Slide 1: Total Year 2013 Earnings Call
Total Year 2013 Earnings Call February 25, 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 – 2013 Highlights Michael Dinkins – 2013 Financial Results – 2014 Guidance Question & Answer 4
Slide 5: Selected 2013 Highlights
SELECTED 2013 HIGHLIGHTS ($ in millions except for EPS) 2013 2012 Actual Actual Variance Sales (organic constant currency growth 5%) $663.9 $646.2 3% Adjusted Operating Income* $82.9 $73.9 12% Adjusted Operating Margin* 12.5% 11.4% 110 bps Adjusted EBITDA* $118.9 $112.3 6% Adjusted EBITDA Margin* 17
Slide 6: 2013 Highlights
2013 Algostim progressing as expected PMA, CE Mark filed PMA, Quality Check, ISO audits, and Design Dossier in process Progress on core R&D projects and medical technologies 55 new patents issued and 108 patent applications filed Medical device patent portfolio now represents 36% of total po
Slide 7: 2013 Organic Growth
2013 ORGANIC GROWTH ($ in thousands) 2013 2012 % Product Line Year Year Chg. Greatbatch Medical Cardiac/Neuromodulation $ 325,412 $ 306,669 6 % Orthopaedic 130,247 122,061 7 % Portable Medical 78,743 81,659 (4 ) % Vascular 48,357 51,980 (7 ) % Energy 52,488 54,066 (3 ) % Other 25,655 27,287 (6 ) % T
Slide 8: Total Year Performance: Cardiac/Neuromodulation
TOTAL YEAR PERFORMANCE Cardiac/Neuromodulation: (49% total revenues; 6% organic growth) Outperformed the market through Sales force execution Leveraging IP and manufacturing excellence to expand IPG business Greatbatch – CRMN Sales CRMN Customers ($ in millions) Rolling 4 Quarters Sales - Rollin
Slide 9: Total Year Performance: Orthopaedics
TOTAL YEAR PERFORMANCE Orthopaedics: (20% of total revenues; 20% organic growth) Expanded and better managed sales force New wins in MIS hip arthroplasty Enhanced ability to expand customer base in cases and trays Greatbatch – Orthopaedics Sales Rolling 4 Quarters ($ in millions) $40 $30 $20 $
Slide 10: Total Year Performance: Other Product Lines
TOTAL YEAR PERFORMANCE Portable Medical: (12% total revenues; -4% organic growth) Driving improved product line profitability/ROIC … Loss of low margin book of business impacting organic growth currently and into 2014 Vascular: (7% total revenues; -7% organic growth) Voluntary 2012 product recal
Slide 11: Financial Results
FINANCIAL RESULTS 282 Greatbatch
Slide 12: 2013 Financial Results
2013 FINANCIAL RESULTS ($ in thousands except for EPS) Year Ended January 3, December % 2014 2012 Change Sales $ 663,945 $ 646,177 3% Organic Constant Currency Sales 5% 0% Growth GAAP Operating Income $ 61,339 $ 25,821 138% GAAP Operating Income as % of Sales 9.2% 4.0% Adjusted Operating Income* $ 8
Slide 13: 2013 Variance Analysis
2013 VARIANCE ANALYSIS Adj. EPS Comments 2012 Adjusted EPS $ 1.77 Productivity 0.55 Volume/efficiencies $0.48 and Swiss orthopaedic consolidations $0.07 Performance based compensation (0.20) Lower spend on medical device initiatives (QiG) SG&A/RD&E (0.10) $0.06; offset by planned investment in sales
Slide 14: Operating Cash Flow
OPERATING CASH FLOW ($ in millions) Net income $ 36.3 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation & Amortization 36.0 Debt related amortization included in Interest Expense 6.4 Stock Based Compensation/Discount Amort 15.1 Change in Deferre
Slide 15: 2014
2014 282 Greatbatch
Slide 16: The Plan: Stay the Course of Executing Our Strategy
THE PLAN: STAY THE COURSE OF EXECUTING OUR STRATEGY Sales and marketing team expansion to leverage IP to drive sustainable organic top line growth Operational excellence to drive cost reductions and margin expansion Commercialization and continued development of full medical device systems I
Slide 17: 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 $85.5 $90 - $100 5 - 17% Capex $18.6 $25 – $35 34 - 88% ROI
Slide 18: Appendix
APPENDIX 18 288 Greatbatch
Slide 19: Selected 4Q 2013 Highlights
SELECTED 4Q 2013 HIGHLIGHTS ($ in millions except for EPS) Q4 2013 Q4 2012 Actual Actual Variance Sales (organic constant currency growth 13%) $176.6 $159.2 11% Adjusted Operating Income* $19.4 $21.1 (8)% Adjusted Operating Margin* 11.0% 13.3% (230) bps Adjusted EBITDA* $28.7 $30.5 (6)% Adjusted EBI
Slide 20: Q4 2013 Organic Growth
Q4 2013 ORGANIC GROWTH ($ in thousands) 2013 2012 % Product Line 4th Qtr. 4th Qtr. Chg. Greatbatch Medical Cardiac/Neuromodulation $ 85,408 $ 72,930 17 % Orthopaedic 38,204 30,982 23 % Portable Medical 18,367 22,313 (18 )% Vascular 13,205 14,189 (7 )% Energy 13,463 13,042 3 % Other 7,086 4,942 43 %
Slide 21: Q4 Variance Analysis
2013 VARIANCE ANALYSIS Adj. EPS Comments Q4 2012 Adjusted EPS $ 0.53 Volume 0.14 Sales and marketing investments ($0.05), lower SG&A/RD&E (0.18) NRE ($0.06); medical device initiatives - QiG ($0.05); and other ($0.02) Interest expense $0.02, taxes $0.08; offset by Other 0.06 higher share count ($0.0
Slide 22: GAAP Reconciliation: Operating Income
GAAP RECONCILLIATION Table A: Operating Income Reconciliation Three Months Ended Greatbatch Medical QiG Unallocated Total Jan. 3, Dec. 28, Jan. 3, Dec. 28, Jan. 3, Dec. 28, Jan. 3, Dec. 28, (dollars in thousands) 2014 2012 2014 2012 2014 2012 2014 2012 Sales $ 175,733 $ 158,398 $ 886 $ 788 $ — $ — $
Slide 23: GAAP Reconciliation: Operating Income, Total Year
GAAP RECONCILLIATION Operating Income Reconciliation – Total Year Year Ended Greatbatch Medical QiG Unallocated Total Jan. 3, Dec. 28, Jan. 3, Dec. 28, Jan. 3, Dec. 28, Jan. 3, Dec. 28, (dollars in thousands) 2014 2012 2014 2012 2014 2012 2014 2012 Sales $ 660,902 $ 643,722 $ 3,043 $ 2,455 $ — $ — $
Slide 24: GAAP Reconciliation: Net Income and Diluted EPS
GAAP RECONCILLIATION Table B: Net Income (loss) and Diluted EPS Reconciliation Three Months Ended Year ended January 3, December 28, January 3, December 28, 2014 2012 2014 2012 Impact Impact Impact Impact Per Net Per Per Net Per Net Diluted Income Diluted Net Diluted Income Diluted (in thousands exc
Slide 25: GAAP Reconciliation: Adjusted EBITDA
GAAP RECONCILLIATION Adjusted EBITDA reconciliation Three Months Ended Year ended (dollars in thousands) January 3, December 28, January 3, December 28, 2014 2012 2014 2012 Sales $ 176,619 $ 159,186 $ 663,945 $ 646,177 Adjusted operating income* $ 19,407 $ 21,121 $ 82,922 $ 73,889 Add: Depreciation
Slide 26: 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 26