LITTLE FALLS, N.J., Dec. 10,
2015 /PRNewswire/ -- CANTEL MEDICAL CORP.
(NYSE:CMN) reported record US GAAP net income of $14,254,000 or $0.34 per diluted share, on a 12.4% increase in
sales to a record $153,779,000 for
the first quarter ended October 31,
2015. This compares with net income of $11,239,000, or $0.27 per diluted share, on sales of $136,811,000 for the first quarter ended
October 31, 2014.
Under non-GAAP financial measures, adjusted net income increased
21% this quarter to $17,120,000, or
$0.41 per diluted share, compared
with adjusted net income of $14,185,000, or $0.34 per diluted share for the same quarter last
year.
Andrew Krakauer, Cantel's Chief
Executive Officer stated, "We are pleased to have delivered record
sales and earnings performance this quarter. The majority of
this quarter's excellent performance was driven by the Endoscopy
business. All three of our major business units including Water
Purification and Filtration and Healthcare Disposables, in addition
to Endoscopy have greatly benefited from further investments in new
product development, sales and marketing programs and the
integration of recent acquisitions. Our 12.4% reported sales growth
can be broken down into strong organic growth of 7.8%, a 0.5%
headwind due to foreign currency translation, with acquisitions
making up the remaining 5.1% demonstrating the continued success of
our acquisition program. We are also pleased to report gross
margins improved approximately 200 basis points compared with the
same quarter last year."
Krakauer added, "Our Endoscopy segment led sales growth for the
company this quarter with a robust year-over-year increase of
28.1%, of which 17.9% was organic. This fast growing segment now
represents 47% of Cantel total revenue. The strongest product
categories in this segment were disinfectant chemistries, procedure
room products, as well as service and spare parts. We
reported six weeks of sales this quarter from our newly acquired
United Kingdom based Medical
Innovations Group Holdings Limited business. We are pleased that
sales in this leading global provider of endoscope storage and
transport systems are exceeding our expectations.
Sales in our Water Purification and Filtration unit grew by 5.5%
this quarter. Organic sales growth of 2.2% in this segment was
driven by increased shipments of sterilants, therapeutic filters
and commercial and industrial water purification equipment.
In our Healthcare Disposables segment, sales declined by 6.8%
this quarter as compared to the same quarter last year. As we
reported last year, this business experienced unusually high
shipments a year ago as a result of the Ebola epidemic as well as
large customer orders in advance of an announced price increase.
This unit's prior year comparisons will return to normal next
quarter.
Over the last several years Cantel has pursued an aggressive
international growth strategy through geographic sales organization
expansion, investment in key leadership positions as well as
strategic international acquisitions. We were pleased to see
that total Cantel Medical international sales grew this quarter by
33.8%, of which 17.9% was organic. This strong performance is a
good validation of our international growth plans."
The Company further reported that its balance sheet at
October 31, 2015 included current
assets of $202,446,000, including
cash of $31,131,000, a current ratio
of 2.7:1, gross debt of $147,500,000
and stockholders' equity of $417,629,000. Krakauer stated, "The Company has a
strong balance sheet and continues to generate significant cash
flow and EBITDAS. Compared to the same quarter last year, Cash Flow
from Operations and Adjusted EBITDAS both grew by 19% to
$15.1 million and $32.4 million, respectively."
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. 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,
2015 on Thursday, December 10,
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 Thursday, December 10,
2015 at 2:00 PM through
midnight on February 10, 2016 by
dialing (877) 660-6853 and using conference ID # 13625708.
The call will be simultaneously broadcast live over the Internet
on vcall.com at
http://www.investorcalendar.com/IC/CEPage.asp?ID=174554. A replay
of the webcast will be available for 90 days on PrecisionIR and via
the investor relations page of the Cantel website.
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,
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
Net sales
|
|
$ 153,779
|
|
$ 136,811
|
|
|
|
|
|
|
|
Cost of
sales
|
|
82,581
|
|
76,297
|
|
|
|
|
|
|
|
Gross
profit
|
|
71,198
|
|
60,514
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Selling
|
|
21,460
|
|
19,411
|
|
General and
administrative
|
|
22,197
|
|
18,507
|
|
Research and
development
|
|
3,765
|
|
3,549
|
|
Total operating
expenses
|
|
47,422
|
|
41,467
|
|
|
|
|
|
|
|
Income from
operations
|
|
23,776
|
|
19,047
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
745
|
|
534
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
23,031
|
|
18,513
|
|
|
|
|
|
|
|
Income
taxes
|
|
8,777
|
|
7,274
|
|
|
|
|
|
|
|
Net
income
|
|
$ 14,254
|
|
$ 11,239
|
|
|
|
|
|
|
|
Earnings per common
share - diluted
|
|
$ 0.34
|
|
$ 0.27
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$ 0.06
|
|
$
-
|
|
|
|
|
|
|
|
Weighted average
shares - diluted
|
|
41,667
|
|
41,551
|
|
CANTEL MEDICAL
CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
October
31,
|
|
July 31,
|
|
|
2015
|
|
2015
|
Assets
|
|
|
|
|
Current assets
|
|
$ 202,446
|
|
$ 188,361
|
Property and equipment,
net
|
|
69,160
|
|
62,541
|
Intangible assets,
net
|
|
119,803
|
|
85,836
|
Goodwill
|
|
280,459
|
|
241,951
|
Other assets
|
|
5,794
|
|
5,342
|
|
|
$ 677,662
|
|
$ 584,031
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
Current
liabilities
|
|
$ 75,067
|
|
$ 70,624
|
Long-term debt
|
|
147,500
|
|
78,500
|
Other long-term
liabilities
|
|
37,466
|
|
28,274
|
Stockholders'
equity
|
|
417,629
|
|
406,633
|
|
|
$ 677,662
|
|
$ 584,031
|
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 months ended October 31,
2015 and 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
EPS.
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.
The reconciliations
of net income to adjusted net income were calculated as
follows:
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
(Amounts in
thousands)
|
|
October
31,
|
|
(Unaudited)
|
|
2015
|
|
2014
|
|
Net Income, as
reported
|
|
$
14,254
|
|
$
11,239
|
|
Intangible
amortization (1)
|
|
3,094
|
|
2,956
|
|
Acquisition related
items (2)
|
|
934
|
|
1,256
|
|
Income tax benefit on
above adjustments
|
|
(1,162)
|
|
(1,266)
|
|
Adjusted net
income
|
|
$
17,120
|
|
$
14,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts are recorded in
general and administrative expenses.
(2) In the three months ending October 31,
2015, acquisition related items of $260,000 and $674,000 were recorded in cost of sales and
general administrative expenses, respectively. In the three months
ending October 31, 2014, acquisition
related items of $667,000 and
$589,000 were recorded in cost of
sales and general administrative expenses, respectively.
The reconciliations
of diluted EPS to adjusted diluted EPS were calculated as
follows:
|
|
|
|
|
|
Three
Months Ended
|
|
|
October
31,
|
(Unaudited)
|
|
2015
|
|
2014
|
Diluted EPS, as
reported
|
|
$
0.34
|
|
$
0.27
|
Intangible
amortization, net of tax
|
|
0.05
|
|
0.04
|
Acquisition related
items, net of tax
|
|
0.02
|
|
0.03
|
Adjusted diluted
EPS
|
|
$
0.41
|
|
$
0.34
|
|
|
|
|
|
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, of which a significant portion 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 months ended October
31, 2015 and 2014, respectively, are as follows:
|
|
Three Months
Ended
|
(Amounts in
thousands)
|
|
October
31,
|
(Unaudited)
|
|
2015
|
|
2014
|
|
|
|
Net income
|
|
$ 14,254
|
|
$ 11,239
|
|
|
|
|
|
Interest expense,
net
|
|
745
|
|
534
|
Income
taxes
|
|
8,777
|
|
7,274
|
Depreciation
|
|
2,822
|
|
2,312
|
Amortization
|
|
3,094
|
|
2,956
|
Loss on disposal of
fixed assets
|
|
100
|
|
13
|
Stock-based
compensation expense
|
|
1,720
|
|
1,581
|
|
|
|
|
|
EBITDAS
|
|
31,512
|
|
25,909
|
|
|
|
|
|
Acquisition related
items
|
|
934
|
|
1,256
|
|
|
|
|
|
Adjusted
EBITDAS
|
|
$ 32,446
|
|
$ 27,165
|
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 October 31, 2015 and
July 31, 2015, the reconciliations of
debt with net debt were calculated as follows:
(Amounts in
thousands)
|
|
October
31,
|
|
July 31,
|
(Unaudited)
|
|
2015
|
|
2015
|
|
|
|
|
|
Long-term
debt
|
|
$ 147,500
|
|
$ 78,500
|
Less cash and cash
equivalents
|
|
(31,131)
|
|
(31,720)
|
Net debt
|
|
$ 116,369
|
|
$ 46,780
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cantel-medical-reports-record-results-for-the-first-quarter-ended-october-31-2015-300190998.html
SOURCE Cantel Medical Corp.