Cantel Medical (CMD) Q1 2018 Earnings Conference Call Transcript

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Cantel Medical (NYSE: CMD) Q1 2018 Earnings Conference CallDec. 7, 2017 11:00 a.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Cantel Medical Corp's First-Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Millicent Brooks, director of corporate communications. Thank you, Ms. Brooks. You may begin.

Millicent Brooks -- Director, Corporate Communications

Thank you, Doug, and good morning, everyone. On today's call, we have Chuck Diker, chairman of the board; Jorgen Hansen, president and chief executive officer; Peter Clifford, EVP and chief financial officer; Seth Yellin, EVP, strategy and corporate development; and Brian Capone, VP, corporate controller. Earlier this morning, the company issued a press release announcing the financial results for the first-quarter Fiscal Year 2018. In addition, we have posted a supplemental presentation to complement today's call.

This presentation can be found on Cantel's website in the Investor Relations section under Presentations. Before we begin, I would like to remind everyone that this conference call may contain forward-looking statements. All forward-looking statements involve risks and uncertainties, including without limitation the risks detailed in the company's filings and reports with the Securities and Exchange Commission. Such statements are only predictions and actual results may differ materially from those projected.

The company will also be making references on today's call to the non-GAAP financial measurements, non-GAAP EBITDAS, non-GAAP operating income, non-GAAP gross profit, non-GAAP diluted earnings per share and net debt. Reconciliations of these financial measures to the most directly comparable GAAP financial measurements are provided in today's earnings release.

With that, I'm pleased to introduce to you Jorgen B. Hansen, president, and CEO.

Jorgen B. Hansen -- Chief Executive Officer and President

Thank you, Millicent, and welcome, everyone. I would start off with some brief opening comments followed by Peter, who will take you through our first-quarter Fiscal Year 2018 financial results. Finally, we will open the call for Q&A. We're extremely pleased with our results this quarter.

We grew reported net sales by 13.3% and 8.6% organic growth. Our three major segments experienced strong growth and we were able to mitigate most of the impact of the hurricanes in August and September. Endoscopy sales grew by 19.8% with organic growth of 10.7%, driven primarily by strength in all of our reoccurring revenue products, including chemistries, procedural products, and services. We continue to see prior-period [inaudible] placements driving strong ongoing chemistry and consumable sales into the installed base, modest but flat when we adjusted for the BHT Group acquisition.

Water purification and filtration recorded solid revenue growth of 7.4% for the quarter, led by equipment sales and service revenue. Operating margin expanded due to product mix and lower warranty expenses. This margin [inaudible] have helped offset continued commercial investments in this business. Revenue in our healthcare disposable segment increased by 5.7% organically, primarily driven by demand for our branded portfolio, which includes our DentaPure product line business, our sterility-assurance product lines, and our branded face masks, all of which continue to be important differentiators for this segment.

This portfolio grew by 10% and offset declines in our legacy business. From [inaudible] our international expansion has continued to generate impressive performance, with 39.2% growth year over year. This includes the first-quarter acquisition of BHT Group in Germany and our Canadian and our Australian distributors, which we acquired in the Fiscal Year 2017. International organic growth was up 15.7%, driven by Asia-Pacific and our direct markets in Europe.

U.S. sales, up 6.9% organically versus prior year, performed well across all business segments, which was notable given our top prior-year comparable to 26.4% growth. Overall, the fourth quarter provided satisfactory results and our expectation for the remainder of the year are in line with our previously stated guidance for the fiscal year 2018.

With that, I'll hand over to Peter to discuss the financial results.

Peter Clifford -- Chief Financial Officer and Executive Vice President

Thanks, Jorgen. Good morning, everyone. Let's take a few minutes to walk through the 1Q '18 financial results. On a consolidated basis, top line, our net sales increased 13.3% year over year in 1Q '18 versus the prior year and 12.9% on a constant-currency basis.

The consolidated net sales [inaudible] elements were: organic came in at 8.6%, M&A came in at 4.3%, and FX was a tailwind at 0.4%. Gross margins for the quarter. Note, as a result of an accounting policy change, we reclassified certain administrative costs and the cost of goods sold, which negatively impacted gross margins by 70 basis points in the current year GAAP and non-GAAP measures. GAAP gross margins contracted 40 basis points to 47.3% versus 47.7 %in 1Q '17, driven by both the BHT, inventory step-up costs, as well as the impact of the recast.

Non-GAAP gross margins expanded 90 basis points year over year when factoring in our accounting policy change impact. As a reminder, the BHT business is almost exclusively capital, which was dilutive to gross margins by 40 basis points. Operating expenses for the quarter. GAAP operating expenses increased by $6.6 million or 10.5% in 1Q '18 compared to last year.

The impact of acquired costs from acquisitions was roughly $2.8 million or 4.5%. The balance was purposeful investment in line with our strategic plan initiatives. Operating profit for the quarter. GAAP op-profit increased 16.9% year over year to $31.6 million while our non-GAAP op-profit increased 13.1% year over year to 38.4 million.

The effective tax rate for the quarter. Our GAAP effective tax rate came in at 27.4%, down 20 basis points from the prior-year rate of 27.6. Key drivers were the benefit from the final resolution of a contingent liability associated with the Jet Prep acquisition, was partially offset by the drop in excess tax benefits related to share-based awards. Our non-GAAP effective tax rate came in at 35.5, up 30 basis points from the prior-year rate of 35.2.

Key drivers were: our continued federal and state initiatives were offset by the geographic impact of our restructuring related activities this quarter. EPS for the quarter. GAAP EPS increased 21.9% year over year to $0.55 while our non-GAAP EPS increased 12.7% year over year to $0.57. Adjusted EBITDAS for the quarter.

1Q adjusted EBITDAS came in at 44.4 million dollars, up 10.8% year over year, while our adjusted EBITDAS for the last 12 months was $165.3 million, up13.1% year over year. Cash flow from operations was strong. 1Q cash flow from ops came in at $30.1 million, up 20.7% year over year.

Now, let's provide some insight into the segment results. For endoscopy segment for the quarter, sales grew 19.8% year over year to just over $112 million. Organic was 10.7%, coming off of prior-year organic comp of 27%. GAAP op-profit increased 12.1% to $19.7 million, while our non-GAAP op-profit increased 17.8% to $23.8 million.

For our water segment for the quarter, sales grew 7.4% year over year to a record $53.6 million. Organic was 7.1% driven by strength of the backlog. Note, our backlog remained stable at just over $66 million, even with record sales during the quarter. GAAP op-profit increased 13.8% to $10.2 million, while our non-GAAP op-profit increased 13.1% to $10.6 million, providing leverage.

For our healthcare disposable segment for the quarter, sales grew 5.7% year over year to $38.9 million. Organic was also 5.7%. Our GAAP op-profit increased 20.3% to $8.9 million, while our non-GAAP op-profit increased 15.8% to $10.5 million, providing strong leverage. For our dialysis segment for the quarter, sales expanded 90.8% year over year to $7.9 million.

Our GAAP op-profit increased 15.8%, while our non-GAAP op-profit increased 15.7.

Now I'd like to hit a few balance sheet and liquidity details. Our balance sheet remains, as always, incredibly strong with significant capacity. We ended the quarter with $37.2 million in cash and cash equivalents, $158.1 million in working capital. Gross debt ended the quarter at $168 million.

This included $61.3 million of borrowings this year to fund the acquisition of BHT. We continued to pay down levels of debt. We paid down $19.3 million in 1Q '18. Net debt is $130.8 million while our net debt to adjusted EBITDAS is 0.79.

Capital expenditures were $6.5 million. As we've signaled, CAPEX will remain elevated for the next six-plus quarters to support our ERP implementation project. As a reminder, we'll be filing our 10-Q before the close of business today.

I hand the call back to Jorgen for closing remarks.

Jorgen B. Hansen -- Chief Executive Officer and President

Thank you, Peter. Overall, we are pleased with our performance this quarter, the positive trajectory of our business, and our strong competitive position in the markets we serve. With the completion of the BHT Group acquisition at the start of this quarter, we remain excited about the evolution of our global leadership position in endoscopy and have high confidence in leveraging this presence for the entire Cantel portfolio, thus driving critical mass and scale on a global basis. From an M&A perspective, we're very encouraged with the health of our pipeline and are optimistic about potential deals in the coming quarters.

We are evaluating opportunities to acquire new businesses and technologies in all of our existing segments as well as exploring potential new verticals within infection prevention. Furthermore, we're pleased by the strength of our new-product development pipeline and look forward to several new product launches in this fiscal year, 2018. Taken together, we expect that Fiscal Year 2018 will be in line with our strategic plan of doubling sales and profits by Fiscal Year 2021 executed through a new product development, market expansion, strategic acquisitions supported by the continuing evolution of the Cantel operating model.

Before I close, I would like to extend a warm welcome to Dr. Peter Pronovost, who rejoined our board last month. He is an [inaudible] and critical physician and a professor at the Johns Hopkins University School of medicine. His experience in the areas of patient safety and quality makes him a great addition to our board and to our company.

In closing, I would like to thank our 2,500 loyal and hard-working team members for their efforts and achievements this quarter. Our entire company takes great pride in our mission to provide solutions to mitigate infections, improve patient safety and outcomes, and ultimately help save lives.

Thank you for listening. I look forward to speaking with you on our second-quarter earnings call in March. We're now ready to take questions.

Questions and Answers:

Operator

Ladies and gentlemen, we will now be conducting a question-and-answer session. If you'd like to ask a question, you may press * 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press * 2 if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Our first question comes from the line of Mike Matson with Needham & Co. Please proceed with your question.

Mike Matson -- Needham -- Analyst

Hi. Thanks for taking my questions. I guess I just wanted to start with tax reform. You stand out as a company within our coverage universe that has a higher tax rate.

So, I know there's a lot of moving parts within the legislation, but at this point, based on what you know, if the current legislation were to become law, what would that mean for your tax rate and even if you can't put a number on it which I wouldn't expect, do you expect a significant decline in your tax rate?

Peter Clifford -- Chief Financial Officer and Executive Vice President

Yeah. I think we're obviously encouraged by the discussions being held in Washington on the corporate tax reform. That said, I think we're cautious to not get ahead of the process. The legislation still needs to make its way through the House and via the president's desk but regardless, we do, as we stated on previous calls and one-on-ones, that tax reform should provide a meaningful tailwind to Cantel given our U.S.-centric profit profile, and we should benefit disproportionately compared to many of our peers but, yeah, I think how I would table it is if legislation actually makes it through the House and through president's desk early in 2018, then we can provide a better update to monetize or give a view of what that might mean to Fiscal '18 and '19 from an ETR perspective.

Mike Matson -- Needham -- Analyst

OK, thanks. And then another topic these days among investors is just regarding Amazon and their potential to move into distributing medical supplies or dental products. So, just curious what your thoughts are if they were to make a big push into the dental distribution area. Would that have any kind of impact on your healthcare disposables business?

Jorgen B. Hansen -- Chief Executive Officer and President

Great question, Mike. This is Jorgen. We don't have any sort of deep understanding of how that might change the landscape. From our perspective, we're already operating in a quite consolidated buyer universe.

Amazon has not had any material impact on our business at this point but it's certainly something that obviously we are watching. One of the areas that obviously we are mindful of is that with the current distribution setup, there is an element of promotion and training of our proprietary products and technologies, which I'm not sure how would be done by Amazon. But I think the best we can say now, we are watching the development. We do not have any strong opinion whether this could be a positive or essentially a negative development for us, but we feel that we are in a good position regardless of how the distribution channels evolve over time.

Mike Matson -- Needham -- Analyst

Currently, though, with that part of the company, is all of that currently being sold through distributors of some sort right now?

Peter Clifford -- Chief Financial Officer and Executive Vice President

Yes, the bulk of the business. There's a little bit of the sterility assurance that goes via the medical side that's a bit of a different channel than the dental piece, but the bulk of the business is still through distribution on the dental side.

Mike Matson -- Needham -- Analyst

OK. All right, I'll let some other folks get on. Thank you.

Operator

Our next question comes from the line of Raymond Myers from The Benchmark Company. Please proceed with your question.

Raymond Myers -- Benchmark -- Analyst

Thank you and congratulations on yet another great quarter. Let me ask you first about the endo market. Another good quarter there. What is happening competitively and do you expect this growth rate to be able to continue?

Jorgen B. Hansen -- Chief Executive Officer and President

Since our last call, I would say, there's been a lot of change comparatively. On the capital side, it's a pretty stable picture globally. Obviously, with us acquiring BHT in Germany which is the leader in [inaudible] base and new installations in Germany. We are in a strong position there as well.

So, again, on the capital perspective, it's the same players that we've seen for a while. On the procedure side of the business, we are starting to see more activity from more players. Despite that we have very solid growth and, as we've talked about in previous calls, the procedure side of the business is really all about penetration and getting customers access to the infection-prevention solutions that eliminate the infection risk during the endoscopy procedure. So still a lot of opportunity for growth in that particular segment.

That said, we're very happy with the growth this quarter coming on top of, I would say, hyper growth in the first quarter of last year, and we feel that the businesses is in a good trajectory and will continue to be the main contributor for the growth of the company overall.

Raymond Myers -- Benchmark -- Analyst

Very good. Can I follow up on asking you about the water systems backlog? How high is the backlog now and how should we view the water systems business? After another good quarter, is it expected to reach a new high plateau or will the backlog continue to drive healthy 7% growth going forward?

Peter Clifford -- Chief Financial Officer and Executive Vice President

Yeah, sequentially the backlog increased about $700,000 from the fourth quarter to the first quarter ending for 2018. So, it's just above $66 million. As we signaled in the past, look, it is a long-cycle business, and with the lead times, we can tend to see the business about two quarters out. So, based on what we can see right now, we see a pretty buoyant market beyond the second quarter.

Two quarters out, it tends to be a bit tougher to call the macro environment in that space but as we circle back to your first question, inherent [Inaudible] 8% that we had been targeting and achieving and continue to aspire toward in the future, embedded in that is sort of water in sort of mid-to-high single digits and HCD and sort of mid-single digits, and endoscopy really in that kind of low teens. So, I think this quarter was completely in line with really what we tend to aspire toward when you look at our organic growth by segment being 10.7% in endo and 5.78% in HCD, and the 7.4% in water is really what we drive toward.

Raymond Myers -- Benchmark -- Analyst

Nice. Good performance on the revenue side. Can we next move to the expense side? I understand that you've been consolidating some facilities to lower your cost structure as well as this quarter we started with the ERP rollout globally. Could you touch on how that is anticipated to improve your cost structure over time?

Peter Clifford -- Chief Financial Officer and Executive Vice President

Yeah, let's take the ERP discussion first. So the timeline for our first sort of go-live, as I think we've shared previously, first up on the slate or the docket is the U.S. endoscopy business. So, the team as kicked off that project probably four months ago and is working hard on it and the intended go-live for our U.S.

endo business is likely the first quarter of '19. So, each site after that would probably trail by about nine months. So, it's going to be a step phase as we go live with various locations and systems, and really what we get out of in the long run is an ability to add a lot less fixed cost as we scale. So, I don't know that it's going to necessarily mean immediate headcount on as much as a meaningfully reduced new-headcount hire and addition rate as we think about the back half of the strat plan.

And as far as just gross margins for the quarter, again, as I announced, we had sort of an accounting pivot and in one of our businesses, we had some quality-type costs that historically had gone to administrative costs that really belonged in cost to goods sold. So, we made that shift here 1Q of '18 to get it consistent with the rest of our segments and ex that item, every one of our divisions was accretive from a non-GAAP gross margin perspective in 1Q '18 versus 1Q '17.

Raymond Myers -- Benchmark -- Analyst

Thanks for the color.

Operator

As a reminder, ladies and gentlemen, it is * 1 to ask a question. Our next question comes from the line of John Tsu from Raymond James. Please proceed with your question.

John Tsu -- Raymond James -- Analyst

Good morning. Thanks for the time. If you could just start off with the estimated hurricane impact that you had in the fiscal first quarter and then are you still expecting any tail in the second quarter?

Jorgen B. Hansen -- Chief Executive Officer and President

Hi, John. As we have talked about, we were able to manage through the two hurricanes quite effectively from an operations perspective. Our site in Houston was a site that was impacted, where we lost three or four days of manufacturing but the team did a really nice job to get back online and get back in manufacturing and rebuild inventories quickly. So we have not really been able to have a very strong understanding of any top-line impact in Q1.

We might speculate that some procedures were postponed in Q1 and we'll see a little bit of uptake in the second quarter. On the flip side, the second quarter has four less days than the first quarter. So, we're not really sure that it's going to be a big impact but so it's like overall there's been a minimal impact to us so far and we do not anticipate any major all off sites going forward either.

Peter Clifford -- Chief Financial Officer and Executive Vice President

I think as far as impacts in 1Q, as Jorgen mentioned, via Saturdays and overtime we were able to not only just hold the commitment but in essence, the center is the customer and avoiding disruption there, I thought the team did a very nice job of making sure that we didn't have customer disruption. What we did see is some modest operating drains since there were obviously headwinds on the endoscopy side and the plants from the plant shutdown. But I would argue that a piece of that was offset, that the hurricanes, especially in Florida, brought us some increased service business on the water side and just allowed us to have a little better utilization on the service side for water, and the two those completely offset and in some ways they nicely offset.

John Tsu -- Raymond James -- Analyst

OK, great. Thanks for that. Very helpful. and then going back to endo, growth was very strong despite a tough comp, despite some hurricane impact, with a double-digit organic growth.

Acquisitions also came in a little bit better than we were looking for. So, as part of that, can you give us an update on how BHT and CR Kennedy are kind of tracking to plan?

Seth Yellin -- Executive Vice President, Strategy and Corporate Development

Hi, John. Seth here. I think it's still early days with BHT and I think we're encouraged with what we see. It's a good business.

It's one that we're in the process right now integrating into our existing Cantel Medical Germany operation, but I think we are encouraged with the people and the team that we brought on and traction we're seeing with that market. But certainly a lot of work remains for us to complete integration and to realize the financial objectives set forth in that acquisition. From the CR Kennedy transaction, we're very pleased with the results of that business. Australia is an important market for us and that team has done exceptionally well in really picking up our full portfolio and exceeding well in that market.

So, we're very pleased with that acquisition.

Jorgen B. Hansen -- Chief Executive Officer and President

And Canada, I might add as well. It's been a great addition to our business and teams have done a nice job driving all three of our major platforms into the Canadian market. So we're excited to see some positive elements in that product team as well.

John Tsu -- Raymond James -- Analyst

OK, great. And then just two more quick ones for you. One, just going back to taxes for a second, I believe in the last call you said your '18 guidance was expecting the medical device tax to be out of that guidance. So, I was just curious your latest your thoughts on that, and is $4 million kind of the right number to think of in terms of expense?

Peter Clifford -- Chief Financial Officer and Executive Vice President

That's a good question. I meant to kind of call that out. But as we think through the corporate rate change, at this point they still haven't addressed the medical device tax issue and I know they're hoping to do that over the next two weeks, but there is a risk that that could come back in January and that's not in our guidance. And, as I stated on the last call, our last full fiscal year with the med device tax was $4.4 million in 2015 and in 2016 we only had a partial year, which was $2.2 million dollars and as we sort of pencil with that impact, if it were to come back since we've grown meaningfully since 2015, we think that's a $6 million to $7 million impact if they can't get that fixed.

John Tsu -- Raymond James -- Analyst

OK, great. Very clear. And the last one from, me, I think you mentioned that you're going to have seven new product launches in Fiscal '18. So, any color there by segment or anything you're really excited about would be very helpful.

Thank you.

Jorgen B. Hansen -- Chief Executive Officer and President

Seven is a little high. I was meaning to say several. We have product launches coming in all three segments. We have new line extensions on the procedure side in endoscopy, which obviously is very important since this is a high-growth high-profit area.

We are planning to launch new [inaudible] water systems and portable water systems in our water business, and we are adding a couple of new products in health disposables or dental business, as well in the consumables side of the business with some new technologies and great markets as well. So, we feel really good about that the pipeline and our ability to continue to drive organic growth through our commercial teams.

John Tsu -- Raymond James -- Analyst

Great. Thank you very much.

Operator

Our next question comes from the line of Mitra Ramgopal from Sidoti & Co. Please proceed with your question.

Mitra Ramgopal -- Sidoti -- Analyst

Yes, good morning. Just a couple of questions. Hi, Jorgen. First, you had a really nice quarter from international in terms of the contribution there and I was just wondering, as we look at the potential for margin expansion, the investments you still feel you need to make on international whether it's entering new countries or continuing to expand sales force or distribution in existing markets.

Jorgen B. Hansen -- Chief Executive Officer and President

Yeah, it's a great question and I think the best way to think about this is that we really have been investing both organically and through M&A in international markets. The results are really showing now from a growth perspective, with almost 16% organic growth this quarter over last year, and the focus for us now is to continue to drive profitability in these markets and we have good off-site. I mean, there's no doubt that U.S. market is much larger, has more scale, and is a much more mature market from that perspective and we have lots of opportunities across our international regions.

In some markets we are further down the line and getting to sort of the end-point of the markets are still quite early. And it in terms of additional expansion, I think it's more like incremental. As we grow the business, we will continue to invest in commercial resources. As Peter mentioned, we have some work upcoming on the EFP side in the next sort of 24-months timeframe, which is very important for that region and the ability to drive leverage throughout our European and Asia-Pacific operations as well.

We're pretty good down the line in terms of aggressive investment, I would say.

Mitra Ramgopal -- Sidoti -- Analyst

OK, thanks. And a quick question on the acquisition front. I know, Seth, you're always looking at opportunities but I just want to get a sense, as you look out over the next several years in terms of candidates, is the goal going to be pretty much more about expanding within your existing segments, also keeping an eye in terms of expanding that 70-billion end-market.

Seth Yellin -- Executive Vice President, Strategy and Corporate Development

I think, as we sort of said on several calls over the last many quarters, we continue to look at new verticals and that remains an important part of our focus in terms of evaluating opportunities and really thinking about strategic fit in the overall umbrella of infection prevention. There are a lot of places that we can play in infection prevention and we're really trying to find the right opportunities, the right targets that fit the growth profile, a margin profile, and having overall portfolio fit with the rest of our divisions that we think we'd be good owners of these businesses and they still fit within this strategic focus on infection prevention but certainly we're going to continue to do both on acquisitions that fit with our divisions but we are actively evaluating and looking at new verticals as well as part of our acquisition strategy.

Mitra Ramgopal -- Sidoti -- Analyst

And then just want to follow up on that front. Are you seeing, in terms of valuations, it's changing at all or the markets remain pretty stable?

Seth Yellin -- Executive Vice President, Strategy and Corporate Development

Look, I think markets remain pretty healthy. I mean, I think there are some areas where we have expectations above what we are willing to stretch on. I think we see other areas where we see certainly good values that we think our businesses that we generate good returns off of. So, it's somewhat target-dependent.

I wouldn't say we've seen any meaningful shift in the market over the last six months or so are but certainly, things remain pretty healthy and it's competitive in the market. And so, we're picking our spots carefully and trying to be disciplined and focused on the targets we pursue.

Mitra Ramgopal -- Sidoti -- Analyst

OK, thanks. And then, Jorgen, finally, just coming back on the product side, I believe you're pretty excited about the REVOX technology and the opportunities you feel you have with. I was just wondering if you have any updates on that front for us.

Jorgen B. Hansen -- Chief Executive Officer and President

Yeah, it's REVOX inline [inaudible] sterilization platform is certainly something that we have high long-term expectations for. It's still an early days' business where we are still evolving and developing the solutions with [inaudible]. We do have a couple of installations that are now on-site with some of the key medical manufacturers in the U.S. and hopefully that will be something that we can continue to expand over the next many quarters.

So we still feel quite bullish but, again, it's a long-term opportunity for us.

Mitra Ramgopal -- Sidoti -- Analyst

Right. OK, thanks again for taking the questions.

Operator

There are no further questions in the queue. I'd like to hand the call back to management for closing comments.

Jorgen B. Hansen -- Chief Executive Officer and President

Well, thank you, everyone, for calling in. I look forward to speaking to you all at our second-quarter call in March. Thank you.

Duration: 35 minutes

Call Participants:

Millicent Brooks -- Director, Corporate Communications

Jorgen B. Hansen -- Chief Executive Officer and President

Peter Clifford -- Chief Financial Officer and Executive Vice President

Mike Matson -- Needham -- Analyst

Raymond Myers -- Benchmark -- Analyst

John Tsu -- Raymond James -- Analyst

Seth Yellin -- Executive Vice President, Strategy and Corporate Development

Mitra Ramgopal -- Sidoti -- Analyst

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