Cantel Medical Corp. (NYSE:CMD) Q3 2016 Earnings Conference Call - Preliminary Transcript
Jun 08, 2016 • 11:00 am ET
Greetings, and welcome to the Cantel Medical Corp Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Andrew Krakauer, CEO of Cantel Medical Corp. Thank you. You may now begin.
Okay. Well, thank you, Shea, and welcome to our third quarter fiscal year 2016 conference call. Before we start, 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. Okay, with that said, good morning again to everyone. With me on our call today are Chuck Diker, Chairman of the Board, Jorgen Hansen, President and Chief Operating Officer, Peter Clifford, Executive Vice President and Chief Financial Officer, Seth Yellin, Senior Vice President Corporate Development and Steve Anaya, Senior Vice President and Chief Accounting Officer.
Cantel Medical achieved outstanding financial performance in the third quarter of fiscal year 2016 with solid sales and net income growth. We reported third quarter US GAAP earnings of $0.34 per share, as compared to the prior year's third quarter earnings of $0.30 per share. Sales increased 22.8% in the quarter to a record $173.7 million, with underlying organic growth of 17.6%. We did have $0.04 included in the GAAP earnings for CEO transition and non-amortization related acquisition cost. On a non-GAAP basis, adjusted net income increased by 24.1% over the same quarter last year to a record $18,243,000. Adjusted EPS grew by over 25% for the quarter to a record $0.44 compared to adjusted EPS in the prior year of $0.35. I'll briefly review the third quarter performance and highlights of our operating segments.
This quarter, our Endoscopy business continued its strong performance at it has for the past three years, setting a new sales record for the 12th consecutive quarter. Sales in this fast growing segment represented 53% of total company sales. In the quarter, we recorded Endoscopy sales of $91.9 million representing total growth of 44.2% over the prior year with strong underlying organic growth of 33.1%. Adjusted operating profit for the segment increased in the quarter by over 42% due to strong volumes in all product categories including reprocessing equipment, procedure room products, chemistries and service. And despite significant investments in the quarter, including the fully acquired infrastructure cost of Medical Innovations recently acquired, substantial sales and marketing additions and significant incentive sales commissions prior to the strong performance, particularly in the United States, adjusted operating expenses were leveraged increasing by 40% as sales grew by 44% for the quarter.
This quarter, our procedure room product lines led the growth in the segment, demonstrating the effectiveness of our global selling strategies as customers