Slide 1: 3Q16 Earnings Conference Call
3Q16 Earnings Conference Call October 27, 2016
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 Thomas J. Hook Michael Dinkins • Strategic / Growth Initiatives President & CEO Executive Vice President & Chief Financial Officer • Closing Comments • Question & Answer Period Integer Confidential / October 27, 2016 / Page 3
Slide 4: Opening Comments
Opening Comments Integer Confidential / October 27, 2016 / Page 4
Slide 5: Quarterly Results Reflect Progress, More Work to Do
Quarterly Results Reflect Progress, More Work to Do • Leveraging customer relationships “We have • Improved line of sight into customer programs, demand established improved plans and growth objectives. line of sight into our • Operationally, making progress customers’ programs, • Cost reduction ini
Slide 6: Financial Results
Financial Results Integer Confidential / October 27, 2016 / Page 6
Slide 7: 3Q16 Key Financial Results
3Q16 Key Financial Results(1) ($ in millions, except per share amounts) 3Q15 2Q16 3Q16 • Revenue stabilizing YoY and QoQ Sales $ 348 $ 348 $ 347 • Cost reduction initiatives coupled Gross Margin 28.2% 27.6% 28.3% with accelerated integration Operating Expenses $ 74 $ 67 $ 61 synergies are producing
Slide 8: Sales Stabilizing Across Multiple Product Lines
Sales Stabilizing Across Multiple Product Lines Quarterly Sales(1) 3Q16 Sales YoY QoQ YTD ($ in millions) Total Sales(2) $358 $377 $348 $360 $331 $348 $347 (0.5%) (0.5%) (5.3%) $17 Electrochem $18 $12 $13 $10 (26%) (10%) (34%) $9 $12 Adv. Surgical, Ortho & $109 $106 $99 $105 $104 $95 (4%) (9%) (7%)
Slide 9: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA(1) ($ in millions) • Focused on improving business performance to generate cash $79 $75 $69 • Ongoing pricing pressure reinforces $65 focus on quality to drive volume increases and efficiency • Improve customer satisfaction • Reduce costs and expand share of wallet wi
Slide 10: Generating Cash to Accelerate Debt Repayment
Generating Cash to Accelerate Debt Repayment Cash Flows $38 ($ in millions) $30 • Generating significant cash flow to meet current debt obligations and Cash from $21 Operations accelerate debt repayments Free Cash $11 • Focused on reducing total leverage as Flow(1) quickly as possible $4 • Paid down
Slide 11: Effectively Managing Working Capital
Effectively Managing Working Capital ($ in millions) 1Q16 2Q16 3Q16 • Maintaining focus on increased cash flows through working capital Inventory $252 $276 $262 management and improved Inventory Turns 4 4 4 operational execution Capital Expenditures $19 $12 $17 • Targeting continued reduction in inv
Slide 12: FY 2016 Outlook
FY 2016 Outlook ($ in millions, except per share amounts) 1Q16 2Q16 3Q16 FY16 Actual Actual Actual Outlook Revenue $331 $348 $347 $1,375 - $1,395 Adjusted: EBITDA $65 $69 $75 $285 - $295 Net Income $13 $18 $26 $82 - $86 Diluted EPS $0.42 $0.56 $0.83 $2.60 - $2.75 Net Synergies $5 $8 $10 $30 - $35 •
Slide 13: Product Line Review
Product Line Review Integer Confidential / October 27, 2016 / Page 13
Slide 14: Advanced Surgical, Orthopedics & Portable Medical
Advanced Surgical, Orthopedics & Portable Medical Providing a wide range of technologies and solutions to the Advanced Surgical and Orthopedic markets Implants Delivery Systems Reamers Laparoscopic Devices Arthroscopy Products Revenue remains a solid contributor to total Company results Signific
Slide 15: Cardio & Vascular
Cardio & Vascular Offering a full-range of products and services for catheter-based interventional vascular devices and a suite of supply chain solutions to support the development and manufacturing of complex components, sub-assemblies and finished devices Steerable Sheaths Catheters & Sheaths Guid
Slide 16: Cardiac / Neuromodulation
Cardiac / Neuromodulation Providing technology solutions for the active implantable medical device industry by partnering with customers to bring quality products to established and emerging markets - from initial concept through to high volume manufacturing Batteries Feedthroughs Enclosures Coated
Slide 17: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Revenues continue to trend with Oil & Gas market - Believe market has bottomed, signs of a slow recovery Battery Cells Military and Environm
Slide 18: Strategic / Growth Initiatives
Strategic / Growth Initiatives Integer Confidential / October 27, 2016 / Page 18
Slide 19: Key Strategic Focus Areas
Key Strategic Focus Areas • Invest to drive growth across full spectrum of product and “Our vision is to systems capabilities enhance the lives of • Focused on improving and enhancing customer patients worldwide relationships by being our • Development programs underway across all product customers’
Slide 20: Closing Comments
Closing Comments Integer Confidential / October 27, 2016 / Page 20
Slide 21: Well-Positioned for Future Growth
Well-Positioned for Future Growth Innovation Business Operating & Broad Product Strong Customer Pipeline to Enable Optimization Manufacturing Continuum Relationships Customer Driving Strong Scalability Success Cash Generation Integer Confidential / October 27, 2016 / Page 21
Slide 22: Question & Answer Period
Question & Answer Period Integer Confidential / October 27, 2016 / Page 22
Slide 23: Appendix
APPENDIX Integer Confidential / October 27, 2016 / Page 23
Slide 24: Debt – Financial Covenant Calculations
Debt – Financial Covenant Calculations Financial Covenant Calculations(1)(2) Leverage Ratio (< 6.5 @ 3Q16) Leverage Ratio = Net Debt / R12 Bank EBITDA Interest Coverage Ratio (> 3.00 @ 3Q16) Interest Coverage Ratio = R12 Bank EBITDA / R12 Cash Interest Expense (3) Net Debt Net DEBT = Total Debt - Ca
Slide 25: Other Operating Expenses
Other Operating Expenses Three Months Ended Nine Months Ended 10/2/15 7/1/16 9/30/16 10/2/15 9/30/16 NOTES: Portable Medical and 2014 Investments in $5.1 $5.1 $4.5 $17.9 $13.8 Vascular product line Capacity and Capabilities transfers Orthopedic Facilities Optimization $0.4 $0.2 $0.3 $1.3 $0.6 Legacy
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD ($ in thousands except per share amounts) Three Months Ended September 30, 2016 October 2, 2015 Per Per Net Diluted Net Diluted Pre-Tax Income Share Pre-Tax Income Share Income and diluted EPS as reported (GAAP) $ 8,717 $ 11,458
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – YTD ($ in thousands except per share amounts) Nine Months Ended September 30, 2016 October 2, 2015 Per Per Net Diluted Net Diluted Pre-Tax Income Share Pre-Tax Income Share Income (loss) and diluted EPS as reported (GAAP) $ (3,358)
Slide 28: Footnotes to Net Income and Diluted EPS Reconciliation
Non-GAAP Reconciliations Footnotes to “Net Income and Diluted EPS Reconciliation” (a) The difference between pre-tax and net income amounts is the estimated tax impact related to the respective adjustment. Net income amounts are computed using a 35% U.S., Mexico, Germany, and France statutory tax ra
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA Reconciliation ($ in thousands) Three Months Ended Nine Months Ended September October September October 30, 2016 2, 2015 30, 2016 2, 2015 Net income (loss) as reported (GAAP) $ 11,458 $ 22 $ (1,972) $ 17,313 Interest expense 27,870 5,825 83,395 8,151 Provisi
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2016 Full-Year Outlook ($ in millions, except per share amounts) GAAP Adjusted Comparable Basis High Low High Low Revenue $1,396 $1,376 $1,395 $1,375 Net Income $13 $9 $86 $82 Earnings per Diluted Share $0.42 $0.27 $2.75 $2.60 EBITDA n/a n/a $295 $285 Except as described bel
Slide 31: Contact Information
Contact Information Amy Wakeham VP, Investor Relations Integer ir@greatbatch.com (O) 214.618.4978 (M) 214.430.7208 www.integer.net Integer Confidential / October 27, 2016 / Page 31