Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jul. 31, 2018 | Aug. 31, 2018 | Jan. 31, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | CANTEL MEDICAL CORP | ||
Entity Central Index Key | 19,446 | ||
Document Type | 10-K | ||
Document Period End Date | Jul. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --07-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 4,121,209,905 | ||
Entity Common Stock, Shares Outstanding | 41,706,084 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 31, 2018 | Jul. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 94,097 | $ 36,584 |
Accounts receivable, net of allowance for doubtful accounts of $1,149 and $1,808 | 118,642 | 110,656 |
Inventories, net | 107,592 | 98,724 |
Prepaid expenses and other current assets | 17,912 | 11,407 |
Total current assets | 338,243 | 257,371 |
Property and equipment, net | 111,417 | 88,338 |
Intangible assets, net | 137,361 | 124,512 |
Goodwill | 368,027 | 311,445 |
Other assets | 5,749 | 4,707 |
Deferred income taxes | 2,911 | 0 |
Total assets | 963,708 | 786,373 |
Current liabilities: | ||
Accounts payable | 34,258 | 27,469 |
Compensation payable | 30,595 | 27,468 |
Accrued expenses | 28,525 | 23,393 |
Deferred revenue | 28,614 | 25,282 |
Current portion of long-term debt | 10,000 | 0 |
Income taxes payable | 2,791 | 3,167 |
Total current liabilities | 134,783 | 106,779 |
Long-term debt | 187,302 | 126,000 |
Deferred income taxes | 27,624 | 24,714 |
Other long-term liabilities | 5,132 | 4,948 |
Total liabilities | 354,841 | 262,441 |
Commitments and Contingencies | ||
Stockholders’ equity: | ||
Preferred Stock, par value $1.00 per share; authorized 1,000,000 shares; none issued | 0 | 0 |
Common Stock, par value $.10 per share; authorized 75,000,000 shares; issued 46,243,582 shares and outstanding 41,706,084 shares as of July 31, 2018; issued 46,194,374 shares and outstanding 41,728,934 shares as of July 31, 2017 | 4,624 | 4,619 |
Additional paid-in capital | 184,212 | 174,602 |
Retained earnings | 491,540 | 407,590 |
Accumulated other comprehensive loss | (11,456) | (9,900) |
Treasury Stock, at cost; 4,537,498 shares as of July 31, 2018; 4,465,440 shares as of July 31, 2017 | (60,053) | (52,979) |
Total stockholders’ equity | 608,867 | 523,932 |
Total liabilities and stockholders' equity | $ 963,708 | $ 786,373 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jul. 31, 2018 | Jul. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,149 | $ 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 | 46,243,582 | 46,194,374 |
Common Stock, shares outstanding | 41,706,084 | 41,728,934 |
Treasury Stock, shares | 4,537,498 | 4,465,440 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Net sales | |||
Product sales | $ 765,158 | $ 684,678 | $ 584,750 |
Product service | 106,764 | 85,479 | 80,005 |
Total net sales | 871,922 | 770,157 | 664,755 |
Cost of sales | |||
Product sales | 385,597 | 343,641 | 300,704 |
Product service | 72,354 | 59,356 | 54,865 |
Total cost of sales | 457,951 | 402,997 | 355,569 |
Gross profit | 413,971 | 367,160 | 309,186 |
Expenses: | |||
Selling | 129,642 | 116,113 | 99,062 |
General and administrative | 138,019 | 122,270 | 97,463 |
Research and development | 24,646 | 18,367 | 15,410 |
Total operating expenses | 292,307 | 256,750 | 211,935 |
Income from operations | 121,664 | 110,410 | 97,251 |
Interest expense, net | 5,289 | 4,303 | 3,320 |
Other income | (1,138) | (126) | 0 |
Income before income taxes | 117,513 | 106,233 | 93,931 |
Income taxes | 26,472 | 34,855 | 33,978 |
Net income | $ 91,041 | $ 71,378 | $ 59,953 |
Earnings per common share: | |||
Basic (in dollars per share) | $ 2.18 | $ 1.71 | $ 1.44 |
Diluted (in dollars per share) | 2.18 | 1.71 | 1.44 |
Dividends per common share (in dollars per share) | $ 0.17 | $ 0.14 | $ 0.12 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 91,041 | $ 71,378 | $ 59,953 |
Other comprehensive (loss) income: | |||
Foreign currency translation | (1,556) | 1,895 | (13,019) |
Total other comprehensive (loss) income | (1,556) | 1,895 | (13,019) |
Comprehensive income | $ 89,485 | $ 73,273 | $ 46,934 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock, at cost |
Beginning Balance (in shares) at Jul. 31, 2015 | 41,604,359 | |||||
Beginning Balance at Jul. 31, 2015 | $ 406,633 | $ 4,591 | $ 156,050 | $ 287,105 | $ 1,224 | $ (42,337) |
Increase (Decrease) in Stockholders' Equity | ||||||
Repurchases of shares (in shares) | (67,038) | |||||
Repurchases of shares | (3,732) | (3,732) | ||||
Stock-based compensation | 8,361 | 8,361 | ||||
Issuance of restricted stock (in shares) | 175,700 | |||||
Issuance of restricted stock | 0 | $ 17 | (17) | |||
Cancellations of restricted stock (in shares) | (4,807) | |||||
Cancellations of restricted stock | 0 | |||||
Excess tax benefit from exercises of stock options and vesting of restricted stock | 1,179 | 1,179 | 0 | |||
Dividends on common stock | (5,005) | (5,005) | ||||
Net income | 59,953 | 59,953 | ||||
Other comprehensive income (loss) | (13,019) | (13,019) | ||||
Ending Balance (in shares) at Jul. 31, 2016 | 41,708,214 | |||||
Ending Balance at Jul. 31, 2016 | 454,370 | $ 4,608 | 165,573 | 342,053 | (11,795) | (46,069) |
Increase (Decrease) in Stockholders' Equity | ||||||
Repurchases of shares (in shares) | (89,607) | |||||
Repurchases of shares | (6,910) | (6,910) | ||||
Stock-based compensation | 8,844 | 8,844 | ||||
Issuance of restricted stock (in shares) | 116,506 | |||||
Issuance of restricted stock | 0 | $ 12 | (12) | |||
Cancellations of restricted stock (in shares) | (6,179) | |||||
Cancellations of restricted stock | 0 | $ (1) | 1 | |||
Excess tax benefit from exercises of stock options and vesting of restricted stock | 196 | 196 | ||||
Dividends on common stock | (5,841) | (5,841) | ||||
Net income | 71,378 | 71,378 | ||||
Other comprehensive income (loss) | $ 1,895 | 1,895 | ||||
Ending Balance (in shares) at Jul. 31, 2017 | 41,728,934 | 41,728,934 | ||||
Ending Balance at Jul. 31, 2017 | $ 523,932 | $ 4,619 | 174,602 | 407,590 | (9,900) | (52,979) |
Increase (Decrease) in Stockholders' Equity | ||||||
Repurchases of shares (in shares) | (62,559) | |||||
Repurchases of shares | (7,074) | (7,074) | ||||
Stock-based compensation | 9,615 | 9,615 | ||||
Issuance of restricted stock (in shares) | 46,551 | |||||
Issuance of restricted stock | 0 | $ 5 | (5) | |||
Cancellations of restricted stock (in shares) | (6,842) | |||||
Cancellations of restricted stock | 0 | |||||
Dividends on common stock | (7,091) | (7,091) | ||||
Net income | 91,041 | 91,041 | ||||
Other comprehensive income (loss) | $ (1,556) | (1,556) | ||||
Ending Balance (in shares) at Jul. 31, 2018 | 41,706,084 | 41,706,084 | ||||
Ending Balance at Jul. 31, 2018 | $ 608,867 | $ 4,624 | $ 184,212 | $ 491,540 | $ (11,456) | $ (60,053) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Cash flows from operating activities | |||
Net income | $ 91,041 | $ 71,378 | $ 59,953 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 17,473 | 15,045 | 11,989 |
Amortization | 17,357 | 18,407 | 13,095 |
Stock-based compensation expense | 9,615 | 8,844 | 8,361 |
Deferred income taxes | (7,520) | 118 | (1,710) |
Excess tax benefits from stock-based compensation | (1,179) | ||
Other non-cash items, net | 1,076 | 1,102 | 267 |
Changes in assets and liabilities, net of effects of business acquisitions/divestitures: | |||
Accounts receivable | (3,700) | (12,860) | (12,729) |
Inventories | (3,785) | 887 | (15,558) |
Prepaid expenses and other assets | (5,169) | (957) | (2,850) |
Accounts payable and other liabilities | 10,614 | 7,124 | 17,657 |
Income taxes | (1,090) | (895) | 2,972 |
Net cash provided by operating activities | 125,912 | 108,193 | 80,268 |
Cash flows from investing activities | |||
Capital expenditures | (37,698) | (27,065) | (18,889) |
Proceeds from disposal of fixed assets | 0 | 47 | 96 |
Acquisition of businesses, net of cash acquired | (87,488) | (70,044) | (94,528) |
Other, net | 0 | 0 | 339 |
Net cash used in investing activities | (125,186) | (97,062) | (112,982) |
Cash flows from financing activities | |||
Proceeds from issuance of long-term debt | 200,000 | 0 | 0 |
Borrowings under revolving credit facility | 82,300 | 74,000 | 96,500 |
Repayments under revolving credit facility | (208,300) | (64,000) | (59,000) |
Debt issuance costs | (2,698) | 0 | 0 |
Dividends paid | (7,091) | (5,841) | (5,005) |
Excess tax benefits from stock-based compensation | 1,179 | ||
Purchases of treasury stock | (7,074) | (6,910) | (3,732) |
Net cash provided by (used in) financing activities | 57,137 | (2,751) | 29,942 |
Effect of exchange rate changes on cash and cash equivalents | (350) | (163) | (581) |
Increase (decrease) in cash and cash equivalents | 57,513 | 8,217 | (3,353) |
Cash and cash equivalents at beginning of period | 36,584 | 28,367 | 31,720 |
Cash and cash equivalents at end of period | 94,097 | 36,584 | 28,367 |
Supplemental disclosures of cash flow information: | |||
Cash interest payments | 5,156 | 3,455 | 3,001 |
Cash income tax payments | 35,251 | 35,858 | 33,559 |
Accruals related to purchases of property and equipment | $ 2,281 | $ 192 | $ 0 |
Business Description
Business Description | 12 Months Ended |
Jul. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description | Business Description 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. Unless otherwise indicated, references in this Form 10-K to 2018 , 2017 , 2016 or “fiscal” 2018 , 2017 , 2016 or other years refer to our fiscal year ended July 31 of that respective year, and references to 2019 or “fiscal” 2019 refer to our fiscal year ending July 31, 2019 . Cantel is a leading provider of infection prevention and control products and services in the healthcare market, specializing in the following reportable segments: 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. 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. 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. See Note 16, "Reportable Segments." Most of our equipment, consumables and supplies are used to help prevent the occurrence or spread of infections. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jul. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The following is a summary of our significant accounting policies used to prepare our consolidated financial statements. Principles of Consolidation The consolidated financial statements include the accounts of Cantel and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year's presentation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we evaluate the adequacy of our reserves and the estimates used in calculations of reserves as well as other judgmental financial statement items, including, but not limited to: collectability of accounts receivable, volume rebates and trade-in allowances, inventory values and obsolescence reserves, warranty reserves, contingent consideration, contingent guaranteed obligations, depreciation and amortization periods, deferred income taxes, goodwill and intangible assets, impairment of long-lived assets, unrecognized tax benefits for uncertain tax positions, reserves for legal exposure, stock-based compensation and expense accruals. Such estimates and assumptions are subjective in nature. We reflect such amounts based upon the most recent information available. Subsequent Events We performed a review of events subsequent to July 31, 2018 through the date of issuance of the accompanying consolidated financial statements. Revenue Recognition Revenue on product sales is recognized as products are shipped to customers and title passes. The passing of title is determined based upon the FOB terms specified for each shipment. With respect to endoscopy and dialysis products, shipment terms are generally FOB origin for common carrier and when our distribution fleet is utilized (except for one large customer in dialysis and several endoscopy customers whereby all products are shipped FOB destination and include risk of loss provisions). With respect to water purification and filtration and healthcare disposable products, shipment terms may be either FOB origin or destination. Customer acceptance for the majority of our product sales occurs at the time of delivery. With respect to a portion of water purification and filtration and endoscopy product sales, equipment is sold as part of a system for which the equipment is functionally interdependent or the customer’s purchase order specifies “ship-complete” as a condition of delivery. Revenue recognition on such sales is deferred until all equipment has been delivered, or post-delivery obligations such as installation have been substantially fulfilled such that the products are deemed functional by the end-user. All shipping and handling fees invoiced to customers, such as freight, are recorded as revenue (and related costs are included within cost of sales) at the time the sale is recognized. A portion of our endoscopy, water purification and filtration and dialysis sales are recognized as multiple element arrangements, whereby revenue is allocated to the equipment, installation and consumable components based upon vendor specific objective evidence, which includes comparable historical transactions of similar equipment, installation and consumables sold as stand-alone components. If vendor-specific objective evidence of selling price is not available, we allocate revenue to the elements of the bundled arrangement using the estimated selling price method in order to qualify the components as separate units of accounting. Revenue on the equipment and consumables components are recognized as the equipment or consumable is shipped to customers and title passes. Revenue on the installation component is recognized when the installation is complete. Revenue on service sales is recognized when repairs are completed at the customer’s location or when repairs are completed at our facilities and the products are shipped to customers. With respect to certain endoscopy and water purification and filtration service contracts, service revenue is recognized on a straight-line basis over the contractual term of the arrangement. Our endoscopy products and services are sold directly to hospitals and other end-users in the United States and primarily to distributors internationally except for certain countries where we sell directly to hospitals and other end-users. Water purification and filtration products and services are sold directly to hospitals, dialysis clinics, pharmaceutical and biotechnology companies, laboratories, medical products and service companies and other end-users as well as through third-party distributors. The majority of our healthcare disposable products are sold to third party distributors, and with respect to some of our sterility assurance products, to hospitals, surgery centers, physician and dental offices, dental schools, medical research companies, laboratories and other end-users. The majority of our dialysis products are sold to dialysis clinics and hospitals. Sales to all of these customers follow our revenue recognition policies. None of our sales contain right-of-return provisions. Customer claims for credit or return due to damage, defect, shortage or other reason must be pre-approved by us before credit is issued or such product is accepted for return. No cash discounts for early payment are offered except with respect to a small portion of our product sales in each segment. We do not offer price protection, although advance pricing contracts or required notice periods prior to implementation of price increases exist for certain customers with respect to many of our products. With respect to certain of our dialysis, healthcare disposables, water purification and filtration and endoscopy customers, rebates are provided. Such rebates, which consist primarily of volume rebates, are provided for as a reduction of sales at the time of revenue recognition and amounted to $8,401 , $6,291 , and $5,944 in fiscal 2018 , 2017 , and 2016 , respectively. Such allowances are determined based on estimated projections of sales volume for the entire rebate periods. If it becomes known that sales volume to customers will deviate from original projections, the rebate provisions originally established would be adjusted accordingly. Translation of Foreign Currency Financial Statements Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at year-end exchange rates; sales and expenses are translated using average exchange rates during the year. The cumulative effect of the translation of the accounts of the foreign subsidiaries is presented as a component of accumulated other comprehensive income or loss. Foreign exchange gains and losses related to the purchase of inventories denominated in foreign currencies are included in cost of sales and foreign exchange gains and losses related to the incurrence of operating costs denominated in foreign currencies and the conversion of foreign assets and liabilities into functional currencies are included in general and administrative expenses. Cash and Cash Equivalents We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of amounts due to us from normal business activities. Allowances for doubtful accounts are reserves for the estimated loss from the inability of customers to make required payments. We use historical experience as well as current market information in determining the estimate. While actual losses have historically been within management’s expectations and provisions established, if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Alternatively, if certain customers paid their delinquent receivables, reductions in allowances may be required. Inventories Inventories consist of raw materials, work-in-process and finished products which are sold in the ordinary course of our business and are stated at the lower of cost (first-in, first-out) or net realizable value. In assessing the value of inventories, we must make estimates and judgments regarding reserves required for product obsolescence, aging of inventories and other issues potentially affecting the saleable condition of products. In performing such evaluations, we use historical experience as well as current market information. With few exceptions, the saleable value of our inventories has historically been within management’s expectation and provisions established, however, rapid changes in the market due to competition, technology and various other factors could impact the value of our inventories, resulting in the need for additional reserves. Property and Equipment Property and equipment are stated at cost. Additions and improvements are capitalized, while maintenance and repair costs are expensed. When assets are retired or otherwise disposed, the cost and related accumulated depreciation or amortization is removed from the respective accounts and any resulting gain or loss is included in income. Depreciation and amortization is provided on the straight-line method over the estimated useful lives of the assets which generally range from 2 - 15 years for furniture and equipment, 5 - 40 years for buildings and improvements and the shorter of the life of the asset or the life of the lease for leasehold improvements. Depreciation expense related to property and equipment in fiscal 2018 , 2017 and 2016 was $17,473 , $15,045 and $11,989 , respectively. Goodwill and Intangible Assets Certain of our identifiable intangible assets, including customer relationships, technology, brand names, non-compete agreements and patents, are amortized using the straight-line method over their estimated useful lives which range from 3 to 20 years. Additionally, we have recorded goodwill and trademarks and trade names, all of which have indefinite useful lives and are therefore not amortized. All of our intangible assets and goodwill are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, and goodwill and intangible assets with indefinite lives are reviewed for impairment at least annually . Our management is responsible for determining if impairment exists and considers a number of factors, including third-party valuations, when making these determinations. We first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount before proceeding to step one of the two-step quantitative goodwill impairment test, if necessary. Such qualitative factors that are assessed include evaluating a segment’s financial performance, industry and market conditions, macroeconomic conditions and specific issues that can directly affect the segment such as changes in business strategies, competition, supplier relationships, operating costs, regulatory matters, litigation and the composition of the segment’s assets due to acquisitions or other events. At May 1, 2018, because we determined through qualitative factors that the fair values of our Endoscopy, Water Purification and Filtration and Healthcare Disposables segments were unlikely to be less than the carrying value, we did not proceed to step one of the two-step quantitative goodwill impairment test for those three segments. We performed step one of the two-step quantitative goodwill impairment test for Dialysis due to the continuing shift by our customers from reusable to single-use dialyzers, which is having an adverse impact on our business and is expected to continue. In performing a detailed quantitative review for goodwill impairment, management uses a two-step process that begins with an estimation of the fair value of the related reporting units by using weighted fair value results of the discounted cash flow methodology, as well as the market multiple and comparable transaction methodologies, where applicable. The first step is a review for potential impairment, and the second step measures the amount of impairment, if any. Historically, goodwill and indefinite lived intangible assets were tested annually for impairment as of July 31 of each fiscal year. In fiscal 2018, we changed our measurement date to May 1 of each year to better align the annual impairment test with the timing of our annual strategic planning process. We perform our annual impairment review for indefinite lived intangibles by first assessing qualitative factors, such as those described above, to determine whether it is more likely than not that the fair value of such assets is less than the carrying values, and if necessary, we perform a quantitative analysis comparing the current fair value of our indefinite lived intangibles assets to their carrying values. At May 1, 2018 , because we determined through qualitative factors that the fair values of all of our indefinite lived intangible assets were unlikely to be less than the carrying value, we did not perform a quantitative analysis for those assets. With respect to amortizable intangible assets when impairment indicators are present, management would determine whether expected future non-discounted cash flows would be sufficient to recover the carrying value of the assets; if not, the carrying value of the assets would be adjusted to their fair value. We did not recognize any impairment charges for goodwill or indefinite lived intangibles in the years presented. Long-Lived Assets We evaluate the carrying value of long-lived assets including property, equipment and other assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An assessment is made to determine if the sum of the expected future non-discounted cash flows from the use of the assets and eventual disposition is less than the carrying value. If the sum of the expected non-discounted cash flows is less than the carrying value, an impairment loss is recognized based on fair value. Our historical assessments of our long-lived assets have not differed significantly from the actual amounts realized. However, the determination of fair value requires us to make certain assumptions and estimates and is highly subjective. On July 31, 2018 , management concluded that no other events or changes in circumstances have occurred that would indicate that the carrying amount of our long-lived assets may not be recoverable. Debt Issuance Costs Debt issuance costs are capitalized and amortized to interest expense over the term of the related credit agreements. As of July 31, 2018 , such debt issuance costs, net of related amortization, were included as a reduction to long-term debt and amounted to $2,698 . Warranties We provide for estimated costs that may be incurred to remedy deficiencies of quality or performance of our products at the time of revenue recognition. Most of our products have a one year warranty, although certain endoscopy and water purification and filtration products that require installation may carry a warranty period of up to 24 months . Additionally, many of our consumables, accessories, parts and service have a 90 -day warranty. We record provisions for product warranties as a component of cost of sales based upon an estimate of the amounts necessary to settle existing and future claims on products sold. As of July 31, 2018 and 2017 , our warranty reserves are included in accrued expenses in the consolidated balance sheets and amounted to $3,280 and $2,328 , respectively. Our warranty provisions and settlements in fiscal 2018 and 2017 were not material and principally relate to our endoscope reprocessing and water purification products. Stock-Based Compensation Stock-based compensation expense is recognized for any option or stock award grant based upon the fair value of the award. Our stock options and time-based stock awards are subject to graded vesting in which portions of the award vest ratably over the vesting period. We recognize compensation expense for the awards with performance conditions using the accelerated attribution method over the requisite service period for each separately vesting portion of the award when it is probable that the performance condition will be achieved. We record expense for the awards with market conditions ratably over the vesting period regardless of whether the market condition is satisfied. We account for forfeitures as they occur, rather than estimate forfeitures over the course of the vesting period. We determine the fair value of each time-based stock award and performance-based stock award by using the closing market price of our common stock on the last trading date immediately prior to the date of grant. We determine the fair value of each award with market conditions using a Monte Carlo simulation model on the date of grant. We estimate the fair value of each option grant on the date of grant using the Black Scholes option valuation model. The determination of fair value using valuation models is affected by our stock price as well as assumptions regarding a number of subjective variables. These variables may include, but are not limited to, the expected price volatility over the term of the award, the expected dividend yield, the expected term of the award, the probability of meeting performance objectives and the stock price of our peers in the S&P Healthcare Equipment Index. Advertising Costs Our policy is to expense advertising costs as they are incurred. Advertising costs charged to expense were $4,115 , $3,694 and $3,349 in fiscal 2018 , 2017 and 2016 , respectively. Income Taxes Our provision for income taxes is based on our current period income, changes in deferred income tax assets and liabilities, statutory income tax rates, changes in uncertain tax benefits and the deductibility of expenses or availability of tax credits in various taxing jurisdictions. Tax laws are complex, subject to different interpretations by the taxpayer and the respective governmental taxing authorities and are subject to future modification, expiration or repeal by government legislative bodies. We use significant judgment on a quarterly basis in determining our annual effective income tax rate and evaluating our tax positions. We regularly review our deferred tax assets for recoverability and establish a valuation allowance, if necessary, based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing temporary differences. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets, as adjusted for valuation allowances, will be realized. Additionally, deferred tax liabilities are regularly reviewed to confirm that such amounts are appropriately stated. A review of our deferred tax items considers known future changes in various income tax rates, principally in the United States. If income tax rates were to change in the future, particularly in the United States and to a lesser extent Germany, the U.K. and Italy, our items of deferred tax could be materially affected. All of such evaluations require significant management judgments. We record liabilities for an unrecognized tax benefit when a tax benefit for an uncertain tax position is taken or expected to be taken on a tax return, but is not recognized in our consolidated financial statements because it does not meet the more-likely-than-not recognition threshold that the uncertain tax position would be sustained upon examination by the applicable taxing authority. Any adjustments upon resolution of income tax uncertainties are recognized in our results of operations. Unrecognized tax benefits are analyzed periodically and adjustments are made as events occur to warrant adjustment to the related liability. Historically, we have not had significant unrecognized tax benefits. Newly Adopted Accounting Standards In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, “ (Topic 805) Simplifying the Accounting for Measurement-Period Adjustments ,” (“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 2015-16 did not have a material impact on our financial position, results of operations or cash flows. In July 2015, the FASB issued ASU 2015-11, “ (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, results of operations and cash flows. In January 2017, the FASB issued ASU 2017-01, “ (Topic 805) Clarifying the Definition of a Business ,” (“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, results of operations or cash flows. Recently Issued Accounting Standards In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”) to allow for the reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects resulting from the Tax Cuts and Jobs Act enacted in December 2017. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018 (our fiscal year 2020), including interim periods within that reporting period. The adoption of ASU 2018-02 is not expected to have a significant impact on our financial position, results of operations or cash flows. 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. The adoption of ASU 2017-12 is not expected to have a significant impact on our financial position, results of operations or cash flows. In May 2017, the FASB issued ASU 2017-09, “ (Topic 718) 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 2017-12 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. The adoption of ASU 2017-09 is not expected to have a significant impact on our financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-04, “(Topic 350) Simplifying the Test for Goodwill Impairment ,” (“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 31, 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, results of operations or cash flows. In August 2016, the FASB issued ASU 2016-15, “(Topic 230) Classification of Certain Cash Receipts and Cash Payments , ” (“ASU 2016-15”). This new guidance will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019). ASU 2016-15 will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. The adoption of ASU 2016-15 is not expected to have a significant impact on our financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, “ (Topic 842) Leases ,” (“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 31, 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, results of operations and cash flows. 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),” (“ASU 2015-14”), 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 international locations and have evaluated the provisions contained therein in light of the five-step model specified by the new guidance. We have also evaluated 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 have reached conclusions on our accounting assessments related to the standard and finalized updates to our accounting policies, processes and controls and will adopt the new standard on August 1, 2018 using the modified retrospective approach. We expect to record an immaterial adjustment to retained earnings upon adoption of Topic 606 in the first quarter of fiscal 2019, primarily related to the timing of revenue recognition for the shipment of products in both our Endoscopy and Water Purification and Filtration segments where risk of loss provisions are present (“synthetic FOB destination”). The new standard does not require us to defer revenue for these products and allows us to recognize revenue at the time of shipment. The adjustment to retained earnings also includes the impact of the change in timing of revenue recognition associated with software licensing arrangements in our Endoscopy segment. Overall, we expect the adoption of Topic 606 to have an immaterial impact on our fiscal 2019 financial position, results of operations or cash flows. The timing of revenue recognition for our primary revenue streams will not change. Additionally, we have completed our assessment of new disclosure requirements. Upon adoption of Topic 606, we will provide additional disclosures in the notes to the consolidated financial statements, specifically related to performance obligations and multiple-element revenue streams. We have designed new internal controls that will be implemented in the first quarter of fiscal 2019 to address risks associated with applying the five-step model. Additionally, we have established monitoring controls to identify new sales arrangements and changes in our business environment that could impact our current accounting assessment. |
Acquisitions
Acquisitions | 12 Months Ended |
Jul. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Post-Fiscal 2018 On August 1, 2018, we acquired certain net assets of Stericycle Inc.'s controlled environmental solutions business (“CES business”) for total cash consideration, excluding acquisition-related costs, of $17,000 . The CES business is a leading provider of testing and certification, environmental monitoring and decontamination services for clean rooms and other controlled environments to ensure safety, regulatory compliance and quality control, and will be included in our Water Purification and Filtration segment. Fiscal 2018 Aexis Medical On March 21, 2018, we purchased all of the issued and outstanding stock of Aexis Medical for total consideration, excluding acquisition-related costs, of $21,600 , consisting of $20,308 of cash consideration (net of cash acquired), plus contingent consideration ranging from zero to a maximum of $1,850 , which is payable upon the achievement of certain purchase order targets through March 21, 2020. Aexis Medical specializes in advanced software solutions focused on the tracking and monitoring of instrument reprocessing for hospitals and healthcare professionals, and is included in our Endoscopy segment. BHT Group On August 23, 2017, we purchased all of the issued and outstanding stock of BHT Group, a leader in the German market in automated endoscope reprocessing and related equipment and services for total cash consideration, excluding acquisition related costs, of $60,216 . 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. Fiscal 2017 CR Kennedy On April 1, 2017, we purchased certain endoscopy-related net assets of CR Kennedy related to its distribution and sale of our Medivators endoscopy products in Australia for total cash 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 related to its distribution and sale of our Medivators endoscopy products in Canada for total cash 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, a Phoenix-based company, for total cash 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 Aexis Medical (1) BHT Group (1) CR Kennedy Vantage (1) Accutron (1) (Preliminary) (Final) (Final) (Final) (Final) Purchase Price: Cash paid $ 20,308 $ 60,216 $ 11,999 $ 4,044 $ 53,049 Fair value of contingent consideration 1,292 — — — — Total $ 21,600 $ 60,216 $ 11,999 $ 4,044 $ 53,049 Allocation: Property and equipment 130 835 — 433 1,676 Amortizable intangible assets: Customer relationships 1,800 12,500 4,200 992 12,800 Technology 4,600 6,200 — — 10,000 Brand names — — — — 2,000 Goodwill 17,092 40,934 5,894 2,299 21,989 Deferred income taxes (1,639 ) (5,881 ) — — 112 Other working capital 909 5,628 1,905 320 4,472 Contingent consideration (1,292 ) — — — — Total $ 21,600 $ 60,216 $ 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. |
Inventories, Net
Inventories, Net | 12 Months Ended |
Jul. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | Inventories, Net A summary of inventories, net, is as follows: July 31, 2018 2017 Raw materials and parts $ 49,054 $ 45,831 Work-in-process 13,189 13,484 Finished goods 53,948 48,262 Less: reserve for excess and obsolete inventory (8,599 ) (8,853 ) Total inventories, net $ 107,592 $ 98,724 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Jul. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net A summary of property and equipment, net, is as follows: July 31, 2018 2017 Land, buildings and improvements $ 50,162 $ 46,921 Furniture, equipment and software 121,248 114,735 Leasehold improvements 9,544 7,858 Construction in process 26,003 4,947 Less: accumulated depreciation (95,540 ) (86,123 ) Total property and equipment, net $ 111,417 $ 88,338 |
Derivatives
Derivatives | 12 Months Ended |
Jul. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives We recognize all derivatives on the balance sheet at fair value. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in the fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of the change in fair value of a derivative that is designated as a hedge will be recognized immediately in earnings. As of July 31, 2018 , all of our derivatives were designated as hedges. We do not hold any derivative financial instruments for speculative or trading purposes. Changes in the value of the Euro, British Pound, Singapore dollar, Canadian dollar, Australian dollar and the Chinese Renminbi against the U.S. dollar affect our results of operations because certain cash bank accounts, accounts receivable, and liabilities of Cantel and its subsidiaries are denominated and ultimately settled in U.S. dollars or these foreign currencies, but must be converted into each entity’s functional currency. 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. There were seven foreign currency forward contracts with an aggregate notional value of $30,159 at July 31, 2018 , which covered certain assets and liabilities that were denominated in currencies other than each entity’s functional currency. 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. For the fiscal year ended July 31, 2018 , such forward contracts partially offset the impact on operations relating to certain assets and liabilities that were denominated in currencies other than each entity’s functional currency. This resulted in an immaterial amount of net currency conversion gains, net of tax, on the hedged items. 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 or Sri Lankan Rupee relative to the U.S. dollar because the overall foreign currency exposures relating to those currencies are currently not deemed significant. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Jul. 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. For the Aexis Medical acquisition, additional purchase price payments ranging from $0 to $1,850 are contingent upon the achievement of certain purchase order targets through March 21, 2020. We estimated the original fair value of the contingent consideration using the weighted probabilities of the possible contingent payments. As of the date of acquisition, we estimated the original fair value of the contingent consideration to be $1,292 . We are required to reassess the fair value of contingent payments on a periodic basis. The significant inputs used in these estimates include numerous possible scenarios for the payments based on the contractual terms of the contingent consideration, for which probabilities are assigned to each scenario. Given the short term nature of the financial instrument, the contingent consideration will not be discounted to present value. Although we believe our assumptions are reasonable, different assumptions or changes in the future may result in different estimated amounts. 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 11, “Commitments and Contingencies.” The fair values of our financial instruments measured on a recurring basis were categorized as follows: July 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ 104 $ — $ — $ 104 Total assets 104 — — 104 Liabilities: Other long-term liabilities: Contingent consideration — — 1,298 1,298 Total other long-term liabilities: — — 1,298 1,298 Total liabilities $ — $ — $ 1,298 $ 1,298 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 Total accrued expenses — — 12 12 Other long-term liabilities: Assumed contingent obligation — — 1,126 1,126 Total other long-term liabilities: — — 1,126 1,126 Total liabilities $ — $ — $ 1,138 $ 1,138 A reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) for fiscal 2018 , 2017 and 2016 is as follows: Aexis Medical Contingent Consideration Jet Prep Contingent Consideration Jet Prep Assumed Contingent Obligation Cantel Medical (U.K.) Contingent Guaranteed Obligation Total Balance, August 1, 2015 $ — $ 751 $ 1,138 $ 888 $ 2,777 (Income) loss included in general and administrative expense — (751 ) — 64 (687 ) Net purchases, issuances, sales and settlements — — — (511 ) (511 ) Balance, July 31, 2016 — — 1,138 441 1,579 Income included in general and administrative expense — — — (265 ) (265 ) Net purchases, issuances, sales and settlements — — — (176 ) (176 ) Balance, July 31, 2017 — — 1,138 — 1,138 Original fair value of contingent consideration 1,292 — — — 1,292 Loss included in general and administrative expense 6 — — — 6 Net purchases, issuances, sales and settlements — — (1,138 ) — (1,138 ) Balance, July 31, 2018 $ 1,298 $ — $ — $ — $ 1,298 Disclosure of Fair Value of Financial Instruments As of July 31, 2018 and 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. As of July 31, 2018 and 2017 , the carrying value of our outstanding borrowings under our credit facility approximated the fair value of these obligations as the borrowings rates reflect prevailing market interest rates. |
Intangibles and Goodwill
Intangibles and Goodwill | 12 Months Ended |
Jul. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles and Goodwill | Intangibles and Goodwill Our intangible assets with definite lives consist primarily of customer relationships, technology, brand names, non-compete agreements and patents. These intangible assets are being amortized on the straight-line method over the estimated useful lives of the assets ranging from 3 - 20 years and have a weighted average amortization period of 14 years . Amortization expense related to intangible assets was $17,357 , $18,407 and $13,095 for fiscal 2018 , 2017 and 2016 , respectively. Our intangible assets that have indefinite useful lives, and therefore are not amortized, consist of trademarks and trade names. Our intangible assets consist of the following: July 31, 2018 July 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Intangible assets with finite lives: Customer relationships $ 133,347 $ (45,618 ) $ 87,729 $ 119,576 $ (34,773 ) $ 84,803 Technology (1) 54,585 (19,836 ) 34,749 39,064 (15,260 ) 23,804 Brand names 8,141 (3,857 ) 4,284 8,188 (3,225 ) 4,963 Non-compete agreements 3,060 (1,628 ) 1,432 3,092 (1,428 ) 1,664 Patents and other registrations 2,826 (1,179 ) 1,647 2,783 (1,053 ) 1,730 201,959 (72,118 ) 129,841 172,703 (55,739 ) 116,964 Trademarks and tradenames 7,520 — 7,520 7,548 — 7,548 Total intangible assets $ 209,479 $ (72,118 ) $ 137,361 $ 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 intangible asset and associated accumulated amortization related to the Jet Prep business. This did not result in any change to the net technology intangible asset as of July 31, 2017. During fiscal 2017, we decided to exit the Jet Prep business that was acquired in fiscal 2014. The Jet Prep acquisition was a fully integrated business within our Endoscopy segment. The useful life of the technology related intangible asset was revised to its respective cease use date, which resulted in accelerated amortization of approximately $2,401 that was recorded in the consolidated statements of income. In addition, we performed a relative fair value analysis for the goodwill recorded as part of the Jet Prep acquisition and determined that all of the goodwill would remain within the Endoscopy segment. We performed our annual goodwill impairment test of all of our reportable segments as of July 31, 2017, including the Endoscopy segment, which did not result in any impairment of our goodwill. We expect to recognize $17,639 , $15,893 , $15,892 , $15,550 and $15,177 of amortization expense related to intangible assets in fiscal 2019 , 2020 , 2021 , 2022 and 2023 , respectively. Goodwill changed during fiscal 2018 and 2017 as follows: Endoscopy Water Purification and Filtration Healthcare Disposables Dialysis Total Goodwill Balance, August 1, 2016 $ 121,015 $ 58,880 $ 92,290 $ 8,133 $ 280,318 Acquisitions 8,193 — 21,989 — 30,182 Foreign currency translation 737 208 — — 945 Balance, July 31, 2017 129,945 59,088 114,279 8,133 311,445 Acquisitions 58,026 — — — 58,026 Foreign currency translation (1,281 ) (163 ) — — (1,444 ) Balance, July 31, 2018 $ 186,690 $ 58,925 $ 114,279 $ 8,133 $ 368,027 On May 1, 2018, we performed impairment analysis of our goodwill and indefinite lived trademarks and trade names and concluded that such assets were not impaired, as more fully described in Note 2, “Summary of Significant Accounting Policies.” |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
Jul. 31, 2018 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Financing Arrangements Our long-term debt consists of the following: Year Ended July 31, 2018 2017 Revolving credit loans outstanding $ — $ 126,000 Tranche A term loan outstanding 200,000 — Unamortized debt issuance costs (2,698 ) — Total long-term debt, net of unamortized debt issuance costs 197,302 126,000 Current portion of long-term debt (10,000 ) — Long-term debt, net of unamortized debt issuance costs and excluding current portion $ 187,302 $ 126,000 On June 28, 2018, we entered into a Fourth Amended and Restated Credit Agreement (the “2018 Credit Agreement”). The Amended Credit Agreement refinances our credit facility under the Third Amended and Restated Credit Agreement (the “Existing Credit Agreement”) dated March 4, 2011, to include a $200,000 tranche A term loan and a $400,000 revolving credit facility. Subject to the satisfaction of certain conditions precedent, including the consent of the lenders, we may from time to time increase its borrowing capacity under the revolving credit facility or tranche A term loan by an aggregate amount not to exceed $300,000 . The 2018 Credit Agreement expires on June 28, 2023. Additionally, subject to certain restrictions and conditions (i) any of our domestic or foreign subsidiaries may become borrowers and (ii) borrowings may occur in multi-currencies. As of July 31, 2018 , we had $200,000 of term loan A borrowings outstanding and no revolver borrowings under the 2018 Credit Agreement. The tranche A term loan is subject to principal amortization, with $10.0 million due and payable in each of fiscal 2019, 2020, 2021 and 2022, with the remaining $160.0 million due and payable at maturity on June 28, 2023. Borrowings under the 2018 Credit Agreement bear interest at rates ranging from 0.00% to 1.00% above prime rate for base rate borrowings, or at rates ranging from 1.00% to 2.00% above the London Interbank Offered Rate (“LIBOR”), depending upon our “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 2018 Credit Agreement (“Consolidated EBITDA”). The Amended Credit Agreement also provides for fees on the unused portion of the revolving credit facility at rates ranging from 0.20% to 0.35% , depending on our Consolidated Leverage Ratio. At July 31, 2018 , the lender’s base rate was 5.00% and the LIBOR rate was 1.25% . The margins applicable to our outstanding borrowings were 0.25% above the lender’s base rate or 1.25% above LIBOR. All of our outstanding borrowings were under LIBOR contracts at July 31, 2018 . The 2018 Credit Agreement also provides for fees on the unused portion of our facility at rates ranging from 0.20% to 0.35% , depending upon our Consolidated Leverage Ratio, which was 0.20% at July 31, 2018 . At July 31, 2018 , the tranche A term loan interest rate was approximately 3.35% . The 2018 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 covenants under the 2018 Credit Agreement. During fiscal 2018, in connection with the refinancing of our credit agreement, we incurred a loss on extinguishment of debt which included a write-off of debt financing costs of $127 , which is recorded in interest expense, net for the fiscal year ended July 31, 2018 . |
Income Taxes
Income Taxes | 12 Months Ended |
Jul. 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 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 benefit was comprised of the following: (i) expense of $294 related to the mandatory transition tax for unrepatriated foreign income and (ii) a benefit of $8,692 related to a revaluation of our deferred tax assets and liabilities. During the third quarter ended April 30, 2018, we reduced the mandatory transition tax by $294 to $0 . Furthermore, during the fourth quarter ended July 31, 2018, upon reassessment of the revaluation of our deferred tax assets and liabilities, we recorded a benefit of $8,657 , as compared to the provisional estimate of $8,692 , which we recorded in the second quarter ended January 31, 2018. 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 potential new or interpretative guidance issued by the SEC, the FASB, or the Internal Revenue Service (“IRS”). We continue to analyze the calculations of earnings and profits in certain foreign subsidiaries, including whether those earnings are held in cash or other assets, as well as the state tax impact of the 2017 Tax Act. Furthermore, such analysis includes but is not limited to provisions that take effect in fiscal 2019 and not subject to SAB 118 such as GILTI and certain employee expense deductions. In the fourth quarter ended July 31, 2018 we revised our assessment of the impact of the 2017 Tax Act on our deferred tax assets and liabilities based on actual fiscal year 2018 results of operations. The consolidated effective tax rate was 22.5% , 32.8% and 36.2% for fiscal 2018 , 2017 and 2016 , respectively, and reflects income tax expense for our U.S. and international operations at their respective statutory rates. The provision for income taxes consists of the following: Year Ended July 31, 2018 2017 2016 Current Deferred Current Deferred Current Deferred United States: Federal $ 24,288 $ (7,308 ) $ 28,900 $ 2,020 $ 29,392 $ (216 ) State 5,078 491 4,352 261 4,433 (153 ) International 4,626 (703 ) 1,545 (2,223 ) 1,863 (1,341 ) Total $ 33,992 $ (7,520 ) $ 34,797 $ 58 $ 35,688 $ (1,710 ) The geographic components of income (loss) before income taxes are as follows: Year Ended July 31, 2018 2017 2016 United States $ 115,697 $ 108,329 $ 92,744 International 1,816 (2,096 ) 1,187 Total $ 117,513 $ 106,233 $ 93,931 The consolidated effective income tax rate differed from the U.S. statutory tax rate of 26.9% in fiscal 2018 and 35.0% in fiscal 2017 and 2016 due to the following: Year Ended July 31, 2018 2017 2016 Expected statutory tax (1) 26.9 % 35.0 % 35.0 % Differential attributable to: Foreign operations 0.6 % — % 0.6 % State and local taxes 3.7 % 3.9 % 3.2 % Domestic production deduction (1.8 )% (2.7 )% (2.3 )% Acquisition-related items, net — % 0.1 % — % Impact of tax legislation on deferred taxes (7.4 )% — % — % R&E tax credit (0.7 )% (1.4 )% (1.1 )% Change in foreign tax rates — % — % (0.4 )% Excess tax benefits (1.7 )% (2.2 )% — % Valuation allowance 2.4 % — % — % Other 0.5 % 0.1 % 1.2 % Consolidated effective income tax rate 22.5 % 32.8 % 36.2 % _______________________________________________ (1) We revised our estimated annual rate to reflect a blended U.S. federal statutory rate of 26.9% as compared to 35.0%. Tax assets and liabilities, shown before and after jurisdictional netting of deferred tax assets (liabilities), are comprised of the following: July 31, 2018 2017 Deferred tax assets: Accrued expenses $ 5,354 $ 6,308 Inventories 3,165 4,655 Accounts receivable 306 729 Other long-term liabilities 103 180 Stock-based compensation 2,700 3,402 Capital investment 426 545 Foreign NOLs 8,605 6,490 Subtotal 20,659 22,309 Valuation allowance (6,358 ) (2,984 ) 14,301 19,325 Deferred tax liabilities: Property and equipment (7,352 ) (9,957 ) Intangible assets (21,300 ) (20,107 ) Goodwill (10,362 ) (13,975 ) (39,014 ) (44,039 ) Net deferred income taxes $ (24,713 ) $ (24,714 ) Reported in Consolidated Balance Sheets as: Deferred income taxes (assets) $ 2,911 $ — Deferred income taxes (liabilities) (27,624 ) (24,714 ) $ (24,713 ) $ (24,714 ) For foreign tax reporting purposes, our Net Operating Losses (“NOLs”) at July 31, 2018 are $8,605 and originated primarily from foreign acquisitions. Most of these NOLs do not expire and are fully available for utilization against future profits in certain non-U.S. tax jurisdictions. However, we have recorded a valuation allowance of $6,358 for these foreign NOLs, which are primarily associated with certain early-stage foreign operations as well as $2,785 recorded in fiscal 2018 relating to pre-acquisition losses attributed to our U.K. operations. Furthermore, the accumulated loss is also related to the exit of the Jet Prep business which is more fully described in Note 8, “Intangibles and Goodwill.” We believe it is more likely than not that we will be unable to utilize these NOLs. During fiscal 2018 and 2017 , no dividends were repatriated from our foreign subsidiaries. As a result of the mandatory one-time transition tax required under the 2017 Tax Act, all of the undistributed earnings of our foreign subsidiaries are deemed repatriated and considered previously taxed income (“PTI”). Additionally, we continue to be indefinitely reinvested and continue to evaluate our assertion for certain legal entities. Accordingly, deferred taxes are not provided on undistributed earnings of foreign subsidiaries that are indefinitely reinvested. Determining the tax liability that would arise if these earnings were remitted is not practicable. At July 31, 2018 , the cumulative amount of such undistributed earnings, inclusive of PTI, indefinitely reinvested outside the United States was approximately $32,774 . We record liabilities for an unrecognized tax benefit when a tax benefit for an uncertain tax position is taken or expected to be taken on a tax return, but is not recognized in our consolidated financial statements because it does not meet the more-likely-than-not recognition threshold that the uncertain tax position would be sustained upon examination by the applicable taxing authority. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the tax authorities. Any adjustments upon resolution of income tax uncertainties are recognized in our results of operations. Our policy is to record potential interest and penalties related to income tax positions in interest expense and general and administrative expense, respectively, in our consolidated financial statements. However, such amounts have been relatively insignificant due to the nominal amount of our unrecognized tax benefits relating to uncertain tax positions. We have no uncertain tax positions at July 31, 2018 and 2017 . We concluded an audit by the IRS for fiscal years 2015, 2013 and 2012. With respect to state or foreign income tax examinations, we are generally no longer subject to examinations for fiscal years ended prior to July 31, 2010. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jul. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases We have several non-cancelable operating leases, primarily for our corporate headquarters, certain of our leased manufacturing facilities, warehouses, office space and equipment. Total rental expense related to our operating leases was $8,801 , $7,715 and $6,675 for fiscal 2018 , 2017 and 2016 , respectively. As of July 31, 2018, future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) for the periods set forth below were as follows: Fiscal year ending: Total 2019 $ 7,958 2020 6,208 2021 4,666 2022 2,904 2023 2,104 Thereafter 3,593 Total $ 27,433 Contingent Consideration We have $1,298 recorded as of July 31, 2018 related to the Aexis Medical acquisition, which is for the estimated fair value of contingent consideration payable upon the achievement of certain purchase order targets through March 21, 2020. 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 fiscal year ended July 31, 2018 . Legal Proceedings In May 2017, Cantel Medical (UK) Limited and Cantel (UK) Limited filed a lawsuit in the UK High Court of Justice against ARC Medical Design Limited (“ARC”) seeking a judgment of invalidity on two of ARC’s patents and additionally/alternatively a declaration of non-infringement of our AmplifEYE TM Endoscopic device. ARC filed counterclaims alleging that the AmplifEYE TM device infringed the two patents as well as registered community design marks and unregistered design rights that ARC had in its Endocuff TM and Endocuff Vision TM devices. In February 2018, the trial judge entered a judgment in favor of ARC, and we decided not to appeal the decision. We entered into a settlement agreement with ARC in March 2018 under which we agreed not to make, use, sell or offer to sell the AmplifEYE TM device in the European Union until ARC’s rights expire, and reimbursed ARC for a portion of their legal costs. During the third quarter of fiscal 2018, we recorded $2,608 of litigation costs within selling, general and administrative expenses associated with this matter. 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. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Jul. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The components and changes in accumulated other comprehensive loss for fiscal 2018 , 2017 and 2016 were as follows: Foreign Currency Translation Adjustments Balance, August 1, 2015 $ 1,224 Other comprehensive loss (13,019 ) Balance, July 31, 2016 (11,795 ) Other comprehensive income 1,895 Balance, July 31, 2017 (9,900 ) Other comprehensive loss (1,556 ) Balance, July 31, 2018 $ (11,456 ) |
Earnings Per Common Share
Earnings Per Common Share | 12 Months Ended |
Jul. 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 (nonvested 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 nonvested 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): Year Ended July 31, 2018 2017 2016 Numerator for basic and diluted earnings per share: Net income $ 91,041 $ 71,378 $ 59,953 Less income allocated to participating securities (320 ) (431 ) (488 ) Net income available to common shareholders $ 90,721 $ 70,947 $ 59,465 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 41,567,722 41,468,487 41,344,013 Dilutive effect of stock options using the treasury stock method and the average market price for the year 67,356 74,278 46,181 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 41,635,078 41,542,765 41,390,194 Earnings per share attributable to common stock: Basic earnings per share $ 2.18 $ 1.71 $ 1.44 Diluted earnings per share $ 2.18 $ 1.71 $ 1.44 Stock options excluded from weighted average dilutive common shares outstanding because their inclusion would have been antidilutive — — — A reconciliation of weighted average number of shares and common stock equivalents attributable to common stock, as determined above, to our total weighted average number of shares and common stock equivalents, including participating securities, is set forth in the following table: Year Ended July 31, 2018 2017 2016 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 41,635,078 41,542,765 41,390,194 Participating securities 148,700 254,727 340,363 Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities 41,783,778 41,797,492 41,730,557 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Jul. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2016 Equity Incentive Plan On January 7, 2016, we terminated the Cantel Medical Corp. 2006 Equity Incentive Plan (the “2006 Plan”) and adopted the Cantel Medical Corp. 2016 Equity Incentive Plan (the “2016 Plan”). As a result, no further options or awards will be granted under the 2006 Plan. The 2016 Plan provides for the granting of stock options, stock appreciation rights (SARs), restricted stock awards, restricted stock units (RSUs) and performance-based awards to our employees, independent contractors and consultants. It also provides the flexibility to grant equity-based awards to our non-employee directors. The 2016 Plan does not permit the granting of discounted options or discounted stock appreciation rights. The maximum number of shares as to which equity awards may be granted under the 2016 Plan is 1,200,000 shares. The 2016 Plan will terminate on the date of our annual meeting of stockholders following the close of our fiscal year ending in 2025, unless terminated earlier by the Board of Directors. Stock awards under this plan: • will be granted at the closing market price at the time of the grant, • will include terms which may not exceed ten years, subject to certain exceptions set forth in the Plan, and • may be granted in the form of Restricted Stock and Restricted Stock Units, Performance Awards, or Dividends. Stock awards outstanding under this plan are subject to risk of forfeiture solely due to an employment length-of-service restriction, with such restriction lapsing as to one-third of the shares of each of the first three anniversaries of the grant date subject to being employed through such vesting date. At July 31, 2018 , 179,133 unvested restricted stock shares were outstanding under the 2016 plan. No options were outstanding under the 2016 plan. At July 31, 2018 , 974,659 shares are collectively available pursuant to restricted stock and other stock awards, stock options and stock appreciation rights. 2006 Equity Incentive Plan A total of 5,591,000 shares of common stock were granted under the 2006 Plan, of which 2,700,000 shares were authorized for issuance pursuant to stock options and stock appreciation rights and 2,891,000 shares were authorized for issuance pursuant to restricted stock and other stock awards. Restricted stock shares outstanding under this plan are subject to risk of forfeiture solely due to an employment length-of-service restriction, with such restriction lapsing as to one-third of the shares on each of the first three anniversaries of the grant date subject to being employed through such vesting date. At July 31, 2018 , options to purchase 70,000 shares of common stock were outstanding, and 32,973 unvested restricted stock shares were outstanding under the 2006 Plan. The following table shows the components of stock-based compensation expense recognized in the consolidated statements of income: Year Ended July 31, 2018 2017 2016 Cost of sales $ 663 $ 371 $ 438 Operating expenses: Selling 1,458 1,582 929 General and administrative 7,292 6,774 6,881 Research and development 202 117 113 Total operating expenses 8,952 8,473 7,923 Stock-based compensation before income taxes $ 9,615 $ 8,844 $ 8,361 Our stock options and time-based stock awards are subject to graded vesting in which portions of the awards vest at different times during the vesting period. We recognize compensation expense for awards subject to graded vesting using the straight-line basis over the vesting period. In October 2016, we granted for the first time to certain employees both equity awards with performance conditions and equity awards with market conditions. The actual number of equity awards earned and eligible to vest will be determined based on the level of achievement against budgeted revenue and a defined gross profit percentage, with respect to the awards with performance conditions, and our 3-year relative total stockholder return performance as measured against the S&P Healthcare Equipment Index, with respect to the awards with market conditions. The maximum share attainment of these awards are 200% of the initial granted shares. We recognize compensation expense for the awards with performance conditions using the accelerated attribution method over the requisite service period for each separately vesting portion of the award when it is probable that the performance condition will be achieved. We record expense for the awards that are subject to market conditions ratably over the vesting period regardless of whether the market condition is satisfied. At July 31, 2018 , total unrecognized stock-based compensation expense, before income taxes, related to total nonvested stock options and restricted stock awards was $12,102 with a remaining weighted average period of 18 months over which such expense is expected to be recognized. The majority of our nonvested awards relate to restricted stock awards. We account for forfeitures as they occur, rather than estimate expected forfeitures over the vesting period. We determine the fair value of each time-based stock award and performance-based stock award by using the closing market price of our common stock on the date of grant. We determine the fair value of each stock award 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 fiscal 2018 , 2017 and 2016 follows: Number of Time-based Shares Number of Performance-based Shares Number of Market-based Shares Number of Total Shares Weighted Average Fair Value August 1, 2015 343,519 — — 343,519 $ 32.77 Granted 175,700 — — 175,700 $ 55.40 Vested (1) (183,045 ) — — (183,045 ) $ 30.06 Forfeited (4,807 ) — — (4,807 ) $ 45.06 July 31, 2016 331,367 — — 331,367 $ 46.09 Granted 86,305 16,960 9,800 113,065 $ 81.77 Vested (1) (214,932 ) (725 ) (555 ) (216,212 ) $ 43.62 Forfeited (5,922 ) — — (5,922 ) $ 59.40 July 31, 2017 196,818 16,235 9,245 222,298 $ 66.28 Granted 94,309 17,486 10,465 122,260 $ 101.74 Vested (1) (115,943 ) (5,845 ) — (121,788 ) $ 60.25 Forfeited (6,864 ) (1,800 ) (2,000 ) (10,664 ) $ 95.09 July 31, 2018 168,320 26,076 17,710 212,106 $ 88.87 _______________________________________________ (1) The aggregate fair value of all nonvested stock awards which vested was approximately $7,338 , $9,431 and $5,503 in fiscal 2018 , 2017 and 2016 , respectively. There were no options granted during fiscal 2018 and 2017 . The fair value of each option grant in fiscal 2016 was estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions: 2016 Dividend yield 0.22 % Expected volatility (1) 55.90 % Risk-free interest rate (2) 1.41 % Expected lives (in years) (3) 5.00 ________________________________________________ (1) Volatility was based on historical closing prices of our common stock. (2) The U.S. Treasury rate based on the expected life at the date of grant. (3) Based on historical exercise behavior. A summary of stock option activity for fiscal 2018 follows: Number of shares Weighted Average Exercise Price Weighted Average Contractual Life Remaining (Years) Aggregate Intrinsic Value Outstanding at August 1, 2017 122,500 $ 29.36 Granted — — Exercised (52,500 ) 17.04 Outstanding at July 31, 2018 70,000 $ 38.60 0.95 $ 3,788 Exercisable at July 31, 2018 65,000 $ 37.31 0.86 $ 3,601 In fiscal 2018, 2017 and 2016, 13,333 , 23,333 and 35,834 , respectively, options vested, with an aggregate fair value of approximately $226 , $349 and $344 , respectively. The weighted average fair value of options granted was $26.49 in fiscal 2016 . At July 31, 2018 , 2017 and 2016 , there were 70,000 , 122,500 and 122,500 , respectively, outstanding options with an aggregate fair value of $3,788 , $5,493 and $4,605 , respectively. At July 31, 2018 and 2017 , all of the outstanding options had vested or were expected to vest in future periods. We do not currently have a publicly announced stock repurchase program. All of the shares purchased during fiscal 2018 and 2017 represent shares surrendered relating to cashless exercises of stock options and to pay employee withholding taxes due upon the vesting of restricted stock or the exercise of stock options. In fiscal 2018 and 2017 , such purchases amounted to 72,058 and 89,607 shares at a total average price per share of $98.16 and $77.12 , respectively. Upon exercise of stock options or grant of stock awards, we typically issue new shares of our common stock as opposed to using treasury shares. Additionally, all options were considered to be deductible for tax purposes in the valuation model. Such non-qualified options were tax-effected using our estimated U.S. effective tax rate at the time of grant. All of our stock options and restricted stock awards are expected to be deductible for tax purposes, except for certain stock awards granted to employees residing outside of the United States, and were tax-effected using our estimated U.S. effective tax rate at the time of grant. 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 fiscal 2018 , income tax deductions of $4,161 were generated, of which $1,988 were recorded as a reduction in income tax expense over the equity awards’ vesting period and the remaining excess tax benefit of $2,173 was recorded as a reduction in income tax expense. For fiscal 2017 , income tax deductions of $5,592 were generated, of which $3,351 were recorded as a reduction in income tax expense over the equity awards’ vesting period and the remaining excess tax benefits of $2,241 were recorded as a reduction in income tax expense. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Jul. 31, 2018 | |
Retirement Benefits [Abstract] | |
Retirement Plans | Retirement Plans We have 401(k) Savings and Retirement Plans for the benefit of eligible U.S. employees. Additionally, our Canadian and certain European subsidiaries maintain profit sharing plans for the benefit of eligible employees. Employer contributions are both discretionary and non-discretionary and are limited in any year to the amount allowable by government tax authorities. Aggregate employer contributions recognized under these plans were $4,676 , $3,863 and $3,406 for fiscal 2018 , 2017 and 2016 , respectively. |
Reportable Segments
Reportable Segments | 12 Months Ended |
Jul. 31, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segments | Reportable Segments In accordance with 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 income from operations. None of our customers accounted for 10% or more of our consolidated net sales during fiscal 2018 , 2017 and 2016 . Our 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 48.0% , 50.2% and 43.7% of our Water Purification and Filtration segment net sales in fiscal 2018 , 2017 and 2016 , 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 45.1% and 43.4% of our Healthcare Disposables segment net sales in fiscal 2018 and 2017 , respectively. Four customers collectively accounted for approximately 49.1% in fiscal 2016 . 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 collectively accounted for approximately 40.6% , 44.2% and 42.6% of our Dialysis segment net sales in fiscal 2018 , 2017 and 2016 , respectively. These customers are the same two customers noted above under our Water Purification and Filtration segment. Information as to reportable segments is summarized below: Year Ended July 31, 2018 2017 2016 Net sales: Endoscopy $ 473,937 $ 398,773 $ 341,752 Water Purification and Filtration 211,209 196,446 177,669 Healthcare Disposables 155,180 144,457 112,584 Dialysis 31,596 30,481 32,750 Total $ 871,922 $ 770,157 $ 664,755 Year Ended July 31, 2018 2017 2016 Income from operations: Endoscopy $ 86,833 $ 73,440 $ 61,021 Water Purification and Filtration 35,100 33,159 30,620 Healthcare Disposables 31,707 28,000 24,486 Dialysis 7,380 8,154 7,907 161,020 142,753 124,034 General corporate expenses 39,356 32,343 26,783 Income from operations 121,664 110,410 97,251 Interest expense, net 5,289 4,303 3,320 Other income (1,138 ) (126 ) — Income before income taxes $ 117,513 $ 106,233 $ 93,931 July, 31 2018 2017 2016 Identifiable assets: Endoscopy $ 490,702 $ 368,820 $ 347,107 Water Purification and Filtration 151,460 147,477 137,731 Healthcare Disposables 210,831 208,328 157,918 Dialysis 22,614 17,211 20,147 General corporate, including cash and cash equivalents 88,101 44,537 31,629 Total $ 963,708 $ 786,373 $ 694,532 Year Ended July, 31 2018 2017 2016 Capital expenditures: Endoscopy $ 18,996 $ 13,816 $ 11,299 Water Purification and Filtration 4,409 3,689 3,376 Healthcare Disposables 2,441 2,492 2,606 Dialysis 644 1,296 667 General corporate 11,208 5,772 941 Total $ 37,698 27,065 18,889 Year Ended July, 31 2018 2017 2016 Depreciation and amortization: Endoscopy $ 19,002 $ 18,245 $ 14,333 Water Purification and Filtration 5,628 5,706 5,441 Healthcare Disposables 8,756 8,556 4,361 Dialysis 711 427 681 General corporate 733 518 268 Total $ 34,830 $ 33,452 $ 25,084 Information as to geographic areas (including net sales which represent the geographic area from which we derive its net sales from external customers) is summarized below: Year Ended July, 31 2018 2017 2016 Net sales: United States $ 643,744 $ 599,657 $ 515,055 Europe/Africa/Middle East 131,130 95,753 88,355 Asia/Pacific 57,108 40,964 33,374 Canada 33,524 26,648 20,975 Latin America/South America 6,416 7,135 6,996 Total $ 871,922 $ 770,157 $ 664,755 July 31, 2018 2017 2016 Total long-lived assets: United States $ 80,918 $ 74,401 $ 62,820 Europe/Africa/Middle East 35,824 16,209 14,863 Asia/Pacific 2,531 1,381 1,607 Canada 804 1,054 463 Total 120,077 93,045 79,753 Goodwill and intangible assets, net 505,388 435,957 392,037 Total $ 625,465 $ 529,002 $ 471,790 |
Quarterly Results of Operations
Quarterly Results of Operations (unaudited) | 12 Months Ended |
Jul. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Results of Operations (unaudited) | Quarterly Results of Operations (unaudited) The following is a summary of the quarterly results of operations for fiscal 2018 and 2017 : Fiscal 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 212,766 $ 213,034 $ 217,268 $ 228,854 Cost of sales 112,107 111,799 112,594 121,451 Gross profit 100,659 101,235 104,674 107,403 Gross profit percentage 47.3 % 47.5 % 48.2 % 46.9 % Net income $ 22,929 $ 32,488 $ 18,736 $ 16,888 Earnings per common share: Basic $ 0.55 $ 0.78 $ 0.45 $ 0.41 Diluted $ 0.55 $ 0.78 $ 0.45 $ 0.41 Fiscal 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 187,725 $ 184,817 $ 192,113 $ 205,502 Cost of sales 98,218 96,340 100,665 107,774 Gross profit 89,507 88,477 91,448 97,728 Gross profit percentage 47.7 % 47.9 % 47.6 % 47.6 % Net income $ 18,800 $ 18,070 $ 17,511 $ 16,997 Earnings per common share: Basic $ 0.45 $ 0.43 $ 0.42 $ 0.41 Diluted $ 0.45 $ 0.43 $ 0.42 $ 0.41 |
Subsequent Event
Subsequent Event | 12 Months Ended |
Jul. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On August 29, 2018, we purchased a new facility in Plymouth, Minnesota for total cash consideration of $22,486 . We expect to occupy this facility during the second half of fiscal 2019. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Jul. 31, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | Schedule II - Valuation and Qualifying Accounts Balance at Beginning of Period Additions Deductions Translation Adjustments Balance at End of Period Allowance for doubtful accounts Year ended July 31, 2018 $ 1,808 $ 326 $ (977 ) $ (8 ) $ 1,149 Year ended July 31, 2017 $ 1,850 $ 998 $ (1,056 ) $ 16 $ 1,808 Year ended July 31, 2016 $ 2,092 $ 15 $ (223 ) $ (34 ) $ 1,850 Reserve for excess and obsolete inventory Year ended July 31, 2018 $ 8,853 $ 1,719 $ (1,862 ) $ (111 ) $ 8,599 Year ended July 31, 2017 $ 5,390 $ 5,016 $ (1,580 ) $ 27 $ 8,853 Year ended July 31, 2016 $ 3,895 $ 3,182 $ (1,569 ) $ (118 ) $ 5,390 Deferred tax asset valuation allowance Year ended July 31, 2018 $ 2,984 $ 3,538 $ (119 ) $ (45 ) $ 6,358 Year ended July 31, 2017 $ 2,334 $ 615 $ — $ 35 $ 2,984 Year ended July 31, 2016 $ 2,037 $ 929 $ (712 ) $ 80 $ 2,334 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jul. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Cantel and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year's presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we evaluate the adequacy of our reserves and the estimates used in calculations of reserves as well as other judgmental financial statement items, including, but not limited to: collectability of accounts receivable, volume rebates and trade-in allowances, inventory values and obsolescence reserves, warranty reserves, contingent consideration, contingent guaranteed obligations, depreciation and amortization periods, deferred income taxes, goodwill and intangible assets, impairment of long-lived assets, unrecognized tax benefits for uncertain tax positions, reserves for legal exposure, stock-based compensation and expense accruals. Such estimates and assumptions are subjective in nature. We reflect such amounts based upon the most recent information available. |
Subsequent Events | Subsequent Events We performed a review of events subsequent to July 31, 2018 through the date of issuance of the accompanying consolidated financial statements. |
Revenue Recognition | Revenue Recognition Revenue on product sales is recognized as products are shipped to customers and title passes. The passing of title is determined based upon the FOB terms specified for each shipment. With respect to endoscopy and dialysis products, shipment terms are generally FOB origin for common carrier and when our distribution fleet is utilized (except for one large customer in dialysis and several endoscopy customers whereby all products are shipped FOB destination and include risk of loss provisions). With respect to water purification and filtration and healthcare disposable products, shipment terms may be either FOB origin or destination. Customer acceptance for the majority of our product sales occurs at the time of delivery. With respect to a portion of water purification and filtration and endoscopy product sales, equipment is sold as part of a system for which the equipment is functionally interdependent or the customer’s purchase order specifies “ship-complete” as a condition of delivery. Revenue recognition on such sales is deferred until all equipment has been delivered, or post-delivery obligations such as installation have been substantially fulfilled such that the products are deemed functional by the end-user. All shipping and handling fees invoiced to customers, such as freight, are recorded as revenue (and related costs are included within cost of sales) at the time the sale is recognized. A portion of our endoscopy, water purification and filtration and dialysis sales are recognized as multiple element arrangements, whereby revenue is allocated to the equipment, installation and consumable components based upon vendor specific objective evidence, which includes comparable historical transactions of similar equipment, installation and consumables sold as stand-alone components. If vendor-specific objective evidence of selling price is not available, we allocate revenue to the elements of the bundled arrangement using the estimated selling price method in order to qualify the components as separate units of accounting. Revenue on the equipment and consumables components are recognized as the equipment or consumable is shipped to customers and title passes. Revenue on the installation component is recognized when the installation is complete. Revenue on service sales is recognized when repairs are completed at the customer’s location or when repairs are completed at our facilities and the products are shipped to customers. With respect to certain endoscopy and water purification and filtration service contracts, service revenue is recognized on a straight-line basis over the contractual term of the arrangement. Our endoscopy products and services are sold directly to hospitals and other end-users in the United States and primarily to distributors internationally except for certain countries where we sell directly to hospitals and other end-users. Water purification and filtration products and services are sold directly to hospitals, dialysis clinics, pharmaceutical and biotechnology companies, laboratories, medical products and service companies and other end-users as well as through third-party distributors. The majority of our healthcare disposable products are sold to third party distributors, and with respect to some of our sterility assurance products, to hospitals, surgery centers, physician and dental offices, dental schools, medical research companies, laboratories and other end-users. The majority of our dialysis products are sold to dialysis clinics and hospitals. Sales to all of these customers follow our revenue recognition policies. None of our sales contain right-of-return provisions. Customer claims for credit or return due to damage, defect, shortage or other reason must be pre-approved by us before credit is issued or such product is accepted for return. No cash discounts for early payment are offered except with respect to a small portion of our product sales in each segment. We do not offer price protection, although advance pricing contracts or required notice periods prior to implementation of price increases exist for certain customers with respect to many of our products. With respect to certain of our dialysis, healthcare disposables, water purification and filtration and endoscopy customers, rebates are provided. Such rebates, which consist primarily of volume rebates, are provided for as a reduction of sales at the time of revenue recognition and amounted to $8,401 , $6,291 , and $5,944 in fiscal 2018 , 2017 , and 2016 , respectively. Such allowances are determined based on estimated projections of sales volume for the entire rebate periods. If it becomes known that sales volume to customers will deviate from original projections, the rebate provisions originally established would be adjusted accordingly. |
Translation of Foreign Currency Financial Statements | Translation of Foreign Currency Financial Statements Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at year-end exchange rates; sales and expenses are translated using average exchange rates during the year. The cumulative effect of the translation of the accounts of the foreign subsidiaries is presented as a component of accumulated other comprehensive income or loss. Foreign exchange gains and losses related to the purchase of inventories denominated in foreign currencies are included in cost of sales and foreign exchange gains and losses related to the incurrence of operating costs denominated in foreign currencies and the conversion of foreign assets and liabilities into functional currencies are included in general and administrative expenses. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of amounts due to us from normal business activities. Allowances for doubtful accounts are reserves for the estimated loss from the inability of customers to make required payments. We use historical experience as well as current market information in determining the estimate. While actual losses have historically been within management’s expectations and provisions established, if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Alternatively, if certain customers paid their delinquent receivables, reductions in allowances may be required. |
Inventories | Inventories Inventories consist of raw materials, work-in-process and finished products which are sold in the ordinary course of our business and are stated at the lower of cost (first-in, first-out) or net realizable value. In assessing the value of inventories, we must make estimates and judgments regarding reserves required for product obsolescence, aging of inventories and other issues potentially affecting the saleable condition of products. In performing such evaluations, we use historical experience as well as current market information. With few exceptions, the saleable value of our inventories has historically been within management’s expectation and provisions established, however, rapid changes in the market due to competition, technology and various other factors could impact the value of our inventories, resulting in the need for additional reserves. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Additions and improvements are capitalized, while maintenance and repair costs are expensed. When assets are retired or otherwise disposed, the cost and related accumulated depreciation or amortization is removed from the respective accounts and any resulting gain or loss is included in income. Depreciation and amortization is provided on the straight-line method over the estimated useful lives of the assets which generally range from 2 - 15 years for furniture and equipment, 5 - 40 years for buildings and improvements and the shorter of the life of the asset or the life of the lease for leasehold improvements. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Certain of our identifiable intangible assets, including customer relationships, technology, brand names, non-compete agreements and patents, are amortized using the straight-line method over their estimated useful lives which range from 3 to 20 years. Additionally, we have recorded goodwill and trademarks and trade names, all of which have indefinite useful lives and are therefore not amortized. All of our intangible assets and goodwill are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, and goodwill and intangible assets with indefinite lives are reviewed for impairment at least annually . Our management is responsible for determining if impairment exists and considers a number of factors, including third-party valuations, when making these determinations. We first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount before proceeding to step one of the two-step quantitative goodwill impairment test, if necessary. Such qualitative factors that are assessed include evaluating a segment’s financial performance, industry and market conditions, macroeconomic conditions and specific issues that can directly affect the segment such as changes in business strategies, competition, supplier relationships, operating costs, regulatory matters, litigation and the composition of the segment’s assets due to acquisitions or other events. At May 1, 2018, because we determined through qualitative factors that the fair values of our Endoscopy, Water Purification and Filtration and Healthcare Disposables segments were unlikely to be less than the carrying value, we did not proceed to step one of the two-step quantitative goodwill impairment test for those three segments. We performed step one of the two-step quantitative goodwill impairment test for Dialysis due to the continuing shift by our customers from reusable to single-use dialyzers, which is having an adverse impact on our business and is expected to continue. In performing a detailed quantitative review for goodwill impairment, management uses a two-step process that begins with an estimation of the fair value of the related reporting units by using weighted fair value results of the discounted cash flow methodology, as well as the market multiple and comparable transaction methodologies, where applicable. The first step is a review for potential impairment, and the second step measures the amount of impairment, if any. Historically, goodwill and indefinite lived intangible assets were tested annually for impairment as of July 31 of each fiscal year. In fiscal 2018, we changed our measurement date to May 1 of each year to better align the annual impairment test with the timing of our annual strategic planning process. We perform our annual impairment review for indefinite lived intangibles by first assessing qualitative factors, such as those described above, to determine whether it is more likely than not that the fair value of such assets is less than the carrying values, and if necessary, we perform a quantitative analysis comparing the current fair value of our indefinite lived intangibles assets to their carrying values. At May 1, 2018 , because we determined through qualitative factors that the fair values of all of our indefinite lived intangible assets were unlikely to be less than the carrying value, we did not perform a quantitative analysis for those assets. With respect to amortizable intangible assets when impairment indicators are present, management would determine whether expected future non-discounted cash flows would be sufficient to recover the carrying value of the assets; if not, the carrying value of the assets would be adjusted to their fair value. We did not recognize any impairment charges for goodwill or indefinite lived intangibles in the years presented. |
Long-Lived Assets | Long-Lived Assets We evaluate the carrying value of long-lived assets including property, equipment and other assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An assessment is made to determine if the sum of the expected future non-discounted cash flows from the use of the assets and eventual disposition is less than the carrying value. If the sum of the expected non-discounted cash flows is less than the carrying value, an impairment loss is recognized based on fair value. Our historical assessments of our long-lived assets have not differed significantly from the actual amounts realized. However, the determination of fair value requires us to make certain assumptions and estimates and is highly subjective. On July 31, 2018 , management concluded that no other events or changes in circumstances have occurred that would indicate that the carrying amount of our long-lived assets may not be recoverable. |
Other Assets | Debt Issuance Costs Debt issuance costs are capitalized and amortized to interest expense over the term of the related credit agreements. |
Warranties | Warranties We provide for estimated costs that may be incurred to remedy deficiencies of quality or performance of our products at the time of revenue recognition. Most of our products have a one year warranty, although certain endoscopy and water purification and filtration products that require installation may carry a warranty period of up to 24 months . Additionally, many of our consumables, accessories, parts and service have a 90 -day warranty. We record provisions for product warranties as a component of cost of sales based upon an estimate of the amounts necessary to settle existing and future claims on products sold. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is recognized for any option or stock award grant based upon the fair value of the award. Our stock options and time-based stock awards are subject to graded vesting in which portions of the award vest ratably over the vesting period. We recognize compensation expense for the awards with performance conditions using the accelerated attribution method over the requisite service period for each separately vesting portion of the award when it is probable that the performance condition will be achieved. We record expense for the awards with market conditions ratably over the vesting period regardless of whether the market condition is satisfied. We account for forfeitures as they occur, rather than estimate forfeitures over the course of the vesting period. We determine the fair value of each time-based stock award and performance-based stock award by using the closing market price of our common stock on the last trading date immediately prior to the date of grant. We determine the fair value of each award with market conditions using a Monte Carlo simulation model on the date of grant. We estimate the fair value of each option grant on the date of grant using the Black Scholes option valuation model. The determination of fair value using valuation models is affected by our stock price as well as assumptions regarding a number of subjective variables. |
Advertising Costs | Advertising Costs Our policy is to expense advertising costs as they are incurred. |
Income Taxes | Income Taxes Our provision for income taxes is based on our current period income, changes in deferred income tax assets and liabilities, statutory income tax rates, changes in uncertain tax benefits and the deductibility of expenses or availability of tax credits in various taxing jurisdictions. Tax laws are complex, subject to different interpretations by the taxpayer and the respective governmental taxing authorities and are subject to future modification, expiration or repeal by government legislative bodies. We use significant judgment on a quarterly basis in determining our annual effective income tax rate and evaluating our tax positions. We regularly review our deferred tax assets for recoverability and establish a valuation allowance, if necessary, based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing temporary differences. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets, as adjusted for valuation allowances, will be realized. Additionally, deferred tax liabilities are regularly reviewed to confirm that such amounts are appropriately stated. A review of our deferred tax items considers known future changes in various income tax rates, principally in the United States. If income tax rates were to change in the future, particularly in the United States and to a lesser extent Germany, the U.K. and Italy, our items of deferred tax could be materially affected. All of such evaluations require significant management judgments. We record liabilities for an unrecognized tax benefit when a tax benefit for an uncertain tax position is taken or expected to be taken on a tax return, but is not recognized in our consolidated financial statements because it does not meet the more-likely-than-not recognition threshold that the uncertain tax position would be sustained upon examination by the applicable taxing authority. Any adjustments upon resolution of income tax uncertainties are recognized in our results of operations. Unrecognized tax benefits are analyzed periodically and adjustments are made as events occur to warrant adjustment to the related liability. Historically, we have not had significant unrecognized tax benefits. |
Recently Issued Accounting Standards | Newly Adopted Accounting Standards In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, “ (Topic 805) Simplifying the Accounting for Measurement-Period Adjustments ,” (“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 2015-16 did not have a material impact on our financial position, results of operations or cash flows. In July 2015, the FASB issued ASU 2015-11, “ (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, results of operations and cash flows. In January 2017, the FASB issued ASU 2017-01, “ (Topic 805) Clarifying the Definition of a Business ,” (“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, results of operations or cash flows. Recently Issued Accounting Standards In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”) to allow for the reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects resulting from the Tax Cuts and Jobs Act enacted in December 2017. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018 (our fiscal year 2020), including interim periods within that reporting period. The adoption of ASU 2018-02 is not expected to have a significant impact on our financial position, results of operations or cash flows. 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. The adoption of ASU 2017-12 is not expected to have a significant impact on our financial position, results of operations or cash flows. In May 2017, the FASB issued ASU 2017-09, “ (Topic 718) 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 2017-12 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. The adoption of ASU 2017-09 is not expected to have a significant impact on our financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-04, “(Topic 350) Simplifying the Test for Goodwill Impairment ,” (“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 31, 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, results of operations or cash flows. In August 2016, the FASB issued ASU 2016-15, “(Topic 230) Classification of Certain Cash Receipts and Cash Payments , ” (“ASU 2016-15”). This new guidance will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019). ASU 2016-15 will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. The adoption of ASU 2016-15 is not expected to have a significant impact on our financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, “ (Topic 842) Leases ,” (“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 31, 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, results of operations and cash flows. 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),” (“ASU 2015-14”), 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 international locations and have evaluated the provisions contained therein in light of the five-step model specified by the new guidance. We have also evaluated 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 have reached conclusions on our accounting assessments related to the standard and finalized updates to our accounting policies, processes and controls and will adopt the new standard on August 1, 2018 using the modified retrospective approach. We expect to record an immaterial adjustment to retained earnings upon adoption of Topic 606 in the first quarter of fiscal 2019, primarily related to the timing of revenue recognition for the shipment of products in both our Endoscopy and Water Purification and Filtration segments where risk of loss provisions are present (“synthetic FOB destination”). The new standard does not require us to defer revenue for these products and allows us to recognize revenue at the time of shipment. The adjustment to retained earnings also includes the impact of the change in timing of revenue recognition associated with software licensing arrangements in our Endoscopy segment. Overall, we expect the adoption of Topic 606 to have an immaterial impact on our fiscal 2019 financial position, results of operations or cash flows. The timing of revenue recognition for our primary revenue streams will not change. Additionally, we have completed our assessment of new disclosure requirements. Upon adoption of Topic 606, we will provide additional disclosures in the notes to the consolidated financial statements, specifically related to performance obligations and multiple-element revenue streams. We have designed new internal controls that will be implemented in the first quarter of fiscal 2019 to address risks associated with applying the five-step model. Additionally, we have established monitoring controls to identify new sales arrangements and changes in our business environment that could impact our current accounting assessment. |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | 2018 2017 Purchase Price Allocation Aexis Medical (1) BHT Group (1) CR Kennedy Vantage (1) Accutron (1) (Preliminary) (Final) (Final) (Final) (Final) Purchase Price: Cash paid $ 20,308 $ 60,216 $ 11,999 $ 4,044 $ 53,049 Fair value of contingent consideration 1,292 — — — — Total $ 21,600 $ 60,216 $ 11,999 $ 4,044 $ 53,049 Allocation: Property and equipment 130 835 — 433 1,676 Amortizable intangible assets: Customer relationships 1,800 12,500 4,200 992 12,800 Technology 4,600 6,200 — — 10,000 Brand names — — — — 2,000 Goodwill 17,092 40,934 5,894 2,299 21,989 Deferred income taxes (1,639 ) (5,881 ) — — 112 Other working capital 909 5,628 1,905 320 4,472 Contingent consideration (1,292 ) — — — — Total $ 21,600 $ 60,216 $ 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. |
Inventories, Net (Tables)
Inventories, Net (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Summary of inventories | A summary of inventories, net, is as follows: July 31, 2018 2017 Raw materials and parts $ 49,054 $ 45,831 Work-in-process 13,189 13,484 Finished goods 53,948 48,262 Less: reserve for excess and obsolete inventory (8,599 ) (8,853 ) Total inventories, net $ 107,592 $ 98,724 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | A summary of property and equipment, net, is as follows: July 31, 2018 2017 Land, buildings and improvements $ 50,162 $ 46,921 Furniture, equipment and software 121,248 114,735 Leasehold improvements 9,544 7,858 Construction in process 26,003 4,947 Less: accumulated depreciation (95,540 ) (86,123 ) Total property and equipment, net $ 111,417 $ 88,338 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair values of financial instruments measured on a recurring basis | The fair values of our financial instruments measured on a recurring basis were categorized as follows: July 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ 104 $ — $ — $ 104 Total assets 104 — — 104 Liabilities: Other long-term liabilities: Contingent consideration — — 1,298 1,298 Total other long-term liabilities: — — 1,298 1,298 Total liabilities $ — $ — $ 1,298 $ 1,298 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 Total accrued expenses — — 12 12 Other long-term liabilities: Assumed contingent obligation — — 1,126 1,126 Total other long-term liabilities: — — 1,126 1,126 Total liabilities $ — $ — $ 1,138 $ 1,138 |
Reconciliation of liabilities measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) | A reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) for fiscal 2018 , 2017 and 2016 is as follows: Aexis Medical Contingent Consideration Jet Prep Contingent Consideration Jet Prep Assumed Contingent Obligation Cantel Medical (U.K.) Contingent Guaranteed Obligation Total Balance, August 1, 2015 $ — $ 751 $ 1,138 $ 888 $ 2,777 (Income) loss included in general and administrative expense — (751 ) — 64 (687 ) Net purchases, issuances, sales and settlements — — — (511 ) (511 ) Balance, July 31, 2016 — — 1,138 441 1,579 Income included in general and administrative expense — — — (265 ) (265 ) Net purchases, issuances, sales and settlements — — — (176 ) (176 ) Balance, July 31, 2017 — — 1,138 — 1,138 Original fair value of contingent consideration 1,292 — — — 1,292 Loss included in general and administrative expense 6 — — — 6 Net purchases, issuances, sales and settlements — — (1,138 ) — (1,138 ) Balance, July 31, 2018 $ 1,298 $ — $ — $ — $ 1,298 |
Intangibles and Goodwill (Table
Intangibles and Goodwill (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Our intangible assets consist of the following: July 31, 2018 July 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Intangible assets with finite lives: Customer relationships $ 133,347 $ (45,618 ) $ 87,729 $ 119,576 $ (34,773 ) $ 84,803 Technology (1) 54,585 (19,836 ) 34,749 39,064 (15,260 ) 23,804 Brand names 8,141 (3,857 ) 4,284 8,188 (3,225 ) 4,963 Non-compete agreements 3,060 (1,628 ) 1,432 3,092 (1,428 ) 1,664 Patents and other registrations 2,826 (1,179 ) 1,647 2,783 (1,053 ) 1,730 201,959 (72,118 ) 129,841 172,703 (55,739 ) 116,964 Trademarks and tradenames 7,520 — 7,520 7,548 — 7,548 Total intangible assets $ 209,479 $ (72,118 ) $ 137,361 $ 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 intangible asset and associated accumulated amortization related to the Jet Prep business. This did not result in any change to the net technology intangible asset as of July 31, 2017. |
Schedule of changes in goodwill | Goodwill changed during fiscal 2018 and 2017 as follows: Endoscopy Water Purification and Filtration Healthcare Disposables Dialysis Total Goodwill Balance, August 1, 2016 $ 121,015 $ 58,880 $ 92,290 $ 8,133 $ 280,318 Acquisitions 8,193 — 21,989 — 30,182 Foreign currency translation 737 208 — — 945 Balance, July 31, 2017 129,945 59,088 114,279 8,133 311,445 Acquisitions 58,026 — — — 58,026 Foreign currency translation (1,281 ) (163 ) — — (1,444 ) Balance, July 31, 2018 $ 186,690 $ 58,925 $ 114,279 $ 8,133 $ 368,027 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Our long-term debt consists of the following: Year Ended July 31, 2018 2017 Revolving credit loans outstanding $ — $ 126,000 Tranche A term loan outstanding 200,000 — Unamortized debt issuance costs (2,698 ) — Total long-term debt, net of unamortized debt issuance costs 197,302 126,000 Current portion of long-term debt (10,000 ) — Long-term debt, net of unamortized debt issuance costs and excluding current portion $ 187,302 $ 126,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | The provision for income taxes consists of the following: Year Ended July 31, 2018 2017 2016 Current Deferred Current Deferred Current Deferred United States: Federal $ 24,288 $ (7,308 ) $ 28,900 $ 2,020 $ 29,392 $ (216 ) State 5,078 491 4,352 261 4,433 (153 ) International 4,626 (703 ) 1,545 (2,223 ) 1,863 (1,341 ) Total $ 33,992 $ (7,520 ) $ 34,797 $ 58 $ 35,688 $ (1,710 ) |
Schedule of geographic components of income before income taxes | The geographic components of income (loss) before income taxes are as follows: Year Ended July 31, 2018 2017 2016 United States $ 115,697 $ 108,329 $ 92,744 International 1,816 (2,096 ) 1,187 Total $ 117,513 $ 106,233 $ 93,931 |
Schedule of reconciliation of differences in effective tax rate from the United States statutory tax rate | The consolidated effective income tax rate differed from the U.S. statutory tax rate of 26.9% in fiscal 2018 and 35.0% in fiscal 2017 and 2016 due to the following: Year Ended July 31, 2018 2017 2016 Expected statutory tax (1) 26.9 % 35.0 % 35.0 % Differential attributable to: Foreign operations 0.6 % — % 0.6 % State and local taxes 3.7 % 3.9 % 3.2 % Domestic production deduction (1.8 )% (2.7 )% (2.3 )% Acquisition-related items, net — % 0.1 % — % Impact of tax legislation on deferred taxes (7.4 )% — % — % R&E tax credit (0.7 )% (1.4 )% (1.1 )% Change in foreign tax rates — % — % (0.4 )% Excess tax benefits (1.7 )% (2.2 )% — % Valuation allowance 2.4 % — % — % Other 0.5 % 0.1 % 1.2 % Consolidated effective income tax rate 22.5 % 32.8 % 36.2 % _______________________________________________ (1) We revised our estimated annual rate to reflect a blended U.S. federal statutory rate of 26.9% as compared to 35.0%. |
Schedule of deferred income tax assets and liabilities | Tax assets and liabilities, shown before and after jurisdictional netting of deferred tax assets (liabilities), are comprised of the following: July 31, 2018 2017 Deferred tax assets: Accrued expenses $ 5,354 $ 6,308 Inventories 3,165 4,655 Accounts receivable 306 729 Other long-term liabilities 103 180 Stock-based compensation 2,700 3,402 Capital investment 426 545 Foreign NOLs 8,605 6,490 Subtotal 20,659 22,309 Valuation allowance (6,358 ) (2,984 ) 14,301 19,325 Deferred tax liabilities: Property and equipment (7,352 ) (9,957 ) Intangible assets (21,300 ) (20,107 ) Goodwill (10,362 ) (13,975 ) (39,014 ) (44,039 ) Net deferred income taxes $ (24,713 ) $ (24,714 ) Reported in Consolidated Balance Sheets as: Deferred income taxes (assets) $ 2,911 $ — Deferred income taxes (liabilities) (27,624 ) (24,714 ) $ (24,713 ) $ (24,714 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of aggregate annual required payments over the next five years and thereafter under contractual obligations that have long-term components | As of July 31, 2018, future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) for the periods set forth below were as follows: Fiscal year ending: Total 2019 $ 7,958 2020 6,208 2021 4,666 2022 2,904 2023 2,104 Thereafter 3,593 Total $ 27,433 |
Accumulated Other Comprehensi36
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | The components and changes in accumulated other comprehensive loss for fiscal 2018 , 2017 and 2016 were as follows: Foreign Currency Translation Adjustments Balance, August 1, 2015 $ 1,224 Other comprehensive loss (13,019 ) Balance, July 31, 2016 (11,795 ) Other comprehensive income 1,895 Balance, July 31, 2017 (9,900 ) Other comprehensive loss (1,556 ) Balance, July 31, 2018 $ (11,456 ) |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 12 Months Ended |
Jul. 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): Year Ended July 31, 2018 2017 2016 Numerator for basic and diluted earnings per share: Net income $ 91,041 $ 71,378 $ 59,953 Less income allocated to participating securities (320 ) (431 ) (488 ) Net income available to common shareholders $ 90,721 $ 70,947 $ 59,465 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 41,567,722 41,468,487 41,344,013 Dilutive effect of stock options using the treasury stock method and the average market price for the year 67,356 74,278 46,181 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 41,635,078 41,542,765 41,390,194 Earnings per share attributable to common stock: Basic earnings per share $ 2.18 $ 1.71 $ 1.44 Diluted earnings per share $ 2.18 $ 1.71 $ 1.44 Stock options excluded from weighted average dilutive common shares outstanding because their inclusion would have been antidilutive — — — |
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 our total weighted average number of shares and common stock equivalents, including participating securities, is set forth in the following table: Year Ended July 31, 2018 2017 2016 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 41,635,078 41,542,765 41,390,194 Participating securities 148,700 254,727 340,363 Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities 41,783,778 41,797,492 41,730,557 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Jul. 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 components of stock-based compensation expense recognized in the consolidated statements of income: Year Ended July 31, 2018 2017 2016 Cost of sales $ 663 $ 371 $ 438 Operating expenses: Selling 1,458 1,582 929 General and administrative 7,292 6,774 6,881 Research and development 202 117 113 Total operating expenses 8,952 8,473 7,923 Stock-based compensation before income taxes $ 9,615 $ 8,844 $ 8,361 |
Summary of nonvested stock award activity | A summary of nonvested stock award activity for fiscal 2018 , 2017 and 2016 follows: Number of Time-based Shares Number of Performance-based Shares Number of Market-based Shares Number of Total Shares Weighted Average Fair Value August 1, 2015 343,519 — — 343,519 $ 32.77 Granted 175,700 — — 175,700 $ 55.40 Vested (1) (183,045 ) — — (183,045 ) $ 30.06 Forfeited (4,807 ) — — (4,807 ) $ 45.06 July 31, 2016 331,367 — — 331,367 $ 46.09 Granted 86,305 16,960 9,800 113,065 $ 81.77 Vested (1) (214,932 ) (725 ) (555 ) (216,212 ) $ 43.62 Forfeited (5,922 ) — — (5,922 ) $ 59.40 July 31, 2017 196,818 16,235 9,245 222,298 $ 66.28 Granted 94,309 17,486 10,465 122,260 $ 101.74 Vested (1) (115,943 ) (5,845 ) — (121,788 ) $ 60.25 Forfeited (6,864 ) (1,800 ) (2,000 ) (10,664 ) $ 95.09 July 31, 2018 168,320 26,076 17,710 212,106 $ 88.87 _______________________________________________ (1) The aggregate fair value of all nonvested stock awards which vested was approximately $7,338 , $9,431 and $5,503 in fiscal 2018 , 2017 and 2016 , respectively. |
Weighted-average assumptions used to estimate fair value of stock options granted using the Black-Scholes option valuation model | We determine the fair value of each stock award 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 % The fair value of each option grant in fiscal 2016 was estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions: 2016 Dividend yield 0.22 % Expected volatility (1) 55.90 % Risk-free interest rate (2) 1.41 % Expected lives (in years) (3) 5.00 ________________________________________________ (1) Volatility was based on historical closing prices of our common stock. (2) The U.S. Treasury rate based on the expected life at the date of grant. (3) Based on historical exercise behavior. |
Summary of stock option activity | A summary of stock option activity for fiscal 2018 follows: Number of shares Weighted Average Exercise Price Weighted Average Contractual Life Remaining (Years) Aggregate Intrinsic Value Outstanding at August 1, 2017 122,500 $ 29.36 Granted — — Exercised (52,500 ) 17.04 Outstanding at July 31, 2018 70,000 $ 38.60 0.95 $ 3,788 Exercisable at July 31, 2018 65,000 $ 37.31 0.86 $ 3,601 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Segment Reporting [Abstract] | |
Information as to operating segments | Information as to reportable segments is summarized below: Year Ended July 31, 2018 2017 2016 Net sales: Endoscopy $ 473,937 $ 398,773 $ 341,752 Water Purification and Filtration 211,209 196,446 177,669 Healthcare Disposables 155,180 144,457 112,584 Dialysis 31,596 30,481 32,750 Total $ 871,922 $ 770,157 $ 664,755 Year Ended July 31, 2018 2017 2016 Income from operations: Endoscopy $ 86,833 $ 73,440 $ 61,021 Water Purification and Filtration 35,100 33,159 30,620 Healthcare Disposables 31,707 28,000 24,486 Dialysis 7,380 8,154 7,907 161,020 142,753 124,034 General corporate expenses 39,356 32,343 26,783 Income from operations 121,664 110,410 97,251 Interest expense, net 5,289 4,303 3,320 Other income (1,138 ) (126 ) — Income before income taxes $ 117,513 $ 106,233 $ 93,931 July, 31 2018 2017 2016 Identifiable assets: Endoscopy $ 490,702 $ 368,820 $ 347,107 Water Purification and Filtration 151,460 147,477 137,731 Healthcare Disposables 210,831 208,328 157,918 Dialysis 22,614 17,211 20,147 General corporate, including cash and cash equivalents 88,101 44,537 31,629 Total $ 963,708 $ 786,373 $ 694,532 Year Ended July, 31 2018 2017 2016 Capital expenditures: Endoscopy $ 18,996 $ 13,816 $ 11,299 Water Purification and Filtration 4,409 3,689 3,376 Healthcare Disposables 2,441 2,492 2,606 Dialysis 644 1,296 667 General corporate 11,208 5,772 941 Total $ 37,698 27,065 18,889 Year Ended July, 31 2018 2017 2016 Depreciation and amortization: Endoscopy $ 19,002 $ 18,245 $ 14,333 Water Purification and Filtration 5,628 5,706 5,441 Healthcare Disposables 8,756 8,556 4,361 Dialysis 711 427 681 General corporate 733 518 268 Total $ 34,830 $ 33,452 $ 25,084 |
Information as to geographic areas | Information as to geographic areas (including net sales which represent the geographic area from which we derive its net sales from external customers) is summarized below: Year Ended July, 31 2018 2017 2016 Net sales: United States $ 643,744 $ 599,657 $ 515,055 Europe/Africa/Middle East 131,130 95,753 88,355 Asia/Pacific 57,108 40,964 33,374 Canada 33,524 26,648 20,975 Latin America/South America 6,416 7,135 6,996 Total $ 871,922 $ 770,157 $ 664,755 July 31, 2018 2017 2016 Total long-lived assets: United States $ 80,918 $ 74,401 $ 62,820 Europe/Africa/Middle East 35,824 16,209 14,863 Asia/Pacific 2,531 1,381 1,607 Canada 804 1,054 463 Total 120,077 93,045 79,753 Goodwill and intangible assets, net 505,388 435,957 392,037 Total $ 625,465 $ 529,002 $ 471,790 |
Quarterly Results of Operatio40
Quarterly Results of Operations (unaudited) (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of quarterly results of operations | The following is a summary of the quarterly results of operations for fiscal 2018 and 2017 : Fiscal 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 212,766 $ 213,034 $ 217,268 $ 228,854 Cost of sales 112,107 111,799 112,594 121,451 Gross profit 100,659 101,235 104,674 107,403 Gross profit percentage 47.3 % 47.5 % 48.2 % 46.9 % Net income $ 22,929 $ 32,488 $ 18,736 $ 16,888 Earnings per common share: Basic $ 0.55 $ 0.78 $ 0.45 $ 0.41 Diluted $ 0.55 $ 0.78 $ 0.45 $ 0.41 Fiscal 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 187,725 $ 184,817 $ 192,113 $ 205,502 Cost of sales 98,218 96,340 100,665 107,774 Gross profit 89,507 88,477 91,448 97,728 Gross profit percentage 47.7 % 47.9 % 47.6 % 47.6 % Net income $ 18,800 $ 18,070 $ 17,511 $ 16,997 Earnings per common share: Basic $ 0.45 $ 0.43 $ 0.42 $ 0.41 Diluted $ 0.45 $ 0.43 $ 0.42 $ 0.41 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - Revenue (Details) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018USD ($)customer | Jul. 31, 2017USD ($) | Jul. 31, 2016USD ($) | |
Revenue recognition - reductions | |||
Number of customers with products shipped FOB destination | customer | 1 | ||
Volume rebates | $ | $ 8,401 | $ 6,291 | $ 5,944 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 17,473 | $ 15,045 | $ 11,989 |
Furniture, equipment and software | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives | 2 years | ||
Furniture, equipment and software | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives | 15 years | ||
Buildings and improvements | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives | 5 years | ||
Buildings and improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives | 40 years |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - Intangible Assets (Details) | 12 Months Ended |
Jul. 31, 2018USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets impairment | $ 0 |
Goodwill impairment | $ 0 |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 3 years |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 20 years |
Summary of Significant Accoun44
Summary of Significant Accounting Policies - Debt Issuance Costs (Details) $ in Thousands | Jul. 31, 2018USD ($) |
Accounting Policies [Abstract] | |
Net debt issuance costs | $ 2,698 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies - Warranties (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Product Warranty Liability [Line Items] | ||
Warranty reserves | $ 3,280 | $ 2,328 |
Most products | ||
Product Warranty Liability [Line Items] | ||
Warranty period | 1 year | |
Endoscopy, Water Purification and Filtration products | ||
Product Warranty Liability [Line Items] | ||
Warranty period | 24 months | |
Consumables, accessories and parts | ||
Product Warranty Liability [Line Items] | ||
Warranty period | 90 days |
Summary of Significant Accoun46
Summary of Significant Accounting Policies - Advertising Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Advertising Costs | |||
Advertising costs charged to expense | $ 4,115 | $ 3,694 | $ 3,349 |
Acquisitions - Post-Fiscal 2018
Acquisitions - Post-Fiscal 2018 (Details) $ in Thousands | Aug. 01, 2018USD ($) |
Subsequent Event | Stericycle Inc. | |
Business Acquisition [Line Items] | |
Total consideration for the transaction, excluding acquisition-related costs | $ 17,000 |
Acquisitions - Aexis Medical (D
Acquisitions - Aexis Medical (Details) - Aexis Medical - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Mar. 21, 2018 | |
Business Acquisition [Line Items] | ||
Total consideration for the transaction, excluding acquisition-related costs | $ 21,600,000 | |
Up-front consideration | 20,308,000 | |
Contingent consideration | $ 1,292,000 | |
Minimum | ||
Business Acquisition [Line Items] | ||
Contingent consideration | $ 0 | |
Maximum | ||
Business Acquisition [Line Items] | ||
Contingent consideration | $ 1,850,000 |
Acquisitions - BHT Group (Detai
Acquisitions - BHT Group (Details) $ in Thousands | 12 Months Ended |
Jul. 31, 2018USD ($) | |
BHT Group | |
Business Acquisition [Line Items] | |
Total consideration for the transaction, excluding acquisition-related costs | $ 60,216 |
Acquisitions - CR Kennedy (Deta
Acquisitions - CR Kennedy (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
CR Kennedy | ||
Business Acquisition [Line Items] | ||
Total consideration for the transaction, excluding acquisition-related costs | $ 11,999 | $ 11,999 |
Acquisitions - Vantage Endoscop
Acquisitions - Vantage Endoscopy Inc. (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Vantage | ||
Business Acquisition [Line Items] | ||
Total consideration for the transaction, excluding acquisition-related costs | $ 4,044 | $ 4,044 |
Acquisitions - Accutron, Inc. (
Acquisitions - Accutron, Inc. (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Accutron | ||
Business Acquisition [Line Items] | ||
Total consideration for the transaction, excluding acquisition-related costs | $ 53,049 | $ 53,049 |
Acquisitions - Summary of Acqui
Acquisitions - Summary of Acquisitions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 368,027 | $ 311,445 | $ 280,318 |
Aexis Medical | |||
Business Acquisition [Line Items] | |||
Cash paid | 20,308 | ||
Fair value of contingent consideration | 1,292 | ||
Total | 21,600 | ||
Property and equipment | 130 | ||
Goodwill | 17,092 | ||
Deferred income taxes | (1,639) | ||
Other working capital | 909 | ||
Contingent consideration | (1,292) | ||
Total | 21,600 | ||
Aexis Medical | Customer relationships | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 1,800 | ||
Aexis Medical | Technology | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 4,600 | ||
Aexis Medical | Brand names | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 0 | ||
BHT Group | |||
Business Acquisition [Line Items] | |||
Cash paid | 60,216 | ||
Fair value of contingent consideration | 0 | ||
Total | 60,216 | ||
Property and equipment | 835 | ||
Goodwill | 40,934 | ||
Deferred income taxes | (5,881) | ||
Other working capital | 5,628 | ||
Contingent consideration | 0 | ||
Total | 60,216 | ||
BHT Group | Customer relationships | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 12,500 | ||
BHT Group | Technology | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 6,200 | ||
BHT Group | Brand names | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 0 | ||
CR Kennedy | |||
Business Acquisition [Line Items] | |||
Cash paid | 11,999 | ||
Fair value of contingent consideration | 0 | ||
Total | 11,999 | 11,999 | |
Property and equipment | 0 | ||
Goodwill | 5,894 | ||
Deferred income taxes | 0 | ||
Other working capital | 1,905 | ||
Contingent consideration | 0 | ||
Total | 11,999 | ||
CR Kennedy | Customer relationships | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 4,200 | ||
CR Kennedy | Technology | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 0 | ||
CR Kennedy | Brand names | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 0 | ||
Vantage | |||
Business Acquisition [Line Items] | |||
Cash paid | 4,044 | ||
Fair value of contingent consideration | 0 | ||
Total | 4,044 | 4,044 | |
Property and equipment | 433 | ||
Goodwill | 2,299 | ||
Deferred income taxes | 0 | ||
Other working capital | 320 | ||
Contingent consideration | 0 | ||
Total | 4,044 | ||
Vantage | Customer relationships | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 992 | ||
Vantage | Technology | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 0 | ||
Vantage | Brand names | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 0 | ||
Accutron | |||
Business Acquisition [Line Items] | |||
Cash paid | 53,049 | ||
Fair value of contingent consideration | 0 | ||
Total | $ 53,049 | 53,049 | |
Property and equipment | 1,676 | ||
Goodwill | 21,989 | ||
Deferred income taxes | 112 | ||
Other working capital | 4,472 | ||
Contingent consideration | 0 | ||
Total | 53,049 | ||
Accutron | Customer relationships | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 12,800 | ||
Accutron | Technology | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | 10,000 | ||
Accutron | Brand names | |||
Business Acquisition [Line Items] | |||
Amortizable intangible assets: | $ 2,000 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Jul. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials and parts | $ 49,054 | $ 45,831 |
Work-in-process | 13,189 | 13,484 |
Finished goods | 53,948 | 48,262 |
Less: reserve for excess and obsolete inventory | (8,599) | (8,853) |
Total inventories, net | $ 107,592 | $ 98,724 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Jul. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (95,540) | $ (86,123) |
Total property and equipment, net | 111,417 | 88,338 |
Land, buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 50,162 | 46,921 |
Furniture, equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 121,248 | 114,735 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 9,544 | 7,858 |
Construction in process | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 26,003 | $ 4,947 |
Derivatives (Details)
Derivatives (Details) - Foreign currency forward contracts - Designated as hedging instrument - Fair value hedge instruments $ in Thousands | 12 Months Ended |
Jul. 31, 2018USD ($)instrument | |
Derivatives | |
Term of contracts | 1 month |
Number of contracts | instrument | 7 |
Aggregate value of contracts | $ | $ 30,159 |
Term of renewed contracts | 1 month |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - USD ($) | 12 Months Ended | |||
Jul. 31, 2018 | Mar. 21, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | |
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Original fair value of contingent consideration | $ 1,292,000 | |||
Aexis Medical | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Fair value of contingent liability | 1,292,000 | |||
Assumed contingent obligation | $ 1,298,000 | |||
Jet Prep Ltd. | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Assumed contingent obligation | $ 0 | $ 1,138,000 | ||
Level 3 | Recurring basis | Jet Prep Ltd. | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Assumed contingent obligation | 0 | |||
Minimum | Aexis Medical | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Fair value of contingent liability | $ 0 | |||
Maximum | Aexis Medical | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Fair value of contingent liability | $ 1,850,000 | |||
Contingent Consideration | Aexis Medical | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Original fair value of contingent consideration | 1,292,000 | |||
Contingent Consideration | Jet Prep Ltd. | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Original fair value of contingent consideration | $ 0 |
Fair Value Measurements - Hiera
Fair Value Measurements - Hierarchy Levels (Details) - Recurring basis - USD ($) $ in Thousands | Jul. 31, 2018 | Jul. 31, 2017 |
Assets: | ||
Total assets | $ 104 | $ 102 |
Liabilities: | ||
Total liabilities | 1,298 | 1,138 |
Accrued expenses: | ||
Liabilities: | ||
Assumed contingent obligation | 12 | |
Total accrued expenses | 12 | |
Other long-term liabilities: | ||
Liabilities: | ||
Contingent consideration | 1,298 | 1,126 |
Total other long-term liabilities: | 1,298 | 1,126 |
Money markets | Cash and cash equivalents: | ||
Assets: | ||
Money markets | 104 | 102 |
Level 1 | ||
Assets: | ||
Total assets | 104 | 102 |
Liabilities: | ||
Total liabilities | 0 | 0 |
Level 1 | Accrued expenses: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | |
Total accrued expenses | 0 | |
Level 1 | Other long-term liabilities: | ||
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total other long-term liabilities: | 0 | 0 |
Level 1 | Money markets | Cash and cash equivalents: | ||
Assets: | ||
Money markets | 104 | 102 |
Level 2 | ||
Assets: | ||
Total assets | 0 | 0 |
Liabilities: | ||
Total liabilities | 0 | 0 |
Level 2 | Accrued expenses: | ||
Liabilities: | ||
Assumed contingent obligation | 0 | |
Total accrued expenses | 0 | |
Level 2 | Other long-term liabilities: | ||
Liabilities: | ||
Contingent consideration | 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 | 1,298 | 1,138 |
Level 3 | Accrued expenses: | ||
Liabilities: | ||
Assumed contingent obligation | 12 | |
Total accrued expenses | 12 | |
Level 3 | Other long-term liabilities: | ||
Liabilities: | ||
Contingent consideration | 1,298 | 1,126 |
Total other long-term liabilities: | 1,298 | 1,126 |
Level 3 | Money markets | Cash and cash equivalents: | ||
Assets: | ||
Money markets | $ 0 | $ 0 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3 | |||
Beginning balance | $ 1,138 | $ 1,579 | $ 2,777 |
Original fair value of contingent consideration | 1,292 | ||
Income included in general and administrative expense | 6 | (265) | (687) |
Net purchases, issuances, sales and settlements | (1,138) | (176) | (511) |
Ending balance | 1,298 | 1,138 | 1,579 |
Contingent Consideration | Jet Prep Ltd. | |||
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3 | |||
Beginning balance | 0 | 0 | 751 |
Original fair value of contingent consideration | 0 | ||
Income included in general and administrative expense | 0 | 0 | (751) |
Net purchases, issuances, sales and settlements | 0 | 0 | 0 |
Ending balance | 0 | 0 | 0 |
Contingent Consideration | Aexis Medical | |||
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3 | |||
Beginning balance | 0 | 0 | 0 |
Original fair value of contingent consideration | 1,292 | ||
Income included in general and administrative expense | 6 | 0 | 0 |
Net purchases, issuances, sales and settlements | 0 | 0 | 0 |
Ending balance | 1,298 | 0 | 0 |
Jet Prep Assumed Contingent Obligation | Jet Prep Ltd. | |||
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3 | |||
Beginning balance | 1,138 | 1,138 | 1,138 |
Original fair value of contingent consideration | 0 | ||
Income included in general and administrative expense | 0 | 0 | 0 |
Net purchases, issuances, sales and settlements | (1,138) | 0 | 0 |
Ending balance | 0 | 1,138 | 1,138 |
Cantel Medical (U.K.) Contingent Guaranteed Obligation | Cantel Medical (UK) - PuriCore International Limited | |||
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3 | |||
Beginning balance | 0 | 441 | 888 |
Original fair value of contingent consideration | 0 | ||
Income included in general and administrative expense | 0 | (265) | 64 |
Net purchases, issuances, sales and settlements | 0 | (176) | (511) |
Ending balance | $ 0 | $ 0 | $ 441 |
Intangibles and Goodwill - Narr
Intangibles and Goodwill - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 17,357 | $ 18,407 | $ 13,095 |
Amortization expense, 2019 | 17,639 | ||
Amortization expense, 2020 | 15,893 | ||
Amortization expense, 2021 | 15,892 | ||
Amortization expense, 2022 | 15,550 | ||
Amortization expense, 2023 | $ 15,177 | ||
Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful lives | 3 years | ||
Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful lives | 20 years | ||
Weighted average | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful lives | 14 years | ||
Technology | Jet Prep Ltd. | |||
Finite-Lived Intangible Assets [Line Items] | |||
Accelerated amortization | $ 2,401 |
Intangibles and Goodwill - Inta
Intangibles and Goodwill - Intangible Assets Summary (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Jul. 31, 2017 |
Intangible assets with finite lives: | ||
Gross | $ 201,959 | $ 172,703 |
Accumulated Amortization | (72,118) | (55,739) |
Net | 129,841 | 116,964 |
Intangible assets with indefinite lives: | ||
Trademarks and tradenames | 7,520 | 7,548 |
Total intangible assets | ||
Gross | 209,479 | 180,251 |
Accumulated Amortization | (72,118) | (55,739) |
Net | 137,361 | 124,512 |
Customer relationships | ||
Intangible assets with finite lives: | ||
Gross | 133,347 | 119,576 |
Accumulated Amortization | (45,618) | (34,773) |
Net | 87,729 | 84,803 |
Total intangible assets | ||
Accumulated Amortization | (45,618) | (34,773) |
Technology | ||
Intangible assets with finite lives: | ||
Gross | 54,585 | 39,064 |
Accumulated Amortization | (19,836) | (15,260) |
Net | 34,749 | 23,804 |
Total intangible assets | ||
Accumulated Amortization | (19,836) | (15,260) |
Brand names | ||
Intangible assets with finite lives: | ||
Gross | 8,141 | 8,188 |
Accumulated Amortization | (3,857) | (3,225) |
Net | 4,284 | 4,963 |
Total intangible assets | ||
Accumulated Amortization | (3,857) | (3,225) |
Non-compete agreements | ||
Intangible assets with finite lives: | ||
Gross | 3,060 | 3,092 |
Accumulated Amortization | (1,628) | (1,428) |
Net | 1,432 | 1,664 |
Total intangible assets | ||
Accumulated Amortization | (1,628) | (1,428) |
Patents and other registrations | ||
Intangible assets with finite lives: | ||
Gross | 2,826 | 2,783 |
Accumulated Amortization | (1,179) | (1,053) |
Net | 1,647 | 1,730 |
Total intangible assets | ||
Accumulated Amortization | $ (1,179) | (1,053) |
Jet Prep Ltd. | Technology | ||
Intangible assets with finite lives: | ||
Gross | (3,730) | |
Accumulated Amortization | 3,730 | |
Total intangible assets | ||
Accumulated Amortization | $ 3,730 |
Intangibles and Goodwill - Good
Intangibles and Goodwill - Goodwill Rollforward (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Changes in Goodwill | ||
Balance at the beginning of the period | $ 311,445 | $ 280,318 |
Acquisitions | 58,026 | 30,182 |
Foreign currency translation | (1,444) | 945 |
Balance at the end of the period | 368,027 | 311,445 |
Endoscopy | ||
Changes in Goodwill | ||
Balance at the beginning of the period | 129,945 | 121,015 |
Acquisitions | 58,026 | 8,193 |
Foreign currency translation | (1,281) | 737 |
Balance at the end of the period | 186,690 | 129,945 |
Water Purification and Filtration | ||
Changes in Goodwill | ||
Balance at the beginning of the period | 59,088 | 58,880 |
Acquisitions | 0 | 0 |
Foreign currency translation | (163) | 208 |
Balance at the end of the period | 58,925 | 59,088 |
Healthcare Disposables | ||
Changes in Goodwill | ||
Balance at the beginning of the period | 114,279 | 92,290 |
Acquisitions | 0 | 21,989 |
Foreign currency translation | 0 | 0 |
Balance at the end of the period | 114,279 | 114,279 |
Dialysis | ||
Changes in Goodwill | ||
Balance at the beginning of the period | 8,133 | 8,133 |
Acquisitions | 0 | 0 |
Foreign currency translation | 0 | 0 |
Balance at the end of the period | $ 8,133 | $ 8,133 |
Financing Arrangements - Schedu
Financing Arrangements - Schedule of long-term debt (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Jun. 28, 2018 | Jul. 31, 2017 |
Debt Instrument [Line Items] | |||
Total long-term debt, net of unamortized debt issuance costs | $ 197,302 | $ 126,000 | |
Current portion of long-term debt | (10,000) | 0 | |
Long-term debt, net of unamortized debt issuance costs and excluding current portion | 187,302 | 126,000 | |
Line of Credit | |||
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs | (2,698) | 0 | |
Revolving credit loan | Line of Credit | |||
Debt Instrument [Line Items] | |||
Loans outstanding | 0 | $ 400,000 | 126,000 |
Tranche A term loan | Line of Credit | |||
Debt Instrument [Line Items] | |||
Loans outstanding | $ 200,000 | $ 200,000 | $ 0 |
Financing Arrangements - Narrat
Financing Arrangements - Narrative (Details) - Line of Credit - USD ($) | 12 Months Ended | ||
Jul. 31, 2018 | Jun. 28, 2018 | Jul. 31, 2017 | |
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 300,000,000 | ||
Fees on unused portion of credit facilities (as a percent) | 0.20% | ||
Shares of foreign subsidiaries pledged as security (as a percent) | 65.00% | ||
Write-off of debt financing costs | $ 127,000 | ||
Minimum | |||
Debt Instrument [Line Items] | |||
Fees on unused portion of credit facilities (as a percent) | 0.20% | ||
Maximum | |||
Debt Instrument [Line Items] | |||
Fees on unused portion of credit facilities (as a percent) | 0.35% | ||
Lender's base rate | |||
Debt Instrument [Line Items] | |||
Margin on reference rate (as a percent) | 0.25% | ||
Reference rate (as a percent) | 5.00% | ||
Lender's base rate | Minimum | |||
Debt Instrument [Line Items] | |||
Margin on reference rate (as a percent) | 0.00% | ||
Lender's base rate | Maximum | |||
Debt Instrument [Line Items] | |||
Margin on reference rate (as a percent) | 1.00% | ||
LIBOR | |||
Debt Instrument [Line Items] | |||
Margin on reference rate (as a percent) | 1.25% | ||
LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Margin on reference rate (as a percent) | 1.00% | ||
Reference rate (as a percent) | 1.25% | ||
LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Margin on reference rate (as a percent) | 2.00% | ||
Tranche A term loan | |||
Debt Instrument [Line Items] | |||
Revolving credit loans outstanding | $ 200,000,000 | 200,000,000 | $ 0 |
Debt Instrument, Face Amount | 200,000,000 | ||
Principal amortization, periodic payment due 2019, 2020, 2021, and 2022 | 10,000,000 | ||
Balance due and payable at maturity in 2023 | $ 160,000,000 | ||
Interest rate (as a percent) | 3.35% | ||
Revolving credit loan | |||
Debt Instrument [Line Items] | |||
Revolving credit loans outstanding | $ 0 | $ 400,000,000 | $ 126,000,000 |
Revolving credit loan | Minimum | |||
Debt Instrument [Line Items] | |||
Fees on unused portion of credit facilities (as a percent) | 0.20% | ||
Revolving credit loan | Maximum | |||
Debt Instrument [Line Items] | |||
Fees on unused portion of credit facilities (as a percent) | 0.35% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Jul. 31, 2018 | Apr. 30, 2018 | Jan. 31, 2018 | Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||||||
Blended tax rate | 26.90% | 35.00% | 35.00% | |||
Revaluation benefit due to TCJA | $ 8,398,000 | |||||
TCJA expenses related to deemed repatriation of deferred foreign income | $ 0 | 294,000 | ||||
TCJA, Revaluation of deferred tax assets and liabilities, provisional income tax expense (benefit) | $ 8,657,000 | $ 8,692,000 | ||||
TJCA, measurement period adjustment, expense reduction related to deemed repatriation of deferred foreign income | $ 294,000 | |||||
Consolidated effective tax rate (as a percent) | 22.50% | 32.80% | 36.20% | |||
Repatriated dividends | $ 0 | $ 0 | ||||
Cumulative amount of undistributed earnings indefinitely reinvested in foreign subsidiaries | $ 32,774,000 | $ 32,774,000 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Current | |||
Federal | $ 24,288 | $ 28,900 | $ 29,392 |
State | 5,078 | 4,352 | 4,433 |
International | 4,626 | 1,545 | 1,863 |
Total | 33,992 | 34,797 | 35,688 |
Deferred | |||
Federal | (7,308) | 2,020 | (216) |
State | 491 | 261 | (153) |
International | (703) | (2,223) | (1,341) |
Total | $ (7,520) | $ 58 | $ (1,710) |
Income Taxes - Geographic Compo
Income Taxes - Geographic Components (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Income Taxes | |||
Income (loss) before income taxes | $ 117,513 | $ 106,233 | $ 93,931 |
United States | |||
Income Taxes | |||
Income (loss) before income taxes | 115,697 | 108,329 | 92,744 |
International | |||
Income Taxes | |||
Income (loss) before income taxes | $ 1,816 | $ (2,096) | $ 1,187 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Expected statutory tax(1) | 26.90% | 35.00% | 35.00% |
Differential attributable to: | |||
Foreign operations | 0.60% | 0.00% | 0.60% |
State and local taxes | 3.70% | 3.90% | 3.20% |
Domestic production deduction | (1.80%) | (2.70%) | (2.30%) |
Acquisition-related items, net | 0.00% | 0.10% | 0.00% |
Impact of tax legislation on deferred taxes | (7.40%) | 0.00% | 0.00% |
R&E tax credit | (0.70%) | (1.40%) | (1.10%) |
Change in foreign tax rates | 0.00% | 0.00% | (0.40%) |
Excess tax benefits | (1.70%) | (2.20%) | 0.00% |
Valuation allowance | 2.40% | 0.00% | 0.00% |
Other | 0.50% | 0.10% | 1.20% |
Consolidated effective tax rate (as a percent) | 22.50% | 32.80% | 36.20% |
Share-based compensation, excess tax benefit, amount | $ 2,173 | $ 2,241 |
Income Taxes - Deferred Taxes (
Income Taxes - Deferred Taxes (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Jul. 31, 2017 |
Deferred tax assets: | ||
Accrued expenses | $ 5,354 | $ 6,308 |
Inventories | 3,165 | 4,655 |
Accounts receivable | 306 | 729 |
Other long-term liabilities | 103 | 180 |
Stock-based compensation | 2,700 | 3,402 |
Capital investment | 426 | 545 |
Foreign NOLs | 8,605 | 6,490 |
Subtotal | 20,659 | 22,309 |
Valuation allowance | (6,358) | (2,984) |
Deferred tax assets, net of valuation allowance | 14,301 | 19,325 |
Deferred tax liabilities: | ||
Property and equipment | (7,352) | (9,957) |
Intangible assets | (21,300) | (20,107) |
Goodwill | (10,362) | (13,975) |
Deferred tax liabilities, gross | (39,014) | (44,039) |
Deferred income taxes (assets) | 2,911 | 0 |
Deferred income taxes (liabilities) | (27,624) | (24,714) |
Net deferred income taxes | $ (24,713) | $ (24,714) |
Income Taxes - Operating Loss C
Income Taxes - Operating Loss Carryforwards (Details) - Foreign $ in Thousands | Jul. 31, 2018USD ($) |
Operating loss carryforwards | |
Net operating loss carryforwards (NOLs) | $ 8,605 |
Valuation allowance on NOLs | 6,358 |
Jet Prep Ltd. | |
Operating loss carryforwards | |
Valuation allowance on NOLs | $ 2,785 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Apr. 30, 2018 | Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Rent expense | $ 8,801 | $ 7,715 | $ 6,675 | ||
Total contractual obligations | |||||
Litigation costs | $ 2,608 | ||||
Aexis Medical | |||||
Total contractual obligations | |||||
Assumed contingent obligation | 1,298 | ||||
Jet Prep Ltd. | |||||
Total contractual obligations | |||||
Assumed contingent obligation | $ 1,138 | $ 0 |
Commitments and Contingencies72
Commitments and Contingencies - Annual Required Payments (Details) $ in Thousands | Jul. 31, 2018USD ($) |
Minimum commitments under noncancelable operating leases | |
2,019 | $ 7,958 |
2,020 | 6,208 |
2,021 | 4,666 |
2,022 | 2,904 |
2,023 | 2,104 |
Thereafter | 3,593 |
Total | $ 27,433 |
Accumulated Other Comprehensi73
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Components and changes in accumulated other comprehensive (loss) income | |||
Other comprehensive income (loss) | $ (1,556) | $ 1,895 | $ (13,019) |
Foreign Currency Translation Adjustments | |||
Components and changes in accumulated other comprehensive (loss) income | |||
Balance | (9,900) | (11,795) | 1,224 |
Other comprehensive income (loss) | 1,895 | (13,019) | |
Balance | $ (11,456) | $ (9,900) | $ (11,795) |
Earnings Per Common Share - Com
Earnings Per Common Share - Computation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jul. 31, 2018 | Apr. 30, 2018 | Jan. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Numerator for basic and diluted earnings per share: | |||||||||||
Net income | $ 16,888 | $ 18,736 | $ 32,488 | $ 22,929 | $ 16,997 | $ 17,511 | $ 18,070 | $ 18,800 | $ 91,041 | $ 71,378 | $ 59,953 |
Less income allocated to participating securities | (320) | (431) | (488) | ||||||||
Net income available to common shareholders | $ 90,721 | $ 70,947 | $ 59,465 | ||||||||
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 (shares) | 41,567,722 | 41,468,487 | 41,344,013 | ||||||||
Dilutive effect of stock options using the treasury stock method and the average market price for the year (shares) | 67,356 | 74,278 | 46,181 | ||||||||
Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock (shares) | 41,635,078 | 41,542,765 | 41,390,194 | ||||||||
Earnings per share attributable to common stock: | |||||||||||
Basic earnings per share (in dollars per share) | $ 0.41 | $ 0.45 | $ 0.78 | $ 0.55 | $ 0.41 | $ 0.42 | $ 0.43 | $ 0.45 | $ 2.18 | $ 1.71 | $ 1.44 |
Diluted earnings per share (in dollars per share) | $ 0.41 | $ 0.45 | $ 0.78 | $ 0.55 | $ 0.41 | $ 0.42 | $ 0.43 | $ 0.45 | $ 2.18 | $ 1.71 | $ 1.44 |
Stock options excluded from weighted average dilutive common shares outstanding because their inclusion would have been antidilutive (shares) | 0 | 0 | 0 |
Earnings Per Common Share - Wei
Earnings Per Common Share - Weighted Average Shares (Details) - shares | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
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 (shares) | 41,635,078 | 41,542,765 | 41,390,194 |
Participating securities (in shares) | 148,700 | 254,727 | 340,363 |
Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities (shares) | 41,783,778 | 41,797,492 | 41,730,557 |
Stock-Based Compensation - 2016
Stock-Based Compensation - 2016 Plan (Details) | 12 Months Ended | ||||
Jul. 31, 2018Installmentshares | Jul. 31, 2017shares | Jul. 31, 2016shares | Jan. 31, 2016shares | Jul. 31, 2015shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Outstanding unvested restricted stock shares | 212,106,000 | 222,298,000 | 331,367,000 | 343,519,000 | |
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Outstanding options (in shares) | 70,000 | 122,500 | 122,500 | ||
2016 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Maximum number of shares authorized for issuance | 1,200,000 | ||||
Number of anniversaries of grant date on which awards vest | Installment | 3 | ||||
Outstanding unvested restricted stock shares | 179,133 | ||||
Outstanding options (in shares) | 0 | ||||
Shares available under Plan | 974,659 | ||||
2016 Plan | First anniversary vesting | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 33.33% | ||||
Vesting period | 1 year | ||||
2016 Plan | Second anniversary vesting | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 33.33% | ||||
Vesting period | 2 years | ||||
2016 Plan | Third anniversary vesting | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 33.33% | ||||
Vesting period | 3 years |
Stock-Based Compensation - 2006
Stock-Based Compensation - 2006 Plan (Details) | 12 Months Ended | |||
Jul. 31, 2018Installmentshares | Jul. 31, 2017shares | Jul. 31, 2016shares | Jul. 31, 2015shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding unvested restricted stock shares | 212,106,000 | 222,298,000 | 331,367,000 | 343,519,000 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding options (in shares) | 70,000 | 122,500 | 122,500 | |
2006 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum number of shares authorized for issuance | 5,591,000 | |||
2006 Plan | Stock options and stock appreciation rights | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum number of shares authorized for issuance | 2,700,000 | |||
2006 Plan | Restricted stock and other stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum number of shares authorized for issuance | 2,891,000 | |||
2006 Plan | Restricted shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of anniversaries of grant date on which awards vest | Installment | 3 | |||
Outstanding unvested restricted stock shares | 32,973 | |||
2006 Plan | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding options (in shares) | 70,000 | |||
First anniversary vesting | 2006 Plan | Restricted shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Vesting period | 1 year | |||
First anniversary vesting | 2006 Plan | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Vesting period | 1 year | |||
Second anniversary vesting | 2006 Plan | Restricted shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Vesting period | 2 years | |||
Second anniversary vesting | 2006 Plan | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Vesting period | 2 years | |||
Third anniversary vesting | 2006 Plan | Restricted shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Vesting period | 3 years | |||
Third anniversary vesting | 2006 Plan | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Vesting period | 3 years |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | |||
Stock-based compensation before income taxes | $ 9,615 | $ 8,844 | $ 8,361 |
Total unrecognized stock-based compensation cost (in dollars) | $ 12,102 | ||
Remaining weighted average period for unrecognized compensation cost | 18 months | ||
Cost of sales | |||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | |||
Stock-based compensation before income taxes | $ 663 | 371 | 438 |
Selling | |||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | |||
Stock-based compensation before income taxes | 1,458 | 1,582 | 929 |
General and administrative | |||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | |||
Stock-based compensation before income taxes | 7,292 | 6,774 | 6,881 |
Research and development | |||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | |||
Stock-based compensation before income taxes | 202 | 117 | 113 |
Total operating expenses | |||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | |||
Stock-based compensation before income taxes | $ 8,952 | $ 8,473 | $ 7,923 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Monte Carlo Simulation (Details) - Restricted shares | 12 Months Ended | |
Jul. 31, 2018 | Jul. 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 | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Number of Shares | |||
Nonvested stock awards at the beginning of the period (in shares) | 222,298,000 | 331,367,000 | 343,519,000 |
Granted (in shares) | 122,260,000 | 113,065,000 | 175,700,000 |
Vested (in shares) | (121,788,000) | (216,212,000) | (183,045,000) |
Forfeited (in shares) | (10,664,000) | (5,922,000) | (4,807,000) |
Nonvested stock awards at the end of the period (in shares) | 212,106,000 | 222,298,000 | 331,367,000 |
Weighted Average Fair Value | |||
Nonvested stock awards at the beginning of the period (in dollars per share) | $ 66.28 | $ 46.09 | $ 32.77 |
Granted (in dollars per share) | 101.74 | 81.77 | 55.40 |
Vested (in dollars per share) | 60.25 | 43.62 | 30.06 |
Forfeited (in dollars per share) | 95.09 | 59.40 | 45.06 |
Nonvested stock awards at the end of the period (in dollars per share) | $ 88.87 | $ 66.28 | $ 46.09 |
Aggregate fair value, vested in period | $ 7,338 | $ 9,431 | $ 5,503 |
Number of Time-based Shares | |||
Number of Shares | |||
Nonvested stock awards at the beginning of the period (in shares) | 196,818,000 | 331,367,000 | 343,519,000 |
Granted (in shares) | 94,309,000 | 86,305,000 | 175,700,000 |
Vested (in shares) | (115,943,000) | (214,932,000) | (183,045,000) |
Forfeited (in shares) | (6,864,000) | (5,922,000) | (4,807,000) |
Nonvested stock awards at the end of the period (in shares) | 168,320,000 | 196,818,000 | 331,367,000 |
Number of Performance-based Shares | |||
Number of Shares | |||
Nonvested stock awards at the beginning of the period (in shares) | 16,235,000 | ||
Granted (in shares) | 17,486,000 | 16,960,000 | |
Vested (in shares) | (5,845,000) | (725,000) | |
Forfeited (in shares) | (1,800,000) | ||
Nonvested stock awards at the end of the period (in shares) | 26,076,000 | 16,235,000 | |
Number of Market-based Shares | |||
Number of Shares | |||
Nonvested stock awards at the beginning of the period (in shares) | 9,245,000 | ||
Granted (in shares) | 10,465,000 | 9,800,000 | |
Vested (in shares) | 0 | (555,000) | |
Forfeited (in shares) | (2,000,000) | ||
Nonvested stock awards at the end of the period (in shares) | 17,710,000 | 9,245,000 |
Stock-Based Compensation - FV A
Stock-Based Compensation - FV Assumptions (Details) - Stock options | 12 Months Ended |
Jul. 31, 2016 | |
Weighted-Average Black-Scholes Option Valuation Assumptions | |
Dividend yield | 0.22% |
Volatility of common stock | 55.90% |
Risk-free interest rate | 1.41% |
Expected lives (in years) | 5 years |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Stock Option Activity, Number of shares | |||
Outstanding at July 31, 2017, Number of shares outstanding (in shares) | 122,500 | ||
Granted (in shares) | 0 | ||
Exercised (in shares) | (52,500) | ||
Outstanding at July 31, 2018, Number of shares outstanding (in shares) | 70,000 | ||
Stock Option Activity, Weighted Average Exercise Price | |||
Outstanding at July 31, 2017, Weighted Average Exercise Price (in dollars per share) | $ 29.36 | ||
Granted (in dollars per share) | 0 | ||
Exercised (in dollars per share) | 17.04 | ||
Outstanding at July 31, 2018, Weighted Average Exercise Price (in dollars per share) | $ 38.60 | ||
Stock Option Activity, Additional Disclosures | |||
Exercisable at July 31, 2018, Number of shares (in shares) | 65,000 | ||
Exercisable at July 31, 2018, Weighted Average Exercise Price (in dollars per share) | $ 37.31 | ||
Outstanding at July 31, 2018, Weighted Average Contractual Life Remaining (Years) | 11 months 12 days | ||
Exercisable at July 31, 2018, Weighted Average Contractual Life Remaining (Years) | 10 months 10 days | ||
Outstanding at July 31, 2018, Aggregate Intrinsic Value | $ 3,788 | ||
Exercisable at July 31, 2018, Aggregate Intrinsic Value | 3,601 | ||
Stock options | |||
Stock Option Activity, Additional Disclosures | |||
Outstanding at July 31, 2018, Aggregate Intrinsic Value | $ 3,788 | $ 5,493 | $ 4,605 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding at July 31, 2018, Aggregate Intrinsic Value | $ 3,788 | ||
Deduction in income tax due to exercise of options and vesting of restricted stock (in dollars) | 4,161 | $ 5,592 | |
Reduction in income tax expense over the equity awards' vesting period | 1,988 | 3,351 | |
Share-based compensation, excess tax benefit, amount | $ 2,173 | $ 2,241 | |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options vested during period (in shares) | 13,333 | 23,333 | 35,834 |
Aggregate fair value of all options vested (in dollars) | $ 226 | $ 349 | $ 344 |
Weighted average fair value of all options granted (in dollars per share) | $ 26.49 | ||
Outstanding options (in shares) | 70,000 | 122,500 | 122,500 |
Outstanding at July 31, 2018, Aggregate Intrinsic Value | $ 3,788 | $ 5,493 | $ 4,605 |
Exercise of stock options (in shares) | 72,058 | 89,607 | |
Total average price per share | $ 98.16 | $ 77.12 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Retirement Benefits [Abstract] | |||
Aggregate employer contributions recognized under 401(k) Savings and Retirement Plans | $ 4,676 | $ 3,863 | $ 3,406 |
Reportable Segments - Narrative
Reportable Segments - Narrative (Details) - Customer concentration - Segment sales | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Water Purification and Filtration | |||
Segment Reporting Information [Line Items] | |||
Concentration risk within segment (as a percent) | 48.00% | 50.20% | 43.70% |
Dialysis | |||
Segment Reporting Information [Line Items] | |||
Concentration risk within segment (as a percent) | 40.60% | 44.20% | 42.60% |
Healthcare Disposables | |||
Segment Reporting Information [Line Items] | |||
Concentration risk within segment (as a percent) | 45.10% | 43.40% | 49.10% |
Reportable Segments - Operating
Reportable Segments - Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jul. 31, 2018 | Apr. 30, 2018 | Jan. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||||||||
Net sales | $ 228,854 | $ 217,268 | $ 213,034 | $ 212,766 | $ 205,502 | $ 192,113 | $ 184,817 | $ 187,725 | $ 871,922 | $ 770,157 | $ 664,755 |
Income from operations: | 121,664 | 110,410 | 97,251 | ||||||||
Interest expense, net | 5,289 | 4,303 | 3,320 | ||||||||
Other income | (1,138) | (126) | 0 | ||||||||
Income before income taxes | 117,513 | 106,233 | 93,931 | ||||||||
Identifiable assets: | 963,708 | 786,373 | 963,708 | 786,373 | 694,532 | ||||||
Capital expenditures: | 37,698 | 27,065 | 18,889 | ||||||||
Depreciation and amortization: | 34,830 | 33,452 | 25,084 | ||||||||
Operating Segment | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Income from operations: | 161,020 | 142,753 | 124,034 | ||||||||
General corporate | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Income from operations: | 39,356 | 32,343 | 26,783 | ||||||||
Identifiable assets: | 88,101 | 44,537 | 88,101 | 44,537 | 31,629 | ||||||
Capital expenditures: | 11,208 | 5,772 | 941 | ||||||||
Depreciation and amortization: | 733 | 518 | 268 | ||||||||
Endoscopy | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 473,937 | 398,773 | 341,752 | ||||||||
Endoscopy | Operating Segment | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Income from operations: | 86,833 | 73,440 | 61,021 | ||||||||
Identifiable assets: | 490,702 | 368,820 | 490,702 | 368,820 | 347,107 | ||||||
Capital expenditures: | 18,996 | 13,816 | 11,299 | ||||||||
Depreciation and amortization: | 19,002 | 18,245 | 14,333 | ||||||||
Water Purification and Filtration | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 211,209 | 196,446 | 177,669 | ||||||||
Water Purification and Filtration | Operating Segment | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Income from operations: | 35,100 | 33,159 | 30,620 | ||||||||
Identifiable assets: | 151,460 | 147,477 | 151,460 | 147,477 | 137,731 | ||||||
Capital expenditures: | 4,409 | 3,689 | 3,376 | ||||||||
Depreciation and amortization: | 5,628 | 5,706 | 5,441 | ||||||||
Healthcare Disposables | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 155,180 | 144,457 | 112,584 | ||||||||
Healthcare Disposables | Operating Segment | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Income from operations: | 31,707 | 28,000 | 24,486 | ||||||||
Identifiable assets: | 210,831 | 208,328 | 210,831 | 208,328 | 157,918 | ||||||
Capital expenditures: | 2,441 | 2,492 | 2,606 | ||||||||
Depreciation and amortization: | 8,756 | 8,556 | 4,361 | ||||||||
Dialysis | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 31,596 | 30,481 | 32,750 | ||||||||
Dialysis | Operating Segment | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Income from operations: | 7,380 | 8,154 | 7,907 | ||||||||
Identifiable assets: | $ 22,614 | $ 17,211 | 22,614 | 17,211 | 20,147 | ||||||
Capital expenditures: | 644 | 1,296 | 667 | ||||||||
Depreciation and amortization: | $ 711 | $ 427 | $ 681 |
Reportable Segments - Geographi
Reportable Segments - Geographic Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jul. 31, 2018 | Apr. 30, 2018 | Jan. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | $ 228,854 | $ 217,268 | $ 213,034 | $ 212,766 | $ 205,502 | $ 192,113 | $ 184,817 | $ 187,725 | $ 871,922 | $ 770,157 | $ 664,755 |
Total long-lived assets: | 120,077 | 93,045 | 120,077 | 93,045 | 79,753 | ||||||
Goodwill and intangible assets, net | 505,388 | 435,957 | 505,388 | 435,957 | 392,037 | ||||||
Total | 625,465 | 529,002 | 625,465 | 529,002 | 471,790 | ||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | 643,744 | 599,657 | 515,055 | ||||||||
Total long-lived assets: | 80,918 | 74,401 | 80,918 | 74,401 | 62,820 | ||||||
Europe/Africa/Middle East | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | 131,130 | 95,753 | 88,355 | ||||||||
Total long-lived assets: | 35,824 | 16,209 | 35,824 | 16,209 | 14,863 | ||||||
Asia/Pacific | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | 57,108 | 40,964 | 33,374 | ||||||||
Total long-lived assets: | 2,531 | 1,381 | 2,531 | 1,381 | 1,607 | ||||||
Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | 33,524 | 26,648 | 20,975 | ||||||||
Total long-lived assets: | $ 804 | $ 1,054 | 804 | 1,054 | 463 | ||||||
Latin America/South America | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | $ 6,416 | $ 7,135 | $ 6,996 |
Quarterly Results of Operatio88
Quarterly Results of Operations (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jul. 31, 2018 | Apr. 30, 2018 | Jan. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 228,854 | $ 217,268 | $ 213,034 | $ 212,766 | $ 205,502 | $ 192,113 | $ 184,817 | $ 187,725 | $ 871,922 | $ 770,157 | $ 664,755 |
Cost of sales | 121,451 | 112,594 | 111,799 | 112,107 | 107,774 | 100,665 | 96,340 | 98,218 | 457,951 | 402,997 | 355,569 |
Gross profit | $ 107,403 | $ 104,674 | $ 101,235 | $ 100,659 | $ 97,728 | $ 91,448 | $ 88,477 | $ 89,507 | 413,971 | 367,160 | 309,186 |
Gross profit percentage | 46.90% | 48.20% | 47.50% | 47.30% | 47.60% | 47.60% | 47.90% | 47.70% | |||
Net income | $ 16,888 | $ 18,736 | $ 32,488 | $ 22,929 | $ 16,997 | $ 17,511 | $ 18,070 | $ 18,800 | $ 91,041 | $ 71,378 | $ 59,953 |
Earnings per common share: | |||||||||||
Basic (in dollars per share) | $ 0.41 | $ 0.45 | $ 0.78 | $ 0.55 | $ 0.41 | $ 0.42 | $ 0.43 | $ 0.45 | $ 2.18 | $ 1.71 | $ 1.44 |
Diluted (in dollars per share) | $ 0.41 | $ 0.45 | $ 0.78 | $ 0.55 | $ 0.41 | $ 0.42 | $ 0.43 | $ 0.45 | $ 2.18 | $ 1.71 | $ 1.44 |
Subsequent Event - Narrative (D
Subsequent Event - Narrative (Details) $ in Thousands | Aug. 29, 2018USD ($) |
Subsequent Event | |
Subsequent Event [Line Items] | |
Cash paid | $ 22,486 |
Schedule II - Valuation and Q90
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 | |
Allowance for doubtful accounts | |||
Changes in valuation and qualifying accounts | |||
Balance at Beginning of Period | $ 1,808 | $ 1,850 | $ 2,092 |
Additions | 326 | 998 | 15 |
Deductions | (977) | (1,056) | (223) |
Translation Adjustments | (8) | 16 | (34) |
Balance at End of Period | 1,149 | 1,808 | 1,850 |
Reserve for excess and obsolete inventory | |||
Changes in valuation and qualifying accounts | |||
Balance at Beginning of Period | 8,853 | 5,390 | 3,895 |
Additions | 1,719 | 5,016 | 3,182 |
Deductions | (1,862) | (1,580) | (1,569) |
Translation Adjustments | (111) | 27 | (118) |
Balance at End of Period | 8,599 | 8,853 | 5,390 |
Deferred tax asset valuation allowance | |||
Changes in valuation and qualifying accounts | |||
Balance at Beginning of Period | 2,984 | 2,334 | 2,037 |
Additions | 3,538 | 615 | 929 |
Deductions | (119) | 0 | (712) |
Translation Adjustments | (45) | 35 | 80 |
Balance at End of Period | $ 6,358 | $ 2,984 | $ 2,334 |