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

 

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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.

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.”

 

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

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)

 

 

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GAAP TO NON-GAAP RECONCILIATION

(in thousands, except per share data)

 

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		Three months ended								Twelve months ended
		May 31, 2017				May 31, 2016				May 31, 2017				May 31, 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

 

 

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NET SALES BY PRODUCT CATEGORY AND BY GEOGRAPHY

(unaudited in thousands)

 

 

		Three months ended																				Twelve months ended
Net Sales by Product Category		May 31, 2017				May 31, 2016				% Growth				Currency Impact (Pos) Neg				Constant Currency Growth				May 31, 2017				May 31, 2016				% Growth				Currency Impact (Pos) Neg				Constant Currency Growth
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%

 

 

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ANGIODYNAMICS, INC. AND SUBSIDIARIES

		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

 

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GAAP TO NON-GAAP RECONCILIATION

(in thousands)