Cantel Medical Corp. Debt surged on 381% and Net Debt / EBITDA jumped on 5.3x from 1.5x to 6.8x
09/17/2020 • About Cantel Medical Corp. (
$CMD) • By InTwits
Cantel Medical Corp. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Cantel Medical Corp. is a growth stock: FY2020 revenue growth was 10.7%, 5 year revenue CAGR was 12.5% at FY2020 ROIC 3.5%
- EBITDA Margin is declining: 12.0% in FY2020 vs. 13.7% in FY2019 vs. 18.4% in FY2016
- Cantel Medical Corp. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 5.8%
- CAPEX is quite volatile: $34m in FY2020, $95m in FY2019, $38m in FY2018, $27m in FY2017, $19m in FY2016
- The company has potentially unprofitable business model: ROIC is 3.5%
- It operates with high leverage: Net Debt/EBITDA is 6.8x while industry average is 3.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 10.7%. Revenue growth showed slowdown in FY20Q4 - it was -2.5% YoY. During FY2016-FY2020 Revenue growth bottomed in FY2019 at 5.3%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.7 pp from 13.7% to 12.0% in FY2020. EBITDA Margin followed a declining trend at -1.8 pp per annum in FY2016-FY2020.
Gross Margin decreased on 3.6 pp from 46.6% to 42.9% in FY2020. During the last 5 years Gross Margin topped in FY2017 at 47.7% and was declining since that time. SG&A as a % of Revenue increased slightly on 0.92 pp from 34.0% to 35.0% in FY2020. SG&A as a % of Revenue stuck to a growing trend at 1.4 pp per annum in the last 5 years.
Net Income margin decreased on 4.6 pp from 6.0% to 1.3% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2018 at 10.4% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 3.3% in FY2020. The company showed almost no change in CAPEX/Revenue from FY2017 to FY2020. Average CAPEX/Revenue for the last three years was 6.0%. During FY2016-FY2020 CAPEX as a % of Revenue topped in FY2019 at 10.4%.
Return on investment
The company operates at low ROIC (3.5%) and ROE (2.0%). ROIC decreased on 6.0 pp from 9.5% to 3.5% in FY2020. ROE decreased on 6.7 pp from 8.7% to 2.0% in FY2020. ROIC declined at -3.6 pp per annum in the last 5 years. During FY2016-FY2020 ROE topped in FY2018 at 16.1% and was declining since that time.
Leverage (Debt)
Debt level is 6.8x Net Debt / EBITDA and 9.1x Debt / EBITDA. Net Debt / EBITDA jumped on 5.3x from 1.5x to 6.8x in FY2020. Debt jumped on 381% while cash jumped on 524%. During the last 5 years Net Debt/EBITDA bottomed in FY2017 at 0.6x and was growing since that time.
Cantel Medical Corp. has no short term refinancing risk: cash is higher than short term debt (1,575.0%).
Valuation and dividends
The company's trades at EV/EBITDA 22.0x and P/E 135.4x.
Management team
George L Fotiades is a Cantel Medical Corp.'s CEO. George L Fotiades has spent 2 years with the company. Shaun M Blakeman is a the company's CFO. Shaun M Blakeman has spent 1 year at the company.
Financial and operational results
FY ended 07/31/2020
Cantel Medical Corp. ($CMD) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 665 | 770 | 872 | 918 | 1,016 | 10.7% |
| Gross Profit | 309 | 367 | 414 | 427 | 436 | 2.0% |
| SG&A | 197 | 238 | 268 | 313 | 355 | 13.7% |
| EBITDA | 122 | 144 | 156 | 126 | 122 | -3.1% |
| Net Income | 60 | 71 | 91 | 55 | 14 | -75.1% |
Balance Sheet
|
|---|
| Cash | 28 | 37 | 94 | 45 | 278 | 523.9% |
| Short Term Debt | 0 | 0 | 10 | 10 | 18 | 76.4% |
| Long Term Debt | 116 | 126 | 187 | 221 | 1,092 | 394.6% |
Cash flow
|
|---|
| Capex | 19 | 27 | 38 | 95 | 34 | -64.6% |
Ratios
|
|---|
| Revenue growth | 17.7% | 15.9% | 13.2% | 5.3% | 10.7% | |
| EBITDA growth | 16.8% | 17.6% | 8.8% | -19.6% | -3.1% | |
|
|---|
| Gross Margin | 46.5% | 47.7% | 47.5% | 46.6% | 42.9% | -3.6% |
| EBITDA Margin | 18.4% | 18.7% | 17.9% | 13.7% | 12.0% | -1.7% |
| SG&A, % of revenue | 29.6% | 31.0% | 30.7% | 34.0% | 35.0% | 0.9% |
| Net Income Margin | 9.0% | 9.3% | 10.4% | 6.0% | 1.3% | -4.6% |
| CAPEX, % of revenue | 2.8% | 3.5% | 4.3% | 10.4% | 3.3% | -7.1% |
|
|---|
| ROIC | 17.5% | 17.3% | 16.1% | 9.5% | 3.5% | -6.0% |
| ROE | 13.9% | 14.6% | 16.1% | 8.7% | 2.0% | -6.7% |
| Net Debt/EBITDA | 0.7x | 0.6x | 0.7x | 1.5x | 6.8x | 5.3x |
Cantel Medical Corp. ($CMD) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 257 | 288 | 237 | 233 | | 14.0% | 28.5% | 3.7% | -2.5% |
| EBITDA | 29 | 30 | 48 | 21 | | -23.3% | -15.3% | 87.0% | -19.2% |
| Net Income | 6 | -2 | 16 | -6 | | -70.0% | -112.0% | 93.1% | -163.3% |
Balance Sheet
|
|---|
| Cash | 49 | 59 | 116 | 278 | | -23.0% | -17.3% | 125.5% | 523.9% |
| Short Term Debt | 34 | 40 | 42 | 18 | | 242.5% | 297.1% | 316.8% | 76.4% |
| Long Term Debt | 919 | 929 | 986 | 1,092 | | 396.9% | 308.1% | 341.6% | 394.6% |
Ratios
|
|---|
| Gross Margin | 45.0% | 42.4% | 42.6% | 41.5% | | -1.6% | -4.2% | -4.1% | -4.7% |
| EBITDA Margin | 11.4% | 10.4% | 20.3% | 9.1% | | -5.6% | -5.4% | 9.0% | -1.9% |
| Net Income Margin | 2.2% | -0.8% | 6.7% | -2.4% | | -6.3% | -9.2% | 3.1% | -6.1% |
Peers in Health Care Equipment
Below we provide Cantel Medical Corp. benchmarking against other companies in Health Care Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MISONIX, Inc. ($MSON) | - | 18.0% | 34.5% | 5.9% | 60.8% |
| Allied Healthcare Products, Inc. ($AHPI) | - | -6.8% | 0.7% | -7.0% | 1.6% |
| Fonar Corporation ($FONR) | - | 6.4% | 4.5% | 7.0% | -1.7% |
| Viveve Medical, Inc. ($VIVE) | - | 114.1% | 21.1% | -64.5% | -16.6% |
| |
|---|
| Median (4 companies) | - | 18.0% | 4.5% | -7.0% | -0.0% |
|---|
| Cantel Medical Corp. ($CMD) | - | 15.9% | 13.2% | 5.3% | 10.7% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MISONIX, Inc. ($MSON) | 67.1% | 69.9% | 73.3% | 70.2% | 70.0% |
| Fonar Corporation ($FONR) | 47.0% | 51.2% | 48.5% | 49.6% | 49.5% |
| Allied Healthcare Products, Inc. ($AHPI) | 20.5% | 19.6% | 19.1% | 16.1% | 17.5% |
| Viveve Medical, Inc. ($VIVE) | 35.4% | 48.7% | 39.5% | 15.5% | 5.4% |
| |
|---|
| Median (4 companies) | 35.4% | 48.7% | 39.5% | 36.3% | 33.5% |
|---|
| Cantel Medical Corp. ($CMD) | 46.5% | 47.7% | 47.5% | 46.6% | 42.9% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Fonar Corporation ($FONR) | 24.1% | 29.0% | 28.9% | 29.8% | 26.5% |
| Allied Healthcare Products, Inc. ($AHPI) | -1.9% | -2.9% | -3.2% | -6.2% | -7.4% |
| MISONIX, Inc. ($MSON) | -18.1% | -20.3% | -4.1% | -14.8% | -24.8% |
| Viveve Medical, Inc. ($VIVE) | -260.4% | -217.7% | -238.6% | -444.7% | -308.5% |
| |
|---|
| Median (4 companies) | -18.1% | -20.3% | -4.1% | -14.8% | -16.1% |
|---|
| Cantel Medical Corp. ($CMD) | 18.4% | 18.7% | 17.9% | 13.7% | 12.0% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Viveve Medical, Inc. ($VIVE) | 3.6% | 5.9% | 11.6% | 16.6% | 14.3% |
| Fonar Corporation ($FONR) | 1.0% | 3.7% | 3.4% | 3.8% | 8.8% |
| Allied Healthcare Products, Inc. ($AHPI) | 0.3% | 0.1% | 0.0% | 0.0% | 1.9% |
| MISONIX, Inc. ($MSON) | 2.0% | 1.8% | 1.0% | 1.8% | 0.5% |
| |
|---|
| Median (4 companies) | 2.0% | 3.3% | 2.4% | 3.8% | 5.4% |
|---|
| Cantel Medical Corp. ($CMD) | 2.8% | 3.5% | 4.3% | 10.4% | 3.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Fonar Corporation ($FONR) | 17.4% | 25.3% | 26.9% | 24.8% | 14.7% |
| MISONIX, Inc. ($MSON) | -24.0% | -24.9% | -11.1% | -31.9% | -18.0% |
| Allied Healthcare Products, Inc. ($AHPI) | -9.8% | -11.8% | -13.1% | -21.2% | -26.0% |
| InVivo Therapeutics Holdings Corp. ($NVIV) | -98.6% | -119.4% | -94.0% | -98.7% | -68.1% |
| Viveve Medical, Inc. ($VIVE) | -212.5% | -188.5% | -144.4% | -106.5% | -105.8% |
| |
|---|
| Median (8 companies) | -63.9% | -95.9% | -80.8% | -95.1% | -87.0% |
|---|
| Cantel Medical Corp. ($CMD) | 17.5% | 17.3% | 16.1% | 9.5% | 3.5% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Fonar Corporation ($FONR) | -0.2x | -0.4x | -0.8x | -0.5x | -0.0x |
| |
|---|
| Median (1 company) | -0.2x | -0.4x | -0.8x | -0.5x | -0.0x |
|---|
| Cantel Medical Corp. ($CMD) | 0.7x | 0.6x | 0.7x | 1.5x | 6.8x |
