UPDATE 2-Layne Christensen Q1 blows past Street; shares soar

* Q1 EPS $0.34 vs est $0.22

* Revenue up 13 pct at $230.7 mln vs est $216.9 mln

* Shares up as much as 17 percent
(Adds analysts’ comments, conference call details, share
movement)

By Krishna N. Das

BANGALORE, June 2 (BestGrowthStock) – Drilling and construction
services provider Layne Christensen Co’s (LAYN.O: ) quarterly
results raced past market estimates as revenue at its mineral
exploration division rose 85 percent, sending its shares up as
much as 17 percent.

The company said activity in its mineral exploration
division continues to improve but expects lower natural gas
prices to reduce earnings in the coming quarters.

“Layne Energy unfortunately is stuck in the natural gas
pricing funk and really can’t do a great deal about it. They
will begin to be a drag on earnings going forward,” a company
executive said on a conference call with analysts.

Natural gas prices now stand just above $4 per million
British thermal unit. The company was selling gas at a higher
price under forward sales contracts, which rolled off on April
1.

Mineral exploration division revenue jumped to $45.9
million in the first quarter, helped by strong business in
North America and Africa, but energy revenue fell 7.5 percent.

“Going forward, they will have lower pricing in the energy
business, at least in the short term, based on current market
rates for natural gas,” Gabelli & Co analyst Anthony Fritz
said.

But analysts are bullish on other businesses.

“We are expecting energy business to post losses throughout
the year but that is well baked in. Positive things going on
elsewhere in the portfolio offset loss at the energy division,”
Janney Montgomery Scott analyst Ryan Connors said.

Gabelli’s Fritz said the water business had couple of good
projects and backlog remained pretty stable, which are both
good signs.

“Water business is in the right direction, margins are
getting better,” Connors, who backed his buy rating on the
stock, said.

The water infrastructure business, which saw marginal
improvement in the first quarter, contributed about 75 percent
to Layne’s total revenue in the quarter.

Net income for the first quarter ended April 30 rose to
$6.6 million, or 34 cents a share, from $1.0 million, or 5
cents a share, last year. Analysts had expected 22 cents.

Revenue rose 13 percent to $230.7 million, compared with
estimates of $216.9 million. [ID:nWNAB5486]

Shares of the Mission Woods, Kansas-based company rose to a
high of $27.76, before paring some of the gains to trade up 11
percent at $26.38 in midday trade Wednesday on Nasdaq.

Stock Market Basics

(Reporting by Krishna N. Das in Bangalore; Editing by Aradhana
Aravindan and Maju Samuel)

UPDATE 2-Layne Christensen Q1 blows past Street; shares soar