Slide 1: 4Q16 Earnings Conference Call
4Q16 Earnings Conference Call February 27, 2017
Slide 2: Presentation of Financial Information & Forward Looking Statements
Presentation of Financial Information & Forward Looking Statements Historical financial and operating data in this presentation reflect the consolidated results of Integer for the periods indicated. This presentation includes financial information prepared in accordance with accounting principles ge
Slide 3: Agenda
Agenda • Opening Comments • Financial Results • Product Line Review Thomas J. Hook Michael Dinkins • Strategic / Growth Initiatives President & CEO Executive Vice President & Chief Financial Officer • Closing Comments • Question & Answer Period Integer Confidential / February 27, 2017 / Page 3
Slide 4: Opening Comments
Opening Comments
Slide 5: Quarterly Results Reflect Continued Progress
Quarterly Results Reflect Continued Progress “We had solid • Business stabilization continues, returning to a growth trajectory performance in the • New COO structure strategically aligns integrated fourth quarter and capabilities more effectively are pleased with the • Building momentum and focused
Slide 6: Financial Results
Financial Results
Slide 7: 4Q16 Financial Results
4Q16 Financial Results(1) ($ in millions, except per share amounts) 4Q15 3Q16 4Q16 FY15 FY16 Sales $ 360 $ 347 $ 360 $ 1,443 $ 1,386 (2) (2) Gross Margin 21.5% 28.3% 25.8% 26.4% 27.2% Operating Expenses $ 89 $ 61 $ 62 $ 302 $ 270 % of Sales 24.7% 17.6% 17.2% 20.9% 19.5% GAAP Net Income $ (47) $ 11 $
Slide 8: Continued Revenue Stabilization
Continued Revenue Stabilization 4Q16 Sales QoQ YoY YTD Quarterly Sales(1) ($ in millions) Total Sales(2) $358 $377 $348 $360 $331 $348 $347 $360 3.8% (0.5%) (4.0%) $17 $18 $13 $11 28% (14%) (30%) Non-Medical $12 $10 $9 $12 Adv. Surgical, Ortho & $109 (6%) $105 $95 $102 7% (3%) Portable Medical $106
Slide 9: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA(1) ($ in millions) • Continued focus on improving business performance to generate cash $79 $75 $69 $71 • Ongoing pricing pressure reinforces $65 focus on quality to drive volume increases and efficiency • Improve customer satisfaction • Reduce costs and expand share
Slide 10: Strong Cash Flow Generation
Strong Cash Flow Generation Cash Flow From Operations Free Cash Flow • Generating significant cash flow to ($ in millions) ($ in millions) $38 meet current debt obligations and $34 accelerate debt repayment $30 • FY17 Cash Flow of $106M $21 $22 • Paid down $17M of debt in 4Q16; $11 $46M YTD $4 • Foc
Slide 11: Working Capital
Working Capital ($ in millions) 4Q15 1Q16 2Q16 3Q16 4Q16 • Targeting continued reduction in Inventory $252 $267 $276 $262 $225 inventory levels through FY17 Inventory Turns 4 4 4 4 5 • Enhanced Sales & Operating Capital Expenditures $13 $19 $12 $17 $12 Plan (S&OP) process showing improved results an
Slide 12: FY 2017 Outlook
FY 2017 Outlook ($ in millions, except per share amounts) FY16 FY17 Actual Outlook Revenue $1,386 $1,390 - $1,430 Adjusted Diluted EPS $2.68 $2.70 - $3.10 • Capital Expenditures expected to be • Working Capital expected to improve in the range of $50M - $60M per year $10M - $20M by YE2017 • Deprecia
Slide 13: Product Line Review
Product Line Review
Slide 14: Advanced Surgical, Orthopedics & Portable Medical
Advanced Surgical, Orthopedics & Portable Medical Providing a wide range of technologies and solutions to the Advanced Surgical and Orthopedic markets Implants Delivery Systems Reamers Laparoscopic Devices Arthroscopy Products • Revenue remains a solid contributor to total Company results, down YOY
Slide 15: Cardio & Vascular
Cardio & Vascular Offering a full-range of products and services for catheter-based interventional vascular devices and a suite of supply chain solutions to support the development and manufacturing of complex components, sub-assemblies and finished devices Steerable Sheaths Catheters & Sheaths Guid
Slide 16: Cardiac & Neuromodulation
Cardiac & Neuromodulation Providing technology solutions for the active implantable medical device industry by partnering with customers to bring quality products to established and emerging markets - from initial concept through to high volume manufacturing Batteries Feedthroughs Enclosures Coated
Slide 17: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications • Revenues continue to trend with Oil & Gas market • Oil prices begun to stabilize in 4Q16 Battery Cells • North American energy customer activi
Slide 18: Strategic / Growth Initiatives
Strategic / Growth Initiatives
Slide 19: Key Strategic Focus Areas
Key Strategic Focus Areas • Laser focused on achieving strategic objectives “Our vision is to • Invest to drive growth with customers across full spectrum of enhance the lives of product and systems capabilities patients worldwide • Deliver shareholder returns through growth in profitability and cas
Slide 20: Closing Comments
Closing Comments
Slide 21: Well-Positioned for Future Growth
Well-Positioned for Future Growth Broad Product Continuum Differentiated Co- Medical Engineered Engineered Medical Transfer Integer Fully Medical Medical Sub Developed Designed Branded Device Components & Devices Components Assemblies Devices Devices Solutions Systems Subassemblies 80% 20% Technical
Slide 22: Question & Answer Period
Question & Answer Period
Slide 23: Appendix
APPENDIX
Slide 24: Other Operating Expenses
Other Operating Expenses Three Months Ended Twelve Months Ended 1/1/16 12/30/16 1/1/16 12/30/16 NOTES: Portable Medical and 2014 Investments in $5.2 $3.3 $23.0 $17.2 Vascular product line Capacity and Capabilities transfers Orthopedic Facilities Optimization $0.0 $0.1 $1.4 $0.7 Lake Region Medical C
Slide 25: Debt – Financial Covenant Calculations
Debt – Financial Covenant Calculations Financial Covenant Calculations(1)(2) Leverage Ratio (< 6.25 @ 4Q16) Leverage Ratio = Net Debt / R12 Bank EBITDA Interest Coverage Ratio (> 2.50 @ 4Q16) Interest Coverage Ratio = R12 Bank EBITDA / R12 Cash Interest Expense(3) Net Debt Net DEBT = Total Debt - Ca
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD Three Months Ended December 30, 2016 January 1, 2016 Per Net Per Net Diluted Income Diluted (in thousands except per share amounts) Pre-Tax Income Share Pre-Tax (Loss) Share (37,46 As reported (GAAP) $ 4,543 $ 7,933 0.25 $ 1) $
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – YTD Year Ended December 30, 2016 January 1, 2016 Per Net Per Net Diluted Income Diluted (in thousands except per share amounts) Pre-Tax Income Share Pre-Tax (Loss) Share (15,70 As reported (GAAP) $ 1,185 $ 5,961 $ 0.19 $ 0) $ (7,594
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations Footnotes to “Net Income and Diluted EPS Reconciliation” a) The difference between pre-tax and net income (loss) amounts is the estimated tax impact related to the respective adjustment. Net income amounts are computed using a 35% U.S., Mexico, Germany, and France statutory
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA Reconciliation Three Months Ended Year Ended December 30, January 1, December 30, January 1, (dollars in thousands) 2016 2016 2016 2016 Net income (loss) as reported $ 7,933 $ (24,907) $ 5,961 $ (7,594) Interest expense 27,875 25,362 111,270 33,513 Benefit fo
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2017 Full-Year Outlook ($ in millions, except per share amounts) GAAP Adjusted Comparable Basis High Low High Low Revenue $1,430 $1,390 $1,430 $1,390 Earnings per Diluted Share $1.50 $1.10 $3.10 $2.70 Except as described below, further reconciliations by line item to the clo
Slide 31: Contact Information
Contact Information Amy Wakeham VP, Investor Relations Integer ir@integer.net (O) 214.618.4978 (M) 214.430.7208 www.integer.net Integer Confidential / February 27, 2017 / Page 31