News Release
LANDAUER
LANDAUER, INC. Reports
Fiscal 2014 FIRST QUARTER RESULTS
For Further Information Contact:
Jim Polson
FTI Consulting
Phone: 312-553-6730
Email: jim.polson@fticonsulting.com
GLENWOOD, Ill.— February 3, 2014—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, 2014 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.
