AngioDynamics Reports Fiscal 2017 Fourth Quarter and Full-Year Results

Company posts record full-year adjusted EPS and Free Cash Flow and issues FY2018 Financial Guidance

  • Q4 net sales of $86.9 million, down 7% year-over-year
  • Q4 GAAP loss per share of $0.30; adjusted EPS of $0.19
  • Full Year net sales of $349.6 million, down 1% year-over-year
  • Full Year GAAP earnings per share of $0.19; Adjusted EPS of $0.73, up 22% compared to FY2016
  • Full Year operating cash generation of $55.7 million; free cash flow generation of $52.7 million

ALBANY, N.Y., July 18, 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 fourth quarter and full year financial results for the 2017 fiscal year ended May 31, 2017.

“The quarter, and year, reflect a commitment to strengthening our business, improving our core operational efficiency and making strategic decisions that will enable long-term, sustainable top-line growth as we outlined in our recent Investor Day, held in April,” said Jim Clemmer, President and Chief Executive Officer of AngioDynamics. “Over the course of the year, we have worked hard to become a profitable, efficiently run operating company. We ended the year with record high Adjusted EPS of $0.73 and free cash flow of more than $52 million. These are important measures as we look at opportunities to spur growth in fiscal year 2018 and beyond.”

Fourth Quarter 2017 Financial Results
Net sales for the fiscal fourth quarter were $86.9 million compared with $93.4 million a year ago. Currency did not have an impact in the quarter.

Peripheral Vascular net sales in the fourth quarter were $54.0 million, compared to $55.6 million in the fiscal year 2016 fourth quarter. Vascular Access net sales in the fourth quarter were $24.2 million, compared to $24.8 million a year ago. Fourth quarter Oncology/Surgery net sales were $8.7 million, down from $13.0 million in the fiscal year 2016 fourth quarter, primarily due to a $2.6 million reserve related to a recall and voluntary market withdrawal of our Acculis Microwave Tissue Ablation System.

Overall U.S. net sales in the fourth quarter were $70.8 million, compared to $75.6 million a year ago. Overall International net sales in the fourth quarter were $16.1 million compared to $17.8 million a year ago.

Gross margins for the fourth quarter of 2017 were 48.7%, compared to 44.5% a year ago. In the fourth quarter of fiscal 2017, the Company recorded a net loss of $10.9 million, or $0.30 on a per share basis. The Company recorded a net loss of $43.1 million, or $1.19 on a per share basis, in the fourth quarter of fiscal 2016.

Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income for the fourth quarter of fiscal 2017 was $6.8 million, or $0.19 per share, compared to an adjusted net income of $7.4 million, or $0.20 per share, in the fourth quarter of fiscal 2016. Adjusted EBITDAS in the fourth quarter of fiscal 2017, excluding the items shown in the attached reconciliation table, was $15.0 million compared to $14.2 million in the fourth quarter of fiscal 2016. The adjustments for both net income and EBITDAS were primarily due to a reserve related to previously disclosed legal matters related to Department of Justice subpoenas in fiscal year 2017 and a tax valuation allowance in fiscal year 2016.

In the fourth quarter of fiscal 2017, the Company generated $19.0 million in operating cash flow and $18.3 million in free cash flow. As of May 31, 2017, cash and cash equivalents were $47.5 million and debt was $97.5 million.

Twelve Months Financial Results
For the twelve months ended May 31, 2017, net sales were $349.6 million compared to the $353.9 million reported a year ago. The Company recorded net income of $7.0 million, or $0.19 per share, compared to a net loss of $43.6 million, or $1.21 per share, reported a year ago. Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income was $27.0 million, or $0.73 per share, compared to adjusted net income of $21.8 million, or $0.60 per share, a year ago. Adjusted EBITDAS, excluding the items shown in the attached reconciliation table, was $61.5 million, compared to $53.1 million in the year ago period. 

“Throughout the 2017 fiscal year, we made strategic decisions to position ourselves for our stated long-term growth objectives. Some of these decisions included writing off assets that we no longer view as strategically aligned, consolidating our physical footprint, evaluating our international opportunities and accelerating previously disclosed legal matters,” said Michael C. Greiner, Executive Vice President and Chief Financial Officer of AngioDynamics. “Even with those items impacting our financial results, we still showed the strength of our business, and balance sheet, through gross margin expansion, EPS growth and strong cash flow.”

Mr. Greiner added, “During the year, we generated more than $52 million in free cash flow, paid down $24 million in outstanding debt, repurchased $13.6 million of our common shares, made $10.1 million in contingent consideration payments and refinanced our credit facility to support future investment opportunities.”

Fiscal Year 2018 Financial Guidance
The Company issued its FY2018 financial guidance affirming a net sales range of $352 to $359 million, adjusted earnings per share (EPS) of $0.64 to $0.68 and free cash flow of greater than $35 million. 

Conference Call
AngioDynamics will host a conference call and webcast today at 8:00am ET to discuss its fourth quarter and full year results and answer questions. To participate in the live call by telephone, please call 877-741-4245 and reference the Conference ID: 4766775. 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 EBITDAS; 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, and Acculis 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 fourth 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 fourth-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, November 30, 2016 and February 28, 2017. 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   Twelve months ended    
  May 31,   May 31,   May 31,   May 31,    
    2017       2016       2017       2016      
                                   
  (unaudited)   (unaudited)    
                   
Net sales $ 86,914     $ 93,419     $ 349,643     $ 353,890      
Cost of sales (exclusive of intangible amortization)   44,579       51,892       173,474       179,574      
Gross profit   42,335       41,527       176,169       174,316      
% of net sales   48.7 %     44.5 %     50.4 %     49.3 %    
                   
Operating expenses                  
Research and development   6,696       6,937       25,269       25,053      
Sales and marketing   20,476       21,104       78,819       83,743      
General and administrative   8,316       6,791       31,406       30,583      
Amortization of intangibles   4,410       4,608       17,296       17,964      
Change in fair value of contingent consideration   125       318       (15,261 )     948      
Acquisition, restructuring and other items, net   13,482       3,493       25,510       12,591      
Medical device excise tax   (1,837 )           (1,837 )     2,416      
Total operating expenses   51,668       43,251       161,202       173,298      
Operating  income   (9,333 )     (1,724 )     14,967       1,018      
Other (expense), net   (695 )     (1,098 )     (3,120 )     (4,271 )    
Income (loss) before income taxes   (10,028 )     (2,822 )     11,847       (3,253 )    
Income tax expense (benefit)   885       40,253       4,839       40,337      
Net income (loss) $ (10,913 )   $ (43,075 )   $ 7,008     $ (43,590 )    
                   
Earnings (loss) per share                  
Basic $ (0.30 )   $ (1.19 )   $ 0.19     $ (1.21 )    
Diluted $ (0.30 )   $ (1.19 )   $ 0.19     $ (1.21 )    
                   
Weighted average shares outstanding                  
Basic   36,655       36,242       36,617       36,161      
Diluted   36,655       36,242       36,959       36,161      
                   

 

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   Twelve months ended  
    May 31,    May 31,    May 31,    May 31,   
      2017       2016       2017       2016    
                                   
    (unaudited)   (unaudited)  
                   
  Gross profit $   42,335     $   41,527     $   176,169     $   174,316    
                   
  Recall expenses included in cost of sales     2,645         –          2,861         (92 )  
  Inventory charge included in cost of sales      –          5,940         –          5,940    
  Adjusted gross profit $   44,980     $   47,467     $   179,030     $   180,164    
  Adjusted gross profit % of sales   51.8 %     50.8 %     51.2 %     50.9 %  
                   
  Reconciliation of Net Income to non-GAAP Adjusted Net Income:          
                   
    Three months ended   Twelve months ended  
    May 31,    May 31,    May 31,    May 31,   
      2017       2016       2017       2016    
                                   
    (unaudited)   (unaudited)  
                   
  Net income (loss) $   (10,913 )   $   (43,075 )   $   7,008     $   (43,590 )  
                   
  Recall expenses included in cost of sales     2,645         –          2,861         (92 )  
  Inventory charge included in cost of sales      –          5,940         –          5,940    
  Amortization of intangibles     4,410         4,608         17,296         17,964    
  Change in fair value of contingent consideration     125         318         (15,261 )       948    
  Acquisition, restructuring and other items, net (1)     13,482         3,493         25,510         12,591    
  Tax effect of non-GAAP items (2)     (2,943 )       36,100         (10,372 )       28,062    
  Adjusted net income $   6,806     $   7,384     $   27,042     $   21,823    
                   
                   
  Reconciliation of Diluted Earnings Per Share to non-GAAP Adjusted Diluted Earnings Per Share:      
                   
    Three months ended   Twelve months ended  
    May 31,    May 31,    May 31,    May 31,   
      2017       2016       2017       2016    
                                   
    (unaudited)   (unaudited)  
                   
  Diluted earnings (loss) per share $   (0.30 )   $   (1.19 )   $   0.19     $   (1.21 )  
                   
  Recall expenses included in cost of sales     0.07         –          0.08         (0.00 )  
  Inventory charge included in cost of sales      –          0.16         –          0.16    
  Amortization of intangibles     0.12         0.13         0.47         0.49    
  Change in fair value of contingent consideration     0.00         0.01         (0.41 )       0.03    
  Acquisition, restructuring and other items, net (1)     0.37         0.10         0.69         0.35    
  Tax effect of non-GAAP items (2)     (0.07 )       0.99         (0.29 )       0.78    
  Adjusted diluted earnings per share $   0.19     $   0.20     $   0.73     $   0.60    
                   
                   
  Adjusted diluted sharecount     36,655         36,391         36,959         36,372    
                   
  (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 EBITDAS and Adjusted EBITDAS:  
                       
        Three months ended   Twelve months ended  
        May 31,    May 31,    May 31,    May 31,   
          2017       2016       2017       2016    
                                       
        (unaudited)   (unaudited)  
                       
  Net income (loss) $   (10,913 )   $   (43,075 )   $   7,008     $  (43,590 )  
                       
  Income tax expense     885         40,253         4,839         40,337    
  Interest expense     689         789         2,860         3,396    
  Depreciation and amortization     6,276         6,706         24,444         27,636    
  Stock-based compensation     1,105         (1,260 )       6,183         3,240    
  EBITDAS     (1,958 )       3,413         45,334         31,019    
                       
  Recall expenses included in cost of sales     2,645         –          2,861         (92 )  
  Inventory charge included in cost of sales      –          5,940         –          5,940    
  Change in fair value of contingent consideration     125         318         (15,261 )       948    
  Acquisition, restructuring and other items, net (1,2)     13,482         3,493         25,510         11,590    
  Other expense, net     6         309         260         875    
  Credit card fees     710         689         2,809         2,794    
  Adjusted EBITDAS $   15,010     $   14,162     $   61,513     $   53,074    
                       
  Per diluted share:                
  EBITDAS   $   (0.05 )   $   0.09     $   1.23     $   0.85    
  Adjusted EBITDAS $   0.41     $   0.39     $   1.66     $   1.46    
                       
                       
 (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   Twelve months ended  
                Currency   Constant               Currency   Constant  
    May 31,   May 31,   %   Impact   Currency   May 31,   May 31,   %   Impact   Currency  
      2017     2016   Growth   (Pos) Neg   Growth     2017     2016   Growth   (Pos) Neg   Growth  
                                           
  Net Sales by Product Category                                        
  Peripheral Vascular $ 53,948   $ 55,584   -3%           $ 208,602   $ 205,620   1%          
  Vascular Access   24,243     24,799   -2%             96,481     99,375   -3%          
  Oncology/Surgery   8,723     13,036   -33%             44,560     48,895   -9%          
  Total $ 86,914   $ 93,419   -7%   0%     -7%   $ 349,643   $ 353,890   -1%   0%   -1%  
                                                   
                                           
  Net Sales by Geography                                        
  United States $ 70,847   $ 75,614   -6%   0%     -6%   $ 282,168   $ 285,824   -1%   0%   -1%  
  International $ 16,067   $ 17,805   -10%   2%     -8%     67,475     68,066   -1%   2%   1%  
  Total $ 86,914   $ 93,419   -7%   0%     -7%   $ 349,643   $ 353,890   -1%   0%   -1%  
                                           

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(in thousands)  
           
    May 31,   May 31,  
      2017     2016  
    (unaudited)      
Assets        
Current Assets        
  Cash and cash equivalents $ 47,544   $ 32,333  
  Marketable securities   1,215     1,653  
  Total cash and investments   48,759     33,986  
           
  Accounts receivable, net   44,523     52,867  
  Inventories   54,506     55,370  
  Prepaid income taxes   336     788  
  Prepaid expenses and other   5,790     3,243  
  Total current assets   153,914     146,254  
           
Property, plant and equipment, net   45,234     48,284  
Other non-current assets   1,886     3,827  
Intangible assets, net   145,675     166,577  
Goodwill   361,252     361,252  
  Total Assets $ 707,961   $ 726,194  
           
Liabilities and Stockholders’ Equity        
Current Liabilities        
  Accounts payable $ 18,087   $ 15,616  
  Accrued liabilities   36,804     21,942  
  Current portion of long-term debt   5,000     16,250  
  Current portion of contingent consideration   9,625     12,919  
  Total current liabilities   69,516     66,727  
Long-term debt, net of current portion   91,320     104,291  
Deferred income taxes, long-term   26,112     21,684  
Contingent consideration, net of current portion   3,136     25,356  
Other long-term liabilities   850     908  
  Total Liabilities   190,934     218,966  
           
Stockholders’ equity   517,027     507,228  
  Total Liabilities and Stockholders’ Equity $ 707,961   $ 726,194  
           

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES    
CONSOLIDATED STATEMENTS OF CASH FLOWS    
(in thousands)    
                   
  Three months ended   Twelve months ended    
  May 31,   May 31,   May 31,   May 31,    
    2017       2016       2017       2016      
  (unaudited)   (unaudited)   (unaudited)   (unaudited)    
                   
Cash flows from operating activities:                  
Net  income  (loss) $ (10,913 )   $ (43,075 )   $ 7,008     $ (43,590 )    
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                  
Depreciation and amortization   6,356       6,826       24,811       28,115      
Stock-based compensation   1,105       (1,260 )     6,183       3,240      
Change in fair value of contingent consideration   125       318       (15,261 )     948      
Loss on impairment of intangible assets         384             384      
Fixed and intangible asset impairments and disposals   108       131       3,930       806      
Deferred income taxes   804       40,371       4,428       39,983      
Change in accounts receivable allowance   292       1,022       (313 )     2,377      
Write-off of other assets               2,685            
Other   (51 )     90       (586 )     90      
Changes in operating assets and liabilities, net of acquisitions:                  
Receivables   1,581       639       8,479       3,131      
Inventories   3,272       10,519       687       11,976      
Prepaid and other assets   (2,305 )     1,494       (3,520 )     712      
Accounts payable and accrued liabilities   18,619       1,085       17,214       (2,956 )    
Net cash provided by (used in) operating activities   18,993       18,544       55,745       45,216      
                   
 Cash flows from investing activities:                   
Additions to property, plant and equipment   (743 )     (431 )     (3,001 )     (2,326 )    
Acquisition of warrants                     (2,000 )    
Acquisition of intangible assets         (3,250 )           (3,268 )    
Proceeds from sale or maturity of marketable securities               450       25      
Net cash provided by (used in) investing activities   (743 )     (3,681 )     (2,551 )     (7,569 )    
                   
Cash flows from financing activities:                  
Repayment of long-term debt   (1,250 )     (5,000 )     (140,381 )     (16,250 )    
Proceeds from issuance  of long-term debt and revolver borrowings               116,471            
Deferred financing costs on long-term debt   (29 )           (1,364 )          
Payment of Contingent Consideration               (9,850 )     (9,850 )    
Repurchase of shares   (5,717 )           (13,557 )          
Proceeds from exercise of stock options and ESPP   429       504       10,698       2,437      
Net cash provided by (used in) financing activities   (6,567 )     (4,496 )     (37,983 )     (23,663 )    
                   
Effect of exchange rate changes on cash   290       69             (42 )    
Increase  (Decrease) in cash and cash equivalents   11,973       10,436       15,211       13,942      
                   
Cash and cash equivalents                  
Beginning of period   35,571       21,897       32,333       18,391      
End of period $ 47,544     $ 32,333     $ 47,544     $ 32,333      
                   

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(in thousands)
                       
  Reconciliation of Free Cash Flows:                    
 
  Three months ended   Twelve months ended  
  May 31,   May 31,   May 31,   May 31,  
    2017       2016       2017       2016    
                                 
  (unaudited)   (unaudited)  
                 
  Net cash provided by (used in) operating activities $ 18,993     $ 18,544     $ 55,745     $ 45,216    
  Additions to property, plant and equipment   (743 )     (431 )     (3,001 )     (2,326 )  
  Free Cash Flow $ 18,250     $ 18,113     $ 52,744     $ 42,890    
     

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