Layne Christensen (LAYN)
Q4 2013 Earnings Call
April 15, 2013 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
John B. Rogers - D.A. Davidson & Co., Research Division
Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division
Previous Statements by LAYN
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Thank you very much, operator. Good morning, and thank you for joining us today for Layne Christensen's Fiscal 2013 Fourth Quarter and Full Year Conference Call. Our speakers for 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 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 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 terminology such as should, intended, continue, believe, may, hope, anticipate, goal, forecast, plan, estimate 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: 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 the 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.
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. This morning, we issued our results for the fiscal 2013 fourth quarter and year end. As most of you are aware, we announced our fourth quarter estimated results on March 6. Although our actual results for the quarter came in slightly better than expected, I can assure you that we do not view this as a victory. The fiscal 2013 fourth quarter was difficult from a P&L perspective. With the exception of Inliner, each of our divisions reported quarterly losses and we incurred noncash charges and non-recurring expenses related to the evolution of our business model and our move to Houston. We faced a number of challenges, some we saw coming, others were unexpected. What I can say with the utmost confidence is that we addressed each of these challenges directly and with a view towards enhancing the long-term value of Layne for all our stakeholders.
We believe that fiscal 2014 will begin to demonstrate the progress we've made with respect to, one, tiering legacy contract and operating issues at Heavy Civil, which remains on track to return to profitability no later than mid-calendar 2013. Two, adjusting to the global slowdown affecting our Mineral Exploration division. Despite the loss in Q4, we have reduced our cost structure at this segment and expect MinEx to return to profitable operations in this first quarter.
Three, building a new third leg to our business in the form of an Energy Services division that will address the unique and substantial water demands of the energy industry. This segment's water transfer business is expected to launch this month, and our mobile treatment business is scheduled to commence in June. We expect our Energy Services division will have a revenue run rate of approximately $20 million by year end.
Four, fostering the ongoing development of our One Layne operating paradigm whereby each of our businesses pursues multiple service opportunities on every project they bid, offering total solutions under a single Layne banner. With respect to One Layne, we are currently tracking $1.5 billion of potential projects, mostly a combination of Heavy Civil and Water Resources combined expertise. By way of comparison, at the end of last year, we were beginning to work collaboratively on projects valued at only $300 million or 20% of where we are today.