Treading Water: Layne Christensen

Nov. 02, 2015 9:06 AM ETLayne Christensen Company (LAYN)
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Summary

  • A turnaround appears to be underway at Layne Christensen, but is it enough to justify an investment?
  • New management is again in place, which seems to be a recurring theme at Layne.
  • Multiple acquisitions and bad times have hampered Layne's financial performance.
  • Certain business segments are performing well and focus needs to be placed on maximizing these opportunities.

Layne Christensen (NASDAQ:LAYN) is a mineral services, water resources, and heavy civil contractor based in the Woodlands, TX. Layne began conducting business as a water well drilling company in South Dakota in 1882. Over its 130+ year history and through numerous acquisitions - most notably over the last decade - Layne has made the transition from tiny water well drilling shop to a global drilling and exploration company. While Layne has had its share of success over the years, the Company's best days appear to be behind it as it struggles with low commodity prices, a competitive bidding environment, and numerous internal distractions over the last few years.

In its heyday, Layne was kicking out earnings of over $1.25/share - reaching $2.20/share in 2008 - on over a billion in revenue. Layne was also recognized by President Obama and the White House for having a significant role in the rescue of 33 miners in Chile who had been trapped for 69 days in a cave collapse in 2010. Layne and affiliates utilized their drilling expertise and global resources to safely bring the miners to the surface.

However, since then, Layne has not had much to celebrate, as revenue has been on a constant downslide since 2012 and the Company has not reported positive earnings over the last four years. The Company's book value peaked at over $25/share in 2011 before subsequently tanking to the $7.50/share today. The stock price, which peaked at around $58 in 2007, followed a similar trajectory, trading today at $6.51/share:

(Source: Google Finance)

Rene Robichaud, a Layne director since 2009, was named CEO in 2011, inheriting a business that had already reached its apex and was in the midst of a tough economic environment. His tenure was marred by an SEC investigation alleging that its affiliates violated the Foreign Corrupt

This article was written by

DLP Investing profile picture
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I am a civil engineer and individual investor. I spend a substantial amount of time reading and researching commodities, macro economic trends, and value investing strategies. With my background in the construction industry, I am able to analyze real world information compared to data provided by media outlets. I plan to eventually transition my career towards the financial sector.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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