Slide 1: 4Q22 Earnings Conference Call
4Q22 Earnings Conference Call February 16, 2023 ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 1
Slide 2: Integer Holdings Corporation Earnings Conference Call
Integer Holdings Corporation Fourth Quarter and Full Year 2022 Earnings Conference Call 9 a.m. Eastern Time, February 16, 2023 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 investor.integ
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 • Accelerating Sales Growth to 200bps Above the Market • Financial Results • 2023 Outlook • Wrap-up • Q&A ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 4
Slide 5: Opening Remarks
Opening Remarks ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 5
Slide 6: Summary
Summary 4Q22 sales and 4Q22 & full year 2022 financial results income at high-end of • 4Q22 sales up 19% vs. 4Q21, adjusted operating income up 30% vs. 4Q21 prior guidance • Full year sales up 13%, adjusted operating income up 3% vs. 2021 Managing interest expense with 2.125% coupon convertible note
Slide 7: Strategy Update
Strategy Update ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 7
Slide 8: Integer Investment Thesis
Integer Investment Thesis Strategy Financial Objectives •1 Sales growth 200 basis points above market •2 Operating profit 2x sales growth rate •3 Debt leverage 2.5x – 3.5x Resilient Compelling Performance Financial Business Model Strategy for Growth Culture Strength ✓ Sustainable mid-single-digit ✓
Slide 9: Integer's Strategy Journey
Integer’s Strategy Journey 2017 2018 2019 2020 2021 2022 2023 Portfolio Divested AS&O Strategy Strategy Developed Portfolio Strategy Launched Initiated Partial Portable Medical Exit Operational Strategy Manufacturing Excellence Launched Margin COVID Impact and Macro Margin Expansion Challenges Expan
Slide 10: Accelerating Sales Growth to 200bps Above the Market
Accelerating Sales Growth to 200bps Above the Market ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 10
Slide 11: Growth Teams Drive Product Line Strategies
Growth Teams Drive Product Line Strategies Growth Team Structured and disciplined Broadest and Deepest product Structure product line strategy process offering in the Medical Device Outsourcing industry Structural Heart Dedicated, cross-functional teams responsible for strategy and accountable for g
Slide 12: C&V Targeted Market Strategy to Drive Sustained Growth Profile
C&V Targeted Market Strategy to Drive Sustained Growth Profile Integer Investment Interventional Focus Cardiology Peripheral Vascular Electro- physiology Neurovascular Pulsed Field Structural Renal Ablation Heart Bubble Size Signifies Approx. Growth Denervation End Market Size Curve Low Technology M
Slide 13: CRM&N Targeted Market Strategy to Drive Sustained Growth Profile
CRM&N Targeted Market Strategy to Drive Sustained Growth Profile Integer Investment Conventional Focus Pain Mgmt. CRM (SCS) Cochlear Epilepsy Incontinence Cardiac Monitoring Neuromodulation Parkinson's Dual- Single-Chamber Chamber Leadless CRM Pain Mgmt. CRM Sleep Leadless (Emerging) Apnea Bubble Si
Slide 14: Strong Pipeline of Emerging Customers with PMA Products
Strong Pipeline of Emerging Customers with PMA (Premarket Approval) Products ($ in millions) Product development through Product introduction & launched launch process customer sales +$20 more than prior guidance $80 - $100+ 17 # of Customers currently in each ✓+ phase (Year End 2022) +$10 more than
Slide 15: Growth Starts with Product Development
Growth Starts with Product Development Product development sales Strategy delivering mix shift +230% since strategy launch to high-growth markets R&D Resources +62% ~230% ~20% ~20% Mature ~50% ~80% ~80% ~50% 3 – 5+ Emerging / Years Growth 2017 2021 2022 2017 2021 2022 Development Sales Development S
Slide 16: Investing to Fuel and Fulfill Growth
Investing to Fuel and Fulfill Growth Investment in growth capex (1) Capacity to support growth Manufacturing/R&D Facilities Sq Ft ~$80 2,400 Irish Acquisitions facilities expansion 1,700 Organic $19 201 2021 2022 2023 2024 201 2021 2022 2023 2024 utlook Est. utlook Est. • Capacity expansions from ac
Slide 17: Critical 2023 Irish Facilities Capacity Investments
Critical 2023 Irish Facilities Capacity Investments ✓ Ireland is home to 300+ med-tech companies, including Integer’s largest customers ✓ Integer’s Ireland facilities serve all C&V markets, focused on high-growth end markets ✓ Announced Galway greenfield September 2021 … 67k sq. ft. of manufacturing
Slide 18: Expect Sustained Above-Market Sales Growth
Expect Sustained Above-Market Sales Growth Above Market Growth +6 – 8 % Weighted Structured & Invest in Avg Market Growth disciplined Win across faster growing strategy process product lifecycle end-markets +4 – 6 % Beginning in 2023, expect sustained 200bps above-market sales growth ITGR: 4Q22 Earn
Slide 19: Financial Results
Financial Results ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 19
Slide 20: 4Q22 Financial Results
(1) 4Q22 Financial Results ($ in millions, except per share amounts) Sales Adj. EBITDA Adj. Operating Income Adj. Net Income % Change 19% 25% 30% 12% $372 $73 $313 $58 $57 $44 $37 $33 44Q21 21 44Q22 22 21 44Q21 22 44Q22 44Q21 21 44Q22 22 21 44Q21 22 44Q22 Adjusted EPS Organic Sales Change: 13% $0.99
Slide 21: Product Line Quarterly Sales Performance Trends
Product Line Quarterly Sales Performance Trends ($ in millions) 4Q22 Highlights Cardio & Vascular CRM & Neuromodulation ✓ Double digit year-over-year growth across all product lines in 4Q22 ✓ Strong organic growth in structural heart market and guidewire products Y-o-Y % Change Y-o-Y % Change ✓ As s
Slide 22: 2022 Financial Results
(1) 2022 Financial Results ($ in millions, except per share amounts) Sales Adj. EBITDA Adj. Operating Income Adj. Net Income % Change 13% 5% 3% (4)% $1,376 $1,221 $256 $243 $187 $192 $136 $130 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 2021 2021 2022 2022 Adjusted EPS Organic Sales
Slide 23: 2022 Adjusted Net Income
(1) 2022 Adjusted Net Income ($ in millions, except per share amounts) (1) Adjusted Net Income and Adjusted EPS are non-GAAP financial measures; refer to “Non-GAAP Financial Measures” in the Appendix ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 23
Slide 24: Cash Flow & Leverage Ratio
Cash Flow & Leverage Ratio(1) ($ in millions) Cash Flow From Ops Free Cash Flow Highlights ✓ 4Q22 cash flow from operations up 86% sequentially versus 3Q22 ✓ $116 million full year cash flow from operations, inclusive of ~$50 million increase in inventory to support manufacturing Net Total Debt Leve
Slide 25: 2023 Outlook
2023 Outlook ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 25
Slide 26: 2023 Full Year Outlook
(1) 2023 Full Year Outlook ($ in millions, except per share amounts) Sales Adj. EBITDA Adj. Operating Income Adj. Net Income % Change 7% - 9% 11% - 16% 10% - 16% 4% - 11% $1,470 - $1,500 $285 - $296 $1,376 $256 $211 - $222 $192 $130 $134 - $144 2022 2022 2023 2023 2022 2022 2023 2023 2022 2022 2023
Slide 27: 2023 Financial Outlook
2023 Financial Outlook ($ in millions) +70bps Full year 14.6% Adj Operating 13.9% • 7% - 9% year-over-year reported and Income organic growth % of sales(1) +7% - 9% • +70bps AOI as a % of sales improvement at mid-point of 2023 guidance $1,470 - $1,500 $1,376 Quarterly profile • Expect 1Q23 sales to
Slide 28: Managing Interest Expense
Managing Interest Expense ($ in millions, except per share amounts) Dec 22 Strategy 6.4% 6.6% ✓ Benefited from prior low interest 4.4% rate environment through Adj Effective 4.2% 4.1% primarily variable-rate debt Interest Rate on 4.0% Borrowings(1) ✓ In the current high interest rate $951 $1,001 env
Slide 29: Disciplined Capital Management to Support Growth
Disciplined Capital Management to Support Growth Year-over-year free cash flow growth drivers Strategy ✓ $39 million year-over-year growth in free cash flow from operations +$35 $(37) ✓ Entering economically beneficial AR factoring program … costs +$39 ~$80 less than current debt Guidance Guidance M
Slide 30: 2023 Cash Flow Outlook
(1) 2023 Cash Flow Outlook ($ in millions) Cash Flow From Ops Free Cash Flow Net Total Debt Leverage CAPEX $100 - $120 $180 - $200 $74 $53 $157 $907 $885 - $905 $104 $818 3.5x $116 $70 - $90 3.4x 2.5x - 3.5x $42 2021 2021 2022 2022 2023 2023 2021 2022 2023 2021 2022 2022 2023 E21 YE21 E22 YE22 E23 Y
Slide 31: Wrap-up
Wrap-up ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 31
Slide 32: Wrap-up
Wrap-up ✓ Strong 4Q22 and full year financial results • 4Q22 Sales up 19% vs. 4Q21, adjusted operating income up 30% vs. 4Q21 • Full Year sales up 13%, adjusted operating income up 3% vs. 2021 ✓ 2023 outlook • Sales $1,470 - $1,500 million, up 7% - 9% reported and organic • Adjusted operating income
Slide 33: Integer Investment Thesis
Integer Investment Thesis Strategy Financial Objectives •1 Sales growth 200 basis points above market •2 Operating profit 2x sales growth rate •3 Debt leverage 2.5x – 3.5x Resilient Compelling Performance Financial Business Model Strategy for Growth Culture Strength ✓ Sustainable mid-single-digit ✓
Slide 34: Questions?
Questions? ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 34
Slide 35: Appendix
Appendix ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 35
Slide 36: 4Q22 Adjusted Net Income
(1) 4Q22 Adjusted Net Income ($ in millions, except per share amounts) (1) Adjusted Net Income and Adjusted EPS are non-GAAP financial measures; refer to “Non-GAAP Financial Measures” in the Appendix ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 36
Slide 37: Convertible Note Payments and Dilution Mitigation
Convertible Note Payments and Dilution Mitigation ($ in millions, except per share amounts) Fixed-rate debt for 5 years → Convertible to equity at maturity ✓ 2.125% fixed coupon $131.62 •1 Semi-annual interest payment (Feb/Aug) $121.75 $108.59 Potential Stock ✓ Net Shares Settlement → amount due in
Slide 38: 2023 Outlook
(a) 2023 Outlook ($ in millions, except per share amounts) ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 38
Slide 39: 2023 Supplemental Financial Information
2023 Supplemental Financial Information ($ in millions, except per share amounts) ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 39
Slide 40: Historical Financial Results
(1) Historical Financial Results ($ in millions, except per share amounts) Sales Adjusted EPS $16 $10 $2 $12 $10 $23 $26 $26 $10 $11 $9 $9 $ $23 $21 $20 $22 $20 $ $143 $25 $136 $9 $131 $123 $ $26 $24 $126 $123 $134 $121 $122 $106 $1.25 $ 4 $ 5 $1.07 $1.11 $1.05 $1.04 $0.97 $0.99 $0.95 $0.7 $0.71 $1
Slide 41: Capitalization
Capitalization(1) Capitalization ($ in millions) ($ in millions) 12/31/22 12/31/22 As Reported Rate Cash & Cash Equivalents $ 24 $400M Revolver [Due 2026] $ 140 L + 175 TLA [Due 2026] $ 455 L + 175 TLB [Due 2028] $ 336 L + 250 Total Principal Amount of Debt Outstanding $ 931 (2) Deferred Fees and OI
Slide 42: Product Line Review
Product Line Review ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 42
Slide 43: Year-over-Year Sales Trend, Trailing 4 Quarters
Year-over-Year Sales Trend, Trailing 4 Quarters % of Sales Cardio & Vascular Integer 51% CRM & Neuromodulation 39% Advanced Surgical, Orthopedics & Portable Medical 7% Electrochem (Non-Medical) 3% ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 43
Slide 44: 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 Sales ($ in millions) Catheters
Slide 45: CRM & Neuromodulation
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 Sales ($ in millions) Pulse Gener
Slide 46: 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 Sales ($ in millions) Orthopedic Implants & Electrosurgical Li-Ion Battery Core Battery Instruments Acc
Slide 47: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Quarterly Sales ($ in millions) Battery Cells Battery Packs Battery Chargers • 4Q22 sales increased 41% vs. 4Q21 driven by strong Y-o-Y % Change
Slide 48: Non-GAAP Financial Measures
Non-GAAP Financial Measures ITGR: 4Q22 Earnings Conference Call / February 16, 2023 / Page 48
Slide 49: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation may contain the non-GAAP financial measures defined in the table 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 releas
Slide 50: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q22 Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) 2022 2021 GAAP Non-GAAP Non-GAAP Restructuring and Acquisition restructuring- and Debt / Amortization related integration Other general Investment Other Tax As Reported o
Slide 51: Non-GAAP Reconciliation
Non-GAAP Reconciliation YTD Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) 2022 2021 GAAP Non-GAAP Non-GAAP Restructuring and Acquisition restructuring- and Debt / Amortization related integration Other general Investment Other Tax As Reported of
Slide 52: Contact Information
Contact Information Tony Borowicz Senior Vice President, Investor Relations Tony.Borowicz@Integer.net (O) 716.759.5809 Andrew Senn Senior Vice President, Strategy & Business Development Andrew.Senn@Integer.net (O) 763.951.8312 www.integer.net ITGR: 4Q22 Earnings Conference Call / February 16, 2023 /