Slide 1: 2015 First Quarter Earnings Call
2015 First Quarter Earnings Call April 30, 2015
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 Executive Summary First Quarter 2015 Performance Michael Dinkins Balance Sheet Review 2015 Guidance Update Thomas J. Hook Neurostimulation Update Question & Answer 4
Slide 5: Executive Summary
Executive Summary We are confirming our guidance for the total year Our Neurostimulation strategy is showing success Algostim subsidiary proposed spin-off will enhance the strategic flexibility and focus of each business Orthopaedics continues sustainable double digit growth Portable Medic
Slide 6: Selected Q1 2015 Highlights
Selected Q1 2015 Highlights (Amounts in millions except for EPS) Q1 Q1 Variance Sales* $161.3 $174.3 -7% Adjusted:** Operating Income $17.2 $22.3 -23% EBITDA $26.4 $31.6 -16% ROIC (TTM) 7.7% 8.0% -30 BPS Operating Cash flow $7.3 $7.0 5% Diluted EPS $0.54 $0.54 0% Adj. EPS Comments 2014 Q1 Adjusted E
Slide 7: Q1 2015 Revenue
Q1 2015 Revenue Q1 2015 Q1 2014 % Organic Actual Actual Change CC Growth Greatbatch Medical CN $76,273 $86,780 -12% -12% Orthopaedics 38,971 36,431 7% 18% Portable Medical 13,667 19,203 -29% -29% Vascular 10,356 13,050 -21% -21% Energy & Other 17,710 18,131 -2% -2% Total Greatbatch Medical 156,977 1
Slide 8: Cardiac/Neuromodulation
Cardiac/Neuromodulation Q1 R4Q Revenue $75,569* $310,208 % of Total Revenue 47% 46% Growth -12% -9% Battery Q1 revenue up 11% on sequential quarter basis Feedthrough Batteries and shield assemblies continue to deliver strong growth Current quarter customer launches partially offset by Enclosur
Slide 9: Orthopaedics
Orthopaedics Q1 R4Q Revenue $38,971 $149,836 % of Total Revenue 24% 22% Growth 7% 9% Implant 18% organic constant currency growth Strong implant franchise…~6% YTD growth despite FX headwinds Double digit growth continues in instruments Winning with our bone cutting preparation technology and
Slide 10: Portable Medical
Portable Medical Q1 R4Q Revenue Amounts in millions $13,667 $63,507 % of Total Revenue 8% 9% Growth -29% -20% Integrated Power Executing the shift to higher value technologies Supplies Building pipeline with new technology in power solutions Leveraging our global footprint to improve overall c
Slide 11: Vascular
Vascular Amounts in millions Q1 R4Q Revenue Amounts in millions $10,356 $56,076 % of Total Revenue 6% 8% Growth -21% 10% Customer inventory management and timing of new product Steerable Sheath introductions Focus on high growth sectors ̶ Complex, steerable catheter shafts for Electrophysiology
Slide 12: EME
EME Q1 R4Q Revenue Amounts in millions $17,710 $81,336 % of Total Revenue 11% 12% Growth -2% 4% Demand stable… Customers focused on battery power/technology Battery Cells to enable more efficiency in exploration and production activities Winning with battery technology…wide range and high temper
Slide 13: Balance Sheet & ROIC
13 Balance Sheet & ROIC $83 Greatbatch
Slide 14: Balance Sheet Metrics
Balance Sheet Metrics ($ in millions except for EPS) Trailing 12 months Q1 2015 Q1 2014 Q1 2015 Q1 2014 Adjusted EBITDA $123.3 $122.4 Working Capital $249 $215 ROIC 7.7% 8.0% Operating Cash Flow $7.3 $7.0 Q1 2015 Q1 2014 FY2014 Days Sales Outstanding 62 61 66 Days Inventory Outstanding 115 92 103 Le
Slide 15: 2015 Guidance
15 2015 Guidance $83 Greatbatch
Slide 16: 2015 Guidance – Confirming Guidance
2015 Guidance – Confirming Guidance (In millions, except for EPS amounts) 2014 2015 Guidance Sales $687.8 $715 - $730 Adjusted Operating Margin 13.3% 13.7% - 14.0% Adjusted Diluted EPS $2.42 $2.61 - $2.71 Operating Cash Flows $81.3 $80 - $100 Capex $24.8 $40 - $50 ROIC 8.4% 9.0% 16
Slide 17: Neurostimulation Update
17 Neurostimulation Update $83 Greatbatch
Slide 18: Neurostimulation Market Overview
Neurostimulation Market Overview Total Neurostimulation Market Spinal Cord Deep Brain Vagus Nerve Sacral Nerve Stimulators Stimulators Stimulators Stimulators Market Segmentation: The Neurostimulation market is segmented by the type of nerve targeted: Spinal Cord Stimulators (SCS): Pain management
Slide 19: Neurostimulation Market Opportunity (US)
Neurostimulation Market Opportunity (US) 19
Slide 20: Positioned to Win Significant Neurostimulation Market Share
Positioned to Win Significant Neurostimulation Market Share 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 Neurostimulation indications
Slide 21: Considering the Spin-off of our Algostim Subsidiary
Considering the Spin-off of our Algostim Subsidiary Enhances the strategic flexibility and focus of each business – Better allocation of resources to meet the needs of the respective businesses – Ability to pursue distinct capital allocation strategies – Focused on different growth opportunities a
Slide 22: Appendix
22 Appendix $83 Greatbatch
Slide 23: Q1 2015 Financial Results
Q1 2015 Financial Results Three Months Ended April 3, April 4, % (Dollars in thousands, except per share data) 2015 2014 Change Sales $ 161,320 $ 174,281 (7)% Organic Constant Currency Sales Growth (7)% 17% GAAP Operating Income $ 9,389 $ 22,524 (58)% GAAP Operating Income as % of Sales 5.8 % 12.9%
Slide 24: Q1 2015 Operating Cash Flow
Q1 2015 Operating Cash Flow ($ in millions) Net income $8.0 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and Amortization 9.2 Debt related Amortization included on Int Expense 0.2 Stock Based Compensation/Discount Amortization 2.3 Other non
Slide 25: GAAP Reconciliation
GAAP Reconciliation Operating Income Reconciliation – 3 Months Three Months Ended Greatbatch Medical QiG Unallocated Total April 3, April 4, April 3, April 4, April 3, April 4, April 3, April 4, (dollars in thousands) 2015 2014 2015 2014 2015 2014 2015 2014 Sales $ 156,977 $ 173,595 $ 5,047 $ 686 $
Slide 26: GAAP Reconciliation
GAAP Reconciliation Net Income and Diluted EPS Reconciliation Three Months Ended April 3, April 4, 2015 2014 Per Per Net Diluted Net Diluted (in thousands except per share amounts) Income Share Income Share Net income as reported $ 8,008 $ 0.31 $ 14,922 $ 0.58 Adjustments: Consolidation and optimiza
Slide 27: GAAP Reconciliation
GAAP Reconciliation Adjusted EBITDA reconciliation Three Months Ended April 3, April 4, (dollars in thousands) 2015 2014 Sales $ 161,320 $ 174,281 Adjusted operating income* $ 17,244 $ 22,310 Add: Depreciation and amortization 9,178 9,252 Adjusted EBITDA $ 26,422 $ 31,562 Adjusted EBITDA as a % of s
Slide 28: 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 28