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 ($13.31 per share).
- Rene J. Robichaud, President and Chief Executive Officer
|Financial Data||Three Months||%|
|(000's, except per share data)||4/30/14||4/30/13||Change|
|--Water Resources||$ 43,126||$ 44,412||(2.9)|
|Total revenues||$ 191,240||$ 226,446||(15.5)|
|Net loss from continuing operations attributable to Layne Christensen Company||$ (27,727)||$ (24,196)||14.6|
|Diluted loss per share - continuing operations||$ (1.41)||$ (1.24)||13.9|
|Net loss attributable to Layne Christensen Company||$ (27,727)||$ (23,779)||16.6|
|Diluted loss per share||$ (1.41)||$ (1.22)||15.8|
Pre-tax income at Inliner for Q1 FY 2015 more than doubled to $4.8 million, Water Resources reported a pre-tax profit of $1.8 million, and Geoconstruction reported its second consecutive profitable quarter, representing a $7.0 million improvement from Q1 FY 2014. The performance of these divisions, however, was more than offset by pre-tax losses of $8.6 million at Heavy Civil, $3.8 million at Mineral Services, and $0.7 million at Energy Services. Unallocated corporate expenses increased by $1.8 million from Q1 FY 2014 and interest expense rose by $3.6 million from the same period last year.Net loss attributable to Layne for Q1 FY 2015 was $27.7 million, or $(1.41) per share as compared to a net loss attributable to Layne of $23.8 million, or ($1.22) per share, in the same period last year. Cost of revenues decreased by $27.4 million, or 14.5%, to $162.2 million from $189.6 million in last year's first fiscal quarter, the result of lower direct costs and lower field expenses caused by a decline in revenues. As a percentage of revenues, these costs were 84.8% in Q1 FY 2015 compared to 83.7% in Q1 FY 2014. Selling, general and administrative expenses declined by 16.9% to $34.9 million from $41.9 million for the same period last year, the result of lower compensation expenses, relocation costs, and legal fees, offset by higher consulting and insurance costs. Depreciation and amortization decreased 8.8% to $13.9 million from $15.3 million for the same period last year, due to reduced capital expenditures in FY2014 and FY2015. Equity in losses of affiliates decreased to $(0.1) million from $(0.5) million in last year's first quarter, due to the continuing impact of the global decline in mineral exploration. Interest expense in Q1 FY 2015 of $4.9 million increased from $1.3 million in last year's first quarter. As previously announced, Layne issued Convertible Notes during FY 2014, and executed an ABL facility and terminated its previous Credit Agreement during Q1 FY 2015. Included in interest expense for Q1 FY 2015 was a $1.1 million write-off of the remaining fees associated with the Company's prior Credit Agreement. Also included was amortization of the deferred financing fees associated with the issuance of the Convertible Notes and the execution of the ABL facility, which totaled $0.2 million.
Other income declined to $0.1 million from $3.8 million in last year's first quarter. For Q1 FY 2014, other income consisted primarily of gains on sales of non-core assets in the amount of $3.4 million.Income tax expense from continuing operations of $2.2 million declined from $5.8 million in last year's first quarter. During Q1 FY 2015, no tax benefit was recorded on the domestic losses and certain foreign losses due to valuation allowances provided as the related deferred tax assets. During Q1 FY 2014, Layne recorded a valuation allowance charge of $8.0 million against prior year foreign tax credit carryforwards. On June 12, 2014, the Board of Directors approved management's plan to implement a series of short-term and long-term cost cutting actions in order to improve Layne's liquidity and results of operations. These actions include cost containment measures, working capital management, and a strategic review of under-performing assets and operations. These actions are expected to generate annual savings of $12 million to $20 million. Management believes this plan will assist Layne to have sufficient funds and adequate financial resources available to meet its anticipated liquidity needs. The timing and costs of the plan may vary from Layne's current estimates based on many factors. Layne may incur other material charges not currently anticipated due to events that could be beyond Layne's control which may occur as a result of, or associated with, the plan and related activities and as such, actual results could differ from current estimates. Summary of Operating Segment Data The following table summarizes financial information for the Company's operating segments. A discussion of the results for Q1 FY 2015 of each segment follows the table.
|Ended April 30,|
|Water Resources||$ 43,126||$ 44,412|
|Total revenues||$ 191,240||$ 226,446|
|Equity in losses of affiliates|
|Total equity in losses of affiliates||$ (66)||$ (481)|
|(Loss) income from continuing operations before income taxes|
|Water Resources||$ 1,825||$ (26)|
|Unallocated corporate expenses||(14,955)||(13,188)|
|Total loss from continuing operations before income taxes||$ (24,530)||$ (18,344)|
|Water Resources Division||Three Months|
|Ended April 30,|
|Revenues||$ 43,126||$ 44,412|
|Income (loss) before income taxes||1,825||(26)|
The bidding environment at Water Resources has improved considerably from FY 2014, due to water sourcing demand increases in response to severe drought conditions in the western U.S., recovering demand for injection wells in Florida, and increasing repair and installation work.Backlog at Water Resources reached $84.4 million as of April 30, 2014, compared to $59.8 million as of January 31, 2014.
|Inliner Division||Three Months|
|Ended April 30,|
|Revenues||$ 33,483||$ 30,280|
|Income before income taxes||4,843||2,339|
|Heavy Civil Division||Three Months|
|Ended April 30,|
|Revenues||$ 49,418||$ 73,840|
|Loss before income taxes||(8,580)||(1,493)|
Heavy Civil also has certain projects, many of them hard-bid contracts, which are in the final stages of completion. These projects are complex and difficult in nature, extending over multiple years. In FY 2013, Layne determined that these hard-bid contracts no longer fit within the strategic focus for this segment and has successfully moved away from bidding this type of work. These contracts incurred losses of $3.1 million during Q1 FY 2015. Layne believes certain of these contracts have amounts for which it will be seeking additional payments from the owner. These amounts have not been included in the results of this division.The backlog at Heavy Civil was $266.5 million as of April 30, 2014 as compared to $257.6 million as of January 31, 2014.
|Geoconstruction Division||Three Months|
|Ended April 30,|
|Revenues||$ 32,595||$ 21,587|
|Income (loss) before income taxes||1,637||(5,408)|
While Geoconstruction is expected to demonstrate significant operating improvement in FY 2015, Brazil remains a disappointing market for this division's services. We are reviewing our investments in this country with local management.Backlog at Geoconstruction was $133.8 million as of April 30, 2014 compared to $118.0 million at January 31, 2014.
|Mineral Services Division||Three Months|
|Ended April 30,|
|Revenues||$ 29,488||$ 54,404|
|(Loss) income before income taxes||(3,799)||1,138|
|Losses from affiliates, included in above earnings||(66)||(481)|
The backlog in the Mineral Services division was $4.4 million as of April 30, 2014 as compared to $2.7 million at January 31, 2014.
|Energy Services Division||Three Months|
|Ended April 30,|
|Revenue||$ 2,828||$ 1,793|
|Loss before income taxes||(726)||(566)|
|Ended April 30,|
|Revenues||$ 3,943||$ 4,933|
|Income before income taxes||115||158|
Unallocated Corporate ExpensesCorporate expenses not allocated to individual divisions, primarily included in selling, general and administrative expenses, were $15.0 million in Q1 FY 2015 compared to $13.2 million for the same period last year. Higher expenses reflect increased consulting expenses of $1.4 million, an increase in rent of $0.2 million, and an increase in temporary services of $0.4 million, partially offset by a decrease in compensation expenses of $0.2 million. Conference Call Rene Robichaud, President & CEO, and James R. Easter, CFO, will conduct a conference call at 11:00 AM ET / 10:00 AM CT this morning to discuss these results and related matters. Interested parties may participate in the call by dialing (877) 212-6082 (Domestic) or (707) 287-9332 (International). The conference call will also be broadcast live via the Investor Information sector of Layne's website at www.layne.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the website for approximately 90 days. Forward-Looking Statements This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Such statements may include, but are not limited to, statements of plans and objectives, statements of future economic performance and statements of assumptions underlying such statements, and statements of management's intentions, hopes, beliefs, expectations or predictions of the future. Forward-looking statements can often be identified by the use of forward-looking terminology, such as "should," "intended," "continue," "believe," "may," "hope," "anticipate," "goal," "forecast," "plan," "estimate" and similar words or phrases. Such statements are based on current expectations and are subject to certain risks, uncertainties and assumptions, including but not limited to: the outcome of the ongoing internal investigation into, among other things, the legality, under the FCPA and local laws, of certain payments to agents and other third parties interacting with government officials in certain countries in Africa relating to the payment of taxes and the importing of equipment (including any government enforcement action which could arise out of the matters under review or that the matters under review may have resulted in a higher dollar amount of payments or may have a greater financial or business impact than management currently anticipates), prevailing prices for various commodities, unanticipated slowdowns in the Company's major markets, the availability of credit, the risks and uncertainties normally incident to the construction industry, the impact of competition, the effectiveness of operational changes expected to increase efficiency and productivity, worldwide economic and political conditions and foreign currency fluctuations that may affect worldwide results of operations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially and adversely from those anticipated, estimated or projected. 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.
Layne is a global solutions provider to the world of essential natural resources—water, mineral and energy. We offer innovative, sustainable products and services with an enduring commitment to safety, excellence and integrity.
|LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED FINANCIAL DATA|
|Ended April 30,|
|(in thousands, except per share data)||2014||2013|
|Revenues||$ 191,240||$ 226,446|
|Cost of revenues (exclusive of depreciation and amortization, shown below)||(162,151)||(189,555)|
|Selling, general and administrative expenses (exclusive of depreciation and amortization, shown below)||(34,856)||(41,944)|
|Depreciation and amortization||(13,923)||(15,263)|
|Losses from affiliates||(66)||(481)|
|Other income, net||116||3,751|
|Loss from continuing operations before income taxes||(24,530)||(18,344)|
|Income tax expense||(2,221)||(5,783)|
|Net loss from continuing operations||(26,751)||(24,127)|
|Net income from discontinued operations||--||417|
|Net income attributable to noncontrolling interests||(976)||(69)|
|Net loss attributable to Layne Christensen Company||$ (27,727)||$ (23,779)|
|(Loss) income per share information attributable to Layne Christensen Company shareholders:|
|Basic loss per share - continuing operations||$ (1.41)||$ (1.24)|
|Basic income per share - discontinued operations||--||0.02|
|Basic loss per share||$ (1.41)||$ (1.22)|
|Diluted loss per share - continuing operations||$ (1.41)||$ (1.24)|
|Diluted income per share - discontinued operations||--||0.02|
|Diluted loss per share||$ (1.41)||$ (1.22)|
|Weighted average shares outstanding - basic||19,624||19,543|
|Dilutive stock options and nonvested shares||--||--|
|Weighted average shares outstanding - dilutive||19,624||19,543|
|April 30,||January 31,|
|Balance Sheet Data:|
|Cash and cash equivalents||$ 21,222||$ 35,013|
|Working capital, including current maturities of long term debt||129,499||121,330|
|Total long term debt, excluding current maturities||147,919||108,304|
|Total Layne Christensen Company equity||264,958||289,464|
|Common shares issued and outstanding||19,904||19,915|
CONTACT: Layne Christensen Company James R. Easter Chief Financial Officer 281-475-2694 Jim.Easter@Layne.com The Equity Group Inc. Devin Sullivan Sr. Vice President 212-836-9608 email@example.com