Presentation on theme: "LANDAUER, INC. Investor Presentation May 2012"— Presentation transcript:
1LANDAUER, INC. Investor Presentation May 2012 Until superseded, this presentation will be available at the Company website – - in the Investors section.
2Safe Harbor StatementThis presentation may contain forward-looking statements, including statements about the outlook and prospects for Company and industry growth, as well as statements about the Company’s future financial and operating performance. Some of the information shared here 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; introduction and customer acceptance of the InLight technology; the adaptability of optically stimulated luminescence (OSL) technology to new platforms and formats, such as Luxel®+; the costs associated with the company's research and business development efforts; the usefulness of older technologies; 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 risks associated with conducting business internationally; other anticipated financial events; the effects of changing economic and competitive conditions; foreign exchange rates; government regulations; accreditation requirements; 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. You can find more information by reviewing the "Significant Risk Factors" section in the company's Annual Report on Form 10-K for the year ended September 30, 2011, and other reports filed by the company from time to time with the Securities and Exchange Commission.
3The Global Leader in Radiation Science and Services Landauer at a GlanceThe Global Leader in Radiation Science and Services1954 FoundedGlenwood, IL Headquarters550 Employees78,000+ Annual Customers Served1.7 million Annual Individuals Served94%+ Customer Retention Rates$120.5M FY2011 Revenue (FYE September)~90% Recurring Revenue20+ Consecutive Years of Revenue Growth$44.4M FY2011 EBITDA60.6%, 36.9% FY2011 Gross, EBITDA Margins$165M 10-Year Cumulative Dividends Paid
4Investment Highlights Comprehensive Portfolio of Best-in-Class Service Offerings and TechnologyMarket Leading Positions in Attractive SegmentsGlobal, Integrated Platform and InfrastructureLarge, Diverse Client Base Generating Recurring RevenueDeep and Experienced Management TeamCompelling Financial ModelHistory of Strong Cash Flows and Dividend YieldGlobal Leader in Radiation Science & Services
5Landauer Strategy Overview Deliver Upside GrowthOptimize Core2.Competitive Growth3. Strategic ExpansionStrategicPrioritiesValue CreationOptimize the CoreCompetitive GrowthStrategic ExpansionNew Management in 2006New CFO in 1Q’12Restructure: CostIT/ERP system upgradesOSL / InLight – new international market accessNew Channels and GeographiesMilitary, First Responder, International.New Products/Existing/ChannelPatient MonitoringRadiation Safety ContinuumMedical Physics acquisitionsIZI Medical Products AcquisitionLeverage core competencies and footprint to expand market opportunity55
6Therapeutic / Diagnostic Accessories Occupational Monitoring Strategic ExpansionTherapeutic / Diagnostic AccessoriesInformationImaging PhysicsTherapy PhysicsPatient MonitoringOccupational MonitoringConsultingComplementary Adjacent Products / ServicesMedical ProductsExisting Services with Penetration Opportunities*Greater than $1.5 Billion Market OpportunityRadiation MonitoringMedical PhysicsThe Radiation Safety Continuum_____________________(*) Average Revenue per Facility greater than $405K.
7$1.5 BILLION Strategy Overview Through the Lens of 2012 Addressable 2005201020112012AddressableMarketsCenter For Innovation =MilitaryEmergency ResponseRadonForensicsDose ReconstructionRadiation MeasurementsIN EXCESS OF$1.5BILLIONGLOBAL MARKETPOTENTIALOccupational MonitoringRadiation MeasurementsRadiation InstrumentsOccupation MonitoringMedical PhysicsMedical ProductsPatient DoseConsumer RadiationRadiation MarkersRadiation ShieldingImagingPatient DoseTherapyInformation ManagementCommissioningData AnalyticsPeak Demand ServicesOUR ROADS TO GROWTH
9Landauer Business Overview Investor PresentationMay 2012
10Three Reportable Operating Segments Radiation MonitoringComplete radiation dosimetry services, including the manufacture, distribution and collection of various types of radiation detection monitors, and the analysis and reporting of exposure findings.Medical PhysicsLeading nationwide provider of therapeutic and imaging physics services to the medical community; medical physics services to hospitals, free standing imaging centers and radiation therapy centers.Medical ProductsLeading provider, internationally and domestically, of high quality medical consumable accessories used in radiology, radiation therapy, and image guided surgery procedures.
11Occupational Radiation Monitoring Overview Service & Product Offering Overview84% contracted services / 16% equipmentOccupational Radiation MonitoringRadiation exposure measurement and monitoringFull-service technical, analytical and client supportServicing healthcare, energy, national security, and industrial marketsRisk Mitigation for EmployersComprehensive Data ManagementEmergency PreparednessPatient Radiation SafetyInLight® Model 2Luxel+®MicroStar® InLight® ReaderRadWatchRadLight ReaderFiscal 2011 Segment Revenue: $100M
12Military and Emergency Response Market Opportunity Expanding application of next generation technology to pursue global military and first responder radiation monitoring marketsThe U.S. military has now issued orders in excess of $17 million to upgrade the Army’s tactical dosimetry capabilities, and dosimetry laboratorySubstantially completed first article testing and plan to begin Radwatch system shipments in Q3 ’12Currently pursuing two additional orders with the military for approximately $5.5 millionRecognition of global military interest in the Radwatch system - discussions with six additional military organizations outside of the U.S.Developing mutual aid response strategy to synchronize first responders, military radiation monitoring strategies, and the nuclear industryShipped the first FEMA emergency response order in Q1, with additional FEMA shipments in Q2
13Medical Physics Market Size / MixMarket Dynamics / Opportunity($ in millions)$1.0 billion domestic market (largest player in market – by 3x)Approximately 6,000 hospitals perform 37 million nuclear medicine procedures per year (10 million in U.S.)Radiopharmaceutical utilization growing at over 10% per yearHighly fragmented and regional, primarily small competitors – significant consolidation opportunitiesContractual relationship with ~5,000 hospitals for Occupational Radiation Monitoring provides significant cross-selling opportunities for Medical Physics businessTotal U.S. MedicalPhysics Market – $1,000$800$200
14Medical Products Overview Provides high quality medical accessories used in Radiology, Radiation Therapy, and Image Guided Surgery proceduresOver two decades of research and development expertiseProducts increase procedural accuracy while decreasing procedural timeDemonstrates a history of new and innovative product launchesBroad consumable product portfolio used with:MRI, CT, and Mammography technologiesImage Guided Surgery procedures100% Recurring Revenue1,000+ Annual Customers ServedExpected Contribution* projected to be $1.1 million to $1.5 million of net income in fiscal 20121991 FoundedBaltimore, MD Headquarters~30 EmployeesNeed to update to include 2011 statisticsProducts focused on four main categories: Tracking, Reference, Positioning, & ComfortHigh Quality Medical Consumable Accessories* Impact of the November 2011 acquisition of IZI Medical Products projected to be $1.1 million to $1.5 million of net income for the 10 months included in fiscal 2012
15Financial OverviewInvestor Presentation May 2012
16Landauer Financial Overview ($ in millions, FYE 9/30)RevenueApproximately 90% of revenue derived from subscription and is recurring in natureRadiation Monitoring business growing organically in the 3% to 5% range going forwardContract with U.S. military to replace its antiquated radiation monitoring system provides opportunities to expand to other global military and first responder marketsStrategic expansion contributing to long term growth prospects.($ in millions, FYE 9/30)EBITDAStrong history of EBITDA to support dividend return to shareholders, reinvestment in the core business and capital required to support strategic expansion.27% growth in revenue and 12% growth in EBITDA expected in FY2012 reflecting execution of business strategy.FY2012 EBITDA adjusted for non-recurring system start up costs is estimated to be between $53 and $57million.* Midpoint of guidance
17Fiscal 2012 Second Quarter Highlights Revenue grew 21 percent to $39.1 millionGross profit grew 11 percent to $23.1 million on increased revenue and improved business mixThe US military continued to expand relationship with Landauer, generating international military interestMedical Products segment contributed $4.0 million in Q2Operating income of $10.1 million, includes $1.3 million expense related to:Acquisition related expense, $0.3 millionIT Platform Enhancement, $0.3 millionNon-cash stock based compensation expense, $0.6 millionGAAP Net income of $7.1 million, or $0.75 per diluted share, included:$0.10 of non-recurring and non-cash charges, after giving effect to taxDividend paid of $0.55 per share for the second fiscal quarter of fiscal 2012Providing an annual dividend rate of $2.20Paid on April 3, 2012Q2 Adjusted EBITDA of $14.9 million and YTD Adjusted Free Cash Flow of $21.8 million1717
18Historical GAAP Financial Performance Revenue, Net Income & Cash Flow from Operations ($ in Millions)*Note: Fiscal 2009 non-GAAP Net Income excludes $1.8M after-tax impact of charges1818
19Competitive Dividend Policy Competitive Average Dividend Yield1919
20Current Dividend Policy and Outlook Board of Directors declared a regular quarterly cash dividend of $0.55 per share for each of the first and second quarters of fiscal 2012This represents an annual rate of $2.20 per share, consistent with fiscal 2011 levelsThe First Quarter dividend was paid on January 4, 2012 to shareholders of record on December 9, 2011The Second Quarter dividend was declared on February 28, 2012 and will be paid on April 3, 2012, to shareholders of record on March 9, 2012.Fiscal 2012 OutlookExpected Revenue $150 to $157 million, which includes 10 months of contributions from the recent IZI Medical Products acquisitionAdjusted EBITDA of $53 to $57 millionNet Income of $21 to $23 million, including non recurring charges reflected aboveThe accretive impact of the November 2011 acquisition of IZI Medical Products projected to be $1.1 million to $1.5 million of net income for the 10 months included in fiscal 20122020
23Long Track Record of Growth and Innovation Landauer is foundedTech/Ops Landauer changes name to Landauer, Inc.Becomes the first U.S. company certified by Canada’s Atomic Energy CommissionIntroduces InLight® dosimetry systemSigns contract with National Dosimetry Services of Health CanadaCompletes 2 tuck-in Occupational Radiation Monitoring acquisitionsDevelops new technology specifically for the U.S. military and first responder marketsAcquires Upstate Medical Physics195419681991199219951998200320062008200920102011Introduces Luxel, first OSL dosimeter for broad market useCompletes 3 tuck-in Medical Physics acquisitionsLandauer merges with Tech/Ops, Inc.An office is opened in the United KingdomAcquires OSL crystalmanufacturing facilityHired new management teamSigns first long- term military contract ($12M)Acquires Global Physics SolutionsAcquires IZI Medical Products($ in millions)20+ Years of Consistent Revenue Growth_____________________(1) Indicates mid-point of FY2012 guidance
24Radiation Safety Continuum Occupational Radiation MonitoringMedical PhysicsIZI Medical Products“Radiation Dose to Workers”Market leader in radiation dosimetry services and equipmentFull range of products and services utilizing proprietary technology continually evolving over 50 yearsUtilize proprietary OSL dosimetry technology for determining radiation exposureCritical services and products applicable to multiple industries and new emerging opportunities“Radiation Dose to Patients”Leading provider of clinical physics support to monitor radiation delivered by imaging equipmentOffers full scope of medical physics services to hospitals and oncology centersThought leadership and unmatched medical physics expertise“Radiation Dose Accuracy”Provides high quality medical accessories used in Radiology, Radiation Therapy, and Image Guided Surgery proceduresDemonstrates a history of new and innovative product launchesBroad product portfolioOver two decades of research and development expertiseProducts increase procedural accuracy while decreasing procedural timeAppendixTo Protect and Improve Health Globally Through our Leadership in Radiation Science and Services24
25Radiation Monitoring Segment Overview Competitive DifferentiatorsRecent DevelopmentsProprietary OSL (Optically Stimulated Luminescence) and InLight® technologyImmediate notification of radiation overexposureComplete historical records for individuals monitoredOnline data and account management toolsComprehensive radiation exposure reporting optionsProductivity leader with advanced automation and IP infrastructureInnovation and new technology expanding addressable market to include Global military & first responders opportunityProvider of choice in newly developed marketImplementing consolidated front-end system to re-engineer legacy order-to- cash systems complete with state-of-the- art web-enabled capabilitiesCapital outlay largely completeImplemented state of the art facility in Japan with JV partners in April 2010Awarded contracts ~17 nuclear power plant facilities, increasing market share above 52%Appendix
27Occupational Radiation Monitoring Market Size / MixMarket Dynamics / Opportunity($ in millions)Annual growth rates of 3% to 5% (international growing faster)Heightened awareness and concern for worker safety and more workers in contact with radiation driving increased demandFurther expansion of addressable market into nuclear, military, first responder, and medical patient monitoringTwo players of scale include Landauer and Mirion – fragmented landscape with further opportunities for consolidationTotal Occupational Radiation Monitoring Market – $600$235$365AppendixOutsourced Occupational Radiation Monitoring Market – $365$45$210$25$60(1)_____________________(1) Includes $100 million of U.S. military and first responder applications.
28Medical Physics Segment Overview Service Offering OverviewFull-service, national medical physics practice groupTherapy physicsDiagnostic physicsEquipment commissioning servicesAccreditation support~ 90% of revenue is recurringProvides full scope medical physics services to:HospitalsFree standing imaging and radiation oncology centers: Midwest, New York, Connecticut, Texas, North & South Carolina, and FloridaUniquely positioned to leverage the emerging C-Suite visibility trendsMade upfront investments in geography and in people who will add credibility in future potential partnershipsAppendixFiscal 2011 Segment Revenue: $21M
29$1.0 billion addressable U.S. market opportunity Medical Physics Growth Characteristics$1.0 billion addressable U.S. market opportunityDemand DriversSupply FactorsStimulated MarketGrowthNew accreditation requirements for imaging reimbursementMedicare and private payersAnnual calibration and testingGrowth in equipment placementDiagnostic imagingLinear acceleratorsIncreasing physicist oversight of radiation departmentsTechnological improvements and complexities in imaging modalitiesDemographic fundamentalsAging populationGrowth in cancer casesIncreased utilization of radiopharmaceuticalsIncreasing use of Intensity-Modulated Radiation Therapy (IMRT)Current:Overall market equilibrium for physicistsUnemployment rate <2%Continued focus on therapeutic specializationHigher payImproved work-life balanceAging of existing pool of physicistsSupply tighteningRegionallyCaliber of physicistFuture:Increasing need for physicist certification / licensureReduction in qualified educational programsAcross the boardTrend toward outsourcingHospital and clinic cost-savingLonger-term contractsReduction in turnoverElimination of hiring / temps / training / etcHigher quality physicistBalance need for less than FTEConsistency / quality of serviceNot every physicist created equalRevenue optimization by hospitals and clinics+=Appendix2929
30Medical Physics Segment Overview Competitive DifferentiatorsRecent DevelopmentsLargest company in the sector with broadest reach and widest array of service capabilitiesContinuing to expand national footprintUnmatched network of board-certified and board-eligible medical physicistsBlue chip client base100+ ACR accreditations across multiple modalitiesOver 150 linear accelerator commissionings worldwideStrong visibility/credibility with thought- leading organizations help drive national platformCompleted 3 additional bolt-on acquisitions LTM, totaling ~$7.0 million in consideration in fiscal year 2011Added imaging practices in St. Louis, South Carolina, and North CarolinaThe businesses in the Carolinas are highly regarded in the region and they bring several unique competencies and service lines that we intend to leverage across our growing national footprint.Appendix
31Medical Physics – Market Overview TherapeuticDiagnosticNuclear MedicalArea of ExpertiseRadiation TreatmentRadiology/ImagingNuclear MedicineOverview of Responsibilities & Services OfferedSelection, acceptance testing commissioning, calibration, and annual surveys of linear accelerators (linacs), simulators, and treatment planning softwareRadio therapy treatment planningQA of patient treatmentShielding designJCAHO, ACR, NCR, State, and IAC AccreditationSelection, acceptance testing, commissioning, calibration, and annual surveys for X-ray, CT, MRI, Ultrasound, and Mammography equipmentShielding design and verificationQA reviewCollimator assessmentACR, IAC accreditation supportSelection, commissioning, calibration, and Annual Surveys of PET, SPECT, and Gamma CamerasQuarterly auditsSealed leak testWipe testsRadioactive materials licensingQA programRecord and image reviewLinearity analysisSite of ServiceHospital-based radiation departments; free-standing cancer treatment centersHospitals; free-standing imaging centers; physicians’ officesHospital-based nuclear medicine departments; free-standing imaging centers; outpatient nuclear cardiology centers, nuclear pharmaciesModalitiesExternal beam therapy: IMRT, IGRT, HDR, GammaKnife, Stereotactic RadiosurgeryBrachytherapyX-Ray, CT, MRI, PET, nuclear medicine, ultrasoundPET, SPECT, gamma camerasCompensatedCPT Codes 77300Medicaid technical component (TC)Operational expenseAppendix31
32IZI Acquisition Overview In November 2011, acquired 100% of the outstanding equity of IZI Medical Products for approximately $93 million cash, subject to certain customary purchase price adjustmentsThe acquisition is expected to be $0.12 to $0.16 accretive to EPS (earnings per share) in fiscal 2012The structure of the transaction will provide a tax benefit with a net present value of approximately $ millionFinanced the entire purchase price (and refinanced Landauer’s existing debt) with a new $175 million revolving debt facilityProvides in excess of $40 million for future strategic transactions or working capital needsIZI represents a logical extension of Landauer’s radiation safety continuumSignificant channel leverage in U.S. and international markets for expanded product offeringEnhances complementary product / service offeringsAccretive both financially and operationallyBroadens addressable marketBrings talented team with innovative culture
33Medical Products Overview IZI provides products to the healthcare industry in four general categories:TrackingPositioningReferenceComfortSpherz®Sterile, disposable passive reflective markers aid registration and instrument tracking during image guided surgery proceduresMulti-Modality MarkersArtificial reference points used on radiology image to provide clear and accurate reference point on scansIZI Gold Fiducial MarkersDesigned with a proven size and shape perfect for soft tissue volume registrationRobust product pipeline and a successful history of leveraging established product channels to quickly gain market penetrationSpherz®Multi-Modality MarkersStays in main deckFiducial MarkersOther Markers
34IZI – Broad and Diverse Customer Base IZI’s customer base includes buyers at several stages along the supply chain including distributors, manufacturers of image guided navigation equipment, and product end usersMedtronicStrykerIntegra RadionicsTargets community hospitals, radiation oncology clinics, mammography clinics, and imaging centersSells direct to over 1,000 domestic hospital clinics and to over 1,600 distinct medical departments80% of total revenue is to hospital end usersUtilize distributors for sales in 25 international countriesInternational sales are only 3% of sales in 2010, but underestimate the use of IZI’s products internationally as domestic OEM’s resell IZI’s private label products directly overseasInternational market presents strong growth potential going forward
36LDR – Filling Urgent Need for Medical Physics Residency Programs
37The GPS Commissioning Team – A Medical Physics Offering
3838 38 Revenue grew 28.9 percent to $36.7 million Gross profit grew 25.4 percent to $21.8 million on increased revenue and mixCompleted acquisition of IZI Medical Products on November 14, 2011The military issued additional orders totaling $2.5 million during the first fiscal quarter of 2012Operating income of $7.6 million, includes $2.9 million expense related to:Acquisition related expense, $1.8 millionIT Platform Enhancement, $0.3 millionNon-cash stock based compensation expense, $0.8 millionGAAP Net income of $4.9 million, or $0.52 per diluted share, included:$0.21 per diluted share of non-recurring and non-cash charges, after giving effect to taxDividend paid of $0.55 per diluted share for the first fiscal quarter of 2012Providing an annual dividend rate of $2.20Paid on January 4, 2012Adjusted EBITDA of $13.5 million and Adjusted Free Cash Flow of $12.0 million3838
39Reconciling Tables GAAP to Non-GAAP Three Months EndedMarch 31,20122011Net income attributed to Landauer, Inc.$7,110 7,997 Add back: Interest expense, net771(13) Income taxes3,1044,294 Depreciation and amortization2,6741,806Earnings before interest, taxes, depreciation and amortization (EBITDA)13,65914,084Adjustments:Non-cash stock-based compensation expenses624518IT platform enhancements expenses306232Acquisition and reorganization costs312115Sub-total adjustments1,242865Adjusted earnings before interest, taxes, depreciation and amortization(Adjusted EBITDA)14,90114,949Six Months EndedMarch 31,20122011Adjusted EBITDA$28,413 26,250 Change in working capital745 (1,021)Capital expenditures(7,358)(5,653)Adjusted Free Cash Flow21,800 19,576
40LANDAUER, INC. Questions? Until superseded, this presentation will be available at the Company website – - in the Investors section.