10. Operating Segments

The Company is a global solutions provider to the world of essential natural resources – water, minerals and energy. Management defines the Company’s operational organizational structure into discrete divisions based on its primary product lines. Each division comprises a combination of individual district offices, which primarily offer similar types of services and serve similar types of markets.

During the third quarter of fiscal 2014, the Company has changed the name of its Mineral Exploration division to Mineral Services to more accurately describe the offerings within that division.

Effective with the start of fiscal 2014, operating responsibility for certain of our operations has changed which resulted in a change in reportable segments. Our Specialty Drilling group and operations in Ethiopia have been shifted from the Water Resources division to the Mineral Services division. We believe the shift more closely aligns our international operating expertise in the markets in which those groups operate. We have also shifted certain of our purchasing groups out of the Water Resources division as they are now focusing on worldwide purchasing for all divisions. These purchasing groups, which also have some third party sales, are now grouped in our Other section. Information for prior periods has been reclassified to conform to our new presentation. We have also separated the Energy Services division from Other and are presenting it as a separate segment due to the expected growth within the Energy Services division.

In addition to the change in reportable segments, in the first quarter of fiscal 2014, the Company has classified the operations of SolmeteX as a discontinued operation, as discussed in Note 11.

The Company’s segments are defined as follows:

Water Resources Division

The Water Resources division provides every aspect of water supply system development and technology, including hydrologic design and construction, source of supply exploration, well and intake construction and well and pump rehabilitation. The division also brings new technologies to the water and wastewater markets and offers water treatment equipment engineering services, which supports the Company’s historic municipal business, providing systems for the treatment of regulated and “nuisance” contaminants, specifically, iron, manganese, hydrogen sulfide, arsenic, radium, nitrate, perchlorate, and volatile organic compounds. The Water Resources division provides water systems and services in most regions of the U.S.

Inliner Division

The Inliner division provides a wide range of process, sanitary and storm water rehabilitation solutions to municipalities and industrial customers dealing with aging infrastructure needs. We focus on our proprietary Inliner^® cured-in-place pipe (“CIPP”) which allows us to rehabilitate aging sanitary sewer, storm water and process water infrastructure to provide structural rebuilding as well as infiltration and inflow reduction. Our trenchless technology minimizes environmental impact and reduces or eliminates surface and social disruption. We are unique in that the technology itself, the liner tube manufacturer and the largest installer of the Inliner CIPP technology are all housed within our family of companies. While we focus on our proprietary Inliner CIPP, we are committed to full system renewal. We also provide a wide variety of other rehabilitative methods including Janssen structural renewal for service lateral connections and mainlines, slip lining, traditional excavation and replacement, U-Liner high-density polyethylene fold and form and manhole renewal with cementitious and epoxy products. The Inliner division provides services in most regions of the U.S.

Heavy Civil Division

The Heavy Civil division provides and oversees the design and construction of water and wastewater treatment plants, as well as pipeline installation. In addition, this division designs and builds integrated water supply and wastewater treatment facilities and provides filter media and membranes. These services are also provided in connection with collector wells, surface water intakes, pumping stations and groundwater pump stations. We also design and construct biogas facilities (anaerobic digesters) for the purpose of generating and capturing methane gas, an emerging renewable energy resource. The Heavy Civil division provides services in most regions of the U.S.

Geoconstruction Division

The Geoconstruction division provides specialized foundation construction services that are focused primarily on soil stabilization and subterranean structural support during the construction of dams/levees, tunnels, shafts, water lines, subways, highways and marine facilities. Services offered include jet grouting, structural diaphragm and slurry cutoff walls, cement and chemical grouting, drilled piles, vibratory ground improvement and installation of ground anchors. The Geoconstruction division provides services in most regions of the U.S., as well as Brazil and Uruguay.

Mineral Services Division

The Mineral Services division conducts primarily aboveground drilling activities, including all phases of core drilling, reverse circulation, dual tube, hammer and rotary air-blast methods. Our service offerings include both exploratory and definitional drilling. Global mining companies hire us to extract samples from sites that the mining companies analyze for mineral content before investing heavily in development. We help them determine if there is a minable mineral deposit on the site, assess whether it will be economical to mine and to assist in mapping the mine layout. Our primary markets are in the western U.S., Mexico, Australia, Brazil and Africa. We also have ownership interests in foreign affiliates operating in Latin America that form our primary presence in this market.

Energy Services Division

The Energy Services division focuses its efforts to provide a closed loop water management solution to energy companies involved in hydraulic fracturing. Our initial focus is in the water-stressed Permian Basin of West Texas, an oil provenance, where we are providing water sourcing, transfer and soon treatment. Our expertise in water well drilling coupled with our flat-hose transfer solution from the water source to the well site where hydraulic fracturing occurs followed by treatment of the produced water and then recapture and recycling that water for reuse in other hydraulic fracturing operations provides a sustainable and environmentally responsible solution to energy companies operating in a part of the country which has significant water shortages and drought. Our system is designed to have virtually no surface discharge of formation or produced and treated water. The Company believes our cradle-to-cradle water management solution will be commercially proven and will begin to increase in scale in the next twelve months and in terms of both revenue and operating income. The Energy Services division will provide services in most regions of the U.S.

Other

Other includes specialty and purchasing operations not included in one of the other divisions.

Financial information for the Company’s segments is presented below. Unallocated corporate expenses primarily consist of general and administrative functions performed on a company-wide basis and benefiting all segments. These costs include accounting, financial reporting, internal audit, treasury, corporate and securities law, tax compliance, executive management and board of directors. Corporate assets are all assets of the Company not directly associated with a segment, and consist primarily of cash and deferred income taxes.


	Three Months						Nine Months
	Ended October 31,						Ended October 31,
(in thousands)	2013			2012			2013			2012
Revenues
Water Resources	$	46,807		$	55,135		$	135,876		$	164,677
Inliner		43,806			32,115			111,971			101,682
Heavy Civil		63,820			70,472			213,431			219,723
Geoconstruction		20,087			44,816			62,966			104,208
Mineral Services		39,773			76,498			144,326			243,965
Energy Services		1,727			1,256			5,268			4,435
Other		5,481			3,087			15,241			7,635
Intersegment Eliminations		(5,039	)		(2,098	)		(14,156	)		(5,307	)

Total revenues	$	216,462		$	281,281		$	674,923		$	841,018

Equity in (losses) earnings of affiliates
Geoconstruction	$	—		$	—		$	—		$	3,488
Mineral Services		(2,300	)		4,947			(4,088	)		15,581

Total equity in (losses) earnings of affiliates	$	(2,300	)	$	4,947		$	(4,088	)	$	19,069

Income (loss) from continuing operations before income taxes
Water Resources	$	583		$	2,702		$	2,193		$	5,393
Inliner		5,717			2,791			12,025			7,927
Heavy Civil		352			(5,487	)		(1,190	)		(21,632	)
Geoconstruction		(2,873	)		5,233			(28,771	)		4,617
Mineral Services		(9,666	)		11,231			(7,484	)		48,087
Energy Services		(1,167	)		(1,094	)		(2,656	)		(2,367	)
Other		(57	)		477			285			426
Unallocated corporate expenses		(10,332	)		(6,794	)		(36,995	)		(23,481	)
Interest expense		(2,038	)		(1,604	)		(4,908	)		(3,020	)

Total (loss) income from continuing operations before income taxes	$	(19,481	)	$	7,455		$	(67,501	)	$	15,950

Product Line Revenue Information
Water systems	$	47,783		$	57,482		$	141,708		$	165,373
Water treatment technologies		8,580			13,349			29,157			36,205
Sewer rehabilitation		43,806			32,115			111,971			101,682
Water and wastewater plant construction		38,104			32,260			121,482			97,098
Pipeline construction		17,529			25,636			64,029			91,902
Soil stabilization		22,032			54,240			70,670			130,548
Environmental and specialty drilling		1,979			1,557			4,613			6,369
Exploration drilling		35,040			62,924			126,955			206,615
Other		1,609			1,718			4,338			5,226

Total revenues	$	216,462		$	281,281		$	674,923		$	841,018

Geographic Information
Revenue
United States	$	174,573		$	210,460		$	522,161		$	654,034
Africa/Australia		8,035			19,314			33,904			74,416
South America		15,690			21,976			43,852			36,036
Mexico		13,070			18,443			48,696			56,381
Other foreign		5,094			11,088			26,310			20,151

Total revenues	$	216,462		$	281,281		$	674,923		$	841,018