Layne Christensen Reports Fiscal 2018 Third Quarter Results

THE WOODLANDS, Texas, Dec. 5, 2017

Q3 FY 2018 Financial Highlights

• Financial performance in Q3 FY 2018 improved significantly compared to the prior year period as a result of continuing strength at Mineral Services and improved performance at Water Resources, including a strong first full quarter contribution from the Water Midstream business.
• Reported net loss from continuing operations for Q3 FY 2018 was ($2.0) million, or ($0.10) per share, compared to ($4.5) million, or ($0.23) per share, for the fiscal 2017 third quarter (Q3 FY 2017) ended October 31, 2016.
• Total Adjusted EBITDA (a non-GAAP financial measure as defined below) increased to $9.9 million in Q3 FY 2018 compared to $7.0 million in Q3 FY 2017.
• Unallocated corporate expenses reflected in Adjusted EBITDA increased to $5.7 million in Q3 FY 2018 compared to $4.5 million in Q3 FY 2017. The increase primarily reflects higher incentive compensation expense based on overall improved operating performance.
• As of October 31, 2017, cash and cash equivalents were $26.1 million, and total debt was $165.1 million. Total liquidity, which includes availability under Layne's credit facility and total cash and cash equivalents, was $101.6 million at October 31, 2017, compared to $107.6 million at July 31, 2017.
• Total backlog was $172.1 million at October 31, 2017 compared to $182.8 million at July 31, 2017 and $172.3 million at October 31, 2016.
• On November 1, 2017, Layne announced a long-term agreement with the Texas General Land Office ("GLO") that provides our Water Midstream business with the exclusive right to develop GLO non-potable water resources for use in oil and gas drilling and completion activities on approximately 88,000 acres interspersed across Reeves and Culberson counties, in the Delaware Basin oil and gas producing region of Texas.

CEO Commentary

Michael J. Caliel, President and Chief Executive Officer of Layne, commented, "We continued to make progress delivering significant improvements in financial performance during the third quarter. We saw ongoing strength at both Inliner and Mineral Services, driven by higher levels of activity and improving markets.  In addition, Water Resources' performance continues to improve, led by increased activity from our new Water Midstream business.

"We are very pleased with the early results from our Water Midstream business and today we are announcing a six-mile northward extension of our current pipeline in order to meet additional demand from upstream producers with limited access to water.  The extension is expected to cost approximately $4 million and should be completed in early 2018.  The growth of our existing Water Midstream infrastructure, together with the recently announced long-term agreement with the Texas General Land Office covering 88,000 acres in the Delaware Basin, position Layne as a leader in providing water resources for use in oil and gas drilling and completion operations.  We believe our Water Midstream business is well positioned for significant growth over the next several years.

"We remain keenly focused on our objectives to significantly improve profitability at Water Resources, leverage our strengths at Inliner to grow the business, take advantage of improved levels of activity in the Americas for Mineral Services, and refinance our balance sheet in an accretive manner.  While our fourth quarter is typically the slowest time of the year due to the winter and holiday season, our results so far this year clearly indicate that we are making meaningful progress."