Slide 1: Investor Day March 18, 2013
Investor Day March 18, 2013
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements, refers to non-GAAP financial measures and provides industry and market data. Please refer to the appendix to this presentation for more information and cautionary language regarding these statements, financial measures and d
Slide 3: Disclaimers
Disclaimers This presentation includes products that have not been approved or cleared by the U.S. Food and Drug Administration and are not available for sale in the U.S. All future product approval and launch dates are based on estimates of completion of regulatory submissions, review and/or approv
Slide 4: Greatbatch Presenters
Greatbatch Presenters Thomas Hook Michael Dinkins Scott Drees President & CEO Senior VP & CFO President Algostim, LLC Welcome 4
Slide 5: Strategic Evolution
Strategic Evolution Experience the transformation from components & sub-assemblies to complete medical device system capabilities Welcome 5
Slide 6: Agenda
Agenda Time Presenter Welcome 1:00 PM Thomas Hook Key Messages 1:05 PM Thomas Hook Sustainable Organic Growth 1:15 PM Thomas Hook Commercialize Medical 2:00 PM Scott Drees Device Innovation Break 2:40 PM Drive Profitable Growth 2:50 PM Michael Dinkins Closing Summary 3:10 PM Thomas Hook Q&A 3:20 PM
Slide 7: Key Message Points
Key Message Points Strong Long-term agreements cover large percentage of revenue Foundational Strong Core Reputation for innovation & operational excellence Business Strong Blue Chip customer base Business Strong markets with significant growth opportunity Grow Leveraging extensive Intellectual Prop
Slide 8: Sustainable Long-Term Growth
Sustainable Long-Term Growth ~ 5% Top Organic Growth Line Leverage IP Pipeline Innovation Bottom Line ~ 2x Top Line Growth Adjusted EPS Key Messages 8
Slide 9: Greatbatch Today
Greatbatch Today Other 2% Energy $646M 10% Vascular 2012 Revenue 8% Cardiac & Neuromodulation Portable 48% Medical 88% 13% Revenues from Orthopaedics Medical Device Market 19% Key Messages 9
Slide 10: Cardiac & Neuromodulation, Orthopaedics, Vascular, Portable Medical
Cardiac & Neuromodulation Orthopaedics Batteries | Capacitors | Catheters | Stimulation Leads | Feedthroughs | Implants | Instruments | Delivery Systems Device Enclosures & Cases | Device Headers | Device Assembly Feedthrough Reamer Handle Header Reamer Battery Delivery System Handles Enclosure Stim
Slide 11: Portable Medical to Greatbatch
Portable Medical to Greatbatch Portable Medical Devices Powered, external medical devices which enable movement and portability for the medical professional, patient and / or caregiver Greatbatch’s Focus Greatbatch is committed to providing reliable, high quality power supplies, charging systems, an
Slide 12: Our Vision, Our Strategy
Our Vision Greatbatch will be the definitive leader in critical technologies by infusing integrity, innovation, and operational excellence into the medical device and commercial markets. Our Strategy Extend partnerships with key OEM customers beyond discrete components to include medical device syst
Slide 13: Sustainable Organic Growth
Welcome Key Messages Sustainable Organic Growth Commercialize Medical Device Innovation Drive Profitable Growth Closing Summary 13
Slide 14: Sustainable Organic Growth
Sustainable Organic Growth Targeted Strategic Markets Investments Supported Sales Force Business Model Emphasis Sustainable Organic Growth 14
Slide 15: Targeted Market Revenue
Targeted Market Revenue Vascular 8% Cardiac & Portable Neuromodulation Medical 48% 13% Orthopaedics ( $ in millions ) 19% 2012 Revenue % of Total Cardiac & Neuromodulation $309 48% 88% Orthopaedics $122 19% Revenues from Portable Medical $82 13% Medical Device Market Vascular $52 8% Sustainable Orga
Slide 16: Greatbatch Market Opportunities: Medical
Greatbatch Market Opportunities: Medical Cardiac & Neuromodulation Orthopaedics GB Opportunity: $1.5B GB Opportunity: $3B GB Revenue: $309M GB Revenue: $122M Avg. Market CAGR: 3% Avg. Market CAGR: 5.5% Pacemakers Peripheral Nerve Fracture Repair Extremities ICDs and CRT-D Stimulation Joint Arthrosco
Slide 17: Cardiac & Neuromodulation
Cardiac & Neuromodulation GB Opportunity: $1.5B Avg. Market CAGR: 3% Cardiac & Neuro Markets Implantable Pulse Generator Leads & Lead Components Market Size / Estimated CAGR CRM NEURO Established GB Market Participation Batteries CRM Leads Pacemaker $3.5B / (2%) ICD $5.9B / (2%) Spinal Cord Stim $1.
Slide 18: Orthopaedics
Orthopaedics Greatbatch Participation $3B Greatbatch Opportunity Avg. Market CAGR: 5.5% Competitive 2012 Implants Instruments Delivery Greatbatch Systems 2012 Strategies 100’s of Suppliers Secure LTAs and improved pricing discipline Improved sales force productivity in core products & through produc
Slide 19: Portable Medical
Portable Medical Greatbatch Opportunity: Portable Medical Markets: $1B Power Supply Market Market Size / Estimated CAGR Avg. Market CAGR: 6% Established GB Market Participation Auto CPR $50M / 13% $82M Staplers / Clips $1.8B / 4% Defib (AEDs) $1.6B / 8% O2 Concentrators $0.8B / 7% $1B Expanding GB M
Slide 20: Vascular
Vascular $1.3B Greatbatch Opportunity Specialty Catheter Markets Avg. Market CAGR: 3.5% Greatbatch Participation Electrophysiology Specialty Catheters Market Size $125M CAGR: 12% Vascular Introducers Specialty Catheter Peripheral Vascular Market Opportunity: Market Size $430M CAGR: 4% Greatbatch $1.
Slide 21: Aggregate Opportunity
Aggregate Opportunity Multi Billion Dollar end markets served Greatbatch Share $6.8B Total Greatbatch Opportunity $565M GB Share of Opportunity (8.7%) Greatbatch Opportunity Major growth opportunity through market share capture Sustainable Organic Growth 21
Slide 22: Supported Business Model
Supported Business Model Targeted Strategic Markets Investments Supported Sales Force Business Model Emphasis Sustainable Organic Growth 22
Slide 23: Blue Chip Customer Base
Blue Chip Customer Base Sustainable Organic Growth 23
Slide 24: Expanding Intellectual Property
Expanding Intellectual Property Issued Patents: 1990 to 2012 1400 1,179 Patents 1200 Med Device Patents Issued: 160 1000 Pending: 57 800 500 Patents 600 158 Patents 593 (307 US) 400 Patents Pending 200 0 1992 1997 2002 2007 2012 US Total OUS Total WW Total Sustainable Organic Growth 24
Slide 25: Long-Term Agreements
Long-Term Agreements 71% Greatbatch Medical revenue under LTAs › Current (through 2013) Terms 65% - 70% Through 2014 50%+ Through 2015 35% - 40% Beyond … in addition, product lifecycle / replacements drive core growth and protection Sustainable Organic Growth 25
Slide 26: Portable Medical: Long Product Life Cycles
Portable Medical: Long Product Life Cycles Design wins early with key OEMs & in emerging segments fuel long term growth Long Product Life Cycles Support Double-Digit Growth Product Millions Revenue Design Post Launch Service & Production Support Phase 0 1 3 4 7 8 10 Years Sustainable Organic Growth
Slide 27: Portable Medical: Long Product Life Cycles
Portable Medical: Long Product Life Cycles Focus on Portfolio Management and IP wins generational development Growth of AED and Defibrillator Battery Markets Replacements Drive Revenue Support Drives Revenue Number of Batteries Revenue Gen 3 Gen 2 Gen 1 0 5 10 15 0 5 10 15 Year Year P1 Replacements
Slide 28: Strategic Investments
Strategic Investments Targeted Strategic Markets Investments Supported Sales Force Business Model Emphasis Sustainable Organic Growth 28
Slide 29: Operations Efficiency & Investment
Operations Efficiency & Investment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Investment Raynham Warsaw Plymouth Med Device Tijuana II Alden I Tijuana I Alden II Clarence Indianapolis Fort Wayne R&D Center 2 sites into 2 sites into Consolidation 2 sites into Tijuana Corgemont Clarence R&D & C
Slide 30: Orthopaedic Update
Orthopaedic Update Completed milestones Transferred instruments and reamers from Switzerland › Net $4M Gross Profit improvement Divested $15M in non-profitable sales Successfully completed customer supplier certification audits at new manufacturing locations First production and shipment of transfer
Slide 31: Quality: A Competitive Advantage
Quality: A Competitive Advantage Medical Device Integrate > Harmonize > Optimize Infrastructure Investment in leadership Over 100 years medical device quality leadership experience Harmonized quality systems Nine ISO 13485 certified facilities Common enterprise quality metrics Eight FDA registered f
Slide 32: Medical Device Investment
Medical Device Investment Medical Device Manufacturing: Plymouth, MN Total Expansion: 27,000 sq ft Controlled Environment [Class 7]: 4,000 sq ft of space Adjacent Molding & Electrical Development Space FDA Registered Facility / Regulatory: ISO13485:2003, CMDCAS, AIMD & MDD Sustainable Organic Growth
Slide 33: Acquisition Strategy
Acquisition Strategy Focus on innovative technologies in our medical markets Aligned with therapy areas Alignment with Technology to leverage and fill gaps Strategy Increasing market share via „tuck-ins‟ Differentiated product or procedures Address Technology Proprietary positioning of products Need
Slide 34: Sales Force Emphasis
Sales Force Emphasis Targeted Strategic Markets Investments Supported Sales Force Business Model Emphasis Sustainable Organic Growth 34
Slide 35: Sales Leadership
Sales Leadership Andrew Holman VP Sales & Marketing, Greatbatch Medical 20 years experience working in medical device technologies Broad commercial medical technologies experience in urology/women‟s health, neurosciences, pain management and orthopaedics Prior experience includes: Boston Scientific,
Slide 36: Sales Force Optimization
Sales Force Optimization Organized for Equipped with Impactful Excellence Tools & Talent Results Investment in leadership Focus on winning generational development programs Customer relationship enhancement Enhanced customer relationships & touch points Distinct technical sales & account executives
Slide 37: Commercialize Medical Device Innovation
Welcome Key Messages Sustainable Organic Growth Commercialize Medical Device Innovation Drive Profitable Growth Closing Summary 37
Slide 38: Scott Drees
Scott Drees President Algostim, LLC 32 years of experience working with implantable medical devices 16 years of neuromodulation market experience Founding Division President, Advanced Neuromodulation Systems Inc. (ANSI) Prior experience includes: St. Jude Medical, Boston Scientific, and Johnson & Jo
Slide 39: Commercialize Medical Device Innovation
Commercialize Medical Device Innovation Leverage Strong Capabilities Value Proposition Technology Innovation Addressing Future Unmet Opportunities Needs Commercialize Medical Device Innovation 39
Slide 40: Capabilities Required For Active Implantable Systems
Capabilities Required For Active Implantable Systems Leads & Accessories Implantable Pulse Generators Programmers & Software Mechanical Design Industrial Design Microprocessor Microprocessor Test Development Finite Element Analysis Design/Controls Firmware Design ASIC Design, Development, Power Mana
Slide 41: Neurostimulation Markets
Neurostimulation Markets EMERGING Deep Brain Stim: Obesity, Stroke Recovery, FDA APPROVED Depression Deep Brain Stim: Cortical Stim: Epilepsy Parkinson‟s Disease, Dystonia, Peripheral Nerve Stim: Migraines, Extremity Pain Essential Tremor, Epilepsy, Obsessive Compulsive Disorder Carotid Artery, Sinu
Slide 42: Neurostimulation Market Sizes
Neurostimulation Market Sizes Market Revenues (W.W.) Average Market CAGR: 11% (7% - 17%) 2015: $3.6B 2012: $2.6 B Other $125M Other $190M VNS $220M VNS $345M SNS $400M SCS SCS SNS $630M $1.4B $1.7B DBS $430M DBS $690M SCS: Spinal Cord SNS: Sacral Nerve Source: Neuromodulation company earnings releas
Slide 43: SCS Market Acceleration
SCS Market Acceleration Market Drivers Advancing technologies Improving implantation techniques Greater awareness and referrals More implanting physicians Strong reimbursement Insurance approval Patients comfort with electronic devices Commercialize Medical Device Innovation 43
Slide 44: SCS Market Growth & Share
SCS 12 Year Market Growth & Share 9% 9% $1,600 10% 13% $1.4B REVENUE MILLIONS $1,400 11% $1.3B 15% $1.2B MARKET SHARE $1,200 15% $1.1B 26% 19% 26% $952M 26% $1,000 16% $854M 27% 24% 26% $745M 26% 31% $800 $647M 24% $544M 33% 20% 32% $600 $469M 5% 15% 27% 31% $378M 24% 25% $300M 22% 24% $400 15% 19%
Slide 45: Market Research
Market Research Physicians Patients Payers Ease of implant Pain reduction Cost effective products versus alternative therapies Clinical performance Discrete device Efficacy Lead options Easy to use Significant reduction in Reliability and longevity Comfortable & convenient medication Simplified prog
Slide 46: Physician Partners
Physician Partners Richard North, MD | Chief Scientific Advisor Director, Neuromodulation, Sandra and Malcolm Berman Brain & Spine Institute of LifeBridge Health, Baltimore, MD (2007-present) Professor of Neurosurgery, Anesthesiology & Critical Care Medicine, John Hopkins University School of Medici
Slide 47: SCS Systems Today: Unmet Needs
SCS Systems Today: Unmet Needs Patient Clinician IPG Leads Programmers Programmers & Rechargers Standardized Percutaneous Leads Designed for Time consuming configuration (2x8) in-home use Non-intuitive Lead migration (13%)* Dependent on sales team Poor tri-pole capabilities Large and non-discrete Le
Slide 48: Product Strategy
Product Strategy Target unmet clinical needs Focus on product differentiation for all user groups Procedurally the same - but better Legacy free, proprietary system Design focused on safety Allows efficient regulatory approval Gen 1: Technology innovation drives market share Gen 2: Breakthrough tech
Slide 49: Algostim System
Paddle Leads Algostim System Perc Leads Patient Programmer Patient Feedback Tool Clinician Programmer Charger PFT CP PPC Pocket Programmer External PoP Pulse Generator EPG Anchors Extensions Trial Cable Implantable Pulse Generators IPG Commercialize Medical Device Innovation 49
Slide 50: Algostim System Innovations
Algostim System Innovations IPG Leads Programmers/Software Perc Leads 12 & 8 Contact Arrays Dual Coil Construction Body Compliant Lead ID System 24 Channels Two Configurations Tri-Pole Capability Color Touch Screen Smallest Volume 3D Pain Mapping Thinnest Implant 3D Stim Mapping Largest Battery Capa
Slide 51: Implantable Pulse Generator
Implantable Pulse Generator Features 24 channels Two header configurations (2x12 & 3x8) Rechargeable battery Largest battery capacity Broadest parametric ranges Smallest & thinnest device Independent current sources Deep discharge recovery Constant current output MICS wireless telemetry Safety therm
Slide 52: Percutaneous Lead Anatomy
Percutaneous Lead Anatomy 12 & 8 contacts Set Screw Ring Connector Coil / Cable Stylet Lumen 4 8 Connectors Electrode Lead Body 3 electrode spacings 4 lead lengths Commercialize Medical Device Innovation 52
Slide 53: Lead Design Progression
Lead Design Progression Past Present Future COIL DESIGN UNCONSTRAINED INDEPENDENT COIL STRUCTURE STRAIGHT WIRE STRAIGHT WIRE COIL IN COIL DESIGN 4-Electrode Leads 8-Electrode Leads 8 & 16-Electrode Leads COIL STRUCTURE 8 & 12-Electrode Leads Commercialize Medical Device Innovation 53
Slide 54: Broader Coverage
Broader Coverage 8-Electrode 12-Electrode mm T8 10 20 30 T9 40 50 60 T10 70 80 T11 90 54
Slide 55: Paddle Lead Standards
Paddle Lead Standards Approximate .8 cc 1.16 cc .7 cc .54 cc .9 cc 1.4 cc Volume 10 2mm 2mm 2mm 2mm 2mm 2mm 7.6mm 10mm 8mm 9.5mm 11mm 13mm 20 30 40 56mm 64mm 46mm 33mm 43mm 57mm 50 60 70 80 mm Current product limitations Excessive volume Lack of steering control Blind positioning Have no / limited b
Slide 56: Surgical / Paddle Leads Anatomy
2x6 Surgical / Paddle Leads Anatomy 1mm 3-4-3-2 Stylet Lumen 1mm 4 Electrodes Connectors 8 to IPG Silicone Paddle Connector Coil / Cable Coil Lead Body Suture Locators Paddle Tail Volume Reduction 56
Slide 57: Thin Profile Paddle Leads
Thin Profile Paddle Leads Current Products Epidural space 57
Slide 58: Programmer Family
Programmer Family Commercialize Medical Device Innovation 58
Slide 59: Patient Programmers
Patient Programmers Pocket Programmer Programmer Charger Discrete key fob design Programming and recharging device Daily control functions Full control programming options Rechargeable device Color touch screen interface MICS wireless telemetry MICS wireless telemetry Quick stim-off Recharge locatio
Slide 60: Clinician Programmers
Clinician Programmers Clinician Programmer Patient Feedback Tool Resistive color touch screen „Computer Assisted Stimulation Programming‟ External monitor connection Automatic impedance check Embedded camera Stimulation threshold determination Rechargeable device Patient identifies best stimulation
Slide 61: Clinician Programmer Software
Clinician Programmer Software Software Features Pain 3D Virtual Environment Mapping 3D Pain Mapping 3D Stimulation Mapping 3D Overlap Scores Product Selection Computer Assisted Stimulation Programming (‘CASP’) Presets for routine intra-operative trials Visual implant selector CASP Patient programmin
Slide 62: Safety Features
Pulse Generators Leads & Extensions Programmers IPG Thermistor Perc & Paddle Leads, Extensions All Programmers MICS Wireless Telemetry Deep Discharge Recovery Battery Minimize Size Battery Status of IPG Bi-Directional Recharge Coil In Coil Design Paired to Single IPG / EPG High Voltage Protection Ci
Slide 63: Regulatory Plan
Proposed Indication Regulatory Plan The Algostim Spinal Cord Stimulation (SCS) System is indicated as an aid in the management of chronic intractable pain of the trunk and/or limbs, including unilateral or bilateral pain associated with failed back surgery syndrome, intractable low back pain and leg
Slide 64: Next Generation
Next Generation IPG Embedded Capabilities High Frequency Stimulation 3-axis accelerometer Novel waveforms & wave shaping Lead Designs Thin-Film Paddle: Planar Cylindrical 24+ Electrodes Thin-film perc lead designs 24+ electrode paddle leads System Level MRI conditional system Commercialize Medical D
Slide 65: Intellectual Property
Intellectual Property Greatbatch IP portfolio > 1000 Algostim invention disclosures 135 Filed patent applications 86 Patent applications in draft 18 Patents licensed Dr. North & Barolat 11 Patents issued to date 6 Patent opinions 77 IP Product Distribution Programmers & Leads IPGs Accessories Total
Slide 66: Leveraging Our Capability
Leveraging Our Capability Commercialize Medical Device Innovation 66
Slide 67: IPG
IPG Plymouth: Header Plymouth: Minneapolis: Stackers Tijuana: Enclosure Multi-pin Plymouth: Feedthrough End Cap Clarence: Assemblies Set Screw Block Clarence: Set Screws Minneapolis: Enclosure Alden: Battery Final Assembly: Plymouth 67
Slide 68: Leads & Extensions
Leads & Extensions Extensions Paddle Leads Percutaneous Leads Manufacturing: Plymouth Commercialize Medical Device Innovation 68
Slide 69: Programmers
Programmers Software Batteries for Programmers Software: Denver Portable Medical: Raynham Commercialize Medical Device Innovation 69
Slide 70: Algostim Timeline
Algostim Timeline 2013 2014 2015 DVT Development completion Animal Study Regulatory Cycle Phased approach (CE mark) PMA process (FDA) Manufacturing Revenue Screening Greatbatch Commercialization ROI Partners Commercialization By partner Commercialize Medical Device Innovation 70
Slide 71: Strong Value Proposition
Strong Value Proposition Leverage Strong Capabilities Value Proposition Technology Innovation Addressing Future Unmet Opportunities Needs Commercialize Medical Device Innovation 71
Slide 72: Impact to Customer Groups
Impact to Customer Groups Physicians Patients No change to implant Long list of Safety Features Portable & Discrete procedures Highly visual & intuitive External Products Improved body compliant programmers Simple and familiar user lead design & steering control Intraoperative visibility and interfa
Slide 73: Value Proposition
Value Proposition “A highly differentiated complete SCS system and platform with extensive offering of innovation, IP, advanced safety features, and future generation capabilities in the fast growing $1.4B SCS market” 1% market share represents $17M revenue to partner in 2015 Highly under penetrated
Slide 74: Leverage Medical Device System Capabilities
Leverage Medical Device System Capabilities Future NewCo’s Deliver on Approved & emerging Entry into cardiac complete system indications systems initiative Implantable Loop Investment in Approved Emerging Recorder capabilities Deep Brain Cortical Address unmet needs Peripheral Vagus Platform Carotid
Slide 75: Drive Profitable Growth
Welcome Key Messages Sustainable Organic Growth Commercialize Medical Device Innovation Drive Profitable Growth Closing Summary 75
Slide 76: Drive Profitable Growth
Drive Profitable Growth Increasing ~ 5% Organic Margins Revenue Growth Strong Balance Sheet & Cash Flow Targeted Med Device M&A Upside Drive Profitable Growth 76
Slide 77: Sustainable Long-Term Growth
Sustainable Long-Term Growth ~ 5% Top Organic Growth Line Leverage IP Pipeline Innovation Bottom Line ~ 2x Top Line Growth Adjusted EPS Drive Profitable Growth 77
Slide 78: Aggregate Opportunity
Aggregate Opportunity Multi Billion Dollar end markets served Greatbatch Share $6.8B Total Greatbatch Opportunity $565M GB Share of Opportunity (8.7%) Greatbatch Opportunity Major growth opportunity through market share capture Drive Profitable Growth 78
Slide 79: Upside Opportunity
Core Business Growth Drivers Innovation & Pipeline Sales Force Productivity Targeted Upside Opportunity ~ 5% Core Organic Growth M&A 3rd Party Manufacturing Cost Reduction Funding Algostim Commercialization Orthopaedic Consolidation ~ 2x Top Line Growth Drive Profitable Growth 79
Slide 80: Strength of Core Business
Strength of Core Business 2012 Performance of Core Business Exclusive of Medical Device Initiative Spend 11.4% 15.8% $1.77 $2.55 2012 2012 2012 2012 (As Reported) (Excluding (As Reported) (Excluding Med Device) Med Device) Adjusted Op Margin* Adjusted EPS* *See appendix of this presentation for a re
Slide 81: 2013 Guidance
2013 Guidance Increasing ~ 5% Organic Margins Revenue Growth Strong Balance Sheet & Cash Flow Targeted Med Device M&A Upside Drive Profitable Growth 81
Slide 82: 2013 Assumptions
2013 Assumptions Assumptions Completion of Swiss Consolidation in Q1 2013 No acquisitions are included although we are actively engaged in looking for accretive deals that will improve our operating revenue growth performance Impact of R&D commercialization not included in guidance (Algostim, MRI, S
Slide 83: Revenue Growth
Revenue Growth ($ in millions) 2012 2013E Annual 2013E Revenue Growth Revenue Revenue Cardiac & $309 0 – 2% $309 – 315 Neuromodulation Orthopaedic (1) $122 (5) – 0% $116 – 122 Portable Medical $82 15 – 20% $94 – 98 Vascular Access $52 7 – 13% $55 – 59 Energy & Other $81 6% $86 – 86 Total Sales $646
Slide 84: 2013 Guidance
2013 Guidance ($ in millions except for EPS) 2013E w/o 2012 2013E Change Device Spend Sales $646 $660 – 680 2 – 5% $660 – 680 Adjusted Operating Margin (1) 11.4% 12 – 12.5% 60 – 110 bps 16 – 17% Adjusted Diluted EPS (1) $1.77 $1.90 – 2.00 7 – 13% $2.62 – 2.67 Adj. Operating Cash Flows (2) $80 ~$90 1
Slide 85: Strength of Core Business
Strength of Core Business 2013 Estimate of Core Business Algostim & targeted M&A represent additional upside $1.90 - $2.62 - 12 – 12.5% 16 - 17% $2.67 $2.00 2013E 2013E 2013E 2013E (Excluding (Excluding Med Device) Med Device) Adjusted Op Margin* Adjusted EPS* *See appendix of this presentation for
Slide 86: EPS Improvement
EPS Improvement $.06 - $.09 $.20 - $.22 $.19 - $.30 $1.90 - $2.00 $(.27) - $(.31) $1.77 $(.05) - $(.07) 7% to 13% Earnings Growth 2012 Actual Orthopaedics Productivity Medical Device Performance Investment in 2013 Guidance Adj. EPS Consolidation Efficiencies in Spend Based Sales & Adj. EPS Initiativ
Slide 87: Strong Operating Cash Flow
Strong Operating Cash Flow $ In Millions $10 $18 $22 $(9) $84 $(21) $90* $(14) 2013E Adjusted Depreciation Amortization Stock Based Interest Taxes Other 2013E Operating Operating Income Comp Cash Flow *Excludes the impact of other operating and DVT expenses of $10M and the deferred tax payment on th
Slide 88: Consistent Cash Flow Drives Lower Leverage
Consistent Cash Flow Drives Lower Leverage Operating Cash Flow $289.4 Total Debt $89.9 $90.0* $76.9 $236.0 $71.8 $64.8 $225.4 $221.0 $220.6 2009 2010 2011 2012 2013E 2009 2010 2011 2012 2013E 5 year annual average of $79M Debt repayment of $129M from 2009 to 2012 *Excludes the impact of other operat
Slide 89: Capacity for Growth Opportunities
Capacity for Growth Opportunities $374 M In Dry Powder Credit facility matures June 2016 $20 M Cash Utilized Line of Credit to finance converts redeemed Feb 2013 $200 M Available Accordion $225 M Outstanding on Borrowings $600 M $174 M Line of Credit Unused Borrowing Capacity Drive Profitable Growth
Slide 90: QiG Business Model
QiG Business Model Increasing ~ 5% Organic Margins Revenue Growth Strong Balance Sheet & Cash Flow Targeted Med Device M&A Upside Drive Profitable Growth 90
Slide 91: Avenues of Development
Avenues of Development Investment Partner Funded Examples Mechanism Entrepreneur / • Intelect Strategic Early Stage Balance Sheet • Sapiens Investments Company • DeCheng 8 In-process OEM Initiated Medical NRE Partner Customers 14 Complete Device Development Non-Recurring Engineering (since 2010) Mar
Slide 92: Development Model
Development Model ROI License or Manufacturing Sale Revenue Greatbatch & 3rd Party Funded Funded Enhanced Margin Commercialization Manufacturing Phase Design & Development 3rd Party & Continuation SALES AND DEVICE DISTRIBUTION CONCEPT DETAILED VERIFICATION REGULATORY MANUFACTURING BY OEM DESIGN & VA
Slide 93: Medical Device Spend Reducing
Medical Device Spend Reducing Total QiG Spend Greatbatch Spend $33 M $31 M 3rd Party Investment $27 M $22 M $15 M 2009 2010 2011 2012 2013E 2014E Drive Profitable Growth 93
Slide 94: Closing Summary
Welcome Key Messages Sustainable Organic Growth Commercialize Medical Device Innovation Drive Profitable Growth Closing Summary 94
Slide 95: Key Message Points
Key Message Points Strong Long-term agreements cover large percentage of revenue Foundational Strong Core Reputation for innovation & operational excellence Business Strong Blue Chip customer base Business Strong markets with significant growth opportunity Grow Leveraging extensive Intellectual Prop
Slide 96: Q&A Panel
Q&A Panel Thomas J. Hook Michael Dinkins Scott Drees President & CEO Senior Vice President & CFO President Algostim Susan M. Bratton Daniel R. Kaiser President Electrochem Vice President & CTO 96
Slide 97: 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 97
Slide 98: Appendix
Appendix re Greatbaten®
Slide 99: Forward Looking Statement
Forward Looking Statement The statements made in this presentation and in the oral remarks accompanying these slides that are not statements of current or historical fact are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
Slide 100: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company‟s reported results prepared in accordance with GAAP. In this presentation: “adjusted” amounts consist of GAAP am
Slide 101: Industry and Market Data
Industry and Market Data The industry and market data used in this presentation was obtained from our own research, internal surveys and studies conducted by third parties, independent industry associations or general publications and other publicly available information. Third party providers of th
Slide 102: Trademarks / Tradename
Trademarks / Tradename These presentation slides include trademarks, servicemarks and tradenames owned by other companies, including companies that are our customers, suppliers and competitors. All trademarks, servicemarks and tradenames included in these slides are the property of their respective
Slide 103: GAAP Reconciliation
GAAP Reconciliation Areconciliation of GAAP operating income to adjusted amounts is as follows (dollars in millions): 2013 Estimate 2012 2011 Total sales $ 660.0-680.0 $ 646.2 568.8 Operating income as reported $ 65.2-73.5 $ 25.8 61.7 Adjustments: Inventory step-up amortization (COS) - 0.5 0.2 Execu
Slide 104: GAAP Reconciliation
GAAP Reconciliation A reconciliation of GAAP net income (loss) and diluted EPS to adjusted amounts i: follows (in millions, except per share amounts): 2013 Estimate 2012 2011 2010 Net Income Impact per (Loss) Diluted Share Net Income (Loss) Impact per Diluted Share Impact per Net Income Diluted (Los