Q3 2011 Earnings Call
April 05, 2011 4:30 pm ET
D. Gersuk - Chief Financial Officer, Chief Accounting Officer, Executive Vice President and Treasurer
Johannes Keltjens - Chief Executive Officer, President and Director
Doug Sherk - The EVC Group
Larry Haimovitch - HMTC
Jayson Bedford - Raymond James & Associates, Inc.
Robert Goldman - CL King & Associates, Inc
Thomas Kouchoukos - Stifel, Nicolaus & Co., Inc.
Jamar Ismail - Canaccord Adams
Brooks West - Craig-Hallum Capital Group LLC
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Thank you, operator, and thank you all for joining us today for the AngioDynamics conference call to review the results of the fiscal third quarter, which ended on February 28, 2011. The news release announcing the third quarter earnings crossed the wire this afternoon after the market closed and is available on the AngioDynamics website. The call is being broadcast live on the web at www.angiodynamics.com. A replay of the call will also be archived on the AngioDynamics website.
Before we get started, during the course of this conference call, the company will make projections or forward-looking statements regarding future events, including the statements about revenue and earnings for fiscal 2011. 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. In addition, today's presentation, includes certain financial measures that -- used to better understand our business, that have not been prepared in accordance with the Generally Accepted Accounting Principles, better known as GAAP. An explanation and reconciliation of these non-GAAP measures has been provided in today's news release issued by the company and is available on the website at www.angiodynamics.com.
AngioDynamics uses non-GAAP measures to establish operational goals and believes that non-GAAP measures may assist investors in analyzing underlying trends of the company's business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or superior to, financial reporting measures prepared in accordance with GAAP.
On today's call, the company will discuss non-GAAP EBITDA and non-EBITDA per share -- excuse me, non-GAAP EBITDA per share and has used these measures in internal analysis and review of operational performance. [Operator Instructions]
And now, I'd like to turn the call over to Johannes Keltjens, President and Chief Executive Officer of AngioDynamics.
Thank you, Doug, and good afternoon, everyone. Thank you for joining us on our third quarter conference call. With me today is, as usual, Joe Gersuk, our Chief Financial Officer. This afternoon, I will start with an overview of our fiscal 2011 third quarter results, and then provide an update on our Oncology/Surgery and Vascular businesses, as well as the progress on our NanoKnife and other strategic programs. Joe will then review financial highlights for the quarter, and we will open the call subsequently for your questions.
This afternoon, after the market closed, we reported net sales for the third quarter up 5% and net income up 14% compared to a year ago. Our sales in the third quarter were driven by continued momentum in our Oncology/Surgery business, and NanoKnife posted strong growth with sales of $1.9 million, almost 25% growth over the fiscal second quarter and more than doubling from last year.
Also, LC Beads continue to show solid growth. And the third pillar of success for Oncology/Surgery is our International business. The International Oncology/Surgery business is becoming an increasingly large portion of our worldwide business, and all three product lines, RF ablation, Habib resection devices and NanoKnife contributed to growth during the third quarter.
I know there's a keen interest from our shareholders in the possible expansion of our LC Bead distribution agreements with Biocompatibles now owned by BTG. We do anticipate a resolution about our ongoing distribution relationship in the next few months. As we've discussed in the past, we are concurrently developing and implementing strategies that are designed to provide ongoing annual top and bottom line growth regardless of the contribution from LC Beads.
In the Vascular business, we continue to operate in a challenging U.S. market environment. Sluggish procedure growth, fierce competition and significant price erosion are the key factors contributing to the operating environment. We expect this difficult operating environment to persist for the next couple of quarters. Adding new innovative products will be the key to regaining consistent growth. We generated good volume increases in our Vascular business, which comprises our combined venous access and Peripheral Vascular franchises. However, this volume growth was largely offset by price erosion.
We did make further progress towards completing our sales force transition to a combined U.S. Vascular force during the quarter. All training has been completed, and we believe the effects of this transition are largely behind us. Going forward, we will continue to strengthen the customer relationships necessary to achieve and sustain a high level of productivity.
Within the Vascular business, we did see some encouraging growth stories. Our VenaCure EVLT franchise continues to grow mid-single digits with strong U.S. growth offsetting the impact of healthcare reform, in particular in the United Kingdom. Our Micro-Introducer kits continue to grow at a healthy pace. And in our venous access franchise both our PICC and Port product family had a particularly strong quarter with solid double-digit growth.