January 6, 2017

AngioDynamics Reports Fiscal 2017 Second Quarter Results

  • Q2 net sales of $89.0 million, down 0.3% year-over-year
  • Q2 GAAP earnings per share of $0.37; non-GAAP adjusted EPS up 36% from Q2 Fiscal 2016
  • Q2 operating cash generation of $14.9 million; free cash flow generation of $13.6 million
  • Reiterated FY2017 revenue guidance; increased adjusted EPS and free cash flow guidance

ALBANY, N.Y., Jan. 06, 2017 (GLOBE NEWSWIRE) -- AngioDynamics (NASDAQ:ANGO), a leading provider of innovative, minimally invasive medical devices for vascular access, surgery, peripheral vascular disease and oncology, today reported financial results for the 2017 fiscal year second quarter ended November 30, 2016.

"Our second quarter results reflect a solid quarter of execution against our fiscal 2017 plan and expectations," said Jim Clemmer, President and Chief Executive Officer of AngioDynamics. "We again saw results driven by the Peripheral Vascular franchise, enhanced by demand created by the Cook Medical angiographic catheter recall. Looking across the business, other areas of strength include continued momentum in BioFlo Midline in the Vascular Access franchise, as well as increased utilization in NanoKnife within Oncology/Surgery."

Mr. Clemmer continued "As we move forward into the second half of fiscal 2017, we continue to make solid progress towards enhancing our operations and developing our long-term growth strategy. During the quarter, we implemented some operational improvements in the form of SKU rationalization, supply chain optimization and a more disciplined approach to controlling our SG&A costs, which we believe will result in improved profitability. Our senior management team continues to work diligently to develop and refine a growth strategy that will improve our operational performance, unlock strategic opportunities and create long-term value for our shareholders. We look forward to providing further updates on our strategic progress in the coming months."

Second Quarter 2017 Financial Results 
Net sales for the fiscal second quarter were $89.0 million, down 0.3% compared with $89.3 million a year ago. Currency did not have an impact in the quarter.

The following comparisons exclude the Boston Scientific supply agreement.  

Peripheral Vascular net sales in the second quarter were $52.9 million compared to $51.1 million in the fiscal year 2016 second quarter. Vascular Access net sales in the second quarter were $23.6 million compared to $25.0 million a year ago. Oncology/Surgery net sales in the second quarter were $11.8 million compared to $12.5 million in the fiscal year 2016 second quarter. Overall U.S. net sales in the second quarter were $70.8 million compared to $70.7 million in the year ago second quarter. Overall International net sales in the second quarter were $17.4 million compared to $17.9 million a year ago.

In the second quarter of fiscal 2017 the Company recorded net income of $13.7 million, or $0.37 on a per share basis, driven primarily by adjustments to contingent consideration and operational improvements. The adjustments to contingent consideration comprise $16.5 million based upon a determination that both AngioVac and an R&D project related to tip location will no longer meet the necessary milestones that will require future liability payments. These gains were partially offset by a $3.6 million write-off of the intangible asset associated with the original consideration paid for the tip location project, as well as an unrelated $2.0 million write-off of the company's investment in EmboMedics. The Company recorded a net loss of $0.3 million, or $0.01 on a per share basis, in the second quarter of fiscal 2016. Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income for the second quarter of fiscal 2017 was $6.9 million, or $0.19 per share, compared to an adjusted net income of $5.1 million, or $0.14 per share, in the second quarter of fiscal 2016.

Adjusted EBITDA in the second quarter of fiscal 2017, excluding the items shown in the attached reconciliation table, was $16.1 million, or $0.43 per share, compared to $13.5 million, or $0.37 per share, in the second quarter of fiscal 2016.

In the second quarter of fiscal 2017, the Company generated $14.9 million in operating cash flow and $13.6 million in free cash flow. As of November 30, 2016, cash and cash equivalents were $35.7 million and debt was $116.5 million .

"Our prudent and thoughtful approach to financial management was apparent in our financial results, as we continue to exceed our projections in free cash flow generation" said Michael Greiner, Executive Vice President and Chief Financial Officer of AngioDynamics. "A strong balance sheet is critical to supporting our long-term growth strategy. During and after the quarter, we took steps to further strengthen our capital structure by entering into a new credit facility as well as paying down debt, which provides us flexibility going forward to capitalize on growth opportunities. We also authorized a share repurchase program, which will be supported by our continued free cash flow generation and underscores our confidence in the future of our business."

Six Months Financial Results 
For the six months ended November 30, 2016, net sales were $177.1 million compared to the $173.0 million reported a year ago. The Company's net income was $15.0 million, or $0.41 per share, compared to net loss of $1.1 million, or $0.03 per share, reported a year ago. Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income was $13.3 million, or $0.36 per share, compared to adjusted net income of $9.0 million, or $0.25 per share, a year ago. Adjusted EBITDA, excluding the items shown in the attached reconciliation table, was $31.0 million, or $0.84 per share, compared to $25.1 million, or $0.69 per share, in the year ago period.

Fiscal Year 2017 Financial Guidance 
The Company announced its FY2017 revenue guidance will remain unchanged, with net sales guidance in the range of $355 million to $360 million. The Company is increasing its FY2017 adjusted EPS guidance from a range of $0.62 to $0.65 to a range of $0.65 to $0.67 and free cash flow guidance from greater than $30 million to greater than $35 million.

Conference Call 
AngioDynamics will host a conference call today at 8:00am ET to discuss its second quarter results. To participate in the live call by telephone, please call 888-461-2031 and reference the Conference ID: 2977550. In addition, a live webcast and archived replay of the call will be available at investors.angiodynamics.com/events. To access the live webcast, please go to the website 15-minutes prior its start to register, download and install the necessary software.

Use of Non-GAAP Measures 
Management uses non-GAAP measures to establish operational goals, and believes that non-GAAP measures may assist investors in analyzing the underlying trends in AngioDynamics' business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this news release, AngioDynamics has reported net sales excluding a supply agreement; adjusted EBITDA; adjusted gross profit; adjusted net income, adjusted earnings per share and free cash flow. Management uses these measures in its internal analysis and review of operational performance. Management believes that these measures provide investors with useful information in comparing AngioDynamics' performance over different periods. By using these non-GAAP measures, management believes that investors get a better picture of the performance of AngioDynamics' underlying business. Management encourages investors to review AngioDynamics' financial results prepared in accordance with GAAP to understand AngioDynamics' performance taking into account all relevant factors, including those that may only occur from time to time but have a material impact on AngioDynamics' financial results. Please see the tables that follow for a reconciliation of non-GAAP measures to measures prepared in accordance with GAAP.

About AngioDynamics 
AngioDynamics Inc. is a leading provider of innovative, minimally invasive medical devices used by professional healthcare providers for vascular access, surgery, peripheral vascular disease and oncology. AngioDynamics' diverse product lines include market-leading ablation systems, fluid management systems, vascular access products, angiographic products and accessories drainage products, thrombolytic products and venous products. More information is available at AngioDynamics.com.

Trademarks 
AngioDynamics, the AngioDynamics logo, BioFlo, AngioVac and NanoKnife are trademarks and/or registered trademarks of AngioDynamics Inc., an affiliate or a subsidiary. EmboMedics is a trademark and/or registered trademark of EmboMedics Inc.

Safe Harbor 
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding AngioDynamics' expected future financial position, results of operations, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include the words such as "expects," "reaffirms," "intends," "anticipates," "plans," "believes," "seeks," "estimates," "optimistic," or variations of such words and similar expressions, are forward-looking statements. These forward looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are cautioned that actual events or results may differ from AngioDynamics' expectations. Factors that may affect the actual results achieved by AngioDynamics include, without limitation, the ability of AngioDynamics to develop its existing and new products, technological advances and patents attained by competitors, infringement of AngioDynamics' technology or assertions that AngioDynamics' technology infringes the technology of third parties, the ability of AngioDynamics to effectively compete against competitors that have substantially greater resources, future actions by the FDA or other regulatory agencies, domestic and foreign health care reforms and government regulations, results of pending or future clinical trials, overall economic conditions, the results of on-going litigation, challenges with respect to third-party distributors or joint venture partners or collaborators, the results of sales efforts, the effects of product recalls and product liability claims, changes in key personnel, the ability of AngioDynamics to execute on strategic initiatives, the effects of economic, credit and capital market conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, the ability of AngioDynamics to integrate purchased businesses, as well as the risk factors listed from time to time in AngioDynamics' SEC filings, including but not limited to its Annual Report on Form 10-K for the year ended May 31, 2016 and  its quarterly report on Form 10-Q for the fiscal period ended August 31, 2016. AngioDynamics does not assume any obligation to publicly update or revise any forward-looking statements for any reason.

In the United States, the NanoKnife System has received a 510(k) clearance by the Food and Drug Administration for use in the surgical ablation of soft tissue, and is similarly approved for commercialization in Canada, the European Union and Australia. The NanoKnife System has not been cleared for the treatment or therapy of a specific disease or condition.

   
ANGIODYNAMICS, INC. AND SUBSIDIARIES  
CONSOLIDATED INCOME STATEMENTS  
(in thousands, except per share data)  
           
 Three months ended Six months ended  
 Nov 30, Nov 30, Nov 30, Nov 30,  
  2016   2015   2016   2015   
                    
 (unaudited) (unaudited)  
          
Net sales$89,029  $89,284  $177,127  $173,037   
Cost of sales (exclusive of intangible amortization) 44,019   43,400   87,085   83,782   
Gross profit 45,010   45,884    90,042   89,255   
% of net sales 50.6%  51.4%  50.8%  51.6%  
          
Operating expenses         
Research and development 5,913   6,179   12,622   12,308   
Sales and marketing  19,524   21,378   39,012   42,578   
General and administrative 7,784   8,082   15,952   15,996   
Amortization of intangibles 4,291   4,483   8,526   8,898   
Change in fair value of contingent consideration (15,951)  306   (15,508)  661   
Acquisition, restructuring and other items, net 7,861   3,913   10,278   6,056   
Medical device excise tax -   978   -   1,981   
Total operating expenses 29,422   45,319   70,882   88,478   
Operating  income 15,588   565   19,160   777   
Other (expense), net  (1,173)  (1,236)  (1,842)  (2,153)  
Income (loss) before income taxes 14,415   (671)   17,318   (1,376)  
Income tax expense (benefit) 681   (337)  2,284   (267)  
Net income (loss)$13,734  $(334) $15,034  $(1,109)  
           
Earnings (loss) per share         
Basic$0.37  $(0.01) $0.41  $(0.03)  
Diluted$0.37  $(0.01) $0.41  $(0.03)  
          
Weighted average shares outstanding         
Basic 36,807   36,140   36,606    36,051   
Diluted 37,146   36,140   37,000   36,051   
          

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES
 
GAAP TO NON-GAAP RECONCILIATION
 
(in thousands, except per share data) 
          
 Reconciliation of Gross Profit to non-GAAP Adjusted Gross Profit     
          
  Three months ended Six months ended 
  Nov 30, Nov 30, Nov 30, Nov 30, 
   2016   2015   2016   2015  
                  
  (unaudited) (unaudited) 
          
 Gross profit$45,010  $45,884  $90,042  $89,255  
          
 Recall expenses included in cost of sales 205   -   205   -  
 Adjusted gross profit$45,215  $45,884  $90,247  $89,255  
 Adjusted gross profit % of sales 50.8%  51.4%  51.0%  51.6% 
          
 Reconciliation of Net Income to non-GAAP Adjusted Net Income:     
          
  Three months ended Six months ended 
  Nov 30, Nov 30, Nov 30, Nov 30, 
   2016   2015   2016   2015  
                   
  (unaudited) (unaudited) 
          
 Net income (loss)$13,734  $(334) $15,034  $(1,109) 
          
 Recall expenses included in cost of sales 205   -    205   -  
 Amortization of intangibles 4,291   4,483   8,526    8,898  
 Change in fair value of contingent consideration (15,951)  306   (15,508)  661  
 Acquisition, restructuring and other items, net (1) 7,861   3,913   10,278   6,056  
 Tax effect of non-GAAP items (2)  (3,215)  (3,268)  (5,212)  (5,464) 
 Adjusted net income$6,926  $5,100  $13,323  $9,042  
          
          
 Reconciliation of Diluted Earnings Per Share to non-GAAP Adjusted Diluted Earnings Per Share:   
           
  Three months ended Six months ended 
  Nov 30, Nov 30, Nov 30, Nov 30, 
   2016   2015   2016   2015  
                  
   (unaudited) (unaudited) 
          
 Diluted earnings (loss) per share$0.37  $(0.01) $0.41  $(0.03) 
           
 Recall expenses included in cost of sales 0.01   -   0.01    -  
 Amortization of intangibles 0.12   0.12   0.23   0.24  
 Change in fair value of contingent consideration (0.43)  0.01   (0.42)  0.02  
 Acquisition, restructuring and other items, net (1) 0.21   0.11   0.28   0.17  
 Tax effect of non-GAAP items (2) (0.09)  (0.09)  (0.14)  (0.15) 
 Adjusted diluted sharecount effect (4) (0.00)  0.00   -   0.00  
 Adjusted diluted earnings per share$0.19  $0.14  $0.36  $0.25  
          
           
 Adjusted diluted sharecount 37,146   36,256   37,000   36,399  
          
 (1)  Includes costs related to mergers and acquisition activities, integrations, restructurings, asset impairments and write-offs, litigation, and other items. 
 (2)  Represents the net tax effect of non-GAAP adjustments.  Based on our historical non-GAAP earnings, our tax effect of non-GAAP items has been calculated assuming no valuation allowance on our deferred tax assets and an effective tax rate of 36%. 
                  

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES
 
GAAP TO NON-GAAP RECONCILIATION (Continued)
 
(in thousands, except per share data) 
                   
Reconciliation of Net Income to EBITDA and Adjusted EBITDA: 
 
           
   Three months ended Six months ended 
   Nov 30, Nov 30, Nov 30, Nov 30, 
   2016  2015 2016 2015 
                   
   (unaudited) (unaudited) 
           
Net income (loss)$13,734  $(334 ) $15,034  $(1,109) 
           
Income tax expense (benefit)  (681)  337   (2,284)  267  
Other (expense), net (1,173)  (1,236)  (1,842)  (2,153) 
Depreciation and amortization 6,033   7,078    12,076   14,072  
EBITDA  21,621   7,643   31,236   14,849  
            
Recall expenses included in cost of sales 205   -   205   -  
Change in fair value of contingent consideration (15,951)   306   (15,508)  661  
Acquisition, restructuring and other items, net (1,2) 7,861   3,536    10,278   5,302  
Credit card fees 704   809   1,397    1,450  
Stock-based compensation 1,701    1,234   3,385   2,860  
Adjusted EBITDA$16,141  $13,528  $30,993  $25,122  
            
Per diluted share:        
EBITDA $0.58  $0.21  $0.84  $0.41  
Adjusted EBITDA$0.43  $0.37  $0.84  $0.69  
           
           
(1)  Includes costs related to mergers and acquisition activities, integrations, restructurings, asset impairments and write-offs, litigation, and other items. 
(2)  Excludes depreciation expense captured in the depreciation and amortization component of the reconciliation.   

 

 ANGIODYNAMICS, INC. AND SUBSIDIARIES  
 PRELIMINARY NET SALES BY PRODUCT CATEGORY AND BY GEOGRAPHY  
 (unaudited in thousands)  
                       
  Three months ended Six months ended  
        Currency Constant        Currency Constant  
  Nov 30, Nov 30, % Impact Currency Nov 30, Nov 30, % Impact Currency  
   2016  2015 Growth (Pos) Neg Growth  2016  2015 Growth (Pos) Neg Growth  
                        
 Net Sales by Product Category                     
 Peripheral Vascular$  52,895 $  51,055 4%      $  104,304 $  98,161 6%      
 Vascular Access   23,553    25,020 -6%         48,558    49,665 -2%      
 Oncology/Surgery   11,780    12,471 -6%        22,844    23,805 -4%      
 Total Excluding Supply Agreement   88,228    88,546 0% 0% 0%    175,706    171,631 2% 1% 3%  
 Supply Agreement   801    738 9% 0% 9%    1,421    1,406 1% 0% 1%  
 Total$  89,029 $  89,284 0% 0%  0% $  177,127 $  173,037 2% 1% 3%  
                       
 Net Sales by Geography                      
 United States$  70,782 $  70,653 0% 0% 0% $  142,535 $  139,022 3% 0% 3%  
 International   17,446    17,893 -2% 1% -1%    33,171    32,609 2% 1% 3%  
 Supply Agreement   801    738 9% 0% 9%    1,421    1,406 1% 0% 1%  
 Total$  89,029 $  89,284 0% 0% 0% $  177,127 $  173,037 2% 1% 3%  
                        

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
(in thousands) 
      
  Nov 30, May 31, 
   2016  2016 
  (unaudited) (unaudited) 
Assets    
Current Assets    
 Cash and cash equivalents$35,664 $32,333 
 Marketable securities 1,203  1,653 
  Total cash and investments 36,867  33,986 
      
 Accounts receivable, net 50,171  52,867 
 Inventories  56,667  55,370 
 Prepaid income taxes 644  788 
 Prepaid expenses and other 3,453  3,243 
 Total current assets 147,802  146,254 
      
Property, plant and equipment, net 47,116  48,284 
Other non-current assets 1,561  3,827 
Intangible assets, net 154,439  166,577 
Goodwill 361,252  361,252 
 Total Assets$712,170 $726,194 
      
Liabilities and Stockholders' Equity    
Current Liabilities    
 Accounts payable$15,286 $15,616 
 Accrued liabilities 20,908  21,896 
 Income taxes payable 118  46 
 Current portion of long-term debt 5,000  16,250 
 Current portion of contingent consideration 9,440  12,919 
 Total current liabilities 50,752  66,727 
Long-term debt, net of current portion 110,163  104,291 
Deferred income taxes, long-term 23,750  21,684 
Contingent consideration, net of current portion 3,073  25,356 
Other long-term liabilities 1,083  908 
 Total Liabilities 188,821  218,966 
      
Stockholders' equity 523,349  507,228 
 Total Liabilities and Stockholders' Equity$712,170 $726,194 
      

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(in thousands) 
         
 Three months ended Six months ended 
 Nov 30, Nov 30, Nov 30, Nov 30, 
  2016   2015   2016   2015  
 (unaudited) (unaudited) (unaudited)  (unaudited) 
         
Cash flows from operating activities:        
Net  income  (loss)$13,734  $(334) $15,034  $(1,109) 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization 6,133   7,197   12,286   14,310  
Stock-based compensation 1,701   1,234   3,385   2,860  
Change in fair value of contingent consideration (15,951)  306   (15,508)  661  
Fixed and intangible asset impairments and disposals 3,699   402   3,744   622  
Deferred income taxes 505   (383)  2,070   (591) 
Change in accounts receivable allowance (413)  229   (610)  338  
Write-off of other assets 2,685   -   2,685   -  
Other (594)  (248)  (576)  (261) 
Changes in operating assets and liabilities, net of acquisitions:        
Receivables 221   (1,017)  3,043   4,908  
Inventories 1,491   3,449    (1,558)  (3,473) 
Prepaid and other assets 401   464   (468)  (2,141) 
Accounts payable and accrued liabilities 1,335   (1,720)  (1,140)  (1,846) 
Net cash provided by (used in) operating activities 14,947   9,579   22,387   14,278  
         
 Cash flows from investing activities:         
Additions to property, plant and equipment (1,365)  (425)  (1,846)  (1,168) 
Proceeds from sale or maturity of marketable securities 450   25   450   25  
Net cash provided by (used in) investing activities (915)  (400)  (1,396)  (1,143) 
         
Cash flows from financing activities:         
Repayment of long-term debt (118,910)  (2,500)  (121,410)  (3,750) 
Proceeds from issuance  of long-term debt and revolver borrowings 116,471   -    116,471   -  
Deferred financing costs on long-term debt (1,177)  -   (1,177)  -  
Payment of Contingent Consideration (7,750)  (7,750)  (9,850)  (9,850) 
Repurchase of shares (7,840)  -   (7,840)  -  
Proceeds from exercise of stock options and ESPP 3,601   (49)  6,404    1,230  
Net cash provided by (used in) financing activities (15,605)  (10,299)  (17,402)  (12,370) 
          
Effect of exchange rate changes on cash (174)  (152)  (258)  (160) 
Increase  (Decrease) in cash and cash equivalents (1,747)  (1,272)  3,331   605  
         
Cash and cash equivalents        
Beginning of period 37,411   20,268   32,333   18,391  
End of period$ 35,664  $18,996  $35,664  $18,996   
         

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(in thousands)
            
 Reconciliation of Free Cash Flows:          
 
 Three months ended Six months ended 
 Nov 30, Nov 30, Nov 30, Nov 30, 
  2016   2015   2016   2015  
                 
 (unaudited) (unaudited) 
         
 Net cash provided by (used in) operating activities$14,947  $9,579  $22,387  $14,278  
 Additions to property, plant and equipment (1,365)  (425)  (1,846)  (1,168) 
 Free Cash Flow$13,582  $9,154  $20,541  $13,110  
   


Company Contact:

AngioDynamics Inc.

Caitlin Stefanik

(518) 795-1418

cstefanik@angiodynamics.com



Investor Relations Contacts:

FTI Consulting

Jim Polson

(312) 553-6730

Jim.Polson@fticonsulting.com,

Kotaro Yoshida

(212) 850-5690

Kotaro.Yoshida@fticonsulting.com



Media Contact:

FTI Consulting

Kimberly Ha

(212) 850-5612

kimberly.ha@fticonsulting.com 

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