LITTLE FALLS, N.J.,
June 9, 2015 /PRNewswire/ --
CANTEL MEDICAL CORP. (NYSE: CMN) reported US GAAP net income
of $12,356,000, or $0.30 per diluted share, on an 18% increase in
sales to a record $141,508,000 for
the third quarter ended April 30,
2015. This compares with net income of $10,249,000, or $0.25 per diluted share, on sales of $120,058,000 for the third quarter ended
April 30, 2014. For the nine months
ended April 30, 2015, the Company
reported US GAAP net income of $34,680,000, or $0.83 per diluted share, on a 16% increase in
sales to a record $413,749,000. This
compares with net income of $32,560,000 or $0.79 per diluted share, on sales of $357,372,000 for the nine months ended
April 30, 2014.
Under non-GAAP measures, adjusted net income increased 19% this
quarter to $14,697,000, or
$0.35 per diluted share compared to
adjusted net income of $12,315,000,
or $0.30 per diluted share for the
same quarter last year. For the nine months ended April 30, 2015, the Company reported a 16%
increase in adjusted net income to $43,979,000, or $1.06 per diluted share. This compares to
adjusted net income for the nine months ended April 30, 2014 of $37,926,000, or $0.92 per diluted share.
Andrew Krakauer, Cantel's Chief
Executive Officer stated, "We are pleased to have delivered
excellent sales and net income growth this quarter. We achieved
strong growth in operating income in our two largest segments -
Endoscopy and Water Purification and Filtration. All business units
have greatly benefitted from further investments in new product
development, sales and marketing programs, and the integration of
recent acquisitions. Overall, we had solid organic sales growth of
approximately 10%, while our total sales growth of 18% demonstrates
the success of our acquisition program."
Krakauer added, "Our Medivators Endoscopy business delivered
robust organic sales growth of 17% in the quarter. Including our
recently acquired businesses in the UK and Italy, sales in this segment grew 35%. All
product categories in our core Endoscopy business were strong,
including equipment, disinfectant chemicals, procedure room
products, as well as service and spare parts. Our European
acquisitions are being integrated effectively and will soon be
launching a number of new highly strategic products which will
further strengthen our competitive offering in Europe. Our Mar Cor Water Purification and
Filtration segment delivered organic sales growth this quarter of
13.5%, and reported growth of 17.5% overall, including sales from
the recently acquired Pure Water Solutions business. Growth this
quarter was driven by strength in capital equipment shipments, as
well as solid performance in consumables and service.
Sales in our Crosstex Healthcare Disposables business decreased
by 3% in the quarter as the business dealt with a number of
headwinds including reduced dental office visits, as well as
some over stocking at some distributors after strong first
half shipments. However, for the nine months of fiscal 2015, sales
are ahead of the prior period by 4%. We were pleased to announce
the acquisition of the DentaPure Dental Waterline Disinfection
System on February 23, 2015. This
product line will enhance our leadership position in infection
prevention and control in the dental industry.
Overall, significant revenue growth drove the improved operating
earnings. In the quarter, our earnings reflected three significant
items that netted no change to GAAP or adjusted earnings. These
items included positive fair value adjustments, offset by
unfavorable charges related to a licensed product and the loss on
sale of our specialty packaging business. Details can be found in
our 10-Q to be released later today."
The Company's balance sheet at April 30,
2015 included current assets of $181,149,000, including cash of $25,365,000, a current ratio of 2.7:1, gross debt
of $91,500,000 and stockholders'
equity of $394,215,000. 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 adjusted EBITDAS grew by 19% to
$27,946,000. Our net debt position
increased by only $17 million to
$66,135,000 during the first nine
months of fiscal 2015 despite borrowings of $47 million to fund our acquisition program."
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, and hollow fiber
membrane filtration and separation products. Additionally, we
provide technical service for our products.
The Company will hold a conference call to discuss the results
for the third quarter ended April 30,
2015 on Tuesday, June 9, 2015
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 Tuesday, June 9, 2015
at 2:00 PM through midnight on
August 9, 2015 by dialing (877)
660-6853 and using conference ID # 13611020.
The call will be simultaneously broadcast live over the Internet
on vcall.com at
http://www.investorcalendar.com/IC/CEPage.asp?ID=174054. 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
|
|
Nine Months
Ended
|
|
|
April 30,
|
|
April 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ 141,508
|
|
$ 120,058
|
|
$ 413,749
|
|
$ 357,372
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
77,909
|
|
67,640
|
|
229,045
|
|
201,120
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
63,599
|
|
52,418
|
|
184,704
|
|
156,252
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Selling
|
|
20,326
|
|
16,532
|
|
58,994
|
|
48,373
|
General and
administrative
|
|
18,456
|
|
16,428
|
|
56,785
|
|
47,149
|
Research and
development
|
|
3,536
|
|
2,632
|
|
10,296
|
|
7,383
|
Total operating
expenses
|
|
42,318
|
|
35,592
|
|
126,075
|
|
102,905
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
21,281
|
|
16,826
|
|
58,629
|
|
53,347
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
619
|
|
535
|
|
1,799
|
|
1,809
|
Loss on sale of
business
|
|
2,206
|
|
-
|
|
2,206
|
|
-
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
18,456
|
|
16,291
|
|
54,624
|
|
51,538
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
6,100
|
|
6,042
|
|
19,944
|
|
18,978
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ 12,356
|
|
$ 10,249
|
|
$ 34,680
|
|
$ 32,560
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - diluted
|
|
$ 0.30
|
|
$ 0.25
|
|
$ 0.83
|
|
$ 0.79
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
-
|
|
$
-
|
|
$ 0.05
|
|
$ 0.05
|
|
|
|
|
|
|
|
|
|
Weighted average
shares - diluted
|
|
41,591
|
|
41,502
|
|
41,574
|
|
41,457
|
CANTEL MEDICAL
CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30,
|
|
July 31,
|
|
|
2015
|
|
2014
|
Assets
|
|
|
|
|
Current assets
|
|
$ 181,149
|
|
$ 163,909
|
Property and equipment,
net
|
|
61,628
|
|
52,718
|
Intangible assets,
net
|
|
89,429
|
|
82,952
|
Goodwill
|
|
242,501
|
|
231,647
|
Other assets
|
|
5,200
|
|
4,919
|
|
|
$ 579,907
|
|
$ 536,145
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
Current
liabilities
|
|
$ 66,186
|
|
$ 66,499
|
Long-term debt
|
|
91,500
|
|
80,500
|
Other long-term
liabilities
|
|
28,006
|
|
23,900
|
Stockholders'
equity
|
|
394,215
|
|
365,246
|
|
|
$ 579,907
|
|
$ 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 (i) adjusted net income, (ii)
adjusted diluted earnings per share ("EPS"), (iii) income before
interest, taxes, depreciation, amortization and stock-based
compensation expense ("EBITDAS"), (iv) EBITDAS adjusted for
atypical items ("Adjusted EBITDAS") and (v) net debt. 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.
Reconciliations 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 and nine months ended April
30, 2015, we made adjustments to net income and diluted EPS
to exclude (i) amortization expense, (ii) significant acquisition
related items impacting current operating performance including
transaction and integration charges and ongoing fair value
adjustments, (iii) the loss on sale of our Specialty Packaging
business and (iv) the impairment of an acquired license to arrive
at our non-GAAP financial measures, adjusted net income and
adjusted EPS. For the three and nine months ended April 30, 2014, we made adjustments to net income
and diluted EPS to exclude (i) amortization expense and (ii)
significant acquisition related items impacting current operating
performance primarily relating to transaction charges and ongoing
fair value adjustments to arrive at our non-GAAP financial
measures.
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 for the three and nine months ended
April 30, 2015 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, (iii) acquisition accounting charges for the
amortization of the initial fair value adjustments of acquired
inventory and deferred revenue and (iv) foreign currency losses
relating to the funding of an international acquisition. 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 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.
On April 7, 2015, we completed the
sale of our Specialty Packaging business to a global packaging and
service company. Overall, this transaction, including costs
associated with the disposition and the recognition of a foreign
currency translation gain, resulted in a $2,206,000 loss, which was recorded in loss on
sale of business in our Condensed Consolidated Statements of Income
for the three and nine months ended April
30, 2015. Since the divestiture of a business is atypical
and non-operating in nature and the loss on sale masks our
underlying operating performance, we excluded the loss on sale of
business for purposes of calculating these non-GAAP financial
measures.
In September 2013, we acquired a
license from a third party granting us the exclusive right to
manufacture, commercialize, distribute and sell an endoscopy
product in its beginning stage of commercialization in exchange for
a series of payments, which totaled $1,000,000 at April 30,
2015 and was recorded in other assets in our Condensed
Consolidated Balance Sheets. We evaluated this long-lived asset at
April 30, 2015 for potential
impairment and determined that the future use of this acquired
license was unlikely based on a recent product analysis.
Accordingly, we deemed the acquired license, together with related
fixed assets of $287,000, to be fully
impaired and recorded a loss of $1,287,000 during our third quarter of fiscal
2015, which was recorded in general and administrative expenses and
as reductions in other assets and property and equipment in the
Condensed Consolidated Financial Statements. Since the acquisition
of the license and subsequent impairment were outside our standard
endoscopy business operations, we excluded the impairment of the
acquired license 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 and nine months ended April 30, 2015 and 2014, the reconciliations of
net income to adjusted net income were calculated as
follows:
|
|
Three
Months Ended
|
|
Nine Months
Ended
|
|
|
April 30,
|
|
April 30,
|
(Amounts in
thousands)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net Income, as
reported
|
|
$
12,356
|
|
$
10,249
|
|
$ 34,680
|
|
$ 32,560
|
Intangible
amortization (1)
|
|
3,460
|
|
2,637
|
|
9,648
|
|
7,882
|
Acquisition related
items (2)
|
|
(2,327)
|
|
456
|
|
1,185
|
|
456
|
Loss on sale of
business
|
|
2,206
|
|
-
|
|
2,206
|
|
-
|
Impairment of
acquired license (1)
|
|
1,287
|
|
-
|
|
1,287
|
|
-
|
Income tax benefit on
above adjustments
|
|
(2,285)
|
|
(1,027)
|
|
(5,027)
|
|
(2,972)
|
Adjusted net
income
|
|
$
14,697
|
|
$
12,315
|
|
$ 43,979
|
|
$ 37,926
|
(1) Amounts are recorded in general and administrative
expenses.
(2) For the three and nine months ended April 30, 2015, acquisition related items of
$408 and $1,951, respectively, were recorded in cost of
sales and ($2,735) and ($766), respectively, were recorded in general
and administrative expenses. The amounts for the prior year periods
were recorded in general and administrative expenses.
For the three and nine months ended April 30, 2015 and 2014, the reconciliations of
diluted EPS to adjusted diluted EPS were calculated as
follows:
|
|
Three
Months Ended
|
|
Nine Months
Ended
|
|
|
April 30,
|
|
April 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Diluted EPS, as
reported
|
|
$
0.30
|
|
$
0.25
|
|
$ 0.83
|
|
$ 0.79
|
Intangible
amortization, net of tax
|
|
0.05
|
|
0.04
|
|
0.15
|
|
0.12
|
Acquisition related
items, net of tax
|
|
(0.06)
|
|
0.01
|
|
0.01
|
|
0.01
|
Loss on sale of
business, net of tax
|
|
0.04
|
|
-
|
|
0.04
|
|
-
|
Impairment of
acquired license, net of tax
|
|
0.02
|
|
-
|
|
0.02
|
|
-
|
Adjusted diluted
EPS
|
|
$
0.35
|
|
$
0.30
|
|
$ 1.06
|
(3)
|
$ 0.92
|
(3) The summation of each diluted EPS does not equal the
adjusted diluted EPS due to rounding.
Reconciliation of EBITDAS and Adjusted EBITDAS
with Net Income
We believe EBITDAS is an important valulation 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, we
regard EBITDAS as a useful measure of operating performance and
cash flow before the effect of interest expense and is a complement
to operating income, net income and other GAAP financial
performance measures.
We define Adjusted EBITDAS as EBITDAS excluding the same
atypical items as previously described as adjustments to net income
. We use Adjusted EBITDAS when evaluating the operating performance
of the Company because we believe the exclusion of such atypical
items, which a majority are non-cash items, is necessary to provide
the most accurate measure of on-going core operating results and to
evaluate comparative results period over period.
The reconciliations of EBITDAS and Adjusted EBITDAS with
net income for the three and nine months ended April 30,
2015 and 2014, respectively, are as follows:
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Amounts in
thousands)
|
|
April 30,
|
|
April 30,
|
(unaudited)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
Net income
|
|
$ 12,356
|
|
$ 10,249
|
|
$ 34,680
|
|
$ 32,560
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
619
|
|
535
|
|
1,799
|
|
1,809
|
Income
taxes
|
|
6,100
|
|
6,042
|
|
19,944
|
|
18,978
|
Depreciation
|
|
2,720
|
|
2,105
|
|
7,573
|
|
6,072
|
Amortization
|
|
3,460
|
|
2,637
|
|
9,648
|
|
7,882
|
Loss on disposal of
fixed assets
|
|
172
|
|
6
|
|
209
|
|
302
|
Stock-based
compensation expense
|
|
1,353
|
|
1,422
|
|
4,354
|
|
3,978
|
|
|
|
|
|
|
|
|
|
EBITDAS
|
|
26,780
|
|
22,996
|
|
78,207
|
|
71,581
|
|
|
|
|
|
|
|
|
|
Acquisition related
items
|
|
(2,327)
|
|
456
|
|
1,185
|
|
456
|
Loss on sale of
business
|
|
2,206
|
|
-
|
|
2,206
|
|
-
|
Impairment of
acquired license
|
|
1,287
|
|
-
|
|
1,287
|
|
-
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDAS
|
|
$ 27,946
|
|
$ 23,452
|
|
$ 82,885
|
|
$ 72,037
|
Reconciliation of Debt with Net Debt
We define net debt as long-term debt less cash and cash
equivalents. Each of the components of net debt appears in the
Condensed Consolidated Balance Sheets. We believe that the
presentation of net debt provides useful information to investors
because we review net debt as part of our management of our overall
liquidity, financial flexibility, capital structure and
leverage.
At April 30, 2015 and
July 31, 2014, the reconciliations of
debt with net debt were calculated as follows:
|
|
April 30,
|
|
July 31,
|
|
|
|
(Amounts in
thousands)
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
$ 91,500
|
|
$ 80,500
|
|
|
|
Less cash and cash
equivalents
|
|
(25,365)
|
|
(31,781)
|
|
|
|
Net debt
|
|
$ 66,135
|
|
$ 48,719
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cantel-medical-reports-results-for-the-third-quarter-ended-april-30-2015-300095964.html
SOURCE Cantel Medical Corp.