Integer Holdings Corporation · NYSE:ITGR
Integer — Greatbatch — JP Morgan Healthcare Conference 2015
31 slides from Integer's conference presentation, Jan 15, 2015
Slide 1: JP Morgan Conference
JP Morgan Conference January 15, 2015
Slide 2: Forward-Looking Statement
Forward-Looking Statement Some of the statements made in the 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 Securities Exchange Act of 1934, as amended, and involve a number of r
Slide 3: Greatbatch Team
Greatbatch Team Thomas J. Hook President & CEO Michael Dinkins Executive Vice President & CFO Betsy Cowell Vice President Finance & Treasurer 3
Slide 4: Agenda
Agenda Value Proposition Strategic Initiatives Financials 4
Slide 5: Our Value Proposition
Our Value Proposition Organic Growth Combination of intellectual property, world-class operations and sales expertise leading to long-term agreements with blue chip customers Successfully leverage our Cardiac technology to the Neuromodulation market with complete systems and components Over 40
Slide 6: Strategic Initiatives
Strategic Initiatives $83 Greatbatch
Slide 7: Our Strategic Initiatives
Our Strategic Initiatives Organic Growth Positioned as a leading developer and manufacturer in Neuromodulation 7
Slide 8: A Leading Developer and Manufacturer in Neuromodulation
A Leading Developer and Manufacturer in Neuromodulation Early stage innovation Medical device components Medical device systems Equity investments Leads Platform system reduces Research Batteries time and risk to market Prototyping Feed throughs Other Neuromodulation indications Co
Slide 9: Neuromodulation Platform for Today and Tomorrow
Neuromodulation Platform for Today and Tomorrow $2.9B Market 6%-8% Growth Established Emerging Deep Brain Stimulation: - $490M: Deep Brain Stimulation: Obesity, Stroke Recovery, Depression, Alzheimer's Parkinson’s Disease, Dystonia, Essential Tremor, Epilepsy, Obsessive Compulsive Disorder Carotid A
Slide 10: Our Strategic Initiatives
Our Strategic Initiatives Organic Growth Positioned as a leading developer and manufacturer in Neuromodulation Sustainable and growing patent portfolio 10
Slide 11: Sustainable and Growing Patent Portfolio
Sustainable and Growing Patent Portfolio 1800 Med Device Patents 1600 1,443 Patents Issued 197 Pending 267 1400 1200 465 (255 US) 1000 Patents Pending 800 545 Patents 600 400 200 116 Patents 0 US OUS Worldwide 11
Slide 12: Our Strategic Initiatives
Our Strategic Initiatives Organic Growth Positioned as a leading developer and manufacturer in Neuromodulation Sustainable and growing patent portfolio Execute opportunities in our core markets 12
Slide 13: Organic Growth
Organic Growth We participate in large and growing markets We compete through technology, speed to market, quality, and service ~ 70% of our core product lines are secured by long term agreements Strong pipeline of new products impacting 2016 and beyond 13
Slide 14: Cardiac/Neuromodulation - $1.5B Opportunity
Cardiac/Neuromodulation - $1.5B Opportunity Market Revenue and Future Opportunities Amounts in millions 2012 A 2013 A 2014 E Revenue $307 $325 $322 Growth 1% 6% -1% Battery Cardiac procedural market growing 1% - 2% Feedthrough Neuromodulation market growing 6% - 8% Cochlear market growing 10%
Slide 15: Orthopaedics - $3B Opportunity
Orthopaedics - $3B Opportunity Market Revenue and Future Opportunities Amounts in millions 2012 A 2013 A 2014 E Revenue $107* $130 $147 Growth** -13% 20% 13% Implant Outsourced manufacturing spend growing 7% - 8% Strong unit growth partially offset by end market pricing pressures Reamer Greatbat
Slide 16: Vascular - $1.1B Opportunity
Vascular - $1.1B Opportunity Market Revenue and Future Opportunities Amounts in millions Amounts in millions 2012 A 2013 A 2014 E Revenue $52 $48 $59 Growth 15% -7% 21% Peripheral vascular growing 6-8% Steerable Sheath Interventional growing 4% Electrophysiology & Neurovascular growing 10% I
Slide 17: Portable Medical - $1B Opportunity
Portable Medical - $1B Opportunity Market Revenue and Future Opportunities Amounts in millions 2012 A 2013 A 2014 E Revenue $82 $79 $69 Growth NA -4% -12% Integrated Power O2 concentrators 7% LVAD 12% Supplies Surgical tools 5% Ultrasound 8% Ventilators 4% Defibrillators 9% Patient monitors 4% Great
Slide 18: Our Strategic Initiatives
Our Strategic Initiatives Organic Growth Positioned as a leading developer and manufacturer in Neuromodulation Sustainable and growing patent portfolio Execute opportunities in our core markets Margin Expansion Sustain excellence in customer service across manufacturing and shared services o
Slide 19: Margin and ROIC Expansion
Margin and ROIC Expansion Culture of continuously identifying programs and processes to deliver competitive cost positions Unparalleled product quality Experienced technology organization with deep and broad knowledge of power solutions Excellence in customer service 2011 2012 2013 2014E Adj
Slide 20: Our Strategic Initiatives
Our Strategic Initiatives Organic Growth Positioned as a leading developer and manufacturer in Neuromodulation Sustainable and growing patent portfolio Execute opportunities in our core markets Margin Expansion Sustain excellence in customer service across manufacturing and shared services o
Slide 21: Targeted Acquisitions
Targeted Acquisitions Objective: Identify and close targeted acquisitions to enhance top line and bottom line growth trajectory and expand pipeline technologies $60M Cash $300 M Unused Borrowing Capacity $200 M Available Criteria: Accordion Drive expansion in core markets $500 M Line of Credit E
Slide 22: Financials
22 Financials $83 Greatbatch
Slide 23: 2014 Year in Review
2014 Year in Review Accomplishments: Greatbatch capabilities foster deeper customer relationships Double digit organic growth in Orthopaedics and Vascular product lines Operating margin expected to increase approximately 50-60 bps Improving ROIC 134 new patents issued and 105 patent applic
Slide 24: Financial Guidance
Financial Guidance Assumptions Expect FDA approval of Algovita first half We continue to evaluate commercialization options and therefore our guidance does not reflect the commercialization of Algovita Organic Growth Cardiac and Neuro guidance reflects the expectation that our customers will h
Slide 25: 2015 Guidance
2015 Guidance (In millions, except for EPS amounts) 2014E(1) 2015 Guidance Change Sales ~$688 $715 – $730 4 – 6% Adjusted: Operating Margin >13% 13.7% - 14.0% 30 – 50 bps ~2X Sales Diluted EPS(2) ~$2.38 $2.55 – $2.70 Growth Operating Cash Flows(2) TBD TBD TBD% Capex ~$25 $35 – $45 40 – 80% ROIC % TB
Slide 26: Valuation: Our Strategic Initiatives and Execution are Delivering Shareholder Value
VALUATION: Our Strategic Initiatives and Execution are Delivering Shareholder Value Strategic Initiatives Organic Growth Margin Expansion Targeted Acquisitions Market Cap* 2014E 2015E 2014E 2015E 2014E 2015E ($MM) P/E** P/E EV/EBITDA** EV/EBITDA EV/Sales** EV/Sales $1.23B 25.6 20.9 11.1 10.5 2
Slide 27: Appendix
27 Appendix $83 Greatbatch
Slide 28: 2015 Guidance EPS Reconciliation
2015 Guidance EPS Reconciliation 2015 2014E(1) Guidance GAAP Diluted EPS ~$2.07 $1.95 - $2.10 Adjustments: Other Operating Expense(2) ~$0.42 $0.54 R&D Tax Credits and Other Items(2) ~($0.11) $0.06(3) Adjusted Diluted EPS ~$2.38 $2.55 - $2.70 1) Estimated and subject to change 2) Refer to the company
Slide 29: Greatbatch Today
Greatbatch Today USA Uruguay Europe Mexico NYSE: GB $700 Million Diversified Revenue Base Over 3,800 Associates 1,500 Patents and Patents Pending Office and Manufacturing locations 29
Slide 30: Greatbatch Today
Greatbatch Today REVENUE GROWTH & DIVERSIFICATION* $687 -$689 (Dollars in millions) % of Sales Portable Medical 10% Energy, Environmental & Military 12% Orthopaedics 21% Vascular 9% $200 % of Sales Energy, Environmental Cardiac and & Military 14% Neuromodulation 48% Cardiac and Neuromodulation 86% 2
Slide 31: 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 31