UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 


 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported)  March 23, 2015

 

CANTEL MEDICAL CORP.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-31337

 

22-1760285

(State or other jurisdiction

 

(Commission

 

(IRS Identification

of incorporation)

 

File Number)

 

Number)

 

150 Clove Road, Little Falls, New Jersey

 

07424

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (973) 890-7220

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02   Results of Operations and Financial Condition.

 

The below information supplements information previously reported for the four quarters of our fiscal 2014 and the full fiscal 2014, which may be used in filings on Form 10-Q and Form 10-K as well as presentations by Company management to investors, analysts and others from time to time.

 

The information below will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended.

 

Non-GAAP Financial Measures

 

In evaluating our operating performance, we supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (“GAAP”) with certain internally derived non-GAAP financial measures, namely adjusted net income and adjusted diluted earnings per share (“EPS”). These non-GAAP financial measures are indicators of the Company’s performance that is not required by, or presented in accordance with, GAAP. They are presented with the intent of providing greater transparency to financial information used by us in our financial analysis and operational decision-making. We believe that these non-GAAP measures provide meaningful information to assist investors, shareholders and other readers of our Condensed Consolidated Financial Statements in making comparisons to our historical operating results and analyzing the underlying performance of our results of operations. These non-GAAP financial measures are not intended to be, and should not be, considered separately from, or as an alternative to, the most directly comparable GAAP financial measures.

 

We define adjusted net income and adjusted diluted EPS as net income and diluted EPS, respectively, adjusted to exclude amortization, acquisition related items, significant reorganization and restructuring charges, major tax events and other significant items management deems atypical or non-operating in nature.

 

Amortization expense is a non-cash expense related to intangibles that were primarily the result of business acquisitions. Our history of acquiring businesses has resulted in significant increases in amortization of intangible assets that reduced the Company’s net income. The removal of amortization from our overall operating performance helps in assessing our cash generated from operations including our return on invested capital, which we believe is an important analysis for measuring our ability to generate cash and invest in our continued growth.

 

Acquisition related items consist of (i) fair value adjustments to contingent consideration and other contingent liabilities resulting from acquisitions and (ii) due diligence, integration, legal fees and other transaction costs associated with specific acquisitions. The adjustments of contingent consideration and other contingent liabilities are periodic adjustments to record such

 

2



 

amounts at fair value at each balance sheet date. Given the subjective nature of the assumptions used in the determination of fair value calculations, fair value adjustments may potentially cause significant earnings volatility that are not representative of our operating results. Similarly, due diligence, integration, legal and other acquisition costs associated with specific acquisitions can be significant and also adversely impact our effective tax rate as certain costs are often not tax-deductible. Since all of these acquisition related items are atypical and often mask underlying operating performance, we excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to past operating performance.

 

For our first and second quarters of our fiscal 2014, we made adjustments to net income and diluted EPS to exclude amortization expense to arrive at our non-GAAP financial measures, adjusted net income and adjusted EPS. Significant acquisition related charges and other atypical costs were not incurred for our first and second quarters of fiscal 2014.

 

For our third and fourth quarters of our fiscal 2014, we made adjustments to net income and diluted EPS to exclude amortization expense and significant acquisition related items impacting current operating performance, including transaction and integration charges and ongoing fair value adjustments, for the purpose of determining our non-GAAP financial measures. For our fourth quarter of fiscal 2014, we also made an adjustment to exclude costs associated with the retirement of our Chief Financial Officer to arrive at our non-GAAP financial measures.

 

For the four quarters of our fiscal 2014 and the full fiscal 2014, the reconciliations of net income and diluted EPS with adjusted net income and adjusted diluted EPS were calculated as follows:

 

3



 

 

 

 

 

 

 

 

 

 

 

As Reported,

 

 

 

As Reported,

 

 

 

Acquisition

 

Other

 

Non-GAAP

 

(Unaudited)

 

Three Months Ended

 

Intangible

 

Related

 

Atypical

 

Three Months Ended

 

(Amount in thousands, except EPS)

 

October 31, 2013

 

Amortization

 

Items

 

Items

 

October 31, 2013

 

Net Sales

 

$

118,272

 

$

 

$

 

$

 

$

118,272

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

66,773

 

 

 

 

66,773

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

51,499

 

 

 

 

51,499

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling

 

15,764

 

 

 

 

15,764

 

General and administrative

 

15,164

 

(2,626

)

 

 

12,538

 

Research and development

 

2,259

 

 

 

 

2,259

 

Total operating expenses

 

33,187

 

(2,626

)

 

 

30,561

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before interest and income taxes

 

18,312

 

2,626

 

 

 

20,938

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

644

 

 

 

 

644

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

17,668

 

2,626

 

 

 

20,294

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

6,483

 

977

 

 

 

7,460

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income / Adjusted net income

 

$

11,185

 

$

1,649

 

$

 

$

 

$

12,834

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS / Adjusted diluted EPS

 

$

0.27

 

$

0.04

 

$

 

$

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

 

As Reported,

 

 

 

As Reported,

 

 

 

Acquisition

 

Other

 

Non-GAAP

 

(Unaudited)

 

Three Months Ended

 

Intangible

 

Related

 

Atypical

 

Three Months Ended

 

(Amount in thousands, except EPS)

 

January 31, 2014

 

Amortization

 

Items

 

Items

 

January 31, 2014

 

Net Sales

 

$

119,042

 

$

 

$

 

$

 

$

119,042

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

66,707

 

 

 

 

66,707

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

52,335

 

 

 

 

52,335

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling

 

16,077

 

 

 

 

16,077

 

General and administrative

 

15,557

 

(2,619

)

 

 

12,938

 

Research and development

 

2,492

 

 

 

 

2,492

 

Total operating expenses

 

34,126

 

(2,619

)

 

 

31,507

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before interest and income taxes

 

18,209

 

2,619

 

 

 

20,828

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

630

 

 

 

 

630

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

17,579

 

2,619

 

 

 

20,198

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

6,453

 

968

 

 

 

7,421

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income / Adjusted net income

 

$

11,126

 

$

1,651

 

$

 

$

 

$

12,777

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS / Adjusted diluted EPS

 

$

0.27

 

$

0.04

 

$

 

$

 

$

0.31

 

 

4



 

 

 

As Reported,

 

 

 

Acquisition

 

Other

 

Non-GAAP

 

(Unaudited)

 

Three Months Ended

 

Intangible

 

Related

 

Atypical

 

Three Months Ended

 

(Amount in thousands, except EPS)

 

April 30, 2014

 

Amortization

 

Items

 

Items

 

April 30, 2014

 

Net Sales

 

$

120,058

 

$

 

$

 

$

 

$

120,058

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

67,640

 

 

 

 

67,640

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

52,418

 

 

 

 

52,418

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling

 

16,532

 

 

 

 

16,532

 

General and administrative

 

16,428

 

(2,637

)

(456

)

 

13,335

 

Research and development

 

2,632

 

 

 

 

2,632

 

Total operating expenses

 

35,592

 

(2,637

)

(456

)

 

32,499

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before interest and income taxes

 

16,826

 

2,637

 

456

 

 

19,919

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

535

 

 

 

 

535

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

16,291

 

2,637

 

456

 

 

19,384

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

6,042

 

977

 

50

 

 

7,069

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income /Adjusted net income

 

$

10,249

 

$

1,660

 

$

406

 

$

 

$

12,315

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS /Adjusted diluted EPS (1)

 

$

0.25

 

$

0.04

 

$

0.01

 

$

 

$

0.30

 

 

 

 

As Reported,

 

 

 

Acquisition

 

Other

 

Non-GAAP

 

(Unaudited)

 

Three Months Ended

 

Intangible

 

Related

 

Atypical

 

Three Months Ended

 

(Amount in thousands, except EPS)

 

July 31, 2014

 

Amortization

 

Items

 

Items

 

July 31, 2014

 

Net Sales

 

$

131,377

 

$

 

$

 

$

 

$

131,377

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

74,330

 

 

 

 

74,330

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

57,047

 

 

 

 

57,047

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling

 

18,146

 

 

 

 

18,146

 

General and administrative

 

17,890

 

(2,759

)

(694

)

(589

)

13,848

 

Research and development

 

3,430

 

 

 

 

3,430

 

Total operating expenses

 

39,466

 

(2,759

)

(694

)

(589

)

35,424

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before interest and income taxes

 

17,581

 

2,759

 

694

 

589

 

21,623

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

508

 

 

 

 

508

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

17,073

 

2,759

 

694

 

589

 

21,115

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

6,368

 

993

 

78

 

218

 

7,657

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income /Adjusted net income

 

$

10,705

 

$

1,766

 

$

616

 

$

371

 

$

13,458

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS /Adjusted diluted EPS

 

$

0.26

 

$

0.04

 

$

0.01

 

$

0.01

 

$

0.32

 

 

5



 

 

 

As Reported,

 

 

 

Acquisition

 

Other

 

Non-GAAP

 

(Unaudited non-GAAP amounts)

 

Twelve months ended

 

Intangible

 

Related

 

Atypical

 

Twelve months ended

 

(Amount in thousands, except EPS)

 

July 31, 2014

 

Amortization

 

Items

 

Items

 

July 31, 2014

 

Net Sales

 

$

488,749

 

$

 

$

 

$

 

$

488,749

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

275,450

 

 

 

 

275,450

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

213,299

 

 

 

 

213,299

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling

 

66,519

 

 

 

 

66,519

 

General and administrative

 

65,039

 

(10,641

)

(1,150

)

(589

)

52,659

 

Research and development

 

10,813

 

 

 

 

10,813

 

Total operating expenses

 

142,371

 

(10,641

)

(1,150

)

(589

)

129,991

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before interest and income taxes

 

70,928

 

10,641

 

1,150

 

589

 

83,308

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

2,317

 

 

 

 

2,317

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

68,611

 

10,641

 

1,150

 

589

 

80,991

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

25,346

 

3,915

 

128

 

218

 

29,607

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income /Adjusted net income

 

$

43,265

 

$

6,726

 

$

1,022

 

$

371

 

$

51,384

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS /Adjusted diluted EPS (1)

 

$

1.04

 

$

0.16

 

$

0.02

 

$

0.01

 

$

1.24

 

 


(1)         The summation of each diluted EPS does not equal the adjusted diluted EPS due to rounding.

 

6



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

CANTEL MEDICAL CORP.

 

 

 

 

 

By:

/s/ Andrew A. Krakauer

 

 

Andrew A. Krakauer

 

 

Chief Executive Officer

 

 

Dated: March 23, 2015

 

 

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