Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jan. 31, 2018 | Feb. 28, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | CANTEL MEDICAL CORP | |
Entity Central Index Key | 19,446 | |
Document Type | 10-Q | |
Document Period End Date | Jan. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 41,714,324 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 39,977 | $ 36,584 |
Accounts receivable, net of allowance for doubtful accounts of $2,057 and $1,808 | 112,592 | 110,656 |
Inventories, net | 111,392 | 98,724 |
Prepaid expenses and other current assets | 15,011 | 11,407 |
Income taxes receivable | 4,007 | 0 |
Total current assets | 282,979 | 257,371 |
Property and equipment, net | 95,677 | 88,338 |
Intangible assets, net | 141,424 | 124,512 |
Goodwill | 358,329 | 311,445 |
Other assets | 5,294 | 4,707 |
Total assets | 883,703 | 786,373 |
Current liabilities: | ||
Accounts payable | 33,788 | 27,469 |
Compensation payable | 20,740 | 27,468 |
Accrued expenses | 28,104 | 23,393 |
Deferred revenue | 26,969 | 25,282 |
Income taxes payable | 0 | 3,167 |
Total current liabilities | 109,601 | 106,779 |
Long-term debt | 160,000 | 126,000 |
Deferred income taxes | 24,143 | 24,714 |
Other long-term liabilities | 3,476 | 4,948 |
Total liabilities | 297,220 | 262,441 |
Commitments and contingencies (Note 10) | ||
Stockholders’ equity: | ||
Preferred Stock, par value $1.00 per share; authorized 1,000,000 shares; none issued | 0 | 0 |
Common Stock, par value $0.10 per share. Authorized 75,000,000 shares; issued 46,243,122 shares and outstanding 41,714,903 shares as of January 31, 2018; issued 46,194,370 shares and outstanding 41,728,934 shares as of July 31, 2017 | 4,624 | 4,619 |
Additional paid-in capital | 180,083 | 174,602 |
Retained earnings | 459,462 | 407,590 |
Accumulated other comprehensive income (loss) | 1,246 | (9,900) |
Treasury Stock, at cost; 4,528,219 shares as of January 31, 2018; 4,465,440 shares as of July 31, 2017 | (58,932) | (52,979) |
Total stockholders’ equity | 586,483 | 523,932 |
Total liabilities and stockholders' equity | $ 883,703 | $ 786,373 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 2,057 | $ 1,808 |
Preferred Stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred Stock, authorized shares | 1,000,000 | 1,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common Stock, authorized shares | 75,000,000 | 75,000,000 |
Common Stock, shares issued | 46,243,122 | 46,194,370 |
Common Stock, shares outstanding | 41,714,903 | 41,728,934 |
Treasury Stock, shares | 4,528,219 | 4,465,440 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Net sales | ||||
Product sales | $ 186,484 | $ 163,904 | $ 374,449 | $ 330,805 |
Product service | 26,550 | 20,913 | 51,351 | 41,737 |
Total net sales | 213,034 | 184,817 | 425,800 | 372,542 |
Cost of sales | ||||
Product sales | 94,144 | 81,755 | 189,243 | 165,371 |
Product service | 17,655 | 14,585 | 34,663 | 29,187 |
Total cost of sales | 111,799 | 96,340 | 223,906 | 194,558 |
Gross profit | 101,235 | 88,477 | 201,894 | 177,984 |
Expenses: | ||||
Selling | 30,922 | 26,910 | 62,522 | 54,803 |
General and administrative | 32,188 | 28,465 | 64,284 | 58,468 |
Research and development | 5,643 | 4,489 | 10,972 | 9,037 |
Total operating expenses | 68,753 | 59,864 | 137,778 | 122,308 |
Income from operations | 32,482 | 28,613 | 64,116 | 55,676 |
Interest expense, net | 1,135 | 1,126 | 2,324 | 2,219 |
Other income | 0 | 0 | (1,138) | 0 |
Income before income taxes | 31,347 | 27,487 | 62,930 | 53,457 |
Income taxes | (1,141) | 9,417 | 7,513 | 16,587 |
Net income | $ 32,488 | $ 18,070 | $ 55,417 | $ 36,870 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 0.78 | $ 0.43 | $ 1.33 | $ 0.88 |
Diluted (in dollars per share) | 0.78 | 0.43 | 1.33 | 0.88 |
Dividends declared per common share (in dollars per share) | $ 0.085 | $ 0 | $ 0.085 | $ 0.07 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 32,488 | $ 18,070 | $ 55,417 | $ 36,870 |
Other comprehensive income (loss): | ||||
Foreign currency translation | 12,379 | 2,588 | 11,146 | (3,933) |
Total other comprehensive income (loss) | 12,379 | 2,588 | 11,146 | (3,933) |
Comprehensive income | $ 44,867 | $ 20,658 | $ 66,563 | $ 32,937 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Cash flows from operating activities | ||
Net income | $ 55,417 | $ 36,870 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 8,190 | 7,148 |
Amortization | 8,412 | 7,966 |
Stock-based compensation expense | 4,590 | 5,038 |
Deferred income taxes | (6,453) | 821 |
Other non-cash items, net | 299 | 621 |
Changes in assets and liabilities, net of effects of business acquisitions: | ||
Accounts receivable | 1,145 | (2,651) |
Inventories | (8,073) | (1,008) |
Prepaid expenses and other assets | (2,139) | (3,628) |
Accounts payable and other liabilities | 557 | (2,543) |
Income taxes | (7,274) | (3,633) |
Net cash provided by operating activities | 54,671 | 45,001 |
Cash flows from investing activities | ||
Capital expenditures | (13,476) | (14,416) |
Proceeds from disposal of fixed assets | 0 | 26 |
Acquisition of businesses, net of cash acquired | (64,287) | (58,348) |
Other, net | 0 | 61 |
Net cash used in investing activities | (77,763) | (72,677) |
Cash flows from financing activities | ||
Borrowings under revolving credit facility | 61,300 | 61,000 |
Repayments under revolving credit facility | (27,300) | (28,000) |
Dividends paid | (3,545) | (2,921) |
Purchases of treasury stock | (5,952) | (6,264) |
Net cash provided by financing activities | 24,503 | 23,815 |
Effect of exchange rate changes on cash and cash equivalents | 1,982 | (155) |
Increase (decrease) in cash and cash equivalents | 3,393 | (4,016) |
Cash and cash equivalents at beginning of period | 36,584 | 28,367 |
Cash and cash equivalents at end of period | $ 39,977 | $ 24,351 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jan. 31, 2018 | |
Basis of Presentation | |
Basis of Presentation | Basis of Presentation Throughout this document, references to “Cantel,” “us,” “we,” “our,” and the “Company” are references to Cantel Medical Corp. and its subsidiaries, except where the context makes it clear the reference is to Cantel itself and not its subsidiaries. Cantel is a leading provider of infection prevention products and services in the healthcare market, specializing in the following reportable segments: Endoscopy, Water Purification and Filtration, Healthcare Disposables and Dialysis. See Note 14, “Reportable Segments.” Most of our equipment, consumables and supplies are used to help prevent the occurrence or spread of infections. The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles for interim financial reporting and the requirements of Form 10-Q and Rule 10.01 of Regulation S-X. Accordingly, they do not include certain information and note disclosures required by generally accepted accounting principles for annual financial reporting and should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Annual Report of Cantel Medical Corp. on Form 10-K for the fiscal year ended July 31, 2017 (the “2017 Form 10-K”) and Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere herein. The unaudited interim financial statements reflect all adjustments (of a normal and recurring nature) which management considers necessary for a fair presentation of the results of operations for these periods. The results of operations for the interim periods are not necessarily indicative of the results for the full year. The Condensed Consolidated Balance Sheet at July 31, 2017 was derived from the audited Consolidated Balance Sheet of Cantel at that date. Subsequent Events We performed a review of events subsequent to January 31, 2018 through the date of issuance of the accompanying unaudited consolidated interim financial statements. |
Accounting Pronouncements
Accounting Pronouncements | 6 Months Ended |
Jan. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Accounting Pronouncements Newly Adopted Accounting Standards In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, “ Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”). The new guidance requires an acquirer in a business combination to recognize a measurement-period adjustment during the period in which it determines the amount, and eliminates the requirement for an acquirer to account for measurement-period adjustments retrospectively. The acquirer must also disclose the amounts and reasons for adjustments to the provisional amounts. ASU 2015-16 is effective for fiscal years beginning after December 15, 2016 (our fiscal year 2018), including interim periods within that reporting period. Accordingly, we adopted ASU 2015-06 on August 1, 2017. The adoption of ASU 2015-06 did not have a material impact on our financial position and results of operations. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” (“ASU 2015-11”). The new guidance requires companies using the first-in, first-out and average costs methods to measure inventory using the lower of cost and net realizable value, where net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016 (our fiscal year 2018), including interim periods within that reporting period. Accordingly, we adopted ASU 2015-11 on August 1, 2017. The adoption of ASU 2015-11 did not have a material impact on our financial position and results of operations. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805)” (“ASU 2017-01”) to clarify the definition of a business. The revised guidance creates a more robust framework to use in determining whether a set of assets and activities is a business. The guidance will be applied on a prospective basis on or after the effective date. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. We early adopted ASU-2017-01 on August 1, 2017. The adoption of ASU 2017-01 did not have a material impact on our financial position and results of operations. Recently Issued Accounting Standards In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”) to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 (our fiscal year 2020), including interim periods within that reporting period. We are currently in the process of evaluating the impact of ASU 2017-12 on our financial position and results of operations. In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting” (“ASU 2017-09”) to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. We are currently in the process of evaluating the impact of ASU 2017-09 on our financial position and results of operations. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other” (“ASU 2017-04”) to simplify the test for goodwill impairment. The revised guidance eliminates the existing Step 2 of the goodwill impairment test which required an entity to compute the implied fair value of its goodwill at the testing date in order to measure the amount of the impairment charge when the fair value of the reporting unit failed Step 1 of the goodwill impairment test. Under the revised guidance, an entity would recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. The guidance will be applied on a prospective basis on or after the effective date. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021) and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of ASU 2017-04 is not expected to have a significant impact on our financial position and results of operations. In February 2016, FASB issued ASU 2016-02, “ Leases (Topic 842) ” (“ASU 2016-02”). The new guidance requires the recording of assets and liabilities arising from leases on the balance sheet accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. The new guidance is expected to provide transparency of information and comparability among organizations. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (our fiscal year 2020), including interim periods within that reporting period. Early adoption is permitted as of the beginning of an interim or annual period. We are currently in the process of evaluating the impact of ASU 2016-02 on our financial position and results of operations. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which will supersede the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition” (“ASC 605”). ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606),” which defers the effective date of ASU 2014-09 by one year to fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606),” (“ASU 2016-12”), which provided narrow scope improvements and practical expedients relating to ASU 2014-09. In preparation for our adoption of ASU 2014-09 and ASU 2016-12 on August 1, 2018, we have obtained representative samples of contracts and other forms of agreements with our customers in the United States and in our international locations and continue to evaluate the provisions contained therein in light of the five-step model specified by the new guidance. We continue to evaluate the impact of the new standard on certain common practices currently employed by us and by other health care manufacturers and service providers, such as multiple-element arrangements, deferred revenues, warranties, rebates and other pricing allowances. We anticipate adopting the standard using the modified retrospective method. There may be differences in timing of revenue recognition under the new standard compared to recognition under ASC 605. |
Acquisitions
Acquisitions | 6 Months Ended |
Jan. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Fiscal 2018 BHT Group On August 23, 2017, we purchased all of the issued and outstanding stock of BHT Hygienetechnik Holding GmbH (“BHT Group”), a leader in the German market in automated endoscope reprocessing and related equipment and services for total consideration (net of cash acquired), excluding acquisition related costs, of $60,787 . The BHT Group consists of a portfolio of high-quality automatic endoscope reprocessors, advanced endoscope storage and drying cabinets (products globally distributed by our Company prior to the acquisition under an agreement with BHT Group), washer-disinfectors for central sterile applications, associated technical service and parts as well as flexible endoscope repair services. BHT Group is included in our Endoscopy segment. We anticipate completing the purchase price allocation before or during the fourth quarter of fiscal 2018. Fiscal 2017 CR Kennedy On April 1, 2017, we purchased certain endoscopy-related net assets of CR Kennedy & Company Pty Ltd. (“CR Kennedy”) related to its distribution and sale of our Medivators endoscopy products in Australia for total consideration, excluding acquisition related costs, of $11,999 . The CR Kennedy business includes a full sales and service organization and our Medivators-branded automated endoscope reprocessors, chemistries, endoscopy procedure products and other consumables in Australia, and is included in our Endoscopy segment. Vantage Endoscopy Inc.’s Medivators ® Endoscopy Business On September 26, 2016, we acquired certain net assets of Vantage Endoscopy Inc. (“Vantage”) related to its distribution and sale of our Medivators endoscopy products in Canada for total consideration, excluding acquisition-related costs, of $4,044 . Vantage was our exclusive distributor of Medivators capital equipment (e.g., automated endoscope reprocessors) and related consumables and accessories in Canada, and is included in our Endoscopy segment. Accutron, Inc. On August 1, 2016, we acquired all of the issued and outstanding stock of Accutron Inc. (“Accutron”), a Phoenix-based company, for total consideration, excluding acquisition-related costs, of $53,049 . The Accutron business designs, manufactures and sells nitrous oxide conscious sedation equipment and single use nasal masks for use in dental procedures, and is included in our Healthcare Disposables segment. 2018 2017 Purchase Price Allocation BHT Group (1) CR Kennedy Vantage (1) Accutron (1) Purchase Price: Cash paid (net of cash acquired) $ 60,787 $ 11,999 $ 4,044 $ 53,049 Debt acquired — — — — Total $ 60,787 $ 11,999 $ 4,044 $ 53,049 Allocation: Property and equipment 835 — 433 1,676 Amortizable intangible assets: Customer relationships 12,500 4,200 992 12,800 Technology 6,200 — — 10,000 Brand names — — — 2,000 Goodwill 41,185 5,894 2,299 21,989 Deferred income taxes (5,881 ) — — 112 Other working capital 5,948 1,905 320 4,472 Total $ 60,787 $ 11,999 $ 4,044 $ 53,049 _______________________________________________ (1) The excess purchase price over net assets acquired was assigned to goodwill, all of which is deductible for income tax purposes. Unaudited Pro Forma Summary of Operations The acquisitions above, both individually and in the aggregate, were not material to our consolidated results of operations or financial position and, therefore, pro forma financial information is not presented. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jan. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2016 Equity Incentive Plan At January 31, 2018 , 202,431 unvested restricted stock awards were outstanding under the 2016 plan. No options were outstanding under the 2016 plan. At January 31, 2018 , 968,456 shares are collectively available pursuant to restricted stock and other stock awards, stock options and stock appreciation rights. 2006 Equity Incentive Plan The 2006 Plan was terminated on January 7, 2016 in conjunction with the adoption of the 2016 Plan. At January 31, 2018 , options to purchase 70,000 shares of common stock were outstanding, and 46,942 unvested restricted stock awards were outstanding under the 2006 Plan. No additional awards will be granted under this plan. The following table shows the income statement components of stock-based compensation expense recognized in the condensed consolidated statements of income: Three Months Ended January 31, Six Months Ended January 31, 2018 2017 2018 2017 Cost of sales $ 181 $ 92 $ 296 $ 202 Operating expenses: Selling 264 310 629 939 General and administrative 2,257 1,685 3,590 3,838 Research and development 37 29 75 59 Total operating expenses 2,558 2,024 4,294 4,836 Stock-based compensation before income taxes $ 2,739 $ 2,116 $ 4,590 $ 5,038 At January 31, 2018 , total unrecognized stock-based compensation expense, before income taxes, related to total nonvested stock options and restricted stock awards was $17,437 with a remaining weighted average period of 22 months over which such expense is expected to be recognized. We determine the fair value of restricted stock awards with market conditions using a Monte Carlo simulation on the date of grant using the following assumptions: 2018 2017 Volatility of common stock 26.60 % 27.75 % Average volatility of peer companies 33.72 % 32.98 % Average correlation coefficient of peer companies 32.26 % 35.35 % Risk-free interest rate 1.62 % 0.96 % A summary of nonvested stock award activity for the six months ended January 31, 2018 follows: Number of Time-based Awards Number of Performance-based Awards Number of Market-based Awards Number of Total Awards Weighted Average Fair Value July 31, 2017 196,818 16,235 9,245 222,298 $ 66.28 Granted 93,054 18,647 10,465 122,166 $ 101.64 Vested (1) (85,953 ) (4,834 ) — (90,787 ) $ 58.24 Forfeited (3,899 ) (405 ) — (4,304 ) $ 83.06 January 31, 2018 200,020 29,643 19,710 249,373 $ 86.30 _______________________________________________ (1) The aggregate fair value of all nonvested stock awards which vested was approximately $5,287 . A summary of stock option activity for the six months ended January 31, 2018 follows: Number of shares Weighted Average Exercise Price Weighted Average Contractual Life Remaining (Years) Aggregate Intrinsic Value Outstanding at July 31, 2017 122,500 $ 29.36 Granted — — Exercised (52,500 ) 17.04 Outstanding at January 31, 2018 70,000 $ 38.60 1.54 $ 5,063 Exercisable at January 31, 2018 65,000 $ 37.31 1.44 $ 4,785 During the six months ended January 31, 2018 , 5,000 options vested, with an aggregate fair value of approximately $132 . During the six months ended January 31, 2018 , 52,500 options were exercised, with an aggregate fair value of approximately $4,049 . As of January 31, 2018 , all of the outstanding options had vested or were expected to vest in future periods. No options were granted during the six months ended January 31, 2018 . Excess tax benefits arise when the ultimate tax effect of the deduction for tax purposes is greater than the income tax benefit on stock-based compensation described above. For the six months ended January 31, 2018 , income tax deductions of $3,406 were generated, of which $1,394 were previously recorded as a reduction to income taxes over the equity awards’ vesting period and the remaining excess tax benefit of $2,012 (which includes the state income tax benefit) was recorded as a reduction to income taxes. For the six months ended January 31, 2017 , income tax deductions of $5,545 were generated, of which $3,259 were previously recorded as a reduction to income taxes over the equity awards’ vesting period and the remaining excess tax benefit of $2,286 was recorded as a reduction to income taxes. |
Inventories, Net
Inventories, Net | 6 Months Ended |
Jan. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories, net | Inventories, Net A summary of inventories is as follows: January 31, 2018 July 31, 2017 Raw materials and parts $ 51,332 $ 45,831 Work-in-process 14,402 13,484 Finished goods 54,139 48,262 Reserve for excess and obsolete inventory (8,481 ) (8,853 ) Total $ 111,392 $ 98,724 |
Derivatives
Derivatives | 6 Months Ended |
Jan. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives In order to hedge against the impact of fluctuations in the value of the Euro, British Pound, Canadian dollar, Australian dollar and Singapore dollar relative to the U.S. dollar on the conversion of such net assets into the functional currencies, we enter into short-term forward contracts to purchase Euros, British Pounds, Canadian dollars, Australian dollars and Singapore dollars, which contracts are one-month in duration. These short-term contracts are designated as fair value hedge instruments. These foreign currency forward contracts are continually replaced with new one -month contracts as long as we have significant net assets that are denominated and ultimately settled in currencies other than each entity’s functional currency. Gains and losses related to hedging contracts to buy Euros, British Pounds, Canadian dollars, Australian dollars and Singapore dollars forward are immediately realized within general and administrative expenses due to the short-term nature of such contracts. We do not currently hedge against the impact of fluctuations in the value of the Chinese Renminbi relative to the U.S. dollar because the overall foreign currency exposure relating to the currency is currently not deemed significant. There were seven foreign currency forward contracts with an aggregate notional value of $24,169 and $24,762 at January 31, 2018 and July 31, 2017 , respectively, which covered certain assets and liabilities that were denominated in currencies other than each entity’s functional currency. For the three and six months ended January 31, 2018 and 2017 , the settlement our forward contracts resulted in immaterial amounts of net currency conversion losses on the hedged items. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jan. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair Value Hierarchy We apply the provisions of ASC 820, “Fair Value Measurements and Disclosures,” (“ASC 820”), for our financial assets and liabilities that are re-measured and reported at fair value each reporting period and our nonfinancial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis. We define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three level fair value hierarchy to prioritize the inputs used in valuations, as defined below: Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis Our financial assets that are re-measured at fair value on a recurring basis include money market funds that are classified as cash and cash equivalents in the consolidated balance sheets. These money market funds are classified within Level 1 of the fair value hierarchy and are valued using quoted market prices for identical assets. In connection with the Jet Prep Ltd. ("Jet Prep") acquisition in fiscal 2014, we assumed a contingent obligation payable to the Israeli Government based on future sales. This fair value measurement was based on significant inputs not observed in the market and thus represent Level 3 measurements. In November 2017, the Israeli Government formally notified us that they would forgive any future amounts payable due to our decision to exit the Jet Prep business. During the first quarter of fiscal 2018, we reduced the fair value of this obligation to $0 . See Note 10, "Commitments and Contingencies." The fair values of the Company’s financial instruments measured on a recurring basis were categorized as follows: January 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ 102 $ — $ — $ 102 Total assets $ 102 $ — $ — $ 102 Liabilities: Accrued expenses: Assumed contingent obligation — — — — Contingent guaranteed obligation — — — — Total accrued expenses — — — — Long-term debt (1) — 160,000 — 160,000 Other long-term liabilities: Assumed contingent obligation — — — — Contingent guaranteed obligation — — — — Total other long-term liabilities: — — — — Total liabilities $ — $ 160,000 $ — $ 160,000 ________________________________________________ (1) Fair value estimated using Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. July 31, 2017 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ 102 $ — $ — $ 102 Total assets $ 102 $ — $ — $ 102 Liabilities: Accrued expenses: Assumed contingent obligation — — 12 12 Contingent guaranteed obligation — — — — Total accrued expenses — — 12 12 Long-term debt (1) — 126,000 — 126,000 Other long-term liabilities: Assumed contingent obligation — — 1,126 1,126 Contingent guaranteed obligation — — — — Total other long-term liabilities: — — 1,126 1,126 Total liabilities $ — $ 126,000 $ 1,138 $ 127,138 ________________________________________________ (1) Fair value estimated using Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. With the exception of the resolution of the Jet Prep obligation, there was no Level 3 activity during the three and six months ended January 31, 2018 . The Level 3 activity during the three and six months ended January 31, 2017 was not material. Disclosure of Fair Value of Financial Instruments As of January 31, 2018 and July 31, 2017 , the carrying amounts for cash and cash equivalents (excluding money markets), accounts receivable and accounts payable approximated fair value due to the short maturity of these instruments. |
Intangibles and Goodwill
Intangibles and Goodwill | 6 Months Ended |
Jan. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles and Goodwill | Intangibles and Goodwill The Company’s intangible assets consist of the following: January 31, 2018 July 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Intangible assets with finite lives: Customer relationships $ 135,192 $ (40,829 ) $ 94,363 $ 119,576 $ (34,773 ) $ 84,803 Technology (1) 48,878 (17,371 ) 31,507 39,064 (15,260 ) 23,804 Brand names 8,323 (3,607 ) 4,716 8,188 (3,225 ) 4,963 Non-compete agreements 3,092 (1,545 ) 1,547 3,092 (1,428 ) 1,664 Patents and other registrations 2,862 (1,136 ) 1,726 2,783 (1,053 ) 1,730 198,347 (64,488 ) 133,859 172,703 (55,739 ) 116,964 Trademarks and tradenames 7,565 — 7,565 7,548 — 7,548 Total intangible assets $ 205,912 $ (64,488 ) $ 141,424 $ 180,251 $ (55,739 ) $ 124,512 _______________________________________________ (1) The gross and accumulated amortization amounts previously reported as of July 31, 2017 have been revised to exclude the $3,730 fully amortized technology related intangible asset and associated accumulated amortization related to the Jet Prep business. This did not result in any change to the net technology related intangible asset as of July 31, 2017. Amortization expense related to intangible assets was $4,364 and $4,057 for the three months ended January 31, 2018 and 2017 , respectively, and $8,412 and $7,966 for the six months ended January 31, 2018 and 2017 , respectively. We expect to recognize an additional $8,825 of amortization expense related to intangible assets for the remainder of fiscal 2018 , and thereafter $17,167 , $15,447 , $15,446 , $15,095 and $14,711 of amortization expense for fiscal years 2019 , 2020 , 2021 , 2022 and 2023 , respectively. Goodwill changed during the six months ended January 31, 2018 as follows: Endoscopy Water Purification and Filtration Healthcare Disposables Dialysis Total Goodwill Balance, July 31, 2017 $ 129,945 $ 59,088 $ 114,279 $ 8,133 $ 311,445 Acquisitions 41,185 — — — 41,185 Foreign currency translation 5,601 98 — — 5,699 Balance, January 31, 2018 $ 176,731 $ 59,186 $ 114,279 $ 8,133 $ 358,329 |
Financing Arrangements
Financing Arrangements | 6 Months Ended |
Jan. 31, 2018 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Financing Arrangements Borrowings under our Third Amended and Restated Credit Agreement (the “2014 Credit Agreement”) bear interest at rates ranging from 0.25% to 1.25% above the lender’s base rate, or at rates ranging from 1.25% to 2.25% above the London Interbank Offered Rate (“LIBOR”), depending upon the Company’s “Consolidated Leverage Ratio,” which is defined as the consolidated ratio of total funded debt to earnings before interest, taxes, depreciation and amortization, and as further adjusted under the terms of the 2014 Credit Agreement (“Consolidated EBITDA”). At January 31, 2018 , the lender’s base rate was 4.50% and the LIBOR rates ranged from 1.46% to 1.56% . The margins applicable to our outstanding borrowings were 0.50% above the lender’s base rate or 1.50% above LIBOR. All of our outstanding borrowings were under LIBOR contracts at January 31, 2018 . The 2014 Credit Agreement also provides for fees on the unused portion of our facility at rates ranging from 0.20% to 0.40% , depending upon our Consolidated Leverage Ratio, which was 0.25% at January 31, 2018 . The 2014 Credit Agreement contains affirmative and negative covenants reasonably customary for similar credit facilities and is secured by (i) substantially all assets of Cantel and its U.S.-based subsidiaries, (ii) a pledge by Cantel of all of the outstanding shares of its U.S.-based subsidiaries and 65% of the outstanding shares of certain of Cantel’s foreign-based subsidiaries and (iii) a guaranty by Cantel’s domestic subsidiaries. We are in compliance with all financial and other covenants under the 2014 Credit Agreement. As of January 31, 2018 and July 31, 2017 , we had $160,000 and $126,000 , respectively, of outstanding borrowings under the 2014 Credit Agreement. Debt issuance costs associated with our credit facilities are capitalized and amortized to interest expense over the term of the credit facilities. As of January 31, 2018 and July 31, 2017 , such debt issuance costs, net of related amortization, were included in other assets, and amounted to $397 and $580 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jan. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingent Consideration and Assumed Contingent Liability During fiscal 2017, we decided to exit the Jet Prep business that was acquired in fiscal 2014. At the time of the acquisition, we assumed a contingent obligation payable to the Israeli Government based on future sales. In November 2017, the Israeli Government formally notified us that they would forgive any future amounts payable due to our decision to exit the Jet Prep business. As a result of this formal notification, we reduced the $1,138 contingent obligation to $0 during the first quarter of fiscal 2018, resulting in a benefit through other income for the six months ended January 31, 2018 . Legal Proceedings In the normal course of business, we are subject to pending and threatened legal actions. It is our policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount of anticipated exposure can be reasonably estimated. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows. |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Jan. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings Per Common Share Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. The following table sets forth the computation of basic and diluted EPS available to stockholders of common stock (excluding participating securities): Three Months Ended Six Months Ended January 31, January 31, 2018 2017 2018 2017 Numerator for basic and diluted earnings per share: Net income $ 32,488 $ 18,070 $ 55,417 $ 36,870 Less income allocated to participating securities (107 ) (103 ) (225 ) (237 ) Net income available to common shareholders $ 32,381 $ 17,967 $ 55,192 $ 36,633 Denominator for basic and diluted earnings per share, as adjusted for participating securities: Denominator for basic earnings per share - weighted average number of shares outstanding attributable to common stock 41,578,483 41,485,557 41,549,570 41,444,304 Dilutive effect of stock awards using the treasury stock method and the average market price for the year 55,561 74,582 60,897 73,279 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 41,634,044 41,560,139 41,610,467 41,517,583 Earnings per share attributable to common stock: Basic earnings per share $ 0.78 $ 0.43 $ 1.33 $ 0.88 Diluted earnings per share $ 0.78 $ 0.43 $ 1.33 $ 0.88 Stock options excluded from weighted average dilutive common shares because their inclusion would have been anti-dilutive — — — — A reconciliation of weighted average number of shares and common stock equivalents attributable to common stock, as determined above, to the Company’s total weighted average number of shares and common stock equivalents, including participating securities, is set forth in the following table: Three Months Ended Six Months Ended January 31, January 31, 2018 2017 2018 2017 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 41,634,044 41,560,139 41,610,467 41,517,583 Participating securities 138,508 233,128 172,205 271,408 Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities 41,772,552 41,793,267 41,782,672 41,788,991 |
Income Taxes
Income Taxes | 6 Months Ended |
Jan. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the U.S. government enacted wide-ranging tax legislation, the Tax Cuts and Jobs Act (the “2017 Tax Act”). The 2017 Tax Act significantly revises U.S. tax law by, among other provisions, (a) lowering the applicable U.S. federal statutory income tax rate from 35% to 21%, (b) creating a partial territorial tax system that includes imposing a mandatory one-time transition tax on previously deferred foreign earnings, (c) creating provisions regarding the (1) Global Intangible Low Tax Income (“GILTI”), (2) the Foreign Derived Intangible Income (“FDII”) deduction, and (3) the Base Erosion Anti-Abuse Tax (“BEAT”), and (d) eliminating or reducing certain income tax deductions, such as interest expense, executive compensation expenses and certain employee expenses. ASC 740 Income Taxes requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted. However, due to the complexity and significance of the 2017 Tax Act’s provisions, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which allows companies to record the tax effects of the 2017 Tax Act on a provisional basis based on a reasonable estimate and then, if necessary, subsequently adjust such amounts during a limited measurement period as more information becomes available. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from enactment. Section 15 of the Internal Revenue Code governs rate changes and was not amended by the 2017 Tax Act. Section 15 requires a blended tax rate for fiscal-year taxpayers for their fiscal year that includes the effective date of the rate change, which was January 1, 2018. As a result of the 2017 Tax Act, we revised our estimated annual effective rate to reflect the change in the U.S. federal statutory rate by computing a tentative tax under both rates, and then prorating the tentative tax based on the number of days with and without the rate change to arrive at a blended tax rate of 26.9% , as required by the code. This blended rate was applied for fiscal 2018 and the new U.S. federal statutory rate of 21% will apply to fiscal 2019 and beyond. During the second quarter ended January 31, 2018, we recorded a one-time net benefit of $8,398 to the income tax provision as a provisional estimate of the net accounting impact of the 2017 Tax Act in accordance with SAB 118. The net charge is comprised of the following: (i) expense of $294 related to the mandatory transition tax for deemed repatriation of deferred foreign income and (ii) a benefit of $8,692 related to a revaluation of our deferred tax assets and liabilities. Given the significant complexity of the 2017 Tax Act, anticipated guidance from the U.S. Treasury concerning implementation of the 2017 Tax Act, and the potential for additional guidance from the SEC or the FASB related to the 2017 Tax Act, the provisional estimates we recorded may require adjustment during the measurement period. The provisional estimates were based on our understanding of the 2017 Tax Act and other information available at the time of the estimates, including assumptions and expectations about future events, such as projected financial performance, and are subject to further refinement as additional information becomes available (including our actual full fiscal 2018 results of operations, as well as potential new or interpretative guidance issued by the SEC, the FASB, or the Internal Revenue Service) and as we continue our analysis. We continue to analyze the changes to certain income tax deductions, assess calculations of earnings and profits in certain foreign subsidiaries, including whether those earnings are held in cash or other assets, and gather additional data to compute the full impact of the 2017 Tax Act on our deferred and current tax assets and liabilities. Furthermore, such analysis includes but is not limited to provisions regarding the GILTI, FDII, BEAT, interest expense and certain employee expense deductions, as well as the state tax impact of the 2017 Tax Act. We are currently in the process of analyzing its structure and estimated future results and, as a result, are not yet able to reasonably estimate the effect of these provisions of the 2017 Tax Act. A reconciliation of the consolidated effective income tax rate from the three and six months ended January 31, 2017 to the three and six months ended January 31, 2018 is as follows: Consolidated Effective Income Tax Rate Three Months Ended Six Months Ended January 31, 2017 34.3 % 31.0 % Difference attributable to: Deferred tax revaluation (27.5 )% (13.7 )% U.S. federal statutory rate decrease (1) (8.1 )% (8.1 )% Prior quarter true-up due to U.S. federal statutory rate decrease (8.2 )% — % Foreign operations 2.4 % 0.2 % State taxes 1.1 % 0.5 % Excess tax benefit 1.1 % 1.1 % Other 1.3 % 0.9 % January 31, 2018 (3.6 )% 11.9 % ___________________________________ (1) The Company revised its estimated annual rate to reflect a blended U.S. federal statutory rate of 26.9% as compared to 35.0%. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jan. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Income (Loss) The components and changes in accumulated other comprehensive income (loss) were as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 Beginning balance $ (11,133 ) $ (18,316 ) $ (9,900 ) $ (11,795 ) Other comprehensive income (loss) for foreign currency translation 12,379 2,588 11,146 (3,933 ) Ending balance $ 1,246 $ (15,728 ) $ 1,246 $ (15,728 ) |
Reportable Segments
Reportable Segments | 6 Months Ended |
Jan. 31, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segments | Reportable Segments In accordance with FASB ASC Topic 280, “ Segment Reporting,” (“ASC 280”), we have determined our reportable business segments based upon an assessment of product types, organizational structure, customers and internally prepared financial statements. The primary factors used by us in analyzing segment performance are net sales and operating income. The Company’s reportable segments are as follows: Endoscopy: designs, develops, manufactures, sells and installs a comprehensive offering of products and services comprising a complete circle of infection prevention solutions. Our products include endoscope reprocessing and endoscopy procedure products. Water Purification and Filtration: designs, develops, manufactures, sells, and installs water purification systems for medical, pharmaceutical and other bacteria controlled applications. We also provide filtration/separation and disinfectant technologies to the medical and life science markets through a worldwide distributor network. Two customers collectively accounted for approximately 51.3% and 50.1% of our Water Purification and Filtration segment net sales for the six months ended January 31, 2018 and 2017 , respectively. Healthcare Disposables: designs, manufactures, sells, supplies and distributes a broad selection of infection prevention healthcare products, the majority of which are single-use products used by dental practitioners. Three customers collectively accounted for approximately 48.3% and 48.2% of our Healthcare Disposables segment net sales for the six months ended January 31, 2018 and 2017 , respectively. Dialysis: designs, develops, manufactures, sells and services reprocessing systems and sterilants for dialyzers (a device serving as an artificial kidney), as well as dialysate concentrates and supplies utilized for renal dialysis. Two customers accounted for approximately 38.7% and 40.0% of our Dialysis segment net sales for the six months ended January 31, 2018 and 2017 , respectively. Information as to reportable segments is summarized below: Three Months Ended January 31, Six Months Ended January 31, 2018 2017 2018 2017 Net sales: Endoscopy $ 116,665 $ 94,367 $ 229,050 $ 188,195 Water Purification and Filtration 50,943 47,420 104,498 97,293 Healthcare Disposables 37,484 35,280 76,376 72,079 Dialysis 7,942 7,750 15,876 14,975 Total $ 213,034 $ 184,817 $ 425,800 $ 372,542 None of our customers accounted for 10% or more of our consolidated net sales for the six months ended January 31, 2018 and 2017 . Three Months Ended January 31, Six Months Ended January 31, 2018 2017 2018 2017 Segment operating income: Endoscopy $ 24,463 $ 18,778 $ 44,147 $ 36,339 Water Purification and Filtration 8,149 8,405 18,299 17,325 Healthcare Disposables 6,993 7,069 15,893 14,465 Dialysis 1,918 2,147 4,017 3,960 41,523 36,399 82,356 72,089 General corporate expenses (1) 9,041 7,786 18,240 16,413 Operating income $ 32,482 $ 28,613 $ 64,116 $ 55,676 _______________________________________________ (1) General corporate expenses relate to unallocated corporate costs primarily related to executive management personnel as well as costs associated with certain facets of our acquisition program and being a publicly traded company. |
Accounting Pronouncements Accou
Accounting Pronouncements Accounting Pronouncements (Policies) | 6 Months Ended |
Jan. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Newly Adopted And Recently Issued Accounting Standards | Newly Adopted Accounting Standards In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, “ Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”). The new guidance requires an acquirer in a business combination to recognize a measurement-period adjustment during the period in which it determines the amount, and eliminates the requirement for an acquirer to account for measurement-period adjustments retrospectively. The acquirer must also disclose the amounts and reasons for adjustments to the provisional amounts. ASU 2015-16 is effective for fiscal years beginning after December 15, 2016 (our fiscal year 2018), including interim periods within that reporting period. Accordingly, we adopted ASU 2015-06 on August 1, 2017. The adoption of ASU 2015-06 did not have a material impact on our financial position and results of operations. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” (“ASU 2015-11”). The new guidance requires companies using the first-in, first-out and average costs methods to measure inventory using the lower of cost and net realizable value, where net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016 (our fiscal year 2018), including interim periods within that reporting period. Accordingly, we adopted ASU 2015-11 on August 1, 2017. The adoption of ASU 2015-11 did not have a material impact on our financial position and results of operations. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805)” (“ASU 2017-01”) to clarify the definition of a business. The revised guidance creates a more robust framework to use in determining whether a set of assets and activities is a business. The guidance will be applied on a prospective basis on or after the effective date. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. We early adopted ASU-2017-01 on August 1, 2017. The adoption of ASU 2017-01 did not have a material impact on our financial position and results of operations. Recently Issued Accounting Standards In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”) to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 (our fiscal year 2020), including interim periods within that reporting period. We are currently in the process of evaluating the impact of ASU 2017-12 on our financial position and results of operations. In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting” (“ASU 2017-09”) to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. We are currently in the process of evaluating the impact of ASU 2017-09 on our financial position and results of operations. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other” (“ASU 2017-04”) to simplify the test for goodwill impairment. The revised guidance eliminates the existing Step 2 of the goodwill impairment test which required an entity to compute the implied fair value of its goodwill at the testing date in order to measure the amount of the impairment charge when the fair value of the reporting unit failed Step 1 of the goodwill impairment test. Under the revised guidance, an entity would recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. The guidance will be applied on a prospective basis on or after the effective date. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021) and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of ASU 2017-04 is not expected to have a significant impact on our financial position and results of operations. In February 2016, FASB issued ASU 2016-02, “ Leases (Topic 842) ” (“ASU 2016-02”). The new guidance requires the recording of assets and liabilities arising from leases on the balance sheet accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. The new guidance is expected to provide transparency of information and comparability among organizations. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (our fiscal year 2020), including interim periods within that reporting period. Early adoption is permitted as of the beginning of an interim or annual period. We are currently in the process of evaluating the impact of ASU 2016-02 on our financial position and results of operations. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which will supersede the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition” (“ASC 605”). ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606),” which defers the effective date of ASU 2014-09 by one year to fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606),” (“ASU 2016-12”), which provided narrow scope improvements and practical expedients relating to ASU 2014-09. In preparation for our adoption of ASU 2014-09 and ASU 2016-12 on August 1, 2018, we have obtained representative samples of contracts and other forms of agreements with our customers in the United States and in our international locations and continue to evaluate the provisions contained therein in light of the five-step model specified by the new guidance. We continue to evaluate the impact of the new standard on certain common practices currently employed by us and by other health care manufacturers and service providers, such as multiple-element arrangements, deferred revenues, warranties, rebates and other pricing allowances. We anticipate adopting the standard using the modified retrospective method. There may be differences in timing of revenue recognition under the new standard compared to recognition under ASC 605. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of purchase price allocated to the assets acquired and assumed liabilities based on estimated fair values | 2018 2017 Purchase Price Allocation BHT Group (1) CR Kennedy Vantage (1) Accutron (1) Purchase Price: Cash paid (net of cash acquired) $ 60,787 $ 11,999 $ 4,044 $ 53,049 Debt acquired — — — — Total $ 60,787 $ 11,999 $ 4,044 $ 53,049 Allocation: Property and equipment 835 — 433 1,676 Amortizable intangible assets: Customer relationships 12,500 4,200 992 12,800 Technology 6,200 — — 10,000 Brand names — — — 2,000 Goodwill 41,185 5,894 2,299 21,989 Deferred income taxes (5,881 ) — — 112 Other working capital 5,948 1,905 320 4,472 Total $ 60,787 $ 11,999 $ 4,044 $ 53,049 _______________________________________________ (1) The excess purchase price over net assets acquired was assigned to goodwill, all of which is deductible for income tax purposes. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of the income statement components of stock-based compensation expense recognized in the Condensed Consolidated Statements of Income | The following table shows the income statement components of stock-based compensation expense recognized in the condensed consolidated statements of income: Three Months Ended January 31, Six Months Ended January 31, 2018 2017 2018 2017 Cost of sales $ 181 $ 92 $ 296 $ 202 Operating expenses: Selling 264 310 629 939 General and administrative 2,257 1,685 3,590 3,838 Research and development 37 29 75 59 Total operating expenses 2,558 2,024 4,294 4,836 Stock-based compensation before income taxes $ 2,739 $ 2,116 $ 4,590 $ 5,038 |
Schedule of weighted-average assumptions used to estimate fair value of stock options | We determine the fair value of restricted stock awards with market conditions using a Monte Carlo simulation on the date of grant using the following assumptions: 2018 2017 Volatility of common stock 26.60 % 27.75 % Average volatility of peer companies 33.72 % 32.98 % Average correlation coefficient of peer companies 32.26 % 35.35 % Risk-free interest rate 1.62 % 0.96 % |
Summary of nonvested stock award activity | A summary of nonvested stock award activity for the six months ended January 31, 2018 follows: Number of Time-based Awards Number of Performance-based Awards Number of Market-based Awards Number of Total Awards Weighted Average Fair Value July 31, 2017 196,818 16,235 9,245 222,298 $ 66.28 Granted 93,054 18,647 10,465 122,166 $ 101.64 Vested (1) (85,953 ) (4,834 ) — (90,787 ) $ 58.24 Forfeited (3,899 ) (405 ) — (4,304 ) $ 83.06 January 31, 2018 200,020 29,643 19,710 249,373 $ 86.30 _______________________________________________ (1) The aggregate fair value of all nonvested stock awards which vested was approximately $5,287 . |
Summary of stock option activity | A summary of stock option activity for the six months ended January 31, 2018 follows: Number of shares Weighted Average Exercise Price Weighted Average Contractual Life Remaining (Years) Aggregate Intrinsic Value Outstanding at July 31, 2017 122,500 $ 29.36 Granted — — Exercised (52,500 ) 17.04 Outstanding at January 31, 2018 70,000 $ 38.60 1.54 $ 5,063 Exercisable at January 31, 2018 65,000 $ 37.31 1.44 $ 4,785 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Summary of inventories | A summary of inventories is as follows: January 31, 2018 July 31, 2017 Raw materials and parts $ 51,332 $ 45,831 Work-in-process 14,402 13,484 Finished goods 54,139 48,262 Reserve for excess and obsolete inventory (8,481 ) (8,853 ) Total $ 111,392 $ 98,724 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair values of financial instruments measured on a recurring basis | The fair values of the Company’s financial instruments measured on a recurring basis were categorized as follows: January 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ 102 $ — $ — $ 102 Total assets $ 102 $ — $ — $ 102 Liabilities: Accrued expenses: Assumed contingent obligation — — — — Contingent guaranteed obligation — — — — Total accrued expenses — — — — Long-term debt (1) — 160,000 — 160,000 Other long-term liabilities: Assumed contingent obligation — — — — Contingent guaranteed obligation — — — — Total other long-term liabilities: — — — — Total liabilities $ — $ 160,000 $ — $ 160,000 ________________________________________________ (1) Fair value estimated using Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. July 31, 2017 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ 102 $ — $ — $ 102 Total assets $ 102 $ — $ — $ 102 Liabilities: Accrued expenses: Assumed contingent obligation — — 12 12 Contingent guaranteed obligation — — — — Total accrued expenses — — 12 12 Long-term debt (1) — 126,000 — 126,000 Other long-term liabilities: Assumed contingent obligation — — 1,126 1,126 Contingent guaranteed obligation — — — — Total other long-term liabilities: — — 1,126 1,126 Total liabilities $ — $ 126,000 $ 1,138 $ 127,138 ________________________________________________ (1) Fair value estimated using Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. |
Intangibles and Goodwill (Table
Intangibles and Goodwill (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The Company’s intangible assets consist of the following: January 31, 2018 July 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Intangible assets with finite lives: Customer relationships $ 135,192 $ (40,829 ) $ 94,363 $ 119,576 $ (34,773 ) $ 84,803 Technology (1) 48,878 (17,371 ) 31,507 39,064 (15,260 ) 23,804 Brand names 8,323 (3,607 ) 4,716 8,188 (3,225 ) 4,963 Non-compete agreements 3,092 (1,545 ) 1,547 3,092 (1,428 ) 1,664 Patents and other registrations 2,862 (1,136 ) 1,726 2,783 (1,053 ) 1,730 198,347 (64,488 ) 133,859 172,703 (55,739 ) 116,964 Trademarks and tradenames 7,565 — 7,565 7,548 — 7,548 Total intangible assets $ 205,912 $ (64,488 ) $ 141,424 $ 180,251 $ (55,739 ) $ 124,512 _______________________________________________ (1) The gross and accumulated amortization amounts previously reported as of July 31, 2017 have been revised to exclude the $3,730 fully amortized technology related intangible asset and associated accumulated amortization related to the Jet Prep business. This did not result in any change to the net technology related intangible asset as of July 31, 2017. |
Schedule of changes in goodwill | Goodwill changed during the six months ended January 31, 2018 as follows: Endoscopy Water Purification and Filtration Healthcare Disposables Dialysis Total Goodwill Balance, July 31, 2017 $ 129,945 $ 59,088 $ 114,279 $ 8,133 $ 311,445 Acquisitions 41,185 — — — 41,185 Foreign currency translation 5,601 98 — — 5,699 Balance, January 31, 2018 $ 176,731 $ 59,186 $ 114,279 $ 8,133 $ 358,329 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted EPS available to stockholders of common stock (excluding participating securities) | The following table sets forth the computation of basic and diluted EPS available to stockholders of common stock (excluding participating securities): Three Months Ended Six Months Ended January 31, January 31, 2018 2017 2018 2017 Numerator for basic and diluted earnings per share: Net income $ 32,488 $ 18,070 $ 55,417 $ 36,870 Less income allocated to participating securities (107 ) (103 ) (225 ) (237 ) Net income available to common shareholders $ 32,381 $ 17,967 $ 55,192 $ 36,633 Denominator for basic and diluted earnings per share, as adjusted for participating securities: Denominator for basic earnings per share - weighted average number of shares outstanding attributable to common stock 41,578,483 41,485,557 41,549,570 41,444,304 Dilutive effect of stock awards using the treasury stock method and the average market price for the year 55,561 74,582 60,897 73,279 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 41,634,044 41,560,139 41,610,467 41,517,583 Earnings per share attributable to common stock: Basic earnings per share $ 0.78 $ 0.43 $ 1.33 $ 0.88 Diluted earnings per share $ 0.78 $ 0.43 $ 1.33 $ 0.88 Stock options excluded from weighted average dilutive common shares because their inclusion would have been anti-dilutive — — — — |
Schedule of reconciliation of weighted average number of shares and common stock equivalents attributable to common stock to the Company's total weighted average number of shares and common stock equivalents including participating securities | A reconciliation of weighted average number of shares and common stock equivalents attributable to common stock, as determined above, to the Company’s total weighted average number of shares and common stock equivalents, including participating securities, is set forth in the following table: Three Months Ended Six Months Ended January 31, January 31, 2018 2017 2018 2017 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 41,634,044 41,560,139 41,610,467 41,517,583 Participating securities 138,508 233,128 172,205 271,408 Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities 41,772,552 41,793,267 41,782,672 41,788,991 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of consolidated effective income tax rate between periods | A reconciliation of the consolidated effective income tax rate from the three and six months ended January 31, 2017 to the three and six months ended January 31, 2018 is as follows: Consolidated Effective Income Tax Rate Three Months Ended Six Months Ended January 31, 2017 34.3 % 31.0 % Difference attributable to: Deferred tax revaluation (27.5 )% (13.7 )% U.S. federal statutory rate decrease (1) (8.1 )% (8.1 )% Prior quarter true-up due to U.S. federal statutory rate decrease (8.2 )% — % Foreign operations 2.4 % 0.2 % State taxes 1.1 % 0.5 % Excess tax benefit 1.1 % 1.1 % Other 1.3 % 0.9 % January 31, 2018 (3.6 )% 11.9 % ___________________________________ (1) The Company revised its estimated annual rate to reflect a blended U.S. federal statutory rate of 26.9% as compared to 35.0%. |
Accumulated Other Comprehensi29
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss) | |
Schedule of the components and changes in accumulated other comprehensive (loss) income | The components and changes in accumulated other comprehensive income (loss) were as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 Beginning balance $ (11,133 ) $ (18,316 ) $ (9,900 ) $ (11,795 ) Other comprehensive income (loss) for foreign currency translation 12,379 2,588 11,146 (3,933 ) Ending balance $ 1,246 $ (15,728 ) $ 1,246 $ (15,728 ) |
Reportable Segments (Tables)
Reportable Segments (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Segment Reporting [Abstract] | |
Information as to operating segments | Information as to reportable segments is summarized below: Three Months Ended January 31, Six Months Ended January 31, 2018 2017 2018 2017 Net sales: Endoscopy $ 116,665 $ 94,367 $ 229,050 $ 188,195 Water Purification and Filtration 50,943 47,420 104,498 97,293 Healthcare Disposables 37,484 35,280 76,376 72,079 Dialysis 7,942 7,750 15,876 14,975 Total $ 213,034 $ 184,817 $ 425,800 $ 372,542 None of our customers accounted for 10% or more of our consolidated net sales for the six months ended January 31, 2018 and 2017 . Three Months Ended January 31, Six Months Ended January 31, 2018 2017 2018 2017 Segment operating income: Endoscopy $ 24,463 $ 18,778 $ 44,147 $ 36,339 Water Purification and Filtration 8,149 8,405 18,299 17,325 Healthcare Disposables 6,993 7,069 15,893 14,465 Dialysis 1,918 2,147 4,017 3,960 41,523 36,399 82,356 72,089 General corporate expenses (1) 9,041 7,786 18,240 16,413 Operating income $ 32,482 $ 28,613 $ 64,116 $ 55,676 _______________________________________________ (1) General corporate expenses relate to unallocated corporate costs primarily related to executive management personnel as well as costs associated with certain facets of our acquisition program and being a publicly traded company. |
Acquisitions - BHT Group (Detai
Acquisitions - BHT Group (Details) - USD ($) $ in Thousands | Aug. 23, 2017 | Jan. 31, 2018 |
BHT Group | ||
Acquisitions | ||
Total consideration for the transaction, excluding acquisition-related costs | $ 60,787 | $ 60,787 |
Acquisitions - CR Kennedy & Com
Acquisitions - CR Kennedy & Company (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Jul. 31, 2017 |
CR Kennedy | ||
Acquisitions | ||
Total consideration for the transaction, excluding acquisition-related costs | $ 11,999 | $ 11,999 |
Acquisitions - Vantage (Details
Acquisitions - Vantage (Details) - USD ($) $ in Thousands | Sep. 26, 2016 | Jul. 31, 2017 |
Vantage | ||
Acquisitions | ||
Total consideration for the transaction, excluding acquisition-related costs | $ 4,044 | $ 4,044 |
Acquisitions - Accutron (Detail
Acquisitions - Accutron (Details) - USD ($) $ in Thousands | Aug. 01, 2016 | Jul. 31, 2017 |
Accutron | ||
Acquisitions | ||
Total consideration for the transaction, excluding acquisition-related costs | $ 53,049 | $ 53,049 |
Acquisitions - Purchase price a
Acquisitions - Purchase price allocation (Details) - USD ($) $ in Thousands | Aug. 23, 2017 | Apr. 01, 2017 | Sep. 26, 2016 | Aug. 01, 2016 | Jan. 31, 2018 | Jul. 31, 2017 |
Acquisitions | ||||||
Goodwill | $ 358,329 | $ 311,445 | ||||
BHT Group | ||||||
Acquisitions | ||||||
Cash paid (net of cash acquired) | 60,787 | |||||
Debt acquired | 0 | |||||
Total | $ 60,787 | 60,787 | ||||
Property and equipment | 835 | |||||
Goodwill | 41,185 | |||||
Deferred income taxes | (5,881) | |||||
Other working capital | 5,948 | |||||
Total | 60,787 | |||||
BHT Group | Customer relationships | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 12,500 | |||||
BHT Group | Technology | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 6,200 | |||||
BHT Group | Brand names | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | $ 0 | |||||
CR Kennedy | ||||||
Acquisitions | ||||||
Cash paid (net of cash acquired) | 11,999 | |||||
Debt acquired | 0 | |||||
Total | $ 11,999 | 11,999 | ||||
Property and equipment | 0 | |||||
Goodwill | 5,894 | |||||
Deferred income taxes | 0 | |||||
Other working capital | 1,905 | |||||
Total | 11,999 | |||||
CR Kennedy | Customer relationships | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 4,200 | |||||
CR Kennedy | Technology | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 0 | |||||
CR Kennedy | Brand names | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 0 | |||||
Vantage | ||||||
Acquisitions | ||||||
Cash paid (net of cash acquired) | 4,044 | |||||
Debt acquired | 0 | |||||
Total | $ 4,044 | 4,044 | ||||
Property and equipment | 433 | |||||
Goodwill | 2,299 | |||||
Deferred income taxes | 0 | |||||
Other working capital | 320 | |||||
Total | 4,044 | |||||
Vantage | Customer relationships | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 992 | |||||
Vantage | Technology | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 0 | |||||
Vantage | Brand names | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 0 | |||||
Accutron | ||||||
Acquisitions | ||||||
Cash paid (net of cash acquired) | 53,049 | |||||
Debt acquired | 0 | |||||
Total | $ 53,049 | 53,049 | ||||
Property and equipment | 1,676 | |||||
Goodwill | 21,989 | |||||
Deferred income taxes | 112 | |||||
Other working capital | 4,472 | |||||
Total | 53,049 | |||||
Accutron | Customer relationships | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 12,800 | |||||
Accutron | Technology | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | 10,000 | |||||
Accutron | Brand names | ||||||
Acquisitions | ||||||
Amortizable intangible assets: | $ 2,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding unvested restricted stock shares (in shares) | 249,373 | 249,373 | 222,298 | |
Outstanding options (in shares) | 70,000 | 70,000 | 122,500 | |
Total unrecognized stock-based compensation cost | $ 17,437 | $ 17,437 | ||
Remaining weighted average period for unrecognized compensation cost | 22 months | |||
Number of options exercised (in shares) | 52,500 | |||
Deduction in income tax due to exercise of options and vesting of restricted stock | $ 3,406 | $ 5,545 | ||
Reduction in income tax expense over the equity awards' vesting period | $ 1,394 | 3,259 | ||
Excess tax benefit | $ 2,012 | $ 2,286 | ||
2016 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding unvested restricted stock shares (in shares) | 202,431 | 202,431 | ||
Outstanding options (in shares) | 0 | 0 | ||
Shares available under Plan (in shares) | 968,456 | 968,456 | ||
2006 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding unvested restricted stock shares (in shares) | 46,942 | 46,942 | ||
Outstanding options (in shares) | 70,000 | 70,000 | ||
Employee and directors stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options vested during period (in shares) | 5,000 | |||
Aggregate fair value of all options vested | $ 132 | |||
Number of options exercised (in shares) | 52,500 | |||
Aggregate fair value of exercised options | $ 4,049 | |||
Options granted in period (in shares) | 0 |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation before income taxes | $ 2,739 | $ 2,116 | $ 4,590 | $ 5,038 |
Cost of sales | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation before income taxes | 181 | 92 | 296 | 202 |
Total operating expenses | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation before income taxes | 2,558 | 2,024 | 4,294 | 4,836 |
Operating expenses: Selling | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation before income taxes | 264 | 310 | 629 | 939 |
Operating expenses: General and administrative | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation before income taxes | 2,257 | 1,685 | 3,590 | 3,838 |
Operating expenses: Research and development | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation before income taxes | $ 37 | $ 29 | $ 75 | $ 59 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Monte Carlo Simulation (Details) - Restricted Stock | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility of common stock | 26.60% | 27.75% |
Average volatility of peer companies | 33.72% | 32.98% |
Average correlation coefficient of peer companies | 32.26% | 35.35% |
Risk-free interest rate | 1.62% | 0.96% |
Stock-Based Compensation - Nonv
Stock-Based Compensation - Nonvested Stock Award Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Jan. 31, 2018 | Jan. 31, 2018 | |
Number of Shares | ||
Nonvested stock awards at the beginning of the period (in shares) | 222,298 | |
Granted (in shares) | 122,166 | |
Vested (in shares) | (90,787) | |
Forfeited (in shares) | (4,304) | |
Nonvested stock awards at the end of the period (in shares) | 249,373 | 249,373 |
Weighted Average Fair Value | ||
Nonvested stock awards at the beginning of the period (in dollars per share) | $ 66.28 | |
Granted (in dollars per share) | 101.64 | |
Vested (in dollars per share) | 58.24 | |
Forfeited (in dollars per share) | 83.06 | |
Nonvested stock awards at the end of the period (in dollars per share) | $ 86.30 | $ 86.30 |
Aggregate fair value of nonvested stock awards that vested | $ 5,287 | |
Number of Time-based Awards | ||
Number of Shares | ||
Nonvested stock awards at the beginning of the period (in shares) | 196,818 | |
Granted (in shares) | 93,054 | |
Vested (in shares) | (85,953) | |
Forfeited (in shares) | (3,899) | |
Nonvested stock awards at the end of the period (in shares) | 200,020 | 200,020 |
Number of Performance-based Awards | ||
Number of Shares | ||
Nonvested stock awards at the beginning of the period (in shares) | 16,235 | |
Granted (in shares) | 18,647 | |
Vested (in shares) | (4,834) | |
Forfeited (in shares) | (405) | |
Nonvested stock awards at the end of the period (in shares) | 29,643 | 29,643 |
Number of Market-based Awards | ||
Number of Shares | ||
Nonvested stock awards at the beginning of the period (in shares) | 9,245 | |
Granted (in shares) | 10,465 | |
Vested (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Nonvested stock awards at the end of the period (in shares) | 19,710 | 19,710 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jan. 31, 2018 | |
Stock Option Activity | |
Outstanding options beginning balance (in shares) | 122,500 |
Number of options exercised (in shares) | (52,500) |
Outstanding options ending balance (in shares) | 70,000 |
Stock Option Activity Weighted Average Exercise Price | |
Options outstanding beginning balance, Weighted average exercise price (in dollars per share) | $ 29.36 |
Options exercised, Weighted average exercise price (in dollars per share) | 17.04 |
Options outstanding ending balance, Weighted average exercise price (in dollars per share) | $ 38.60 |
Stock Option Activity, Additional Disclosures | |
Options outstanding, Weighted average contractual life remaining (in years) | 1 year 6 months 14 days |
Options outstanding, Aggregate intrinsic value (in dollars) | $ 5,063 |
Options exercisable, number of options (in shares) | 65,000 |
Options exercisable, Weighted average exercise price (in dollars per share) | $ 37.31 |
Options exercisable, Weighted average contractual life remaining (in years) | 1 year 5 months 10 days |
Options exercisable, Aggregate intrinsic value (in dollars) | $ 4,785 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials and parts | $ 51,332 | $ 45,831 |
Work-in-process | 14,402 | 13,484 |
Finished goods | 54,139 | 48,262 |
Reserve for excess and obsolete inventory | (8,481) | (8,853) |
Total | $ 111,392 | $ 98,724 |
Derivatives (Details)
Derivatives (Details) - Foreign currency forward contracts - Designated as hedging instrument - Fair value hedge instruments $ in Thousands | 6 Months Ended | |
Jan. 31, 2018USD ($)contract | Jul. 31, 2017USD ($)contract | |
Derivatives | ||
Term of contracts | 1 month | |
Number of contracts | contract | 7 | 7 |
Aggregate value of contracts | $ | $ 24,169 | $ 24,762 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Oct. 31, 2017 | Jul. 31, 2017 |
Level 3 | Recurring basis | Jet Prep Ltd. | |||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | |||
Assumed contingent obligation | $ 0 | $ 0 | $ 1,138 |
Fair Value Measurements - Hiera
Fair Value Measurements - Hierarchy Levels (Details) - Recurring basis - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Assets: | ||
Total assets | $ 102 | $ 102 |
Liabilities: | ||
Total liabilities | 160,000 | 127,138 |
Accrued expenses: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | 12 |
Contingent guaranteed obligation | 0 | 0 |
Total accrued expenses | 0 | 12 |
Long-term debt | 160,000 | 126,000 |
Other long-term liabilities: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | 1,126 |
Contingent guaranteed obligation | 0 | 0 |
Total other long-term liabilities: | 0 | 1,126 |
Money markets | Cash and cash equivalents: | ||
Assets: | ||
Money markets | 102 | 102 |
Level 1 | ||
Assets: | ||
Total assets | 102 | 102 |
Liabilities: | ||
Total liabilities | 0 | 0 |
Level 1 | Accrued expenses: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | 0 |
Contingent guaranteed obligation | 0 | 0 |
Total accrued expenses | 0 | 0 |
Long-term debt | 0 | 0 |
Level 1 | Other long-term liabilities: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | 0 |
Contingent guaranteed obligation | 0 | 0 |
Total other long-term liabilities: | 0 | 0 |
Level 1 | Money markets | Cash and cash equivalents: | ||
Assets: | ||
Money markets | 102 | 102 |
Level 2 | ||
Assets: | ||
Total assets | 0 | 0 |
Liabilities: | ||
Total liabilities | 160,000 | 126,000 |
Level 2 | Accrued expenses: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | 0 |
Contingent guaranteed obligation | 0 | 0 |
Total accrued expenses | 0 | 0 |
Long-term debt | 160,000 | 126,000 |
Level 2 | Other long-term liabilities: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | 0 |
Contingent guaranteed obligation | 0 | 0 |
Total other long-term liabilities: | 0 | 0 |
Level 2 | Money markets | Cash and cash equivalents: | ||
Assets: | ||
Money markets | 0 | 0 |
Level 3 | ||
Assets: | ||
Total assets | 0 | 0 |
Liabilities: | ||
Total liabilities | 0 | 1,138 |
Level 3 | Accrued expenses: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | 12 |
Contingent guaranteed obligation | 0 | 0 |
Total accrued expenses | 0 | 12 |
Long-term debt | 0 | 0 |
Level 3 | Other long-term liabilities: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | 1,126 |
Contingent guaranteed obligation | 0 | 0 |
Total other long-term liabilities: | 0 | 1,126 |
Level 3 | Money markets | Cash and cash equivalents: | ||
Assets: | ||
Money markets | $ 0 | $ 0 |
Intangibles and Goodwill - Inta
Intangibles and Goodwill - Intangible Assets Summary (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Intangible assets with finite lives: | ||
Gross | $ 198,347 | $ 172,703 |
Accumulated Amortization | (64,488) | (55,739) |
Net | 133,859 | 116,964 |
Intangible assets with indefinite lives: | ||
Trademarks and tradenames | 7,565 | 7,548 |
Total intangible assets | ||
Gross | 205,912 | 180,251 |
Accumulated Amortization | (64,488) | (55,739) |
Net | 141,424 | 124,512 |
Amortized technology related asset excluded from computation | 64,488 | 55,739 |
Customer relationships | ||
Intangible assets with finite lives: | ||
Gross | 135,192 | 119,576 |
Accumulated Amortization | (40,829) | (34,773) |
Net | 94,363 | 84,803 |
Total intangible assets | ||
Accumulated Amortization | (40,829) | (34,773) |
Amortized technology related asset excluded from computation | 40,829 | 34,773 |
Technology | ||
Intangible assets with finite lives: | ||
Gross | 48,878 | 39,064 |
Accumulated Amortization | (17,371) | (15,260) |
Net | 31,507 | 23,804 |
Total intangible assets | ||
Accumulated Amortization | (17,371) | (15,260) |
Amortized technology related asset excluded from computation | 17,371 | 15,260 |
Technology | Jet Prep Ltd. | ||
Intangible assets with finite lives: | ||
Accumulated Amortization | (3,730) | |
Total intangible assets | ||
Accumulated Amortization | (3,730) | |
Amortized technology related asset excluded from computation | 3,730 | |
Brand names | ||
Intangible assets with finite lives: | ||
Gross | 8,323 | 8,188 |
Accumulated Amortization | (3,607) | (3,225) |
Net | 4,716 | 4,963 |
Total intangible assets | ||
Accumulated Amortization | (3,607) | (3,225) |
Amortized technology related asset excluded from computation | 3,607 | 3,225 |
Non-compete agreements | ||
Intangible assets with finite lives: | ||
Gross | 3,092 | 3,092 |
Accumulated Amortization | (1,545) | (1,428) |
Net | 1,547 | 1,664 |
Total intangible assets | ||
Accumulated Amortization | (1,545) | (1,428) |
Amortized technology related asset excluded from computation | 1,545 | 1,428 |
Patents and other registrations | ||
Intangible assets with finite lives: | ||
Gross | 2,862 | 2,783 |
Accumulated Amortization | (1,136) | (1,053) |
Net | 1,726 | 1,730 |
Total intangible assets | ||
Accumulated Amortization | (1,136) | (1,053) |
Amortized technology related asset excluded from computation | $ 1,136 | $ 1,053 |
Intangibles and Goodwill - Narr
Intangibles and Goodwill - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 4,364 | $ 4,057 | $ 8,412 | $ 7,966 |
2,018 | 8,825 | 8,825 | ||
2,019 | 17,167 | 17,167 | ||
2,020 | 15,447 | 15,447 | ||
2,021 | 15,446 | 15,446 | ||
2,022 | 15,095 | 15,095 | ||
Thereafter | $ 14,711 | $ 14,711 |
Intangibles and Goodwill - Good
Intangibles and Goodwill - Goodwill Rollforward (Details) $ in Thousands | 6 Months Ended |
Jan. 31, 2018USD ($) | |
Changes in Goodwill | |
Balance at the beginning of the period | $ 311,445 |
Acquisitions | 41,185 |
Foreign currency translation | 5,699 |
Balance at the end of the period | 358,329 |
Endoscopy | |
Changes in Goodwill | |
Balance at the beginning of the period | 129,945 |
Acquisitions | 41,185 |
Foreign currency translation | 5,601 |
Balance at the end of the period | 176,731 |
Water Purification and Filtration | |
Changes in Goodwill | |
Balance at the beginning of the period | 59,088 |
Acquisitions | 0 |
Foreign currency translation | 98 |
Balance at the end of the period | 59,186 |
Healthcare Disposables | |
Changes in Goodwill | |
Balance at the beginning of the period | 114,279 |
Acquisitions | 0 |
Foreign currency translation | 0 |
Balance at the end of the period | 114,279 |
Dialysis | |
Changes in Goodwill | |
Balance at the beginning of the period | 8,133 |
Acquisitions | 0 |
Foreign currency translation | 0 |
Balance at the end of the period | $ 8,133 |
Financing Arrangements (Details
Financing Arrangements (Details) - Credit Agreement - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2018 | Jul. 31, 2017 | |
Financing Arrangements | ||
Fees on unused portion of credit facilities (as a percent) | 0.25% | |
Shares of foreign subsidiaries pledged as security (as a percent) | 65.00% | |
Outstanding borrowings | $ 160,000 | $ 126,000 |
Other assets | ||
Financing Arrangements | ||
Unamortized debt issuance costs | $ 397 | $ 580 |
Minimum | ||
Financing Arrangements | ||
Fees on unused portion of credit facilities (as a percent) | 0.20% | |
Maximum | ||
Financing Arrangements | ||
Fees on unused portion of credit facilities (as a percent) | 0.40% | |
Lender's base rate | ||
Financing Arrangements | ||
Margin on reference rate (as a percent) | 0.50% | |
Reference rate (as a percent) | 4.50% | |
Lender's base rate | Minimum | ||
Financing Arrangements | ||
Margin on reference rate (as a percent) | 0.25% | |
Lender's base rate | Maximum | ||
Financing Arrangements | ||
Margin on reference rate (as a percent) | 1.25% | |
LIBOR | ||
Financing Arrangements | ||
Margin on reference rate (as a percent) | 1.50% | |
LIBOR | Minimum | ||
Financing Arrangements | ||
Margin on reference rate (as a percent) | 1.25% | |
Reference rate (as a percent) | 1.46% | |
LIBOR | Maximum | ||
Financing Arrangements | ||
Margin on reference rate (as a percent) | 2.25% | |
Reference rate (as a percent) | 1.56% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Oct. 31, 2017 | Jul. 31, 2017 |
Recurring basis | Level 3 | Jet Prep Ltd. | |||
Acquisitions | |||
Assumed contingent obligation | $ 0 | $ 0 | $ 1,138 |
Earnings Per Common Share - Com
Earnings Per Common Share - Computation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Numerator for basic and diluted earnings per share: | ||||
Net income | $ 32,488 | $ 18,070 | $ 55,417 | $ 36,870 |
Less income allocated to participating securities | (107) | (103) | (225) | (237) |
Net income available to common shareholders | $ 32,381 | $ 17,967 | $ 55,192 | $ 36,633 |
Denominator for basic and diluted earnings per share, as adjusted for participating securities: | ||||
Denominator for basic earnings per share - weighted average number of shares outstanding attributable to common stock (in shares) | 41,578,483 | 41,485,557 | 41,549,570 | 41,444,304 |
Dilutive effect of stock awards using the treasury stock method and the average market price for the year (in shares) | 55,561 | 74,582 | 60,897 | 73,279 |
Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock (in shares) | 41,634,044 | 41,560,139 | 41,610,467 | 41,517,583 |
Earnings per share attributable to common stock: | ||||
Basic earnings per share (in dollars per share) | $ 0.78 | $ 0.43 | $ 1.33 | $ 0.88 |
Diluted earnings per share (in dollars per share) | $ 0.78 | $ 0.43 | $ 1.33 | $ 0.88 |
Stock options excluded from weighted average dilutive common shares outstanding because their inclusion would have been antidilutive (in shares) | 0 | 0 | 0 | 0 |
Earnings Per Common Share - Wei
Earnings Per Common Share - Weighted Average Shares (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Reconciliation of weighted average number of shares and common stock equivalents attributable to common stock, to the entity's total weighted average number of shares and common stock equivalents, including participating securities | ||||
Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock (in shares) | 41,634,044 | 41,560,139 | 41,610,467 | 41,517,583 |
Participating securities (in shares) | 138,508 | 233,128 | 172,205 | 271,408 |
Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities (in shares) | 41,772,552 | 41,793,267 | 41,782,672 | 41,788,991 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective blended tax rate | 26.90% | |||
Revaluation benefit due to TCJA | $ 8,398 | |||
TCJA expenses related to deemed repatriation of deferred foreign income | 294 | |||
TCJA, Revaluation of deferred tax assets and liabilities, provisional income tax expense (benefit) | $ (8,692) | |||
Consolidated effective income tax rate (as a percent) | (3.60%) | 34.30% | 11.90% | 31.00% |
Deferred tax revaluation | (27.50%) | (13.70%) | ||
U.S. federal statutory rate decrease | (8.10%) | (8.10%) | ||
Prior quarter true-up due to U.S. federal statutory rate decrease | (8.20%) | 0.00% | ||
Foreign operations | 2.40% | 0.20% | ||
State taxes | 1.10% | 0.50% | ||
Excess tax benefit | 1.10% | 1.10% | ||
Other | 1.30% | 0.90% |
Accumulated Other Comprehensi53
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Components and changes in accumulated other comprehensive (loss) income | ||||
Beginning Balance | $ 523,932 | |||
Ending Balance | $ 586,483 | 586,483 | ||
Accumulated Other Comprehensive Income | ||||
Components and changes in accumulated other comprehensive (loss) income | ||||
Beginning Balance | (11,133) | $ (18,316) | (9,900) | $ (11,795) |
Ending Balance | 1,246 | (15,728) | 1,246 | (15,728) |
Foreign Currency Translation Adjustments | ||||
Components and changes in accumulated other comprehensive (loss) income | ||||
Other comprehensive income (loss) for foreign currency translation | $ 12,379 | $ 2,588 | $ 11,146 | $ (3,933) |
Reportable Segments - Concentra
Reportable Segments - Concentration Risk (Details) - Segment sales - Customer concentration | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Water Purification and Filtration | Two customers | ||
Concentration risk | ||
Concentration risk within segment (as a percent) | 51.30% | 50.10% |
Healthcare Disposables | Three customers | ||
Concentration risk | ||
Concentration risk within segment (as a percent) | 48.30% | 48.20% |
Dialysis | Two customers | ||
Concentration risk | ||
Concentration risk within segment (as a percent) | 38.70% | 40.00% |
Reportable Segments - Results (
Reportable Segments - Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Information as to operating segments | ||||
Net sales | $ 213,034 | $ 184,817 | $ 425,800 | $ 372,542 |
Segment operating income | 32,482 | 28,613 | 64,116 | 55,676 |
General corporate expenses | 32,188 | 28,465 | 64,284 | 58,468 |
Operating Segment | ||||
Information as to operating segments | ||||
Segment operating income | 41,523 | 36,399 | 82,356 | 72,089 |
Endoscopy | ||||
Information as to operating segments | ||||
Net sales | 116,665 | 94,367 | 229,050 | 188,195 |
Endoscopy | Operating Segment | ||||
Information as to operating segments | ||||
Segment operating income | 24,463 | 18,778 | 44,147 | 36,339 |
Water Purification and Filtration | ||||
Information as to operating segments | ||||
Net sales | 50,943 | 47,420 | 104,498 | 97,293 |
Water Purification and Filtration | Operating Segment | ||||
Information as to operating segments | ||||
Segment operating income | 8,149 | 8,405 | 18,299 | 17,325 |
Healthcare Disposables | ||||
Information as to operating segments | ||||
Net sales | 37,484 | 35,280 | 76,376 | 72,079 |
Healthcare Disposables | Operating Segment | ||||
Information as to operating segments | ||||
Segment operating income | 6,993 | 7,069 | 15,893 | 14,465 |
Dialysis | ||||
Information as to operating segments | ||||
Net sales | 7,942 | 7,750 | 15,876 | 14,975 |
Dialysis | Operating Segment | ||||
Information as to operating segments | ||||
Segment operating income | 1,918 | 2,147 | 4,017 | 3,960 |
General corporate | Segment reconciling items | ||||
Information as to operating segments | ||||
General corporate expenses | $ 9,041 | $ 7,786 | $ 18,240 | $ 16,413 |