EX-99.1 2 a06-21307_1ex99d1.htm EX-99

Exhibit 99.1

CANTEL MEDICAL CORP.

150 Clove Road

Little Falls, New Jersey  07424

FOR IMMEDIATE RELEASE

Contact:

James P. Reilly

Richard E. Moyer

 

President and CEO

Cameron Associates, Inc.

 

Cantel Medical Corp.

richard@cameronassoc.com

 

Phone: 973-890-7220

Phone: 212-554-5466

 

CANTEL MEDICAL REPORTS RESULTS

FOR QUARTER AND YEAR ENDED JULY 31, 2006

LITTLE FALLS, New Jersey (October 12, 2006) ... CANTEL MEDICAL CORP. (NYSE:CMN) reported net income from operations of $4,198,000, or $0.26 per diluted share, including $922,000 from continuing operations, or $0.06 per diluted share,  and $3,276,000 from discontinued operations, or $0.20 per diluted share, for the quarter ended July 31, 2006, compared with net income from operations of $4,713,000, or $0.29 per diluted share, including $2,664,000 from continuing operations, or $0.16 per diluted share, and $2,049,000 from discontinued operations, or $0.13 per diluted share, for the quarter ended July 31, 2005.

Sales for the quarter ended July 31, 2006 were $69,885,000, including $50,140,000 from continuing operations and $19,745,000 from discontinued operations, compared with sales of $51,990,000, including $35,665,000 from continuing operations and $16,325,000 from discontinued operations, for the quarter ended July 31, 2005.

The results from continuing operations for the quarter ended July 31, 2006 were impacted by the initial costs of $500,000, net of tax, or $0.03 per diluted share, to develop our direct endoscope reprocessing sales and service network in the United States and stock-based compensation of $190,000, net of tax, or $0.01 per diluted share.  In addition, our results of continuing operations were impacted by lower sales and lower average selling prices on dialysis products due to the continuing consolidation of dialysis providers.  Additionally, the effective tax rate for 2006 is higher due to the geographic mix of pretax income, the increase in our United States statutory rate to 35% from 34%, the recording of only a partial income tax benefit relating to stock-based compensation and losses on operations at our Netherlands subsidiary.  The higher effective tax rate for the quarter ended July 31, 2006 impacted income taxes by $448,000, or $0.03 per diluted share.




For the year ended July 31, 2006, the Company reported net income from operations of $16,921,000, or $1.04 per diluted share, including $6,653,000 from continuing operations, or $0.41 per diluted share, and $10,268,000 from discontinued operations, or $0.63 per diluted share, compared with net income from operations of $15,505,000, or $0.96 per diluted share, including $7,895,000 from continuing operations, or $0.49 per diluted share, and $7,610,000 from discontinued operations, or $0.47 per diluted share, for the year ended July 31, 2005.

Sales for the year ended July 31, 2006 were $257,100,000, including $192,179,000 from continuing operations and $64,921,000 from discontinued operations, compared with sales of $197,402,000, including $137,157,000 from continuing operations and $60,245,000 from discontinued operations, for the year ended July 31, 2006.

The results from continuing operations for the year ended July 31, 2006 were impacted by $683,000, net of tax, or $0.04 per diluted share, of one-time expenses related to the acquisition of Crosstex in August 2005; the initial costs of $500,000, net of tax, or $0.03 per diluted share, to develop our direct endoscope reprocessing sales and service network in the United States; and stock-based compensation of $808,000, net of tax, or $0.05 per diluted share.  In addition, our results of continuing operations were impacted by lower sales and lower average selling prices on dialysis products due to the continuing consolidation of dialysis providers.   Additionally, the effective tax rate for 2006 is higher due to the geographic mix of pretax income, the increase in our United States statutory rate to 35% from 34%, the recording of only a partial income tax benefit relating to stock-based compensation and losses on operations at our Netherlands subsidiary.  The higher effective tax rate for the year ended July 31, 2006 impacted income taxes by $398,000, or $0.02 per diluted share.

The Company also reported a gain on disposal of discontinued operations of $6,776,000, net of tax, or $0.42 per diluted share.  As previously announced, our Carsen subsidiary terminated its business operations on July 31, 2006.  Such termination was 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.  Net proceeds from Carsen’s sale of net assets and the termination of its operations were approximately $21,100,000 after satisfaction of remaining liabilities and taxes.

The Company further reported that its balance sheet at July 31, 2006 included current assets of $82,448,000, including cash of $29,898,000, a current ratio of 2.1:1, a ratio of funded debt to equity of .27:1, net debt of $8,102,000 and stockholders’ equity of $140,805,000.

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Mr. James P. Reilly, President and Chief Executive Officer of Cantel, commented, “Despite the challenges that we faced in fiscal 2006, we are very optimistic about our future growth potential, especially in our Dental, Endoscope Reprocessing and Water Purification and Filtration segments.” Reilly further commented, “The improved performance of the Mar Cor Purification water and filtration operation in fiscal 2006, the strong performance of the Crosstex dental business since its acquisition at the beginning of fiscal 2006, and our recently implemented strategy to develop our Medivators endoscope reprocessing direct sales and service network in the United States, which will also allow us to explore future hospital-based growth opportunities, provide us with excellent growth platforms for fiscal 2007 and beyond.” Reilly added, “In addition to growth from our core businesses, we are aggressively searching for acquisitions that will complement our existing businesses as well as allow us to add new segments that demonstrate strong future growth potential and continue to enhance our position as a leader in infection prevention and control.”

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 quarter and year ended July 31, 2006 on Thursday, October 12, 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, October 12 at 2:00 PM through midnight on October 13, by dialing 1-877-660-6853 and using passcode #286 and conference ID #216400. The call will be simultaneously broadcast live over the Internet on vcall.com at http://www.vcall.com/IC/CEPage.asp?ID=109908. 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.  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.

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CANTEL MEDICAL CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 

 

Three Months Ended

 

Year Ended

 

 

 

July 31,

 

July 31,

 

 

 

2006

 

2005

 

2006

 

2005

 

Net sales:

 

 

 

 

 

 

 

 

 

Product sales

 

$

45,232

 

$

31,904

 

$

175,353

 

$

122,681

 

Product service

 

4,908

 

3,761

 

16,826

 

14,476

 

Total net sales

 

50,140

 

35,665

 

192,179

 

137,157

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Product sales

 

28,898

 

18,628

 

110,417

 

73,020

 

Product service

 

3,871

 

2,709

 

12,546

 

10,256

 

Total cost of sales

 

32,769

 

21,337

 

122,963

 

83,276

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

17,371

 

14,328

 

69,216

 

53,881

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Selling

 

5,443

 

3,629

 

18,530

 

15,266

 

General and administrative

 

7,797

 

5,437

 

30,225

 

20,194

 

Research and development

 

1,306

 

990

 

5,117

 

4,099

 

Total operating expenses

 

14,546

 

10,056

 

53,872

 

39,559

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before interest, other income and income taxes

 

2,825

 

4,272

 

15,344

 

14,322

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

956

 

335

 

4,232

 

1,446

 

Interest income

 

(251

)

(187

)

(839

)

(506

)

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

2,120

 

4,124

 

11,951

 

13,382

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

1,198

 

1,460

 

5,298

 

5,487

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

922

 

2,664

 

6,653

 

7,895

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations, net of tax

 

3,276

 

2,049

 

10,268

 

7,610

 

 

 

 

 

 

 

 

 

 

 

Gain on disposal of discontinued operations, net of tax

 

7,241

 

 

6,776

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

11,439

 

$

4,713

 

$

23,697

 

$

15,505

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - diluted

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.06

 

$

0.16

 

$

0.41

 

$

0.49

 

Discontinued operations

 

0.20

 

0.13

 

0.63

 

0.47

 

Gain on disposal of discontinued operations

 

0.45

 

 

0.42

 

 

Net income

 

$

0.71

 

$

0.29

 

$

1.46

 

$

0.96

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - diluted

 

16,088

 

16,248

 

16,276

 

16,208

 

 




CANTEL MEDICAL CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

July 31,

 

July 31,

 

 

 

2006

 

2005

 

Assets

 

 

 

 

 

Current assets

 

$

82,448

 

$

94,490

 

Property and equipment, net

 

38,104

 

22,034

 

Intangible assets

 

43,219

 

13,215

 

Goodwill

 

72,571

 

33,119

 

Other assets

 

1,885

 

2,421

 

 

 

$

238,227

 

$

165,279

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current portion of long-term debt

 

$

4,000

 

$

15,750

 

Other current liabilities

 

35,097

 

27,725

 

Long-term debt

 

34,000

 

 

Other long-term liabilities

 

24,325

 

13,178

 

Stockholders' equity

 

140,805

 

108,626

 

 

 

$

238,227

 

$

165,279