Good day, ladies and gentlemen. Thank you for standing by. Welcome to the AngioDynamics Third Quarter Fiscal 2014 Financial Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Wednesday April 9, 2014. And I’d now like to turn the conference over to Bob Jones, Investor Relations. Please go ahead, sir.

Thank you, Britney. Welcome everyone and thank you for joining us for AngioDynamics' conference call this afternoon to review the financial results for the fiscal 2014 third quarter, which ended on February 28, 2014. The news release is available on AngioDynamics' website at www.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 the fiscal 2014 fourth quarter and full-year ending May 31. 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 the actual results or events to differ materially from those described in forward-looking statements. Finally, during the question-and-answer period today, we’d like to request each caller to limit themselves to two questions and encourage callers to re-queue to ask additional questions. We appreciate everyone’s cooperation with this procedure. And with that, I’d now like to turn the call over to Joe DeVivo, Chief Executive Officer.

Thank you, Bob. Welcome ladies and gentlemen to our third quarter AngioDynamics conference call. I’m very pleased to report a very strong revenue performance for the entire AngioDynamics team this quarter. Last quarter two of our four businesses, PV and Oncology grew while International was flat and VA made progress, Vascular Access, from the preceding quarter, but was still declining at 4% year-over-year. This quarter, each of our four reporting P&L businesses, Peripheral Vascular, Oncology, Vascular Access, and International grew for an aggregate worldwide top line of 8%. It will be 9% net our OEM supply agreement. Each quarter, I keep telling you that I look forward to growing our Vascular Access business as when it does, we should be at a real middle-single digit grower. Well that time has arrived. We delivered 3% growth in Vascular Access business, a 7% improvement over last quarter alone. I believe that growth and better growth in the future is now here to stay. I believe we have a long runway with our key growth drivers in NanoKnife, BioFlo, EVLT, and AngioVac in both the development of new markets as well as driving market share through increased penetration in competition. While we still have businesses which will float with the overall economy, a greater portion of our growth is in our control, and I believe shines a bright future for AngioDynamics. Each quarter, we enjoy the benefit of the investment that we’ve made to fuel growth. I like to review several highlights this quarter to provide more detail and color on them for you. So starting off, Vascular Access. BioFlo in my view is winning. Today, BioFlo is now over 40% of our worldwide PICCs, driving our Vascular Access business to the first quarter growth in the last two years. More data keeps…

Thank you, Joe, and good afternoon, ladies and gentlemen. As Joe indicated, we continued to deliver improved revenue growth driven by a focused sales effort and the increased market acceptance of our new products AngioVac, BioFlo and Microwave. As you also saw, our earnings leverage is taking a little longer to catch up and we did have some ERP implementation impact on the cash front, which we will explain later in the call. I'll start with our quarter results and then move to guidance for both the fourth quarter and the full fiscal year. Total revenue was up 8% from the prior fiscal year, but excluding the impact of the planned wind down of our supply agreement, we were 9% higher than the prior fiscal year. In the quarter we did benefit from extra sales day, which we estimate contributed about 2% of the growth. The sales quarterly trend line is demonstrating progressive improvement from negative 1% in the quarter for 2013 to 1% growth in quarter one, 3% growth last quarter and 7% in the third quarter without the extra sales day. Turning to product performance, our Peripheral Vascular business grew 11% to $47.4 million, reflecting continued 20% growth in EVLT and a larger contribution from AngioVac. AngioVac did slow its growth trajectory to $2.2 million, but for understandable reason as Joe articulated. EVLT strong results were driven once again by exceptional U.S. performance and the conversion of a competitive customer. Our Vascular Access business delivered a strong turnaround, improving by 7% sequentially from the prior quarter and 3% growth compared to the prior fiscal year’s third quarter. All three products PICCs, Ports and Dialysis grew with PICCs and Ports at 5%.BioFlo Technology as Joe commented was the key driver behind both PICCs and Ports improvements. In the Oncology/Surgery…

Thank you, Mark. I just realized, I didn’t write down your full last name and title. So, Mark Frost our Chief Financial Officer, so I apologize for that. It's so casual here, a pleasure to work with you. So our plans are to rebuild our -- our plan to rebuild our top-line are working. Our growth drivers continue to deliver and our entire team continues to hit their mark. The plan we laid out for growth in each of our businesses is progressing as we’re focusing on execution on both the top and bottom lines. But I believe that we will exit this year at that 5% growth that we’ve been targeting and I believe we should have every opportunity to not look back from there. As we drive our top-line, we will leverage the bottom-line and make AngioDynamics a wonderful valuable company for investors and we very much appreciate your support going forward. So with that operator, let’s open it up for questions.

Thank you, sir. (Operator Instructions) Our first question comes from the line of Charles Haff with Craig-Hallum. Please go ahead.

Hi, thanks for taking my question. I had a question for you about your revenue guidance which appears to be going up a little bit, a little more than the beat that you had this quarter. I am getting calls from investors with concerns about bad weather. Some of the hospitals are saying they have mixed surgical volumes versus their prior expectations. I am just wondering, how much kind of conservatism or how much are you concerned about some of these bad weather issues that happened in March and so forth in terms of your revenue guidance?

Yes. So weather in -- so third quarter is December, January, and February, and weather was an issue. We don’t see it as much of an issue in March, but it was most certainly an issue in January and February. There were times, I think our sales teams had reported up that East-Coast and Mid-West we lost anywhere between three and six days of elective procedures. But we all -- we think we’ll catch it up in the fourth quarter. We don’t believe weather will impact, anything that has been done from March is a function of our current revenue guidance, but I will tell you that I believe we would have add an even better third quarter if it wasn’t for weather. So, I wouldn’t be surprised if other companies especially those reporting January, February, March are going to be lamenting a really tough winter.

Okay, great. And then, Joe you mentioned you were winning some IDN contracts and expect some good GPO news in the future. Obviously, you probably don’t want to mention names, but can you kind of characterize what type of wins those would be. Would those be BioFlo wins or will those be your whole product set or how should we kind of think about the magnitude and the potential impacts for those wins in the future?

Well, right now the main crux of our focus is in the Vascular Access category, and so there are PICC contracts, port contracts coming up. We have been sitting in the last couple of years talking about the fact that we’re loosing customers in Vascular Access tip-location. Tip-location of course is an issue for growing some new business, but BioFlo is proving out hospital-after-hospitals who’re doing their evaluations are seeing the same type of clinical benefit that the original hospitals have had, and that is creating a stickiness. ‘A’ we’re not loosing accounts anymore and ‘B’, we are converting accounts, we have a line of sight on a whole laundry list of them. And yet, there are times now where AngioDynamics historically has not been in for Vascular Access, the GPO conversation today, buttressed by not only having BioFlo and seeing the benefits and it being a proprietary technology that no one else has, but coupled with the fact that the acquisition of Navilyst is paying off in States which not only delivered us BioFlo, but also a very complete product line offering. So when we now go into GPO conversations and IDN conversations, we’re not trying to carve out this product or that product because we don’t have it. We can convert out any competitor lock, stock, and barrel and that makes us formidable now. So, we don’t guide to -- in our guidance, it doesn’t represent expected wins. In our guidance, it's purely what's in hand and what we think we can accomplish with what we have. Some of these arrangements could be very meaningful, but I also want to be cautious because the incumbent competitors are incredibly powerful. They use a lot of their market cloud, especially even in other businesses to make sure that small companies don’t, at times can compete head-to-head. So, we’ll see how that all plays out. But I’ll tell you, this is our time. Right now, we're -- there’s no reason why we can’t make an impact. We have brought on and promoted some of our best sales executives into the corporate accounts part of our business, and I am terribly pleased with each one of their efforts as they’re representing our company very well, and it’s an upside. As I look at a growth driver from a product standpoint, there’s a growth driver from our corporate strategy of coming up with the complete product line and bringing in great technology, so the ability to satisfy competitively this category which has virtually been a monopoly for a competitor I think is now fair game.

Okay, great. And then one more question, I’ll jump back in queue I have other questions, but I’ll re-queue for those. In terms of NanoKnife congratulations on the IDE. One; we haven't heard about NanoKnife in a big way for a while from your company. One of the concerns that I hear from investors is how much money are you willing to put into this product at this juncture given the fact that you’ve put a lot in already. How should we think about the work that you’re doing from a capital allocation standpoint over the next couple of years; it might be helpful to just kind of put that in context. Thank you.

Thank you very much Charles for the question. I think I mentioned in the past that we have -- historically in the past there was I guess there was a substantial investment -- almost an over investment in NanoKnife to the Dutchmen of other businesses. Within our operating businesses we have now created a balance between the revenue opportunity and the expenses associated to it, and we're growing our businesses in as very well hedged portfolio. We’re not betting to farm in any one area, whether it be AngioVac, BioFlo or NanoKnife. But we are continuing to invest in NanoKnife’s clinicals proportionately. Of course if there is a time when we feel we can create a significant value in doing a massive U.S. pivotal trial that may tip the scales and we may have to talk about that but, we would have to believe that was incredibly meaningful in order to do it and I don’t see that in our near term plans. I think the ability to clinically validate the technology can be done within our means at the moment.

Okay, great. Thanks a lot. Nice quarter.

Thank you.

Thank you. Our next question comes from the line of Tom Gunderson with Piper Jaffray. Please go ahead.

Hi, good afternoon. So on BioFlo, that’s going well on PICCs and Ports. You got the FDA approval for the dialysis catheter. Joe, how should we think of adoption of BioFlo within the new category of dialysis catheters, is that something that people are waiting for? Is it going to take a couple of quarters to get people familiar with it? Give me a little color on how you think the product rolls out?

Thank you Tom for the question. Just like in PICCs and Ports there is a long dwell time for the catheter, and so I think it's going to take us three to four months of clinical time for the investigators to start to see the reduction or the reduction or elimination of Thrombus formation and then see the benefit. So I don’t see that it's something that would fly off the shelves day one. And we’re very committed to getting that evidence. Because boy, when you have it, it does alive itself. One of the good things in this area is there’s no tip-location that holds us. We have a great product already and typically those who see the complications are the ones who are placing the product. With PICCs you have to walk in the hospital and convince them they have a problem, because a lot other people who put it in aren’t the ones who were dealing with the patients who are (indiscernible) Thrombus. So you got to go through this study and then you build this awareness and they go what? We’re spending that much money in Cathflo, what we have these complications. And then after years of hard work -- after a year of hard work it's now starting to catch on and hospital after hospital are seeing the benefits. On the dialysis side, I think it's going to happen quicker. So, we’re going to have to wait a few months to get the clinical data. But once that data happens I think the adoption might happen quickly than PICCs because we don’t have to convince a radiologist that or a nephrologist for that matter that a dialysis patient has a Thrombus issue. They all have Thrombus issues. So if we make -- if we are successful clinically, I think we’ll see a quicker adoption in the dialysis segment than in PICCs.

Got it. Thanks. That’s exactly what I wanted. And then a quick question on the lawsuits, the ongoing litigation with Biolitec, is that -- $75 million would help the balance sheet considerably even if there was tax that would help the balance sheet considerably. But we all know that the court system is moving slowly. Is there any prediction that you have gotten from your lawyers or internally that on the timing of when you might receive money?

Well we still have several steps to go. We are certain that the defended will appeal, that will take six to nine months. We feel confident as we’ve been successful at almost every turn because we’re in the right, that we’ll win that appeal. And then at that point in time Tom we’re going to now then have to take action on the entity who is domiciled in Austria. Now they have assets around the world that we may be able to go after, but I think it's a long process. I don’t expect a check for $75 million anytime soon. But we have a major, if this is upheld a major set of leverage and we will continue until we get as much value as they have.

Got it. Thanks. Those are my two. Thank you guys.

Thank you, Tom.

Thank you. Our next question comes from the line of Jayson Bedford with Raymond James. Please go ahead.

Hi, good afternoon guys, I apologize for the background noise here, but just a couple of questions. Just following on Tom’s question on dialysis, it seems like it's little more of a price sensitive market. What's the pricing strategy on BioFlo for dialysis?

Well it's a consistent strategy that we have across the board. But well the dialysis category does have another product that has similar benefits but it's priced very, very high and it's been neighed for that purpose. We continue to hold a 15%, 20% premium on BioFlo, we’ll do that in dialysis. And because Thrombus is such an immediate acute issue that drives dialysis cost, we don’t think that the additional up-charge we’ll require to cover our cost will be a problem. What's going to happen for us is over the next three to four months we’re going to get our clinical evidence. And if the clinical evidence shows a similar Thrombus reduction, an improvement in other areas, we think we’re priced well to not only grow the business but to make a very good argument to dialysis centers to convert to BioFlo lock, stock, and barrel.

That’s helpful. Your growth in EVLT business was strong. Have you seen any benefit from the in-house for reimbursement shift at all?

I don’t know that I have any -- we have anecdotal information. There are definitely accounts where on the inpatient and hospitals where we now have some lasers going in. I can’t say that, that’s the reason why we’re growing as much, it's definitely a tailwind which is great. And I think it's something that will help us deliver the growth in the future. But I can’t tell you that of the growth rate I can attribute a portion to it yet. But I think, if you spoke to my sales force they definitely have a line of sight, and we most certainly have seen several accounts convert since that January timeframe.

Okay. And then just last one if I could sneak it in on the cost side. I missed the gross margin comment. Is the assumption that gross margin is above 52% in the fourth quarter and then what's the increased cost in a dollar value related to the Medcomp deal? Thanks.

Okay, I’ll do my best to answer it. Yes, the guidance is in the fourth quarter we will get to that, but as I said for the overall year adjusted gross margin would improve by about 50 basis points. That does put us in for a 52% range. On Medcomp it's about 110% is what the extra R&D clinical cost have been baked into our guidance.

Okay. So sorry Mark, the 50 basis points was a year-over-year number?

That’s a year-over-year improvement. So you can back into what the fourth quarter is going to be, which is close to what you said.

Okay. Thank you.

Thank you. (Operator Instructions) And we do have a follow up question from the line of Charles Haff with Craig-Hallum. Please go ahead.

Hi, thanks for taking my follow up question. So on sales and marketing you guys came in a little bit higher than I was expecting and I think Mark you mentioned the U.S. sales force doing a little better and that was the, kind of the additional bonuses that were paid. But is there anything else that I should be thinking about when I model sales and marketing expenses?

No, it is primarily because of that reason that we're -- as I said in my talk earlier, we’re over teaming on the U.S. which then triggers we have to hire -- pay higher achievement to our U.S. sales force. The problem is when we missed on the international side we have a very low rate of commissions, so it's almost fixed cost, so we get no benefit when we miss on the international. So we’re getting no leverage the other way. So the U.S. achievement is a pure additional cost for us at this point in time, and that’s what we expect for the fourth quarter as well. Now this will go away as we reset our 2015 plan, but it's an issue with our operating plan in 2014 the way the revenue is played out.

Yes, Charles we had expected at the beginning of the year a lot more from international and frankly less from the U.S. We have, when you do your U.S. plans you factor in how many people you think will get to over achievement and then you create an accrual for that. And the truth is; we’re going to have a lot of U.S. sales people. We’re going to make a lot of money this year, and you know what, they deserve it. I am happy for them. If I could take an accrual in the third and fourth quarters to help pay for the success of that, that the team has delivered, so be it. It will be nice if we had the confidence to actually bake that in at the beginning of the year, but we just didn’t expect them to deliver as much as they had done so quickly. So, normally with the lower revenue in international if we had a variable comp plan, that team would have made a lot less and we would have been able to offset the wins and the gains for this level of revenue, but it's just the way it is. So when we look at as Mark mentioned; we look at our operating income. Our operating income adjustment is improving. Our operation excellence programs are in place. Our ability to -- our overall gross margin if you net out this mix issue actually it is doing what we wanted to do and it matched some of the great work our operations team is doing, but it's just an artifact of the year. So, we’re very pleased with the top-line growth. We know top-line growth gives us the ability to adjust our plans and the ability to create leverage. We’re focused and…

Okay, great. And then my last question is regarding the Queensbury facility. You mentioned inspection recently with no 483’s, congratulations for that. And you hope the warning letter to be cleared soon. What kind of impacts could that have to your business, I am not quite clear on that because I know in terms of the operating excellence plan you kind of move some stuff around, but what type of impacts would the lifting of the warning letter have?

The most material impact lifting a warning letter would have is on our international revenue. Products that are made out of that facility we can’t reregister until we lift that warning letter in international markets. In our Latin America EVLT business for example, we don’t even have our 1470 laser registered in all of Latin America, and it's a large EVLT market, but because of this warning letter we have an old system down there that really hasn’t made much traction. And I can go line-by-line of all the stuff that come out of a plant, there is issues where we’re registering products in China that is affecting us, there’s issues in South-East Asia where we’re registering products that we can’t get these registration. So, it's actually a core contributor to the international performance but not the entire contributor. So, we think we’re very close to lifting those restrictions. We think that will then allow us over a 6 to 9 month period to go through the re-registration process. And I think this time next year, on a one-to-one basis the international business is going to start seeing some really nice growth based simply registering and selling products we currently have in those markets.

Yes. Let me just build on Joe’s answer. Charles, there is actually a potential interim step that we’re pursuing were you can file for what's called a CFG, Certificate of Foreign Goods, which allows you to register earlier before you even get the warning letter lifted. So we’re doing both plays. We may be able to get some of the economic benefit even earlier before waiting to get the warning letter lifted. So we’re pursuing both avenues at the same time.

And how long does that Certificate of Foreign Goods usually take to process?

It’s usually pretty immediate. I mean we’re I think it’s a -- we’ve applied for it and it’s about 30 day wait and so we should know in a few weeks whether that clears. And if it doesn’t, it will -- we will be getting it to clear in the near future, because there is no basis for it to not and we will just have to sit with FDA and understand why. And then just one other clarifying comment, there were a couple 483s out of the Queensberry facility, but they were not related to any of the prior issues and there is stuff that we will resolve, but if we had a repeat 483 for the issues that we were remediating then that would be a serious issue, but so when I say no 483s, I meant no repeat 483s.

I got you. Yes, that makes sense. Okay, great. Thanks for taking my additional questions.

Thank you. And I’m showing no additional questions in the queue. At this time, I’d like to like the turn conference back to Mr. DeVivo for any closing remarks.

All right everyone. Well, thank you so much for your interest in our Company and watching our progress. For the employees of AngioDynamics we’re very proud of the work that they’ve done operationally, sales and marketing globally. This is a journey and while everything doesn’t move in concert always in the same direction, everything is getting better and the team is delivering. So I appreciate your attention and thank you.

Thank you. Ladies and gentlemen, this concludes the AngioDynamics third quarter fiscal 2014 financial results conference call. We thank you for your participation. You may now disconnect.