Layne Christensen (LAYN) Q3 2012 Earnings Call December 08, 2011 11:00 am ET Executives
Okay, Jerry, want to take us away?Jerry W. Fanska Thank you, Andy. Good morning, everyone. Revenues for the third quarter increased $25.1 million or 9.3% to $294.9 million from $269.8 million in the prior year. Water Infrastructure revenues increased $5.4 million or 2.6% for the quarter to $215.3 million. Revenues from business acquisitions increased $18.3 million and specialty drilling operations increased $8.6 million. These increases were partially offset by decreases of $11.2 million in non-acquisition-related geoconstruction operations and $7.3 million in heavy civil construction. Revenues from our water well drilling work in Afghanistan also decreased $4.6 million from the prior year's quarter. Mineral Exploration revenues increased 39.6% to $72.1 million, another quarterly record, with increased activity across all regions. Layne Energy revenues increased 2.8% to $5.1 million from $4.9 million in the prior year. Cost of revenues increased $19.5 million to $229.2 million for the quarter compared to $209.7 million in the same period last year and remained flat as a percentage of revenues at 77.7%. Margin pressures, especially in the Water Infrastructure's heavy civil construction unit, were offset by other product lines and divisions. Selling, general and administrative expenses increased to $43.7 million in the quarter from $37.9 million in the prior year, primarily a result of $3 million of increased compensation-related expenses, $2.1 million of operating tax increases, $1.6 million in legal and professional costs and $1 million in additional SG&A from acquired operations. Included in the $3 million of compensation-related expenses are $2.4 million or approximately $0.07 per share of transitional cost associated with the retirement of the CEO and changes in other executive positions. Depreciation, depletion and amortization increased in the quarter to $15.5 million from $12.8 million, primarily due to acquisitions and property additions. Equity and earnings of affiliates increased 51.3% to a record $6.5 million in the quarter, $1.2 million from the Water Infrastructure affiliates and the remainder from minerals. The Water Infrastructure increase comes from the result of our Costa Fortuna affiliate and infrastructure projects in Brazil, and the Mineral Exploration increase is primarily the result of continued strong metals markets in Latin America in copper and gold.
Interest expense increased to $700,000 from $337,000 for the quarter as a result of additional working capital requirements.The effective income tax rate for the quarter was 30.7% compared to 38.7% in the prior year. The decrease in the effective rate was primarily attributable to the tax effect of a continued increase in the forecasted equity earnings of our affiliates as a percentage of overall forecasted pretax earnings for the year. This has obviously an effect on our effective income tax rate. The current effective rate estimate for the entire year is 39%. The net result for the quarter was $0.45 per diluted share in earnings compared to $0.42 per diluted share last year. The company's balance sheet at October 31, 2011, reflects total assets of $899 million, stockholders' equity of $536.9 million, total long-term debt of $65.2 million excluding current maturities of $84,000 and cash and cash equivalents of $44.5 million. The company generated $19.4 million in cash from operating activities in the quarter. Investing activities totaled $16.9 million net of proceeds from equipment sales. The investing activities included $24.9 million in property plant and equipment additions and approximately $1 million in energy expenditures, offset by a release of $9 million net in restricted cash associated with the previously disclosed Fontana, California real estate transaction. With that, I'll turn it over to Rene to talk about the operations. Rene J. Robichaud Thanks, Jerry. Just a few comments on our consolidated results. It's interesting that all 3 of our divisions had higher revenues in the third quarter despite the economy headwind. I also appreciate that our cost of revenues were flat at 77.7%, despite at least a couple, what I will say, short-term expenses in SG&A. One includes legal expenses and travel of $1.6 million in the quarter or $0.04 per share. Part of that, of course, has to do with our FCPA investigation, and the other is $2.4 million expense or $0.07 per share in our executive transition cost. Read the rest of this transcript for free on seekingalpha.com