Cantel Medical to Relocate Dutch Manufacturing Operations to US

Cantel Medical Corp. announced that its Minntech Corporation subsidiary will relocate all of its remaining Dutch manufacturing operations to the US. The move is part of Cantel’s continuing effort to reduce operating costs and leverage the existing infrastructure of its Minntech operations in Minneapolis.

The elimination of the Dutch manufacturing operations will lead to the discontinuance of onsite material management, quality assurance, finance and accounting, human resources and some customer service functions. Minntech will continue to maintain a strong marketing, sales, service and technical support presence based in Holland to serve customers throughout Europe, the Middle East and Africa.

According to Andrew Krakauer, Cantel’s President, “This action is designed to keep a strong sales and service presence in Europe, while significantly leveraging existing infrastructure and overhead in our Minntech subsidiary. This streamlining should be completed by December 31 and is anticipated to result in annual pre-tax savings of more than $1 million.”

In connection with the relocation plan, based on management’s preliminary good faith estimate, the Company anticipates incurring severance costs of approximately $550,000, asset impairment charges in the range of $200,000 to $300,000 and inventory write-down and other associated costs of approximately $200,000.

Of those amounts, the Company anticipates that about 50% to 60% will be recorded in the fourth quarter of fiscal year 2008 and the balance recorded during the first four months of fiscal year 2009.

In addition, the Company intends to sell its facility in Holland. Although the timing and financial effect of this sale are currently unknown, based on the appraised value of the facility, the Company anticipates that it will generate a gain on the sale of approximately $300,000.

Krakauer added, “This restructuring exemplifies Cantel’s commitment to improved financial performance, especially in light of the recent unprecedented cost increases in raw material and transportation costs being experienced throughout its divisions. These cost increases will clearly have a negative impact on the Company’s FY 2008 4th quarter performance. However, despite these increases, we believe various initiatives now being undertaken by our divisions and at corporate headquarters (including the imposition of price increases to our customers) will lead to significant earnings growth in FY 2009 and beyond.”

Cantel Medical Corp. is a leading provider of infection prevention and control products in the healthcare market. Its products include specialized medical device reprocessing systems for renal dialysis and endoscopy, dialysate concentrates and other dialysis supplies, disposable infection control products primarily for the dental industry, water purification equipment, sterilants, disinfectants and cleaners, hollow fiber membrane filtration and separation products for medical and non-medical applications, and specialty packaging for infectious and biological specimens.

SOURCE: Businesswire