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Cantel Medical Reports EPS Of $0.27 vs. $0.25 On 12% Sales Increase For Second Quarter Ended January 31, 2014

Companies mentioned in this article: Cantel Medical Corp.

LITTLE FALLS, N.J., March 11, 2014 /PRNewswire/ -- CANTEL MEDICAL CORP. (NYSE:CMN) reported net income of $11,126,000, or $0.27 per diluted share, on a 12% increase in sales to a record $119,042,000 for the second quarter ended January 31, 2014. This compares with net income of $10,452,000, or $0.25 per diluted share, on sales of $106,363,000 for the second quarter ended January 31, 2013. For the six months ended January 31, 2014, the Company reported record net income of $22,311,000, or $0.54 per diluted share, on a 15% increase in sales to a record $237,314,000. This compares with net income of $20,028,000, or $0.49 per diluted share, on sales of $206,044,000 for the six months ended January 31, 2013. Results for the prior year's second quarter and six months ended January 31, 2013 include $0.01 in net favorable adjustments related to acquisition accounting fair value adjustments partially offset by severance and recruiting costs.

Andrew Krakauer, Cantel's President and CEO stated, "We are pleased to have delivered record sales and solid earnings performance in the second quarter. These positive results confirm the continued success of our strategic approach to growth which includes investing in new product development, sales and marketing programs and acquisitions. Most importantly, for the third consecutive quarter we had strong organic sales growth of 10%."

Krakauer added, "Financial performance was led this quarter by our Water Purification and Filtration unit where year-over-year sales increased 26%, of which 18% was organic. The record sales in this segment were led by increased shipments of central and portable water purification equipment. Our Medivators Endoscopy business also had excellent organic growth of 13% for the quarter and achieved record sales for the second consecutive quarter. In this segment, organic growth was driven by strength in disinfectant chemicals, procedural products, as well as service and spare parts. Also during the quarter, the Company completed two small but strategically important acquisitions, including Jet Prep Ltd. in the Endoscopy segment and Sterilator Company, Inc. in the Healthcare Disposables segment.

Our strong revenue increases have allowed us to improve earnings, even as we are increasing investments in sales and marketing and new product development. Further, we are taking an aggressive approach in building our international sales, marketing, and operations teams to grow this part of our business in the medium-term. Overall, we expect to continue to accelerate these investments over the next several quarters, while remaining committed to an active global acquisition program.

The Company further reported that its balance sheet at January 31, 2014 included current assets of $147,963,000, including cash of $19,706,000, a current ratio of 3.1:1, gross debt of $74,500,000 and stockholders' equity of $342,018,000. Krakauer stated, "The Company has a strong balance sheet and continues to generate significant cash flow and EBITDAS. When compared with the same quarter last year, our EBITDAS grew by 10% to $24,437,000. EBITDAS for the first six months of fiscal year 2014 of $48,585.000 is 12% ahead of the same period in the prior year." Subsequent to quarter-end on March 4, 2014, the Company significantly increased its overall financial flexibility and access to capital by entering into a $250,000,000 amended and restated credit facility with its existing bank syndicate which established new and improved terms under its revolving credit facility including an expansion of borrowing capacity, a decrease in applicable rates used for borrowings, the ability to borrow in multiple currencies and an extension of the expiration date to March 4, 2019.

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 second quarter ended January 31, 2014 on Tuesday, March 11, 2014 at 11:00 AM Eastern time. To participate in the conference call, dial 1-877-407-8033 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, March 11, 2014 at 2:00 PM through midnight on May 11, 2014 by dialing 1-877-660-6853 and using conference ID #13577321.

The call will be simultaneously broadcast live over the Internet on vcall.com at http://www.investorcalendar.com/IC/CEPage.asp?ID=172344. A replay of the webcast will be available on Vcall for 90 days.

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            Six Months
                          Ended                 Ended

                      January 31,            January 31,
                      -----------            -----------

                                2014                   2013              2014      2013
                                ----                   ----              ----      ----


     Net
     sales                  $119,042               $106,363          $237,314  $206,044


     Cost
     of
     sales                    66,707                 61,212           133,480   117,166
                              ------                 ------           -------   -------


     Gross
     profit                   52,335                 45,151           103,834    88,878


    Expenses:

      Selling                 16,077                 13,723            31,841    27,136

       General
       and
       administrative         15,557                 12,382            30,721    24,430

       Research
       and
       development             2,492                  2,183             4,751     4,477
                               -----                  -----             -----     -----

     Total
     operating
     expenses                 34,126                 28,288            67,313    56,043
                              ------                 ------            ------    ------


     Income
     before
     interest
     and
     income
     taxes                    18,209                 16,863            36,521    32,835


     Interest
     expense                     645                    791             1,302     1,437

     Interest
     income                      (15)                   (16)              (28)      (29)
                                 ---                    ---               ---       ---


     Income
     before
     income
     taxes                    17,579                 16,088            35,247    31,427


     Income
     taxes                     6,453                  5,636            12,936    11,399
                               -----                  -----            ------    ------


     Net
     income                  $11,126                $10,452           $22,311   $20,028
                             =======                =======           =======   =======


     Earnings
     per
     common
     share
     -
     diluted                   $0.27                  $0.25             $0.54     $0.49
                               =====                  =====             =====     =====


     Dividends
     per
     common
     share               $         -            $         -             $0.05     $0.04
                         ===========            ===========             =====     =====


     Weighted
     average
     shares
     -
     diluted                  41,493                 41,192            41,433    41,116



                              CANTEL MEDICAL CORP.

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

                                  (unaudited)



                                              January 31,    July 31,

                                                        2014         2013
                                                        ----         ----

                    Assets

     Current assets                                 $147,963     $150,660

     Property and equipment, net                      47,072       46,465

     Intangible assets, net                           76,476       75,929

     Goodwill                                        218,677      211,618

     Other assets                                      2,997        2,999
                                                       -----        -----

                                                    $493,185     $487,671
                                                    ========     ========


            Liabilities and stockholders'
             equity

     Current portion of long-term
      debt                                      $          -      $10,000

     Other current liabilities                        47,524       49,151

     Long-term debt                                   74,500       85,000

     Other long-term liabilities                      29,143       22,388

     Stockholders' equity                            342,018      321,132

                                                    $493,185     $487,671
                                                    ========     ========



    SUPPLEMENTARY INFORMATION


    Reconciliation of Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-Based

    Compensation Expense ("EBITDAS")

    (unaudited)


    The reconciliation of EBITDAS with net income for the three and six months ended January 31, 2014 and 2013,

    respectively, is as follows (in thousands):


                                                                                           Three Months
                                                                                              Ended              Six Months Ended

                                                                                           January 31,              January 31,
                                                                                           -----------              -----------

                                                                                                      2014                     2013                     2014     2013
                                                                                                      ----                     ----                     ----     ----



    Net income                                                                                     $11,126                  $10,452                  $22,311  $20,028


    Income taxes                                                                                     6,453                    5,636                   12,936   11,399

    Interest expense                                                                                   645                      791                    1,302    1,437

    Interest income                                                                                    (15)                     (16)                     (28)     (29)

    Depreciation                                                                                     2,030                    1,814                    3,967    3,574

    Amortization                                                                                     2,619                    2,573                    5,245    4,840

    Loss on disposal of fixed assets                                                                   171                       99                      296      140
                                                                                                       ---                      ---                      ---      ---


    EBITDA                                                                                          23,029                   21,349                   46,029   41,389


    Stock-based compensation expense                                                                 1,408                      929                    2,556    1,887
                                                                                                     -----                      ---                    -----    -----


    EBITDAS                                                                                        $24,437                  $22,278                  $48,585  $43,276
                                                                                                   =======                  =======                  =======  =======




    EBITDAS is a measure of the Company's performance that is not required by, or presented in accordance with, Generally Accepted Accounting
     Principles ("GAAP"). EBITDAS is a non-GAAP financial measure defined by the Company as income before interest, taxes, depreciation, amortization
     and stock-based compensation expense. 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 reduced 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.
     Generally, a non-GAAP financial measure is a numerical measure of a Company's performance, financial position or cash flow that either excludes
     or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance
     with GAAP. This measure, however, should be considered in addition to, and not as a substitute or superior to, net income, cash flows, or other
     measures of financial performance prepared in accordance with GAAP.

SOURCE Cantel Medical Corp.