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Landauer, Inc. Reports Fiscal 2014 First Quarter Results

February 3, 2014

GLENWOOD, Ill., Feb. 3, 2014 /PRNewswire/ — Landauer, Inc. (NYSE: LDR), a recognized leader in personal and environmental radiation measurement and monitoring, outsourced medical physics services and high quality medical consumable accessories, today reported financial results for its fiscal 2014 first quarter ended December 31, 2013.

Fiscal 2014 First Quarter Highlights

    --  Revenue of $37.7 million
    --  Operating income of $5.0 million includes R&D expenses advancing our
        next generation dosimeter ($1.0 million), acquisition and reorganization
        costs ($0.1 million) and non-cash stock based compensation ($0.3
        million)
    --  Net income of $3.1 million, or $0.32 per diluted share, includes $0.02
        per diluted share impact of non-cash stock based compensation expenses.
    --  Adjusted EBITDA of $9.6 million
    --  Operating Cash Flow of $10.0 million
    --  Company reaffirms 2014 guidance

“Our financial results were as expected for the start to our fiscal year,” stated Bill Saxelby, President and Chief Executive Officer of Landauer. “We improved our cash flows over the prior period and the issues with government funding uncertainty that we have communicated during 2013 have had the effect we anticipated. We grew our core Radiation Measurement business global revenues while investing in our next generation technology platform. Our Medical Physics business invested in its infrastructure to support several hospital systems who will implement our enterprise wide radiation safety solution, and our Medical Products business is focused on executing against the growth strategies begun in 2013 and are incrementally moving this business to improved profitability.”

Saxelby added, “In 2014 we will maintain focus on our segment specific growth initiatives and strategic objectives. In Radiation Measurement we will invest in our next generation dosimetry platform, new product introductions and actively work our potential military revenue opportunities as the military funding environment becomes more clear. In Medical Physics we will see hospital systems adopt our enterprise wide radiation safety solution over the course of the year. In Medical Products we will introduce new medical devices to complement our existing product offering during the year.”

First Fiscal Quarter Financial Overview and Business Segment Results

Revenues for the first fiscal quarter of 2014 were $37.7 million, an increase of $1.0 million or 2.7%, compared with revenues of $36.7 million for the first fiscal quarter of 2013. The Radiation Measurement segment revenue increased $1.4 million primarily due to an increase of $1.1 million increase in revenue from its international operations. The increase was partially offset by a decline in the Medical Products segment of $0.5 million compared to the prior year period, due to the decline in Spherz selling price and shipments. The Medical Physics segment revenue increased 1.3% to $7.7 million in the first fiscal quarter of 2014. Consolidated revenue for the first fiscal quarter was favorably impacted by less than $0.1 million as strength in the Euro was largely offset by lower Brazilian Real and Australian Dollar.

Gross margins were 51.7 percent for the first fiscal quarter of 2014, compared with 54.8 percent for the first fiscal quarter of 2013. The decrease in the gross margin over the prior year period was due primarily to lower Spherz selling price and higher sales of lower margin products in the Medical Products segment, higher costs in the Medical Physics segment, and higher equipment sales and increased IT expense in the Radiation Measurement segment.

Total selling, general and administrative expenses for the first fiscal quarter of 2014 were $14.5 million, an increase of $1.1 million, or 8.2 percent, compared with operating expenses of $13.4 million for the same quarter in fiscal 2013. The selling, general and administrative expense increase was primarily due to $1.0 million of increased research and development expenses, primarily attributed to advancement of our next generation dosimetry platform, $0.4 million in increased amortization expense, offset by $0.5 million of reduced stock based compensation expense consistent with the company’s fiscal 2014 guidance.

Operating income for the first fiscal quarter of 2014 was $5.0 million, a decrease of $1.7 million compared with operating income of $6.7 million for the first fiscal quarter of 2013. The decrease in operating income was due to increased research and development costs of $1.0 million, decreased Spherz revenue of $0.5 million, increased material costs of $0.5 million, increased amortization costs of $0.4 million and increased services and payroll of $0.5 million offset by $0.7 million of increased international operating income and $0.5 million of reduced stock compensation expense.

Equity earnings in non-consolidated joint ventures for the first fiscal quarter of 2014 were $0.6 million, $0.9 million lower than the first fiscal quarter of 2013. This was due primarily to unfavorable FX on Nagase-Landauer equity earnings, and lower sales due to the timing of government funding impacting our joint venture partner.

The effective tax rate was 31.5% and 31.1% for the first three months of fiscal 2014 and 2013, respectively. The increase in the effective tax rate was due primarily to a true-up of a prior year pension adjustment.

Net income for the first fiscal quarter ended December 31, 2013 was $3.1 million, or $0.32 per diluted share, compared to net income of $4.9 million, or $0.52 per diluted share, in the same period last year. The decrease in net income was due to increased research and development costs of $1.0 million, decreased equity earnings of $0.9 million, decreased Spherz revenue of $0.5 million, increased material costs of $0.5 million, increased amortization costs of $0.4 million and increased services and payroll of $0.5 million offset by $0.7 million of increased international operating income, $0.8 million in decreased income taxes and $0.5 million of reduced stock compensation expense.

Excluding the costs associated with an acquisition, and non-cash stock based compensation expenses, adjusted net income was $3.3 million, compared to adjusted net income of $5.5 million in the comparable prior year period. The resulting adjusted diluted earnings per share for the first fiscal quarter ended December 31, 2013 was $0.35 per share, compared to $0.58 per share in the same period last year.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first fiscal quarter of 2014 were $9.2 million compared with $11.5 million for the first fiscal quarter of 2013. The decrease was due primarily to decreased net income and lower provision for income tax expense. A reconciliation of net income to EBITDA and Adjusted EBITDA is included in the attached financial exhibits.

Change in Segment Presentation

During the first fiscal quarter of 2014, the Company changed the presentation of its reporting segments to separately disclose certain ‘corporate expenses’ that had previously been reported within the Radiation Measurement segment. As a result, the current segment disclosures will reflect three reporting segments: Radiation Measurement, Medical Physics, Medical Products and one functional group: Corporate.

Radiation Measurement Segment

Radiation Measurement revenues for the first fiscal quarter of 2014 were $27.7 million, an increase of $1.3 million or 4.9%, from the first fiscal quarter of 2013 to $26.4 million. The increase in the fiscal quarter was primarily due to increases at international subsidiaries over the prior year first fiscal quarter of $1.1 million due to both increases in equipment and measurement services.

Radiation Measurement operating income for the first fiscal quarter of 2014 was $8.6 million, a decrease of $0.9 million or 9.6%, compared to operating income of $9.4 million for the first fiscal quarter of 2013. The decrease in operating income was due to increased research and development expenses of $1.0 million, primarily attributed to advancement of our next generation dosimeter and increased materials of $0.3 million due to higher Radwatch sales offset by increased international operating income of $0.7 million.

Medical Physics Segment

Medical Physics revenues for the first fiscal quarter increased 1.3% to $7.7 million, as compared to $7.6 million for the first fiscal quarter of 2013. Medical Physics operating income was $0.4 million as compared to $0.8 million in the first fiscal quarter of 2013. The decrease in operating income was partially due to increased staffing in support of the continued advancement of its system-sell initiatives and previously unallocated expense prior to changes in segment presentation.

Medical Products Segment

Medical Products revenues for the first fiscal quarter of 2014 were $2.2 million, a decrease of $0.5 million or 18.5%, compared to $2.7 million for the first fiscal quarter of 2013. Medical Products operating loss for the first fiscal quarter of 2014 was $0.4 million, a decrease of $1.1 million, as compared to operating income of $0.7 million for the first fiscal quarter of 2013. The decrease is due primarily to a decrease in revenue of $0.5 million, an increase in amortization of $0.4 million and increased material costs of $0.2 million.

Corporate Selling, General and Administrative Expenses

Corporate SG&A expenses reflect costs associated with supporting our entire company including executive management and administrative functions such as accounting, treasury, legal, human resources, and sales and information technology management, as well as other costs required to support our company. Corporate expenses for the first fiscal quarter of 2014 were $3.6 million, a decrease of $0.6 million as compared to $4.2 million in the first fiscal quarter of 2013, the decrease was due primarily to $0.5 million of reduced stock compensation expense consistent with the company’s fiscal 2014 guidance. These expenses were largely burdened within the Radiation Measurement Segment in previous years.

Balance Sheet

Landauer ended the first fiscal quarter of 2014 with total assets of $274.1 million, a decrease of $2.7 million compared to total assets of $276.8 million at the end of fiscal 2013. The Company completed the quarter with $13.3 million of cash and cash equivalents on the balance sheet and unused borrowing capacity of $31 million under its current $175 million credit facility, which provides adequate liquidity to meet its current and anticipated obligations. Net operating cash flow generated during the first fiscal quarter of 2014 was $10.0 million, representing an increase over the prior year period of $2.3 million due primarily to lower accounts receivable and inventory and a smaller decrease in accounts payable.

Fiscal 2014 Outlook

Landauer’s business plan for fiscal 2014 currently anticipates aggregate revenues for the year to be in the range of $140 to $160 million, and reflects the uncertainty of government funding during fiscal 2014 for the military equipment sales opportunities the company has developed. The business plan also anticipates:

    --  The effective tax rate for the full fiscal year is anticipated to be
        within a range of 28 percent to 32 percent.
    --  Based upon the above assumptions, the Company anticipates reported net
        income for fiscal 2014 in the range of $16 to $18 million and Adjusted
        EBITDA expected for fiscal 2014 in the range of $46 to $49 million.

Conference Call Details

Landauer has scheduled its first quarter conference call for investors over the Internet on Tuesday, February 4, 2014, at 9:00 a.m. Central Time (10 a.m. Eastern Time). To participate, callers should dial 800-762-8779 (within the United States and Canada), or 480-629-9645 (international callers) about 10 minutes before the presentation. To listen to a webcast on the Internet, please go to the Company’s website at http://www.landauer.com at least 15 minutes early to register, download and install any necessary audio software. Investors may access a replay of the call by dialing 800-406-7325 (within the United States and Canada), or 303-590-3030 (international callers), passcode 4651634#, which will be available through Tuesday, March 4, 2014. The replay will also be available on Landauer’s website for 90 days following the call.

About Landauer

Landauer is a leading global provider of technical and analytical services to determine occupational and environmental radiation exposure, the leading domestic provider of outsourced medical physics services, as well as a provider of high quality medical accessories used in radiology, radiation therapy, and image guided surgery procedures. For more than 50 years, the Company has provided complete radiation dosimetry services to hospitals, medical and dental offices, universities, national laboratories, nuclear facilities and other industries in which radiation poses a potential threat to employees. Landauer’s services include the manufacture of various types of radiation detection monitors, the distribution and collection of the monitors to and from customers, and the analysis and reporting of exposure findings. The Company provides its dosimetry services to approximately 1.8 million individuals globally. In addition, through its Medical Physics segment, the Company provides therapeutic and imaging physics services to the medical physics community. Through its Medical Products segment, the Company provides medical consumable accessories used in radiology, radiation therapy, and image guided surgery procedures. For information about Landauer, please visit our website at http://www.landauer.com.

Safe Harbor Statement

Some of the information shared here (including, in particular, the section titled “Fiscal 2013 Outlook”) constitutes forward-looking statements that are based on assumptions and involve certain risks and uncertainties. These include the following, without limitation: assumptions, risks and uncertainties associated with the Company’s future performance, the Company’s development and introduction of new technologies in general; the ability to protect and utilize the Company’s intellectual property; continued customer acceptance of the InLight technology; the adaptability of optically stimulated luminescence (OSL) technology to new platforms and formats; military and other government funding for the purchase of certain of the Company’s equipment and services; the impact on sales and pricing of certain customer group purchasing arrangements; changes in spending or reimbursement for medical products or services; the costs associated with the Company’s research and business development efforts; the usefulness of older technologies and related licenses and intellectual property; the effectiveness of and costs associated with the Company’s IT platform enhancements; the anticipated results of operations of the Company and its subsidiaries or ventures; valuation of the Company’s long-lived assets or business units relative to future cash flows; changes in pricing of services and products; changes in postal and delivery practices; the Company’s business plans; anticipated revenue and cost growth; the ability to integrate the operations of acquired businesses and to realize the expected benefits of acquisitions; the risks associated with conducting business internationally; costs incurred for potential acquisitions or similar transactions; other anticipated financial events; the effects of changing economic and competitive conditions, including instability in capital markets which could impact availability of short and long-term financing; the timing and extent of changes in interest rates; the level of borrowings; foreign exchange rates; government regulations; accreditation requirements; changes in the trading market that affect the costs of obligations under the Company’s benefit plans; and pending accounting pronouncements. These assumptions may not materialize to the extent assumed, and risks and uncertainties may cause actual results to be different from what is anticipated today. These risks and uncertainties also may result in changes to the Company’s business plans and prospects, and could create the need from time to time to write down the value of assets or otherwise cause the Company to incur unanticipated expenses. Additional information may be obtained by reviewing the information set forth in Item 1A “Risk Factors” and Item 7A “Quantitative and Qualitative Disclosures about Market Risk” and information contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2013 and other reports filed by the Company, from time to time, with the Securities and Exchange Commission. The Company does not undertake, and expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events or changes in the Company’s expectations, except as required by law.

Financial Tables Follow


                    Landauer, Inc. and Subsidiaries

                      Consolidated Balance Sheets

    (Dollars in           December                          September
     Thousands)             31,                               30,

                                2013                         2013
    ---                         ----                         ----

    ASSETS

    Current assets:

    Cash and cash
     equivalents                                   $13,272             $11,184

    Receivables,
     net of
     allowances of
     $570 and $600
     respectively                                   34,178              38,419

    Inventories                                      8,301               9,539

    Prepaid income
     taxes                                           2,671               3,132

    Prepaid
     expenses and
     other current
     assets                                          5,220               4,019
    --------------                                   -----               -----

    Current assets                                  63,642              66,293
    --------------                                  ------              ------

    Property, plant
     and equipment,
     at cost                                       104,316             107,446

    Accumulated
     depreciation
     and
     amortization                                  (53,407)            (55,514)
    -------------                                  -------             -------

    Net property,
     plant and
     equipment                                      50,909              51,932
    -------------                                   ------              ------

    Equity in joint
     ventures                                       22,600              23,942

    Goodwill                                        86,529              84,436

    Intangible
     assets, net of
     accumulated
     amortization
     of $14,789 and
     $13,605,
     respectively                                   37,022              37,161

    Dosimetry
     devices, net
     of accumulated
     depreciation
     of $9,915 and
     $9,472,
     respectively                                    5,739               5,798

    Other assets                                     7,704               7,271
    ------------                                     -----               -----

    Assets                                        $274,145            $276,833
    ======                                        ========            ========

    LIABILITIES AND
     STOCKHOLDERS'
     EQUITY

    Current
     liabilities:

    Accounts
     payable                                        $6,036              $6,310

    Dividends
     payable                                         5,433               5,419

    Deferred
     contract
     revenue                                        13,572              13,181

    Accrued
     compensation
     and related
     costs                                           6,160               8,207

    Other accrued
     expenses                                        6,217               7,531
    -------------                                    -----               -----

    Current
     liabilities                                    37,418              40,648
    ------------                                    ------              ------

    Non-current
     liabilities:

    Long-term debt                                 143,785             142,785

    Pension and
     postretirement
     obligations                                    13,308              13,047

    Deferred income
     taxes                                          10,324               9,817

    Other non-
     current
     liabilities                                     1,890                 915
    ------------                                     -----                 ---

    Non-current
     liabilities                                   169,307             166,564
    ------------                                   -------             -------

    Stockholders'
     equity:

    Preferred
     stock, $.10
     par value per
     share,
     authorized
     1,000,000
     shares; none
     issued                                              -                   -

    Common stock,
     $.10 par value    2013 and
     per share,        September 30,
     authorized        2013
     20,000,000        respectively
     shares;
     9,615,711 and
     9,575,926
     issued and
     outstanding at
     December 31,                                      962                 958

    Additional paid
     in capital                                     39,653              39,465

    Accumulated
     other
     comprehensive
     loss                                           (4,547)             (4,456)

    Retained
     earnings                                       29,582              32,012
    ---------                                       ------              ------

    Landauer, Inc.
     stockholders'
     equity                                         65,650              67,979

    Noncontrolling
     interest                                        1,770               1,642
    --------------                                   -----               -----

    Stockholders'
     equity                                         67,420              69,621
    -------------                                   ------              ------

    Liabilities and
     Stockholders'
     Equity                                       $274,145            $276,833
    ===============                               ========            ========


                        Landauer, Inc. and Subsidiaries

                First Fiscal Quarter 2014 Financial Highlights

                                        Three Months
                                            Ended
                                          December
                                             31,
                                       ------------

    (Dollars in Thousands,
     Except per Share)           2013                  2012
    ----------------------       ----                  ----

    Service revenues                         $31,894                $31,469

    Product revenues                           5,811                  5,212
    ----------------                           -----                  -----

    Net revenues                              37,705                 36,681

    Cost and expenses:

    Service costs                             15,049                 14,308

    Product costs                              3,158                  2,255
    -------------                              -----                  -----

    Total cost of sales                       18,207                 16,563
    -------------------                       ------                 ------

    Selling, general and
     administrative                           14,362                 13,391

    Acquisition and
     reorganization costs                        111                      0
    ---------------------                        ---                    ---

    Costs and expenses                        32,680                 29,954
    ------------------                        ------                 ------

    Operating income                           5,025                  6,727

    Equity in income of joint
     ventures                                    573                  1,528

    Interest expense, net                       (892)                (1,033)

    Other income, net                             37                     95
    -----------------                            ---                    ---

    Income before taxes                        4,743                  7,317

    Income taxes                               1,496                  2,274
    ------------                               -----                  -----

    Net income                                 3,247                  5,043

    Less:  Net income
     attributed to                               196                    166

    noncontrolling interest
    -----------------------

    Net income attributed to
     Landauer, Inc.                           $3,051                 $4,877
    ========================                  ======                 ======

    Net income per share
     attributable to

    Landauer, Inc.
     shareholders:

    Basic                                      $0.32                  $0.52

    Weighted average basic
     shares                                    9,422                  9,336

    outstanding
    ===========

    Diluted                                    $0.32                  $0.52

    Weighted average diluted
     shares                                    9,467                  9,385

    outstanding
    ===========

A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is provided below:


                                 Three Months
                                     Ended

                                December 31,
                                ------------

                                         2013         2012
                                         ----         ----

    Adjusted EBITDA

    Net income attributed to
     Landauer, Inc.                           $3,051        $4,877

    Add back:

    Interest expense, net                        789           932

    Depreciation and
     amortization                              3,894         3,450

    Provision for income taxes                 1,496         2,274
    --------------------------                 -----         -----

    Earnings before interest,
     taxes, depreciation and
     amortization (EBITDA)                    $9,230       $11,533
    -------------------------                 ------         -----

    Adjustments:

    Non-cash stock based
     compensation                                292           684

    IT platform enhancements
     expenses                                      -           178

    Acquisition and
     reorganization costs                        111             -
                                                 ---           ---

    Sub-total adjustments                        403           862
    ---------------------                        ---           ---

    Adjusted EBITDA                           $9,633       $12,395
    ===============                           ======         =====

    Adjusted Net Income

    Net income attributed to
     Landauer, Inc.                           $3,051        $4,877

    Sub-total adjustments                        403           862

    Income-taxes on adjustments                 (127)         (268)
    ---------------------------                 ----          ----

    Adjustments, net                             276           594
    ----------------                             ---           ---

    Adjusted, Net Income                      $3,327        $5,471
    ====================                      ======        ======

    Adjusted Net Income per
     Diluted Share                             $0.35         $0.58

    Free Cash Flow

    Net cash provided by
     operating activities                     $9,954         2,340

    Capital expenditures                      (1,071)       (1,902)
    --------------------                       -----         -----

    Free Cash flow                             8,883           438

    IT platform enhancements
     expenses                                      -           178

    Acquisition and
     reorganization costs                        111             -
    ---------------------                        ---           ---

    Adjusted Free Cash Flow                   $8,994           616
    =======================                   ======           ===

Segment Information

The following tables summarize financial information for each reportable segment for the three months ended December 31:


                             Three Months
                                 Ended
                               December
                                  31,
                            ------------

                                     2013          2012
                                     ----          ----

    Revenues by segment:

    Radiation Measurement                 $27,741       26,403

    Medical Physics                         7,739        7,589

    Medical Products                        2,225        2,689

    Consolidated revenues                 $37,705       36,681
    =====================                   =====       ======

                             Three Months
                                 Ended
                               December
                                  31,
                            ------------

                                     2013          2012
                                     ----          ----

    Operating income (loss)
     by segment:

    Radiation Measurement                  $8,579        9,432

    Medical Physics                           433          792

    Medical Products                         (438)         670

    Corporate                              (3,549)      (4,167)
    ---------                               -----        -----

    Consolidated operating
     income                                $5,025        6,727
    ======================                 ======        =====

SOURCE Landauer, Inc.


Source: PR Newswire



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