Cover
Cover - shares | 6 Months Ended | |
Jan. 31, 2020 | Feb. 29, 2020 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jan. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-31337 | |
Entity Registrant Name | Cantel Medical Corp. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 22-1760285 | |
Entity Address, Address Line One | 150 Clove Road | |
Entity Address, City or Town | Little Falls | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07424 | |
City Area Code | (973) | |
Local Phone Number | 890-7220 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | CMD | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 42,141,460 | |
Entity Central Index Key | 0000019446 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --07-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jan. 31, 2020 | Jul. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 58,730 | $ 44,535 |
Accounts receivable, net of allowance for doubtful accounts of $2,784 and $2,322 | 168,878 | 146,910 |
Inventories, net | 184,177 | 138,234 |
Prepaid expenses and other current assets | 25,963 | 22,117 |
Total current assets | 437,748 | 351,796 |
Property and equipment, net | 230,023 | 185,242 |
Right-of-use assets, net | 52,014 | |
Intangible assets, net | 496,735 | 141,513 |
Goodwill | 656,612 | 378,109 |
Other long-term assets | 10,808 | 9,425 |
Deferred income taxes | 6,958 | 4,281 |
Total assets | 1,890,898 | 1,070,366 |
Liabilities and stockholders’ equity | ||
Accounts payable | 37,693 | 39,450 |
Compensation payable | 36,761 | 32,762 |
Accrued expenses | 36,615 | 38,545 |
Deferred revenue | 25,614 | 27,840 |
Current portion of long-term debt | 29,500 | 10,000 |
Income taxes payable | 2,255 | 2,803 |
Current portion of lease liabilities | 10,207 | |
Contingent consideration | 25,346 | 0 |
Total current liabilities | 203,991 | 151,400 |
Long-term debt | 885,442 | 220,851 |
Deferred income taxes | 29,490 | 29,278 |
Long-term lease liabilities | 43,323 | |
Other long-term liabilities | 5,371 | 7,300 |
Total liabilities | 1,167,617 | 408,829 |
Commitments and contingencies (Note 12) | ||
Preferred Stock, par value $1.00 per share; authorized 1,000,000 shares; none issued | 0 | 0 |
Common Stock, par value $0.10 per share; authorized 75,000,000 shares; issued 47,221,781 shares and outstanding 42,579,275 shares at January 31, 2020; issued 46,362,902 shares and outstanding 41,771,228 shares at July 31, 2019 | 4,722 | 4,636 |
Additional paid-in capital | 265,837 | 204,795 |
Retained earnings | 538,130 | 539,097 |
Accumulated other comprehensive loss | (16,914) | (22,197) |
Treasury Stock; 4,642,506 shares at January 31, 2020; 4,591,674 shares at July 31, 2019 | (68,494) | (64,794) |
Total stockholders’ equity | 723,281 | 661,537 |
Total liabilities and stockholders’ equity | $ 1,890,898 | $ 1,070,366 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jan. 31, 2020 | Jul. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 2,784 | $ 2,322 |
Preferred Stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred Stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred Stock, issued (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common Stock, authorized (in shares) | 75,000,000 | 75,000,000 |
Common Stock, issued (in shares) | 47,221,781 | 46,362,902 |
Common Stock, outstanding (in shares) | 42,579,275 | 41,771,228 |
Treasury Stock (in shares) | 4,642,506 | 4,591,674 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Net sales | ||||
Net sales | $ 288,498 | $ 224,538 | $ 545,744 | $ 450,127 |
Cost of sales | ||||
Cost of sales | 166,254 | 119,863 | 307,631 | 240,203 |
Gross profit | 122,244 | 104,675 | 238,113 | 209,924 |
Expenses: | ||||
Selling | 44,740 | 33,198 | 83,151 | 67,156 |
General and administrative | 62,051 | 37,358 | 117,338 | 73,893 |
Research and development | 7,857 | 7,923 | 15,604 | 15,001 |
Total operating expenses | 114,648 | 78,479 | 216,093 | 156,050 |
Income from operations | 7,596 | 26,196 | 22,020 | 53,874 |
Interest expense, net | 10,250 | 2,207 | 15,969 | 4,233 |
Other income, net | 0 | (1,313) | 0 | (1,313) |
(Loss) income before income taxes | (2,654) | 25,302 | 6,051 | 50,954 |
Income taxes | (391) | 6,502 | 2,547 | 12,912 |
Net (loss) income | $ (2,263) | $ 18,800 | $ 3,504 | $ 38,042 |
(Loss) earnings per common share: | ||||
Basic (in dollars per share) | $ (0.05) | $ 0.45 | $ 0.08 | $ 0.91 |
Diluted (in dollars per share) | (0.05) | 0.45 | 0.08 | 0.91 |
Dividends per common share (in dollars per share) | $ 0.11 | $ 0.10 | $ 0.11 | $ 0.10 |
Product sales | ||||
Net sales | ||||
Net sales | $ 256,935 | $ 194,013 | $ 482,613 | $ 389,773 |
Cost of sales | ||||
Cost of sales | 144,891 | 100,418 | 265,477 | 199,728 |
Product service | ||||
Net sales | ||||
Net sales | 31,563 | 30,525 | 63,131 | 60,354 |
Cost of sales | ||||
Cost of sales | $ 21,363 | $ 19,445 | $ 42,154 | $ 40,475 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (2,263) | $ 18,800 | $ 3,504 | $ 38,042 |
Other comprehensive income (loss): | ||||
Foreign currency translation | (140) | (417) | 3,792 | (5,640) |
Interest rate swap, net of tax | 246 | 0 | 1,491 | 0 |
Total other comprehensive income (loss): | 106 | (417) | 5,283 | (5,640) |
Comprehensive (loss) income | $ (2,157) | $ 18,383 | $ 8,787 | $ 32,402 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - 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, 2018 | 41,706,084 | |||||
Beginning Balance at Jul. 31, 2018 | $ 608,867 | $ 4,624 | $ 184,212 | $ 491,540 | $ (11,456) | $ (60,053) |
Increase (Decrease) in Stockholders' Equity | ||||||
Repurchases of shares (in shares) | (37,802) | |||||
Repurchases of shares | (4,288) | (4,288) | ||||
Stock-based compensation | 2,576 | 2,576 | ||||
Equity vests/option exercises (in shares) | 53,320 | |||||
Equity vests/option exercises | 955 | $ 7 | 948 | |||
Cancellations of restricted stock (in shares) | (286) | |||||
Cancellations of restricted stock | 0 | |||||
Net (loss) income | 19,242 | 19,242 | ||||
Other | (634) | (634) | ||||
Other comprehensive income (loss) | (5,223) | (5,223) | ||||
Ending Balance (in shares) at Oct. 31, 2018 | 41,721,316 | |||||
Ending Balance at Oct. 31, 2018 | 622,360 | $ 4,631 | 187,102 | 511,647 | (16,679) | (64,341) |
Beginning Balance (in shares) at Jul. 31, 2018 | 41,706,084 | |||||
Beginning Balance at Jul. 31, 2018 | 608,867 | $ 4,624 | 184,212 | 491,540 | (11,456) | (60,053) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net (loss) income | 38,042 | |||||
Other comprehensive income (loss) | (5,640) | |||||
Ending Balance (in shares) at Jan. 31, 2019 | 41,721,186 | |||||
Ending Balance at Jan. 31, 2019 | 641,603 | $ 4,631 | 192,202 | 526,274 | (17,096) | (64,408) |
Beginning Balance (in shares) at Oct. 31, 2018 | 41,721,316 | |||||
Beginning Balance at Oct. 31, 2018 | 622,360 | $ 4,631 | 187,102 | 511,647 | (16,679) | (64,341) |
Increase (Decrease) in Stockholders' Equity | ||||||
Repurchases of shares (in shares) | (880) | |||||
Repurchases of shares | (67) | (67) | ||||
Stock-based compensation | 3,587 | 3,587 | ||||
Equity vests/option exercises (in shares) | 1,857 | |||||
Cancellations of restricted stock (in shares) | (1,107) | |||||
Cancellations of restricted stock | 0 | |||||
Dividends on common stock | (4,173) | (4,173) | ||||
Net (loss) income | 18,800 | 18,800 | ||||
Other | 1,513 | 1,513 | ||||
Other comprehensive income (loss) | (417) | (417) | ||||
Ending Balance (in shares) at Jan. 31, 2019 | 41,721,186 | |||||
Ending Balance at Jan. 31, 2019 | $ 641,603 | $ 4,631 | 192,202 | 526,274 | (17,096) | (64,408) |
Beginning Balance (in shares) at Jul. 31, 2019 | 41,771,228 | 41,771,228 | ||||
Beginning Balance at Jul. 31, 2019 | $ 661,537 | $ 4,636 | 204,795 | 539,097 | (22,197) | (64,794) |
Increase (Decrease) in Stockholders' Equity | ||||||
Repurchases of shares (in shares) | (49,614) | |||||
Repurchases of shares | (3,613) | (3,613) | ||||
Stock-based compensation | 2,404 | 2,404 | ||||
Issuance of shares (in shares) | 751,471 | |||||
Issuance of shares | 60,000 | $ 75 | 59,925 | |||
Equity vests/option exercises (in shares) | 104,686 | |||||
Equity vests/option exercises | 919 | $ 11 | 908 | |||
Cancellations of restricted stock (in shares) | (946) | |||||
Cancellations of restricted stock | 0 | |||||
Net (loss) income | 5,767 | 5,767 | ||||
Other comprehensive income (loss) | 5,177 | 5,177 | ||||
Ending Balance (in shares) at Oct. 31, 2019 | 42,576,825 | |||||
Ending Balance at Oct. 31, 2019 | $ 732,191 | $ 4,722 | 268,032 | 544,864 | (17,020) | (68,407) |
Beginning Balance (in shares) at Jul. 31, 2019 | 41,771,228 | 41,771,228 | ||||
Beginning Balance at Jul. 31, 2019 | $ 661,537 | $ 4,636 | 204,795 | 539,097 | (22,197) | (64,794) |
Increase (Decrease) in Stockholders' Equity | ||||||
Equity vests/option exercises (in shares) | 25,000 | |||||
Net (loss) income | $ 3,504 | |||||
Other comprehensive income (loss) | $ 5,283 | |||||
Ending Balance (in shares) at Jan. 31, 2020 | 42,579,275 | 42,579,275 | ||||
Ending Balance at Jan. 31, 2020 | $ 723,281 | $ 4,722 | 265,837 | 538,130 | (16,914) | (68,494) |
Beginning Balance (in shares) at Oct. 31, 2019 | 42,576,825 | |||||
Beginning Balance at Oct. 31, 2019 | 732,191 | $ 4,722 | 268,032 | 544,864 | (17,020) | (68,407) |
Increase (Decrease) in Stockholders' Equity | ||||||
Repurchases of shares (in shares) | (1,218) | |||||
Repurchases of shares | (87) | (87) | ||||
Stock-based compensation | 3,412 | 3,412 | ||||
Issuance of shares | (5,608) | (5,608) | ||||
Equity vests/option exercises (in shares) | 3,900 | |||||
Equity vests/option exercises | 1 | 1 | ||||
Cancellations of restricted stock (in shares) | (232) | |||||
Cancellations of restricted stock | 0 | |||||
Dividends on common stock | (4,471) | (4,471) | ||||
Net (loss) income | (2,263) | (2,263) | ||||
Other comprehensive income (loss) | $ 106 | 106 | ||||
Ending Balance (in shares) at Jan. 31, 2020 | 42,579,275 | 42,579,275 | ||||
Ending Balance at Jan. 31, 2020 | $ 723,281 | $ 4,722 | $ 265,837 | $ 538,130 | $ (16,914) | $ (68,494) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Cash flows from operating activities | ||
Net (loss) income | $ 3,504 | $ 38,042 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 14,215 | 9,563 |
Amortization | 15,003 | 10,552 |
Stock-based compensation expense | 5,816 | 6,163 |
Amortization of right-of-use assets | 5,945 | |
Deferred income taxes | (2,467) | (3,096) |
Inventory step-up amortization | 16,700 | 0 |
Fair value adjustments to contingent consideration | 10,578 | 0 |
Other non-cash items, net | 46 | (154) |
Changes in assets and liabilities, net of effects of acquisitions/dispositions: | ||
Accounts receivable | 5,706 | (6,909) |
Inventories | (2,198) | (9,517) |
Prepaid expenses and other assets | 314 | (2,980) |
Accounts payable and other liabilities | (22,682) | (10,105) |
Income taxes | (1,551) | (2,365) |
Operating lease liabilities | (5,396) | |
Net cash provided by operating activities | 43,533 | 29,194 |
Cash flows from investing activities | ||
Capital expenditures | (21,098) | (62,062) |
Proceeds from sale of businesses | 2,236 | 3,053 |
Acquisitions, net of cash acquired | (686,350) | (24,047) |
Net cash used in investing activities | (705,212) | (83,056) |
Cash flows from financing activities | ||
Borrowings of long-term debt | 400,000 | 0 |
Repayments of long-term debt | (4,750) | (5,000) |
Borrowings under revolving credit facility | 317,900 | 45,000 |
Repayments under revolving credit facility | (20,900) | 0 |
Dividends paid | (4,471) | (4,173) |
Debt issuance costs | (9,234) | 0 |
Finance lease liabilities | (209) | |
Purchases of treasury stock | (3,700) | (4,355) |
Net cash provided by financing activities | 674,636 | 31,472 |
Effect of exchange rate changes on cash and cash equivalents | 1,238 | (676) |
Increase (decrease) in cash and cash equivalents | 14,195 | (23,066) |
Cash and cash equivalents at beginning of period | 44,535 | 94,097 |
Cash and cash equivalents at end of period | $ 58,730 | $ 71,031 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jan. 31, 2020 | |
Basis of Presentation | |
Basis of Presentation | Basis of Presentation Throughout this document, references to “Cantel,” “us,” “we,” “our,” and the “Company” are references to Cantel Medical Corp. and its subsidiaries, except where the context makes it clear the reference is to Cantel itself and not its subsidiaries. Cantel is a leading provider of infection prevention products and services in the healthcare market, specializing in the following reportable segments: Medical, Life Sciences, Dental and Dialysis. Most of our equipment, consumables and supplies are used to help prevent the occurrence or spread of infections. The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles for interim financial reporting and the requirements of Form 10-Q and Rule 10.01 of Regulation S-X. Accordingly, they do not include certain information and note disclosures required by generally accepted accounting principles for annual financial reporting and should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Annual Report of Cantel Medical Corp. on Form 10-K for the fiscal year ended July 31, 2019 (the “2019 Form 10-K”) and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere herein. The unaudited interim financial statements reflect all adjustments (of a normal and recurring nature) which management considers necessary for a fair presentation of the results of operations for these periods. The results of operations for the interim periods are not necessarily indicative of the results for the full year. The Condensed Consolidated Balance Sheet at July 31, 2019 was derived from the audited Consolidated Balance Sheet of Cantel at that date. Certain prior year amounts have been reclassified to conform to the current year presentation. Subsequent Events We performed a review of events subsequent to January 31, 2020 through the date of issuance of the accompanying unaudited consolidated interim financial statements. See Note 16, “Subsequent Events.” |
Accounting Pronouncements
Accounting Pronouncements | 6 Months Ended |
Jan. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Accounting Pronouncements | Accounting Pronouncements Newly Adopted Accounting Standards 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 our condensed consolidated balance sheet accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. 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. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU 2018-11, “Leases (Topic 842) Targeted Improvements,” in December 2018, the FASB issued ASU 2018-20, “Narrow-Scope Improvements for Lessors” and in March 2019, the FASB issued ASU 2019-01 , “Leases (Topic 842): Codification Improvements.” These ASUs provide adjustments relating to ASU 2016-02 and improvements to comparative reporting requirements for initial adoption and for separating components of a contract for lessors. We adopted the collective standard “ASC 842” using the modified retrospective transition approach with optional transition relief, and recognized the cumulative effect of applying the new leasing standard to existing contracts on our condensed consolidated balance sheet on August 1, 2019. Therefore, results for reporting periods beginning after August 1, 2019 are presented under the new leasing standard; however, the comparative prior period amounts have not been restated and continue to be reported in accordance with historic accounting under ASC Topic 840. The most significant effects of adoption of the new leasing standard relate to the recognition of right-of-use assets of $35,842 and lease liabilities of $36,417 for operating leases, which we recorded on our condensed consolidated balance sheet on August 1, 2019. Additionally, the amortization of the right-of-use assets and the cash flow impact from lease liabilities are separately disclosed in the condensed consolidated statement of cash flows. The new leasing standard did not impact our condensed consolidated statements of income. See Note 6, “Leases” for a discussion of the impact to the condensed consolidated balance sheets and related disclosures. 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. Accordingly, we adopted ASU 2018-02 on August 1, 2019. The adoption of ASU 2018-02 did not have a material impact on our financial position, results of operations or cash flows. Recently Issued Accounting Standards In December 2019, the FASB issued ASU 2019-12, “(Topic 740) Simplifying the Accounting for Income Taxes,” (“ASU 2019-12”) to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 (our fiscal year 2022), including interim periods within that reporting period. The adoption of ASU 2019-12 is not expected to have a material impact on our financial position, results of operations or cash flows. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”) to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021), including interim periods within that reporting period. The adoption of ASU 2018-15 is not expected to have a material impact on our financial position, results of operations or cash flows. In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) to modify the disclosure requirements on fair value measurements in ASC 820, “Fair Value Measurement” . ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021), including interim periods within that reporting period. The adoption of ASU 2018-13 is not expected to have a material 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. 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 material impact on our financial position, results of operations or cash flows. In June 2016, the FASB issued ASU 2016-13, “ Measurement of Credit Losses on Financial Instruments ,” (“ASU 2016-13”) to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this ASU replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021). The adoption of ASU 2016-13 is not expected to have a material impact on our financial position, results of operations or cash flows. |
Acquisitions
Acquisitions | 6 Months Ended |
Jan. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Fiscal 2020 Hu-Friedy: On October 1, 2019, we purchased all of the issued and outstanding membership interests of Hu-Friedy Mfg. Co. LLC (“Hu-Friedy”), for a total consideration (net of cash acquired), excluding acquisition-related costs, of $716,542, consisting of $662,151 of cash and $54,391 of stock consideration (subject to adjustment), plus contingent consideration payable in cash. The additional contingent consideration payments are (i) subject to the achievement of certain commercial milestones through March 31, 2021 ranging from zero to a maximum of $50,000 and (ii) contingent upon changes in our stock price from the date of closing through a future date subject to a registration rights agreement. See Note 9, “Fair Value Measurements,” for further details regarding these contingent payments. Hu-Friedy is a leading global manufacturer of instruments and instrument reprocessing systems serving the dental industry, and is included in our Dental segment. Fiscal 2019 Omnia: On February 1, 2019, we purchased all of the issued and outstanding stock of Omnia S.p.A. (“Omnia”), an Italian-based market leader in dental surgical consumables solutions, for total consideration (net of cash acquired), excluding acquisition-related costs, of $19,007, consisting of $15,797 of cash and $3,210 of stock consideration, plus additional earn-outs ranging from zero to a maximum of $5,800, which is payable upon the achievement of certain performance-based financial targets. Omnia’s business consists of a wide-ranging portfolio of sutures, irrigation tubing and customized dental surgical procedure kits, with a focus on procedure room set-up and cross-contamination prevention, and is included in our Dental segment. CES business: On August 1, 2018, we acquired certain net assets of Stericycle Inc. related to its controlled environmental solutions business (“CES business”) for total cash consideration, excluding acquisition-related costs, of $17,047. 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 is included in our Life Sciences segment. The following table presents our purchase price allocations of our material acquisitions: 2020 2019 Purchase Price Allocation Hu-Friedy Omnia CES Business (1) (Preliminary) (Final) (Final) Purchase Price: Cash paid $ 662,151 $ 15,797 $ 17,047 Fair value of contingent consideration 38,371 — — Common stock issued 54,391 3,210 — Total $ 754,913 $ 19,007 $ 17,047 Allocation: Property and equipment 38,571 1,285 539 Intangible assets: Customer relationships 226,000 10,206 8,100 Technology 32,000 1,257 — Brand names 112,000 1,600 — Goodwill 278,001 10,539 6,137 Deferred income taxes — (2,346) — Inventories 60,596 — — Other working capital 7,745 1,673 2,271 Long-term debt — (5,207) — Total $ 754,913 $ 19,007 $ 17,047 _______________________________________________ (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 following pro forma summary of operations presents our operations as if the Hu-Friedy acquisition had occurred as of the beginning of fiscal 2019. In addition to including the results of operations of this acquisition, the pro forma information gives effect to amortization of the step-up in inventory, depreciation of the step-up in property and equipment, the interest on additional borrowings, the amortization of intangible assets and the issuance of shares of common stock. On an actual basis, the Hu-Friedy acquisition contributed $56,649 and $75,374 to our consolidated net sales for the three and six months ended January 31, 2020, respectively. Three Months Ended January 31, Six Months Ended January 31, Pro Forma Summary of Operations 2020 2019 2020 2019 Net sales $ 288,498 $ 277,532 $ 584,669 $ 557,805 Net (loss) income $ (2,263) $ 18,388 $ (1,514) $ 38,256 (Loss) earnings per common share: Basic $ (0.05) $ 0.43 $ (0.04) $ 0.90 Diluted $ (0.05) $ 0.43 $ (0.04) $ 0.90 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jan. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2016 Equity Incentive Plan At January 31, 2020, 433,801 nonvested restricted stock awards were outstanding under the 2016 plan. No options were outstanding under the 2016 plan. At January 31, 2020, 524,775 shares were collectively available for issuance pursuant to restricted stock and other stock awards, stock options and stock appreciation rights. 2006 Equity Incentive Plan The 2006 Plan was terminated on January 7, 2016 in conjunction with the adoption of the 2016 Plan. At January 31, 2020, options to purchase 15,000 shares of common stock were outstanding under the 2006 Plan. No additional awards will be granted under this plan. The following table shows the components of stock-based compensation expense recognized in the condensed consolidated statements of income: Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Cost of sales $ 390 $ 287 $ 650 $ 524 Operating expenses: Selling 609 575 1,145 1,146 General and administrative 2,306 2,665 3,833 4,375 Research and development 107 60 188 118 Total operating expenses 3,022 3,300 5,166 5,639 Stock-based compensation expense $ 3,412 $ 3,587 $ 5,816 $ 6,163 At January 31, 2020, total unrecognized stock-based compensation expense related to total nonvested stock options and restricted stock awards was $25,234 with a remaining weighted average period of 18 months over which such expense is expected to be recognized. We determined the fair value of our market-based restricted stock awards using a Monte Carlo simulation on the date of grant using the following assumptions: Six Months Ended January 31, 2020 2019 Volatility of common stock 30.73 % 27.54 % Average volatility of peer companies 36.28 % 36.55 % Average correlation coefficient of peer companies 24.63 % 27.18 % Risk-free interest rate 1.49 % 2.93 % A summary of nonvested stock award activity for the six months ended January 31, 2020 follows: Number of Number of Performance-based Awards Number of Market-based Awards Number of Weighted Average Nonvested stock awards at July 31, 2019 234,864 40,210 32,079 307,153 $ 88.99 Granted 207,311 — 47,967 255,278 $ 73.66 Vested (1) (91,439) (8,475) (3,462) (103,376) $ 90.25 Forfeited (14,684) (1,165) (9,405) (25,254) $ 85.19 Nonvested stock awards at January 31, 2020 336,052 30,570 67,179 433,801 $ 79.81 _______________________________________________ (1) The aggregate fair value of all nonvested stock awards which vested was approximately $9,329. A summary of stock option activity for the six months ended January 31, 2020 follows: Number of shares Weighted Average Exercise Price Weighted Average Contractual Life Remaining (Years) Aggregate Intrinsic Value Outstanding at July 31, 2019 40,000 $ 43.70 Exercised (25,000) $ 36.70 Outstanding at January 31, 2020 15,000 $ 55.36 0.70 $ 146 Exercisable at January 31, 2020 15,000 $ 55.36 0.70 $ 146 During the six months ended January 31, 2020, 25,000 options were exercised, with an aggregate fair value of approximately $1,067. At January 31, 2020, all outstanding options were vested. 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. For the six months ended January 31, 2020, income tax deductions of $2,022 were generated, of which $2,581 were recorded as a reduction in income tax expense over the equity awards’ vesting period and the remaining excess tax expense of $559 was recorded as an increase in income tax expense. For the six months ended January 31, 2019, income tax deductions of $3,059 were generated, of which $2,062 were recorded as a reduction in income tax expense over the equity awards’ vesting period and the remaining excess tax benefit of $997 was recorded as a reduction in income tax expense. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jan. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition We adopted ASC 606, effective August 1, 2018, using the modified retrospective method applied to those contracts which were not completed as of August 1, 2018. Due to the cumulative impact of adopting ASC 606, we recorded a net increase of $865 to opening retained earnings, net of tax, as of August 1, 2018. The impact is primarily related to the timing of revenue recognition for the shipment of products in both our Medical and Life Sciences 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 cumulative adjustment to retained earnings also includes the impact of the change in timing of revenue recognition associated with software licensing arrangements in our Medical segment. Additionally, revenue related to software renewals was historically recognized on a ratable basis over the license period. Under ASC 606, the license is considered functional intellectual property, and is considered to be transferred to the customer at a point in time, specifically, at the start of each annual renewal period. As a result, revenue related to our annual software license renewals has been accelerated. The following table gives information as to the net sales disaggregated by geography and product line: Three Months Ended January 31, Six Months Ended January 31, Net sales by geography 2020 2019 2020 2019 United States $ 207,598 $ 165,164 $ 397,682 $ 334,102 Europe/Africa/Middle East 49,496 34,319 90,514 66,333 Asia/Pacific 22,266 15,568 39,331 31,320 Canada 7,745 8,138 15,578 15,509 Latin America/South America 1,393 1,349 2,639 2,863 Total $ 288,498 $ 224,538 $ 545,744 $ 450,127 Net sales by product line Capital equipment $ 59,724 $ 57,387 $ 118,472 $ 115,519 Consumables 154,209 135,731 307,488 272,552 Product service 31,563 30,525 63,131 60,354 Instrument sales 40,821 — 54,341 — All other (1) 2,181 895 2,312 1,702 Total $ 288,498 $ 224,538 $ 545,744 $ 450,127 _______________________________________________ (1) Primarily includes software licensing revenues. Remaining Performance Obligations At January 31, 2020, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $72,451, primarily within the Medical segment. We expect to recognize revenue on approximately 60% of these remaining performance obligations over the remainder of fiscal 2020 and fiscal 2021. These performance obligations primarily reflect the future product service revenues for multi-period service arrangements. Contract Liabilities Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. Our contract liabilities arise primarily in the Medical and Life Sciences segments when payment is received upfront for various multi-period extended service arrangements. We expect to recognize substantially all of this revenue over the next twelve months. A summary of contract liabilities activity follows: Six Months Ended January 31, 2020 2019 Beginning balance $ 28,235 $ 29,015 Revenue deferred in current year 27,197 31,525 Deferred revenue recognized (29,605) (32,444) Foreign currency translation 136 (443) Ending balance 25,963 27,653 Contract liabilities included in Other long-term liabilities (349) (517) Deferred revenue $ 25,614 $ 27,136 |
Leases
Leases | 6 Months Ended |
Jan. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases Adoption of “Leases (ASC 842)” We adopted ASC 842, effective August 1, 2019, using the modified retrospective transition approach with optional transition relief, and recognized the cumulative effect of applying the new leasing standard to existing contracts on our condensed consolidated balance sheet on August 1, 2019. Results for reporting beginning after August 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and will continue to be reported in accordance with our historical accounting under ASC 840. We elected a package of practical expedients that were consequently applied to all leases. We did not reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases, nor whether previously capitalized initial direct costs would qualify for capitalization under the new standard. Upon transition, we did not elect to use hindsight with respect to lease renewals and purchase options when accounting for existing leases, as well as assessing the impairment of right-of-use assets. Therefore, lease terms largely remained unchanged. In addition, we elected the short-term lease recognition exemption and did not recognize a lease liability and right-of-use asset on our condensed consolidated balance sheet for all leases with terms of 12 months or less. We elected the practical expedient to combine lease and non-lease components, such as common area maintenance fees, in total gross rent for all of our leases which resulted in larger lease liabilities recorded on our condensed consolidated balance sheet. Our lease portfolio consists primarily of real estate, equipment and vehicles. We have approximately 90 real estate leases with lease terms ranging from 1 year to 16 years, which include our corporate headquarters, regional headquarters, and other facilities for sales and administration, warehousing, manufacturing and training. Our equipment leases primarily consist of furniture, computers and other office equipment. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. At lease commencement, we record a liability for our lease obligation measured at the present value of future lease payments and a right-of-use asset equal to the lease liability adjusted for prepayments and lease incentives. We use our collateralized incremental borrowing rate to calculate the present value of lease liabilities as most of our leases do not provide an implicit rate that is readily determinable. Some real estate leases include one or more options to renew or terminate a lease. The exercise of a lease renewal or termination option is assessed at commencement of the lease and only reflected in the lease term if we are reasonably certain to exercise the option. Operating lease expense is recognized on a straight-line basis over the respective lease term. Supplemental balance sheet information related to our leases follows: Lease Type January 31, 2020 Assets: Operating lease assets $ 47,329 Finance lease assets 4,685 Right-of-use assets, net $ 52,014 Liabilities: Operating lease liabilities $ 9,859 Finance lease liabilities 348 Current portion of lease liabilities 10,207 Operating lease liabilities 39,080 Finance lease liabilities 4,243 Long-term lease liabilities 43,323 Total lease liabilities $ 53,530 Weighted average remaining lease term: Operating leases 6.42 years Finance leases 6.29 years Weighted average discount rate: Operating leases 2.74 % Finance leases 23.69 % At January 31, 2020, maturities of lease liabilities for the periods set forth below were as follows: Fiscal year Operating Finance Total Remaining 2020 $ 5,561 $ 708 $ 6,269 2021 10,217 1,421 11,638 2022 8,317 1,406 9,723 2023 7,339 1,398 8,737 2024 6,390 1,407 7,797 Thereafter 16,038 2,457 18,495 Total lease payments 53,862 8,797 62,659 Less: interest (4,923) (4,206) (9,129) Present value of lease liabilities $ 48,939 $ 4,591 $ 53,530 As previously disclosed in our 2019 Annual Report on Form 10-K and in accordance with our historical accounting under ASC 840, 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 Total 2020 $ 9,099 2021 7,671 2022 6,021 2023 5,659 2024 5,159 Thereafter 15,251 Total $ 48,860 Supplemental income statement information related to our leases follows: Six Months Ended January 31, 2020 Operating lease costs $ 5,684 Finance lease costs: Amortization of right-of-use assets 261 Interest on lease obligations 358 Variable lease costs 1,534 Short-term lease costs 591 Net lease cost $ 8,428 Supplemental cash flow information related to leases follows: Six Months Ended January 31, 2020 Right-of-use assets obtained in exchange for lease liabilities: Operating leases (1) $ 17,738 Finance leases (2) $ 4,798 _______________________________________________ (1) Primarily relates to new warehouse facility included in our Dental segment and operating leases acquired in the Hu-Friedy acquisition. (2) Includes finance leases acquired in the Hu-Friedy acquisition. |
Leases | Leases Adoption of “Leases (ASC 842)” We adopted ASC 842, effective August 1, 2019, using the modified retrospective transition approach with optional transition relief, and recognized the cumulative effect of applying the new leasing standard to existing contracts on our condensed consolidated balance sheet on August 1, 2019. Results for reporting beginning after August 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and will continue to be reported in accordance with our historical accounting under ASC 840. We elected a package of practical expedients that were consequently applied to all leases. We did not reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases, nor whether previously capitalized initial direct costs would qualify for capitalization under the new standard. Upon transition, we did not elect to use hindsight with respect to lease renewals and purchase options when accounting for existing leases, as well as assessing the impairment of right-of-use assets. Therefore, lease terms largely remained unchanged. In addition, we elected the short-term lease recognition exemption and did not recognize a lease liability and right-of-use asset on our condensed consolidated balance sheet for all leases with terms of 12 months or less. We elected the practical expedient to combine lease and non-lease components, such as common area maintenance fees, in total gross rent for all of our leases which resulted in larger lease liabilities recorded on our condensed consolidated balance sheet. Our lease portfolio consists primarily of real estate, equipment and vehicles. We have approximately 90 real estate leases with lease terms ranging from 1 year to 16 years, which include our corporate headquarters, regional headquarters, and other facilities for sales and administration, warehousing, manufacturing and training. Our equipment leases primarily consist of furniture, computers and other office equipment. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. At lease commencement, we record a liability for our lease obligation measured at the present value of future lease payments and a right-of-use asset equal to the lease liability adjusted for prepayments and lease incentives. We use our collateralized incremental borrowing rate to calculate the present value of lease liabilities as most of our leases do not provide an implicit rate that is readily determinable. Some real estate leases include one or more options to renew or terminate a lease. The exercise of a lease renewal or termination option is assessed at commencement of the lease and only reflected in the lease term if we are reasonably certain to exercise the option. Operating lease expense is recognized on a straight-line basis over the respective lease term. Supplemental balance sheet information related to our leases follows: Lease Type January 31, 2020 Assets: Operating lease assets $ 47,329 Finance lease assets 4,685 Right-of-use assets, net $ 52,014 Liabilities: Operating lease liabilities $ 9,859 Finance lease liabilities 348 Current portion of lease liabilities 10,207 Operating lease liabilities 39,080 Finance lease liabilities 4,243 Long-term lease liabilities 43,323 Total lease liabilities $ 53,530 Weighted average remaining lease term: Operating leases 6.42 years Finance leases 6.29 years Weighted average discount rate: Operating leases 2.74 % Finance leases 23.69 % At January 31, 2020, maturities of lease liabilities for the periods set forth below were as follows: Fiscal year Operating Finance Total Remaining 2020 $ 5,561 $ 708 $ 6,269 2021 10,217 1,421 11,638 2022 8,317 1,406 9,723 2023 7,339 1,398 8,737 2024 6,390 1,407 7,797 Thereafter 16,038 2,457 18,495 Total lease payments 53,862 8,797 62,659 Less: interest (4,923) (4,206) (9,129) Present value of lease liabilities $ 48,939 $ 4,591 $ 53,530 As previously disclosed in our 2019 Annual Report on Form 10-K and in accordance with our historical accounting under ASC 840, 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 Total 2020 $ 9,099 2021 7,671 2022 6,021 2023 5,659 2024 5,159 Thereafter 15,251 Total $ 48,860 Supplemental income statement information related to our leases follows: Six Months Ended January 31, 2020 Operating lease costs $ 5,684 Finance lease costs: Amortization of right-of-use assets 261 Interest on lease obligations 358 Variable lease costs 1,534 Short-term lease costs 591 Net lease cost $ 8,428 Supplemental cash flow information related to leases follows: Six Months Ended January 31, 2020 Right-of-use assets obtained in exchange for lease liabilities: Operating leases (1) $ 17,738 Finance leases (2) $ 4,798 _______________________________________________ (1) Primarily relates to new warehouse facility included in our Dental segment and operating leases acquired in the Hu-Friedy acquisition. (2) Includes finance leases acquired in the Hu-Friedy acquisition. |
Inventories, Net
Inventories, Net | 6 Months Ended |
Jan. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | Inventories, Net A summary of inventories, net is as follows: January 31, 2020 July 31, 2019 Raw materials and parts $ 70,068 $ 69,498 Work-in-process 8,946 5,801 Finished goods 121,853 73,050 Reserve for excess and obsolete inventory (16,690) (10,115) Total Inventories, net $ 184,177 $ 138,234 |
Derivatives
Derivatives | 6 Months Ended |
Jan. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives Foreign Currency In order to hedge against the impact of fluctuations in the value of the Euro, British Pound, Canadian dollar, Australian dollar, Singapore dollar and Chinese Renminbi 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 such foreign currencies, which contracts are one one ultimately settled in currencies other than each entity’s functional currency. Gains and losses related to hedging contracts to buy foreign currencies 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 Japanese Yen and Sri Lankan Rupee relative to the U.S. dollar because the overall foreign currency exposure relating to these currencies is not material. There were six foreign currency forward contracts with an aggregate notional value of $69,302 and $78,264 at January 31, 2020 and July 31, 2019, respectively, which covered certain assets and liabilities that were denominated in currencies other than each entity’s functional currency. For the three and six months ended January 31, 2020 and 2019, the settlements of our forward contracts resulted in immaterial amounts of currency conversion gains and losses on the hedged items in the aggregate. Variable Rate Borrowings In order to hedge against the impact of fluctuations in the interest rate associated with our variable rate borrowings, in fiscal 2019, we entered into two interest rate swaps with a combined notional value of $150,000, expiring on June 28, 2023. The swaps fixed interest rates at 2.265%. At January 31, 2020, we had a short-term asset of $1,253 recorded in prepaid expenses and other current assets, and a long-term asset of $4,071 recorded in other assets, which represent the fair value of the interest rate swaps. At July 31, 2019, we had a short-term asset of $486 recorded in prepaid expenses and other current assets, and a long-term asset of $2,826 recorded in other assets. The fair value of these interest rate swaps is subject to movements in LIBOR and will fluctuate in future periods. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jan. 31, 2020 | |
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. 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 condensed 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 Hu-Friedy acquisition, additional purchase price payments are (i) contingent upon the achievement of certain commercial milestones through March 31, 2021, and (ii) contingent upon changes in our stock price from the date of closing through a future date subject to a registration rights agreement. We estimated the aggregate fair value of these contingent consideration arrangements to be $38,371 at the date of acquisition and was reported separately in our condensed consolidated balance sheet. For the contingent consideration arrangements based upon the achievement of certain commercial milestones, the initial value assigned at the date of acquisition was determined on the basis of forecasted sales and gross profit percentage of Hu-Friedy products over the next twelve to eighteen months. The fair value was determined by employing a Monte Carlo simulation in a risk neutral framework with the underlying simulated variable of net sales and the related achievement of certain gross profit percentages. The model also included assumptions on the market price of risk, which was calculated as the weighted average cost of capital less the long-term risk free-rate. During the second quarter of fiscal 2020, we paid $25,000 to settle a portion of this contingent consideration arrangement related to net sales achieved for the twelve month period ended December 31, 2019. For the contingent consideration arrangement based upon changes in our stock price through a future date, we are required pay to the sellers of Hu-Friedy an amount in cash equal to $35,000 minus the aggregate net proceeds received by the seller in connection with a future equity issuance if the amount of such aggregate net proceeds are less than $35,000. The initial fair value assigned to this contingent consideration arrangement was determined based on the closing price of our stock price at the date that the acquisition closed (October 1, 2019) relative to the contracted stock price stipulated in the purchase agreement. On February 13, 2020, we paid $6,722 to the former owners of Hu-Friedy to settle this contingent consideration. See Note 16, “Subsequent Events.” For the Aexis acquisition, additional purchase price payments ranging from zero 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. At 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 is not discounted to present value. We are required to reassess the fair value of contingent consideration payments on a periodic basis. Although we believe our assumptions are reasonable, different assumptions or changes in the future may result in different estimated amounts. The fair values of our financial instruments measured on a recurring basis were categorized as follows: January 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money markets $ 107 $ — $ — $ 107 Prepaid and other current assets: Interest rate swap — 1,253 — 1,253 Other Assets: Interest rate swap — 4,071 — 4,071 Total assets $ 107 $ 5,324 $ — $ 5,431 Contingent consideration: 6,481 — 18,865 25,346 Total liabilities $ 6,481 $ — $ 18,865 $ 25,346 July 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money markets $ 104 $ — $ — $ 104 Prepaid expenses and other current assets: Interest rate swap — 486 — 486 Other Assets: Interest rate swap — 2,826 — 2,826 Total assets $ 104 $ 3,312 $ — $ 3,416 Other long-term liabilities: Contingent consideration — — 1,411 1,411 Total liabilities $ — $ — $ 1,411 $ 1,411 A reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows: Aexis Contingent Consideration Hu-Friedy Contingent Consideration (Earnouts) Hu-Friedy Contingent Consideration (Stock Price) Total Balance, July 31, 2019 1,411 — — 1,411 Acquisitions — 35,100 3,272 38,372 Fair value adjustments included in general and administrative expenses 242 7,112 3,209 10,563 Settlements/payments — (25,000) — (25,000) Balance, January 31, 2020 $ 1,653 $ 17,212 $ 6,481 $ 25,346 Disclosure of Fair Value of Financial Instruments At January 31, 2020 and July 31, 2019, 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. At January 31, 2020 and July 31, 2019, the carrying value of our outstanding borrowings under our credit facility approximated the fair value of these obligations as the respective borrowing rates reflect prevailing market interest rates. |
Intangibles and Goodwill
Intangibles and Goodwill | 6 Months Ended |
Jan. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles and Goodwill | Intangibles and Goodwill Our intangible assets consist of the following: January 31, 2020 July 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Intangible assets with finite lives: Customer relationships $ 372,075 $ (65,049) $ 307,026 $ 146,204 $ (54,866) $ 91,338 Technology 90,840 (27,052) 63,788 60,032 (24,081) 35,951 Brand names 8,459 (3,649) 4,810 8,361 (3,256) 5,105 Non-compete agreements 2,850 (1,720) 1,130 2,880 (1,653) 1,227 Patents and other registrations 2,513 (810) 1,703 2,866 (1,252) 1,614 476,737 (98,280) 378,457 220,343 (85,108) 135,235 Trademarks and tradenames 118,278 — 118,278 6,278 — 6,278 Total intangible assets $ 595,015 $ (98,280) $ 496,735 $ 226,621 $ (85,108) $ 141,513 Amortization expense related to intangible assets was $15,003 and $10,552 for the six months ended January 31, 2020 and 2019, respectively. We expect to recognize an additional $17,625 of amortization expense related to intangible assets for the remainder of fiscal 2020, and thereafter $35,135, $34,763, $33,730, $32,866 and $30,024 of amortization expense for fiscal years 2021, 2022, 2023, 2024 and 2025, respectively. Goodwill changed during the six months ended January 31, 2020 as follows: Medical Life Sciences Dental Dialysis Total Balance, July 31, 2019 $ 180,197 $ 64,481 $ 125,298 $ 8,133 $ 378,109 Acquisitions — — 277,200 — 277,200 Foreign currency translation 1,457 20 (174) — 1,303 Balance, January 31, 2020 $ 181,654 $ 64,501 $ 402,324 $ 8,133 $ 656,612 |
Financing Arrangements
Financing Arrangements | 6 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Financing Arrangements Our long-term debt consists of the following: January 31, 2020 July 31, 2019 Revolving credit loans outstanding $ 340,000 $ 43,000 Tranche A term loans outstanding 585,250 190,000 Unamortized debt issuance costs (10,308) (2,149) Total long-term debt, net of unamortized debt issuance costs 914,942 230,851 Current portion of long-term debt (29,500) (10,000) Long-term debt, net of unamortized debt issuance costs and excluding current portion $ 885,442 $ 220,851 On September 6, 2019, we entered into a First Amendment (the “Amendment”), amending the 2018 Credit Agreement, and as amended by the Amendment, the (“Amended Credit Agreement”) dated as of June 28, 2018. The Amendment added a $400,000 delayed draw term loan facility (the “Delayed Draw Facility”), in addition to the existing tranche A term loan and existing revolving credit facility. The Delayed Draw Facility and a portion of the revolving credit facility was used to finance a portion of the cash consideration for our acquisition of Hu-Friedy. The remaining proceeds were used to refinance certain existing indebtedness of Cantel and Hu-Friedy, and to pay the fees and expenses incurred in connection therewith, as well as for working capital, capital expenditures and other lawful corporate purposes. Pursuant to the Amended Credit Agreement, 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 by, or incur incremental term loans in, an aggregate amount not to exceed the sum of (i) the greater of (x) $300,000 or (y) an amount equal to two times the our consolidated EBITDA, calculated on a pro forma basis, plus (ii) the aggregate principal amount of voluntary prepayments of the revolving loans and term loans. At January 31, 2020, we had $585,250 of term loan A borrowings outstanding and $340,000 revolver borrowings under the Amended Credit Agreement. The tranche A term loans are subject to principal amortization, with $19,500 due and payable in fiscal 2020, $29,500 due and payable in each of fiscal 2021, 2022, 2023, and 2024, with the remaining $452,500 due and payable at maturity on September 6, 2024. During the six months ended January 31, 2020, we made principal payments of $4,750. Borrowings under the Amended Credit Agreement bear interest at rates ranging from 0.00% to 1.25% above prime rate for base rate borrowings, or at rates ranging from 1.00% to 2.25% above the London Interbank Offered Rate (“LIBOR”), depending upon our “Consolidated Leverage Ratio,” which is the consolidated ratio of total funded debt (minus certain unrestricted cash) to consolidated EBITDA. At January 31, 2020, the lender’s base rate was 4.75% and the LIBOR rate was 2.03%. The margins applicable to our outstanding borrowings were 1.25% above the lender’s base rate or 2.25% above LIBOR. All of our outstanding borrowings were under LIBOR contracts at January 31, 2020. The Amended Credit Agreement also provides for fees on the unused portion of our facility at rates ranging from 0.20% to 0.40%, depending upon our Consolidated Leverage Ratio, which was 0.40% at January 31, 2020. At January 31, 2020, the interest rate on our outstanding borrowings was approximately 3.98%. The Amended 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 each Loan Party 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 Amended Credit Agreement. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jan. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingent Consideration Arrangements At January 31, 2020, $17,212 was recorded associated with the Hu-Friedy acquisition, which is for the estimated fair value of contingent consideration arrangements that are payable upon the achievement of certain commercial milestones through March 31, 2021. Additionally, $6,481 was recorded, which is for the estimated fair value of contingent consideration arrangement based upon changes in our stock price through a future date. At January 31, 2020, $1,653 was recorded associated with the Aexis acquisition, which is for the estimated fair value of contingent consideration payable upon the achievement of certain purchase order targets through March 21, 2020. See Note 9, “Fair Value Measurements” for additional information. Legal Matters In the normal course of business, we are subject to pending and threatened legal actions. It is our policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount of anticipated exposure can be reasonably estimated. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows. |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Jan. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings Per Common ShareBasic 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): Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Numerator for basic and diluted earnings per share: Net (loss) income $ (2,263) $ 18,800 $ 3,504 $ 38,042 Less income allocated to participating securities — (16) — (49) Net (loss) income available to common shareholders $ (2,263) $ 18,784 $ 3,504 $ 37,993 Denominator for basic and diluted (loss) earnings per share, adjusted for participating securities: Denominator for basic (loss) earnings per share - weighted average number of shares outstanding attributable to common stock 42,561,178 41,667,955 42,298,833 41,660,095 Dilutive effect of stock awards using the treasury stock method and the average market price for the year — 18,088 91,286 41,558 Denominator for diluted (loss) earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 42,561,178 41,686,043 42,390,119 41,701,653 (Loss) earnings per share attributable to common stock: Basic (loss) earnings per share $ (0.05) $ 0.45 $ 0.08 $ 0.91 Diluted (loss) earnings per share $ (0.05) $ 0.45 $ 0.08 $ 0.91 Stock awards excluded because their inclusion would have been anti-dilutive 36,150 — — — 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: Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Denominator for diluted (loss) earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 42,561,178 41,686,043 42,390,119 41,701,653 Participating securities 2,981 33,400 9,962 55,436 Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities 42,564,159 41,719,443 42,400,081 41,757,089 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jan. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The components and changes in accumulated other comprehensive loss follow: Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Beginning balance $ (17,020) $ (16,679) $ (22,197) $ (11,456) Foreign currency translation (140) (417) 3,792 (5,640) Interest rate swap, net of taxes (1) 246 — 1,491 — Ending balance $ (16,914) $ (17,096) $ (16,914) $ (17,096) _______________________________________________ (1) Includes tax effect of $375 and $521 for the three and six months ended January 31, 2020, respectively. |
Reportable Segments
Reportable Segments | 6 Months Ended |
Jan. 31, 2020 | |
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. In the first quarter of fiscal 2020 and as a result of the Hu-Friedy acquisition, we moved the financial reporting and management of our industrial biological and chemical indicator business to our Dental segment from our Life Sciences segment. Prior year segment disclosures have been recast to conform to the current year presentation. Our reportable segments are as follows: Medical: 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. Life Sciences: designs, develops, manufactures, sells, and installs water purification systems for medical 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 45.0% and 42.5% of our Life Sciences segment net sales for the six months ended January 31, 2020 and 2019, respectively. Dental: 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. We are also a leading global manufacturer of instruments and instrument reprocessing workflow systems serving the dental industry. Three customers collectively accounted for approximately 43.3% and 47.9% of our Dental segment net sales for the six months ended January 31, 2020 and 2019, respectively. Dialysis: designs, develops, manufactures, sells and services reprocessing systems and sterilants for dialyzers (a device serving as an artificial kidney), as well as dialysate concentrates and supplies utilized for renal dialysis. Three customers accounted for approximately 50.7% and 20.6% of our Dialysis segment net sales for the six months ended January 31, 2020 and 2019, respectively. These customers include the top two customers noted above under our Life Sciences segment. None of our customers accounted for 10% or more of our consolidated net sales for the six months ended January 31, 2020 and 2019. Information as to reportable segments is summarized below Three Months Ended January 31, Six Months Ended January 31, Net sales 2020 2019 2020 2019 Medical $ 130,959 $ 128,580 $ 264,312 $ 256,132 Life Sciences 50,122 50,516 99,263 102,358 Dental 101,044 37,286 168,287 75,417 Dialysis 6,373 8,156 13,882 16,220 Total net sales $ 288,498 $ 224,538 $ 545,744 $ 450,127 Three Months Ended January 31, Six Months Ended January 31, Income (loss) from operations 2020 2019 2020 2019 Medical $ 21,534 $ 25,525 $ 42,653 $ 50,736 Life Sciences 7,700 6,701 14,835 12,273 Dental (856) 5,510 4,148 12,194 Dialysis 1,507 1,193 3,129 2,577 29,885 38,929 64,765 77,780 General corporate expenses 22,289 12,733 42,745 23,906 Total income from operations $ 7,596 $ 26,196 $ 22,020 $ 53,874 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jan. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn February 13, 2020, we entered into a stock repurchase agreement with Dental Holding, the former owners of Hu-Friedy (the “Repurchase Agreement”). The Repurchase Agreement amended the Hu-Friedy purchase and sale agreement and the related registration rights agreement to provide that we repurchase a portion the shares from the seller included in the equity consideration transferred at a price per share of $64.51 (the “Repurchase”), which equals the closing price of shares of our common stock traded on the New York Stock Exchange on February 12, 2020. The Repurchase was completed on February 13, 2020, and the shares were thereafter canceled and retired. The Hu-Friedy purchase and sale agreement further required us to pay to the seller an amount in cash equal to $35,000 minus the aggregate net proceeds received by the seller from an equity issuance if the amount of such aggregate net proceeds was less than $35,000 (the “True-Up Obligation”). The Repurchase Agreement further amended the purchase and sale agreement to provide that in satisfaction of the True-Up Obligation, we will make a payment to the sellers in an amount equal to $6,722, which amount equals $35,000 minus the aggregate amount of $28,279 paid to Dental Holding as consideration for the Repurchase. These payments were made to Dental Holding on February 13, 2020. |
Accounting Pronouncements (Poli
Accounting Pronouncements (Policies) | 6 Months Ended |
Jan. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Newly Adopted And Recently Issued Accounting Standards | Newly Adopted Accounting Standards 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 our condensed consolidated balance sheet accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. 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. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU 2018-11, “Leases (Topic 842) Targeted Improvements,” in December 2018, the FASB issued ASU 2018-20, “Narrow-Scope Improvements for Lessors” and in March 2019, the FASB issued ASU 2019-01 , “Leases (Topic 842): Codification Improvements.” These ASUs provide adjustments relating to ASU 2016-02 and improvements to comparative reporting requirements for initial adoption and for separating components of a contract for lessors. We adopted the collective standard “ASC 842” using the modified retrospective transition approach with optional transition relief, and recognized the cumulative effect of applying the new leasing standard to existing contracts on our condensed consolidated balance sheet on August 1, 2019. Therefore, results for reporting periods beginning after August 1, 2019 are presented under the new leasing standard; however, the comparative prior period amounts have not been restated and continue to be reported in accordance with historic accounting under ASC Topic 840. The most significant effects of adoption of the new leasing standard relate to the recognition of right-of-use assets of $35,842 and lease liabilities of $36,417 for operating leases, which we recorded on our condensed consolidated balance sheet on August 1, 2019. Additionally, the amortization of the right-of-use assets and the cash flow impact from lease liabilities are separately disclosed in the condensed consolidated statement of cash flows. The new leasing standard did not impact our condensed consolidated statements of income. See Note 6, “Leases” for a discussion of the impact to the condensed consolidated balance sheets and related disclosures. 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. Accordingly, we adopted ASU 2018-02 on August 1, 2019. The adoption of ASU 2018-02 did not have a material impact on our financial position, results of operations or cash flows. Recently Issued Accounting Standards In December 2019, the FASB issued ASU 2019-12, “(Topic 740) Simplifying the Accounting for Income Taxes,” (“ASU 2019-12”) to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 (our fiscal year 2022), including interim periods within that reporting period. The adoption of ASU 2019-12 is not expected to have a material impact on our financial position, results of operations or cash flows. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”) to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021), including interim periods within that reporting period. The adoption of ASU 2018-15 is not expected to have a material impact on our financial position, results of operations or cash flows. In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) to modify the disclosure requirements on fair value measurements in ASC 820, “Fair Value Measurement” . ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021), including interim periods within that reporting period. The adoption of ASU 2018-13 is not expected to have a material 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. 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 material impact on our financial position, results of operations or cash flows. In June 2016, the FASB issued ASU 2016-13, “ Measurement of Credit Losses on Financial Instruments ,” (“ASU 2016-13”) to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this ASU replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021). The adoption of ASU 2016-13 is not expected to have a material impact on our financial position, results of operations or cash flows. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of purchase price allocated to the assets acquired and assumed liabilities based on estimated fair values | The following table presents our purchase price allocations of our material acquisitions: 2020 2019 Purchase Price Allocation Hu-Friedy Omnia CES Business (1) (Preliminary) (Final) (Final) Purchase Price: Cash paid $ 662,151 $ 15,797 $ 17,047 Fair value of contingent consideration 38,371 — — Common stock issued 54,391 3,210 — Total $ 754,913 $ 19,007 $ 17,047 Allocation: Property and equipment 38,571 1,285 539 Intangible assets: Customer relationships 226,000 10,206 8,100 Technology 32,000 1,257 — Brand names 112,000 1,600 — Goodwill 278,001 10,539 6,137 Deferred income taxes — (2,346) — Inventories 60,596 — — Other working capital 7,745 1,673 2,271 Long-term debt — (5,207) — Total $ 754,913 $ 19,007 $ 17,047 _______________________________________________ (1) The excess purchase price over net assets acquired was assigned to goodwill, all of which is deductible for income tax purposes. |
Schedule of pro forma summary of operations | The following pro forma summary of operations presents our operations as if the Hu-Friedy acquisition had occurred as of the beginning of fiscal 2019. In addition to including the results of operations of this acquisition, the pro forma information gives effect to amortization of the step-up in inventory, depreciation of the step-up in property and equipment, the interest on additional borrowings, the amortization of intangible assets and the issuance of shares of common stock. On an actual basis, the Hu-Friedy acquisition contributed $56,649 and $75,374 to our consolidated net sales for the three and six months ended January 31, 2020, respectively. Three Months Ended January 31, Six Months Ended January 31, Pro Forma Summary of Operations 2020 2019 2020 2019 Net sales $ 288,498 $ 277,532 $ 584,669 $ 557,805 Net (loss) income $ (2,263) $ 18,388 $ (1,514) $ 38,256 (Loss) earnings per common share: Basic $ (0.05) $ 0.43 $ (0.04) $ 0.90 Diluted $ (0.05) $ 0.43 $ (0.04) $ 0.90 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Share-based Payment Arrangement [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 condensed consolidated statements of income: Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Cost of sales $ 390 $ 287 $ 650 $ 524 Operating expenses: Selling 609 575 1,145 1,146 General and administrative 2,306 2,665 3,833 4,375 Research and development 107 60 188 118 Total operating expenses 3,022 3,300 5,166 5,639 Stock-based compensation expense $ 3,412 $ 3,587 $ 5,816 $ 6,163 |
Schedule of weighted-average assumptions used to estimate fair value of stock options | We determined the fair value of our market-based restricted stock awards using a Monte Carlo simulation on the date of grant using the following assumptions: Six Months Ended January 31, 2020 2019 Volatility of common stock 30.73 % 27.54 % Average volatility of peer companies 36.28 % 36.55 % Average correlation coefficient of peer companies 24.63 % 27.18 % Risk-free interest rate 1.49 % 2.93 % |
Summary of nonvested stock award activity | A summary of nonvested stock award activity for the six months ended January 31, 2020 follows: Number of Number of Performance-based Awards Number of Market-based Awards Number of Weighted Average Nonvested stock awards at July 31, 2019 234,864 40,210 32,079 307,153 $ 88.99 Granted 207,311 — 47,967 255,278 $ 73.66 Vested (1) (91,439) (8,475) (3,462) (103,376) $ 90.25 Forfeited (14,684) (1,165) (9,405) (25,254) $ 85.19 Nonvested stock awards at January 31, 2020 336,052 30,570 67,179 433,801 $ 79.81 _______________________________________________ (1) The aggregate fair value of all nonvested stock awards which vested was approximately $9,329. |
Summary of stock option activity | A summary of stock option activity for the six months ended January 31, 2020 follows: Number of shares Weighted Average Exercise Price Weighted Average Contractual Life Remaining (Years) Aggregate Intrinsic Value Outstanding at July 31, 2019 40,000 $ 43.70 Exercised (25,000) $ 36.70 Outstanding at January 31, 2020 15,000 $ 55.36 0.70 $ 146 Exercisable at January 31, 2020 15,000 $ 55.36 0.70 $ 146 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of net sales disaggregated by geography and product line | The following table gives information as to the net sales disaggregated by geography and product line: Three Months Ended January 31, Six Months Ended January 31, Net sales by geography 2020 2019 2020 2019 United States $ 207,598 $ 165,164 $ 397,682 $ 334,102 Europe/Africa/Middle East 49,496 34,319 90,514 66,333 Asia/Pacific 22,266 15,568 39,331 31,320 Canada 7,745 8,138 15,578 15,509 Latin America/South America 1,393 1,349 2,639 2,863 Total $ 288,498 $ 224,538 $ 545,744 $ 450,127 Net sales by product line Capital equipment $ 59,724 $ 57,387 $ 118,472 $ 115,519 Consumables 154,209 135,731 307,488 272,552 Product service 31,563 30,525 63,131 60,354 Instrument sales 40,821 — 54,341 — All other (1) 2,181 895 2,312 1,702 Total $ 288,498 $ 224,538 $ 545,744 $ 450,127 _______________________________________________ (1) Primarily includes software licensing revenues. |
Schedule of contract liabilities activity | A summary of contract liabilities activity follows: Six Months Ended January 31, 2020 2019 Beginning balance $ 28,235 $ 29,015 Revenue deferred in current year 27,197 31,525 Deferred revenue recognized (29,605) (32,444) Foreign currency translation 136 (443) Ending balance 25,963 27,653 Contract liabilities included in Other long-term liabilities (349) (517) Deferred revenue $ 25,614 $ 27,136 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Leases [Abstract] | |
Schedule of supplemental balance sheet information | Supplemental balance sheet information related to our leases follows: Lease Type January 31, 2020 Assets: Operating lease assets $ 47,329 Finance lease assets 4,685 Right-of-use assets, net $ 52,014 Liabilities: Operating lease liabilities $ 9,859 Finance lease liabilities 348 Current portion of lease liabilities 10,207 Operating lease liabilities 39,080 Finance lease liabilities 4,243 Long-term lease liabilities 43,323 Total lease liabilities $ 53,530 Weighted average remaining lease term: Operating leases 6.42 years Finance leases 6.29 years Weighted average discount rate: Operating leases 2.74 % Finance leases 23.69 % |
Schedule of operating lease maturity | At January 31, 2020, maturities of lease liabilities for the periods set forth below were as follows: Fiscal year Operating Finance Total Remaining 2020 $ 5,561 $ 708 $ 6,269 2021 10,217 1,421 11,638 2022 8,317 1,406 9,723 2023 7,339 1,398 8,737 2024 6,390 1,407 7,797 Thereafter 16,038 2,457 18,495 Total lease payments 53,862 8,797 62,659 Less: interest (4,923) (4,206) (9,129) Present value of lease liabilities $ 48,939 $ 4,591 $ 53,530 |
Schedule of finance lease maturity | At January 31, 2020, maturities of lease liabilities for the periods set forth below were as follows: Fiscal year Operating Finance Total Remaining 2020 $ 5,561 $ 708 $ 6,269 2021 10,217 1,421 11,638 2022 8,317 1,406 9,723 2023 7,339 1,398 8,737 2024 6,390 1,407 7,797 Thereafter 16,038 2,457 18,495 Total lease payments 53,862 8,797 62,659 Less: interest (4,923) (4,206) (9,129) Present value of lease liabilities $ 48,939 $ 4,591 $ 53,530 |
Schedule of future minimum lease payments under non-cancelable operating leases | As previously disclosed in our 2019 Annual Report on Form 10-K and in accordance with our historical accounting under ASC 840, 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 Total 2020 $ 9,099 2021 7,671 2022 6,021 2023 5,659 2024 5,159 Thereafter 15,251 Total $ 48,860 |
Schedule of supplemental income statement and cash flow information | Supplemental income statement information related to our leases follows: Six Months Ended January 31, 2020 Operating lease costs $ 5,684 Finance lease costs: Amortization of right-of-use assets 261 Interest on lease obligations 358 Variable lease costs 1,534 Short-term lease costs 591 Net lease cost $ 8,428 Supplemental cash flow information related to leases follows: Six Months Ended January 31, 2020 Right-of-use assets obtained in exchange for lease liabilities: Operating leases (1) $ 17,738 Finance leases (2) $ 4,798 _______________________________________________ (1) Primarily relates to new warehouse facility included in our Dental segment and operating leases acquired in the Hu-Friedy acquisition. (2) Includes finance leases acquired in the Hu-Friedy acquisition. |
Inventories, Net (Tables)
Inventories, Net (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Summary of inventories | A summary of inventories, net is as follows: January 31, 2020 July 31, 2019 Raw materials and parts $ 70,068 $ 69,498 Work-in-process 8,946 5,801 Finished goods 121,853 73,050 Reserve for excess and obsolete inventory (16,690) (10,115) Total Inventories, net $ 184,177 $ 138,234 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
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: January 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money markets $ 107 $ — $ — $ 107 Prepaid and other current assets: Interest rate swap — 1,253 — 1,253 Other Assets: Interest rate swap — 4,071 — 4,071 Total assets $ 107 $ 5,324 $ — $ 5,431 Contingent consideration: 6,481 — 18,865 25,346 Total liabilities $ 6,481 $ — $ 18,865 $ 25,346 July 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money markets $ 104 $ — $ — $ 104 Prepaid expenses and other current assets: Interest rate swap — 486 — 486 Other Assets: Interest rate swap — 2,826 — 2,826 Total assets $ 104 $ 3,312 $ — $ 3,416 Other long-term liabilities: Contingent consideration — — 1,411 1,411 Total liabilities $ — $ — $ 1,411 $ 1,411 |
Level 3 activity of financial liabilities | A reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows: Aexis Contingent Consideration Hu-Friedy Contingent Consideration (Earnouts) Hu-Friedy Contingent Consideration (Stock Price) Total Balance, July 31, 2019 1,411 — — 1,411 Acquisitions — 35,100 3,272 38,372 Fair value adjustments included in general and administrative expenses 242 7,112 3,209 10,563 Settlements/payments — (25,000) — (25,000) Balance, January 31, 2020 $ 1,653 $ 17,212 $ 6,481 $ 25,346 |
Intangibles and Goodwill (Table
Intangibles and Goodwill (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Our intangible assets consist of the following: January 31, 2020 July 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Intangible assets with finite lives: Customer relationships $ 372,075 $ (65,049) $ 307,026 $ 146,204 $ (54,866) $ 91,338 Technology 90,840 (27,052) 63,788 60,032 (24,081) 35,951 Brand names 8,459 (3,649) 4,810 8,361 (3,256) 5,105 Non-compete agreements 2,850 (1,720) 1,130 2,880 (1,653) 1,227 Patents and other registrations 2,513 (810) 1,703 2,866 (1,252) 1,614 476,737 (98,280) 378,457 220,343 (85,108) 135,235 Trademarks and tradenames 118,278 — 118,278 6,278 — 6,278 Total intangible assets $ 595,015 $ (98,280) $ 496,735 $ 226,621 $ (85,108) $ 141,513 |
Schedule of changes in goodwill | Goodwill changed during the six months ended January 31, 2020 as follows: Medical Life Sciences Dental Dialysis Total Balance, July 31, 2019 $ 180,197 $ 64,481 $ 125,298 $ 8,133 $ 378,109 Acquisitions — — 277,200 — 277,200 Foreign currency translation 1,457 20 (174) — 1,303 Balance, January 31, 2020 $ 181,654 $ 64,501 $ 402,324 $ 8,133 $ 656,612 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Our long-term debt consists of the following: January 31, 2020 July 31, 2019 Revolving credit loans outstanding $ 340,000 $ 43,000 Tranche A term loans outstanding 585,250 190,000 Unamortized debt issuance costs (10,308) (2,149) Total long-term debt, net of unamortized debt issuance costs 914,942 230,851 Current portion of long-term debt (29,500) (10,000) Long-term debt, net of unamortized debt issuance costs and excluding current portion $ 885,442 $ 220,851 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted EPS available to stockholders of common stock (excluding participating securities) | The following table sets forth the computation of basic and diluted EPS available to stockholders of common stock (excluding participating securities): Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Numerator for basic and diluted earnings per share: Net (loss) income $ (2,263) $ 18,800 $ 3,504 $ 38,042 Less income allocated to participating securities — (16) — (49) Net (loss) income available to common shareholders $ (2,263) $ 18,784 $ 3,504 $ 37,993 Denominator for basic and diluted (loss) earnings per share, adjusted for participating securities: Denominator for basic (loss) earnings per share - weighted average number of shares outstanding attributable to common stock 42,561,178 41,667,955 42,298,833 41,660,095 Dilutive effect of stock awards using the treasury stock method and the average market price for the year — 18,088 91,286 41,558 Denominator for diluted (loss) earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 42,561,178 41,686,043 42,390,119 41,701,653 (Loss) earnings per share attributable to common stock: Basic (loss) earnings per share $ (0.05) $ 0.45 $ 0.08 $ 0.91 Diluted (loss) earnings per share $ (0.05) $ 0.45 $ 0.08 $ 0.91 Stock awards excluded because their inclusion would have been anti-dilutive 36,150 — — — |
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: Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Denominator for diluted (loss) earnings per share - weighted average number of shares and common stock equivalents attributable to common stock 42,561,178 41,686,043 42,390,119 41,701,653 Participating securities 2,981 33,400 9,962 55,436 Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities 42,564,159 41,719,443 42,400,081 41,757,089 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) | |
Schedule of the components and changes in accumulated other comprehensive income (loss) | The components and changes in accumulated other comprehensive loss follow: Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 Beginning balance $ (17,020) $ (16,679) $ (22,197) $ (11,456) Foreign currency translation (140) (417) 3,792 (5,640) Interest rate swap, net of taxes (1) 246 — 1,491 — Ending balance $ (16,914) $ (17,096) $ (16,914) $ (17,096) _______________________________________________ (1) Includes tax effect of $375 and $521 for the three and six months ended January 31, 2020, respectively. |
Reportable Segments (Tables)
Reportable Segments (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Segment Reporting [Abstract] | |
Information as to reportable segments | Information as to reportable segments is summarized below Three Months Ended January 31, Six Months Ended January 31, Net sales 2020 2019 2020 2019 Medical $ 130,959 $ 128,580 $ 264,312 $ 256,132 Life Sciences 50,122 50,516 99,263 102,358 Dental 101,044 37,286 168,287 75,417 Dialysis 6,373 8,156 13,882 16,220 Total net sales $ 288,498 $ 224,538 $ 545,744 $ 450,127 Three Months Ended January 31, Six Months Ended January 31, Income (loss) from operations 2020 2019 2020 2019 Medical $ 21,534 $ 25,525 $ 42,653 $ 50,736 Life Sciences 7,700 6,701 14,835 12,273 Dental (856) 5,510 4,148 12,194 Dialysis 1,507 1,193 3,129 2,577 29,885 38,929 64,765 77,780 General corporate expenses 22,289 12,733 42,745 23,906 Total income from operations $ 7,596 $ 26,196 $ 22,020 $ 53,874 |
Accounting Pronouncements (Deta
Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Aug. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use assets | $ 47,329 | |
Operating lease liability | $ 48,939 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use assets | $ 35,842 | |
Operating lease liability | $ 36,417 |
Acquisitions Acquisitions - Hu-
Acquisitions Acquisitions - Hu-Friedy (Details) - USD ($) | Oct. 01, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | Jul. 31, 2019 |
Business Acquisition [Line Items] | ||||
Cash consideration | $ 686,350,000 | $ 24,047,000 | ||
Contingent consideration | 25,346,000 | $ 0 | ||
Hu-Friedy | ||||
Business Acquisition [Line Items] | ||||
Consideration, excluding contingent consideration | $ 716,542,000 | |||
Cash consideration | 662,151,000 | |||
Stock consideration | 54,391,000 | |||
Contingent consideration | $ 38,371,000 | |||
Minimum | Hu-Friedy | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | 0 | |||
Maximum | Hu-Friedy | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | $ 50,000,000 |
Acquisitions Acquisitions - Omn
Acquisitions Acquisitions - Omnia (Details) - USD ($) | Feb. 01, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | Jul. 31, 2019 |
Business Acquisition [Line Items] | ||||
Cash consideration | $ 686,350,000 | $ 24,047,000 | ||
Contingent consideration | $ 25,346,000 | $ 0 | ||
Omnia | ||||
Business Acquisition [Line Items] | ||||
Total consideration | $ 19,007,000 | |||
Cash consideration | 15,797,000 | |||
Stock consideration | 3,210,000 | |||
Minimum | Omnia | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | 0 | |||
Maximum | Omnia | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | $ 5,800,000 |
Acquisitions - CES Business (De
Acquisitions - CES Business (Details) $ in Thousands | Aug. 01, 2018USD ($) |
CES Business | |
Business Acquisition [Line Items] | |
Business acquisition, total consideration, excluding acquisition-related costs | $ 17,047 |
Acquisitions - Summary of Acqui
Acquisitions - Summary of Acquisitions (Details) - USD ($) $ in Thousands | Oct. 01, 2019 | Feb. 01, 2019 | Aug. 01, 2018 | Jan. 31, 2020 | Aug. 01, 2019 | Jul. 31, 2019 |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 656,612 | $ 378,109 | ||||
Hu-Friedy | ||||||
Business Acquisition [Line Items] | ||||||
Cash paid | $ 662,151 | |||||
Fair value of contingent consideration | 38,371 | |||||
Common stock issued | 54,391 | |||||
Total consideration | 754,913 | |||||
Property and equipment | 38,571 | |||||
Goodwill | 278,001 | |||||
Deferred income taxes | 0 | |||||
Inventories | 60,596 | |||||
Other working capital | 7,745 | |||||
Long-term debt | 0 | |||||
Total | 754,913 | |||||
Hu-Friedy | Customer relationships | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | 226,000 | |||||
Hu-Friedy | Technology | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | 32,000 | |||||
Hu-Friedy | Brand names | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | $ 112,000 | |||||
Omnia | ||||||
Business Acquisition [Line Items] | ||||||
Cash paid | $ 15,797 | |||||
Fair value of contingent consideration | 0 | |||||
Common stock issued | 3,210 | |||||
Total consideration | 19,007 | |||||
Property and equipment | 1,285 | |||||
Goodwill | 10,539 | |||||
Deferred income taxes | (2,346) | |||||
Inventories | 0 | |||||
Other working capital | 1,673 | |||||
Long-term debt | (5,207) | |||||
Total | 19,007 | |||||
Omnia | Customer relationships | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | 10,206 | |||||
Omnia | Technology | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | 1,257 | |||||
Omnia | Brand names | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | $ 1,600 | |||||
CES Business | ||||||
Business Acquisition [Line Items] | ||||||
Cash paid | $ 17,047 | |||||
Fair value of contingent consideration | 0 | |||||
Common stock issued | 0 | |||||
Total consideration | $ 17,047 | |||||
Property and equipment | $ 539 | |||||
Goodwill | 6,137 | |||||
Deferred income taxes | 0 | |||||
Inventories | 0 | |||||
Other working capital | 2,271 | |||||
Long-term debt | 0 | |||||
Total | 17,047 | |||||
CES Business | Customer relationships | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | 8,100 | |||||
CES Business | Technology | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | 0 | |||||
CES Business | Brand names | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets: | $ 0 |
Acquisitions Acquisitions - Pro
Acquisitions Acquisitions - Pro Forma Summary of Operations (Details) - Hu-Friedy - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Actual revenue from acquiree | $ 56,649 | $ 75,374 | ||
Pro forma net sales | 288,498 | $ 277,532 | 584,669 | $ 557,805 |
Pro forma net (loss) income | $ (2,263) | $ 18,388 | $ (1,514) | $ 38,256 |
Pro forma (loss) earnings per common share, basic (in dollars per share) | $ (0.05) | $ 0.43 | $ (0.04) | $ 0.90 |
Pro forma earnings per common share, diluted (in dollars per share) | $ (0.05) | $ 0.43 | $ (0.04) | $ 0.90 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jul. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding unvested restricted stock shares (in shares) | 433,801 | 307,153 | |
Outstanding options (in shares) | 15,000 | 40,000 | |
Total unrecognized stock-based compensation cost | $ 25,234 | ||
Remaining weighted average period for unrecognized compensation cost | 18 months | ||
Number of options exercised (in shares) | 25,000 | ||
Deduction in income tax due to exercise of options and vesting of restricted stock | $ 2,022 | $ 3,059 | |
Reduction in income tax expense over the equity awards' vesting period | 2,581 | 2,062 | |
Excess tax benefit | $ (559) | $ 997 | |
Employee and directors stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options exercised (in shares) | 25,000 | ||
Aggregate fair value of exercised options | $ 1,067 | ||
2016 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding unvested restricted stock shares (in shares) | 433,801 | ||
Outstanding options (in shares) | 0 | ||
Shares available under Plan (in shares) | 524,775 | ||
2006 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding options (in shares) | 15,000 |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation expense | $ 3,412 | $ 3,587 | $ 5,816 | $ 6,163 |
Cost of sales | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation expense | 390 | 287 | 650 | 524 |
Total operating expenses | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation expense | 3,022 | 3,300 | 5,166 | 5,639 |
Selling | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation expense | 609 | 575 | 1,145 | 1,146 |
General and administrative | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation expense | 2,306 | 2,665 | 3,833 | 4,375 |
Research and development | ||||
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income | ||||
Stock-based compensation expense | $ 107 | $ 60 | $ 188 | $ 118 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Monte Carlo Simulation (Details) - Restricted Stock | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility of common stock | 30.73% | 27.54% |
Average volatility of peer companies | 36.28% | 36.55% |
Average correlation coefficient of peer companies | 24.63% | 27.18% |
Risk-free interest rate | 1.49% | 2.93% |
Stock-Based Compensation - Nonv
Stock-Based Compensation - Nonvested Stock Award Activity (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jan. 31, 2020USD ($)$ / sharesshares | |
Number of Shares | |
Nonvested stock awards at the beginning of the period (in shares) | 307,153 |
Granted (in shares) | 255,278 |
Vested (in shares) | (103,376) |
Forfeited (in shares) | (25,254) |
Nonvested stock awards at the end of the period (in shares) | 433,801 |
Weighted Average Fair Value | |
Nonvested stock awards at the beginning of the period (in dollars per share) | $ / shares | $ 88.99 |
Granted (in dollars per share) | $ / shares | 73.66 |
Vested (in dollars per share) | $ / shares | 90.25 |
Forfeited (in dollars per share) | $ / shares | 85.19 |
Nonvested stock awards at the end of the period (in dollars per share) | $ / shares | $ 79.81 |
Aggregate fair value of nonvested stock awards that vested | $ | $ 9,329 |
Number of Time-based Awards | |
Number of Shares | |
Nonvested stock awards at the beginning of the period (in shares) | 234,864 |
Granted (in shares) | 207,311 |
Vested (in shares) | (91,439) |
Forfeited (in shares) | (14,684) |
Nonvested stock awards at the end of the period (in shares) | 336,052 |
Number of Performance-based Awards | |
Number of Shares | |
Nonvested stock awards at the beginning of the period (in shares) | 40,210 |
Granted (in shares) | 0 |
Vested (in shares) | (8,475) |
Forfeited (in shares) | (1,165) |
Nonvested stock awards at the end of the period (in shares) | 30,570 |
Number of Market-based Awards | |
Number of Shares | |
Nonvested stock awards at the beginning of the period (in shares) | 32,079 |
Granted (in shares) | 47,967 |
Vested (in shares) | (3,462) |
Forfeited (in shares) | (9,405) |
Nonvested stock awards at the end of the period (in shares) | 67,179 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jan. 31, 2020 | |
Number of shares | |
Outstanding, beginning balance (in shares) | 40,000 |
Exercised (in shares) | (25,000) |
Outstanding, ending balance (in shares) | 15,000 |
Weighted Average Exercise Price | |
Outstanding, beginning balance (in dollars per share) | $ 43.70 |
Exercised (in dollars per share) | 36.70 |
Outstanding, ending balance (in dollars per share) | $ 55.36 |
Stock Option Activity, Additional Disclosures | |
Options outstanding, weighted average contractual life remaining | 8 months 12 days |
Options outstanding, aggregate intrinsic value | $ 146 |
Options exercisable, number of options (in shares) | 15,000 |
Options exercisable, weighted average exercise price (in dollars per share) | $ 55.36 |
Options exercisable, weighted average contractual life remaining | 8 months 12 days |
Options exercisable, aggregate intrinsic value | $ 146 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Jul. 31, 2019 | Aug. 01, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 538,130 | $ 539,097 | |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 865 |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Net Sales by Geography and Product Line (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 288,498 | $ 224,538 | $ 545,744 | $ 450,127 |
Capital equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 59,724 | 57,387 | 118,472 | 115,519 |
Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 154,209 | 135,731 | 307,488 | 272,552 |
Product service | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 31,563 | 30,525 | 63,131 | 60,354 |
Instrument sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 40,821 | 0 | 54,341 | 0 |
All other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2,181 | 895 | 2,312 | 1,702 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 207,598 | 165,164 | 397,682 | 334,102 |
Europe/Africa/Middle East | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 49,496 | 34,319 | 90,514 | 66,333 |
Asia/Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 22,266 | 15,568 | 39,331 | 31,320 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 7,745 | 8,138 | 15,578 | 15,509 |
Latin America/South America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 1,393 | $ 1,349 | $ 2,639 | $ 2,863 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining performance obligations (Details) $ in Thousands | Jan. 31, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, amount | $ 72,451 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 60.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year 6 months |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Contract Liabilities Activity (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jul. 31, 2019 | Jan. 31, 2019 | |
Contract Liability Activity | |||||
Beginning Balance | $ 28,235 | $ 29,015 | |||
Revenue deferred in current year | 27,197 | 31,525 | |||
Deferred revenue recognized | (29,605) | (32,444) | |||
Foreign currency translation | 136 | (443) | |||
Ending balance | $ 28,235 | $ 29,015 | $ 25,963 | $ 28,235 | $ 27,653 |
Contract liabilities included in Other long-term liabilities | (349) | (517) | |||
Deferred revenue | $ 25,614 | $ 27,840 | $ 27,136 |
Leases - Narrative (Details)
Leases - Narrative (Details) - Real Estate | 6 Months Ended |
Jan. 31, 2020contract | |
Lessee, Lease, Description [Line Items] | |
Number of lease contracts | 90 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 16 years |
Leases - Supplemental balance s
Leases - Supplemental balance sheet (Details) $ in Thousands | Jan. 31, 2020USD ($) |
Assets: | |
Operating lease assets | $ 47,329 |
Finance lease assets | 4,685 |
Right-of-use assets, net | 52,014 |
Liabilities: | |
Operating lease liabilities | 9,859 |
Finance lease liabilities | 348 |
Current portion of lease liabilities | 10,207 |
Operating lease liabilities | 39,080 |
Finance lease liabilities | 4,243 |
Long-term lease liabilities | 43,323 |
Total lease liabilities | $ 53,530 |
Weighted average remaining lease term: | |
Operating leases | 6 years 5 months 1 day |
Finance leases | 6 years 3 months 14 days |
Weighted average discount rate: | |
Operating leases | 2.74% |
Finance leases | 23.69% |
Leases - Maturities of lease li
Leases - Maturities of lease liabilities (Details) $ in Thousands | Jan. 31, 2020USD ($) |
Operating | |
Remaining 2020 | $ 5,561 |
2021 | 10,217 |
2022 | 8,317 |
2023 | 7,339 |
2024 | 6,390 |
Thereafter | 16,038 |
Total lease payments | 53,862 |
Less: interest | (4,923) |
Present value of lease liabilities | 48,939 |
Finance | |
Remaining 2020 | 708 |
2021 | 1,421 |
2022 | 1,406 |
2023 | 1,398 |
2024 | 1,407 |
Thereafter | 2,457 |
Total lease payments | 8,797 |
Less: interest | (4,206) |
Present value of lease liabilities | 4,591 |
Total | |
Remaining 2020 | 6,269 |
2021 | 11,638 |
2022 | 9,723 |
2023 | 8,737 |
2024 | 7,797 |
Thereafter | 18,495 |
Total lease payments | 62,659 |
Less: interest | (9,129) |
Total lease liabilities | $ 53,530 |
Leases - Future minimum lease p
Leases - Future minimum lease payments (Details) $ in Thousands | Jul. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 9,099 |
2021 | 7,671 |
2022 | 6,021 |
2023 | 5,659 |
2024 | 5,159 |
Thereafter | 15,251 |
Total | $ 48,860 |
Leases - Supplemental income st
Leases - Supplemental income statement (Details) $ in Thousands | 6 Months Ended |
Jan. 31, 2020USD ($) | |
Leases [Abstract] | |
Operating lease costs | $ 5,684 |
Finance lease costs: | |
Amortization of right-of-use assets | 261 |
Interest on lease obligations | 358 |
Variable lease costs | 1,534 |
Short-term lease costs | 591 |
Net lease cost | $ 8,428 |
Leases - Supplemental cash flow
Leases - Supplemental cash flow (Details) $ in Thousands | 6 Months Ended |
Jan. 31, 2020USD ($) | |
Leases [Abstract] | |
Operating leases | $ 17,738 |
Finance leases | $ 4,798 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Jul. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials and parts | $ 70,068 | $ 69,498 |
Work-in-process | 8,946 | 5,801 |
Finished goods | 121,853 | 73,050 |
Reserve for excess and obsolete inventory | (16,690) | (10,115) |
Total Inventories, net | $ 184,177 | $ 138,234 |
Derivatives (Details)
Derivatives (Details) - Designated as hedging instrument | 6 Months Ended | |
Jan. 31, 2020USD ($)instrument | Jul. 31, 2019USD ($)instrument | |
Foreign currency forward contracts | Fair value hedge instruments | ||
Derivatives | ||
Term of contracts | 1 month | |
Number of contracts | instrument | 6 | 6 |
Aggregate value of contracts | $ 69,302,000 | $ 78,264,000 |
Interest rate swap | ||
Derivatives | ||
Number of contracts | instrument | 2 | |
Notional value | $ 150,000,000 | |
Fixed interest rate | 2.265% | |
Derivative short-term asset | 1,253,000 | $ 486,000 |
Derivative long-term asset | $ 4,071,000 | $ 2,826,000 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | Feb. 13, 2020 | Jan. 31, 2020 | Jul. 31, 2019 | Mar. 21, 2018 |
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Contingent consideration | $ 25,346,000 | $ 0 | ||
Hu-Friedy | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Contingent consideration | 38,371,000 | |||
Payment to settle portion of contingent consideration | 25,000,000 | |||
Contingent consideration, high end of range | $ 35,000,000 | |||
Hu-Friedy | Subsequent Event | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Payment to settle portion of contingent consideration | $ 6,722,000 | |||
Aexis | ||||
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | ||||
Contingent consideration | $ 1,292,000 | |||
Contingent consideration, high end of range | 1,850,000 | |||
Contingent consideration, low end of range | $ 0 |
Fair Value Measurements - Hiera
Fair Value Measurements - Hierarchy Levels (Details) - Recurring basis - USD ($) $ in Thousands | Jan. 31, 2020 | Jul. 31, 2019 |
Other Assets: | ||
Total assets | $ 5,431 | $ 3,416 |
Other long-term liabilities: | ||
Contingent consideration | 25,346 | 1,411 |
Total liabilities | 25,346 | 1,411 |
Money markets | ||
Cash and cash equivalents: | ||
Money markets | 107 | 104 |
Level 1 | ||
Other Assets: | ||
Total assets | 107 | 104 |
Other long-term liabilities: | ||
Contingent consideration | 6,481 | 0 |
Total liabilities | 6,481 | 0 |
Level 1 | Money markets | ||
Cash and cash equivalents: | ||
Money markets | 107 | 104 |
Level 2 | ||
Other Assets: | ||
Total assets | 5,324 | 3,312 |
Other long-term liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities | 0 | 0 |
Level 2 | Money markets | ||
Cash and cash equivalents: | ||
Money markets | 0 | 0 |
Level 3 | ||
Other Assets: | ||
Total assets | 0 | 0 |
Other long-term liabilities: | ||
Contingent consideration | 18,865 | 1,411 |
Total liabilities | 18,865 | 1,411 |
Level 3 | Money markets | ||
Cash and cash equivalents: | ||
Money markets | 0 | 0 |
Interest rate swap | ||
Prepaid and other current assets: | ||
Interest rate swap | 1,253 | 486 |
Other Assets: | ||
Interest rate swap | 4,071 | 2,826 |
Interest rate swap | Level 1 | ||
Prepaid and other current assets: | ||
Interest rate swap | 0 | 0 |
Other Assets: | ||
Interest rate swap | 0 | 0 |
Interest rate swap | Level 2 | ||
Prepaid and other current assets: | ||
Interest rate swap | 1,253 | 486 |
Other Assets: | ||
Interest rate swap | 4,071 | 2,826 |
Interest rate swap | Level 3 | ||
Prepaid and other current assets: | ||
Interest rate swap | 0 | 0 |
Other Assets: | ||
Interest rate swap | $ 0 | $ 0 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Rollforward (Details) $ in Thousands | 6 Months Ended |
Jan. 31, 2020USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 1,411 |
Acquisitions | 38,372 |
Fair value adjustments included in general and administrative expenses | 10,563 |
Settlements/payments | (25,000) |
Ending Balance | 25,346 |
Aexis | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 1,411 |
Acquisitions | 0 |
Fair value adjustments included in general and administrative expenses | 242 |
Settlements/payments | 0 |
Ending Balance | 1,653 |
Hu-Friedy | Earnouts | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 0 |
Acquisitions | 35,100 |
Fair value adjustments included in general and administrative expenses | 7,112 |
Settlements/payments | (25,000) |
Ending Balance | 17,212 |
Hu-Friedy | Stock Price | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 0 |
Acquisitions | 3,272 |
Fair value adjustments included in general and administrative expenses | 3,209 |
Settlements/payments | 0 |
Ending Balance | $ 6,481 |
Intangibles and Goodwill - Inta
Intangibles and Goodwill - Intangible Assets Summary (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Jul. 31, 2019 |
Intangible assets with finite lives: | ||
Gross | $ 476,737 | $ 220,343 |
Accumulated Amortization | (98,280) | (85,108) |
Net | 378,457 | 135,235 |
Intangible assets with indefinite lives: | ||
Trademarks and tradenames | 118,278 | 6,278 |
Total intangible assets | ||
Gross | 595,015 | 226,621 |
Accumulated Amortization | (98,280) | (85,108) |
Net | 496,735 | 141,513 |
Customer relationships | ||
Intangible assets with finite lives: | ||
Gross | 372,075 | 146,204 |
Accumulated Amortization | (65,049) | (54,866) |
Net | 307,026 | 91,338 |
Total intangible assets | ||
Accumulated Amortization | (65,049) | (54,866) |
Technology | ||
Intangible assets with finite lives: | ||
Gross | 90,840 | 60,032 |
Accumulated Amortization | (27,052) | (24,081) |
Net | 63,788 | 35,951 |
Total intangible assets | ||
Accumulated Amortization | (27,052) | (24,081) |
Brand names | ||
Intangible assets with finite lives: | ||
Gross | 8,459 | 8,361 |
Accumulated Amortization | (3,649) | (3,256) |
Net | 4,810 | 5,105 |
Total intangible assets | ||
Accumulated Amortization | (3,649) | (3,256) |
Non-compete agreements | ||
Intangible assets with finite lives: | ||
Gross | 2,850 | 2,880 |
Accumulated Amortization | (1,720) | (1,653) |
Net | 1,130 | 1,227 |
Total intangible assets | ||
Accumulated Amortization | (1,720) | (1,653) |
Patents and other registrations | ||
Intangible assets with finite lives: | ||
Gross | 2,513 | 2,866 |
Accumulated Amortization | (810) | (1,252) |
Net | 1,703 | 1,614 |
Total intangible assets | ||
Accumulated Amortization | $ (810) | $ (1,252) |
Intangibles and Goodwill - Narr
Intangibles and Goodwill - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 15,003 | $ 10,552 |
Future amortization - remainder of 2020 | 17,625 | |
Future amortization - 2021 | 35,135 | |
Future amortization - 2022 | 34,763 | |
Future amortization - 2023 | 33,730 | |
Future amortization - 2024 | 32,866 | |
Future amortization - 2025 | $ 30,024 |
Intangibles and Goodwill - Good
Intangibles and Goodwill - Goodwill Rollforward (Details) $ in Thousands | 6 Months Ended |
Jan. 31, 2020USD ($) | |
Changes in Goodwill | |
Balance at the beginning of the period | $ 378,109 |
Acquisitions | 277,200 |
Foreign currency translation | 1,303 |
Balance at the end of the period | 656,612 |
Medical | |
Changes in Goodwill | |
Balance at the beginning of the period | 180,197 |
Acquisitions | 0 |
Foreign currency translation | 1,457 |
Balance at the end of the period | 181,654 |
Life Sciences | |
Changes in Goodwill | |
Balance at the beginning of the period | 64,481 |
Acquisitions | 0 |
Foreign currency translation | 20 |
Balance at the end of the period | 64,501 |
Dental | |
Changes in Goodwill | |
Balance at the beginning of the period | 125,298 |
Acquisitions | 277,200 |
Foreign currency translation | (174) |
Balance at the end of the period | 402,324 |
Dialysis | |
Changes in Goodwill | |
Balance at the beginning of the period | 8,133 |
Acquisitions | 0 |
Foreign currency translation | 0 |
Balance at the end of the period | $ 8,133 |
Financing Arrangements - Schedu
Financing Arrangements - Schedule of long-term debt (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Jul. 31, 2019 |
Debt Instrument [Line Items] | ||
Total long-term debt, net of unamortized debt issuance costs | $ 914,942 | $ 230,851 |
Current portion of long-term debt | (29,500) | (10,000) |
Long-term debt, net of unamortized debt issuance costs and excluding current portion | 885,442 | 220,851 |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs | (10,308) | (2,149) |
Revolving credit loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Loans outstanding | 340,000 | 43,000 |
Tranche A term loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Loans outstanding | $ 585,250 | $ 190,000 |
Financing Arrangements - Narrat
Financing Arrangements - Narrative (Details) - USD ($) | 6 Months Ended | |||
Jan. 31, 2020 | Jan. 31, 2019 | Sep. 06, 2019 | Jul. 31, 2019 | |
Debt Instrument [Line Items] | ||||
Principal payment made | $ 4,750,000 | $ 5,000,000 | ||
Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Potential increased borrowing capacity | $ 300,000,000 | |||
Fees on unused portion of credit facilities (as a percent) | 0.40% | |||
Shares of foreign subsidiaries pledged as security (as a percent) | 65.00% | |||
Line of Credit | Minimum | ||||
Debt Instrument [Line Items] | ||||
Fees on unused portion of credit facilities (as a percent) | 0.20% | |||
Line of Credit | Maximum | ||||
Debt Instrument [Line Items] | ||||
Fees on unused portion of credit facilities (as a percent) | 0.40% | |||
Line of Credit | Lender's base rate | ||||
Debt Instrument [Line Items] | ||||
Margin on reference rate (as a percent) | 1.25% | |||
Reference rate (as a percent) | 4.75% | |||
Line of Credit | Lender's base rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Margin on reference rate (as a percent) | 0.00% | |||
Line of Credit | Lender's base rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Margin on reference rate (as a percent) | 1.25% | |||
Line of Credit | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Margin on reference rate (as a percent) | 2.25% | |||
Line of Credit | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Margin on reference rate (as a percent) | 1.00% | |||
Reference rate (as a percent) | 2.03% | |||
Line of Credit | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Margin on reference rate (as a percent) | 2.25% | |||
Line of Credit | Delayed Draw Term Loan | ||||
Debt Instrument [Line Items] | ||||
Loans outstanding | $ 400,000,000 | |||
Line of Credit | Tranche A term loan | ||||
Debt Instrument [Line Items] | ||||
Loans outstanding | $ 585,250,000 | $ 190,000,000 | ||
Term loan borrowings outstanding | 585,250,000 | |||
Principal payment due 2020 | 19,500,000 | |||
Principal payment due 2021 | 29,500,000 | |||
Principal payment due 2022 | 29,500,000 | |||
Principal payment due 2023 | 29,500,000 | |||
Principal payment due 2024 | 29,500,000 | |||
Principal payment due at maturity | 452,500,000 | |||
Principal payment made | $ 4,750,000 | |||
Interest rate (as a percent) | 3.98% | |||
Line of Credit | Revolving credit loan | ||||
Debt Instrument [Line Items] | ||||
Loans outstanding | $ 340,000,000 | $ 43,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | Jan. 31, 2020USD ($) |
Hu-Friedy | |
Business Acquisition [Line Items] | |
Assumed contingent obligation | $ 17,212 |
Equity consideration | 6,481 |
Aexis | |
Business Acquisition [Line Items] | |
Assumed contingent obligation | $ 1,653 |
Earnings Per Common Share - Com
Earnings Per Common Share - Computation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jan. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2019 | Oct. 31, 2018 | Jan. 31, 2020 | Jan. 31, 2019 | |
Numerator for basic and diluted earnings per share: | ||||||
Net (loss) income | $ (2,263) | $ 5,767 | $ 18,800 | $ 19,242 | $ 3,504 | $ 38,042 |
Less income allocated to participating securities | 0 | (16) | 0 | (49) | ||
Net (loss) income available to common shareholders | $ (2,263) | $ 18,784 | $ 3,504 | $ 37,993 | ||
Denominator for basic and diluted (loss) earnings per share, adjusted for participating securities: | ||||||
Denominator for basic (loss) earnings per share - weighted average number of shares outstanding attributable to common stock (in shares) | 42,561,178 | 41,667,955 | 42,298,833 | 41,660,095 | ||
Dilutive effect of stock awards using the treasury stock method and the average market price for the year (in shares) | 0 | 18,088 | 91,286 | 41,558 | ||
Denominator for diluted (loss) earnings per share - weighted average number of shares and common stock equivalents attributable to common stock (in shares) | 42,561,178 | 41,686,043 | 42,390,119 | 41,701,653 | ||
(Loss) earnings per share attributable to common stock: | ||||||
Basic (loss) earnings per share (in dollars per share) | $ (0.05) | $ 0.45 | $ 0.08 | $ 0.91 | ||
Diluted (loss) earnings per share (in dollars per share) | $ (0.05) | $ 0.45 | $ 0.08 | $ 0.91 | ||
Stock awards excluded from weighted average dilutive common shares outstanding because their inclusion would have been anti-dilutive (in shares) | 36,150 | 0 | 0 | 0 |
Earnings Per Common Share - Wei
Earnings Per Common Share - Weighted Average Shares (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Reconciliation of weighted average number of shares and common stock equivalents attributable to common stock, to the entity's total weighted average number of shares and common stock equivalents, including participating securities | ||||
Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock (in shares) | 42,561,178 | 41,686,043 | 42,390,119 | 41,701,653 |
Participating securities (in shares) | 2,981 | 33,400 | 9,962 | 55,436 |
Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities (in shares) | 42,564,159 | 41,719,443 | 42,400,081 | 41,757,089 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jan. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2019 | Oct. 31, 2018 | Jan. 31, 2020 | Jan. 31, 2019 | |
Components and changes in accumulated other comprehensive (loss) income | ||||||
Beginning Balance | $ 732,191 | $ 661,537 | $ 622,360 | $ 608,867 | $ 661,537 | $ 608,867 |
Other comprehensive income (loss) | 106 | 5,177 | (417) | (5,223) | 5,283 | (5,640) |
Ending Balance | 723,281 | 732,191 | 641,603 | 622,360 | 723,281 | 641,603 |
Tax effect on interest rate swap | 375 | 521 | ||||
Accumulated Other Comprehensive Loss | ||||||
Components and changes in accumulated other comprehensive (loss) income | ||||||
Beginning Balance | (17,020) | (22,197) | (16,679) | (11,456) | (22,197) | (11,456) |
Other comprehensive income (loss) | 106 | 5,177 | (417) | (5,223) | ||
Ending Balance | (16,914) | $ (17,020) | (17,096) | $ (16,679) | (16,914) | (17,096) |
Foreign Currency Translation | ||||||
Components and changes in accumulated other comprehensive (loss) income | ||||||
Other comprehensive income (loss) | (140) | (417) | 3,792 | (5,640) | ||
Interest Rate Swap, net of taxes | ||||||
Components and changes in accumulated other comprehensive (loss) income | ||||||
Other comprehensive income (loss) | $ 246 | $ 0 | $ 1,491 | $ 0 |
Reportable Segments - Concentra
Reportable Segments - Concentration Risk (Details) - Segment sales - Customer concentration | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Life Sciences | Two customers | ||
Concentration risk | ||
Concentration risk within segment (as a percent) | 45.00% | 42.50% |
Dental | Three customers | ||
Concentration risk | ||
Concentration risk within segment (as a percent) | 43.30% | 47.90% |
Dialysis | Three customers | ||
Concentration risk | ||
Concentration risk within segment (as a percent) | 50.70% | 20.60% |
Reportable Segments - Results (
Reportable Segments - Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Information as to operating segments | ||||
Net sales | $ 288,498 | $ 224,538 | $ 545,744 | $ 450,127 |
Income (loss) from operations | 7,596 | 26,196 | 22,020 | 53,874 |
General corporate expenses | 62,051 | 37,358 | 117,338 | 73,893 |
Operating Segment | ||||
Information as to operating segments | ||||
Income (loss) from operations | 29,885 | 38,929 | 64,765 | 77,780 |
General corporate expenses | ||||
Information as to operating segments | ||||
General corporate expenses | 22,289 | 12,733 | 42,745 | 23,906 |
Medical | ||||
Information as to operating segments | ||||
Net sales | 130,959 | 128,580 | 264,312 | 256,132 |
Medical | Operating Segment | ||||
Information as to operating segments | ||||
Income (loss) from operations | 21,534 | 25,525 | 42,653 | 50,736 |
Life Sciences | ||||
Information as to operating segments | ||||
Net sales | 50,122 | 50,516 | 99,263 | 102,358 |
Life Sciences | Operating Segment | ||||
Information as to operating segments | ||||
Income (loss) from operations | 7,700 | 6,701 | 14,835 | 12,273 |
Dental | ||||
Information as to operating segments | ||||
Net sales | 101,044 | 37,286 | 168,287 | 75,417 |
Dental | Operating Segment | ||||
Information as to operating segments | ||||
Income (loss) from operations | (856) | 5,510 | 4,148 | 12,194 |
Dialysis | ||||
Information as to operating segments | ||||
Net sales | 6,373 | 8,156 | 13,882 | 16,220 |
Dialysis | Operating Segment | ||||
Information as to operating segments | ||||
Income (loss) from operations | $ 1,507 | $ 1,193 | $ 3,129 | $ 2,577 |
Subsequent Event (Details)
Subsequent Event (Details) - Hu-Friedy - USD ($) $ / shares in Units, $ in Thousands | Feb. 13, 2020 | Feb. 12, 2020 | Jan. 31, 2020 |
Subsequent Event [Line Items] | |||
Contingent consideration, high end of range | $ 35,000 | ||
Subsequent Event | Dental Holdings | |||
Subsequent Event [Line Items] | |||
Repurchase of shares (in dollars per share) | $ 64.51 | ||
Contingent consideration, high end of range | $ 35,000 | ||
Payment to settle portion of contingent consideration | 6,722 | ||
Consideration for the repurchase | $ 28,279 |
Uncategorized Items - cmd-20200
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 865,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 865,000 |