Tuesday
April 3, 2007
Layne Christensen Reports
Fourth Quarter and Fiscal 2007 Year-End Results
Source: Business Wire
* Revenues for the quarter up
31.6% to $193.1 million and for the year up 56.1% to $722.8 million
* Earnings per share for the quarter more than doubled to $0.42 and for
the year up 60% to $1.68 per share
* Water and wastewater infrastructure division revenues and earnings up
for the year 65.7% and 23.9%, respectively
* Mineral exploration division revenues and earnings up for the year 19.9%
and 90.4%, respectively
* Energy division revenues and earnings up for the year 116% and 269.4%,
respectively
* For the year, other segment revenues and earnings of $14.9 million and
$4.1 million, respectively, resulted primarily from a single non-recurring
contract with an international oil exploration company
"The fourth quarter is a
fitting final quarter to what has been a record year at Layne Christensen.
We continue to benefit from strong demand in our water, minerals and
energy markets. Performance in our mineral exploration division has been
exceptional and driven earnings all year, while gas production in Layne
Energy doubled. Our water treatment growth was also impressive with
organic revenues doubling. Reynolds is starting to make its mark within
Layne Christensen and successfully folded in two new acquisitions this
past year. We are in a very good business rhythm right now."
- Andrew B. Schmitt, President and Chief Executive Officer
Layne Christensen Company (Nasdaq: LAYN - News) today announced net income for the fiscal year ended January 31, 2007 of $26,252,000, or $1.68 per diluted share, compared to net income of $14,681,000, or $1.05 per diluted share last year. Net income for the fourth quarter was $6,656,000, or $0.42 per diluted share, compared to net income of $3,116,000, or $0.20 per diluted share, in the fourth quarter last year.
Revenues for the three and twelve months ended January 31, 2007 increased 31.6% and 56.1%, to $193,081,000 and $722,768,000 compared to $146,729,000 and $463,015,000 for the same periods last year. Revenues were up across all divisions for both periods, with the main increase in the water and wastewater infrastructure division, primarily from the acquisition of Reynolds, Inc. ("Reynolds") that closed on September 28, 2005, the Collector Wells, International ("CWI") acquisition that closed on June 16, 2006 and the acquisition of American Water Services Underground Infrastructure, Inc. ("UIG") that closed on November 20, 2006. A further discussion of results of operations by division is presented below.
Gross profit as a percentage of revenues was 25.0% and 25.8% for the three and twelve months ended January 31, 2007, compared to 23.5% and 25.6% for the same periods last year. The increases in the gross profit percentage were primarily the result of improved margins in the mineral exploration division due to improved pricing and efficiency and the energy division due to increased production of unconventional gas, offset by reduced margins in the water and wastewater infrastructure division arising from the change in product mix with the acquisition of Reynolds.
Selling, general and administrative expenses increased to $27,279,000 and $102,603,000 for the three and twelve months ended January 31, 2007, compared to $20,783,000 and $69,979,000 for the same periods last year. The increases were primarily the result of $1,830,000 and $12,653,000 in incremental expenses added from the acquired businesses, additional incentive compensation expense of $979,000 and $6,300,000 from increased profitability, wage and benefit increases of $1,456,000 and $4,281,000 and increases in compensation expense of $575,000 and $2,187,000 associated with stock options under SFAS 123R, "Share Based Payments."
Depreciation, depletion and amortization increased to $9,714,000 and $32,853,000 for the three and twelve months ended January 31, 2007, compared to $6,902,000 and $20,024,000 for the same periods last year. The increases were primarily the result of higher levels of capital expenditures, increased depreciation and amortization of $427,000 and $5,930,000 associated with the acquired businesses and increased depletion expense of $863,000 and $2,896,000 resulting from the increase in production of unconventional gas from the Company's energy operations.
Equity in earnings of affiliates increased to $1,560,000 and $4,452,000 for the three and twelve months ended January 31, 2007, compared to $1,101,000 and $4,345,000 for the same periods last year. The changes reflect increased earnings of $892,000 and $946,000 from foreign affiliates in mineral exploration offset by decreases in earnings of $433,000 and $839,000 from a non-recurring domestic joint venture in the water and wastewater infrastructure division completed in the prior year.
Interest expense increased to $2,601,000 and $9,781,000 for the three and twelve months ended January 31, 2007, compared to $2,120,000 and $5,773,000 for the same periods last year. The increases were primarily a result of increases in the Company's average borrowings in conjunction with the financing of acquisitions.
Other, net was a gain of $1,258,000 and $2,557,000 for the three and twelve months ended January 31, 2007, and a loss of $104,000 and a gain of $900,000 for the same periods last year. The increase for both periods primarily consists of a gain of $920,000 in the three months ended January 31, 2007, from the Company's sale of its interest in a minerals concession.
Income tax expense was recorded at effective rates of 42.2% and 45.5% for the three and twelve months ended January 31, 2007, compared to effective rates of 44.5% and 47.1% for the same periods last year. The improvements in the effective rates were primarily attributable to the increases in pre-tax earnings, especially in international operations. The effective rates in excess of the statutory federal rate were due primarily to the impact of nondeductible expenses and the tax treatment of certain foreign operations.
Water and wastewater infrastructure revenues increased 30.6% to $144,309,000 and 65.7% to $531,916,000 for the three and twelve months ended January 31, 2007, from $110,469,000 and $320,996,000 for the same periods last year. The increases in revenues were primarily attributable to incremental increases of $21,753,000 and $169,124,000 from the Company's acquisitions and additional revenues of $7,413,000 and $21,064,000 from the Company's continued expansion into water treatment markets.
Income from continuing operations for the water and wastewater infrastructure division decreased 3.3% to $7,577,000 for the three months ended January 31, 2007, compared to $7,839,000 in the prior year, and increased 23.9% to $35,000,000 for the twelve months ended January 31, 2007, compared to $28,255,000 for the prior year. The decrease for the three months was primarily due to the favorable settlement of several contract change orders in the ground stabilization product line, which occurred in the prior year, partially offset by incremental increases from acquired businesses and water treatment initiatives. The increase in income from continuing operations for the twelve months was primarily attributable to incremental increases of $8,374,000 from the acquired businesses and an increase in earnings from the Company's water treatment initiatives of $2,678,000. These were partially offset by an increase in accrued incentive compensation of $3,219,000 due to higher profitability in the current year, reduced operating earnings of $4,081,000 as a result of a slowdown in certain ground stabilization construction operations in the western United States and a decrease of $839,000 from a domestic joint venture completed in the prior year.
Mineral exploration revenues increased 25.3% to $37,296,000 and 19.9% to $148,911,000 for the three and twelve months ended January 31, 2007, compared to revenues of $29,773,000 and $124,206,000 for the same periods last year. The increases in revenues were primarily attributable to continued strength in worldwide exploration activity as a result of the relatively high gold and base metal prices.
Income from continuing operations for the mineral exploration division increased 640.9% to $6,594,000 and 90.4% to $26,557,000 for the three and twelve months ended January 31, 2007, compared to $890,000 and $13,947,000 for the same periods last year. The improved earnings were attributable to the impact of increased exploration activity in most of the Company's markets and increased earnings by the Company's Latin American affiliates. In addition, in January 2007 the division recognized a gain of $920,000 on the sale of its interest in a mineral concession. The improved earnings for the twelve months were partially offset by an increase in accrued incentive compensation of $808,000 due to higher profitability in the current year.
Energy division revenues increased 97.4% to $9,278,000 and 116.0% to $27,081,000 for the three and twelve months ended January 31, 2007, compared to revenues of $4,700,000 and $12,536,000 for the same periods last year. The increases in revenues were primarily attributable to increased production from the Company's unconventional gas properties.
The division had income from continuing operations of $4,340,000 and $10,680,000 for the three and twelve months ended January 31, 2007, compared to $1,460,000 and $2,891,000 for the same periods last year. The increases in income from continuing operations were due to the increase in production noted above.
The increases in revenues and income from continuing operations as compared to the prior year were primarily due to a non-recurring contract to provide equipment and supplies to an international oil exploration company. Revenues of $8,798,000 were recognized during fiscal 2007, primarily in the second quarter, as the equipment and supplies were delivered and accepted.
Unallocated Corporate Expenses
Corporate expenses not allocated to individual divisions, primarily included in selling, general and administrative expenses, were $4,935,000 and $18,383,000 for the three and twelve months ended January 31, 2007, and $3,332,000 and $12,771,000 for the same periods last year. The increases were primarily due to the recognition of compensation expense under SFAS 123R of $525,000 and $2,187,000, increases in wage and benefit costs of $367,000 and $1,077,000, increases in accrued incentive compensation of $377,000 and $815,000, and, for the twelve months, an increase in consulting services of $732,000.
Outlook
Andrew B. Schmitt, President and Chief Executive Officer, stated, "In fiscal 2008, we expect to see some topping out on the commodity side of our business albeit at current high levels of activity. In addition, water and wastewater infrastructure backlog in the U.S. is at record levels, up 54% over this time last year to $349,200,000. It should bode well for fiscal 2008."
Layne Christensen Company provides sophisticated services and related products for the water, mineral, construction and energy markets.
Contact:
Layne Christensen Company
Jerry W. Fanska, 913-677-6858
Sr. Vice President Finance
www.laynechristensen.com
