LITTLE FALLS, N.J.--(BUSINESS WIRE)--June 8, 2006--CANTEL MEDICAL CORP. (NYSE:CMN - News)
Sales - $65,358,000 vs. $50,534,000 - Increase of 29% for Quarter
- $187,215,000 vs. $145,412,000 - Increase of 29% for Nine
Months
EPS - $0.28 vs. $0.23 For Quarter
- $0.75 vs. $0.67 For Nine Months
CANTEL MEDICAL CORP. (NYSE:CMN - News) reported a 20% increase in net
income to $4,583,000, or $0.28 per diluted share, on a 29% increase in
sales to $65,358,000 for its third quarter ended April 30, 2006. This
compares with net income of $3,809,000, or $0.23 per diluted share, on
sales of $50,534,000 for the quarter ended April 30, 2005. For the
nine months ended April 30, 2006, the Company reported a 14% increase
in net income to $12,258,000, or $0.75 per diluted share, on a 29%
increase in sales to $187,215,000. This compares with net income of
$10,791,000, or $0.67 per diluted share, on sales of $145,412,000 for
the nine months ended April 30, 2005. The increases in net sales were
principally due to Crosstex, which was acquired on August 1, 2005.
The results for the quarter were impacted by expenses of $360,000,
net of tax, or $0.02 per diluted share, including wind down costs of
$197,000 related to the non-renewal of the Carsen distribution of
Olympus products in Canada at July 31, 2006 (such wind down costs will
continue throughout fiscal 2006) and $163,000 of stock-based
compensation. Although not included in the 2005 quarter, stock-based
compensation would have been $903,000, net of tax, or $0.05 per
diluted share. After adjusting for wind down expenses related to
Carsen in fiscal 2006 and stock-based compensation expense in fiscal
2005, earnings per diluted share would have been $0.29 vs. $0.18 for
the quarters ended April 30, 2006 and April 30, 2005, respectively.
The results for the nine months were impacted by expenses of
$1,829,000, net of tax, or $0.11 per diluted share, including wind
down costs of $464,000 related to the non-renewal of the Carsen
distribution of Olympus products in Canada at July 31, 2006 (such wind
down costs will continue throughout fiscal 2006), $683,000 of expenses
related to the acquisition of Crosstex in August 2005 and $682,000 of
stock-based compensation. Although not included in the 2005 period,
stock-based compensation would have been $2,002,000, net of tax, or
$0.12 per diluted share. After adjusting for wind down expenses
related to Carsen in fiscal 2006, expenses related to the acquisition
of Crosstex in fiscal 2006, and stock-based compensation expense in
fiscal 2005, earnings per diluted share would have been $0.82 vs.
$0.54 for the nine month periods ended April 30, 2006 and 2005,
respectively.
The Company reported that its cash flow from operations was
$16,592,000 for the nine months ended April 30, 2006 compared with
$14,821,000 for the nine months ended April 30, 2005. On a diluted per
share basis, such cash flow from operations was $1.01 and $0.92 for
the nine months ended April 30, 2006 and 2005, respectively. The
Company further reported that its cash flow generated by net income,
after adjusting for non-cash charges related only to depreciation and
amortization and stock-based compensation expense (but excluding other
elements of cash flow from operations), was $21,417,000 for the nine
months ended April 30, 2006 compared with $14,654,000 for the nine
months ended April 30, 2005, or $1.31 and $0.90 per diluted share,
respectively.
The Company further reported that its balance sheet at April 30,
2006 included current assets of $98,605,000, including cash of
$21,813,000, a current ratio of 2.9:1, a ratio of funded debt to
equity of .43:1, net debt of $35,687,000 and stockholders' equity of
$134,401,000.
As previously announced, our Carsen subsidiary will be terminating
its business operations on July 31, 2006. Such termination is the
result of the decision by Olympus not to further extend Carsen's
distribution agreements under which it was granted the exclusive right
in Canada to distribute and service Olympus endoscope and surgical
products, scientific products related to microscopy and scientific
products related to industrial technology equipment. During the nine
months ended April 30, 2006, total net sales of Carsen accounted for
approximately 25% of our consolidated net sales. Operating income of
Carsen during the nine months ended April 30, 2006 was approximately
45% of our consolidated operating income.
Net proceeds (after income taxes) from the termination of Carsen's
operations at July 31, 2006 are currently projected to be
approximately $21,000,000. Such net proceeds will consist of the
$10,000,000 fixed payment from Olympus and net proceeds from the sale
of inventories, accounts receivable and unfilled customer orders, less
satisfaction of liabilities, severance costs and other wind-down
costs. Management's projection of net proceeds is an estimate based on
inventories, accounts receivable, backlog orders and liabilities at
April 30, 2006 and assumptions for potential wind-down costs.
Mr. James P. Reilly, President and Chief Executive Officer of
Cantel, commented, "Despite the strong performance in the third
quarter and nine month periods ended April 30, 2006, the Company
continues to transition from the distribution of other companies'
products to the development, manufacture and distribution of our own
proprietary products. Our immediate goal is to replace the revenue and
earnings we will lose after this year due to the termination of the
Carsen business in Canada, as well as the continuing effects of the
consolidation in the dialysis industry." Reilly added, "While we
continue to concentrate on internal growth, our strong cash flow and
healthy balance sheet will allow us to continue our aggressive search
for acquisitions of companies specializing in infection prevention and
control products and services that will either complement our current
business segments or allow us to enter new segments where we see
opportunities for future growth."
Cantel Medical Corp. is a leading provider of infection prevention
and control products in the healthcare market. Our products include
specialized medical device reprocessing systems for renal dialysis and
endoscopy, dialysate concentrates and other dialysis supplies,
disposable infection control products primarily for the dental
industry, endoscopy and surgical products, water purification
equipment, sterilants, disinfectants and cleaners, hollow fiber
membrane filtration and separation products for medical and
non-medical applications, and specialty packaging for infectious and
biological specimens. The Company also sells scientific
instrumentation products, provides technical maintenance for its
products and offers compliance training services for the transport of
infectious and biological specimens.
The Company will hold a conference call to discuss the results for
the third quarter ended April 30, 2006 on Thursday, June 8, 2006 at
11:00 AM Eastern time. To participate in the conference call, dial
1-877-407-8035 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, June 8 at 2:00 PM through
midnight on June 9, by dialing 1-877-660-6853 and using passcode #286
and conference ID #205353. The call will be simultaneously broadcast
live over the Internet on vcall.com at
http://www.vcall.com/IC/CEPage.asp?ID=105578. A replay of the webcast
will be available on Vcall for 30 days.
For further information, visit the Cantel Web site at
www.cantelmedical.com.
This press release contains forward-looking statements. All
forward-looking statements involve risks and uncertainties, including,
without limitation, the risks detailed in the Company's filings and
reports with the Securities and Exchange Commission. Such statements
are only predictions, and actual events or results may differ
materially from those projected.
CANTEL MEDICAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended Nine Months Ended
April 30, April 30,
------------------- ------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net sales $ 65,358 $ 50,534 $187,215 $145,412
Cost of sales 40,658 31,011 116,504 89,853
-------- -------- -------- --------
Gross profit 24,700 19,523 70,711 55,559
Operating expenses:
Selling 6,561 6,007 19,072 17,229
General and administrative 8,922 5,674 25,146 16,491
Research and development 1,176 1,103 3,811 3,109
-------- -------- -------- --------
Total operating expenses 16,659 12,784 48,029 36,829
-------- -------- -------- --------
Income before interest and
income taxes 8,041 6,739 22,682 18,730
Interest expense - net 730 219 2,731 883
-------- -------- -------- --------
Income before income taxes 7,311 6,520 19,951 17,847
Income taxes 2,728 2,711 7,693 7,056
-------- -------- -------- --------
Net income $ 4,583 $ 3,809 $ 12,258 $ 10,791
======== ======== ======== ========
Earnings per common share -
diluted $ 0.28 $ 0.23 $ 0.75 $ 0.67
======== ======== ======== ========
Weighted average shares -
diluted 16,313 16,521 16,357 16,194
CANTEL MEDICAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
April 30, July 31,
2006 2005
---------- ----------
Assets
Current assets $ 98,605 $ 93,666
Property and equipment, net 35,990 22,661
Intangible assets 43,986 13,317
Goodwill 68,218 33,343
Other assets 1,927 1,353
---------- ----------
$ 248,726 $ 164,340
========== ==========
Liabilities and stockholders' equity
Current portion of long-term debt $ 3,500 $ 15,750
Other current liabilities 30,126 26,901
Long-term debt 54,000 -
Other long-term liabilities 26,699 13,063
Stockholders' equity 134,401 108,626
---------- ----------
$ 248,726 $ 164,340
========== ==========
