Slide 1: 2014 First Quarter Earnings Call
2014 First Quarter Earnings Call April 30, 2014 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Some of the statements made in this 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 the Securities Exchange Act of 1934, as amended, and involve a numbe
Slide 3: Earnings Call Participants
EARNINGS CALL PARTICIPANTS Thomas J. Hook President & CEO Michael Dinkins Executive Vice President & CFO Betsy Cowell Vice President Finance & Treasurer 3
Slide 4: Agenda
AGENDA Thomas J. Hook – First Quarter 2014 Highlights Michael Dinkins – First Quarter 2014 Financial Results – 2014 Guidance Question & Answer 4
Slide 5: Selected Q1 Highlights
SELECTED Q1 HIGHLIGHTS ($ in millions except for EPS) Q1 2014 Q1 2013 Variance Sales $174.3 $148.3 18%* Adjusted Operating Income** $22.3 $19.3 16% Adjusted Operating Margin** 12.8% 13.0% (20) bps Adjusted EBITDA** $31.6 $28.1 12% Adjusted EBITDA Margin** 18.1% 18.9% (80) bps Adjusted Diluted EPS**
Slide 6: Q1 Accomplishments
Q1 ACCOMPLISHMENTS Sales force and down stream marketing productivity Three of our Medical product lines grew in excess of 20% On plan with product launches; continue to deepen and broaden customer relationships Greatbatch Medical manufacturing efficiencies Capitalizing on infrastructure scala
Slide 7: Q1 Organic Growth
Q1 ORGANIC GROWTH ($ in thousands) Q1 Q1 Product Line Chg. 2014 2013 Greatbatch Medical Cardiac/Neuromodulation $ 86,780 $ 70,524 23 % Orthopaedic 36,431 29,623 23 % Portable Medical 19,203 18,889 2% Vascular 13,050 10,624 23 % EME 18,131 17,962 1% Total Greatbatch Medical 173,595 147,622 18 % QiG 6
Slide 8: Q1 Performance: Cardiac/Neuromodulation
Q1 PERFORMANCE Cardiac/Neuromodulation (CRMN): (50% total revenues; 23% organic growth) Strong growth from customer product launches, inventory replenishments and sale force productivity Greatbatch – CRMN CRMN Customers Sales - Rolling 4 Quarters ($ in millions) Sales - Rolling 4 Quarters* ($ in m
Slide 9: Q1 Performance: Orthopaedics
Q1 PERFORMANCE Orthopaedics: (21% of total revenues; 20% organic constant currency growth) Progressive sales and marketing efforts expanding customer base Growth in implants and instruments Greatbatch – Orthopaedics Sales Rolling 4 Quarters ($ in millions) $40 $30 $20 $10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 10: Q1 Performance: Portable Medical, Vascular, EME
Q1 PERFORMANCE Portable Medical: (11% total revenues; 2% organic growth) Share gains while refining product positioning Continued strength in rechargeable battery applications Vascular: (7% total revenues; 23% organic growth) Marketing initiatives and sales force productivity Steerable cathe
Slide 11: Financial Results
FINANCIAL RESULTS #82 Greatbatch
Slide 12: Q1 Financial Results
Q1 FINANCIAL RESULTS ($ in thousands except for EPS) Three Months Ended April 4, March 29, % January, 3 % (Dollars in thousands, except per share data) 2014 2013 Change 2014 Change Sales $ 174,281 $ 148,265 18% $ 176,619 -1% Organic Constant Currency Sales Growth 17 % (4) % 13 % GAAP Operating Incom
Slide 13: Q1 Variance Analysis
Q1 VARIANCE ANALYSIS Adj. EPS Comments 2013 Adjusted EPS $ 0.44 Mix / Volume 0.23 Performance based compensation (0.07) SG&A/RD&E (0.07) RD&E/DVT initiatives ($0.03), lower NRE ($0.02); and higher SG&A ($0.02) Other 0.01 Lower interest expense $0.04 and adjusted tax rate $0.01; offset by share count
Slide 14: Q1 Operating Cash Flow
Q1 OPERATING CASH FLOW ($ in millions) Net income $ 14.9 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation & Amortization 9.3 Debt related amortization included in Interest Expense 0.2 Stock Based Compensation 3.2 Change in Deferred Taxes & Othe
Slide 15: 2014 Guidance
2014 GUIDANCE #82 Greatbatch
Slide 16: 2014 Guidance
2014 GUIDANCE ($ in millions except for EPS) 2013 2014 Guidance Change Sales $663.9 $685 – $705 3 – 6% Adjusted Operating Margin(1) 12.5% 13.0 – 13.3% 50 - 80 bps Adjusted Diluted EPS(1) $2.10 $2.25 – $2.35 7 – 12% Adj. Operating Cash Flows (2) $85.5 $90 - $100 5 - 17% Capex $18.6 $25 – $35 34 - 88%
Slide 17: Appendix
APPENDIX 7 ss Greatbatch
Slide 18: GAAP Reconciliation: Operating Income
GAAP RECONCILLIATION Table A: Operating Income Reconciliation Three Months Ended Greatbatch Medical QiG Unallocated Total April 4, March 29, April 4, March 29, April 4, March 29, April 4, March 29, (dollars in thousands) 2014 2013 2014 2013 2014 2013 2014 2013 Sales $ 173,595 $ 147,622 $ 686 $ 643 $
Slide 19: GAAP Reconciliation: Net Income and Diluted EPS
GAAP RECONCILLIATION Table B: Net Income (loss) and Diluted EPS Reconciliation Three Months Ended April 4, March 29, 2014 2013 Net Impact Net Impact Income Per Income Per (in thousands except per share amounts) Diluted Diluted Share Share Net income as reported $ 14,922 $ 0.58 $ 5,663 0.23 Adjustmen
Slide 20: GAAP Reconciliation: Adjusted EBITDA
GAAP RECONCILLIATION Table C: Adjusted EBITDA reconciliation Three Months Ended April 4, March 29, (dollars in thousands) 2014 2013 Sales $ 174,281 $ 148,265 Adjusted operating income* $ 22,310 $ 19,311 Add: Depreciation and amortization 9,252 8,764 Adjusted EBITDA $ 31,562 $ 28,075 Adjusted EBITDA
Slide 21: GAAP Reconciliation: EPS
GAAP RECONCILLIATION Table D: EPS Reconciliation 2013 2014 Guidance GAAP Diluted EPS $1.43 $1.94 - $1.99 Adjustments: Other Operating Expense(1) $0.46 $0.31 - $0.35 DVT Builds(1) $0.15 CSN conversion option discount and $0.12 deferred fee accelerated amortization(1) R&D Tax Credits and other Tax Ite
Slide 22: Contact Information
CONTACT INFORMATION Betsy Cowell Vice President Finance & Treasurer Greatbatch 2595 Dallas Parkway Suite 310 Frisco, Texas 75034 214 618 4982 ecowell@greatbatch.com www.greatbatch.com 22