CANTEL MEDICAL CORP. (NYSE:CMN) -0- *T Sales - $65,358,000 vs.
$50,534,000 - Increase of 29% for Quarter - $187,215,000 vs.
$145,412,000 - Increase of 29% for Nine Months EPS - $0.28 vs.
$0.23 For Quarter - $0.75 vs. $0.67 For Nine Months *T CANTEL
MEDICAL CORP. (NYSE:CMN) reported a 20% increase in net income to
$4,583,000, or $0.28 per diluted share, on a 29% increase in sales
to $65,358,000 for its third quarter ended April 30, 2006. This
compares with net income of $3,809,000, or $0.23 per diluted share,
on sales of $50,534,000 for the quarter ended April 30, 2005. For
the nine months ended April 30, 2006, the Company reported a 14%
increase in net income to $12,258,000, or $0.75 per diluted share,
on a 29% increase in sales to $187,215,000. This compares with net
income of $10,791,000, or $0.67 per diluted share, on sales of
$145,412,000 for the nine months ended April 30, 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 $360,000, net of tax, or $0.02 per diluted
share, including wind down costs of $197,000 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 $163,000 of stock-based compensation.
Although not included in the 2005 quarter, stock-based compensation
would have been $903,000, net of tax, or $0.05 per diluted share.
After adjusting for wind down expenses related to Carsen in fiscal
2006 and stock-based compensation expense in fiscal 2005, earnings
per diluted share would have been $0.29 vs. $0.18 for the quarters
ended April 30, 2006 and April 30, 2005, respectively. The results
for the nine months were impacted by expenses of $1,829,000, net of
tax, or $0.11 per diluted share, including wind down costs of
$464,000 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 $682,000 of
stock-based compensation. Although not included in the 2005 period,
stock-based compensation would have been $2,002,000, net of tax, or
$0.12 per diluted share. After adjusting for 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 $0.82 vs. $0.54 for the nine month periods ended
April 30, 2006 and 2005, respectively. The Company reported that
its cash flow from operations was $16,592,000 for the nine months
ended April 30, 2006 compared with $14,821,000 for the nine months
ended April 30, 2005. On a diluted per share basis, such cash flow
from operations was $1.01 and $0.92 for the nine months ended April
30, 2006 and 2005, respectively. The Company further reported that
its cash flow generated by net income, after adjusting for non-cash
charges related only to depreciation and amortization and
stock-based compensation expense (but excluding other elements of
cash flow from operations), was $21,417,000 for the nine months
ended April 30, 2006 compared with $14,654,000 for the nine months
ended April 30, 2005, or $1.31 and $0.90 per diluted share,
respectively. The Company further reported that its balance sheet
at April 30, 2006 included current assets of $98,605,000, including
cash of $21,813,000, a current ratio of 2.9:1, a ratio of funded
debt to equity of .43:1, net debt of $35,687,000 and stockholders'
equity of $134,401,000. As previously announced, our Carsen
subsidiary will be terminating its business operations on July 31,
2006. Such termination is the result of the decision by Olympus not
to further extend Carsen's distribution agreements under which it
was granted the exclusive right in Canada to distribute and service
Olympus endoscope and surgical products, scientific products
related to microscopy and scientific products related to industrial
technology equipment. During the nine months ended April 30, 2006,
total net sales of Carsen accounted for approximately 25% of our
consolidated net sales. Operating income of Carsen during the nine
months ended April 30, 2006 was approximately 45% of our
consolidated operating income. Net proceeds (after income taxes)
from the termination of Carsen's operations at July 31, 2006 are
currently projected to be approximately $21,000,000. Such net
proceeds will consist of the $10,000,000 fixed payment from Olympus
and net proceeds from the sale of inventories, accounts receivable
and unfilled customer orders, less satisfaction of liabilities,
severance costs and other wind-down costs. Management's projection
of net proceeds is an estimate based on inventories, accounts
receivable, backlog orders and liabilities at April 30, 2006 and
assumptions for potential wind-down costs. Mr. James P. Reilly,
President and Chief Executive Officer of Cantel, commented,
"Despite the strong performance in the third quarter and nine month
periods ended April 30, 2006, the Company continues to transition
from the distribution of other companies' products to the
development, manufacture and distribution of our own proprietary
products. Our immediate goal is to replace the revenue and earnings
we will lose after this year due to the termination of the Carsen
business in Canada, as well as the continuing effects of the
consolidation in the dialysis industry." Reilly added, "While we
continue to concentrate on internal growth, our strong cash flow
and healthy balance sheet will allow us to continue our aggressive
search for acquisitions of companies specializing in infection
prevention and control products and services that will either
complement our current business segments or allow us to enter new
segments where we see opportunities for future growth." 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 third quarter ended
April 30, 2006 on Thursday, June 8, 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, June 8 at 2:00 PM through midnight on June
9, by dialing 1-877-660-6853 and using passcode #286 and conference
ID #205353. The call will be simultaneously broadcast live over the
Internet on vcall.com at
http://www.vcall.com/IC/CEPage.asp?ID=105578. 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 Nine Months Ended April
30, April 30, ------------------- ------------------ 2006 2005 2006
2005 -------- -------- -------- -------- Net sales $ 65,358 $
50,534 $187,215 $145,412 Cost of sales 40,658 31,011 116,504 89,853
-------- -------- -------- -------- Gross profit 24,700 19,523
70,711 55,559 Operating expenses: Selling 6,561 6,007 19,072 17,229
General and administrative 8,922 5,674 25,146 16,491 Research and
development 1,176 1,103 3,811 3,109 -------- -------- --------
-------- Total operating expenses 16,659 12,784 48,029 36,829
-------- -------- -------- -------- Income before interest and
income taxes 8,041 6,739 22,682 18,730 Interest expense - net 730
219 2,731 883 -------- -------- -------- -------- Income before
income taxes 7,311 6,520 19,951 17,847 Income taxes 2,728 2,711
7,693 7,056 -------- -------- -------- -------- Net income $ 4,583
$ 3,809 $ 12,258 $ 10,791 ======== ======== ======== ========
Earnings per common share - diluted $ 0.28 $ 0.23 $ 0.75 $ 0.67
======== ======== ======== ======== Weighted average shares -
diluted 16,313 16,521 16,357 16,194 CANTEL MEDICAL CORP. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands) April 30, July 31, 2006
2005 ---------- ---------- Assets Current assets $ 98,605 $ 93,666
Property and equipment, net 35,990 22,661 Intangible assets 43,986
13,317 Goodwill 68,218 33,343 Other assets 1,927 1,353 ----------
---------- $ 248,726 $ 164,340 ========== ========== Liabilities
and stockholders' equity Current portion of long-term debt $ 3,500
$ 15,750 Other current liabilities 30,126 26,901 Long-term debt
54,000 - Other long-term liabilities 26,699 13,063 Stockholders'
equity 134,401 108,626 ---------- ---------- $ 248,726 $ 164,340
========== ========== *T
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