Fiscal 2019 Third Quarter Highlights
- Net sales of $86.3 million, an
increase of 3.0% year over year
- Gross margin declined 10 basis
points year over year to 54.1%
- GAAP EPS of $0.02 per share;
adjusted EPS of $0.19 per share
- Cash provided by operations of $8.3
million; capital expenditures of $0.9 million
- Received unconditional IDE approval
from the FDA to initiate NanoKnife® DIRECT Clinical
Study
- Won patent infringement dispute with
Bard
AngioDynamics, Inc. (NASDAQ:ANGO), a leading provider
of innovative, minimally invasive medical devices for vascular
access, peripheral vascular disease, and oncology, today announced
financial results for the third quarter of fiscal year
2019, which ended February 28, 2019.
“While we had pockets of softness in our financial performance
during the third quarter, our overall performance remains strong,
and we are confident that we will achieve our full-year guidance.
We saw strong growth contributions during the quarter from AngioVac
and Solero, as well as from Fluid Management,” commented Jim
Clemmer, President and Chief Executive Officer of AngioDynamics,
Inc. “Additionally, I am very excited that the FDA has approved the
IDE for our NanoKnife® DIRECT Clinical Study, which is the next
step toward this incredible technology improving the standard of
care for patients afflicted with Stage III pancreatic cancer. The
IDE approval also represents a milestone for AngioDynamics as we
transform into an evidence-based Company focused on therapies and
outcomes facilitated by our unique technologies.”
Third Quarter 2019 Financial Results
Net sales for the third quarter of fiscal 2019 were $86.3
million, an increase of 3.0%, compared to $83.9 million a year ago.
Foreign currency translation did not have a significant impact on
the Company’s sales in the quarter.
- Oncology net sales were $13.9 million,
an increase of 15.1% from $12.1 million a year ago, as strong sales
of Solero, as well as the recent BioSentry and RadiaDyne
acquisitions, more than offset weaker than anticipated NanoKnife
capital sales during the quarter.
- Vascular Interventions and Therapies
net sales in the third quarter of fiscal 2019 were $50.1 million,
an increase of 3.3%, compared to $48.5 million a year ago, as
strong growth in AngioVac was partially offset by a decelerating
decline in the Venous Insufficiency business.
- Vascular Access net sales were $22.3
million, a decrease of 4.0% from $23.3 million a year ago, as lower
sales of midlines, PICCs, and ports were somewhat offset by strong
dialysis sales.
U.S. net sales in the third quarter of fiscal 2019 were $68.3
million, an increase of 3.9% from $65.8 million a year ago, and
International net sales were $18.0 million, a decrease of 0.3% from
$18.1 million a year ago.
Gross margin for the third quarter of fiscal 2019 declined 10
basis points to 54.1% from 54.2% a year ago. This reflects
temporary headwinds related to FX and a one-time positive impact
from plant closures recognized last year. The Company continues to
see gains in gross margin related to operational and supply-chain
improvements.
The Company recorded net income of $0.8 million, or $0.02 per
share, in the third quarter of fiscal 2019. This compares to net
income of approximately $14.0 million, or $0.37 per share, a
year ago.
Excluding the items shown in the non-GAAP reconciliation table
below, adjusted net income for the third quarter of fiscal 2019 was
$7.4 million, or $0.19 per share, compared to adjusted net income
of $8.7 million, or $0.23 per share, in the third quarter of
fiscal 2018.
Adjusted EBITDAS in the third quarter of fiscal 2019, excluding
the items shown in the reconciliation table below, was $14.9
million, compared to $16.8 million in the third quarter of fiscal
2018.
In the third quarter of fiscal 2019, the Company generated $8.3
million in operating cash flow and had capital expenditures of $0.9
million. As of February 28, 2019, the Company had $41.7 million in
cash and cash equivalents and $133.8 million in debt, excluding the
impact of deferred financing costs.
Nine Months Financial Results
For the nine months ended February 28, 2019:
- Net sales were $263.2 million, an
increase of 2.8%, compared to $256.0 million for the same period a
year ago.
- The Company's net income was $2.5
million, or $0.06 per share, compared to net income of $14.2
million, or $0.38 per share, a year ago.
- Gross margin improved 270 basis points
to 53.3% from 50.6% a year ago.
- Excluding the items shown in the
non-GAAP reconciliation table below, adjusted net income was $22.0
million, or $0.57 per share, compared to adjusted net income of
$19.9 million, or $0.53 per share, a year ago.
- Adjusted EBITDAS, excluding the items
shown in the reconciliation table below, was $43.9 million,
compared to $41.5 million for the same period a year ago.
Fiscal Year 2019 Financial Guidance
The Company reiterates its previously announced financial
guidance, continuing to expect fiscal year 2019 net sales in the
range of $354 to $359 million and free cash flow in the range of
$26 to $31 million. Additionally, the Company continues to
expect adjusted earnings per share in the range of $0.82 to
$0.86.
Conference Call
The Company’s management will host a conference call today at
8:00 a.m. ET to discuss its third quarter 2019 results.
To participate in the conference call, dial 1-877-407-0784
(domestic) or 1-201-689-8560 (international) and refer to the
passcode 13688664.
This conference call will also be webcast and can be accessed
from the “Investors” section of the AngioDynamics website at
www.angiodynamics.com. The webcast replay of the call will be
available at the same site approximately one hour after the end of
the call.
A recording of the call will also be available from 11:00 a.m.
ET on Tuesday, April 2, 2019, until 11:59 p.m. ET on Tuesday, April
9, 2019. To hear this recording, dial 1-844-512-2921 (domestic) or
1-412-317-6671 (international) and enter the passcode 13688664.
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 adjusted EBITDAS, 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, Inc.
AngioDynamics, Inc. is a leading provider of innovative,
minimally invasive medical devices used by professional healthcare
providers for vascular access, 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. For more information,
visit www.angiodynamics.com.
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 acquired 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, 2018. 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 February 28,
February 28, February 28, February 28, 2019
2018 2019 2018 (unaudited) (unaudited) Net sales $ 86,341 $
83,851 $ 263,184 $ 255,968 Cost of sales (exclusive of intangible
amortization) 39,650 38,403 122,917 126,560
Gross profit 46,691 45,448 140,267
129,408 % of net sales 54.1 % 54.2 % 53.3 % 50.6 %
Operating expenses Research and development 7,210 6,457 22,235
19,005 Sales and marketing 19,413 18,009 59,115 56,378 General and
administrative 8,780 7,723 26,612 23,319 Amortization of
intangibles 5,342 4,191 14,646 12,433 Change in fair value of
contingent consideration 609 31 865 218 Acquisition, restructuring
and other items, net 2,550 4,177 9,700 11,932
Total operating expenses 43,904 40,588 133,173
123,285 Operating income 2,787 4,860 7,094 6,123
Interest expense, net (1,442 ) (740 ) (3,689 ) (2,223 ) Other
income (expense), net (266 ) (49 ) (72 ) 238 Total other
expense, net (1,708 ) (789 ) (3,761 ) (1,985 ) Income before income
taxes 1,079 4,071 3,333 4,138 Income tax expense (benefit) 283
(9,948 ) 866 (10,095 ) Net Income $ 796 $
14,019 $ 2,467 $ 14,233 Earnings per
share Basic $ 0.02 $ 0.38 $ 0.07 $ 0.38 Diluted $ 0.02 $ 0.37 $
0.06 $ 0.38 Weighted average shares outstanding Basic 37,518
37,122 37,446 37,031 Diluted 38,338 37,442 38,350 37,358
ANGIODYNAMICS, INC. AND SUBSIDIARIES GAAP TO
NON-GAAP RECONCILIATION
(in thousands, except per share data)
Reconciliation of Net Income to non-GAAP Adjusted Net
Income:
Three months ended Nine months ended February 28, February
28, February 28, February 28, 2019 2018 2019 2018 (unaudited)
(unaudited) Net Income $ 796 $ 14,019 $ 2,467 $ 14,233
Amortization of intangibles 5,342 4,191 14,646 12,433 Change
in fair value of contingent consideration 609 31 865 218
Acquisition, restructuring and other items, net (1) 2,550 4,177
9,700 11,932 Tax effect of non-GAAP items (2) (1,920 ) (13,766 )
(5,699 ) (18,889 ) Adjusted net income $ 7,377 $ 8,652
$ 21,979 $ 19,927
Reconciliation of
Diluted Earnings Per Share to non-GAAP Adjusted Diluted Earnings
Per Share: Three months ended Nine months ended February
28, February 28, February 28, February 28, 2019 2018 2019 2018
(unaudited) (unaudited) Diluted earnings per share $ 0.02 $
0.37 $ 0.06 $ 0.38 Amortization of intangibles 0.14 0.11
0.38 0.33 Change in fair value of contingent consideration 0.02
0.00 0.02 0.01 Acquisition, restructuring and other items, net (1)
0.07 0.11 0.25 0.32 Tax effect of non-GAAP items (2) (0.06 ) (0.36
) (0.14 ) (0.51 ) Adjusted diluted earnings per share $ 0.19
$ 0.23 $ 0.57 $ 0.53 Adjusted diluted
sharecount 38,338 37,442 38,350 37,358 (1) Includes costs
related to merger and acquisition activities, restructurings, and
unusual items, including asset impairments and write-offs, certain
litigation, and other items.
(2) Adjustment to reflect the income tax
provision on a non-GAAP basis has been calculated assuming no
valuation allowance on the Company’s U.S. deferred tax assets and
an effective tax rate of 23% for February 28, 2019. For February
28, 2018, the effective tax rate i) has been calculated using a
blended rate of 30.62% for the year ended May 31, 2018 due to the
enactment of the Tax Cuts and Jobs Act (the “Act”) that reduced the
federal corporate tax rate to 21%; ii) excludes the benefit
recorded in Q3 fiscal 2018 resulting from remeasurement of the
Company’s deferred tax assets from the Act; iii) tax effects the
non-GAAP adjustment shown above and iv) assumes the Company does
not have a valuation allowance on its U.S. deferred tax assets.
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 Nine months ended February 28,
February 28, February 28, February 28, 2019 2018 2019 2018
(unaudited) (unaudited) Net Income $ 796 $ 14,019 $ 2,467 $
14,233 Income tax expense (benefit) 283 (9,948 ) 866 (10,095
) Interest expense, net 1,442 740 3,689 2,223 Depreciation and
amortization 6,867 5,718 19,158 17,395 Stock based compensation
2,378 2,058 7,119 5,821 EBITDAS $
11,766 $ 12,587 $ 33,299 $ 29,577
Change in fair value of contingent consideration $ 609 $ 31
$ 865 $ 218 Acquisition, restructuring and other items, net (1)
2,550 4,216 9,700 11,656 Adjusted
EBITDAS $ 14,925 $ 16,834 $ 43,864 $ 41,451
Per diluted share: EBITDAS $ 0.31 $ 0.34 $ 0.87 $
0.79 Adjusted EBITDAS $ 0.39 $ 0.45 $ 1.14 $ 1.11 (1)
Includes costs related to merger and acquisition activities,
restructurings, and unusual items, including asset impairments and
write-offs, certain litigation, and other items.
ANGIODYNAMICS, INC. AND
SUBSIDIARIES NET SALES BY PRODUCT CATEGORY AND BY
GEOGRAPHY
(in thousands)
Three months ended Nine months ended
Feb 28,2019
Feb 28,2018
%Growth
CurrencyImpact
ConstantCurrencyGrowth
Feb 28,2019
Feb 28,2018
%Growth
CurrencyImpact
ConstantCurrencyGrowth
Net Sales by Product Category Vascular Interventions &
Therapies $ 50,115 $ 48,517 3.3% $ 152,603 $ 149,751 1.9% Vascular
Access 22,348 23,279 (4.0)% 69,861 69,091 1.1% Oncology 13,878
12,055 15.1% 40,720 37,126 9.7% Total $
86,341 $ 83,851 3.0% 0.0% 3.4% $ 263,184 $
255,968 2.8% 0.0% 3.1%
Net Sales by Geography United States $ 68,331 $ 65,787 3.9%
0.0% 3.9% $ 207,898 $ 203,020 2.4% 0.0% 2.4% International 18,010
18,064 (0.3)% 2.0% 1.9% 55,286 52,948
4.4% 2.0% 5.6% Total $ 86,341 $ 83,851 3.0% 0.0% 3.4%
$ 263,184 $ 255,968 2.8% 0.0% 3.1%
ANGIODYNAMICS, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(in thousands)
February 28, 2019 May 31, 2018 (unaudited) (audited)
Assets Current assets: Cash and cash equivalents $ 41,704 $
74,096 Marketable securities — 1,317 Total cash and
investments 41,704 75,413 Accounts receivable, net 44,208
39,401 Inventories 52,388 48,916 Prepaid expenses and other 4,440
4,302 Total current assets 142,740 168,032 Property,
plant and equipment, net 41,207 42,461 Other assets 3,610 3,417
Intangible assets, net 166,564 130,310 Goodwill 423,674
361,252 Total assets $ 777,795 $ 705,472
Liabilities and
stockholders' equity Current liabilities: Accounts payable $
18,443 $ 15,775 Accrued liabilities 21,929 34,426 Current portion
of long-term debt 6,250 5,000 Current portion of contingent
consideration 6,673 2,100 Total current liabilities 53,295
57,301 Long-term debt, net of current portion 126,837 86,621
Deferred income taxes 17,834 17,173 Contingent consideration, net
of current portion 20,454 1,161 Other long-term liabilities 5,296
621 Total liabilities 223,716 162,877 Stockholders'
equity 554,079 542,595 Total Liabilities and Stockholders'
Equity $ 777,795 $ 705,472
ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended Nine months ended February 28,
February 28, February 28, February 28, 2019
2018 2019 2018 (unaudited) (unaudited)
Cash flows from operating
activities: Net Income $ 796 $ 14,019 $ 2,467 $ 14,233
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 6,867 5,718
19,158 17,395 Stock based compensation 2,378 2,058 7,119 5,821
Change in fair value of contingent consideration 609 31 865 218
Deferred income taxes 138 (10,044 ) 633 (10,150 ) Change in
accounts receivable allowances (24 ) (315 ) (99 ) (35 ) Fixed and
intangible asset impairments and disposals 677 22 689 30 Other 12
(78 ) (5 ) (635 ) Changes in operating assets and liabilities, net
of acquisitions: Accounts receivable (785 ) 598 (3,853 ) 2,897
Inventories (1,747 ) (2,511 ) (2,702 ) (1,913 ) Prepaid expenses
and other (325 ) 155 (1,508 ) (548 ) Accounts payable, accrued and
other liabilities (254 ) (5,338 ) (10,336 ) (9,797 )
Net cash
provided by operating activities 8,342 4,315
12,428 17,516
Cash flows from investing
activities: Additions to property, plant and equipment (887 )
(425 ) (2,303 ) (1,647 ) Acquisition of intangibles — (1,265 ) —
(1,265 ) Cash paid in acquisition — — (84,920 ) — Proceeds from
sale of marketable securities 1,350 — 1,350 —
Net cash used in investing activities 463
(1,690 ) (85,873 ) (2,912 )
Cash flows from financing
activities: Proceeds from issuance of long-term debt — — 55,000
— Repayment of long-term debt (11,250 ) (1,250 ) (13,750 ) (3,750 )
Payment of contingent consideration previously established in
purchase accounting — — (2,100 ) (9,500 ) Proceeds from exercise of
stock options and employee stock purchase plan 1,169 822
2,023 2,560
Net cash provided by (used) in
financing activities (10,081 ) (428 ) 41,173 (10,690 )
Effect of exchange rate changes on cash and cash equivalents 160
239 (120 ) 834
Increase (decrease) in cash
and cash equivalents (1,116 ) 2,436 (32,392 ) 4,748 Cash and
cash equivalents at beginning of period 42,820 49,856
74,096 47,544
Cash and cash equivalents at end of
period $ 41,704 $ 52,292 $ 41,704 $ 52,292
ANGIODYNAMICS, INC.
AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION
(in thousands)
Reconciliation of Free Cash Flows:
Three months ended Nine months ended February 28,
February 28, February 28, February 28, 2019 2018 2019 2018
(unaudited) (unaudited) Net cash provided by operating
activities $ 8,342 $ 4,315 $ 12,428 $ 17,516 Additions to property,
plant and equipment (887 ) (425 ) (2,303 ) (1,647 ) Free Cash Flow
$ 7,455 $ 3,890 $ 10,125 $ 15,869
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Investors:AngioDynamics, Inc.Michael C. Greiner, Executive Vice
President & CFO(518) 795-1821
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