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Note 4 - Restructuring

12 Months Ended

Dec. 31, 2020

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

4. RESTRUCTURING

On July 28, 2017, the Company’s board of directors approved the Restructuring. As part of the 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 CIPP businesses in Australia and Denmark; and (iv) reduce corporate and other operating costs.

During 2018 and 2019, the Company’s board of directors approved additional actions with respect to the 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 International Limited, the Company’s cathodic protection materials manufacturing and production joint venture in Saudi Arabia; (b) United Pipeline de Mexico S.A. de C.V., the Company’s Tite Liner^® joint venture in Mexico (“United Mexico”); (c) the Company’s Tite Liner^® businesses in Brazil and Argentina; (d) Aegion South Africa Proprietary Limited, the Company’s Tite Liner^® and CIPP joint venture in the Republic of South Africa; and (e) the Company’s CIPP contract installation operations in England, the Netherlands, Spain and Northern Ireland.

The Company completed the divestitures of Bayou and the Denmark CIPP business in 2018. The Company also completed the divestitures of the Netherlands CIPP business and its Tite Liner^® joint venture in Mexico in 2019, as well as the shutdown of activities for the CIPP business in England. The Company completed the divestitures of CIPP operations in Australia and Spain in early 2020 (see Note 1). Remaining shutdown activities include Corrosion Protection entities in Argentina and South Africa, which are expected to be completed in the first half of 2021. Additionally, the exit of the Company’s cathodic protection installation activities in the Middle East is substantially complete, though management expects minimal wind-down activities will extend through the first half of 2021 related to a small number of projects remaining in backlog. The sale of the Northern Ireland contracting operation was temporarily suspended due to COVID-19, but the Company expects to recommence the sale process during the second half of 2021.

As part of efforts to optimize the cathodic protection operations in North America, management initiated plans during the fourth quarter of 2019 to further downsize operations in the U.S., including the closure of three branch offices and the exit of capital intensive drilling activities at four branch offices. These actions included a reduction of approximately 20% of the cathodic protection domestic workforce and an exit of drilling activities that contributed approximately 20% to our cathodic protection domestic revenues in 2019. Management expects these actions to improve our cathodic protection cost structure in the U.S., eliminate unprofitable results in certain parts of the business and reduce consolidated annual expenses for the business overall. Also during 2019, the Company reduced corporate headcount and took other actions to reduce corporate costs.

Although not part of the original outlined restructuring plan, during 2020, the Company executed additional headcount reductions and office closings across the Company related to business slowdowns and to balance the effects of COVID-19. The Company also implemented further actions at its cathodic protection operations in North America to reduce exposure to construction activities, including additional headcount reductions and office closures. Additionally, the Company dissolved its specialty turnaround services business, P2S ServTech, LLC (“P2S”), which is reported within discontinued operations.

Total pre-tax restructuring and related impairment charges since the Restructuring’s inception were $188.7 million ($171.6 million post-tax) and consisted of cash charges totaling $57.3 million and non-cash charges totaling $131.4 million. Cash charges included employee severance, retention, extension of benefits, employment assistance programs, early lease and contract termination costs and other restructuring charges 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) $45.0 million related to allowances for accounts receivable, write-offs of inventory and long-lived assets, impairment of goodwill and definite-lived intangible assets, release of cumulative currency translation adjustments as well as net losses on the disposal of both domestic and international entities. The Company reduced headcount by approximately 830 employees as a result of these actions.

The Company continues to monitor the impact COVID-19 is having on the oil refining markets in the United States and stay-at-home or other restrictive orders in certain of the Company’s international operations. The Company is prepared to proactively respond to the situation and may take further restructuring actions as warranted. The Company expects to incur approximately $2 million of additional cash charges in 2021 related to this program. It 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 businesses

During 2020, 2019 and 2018, the Company recorded pre-tax restructuring charges as follows (in thousands):

	Year Ended December 31, 2020
	Infrastructure Solutions			Corrosion Protection			*Corporate*		Continuing Operations			Discontinued Operations		*Total*
Severance and benefit related costs	$	29		$	3,673		$	324	$	4,026		$	571	$	4,597
Contract termination costs		66			(166	)		—		(100	)		199		99
Relocation and other moving costs		99			137			—		236			34		270
Other restructuring costs (1)		(1,626	)		5,864			2,879		7,117			4,654		11,771
Total pre-tax restructuring charges	$	(1,432	)	$	9,508		$	3,203	$	11,279		$	5,458	$	16,737

⁽¹⁾

Includes charges primarily related to certain wind-down costs, allowances for accounts receivable, fixed asset disposals, release of cumulative currency translation adjustments and other restructuring-related costs in connection with optimizing the cathodic protection operations in North America, exiting the CIPP operations in Europe, disposing of certain international businesses and other cost savings initiatives. Amounts also include goodwill and definite-lived intangible asset impairments related to exiting a small business in discontinued operations.

	Year Ended December 31, 2019
	Infrastructure Solutions		Corrosion Protection		*Corporate*		Continuing Operations		Discontinued Operations		*Total*
Severance and benefit related costs	$	938	$	3,179	$	1,685	$	5,802	$	553	$	6,355
Contract termination costs		601		1,089		98		1,788		234		2,022
Relocation and other moving costs		190		408		—		598		55		653
Other restructuring costs (1)		13,642		4,592		4,258		22,492		819		23,311
Total pre-tax restructuring charges	$	15,371	$	9,268	$	6,041	$	30,680	$	1,661	$	32,341

⁽¹⁾

Includes charges primarily related to certain wind-down costs, inventory obsolescence, fixed asset disposals, release of cumulative currency translation adjustments and other restructuring-related costs in connection with exiting or divesting the CIPP operations in Europe and Australia, exiting the cathodic protection operations in the Middle East and right-sizing the cathodic protection services operation in North America.

	Year Ended December 31, 2018
	Infrastructure Solutions		Corrosion Protection		*Corporate*		Continuing Operations		Discontinued Operations		*Total*
Severance and benefit related costs	$	3,038	$	1,094	$	170	$	4,302	$	234	$	4,536
Contract termination costs		1,999		25		150		2,174		—		2,174
Relocation and other moving costs		184		—		—		184		—		184
Other restructuring costs (1)		13,311		7,936		1,317		22,564		28		22,592
Total pre-tax restructuring charges	$	18,532	$	9,055	$	1,637	$	29,224	$	262	$	29,486

⁽¹⁾

Includes charges primarily related to certain wind-down costs, allowances for accounts receivable, fixed asset disposals and other restructuring-related costs in connection with exiting non-pipe-related contract applications for the Tyfo^® system in North America, divesting the CIPP operations in Australia and Denmark, and exiting the cathodic protection operations in the Middle East. Amounts also include goodwill and definite-lived intangible asset impairments related to Denmark and definite-lived intangible asset impairments related to the cathodic protection operations in the Middle East.

Restructuring costs from continuing operations that were related to severance, other termination benefit costs and early contract termination costs were $4.2 million, $8.2 million and $6.7 million in 2020, 2019 and 2018, respectively, and are reported on a separate line in the Consolidated Statements of Operations.

The following tables summarize restructuring charges recognized in 2020, 2019 and 2018 as presented in their affected line in the Consolidated Statements of Operations (in thousands):

	Year Ended December 31, 2020
	*Infrastructure Solutions*			*Corrosion Protection*			*Corporate*		*Continuing Operations*			*Discontinued Operations*		*Total (1)*
Cost of revenues	$	69		$	1,952		$	—	$	2,021		$	—	$	2,021
Operating expenses		(357	)		3,947			2,360		5,950			—		5,950
Restructuring and related charges		194			3,644			324		4,162			—		4,162
Other expense (2)		(1,338	)		(35	)		519		(854	)		—		(854	)
Loss from discontinued operations		—			—			—		—			5,458		5,458
Total pre-tax restructuring charges	$	(1,432	)	$	9,508		$	3,203	$	11,279		$	5,458	$	16,737

⁽¹⁾	Total pre-tax restructuring charges include cash charges of $12.0 million and non-cash charges of $4.7 million. Cash charges consist of charges incurred during the year that will be settled in cash, either during the current period or future periods.
⁽²⁾	Includes charges related to the (gain) loss on disposal of restructured entities, including the release of cumulative currency translation adjustments resulting from those disposals.

	Year Ended December 31, 2019
	Infrastructure Solutions		Corrosion Protection		*Corporate*		Continuing Operations		Discontinued Operations		*Total (1)*
Cost of revenues	$	469	$	1,869	$	—	$	2,338	$	—	$	2,338
Operating expenses		5,349		1,131		3,444		9,924		—		9,924
Restructuring and related charges		1,729		4,676		1,783		8,188		—		8,188
Other expense (2)		7,824		1,592		814		10,230		—		10,230
Income from discontinued operations		—		—		—		—		1,661		1,661
Total pre-tax restructuring charges	$	15,371	$	9,268	$	6,041	$	30,680	$	1,661	$	32,341

⁽¹⁾	Total pre-tax restructuring charges include cash charges of $19.5 million and non-cash charges of $12.8 million. Cash charges consist of charges incurred during the year that will be settled in cash, either during the current period or future periods.
⁽²⁾	Includes charges related to the loss on disposal of restructured entities, including the release of cumulative currency translation adjustments resulting from those disposals.

	Year Ended December 31, 2018
	Infrastructure Solutions		Corrosion Protection		*Corporate*		Continuing Operations		Discontinued Operations		*Total (1)*
Cost of revenues	$	1,281	$	600	$	—	$	1,881	$	—	$	1,881
Operating expenses		7,291		4,547		1,317		13,155		—		13,155
Goodwill impairment		1,389		—		—		1,389		—		1,389
Definite-lived intangible asset impairment		870		1,299		—		2,169		—		2,169
Restructuring and related charges		5,221		1,119		320		6,660		—		6,660
Other expense (2)		2,480		1,490		—		3,970		—		3,970
Income from discontinued operations		—		—		—		—		262		262
Total pre-tax restructuring charges	$	18,532	$	9,055	$	1,637	$	29,224	$	262	$	29,486

⁽¹⁾	Total pre-tax restructuring charges include cash charges of $12.1 million and non-cash charges of $17.4 million. Cash charges consist of charges incurred during the year that will be settled in cash, either during the current period or future periods.
⁽²⁾	Includes charges related to the loss on disposal of restructured entities, including the release of cumulative currency translation adjustments resulting from those disposals.

The following tables summarize restructuring activity during 2020, 2019 and 2018 (in thousands):

								Utilized in 2020
	*Reserves at December 31, 2019*		*2020 Charge to Income*		*Foreign Currency Translation*			*Cash(1)*		*Non-Cash(2)*		*Reserves at December 31, 2020*
Severance and benefit related costs	$	4,389	$	4,597	$	(30	)	$	7,179	$	—	$	1,777
Contract termination costs		953		99		(7	)		1,020		—		25
Relocation and other moving costs		367		270		1			515		—		123
Other restructuring costs		2,379		11,771		35			7,302		4,801		2,082
Total pre-tax restructuring charges	$	8,088	$	16,737	$	(1	)	$	16,016	$	4,801	$	4,007

								Utilized in 2019
	Reserves at December 31, 2018		2019 Charge to Income		Foreign Currency Translation			Cash(1)		Non-Cash(2)		Reserves at December 31, 2019
Severance and benefit related costs	$	1,742	$	6,355	$	(11	)	$	3,697	$	—	$	4,389
Contract termination costs		359		2,022		(20	)		1,408		—		953
Relocation and other moving costs		—		653		(3	)		283		—		367
Other restructuring costs		311		23,311		(4	)		8,457		12,782		2,379
Total pre-tax restructuring charges	$	2,412	$	32,341	$	(38	)	$	13,845	$	12,782	$	8,088

								Utilized in 2018
	Reserves at December 31, 2017		2018 Charge to Income		Foreign Currency Translation			Cash(1)		Non-Cash(2)		Reserves at December 31, 2018
Severance and benefit related costs	$	3,864	$	4,536	$	(69	)	$	6,589	$	—	$	1,742
Contract termination costs		650		2,174		(19	)		2,446		—		359
Relocation and other moving costs		—		184		—			184		—		—
Other restructuring costs		675		22,592		(3	)		5,581		17,372		311
Total pre-tax restructuring charges	$	5,189	$	29,486	$	(91	)	$	14,800	$	17,372	$	2,412

⁽¹⁾	Refers to cash utilized to settle charges during the year.
⁽²⁾	Includes non-cash charges from discontinued operations of $3.6 million, $0.1 million and zero in 2020, 2019 and 2018, respectively.