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 in this report).

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.

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 largest portion of our revenues are derived from the InsituformŪ 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 a high level of transparency into our businesses and 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 and water rehabilitation sectors 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, referred to herein as "Bayou," and the noncontrolling interests of certain subsidiaries of Bayou. 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, insulation, project management and logistics. Bayou also provides specialty fabrication services for offshore deepwater installations. The purchase price for Bayou consisted of $127.9 million in cash. Pursuant to the acquisition agreement, we agreed 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 equity offering completed in February 2009 to fund the purchase price for Bayou and a portion of the cash purchase price for the noncontrolling interests. During the third quarter of 2009, the Bayou purchase price was reduced by $0.7 million due to certain amounts owed back to us for working capital targets at the acquisition date that were not met by Bayou. The financial results of Bayou for the 39-day period that we owned Bayou in the first quarter and the complete second and third quarters are included in the results of our Energy and Mining segment.

On March 31, 2009, we acquired Corrpro Companies, Inc., referred to herein as "Corrpro". Corrpro is a premier provider of corrosion protection and pipeline maintenance services in North America and 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 credit facility entered into in March 2009 and existing cash. The financial results of Corrpro for the second and third quarters are included in our Energy and Mining segment.

On June 30, 2009, we acquired the shares of our joint venture partner, VSL International Limited, referred to herein as VSL, in Insituform Asia Limited, our Hong Kong joint venture ("IAL"), and Insituform Pacific Pty Limited, our Australian joint venture ("IPPL"), in order to expand our operations in both Hong Kong and Australia. Prior to these acquisitions, we owned 50% of the shares in each entity and VSL owned the other 50% interest in each entity. The aggregate purchase price for VSL's 50% interests in both companies was approximately $0.3 million. We recorded $3.2 million of goodwill in our Asia-Pacific Sewer Rehabilitation segment as a result of the transactions. The preliminary goodwill amount exceeds the aggregate purchase price because our investment in IAL and IPPL prior to the acquisitions was a deficit. We also contributed additional capital into these entities in order to allow IAL and IPPL to pay VSL approximately $1.5 million in intercompany debt. In addition, we took responsibility to provide support under our credit facility for IAL's and IPPL's working capital and performance bonding needs. We have not completed the final purchase price accounting of the acquisitions. As we complete the final accounting for these acquisitions, there may be changes to our initial accounting, some of which may be material. In accordance with FASB ASC 805, we expensed all costs related to these acquisitions in the second quarter of 2009. As a result of the acquisitions, the balance sheets of IAL and IPPL are included in our consolidated balance sheet at September 30, 2009.For periods ended on or prior to June 30, 2009, we accounted for these entities using the equity method of accounting.

Overview - Consolidated Results

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

                                                                                       Increase
                                               2009             2008                 $                %
Three Months Ended September 30,
 Revenues                                  $   201,852       $  137,877        $    63,975          46.4 %
 Gross profit                                   53,122           32,222             20,900          64.9
 Gross margin                                     26.3 %           23.4 %                            2.9
 Operating expenses                             35,418           21,948             13,470          61.4
 Operating income                               17,704           10,274              7,430          72.3
 Operating margin                                  8.8 %            7.5 %                            1.3
 Net income from continuing operations
 attributable to common stockholders            11,793            7,791              4,002          51.4

Nine Months Ended September 30,
 Revenues                                  $   513,060          399,390         $  113,670          28.5 %
 Gross profit                                  131,711           90,238             41,473          46.0
 Gross margin                                     25.7 %           22.6 %                            3.1
 Operating expenses                            100,458           70,494             29,964          42.5
 Operating income                               31,253           19,744             11,509          58.3
 Operating margin                                  6.1 %            4.9 %                            1.2
 Net income from continuing operations
 attributable to common stockholders            18,425           13,734              4,691          34.2

Consolidated net income from continuing operations attributable to common stockholders was $4.0 million, or 51.4%, higher in the third quarter of 2009 than in the third quarter of 2008, and $4.7 million, or 34.2%, higher in the first nine months of 2009 compared to the prior year period. Revenues during the third quarter of 2009 increased by $64.0 million, or 46.4%, due primarily to the inclusion of Bayou and Corrpro revenues in the quarter. The increase in revenues was partially offset by declines in revenues in our European Sewer Rehabilitation, Water Rehabilitation and United Pipeline Systems businesses. Also, the increase in revenues was partially offset by a $19.0 million unfavorable impact relating to foreign currencies on a consolidated basis. The increase in net income from continuing operations attributable to common stockholders for the third quarter and first nine months of 2009 was principally due to improved gross profit results in our North American Sewer Rehabilitation and European Rehabilitation segments. Our gross margin improvement in both segments, coupled with growth in our Asia-Pacific Sewer Rehabilitation segment, also helped to drive the improved results. In the third quarter of 2009, based on the year-to-date results for Bayou, we revised our estimate of the Bayou earnout, which resulted in a favorable pre-tax adjustment to transaction expenses of $1.6 million. In the first nine months of 2009, consolidated income from continuing operations included $6.6 million in pre-tax transaction and severance costs associated with the acquisitions of Bayou and Corrpro.

Consolidated operating expenses increased by $13.5 million, or 61.4%, in the third quarter of 2009 compared to the corresponding prior year period. The increase was primarily due to the inclusion of $12.1 million of operating expenses for Bayou and Corrpro. The third quarter 2009 consolidated operating expenses included $1.7 million (net of $1.6 million favorable earnout adjustment) and $10.4 million of expenses for Bayou and Corrpro, respectively. Excluding the operating expenses of Bayou and Corrpro, consolidated operating expenses for the quarter would have increased by $1.4 million, or 6.4%, due primarily to growth in our Asia-Pacific Sewer Rehabilitation segment. In the first nine months of 2009, operating expenses increased by $30.0 million due to the $28.5 million in operating expenses of Bayou and Corrpro, $4.0 million to fund growth in our Asia-Pacific Sewer Rehabilitation segment and $6.6 million of transaction and severance costs related to the acquisitions of Bayou and Corrpro. In the first nine months of 2008, we incurred approximately $1.7 million in expenses related to a proxy contest.

We experienced a $5.4 million, or 12.2%, decrease in operating expenses in our North American Sewer Rehabilitation business in the first nine months of 2009 compared to the prior year period, which partially offset the increase in consolidated operating expenses. This decrease was primarily the result of cost reduction measures taken in the fourth quarter of 2008. In addition, we reduced operating expenses by $2.8 million, or 16.4%, in our European Sewer Rehabilitation business in the first nine months of 2009.

Total contract backlog improved to $467.7 million at September 30, 2009, a record for our company, compared to $292.9 million at September 30, 2008 and $249.1 million at December 31, 2008. The September 30, 2009 level of backlog was significantly higher than total contract backlog at December 31, 2008 and September 30, 2008 due primarily to the addition of $123.8 million total contract backlog of Bayou and Corrpro at September 30, 2009. Excluding the backlog from Bayou and Corrpro, consolidated

backlog at September 30, 2009 increased by $94.8 million, or 38.1%, and $51.0 million, or 17.4%, compared to December 31, 2008 and September 30, 2008, respectively, due to the high backlog levels in our North American Sewer Rehabilitation segment, European Sewer Rehabilitation segment and Asia-Pacific Rehabilitation segment. In addition, our United Pipeline Systems business experienced a 17.1% growth in backlog at September 30, 2009 compared to September 30, 2008. These increases in backlog are due to improved win-rates and increased market penetration.

North American Sewer Rehabilitation Segment

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

                                                                       Increase (Decrease)
                                         2009             2008             $              %
Three Months Ended September 30,
 Revenues                            $   94,858       $   89,346        $   5,512         6.2 %
 Gross profit                            24,082           20,184            3,898        19.3
 Gross margin                              25.4 %           22.6 %                        2.8
 Operating expenses                      13,760           13,427              333         2.5
 Operating income                        10,322            6,757            3,565        52.8
 Operating margin                          10.9 %            7.6 %                        3.3

Nine Months Ended September 30,
 Revenues                            $  259,049        $ 257,495        $   1,554         0.0 %
 Gross profit                            64,915           56,405            8,510        15.1
 Gross margin                              25.1 %           21.9 %                        3.2
 Operating expenses                      39,071           44,495           (5,424 )     (12.2 )
 Operating income                        25,844           11,910           13,934       117.0
 Operating margin                          10.0 %            4.6 %                        5.4

Revenues
Revenues increased by $5.5 million, or 6.2%, in our North American Sewer Rehabilitation segment in the third quarter of 2009 compared to the third quarter of 2008. The increase in revenues was primarily due to increased workable backlog in the third quarter of 2009. Third-party product sales in this segment were $2.9 million and $2.4 million in the third quarter of 2009 and 2008, respectively. Revenues increased slightly in our North American Sewer Rehabilitation segment in the first nine months of 2009 compared to the first nine months of 2008.

Contract backlog in our North American Sewer Rehabilitation segment at September 30, 2009 was $183.8 million. This represented a $5.3 million, or 3.0%, increase from backlog at September 30, 2008. Backlog at September 30, 2009 declined 11.2% compared to June 30, 2009. This decline was primarily attributed to increased revenue during the third quarter of 2009 and delays in contract awards on certain large projects. Overall increasing levels of backlog compared to September 30, 2008 are a result of improved win-rates and slightly increased market activity some of which is attributable to federal stimulus programs. The stimulus programs are expected to have a favorable impact on the market in the upcoming quarters.

Gross Profit and Gross Margin
Gross profit in our North American Sewer Rehabilitation segment increased $3.9 million, or 19.3%, in the third quarter of 2009 compared to the prior year quarter, primarily due to project execution improvements and lower pricing for resin and fuel. Also, general cost management practices continue to drive a lower overall cost structure. In the third quarter of 2009, our gross margin increased to 25.4% from 22.6% in the third quarter of 2008, as a result of the factors mentioned above.

We will continue to drive profitability and returns through enhanced project management and crew training, and the continued implementation of technologies and improved logistics management. In addition, we continue to seek avenues for taking advantage of our vertical integration and manufacturing capabilities by further expanding our third-party product sales efforts.

In the first nine months of 2009, gross profit increased by $8.5 million, or 15.1%, over the prior year period, despite an increase in revenues of only $1.6 million. In the first nine months of 2009, our gross margin increased to 25.1% from 21.9%, a 320 basis point increase. The improvement in our gross profit margins was primarily due to project execution improvements and lower pricing for fuel and resin. In addition, gross margins were boosted by increased third party product sales.

Operating Expenses
Operating expenses in our North American Sewer Rehabilitation segment increased by $0.3 million, or 2.5%, during the third quarter of 2009 compared to the third quarter of 2008. The increase was primarily due to an increase in health care costs. Operating expenses as a percentage of revenues were 14.5% in the third quarter of 2009 compared to 15.0% in the third quarter of 2008.

Operating expenses decreased by $5.4 million, or 12.2%, in the first nine months of 2009 compared to the first nine months of 2008, primarily due to cost reduction and realignment efforts in this segment. Operating expenses as a percentage of revenues were 15.2% in the first nine months of 2009 compared to 17.3% in the first nine months of 2008.

Operating Income and Operating Margin
The higher revenue level and improved gross profit led to a $3.6 million, or 52.8%, increase in operating income in our North American Sewer Rehabilitation segment in the third quarter of 2009 compared to the third quarter of 2008. Our North American Sewer Rehabilitation operating margin, which is operating income as a percentage of revenues, improved to 10.9% in the third quarter of 2009 compared to 7.6% in the third quarter of 2008, an increase of 330 basis points.

Operating income in this segment in the first nine months of 2009 increased to $25.8 million compared to $11.9 million in the first nine months of 2008, a 117.0% increase. Our North American Sewer Rehabilitation operating margin improved to 10.0% in the first nine months of 2009 compared to 4.6% in the first nine months of 2008, an increase of 540 basis points. This improvement was primarily due to the gross margin improvements discussed above.

European Sewer Rehabilitation Segment

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

                                                                                 Increase (Decrease)
                                                 2009            2008               $                 %
Three Months Ended September 30,
 Revenues                                  $    23,152       $   27,055         $   (3,903 )      (14.4 )%
 Gross profit                                    6,212            5,941                271          4.6
 Gross margin                                     26.8 %           22.0 %                           4.8
 Operating expenses                              5,117            5,594               (477 )       (8.5 )
 Operating income                                1,095              347                748        215.6
 Operating margin                                  4.7 %            1.3 %                           3.4

Nine Months Ended September 30,
 Revenues                                   $   62,067       $   79,313         $  (17,246 )      (21.7 )%
 Gross profit                                   16,354           15,936                418          2.6
 Gross margin                                     26.3 %           20.1 %                           6.2
 Operating expenses                             14,234           17,020             (2,786 )      (16.4 )
 Operating income (loss)                         2,120           (1,084 )            3,204        295.6
 Operating margin                                  3.4 %           (1.4 )%                          4.8

Revenues
Revenues in our European Sewer Rehabilitation segment decreased by $3.9 million, or 14.4%, during the third quarter of 2009 compared to the third quarter of 2008, primarily due to continued market weakness in the United Kingdom and a $1.9 million unfavorable impact of foreign currencies against the U.S. dollar.

For the first nine months of 2009, revenues decreased by $17.2 million, or 21.7%, compared to the first nine months of 2008, primarily due to a $9.8 million unfavorable impact of weak European currencies versus the U.S. dollar as well as a decline in revenues from our United Kingdom operations due to continuing soft market conditions.

Contract backlog in our European Sewer Rehabilitation segment was $40.7 million at September 30, 2009. This represented an increase of $10.0 million, or 32.6%, compared to September 30, 2008. The increase was principally due to higher backlog in Switzerland and The Netherlands. 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 the remainder of 2009.

As part of our continuing efforts to improve our European financial performance, certain recent operational and management changes have been made. We also are working to restructure a number of country-based operations to reduce fixed costs and improve project execution and management. We continue to anticipate only modest growth in revenues (not accounting for foreign

currency impacts) for this segment in 2010; however, we expect profitability to improve year over year due to recent organizational changes and other continuing restructuring efforts.

Gross Profit and Gross Margin

Gross profit in our European Sewer Rehabilitation segment increased by $0.3 million, or 4.6%, during the third quarter of 2009 compared to the third quarter of 2008, despite the 14.4% decline in revenues. Our European Sewer Rehabilitation segment experienced an increase in gross margin year over year of 480 basis points. The increase in gross profit quarter over quarter was due to improved margins in the United Kingdom due to improved project execution performance and cost reductions in Switzerland, Poland and France.

Gross profit in our European Sewer Rehabilitation segment increased by $0.4 million during the first nine months of 2009 compared to the first nine months of 2008. We experienced an improvement in both Switzerland and France after the restructuring plans were implemented during 2008. We also improved operationally in Poland. During the first nine months of 2008, gross profit for this segment was negatively impacted by several large project execution issues in our Eastern European operations.

While our recent profitability in Europe has not met our long-term expectations, we continue to implement changes in this business unit that we expect will result in significantly improved performance. We are focusing on bottom-line improvements that should enable this business to achieve our expected financial returns. With dramatically improved contract backlog, coupled with the restructuring efforts, we expect to see significant profitability improvements in future quarters.

Operating Expenses
Operating expenses in our European Sewer Rehabilitation segment decreased by $0.5 million, or 8.5%, during the third quarter of 2009 compared to the third quarter of 2008, primarily due to a reduction in operating expenses in France, Switzerland and the United Kingdom due to cost reduction efforts.

Operating expenses in our European Sewer Rehabilitation segment decreased by $2.8 million, or 16.4%, during the first nine months of 2009 compared to the first nine months of 2008. This was primarily due to cost reduction efforts in the United Kingdom, Switzerland, France and Poland. Operating expenses as a percentage of revenues increased to 23.0% in the first nine months of 2009 compared to 21.5% in the first nine months of 2008, primarily due to the decline in revenues.

Operating Income (loss) and Operating Margin Lower operating expenses and higher gross profit led to a $0.7 million improvement in operating income in the third quarter of 2009 compared to the third quarter of 2008. Our European Sewer Rehabilitation operating margin, which is operating income as a percentage of revenues, improved to 4.7% in the third . . .