AngioDynamics, Inc. :ANGO-US: Earnings Analysis: Q2, 2017 By the Numbers : January 17, 2017

AngioDynamics, Inc. reports financial results for the quarter ended November 30, 2016.

Highlights

  • Summary numbers: Revenues of USD 89.03 million, Net Earnings of USD 13.73 million.
  • Gross margins narrowed from 45.75% to 45.74% compared to the same period last year, operating (EBITDA) margins now 15.31% from 14.43%.
  • Change in operating cash flow of 56.04% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-11-30 2016-08-31 2016-05-31 2016-02-29 2015-11-30
Relevant Numbers (Quarterly)
Revenues (mil) 89.03 88.1 93.37 86.95 88.26
Revenue Growth (%YOY) 0.88 6.53 3.9 1.62 -3.09
Earnings (mil) 13.73 1.3 -43.96 0.63 -0.36
Earnings Growth (%YOY) 3893.92 271.73 -5300.74 114.78 -127.06
Net Margin (%) 15.43 1.48 -47.08 0.72 -0.41
EPS 0.37 0.04 -1.21 0.02 -0.01
Return on Equity (%) 10.6 1.02 -33.24 0.46 -0.26
Return on Assets (%) 7.64 0.72 -23.75 0.33 -0.19

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, ANGO-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if ANGO-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 1.06% and earnings by 956.46% compared to the previous period.

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 14.43% to 15.31%. For comparison, gross margins were 46.31% and EBITDA margins were 14.29% in the last period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

ANGO-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 93.99 days from 98.38 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Cash Versus Earnings – Sustainable Performance?

ANGO-US‘s year-on-year change in operating cash flow of 56.04% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 6.27% to 8.42% and (2) one-time items. The company’s pretax margins are now 16.19% compared to -0.82% for the same period last year.

EBIT Margin History
PreTax Margin History

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Company Profile

AngioDynamics, Inc. engages in the business of medical devices. Its activities include design, manufactures, and sale of medical, surgical and diagnostic devices. The company focuses on devices in the field of vascular access, peripheral vascular, oncology, and surgery. AngioDynamics was founded by Eamonn P. Hobbs in 1988 and is headquartered in Latham, NY.

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