Layne Christensen (LAYN)
Q2 2014 Earnings Call
September 06, 2013 11:00 am ET
Devin Sullivan - Senior Vice President
Rene J. Robichaud - Chief Executive Officer, President and Director
James R. Easter - Chief Financial Officer and Senior Vice President
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, Karen. Good morning, everyone, and thank you for joining us today for Layne Christensen's Fiscal 2014 Second Quarter Conference Call. Our speakers for today will be Rene Robichaud, President and Chief Executive Officer of Layne Christensen; and Jim Easter, Chief Financial Officer of the company.
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 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 estimated, anticipated 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 said, 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. Our results for the second quarter were disappointing, well below our expectations and our abilities as a company. The $79.9 million loss from continuing operations was primarily attributable to $57.3 million of noncash items, operating losses at Geoconstruction, substantially lower profits at Mineral Exploration and lastly, the planned temporary corporate overhead costs primarily associated with the consolidation of our headquarters to The Woodlands, Texas.
The results of this quarter should not overshadow some exciting and welcomed developments at our business segments. We continue to operate in an environment that is notably different from last year.
Bearing this in mind, and as we did last quarter, I will discuss the progress at our divisions on a consecutive quarterly basis. At Water Resources, we reported a pretax profit of $1.6 million in the second quarter of fiscal 2014, which compares to a $26,000 loss in the first quarter.
At Heavy Civil, the most challenging of our businesses, has produced the most rewarding of turnarounds. Heavy Civil reported a pretax loss of $49,000 in the second quarter, improving from a loss of $1.5 million in the first quarter. Heavy Civil is on track to return to profitability later this fiscal year.
We're continuing to diversify our Heavy Civil and Water Resources businesses away from the hard-bid municipal market and towards higher-margin, reduced competition and negotiated project work. Our success in this regard is evident in the progress at both Heavy Civil and Water Resources through the first half of fiscal 2014.
Inliner's profit of nearly $4 million in the second quarter rose by nearly 70% from the first quarter. Inliner is on track to post its eighth consecutive year of record results.
In a still challenging global commodities market, Mineral Exploration's pretax profit of $1 million was slightly below the first quarter of this year. MinEx's second quarter profit is notable when considering that our Latin American affiliates lost $1.3 million in the quarter, nearly triple the loss posted in the first quarter.
Geoconstruction continued to incur significant operating losses, along with a $14.6 million noncash goodwill impairment charge. However, things are beginning to look up at this division, and I will comment on that shortly.