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Last Update: 15-Apr-13 08:25 ET
Layne Christensen shares little changed following miss on earnings
Layne Christensen (LAYN $20.49 +0.00) reported fourth quarter loss of $0.91 per share ($1.23 GAAP), excluding non-recurring items, $0.12 worse than the Capital IQ single est of ($0.79), while revenues fell 15.5% year/year to $229.7 million versus the $231.54 mln two est avg. The company on March 7 guided for EPS of ($1.28)-(1.18) on rev of approximately $230 million (consensus was $273 mln). With the exception of Geoconstruction, revenues in Q4 FY2013 declined across all operations, most significantly at the Heavy Civil and Mineral Exploration divisions. Declines at Heavy Civil were by design; we are continuing to be more selective in the projects we pursue as part of an overall effort to seek higher margin opportunities. Lower revenues at Mineral Exploration were due to exploration program cutbacks by our customers, especially in Australia and Africa. "Our performance in Q4 FY2013 was slightly better than the forecast we issued in March 2013. With the exception of Inliner, each of our divisions reported quarterly losses and we incurred non-cash charges and non-recurring expenses associated with various aspects of our growth and operating evolution. We expect Layne's overall profitability will be impacted in FY2014 by temporary weakness at Geoconstruction, continuing investments in our Energy Services Division and higher corporate overhead costs due to our strategic move to The Woodlands, Texas. We expect Heavy Civil to return to profitability by mid-calendar 2013, driven by our progress in working through older projects that do not meet our profitability expectations, securing new projects with higher associated margins and cost savings associated with headcount reductions and other measures at this division. The vast majority of Heavy Civil's current backlog, which is higher than a year ago, reflects projects we expect to complete at improved margins during FY2014 and beyond. Mineral Exploration should return to profitability in Q1 FY2014, albeit at a lower level than last year. For the year, we believe that exploration programs will continue, but at a slower pace due to the global mining expenditure slowdown and, in some cases, as mining companies work through the integration of large acquisitions. We now believe that this market may be soft for most of FY2014, but could begin to improve in the latter half of this fiscal year as long as gold and copper prices remain stable. Our Energy Services Division remains a key part of our strategy and we expect to announce new contracts and business initiatives in the coming months."
