CMD Cantel Medical Corp

CRITICARE SYSTEMS, INC. (AMEX:CMD). Criticare Systems Inc. today announced financial results for the first quarter of fiscal 2006 ended September 30, 2005. The company reported record first quarter revenue of $7,672,313 for the three months ended September 30, 2005, an increase of $2,340,956, or 43.9%, as compared to $5,331,357 for the same quarter in fiscal 2005. The Company's net income was $137,378, or $0.01 per diluted share, for the first quarter of fiscal 2006 as compared to a net loss of ($700,309), or ($0.06) per diluted share, for the same period the previous year. Stock-based employee compensation expense of $40,017 was recognized during the first quarter of fiscal 2006, a modest but new expense as required by SFAS 123(R). Gross margin improved to 38.2% for the first quarter of fiscal 2006, as compared with 35.1% for the first quarter of fiscal 2005. The increased margins in the current period were primarily due to increased manufacturing overhead absorption related to the increased number of units shipped and relatively fixed overhead costs. As expected, gross profit was adversely impacted by one-time manufacturing start-up costs related to the Company's new portable cardiac monitor. The first production run of this family of products is being done at the Company headquarters in Wisconsin, with planned offshore manufacturing beginning in the third quarter of fiscal 2006. All of the significant areas of the Company's business experienced growth during the first quarter of fiscal 2006. Specific increases, as compared to the first quarter of fiscal 2005, were achieved in OEM sales of $831,946, new Acute Care sales of $547,095, increased international sales of $410,182, and increased domestic sales of $294,309. Operating expenses for the three months ending September 30, 2005 increased $272,720 from the same period in fiscal 2005. The primary drivers were increased sales commissions, trade show costs and product development expenses. The Company's total order backlog as of September 30, 2005 was $9,047,699. As of September 30, 2005 the Company's cash balance was $3,589,832 as compared to its September 30, 2004 balance of $2,490,712. The Company remains free of long-term bank debt and has access to a $2,000,000 line of credit. Emil Soika, President and CEO, stated; "We are very pleased with our first quarter results, which reflected the Company's niche market focus through OEM and the new Acute Care sales network. This is the second consecutive quarter for sales of the MRI monitoring line and the first quarter for Acute Care sales. During fiscal 2006, Criticare expects to add new OEM business, introduce an additional sales channel, and continue proprietary new product offerings." Criticare (www.csiusa.com) designs, manufactures, and markets cost-effective patient monitoring systems and noninvasive sensors for a wide range of hospitals and alternate health care environments throughout the world. This press release contains forward-looking statements. Such statements refer to the Company's beliefs and expectations. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those described. Such uncertainties include, but are not limited to, the timely completion of new products, regulatory approvals for new products, the risk of new and better technologies, risks relating to international markets, as well as general conditions and competition in the company's markets. Criticare does not believe its backlog of any date is indicative of its future sales. Other risks are set forth in Criticare's reports and documents filed from time to time with the Securities and Exchange Commission. -0- *T CRITICARE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004 (UNAUDITED) 2006 2005 ------------- ------------- NET SALES $7,672,313 $5,331,357 COST OF GOODS SOLD 4,737,013 3,459,923 ------------- ------------- GROSS PROFIT 2,935,300 1,871,434 OPERATING EXPENSES: Sales and marketing 1,486,832 1,314,487 Research, development and engineering 626,650 541,118 Administrative 764,747 749,904 ------------- ------------- Total 2,878,229 2,605,509 INCOME (LOSS) FROM OPERATIONS 57,071 (734,075) OTHER INCOME (EXPENSE): Interest expense (5,443) (6,661) Interest income 20,256 8,608 Other income 65,494 31,819 ------------- ------------- Total 80,307 33,766 INCOME (LOSS) BEFORE INCOME TAXES 137,378 (700,309) INCOME TAX PROVISION -- -- ------------- ------------- NET INCOME (LOSS) $137,378 $(700,309) ============= ============= NET INCOME (LOSS) PER COMMON SHARE Basic $0.01 $(0.06) Diluted $0.01 $(0.06) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 11,843,923 11,451,465 Diluted 12,192,149 11,451,465 CRITICARE SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2005 AND JUNE 30, 2005 (UNAUDITED) ASSETS September 30, June 30, 2005 2005 ------------- ------------- CURRENT ASSETS: Cash and cash equivalents $3,589,832 $3,680,965 Accounts receivable, less allowance for doubtful accounts of $300,000 and $300,000, respectively 7,710,851 6,847,432 Other receivables 654,404 645,479 Inventories 6,420,233 5,551,093 Prepaid expenses 264,188 255,104 ------------- ------------- Total current assets 18,639,507 16,980,073 Property, plant and equipment - net 2,233,177 2,010,417 License rights and patents - net 68,232 69,983 ------------- ------------- TOTAL ASSETS $20,940,917 $19,060,473 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $4,420,623 $3,033,559 Accrued liabilities: Compensation and commissions 847,226 900,636 Product warranties 422,522 452,000 Obligations under capital lease 64,063 62,739 Other 184,572 191,807 ------------- ------------- Total current liabilities 5,939,006 4,640,741 LONG-TERM LIABILITIES: Obligations under capital lease 185,510 202,031 Other long-term obligations 6,586 8,561 ------------- ------------- Total long-term liabilities 192,096 210,592 TOTAL LIABILITIES 6,131,102 4,851,333 STOCKHOLDERS' EQUITY: Preferred stock - $.04 par value, 500,000 shares authorized no shares issued or outstanding -- -- Common stock - $.04 par value, 15,000,000 shares authorized, 12,120,461 and 11,925,086 shares issued, and 12,009,426 and 11,812,493 outstanding, respectively 484,818 477,003 Additional paid-in capital 25,228,574 24,775,995 Common stock held in treasury (111,035 and 112,593 shares, respectively) (383,931) (386,834) Retained earnings (accumulated deficit) (10,511,534) (10,648,912) Cumulative translation adjustment (8,112) (8,112) ------------- ------------- Total stockholders' equity 14,809,815 14,209,140 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $20,940,917 $19,060,473 ============= ============= *T