Cantel Medical Reports 2% Increase in Net Income - EPS of $0.25 for Quarter Ended April 30, 2010

Jun 08, 2010, 08:00 ET from Cantel Medical Corp.

LITTLE FALLS, N.J., June 8 /PRNewswire-FirstCall/ -- CANTEL MEDICAL CORP. (NYSE: CMN) reported a 2% increase in net income to $4,274,000, or $0.25 per diluted share, on sales of $66,559,000 for the third quarter ended April 30, 2010. This compares with net income of $4,183,000, or $0.25 per diluted share, on sales of $66,431,000 for the third quarter ended April 30, 2009. For the nine months ended April 30, 2010, the Company reported a 36% increase in net income to $15,318,000, or $0.90 per diluted share, on sales of $204,141,000. This compares with net income of $11,290,000, or $0.68 per diluted share, on sales of $193,257,000 for the nine months ended April 30, 2009.

Andrew Krakauer, Cantel’s President and CEO stated, “In evaluating the individual business units, we view this as a solid quarter.  In our three largest business segments -- Endoscope Reprocessing, Water Purification and Healthcare Disposables -- we grew sales faster than the underlying markets and expanded gross margins. In our Dialysis segment, sales continued to erode as anticipated, primarily due to decreased shipments of lower margin dialysate concentrate. Excluding the Dialysis segment, sales grew 7% for the remainder of Cantel’s businesses.”

Krakauer added, “From a macro level, the economic slowdown has still deferred the rate of growth in our capital equipment sales.  Despite that effect, we continued to generate substantial cash flow from the strong sales of consumables, including disinfectants, sterilants and filters.  This outcome is a result of our continued strategic investments in sales and marketing, which are yielding both top-line and gross profit improvements in our three largest segments.”

Krakauer continued, “Although our businesses are not immune to the economic downturn, the need for and focus on infection control continues to rise.  We remain fully dedicated to advancing our strategies to grow and improve performance, and to ensure that we are well positioned with next generation products.  Our competitive advantages are our strong leadership positions in several infection prevention and control markets, a quality reputation and strong brand equity.  We have proactively developed our business to where approximately 75% of our sales come from disposables and service, which are supported by a large installed base of equipment. Further, we remain active in the search for synergistic acquisitions. Last week, we were pleased to announce the acquisition of Purity Water Company of San Antonio, Inc. which expanded our Water Purification and Filtration business in the large Texas and nearby markets.”

The Company further reported that its balance sheet at April 30, 2010 included current assets of $91,752,000, including cash of $19,165,000, debt of $25,000,000, stockholders’ equity of $206,221,000 and a ratio of funded debt to equity of 0.1:1. Krakauer stated, “We continue to generate significant cash provided by operating activities, including $7,136,000 for the quarter. Our balance sheet is very healthy, and we have further reduced our net debt position by 53% from the second quarter to $5,835,000.”

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, 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. We also provide technical maintenance for our products and offer 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, 2010 on Tuesday, June 8, 2010 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 Tuesday, June 8, 2010 at 2:00 PM through midnight on June 15, by dialing 1-877-660-6853 and using passcode #286 and conference ID #351550.

The call will be simultaneously broadcast live over the Internet on vcall.com at http://www.investorcalendar.com/IC/CEPage.asp?ID=159240. A replay of the webcast will be available on Vcall for 30 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 Ended

Nine Months Ended

April 30,

April 30,

2010

2009

2010

2009

Net sales

$ 66,559

$ 66,431

$ 204,141

$ 193,257

Cost of sales

39,866

40,908

120,866

120,500

Gross profit

26,693

25,523

83,275

72,757

Expenses:

 Selling

9,348

7,984

26,583

22,326

 General and administrative

9,149

9,106

27,726

27,167

 Research and development

1,342

1,261

3,764

3,309

Total operating expenses

19,839

18,351

58,073

52,802

Income before interest and income taxes

6,854

7,172

25,202

19,955

Interest expense  

233

588

959

2,013

Interest income

(19)

(24)

(35)

(132)

Income before income taxes

6,640

6,608

24,278

18,074

Income taxes

2,366

2,425

8,960

6,784

Net income

$   4,274

$   4,183

$   15,318

$   11,290

Earnings per common share - diluted  

$     0.25

$     0.25

$       0.90

$       0.68

Dividends per common share

$         -

$         -

$       0.05

$           -

Weighted average shares - diluted

17,052

16,647

16,948

16,534

CANTEL MEDICAL CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

April 30,

July 31,

2010

2009

              Assets

    Current assets

$   91,752

$   88,910

    Property and equipment, net

35,281

35,968

    Intangible assets, net

33,500

37,042

    Goodwill

115,627

114,995

    Other assets

1,151

956

$ 277,311

$ 277,871

       Liabilities and stockholders' equity

    Current portion of long-term debt

$   10,000

$   10,000

    Other current liabilities

27,418

29,113

    Long-term debt

15,000

33,300

    Other long-term liabilities

18,672

18,342

    Stockholders' equity

206,221

187,116

$ 277,311

$ 277,871

SUPPLEMENTARY INFORMATION

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

Compensation Expense ("EBITDAS")

The reconciliation of EBITDAS with net income for the three and nine months ended April 30, 2010 and 2009,

respectively, is as follows (in thousands):

Three Months Ended

Nine Months Ended

April 30,

April 30,

2010

2009

2010

2009

Net income

$           4,274

$           4,183

$        15,318

$         11,290

Income taxes

2,366

2,425

8,960

6,784

Interest expense  

233

588

959

2,013

Interest income

(19)

(24)

(35)

(132)

Depreciation

1,583

1,562

4,721

4,637

Amortization

1,270

1,264

3,842

3,870

Loss on disposal of fixed assets

(3)

-

224

22

EBITDA

9,704

9,998

33,989

28,484

Stock-based compensation expense

670

784

2,270

1,829

EBITDAS

$         10,374

$         10,782

$        36,259

$         30,313

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.



RELATED LINKS

http://www.cantelmedical.com