Landauer Incorporated, F1Q09 (Qtr End 12/31/08) Earnings Call Transcript

Landauer Incorporated (LDR)

F1Q09 (Qtr End 12/31/08) Earnings Call

February 03, 2009, 2:00 pm ET

Executives

Jonathon Singer - CFO, SVP, Treasurer and Secretary

Bill Saxelby - President and CEO

Craig Yoder - SVP, Marketing and Technology

Analysts

Stephen O'Neil - Hilliard Lyons

Greg Halter - Great Lakes Review

Tom Lamb - Weybosset Research

Bob Mitchell - Constarta

Presentation

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Landauer, Incorporated First Quarter Earnings Conference Call. At this time all participants are in a listen-only mode, later we'll have a question-and-answer session and instructions will be giving at that time. (Operator Instructions). As a reminder this call is being recorded today Tuesday February 3, 2009.

I would now like to turn the conference over to Jonathon Singer, Chief Financial Officer for Landauer Incorporated. Please go ahead.

Jonathon Singer

Thank you, operator. Good afternoon. I am Jon Singer, the Chief Financial Officer for Landauer. On behalf of the company, I'm pleased to welcome everyone to the first fiscal quarter 2009 conference call.

With us today on the line we have Bill Saxelby, President and Chief Executive Officer, Craig Yoder, Senior Vice President, Marketing and Technology, and Dick Bailey, Senior Vice President of Operations, and Gerry Bilek, Vice President and Controller.

By now you should have all received the copy of the press release. If not, please contact Rebecca Warmes at 708-441-8311 and she will send one to you immediately. Alternatively, you can visit the company's website at www.LandauerInc.com under the Investors heading.

This conference call will follow a standard format, with a review of the results followed by a Q&A session.

Before I turn the call over to Bill, I need to remind you that certain statements made in the press release and on this conference call that are not historical may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Landauer believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, they can give no assurance that its expectations will be obtained. Please refer to the complete Safe Harbor statement within the press release.

Additional information may be obtained by reviewing the significant risk factor section in the company's annual report on Form 10-K for the year ended September 30, 2008 and other reports filed by the company from time-to-time with the SEC.

Additionally, we wanted to let people know that the information and statements made during the call are made as of the date of the call, February 3, 2009. Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements.

Also, the contents of the call are the property of the company and any replay or transmission of the call may be done only with the consent of Landauer.

At this time, I'd like to turn the call over to Bill.

Bill Saxelby

Thank you, Jon. Good afternoon everyone and thank you for joining us for our 2009 first quarter earnings call.

I am pleased to have the opportunity to discuss our first quarter which was a success. Revenues for the quarter were $22.4 million which was a 3% increase over the prior year period.

Our revenues translated to strong profitability as our net income grew to $6.1 million which was up 16% from what we had earned in the year ago period. We are pleased with this performance especially given the current economic environment.

Landauer continues to be debt free and end of the quarter with over a $113 million in assets and $34 million in working capital. Our consistent ability to generate positive operating cash flows in our strong balance sheet signify the financial health of the business and gives us the ability to reinvest in our business and pursue growth initiatives. Jon, will provide an overview of the quarterly results in more detail during the financial review portion of the call.

The first quarter established a good start to the 2009 fiscal year and we continued to reach important milestones for the company. Landauer remains committed to strategic growth in delivering value to its shareholders. The results we reported for this recent quarter reflects this commitment and the consistent execution on our three strategic growth initiatives which are optimizing the core business, driving competitive growth and pursuing strategic expansion.

One of our ongoing priorities relative to our first strategic growth initiatives optimizing the core business has been to invest internally to drive improvements in productivity and strengthen our infrastructure. We continue to make progress towards the completion of our systems initiative but the implementation is talking longer than expected.

We continue to manage and monitor all components of this initiative which will likely result in some additional capital and expense spending requirements.

Our most important priority continues to be to ensure that the transition to this new system delivers the highest quality and optimal product from an operations perspective, but most importantly have this transition be seamless to our customers.

We expect this and other internal initiatives to continue to support our long term growth and continued strong return on invested capital. We are also exploring changes that we feel will improve our capital structure and our benefits policies.

We are evaluating alternative retirement programs that would shift benefits till we define contribution model from a defined benefits model. This will modernize our program, reduce our cost structure and continue to ensure our highly skilled work force is treated fairly and compensated appropriately. We expect to have more detail on this initiative in the coming months and we will update you accordingly.

Our second strategic priority driving competitive growth needs continuing to invest in R&D and sales and marketing to build momentum in our targeted growth markets. Within our domestic portfolio, we continue to focus on core occupational monitoring services, while expanding our served markets through a focus on nuclear power, the military, and patient monitoring for therapeutic and diagnostic applications.

We introduced a number of new products last year that will position us for a continued success in 2009 as these products gain traction.

Expanding applications for our best-in-class OSL technology and the InLight family of products continues to be a key in driving competitive growth. For example last year we introduced a new InLight Albedo neutron product offering that was well received by certain domestic nuclear power customers.

In this first quarter of 2009, we are in active discussions with several potential International nuclear power customers who have Albedo neutron requirements that we could not address until this product was introduced.

We closed the single largest order in Landauer's history last year when we signed a $2 million agreement to provide our InLight products to the National Dosimetry Services of Health Canada.

In this quarter, we continued to deliver products to the client under that agreement. We anticipate this order to be completed within the next six months and hope to be able to expand our relationship with Health Canada based on this initial success.

The agreement with Health Canada reflects the scalability of the InLight family of products to support the needs of the National Laboratory and the capacity of Landauer to execute an order of this size.

The other benefit of the InLight family of products is that it enables us to bring next generation Dosimetry technology anywhere in the world. The most visible example during the first quarter 2009 was the continued success in growth of our new joint venture with the leading provider of Dosimetry services in Mexico.

ALSA our Mexican venture in which Landauer owns 56.25% will provide a positive revenue increase this year. This has been evident in the early performance of the venture as we have seen double digit growth in participants and geographic expansion of the service in Mexico and into other Central American countries via the ALSA platform.

Despite nearly 26% depreciation in the pace of this past quarter we've realized approximately $200,000 in revenue growth in this part of the world due to our partnership with Mexico.

With our new partnership in Mexico and a long standing venture on Brazil we now have excellent coverage in Central and South America and platforms for further growth in these regions. We also expect to see continued growth in our current JVs in Asia and Australia.

Our success in expanding and partnering around the globe will continue as we look for new opportunities to bring our best in class technologies to new markets. We have had initial success addressing the needs of the medical community to better understand the impact of increased utilization of radiation in medical procedures on patient safety as evidenced by the placement of our InLight microStar technology into the medical market for diagnostic and therapeutic applications.

We continue to work with our partners in the military and homeland security to explore robust and cost-effective radiation monitoring solutions for fuel deployment.

In the military there are needs for occupational monitoring of military workers, tactical monitoring of troops in the field in military applications. We believe that the InLight family of products offers a superior alternative for the military to support the full scope of their radiation monitoring requirements.

In addition to the significant growth opportunities we see for our current product offering we are continually valuating strategic expansion opportunities, our third strategic priority.

We feel that our core technologies and competencies, such as patient patient dose monitoring, chain of custody analysis, and high-volume testing, can be leveraged across many peripheral markets. Based upon available opportunities, we continue to evaluate whether we want to supplement organic growth with strategic acquisitions.

Recent global trends and current market opportunities present us with attractive growth prospects in areas where we can leverage our business offerings in the foreseeable future. Regulatory standardization in developing countries relating to employee safety and the desire for state-of-the-art dosimetry technology speaks to the need for our products and has helped increase our international InLight sales. As the leading provider of monitoring services, we are poised to increase penetration of this growing demographic.

Our solid performance during this quarter continues to highlight the sustainability of our product offering as well as the continued global awareness of the risks of radiation exposure.

In conclusion, we are pleased with the success we have achieved this quarter and believe that the market opportunities that currently exist will continue to present us with attractive prospects to grow and expand our business. These results also demonstrate the balanced approach we take in pursuit of new growth opportunities and we continue to manage resources to ensure progress against all three of our strategic priorities.

Our management of expenses and financial discipline allows for prudent and effective cost structure, in turn providing Landauer with the flexibility to be opportunistic in expanding its best-in-class offerings to other markets.

Ultimately, we believe that the traditional commitment to our shareholders' best interest, the strength of our product offering, and our position as the market leader in global dosimetry services will continue to drive the growth and development of Landauer over the long term. We are excited about our opportunities and we will continue to execute on our strategic initiatives in 2009 and beyond.

With that I'd like to turn the call over to Jon, for a review of our financials.

Jonathon Singer

Thanks Bill. Jumping into the top. Revenues for the first quarter of fiscal 2009, were $22.4 million, a 2.9% increase compared to revenues of $21.8 million for the same quarter in fiscal 2008.

Domestic revenue growth for the first quarter was $886,000 or 5.5%, resulting from gains in the core radiation monitoring business, driven by increased price for certain targeted services, and increases in domestic InLight's equipment revenue.

International revenue declined $257,000 or 4.6%.

Growth in volume in most regions was offset by the impact of the strengthening of the dollar against most foreign currencies, which reduced revenue by approximately $700,000 compared with the same quarter in fiscal 2008.

The domestic InLight equipment sales increase was driven primarily by a sale to the Canadian Government agency responsible for occupational monitoring and radiation emergency preparedness for the citizens of Canada, as Bill referenced above.

As you may recall, the company completed a $2 million contract during the quarter ended March 31, 2008, under which $1.9 million of the product was delivered. Approximately, $1.1 million of the product delivered required additional processing by Landauer to be fully utilized for its intended purpose. For the terms of the agreement, the Canadian agency had the option to obtain additional processing of the dosimetry materials from the company, or to exchange the materials for finished product.

Consistent with appropriate accounting, the company recorded $1.1 million of deferred revenue in fiscal 2008 related to the portion of the sale that required additional performance by the company.

During the first quarter of fiscal 2009, the company recognized $556,000 of revenue for InLight equipment delivered under the exchange provisions of the agreement. As of December 31, 2008 $544,000 of the $1.1 million product delivery in fiscal 2008 remains in deferred revenue.

Total cost of sales for the first quarter of 2009 was $7.1 million a decrease of $61,000 or 0.8% compared with cost of sales of $7.2 million for the same quarter in fiscal 2008. Gross margins were 68.2% of revenues for the first quarter fiscal 2009 compared with the 67% reported for the same period in fiscal 2008. The improvement of primarily result of mix in reduction and overhead driven by lower depreciation employee benefit costs.

Selling, general and administrative expense for the first quarter fiscal 2009 was $6.5 million, a decrease of $295,000 or 4.3% compared with expense of $6.8 million for the first quarter fiscal 2008, which included accelerated depreciation charges of $188,000.

The primary factor contributing to the decrease in selling, general and administrative expenses $319,000 reduction due to timing in expense spending to reengineer business processes and the replacement of the company's information technology systems that support in approved business relationship management in the ordinary cash cycle.

Operating income for the quarter ended December 31, 2008 was $8.8 million an increase of 12.6% compared with $7.8 million reported in the same quarter year ago.

Net other income was $135,000 lower than a year ago reflecting lower net interest income. Other income includes equity income of joint ventures of $420,000 and $386,000 in fiscal 2009 and 2008 respectively.

The effective income tax rate for the first quarter of fiscal 2009 and 2008 were 33.6% and 37.3% respectively. The reduction is due primarily to a change in the state tax rate driven by changes in the Illinois state tax laws, as well as the benefit of certain one time credits realized during the quarter which reduced the rate by approximately 50 basis points.

Resulting net income for the quarter ended December 31, 2008 amounted to $6.1 million or $0.66 per diluted share impaired with $5.3 million or $0.57 per diluted share for the same quarter in fiscal 2008.

Landauer used $10.4 million in cash during the quarter primarily, for the payment of dividends, this quarter we had an extra dividend payment versus prior quarter. And additional funding into our pension trust resulted in cash on hand of $23.6 million as of 12/31.

Cash flows provided by operating activities for the first fiscal quarter of 2009 were $1.1 million, a decrease of $7.4 million or 87.4% from fiscal 2008. The decrease is due primarily to $2 million payments of the company's defined benefit pension plan to increase funding. An increase of a prior year employee performance compensation payment in timing related to changes in the other components of working capital.

Investing activities including acquisitions of property plants and equipment and the amounts of $1.3 million and $1.6 million for the three months ended December 31, 2008 and 2007 respectively.

Capital expenditures for the remainder of the fiscal year are expected to be approximately $6 million to $7 million prior to any increase in the cost, in our systems initiative to be discussed below.

Company anticipates that the funds for these capital improvements will be provided from operations.

During the 2007 fiscal year, the company initiated a project to replace its information technology system. The project has extended beyond its initial time line due to increased customization of the software to capture the unique business requirements of the company.

At the end of our fiscal year the project was expected to cost $14.5 million to $16.5 million. We believe the cost will be above this range. Company's financing activities were comprised primarily of payment of cash dividends to shareholders during the first quarter of fiscal 2009. The company funded cash dividends of $9.5 million, or 52.5 cents per share for the first quarter fiscal 2009 and $0.50 for the fourth quarter of fiscal 2008.

Due to the dividend payment date of January 2, 2009, we have fund in an additional dividend payment during the quarter as I mentioned earlier. During the first quarter of fiscal 2008, the company paid cash dividends of $4.4 million, or 47.5 cents per share for the fourth quarter of the prior fiscal year. Such amounts for dividends have been provided from operations.

Transitioning to the outlook for the balance of fiscal 2009, during the past two years the company has been engaged in the valuation of alternatives to it's current retirement program, which will likely result in changes to our defined benefit pension and define contribution plans for employees.

As a result of any changes, the company would recognize a non-recurring curtailment loss in accordance with the guidance of FAS B, number 88 titled Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits.

In addition, the company anticipates, they will provide additional funding to the defined benefit pension plan upon any change. We intent to review these alternatives with our board in an upcoming meeting this week. The company anticipates that any redesign of our retirement program will result in future cost saving while offering market-based retirement benefits for our employees.

In closing, Landauer business plan for fiscal 2009 anticipates currently aggregate revenue growth for the year to be in the range of 3% to 5%. Company anticipates currently or net recurring net income increase in the range of 6% to 8%. This range does not include any potential curtailment loss from changes to the company's retirement program as discussed above in potential additional cost associated with the extension of our systems initiative.

With that we will now open the call for questions.

Question-and-Answer Session

Thank you. (Operator Instructions). Our first question comes from the line of Steve O'Neil from Hilliard Lyons. Please go ahead.

Stephen O'Neil - Hilliard Lyons

Good afternoon.

Bill Saxelby

Hey, Steve.

Stephen O'Neil - Hilliard Lyons

Just want to make sure I did this correctly. If I take out the recognized revenue from Health Canada, which I am assuming is in the domestic business that leads about a 2% increase for domestic operations. I want to see if does that sound correct and if that's the case can you give me some idea of what your price increases were?

Jonathon Singer

The math sounds accurate. And most of the balance of the growth would be in the core radiation business.

Stephen O'Neil - Hilliard Lyons

Okay, are you able to comment on price increases?

Jonathon Singer

No.

Stephen O'Neil - Hilliard Lyons

Okay. Secondly, can you give me an idea, we mentioned that the currency reduced foreign revenue by $700,000 would I be correct in assuming then the constant currency would have been about a 9% increase in local currencies for those closed operations?

Jonathon Singer

Yeah, we got to run the math Steve, but that seems to be accurate. That seems to be accurate.

Stephen O'Neil - Hilliard Lyons

Was one currency, they said euro for instance, weaker against the dollar than other worldwide currencies, can you comment on some of the currency trends is that for your.

Jonathon Singer

Yeah. The Latin American currencies were the weakest against the dollar, where depending upon where you were in the cycle were anywhere from 25% to 40% down. The euro has the largest impact on our business because of the size of France.

Stephen O'Neil - Hilliard Lyons

Okay, then lastly you mentioned the $319,000 production and timing of spending. And I think you alluded to this, but that may come back into spending later in the year, or we should be looking for that?

Bill Saxelby

Yeah, if you look at any systems project under appropriate accounting, there is activities that are capital based and there is activities that are expense based. And so depending upon where you are in the lifecycle of the project will dictate how you are treating that balance sheet versus income statement.

Stephen O'Neil - Hilliard Lyons

Thanks very much.

Operator

Thank you. And our next question comes from the line of Greg Halter from Great Lakes Review. Please go ahead.

Greg Halter - Great Lakes Review

Yes. Good afternoon.

Bill Saxelby

Hi, Greg

Greg Halter - Great Lakes Review

Hi, I wondered if you could comment on some of the products that you have discussed in the past like the nanoDot and CT Dosimetry?

Bill Saxelby

Well, Craig and I may both take a piece of this, Greg. But I think in general, I think the easiest way to probably describe that as we talked about placements, I think in the last call microStar has been over a hundred and the nanoDot is a reflection of what we do from a microStar sale perspective that number has increased, meaning the microStar fairly significantly on a relative basis were up over a 150 units now place.

And I would say that the performance on the nanoDot and the microStar as we began to explore the therapeutic and diagnostic applications is kind of a, so far so good. I mean there is still lot of uncertainty in the marketplace in terms of exactly to what degree patient monitoring is going to be adopted with the reimbursement related opportunities are for facilities as it relates to that versus IMRT as an example.

So I would say we are still learning, but we are gaining positive traction and thought leaders in the industry continue to show fairly high degree of interest in, both the technology as well as the area of patient monitoring. I don't know if Craig if you would add anything to that.

Craig Yoder

No, Greg. I think what we are finding is that the nanoDot is really pushing on to really uncertain specialized radiation therapy applications. Such as total body radiation, and so that gives us a good cause for thinking that this is going to continue to expand into other areas.

Greg Halter - Great Lakes Review

Okay, and is there anything new or different on the CT?

Craig Yoder

Now the CT, I guess is pretty much is flat right now. I think part of it is also is there an effect from the nanoDot, because it's an equivalent type of measurement that could be made at the facility rather than sending the CT to similar back to Landauer.

Greg Halter - Great Lakes Review

Okay. And relative to your business with the a nuclear power plant in the industry any updates there in terms of what kind of facility growth you are seeing and so forth?

Craig Yoder

Well, we added one, another one beginning this January. New US nuclear power plant, we are currently looking intently at some of the international bids that are coming on particularly in Asia where they are going to do a significant number of new plant construction. Right now our estimate is, we are about 29 plants out of the 65 sites, so growing.

Greg Halter - Great Lakes Review

Okay, definitely growing, and I believe you have been in the process or converting Japan, Mexico, Australia to InLight, is that continuing, or do I have that, correct?

Craig Yoder

Yes, that's correct. Mexico is significantly converted to the InLight platform as of begin this January, probably anywhere about 80%. Our efforts in Japan are going according to plan, but we don't expect them to make the full transition towards end of the year?

Greg Halter - Great Lakes Review

In Japan?

Craig Yoder

In Japan.

Greg Halter - Great Lakes Review

Okay. And Jon, I Know you talked about the cash flow from operations, the pension being about at $2 million payment. But if you had to look at the other two components there, the compensation and the timing if you could put a percentage of that shortfall on those, or dollar figure that would be helpful?

Jonathon Singer

Well, I will tell you they are all timing, when you put those two together, because we pay our bonuses from last year in the first quarter of this year. And so if everything being equal it's all timing over the 12 months.

But in general, it's probably about 60% components of working capital and the balance take out the pension it's about 60% components of working capital, and the balance around the incentive compensation payment.

Greg Halter - Great Lakes Review

Okay. The compensation payments, you are saying you paid the bonuses in '09 that were earned in '08?

Jonathon Singer

Correct.

Greg Halter - Great Lakes Review

But you would normally pay those, I presume in your October, November, December timeframe. But it carried over into the first quarter, is that the correct way to look at it?

Jonathon Singer

Well, again October, November, December is our first quarter.

Greg Halter - Great Lakes Review

Okay, but I mean they were earned through the end of September?

Jonathon Singer

They were earned through September, accrued and then paid in late November. If you look at our proxy, you will also see because of our performance last year. Yes, the bonuses were higher last year than they had been in the previous year. And so, it’s really the increased payment on what was accrued. So, the bonuses were in the result represented on the balance sheet and then the cash flow was in the first quarter and it was just higher than it had been in past periods.

Greg Halter - Great Lakes Review

Okay. And looking at your cash that you have about $23.5 million, where is that located by country? What kind of rate are you earning on that and what is it invested in?

Jonathon Singer

Well, it's probably about 80% domestic, and the businesses tend to generate cash and correlations to their contribution to the business, if that makes sense?

Greg Halter - Great Lakes Review

No, it definitely.

Jonathon Singer

And so, with cash flow positive and has balances in all of the countries in which we operate, we got a fairly conservative investment policy, focused primarily on either commercial paper, government securities, those types of facilities. So, the preponderance of cash domestically is either in commercial paper of our bank or just overnight refocus rates, rates are pretty down. Well, so you are talking about below 1%.

Greg Halter - Great Lakes Review

Okay.

Jonathon Singer

And then internationally, there in similar securities and just depending upon the country you can get a higher rate. But it is not significant to our results.

Greg Halter - Great Lakes Review

Alright. And then looking at the IT system, I know you have mentioned the figure maybe above I think you said 14.5, 15.5, or was that 16.5?

Jonathon Singer

16.5.

Greg Halter - Great Lakes Review

16.5. I know it's higher than expected anticipated or anticipated to be and it was last quarter, I am just wondering if you can provide some more color on what’s going on there and does this have potential to be $25 million cost and extend over the next two or three years?

Jonathon Singer

We are in the process of replacing a 30 old system, that supported business that has a lot of unique characteristics and with just lot of what would be considered to be legacy customization in the project itself is required more customization than originally anticipated. And so we are really focused on getting it done right for the long-term help of the business and building a platform that will support the growth that we anticipate the business can generate.

Greg Halter - Great Lakes Review

Okay. You are not at this point willing to provide estimate on the cost going forward.

Jonathon Singer

No at this stage.

Greg Halter - Great Lakes Review

Okay. And has any of that been implemented yet or is it still on the really development planning stage?

Bill Saxelby

I would make a comment on that, Greg, it’s well beyond the development and planning stages. But the system itself is going to be implemented basically at a point in time not in a serial fashion. So I think the answer to your question is, is it not something that gets rolled out on a piece-by-piece basis if that make sense. And I think the only thing I would add is to Jon’s point about the legacy customization of the system, that requires when we make the final decision to go live that in fact its going to be done in a step fashion. And just the last comment I would make is that that’s the reason for the diligence around the process, because as I have stated on a couple of other calls, we win no points by trying to move more quickly to reach a date or a time line given the fact that we are trying to replace a 30 year old system. We win no points from that perspective if in fact we have a customer problem.

So our overarching issue through this whole process has been, there are points where we probably could have moved a little more quickly in the process and have always defaulted back to the fact that we are going to do this right without impacting customer service and we are going to stay there of course.

Greg Halter - Great Lakes Review

Okay, and on the competitive front I know American capital at least relative to their share prices have been having difficulties. Has that so far translated into any change that you see by $1 million either in their strategic tactics in pricing are going after some of your customers?

Bill Saxelby

I would say that is not Greg. We have not seen anything, if your question is if we have seen anything that would be kind of considered somewhat either irrational or opportunistic. They still continue to be a good competitor and I have commented also on different calls over time that Tom Logan and that organization, meaning Mirion, has, I think, always approached the market in a consistent fashion, we have not seen any changes in that.

Greg Halter - Great Lakes Review

Okay, great. Thank you.

Operator

Thank you. And our next question comes from the line of Tom Lamb from Weybosset Research. Please go ahead.

Tom Lamb - Weybosset Research

Good afternoon everyone.

Jonathon Singer

Good afternoon, Tom. How are you doing?

Tom Lamb - Weybosset Research

Good, thank you. I had a question about the systems initiative but was answered too bad you can't give us a final cost for that and a deployment date but that’s understood. The other question I had was regarding, I was wondering if you can give us a little bit more information regarding the pension changes you will be undertaking and perhaps the cost involved in there. Do you have any more color on that or time line?

Jonathon Singer

The short is no. We have gone through a thorough valuation of alternatives to our current programs. We believe it will result in a change from our current define benefit velocity to a more market based define contribution approach. And we have gone through a number of actuarial evaluations that we were in the process of finalizing the cost. We do believe that any transition of this nature as you are aware results in one time charge. We anticipate reviewing it with the competition committee and the Board and then going from there.

Tom Lamb - Weybosset Research

Okay. And can you give us perhaps any more color on when you think perhaps your next product breakthrough might occur. I don’t mean a breakthrough but one of your next sort of incubating products might start to take off?

Bill Saxelby

Tom, I think I can take that one. It's going to be a disappointing answer to you but I think that the best way, the example that we gave a little bit earlier about the microStar which I don’t necessary consider. It depends on what's your definition of breakthrough as I consider that to be a very product extension that opens up a new market opportunity for us. We have a couple of very interesting opportunities that we are working on right now. But I think to try to either discuss those in a lot of detail or quantify that for you it really wouldn’t be appropriate. As we have kind of walked through the nanoDot and the microStar going from kind of infancy through 150 plus units now on the field. But we will be happy to continue to supply that kind of information as we go forward. But I think suffice it to say, we got some interesting opportunities based on some of the general discussion that I have had in, comments around peripheral markets that we haven’t participated in as fully as we may have in the past, but to go beyond that I think probably isn’t appropriate right now.

Tom Lamb - Weybosset Research

Okay, great.

Bill Saxelby

The one thing I would add though is that, I will use the example of the albedo neutron product with OSL, Craig and his team have done a significant job with that. You heard me mention in my comments that we began the introduction of that in the domestic US market. We actually have several a very interesting nuclear opportunities that we are at least exploring that we now have this capability in our operations outside the US for a company like Landauer that it had previously not really spend a lot of time on new product introductions on a regular basis but had relied fairly heavily on price increases.

I think if you look of the inlay system and products, the microStar the addition of an albedo neutron product all kind of fairly recent within the last couple of year's. I think those are good building block examples of what we are trying to do. And we have some other interesting opportunities, and I think I want to make sure that people understand that we are continuing to be very disciplined and focused about the way we approach those and also from a financial standpoint as well as really understanding the market. But I do want to reference, there have been a couple of very interesting new products, I think, InLight being one, this albedo neutron being another, the patient monitoring applications with the microStar, the nanoDot. So, hopefully people are started to get a sense for movement in that direction and then we will just continue to keep you posted.

Tom Lamb - Weybosset Research

Okay, fair enough. Thank you very much. Keep up the good work.

Bill Saxelby

Thank you.

Operator

Thank you. (Operator Instructions). Our next question comes from the line of Steve O’Neil from Hilliard Lyons. Please go ahead.

Stephen O’Neil - Hilliard Lyons

I am back on currency again, I just wanted to ask, you mentioned that the European operations were your largest, and will have the largest impact in the absolute amount. I guess I am wondering the currencies for Latin and South America, maybe Asia make have been weaker than the euro versus the dollar, but they would tend to be faster growing operations, wouldn’t they?

Jonathon Singer

In general correct.

Stephen O’Neil - Hilliard Lyons

And then you mentioned a $200,000 and let me make sure I understood this correctly. You mentioned $200,000 in revenue growth from Mexico and is that in local currency or would that be translated in dollars?

Jonathon Singer

Those are dollars.

Stephen O’Neil - Hilliard Lyons

And then finally, Jon, I couldn’t recall, but I will ask you to breakout the joint venture and other income for the quarter?

Jonathon Singer

That’s all in the script

Stephen O’Neil - Hilliard Lyons

I may have been writing, I missed it.

Jonathon Singer

It’s my Steve O'Neil provision. It is 420 this year versus 386 last year.

Stephen O’Neil - Hilliard Lyons

For the JV.

Jonathon Singer

Correct

Stephen O’Neil - Hilliard Lyons

Thank you.

Operator

And our next question comes from the line of Bob Mitchell from Constarta. Please go ahead.

Bob Mitchell - Constarta

Good afternoon.

Jonathon Singer

Good afternoon. Hi Bob. How are you doing?

Bob Mitchell - Constarta

Good. And question, Bill you know it's been a while since we have heard the word price increases in terms of implementing them at Landauer and that was a kind of strategic decision on your part a couple of years ago. I was just curious if you could comment on perhaps, you obviously said in the press release that you took selected price increases. If you can just talk about is that a shift in strategy or talk a little bit about that.

Bill Saxelby

I don’t think it's a shift in strategy, Bob, its good question though. I mean we have gone in excess of three plus years without a pricing increase and actually have enabled to, I think, absorb those effectively from a cost infrastructure perspective as kind of evidenced by our margins. But I would say it's a combination of a three year plus timeframe as well as evaluating competitive initiatives in the field, and those were really the primary drivers. I wouldn’t call that a shift in strategy.

You noticed in my comments I didn’t really spend any time talking about a price increase that focused more on the kind of growth opportunities not to be redundant but I just talked about a little bit earlier. Those were clearly the ways we see in our strategic growth happening here for the company, but certainly price is a component and given the fact that we have certainly been raising prices somewhere in the 5% to 10% range for probably a 7 to 10 year period of time prior to me getting here. I think the [equation] from pricing was appreciated by customers and understood and I think they also understood that we have managed that effectively. So, but not a shift in strategy.

Bob Mitchell - Constarta

There is nothing all with the price increase from my perspective. But also Jon on the working capital side, you guys have made significant stride in that over the last year or so and it looks like you could comment may be on the account receivable increasing and anything that be concern about or can you just comment on that?

Jonathon Singer

No, it's nothing to be concerned about, in fact, our DSO domestically are down and actually the quality of our aging is continued to improve. So what you see is a function a couple of things, it's currency obviously impacts that line on the balance sheet. So some of the increases simply the currency impact, that’s go on the wrong way, I am sorry, that's not the right answer.

The other impact that you are seeing is that in a number of our foreign locations that tend to do business in the healthcare sector, they are socialite in nature and so you are just seeing a slowdown, you still have good receivables, you are just seeing the government funding the payment at a slower rate and then we did have a system transition at the end of the period in France where they build everything off a little bit later in their billing cycle. So the receivables tend to be fitting out there at a higher level than it was in a comparable period.

Bob Mitchell - Constarta

Great. Another question if I could, in terms of the Canada the national health business. You shipped if I heard you correctly about 500,000 of that product during the quarter?

Jonathon Singer

Correct.

Bob Mitchell - Constarta

With another 500,000 to go, I mean can you talk a little bit more about that relationship and the opportunity there?

Bill Saxelby

Well, it's a very good relationship and we continue to provide technical support in firming up that relationship with the people in Canada. So, we feel like this is the start of a continuing relationship.

Jonathon Singer

Yes, Bob, there is approximately 110,000 participants right now that are managed in Canada as we have reflected on a couple of these calls. This initial partnering relationship with them was to fill an emergency response requirement that the country had, which is one of the advantages of, and I think is good credibility on our InLight system which allows them to be able to respond in any part of the country that they might need emergency, the ability to be able to read radiation in an emergency environment. To the Craig's point, we hope and we view the opportunity to have a stronger relationship with them, that we hope translates to their overall dosimetry services as time goes on.

Bob Mitchell - Constarta

Okay, thank you. And if I could ask one more question in terms of the economic impact that you have seen on your business, if you could maybe just give us a little bit of better sense of that in terms of was there any particular type of customer that you are seeing being most impacted that kind of thing, or domestic versus international, any commentary on that?

Jonathon Singer

Sure. Well, I think, here a couple of key statistics, Bob, that would be helpful for you and the others listening, is that we provide service to about 1.6 million individuals globally right now, between ourselves domestically here and our subsidiaries. The primary industries obviously are healthcare and energy, and I want to say this the right way, but we are fortunate in that the expenditures for our service tends to be a fairly minor portion of an overall cost budget. And if people are going to continue to be in the business of having radiation and the risk associated with radiation as a part of their business, they obviously need to badge by regulation. Now that differs by country, but we have some advantages, I think number one, in that the total spend in our services, I won’t say it's insignificant but it’s a minor portion of an overall cost budget. And while every customer is important to the success of the company to Landauer the majority of our customers individually are immaterial to our overall gross revenue.

So said directly, we unlike some of my past experiences in Baxter healthcare etcetera where you may have one customer that made up 25% to 30% of your revenue. We don’t have that type of exposure here at Landauer. So that’s not to say that we haven’t seen some changes with businesses our homebuyers business which is [radon] related and real estate market as an example. And I think this also gets maybe to Steve O'Neil’s question earlier, as he was trying to back into what the price increase was. We have seen some deterioration in that business, as I think most people would expect because what’s going on in the real estate market, but that’s also less than 2% of our total revenue it’s a small part of our business.

So, I think in general when you step back we see the affects, we are closely monitoring trends, hospital trends in particular since a large portion of our businesses healthcare oriented. But I would say at this point, we feel fairly confident that we will be able to work through this situation, that doesn't mean we are immune to it, but kind of some of that background I think gives you a sense for the fact that we are not as maybe expose as some companies maybe under this kind of current economic situation.

Operator

Thank you. (Operator Instructions). And gentlemen I am sure we have no further questions at this time. Please continue.

Bill Saxelby

I would like to just thank everyone for taking the time and we look forward to talking to you all again here at the end of our second quarter. Thanks very much.

Operator

And ladies and gentlemen that does concludes conference for today. Thank you for your participation. You may now disconnect.

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