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Layne Christensen Reports First Quarter Fiscal 2015 Financial Results

Q1 FY 2015 Overview

  • Revenues of $191.2 million compared to $226.4 million in Q1 FY 2014
  • Profits at Inliner, Water Resources, and Geoconstruction offset by losses at Heavy Civil and Mineral Services.
  • Total backlog rose 12.1% to $559.7 million from Q4 FY 2014.
  • Net loss attributable to Layne Christensen Company was $27.7 million, or $(1.41) per share, compared to $23.8 million, or $(1.24) per diluted share, in Q1 FY 2014.
  • Layne is taking new steps to improve its operating results and cash flows, including evaluating its alternatives regarding under-performing assets and businesses. Layne expects to realize $12 to $20 million in annualized cost savings. Approximately 25% of the annualized savings is expected to be realized during the remainder of fiscal year 2015.
  • As of April 30, 2014, cash and cash equivalents were $21.2 million, long-term debt, excluding current maturities, was $147.9 million, and equity was $265.0 million ($13.31 per share).

"Many of the conditions that adversely impacted our results in Q4 FY 2014 carried over into Q1 FY 2015, most notably with respect to Heavy Civil and Mineral Services; however, we believe that Water Resources, Inliner, Geoconstruction and Energy Services are positioned to improve their financial performance in FY 2015. Losses persisted at Heavy Civil during Q1 FY 2015, driven by the lingering effects of weather-induced project delays creating additional costs, as well as difficulties completing certain hard-bid construction projects. These delayed projects are now underway. We are taking several steps to enhance the financial performance at Heavy Civil. Mineral Services continues to operate in a difficult environment, especially in Africa, and challenges will likely persist throughout the year. Although utilization rates have improved and longer-term fundamentals for mining remain positive, our focus at Mineral Services will be managing costs while the industry recovers. Inliner's performance in Q1 FY 2015 bolsters our confidence that this division is on its way to producing an eighth consecutive year of record results. The outlook at Water Resources is promising, due largely to sourcing activities in water stressed regions of the country, particularly in the western United States. Geoconstruction commenced work on a portion of the $150 million in contracts signed in Q4 FY 2014 and Q1 FY 2015, and we expect stronger performance from this division this year except in Brazil. Our Energy Services business continues to gain traction in the areas of product development and implementation, and new contracts. Our water sourcing and transfer businesses are operating at 100% of available capacity for the first time and we expect growth in treatment revenues soon. This division is expected to reach an annual revenue run rate of approximately $20 million in Q3 FY 2015. Backlog rose in each of our divisions when compared to Q4 FY 2014. Layne is taking steps to improve its operating results and cash flows including evaluating its alternatives regarding under-performing assets and business. Our goal is to eliminate $12 - $20 million of operating expenses annually and reduce our exposure to under-peforming businesses and geographic areas. We are currently pursuing approximately $200 million of One Layne projects with expected start dates in the next year."

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