Integra LifeSciences Holdings Corporation · NASDAQ:IART
Integra LifeSciences — Q4 2016 Earnings Presentation
22 slides from Integra LifeSciences's earnings presentation, Feb 23, 2017
Slide 1: Fourth Quarter 2016 Earnings Call Presentation
Fourth Quarter 2016 Earnings Call Presentation February 23, 2017 1
Slide 2: Forward-Looking Statements / Safe Harbor
Forward-Looking Statements / Safe Harbor This presentation contains “forward-looking statements”, including statements regarding the proposed Codman Neurosurgery and Derma transactions and the ability to consummate the proposed transactions. Statements in this document may contain, in addition to hi
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: Fourth Quarter Accomplishments
Fourth Quarter Accomplishments • Total Company organic revenue growth of 7.0% • Specialty Surgical Solutions organic growth of 7.2% • International sales grew 13.6% (constant currency) • Adjusted gross margin at record high of 70.2% • Adjusted EBITDA margin at 26.0% • Adjusted free cash flow convers
Slide 5: Specialty Surgical Solutions Revenue Discussion
Specialty Surgical Solutions Revenue Discussion Fourth Quarter 2016 **All Commentary in Constant Currency** $163.8M; +7.0% Reported • Tissue Ablation and Neuro Critical Care sales together increased mid-teens driven by strong global capital sales $ in millions As reported Int’l: • Dural Repair sales
Slide 6: Orthopedics & Tissue Technologies Revenue Discussion
Orthopedics & Tissue Technologies Revenue Discussion Fourth Quarter 2016 **All Commentary in Constant Currency** $91.9M; +4.3% Reported • Regenerative Technologies sales, excluding PriMatrix® and SurgiMend®, Int’l: grew double digits $ in millions $11.1; As reported (9.5%) • PriMatrix® and SurgiMend
Slide 7: Components of 2017 Revenue Guidance
Components of 2017 Revenue Guidance Full Year 2017 $1,150 Derma Sciences $1.12B-$1.14B • Derma expected to contribute ~$70 million $1,100 Discontinued Organic • Foreign currency expected to have a Products/FX negative impact of ~1% $1,050 $992M • Discontinued products represent a ($ millions) $1,000
Slide 8: Fourth Quarter and YTD 2016 Results and 2017 Guidance
Fourth Quarter and YTD 2016 Results and 2017 Guidance % of revenue Q4 2016 Q4 2015 Change FY 2016 FY 2015 Change 2017 Guidance Gross Margin 66.6% 62.7% +390BPS 64.8% 63.0% +180BPS 65% - 66% Adj. Gross Margin* 70.2% 68.3% +190BPS 69.5% 67.5% +200BPS 69% - 70% R&D 5.4% 5.7% -30BPS 5.9% 5.8% +10BPS ~6%
Slide 9: Components of 2017 Adj. Earnings Per Share Guidance
Components of 2017 Adj. Earnings Per Share Guidance Operational Growth $0.20 $1.88 - $1.94 $2.00 Derma $1.76 FX ($0.03) $1.75 ($0.02) ($ per share) $1.50 $1.25 $1.00 $0.75 $0.50 2016 Actual 2017 Guidance First quarter Adjusted EPS expected to be flat to prior year Adjusted EPS Double-Digit Adjusted
Slide 10: Cash Flow and Other Measures: Fourth Quarter and 2017 Guidance
Cash Flow and Other Measures: Fourth Quarter and 2017 Guidance 2017 ($ millions) Q4 2016 Q4 2015 Change Guidance Operating Cash Flow^ $49.3 $25.6 92.6% $115 - $145 CapEx $21.2 $13.1 61.8% ~$50 - $55 Free Cash Flow* $28.1 $12.5 124.8% $65 - $90 FCF Conversion (TTM)* 82.7% 77.0% +5.7Pts 40% - 60% Depr
Slide 11: 2016 Year-End Capital Structure
2016 Year-End Capital Structure Current Capitalization Credit Statistics ($ in millions) 12/31/2016 Bank Leverage Ratio* 2.4x Cash and Equivalents $ 102 Max Leverage Ratio 4.5x Current Acquisition Capacity $ 835 Revolver ($1,000) $ 165 *This ratio is calculated per the Senior Credit Term Loan $ 500
Slide 12: Pro Forma Capital Structure
Pro Forma+ Capital Structure Current Capitalization Credit Statistics ($ in millions) Bank Leverage Ratio ~4.7x Cash and Equivalents (12/31/2016) $102 Max Leverage Ratio TBD Revolver ($1,000) $ 750 Term Loan A $ 500 Term Loan B^ $ 700 Total Debt (face value) $1,950 Net Debt $ 1,850 Strong Balance Sh
Slide 13: Key Focus Areas for 2017 and Beyond
Key Focus Areas for 2017 and Beyond 1 Execute on our 2017 financial targets 2 Focus on integration of Derma Sciences and closing of Codman Neurosurgery acquisition 3 Increase regenerative technology commercial investments and new product launches • Build upon 3 x 3 wound care strategy • Enhance mark
Slide 14: Pro Forma Integra
Pro Forma+ Integra 2018 Financial 2016 2018 Pro Forma+ Targets Organic Revenue Growth 9% 6% - 8% with Acquisitions 12.4% 10%+ (3yr CAGR) Adj. Gross Margin 69.5% 70% - 71% Adj. EBITDA Margin 23.4% ~25% Adj. EPS Growth 14.3% 12%+ Adj. FCF Conversion 82.7% ~95% With Acquisitions, Maintaining 6% - 8% Or
Slide 15: Appendix: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations 15
Slide 16: Organic Growth Reconciliation
Fourth Quarter and YTD 2016 Organic Growth Reconciliation (In thousands) Q4 2016 Q4 2015 FY 2016 FY 2015 Specialty Surgical Solutions $163,777 $153,082 $632,524 $586,918 Domestic 117,335 111,663 453,856 427,057 International 46,442 41,419 178,668 159,861 Orthopedics and Tissue Technologies $91,886 $
Slide 17: Adjusted EBITDA Margin Reconciliation
Fourth Quarter and YTD 2016 & 2015 Adjusted EBITDA Margin Reconciliation (In thousands) Q4 2016 Q4 2015 FY 2016 FY 2015 GAAP net income $28,246 $14,980 $74,564 $6,851 Depreciation and intangible asset amortization expense 18,312 18,268 72,665 59,253 Other (income) expense, net (1,243) (1,604) (845)
Slide 18: Adjusted EPS Reconciliation
Fourth Quarter and YTD 2016 and 2015 Adjusted EPS Reconciliation (In thousands) Q4 2016 Q4 2015 FY 2016 FY 2015 GAAP net income $28,246 $14,980 $74,564 $6,851 Global ERP implementation charges 3,199 4,484 15,585 16,375 Structural optimization charges 2,254 3,283 7,794 16,752 Certain employee severan
Slide 19: Free Cash Flow Conversion Reconciliation
Fourth Quarter and YTD 2016 and 2015 (TTM) Free Cash Flow Conversion Reconciliation (In thousands) Q4 2016 Q4 2015 TTM 2016 TTM 2015 GAAP Net cash provided by operating activities*^ $49,315 $25,640 $159,191 $117,063 Purchases of Property and Equipment (21,192) (13,099) (47,328) (33,413) Free Cash Fl
Slide 20: Gross Margin Reconciliation
Fourth Quarter and YTD 2016 Gross Margin Reconciliation (In thousands) Q4 2016 Q4 2015 FY 2016 FY 2015 Reported Gross Profit $170,241 $151,159 $642,986 $556,192 Structural optimization charges 1,354 1,426 4,480 6,799 Certain employee severance charges 12 158 499 654 Acquisition-related charges 1,025
Slide 21: Adjusted SG&A Reconciliation
Fourth Quarter and YTD 2016 Adjusted SG&A Reconciliation (In thousands) Q4 2016 Q4 2015 FY 2016 FY 2015 Reported SG&A $112,119 $109,750 $455,629 $415,757 Global ERP implementation charges 3,199 4,484 15,585 16,375 Structural optimization charges 900 1,277 3,314 9,751 Certain employee severance charg
Slide 22: Adjusted R&D Reconciliation
Fourth Quarter and YTD 2016 Adjusted R&D Reconciliation (In thousands) Q4 2016 Q4 2015 FY 2016 FY 2015 Reported R&D $13,901 $13,866 $58,155 $50,895 Structural optimization charges - 580 - 580 Acquisition-related charges - - 200 - Adjusted R&D $13,901 $13,286 $57,955 $50,315 Total Revenues $255,663 $
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