March 30, 2017

AngioDynamics Reports Fiscal 2017 Third Quarter Results

  • Q3 net sales of $85.6 million, down 2% year-over-year
  • Q3 GAAP earnings per share of $0.08; non-GAAP adjusted EPS up 27% from Q3 fiscal 2016
  • Q3 operating cash generation of $14.4 million; free cash flow generation of $14.0 million
  • Revised FY2017 revenue and adjusted EPS guidance; free cash flow guidance unchanged

ALBANY, N.Y., March 30, 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 third quarter ended February 28, 2017.

"The quarter demonstrates continued execution on our core imperatives to improve our operational efficiency, strengthen our balance sheet and move forward on initiatives that will enable us to deliver sustainable top line revenue growth," said Jim Clemmer, President and Chief Executive Officer of AngioDynamics. "We have already taken several positive steps to improve our operational efficiency and simplify our supply chain, and in February we made the decision to consolidate operations in Denmead, U.K. and Manchester, Ga. into our New York facilities."

Mr. Clemmer added, "As the quarter ended, we obtained CE Mark certification for the Solero Microwave Tissue Ablation System. With an initial launch in Europe in April, we await FDA approval in the U.S. which we believe will fortify our global position in the innovative ablation market. To support our long-term performance, we will remain focused on delivering high value products within growing markets by better leveraging our renewed R&D process and our existing portfolio of high value offerings like BioFlo and NanoKnife."

Third Quarter 2017 Financial Results
Net sales for the fiscal third quarter were $85.6 million compared with $87.4 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 third quarter were $48.5 million compared to $49.8 million in the fiscal year 2016 third quarter. Vascular Access net sales in the third quarter were $23.7 million compared to $24.9 million a year ago. Oncology/Surgery net sales in the third quarter were $13.0 million compared to $12.1 million in the fiscal year 2016 third quarter. Overall U.S. net sales in the third quarter were $67.4 million compared to $69.5 million in the year ago third quarter. Overall International net sales in the third quarter were $17.8 million compared to $17.2 million a year ago.

In the third quarter of fiscal 2017, the Company recorded net income of $2.9 million, or $0.08 on a per share basis. The Company recorded net income of $0.6 million, or $0.02 on a per share basis, in the third quarter of fiscal 2016. Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income for the third quarter of fiscal 2017 was $6.9 million, or $0.19 per share, compared to an adjusted net income of $5.4 million, or $0.15 per share, in the third quarter of fiscal 2016.

Adjusted EBITDA in the third quarter of fiscal 2017, excluding the items shown in the attached reconciliation table, was $15.5 million compared to $13.9 million in the third quarter of fiscal 2016.

In the third quarter of fiscal 2017, the Company generated $14.4 million in operating cash flow and $14.0 million in free cash flow. As of February 28, 2017, cash and cash equivalents were $35.6 million and debt was $98.8 million.

"Our commitment to prudent financial management during the quarter was evidenced by year-over-year and sequential gross margin expansion, EPS growth and strong cash flow," said Michael Greiner, Executive Vice President and Chief Financial Officer of AngioDynamics. "To further enhance our financial performance and strengthen our operations, the consolidation of our manufacturing operations, which is expected to be completed and fully integrated by the end of the third quarter of the 2018 fiscal year, will drive additional efficiencies and improve margins. We are confident that a solid operating platform and strong balance sheet will fuel our long-term growth potential."

Nine Months Financial Results
For the nine months ended February 28, 2017, net sales were $262.7 million compared to $260.5 million a year ago. The Company's net income was $17.9 million, or $0.49 per share, compared to a net loss of $0.5 million, or $0.01 per share a year ago. Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income was $20.2 million, or $0.55 per share, compared to adjusted net income of $14.4 million, or $0.40 per share, a year ago. Adjusted EBITDA, excluding the items shown in the attached reconciliation table, was $46.5 million compared to $38.9 million in the year ago period.

Fiscal Year 2017 Financial Guidance
The company is revising its FY2017 revenue guidance from a range of $355 million to $360 million to a range of $352 million to $355 million. The company is increasing its FY2017 adjusted EPS guidance from a range of $0.65 to $0.67 to a range of $0.68 to $0.70. The company's free cash flow guidance remains unchanged at greater than $35 million.

Conference Call
AngioDynamics will host a conference call today at 8:00am ET to discuss its third quarter results. To participate in the live call by telephone, please call 888-299-7212 and reference the Conference ID: 6053267. 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 to 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, NanoKnife and Solero are trademarks and/or registered trademarks of AngioDynamics Inc., an affiliate or a subsidiary.

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 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 periods ended August 31, 2016 and November 30, 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 Nine months ended
  Feb 28, Feb, 29 Feb 28, Feb, 29
   2017   2016   2017   2016 
                  
  (unaudited) (unaudited)
         
Net sales $85,602  $87,434  $262,729  $260,471 
Cost of sales (exclusive of intangible amortization)  41,810   43,900   128,895   127,682 
Gross profit  43,792   43,534    133,834   132,789 
% of net sales  51.2%   49.8%   50.9%   51.0% 
         
Operating expenses        
Research and development  5,951   5,808   18,573   18,116 
Sales and marketing  19,469   20,955   58,481   63,534 
General and administrative  7,000   6,901   22,952   22,897 
Amortization of intangibles  4,360   4,458   12,886   13,356 
Change in fair value of contingent consideration  122    (31)  (15,386)  630 
Acquisition, restructuring and other items, net  1,750   3,042    12,028   9,098 
Medical device excise tax  -   435   -   2,416 
Total operating expenses  38,652   41,568   109,534   130,047 
Operating  income  5,140   1,966   24,300    2,742 
Other (expense), net  (583)  (1,021)  (2,425)  (3,173)
Income (loss) before income taxes  4,557   945   21,875   (431)
Income tax expense (benefit)  1,670   351   3,954   84 
Net income (loss) $2,887  $594  $17,921  $(515)
         
Earnings (loss) per share        
Basic $0.08  $0.02  $0.49  $(0.01)
Diluted $0.08  $0.02  $0.48  $(0.01)
         
Weighted average shares outstanding         
Basic  36,625   36,146   36,557   36,083 
Diluted  37,126   36,390   37,068   36,083 
         

 

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 Nine months ended
 Feb 28, Feb, 29 Feb 28, Feb, 29
  2017   2016   2017   2016 
                
 (unaudited) (unaudited)
        
Gross profit$43,792  $43,534  $133,834  $132,789 
         
Recall expenses included in cost of sales 14   6   216   (92)
Adjusted gross profit$43,806  $43,540   $134,050  $132,697 
Adjusted gross profit % of sales 51.2%   49.8%   51.0%   50.9% 
        
Reconciliation of Net Income to non-GAAP Adjusted Net Income:    
        
 Three months ended Nine months ended
 Feb 28, Feb, 29 Feb 28, Feb, 29
  2017   2016   2017   2016 
                
 (unaudited) (unaudited)
         
Net income (loss)$2,887  $ 594  $17,921  $(515)
        
Recall expenses included in cost of sales 14   6   216   (92)
Amortization of intangibles 4,360   4,458    12,886   13,356 
Change in fair value of contingent consideration 122   (31)  (15,386)  630 
Acquisition, restructuring and other items, net (1) 1,750    3,042   12,028   9,098 
Tax effect of non-GAAP items (2) (2,219)  (2,680)  (7,429)  (8,038)
Adjusted net income$6,914  $5,389  $20,236  $14,439  
        
        
Reconciliation of Diluted Earnings Per Share to non-GAAP Adjusted Diluted Earnings Per Share:  
        
 Three months ended Nine months ended
 Feb 28, Feb, 29 Feb 28, Feb, 29
  2017   2016   2017   2016 
                
 (unaudited) (unaudited)
        
Diluted earnings (loss) per share$0.08  $0.02  $0.48  $(0.01)
         
Recall expenses included in cost of sales$0.00   0.00  $0.01   (0.00)
Amortization of intangibles$0.12   0.12  $0.34   0.37 
Change in fair value of contingent consideration$0.00   (0.00) $(0.41)  0.02 
Acquisition, restructuring and other items, net (1)$0.05   0.08  $0.33   0.25 
Tax effect of non-GAAP items (2)$(0.06)  (0.07) $(0.20)  (0.22)
Adjusted diluted earnings per share$0.19  $0.15  $ 0.55  $0.40 
         
        
Adjusted diluted sharecount 37,126   36,390   37,068   36,083 
        
(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 Nine months ended
 Feb 28, Feb, 29 Feb 28, Feb, 29
  2017   2016   2017   2016 
                
 (unaudited) (unaudited)
        
Net income (loss)$2,887  $594  $17,921  $(515)
         
Income tax expense (benefit) (1,670)  (351)  (3,954)  (84)
Other (expense), net (583)  (1,021)  (2,425)  (3,173)
Depreciation and amortization 6,091   6,860   18,168   20,931 
EBITDA 11,231   8,826   42,468   23,673 
        
Recall expenses included in cost of sales 14   6    216   (92)
Change in fair value of contingent consideration 122   (31)  (15,386)  630 
Acquisition, restructuring and other items, net (1,2) 1,750   2,794   12,028   8,097 
Credit card fees 702   654   2,099   2,107 
Stock-based compensation 1,693   1,640   5,078   4,500 
Adjusted EBITDA$15,512  $13,889  $46,503  $38,915 
        
Per diluted share:       
EBITDA$0.30  $0.24  $1.15  $0.66 
Adjusted EBITDA$0.42  $0.38  $1.25  $1.08 
        
        
(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
NET SALES BY PRODUCT CATEGORY AND BY GEOGRAPHY
(unaudited in thousands)
                       
                      
                      
                      
                       
 Three months ended Nine months ended
        Currency Constant        Currency Constant
 Feb 28,  Feb, 29 % Impact Currency Feb 28,  Feb, 29 % Impact Currency
  2017   2016  Growth (Pos) Neg Growth  2017   2016 Growth (Pos) Neg Growth
                       
Net Sales by Product Category                     
Peripheral Vascular$48,496  $49,779 -3%     $152,800  $147,940 3%    
Vascular Access 23,680   24,911  -5%      72,238   74,576 -3%    
Oncology/Surgery 12,993   12,054 8%      35,837   35,859 0%    
Total Excluding Supply Agreement 85,169   86,744 -2% 0% -2%  260,875   258,375 1% 0% 1%
Supply Agreement 433   690 -37% 0% -37%  1,854   2,096 -12% 0% -12%
Total$85,602  $87,434 -2% 0% -2% $262,729  $260,471 1% 0% 1%
                      
                      
Net Sales by Geography                     
United States$67,366  $69,501 -3% 0% -3% $209,901  $208,523 1% 0% 1%
International 17,803   17,243 3% 1% 4%   50,974   49,852 2% 2% 4%
Supply Agreement 433   690 -37% 0% -37%  1,854   2,096 -12% 0% -12%
Total$85,602  $87,434 -2% 0% -2% $262,729  $260,471 1% 0% 1%
                      

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
     
     
     
 Feb 28,  May 31,
 2017  2016
 (unaudited)  (unaudited)
Assets    
Current Assets    
Cash and cash equivalents$ 35,571  $32,333
Marketable securities 1,203   1,653
Total cash and investments 36,774   33,986
      
Accounts receivable, net 46,302   52,867
Inventories 57,681   55,370
Prepaid income taxes 309   788
Prepaid expenses and other 3,985   3,243
Total current assets 145,051   146,254
     
Property, plant and equipment, net 46,180   48,284
Other non-current assets 1,757   3,827
Intangible assets, net 150,078   166,577
Goodwill 361,252   361,252
Total Assets$704,318  $726,194
     
Liabilities and Stockholders' Equity    
Current Liabilities    
Accounts payable$15,357  $15,616
Accrued liabilities 20,753   21,942
Current portion of long-term debt 5,000   16,250
Current portion of contingent consideration 9,531   12,919
Total current liabilities 50,641   66,727
Long-term debt, net of current portion 92,519   104,291
Deferred income taxes, long-term 25,304   21,684
Contingent consideration, net of current portion 3,104   25,356
Other long-term liabilities 1,000   908
Total Liabilities 172,568   218,966
     
Stockholders' equity 531,750   507,228
Total Liabilities and Stockholders' Equity$704,318  $726,194
     

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
           
            
           
 Three months ended  Nine months ended
 Feb 28,  Feb, 29  Feb 28,  Feb, 29
  2017    2016    2017    2016 
 (unaudited)  (unaudited)  (unaudited)  (unaudited)
           
Cash flows from operating activities:          
Net  income  (loss)$2,887   $594   $17,921   $(515)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Depreciation and amortization 6,169    6,979    18,455    21,289 
Stock-based compensation 1,693    1,640    5,078    4,500 
Change in fair value of contingent consideration 122    (31)    (15,386)   630 
Fixed and intangible asset impairments and disposals 78    53    3,822    675 
Deferred income taxes 1,554    203    3,624    (388)
Change in accounts receivable allowance 5    1,017    (605)   1,355 
Write-off of other assets -    -     2,685    - 
Other 41    261    (535)   - 
Changes in operating assets and liabilities, net of acquisitions:          
Receivables 3,855    (2,416)   6,898    2,492 
Inventories (1,027)   4,930     (2,585)   1,457 
Prepaid and other assets (747)   1,359    (1,215)   (782)
Accounts payable and accrued liabilities (265)   (2,195)   (1,405)   (4,041)
Net cash provided by (used in) operating activities 14,365    12,394    36,752    26,672 
            
 Cash flows from investing activities:           
Additions to property, plant and equipment (412)   (727)   (2,258)   (1,895)
Acquisition of businesses, net of cash acquired -    (2,000)   -    (2,000)
Acquisition of intangible assets -    (18)   -    (18)
Proceeds from sale or maturity of marketable securities -    -    450    25 
Net cash provided by (used in) investing activities (412)   (2,745)   (1,808)   (3,888)
            
Cash flows from financing activities:          
Repayment of long-term debt (17,721)   (7,500)   (139,131)   (11,250)
Proceeds from issuance  of long-term debt and revolver borrowings -    -    116,471    - 
Deferred financing costs on long-term debt (158)   -    (1,335)   - 
Payment of Contingent Consideration -    -    (9,850)   (9,850)
Repurchase of shares -    -    (7,840)   - 
Proceeds from exercise of stock options and ESPP 3,865    703    10,269    1,933 
Net cash provided by (used in) financing activities (14,014)   (6,797)   (31,416)   (19,167)
           
Effect of exchange rate changes on cash (32)   49    (290)   (111)
Increase  (Decrease) in cash and cash equivalents (93)   2,901    3,238    3,506 
            
Cash and cash equivalents          
Beginning of period 35,664    18,996    32,333    18,391 
End of period$35,571   $21,897   $35,571   $21,897 
           

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(in thousands)
         
         
         
Reconciliation of Free Cash Flows:        
 
  Three months ended Nine months ended
  Feb 28,  Feb, 29 Feb 28, Feb, 29
   2017   2016   2017   2016 
                 
  (unaudited) (unaudited)
         
Net cash provided by (used in) operating activities $  14,365  $  12,394  $  36,752  $  26,672 
Additions to property, plant and equipment    (412)    (727)    (2,258 )    (1,895)
Free Cash Flow $  13,953  $  11,667  $  34,494  $  24,777 
   
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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