Slide 1: 4Q17 Earnings Conference Call
4Q17 Earnings Conference Call February 22, 2018
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 • Strategy Update • Question & Answer Period ITGR: 4Q17 Earnings Conference Call / Feb 22, 2018 / Page 3
Slide 4: Opening Comments
Opening Comments
Slide 5: Continued Top-Line Growth Closes Year Out Strong
Continued Top-Line Growth Closes Year Out Strong Fourth Quarter Highlights “Integer had record • Organic sales up 8% … Year-to-date up 5% sales in the fourth ‒ YOY sales growth across all product-lines quarter … we are • Adjusted Results now executing on a ‒ EBITDA increased 17% organically … up 7%
Slide 6: 2017 Growth Driven by Improving Sales Trends Across All Product Lines
2017 Growth Driven by Improving Sales Trends Across All Product Lines Product Line YOY Sales Growth AS&O C&V 9% Integer YOY Sales Growth 6% 2% 5% (6%) 2016 2017 2016 2017 CRMN Electrochem 37% (2%) (4%) 2015 2016 2017 (2%) (5%) (30%) 2016 2017 2016 2017 ITGR: 4Q17 Earnings Conference Call / Feb 22, 2
Slide 7: Financial Results
Financial Results
Slide 8: 4Q17 Adjusted Financial Results
4Q17 Adjusted Financial Results(1) ($ in millions, except per share amounts) Sales Adjusted EBITDA Adjusted Net Income 7.6% organic(2) 17% organic(3) 28% organic(3) % Growth 8.6% reported 11% reported 15% reported $79 FX Adjusted $390 Reported $1 FX $71 Reported $32 FX Adjusted $(3) FX $78 $1 FX $(4
Slide 9: Adjusted EBITDA & Adjusted Net Income
Adjusted EBITDA & Adjusted Net Income ($ in millions except per share amounts) Adjusted EBITDA Adjusted Net Income $7 $(3) $12 $(4) $78 $31 $27 FX FX $71 Organic(1) Organic(1) 4Q16 4Q17 4Q16 4Q17 Adj. EPS $0.87 $0.19 $(0.10) $0.96 (1) Organic amounts exclude the YOY impact of foreign currency gain (
Slide 10: FY17 Adjusted Financial Results
FY17 Adjusted Financial Results(1) ($ in millions, except per share amounts) Sales Adjusted EBITDA Adjusted Net Income 5.3% organic(2) 7% organic(3) 23% organic(3) % Growth 5.4% reported 2% reported 8% reported $1,462 Reported $(2) FX $295 FX Adjusted $98 FX Adjusted $1,460 $9 FX $84 Reported $8 FX
Slide 11: FY17 Actual Results compared to Original Guidance
FY17 Actual Results compared to Original Guidance Sales Adjusted EPS (1) (1) Original Actual Original Actual % Growth 0% - 3% 5.4% $2.70 to $3.10 $3.05 FX Adjusted $1,462 $1,390 - $1,430 $0.24 FX Impact YTD (2) $2.81 As Reported Sales above original guidance range … Adj. EPS within range (1) Origina
Slide 12: Continued Strong & Steady Cash Flow Generation
Continued Strong & Steady Cash Flow Generation Cash Flow From Ops Free Cash Flow (1) Leverage (2) ($ in millions) ($ in millions) $149 $150+ $103 $100+ 6.1x 5.6x • Continued strong cash flow and $106 debt reduction • Reduced leverage ratio from $47 6.1x to 5.6x in FY17 • Repaid $129M of debt in FY17
Slide 13: Full-Year 2018 Outlook
Full-Year 2018 Outlook ($ in millions except per share amounts) Sales Adjusted EBITDA Adjusted EPS Growth % 2% - 5% 7% - 10% 12% - 23% $1,490 - $1,530 $305 - $315 $3.15 - $3.45 $1,462 $286 $2.81 2017 2018 2017 2018 2017 2018 Outlook Outlook Outlook Adj. Effective 20% 20% - 25% Tax Rate See Slide 38
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 Quarterly YOY Growth 11% 7% 7% % Change Orthopedic Implants & Laparoscopy & Arthroscopy Biopsy & Drug Portable Medical 0% Instruments General Surgery
Slide 16: Cardio & Vascular
Cardio & Vascular Offering a full-range of services for the design, development, and manufacturing of diagnostic and interventional cardiac and endovascular delivery and retrieval devices, along with comprehensive supply-chain solutions Quarterly YOY Growth 12% 10% 9% 8% 7% Steerable Sheaths Cathete
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) 3% % Change
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 71% 60% 30% Battery Cells Battery Packs Battery Chargers % Change 0% (3%) (14%) (41%) (26%) • Continued YOY Sales growth in
Slide 19: Strategy Update
Strategy Update
Slide 20: Focused Strategy to Drive Long-Term Growth
Focused Strategy to Drive Long-Term Growth Portfolio Strategy Operational Strategy – Strategic Imperatives Invest to Grow Cardio & Vascular Customers Neuromodulation “earn business Electrochem daily” Protect & Preserve • Sales Force Excellence • Market Focused Innovation Cardiac Rhythm Management Im
Slide 21: Organization Alignment to Drive Strategic Imperatives
Organization Alignment to Drive Strategic Imperatives Organization Updates Strategic Imperatives • 2018 Focus Jeremy Friedman COO ◦ Improve AS&O profitability ◦ Customer strategic imperatives • Anticipated retirement YE18 Jeremy Friedman COO Customers “earn business daily” • Strong commercial and ge
Slide 22: Summary
Summary Strategy to Accelerate Growth “I am confident we have the right • Portfolio Management strategy and the right • Operational Excellence – Strategic Imperatives team in place to Management Team in Place deliver for our • Appointed since 2Q17 customers and to ‒ CEO, CFO, CHRO, President C&V rea
Slide 23: Question & Answer Period
Question & Answer Period
Slide 24: Appendix
APPENDIX
Slide 25: Historical Financial Results
Historical Financial Results ($ in millions, except per share amounts) (1)(2)(3) Sales (1) Adjusted EPS Organic $331 $348 $347 $360 $345 $363 $363 $390 Adjusted $0.36 $0.58 $0.83 $0.79 $0.44 $0.76 $0.87 $0.98 EPS(4) $15 $11 $16 $15 $10 $9 $11 $12 $119 $0.02 $100 $107 $109 $108 $109 $105 $98 $0.05 $0
Slide 26: YOY Sales Improvement Continues in 4Q17
YOY Sales Improvement Continues in 4Q17 Advanced Surgical, Orthopedics & Portable Medical (1) 0% Integer 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 16 16 16 16 17 17 17 17 7.6% Quarterly YOY % Organic Change 5.0% 6.9% Quarterly YOY % Change – as Reported Cardio & Vascular 4.5% 4.4% 4.8% 0.6% 2.8% 2.6% 0.3% 0% (0.0%) 0
Slide 27: Working Capital
Working Capital ($ in millions) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Inventory $267 $276 $262 $225 $231 $236 $247 $228 (1) Inventory Turns 3.7 3.7 3.7 4.4 4.5 4.5 4.4 4.8 Capital Expenditures $19 $12 $17 $11 $12 $10 $12 $13 Working Capital ($ in millions) $325 $332 $325 $328 $323 $323 $318 $317 1
Slide 28: Impact of U.S. Tax Reform Act
Impact of U.S. Tax Reform Act • Full impact of changes to U.S. Tax Policy still under evaluation • 2017 adjusted effective tax rate of 20.0% excludes an approximately $40 million net positive impact due to: • $57 million benefit resulting from re-measured deferred tax liabilities • $15 million of on
Slide 29: Other Operating Expenses – Historical
Other Operating Expenses – Historical ($ in millions) YTD Three Months Ended YTD FY16 1Q17 2Q17 3Q17 4Q17 FY17 2014 Investments in $17.2 $1.6 $1.3 $1.5 $2.3 $6.7 Capacity and Capabilities Legacy Lake Region Medical $8.6 $0.7 $1.5 $1.5 $2.1 $5.7 Consolidation and Optimization Acquisition and Integrat
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD ($ in thousands, except per share amounts) Three Months Ended December 29, 2017 December 30, 2016 Per Per Net Diluted Net Diluted Pre-Tax Income Share Pre-Tax Income Share As reported (GAAP) $ 9,916 $ 54,338 $ 1.68 $ 4,543 $ 7,9
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q17 QTD Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) THREE MONTHS ENDED GAAP Non-GAAP Adj. (a) Non-GAAP Debt / Litigation Strategic Investment Related Consolidation & Acquisition & Reorganization Tax Related Income Stat
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – YTD ($ in thousands, except per share amounts) Year Ended December 29, 2017 December 30, 2016 Per Per Net Diluted Net Diluted Pre-Tax Income Share Pre-Tax Income Share As reported (GAAP) $ 21,827 $ 66,679 $ 2.09 $ 1,185 $ 5,961 $ 0.
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY17 Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) TWELVE MONTHS ENDED GAAP Non-GAAP Adj. Non-GAAP Debt / Litigation Strategic Investment Related Consolidation & Acquisition & Reorganization Tax Related Income Statement F
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Footnotes to “Net Income and Diluted EPS Reconciliations” (a) The difference between pre-tax and net income 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 in Mex
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations EBITDA and Adjusted EBITDA Reconciliation ($ in thousands) Three Months Ended Year Ended December 29, December 30, December 29, December 30, 2017 2016 2017 2016 Net Income (GAAP) $ 54,338 $ 7,933 $ 66,679 $ 5,961 Interest expense 25,435 27,875 106,460 111,270 Benefit for inc
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Organic Sales Growth Rate Reconciliation (% Change) Impact of GAAP Nuvectra Impact of Non-GAAP Reported prior to Foreign Organic Growth Spin-off(a) Currency(b) Growth QTD Change (4Q 2017 vs. 4Q 2016) Medical Sales Cardio & Vascular 11.9% — (0.8)% 11.1% Cardiac & Neuromodulat
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Organic Growth Rate Reconciliation (% Change) GAAP Impact of Impact of Non-GAAP Reported Non-GAAP Foreign Organic Growth Adjustment(a) Currency(b) Growth QTD Change (4Q 2017 vs. 4Q 2016) EBITDA 9.9% 1.3% 6.1% 17.3% Net Income NM 14.8% 13.5% 28.3% NM Diluted EPS 10.3
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2018 Full-Year Outlook ($ in millions, except per share amounts) 2018 Outlook GAAP Non-GAAP As Reported Growth Adjusted Growth Revenue $1,490 - $1,530 2% - 5% $1,490 - $1,530 2% - 5% Net Income $50 - $60 (25)% - (10)% $102 - $112 13% - 24% EBITDA N/A N/A $305 - $315 7% - 10%
Slide 39: Contact Information
Contact Information Amy Wakeham VP, Investor Relations Integer ir@integer.net (O) 214.618.4978 (M) 214.430.7208 www.integer.net