Slide 1: 3Q17 Earnings Conference Call
3Q17 Earnings Conference Call October 26, 2017
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 • Vision & Strategy • Question & Answer Period ITGR: 3Q17 Earnings Conference Call / Oct 26, 2017 / Page 3
Slide 4: Opening Comments
Opening Comments
Slide 5: Quarterly Results Reflect Continued Progress
Quarterly Results Reflect Continued Progress Third Quarter Highlights “Integer delivered • Organic sales up 4.4% … Year-to-date up 4.5% another quarter of • Adjusted Results solid year-over-year ‒ EBITDA flat organically … up 4.2% year-to-date sales growth … we ‒ Net Income increased 8% organically
Slide 6: Sales Recovery – Growth in 2017
Sales Recovery – Growth in 2017 Sales trajectory continues to improve Sales – Trailing 4 Quarters 5% 2.5% to 3.5% 3% 2% Organic Growth 0% (1)% (2)% (4)% (5)% 4Q15 4Q16 1Q17 2Q17 3Q17 4Q17 Outlook Trailing 4-quarter Actuals ITGR: 3Q17 Earnings Conference Call / Oct 26, 2017 / Page 6
Slide 7: Improving Sales Trend Across Most Product Lines
Improving Sales Trend Across Most Product Lines Sales - Trailing 4 Quarters Medical Segment Non-Medical Segment 9% 10% Cardio & Vascular 7% 30% 23% 5% 2% 2% Adv. Surgical, Ortho & Portable Medical 1% 0% 0% (0%) (1%) (2%) Cardiac & Neuro (23%) (5%) (4%) (30%) (5%) (6%) (10)% (40)% 4Q16 1Q17 2Q17 3Q17
Slide 8: Financial Results
Financial Results
Slide 9: 3Q17 Adjusted Financial Results
3Q17 Adjusted Financial Results(1) ($ in millions, except per share amounts) Sales Adjusted EBITDA Adjusted Net Income 4.4% organic(2) -- % organic(3) 8% organic(3) % Growth 4.8% reported (3)% reported 2% reported $363 Reported $75 FX Adjusted $28 FX Adjusted $(1.6) FX $2 FX $2 FX $75 $73 $362 FX Ad
Slide 10: YOY Sales Improvement Continues in 3Q17
YOY Sales Improvement Continues in 3Q17 Advanced Surgical, Orthopedics & Portable Medical 10% (1) 0% 0% Integer (10%) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 10.0% (20%) 16 16 16 16 17 17 17 Quarterly YOY % Organic Change 15% 5.0% 4.5% Quarterly YOY % Change – as Reported Cardio & Vascular 5.0% 4.4% 10% 4.8% 2.8% 2.6%
Slide 11: Adjusted EBITDA & Adjusted Net Income
Adjusted EBITDA & Adjusted Net Income ($ in millions except per share amounts) 3Q17 Adjusted EBITDA Adjusted Net Income $2 $(2) $26 $26 $75 $ -- $(2) $73 Organic(2) FX Organic(2) FX 3Q16 3Q17 3Q16 3Q17 Adj. EPS $0.83 $0.04 $(0.05) $0.82 (1) YTD 3Q17 YTD YTD 3Q16 Organic(2) FX 3Q17 Adj. EBITDA $209 $
Slide 12: Continued Strong & Steady Cash Flow Generation
Continued Strong & Steady Cash Flow Generation Cash Flow From Operations Free Cash Flow(1) ($ in millions) ($ in millions) $38 $39 $39 $38 $34 • Continued strong cash flow, well in $28 $27 $30 $26 excess of current debt obligations $21 $22 • Remain focused on accelerating debt $11 repayment to reduc
Slide 13: Revised Full-Year 2017 Outlook
Revised Full-Year 2017 Outlook ($ in millions except per share amounts) (1) Sales(1) Adjusted EPS Cash Flow from Operations % 2.5% - 3.6% organic(2) 9% - 16% organic(3) 42% reported Growth 2.5% - 3.5% reported (5)% - 3% reported ~$150 $1,420 - $1,435 $1,386 $2.68 $2.55 - $2.75 $106 2016 2017 2016 20
Slide 14: Full-Year Outlook – Original vs. Revised
Full-Year Outlook – Original vs. Revised Sales Adjusted EPS % Growth 0% - 3% 2.5% - 3.5% $1,420 to $1,435 $1,390 - $1,430 $2.70 to $3.10 $(0.22) $2.48 to $2.88 $2.55 to $2.75 FX Impact YTD (2) (1) (1) Original Revised Original Original Revised 3Q17 Adjusted 3Q17 For YTD FX Impact (1) Revised outlook
Slide 15: Product Line Review
Product Line Review
Slide 16: 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 Quarterly YOY Growth 7% 7% % Change Orthopedic Implants & Laparoscopy & Arthroscopy Biopsy & Drug Portable Medical 0% Instruments General Surgery Pro
Slide 17: 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 Quarterly YOY Growth 9% 10% 8% 7% Steerable Sheaths Catheters &
Slide 18: 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 Quarterly YOY Growth(1) 3% % Change
Slide 19: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Quarterly YOY Growth 71% 60% Battery Cells Battery Packs Battery Chargers % Change 0% (3%) (14%) (34%) (26%) • Continued Sales growth in 3Q17 dr
Slide 20: Vision & Strategy
Vision & Strategy
Slide 21: Our Vision and Strategy
Our Vision and Strategy “Our vision is to Executing our Strategy … to Realize our Vision enhance the lives of • Serving the needs of our customers as their preferred global device outsource partner patients worldwide by being our • Leveraging our global presence and breadth of capabilities to provid
Slide 22: Question & Answer Period
Question & Answer Period
Slide 23: Appendix
APPENDIX
Slide 24: Historical Financial Results
Historical Financial Results ($ in millions, except per share amounts) (1)(2)(3) Sales (1) Adjusted EPS Organic $331 $348 $347 $360 $345 $363 $363 Adjusted $0.36 $0.58 $0.83 $0.79 $0.44 $0.76 $0.87 EPS(4) $11 $16 $15 $10 $9 $11 $12 $100 $107 $109 $108 $109 $105 $98 $0.05 $108 $116 $106 $102 $0.14 $1
Slide 25: Working Capital
Working Capital ($ in millions) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Inventory $267 $276 $262 $225 $231 $236 $247 Inventory Turns(1) 3.7 3.7 3.7 4.4 4.5 4.5 4.4 Capital Expenditures $19 $12 $17 $11 $12 $10 $12 Working Capital ($ in millions) $325 $332 $325 $328 $323 $318 $317 1Q16 2Q16 3Q16 4Q16 1Q17
Slide 26: Other Operating Expenses – Historical
Other Operating Expenses – Historical ($ in millions) Three Months Ended YTD Three Months Ended 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17 2014 Investments in $4.2 $5.1 $4.5 $3.3 $17.2 $1.6 $1.3 $1.5 Capacity and Capabilities Legacy Lake Region Medical $2.4 $2.1 $2.9 $1.2 $8.6 $0.7 $1.5 $1.5 Consolidat
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – QTD ($ in thousands, except per share amounts) Three Months Ended September 29, 2017 September 30, 2016 Per Per Net Diluted Net Diluted Pre-Tax Income Share Pre-Tax Income Share As reported (GAAP) $ 11,990 $ 13,690 $ 0.43 $ 8,717 $
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q17 QTD Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) GAAP Non-GAAP Adj. (a) Non-GAAP Debt / Litigation Investment Related Consolidation & Acquisition & Related 3Q17 Act Income Statement 3Q17 Act Amortization Charges(b)
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Income and Diluted EPS Reconciliation – YTD ($ in thousands, except per share amounts) Nine Months Ended September 29, 2017 September 30, 2016 Per Net Per Net Diluted Income Diluted Pre-Tax Income Share Pre-Tax (Loss) Share As reported (GAAP) $ 11,911 $ 12,341 $ 0.39 $ (3
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation YTD 3Q17 Net Income and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) GAAP Non-GAAP Adj. Non-GAAP Debt / Litigation Consolidation & Acquisition & Investment 3Q17 YTD ACT Income Statement 3Q17 YTD ACT Amortization Related Charges Optimiz
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations Footnotes to “Net Income and Diluted EPS Reconciliation” (a) The difference between pre-tax and net income (loss) amounts is the estimated tax impact related to the respective adjustment. Net income amounts are computed using a 35% U.S. tax rate, and the statutory tax rates
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations EBITDA and Adjusted EBITDA Reconciliation ($ in thousands) Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, 2017 2016 2017 2016 Net Income (loss) (GAAP) $ 13,690 $ 11,458 $ 12,341 $ (1,972) Interest expense 26,485 27,870 81,025 83,
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Organic Sales Growth Rate Reconciliation (% Change) Impact of GAAP Nuvectra Impact of Non-GAAP Reported prior to Foreign Organic Growth Spin-off(a) Currency(b) Growth QTD Change (3Q 2017 vs. 3Q 2016) Medical Sales Cardio & Vascular 7.4% — (0.4)% 7.0% Cardiac & Neuromodulatio
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Organic Growth Rate Reconciliation (% Change) GAAP Impact of Impact of Non-GAAP Reported Non-GAAP Foreign Organic Growth Adjustment(a) Currency(b) Growth QTD Change (3Q 2017 vs. 3Q 2016) EBITDA 7.9% (10.9)% 2.7% (0.3)% Net Income 19.5% (17.4)% 6.3% 8.4% Diluted EPS
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2017 Full-Year Outlook ($ in millions, except per share amounts) 2017 Outlook GAAP Non-GAAP As Reported Growth Adjusted Basis Growth Organic Growth Revenue $1,420 - $1,435 2.5% - 3.5% $1,420 - $1,435 2.5% - 3.5% 2.5% - 3.6% Earnings per Diluted Share $0.60 - $0.80 Favorable
Slide 36: Contact Information
Contact Information Amy Wakeham VP, Investor Relations Integer ir@integer.net (O) 214.618.4978 (M) 214.430.7208 www.integer.net