AngioDynamics Reports Fiscal 2017 First Quarter Results

  • Q1 net sales of $88.1 million, up 5% year-over-year
  • Q1 GAAP earnings per share of $0.04; non-GAAP adjusted EPS of $0.17
  • Q1 operating cash generation of $7.4 million
  • FY2017 guidance remains unchanged

ALBANY, N.Y., Oct. 05, 2016 (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 first quarter financial results for the 2017 fiscal quarter ended August 31, 2016.

“I’m pleased with our first quarter performance, which lays the foundation for continued positive momentum in fiscal 2017,” said Jim Clemmer, President and Chief Executive Officer of AngioDynamics. “These results were primarily driven by growth in the Peripheral Vascular franchise as a result of opportunities created by the Cook Medical recall. Looking across the business, we also delivered a solid performance in BioFlo Midline and Dialysis in the Vascular Access franchise, and growth for NanoKnife and Microwave in Oncology/Surgery. As we move through fiscal 2017, we remain committed to executing on our long-term strategy of pursuing initiatives where we have a clear competitive advantage, focusing on driving operational efficiency and developing products that improve patient outcomes and lessen the burden on the provider and healthcare system.”

First Quarter 2017 Financial Results
Net sales for the fiscal first quarter were $88.1 million, an increase of 5% compared with $83.8 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 first quarter were $51.4 million compared to $47.1 million in the fiscal year 2016 first quarter. Vascular Access net sales in the first quarter were $25.0 million compared to $24.6 million a year ago. Oncology/Surgery net sales in the first quarter were $11.1 million compared to $11.3 million in the fiscal year 2016 first quarter. Overall U.S. net sales in the first quarter were $71.8 million compared to $68.4 million in the year ago first quarter. Overall International net sales in the first quarter were $15.7 million compared to $14.7 million a year ago.

In the first quarter of fiscal 2017 the Company recorded net income of $1.3 million, or $0.04 on a per share basis, driven by volume growth and continued margin improvement. The Company recorded a net loss of $0.8 million, or $0.02 on a per share basis, in the first quarter of fiscal 2016. Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income for the first quarter was $6.4 million, or $0.17 per share, compared to an adjusted net income of $4.0 million, or $0.11 per share, in the first quarter of fiscal 2016.

Adjusted EBITDA in the first quarter of fiscal 2017, excluding the items shown in the attached reconciliation table, was $14.9 million, or $0.40 per share, compared to $11.6 million, or $0.32 per share, in the first quarter of fiscal 2016.

In the first quarter of fiscal 2017, the Company generated $7.4 million in operating cash flow and $7.0 million in free cash flow. As of August 31, 2016, cash and cash equivalents were $37.4 million and gross debt was $118.9 million excluding the net impact of deferred financing costs.

“In addition to delivering solid financial performance in revenue and EPS, we continued to generate strong free cash flow in the first quarter,” said Michael Greiner, Chief Financial Officer of AngioDynamics. “Going forward we will remain focused on improving our operating performance and free cash flow generation.  By doing so, we will be able to support long-term value creation for our stakeholders by strategically investing in growth opportunities and further strengthening our balance sheet.”

Fiscal Year 2017 Financial Guidance
The Company announced its FY2017 guidance will remain unchanged, with net sales guidance of $355 million to $360 million and adjusted EPS of $0.62 to $0.65. The Company reiterated its FY2017 free cash flow guidance of greater than $30 million.

Conference Call
AngioDynamics will host a conference call today at 8:00am ET to discuss its first quarter results. To participate in the live call by telephone, please call 888-211-0353 and reference the Conference ID: 8618019. 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 sales growth; adjusted EBITDA (income before interest, taxes, depreciation and amortization); adjusted gross profit; adjusted net income and adjusted earnings per share. Additionally, this press release evaluates results on a constant currency basis. As a non-GAAP measure, constant currency excludes the impact of foreign currency exchange rate fluctuations. 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, angioplasty products, drainage products, thrombolytic products and venous products. More information is available at AngioDynamics.com.

Trademarks
AngioDynamics, the AngioDynamics logo, BioFlo and NanoKnife 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 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. 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  
  August 31,   August 31,  
    2016       2015    
                 
  (unaudited)  
         
Net sales $ 88,098     $ 83,753    
Cost of sales (exclusive of intangible amortization)   43,066       40,382    
Gross profit   45,032       43,371    
% of net sales   51.1 %     51.8 %  
         
Operating expenses        
Research and development   6,709       6,129    
Sales and marketing   19,488       21,200    
General and administrative   8,168       7,914    
Amortization of intangibles   4,235       4,415    
Change in fair value of contingent consideration   443       355    
Acquisition, restructuring and other items, net   2,417       2,143    
Medical device excise tax         1,003    
Total operating expenses   41,460       43,159    
Operating  income (loss)   3,572       212    
Other income (expense), net   (669 )     (917 )  
Income (loss) before income taxes   2,903       (705 )  
Income tax expense (benefit)   1,603       70    
Net income (loss) $ 1,300     $ (775 )  
         
Earnings (loss) per share        
Basic $ 0.04     $ (0.02 )  
Diluted $ 0.04     $ (0.02 )  
         
Weighted average shares outstanding        
Basic   36,319       35,960    
Diluted   36,698       35,960    
         

 

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    
  August 31,   August 31,    
    2016       2015      
                   
  (unaudited)    
           
Gross profit $ 45,032     $ 43,371      
           
Recall expenses included in cost of sales         (27 )    
Adjusted gross profit $ 45,032     $ 43,344      
Adjusted gross profit % of sales   51.1 %     51.8 %    
           
Reconciliation of Net Income to non-GAAP Adjusted Net Income:    
           
  Three months ended    
  August 31,   August 31,    
    2016       2015      
                   
  (unaudited)    
           
Net income (loss) $ 1,300     $ (775 )    
           
Recall expenses included in cost of sales         (27 )    
Amortization of intangibles   4,235       4,415      
Change in fair value of contingent consideration   443       355      
Acquisition, restructuring and other items, net (1)   2,417       2,143      
Tax effect of non-GAAP items (2)   (1,996 )     (2,155 )    
Adjusted net income $ 6,399     $ 3,956      
           
           
Reconciliation of Diluted Earnings Per Share to non-GAAP Adjusted Diluted Earnings Per Share:  
           
  Three months ended    
  August 31,   August 31,    
    2016       2015      
                   
  (unaudited)    
           
Diluted earnings (loss) per share $ 0.04     $ (0.02 )    
           
Amortization of intangibles   0.11       0.12      
Change in fair value of contingent consideration   0.01       0.01      
Acquisition, restructuring and other items, net (1)   0.06       0.06      
Tax effect of non-GAAP items (2)   (0.05 )     (0.06 )    
Adjusted diluted earnings per share $ 0.17     $ 0.11      
           
           
Adjusted diluted sharecount   36,698       36,537      
           
(1)  Includes costs related to mergers and acquisition activities, integrations, restructurings, debt refinancings, litigation, and other items.    
(2)  Represents the net tax effect of non-GAAP adjustments.    
                   

 

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    
      August 31,   August 31,    
        2016       2015      
                       
      (unaudited)    
               
Net income (loss)     $ 1,300     $ (775 )    
               
Income tax (expense) benefit       1,603       70      
Other (income) expense, net       669       917      
Depreciation and amortization       6,042       6,993      
EBITDA       9,614       7,205      
               
Recall expenses included in cost of sales             (27 )    
Change in fair value of contingent consideration       443       355      
Acquisition, restructuring and other items, net (1,2)       2,417       1,766      
Credit card fees       694       641      
Stock-based compensation       1,684       1,626      
Adjusted EBITDA     $ 14,852     $ 11,566      
               
Per diluted share:              
EBITDA     $ 0.26     $ 0.20      
Adjusted EBITDA     $ 0.40     $ 0.32      
               
(1)  Includes costs related to mergers and acquisition activities, integrations, restructurings, debt refinancings, 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    
                Currency   Constant    
    August 31,   August 31,   %   Impact   Currency    
      2016       2015     Growth   (Pos) Neg   Growth    
                         
  Net Sales by Product Category                      
  Peripheral Vascular $   51,409     $   47,106       9 %            
  Vascular Access     25,005         24,645       1 %            
  Oncology/Surgery     11,064         11,334       -2 %            
  Total Excluding Supply Agreement     87,478         83,085       5 %     0 %     5 %    
  Supply Agreement     620         668       -7 %     0 %     -7 %    
  Total $   88,098     $   83,753       5 %     0 %     5 %    
                         
  Net Sales by Geography                      
  United States $   71,753     $   68,369       5 %     0 %     5 %    
  International     15,725         14,716       7 %     1 %     8 %    
  Supply Agreement     620         668       -7 %     0 %     -7 %    
  Total $   88,098     $   83,753       5 %     0 %     5 %    
                         

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(in thousands)  
           
    August 31,   May 31,  
      2016       2016    
    (unaudited)   (unaudited)  
Assets        
Current Assets        
  Cash and cash equivalents $ 37,411     $ 32,333    
  Marketable securities   1,647       1,653    
  Total cash and investments   39,058       33,986    
           
  Accounts receivable, net   50,124       52,867    
  Inventories   58,274       55,370    
  Prepaid income taxes   568       788    
  Prepaid expenses and other   4,258       3,243    
  Total current assets   152,282       146,254    
           
Property, plant and equipment, net   47,230       48,284    
Other non-current assets   3,605       3,827    
Intangible assets, net   162,342       166,577    
Goodwill   361,252       361,252    
  Total Assets $ 726,711     $ 726,194    
           
Liabilities and Stockholders’ Equity        
Accounts payable $ 15,648     $ 15,616    
Accrued liabilities   19,214       21,896    
Income taxes payable   16       46    
Current portion of long-term debt   17,500       16,250    
Current portion of contingent consideration   13,053       12,919    
  Total current liabilities   65,431       66,727    
Long-term debt, net of current portion   100,652       104,291    
Deferred income taxes, long-term   23,246       21,684    
Contingent consideration, net of current portion   23,565       25,356    
Other long-term liabilities   1,100       908    
  Total Liabilities   213,994       218,966    
           
Stockholders’ equity   512,717       507,228    
  Total Liabilities and Stockholders’ Equity $ 726,711     $ 726,194    
           

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(in thousands)  
         
  Three months ended  
  August 31,   August 31,  
    2016       2015    
  (unaudited)   (unaudited)  
         
Cash flows from operating activities:        
Net  income  (loss) $ 1,300     $ (775 )  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization   6,153       7,113    
Stock-based compensation   1,684       1,626    
Change in fair value of contingent consideration   443       355    
Fixed and intangible asset impairments and disposals   45       220    
Deferred income taxes   1,565       (208 )  
Change in accounts receivable allowance   (197 )     109    
Other   18       (13 )  
Changes in operating assets and liabilities, net of acquisitions:        
Receivables   2,822       5,925    
Inventories   (3,049 )     (6,922 )  
Prepaid and other assets   (869 )     (2,605 )  
Accounts payable and accrued liabilities   (2,475 )     (126 )  
Net cash provided by (used in) operating activities   7,440       4,699    
         
Cash flows from investing activities:         
Additions to property, plant and equipment   (481 )     (743 )  
Net cash provided by (used in) investing activities   (481 )     (743 )  
         
Cash flows from financing activities:        
Repayment of long-term debt   (2,500 )     (1,250 )  
Payment of Contingent Consideration   (2,100 )     (2,100 )  
Proceeds from exercise of stock options and ESPP   2,803       1,279    
Net cash provided by (used in) financing activities   (1,797 )     (2,071 )  
         
Effect of exchange rate changes on cash   (84 )     (8 )  
Increase  (Decrease) in cash and cash equivalents   5,078       1,877    
         
Cash and cash equivalents        
Beginning of period   32,333       18,391    
End of period $ 37,411     $ 20,268    
         
CONTACT: 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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