Attached files

file filename
8-K - 8-K - LAYNE CHRISTENSEN COlayn-8k_20170430.htm

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

LAYNE CHRISTENSEN REPORTS

FISCAL 2018 FIRST QUARTER RESULTS

 

THE WOODLANDS, TEXAS, June 8, 2017 – Layne Christensen Company (NASDAQ: LAYN) (“Layne” or the “Company”) today announced financial and operating results for the fiscal 2018 first quarter (Q1 FY 2018) ended April 30, 2017.

Q1 FY 2018 Financial Highlights

Financial performance in Q1 FY 2018 improved significantly compared to the prior year period as a result of continuing strong performance at Inliner, further SG&A cost reductions and a marked improvement in earnings at Mineral Services.

The Water Resources segment produced significant sequential improvement from the fiscal 2017 fourth quarter, generating higher revenues and positive Adjusted EBITDA.

On April 30, 2017, Layne sold its Heavy Civil business receiving cash consideration of $5.8 million, which included an estimate of the business’ working capital at closing.  Financial results for the first quarter reflect the Heavy Civil business as discontinued operations for both current and historical periods.

Reported net loss from continuing operations for Q1 FY 2018 was ($3.4) million, or ($0.17) per share, compared to ($8.0) million, or ($0.41) per share, for the fiscal 2017 first quarter (Q1 FY 2017).  The net loss from discontinued operations for Q1 FY 2018 was ($19.5) million, which included ($16.7) million related to the loss on the sale of the Heavy Civil business.

Total Adjusted EBITDA (a non-GAAP financial measure as defined below) increased to $9.6 million in Q1 FY 2018 compared to $4.3 million in Q1 FY 2017.

Unallocated corporate expenses reflected in Adjusted EBITDA continued to decline to $4.0 million in Q1 FY 2018 compared to $7.0 million in Q1 FY 2017.

As of April 30, 2017, cash and cash equivalents were $54.6 million, and total debt was $163.2 million.  Total liquidity, which includes availability under Layne’s credit facility and total cash and cash equivalents, was $121.5 million at April 30, 2017, compared to $141.3 million at January 31, 2017.  

Total backlog was $172.2 million at April 30, 2017 compared to $166.6 million at January 31, 2017 and $213.5 million at April 30, 2016.  

Layne announced its new energy infrastructure business and the construction of a new high-capacity water pipeline and infrastructure system in the Delaware Basin of West Texas which is expected to begin generating positive earnings and cash flow in the fiscal 2018 third quarter.

 


 

 

CEO Commentary

Michael J. Caliel, President and Chief Executive Officer of Layne, commented, “We are encouraged with the significant financial improvement we delivered in the first quarter that was led by continuing strength at Inliner, further reductions in SG&A costs, and significantly improved activity and profitability at Mineral Services.  Further, 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.

“The completion of the sale of our Heavy Civil business will allow us to concentrate on growing our core water infrastructure businesses, while reducing our overall risk exposure to large construction projects.  

“We are pleased and excited about our new energy infrastructure business and the construction of our new high-capacity water pipeline and infrastructure system in the Delaware Basin of West Texas.  This investment is part of our longer-term strategy to leverage our substantial know-how in providing water infrastructure solutions to our clients and is expected to build on our core water and energy expertise, and broaden our diverse water customer base.

“Our objectives for fiscal 2018 are to significantly improve profitability at Water Resources, leverage our strengths at Inliner to further 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. While clearly there is more work to be done, we expect our overall financial performance in fiscal 2018 to show material improvement over last fiscal year and are confident that our efforts will be successful.”


2

 


 

 

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL DATA

 

 

 

Three Months

 

 

 

 

Ended April 30,

 

 

 

 

(unaudited)

 

 

(in thousands, except per share data)

 

2017

 

 

2016

 

 

Revenues

 

$

111,507

 

 

$

120,646

 

 

Cost of revenues (exclusive of depreciation and

   amortization charges shown below)

 

 

(86,283

)

 

 

(97,062

)

 

Selling, general and administrative expenses (exclusive of

   depreciation and amortization charges shown below)

 

 

(17,640

)

 

 

(21,559

)

 

Depreciation and amortization

 

 

(6,484

)

 

 

(5,958

)

 

Gain on sale of fixed assets

 

 

612

 

 

 

135

 

 

Equity in earnings of affiliates

 

 

711

 

 

 

1,269

 

 

Restructuring costs

 

 

(428

)

 

 

(64

)

 

Interest expense

 

 

(4,200

)

 

 

(4,246

)

 

Other (expense) income, net

 

 

(163

)

 

 

31

 

 

Loss from continuing operations before income taxes

 

 

(2,368

)

 

 

(6,808

)

 

Income tax expense

 

 

(1,050

)

 

 

(1,213

)

 

Net loss from continuing operations

 

 

(3,418

)

 

 

(8,021

)

 

Net loss from discontinued operations

 

 

(19,482

)

 

 

(782

)

 

Net loss

 

$

(22,900

)

 

$

(8,803

)

 

Loss per share information:

 

 

 

 

 

 

 

 

 

Loss per share from continuing operations - basic and diluted

 

$

(0.17

)

 

$

(0.41

)

 

Loss per share from discontinued operations - basic and diluted

 

 

(0.98

)

 

 

(0.04

)

 

Loss per share - basic and diluted

 

$

(1.15

)

 

$

(0.45

)

 

Weighted average shares outstanding - basic and dilutive

 

 

19,796

 

 

 

19,773

 

 

 

 

 

As of

 

 

 

April 30,

 

 

January 31,

 

(in thousands)

 

2017

 

 

2017

 

 

 

(unaudited)

 

 

(unaudited)

 

Balance Sheet Data

 

 

 

 

 

 

 

 

  Cash and cash equivalents

 

$

54,598

 

 

$

69,000

 

  Working capital

 

 

85,777

 

 

 

105,545

 

  Adjusted Working Capital (excluding cash and cash equivalents)

 

 

31,179

 

 

 

36,545

 

  Total assets

 

 

392,715

 

 

 

436,151

 

  Total debt

 

 

163,239

 

 

 

162,355

 

  Total Layne Christensen Company equity

 

 

59,646

 

 

 

82,220

 

  Common shares issued and outstanding

 

 

19,805

 

 

 

19,805

 

 

 

 

 

 

 

 

3

 


 

 

Summary of Operating Segment Data

The following table summarizes financial information for Layne's operating segments. A discussion of the results for Q1 FY 2018 for each segment compared to the prior year period follows the table.

 

 

 

Three Months

 

 

 

Ended April 30,

 

(in thousands)

 

2017

 

 

2016

 

Revenues

 

 

 

 

 

 

 

 

Water Resources

 

$

42,143

 

 

$

61,950

 

Inliner

 

 

47,408

 

 

 

47,534

 

Mineral Services

 

 

21,956

 

 

 

11,255

 

Intersegment eliminations

 

 

 

 

 

(93

)

Total revenues

 

$

111,507

 

 

$

120,646

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

Water Resources

 

$

469

 

 

$

4,097

 

Inliner

 

 

8,073

 

 

 

7,218

 

Mineral Services

 

 

5,026

 

 

 

51

 

Unallocated corporate expenses

 

 

(3,960

)

 

 

(7,039

)

Total Adjusted EBITDA

 

$

9,608

 

 

$

4,327

 

 

 

 

 

 

 

 

 

 

Water Resources

 

 

Three Months

 

 

 

Ended April 30,

 

(in thousands)

 

2017

 

 

2016

 

Revenues

 

$

42,143

 

 

$

61,950

 

Adjusted EBITDA

 

 

469

 

 

 

4,097

 

Adjusted EBITDA as a percentage of revenues

 

 

1.1

%

 

 

6.6

%

Revenues for Water Resources decreased during Q1 FY 2018 primarily due to reduced activity in agricultural drilling projects in the western U.S. stemming from increased precipitation in the region.  

The decrease in Adjusted EBITDA for the Water Resources segment for Q1 FY 2018 was primarily due to reduced drilling activity in the western U.S.

Backlog was $62.3 million at April 30, 2017 compared to $49.2 million at January 31, 2017 and $91.7 million at April 30, 2016.  Backlog increased from Q4 FY 2017 to Q1 FY 2018 as a result of increased bookings in both water well drilling and repair and maintenance work.  

 

Inliner

 

 

 

Three Months

 

 

 

Ended April 30,

 

(in thousands)

 

2017

 

 

2016

 

Revenues

 

$

47,408

 

 

$

47,534

 

Adjusted EBITDA

 

 

8,073

 

 

 

7,218

 

Adjusted EBITDA as a percentage of revenues

 

 

17.0

%

 

 

15.2

%

Revenues for Inliner during Q1 FY 2018 were relatively flat as compared to the prior year period.

4

 


 

 

The increase in Adjusted EBITDA for the Inliner segment as compared to the prior year period reflects improved results across most operating regions.  The increase in Adjusted EBITDA for the Inliner segment as a percentage of revenues was primarily attributable to a higher mix of self-performed work and increased crew efficiency in the current quarter compared to the prior year period.

Backlog was $109.9 million at April 30, 2017 compared to $117.4 million at January 31, 2017 and $121.8 million at April 30, 2016.

Mineral Services

 

 

Three Months

 

 

 

Ended April 30,

 

(in thousands)

 

2017

 

 

2016

 

Revenues

 

$

21,956

 

 

$

11,255

 

Adjusted EBITDA

 

 

5,026

 

 

 

51

 

Adjusted EBITDA as a percentage of revenues

 

 

22.9

%

 

 

0.5

%

Revenues for Mineral Services were almost double the prior year period due to increased activity in the western U.S., Mexico and Brazil.

The increase in Adjusted EBITDA for the Mineral Services segment for Q1 FY 2018 was primarily due to significantly increased activity and profitability in the western U.S. and Mexico, compared to the prior year period.

Unallocated Corporate Expenses

Unallocated corporate expenses reflected in Adjusted EBITDA were $4.0 million for the Q1 FY 2018, compared to $7.0 million for the same period last year. The improvement was primarily due to a reduction in legal and professional fees, consulting fees and compensation related expenses.

Use of Non-GAAP Financial Information

Layne defines Total Adjusted EBITDA, a non-GAAP financial measure, as the total of Adjusted EBITDA for all segments plus unallocated corporate expenses and other items/eliminations.  Layne’s management evaluates segment performance based primarily on the segment’s revenues and Adjusted EBITDA, among other factors.  Layne’s measure of segment Adjusted EBITDA, which may not be comparable to other companies’ measure of Adjusted EBITDA, represents the segment’s shares of income or loss from continuing operations before interest, taxes, depreciation and amortization, gain on sale of fixed assets, non-cash share-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 us understand and evaluate our operating performance and trends and provides useful information to both management and investors.  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.

5

 


 

 

 

The following table reconciles Total Adjusted EBITDA to income (loss) from continuing operations before income taxes, which Layne consider to be the most directly comparable GAAP financial measure to Total Adjusted EBITDA.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated

 

 

 

 

 

 

 

 

 

Three Months Ended April 30, 2017

 

Water

 

 

 

 

 

 

Mineral

 

 

Corporate

 

 

Other Items/

 

 

 

 

 

(in thousands)

 

Resources

 

 

Inliner

 

 

Services

 

 

Expenses

 

 

Eliminations

 

 

Total

 

Revenues

 

$

42,143

 

 

$

47,408

 

 

$

21,956

 

 

$

 

 

$

 

 

$

111,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income  from continuing operations before income taxes

 

$

(2,411

)

 

$

6,462

 

 

$

2,820

 

 

$

(5,039

)

 

$

(4,200

)

 

$

(2,368

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,200

 

 

 

4,200

 

Depreciation expense and amortization

 

 

3,057

 

 

 

1,517

 

 

 

1,686

 

 

 

224

 

 

 

 

 

 

6,484

 

Gain on sale of fixed assets

 

 

(374

)

 

 

 

 

 

(238

)

 

 

 

 

 

 

 

 

(612

)

Non-cash equity-based compensation

 

 

85

 

 

 

56

 

 

 

60

 

 

 

818

 

 

 

 

 

 

1,019

 

Equity in earnings of affiliates

 

 

 

 

 

 

 

 

(711

)

 

 

 

 

 

 

 

 

(711

)

Restructuring costs

 

 

14

 

 

 

3

 

 

 

389

 

 

 

22

 

 

 

 

 

 

428

 

Other expense, net

 

 

98

 

 

 

35

 

 

 

15

 

 

 

15

 

 

 

 

 

 

163

 

Dividends received from affiliates

 

 

 

 

 

 

 

 

1,005

 

 

 

 

 

 

 

 

 

1,005

 

Adjusted EBITDA

 

$

469

 

 

$

8,073

 

 

$

5,026

 

 

$

(3,960

)

 

$

 

 

$

9,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated

 

 

 

 

 

 

 

 

 

Three Months Ended April 30, 2016

 

Water

 

 

 

 

 

 

Mineral

 

 

Corporate

 

 

Other Items/

 

 

 

 

 

(in thousands)

 

Resources

 

 

Inliner

 

 

Services

 

 

Expenses

 

 

Eliminations

 

 

Total

 

Revenues

 

$

61,950

 

 

$

47,534

 

 

$

11,255

 

 

$

 

 

$

(93

)

 

$

120,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

$

300

 

 

$

5,645

 

 

$

(347

)

 

$

(8,160

)

 

$

(4,246

)

 

$

(6,808

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,246

 

 

 

4,246

 

Depreciation expense and amortization

 

 

3,153

 

 

 

1,254

 

 

 

1,219

 

 

 

332

 

 

 

 

 

 

5,958

 

Loss (gain) on sale of fixed assets

 

 

359

 

 

 

7

 

 

 

(499

)

 

 

(2

)

 

 

 

 

 

(135

)

Non-cash equity-based compensation

 

 

204

 

 

 

251

 

 

 

49

 

 

 

707

 

 

 

 

 

 

1,211

 

Equity in earnings of affiliates

 

 

 

 

 

 

 

 

(1,269

)

 

 

 

 

 

 

 

 

(1,269

)

Restructuring costs

 

 

 

 

 

 

 

 

64

 

 

 

 

 

 

 

 

 

64

 

Other expense (income), net

 

 

81

 

 

 

61

 

 

 

(257

)

 

 

84

 

 

 

 

 

 

(31

)

Dividends received from affiliates

 

 

 

 

 

 

 

 

1,091

 

 

 

 

 

 

 

 

 

1,091

 

Adjusted EBITDA

 

$

4,097

 

 

$

7,218

 

 

$

51

 

 

$

(7,039

)

 

$

 

 

$

4,327

 

 

Conference Call

Layne Christensen will conduct a conference call at 9:00 AM ET / 8:00 AM CT Friday, June 9, 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

6

 


 

 

through June 16, 2017 and may be accessed by calling 1-877-660-6853 (Domestic) or 1-201-612-7415 (International) and using passcode 13662609#.

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 effect of any deregulation or other initiatives by the Trump Administration, the effectiveness of operational changes expected to reduce operating expenses and increase efficiency, productivity and profitability, the satisfaction of all of the post-closing conditions for the sale of Layne's Heavy Civil business in a timely manner, the availability of equity or debt capital needed for the business, including the refinancing of Layne's existing indebtedness as it matures, 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.

7

 


 

 

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

 

8