The following is management's discussion and analysis of certain significant factors that have affected our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited consolidated financial statements. This discussion should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2008.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (see Note 2 to Consolidated Financial Statements included as part of this Quarterly Report on Form 10-Q for the period ended March 31, 2009).

We believe that certain accounting policies could potentially have a more significant impact on our consolidated financial statements, either because of the significance of the consolidated financial statements to which they relate or because they involve a higher degree of judgment and complexity. A summary of such critical accounting policies can be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Annual Report on Form 10-K for the year ended December 31, 2008.

Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. The Company makes forward-looking statements in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this Quarterly Report on Form 10-Q that represent the Company's beliefs or expectations about future events or financial performance. These forward-looking statements are based on information currently available to the Company and on management's beliefs, assumptions, estimates and projections and are not guarantees of future events or results. When used in this 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission on March 2, 2009, and in our subsequent Quarterly Reports on Form 10-Q, including this report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. In addition, our actual results may vary materially from those anticipated, estimated, suggested or projected. Except as required by law, we do not assume a duty to update forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, review additional disclosures made by the Company from time to time in its periodic filings with the Securities and Exchange Commission. Please use caution and do not place reliance on forward-looking statements. All forward-looking statements made by the Company in this Form 10-Q are qualified by these cautionary statements.

Executive Summary

We are a leading vertically integrated global provider of proprietary technologies and services for the rehabilitation of municipal sewer and water and other underground piping systems without digging or disruption and the corrosion protection of mineral, oil and gas and other industrial piping systems. Our operations are organized based on differences in products and services, as well as by geographic areas. We operate in three distinct markets:
sewer rehabilitation, water rehabilitation and energy and mining services. Within the sewer and water rehabilitation markets, we operate in three distinct geographies: North America, Europe and internationally outside of North America and Europe. While we use a variety of technologies in many different locations, the majority of our revenues are derived from the Insituform® cured-in-place-pipe ("CIPP") process in the United States.

We are organized into five reportable segments: North American Sewer Rehabilitation, European Sewer Rehabilitation, Asia-Pacific Sewer Rehabilitation, Water Rehabilitation and Energy and Mining. We believe that this segment disclosure provides improved transparency into our business and greater insight into our results. We also believe that this segmentation is helpful in articulating our strategic direction to our investors.

Our long-term strategy consists of: first, streamlining our rehabilitation and energy and mining operations in North America and in Europe by improving project execution, cost management practices, including the reduction of redundant fixed costs, and product mix and by identifying opportunities to streamline key management functions and processes to improve our profitability; second, growing our water rehabilitation business by leveraging our premier brand and experience of successfully innovating and delivering technologies and services; third, expanding all of our businesses in key emerging markets such as Eastern Europe, India and Asia; and fourth, expanding our position in the growing and profitable energy and mining sector through organic growth, selective acquisitions of companies, which may be significant in size, and by conducting complimentary product and technology acquisitions.

On February 20, 2009, we acquired the business of The Bayou Companies, L.L.C. and its related entities and the noncontrolling interests of certain subsidiaries of Bayou pursuant to certain agreements dated January 31, 2009. Bayou provides cost-effective solutions to energy and infrastructure companies primarily in the Gulf of Mexico and North America. Bayou's products and services include internal and external pipeline coating, lining, weighting and insulation. Bayou also provides specialty fabrication services for offshore deepwater installations, including project management and logistics. The purchase price for Bayou consisted of $127.9 million in cash. We may be required to pay up to an additional $7.5 million plus 50% of Bayou's excess earnings if the Bayou business achieves certain financial performance targets. The aggregate purchase price for the noncontrolling interests was $8.5 million and consisted of cash, a promissory note and shares of our common stock. We used proceeds from our recently completed equity offering to fund the purchase price for Bayou and a portion of the cash purchase price for the noncontrolling interests. The financial results of Bayou for the 39-day period under our ownership during the first quarter of 2009 are included in the Energy and Mining segment.

On March 31, 2009, we acquired Corrpro Companies, Inc. ("Corrpro") pursuant to an agreement dated February 1, 2009. Corrpro is a premier provider of corrosion protection and pipeline maintenance services in North America. Corrpro also has operations in the United Kingdom. Corrpro's comprehensive line of fully-integrated corrosion protection products and services includes:
(i) engineering; (ii) product and material sales; (iii) construction and installation; (iv) inspection, monitoring and maintenance; and (v) coatings. The purchase price for Corrpro consisted of cash consideration paid to the Corrpro shareholders of $65.2 million. In addition, we repaid $26.3 million of indebtedness of Corrpro. The total acquisition cost for Corrpro was approximately $91.5 million. We paid the purchase price for Corrpro with borrowings under our new credit facility and existing cash.

The financial results of Corrpro are not included in our results of operations disclosed herein, as the acquisition was consummated on March 31, 2009. The Corrpro results will be reported in our Energy and Mining segment disclosures beginning with our quarterly report on Form 10-Q for the period ending June 30, 2009.

Results of Operations - Three Months Ended March 31, 2009 and 2008

Overview - Consolidated Results

Key financial data for our consolidated operations was as follows (dollars in
thousands):

                                          Three Months Ended March 31,
                                            2009                2008               $ Change           % Change

 Revenues                               $     128,012       $     125,927       $      2,085                1.7 %
 Gross profit                                  30,673              26,886              3,787               14.1
 Gross margin                                    24.0 %              21.4 %              2.6 %
 Operating expenses                            30,594              23,631             (6,963 )            (29.5 )
 Operating income                                  79               3,255             (3,176 )            (97.8 )
 Operating margin                                 0.1 %               2.6 %             (2.5 )%
 Income (loss) from continuing
operations                                     (1,107 )             2,030             (3,137 )           (154.5 )

Consolidated income (loss) from continuing operations was $(1.1) million, or 154.5%, lower in the first quarter of 2009 than in the first quarter of 2008. The decrease in consolidated income from continuing operations for the first quarter was principally due to costs associated with the acquisitions of Bayou and Corrpro, which totaled $8.2 million for the quarter. The first quarter results in our North American Sewer Rehabilitation segment were improved over the prior corresponding period. Our improved margins in our North American Sewer Rehabilitation segment, coupled with growth in our Asia-Pacific Sewer Rehabilitation segment helped to partially offset the acquisition costs.

Consolidated operating expenses increased by approximately $7.0 million, or 29.5%, due to the transaction costs of $8.2 million related to the acquisitions of Bayou and Corrpro. Consolidated operating expenses, excluding acquisition-related costs, would have been $1.3 million, or 5.3%, lower in the first quarter of 2009 than in the first quarter of 2008 due primarily to cost savings generated by our reorganization activities in 2008. The consolidated operating expenses included $1.5 million of operating expenses from Bayou. Excluding the Bayou expenses, as well as the acquisition-related costs, consolidated operating expenses would have decreased by $2.8 million, or 11.8%.

We experienced a $2.5 million, or 16.6%, decrease in operating expenses in our North American Sewer Rehabilitation business in the first quarter of 2009 compared to the prior year quarter, which partially offset the increase in consolidated operating expenses. We have been focused on cost reduction and realignment efforts, particularly in our North American Sewer Rehabilitation business and corporate support group, over the last twelve months. Our efforts to reduce our fixed overhead costs will continue as we progress through 2009.

Total contract backlog improved to $388.7 million at March 31, 2009 compared to $285.6 million at March 31, 2008. The March 31, 2009 level of backlog was significantly higher than total contract backlog of $249.1 million at December 31, 2008 due to the addition of contract backlog of Bayou and Corrpro at March 31, 2009 of $138.9 million, collectively. .
North American Sewer Rehabilitation Segment

Key financial data for our North American Sewer Rehabilitation segment was as follows (dollars in thousands):

                                            Three Months Ended March 31,
                                             2009                  2008              $ Change           % Change

 Revenues                                $       80,504       $      81,053       $        (549 )            (0.7 )%
 Gross profit                                    18,450              16,390               2,060              12.6
 Gross margin                                      22.9 %              20.2 %               2.7 %
 Operating expenses                              12,629              15,149              (2,520 )           (16.6 )
 Operating income                                 5,821               1,241               4,580             369.1
 Operating margin                                   7.2 %               1.5 %               5.7 %

Revenues
Revenues decreased by $0.5 million in our North American Sewer Rehabilitation segment in the first quarter of 2009 compared to the first quarter of 2008. Although we experienced a slight decrease in revenues this quarter, market conditions in our North American Sewer Rehabilitation business in the first quarter of 2009 remained essentially flat as compared to the prior year period. Third-party product sales in this segment were $3.6 million and $1.6 million in the first quarters of 2009 and 2008, respectively.

Contract backlog in our North American Sewer Rehabilitation segment at March 31, 2009 was $160.4 million. This represented a $9.6 million, or 6.4%, increase from backlog at December 31, 2008. As compared to March 31, 2008, North American Sewer Rehabilitation experienced a decrease in contract backlog of $13.8 million, or 7.9%. As with the fourth quarter of 2008, there were a number of large project wins during the first quarter that we believed would be under contract by the end of the quarter, but were delayed. Overall, the bidding horizon for this segment remains in line with recent periods. We believe that bidding opportunities will remain steady for the upcoming quarter.

Gross Profit and Gross Margin
Gross profit in our North American Sewer Rehabilitation segment increased $2.1 million, or 12.6%, in the first quarter of 2009 compared to the prior year quarter, primarily due to improved project execution and lower resin and fuel costs. In addition, cost management practices continue to drive a lower overall cost structure. Our gross profit and gross margins for our North American Sewer Rehabilitation segment were also boosted by increased third-party product sales in North America.

We will continue driving improvements in productivity through enhanced project management and crew training, continued implementation of technologies and improved logistics management. We are also seeking avenues for taking advantage of our vertical integration and manufacturing capabilities by expanding our third-party product sales efforts. In the first quarter of 2009, our gross profit margin percentage increased to 22.9% from 20.2% in the first quarter of 2008 as a result of the factors mentioned above.

Operating Expenses
Operating expenses in our North American Sewer Rehabilitation segment decreased by $2.5 million during the first quarter of 2009 compared to the first quarter of 2008, despite a small increase in revenues, primarily due to the cost-cutting and performance improvement initiatives described above. We have been focused on cost reduction and realignment efforts, particularly within this segment. We plan to continue to reduce our fixed overhead costs throughout the remainder of 2009. Operating expenses as a percentage of revenues were 15.7% in the first quarter of 2009 compared to 18.7% in the first quarter of 2008.

Operating Income and Operating Margin
Improved gross profit, as well as lower operating expenses, led to a $4.6 million increase in operating income in our North American Sewer Rehabilitation segment in the first quarter of 2009 compared to the first quarter of 2008. The North American Sewer Rehabilitation operating margin, which is operating income as a percentage of revenues, improved to 7.2% in the first quarter of 2009 compared to 1.5% in the first quarter of 2008.

European Sewer Rehabilitation Segment

Key financial data for our European Sewer Rehabilitation segment was as follows
(dollars in thousands):

                                             Three Months Ended March 31,
                                             2009                  2008                $ Change            % Change

 Revenues                                 $      18,207        $      25,610        $       (7,403 )           (28.9 )%
 Gross profit                                     4,498                4,720                  (222 )            (4.7 )
 Gross margin                                      24.7 %               18.4 %                 6.3 %
 Operating expenses                               4,641                5,655                (1,014 )           (17.9 )
 Operating income (loss)                           (143 )               (935 )                 792             (84.7 )
 Operating margin                                  (0.8 )%              (3.7 )%                2.9 %

Revenues
Revenues in our European Sewer Rehabilitation segment decreased by $7.4 million, or 28.9%, during the first quarter of 2009 compared to the first quarter of 2008, primarily due to a $4.0 million impact of weak European currencies versus the U.S. dollar and softness in the United Kingdom market.

Contract backlog in our European Sewer Rehabilitation segment was $26.1 million at March 31, 2009. This represented an increase of $0.9 million, or 3.6%, compared to December 31, 2008. The increase was principally due to higher backlog in Switzerland and The Netherlands. This increase in backlog was tempered by a $1.5 million negative impact of European currencies against the U.S. dollar that prevailed at March 31, 2009. As compared to March 31, 2008, European Sewer Rehabilitation experienced a decrease in contract backlog of $12.9 million, or 33.1%. Approximately $5.3 million of this decrease was due to weaker European currencies against the U.S. dollar that prevailed at March 31, 2008. European orders and backlog have been fairly steady for the past several quarters, with the exception of the United Kingdom, and we believe this trend will continue through 2009. We continue to anticipate only modest growth in revenue, not accounting for foreign currency impacts, for this segment in 2009.

Gross Profit and Gross Margin

Gross profit in our European Sewer Rehabilitation segment decreased by only $0.2 million during the first quarter of 2009 compared to the first quarter of 2008, despite the 28.9% decline in revenues. Our European Sewer Rehabilitation segment experienced an increase in gross profit margins year over year of 6.3%. During the first quarter of 2009, we experienced an improvement in both Switzerland and France after the restructuring that occurred during the first quarter of 2008. We also improved operationally in Poland. The first quarter 2008 gross profit for this segment was impacted by several large project execution issues in Eastern Europe.

Operating Expenses
Operating expenses in our European Sewer Rehabilitation segment decreased by $1.0 million during the first quarter of 2009 compared to the first quarter of 2008, primarily due to the impact of weak European currencies versus the U.S. dollar of $0.7 million. Operating expenses as a percentage of revenues increased to 25.5% in the first quarter of 2009 compared to 22.1% in the first quarter of 2008.

Operating Loss and Operating Margin
Lower operating expenses and higher gross margin led to a $0.8 million improvement in operating loss in the first quarter of 2009 compared to the first quarter of 2008. The European Sewer Rehabilitation operating margin, which is operating loss as a percentage of revenues, improved to (0.8)% in the first quarter of 2009 compared to (3.7)% in the first quarter of 2008.

As part of the continued efforts that started in 2008 to improve our European financial performance, certain operational and management changes have been made. We have also restructured a number of country-based operations to reduce fixed costs and improve execution. We anticipate only modest growth in revenues (not accounting for foreign currency weakness) for this segment in 2009. Profitability is expected to improve year over year due to recent organizational changes and other restructuring efforts.

Asia-Pacific Sewer Rehabilitation Segment

Key financial data for our Asia-Pacific Sewer Rehabilitation segment was as
follows (dollars in thousands):

                                           Three Months Ended March 31,
                                             2009                 2008              $ Change            % Change

 Revenues                                 $       5,746       $      1,539       $        4,207             273.4 %
 Gross profit                                     2,054                481                1,573             327.0
 Gross margin                                      35.7 %             31.3 %                4.4 %
 Operating expenses                                 792                316                  476             150.6
 Operating income                                 1,262                165                1,097             664.8
 Operating margin                                  22.0 %             10.7 %               11.3 %

Revenues
Revenues in our Asia-Pacific Sewer Rehabilitation segment increased by $4.2 million, or 273.4%, in the first quarter of 2009 compared to the first quarter of 2008. We secured large revenue projects in India in 2008 that we believe will lead to continued revenue growth in this segment in the upcoming quarters and through 2009. This segment of our business was in its infancy during 2008, and we continue to see increased revenues from the geographic regions served by this segment, most notably India, Hong Kong and Australia.

Contract backlog in our Asia-Pacific Sewer Rehabilitation segment was $40.1 million at March 31, 2009. This represented a decrease of $6.1 million, or 13.2%, compared to December 31, 2008. This decrease was principally due to low orders during the quarter, coupled with an approximately $1.6 million devaluation of certain Asian currencies, including the Indian Rupee, against the U.S. dollar. Bidding activity has slowed in this segment as a result of upcoming national elections in India, which are ongoing and should conclude in May. We anticipate significant bidding opportunities in the Indian market once the elections are complete. As compared to March 31, 2008, Asia-Pacific Sewer Rehabilitation experienced an increase in contract backlog of $5.7 million, or 16.6% at March 31, 2009. The increase in backlog was offset by $11.7 million due to the negative impact of foreign currencies against the U.S. dollar that prevailed at March 31, 2008. The Indian market continues to be very robust, and we expect growth to continue as we gain momentum with sales penetration in the major Indian cities. We also are pursuing other growth opportunities throughout the Asia-Pacific region, including significant opportunities in Australia and Singapore.

Gross Profit and Gross Margin
Gross profit in the Asia-Pacific Sewer Rehabilitation segment increased by $1.6 million, or 327.0%, in the first quarter of 2009 compared to the first quarter of 2008. Our gross profit margin increased to 35.7% compared to 31.3% in the same period. Gross profit increased substantially as a result of the increase in revenue, while margins expanded as a result of strong contracting results in India, coupled with increased revenue from tube sales and royalties in Japan, Australia and Hong Kong.

Operating Expenses
Operating expenses increased by $0.5 million in the Asia-Pacific Sewer Rehabilitation segment during the first quarter of 2009 compared to the first quarter of 2008, principally due to the increased revenue and the continued developmental efforts in international markets, which will require us to dedicate additional resources to these efforts. Operating expenses as a percentage of revenues decreased to 13.8% in the first quarter of 2009 compared to 20.5% in the first quarter of 2008, as expenses were spread among a much larger revenue base.

Operating Income and Operating Margin
Improved revenues and gross profit, partially offset by higher operating expenses, led to a $1.1 million increase in operating income in this segment in the first quarter of 2009 compared to the first quarter of 2008. Operating margin increased to 22.0% in the first quarter of 2009 compared to 10.7% in the first quarter of 2008.

Water Rehabilitation Segment

Key financial data for our Water Rehabilitation segment was as follows (dollars
in thousands):

                                           Three Months Ended March 31,
                                            2009                 2008                $ Change            % Change

 Revenues                               $       1,958        $       1,873        $          85                4.5 %
 Gross profit (loss)                             (175 )                 61                 (236 )           (386.9 )
 Gross margin                                    (8.9 )%               3.3 %              (12.2 )%
 Operating expenses                             1,055                  662                  393               59.4
 Operating loss                                (1,230 )               (601 )               (629 )            104.7
 Operating margin                               (62.8 )%             (32.1 )%             (30.7 )%

Revenues
Revenues from our Water Rehabilitation segment increased to $2.0 million in the first quarter of 2009 from $1.9 million in the prior year period. Our Water Rehabilitation segment revenues were essentially flat for the first quarter, reflecting low workable backlog. We have performed water rehabilitation projects in the U.S., Europe and Asia thus far in 2009.

Our Water Rehabilitation segment contract backlog was $8.9 million at March 31, 2009. This represented an increase of $0.7 million, or 8.5%, compared to December 31, 2008. Backlog was slightly increased due to a number of projects awarded during the quarter. Our $4.4 million water pipeline rehabilitation project in Victoria, British Columbia will begin in the second quarter of 2009, and our project on Madison Avenue in New York City will resume next month. Last month, we launched InsituMain™, our new cured-in-place pipe system for pressure pipe rehabilitation. This new product, coupled with our other Insituform Blue® water pipe rehabilitation products, firmly establishes the Company in the marketplace. We believe that prospects for new orders and growth are strong, and we anticipate growth in backlog over the coming quarters. As compared to March 31, 2008, Water Rehabilitation contract backlog increased by $3.1 million, or 53.4%.

Gross Profit (loss) and Gross Margin
During the first quarter of 2009, gross profit (loss) in our Water Rehabilitation segment decreased to $(0.2) million from $0.1 million in the first quarter of 2008. In addition, our gross margin percentage decreased by 12.2% for the same period. The loss was primarily due to low productivity in the U.S., resulting from low workable backlog as a result of seasonality, coupled with continued low margin work in the United Kingdom.

Operating Expenses
Operating expenses in our Water Rehabilitation segment increased by $0.4 million in the first quarter of 2009 compared to the first quarter of 2008. As a percentage of revenues, operating expenses were 53.9% in the first quarter of 2009 compared to 35.3% in the first quarter of 2008.

Operating Loss and Operating Margin
Operating loss in this segment was $0.6 million higher in the first quarter of 2009 compared to the first quarter of 2008, primarily due lower gross profit and higher operating expenses. Operating margin declined to (62.8)% in the first . . .