News Release
LANDAUER
LANDAUER, INC. Reports
Fiscal 2015 FIRST QUARTER RESULTS
For Further Information Contact:
Jim Polson
FTI Consulting
Phone: 312-553-6730
Email: jim.polson@fticonsulting.com
GLENWOOD, Ill.— March 9, 2015—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 2015 first quarter ended December 31, 2014.
Fiscal 2015 First Quarter Highlights
| · | | Revenue of $37.5 million, a decrease of 1.6% year-over-year |
| · | | Operating income of $6.1 million, an increase of 13.1% year-over-year |
| · | | Net income of $4.4 million, or $0.46 per diluted share |
| · | | Adjusted EBITDA of $10.3 million |
| · | | Verifii, the next generation wireless service platform, continued advancement according to plan. |
| · | | Company declares a reduction in dividend to $0.275 per share, compared to $0.55 per share in the previous quarter |
| · | | Company reaffirms 2015 guidance |
Mike Leatherman, President and Chief Executive Officer of Landauer stated, “We are pleased with our fiscal first quarter results, which provides a solid foundation for fiscal year 2015. We expect to return to a normal reporting cycle going forward. With the continued progress of our next generation digital dosimeter platform, Verifii, and the accounting issues clearly identified, the company has reset its strategic plan to become the premier Radiation Safety Solution Company. Going forward the priorities for increasing shareholder value include the following:
| · | | Continue investment in technology and the organization required to fully capitalize on the Verifii platform. Our goal is to increase penetration and expand our offering to our current channels of acute health care, professional health care offices and the military and industrial markets. The primary focus to drive revenue and profit growth will be new products and services that are annuity based in nature. |
| · | | Stabilize the core business by continuing the aggressive remediation of the accounting control issues identified in our latest Form 10K filing. |
| · | | Remain fully prepared to pursue large military and equipment orders. |
| · | | Assess all components of the business to ensure alignment with strategic objectives. |
| · | | Continue to manage the balance sheet and reduce debt. |
| · | | Continue to return a competitive dividend to our shareholders. |
Given Landauer’s history of successfully servicing regulated environments, we are well positioned to expand our services to the healthcare market as a result of the new regulations passed into law by The Joint Commission which become effective in July, 2015. Our dosimetry services combined with Imaging Physics services and our IT infrastructure uniquely position Landauer as an integrated solution for these new requirements. The introduction of the wireless Verifii platform into this set of integrated services is expected to bring increased value to the customer and a lower cost structure to Landauer. Finally, the changes we have made in our Medical Products business are beginning to yield results, as we realize modest, sequential growth and have received FDA approval for a new product. This product is now moving into field trials and there are two additional products in the FDA pipeline.”
First Fiscal Quarter Financial Overview and Business Segment Results
Revenues for the first fiscal quarter of 2015 were $37.5 million, a decrease 1.6%, compared with revenues of $38.1 million for the first fiscal quarter of 2014. The Radiation Measurement segment revenue decreased 6.0% to $26.5 million, due to a $0.8 million unfavorable foreign currency impact and a $0.7 million decrease in sales of military products. The Medical Physics segment increased 9.1% to $8.4 million, due to increased imaging and radiation therapy services. The Medical Products segment increased 18.2% to $2.6 million, due to higher domestic revenues and the full-quarter impact in fiscal 2015 of a modest acquisition in December 2013.
Gross margin was 52.8% for the first fiscal quarter of 2015, compared with 52.0% for the first fiscal quarter of 2014. Higher gross margins in the Radiation Measurement segment, were primarily attributable to favorable product mix, partially offset by a 0.6% decline in gross margin driven by increased staffing expenses in the Medical Physics segment to support additional contracts in the imaging and therapy divisions and a 0.5% decline in gross margin driven by Spherz price pressure in the Medical Products segment.
Selling, general and administrative expenses for the first fiscal quarter of 2015 were $13.7 million, a decrease of $0.6 million, or 4.2%, compared with $14.3 million for the first fiscal quarter of 2014. The decrease in selling, general and administrative expenses resulted primarily from a $0.9 million decrease in research and development expenses and a $0.7 million decrease in amortization expense as a result of adjustments recorded during the third fiscal quarter of 2014 to reduce the carrying value of intangible assets, offset by higher legal, audit and other professional fees of $0.7 million.
Operating income for the first fiscal quarter of 2015 was $6.1 million, an increase of $0.7 million, or 13.0%, compared with operating income of $5.4 million for the first fiscal quarter of 2014. The increase in operating income was driven by a $0.9 million decrease in research and development expenses, offset by an increase in selling, general and administrative expenses of $0.3 million.
Equity in income of joint ventures for the first fiscal quarter of 2015 was $0.7 million, a decrease of $0.6 million, or 46.2%, compared with $1.3 million for the first fiscal quarter of 2014. The decrease was due primarily to the timing of military orders.
The effective tax rates for the first fiscal quarter of 2015 and 2014 were 26.2% and 32.0%, respectively. The decrease in the effective tax rate was due primarily to the enactment of the research and development credit for calendar year 2014 in the first fiscal quarter of 2015.
Net income attributed to Landauer for the first fiscal quarter of 2015 was $4.4 million, an increase of $0.6 million, or 15.8%, compared with net income of $3.8 million in the first fiscal quarter of 2014. The increase in net income was the result of a decrease in operating expenses of $0.7 million and a decrease in income tax provision of $0.3 million, partially offset by a decrease in equity in income of joint ventures of $0.6 million.
Excluding the costs associated with an acquisition, and non-cash stock based compensation expenses, adjusted net income was $4.7 million, compared to adjusted net income of $4.1 million in the comparable prior year period. The resulting adjusted diluted earnings per share for the first fiscal quarter ended December 31, 2014 was $0.50 per share, compared to $0.43 per share in the same period last year.
The Company reported Adjusted EBITDA of $10.3 million in the first fiscal quarter of 2015 compared with $10.6 million for the first fiscal quarter of 2014. 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 first fiscal quarter of 2015 were $26.5 million, a decrease of $1.7 million, or 6.0%, compared with $28.2 million for the first fiscal quarter of 2014. The decrease in revenues was due primarily to the unfavorable impact of changes in foreign currency exchange rates of $0.8 million and lower military product sales to our joint venture of $0.7 million.
Radiation Measurement operating income for the first fiscal quarter of 2015 was $9.4 million, an increase of $0.6 million, or 6.8%, compared with operating income of $8.8 million for the first fiscal quarter of 2014. The increase in operating income was primarily due to a $1.0 million decrease in research and development expenses to support the Verifii next generation dosimetry platform, offset by a $0.3 million increase in selling, general and administrative expenses due to higher bad debt expense and additional headcount to support sales and marketing activities.
Medical Physics Segment
Medical Physics revenues for the first fiscal quarter of 2015 were $8.4 million, an increase of $0.7 million, or 9.1%, compared with $7.7 million for the first fiscal quarter of 2014. Medical Physics operating income for the first fiscal quarter of 2015 was $0.6 million, compared to $0.4 million for the first fiscal quarter of 2014. The increase in operating income is due primarily to lower operating expenses as a result of organizational restructuring during fiscal 2014.
Medical Products Segment
Medical Products revenues for the first fiscal quarter of 2015 were $2.6 million, an increase of $0.4 million, or 18.2%, compared to $2.2 million for the first fiscal quarter of 2014. Medical Products operating income for the first fiscal quarter of 2015 was $0.3 million, as compared to an operating loss of $0.3 million for the first fiscal quarter of 2014. The change was primarily due to a $0.7 million decrease in amortization expense as a result of adjustments recorded during the third fiscal quarter of 2014 to reduce the carrying value of intangible assets.
Corporate Selling, General and Administrative Expenses
Corporate selling, general and administrative expenses for the first fiscal quarter of 2015 were $4.2 million, an increase of $0.7 million, or 20%, compared to $3.5 million for the first fiscal quarter of 2014. The increase was due primarily to higher legal, audit and other professional fees of $0.7 million.
Balance Sheet
Landauer ended the first fiscal quarter of 2015 with total assets of $210.8 million, a decrease of $5.8 million compared to total assets of $216.6 million at the end of fiscal 2014. The Company completed the quarter with $8.4 million of cash and cash equivalents on the balance sheet and unused borrowing capacity of $41 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 2015 was $9.5 million, representing a decrease from the prior year period of $0.5 million.
Dividend
Today, the Board of Directors declared a dividend of $0.275 per share, which is a reduction from the previous quarter’s dividend of $0.55 per share. The dividend is payable on April 3, 2015 to shareholders of record on March 19, 2015.
Based upon the Company’s updated strategic objectives, the Board decided the timing is right to reset the dividend. The Board firmly believes it is prudent to improve the Company’s capital management flexibility by reducing the dividend payments. The revised dividend level still offers a competitive yield, while allowing further investment in growth and the retirement of debt. The dividend policy will continue to be evaluated every quarter to provide a balance of a sustainable dividend level to our shareholders, capital to execute our strategy and debt reduction.
Fiscal 2015 Outlook
Landauer’s business plan for fiscal 2015 currently anticipates aggregate revenues for the year to be in the range of $153 to $163 million. This range reflects the uncertainty of government funding during fiscal 2015 for military equipment sales opportunities as well as the outlook for foreign currencies. 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 Adjusted Net Income for fiscal 2015 in the range of $16 to $19 million and Adjusted EBITDA expected for fiscal 2015 in the range of $41 to $46 million. |
Conference Call Details
Landauer has scheduled its first quarter conference call for investors over the Internet on Tuesday, March 10, 2015, at 9:00 a.m. Central Time (10 a.m. Eastern Time). To participate, callers should dial 888-401-4668 (within the United States and Canada), or 719-325-2495 (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 888-203-1112 (within the United States and Canada), or 719-457-0820 (international callers), passcode 8727665#, which will be available through Thursday, April 9, 2015. 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 their website at http://www.landauer.com.
