On March 29, 2018 -AngioDynamics, Inc. (NASDAQ: ANGO), a leading provider of innovative, minimally invasive medical devices for vascular access, peripheral vascular disease, surgery and oncology, reported financial results for the third quarter of fiscal year 2018, which ended February 28, 2018 (Press release, AngioDynamics, 29 29, 2018, View Source [SID1234525066]).
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"Our third quarter results demonstrate continued execution against our operational goals as evidenced by meaningful gross margin expansion and strong profitability. Revenue growth remains negatively impacted by competitive headwinds in our Venous and PICCs product lines, but we continue to believe that our ongoing portfolio evaluation and reshaping efforts will drive long-term sustainable top-line growth," commented Jim Clemmer, President and Chief Executive Officer of AngioDynamics, Inc. "We remain committed to creating value through both organic efforts and M&A as we continue transforming AngioDynamics into a dynamic leader in our industry."
Third Quarter 2018 Financial Results
Net sales for the third quarter of fiscal 2018 were $83.9 million, a decrease of 2.0%, compared to $85.6 million a year ago, primarily related to declines in the Company’s Venous Insufficiency business, as well as a negative year-over-year comparison related to the RFA product line, which was discontinued in Japan. Japanese RFA sales in the third quarter of fiscal 2017 were $1.7 million.
Currency did not have a significant impact on the Company’s sales in the quarter.
Peripheral Vascular net sales in the third quarter of fiscal 2018 were $48.5 million, a decrease of 0.8% from $48.9 million a year ago, as growth in the Fluid Management, AngioVac, and Angiographic Catheter product lines was offset by declines in the Venous Insufficiency business. Vascular Access net sales were $23.3 million, a decrease of 1.7% from $23.7 million a year ago, as growth in Midlines and other BioFlo related products was more than offset by declines in PICCs. Oncology/Surgery net sales were $12.1 million, a decrease of 7.2% from $13.0 million a year ago, as lower sales related to the discontinued RFA product noted above were only partially offset by mid-teens growth in sales of both NanoKnife and the Solero Microwave Tissue Ablation System.
U.S. net sales in the third quarter of fiscal 2018 were $65.8 million, a decrease of 2.8% from $67.7 million a year ago, primarily due to declines in the Venous, PICCs, and RFA businesses. International net sales in the third quarter of fiscal 2018 were $18.1 million, an increase of 0.7% from $17.9 million a year ago, primarily due to consistent performance across each of the business units, partially offset by the decrease in sales of our discontinued RFA product line in Japan.
Gross margin for the third quarter of fiscal 2018 expanded 300 basis points to 54.2% from 51.2% a year ago largely as a result of ongoing operational improvements, recently completed facility consolidations, and the expiration of a royalty arrangement in the second quarter of this fiscal year.
The Company recorded net income of $14.0 million, or $0.37 per share, in the third quarter of fiscal 2018. This compares to net income of $2.9 million, or $0.08 per share, a year ago. The improvement in net income was primarily attributable to the re-measurement of deferred taxes pursuant to the U.S. Tax Reform, resulting in a tax benefit of $9.9 million, compared to a prior-year tax expense of $1.7 million.
Excluding the items shown in the non-GAAP reconciliation table below, adjusted net income for the third quarter of fiscal 2018 was $9.5 million, or $0.25 per share, compared to adjusted net income of $6.9 million, or $0.19 per share, in the third quarter of fiscal 2017.
Adjusted EBITDAS in the third quarter of fiscal 2018, excluding the items shown in the reconciliation table below, was $16.8 million, compared to $14.9 million in the third quarter of fiscal 2017.
In the third quarter of fiscal 2018, the Company generated $4.3 million in operating cash flow and $3.9 million in free cash flow. As of February 28, 2018, the Company had $53.6 million in cash and cash equivalents and $93.8 million in debt, excluding the impact of deferred financing costs.
Nine Months Financial Results
For the nine months ended February 28, 2018:
Net sales were $256.0 million, a decrease of 2.6%, compared to $262.7 million for the same period a year ago.
The Company’s net income was $14.2 million, or $0.38 per share, compared to net income of $17.9 million, or $0.49 per share, a year ago.
Excluding the items shown in the non-GAAP reconciliation table below, adjusted net income for the nine months ended February 28, 2018 was $19.9 million, or $0.53 per share, compared to adjusted net income of $20.2 million, or $0.55 per share, a year ago.
Adjusted EBITDAS, excluding the items shown in the reconciliation table below, was $41.5 million, compared to $44.4 million for the same period a year ago.
Fiscal Year 2018 Financial Guidance
The Company reaffirms its previously announced financial guidance and expects its fiscal year 2018 net sales in the range of $345 to $350 million and free cash flow in the range of $30 to $35 million, excluding the cash payment related to the previously disclosed Department of Justice legal matters that the Company now anticipates paying during the fourth quarter. The Company expects its adjusted earnings per share in the range of $0.64 to $0.68, excluding any impact from the recently enacted 2017 Tax Reform Act. Including the impact of Tax Reform, guidance for adjusted earnings per share is $0.70 to $0.74.
Conference Call
The Company’s management will host a conference call today at 8:00 a.m. ET to discuss its third quarter 2018 results.
To participate in the conference call, dial 1-877-407-0784 (domestic) or 1-201-689-8560 (international) and refer to the passcode 13677111.
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 Thursday, March 29, 2018, until 11:59 p.m. ET on Thursday, April 5, 2018. To hear this recording, dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and enter the passcode 13677111.
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 gross margin, 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.