Slide 1: 4Q20 Earnings Conference Call
4Q20 Earnings Conference Call February 18, 2021 ITGR: 4Q20 Earnings Conference Call / February 18, 2021 / Page 1
Slide 2: Integer Holdings Corporation Fourth Quarter 2020 Earnings Conference Call
Integer Holdings Corporation Fourth Quarter 2020 Earnings Conference Call 9 a.m. Eastern Time, February 18, 2021 Speakers: • A webcast of today’s call can be accessed in the “Investor Relations” section of the Joe Dziedzic Company’s website: President and Chief Executive http://investor.integer.net
Slide 3: Presentation of Financial Information & Forward-Looking Statements
Presentation of Financial Information & Forward-Looking Statements Important Information This presentation contains summarized information concerning Integer Holdings Corporation (the “Company”) and its business, operations, financial performance and trends. The historical financial and operating da
Slide 4: Agenda
Agenda • Opening Remarks • Strategy Update • Financial Results • 2021 Outlook • Wrap-up • Q&A ITGR: 4Q20 Earnings Conference Call / February 18, 2021 / Page 4
Slide 5: Opening Remarks
Opening Remarks
Slide 6: Summary
Summary 4Q: Financial Results Sales as expected • 4Q sequential improvement vs 3Q: Profit margin rate ‒ Sales up $33 million, +14% … at high end of guidance continues to ‒ Profit margin up ~350 bps … above high end of guidance improve • During 4Q the industry declined low single-digit vs. expect
Slide 7: Strategy Update
Strategy Update
Slide 8: Journey to Excellence … Pre-COVID
Journey to Excellence … Pre-COVID Sales Growth versus Prior Year: 2015 * 2016* 2017 * 2018 2019 Strategy Financial 7% Objectives 5% 4% Sales growth 200 1 basis points above (2)% market (4)% Declined Declined >6x Market growth ~1x sales growth 5.6x 3.5x Market growth 2x sales 2.9x 2 Operating profi
Slide 9: Journey to Excellence … COVID Impact
Journey to Excellence … COVID Impact Sales Growth versus Prior Year: 2015 * 2016* 2017 * 2018 2019 2020 7% 5% 4% (2)% (4)% (15)% Declined Market growth Market growth Market decline Declined ~1x sales growth 2x sales (39)% >6x 5.6x 3.5x 2.9x 3.6x Profit Disruption Stabilizing & Building COVID Expansi
Slide 10: Potential COVID-19 Impact on Integer vs. Industry
Potential COVID-19 Impact on Integer vs. Industry 1Q20 2Q20 3Q20 4Q20 1Q21 Integer sales Industry run rate (at market growth) Industry sales Sales change vs. 2019 (%) and bridge between Industry and Integer 1Q20 2Q20 3Q20 4Q20 Full Year 2020 Industry ~(6)% ~(34)% ~(3)% ~(4)% ~(12)% COVID timing diff
Slide 11: How is Integer Leading Through COVID
How is Integer Leading Through COVID Taking care of Associates, who take care of Customers • Pandemic Team response focused on associate safety • Sales / Marketing team remained close to Customers Managing uncertainty • Balanced cost management during temporary sales decline • Adjusted productio
Slide 12: Strengthening Culture through Strategic Imperatives
Strengthening Culture through Strategic Imperatives Leadership Capability Performance Excellence • Talent Analytics • Strategic Workforce Planning • Talent Review / Evaluation • Associate Engagement • Selection Process • Performance Management • Leadership Development • Total Rewards • Succession Pl
Slide 13: Manufacturing Excellence … Competitive Advantage
Manufacturing Excellence … Competitive Advantage Four Workstreams 1 Integer Production System 1 Integer Production System Provides the overall framework and detailed system elements of our Integer Production System 2 Lean Diagnosis and Site Transformation Plan Comprehensive site mapping, strategic a
Slide 14: Delivering for Customers
Delivering for Customers Quality(1) On Time Delivery Annual Sales Under Multi-Year Agreement(2) +49% improvement +12% improvement As of YE20 ~70% 2017 2020 2017 2020 Annual sales (1) Quality metric reflects improvement in customer complaints rate (2) Excludes development engineering ITGR: 4Q20 Earni
Slide 15: Investments in Strategy
Investments in Strategy Capabilities Capacity 2020 Talent Additions Salem Juarez Customer Strategic Imperative +Laser machining • Strategic Account Roles Chaska, Plymouth Tijuana • R&D Engineers +15% vs ‘18 +C&V quick-turn South US BioDesign (M&A) Tijuana Cost Strategic Imperative North • Sourcing L
Slide 16: Significantly Reduced Net Debt
Significantly Reduced Net Debt(1) ($ in millions) Net Total Debt 1,719 1,598 916 812 689 2016 2017 2018 2019 2020 Leverage Ratio 6.1x 5.6x 3.5x 2.9x 3.6x (1) Refer to the appendix of this presentation for a reconciliation of Net Total Debt and Leverage ratio to the most directly comparable GAAP meas
Slide 17: Journey to Excellence … Strategic Objectives
Journey to Excellence … Strategic Objectives Sales Growth versus Prior Year: 2015 * 2016* 2017 * 2018 2019 2020 Strategic Objectives 7% Market + 2% 5% 4% (2)% (4)% (15)% Declined Market growth Market growth Market decline • 200 bps above market Declined ~1x sales growth 2x sales (39)% • Operating pr
Slide 18: Financial Results
Financial Results
Slide 19: 4Q20 Financial Results
4Q20 Financial Results(1) ($ in millions, except per share amounts) Sales Adjusted Operating Income Adjusted Net Income % Change (17)% (38)% (43)% $326 $61 $269 $41 $38 $23 Adjusted EBITDA Adjusted EPS $73 $49 $1.25 $0.71 (1) Refer to the appendix of this presentation for a reconciliation of Adjuste
Slide 20: 2020 Financial Results
2020 Financial Results(1) ($ in millions, except per share amounts) Sales Adjusted Operating Income Adjusted Net Income % Change (15)% (39)% (41)% $1,258 $236 $1,073 $154 $144 $92 Adjusted EBITDA Adjusted EPS $284 $190 $4.68 $2.77 (1) Refer to the appendix of this presentation for a reconciliation o
Slide 21: 2020 Adjusted Net Income
2020 Adjusted Net Income(1) ($ in millions, except per share amounts) COVID-19 volume / $154 deleverage $5 $92 $10 $(76) $(1) 2019 Operational FX Interest Tax Rate 2020 Drivers Adj EPS $4.68 $(2.32) $(0.04) $0.31 $0.14 $2.77 (1) Refer to the appendix of this presentation for a reconciliation of Adju
Slide 22: Cash Flow & Leverage Ratio
Cash Flow & Leverage Ratio(1) ($ in millions) Cash Flow From Ops Free Cash Flow Highlights $29 Strong 4Q cash flow from AVX $29 ops before additional $29 AVX million from AVX patent $42 judgment collection $30 Reduced Net Total Debt by $123 million in 2020 Net Total Debt Leverage Change vs Con
Slide 23: 2021 Outlook
2021 Outlook
Slide 24: 2021 Sales Outlook
2021 Sales Outlook ($ in millions) 2021 Sales Outlook Framework 8% - 12% vs 2020 4Q20 impact on 2021 • Slower Industry recovery vs. beginning of 4Q20 expectation $1,160 - $1,200 Industry declined low single-digit vs expected low single-digit growth year over year $1,073 Integer sales at high-end
Slide 25: 2021 Full-Year Outlook
2021 Full-Year Outlook (1) ($ in millions, except per share amounts) Sales Adjusted Operating Income Adjusted Net Income % Change 8% - 12% 18% - 32% 23% - 41% $1,160 - $1,200 $1,073 $170 - $190 $113 - $130 $144 $92 Adjusted EBITDA Adjusted EPS $190 $230 - $250 $2.77 $3.40 - $3.90 (1) Refer to the ap
Slide 26: 1Q21 Outlook
1Q21 Outlook ($ in millions) Sales Adjusted Operating Income(1) % of Sales vLY % 4% (24)% (22)% (17)% (15)% - (12)% • Expect $10 to $20 improvement 1Q21 vs 4Q20 • Expect margin to continue to expand with volume supported by orders backlog • Continued traction on Manufacturing Excellence • Integer 1Q
Slide 27: 2021 Cash Flow Outlook
2021 Cash Flow Outlook(1) ($ in millions, except per share amounts) Cash Flow From Ops Free Cash Flow Net Total Debt Reduction Leverage CAPEX $181 $50 - $60 $48 $47 $165 $29 $145 - $165 AVX $135 3.6x $152 $117 $29 $123 AVX $104 $90 - $110 $90 - $110 2.9x $106 Target 2.5x - 3.5x 2019 2020 2021 2019 2
Slide 28: Wrap Up
Wrap Up
Slide 29: Journey to Excellence
Journey to Excellence Sales Growth versus Prior Year: 2017 * 2018 2019 2020 2021 Strategic Objectives Outlook 7% Market + 2% 8% - 12% 5% 4% (15)% Market growth Market growth Market decline Market growth • 200 bps above market ~1x sales growth 2x sales (39)% >2.5x sales • Operating profit 2x 5.6x 3.5
Slide 30: Integer Investment Thesis
Integer Investment Thesis Portfolio Strategy Operational Strategy Integer Values How We Win In How We Achieve Excellence How We Engage With The Markets We Serve In Everything We Do Each Other Resilient Compelling Performance Financial Business Model Growth Strategy Culture Strength Sustainable mid
Slide 31: Questions?
Questions? ITGR: 4Q20 Earnings Conference Call / February 18, 2021 / Page 31
Slide 32: Appendix
APPENDIX
Slide 33: Year-over-Year Sales Trend
Year-over-Year Sales Trend(1) Trailing 4 Quarters Cardio & Vascular Integer Cardiac & Neuromodulation Advanced Surgical, Orthopedic & Portable Medical Electrochem (Non-Medical) (1) Excludes impact from changes in foreign currency exchange rates and acquisition ITGR: 4Q20 Earnings Conference Call / F
Slide 34: 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 Quarterly Organic Sales Change(1) Steerabl
Slide 35: CRM & Neuromodulation
nd CRM. CRM & 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 high-volume manufacturing Quarterly Organic Sales Change(1) P
Slide 36: Advanced Surgical, Orthopedics & Portable Medical
Advanced Surgical, Orthopedics & Portable Medical Offering a broad portfolio of power solutions and technologies to Portable Medical markets and supporting the divested AS&O product line Quarterly Organic Sales Change(1) Orthopedic Implants & Electrosurgical Li-Ion Battery Core Battery Instruments A
Slide 37: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Quarterly Organic Sales Change(1) Battery Cells Battery Packs Battery Chargers • 4Q20 declined by approximately $6 million, driven by a severe d
Slide 38: 4Q20 Adjusted Net Income
4Q20 Adjusted Net Income(1) ($ in millions, except per share amounts) COVID-19 volume / $41 deleverage $23 $2 $0 $(20) $(1) 4Q19 Operational FX Interest Tax Rate 4Q20 Drivers Adj EPS $1.25 $(0.60) $(0.03) $0.07 $0.01 $0.71 (1) Refer to the appendix of this presentation for a reconciliation of Adjust
Slide 39: 2021 vs 2019 Sales Comparability
2021 vs 2019 Sales Comparability ($ in millions) Integer comparability adjustments Integer Sales $1,258 $(17) Integer 2021 Outlook $(10) $(23) Non $58 $(38) +/- v. 2020 8% - 12% medical $1,170 $1,160-$1,200 Nuvectra Fewer v. 2019 (1)% - 3% bankruptcy days Electrochem - $35 comparable 4Q19 energy mar
Slide 40: 2021 Outlook
2021 Outlook(a) ($ in millions, except per share amounts) ITGR: 4Q20 Earnings Conference Call / February 18, 2021 / Page 40
Slide 41: Historical Financial Results
Historical Financial Results(1) ($ in millions, except per share amounts) Sales Adjusted EPS Organic EPS $1.00 $1.23 $1.19 $1.26 $1.23 $0.30 $0.53 $0.74 $0.01 $(0.02) $326 $328 $(0.01) $315 $314 $304 $269 $240 $236 $(0.02) Impact of foreign currency reported in other (income)/loss, net and impact of
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q20 Income from Continuing Operations and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) 2020 2019 GAAP Adjustments Non-GAAP Non-GAAP Other Debt / Adjusted Adjusted Continuing Amortization of Certain legal operating Investment Customer
Slide 43: Non-GAAP Reconciliation
Non-GAAP Reconciliation YTD Income from Continuing Operations and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) 2020 2019 GAAP Adjustments Non-GAAP Non-GAAP Certain legal Other Debt / Adjusted Adjusted Continuing Amortization expenses operating Investment Cust
Slide 44: Capitalization
Capitalization ($ in millions) 12/31/20 Original 12/31/20 As Reported Rate Rate Cash & Cash Equivalents $ 49 $200M Revolver [Due 2022] $ - L + 325 L + 225 TLA [Due 2022] $ 230 L + 325 L + 225 TLB [Due 2022] $ 508 L + 425 L + 250 (2) Total Principal Amount of Debt Outstanding $ 738 Deferred Fees and
Slide 45: Notes
Notes Non-GAAP Financial Measures This presentation may contain the non-GAAP financial measures defined below. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the financial schedules accompanying the earnings release and t
Slide 46: Contact Information
Contact Information Tony Borowicz SVP, Strategy, Business Development & Investor Relations Integer Tony.Borowicz@Integer.net (O) 716.759.5809 www.integer.net ITGR: 4Q20 Earnings Conference Call / February 18, 2021 / Page 46