Mixed Bag for Cantel in 4Q - Analyst Blog
October 17 2011 - 5:00AM
Zacks
Leading infection prevention and
control products maker Cantel Medical’s (CMN)
fourth-quarter 2011 (ended July 31) earnings of 27 cents per share
fell shy of the Zacks Consensus Estimate by three cents, while it
matched the year-ago earnings. Profit edged up 1% year over year to
roughly $4.7 million as higher costs (including acquisition
expenses) neutralized healthy double-digit growth in the top
line.
For fiscal 2011, earnings of $1.18
a share also trailed the Zacks Consensus Estimate of $1.22 and were
in line with the year-ago earnings. Profit edged up roughly 2% year
over year to $20.4 million. Acquisition costs impacted the bottom
line in fiscal 2011.
Revenues for the quarter soared 23%
year over year to a record $86 million, ahead of the Zacks
Consensus Estimate of $82 million. The solid growth was led by the
New Jersey-based company’s Endoscope Reprocessing business. Cantel
registered growth across its three major businesses in the quarter.
For the fiscal, sales spiked 17% year over year to $321.7
million.
The Endoscope Reprocessing business
had yet another strong quarter with revenues zooming 53% on the
back of healthy shipments of the company’s two new reprocessors
(Advantage Plus and DSD Edge). The strong results underscore the
company’s successful execution of its three-pronged strategy (new
product development, sales and marketing programs and acquisitions)
to spur growth.
Gross margin for the quarter fell
to 37.1% from 39.7% a year ago due to higher cost of sales, which
jumped 28.5%. Operating expenses surged 23% year over
year to $24.9
million as the company hiked spending on R&D, selling and
marketing. As a result, operating margin slipped to 8.2% from 10.7%
a year-ago.
Cantel Medical ended the
fiscal year with cash of roughly $18.4 million, down 19% year over
year. Total debt increased 14% year over year to roughly $24
million.
Cantel, which operates through six
segments, offers its infection prevention and control products to
dialysis, dental, endoscope processing, water purification,
therapeutic filtration and specialty packaging markets. It competes
with Siemens (SI) among others.
Cantel continues to execute its
strategy of growth through acquisitions. The company acquired the
U.S. water purification business of medical technology firm Gambro
Renal Products Inc. in October 2010. Moreover, it bought, in
February 2011, the sterilization monitoring business of the leading
biological monitoring services provider ConFirm Monitoring
Systems.
More recently, Cantel acquired (its
largest buyout so far) privately-held disposable infection control
products maker Byrne Medical for $100 million, which has enabled it
to broaden its gastrointestinal (GI) endoscopy business.
While acquisition-related costs
encumbered Cantel’s profits in fiscal 2011, it remains upbeat that
the three acquisitions coupled with new products and
investment in
the sales/marketing infrastructure will significantly
contribute to its sales and earnings in fiscal 2012.
CANTEL MED CORP (CMN): Free Stock Analysis Report
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