Slide 1: 3Q18 Earnings Conference Call
3Q18 Earnings Conference Call November 1, 2018 ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / 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 • 2018 Outlook • Question & Answer Period ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 3
Slide 4: Opening Comments
Opening Comments ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 4
Slide 5: Strong Financial Results…Executing Strategy…Building Team
Strong Financial Results…Executing Strategy…Building Team Financial Results Integer delivered • 3Q results support improved guidance - Revenue guidance increased to 6% - 7% growth another strong quarter - EPS guidance increased primarily due to lower taxes and interest expense of sales and profit •
Slide 6: Financial Results
Financial Results
Slide 7: 3Q18 Adjusted Financial Results
3Q18 Adjusted Financial Results(1) ($ in millions, except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted Net Income (2) (3) (3) 7% organic 9% organic 15% organic % Growth 7% reported 10% reported 18% reported $36 $68 FX adjusted $305 $31 Reported $63 FX adjusted FX Adjusted $285 FX Adjus
Slide 8: Year-over-Year Sales Improvement Continues
Year-over-Year Sales Improvement Continues(1) Trailing 4 Quarters Cardio & Vascular 12% 8% 4% 0% Integer 9% Cardiac & Neuromodulation 8% 6% 7% 2% 6% (2)% 4% (6)% Advanced Surgical, Orthopedic & Portable Medical 15% 10% 0% 5% 3Q17 4Q17 1Q18 2Q18 3Q18 0% Non-Medical (Electrochem) 40% 20% 0% (1) Exclud
Slide 9: Adjusted EBITDA & Adjusted Net Income
Adjusted EBITDA & Adjusted Net Income ($ in millions except per share amounts) Adjusted EBITDA Adjusted Net Income $9 $1 $35 $1 $67 $(4) $(1) $29 $60 FX Tax Rate • $10 from Operations • $1 FX Incentive Operational • $(4) Incentive Compensation Improvement Compensation 3Q17 3Q18 3Q17 Operational Ince
Slide 10: Continued Deleveraging
Continued Deleveraging Cash Flow From Ops Free Cash Flow (1) ($ in millions) $54 ($ in millions) $40 $36 $46 $38 • Reduced leverage ratio to $27 3.7 times adjusted EBITDA $34 $21 $21 • $548M from divestiture $13 proceeds • $40M in additional accelerated pay down 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q
Slide 11: Product Line Review
Product Line Review
Slide 12: Cardio & Vascular
Cardio & Vascular Offering a full-range of services for the design, development, and manufacturing of diagnostic and interventional cardiac and endovascular delivery and retrieval devices, along with comprehensive supply-chain solutions Organic Quarterly Y-o-Y Growth 13% 11% 10% 9% 7% % Change Steer
Slide 13: Cardiac & Neuromodulation
Cardiac & Neuromodulation Providing technology solutions for the active implantable medical device industry by partnering with customers to bring high-quality products to established and emerging markets – from initial concept through high-volume manufacturing Organic Quarterly Y-o-Y Growth 9% 8% 5%
Slide 14: Advanced Surgical, Orthopedics & Portable Medical
Advanced Surgical, Orthopedics & Portable Medical Supporting our divested AS&O business and providing technologies and solutions to Portable Medical markets Organic Quarterly Y-o-Y Growth 25% 21% Orthopedic Implants & Electrosurgical Li-Ion Battery Core Battery % Change Instruments Accessories Packs
Slide 15: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Organic Quarterly Y-o-Y Growth 71% 30% % Change Battery Cells Battery Packs Battery Chargers 12% (5)% 0% (18)% 3Q17 4Q17 1Q18 2Q18 3Q18 • 3Q18 s
Slide 16: 2018 Revised Outlook
2018 Revised Outlook
Slide 17: 2018 Outlook
2018 Outlook ($ in millions except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted EPS Growth % 6% - 7% 9% - 13% 15% - 20% $1,195 - $1,210 $255 - $265 $3.55 - $3.70 $1,131 $234 $3.09 2017 2018 2017 2018 2017 2018 Outlook Outlook Outlook Prior Outlook $1,175 - $1,200 $255 - $265 $3.35 - $3
Slide 18: Increased Cash Flow Outlook
Increased Cash Flow Outlook Cash Flow From Ops Free Cash Flow(1) Debt Payments Leverage(2) ($ in millions) ($ in millions) ($ in millions) ~$695 ~$165 $149 ~$120 $120 6.1x 5.6x $103 $106 $145 ~ 3.6x $129 $145+ $47 $98 $44 $15 $29 $31 $30 FY16 FY17 FY18 FY16 FY17 FY18 2016 (3) 2017 2018 YE16 YE17 YE1
Slide 19: Focused Strategy to Drive Long-term Growth
Focused Strategy to Drive Long-term Growth Portfolio Strategy Operational Strategy: How we win Strategic Imperatives in the markets we serve How we achieve excellence in everything we do Invest to Grow Cardio & Vascular Neuromodulation Electrochem Protect & Preserve Cardiac Rhythm Management Improve
Slide 20: Summary
Summary Vision Financial Results Enhance patient’s lives by being our • 3Q results support slightly improved guidance customers partner of choice • Continued Deleveraging Strategic Imperatives - Sales Force Excellence Strategy - Market Focused Innovation • Launched execution of multi-year Operationa
Slide 21: Appendix
APPENDIX ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 21
Slide 22: Historical Financial Results
Historical Financial Results ($ in millions except per share amounts) (1) (2) Adjusted Sales Adjusted EPS $313 $305 Organic $301 $285 $292 Adjusted $280 EPS(3) $265 $0.58 $0.91 $0.98 $0.89 $0.66 $1.01 $1.10 Impact of foreign currency reported in other gain or loss, net Adjusted EPS, as reported (1)
Slide 23: 2018 Full-Year Outlook
2018 Full-Year Outlook ($ in millions except per share amounts) 2018 Outlook Prior Guidance Growth Updated Guidance Growth (Non-GAAP) (Non-GAAP) Adjusted Revenue $1,175 - $1,200 4% to 6% $1,195 - $1,210 6% to 7% Adjusted Net Income $110 - $120 11% to 21% $117 - $122 18% to 23% Adjusted EBITDA $255 -
Slide 24: 2018 Full-Year Outlook – Supplemental Items Affecting Cash Flow
2018 Full-Year Outlook – Supplemental Items Affecting Cash Flow ($ in millions, except per share amounts) ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 24
Slide 25: 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 26 of this presentation ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 25
Slide 26: Footnotes to Non-GAAP Reconciliation
Footnotes to Non-GAAP Reconciliation ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 26
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q18 Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 27
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA and Adjusted EBITDA Reconciliation ($ in thousands) ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 28
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Organic Sales Growth Rate Reconciliation (% Change) a) Represents adjustment to third quarter and year-to-date 2017 sales to exclude the net impact of the LSA. b) Third quarter and year-to-date 2018 sales were positively impacted by $0.1 million (negative impact) and $2.3 mil
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP Organic Growth Rate Reconciliation (% Change) NM calculated change not meaningful (a) Represents the impact to our growth rate from our Non-GAAP adjustments. (b) Represents the impact to our growth rate due to changes in foreign currency exchange rates ITGR: 3Q18 Ear
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2018 Full-Year Outlook(a) ($ in millions, except per share amounts) ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 31
Slide 32: Capitalization
Capitalization ($ in millions) As Reported Original 6/30/18 9/28/18 9/28/18 Rate Rate Rate Cash and Cash Equivalents $23 $200m Revolver due 2020 -- L + 325 L + 325 L + 250 Term Loan A due 2021 314 L + 325 L + 325 L + 250 Term Loan B due 2022 658 L + 425 L + 325 L + 300 Total Secured Debt $972 Senior
Slide 33: 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: 3Q18 Earnings Conference Call / November 1, 2018 / Page 33