Attached files
| file | filename |
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| 8-K - FORM 8-K DATED NOVEMBER 2, 2009 - Aegion Corp | form8k11022009.htm |
Investor
Update - November 2009
Energy
& Mining
Wastewater
Sustainable
Pipeline Solutions
2
Forward-Looking
Statements
The
Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for
forward-looking
statements. The Company makes forward-looking statements in this document that represent the
Company’s beliefs or expectations about future events or financial performance. These forward-looking
statements are based on information currently available to the Company and on management’s beliefs,
assumptions, estimates and projections and are not guarantees of future events or results. When used in
this document, 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 the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange
Commission on March 2, 2009. 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 the Company from time to time in its
periodic 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 the Company in this
document are qualified by these cautionary statements.
statements. The Company makes forward-looking statements in this document that represent the
Company’s beliefs or expectations about future events or financial performance. These forward-looking
statements are based on information currently available to the Company and on management’s beliefs,
assumptions, estimates and projections and are not guarantees of future events or results. When used in
this document, 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 the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange
Commission on March 2, 2009. 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 the Company from time to time in its
periodic 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 the Company in this
document are qualified by these cautionary statements.
In
addition, some of the market and industry data and forecasts included in this
Investor Presentation
are based upon independent industry sources. Although we believe that these independent sources are
reliable we have not independently verified the accuracy and completeness of this information.
are based upon independent industry sources. Although we believe that these independent sources are
reliable we have not independently verified the accuracy and completeness of this information.
Insituform®,
the Insituform® logo, Insitumain™, United Pipeline Systems®, Bayou
Companies™,
Corrpro®, Insituform Blue® and our other trademarks referenced herein are the registered and
unregistered trademarks of Insituform Technologies, Inc. and its affiliates.
Corrpro®, Insituform Blue® and our other trademarks referenced herein are the registered and
unregistered trademarks of Insituform Technologies, Inc. and its affiliates.
3
Insituform
is a leading global provider of proprietary
technologies and services for rehabilitating and maintaining
sewer, water and energy and mining piping systems and the
corrosion protection of industrial pipelines
technologies and services for rehabilitating and maintaining
sewer, water and energy and mining piping systems and the
corrosion protection of industrial pipelines
4
§ Sewer
Rehabilitation
§ Europe - Focus on
improving profitability through right-sizing installation businesses, expanding
third party tube
sales, optimizing German joint venture and lowering fixed operating expenses
sales, optimizing German joint venture and lowering fixed operating expenses
§ Asia/Pacific - Growth in India,
Hong Kong and Australia, expansion into Singapore and China, growth of
third
party tube sales through development of certified installer program throughout Asia
party tube sales through development of certified installer program throughout Asia
§ Water
Rehabilitation
§ Focus on successful
implementation of Insitumain®
§ Development of
broader water platform to capitalize on growing water infrastructure needs
globally
§ Energy
and Mining
§ Continued
integration of recent acquisitions of Bayou and Corrpro under common platform
leadership group
§ Investing in
building business development opportunities for comprehensive service
platform
§ Focus on selective
geographic expansion (Asia, Middle East) coordinated with current Insituform
theatre
management
management
Our
Vision
5
Financial
Snapshot
NOTE: LTM 2009
as of September 30, excluding Acquisition-
Related Transaction and Severance Costs
Related Transaction and Severance Costs
Ø LTM
revenue growth of 21% and
operating income growth of 54% with
margin increasing from 6.3% to 8.0%
operating income growth of 54% with
margin increasing from 6.3% to 8.0%
Ø Significant
revenue growth expected
in near term:
in near term:
• Economic
recovery in NA Market
• Stimulus
funding
• Insitumain™
momentum
• Increasing
Asia / Pacific
infrastructure
infrastructure
• Oil
and Gas pricing recovery
• Geographic
expansion across
service segments
service segments
Ø Growth
increases earnings potential
Ø Geographic
expansion and expanded
Energy and Mining platform
dramatically increased addressable
market size / organic growth
opportunities
Energy and Mining platform
dramatically increased addressable
market size / organic growth
opportunities
Ø Additional
cost synergies as
companies integrate / achieve
additional scale
companies integrate / achieve
additional scale
6
Financial Snapshot
(Continued)
NOTE: LTM 2009
as of September 30, excluding Acquisition-
Related Transaction and Severance Costs
Related Transaction and Severance Costs
7
PERFORMANCE
§ Gross margin %
increased to 24.6% (LTM Sept 2009) from 22.2% in 2008, primarily resulting
from:
- Cost of quality
reductions
- Crew efficiency /
Manufacturing efficiency
- Implementation of
improved installation techniques (IPlus® Infusion (steam cure small diameter
technique))
- Lower fuel / resin
prices
- Lower fixed costs
for equipment
§ Win rate by $
increasing as we focus on large projects:
- Win rate increased
to 55% for first nine months of 2009, from 45% for full year of
2008
- Won 7 of 9 projects
over $6 million in 2009
§ Market pricing for
CIPP tube contributing to increased margin - dollars and margin %
§ Contract backlog
$183.8 million at September, up 3% from $178.5 million in Sept 2008
OUTLOOK
§ Continue to optimize
market share
§ Capture of stimulus
work in 2010-2011
§ Continuous
improvement in project management capability
§ Increase operating
expense efficiency
§ Grow third party
tube sales business
NOTE: LTM 2009
as of September 30
North
American Sewer Rehabilitation
8
PERFORMANCE
§ Gross margin trends
very positive - 27.2%¹ (LTM Sept 2009) versus 22.3% for 2008
§ Quality improvements
- large improvement on project execution (fewer project write-
downs)
downs)
§ Backlog growing -
$40.7 million at September 2009 versus $30.7 million at September
2008, a 32.6% improvement
2008, a 32.6% improvement
§ German JV
performance improving - Insituform’s equity earnings improved to $1.0
million (LTM Sept 2009) versus $0.8 million in 2008, a 29% improvement
million (LTM Sept 2009) versus $0.8 million in 2008, a 29% improvement
¹ Excludes
fourth quarter 2008 one-time gain from litigation settlement of $8 million
recorded as revenues
NOTE: LTM 2009
as of September 30
European Sewer
Rehabilitation
9
PERFORMANCE
/ OUTLOOK
§ Creating a capable
execution organization on a market specific basis
§ India - strong
relationship with SPML, opening new regional markets
§ Using recent Sydney
award to grow share in Australian market
§ Certified installer
program to promote tube sales in small diameter
markets (Singapore, China)
markets (Singapore, China)
NOTE: LTM 2009
as of September 30
Asia-Pacific Sewer
Rehabilitation
10
§ Cities
over 1 million people - 56
§ Structure
- 50.5% owned JV with SPML
Overview
/ Outlook:
§ Established solid
base of operations in Delhi
§ Recently
successfully expanded outside of Delhi
with contract win in Uttar Pradesh
with contract win in Uttar Pradesh
§ Actively marketing
to other major cities - Mumbai,
Hyderabad
Hyderabad
§ Chennai efforts
important as they will establish
operations outside of monsoon belt
operations outside of monsoon belt
1
3
Current
capability
India
11
Overview
/ Outlook:
§ Hong Kong is the
springboard into China
§ Acquired remaining
50% of joint venture with
VSL in June
VSL in June
§ Significant recent
project wins direct with the
client will enable operational efficiencies
client will enable operational efficiencies
§ Currently
identifying potential CIPP installers in
China to become certified Insituform installers in
greater Guangzhou, Shanghai, Beijing, Wuhan
and Chongqing areas
China to become certified Insituform installers in
greater Guangzhou, Shanghai, Beijing, Wuhan
and Chongqing areas
1
Hong
Kong / China
12
§ Estimated
Addressable Market Size - $US195 million
§ Cities
over 1 million people - 4
§ Overview
/ Outlook:
§ Sydney represents
largest trenchless rehabilitation market in Australia
§ Focus on scaling up
to establish fully-functional business platform
throughout Australia (specialized roles, crew productivity, etc.)
throughout Australia (specialized roles, crew productivity, etc.)
§ During 2010 will
establish service platform in Victoria
§ During 2011 will
establish service platform in Queensland
Current
capability
Planned
Expansion
Expansion
Water
Opportunities
Opportunities
Australia
13
§ Estimated
Addressable Market - $110 M (per annum)
Overview
/ Outlook
§ Insituform
purchasing former licensee to have execution capability
§ Plan to bid on large
diameter projects and institute a certified installer
program to sell tube and technical services for small diameter projects
(one already agreed upon)
program to sell tube and technical services for small diameter projects
(one already agreed upon)
§ Opportunity -
Approximately $300 million in sewer rehabilitation projects
to be tendered over next three years
to be tendered over next three years
Singapore
14
CONSIDERATIONS
§ Introduced
Insitumain in March 2009 -
- Fully Structural
CIPP water product
- Current
capability -
diameters from 6” to 12”, operating pressures up to 150 psi (working on
developing capability up to 24”), and any type of host pipe material - very important as it can
addresses 65-70% of market issues
developing capability up to 24”), and any type of host pipe material - very important as it can
addresses 65-70% of market issues
- Epoxy resin system
allows adhesive seal of connections (versus mechanical seal)
§ Began pilot testing
in the 3rd quarter
with success
§ Will continue pilot
tests in the 4th
quarter
§ Already secured
approximately $2 million in project awards, with more pending
NOTE: LTM 2009
as of September 30
Water
Rehabilitation
15
PERFORMANCE
§ Integration
completed with run rate savings > $6.5M (2010)
§ Corrpro has
performed as planned
§ Bayou has performed
well despite depressed natural gas pricing
- >30% drop in
ancillary businesses (CCSI, BWW, Baton Rouge Coating JV)
- Virtually no work in
small diameter gas market in 2009
- Oil market
rebounding, leading to increased quote activity late in the year
§ UPS downturn related
to lower copper and gas pricing - significant backlog growth in second half
of
2009
2009
§ Platform sales
momentum created by recent Mexican project awards (see next slide)
STRATEGIC
OUTLOOK
§ Strengthening bid
table as commodity pricing recovers - Chile,
Australia, Canada, Middle East
Australia, Canada, Middle East
§ Target capital
“light:” geographic expansions - Garneau (Canada)
§ Platform momentum
creates value added opportunities in key markets -
Oil Sands, Gulf of Mexico
Oil Sands, Gulf of Mexico
§ Concrete /
Insulation expansion
NOTE: LTM 2009
as of September 30, excluding Acquisition-Related Transaction and Severance
Costs
Energy
and Mining
16
§ First significant
cross E&M platform sale - total value $13 million
§ Scope - oil and
water line replacement, which includes elements for
TiteLiner®, CCSI, Corrpro, Bayou Welding Works
TiteLiner®, CCSI, Corrpro, Bayou Welding Works
§ Direct relationship
with Petróleos Mexicanos (“Pemex”) (versus
contractors)
contractors)
§ Creates future
opportunities for work with Pemex and well field
developers (Schlumberger, etc.)
developers (Schlumberger, etc.)
§ Robust bid
table:
§ Mexico - >$100
million in first half 2010
§ Canadian Oil
Sands
§ North
Sea
Project
Summary - Poza Rico, Mexico
17
§ Will look for
opportunities to expand capability:
Ø Pipeline inspection
/ leak detection - complementary
Corrpro capabilities on industrial side
Corrpro capabilities on industrial side
Ø Front-end
development of maintenance programs -
complement our execution capability
complement our execution capability
Ø Flexible pipe
opportunities to access markets where dig
and replace will remain dominant
and replace will remain dominant
Ø Pipeline integrity
services
Focus
on Water for Future Growth
18
Technology
Innovator
Premier
Brand / Long
Standing Customer
Relationships
Standing Customer
Relationships
Experience
with Complex
Regulatory Environment
Regulatory Environment
Project
Management and
Execution Capability
Execution Capability
Leader
in Large and
Growing Markets
Growing Markets
Energy
& Mining
Wastewater
Our
Business
19
Appendix
20
§ The
following is a reconciliation of Insituform's income from continuing operations
to EBITDA:
(1)
9/30/09 Pro Forma EBITDA excludes all acquisition transaction costs incurred by
Insituform, Bayou and Corrpro
EBITDA
Reconciliation