Cantel Medical Management Discusses Q1 2014 Results - Earnings Call Transcript

| About: Cantel Medical (CMN)

Cantel Medical (NYSE:CMN)

Q1 2014 Earnings Call

December 05, 2013 11:00 am ET


Andrew A. Krakauer - Chief Executive Officer, President, Director and Member - Office of the Chairman

Craig A. Sheldon - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer

Jorgen B. Hansen - Chief Operating Officer, Executive Vice President and Member - Office of the Chairman


Thomas J. Gunderson - Piper Jaffray Companies, Research Division

L. Mitra Ramgopal - Sidoti & Company, LLC


Greetings, and welcome to the Cantel Medical Corp.'s First Quarter for Fiscal Year 2013 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andy Krakauer, President and CEO. Thank you. You may begin.

Andrew A. Krakauer

Great. Thank you, Stacy, and welcome to our first quarter fiscal year 2014 conference call. Before we start, I'd like to remind everyone that this conference call may contain forward-looking statements. All forward-looking statements involve risks and uncertainties, including, without limitations, the risks detailed in the company's filings and reports with the Securities and Exchange Commission. Such statements are only predictions and actual results may differ materially from those projected.

Again, so good morning, everyone. With me on our call today are Chuck Diker, Chairman of the Board; Jorg Hansen, Executive Vice President and Chief Operating Officer; Craig Sheldon, Senior Vice President, Chief Financial Officer and Treasurer; and Seth Yellin, Senior Vice President, Corporate Development.

Cantel Medical achieved record financial performance in the first quarter of fiscal year 2014 with solid sales and net income growth. We reported first quarter earnings of $0.27 per share as compared to the prior year's first quarter earnings of $0.23 per share. Sales increased 19% in the quarter, of which 10% was organic. Our net income increased by 17% but would have been over 23% if not for the Medical Device Tax, almost $1 million now in this quarter, which we did not have last year.

All 3 major segments, Endoscopy, Water Purification and Filtration and Healthcare Disposables performed well in the first quarter.

Our Endoscopy business had outstanding growth for the second consecutive quarter. This quarter's sales of $43.6 million were up 19% over the same quarter last year, all of which was organic growth. Operating profit for the segment on a reported basis increased by 7%. But after adjusting for unfavorable acquisition, accounting items over $400,000 and the Medical Device Tax over $400,000, operating profit growth was really in the high teens on a normalized basis.

We are very optimistic that our Medivators Endoscopy business will deliver good sales growth and increase operating profits for the rest of fiscal year 2014 and beyond. This quarter, we saw nice increases in our large and growing installed base of endoscope processing equipment. And this sales growth came from both the United States and international businesses.

Equipment placements drive sales of our higher-margin disinfectant chemistries, much of which is our proprietary Rapicide PA product. This quarter our disinfectant and detergent Chemistries grew by 25%. Our growing installed base of machines also provides great opportunities to expand our service in spare parts business, which grew 15% this quarter.

On the product development front, we have recently launched several new or improved endoscopy disposable product lines, which we expect will generate positive sales momentum as we progress through fiscal year 2014. We also remain very confident in the strength and capability of the entire Medivators United States direct sales and service team and their ability to effectively launch and grow our increasing product portfolio.

Further, we are in the process of adding a number of additional sales and marketing resources to this team to support growth towards the end of fiscal year 2014 and into fiscal year 2015. To lead this team, we have recently hired Michael Spicer as our new Senior Vice President of Endoscopy Sales and Service. Michael is a highly experienced senior sales executive with extensive U.S. hospital experience, including in the endoscopy market. He has held senior positions in sales with Smith & Nephew and Boston Scientific.

On a further positive note, we are pleased to have just announced on November 6, the acquisition of Jet Prep Ltd. based in Israel. This acquisition brings Medivators team another innovative single-use endoscopy product. The Jet Prep device, which has FDA 510-K and CE marked clearances, is a novel irrigation and aspiration catheter used to improve visualization during colonoscopy procedures. A small group of engineers in Israel will remain and work on new product development for the company.

As we look at fiscal year 2015 and beyond, we see the potential for significant growth in our Endoscopy segment in international markets for all product categories. This large opportunity is why we are now making major investments in sales and marketing and new product development that is focused specifically on international markets. And we will continue to make these investments throughout fiscal year 2014.

Additionally, this business could benefit greatly from further acquisitions.

Our Water Purification and Filtration segment has shown strong performance for the past 2 years. This quarter, sales grew by 20% over the same quarter last year. Sales for the quarter of $39.8 million were another record and up 11% sequentially. The increase was primarily due to record shipments of Water Purification equipment, as well as sales generated from our Siemens dialysis water acquisition.

Operating profit was nicely leveraged to a 31% increase over the same quarter last year. The profit increase was driven primarily by the greater shipments.

During the first quarter, we continue to see broad marketing acceptance of our heat-based disinfection central and portable water purification systems. These automated systems provide for a higher standard of Water Purification than the older conventional technology equipment, they replaced and provide great benefits to our dialysis customers and their patients. Sales of these more advanced machines would sell for higher average selling prices now account for about 70% to 75% of our shipments. We expect the adoption rate for these newer and higher value technology platforms to grow further as customers continue to recognize the performance benefits and cost savings provided by these new products.

On a further positive note, Water Purification equipment orders greatly exceeded the very strong shipments, leading to another quarter end with a record backlog, which bodes well for continued growth over the next few quarters.

Adding to our optimism about the future of our Water Purification business is the integration of the acquired Siemens dialysis water business announced on March 25. By the end of the first quarter, we were mostly complete the transferring hundreds of new United States and Canadian customer service contracts to Mar Cor Purification. That will add approximately $10 million in ongoing new business in fiscal year 2014. We will now be able to better utilize our large service network and have another installed base of machines to target for upgrading to our new heat-based technologies. And not only can we now market our new technologies with ease, acquired install base, but also an overwhelming number of the 6,000 dialysis clinics in United States are still using older, manually, chemically disinfected Water Purification equipment, which is an opportunity for Mar Cor in the future quarters.

As I discussed last quarter, our Mar Cor unit has taken over management of our $14 million Therapeutic Filtration and Chemistries businesses. We are now adding some sales marketing and product development resources to pursue what we believe will be profitable growth opportunities in these businesses going forward. Most of the potential benefits with these investments will start in fiscal year 2015. And we are optimistic that we have some exciting future opportunities with our unique hollow fiber filters, as well as our noble new REVOX sterilization service technology.

Overall, we remain very optimistic that we can continue the great momentum we have achieved over a number of quarters now in the Water Purification and Filtration business.

Our Crosstex Healthcare Disposables business continues to be a strong performer as well. First quarter sales of $26.2 million grew by 32% over the quarter, the same quarter last year, primarily driven by sales of SPS Medical products. Organic growth was roughly 4%. The acquisition of SPS in November 2012 greatly added to our sterility assurance product offering. We are very pleased that this business has performed to our high expectations. In November 2013, we integrated the SPS Rochester New York operation into our current ERP system. We are also excited about the opportunities to leverage our combined SPS and Crosstex product lines outside the dental market into the physician office and hospital markets.

Operating profits for this segment grew by 40% this quarter, primarily due to incremental SPS Medical product sales, but also from some underlying operating leverage. We had improved gross margins due to sales of higher-margin products, such as face masks and the continued growth of our ConFirm line of sterility assurance products.

As we go forward, I remain optimistic about the growth of the Healthcare Disposables business, driven by our increasing presence in the sterility assurance market from new opportunities and hospitals and alternate care markets, for new product development activities and from potential international sales growth. We are making sales and marketing investments to grow the United States hospital and alternate channel markets -- to grow the United States hospitals and alternate channel markets, as well as our historically strong position in the dental market.

One of our big opportunities in this segment is the recent United States launch of RAPICIDE OPA-28, our third automated in endoscopy processing chemical and our first chemistry product that can address the large market for manual soaking of instruments. The effort is being led by our hospital distributor team with great assistance from our much larger endoscopy direct sales team. Early results are very promising and we are planning some international launches in upcoming quarters.

We're also making substantial investments to increase our Healthcare Disposables growth in international markets. We have recently hired a dedicated Healthcare Disposables focused sales executive in Asia and are now looking for additional resources in Europe. Further, our recently hired Crosstex Senior Vice President of Sales, Ken Plunkett has extensive experience in international markets. Ken most recently, held a senior sales position with, Hu-Friedy a leading company in the global dental industry.

In the Dialysis segment, as expected, first quarter sales were 11% lower, primarily due to a decline in reused equipment and chemicals in the United States. Operating profit decreased by 19%, but operating margin was still high at 24%. Relative to the growth in the rest of Cantel, this segment has become a much smaller part of our overall company, representing now only 8% of our combined segment operating profit in the first quarter of fiscal year 2014, as compared to 12% in the same quarter last year. Nonetheless, the business remains important to the company and we work hard to continue to take care of our customers while seeking growth globally.

So now I'll turn it over to our CFO, Craig Sheldon to take us through some financial details.

Craig A. Sheldon

Okay. Thank you, Andy, and good morning, everyone. I'd like to turn your attention to the earnings release issued earlier this morning. And as always, start by going down the income statement.

As Andy has already indicated, sales increased by 18.7% in the first quarter versus last year's first quarter to a record $118.3 million with organic growth, as Andy indicated of 10%. The top line growth was driven by all 3 of our largest segments: Endoscopy, Water Purification and Healthcare Disposables, partially offset by a decline in Dialysis.

There were 2 acquisitions that we've talked about before that impacted the numbers, I just wanted to go over those again. The first was the SPS Medical acquisition, that company as we've indicated, was acquired on November 1, 2012, so that was the first day of last year's second fiscal quarter. Therefore, this acquisition is reflected only in our fiscal 2014 first quarter and not in the prior year's first quarter. SPS Medical contributed sales of $5.5 million in the first quarter this year reported in our Healthcare Disposable segment.

Second acquisition, we have talked about a Siemens Water, which although is closed in March, had a end of the fourth quarter closing date for accounting purposes, which is why the majority of the former Siemens' customers were transferred over to our Water business. This acquisition contributed sales of approximately $3 million in the first quarter and is not reflected in last year's first quarter. So between the two of them $8.5 million of first quarter sales.

The gross profit in the first quarter was 43.5%. So approximately the same as last year's 43.3%. The new Medical Device Tax was $956,000 in the first quarter. Again, we've talked about that tax was effective on January 1, so we didn't have it in the first quarter of the prior year. So if you adjust for the Medical Device Tax, the gross margin in the first quarter would have been 44.4%, that's a 90 basis point improvement, which translates to into about $1.50 per share.

So aside from the impact on the Medical Device Tax, our GP percentage actually went up quite nicely, primarily due to a favorable sales mix in all 3 of our largest segments.

Gross operating expenses increased by $5.4 million in the first quarter compared to last year's quarter, attributable principally to adding the SPS Medical infrastructure and I guess, a bit of the Siemens infrastructure, as well as continued investments in personnel, particularly in our sales teams, as well as other sales and marketing initiatives, all of which is an important part of our future of strategic growth plan.

Operating income overall reporting a $2.3 million increase over last year's quarter, which is 14.7%. And again, if you pulled out the effect of that Medical Device Tax, our operating earnings actually would have been up 21%. All 3 of our major segments contributed significantly to the strong earnings growth improvement, which was achieved while still allowing for us to continue the investments in our sales and marketing programs.

Our net interest is relatively unchanged over the first quarter last year. Although, we made substantial debt repayments in the past 12 months. That's been offset by additional borrowings for our new acquisitions. But total interest expense remains at only $644,000, so quite a low number. If we continue to repay borrowings quickly. We have strong cash flow and maintain very low interest rates.

On the income tax line, the overall effective rate was 36.7% in the first quarter, which is down from 37.6% in last year's first quarter. And as I've indicated in the past, the overall effective rate is very difficult to predict and is directly impacted by geographic mix and the timing and extent of new tax legislation. However, since 96% of our pretax income is generated in the U.S., assuming the legislative changes and tax rates or credits, this tax rate is expected to be right in this range roughly. I would point out that the R&E credit once again, is set to expire at the end of the calendar year, and seems to be a recurring theme. That's very important to us and hopefully as far as any budget and tax resolutions, we'll get that R&E credit reinstated. So we'll wait and see on that.

I also wanted to mention that in October, our Board of Directors approved a 22% increase in the semi-annual cash dividend to $0.045 per outstanding share of common stock, that's $0.09 on an annual basis and that will be paid in January.

And finally, the income statement, as previously reported in July, we completed a 3 point -- 3-for-2 stock split last July. Therefore, all EPS and all share amounts reported in the earnings release, as well as the upcoming 10-Q that relate to the prior year have been restated to reflect the effect of the stock split.

Moving onto the balance sheet, remains very strong. We had $28.5 million in cash and cash equivalents at the end of October, $91.3 million of working capital and a current ratio of 2.5:1.

Our funded debt was $82 million at October 31. And meanwhile, we continue to pay down significant levels of debt. In fact, we paid down $13 million of debt during the first quarter and this is the most we've ever paid down in any single quarter.

Our net debt is $53.5 million at October 31. This is a reduction of $7.4 million compared to the end of last July. Gross debt to equity is only 0.25 at October 31. And our gross debt to rolling 12-month EBITDAS is now under 1 or 0.94.

And we generated $24.1 million of EBITDAS in the first quarter. This is 15% higher than the prior year's first quarter. Rolling 12-month EBITDAS continues to grow and is now $87.5 million. Cash flow provided by operations was $10.8 million in the first quarter. That's a strong number for us in the first quarter. Capital expenditures were $2.2 million in the first quarter. So we continue to demonstrate strong cash generation capabilities and the ability to pay down meaningful portions of debt every quarter.

And finally, just to alert everyone, we will be filing our 10-Q next Tuesday on its normal deadline.

So at this point, Andy, I'd like to turn the call back over to you for some closing comments.

Andrew A. Krakauer

Okay. Great, thanks, Craig. So, look, in summary, the first quarter was an outstanding start of fiscal year 2014 for Cantel Medical. We continued the momentum of our strong fiscal year 2013 and achieved new sales and earnings records. And this quarter exemplifies why we're so optimistic about the future of Cantel. We showed excellent sales growth of 19% and if not for the Medical Device Tax, would have leveraged the sales increase to a 23% increase in net income.

Also, this quarter was the second consecutive quarter that we had 10% organic sales growth, which obviously is very important. We continue to demonstrate consistent growth through execution of our three-pronged strategy, investments in new product development, increased sales and marketing activities and a proven acquisition program. And despite the significant investments in future growth drivers, we improved operating profits by driving sales growth, while focusing on increasing gross margins, accelerating the growth of the businesses we acquire and driving overall operating leverage as a result of increased volumes and careful expense management.

More importantly, all of our major businesses have great growth prospects. And now with the addition of SPS Medical and the Siemens Dialysis water business, we had added additional important contributors to growth, which has positively affected this quarter and will as we go forward.

Additionally, our customers in the Dialysis industry just received good news, which, of course, is good news for us, as they proposed 9% cut in reimbursement for Dialysis treatments have been postponed at least until 2015 and will be reviewed again in 2015. This was good news just received a few days ago. The worldwide market potential for our products continues to grow and has never been greater. As we discussed last quarter, our strategic plan supports our aspirations to double sales and profits in the next 5 years. These are aspirations and not predictions. But we are optimistic that we can achieve these goals. Our detailed market analysis have shown that we now compete in total addressable markets well in excess of $5 billion with great opportunities for growth in all of our major businesses. This potential and our clear growth drivers are reasons why we believe that Cantel has never been better positioned for meaningful sustainable growth over the medium to long-term horizon. We are focusing on substantial sales and marketing investments to promote newly launched products, to meaningfully grow international sales and increase penetration in our existing markets. We are investing in future new products; Disposables, Chemistries and Equipment, which we believe have large potential upside 2 or 3 years from now. We should expect to see continue to invest heavily in these categories with acceleration and expenditures over the next few quarters, as these investments are required to build the foundation to enable Cantel to achieve our medium and long-term strategic growth objectives.

Let me just expand briefly on our planned investments for 2014. Our great success in the past 5 years have come from substantial investments again in sales and marketing and R&D. And these investments are based on well defined strategic objectives and identification of very specific opportunities. And we have identified these large opportunities for further sales growth by adding new products, especially broadening the product portfolio in the Endoscopy business. And we have a goal to greatly accelerate the growth of all these products in international markets. Some of this international strategy includes going to direct in certain countries and generally increasing focused sales and marketing support in major markets.

I also mentioned that we are adding physicians to strengthen our Healthcare Disposables and Water Purification businesses as well. These strategies have great potential in the medium and long-term but call for substantial upfront investments. To achieve the objectives of our 5-year strategic plan, we have added a number of sales and marketing positions already in fiscal year 2013 and have a detailed plan for recruiting new positions over the next few quarters. Again, not only are we adding to our sales and marketing teams, but we're also adding needed infrastructure and support roles, just one example being finance and HR teams in China, as well in other locations, as for example, Singapore.

In the first quarter, we added about 20 positions and have plan to add up between 30 and 40 more over the rest of fiscal year 2014. The majority of these positions, again, but not all are in sales and marketing. And about 40% are dedicated to international markets.

Despite these investments in the business, we expect to grow annual earnings this year. Besides increase profits driven by the sales growth, we are implementing cost and operating expense efficiency programs to in part help pay for these incremental investments. The benefits of these cost reductions plan will begin in the second half of fiscal year 2014.

We feel confident in our growth plans and see great opportunities in all of our major businesses to grow organically. But we also continue our success in identifying, executing and integrating acquisitions worldwide. This is a core competency of Cantel that has brought us top-notch entrepreneurial management, new and higher-margin products and additional growth in sales and profits on our improvement strategy to invest and accelerate the growth of the acquired companies.

We continue to search and identification of synergistic markets and potential acquisition targets is a key role of our senior management team. And in particular, we have increased our focus on international targets. This worth noting that international acquisitions carry substantial greater transaction costs for travel, legal translations transaction services and acquisitions in the United States. And we're dealing with those expenses right now. We expect to have an excellent fiscal year 2014, which will be a year of major investments to accelerate future growth worldwide and we're off to a great start.

Our second quarter will have a few less selling days than our first quarter and with almost 75% of our sales been recurring, this may affect financial performance relative to the first quarter that we just completed. Nonetheless, we have great momentum, leading positions in a growing multibillion-dollar global infection prevention and control market and we have exciting opportunities before us with new products and expanding markets.

We are committed to profitably growing the company, while serving our customers and benefiting our shareholders. And again, our entire organization takes great pride in our mission to provide products, services and guidance to mitigate infection risks, improve safety and patient outcomes ultimately save lives. I thank all of our now over 1,300 loyal and hardworking employees for their great efforts and achievements in the first quarter of fiscal year 2014.

So thank you for listening. We look forward again, to speaking to you on our second quarter fiscal year 2014 earnings call in early March. And with that, Stacy, I'll turn it over to you, take some questions.

Question-and-Answer Session


[Operator Instructions] Our first question comes from Tom Gunderson with Piper Jaffray.

Thomas J. Gunderson - Piper Jaffray Companies, Research Division

I guess, the only follow-up I have, Andy, is quite a bit of discussion on international appropriately. But is there -- from your standpoint, is there are hierarchy of international markets where you say, boy, we've really got to go in here strong. I heard you mentioned, you're already adding into China, and you mentioned a little bit of Singapore. But what are the top 4 areas of the world that we should look at where you might get the most bangs for your buck in late '14 or early '15?

Andrew A. Krakauer

I'm going to turn that over to Jorgen Hansen, our COO, who is really been leading that effort, and he is right here.

Jorgen B. Hansen

Thanks, Andy. Good morning, Tom. It's a very good question and we do have a very clear presentation of the market that we are investing in and believe having the large opportunity. China is our #1 priority and has been accountable for most of the investments this year. We believe that China could potentially be a very large market for us. Infection prevention control is a top 3 priority from the Chinese government and the Ministry of Health. And we are working with them in addressing their issues, infection prevention control issues already today and we'll be have ambitions of being a key partner going forward, particular in the Endoscopy space. So China, absolutely is #1 and we already have a very decent presence there in terms of new processing that we are building on. Other than that, it's really Europe. We just hired our first country manager in Germany and starting to really invest in the German markets and its large existing markets, so it's a little bit of a different story than China. And probably, we believe, we have a great product portfolio that has lots of opportunities in the German market. The first priority for us is the U.K. where we have a strong market already. We have a strong distribution partner there and we are currently now launching more new products into the U.K. market and believe that, that could be a key pillar of growth in the future. And if you bring the fourth opportunity is probably Australia. Australia is a strong market for us today. We have a high market share there and we have a great distributor team industry market and both mid-term and long term, we can believe that there could be a great pillar for us as well. So we really are very global in our approach but also very focused on what markets that we are building now. And then obviously, there are a lot of second-tier markets we have, Latin America that we have invested in recently. And so, we're bringing a global approach along also once just mentioned. Eastern Europe where we're starting to get some really good sales into some of those markets, so in terms of priority, China, Germany, U.K. and Australia.

Thomas J. Gunderson - Piper Jaffray Companies, Research Division

Great, thanks. It's that's exactly what I was looking for. On the follow-up would be, as you expand acquisitions overseas, would it follow the same kinds of markets or you're going to be more opportunistic and just say, here's a good deal and we'll distribute it globally from wherever it happens to be?

Jorgen B. Hansen

Obviously, I mean to do acquisitions, they need to be a seller in [indiscernible] opportunity. Obviously, need to be a little more opportunistic. I would qualify though that doing acquisitions in China is not our primary strategy. However, both in Europe and Australia, it could certainly be something that we'd be looking at because there are companies out there that would fit well for us. So both the Europe and Australia, that is certainly something we're looking at. And whether it's going to follow [indiscernible] our order for us, it really depends on what opportunities out there.

Andrew A. Krakauer

And Tom, this as Andy. We would we'd be looking for established companies that could become an important major base of operations outside. Right now, we have a base in Singapore, mostly distributor management, we have a base of operations in Holland, which is again mostly distributor management, even though, we direct in Holland. But if the right candidate has a major infrastructure, it could be really a major center for Cantel internationally.


Our next question comes from Mitra Ramgopal with Sidoti.

L. Mitra Ramgopal - Sidoti & Company, LLC

First, just following up quickly on the acquisition questions. I know you've been paying down debt. How much do have available as you look towards acquisitions in which you have the ability to spend?

Craig A. Sheldon

We're in good shape, Mitra. Obviously, we have $82 million of debt outstanding now and we have over $50 million available on the revolver and we have opportunities to expand that by another $15 million, not without even making any changes to our bank facility. So we have -- where we clearly have more than ample room and then some in our facility to support our 5-year strategic plan and even acquisitions that wouldn't perhaps crop up outside of our 5-year strategic plan. So financing is certainly not a concern for the company at all.

L. Mitra Ramgopal - Sidoti & Company, LLC

Okay, thanks. And Andy, I know you talked a lot about investments especially in the international front. Could you give us a sense on when we should probably expect the bulk of that to be completed if it's sort of something that goes well into fiscal '15 or even beyond that?

Andrew A. Krakauer

Well, let me give you a perspective. Obviously, circumstances, market growth, actual how successful we are in the investments we make, that's why it's still we have even leave it as a range in what we're going to hire for the rest of this year. But I would say the overwhelming kick-off start to get to where we wanted to get it to be going to be in '14 and '15. We obviously want to prove the success of the major investments we're making in '14. I think, if we can do that, which I fully expect, we could see similar -- I mean, these are still -- no, it's a lot of people, and adds up to many millions of dollars, but it's not a huge percentage of a company now with 1,300 -- 1,350 employees, but it is a major investment. I would anticipate about an equal investment in 2015 and then start to show even greater -- much greater leverage as we go forward. So let's look at it, there's a number of quarters to go.

L. Mitra Ramgopal - Sidoti & Company, LLC

Okay, thanks, it's helpful. And just quickly on the -- if we look at the organic growth this quarter, I think, it was about 10%. I think historically, you've always sort of characterized the company as a mid-to-high single digit organic growth. Are we seeing a new Cantel here in terms of double digit and beyond?

Andrew A. Krakauer

Well, I'm not ready to make a prediction on that or obviously guidance on that, but what it shows is that we -- we're not in markets that are growing at 10%, so let's put that perspective. So we are -- we continue to grow in excess of our underlying markets by -- and how well we can keep this rate has a lot to do with, in fact, of this, of the new products that we're launching, the new sales investments that we're making, go direct strategies. You know that, we have a market shift going on in the water business so the same equipment is selling at higher average selling prices organic growth is higher. We've gotten back to sort of normal for Endoscopy equipment, so now you're seeing larger-than-market growth because we have our chemistry and service business that have already -- that have been growing right to the last few quarters. So I'm not ready to say that we are going to guarantee that we can grow by 10%, but it's certainly in our company if we could just implement all of the things we're talking about. And frankly, you can't -- you shouldn't be as a company, try to make the investments that we're making, if they don't generate that kind of organic growth because first of all, that's what pays for. The second of all, that's the reason we're investing, to beat the market. So I would hope that we continue 10% organic growth. I mean, that certainly would be a goal to do that with the investments that we're making. There are no productions, Mitra

L. Mitra Ramgopal - Sidoti & Company, LLC

That's very helpful. And finally again, given all the opportunities you are seeing, especially on the international front, acquisition pipeline et cetera, should we expect the focus to remain on one Endoscopy and Healthcare Disposables in the near to medium term?

Andrew A. Krakauer

I'm sorry, should we...

L. Mitra Ramgopal - Sidoti & Company, LLC

Expect the focus to remain on those 3 platforms or are you depending on what comes up you might be willing to add a fourth or...

Andrew A. Krakauer

I'm sorry, I understand the question now. That's really an acquisition question. In fact, Seth[ph] has answered this question so many times. I'm going to let him answer that question.

Jorgen B. Hansen

Thanks, Mitra. I think, as always, you should expect to see us continue to add to our 3 primary pillars, Endoscopy, Water Purification and Filtration, as well as Healthcare Disposables. That being said -- and I would say that the majority of our pipeline does focus on those categories. That being said, there are some other attractive areas outside of those 3 pillars that remain within infection control universe that we think would be attractive additions to our business. But there's a lot of strategic thinking has to go into the availability of the assets, as well as our ability to properly integrate them and make sure we can manage them adequately. So we continue to evaluate opportunities outside of our core franchises. And if the right one becomes available and we are absolutely convinced that it is a strong strategic addition to our portfolio, we would do that. But again, it would be consistent with the overall theme of our focus, which remains Infection Control and Prevention.


[Operator Instructions] Gentlemen, there are no further questions at this time.

Andrew A. Krakauer

Okay, fine. This is Andy Krakauer. Listen, so thank, everybody. Thank you, everyone, for listening. We'll be speaking to you again in March to talk about our second quarter of fiscal year '14 earnings, and so thanks for now.


Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.

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