THE WOODLANDS, Texas,
Dec. 5, 2017 /PRNewswire/ -- Layne
Christensen Company (NASDAQ: LAYN) ("Layne" or the "Company")
today announced financial and operating results for the fiscal 2018
third quarter (Q3 FY 2018) ended October 31,
2017.
Q3 FY 2018 Financial Highlights
- Financial performance in Q3 FY 2018 improved significantly
compared to the prior year period as a result of continuing
strength at Mineral Services and improved performance at Water
Resources, including a strong first full quarter contribution from
the Water Midstream business.
- Reported net loss from continuing operations for Q3 FY 2018 was
($2.0) million, or ($0.10) per share, compared to ($4.5) million, or ($0.23) per share, for the fiscal 2017 third
quarter (Q3 FY 2017) ended October 31,
2016.
- Total Adjusted EBITDA (a non-GAAP financial measure as defined
below) increased to $9.9 million in
Q3 FY 2018 compared to $7.0 million
in Q3 FY 2017.
- Unallocated corporate expenses reflected in Adjusted EBITDA
increased to $5.7 million in Q3 FY
2018 compared to $4.5 million in Q3
FY 2017. The increase primarily reflects higher incentive
compensation expense based on overall improved operating
performance.
- As of October 31, 2017, cash and
cash equivalents were $26.1 million,
and total debt was $165.1 million.
Total liquidity, which includes availability under Layne's credit
facility and total cash and cash equivalents, was $101.6 million at October
31, 2017, compared to $107.6
million at July 31, 2017.
- Total backlog was $172.1 million
at October 31, 2017 compared to
$182.8 million at July 31, 2017 and $172.3
million at October 31,
2016.
- On November 1, 2017, Layne
announced a long-term agreement with the Texas General Land Office
("GLO") that provides our Water Midstream business with the
exclusive right to develop GLO non-potable water resources for use
in oil and gas drilling and completion activities on approximately
88,000 acres interspersed across Reeves and Culberson counties, in the Delaware Basin oil and gas producing region of
Texas.
CEO Commentary
Michael J. Caliel, President and
Chief Executive Officer of Layne, commented, "We continued to make
progress delivering significant improvements in financial
performance during the third quarter. We saw ongoing strength at
both Inliner and Mineral Services, driven by higher levels of
activity and improving markets. In addition, Water Resources'
performance continues to improve, led by increased activity from
our new Water Midstream business.
"We are very pleased with the early results from our Water
Midstream business and today we are announcing a six-mile northward
extension of our current pipeline in order to meet additional
demand from upstream producers with limited access to water.
The extension is expected to cost approximately $4 million and should be completed in early
2018. The growth of our existing Water Midstream
infrastructure, together with the recently announced long-term
agreement with the Texas General Land Office covering 88,000 acres
in the Delaware Basin, position
Layne as a leader in providing water resources for use in oil and
gas drilling and completion operations. We believe our Water
Midstream business is well positioned for significant growth over
the next several years.
"We remain keenly focused on our objectives to significantly
improve profitability at Water Resources, leverage our strengths at
Inliner to grow the business, take advantage of improved levels of
activity in the Americas for Mineral Services, and refinance our
balance sheet in an accretive manner. While our fourth
quarter is typically the slowest time of the year due to the winter
and holiday season, our results so far this year clearly indicate
that we are making meaningful progress."
LAYNE CHRISTENSEN
COMPANY AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED FINANCIAL DATA
|
|
|
|
Three
Months
|
|
Nine
Months
|
|
|
Ended October
31,
|
|
Ended October
31,
|
|
|
(unaudited)
|
|
(unaudited)
|
(in thousands, except
per share data)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues
|
|
$
127,423
|
|
$
120,574
|
|
$
365,090
|
|
$
364,855
|
Cost of revenues
(exclusive of depreciation and amortization, shown
below)
|
|
(100,140)
|
|
(97,124)
|
|
(285,292)
|
|
(294,660)
|
Selling, general and
administrative expenses (exclusive of depreciation and
amortization shown below)
|
|
(19,303)
|
|
(17,609)
|
|
(55,983)
|
|
(57,238)
|
Depreciation and
amortization
|
|
(6,821)
|
|
(6,517)
|
|
(19,678)
|
|
(19,002)
|
Gain on sale of fixed
assets
|
|
881
|
|
2,739
|
|
1,913
|
|
2,828
|
Equity in earnings of
affiliates
|
|
1,367
|
|
189
|
|
3,093
|
|
1,916
|
Restructuring
costs
|
|
(953)
|
|
(1,711)
|
|
(2,208)
|
|
(2,776)
|
Interest
expense
|
|
(4,308)
|
|
(4,206)
|
|
(12,745)
|
|
(12,661)
|
Other (expense)
income, net
|
|
(70)
|
|
554
|
|
(4)
|
|
665
|
Loss from continuing
operations before income taxes
|
|
(1,924)
|
|
(3,111)
|
|
(5,814)
|
|
(16,073)
|
Income tax
expense
|
|
(80)
|
|
(1,352)
|
|
(1,743)
|
|
(1,824)
|
Net loss from
continuing operations
|
|
(2,004)
|
|
(4,463)
|
|
(7,557)
|
|
(17,897)
|
Net loss from
discontinued operations
|
|
(76)
|
|
(580)
|
|
(22,329)
|
|
(1,259)
|
Net loss
|
|
$
(2,080)
|
|
$
(5,043)
|
|
$
(29,886)
|
|
$
(19,156)
|
Loss per share
information:
|
|
|
|
|
|
|
|
|
Loss per share from
continuing operations - basic and diluted
|
|
$
(0.10)
|
|
$
(0.23)
|
|
$
(0.38)
|
|
$
(0.91)
|
Loss per share from
discontinued operations - basic and diluted
|
|
(0.01)
|
|
(0.03)
|
|
(1.13)
|
|
(0.06)
|
Loss per share -
basic and diluted
|
|
$
(0.11)
|
|
$
(0.26)
|
|
$
(1.51)
|
|
$
(0.97)
|
Weighted average
shares outstanding - basic and dilutive
|
|
19,882
|
|
19,791
|
|
19,846
|
|
19,782
|
|
|
|
|
|
|
|
As of
|
|
|
October
31,
|
|
January
31,
|
(in
thousands)
|
|
2017
|
|
2017
|
|
|
(unaudited)
|
|
(unaudited)
|
Balance Sheet
Data
|
|
|
|
|
Cash and cash
equivalents
|
|
$
26,085
|
|
$
69,000
|
Working
capital
|
|
60,296
|
|
105,545
|
Adjusted
working capital (excluding cash and cash
equivalents)
|
|
34,211
|
|
36,545
|
Total
assets
|
|
389,470
|
|
436,151
|
Total
debt
|
|
165,064
|
|
162,355
|
Total Layne
Christensen Company equity
|
|
53,989
|
|
82,220
|
Common shares
issued and outstanding
|
|
19,883
|
|
19,805
|
Summary of Operating Segment Data
The following are revenues and Adjusted EBITDA for Layne's
operating segments. A discussion of the results for Q3 FY 2018 for
each segment compared to the prior year period follows the
table.
|
|
|
|
|
|
|
Three
Months
|
|
Nine
Months
|
|
|
Ended October
31,
|
|
Ended October
31,
|
(in
thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues
|
|
|
|
|
|
|
|
|
Water
Resources
|
|
$
45,902
|
|
$
49,939
|
|
$ 132,875
|
|
$ 168,360
|
Inliner
|
|
54,623
|
|
50,517
|
|
155,993
|
|
151,027
|
Mineral
Services
|
|
26,898
|
|
20,188
|
|
76,222
|
|
45,761
|
Other
items/eliminations
|
|
—
|
|
(70)
|
|
—
|
|
(293)
|
Total
revenues
|
|
$ 127,423
|
|
$ 120,574
|
|
$ 365,090
|
|
$ 364,855
|
|
|
|
|
|
|
|
|
|
Total Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
Water
Resources
|
|
$
2,082
|
|
$
(798)
|
|
$
3,942
|
|
$
5,064
|
Inliner
|
|
8,317
|
|
9,628
|
|
25,310
|
|
24,979
|
Mineral
Services
|
|
5,202
|
|
2,701
|
|
15,412
|
|
6,815
|
Unallocated corporate
expenses
|
|
(5,655)
|
|
(4,495)
|
|
(15,104)
|
|
(18,250)
|
Total Adjusted
EBITDA
|
|
$
9,946
|
|
$
7,036
|
|
$
29,560
|
|
$
18,608
|
Water Resources
Revenues for Water Resources decreased during the three months
ended October 31, 2017 compared to
the prior year period due to reduced activity primarily in
agricultural drilling projects in the western and mid-western U.S.
stemming from increased precipitation in the region. The decline
was partially offset by activity from our new Water Midstream
business.
Adjusted EBITDA for the three months ended October 31, 2017 improved compared to the prior
year with reduced losses from injection well drilling and increased
activity from our Water Midstream business. Partially offsetting
these improvements was reduced drilling activity in the western
U.S. from increased precipitation in the region.
Backlog was $63.4 million at
October 31, 2017 compared to
$68.7 million at July 31, 2017 and $59.9
million at October 31,
2016.
Inliner
Revenues for Inliner were higher by 8.1% compared to the prior
year period due to increased activity levels. Delays resulting from
hurricanes in Texas and
Florida reduced revenues in the
current quarter by approximately $1
million.
The decrease in Adjusted EBITDA was primarily attributable to
margin pressure from certain jobs and the impact of revenue delays
from hurricane activity in the current quarter. The prior year
period included favorable margins on a number of jobs.
Backlog was $108.7 million at
October 31, 2017 compared to
$114.1 million at July 31, 2017 and $112.4
million at October 31,
2016.
Mineral Services
Revenues for Mineral Services increased 33.2% from the prior
year period due to increased drilling activity related to the
minerals market recovery in the western U.S. and Mexico.
The increase in Adjusted EBITDA for the three months ended
October 31, 2017 compared to the
prior year period was primarily due to increased activity and
profitability in the western U.S. with higher utilization within
the core drilling business and increased mine water management
work.
Unallocated Corporate Expenses
Unallocated corporate expenses reflected in our Adjusted EBITDA
were $5.7 million for the three
months ended October 31, 2017
compared to $4.5 million for the same
period last year. The increase was primarily due to an increase in
incentive compensation expense based on improved operating
performance.
Use of Non-GAAP Financial Information
Layne's measure of Total Adjusted EBITDA, which may not be
comparable to other companies' measure of Total Adjusted EBITDA,
represents net loss before discontinued operations, taxes,
interest, depreciation and amortization, gain or loss on sale of
fixed assets, non-cash equity-based compensation, equity in
earnings or losses from affiliates, certain non-recurring items
such as restructuring costs, and certain other gains or losses,
plus dividends received from affiliates. Total Adjusted EBITDA is
included as a complement to results provided in accordance with
generally accepted accounting principles (GAAP) because management
believes this non-GAAP financial measure helps in understanding and
evaluating Layne's operating performance and trends and may be
useful to investors. Layne management evaluates segment performance
based on the segment's revenues and Adjusted EBITDA, among other
factors. In addition, we use Total Adjusted EBITDA as a
factor in incentive compensation decisions and our credit facility
agreement uses measures similar to Total Adjusted EBITDA to measure
compliance with certain covenants.
The following table reconciles net loss to Total Adjusted
EBITDA.
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Nine
Months
|
|
|
Ended October
31,
|
|
Ended October
31,
|
(in
thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net loss
|
|
$
(2,080)
|
|
$
(5,043)
|
|
$ (29,886)
|
|
$ (19,156)
|
Items not included in
Total Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Net loss from
discontinued operations
|
|
76
|
|
580
|
|
22,329
|
|
1,259
|
Income tax
expense
|
|
80
|
|
1,352
|
|
1,743
|
|
1,824
|
Interest
expense
|
|
4,308
|
|
4,206
|
|
12,745
|
|
12,661
|
Depreciation and
amortization
|
|
6,821
|
|
6,517
|
|
19,678
|
|
19,002
|
Gain on sale of fixed
assets
|
|
(881)
|
|
(2,739)
|
|
(1,913)
|
|
(2,828)
|
Non-cash equity-based
compensation
|
|
774
|
|
619
|
|
2,543
|
|
2,637
|
Equity in earnings of
affiliates
|
|
(1,367)
|
|
(189)
|
|
(3,093)
|
|
(1,916)
|
Restructuring
costs
|
|
953
|
|
1,711
|
|
2,208
|
|
2,776
|
Other expense
(income), net
|
|
70
|
|
(554)
|
|
4
|
|
(665)
|
Dividends received
from affiliates
|
|
1,192
|
|
576
|
|
3,202
|
|
3,014
|
Total Adjusted
EBITDA
|
|
$
9,946
|
|
$
7,036
|
|
$
29,560
|
|
$
18,608
|
Conference Call
Layne Christensen will conduct a
conference call at 9:00 AM ET / 8:00
AM CT on Wednesday, December 6, 2017,
to discuss these results and related matters. Interested parties
may participate in the call by dialing 1-877-407-0672 (Domestic) or
1-412-902-0003 (International). The conference call will also be
broadcast live via the Investor Relations section of Layne's
website at www.layne.com. To listen to the live call, please go to
the website at least 10 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. A telephonic replay of the conference
call will be available through December 13,
2017 and may be accessed by calling 1-877-660-6853
(Domestic) or 1-201-612-7415 (International) and using passcode
13673438#.
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: estimates and assumptions regarding
Layne's strategic direction and business strategy, the timely and
effective execution of Layne's strategy for Water Resources, the
continuing recovery in the mining industry, prevailing prices for
various commodities, the timing and extent of future oil and gas
drilling and production in the Delaware Basin, longer term weather patterns,
unanticipated slowdowns in Layne's major markets, the availability
of credit, the availability of equity or debt capital needed for
the business, including the refinancing of Layne's existing
indebtedness as it matures or accelerates, the risks and
uncertainties normally incident to Layne's industries of operation,
the impact of competition, worldwide economic and political
conditions and foreign currency fluctuations that may affect
Layne's 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 Layne
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.
About Layne
Layne is a global water management, infrastructure services and
drilling company, providing responsible solutions to the world of
essential natural resources—water, minerals and energy. We
offer innovative, sustainable products and services with an
enduring commitment to safety, excellence and integrity.
Contacts
J. Michael Anderson
Chief Financial Officer
281-475-2694
michael.anderson@layne.com
Dennard Lascar Investor
Relations
Jack Lascar
713-529-6600
jlascar@dennardlascar.com
[LAYN-F]
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SOURCE Layne Christensen Company