Slide 1: 2Q17 Earnings Conference Call
2Q17 Earnings Conference Call July 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 • Vision & Strategy • Question & Answer Period ITGR: 2Q17 Earnings Conference Call / July 27, 2017 / Page 3
Slide 4: Opening Comments
Opening Comments
Slide 5: Quarterly Results Reflect Continued Progress
Quarterly Results Reflect Continued Progress Second Quarter Highlights “Another quarter of • 2Q17 organic sales up 4.5% … Trailing 4 quarters up 2% solid sales growth • Adjusted Results gives us confidence ‒ EBITDA increased 9% organically that we are back on ‒ Net Income increased 34% organically •
Slide 6: Sales Recovery – Growth in 2017
Sales Recovery – Growth in 2017 Sales trajectory continues to improve Sales – Trailing 4 Quarters 5% [1% to 3%] 2% Organic Growth 0% (1)% (2)% (4)% (5)% 4Q15 4Q16 1Q17 2Q17 4Q17 Trailing 4-quarter Actuals Outlook ITGR: 2Q17 Earnings Conference Call / July 27, 2017 / Page 6
Slide 7: Improving Sales Trend Across All Product Lines
Improving Sales Trend Across All Product Lines Sales - Trailing 4-quarter Medical Segment Non-Medical Segment Cardio & Vascular 10% 7% 10% 5% 1% 0% 2% Adv. Surgical, Ortho & Portable Medical 0% (0)% (1)% (2)% (5)% Cardiac & Neuro (22)% (5)% (6)% (30)% (35)% (10)% 4Q16 1Q17 2Q17 4Q16 1Q17 2Q17 Traili
Slide 8: Financial Results
Financial Results
Slide 9: 2Q17 Adjusted Financial Results
2Q17 Adjusted Financial Results(1) ($ in millions, except per share amounts) Sales Adjusted EBITDA Adjusted Net Income 4.5% organic(2) 9% organic(3) 34% organic(3) % Growth 4.1% reported 2% reported 13% reported $364 FX Adjusted $76 FX Adjusted $6 FX $24 FX Adjusted $363 Reported $69 $70 $348 $4 FX
Slide 10: YOY Sales Improvement Continues in 2Q17
YOY Sales Improvement Continues in 2Q17 Advanced Surgical, Orthopedics & Portable Medical 10% 0% 0% Integer(1) -10% 10% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 -20% Quarterly YOY % Organic Change 15% 4.8% 4.5% Quarterly YOY % Change – as Reported Cardio & Vascular 5% 10% 5% 0% 0% 0% 0% (0.5)% (0.0)% -5% -5% -
Slide 11: Strong Organic Growth in Adjusted EBITDA & Adjusted EPS
Strong Organic Growth in Adjusted EBITDA & Adjusted EPS ($ in millions except per share amounts) Adjusted EBITDA Adjusted EPS $0.18 $(0.12) $6.5 $(5.0) $70 $0.62 $69 $0.56 FX FX Organic(2) Organic(2) 2Q16 2Q17 2Q16 2Q17 Adjusted Net $17.5 $6.2 $(4.0) $19.7 Income (1) Organic amounts exclude the YOY
Slide 12: Continued Strong & Steady Cash Flow Generation
Continued Strong & Steady Cash Flow Generation Cash Flow From Operations Free Cash Flow ($ in millions) ($ in millions) $38 $39 $39 • Generating cash flow well in excess of $34 $30 $28 current debt obligations $26 $21 $22 • Focused on accelerating debt $11 repayment to reduce leverage $4 • Repaid $4
Slide 13: Revised Full-Year 2017 Outlook
Revised Full-Year 2017 Outlook ($ in millions except per share amounts) Sales Adjusted EPS Cash Flow from Operations % 1% - 3% organic(1) 7% - 22% organic(2) 42% reported Growth 1% - 3% reported (5)% - 10% reported ~$150 $1,400 - $1,430 $1,386 $2.55 - $2.95 $2.68 $106 2016 2017 2016 2017 2016 2017 O
Slide 14: Product Line Review
Product Line Review
Slide 15: 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 15% Quarterly YOY Growth 10% 7% 5% % Change 0% 0% Orthopedic Implants & Laparoscopy & Arthroscopy Biopsy & Drug Portable Medical -5% (1)% Instruments
Slide 16: 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 YOY Growth 15% 10% 9% 10% 8% Ste
Slide 17: Cardiac & Neuromodulation
Cardiac & 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 to high-volume manufacturing Quarterly YOY Growth(1) 15% 10% 5% 3
Slide 18: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Quarterly YOY Growth 60% 70% 50% 30% % Change 10% Battery Cells Battery Packs Battery Chargers 0% -10% (3)% (14)% -30% -50% (34)% (26)% • 2Q17 S
Slide 19: Vision & Strategy
Vision & Strategy
Slide 20: Our Vision and Strategy
Our Vision and Strategy “Our vision is to Executing our Strategy … to Realize our Vision enhance the lives of • Serving the needs of our customers as their preferred global device outsource partner patients worldwide by being our • Leveraging our global presence and breadth of capabilities to provid
Slide 21: Question & Answer Period
Question & Answer Period
Slide 22: Appendix
APPENDIX
Slide 23: Historical Financial Results
Historical Financial Results $( in millions, except per share amounts) Sales(1) Adjusted EPS(1)(2)(4) Organic $360 $363 Adjusted $0.36 $0.58 $0.83 $0.79 $0.44 $0.76 $348 $347 $345 $11 $16 EPS(3) $331 $10 $9 $11 $12 $100 $107 $109 $109 $105 $98 $0.14 $108 $116 $104 $106 $107 $107 $0.02 $0.03 $0.83 $0
Slide 24: Working Capital
Working Capital 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Inventory $267 $276 $262 $225 $231 $236 (1) Inventory Turns 3.7 3.7 3.7 4.4 4.5 4.5 Capital Expenditures $19 $12 $17 $11 $12 $10 Working Capital $( in millions) $318 $325 $332 $325 $328 $317 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 (1) Inventory Turns calculated as
Slide 25: Other Operating Expenses - Historical
Other Operating Expenses - Historical Three Months Ended YTD Three Months Ended 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 2014 Investments in $4.2 $5.1 $4.5 $3.3 $17.2 $1.6 $1.3 Capacity and Capabilities Legacy Lake Region Medical $2.4 $2.1 $2.9 $1.2 $8.6 $0.7 $1.5 Consolidation and Optimization Acquisitio
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD Three Months Ended June 30, 2017 July 1, 2016 Per Net Per Net Diluted Income Diluted Pre-Tax Income Share Pre-Tax (Loss) Share As reported (GAAP) $ 4,116 $ 2,990 $ 0.09 $ 687 $ (770) $ (0.03 Adjustments: Amortization of intangib
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – YTD Six Months Ended June 30, 2017 July 1, 2016 Net Per Net Per Income Diluted Income Diluted Pre-Tax (Loss) Share Pre-Tax (Loss) Share As reported (GAAP) $ (79) $ (1,349) $ (0.04) $ (12,075) $ (13,430) $ (0.44) Adjustments: Amortiz
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q17 Net Income and Diluted EPS Reconciliation GAAP Non-GAAP Adj. (a) Non-GAAP Debt / Litigation Investment Related Consolidation & Acquisition & Related Income Statement 2Q17 Actual Amortization Charges(b) Optimization(c)(e) Integration(d) Charges(f) 2Q17 Adjusted Sales $ 36
Slide 29: 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. tax rate, and the statutory tax rates
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations EBITDA and Adjusted EBITDA Reconciliation Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, 2017 2016 2017 2016 Net Income (loss) (GAAP) $ 2,990 $ (770) $ (1,349) $ (13,430) Interest expense 25,647 27,908 54,540 55,525 Provision for income taxes 1,126 1,4
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations Organic Sales Growth Rate Reconciliation (% Change) Impact of GAAP Nuvectra Non-GAAP Reported prior to Foreign Organic QTD Change (2Q 2017 vs. 2Q 2016) Growth Spin-off Currency Growth Medical Sales Cardio & Vascular 8.2% — 0.2% 8.4% Cardiac & Neuromodulation (0.7)% — — (0.7)
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Organic Growth Rate Reconciliation Impact of GAAP Impact of Foreign Non-GAAP Reported Non-GAAP Currency Organic Growth Adjustment(a) Loss(b) Growth QTD Change (2Q 2017 vs. 2Q 2016) EBITDA 6.6% (4.8)% 7.1% 8.9% Net Income NM 12.5% 21.8% 34.3% Diluted EPS NM 10.7% 20.
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2017 Full-Year Outlook $( in millions, except per share amounts) 2017 Outlook GAAP Non-GAAP As Reported Growth Adjusted Basis Growth Revenue $1,400 - $1,430 1% - 3% $1,400 - $1,430 1% - 3% Earnings per Diluted Share $0.60 - $1.00 favorable $2.55 - $2.95 (5)% - 10% Cash Flow
Slide 34: Contact Information
Contact Information Amy Wakeham VP, Investor Relations Integer ir@integer.net (O) 214.618.4978 (M) 214.430.7208 www.integer.net ITGR: 2Q17 Earnings Conference Call / July 27, 2017 / Page 34