AngioDynamics Reports Fiscal 2018 Fourth Quarter and Full-Year Financial Results

AngioDynamics, Inc. (NASDAQ: ANGO), a leading provider of innovative,
minimally invasive medical devices for vascular access, peripheral
vascular disease, oncology and surgery, today announced financial
results for the fourth quarter and fiscal year, which ended May 31, 2018.

“Our quarterly and full-year results showed further improvement in our
operational outcomes, continuing our path to sustainable long-term
growth. We are very pleased with our year-over-year gross margin
expansion and solid profitability, as well as our consistent free cash
flow generation,” commented Jim Clemmer, President and Chief Executive
Officer of AngioDynamics, Inc. “Our Oncology ablation systems, AngioVac
thrombus management product, and Fluid Management family of products are
each examples of where we are well positioned to win and grow the value
of the Company. We will continue to actively focus on pursuing our
portfolio optimization strategy, which includes both internal and
external growth opportunities. We will look to augment those areas where
we currently have a product family foundation with additional
opportunities to win, driving sustainable long-term revenue growth.”

Fourth Quarter 2018 Financial Results

Net sales for the fourth quarter of fiscal 2018 were $88.3 million, an
increase of 1.6%, compared to $86.9 million a year ago. During the
quarter, growth in the Fluid Management, Angiographic Catheters, and
AngioVac product lines, as well as two of the Company’s Ablation
Systems, Solero® and NanoKnife®, was partially
offset by declines in its Venous Insufficiency business, PICCs and
Midline products.

Currency had a positive impact on net sales of approximately 50 basis
points for both the fourth quarter and full year.

Peripheral Vascular net sales in the fourth quarter of fiscal 2018 were
$52.6 million, a decrease of 2.4% from $53.9 million a year ago, as
growth in the Fluid Management, Angiographic catheters, and AngioVac
product lines was more than offset by declines in the Venous
Insufficiency and Thrombolytic businesses. Oncology/Surgery net sales
were $12.1 million, an increase of 37.5% from $8.8 million a year ago,
as strong growth in our Solero Microwave Ablation System and an increase
in sales of NanoKnife, were partially offset by lower sales
of RFA. Vascular Access net sales were $23.6 million, a decrease of 2.5%
from $24.2 million a year ago, as growth in Ports and Dialysis products
was more than offset by declines in PICCs.

U.S. net sales in the fourth quarter of fiscal 2018 were $70.3 million,
a decrease of 0.7% from $70.8 million a year ago, primarily due to lower
sales of our Venous Insufficiency, PICCs, RFA, and NanoKnife product
lines. International net sales in the fourth quarter of fiscal 2018 were
$18.0 million, an increase of 11.8% from $16.1 million a year ago,
primarily due to strong performance in Europe.

Gross margin for the fourth quarter of fiscal 2018 expanded 500 basis
points to 53.7% from 48.7% a year ago, largely as a result of the
prior-year Acculis recall that was announced in the fourth quarter of
2017 along with ongoing operational improvements, recently completed
facility consolidation, and the expiration of a royalty arrangement in
the second quarter of fiscal 2018.

The Company recorded net income of $2.1 million, or $0.06 per share, in
the fourth quarter of fiscal 2018. This compares to a net loss of $12.9
million, or $0.35 per share, a year ago. The improvement in net income
was primarily attributable to the reserves for legal matters related
to Department of Justice subpoenas, as well as the Acculis recall that
were both recorded in the fourth quarter of fiscal year 2017.

Excluding the items shown in the non-GAAP reconciliation table below,
adjusted net income for the fourth quarter of fiscal 2018 was $7.7
million, or $0.20 per share, compared to adjusted net income of $6.8
million, or $0.19 per share, in the fourth quarter of fiscal 2017.

Adjusted EBITDAS in the fourth quarter of fiscal 2018, excluding the
items shown in the reconciliation table below, was $15.6 million,
compared to $14.3 million in the fourth quarter of fiscal 2017.

In the fourth quarter of fiscal 2018, the Company generated $23.8
million in operating cash flow and $23.0 million in free cash flow. As
of May 31, 2018, the Company had $74.1 million in cash and cash
equivalents and $92.5 million in debt, excluding the impact of deferred
financing costs.

Full-Year 2018 Financial Results

For the twelve months ended May 31, 2018:

Fiscal Year 2019 Financial Guidance

The Company expects its fiscal year 2019 net sales to be in the range of
$344 to $349 million and free cash flow in the range of $38 to $43
million, excluding an approximately $12.5 million cash payment to the
Department of Justice related to previously disclosed legal matters. The
Company expects its 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 fourth quarter and full-year 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 13681007.

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
Wednesday, July 11, 2018, until 11:59 p.m. ET on Wednesday, July 18,
2018. To hear this recording, dial 1-844-512-2921 (domestic) or
1-412-317-6671 (international) and enter the passcode 13681007.

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.

About AngioDynamics, Inc.

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. 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 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, 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.

CONSOLIDATED INCOME STATEMENTS

% of net sales

Adjusted diluted share count

 

ANGIODYNAMICS, INC. AND SUBSIDIARIES

 

NET SALES BY PRODUCT CATEGORY AND BY GEOGRAPHY

 

(unaudited in thousands)

CurrencyImpact(Pos) Neg

ConstantCurrencyGrowth

%

Net income

 

 

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