LITTLE FALLS, N.J.,
Dec. 10, 2014 /PRNewswire/
-- CANTEL MEDICAL CORP. (NYSE: CMN) reported US GAAP
net income of $11,239,000, or
$0.27 per diluted share, inclusive of
$0.03 of acquisition related
(non-amortization of intangibles) charges on a 16% increase in
sales to a record $136,811,000 for
the first quarter ended October 31,
2014. This compares with net income of $11,185,000 or $0.27 per diluted share, on sales of $118,272,000 for the first quarter ended
October 31, 2013.
Using non-GAAP adjusted measures as described in our release of
December 3, 2014, we reported a 10.5%
increase in adjusted net income for the quarter ended October 31, 2014 to $14,185,000, or $0.34 per diluted share. This compares to
adjusted net income for the quarter ended October 31, 2013 of $12,834,000, or $0.31 per diluted share.
Andrew Krakauer, Cantel's Chief
Executive Officer stated, "We are pleased to have delivered record
sales and solid earnings this quarter. We achieved good financial
performance in all three major business segments – Endoscopy, Water
Purification and Filtration, and Healthcare Disposables. All three
business units have greatly benefitted from further investments in
new product development, sales and marketing programs, and the
integration of recent acquisitions. Most importantly, for the sixth
consecutive quarter we had strong organic sales growth exceeding
10%. Further, our total sales growth of 16% demonstrates the
success of our acquisition program."
Krakauer added, "Our Medivators Endoscopy business achieved
robust organic sales growth of 13% in the quarter. Including our
newly acquired PuriCore business, now called Cantel Medical (UK)
Limited, sales in this segment grew 28%. All product categories in
the legacy business were strong, including equipment, disinfectant
chemicals, procedure room products, as well as service and spare
parts. Further we were pleased to have announced on November 4 that Cantel acquired International
Medical Service S.r.l. (IMS), located near Rome, Italy. IMS further enhances Cantel's
global leadership in the automated endoscope reprocessor and
related chemistries business and brings the Company European-based
chemistry manufacturing.
Sales in our Crosstex Healthcare Disposables business grew by
12% organically driven by strong sales of face masks and sterility
assurance products. Some of the growth in this segment was
driven by customers buying products in advance of an announced
price increase and some increased shipments due to concerns over
Ebola. Neither of these factors are continuing into the second
quarter. Our Mar Cor Water Purification and Filtration segment
showed organic sales growth of nearly 7%, as robust sales continued
for our dialysis industry water purification equipment, disposables
and service. Substantial revenue increases in all three major units
drove the improved operating earnings when excluding acquisition
related charges."
The Company also reported that its balance sheet at October 31, 2014 included current assets of
$173,963,000, including cash of
$29,714,000, a current ratio of
2.7:1, gross debt of $93,500,000 and
stockholders' equity of $375,698,000.
Krakauer stated, "We continue to maintain a strong balance sheet
and generate substantial cash flow and EBITDAS. When compared with
the same quarter last year, our EBITDAS grew by 7% to $25,909,000. Our net debt position increased by
$15 million to $63,786,000 during the quarter, despite borrowing
over $24 million to fund the IMS
acquisition."
Cantel Medical is a leading global company dedicated to
delivering innovative infection prevention and control 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, and specialty
packaging for infectious and biological specimens. Additionally, we
provide technical service for our products.
The Company will hold a conference call to discuss the results
for the first quarter ended October 31,
2014 on Wednesday, December 10,
2014 at 11:00 AM Eastern time.
To participate in the conference call, dial (877) 407-8033
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 Wednesday, December 10,
2014 at 2:00 PM through
midnight on February 10, 2015 by
dialing (877) 660-6853 and using conference ID # 13596890.
The call will be simultaneously broadcast live over the Internet
on vcall.com at
http://www.investorcalendar.com/IC/CEPage.asp?ID=173463. A
replay of the webcast will be available on PrecisionIR for 90 days
and via the investor relations page of the Cantel web site.
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
|
|
(In thousands, except
per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
October
31,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
Net sales
|
|
$ 136,811
|
|
$ 118,272
|
|
|
|
|
|
Cost of
sales
|
|
76,297
|
|
66,773
|
|
|
|
|
|
Gross
profit
|
|
60,514
|
|
51,499
|
|
|
|
|
|
Expenses:
|
|
|
|
|
Selling
|
|
19,411
|
|
15,764
|
General and
administrative
|
|
18,507
|
|
15,164
|
Research and
development
|
|
3,549
|
|
2,259
|
Total operating
expenses
|
|
41,467
|
|
33,187
|
|
|
|
|
|
Income before
interest and income taxes
|
|
19,047
|
|
18,312
|
|
|
|
|
|
Interest expense,
net
|
|
534
|
|
644
|
|
|
|
|
|
Income before income
taxes
|
|
18,513
|
|
17,668
|
|
|
|
|
|
Income
taxes
|
|
7,274
|
|
6,483
|
|
|
|
|
|
Net
income
|
|
$ 11,239
|
|
$ 11,185
|
|
|
|
|
|
Earnings per common
share - diluted
|
|
$ 0.27
|
|
$ 0.27
|
|
|
|
|
|
Dividends per common
share
|
|
$
-
|
|
$ 0.05
|
|
|
|
|
|
Weighted average
shares - diluted
|
|
41,551
|
|
41,373
|
CANTEL MEDICAL
CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
October
31,
|
|
July 31,
|
|
|
2014
|
|
2014
|
Assets
|
|
|
|
|
Current assets
|
|
$ 173,963
|
|
$ 163,909
|
Restricted cash for IMS
Acquisition
|
|
24,257
|
|
-
|
Property and equipment,
net
|
|
52,936
|
|
52,718
|
Intangible assets,
net
|
|
78,484
|
|
82,952
|
Goodwill
|
|
224,146
|
|
231,647
|
Other assets
|
|
4,939
|
|
4,919
|
|
|
$ 558,725
|
|
$ 536,145
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
Current
liabilities
|
|
$ 64,038
|
|
$ 66,499
|
Long-term debt
|
|
93,500
|
|
80,500
|
Other long-term
liabilities
|
|
25,489
|
|
23,900
|
Stockholders'
equity
|
|
375,698
|
|
365,246
|
|
|
$ 558,725
|
|
$ 536,145
|
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 accounting principles generally
accepted in the United States ("GAAP") with certain internally
driven non-GAAP financial measures, namely adjusted net income,
adjusted diluted earnings per share ("EPS") and income before
interest, taxes, depreciation, amortization and stock-based
compensation expense ("EBITDAS"). These non-GAAP financial measures
are indicators of the Company's performance that is 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, shareholders and other
readers of our Condensed 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.
|
|
Reconciliation of
EBITDAS with Net Income
|
|
The Company believes
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, has on the Company's net
income. In particular, acquisitions have historically resulted in
significant increases in amortization of intangible assets that
reduce the Company's net income. Additionally, the Company regards
EBITDAS as a useful measure of operating performance and cash flow
before the effect of interest expense and complements operating
income, net income and other GAAP financial performance
measures.
|
|
The reconciliation of
EBITDAS with net income for the three months ended October 31, 2014
and 2013,
|
respectively, is as
follows:
|
|
|
|
Three Months
Ended
|
|
|
July 31,
|
|
|
2014
|
|
2013
|
|
|
(In
thousands)
|
|
|
(unaudited)
|
|
|
|
|
|
Net income
|
|
$ 11,239
|
|
$ 11,185
|
|
|
|
|
|
Income
taxes
|
|
7,274
|
|
6,483
|
Interest expense,
net
|
|
534
|
|
644
|
Depreciation
|
|
2,312
|
|
1,937
|
Amortization
|
|
2,956
|
|
2,626
|
Loss on disposal of
fixed assets
|
|
13
|
|
125
|
|
|
|
|
|
EBITDA
|
|
24,328
|
|
23,000
|
|
|
|
|
|
Stock-based
compensation expense
|
|
1,581
|
|
1,148
|
|
|
|
|
|
EBITDAS
|
|
$ 25,909
|
|
$ 24,148
|
|
|
|
|
|
|
Reconciliation of
Net Income and Diluted EPS to Adjusted Net Income and Adjusted
Diluted EPS
|
|
We define adjusted
net income and adjusted diluted EPS as net income and diluted EPS,
respectively, adjusted to exclude amortization, acquisition related
items, significant reorganization and restructuring charges, major
tax events and other significant items management deems atypical or
non-operating in nature.
|
|
For the three months
ended October 31, 2014, we made adjustments to net income and
diluted EPS to exclude amortization expense and acquisition related
items impacting current operating performance including transaction
and integration charges and ongoing fair value adjustments to
arrive at our non-GAAP financial measures, adjusted net income and
adjusted diluted EPS. For the three months ended October 31, 2013,
we made adjustments to net income and diluted EPS to exclude
amortization expense to arrive at our non-GAAP financial measures.
Acquisition related items were not incurred for the three months
ended October 31, 2013.
|
|
Amortization expense
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 reduced 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 specific acquisitions 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 specific acquisitions,
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 all of these
acquisition related items are atypical and often mask underlying
operating performance, we excluded 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.
|
For the three months
ended October 31, 2014, the reconciliations of net income and
diluted EPS with adjusted net income and
|
adjusted diluted EPS
were as follows:
|
|
|
|
|
|
|
|
|
|
As
Reported,
|
|
|
|
Acquisition
|
|
Non-GAAP
|
(In
thousands)
|
Three Months
Ended
|
|
Intangible
|
|
Related
|
|
Three Months
Ended
|
(unaudited)
|
October 31,
2014
|
|
Amortization
|
|
Items
|
|
October 31,
2014
|
|
|
|
|
|
|
|
|
Net sales
|
$
136,811
|
|
$
-
|
|
$
-
|
|
$
136,811
|
|
|
|
|
|
|
|
|
Cost of
sales
|
76,297
|
|
-
|
|
(667)
|
|
75,630
|
|
|
|
|
|
|
|
|
Gross
profit
|
60,514
|
|
-
|
|
667
|
|
61,181
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Selling
|
19,411
|
|
-
|
|
-
|
|
19,411
|
General and
administrative
|
18,507
|
|
(2,956)
|
|
(589)
|
|
14,962
|
Research and
development
|
3,549
|
|
-
|
|
-
|
|
3,549
|
Total operating
expenses
|
41,467
|
|
(2,956)
|
|
(589)
|
|
37,922
|
|
|
|
|
|
|
|
|
Income before
interest and income taxes
|
19,047
|
|
2,956
|
|
1,256
|
|
23,259
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
534
|
|
-
|
|
-
|
|
534
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
18,513
|
|
2,956
|
|
1,256
|
|
22,725
|
|
|
|
|
|
|
|
|
Income
taxes
|
7,274
|
|
1,102
|
|
164
|
|
8,540
|
|
|
|
|
|
|
|
|
Net income/Adjusted
net income
|
$
11,239
|
|
$ 1,854
|
|
$ 1,092
|
|
$
14,185
|
|
|
|
|
|
|
|
|
Diluted EPS/Adjusted
diluted EPS
|
$
0.27
|
|
$ 0.04
|
|
$ 0.03
|
|
$
0.34
|
|
|
|
|
|
|
|
|
For the three months
ended October 31, 2013, the reconciliations of net income and
diluted EPS with adjusted net income and
|
adjusted diluted EPS
were as follows:
|
|
|
|
|
|
|
|
|
|
As
Reported,
|
|
|
|
Acquisition
|
|
Non-GAAP
|
(In
thousands)
|
Three Months
Ended
|
|
Intangible
|
|
Related
|
|
Three Months
Ended
|
(unaudited)
|
October 31,
2013
|
|
Amortization
|
|
Items
|
|
October 31,
2013
|
|
|
|
|
|
|
|
|
Net sales
|
$
118,272
|
|
$
-
|
|
$ -
|
|
$
118,272
|
|
|
|
|
|
|
|
|
Cost of
sales
|
66,773
|
|
-
|
|
-
|
|
66,773
|
|
|
|
|
|
|
|
|
Gross
profit
|
51,499
|
|
-
|
|
-
|
|
51,499
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Selling
|
15,764
|
|
-
|
|
-
|
|
15,764
|
General and
administrative
|
15,164
|
|
(2,626)
|
|
-
|
|
12,538
|
Research and
development
|
2,259
|
|
-
|
|
-
|
|
2,259
|
Total operating
expenses
|
33,187
|
|
(2,626)
|
|
-
|
|
30,561
|
|
|
|
|
|
|
|
|
Income before
interest and income taxes
|
18,312
|
|
2,626
|
|
-
|
|
20,938
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
644
|
|
-
|
|
-
|
|
644
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
17,668
|
|
2,626
|
|
-
|
|
20,294
|
|
|
|
|
|
|
|
|
Income
taxes
|
6,483
|
|
977
|
|
-
|
|
7,460
|
|
|
|
|
|
|
|
|
Net income/Adjusted
net income
|
$
11,185
|
|
$ 1,649
|
|
$ -
|
|
$
12,834
|
|
|
|
|
|
|
|
|
Diluted EPS/Adjusted
diluted EPS
|
$
0.27
|
|
$ 0.04
|
|
$ -
|
|
$
0.31
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cantel-medical-reports-16-sales-growth-and-us-gaap-eps-of-027-for-the-first-quarter-ended-october-31-2014-300007497.html
SOURCE Cantel Medical Corp.