Integra Lifesciences Holdings Corporation · NASDAQ:IART
Integra Lifesciences — Q3 2017 Earnings Presentation
20 slides from Integra Lifesciences's earnings presentation, 2017
Slide 1: Integra Earnings Call Presentation Third Quarter 2017
Integra Earnings Call Presentation Third Quarter 2017 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements that are based on management’s current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described. All statements, o
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures In addition to our GAAP results, we provide organic revenues, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted net income, adjusted EPS, free cash flow and adjusted free cash flow conversion. Organic revenues consist of total re
Slide 4: Third Quarter Key Messages
Third Quarter Key Messages Third Quarter 2017 Revenue of $278.8M, up 11.4% vs. PY: INTEGRA NEW PRODUCT INTRODUCTIONS Specialty Surgical Solutions + Closed Codman acquisition on Oct. 2nd • Reiterating revenue guidance of ~$60-65M, net of divestitures + Tissue Ablation and Mayfield® up double digits •
Slide 5: Specialty Surgical Solutions Revenue
Specialty Surgical Solutions Revenue Third Quarter 2017 $164.8M; +3.4% Reported **All Commentary in Constant Currency** • SSS organic growth of 2.7% $ in millions As reported • Global Tissue Ablation delivered double digit growth Int’l: $49.3; • CUSA® Clarity off to a strong start +11.7% • Dural Rep
Slide 6: Orthopedics & Tissue Technologies Revenue
Orthopedics & Tissue Technologies Revenue Third Quarter 2017 **All Commentary in Constant Currency** $114.1M; +25.5% Reported • OTT organic sales declined 1%, largely affected by hurricane impact • Regenerative Technologies $ in millions Int’l: $15.8; ++ PriMatrix achieved double digit growth As rep
Slide 7: Components of Revised 2017 Revenue Guidance
Components of Revised 2017 Revenue Guidance Net $60-65M $69-74M ($9M) $1.165-1.175B IART Divestitures $1.125-1.140B ($15M) ($10M) 2017 Organic Growth: Hurricane ~4.0% Impact Organic Codman Net Revenue Revenue 2017 Reported Growth: 17.4% - 18.4% July Guidance 2017 Oct. Guidance Full-Year Guidance Inc
Slide 8: Third Quarter and YTD Results and 2017 Guidance
Third Quarter and YTD Results and 2017 Guidance Q3 YTD Q3 YTD July 2017 Oct 2017 % of revenue Q3 2017 Q3 2016 Delta Δ Delta Δ 2017 2016 Guidance Guidance Gross Margin 63.5% 64.3% (80BPS) 64.9% 64.2% +70BPS 65% - 66% ~63% Adj. Gross Margin* 68.7% 69.3% (60BPS) 69.1% 69.3% (20BPS) ~69% No Change R&D 5
Slide 9: Components of Revised 2017 Adjusted EPS Guidance
Components of Revised 2017 Adjusted EPS Guidance $2.00 $1.95 $1.88-$1.94 ($0.07) $1.90 ($0.05) $0.02 $1.83-$1.87 $1.85 $0.04 Hurricane Codman $1.80 Impact Acquisition Organic Operational $1.75 Sales Reduction Savings $1.70 $1.65 $1.60 $1.55 $1.50 July Guidance October 2017 EPS Guidance Lowering Adju
Slide 10: Preliminary Thoughts on Full Year 2018 Adjusted EPS
Preliminary Thoughts on Full Year 2018 Adjusted EPS $0.25 ($0.07) $2.25-$2.35 OTT Channel $0.22 $0.05 Investment Codman Accretion $1.83-$1.87 Add Back Hurricane 2018 EPS Impact Growth Estimate ~12% FY 2017 Preliminary Adj. EPS Guidance FY 2018 Adj. EPS 2018 Adjusted Earnings Per Share Growth of Appr
Slide 11: Cash Flow and Other Measures: Third Quarter and 2017 Guidance
Cash Flow and Other Measures: Third Quarter and 2017 Guidance Jul 2017 Oct 2017 ($ millions) Q3 2017 Q3 2016 Delta Δ Guidance Guidance Operating Cash Flow $45.2 $46.8 (2.4%) $115 - $145 No Change CapEx $7.8 $7.0 11.4% ~$50 - $55 No Change Free Cash Flow* $37.4 $39.8 (4.8%) $65 - $90 No Change FCF Co
Slide 12: Capital Structure: Current & Pro Forma
Capital Structure: Current & Pro Forma Sept. 30, 2017 Dec. 31, 2017 Pro Forma Cash and Equivalents $ 482 Cash and Equivalents $ 170 Revolver ($1,000) $ 671 Revolver ($1,000) $ 671 Term Loan $ 500 Term Loan $ 500 Total Debt $1,171 Additional Codman Debt $ 700 Total Debt $1,871 Net Debt $ 689 Net Debt
Slide 13: Key Focus Areas for 2017 and Beyond
Key Focus Areas for 2017 and Beyond Execute on our 2017 financial targets Focus on integration of Derma Sciences and Codman Neurosurgery Advanced Wound Care: Increase regenerative technology commercial investments and new product launches • Build upon advanced wound care strategy and channel expansi
Slide 14: Appendix & Non-GAAP Reconciliations
Appendix & Non-GAAP Reconciliations 14
Slide 15: Third Quarter and YTD 2017 Organic Growth Reconciliation
Third Quarter and YTD 2017 Organic Growth Reconciliation Q3 YTD Q3 YTD (In thousands) Q3 2017 Q3 2016 2017 2016 Specialty Surgical Solutions $164,760 $159,409 $480,907 $468,767 Orthopedics and Tissue Technologies $114,074 $90,923 $338,727 $267,664 Total Revenue $278,834 $250,332 $819,634 $736,411 Re
Slide 16: Adjusted EBITDA Margin Reconciliation
Third Quarter and YTD 2017 & 2016 Adjusted EBITDA Margin Reconciliation Q3 YTD Q3 YTD (In thousands) Q3 2017 Q3 2016 2017 2016 GAAP net income $3,159 $20,144 $20,388 $46,316 Depreciation and intangible asset amortization expense 24,259 18,086 65,571 54,353 Other (income) expense, net 735 (1,192) 1,4
Slide 17: Adjusted EPS Reconciliation
Third Quarter and YTD 2017 and 2016 Adjusted EPS Reconciliation Q3 YTD Q3 YTD (In thousands) Q3 2017 Q3 2016 2017 2016 GAAP net income $3,159 $20,144 $20,388 $46,316 Global ERP implementation charges - 3,366 3,261 12,386 Structural optimization charges 1,944 1,993 5,336 5,540 Certain employee severa
Slide 18: Free Cash Flow Conversion Reconciliation
Third Quarter and YTD 2017 and 2016 (TTM) Free Cash Flow Conversion Reconciliation (In thousands) Q3 2017 Q3 2016 TTM 2017 TTM 2016 GAAP Net cash provided by operating activities $45,240 $46,766 $152,303 $135,515 Purchases of Property and Equipment (7,796) (6,974) (50,998) (39,235) Free Cash Flow $3
Slide 19: Gross Margin Reconciliation
Third Quarter and YTD 2017 Gross Margin Reconciliation Q3 YTD Q3 YTD (In thousands) Q3 2017 Q3 2016 2017 2016 Reported Gross Profit $177,077 $161,003 $532,294 $472,744 Structural optimization charges 1,309 1,133 3,181 3,126 Certain employee severance charges - (41) - 487 Acquisition-related charges
Slide 20: Adjusted SG&A Reconciliation
Third Quarter and YTD 2017 Adjusted SG&A Reconciliation Q3 YTD Q3 YTD (In thousands) Q3 2017 Q3 2016 2017 2016 Reported SG&A $145,945 $112,317 $433,457 $343,510 Global ERP implementation charges - 3,366 3,261 12,386 Structural optimization charges 635 860 2,155 2,414 Certain employee severance charg
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