Aegion Corp Annual Report 2017

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FY2017 Annual Report · Aegion Corp

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WHAT
IT TAKES

SALES DISCIPLINE

PROJECT RISK MANAGEMENT

OPERATIONAL EXCELLENCE

STRATEGIC CAPITAL ALLOCATION

2 0 1 7 A N N U A L R E P O R T

IT TAKES a lot to be a leader
in keeping infrastructure working
better, safer and longer for
customers throughout the world.

Our VALUES guide the people of Aegion. When combined with a disciplined approach

to sales, project risk management, operations and capital allocation, we have

WHAT IT TAKES to deliver sustainable organic growth.

It takes a commitment to safety, including the belief that ZERO INCIDENTS ARE POSSIBLE.

It takes the resolve to DO WHAT’S RIGHT in every situation.

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

FOR THE YEARS ENDED DECEMBER 31

2 017

2 016

2 015

2 014

2 013

Revenue

Gross Profit

$ 1,359,019

$ 1,221,920

$ 1,333,570

$ 1,331,421

$ 1,091,420

284,812

253,164

275,787

279,983

247,021

Operating Income (Loss)

(43,173)

50,826

Income (Loss) from Continuing Operations

(69,054)

29,488

19,946

(8,067)

47,233

(8,067)

(19,812)

66,882

(33,320)

50,812

52,202

(37,167)

49,451

44,351

34,785

(69,054)

38,641

29,488

Adjusted Income from Continuing
Operations (non-GAAP)1

Net Income (Loss)

Diluted Earnings (Loss) per Share

Income (Loss) per Share
from Continuing Operations

Adjusted Income per Share from
Continuing Operations (non-GAAP)1

Diluted Net Income (Loss) per Share

(2.08)

0.84

(0.22)

(0.88)

1.30

1.03

(2.08)

1.10

0.84

1.28

(0.22)

1.37

(0.98)

1.27

1.13

It takes the ability to SOLVE PROBLEMS, especially the complex challenges critical to customer success.

Operating Cash Flow from Continuing Operations

$ 66,301

$ 73,216

$ 132,023

$ 81,868

$ 88,065

It takes a rock-solid belief that RESULTS MATTER in the pursuit of sustainable organic growth.

It takes dedication to continuous improvement and a daily quest to BE BETTER.

1 For 2017, 2016, 2015, 2014 and 2013, non-GAAP amounts exclude, as applicable, restructuring charges, goodwill and definite-lived intangible asset impairment
charges, impacts from the Tax Cuts and Jobs Act, reversal of a contingency reserve, reserves for disputed and long-dated receivables, certain litigation
settlements, certain acquisition-related escrow settlements, acquisition and divestiture expenses, prior debt redemption expenses and joint venture and
divestiture activity; see reconciliation on pages A-1, A-2 and A-3.

WHAT IT TAKES

MUNICIPAL PIPELINE REHABILITATION

Our INFRASTRUCTURE SOLUTIONS platform is
a market leader for the rehabilitation of municipal
and industrial water and wastewater pipelines in
North America and select markets around the world.
The municipal pipeline rehabilitation market is
Aegion’s single largest market and represented more
than 40 percent of Aegion’s consolidated revenues
and new orders in 2017.

Our North America municipal CIPP business delivered
another outstanding performance in 2017, setting a record for
revenues. This represents the sixth consecutive year of
favorable conditions and improved financial performance.

Several factors contributed to these results, beginning with
our decision to grow the business by rethinking our role and
pursuing a greater share of the available market opportunity.
Instead of competing as a specialty CIPP subcontractor,
our sales team is leveraging our enhanced project and risk
management capabilities to pursue larger, more complex
bid packages as a prime contractor. We have also expanded
our geographic reach, opening new offices in underserved
regions of North America. Our deliberate customer-focused
approach yielded more than a $100 million, or 28 percent,
increase in new orders in 2017.

Our Tyfo® system business in Asia-Pacific, as well as our
global third-party tube sales business, performed largely
according to expectations. Pressure pipe sales increased
modestly in 2017, compared to 2016, with the addition of our
new CIPP pressure pipe solution. The trenchless pressure
pipe rehabilitation market potential remains in its early
stage, and we are optimistic for its future, given the strength
of our pressure pipe portfolio and our experienced sales
team that is converting other rehabilitation methods to
our trenchless solutions.

OIL & GAS PIPELINE PROTECTION

Our CORROSION PROTECTION platform offers
technologies and services that protect and monitor
oil & gas pipelines from the effects of corrosion in
North America and other parts of the world. Our
solutions include best-in-class cathodic protection
systems, pipeline inspection, interior pipe linings,
interior and exterior pipe coatings and insulation,
as well as pipeline repair capabilities.

A $130 million deepwater pipe coating and insulation
project — the largest in our Company’s history — contributed
significantly to our Corrosion Protection platform’s revenues

and adjusted operating income in 2017, which rose to
$456.1 million and $20.6 million, respectively. With that
project drawing to a close and the process of divesting
the Bayou subsidiary that performed this work now
underway, the future of this platform lies in more
predictable, sustainable organic growth opportunities.

Overall, 2017 results in the rest of the platform were mixed.
Execution issues impacted our performance in U.S. cathodic
protection services and slowed the rollout of our new asset
integrity management system. Behind the scenes, we
continued to make strategic investments in this technology,
expanding the applications for the pipeline survey data
collected, while also adding significant strength to our
technology portfolio.

Weakness in oil & gas prices in the first half of the year
limited the opportunity for our cathodic protection business
in Canada. Strong execution, rising oil prices and an expanded
sales force resulted in improved adjusted operating income
in the second half of 2017 and a strong backlog heading into
2018. Our cathodic protection business in the United Kingdom
turned in another solid performance. It was complemented by
a strong rebound in the Middle East for our corrosion protection
business, where we saw new orders grow 80 percent.

Other bright spots included our Coating Services business,
which performed better than expected, and our pipe lining
business, which registered an 11 percent year-over-year
growth in revenues by diversifying its business outside of oil
& gas markets. These two businesses secured significant
projects in the Middle East and Latin America in 2017 that
will be primarily executed in 2018. Successful execution on
these key projects will be critical as we look to secure other
high-value global projects over the next year.

Higher oil prices, coupled with an improved sales process,
strong backlog and new platform leadership create a solid
outlook in 2018.

DOWNSTREAM REFINERY MAINTENANCE

Our ENERGY SERVICES platform is a major provider
of day-to-day maintenance services to refinery
customers, holding the leading maintenance
position in 13 of the 17 refineries on the U.S. West
Coast. In addition to critical maintenance services,
we perform turnarounds, scaffolding services, safety
services and small capital construction activities.

When Aegion acquired Brinderson in 2013, its revenues
totaled $214 million, approximately 40 percent of which came
from upstream sources and 60 percent from downstream
work. The Energy Services platform has since shed its
upstream energy market exposure and focused on the
less-volatile downstream space in our core West Coast

RICK N. ST. LAURENT
President,
Energy Services

DAVID F. MORRIS
Executive Vice President,
General Counsel & Interim
Chief Financial Officer

CHARLES R. GORDON
President &
Chief Executive Officer

FRANK R. FIRSCHING
President,
Infrastructure Solutions

BRIAN S. GROODY
President,
Corrosion Protection

DEAR FELLOW
STOCKHOLDERS:

Aegion’s actions in 2017 simplify and position our Company
to deliver stable earnings growth. Our focus is on market
opportunities with favorable earnings profiles. Infrastructure
spending remains strong, and energy markets are improving.
With the disciplined approaches we have adopted for sales,
project risk management, operations and capital allocation,
I believe we have WHAT IT TAKES to bring our distinct
competitive advantages to market and earn the returns
our stockholders expect.

Maintaining a safe working environment remains our first
and highest priority. In 2017, Aegion’s total Recordable and
Lost Time Incident Rates continued to rank in the industry’s
top safety tier. We believe ZERO INCIDENTS ARE POSSIBLE,
and we are committed to providing a safe work environment,
the best available safety equipment and the proper training
to drive consistent safety awareness and performance
across Aegion.

Decisive steps we took in the second half of the year to
address three small, troubled businesses came too late
to mitigate their negative impact on our 2017 earnings.

Together, these businesses represented just over $50 million,
or 3.9 percent, of our $1.36 billion in consolidated revenue.
But their adjusted operating losses reduced our adjusted
diluted earnings per share by $0.33 cents, which is both
disappointing and unacceptable.

Our actions included restructuring the first of these
businesses — our Fyfe North America commercial construction
business — beginning late last summer. Instead of continuing
to compete against concrete repair and restoration companies
for contracts to install our engineered Tyfo® fiber-reinforced
polymer technology on bridges and other commercial
structures, we launched a certified applicator program
that includes product sales and engineering support as
our channel to this market. This new streamlined business
model allows us to significantly increase our focus on our
core competencies in materials science and structural
engineering, while lowering our risk profile and costs.

We identified weaknesses in two other poor performers — our
cured-in-place pipe (CIPP) contracting operations in Australia
and Denmark — during the same time frame. By year end,
we had consolidated the regional offices and realigned
management and support staff in both locations to match
anticipated regional market activity. These restructuring
efforts are now largely behind us, and we believe all three
of these businesses are positioned to be markedly more
profitable in 2018.

AEGION CORPORATION 2017 ANNUAL REPORT

WHAT IT TAKES

2017–2019

AEGION’S
THREE-YEAR
FINANCIAL
TARGETS

REVENUE GROWTH
low to mid-single digits

OPERATING MARGINS
at least 7 percent by 2019

EPS GROWTH
low to mid-double digits

ROIC
≈ 10 percent by 2019

OPERATING CASH FLOW
> 2x net income

FREE CASH FLOW
> 1x net income

refinery market. In 2017, the platform’s $291 million in
revenue came almost exclusively from this market, an
increase of approximately 17 percent over 2016. Adjusted
operating income more than tripled year over year.

The platform’s strong results were driven partially by our
success in supporting California refineries in their efforts
to comply with new state hiring requirements. In 2017, we
transitioned our first two refinery maintenance contracts
to our building trade subsidiary, with additional transitions
and bid opportunities anticipated in 2018. The platform also
profited from the expansion of its safety services offering,
as well as an increase in small construction projects at sites
where we are already embedded.

While we anticipate turnaround activity to be lower in 2018
than typical, opportunities for expanding our other services,
both inside and outside the refinery space, are strong, and we
expect another year of top- and bottom-line growth.

2018 STRATEGIC FOCUS

We set financial targets in our three-year strategic plan in late
2016 and have identified four key areas that require increased
attention to achieve these targets by 2019:

SALES DISCIPLINE

PROJECT RISK MANAGEMENT

OPERATIONAL EXCELLENCE

STRATEGIC CAPITAL ALLOCATION

We demonstrated substantial progress in each of these areas
in 2017 and will take additional steps in 2018 to help ensure
continued strong execution.

SALES DISCIPLINE

We have spoken at length in recent years about our investment
in sales training and our evolution to becoming a more
customer-focused company. This includes transforming our
sales culture by implementing a consistent commission-based
sales approach across all platforms and a customer
relationship management tool. We invested in a chief sales
officer, set sales expectations and now rank our sales team
members based on results. Perhaps most importantly, we
made the conscious decision to pursue organic growth not
only through market diversification and service expansion,
but also by serving as a turnkey, cross-platform solutions
provider to key accounts.

These investments have started to pay dividends. New
orders were up a remarkable 20 percent year over year,
and we enter 2018 with increased backlog across all
platforms, excluding the large deepwater project. Sales
in our top 20 key oil & gas accounts grew an average of
18 percent year over year. While this rate of growth is likely
not sustainable, revenue growth of low to mid-single digits
is certainly within our reach.

PROJECT RISK MANAGEMENT

Project success relies on many factors: proven technologies,
technical know-how, properly working equipment and good
weather, to name a few. But there are two key components
of project success that are sometimes overlooked: defining
a clear scope of responsibility with our customers and a fair
allocation of risk in the terms and conditions of a contract.

We improved our ability in 2017 to manage project risk by
adopting a common risk management-focused contracting
approach across all our platforms. This approach includes
proactively partnering with our customers to identify risks
and challenges upfront. To limit the risk of disputes, we are
also training project personnel to immediately address and
resolve contract issues with customers as they occur — when
both parties have a clear perspective of the situation. Our
goal is to execute balanced and fair contracts that assign
responsibility to each party for the risks they control.

Our focus on project risk management also extends into our
finance organization, which we are repositioning to better
leverage our data and analytics capabilities. By strengthening
cross-functional partnerships between our finance personnel
and operations teams, we are improving financial processes,
planning and forecasting.

OPERATIONAL EXCELLENCE

We have made significant investments in recent years
to improve project success through better planning and
management systems. By increasing discipline in every
aspect of our operations, we aim to improve performance
throughout the world.

Our application of The Aegion Way, the lean-based continuous
improvement process we launched in 2016, also continued
to build momentum in 2017. We conducted a total of 17 kaizen
events, with results ranging from reducing the 12-month
rolling days sales outstanding average for our North America
municipal CIPP business by four days, to improving crew
productivity by 3 percent.

STRATEGIC CAPITAL ALLOCATION

Our cash position remains strong. Cash flow from operating
activities in 2017 was $66 million, or 191 percent of adjusted
net income, which is in line with our financial targets
despite nearly $10 million in cash payments related to
our restructuring activities.

We are committed to a disciplined approach towards capital
allocation and, through our disciplined approach, we intend to
continue investing in our businesses to improve productivity,
drive increased sales and fund new product development. In
addition, we expect to continue to return cash to our stockholders
through our open market share repurchase program.

Our first priority for cash is debt repayment with the goal
of keeping our debt-to-EBITDA ratio below 3-to-1. We paid

down nearly $20 million in debt in 2017. In 2018, we have
required debt repayments of $26 million on our term loan
and will further seek to opportunistically reduce borrowings
on our line of credit throughout the year.

Our second priority for cash is for capital spending, mostly to
maintain our asset base but also to promote organic growth.
During 2017, capital expenditures of $31 million were primarily
related to investments to support our CIPP operations in the
United States and Europe, and our pipe coating and insulation
business. For 2018, we anticipate we will spend approximately
$30 to $35 million for capital expenditures.

Our third priority is returning cash to stockholders through
our open market share repurchase program. During 2017,
we acquired nearly 1.6 million shares of our common stock
for $35 million at an average price of $22.10 per share. We
also purchased an additional 113,000 shares of common stock
for $2.5 million to satisfy tax obligations related to employee
equity awards. Over the last five years, we have spent more
than $145 million to repurchase approximately 7 million shares
in open market transactions at an average price of $20.63
per share. Looking at our share price today, we view this as a
successful strategy. Our board of directors has authorized
a program to repurchase up to $30 million of our common
stock in 2018 through open market repurchases. While we
expect to continue Aegion’s open market share repurchase
program, the number of shares repurchased in any given year
may vary based on the market price of our shares.

We believe we have a solid organic growth strategy to deliver
stockholder value, which places sizable M&A activity at
the bottom of our priority list. We will, however, continue
to evaluate smaller acquisitions that add new technologies
to our product and services portfolio or new geographic
areas. Should an opportunity present itself, we will employ
a disciplined approach to evaluate its potential to support
our mission and deliver appropriate stockholder value.

LOOKING AHEAD: RESULTS MATTER.

It takes a lot to build a strong foundation that is a springboard
for sustainable organic growth.

It takes a capable and dedicated sales team with a plan for
capturing a larger share of our markets with strong earnings
profiles. It takes a disciplined approach to managing risks
and day-to-day operations. It takes strategic capital allocation.
It takes a daily commitment to living the core values that define
our organization’s culture.

As we enter 2018, I believe Aegion has WHAT IT TAKES
to succeed. A successful future is ours for the taking.

Charles R. Gordon
President & Chief Executive Officer

AEGION CORPORATION 2017 ANNUAL REPORT

WHAT IT TAKES

IT TAKES

A change has taken place at Aegion since we implemented
a more disciplined sales process designed around
customer needs.

Tools that increase market visibility and sales team
accountability, while giving us the ability to react more quickly
to our clients, have improved our performance. These tools
have helped us transform from a specialty subcontractor of
a single service to a prime contractor responsible for much
larger scopes of work in most of the markets we serve. Our
ability to add new services to our existing contracts improves
our position as a solutions provider and problem solver.
We are targeting new geographies and have restructured
old business models in others. Companywide, we are
focusing on key accounts with needs that cross our business
platforms and on new ways of serving them. We are also
improving communication across Aegion to ensure we are
aligned in our efforts.

The 2017 result: Our growth significantly exceeded market
growth, and customer orders were up 20 percent year over
year. We also entered 2018 with increased backlog across all
three platforms, excluding the large deepwater project.

Aegion’s North America municipal CIPP business delivered
high, often record-setting performances between 2012 and
2017. These results demonstrated the strength of our project
management and sales teams, and our ability to remain
competitive in a maturing market.

We bid on 21 percent more North America municipal CIPP
projects in 2017 than the previous year, and new orders
increased 29 percent over 2016. Our greater customer focus
and disciplined sales processes led to new records in both
revenue and earned income.

Our sales teams are committed to maximizing our
participation in the market. In 2017, we used customer
relationship management tools to deepen customer
relationships and better understand their needs and pain
points. The benefits of early customer consultations paid off
in the form of projects that gave Aegion better chances for
success. We pursued a broader scope of opportunities as a
result, increasingly taking the role of prime contractor on
larger projects. And, after identifying underserved regions,
we added sales resources and are opening new offices to
address them.

The market intelligence we collect allows us to evaluate
how best to compete for new work. The discipline we have
built into our sales process helps position us to win it.

Revenue from our top 20 key
oil & gas accounts grew 18 percent
in 2017, driven by stronger working
ties across our platforms.

New orders in 2017 increased
20 percent year over year.

ALIGNED GOALS

An effective sales process meets two critical
objectives: It achieves a company’s strategic
and financial goals, and it rewards the people
who contribute to accomplishing them. In line
with the Company’s goals, Energy Services
identified significant opportunities to expand
our scope of services with existing clients,
and we implemented a plan to pursue them.

Aegion’s goals and my goals are now one and
the same. I continue to focus on my primary
accounts but have expanded my contacts at each
site to ensure I am communicating with those
we can serve rather than just those we do serve.

Bill Short
Energy Services Sales Vice President

AEGION CORPORATION 2017 ANNUAL REPORT

WHAT IT TAKES

SALES DISCIPLINEIT TAKES

Aegion has significantly reduced commercial litigation
across all platforms.

We attribute this drop to a more disciplined approach to
project risk management. After identifying common causes
of disputes, we developed and implemented new tools for
mitigating project risks.

We place an emphasis on working with customers on the front
end to define contractual risk and responsibility. The resulting
contracts include reasonable commercial terms that require
us to take contractual responsibility for what we can control.
Our field personnel are trained to identify and resolve project
issues that arise in real time through proactive communication
and problem solving with our customers. This approach not
only improves our ability to manage risks but also strengthens
our customer relationships.

ISO CERTIFICATION SUPPORTS INCREASED FOCUS ON RISK

In 2017, four of our business units, Aegion Coating Services,
Corrpro, Insituform and Fyfe, achieved ISO 9001:2015
certification.

The new standard places increased emphasis on risk and
leadership involvement prior to project execution, with

a broadened scope around products and services. This
risk-based thinking helps mitigate and prevent unforeseen
issues. Effective use of the ISO 9001:2015 standard has
allowed us to better plan and execute work, resulting in
improved customer satisfaction and operational efficiency.

CHANGES TO QUALITY SYSTEM THAT ADDRESS RISK

• Internal audit checklists updated to review

risk mitigation activities

• Management review evaluates effectiveness

of actions to address risk

• Quality manual revised to identify risks

• Risk reviewed during change management,

customer feedback and corrective action process

• Quality plans developed to minimize risk

• Monthly quality report used to identify risk

and needed improvements

LEAVING NOTHING TO CHANCE IN HALIFAX

The 100-year-old Northwest Arm Trunk Sewer in
Halifax, Nova Scotia, runs primarily through the yards
of multimillion-dollar residential properties overlooking
the Halifax Harbour. Halifax Water’s plan to rehabilitate
the large-diameter, arch-shaped sewer was deemed so
complex and risky that only one company agreed to bid
the work — Aegion. Our operation team’s customer focus
allowed for coordinated upfront planning on the $7.5 million
project. Everything from bridge weight restrictions that
required Aegion to shuttle only half-full tankers of resin to
the site to the temperature and sunlight controls needed to
keep the liner from hardening prematurely were considered.
“We preplanned absolutely everything,” says David Runge,
Insituform Regional Manager. “And it paid off.”

Aegion’s work was completed and the relined trunk line was
operational ahead of schedule in December 2017.

Our more focused, risk-based
approach to contracting requires
increased emphasis on resolving
unavoidable project issues in
real time.

CREATING SUCCESS

Our success depends on our ability to determine
if a project’s potential rewards justify the risks.
That requires collaboration by multiple
stakeholders throughout our organization.
In reviewing opportunities, we consider not
only health, safety and environmental risks
but also a project’s strategic value and potential
to meet our profitability goals. Will it enable
us to increase market share? Can we leverage
other services? By asking the right questions
and identifying ways to improve our risk profile,
we are creating a framework for delivering
projects on time to satisfied customers.

Sam Jeffery
Corrpro Operations Manager

AEGION CORPORATION 2017 ANNUAL REPORT

WHAT IT TAKES

PROJECT RISK MANA GEMENTA burnt-out tail light or missing logbook entry may seem
like insignificant details. But, in our business, either one can
lead to a work crew delay at a Department of Transportation
roadside inspection.

Using The Aegion Way, our continuous improvement process,
we improved our pre-trip inspection process in 2017 and
reduced our fleet incident rate. We are enhancing quality
and safety, driving down costs, improving efficiency and
putting Aegion on a path to long-term success.

In 2017, we continued our Focus Four safety initiative
to reduce workplace injuries and realized a meaningful
year-over-year reduction in safety incidents. While
each business faces unique safety risks, these global
principles apply:

IMPROVING PROCESSES

Using lean processes to speed inspection report turnaround
in 2017, our Corrosion Protection platform performed close
interval surveys on approximately 25,000 miles of transmission
pipelines throughout North America. Our energy clients rely on
these mandatory, time-critical surveys to identify conditions
that cause corrosion. Application of The Aegion Way resulted
in process improvements that enable us to now generate and
deliver these reports in one-third the time it took previously.
Another kaizen event led to the use of new tools within our
Asset Integrity Management system to process higher-quality
close interval survey data more efficiently.

FOCUS FOUR SAFETY INITIATIVES

Companywide, Aegion maintains a world-class safety
record. We believe ZERO INCIDENTS ARE POSSIBLE
and are systematically working toward that goal. All our
platforms continuously assess the leading indicators of
workplace incidents.

Safety leadership — Making sure workers have
the time, tools and training to execute work safely

Body mechanics — Employing technologies that
reduce lifting on a jobsite

Hazard recognition — Training employees
and leaders to identify and eliminate site hazards

Hand safety — Implementing process changes
that protect workers’ hands

Our Focus Four safety initiative
led to a 50 percent year-over-year
reduction in 2017 in injuries that
resulted in employees missing work.

CONTINUOUS IMPROVEMENT

After The Aegion Way was introduced, several kaizen
events focused on a single process that contributes
to successful project execution — from the pre-bid
process to subcontractor management. A kaizen
event on preconstruction, for example, resulted in
improvements to the way we collect and transfer
information from our sales, project management
and estimating teams to our operations and
administrative personnel.

They also made us better problem solvers,
produced safer jobsites, improved quality
and sped up the billing process.

Amal Toke
Insituform East Area Manager

IT TAKES

AEGION CORPORATION 2017 ANNUAL REPORT

WHAT IT TAKES

OPERATIONAL EXCELLENCEIT TAKES

Aegion operates businesses that keep the world’s infrastructure
working better, safer and longer. Sound financial decision-making
means knowing when, where and how to allocate our assets to
foster the profitable growth of these businesses.

In 2017, we established clear priorities for spending and
positioned our financial organization to better leverage
our strategic and analytical financial talent in service to
our businesses. Through a more disciplined approach to
capital allocation and cross-functional collaboration, we are
investing in ways that improve productivity, drive organic
sales growth and return cash to our stockholders.

In 2017, Aegion paid down nearly
$20 million in debt and returned
more than $35 million to
stockholders through an open
market share repurchase program.

AEGION’S CAPITAL ALLOCATION STRATEGY

Our capital allocation strategy is built around our pursuit of
organic growth and our aim to increase value to stockholders.
Our four spending priorities for 2018 are:

Debt repayment. Our goal is to maintain a debt-to-EBITDA
ratio of less than 3-to-1.

Invest in our current businesses. Maintenance and capital
spending will be channeled to productivity-enhancing
upgrades, geographic expansion and other efforts that
support organic growth.

Share repurchases. We are authorized for a $30 million share
buyback program in 2018. Actual purchases will be dependent
on share price levels throughout the year.

Pursue M&A opportunities. While our primary focus is on
growing our existing businesses, we will take a disciplined

approach to pursuing smaller acquisitions that add new
technologies to our portfolio or help us expand into new
geographic areas.

LEVERAGING AEGION’S FINANCIAL ORGANIZATION

Aegion’s financial professionals provide strong operational
planning and forecasting expertise along with sound,
data-based business insights. In 2017, we empowered our
financial organization to step outside its traditional role and
forge cross-functional partnerships with our operational
leadership. Together, they are using data and analysis to
augment decision-making, drive process improvements,
increase cost discipline and streamline financial closeouts.

Our financial team is now focused on the following ways
to BE BETTER:

• Become a strategic partner to business unit presidents,
better understand and anticipate risks and opportunities,
and provide financial insight

• Provide strong operational planning and forecasting

• Collaborate with and understand customer needs

• Implement process excellence and continuous improvement

• Leverage data and analysis

ANALYSIS MANAGEMENT

Our monthly project progress reports contain
valuable information we use to understand and
report our financial position. A 2017 kaizen event
focused on ways to improve the timeliness and
accuracy of these reports, as well as our ability
to mine them for insights. The outcome was a
new online progress report application within our
enterprise software. Our project managers now
have the capability to assess their projects’ financial
status in real time, 24/7. And, by automating and
eliminating many manual processes, we’ve enabled
our financial staff to focus on higher-level activities
and expect to expedite project closeout by an
estimated average of two days.

Julie Smith
Insituform Area Controller

AEGION CORPORATION 2017 ANNUAL REPORT

WHAT IT TAKES

STRATEGIC CAPITAL AL LOCATIONRESULTS MATTER
Strategy is important to be successful
in business. So is having a commitment
to world-class safety and proven
market-leading products and services.

A disciplined approach to sales, project
risk management, operational excellence
and capital allocation is critical for
success. A company also needs problem
solvers who are driven by the desire
for continuous improvement. But in the
final analysis, it’s results that matter.
To satisfy its customers, stockholders and
employees, a company must successfully
execute its plans.

Aegion has WHAT IT TAKES to execute.
Aegion has WHAT IT TAKES to succeed.

2017 RESULTS

OUTLOOK

INFRASTRUCTURE
SOLUTIONS

CORROSION
PROTECTION

ENERGY
SERVICES

The Infrastructure Solutions
platform set new records
in 2017 with revenues of
$612 million and new orders
of $658 million. Strong
top-line results were offset
by nearly $16 million of
adjusted losses, or $0.33
adjusted earnings per diluted
share, from three businesses
subject to restructuring
actions in Denmark, Australia
and Fyfe North America.

We expect the market
strength and sales
performance that drove
record 2017 order intake
to position the platform to
deliver revenue growth in
the low to mid-single digit
range in 2018, exceeding the
high-water mark achieved
in 2017. Additionally, the
restructuring actions taken
to reduce costs in the
Infrastructure Solutions
platform are expected to
drive marked improvements
in profitability in 2018.

The Corrosion Protection
platform delivered near record
revenues of $456 million and
a more than threefold increase
in adjusted operating income in
2017 compared to the previous
year. These results were driven
by successful execution of the
large deepwater pipe coating
and insulation project.

Energy Services platform
revenues grew 17 percent and
adjusted operating margin
improved 160 basis points
from 2016 on growth across
all revenue streams. The
strength in Energy Services
reflects significant benefits
from restructuring efforts taken
in 2016 to better position the
platform for long-term success.

The Corrosion Protection
platform is well positioned
for 2018 on the back of
market strength and expected
successful completion of the
large international robotic
field joint coating projects.
New leadership and additional
key resource investments
within the platform are
expected to drive a renewed
focus on operational excellence
and improved profitability,
leading to a 15 to 20 percent
revenue increase (excluding
2017 revenues from the large
deepwater project).

Energy Services is a key
service provider to West Coast
refineries and expects to
continue to expand revenues
and margins in 2018 through
ongoing growth in base
maintenance activities and
improving share of services
with existing customers.
The platform is expected to
deliver mid-single digit revenue
growth in 2018 and improve
adjusted operating margins
by 75 to 150 basis points.

AEGION CORPORATION 2017 ANNUAL REPORT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

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: 001-35328

Aegion Corporation

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

17988 Edison Avenue, Chesterfield, Missouri
(Address of principal executive offices)

45-3117900
(I.R.S. Employer Identification No.)

63005-1195
(Zip Code)

Registrant’s telephone number, including area code: (636) 530-8000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Class A Common Shares, $.01 par value

Name of each exchange on which registered
The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of 15(d) of the Act. Yes

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. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted 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 and post such files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

Large accelerated filer

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.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the
price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2017:
$724,676,376.

There were 32,635,327 shares of Class A common stock, $.01 par value per share, outstanding at February 22, 2018.

DOCUMENTS INCORPORATED BY REFERENCE

As provided herein, portions of the documents below are incorporated by reference:

Document
Registrant’s Proxy Statement for the 2018 Annual Meeting of Stockholders

Part — Form 10-K
Part III

TABLE OF CONTENTS

PART I

Item 1.

Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4. Mine Safety Disclosure

Item 4A. Executive Officers of the Registrant

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities

Item 6.

Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8.

Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules

SIGNATURES

108

109

110

111

Note About 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 this Annual Report on Form 10-K for the year ended December 31, 2017 (this “Report”) 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 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.

Item 1. Business

PART I

Unless otherwise indicated, the terms “Aegion Corporation,” “Aegion,” “the Company,” “we,” “our” and “us” are used in

this Report to refer to Aegion Corporation or one of our consolidated subsidiaries or to all of them taken as a whole. We are
incorporated in the State of Delaware. We maintain executive offices at 17988 Edison Avenue, Chesterfield, Missouri 63005.
Our telephone number is (636) 530-8000 or toll free at (800) 325-1159. Our website address is www.aegion.com. Our
common shares, $.01 par value, are traded on The Nasdaq Global Select Market under the symbol “AEGN”. Our fiscal year
ends on December 31 of each calendar year.

Overview

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 transformational 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®. Our products
and services are currently utilized in over 80 countries across six continents. 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 Company premise is to use technology to extend the structural design life and maintain, if not improve, the

performance of infrastructure, mostly related to pipelines and piping systems. We have proved this expertise can be applied in
a variety of markets to protect pipelines in oil, gas, nuclear, mining, wastewater and water applications and can be extended to
the rehabilitation and maintenance of commercial structures and the provision of professional services in energy-related
industries. Many types of infrastructure must be protected from the corrosive and abrasive materials that pass through or near
them. Our expertise in non-disruptive corrosion engineering and abrasion protection is wide-ranging. We have a long history
of product development and intellectual property management. We manufacture many of the engineered solutions we offer to
customers as well as the specialized equipment required to install them. Finally, decades of experience give us an advantage in
understanding municipal, energy, mining, industrial and commercial customers. Strong customer relationships and brand
recognition allow us to support the expansion of existing and innovative technologies in our core end markets.

We originally incorporated in Delaware in 1980 to act as the exclusive United States licensee of the Insituform® cured-in-
place pipe (“CIPP”) process, which Insituform’s founder invented in 1971. The Insituform® CIPP process served as the first
trenchless technology for rehabilitating wastewater pipelines and has enabled municipalities and private industry to avoid the
extraordinary expense and extreme disruption that can result from conventional “dig-and-replace” methods. We have
maintained our leadership position in the CIPP market from manufacturing to technological innovations and market share for
over 45 years.

We embarked on a diversification strategy in 2009 to expand not only our geographic reach but also our product and
service portfolio into the oil and gas markets. Through a series of strategic initiatives and key acquisitions, we possess a broad
portfolio of cost-effective solutions for rehabilitating and maintaining aging or deteriorating infrastructure, protecting new
infrastructure from corrosion and providing integrated professional services in engineering, procurement, construction,
maintenance and turnaround services for oil companies, primarily in the downstream market. Today, our long-term strategy is
to invest in our core end markets for organic growth and acquire innovative technologies to enhance our competitive position.
2

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 our management organizational structure. Each operating
segment has leadership that reports to our chief executive officer, who is also the chief operating decision manager (“CODM”).
The operating results and financial information reported by each of the segments are evaluated separately, reviewed regularly
and used by the CODM to evaluate segment performance, allocate resources and determine management incentive
compensation. See Note 13 to the consolidated financial statements contained in this Report for further discussion regarding
our segments.

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, 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 both
domestically and internationally. 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 insulation, as well as an increasing offering of inspection
and repair capabilities. We provide solutions to customers to enhance the safety, environmental integrity, reliability
and compliance of their pipelines 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, 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 and professional and providing
predictable value.

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. In 2016, we acquired Underground Solutions, Inc. and
its subsidiary, Underground Solutions Technologies Group, Inc. (collectively, “Underground Solutions”), adding its
patented Fusible PVC® pipe technology to our pressure pipe portfolio, which includes InsituMain® CIPP as well as the
Tyfo® fiber-reinforce polymer (“FRP”) and Tite Liner® high-density polyethylene (“HDPE”) systems. Our
international strategy is to use a blend of third-party product sales as well as CIPP and 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.

Midstream Pipeline Integrity 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 majority 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. 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 continue to promote our safety services and recently began offering 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.

Our Products and Services

Today our diverse portfolio of full service solutions includes:

Rehabilitation of Water and Wastewater Pipelines with CIPP Products – Through our Infrastructure Solutions
segment, we offer manufacturing and installation of cost-effective solutions to remediate operational, health, regulatory and
environmental problems resulting from aging and defective water and wastewater pipelines. Our Insituform® CIPP product is a
trenchless, jointless, seamless pipe-within-a-pipe solution used to rehabilitate pipes in various diameters. Our Insituform®
CIPP process provides a more affordable alternative to dig-and-replace methods and is a less disruptive and more
environmentally friendly method for pipe repairs. We have maintained our leadership position in the CIPP market through our
ISO 9001:2008 certified manufacturing facilities and technological innovations for the past 45 years. Our Insituform® portfolio
of products and services are utilized worldwide.

Fusible Polyvinyl Chloride Products for Rehabilitation – Underground Solutions’ patented Fusible PVC® pipe is used
in the rehabilitation of pressure pipelines, primarily in North America. Underground Solutions uniquely complements Aegion’s
existing pressure pipe rehabilitation technologies (InsituMain® CIPP as well as the Tyfo® and Tite Liner® systems) and
increases Aegion’s presence in the pressure pipe market.

Fiber Reinforced Polymer Systems for Rehabilitation and Strengthening – We use the Tyfo® system to rehabilitate

medium- to large-diameter pipelines, providing a unique advantage over conventional rehabilitation methods. The Tyfo®
system consists of proprietary and specialized carbon, glass, aramid and hybrid lightweight and low profile woven fabrics
combined with the proprietary resin and epoxy polymers, which, in unique combinations, create the tested, proven and certified
Tyfo® advanced composite system. The Tyfo® system is specifically engineered, manufactured and installed to solve a host of
structural deficiencies or demands in existing structures. Certified Tyfo® system applicators apply the technology to civil
structures to withstand seismic and force loads and provide strengthening, repair and restoration of masonry, concrete, steel and
wooden infrastructure worldwide. We offer personalized technical support to our customers through a highly-trained structural
engineering team that assists in all phases of a potential project, from the initial design to implementation and installation. We
believe there is a growing addressable market in North America as well as an increasing acceptance of our products and
services internationally, with particular focus in Southeast Asia.

Cathodic Protection for Corrosion Engineering Control and Infrastructure Rehabilitation – Through our Corrosion

Protection segment, we offer cathodic protection solutions, a time-tested pipeline corrosion mitigation technology that is
mandated by regulatory rules in many types of pipeline systems. We provide engineering and inspection services by National
Association of Corrosion Engineers International (“NACE”) trained and certified inspectors (one of the largest independent
consulting corrosion engineering organizations in the world), project management, training, research, testing and design,
consultation and installation services to the following markets: pipeline, refinery, above and underground storage tanks, water/
wastewater structures, concrete infrastructure and offshore and marine structures. We also offer a full line of superior quality
corrosion control and cathodic protection materials, which are NSF/ANSI 61 classified for drinking water system components.
Through our subsidiary, Hockway Middle East FZE (“Hockway”), our joint venture in Saudi Arabia and our branch office in
Abu Dhabi, we have an expanded presence of cathodic protection capabilities in the Middle East. Hockway offers a complete
cathodic protection solution from initial investigative surveys through engineering design, manufacture of equipment, site
installation and commissioning of systems with subsequent planned operational inspection and maintenance. More recently,
we have enhanced our pipeline inspection services through the internal development of an asset integrity management program,
which is designed to digitize the critical pipeline data we gather and efficiently transmit, store and display the results to our
customers.

Pipe Coatings for Corrosion and Thermal Control and Prevention – We provide products and services to protect pipes
from corrosion and to provide flow assurance primarily for the oil and gas industries. We accomplish this through external and
internal pipe coatings utilizing fusion bonded epoxy (“FBE”), concrete for buoyancy reduction, extruded polyethylene for
additional protection, insulation coating for thermal control and field joint coating for corrosion protection of fittings, valves
and other primary sources for metal corrosion. Additionally, we provide custom coating services on pipe bends, fittings,
fabricated spools, valves and short runs of straight pipe for oil, gas and potable water services, as well as onshore or offshore

fabrication and welding services. We also offer a proprietary robotic pipe coating and inspection technology for internal and
external welded pipe field joints and rebar coating.

Thermoplastic Pipe Lining for Corrosion Control, Abrasion Protection and Pipeline Rehabilitation – Our proprietary

Tite Liner® installation system provides chemical, corrosion and abrasion resistance for numerous pipeline applications,
including in the oil and gas, mining and chemical pipeline markets, and has application in the rehabilitation of pressure pipes in
the municipal marketplace. Our system can rehabilitate pipelines for a fraction of the cost and time associated with industrial
pipeline replacement. We offer our lining protection products and services worldwide, with a strategic focus on expanding our
presence in key end markets with sustainable capital spend on oil, gas and mining activities.

Our cathodic protection capabilities and products for lining and coating pipelines are applicable worldwide in the oil, gas

and mining markets, with a focus on the Gulf of Mexico, Western Canada, the United States, Europe, the Middle East, East and
Southern Africa, and South America.

Construction and Maintenance of Oil and Gas Facilities – Through our Energy Services segment, which operates as
Aegion Energy Services, we are a leading integrated service provider of maintenance, construction and turnaround activities for
the oil and gas markets. Focused on serving large oil and gas customers on the United States West Coast, primarily California,
Energy Services offers an industry-leading safety record, a strong reputation for reliability and quality and comprehensive
solutions needed for major refinery maintenance, repairs and retrofits. These core competencies position Energy Services to
meet the growing demand for non-discretionary operating and maintenance expenditures.

Strategic Initiatives and Key Acquisitions

Acquisitions

Our recent acquisition strategy has focused on acquisitions that add new technologies to our Company’s product and
services portfolio or new geographic areas. During 2017 and 2016, we targeted strategic acquisitions in the infrastructure
sector by:

adding patented Fusible PVC® pipe technology to our pressure pipe rehabilitation portfolio through the acquisition of
Underground Solutions;

ii. expanding our CIPP presence in Europe by acquiring the CIPP contracting operations of Leif M. Jensen A/S

(“LMJ”), a Danish company and the Insituform licensee in Denmark since 2011, and acquiring Environmental
Techniques Limited and its parent holding company, Killeen Trading Limited (collectively “Environmental
Techniques”), a Northern Ireland-based provider of trenchless drainage inspection, cleaning and rehabilitation
services throughout the United Kingdom and the Republic of Ireland;

iii. acquiring the remaining worldwide rights that we did not already own to market, manufacture and install the patented
Tyfo® system by acquiring the operations and territories of Fyfe Europe S.A. and related companies (“Fyfe Europe”);
and

iv. expanding our FRP presence in Asia Pacific through the acquisition of Concrete Solutions Limited (“CSL”) and
Building Chemical Supplies Limited (“BCS”), two New Zealand-based companies that were the Tyfo® system
certified applicators in New Zealand since the late 1990’s (collectively, “Concrete Solutions”).

See Notes 1 and 2 to the consolidated financial statements contained in this Report for additional information and

disclosures regarding our acquisitions.

Restructuring Activities

2017 Restructuring

On July 28, 2017, our board of directors approved a realignment and restructuring plan (the “2017 Restructuring”) 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
our cathodic protection services operation in Canada; and (iv) reduce corporate and other operating costs. These decisions
reflected our: (a) desire to reduce further our exposure in the North American upstream oil and gas markets; (b) assessment of
our ability to drive sustainable, profitable growth in the non-pipe FRP contracting market in North America; and (c) assessment
of continuing weak conditions in the Canadian oil and gas markets. During 2017, we also completed a detailed assessment of
the Infrastructure Solutions’ CIPP businesses in Australia and Denmark, which resulted in additional restructuring actions in
both countries.

We expect the 2017 Restructuring to reduce consolidated annual expenses by over $20 million, of which approximately
$12 million and $4 million relate to cost reductions expected to be recognized within Infrastructure Solutions and Corrosion

Protection, respectively, and $4 million related to reduced corporate and other costs. Cost reductions are expected to be fully
realized in 2018.

2016 Restructuring

On January 4, 2016, our board of directors approved a restructuring plan (the “2016 Restructuring”) to reduce our exposure

to the upstream oil markets and to reduce consolidated expenses. During 2016, we completed the 2016 Restructuring, which:
(i) repositioned Energy Services’ upstream operations in California; (ii) reduced Corrosion Protection’s upstream exposure by
divesting our interest in Bayou Perma-Pipe Canada, Ltd. (“BPPC”), our Canadian pipe coating joint venture; (iii) right-sized
Corrosion Protection to compete more effectively; and (iv) reduced corporate and other operating costs. The 2016
Restructuring reduced consolidated annual operating costs by approximately $17.4 million, of which approximately $1.2
million, $6.6 million and $5.6 million related to recognized savings within Infrastructure Solutions, Corrosion Protection and
Energy Services, respectively, and $4.0 million related to reduced corporate costs.

2014 Restructuring

On October 6, 2014, our board of directors approved a restructuring plan (the “2014 Restructuring”) to improve gross
margins and profitability over the long-term by exiting certain unprofitable international locations for our CIPP business and
eliminating certain idle facilities in our pipe coating and insulation operation in Louisiana. The 2014 Restructuring reduced
consolidated annual operating costs by approximately $10.8 million and consisted of approximately $8.4 million and $2.4
million of recognized savings within Infrastructure Solutions and Corrosion Protection, respectively.

See Notes 1 and 3 to the consolidated financial statements contained in this Report for a detailed discussion regarding

strategic initiatives and 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 2017, 2016
and 2015:

i. On July 28, 2017, as part of the 2017 Restructuring, the Company’s board of directors approved a plan to divest our
pipe coating and insulation businesses at Bayou. We are currently engaged in a process to market and sell Bayou.

ii.

In February 2016, we sold our fifty-one percent (51%) interest in BPPC to our joint venture partner, Perma-Pipe, Inc.
BPPC served as our pipe coating and insulation operation in Canada. The sale of our interest in BPPC was part of a
broader effort to reduce our exposure in the North American upstream market in light of expectations for a prolonged
low oil price environment.

iii. In February 2015, we sold our wholly-owned subsidiary, Video Injection - Insituform SAS (“VII”), our French CIPP

contracting operation, to certain employees of VII.

See Note 1 to the consolidated financial statements contained in this Report for a detailed discussion regarding strategic

initiatives and divestitures.

Available Information

Our website is www.aegion.com. We make available on this website (under “Investors” and then under “SEC

Information”), free of charge, our proxy statements used in conjunction with stockholder meetings, annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and Section 16 beneficial ownership reports (as well as any
amendments to those reports) as soon as reasonably practicable after we electronically file such material with, or furnish it to,
the Securities and Exchange Commission. In addition, our Code of Ethics for our Chief Executive Officer, Chief Financial
Officer and senior financial employees, our Code of Conduct applicable to all of our officers, directors and employees, our
Corporate Governance Guidelines and our Board committee charters are available, free of charge, on our website (under
“Investors” and then under “Corporate Governance”). In addition, paper copies of these documents will be furnished to any
stockholder, upon request, free of charge.

Technologies

Infrastructure Solutions

Our Insituform® CIPP process (including Insitupipe® and Insitutube®) for the rehabilitation of wastewater pipelines and
other conduits utilizes a custom-manufactured tube, or liner, made of synthetic fiber. After the tube is saturated (impregnated)

with a thermosetting resin mixture, it is installed in the host pipe by various processes. The resin is then cured, by heat using
hot water, steam or ultraviolet light, forming a new rigid pipe within a pipe.

Our iPlus® Infusion® pull-in CIPP is a trenchless method for the rehabilitation of small-diameter wastewater pipelines,
whereby a felt liner is continuously impregnated with liquid, thermosetting resin through a proprietary process, after which the
liner is pulled into the host pipe, inflated with air and cured with steam.

Our iPlus® Composite CIPP is used for the trenchless rehabilitation of large-diameter wastewater pipelines, where the felt
liner is reinforced with carbon or glass fiber, impregnated with liquid, thermosetting resin, inverted into place and cured with
hot water or steam.

Our InsituMain® CIPP system is a solution for pressure pipes, including water mains and force mains up to 96-inches in
diameter. The system can negotiate bends and is pressure-rated up to 150 psi. The InsituMain® system has also been certified
as complying with NSF/ANSI Standard 61.

Our Insituform® RPP™ process is a trenchless technology used for the rehabilitation of wastewater force mains and

industrial pressure pipelines. The felt tube is reinforced with glass and impregnated with liquid, thermosetting resin, after
which it is inverted with water and cured with hot water to form a structural, jointless pipe within the host pipe.

Our Insituform® PPL® process is a trenchless technology certified to NSF/ANSI Standard 61 used for the rehabilitation of

drinking water and industrial pressure pipelines. A glass-reinforced liner is impregnated with an epoxy or vinyl ester resin,
inverted with water and cured with hot water to form a jointless pipe lining within the host pipe.

Our ultraviolet/glass lining system is a CIPP solution for small- to medium-diameter pipes utilizing a glass fiber tube that
is impregnated with a resin sensitive to ultraviolet light or steam curing. The tube is pulled into place in the host pipe, inflated
by air and cured via an ultraviolet light source or steam.

Sliplining is a method used to push or pull a new pipeline into an old one. With segmented sliplining, short segments of

pipe are joined to form the new pipe. For gravity wastewater rehabilitation, these short segments can often be joined in a
manhole or access structure, eliminating the need for a large pulling pit.

Our sealing method reconnects a ferrule of a service line from within the bore of a lined host pipe.

Our Fusible PVC® technology contains proprietary polyvinyl chloride (“PVC”) formulation that, when combined with its

patented fusion process, results in a monolithic, fully-restrained, gasket-free, leak-free piping system. Fusible PVC® pipe
products include Fusible C-900®, Fusible C-905® and FPVC® pipes. Fusible C-900® and Fusible C-905® pipes both comply
with the AWWA standards AWWA C900 and C905, respectively, and are certified to the NSF/ANSI Standard 61.

Our ServiceGuard® composite pipe product combines the performance benefits of chlorinated PVC with the strength and

durability of an aluminum core to offer the ultimate water service line pipe.

Our Tyfo® system applies high-strength fiber fabric to strengthen structures, including pipelines, and the connections
between structural components, thereby strengthening, repairing and restoring masonry, concrete, steel and wooden structures.
Beyond general strengthening of pipelines and structures, the Tyfo® system also has application in blast mitigation and seismic
reinforcement.

See “Patents and Proprietary Technologies” below for more information concerning certain of these technologies.

Corrosion Protection

Our Tite Liner® system is a method of lining new and existing pipe with a corrosion and abrasion resistant thermoplastic

pipe.

Our Safetyliner™ product is a grooved thermoplastic liner that is installed in an industrial pipeline using the Tite Liner®
process. The Safetyliner™ liner is normally used in natural gas or CO2 pipelines to allow the release of gas that permeates the
thermoplastic liner. If gas is allowed to build in the annular space under normal operating conditions, the line can be
susceptible to collapse upon sudden changes in operating pressures. The Safetyliner™ liner also has been used in pipelines as a
leak detection system and for dual containment in mine water pipelines.

The fusion bonded epoxy (“FBE”) application process utilizes heat to melt a dry powder FBE coating material into liquid

form. The liquid material flows onto the steel pipe and solidifies through a process called cross-linking. Once cooled, this
“fusion-bonded” epoxy cannot return to its original state and forms a corrosion protection barrier on the interior or exterior
surface of the pipe.

Our deepwater pipe coating and insulation capabilities answer the challenge of subsea wet insulation requirements for

high-pressure and high-temperature environments.

Our 3-layer polyethylene coating and 3-layer polypropylene coating offerings are intended for use as an external coating

for buried or submerged oil or gas pipelines and offer superior adhesion, cathodic disbondment resistance and mechanical
protection.

Our 5-layer polypropylene coating offering is one of our insulating coating solutions that provides superior thermal

insulation and mechanical protection for high-temperature pipelines in deepwater environments.

Our concrete coatings provide submerged weight stability and protect the external corrosion protective coating on pipelines

installed offshore and at other water crossings such as swamps or bays.

Our InnerGard™ product is an internal FBE coating that provides corrosion protection for water injection lines and reduces

costs compared to alloy pipe.

Our Enventure™ product is an internal lubricity coating for solid expandable downhole tubulars.

Our internal field joint coating technology consists of self-contained robots that travel inside the pipe, find the weld and
then blast clean, vacuum and coat the area. Utilizing various cameras, these field joint coating robots transmit a real-time video
image back to the operator which is then used for control and inspection. The technology allows for the field application of
FBE and plural component liquid materials to the weld area.

Cathodic protection is an electrochemical process that prevents corrosion of new structures and stops corrosion on existing

structures. Metal loss is prevented by the passing of a very small direct current from a cathodic protection electrode (anode),
through the electrolyte (soil, water, concrete, etc.) on to the structure to be protected (cathode). In this process, the anode
corrodes, sacrificing itself to protect the integrity of the cathode. Structures commonly protected by this process include oil and
gas pipelines, offshore platforms, above and underground storage tanks, ships, electric power plants, bridges, parking garages,
transit systems and water and wastewater facilities.

Our CorrFlex® system is a linear anode system installed parallel to pipelines, oftentimes to prevent stress corrosion

cracking that can lead to ruptures on high pressure gas transmission pipelines.

Our CorrSpray® product provides a unique solution for preventing corrosion of steel reinforcements in concrete structures.

Our Green Rectifier® system is an ecologically friendly method of cathodic protection using solar panels and a wind

generator to power the cathodic protection process.

Our Grid™ system has set the global standard for preventing releases from external corrosion of at-grade storage tanks

containing oil and petroleum products, thereby ensuring safe operations and protection of the environment.

Our AC interference mitigation solution protects pipeline operators and the public from electrical hazards when pipelines

share space on rights-of-way with overhead electric transmission lines. Beginning with advanced predictive modeling, we then
design mitigation schemes and provide systems to protect people and the pipeline.

Our asset integrity management platform allows for the collection, communication and storage of data in a geospatial
information system-based, centralized, integrated repository that provides us and our customers more timely information and
improved data analytics.

See “Patents and Proprietary Technologies” below for more information concerning certain of these technologies.

Energy Services

Our DelayTrak® system identifies delays in real time. The data is used to identify and quickly communicate improvement

opportunities and, later, action plans for improvement.

Our TimeTrak™ system tracks how time is spent by crews on a jobsite. The data is used to drive process improvements in

routine maintenance.

Operations

We are organized into three operating segments, which are also our reportable segments: Infrastructure Solutions,

Corrosion Protection and Energy Services. Each segment is regularly reviewed and evaluated separately.

Our operations are generally project oriented. Projects may range in duration from just a few days to several years and can

be performed as one-time contracts or as part of longer-term agreements. These contracts are usually obtained through
competitive bidding or negotiations and require performance at a fixed price or time and materials basis. Our Corrosion
Protection and Energy Services projects are generally performed under contracts with industrial entities. A majority of our
water and wastewater rehabilitation installation projects in our Infrastructure Solutions segment are performed under contracts
with municipal entities. Independent contractors may be utilized to perform portions of the work on any given project that we
provide.

Infrastructure Solutions Operations

Our water and wastewater pipeline rehabilitation activities are conducted principally through installation and other

construction operations performed directly by our subsidiaries.

Our North American Infrastructure Solutions operations, including research and development, engineering, training and
financial support systems, are headquartered in Chesterfield, Missouri. Tube manufacturing and processing facilities for North
America are maintained in ten locations, geographically dispersed throughout the United States and Canada to support our
North American contracting operations and through which we sell liners to third parties, domestically and internationally.

We also conduct Insituform® CIPP process rehabilitation operations worldwide through our wholly-owned subsidiaries.
We utilize multifunctional robotic devices developed by a wholly-owned French subsidiary in connection with the inspection
and repair of pipelines. We also maintain a manufacturing facility in Wellingborough, United Kingdom to support our
international operations and through which we sell liners to third parties internationally.

We have granted licenses to our trenchless rehabilitation processes to unaffiliated companies in certain geographic regions.

As described under “Ownership Interests in Operating Licensees and Joint Ventures” below, we have also entered into
contractual joint ventures from time to time to capitalize on our trenchless rehabilitation processes. Under these contractual
joint venture relationships, work is bid by the joint venture entity and subcontracted to the joint venture partners or to third
parties. The joint venture partners are primarily responsible for their subcontracted work, but both joint venture partners are
liable to the customer for all of the work. Revenues and associated costs are recorded using percentage-of-completion
accounting for our subcontracted portion of the total contract only.

Our acquisition in February 2016 of Underground Solutions bolstered our capabilities with respect to water pipeline
rehabilitation operations. We are now able to provide additional infrastructure technologies for water, wastewater and conduit
applications, primarily Fusible PVC® pipe, which, when combined with its patented fusion process, results in a monolithic,
fully-restrained, gasket-free, leak-free piping system.

In addition to wastewater pipeline rehabilitation, we have performed water pipeline rehabilitation operations since 2006

using our pressure pipe product portfolio. We are now able to restore water pipes using our InsituMain® CIPP, Tite Liner®
system, Tyfo® system and Fusible PVC® pipe.

Our infrastructure rehabilitation operations also utilize FRP to rehabilitate and strengthen pipelines throughout the United
States through Fibrwrap Construction Services, headquartered in San Diego, California. We also design and manufacture FRP
composite systems used for rehabilitating buildings, bridges, tunnels, industrial developments and waterfront structures, which
we supply to certified applicators. We service the European FRP markets with respect to product and engineering services
through our wholly-owned subsidiaries in the United Kingdom. We service the Asia-Pacific FRP market, with respect to both
product and engineering services as well as application services, through our wholly-owned subsidiaries in Singapore, Japan,
Malaysia, Hong Kong and New Zealand and through our joint ventures in Borneo and Indonesia. Finally, we have granted
licenses to our proprietary FRP products and processes to unaffiliated companies in certain additional geographic regions, as
described under “Ownership Interests in Operating Licensees and Joint Ventures” below.

Corrosion Protection Operations

Our corrosion protection operations perform maintenance, rehabilitation and corrosion protection services for oil and gas,

industrial and mineral piping systems and structures. We also offer products for gas release and leak detection systems. Our
worldwide corrosion protection operations are headquartered in Houston, Texas and conducted through our various subsidiaries
(Corrpro based in Houston, Texas; United Pipeline Systems based in Durango, Colorado; Bayou based in New Iberia,
Louisiana; and Aegion Coating Services, LLC (“ACS”) based in Tulsa, Oklahoma and Conroe, Texas). Certain of our
corrosion protection operations outside of the United States are conducted through our wholly-owned subsidiaries in the United
Kingdom, Portugal, Chile, Canada, Argentina, Brazil and the United Arab Emirates and through our joint ventures in Mexico,
Oman, Saudi Arabia and South Africa.

Our Corrpro business performs fully-integrated corrosion prevention services including: (i) engineering and design; (ii)

product and material sales; (iii) construction and installation; (iv) inspection, surveying, monitoring, data collection and
maintenance; and (v) coatings. United Pipeline Systems performs pipeline rehabilitation and protection services using our
proprietary Tite Liner® process. Our Bayou business performs internal and external pipeline coating, lining, and weighting and
insulation services, including project management and logistics. Our ACS business specializes in the application of internal
corrosion coatings services, provision of external field joint anti-corrosion coating services and the supply of equipment, all for
pipeline construction projects onshore and offshore in locations around the world.

Energy Services Operations

Aegion Energy Services is based in Irvine, California and performs construction, maintenance and turnaround services,

primarily for the downstream oil and gas industry. Aegion Energy Services’ operations are located in California and

Washington. We specialize in offering clients a flexible, single source for all project needs. Clients may choose a single
service or multiple integrated services, from technical consulting to turnkey project delivery, ongoing maintenance and
scaffolding services. We provide project management professionals across various disciplines, including chemical, civil,
structural, mechanical, electrical, instrumentation, project controls, estimating, procurement and safety. AllSafe Services, Inc.,
a wholly-owned subsidiary of Aegion Energy Services, provides safety field services.

Sweeping refinery industry changes are occurring in California as a result of the implementation of California Health and
Safety Code section 25536.7 (the “California Refinery Safety Law”). The law introduced new requirements for refineries and
outside contractors at covered facilities in California, which are providing new opportunities for the Energy Services segment.
Energy Services has successfully transitioned three of its clients’ refinery operations to building trade union employees as
required by the California Refinery Safety Law.

Licensees

We have granted licenses for the Insituform® CIPP process covering exclusive and non-exclusive territories to non-
affiliated licensees that provide pipe repair and rehabilitation services throughout their respective licensed territories. The
licenses generally grant to the licensee the right to utilize our know-how and patent rights (where such rights exist) relating to
the subject process, and to use our copyrights and trademarks. These licenses have an average term of ten years with a right to
renew.

Our CIPP licensees generally are obligated to pay a royalty at a specified rate. Any improvements or modifications a

licensee may make in the subject process during the term of the license agreement generally becomes our property or is
licensed to us. Should a licensee fail to meet its royalty obligations or other material obligations, we may terminate the license
at our discretion. Licensees, upon prior notice to us, may generally terminate the license for certain specified reasons. We may
vary the terms of agreements entered into with new licensees according to prevailing conditions. Income from royalties are
immaterial to our overall consolidated revenues.

Our Fyfe joint ventures in Borneo and Indonesia provide design, product and engineering support to applicators of FRP
systems in Asia-Pacific. Our joint ventures in Asia-Pacific are granted the non-exclusive right to use Fyfe products in their
respective territories. Fyfe Co. also periodically licenses its patented technology on a project-by-project basis to both affiliated
and third-party certified applicators.

With regard to our Underground Solutions business, we have granted licenses to our Fusible PVC® pipe products and
fusion processes internationally covering exclusive and non-exclusive territories to non-affiliated licensees that provide fusible
PVC products and services. The licenses generally grant to the licensee, in exchange for royalties at a specified rate, the right
to utilize our know-how and patent rights (where such rights exist) relating to the subject products and processes, and to use our
copyrights and trademarks. Underground Solutions also licenses domestically its patented technology to third-party extruders
and installers.

Ownership Interests in Operating Licensees and Joint Ventures

We hold controlling interests in Fyfe/Fibrwrap joint ventures in Borneo and Indonesia. Through our wholly-owned
subsidiary, Fyfe Asia Pte. Ltd., we hold (i) a fifty-one percent (51%) equity interest in Fyfe Borneo Sdn Bhd., with the other
forty-nine percent (49%) equity interest held by C. Tech Sdn Bhd; and (ii) a fifty-five percent (55%) equity interest in PT Fyfe
Fibrwrap Indonesia, with the other forty-five percent (45%) equity interest held by PT Graha Citra Anugerah Lestari.

Through our subsidiary, INA Acquisition Corp., we hold a fifty-five percent (55%) equity interest in United Pipeline de
Mexico S.A. de C.V., our licensee of the Tite Liner® process in Mexico. The remaining ownership interest is held by Miller
Pipeline de Mexico S.A. de C.V., an unaffiliated Mexican company.

Through our subsidiary, Aegion Holding Company, LLC, we hold a fifty-one percent (51%) equity interest in Bayou
Wasco Insulation, LLC through which we provide insulation services primarily for projects located in the United States,
Central America, the Gulf of Mexico and the Caribbean. The other forty-nine percent (49%) equity interest is held by Wasco
Energy, a leading insulation coatings provider based in Malaysia.

Through our subsidiary, Corrpro Canada, Inc., we hold a seventy-percent (70%) equity interest in Corrpower International

Limited (“Corrpower”) based in Saudi Arabia, through which we provide fully integrated corrosion prevention products and
services to government and private sector clients throughout the Kingdom of Saudi Arabia. The other thirty-percent (30%)
equity interest is held by Saudi Trading & Research Co., Ltd., based in Al-Khobar, Saudi Arabia.

Through our subsidiary, Insituform Technologies Netherlands B.V., we hold a fifty-one percent (51%) equity interest in

United Special Technical Services LLC located in Oman for the purpose of executing pipeline, piping and flow line
thermoplastic lining services throughout the Middle East and Northern Africa. The other forty-nine percent (49%) equity
interest is held by Special Technical Services LLC, an Omani company.

Through our subsidiary Aegion International Holdings Limited, we hold a sixty percent (60%) equity interest in Aegion

South Africa (Pty) Ltd located in South Africa, through which we provide pipeline rehabilitation products and services in East
and Southern Africa. The other forty percent (40%) equity interest is held by Robor Proprietary Limited, a South African
manufacturer and supplier of steel pipe.

We have previously entered into teaming and other cooperative arrangements in various geographic regions throughout the

world in order to develop cooperative bids on contracts for our thermoplastic pipeline rehabilitation and cathodic protection
businesses. Typically, the arrangements provide for each participant to complete its respective scope of work, and we are not
required to complete the other participant’s scope of work. We continue to investigate opportunities for expanding our business
through such arrangements.

We previously entered into contractual joint ventures in other geographic regions in order to develop joint bids on contracts

for our wastewater pipeline rehabilitation business. Typically, the joint venture entity holds the contract with the owner and
subcontracts portions of the work to the joint venture partners. As part of the subcontracts, the partners usually provide bonds
to the joint venture. We could be required to complete our joint venture partner’s portion of the contract if the partner were
unable to complete its portion and a bond is not available. We continue to investigate opportunities for expanding our business
through such arrangements.

Product Development

We seek out and develop innovative solutions for pipelines and other infrastructure. To that end, in 2014, we introduced a
stage-gate process for management of our research and development initiatives. The process is executed under the direction of
our Chief Technical Officer with a market and business impact evaluation at each gate review. Corporate and business unit
resources make up the specific research and development teams, supplemented, where beneficial, by our technology partners
(often major suppliers), outside consultants and academic institutions. During the years ended December 31, 2017, 2016 and
2015, we spent $4.2 million, $4.7 million and $2.6 million, respectively, on research and development related activities,
including engineering.

Customers and Marketing

We offer our products and services to highly diverse markets worldwide. We service municipal, state and federal

governments, as well as corporate customers in numerous industries including pipelines, energy, oil and gas, refinery, mining,
general and industrial construction, infrastructure (buildings, bridges, tunnels, railways, etc.), water and wastewater,
transportation, utilities, maritime and defense. Our products and services are currently utilized and performed in over 80
countries across six continents.

We offer our corrosion protection solutions worldwide to energy, refinery, mining and other customers to protect new and
existing pipelines and other structures. The marketing of wastewater pipeline rehabilitation technologies is focused primarily
on the municipal wastewater markets worldwide. We offer our water rehabilitation products to municipal and commercial
customers. We offer our other infrastructure rehabilitation products worldwide to certain certified third-party installers and
applicators and market our engineering, manufacturing and, in some countries, installation services to municipal, state, federal
and commercial customers. We offer our Energy Services solutions primarily to the oil and gas markets on the West Coast. No
customer accounted for more than 10% of our consolidated revenues during the years ended December 31, 2016 or 2015.
During the year ended December 31, 2017, we had one customer that accounted for approximately 12.1% of our consolidated
revenues primarily due to a large deepwater pipe coating and insulation project that was substantially completed during the
year.

To help shape decision making at every step, we use a highly-trained, multi-level sales force structured around target
markets and key accounts, focusing on engineers, contractors, consultants, administrators, technical staff and public officials.
Due to the technical nature of our products and services, many of our sales personnel have engineering or technical expertise
and experience. We also produce sales literature and presentations, participate in trade shows, present at conferences and
execute other marketing programs for our own sales force and those of unaffiliated licensees. Our unaffiliated licensees are
responsible for marketing and sales activities in their respective territories. See “Licensees” and “Ownership Interests in
Operating Licensees and Joint Ventures” above for a description of our licensing operations and for a description of
investments in licensees.

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 generally do not undertake 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 and projects where we have been advised that we are the low bidder, but have not
formally been awarded the contract.

In accordance with industry practice, substantially all of our contracts are subject to cancellation, termination or suspension

at the discretion of the customer. Contracts in our backlog are subject to changes in scope and of services to be provided as
well as adjustments to the costs relating to the contracts. Accordingly, backlog is not necessarily indicative of our future
revenues or earnings.

Included within backlog for Energy Services are amounts that represent expected revenues to be realized under long-term

Master Service Agreements (“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.

Included within backlog for Infrastructure Solutions and Corrosion Protection are certain contracts that are performed

through our variable interest entities in which we own a controlling portion of the entity. With the exception of Energy
Services, 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.

For additional information regarding our backlog including those risk factors specific to backlog, please refer to “Risk
Factors” in Item 1A, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7
below.

Manufacturing and Suppliers

We maintain our North American Insituform® CIPP process liner manufacturing facility in Batesville, Mississippi. In
Europe, we manufacture and sell Insituform® CIPP process liners from our plant located in Wellingborough, United Kingdom.
Although raw materials used in Insituform® CIPP process products are typically available from multiple sources, our historical
practice has been to purchase materials from a limited number of suppliers. We maintain our own felt manufacturing facility in
Batesville, Mississippi. Substantially all of our fiber requirements are purchased from two sources, but there are alternate
vendors readily available. We source our global resin supply from multiple vendors. We also manufacture certain equipment
used in our Insituform® CIPP business. We believe that the sources of supply for our Insituform® CIPP operations in North
America, Europe and Asia-Pacific are adequate for our needs.

We sell Insituform® CIPP process liners and related products to third parties and certain licensees on a long-term or, in
certain instances, on a project to project basis. In Europe, in addition to sales made on a project by project basis, we have
entered into supply agreements with two third parties to supply them with Insituform® CIPP process liners and related products.

With regard to Underground Solutions, we have three qualified third-party extruders to toll manufacture our Fusible PVC®

pipe products.

The principal raw materials used by Fyfe Co. in the manufacture of FRP composite materials are carbon, glass, resins,
fabric and epoxy raw materials. Fabric and epoxies are the most significant materials purchased, which are currently purchased
through a select group of suppliers, although these and the other materials are available from a number of vendors. The
weaving of FRP components into woven fabric is done at our facility in La Conner, Washington. Fyfe Co. does specialized
blending of unique epoxies from basic chemicals at our Batesville, Mississippi facility. The epoxy resin is also repackaged at
our Batesville, Mississippi facility, and the specialized blending is usually done on each job site. Fyfe Co. also sells finished
materials throughout the United States and worldwide to our affiliates and certain certified third-party applicators.

Product and material revenues for our Corrpro business are derived principally from the sale of products that are purchased

from select outside vendors or from assembling components that are sourced from suppliers. We conduct light assembly for a
number of our Corrpro products in our production facilities in Sand Springs, Oklahoma; Edmonton, Alberta, Canada; the
United Kingdom; Dubai, United Arab Emirates; and Saudi Arabia. In addition, we manufacture our own line of rectifiers and
other power supplies in Canada, the United Kingdom and Saudi Arabia. The primary products and raw materials used by our
Corrpro businesses include zinc, aluminum, magnesium and other metallic anodes, as well as wire and cable. We maintain
relationships with multiple vendors for these products and are not dependent on any single vendor to meet our supply needs.

The product and service revenues for our United Pipeline Systems business are derived primarily from the manufacturing

and installation of polyethylene liners inside pipelines. The raw material used for these liners is extruded thermoplastic pipe. It
has been our practice to purchase this material from a selective group of suppliers; however, we believe that it is readily

available from many other sources. We manufacture most of the proprietary equipment and many of the consumable items
used in Tite Liner® system installations in our own facilities in Canada, the United States and Chile.

Product and service revenues for our Bayou and ACS businesses are derived principally from internal and external pipeline
coating, lining, weighting and insulation. Facilities are located in New Iberia, Louisiana; Tulsa, Oklahoma; and Conroe, Texas.
The primary raw materials used in the coating process include FBE, paint, concrete, iron ore, sand and gravel. Although our
historical practice has been to purchase materials from a limited number of suppliers, we believe that the raw materials used in
the coating process are typically available from multiple sources. However, in certain limited circumstances, our customer has
required use of a specific material available from only a single source.

Our pricing of raw materials is subject to fluctuations in the underlying commodity prices. See “Commodity Risk” in Item

7A of this Report for detail on our management of the risks associated with such price fluctuations.

Patents and Proprietary Technologies

As of December 31, 2017, we held 30 United States patents relating to the Insituform® CIPP process. As of December 31,

2017, we had three pending United States patent applications relating to the Insituform® CIPP process.

We have obtained and are pursuing patent protection in our principal foreign markets covering various aspects of the
Insituform® CIPP process. As of December 31, 2017, there were 97 issued foreign patents and utility models relating to the
Insituform® CIPP processes, and 16 applications pending in foreign jurisdictions. Of the applications pending in foreign
jurisdictions, one is a Patent Cooperation Treaty (“PCT”) application that covers most jurisdictions throughout the world. The
specifications and/or rights granted in relation to each patent will vary from jurisdiction to jurisdiction. In addition, as a result
of differences in the nature of the work performed and in the climate of the countries in which the work is carried out, we do
not necessarily seek patent protection for all of our inventions in every jurisdiction in which we do business.

As of December 31, 2017, we held 15 United States patents and 22 foreign patents with regard to Fusible PVC® pipe
products and fusion processes as well as other infrastructure technologies for water, wastewater and conduit applications that
relate to our Fusible PVC® pipe lining business.

As of December 31, 2017, we held 15 issued patents and five pending patent applications in the United States and eight
issued patents and 13 pending patent applications in foreign jurisdictions that relate to our Tyfo® system. Of these applications,
one is a PCT application that covers multiple jurisdictions in Europe and throughout the world.

For our Corrosion Protection operations, as of December 31, 2017, we held nine issued patents and seven pending patent
applications in the United States and ten issued patents and seven pending patent applications in foreign jurisdictions that relate
to our cathodic protection and pipe coating businesses. As of December 31, 2017, we had four issued patents and one pending
patent application in the United States, and six issued patents and seven pending patent applications in foreign jurisdictions that
relate to the Tite Liner® process. Of the foreign applications, one is a European regional application which covers all of
Europe. As of December 31, 2017, we have two pending patent applications in the United States, and two pending applications
in foreign jurisdictions, that relate to our pipeline coatings process.

There can be no assurance that the validity of our patents will not be successfully challenged. Our business could be
adversely affected by increased competition upon expiration of the patents or if one or more of our patents were adjudicated to
be invalid or inadequate in scope to protect our operations. We believe in either case that our long experience with the
proprietary processes, the strength of our trademarks and our degree of market penetration should enable us to continue to
compete effectively in the pipeline rehabilitation, corrosion protection, energy, mining and infrastructure protection markets.

In some instances throughout each of our three platforms, we have elected to maintain certain internally developed
technologies, know-how and inventions as trade secrets. We have entered into confidentiality agreements with employees,
consultants and third parties to whom we disclose such trade secrets. Although there can be no assurance that these measures
will suffice to prevent unauthorized disclosure or use or that third parties will not develop similar technologies, we believe it
would take substantial time and resources to independently develop such technologies.

See “Risk Factors” in Item 1A of this Report for further discussion.

Competition

The markets in which we operate are highly competitive, primarily on the basis of price, quality of service and capacity to
perform. Many of our products and services face direct competition from competitors offering similar or essentially equivalent
products or services. In addition, customers can select a variety of methods to meet their infrastructure installation,
strengthening and rehabilitation needs, as well as their coating and cathodic protection needs, including a number of methods
that we do not offer.

In the trenchless wastewater rehabilitation market, the CIPP process is one of the preferred rehabilitation methods.
Because relatively few significant barriers to entry exist in this market, any organization with adequate financial resources and
13

access to technical expertise may become a competitor. As such, there are numerous companies with which we compete.
Worldwide, we compete with numerous smaller firms on local or regional levels and with several larger firms on the global and
national levels. Despite the number of competitors, Insituform, as the worldwide pioneer of this technology, has maintained its
role as a global market leader, both in the United States and abroad.

In water rehabilitation, dig-and-replace is still the preferred method for the majority of customers. Currently, we believe
CIPP is utilized in less than 5% of water pipeline rehabilitation projects in the United States. Because this is a more specialized
field, with more barriers to entry, including strict government mandates, we compete primarily with a handful of global and
national specialty contractors.

Our Fusible PVC® products compete against other more-traditional products in the pressure pipe market, such as HDPE

and restrained joint PVC pipe products.

In our infrastructure rehabilitation business, the FRP process competes against traditional methods of pipeline and

structural retrofitting, but is gaining acceptance in the construction and retrofitting industries. With its proprietary technologies
relating to both products and application, Fyfe Co. is a leader in the FRP market and Fibrwrap Construction, having
successfully performed installations of FRP systems for 25 years, is one of the most experienced applicators of the Tyfo®
system and has a well-established reputation. In this field, there are barriers to entry, including testing requirements,
experience, intellectual property and certifications. Fyfe has teamed with a number of universities around the world to conduct
extensive product testing. In addition, Fyfe has dedicated significant resources to obtaining technical market acceptance of its
proprietary products. As a result, Fyfe has received a number of certifications, including NSF certification for its Tyfo® system;
International Code Council - Evaluation Service Report (ESR-2103), indicating product approval by the International Building
Code; and compliance with ICC-AC125 guidelines for FRP strengthening. Because of the barriers to entry, Fyfe Co. and
Fibrwrap Construction tend to compete with a small number of companies on a regional or national level, most of which do not
provide the full spectrum of services provided by Fyfe Co. and Fibrwrap Construction.

In our Corrosion Protection segment, Corrpro operates in the highly-competitive field of cathodic protection for corrosion

control. While this market is highly competitive, because there are relatively few barriers to entry, Corrpro is a recognized
market leader in North America in this field. Competitors include a limited number of large firms, which provide services
nationally and, in some instances, globally, although more prevalent are a number of small- and medium-sized firms with more
limited portfolios of products and services, which are only provided on a regional or local level. Corrpro’s competitive
advantage is its broad depth of high-quality cathodic protection offerings, including its cost-effective engineering, pipeline
integrity, construction and coating services, which are provided to customers worldwide. Through Hockway and our
Corrpower joint venture, we are expanding our position as a leader in cathodic protection in the Middle East.

The process of utilizing thermoplastic liners is a prevalent method used to protect pipelines servicing the energy and
mining industries. United Pipeline Systems is recognized as a leader in the thermoplastic market, having provided relining
solutions on six continents. Due to barriers to entry arising from necessary technological capabilities, United Pipeline Systems
mainly competes with a small number of specialty firms globally, nationally and regionally. Through our focused efforts on
expanding our services worldwide, United Pipeline Systems enjoys significant name recognition and substantial market share
in this industry in the key energy and mining regions of the world.

The FBE process is one of the standard methods for pipe coating. Bayou has a presence in the FBE and insulation coating

market in the Gulf South of the United States. Because the pipe coating industry is very capital intensive, Bayou usually
competes with a small number of global and national companies. However, Bayou also competes on a project-specific basis
with small firms on local or regional jobs. These regional firms are often steel mills that have coatings plants on-site to provide
for their coatings needs, but these firms will outsource their coatings services if projects are beyond their geographic reach.
Competition from these regional firms on more than a project basis is unlikely as these firms tend to be restricted
geographically due to their shipping limitations. In recent years, Bayou has achieved differentiation in certain pipe coating and
insulation applications through the development of our deepwater pipe coating and insulation capabilities described above
under “Technologies” and “Patents and Proprietary Technologies”.

ACS has a strong presence in the field of FBE coating and is an industry leader in both inner diameter robotic coatings and
outer diameter coatings. Because of these specialized fields, ACS usually competes with a small number of specialty providers.

Our Energy Services segment operates in a fragmented and intensely competitive field of plant maintenance and
construction and specialty services in the downstream oil refining industry, as well as performing work in the industrial and
natural gas, gas processing and compression markets. Competitors may be local, regional or national contractors and service
providers and vary with the markets that are served, with few competitors competing in all of the geographic markets we serve
or offering all of the services we provide. With the implementation of the California Refinery Safety Law, competition at
refineries in California is from building trade union contractors or, in some instances, from customers themselves expanding
their own workforces to reduce reliance on contractors. Contracts are generally awarded based on safety performance,
reputation for quality, price, schedule and client satisfaction.

There can be no assurance as to the success of our processes in competition with our competitors and alternative

technologies for pipe installation and rehabilitation, coating, cathodic protection and infrastructure installation, strengthening
and rehabilitation.

Seasonality

Our operations can be affected by seasonal variations and our results tend to be stronger in the second and third quarters of
each year due to milder weather. We are more likely to be impacted by weather extremes, such as excessive rain, hurricanes or
monsoons, snow and ice or frigid temperatures, which may cause temporary, short-term anomalies in our operational
performance in certain localized geographic regions. However, these impacts usually have not been material to our operations
as a whole. See “Risk Factors” in Item 1A of this Report for further discussion.

Employees

As of December 31, 2017, we had approximately 5,820 employees. Certain of our subsidiaries are parties to collective

bargaining agreements that covered an aggregate of approximately 1,450 employees as of December 31, 2017. We generally
consider our relations with our employees and unions to be good.

Insurance and Bonding

We are required to carry insurance and provide bonding in connection with certain projects and, accordingly, maintain
comprehensive insurance policies, including workers’ compensation, general and automobile liability and property coverage.
We believe that we presently maintain adequate insurance coverage for all operations. We have also arranged bonding capacity
for bid, performance and payment bonds. Typically, the cost of a performance bond is less than 1% of the contract value. We
are required to indemnify the surety companies against losses from third-party claims of customers and subcontractors. The
indemnification obligations are collateralized by unperfected liens on our assets and the assets of those subsidiaries that are
parties to the applicable indemnification agreement.

Government Regulation

We are required to comply with all applicable United States federal, state and local, and all applicable foreign statutes,

regulations and ordinances. In addition, our installation and other operations have to comply with various relevant
occupational safety and health regulations, transportation regulations, code specifications, permit and licensing requirements
and bonding and insurance requirements, as well as with fire regulations relating to the storage, handling and transporting of
flammable materials. Our manufacturing and coatings facilities, as well as our installation and other operations, are subject to
federal and state environmental protection regulations, none of which presently have any material effect on our capital
expenditures, earnings or competitive position in connection with our present business. However, although our installation and
other operations have established monitoring programs and safety procedures, further restrictions could be imposed on the
manner in which installation and other activities are conducted, on equipment used in installation and other activities, on
volatile organic compounds and hazardous air pollutant emissions from our paintings and coatings processes and on the use of
solvents or the thermosetting resins used in the Insituform® CIPP process.

The use of both thermoplastics and thermosetting resin materials in contact with drinking water is strictly regulated in most

countries. In the United States, a consortium led by NSF International, under arrangements with the United States
Environmental Protection Agency (“EPA”), establishes minimum requirements for the control of potential human health effects
from substances added indirectly to water via contact with treatment, storage, transmission and distribution system
components, by defining the maximum permissible concentration of materials that may be leached from such components into
drinking water, and methods for testing them. Our lining and coating products for drinking water use are NSF/ANSI Standard
61 compliant, including the entire Tyfo® system, Insituform’s full range of water pipe lining products and our Fusible C-900®
and Fusible C-905® products. In addition, our Tite Liner® HDPE system is certified to NSF/ANSI Standard 61. Corrpro’s
corrosion control products are NSF/ANSI Standard 61 classified for drinking water systems and its cathodic protection
solutions for water storage tanks and water treatment units are compliant with AWWA Standard D104 and NACE
recommended practices. NSF assumes no liability for use of any products, and NSF’s arrangements with the EPA do not
constitute the EPA’s endorsement of NSF, NSF’s policies or its standards. Dedicated equipment is needed in connection with
use of these products in drinking water applications.

Item 1A. Risk Factors.

You should carefully consider the following risks and other information contained or incorporated by reference into this

Report when evaluating our business and financial condition and an investment in our common stock. Should any of the
following risks or uncertainties develop into actual events, such developments could have material adverse effects on our
business, financial condition, cash flows and results of operations.

Our businesses face significant competition in the industries in which they operate.

Many of our products and services face direct competition from companies offering similar products or services.
Competition can place downward pressure on our contract prices and profit margins. Intense competition is expected to
continue in these markets. If we are unable to realize our objectives, we could lose market share to our competitors and
experience an overall reduction in our profits.

In the water and wastewater rehabilitation portion of our Infrastructure Solutions segment, we face competition from
companies providing similar products and services as well as companies providing other methods of rehabilitation that we do
not offer, including traditional dig-and-replace, which is still the preferred method in the water rehabilitation market. In the
trenchless wastewater rehabilitation market, CIPP is one of the preferred methods. In this market, few significant barriers to
entry exist and, as a result, any organization that has the financial resources and access to technical expertise and bonding may
become a competitor. As such, we compete with many smaller firms on a local or regional level and with several larger firms
on the global and national levels. In water rehabilitation, where there are more significant barriers to entry because the market
is strictly regulated, we compete with a smaller number of specialty contractors around the world. Further, our Fusible PVC®
pipe products compete against other more traditional products, such as HDPE and restrained joint PVC pipe products.

In the infrastructure rehabilitation portion of our Infrastructure Solutions segment, the Tyfo® system competes against
traditional methods of structural retrofitting. There are significant barriers to entry, including testing requirements, experience,
intellectual property and certifications. In manufacturing, we only compete with a handful of FRP suppliers. However, with
respect to installation, we compete with a number of FRP applicators. Our ability to grow revenues in this market could be
adversely impacted if any of our competitors were to become fully-integrated like us or if new entrants in the market were to
develop strong installation and manufacturing expertise.

In our Corrosion Protection platform, we compete primarily with a small number of global and national companies in the

pipe coating industry, specialty firms in the pipeline protection industry, a limited number of large firms globally and a large
number of smaller firms regionally in the cathodic protection industry. In addition, customers can select a variety of methods to
meet their pipe installation, rehabilitation, coating and cathodic protection needs, including methods that we do not offer.

In our Energy Services platform, we compete with a limited number of local, regional and national companies in the oil

and gas procurement, construction, maintenance, scaffolding and turnaround industries on the U.S. West Coast.

Our business depends upon the maintenance of our proprietary technologies and information.

We depend on our proprietary technologies and information, many of which are no longer subject to patent protection. We

rely principally upon trade secret and copyright laws to protect our proprietary technologies. We regularly enter into
confidentiality agreements with our key employees, customers, potential customers and other third parties and limit access to
and distribution of our trade secrets and other proprietary information. However, these measures may not be adequate to
prevent misappropriation of our technologies or to assure that our competitors will not independently develop technologies that
are substantially equivalent or superior to our technologies. In addition, the laws of other countries in which we operate may
not protect our proprietary rights to the same extent as the laws of the United States. We are also subject to the risk of adverse
claims and litigation alleging infringement of intellectual property rights.

Our efforts to develop new products and services or enhance existing products and services involve substantial research,
development and marketing expenses, and the resulting new or enhanced products or services may not generate
sufficient revenues to justify such expenses.

Our future success will depend in part on our ability to anticipate and respond to changing technologies and customer

requirements by enhancing our existing products and services. We will need to develop and introduce, on a timely and cost-
effective basis, new products, features and services that address the needs of our customer base. As a result of these efforts, we
may be required to expend substantial research, development and marketing resources, and the time and expense required to
develop a new product or service or enhance an existing product or service are difficult to predict. We cannot assure that we
will succeed in developing, introducing and marketing new products or services or product or service enhancements. In
addition, we cannot be certain that any new or enhanced product or service will generate sufficient revenues to justify the
expenses and resources devoted to this product development and enhancement effort.

Acquisitions and investments could result in operating difficulties, dilution and other harmful consequences that may
adversely impact our business and results of operations.

Acquisitions are an element of our overall corporate strategy and use of capital, and these transactions could be material to
our financial condition and results of operations. We expect to continue to evaluate and enter into discussions regarding a wide
array of potential strategic transactions. The process of integrating an acquired company, business or technology has created,
and will continue to create, unforeseen operating difficulties and expenditures. The areas where we face risks include:

• Diversion of management time and focus from operating our business to acquisition integration challenges.

• Failure to successfully operate and further develop the acquired business or technology.

•

Implementation or remediation of controls, procedures and policies at the acquired company.

Integration of the acquired company’s accounting, human resource and other administrative systems, and
coordination of product, engineering and sales and marketing functions.

• Transition of operations, users and customers onto our existing platforms.

• Failure to obtain required approvals on a timely basis, if at all, from governmental authorities, or conditions placed
upon approval, under competition and antitrust laws which could, among other things, delay or prevent us from
completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of an
acquisition.

•

In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to
address the particular economic, currency, political and regulatory risks associated with specific countries.

• Cultural challenges associated with integrating employees from the acquired company into our organization, and

retention of employees from the businesses we acquire.

• Liability for activities of the acquired company before the acquisition, including patent and trademark infringement

claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities.

• Assumption of contracts with terms, including, without limitation, terms relating to liability, waiver of damages and

indemnification, that are not in line with our normal contracting practices.

• Litigation or other claims in connection with the acquired company, including claims from terminated employees,

customers, former stockholders or other third parties.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and
investments could cause us to fail to realize the anticipated benefits of such acquisitions or investments, incur unanticipated
liabilities, and harm our business generally.

Our acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, the assumption of
contingent liabilities, amortization expenses, impairment of goodwill and purchased long-lived assets and restructuring charges,
any of which could harm our financial condition or results of operations. Also, the anticipated benefit of many of our
acquisitions may not materialize for reasons separate and apart from the specific risks set forth above.

We may be liable to complete the work of our joint venture partners under our joint venture arrangements.

We enter into contractual joint ventures in order to develop joint bids on certain contracts. The success of these joint
ventures depends largely on the satisfactory performance by our joint venture partners of their obligations with respect to the
joint venture. Under these joint venture arrangements, we may be required to complete our joint venture partner’s portion of
the contract if the joint venture partner is unable to complete its portion and a bond is not available. In such case, the additional
obligations could result in reduced profits or, in some cases, significant losses for us.

Our backlog is an uncertain indicator of our future earnings.

Our backlog, which at December 31, 2017 was approximately $692.4 million, is subject to unexpected adjustments and
cancellation. The revenues projected in this backlog may not be realized or, if realized, may not result in profits. We may be
unable to complete some projects included in our backlog in the estimated time and, as a result, such projects could remain in
backlog for extended periods of time. To the extent that we experience project cancellation or scope adjustments, we could face
a reduction in the dollar amount of our backlog and the revenues that we actually receive from such backlog. In addition, one
or more of our multi-year contracts have in the past and may in the future contribute a material portion of our backlog in any
one year. The loss of business from any one of these significant customers could have a material adverse effect on our business
or results of operations.

The preparation of our consolidated financial statements requires us to make estimates and judgments, which are
subject to an inherent degree of uncertainty and which may differ from actual results.

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the
United States, which require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses and related disclosure of contingent assets and liabilities. Some accounting policies require the application of
significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their
nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results may differ from these

estimates and judgments under different assumptions or conditions, which may have an adverse effect on our financial
condition or results of operations in subsequent periods.

Our use of the percentage-of-completion method of accounting could result in a reduction or reversal of previously
recorded results.

We employ the percentage-of-completion method of accounting for our construction projects. This methodology
recognizes revenues and profits over the life of a project based on costs incurred to date compared to total estimated project
costs. Revisions to revenues and profits are made once amounts are known and can be reasonably estimated. Given the
uncertainties associated with some of our contracts, it is possible for actual costs to vary from estimates previously made.
Revisions to estimates could result in the reversal of revenues and gross profit previously recognized. For the year ended
December 31, 2017, approximately 67% of our revenues were derived from percentage-of-completion accounting.

We may experience cost overruns on our projects.

We conduct a significant portion of our business under guaranteed maximum price or fixed price contracts, where we bear

a significant portion of the risk for cost overruns. Under such contracts, prices are established in part on cost and scheduling
estimates, which are based on a number of assumptions, including assumptions about future economic conditions, prices and
availability of materials and other exigencies. Our profitability depends heavily on our ability to make accurate estimates.
Inaccurate estimates, or changes in other circumstances, such as unanticipated technical problems, difficulties obtaining permits
or approvals, changes in local laws or labor conditions, weather delays, cost of raw materials, currency fluctuations or our
suppliers’ or subcontractors’ inability to perform could result in substantial losses, as such changes adversely affect the
revenues and gross profit recognized on each project.

Our recognition of revenues from change orders, extra work or variations in the scope of work could be subject to
reversal in future periods.

We recognize revenues from change orders, extra work or variations in the scope of work as set forth in our written

contracts with our clients when management believes that realization of these revenues is probable and the recoverable amounts
can be reasonably estimated. We also factor in all other information that we possess with respect to the change order to
determine whether the change order should be recognized at all and, if recognition is appropriate, what dollar amount of the
change order should be recognized. Due to factors that we may not anticipate at the time of recognition, however, revenues
ultimately received on these change orders could be less than revenues that we recognized in a prior reporting period or periods,
which could require us in subsequent reporting periods to reduce or reverse revenues and gross profit previously recognized.

We may incur significant costs in providing services in excess of original project scope without having an approved
change order.

After commencement of a contract, we may perform, without the benefit of an approved change order from the customer,

additional services requested by the customer that were not contemplated in our contract price for various reasons, including
customer changes, incomplete or inaccurate engineering, changes in project specifications and other similar information
provided to us by the customer. Our construction contracts generally require the customer to compensate us for additional work
or expenses incurred under these circumstances.

A failure to obtain adequate compensation for these matters could require us to record in the current period an adjustment

to revenues and profit recognized in prior periods under the percentage-of-completion accounting method. Any such
adjustments, if substantial, could have a material adverse effect on our results of operations and financial condition, particularly
for the period in which such adjustments are made. We can provide no assurance that we will be successful in obtaining,
through negotiation, arbitration, litigation or otherwise, approved change orders in an amount adequate to compensate us for
our additional work or expenses.

Cyclical downturns in the mining, oil and natural gas industries, including a substantial or extended decline in the price
of mined minerals, oil or natural gas, or in the oil field, refinery and mining services businesses, may have a material
adverse effect on our financial condition or results of operations.

The mining, oil and natural gas industries are highly cyclical. Demand for the majority of the oil field, refinery and mining
products and services provided by our Corrosion Protection and Energy Services platforms are substantially dependent on the
level of expenditures by the mining, oil and natural gas industries for the exploration, development and production of mined
minerals, crude oil and natural gas reserves, which are sensitive to the prices of these commodities and generally dependent on
the industry’s view of future mined mineral, oil and natural gas prices. The prices of these commodities can be volatile. There
are numerous factors affecting the related industries and, thereby, the supply of, and demand for, our products and services,
which include, but are not limited to:

• market prices of mined minerals, oil and natural gas and expectations about future prices;

• cost of producing mined minerals, oil and natural gas;

•

the level of mining, drilling and production activity;

the discovery rate of new oil and gas reserves;

• mergers, consolidations and downsizing among our clients;

• coordination by the Organization of Petroleum Exporting Countries (OPEC);

•

the output and willingness to export of certain oil-producing countries;

the impact of commodity prices on the expenditure levels of our clients;

financial condition of our client base and their ability to fund capital and maintenance expenditures;

• adverse weather conditions;

• political instability in oil-producing countries;

•

tax incentives, including for alternative energy sources;

• domestic and worldwide economic conditions;

• weather conditions that can affect mining, oil or natural gas operations over a wide area;

• availability of energy sources other than oil and gas;

•

level of consumption of minerals, oil, natural gas and petrochemicals by consumers, including the effects of increased
regulation, conservation measures and technological advances affecting energy consumption; and

• availability of services and materials for our clients to grow their capital expenditures.

As seen in the historic high volatility in crude oil prices and other energy commodities, prices for mined minerals, oil and

natural gas are subject to periodic downturns and large fluctuations in response to relatively minor changes in supply and
demand, market uncertainty and a variety of other factors (including those set forth above) that are beyond our control, and we
expect such prices to continue to be volatile. Demand for the products and services we provide could decrease in the event of a
sustained reduction in demand for mined minerals, oil or natural gas, while perceptions of long-term decline in the prices of
mined materials, oil and natural gas by mining, oil and gas companies (some of our customers) can similarly reduce or defer
major expenditures given the long-term nature of many large-scale projects or result in downward pressure on the prices we
charge. As such, a significant downturn in the mining, oil and/or natural gas industries could result in a reduction in demand
for our mining, oil field and refinery services and could adversely affect our operating results. Additionally, the volatility of
such prices and the resulting effects are difficult to predict, which reduces our ability to anticipate and respond effectively to
changing conditions.

Our operations could be adversely impacted by the continuing effects from the U.S. government regulations on offshore
drilling projects.

In response to the Deepwater Horizon incident in the U.S. Gulf of Mexico in April 2010, the U.S. government

implemented various new regulations intended to improve offshore drilling safety and environmental protection and increase
liability for oil spills in the federal waters of the outer continental shelf. These new regulations increased the complexity of the
drilling permit process and have delayed the receipt of drilling permits in both deepwater and shallow-water areas since the
incident, although there has been an increase in the number of drilling permits issued and drilling activity is recovering.

While the current U.S. federal government administration may be considering amending offshore drilling regulations, we

cannot be certain that the regulations will be amended, nor can we predict what the continuing effects from the U.S.
government regulations on offshore deepwater drilling projects may have on offshore oil and gas exploration and development
activity, or what actions may be taken by our customers in our Corrosion Protection segment or other industry participants in
response to these regulations. This could reduce demand for our services, which could have an adverse impact on certain
aspects of our business.

Our operations could be adversely impacted by the California Refinery Safety Law related to downstream work
performed in California refineries.

Aegion Energy Services continues to face challenges with the impacts of the California Refinery Safety Law, which went
into effect on January 1, 2014. The law introduced new requirements for refineries and outside contractors at covered facilities
when construction, alteration, demolition, installation, repair or maintenance work is performed at the covered facility. The law
imposes the following requirements:

• all subject workers must be paid the applicable prevailing wage rate;

• all subject workers must be either “skilled journeymen” or “registered apprentices”; and

• at least 60% of skilled journeypersons on the project must be graduates of certified apprenticeship programs.

The effect of the California Refinery Safety Law is to require the use of building trade union contractors or refinery owners or
operators to perform the covered work.

These requirements only pertain to contracts entered into, extended or renewed after January 1, 2014. Contracts entered
into, extended or renewed prior to that date generally will expire in 2018 across the industry. Aegion Energy Services currently
has long-term contracts in place with many of its major downstream clients, which it is attempting to maintain through its
building trade union entity. There are no assurances that customers will maintain their contracts with Aegion Energy Services,
which could materially and adversely impact its revenues.

Federal and state legislative and regulatory initiatives as well as governmental reviews relating to hydraulic fracturing
could result in increased costs and additional operating restrictions or delays that could adversely affect our Corrosion
Protection customers.

Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs

and additional operating restrictions or delays in the production of oil and natural gas, including from the developing shale
plays. Our Corrosion Protection segment services oil and gas companies in the shale plays and we foresee strong market
opportunities here. A decline in drilling of new wells and related servicing activities caused by these initiatives could have an
adverse effect on our business, financial position or results of operations.

The effects of the Tax Cuts and Jobs Act on our business have not yet been fully analyzed and could have an adverse
effect on our business and financial condition.

Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”), was signed into law on
December 22, 2017. The TCJA contains significant changes to corporate taxation, including reducing the corporate tax rate
from 35% to 21%, limiting the tax deduction for interest expense to 30% of earnings (except for certain small businesses),
limiting the deduction for net operating losses to 80% of current year taxable income and eliminating net operating loss
carrybacks, one-time taxing of offshore earnings at reduced rates regardless of whether they are repatriated, eliminating U.S.
tax on foreign earnings (subject to certain important exceptions), immediately deducting certain new investments instead of
deducting depreciation expense over time, and modifying or repealing many business deductions and credits. Information
regarding the impacts of the TCJA consists of preliminary estimates which are forward-looking statements, is based on our
current calculations, as well our current interpretations, assumptions and expectations relating to TCJA, and is subject to
change, possibly materially, as we continue to analyze the impact of the TCJA. The impacts of the legislation may differ from
this estimate, possibly materially (and the amount of the impact on the Company may accordingly be adjusted over the course
of 2018), due to guidance that may be issued, changes in interpretations and assumptions the Company has made, and actions
the Company may take as a result of the TCJA. While we will continue to examine the impact the TCJA may have on our
business, the overall impact of the TCJA is uncertain, and our business and financial condition could be adversely affected.

A general downturn in U.S. and global economic conditions, and specifically a downturn in the municipal bond market,
may reduce our business prospects and decrease our revenues and cash flows.

Our business is affected by general economic conditions. Any extended weakness in the U.S. and global economies could
reduce our business prospects and could cause decreases in our revenues and operating cash flows. Specifically, a downturn in
the municipal bond market caused by an actual downgrade of monoline insurers could result in our municipal customers being
required to spend municipal funds previously allocated to projects that would benefit our business to pay off outstanding bonds.

We conduct manufacturing, sales and distribution operations on a worldwide basis and are subject to a variety of risks
associated with doing business outside the United States.

We maintain significant international operations, including operations in North America, Europe, Asia-Pacific, Australia,

the Middle East, South America and Africa. For the years ended December 31, 2017, 2016 and 2015, approximately 24%,
24%, and 28%, respectively, of our revenues were derived from international operations. We expect a significant portion of our
revenues and profits to come from international operations and joint ventures for the foreseeable future and to continue to grow
over time.

As a result, we are subject to a number of risks and complications associated with international manufacturing, sales,

services and other operations. These include:

• difficulties in enforcing agreements, collecting receivables and resolving disputes through some foreign legal

systems;

•

foreign customers with longer payment cycles than customers in the United States;

• difficulties in enforcing intellectual property rights or weaker intellectual property right protections in some countries;

•

tax rates in certain foreign countries that exceed those in the United States and foreign earnings subject to
withholding requirements;

•

tax laws that restrict our ability to use tax credits, offset gains or repatriate funds;

tax laws that impose additional taxes on our operations, including the implementation of value added tax in certain
countries in the Middle East;

tariffs, exchange controls or other trade restrictions, including transfer pricing restrictions, when products produced in
one country are sold to an affiliated entity in another country;

• abrupt changes in foreign government policies and regulations;

• unsettled political conditions;

• acts of terrorism or criminality;

• kidnapping of employees;

• nationalization or privatization of companies with which we do business;

• protectionist policies in certain foreign countries, including those in the Middle East, that disfavor foreign companies

•

operating in such countries;

forced negotiation or modification of contracts;

increased governmental ownership and regulation of markets in which we operate;

the financial instability of, and the related inability or unwillingness to timely pay for our services by, national oil
companies and other foreign customers resulting from, and/or exacerbated by, depressed oil prices;

• hostility from local populations, particularly in the Middle East;
•

tenuous, unstable or hostile relationships between countries that are interconnected in our operations; and

• difficulties associated with compliance with a variety of laws and regulations governing international trade, including

the Foreign Corrupt Practices Act.

To the extent that our international operations are affected by these unexpected and adverse foreign economic and political

conditions, we may experience project disruptions and losses that could significantly reduce our revenues and profits.

Implementation and achievement of international growth objectives also may be impeded by political, social and economic

uncertainties or unrest in countries in which we conduct operations or market or distribute our products. In addition,
compliance with multiple, and potentially conflicting, international laws and regulations, import and export limitations, anti-
corruption laws and exchange controls may be difficult, burdensome or expensive.

For example, we are subject to compliance with various laws and regulations, including the Foreign Corrupt Practices Act
and similar anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to
officials for the purpose of obtaining or retaining business. While our employees and agents are required to comply with these
laws, we cannot provide assurance that our internal policies, procedures and controls will always protect us from violations of
these laws, despite our commitment to legal compliance and corporate ethics. The occurrence or allegation of these types of
risks may adversely affect our business, performance, prospects, value, financial condition and results of operations.

Operational disruptions caused by political instability and conflict in the Middle East, South America, Africa and Asia
could adversely impact our current operations and plans of expansion in these regions.

Our Corrosion Protection segment currently operates in the Middle East, South America and Africa, and our Infrastructure
Solutions segment currently operates in Asia. Both segments continue to focus efforts on expansion in these regions. Political
instability and social unrest in the Middle East, South America, Africa and Asia, as well as the potential for catastrophic events
such as abrupt political change, terrorist acts and conflicts or wars in these and other regions may cause damage or disruption to
the economy, financial markets and our current and prospective customers in the these regions. Political instability, conflicts
and the potential for catastrophic events have contributed to, and will likely continue to contribute to, volatility in these regions,
which could adversely affect our operations and operating results.

As a result of our operations and plans of expansion in the these regions, we are also exposed to certain other uncertainties

not generally encountered in our U.S. operations, including those detailed in the risks detailed in the risk factor immediately
above.

Business operations could be adversely affected by terrorism.

The threat of, or actual acts of, terrorism may affect our operations around the world in unpredictable ways and may force

an increase in security measures and cause disruptions in supplies and markets. If any of our facilities, including our
manufacturing facilities, or if any of the projects we are working on, particularly in the energy and mining sector, were to be a
direct target, or an indirect casualty, of an act of terrorism, our operations could be adversely affected. Corresponding
instability in the financial markets as a result of terrorism also could adversely affect our ability to raise capital.

International trade tariffs and restrictions in the steel market may adversely affect our Bayou business.

The business of our subsidiary, Bayou, is heavily dependent on providing products and services to customers that import
steel pipe into the United States from the international markets. To the extent that trade tariffs and other restrictions imposed by
the United States increase the price of, or limit the amount of, steel pipe imported into the United States, the demand from
Bayou’s customers for Bayou’s products and services will be diminished, which will adversely affect Bayou’s revenues and
profitability.

We have international operations that are subject to foreign economic uncertainties and foreign currency fluctuation.

Global financial and credit markets have been, and continue to be, unstable and unpredictable. For example, the June 2016

referendum by British voters to exit the European Union (commonly referred to as “Brexit”) has created significant
uncertainties affecting the economy and business operations, including our operations, in the United Kingdom and the
European Union. While the United Kingdom is currently scheduled to depart the European Union on March 29, 2019, the
terms of Brexit have not yet been confirmed, and as such, it is difficult to predict the effect of Brexit on our Company and our
operations in the United Kingdom, including our operations in Northern Ireland and the Republic of Ireland, our manufacturing
facility in Wellingborough, United Kingdom, which distributes liners to the European Union and elsewhere, and our
manufacturing facility in Stockton-on-Tees, United Kingdom, which manufactures and distributes cathodic protection
equipment world wide. Brexit could, among other things, affect the legal and regulatory schemes to which our operations in
the United Kingdom are subject, adversely affect trade between the United Kingdom and the European Union and continue to
cause economic uncertainty. The instability of the markets and weakness of the economy could affect the demand for our
services, the financial strength of our customers and suppliers, their ability or willingness to do business with us, our
willingness to do business with them, and/or our suppliers’ and customers’ ability to fulfill their obligations to us and/or the
ability of us, our customers or our suppliers to obtain credit. These factors could adversely affect our operations, earnings and
financial condition.

A significant portion of our contracts and revenues are denominated in foreign currencies, which may result in additional
risk of fluctuating currency values and exchange rates, hard currency shortages and controls on currency exchange. Changes in
the value of foreign currencies could increase our U.S. dollar costs for, or reduce our U.S. dollar revenues from, our foreign
operations. Any increased costs or reduced revenues as a result of foreign currency fluctuations could affect our profits. For
example, if there is another significant strengthening of the U.S. dollar compared to the Euro, the Canadian dollar or the
Australian dollar, it may adversely affect our operating results and financial condition.

An inability to attract and retain qualified personnel, and in particular, engineers, estimators, project managers, line
workers, skilled craft workers and other experienced professionals, could impact our ability to perform on our
contracts, which could harm our business and impair our future revenues and profitability.

Our ability to attract and retain qualified engineers, estimators, project managers, line workers, skilled craft workers and
other experienced professionals in accordance with our needs is an important factor in our ability to maintain profitability and
grow our business. The market for these professionals is competitive, particularly during periods of economic growth when the
supply is limited. We cannot provide any assurance that we will be successful in our efforts to retain or attract qualified
personnel when needed. Therefore, when we anticipate or experience growing demand for our services, we may incur
additional cost to maintain a professional staff in excess of our current contract needs in an effort to have sufficient qualified
personnel available to address this anticipated demand. If we do incur additional compensation and benefit costs, our customer
contracts may not allow us to pass through these costs.

Competent and experienced engineers, project managers and craft workers are especially critical to the profitable
performance of our contracts, particularly on our fixed-price contracts where superior design or execution of the project can
result in profits greater than originally estimated or where inferior design or project execution can reduce or eliminate estimated
profits or even result in a loss. Our project managers are involved in most aspects of contracting and contract execution
including:

• supervising the bidding process, including providing estimates of significant cost components, such as material and

equipment needs, and the size, productivity and composition of the workforce;

• negotiating contracts;

• supervising project performance, including performance by our employees, subcontractors and other third-party

suppliers and vendors;

• estimating costs for completion of contracts that is used to estimate amounts that can be reported as revenues and

earnings on the contract under the percentage-of-completion method of accounting;

• negotiating requests for change orders and the final terms of approved change orders; and

• determining and documenting claims by us for increased costs incurred due to the failure of customers,

subcontractors and other third-party suppliers of equipment and materials to perform on a timely basis and in
22

accordance with contract terms.

The California Refinery Safety Law, which requires owners and operators to use only building trade union contractors for
covered work at the refineries (if not self-performed), has the potential to reduce the entire labor pool for refinery maintenance
in California by: (i) eliminating the non-union workforce; and (ii) requiring the use of the same workforce that also performs
public works and general construction in California. This could adversely affect staffing for large turnaround projects at
California refineries. This could also adversely affect Energy Services’ ability to support turnaround and project work outside
California, due to its past reliance on its mobile California workforce to staff short term projects throughout the West Coast.
There will be a significant wage differential between high union wages in California and wages in other states on the West
Coast, creating a large disincentive for the California workforce to leave the state. All of the uncertainty created by this
industry workforce change has the potential to negatively impact the entire West Coast refinery labor market, which in turn
would negatively impact our revenues, profits and operations.

In addition, we use a multi-level sales force structured around target markets and key accounts, focusing on marketing our

products and services to engineers, consultants, administrators, technical staff and elected officials. We are dependent on our
personnel to continue to develop improvements to our proprietary processes, including materials used and the methods of
manufacturing, installing, strengthening, coating and cathodic protection and we require quality field personnel to effectively
and profitably perform our work. Our success in attracting and retaining qualified personnel is dependent on the resources
available in individual geographic areas and the impact on the labor supply of general economic conditions, as well as our
ability to provide a competitive compensation package and work environment. Our failure to attract, train, integrate, engage
and retain qualified personnel could have a significant effect on our financial condition and results of operations.

Our profitability could be negatively impacted if we are not able to maintain appropriate utilization of our workforce.

The extent to which we utilize our workforce affects our profitability. If we under utilize our workforce, our project gross

margins and overall profitability suffer in the short term. If we over utilize our workforce, we may negatively impact safety,
employee satisfaction and project execution, which could result in an increase in injuries to our employees and a decline of
future project awards. The utilization of our workforce is impacted by numerous factors including:

• our estimate of the headcount requirements for various units based on our forecast of the demand for our products

and services;

• our ability to maintain our talent base and manage attrition;

• our ability to schedule our portfolio of projects to efficiently utilize our employees and minimize downtime between

project assignments; and

• our need to invest time and resources into functions such as training, business development, employee recruiting, and

sales that are not chargeable to customer projects.

Our business may be adversely impacted by work stoppages, staffing shortages and other labor matters.

As of December 31, 2017, our Aegion Energy Services business had approximately 1,300 employees that were represented

by unions, although these numbers are constantly changing as customer demands change. Infrastructure Solutions has
approximately 150 employees represented by unions. Although we believe that our relations with our employees and the
unions are good, no assurances can be made that we will not experience these and other types of conflicts with labor unions,
works councils, other groups representing employees, or our employees in general, especially in the context of any future
negotiations with our labor unions. We can also make no assurance that future negotiations with our labor unions will not result
in a significant increase in the cost of labor. Approximately one-third of our Energy Services union employees currently
participate in twenty-nine multi-employer benefit plans, which may increase in the future if more clients transition to using our
building trade union contracting entity. Participation in multi-employer benefit plans may result in liability to Aegion Energy
Services in excess of that directly attributable to employees of Aegion Energy Services.

Additionally, the employees of some of our customers are unionized, especially the customers of our Aegion Energy
Services business. Any strikes, work stoppages or other labor matters experienced by our customers may impact our ability to
work on projects and, as a result, have an adverse effect on our financial condition and results of operations.

The revenues from the water and wastewater portion of our Infrastructure Solutions platform are substantially
dependent on municipal government spending.

Many of our customers are municipal governmental agencies and, as such, we are dependent on municipal spending.
Spending by our municipal customers can be affected by local political circumstances, budgetary constraints and other factors.
Consequently, future municipal spending may not be allocated to projects that would benefit our business or may not be
allocated in the amounts or for the size of the projects that we anticipated. A decrease in municipal spending on such projects
would adversely impact our revenues, results of operations and cash flows.

The loss of one or more of our significant customers could adversely affect us.

One or more customers have in the past and may in the future contribute a material portion of our revenues in any one year.

Because these significant customers generally contract with us for specific projects or for specific periods of time, we may lose
these customers from year to year as the projects or maintenance contracts are completed. The loss of business from any one of
these customers could have a material adverse effect on our business or results of operations.

The execution of our growth strategy is dependent upon the continued availability of third-party financing
arrangements for our customers.

Tighter credit markets could adversely affect our customers’ ability to secure the financing necessary to proceed or
continue with pipe or other infrastructure installation, rehabilitation, strengthening, coating and cathodic protection projects.
Our customers’ or potential customers’ inability to secure financing for projects could result in the delay, cancellation or
downsizing of new projects or the suspension of projects already under contract, which could cause a decline in the demand for
our services and negatively impact our revenues and earnings.

A substantial portion of our raw materials is from a limited number of vendors, and we are subject to market
fluctuations in the prices of certain commodities.

The primary products and raw materials used by our Corrpro operations include zinc, aluminum, magnesium and other
metallic anodes, as well as wire and cable. We believe that Corrpro has multiple sources available for these raw materials and
is not dependent on any single vendor to meet its supply needs. However, the prices of these raw materials have historically
been affected by the prices of energy, petroleum, steel and other commodities, tariffs and duties on imported materials and
foreign currency and exchange rates. A significant increase in the prices of these raw materials could adversely affect our
results of operations.

We purchase the majority of our fiber requirements for Insituform® tube manufacturing from two sources. We believe,
however, that alternate sources are readily available, and we continue to negotiate with other supply sources. The manufacture
of the Insituform® tubes used in our water and wastewater pipeline rehabilitation business is dependent upon the availability of
resin, a petroleum-based product. We currently have qualified four resin suppliers from which we intend to purchase the
majority of our resin requirements for our North American operations. For our European operations, we currently have
qualified six resin suppliers, and we currently have qualified six resin suppliers for our Asia-Pacific operations. We believe that
these and other sources of resin supply are readily available. Historically, resin prices have fluctuated on the basis of the
prevailing prices of its inputs, including styrene and oil. We anticipate that prices will continue to be heavily influenced by the
events affecting these inputs, including the oil market. If there is a shortage or contraction of fiber or resin suppliers or if the
price of fiber or resin increase, it could have an adverse effect on our results of operations.

The primary products and raw materials used by the infrastructure rehabilitation portion of our Infrastructure Solutions

segment in the manufacture of FRP composite systems are carbon, glass, resins, fabric and epoxy raw materials. Carbon 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. An increase in the price of these raw materials may have an adverse
effect on our operations. Further, because we utilize a limited number of extruders to toll manufacture our Fusible PVC® pipe
products, we could be adversely affected if one or more of these extruders is unable to continue to toll manufacture our Fusible
PVC® pipe products.

We also purchase a significant volume of fuel to operate our trucks and equipment. At present, we do not engage in any

type of hedging activities to mitigate the risks of fluctuating market prices for oil or fuel. A significant increase in the price of
oil could cause an adverse effect on our cost structure that we may not be able to recover from our customers.

Extreme weather conditions may adversely affect our operations.

We are likely to be impacted by weather extremes, such as excessive rain or hurricanes, tornadoes, typhoons, snow and ice

or frigid temperatures, which may cause temporary, short-term anomalies in our operational performance in certain localized
geographic regions. Our Infrastructure Solutions segment is particularly sensitive to weather extremes. Delays and other
weather impacts could adversely affect our ability to meet project deadlines and may increase a project’s cost and decrease its
profitability.

Certain of our facilities are located in regions that may be affected by natural disasters.

Certain of our Bayou facilities are located on the Gulf Coast in Louisiana. We also have facilities near Houston, Texas, and
in Florida. These regions are subject to increased hurricane activity that can result in substantial flooding. Our Aegion Energy
Services business serves large oil and gas customers in California and is headquartered in Irvine, California with operations

near major earthquake faults throughout California. Furthermore, our Infrastructure Solutions segment has substantial
operations in California near major earthquake faults. Our Bayou facilities have in the past experienced damage due to winds
and floods, while our facilities in these other locations have experienced minimal damages from recent natural disasters.
Although we maintain loss insurance where necessary, a hurricane, earthquake or other natural disaster could result in
significant damage to our facilities, destruction or disruption of our critical business or information technology systems,
recovery costs and interruption to certain of our operations. In addition, a catastrophic event could interrupt operations of our
customers and suppliers, which could result in delays or cancellation of customer orders, the loss of customers, and
impediments to the manufacture or shipment of products, which could result in loss of business or an increase in expense, both
of which may have a material adverse effect on our business.

The actual timing, costs and benefits of the 2017 Restructuring may differ from those currently expected, which may
reduce our operating results.

On July 28, 2017, we announced the 2017 Restructuring, which is intended to reduce the Company’s consolidated annual

expenses by more than $20 million. We completed a majority of the 2017 Restructuring during 2017 and will substantially
complete the 2017 Restructuring during 2018. See Notes 1 and 3 to the consolidated financial statements contained in this
report for additional information and disclosures regarding our restructuring activities.

The 2017 Restructuring is subject to various risks, which could result in the actual timing, costs and benefits of the plan

differing from those currently anticipated. These risks and uncertainties include, among others, that: (i) we may not be able to
implement the 2017 Restructuring in the timeframe currently planned; (ii) our costs related to the 2017 Restructuring may be
higher than currently estimated; (iii) the expected annual expense reductions may be less than currently estimated; and (iv)
unanticipated disruptions to our operations may result in additional costs being incurred. We also cannot provide assurance that
we will not undertake additional restructuring activities in the future. Because of these and other factors, we cannot predict
whether we will realize the purpose and anticipated benefits of the 2017 Restructuring, and if we do not, our business and
results of operations may be adversely impacted.

Additionally, the 2017 Restructuring may yield unintended consequences, such as:

• actual or perceived disruption of service or reduction in service standards to customers;

•

the failure to preserve supplier relationships and distribution, sales and other important relationships and to resolve
conflicts that may arise;

• attrition beyond our intended reduction in headcount and reduced employee morale, which may cause our employees

who were not affected by the 2017 Restructuring to seek alternate employment;

•

increased risk of employment litigation; and

• diversion of management attention from ongoing business activities.

We may face significant challenges in our plans to divest The Bayou Companies, LLC and Bayou Wasco Insulation,
LLC.

On July 28, 2017, we initiated actions to divest Bayou, our pipe coating and insulation businesses in Louisiana.

Divestitures pose risks and challenges that could negatively impact our business, including required separation or carve-out
activities, disputes with buyers and unexpected costs. The uncertainty resulting from our announced plans to divest Bayou
could cause significant disruption to the Bayou businesses. Our management’s attention to our ongoing operations may be
diverted by efforts to divest Bayou. There are significant risks and uncertainties in the sales process, including the timing and
uncertainty of completion of any transaction and the fulfillment of closing conditions, some of which may be outside of our
control. Any significant delay in the completion of this divestiture, or the failure to complete the divestiture, may negatively
impact our ability to implement new strategic plans, or achieve our previously announced strategic plans. We may also dispose
of a business at a price or on terms that are less favorable, or at a higher cost, than we had previously anticipated, which may
result in impairment charges or losses on disposal. If we reach an agreement with a buyer for the disposition of a business, we
might be subject to satisfaction of pre-closing conditions, as well as necessary regulatory and governmental approvals on
acceptable terms, which may prevent us from completing a transaction. Dispositions may also involve continued financial
involvement, as we may be required to retain responsibility for, or agree to indemnify a buyer against, contingent liabilities
related to businesses sold, such as lawsuits, tax liabilities, lease payments, product liability claims or environmental matters.
Under these types of arrangements, performance by the divested businesses or other conditions outside of our control could
affect future financial results.

We may from time to time undertake internal reorganizations that may adversely impact our business and results of
operations.

From time to time, including in 2018, in an effort to simplify our organizational structure and streamline our operations or

for other operational reasons, we may undertake certain internal reorganizations that may involve, among other things, the

combination or dissolution of certain of our existing subsidiaries, the creation of new subsidiaries and business divisions and
the settlement of historical inter-company transactions. Additionally, as a result of the enactment of the TCJA and its effect on
the taxation of offshore earnings, in connection with these actions or our operations generally, we may determine to repatriate
certain earnings from our international subsidiaries, which earnings were previously permanently reinvested in such
subsidiaries’ operations. In undertaking such actions, we consider, among other things, the alignment of our corporate structure
with our organizational objectives, the operational and tax efficiency of our corporate structure and the long-term cash flow
needs of our business. These efforts may not result in the intended or expected benefits, may result in disruptions to our
business and may cause the Company to incur additional expenses or tax liabilities. Accordingly, such actions may adversely
impact our business and results of operations.

Changes in the industries within which we operate and market conditions could lead to charges related to
discontinuances of certain of our businesses, asset impairment, workforce reductions or restructurings.

In response to changes in industry and market conditions, we may be required to strategically realign our resources and to
consider restructuring, disposing of or otherwise exiting businesses. Any resource realignment, or decision to limit investment
in or dispose of or otherwise exit businesses, may result in the recording of special charges, such as asset write-offs, workforce
reductions, restructuring costs or charges relating to consolidation of excess facilities or businesses. Our estimates with respect
to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change
as a result of such assessments and decisions. Further, our estimates relating to the liabilities for excess facilities are affected
by changes in real estate market conditions.

We may incur further impairments to goodwill or long-lived assets.

We review our long-lived assets, including goodwill and other intangible assets, for impairment annually or whenever
events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The valuation of
goodwill and other intangible assets requires assumptions and estimates of many critical factors, including revenue and market
growth, operating cash flows, market multiples and discount rates. Negative industry or economic trends, including reduced
market prices of our common stock, reduced estimates of future cash flows, disruptions to our business, slower growth rates, or
lack of growth in our relevant businesses, could lead to further impairment charges against our long-lived assets, including
goodwill and other intangible assets. If, in any period, our stock price decreases to the point where our fair value, as
determined by our market capitalization, is less than the book value of our assets for an extended period of time, this could also
indicate a potential impairment, and we may be required to record an impairment charge in that period, which could adversely
affect our results of operations.

We may be subject to information technology system failures, network disruptions, cybersecurity attacks and breaches
in data security, which could disrupt our operations and could result in a loss of assets.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary
business information, and personally identifiable information of our customers and employees, in our data centers and on our
networks. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our
security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to
employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored
there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result
in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties,
and damage our reputation, which could adversely affect our business/operating margins, revenues and competitive position.
The secure processing, maintenance, and transmission of this information is critical to our operations, and we devote significant
resources to protecting our information. We maintain cyber risk insurance, but this insurance may not be sufficient to cover all
of our losses from any breaches of our systems.

To improve the effectiveness of our operations and to interface with our customers and suppliers, we use our suppliers’ or

vendors’ information technology systems to submit and process invoices and payments. The failures of these systems could
disrupt our operations by causing transaction errors, processing inefficiencies, delays or cancellation of customer orders,
impediments to the manufacture or shipment of products and other business disruptions. These events could lead to financial
losses from loss of business or an increase in expense, all of which may have a material adverse effect on our business.

Increasing regulatory focus on privacy issues and expanding laws could expose us to increased liability.

In May 2018, the European Union’s new General Data Protection Regulation will replace the existing European Union
Data Protection Directive, and it will have a significant impact on how businesses can collect and process the personal data of
European Union individuals, including the requirement for business to self-report personal data breaches to the relevant
supervisory authority and, under certain circumstances, to the affected data subjects, and provide additional rights to individuals
whose data is processed. Penalties for non-compliance are also significantly higher under the new law, with the maximum fine
being the higher of €20 million or 4% of global turnover for the preceding year . More than 5% of our workforce as of

December 31, 2017 was employed in the European Union. In addition, numerous proposals regarding privacy and data
protection are pending before U.S. and non-U.S. legislative and regulatory bodies. Despite our commitment to complying with
applicable laws, actual or alleged violations of these laws could result in legal claims or proceedings and regulatory penalties,
which could disrupt our business, distract our employees and negatively impact our reputation as well as our results of
operations.

We are subject to a number of restrictive debt covenants under our credit facility.

In October 2015, the Company amended and restated its $650.0 million senior secured credit facility (as amended, the
“Credit Facility”) with a syndicate of banks. Our Credit Facility contains certain restrictive covenants, which restrict our ability
to, among other things, incur additional indebtedness, incur certain liens on our assets or sell assets, make investments and
make other restricted payments. Our Credit Facility also requires us to maintain specified financial ratios under certain
conditions and satisfy financial condition tests. Our ability to meet those financial ratios and tests and otherwise comply with
our financial covenants may be affected by the factors described in this “Risk Factors” section of this Report and other factors
outside our control, and we may not be able to continue to meet those ratios, tests and covenants. Our ability to generate
sufficient cash from operations to meet our debt obligations will depend upon our future operating performance, which will be
affected by general economic, financial, competitive, business and other factors beyond our control. A breach of any of these
covenants, ratios, tests or restrictions, as applicable, or any inability to pay interest on, or principal of, our outstanding debt as it
becomes due could result in an event of default. Upon an event of default, if not waived by our lenders, our lenders may
declare all amounts outstanding as due and payable.

At December 31, 2017, we were in compliance with all of our debt covenants as required under the Credit Facility. If we
are unable to comply with the restrictive covenants in the future, we would be required to obtain amendments or waivers from
our lenders or secure another source of financing. If our current lenders accelerate the maturity of our indebtedness, we may
not have sufficient capital available at that time to pay the amounts due to our lenders on a timely basis. In addition, these
restrictive covenants may prevent us from engaging in transactions that benefit us, including responding to changing business
and economic conditions and taking advantage of attractive business opportunities.

We occasionally access the financial markets to finance a portion of our working capital requirements and support our
liquidity needs. Our ability to access these markets may be adversely affected by factors beyond our control and could
negatively impact our ability to finance our operations, meet certain obligations or implement our operating strategy.

We occasionally borrow under our existing credit facility to fund operations, including working capital investments.
Market disruptions such as those experienced in the United States and abroad in the past few years have materially impacted
liquidity in the credit and debt markets, making financing terms for borrowers less attractive and, in certain cases, resulting in
the unavailability of certain types of financing. Uncertainty in the financial markets may negatively impact our ability to access
additional financing or to refinance our existing credit facility or existing debt arrangements on favorable terms or at all, which
could negatively affect our ability to fund current and future expansion as well as future acquisitions and development. These
disruptions may include turmoil in the financial services industry, volatility in the markets where our outstanding securities
trade and general economic downturns in the areas where we do business. If we are unable to access funds at competitive rates,
or if our short-term or long-term borrowing costs increase, our ability to finance our operations, meet our short-term obligations
and implement our operating strategy could be adversely affected.

As a holding company, Aegion depends on its operating subsidiaries to meet its financial obligations.

Aegion Corporation is a holding company with no significant operating assets. Our subsidiaries conduct all of our
operations and own substantially all of our assets. Our cash flow and our ability to meet our obligations depends on the cash
flow of our subsidiaries. In addition, the payments of funds in the form of dividends, intercompany payments, tax sharing
payments and other forms may be subject to restrictions under the laws of the states and countries in which we operate.

The market price of our common stock is highly volatile and may result in investors selling shares of our common stock
at a loss.

The trading price of our common stock is highly volatile and subject to wide fluctuations in price in response to various

factors, many of which are beyond our control, including:

• actual or anticipated variations in quarterly operating results;

• changes in financial estimates by securities analysts that cover our stock or our failure to meet these estimates;

• conditions or trends in the U.S. wastewater rehabilitation market;

• conditions or trends in mined materials, oil and natural gas markets;

• changes in municipal and corporate spending practices;

• a downturn of the municipal bond market or lending markets generally;

• changes in the federal or state governments that impact regulation and spending regarding energy and infrastructure;

• changes in market valuations of other companies operating in our industries;

• announcements by us or our competitors of a significant acquisition or divestiture; and

• additions or departures of key personnel.

In addition, the stock market in general and The Nasdaq Global Select Market in particular have experienced extreme price

and volume fluctuations that may be unrelated or disproportionate to the operating performance of listed companies. Industry
factors may seriously harm the market price of our common stock, regardless of our operating performance. Such stock price
volatility could result in investors selling shares of our common stock at a loss.

Future sales of our common stock or equity-linked securities in the public market could adversely affect the trading
price of our common stock and our ability to raise funds in new stock offerings.

Sales of substantial numbers of additional shares of our common stock or any shares of our preferred stock, including sales
of shares in connection with any future acquisitions, or the perception that such sales could occur, may have a harmful effect on
prevailing market prices for our common stock and our ability to raise additional capital in the financial markets at a time and
price favorable to us. We may issue equity securities in the future for a number of reasons, including to finance our operations
and business strategy, to adjust our ratio of debt to equity, to satisfy obligations upon exercise of outstanding warrants or
options or for other reasons. Our certificate of incorporation provides that we have authority to issue 125,000,000 shares of
common stock. As of December 31, 2017, 32,462,542 shares of common stock were issued and outstanding.

Provisions in our certificate of incorporation could make it more difficult for a third party to acquire us or could
adversely affect the rights of holders of our common stock or the market price of our common stock.

Our certificate of incorporation provides that our board of directors has the authority, without any action of our

stockholders, to issue up to 2,000,000 shares of preferred stock. Preferred stock may be issued upon such terms and with such
designations as our board of directors may fix in its discretion, including with respect to: (i) the payment of dividends upon our
liquidation, dissolution or winding up; (ii) voting rights that dilute the voting power of our common stock; (iii) dividend rates;
(iv) redemption or conversion rights; (v) liquidation preferences; or (vi) voting rights.

In addition, our certificate of incorporation provides that subject to the rights of the holders of any class or series of
preferred stock set forth in our certificate of incorporation, the certificate of designation relating to such class or series of
preferred stock, or as otherwise required by law, any stockholder action may be taken only at a meeting of stockholders and
may not be effected by any written consent by such stockholders. The affirmative vote of the holders of at least 80% of the
capital stock entitled to vote for the election of directors is required to amend, repeal or adopt any provision inconsistent with
such arrangement.

These provisions could potentially be used to discourage attempts by others to obtain control of our company through
merger, tender offer, proxy, consent or otherwise by making such attempts more difficult or more costly, even if the offer may
be considered beneficial by our stockholders. These provisions also may make it more difficult for stockholders to take action
opposed by our board of directors or otherwise adversely affect the rights of holders of our common stock or the market price
of our common stock.

Our amended and restated by-laws designate the state courts of Delaware or, if no such state court has jurisdiction, the
federal court for the District of Delaware, as the sole and exclusive forum for certain types of claims that may be
initiated by our stockholders, which could discourage lawsuits against Aegion and Aegion’s directors and officers.

Our amended and restated by-laws provide that, unless waived by Aegion, the state courts of the State of Delaware or, if no

state court located in the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and
exclusive forum for any claims brought by a stockholder (including a beneficial owner) (i) that are based upon a violation of a
duty by a current or former director, officer or stockholder in such capacity or (ii) as to which the Delaware General
Corporation Law confers jurisdiction upon the Delaware Court of Chancery. This exclusive forum provision may limit the
ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with Aegion or
Aegion’s directors or officers, which may discourage such lawsuits against Aegion and Aegion’s directors and officers.
Alternatively, if a court outside of Delaware were to find this exclusive forum provision inapplicable to, or unenforceable in
respect of, one or more of the specified types of actions or proceedings described above, we could incur additional costs
associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or
results of operations.

We do not intend to pay cash dividends on our common stock in the foreseeable future.

We do not anticipate paying cash dividends on our common stock in the foreseeable future. Our present policy is to retain
earnings to provide for the operation and expansion of our business or for the repurchase of shares of our common stock. Any

payment of cash dividends will depend upon our earnings, financial condition, cash flows, financing agreements and other
factors deemed relevant by our board of directors. Furthermore, under the terms of certain debt arrangements to which we are a
party, we are subject to certain limitations on paying dividends. However, we carefully review this policy regularly and could
initiate dividends in the future depending on appropriate circumstances.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We own our executive offices located in Chesterfield, Missouri, a suburb of St. Louis, at 17988 Edison Avenue. We also

own our research and development and training facilities in Chesterfield.

Insituform Technologies, LCC owns a liner manufacturing facility and a contiguous felt manufacturing facility in

Batesville, Mississippi. Insituform Linings Limited, our United Kingdom manufacturing company, owns certain premises in
Wellingborough, United Kingdom, where its felt liner manufacturing facility is located and leases a facility for its glass liner
manufacturing.

Underground Solutions, our wholly-owned subsidiary, leases office and warehouse space in California and Pennsylvania,

and also leases pipe storage space in North Dakota and South Carolina.

Fyfe Co., our wholly-owned subsidiary, leases an office in San Diego, California.

Corrpro, our wholly-owned subsidiary, owns certain office and warehouse space in Medina, Ohio as well as a

manufacturing and warehouse facility in Sands Springs, Oklahoma. Its subsidiary, Corrpro Canada, Inc., also owns certain
premises in Edmonton, Alberta, Canada used for office and warehouse space. In addition, our Corrpro subsidiary in the United
Kingdom, Corrpro Companies Europe Ltd., owns an office and production facility in Stockton-on-Tees, United Kingdom.

Our wholly-owned subsidiary, United Pipeline Systems, Inc., owns an office and shop facility as well as additional
property in Durango, Colorado. In addition, our wholly-owned Canadian subsidiary, United Pipeline Systems Limited, owns
an operating facility in Edmonton, Alberta, Canada for office space and manufacturing.

Our wholly-owned subsidiary, The Bayou Companies, LLC, owns a pipe yard in New Iberia, Louisiana and leases
approximately 220 acres from the Port of Iberia and other property owners in Louisiana, of which a certain portion has been
subleased to Bayou Wasco Insulation, LLC.

ACS, another wholly-owned subsidiary, owns certain premises in Conroe, Texas that are used as office space and

operational facilities.

Our wholly-owned subsidiary, Aegion Energy Services, leases an office in Irvine, California for its headquarters and also

leases various operational facilities throughout California and Washington.

We own or lease various other operational facilities in the United States, Canada, Europe, Latin America, South America,

Asia-Pacific, Australia, South Africa and the Middle East, and the foregoing facilities are regarded by management as adequate
for the current requirements of our business.

Item 3. 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 4. Mine Safety Disclosure.

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 annual
report on Form 10-K.

Item 4A. Executive Officers of the Registrant.

Our executive officers, and their respective ages and positions with us, are as follows:

Charles R. Gordon
David F. Morris

Michael D. White
Stephen P. Callahan

59
56

45
51

President and Chief Executive Officer
Executive Vice President, Interim Chief Financial Officer, Chief Administrative Officer,
General Counsel and Secretary

Senior Vice President, Chief Accounting Officer and Corporate Controller
Senior Vice President, Human Resources

Charles R. Gordon serves as our President and Chief Executive Officer, a position he has held since October 2014. Mr.
Gordon had been serving as our interim Chief Executive Officer since May 2014 and has served on our Board of Directors
since 2009. Prior to serving as interim Chief Executive Officer of the Company, Mr. Gordon served as Chief Executive Officer
of Natural Systems Utilities, LLC, a distributed water infrastructure company, from February 2014 to May 2014. Prior to
Natural Systems Utilities, LLC, Mr. Gordon was President and Chief Operating Officer of Nuverra Environmental Solutions,
Inc. (a holding company formerly known as Heckmann Corporation that buys and builds companies in the water sector) from
November 2010 until his resignation in October 2013. Mr. Gordon was President and Chief Executive Officer of Siemens
Water Technologies (a business unit of Siemens AG, a world leader in products, systems and services for water and wastewater
treatment for industrial, institutional and municipal customers) from 2008 to 2010. Previously, Mr. Gordon served as Executive
Vice President of the Siemens Water & Wastewater Systems Group from 2005 to 2008 and as Executive Vice President of the
Siemens Water & Wastewater Services and Products Group from 2003 to 2005. His past experience also includes various
management positions with US Filter Corporation and Arrowhead Industrial Water, prior to the acquisition of US Filter
Corporation by the Siemens family of companies in 2004.

David F. Morris serves as our Executive Vice President, Interim Chief Financial Officer, Chief Administrative Officer,
General Counsel and Secretary, a position he has held since November 2017. Mr. Morris served as our Vice President, General
Counsel and Secretary beginning in January 2005 through April 2007, at which time he was promoted to Senior Vice President.
Mr. Morris became our Chief Administrative Officer in August 2007. Mr. Morris was promoted to Executive Vice President in
October 2014. From March 1993 until January 2005, Mr. Morris was an attorney with the law firm of Thompson Coburn LLP,
St. Louis, Missouri, most recently as a partner in its corporate and securities practice areas.

Michael D. White serves as our Senior Vice President, Chief Accounting Officer and Corporate Controller, a position he

has held since April 2017. Mr. White joined Aegion in October 2013 as Vice President and Corporate Controller and was
promoted to Senior Vice President in October 2014. Prior to joining Aegion, he served in various financial leadership positions
in the oil and gas and technology industries, including Chief Accounting Officer for SunGard Energy and Chief Financial
Officer for Baker Energy. Prior to 2001, he was a manager with Ernst & Young, LLP. Mr. White earned a BBA in Accounting
and Finance from the University of Houston and is a Certified Public Accountant and member of the American Institute of
Certified Public Accountants.

Stephen P. Callahan serves as our Senior Vice President, Human Resources, a position he has held since November 2015.

Prior to joining Aegion, Mr. Callahan was Vice President of Corporate and International Human Resources and HRIS at
Peabody Energy from October 2010 until November 2015, where he was responsible for driving global alignment within the
human resources function, HRIS, global mobility, business development support and M&A integration, HR metrics and
analytics and corporate generalist support. Mr. Callahan has over 20 years of global experience working in Romania, India,
France, China, Indonesia, Mongolia, Singapore and the United Kingdom.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.

Our common shares, $.01 par value, are traded on The Nasdaq Global Select Market under the symbol “AEGN”. The
following table sets forth the range of quarterly high and low sales prices for the years ended December 31, 2017 and 2016, as
reported on The Nasdaq Global Select Market. Quotations represent prices between dealers and do not include retail mark-ups,
mark-downs or commissions.

Period
2017

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

2016

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

High

Low

26.68
23.94
24.25
28.19

21.50
21.95
21.00
26.14

21.43
19.16
19.11
19.81

16.00
17.35
17.18
17.85

During the quarter ended December 31, 2017, we did not offer any equity securities that were not registered under the
Securities Act of 1933, as amended. As of February 22, 2018, the number of holders of record of our common stock was 407.

Holders of common stock are entitled to receive dividends as and when they may be declared by our board of directors.

Our present policy is to retain earnings to provide for the operation and expansion of our business. However, our board of
directors will review our dividend policy from time to time and will consider our earnings, financial condition, cash flows,
financing agreements and other relevant factors in making determinations regarding future dividends, if any. Under the terms
of our debt arrangement to which we are a party, we are subject to certain limitations on paying dividends. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Long-Term
Debt” for further discussion of such limitations.

The following table provides information as of December 31, 2017 with respect to the shares of common stock that may be

issued under our existing equity compensation plans:

Equity Compensation Plan Information

Plan Category
Equity compensation plans approved by security holders (1)

Equity compensation plans not approved by security holders

Total

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)

Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)

1,825,535

—

1,825,535

19.71

—

19.71

Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column (a))
(c)

1,619,223

—

1,619,223

_________________________________
(1) The number of securities to be issued upon exercise of granted/awarded options, warrants and rights includes: (i) 126,680 stock options;
(ii) 1,428,878 restricted stock, restricted stock units and restricted performance units; and (iii) 269,977 deferred stock units outstanding
at December 31, 2017.

Issuer Purchases of Equity Securities

The following table provides information regarding repurchases made by us of our common stock during the year ended

December 31, 2017, pursuant to share repurchase programs approved by our board of directors.

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
Purchased Under
the Plans or
Programs

117,029

125,211

220,077

126,448

205,735

171,037

152,479

179,652

154,628

169,497

38,224

51,975

$ 22.92

107,647

37,540,031

22.95

22.49

22.76

19.99

20.67

23.17

20.66

22.25

22.54

25.65

25.38

108,355

150,912

126,400

205,200

169,708

149,100

178,810

150,000

165,100

37,700

50,161

35,054,935

31,627,784

28,751,326

24,649,082

21,140,282

17,682,708

13,988,740

10,645,225

6,924,663

5,956,757

—

1,711,992

$ 22.10

1,599,093

January 2017 (1) (2)

February 2017 (1) (2)

March 2017 (1) (2)
April 2017 (1) (2)
May 2017 (1) (2)
June 2017 (1) (2)
July 2017 (1) (2)

August 2017 (1) (2)

September 2017 (1) (2)

October 2017 (1) (2)

November 2017 (1) (2)

December 2017 (1) (2) (3)

Total

_________________________________
(1) In October 2016, our board of directors authorized the open market repurchase of up to $40.0 million of our common stock to be made
during 2017. We began repurchasing shares under this program in January 2017 and ceased on December 31, 2017 due to expiration of
the program. Once repurchased, we promptly retired the shares.

(2) In connection with approval of our then current 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 and directors. 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 or deferred stock units issued to
employees and directors. During 2017, zero shares were surrendered in connection with stock swap transactions and 112,899 shares
were surrendered in connection with restricted stock and restricted stock 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 or restricted stock units vested or the
stock option was exercised. Once a repurchase is complete, we promptly retire the shares.

(3) In October 2017, our board of directors authorized the open market repurchase of up to $40.0 million of our common stock to be made
during 2018. Any shares repurchased will be pursuant to one or more 10b5-1 plans. The program will expire on the earlier of: (i)
December 31, 2018; (ii) the repurchase by the Company of $40.0 million of common stock pursuant to the program; or (iii) the board of
directors’ termination of the program. On February 27, 2018, we amended our senior secured credit facility, which limits the open
market repurchase of our common stock to be made during 2018 to $30.0 million.

Performance Graph

The following performance graph compares the total stockholder return on our common stock to the S&P 500 Index and a
selected peer group index for the past five years. The compensation committee of our board of directors also reviews data for
this peer group in establishing the compensation of our executive officers. In 2017, the peer group index was comprised of the
following companies:

Actuant Corporation
Barnes Group, Inc.
CIRCOR International, Inc.
Dril-Quip, Inc.
Forum Energy Technologies, Inc.
Granite Construction Incorporated
Helix Energy Solutions Group, Inc.
Kennametal, Inc.
MasTec, Inc.

Matrix Service Company
McDermott International Inc.
Mistras Group, Inc.
Newpark Resources, Inc.
Oil States International Inc.
Team, Inc.
Tetra Tech, Inc.
Valmont Industries, Inc.
Willbros Group, Inc.

The graph assumes that $100 was invested in our common stock and each index on December 31, 2012 and that all

dividends, if any, were reinvested.

Comparison of Five-Year Cumulative Return

Aegion Corporation

S&P 500 Total Returns

Peer Group

2012

2013

2014

2015

2016

2017

$ 100.00

98.65

83.87

87.02

$ 106.80

$ 114.60

100.00

132.39

126.70

150.51

99.40

152.59

73.80

170.84

107.71

208.14

112.04

Notwithstanding anything set forth in any of our previous filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 which might incorporate future filings, including this Annual Report on Form 10-K, in whole or in part, the
preceding performance graph shall not be deemed incorporated by reference into any such filings.

Item 6. Selected Financial Data.

The selected financial data set forth below has been derived from our consolidated financial statements contained in “Item

8. Financial Statements and Supplementary Data” of this Report and previously published historical financial statements not
included in this Report. The selected financial data set forth below should be read in conjunction with “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements,
including the footnotes, contained in this Report.

2017(1)

2016(2)

Years Ended December 31,
2015(3)
(In thousands, except per share amounts)

2014(4)

2013(5)

STATEMENT OF OPERATIONS DATA:
Revenues
Operating income (loss)
Income (loss) from continuing operations (6)
Loss from discontinued operations
Net income (loss) (6)
Basic earnings (loss) per share:

Income (loss) from continuing operations (6)
Loss from discontinued operations
Net income (loss) (6)

Diluted earnings (loss) per share:

Income (loss) from continuing operations (6)
Loss from discontinued operations
Net income (loss) (6)

$ 1,359,019
(43,173)
(69,054)
—
(69,054)

$ 1,221,920
50,826
29,488
—
29,488

$ 1,333,570
19,946
(8,067)
—
(8,067)

$ 1,331,421
(19,812)
(33,320)
(3,847)
(37,167)

$ 1,091,420
66,882
50,812
(6,461)
44,351

(2.08)
—
(2.08)

0.85
—
0.85

0.84
—
0.84

(0.22)
—
(0.22)

(0.88)
(0.10)
(0.98)

1.31
(0.17)
1.14

1.30
(0.17)
1.13

105,717
219,673
587,064
109,040
260,715
132,345
1,107,099
26,555
318,240
602,043
494,246

129,500
172,136
532,237
156,747
298,619
194,911
1,193,582
19,835
350,785
617,399
568,500

BALANCE SHEET DATA:
Cash and cash equivalents
Working capital, net of cash
Current assets (7)
Property, plant and equipment, net
Goodwill
Identified intangible assets, net
Total assets (7)
Current maturities of long-term debt
Long-term debt, less current maturities
Total liabilities (7)
Total stockholders’ equity
_________________________________
(1) 2017 results include charges of $24.0 million related to our restructuring efforts, $86.4 million related to certain goodwill and definite-
lived intangible asset impairments, and $2.9 million in acquisition and divestiture expenses related to our acquisition of Environmental
Techniques and our planned divestiture of Bayou. Results also include tax expenses of $2.4 million related to impacts from the TCJA.
2016 results include charges of $15.9 million related to our restructuring efforts and $2.7 million in acquisition expenses related to our
acquisitions of Underground Solutions, Fyfe Europe, Concrete Solutions, LMJ and diligence on other targets. Results also include a
gain of $6.6 million in connection with the settlement of two longstanding lawsuits.
2015 results include charges of $11.0 million related to our restructuring efforts, $43.5 million related to certain goodwill impairments,
and $1.9 million in acquisition expenses related to our acquisitions of Schultz, Underground Solutions and diligence on other targets.
Results also include $3.4 million related to expenses associated with the Credit Facility and our write-off of unamortized debt issuance
costs from our prior credit facility.

209,253
171,176
678,196
144,833
249,120
174,118
1,254,013
17,648
333,480
659,457
578,025

174,965
198,834
638,122
168,213
293,023
182,273
1,291,133
26,399
346,536
646,048
626,635

158,045
210,858
603,858
182,303
348,680
209,283
1,372,332
22,024
361,530
645,411
709,368

(3)

(2)

(4) 2014 results include charges of $49.5 million related to our restructuring efforts, $52.7 million related to certain goodwill and definite-
lived intangible asset impairments, and $1.4 million in acquisition expenses related to our acquisition of Brinderson and diligence on
other targets. Results also include $4.5 million in proceeds received in connection with the settlement of escrow claims related to the
purchase of Brinderson.

(5) 2013 results include $5.8 million in acquisition expenses related to our acquisition of Brinderson and diligence on other targets.
(6) All periods presented include amounts attributable to Aegion Corporation.
(7) 2014 and 2013 amounts also include certain components of discontinued operations.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

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®. Our products
and services are currently utilized in over 80 countries across six continents. 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.

Business Outlook

We believe favorable end markets and the progress made over the last three years to advance our long-term strategy give
us the opportunity to grow operating income in 2018, which is expected to result in strong earnings per share growth, greater
cash generation and an increase in return on invested capital.

Infrastructure Solutions

One of the most attractive areas for growth is in the rehabilitation of municipal pressure pipelines, primarily in North
America. We have a diverse portfolio of solutions in a highly fragmented and growing North American market. We also have
an attractive market in Asia-Pacific for large-diameter pressure pipe strengthening. We completed a research and development
effort in 2016 that has 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. These enhancements and favorable market conditions support our expectations for strong growth in
North America pressure pipeline rehabilitation activities in 2018.

Similar to investments made in 2017, we will make additional investments in 2018 to expand the use of Insituform® CIPP
in several regions currently underserved by Insituform in the North American wastewater pipeline market. Our objective is to
maintain growth and our leading share in a large and mature market. Outside North America, we are targeting select markets in
Europe for Insituform® CIPP contract installation activities and continuing to pursue a strategy of growing third-party product
sales across the continent. We also plan to grow third-party CIPP sales in several Asian countries.

With favorable end markets, strategic investments and technology enhancements, we expect Infrastructure Solutions in

2018 to grow revenues in the low to mid-single digit range, after a year of strong orders and revenue growth in 2017.
Operating margins will also likely be higher in 2018 than in 2017 due to the expected avoidance of losses incurred in 2017 in
our CIPP businesses in Denmark and Australia and in our FRP business in North America, partially offset by potential increases
in petroleum based inputs and construction labor costs. We are employing continuous improvement processes in our CIPP
manufacturing and operations to partially offset these expected cost headwinds.

Corrosion Protection

For Corrosion Protection, we expect a 10 percent to 15 percent revenue decline in 2018 compared to 2017, reflecting the
lost contribution from the large deepwater project. Excluding the large deepwater project, revenues are projected to increase 15
percent to 20 percent in 2018 compared to 2017.

Nearly 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 plan to continue to promote our new asset integrity management program, which we introduced in
2017, for pipeline corrosion inspections. The 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 inspection services are expected to create a multiplier effect for our other capabilities in direct pipeline
inspections, 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 responded to more customer inquiries for our Tite Liner® lining

pipeline protection system, pipe coatings and insulation for the United States Gulf Coast region and field pipe coatings
domestically and overseas. We are encouraged by the growing customer interest and believe this can lead to a modestly
improved energy market in 2018, especially in North America.

Energy Services

We expect Energy Services to build on the momentum achieved in 2017 after completing the downsizing of its upstream

operations in Central California and the Permian Basin as part of the 2016 Restructuring. The outlook for day-to-day
downstream refinery maintenance remains robust based on long-term contracts and our position as the lead maintenance
provider in 13 out of the 17 refineries on the United States West Coast. We have an effort underway to expand our services to
those customers in mechanical maintenance, turnaround support, electrical and instrumentation maintenance, scaffolding
services and small capital construction activities. We will continue to improve operating efficiencies to maximize margins and
cash generation. The favorable outlook we expect in 2018 supports mid-single digit revenue growth and a 75 basis point to 150
basis point improvement in operating margins compared to 2017.

Acquisitions/Strategic Initiatives/Divestitures

Acquisitions

adding patented Fusible PVC® pipe technology to our pressure pipe rehabilitation portfolio through the acquisition of
Underground Solutions;

ii. expanding our CIPP presence in Europe by acquiring the CIPP contracting operations of Leif M. Jensen A/S

See Note 1 to the consolidated financial statements contained in this Report for additional information and disclosures

regarding our acquisitions.

2017 Restructuring

On July 28, 2017, our board of directors approved a realignment and restructuring plan (the “2017 Restructuring”) 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
our cathodic protection services operation in Canada; and (iv) reduce corporate and other operating costs. These decisions
reflect our: (i) desire to reduce further our exposure in the North American upstream oil and gas markets; (ii) assessment of our
ability to drive sustainable, profitable growth in the non-pipe FRP contracting market in North America; and (iii) assessment of
continuing weak conditions in the Canadian oil and gas markets. During 2017, we also completed a detailed assessment of the
Infrastructure Solutions’ CIPP businesses in Australia and Denmark, which resulted in additional restructuring actions in both
countries.

We expect the 2017 Restructuring to reduce consolidated annual expenses by more than $20 million, primarily through
headcount reductions, office closures and reduced amortization of intangible assets. Approximately $12 million and $4 million
relate to cost reductions expected to be recognized within Infrastructure Solutions and Corrosion Protection, respectively, and
$4 million related to reduced corporate and other costs. Cost reductions are expected to be fully realized in 2018. The
Company reduced headcount by approximately 300 employees as a result of these actions.

Total pre-tax 2017 Restructuring charges recorded during 2017 were $23.7 million ($20.6 million post-tax) and consisted
of employee severance, retention, extension of benefits, employment assistance programs, early lease and contract termination
and other restructuring costs associated with the restructuring efforts described above. We expect to incur additional cash
charges of $5 million to $7 million in 2018. Additionally, as we look to simplify our organizational structure and streamline
our operations to best accommodate the TCJA or for other operational reasons, we could incur both cash and non-cash charges
in 2018 primarily related to the the combination or dissolution of certain of our existing subsidiaries, the creation of new
subsidiaries, and the foreign currency impact from settlement of inter-company loans. These charges are expected to be mainly
in Infrastructure Solutions and, to a lesser extent, Corrosion Protection.

As a result of the above actions to exit all non-pipe related contract applications for the Tyfo® system in North America, we

recorded pre-tax goodwill impairment charges of $45.4 million ($42.2 million post-tax) and pre-tax long-lived asset
impairment charges of $41.0 million ($36.4 million post-tax) related to the Fyfe reporting unit, which is included in the
Infrastructure Solutions reportable segment, in the third quarter of 2017.

2016 Restructuring

During 2016, we completed our 2016 Restructuring, which: (i) repositioned Energy Services’ upstream operations in
California; (ii) reduced Corrosion Protection’s upstream exposure by divesting our interest in Bayou Perma-Pipe Canada, Ltd.
(“BPPC”), our Canadian pipe coating joint venture; (iii) right-sized Corrosion Protection to compete more effectively; and (iv)
reduced corporate and other operating costs. The 2016 Restructuring reduced consolidated annual operating costs by
approximately $17.4 million, of which approximately $1.2 million, $6.6 million and $5.6 million related to recognized savings
within Infrastructure Solutions, Corrosion Protection and Energy Services, respectively, and $4.0 million related to reduced
corporate costs. Cost savings were achieved primarily through office closures and reducing headcount by 964 employees, or
15.5% of our total workforce as of December 31, 2015.

During 2016, we recorded pre-tax charges of $16.1 million ($10.3 million post-tax), most of which were cash charges,
consisting primarily of employee severance, extension of benefits, early lease termination and other costs associated with the
restructuring efforts as described above. We do not expect to incur any future charges related to the 2016 Restructuring.

2014 Restructuring

The 2014 Restructuring reduced consolidated annual operating costs by approximately $10.8 million and consisted of
approximately $8.4 million and $2.4 million of recognized savings within Infrastructure Solutions and Corrosion Protection,
respectively. We achieved these cost savings by exiting certain unprofitable international locations for our CIPP business and
eliminating certain idle facilities in our pipe coating and insulation operation in Louisiana.

We completed all of the aforementioned objectives related to the 2014 Restructuring and do not expect to incur any future
charges. Total headcount reductions were 86 and total pre-tax 2014 Restructuring charges since inception were $60.6 million
($45.0 million post-tax), consisting of non-cash charges totaling $48.3 million and cash charges totaling $12.3 million.

See “Financial Statements and Supplementary Data” in Item 8 of this Report for further discussion regarding our recent
acquisitions and strategic initiatives. See Note 3 to the consolidated financial statements contained in this Report for additional
information on the charges related to our restructuring efforts.

Divestitures – Planned and Completed

Through our restructuring efforts, we have divested, or plan to divest, certain businesses in our Infrastructure Solutions and

Corrosion Protection segments during 2017, 2016 and 2015:

i. On July 28, 2017, as part of the 2017 Restructuring, our board of directors approved a plan to divest our pipe coating
and insulation businesses in Louisiana. We are currently engaged in a process to sell the businesses. As of December
31, 2017, the assets and liabilities of these businesses were classified as held for sale on our consolidated balance
sheet. If we are unable to sell these businesses or if we dispose of them at a price or on terms that are less favorable,
or at a higher cost, than we currently anticipate, we could incur impairment charges or losses on disposal.

ii.

iii. In February 2015, we sold our wholly-owned subsidiary, Video Injection - Insituform SAS (“VII”), our French CIPP

contracting operation, to certain employees of VII.

See Notes 1 and 5 to the consolidated financial statements contained in this Report for additional information and

disclosures regarding our divestitures.

Results of Operations

Overview

Record revenues of $1.36 billion were generated in 2017 primarily due to work performed on a large deepwater project in

our pipe coating and insulation operation within Corrosion Protection and continued expansion of our CIPP business within
Infrastructure Solutions.

While the U.S. oil and gas markets experienced slight improvement in 2017 from customer spending levels in 2016 and
2015, Corrosion Protection continued to experience upstream, and to a lesser extent midstream, market challenges mostly in
our domestic coating services and industrial linings operations as a result of recent and current oil prices. Internationally,
Corrosion Protection benefited from increased coating services and industrial linings project activities primarily in the Middle
East and North America. As part of our restructuring efforts to lower our exposure to the upstream market, we completed the
divestiture of our pipe coating joint venture in Canada in early 2016 and we are engaged in a process to divest Bayou, which is
our domestic pipe coating and insulation operation in New Iberia, Louisiana.

Infrastructure Solutions experienced higher revenues in 2017 compared to 2016 primarily due to continued favorable

market conditions in our CIPP business in North America and acquisitions made in Europe and Asia-Pacific. However,
negative impacts from our FRP business in North America and our CIPP businesses in Australia and Denmark, all of which
were included in our 2017 Restructuring, resulted in an overall decline in profitability in 2017 as compared to 2016 for
Infrastructure Solutions. As part of our 2017 Restructuring, we decided to exit all non-pipe related contract applications for the
Tyfo® system in North America, which resulted in goodwill and long-lived asset impairment charges totaling $86.4 million in
the third quarter of 2017.

Energy Services, which successfully completed its restructuring objectives in 2016 by decreasing its exposure to the

upstream market and lowering its related cost structure, generated improved financial results in 2017 as compared to 2016
primarily due to increased turnaround services activities and cost savings associated with its restructuring efforts.

The TCJA had a negative impact to our effective tax rate in 2017, specifically related to the transition of U.S. international
taxation to a modified territorial tax system, which resulted in a one-time U.S. tax liability on earnings that have not previously
been repatriated to the U.S. However, we expect to benefit from a lower effective tax rate in 2018 as a result of the new
legislation.

Significant Events

2017 Restructuring – As part of the 2017 Restructuring, we recorded pre-tax charges of $23.7 million ($20.6 million post-

tax) during 2017. These charges exclude long-lived asset impairment charges of $86.4 million in 2017 for the Fyfe reporting
unit noted below. Including those charges, total 2017 Restructuring pre-tax charges were $110.1 million ($99.2 million post-
tax) in 2017 (see Notes 2 and 3 to the consolidated financial statements contained in this Report).

2016 Restructuring – As part of the 2016 Restructuring, we recorded pre-tax charges of $16.1 million ($10.3 million post-

tax) during 2016 (see Note 3 to the consolidated financial statements contained in this Report).

2014 Restructuring – As part of the 2014 Restructuring, we recorded pre-tax charges (credits) of $0.2 million ($0.1
million post-tax), $(0.2) million ($(0.1) million post-tax) and $11.0 million ($8.7 million post-tax) during 2017, 2016 and 2015,
respectively (see Note 3 to the consolidated financial statements contained in this Report).

Impairment of goodwill – We recorded pre-tax, non-cash goodwill impairment charges of $45.4 million ($42.2 million

post-tax) and $43.5 million ($35.7 million post-tax) during 2017 and 2015, respectively (see Note 2 to the consolidated
financial statements contained in this Report). These charges were recorded as follows:

Fyfe Reporting Unit – During the third quarter of 2017, we recognized a pre-tax, non-cash charge of $45.4
million. As part of the 2017 Restructuring, we exited all non-pipe related contract applications for the Tyfo® system
in North America, permanently lowering the expected future cash flows of the reporting unit. As a result of this
action, we evaluated the goodwill of our Fyfe reporting unit and determined that a triggering event occurred. The
Fyfe reporting unit is included in the Infrastructure Solutions reportable segment.

Energy Services Reporting Unit – During the fourth quarter of 2015, we recognized a pre-tax, non-cash charge of

$33.5 million. In response to contract losses in the Central California upstream energy market during the fourth
quarter of 2015 and our subsequent decision to reduce exposure to the upstream market, we performed a market
assessment of our energy-related businesses and concluded that sustained low oil prices would continue to create
market challenges for the foreseeable future, including a continued reduction in spending by certain of our customers
in 2016. The loss of contracts, coupled with the decision to downsize, caused us to perform an interim impairment
review of the goodwill and long-lived assets of our operations affected by these circumstances. As a result of the
review, we determined that goodwill was impaired; however, there were no impairment charges related to long-lived
assets. The Energy Services reporting unit is included in the Energy Services reportable segment.

CRTS Reporting Unit – During the fourth quarter of 2015, we recognized a pre-tax, non-cash charge of $10.0
million. In response to customer-driven work delays, work order cancellations and canceled sales opportunities as a
result of declining oil prices, we performed an impairment review for goodwill and long-lived assets at CRTS. We
determined that goodwill was impaired; however, there were no impairment charges related to long-lived assets. The
CRTS reporting unit is included in the Corrosion Protection reportable segment.

Impairment of long-lived assets – During 2017, we recorded pre-tax, non-cash long-lived asset impairment charges of
$41.0 million ($36.4 million post-tax) related to the Fyfe reporting unit (see Note 2 to the consolidated financial statements
contained in this Report). In the third quarter of 2017, as part of our 2017 Restructuring, we determined that the carrying value
of the Fyfe North America asset group exceeded the fair value, which caused us to evaluate the long-lived assets of the asset
group. Based on the results of the valuation, the carrying amount of certain long-lived assets at the Fyfe North America asset
group, such as customer relationships, trademarks and patents, exceeded their fair value.

Legal settlement – In December 2016, we settled two lawsuits related to the December 2012 departure of several key
leaders in sales and operations for the Tyfo® technology, which is part of the Infrastructure Solutions reportable segment.
Under the settlement, we will receive $6.6 million, which was recorded as “Gain on litigation settlement” in the Consolidated
Statement of Operations. The initial $3.6 million cash payment was received in December 2016 and the remainder is to be paid
in $750,000 annual installments over a four-year period, the first installment of which was received in December 2017.

Divestitures – In December 2015, we recognized a loss of $0.6 million related to the sale of our 51% joint venture interest

in BPPC, which transaction closed in February 2016 (see Notes 2 and 5 to the consolidated financial statements contained in
this Report).

See Note 1 to the consolidated financial statements contained in this Report.

Operating Results

(dollars in thousands)

Revenues

Gross profit

Gross profit margin

Operating expenses

Goodwill impairment

Definite-lived intangible
asset impairment

Gain on litigation
settlement

Acquisition and
divestiture expenses

Restructuring and related
charges 1
Operating income (loss)

2017
$ 1,359,019

Years Ended December 31,
2016
$ 1,221,920

2015
$ 1,333,570

284,812

253,164

275,787

21.0 %

20.7%

225,826

45,390

41,032

197,099

—

(6,625)

209,477

43,484

—

2017 vs 2016
Increase (Decrease)

2016 vs 2015
Increase (Decrease)

$
$ 137,099

31,648

N/A

28,727

45,390

41,032

6,625

%
11.2 % $(111,650)
(22,623)
12.5

30bp

14.6

N/M

N/A
(12,378)
(43,484)

—

(6,625)

%
(8.4)%

(8.2)

—bp

(5.9)

N/M

2,923

2,696

1,912

227

8.4

784

41.0

12,814

(43,173)

9,168

50,826

968

19,946

3,646
(93,999)

39.8
(184.9)

8,200

30,880

847.1

154.8

Operating margin

(3.2)%

4.2%

1.5%

N/A

(740)bp

N/A

270bp

Net income (loss)
attributable to Aegion
Corporation

(69,054)

29,488

(8,067)

(98,542)

(334.2)

37,555

465.5

______________________________
1 See Note 3 to the consolidated financial statements contained in this Report for a complete accounting of all charges related to restructuring efforts.
“N/A” represents not applicable.
“N/M” represents not meaningful.

2017 Compared to 2016

Revenues

Revenues increased $137.1 million, or 11.2%, to $1,359.0 million in 2017 compared to $1,221.9 million in 2016. The
increase in revenues was due to a $54.7 million increase in Corrosion Protection, driven by a $53.5 million increase in revenues
from the substantial completion of a large deepwater project in our pipe coating and insulation operation as well as increased
international project activities in our coating services and industrial linings operations, a $41.8 million increase in Energy
Services mainly due to increased turnaround services activities and, to a lesser extent, construction and maintenance services
activities, and a $40.6 million increase in Infrastructure Solutions primarily as a result of increased CIPP contracting
installation services activities in our North American and European operations.

Gross Profit and Gross Profit Margin

Gross profit increased $31.6 million, or 12.5%, to $284.8 million in 2017 compared to $253.2 million in 2016. The

increase in gross profit was primarily due to a $25.0 million increase in Corrosion Protection largely driven by higher revenues,
as discussed above, and a $7.5 million increase in Energy Services generated mainly from increased revenues, improved project
performance and project mix. Partially offsetting the increases in gross profit was a decrease of $0.9 million in Infrastructure
Solutions primarily due to operations included in our 2017 Restructuring which experienced a decline in high-margin revenues
and lower project performance associated with FRP project activity in our North American operation and lower project
performances in CIPP contracting installation services activity in Australia and Denmark within our Asia-Pacific and European
operations, respectively. Substantially offsetting the decrease in gross profit in Infrastructure Solutions was an increase in our
North American operation primarily driven by higher CIPP revenues and an expense of $3.6 million in 2016 related to the
recognition of inventory step up expense associated with the acquisition of Underground Solutions.

Gross profit margin improved 30 basis points to 21.0% in 2017 compared to 20.7% in 2016. The improvement was

primarily due to higher gross profit margin performance in Corrosion Protection driven by higher margin projects and
improved project performance, specifically related to the large deepwater project and international project activities noted
above, and higher gross profit margin in Energy Services resulting from improved project performance, project mix and the
elimination of cost overruns on certain isolated lump sum construction projects associated with the downsizing of our upstream
operation in 2016. Partially offsetting the increases in gross profit margin was a decrease in Infrastructure Solutions primarily
due to lower project performances in CIPP contracting installation services activity in Australia and Denmark within our Asia-
Pacific and European operations, respectively, and in FRP project activity in our North American operation.

Operating Expenses

Operating expenses increased $28.7 million, or 14.6%, to $225.8 million in 2017 compared to $197.1 million in 2016.

Included within operating expenses are restructuring charges totaling $11.0 million and $6.2 million in 2017 and 2016,
respectively. Excluding these charges, operating expenses increased $23.9 million, or 12.5%, to $214.8 million in 2017
compared to $190.9 million in 2016. The increase in operating expenses was primarily due to: (i) an $8.4 million increase in
Infrastructure Solutions, mostly driven by incremental operating expense contributions from acquisitions made in 2017 and
2016 and investments made to hire professional sales and administrative staff to facilitate continued growth in our North
American operation; (ii) a $10.5 million increase in Corrosion Protection mainly due to increased incentive compensation
expense, higher bad debt reserves, gains from sales of fixed assets in 2016 and added sales and administrative support costs;
and (iii) a $5.0 million increase in Energy Services resulting from a $4.1 million decrease in reserves for certain Brinderson
pre-acquisition matters in 2016, increased incentive compensation expense and an increase in general and administrative costs
to support continued growth.

Operating expenses as a percentage of revenues were 16.6% and 16.1% in 2017 and 2016, respectively. Excluding
restructuring charges, operating expenses as a percentage of revenues were 15.8% and 15.6% in 2017 and 2016, respectively.

Consolidated Net Income (Loss)

Consolidated net income (loss) decreased $98.5 million, or (334.2)%, to a consolidated net loss of $69.1 million in 2017,
from consolidated net income of $29.5 million in 2016. Included in consolidated net income (loss) were the following items:
(i) goodwill impairment charges of $45.4 million ($42.2 million post-tax) in 2017; (ii) definite-lived intangible asset
impairment charges of $41.0 million ($36.4 million post-tax) in 2017; (iii) restructuring charges of $24.0 million ($20.8 million
post-tax) and $15.9 million ($10.2 million post-tax) in 2017 and 2016, respectively; (iv) gain on a litigation settlement of $6.6
million ($4.0 million post-tax) in 2016; and (v) acquisition and divestiture expenses of $3.1 million ($2.0 million post-tax) and
$2.7 million ($2.2 million post-tax) in 2017 and 2016, respectively.

Excluding the above items, consolidated net income decreased $5.6 million, or 14.7%, to $32.4 million in 2017 from $37.9
million in 2016. The decrease was due to: (i) lower gross profit primarily from performances in operations that are included in
our 2017 Restructuring within Infrastructure Solutions; (ii) an increase in consolidated operating expenses; (iii) negative
impacts from foreign currency losses; and (iv) higher tax expense primarily due to negative impacts associated with changes in
tax valuation allowances and a $2.4 million charge related to TCJA. Partially offsetting the decreases in consolidated net
income noted above were higher revenues and related gross profit in Corrosion Protection and Energy Services.

2016 Compared to 2015

Revenues

Revenues decreased $111.7 million, or 8.4%, to $1,221.9 million in 2016 compared to $1,333.6 million in 2015. The
decrease in revenues was due to a $90.5 million decline in revenues in Energy Services primarily resulting from our decision in
the first quarter of 2016 to downsize our exposure to the upstream energy market due to the effects of lower oil prices and a
decrease in refinery clean-up, construction and turnaround services activities. Revenues in Corrosion Protection decreased

$36.4 million mainly due to: (i) a decrease in Canadian upstream, and to a lesser extent midstream, project activity attributable
to a decline in client spending on crude oil projects as well as a $25.3 million revenue decline associated with the sale of our
Canadian pipe coating joint venture interest in February 2016; (ii) a decrease in domestic upstream project activity; and (iii) the
completion of certain large international projects performed primarily in 2015 and completed in early 2016. Revenues in
Infrastructure Solutions increased $15.3 million primarily due to our acquisition of Underground Solutions in February 2016
and an increase in CIPP contracting installation services activity in our North American operation, partially offset by decreases
in FRP project activity in our North American operation and international CIPP contracting installation services activity.

Gross Profit and Gross Profit Margin

Gross profit decreased $22.6 million, or 8.2%, to $253.2 million in 2016 compared to $275.8 million in 2015. As part of

our restructuring efforts, we recognized charges totaling $0.3 million and $2.7 million in 2016 and 2015, respectively.
Excluding restructuring charges, gross profit decreased $25.0 million, or 9.0%, to $253.5 million in 2016 compared to $278.5
million in 2015. The decrease in gross profit was primarily due to a $10.0 million decrease in Corrosion Protection and a $14.5
million decrease in Energy Services primarily due to declines in revenues, as noted above, and added costs associated with
certain challenging international projects in Corrosion Protection. Gross profit in Infrastructure Solutions increased $1.8
million largely driven by changes in our North American operation which included increased CIPP contracting installation
services activity and the contribution from Underground Solutions, partially offset by a decline in higher margin, emergency
large diameter FRP pressure pipe project activity.

Gross profit margin remained consistent at 20.7% in 2016 and 2015. Excluding restructuring charges, gross profit margin

declined 20 basis points to 20.7% in 2016 from 20.9% in 2015. Gross profit margin declined primarily due to the negative
impacts from challenging upstream energy market conditions in Corrosion Protection and decreased labor and equipment
utilization in our international CIPP operations in Infrastructure Solutions, partially offset by the higher margin contribution
from Infrastructure Solutions’ Underground Solutions business and improved margins in Energy Services.

Operating Expenses

Operating expenses decreased $12.4 million, or 5.9%, to $197.1 million in 2016 compared to $209.5 million in 2015. We
recognized restructuring charges of $6.2 million and $4.4 million in 2016 and 2015, respectively. In 2015, we recorded a loss
reserve of $2.9 million related to a long-dated accounts receivable in Corrosion Protection and a loss reserve of $2.8 million
related to a legal matter in Infrastructure Solutions. Excluding restructuring charges and noted loss reserves, operating
expenses decreased $8.5 million, or 4.3%, to $190.9 million in 2016 compared to $199.4 million in 2015.

The decrease in operating expenses was primarily due to our restructuring efforts, which generated cost savings mainly in
Energy Services’ upstream operation and Corrosion Protection’s upstream and midstream operations. Included in the decrease
in operating expenses was an offset to operating expenses related to favorable reductions in reserves for certain Brinderson pre-
acquisition matters in Energy Services and a decrease related to the sale of our Canadian pipe coating operation in Corrosion
Protection. Partially offsetting the decrease in operating expenses was an increase in Infrastructure Solutions primarily related
to the acquisition of Underground Solutions.

Operating expenses as a percentage of revenues were 16.1% and 15.7% in 2016 and 2015, respectively. Excluding
restructuring charges and loss reserves noted above, operating expenses as a percentage of revenues were 15.6% and 15.0% in
2016 and 2015, respectively.

Consolidated Net Income (Loss)

Consolidated net income (loss) increased $37.6 million, or 465.5%, to $29.5 million in 2016, from a consolidated net loss
of $8.1 million in 2015. Included in consolidated net income (loss) were the following items: (i) restructuring charges of $15.9
million ($10.2 million post-tax) and $11.0 million ($8.7 million post-tax) in 2016 and 2015, respectively; (ii) goodwill
impairment charges of $43.5 million ($35.7 million post-tax) in 2015; (iii) loss reserves of $2.9 million ($1.1 million post-tax)
in 2015 related to long-dated accounts receivable; (iv) a loss reserve of $2.8 million ($1.7 million post-tax) related to a legal
matter in 2015; (v) gain on a litigation settlement of $6.6 million ($4.0 million post-tax) in 2016; (vi) loss on divestitures of
$0.8 million ($1.4 million post-tax) in 2015; (vii) credit facility arrangement fees of $3.4 million ($2.0 million post-tax) in
2015; and (viii) acquisition and divestiture expenses of $2.7 million ($2.2 million post-tax) and $1.9 million ($4.7 million post-
tax) in 2016 and 2015, respectively.

Excluding the above items, consolidated net income decreased $9.3 million, or 19.7%, to $37.9 million in 2016 from $47.2

million in 2015. This decrease was primarily due to declining revenues and gross profit related to the negative impacts from
the low oil price environment in Energy Services and Corrosion Protection, partially offset by an increase in revenues and gross
profit in Infrastructure Solutions. Operating expenses favorably impacted consolidated net income as a result of operating
expense savings associated with our restructuring efforts and decreases in reserves for certain Brinderson pre-acquisition
matters noted above, partially offset by the operating expense contribution from Underground Solutions. Consolidated net
income in 2016, as compared to 2015, was negatively impacted by an increase in interest expense due to higher borrowing

costs and higher debt balances, but positively benefited from the $4.2 million reversal of a previously recorded valuation
allowance due to changes in the realization of future tax benefits.

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 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 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 and projects where we have been advised that we are the low bidder, but have not formally been awarded the
contract.

The following table summarizes our consolidated backlog by segment (in millions):

Infrastructure Solutions
Corrosion Protection (1)

Energy Services

Total backlog

_________________________________

December 31,

2017

2016

2015

328.9

283.4

155.7

207.8

213.4

192.8

692.4

689.6

311.2

272.5

192.8

776.5

(1) December 31, 2017, 2016 and 2015 included backlog from our large domestic pipe coating and insulation contract of $3.5 million,

$96.8 million and $134.3 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 December 31, 2017, 0.5% and 15.0% 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, however, generally enters into cost reimbursable
contracts that are based on costs incurred at agreed upon contractual rates.

In accordance with industry practice, substantially all of our contracts are subject to cancellation or termination at the

discretion of the customer. In a situation where a customer terminates a contract, we would ordinarily be entitled to receive
payment for work performed up to the date of termination and, in certain circumstances, we may be entitled to allowable
termination and cancellation costs. There were no significant cancellations in 2017.

While management uses all information available to it to determine backlog, our backlog at any given time is subject to

changes in the scope of services to be provided as well as increases or decreases in costs relating to the contracts included
therein. Accordingly, backlog is not necessarily a reliable indicator of future revenues.

Total contract backlog increased $2.8 million, or 0.4%, to $692.4 million at December 31, 2017 from $689.6 million at
December 31, 2016. The increase in backlog was due to several factors, including: (i) robust activity in the North American
CIPP market; (ii) increase attributable to Environmental Techniques, which was acquired in 2017; (iii) sizable contract awards
in Corrosion Protection for onshore and offshore gas field development in the Middle East; and (iv) increased market share on
the West Coast of the United States, primarily California, for our maintenance services activities in Energy Services.
Substantially offsetting these increases in total backlog was a decrease related to work performed during 2017 on the large
domestic pipe coating and insulation contract included in backlog at December 31, 2016 within Corrosion Protection.
Excluding this particular project, backlog at December 31, 2017 increased $96.1 million, or 16.2%, from December 31, 2016.

Consolidated customer orders, net of cancellations (“New Orders”), increased $227.5 million, or 20.0%, to $1,362.3
million in 2017 compared to $1,134.9 million in 2016. New Orders in 2015 were $1,352.1 million and bolstered by the $134
million domestic pipe coating and insulation contract award.

Subject to factors discussed in Item 1A – “Risk Factors”, we estimate that approximately $682.4 million, or 98.6%, of total

backlog at December 31, 2017 will be realized as revenues in 2018.

Segment Results

Infrastructure Solutions Segment

Key financial data for Infrastructure Solutions was as follows:

2017 vs 2016
Increase (Decrease)

2016 vs 2015
Increase (Decrease)

$
$ 40,603
(858)

N/A

16,920

45,390

41,032

6,625

%
7.1 % $ 15,317
(0.6)
(180)bp
18.9

1,786

N/A
(1,451)
—

N/M

—
(6,625)

%
2.8 %

1.3
(40)bp
(1.6)

N/M

(dollars in thousands)

Revenues

Gross profit

Gross profit margin
Operating expenses

Goodwill impairment

Definite-lived intangible asset
impairment

Gain on litigation settlement

Acquisition and divestiture
expenses

Restructuring and related
charges 1
Operating income (loss)

Years Ended December 31,
2016
$ 571,551

2015
$ 556,234

2017
$612,154

140,823

141,681

139,895

23.0 %

24.8%

25.2%

89,477

90,928

—

(6,625)

—

106,397

45,390

41,032

—

651

2,696

1,132

(2,045)

(75.9)

1,564

138.2

Operating margin

(10.1)%

9.4%

8.4%

N/A

9,160

(61,807)

2,630

53,503

968

46,867

6,530
(115,310)

248.3
(215.5)
(1,950)bp

1,662

6,636

N/A

171.7

14.2

100bp

2017 Compared to 2016

Revenues

Revenues in Infrastructure Solutions increased $40.6 million, or 7.1%, to $612.2 million in 2017 compared to $571.6

million in 2016. The increase in revenues was primarily driven by record CIPP revenues in our North American operation.
Revenues also improved as a result of an increase in CIPP contracting installation services activity in our European operation
and FRP project activity in our Asia-Pacific operation, both of which benefited from business acquisitions in the second and
third quarters of 2016, respectively. Partially offsetting the increases in revenues was a decrease in FRP project activity in our
North American operation, specifically associated with non-pressure pipe FRP contracting installation services activity. As part
of our 2017 Restructuring, we are exiting contracting installation services for non-pressure pipe FRP applications within the
North American market.

Gross Profit and Gross Profit Margin

Gross profit in Infrastructure Solutions decreased $0.9 million, or 0.6%, to $140.8 million in 2017 compared to $141.7

million in 2016. Gross profit decreased primarily due to operations included in our 2017 Restructuring, which experienced a
decline in high-margin revenues and lower project performance associated with FRP project activity in our North American
operation and lower project performance in CIPP contracting installation services activity in Australia and Denmark within our
Asia-Pacific and European operations, respectively. Substantially offsetting the decreases in gross profit were increases
primarily driven by higher revenues within our North American operation associated with CIPP contracting installation services
activity, royalty income from a $3.9 million license settlement and an expense of $3.6 million in 2016 related to the recognition
of inventory step-up required in the accounting for business combinations related to the Underground Solutions acquisition in
February 2016.

Gross profit margin declined 180 basis points to 23.0% in 2017 from 24.8% in 2016. Gross profit margin declined

primarily due to the same factors impacting the changes in gross profit, as noted above.

Operating Expenses

Operating expenses in Infrastructure Solutions increased $16.9 million, or 18.9%, to $106.4 million in 2017 compared to

$89.5 million in 2016. As part of our restructuring efforts, we recognized charges totaling $8.8 million and $0.3 million in
2017 and 2016, respectively, related to cost reduction efforts. Excluding restructuring charges, operating expenses increased
$8.4 million, or 9.4%, to $97.6 million in 2017 compared to $89.2 million in 2016. The increase in operating expenses was
primarily due to incremental operating expense contributions from acquisitions in the European CIPP market and the Asia-
Pacific FRP market during 2017 and 2016, as well as the operating expense contribution from the acquisition of Underground
Solutions in the first quarter of 2016. Operating expenses also increased as a result of investments in the hiring of experienced
sales and business development professionals and administrative support costs to facilitate continued growth in our North
American operation.

Operating expenses as a percentage of revenues were 17.4% and 15.7% in 2017 and 2016, respectively. Excluding
restructuring charges, operating expenses as a percentage of revenues were 15.9% and 15.6% in 2017 and 2016, respectively.

Operating Income (Loss) and Operating Margin

Operating income (loss) in Infrastructure Solutions decreased $115.3 million, or 215.5%, to a loss of $61.8 million in 2017

compared to income of $53.5 million in 2016. Operating margin declined 1,950 basis points to (10.1)% in 2017 compared to
9.4% in 2016. Included in operating income (loss) were the following items: (i) goodwill impairment charges of $45.4 million
in 2017; (ii) definite-lived intangible asset impairment charges of $41.0 million in 2017; (iii) restructuring charges of $18.1
million and $2.9 million in 2017 and 2016, respectively, primarily related to severance, extension of benefits, employee
assistance programs, wind-down and other restructuring costs; (iv) acquisition and divestiture related expenses of $0.7 million
and $2.7 million in 2017 and 2016, respectively; (v) inventory step-up expense of $3.6 million associated with the acquisition
of Underground Solutions in 2016; and (vi) gain on litigation settlement of $6.6 million related to our FRP business in North
America in 2016.

Excluding the above items, operating income decreased $12.8 million, or 22.7%, to $43.3 million in 2017 compared to
$56.1 million in 2016 and operating margin declined 270 basis points to 7.1% in 2017 from 9.8% in 2016. Operating income
and operating margin deceased primarily due to poor international CIPP project performances specifically in Australia and
Denmark, declining revenues and lower project performance related to FRP project activity in our North American operation
and higher operating expenses resulting from acquisitions and growth initiatives. Partially offsetting the decreases in operating
income and operating margin were increases mainly driven by higher revenues and related gross profit from our North
American CIPP operation, as discussed above.

2016 Compared to 2015

Revenues

Revenues in Infrastructure Solutions increased $15.3 million, or 2.8%, to $571.6 million in 2016 compared to $556.2
million in 2015. As part of the 2014 Restructuring, we exited certain foreign operations primarily in 2015. Excluding revenues
from restructured operations, revenues in Infrastructure Solutions increased $23.3 million, or 4.3%, in 2016 compared to 2015.
The increase in revenues was primarily driven by the $29.4 million contribution from Underground Solutions, which was
acquired in February 2016, and to-date record CIPP revenues in our North American operation. Revenues in our European
operation increased primarily due to the $4.9 million contribution from LMJ, which was acquired in June 2016. Partially
offsetting the increases in revenues was a decrease in FRP project activity in North America, which included the completion of
a large industrial project that was performed and completed in 2015, and a decrease in CIPP contracting installation services
activity in our Asia-Pacific operation.

Gross Profit and Gross Profit Margin

Gross profit in Infrastructure Solutions increased $1.8 million, or 1.3%, to $141.7 million in 2016 compared to $139.9
million in 2015. We recognized restructuring charges of $0.1 million and $2.7 million in 2016 and 2015, respectively, related
to costs associated with the exiting of certain foreign locations. Excluding restructuring charges, gross profit decreased $0.9
million, or 0.6%, to $141.7 million in 2016 compared to $142.6 million in 2015. The decrease in gross profit was primarily due
to: (i) a decline in emergency, large diameter pressure pipe FRP project activity in our North American operation; (ii) a decline
in CIPP contracting installation services activity, primarily related to project execution, in our Asia-Pacific operation; (iii) a
decline in gross profit primarily due to lower labor and equipment utilization related to CIPP contracting installation services
activity in our European operation; and (iv) an expense of $3.6 million in the first half of 2016 for the recognition of inventory
step up related to the Underground Solutions acquisition. Substantially offsetting the decrease in gross profit were increases in
our North American operation, which included the contribution from Underground Solutions and increased CIPP contracting
installation services activity.

Gross profit margin declined 40 basis points to 24.8% in 2016 from 25.2% in 2015. Excluding restructuring charges, gross
profit margin declined 80 basis points to 24.8% in 2016 from 25.6% in 2015. Gross profit margin declined mainly as a result of
a decline in FRP project activity in our North American operation and, to a lesser extent, lower labor and equipment utilization
related to CIPP project activities in our European and Asia-Pacific operations. Partially offsetting the declines in gross profit
margin were increases related to higher margin project activity in Underground Solutions and greater efficiencies in CIPP
project activity in our North American operation.

Operating Expenses

Operating expenses in Infrastructure Solutions decreased $1.5 million, or 1.6%, to $89.5 million in 2016 compared to
$90.9 million 2015. As part of the 2016 Restructuring, we recognized charges totaling $0.6 million in 2016 related to cost
reduction efforts. As part of the 2014 Restructuring, we recognized expense reversals totaling $0.3 million and charges totaling
$4.4 million in 2016 and 2015, respectively, associated with the exiting of certain foreign locations. In 2015, we recorded a
loss reserve of $2.8 million related to a legal matter. Excluding restructuring charges and the loss reserve related to a legal
matter in 2015, operating expenses increased $5.4 million, or 6.5%, to $89.2 million in 2016 compared to $83.8 million in
2015. The increase in operating expenses was primarily due to the contribution from Underground Solutions since its
acquisition in February 2016 and, to a lesser extent, operating expense contributions related to the acquisitions of LMJ,
Concrete Solutions and Fyfe Europe in 2016. Partially offsetting the increases in operating expenses were decreases related to
cost savings in our FRP and CIPP businesses in our North American operation.

Operating expenses as a percentage of revenues were 15.7% and 16.3% in 2016 and 2015, respectively. Excluding
restructuring charges and the loss reserve noted above, operating expenses as a percentage of revenues were 15.6% and 15.1%
in 2016 and 2015, respectively.

Operating Income and Operating Margin

Operating income in Infrastructure Solutions increased $6.6 million, or 14.2%, to $53.5 million in 2016 compared to $46.9

million in 2015. Operating margin increased 100 basis points to 9.4% in 2016 compared to 8.4% in 2015. Included in
operating income were the following items: (i) gain on litigation settlement of $6.6 million related to our FRP business in North
America in 2016; (ii) restructuring charges of $2.9 million and $8.1 million in 2016 and 2015, respectively, primarily related to
severance, extension of benefits, employee assistance programs, wind-down and other restructuring costs; (iii) inventory step-
up expense of $3.6 million associated with the acquisition of Underground Solutions in 2016; (iv) acquisition-related expenses
of $2.7 million and $1.1 million in 2016 and 2015, respectively; and (v) a loss reserve of $2.8 million related to a legal matter
in 2015.

Excluding the above items, operating income decreased $2.8 million, or 4.7%, to $56.1 million in 2016 compared to $58.8

million in 2015 and operating margin declined 80 basis points to 9.8% in 2016 from 10.6% in 2015. These decreases were
primarily driven by a decline in FRP project activity in our North American operation, a decline in profitability in CIPP project
activity from lower labor and equipment utilization in our European operation and a decline in CIPP contracting installation
services activity mainly due to delays in project timing in our Asia-Pacific operation. Partially offsetting the decreases in
operating income and operating margin were increases primarily related to our North American operation, which benefited
from increased CIPP contracting installation services activity, improved efficiencies and the contribution from Underground
Solutions.

Corrosion Protection Segment

Key financial data for Corrosion Protection was as follows:

(dollars in thousands)

Revenues

Gross profit

Gross profit margin
Operating expenses

Goodwill impairment
Acquisition and divestiture
expenses
Restructuring and related
charges 1
Operating income (loss)

Years Ended December 31,
2016
$ 401,469

2015
$437,921

2017
$ 456,139

108,240

83,269

93,220

23.7%

20.7%

21.3 %

89,877

77,657

—

2,272

3,654

12,437

—

3,803

1,809

84,577

9,957

457

—

(1,771)

2017 vs 2016
Increase (Decrease)

2016 vs 2015
Increase (Decrease)

$
$ 54,670

24,971

N/A

12,220

—

2,272

%
13.6 % $ (36,452)
(9,951)
30.0

300bp
15.7

N/M

%
(8.3 )%
(10.7)

(60)bp
(8.2)

N/M

(202.1)

90bp

N/A
(6,920)
(9,957)

(457)

3,803

3,580

N/A

(149)
10,628

(3.9)

587.5

Operating margin

2.7%

0.5%

(0.4)%

N/A

220bp

2017 Compared to 2016

Revenues

Revenues in Corrosion Protection increased $54.7 million, or 13.6%, to $456.1 million in 2017 compared to $401.5

million in 2016. The increase was primarily due to a $46.2 million increase in revenues in our pipe coating and insulation
operation, which included revenues from the substantial completion of a large deepwater project totaling $93.6 million and
$40.1 million in 2017 and 2016, respectively. Also contributing to the increase in revenues was an increase in international
project activities, primarily in the Middle East and North America, in our coating services and industrial linings operations.
Partially offsetting the increases in revenues was a decline in revenues in our cathodic protection operation, primarily in North
America and Europe, as well as a decline in domestic revenues in our industrial linings operation.

Gross Profit and Gross Profit Margin

Gross profit in Corrosion Protection increased $25.0 million, or 30.0%, to $108.2 million in 2017 compared to $83.3
million in 2016. The increase in gross profit was substantially due to production on a large deepwater project in our pipe
coating and insulation operation and, to a lesser extent, increased gross profit in our coating services operation driven primarily
from project activities in the Middle East and in our industrial linings operation generated primarily from project activities in
several international countries. Partially offsetting the increases in gross profit was a decrease in our cathodic protection
operation resulting from project mix and isolated project performance issues in the United States and weaker oil and gas market
conditions in Canada.

Gross profit margin improved 300 basis points to 23.7% in 2017 from 20.7% in 2016 primarily due to higher margins
generated from a large deepwater project in our pipe coating and insulation operation and higher margin projects performed in
the Middle East in our coating services, industrial linings and cathodic protection operations. Partially offsetting the increases
in gross profit margin was a decline resulting from project mix and isolated project performance issues in the United States in
our cathodic protection operation.

Operating Expenses

Operating expenses in Corrosion Protection increased $12.2 million, or 15.7%, to $89.9 million in 2017 compared to $77.7

million in 2016. As a part of our restructuring efforts, we recognized charges of $2.2 million and $0.5 million in 2017 and
2016, respectively, related to the downsizing of certain midstream and upstream operations. Excluding these restructuring
charges, operating expenses increased $10.5 million, or 13.5%, to $87.6 million in 2017 compared to $77.2 million in 2016.
The increase in operating expenses was primarily due to increased incentive compensation expense, higher bad debt reserves,
gains from sales of fixed assets in 2016 and added sales and administrative support costs.

Operating expenses as a percentage of revenues were 19.7% and 19.3% in 2017 and 2016, respectively. Excluding
restructuring charges, as noted above, operating expenses as a percentage of revenues were 19.2% and 19.2% in 2017 and
2016, respectively.

Operating Income and Operating Margin

Operating income in Corrosion Protection increased $10.6 million, or 587.5%, to $12.4 million in 2017 compared to $1.8

million in 2016. Operating margin improved 220 basis points to 2.7% in 2017 compared to 0.5% in 2016. Included in
operating income were the following items: (i) restructuring charges of $5.9 million and $4.6 million in 2017 and 2016,
respectively, related to employee severance, retention, extension of benefits, employee assistance programs, early lease
termination, wind-down and other restructuring costs; and (ii) acquisition and divestiture related expenses of $2.3 million in
2017 primarily related to the planned sale of our pipe coating and insulation operation.

Excluding restructuring charges and acquisition and divestiture expenses, operating income increased $14.3 million, or
223.6%, to $20.6 million in 2017 compared to $6.4 million in 2016 and operating margin improved 290 basis points to 4.5% in
2017 from 1.6% in 2016. The increases in operating income and operating margin were substantially due to increased gross
profit and related gross profit margin contribution from a large deepwater project in our pipe coating and insulation operation
and, to a lesser extent, increased contribution from international project activities primarily in the Middle East in our coating
services operation, partially offset by a lower contribution from our cathodic protection operation and increased operating
expenses, as noted above.

2016 Compared to 2015

Revenues

Revenues in Corrosion Protection decreased $36.5 million, or 8.3%, to $401.5 million in 2016 compared to $437.9 million

in 2015. The decrease in revenues was primarily due to a $43.2 million decline in revenues generated from our Canadian
operations, which included a $25.3 million decline related to the sale of our Canadian pipe coating and insulation operation in
February 2016, as weak Canadian market conditions negatively impacted our cathodic protection and industrial linings
operations. Also contributing to the decrease in revenues was a decline in project activities in the Middle East primarily in our
cathodic protection and industrial linings operations and the completion of a large coating services project in South America.
Partially offsetting the decreases in revenues were increases primarily due to revenues of $40.1 million in 2016 generated from
a large deepwater project which commenced in 2016 in our pipe coating and insulation operation in Louisiana, increased
project activities in our domestic and European cathodic protection operation and increased project activities in our coating
services operation in the Middle East.

Gross Profit and Gross Profit Margin

Gross profit in Corrosion Protection decreased $10.0 million, or 10.7%, to $83.3 million in 2016 compared to $93.2

million in 2015. As part of our restructuring efforts, we recognized charges of $0.3 million in 2016 related to the downsizing of
certain upstream and midstream operations. Excluding restructuring charges, gross profit decreased $9.7 million, or 10.4%.
The decrease in gross profit was primarily due to a $11.7 million decline in gross profit generated from our Canadian
operations, which included a $4.7 million decline related to the sale of our Canadian pipe coating and insulation operation, as
project activity in Canada declined as noted above. Also contributing to the decrease in gross profit were added costs on
certain challenging coating services projects in the Middle East and a large coating services project in South America
performed mostly in 2015 and completed in early 2016. Partially offsetting the decreases in gross profit were increases
primarily related to production on a large deepwater project in our pipe coating and insulation operation in Louisiana, increased
project activities in our domestic as well as European cathodic protection operation and increased project activities in the
United States in our industrial linings operation. Improved efficiencies resulting from our restructuring efforts in 2016 also led
to higher gross profit generated in our cathodic protection operation.

Gross profit margin declined 60 basis points to 20.7% in 2016 from 21.3% in 2015. Excluding restructuring charges, gross
profit margin declined 50 basis points in 2016 from 2015. The decrease in gross profit margin was primarily due to added costs
on certain coating services projects in the Middle East as well as lower labor and equipment utilization in our Canadian
operations. Partially offsetting the decreases in gross profit margin were increases primarily related to higher margins
generated from a large deepwater project in our pipe coating and insulation operation, higher margin work in our domestic
industrial linings operation and improved efficiencies resulting from our restructuring efforts in 2016 in our cathodic protection
operation.

Operating Expenses

Operating expenses in Corrosion Protection decreased $6.9 million, or 8.2%, to $77.7 million in 2016 compared to $84.6

million in 2015. Excluding restructuring charges of $0.5 million in 2016 and loss reserves of $2.9 million related to long-dated
accounts receivable in 2015, operating expenses decreased $4.5 million, or 5.5%, to $77.2 million in 2016 compared to $81.7
47

million in 2015. The decrease in operating expenses was primarily due to cost savings associated with our restructuring plan
and other controlled spending efforts in a period of declining revenues. Also contributing to the decrease in operating expenses
was a $1.6 million decline in operating expenses related to the sale of our Canadian pipe coating operation.

Operating expenses as a percentage of revenues were 19.3% and 19.3% in 2016 and 2015, respectively. Excluding
restructuring charges in 2016 and the loss reserves in 2015, as noted above, operating expenses as a percentage of revenues
were 19.2% and 18.7% in 2016 and 2015, respectively.

Operating Income (Loss) and Operating Margin

Operating income in Corrosion Protection increased $3.6 million, or 202.1%, to $1.8 million in 2016 compared to a loss of

$1.8 million in 2015. Operating margin improved 90 basis points to 0.5% in 2016 compared to (0.4)% in 2015. Included in
operating income (loss) were the following items: (i) restructuring charges of $4.6 million in 2016 related to employee
severance, retention, extension of benefits, employee assistance programs, wind-down and other restructuring costs; (ii)
goodwill impairment charges of $10.0 million in 2015; (iii) loss reserves of $2.9 million in 2015 related to a long-dated
accounts receivable; and (iv) acquisition and divestiture related expenses of $0.5 million in 2015.

Excluding the above items, operating income decreased $5.2 million, or 44.7%, to $6.4 million in 2016 compared to $11.5

million in 2015 and operating margin declined 100 basis points to 1.6% in 2016 from 2.6% in 2015. These decreases were
mainly due to declining revenues and gross profit, as noted above, partially offset by operating expense savings primarily
generated from cost saving initiatives associated with our restructuring efforts in 2016.

Energy Services Segment

Key financial data for Energy Services was as follows:

(dollars in thousands)

Revenues

Gross profit

Gross profit margin

Operating expenses

Goodwill impairment

Acquisition and divestiture
expenses

Restructuring and related
charges 1
Operating income (loss)

Years Ended December 31,
2016
$248,900

2015
$339,415

2017
$ 290,726

35,749

28,214

42,672

12.3%

11.3 %

12.6 %

29,552

29,965

—

6,197

—

2,735

(4,486)

33,972

33,527

323

—

(25,150)

$
$ 41,826

7,535

N/A
(413)
—

—

(2,735)
10,683

2017 vs 2016
Increase (Decrease)

2016 vs 2015
Increase (Decrease)

%
16.8 % $ (90,515)
(14,458)
26.7

100bp

(1.4)

N/M

238.1

N/A
(4,007)
(33,527)

(323)

2,735

20,664

N/A

(26.7 )%
(33.9)
(130)bp
(11.8)

N/M

(82.2)

560bp

Operating margin

2.1%

(1.8)%

(7.4)%

N/A

390bp

2017 Compared to 2016

Revenues

Revenues in Energy Services increased $41.8 million, or 16.8%, to $290.7 million in 2017 compared to $248.9 million in
2016. The increase was primarily due to turnaround services activity generated from an increase in the number of turnaround
plans performed in 2017 and the related turnaround labor volume, which more than doubled in 2017 compared to 2016. An
increase in construction and maintenance services activities also contributed to the increase in revenues. These increases in
revenues were the result of increased demand from existing customers, coupled with expanded market share from various
customers primarily on the West Coast of the United States.

Gross Profit and Gross Profit Margin

Gross profit in Energy Services increased $7.5 million, or 26.7%, to $35.7 million in 2017 compared to $28.2 million in
2016. The increase in gross profit was primarily due to improved revenues, as noted above, and improved project performance
and project mix in turnaround, construction and maintenance services activities. Also contributing to the increase in gross

profit was the elimination of cost overruns mainly from certain isolated lump sum construction projects in the first half of 2016
associated with the downsizing of our upstream operation in 2016.

Gross profit margin improved 100 basis points to 12.3% in 2017 compared to 11.3% in 2016 primarily due to improved
project performance, project mix and the elimination of cost overruns on certain isolated lump sum construction projects, as
discussed above.

Operating Expenses

Operating expenses in Energy Services decreased $0.4 million, or 1.4%, to $29.6 million in 2017 compared to $30.0

million in 2016. As part of our restructuring efforts, we recognized charges of $5.4 million in 2016 primarily related to
downsizing our upstream operation. Excluding restructuring charges, operating expenses increased $5.0 million, or 20.5%,
primarily due to a $4.1 million decrease in reserves for certain Brinderson pre-acquisition matters in 2016, increased incentive
compensation expense and an increase in general and administrative expenses to support continued growth of the business.

Operating expenses as a percentage of revenues were 10.2% and 12.0% in 2017 and 2016, respectively. Excluding
restructuring charges noted above, operating expenses as a percentage of revenues were 10.2% and 9.9% in 2017 and 2016,
respectively.

Operating Income (Loss) and Operating Margin

Operating income (loss) in Energy Services increased $10.7 million, or 238.1%, to income of $6.2 million in 2017

compared to a loss of $4.5 million in 2016. Operating margin improved 390 basis points to 2.1% in 2017 from (1.8)% in 2016.
Included in operating income (loss) were restructuring charges of $8.2 million in 2016 primarily related to severance, retention,
extension of benefits, employee assistance programs, wind-down, early lease termination and other restructuring costs related
to the downsizing of our upstream operation.

Excluding restructuring charges, operating income increased $2.5 million, or 68.2%, to $6.2 million in 2017 compared to

$3.7 million in 2016 and operating margin improved 60 basis points to 2.1% in 2017 compared to 1.5% in 2016. These
increases were primarily due to higher revenues and related gross profit generated from increased turnaround, construction and
maintenance services activities, partially offset by an increase in operating expenses, as discussed above.

2016 Compared to 2015

Revenues

Revenues in Energy Services decreased $90.5 million, or 26.7%, to $248.9 million in 2016 compared to $339.4 million in

2015. The decrease was substantially due to a decline in revenues of $68.3 million related to upstream projects, located
primarily in Central California and the Permian Basin, with the majority of the decline affecting upstream maintenance services
activity and, to a lesser extent, upstream construction services activity. As part of the 2016 Restructuring, we significantly
reduced our exposure to the upstream energy market in response to challenging upstream energy market conditions. Also
contributing to the decrease in revenues was a decline in maintenance services activity, primarily driven by reduced refinery
clean-up, and a decline in construction and turnaround services activities.

Gross Profit and Gross Profit Margin

Gross profit in Energy Services decreased $14.5 million, or 33.9%, to $28.2 million in 2016 compared to $42.7 million in

2015. The decrease in gross profit was primarily due to declining revenues, as noted above, and cost overruns mainly on
certain isolated lump sum construction projects in the first half of 2016 associated with the downsizing of our upstream
operation.

Gross profit margin declined 130 basis points to 11.3% in 2016 compared to 12.6% in 2015 primarily due to the cost
overruns mentioned above, a decline in higher margin refinery clean-up work as part of maintenance services activity, and a
decline in higher margin construction and turnaround services activities.

Operating Expenses

Operating expenses in Energy Services decreased $4.0 million, or 11.8%, to $30.0 million in 2016 compared to $34.0
million in 2015. Included in operating expenses in 2016 were restructuring charges of $5.4 million primarily related to the
downsizing our upstream operation. Excluding restructuring charges, operating expenses decreased $9.4 million, or 27.8%,
primarily due to controlled spending efforts as well as reserve decreases totaling $4.1 million in 2016 for certain Brinderson
pre-acquisition matters and a $0.7 million expense in 2015 for severance related costs due to organizational leadership changes.

Operating expenses as a percentage of revenues were 12.0% and 10.0% in 2016 and 2015, respectively. Excluding
restructuring charges noted above, operating expenses as a percentage of revenues were 9.9% and 10.0% in 2016 and 2015,
respectively.

Operating Loss and Operating Margin

Operating loss in Energy Services decreased $20.7 million, or 82.2%, to a loss of $4.5 million in 2016 compared to a loss

of $25.2 million in 2015. Operating margin improved 560 basis points to (1.8)% in 2016 from (7.4)% in 2015. Included in
operating loss were the following items: (i) restructuring charges of $8.2 million in 2016 primarily related to severance,
retention, extension of benefits, employee assistance programs, wind-down, early lease termination and other restructuring
costs related to the downsizing of our upstream operation; (ii) goodwill impairment charges of $33.5 million in 2015; and (iii)
acquisition-related expenses of $0.3 million in 2015 related to the purchase of Schultz.

Excluding the above items, operating income decreased $5.0 million, or 57.6%, to $3.7 million in 2016 compared to $8.7
million in 2015 and operating margin declined 110 basis points to 1.5% in 2016 compared to 2.6% in 2015. These decreases
were primarily due to decreases in revenues and related impacts to gross profit and gross profit margins, as noted above,
partially offset by reduced operating expenses resulting from restructuring efforts and a reduction in reserves related to certain
Brinderson pre-acquisition matters.

Other Income (Expense)

Interest Income and Expense

Interest income decreased less than $0.1 million in 2017 compared to 2016. Interest expense increased by $1.0 million to

$16.0 million in 2017 compared to $15.0 million in 2016. Interest expense increased primarily due to rising LIBOR-based
borrowing costs under our Credit Facility, partially offset by reduced outstanding loan principal balances during 2017
compared to 2016.

Interest income decreased less than $0.1 million in 2016 compared to 2015. Interest expense decreased by $1.0 million to

$15.0 million in 2016 compared to $16.0 million in 2015.

During the fourth quarter of 2015, we recognized charges of $3.4 million related to certain arrangement fees associated
with securing our new $650.0 million senior secured credit facility as well as the write-off of previously unamortized deferred
financing costs. Excluding these prior year charges, interest expense increased $2.4 million in 2016 compared to 2015 due to
higher borrowing costs under our new Credit Facility, higher debt balances resulting from the February 2016 acquisition of
Underground Solutions and an increase in amortized loan fees.

Other Income (Expense)

Other expense was $2.2 million in 2017 and primarily consisted of foreign currency transaction losses. Other expense was
$0.7 million in 2016 and primarily consisted of foreign currency transaction losses, partially offset by the release of cumulative
currency translation gains related to disposed entities. Other expense was $2.9 million in 2015 and primarily related to foreign
currency transaction losses, the $2.9 million loss recognized on the sale of Video Injection - Insituform SAS and the $0.6
million loss recognized on the sale of BPPC (both of which are discussed in Note 1 to the consolidated financial statements
contained in this Report), partially offset by income of $0.8 million related to a settlement of escrow claims for the acquisition
of CRTS, Inc. (as discussed in Note 1 to the consolidated financial statements contained in this Report) and the recorded gains
of approximately $0.7 million on the sale of certain assets related to our restructured entities.

Taxes on Income (Loss)

On December 22, 2017, the U.S. government enacted the TCJA. The TCJA includes significant changes to the U.S.

corporate income tax system including: (i) a federal corporate rate reduction from 35% to 21%; (ii) limitations on the
deductibility of interest expense and executive compensation; (iii) creation of new minimum taxes such as the Global
Intangible Low Taxed Income (“GILTI”) tax and the base erosion anti-abuse tax (“BEAT”); and (iv) the transition of U.S.
international taxation from a worldwide tax system to a modified territorial tax system, which will result in a one time U.S. tax
liability on those earnings that have not previously been repatriated to the U.S.

Taxes on income (loss) decreased $1.1 million to $5.0 million in 2017 compared to $6.1 million in 2016. Our effective tax
rate was negative 8.2% and 17.3% in 2017 and 2016, respectively. The effective tax rate in 2017 was unfavorably impacted by
(i) charges associated with the TCJA, which resulted in additional income tax expense of $2.4 million. The expense is
primarily related to the TCJA’s transition tax on previously unremitted earnings of non-U.S. subsidiaries offset by the release of
a deferred tax liability on unremitted foreign earnings; (ii) significant pre-tax charges primarily related to goodwill impairment,
which were not deductible for tax purposes; and (iii) the impact of establishing valuation allowances on deferred tax assets in
jurisdictions where we are unlikely to recognize these benefits.

Taxes on income decreased $3.1 million to $6.1 million in 2016 compared to $9.2 million in 2015. The effective tax rate

in 2016 was positively impacted by: (i) a $4.2 million net benefit, or 11.8% benefit to the effective tax rate, related to

reductions of previously recorded valuation allowances in the U.S., due to changes in the realization of future tax benefits and
deferred tax composition changes; and (ii) a $2.6 million net benefit from foreign tax rate differences primarily related to
earnings from Europe. Partially offsetting these benefits was: (i) a $1.4 million increase in the valuation allowance on certain
net operating losses and deferred tax assets in foreign jurisdictions, primarily Europe; (ii) certain non-deductible tax items
related to the 2016 Restructuring; and (iii) a higher mix of earnings toward U.S. jurisdictions, which generally have higher
statutory tax rates.

The effective tax rate in 2015 was 757.6% and unfavorably impacted by: (i) significant pre-tax charges primarily related to

goodwill impairments, certain of which are not deductible for tax purposes; (ii) U.S. income and foreign withholding taxes on
the repatriation of foreign earnings; and (iii) the impact of establishing valuation allowances on deferred tax assets in
jurisdictions where we are unlikely to recognize these benefits. Partially offsetting these items was a $1.5 million net benefit
from foreign tax rate differences primarily related to earnings from Europe and Canada.

Non-controlling Interests

Income and loss attributable to non-controlling interests was income of $2.8 million in 2017, a loss of $0.3 million in 2016

and income of $0.1 million in 2015. In 2017, income was primarily driven from our joint venture in Louisiana, which
performed a majority of its work on a large deepwater project in our pipe coating and insulation operation.

Liquidity and Capital Resources

Cash and Equivalents

Cash and cash equivalents

Restricted cash

December 31,

2017

2016

(in thousands)

105,717

129,500

1,839

4,892

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. Changes in restricted cash flows are reported in the consolidated statements of cash flows
based on the nature of the restriction.

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, share repurchases and potential acquisitions.

During 2017, capital expenditures were primarily related to growth and maintenance capital associated with the CIPP
operations in Infrastructure Solutions, primarily in the United States and Europe. For 2018, we anticipate that we will spend
approximately $30.0 million to $35.0 million for capital expenditures, which is a similar overall level from that in 2017.
During 2018, we expect a continued level of capital expenditures to support the CIPP growth of our Infrastructure Solutions
business, increased levels to support our Corrosion Protection businesses in the Middle East, and also to expand our domestic
cathodic protection facilities.

Under the terms of our Credit Facility, we are authorized to purchase annually up to $40.0 million of our common stock in

open market transactions (reduced to $30.0 million in 2018 as a result of the February 27, 2018 Credit Facility amendment),
subject to Board of Director authorization. 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 2017, we acquired 1,599,093
shares of our common stock for $35.3 million ($22.10 average price per share) through the open market repurchase program
discussed above. In addition, we repurchased 112,899 shares of our common stock for $2.5 million ($22.15 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. In October 2017, our Board of Directors authorized the open market repurchase of up to $40.0
million of our common stock to be made during 2018. That authorization is now limited to $30.0 million in 2018 due to the
recent amendment to our Credit Facility. Any shares repurchased during 2018 are expected to be funded primarily through
available cash. Once repurchased, we promptly retire such shares.

As part of our 2017 Restructuring, we incurred cash charges of $13.6 million during 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 Canada, right-size our Infrastructure Solutions businesses in Australia and Denmark, and
reduce corporate and other operating costs. We estimate our remaining cash costs in 2018 will be approximately $5 million to
$7 million related to these activities. Additionally, as we look to simplify our organizational structure and streamline our
operations to best accommodate the TCJA or for other operational reasons, we could incur both cash and non-cash charges in
2018 primarily related to the the combination or dissolution of certain of our existing subsidiaries, the creation of new
subsidiaries, and the foreign currency impact from settlement of inter-company loans.

As part of our 2016 Restructuring, we incurred $15.3 million in cash charges during 2016 related to employee severance,

extension of benefits, employment assistance programs and early lease termination and other restructuring costs as we
repositioned our Energy Services’ upstream operations in California, right-sized Corrosion Protection to compete more
effectively, and reduced corporate and other operating costs. We do not expect to incur any future cash costs related to the 2016
Restructuring. These actions reduced consolidated annual operating costs by approximately $17.4 million primarily through
headcount reductions and office closures.

At December 31, 2017, our cash balances were located worldwide for working capital and support needs. Given the

breadth of our international operations, approximately $51.5 million, or 48.7%, of our cash was denominated in currencies
other than the United States dollar as of December 31, 2017. 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. As part of the February 2016 acquisition of Underground Solutions, we repatriated approximately $29.7
million from foreign subsidiaries to assist in funding the transaction, incurring approximately $3.2 million in additional taxes.
This was viewed as a one-time, special-use transaction. As a result of the deemed mandatory repatriation provisions in the
TCJA, we have included an estimated $210.6 million of undistributed earnings in income subject to U.S. tax at reduced tax
rates. The TCJA resulted in certain reassessments of previous indefinite reinvestment assertions with respect to certain
jurisdictions. 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 TCJA; or (iii) earnings that would not result in significant foreign taxes. As a result, we have not recognized a
deferred tax liability on our investment in foreign subsidiaries at December 31, 2017. We continue to refine our provisional
balances under the TCJA and adjustments may be made during the allowed one-year measurement period. The ultimate impact
of the TCJA may differ from the current provisional amounts and the adjustments could be material.

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 costs and estimated earnings in excess of billings. At December 31,
2017, we believed our net accounts receivable and our costs and estimated earnings in excess of billings, 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.

In March 2016, we settled an outstanding project dispute with a client in Infrastructure Solutions. In connection with the

settlement, we agreed to forgo approximately $7.5 million in receivables owed by our client and we agreed to pay an additional
$2.4 million. During April 2016, we paid the settlement amount. The customer receivable, along with the related allowance
for doubtful account, was written off as of March 31, 2016.

Cash Flows from Operations

Cash flows from operating activities provided $66.3 million in 2017 compared to $73.2 million provided in 2016. The
decrease in operating cash flow from 2017 to 2016 was primarily due to lower cash flows related to working capital as a result
of the timing of customer payments. Cash flows during 2017 and 2016 were negatively impacted by $9.4 million and $15.3
million, respectively, in cash payments related to our restructuring activities.

The net losses recorded in 2017 were primarily driven by non-cash charges of $96.5 million related to restructuring,
definite-lived intangible asset impairments and goodwill impairments. Working capital used $10.2 million of cash during 2017

compared to $10.1 million used in 2016. This decrease in cash flow was primarily due to the timing of customer payments on
certain large projects and an overall growth in revenues during 2017 compared to 2016. Days sales outstanding increased by
approximately ten days as of December 31, 2017 compared to December 31, 2016. However, excluding the impacts of the
coating and insulation project activity at our Bayou Louisiana facility, days sales outstanding decreased by five days year over
year, primarily due to stronger collections in all of our Corrosion Protection platform businesses.

Cash flows from operating activities provided $132.0 million in 2015. The decrease in operating cash flow from 2015 to
2016 was primarily due to lower cash-related earnings in 2016 and lower cash flows related to working capital primarily as a
result of the timing of vendor payments. In addition, cash flows during 2016 were also negatively impacted by $15.3 million in
cash charges related to our 2016 Restructuring. Working capital used $10.1 million of cash during 2016 compared to $35.5
million provided in 2015. This decrease was primarily due to significant movements in billings in excess of costs and
estimated earnings and prepaid expenses and other current assets. Our billings in excess of costs and estimated earnings was
$62.7 million at December 31, 2016, a decrease of $24.8 million from December 31, 2015, due primarily to the timing of
billing and advance deposits received on the coating and insulation project noted above. Our prepaid expenses and other
current assets was $51.8 million at December 31, 2016, a decrease of $15.2 million from December 31, 2015, due primarily to
the timing of advance deposits paid to suppliers on the same project described above. Excluding the changes in the line items
described above, the other elements of working capital provided $0.9 million in cash in 2016 primarily due to a focused effort
on accounts receivable management, partially offset by the timing of vendor payments. Days sales outstanding decreased by
approximately five days as of December 31, 2016 compared to December 31, 2015 primarily due to the coating and insulation
project activity stated above and the impact of stronger collections in nearly all operations globally, with particular
improvement in the North American CIPP operation.

Cash Flows from Investing Activities

Cash flows from investing activities used $37.5 million and $127.3 million of cash in 2017 and 2016, respectively. During

2017, we used approximately $8.0 million to acquire Environmental Techniques. During 2016, we used $96.3 million to
acquire Underground Solutions, Fyfe Europe, the CIPP business of LMJ and Concrete Solutions. During 2016, we received
proceeds of $6.6 million, net of cash disposed, from the sale of our interest in our Canadian pipe coating operation. We used
$30.8 million in cash for capital expenditures in 2017 compared to $38.8 million in the prior year. The decrease was primarily
due to $13.5 million in capital expenditures during 2016 related to constructing the new pipe coating and insulation plant in our
Corrosion Protection segment. In 2017 and 2016, $1.0 million and $1.2 million, respectively, of non-cash capital expenditures
were included in accounts payable and accrued expenses. Capital expenditures in 2017 and 2016 were partially offset by $0.7
million and $3.3 million, respectively, in proceeds received from asset disposals.

In 2015, cash flows from investing activities used $39.1 million of cash. We used $29.5 million in cash for capital

expenditures and transferred $3.5 million to restricted cash. Also in 2015, we used $6.7 million to acquire Schultz Mechanical
Contractors.

Cash Flows from Financing Activities

Cash flows from financing activities used $56.4 million during 2017 compared to $25.9 million used in 2016. In 2017 and

2016, we used cash of $37.8 million and $44.5 million, respectively, to repurchase 1.7 million and 2.3 million shares,
respectively, of our common stock through open market purchases and in connection with our equity compensation programs as
discussed in Note 8 to the consolidated financial statements contained in this report. During 2017, we had net borrowings of
$2.0 million from our line of credit to fund domestic working capital needs, and we used cash of $21.6 million to pay down the
principal balance of our term loan. During 2016, we had net borrowings of $36.0 million from our line of credit primarily to
fund our acquisition activity, and we used cash of $17.5 million to pay down the principal balance of our term loan.

During 2015, we amended and restated our $650.0 million credit facility and (i) borrowed $350.0 million on the term loan;

(ii) used cash of $368.8 million to retire the previous credit facility; (iii) used cash of $4.4 million for facility financing fees;
and (iv) made a $26.5 million mandatory prepayment on the balance of our term loan, utilizing $26.0 million from our line of
credit to fund the term loan prepayment. Additionally, we used cash of $27.8 million to repurchase 1.5 million shares of our
common stock.

Long-Term Debt

In October 2015, we entered into our Credit Facility. At December 31, 2017, the Credit Facility consisted of a $300.0

million five-year revolving line of credit and a $350.0 million five-year term loan facility.

Our indebtedness at December 31, 2017 consisted of $308.4 million outstanding from the $350.0 million term loan under
the Credit Facility, $38.0 million on the line of credit under the Credit Facility and $0.9 million of third-party notes and bank
debt. Additionally, we had $7.7 million of debt held by our joint venture partner (representing funds loaned by our joint

venture partner) listed as held for sale at December 31, 2017 related to the planned sale of Bayou. During 2017, we had net
borrowings of $2.0 million on the line of credit for domestic working capital needs.

As of December 31, 2017, we had $30.5 million in letters of credit issued and outstanding under the Credit Facility. Of
such amount, $13.4 million was collateral for the benefit of certain of our insurance carriers and $17.1 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 our 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 the 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.

The Credit Facility is subject to certain financial covenants, including a consolidated financial leverage ratio and

consolidated fixed charge coverage ratio. In conjunction with the amended Credit Facility, as described below and in Note 15
to the consolidated financial statements contained in this Report, these financial covenants were subsequently revised effective
as of December 31, 2017. At December 31, 2017, based upon the amended financial covenants, we had the capacity to borrow
up to $95.3 million of additional debt under our amended Credit Facility. We were in compliance with all covenants at
December 31, 2017 and expect continued compliance for the foreseeable future.

On February 27, 2018, we amended our existing Credit Facility to, among other items: (i) extend the expiration date and

the amortization period for the term loan facility from October 2020 to February 2023; (ii) receive approval for the sale of
Bayou; and (iii) update the defined terms to allow for the add-back of certain charges related to the 2017 Restructuring when
calculating our compliance with the financial covenants. In the event of the sale of Bayou, the net cash proceeds are required
to be applied first against any outstanding borrowings on the revolving line of credit. Additionally, upon any such sale, the
maximum aggregate principal amount of the revolving line of credit will be permanently reduced from $300.0 million to
$275.0 million.

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. We expect cash generated from operations to increase in 2018 due to improved operating income, improved working
capital management initiatives and the cost savings generated through our restructuring efforts.

See Notes 7 and 15 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

We have entered into various contractual obligations and commitments in the course of our ongoing operations and
financing strategies. Contractual obligations are considered to represent known future cash payments that we are required to
make under existing contractual arrangements, such as debt and lease agreements. These obligations may result from both
general financing activities or from commercial arrangements that are directly supported by related revenue-producing
activities. Commercial commitments represent contingent obligations, which become payable only if certain pre-defined
events were to occur, such as funding financial guarantees. See Note 11 to the consolidated financial statements contained in
this Report for further discussion regarding our commitments and contingencies.

The following table provides a summary of our contractual obligations and commercial commitments as of December 31,
2017. This table includes cash obligations related to principal outstanding under existing debt agreements and operating leases
(in thousands):

Cash Obligations (1) (2) (3) (4) (5) (6)

Total

2018

Payments Due by Period
2021

2020

2019

2022

Thereafter

Long-term debt and notes payable

$ 347,312

26,555

28,437

$ 292,320

— $

Interest on long-term debt

Operating leases

32,567

70,283

12,655

21,084

11,327

16,336

8,585

11,652

—

8,148

—

5,245

Total contractual cash obligations

$ 450,162

60,294

56,100

$ 312,557

8,148

5,245

—

7,818

___________________

(1) Cash obligations are not discounted. See Notes 7 and 11 to the consolidated financial statements contained in this Report regarding our

long-term debt and Credit Facility and commitments and contingencies, respectively.

(2) Interest on long-term debt was calculated using the current annualized rate on our long-term debt as discussed in Note 7 to the

consolidated financial statements contained in this Report.

(3) Liabilities related to Financial Accounting Standards Board Accounting Standards Codification 740, Income Taxes, have not been

included in the table above because we are uncertain as to if or when such amounts may be settled. As of December 31, 2017, we had
income tax receivable and income tax payable of $2.3 million and $4.6 million, respectively, recorded on our consolidated balance
sheet.

(4) There were no material purchase commitments at December 31, 2017.
(5) Amounts exclude approximately $5.0 million to $7.0 million of cash charges expected to be incurred in 2018 related to the 2017

Restructuring and estimated charges resulting from the TCJA of $0.8 million in each year between 2018 and 2022, $1.6 million in
2023, $2.1 million in 2024 and $2.7 million in 2025.

(6) See Note 15 to the consolidated financial statements contained in this Report regarding the amended Credit Facility.

Off-Balance Sheet Arrangements

We use various structures for the financing of operating equipment, including borrowings and operating leases. All debt is

presented in the balance sheet. Our future commitments were $450.2 million at December 31, 2017. We have no other off-
balance sheet financing arrangements or commitments. See Note 11 to the consolidated financial statements contained in this
Report regarding commitments and contingencies.

Critical Accounting Policies

Discussion and analysis of our financial condition and results of operations are based upon our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported
amount of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the financial
statement dates. Actual results may differ from these estimates under different assumptions or conditions.

Some accounting policies require the application of significant judgment by management in selecting the appropriate

assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of
uncertainty. We believe that our critical accounting policies are those described below. For a detailed discussion on the
application of these and other accounting policies, see Note 2 to the consolidated financial statements contained in this Report.

Revenue Recognition

We recognize revenues and costs as construction, engineering and installation contracts progress using the percentage-of-

completion method of accounting, which relies on total expected contract revenues and estimated total costs. Under this
method, estimated contract revenues and resulting gross profit margin are recognized based on actual costs incurred to date as a
percentage of total estimated costs. We follow this method since reasonably dependable estimates of the revenues and costs
applicable to various elements of a contract can be made. Since the financial reporting of these contracts depends on estimates,
which are assessed continually during the term of these contracts, recognized revenues and gross profit are subject to revisions
as the contract progresses to completion. Total estimated costs, and thus contract gross profit, are impacted by changes in
productivity, scheduling and the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such
as weather, customer needs, customer delays in providing approvals, labor availability, governmental regulation and politics
also may affect the progress and estimated cost of a project’s completion and thus the timing of revenue recognition and gross
profit. A revision in profit estimates are reflected in the period in which the facts that give rise to the revision become known.
The effects of any changes in estimates are disclosed in the notes to the consolidated financial statements and in the

Management’s Discussion and Analysis section of this Report, if material. When current estimates of total contract costs
indicate that the contract will result in a loss, the projected loss is recognized in full in the period in which the loss becomes
evident. Revenues from change orders, extra work and variations in the scope of work are recognized when it is probable that
they will result in additional contract revenue and when the amount can be reliably estimated. Given the uncertainties
associated with some of our contracts, it is possible for actual costs to vary from estimates previously made. Revisions to
estimates could result in the reversal of revenues and gross profit previously recognized. Approximately 67%, 69%, and 69%
of our revenues were derived from percentage-of-completion accounting in each of the years ended December 31, 2017, 2016
and 2015, respectively.

Revenues from our Energy Services segment are derived mainly from multiple maintenance contracts under multi-year,

long-term Master Service Agreements and alliance contracts, as well as engineering and construction type contracts.
Businesses within Energy Services enter into customer contracts that contain three principal types of pricing provisions: time
and materials, cost plus fixed fee and fixed price. Although the terms of these contracts vary, most are made pursuant to cost
reimbursable contracts on a time and materials basis under which revenues are recorded based on costs incurred at agreed upon
contractual rates. Energy Services also performs services on a cost plus fixed fee basis under which revenues are recorded
based upon costs incurred at agreed upon rates and a proportionate amount of the fixed fee or percentage stipulated in the
contract.

Many of our contracts provide for termination of the contract at the convenience of the customer. If a contract is
terminated prior to completion, we would typically be compensated for progress up to the time of termination and any
termination costs. In addition, many contracts are subject to certain completion schedule requirements with liquidated damages
in the event schedules are not met as the result of circumstances that are within our control. Losses on terminated contracts and
liquidated damages have historically not been significant.

Taxation

We provide 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, 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 our ability to generate future taxable income and, at
times, is dependent on our ability to implement strategic tax initiatives to ensure full utilization of recorded deferred tax assets.
Should we not be able to implement the necessary tax strategies, we 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.

As a result of the TCJA’s reduction in the U.S. corporate income tax rate from 35% to 21%, FASB ASC 740 required us to
remeasure our deferred tax assets and liabilities based on tax rates at which the balances are expected to reverse in the future.
The provisional amount recorded for the remeasurement of our deferred tax balances resulted in no adjustment to tax expense.
The remeasurement of the deferred tax assets gave rise to an additional income tax expense of $5.1 million, which was offset
by an equal reduction in the valuation allowance of $5.1 million. We continue to analyze certain aspects of the TCJA,
including consideration of additional forthcoming technical guidance, which could potentially affect the measurement of these
balances or potentially give rise to new deferred tax amounts.

In accordance with FASB ASC 740, tax benefits from an uncertain tax position may be recognized when it is more likely

than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation
processes, based on the technical merits. In addition, this recognition model includes a measurement attribute that measures the
position as the largest amount of tax that is greater than 50% likely of being realized upon ultimate settlement in accordance
with FASB ASC 740. This interpretation also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition.

We recognize tax liabilities in accordance with FASB ASC 740 and we adjust these liabilities when our judgment changes
as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties,
the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These
differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. While
we believe the resulting tax balances as of December 31, 2017 and 2016 were appropriately accounted for in accordance with
FASB ASC 740, the ultimate outcome of such matters could result in favorable or unfavorable adjustments to our consolidated
financial statements and such adjustments could be material.

In connection with our initial analysis of the impact of the TCJA, we have recorded a provisional estimated net tax expense

of $2.4 million, which consists of a charge of $10.4 million for the deemed mandatory repatriation, and reduced by a $7.1
million release of a deferred tax liability on unremitted foreign earnings and $0.9 million of other TCJA related impacts. On
December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of
56

the Tax Cuts and Jobs Act, (“SAB 118”), directing a taxpayer to consider the impact of the U.S. legislation as “provisional”
when it does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail
to complete the accounting for income tax effects of the TCJA. In accordance with SAB 118, the additional estimated income
tax of $2.4 million represents our best estimate understanding that the provisional amount is subject to further adjustments
under SAB 118. We continue to refine provisional balances, and adjustments may be made under SAB 118 during the
measurement period as a result of future changes in interpretation, issuance of additional regulatory guidance from the U.S.
federal and state tax authorities, or our own assumption changes. All accounting will be completed within the one-year
measurement period allowed under SAB 118. The ultimate impact of the TCJA may differ from the current provisional
amounts and the adjustments could be material.

Purchase Price Accounting

We account for our acquisitions in accordance with FASB ASC 805, Business Combinations. The base cash purchase price

plus the estimated fair value of any non-cash or contingent consideration given for an acquired business is allocated to the
assets acquired (including identified intangible assets) and liabilities assumed based on the estimated fair values of such assets
and liabilities. The excess of the total consideration over the aggregate net fair values assigned is recorded as goodwill.
Contingent consideration, if any, is recognized as a liability as of the acquisition date with subsequent adjustments recorded in
the consolidated statements of operations. Indirect and general expenses related to business combinations are expensed as
incurred.

We typically determine the fair value of tangible and intangible assets acquired in a business combination using

independent valuations that rely on management’s estimates of inputs and assumptions that a market participant would use.
Key assumptions include cash flow projections, growth rates, asset lives, and discount rates based on an analysis of weighted
average cost of capital.

Long-Lived Assets

Property, plant and equipment and other identified intangibles (primarily customer relationships, patents and acquired
technologies, trademarks, licenses and non-compete agreements) are recorded at cost, net of accumulated depreciation and
impairment, and, except for goodwill and certain trademarks, are depreciated or amortized on a straight-line basis over their
estimated useful lives. Changes in circumstances such as technological advances, changes to our business model or changes in
our capital strategy can result in the actual useful lives differing from our estimates. During 2017, no such changes were noted.
If we determine that the useful life of our property, plant and equipment or our identified intangible assets should be changed,
we would depreciate or amortize the net book value in excess of the salvage value over its revised remaining useful life,
thereby increasing or decreasing depreciation or amortization expense.

Long-lived assets, including property, plant and equipment and other intangibles, are reviewed for impairment whenever

events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such impairment
tests are based on a comparison of undiscounted cash flows to the recorded value of the asset. The estimate of cash flow is
based upon, among other things, assumptions about expected future operating performance. Our estimates of undiscounted
cash flow may differ from actual cash flow due to, among other things, technological changes, economic conditions, changes to
our business model or changes in our operating performance. If the sum of the undiscounted cash flows is less than the
carrying value, we recognize an impairment loss, measured as the amount by which the carrying value exceeds the fair value of
the asset.

Impairment Review – 2017

As part of the 2017 Restructuring, which was approved by our board of directors on July 28, 2017, we exited all non-pipe

related contract applications for the Tyfo® system in North America. As a result of this action, we evaluated the long-lived
assets of our Fyfe reporting unit, which caused us to review the financial performance of at-risk asset groups within that
reporting unit in accordance with FASB ASC 360, Property, Plant and Equipment (“FASB ASC 360”). The results of the Fyfe
reporting unit and its related asset groups are reported within the Infrastructure Solutions reportable segment.

The assets of an asset group represent the lowest level for which identifiable cash flows can be determined independent of

other groups of assets and liabilities. The Fyfe North America asset group was the only at-risk asset group reviewed for
impairment. We developed internal forward business plans under the guidance of local and regional leadership to determine the
undiscounted expected future cash flows derived from Fyfe North America’s long-lived assets. Such were based on
management’s best estimates considering the likelihood of various outcomes. Based on the internal projections, we determined
that the sum of the undiscounted expected future cash flows for the Fyfe North America asset group was less than the carrying
value of the assets, and as a result, engaged a third-party valuation firm to assist management in determining the fair value of
long-lived assets for the Fyfe North America asset group.

In order to determine the impairment amount of long-lived assets, we first determined the fair value of each key
component of our long-lived assets for the Fyfe North America asset group. The fair values were derived using various

income-based approaches, which utilize discounted cash flows to evaluate the net earnings attributable to the asset being
measured. Key assumptions used in assessment include the discount rate (based on weighted-average cost of capital), revenue
growth rates, contributory asset charges, customer attrition, income tax rates and working capital needs, which were based on
current market conditions and were consistent with internal management projections.

Based on the results of the valuation, the carrying amount of certain long-lived assets for the Fyfe North America asset

group exceeded the fair value. Accordingly, we recorded impairment charges of $3.4 million to trademarks, $20.8 million to
customer relationships and $16.8 million to patents and acquired technology in the third quarter of 2017. The impairment
charges were recorded to “Definite-lived intangible asset impairment” in the Consolidated Statement of Operations. Property,
plant and equipment was determined to have a carrying value that exceeded fair value; thus, no impairment was recorded.

Impairment Reviews – 2015

As a result of the annual impairment assessment in accordance with FASB ASC 350, Intangibles - Goodwill and Other
(“FASB ASC 350”) as of October 1, 2015, the CRTS reporting unit had a fair value below its carrying value, which caused us
to review the financial performance of at risk asset groups within that reporting unit in accordance with FASB ASC 360. The
results of CRTS are reported within the Corrosion Protection reportable segment.

In response to contract losses in the Central California upstream energy market during the fourth quarter of 2015 and our

subsequent decision to reduce exposure to the upstream market, we performed a market assessment of our energy-related
businesses and concluded that sustained low oil prices would continue to create market challenges for the foreseeable future,
including a continued reduction in spending by certain of our customers in 2016. The loss of the contracts, coupled with the
decision to downsize, caused us to review the financial performance of at risk asset groups within the reporting unit. The
results of Energy Services are reported within the Energy Services reportable segment.

The assets of each asset group represent the lowest level for which identifiable cash flows can be determined independent
of other groups of assets and liabilities. We developed internal forward business plans under the guidance of local and regional
leadership to determine the undiscounted expected future cash flows derived from each of the at risk asset groups’ long-lived
assets. Such were based on our best estimates considering the likelihood of various outcomes. Based on the internal
projections, we determined that the undiscounted expected future cash flows for all of the identified at risk asset groups
exceeded the carrying value of the assets, and as such, no impairment to recorded long-lived assets was required.

The fair value estimates described above were determined using observable inputs and significant unobservable inputs,

which are based on level 3 inputs as defined in Note 12.

Goodwill

Under FASB ASC 350, we assess recoverability of goodwill on an annual basis or when events or changes in

circumstances indicate that the carrying amount of goodwill may not be recoverable. An impairment charge will be recognized
to the extent that the fair value of a reporting unit is less than its carrying value. Factors that could potentially trigger an
impairment review include (but are not limited to):

•

•
•

•

significant underperformance of a segment relative to expected, historical or forecasted operating results;

significant negative industry or economic trends;

significant changes in the strategy for a segment including extended slowdowns in the segment’s market;
a decrease in market capitalization below our book value; and

a significant change in regulations.

Whether during the annual impairment assessment or during a trigger-based impairment review, we determine the fair
value of our reporting units and compare such fair value to the carrying value of those reporting units to determine if there are
any indications of goodwill impairment.

Fair value of reporting units is determined using a combination of two valuation methods: a market approach and an
income approach with each method given equal weight in determining the fair value assigned to each reporting unit. Absent an
indication of fair value from a potential buyer or similar specific transaction, we believe the use of these two methods provides
a reasonable estimate of a reporting unit’s fair value. Assumptions common to both methods are operating plans and economic
outlooks, which are used to forecast future revenues, earnings and after-tax cash flows for each reporting unit. These
assumptions are applied consistently for both methods.

The market approach estimates fair value by first determining earnings before interest, taxes, depreciation and amortization

(“EBITDA”) multiples for comparable publicly-traded companies with similar characteristics of the reporting unit. The
EBITDA multiples for comparable companies are based upon current enterprise value. The enterprise value is based upon
current market capitalization and includes a control premium. We believe this approach is appropriate because it provides a fair
value estimate using multiples from entities with operations and economic characteristics comparable to its reporting units.

The income approach is based on forecasted future (debt-free) cash flows that are discounted to present value using factors

that consider timing and risk of future cash flows. We believe this approach is appropriate because it provides a fair value
estimate based upon the reporting unit’s expected long-term operating cash flow performance. Discounted cash flow
projections are based on financial forecasts developed from operating plans and economic outlooks, growth rates, estimates of
future expected changes in operating margins, terminal value growth rates, future capital expenditures and changes in working
capital requirements. Estimates of discounted cash flows may differ from actual cash flows due to, among other things,
changes in economic conditions, changes to business models, changes in our weighted average cost of capital, or changes in
operating performance.

The discount rate applied to the estimated future cash flows is one of the most significant assumptions utilized under the
income approach. We determine the appropriate discount rate for each of its reporting units based on the weighted average cost
of capital (“WACC”) for each individual reporting unit. The WACC takes into account both the pre-tax cost of debt and cost of
equity (including the risk-free rate on twenty year U.S. Treasury bonds), and certain other company-specific and market-based
factors. As each reporting unit has a different risk profile based on the nature of its operations, the WACC for each reporting
unit is adjusted, as appropriate, to account for company-specific risks. Accordingly, the WACC for each reporting unit may
differ.

Impairment Review – Third Quarter 2017

As part of the 2017 Restructuring, which was approved by our board of directors on July 28, 2017, we exited all non-pipe
related contract applications for the Tyfo® system in North America. As a result of this action, we evaluated the goodwill of our
Fyfe reporting unit and determined that a triggering event occurred. As such, we engaged a third-party valuation firm to assist
management in performing a goodwill impairment review for our Fyfe reporting unit during the third quarter of 2017. In
accordance with the provisions of FASB ASC 350, we determined the fair value of the reporting unit and compared such fair
value to the carrying value of the reporting unit. For the Fyfe reporting unit, carrying value, as adjusted for the long-lived asset
impairments discussed previously, exceeded fair value by approximately 45%.

Despite our recent investments in sales resources to drive growth in North America, FRP technology has become more

widely accepted and more contractors have become proficient with installation, which has begun to commoditize the
application of the Tyfo® system during construction in the North American civil structure market. As a result of this and other
factors, we decided to exit all non-pipe related contract applications for the Tyfo® system in North America. We are now
focused on using our expertise in FRP technologies to promote third-party product sales, continuing pipe-related FRP
installations and providing technical engineering support in the civil structural market in North America. The FRP operation in
Asia remains largely unchanged as market conditions remain favorable.

Our decision, as noted above, permanently lowered the expected future cash flows of the reporting unit. As a result, the
values derived from both the income approach and the market approach decreased from the October 1, 2016 annual goodwill
impairment analysis. The fair value for the Fyfe reporting unit decreased $105.2 million, or 65.3%, from the previous analysis.
The impairment analysis assumed a weighted average cost of capital of 17.0%, which is higher than the 16.0% utilized in the
October 1, 2016 review, primarily due to rising risk-free rates on twenty-year U.S. Treasury bonds. The company-specific
factors influencing discount rates remained consistent in both analyses. The impairment analysis also assumed a long-term
growth rate of 2.5%, which was reduced from 3.5% used in the October 1, 2016 review. This change reflects our expectations
for future annual revenue growth, which were lowered from 10.8% in the previous analysis to 4.0%, primarily due to the
downsizing of the North American operations. Expected gross margins were consistent between both analyses.

As of January 1, 2017, we adopted FASB Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill

Impairment, which states that an impairment charge should be recognized for the amount by which the carrying amount
exceeds the reporting unit’s fair value. Based on the impairment analysis, we determined that recorded goodwill at the Fyfe
reporting unit was impaired by $45.4 million, which was recorded to “Goodwill impairment” in the Consolidated Statement of
Operations during the third quarter of 2017. As of December 31, 2017, we had remaining Fyfe goodwill of $9.6 million.
Projected cash flows were based, in part, on the ability to grow third-party product sales and pressure pipe contracting in North
America, and maintaining a presence in other international markets. If these assumptions do not materialize in a manner
consistent with our expectations, there is risk of additional impairment to recorded goodwill.

Annual Impairment Assessment – October 1, 2017

We had seven reporting units for purposes of assessing goodwill at October 1, 2017 as follows: Municipal Pipe
Rehabilitation, Fyfe, Corrpro, United Pipeline Systems, Bayou, Coating Services and Energy Services. During 2017, we
acquired Environmental Techniques (see Note 1 to the consolidated financial statements contained in this Report) and
integrated it into the Municipal Pipe Rehabilitation reporting unit.

Significant assumptions used in our October 1, 2017 goodwill review included: (i) discount rates ranging from 12.0% to

17.0%; (ii) compound annual growth rates for revenues generally ranging from 1.4% to 5.8%; (iii) gross margin stability or

slight improvement in the short term related to certain reporting units affected by the 2017 Restructuring, but sustained or
slightly increased gross margins long term; (iv) peer group EBITDA multiples; and (v) terminal values for each reporting unit
using a long-term growth rate of 1.0% to 3.0%. If actual results differ from estimates used in these calculations, we could incur
future impairment charges.

During the assessment of our reporting units’ fair values in relation to their respective carrying values, no reporting units
had a fair value below carrying value and only one reporting unit had a fair value within 10% percent of its carrying value. The
reporting unit with a fair value within 10% of its carrying value was the Fyfe reporting unit, which recorded goodwill
impairment and adjusted its carrying value to fair value during the third quarter of 2017 as discussed above.

Annual Impairment Assessment – October 1, 2015

As a result of the annual impairment assessment in accordance with FASB ASC 350, the CRTS reporting unit had a fair
value less than its carrying value. Long-term expectations for the CRTS businesses remained low due to continued uncertainty
in the upstream oil markets, which caused customer-driven delays in the more profitable international offshore pipeline market
and delayed or canceled sales opportunities in certain North American markets. CRTS secured sizable project wins during
2014 and 2015; however, most were situated in international onshore and mining markets, which typically offer lower margin
profiles. As a result of failing Step 1, we performed Step 2 procedures, which compares the carrying value of goodwill to its
implied fair value. Based on this analysis, we determined that recorded goodwill at CRTS was impaired by $10.0 million,
which was recorded to “Goodwill impairment” in the Consolidated Statement of Operations in the fourth quarter of 2015. As
of December 31, 2015, we had remaining CRTS goodwill of $4.4 million. Projected cash flows were based, in part, on
maintaining a presence in the higher-margin, international offshore pipeline market and our ability to expand its technology to
other applications.

Impairment Review – December 31, 2015

In response to contract losses in the Central California upstream energy market during the fourth quarter of 2015 and our

subsequent decision to reduce exposure to the upstream market, we performed a market assessment of our energy-related
businesses and concluded that sustained low oil prices would continue to create market challenges for the foreseeable future,
including a continued reduction in spending by certain of our customers in 2016. The loss of the contracts, coupled with the
decision to downsize, caused us to review the goodwill of our operations affected by these circumstances and determined that a
triggering event had occurred. As such, we performed an interim goodwill impairment review for our Energy Services
reporting unit as of December 31, 2015.

In accordance with the provisions of FASB ASC 350, we determined the fair value of the affected reporting unit and it was

found to be less than the carrying value. As a result of failing Step 1, we performed Step 2 procedures, which compares the
carrying value of goodwill to its implied fair value. Based on this analysis, we determined that recorded goodwill at Energy
Services was impaired by $33.5 million, which was recorded to “Goodwill impairment” in the Consolidated Statement of
Operations in the fourth quarter of 2015. As of December 31, 2015, Energy Services had remaining goodwill of $46.7 million.
Projected cash flows were based on maintaining a smaller but profitable presence in the upstream energy market and continued
strength in the Central California downstream energy market. Also included in the projected cash flows were certain cost
savings expected to be achieved through the 2016 Restructuring.

See Note 6 to the consolidated financial statements contained in this Report for a reconciliation of the beginning and

ending balances of goodwill.

Accounting Standards Updates

See Note 2 to the consolidated financial statements contained in this Report.

Item 7A. 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 December 31, 2017 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 December 31, 2017 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 Credit Facility.

At December 31, 2017, the estimated fair value of our long-term debt was approximately $356.0 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
December 31, 2017 would result in a $1.0 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 December 31, 2017, a substantial portion of our cash and cash
equivalents was denominated in foreign currencies, and a hypothetical 10.0% change in currency exchange rates could result in
an approximate $12.2 million impact to our equity through accumulated other comprehensive 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
December 31, 2017, there were no material foreign currency hedge instruments outstanding. See Note 12 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, iron ore, 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 FRP

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.

Iron ore inventory balances are managed according to our anticipated volume of concrete weight coating projects. We

obtain the majority of our iron ore from a limited number of suppliers, and pricing can be volatile. Iron ore is typically
purchased near the start of each project. Concrete weight coating revenue accounts for a small percentage of our overall
revenues.

Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016 and 2015

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015

Consolidated Balance Sheets at December 31, 2017 and 2016

Consolidated Statements of Equity for the Years Ended December 31, 2017, 2016 and 2015

Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015

Notes to Consolidated Financial Statements

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act Rule 13a-15(f).

Under the supervision and with the participation of Company management, including the Chief Executive Officer (the principal
executive officer) and the Chief Financial Officer (the principal financial officer), an evaluation was performed of the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. In performing this
evaluation, management employed the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control – Integrated Framework (2013).

Based on the criteria set forth in Internal Control – Integrated Framework (2013), management, including the Company’s
Chief Executive Officer and its Chief Financial Officer, has concluded that the Company’s internal control over financial
reporting was effective as of December 31, 2017.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears herein.

/s/ Charles R. Gordon
Charles R. Gordon
President and Chief Executive Officer
(Principal Executive Officer)

/s/ David F. Morris
David F. Morris
Executive Vice President, General Counsel and
Interim Chief Financial Officer
(Principal Financial Officer)

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Aegion Corporation:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Aegion Corporation and its subsidiaries as of December 31, 2017
and 2016, and the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three
years in the period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial
statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the
Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of
the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Saint Louis, Missouri
March 1, 2018

We have served as the Company’s auditor since 2002.

AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

Revenues

Cost of revenues
Gross profit

Operating expenses

Goodwill impairment

Definite-lived intangible asset impairment

Gain on litigation settlement

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

Years Ended December 31,

2017

2016

2015

1,359,019

1,221,920

1,333,570

1,074,207

284,812

225,826

45,390

41,032

—

2,923

12,814
(43,173)

(16,001)
145
(2,201)
(18,057)
(61,230)
5,005
(66,235)
(2,819)
(69,054) $

968,756

253,164

197,099

—

—
(6,625)
2,696

9,168

50,826

(15,029)
166
(694)
(15,557)
35,269

6,109

29,160

328

29,488

1,057,783

275,787

209,477

43,484

—

1,912

968

19,946

(16,044)
218
(2,905)
(18,731)
1,215

9,205
(7,990)
(77)
(8,067)

(2.08) $
(2.08) $

0.85

0.84

(0.22)
(0.22)

The accompanying notes are an integral part of the consolidated financial statements.

AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

Years Ended December 31,

2017
(66,235) $

2016

2015

29,160

(7,990)

19,390

1,402

93
(45,350)
(3,040)
(48,390) $

(6,343)
746
(8)
23,555

294

23,849

(25,379)
279

145
(32,945)
1,686
(31,259)

Net income (loss)
Other comprehensive income (loss):

Currency translation adjustments
Deferred gain 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 $930, $496 and $187 for the years ended December 31, 2017, 2016 and 2015, respectively.
(2) Amounts presented net of tax of $22, $(2) and $37 for the years ended December 31, 2017, 2016, and 2015, respectively.

The accompanying notes are an integral part of the consolidated financial statements.

AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

Assets

Current assets

Cash and cash equivalents
Restricted cash
Receivables, net of allowances of $5,775 and $6,098, respectively
Retainage
Costs and estimated earnings in excess of billings
Inventories
Prepaid expenses and other current assets
Assets held for sale
Total current assets

Property, plant & equipment, less accumulated depreciation

Other assets
Goodwill
Identified intangible assets, less accumulated amortization
Deferred income tax assets
Other assets

Total other assets

Total Assets

Liabilities and Equity
Current liabilities
Accounts payable
Accrued expenses
Billings in excess of costs and estimated earnings
Current maturities of long-term debt
Liabilities held for sale
Total current liabilities
Long-term debt, less current maturities
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
32,462,542 and 33,956,304, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss

Total stockholders’ equity
Non-controlling interests

Total equity

Total Liabilities and Equity

December 31,

2017

2016

105,717
1,839
201,570
33,002
75,371
63,969
35,282
70,314
587,064
109,040

260,715
132,345
1,666
16,269
410,995
1,107,099

70,611
92,011
51,597
26,555
20,900
261,674
318,240
9,211
12,918
602,043

129,500
4,892
186,016
33,643
62,401
63,953
51,832
—
532,237
156,747

298,619
194,911
1,848
9,220
504,598
1,193,582

63,058
85,010
62,698
19,835
—
230,601
350,785
23,339
12,674
617,399

—

325
140,749
386,008
(32,836)
494,246
10,810
505,056
1,107,099

340
166,598
455,062
(53,500)
568,500
7,683
576,183
1,193,582

The accompanying notes are an integral part of the consolidated financial statements.

AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except number of shares)

BALANCE, December 31, 2014

37,360,515

374

217,289

433,641

(24,669) $

18,450

645,085

Common Stock

Amount

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Non-
Controlling
Interests

Total
Equity

Net income (loss)
Issuance of common stock upon stock
option exercises, including tax benefit
Issuance of shares pursuant to restricted
stock units
Issuance of shares pursuant to deferred
stock unit awards
Forfeitures of restricted shares
Shares repurchased and retired
Equity-based compensation expense
Investment by non-controlling interests
Purchase of non-controlling interests
Currency translation adjustment and
derivative transactions, net

—

209,205

12,646

27,779

(54,045)

(1,502,601)

—

(1)

(14)

—

(8,067)

2,464

—

(27,789)

7,987

—

239

(472)

(7,990)

2,466

—

(1)

(27,803)

7,987

239

(472)

(23,192)

(1,763)

(24,955)

BALANCE, December 31, 2015

36,053,499

361

199,951

425,574

(47,861) $

16,531

594,556

—

29,488

—

114,307

141,507

39,660

(42,775)

—

1,817

—

Shares repurchased and retired

(2,349,894)

(23)

(44,431)

Equity-based compensation expense

Sale of non-controlling interest

Distributions to non-controlling interests
Currency translation adjustment and
derivative transactions, net

—

9,261

—

(328)

29,160

—

(7,278)

(1,276)

1,818

—

(44,454)

9,261

(7,278)

(1,276)

(5,639)

(5,605)

BALANCE, December 31, 2016

33,956,304

340

166,598

455,062

(53,500) $

7,683

576,183

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 unit awards
Forfeitures of restricted shares
Shares repurchased and retired
Equity-based compensation expense
Investments from non-controlling interest
Distributions to non-controlling interests
Currency translation adjustment and
derivative transactions, net

—

43,573

95,510

49,672

30,559

(1,084)

—

822

—

(1,711,992)

(16)

(37,833)

—

11,162

—

(69,054)

—

20,664

2,819

(66,235)

—

158

(71)

221

822

—

(37,849)

11,162

158

(71)

20,885

BALANCE, December 31, 2017

32,462,542

325

140,749

386,008

(32,836) $

10,810

505,056

The accompanying notes are an integral part of the consolidated financial statements.
68

AEGION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

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

Non-cash portion of litigation settlement

Definite-lived intangible asset impairment

Goodwill impairment
Debt issuance costs

Loss on sale of businesses

Loss on foreign currency transactions

Other

Changes in operating assets and liabilities (net of acquisitions):

Restricted cash related to operating activities

Receivables net, retainage and costs and estimated earnings in excess of billings

Inventories

Prepaid expenses and other assets

Accounts payable and accrued expenses

Billings in excess of costs and estimated earnings

Other operating

Net cash provided by operating activities

Cash flows from investing activities:

Capital expenditures

Proceeds from sale of fixed assets

Patent expenditures

Restricted cash related to investing activities

Purchase of Underground Solutions, Inc., net of cash acquired

Other acquisition activity, net of cash acquired

Sale of interest in Bayou Perma-Pipe Canada, Ltd., net of cash disposed

Payment to Fyfe Asia sellers for final net working capital

Net cash used in investing activities

Years Ended December 31,

2017

2016

2015

(66,235) $

29,160

(7,990)

44,419
(59)
11,162
(9,376)
10,080

—

41,032

45,390
—

—

2,152
(1,562)

1,258
(29,847)
(1,926)
8,732

18,803
(5,924)
(1,798)
66,301

(30,830)
707
(379)
2,000

—
(9,045)
—

—
(37,547)

46,719
(1,916)
9,261

1,772

300
(3,000)
—

—
—

—

911
(1,044)

2,055

52,774
(2,569)
16,759
(49,259)
(27,761)
(946)
73,216

(38,760)
3,310
(1,043)
(1,086)
(84,740)
(11,567)
6,599

—
(127,287)

43,791
(929)
7,987

924

1,816

—

43,484
3,377

3,414

80
(168)

(382)
12,283

6,984
(28,895)
(582)
45,700

1,129

132,023

(29,454)
3,173
(1,503)
(3,538)
—
(6,662)

—
(1,098)
(39,082)

Cash flows from financing activities:

Proceeds from issuance of common stock upon stock option exercises, including
tax effects

823

1,818

2,466

Repurchase of common stock

Investments from non-controlling interest

Sale of non-controlling interest

Purchase of or distributions to non-controlling interests

Payment of contingent consideration

Credit facility financing fees

Proceeds from (payments on) notes payable, net

Proceeds from (payments on) line of credit, net

Proceeds from long-term debt

Principal payments on long-term debt

Net cash used in financing activities
Effect of exchange rate changes on cash

Net increase (decrease) in cash and cash equivalents for the year
Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Cash and cash equivalents associated with assets held for sale, end of year

Cash and cash equivalents, end of year

Supplemental disclosures of cash flow information:
Cash paid (received) for:

Interest

Income taxes

(37,849)
158

—
(71)
(500)
—

639

2,000

—
(21,647)
(56,447)
4,899
(22,794)
129,500

106,706
(989)
$ 105,717

(44,454)
—

—
(1,276)
(500)
—

—

36,000

—
(17,500)
(25,912)
(2,213)
(82,196)
211,696

129,500

—

$ 129,500

(27,804)
—

239
(472)
(684)
(4,360)
(370)
(45,500)
350,000
(323,750)
(50,235)
(5,975)
36,731
174,965

211,696
(2,443)
$ 209,253

14,998

5,649

11,118
(517)

9,873

8,753

The accompanying notes are an integral part of the consolidated financial statements.

AEGION CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

Aegion Corporation combines innovative technologies with market leading expertise to maintain, rehabilitate and
strengthen pipelines and other infrastructure around the world. Since 1971, the Company has played a pioneering role in
finding transformational solutions to rehabilitate aging infrastructure, primarily pipelines in the wastewater, water, energy,
mining and refining industries. The Company also maintains the efficient operation of refineries and other industrial facilities
and provide innovative solutions for the strengthening of buildings, bridges and other structures. Aegion is committed to
Stronger. Safer. Infrastructure®. The Company’s products and services are currently utilized and performed in over 80
countries across six continents. The Company believes that the depth and breadth of its products and services platform make
Aegion a leading “one-stop” provider for the world’s infrastructure rehabilitation and protection needs.

The Company is primarily built on the premise that it is possible to use technology to extend the structural design life and

maintain, if not improve, the performance of infrastructure, mostly pipe. The Company is proving that this expertise can be
applied in a variety of markets to protect pipelines in oil, gas, mining, wastewater and water applications and extending this to
the rehabilitation and maintenance of commercial structures and the provision of professional services in energy-related
industries. Many types of infrastructure must be protected from the corrosive and abrasive materials that pass through or near
them. The Company’s expertise in non-disruptive corrosion engineering and abrasion protection is now wide-ranging, opening
new markets for growth. The Company has a long history of product development and intellectual property management. The
Company manufactures most of the engineered solutions it creates as well as the specialized equipment required to install them.
Finally, decades of experience give the Company an advantage in understanding municipal, energy, mining, industrial and
commercial customers. Strong customer relationships and brand recognition allow the Company to support the expansion of
existing and innovative technologies into new high growth end markets.

The Company’s predecessor was originally incorporated in Delaware in 1980 to act as the exclusive United States licensee
of the Insituform® cured-in-place pipe (“CIPP”) process, which Insituform’s founder invented in 1971. The Insituform® CIPP
process served as the first trenchless technology for rehabilitating sewer pipelines and has enabled municipalities and private
industry to avoid the extraordinary expense and extreme disruption that can result from conventional “dig-and-replace”
methods. For more than 45 years, the Company has maintained its leadership position in the CIPP market from manufacturing
to technological innovations and market share.

In order to strengthen the Company’s ability to service the emerging demands of the infrastructure protection market and to

better position the Company for sustainable growth, the Company embarked on a diversification strategy in 2009 to expand its
product and service portfolio and its geographical reach. Through a series of strategic initiatives and key acquisitions, the
Company now possesses a broad portfolio of cost-effective solutions for rehabilitating and maintaining aging or deteriorating
infrastructure, protecting new infrastructure from corrosion worldwide and providing integrated professional services in
engineering, procurement, construction, maintenance, and turnaround services for oil companies, primarily in the downstream
market.

Recognizing that the breadth of offerings expanded beyond the Company’s flagship Insituform® brand, which constituted
less than half of the Company’s revenues in 2011, the Company reorganized Insituform Technologies, Inc. (“Insituform”), the
parent company at the time, into a new holding company structure in October 2011. Aegion became the new parent company
and Insituform became a wholly-owned subsidiary of Aegion. Aegion reflects the Company’s mission of extending its
leadership capabilities to furnish products and services to provide: (i) long-term protection for water and wastewater pipes, oil
and gas pipelines and infrastructure as well as commercial and governmental structures and transportation infrastructure; and
(ii) integrated professional services to energy companies.

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”) 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 (iv) reduce corporate and
other operating costs. These decisions reflected the Company’s: (a) desire to reduce further its exposure in the North American
upstream oil and gas markets; (b) assessment of its ability to drive sustainable, profitable growth in the non-pipe fiber
reinforced polymer (“FRP”) contracting market in North America; and (c) assessment of continuing weak conditions in the
Canadian oil and gas markets. During 2017, the Company also completed a detailed assessment of Infrastructure Solutions’
CIPP businesses in Australia and Denmark, which resulted in additional restructuring actions in both countries. See Note 3.

2016 Restructuring

On January 4, 2016, the Company’s board of directors approved a restructuring plan (the “2016 Restructuring”) to reduce

the Company’s exposure to the upstream oil markets and to reduce consolidated expenses. The 2016 Restructuring
repositioned Energy Services’ upstream operations in California, reduced Corrosion Protection’s upstream exposure by
divesting its interest in a Canadian pipe coating joint venture, right-sized Corrosion Protection to compete more effectively and
reduced corporate and other operating costs. The Company completed all of the aforementioned objectives related to the 2016
Restructuring. See Note 3.

Infrastructure Solutions Segment (“Infrastructure Solutions”)

On March 1, 2017, the Company acquired Environmental Techniques Limited and its parent holding company, Killeen
Trading Limited (collectively “Environmental Techniques”), for a purchase price of £6.5 million, approximately $8.0 million,
which was funded from the Company’s international cash balances. The purchase price is subject to post-closing working
capital adjustments and included £1.0 million, approximately $1.2 million, held in escrow as security for any post-closing
purchase price adjustments and post-closing indemnification obligations of Environmental Techniques’ previous owners.
Environmental Techniques provides trenchless drainage inspection, cleaning and rehabilitation services throughout the United
Kingdom and the Republic of Ireland.

On July 1, 2016, the Company acquired Concrete Solutions Limited (“CSL”) and Building Chemical Supplies Limited
(“BCS”), two New Zealand companies (collectively, “Concrete Solutions”), for a purchase price paid at closing of NZD 7.5
million, approximately $5.5 million, which was funded from the Company’s cash balances. The sellers have the ability to earn
up to an additional NZD 2.0 million, approximately $1.4 million, of proceeds based on reaching certain future performance
targets. CSL provides structural strengthening, concrete repair and bridge jointing solutions primarily through application of
FRP and injection resins and had served as a Tyfo® system certified applicator in New Zealand since the late 1990’s. BCS
imports and distributes materials, including fiber reinforced polymer, injection resins, repair mortars and protective coatings.

On June 2, 2016, the Company acquired the cured-in-place pipe (“CIPP”) contracting operations of Leif M. Jensen A/S

(“LMJ”), a Danish company and the Insituform licensee in Denmark since 2011. The purchase price was €2.9 million ,
approximately $3.2 million, and was funded from the Company’s cash balances.

On May 13, 2016, the Company acquired the operations and territories of Fyfe Europe S.A. and related companies (“Fyfe

Europe”) for a purchase price of $3.0 million. The transaction was funded from the Company’s cash balances. Fyfe Europe
held rights to provide Fyfe® product engineering and support to installers and applicators of FRP systems in 72 countries
throughout Europe, the Middle East and North Africa. The acquisition of these territories now provides the Company with
worldwide rights to market, manufacture and install the patented Tyfo® technology.

On February 18, 2016, the Company acquired Underground Solutions, Inc. and its subsidiary, Underground Solutions

Technologies Group, Inc. (collectively, “Underground Solutions”), for an initial purchase price of $85.0 million plus an
additional $5.0 million for the value of the estimated tax benefits associated with Underground Solutions’ net operating loss
carry forwards. The purchase price included $6.3 million held in escrow as security for the post-closing purchase price
adjustments and post-closing indemnification obligations of Underground Solutions’ previous owners. The transaction was
funded partially from the Company’s cash balances and partially from borrowings under the Company’s revolving credit
facility. To supplement the domestic cash balances, the Company repatriated approximately $29.7 million from foreign
subsidiaries to assist in funding the transaction, incurring approximately $3.2 million in additional taxes, an accrual for which
was included in the Company’s tax provision amounts for 2015. Underground Solutions provides infrastructure technologies
for water, sewer and conduit applications.

In February 2015, the Company sold its wholly-owned subsidiary, Video Injection - Insituform SAS (“VII”), the
Company’s French cured-in-place pipe (“CIPP”) contracting operation, to certain employees of VII. In connection with the
sale, the Company entered into a five-year exclusive tube supply agreement whereby VII will purchase liners from Insituform
Linings Limited. VII will also be entitled to continue to use its trade name based on a trade mark license granted for the same
five-year time period. The sale resulted in a loss of approximately $2.9 million that was recorded to “Other income (expense)”
in the Consolidated Statement of Operations during the first quarter of 2015.

On October 6, 2014, the Company’s board of directors approved a realignment and restructuring plan (the “2014
Restructuring”) which included the decision to exit Insituform’s contracting markets in France, Switzerland, Hong Kong,
Malaysia and Singapore (see Note 3). The Company completed all of the aforementioned objectives related to the 2014
Restructuring. See Note 3.

Corrosion Protection Segment (“Corrosion Protection”)

In September 2017, the Company organized Aegion South Africa Proprietary Limited, a joint venture in South Africa
between Aegion International Holdings Limited, a subsidiary of the Company (“Aegion International”), and Robor Proprietary

Limited (“Robor”), for the purpose of providing Aegion’s Corrosion Protection and Infrastructure Solutions products and
services to Eastern and Southern Africa. Aegion International owns sixty percent (60%) of the joint venture and Robor owns
the remaining forty percent (40%).

On July 28, 2017, the Company’s board of directors approved a plan to divest Bayou. Accordingly, the Company has
classified Bayou’s assets and liabilities as held for sale on the Consolidated Balance Sheet at December 31, 2017. See Note 5.

On February 1, 2016, the Company sold its fifty-one percent (51%) interest in its Canadian pipe-coating joint venture,
Bayou Perma-Pipe Canada, Ltd. (“BPPC”), to its joint venture partner, Perma-Pipe, Inc. The sale price was $9.6 million, which
consisted of a $7.6 million payment at closing and a $2.0 million promissory note, which was paid in full on July 28, 2016.
BPPC served as the Company’s pipe coating and insulation operation in Canada. As a result of the sale, the Company
recognized a pre-tax, non-cash charge of approximately $0.6 million at December 31, 2015 to reflect the expected loss on the
sale of the business. This loss was derived primarily from the release of cumulative currency translation adjustments and was
recorded to “Other income (expense)” in the Consolidated Statement of Operations.

In July 2015, the Company paid $0.7 million to the sellers of CRTS, Inc. (“CRTS”) related to contingent consideration

achieved during the year ended December 31, 2013. Also, in June 2015, the Company finalized the settlement of escrow
claims made pursuant to the CRTS purchase agreement. As a result of the settlement, the Company received proceeds of
approximately $1.0 million in July 2015, of which $0.2 million was recorded as an offset to operating expenses and the
remaining $0.8 million was recorded to “Other income (expense)” in the Consolidated Statement of Operations.

Energy Services Segment (“Energy Services”)

On March 1, 2015, the Company acquired Schultz Mechanical Contractors, Inc. (“Schultz”), a California corporation, for a
total purchase price of $7.7 million. Schultz primarily services customers in California and Arizona and is a provider of piping
installations, concrete construction and excavation and trenching services to the upstream and downstream oil and gas markets.

Purchase Price Accounting

During 2017, the Company substantially completed its accounting for Environmental Techniques and finalized its
accounting for Underground Solutions, Fyfe Europe, LMJ and Concrete Solutions. There were no significant adjustments to
the purchase price accounting for Underground Solutions, Fyfe Europe, LMJ or Concrete Solutions during 2017. As the
Company completes its final accounting for the Environmental Techniques acquisition, future adjustments related to working
capital, deferred income taxes, definite-lived intangible assets and goodwill could occur. The goodwill and definite-lived
intangible assets associated with the Fyfe Europe, LMJ and Concrete Solutions acquisitions are deductible for tax purposes;
whereas, the goodwill and definite-lived intangible assets associated with the Environmental Techniques and Underground
Solutions acquisitions are not deductible for tax purposes.

Schultz, Underground Solutions, Fyfe Europe, LMJ, Concrete Solutions and Environmental Techniques made the

following contributions to the Company’s revenues and profits (in thousands):

Year Ended December 31,

2017

2016

2015

Revenues

Net Loss

Revenues

Net Income
(Loss)

71,252

(891) $

24,702

32,063

583

3,070

5,922

5,270

(3,778)
(190)
(2,186)
(1,940)
(909)

29,425

4,865

2,700

N/A

(1,068) $
(2,694)
(764)
(1,153)
106

N/A

Revenues

Net Loss

13,771

(1,470)

N/A

Schultz (1)
Underground Solutions (2)
Fyfe Europe
LMJ (3)
Concrete Solutions (4)
Environmental Techniques

_____________________

“N/A” represents not applicable.

(1) The reported net loss in 2017 includes a pre-tax allocation of corporate expenses of $6.8 million. The reported net loss in 2016
includes pre-tax 2016 Restructuring charges of $0.2 million and a pre-tax allocation of corporate expenses of $2.9 million. The
reported net loss in 2015 includes a pre-tax impairment charge of $1.7 million allocated from goodwill impairments in the Energy
Services reporting unit (see Note 2) and a pre-tax allocation of corporate expenses of $1.0 million.

(2) The reported net loss in 2017 includes a pre-tax allocation of corporate expenses of $4.5 million. The reported net loss in 2016 includes
a pre-tax charge for inventory step-up of $3.6 million, recognized as part of the accounting for business combinations, and a pre-tax
allocation of corporate expenses of $3.2 million.

(3) The reported net loss in 2017 includes pre-tax 2017 Restructuring charges of $0.1 million.

(4) The reported net loss in 2017 includes a pre-tax impairment charge of $2.2 million allocated from goodwill impairments in the Fyfe

reporting unit (see Note 2).

The following unaudited pro forma summary presents combined information of the Company as if the Schultz,

Underground Solutions, Fyfe Europe, LMJ, Concrete Solutions and Environmental Techniques acquisitions had occurred at the
beginning of the year preceding their acquisition (in thousands, except earnings per share):

Revenues
Net income (loss) (4)
Diluted earnings (loss) per share

_____________________

Years Ended December 31,
2016(2)
$ 1,238,730

2015(3)
$ 1,387,465
(6,545)
(0.18)

29,959

0.85

2017(1)
$ 1,359,901
(69,227)

(2.09) $

(1) Includes pro-forma results related to Environmental Techniques.
(2) Includes pro-forma results related to Environmental Techniques, Underground Solutions, Fyfe Europe, LMJ and Concrete Solutions.
(3) Includes pro-forma results related to Underground Solutions, Fyfe Europe, LMJ, Concrete Solutions and Schultz.
(4) Includes pro-forma adjustments for depreciation and amortization associated with acquired tangible and intangible assets, as if those

assets were recorded at the beginning of the year preceding the acquisition date.

The transaction purchase price to acquire Environmental Techniques was £6.5 million, approximately $8.0 million, which

represented cash consideration paid at closing.

The transaction purchase price to acquire Underground Solutions was $88.4 million, which included: (i) a payment at
closing of $85.0 million; (ii) a payment of $5.0 million for the value of the estimated tax benefits associated with Underground
Solutions’ net operating loss carry forwards; and (iii) working capital adjustments of $1.6 million payable to the Company.

The transaction purchase price to acquire Fyfe Europe was $3.0 million, which represented cash consideration paid at

closing of $2.8 million plus $0.2 million of deferred contingent consideration, which was paid during 2017.

The transaction purchase price to acquire LMJ was €2.9 million , approximately $3.2 million, which was paid at closing.

The transaction purchase price to acquire Concrete Solutions was NZD 8.9 million, approximately $6.4 million, which

included: (i) a payment at closing of NZD 7.5 million, approximately $5.5 million; (ii) a preliminary working capital
adjustment payable to the sellers of NZD 0.2 million, approximately $0.1 million; and (iii) the estimated fair value of earnout
consideration of NZD 1.2 million, approximately $0.9 million. During 2017, the Company reversed $0.1 million of the earnout
consideration as operating results for the twelve-month period ended June 30, 2017 were below the target amounts in the
purchase agreement. The accrual adjustment resulted in an offset to “Operating expenses” in the Consolidated Statement of
Operations. After the accrual adjustment, the estimated fair value of the contingent consideration was NZD 1.0 million,
approximately $0.8 million, and recorded to “Other non-current liabilities” in the Consolidated Balance Sheet. The fair value
estimate was determined using observable inputs and significant unobservable inputs, which are based on level 3 inputs as
defined in Note 12.

Total cash consideration recorded to acquire Schultz was $6.7 million, which was funded by the Company’s cash reserves.

The cash consideration included the purchase price paid at closing of $7.1 million less working capital adjustments of $0.4
million. The total purchase price was $7.7 million, which represented the cash consideration of $6.7 million plus $1.0 million
of deferred contingent consideration. The fair value estimate of the contingent consideration was determined using observable
inputs and significant unobservable inputs, which are based on level 3 inputs as defined in Note 12. In each of the first quarters
of 2017 and 2016, $0.5 million of the contingent consideration was paid to the previous owners.

The following table summarizes the fair value of identified assets and liabilities of the Environmental Techniques,

Underground Solutions, Fyfe Europe, LMJ, Concrete Solutions and Schultz acquisitions at their respective acquisition dates (in
thousands):

Environmental
Techniques

Underground
Solutions

Fyfe
Europe

LMJ

Concrete
Solutions

Schultz

— $

3,630

— $

—

801

1,281

2,147

1,869

124

—

(1,025)

(186)

—

(413)

4,691

8,046

4,691

3,355

6,339

12,629

671

2,755

33,370

13,282

90
(4,653)
(5,900)

(2,943)
(14,562)
44,708

88,370

44,708

43,662

—

513

—

563

3,000

563

2,437

—

504

—

1,194

795

—

2,493

3,235

2,493

742

1,469

1,086

857

422

1,722

—

—
(837)
(149)

—
(482)
3,020

6,393

3,020

3,373

—

162

3,060

—

—
(663)
—

—

3,664

7,662

3,664

3,998

Cash

Receivables and cost and estimated earnings
in excess of billings
Inventories

Prepaid expenses and other current assets

Property, plant and equipment

Identified intangible assets

Deferred income tax assets

Other assets

Accounts payable

Accrued expenses

Billings in excess of cost and estimated
earnings

Deferred tax liabilities

Total identifiable net assets

Total consideration recorded

Less: total identifiable net assets

Final purchase price goodwill

2. ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and majority-
owned subsidiaries in which the Company is deemed to be the primary beneficiary. All significant intercompany transactions
and balances have been eliminated.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Revenues

Revenues include construction, engineering and installation revenues that are recognized using the percentage-of-
completion method of accounting in the ratio of costs incurred to estimated final costs. Revenues from change orders, extra
work and variations in the scope of work are recognized when it is probable that they will result in additional contract revenue
and when the amount can be reliably estimated. Contract costs include all direct material and labor costs and those indirect
costs related to contract performance, such as indirect labor, supplies, tools and equipment costs. The Company expenses all
pre-contract costs in the period these costs are incurred. Since the financial reporting of these contracts depends on estimates,
which are assessed continually during the term of these contracts, recognized revenues and profit are subject to revisions as the
contract progresses to completion. A revision in profit estimates are reflected in the period in which the facts that give rise to
the revision become known. If material, the effects of any changes in estimates are disclosed in the notes to the consolidated
financial statements. When estimates indicate that a loss will be incurred on a contract, a provision for the expected loss is
recorded in the period in which the loss becomes evident. Any revenue recognized is only to the extent costs have been
recognized in the period. Additionally, the Company expenses all costs for unpriced change orders in the period in which they
are incurred.

Revenues from the Company’s Energy Services segment are derived mainly from multiple maintenance contracts under
multi-year, long-term Master Service Agreements and alliance contracts, as well as engineering and construction type contracts.
Businesses within Energy Services enter into customer contracts that contain three principal types of pricing provisions: time
and materials, cost plus fixed fee and fixed price. Although the terms of these contracts vary, most are made pursuant to cost
reimbursable contracts on a time and materials basis under which revenues are recorded based on costs incurred at agreed upon
contractual rates. Energy Services also performs services on a cost plus fixed fee basis under which revenues are recorded
based upon costs incurred at agreed upon rates and a proportionate amount of the fixed fee or percentage stipulated in the
contract.

Foreign Currency

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.

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):

Currency translation adjustments (1)
Derivative hedging activity

Pension activity

Total accumulated other comprehensive loss

__________________________

December 31,

2017
(35,928) $
3,336
(244)
(32,836) $

2016
(54,145)
1,004
(359)
(53,500)

(1) Due to the weakening of the U.S. dollar, there was a substantial increase during 2017 with respect to certain functional currencies and

their relation to the U.S. dollar, most notably the Canadian dollar, Australian dollar, British pound and euro.

Net foreign exchange transaction losses of $3.3 million, $0.9 million and $0.1 million for 2017, 2016 and 2015,

respectively, are included in “Other expense” in the Consolidated Statements of Operations.

Research and Development

The Company expenses research and development costs as incurred. Research and development costs of $4.2 million, $4.7

million and $2.6 million for the years ended December 31, 2017, 2016 and 2015, respectively, are included in “Operating
expenses” 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.

As a result of the reduction in the U.S. corporation income tax rate from 35% to 21% under the Tax Cuts and Jobs Act
(“TCJA”), FASB ASC 740 required the Company to remeasure its deferred tax assets and liabilities based on tax rates at which
the balances are expected to reverse in the future. The provisional amount recorded for the remeasurement of the Company’s
deferred tax balances resulted in no adjustment to tax expense. The remeasurement of the deferred tax assets gave rise to an
additional income tax expense of $5.1 million, which was offset by an equal reduction in the valuation allowance of $5.1
million. The Company continues to analyze certain aspects of the TCJA, including consideration of additional forthcoming
technical guidance, which could potentially affect the measurement of these balances or potentially give rise to new deferred
tax amounts.

In accordance with FASB ASC 740, tax benefits from an uncertain tax position may be recognized when it is more likely

The Company recognizes tax liabilities in accordance with FASB ASC 740 and adjusts these liabilities when judgment

changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these
uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax
liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are
determined. While the Company believes the resulting tax balances as of December 31, 2017 and 2016 were appropriately
accounted for in accordance with FASB ASC 740, the ultimate outcome of such matters could result in favorable or unfavorable
adjustments to the consolidated financial statements and such adjustments could be material.

In connection with the Company’s initial analysis of the impact of the TCJA, it recorded a provisional estimated net tax
expense of $2.4 million, which consisted of a charge of $10.4 million for the deemed mandatory repatriation, and reduced by a
$7.1 million release of a deferred tax liability on unremitted foreign earnings and $0.9 million of other TCJA related impacts.
On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting
Implications of the Tax Cuts and Jobs Act, (“SAB 118”), directing a taxpayer to consider the impact of the U.S. legislation as
“provisional” when it does not have the necessary information available, prepared, or analyzed (including computations) in
reasonable detail to complete the accounting for income tax effects of the TCJA. In accordance with SAB 118, the additional
estimated income tax of $2.4 million represents the Company’s best estimate understanding that the provisional amount is
subject to further adjustments under SAB 118. The Company continues to refine provisional balances, and adjustments may be
made under SAB 118 during the measurement period as a result of future changes in interpretation, issuance of additional
regulatory guidance from the U.S. federal and state tax authorities, or its own assumption changes. All accounting will be
completed within the one-year measurement period allowed under SAB 118. The ultimate impact of the TCJA may differ from
the current provisional amounts and the adjustments could be material.

Refer to Note 10 for additional information regarding taxes on income.

Earnings per Share

Earnings per share have been calculated using the following share information:

Years Ended December 31,

2017

2016

2015

Weighted average number of common shares used for basic EPS

33,150,949

34,713,937

36,554,437

Effect of dilutive stock options and restricted and deferred stock unit awards

—

496,493

—

Weighted average number of common shares and dilutive potential common
stock used in dilutive EPS

33,150,949

35,210,430

36,554,437

The Company excluded 735,577 and 324,804 stock options and restricted and deferred stock units in 2017 and 2015,
respectively, from the diluted earnings per share calculation for the Company’s common stock because of the reported net loss
for each period. The Company excluded 73,897, 77,807 and 164,014 stock options in 2017, 2016 and 2015, respectively, from
the diluted earnings per share calculations for the Company’s common stock because they were anti-dilutive as their exercise
prices were greater than the average market price of common shares for each period.

Purchase Price Accounting

The Company accounts for its acquisitions in accordance with FASB ASC 805, Business Combinations. The base cash

purchase price plus the estimated fair value of any non-cash or contingent consideration given for an acquired business is
allocated to the assets acquired (including identified intangible assets) and liabilities assumed based on the estimated fair values
of such assets and liabilities. The excess of the total consideration over the aggregate net fair values assigned is recorded as
goodwill. Contingent consideration, if any, is recognized as a liability as of the acquisition date with subsequent adjustments
recorded in the consolidated statements of operations. Indirect and general expenses related to business combinations are
expensed as incurred.

The Company typically determines the fair value of tangible and intangible assets acquired in a business combination using

Classification of Current Assets and Current Liabilities

The Company includes in current assets and current liabilities certain amounts realizable and payable under construction
contracts that may extend beyond one year. The construction periods on projects undertaken by the Company generally range
from less than one month to 24 months.

At December 31, 2017, the Company’s balance in billings in excess of costs and estimated earnings was $51.6 million,
which decreased $11.1 million from $62.7 million at December 31, 2016 primarily due to the timing of billing and advance
deposits received on certain pipe coating and insulation projects at our Bayou facility in Louisiana. Correspondingly, the
Company’s balance in prepaid expenses and other current assets was $35.3 million at December 31, 2017, a decrease of $16.6
million from $51.8 million at December 31, 2016 due primarily to the timing of advance deposits paid to suppliers on those
same projects.

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. Restricted cash primarily consists of funds
reserved for legal requirements, payments from certain customers placed in escrow in lieu of retention in case of potential
issues regarding future job performance by the Company, 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. Changes in restricted cash flows are reported in the consolidated
statements of cash flows based on the nature of the restriction.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market. Actual cost is used to value raw materials and
supplies. Standard cost, which approximates actual cost, is used to value work-in-process, finished goods and construction
materials. Standard cost includes direct labor, raw materials and manufacturing overhead based on normal capacity. For
certain businesses within our Corrosion Protection segment, the Company uses actual costs or average costs for all classes of
inventory.

Retainage

Many of the contracts under which the Company performs work contain retainage provisions. Retainage refers to that

portion of revenue earned by the Company but held for payment by the customer pending satisfactory completion of the
project. The Company generally invoices its customers periodically as work is completed. Under ordinary circumstances,
collection from municipalities is made within 60 to 90 days of billing. In most cases, 5% to 15% of the contract value is
withheld by the municipal owner pending satisfactory completion of the project. Collections from other customers are
generally made within 30 to 45 days of billing. Unless reserved, the Company believes that all amounts retained by customers
under such provisions are fully collectible. Retainage on active contracts is classified as a current asset regardless of the term
of the contract. Retainage is generally collected within one year of the completion of a contract, although collection can extend
beyond one year from time to time. As of December 31, 2017, retainage receivables aged greater than 365 days approximated
10% of the total retainage balance and collectibility was assessed as described in the allowance for doubtful accounts section
below.

Allowance for Doubtful Accounts

Management makes estimates of the uncollectibility of accounts receivable and retainage. The Company records an
allowance based on specific accounts to reduce receivables, including retainage, to the amount that is expected to be collected.
The specific allowances are reevaluated and adjusted as additional information is received. After all reasonable attempts to
collect the receivable or retainage have been explored, the account is written off against the allowance. The Company also
includes reserves related to certain accounts receivable that may be in litigation or dispute.

Long-Lived Assets

Property, plant and equipment and other identified intangibles (primarily customer relationships, patents and acquired
technologies, trademarks, licenses and non-compete agreements) are recorded at cost, net of accumulated depreciation and
impairment, and, except for goodwill and certain trademarks, are depreciated or amortized on a straight-line basis over their
estimated useful lives. Changes in circumstances such as technological advances, changes to the Company’s business model or
changes in the Company’s capital strategy can result in the actual useful lives differing from the Company’s estimates. If the
Company determines that the useful life of its property, plant and equipment or its identified intangible assets should be
changed, the Company would depreciate or amortize the net book value in excess of the salvage value over its revised
remaining useful life, thereby increasing or decreasing depreciation or amortization expense.

Long-lived assets, including property, plant and equipment and other intangibles, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such impairment tests
are based on a comparison of undiscounted cash flows to the recorded value of the asset. The estimate of cash flow is based
upon, among other things, assumptions about expected future operating performance. The Company’s estimates of
undiscounted cash flow may differ from actual cash flow due to, among other things, technological changes, economic
conditions, changes to its business model or changes in its operating performance. If the sum of the undiscounted cash flows is
less than the carrying value, the Company recognizes an impairment loss, measured as the amount by which the carrying value
exceeds the fair value of the asset.

Impairment Review – 2017

As part of the 2017 Restructuring, which was approved by the Company’s board of directors on July 28, 2017, the

Company exited all non-pipe related contract applications for the Tyfo® system in North America. As a result of this action, the
Company evaluated the long-lived assets of its Fyfe reporting unit, which caused the Company to review the financial
performance of at-risk asset groups within the Fyfe reporting unit in accordance with FASB ASC 360, Property, Plant and
Equipment (“FASB ASC 360”). The results of the Fyfe reporting unit and its related asset groups are reported within the
Infrastructure Solutions reportable segment.

The assets of an asset group represent the lowest level for which identifiable cash flows can be determined independent of

other groups of assets and liabilities. The Fyfe North America asset group was the only at-risk asset group reviewed for
impairment. The Company developed internal forward business plans under the guidance of local and regional leadership to
determine the undiscounted expected future cash flows derived from Fyfe North America’s long-lived assets. Such were based
on management’s best estimates considering the likelihood of various outcomes. Based on the internal projections, the
Company determined that the sum of the undiscounted expected future cash flows for the Fyfe North America asset group was
less than the carrying value of the assets, and as a result, engaged a third-party valuation firm to assist management in
determining the fair value of long-lived assets for the Fyfe North America asset group.

In order to determine the impairment amount of long-lived assets, the Company first determined the fair value of each key
component of its long-lived assets for the Fyfe North America asset group. The fair values were derived using various income-
based approaches, which utilize discounted cash flows to evaluate the net earnings attributable to the asset being measured.
Key assumptions used in assessment include the discount rate (based on weighted-average cost of capital), revenue growth
rates, contributory asset charges, customer attrition, income tax rates and working capital needs, which were based on current
market conditions and were consistent with internal management projections.

Based on the results of the valuation, the carrying amount of certain long-lived assets for the Fyfe North America asset

group exceeded the fair value. Accordingly, the Company recorded impairment charges of $3.4 million to trademarks, $20.8
million to customer relationships and $16.8 million to patents and acquired technology in the third quarter of 2017. The
impairment charges were recorded to “Definite-lived intangible asset impairment” in the Consolidated Statement of Operations.
Property, plant and equipment were determined to have a carrying value that exceeded fair value; thus, no impairment was
recorded.

Impairment Reviews – 2015

As a result of the annual impairment assessment in accordance with FASB ASC 350, Intangibles - Goodwill and Other
(“FASB ASC 350”) as of October 1, 2015, the CRTS reporting unit had a fair value below its carrying value, which caused the
Company to review the financial performance of at risk asset groups within that reporting unit in accordance with FASB ASC
360. The results of CRTS are reported within the Corrosion Protection reportable segment.

In response to contract losses in the Central California upstream energy market during the fourth quarter of 2015 and the

Company’s subsequent decision to reduce our Energy Service segment’s exposure to the upstream market, the Company
performed a market assessment and concluded that sustained low oil prices would continue to create market challenges for the
foreseeable future, including a continued reduction in spending by certain of its customers in 2016. The loss of the contracts,
coupled with the decision to downsize, caused the Company to review the financial performance of at risk asset groups within
the reporting unit. The results of Energy Services are reported within the Energy Services reportable segment.

The assets of each asset group represent the lowest level for which identifiable cash flows can be determined independent
of other groups of assets and liabilities. The Company developed internal forward business plans under the guidance of local
and regional leadership to determine the undiscounted expected future cash flows derived from each of the at risk asset groups’
long-lived assets. Such were based on management’s best estimates considering the likelihood of various outcomes. Based on
the internal projections, the Company determined that the undiscounted expected future cash flows for all of the identified at
risk asset groups exceeded the carrying value of the assets, and as such, no impairment to recorded long-lived assets was
required.

The fair value estimates described above were determined using observable inputs and significant unobservable inputs,

which are based on level 3 inputs as defined in Note 12.

Goodwill

Under FASB ASC 350, the Company assesses recoverability of goodwill on an annual basis or when events or changes in
circumstances indicate that the carrying amount of goodwill may not be recoverable. An impairment charge will be recognized
to the extent that the fair value of a reporting unit is less than its carrying value. Factors that could potentially trigger an
impairment review include (but are not limited to):

•

significant underperformance of a segment relative to expected, historical or forecasted operating results;

significant negative industry or economic trends;

significant changes in the strategy for a segment including extended slowdowns in the segment’s market;

a decrease in market capitalization below the Company’s book value; and

a significant change in regulations.

Whether during the annual impairment assessment or during a trigger-based impairment review, the Company determines

the fair value of its reporting units and compares such fair value to the carrying value of those reporting units to determine if
there are any indications of goodwill impairment.

Fair value of reporting units is determined using a combination of two valuation methods: a market approach and an
income approach with each method given equal weight in determining the fair value assigned to each reporting unit. Absent an
indication of fair value from a potential buyer or similar specific transaction, the Company believes the use of these two
methods provides a reasonable estimate of a reporting unit’s fair value. Assumptions common to both methods are operating
plans and economic outlooks, which are used to forecast future revenues, earnings and after-tax cash flows for each reporting
unit. These assumptions are applied consistently for both methods.

The market approach estimates fair value by first determining earnings before interest, taxes, depreciation and amortization

(“EBITDA”) multiples for comparable publicly-traded companies with similar characteristics of the reporting unit. The
EBITDA multiples for comparable companies are based upon current enterprise value. The enterprise value is based upon
current market capitalization and includes a control premium. The Company believes this approach is appropriate because it
provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to its
reporting units.

The income approach is based on forecasted future (debt-free) cash flows that are discounted to present value using factors
that consider timing and risk of future cash flows. The Company believes this approach is appropriate because it provides a fair
value estimate based upon the reporting unit’s expected long-term operating cash flow performance. Discounted cash flow
projections are based on financial forecasts developed from operating plans and economic outlooks, growth rates, estimates of
future expected changes in operating margins, terminal value growth rates, future capital expenditures and changes in working
capital requirements. Estimates of discounted cash flows may differ from actual cash flows due to, among other things,
changes in economic conditions, changes to business models, changes in the Company’s weighted average cost of capital, or
changes in operating performance.

The discount rate applied to the estimated future cash flows is one of the most significant assumptions utilized under the

income approach. The Company determines the appropriate discount rate for each of its reporting units based on the weighted
average cost of capital (“WACC”) for each individual reporting unit. The WACC takes into account both the pre-tax cost of
debt and cost of equity (including the risk-free rate on twenty year U.S. Treasury bonds), and certain other company-specific
and market-based factors. As each reporting unit has a different risk profile based on the nature of its operations, the WACC for
each reporting unit is adjusted, as appropriate, to account for company-specific risks. Accordingly, the WACC for each
reporting unit may differ.

Impairment Review – Third Quarter 2017

As part of the 2017 Restructuring, which was approved by the Company’s board of directors on July 28, 2017, the

Company exited all non-pipe related contract applications for the Tyfo® system in North America. As a result of this action, the
Company evaluated the goodwill of its Fyfe reporting unit and determined that a triggering event occurred. As such, the
Company engaged a third-party valuation to assist management in performing a goodwill impairment review for its Fyfe
reporting unit during the third quarter of 2017. In accordance with the provisions of FASB ASC 350, the Company determined
the fair value of the reporting unit and compared such fair value to the carrying value of the reporting unit. For the Fyfe
reporting unit, carrying value, as adjusted for the long-lived asset impairments discussed previously, exceeded fair value by
approximately 45%.

Despite the Company’s recent investments in sales resources to drive growth in North America, FRP technology has
become more widely accepted and more contractors have become proficient with installation, which has begun to commoditize
the application of the Tyfo® system during construction in the North American civil structure market. As a result of this and
other factors, the Company decided to exit all non-pipe related contract applications for the Tyfo® system in North America.
The Company is now focused on using its expertise in FRP technologies to promote third-party product sales, continuing pipe-
related FRP installations and providing technical engineering support in the civil structural market in North America. The FRP
operation in Asia remains largely unchanged as market conditions remain favorable.

The Company’s decision, as noted above, permanently lowered the expected future cash flows of the reporting unit. As a
result, the values derived from both the income approach and the market approach decreased from the October 1, 2016 annual
goodwill impairment analysis. The fair value for the Fyfe reporting unit decreased $105.2 million, or 65.3%, from the previous
analysis. The impairment analysis assumed a weighted average cost of capital of 17.0%, which is higher than the 16.0%
utilized in the October 1, 2016 review, primarily due to rising risk-free rates on twenty-year U.S. Treasury bonds. The
company-specific factors influencing discount rates remained consistent in both analyses. The impairment analysis also
assumed a long-term growth rate of 2.5%, which was reduced from 3.5% used in the October 1, 2016 review. This change
reflects the Company’s expectations for future annual revenue growth, which were lowered from 10.8% in the previous analysis
to 4.0%, primarily due to the downsizing of the North American operations. Expected gross margins were consistent between
both analyses.

As of January 1, 2017, the Company adopted FASB Accounting Standards Update No. 2017-04, Simplifying the Test for

Goodwill Impairment, which states that an impairment charge should be recognized for the amount by which the carrying
amount exceeds the reporting unit’s fair value. Based on the impairment analysis, the Company determined that recorded
goodwill at the Fyfe reporting unit was impaired by $45.4 million, which was recorded to “Goodwill impairment” in the
Consolidated Statement of Operations during the third quarter of 2017. As of December 31, 2017, the Company had remaining
Fyfe goodwill of $9.6 million. Projected cash flows were based, in part, on the ability to grow third-party product sales and
pressure pipe contracting in North America, and maintaining a presence in other international markets. If these assumptions do
not materialize in a manner consistent with Company’s expectations, there is risk of additional impairment to recorded
goodwill.

Annual Impairment Assessment – October 1, 2017

The Company had seven reporting units for purposes of assessing goodwill at October 1, 2017 as follows: Municipal Pipe

Rehabilitation, Fyfe, Corrpro, United Pipeline Systems, Bayou, Coating Services and Energy Services. During 2017, the
Company acquired Environmental Techniques (see Note 1) and integrated it into the Municipal Pipe Rehabilitation reporting
unit.

Significant assumptions used in the Company’s October 2017 goodwill review included: (i) discount rates ranging from

12.0% to 17.0%; (ii) compound annual growth rates for revenues generally ranging from 1.4% to 5.8%; (iii) gross margin
stability or slight improvement in the short term related to certain reporting units affected by the 2017 Restructuring, but
sustained or slightly increased gross margins long term; (iv) peer group EBITDA multiples; and (v) terminal values for each
reporting unit using a long-term growth rate of 1.0% to 3.0%.

During the Company’s assessment of its reporting units’ fair values in relation to their respective carrying values, no

reporting units had a fair value below carrying value and only one reporting unit had a fair value within 10% percent of its
carrying value. The reporting unit with a fair value within 10% of its carrying value was the Fyfe reporting unit, which
recorded goodwill impairment and adjusted its carrying value to fair value during the third quarter of 2017 as discussed above.

Annual Impairment Assessment – October 1, 2015

As a result of the annual impairment assessment in accordance with FASB ASC 350, the CRTS reporting unit had a fair
value less than its carrying value. Long-term expectations for the CRTS businesses remained low due to continued uncertainty
in the upstream oil markets, which caused customer-driven delays in the more profitable international offshore pipeline market
and delayed or canceled sales opportunities in certain North American markets. CRTS secured sizable project wins during
2014 and 2015; however, most were situated in international onshore and mining markets, which typically offer lower margin
profiles. As a result of failing Step 1, the Company performed Step 2 procedures, which compares the carrying value of
goodwill to its implied fair value. Based on this analysis, the Company determined that recorded goodwill at CRTS was
impaired by $10.0 million, which was recorded to “Goodwill impairment” in the Consolidated Statement of Operations in the
fourth quarter of 2015. As of December 31, 2015, the Company had remaining CRTS goodwill of $4.4 million. Projected cash
flows were based, in part, on maintaining a presence in the higher-margin, international offshore pipeline market and the
Company’s ability to expand its technology to other applications.

Impairment Review – December 31, 2015

In response to contract losses in the Central California upstream energy market during the fourth quarter of 2015 and the
Company’s subsequent decision to reduce exposure to the upstream market, the Company performed a market assessment of its
energy-related businesses and concluded that sustained low oil prices would continue to create market challenges for the
foreseeable future, including a continued reduction in spending by certain of its customers in 2016. The loss of the contracts,
coupled with the decision to downsize, caused the Company to review the goodwill of its operations affected by these
circumstances and determined that a triggering event had occurred. As such, the Company performed an interim goodwill
impairment review for its Energy Services reporting unit as of December 31, 2015.

In accordance with the provisions of FASB ASC 350, the Company determined the fair value of the affected reporting unit

and it was found to be less than the carrying value. As a result of failing Step 1, the Company performed Step 2 procedures,
which compares the carrying value of goodwill to its implied fair value. Based on this analysis, the Company determined that
recorded goodwill at Energy Services was impaired by $33.5 million, which was recorded to “Goodwill impairment” in the
Consolidated Statement of Operations in the fourth quarter of 2015. As of December 31, 2015, Energy Services had remaining
goodwill of $46.7 million. Projected cash flows were based on maintaining a smaller but profitable presence in the upstream
energy market and continued strength in the Central California downstream energy market. Also included in the projected cash
flows were certain cost savings expected to be achieved through the 2016 Restructuring.

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.

The Company’s overall methodology for evaluating transactions and relationships under the VIE requirements includes the

following two steps:

•

determine whether the entity meets the criteria to qualify as a VIE; and

determine whether the Company is the primary beneficiary of the VIE.

In performing the first step, the significant factors and judgments that the Company considers in making the determination

as to whether an entity is a VIE include:

•

the design of the entity, including the nature of its risks and the purpose for which the entity was created, to determine
the variability that the entity was designed to create and distribute to its interest holders;

•

the nature of the Company’s involvement with the entity;

• whether control of the entity may be achieved through arrangements that do not involve voting equity;

• whether there is sufficient equity investment at risk to finance the activities of the entity; and

• whether parties other than the equity holders have the obligation to absorb expected losses or the right to receive

residual returns.

If the Company identifies a VIE based on the above considerations, it then performs the second step and evaluates whether

it is the primary beneficiary of the VIE by considering the following significant factors and judgments:

• whether the entity has the power to direct the activities of a variable interest entity that most significantly impact the

entity’s economic performance; and

• whether the entity has the obligation to absorb losses of the entity that could potentially be significant to the variable

interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest
entity.

Based on its evaluation of the above factors and judgments, as of December 31, 2017, the Company consolidated any VIEs

in which it was the primary beneficiary.

Financial data for consolidated variable interest entities are summarized in the following tables (in thousands):

Balance sheet data

Current assets

Non-current assets

Current liabilities

Non-current liabilities

_____________________

December 31,

2017 (1)

2016

42,732

26,346

12,449

30,675

51,354

25,607

29,324

28,849

(1) Amounts include $25.4 million of assets and $9.8 million of liabilities classified as held for sale relating to our pipe coating and insulation

joint venture in Louisiana, Bayou Wasco Insulation, LLC. See Note 5.

Statement of operations data

Revenue
Gross profit
Net income (loss)

_____________________

Years Ended December 31,
2016

2017 (1)

2015

91,947
15,194
3,432

61,205
5,760
(3,075)

77,361
11,325
321

(1) During 2017, increases were primarily driven from: (i) our joint venture in Louisiana, which completed its work on a large deepwater

pipe coating and insulation project; and (ii) the formation of our new joint venture in South Africa.

Accounting Standards Updates

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 TCJA on
items within AOCI to retained earnings. The guidance is effective for the Company’s fiscal year beginning January 1, 2019,
including interim periods within that fiscal year. 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 is currently evaluating the effect the guidance will have on its consolidated financial statements.

In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815):
Targeted Improvements to Accounting for Hedging Activities, which amends the recognition and presentation requirements for
hedge accounting activities. The standard will improve the financial reporting of hedging relationships to better portray the
economic results of an entity’s risk management activities in its financial statements and reduce the complexity of applying
hedge accounting. This new guidance is effective for the Company’s fiscal year beginning January 1, 2019, including interim
periods within that fiscal year, and the new guidance is to be applied retrospectively. The Company intends to early adopt this
standard effective January 1, 2018; the adoption of which is not expected to have a material impact on its consolidated financial
statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic
350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by removing the
second step of the two-step impairment test. The standard requires an entity to perform its goodwill impairment test by
comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the
amount by which the carrying amount exceeds the reporting unit’s fair value. The standard is effective for the Company’s
fiscal year beginning January 1, 2020, but early adoption is permitted for interim or annual goodwill impairment tests
performed after January 1, 2017. The Company adopted this standard, effective January 1, 2017, and applied the guidance in
its goodwill impairment testing for the Fyfe reporting unit, as described above.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230):
Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total of cash, cash
equivalents, and restricted cash. As a result, restricted cash will be included with cash and cash equivalents when reconciling
the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This new guidance is effective
for the Company’s fiscal year beginning January 1, 2018, including interim periods within that fiscal year, and will be applied
retrospectively. The Company’s adoption of this standard is not expected to have a material impact on its consolidated financial
statements, other than the classification of restricted cash on the consolidated statement of cash flows.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments, which addresses diversity in how certain cash receipts and cash
payments are presented and classified in the statement of cash flows. The standard is effective for the Company’s fiscal year

beginning January 1, 2018, including interim periods within that fiscal year. The Company’s adoption of this standard is not
expected to have a material impact on its consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic

718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for
share-based payment awards to employees, including the accounting for income taxes, classification of awards as either equity
or liabilities and classification in the statement of cash flows. The standard was effective for the Company’s fiscal year
beginning January 1, 2017, including interim periods within the year. The Company’s adoption of this standard, effective
January 1, 2017, did not have a material impact on its consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), that 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 standard is effective for the Company’s fiscal year beginning January 1, 2019, including interim periods within that fiscal
year. Early adoption is permitted, although the Company does not intend to do so. The Company intends to adopt the new
guidance using the cumulative effect method, which would apply to all new lease contracts initiated on or after January 1, 2019.
For existing lease contracts that have remaining obligations as of January 1, 2019, the difference between the recognition
criteria in the new guidance and the Company’s current practices would be recognized using a cumulative effect adjustment to
the opening balance of retained earnings.

In 2017, the Company identified a project manager as well as a cross-functional implementation team responsible for
identifying and assessing the impact on its lease contracts. During 2017, the implementation team began the assessment phase,
which included data retrieval from the Company’s key third-party lease administration vendors and the identification of the
Company’s known lease contracts throughout the world. During the first half of 2018, the Company will: (i) perform an
analysis of the new standard on its current lease contracts as well as other existing arrangements to determine if they qualify for
lease accounting under the new standard; and (ii) identify potential changes to business processes, systems and controls to
support recognition and disclosure under the new standard.

In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet

Classification of Deferred Taxes, which requires all deferred tax assets and liabilities, along with any related valuation
allowance, to be presented as non-current within the Consolidated Balance Sheet. It was effective for the Company’s fiscal
year beginning January 1, 2017, including interim periods within the year. The Company’s adoption of this standard, effective
January 1, 2017, did not have a material impact on its consolidated financial statements. Prior period balances were not
retrospectively adjusted.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic

606), which replaces revenue recognition requirements regarding contracts with customers to transfer goods or services with a
single revenue recognition model for recognizing revenue. Under the new guidance, entities are required to recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The guidance provides a five-step analysis to be performed on
transactions to determine when and how revenue is recognized. This new guidance is effective for the Company’s fiscal year
beginning January 1, 2018. Early adoption is permitted; however, the Company will adopt the new guidance as of the effective
date. Entities are allowed to transition to the new standard either on a full retrospective basis or under the cumulative effect
method. The Company will adopt the new guidance using the cumulative effect method and will expand consolidated financial
disclosures to comply with the new guidance. Under this method, the new guidance would apply to all new contracts initiated
on or after January 1, 2018. The Company determined the adoption of Topic 606 will not have a material impact on the
Company's consolidated results of operations, cash flows or financial position.

In early 2016, the Company identified a project manager as well as a cross-functional implementation team responsible for

assessing the impact on its contracts. During 2017, the implementation team finalized: (i) the assessment phase, which
included the identification of the Company’s key revenue streams (fixed fee, time and materials, product sales and royalty fees
from license arrangements) and the comparison of historical accounting policies and practices to the requirements of the new
revenue standard; (ii) the contract review phase, which included identifying the population of contracts and a comprehensive
analysis of the new standard on individual contract terms; and (iii) the process of identifying potential changes to business
processes, systems and controls to support recognition and disclosure under the new standard. The findings and progress of
each phase, as discussed herein, were reported to the Company’s management and audit committee on a frequent basis since
early 2016.

Based on the conclusions of the assessment and contract review phases, the Company determined that the majority of its
revenues, which are earned from construction, engineering and installation services and currently recognized using the cost-to-
cost method for measuring progress under the percentage-of-completion method of accounting, are expected to follow a
revenue recognition pattern under the new guidance consistent with the Company’s current practice. Revenue for the majority
of the Company’s contracts will continue to be recognized over time primarily as: (i) services performed or products installed

by the Company are for the enhancement of assets owned and controlled by the customer; (ii) customized products and services
performed do not have an alternative use to the Company; and (iii) there is continuous transfer of control to the customer. The
Company also determined that revenues related to time and materials projects and product sales are expected to follow a
revenue recognition pattern under the new guidance consistent with the Company’s current practice. The Company identified
required changes under the new guidance for the recognition of royalty fees and the capitalization of contract fees. Based on
the review of contracts across all of the Company’s business units, changes related to these items are expected to have an
inconsequential impact on the timing or amount of revenue recognized as compared to current practices. The Company
evaluated all new contracts through the date of adoption as part of its review.

The Company implemented changes to its financial reporting processes, systems and controls to comply with the

disclosure requirements of the new guidance including: (i) changes to balances in contract assets and contract liabilities; and (ii)
disaggregation of revenues. The Company expects to change the presentation of certain financial statement accounts to align
with the new standard. The most notable change will be presenting costs and estimated earnings in excess of billings as
contract assets and billings in excess of costs and estimated earnings as contract liabilities. The Company will report contract
balances as a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period.

3. RESTRUCTURING

2017 Restructuring

On July 28, 2017, the Company’s board of directors approved the 2017 Restructuring 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 (iv) reduce corporate and other operating costs. These decisions reflected the
Company’s: (a) desire to reduce further its exposure in the North American upstream oil and gas markets; (b) assessment of its
ability to drive sustainable, profitable growth in the non-pipe FRP contracting market in North America; and (c) assessment of
continuing weak conditions in the Canadian oil and gas markets. During the third quarter of 2017, the Company also
completed a detailed assessment of Infrastructure Solutions’ CIPP businesses in Australia and Denmark, which resulted in
additional restructuring actions in both countries.

During 2017, total pre-tax 2017 Restructuring charges recorded were $23.7 million ($20.6 million post-tax), which
consisted of cash charges of $13.6 million and non-cash charges of $10.1 million, related to employee severance, retention,
extension of benefits, employment assistance programs, early lease termination and other restructuring costs associated with the
restructuring efforts described above. The Company expects to incur additional charges of $5 million to $7 million, most of
which are expected to be cash charges incurred in 2018. These charges are mainly in Infrastructure Solutions and, to a lesser
extent, Corrosion Protection. The Company reduced headcount by approximately 300 employees as a result of these actions.

During 2017, the Company recorded pre-tax expenses related to the 2017 Restructuring as follows (in thousands):

Severance and benefit related costs

Lease and contract termination costs

Relocation and other moving costs
Other restructuring costs (1)

Total pre-tax restructuring charges (2)

__________________________

Infrastructure
Solutions

Corrosion
Protection

Total

4,587

2,758

4,545

8,668

775

121

2,263

17,826

5,917

7,345

5,320

147

10,931

23,743

(1) Includes charges primarily related to exiting non-pipe-related applications for the Tyfo® system in North America and right-sizing the
cathodic protection services operation in Canada, inclusive of wind-down costs, professional fees, patent write offs, fixed asset
disposals and certain other restructuring and related charges.

(2) Includes $1.3 million of corporate-related restructuring charges that have been allocated to the Infrastructure Solutions and Corrosion

Protection reportable segments.

2017 Restructuring costs related to severance, other termination benefit costs and early lease and contract termination costs

were $12.8 million in 2017 and are reported on a separate line in the Consolidated Statements of Operations.

The following table summarizes all charges related to the 2017 Restructuring recognized in 2017 as presented in their

affected line in the Consolidated Statements of Operations (in thousands):

Cost of revenues

Operating expenses

Restructuring and related charges

Total pre-tax restructuring charges

__________________________

Infrastructure
Solutions

Corrosion
Protection

Total (1)

8,636

9,160

2,248

3,654

17,826

5,917

10,884

12,814

23,743

(1) Total pre-tax restructuring charges include cash charges of $13.6 million and non-cash charges of $10.1 million. Cash charges consist

of charges incurred during the year that will be settled in cash, either during the current period or future periods.

The following table summarizes the 2017 Restructuring activity during 2017 (in thousands):

Severance and benefit related costs

Lease and contract termination costs

Relocation and other moving costs

Other restructuring costs

2017
Charge to
Income

Utilized in 2017

Cash(1)

Non-Cash

Reserves at
December 31,
2017

7,345

3,481

— $

3,864

5,320

147

10,931

2,706

147

2,140

1,964

—

8,116

650

—

675

Total pre-tax restructuring charges

23,743

8,474

10,080

5,189

__________________________

(1) Refers to cash utilized to settle charges during 2017.

2016 Restructuring

On January 4, 2016, the Company’s board of directors approved the 2016 Restructuring to reduce its exposure to the
upstream oil markets and to reduce consolidated expenses. During 2016, the Company completed its restructuring, which
included repositioning Energy Services’ upstream operations in California, reducing Corrosion Protection’s upstream exposure
by divesting its interest in a Canadian pipe coating joint venture, right-sizing Corrosion Protection to compete more effectively
and reducing corporate and other operating costs. The 2016 Restructuring reduced consolidated annual expenses by
approximately $17.4 million, of which approximately $1.2 million, $6.6 million and $5.6 million related to recognized savings
within Infrastructure Solutions, Corrosion Protection and Energy Services, respectively, and $4.0 million related to reduced
corporate costs. Cost savings were achieved primarily through office closures and reducing headcount by 964 employees, or
15.5% of the Company’s total workforce as of December 31, 2015.

The Company recorded total pre-tax charges, most of which were cash charges, of $16.1 million ($10.3 million post-tax) in

connection with the 2016 Restructuring. These charges included employee severance, retention, extension of benefits, early
lease termination and other restructuring costs associated with the restructuring efforts described above.

During 2016, the Company recorded pre-tax expense related to the 2016 Restructuring as follows (in thousands):

Severance and benefit related costs

Lease termination costs

Relocation and other moving costs
Other restructuring costs (1)

Total pre-tax restructuring charges (2)

__________________________

Year Ended December 31, 2016

Infrastructure
Solutions

Corrosion
Protection

Energy
Services

Total

2,249

3,588

1,559

—

307

808

154

761

983

193

5,436

3,364

4,565

8,171

7,396

1,137

562

7,005

16,100

(1) For Energy Services, includes charges primarily related to downsizing the Company’s upstream operations in California, inclusive of

wind-down costs, professional fees, fixed asset disposals and certain other restructuring charges.

(2) Includes $1.4 million of corporate-related restructuring charges that have been allocated to the Infrastructure Solutions, Corrosion

Protection and Energy Services reportable segments.

2016 Restructuring costs related to severance, other termination benefit costs and early lease termination costs were $9.1

million in 2016 and reported on a separate line in the Consolidated Statements of Operations.

The following tables summarize all charges related to the 2016 Restructuring recognized in 2016 as presented in their

affected line in the Consolidated Statements of Operations (in thousands):

Cost of revenues
Operating expenses
Restructuring and related charges
Other expense

Total pre-tax charges

__________________________

Year Ended December 31, 2016

Infrastructure
Solutions

Corrosion
Protection

Energy
Services

Total (1)

— $
559
2,557
249
3,365

278
483
3,803
—
4,564

— $

5,436
2,735
—
8,171

278
6,478
9,095
249
16,100

(1) Total pre-tax restructuring charges include cash charges of $15.3 million and non-cash charges of $0.8 million for in 2016. Cash
charges consist of charges incurred during the period that will be settled in cash, either during the current period or future periods.

The following tables summarize the 2016 Restructuring activity during 2017 and 2016 (in thousands):

Severance and benefit related costs

Lease termination costs

Relocation and other moving costs

Other restructuring costs

Total pre-tax restructuring charges

__________________________

Reserves at
December 31,
2016

2017
Charge to
Income

Utilized in 2017

Cash (1)

Non-Cash

Reserves at
December 31,
2017

645

125

120

900

— $

—

— $

645

125

120

900

— $

—

— $

—

(1) Refers to cash utilized to settle charges during 2017.

Severance and benefit related costs

Lease termination costs

Relocation and other moving costs

Other restructuring costs

Total pre-tax restructuring charges

__________________________

(1) Refers to cash utilized to settle charges during 2016.

2014 Restructuring

2016
Charge to
Income

Utilized in 2016

Cash (1)

Non-Cash

Reserves at
December 31,
2016

7,396

6,751

— $

1,137

562

7,005

1,012

552

6,120

16,100

14,435

—

765

645

125

120

900

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring to improve gross margins and
profitability over the long term by exiting certain unprofitable international locations for the Company’s CIPP business and
eliminating certain idle facilities in the Company’s pipe coating and insulation operation in Louisiana.

The Company completed all of the aforementioned objectives related to the 2014 Restructuring and reduced consolidated

annual operating costs by approximately $10.8 million, consisting of approximately $8.4 million and $2.4 million of
recognized savings within Infrastructure Solutions and Corrosion Protection, respectively.

Total pre-tax 2014 Restructuring charges since inception were $60.6 million ($45.0 million post-tax) and consisted of non-

cash charges totaling $48.3 million and cash charges totaling $12.3 million. The non-cash charges of $48.3 million included:
(i) $22.2 million related to the impairment of certain long-lived assets and definite-lived intangible assets for Bayou’s pipe
coating operation in Louisiana; and (ii) $26.1 million related to impairment of definite-lived intangible assets, allowances for
accounts receivable, write-off of certain other current assets and long-lived assets, inventory obsolescence, as well as losses
related to the sales of the Company’s CIPP contracting operations in France and Switzerland, which were reported in
Infrastructure Solutions. Cash charges totaling $12.3 million included employee severance, retention, extension of benefits,

employment assistance programs and other costs associated with the restructuring of Insituform’s European and Asia-Pacific
operations and Fyfe’s worldwide business.

The Company recorded pre-tax expenses (reversals) of $0.2 million, $(0.2) million and $11.0 million in 2017, 2016 and

2015, respectively, related to the 2014 Restructuring.

4. SUPPLEMENTAL BALANCE SHEET INFORMATION

Allowance for Doubtful Accounts

Activity in the allowance for doubtful accounts is summarized as follows (in thousands):

Balance, January 1, 2017
Bad debt expense (1)(2)
Write-offs and adjustments (1)(2)

Balance, December 31, 2017 (3)

__________________________

Years Ended December 31,

2017

2016

2015

6,098

14,524

3,155
(3,478)
5,775

1,083
(9,509)
6,098

19,307

6,369
(11,152)
14,524

(1) The Company recorded bad debt expense (reversals) of $0.4 million, $(0.6) million and $1.2 million in 2017, 2016 and 2015,

respectively, as part of the restructuring efforts (see Note 3) and was primarily due to the exiting of certain low-return businesses
mainly in foreign locations.

(2) The Company recorded bad debt expense of $2.9 million in 2015 related to long-dated receivables within Corrosion Protection.
(3) December 31, 2015 balance includes $7.5 million related to long-dated receivables, some of which were in litigation or dispute, within

Infrastructure Solutions.

Costs and Estimated Earnings on Uncompleted Contracts

Costs and estimated earnings on uncompleted contracts consisted of the following (in thousands):

Costs incurred on uncompleted contracts
Estimated earnings to date

Subtotal

Less – billings to date

Total

Included in the accompanying balance sheets:

Costs and estimated earnings in excess of billings
Billings in excess of costs and estimated earnings

Total

December 31,

2017

2016

751,399
138,998
890,397
(866,623)
23,774

75,371
(51,597)
23,774

741,590
165,862
907,452
(907,749)
(297)

62,401
(62,698)
(297)

Costs and estimated earnings in excess of billings represent work performed that has not been 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.

Inventories

Inventories are summarized as follows (in thousands):

Raw materials and supplies
Work-in-process
Finished products
Construction materials

Total

December 31,

2017

2016

30,265
3,246
13,596
16,862
63,969

31,399
2,207
14,015
16,332
63,953

Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

Land and land improvements
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Autos and trucks
Construction in progress
Subtotal

Less – Accumulated depreciation

Total

Estimated
Useful Lives
(Years)

5 — 40
4 — 10
3 — 10
3 — 10

December 31,

2017

2016

10,258
47,725
159,626
35,149
54,039
8,424
315,221

10,414
65,505
189,849
32,386
50,128
9,944
358,226

(206,181)
109,040

(201,479)
156,747

Depreciation expense was $29.3 million, $30.4 million and $30.6 million for the years ended December 31, 2017, 2016
and 2015, respectively. The decrease in 2017 was primarily due to the held for sale classification of Bayou’s assets during the
third quarter of 2017.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

Vendor and other accrued expenses
Estimated casualty and healthcare liabilities
Job costs
Accrued compensation
Income taxes payable
Deferred income taxes (1)

Total

__________________________

December 31,

2017

2016

35,193
14,772
9,585
27,901
4,560
—
92,011

33,108
14,610
8,707
23,398
1,870
3,317
85,010

(1) As of January 1, 2017, the Company adopted FASB Accounting Standards Update No. 2015-17, Balance Sheet Classification of

Deferred Taxes, which requires all deferred tax assets and liabilities, along with any related valuation allowance, to be presented as
non-current. Prior period balances were not retrospectively adjusted.

5. ASSETS AND LIABILITIES HELD FOR SALE

On July 28, 2017, the Company’s board of directors approved a plan to sell the assets and liabilities of Bayou (see Note 1).
It is probable that such sale will occur within one year of July 28, 2017. As a result, the relevant asset and liability balances are
accounted for as held for sale and measured at the lower of carrying value or fair value less cost to sell. No impairment charges
were recorded as the net carrying value approximated or was less than management’s current expectation of fair value less cost
to sell. In the event the Company is unable to sell the assets and liabilities of Bayou 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 impairment charges or a loss on disposal.

On September 17, 2017, the Company entered into an agreement with Wasco Coatings UK Ltd. (“Wasco UK”), the
Company’s joint venture partner in Bayou Wasco Insulation, LLC (“Bayou Wasco”), whereby the Company paid $1.5 million
to Wasco UK for Wasco UK’s waiver of its transfer restrictions contained in the original operating agreement for Bayou Wasco.
The payment was recorded to “Acquisition and divestiture expenses” in the Consolidated Statement of Operations in 2017.

The following table provides the components of assets and liabilities held for sale (in thousands):

Assets held for sale:

Current assets

Cash and cash equivalents
Receivables
Costs and estimated earnings in excess of billings
Inventories
Prepaid expenses and other current assets

Total current assets
Property, plant & equipment, less accumulated depreciation
Identified intangible assets, less accumulated amortization

Total assets held for sale

Liabilities held for sale:

Current liabilities

Accounts payable
Accrued expenses
Billings in excess of costs and estimated earnings

Total current liabilities
Debt
Other liabilities

Total liabilities held for sale

December 31,
2017

989
6,368
1,299
3,727
827
13,210
53,887
3,217
70,314

5,763
1,805
5,478
13,046
7,757
97
20,900

6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table presents a reconciliation of the beginning and ending balances of the Company’s goodwill (in

millions):

Balance, December 31, 2015

Goodwill, gross

Accumulated impairment losses

Goodwill, net
2016 Activity:

Acquisitions (1)
Foreign currency translation

Balance, December 31, 2016

Goodwill, gross

Accumulated impairment losses
Goodwill, net
2017 Activity:

Acquisitions (2)
Impairments (3)
Foreign currency translation

Balance, December 31, 2017

Goodwill, gross

Accumulated impairment losses

Goodwill, net

__________________________

Infrastructure
Solutions

Corrosion
Protection

Energy
Services

Total

190,525
(16,069)
174,456

73,345
(45,400)
27,945

80,246
(33,527)
46,719

344,116
(94,996)
249,120

50,585
(1,616)

239,494
(16,069)
223,425

3,355
(45,390)
3,637

—

530

73,875
(45,400)
28,475

—

494

—

80,246
(33,527)
46,719

—

50,585
(1,086)

393,615
(94,996)
298,619

3,355
(45,390)
4,131

246,486
(61,459)
185,027

74,369
(45,400)
28,969

80,246
(33,527)
46,719

401,101
(140,386)
260,715

(1) During 2016 , the Company recorded goodwill of $44.0 million, $2.4 million, $0.8 million and $3.4 million related to the acquisitions

of Underground Solutions, Fyfe Europe, LMJ and Concrete Solutions, respectively (see Note 1)

(2) During 2017, the Company recorded goodwill of $3.4 million related to the acquisition of Environmental Techniques (see Note 1).
(3) During 2017, the Company recorded a $45.4 million goodwill impairment to its Fyfe reporting unit, which is included in the

Infrastructure Solutions reportable segment (see Note 2).

Intangible Assets

Intangible assets were as follows (in thousands):

December 31, 2017

December 31, 2016

Weighted
Average
Useful Lives
(Years)

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

License agreements

Leases
Trademarks (1)(2)
Non-competes
Customer relationships (1)(2)
Patents and acquired technology (2)(3)

10.5

3.0

10.5

1.7

9.9

6.1

4,497

(3,623) $

796

15,464

1,197

160,423

39,285

(534)

(6,184)

(1,048)

874

262

9,280

149

4,418

(3,438) $

980

2,065

24,185

1,308

(912)

(7,868)

(1,054)

1,153

16,317

254

(56,907)

103,516

187,554

(53,830)

133,724

(21,021)

18,264

66,222

(23,739)

42,483

__________________________

(1) During 2017, the Company recorded trademarks of $0.1 million and customer relationships of $1.7 million related to the acquisition of

Environmental Techniques (see Note 1).

$ 221,662

(89,317) $ 132,345

$ 285,752

(90,841) $ 194,911

(2) During 2017, the Company recorded intangible asset impairments related to restructuring and realignment efforts at Fyfe North

America of $3.4 million for trademarks, $20.8 million for customer relationships and $16.8 million for patents and acquired technology
(see Note 2).

(3) During 2017, the Company wrote off $5.3 million related to certain patents abandoned as part of the 2017 Restructuring (see Note 3).

Amortization expense was $16.1 million, $16.4 million and $13.2 million for the years ended December 31, 2017, 2016

and 2015, respectively. Estimated amortization expense by year is as follows (in thousands):

Year

2018

2019

2020

2021

2022

Amount

13,733

13,569

13,496

13,328

7. LONG-TERM DEBT AND CREDIT FACILITY

Long-term debt, term note and notes payable consisted of the following (in thousands):

Term note, due October 30, 2020, annualized rates of 3.60% and 3.08%, respectively
Line of credit, 3.50% and 2.96%, respectively
Other notes with interest rates from 3.3% to 7.8%

Subtotal

Less – Current maturities and notes payable
Less – Unamortized loan costs

Total

December 31,

2017
308,437
38,000
875
347,312
26,555
2,517
318,240

2016
328,125
36,000
9,901
374,026
19,835
3,406
350,785

At December 31, 2017, principal payments required to be made for each of the next five years are summarized as follows

(in thousands):

Year
2018
2019
2020
2021
2022
Thereafter
Total

Amount (1)
26,555
$
28,437
292,320
—
—
—
347,312

___________________

(1) See Note 15 to the consolidated financial statements contained in this Report regarding the amended Credit Facility.

Financing Arrangements

In October 2015, the Company entered into an amended and restated $650.0 million senior secured credit facility (the

“Credit Facility”) with a syndicate of banks. Bank of America, N.A. served as the sole administrative agent and JP Morgan
Chase Bank, N.A. and U.S. Bank National Association acted as co-syndication agents. Merrill Lynch Pierce Fenner & Smith
Incorporated, JPMorgan Securities LLC and U.S. Bank National Association acted as joint lead arrangers and joint book
managers in the syndication of the Credit Facility.

At December 31, 2017, the Credit Facility consisted of a $300.0 million five-year revolving line of credit and a $350.0
million five-year term loan facility. The Company drew the entire term loan from the Credit Facility to (i) retire $344.7 million
in indebtedness outstanding under the Company’s prior credit facility; (ii) fund expenses associated with the Credit Facility;
and (iii) fund general corporate purposes.

In 2015, the Company paid expenses of $4.4 million associated with the Credit Facility, $1.8 million related to up-front
lending fees and $2.6 million related to third-party arranging fees, the latter of which was recorded in interest expense on the
consolidated statement of operations. In addition, the Company had $3.5 million in unamortized loan costs associated with the
prior credit facility, of which $0.8 million was recorded in interest expense on the consolidated statement of operations.

Generally, interest is charged on the principal amounts outstanding under the 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 is also based on the Company’s consolidated leverage ratio. The applicable LIBOR borrowing rate
(LIBOR plus Company’s applicable rate) as of December 31, 2017 was approximately 3.59%.

The Company’s indebtedness at December 31, 2017 consisted of $308.4 million outstanding from the $350.0 million term
loan under the Credit Facility, $38.0 million on the line of credit under the Credit Facility and $0.9 million of third-party notes
and bank debt. Additionally, the Company had $7.7 million of debt held by its joint venture partner (representing funds loaned
by its joint venture partner) listed as held for sale at December 31, 2017 related to the planned sale of Bayou. During 2017, the
Company had net borrowings of $2.0 million on the line of credit for domestic working capital needs.

As of December 31, 2017, the Company had $30.5 million in letters of credit issued and outstanding under the Credit
Facility. Of such amount, $13.4 million was collateral for the benefit of certain of our insurance carriers and $17.1 million was
for letters of credit or bank guarantees of performance or payment obligations of foreign subsidiaries.

The Company’s indebtedness at December 31, 2016 consisted of $328.1 million outstanding from the term loan under the
Credit Facility and $36.0 million on the line of credit under the Credit Facility. During 2016, the Company: (i) borrowed $30.0
million on the line of credit to help fund the acquisition of Underground Solutions; (ii) borrowed $3.0 million on the line of
credit to help fund a small acquisition; and (iii) had net borrowings of $3.0 million on the line of credit for both domestic and
international working capital needs. Additionally, the Company designated $9.6 million of debt held by its joint ventures
(representing funds loaned by its joint venture partners) as third-party debt in the consolidated financial statements and held
$0.3 million of third-party notes and bank debt at December 31, 2016.

At December 31, 2017 and 2016, the estimated fair value of the Company’s long-term debt was approximately $356.0
million and $366.0 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 3 inputs as defined in Note 12.

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 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 the variable monthly LIBOR-based interest cost on a
corresponding $262.5 million portion of the Company’s 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. See Note 12.

The Credit Facility is subject to certain financial covenants, including a consolidated financial leverage ratio and
consolidated fixed charge coverage ratio. Under the amended Credit Facility, as described in Note 15, these financial
covenants were subsequently revised and effective as of December 31, 2017. Subject to the specifically defined terms and
methods of calculation as set forth in the amended Credit Facility, the financial covenant requirements, as of each quarterly
reporting period end, are defined as follows:

• Consolidated financial leverage ratio, as amended, compares consolidated funded indebtedness to amended Credit

Facility defined income with a maximum amount not to exceed 3.75 to 1.00. At December 31, 2017, the Company’s
consolidated financial leverage ratio was 2.97 to 1.00 and, using the amended Credit Facility defined income, the
Company had the capacity to borrow up to $95.3 million of additional debt.

• Consolidated fixed charge coverage ratio, as amended, compares amended Credit Facility defined income to amended

Credit Facility defined fixed charges with a minimum permitted ratio of not less than 1.15 to 1.00. At December 31,
2017, the Company’s fixed charge ratio was 1.72 to 1.00.

At December 31, 2017, the Company was in compliance with all of its debt and financial covenants as required under the

amended Credit Facility.

See Note 15 for further information regarding the amended Credit Facility.

8. STOCKHOLDERS’ EQUITY

Share Repurchase Plan

Under the terms of its Credit Facility, the Company is authorized to purchase up to $40.0 million of shares of its common
stock in open market purchases on an annual basis, subject to board of director authorization. In October 2016, the Company’s
board of directors authorized the open market repurchase of up to $40.0 million of our common stock to be made during 2017.
The Company repurchased shares under this program throughout 2017. In October 2017, the Company’s board of directors
authorized a similar $40.0 million program for 2018. On February 27, 2018, the Company amended its Credit Facility, which
limits the open market share repurchases to $30.0 million for 2018 (see Note 15). 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 and
restricted stock 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 or restricted stock 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 Company common stock surrendered to the Company for taxes due on the exercise of the option are deemed
repurchased by the Company.

During 2017, the Company acquired 1,599,093 shares of the Company’s common stock for $35.3 million ($22.10 average
price per share) through the open market repurchase programs discussed above and 112,899 shares of the Company’s common
stock for $2.5 million ($22.15 average price per share) in connection with the satisfaction of tax obligations in connection with
the vesting of restricted stock and restricted stock units. Once repurchased, the Company immediately retired all such shares.
During 2017, the Company did not acquire any of the Company’s common stock in connection with “net, net” exercises of
employee stock options.

During 2016, the Company acquired 2,226,875 shares of the Company’s common stock for $41.8 million ($18.76 average
price per share) through open market repurchase programs and 61,039 shares of the Company’s common stock for $1.2 million
($19.65 average price per share) in connection with the satisfaction of tax obligations in connection with the vesting of
restricted stock and restricted stock units. In addition, during 2016, the Company acquired 61,980 shares of the Company’s
common stock in connection with “net, net” exercises of employee stock options for a gross value of $1.5 million ($1.2 million
in cash value). Once repurchased, the Company immediately retired all such shares.

During 2015, the Company acquired 1,306,199 shares of the Company’s common stock for $24.3 million ($18.58 average
price per share) through open market repurchase programs and 32,902 shares of the Company’s common stock for $0.6 million
($17.05 average price per share) in connection with the satisfaction of tax obligations in connection with the vesting of
restricted stock, the exercise of stock options and the distribution of deferred stock units. In addition, during 2015, the
Company acquired 163,500 shares of the Company’s common stock in connection with “net, net” exercises of employee stock
options for a gross value of $3.0 million ($0.9 million in cash value). Once repurchased, the Company immediately retired all
such shares.

Equity-Based Compensation Plans

Employee 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”). The
2016 Employee Plan replaced the 2013 Employee Equity Incentive Plan. The 2016 Employee Plan provides for equity-based
compensation awards, including restricted shares of common stock, performance awards, stock options, stock units and stock
appreciation rights. There are 2,132,739 shares of the Company’s common stock registered for issuance under the 2016
Employee Plan. 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. At December 31, 2017, there were no
options and 448,225 unvested restricted stock units outstanding under the 2016 Employee Plan.

Prior to the 2016 Employee Plan, the Board of Directors administered the 2013 Employee Equity Incentive Plan (the
“2013 Employee Plan”) and the 2009 Employee Equity Incentive Plan (the “2009 Employee Plan”). At December 31, 2017,
there were no options and 980,653 unvested shares of restricted stock and restricted stock units outstanding under the 2013

Employee Plan, and 126,680 options and no unvested shares of restricted stock and restricted stock units outstanding under the
2009 Employee Plan.

Director Plans

In April 2016, the Company’s stockholders also approved the 2016 Director Equity Incentive Plan (the “2016 Director

Plan”), which replaced the 2011 Non-Employee Director Equity Incentive 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. There are 166,456 shares of the Company’s common stock registered for issuance under the 2016 Director Plan. At
December 31, 2017, there were 49,195 deferred stock units outstanding under the 2016 Director Plan.

Prior to the 2016 Director Plan, the Board of Directors administered the 2011 Non-Employee Director Equity Plan (“2011

Director Plan”), the 2006 Non-Employee Director Equity Plan (“2006 Director Plan”) and the 2001 Non-Employee Director
Equity Plan (“2001 Director Plan”), all of which contained substantially the same provisions as the current plan. At
December 31, 2017, there were 119,366 deferred stock units outstanding under the 2011 Director Plan, 46,841 deferred stock
units outstanding under the 2006 Director Plan and 54,575 deferred stock units outstanding under the 2001 Director Equity
Plan.

Activity and related expense associated with these plans are described in Note 9.

9. EQUITY-BASED COMPENSATION

Stock Awards

Stock awards, which include shares of restricted stock, restricted stock units and performance 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 units causes the reversal of all previous expense recorded as a reduction of current
period expense.

A summary of stock award activity is as follows:

2017

Weighted
Average
Award
Date
Fair Value

Stock
Awards

Outstanding, beginning of year

1,501,021

Restricted stock units awarded

Performance stock units awarded

Restricted shares distributed

Restricted stock units distributed

Performance stock units distributed

Restricted shares forfeited

Restricted stock units forfeited
Performance stock units forfeited

Outstanding, end of year

257,532

213,436

(179,169)

(95,510)

(49,672)

(1,084)

(81,626)
(136,050)
1,428,878

20.58

23.06

28.18

22.44

20.71

21.95

23.01

20.36
24.29
21.53

Years Ended December 31,
2016

Weighted
Average
Award
Date
Fair Value

Stock
Awards

1,275,707

335,026

245,586
(162,554)
(23,739)
—
(22,045)
(71,992)
(74,968)
1,501,021

20.54

18.43

25.69

23.49

20.73

—

23.34

17.60
22.64
20.58

2015

Weighted
Average
Award
Date
Fair Value

Stock
Awards

767,540

422,141

297,164
(90,607)
(12,646)
—
(54,045)
(27,360)
(26,480)
1,275,707

21.93

17.37

21.55

19.25

19.62

—

23.40

18.79
22.42
20.54

Expense associated with stock awards was $10.1 million, $8.3 million and $6.8 million in 2017, 2016 and 2015,
respectively. Unrecognized pre-tax expense of $11.8 million related to stock awards is expected to be recognized over the
weighted average remaining service period of 1.7 years for awards outstanding at December 31, 2017.

At December 31, 2017, 1,501,962 shares of common stock were available for equity-based compensation awards pursuant

to the 2016 Employee Plan.

Deferred Stock Unit Awards

Deferred stock units generally are 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 and generally are fully vested on the date of grant.
The expense related to the issuance of deferred stock units is recorded as of the date of the award.

The following table summarizes information about deferred stock unit activity:

2017

Weighted
Average
Award
Date
Fair Value

Deferred
Stock
Units

253,445

47,091

(30,559)
269,977

19.93

23.53

23.57
20.14

Years Ended December 31,
2016

Weighted
Average
Award
Date
Fair Value

Deferred
Stock
Units

247,219

45,886
(39,660)
253,445

19.92

21.22

21.29
19.93

2015

Weighted
Average
Award
Date
Fair Value

Deferred
Stock
Units

221,471

53,527
(27,779)
247,219

20.10

18.56

18.76
19.92

Outstanding, beginning of year

Awarded

Shares distributed

Outstanding, end of year

Expense associated with awards of deferred stock units was $1.1 million, $1.0 million and $1.0 million in 2017, 2016 and

2015, respectively.

At December 31, 2017, 117,261 shares of common stock were available for equity-based compensation awards pursuant to

the 2016 Director Plan.

Stock Options

Stock options on the Company’s common stock are awarded from time to time to executive officers and certain key

employees of the Company. Stock options granted generally have a term of seven to ten years and an exercise price equal to the
market value of the underlying common stock on the date of grant.

A summary of stock option activity is as follows:

2017

Weighted
Average
Exercise
Price

Years Ended December 31,
2016

2015

288,383
(114,307)
(3,823)
170,253

Weighted
Average
Exercise
Price

21.73

21.33

22.24
21.99

503,134
(209,205)
(5,546)
288,383

Weighted
Average
Exercise
Price

18.18

13.13

24.21
21.73

21.78

23.06

170,253

21.99

284,929

Outstanding at January 1

170,253

Exercised

Canceled/Expired

Outstanding at December 31

(43,573)

—
126,680

Exercisable at December 31

126,680

21.99

18.87

—
23.06

In 2017, 2016 and 2015, the Company recorded expense of zero, less than $0.1 million and $0.1 million, respectively,
related to stock option grants. Unrecognized pre-tax expense related to stock option grants was zero at December 31, 2017.

Financial data for stock option exercises are summarized in the following table (in thousands):

Years Ended December 31,
2016

2015

2017

Amount collected from stock option exercises

Total intrinsic value of stock option exercises
Tax benefit of stock option exercises recorded in income tax expense (1)
Tax benefit of stock option exercises recorded in additional paid-in-capital (1)
Aggregate intrinsic value of outstanding stock options

Aggregate intrinsic value of exercisable stock options

822

370
63

—

386

306

47
—

315

102

2,748

1,108
—

209

173

169

__________________________

(1) As of January 1, 2017, the Company adopted FASB Accounting Standards Update No. 2016-09, Compensation - Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment Accounting, which, among other items, changed the accounting for the
tax benefit of stock option exercises so that it is now recorded as part of current earnings rather than additional paid-in capital. Prior
period balances were not retrospectively adjusted.

The intrinsic value calculations are based on the Company’s closing stock price of $25.43, $23.70 and $19.31 on

December 31, 2017, 2016 and 2015, respectively.

10. TAXES ON INCOME

Income (loss) before taxes on income was as follows (in thousands):

Domestic

Foreign

Total

Years Ended December 31,

2017
(39,660) $
(21,570)
(61,230) $

2016

23,205

12,064

35,269

2015
(15,944)
17,159

1,215

Provisions for taxes on income (loss) consisted of the following components (in thousands):

Years Ended December 31,

2017

2016

2015

Current:

Federal

Foreign

State

Subtotal

Deferred:

Federal

Foreign

State

Subtotal

3,764

(636) $
3,585

175

3,124

2,158

475

352

2,985

2,150

5,600

528

8,278

218

1,382
(673)
927

9,205

6,109

7,512

3,351

14,627

(8,706)
(1,099)
183
(9,622)
5,005

Total tax provision

Income tax expense differed from the amounts computed by applying the U.S. federal income tax rate of 35% to income

(loss) before taxes on income as a result of the following (in thousands):

Income taxes (benefit) at U.S. federal statutory tax rate

$ (21,431)

12,344

425

Years Ended December 31,

2017

2016

2015

Increase (decrease) in taxes resulting from:

Change in the balance of the valuation allowance for deferred tax assets
allocated to foreign income tax expense
Change in the balance of the valuation allowance for deferred tax assets
allocated to domestic income tax expense

State income taxes, net of federal income tax benefit

Divestitures

Meals and entertainment

Changes in taxes previously accrued

Foreign tax rate differences

Goodwill impairment

Recognition of uncertain tax positions
Deemed mandatory repatriation

Release of deferred tax liability on foreign earnings

Settlement of escrow arrangement

Domestic Production Activities deduction

Incremental U.S. taxes on undistributed foreign earnings

Other matters

Total tax provision

Effective tax rate

4,598

1,364

(756)

12,755

2,270

—

785

(1,339)

913

6,359

(62)
10,406

(7,051)

—

(1,921)

—

(1,277)

5,005

(4,202)
342

271

736

23
(2,559)
—

85
—

—

—
(1,017)
—
(1,278)
6,109

4,834
(94)
2,269

761
(489)
(1,468)
3,485

24
—

—
(1,115)
(528)
2,102
(245)
9,205

(8.2)%

17.3%

757.6%

On December 22, 2017, the U.S. government enacted the TCJA, which includes significant changes to the U.S. corporate

income tax system including: (i) a federal corporate rate reduction from 35% to 21%; (ii) limitations on the deductibility of
interest expense and executive compensation; (iii) creation of new minimum taxes such as the Global Intangible Low Taxed
Income (“GILTI”) tax and the base erosion anti-abuse tax (“BEAT”); and (iv) the transition of U.S. international taxation from
a worldwide tax system to a modified territorial tax system, which will result in a one time U.S. tax liability on those earnings
that have not previously been repatriated to the U.S.

The transitional tax is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of certain of the
Company’s non-U.S. subsidiaries. To determine the amount of the transition tax, the Company must determine the amount of
post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. Further, the
one-time transition tax is based on the amount of those earnings held in cash and other specified assets, either at the end of
2017 or the average of the year end balances for 2015 and 2016. Based on the Company’s initial analysis of the TCJA, it has
recorded a provisional estimated net tax expense of $2.4 million, which consists of a charge of $10.4 million for the deemed
mandatory repatriation, and reduced by a $7.1 million release of a deferred tax liability on unremitted foreign earnings and $0.9
million of other TCJA related impacts. The Company continues to gather additional information and will further analyze its
calculation of the transition tax based on additional technical guidance from U.S. federal and state tax authorities about the
application of these new rules.

Net deferred taxes consisted of the following (in thousands):

Deferred income tax assets:

Foreign tax credit carryforwards

Net operating loss carryforwards

Accrued expenses

Other

Total gross deferred income tax assets

Less valuation allowance

Net deferred income tax assets

Deferred income tax liabilities:

Property, plant and equipment

Intangible assets

Undistributed foreign earnings

Other

Total deferred income tax liabilities

Net deferred income tax liabilities

December 31,

2017

2016

466

23,216

12,107

4,707

40,496
(29,782)
10,714

(9,482)
(2,201)
—
(6,576)
(18,259)
(7,545) $

3,426

26,212

17,366

8,701

55,705
(15,428)
40,277

(12,627)
(28,346)
(7,051)
(9,237)
(57,261)
(16,984)

The Company’s tax assets and liabilities, netted by taxing location, are in the following captions in the balance sheets (in

thousands):

Current deferred income tax assets, net (1)
Current deferred income tax liabilities, net (1)
Noncurrent deferred income tax assets, net

Noncurrent deferred income tax liabilities, net

Net deferred income tax liabilities

__________________________

December 31,

2017

2016

— $

—

1,666
(9,211)
(7,545) $

7,824
(3,317)
1,848
(23,339)
(16,984)

(1) As of January 1, 2017, the Company adopted FASB Accounting Standards Update No. 2015-17, Balance Sheet Classification of

The Company’s deferred tax assets at December 31, 2017 included $23.2 million in federal, state and foreign net operating

loss (“NOL”) carryforwards. These NOLs include $14.6 million, which if not used will expire between the years 2018 and
2037, and $8.6 million that have no expiration dates. The Company also has deferred tax amounts related to foreign tax credit
carryforwards of $0.5 million, of which, $0.3 million will expire in 2026 if not used and $0.2 million have no expiration date.

For financial reporting purposes, a valuation allowance of $29.8 million has been recognized to reduce the deferred tax

assets related to certain federal, state and foreign net operating loss carryforwards and other assets, for which it is more likely
than not that the related tax benefits will not be realized, due to uncertainties as to the timing and amounts of future taxable
income. The valuation allowance at December 31, 2016 was $15.4 million.

The increase during 2017 was primarily related to the assessment of positive and negative evidence to estimate if sufficient

future taxable income will be generated to use the existing deferred tax assets. A significant component of the objective
negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2017. Such
objective evidence limits the ability to consider other subjective evidence such as our projections for future growth.

On the basis of this evaluation, as of December 31, 2017, a valuation allowance has been recorded to record only the

portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered
realizable; however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or
increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be
given to subjective evidence such as our projections for growth.

Activity in the valuation allowance is summarized as follows (in thousands):

Years Ended December 31,
2016

2015

2017

Balance, at beginning of year

15,428

18,897

Additions

Reversals

Remeasurement of U.S. deferred tax balances

Other adjustments

Balance, at end of year

19,260
(183)
(5,141)
418

29,782

3,095
(4,984)
—
(1,580)
15,428

19,353

7,783
(5,294)
—
(2,945)
18,897

As a result of the deemed mandatory repatriation provisions in the TCJA, during 2017 the Company included an estimated

$210.6 million of undistributed earnings in income subject to U.S. tax at reduced tax rates. The TCJA resulted in certain
reassessments of previous indefinite reinvestment assertions with respect to certain jurisdictions. The Company does not intend
to distribute earnings in a taxable manner; and therefore, intends 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 TCJA; or (iii) earnings
that would not result in significant foreign taxes. As a result, the Company has not recognized a deferred tax liability on its
investment in foreign subsidiaries as of December 31, 2017. The Company continues to refine its provisional balances under
the TCJA and adjustments may be made during the one-year measurement period under SAB 118. The ultimate impact of the
TCJA may differ from the current provisional amounts and the adjustments could be material.

As part of the February 2016 acquisition of Underground Solutions, the Company repatriated approximately $29.7 million

from foreign subsidiaries to assist in funding the transaction, incurring approximately $3.2 million in additional taxes, an
estimate for which was accrued as of December 31, 2015. This was viewed as a one-time, special-use transaction.

FASB ASC 740, Income Taxes (“FASB ASC 740”), prescribes a more-likely-than-not threshold for the financial statement

recognition and measurement of a tax position taken or expected to be taken in a tax return. FASC ASC 740 also provides
guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure of uncertain tax
positions in financial statements.

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):

Years Ended December 31,
2016

2017

2015

Balance, at beginning of year

2,465

2,410

Additions for tax positions of prior years related to acquisitions

Additions for tax positions of prior years

Lapse in statute of limitations

Foreign currency translation

—

12
(274)
26

Balance, at end of year, total tax provision

2,229

148

10
(83)
(20)
2,465

2,672

—

10
(218)
(54)
2,410

The total amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate was $0.5 million at

December 31, 2017.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. During
the years ended December 31, 2017, 2016 and 2015, approximately $0.3 million was expensed for interest and penalties in each
period.

The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits will change in 2018.

The Company has certain tax return years subject to statutes of limitation that will expire within twelve months. Unless
challenged by tax authorities, the expiration of those statutes of limitation is expected to result in the recognition of uncertain
tax positions in the amount of approximately $0.4 million.

The Company is subject to taxation in the United States, various states and foreign jurisdictions. With few exceptions, the

Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2013.

100

11. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases a number of its administrative and operations facilities under non-cancellable operating leases
expiring at various dates through 2025. In addition, the Company leases certain construction, automotive and computer
equipment on a multi-year, monthly or daily basis. Rental expense in the years ended December 31, 2017, 2016 and 2015 was
$26.7 million, $23.8 million and $24.9 million, respectively.

At December 31, 2017, the future minimum lease payments required under the non-cancellable operating leases were as

follows (in thousands):

Year
2018
2019
2020
2021
2022
Thereafter
Total

Minimum Lease
Payments

21,084
16,336
11,652
8,148
5,245
7,818
70,283

Litigation

In December 2016, the Company settled two lawsuits related to the December 2012 departure of several key leaders in
sales and operations for the Tyfo® technology, which is part of the Infrastructure Solutions platform. Under the settlement,
Aegion will receive $6.6 million over the next four years; and accordingly, recorded the gain to “Gain on litigation settlement”
in the Consolidated Statement of Operations. The initial $3.6 million cash payment was received in December 2016 and the
first cash installment of $750,000 was received in December 2017. The remainder is to be paid in $750,000 annual
installments over the next three years. At December 31, 2017, $750,000 was recorded to “Prepaid expenses and other current
assets” and $1.5 million was recorded to “Other assets” in the Consolidated Balance Sheet.

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.

Contingencies

In connection with the Brinderson acquisition, certain pre-acquisition matters were identified in 2014 whereby a loss is
both probable and reasonably estimable. The Company establishes liabilities in accordance with FASB ASC Subtopic No.
450-20, Contingencies - Loss Contingencies, and accordingly, recorded an accrual related to various legal, tax, employee
benefits and employment matters. At December 31, 2016, the accrual relating to these matters was $6.0 million. During 2017,
the Company made a $0.3 million payment related to one of the above matters. Additionally, the Company reassessed its
reserve during the year for: (i) the lapse of certain payroll tax statutory limitation periods; and (ii) further developments in the
legal status of these matters, including the preliminary settlement through mediated resolution of several matters. Following
consultation with internal and third-party legal and tax counsel, the Company lowered its accrual for such matters by $1.5
million during 2017. The accrual adjustments resulted in an offset to “Operating expense” in the Consolidated Statement of
Operations. As of December 31, 2017, the remaining accrual relating to these matters was $4.2 million.

Purchase Commitments

The Company had no material purchase commitments at December 31, 2017.

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

101

of material loss is remote under these arrangements and has not recorded a liability for these risks at December 31, 2017 on its
consolidated balance sheet.

Retirement Plans

Approximately 450 of our U.S. employees participate in multi-employer retirement plans. Substantially all of the
Company’s remaining U.S. employees are eligible to participate in one of the Company’s sponsored defined contribution
savings plans, which are qualified plans under the requirements of Section 401(k) of the Internal Revenue Code. Company
contributions to the domestic plans were $6.3 million, $5.5 million and $5.5 million for the years ended December 31, 2017,
2016 and 2015, respectively.

Certain foreign subsidiaries maintain various other defined contribution retirement plans. Company contributions to such

plans for the years ended December 31, 2017, 2016 and 2015 were $1.0 million, $0.8 million and $0.8 million, respectively.

In connection with the Company’s 2009 acquisition of Corrpro, the Company assumed an obligation associated with a
contributory defined benefit pension plan sponsored by a subsidiary of Corrpro located in the United Kingdom. Employees of
this Corrpro subsidiary no longer accrue benefits under the plan; however, Corrpro continues to be obligated to fund prior
period benefits. Corrpro funds the plan in accordance with recommendations from an independent actuary and made
contributions of $0.0 million, $0.1 million and $0.1 million in 2017, 2016 and 2015, respectively. Both the pension expense
and funding requirements for the years ended December 31, 2017, 2016 and 2015 were immaterial to the Company’s
consolidated financial position and results of operations. The benefit obligation and plan assets at December 31, 2017 were
approximately $7.5 million and $9.3 million, respectively. The Company used a discount rate of 2.5% for the evaluation of the
pension liability. The Company recorded an asset associated with the overfunded status of this plan of approximately $1.8
million, which is included in other long-term assets on the consolidated balance sheet. The benefit obligation and plan assets at
December 31, 2016 approximated $7.4 million and $8.8 million, respectively. Plan assets consist of investments in equity and
debt securities as well as cash, which are primarily Level 2 investments under the fair value hierarchy of U.S. GAAP.

12. 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, 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 the outstanding hedged balance. During each of the years ended December 31, 2017, 2016 and 2015, the
Company recorded less than $0.1 million as a gain on the consolidated statements of operations in the other income (expense)
line item upon settlement of the cash flow hedges. At December 31, 2017, the Company’s cash flow hedges were in a net
deferred gain position of $3.3 million due to favorable movements in short-term interest rates relative to the hedged position.
The gain was recorded in prepaid expenses and other current assets and other comprehensive income on the Consolidated
Balance Sheets and on the foreign currency translation adjustment and derivative transactions line of the Consolidated
Statements of Equity. The Company presents derivative instruments in the consolidated financial statements on a gross basis.
The gross and net difference of derivative instruments are considered to be immaterial to the financial position presented in the
financial statements.

The Company engages in regular inter-company trade activities with, and receives royalty payments from, its wholly-
owned Canadian entities, paid in Canadian Dollars, rather than the Company’s functional currency, U.S. Dollars. In order to
reduce the uncertainty of the U.S. Dollar settlement amount of that anticipated future payment from the Canadian entities, the
Company uses forward contracts to sell a portion of the anticipated Canadian Dollars to be received at the future date and buys
U.S. Dollars.

In October 2015, the Company entered into an interest rate swap agreement for a notional amount of $262.5 million, which

102

The following table provides a summary of the fair value amounts of our derivative instruments, all of which are Level 2

(as defined below) inputs (in thousands):

Designation of Derivatives

Balance Sheet Location

2017

2016

December 31,

Derivatives Designated as Hedging Instruments:

Forward Currency Contracts

Prepaid expenses and other current assets

Interest Rate Swaps

Forward Currency Contracts

Other non-current assets
Total Assets

Accrued expenses
Total Liabilities

Derivatives Not Designated as Hedging Instruments:

Forward Currency Contracts

Prepaid expenses and other current assets
Total Assets

Total Derivative Assets

Total Derivative Liabilities

Total Net Derivative Asset (Liability)

176

3,193

3,369

3,379

3,346

—

1,061

1,087

1,030

FASB ASC 820, Fair Value Measurements (“FASB ASC 820”), defines fair value, establishes a framework for measuring

fair value and expands disclosure requirements about fair value measurements for interim and annual reporting periods. 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; and 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 instruments summarized below are derived from significant observable inputs,
referred to as Level 2 inputs.

The following table represents assets and liabilities measured at fair value on a recurring basis and the basis for that

measurement (in thousands):

Assets:

Forward Currency Contracts

Interest Rate Swaps

Total

Liabilities:

Forward Currency Contracts

Total

Total Fair
Value at
December 31,
2017

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

186

3,193

3,379

— $

—

— $

186

3,193

3,379

—

103

Assets:

Forward Currency Contracts

Interest Rate Swap

Total

Liabilities:

Forward Currency Contracts

Total

Total Fair
Value at
December 31,
2016

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

1,061

1,087

— $

—

— $

1,061

1,087

—

The following table summarizes the Company’s derivative positions at December 31, 2017:

Canadian Dollar/USD

USD/British Pound

EURO/British Pound

USD/South African Rand

Interest Rate Swap

Position
Sell

Sell

Notional
Amount

1,662,500

4,595,000

2,568,300

R 38,371,793

$ 231,328,125

Weighted
Average
Remaining
Maturity
In Years

0.3

0.1

2.8

Average
Exchange
Rate

1.26
1.35

0.89

12.44

The Company had no transfers between Level 1, 2 or 3 inputs during 2017. 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 our 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 are based on Level 2 inputs as previously defined.

13. SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates in three distinct markets: energy and mining; water and wastewater; and commercial and structural

services. The Company’s three operating segments 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 a president who 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).

104

Financial information by segment was as follows (in thousands):

Revenues:

Infrastructure Solutions
Corrosion Protection
Energy Services

Total revenues

Operating income (loss):
Infrastructure Solutions (1)
Corrosion Protection (2)
Energy Services (3)

Total operating income (loss)
Other income (expense):

Interest expense
Interest income
Other

Total other expense
Income (loss) before taxes on income

Total assets:

Infrastructure Solutions
Corrosion Protection
Energy Services
Corporate
Assets held for sale

Total assets

Capital expenditures:

Infrastructure Solutions
Corrosion Protection
Energy Services
Corporate

Total capital expenditures

Depreciation and amortization:

Infrastructure Solutions
Corrosion Protection
Energy Services
Corporate

Total depreciation and amortization

__________________________

Years Ended December 31,

2017

2016

2015

612,154
456,139
290,726
$ 1,359,019

571,551
401,469
248,900
$ 1,221,920

556,234
437,921
339,415
$ 1,333,570

(61,807) $
12,437
6,197
(43,173)

(16,001)
145
(2,201)
(18,057)
(61,230) $

53,503
1,809
(4,486)
50,826

(15,029)
166
(694)
(15,557)
35,269

46,867
(1,771)
(25,150)
19,946

(16,044)
218
(2,905)
(18,731)
1,215

531,746
329,848
152,416
22,775
70,314
$ 1,107,099

584,425
424,007
147,171
37,979
—
$ 1,193,582

508,817
489,519
183,763
50,854
21,060
$ 1,254,013

16,680
8,603
2,713
2,834
30,830

18,731
15,598
6,726
4,319
45,374

19,834
14,393
2,514
2,019
38,760

17,547
18,792
7,067
3,313
46,719

7,657
17,226
2,202
2,369
29,454

14,836
18,834
7,641
2,480
43,791

(1) Operating loss for 2017 includes: (i) $18.1 million of restructuring charges (see Note 3); (ii) $45.4 million of goodwill impairment
charges (see Note 2); (iii) $41.0 million of definite-lived intangible asset impairment charges (see Note 2); and (iv) $0.7 million of
costs incurred related to the acquisition of Environmental Techniques. Operating income for 2016 includes: (i) $2.9 million of
restructuring charges (see Note 3); (ii) $2.7 million of costs incurred related to the acquisitions of Underground Solutions, Fyfe
Europe, LMJ and Concrete Solutions; (iii) inventory step up expense of $3.6 million recognized as part of the accounting for business
combinations; and (iv) a gain of $6.6 million in connection with the settlement of two longstanding lawsuits (see Note 11). Operating
income for 2015 includes $8.1 million of restructuring charges (see Note 3) and $1.1 million of costs incurred related to the
acquisition of Underground Solutions.

105

(2) Operating income for 2017 includes: (i) $5.9 million of restructuring charges (see Note 3); and (ii) $2.3 million of costs incurred

related to the planned divestiture of Bayou. Operating income for 2016 includes $4.6 million of 2016 Restructuring charges (see Note
3). Operating loss for 2015 includes $10.0 million of goodwill impairment charges (see Note 2) and $0.5 million of acquisition
related expenses.

(3) Operating loss for 2016 includes $8.2 million of restructuring charges (see Note 3). Operating loss for 2015 includes $33.5 million of

goodwill impairment charges (see Note 2) and $0.3 million of costs incurred related to the acquisition of Schultz.

The following table summarizes revenues, operating income (loss) and long-lived assets by geographic region (in thousands):

Revenues: (1)

United States
Canada
Europe
Other foreign
Total revenues

Operating income (loss):

United States
Canada
Europe
Other foreign

Total operating income (loss)

Long-lived assets: (1)(2)

United States
Canada
Europe
Other foreign

Total long-lived assets

__________________________

Years Ended December 31,
2016

2017

2015

$ 1,028,313
139,734
71,839
119,133
$ 1,359,019

924,580
129,291
60,238
107,811
$ 1,221,920

965,957
174,827
56,474
136,312
$ 1,333,570

(33,236) $
12,220
(3,771)
(18,386)
(43,173) $

28,048
16,156
981
5,641
50,826

93,472
8,816
13,435
9,586
125,309

140,099
9,464
7,575
8,829
165,967

(18,959)
27,126
3,217
8,562
19,946

124,120
9,872
7,268
9,189
150,449

(1) Revenues and long-lived assets are attributed to the country of origin for the Company’s legal entities. For a significant majority of its

legal entities, the country of origin relates to the country or geographic area that it services.

(2) Long-lived assets as of December 31, 2017, 2016 and 2015 do not include intangible assets, goodwill or deferred tax assets.

14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Unaudited quarterly financial data was as follows (in thousands, except per share data):

Year ended December 31, 2017:

Revenues
Gross profit
Operating income (loss)
Net income (loss)

Earnings per share attributable to Aegion Corporation:

Basic
Diluted

First
Quarter(1)

Second
Quarter(2)

Third
Quarter(3)

Fourth
Quarter(4)

325,175
67,412
14,133
7,753

354,473
79,768
21,659
12,178

341,872
73,442
(75,009)
(73,782)

337,499
64,190
(3,956)
(12,384)

0.17
0.17

$
$

0.33
0.33

$
$

(2.23) $
(2.23) $

(0.39)
(0.39)

$
$

____________________
(1) Includes pre-tax expense reversals of $(0.1) million related to our restructuring efforts (see Note 3).

106

(2) Includes pre-tax expenses of $0.3 million related to our restructuring efforts (see Note 3).
(3) Includes pre-tax expenses of $6.7 million related to our restructuring efforts (see Note 3); pre-tax goodwill impairment charges of $45.4

million (see Note 2); and pre-tax definite-lived intangible asset impairment charges of $41.0 million (see Note 2).

(4) Includes pre-tax expenses of $17.1 million related to our restructuring efforts (see Note 3).

Year ended December 31, 2016:

Revenues
Gross profit
Operating income (loss)
Net income (loss)

Earnings per share attributable to Aegion Corporation:

Basic
Net income (loss)

First
Quarter(1)

Second
Quarter(2)

Third
Quarter(3)

Fourth
Quarter(4)

293,908
54,414
(4,139)
(3,949)

297,686
61,190
8,145
3,193

308,524
66,318
20,505
11,787

321,802
71,242
26,315
18,129

(0.11) $
(0.11) $

0.10
0.10

$
$

0.35
0.34

$
$

0.52
0.52

$
$

____________________
(1) Includes pre-tax expenses of $9.5 million related to our restructuring efforts (see Note 3).
(2) Includes pre-tax expenses of $3.9 million related to our restructuring efforts (see Note 3).
(3) Includes pre-tax expenses of $0.9 million related to our restructuring efforts (see Note 3).
(4) Includes pre-tax expenses of $1.6 million related to our restructuring efforts (see Note 3), and a gain on litigation settlement of $6.6

million (see Note 11).

15. SUBSEQUENT EVENT

On February 27, 2018, the Company amended its existing $650.0 million senior secured credit facility with a syndicate of

banks. Bank of America, N.A. served as the sole administrative agent and U.S. Bank National Association, PNC Bank,
National Association and Compass Bank acted as co-syndication agents. Merrill Lynch Pierce Fenner & Smith Incorporated,
U.S. Bank National Association, PNC Capital Markets, LLC and Compass Bank acted as joint lead arrangers and joint book
managers in the syndication of the amended Credit Facility.

The amended Credit Facility consists of a $300.0 million five-year revolving line of credit and a $308.4 million five-year

term loan facility. Interest terms from the Company’s existing Credit Facility have not changed under the amendment. The
amended Credit Facility also: (i) extended the expiration date of the Credit Facility and the amortization period for the term
loan facility from October 2020 to February 2023; (ii) approved the sale of Bayou; and (iii) updated the defined terms to allow
for the add-back of certain charges related to the 2017 Restructuring when calculating our compliance with the financial
covenants. In the event of the sale of Bayou, the net cash proceeds are required to be applied first against any outstanding
borrowings on the revolving line of credit. Additionally, upon any such sale, the maximum aggregate principal amount of the
revolving line of credit will be permanently reduced from $300.0 million to $275.0 million.

The Company paid approximately $2.4 million for arranging fees, up-front lending fees and other expenses associated with

the amended Credit Facility.

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, the financial covenant requirements, as of each quarterly reporting period end beginning with
December 31, 2017, are defined as follows:

• Consolidated financial leverage ratio compares consolidated funded indebtedness to amended Credit Facility defined
income. The initial maximum amount is not to exceed 3.75 to 1.00 and will decrease periodically at scheduled
reporting periods to not more than 3.50 to 1.00 beginning with the quarter ending September 30, 2018.

• Consolidated fixed charge coverage ratio compares amended Credit Facility defined income to amended Credit

Facility defined fixed charges. The initial minimum permitted ratio is not less than 1.15 to 1.00 and will increase to
1.25 to 1.00 beginning with the quarter ending December 31, 2018.

107

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Our management, under the supervision and with the participation of our Chief Executive Officer (our principal executive
officer) and interim 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 December 31, 2017. Based upon and as of the date
of this evaluation, our Chief Executive Officer and interim Chief Financial Officer have concluded that our disclosure controls
were effective to provide reasonable assurance 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.

Management’s report is included in Item 8 of this Report under the caption entitled “Management’s Report on Internal

Control Over Financial Reporting,” and is incorporated herein by reference. The effectiveness of the Company’s internal
control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in its report which is included in Item 8 of this Report under the caption entitled
“Report of Independent Registered Public Accounting Firm” and is incorporated herein by reference.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31,

2017 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Not applicable.

108

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Information concerning this item is included in “Item 4A. Executive Officers of the Registrant” of this Report and under

the captions “Certain Information Concerning Director Nominees,” “Section 16(a) Beneficial Ownership Reporting
Compliance,” “Corporate Governance—Corporate Governance Documents,” “Corporate Governance—Board Meetings and
Committees—Audit Committee” and “Corporate Governance—Board Meetings and Committees—Audit Committee Financial
Expert” in our Proxy Statement for our 2018 Annual Meeting of Stockholders (“2018 Proxy Statement”) and is incorporated
herein by reference.

Item 11. Executive Compensation.

Information concerning this item is included under the captions “Executive Compensation,” “Compensation in Last Fiscal

Year,” “Director Compensation,” “Corporate Governance—Board Meetings and Committees—Compensation Committee
Interlocks and Insider Participation” and “Compensation Committee Report” in the 2018 Proxy Statement and is incorporated
herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information concerning this item is included in Item 5 of this Report under the caption “Equity Compensation Plan
Information” and under the caption “Information Concerning Certain Stockholders” in the 2018 Proxy Statement and is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information concerning this item is included under the captions “Related-Party Transactions” and “Corporate Governance

—Independent Directors” in the 2018 Proxy Statement and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

Information concerning this item is included under the caption “Independent Auditors’ Fees” in the 2018 Proxy Statement

and is incorporated herein by reference.

109

Item 15. Exhibits and Financial Statement Schedules.

1. Financial Statements:

PART IV

The consolidated financial statements filed in this Annual Report on Form 10-K are listed in the Index to Consolidated

Financial Statements included in “Item 8. Financial Statements and Supplementary Data,” which information is incorporated
herein by reference.

2. Financial Statement Schedules:

No financial statement schedules are included herein because of the absence of conditions under which they are required or

because the required information is contained in the consolidated financial statements or notes thereto contained in this Report.

3. Exhibits:

The exhibits required to be filed as part of this Annual Report on Form 10-K are listed in the Index to Exhibits attached

hereto.

110

Pursuant to the requirements of Section 13 or 15(d) 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.

SIGNATURES

Dated: March 1, 2018

AEGION CORPORATION

By:

/s/ Charles R. Gordon
Charles R. Gordon
President and Chief Executive Officer

POWER OF ATTORNEY

The registrant and each person whose signature appears below hereby appoint Charles R. Gordon and David F. Morris as
attorneys-in-fact with full power of substitution, severally, to execute in the name and on behalf of the registrant and each such
person, individually and in each capacity stated below, one or more amendments to the annual report which amendments may
make such changes in the report as the attorney-in-fact acting deems appropriate and to file any such amendment to the report
with the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

/s/ Charles R. Gordon
Charles R. Gordon

/s/ David F. Morris
David F. Morris

/s/ Michael D. White
Michael D. White

/s/ Stephen P. Cortinovis
Stephen P. Cortinovis

/s/ Stephanie A. Cuskley
Stephanie A. Cuskley

/s/ Walter J. Galvin
Walter J. Galvin

/s/ Rhonda Germany Ballintyn
Rhonda Germany Ballintyn

/s/ Juanita H. Hinshaw
Juanita H. Hinshaw

/s/ M. Richard Smith
M. Richard Smith

/s/ Alfred L. Woods
Alfred L. Woods

/s/ Phillip D. Wright
Phillip D. Wright

Date

March 1, 2018

Principal Executive Officer and
Director

Principal Financial Officer

March 1, 2018

Principal Accounting Officer

March 1, 2018

Director

111

March 1, 2018

INDEX TO EXHIBITS (1)

3.1

3.2

3.3

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

Certificate of Incorporation of the Company (incorporated by reference to Exhibit 2.1 to the current report on
Form 8-K12B filed on October 26, 2011), and Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.3 to the current report on Form 8-
K12B filed October 26, 2011).

Certificate of Correction of the Certificate of Incorporation of the Company (incorporated by reference to Exhibit
3.2 to the annual report on Form 10-K for the year ended December 31, 2013).

Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.1 to the current report
on Form 8-K filed August 4, 2015).

2009 Employee Equity Incentive Plan of the Company (incorporated by reference to Appendix A to the definitive
proxy statement on Schedule 14A filed March 25, 2009, as revised on April 7, 2009, in connection with the 2009
annual meeting of stockholders). (2)

2013 Employee Equity Incentive Plan of the Company (incorporated by reference to Appendix A to the definitive
proxy statement on Schedule 14A filed April 4, 2013 in connection with the 2013 annual meeting of
stockholders). (2)

2016 Employee Equity Incentive Plan of the Company (incorporated by reference to Appendix A to the definitive
proxy statement on Schedule 14A filed March 11, 2016 in connection with the 2016 annual meeting of
stockholders). (2)

First Amendment to 2016 Employee Equity Incentive Plan of the Company (incorporated by reference to
Appendix A to the definitive proxy statement on Schedule 14A filed March 17, 2017 in connection with the 2017
annual meeting of stockholders). (2)

Amended and Restated 2001 Non-Employee Director Equity Incentive Plan of the Company (incorporated by
reference to Appendix B to the definitive proxy statement on Schedule 14A filed April 16, 2003 in connection
with the 2003 annual meeting of stockholders). (2)

2006 Non-Employee Director Equity Plan of the Company (incorporated by reference to Appendix B to the
definitive proxy statement on Schedule 14A filed March 10, 2006 in connection with the 2006 annual meeting of
stockholders). (2)

2011 Non-Employee Director Equity Plan of the Company (incorporated by reference to Appendix A to the
definitive proxy statement on Schedule 14A filed March 18, 2011 in connection with the 2011 annual meeting of
stockholders). (2)

2016 Non-Employee Director Equity Plan of the Company (incorporated by reference to Appendix C to the
definitive proxy statement on Schedule 14A filed March 11, 2016 in connection with the 2016 annual meeting of
stockholders). (2)

10.9

Employee Stock Purchase Plan of the Company (incorporated by reference to Appendix B to the definitive proxy
statement on Schedule 14A filed March 17, 2017 in connection with the 2017 annual meeting of stockholders). (2)

10.10

Voluntary Deferred Compensation Plan, as amended and restated effective January 1, 2018, filed herewith. (2)

10.11

2016 Executive Performance Plan of the Company (incorporated by reference to Appendix B to the definitive
proxy statement on Schedule 14A filed March 11, 2016 in connection with the 2016 annual meeting of
stockholders). (2)

10.12

Form of Directors’ Indemnification Agreement (incorporated by reference to Exhibit 10.13 to the annual report
on Form 10-K for the year ended December 31, 2011).

112

10.13

10.14

Form of Executive Change in Control Severance Agreement, dated as of October 6, 2014, between Aegion
Corporation and each of Charles R. Gordon, David A. Martin and David F. Morris (incorporated by reference to
Exhibit 10.6 to the current report on Form 8-K filed October 10, 2014). (2)

Form of First Amendment to Executive Change in Control Severance Agreement, dated May 2, 2016, by and
between Aegion Corporation and each of Charles R. Gordon, David A. Martin and David F. Morris (incorporated
by reference to Exhibit 10.2 to the quarterly report on Form 10-Q for the quarter ended March 31, 2016). (2)

10.15

Severance Policy effective March 15, 2017 (incorporated by reference to Exhibit 10.3 to the quarterly report filed
on Form 10-Q for the quarter ended March 31, 2017). (2)

10.16

Form of Change in Control Severance Agreement, dated as of March 1, 2017, between Aegion Corporation and
each of Stephen P. Callahan and Michael D. White (incorporated by reference to Exhibit 10.15 to the annual
report filed on Form 10-K for the year ended December 31, 2016). (2)

10.17 Management Annual Incentive Plan, effective January 1, 2018, filed herewith. (2)

10.18

Form of Director Deferred Stock Unit Agreement (for Non-Employee Directors) (incorporated by reference to
Exhibit 10.8 to the quarterly report on Form 10-Q for the quarter ended March 31, 2017).

10.19

Form of Performance Unit Agreement, dated February 21, 2018, between Aegion Corporation and certain
executive officers of Aegion Corporation, filed herewith. (2)

10.20

Form of Restricted Stock Unit Agreement, dated February 21, 2018, between Aegion Corporation and certain
executive officers of Aegion Corporation, filed herewith. (2)

10.21

Letter agreement, dated October 6, 2014, between Aegion Corporation and Charles R. Gordon (incorporated by
reference to Exhibit 10.2 to the current report on Form 8-K filed October 10, 2014). (2)

10.22

Form of Restricted Stock Agreement, dated October 8, 2014, between Aegion Corporation and Charles R.
Gordon (incorporated by reference to Exhibit 10.3 to the current report on Form 8-K filed October 10, 2014). (2)

10.23

Form of Inducement Restricted Stock Award Agreement, dated October 8, 2014, between Aegion Corporation
and Charles R. Gordon (incorporated by reference to Exhibit 10.5 to the current report on Form 8-K filed October
10, 2014). (2)

10.24

Transition Agreement and Full Release, dated November 18, 2017, between Aegion Corporation and David A.
Martin (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed November 20, 2017). (2)

10.25

Separation Agreement and Full and Final Release, dated September 8, 2017, between John D. Huhn and Aegion
Corporation (incorporated by reference to Exhibit 10.1 to the quarterly report filed on Form 10-Q for the quarter
ended September 30, 2017). (2)

10.26

Amended and Restated Credit Agreement, dated October 30, 2015 (incorporated by reference to Exhibit 10.1 to
the current report on Form 8-K filed November 2, 2015).

10.27

First Amendment to Credit Agreement, dated November 30, 2017 (incorporated by reference to Exhibit 10.1 to
the current report on Form 8-K filed December 6, 2017).

10.28

Second Amendment to Credit Agreement, dated February 27, 2018 (incorporated by reference to Exhibit 10.1 to
the current report on Form 8-K filed March 1, 2018).

113

10.29

Agreement and Plan of Merger, dated January 4, 2016, among Aegion Corporation, PUAC, Inc., Underground
Solutions, Inc., Fortis Advisors LLC and UGSI Solutions, Inc. (incorporated by reference to Exhibit 10.1 to the
current report on Form 8-K filed January 8, 2016).

Subsidiaries of the Company, filed herewith.

Consent of PricewaterhouseCoopers LLP, filed herewith.

Power of Attorney (set forth on signature page).

31.1

Certification of Charles R. Gordon pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2

Certification of David F. Morris pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1

32.2

Certification of Charles R. Gordon pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed herewith.

Certification of David F. Morris pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed herewith.

Mine Safety Disclosure, filed herewith.

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) The Company’s current, quarterly and annual reports are filed with the Securities and Exchange Commission under file

no. 001-35328.

(2) Management contract or compensatory plan or arrangement.

Documents listed in this Index to Exhibits will be made available upon written request.

* * *

114

AEGION CORPORATION
Income from Continuing Operations Reconciliation to Non‐GAAP

IN THOUSANDS, EXCEPT PER SHARE DATA

Loss from continuing operations (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Long‐lived asset and goodwill impairments
Acquisition and divestiture expenses
Tax Cuts and Jobs Act of 2017

Income from continuing operations (Non‐GAAP)

2017

2016

Income from continuing operations (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Acquisition‐related expenses
Litigation settlement
Reversal of contingency reserve

Income from continuing operations (Non‐GAAP)

2015

Loss from continuing operations (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Goodwill impairments
Credit facility financing fees
Acquisition‐related expenses
Joint venture and divestiture activity
Litigation settlement
Reserves for disputed and long‐dated accounts receivable

Amount

(69,054)

EPS
(2.08)

20,781
78,616
2,016
2,426
34,785

0.62
2.35
0.06
0.08
1.03

Amount

EPS

29,488

0.84

10,227
4,366
(3,982)
(1,458)

0.29
0.12
(0.11)
(0.04)

38,641

1.10

Amount

(8,067)

EPS
(0.22)

8,712
35,711
2,023
4,657
1,427
1,660
1,110

0.24
0.97
0.05
0.13
0.04
0.04
0.03

Income from continuing operations (Non‐GAAP)

47,233

1.28

2014

Loss from continuing operations (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Long‐lived assets and goodwill impairments
Acquisition‐related expenses
Joint venture and divestiture activity
Reserves for disputed and long‐dated accounts receivable
Acquisition‐related escrow settlement

Amount

(33,320)

EPS
(0.88)

36,153
46,613
828
278
4,494
(2,844)

0.95
1.23
0.02
0.01
0.11
(0.07)

Income from continuing operations (Non‐GAAP)

52,202

1.37

2013

Income from continuing operations (GAAP, as reported)
Adjustments:

Acquisition‐related expenses
Credit facility financing fees
Joint venture and divestiture activity

Income from continuing operations (Non‐GAAP)

Amount

EPS

50,812

1.30

3,510
1,182
(6,053)

0.09
0.03
(0.15)

49,451

1.27

A‐1

AEGION CORPORATION
Operating Income Reconciliation to Non‐GAAP

IN THOUSANDS, EXCEPT MARGIN PERCENTAGES

Operating loss (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Long‐lived asset and goodwill impairments
Acquisition and divestiture expenses

Operating income (Non‐GAAP)

Operating income (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Acquisition‐related expenses
Litigation settlement
Reversal of contingency reserve

Operating income (Non‐GAAP)

2017

2016

2015

Operating income (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Goodwill impairments
Acquisition‐related expenses
Litigation settlement
Reserves for disputed and long‐dated accounts receivable

Amount

(43,173)

Margin

(3.2%)

23,987
86,422
2,923

70,159

5.2%

Amount

50,826

Margin
4.2%

15,680
6,268
(6,625)
(2,336)

63,813

5.2%

Amount

19,946

Margin
1.5%

8,072
43,484
1,912
2,771
2,883

Operating income (Non‐GAAP)

79,068

5.9%

2014

Operating loss (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Long‐lived asset and goodwill impairments
Acquisition‐related expenses
Reserves for disputed and long‐dated accounts receivable
Acquisition‐related escrow settlement

Amount

(19,812)

Margin

(1.5%)

47,824
52,732
1,375
7,465
(4,500)

Operating income (Non‐GAAP)

85,084

6.4%

2013

Operating income (GAAP, as reported)
Adjustments:

Acquisition‐related expenses

Operating income (Non‐GAAP)

Amount

66,882

Margin
6.1%

5,831

72,713

6.7%

A‐2

AEGION CORPORATION
2017 Segment Operating Income Reconciliation to Non‐GAAP

IN THOUSANDS, EXCEPT MARGIN PERCENTAGES

Infrastructure Solutions

Operating income (loss) (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Acquisition‐related expenses
Long‐lived asset and goodwill impairments
Litigation settlements

2017

2016

Amount

(61,807)

Margin
(10.1%)

Amount

53,503

Margin
9.4%

18,070
651
86,422
‐

2,945
6,268
‐
(6,625)

Operating income (Non‐GAAP)

43,336

7.1%

56,091

9.8%

Corrosion Protection

2017

2016

Amount

12,437

Margin
2.7%

Amount

1,809

Margin
0.5%

5,917
2,272

4,564
‐

20,626

4.5%

6,373

1.6%

Energy Services

2017

2016

Amount

6,197

Margin
2.1%

Amount

(4,486)

Margin
(1.8%)

‐
‐
6,197

8,171
(2,336)
1,349

2.1%

0.5%

Operating income (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Acquisition and divestiture expenses

Operating income (Non‐GAAP)

Operating income (loss) (GAAP, as reported)
Adjustments:

Restructuring‐related charges
Reversal of contingency reserve

Operating income (Non‐GAAP)

AEGION CORPORATION
Return on Invested Capital (ROIC) Definition

ROIC =

Adjusted Operating Income after T axes1 + Equity Earnings + Non-controlling Interests (Income) Loss
[(T otal Assets - Non-Interest Bearing Liabilities) - (Cash and Cash Equivalents)]

1 Adjusted (non‐GAAP) operating income is reconciled on page A‐2.

A‐3

CORPORATE INFORMATION

BOARD OF DIRECTORS

AEGION CORPORATION EXECUTIVE OFFICERS

Charles R. Gordon
President & Chief Executive Officer

David F. Morris
Executive Vice President, General Counsel & Interim Chief Financial Officer

Stephen P. Callahan
Senior Vice President, Global Human Resources

Michael D. White
Senior Vice President, Chief Accounting Officer & Corporate Controller

AEGION CORPORATION PLATFORM PRESIDENTS

Frank R. Firsching
Infrastructure Solutions

Brian S. Groody
Corrosion Protection

Rick N. St. Laurent
Energy Services

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP
800 Market Street, St. Louis, Missouri 63101

TRANSFER AGENT & REGISTRAR

American Stock Transfer & Trust Company
59 Maiden Lane, New York, New York 10038

PRICE RANGE OF SECURITIES

The Company’s common shares, $.01 par value, are traded on The
Nasdaq Global Select Market under the symbol “AEGN.” The following
table sets forth the range of quarterly high and low sales prices for the
years ended December 31, 2017 and 2016, as reported on The Nasdaq
Global Select Market. Quotations represent prices between dealers
and do not include retail markups, markdowns or commissions.

PERIOD

2017:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

2016:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

HIGH

LOW

$ 26.68
23.94
24.25
28.19

$ 21.50
21.95
21.00
26.14

$ 21.43
19.16
19.11
19.81

$ 16.00
17.35
17.18
17.85

FORM 10-K

A copy of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2017, as filed with the Securities and Exchange
Commission on March 1, 2018, is available free of charge on our website,
www.aegion.com, or upon request by writing to the Company’s Investor
Relations department at 17988 Edison Avenue, St. Louis, Missouri 63005.

Alfred L. Woods

Chairman of the Board

Ex Officio Member of All Standing Board Committees

Former President & CEO
Woods Group, LLC

Charles R. Gordon

Strategic Planning & Finance Committee (Member)

President & CEO
Aegion Corporation

Stephen P. Cortinovis

Compensation Committee (Member)

Strategic Planning & Finance Committee (Chair)

Former President, Europe
Emerson Electric Co.

Stephanie A. Cuskley

Audit Committee (Member)

Compensation Committee (Chair)

CEO
Leona M. and Henry B. Helmsley Charitable Trust

Walter J. Galvin

Audit Committee (Chair)

Corporate Governance & Nominating Committee (Member)

Former CFO & Vice Chairman
Emerson Electric Co.

Rhonda Germany Ballintyn

Corporate Governance & Nominating Committee (Member)

Strategic Planning & Finance Committee (Member)

Former VP & Chief Strategy and Marketing Officer
Honeywell International, Inc.

Juanita H. Hinshaw

Audit Committee (Member)

Compensation Committee (Member)

President & CEO
H & H Advisors

M. Richard Smith

Corporate Governance & Nominating Committee (Chair)

Strategic Planning & Finance Committee (Member)

Former SVP and President, Fossil Power
Bechtel Corporation

Phillip D. Wright

Compensation Committee (Member)

Strategic Planning & Finance Committee (Member)

Former President & CEO
Williams Energy Services, Inc.

AEGION CORPORATION
17988 Edison Avenue
St. Louis, Missouri 63005
636.530.8000
www.aegion.com

Aegion®, the Aegion® logo, Stronger. Safer. Infrastructure.®,
Insituform®, Fyfe®, Brinderson®, Bayou®, Corrpro® and Tyfo® are
the registered trademarks and service marks of Aegion Corporation
and its affiliates in the USA and other countries.