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| 8-K - 8-K - LAYNE CHRISTENSEN CO | d674599d8k.htm |
 February 2014
LAYNE CHRISTENSEN
Investor Presentation
Exhibit 99.1 |
 SAFE HARBOR
2
This
presentation
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
forward-looking
terminology,
such
as
“should,”
“intend,”
“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
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
anticipated,
estimated
or
projected.
These
forward-looking
statements
are
made
as
of
the
date
of
this
presentation
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.
|
 3
Integrated Technologies
Strong End Market Exposure
Clear
Growth
Initiatives
Blue Chip Client Relationships
New Management with Clear Vision
Diverse Revenue Base & Backlog
Soil
Stabilization
Water
Treatment
Exploration
Drilling
Sewer
Rehabilitation
Environmental
Drilling
Wastewater Plant
Construction
Pipeline Construction
Energy Services
OVERVIEW |
 4
A leading global water management, construction and drilling company
–
Integrated solutions address the world’s toughest water, mineral and energy
challenges –
Over 130 years of experience, with more than 50,000 wells installed
–
80 facilities across 5 continents
Water
–
Market leading positions in water well drilling, sewer repair, construction and
rehabilitation –
Specialize in the design and delivery of tailored, end-to-end solutions
for complex projects Mineral Services
–
Leading global provider of drilling services for mining companies in North
America, South
America, Africa, and Australia Energy Services
–
Addressing the unique and substantial water requirements of the oil & gas
industry New management team focused on improving operations and strategic
growth ONE Layne operating paradigm has produced $1.1 billion of
multi-divisional project opportunities, up from $300 million last
year. Strengthened financial condition
INVESTMENT CONSIDERATIONS |
 5
Geo-
construction
Energy
Services
Water
Resources
Heavy Civil
Inliner
Mineral
Services
LTM 10/31/13
Sales:
$92.0 Million
Dams, levees, tunnels,
subways, highways, and
marine facilities
LTM 10/31/13
Sales: $185.3 Million
#1: U.S.
water well drilling
LTM 10/31/13
Sales: $271.8 Million
Top 5 in U.S. sewer
repair and construction
LTM 10/31/13
Sales: $143.5 Million
#2: U.S. trenchless
pipeline rehab
LTM 10/31/13
Sales:
$202.5 Million
#3 in Mineral
Exploration
LTM 10/31/13
Sales: $6.7 Million
Focus on frac
market segment
Water
A MARKET LEADER IN THE U.S AND AROUND THE WORLD
Water supply, system
development,
sourcing, drilling,
repair and
installation of pumps
Water and wastewater
treatment, pipeline
installation, wells,
and biogas facilities
Proprietary CIPP
(Cured In Place Pipe)
for pipeline and
structure
rehabilitation
Soil stabilization and
subterranean
structural support
Determine minable
mineral deposit,
and economic
feasibility of
mining & mapping
Water sourcing,
surface water transfer
and treatment |
 6
LAYNE SOLUTIONS LIFECYCLE |
 7
WATER
Managing Every Phase of the Water Cycle
LTM 10/31/13 Revenue Percentage
by Segment
Increasing demand driven by:
•
Population growth in water-challenged regions
•
Aging U.S. wastewater infrastructure
•
Targeted shift to private sector, away from hard-bid municipal contracts
•
Increased regulation
•
Growth in mining and energy services
•
Significant improvement in Heavy Civil; rapidly growing GEO backlog
Total Sales: $692.7 million
Supplying Water to U.S.
Troops in Afghanistan
Indiana Department of
Transportation Contract
Kentucky Water
Treatment Plant
Hurricane Katrina Flood
Wall Remediation |
 8
MINERAL SERVICES
Full Spectrum Services for Global Mining Companies
Targeted Growth Strategies:
•
Provide differentiated water management, soil stabilization and
exploration services in greenfield and brownfield locations
•
Right-sized business in response to soft market conditions
and low global demand
•
Reduced operating expenses
•
Target high growth countries with rapid industrialization / urbanization
•
Shifting assets to Mexico and Brazil
•
Increase rig utilization
LTM 10/31/13 Revenue Profile
Total Sales: $271.8 million
Selected Clients
•
Longer-term mining industry fundamentals remain positive
•
Well-
positioned for next up-cycle in global commodities
|
 9
CHILEAN MINERS RESCUE
Situation
33 miners trapped 2,300 feet below
ground on August 5, 2010
700 tons of rock shifted in
the
San Jose Mine
Solution
Original estimate to reach miners was
4 months
The team worked around the clock to
bring all 33 miners to surface in 33 days
Services Employed
Directional Drilling
Large Diameter Drilling |
 ENERGY SERVICES
10
Emerging Initiative: Fluid Sourcing & Treatment Solutions for the
E&P Industry •
Leveraging 130-year history of protecting municipal water supplies
to provide responsible, safe, and sustainable water management
solutions for the energy (E&P) industry
•
Developed cradle-to-cradle capabilities almost entirely in-house
•
Identify, evaluate, treat and develop optimal water sources
•
Superior water treatment technology
•
Low incremental capital investment required
•
Highly-synergistic with existing Layne businesses
Identified, drilled, and completed water
supply wells in the Santa Rosa Aquifer
•
Launched water sourcing businesses
•
Developed water transfer & treatment technologies
•
Significant capital investment
•
Exited upstream business with sale of E&P assets
•
Commercial validation
•
Launched water treatment business in
January 2014
•
Expect meaningful revenue generation in FY 2015
•
Substantial growth opportunity
•
Long-term target of 25% EBIT margins
Permian Water Sourcing
FY 2013
FY 2014
FY 2015-
2018 |
 11
Geoconstruction
Backlog building quickly
Rapidly impoving bidding environment
Focus on competitive pricing and margin preservation
Heavy
Civil
Benefitting from higher margin new business, completion
of lower margin legacy projects, and asset sales
Leadership structure change to functional vs. regional
Significantly reduced employee base since early 2012
More ONE Layne opportunities than any other division
Energy
Services
Complete water recycling capability now in place
Negotiating MSAs with large E&P companies
Water
Resources
Focus on higher-margin, private sector customers and
negotiated project work
Pursuing
$125
million
“ONE
Layne”-
generated
bidding opportunities
Inliner
Expect 8
consecutive year of record profits
Fiberglass wet-out facility in Indiana
completed
this summer
Mineral
Services
Stabilizing gold and copper prices offset by weak demand
Shifting assets to promising geographies and services
Significantly reduced costs in Australia and most of Africa, with
targeted expansion in Ethiopia
Developing water management and soil stabilization business
The
statements
on
this
slide
that
are
not
statements
about
historical
facts
are
forward-looking
statements
and
represent
our
current
expectations
of
future
business
operations
and
opportunities.
Actual
results
may
vary
materially
and
adversely
from
these
forward-looking
statements,
including
for
reasons
that
are
beyond
our
control.
Accordingly,
you
should
not
unduly
rely
on
these
statements.
BUSINESS UPDATE
th |
 12
Featured
Projects
Completed
Konnoco
Mineral Services
Gold Slickline
Directional Drilling
Louisville Water
Water Transmission
Main
Sahuarita Water
LayneRT
Arsenic Removal
UWNY
Deaeration Systems
City of Hutchinson, KS
6 MGD RO System
(1)
These
projects
are
still
in
development,
and
we
may
not
complete
these
projects
within
our
currently
planned
timelines
or
receive
the
indicated
contract
prices.
San Francisco Subway
$57 Million
October 2013
Transbay Tower, San Francisco
$19 Million
October 2013
Cudjoe Wastewater
$80 Million
March 2013
Islamorada Wastewater
$91 Million
September 2012
LNG Terminal, Uruguay
$20.7 Million
January 2014
BUSINESS UPDATE
Complex Project Wins |
 13
Water Resources
Integrated with Heavy Civil
Enhancing “presence”
with Mineral Services
clients and engaging Energy Services
projects
Energy Services
Engages with Water Resources and
Heavy Civil
Inliner
Cost sharing and cost controls
with Heavy Civil
Heavy Civil
Works closely with Water Resources
and Geo on water treatment and
transfer opportunities
Helping Energy Services division
Geoconstruction
Collaborates with Mineral
Services, Heavy Civil and
Water Resources
Water Management
Construction
Drilling
Water (Gov’t)
Water (Private)
Mining
Energy
Current Clients (Yes or
No ) Mineral Services
Collaborates with Geo, Water Resources and
Heavy Civil to improve project performance
Working with Water Resources’
mining clients
INTEGRATED SOLUTIONS, COLLABORATIVE MODEL |
 (1)
Marketline
Outlook
June
2013.
(2)
Jefferies,
January
27,
2014.
(3)
Interstate
Natural
Gas
Association
of
America
(INGAA).
U.S. Oil /
Liquids Reserves
(3)
Projected U.S. Water Infrastructure
Needs
(1)
14
State
of
U.S.
Water
Infrastructure
Rated
“D”
by
ASCE
25%+
of
U.S.
water
pipes
classified
as
“poor”
or
“very
poor”
by
EPA
~25%
of
U.S.
dams
and
levees
in
need
of
repair
Clean
Water
State
Revolving
Fund
Reduced segment operating costs to
align with global market conditions
Future demand for metals and raw
materials expected to rise as cities
and populations grow
Complexity of discovering and
accessing new reserves will benefit
Layne during next cyclical upturn
Total Mining Capex
(2)
North American frac forecast to
increase from 420 billion cubic
meters in 2010 to 760 by 2035
Hydraulic oil & gas fracking requires
25,000 -
140,000 bbl of water / well
E&P extraction requires massive fluid
infrastructure investment
INDUSTRY AND END MARKET TRENDS
($ in billions)
(billion barrels)
430% Increase in
potential domestic
reserves |
 15
Energy Services
Water
Mineral Services
Water Resources
-
Increase international business
-
Focus on growth markets
Inliner
-
New territory expansion -
westward
toward Rocky Mountains and beyond
-
Expanded installation / curing
methods
Heavy Civil
-
Rebounding infrastructure market
-
Greater discipline in project choice
and bidding
Geoconstruction
-
Rapidly increasing U.S backlog
Expertise in water management forms
an outstanding foundation to serve the
hydraulic frac drilling market
Shale production of oil & gas support
continued growth in the sector
expected through 2020
Relocation to Houston better positions
Layne to develop E&P relationships
Develop services across various
geographies
Shifting assets to high potential
markets, such as Mexico and Brazil
Strong relationships with premier
mineral services clients:
-
Vale
-
BHP Billiton
-
First Quantum
-
Freeport-McMoRan Copper & Gold
GROWTH INITIATIVES |
 16
Rene Robichaud –
President and CEO
CEO since February 2012
President since September 2011
Director since January 2009
Former President and CEO of NS Group
Mark Accetturo
President, Heavy
Civil
Mauro Chinchelli
President,
Geoconstruction
Kevin Maher
President, Mineral
Services
Larry Purlee
President, Inliner
Kent Wartick
President, Energy
Services
James R. Easter –
SVP & CFO
SVP & CFO since May 2013
Co-founder & Former CFO of SEH Offshore Ventures,
LLC
Former CEO and CFO at Seahawk Drilling where he
successfully managed the sale of the company
Gernot Penzhorn –
SVP, International
Operations
SVP since January 2013
Former President of Mineral Services Division
Former Int. Operations Director for Boart Longyear
David Singleton –
SVP, US Operations
SVP since January 2013
Former President of the Water Resources Division
Over 30 years of experience in various areas of the
Company’s operations
Ron Thalacker
President, Water
Resources
President since
February 2010
Over 42 years of
experience in water
and wastewater
industry
President since
August 2013
Over 40 years of
experience in
geoconstruction
President since
January 2013
Over 25 years of
experience in the
drilling industry
President since
February 2010
Over 42 years of
experience in
pipeline renewal
President since
January 2013
Over 27 years of
experience in drilling
and water supply
projects
President since
February 2013
Over 28 years of
experience in energy
engineering
NEW MANAGEMENT TEAM WITH CLEAR VISION |
 17
Revenue by Division
(1)
Revenue by Geography
(1)
Diverse and stable revenue base across 6 divisions + expanding international
presence 10/31/13
10/31/13
($ in millions)
($ in millions)
(1) Totals are net of intersegment eliminations.
DIVERSIFIED BACKLOG & REVENUE BASE
10/31/13 -
Backlog by Division ($551 million) |
 18
Total Revenues
(1)
Gross Profit & Margins
Total Backlog
Adjusted EBITDA & Margins
($ in millions)
($ in millions)
($ in millions)
($ in millions)
Layne uses certain “Non-GAAP”
financial measures as defined by the Securities and Exchange Commission. These are
measures of performance and not defined by accounting principles generally accepted in the United
States,
and
should
be
considered
in
addition
to,
not
in
lieu
of,
GAAP
reported
measures.
EBITDA
defined
as
earnings
before
interest,
income
taxes,
noncontrolling
interests,
depreciation
and
amortization,
non-cash
stock-based
compensation and certain one-time items.
(1) Totals are net of intersegment eliminations.
SUMMARY OF FINANCIAL PERFORMANCE |
 19
APPENDIX |
 20
THREE AND NINE MONTHS FINANCIAL DATA |
 21
NON-GAAP RECONCILIATIONS: THREE AND NINE MONTHS |
 22
Trailing twelve months
($ in millions)
Jan. 31, 2013
Apr. 30, 2013
Jul. 31, 2013
Oct. 31, 2013
Net income attributable to Layne
($24.9)
($23.8)
($74.8)
($15.8)
Loss from discontinued operations
2.2
(0.4)
($5.4)
-
Income tax benefit (expense)
14.7
(5.8)
(50.2)
3.9
Interest expense
1.3
1.3
1.6
2.0
Depreciation and amortization
15.8
15.3
15.2
15.2
Impairment Charges
8.4
-
14.6
-
Non-cash stock-based compensation
(0.2)
1.2
0.8
0.5
HQ Relocation Costs
2.7
3.7
3.2
1.9
Adjusted EBITDA
($9.4)
$3.0
$5.5
($0.1)
Layne uses certain “Non-GAAP”
financial measures as defined by the Securities and Exchange Commission. These are
measures of performance and not defined by accounting principles generally
accepted in the United States, and should be considered in addition to, not
in lieu of, GAAP reported measures. EBITDA defined as earnings before interest, income taxes, noncontrolling interests,
depreciation and amortization, non-cash stock-based compensation and
certain one-time items. NON-GAAP RECONCILIATIONS: TRAILING TWELVE
MONTHS |
 23
Jim Easter, Chief Financial Officer
281.475.2694
jim.easter@layne.com
www.layne.com
Devin Sullivan, SVP
212.836.9608
dsullivan@equityny.com
www.theequitygroup.com
CONTACT |