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Landauer (LDR) Reports Fiscal 2011 Second Quarter Results


5/3/2011 7:34:21 AM

GLENWOOD, Ill., May 3, 2011 /PRNewswire/ -- Landauer, Inc. (NYSE: LDR), a recognized global leader in personal and environmental radiation monitoring and the leading domestic provider of outsourced medical physics services, today reported financial results for its fiscal 2011 second quarter ended March 31, 2011.

Fiscal 2011 Second Quarter Highlights

  • Revenue grew 2 percent to $32.3 million on contribution from Medical Physics segment and international growth.
  • Gross profit grew 4 percent to $20.7 million on increased revenue and mix.
  • Operating income increased 4 percent to $11.9 million.
  • Net income rose 2 percent to $8.0 million, or $0.85 per diluted share.

"The natural disasters in Japan and resulting nuclear emergency have heightened global awareness of the importance of radiation monitoring. This awareness supports the strategic investments Landauer has made to position our technology with military personnel and first responders and reinforces our value proposition with targeted customers," stated Bill Saxelby, President and CEO of Landauer. "Our technology is being deployed through our joint venture in Japan - Nagase Landauer, our partners in the Canadian government, and the U.S. Army to assist with the monitoring of emergency responders. We are pleased that Landauer technology and equipment is helping to support the response in this difficult situation."

Saxelby added, "We continued to gain traction with our Medical Physics business. In the quarter we signed a new contract for comprehensive medical physics services with a large multi-site system. We continue to focus on organic growth and strategic expansion opportunities that support the safe utilization of radiation in the healthcare setting."

Second Fiscal Quarter Financial Overview and Business Segment Results

Revenues for the second fiscal quarter of 2011 were $32.3 million, a 2 percent increase compared with the $31.8 million reported for the second fiscal quarter of 2010. Cost of sales for the second fiscal quarter of 2011 were $11.6 million, a 2 percent decrease compared with the $11.8 million reported for the second fiscal quarter of 2010. The gross margin increased to 64 percent from 63 percent in the year ago period. Selling, general and administrative costs for the second fiscal quarter of 2011 were $8.7 million, a 4 percent increase compared with the $8.4 million reported for the second fiscal quarter of 2010.

Operating income for the second fiscal quarter of 2011 was $11.9 million, a 4 percent increase compared with operating income of $11.4 million for fiscal 2010. Other income for the second fiscal quarter increased 18 percent to $0.5 million.

The effective tax rate was 34.6% and 33.6% for the second fiscal quarter of 2011 and 2010, respectively. Net income for the second fiscal quarter ended March 31, 2011 was $8.0 million, an increase of 2 percent compared with $7.8 million for the second fiscal quarter of 2010. The resulting diluted earnings per share for the second fiscal quarter of 2011 were $0.85 compared with $0.83 for the second fiscal quarter of 2010. Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $14.2 million, a 7 percent increase compared with $13.3 million a year ago. The increase was due primarily to revenue growth, lower product costs based on revenue mix and favorable equity earnings of joint ventures for the second fiscal quarter of 2011. A reconciliation of net income to EBITDA is included in the attached financial exhibits.

Radiation Monitoring Segment

Radiation Monitoring revenues for the second fiscal quarter of 2011 declined 3 percent, or $0.8 million, to $27.5 million. Of the decline, $0.7 million is due to the previously reported change in the supply relationship between Landauer and Nagase Landauer, which converted its customer base from Luxel to the InLight technology during fiscal 2010. Nagase Landauer no longer purchases service badges from the Company. The historical Luxel badge revenues were partially replaced by a royalty arrangement, resulting in no corresponding impact on net income. Without the Nagase Landauer impact, domestic Radiation Monitoring revenues declined 6 percent, or $1.2 million, driven by lower non-recurring InLight equipment sales, primarily to the Canadian government agency responsible for occupational monitoring and radiation emergency preparedness for the citizens of Canada. International Radiation Monitoring revenues increased 14 percent, or $1.0 million, on organic growth in most regions and the strengthening of most foreign currencies against the dollar.

Radiation Monitoring gross margin for the second fiscal quarter of 2011 increased to 71 percent from 68 percent in the year ago period, primarily due to the decline in lower margin sales to Nagase Landauer. Selling, general and administrative costs for the second fiscal quarter of 2011 increased 3 percent, or $0.2 million, to $7.4 million. The increase is due primarily to the strengthening of most foreign currencies against the dollar. Operating income, inclusive of the impact of acquisition related transaction and reorganization costs, for the second fiscal quarter of 2011 increased 2 percent, or $0.2 million, to $12.1 million compared with operating income of $11.9 million for fiscal 2010.

Medical Physics Segment

Medical Physics revenues for the second fiscal quarter of 2011 increased 40 percent, or $1.4 million, to $4.8 million on $0.7 million of organic growth and $0.7 million due to the impact of acquired companies. The gross margin increased to 23 percent from 22 percent in the year ago period. Selling, general and administrative costs for the second fiscal quarter of 2011 increased 11 percent, or $0.1 million, to $1.3 million due to the annualized impact of acquired companies. Operating loss for the second fiscal quarter of 2011 was $0.2 million, compared with an operating loss of $0.4 million for fiscal 2010.

Fiscal Six Months Financial Overview and Business Segment Results

Revenues for the first six months of fiscal 2011 were $60.8 million, a 3 percent increase compared with the $59.0 million reported for the same period in fiscal 2010. Cost of sales for the first six months of fiscal 2011 were $22.7 million, a 3 percent increase compared with the $22.0 million reported for the same period in fiscal 2010. Gross margins were 63 percent each for the first half of fiscal 2011 and 2010, respectively. Selling, general and administrative costs for the first six months of fiscal 2011 were $17.9 million, a 10 percent increase compared with the $16.2 million reported for the same period in fiscal 2010.

In conjunction with Landauer's acquisition activity, the Company incurred $0.2 million and $1.7 million ($1.2 million, after-tax) of acquisition related transaction and reorganization costs for the first six months of fiscal 2011 and 2010, respectively. Operating income for the six months ended March 31, 2011 was $20.0 million, a 4 percent increase compared with operating income of $19.2 million for the same period in fiscal 2010. Other income for the first six months of fiscal 2011 increased 19 percent to $1.1 million.

The effective tax rate was 33.2% and 34.8% for the first half of fiscal 2011 and 2010, respectively. The decline in effective tax rate was due primarily to the realization of R&D tax credits in fiscal 2011 recognized with the passage of tax legislation in December 2010 and the non-deductibility of certain acquisition related costs in fiscal 2010. Net income for the six months ended March 31, 2011 was $13.8 million, an increase of 7 percent compared with $12.9 million for the six months ended March 31, 2010. The resulting diluted earnings per share for the first half of fiscal 2011 were $1.47 compared with $1.38 for the same period in fiscal 2010. Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $24.4 million, a 6 percent increase compared with $23.0 million a year ago. The increase is due primarily to the $1.4 million reduction in acquisition related transaction and reorganization costs for the first half of fiscal 2011. A reconciliation of net income to EBITDA is included in the attached financial exhibits.

Radiation Monitoring Segment

Radiation Monitoring revenues for the first six months of fiscal 2011 declined 4 percent, or $2.0 million, to $51.4 million. Of the decline, $2.1 million is due to the previously reported change in the supply relationship between Landauer and Nagase Landauer, the Company's unconsolidated joint venture in Japan. Without the Nagase Landauer impact, domestic Radiation Monitoring revenues declined 4 percent, or $1.4 million, and international Radiation Monitoring revenues increased 11 percent, or $1.5 million, on organic growth in most regions and the strengthening of most foreign currencies against the dollar.

Radiation Monitoring gross margin for the six months ended March 31, 2011 increased to 70 percent from 67 percent in the year ago period, primarily due to the decline in lower margin sales to Nagase Landauer. Selling, general and administrative costs for the first six months of fiscal 2011 increased 5 percent, or $0.8 million, to $15.1 million. The increase is due primarily to costs to replace the Company's IT systems and increased spending to support international revenue growth. Operating income, inclusive of the impact of acquisition related transaction and reorganization costs, for the six months ended March 31, 2011 increased 4 percent, or $0.9 million, to $20.7 million compared with operating income of $19.8 million for the same period in fiscal 2010.

Medical Physics Segment

Medical Physics revenues for the first six months of fiscal 2011 increased 67 percent, or $3.8 million, to $9.3 million on $1.4 million of organic growth and $2.4 million due primarily to the annualized impact of acquired companies. The gross margin was 23 percent each for the first six months of fiscal 2011 and in the year ago period. Selling, general and administrative costs for the first six months of fiscal 2011 increased 46 percent, or $0.9 million, to $2.8 million. The increase is due to the impact of acquired companies. Operating loss for the six months ended March 31, 2011 was $0.7 million, compared with an operating loss of $0.6 million for the same period in fiscal 2010.

Solid Financial Position

Landauer ended the second fiscal quarter of 2011 with total assets of $157.1 million. Due to the current liability classification of $18.3 million in outstanding borrowings incurred to support the acquisitions completed during the first fiscal quarter of 2010, the Company had negative working capital of $5.0 million. The Company believes projected operating cash flow and available borrowing under its current credit arrangements provide adequate liquidity to meet its current and anticipated obligations. Cash provided by operating activities for the six months ended March 31, 2011 was $16.9 million, an increase of $7.1 million from the first half of fiscal 2010 due primarily to the changes in the components of working capital.

Fiscal 2011 Outlook

Landauer's current business plan for fiscal 2011 anticipates consolidated revenue for the year to be in the range of $120 to $126 million, including $4 to $8 million in sales to the U.S. military and first responder markets. Military and first responder market sales are dependent on military and other governmental appropriations and approvals which have yet to be obtained. There can be no assurance that such appropriations and approvals can be obtained in fiscal 2011 or that orders will result immediately following any such appropriation or approval. The business plan anticipates spending of $10 to $12 million to support the completion of the Company's systems initiative, with $2 to $3 million being expensed in the current fiscal year. Based upon the above assumptions, the Company anticipates reported net income for fiscal 2011 in the range of $24 to $26 million.

Conference Call Details

Landauer has scheduled its second quarter conference call for investors over the Internet on Tuesday, May 3, 2011 at 2:00 p.m. Eastern Time (11:00 a.m. Pacific Time). To participate, callers should dial 888-561-1721 (within the United States and Canada), or 480-629-9774 (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.landauerinc.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 4435818#, which will be available until June 2, 2011. The replay of the call will remain available on Landauer's website for 90 days.

About Landauer

Landauer is a leading global provider of technical and analytical services to determine occupational and environmental radiation exposure and is the leading domestic provider of outsourced medical physics services. 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 1.6 million individuals globally. In addition, through its Global Physics Solutions subsidiary, the Company provides therapeutic and imaging physics services to the medical physics community.

Safe Harbor Statement

Some of the information shared here (including, in particular, the section titled "Fiscal 2011 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 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; 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 products and services; 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; foreign exchange rates; government regulations; accreditation requirements; changes in the trading market that affect the cost 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 the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended September 30, 2010, and other reports filed by the Company from time to time with the Securities and Exchange Commission.

Financial Tables Follow



Second Fiscal Quarter 2011 Financial Highlights


(unaudited, amounts in thousands, except per share data)



Three Months Ended


Six Months Ended


March 31,


March 31,


2011

2010


2011

2010







Net revenues

$ 32,327

$ 31,806


$ 60,765

$ 59,040







Costs and expenses:






Cost of sales

11,604

11,819


22,687

21,975

Selling, general and administrative

8,728

8,408


17,859

16,212

Acquisition and reorganization costs

115

143


212

1,660

Costs and expenses

20,447

20,370


40,758

39,847







Operating income

11,880

11,436


20,007

19,193







Other income, net

540

459


1,143

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