CMD Cantel Medical Corp

EPS - $0.24 vs. $0.24 for Quarter - $0.47 vs. $0.44 for Six Months CANTEL MEDICAL CORP. (NYSE:CMN) reported net income of $3,929,000, or $0.24 per diluted share, on a 24% increase in sales to $61,624,000 for its second quarter ended January 31, 2006. This compares with net income of $3,875,000, or $0.24 per diluted share, on sales of $49,536,000 for the quarter ended January 31, 2005. For the six months ended January 31, 2006, the Company reported a 10% increase in net income to $7,675,000, or $0.47 per diluted share, on a 28% increase in sales to $121,857,000. This compares with net income of $6,982,000, or $0.44 per diluted share, on sales of $94,878,000 for the six months ended January 31, 2005. The increases in net sales were principally due to Crosstex, which was acquired on August 1, 2005. The results for the quarter were impacted by expenses of $343,000, net of tax, or $0.02 per diluted share, including one-time wind down costs of $136,000 related to the non- renewal of the Carsen distribution of Olympus products in Canada at July 31, 2006 (such wind down costs will continue throughout fiscal 2006) and $207,000 of stock-based compensation. Although not included in the 2005 quarter, stock-based compensation would have been $639,000, net of tax, or $0.04 per diluted share. After adjusting for one-time wind down expenses related to Carsen in fiscal 2006 and stock-based compensation expense in fiscal 2005, earnings per diluted share would have been $0.25 vs. $0.20 for the quarter ended January 31, 2006 and January 31, 2005, respectively. The results for the six months were impacted by expenses of $1,470,000, net of tax, or $0.09 per diluted share, including one-time wind down costs of $268,000 related to the non-renewal of the Carsen distribution of Olympus products in Canada at July 31, 2006 (such wind down costs will continue throughout fiscal 2006), $683,000 of expenses related to the acquisition of Crosstex in August 2005 and $519,000 of stock-based compensation. Although not included in the 2005 period, stock-based compensation would have been $1,099,000, net of tax, or $0.07 per diluted share. After adjusting for one-time wind down expenses related to Carsen in fiscal 2006, expenses related to the acquisition of Crosstex in fiscal 2006, and stock-based compensation expense in fiscal 2005, earnings per diluted share would have been $0.53 vs. $0.37 for the six month periods ended January 31, 2006 and 2005, respectively. The Company further reported that its balance sheet at January 31, 2006 included current assets of $94,765,000, including cash of $19,722,000, a current ratio of 3.1:1, a ratio of funded debt to equity of .48:1, net debt of $41,778,000 and stockholders' equity of $129,030,000. The Company reported that its cash flow from operations was $8,706,000 for the six months ended January 31, 2006 compared with $7,997,000 for the six months ended January 31, 2005. On a diluted per share basis, such cash flow from operations was $0.53 and $0.50 for the six months ended January 31, 2006 and 2005, respectively. The Company further reported that its cash flow generated by net income, after adjusting for non-cash charges related to depreciation and amortization and stock-based compensation expense, was $14,130,000 for the six months ended January 31, 2006 compared with $9,560,000 for the six months ended January 31, 2005, or $0.86 and $0.60 per diluted share, respectively. Mr. James P. Reilly, President and Chief Executive Officer of Cantel, commented, "We have been very pleased with the sizeable addition of Crosstex to the Cantel family. We continue to be impressed with the management team, the positioning of the company, and the overall encouraging performance of the business. Based upon the overall results for the first six months, we remain positive about the outlook for the balance of fiscal 2006." Reilly added, "However, we still must meet the challenges ahead, including the non-renewal of the Carsen distribution of Olympus products in Canada at July 31, 2006 and the continuing effects of the consolidation in the dialysis industry. To meet these challenges, we will continue to concentrate on the growth, both organically and by acquisition, of our existing water purification and filtration, dental, endoscope reprocessing and specialty packaging businesses, as well as aggressively seeking additional acquisitions of companies specializing in infection prevention and control products and services. Given our consistently improving and healthy balance sheet, and our concentrated efforts in acquisitions, we are well positioned to execute against this plan." Cantel Medical Corp. is a leading provider of infection prevention and control products in the healthcare market. Our products include specialized medical device reprocessing systems for renal dialysis and endoscopy, dialysate concentrates and other dialysis supplies, disposable infection control products primarily for the dental industry, endoscopy and surgical products, water purification equipment, sterilants, disinfectants and cleaners, hollow fiber membrane filtration and separation products for medical and non-medical applications, and specialty packaging for infectious and biological specimens. The Company also sells scientific instrumentation products, provides technical maintenance for its products and offers compliance training services for the transport of infectious and biological specimens. The Company will hold a conference call to discuss the results for the second quarter ended January 31, 2006 on Thursday, March 9, 2006 at 11:00 AM Eastern time. To participate in the conference call, dial 1-877-407-8035 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 9 at 2:00 PM through midnight on March 10, by dialing 1-877-660-6853 and using passcode #286 and conference ID #195515. The call will be simultaneously broadcast live over the Internet on vcall.com at http://www.vcall.com/IC/CEPage.asp?ID=102256. A replay of the webcast will be available on Vcall for 30 days. For further information, visit the Cantel Web site at www.cantelmedical.com. This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, including, without limitation, the risks detailed in the Company's filings and reports with the Securities and Exchange Commission. Such statements are only predictions, and actual events or results may differ materially from those projected. -0- *T CANTEL MEDICAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three Months Ended Six Months Ended January 31, January 31, ----------------- ------------------ 2006 2005 2006 2005 -------- -------- --------- -------- Net sales $61,624 $49,536 $121,857 $94,878 Cost of sales 38,760 30,715 75,846 58,842 -------- -------- --------- -------- Gross profit 22,864 18,821 46,011 36,036 Operating expenses: Selling 6,094 5,814 12,511 11,222 General and administrative 8,113 5,367 16,224 10,817 Research and development 1,415 1,022 2,635 2,006 -------- -------- --------- -------- Total operating expenses 15,622 12,203 31,370 24,045 -------- -------- --------- -------- Income before interest and income taxes 7,242 6,618 14,641 11,991 Interest expense - net 949 313 2,001 664 -------- -------- --------- -------- Income before income taxes 6,293 6,305 12,640 11,327 Income taxes 2,364 2,430 4,965 4,345 -------- -------- --------- -------- Net income $3,929 $3,875 $7,675 $6,982 ======== ======== ========= ======== Earnings per common share - diluted $0.24 $0.24 $0.47 $0.44 ======== ======== ========= ======== Weighted average shares - diluted 16,370 16,182 16,411 16,044 CANTEL MEDICAL CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) January 31, July 31, 2006 2005 ----------- --------- Assets Current assets $94,765 $93,666 Property and equipment, net 35,550 22,661 Intangible assets 44,956 13,317 Goodwill 67,912 33,343 Other assets 2,003 1,353 ----------- --------- $245,186 $164,340 =========== ========= Liabilities and stockholders' equity Current portion of long-term debt $3,000 $15,750 Other current liabilities 28,042 26,901 Long-term debt 58,500 - Other long-term liabilities 26,614 13,063 Stockholders' equity 129,030 108,626 ----------- --------- $245,186 $164,340 =========== ========= *T