Drilling and construction service provider Layne Christensen Company (Nasdaq:LAYN) has posted profits of $6.45 million, or $0.33 per diluted share for the second quarter of fiscal 2011, compared to a loss of $8.64 million or $0.45 per diluted share for the same period last year, on account of the strong performance in its mineral exploration business.
Excluding an after-tax non-cash impairment charge of $13.0 million, or $0.68 per share, net income for the second quarter in fiscal 2010 was $4.39 million, or $0.23 per share, which would still mean an increase of 47% in Q2 2011 profits.
Revenues also increased 16.6% for the quarter to $253.3 million.
"The strength of our mineral exploration business, projects in specialty drilling and improvements in Layne's legacy water well drilling business carried earnings in the second quarter," said president and CEO Andrew B. Schmitt.
Indeed, revenues from its mineral exploration business jumped by 67.8% to $50.8 million. The increased activity levels which began in the fourth quarter of last year continued across most locations with the largest increases in Africa and Mexico, it said.
Earnings in the infrastructure intensive part of the water business were relatively flat in the quarter, however, and its energy business` quarterly results reflected the weak pricing in the natural gas market.
Water infrastructure revenues increased 11.4% for Q2 2011 to $194.0 million, compared to the same period last year. The increases were primarily attributable to additional revenues from acquired operations and specialty drilling projects, including work in Afghanistan, which were partially offset by a reduction in revenue from a large utility contract in Colorado that was completed last year.
The energy business had the roughest quarter, posting a decline in revenues of 51.3% to $5.8 million, versus nearly $12 million for the same period a year earlier, primarily attributable to the expiration of favorably-priced forward sales contracts.
For the three months ending July 31 2010, net gas production was 1,143 MMcf, compared to 1,151 MMcf for the same period last year. The average net sales price on production was $4.12 per Mcf, compared to $8.85 per Mcf a year earlier, excluding revenue generated from third party gas.
Going forward, the second half of the year looks a little more challenging than the first. We will have tougher year-over-year comparables with the absence of last year's Katrina related work in New Orleans, lower natural gas prices and water infrastructure margins that are weaker.
However, mineral exploration and Layne`s water business is expected to improve over the second half of last year, which should provide some offsets, he concluded.
Layne Christensen provides drilling and construction services and related products in two principal markets: water infrastructure and mineral exploration, as well as operates as a producer of unconventional natural gas for the energy market. The company operates throughout North America, as well as Africa, Australia, Europe and Brazil.
Its customers include municipalities, investor-owned water utilities, industrial companies, global mining companies, consulting engineering firms, heavy civil construction contractors, oil and gas companies and, to a lesser extent, agribusiness.
Disclosure: No position