Christensen stock plummets
Despite more than doubling its net income for the quarter, Layne Christensen Co. saw its stock drop sharply Tuesday as earnings fell short of an analyst’s expectations.
Layne’s stock price dropped nearly $4 a share in early Nasdaq trading Tuesday before recovering during the remainder of the business day.
Layne’s shares closed off $2.70 at $29.58 a share, an 8.4 percent drop from Monday.
For the fiscal fourth quarter that ended Jan. 31, Layne earned $3.12 million, or 20 cents a share, on $146.73 million in revenue. That was up from the same quarter last year, when the company earned $1.17 million, or 9 cents a share, on $89.59 million in revenue.
Layne, based in Mission Woods, provides products and services for the water, mineral exploration and energy markets in the United States and abroad.
Andrew Schmitt, Layne’s president and chief executive officer, said fourth-quarter earnings were 5 cents lower than what was forecast by one analyst who covers Layne.
“Our biggest issue was the longer-than-expected shutdown of some of our mines in Africa at the end of the year,” he said. “There were also weather-related problems in east Africa that kept us from moving equipment. The infrastructure there is really challenging.”
Layne’s water division also had problems in key markets like California and Texas. Nevertheless, the company posted fiscal 2006 earnings of $14.68 million, or $1.05 a share, on $463.02 million in revenue. That was up from the previous fiscal year, when earnings were $9.75 million, or 75 cents a share, on $343.46 million in sales.
Schmitt said Layne’s results were encouraging given the problems it encountered in Texas, California and Africa.
“These three markets are important historical earnings generators for us, so to post these annual financial results under such circumstances is impressive,” he said.
Schmitt said he is optimistic about the new fiscal year.
“Going forward, the fundamentals are strong,” he said. “We’re in water, mineral exploration and energy, which is natural gas for us. They are all good places to be right now.”
Layne, which has been in a fight with Steel Partners II, one of its largest shareholders, last week reached an agreement with the investment fund for Layne to reduce the size of its board and to retain Morgan Joseph & Co. as a strategic consultant to evaluate its future direction.
It was a Morgan Joseph analyst that projected Layne’s earnings to be higher for the quarter. Schmitt said Layne hired the investment banking side of Morgan Joseph as a consultant, a division separate from the equity research arm of the firm.
“There’s a great big wall between the two,” he said.