Slide 1: Investor Presentation - JP Morgan Conference
Investor Presentation JP Morgan Conference January 2013
Slide 2: Greatbatch Team
Greatbatch Team Thomas J. Hook President & CEO Michael Dinkins Senior Vice President & CFO 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements We will be making forward-looking statements during today’s presentation. Please refer to the appendix of this presentation and our most recent SEC filings for more information and cautionary language surrounding these statements. 3
Slide 4: Greatbatch Today
Other 3% Energy/Environmental 11% Greatbatch Today Portable Medical 12% CRM/Neurology 47% 86% Orthopaedics Revenues from 19% Medical Device Market Vascular 8% 4
Slide 5: Blue Chip Customer Base
Blue Chip Customer Base ues St. JUDE MEDICAL MORE CONTROL LESS RISK. stryker" Ed covipien HALLIBURTON cn Seite a> BIOTRONIK LSM LE $88 Greatbatch
Slide 6: Our Vision Our Strategy
Our Vision Market-driven technologies and operational excellence in the medical device markets. Our Strategy Extend partnerships with key OEM customers beyond discrete components to include medical device systems. 6
Slide 7: Strategic Initiatives
Identify AlgoStim commercial partner Strategic Monetize QiG Commercialize non-core assets through Investment Initiatives licensing deals Advance Medical Funding alternatives for portfolio investments Device Strategic equity investments Initiatives Orthopaedic consolidation on schedule Leve
Slide 8: Strengthening Our Core, Expanding Our Pipeline
Strengthening Our Core, Expanding Our Pipeline Dispositions • Technology Acquisitions • Operating company • Technology Gain value from technologies that Accelerate our growth will not be commercialized Complement our business model Deepen relationships with strategic Leverage our outstandi
Slide 9: Building Success in 2013
Building Success in 2013 Profitable Accountability Growth Innovation Teamwork 9
Slide 10: Profitable Growth
Profitable Growth Top Line 5-8% 7-13% Organic Revenue Growth Adjusted EPS Growth 2-5% Revenue Growth Bottom supported by operational Pipeline Line excellence ~60bps Adjusted Operating Margin Increase 10
Slide 11: Key Enablers
Key Enablers Portable Medical 15-20% growth - Greater Market Share Organic Vascular 7-13% growth - New Product Introduction Orthopaedic 8-14% organic growth on new base business Growth (after estimated disposition of $15M of Orthopaedic products) Rationalize Focus R&D spend on Algostim and P
Slide 12: 2013 Assumptions
2013 Assumptions Completion of Swiss Consolidation in Q1 2013 No acquisitions are included although we are actively engaged in looking for accretive deals that will improve our revenue growth performance Impact of R&D commercialization not included in guidance (Algostim, MRI, Sensor) Medical
Slide 13: Selected Highlights
Selected Highlights ($ in millions except for EPS) 2011A 2012E 2013E Sales $569 $645 $660 - $680 Adjusted Operating Margin 11.9% ~11.5% 12% - 12.5% Adjusted EPS $1.68 ~$1.77 $1.90 - $2.00 Operating Cash Flows $90 $48 $85 - $95* Capex $22 $35 $20 - $25 ROIC 7.3% 7.2% 8% - 9% Consolidations and organi
Slide 14: Adjusted Operating Margin Expansion Opportunity
Adjusted Operating Margin Expansion Opportunity % of sales +60 bps potential over 2012 0.2% - 0.4% 12%-12.5% 0.3% - 0.6% ~11.5% 2012E Gross Margin Reduced Opex 2013E 14
Slide 15: Strong Operating Cash Flow
Strong Operating Cash Flow $ in millions $10 $20 $(9) $25 $(21) $90 ~$82 $(17) 2013E Adjusted Depreciation Amortization Stock Based Interest Taxes Other 2013E Operating Comp Operating Cash Income Flow *Excludes one-time impact of $30M deferred tax payment related to redemption of 2007 Convertible De
Slide 16: Consistent Cash Flow Drives Lower Leverage
Consistent Cash Flow Drives Lower Leverage $ in millions Operating Cash Flow Total Debt $289.4 $89.9 $90.0* $71.8 $76.9 $236.0 $232.0 $220.6 $221.0 $48.0 2009 2010 2011 2012E 2013E 2009 2010 2011 2012E 2013E 5 year annual average of $75M Est. debt repayment of $125M from 2009 to 2012 *Excludes one-t
Slide 17: Capacity for Growth Opportunities
Capacity for Growth Opportunities Available Accordion $361M in Dry Powder $200M Unused Borrowing Capacity $161M $400M Credit facility matures June 2016 Line Outstanding on Converts of $198M Credit Outstanding on Borrowings Will utilize Line of Credit to finance $41M converts maturing in 2013 Cash $2
Slide 18: Profitable Growth
Targeted acquisitions focused on returns Capital investments Emphasis on 2013 continued cost focused on new product demands Profitable efficiencies 60 bps Operating Margin Capital Spend $20M - $25M Growth Improvement Focused use of cash Operating Cash Flows $85M-$90M* *Excludes one-time impact of $3
Slide 19: Appendix
$3 Greatbatch Innovative Appendix Targeted Acquisitions — | Profitable Growth.
Slide 20: Forward-Looking Statements
Forward-Looking Statements Some of the statements made in the presentation whether written or oral may be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of Securities Exchange Act of 1934, as amended, and involve a number of
Slide 21: Revenue Growth
Revenue Growth Estimated Preliminary 2013 Estimated 2013 2012 Revenue Revenue Annual Growth Product Line (millions) Rate (millions) CRM & Neuromodulation $308 0% – 2% $308 – $314 Vascular Access $53 7% – 13% $56 – $60 Orthopaedic $119 (5%) – 0% $113 – $119 Portable Medical $80 15% – 20% $92 – $96 En
Slide 22: Contact Information
Contact Information Michael Dinkins Chief Financial Officer Greatbatch, Inc. 2595 Dallas Parkway Suite 310 Frisco, TX 75034 Tel: 214-618-5242 MDinkins@greatbatch.com www.greatbatch.com 22