Q4 2011 Earnings Call
July 14, 2011 4:30 pm ET
Scott Solano - Interim Chief Executive Officer and Chief Technology Officer
D. Gersuk - Chief Financial Officer, Chief Accounting Officer, Executive Vice President and Treasurer
Doug Sherk - Founder and Chief Executive Officer
Matthew Hewitt - Craig-Hallum Capital Group LLC
Jayson Bedford - Raymond James & Associates, Inc.
Robert Goldman - CL King & Associates, Inc.
Jamar Ismail - Canaccord Adams
Unknown Analyst -
Jeffrey Jonas - Gabelli & Company, Inc.
Previous Statements by ANGO
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Thank you, operator, and thank you, everyone, for joining us today for the AngioDynamics conference call to review the results of the fiscal fourth quarter and full year, which ended on March -- excuse me, May 31, 2011. The news release announcing the results 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 2012. 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 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 those non-GAAP measures has been provided in today's news release issued by the company and is available on the company's website.
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-GAAP EBITDA per share and has used these measures as an internal analysis and review of operational performance.
Finally, during the question-and-answer period today, we'd like to request each caller to limit themselves to 2 questions and encourage callers to requeue to ask additional questions. We appreciate everyone's cooperation with this procedure.
And now I'd like to turn the call over to Scott Solano, Interim Chief Executive Officer of AngioDynamics.
Thank you, Doug, and good afternoon, everyone. Thanks for joining us on our fiscal 2011 fourth quarter and full year conference call. With me today is Joe Gersuk, our Chief Financial Officer. We had a very busy several weeks since the leadership transition now underway at the company. While we wait the completion of the search process in the appointment of a new Chief Executive Officer, our management team has been focused on a number of key priorities including our Vascular business, revising our product strategy, reallocating our internal investments between our Oncology/Surgery business and our base Vascular business to maximize the opportunities for growth and aggressively seeking potential acquisitions to support our growth.
Joe will brief you in a few minutes on the financials for both the fourth quarter and the year. I'd like to address a couple of the key results namely the top line performance, the Vascular business and NanoKnife progress.
As our release issued after the market closed notes, our annual revenues were flat compared to the prior year and our fourth quarter sales declined over the prior year Q4. This is primarily a result of Vascular sales declining 13% from the fourth quarter 2010. We are obviously very disappointed with these results, and while we are operating on a very competitive environment, a large contributor to our performance was the disappointing sales of recently launched Vascular products. The U.S. Vascular business has been the #1 priority since the beginning of our leadership transition. We begun taking steps to ensure a flow of effective new products delivered to a committed sales force. We plan to increase our commitment to new product development and invest 10.6% of sales on R&D in fiscal 2012, which will represent an incremental increase over fiscal 2011 R&D spending of almost $2.5 million. We have also examined our R&D investment strategy and we've made 3 major revisions. We are allocating the spending between Oncology/Surgery product development, NanoKnife clinical trials and our base Vascular business in order to assure that short-, medium- and long-term growth objectives can be met. We are focusing development efforts on product areas and technology that capitalize on our strength, and where we feel we have the opportunity to achieve true leadership and growing market. And we also aim to strike a balance between product line extensions that have smaller impact and truly innovative but riskier product development.
We feel that combining these internal investments with a careful license in acquisition of external products and technologies should create a portfolio of products that can drive our growth in both our Oncology/Surgery and Vascular divisions. This early June, we've had 2 sales meetings; one for the domestic organization, another for the international organization. And I think that it's fair to characterize the team is focused, determined and enthused. We spent a great deal of time during our recent national sales conference, providing intensive product and sales training to our team members, both old and new, and generated a great deal of enthusiasm from the field. As a result, we're already seeing initial benefits from this effort and some early signs of improved Vascular sales performance.