Slide 1: 1Q17 Earnings Conference Call
1Q17 Earnings Conference Call May 8, 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 • Strategic / Growth Initiatives • Closing Comments • Question & Answer Period ITGR: 1Q17 Earnings Conference Call / May 8, 2017 / Page 3
Slide 4: Opening Comments
Opening Comments
Slide 5: Quarterly Results Reflect Continued Progress
Quarterly Results Reflect Continued Progress • 1Q17 Financial Results “First quarter results • Revenue trajectory continues to improve are in-line with our • Adjusted Net Income up 26% organically full-year expectations • Strong cash flow generation supports continued deleveraging and demonstrate •
Slide 6: Revenue Recovery – Growth in 2017
Revenue Recovery – Growth in 2017 Revenue trajectory continues to improve Revenue – Trailing 4 Quarters 5% 0% to 3% Organic Growth 0% (1)% (2)% (4)% (5)% 4Q15 4Q16 1Q17 4Q17 Trailing 4-quarter Actuals Outlook ITGR: 1Q17 Earnings Conference Call / May 8, 2017 / Page 6
Slide 7: Financial Results
Financial Results
Slide 8: 1Q17 Adjusted Financial Results
1Q17 Adjusted Financial Results(1) $( in millions, except per share amounts) Revenue Adjusted EBITDA Adjusted Net Income +5% organic(2) +4% organic(3) +26% organic(3) % Growth (2)% reported +4% reported (1)% reported $65 $64 $345 $331 $13 $13 1Q16 1Q17 1Q16 1Q17 1Q16 1Q17 Adjusted $0.42 $0.41 EPS (1
Slide 9: Continued Revenue Improvement in 1Q17
Continued Revenue Improvement in 1Q17 Advanced Surgical, Orthopedics & Portable Medical 10% 0% 0% Integer(1) -10% -20% 1Q16 2Q16 3Q16 4Q16 1Q17 10% Quarterly YOY % Organic Change 5% Cardio & Vascular 10% 5% Quarterly YOY % Change 0% 0% 0% 0% -10% 0% -5% (1)% -20% 10% Cardiac & Neuromodulation -10% (
Slide 10: Driving Organic Growth to the Bottom Line
Driving Organic Growth to the Bottom Line $( in millions except per share amounts) Adjusted EBITDA(1) Adjusted EPS(1) $3 $(4) $65 $64 $0.09 $(0.10) Organic(2) $0.42 $0.41 FX Organic(2) FX 1Q16 1Q17 1Q16 1Q17 Adjusted Net $13.1 $2.9 $(3.1) $12.9 Income (1) Adjusted EBITDA, Adjusted EPS and Adjusted N
Slide 11: Continued Strong Cash Flow Generation
Continued Strong Cash Flow Generation Cash Flow From Operations Free Cash Flow $( in millions) $( in millions) $38 $39 $34 • Generating sufficient cash flow to meet $26 current debt obligations and accelerate $21 $22 debt repayment • Repaid $29M of debt in 1Q17 – total payments of $73M since acquisi
Slide 12: Reaffirming our Full-Year 2017 Outlook
Reaffirming our Full-Year 2017 Outlook Revenue Adjusted EPS Cash Flow from Operations ~$150 $1,390 - $1,430 $1,386 $2.70 - $3.10 $2.68 $106 2016 2017 2016 2017 2016 2017 Outlook Outlook Outlook ITGR: 1Q17 Earnings Conference Call / May 8, 2017 / Page 12
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 Orthopedic Implants & Laparoscopy & Biopsy & Drug Portable Medical Arthroscopy Products Instruments General Surgery Delivery (Power Solutions) 15% YO
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 high-quality products to established and emerging markets – from initial concept through to high-volume manufacturing Pulse Generator Components Leads & L
Slide 17: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Battery Cells Battery Packs Battery Chargers • Revenue continues to trend towards YOY growth driven by increased North American energy customer
Slide 18: Strategic / Growth Initiatives
Strategic / Growth Initiatives
Slide 19: Key Strategic Focus Areas
Key Strategic Focus Areas • Executing our strategy “Our vision is to • Serving the needs of our customers as their global device outsource partner enhance the lives of • Leveraging our global presence and breadth of capabilities to provide high quality manufactured products – from components to fini
Slide 20: Closing Comments
Closing Comments
Slide 21: Well-Positioned for Future Growth
Well-Positioned for Future Growth Broad Product Continuum Engineered Engineered Contract Customer Owned / Integer Owned Manufactured Co-Developed Systems, Devices Components Sub-Assemblies Devices Devices & Co-Developed 80% 20% Technical Solutions Product Solutions (Traditional CMO) (More IP Focused
Slide 22: Question & Answer Period
Question & Answer Period
Slide 23: Appendix
APPENDIX
Slide 24: Historical Financial Results
Historical Financial Results $( in millions, except per share amounts) Revenue(1) Adjusted EPS(1)(2) $360 $348 $347 $345 $331 $11 $10 $9 $11 $12 $100 $107 $109 $105 $0.87 $98 $0.83 $107 $108 $116 $104 $0.56 $107 $0.42 $0.41 $114 $122 $129 $126 $125 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 N
Slide 25: Revised Product-Line Historical Financial Results
Revised Product-Line Historical Financial Results(1) 2015 Product-Line Sales(2) 1Q15 2Q15 3Q15 4Q15 FY2015 Medical Sales Advanced Surgical, Orthopedics, & Portable Medical $ 112,081 $ 115,113 $ 103,764 $ 109,941 $ 440,899 Cardiac & Neuromodulation 111,612 123,280 105,448 121,449 461,789 Cardio & Vas
Slide 26: Working Capital
Working Capital 1Q16 2Q16 3Q16 4Q16 1Q17 Inventory $267 $276 $262 $225 $231 (1) Inventory Turns 3.7 3.7 3.7 4.4 4.5 Capital Expenditures $19 $12 $17 $11 $12 Working Capital $( in millions) $318 $325 $332 $325 $317 1Q16 2Q16 3Q16 4Q16 1Q17 (1) Inventory Turns calculated as “COGS divided by quarterly
Slide 27: Other Operating Expenses
Other Operating Expenses Three Months Ended 1Q17 1Q16 NOTES: Portable Medical and 2014 Investments in $1.6 $4.2 Vascular product line Capacity and Capabilities transfers Legacy Lake Region Medical $0.7 $2.4 Consolidation and Optimization Acquisition and Integration Costs $4.8 $10.0 Lake Region Medic
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD Three Months Ended March 31, 2017 April 1, 2016 Net Per Net Per Income Diluted Income Diluted (in thousands except per share amounts) Pre-Tax (Loss) Share Pre-Tax (Loss) Share As reported (GAAP) $ (4,195) $ (4,339) $ (0.14) $ (1
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q17 Net Income and Diluted EPS Reconciliation GAAP Non-GAAP Adj. (a) Non-GAAP Debt / Litigation Investment Related Consolidation & Acquisition & Related Income Statement 1Q17 Actual Amortization Charges(b) Optimization(c)(e) Integration(d) Charges(f) 1Q17 Adjusted Sales $ 34
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q16 Net Income and Diluted EPS Reconciliation THREE MONTHS ENDED GAAP Non-GAAP Adj. (a) Non-GAAP Debt / Litigation Investment Related Consolidation & Acquisition & Nuvectra Related Income Statement 1Q16 Actual Amortization Charges(b) Optimization(c)(e) Integration(d) Spin(g)
Slide 31: 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 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA Reconciliation Three Months Ended March 31, April 1, (in thousands) 2017 2016 Net loss (GAAP) $ (4,339) $ (12,660) Interest expense 28,893 27,617 (Benefit) provision for income taxes 144 (102) Depreciation 13,628 12,949 Amortization 10,978 9,464 EBITDA 49,304
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Organic Revenue Growth Rate Reconciliation Three Months Ended 1Q 2017 Impact of Nuvectra As Prior to Foreign Organic Reported Spin-off Currency Growth Growth Rates Medical Sales Cardio & Vascular 10 % — — 10 % Cardiac & Neuromodulation(a) (4)% 1% — (3)% Advanced Surgical, Or
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Organic Growth Rate Reconciliation Three Months Ended 1Q 2017 Impact of Impact of Foreign Non-GAAP Currency Organic Growth (Decline) % GAAP Adjustments(a) Loss(b) Growth EBITDA 32 % (34)% 6% 4% Net Income (Loss) (66)% 65 % 27% 26% Diluted EPS (66)% 64 % 26% 24% (a)
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2017 Full-Year Outlook $( in millions, except per share amounts) GAAP Non-GAAP As Reported Growth Adjusted Basis Growth Revenue $1,390 to $1,430 0% to 3% $1,390 to $1,430 0% to 3% Earnings per Diluted Share $1.03 to $1.43 favorable $2.70 to $3.10 1% to 16% Cash Flow from Ope
Slide 36: 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: 1Q17 Earnings Conference Call / May 8, 2017 / Page 36