Layne Christensen (LAYN) Q2 2013 Earnings Call September 06, 2012 11:00 am ET Executives Devin Sullivan - Senior Vice President Rene J. Robichaud - Chief Executive Officer, President and Director Jerry W. Fanska - Principal Financial Officer, Principal Accounting Officer, Senior Vice President of Finance and Treasurer Jeffrey J. Reynolds - Chief Operating Officer, Executive Vice President and Director Analysts John Rogers - D.A. Davidson & Co., Research Division Steven Fisher - UBS Investment Bank, Research Division Michael G. Roomberg - Ladenburg Thalmann & Co. Inc., Research Division Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division Taylor Finch Presentation Operator
These forward-looking statements are made as of the date of this filing, and the company assumes no obligation to update such forward-looking statements or to update the reasons why actual results could differ materially from those anticipated in such forward-looking statements.I'd now like to turn the call over to Rene Robichaud, Rene, please go ahead. Rene J. Robichaud Thanks, Devin, and good morning, everyone. Thank you, all, for joining us today. Hopefully, you've had an opportunity to review our results for the second quarter. I'll make some brief remarks, turn it over to Jerry Fanska for a review of the numbers, and then we can open the call up for question. Three significant factors impacted our results for the second quarter. We realized a noncash loss of $7.7 million related to the remeasurement of our equity investment in Costa Fortuna, which was recorded in the Geoconstruction division. Exclusive of this adjustment, income from continuing operations for the second quarter was $4.8 million or $0.25 per diluted share. This was an odd accounting result for what is a good business combination for Layne. Accounting rules require that we remeasure the value of the first half of the Costa Fortuna investment, which was acquired 2 years ago, based on what we paid for the second half. The purchase price is basically the same as the first half. With significant growth in earnings in the business over the last 2 years, we are paying substantially less for the second half than our recorded investment plus earnings for the first half. Again, a very odd accounting result for a very good acquisition. As we move further down the P&L, you'll see that we recorded a net loss from discontinued operations for the second quarter of $21.1 million, reflecting our strategic decision to exit the exploration and production business. The great bulk of this charge is noncash.
As we've previously discussed, our shift in corporate strategy forced us to take a hard look in not only who we are, but more importantly, what we want to become. We do intend to be in the oil and gas services business for quite some time. We see a significant opportunity to build a water services business that addresses the critical needs of the E&P industry. Our plan is to develop this total water solutions business under the energy services banner into a $200 million enterprise over the next 3 to 5 years.Read the rest of this transcript for free on seekingalpha.com