LITTLE FALLS, N.J.,
March 8, 2018 /PRNewswire/ -- Cantel Medical Corp. (NYSE:
CMD) today announced financial results for its second quarter ended
January 31, 2018.
Jørgen B. Hansen, President and Chief Executive Officer, stated,
"We are pleased to report record sales and earnings performance
this quarter. Our 15.3% reported sales increase was driven by
organic growth of 10.0%, the impact from acquisitions of 4.2%, and
a favorable impact from foreign currency of 1.1%. We continue to
outperform internationally where sales were up 43.0% overall, while
our US business had a strong quarter with 7.9% growth."
Financial Highlights:
Endoscopy sales grew 23.6%, with
strong organic growth of 13.8%, showing continued performance
across our core product lines. Recurring revenue for this segment
was up 20.9%, and favorable product mix drove margin rate
expansion. Reported sales in Water Purification and Filtration
increased 7.4%, as a strong backlog translated into increased
shipments for the quarter. Healthcare Disposables reported strong
year over year growth of 6.2%, with 5.5% organic, driven by the
strategic branded portfolio which grew by 9.2%.
The Company's balance sheet continues to generate significant
cash flow and EBITDAS. The second quarter ended with cash of
$40.0M and gross debt of $160.0M, while generating adjusted EBITDAS of
$45.9M in the quarter, up 16.2%.
As a result of the federal Tax Cuts and Jobs Act, the Company's
tax rate decreased in the quarter, and the Company had a net
benefit comprised of the favorable one-time benefit related to a
revaluation of our net deferred tax liabilities, partially offset
by the unfavorable impact related to the mandatory transition
tax for deemed repatriation of deferred foreign income. The
Company plans to release updated guidance for fiscal year 2018,
along with the expected full year effective tax rate during the
quarterly earnings call.
Conference Call Information:
The Company will hold a
conference call to discuss the results for its second quarter ended
January 31, 2018 on Thursday, March 8, 2018 at 11:00
a.m. Eastern Standard Time.
To participate in the conference call, dial 1-877-407-8033
(US & Canada) or
1-201-689-8033 (International) approximately 5 to 10 minutes before
the beginning of the call. If you are unable to participate, a
digital replay of the call will be available from Thursday,
March 8, 2018 through midnight on April
8, 2018 by dialing 1-877-481-4010 (US & Canada) or 1-919-882-2331 (International) and
using conference ID #: 26091.
An audio webcast will be available via the Cantel website at
www.cantelmedical.com. A replay of the presentation will be
archived on the Cantel web site for those unable to listen live. In
addition, the Company will provide a supplemental presentation to
complement the conference call. The presentation can be accessed on
Cantel's website in the Investor Relations section under
presentations.
About Cantel Medical:
Cantel Medical is a leading
global company dedicated to delivering innovative infection
prevention products and services for patients, caregivers, and
other healthcare providers which improve outcomes, enhance safety
and help save lives. Our products include specialized medical
device reprocessing systems for endoscopy and renal dialysis,
advanced water purification equipment, sterilants, disinfectants
and cleaners, sterility assurance monitoring products for hospitals
and dental clinics, disposable infection control products primarily
for dental and GI endoscopy markets, dialysate concentrates, hollow
fiber membrane filtration and separation products. Additionally, we
provide technical service for our products.
For further information, visit the Cantel website at
www.cantelmedical.com.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements involve a number of risks and uncertainties,
including, without limitation, the risks detailed in Cantel's
filings and reports with the Securities and Exchange Commission.
Such forward-looking statements are only predictions, and actual
events or results may differ materially from those projected or
anticipated.
CANTEL MEDICAL
CORP.
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
January
31,
|
|
January
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales
|
$
|
213,034
|
|
|
$
|
184,817
|
|
|
$
|
425,800
|
|
|
$
|
372,542
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
111,799
|
|
|
96,340
|
|
|
223,906
|
|
|
194,558
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
101,235
|
|
|
88,477
|
|
|
201,894
|
|
|
177,984
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Selling
|
30,922
|
|
|
26,910
|
|
|
62,522
|
|
|
54,803
|
|
General and
administrative
|
32,188
|
|
|
28,465
|
|
|
64,284
|
|
|
58,468
|
|
Research and
development
|
5,643
|
|
|
4,489
|
|
|
10,972
|
|
|
9,037
|
|
Total operating
expenses
|
68,753
|
|
|
59,864
|
|
|
137,778
|
|
|
122,308
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
32,482
|
|
|
28,613
|
|
|
64,116
|
|
|
55,676
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
1,135
|
|
|
1,126
|
|
|
2,324
|
|
|
2,219
|
|
Other
income
|
—
|
|
|
—
|
|
|
(1,138)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
31,347
|
|
|
27,487
|
|
|
62,930
|
|
|
53,457
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
(1,141)
|
|
|
9,417
|
|
|
7,513
|
|
|
16,587
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
32,488
|
|
|
$
|
18,070
|
|
|
$
|
55,417
|
|
|
$
|
36,870
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - diluted
|
$
|
0.78
|
|
|
$
|
0.43
|
|
|
$
|
1.33
|
|
|
$
|
0.88
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.09
|
|
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
Weighted average
shares - diluted
|
41,634,044
|
|
|
41,560,139
|
|
|
41,610,467
|
|
|
41,517,583
|
|
|
(dollar amounts in
thousands except share and per share data or as otherwise
specified)
|
CANTEL MEDICAL
CORP.
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
January 31,
2018
|
|
July 31,
2017
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
39,977
|
|
|
$
|
36,584
|
|
Accounts receivable,
net
|
112,592
|
|
|
110,656
|
|
Inventories,
net
|
111,392
|
|
|
98,724
|
|
Prepaid expenses and
other current assets
|
15,011
|
|
|
11,407
|
|
Income taxes
receivable
|
4,007
|
|
|
—
|
|
Property and
equipment, net
|
95,677
|
|
|
88,338
|
|
Intangible assets,
net
|
141,424
|
|
|
124,512
|
|
Goodwill
|
358,329
|
|
|
311,445
|
|
Other
assets
|
5,294
|
|
|
4,707
|
|
Total
assets
|
$
|
883,703
|
|
|
$
|
786,373
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
$
|
109,601
|
|
|
$
|
106,779
|
|
Long-term
debt
|
160,000
|
|
|
126,000
|
|
Deferred income
taxes
|
24,143
|
|
|
24,714
|
|
Other long-term
liabilities
|
3,476
|
|
|
4,948
|
|
Stockholders'
equity
|
586,483
|
|
|
523,932
|
|
Total liabilities and
stockholders' equity
|
$
|
883,703
|
|
|
$
|
786,373
|
|
|
(dollar amounts
in thousands except share and per share data or as otherwise
specified)
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Six Months Ended
January 31,
|
|
2018
|
|
2017
|
Cash flows from
operating activities
|
|
|
|
Net income
|
$
|
55,417
|
|
|
$
|
36,870
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
|
8,190
|
|
|
7,148
|
|
Amortization
|
8,412
|
|
|
7,966
|
|
Stock-based
compensation expense
|
4,590
|
|
|
5,038
|
|
Deferred income
taxes
|
(6,453)
|
|
|
821
|
|
Other non-cash items,
net
|
299
|
|
|
621
|
|
Changes in assets and
liabilities, net of effects of business acquisitions
|
(15,784)
|
|
|
(13,463)
|
|
Net cash provided by
operating activities
|
54,671
|
|
|
45,001
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
Capital
expenditures
|
(13,476)
|
|
|
(14,416)
|
|
Acquisition of
businesses, net of cash acquired
|
(64,287)
|
|
|
(58,348)
|
|
Other investing
activities, net
|
—
|
|
|
87
|
|
Net cash used in
investing activities
|
(77,763)
|
|
|
(72,677)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
Borrowings under
revolving credit facility
|
61,300
|
|
|
61,000
|
|
Repayments under
revolving credit facility
|
(27,300)
|
|
|
(28,000)
|
|
Dividends
paid
|
(3,545)
|
|
|
(2,921)
|
|
Purchases of treasury
stock
|
(5,952)
|
|
|
(6,264)
|
|
Net cash provided by
financing activities
|
24,503
|
|
|
23,815
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1,982
|
|
|
(155)
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
3,393
|
|
|
(4,016)
|
|
Cash and cash
equivalents at beginning of period
|
36,584
|
|
|
28,367
|
|
Cash and cash
equivalents at end of period
|
$
|
39,977
|
|
|
$
|
24,351
|
|
|
(dollar amounts
in thousands except share and per share data or as otherwise
specified)
|
SUPPLEMENTARY INFORMATION - RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
In evaluating our operating performance, we supplement the
reporting of our financial information determined under generally
accepted accounting principles in the
United States ("GAAP") with certain non-GAAP financial
measures including (i) non-GAAP net income; (ii) non-GAAP earnings
per diluted share ("EPS"); (iii) earnings before interest, taxes,
depreciation, amortization, loss on disposal of fixed assets, and
stock-based compensation expense ("EBITDAS"); (iv) adjusted
EBITDAS; (v) net debt and (vi) organic sales. These non-GAAP
financial measures are indicators of the Company's performance that
are not required by, or presented in accordance with, GAAP. They
are presented with the intent of providing greater transparency to
financial information used by us in our financial analysis and
operational decision-making. We believe that these non-GAAP
measures provide meaningful information to assist investors,
stockholders and other readers of our consolidated financial
statements in making comparisons to our historical operating
results and analyzing the underlying performance of our results of
operations. These non-GAAP financial measures are not intended to
be, and should not be, considered separately from, or as an
alternative to, the most directly comparable GAAP financial
measures.
To measure earnings performance on a consistent and comparable
basis, we exclude certain items that affect comparability of
operating results and the trend of earnings. These adjustments are
irregular in timing, may not be indicative of our past and future
performance and are therefore excluded to allow investors to better
understand underlying operating trends. The following are examples
of the types of adjustments that are excluded: (i) amortization of
purchased intangible assets; (ii) acquisition-related items; (iii)
business optimization and restructuring-related charges; (iv) net
tax benefits associated with the estimated impact of the
revaluation of our U.S. net deferred tax liabilities as a result of
U.S. tax reform and the unfavorable impact of a repatriation tax;
(v) excess tax benefits applicable to stock compensation and (vi)
other significant items management deems irregular or non-operating
in nature.
Amortization expense of purchased intangible assets is a
non-cash expense related to intangibles that were primarily the
result of business acquisitions. Our history of acquiring
businesses has resulted in significant increases in amortization of
intangible assets that reduce the Company's net income. The removal
of amortization from our overall operating performance helps in
assessing our cash generated from operations including our return
on invested capital, which we believe is an important analysis for
measuring our ability to generate cash and invest in our continued
growth.
Acquisition-related items consist of (i) fair value
adjustments to contingent consideration and other contingent
liabilities resulting from acquisitions, (ii) due diligence,
integration, legal fees and other transaction costs associated with
our acquisition program and (iii) acquisition accounting
charges for the amortization of the initial fair value adjustments
of acquired inventory and deferred revenue. The adjustments of
contingent consideration and other contingent liabilities are
periodic adjustments to record such amounts at fair value at each
balance sheet date. Given the subjective nature of the assumptions
used in the determination of fair value calculations, fair value
adjustments may potentially cause significant earnings volatility
that are not representative of our operating results. Similarly,
due diligence, integration, legal and other acquisition costs
associated with our acquisition program, including acquisition
accounting charges relating to recording acquired inventory and
deferred revenue at fair market value, can be significant and also
adversely impact our effective tax rate as certain costs are often
not tax-deductible. Since these acquisition-related items are
irregular and often mask underlying operating performance, we
exclude these amounts for purposes of calculating these non-GAAP
financial measures to facilitate an evaluation of our current
operating performance and a comparison to past operating
performance.
On December 22, 2017, the U.S.
government enacted wide-ranging tax legislation, the Tax Cuts and
Jobs Act (the "2017 Tax Act"). The 2017 Tax Act significantly
revises U.S. tax law by, among other provisions, (a) lowering the
applicable U.S. federal statutory income tax rate
from 35% to 21%, (b) creating a partial territorial
tax system that includes imposing a mandatory one-time transition
tax on previously deferred foreign earnings, (c) creating
provisions regarding the (1) Global Intangible Low Tax Income, (2)
the Foreign Derived Intangible Income deduction, and (3) the Base
Erosion Anti-Abuse Tax, and (d) eliminating or reducing certain
income tax deductions, such as interest expense, executive
compensation expenses and certain employee expenses. During the
three months ended January 31, 2018, the Company recorded a
one-time net benefit as a provisional estimate of the net
accounting impact of the 2017 Tax Act in accordance with the
Securities and Exchange Commission Staff Accounting Bulletin No.
118. The net benefit is comprised of the following: (i) unfavorable
impact related to the mandatory transition tax for deemed
repatriation of deferred foreign income and (ii) a favorable
benefit related to a revaluation of the Company's deferred tax
assets and liabilities. Since these net favorable tax benefits are
largely unrelated to our results and unrepresentative of our normal
effective tax rate, we excluded its impact on net income and
diluted EPS to arrive at our non-GAAP financial measures.
Excess tax benefits resulting from stock compensation are
recorded as a reduction of income tax expense. The magnitude of the
impact of excess tax benefits generated in the future, which may be
favorable or unfavorable, are dependent upon our future grants of
equity awards, our future share price on the date awards vest in
relation to the fair value of awards on grant date and the exercise
behavior of our stock option holders. Since these tax benefits are
largely unrelated to our results and unrepresentative of our normal
effective tax rate, we excluded their impact on net income and
diluted EPS to arrive at our non-GAAP financial measures. For the
three months ended January 31, 2018
and as a result of the 2017 Tax Act, the Company revised its
estimated annual effective rate to reflect the change in the U.S.
federal statutory rate applicable to stock compensation. The
reduction in the federal rate applicable to the gains and corollary
deferred tax asset resulted in a decrease in the excess tax benefit
reported for the three months ended October
31, 2017.
In fiscal 2016, we announced the retirement plans of our former
Chief Executive Officer and recorded the majority of the costs
associated with his retirement in our consolidated financial
statements. Since these costs are irregular and mask our underlying
operating performance, we made an adjustment to our net income and
diluted EPS to exclude such costs to arrive at our non-GAAP
financial measures.
Three Months Ended January 31, 2018
We made adjustments to net income and diluted EPS to exclude
(i) amortization expense of purchased intangible assets,
(ii) acquisition-related items, (iii) other business
optimization and restructuring-related charges, (iv) net tax
benefits associated with the estimated impact of the revaluation of
our U.S. net deferred tax liabilities as a result of the 2017 Tax
Act and the unfavorable impact of a repatriation tax and (v) excess
tax benefits related to the change in the U.S. federal statutory
rate applicable to stock compensation to arrive at our non-GAAP
financial measures, non-GAAP net income and non-GAAP diluted
EPS.
Three Months Ended January 31, 2017
We made adjustments to net income and diluted EPS to exclude
(i) amortization expense of purchased intangible assets and
(ii) other business optimization and restructuring-related
charges to arrive at our non-GAAP financial measures, non-GAAP net
income and non-GAAP diluted EPS.
The reconciliations of net income and diluted EPS to non-GAAP
net income and non-GAAP diluted EPS were calculated as follows:
|
Three Months Ended
January 31,
|
|
2018
|
|
2017
|
Net income/Diluted
EPS, as reported
|
$
|
32,488
|
|
|
$
|
0.78
|
|
|
$
|
18,070
|
|
|
$
|
0.43
|
|
Intangible
amortization, net of tax(1)
|
3,507
|
|
|
0.08
|
|
|
2,839
|
|
|
0.07
|
|
Acquisition-related
items, net of tax(2)
|
575
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
Restructuring-related
charges, net of tax(3)
|
1,267
|
|
|
0.03
|
|
|
642
|
|
|
0.02
|
|
Excess tax benefit
reduction(4)
|
274
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
Tax legislative
changes(5)
|
(8,398)
|
|
|
(0.20)
|
|
|
—
|
|
|
—
|
|
Non-GAAP net
income/Non-GAAP diluted EPS
|
$
|
29,713
|
|
|
$
|
0.71
|
|
|
$
|
21,551
|
|
|
$
|
0.52
|
|
________________________________________________
(1)
|
Amounts were recorded
in general and administrative expenses.
|
(2)
|
For the three months
ended January 31, 2018, pre-tax acquisition-related items of $540
were recorded in general and administrative expenses.
|
(3)
|
For the three months
ended January 31, 2018, pre-tax restructuring-related items of $642
were recorded in cost of sales and $748 were recorded in general
and administrative expenses. For the three months ended January 31,
2017, pre-tax restructuring-related items of $856 were recorded in
general and administrative expenses.
|
(4)
|
Amounts were recorded
in income taxes and relate to the change in the U.S. federal
statutory rate applicable to stock compensation.
|
(5)
|
Amounts were recorded
in income taxes.
|
|
|
|
|
(dollar amounts in
thousands except share and per share data or as otherwise
specified)
|
Six Months Ended January 31, 2018
We made adjustments to net income and diluted EPS to exclude
(i) amortization expense of purchased intangible assets,
(ii) acquisition-related items, (iii) other business
optimization and restructuring-related charges, (iv) the resolution
of the contingent liability associated with the Jet Prep
acquisition, (v) net tax benefits associated with the estimated
impact of the revaluation of our U.S. net deferred tax liabilities
as a result of the 2017 Tax Act and the unfavorable impact of a
repatriation tax and (vi) excess tax benefits applicable to stock
compensation to arrive at our non-GAAP financial measures, non-GAAP
net income and non-GAAP diluted EPS.
Six Months Ended January 31, 2017
We made adjustments to net income and diluted EPS to exclude
(i) amortization expense of purchased intangible assets,
(ii) acquisition-related items, (iii) other business
optimization and restructuring-related charges, (iv) costs
associated with the retirement of our former Chief Executive
Officer and (v) excess tax benefits applicable to stock
compensation to arrive at our non-GAAP financial measures, non-GAAP
net income and non-GAAP diluted EPS.
The reconciliations of net income and diluted EPS to non-GAAP
net income and non-GAAP diluted EPS were calculated as follows:
|
Six Months Ended
January 31,
|
|
2018
|
|
2017
|
Net income/Diluted
EPS, as reported
|
$
|
55,417
|
|
|
$
|
1.33
|
|
|
$
|
36,870
|
|
|
$
|
0.88
|
|
Intangible
amortization, net of tax(1)
|
6,376
|
|
|
0.15
|
|
|
5,586
|
|
|
0.13
|
|
Acquisition-related
items, net of tax(2)
|
1,656
|
|
|
0.04
|
|
|
768
|
|
|
0.02
|
|
CEO retirement costs,
net of tax(1)
|
—
|
|
|
—
|
|
|
1,249
|
|
|
0.03
|
|
Restructuring-related
charges, net of tax(3)
|
1,853
|
|
|
0.05
|
|
|
642
|
|
|
0.02
|
|
Excess tax
benefit(4)
|
(2,012)
|
|
|
(0.05)
|
|
|
(2,241)
|
|
|
(0.05)
|
|
Resolution of Jet
Prep contingent liability(5)
|
(1,138)
|
|
|
(0.03)
|
|
|
—
|
|
|
—
|
|
Tax legislative
changes(4)
|
(8,398)
|
|
|
(0.20)
|
|
|
—
|
|
|
—
|
|
Non-GAAP net
income/Non-GAAP diluted EPS
|
$
|
53,754
|
|
|
$
|
1.29
|
|
|
$
|
42,874
|
|
|
$
|
1.03
|
|
________________________________________________
(1)
|
Amounts were recorded
in general and administrative expenses.
|
(2)
|
For the six months
ended January 31, 2018, pre-tax acquisition-related items of $893
were recorded in cost of sales and $1,456 were recorded in general
and administrative expenses. For the six months ended January 31,
2017, pre-tax acquisition-related items of $170 were recorded in
cost of sales and $905 were recorded in general and administrative
expenses.
|
(3)
|
For the six months
ended January 31, 2018, pre-tax restructuring-related items of
$1,147 were recorded in cost of sales and $1,191 were recorded in
general and administrative expenses. For the six months ended
January 31, 2017, pre-tax restructuring-related items of $856 were
recorded in general and administrative expenses.
|
(4)
|
Amounts were recorded
in income taxes.
|
(5)
|
Amounts were recorded
in other income.
|
|
|
(dollar amounts in
thousands except share and per share data or as otherwise
specified)
|
Tax Reform
The 2017 Tax Act, among other things, lowers the U.S. federal
corporate income tax rate to 21% from the previous maximum rate of
35%. We are required to recognize the impact of the tax law changes
in the period when the law was enacted, including the
re-measurement of deferred income tax assets and liabilities. We
have recorded the impact in the second quarter based on available
information. Our non-GAAP effective tax rate decreased to
approximately 21% in the quarter. The net benefit is comprised of
the favorable one-time benefit related to a revaluation our net
deferred tax liabilities, partially offset by the unfavorable
impact related to the mandatory transition tax for deemed
repatriation of deferred foreign income. The following table
shows Pro Forma non-GAAP net income and non-GAAP diluted EPS
assuming a 35% U.S. federal income tax rate that applied prior to
the enactment of the 2017 Tax Act.
This table is intended solely to provide comparability to prior
periods and is not intended to be a substitute for net income or
diluted EPS determined in accordance with GAAP using currently
applicable tax rates.
|
Three Months
Ended
|
|
Six Months
Ended
|
|
January
31,
|
|
January
31,
|
(Unaudited)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Income before income
taxes, as reported
|
$
|
31,347
|
|
|
$
|
27,487
|
|
|
$
|
62,930
|
|
|
$
|
53,457
|
|
Non-GAAP
adjustments(1)
|
6,327
|
|
|
4,913
|
|
|
12,026
|
|
|
11,834
|
|
Non-GAAP income
before taxes
|
$
|
37,674
|
|
|
$
|
32,400
|
|
|
$
|
74,956
|
|
|
$
|
65,291
|
|
Pro Forma effective
income tax rate(2)
|
34.4
|
%
|
|
33.5
|
%
|
|
35.0
|
%
|
|
34.4
|
%
|
Pro Forma income tax
provision(2)
|
$
|
12,960
|
|
|
$
|
10,860
|
|
|
26,212
|
|
|
22,427
|
|
Pro Forma non-GAAP
net income
|
$
|
24,714
|
|
|
$
|
21,540
|
|
|
$
|
48,744
|
|
|
$
|
42,864
|
|
Pro Forma non-GAAP
diluted EPS
|
$
|
0.59
|
|
|
$
|
0.52
|
|
|
$
|
1.17
|
|
|
$
|
1.03
|
|
_______________________________________________________________________________
(1)
|
These non-GAAP
adjustments are the pre-tax amounts found in the reconciliations of
net income and diluted EPS to non-GAAP net income and non-GAAP
diluted EPS above.
|
(2)
|
Pro Forma effective
income tax rate assumes a 35% U.S. federal corporate income tax
rate.
|
|
|
(dollar amounts
in thousands except share and per share data or as otherwise
specified)
|
Reconciliation of Net Income to EBITDAS and
Adjusted EBITDAS
We believe EBITDAS is an important valuation measurement for
management and investors given the increasing effect that non-cash
charges, such as stock-based compensation, amortization related to
acquisitions and depreciation of capital equipment have on net
income. In particular, acquisitions have historically resulted in
significant increases in amortization of purchased intangible
assets that reduce net income. Additionally, we regard EBITDAS as a
useful measure of operating performance and cash flow before the
effect of interest expense and is a complement to operating income,
net income and other GAAP financial performance measures.
We define adjusted EBITDAS as EBITDAS excluding the same
non-GAAP adjustments to net income discussed above. We use adjusted
EBITDAS when evaluating operating performance because we believe
the exclusion of such adjustments, of which a significant portion
are non-cash items, is necessary to provide the most accurate
measure of on-going core operating results and to evaluate
comparative results period over period.
The reconciliations of net income to EBITDAS and adjusted
EBITDAS were calculated as follows:
|
Three Months Ended
January 31,
|
|
Six Months Ended
January 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income, as
reported
|
$
|
32,488
|
|
|
$
|
18,070
|
|
|
$
|
55,417
|
|
|
$
|
36,870
|
|
Interest expense,
net
|
1,135
|
|
|
1,126
|
|
|
2,324
|
|
|
2,219
|
|
Income
taxes
|
(1,141)
|
|
|
9,417
|
|
|
7,513
|
|
|
16,587
|
|
Depreciation
|
4,154
|
|
|
3,694
|
|
|
8,190
|
|
|
7,148
|
|
Amortization
|
4,364
|
|
|
4,057
|
|
|
8,412
|
|
|
7,966
|
|
Loss on disposal of
fixed assets
|
265
|
|
|
178
|
|
|
334
|
|
|
402
|
|
Stock-based
compensation expense
|
2,739
|
|
|
2,116
|
|
|
4,590
|
|
|
5,038
|
|
EBITDAS
|
44,004
|
|
|
38,658
|
|
|
86,780
|
|
|
76,230
|
|
Acquisition-related
items
|
540
|
|
|
—
|
|
|
2,349
|
|
|
1,075
|
|
CEO retirement
costs(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,413
|
|
Restructuring related
charges
|
1,390
|
|
|
856
|
|
|
2,338
|
|
|
856
|
|
Resolution of Jet
Prep contingent liability
|
—
|
|
|
—
|
|
|
(1,138)
|
|
|
—
|
|
Adjusted
EBITDAS
|
$
|
45,934
|
|
|
$
|
39,514
|
|
|
$
|
90,329
|
|
|
$
|
79,574
|
|
________________________________________________
(1)
|
For comparative
purposes, we have revised the amounts associated with CEO
retirement costs for the six months ended January 31, 2017 to
exclude stock-based compensation expense which was reported in
"Stock-based compensation expense" above.
|
|
|
(dollar amounts
in thousands except share and per share data or as otherwise
specified)
|
Net Debt
We define net debt as long-term debt less cash and cash
equivalents. Each of the components of net debt appears on our
consolidated balance sheets. We believe that the presentation of
net debt provides useful information to investors because we review
net debt as part of our management of our overall liquidity,
financial flexibility, capital structure and leverage.
|
January 31,
2018
|
|
July 31,
2017
|
Long-term
debt
|
$
|
160,000
|
|
|
$
|
126,000
|
|
Less cash and cash
equivalents
|
(39,977)
|
|
|
(36,584)
|
|
Net debt
|
$
|
120,023
|
|
|
$
|
89,416
|
|
Reconciliation of Net Sales Growth to Organic
Sales Growth
We define organic sales as net sales less (i) the impact of
foreign currency translation and (ii) net sales related to
acquired businesses during the first twelve months of ownership and
(iii) divestitures during the periods being compared. We believe
that reporting organic sales provides useful information to
investors by helping identify underlying growth trends in our
business and facilitating easier comparisons of our revenue
performance with prior periods. We exclude the effect of foreign
currency translation from organic sales because foreign currency
translation is not under management's control, is subject to
volatility and can obscure underlying business trends. We exclude
the effect of acquisitions and divestitures because the nature,
size, and number of acquisitions and divestitures can vary
dramatically from period to period and can obscure underlying
business trends and make comparisons of financial performance
difficult.
For the three months ended January 31, 2018, the
reconciliation of net sales growth to organic sales growth for
total net sales and net sales of our four reportable segments were
calculated as follows:
(Unaudited)
|
|
Net Sales
|
|
Endoscopy
Net Sales
|
|
Water
Purification
and
Filtration
Net Sales
|
|
Healthcare
Disposables
Net Sales
|
|
Dialysis
Net Sales
|
Net sales
growth
|
|
15.3
|
%
|
|
23.6
|
%
|
|
7.4
|
%
|
|
6.2
|
%
|
|
2.5
|
%
|
Impact due to foreign
currency translation
|
|
(1.1)
|
%
|
|
(1.8)
|
%
|
|
(0.5)
|
%
|
|
(0.1)
|
%
|
|
(1.4)
|
%
|
Sales related to
acquisitions
|
|
(4.2)
|
%
|
|
(8.0)
|
%
|
|
0.0
|
%
|
|
(0.6)
|
%
|
|
0.0
|
%
|
Organic sales
growth
|
|
10.0
|
%
|
|
13.8
|
%
|
|
6.9
|
%
|
|
5.5
|
%
|
|
1.1
|
%
|
For the six months ended January 31, 2018, the
reconciliation of net sales growth to organic sales growth for
total net sales and net sales of our four reportable segments were
calculated as follows:
(Unaudited)
|
|
Net Sales
|
|
Endoscopy
Net Sales
|
|
Water
Purification
and
Filtration
Net Sales
|
|
Healthcare
Disposables
Net Sales
|
|
Dialysis
Net Sales
|
Net sales
growth
|
|
14.3
|
%
|
|
21.7
|
%
|
|
7.4
|
%
|
|
6.0
|
%
|
|
6.0
|
%
|
Impact due to foreign
currency translation
|
|
(0.8)
|
%
|
|
(1.2)
|
%
|
|
(0.4)
|
%
|
|
(0.1)
|
%
|
|
(0.7)
|
%
|
Sales related to
acquisitions
|
|
(4.2)
|
%
|
|
(8.3)
|
%
|
|
0.0
|
%
|
|
(0.3)
|
%
|
|
0.0
|
%
|
Organic sales
growth
|
|
9.3
|
%
|
|
12.2
|
%
|
|
7.0
|
%
|
|
5.6
|
%
|
|
5.3
|
%
|
|
(dollar amounts in
thousands except share and per share data or as otherwise
specified)
|
View original
content:http://www.prnewswire.com/news-releases/cantel-medical-reports-record-financial-results-for-its-second-quarter-fiscal-year-2018-300610434.html
SOURCE Cantel Medical Corp.