AngioDynamics Reports Fiscal 2014 Third Quarter Financial Results

AngioDynamics Reports Fiscal 2014 Third Quarter Financial Results    *Net sales increase 8% over prior year to $88.2 million   *GAAP income per share of $0.14; Non-GAAP adjusted net income, excluding     amortization, of $0.16 per share   *Adjusted EBITDA of $14.6 million   *Company's revenue guidance to $351 million- $355 million for FY14;     Adjusted EPS, excluding amortization, of $0.60-$0.63  ALBANY, N.Y., April 9, 2014 (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 fiscal 2014 third quarter ended February 28, 2014.  "Our strong top line performance marks the fourth consecutive quarter of improved sales results, reflecting continued market acceptance of our innovative products and solid execution by our global sales team. The 8% revenue increase was driven by double-digit sales growth in our Peripheral Vascular and Oncology/Surgery businesses of 11% and 15%, respectively, and a significant turnaround in Vascular Access, which grew 3% over last year's comparable quarter and 7% from the prior quarter. The improvement in our Vascular Access business demonstrates the effectiveness of the BioFlo technology which now accounts for 40% of our global PICC revenue," said Joseph M. DeVivo, President and Chief Executive Officer. "With the recent FDA clearance of the DuraMax Dialysis Catheter with BioFlo – the third U.S. clearance of a BioFlo product line – we expect further adoption of this technology as its clinical value becomes widely accepted. As our other key growth drivers, including the AngioVac Cannula & Circuit in our Peripheral Vascular business, and the Acculis microwave system in our Oncology/Surgery business, make a more significant contribution to overall revenue, we anticipate improved margin profile over time leading to improved profitability."  Q3 FY14 Financial Results  Net sales of $88.2 million were up 8% compared with last year's third quarter net sales of $81.6 million. Excluding the planned wind-down of the supply agreement with Boston Scientific (BSC), third quarter sales were up 9% to $86.6 million compared to $79.5 million in last year's third quarter. The following sales comparisons exclude the BSC supply agreement.  Peripheral Vascular net sales in the third quarter increased 11% to $47.4 million compared to $42.6 million in the prior year period. Vascular Access net sales increased 3% to $27.3 million compared to $26.4 million in the year ago quarter. Oncology/Surgery net sales of $12 million increased 15% compared to the year ago quarter. U.S. net sales increased 10% to $69.9 million from $63.8 million in the prior year period, and International net sales were up 7% at $16.8 million compared to a year ago.  The Company's net income in the third quarter was $5.1 million, or $0.14 per share, compared to a net loss of $1 million, or $0.03 per share, in the prior year period. Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income excluding amortization for intangible assets was $5.6 million, or $0.16 per share, for the third quarter of fiscal year 2014 compared to net income of $5.5 million, or $0.16 per share, for the year ago quarter.  Third quarter EBITDA was $14 million, or $0.39 per share, compared to EBITDA of $6.5 million, or $0.18 per share, a year ago. Adjusted EBITDA, excluding the items shown in the attached reconciliation table, was $14.6 million, or $0.41 per share, compared to $13.7 million, or $0.39 per share, in the year ago period.  At February 28, 2014, cash and investments were $9.2 million and debt was $138.9 million.  Recent Operational Highlights    *The U.S. Food and Drug Administration (FDA) cleared an expanded indication     for the Company's AngioVac cannula for venous drainage during     extracorporeal bypass for up to six hours to include removal of fresh,     soft thrombi or emboli. The expanded clearance makes AngioVac a more     powerful tool for physicians in the U.S., where an estimated 1 million     people are affected by venous thromboembolic disease (VTE).   *The Company received 510(k) clearance for its BioFlo DuraMax chronic     hemodialysis catheter – the third U.S. clearance of a BioFlo product line     in the Company's Vascular Access business. The Company expects a     commercial launch in the fourth quarter of fiscal year 2014.   *The Company executed an agreement with Medcomp and its development partner     to acquire regulatory control over the Celerity tip-location platform, as     well as access to next-generation product introductions.   *Enrollment of the first patient in a clinical study at Duke University to     evaluate the feasibility and short-term safety and effectiveness of the     NanoKnife system in the ablation of focal prostate cancer occurred. The     prospective, non-randomized pilot study will enroll six patients who meet     a low risk prostate cancer criteria defined by this protocol. The primary     objective will be to evaluate procedural and short-term post-treatment     safety of the NanoKnife system via incidence of adverse events and     evaluation of effect on urologic (urinary and erectile) function.   *The Company was awarded $74.9 million in damages based     onAngioDynamics'claims against biolitec AG,Biomed Technology Holdings     LimitedandWolfgang Neuberger.   *The Company completed the creation of its Distribution Center of     Excellence in Queensbury, representing a major milestone in its     Company-wide operational excellence program designed to save $15 million     to $18 million during the course of the next three years.   *AngioDynamics' new Oracle-based business system was launched, unifying the     Company under a single ERP system, and completing one of the final and     most visible steps to completing the integration of AngioDynamics and     Navilyst Medical.  Nine Months Financial Results  For the nine months ended February 28, 2014, net sales were $260.4 million, a 3% increase compared to net sales of $252 million reported a year ago. The Company's net income was $4.6 million, or $0.13 per share, compared to net income of $0.3 million, or $0.01 per share, reported a year ago. Excluding the items shown in the attached quarterly non-GAAP reconciliation table, adjusted net income excluding amortization for intangible assets was $14.7 million, or $0.41 per share, compared to net income of $17.5 million, or $0.50 per share, a year ago. EBITDA was $29.1 million, or $0.83 per share, compared to EBITDA of $24.4 million, or $0.69 per share, a year ago. Adjusted EBITDA, excluding the items shown in the attached reconciliation table, was $38.6 million, or $1.09 per share, compared to $43.3 million, or $1.23 per share, in the year ago period.  Fiscal 2014 Guidance  "Our net sales increase in the third quarter included one additional selling day, which benefitted our top line by approximately 2%.Given our strong sales performance in the first nine months of fiscal 2014, we are raising our fiscal year 2014 sales guidance to a range of $351 million to $355 million," said Mark Frost, Executive Vice President and Chief Financial Officer. "We are also revising our fiscal year 2014 expectation for adjusted EPS without amortization to a range of $0.60 to $0.63 due to our current product and geographic mix, as well as unanticipated costs related to the recent Medcomp agreement."  "As a result of the updated fiscal year 2014 guidance, we anticipate revenue to range from $91 million to $95 million in the fiscal fourth quarter, up to 6% at the top end and 8% on an average daily sales basis, and adjusted EPS without amortization is expected to be in the range of $0.18-$0.21," Mr. Frost concluded.  Conference Call  AngioDynamics will host a conference call today at 4:30 p.m. Eastern Time to discuss itsthird quarter results. To participate in the live call, please dial 1-877-941-0844. In addition, a live webcast and archived replay of the call will be available at http://investors.angiodynamics.com. 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 EBITDA (income before interest, taxes, depreciation and amortization), adjusted EBITDA, adjusted net income, excluding amortization, and adjusted earnings per share, excluding amortization. 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 www.AngioDynamics.com.  Trademarks  AngioDynamics, the AngioDynamics logo, Acculis, AngioVac, BioFlo DuraMax and NanoKnife are trademarks and/or registered trademarks of AngioDynamics Inc., an affiliate or a subsidiary. Celerity is a trademark and/or registered trademark of Medcomp Inc.  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, 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, 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, including Navilyst Medical and its products, R&D capabilities, infrastructure and employees 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, 2013. AngioDynamics does not assume any obligation to publicly update or revise any forward-looking statements for any reason.  ANGIODYNAMICS, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (in thousands, except per share data)                                                                                                          Three months ended Nine months ended                                        Feb 28,  Feb 28,   Feb 28,   Feb 28,                                        2014     2013      2014      2013                                        (unaudited)        (unaudited)                                                                   Net sales                               $88,195 $81,571  $260,390 $251,994 Cost of sales                                                      Acquired inventory step-up             75      400      150      3,845 Quality call to action                 --     38       --      850 Other cost of sales                    42,485  39,932   127,193  122,552 Total cost of sales                    42,560  40,370   127,343  127,247 Gross profit                            45,635  41,201   133,047  124,747 % of net sales                          51.7%    50.5%     51.1%     49.5%                                                                   Operating expenses                                                 Research and development              7,045   5,793    20,757   19,881 Sales and marketing                    20,700  18,520   61,736   55,734 General and administrative             6,231   6,046    19,082   19,854 Amortization of intangibles            4,248   4,314    12,871   11,961 Medical device tax                     980     683      2,955    683 Change in fair value of contingent     (4,154) 630      (2,481)  827 consideration Acquisition and other non-recurring    3,016   5,157    7,697    9,943 Total operating expenses                38,066  41,143   122,617  118,883 Operatingincome                       7,569   58       10,430   5,864 Other income (expense), net             (1,985) (1,879)  (5,580)  (5,707) Income (loss) before income taxes       5,584   (1,821)  4,850    157 Provision for (benefit from) income     476     (829)    267      (99) taxes Net income (loss)                       $5,108 $(992)  $4,583  $256                                                                   Earnings (loss) per common share                                   Basic                                   $0.15  $(0.03) $0.13   $0.01 Diluted                                 $0.14  $(0.03) $0.13   $0.01                                                                   Weighted average common shares                                     Basic                                   35,184  34,834   35,088   34,787 Diluted                                 35,704  34,834   35,372   35,315                                                                                                                                      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                                        Feb 28,  Feb 28,   Feb 28,   Feb 28,                                        2014     2013      2014      2013                                        (unaudited)        (unaudited)                                                                   Net income (loss)                       $5,108 $(992)  $4,583  $256                                                                   After tax:                                                         Acquisition and other non-recurring (1) 2,176   3,111    5,208    6,158 Quality Call to Action Program (2)      --     24       --      540 Inventory step-up (3)                   48      254      95       2,442 Contingent earn out valuation (4)       (4,461) 400      (3,398)  525 Amortization of intangibles             2,698   2,739    8,173    7,596 Adjusted net income excluding           $5,569 $5,536  $14,661 $17,516 amortization                                                                                                                                     Reconciliation of Diluted Earnings Per Share to non-GAAP Adjusted Diluted Earnings Per Share:                                                                                                          Three months ended Nine months ended                                        Feb 28,  Feb 28,   Feb 28,   Feb 28,                                        2014     2013      2014      2013                                        (unaudited)        (unaudited)                                                                   Diluted earnings (loss) per share       $0.14  $(0.03) $0.13   $0.01                                                                   After tax:                                                         Acquisition and other non-recurring (1) 0.06    0.09     0.15     0.17 Quality Call to Action Program (2)      0.00    0.00     0.00     0.02 Inventory step-up (3)                   0.00    0.01     0.00     0.07 Contingent earn out valuation (4)       (0.12)  0.01     (0.10)   0.01 Amortization of intangibles             0.08    0.08     0.23     0.22 Adjusted diluted earnings per share     $0.16  $0.16   $0.41   $0.50 excluding amortization                                                                    (1) Includes costs relating to acquisitions, debt financing, business restructuring, litigation and facility consolidations. (2) Direct costs of implementing a comprehensive Quality Call to Action program to review and augment the quality management systems at our Queensbury and Fremont facilities. (3) Amortization of basis step-up of acquired inventory. (4) Impact of revaluation of contingent earn outs related to acquisitions.    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 28,   Feb 28,   Feb 28,                                       2014      2013      2014      2013                                       (unaudited)         (unaudited)                                                                   Net income (loss)                      $5,108  $(992)  $4,583  $256                                                                   Provision for (benefit from) income    476      (829)    267      (99) taxes Other income (expense), net            1,985    1,879    5,580    5,707 Amortization of intangibles            4,248    4,314    12,871   11,961 Depreciation                           2,227    2,096    5,889    6,610 EBITDA                                 14,044   6,468    29,190   24,435                                                                   Acquisition and other non-recurring    3,016    5,157    7,697    9,943 (1) Stock-based compensation               1,599    997      4,022    3,372 Quality Call to Action Program (2)     --      38       --      850 Inventory step-up (3)                  75       400      150      3,845 Contingent earn out revaluation (4)    (4,154)  630      (2,481)  827 Adjusted EBITDA                        $14,580 $13,690 $38,578 $43,272                                                                   EBITDA per common share                                            Basic                                  $0.40   $0.19   $0.83    $0.70 Assumes Diluted                        $0.39   $0.18   $0.83    $0.69                                                                   Adjusted EBITDA per common share                                   Basic                                  $0.41    $0.39    $1.10    $1.24 Assumes Diluted                        $0.41    $0.39    $1.09    $1.23                                                                                                                                     Reconciliation of Operating Income to non-GAAP Adjusted Operating Income:                                                                                                         Three months ended  Nine months ended                                       Feb 28,   Feb 28,   Feb 28,   Feb 28,                                       2014      2013      2014      2013                                       (unaudited)         (unaudited)                                                                   Operating income (loss)                $7,569   $58      $10,430  $5,864                                                                   Acquisition and other non-recurring    3,016    5,157    7,697    9,943 (1) Quality Call to Action Program (2)     --      38       --      850 Inventory step-up (3)                  75       400      150      3,845 Contingent earn out revaluation (4)    (4,154)  630      (2,481)  827 Amortization of intangibles            4,248    4,314    12,871   11,961 Adjusted Operating income              $10,754 $10,597 $28,667 $33,290                                                                    (1) Includes costs relating to acquisitions, debt financing, business restructuring, litigation and facility consolidations. (2) Direct costs of implementing a comprehensive Quality Call to Action program to review and augment the  quality management systems at our Queensbury and Fremont facilities. (3) Amortization of basis step-up of acquired inventory. (4) Impact of revaluation of contingent earn outs related to acquisitions    ANGIODYNAMICS, INC. AND SUBSIDIARIES PRELIMINARY NET SALES BY PRODUCT CATEGORY AND BY GEOGRAPHY (unaudited in thousands)                                                                                              Three months ended (a)   Nine months ended (b)                           Feb 28,  Feb 28,  %      Feb 28,   Feb 28,   %                           2014     2013     Growth 2014      2013      Growth                                                                    Net Sales by Product                                                Category Peripheral Vascular        $47,403 $42,616 11%    $141,743 $131,676 8% Vascular Access            27,259  26,391  3%     78,113   79,733   (2%) Oncology/Surgery           11,968  10,449  15%    35,692   33,688   6% Total Excluding Supply     86,630  79,456  9%     255,548  245,097  4% Agreement Supply Agreement           1,565   2,115   (26%)  4,842    6,897    (30%) Total                      $88,195 $81,571 8%     $260,390 $251,994 3%                                                                    Net Sales by Geography                                              United States              $69,859 $63,784 10%    $206,491 $196,682 5% International              16,771  15,672  7%     49,057   48,415   1% Supply Agreement           1,565   2,115   (26%)  4,842    6,897    (30%) Total                      $88,195 $81,571 8%     $260,390 $251,994 3%                                                                     (a) Sales days for the three months ended Feb 28, 2014 and Feb 28, 2013, were 61 and 60 days respectively. (b) Sales days for the nine months ended Feb 28, 2014 and Feb 28, 2013 were both 187 days.    ANGIODYNAMICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands)                                                                                                             Feb 28,     May 31,                                                 2014        2013                                                 (unaudited) (unaudited) Assets                                                       Current Assets                                               Cash and cash equivalents                        $7,382     $21,802 Marketable securities                            1,807      2,153 Total cash and investments                      9,189      23,955                                                             Receivables, net                                 57,726     47,791 Inventories, net                                 59,834     55,062 Deferred income taxes                            3,656      6,591 Prepaid income taxes                             2,727      438 Prepaid expenses and other                       7,000      7,679 Total current assets                            140,132    141,516                                                             Property, plant and equipment, net               66,478     62,650 Intangible assets, net                           207,970    214,848 Goodwill                                         359,736    355,458 Deferred income taxes                            11,721     11,007 Other non-current assets                         6,137      6,105 Total Assets                                    $792,174   $791,584                                                             Liabilities and Stockholders' Equity                         Current portion of long-term debt                $5,000     $7,500 Current portion of contingent consideration      12,146     9,207 Other current liabilities                        46,235     46,730 Total current liabilities                       63,381     63,437 Long-term debt, net of current portion           133,910    135,000 Contingent consideration, net of current portion 55,841     65,842 Other long-term liabilities                      1,353      475 Total Liabilities                               254,485    264,754                                                             Stockholders' equity                             537,689    526,830 Total Liabilities and Stockholders' Equity      $792,174   $791,584                                                             Shares outstanding                               35,416     35,060                                                                                                                          ANGIODYNAMICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)                                                                                               Three months ended      Nine months ended                               Feb 28,     Feb 28,     Feb 28,     Feb 28,                               2014        2013        2014        2013                               (unaudited) (unaudited) (unaudited) (unaudited)                                                                 Cash flows from operating                                        activities: Netincome(loss)            $5,108    $(992)    $4,583    $256 Depreciation and              6,475      6,410      18,760     18,571 amortization Change in fair value of       (4,154)    630        (2,481)    827 contingent consideration Tax effect of exercise of     --        82         (146)      (422) stock options Deferred income taxes        794        1,244      2,219      3,419 Stock-based compensation     1,599      997        4,022      3,372 Amortization of inventory     75         400        150        3,845 step-up Other                        (28)       1,304      (51)       894 Changes in operating assets                                     and liabilities Receivables                  (9,321)    2,454      (9,411)    3,957 Inventories                  144        644        (4,225)    (9,468) Accounts payable and accrued  (1,059)    (3,273)    2,698      (10,134) liabilities Other                        (265)      100        (944)      398 Net cash provided by (used    (632)      10,000     15,174     15,515 in) operating activities                                                                 Cash flows from investing                                       activities: Additions to property, plant  (1,811)    (2,921)    (9,003)    (7,708) and equipment Acquisition of businesses,    (30)       (10,966)   (4,349)    (25,274) net of cash acquired Other cash flows from         --        2,500      --        3,301 investing activities Purchases, sales and maturities of marketable       25         --        328        11,855 securities, net Net cash provided by (used    (1,816)    (11,387)   (13,024)   (17,826) in) investing activities                                                                 Cash flows from financing                                        activities: Repayment of long-term debt  (1,250)    (1,875)    (145,000)  (5,625) Proceeds from issuance of new --        --        141,410    -- debt Payment of Contingent         (5,250)    --        (14,597)   -- Consideration Deferred financing costs of   --        --        (677)      -- long-term debt Proceeds from exercise of     1,075      620        2,208      1,096 stock options and ESPP Net cash provided by (used    (5,425)    (1,255)    (16,656)   (4,529) in) financing activities                                                                 Effect of exchange rate       82         (54)       86         (43) changes on cash Increase(Decrease) in cash   (7,791)    (2,696)    (14,420)   (6,883) and cash equivalents                                                                 Cash and cash equivalents                                        Beginning of period          15,173     19,321     21,802     23,508 End of period                $7,382     $16,625    $7,382     $16,625                                                                  CONTACT: Company Contact:          AngioDynamics Inc.          Mark Frost, CFO          (800) 772-6446 x1981          mfrost@AngioDynamics.com                   Investor Relations Contacts:          EVC Group, Inc.          Michael Polyviou/Robert Jones          (212) 850-6020; (646) 201-5447          mpolyviou@evcgroup.com; bjones@evcgroup.com                   Media Contact:          EVC Group, Inc.          Dave Schemelia          (646) 201-5431          dave@evcgroup.com