Slide 1: 2015 Third Quarter Earnings Call
2015 Third Quarter Earnings Call October 29, 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 Lake Region Medical Acquisition Nuvectra Update Third Quarter 2015 Performance Michael Dinkins Third Quarter Financial Review 2015 Guidance Question & Answer 4
Slide 5: Executive Summary
Executive Summary We are confirming our total year guidance The Lake Region Medical acquisition is closed Greatbatch intends to rename the combined company Integer Holdings Corporation – Strong and respective brands remain to serve our customers – Subject to shareholder approval The Nuvectra
Slide 6: Acquisition Update
Acquisition Update $83 Greatbatch
Slide 7: Lake Region Medical Update
Lake Region Medical Update Closed the acquisition October 27, 2015 Announced the business and executive organizational structure Lake Region Medical delivered double digit adjusted EBITDA growth in Q3 – On track to achieve 2015 revenue and adjusted EBITDA expectations – Healthy balance sheet a
Slide 8: Nuvectra Update
Nuvectra Update $83 Greatbatch
Slide 9: Nuvectra Update: We are on track with the spin-off
Nuvectra Update We are on track with the spin - off Still subject to final Board approval Clear shareholder benefits ̶ Dividend of Nuvectra shares to our Greatbatch shareholders ̶ Reduced operating expenses of up to $16M annually ̶ Long term manufacturing agreement with Nuvectra Our platform h
Slide 10: Third Quarter 2015 Performance
Third Quarter 2015 Performance 10
Slide 11: Selected Q3 2015 Highlights
Selected Q3 2015 Highlights Three Months Ended October 2, October 3, % 2015 2014 Change (Dollars in thousands, except per share data) Sales $ 146,637 $ 171,699 (15 )% Organic Constant Currency Sales Growth (13 )% 1% GAAP Diluted EPS $ — $ 0.54 (100 )% Adjusted Diluted EPS* $ 0.58 $ 0.75 (23 )% GAAP
Slide 12: Q3 2015 Revenue
Q3 2015 Revenue Three Months Ended October 2, October 3, 2015 2014 Change Greatbatch Medical Cardiac/Neuromodulation $ 72,961 $ 85,618 (15 )% Orthopaedic 27,752 32,489 (15 )% Portable Medical 17,224 17,199 — % Vascular 14,107 14,903 (5 )% Energy, Military, Environmental 11,977 19,016 (37 )% Total Gr
Slide 13: Cardiac/Neuromodulation
Cardiac/Neuromodulation Q3 YTD R4Q Revenue $72,801* $237,886* $306,902 % of Total Revenue 50%* 49%* 47% Growth -15%* -6%* -9% Battery Feedthrough Customers tightened inventory • Timing of product introductions and end of life (EOL) products Enclosure Continued strong Neuromodulation growth accel
Slide 14: Orthopaedics
Orthopaedics Q3 YTD R4Q Revenue $27,752 $102,204 $142,715 % of Total Revenue 19% 21% 22% Organic CC Growth -7% 7% 8% Implant Strong 2014 customer demand for cup impactors not repeated in 2015 Large last time buys for Gen 1 hip instruments as Gen2 development is completed Reamer Greatbatch Sustai
Slide 15: Portable Medical
Portable Medical Q3 YTD R4Q Revenue Amounts in millions $17,224 $48,591 $64,495 % of Total Revenue 12% 10% 10% Growth 0% -9% -10% Integrated Power Demand stabilizing Supplies Building pipeline with new power solutions technology leveraging key partnerships for future growth in business Product
Slide 16: Vascular
Vascular Q3 YTD R4Q Amounts in millions Revenue $14,107 $37,370 $52,930 Amounts in millions % of Total Revenue 10% 8% 8% Growth -5% -14% -6% Customers working off EOL product inventory making for tough prior year comparable Steerable Sheath On track with product transitions to Mexico Focus on
Slide 17: EME
EME Q3 YTD R4Q Revenue $11,977 $46,232 $69,490 Amounts in millions % of Total Revenue 8% 10% 11% Growth -37% -21% -12% Continued weakness in the global Energy market Battery Cells Greatbatch Sustainable Advantages Battery Packs Industry leading quality and reliability … 40+ years experience with
Slide 18: Third Quarter Financial Review
Third Quarter Financial Review 18
Slide 19: Financial Overview
Financial Overview Three Months Ended October 2, October 3, % (Dollars in thousands, except per share data) 2015 2014 Change Sales $ 146,637 $ 171,699 (15 )% Organic Constant Currency Sales Growth (13 )% 1% Gross profit $ 51,647 $ 58,118z (11 )% Gross margin % 35.2% 33.8% 137 Adjusted NI $ 13,130 $
Slide 20: Balance Sheet Metrics
Balance Sheet Metrics ($ in millions except for EPS) Trailing 12 months Q3 2015 2014 YTD Q3 2015 Q3 2014 Working Capital $248.9 $237.0 Adjusted EBITDA $133.1 $147.8 Operating Cash Flow $31.0 $54.7 ROIC 6.3% 8.4% CapEx $31.3 $16.0 Q3 2015 Q3 2014 FY2014 Days Sales Outstanding 60 65 66 Days Inventory
Slide 21: Lake Region Medical Financing
Lake Region Medical Financing Secured $1,760 million financing Term Loan A/Revolver Size $575M Pricing Libor + 325 bps Maturity 6 years (TLA) 5 years (Revolver) Term Loan B Size $1,025M Pricing Libor + 425 bps; 1% libor floor OID 99 Maturity 7 years Senior Unsecured Notes Size $360M Pricing 9.13% OI
Slide 22: 2015 Guidance
22 2015 Guidance $83 Greatbatch
Slide 23: 2015 Guidance – Reaffirming October Guidance
2015 Guidance – Reaffirming October Guidance (In millions, except for EPS amounts) 2014 2015 Guidance Sales $687.8 $685 - $695 Previous Adjusted Diluted EPS $2.42 $2.61 - $2.71 Intangible Amortization $0.37 $0.35 - $0.35 New Adjusted Diluted EPS $2.79 $2.96 - $3.06 Capex $24.8 $40 - $50 Adjusted Eff
Slide 24: Appendix
24 Appendix $83 Greatbatch
Slide 25: 2015 YTD Revenue
2015 YTD Revenue 9 Months 2015 9 Months 2014 % Organic Actual Actual Change CC Growth Greatbatch Medical CN $239,387 $252,403 -5.2% -5.2% Orthopaedics 102,204 106,785 -4.3% 7.0% Portable Medical 48,591 53,139 -8.6% -8.6% Vascular 37,370 43,210 -13.5% -13.5% Energy & Other 46,232 58,499 -21.0% -21.0%
Slide 26: 2015 YTD Cash Flow
2015 YTD Cash Flow ($ in millions) Net income* $17.3 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and Amortization 26.9 Debt related Amortization included on Int Expense 5.4 Stock Based Compensation/Discount Amortization 9.0 Other non-cash
Slide 27: GAAP Reconciliation
GAAP Reconciliation Net Income and Diluted EPS Reconciliation Three Months Ended Nine Months Ended October 2, October 3, October 2, October 3, 2015 2014 2015 2014 Per Per Per Per Net Diluted Net Diluted Net Diluted Net Diluted (in thousands except per share amounts) Income Share Income Share Income
Slide 28: GAAP Reconciliation
GAAP Reconciliation Adjusted EBITDA reconciliation Three Months Ended Nine Months Ended October 2, October 3, October 2, October 3, (dollars in thousands) 2015 2014 2015 2014 Net income as reported $ 22 $ 14,012 $ 17,313 $ 41,282 Interest expense 5,825 1,051 8,151 3,208 Provision (benefit) for incom
Slide 29: Other Operating Expenses 2015
Other Operating Expenses 2015 Q1 Q2 Q3 YTD 2014 Investments and Capacity and Capabilities $6.5 $6.3 $5.1 $17.9 Portable Medical and Vascular product line transfers Orthopaedic Optimization $0.5 $0.5 $0.4 $1.3 Acquisition and Integration Costs $0.1 $0.1 $5.2 $5.4 Lake Region Medical and CCC Medical D
Slide 30: Contact Information
Contact Information Betsy Cowell Investor Relations Greatbatch 2595 Dallas Parkway Dallas, Texas 75034 214.618.4982 Ecowell@greatbatch.com www.greatbatch.com 30