AngioDynamics CEO Clemmer is on the M&A trail
Friday, July 13, 2018
CEO Jim Clemmer said the company is actively walking the M&A trail as it looks at markets with unmet needs and high margins.
Latham, N.Y.-based AngioDynamics posted fiscal fourth-quarter results July 11 that missed Wall Street’s expectations, sending share prices down some -9% this week despite a swing to black ink.
During a conference call discussing the results, Clemmer said one aspect of the turnaround he was hired to engineer involves acquisition and, perhaps, even selling off some assets.
Citing “portfolio optimization” as the goal, the Covidien veteran said the external piece of that is seeking potential targets “focused on products and technologies that fulfill unmet needs in large addressable markets and generally have high-margin profiles,” according to a Seeking Alpha transcript.
“The first, I’ll call it, four to six quarters of my tenure here at Angio was more shoring up the business,” said Clemmer, who took over the corner office from Joe DeVivo in 2016. “With the last six months or so, we have shifted a little bit, because we know the market is better than we did before.
“We are doing deep analysis around potential opportunities to either bring it to our portfolio or maybe to shift out. So it is hard to gauge exact timing, but we are actively engaged in the process, utilizing [the] discipline I think we have shown to you over time. Maybe soon we will have some announcements, but we are actively engaged in that process.”
Clemmer also said that AngioDynamics has people and procedures in place to minimize the disruption of either an acquisition or divestiture.
“In any company, if a company were to make a decision to carve out the business or divest something, there is always disruption and you know my background, I was at a company that did a lot of M&A, internal and external. Here at AngioDynamics, if we decide to make a portfolio move that would carve something out as you mentioned or divest something, the good news is the operational aspect of our company is much higher than it was two years ago. We have got plans in place that if we were to do that, how we could execute. We have also got the right people in place now who have done that before,” he said. “We think we would execute well on either aspect with M&A.”
“We are pleased with our consistent free-cash-flow generation, which bolsters our strong balance sheet and provides us with the capital we will need to pursue targeted investments in R&D and strategic M&A opportunities,” added CFO Michael Greiner, noting the $74.1 million in cash and equivalents the company had as of the end of May.
AngioDynamics also renamed its segments, from peripheral vascular to vascular interventions from oncology surgery to oncology, and will begin reporting its business under those names with its fiscal first quarter beginning June 1.
For the fourth quarter, the company reported profits of $2.1 million, or 6¢ per share, on top-line growth of 1.6% to $88.3 million, compared with losses of -$12.9 million during fiscal Q4 2017. Adjusted to exclude one-time items, earnings per share were 20¢, a penny below the consensus forecast on Wall Street, where analysts were looking for sales of $89.3 million.
Full-year profits surged 226.2% to $16.3 million, or 44¢ per share, on a -1.5% sales slip to $344.3 million compared with fiscal 2017. Adjusted EPS hit the consensus of 74¢, but analysts had expected sales of $345.3 million. AngioDynamics said it expects to report adjusted EPS of 82¢ to 86¢ for fiscal 2019, on sales of $344 million to $349 million.
The earnings report sent shares down -16.1% to an $18.95 close July 11; since then the stock has held steady at $20.50 per share, off -9.2% from its mid-week peak.