Layne Christensen Reports Fiscal 2017 Fourth Quarter And Full Year Results

THE WOODLANDS, Texas, April 10, 2017

Q4 FY 2017 Overview

• Consolidated revenues declined 19% to $129.6 million in Q4 FY 2017 from $159.2 million in the fiscal 2016 fourth quarter (Q4 FY 2016) due to reduced Water Resources drilling activity in the western U.S., lower levels of subcontracted work at Inliner, and Heavy Civil's continuing shift towards more selective opportunities.
• Reported net loss from continuing operations for Q4 FY 2017 was ($33.1) million, or ($1.67) per share, compared to ($13.8) million, or ($0.70) per share, for Q4 FY 2016. Included in Q4 FY 2017 results were $14.2 million in restructuring costs, or ($0.72) per share, which included a $12.4 million non-cash currency translation adjustment associated with the closure of Mineral Services' African and Australian entities. Q4 FY 2016 results included $3.2 million in restructuring costs, or ($0.16) per share, primarily related to severance costs and write-down of assets as part of Mineral Services' exit from its operations in Africa and Australia.
• Adjusted EBITDA (a non-GAAP financial measure as defined below) was negative ($7.7) million in Q4 FY 2017 compared to $3.5 million in Q4 FY 2016.
• At January 31, 2017, cash and cash equivalents were $69.0 million, and total debt was $162.3 million. Total liquidity, which includes availability under Layne's credit facility and total cash and cash equivalents, was $141.3 million at January 31, 2017, compared to $145.0 million at October 31, 2016 and $131.7 million at January 31, 2016.
• Total backlog was $360.0 million at January 31, 2017 compared to $244.1 million at October 31, 2016 and $346.3 million at January 31, 2016. The increase in backlog was primarily due to new work in Heavy Civil.
• On February 8, 2017, Layne entered into an Asset Purchase Agreement to sell substantially all of the assets of its Heavy Civil business for $10.1 million, subject to certain working capital adjustments.

FY 2017 Overview

• Revenues for FY 2017 declined 12% to $602.0 million from $683.0 million in the fiscal year ended January 31, 2016 (FY 2016), due to reduced Water Resources' drilling activity in the western U.S., Heavy Civil's continuing shift towards more selective opportunities, and declines in Mineral Services reflecting the exit from operations in Africa and Australia.
• Net loss from continuing operations for FY 2017 was ($52.2) million, or ($2.64) per diluted share, compared to ($52.9) million, or ($2.68) per diluted share, for FY 2016. Included in the FY 2017 results were restructuring costs of $17.3 million, or ($0.88) per diluted share, primarily related to exiting Mineral Services' operations in Africa and Australia, as well as restructuring costs associated with the Water Resources' business performance initiative. Included in the FY 2016 results were restructuring costs of $17.9 million (including inventory write downs of $7.9 million), or ($0.91) per diluted share, primarily related to Mineral Services' exit from its operations in Africa and Australia.
• Inliner's revenues of $196.8 million in FY 2017 increased slightly from $193.7 million in FY 2016. Adjusted EBITDA increased to $32.0 million in FY 2017 from $27.9 million in FY 2016. During FY 2017, Inliner added additional capacity to its liner products manufacturing facility.
• Unallocated corporate expenses decreased to $23.8 million in FY 2017 from $29.3 million in FY 2016 as a result of reduced headcount and lower accounting, legal and consulting expenses.

CEO Commentary

Michael J. Caliel, President and Chief Executive Officer of Layne, commented, "We are extremely disappointed with our fourth quarter performance that was hampered by job losses at Water Resources and Heavy Civil; however we are confident that our recent actions will significantly improve profitability at Water Resources in the fiscal year ending January 31, 2018.  Importantly, both Inliner and Mineral Services delivered improved EBITDA during FY 2017.

"The sale of our Heavy Civil business, which is expected to close in May 2017, will enable us to focus on growing our core water infrastructure businesses, while reducing our overall risk exposure to large construction projects. 

"Over two years ago, we embarked on a program to transform Layne that included a series of strategic, financial, operational and organizational initiatives. I am pleased that we have made significant progress in reshaping our portfolio, reducing our cost structure and positioning Layne for the future. Our objectives for fiscal 2018 are to significantly improve profitability at Water Resources, leverage our strengths at Inliner to further grow the business and take advantage of the emerging levels of activity in the minerals market. We are in the midst of a major transformation of the Company; we recognize there is more work to be done and we are confident that our efforts will be successful."