Thursday
May 31, 2007
Layne Christensen Reports
First Quarter Fiscal 2008 Earnings
Source: Business Wire
* Record revenues for the
quarter, up 28.6% to $201.6 million compared to $156.7 million in the
prior year.
* Record earnings per share for the quarter, up 73.3% to $0.52 per share
compared to $0.30 per share in the prior year.
* Water and wastewater infrastructure division revenues and earnings
increase 31.5% and 48.2%, respectively, from the prior year.
* Mineral exploration division revenues and earnings up 10.3% and 15.4%,
respectively, from the prior year.
* Energy division revenues and earnings up 88.6% and 85.7%, respectively,
from the prior year.
"We are very pleased with
the strong first quarter. The results were consistent with our comments at
year-end that the water and wastewater infrastructure division would have
to contribute at a higher level while minerals and energy stayed strong to
show year-over-year improvement. The Reynolds' businesses produced very
solid results with their best quarter since being acquired by Layne
Christensen. Looking forward, the mineral exploration division is expected
to enjoy better weather in the second quarter and currently is extremely
busy. The water and wastewater infrastructure division backlog is at
historical highs and energy should improve over last year. We will need
all our businesses contributing at high levels as year-over-year
comparisons get very tough for the balance of fiscal 2008, but we're off
to a great start." -- Andrew B. Schmitt, President and Chief
Executive Officer
Layne Christensen Company (Nasdaq: LAYN) today announced net income for the first quarter ended April 31, 2007 of $8,153,000, or $0.52 per diluted share, compared to net income of $4,642,000, or $0.30 per diluted share last year.
Revenues for the three months ended April 30, 2007 increased $44,898,000, or 28.6%, to $201,615,000 compared to $156,717,000 for the same period last year. Revenues were up across all divisions with the main increase in the water and wastewater infrastructure division, including the impact of the acquisitions of American Water Services Underground Infrastructure, Inc. ("UIG") in November 2006 and Collector Wells International Inc. ("CWI") in June 2006. A further discussion of results of operations by division is presented below.
Gross profit, as adjusted, as a percentage of revenues was 26.9% for the three months ended April 30, 2007 compared to 25.3% for the three months ended April 30, 2006. The increase in gross profit percentage was primarily the result of improved margins in the water and wastewater infrastructure and energy divisions.
Selling, general and administrative expenses increased 31.5% to $29,408,000 for the three months ended April 30, 2007 compared to $22,364,000 for the three months ended April 30, 2006. The increase was primarily the result of $1,638,000 in expenses added from the acquisitions of UIG and CWI and from various other categories including additional incentive compensation expense of $1,985,000 from increased profitability in the quarter, wage and benefit increases of $1,502,000 and an increase in legal and professional fees of $535,000.
Equity in earnings of affiliates increased $1,126,000 to $1,491,000 for the three months ended April 30, 2007 from $365,000 in the prior year. The increase reflects continued strong performance in the mineral exploration division by our affiliates in Latin America and the absence of inclement weather which occurred in the prior year.
Depreciation, depletion and amortization increased to $10,338,000 for the three months ended April 30, 2007 compared to $7,066,000 for the same period last year. The increase was primarily the result of increased depletion expense of $1,553,000 resulting from the increase in production of unconventional gas from the Company's energy operations and additional depreciation of assets acquired in the UIG and CWI acquisitions.
Interest expense increased to $2,430,000 for the three months ended April 30, 2007 compared to $2,131,000 for the three months ended April 30, 2006. The increase was primarily a result of increases in the Company's average borrowings for the period in conjunction with the financing of the UIG and CWI acquisitions.
Income tax expense of $5,666,000 (an effective rate of 41.0%) was recorded for the three months ended April 30, 2007, compared to $4,116,000 (an effective rate of 47.0%) for the same period last year. The improvement in the effective rate is primarily attributable to increased pre-tax earnings, especially in international operations, and the resolution of certain tax contingencies. The effective rate in excess of the statutory federal rate for the periods was due primarily to the impact of nondeductible expenses and the tax treatment of certain foreign operations.
Water and wastewater infrastructure revenues increased 31.5% to $153,509,000 for the three months ended April 30, 2007 from $116,695,000 for the three months ended April 30, 2006. The increase in revenues was primarily attributable to additional revenues of $14,716,000 from the Company's acquisitions of UIG and CWI, additional revenues of $3,161,000 from the Company's continued expansion into water treatment markets, and an increase in revenues of approximately $12,355,000 from certain water supply and wastewater plant projects in the Atlanta area.
Income before income taxes for the water and wastewater infrastructure division increased 48.2% to $11,834,000 for the three months ended April 30, 2007, compared to $7,983,000 for the three months ended April 30, 2006. The increase in income before income taxes is primarily attributable to income of $804,000 from the acquisitions of UIG and CWI, an increase in income of approximately $2,352,000 from the water supply and wastewater plant projects in Atlanta, and income of $1,626,000 from the recovery of previously written off costs associated with a groundwater transfer project in Texas, partially offset by increases in incentive compensation and legal and professional fees. The backlog for the water and wastewater infrastructure division at April 30, 2007 was $336,915,000 compared to $257,438,000 at April 30, 2006.
Mineral exploration revenues increased 10.3% to $37,097,000 for the three months ended April 30, 2007 from $33,628,000 for the three months ended April 30, 2006. The increase was primarily attributable to continued strength in the Company's North American markets due to relatively high gold and base metal prices.
Income before income taxes for the mineral exploration division was up 15.4% to $5,751,000 for the three months ended April 30, 2007, compared to $4,985,000 for the three months ended April 30, 2006. The improved earnings in the division were primarily attributable to the impact of increased exploration activity in the Company's North American markets and an increase of $1,126,000 in equity earnings of affiliates in Latin America, partially offset by an increase in accrued incentive compensation expense of $264,000 due to higher profitability in the current year.
Energy revenues increased 88.6% to $9,552,000 for the three months ended April 30, 2007, compared to revenues of $5,064,000 for the three months ended April 30, 2006. The increase in revenues was primarily attributable to increased production from the Company's unconventional gas properties.
The income before income taxes for the energy division was $3,819,000 for the three months ended April 30, 2007, compared to $2,057,000 for the three months ended April 30, 2006. The increase in income before income taxes is due to the increase in production noted above.
Unallocated Corporate Expenses
Corporate expenses not allocated to individual divisions, primarily included in selling, general and administrative expenses, were $5,379,000 and $4,441,000 for the three months ended April 30, 2007 and 2006, respectively. The increase for the quarter was primarily due to wage and benefit increases of $378,000 and increased incentive compensation of $284,000.
Layne Christensen Company provides sophisticated services and related products for the water, wastewater, mineral and energy markets.
Contact:
Layne Christensen Company
Jerry W. Fanska, 913-677-6858
Sr. Vice President Finance
www.laynechristensen.com
