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Note 4 - Restructuring

6 Months Ended

Jun. 30, 2019

Restructuring, Impairment, and Other Activities Disclosure [Text Block]

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 $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):

	Quarter Ended June 30, 2019											Quarter Ended June 30, 2018
	Infrastructure Solutions			Corrosion Protection		Energy Services		Corporate		Total		Infrastructure Solutions		Corrosion Protection		Corporate		Total
Severance and benefit related costs	$	551		$	1,575	$	6	$	—	$	2,132	$	1,001	$	196	$	—	$	1,197
Contract termination costs		(92	)		790		—		—		698		309		—		—		309
Relocation and other moving costs		—			144		—		—		144		34		—		—		34
Other restructuring costs (1)		1,696			940		—		906		3,542		1,186		139		48		1,373
Total pre-tax restructuring charges	$	2,155		$	3,449	$	6	$	906	$	6,516	$	2,530	$	335	$	48	$	2,913

⁽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	$	833	$	1,745	$	40	$	9	$	2,627	$	1,781	$	317	$	170	$	2,268
Contract termination costs		333		807		—		98		1,238		837		—		150		987
Relocation and other moving costs		51		144		—		—		195		74		—		—		74
Other restructuring costs (1)		3,440		729		—		1,153		5,322		3,054		1,483		291		4,828
Total pre-tax restructuring charges	$	4,657	$	3,425	$	40	$	1,260	$	9,382	$	5,746	$	1,800	$	611	$	8,157

⁽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 $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):

	Quarter Ended June 30, 2019											Quarter Ended June 30, 2018
	Infrastructure Solutions			Corrosion Protection		Energy Services		Corporate		Total ⁽¹⁾		Infrastructure Solutions		Corrosion Protection		Corporate		Total ⁽²⁾
Cost of revenues	$	(67	)	$	463	$	—	$	—	$	396	$	—	$	—	$	—	$	—
Operating expenses		976			331		—		898		2,205		1,186		139		48		1,373
Restructuring and related charges		459			2,509		6		—		2,974		1,344		196		—		1,540
Other expense		787			146		—		8		941		—		—		—		—
Total pre-tax restructuring charges	$	2,155		$	3,449	$	6	$	906	$	6,516	$	2,530	$	335	$	48	$	2,913

⁽¹⁾

Total pre-tax restructuring charges for the quarter ended June 30, 2019, include cash charges of $5.4 million and non-cash charges of $1.1 million. Cash charges consist of charges incurred during the quarter that will be settled in cash, either during the current period or future periods.

⁽²⁾

Total pre-tax restructuring charges for the quarter ended June 30, 2018, include cash charges of $2.3 million and non-cash charges of $0.6 million. Cash charges consist of charges incurred during the quarter that will be settled in cash, either during the current period or future periods.

	Six Months Ended June 30, 2019												Six Months Ended June 30, 2018
	Infrastructure Solutions			Corrosion Protection			Energy Services		Corporate		Total ⁽¹⁾		Infrastructure Solutions		Corrosion Protection		Corporate		Total ⁽²⁾
Cost of revenues	$	(92	)	$	562		$	—	$	—	$	470	$	—	$	—	$	—	$	—
Operating expenses		2,322			268			—		1,145		3,735		3,054		1,483		291		4,828
Restructuring and related charges		1,217			2,696			40		107		4,060		2,692		317		320		3,329
Other expense		1,210			(101	)		—		8		1,117		—		—		—		—
Total pre-tax restructuring charges	$	4,657		$	3,425		$	40	$	1,260	$	9,382	$	5,746	$	1,800	$	611	$	8,157

⁽¹⁾

Total pre-tax restructuring charges include cash charges of $8.5 million and non-cash charges of $0.9 million. Cash charges consist of charges incurred during the quarter that will be settled in cash, either during the current period or future periods.

⁽²⁾

Total pre-tax restructuring charges include cash charges of $5.2 million and non-cash charges of $3.0 million. Cash charges consist of charges incurred during the quarter that will be settled in cash, either during the current period or future periods.

The following 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 Charge to Income		Foreign Currency Translation			Cash⁽¹⁾		Non-Cash		Reserves at June 30, 2019
Severance and benefit related costs	$	1,742	$	2,627	$	(10	)	$	1,860	$	—	$	2,499
Contract termination costs		359		1,238		(13	)		606		—		978
Relocation and other moving costs		—		195		(1	)		26		—		168
Other restructuring costs		311		5,322		(3	)		3,450		1,409		771
Total pre-tax restructuring charges	$	2,412	$	9,382	$	(27	)	$	5,942	$	1,409	$	4,416

⁽¹⁾

Refers to cash utilized to settle charges during the first six months of 2019.

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

⁽¹⁾

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