Slide 1: 4Q18 Earnings Conference Call
4Q18 Earnings Conference Call February 21, 2019 ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 1
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 • 2019 Outlook • Question & Answer Period ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 3
Slide 4: Opening Comments
Opening Comments ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 4
Slide 5: Strong Financial Results
Strong Financial Results … Integer delivered another 4Q Financial Results quarter of growth… • 1% revenue growth against difficult prior year comps despite difficult prior year comps • Strong profit leverage on revenue growth • Strong cash generation and continued debt pay-down Met or exceeded guida
Slide 6: 2018 Highlights
2018 Highlights Portfolio & Product Strategy • Divested AS&O Product Line…$400 million sales, 10 plants • Developing and executing strategy to penetrate high growth segments in C&V (Electrophysiology, Structural Heart, Peripheral Vascular), Neuro and Electrochem • Strengthening CRM customer relation
Slide 7: Financial Results
Financial Results
Slide 8: 4Q18 Adjusted Financial Results
4Q18 Adjusted Financial Results(1) ($ in millions, except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted Net Income (2) (3) (3) 1% organic 5% organic 19% organic % Growth 1% reported 6% reported 20% reported $303 $68 $34 $301 FX Adjusted $64 FX Adjusted Reported FX adjusted FX Adjusted $
Slide 9: 4Q18 Adjusted EBITDA & Net Income
4Q18 Adjusted EBITDA & Net Income ($ in millions, except per share amounts) Adjusted EBITDA Adjusted Net Income $1 $34 $0 $1 $2 $1 $68 +6% $64 $29 4Q17 4Q18 4Q17 Operational Incentive FX Interest Tax Rate 4Q18 Improvement Compensation (Cash & Stock) Adj. $0.89 $0.05 $0.02 $0.01 $0.03 $0.04 $1.04 EPS
Slide 10: 2018 Adjusted Financial Results
2018 Adjusted Financial Results(1) ($ in millions, except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted Net Income (2) (3) (3) 7% organic 6% organic 16% organic % Growth 7% reported 11% reported 26% reported $1,213 $125 Reported FX Adjusted $1,131 $260 $108 Reported $1,211 $245 FX Adjus
Slide 11: 2018 Adjusted EBITDA & Net Income
2018 Adjusted EBITDA & Net Income ($ in millions, except per share amounts) Adjusted EBITDA Adjusted Net Income $259 +11% $3 $1 $124 $22 $8 $234 $99 $(9) 2017 2018 2017 Operational Incentive FX Interest Tax Rate 2018 Improvement Compensation (Cash & Stock) Adj. $3.09 $0.61 $(0.28) $0.26 $0.10 $0.02
Slide 12: FY18 Actual Results compared to Guidance Post AS&O Divestiture
FY18 Actual Results compared to Guidance Post AS&O Divestiture ($ in millions, except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted EPS (1) (1) (1) Guidance Actual Guidance Actual Guidance Actual $1,175 - $1,200 $1,213 $255 - $265 $259 $3.35 – $3.65 $3.80 % Reported Growth 4% - 6% 7% 9%
Slide 13: FY18 Actual Results compared to Guidance Post AS&O Divestiture
FY18 Actual Results compared to Guidance Post AS&O Divestiture ($ in millions, except per share amounts) Cash Flow From Ops Free Cash Flow(1) Debt Payments Leverage(2) $700 $665+ $548 $550 $124 ~ 3.6x $167 $110 + 3.5x $160 + $122 $85 $30 $30 (3) (3) (3) (3) Guidance Actual Guidance Actual Guidance A
Slide 14: Product Line Review
Product Line Review
Slide 15: Year-over-Year Sales Growth Continues
Year-over-Year Sales Growth Continues(1) Trailing 4 Quarters Cardio & Vascular 11% 11% 10% 10% 9% 9% 8% 4Q17 1Q18 2Q18 3Q18 4Q18 Integer Cardiac & Neuromodulation 6% 9% 8% 3% 7% 0% 7% (3)% 6% (6)% Advanced Surgical, Orthopedic & Portable Medical 16% 12% 8% 4% 4Q17 1Q18 2Q18 3Q18 4Q18 0% Non-Medical
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 Organic Quarterly Y-o-Y Growth 13% 11% 10%
Slide 17: CRM & Neuromodulation
CRM & 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 Organic Quarterly Y-o-Y Growth 9% 8% 5%
Slide 18: Advanced Surgical Orthopedics & Portable Medical
Advanced Surgical Orthopedics & Portable Medical Supporting our divested AS&O business and providing technologies and solutions to Portable Medical markets Organic Quarterly Y-o-Y Growth 25% 21% % Change Orthopedic Implants & Electrosurgical Li-Ion Battery Core Battery 9% Instruments Accessories Pac
Slide 19: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Organic Quarterly Y-o-Y Growth 30% % Change 12% (5)% Battery Cells Battery Packs Battery Chargers 0% (13)% (18)% 4Q17 1Q18 2Q18 3Q18 4Q18 • Q418
Slide 20: 2019 Outlook
2019 Outlook
Slide 21: Integer's Journey
Integer’s Journey Revenue Growth versus Prior Year: 2015 2016 2017 2018 2019 Guidance Strategic Objectives 2015 2016 2017 2018 2021 7% 4% - 6% Market + 2% 5% (2)% (4)% Declined • Market growth • Market growth • 200bps above market Declined • ~1x revenue growth • 1.5x revenue growth • 2x revenue grow
Slide 22: 2019 Outlook
2019 Outlook ($ in millions except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted EPS Growth % 4% - 6% 6% - 9% 7% - 12% $1,260 - $1,280 $275 - $283 $4.05 - $4.25 $1,213 $259 $3.80 2018 2019 2018 2019 2018 2019 Outlook Outlook Outlook ITGR: 4Q18 Earnings Conference Call / February 21, 201
Slide 23: 2019 Cash Flow Outlook
2019 Cash Flow Outlook ($ in millions) Cash Flow From Ops Free Cash Flow(1) Debt Payments Leverage(2) $700 $160 - $170 $548 $167 $124 $110 - $120 5.6x $103 $129 $105 - $115 Target $122 3.5x 2.5x – 3.5x $149 $98 $67 - $77 $31 $30 $38 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 YE17 YE18 YE19 Guidanc
Slide 24: Target debt to EBITDA leverage ratio
Target debt to EBITDA leverage ratio Significant Leverage framework deleveraging ✓ Continued EBITDA growth ✓ Increased free cash flow 6.1x 5.6x ✓ Capacity for “bolt-on” acquisitions Debt x EBITDA Leverage 3.5x ~2.5 - 3.5x 2016 2017 2018 Disciplined capital deployment ITGR: 4Q18 Earnings Conference C
Slide 25: Summary
Summary
Slide 26: Focused Strategy to Drive Long-term Growth
Focused Strategy to Drive Long-term Growth Portfolio Strategy Operational Strategy: How we win Strategic Imperatives in the markets we serve How we achieve excellence in everything we do Invest to Grow Cardio & Vascular Neuromodulation Electrochem Protect & Preserve Cardiac Rhythm Management Improve
Slide 27: Summary
Summary Portfolio & Product Strategy • Developing and executing strategy to penetrate high growth segments • Strengthening CRM customer relationships to maintain market leadership • Investing more aggressively to grow both organically and inorganically Operational Strategy Customers • Customers: Lay
Slide 28: Appendix
APPENDIX ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 28
Slide 29: Continued Deleveraging
Continued Deleveraging Cash Flow From Ops Free Cash Flow (1) 2018 Highlights ($ in millions) ($ in millions) • Reduced leverage ratio to 3.5 times adjusted EBITDA • $548M from divestiture proceeds • $122M in additional accelerated pay down Debt Payments Leverage (2) ($ in millions) $595 • No signifi
Slide 30: Historical Financial Results
Historical Financial Results ($ in millions except per share amounts) (1) (2) Adjusted Sales Adjusted EPS Organic Adjusted EPS(3) $0.58 $0.91 $0.98 $0.89 $0.66 $1.01 $1.10 $1.04 $313 $305 $303 $301 $292 $280 $285 $265 $(0.05) $0.04 $0.00 $0.06 $0.01 $0.17 $0.03 $0.04 $1.06 $1.06 $1.04 $0.91 $0.89 $0
Slide 31: 2019 Full-Year Outlook Supplemental Items Affecting Cash Flow
2019 Full-Year Outlook Supplemental Items Affecting Cash Flow ($ in millions, except per share amounts) ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 31
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD ($ in thousands, except per share amounts) See the Footnotes to this table on Slide 34 of this presentation ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 32
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD ($ in thousands, except per share amounts) See the Footnotes to this table on Slide 34 of this presentation ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 33
Slide 34: Footnotes to Non-GAAP Reconciliation
Footnotes to Non-GAAP Reconciliation ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 34
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q18 Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) ITGR: 4Q18 Earnings Conference Call / February 21, 2018 / Page 35
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY18 Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) ITGR: 4Q18 Earnings Conference Call / February 21, 2018 / Page 36
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA and Adjusted EBITDA Reconciliation ($ in thousands) ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 37
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation Organic Sales Growth Rate Reconciliation (% Change) ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 38
Slide 39: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP Organic Growth Rate Reconciliation (% Change) ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 39
Slide 40: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2019 Full-Year Outlook(a) ($ in millions, except per share amounts) ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 40
Slide 41: Capitalization
Capitalization ($ in millions) 12/28/18 Original 06/30/18 12/28/18 As Reported Rate Rate Rate Cash & Cash Equivalents $26 $200M Revolver [Due 2020] $5 L + 325 L + 325 L + 250 TLA [Due 2021] $305 L + 325 L + 325 L + 250 TLB [Due 2022] $632 L + 425 L + 325 L + 300 Total Secured Debt $942 Senior Unsecu
Slide 42: Contact Information
Contact Information Tony Borowicz SVP, Strategy, Corporate Development & Investor Relations Integer Tony.Borowicz@Integer.net (O) 716.759.5809 www.integer.net ITGR: 4Q18 Earnings Conference Call / February 21, 2019 / Page 42