000 | $ 1,800,000 | |||||||||
Total current assets | 32,161,000 | 32,161,000 | 7,792,000 | |||||||||
Impairment of assets held for sale | 11,946,000 | $ 0 | 11,946,000 | $ 0 | ||||||||
Disposal Group, Including Discontinued Operation, Contract Liabilities, Current | 2,100,000 | 2,100,000 | 100,000 | |||||||||
Total current liabilities | 17,392,000 | 17,392,000 | 5,260,000 | |||||||||
Disposal Group, Held-for-sale, Not Discontinued Operations [Member] | ||||||||||||
Cash and cash equivalents | 1,330,000 | [1] | 1,330,000 | [1] | 0 | [2] | ||||||
Restricted cash | 379,000 | [1] | 379,000 | [1] | 0 | [2] | ||||||
Receivables, net | 9,888,000 | [1] | 9,888,000 | [1] | 1,309,000 | [2] | ||||||
Retainage | 623,000 | [1] | 623,000 | [1] | 15,000 | [2] | ||||||
Disposal Group, Including Discontinued Operation, Contract Assets, Current | 8,301,000 | [1] | 8,301,000 | [1] | 1,777,000 | [2] | ||||||
Inventories | 5,136,000 | [1] | 5,136,000 | [1] | 2,123,000 | [2] | ||||||
Prepaid expenses and other current assets | 2,264,000 | [1] | 2,264,000 | [1] | 300,000 | [2] | ||||||
Total current assets | 27,921,000 | [1] | 27,921,000 | [1] | 5,524,000 | [2] | ||||||
Property, plant & equipment, less accumulated depreciation | 8,823,000 | [1] | 8,823,000 | [1] | 2,268,000 | [2] | ||||||
Goodwill | 4,224,000 | [1] | 4,224,000 | [1] | 0 | [2] | ||||||
Intangible assets, less accumulated amortization | 1,470,000 | [1] | 1,470,000 | [1] | 0 | [2] | ||||||
Operating lease assets | 769,000 | [1] | 769,000 | [1] | 0 | [2] | ||||||
Deferred income tax assets | [1] | 730,000 | 730,000 | |||||||||
Other assets | 170,000 | [1] | 170,000 | [1] | 0 | [2] | ||||||
Impairment of assets held for sale | (11,946,000) | [1] | 0 | [2] | ||||||||
Disposal Group, Including Discontinued Operation, Assets, Total | 32,161,000 | [1] | 32,161,000 | [1] | 7,792,000 | [2] | ||||||
Accounts payable | 5,779,000 | [1] | 5,779,000 | [1] | 1,331,000 | [2] | ||||||
Accrued expenses | 7,971,000 | [1] | 7,971,000 | [1] | 3,891,000 | [2] | ||||||
Disposal Group, Including Discontinued Operation, Contract Liabilities, Current | 2,081,000 | [1] | 2,081,000 | [1] | 38,000 | [2] | ||||||
Current maturities of long-term debt | 864,000 | [1] | 864,000 | [1] | 0 | [2] | ||||||
Total current liabilities | 16,695,000 | [1] | 16,695,000 | [1] | 5,260,000 | [2] | ||||||
Operating lease liabilities | 357,000 | [1] | 357,000 | [1] | 0 | [2] | ||||||
Other non-current liabilities | 340,000 | [1] | 340,000 | [1] | 0 | [2] | ||||||
Disposal Group, Including Discontinued Operation, Liabilities, Total | $ 17,392,000 | [1] | $ 17,392,000 | [1] | $ 5,260,000 | [2] | ||||||
|
Note 6 - Leases (Details Textual) - USD ($) |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
||||
Operating Lease, Right-of-Use Asset | $ 69,057,000 | $ 0 | ||||
Operating Lease, Liability, Total | [1] | $ 69,100,000 | ||||
Lessee, Operating Lease, Renewal Term | 5 years | |||||
Operating Lease, Liability, Current | [1] | $ 15,361,000 | ||||
Operating Lease, Liability, Noncurrent | 53,739,000 | 0 | ||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | 19,800,000 | |||||
Operating Leases, Future Minimum Payments, Due in Two Years | 15,100,000 | |||||
Operating Leases, Future Minimum Payments, Due in Three Years | 11,500,000 | |||||
Operating Leases, Future Minimum Payments, Due in Four Years | 8,100,000 | |||||
Operating Leases, Future Minimum Payments, Due in Five Years | 5,400,000 | |||||
Operating Leases, Future Minimum Payments, Due Thereafter | $ 7,200,000 | |||||
Discontinued Operations, Held-for-sale [Member] | ||||||
Operating Lease, Right-of-Use Asset | 800,000 | |||||
Operating Lease, Liability, Current | 900,000 | |||||
Operating Lease, Liability, Noncurrent | $ 400,000 | |||||
Minimum [Member] | ||||||
Lessee, Operating Lease, Remaining Lease Term | 1 year | |||||
Maximum [Member] | ||||||
Lessee, Operating Lease, Remaining Lease Term | 20 years | |||||
Accounting Standards Update 2016-02 [Member] | ||||||
Operating Lease, Right-of-Use Asset | $ 70,500,000 | |||||
Operating Lease, Liability, Total | $ 70,500,000 | |||||
|
Note 6 - Leases - Lease Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Operating lease cost | $ 5,938 | $ 11,390 |
Short-term lease cost | 5,482 | 12,721 |
Total lease cost | 11,420 | 24,111 |
Operating cash flows from operating leases | 5,982 | 11,444 |
Operating leases | $ 1,706 | $ 7,832 |
Note 6 - Leases - Supplement Financial Statement Disclosure (Details) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
[1] | |||
Operating lease assets | $ 69,057 | |||
Accrued expenses | 15,361 | |||
Other liabilities | 53,739 | |||
Total operating lease liabilities | $ 69,100 | |||
Weighted-average remaining lease term (Year) | 5 years 7 months 13 days | |||
Weighted-average discount rate | 6.28% | |||
|
Note 6 - Leases - Operating Lease Liabilities (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
|||
---|---|---|---|---|
Six months ended December 31, 2019 | $ 9,874 | |||
2020 | 17,165 | |||
2021 | 14,571 | |||
2022 | 11,530 | |||
2023 | 9,216 | |||
Thereafter | 19,235 | |||
Total undiscounted operating lease liability | 81,591 | |||
Less: Imputed interest | (12,491) | |||
Total discounted operating lease liability | $ 69,100 | [1] | ||
|
Note 7 - Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Amortization of Intangible Assets, Total | $ 3.4 | $ 3.5 | $ 6.9 | $ 7.0 |
Note 7 - Goodwill and Intangible Assets - Reconciliation Goodwill (Details) - USD ($) |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
||||
Goodwill, gross | $ 398,548,000 | $ 402,408,000 | |||
Accumulated impairment losses | (141,775,000) | (141,775,000) | |||
Goodwill, net | 256,773,000 | 260,633,000 | |||
Foreign currency translation | 364,000 | ||||
Reclassification to assets held for sale (1) | [1] | (4,224,000) | |||
Infrastructure Solutions [Member] | |||||
Goodwill, gross | 240,280,000 | 244,521,000 | |||
Accumulated impairment losses | (62,848,000) | (62,848,000) | |||
Goodwill, net | 177,432,000 | 181,673,000 | |||
Foreign currency translation | (17,000) | ||||
Reclassification to assets held for sale (1) | [1] | (4,224,000) | |||
Corrosion Protection [Member] | |||||
Goodwill, gross | 76,764,000 | 76,383,000 | |||
Accumulated impairment losses | (45,400,000) | (45,400,000) | |||
Goodwill, net | 31,364,000 | 30,983,000 | |||
Foreign currency translation | 381,000 | ||||
Reclassification to assets held for sale (1) | [1] | 0 | |||
Energy Services [Member] | |||||
Goodwill, gross | 81,504,000 | 81,504,000 | |||
Accumulated impairment losses | (33,527,000) | (33,527,000) | |||
Goodwill, net | 47,977,000 | $ 47,977,000 | |||
Foreign currency translation | 0 | ||||
Reclassification to assets held for sale (1) | [1] | $ 0 | |||
|
Note 7 - Goodwill and Intangible Assets - Intangible assets (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Gross carrying amount | $ 219,657 | $ 221,095 |
Accumulated amortization | (107,962) | (101,399) |
Net carrying amount | $ 111,695 | 119,696 |
Licensing Agreements [Member] | ||
Weighted average useful lives (Year) | 2 years 6 months | |
Gross carrying amount | $ 3,894 | 3,894 |
Accumulated amortization | (3,778) | (3,716) |
Net carrying amount | $ 116 | 178 |
Lease Agreements [Member] | ||
Weighted average useful lives (Year) | 1 year 6 months | |
Gross carrying amount | $ 864 | 864 |
Accumulated amortization | (733) | (689) |
Net carrying amount | $ 131 | 175 |
Trademarks [Member] | ||
Weighted average useful lives (Year) | 10 years 6 months | |
Gross carrying amount | $ 15,673 | 15,751 |
Accumulated amortization | (6,557) | (6,202) |
Net carrying amount | $ 9,116 | 9,549 |
Noncompete Agreements [Member] | ||
Weighted average useful lives (Year) | 3 years 10 months 24 days | |
Gross carrying amount | $ 2,537 | 2,529 |
Accumulated amortization | (1,364) | (1,229) |
Net carrying amount | $ 1,173 | 1,300 |
Customer Relationships [Member] | ||
Weighted average useful lives (Year) | 8 years | |
Gross carrying amount | $ 157,803 | 159,719 |
Accumulated amortization | (71,589) | (66,753) |
Net carrying amount | $ 86,214 | 92,966 |
Patents [Member] | ||
Weighted average useful lives (Year) | 8 years 3 months 18 days | |
Gross carrying amount | $ 38,886 | 38,338 |
Accumulated amortization | (23,941) | (22,810) |
Net carrying amount | $ 14,945 | $ 15,528 |
Note 7 - Goodwill and Intangible Assets - Estimate Future Amortization (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
2019 | $ 13,747 |
2020 | 13,631 |
2021 | 13,451 |
2022 | 13,406 |
2023 | $ 13,406 |
Note 8 - Long-term Debt and Credit Facility (Details Textual) - USD ($) |
1 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Mar. 12, 2018 |
Oct. 31, 2015 |
|
Line of Credit Facility, Fees | $ 2,500,000 | ||||
Line of Credit Facility, Up Front Lending Fee | 900,000 | ||||
Line of Credit Facility, Third Party Arrangement Fees | 1,600,000 | ||||
Long-term Debt, Total | $ 314,219,000 | $ 307,063,000 | |||
Other Loans Payable, Total | 1,000,000.0 | 900,000 | |||
Long-term Debt, Fair Value | 307,700,000 | 315,800,000 | |||
Derivative, Fixed Interest Rate | 2.937% | ||||
Interest Rate Swap [Member] | |||||
Derivative Asset, Notional Amount | 201,796,875 | ||||
A 2015 Interest Rate Swap [Member] | |||||
Debt Instrument, Interest Rate, Effective Percentage | 3.68% | ||||
Derivative Asset, Notional Amount | $ 262,500,000 | ||||
Derivative, Fixed Interest Rate | 1.46% | ||||
A 2018 Interest Rate Swap [Member] | |||||
Derivative Asset, Notional Amount | $ 170,600,000 | ||||
Derivative, Fixed Interest Rate | 2.937% | ||||
Derivative, Amount of Hedged Item | $ 170,600,000 | ||||
A 2015 Credit Facility [Member] | |||||
Debt Instrument, Face Amount | $ 650,000,000.0 | ||||
Line of Credit Facility, Maximum Borrowing Capacity | 350,000,000.0 | ||||
Line Of Credit Facility, Unamortized Loan Costs | 2,400,000 | ||||
Interest Expense, Debt, Total | $ 200,000 | ||||
Long-term Line of Credit, Total | 31,000,000.0 | 38,000,000.0 | |||
Letters of Credit Outstanding, Amount | $ 23,600,000 | ||||
Derivative, Amount of Hedged Item | $ 262,500,000 | ||||
Credit Facility Maximum Consolidated Leverage Ratio | 3.75 | ||||
Credit Facility Actual Consolidated Leverage Ratio | 3.15 | ||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 60,800,000 | ||||
Credit Facility Minimum Consolidated Fixed Charge Ratio | 1.15 | ||||
Credit Facility Actual Consolidated Fixed Charge Ratio | 1.34 | ||||
A 2015 Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Interest Rate Swap [Member] | |||||
Debt Instrument, Interest Rate, Effective Percentage | 4.38% | ||||
A 2015 Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | ||||
A 2015 Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | |||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | ||||
A 2015 Credit Facility [Member] | Term Loan [Member] | |||||
Debt Instrument, Face Amount | $ 308,400,000 | ||||
Debt Instrument, Term | 5 years | ||||
Long-term Debt, Total | $ 282,200,000 | $ 269,100,000 | |||
A 2015 Credit Facility [Member] | Revolving Credit Facility [Member] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 275,000,000.0 | ||||
Debt Instrument, Term | 5 years | ||||
A 2015 Credit Facility [Member] | Working Performance Obligation [Member] | |||||
Long-term Line of Credit, Total | 7,000,000.0 | ||||
Letters of Credit Outstanding, Amount | 11,300,000 | ||||
A 2015 Credit Facility [Member] | Insurance Carries Collateral [Member] | |||||
Letters of Credit Outstanding, Amount | $ 12,300,000 |
Note 8 - Long-term Debt and Credit Facility - Long-term Debt (Details) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Long term debt | $ 307,063,000 | $ 314,219,000 |
Less – Current maturities of long-term debt | 32,810,000 | 29,469,000 |
Less – Unamortized loan costs | 2,421,000 | 2,747,000 |
Total | 271,832,000 | 282,003,000 |
Medium-term Notes [Member] | ||
Long term debt | 269,063,000 | 282,188,000 |
Line of Credit [Member] | ||
Long term debt | 38,000,000 | 31,000,000 |
Notes Payable, Other Payables [Member] | ||
Long term debt | $ 0 | $ 1,031,000 |
Note 8 - Long-term Debt and Credit Facility - Long-term Debt (Details) (Parentheticals) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Medium-term Notes [Member] | ||
Current effective interest rate | 4.38% | 4.59% |
Line of Credit [Member] | ||
Current effective interest rate | 4.40% | 4.45% |
Notes Payable, Other Payables [Member] | Minimum [Member] | ||
Current effective interest rate | 3.30% | 3.30% |
Notes Payable, Other Payables [Member] | Maximum [Member] | ||
Current effective interest rate | 7.80% | 7.80% |
Note 9 - Stockholders' Equity and Equity Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Apr. 30, 2019 |
Dec. 31, 2018 |
Apr. 30, 2018 |
|
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 2,000,000 | ||||||
Share-based Payment Arrangement, Expense | $ 2.0 | $ 2.0 | $ 4.0 | $ 4.1 | |||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $ 14.6 | $ 14.6 | |||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 1 month 6 days | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 1 year | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 52,783 | ||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 18.11 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 0 | 0 | |||||
A 2016 Employee Plan [Member] | |||||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 1,700,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,948,756 | 1,948,756 | |||||
A 2016 Director Plan [Member] | |||||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 300,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 326,533 | 326,533 | |||||
Share-based Payment Arrangement, Option [Member] | |||||||
Stock Repurchased During Period, Shares | 48,409 | 0 | |||||
Share-based Payment Arrangement, Option [Member] | Minimum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 7 years | ||||||
Share-based Payment Arrangement, Option [Member] | Maximum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | ||||||
Deferred Stock Units [Member] | |||||||
Share-based Payment Arrangement, Expense | $ 0.2 | $ 0.9 | $ 0.2 | $ 1.0 | |||
In Connection With Equity Compensation Programs [Member] | |||||||
Stock Repurchase Program, Authorized Amount | $ 10.0 | $ 10.0 | |||||
Stock Repurchased During Period, Shares | 153,630 | 223,974 | |||||
Stock Repurchased During Period, Value | $ 3.1 | $ 5.4 | |||||
Treasury Stock Acquired, Average Cost Per Share | $ 20.48 | $ 24.14 | |||||
Through The Open Market Repurchase Program [Member] | |||||||
Stock Repurchased During Period, Shares | 1,274,086 | 548,198 | |||||
Stock Repurchased During Period, Value | $ 22.0 | $ 13.2 | |||||
Treasury Stock Acquired, Average Cost Per Share | $ 17.28 | $ 24.07 | |||||
Amended Credit Facility [Member] | |||||||
Stock Repurchase Program, Authorized Amount | $ 32.0 |
Note 9 - Stockholders' Equity and Equity Compensation - Summary of Stock Award Activity (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019
$ / shares
shares
| |
Stock Awards, Outstanding (in shares) | shares | 1,143,205 |
Weighted average award date fair value (in dollars per share) | $ / shares | $ 23.26 |
Stock Awards, Outstanding (in shares) | shares | 1,205,570 |
Weighted average award date fair value (in dollars per share) | $ / shares | $ 22.89 |
Restricted Stock Units (RSUs) [Member] | |
Awards, grants during period (in shares) | shares | 297,865 |
Weighted average award date fair value, award granted (in dollars per share) | $ / shares | $ 20.10 |
Awards, distributed during period (in shares) | shares | (205,274) |
Weighted average award date fair value, award distributed (in dollars per share) | $ / shares | $ 18.49 |
Awards, forfeited during period (in shares) | shares | (20,871) |
Weighted average award date fair value, award forfeited (in dollars per share) | $ / shares | $ 23.35 |
Performance Shares [Member] | |
Awards, grants during period (in shares) | shares | 146,367 |
Weighted average award date fair value, award granted (in dollars per share) | $ / shares | $ 22.78 |
Awards, distributed during period (in shares) | shares | (111,155) |
Weighted average award date fair value, award distributed (in dollars per share) | $ / shares | $ 25.85 |
Awards, forfeited during period (in shares) | shares | (44,567) |
Weighted average award date fair value, award forfeited (in dollars per share) | $ / shares | $ 25.98 |
Note 9 - Stockholders' Equity and Equity Compensation - Deferred Stock Unit Activity (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019
$ / shares
shares
| |
Stock Awards, Outstanding (in shares) | shares | 1,143,205 |
Weighted average award date fair value (in dollars per share) | $ / shares | $ 23.26 |
Stock Awards, Outstanding (in shares) | shares | 1,205,570 |
Weighted average award date fair value (in dollars per share) | $ / shares | $ 22.89 |
Deferred Stock Units [Member] | |
Stock Awards, Outstanding (in shares) | shares | 287,350 |
Weighted average award date fair value (in dollars per share) | $ / shares | $ 20.80 |
Awards, grants during period (in shares) | shares | 45,047 |
Weighted average award date fair value, award granted (in dollars per share) | $ / shares | $ 19.67 |
Awards, distributed during period (in shares) | shares | (77,486) |
Weighted average award date fair value, award distributed (in dollars per share) | $ / shares | $ 20.39 |
Stock Awards, Outstanding (in shares) | shares | 254,911 |
Weighted average award date fair value (in dollars per share) | $ / shares | $ 20.73 |
Note 10 - Taxes on Income (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Effective Income Tax Rate Reconciliation, Percent, Total | (111.00%) | 28.70% | (40.90%) | 24.90% |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Payment Arrangement, Amount | $ 1.5 | $ 2.1 | ||
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Payment Arrangement, Percent | 19.50% |
Note 12 - Segment Reporting (Details Textual) |
3 Months Ended | 6 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
|||||||||||||
Number of Reportable Segments | 3 | |||||||||||||||
Restructuring Charges, Total | $ 3,000,000.0 | $ 1,500,000 | $ 4,100,000 | $ 3,300,000 | ||||||||||||
Impairment of Long-Lived Assets to be Disposed of | 11,946,000 | 0 | 11,946,000 | 0 | ||||||||||||
Operating Income (Loss) [Member] | Infrastructure Solutions [Member] | ||||||||||||||||
Impairment of Long-Lived Assets to be Disposed of | 9,000,000.0 | |||||||||||||||
Operating Income (Loss) [Member] | Corrosion Protection [Member] | ||||||||||||||||
Impairment of Long-Lived Assets to be Disposed of | 2,900,000 | |||||||||||||||
Restructuring 2017 [Member] | ||||||||||||||||
Restructuring Charges, Total | 6,516,000 | [1] | 2,913,000 | [2] | 9,382,000 | [3] | 8,157,000 | [4] | ||||||||
Restructuring 2017 [Member] | Corporate, Non-Segment [Member] | ||||||||||||||||
Restructuring Charges, Total | 906,000 | 48,000 | 1,260,000 | 611,000 | ||||||||||||
Restructuring 2017 [Member] | Operating Income (Loss) [Member] | Corporate, Non-Segment [Member] | ||||||||||||||||
Restructuring Charges, Total | 900,000 | 100,000 | 1,300,000 | 600,000 | ||||||||||||
Restructuring 2017 [Member] | Operating Income (Loss) [Member] | Divestiture of International Operations [Member] | Corporate, Non-Segment [Member] | ||||||||||||||||
Restructuring Charges, Total | 400,000 | 500,000 | 400,000 | 800,000 | ||||||||||||
Restructuring 2017 [Member] | Operating Income (Loss) [Member] | Infrastructure Solutions [Member] | ||||||||||||||||
Restructuring Charges, Total | 1,400,000 | 2,500,000 | 3,400,000 | 5,700,000 | ||||||||||||
Restructuring 2017 [Member] | Operating Income (Loss) [Member] | Infrastructure Solutions [Member] | Divestiture of International Operations [Member] | ||||||||||||||||
Restructuring Charges, Total | 400,000 | 200,000 | 0.5 | 0.2 | ||||||||||||
Restructuring 2017 [Member] | Operating Income (Loss) [Member] | Corrosion Protection [Member] | ||||||||||||||||
Restructuring Charges, Total | 3,300,000 | 300,000 | 3,500,000 | 1,800,000 | ||||||||||||
Restructuring 2017 [Member] | Operating Income (Loss) [Member] | Corrosion Protection [Member] | Divestiture of International Operations [Member] | ||||||||||||||||
Restructuring Charges, Total | 100,000 | $ 100,000 | 100,000 | $ 200,000 | ||||||||||||
Restructuring 2017 [Member] | Other Nonoperating Income (Expense) [Member] | ||||||||||||||||
Restructuring Charges, Total | $ 900,000 | $ 1,100,000 | ||||||||||||||
|
Note 12 - Segment Reporting - Summary of Revenues (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
||||||||||||||||
Revenues | [1] | $ 318,740,000 | $ 335,030,000 | $ 595,644,000 | $ 659,891,000 | ||||||||||||||
Gross profit | [1] | 67,437,000 | 71,053,000 | 115,732,000 | 132,557,000 | ||||||||||||||
Total operating income (loss) | 459,000 | 14,459,000 | (315,000) | 17,640,000 | |||||||||||||||
Interest expense | (3,566,000) | (3,923,000) | (7,156,000) | (9,366,000) | |||||||||||||||
Interest income | 261,000 | 62,000 | 546,000 | 109,000 | |||||||||||||||
Other | [2] | (1,015,000) | (506,000) | (1,689,000) | (768,000) | ||||||||||||||
Total other expense | (4,320,000) | (4,367,000) | (8,299,000) | (10,025,000) | |||||||||||||||
Income (loss) before taxes on income | (3,861,000) | 10,092,000 | (8,614,000) | 7,615,000 | |||||||||||||||
UNITED STATES | |||||||||||||||||||
Revenues | 239,987,000 | [1] | 253,699,000 | [1] | 448,762,000 | [3] | 490,231,000 | [1] | |||||||||||
Gross profit | [1] | 50,792,000 | 58,599,000 | 82,619,000 | 108,162,000 | ||||||||||||||
CANADA | |||||||||||||||||||
Revenues | [1] | 33,392,000 | 30,426,000 | 57,460,000 | 59,265,000 | ||||||||||||||
Gross profit | [1] | 5,028,000 | 5,454,000 | 8,482,000 | 10,229,000 | ||||||||||||||
Europe [Member] | |||||||||||||||||||
Revenues | [1] | 17,381,000 | 15,846,000 | 33,384,000 | 31,855,000 | ||||||||||||||
Gross profit | [1] | 3,311,000 | 1,401,000 | 6,830,000 | 2,535,000 | ||||||||||||||
Other Foreign Countries [Member] | |||||||||||||||||||
Revenues | [1] | 27,980,000 | 35,059,000 | 56,038,000 | 78,540,000 | ||||||||||||||
Gross profit | [1] | 8,306,000 | 5,599,000 | 17,801,000 | 11,631,000 | ||||||||||||||
Infrastructure Solutions [Member] | |||||||||||||||||||
Revenues | 155,440,000 | 160,732,000 | 286,983,000 | 295,159,000 | |||||||||||||||
Infrastructure Solutions [Member] | UNITED STATES | |||||||||||||||||||
Revenues | 110,957,000 | 117,580,000 | 208,848,000 | 211,425,000 | |||||||||||||||
Infrastructure Solutions [Member] | CANADA | |||||||||||||||||||
Revenues | 18,934,000 | 15,607,000 | 29,545,000 | 27,876,000 | |||||||||||||||
Infrastructure Solutions [Member] | Europe [Member] | |||||||||||||||||||
Revenues | 12,888,000 | 12,996,000 | 25,413,000 | 26,140,000 | |||||||||||||||
Infrastructure Solutions [Member] | Other Foreign Countries [Member] | |||||||||||||||||||
Revenues | 12,661,000 | 14,549,000 | 23,177,000 | 29,718,000 | |||||||||||||||
Corrosion Protection [Member] | |||||||||||||||||||
Revenues | 77,596,000 | 96,389,000 | 142,094,000 | 194,494,000 | |||||||||||||||
Corrosion Protection [Member] | UNITED STATES | |||||||||||||||||||
Revenues | 43,326,000 | 58,210,000 | 73,347,000 | 108,568,000 | |||||||||||||||
Corrosion Protection [Member] | CANADA | |||||||||||||||||||
Revenues | 14,458,000 | 14,819,000 | 27,915,000 | 31,389,000 | |||||||||||||||
Corrosion Protection [Member] | Europe [Member] | |||||||||||||||||||
Revenues | 4,493,000 | 2,850,000 | 7,971,000 | 5,715,000 | |||||||||||||||
Corrosion Protection [Member] | Other Foreign Countries [Member] | |||||||||||||||||||
Revenues | 15,319,000 | 20,510,000 | 32,861,000 | 48,822,000 | |||||||||||||||
Energy Services [Member] | |||||||||||||||||||
Revenues | 85,704,000 | 77,909,000 | 166,567,000 | 170,238,000 | |||||||||||||||
Energy Services [Member] | UNITED STATES | |||||||||||||||||||
Revenues | 85,704,000 | 77,909,000 | 166,567,000 | 170,238,000 | |||||||||||||||
Energy Services [Member] | CANADA | |||||||||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||||||||
Energy Services [Member] | Europe [Member] | |||||||||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||||||||
Energy Services [Member] | Other Foreign Countries [Member] | |||||||||||||||||||
Revenues | 0 | 0 | 0 | 0 | |||||||||||||||
Operating Segments [Member] | Infrastructure Solutions [Member] | |||||||||||||||||||
Revenues | 155,439,000 | 160,732,000 | 286,982,000 | 295,159,000 | |||||||||||||||
Gross profit | 38,871,000 | 35,949,000 | 65,458,000 | 62,658,000 | |||||||||||||||
Total operating income (loss) | [3] | 9,120,000 | 12,916,000 | 14,835,000 | 16,153,000 | ||||||||||||||
Operating Segments [Member] | Corrosion Protection [Member] | |||||||||||||||||||
Revenues | 77,597,000 | 96,389,000 | 142,095,000 | 194,494,000 | |||||||||||||||
Gross profit | 16,692,000 | 24,537,000 | 29,564,000 | 48,113,000 | |||||||||||||||
Total operating income (loss) | [4] | (3,863,000) | 6,953,000 | (5,623,000) | 11,915,000 | ||||||||||||||
Operating Segments [Member] | Energy Services [Member] | |||||||||||||||||||
Revenues | 85,704,000 | 77,909,000 | 166,567,000 | 170,238,000 | |||||||||||||||
Gross profit | 11,874,000 | 10,567,000 | 20,710,000 | 21,786,000 | |||||||||||||||
Total operating income (loss) | 4,107,000 | 2,498,000 | 5,222,000 | 5,625,000 | |||||||||||||||
Corporate, Non-Segment [Member] | |||||||||||||||||||
Total operating income (loss) | [5] | $ (8,905,000) | $ (7,908,000) | $ (14,749,000) | $ (16,053,000) | ||||||||||||||
|
Note 13 - Derivative Financial Instruments (Details Textual) - USD ($) $ in Thousands |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Mar. 12, 2018 |
Oct. 31, 2015 |
|
Derivative Assets (Liabilities), at Fair Value, Net, Total | $ (4,127) | $ 1,719 | |||
Gain (Loss) on Foreign Currency Derivatives Recorded in Earnings, Net | (300) | $ (300) | |||
Derivative, Fixed Interest Rate | 2.937% | ||||
A 2015 Interest Rate Swap [Member] | |||||
Derivative, Fixed Interest Rate | 1.46% | ||||
Derivative Asset, Notional Amount | $ 262,500 | ||||
A 2018 Interest Rate Swap [Member] | |||||
Derivative, Amount of Hedged Item | $ 170,600 | ||||
Derivative, Fixed Interest Rate | 2.937% | ||||
Derivative Asset, Notional Amount | $ 170,600 | ||||
A 2015 Credit Facility [Member] | |||||
Derivative, Amount of Hedged Item | 262,500 | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 350,000 | ||||
A 2018 Credit Facility [Member] | |||||
Derivative Asset, Notional Amount | $ 170,600 | ||||
Fair Value, Recurring [Member] | Designated as Hedging Instrument [Member] | |||||
Derivative Assets (Liabilities), at Fair Value, Net, Total | $ 4,100 | $ 1,800 |
Note 13 - Derivative Financial Instruments - Summary of Derivative Positions (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2019
USD ($)
Rate
|
Jun. 30, 2019
GBP (£)
Rate
|
|
Interest Rate Swap [Member] | ||
Notional amount | $ | $ 201,796,875 | |
Weighted average remaining maturities (Year) | 3 years 6 months | |
Short [Member] | USD British Pound [Member] | ||
Notional amount | £ | £ 2,670,000 | |
Weighted average remaining maturities (Year) | 3 months 18 days | |
Average Exchange Rate (Rate) | Rate | 90.00% | 90.00% |
Short [Member] | EURO British Pound [Member] | ||
Notional amount | £ | £ 3,573,000 | |
Weighted average remaining maturities (Year) | 3 months 18 days | |
Average Exchange Rate (Rate) | Rate | 78.00% | 78.00% |
Note 13 - Derivative Financial Instruments - Summary of Fair Value Amounts of Derivative Instruments (Details) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative assets | $ 785,000 | $ 3,648,000 |
Derivative liabilities | 4,912,000 | 1,929,000 |
Net derivative assets (liabilities) | (4,127,000) | 1,719,000 |
Designated as Hedging Instrument [Member] | ||
Derivative assets | 785,000 | 3,648,000 |
Derivative liabilities | 4,871,000 | 1,885,000 |
Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member] | ||
Derivative assets | 785,000 | 3,648,000 |
Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member] | ||
Derivative liabilities | 4,871,000 | 1,885,000 |
Not Designated as Hedging Instrument [Member] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | 41,000 | 44,000 |
Not Designated as Hedging Instrument [Member] | Prepaid Expenses and Other Current Assets [Member] | ||
Derivative assets | 0 | 0 |
Not Designated as Hedging Instrument [Member] | Accrued Expense [Member] | ||
Derivative liabilities | $ 41,000 | $ 44,000 |
0I*0!+!@#5D12!; #0F;8N
M0>!5 9S4.M 6FB,3K(,R@(HP+*Z)E-XIIGJVA 7.-@'I4@CPKHHV? BD
MX]-:CW-Y3(*4*JZE/"2NI398OH'N 3A3&F1^=$5/)$ UM8Q)4_;>_M.>=^]#:?C'UR'8 GSUKUKJ"=]\.),5=UH(6[
M,P/T>-,8JX5'T[;,#19$'4E:,9XD;YD6LJ=E'GT76^9F]$KV<+'$C5H+^_L,
MRDP%/= 7QZ-L.Q\%,9JX5'T];,
M=19$&4E:,9XD-TP+V=(\C;ZCS5/3>R5;.%KB>JV%_3B ,D-&-_3B>)5UXX.#
MY6DG:O@)_E=WM&BQ6:64&EHG34LL5!E]V.P/NX"/@-\2!K +"VRC ML@L/U2(KTH,8;9Q$V2J$D2$=A>F,0P
MR84)65RW/"ZLZJ8V)?._(G\'4$L#!!0 ( -6+ D]L
M@Z&GMP$ -(# 9 >&PO=V]R:W-H965T
@O
MQEMD4:FY!&6Y5LA 4^#[Y'3. CX"?G(8[>J,0B57K5^"\:4N\"XD! (J%Q28
MWV[P $($(9_&[UD3+R$#<7U^4W^,M?M:KLS"@Q:_>.VZ A\QJJ%A@W#/>GR"
MN9X]1G/Q7^$&PL-#)CY&I86-*ZH&Z[2<57PJDKU..U=Q'Z>;_7&F;1/H3* +
MX1CCD"E0S/PS