AngioDynamics Q3 2007 Earnings Presentation Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Phillip Nalbone - RBC Capital Markets - Analyst : Good afternoon. Eamonn, I wonder if we can start with fiscal '08 guidance. The expectation is for 55% to 60% topline growth. Can you talk about what that contemplates in terms of the outcome of the Diomed patent case? What are you assuming happens with the VenaCure line in that year?

Question: Phillip Nalbone - RBC Capital Markets - Analyst : Okay. Could -- can you walk us back through some of the analysis you provided regarding a net income expectation? I believe you gave some numbers that I didn't hear.

Question: Phillip Nalbone - RBC Capital Markets - Analyst : Yes.

Question: Phillip Nalbone - RBC Capital Markets - Analyst : Well, with regard to the -- the new product just recently introduced? The Smart Port? Well, really that whole line of Port Access products, inclusive of the CT capable. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MARCH 27, 2007 / 8:30PM, ANGO.OQ - Q3 2007 AngioDynamics Earnings Presentation

Question: Phillip Nalbone - RBC Capital Markets - Analyst : Okay. Thank you.

Question: Suraj Kalia - Piper Jaffray & Co. - Analyst : Yes. Good afternoon, gentleman. Eamonn, if I look at the organic growth, just per my calculations, if I look in Q1, it was roughly about 26% year over year, Q2 is about 30%, and Q3 was 6%. And this is organic, if I'm just looking at five -- at removing five weeks of RITA Medical, again, an approximation. I do understand it might be a little here and there. The question I have is, this patent dispute with Diomed has not been -- has been going on for some time. What changed in this quarter for the sudden drop in overall -- or in revenue growth? What was the thing that was different relative to Q1 and Q2?

Question: Suraj Kalia - Piper Jaffray & Co. - Analyst : So -- so Eamonn, can you shed some color in terms of what was the contribution from VenaCure sales? My understanding -- or as as a percent of overall organic revenues ex-RITA probably in the 15% range. One is my assumption fair? And two, what will you say if you can shed some color on what the contribution was in Q3 relative to Q1 and Q2? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MARCH 27, 2007 / 8:30PM, ANGO.OQ - Q3 2007 AngioDynamics Earnings Presentation

Question: Suraj Kalia - Piper Jaffray & Co. - Analyst : So your guidance for FY '08, Eamonn, what -- and maybe you've already answered this, but what is your internal strategic expectation on VenaCure as being part of the overall growth engine?

Question: Suraj Kalia - Piper Jaffray & Co. - Analyst : So is it fair to say that you'll have factored it into FY '08 guidance? Sorry for belaboring this point, I just need to make sure I understand it right?

Question: Suraj Kalia - Piper Jaffray & Co. - Analyst : Okay. In terms of -- what were the -- Joe, what would the legal expenses in the quarter related to the litigation?

Question: Suraj Kalia - Piper Jaffray & Co. - Analyst : Okay. In terms of the sales force, your SG&A on an absolute basis has increased. Obviously you'll have a higher sales head count with the Rita acquisition. Eamonn, can you help us understand -- my understanding was the RITA acquisition was -- sales force was going to be pushing to the oncobiotic product. Can you help us understand how the sales force is positioned right now and how should we look upon it moving forward, especially for FY '08 as a percent of sales?

Question: Suraj Kalia - Piper Jaffray & Co. - Analyst : Perfect. Gentleman, thank you for taking my questions.

Question: Jayson Bedford - Raymond James & Associates - Analyst : Hi. Good afternoon. Can you hear me, gentleman?

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. Doing well, thanks. Just a couple quick questions. Of the $24.5 million in interventional revenue in the third quarter, what -- what were port revenue in that quarter?

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. If I look at -- I'm just trying to figure out what's change over the last few months. If I look at your guidance -- your topline guidance for fiscal '08, I'm assuming that 55% to 60% growth is off a consolidated '07 revenue number, which if I take the mid point of the fourth quarter looks to be about $112 million, $113 million, which puts you at about $170 -- $174 million, $175 million in fiscal '08. Is that the way I should interrupt your guidance?

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. And so with that number, let's call it mid-to-high $170 million, what is -- what's changed over the last few months? Is the base business a little slower, is the port business going to take a little longer to ramp? I'm guess I'm just trying to figure out what's going on there.

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. Just last couple of questions here. The guidance for the fourth quarter EPS number, that $0.13 is a GAAP number? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MARCH 27, 2007 / 8:30PM, ANGO.OQ - Q3 2007 AngioDynamics Earnings Presentation

Question: Jayson Bedford - Raymond James & Associates - Analyst : And then what's the -- what are the adjustments that lead to the $0.12 delta between the GAAP number and the $0.25 number?

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. And your assumed tax rate in the fourth quarter is roughly 38% on a reported basis?

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. And then just on '08, do you have just a raw absolute number of what you'll charge to amortization in '08?

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. And there -- are there -- besides stock options, are there any other noncash items in that '08 number?

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. And then, I guess for you, Joe. In terms of integration time lines, can you maybe walk us through what's left in terms of integrating RITA? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MARCH 27, 2007 / 8:30PM, ANGO.OQ - Q3 2007 AngioDynamics Earnings Presentation

Question: Jayson Bedford - Raymond James & Associates - Analyst : Okay. Thank you.

Question: Gregg Brash - Sidoti & Company - Analyst : Hey, Eamonn. Hey, Joe. Thanks for taking my call.

Question: Gregg Brash - Sidoti & Company - Analyst : I am, I am. So as far as -- I know you don't want to break out revenues for each product, are you also unwilling to break them out for the product segments as you had in the past?

Question: Gregg Brash - Sidoti & Company - Analyst : Okay. And looking forward to fiscal '08, just for me to try to come up with an EPS number right here, you said gross margins, 61% to 62%, SG&A, 36% to 38%, but then you mentioned net income around $15 million to $17 million, is that then also including the $7 million in amortization?

Question: Gregg Brash - Sidoti & Company - Analyst : Okay. Do you know what --

Question: Gregg Brash - Sidoti & Company - Analyst : Okay.

Question: Gregg Brash - Sidoti & Company - Analyst : Okay. Do you know what your stock option expense range that may be in '08?

Question: Gregg Brash - Sidoti & Company - Analyst : Okay. $5 million, before or after tax?

Question: Gregg Brash - Sidoti & Company - Analyst : Before, okay. Lastly, I was wondering if you could just talk a little bit more about the changes to the Morpheus bedside insertion? What went wrong there, and what is this change going to help fix?

Question: Gregg Brash - Sidoti & Company - Analyst : Okay, great. And one last question for Joe. Could you break out the sales and marketing and G&A for the quarter?

Question: Gregg Brash - Sidoti & Company - Analyst : Okay, okay. That's very helpful. Thank you.

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Hi, guys. Thanks for taking my question.

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : A couple quick ones, most have been answered. I know you won't give line items, can you talk to what RITA as a -- as its own entity would have put up in the fourth quarter would you guys not acquired them?

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : I'm sorry, in -- sorry, this past quarter.

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Yes.

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : You did $2.2 million for the five weeks you had, right. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MARCH 27, 2007 / 8:30PM, ANGO.OQ - Q3 2007 AngioDynamics Earnings Presentation

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Okay. What was the whole business for the quarter -- if they would have had a whole quarter's worth, what would it have been? What was their contribution if you would have had a whole quarter?

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Okay. So looking at growth rates, was there your typical transition issues that might have slowed things down a little bit? Did you have any rep turnover with them at all?

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Yes. Okay. And then looking at the core business, in -- with respect to guidance and all the questions about VenaCure have been asked. It sounds like you guys are pretty confident that that's going to come back. On the Sotradecol side, would you say that -- I think you had had a $5 million target out there for fiscal '07. Is that where some short fall will be that you won't get to that number? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MARCH 27, 2007 / 8:30PM, ANGO.OQ - Q3 2007 AngioDynamics Earnings Presentation

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Okay. Then, I guess on the earnings front for '08, you talked about $15 million to $17 million on a GAAP basis, including amortization, including your stock option expense. On the EPS line, did you give that number of what that -- I guess we could figure it out pretty easily, I just don't have it in front of me. I guess what I'm looking for, what was your $0.05 accretion on a GAAP basis accretive to? What was your base number? Was it what the street had out there?

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Just one last one. On the oncology side, it looks like from the most recent RITA quarters, that LCD has been one of the faster-growing products. And I would expect that's going to continue for the next several quarters. Can you give some context what part of the product line that makes up, and what kind of growth rates you expect there?

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Okay. As it ramps up, can you talk a little bit about what your margin is with that product?

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : I'm trying to look at it from a perspective, since you are a distributor of it, should we assume it's a typical distribution-type arrangement?

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Okay. Actually, I have one more. I'm sorry. The Profiler, did you guys launch that this quarter on a test basis, or is that really going to be an '08 event?

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : I remember that, but I think you said Q3 you would have had it on the market.

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : Great. We'll see impact largely from that in '08, then.

Question: Thomas Kouchoukos - A.G. Edwards & Sons, Inc. - Analyst : That's all. Thanks guys.

Question: Ed Antoian - Chartwell Invst Partners L.P. - Analyst : Hi, guys. A couple questions. I won't ask for numbers, but maybe you can tell us qualitatively how did the kit business do versus the box business do in the Venous business?

Question: Ed Antoian - Chartwell Invst Partners L.P. - Analyst : Eamonn, also, on Sotradecol, you had gotten the distributors out of the game and were able or at least supposedly be able to take some of the share back from that part of the market. Did that -- what, if anything, change there?

Question: Ed Antoian - Chartwell Invst Partners L.P. - Analyst : And on dialysis, not last quarter by the quarter before, your dialysis business was relatively weak, and then last quarter it rebounded quite strongly and you said qualitatively that was a weak business for you this quarter. Two quarters ago, it was -- at least some of the issues were customer-specific. Any other comment about the cause for this quarter?

Question: Ed Antoian - Chartwell Invst Partners L.P. - Analyst : Okay. I was just kind of curious, that was the issue six months ago and last quarter you had just a great quarter in dialysis.

Question: Ed Antoian - Chartwell Invst Partners L.P. - Analyst : So was there any kind of promo activity or --

Question: Ed Antoian - Chartwell Invst Partners L.P. - Analyst : -- or sales force focus last quarter that pushed the number higher than it normally should be?

Question: Ed Antoian - Chartwell Invst Partners L.P. - Analyst : Okay. Alrighty, that's all I have. Thank you.