News Release
LANDAUER
LANDAUER, INC. Reports
Fiscal 2013 Fourth Quarter and year end Results
For Further Information Contact:
Jim Polson
FTI Consulting
Phone: 312-553-6730
Email:
GLENWOOD, Ill.— December 9, 2013—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 2013 fourth quarter and year ended September 30, 2013.
Fiscal 2013 Highlights
· | Revenue of $150.2 million in fiscal 2013 |
· | Operating income of $4.1 million includes IT platform enhancement expense ($5.5 million), non-cash stock based compensation ($2.6 million), and a non-cash goodwill impairment charge recorded in the third fiscal quarter ($22.7 million) |
· | Net income of $4.8 million, or $0.49 per diluted share, included $3.63 per diluted share impact of goodwill impairment charge, IT platform enhancement, acquisition and reorganization expenses, and non-cash stock based compensation expenses, which is comprised of $2.86 of pre-tax adjustments and $0.77 per diluted share of favorable tax impact. |
· | Adjusted EBITDA of $49.2 million |
· | Company signs group purchasing agreement with Premier Healthcare to provide Medical Physics services |
· | Company issues Fiscal 2014 guidance |
“Our full year financial results were in line with the revised guidance range announced in our third quarter earnings call, on August 6th” stated Bill Saxelby, President and Chief Executive Officer of Landauer.
“Our core Radiation Measurement business performance was solid in FY 2013, as we continued to build and deepen our relationships with key customers in the military market, improved our customer experience via investments in our customer services organization, on-line myLDR.com system, and increased domestic sales while significantly reducing costs across our infrastructure. We were pleased with the operating margin and profitability improvements in our Medical Physics business. Our integrated enterprise wide radiation safety solution for large hospital systems is gaining traction, as evidenced by the sole source agreement signed with Premier Healthcare in the fourth quarter, one of the largest group purchasing hospital providers in the nation. Our Medical Products business was impacted in fiscal 2013 by a difficult product pricing environment and a management restructuring. We have taken the necessary steps to implement a new leadership team for this
segment, changed the sales structure, and improved product development. We now have the right team and strategy to drive the long term growth and profitability of this business.”
Fourth Fiscal Quarter Financial Overview and Business Segment Results
Revenues for the fourth fiscal quarter of 2013 and for the fourth fiscal quarter of 2012 were $39.9 million and $37.4 million, respectively. The Radiation Measurement segment revenue increased by $3.2 million, partially offset by a decline in the Medical Products segment of $0.8 million compared to the prior year period, due to the decline in Spherz selling price and shipments. The Medical Physics segment revenue was flat year-over-year. Consolidated revenue for the fourth fiscal quarter of 2013 was favorably affected in the amount of $0.1 million by currency fluctuation, as compared with the prior fiscal year period, principally due to gains in the Euro against the U.S. dollar.
Gross margins were 51.2 percent for the fourth fiscal quarter of 2013, compared with 54.3 percent for the fourth fiscal quarter of 2012. The decrease in the gross margin over the prior year period was due primarily to the impact of the lower sales of high margin products in the Medical Products segment, and increased IT support services of $0.9M related to steady state services as planned, partially offset by the effect of increased low margin equipment and military/first responder sales, and lower service costs of $0.3M.
Total selling, general and administrative expenses for the fourth fiscal quarter of 2013 and 2012 were $12.4 million and $13.9 million respectively. For the fourth fiscal quarter of 2013, total selling, general and administrative expenses included $0.4 million of additional intangible amortization, and $0.3 million of higher recruitment expense, more than offset by $1.0 million of lower IT platform post go-live stabilization expense, $0.2 million of lower incentive compensation, $0.2 million of lower customer service and customer facing costs, and $0.2 million of lower international SG&A.
Operating income for the fourth fiscal quarter of 2013 was $7.0 million, an increase of $5.8 million compared with operating income of $1.2 million for the fourth fiscal quarter of 2012. Operating income for the fourth fiscal quarter of 2013 was $8.7 million, adjusted for non-recurring acquisition, impairment and reorganization expenses, non-cash stock based compensation expense, and IT platform stabilization related expenses, a 13 percent increase, compared with adjusted operating income on a relative basis of $7.7 million for the fourth fiscal quarter of 2012.
Equity earnings in non-consolidated joint ventures for the fourth fiscal quarter of 2013 of $1.3 million were $0.7 million higher than the fourth fiscal quarter of 2012. This was due primarily to higher Radwatch product sales through Landauer’s Military partner.
The effective tax rate for the fourth fiscal quarter of 2013 was a benefit of 17.8 percent versus an expense of 14.9 percent in the fourth fiscal quarter of 2012. The tax rate decreased primarily due to an increased realization of certain US tax credits and the mix of earnings by jurisdiction.
Net income for the fourth fiscal quarter ended September 30, 2013 was $8.6 million, or $0.90 per diluted share, compared to net income of $0.7 million, or $0.07 per diluted share, in the same period last year. The increase in net income was due primarily to the impact of higher Radiation Measurement revenue more than offsetting lower Medical Products revenue, lower SG&A, and higher equity earnings in non-consolidated joint ventures in the fourth fiscal quarter of 2013, and $3.4 million of impairment charges, $0.8 million higher acquisition related expense, and $1.0 million of IT platform enhancement stabilization expense in the fourth fiscal quarter of 2012. A tax benefit of $1.4 million versus a tax expense of $0.2 million in 2013 and 2012, respectively, also contributed to the improvement in net income.
Excluding the costs associated with the asset impairment, acquisition, IT platform enhancement, and non-cash stock based compensation expenses, adjusted net income was $10.6 million, compared to adjusted
net income of $6.2 million in the comparable prior year period. The resulting adjusted diluted earnings per share for the fourth fiscal quarter ended September 30, 2013 was $1.11 per share, compared to $0.66 per share in the same period last year.
Adjusted EBITDA for the fiscal fourth quarter 2013 was $13.8 million compared with $11.9 million for the fourth fiscal quarter of 2012. The increase was due primarily to the effect of higher sales and lower SG&A in fiscal fourth quarter 2013. A reconciliation of net income to EBITDA and Adjusted EBITDA is included in the attached financial exhibits.
Radiation Measurement Segment
Radiation Measurement revenues for the fourth fiscal quarter of 2013 increased 12.1 percent, or $3.2 million, from the fourth fiscal quarter of 2012 to $29.8 million. The increase in the fiscal 2013 fourth quarter was driven by higher international equipment sales, Radwatch product sales, InLight equipment sales domestically, and currency translation benefits of $0.1 million.
Radiation Measurement operating income for the fourth fiscal quarter of 2013 increased to $6.3 million, from $0.4 million in the comparable prior year period. The increase in operating income was due to $0.9 million of higher gross profit from higher sales, lower IT platform enhancement stabilization expense of $1.0 million, $0.2 million of lower customer service and customer facing costs, and $0.2 million of lower international SG&A, lower bad debt expense, and $3.5 million of acquisition, impairment and reorganization expense, partially offset by $0.4 million of additional intangible amortization, $0.3 million of higher recruitment expense, and $0.2 million of higher incentive compensation.
Medical Physics Segment
Medical Physics revenues for the fourth fiscal quarter increased 0.2% to $7.8 million. The Medical Physics segment operating income was $0.9 million, an increase of $1.1 million from an operating loss of $0.2 million in the fourth fiscal quarter of 2012, due primarily to operating efficiencies in the core Medical Physics business, and $0.2 million of lower incentive compensation expense. The prior year incurred $0.8 million of expense related to the impairment of a trade-name in that year.
Medical Products Segment
Medical Products revenues for the fourth fiscal quarter of 2013 decreased 25.9 percent, or $0.8 million, from the fourth fiscal quarter of 2012 to $2.3 million. Medical Products operating loss for the fourth fiscal quarter of 2013 was $0.2 million as compared to an operating profit of $0.9 million in the fourth fiscal quarter of 2012, due primarily to lower sales and $0.4 million of additional intangible amortization. The decrease in revenue and operating income was due primarily to a decline in selling price and shipments of Spherz product partially offset by new accounts.
Balance Sheet
Landauer ended the fourth fiscal quarter of 2013 with total assets of $276.8 million, a decrease of $25.3 million compared to total assets of $302.1 million at the end of fiscal 2012 due primarily to the $22.7 million goodwill impairment in the third fiscal quarter. The Company completed the year with $11.2 million of cash and cash equivalents on the balance sheet and unused borrowing capacity of $32 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 fiscal year 2013 was $23.0 million, representing a 39 percent decrease over the prior year period due primarily to the timing of revenue in the fiscal fourth quarter of 2013, lower accounts payable, and a change in tax position resulting from the IT platform enhancement go live in the fourth fiscal quarter of 2012.
Fiscal Year Ended September 30, 2013 Financial Overview and Business Segment Results
Revenues for the fiscal year ended September 30, 2013 were $150.2 million, a decrease of $2.2 million, or 1.4 percent compared with revenues of $152.4 million for the fiscal year 2012. The Medical Products segment revenues decreased by $4.0 million due to the decline in the Spherz selling price and shipments and the Radiation Measurement segment revenues increased $1.9 million on higher international sales, primarily of equipment, offset by declines in domestic badge revenues.
Gross margins were 52.7 percent for the fiscal year 2013, compared with 57.1 percent for the fiscal year 2012. The decrease in the gross margin rate was primarily due to expenses related to the Company’s recent IT platform enhancement, increased support costs of $3.2 million, increased IT systems depreciation of $1.3 million, and international cost increases of $1.8 million on higher equipment shipments.
Total selling, general and administrative for the fiscal year 2013 were $51.0 million, a decrease of $0.1 million, compared with selling, general and administrative of $51.1 million for the fiscal year 2012.
Acquisition, reorganization and nonrecurring costs for fiscal 2013 were $1.4 million and consisted of $0.6 million in corporate reorganization expenses, $0.4 million reserves for escheatment liability and $0.4 million of costs related to acquisitions.
During the third quarter of 2013, it became apparent that anticipated revenue trends in our Medical Products reporting unit were not being achieved to the extent forecasted. Early budget reviews also indicated future sales growth may be less than expected. We updated the forecasted results of operations for our Medical Products operating segment based on the most recent financial results and our best estimates of future operations. The updated forecast reflects a slower growth in revenues for the Medical Products segment due to anticipated continued pricing pressures from certain competitors greater than the anticipated growth from existing and new product sales. During the third quarter of 2013, we recorded a $22.7 million pretax charge for the impairment of goodwill to reduce the carrying value of goodwill in our Medical Products segment. The impairment charge is non-cash in nature and does not affect the Company’s liquidity or debt covenant compliance.
Operating income for the fiscal year 2013 was $4.1 million, a decrease of $23.3 million, or 85.5 percent, compared with operating income of $28.2 million for the same period in fiscal 2012. The decrease in operating income was due primarily to the $22.7 million goodwill impairment charge to reduce the carrying value of goodwill in our Medical Products segment. The remaining variance of $1.0 million to prior year relates to Medical Products revenue decrease of $4.1 million offset by $1.9 million of increased Radiation Measurement revenue. Increased cost of sales due to the IT platform enhancement of $4.5 million and increased international costs of $1.8 million offset by cost savings of $0.8 million and selling, general and administrative expenses higher by $0.9 million.
Equity in income of joint ventures for fiscal 2013 was $3.9 million, an increase of $0.7 million, or 21.9 percent, compared with equity in income of joint ventures of $3.2 million for fiscal 2012. Interest expense for fiscal 2013 was $4.2 million, an increase of $0.9 million, or 27.2 percent, compared with interest expense of $3.3 million for fiscal 2012.
The effective tax rate was a benefit of 27.2 percent and an expense of 28.6 percent for fiscal 2013 and 2012, respectively. The fiscal 2013 effective tax rate decreased due primarily to an increased realization of certain U.S. tax credits and mix of earnings by jurisdiction.
Net income for the fiscal year 2013 was $4.8 million, a decrease of $14.5 million, or 75.1 percent, compared with net income of $19.3 million for fiscal 2012. The decrease in net income was due primarily to a goodwill impairment charge of $22.7 million and decreased Medical Products revenue of
$4.1 million, partially offset by $1.9 million of increased Radiation Measurement revenue. Increased cost of sales was due primarily to the IT platform enhancement of $4.5 million and increased international costs of $1.8 million and higher selling, general and administrative expense of $0.9 million offset by cost savings of $0.8 million. Income taxes offset the decreases by $9.2 million.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the fiscal year 2013 was $22.3 million, a 46.8 percent decrease compared with $41.9 million in fiscal year 2012. The decrease was due primarily to the goodwill impairment charge. Adjusted EBITDA for fiscal 2013 was $49.2 million, a 9.2 percent decrease compared with $54.2 million in the prior year. A reconciliation of net income to EBITDA, Adjusted EBITDA, and Non-GAAP diluted earnings per share is included in the attached financial exhibits.
Radiation Measurement Segment
Radiation Measurement revenues for fiscal 2013 were $109.8 million, an increase of $1.9 million, or 1.8 percent, compared with revenues of $107.9 million for fiscal 2012. The increase in revenue was driven by higher international equipment sales of $3.0 million in China and EMEA while domestic InLight equipment decreases were partially offset by increases in Radwatch products. In addition, the segment had decreased domestic service badge revenue of $1.0 million and foreign exchange losses of $0.1 million.
Radiation Measurement operating income for the fiscal year 2013 increased to $22.4 million, a 4.2 percent increase from $21.5 million in the comparable prior year period. The revenue increase of $1.9 million was partially offset by IT platform enhancement increases of $3.2 million, IT systems depreciation of $2.3 million and increased international equipment costs of $1.8 million on higher sales and increased customer service support of $1.0 million offset by prior year non-recurring acquisition costs of $3.2 million and asset abandonments of $2.5 million and prior year IT Platform expenses of $2.0 million and decreased material costs of $0.3 million.
Corporate expenses for shared functions, as well as acquisition and reorganization costs are recognized in the Radiation Measurement segment where they have been reported historically. As the Company’s business model evolves, management may determine it necessary to change this reporting practice to reflect any appropriate allocations.
Medical Physics Segment
Medical Physics revenues were $30.9 million for both fiscal 2013 and 2012. Medical Physics operating income for fiscal 2013 was $3.5 million, an increase of $2.2 million, or 169.2 percent, compared with operating income of $1.3 million for fiscal 2012. The increase in operating income was primarily due to operating efficiencies in the core Medical Physics business as well as segment administration cost reductions.
Medical Products Segment
Medical Products revenues for fiscal 2013 were $9.5 million, a decrease of $4.0 million, or 29.6 percent, compared with revenues of $13.5 million for fiscal 2012. This decrease resulted from the decline in the Spherz selling price and shipments. Medical Products operating loss for fiscal 2013 was $21.8 million, a decrease of $27.1 million, compared with operating income of $5.3 million for fiscal 2012. The decrease was primarily attributable to the third quarter goodwill impairment charge of $22.7 million and the revenue decrease of $4.0 million resulting from the decline in Spherz selling price and shipments and additional tradename amortization of $0.4 million.
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.
Saxelby added, “We have short and long-term growth opportunities to create value for all of our stakeholders. The Radiation Measurement business has now successfully implemented its order-to-cash system and is focused on growing its annuity service and equipment offerings. The Medical Physics business has momentum and we now have the right team and strategy in our Medical Products business. In fiscal 2014, our efforts to reduce operating expenses have allowed us to prioritize investing in our next generation dosimetry platform, which is a key component of our long-term growth plan. Our focus will be on executing against our strategic objectives, generating free cash flow to invest in future growth opportunities and maintaining robust dividend distributions to our shareholders.”
Conference Call Details
Landauer has scheduled its fourth quarter conference call for investors over the Internet on Tuesday, December 10, 2013, 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 Friday, January 10, 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.
