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Cantel Medical Reports EPS of $0.38 vs. $0.27 on 9% Sales Increase for Second Quarter Ended January 31, 2013

March 7, 2013

EPS Inclusive of $0.02 Net Favorable Adjustments for Acquisition Accounting Partially Offset by Severance and Recruiting Expenses

LITTLE FALLS, N.J., March 7, 2013 /PRNewswire/ — CANTEL MEDICAL CORP. (NYSE: CMN) reported record net income of $10,452,000, or $0.38 per diluted share, on a 9% increase in sales to a record $106,363,000 for the second quarter ended January 31, 2013. This compares with net income of $7,294,000, or $0.27 per diluted share, on sales of $97,297,000 for the second quarter ended January 31, 2012. For the six months ended January 31, 2013, the Company reported record net income of $20,028,000, or $0.73 per diluted share, on an 8% increase in sales to a record $206,044,000. This compares with net income of $13,514,000, or $0.50 per diluted share, on sales of $190,559,000 for the six months ended January 31, 2012. Results for the second quarter and six months ended January 31, 2013 include $0.02 in net favorable adjustments related to acquisition accounting partially offset by severance and recruiting costs. Results for the second quarter and six months ended January 31, 2012 were inclusive of a $0.02 charge related to an asset impairment.

Andrew Krakauer, Cantel’s President and CEO stated, “We are pleased to have delivered record sales and earnings in the second quarter. These positive results confirm the continued success of our three prong approach to growth which includes investing in new product development, sales and marketing programs and acquisitions. All of these strategies positively affected the results this quarter.”

Krakauer added, “Performance this quarter was led by our Healthcare Disposables segment. With the benefit of the ongoing integration of the SPS Medical sterility assurance business acquired on November 1, 2012, sales in this segment exceeded the same quarter last year by 36%. Organic sales growth was 11%, about half of which was driven by our distributor customers pulling forward shipments in anticipation of January 1 price increases. Operating profit grew by over 80%, with approximately two thirds of the growth being organic, driven by operating leverage.

As in the first quarter, our Water Purification and Filtration segment had excellent year-over-year quarterly performance with organic sales growth of 15%. Operating profit in the segment grew by 21% due to greater sales of advanced technology products and improved operating efficiencies. Our largest business unit, Endoscopy, had sequential quarterly sales growth of 7%. However, as expected, this segment showed a 2% decline in sales against very strong comparables from the year earlier quarter.”

The Company further reported that its balance sheet at January 31, 2013 included current assets of $138,042,000, including cash of $26,825,000, a current ratio of 2.7:1, debt of $107,000,000 and stockholders’ equity of $298,002,000. 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 20% to $22,278,000. After the acquisition of SPS Medical on the first day of the quarter, we were able to reduce net debt by $9 million to $80,175,000.”

Cantel Medical Corp. (NYSE:CMN) is a leading provider of infection prevention and control products in the healthcare market. Our products include water purification equipment, sterilants, disinfectants and cleaners, specialized medical device reprocessing systems for endoscopy and renal dialysis, disposable infection control products primarily for dental and GI endoscopy markets, dialysate concentrates and other dialysis supplies, 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 second quarter ended January 31, 2013 on Thursday, March 7, 2013 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 Thursday, March 7, 2013 at 2:00 PM through midnight on May 7, 2013 by dialing 1-877-660-6853 and using conference ID #410008.

The call will be simultaneously broadcast live over the Internet on vcall.com at http://www.investorcalendar.com/IC/CEPage.asp?ID=170630. 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 Ended               Six Months Ended

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

                                                                                          2013                            2012      2013      2012
                                                                                          ----                            ----      ----      ----

    Net sales                                                                         $106,363                         $97,297  $206,044  $190,559

    Cost of sales                                                                       61,212                          56,476   117,166   111,788
                                                                                        ------                          ------   -------   -------

    Gross profit                                                                        45,151                          40,821    88,878    78,771

    Expenses:

      Selling                                                                           13,723                          13,270    27,136    26,193

      General and administrative                                                        12,382                          12,092    24,430    24,194

      Research and development                                                           2,183                           2,298     4,477     4,443
                                                                                         -----                           -----     -----     -----

    Total operating expenses                                                            28,288                          27,660    56,043    54,830
                                                                                        ------                          ------    ------    ------

    Income before interest, other expense and income taxes                              16,863                          13,161    32,835    23,941

    Interest expense                                                                       791                           1,000     1,437     2,031

    Interest income                                                                        (16)                            (24)      (29)      (54)

    Other expense                                                                            -                             605         -       605
                                                                                           ---                             ---       ---       ---

    Income before income taxes                                                          16,088                          11,580    31,427    21,359

    Income taxes                                                                         5,636                           4,286    11,399     7,845
                                                                                         -----                           -----    ------     -----

    Net income                                                                         $10,452                          $7,294   $20,028   $13,514
                                                                                       =======                          ======   =======   =======

    Earnings per common share - diluted                                                  $0.38                           $0.27     $0.73     $0.50
                                                                                         =====                           =====     =====     =====

    Dividends per common share                                                $              -                 $             -     $0.06     $0.05
                                                                              ================                 ===============     =====     =====

    Weighted average shares - diluted                                                   27,462                          27,243    27,411    27,084

                                       CANTEL MEDICAL CORP.

                               CONDENSED CONSOLIDATED BALANCE SHEETS

                                          (In thousands)

                                            (unaudited)

                                                January 31,          July 31,

                                                            2013                2012
                                                            ----                ----

                    Assets

     Current assets                                     $138,042            $133,892

     Property and equipment, net                          45,781              43,022

     Intangible assets, net                               76,755              71,311

     Goodwill                                            208,305             183,655

     Other assets                                          2,975               2,932
                                                           -----               -----

                                                        $471,858            $434,812
                                                        ========            ========

            Liabilities and stockholders' equity

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

     Other current liabilities                            41,389              45,141

     Long-term debt                                       97,000              80,000

     Other long-term liabilities                          25,467              23,735

     Stockholders' equity                                298,002             275,936

                                                        $471,858            $434,812
                                                        ========            ========

    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, 2013 and 2012,

    respectively, is as follows (in thousands):

                                                                                                               Three Months Ended       Six Months Ended

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

                                                                                                                                  2013                    2012     2013     2012
                                                                                                                                  ----                    ----     ----     ----

    Net income                                                                                                                 $10,452                  $7,294  $20,028  $13,514

    Income taxes                                                                                                                 5,636                   4,286   11,399    7,845

    Interest expense                                                                                                               791                   1,000    1,437    2,031

    Interest income                                                                                                                (16)                    (24)     (29)     (54)

    Other expense                                                                                                                    -                     605        -      605

    Depreciation                                                                                                                 1,814                   1,717    3,574    3,394

    Amortization                                                                                                                 2,573                   2,278    4,840    4,567

    Loss on disposal of fixed assets                                                                                                99                      33      140       36
                                                                                                                                   ---                     ---      ---      ---

    EBITDA                                                                                                                      21,349                  17,189   41,389   31,938

    Stock-based compensation expense                                                                                               929                   1,382    1,887    2,313
                                                                                                                                   ---                   -----    -----    -----

    EBITDAS                                                                                                                    $22,278                 $18,571  $43,276  $34,251
                                                                                                                               =======                 =======  =======  =======

    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.


Source: PR Newswire