Slide 1: 2Q18 Earnings Conference Call
2Q18 Earnings Conference Call August 2, 2018
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 • Post Divestiture Profile • 2018 Outlook • Question & Answer Period ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 3
Slide 4: Opening Comments
Opening Comments
Slide 5: Continued Strong Growth… Completed Divestiture
Continued Strong Growth… Completed Divestiture Second Quarter Highlights “Integer delivered • Double digit sales and earnings growth another strong quarter • Significantly reduced leverage to 4 times EBITDA (on July 10th) of sales and profit growth” Strategy • Completed AS&O divestiture on July 2, 2
Slide 6: Financial Results
Financial Results
Slide 7: 2Q18 Adjusted Financial Results – Pre-Divestiture
2Q18 Adjusted Financial Results(1) – Pre-Divestiture ($ in millions, except per share amounts) Sales Adjusted EBITDA Adjusted Net Income 10% organic(2) 15% organic(3) 37% organic(3) % Growth 11% reported 27% reported 76% reported $403 Reported $89 Reported $399 $76 FX Adjusted FX Adjusted $87 $35 FX
Slide 8: YOY Sales Improvement Continues
YOY Sales Improvement Continues Trailing 4 Quarters – Pre-Divestiture Advanced Surgical, Orthopedics & Portable Medical 12% 8% (1) 4% Integer 0% 2Q17 3Q17 4Q17 1Q18 2Q18 8% Quarterly YOY % Change - Organic Cardio & Vascular Quarterly YOY % Change – Organic 15% 6% 10% 5% 5% 3% 0% 2% Cardiac & Neuromo
Slide 9: Adjusted EBITDA & Adjusted Net Income
Adjusted EBITDA & Adjusted Net Income ($ in millions except per share amounts) Adjusted EBITDA Adjusted Net Income $1 $35 $5 $89 Tax Rate $12 $70 • +$19M YOY FX • $16M from $20 ($3) Operations • $8M FX YoY Incentive Operational • ($5M) Incentive Compensation Improvement Compensation 2Q17 Incentive O
Slide 10: Continued Deleveraging
Continued Deleveraging Cash Flow From Ops Free Cash Flow (1) ($ in millions) ($ in millions) $46 $36 $39 $38 • Reduced leverage to 5.1x $34 $28 $27 at end of Q2 $21 $21 • July 10 paid down $13 additional $548M from divestiture proceeds • $75M debt pay down in 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17
Slide 11: Product Line Review
Product Line Review
Slide 12: Cardio & Vascular
Cardio & Vascular Offering a full-range of services for the design, development, and manufacturing of diagnostic and interventional cardiac and endovascular delivery and retrieval devices, along with comprehensive supply-chain solutions Organic Quarterly YOY Growth 13% 11% 9% 8% % Change Steerable S
Slide 13: Cardiac & Neuromodulation
Cardiac & Neuromodulation Providing technology solutions for the active implantable medical device industry by partnering with customers to bring high-quality products to established and emerging markets – from initial concept through to high-volume manufacturing Organic Quarterly YOY Growth 9% 5% %
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 Organic Quarterly YOY Growth 12% 10% 9% 6% Orthopedic Implants & Laparoscopy & Arthroscopy Biopsy & Drug Portable Medical % Change Instruments Genera
Slide 15: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Organic Quarterly YOY Growth 71% 60% % Change Battery Cells Battery Packs Battery Chargers 30% 12% (5)% 0% 2Q17 3Q17 4Q17 1Q18 2Q18 • 2Q18 sales
Slide 16: Post Divestiture Profile
Post Divestiture Profile
Slide 17: Strategic Rationale for Divestiture
Strategic Rationale for Divestiture Transaction Rationale Strategic • 2H17 Integer strategic review • Clear leader in remaining product identified opportunity to unlock value lines with differentiated technology in AS&O • Cardio & Vascular, Cardiac & Neuromodulation, Electrochem • Highly fragmented
Slide 18: Impact of Advanced Surgical & Orthopedic Divestiture
Impact of Advanced Surgical & Orthopedic Divestiture Financials 2017 1H18 Actual 2018 Full Year Estimate Sales: ↓ $331M ↓ $180M ↓ $345M Operating Profit: $11M ($1M) $6M ↓ $31M ↓ $23M ↓ $38M (adjusted) Increased Reduced Increased Income Income Income Interest Expense: ↓ $42M $0.27 EPS ↓ $22M $0.02 EP
Slide 19: Non-GAAP Financials
Non-GAAP Financials (excluding Divested AS&O Product Lines)
Slide 20: 2Q18 Non-GAAP Financial Results – Post Divestiture
2Q18 Non-GAAP Financial Results – Post Divestiture(1) ($ in millions, except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted Net Income 11% organic(2) 9% organic(3) 14% organic(3) % Growth 12% reported 26% reported 47% reported $313 Reported $71 Reported $312 $63 $35 FX Adjusted FX Adjust
Slide 21: 2018 Revised Outlook
2018 Revised Outlook
Slide 22: 2018 Outlook – Post-Divestiture
2018 Outlook – Post-Divestiture ($ in millions except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted EPS Growth % 4% - 6% 9% - 13% 9% - 19% $1,175 - $1,200 $255 - $265 $3.35 - $3.65 $1,131 $234 $3.09 2017 2018 2017 2018 2017 2018 Outlook Outlook Outlook Prior Outlook $1,510 - $1,550 $310
Slide 23: Increased Cash Flow Outlook
Increased Cash Flow Outlook Cash Flow From Ops Free Cash Flow(1) Debt Payments Leverage(2) ($ in millions) ($ in millions) ($ in millions) $665+ $160 + $110 + $149 $103 6.1x 5.6x $106 $129 ~ 3.6x $115 $115+ $47 $98 $44 $15 $29 $31 $30 (3) FY16 FY17 FY18 FY16 FY17 FY18 2016 2017 2018 YE16 YE17 YE18 O
Slide 24: Strategy to Drive Long-Term Growth
Strategy to Drive Long-Term Growth Portfolio Strategy Operational Strategy – Strategic Imperatives Invest to Grow Cardio & Vascular Customers Neuromodulation “earn business Electrochem daily” Protect & Preserve • Sales Force Excellence • Market Focused Innovation Cardiac Rhythm Management Improve Pr
Slide 25: Summary
Summary Vision Enhance patient’s lives by being our Second Quarter 2018 customers partner of choice • Strong growth continues • Full year EPS guidance increased $0.15 on Strategic Imperatives AS&O divestiture - Sales Force Excellence - Market Focused Innovation - Manufacturing Excellence Strategy -
Slide 26: Appendix
APPENDIX
Slide 27: Historical Financial Results – Pre-Divestiture
Historical Financial Results – Pre-Divestiture ($ in millions, except per share amounts) (1)(2) Sales Adjusted EPS Organic $345 $363 $363 $390 $382 Adjusted $0.76 $0.87 $0.98 $0.64 $1.01 $403 EPS(3) $390 $382 $363 $363 $15 $0.04 ($0.04) $15 $13 $16 $15 $0.02 $122 $119 $122 $0.05 $109 $108 $0.14 $0.0
Slide 28: Financials “Before” and “After” Divestiture
Financials “Before” and “After” Divestiture ($ in millions, except per share amounts) 2017 1H 2018 Reduce Reduce Remove Remove Before (1) Interest After Before Interest After AS&O AS&O Expense Expense Sales $1,462 ($331) $1,131 $785 ($180) $605 Operating Profit $225 ($31) $194 $121 ($23) $99 Interes
Slide 29: 2018 Full-Year Outlook
2018 Full-Year Outlook ($ in millions except per share amounts) Proforma Post Divestiture Prior Guidance Divestiture Updated Guidance Pre-Divestiture 1H 2018 Outlook + = (Non-GAAP) Adjustments (Non-GAAP) Post-Divestiture 2H Revenue $1,510 - $1,550 ($335) - ($355) $1,175 - $1,200 $1,350 - $1,390 Adju
Slide 30: 2018 Full-Year Outlook – Supplemental Items Affecting Cash Flow
2018 Full-Year Outlook – Supplemental Items Affecting Cash Flow ($ in millions, except per share amounts) ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 30
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD ($ in thousands, except per share amounts) See the Footnotes to this table on Slide 32 of this presentation ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 31
Slide 32: Footnotes to Non-GAAP Reconciliation
Footnotes to Non-GAAP Reconciliation ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 32
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q18 Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 33
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA and Adjusted EBITDA Reconciliation ($ in thousands) ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 34
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation Organic Sales Growth Rate Reconciliation (% Change) (a) Second quarter 2018 sales were positively impacted by $0.9 million due to foreign currency exchange rate fluctuations, primarily in our Cardio & Vascular product lines. ITGR: 2Q18 Earnings Conference Call / August 2, 201
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP Organic Growth Rate Reconciliation (% Change) NM calculated change not meaningful (a) Represents the impact to our growth rate from our Non-GAAP adjustments. (b) Represents the impact to our growth rate due to changes in foreign currency exchange rates ITGR: 2Q18 Ear
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2018 Full-Year Outlook(a) ($ in millions, except per share amounts) ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 37
Slide 38: Capitalization
Capitalization ($ in millions) As Reported Pro Forma Original Previous Pro Forma 6/30/18 6/30/18 Rate Rate Rate Cash and Cash Equivalents $20 $19 $200m Revolver due 2020 74 -- L + 325 L + 325 L + 250 Term Loan A due 2021 321 321 L + 325 L + 325 L + 250 Term Loan B due 2022 812 698 L + 425 L + 325 L
Slide 39: Contact Information
Contact Information Tony Borowicz VP, Investor Relations Integer tborowicz@integer.net (O) 716.759.5809 www.integer.net