Exhibit 99
NEWS RELEASE Layne logo
CONTACTS: LAYNE CHRISTENSEN COMPANY
JERRY W. FANSKA
VICE PRESIDENT FINANCE
913-677-6858
www.laynechristensen.com
TUESDAY, AUGUST 31, 2004
LAYNE CHRISTENSEN REPORTS FISCAL 2005 SECOND QUARTER RESULTS
o Net income from continuing operations was $0.29 per share versus a loss of
$0.03 per share last year.
o Revenues increase 22.8% for the quarter up across all product lines.
o Water Resources revenues and earnings up 7.4% and 31.0%, respectively.
o Mineral Exploration earnings triple from prior year on a 55.3% increase in
revenues.
o Geoconstruction revenues up 33.2% and earnings up 54.9% from prior year.
o Energy Division continues to expand coalbed methane development in
mid-continent basin.
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FINANCIAL DATA THREE MONTHS % SIX MONTHS %
- --------------- -------------------- -------------------
(in 000's, except per share data) 7/31/04 7/31/03 CHANGE 7/31/04 7/31/03 CHANGE
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Net Revenues
--Water Resources $47,918 $44,607 7.4 $93,201 $83,376 11.8
--Mineral Exploration 26,153 16,836 55.3 50,242 30,892 62.6
--Geoconstruction 10,949 8,221 33.2 17,039 14,352 18.7
--Energy 1,166 524 * 1,913 1,313 45.7
Gross Profit 24,017 20,419 17.6 44,073 37,670 17.0
Net Income 3,653 (450) * 5,125 169 *
Dilutive EPS from continuing operations 0.29 (0.03) * 0.41 0.02 *
Dilutive EPS 0.28 (0.04) * 0.40 0.01 *
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* not meaningful
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"A very strong quarter as all our divisions were up at the same time. Given our
mix of business, we are benefiting from a number of positive drivers impacting
natural resource demand and an improving economy. Normally, we would experience
a few bumps along the way. This quarter we were hitting on all cylinders."--
ANDREW B. SCHMITT, PRESIDENT AND CHIEF EXECUTIVE OFFICER.
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-more-
MISSION WOODS, KANSAS, AUGUST 31, 2004 - LAYNE CHRISTENSEN COMPANY (NASDAQ:
LAYN), today announced net income from continuing operations for the second
quarter ended July 31, 2004 of $3,749,000, or $0.29 per share, compared to a
loss from continuing operations of $377,000 or $0.03 per share, in the same
period last year. Revenues for the three months ended July 31, 2004 increased
$15,998,000, or 22.8%, to $86,186,000, compared to $70,188,000 the same period
last year.
"A very strong quarter as all our divisions were up at the same time," said
Andrew B. Schmitt, President and Chief Executive Officer. "Given our mix of
business, we are benefiting from a number of positive drivers impacting natural
resource demand and an improving economy. Normally, we would experience a few
bumps along the way. This quarter we were hitting on all cylinders."
Gross profit as a percentage of revenues was 27.9% and 27.1% for the three and
six months ended July 31, 2004 compared to 29.1% and 29.0% for the three and six
months ended July 31, 2003. The decreases in gross profit percentage were
primarily attributable to continued pricing pressures from municipal customers
in the water resources division along with reduced margins associated with the
promotion of certain new water treatment products. The decreases in the water
resources division margins were partially offset by increased margins in the
mineral exploration division due to increased exploration activity because of
higher gold and base metal prices.
Selling, general and administrative expenses decreased to $14,471,000 for the
three months ended July 31, 2004 and increased to $28,396,000 for the six months
ended July 31, 2004 compared to $15,124,000 and $27,623,000 for the three and
six months ended July 31, 2003. Excluding severance-related benefits of
$1,244,000 accrued in the second quarter of fiscal 2004, the increase for both
the three and six month periods was primarily related to the Company's expansion
of its water treatment capabilities, increased expenses associated with the
Company's coalbed methane ("CBM") development efforts and incremental costs of
approximately $650,000 for the implementation of Sarbanes-Oxley requirements.
Depreciation, depletion and amortization increased to $3,338,000 and $6,523,000
for the three and six months ended July 31, 2004 compared to $2,951,000 and
$6,011,000 for the same periods last year. The increase was primarily a result
of increased depreciation in the mineral exploration division and depletion
associated with the Company's CBM projects.
The Company recorded a loss on extinguishment of debt of $2,320,000 for the
three and six months ended July 31, 2003. The loss represents prepayment
penalties and the write-off of associated deferred fees in connection with
refinancing of the Company's credit facilities in July 2003.
Income tax expense of $3,751,000 and $5,289,000 were recorded for the three and
six months ended July 31, 2004, compared to $663,000 and $1,527,000 for the same
periods last year. The debt extinguishment costs recorded in the second quarter
of fiscal 2004 were treated as discrete period items for interim tax accounting
purposes, which resulted in the recording of a tax benefit at the statutory tax
rate. Exclusive of the impact of the tax treatment of the debt extinguishment
costs in July 2003, the effective rate was 50% for the six months ended July 31,
2004 compared to 60.7% for the same period last year. The improvement in the
effective rate is primarily attributable to improved earnings in international
operations. The effective rate in excess of the statutory federal rate was a
result of the impact of nondeductible expenses and the tax treatment of certain
foreign operations.
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WATER RESOURCES DIVISION
(in thousands)
Three months ended Six months ended
July 31, July 31,
------------------------- -----------------------
2004 2003 2004 2003
------- ------ ------ ------
Revenues $47,918 $44,607 $93,201 $83,376
Income from continuing operations 6,299 4,807 10,330 9,510
Water resources revenues increased 7.4% to $47,918,000, and 11.8% to
$93,201,000, for the three and six months ended July 31, 2004, respectively. The
increases were primarily attributable to the Company's continued efforts to
maintain market share, results from the Company's water treatment initiatives
and increased infrastructure needs in metropolitan areas of California and
Illinois.
Income from continuing operations for the water resources division increased
31.0% to $6,299,000 for the three months ended July 31, 2004, and 8.6% to
$10,330,000 for the six months ended July 31, 2004 compared to $4,807,000 and
$9,510,000 for the three and six months ended July 31, 2003. The increases in
income from continuing operations were primarily the result of the incremental
earnings impact from increases in revenues.
MINERAL EXPLORATION DIVISION
(in thousands)
Three months ended Six months ended
July 31, July 31,
------------------------- -----------------------
2004 2003 2004 2003
------- ------ ------ ------
Revenues $26,153 $16,836 $50,242 $30,892
Income from continuing operations 3,705 1,213 7,227 1,003
Mineral exploration revenues increased 55.3% to $26,153,000 and 62.6% to
$50,242,000 for the three and six months ended July 31, 2004 compared to
revenues of $16,836,000 and $30,892,000 for the three and six months ended July
31, 2003. The increase for the periods was primarily the result of increased
exploration activity in the Company's markets due to higher gold and base metal
prices. Additionally, increases in Africa were partially the result of capacity
from the purchase of DrillCorp assets late in fiscal 2004.
Income from continuing operations for the mineral exploration division was
$3,705,000 for the three months ended July 31, 2004 and $7,227,000 for the six
months ended July 31, 2004, compared to $1,213,000 and $1,003,000 for the three
and six months ended July 31, 2003. The improved earnings in the division were
primarily attributable to the increased activity levels noted above and improved
earnings by the Company's Latin American affiliates. In addition, in the prior
year, the Company incurred increased expenses in Australia to bring equipment
into compliance with changes to local transportation regulations.
3
GEOCONSTRUCTION DIVISION
(in thousands)
Three months ended Six months ended
July 31, July 31,
------------------------- -----------------------
2004 2003 2004 2003
------- ------ ------ ------
Revenues $10,949 $ 8,221 $17,039 $14,352
Income from continuing operations 1,654 1,068 1,519 1,272
Geoconstruction revenues increased 33.2% to $10,949,000 and 18.7% to $17,039,000
for the three and six months ended July 31, 2004 compared to $8,221,000 and
$14,352,000 for the three and six months ended July 31, 2003. The increases in
revenues were primarily attributable to certain large domestic projects and
increased product sales by the Company's manufacturing unit in Italy.
Income from continuing operations for the geoconstruction division increased
54.9% to $1,654,000 for the three months ended July 31, 2004, and 19.4% to
$1,519,000 for the six months ended July 31, 2004 compared to $1,068,000 and
$1,272,000 for the three and six months ended July 31, 2003. The increases in
income from continuing operations were primarily the result of the incremental
earnings impact from increases in revenues.
ENERGY DIVISION
(in thousands)
Three months ended Six months ended
July 31, July 31,
------------------------- -----------------------
2004 2003 2004 2003
------- ------ ------ ------
Revenues $ 1,166 $ 524 $ 1,913 $ 1,313
Loss from continuing operations (1) (176) (1,019) (546)
Energy revenues increased 122.5% to $1,166,000 and 45.7% to 1,913,000 for the
three and six months ended July 31, 2004, compared to revenues of $524,000 and
$1,313,000 for the three and six months ended July 31, 2003. Increased
production from the Company's CBM projects resulted in the increases in revenues
for the three and six months ended July 31, 2004 compared to the same periods
last year.
Losses from continuing operations for the energy division were $1,000 and
$1,019,000 for the three and six months ended July 31, 2004 compared to $176,000
and $546,000 for the three and six months ended July 31, 2003. The loss for the
three months ended July 31, 2004 included a gain on the sale of exploration
equipment of approximately $906,000. Excluding the gain, the loss from
continuing operations would have been $907,000 and $1,925,000 for the three and
six months ended July 31, 2004, respectively, and was primarily a result of
increased expenses associated with exploration and development activity and a
slow first half of the year in the division's energy service businesses.
UNALLOCATED CORPORATE EXPENSES
Corporate expenses not allocated to individual divisions decreased to $3,424,000
for the three months ended July 31, 2004 and increased to $6,065,000 for the six
months ended July 31, 2004 compared to $3,741,000 and $6,016,000 for the three
and six months ended July 31, 2003. Excluding severance-related costs of
approximately $800,000 included in the second quarter of fiscal 2004, the
increases for both the three and six
4
month periods were primarily due to incremental costs of approximately $650,000
for the implementation of Sarbanes-Oxley requirements and higher travel-related
expenses.
DIVISION SUMMARY (IN THOUSANDS)
Three Months Six Months
Ended July 31, Ended July 31,
----------------------------- -----------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues
Water resources $ 47,918 $ 44,607 $ 93,201 $ 83,376
Mineral exploration 26,153 16,836 50,242 30,892
Geoconstruction 10,949 8,221 17,039 14,352
Energy 1,166 524 1,913 1,313
--------- --------- --------- ---------
Total revenues $ 86,186 $ 70,188 $ 162,395 $ 129,933
========= ========= ========= =========
Income (loss) from
continuing operations
Water resources $ 6,299 $ 4,807 $ 10,330 $ 9,510
Mineral exploration 3,705 1,213 7,227 1,003
Geoconstruction 1,654 1,068 1,519 1,272
Energy (1) (176) (1,019) (546)
Unallocated corporate
expenses (3,424) (3,741) (6,065) (6,016)
Debt extinguishment costs -- (2,320) -- (2,320)
Interest (733) (672) (1,416) (1,231)
--------- --------- --------- ---------
Total income from
continuing operations $ 7,500 $ 179 $ 10,576 $ 1,672
========= ========= ========= =========
OUTLOOK
Andrew B. Schmitt, President and Chief Executive Officer, stated, "Looking
forward from a macro standpoint, we expect to continue to benefit from natural
resource demand, the improving financial condition of U.S. municipalities and
stronger non-residential construction spending. More specifically, in the third
quarter we expect to experience a slow down in mineral exploration in Africa as
we enter the wet season and in South America, as they are in their winter
months. The water resource business should continue to recover while
Geoconstruction's backlog is steadily increasing. On the Energy side, we expect
CBM production will continue to grow and gas prices remain very attractive. With
mineral exploration now making a positive contribution, the balance we derive
from the industries in which we participate becomes a positive factor again for
the Company."
This press release contains 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 are those concerning the strategic plans, expectations and
objectives for future operations and are generally indicated by words or phrases
such as "anticipate," "estimate," "project," "believe," "intend", "expect,"
"plan" 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 prevailing prices for various commodities,
unanticipated slowdowns in the Company's major markets, the risks and
uncertainties normally incident to the exploration for and development and
production of oil and gas, the impact of competition, the effectiveness of
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operational changes expected to increase efficiency and productivity, worldwide
economic and political conditions and foreign currency fluctuations that may
affect worldwide 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 report, and the Company 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.
Layne Christensen Company provides sophisticated services and related products
for the water, mineral, construction and energy markets.
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LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
Three Months Six Months
Ended July 31, Ended July 31,
(unaudited) (unaudited)
------------------------------- -------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues $ 86,186 $ 70,188 $ 162,395 $ 129,933
Cost of revenues (exclusive of depreciation
shown below) 62,169 49,769 118,322 92,263
------------ ------------ ------------ ------------
Gross profit 24,017 20,419 44,073 37,670
Selling, general and administrative expenses 14,471 15,124 28,396 27,623
Depreciation, depletion and amortization 3,338 2,951 6,523 6,011
Other income (expense):
Equity in earnings of affiliates 1,220 608 1,689 700
Interest (733) (672) (1,416) (1,231)
Debt extinguishment costs -- (2,320) -- (2,320)
Other, net 805 219 1,149 487
------------ ------------ ------------ ------------
Income before income taxes 7,500 179 10,576 1,672
Income tax expense 3,751 663 5,289 1,527
Minority interest -- 107 -- 163
------------ ------------ ------------ ------------
Net income (loss) from continuing operations
before discontinued operations 3,749 (377) 5,287 308
Loss from discontinued operations, net of
income taxes of $(1) and $(53) for the
three months ending July 31, 2004 and
2003, respectively, and $(96) and $(107)
for the six months ending July 31, 2004
and 2003, respectively (96) (73) (162) (139)
------------ ------------ ------------ ------------
Net income (loss) $ 3,653 $ (450) $ 5,125 $ 169
============ ============ ============ ============
Basic income (loss) per share:
Net income (loss) from continuing operations $ 0.30 $ (0.03) $ 0.42 $ 0.02
Loss from discontinued operations, net of tax (0.01) (0.01) (0.01) (0.01)
------------ ------------ ------------ ------------
Income (loss) per share $ 0.29 $ (0.04) $ 0.41 $ 0.01
============ ============ ============ ============
Diluted income (loss) per share:
Net income (loss) from continuing operations $ 0.29 $ (0.03) $ 0.41 $ 0.02
Loss from discontinued operations, net of tax (0.01) (0.01) (0.01) (0.01)
------------ ------------ ------------ ------------
Income (loss) per share $ 0.28 $ (0.04) $ 0.40 $ 0.01
============ ============ ============ ============
Weighted average shares outstanding 12,559,000 11,927,000 12,548,000 11,915,000
Dilutive stock options 345,000 -- 328,000 237,000
------------ ------------ ------------ ------------
12,904,000 11,927,000 12,876,000 12,152,000
============ ============ ============ ============
July 31, January 31, July 31,
2004 2004 2003
------------ ------------ ------------
Balance Sheet Data:
Total assets $ 217,735 $ 217,327 $ 191,560
Total debt 46,100 42,000 40,000
Stockholders' equity 96,263 93,685 86,282
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