AngioDynamics, Inc. (ANGO)
Analyst and Investor Conference
March 08, 2013 8:30 am ET
Robert Jones - Senior Managing Director
Joseph M. DeVivo - Chief Executive Officer, President and Director
Mark T. Frost - Chief Financial Officer
Jayson T. Bedford - Raymond James & Associates, Inc., Research Division
Charles Haff - Craig-Hallum Capital Group LLC, Research Division
Thomas J. Gunderson - Piper Jaffray Companies, Research Division
Robert M. Goldman - CL King & Associates, Inc., Research Division
Charles Croson - Sidoti & Company, LLC
Previous Statements by ANGO
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Welcome, everyone. Thank you for joining us this morning on AngioDynamics' conference call to comment -- to discuss the preliminary fiscal 2013 third quarter results news release issued yesterday after the close. The news release is available on AndgioDynamics' website at angiodynamics.com. A replay of this call will be archived on the company's website.
Before we get started, during the course of this conference call, the company will make projections and forward-looking statements regarding future events, including statements about revenue and earnings for fiscal 2013. We encourage you to review the company's past and future filings with the SEC, including, without limitation, the company's forms 10-Q and 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in forward-looking statements. [Operator Instructions] And with that, I'd like to turn the call over to Joe DeVivo, Chief Executive Officer.
Joseph M. DeVivo
Thanks, Bob. Good morning, and thank you for joining us on the call, especially on such short notice. We want to provide our investors with the opportunity to ask questions this morning following yesterday afternoon's preliminary third quarter results and news release. We'll release actual third quarter results on April 9 and hold our normal conference call on that date, and we'll also provide guidance for the fourth fiscal quarter at that time, as we would normally do.
This morning, I'll make some brief opening remarks, then Mark Frost, our CFO, will cover the expected sales results for our 3 businesses and then I'll make closing remarks before we open up the call for questions.
Needless to say, we're disappointed with the results for the quarter that just ended. The momentum we expected to build in the second half of the year just didn't materialize, pretty much across the board. The average daily sales volume of our core product lines were flat compared to the prior quarter, so while we, like many of our peers, faced an overall challenging market that produced little if not any growth, we fell short of the ambitious sales goals we set for ourselves at the beginning of the fiscal year.
And now before Mark and I go through the detail, I do want to start off saying that we are absolutely committed to our strategy. We're committed to our growth initiatives and our team. In January, during our Analyst Day, we laid out our strategy for each of our businesses, we identified our growth drivers and as I just said, are completely committed to the future view and shape of the business. Nothing has changed. We've made very bold moves in the past to reset this company. And unfortunately, as others have predicted, it's proven to take some time to settle in and build consistency. Specifically, we felt the impact of bringing together these organizations following their -- a major acquisition in a market that showed some pretty weak fundamentals as elective procedure volumes have slowed recently, particularly in our EVLT business and our Cardiology business. EVLT has been a key and consistent grower, and during the quarter, while it grew, the pace had slowed. In our Vascular Access franchise, we operated at a competitive disadvantage as we talked every quarter about tip location. That disadvantage, we hope, goes away this summer.
This quarter, we did not build the type of momentum we expected, but we view the quarter's performance, really, as a temporary setback. It'll just take some more time to build the momentum, as we continue to onboard our new technologies, as our sales force settles in. As we integrated and innovated our business, we also ran it very well this quarter by protecting our profitability, successfully reducing costs as we've committed, which helped us offset the lower sales level, while generating cash and managing our inventory levels responsibly.
We also saw a very positive sign in our longer-term growth strategy through transformative product innovation and technology, is working and gaining traction. The quarter really masks some progress that we've made in executing that growth. We converted several very large PICC accounts to BioFlo, which now represents just a bit over 10% of our worldwide PICC sales, and that's only in 4 months. We just completed the training of AngioVac for our entire Peripheral Vascular sales force. We committed that we would get to $1 million in AngioVac revenue and in the third quarter, booked over $500,000, well ahead of our own internal expectations for that product. We recognized our first Microsulis sale in the quarter for the U.S. As it's going well internationally, we are looking forward to that product finally being in the U.S. and helping our Oncology business. And also, just as significant, we won an IDN agreement, which is a shareholder of a major GPO, that allowed us to gain a sole-sourced vascular access commitment. And consistent with the strategy in acquiring Navilyst to build scale in those product lines, the fact that they would displace the market leader due to the breadth of our product offering and the ability to meet their needs, is a significant indication that our strategy is working, and then in the future, we can deliver on this agreement and more for the company. That particular agreement is a sole-sourced agreement, as I mentioned, which will help us generate an additional $2 million worth of annual sales as we convert that business.