Layne Christensen Company (LAYN)

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Layne Christensen (LAYN)

F3Q 2013 Earnings Call

December 06, 2012 11:00 am ET


Devin Sullivan - Senior Vice President

Rene J. Robichaud - Chief Executive Officer, President and Director

Jerry W. Fanska - Principal Financial Officer, Principal Accounting Officer, Senior Vice President of Finance and Treasurer


Anix Vyas - Gabelli & Company, Inc.

Michael G. Roomberg - Ladenburg Thalmann & Co. Inc., Research Division

John Rogers - D.A. Davidson & Co., Research Division

Robert Niewijk

Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division

John Rosenberg



Good day, ladies and gentlemen, and welcome to the Layne Christensen Co. Reports Third Quarter 2013 Financial Results Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Devin Sullivan of The Equity Group. Sir, you may begin.

Devin Sullivan

Thank you, Mary. Good morning, everyone, and thank you for joining us today for Layne Christensen's fiscal 2013 third quarter conference call. Our speakers today will be Rene Robichaud, President and Chief Executive Officer of Layne Christensen; and Jerry Fanska, Senior Vice President of Finance.

Before we get started, I'd like to remind everyone that statements made during today's call may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. 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 terminologies such as should, intended, continue, believe, may, hope, anticipate, goal, forecast, plan, estimate and similar words or phrases.

Such statements are based upon current expectations and are subject to certain risks and uncertainties and assumptions, including, but not limited to: the outcome of the ongoing internal investigation into, among other things, the legality under the FCPA; and local laws of certain payments to agents and other third parties interacting with government officials in certain countries in Africa relating to the payment of taxes and the importing of equipment, including any government enforcement action, which could arise out of the matters under review or that the matters under review may have resulted in a higher dollar amount of payments or may have a greater financial or business impact than management currently anticipates; prevailing prices for various commodities; unanticipated slowdowns in the company's major markets; the availability of credit; the risks and uncertainties normally incident to the construction industry; the impact of competition; the effectiveness of 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 filing, 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.

With that, I'd now like to turn the call over to Rene Robichaud. Rene, please go ahead.

Rene J. Robichaud

Thanks, Devin, and good morning, everyone. Thank you, all, for joining us today. We issued 2 very important announcements this morning. The first being our results for the fiscal 2013 third quarter followed by the announcement that we will be consolidating our divisional headquarters and corporate staff to a new headquarters in Houston by the end of next year.

I'll begin with an overview of third quarter results. At Water Infrastructure, our Water Resources, our Inliner and our Geoconstruction segments reported higher quarter-over-quarter profitability. In Water Resources, our revenues and profits increased, primarily the result of improved performance in drought-affected areas of the Southeast and Midwest United States.

On the international front, in Ethiopia, we are moving equipment from the port to the job site and anticipate drilling for water this month. Our goal is to be drilling for water there for many years to come. We're currently working in Canada and Mexico on water-related and specialty drilling projects.

Domestically, we continue to make good progress on our plan to diversify from so much hard-bid municipal work, and to generate industrial-based revenue in Water Resources. During the first 9 months of fiscal year 2013, approximately $47 million of revenues came from a domestic industrial client. You'll recall that we set a goal of $50 million of negotiated industrial business by year end, and we will exceed our goal.

The lingering drought in many parts of the Southwest and Midwest and the impact of Hurricane Sandy on the East Coast earlier this year have made it clear that we must address our nation's aging water infrastructure, much of which is 50 to 100 years old.

At the same time, in many parts of the world, integrated effective water management systems have yet to be built. We believe that the opportunities to construct, rebuild and restore this infrastructure are significant. These projects would involve each of Layne's water services from hydrological mapping to drilling, to pipelines, water treatment and recycling and beyond. The need for water is quickly extending beyond agriculture and drinking to include areas such as unconventional oil and gas exploration and production.

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