Integer Holdings Corporation · NYSE:ITGR
Integer — Greatbatch — Bank of America Conference 2013
32 slides from Integer's conference presentation, May 16, 2013
Slide 1: Bank of America May 16, 2013
* Greatbatch Bank of America May 16, 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: 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 4: 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 5: 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 5
Slide 6: 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% 6
Slide 7: Sustainable Organic Growth
Sustainable Organic Growth Targeted Sales Force Markets Emphasis Supported Strategic Business Model Investments 7
Slide 8: 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 9: 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 9
Slide 10: Blue Chip Customer Base
Blue Chip Customer Base Bost Scientific Ean mee ST. JUDE MEDICAL ann ° MOR INTRO! SS RISK E CONTRI LEss RISK Medtronic Gotmonsfolmon 2 BIOTRONIK (J) ummer SORIN ath ° Ed COVIDIEN Baxter 7y smith&nephew Carestream HALLIBURTON ieM=\ls ZOLL. $88 Greatbatch 10
Slide 11: Long-Term Agreements
Long-Term Agreements 71% Greatbatch Medical revenue under LTAs › Current (through 2013) Terms 65% - 70% Through 2014 50%+ Through 2015 35% - 40% Beyond … in addition, product lifecycle / replacements drive core growth and protection 11
Slide 12: Expanding Intellectual Property
Expanding Intellectual Property Issued Patents: 1990 to 2012 1400 1,179 Patents 1200 Med Device Patents Issued: 160 1000 Pending: 57 800 500 Patents 600 158 Patents 593 (307 US) 400 Patents Pending 200 0 1992 1997 2002 2007 2012 US Total OUS Total WW Total 12
Slide 13: Commercialize Medical Device Innovation
Commercialize Medical Device Innovation Leverage Strong Capabilities Value Proposition Technology Innovation Addressing Future Unmet Opportunities Needs 13
Slide 14: Algostim System
Paddle Leads Algostim System Perc Leads Patient Programmer Patient Feedback Tool Clinician Programmer Charger PFT CP PPC Pocket Programmer External PoP Pulse Generator EPG Anchors Extensions Trial Cable Implantable Pulse Generators IPG 14
Slide 15: Algostim Timeline
Algostim Timeline 2013 2014 2015 DVT Development completion Animal Study Regulatory Cycle Phased approach (CE mark) PMA process (FDA) Manufacturing Revenue Screening Greatbatch Commercialization ROI Partners Commercialization By partner 15
Slide 16: 2013 Guidance
2013 Guidance Increasing ~ 5% Organic Margins Revenue Growth Strong Balance Sheet & Cash Flow Targeted Med Device M&A Upside 16
Slide 17: 2013 Guidance
2013 Guidance ($ 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 18: 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 19: Sustainable Long Term Growth
Sustainable Long Term Growth 5% Organic Growth Top Line Leverage IP Pipeline Innovation Bottom Line ~ 2x Organic Growth Adjusted EPS growth 19
Slide 20: Contact Information
Contact Information Betsy Cowell Vice President Finance &Treasurer Greatbatch, Inc. 2595 Dallas Parkway Suite 310 Frisco, TX 75034 Tel: 214-618-4982 ecowell@greatbatch.com www.greatbatch.com 20
Slide 21: Appendix
Appendix $88 Greatbatch 21
Slide 22: 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 23: 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 24: 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 25: 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 26: Cardiac & Neuromodulation, Orthopaedics, Vascular
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 27: 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 28: 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 29: 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 30: Strategic Investments
Strategic Investments Targeted Sales Force Markets Emphasis Supported Strategic Business Model Investments 30
Slide 31: 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 32: 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