GLENWOOD, Ill., Feb. 6, 2012 /PRNewswire/ -- Landauer, Inc. (NYSE: LDR), a recognized leader in personal and environmental radiation monitoring, outsourced medical physics services and high quality medical consumable accessories, today reported financial results for its fiscal 2012 first quarter ended December 31, 2011.
Fiscal 2012 First Quarter Highlights
- Revenue grew 28.9 percent to $36.7 million.
- Gross profit grew 25.4 percent to $21.8 million on increased revenue and business mix.
- Operating income of $7.6 million includes $2.9 million of acquisition ($1.8 million), IT platform enhancement ($0.3 million), and non-cash stock based compensation ($0.8 million) related expenses.
- Net income of $4.9 million, or $0.52 per diluted share, included $1.9 million, or $0.21 per diluted share, of acquisition and IT platform enhancement, and non-cash stock based compensation related expense after giving effect to tax.
- Adjusted EBITDA of $13.5 million, a 20 percent increase over prior year period.
- Adjusted Free Cash Flow of $12.0 million, a 33 percent increase over prior year period.
- Completed the acquisition of IZI Medical Products on November 14, 2011.
"Our first quarter financial results showed positive momentum generated by our strategic initiatives," stated Bill Saxelby, President and CEO of Landauer. "As a result of the continued improvement in our Medical Physics business, increased interest from the military and first responder customers, and contributions from our recently completed acquisition of IZI Medical Products, we are confident in our ability to meet our growth objectives for the year."
Saxelby added, "During the quarter our competitive growth initiatives were strengthened as the US Army placed additional orders for our Radwatch system and we shipped them $2.0 million in InLight equipment for their dosimetry laboratory. In addition, we've also begun to see increased interest in our Radwatch system across the global military and first responder communities. The Medical Physics segment saw positive revenue growth over the prior year quarter, with the full benefit of contributions made from acquired businesses in the segment in prior periods, organic growth and results from profitability improvement initiatives being implemented."
"Finally, the acquisition of IZI Medical Products expanded our offering across the radiation safety continuum with a financial profile that mirrors our core dosimetry business and expands our product portfolio into a broader consumables category."
Financial Overview and Business Segment Results
Revenues for the first fiscal quarter of 2012 were $36.7 million, a 28.9 percent increase, which includes $4.3 million of revenue contribution from acquisitions, of which $2.2 million was IZI Medical Products contribution, compared with the $28.4 million reported for the first fiscal quarter of 2011. Revenue in the quarter also benefited from $2.0 million in InLight military market sales, growth in equipment sales and service revenue from International operations of about $1.0 million, and nearly $0.8 million organic growth in our Medical Physics Segment.
The gross margin as a percentage of revenue declined to 59.4 percent from 61.0 percent in the year ago period, primarily due to a shift in the mix of cost of sales particularly the growth in equipment sales in the quarter.
Total operating expenses for the first fiscal quarter of 2012 were $11.2 million, before $1.8 million of non-recurring acquisition expense, $0.3 million of IT platform enhancement related expense, and $0.8 million of non-cash stock based compensation expense, for an operating margin impact of 30.7 percent of total revenue. This compares with the $8.3 million reported for the first fiscal quarter of 2011, before $0.1 million of non-recurring acquisition expense, $0.4 million of IT platform enhancement related expense, and $0.4 million of non-cash stock based compensation expense, for an operating income impact of 29.2 percent of total revenue in the prior year period.
Operating income, before non-recurring acquisition expense, IT platform enhancement related expense, and non-cash stock based compensation expense, for the first fiscal quarter of 2012 was $10.5 million, a 16.0 percent increase compared with operating income on a relative basis of $9.1 million, for the first fiscal quarter of 2011.
Net other income for the first fiscal quarter of 2012 was $0.3 million, a decrease of $0.3 million, or 54.7 percent, from the prior year quarter. A $0.6 million increase in interest expense associated with six-weeks of borrowings to acquire IZI in the first fiscal quarter of 2012 was partially offset by an increase of $0.3 million in the equity in income of joint ventures over the comparable prior year period.
The effective tax rate was 35.0 percent and 31.4 percent for the first fiscal quarter of 2012 and 2011, respectively. The increase in effective tax rate was due primarily to an increase in the blended state tax rate as a result of acquisitions and the expiration of the R&D tax credit as of December 31, 2011. In the prior year, the effective tax rate was lower due to the enactment of the R&D credit for calendar year 2010 in the first fiscal quarter of 2011.
Net income including the costs associated with the acquisitions, IT platform enhancement, and non-cash stock based compensation for the first fiscal quarter ended December 31, 2011 was $4.9 million, a decline of 15.4 percent compared with $5.8 million for the first fiscal quarter of 2011. Excluding these acquisition costs ($1.8 million), IT platform enhancement expenses ($0.3 million), and non-cash stock based compensation expenses ($0.8 million), net income was $6.9 million, as compared to $6.5 million in the prior year period.
The resulting diluted earnings per share for the first fiscal quarter of 2012 were $0.73, excluding $0.21 per diluted share of acquisition expense, IT platform enhancement expense, and non-cash stock based compensation related expense. This compares with $0.69 for the first fiscal quarter of 2011, excluding $0.07 per diluted share of acquisition, IT platform enhancement, and non-cash stock based compensation related expenses.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $ 10.6 million, a 1.8 percent increase compared with $10.4 million in the prior year period. The increase was due primarily to revenue growth, lower product costs based on revenue mix and favorable equity in earnings of joint ventures for the first fiscal quarter of 2012 partially offset by higher selling, general and administrative expenses. Adjusted earnings before interest, taxes, depreciation and amortization, acquisition related expense, IT platform enhancement expense, and non-cash stock based compensation ("Adjusted EBITDA") were $13.5 million, a 19.5 percent increase compared with $11.3 million a year ago. Adjusted Free Cash Flow (Adjusted EBITDA, plus or minus changes in working capital, less capital expenditures) was $12.0 million, a 33 percent increase over the prior year period of $9.0 million due principally to improved EBITDA, and improved working capital offset by increased capital expenditures. A reconciliation of net income to EBITDA and Adjusted EBITDA, and Adjusted Free Cash Flow is included in the attached financial exhibits.
Radiation Monitoring Segment
Radiation Monitoring revenues for the first fiscal quarter of 2012 increased 13.1 percent, or $3.1 million, to $27.0 million. Of the increase, $2.1 million was the result of the Company's ongoing initiatives with the military. Domestic Radiation Monitoring revenues increased 12.4 percent, or $2.1 million, and international Radiation Monitoring revenue increased 14.9 percent, or $1.1 million, driven primarily by organic growth in most regions, including both equipment sales and service revenue.
Radiation Monitoring operating income for the first fiscal quarter of 2012 decreased to $6.3 million, a 26.7 percent decrease from $8.6 million in the prior year period, impacted by a $1.8 million increase in acquisition related expense, primarily related to IZI Medical Products, an increase in lower margin equipment sales both domestically and internationally, and higher selling, general and administrative expense. Selling, general and administrative costs for the first fiscal quarter of 2012 increased 24.6 percent, or $1.9 million, to $9.6 million. The increase was due primarily to a $0.8 million increase in compensation costs, consistent with operating performance expectations and timing of short-term and long-term incentive plans, $0.4 million of increased spending to support international revenue growth, a $0.2 million increase as a result of headcount additions in R&D and marketing, and a $0.2 million increase in research and development activities in connection with the military initiatives.
Radiation Monitoring operating income, exclusive of the impact of acquisition related transaction expenses, IT platform enhancement expense, and non-cash stock based compensation related expense, for the first fiscal quarter of 2012 decreased 2.9 percent, or $0.3 million, to $9.2 million compared with operating income of $9.5 million for fiscal 2011. Corporate expenses for shared functions are recognized in the Radiation Monitoring segment where they have been reported historically. Acquisition and reorganization costs are not allocated to the segments. As the company's business model evolves in complexity, management may determine it necessary to change this reporting practice to reflect any appropriate allocations.
Medical Physics Segment
Medical Physics revenues for the first fiscal quarter of 2012 increased 64.0 percent, or $2.9 million, to $7.4 million on $0.8 million of organic growth and $2.1 million due to the impact of acquired companies. The Medical Physics operating income of $0.9 million, or 12.0 percent of revenue, increased $1.4 million as compared to a loss of $0.5 million, or 10.1 percent of revenue, in the first fiscal quarter of 2011. The improvement in operating income is primarily due to operating efficiencies in the core Medical Physics business and higher episodic equipment commissioning sales leveraging a relatively fixed cost structure, as well as higher volume sales inclusive of acquired companies.
Medical Products Segment
With the acquisition of IZI Medical Products on November 14, 2011, the Company now operates in a third reportable segment. The Medical Products segment provides medical consumable accessories used in radiology, radiation therapy, and image guided surgery procedures. Medical products range from consumables used with MRI, CT, and mammography technologies to highly engineered passive reflective markers used during image guided surgery procedures. Medical Products sales are provided through the Company's IZI Medical Products subsidiary. Revenue for the six weeks of operations from the date of acquisition included in the first fiscal quarter of 2012 was $2.2 million. The Medical Products operating income was $0.4 million or 16.9 percent of revenue for the same period included in the first fiscal quarter of 2012. Given the acquisition of IZI Medical Products was completed during the first quarter of fiscal 2012, there is no direct comparison to the prior year quarter.