Slide 1: 1Q20 Earnings Conference Call
1Q20 Earnings Conference Call May 7, 2020 ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 1
Slide 2: First Quarter 2020 Earnings Conference Call
Integer Holdings Corporation First Quarter 2020 Earnings Conference Call 5 p.m. Eastern Time, May 7, 2020 Speakers: • A webcast of today’s call can be accessed in the “Investor Relations” section of the Joe Dziedzic Company’s website: President and Chief Executive http://investor.integer.net Officer
Slide 3: Presentation of Financial Information & Forward-Looking Statements
Presentation of Financial Information & Forward-Looking Statements Important Information This presentation contains summarized information concerning Integer Holdings Corporation (the “Company”) and its business, operations, financial performance and trends. The historical financial and operating da
Slide 4: Agenda
Agenda • Opening Remarks • Financial Results • Product Line Review • Cash Flow, Liquidity and Cost Management • Summary • Q&A ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 4
Slide 5: Opening Remarks
Opening Remarks
Slide 6: 1Q20 Summary
1Q20 Summary Essential businesses, Leading during COVID-19 protecting our • Prioritizing safety of our associates while providing critical products associates while that patients rely on every day delivering critical products • All manufacturing sites are operating; social distancing & enhanced clea
Slide 7: COVID-19 Update
COVID-19 Update
Slide 8: COVID-19 Impact and Integer's Response
COVID-19 Impact and Integer’s Response • Common belief that 2Q will be the most significantly impacted quarter Our view of the • Gradually improving 3Q and approaching “normal” levels late 4Q20/1Q21 Industry impact • Med-device OEMs are managing volume decline differently • Expect sales decline to r
Slide 9: COVID-19 Impact and Integer's Response
COVID-19 Impact and Integer’s Response • Common belief that 2Q will be the most significantly impacted quarter Our view of the • Gradually improving 3Q and approaching “normal” levels late 4Q20/1Q21 Industry impact • Med-device OEMs are managing volume decline differently • Expect sales decline to r
Slide 10: Published Messages from Med-Device OEMs
Published Messages from Med-Device OEMs Depth of decline and speed of recovery Management plans "We are assuming the most significant negative impact occurs in the second quarter, “We’ve temporarily closed some a lingering impact but signs of stabilization in the third quarter and then some recovery
Slide 11: Potential COVID-19 Impact on Industry Sales
Potential COVID-19 Impact on Industry Sales Industry run rate Upper bound Industry sales Lower bound 1Q20 2Q20 3Q20 4Q20 1Q21 How deep is the decline and how fast is the recovery? Wide range of scenarios This slide is intended to provide a graphical depiction of the wide range of possible outcom
Slide 12: COVID-19 Impact and Integer's Response
COVID-19 Impact and Integer’s Response • Common belief that 2Q will be the most significantly impacted quarter Our view of the • Gradually improving 3Q and approaching “normal” levels late 4Q20/1Q21 Industry impact • Med-device OEMs are managing volume decline differently • Expect sales decline to r
Slide 13: Potential COVID-19 Impact on Integer Sales
Potential COVID-19 Impact on Integer Sales Integer sales Industry run rate Upper bound Industry sales Lower bound 1Q20 2Q20 3Q20 4Q20 1Q21 Integer impact delayed by 1 to 2 months Integer recovery influenced by blend of customers’ plans & inventory strategies This slide is intended to provide a g
Slide 14: Majority of Integer's Sales Tied to More Essential Procedures
Majority of Integer’s Sales Tied to More Essential Procedures Elective Moderately Elective More Urgent Ortho Interventional Pacemakers SCS/ Cardiology Neuromodulation CRT-D/ICD Respiratory Structural Heart Angiography Electrophysiology Peripheral Cardiac Arterial Neurovascular Monitoring Gastro Surg
Slide 15: COVID-19 Impact and Integer's Response
COVID-19 Impact and Integer’s Response • Common belief that 2Q will be the most significantly impacted quarter Our view of the • Gradually improving 3Q and approaching “normal” levels late 4Q20/1Q21 Industry impact • Med-device OEMs are managing volume decline differently • Expect sales decline to r
Slide 16: Progress to Date on Our Journey to Excellence
Progress to Date on Our Journey to Excellence Culture … senior leadership team complete Manufacturing excellence(1) • Quality +40% • On time delivery +10% • Efficiency ... Adj. EBITDA margins +190 bps Customer relationships … multi-year contracts Deleveraged(1) from 6.1x to 2.8x … ample liqu
Slide 17: Investing Throughout the Pandemic
Investing Throughout the Pandemic 4Q19 Earnings Presentation Continuing virtual Lean events to drive continuous improvement Sales and marketing leadership in place … adding critical talent Growing R&D … strong development pipeline Expanding capabilities through M&A and technology licenses Pr
Slide 18: Financial Results
Financial Results
Slide 19: 1Q20 Adjusted Financial Results
1Q20 Adjusted Financial Results(1) ($ in millions, except per share amounts) Sales Adjusted Operating Income Adjusted Net Income % Growth 4% 10% 26% Adjusted EBITDA Adjusted EPS $66 $71 $1.00 $1.25 (1) Refer to the appendix of this presentation for a reconciliation of Adjusted Operating Income, Adju
Slide 20: 1Q20 Adjusted Net Income
1Q20 Adjusted Net Income(1) ($ in millions, except per share amounts) $3 $0 $1 $41 $7 $(2) $33 1Q19 Operational FX Interest Tax Rate COVID-19, 1Q20 Improvement Oil Impact Adj. $1.00 $0.20 $0.02 $0.08 $0.01 $(0.06) $1.25 EPS (1) Refer to the appendix of this presentation for a reconciliation of Adjus
Slide 21: Product Line Review
Product Line Review
Slide 22: Year-over-Year Sales Growth Continues
Year-over-Year Sales Growth Continues(1) Trailing 4 Quarters Cardio & Vascular Integer – Trailing 4 Quarters Cardiac & Neuromodulation Advanced Surgical, Orthopedic & Portable Medical Electrochem (Non-Medical) (1) Excludes impact from changes in foreign currency exchange rates and acquisition ITGR:
Slide 23: 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 Quarterly Adjusted Sales Change(1) Steerab
Slide 24: CRM & Neuromodulation
CRM & Neuromodulation Providing technology solutions for the active implantable medical device industry by partnering with customers to bring high-quality products to established and emerging markets – from initial concept through high-volume manufacturing Quarterly Adjusted Sales Change(1) Pulse Ge
Slide 25: Advanced Surgical, Orthopedics & Portable Medical
Advanced Surgical, Orthopedics & Portable Medical Offering a broad portfolio of power solutions and technologies to Portable Medical markets and supporting the divested AS&O product line Quarterly Adjusted Sales Change(1) Orthopedic Implants & Electrosurgical Li-Ion Battery Core Battery Instruments
Slide 26: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Quarterly Adjusted Sales Change(1) Battery Cells Battery Packs Battery Chargers • 1Q20 declined by approximately $3 million, driven by a severe
Slide 27: Cash Flow, Liquidity and Cost Management
Cash Flow, Liquidity and Cost Management
Slide 28: Cash Flow & Leverage
Cash Flow & Leverage ($ in millions) Cash Flow From Ops Free Cash Flow (1) 1Q20 Highlights • 1Q includes $16 million from new supplier financing at interest rates below Integer borrowing cost • 1Q is consistent with quarterly profile due to annual cash payments at beginning of year, excluding suppli
Slide 29: Strong Financial Position to Weather the Pandemic
Strong Financial Position to Weather the Pandemic ($ in millions) $198 • In early 2Q, executed a $37 draw down of our full Cash-on- $14 revolver to protect 1• Ample liquidity hand against a prolonged 4Q19 1Q20 5/1/20 pandemic ($185 million total drawn) 167 165 • Sustainable and strong 149 Cash Flow
Slide 30: Balanced Cost Management Response to Temporary COVID-19 Sales Reduction
Balanced Cost Management Response to Temporary COVID-19 Sales Reduction Alignment to P&L Costs Sales Reduction Management Approach Material Mostly Reduce purchases to align to production & product mix Align labor with demand (furloughs, temp shutdowns); Direct Labor Mostly considering unemployme
Slide 31: Wrap Up
Wrap Up
Slide 32: How We Continue to Lead Integer
How We Continue to Lead Integer Take care of Associates, who take care of Customers Manage uncertainty ... COVID-19 • Balanced cost management during temporary sales decline • Expect temporary contraction of margin rates Maintain focus on executing our strategy • Executing our strategy, strong
Slide 33: Questions?
Questions? ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 33
Slide 34: APPENDIX
APPENDIX ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 34
Slide 35: Historical Financial Results
Historical Financial Results(1) ($ in millions, except per share amounts) (2) Adjusted Sales Adjusted EPS Organic Adjusted EPS(3) $0.58 $0.91 $0.98 $0.89 $0.66 $1.01 $1.10 $1.04 $1.00 $1.23 $1.19 $1.26 $1.23 $326 $328 $313 $305 $315 $314 $301 $292 $303 $304 $280 $285 $265 $(0.02) $(0.01) $(0.05) Imp
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation Income from Continuing Operations and Diluted EPS Reconciliation – QTD ($ in thousands, except per share amounts) ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 36
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q20 Income from Continuing Operations and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 37
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA and Adjusted EBITDA Reconciliation ($ in thousands) ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 38
Slide 39: Non-GAAP Reconciliation
Non-GAAP Reconciliation Organic Growth Rates Reconciliation (% Change) ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 39
Slide 40: Capitalization
Capitalization ($ in millions) 04/03/20 Original 04/03/20 As Reported Rate Rate Cash & Cash Equivalents $ 37 $200M Revolver [Due 2022] $ 25 L + 325 L + 200 TLA [Due 2022] $ 258 L + 325 L + 200 TLB [Due 2022] $ 558 L + 425 L + 250 Total Principal Amount of Debt Outstanding $ 841 (1) Deferred Fees and
Slide 41: Contact Information
Contact Information Tony Borowicz SVP, Strategy, Business Development & Investor Relations Integer Tony.Borowicz@Integer.net (O) 716.759.5809 www.integer.net ITGR: 1Q20 Earnings Conference Call / May 7, 2020 / Page 41