THE WOODLANDS, Texas,
Sept. 11, 2017 /PRNewswire/ --
Layne Christensen Company (NASDAQ: LAYN) ("Layne" or the
"Company") today announced financial and operating results for the
fiscal 2018 second quarter (Q2 FY 2018) ended July 31, 2017.
Q2 FY 2018 Financial Highlights
- Financial performance in Q2 FY 2018 improved significantly
compared to the prior year period as a result of a marked
improvement in earnings at Mineral Services, further SG&A cost
reductions and continuing strong performance at Inliner.
- Reported net loss from continuing operations for Q2 FY 2018 was
($2.1) million, or ($0.11) per share, compared to ($5.4) million, or ($0.27) per share, for the fiscal 2017 second
quarter (Q2 FY 2017).
- Total Adjusted EBITDA (a non-GAAP financial measure as defined
below) increased to $10.0 million in
Q2 FY 2018 compared to $7.2 million
in Q2 FY 2017.
- Water Resources produced significant sequential improvement
compared to the fiscal 2018 first quarter, generating higher
revenues and Adjusted EBITDA.
- Unallocated corporate expenses reflected in Adjusted EBITDA
declined versus the prior year period and were $5.5 million in Q2 FY 2018 compared to
$6.7 million in Q2 FY 2017.
- As of July 31, 2017, cash and
cash equivalents were $34.2 million,
and total debt was $164.1
million. Total liquidity, which includes availability
under Layne's credit facility and total cash and cash equivalents,
was $107.6 million at July 31, 2017, compared to $121.5 million at April
30, 2017.
- Total backlog was $182.8 million
at July 31, 2017 compared to
$172.2 million at April 30, 2017 and $194.1
million at July 31,
2016.
- Layne completed construction of its new high-capacity water
pipeline and infrastructure system in the Delaware Basin of West Texas and generated positive earnings
from the Water Midstream business during Q2 FY 2018.
CEO Commentary
Michael J. Caliel, President and
Chief Executive Officer of Layne, commented, "We remain encouraged
with the overall trajectory of our business and the significant
improvement in financial performance that we delivered in the
second quarter. We saw continued strength at Inliner, improved
activity and profitability at Mineral Services and further
reductions in SG&A costs. In addition, the improvements
underway at Water Resources to stem project losses we incurred in
the last half of fiscal year 2017 led to meaningful sequential
improvement for the division.
"We are also very excited about our entry into the energy
infrastructure business as we completed our new high-capacity water
pipeline in the Delaware Basin of
West Texas ahead of
schedule. Driven by increased demand from upstream producers,
we are now in the process of expanding our pipeline capacity and we
plan to further leverage our substantial core competencies in water
sourcing, drilling and treatment to provide water infrastructure
solutions to our energy clients.
"We remain intently focused on our fiscal 2018 objectives to
significantly improve profitability at Water Resources, leverage
our strengths at Inliner to grow the business, take advantage of
the improved levels of activity in the Americas for Minerals
Services, further reduce our cost base and significantly grow our
energy infrastructure business. Our first half results clearly
indicate that we are making meaningful progress."
LAYNE CHRISTENSEN
COMPANY AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED FINANCIAL DATA
|
|
|
|
Three
Months
|
|
|
Six Months
|
|
|
|
Ended July
31,
|
|
|
Ended July
31,
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
(in thousands, except
per share data)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenues
|
|
$
|
126,160
|
|
|
$
|
123,635
|
|
|
$
|
237,667
|
|
|
$
|
244,281
|
|
Cost of revenues
(exclusive of depreciation and amortization charges shown below)
|
|
|
(98,869)
|
|
|
|
(100,474)
|
|
|
|
(185,152)
|
|
|
|
(197,536)
|
|
Selling, general and
administrative expenses (exclusive of depreciation and amortization charges shown
below)
|
|
|
(19,040)
|
|
|
|
(18,070)
|
|
|
|
(36,680)
|
|
|
|
(39,629)
|
|
Depreciation and
amortization
|
|
|
(6,373)
|
|
|
|
(6,527)
|
|
|
|
(12,857)
|
|
|
|
(12,485)
|
|
Gain (loss) on sale
of fixed assets
|
|
|
420
|
|
|
|
(46)
|
|
|
|
1,032
|
|
|
|
89
|
|
Equity in earnings of
affiliates
|
|
|
1,015
|
|
|
|
458
|
|
|
|
1,726
|
|
|
|
1,727
|
|
Restructuring
costs
|
|
|
(827)
|
|
|
|
(1,001)
|
|
|
|
(1,255)
|
|
|
|
(1,065)
|
|
Interest
expense
|
|
|
(4,237)
|
|
|
|
(4,209)
|
|
|
|
(8,437)
|
|
|
|
(8,455)
|
|
Other income,
net
|
|
|
229
|
|
|
|
80
|
|
|
|
66
|
|
|
|
111
|
|
Loss from continuing
operations before income taxes
|
|
|
(1,522)
|
|
|
|
(6,154)
|
|
|
|
(3,890)
|
|
|
|
(12,962)
|
|
Income tax (expense)
benefit
|
|
|
(613)
|
|
|
|
741
|
|
|
|
(1,663)
|
|
|
|
(472)
|
|
Net loss from
continuing operations
|
|
|
(2,135)
|
|
|
|
(5,413)
|
|
|
|
(5,553)
|
|
|
|
(13,434)
|
|
Net (loss) income
from discontinued operations
|
|
|
(2,771)
|
|
|
|
103
|
|
|
|
(22,253)
|
|
|
|
(679)
|
|
Net loss
|
|
$
|
(4,906)
|
|
|
$
|
(5,310)
|
|
|
$
|
(27,806)
|
|
|
$
|
(14,113)
|
|
Loss per share
information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share from
continuing operations - basic and diluted
|
|
$
|
(0.11)
|
|
|
$
|
(0.27)
|
|
|
$
|
(0.28)
|
|
|
$
|
(0.68)
|
|
(Loss) income per
share from discontinued operations - basic and diluted
|
|
|
(0.14)
|
|
|
|
0.01
|
|
|
|
(1.12)
|
|
|
|
(0.03)
|
|
Loss per share - basic
and diluted
|
|
$
|
(0.25)
|
|
|
$
|
(0.26)
|
|
|
$
|
(1.40)
|
|
|
$
|
(0.71)
|
|
Weighted average
shares outstanding - basic and dilutive
|
|
|
19,858
|
|
|
|
19,790
|
|
|
|
19,827
|
|
|
|
19,782
|
|
|
|
As of
|
|
|
|
July 31,
|
|
|
January
31,
|
|
(in
thousands)
|
|
2017
|
|
|
2017
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Balance Sheet
Data
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
34,175
|
|
|
$
|
69,000
|
|
Working
capital
|
|
|
68,545
|
|
|
|
105,545
|
|
Adjusted
working capital (excluding cash and cash equivalents)
|
|
|
34,370
|
|
|
|
36,545
|
|
Total
assets
|
|
|
391,426
|
|
|
|
436,151
|
|
Total
debt
|
|
|
164,137
|
|
|
|
162,355
|
|
Total Layne
Christensen Company equity
|
|
|
55,928
|
|
|
|
82,220
|
|
Common shares
issued and outstanding
|
|
|
19,882
|
|
|
|
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 Q2 FY 2018 for
each segment compared to the prior year period follows the
table.
|
|
|
|
|
|
|
|
|
Three
Months
|
|
|
Six Months
|
|
|
|
Ended July
31,
|
|
|
Ended July
31,
|
|
(in
thousands)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
Resources
|
|
$
|
44,830
|
|
|
$
|
56,471
|
|
|
$
|
86,973
|
|
|
$
|
118,421
|
|
Inliner
|
|
|
53,962
|
|
|
|
52,976
|
|
|
|
101,370
|
|
|
|
100,510
|
|
Mineral
Services
|
|
|
27,368
|
|
|
|
14,318
|
|
|
|
49,324
|
|
|
|
25,573
|
|
Intersegment
eliminations
|
|
|
—
|
|
|
|
(130)
|
|
|
|
—
|
|
|
|
(223)
|
|
Total
revenues
|
|
$
|
126,160
|
|
|
$
|
123,635
|
|
|
$
|
237,667
|
|
|
$
|
244,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
Resources
|
|
$
|
1,391
|
|
|
$
|
1,765
|
|
|
$
|
1,860
|
|
|
$
|
5,862
|
|
Inliner
|
|
|
8,920
|
|
|
|
8,133
|
|
|
|
16,993
|
|
|
|
15,351
|
|
Mineral
Services
|
|
|
5,184
|
|
|
|
4,063
|
|
|
|
10,210
|
|
|
|
4,114
|
|
Unallocated corporate
expenses
|
|
|
(5,489)
|
|
|
|
(6,716)
|
|
|
|
(9,449)
|
|
|
|
(13,755)
|
|
Total Adjusted
EBITDA
|
|
$
|
10,006
|
|
|
$
|
7,245
|
|
|
$
|
19,614
|
|
|
$
|
11,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water Resources
Revenues for Water Resources decreased during the three months
ended July 31, 2017 compared to the
prior year period primarily due to reduced activity in agricultural
drilling projects in the western U.S. stemming from increased
precipitation in the region and a decline in injection well
activity.
Adjusted EBITDA for the three months ended July 31, 2017 was lower compared to the prior
year reflecting reduced drilling activity in the western
U.S.
Backlog was $68.7 million at
July 31, 2017 compared to
$62.3 million at April 30, 2017 and $72.6
million at July 31,
2016.
Inliner
Revenues for Inliner were higher by 1.9% compared to the prior
year period due to overall increased activity levels.
The increase in Adjusted EBITDA was primarily attributable to
increased crew efficiency coupled with a higher mix of
self-performed work in the current quarter compared to the prior
year period.
Backlog was $114.1 million at
July 31, 2017 compared to
$109.9 million at April 30, 2017 and $121.5
million at July 31, 2016.
Mineral Services
Revenues for Mineral Services increased 91.1% from the prior
year period due to increased drilling activity from new and renewed
business in Mexico, the western
U.S. and Brazil.
The increase in Adjusted EBITDA for the three months ended
July 31, 2017 was primarily due to
significantly increased activity and profitability in Mexico and the western U.S. compared to the
prior year period. Prior year Adjusted EBITDA included a
$2.2 million value added tax
recovery.
Unallocated Corporate Expenses
Unallocated corporate expenses reflected in Adjusted EBITDA were
$5.5 million for the three months
ended July 31, 2017 compared to
$6.7 million for the same period last
year. The improvement was primarily due to a reduction in legal and
professional fees.
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
|
|
|
Six Months
|
|
|
|
Ended July
31,
|
|
|
Ended July
31,
|
|
(in
thousands)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net loss
|
|
$
|
(4,906)
|
|
|
$
|
(5,310)
|
|
|
$
|
(27,806)
|
|
|
$
|
(14,113)
|
|
Items not included in
Total Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (income) from
discontinued operations
|
|
|
2,771
|
|
|
|
(103)
|
|
|
|
22,253
|
|
|
|
679
|
|
Income tax expense
(benefit)
|
|
|
613
|
|
|
|
(741)
|
|
|
|
1,663
|
|
|
|
472
|
|
Interest
expense
|
|
|
4,237
|
|
|
|
4,209
|
|
|
|
8,437
|
|
|
|
8,455
|
|
Depreciation expense
and amortization
|
|
|
6,373
|
|
|
|
6,527
|
|
|
|
12,857
|
|
|
|
12,485
|
|
(Gain) loss on sale of
fixed assets
|
|
|
(420)
|
|
|
|
46
|
|
|
|
(1,032)
|
|
|
|
(89)
|
|
Non-cash equity-based
compensation
|
|
|
750
|
|
|
|
807
|
|
|
|
1,769
|
|
|
|
2,018
|
|
Equity in earnings of
affiliates
|
|
|
(1,015)
|
|
|
|
(458)
|
|
|
|
(1,726)
|
|
|
|
(1,727)
|
|
Restructuring
costs
|
|
|
827
|
|
|
|
1,001
|
|
|
|
1,255
|
|
|
|
1,065
|
|
Other income,
net
|
|
|
(229)
|
|
|
|
(80)
|
|
|
|
(66)
|
|
|
|
(111)
|
|
Dividends received
from affiliates
|
|
|
1,005
|
|
|
|
1,347
|
|
|
|
2,010
|
|
|
|
2,438
|
|
Total
Adjusted EBITDA
|
|
$
|
10,006
|
|
|
$
|
7,245
|
|
|
$
|
19,614
|
|
|
$
|
11,572
|
|
Conference Call
Layne Christensen will conduct a
conference call at 9:00 AM ET /
8:00 AM CT Tuesday, September 12,
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 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. A
telephonic replay of the conference call will be available through
September 19, 2017 and may be
accessed by calling 1-877-660-6853 (Domestic) or 1-201-612-7415
(International) and using passcode 13668672#.
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
extent and timing of a recovery in the mining industry, prevailing
prices for various commodities, longer term weather patterns,
unanticipated slowdowns in Layne's major markets, the availability
of credit, the risks and uncertainties normally incident to Layne's
industries of operation, the impact of competition, the
availability of equity or debt capital needed for the business,
including the refinancing of Layne's existing indebtedness as it
matures or accelerates, 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 Associates
Jack Lascar
713-529-6600
jlascar@dennardlascar.com
[LAYN-F]
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SOURCE Layne Christensen Company