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Layne Christensen Reports Second Quarter Fiscal 2013 Financial Results

Stocks in this article: LAYN

Cost of revenues increased $1.9 million or 0.8% to $230.5 million (79.6% of revenues) from $228.6 million (79.0% of revenues) for the same period last year. The increased percentage of revenues resulted from margin pressures across most divisions, especially those exposed to the municipal sector, as well as  cost overruns in Heavy Civil for Q2 FY2013.

Selling, general and administrative expenses increased 11.9% to $41.9 million from $37.5 million in last year's second quarter. The increase was primarily due to additional legal and professional fees of $3.5 million and $1.2 million of increased compensation costs, partially offset by reduction in various other expense categories.

Depreciation, depletion and amortization increased 24.4% to $16.0 million for Q2 FY2013 from $12.8 million in the same period  last year, primarily driven by additional assets from acquisitions and property additions.

During Q2 FY2013, Layne acquired the remaining 50% of Diberil Sociedad Anonima, ("Diberil") a Uruguayan company and parent company to Costa Fortuna (Brazil and Uruguay). Previously, Diberil had been accounted for on the equity method. In accordance with accounting guidance in moving the company to a fully consolidated basis, Layne remeasured the previously held equity investment to fair value and recognized a non-cash loss of $7.7 million during Q2 FY2013. The fair value of the initial 50% noncontrolling interest was estimated to be $15.8 million at the time of the adjustment.

Equity in earnings of affiliates decreased 18.8% to $6.4 million for Q2 FY2013 from $7.8 million in last year's second quarter. The decline is primarily due to decreased earnings at our affiliate operations in Mineral Exploration due to a temporary mine shutdown by one of our clients and inefficiencies caused by transferring equipment between sites. Both situations no longer exist.

Interest expense increased to $0.8 million from $0.7 million, the result of increased borrowings on our credit facilities to fund capital expenditures, acquisitions and seasonal working capital needs.

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