Slide 1: 1Q19 Earnings Conference Call
1Q19 Earnings Conference Call May 2, 2019 ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 1
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 • 2019 Outlook • Question & Answer Period ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 3
Slide 4: Opening Comments
Opening Comments ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 4
Slide 5: Strong Financial Results
Strong Financial Results … 1Q Financial Results Integer delivered another • Strong revenue growth of 8%; 4% excluding impact of long-term quarter of strong sales agreement signed in 1Q19 and profit growth • Strong profit growth; EBITDA +22%, EPS +59% • Slight upward revision to sales and EPS guidanc
Slide 6: Leadership Changes to Accelerate Strategy
Leadership Changes to Accelerate Strategy Jen Bolt Joel Becker Carter Houghton SVP President President Global Operations Cardiac Rhythm Mgmt & Electrochem & Neuromodulation Portable Medical • Leading manufacturing • 20 years St Jude Medical, • 15 years in medical device excellence strategy including
Slide 7: Executive Alignment to Drive Our Strategy
Executive Alignment to Drive Our Strategy Portfolio Strategy Operational Strategy Product Line Leaders Strategic Imperative Leaders Market Focused Sales Force Innovation Excellence Payman Khales President, Cardio & Vascular Manufacturing Excellence Payman Khales Joel Becker President, C&V President,
Slide 8: Focused Strategy to Drive Long-term Growth
Focused Strategy to Drive Long-term Growth Portfolio Strategy Operational Strategy: How we win Strategic Imperatives in the markets we serve How we achieve excellence in everything we do Invest to Grow Cardio & Vascular Neuromodulation Electrochem Portable Medical Protect & Preserve Cardiac Rhythm M
Slide 9: Manufacturing Excellence: Business Optimization and Margin Expansion
Manufacturing Excellence: Business Optimization and Margin Expansion Status Integer • Defined & scoped 16 elements • Framework and detailed system that comprise the IPS Production elements of our Integer System • Building IPS element tools, manufacturing processes (IPS) templates and resources • Com
Slide 10: Financial Results
Financial Results
Slide 11: 1Q19 Adjusted Financial Results
1Q19 Adjusted Financial Results(1) ($ in millions, except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted Net Income 8% organic(2) 19% organic(3) 53% organic(3) % Growth 8% reported 22% reported 61% reported Reported $315 $66 $33 $292 $54 $20 1Q18 1Q19 Adj Reported $ 0.63 $ 1.00 EPS FX Ad
Slide 12: 1Q19 Adjusted Net Income
1Q19 Adjusted Net Income ($ in millions, except per share amounts) Adj. $0.63 $0.26 $0.03 $0.03 $0.06 $1.00 EPS ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 12
Slide 13: Product Line Review
Product Line Review
Slide 14: Year-over-Year Sales Growth Continues
Year-over-Year Sales Growth Continues(1) Trailing 4 Quarters Cardio & Vascular Integer – Trailing 4 Quarters 1Q18 2Q18 3Q18 4Q18 1Q19 Cardiac & Neuromodulation Advanced Surgical, Orthopedic & Portable Medical Non-Medical (Electrochem) (1) Excludes impact from changes in foreign currency exchange rat
Slide 15: 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 Organic Quarterly Y-o-Y Growth % Change St
Slide 16: 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 Organic Quarterly Y-o-Y Growth % Change Pul
Slide 17: Advanced Surgical, Orthopedics & Portable Medical
Advanced Surgical, Orthopedics & Portable Medical Supporting our divested AS&O business and providing technologies and solutions to Portable Medical markets Organic Quarterly Y-o-Y Growth % Change Orthopedic Implants & Electrosurgical Li-Ion Battery Core Battery Instruments Accessories Packs Pack As
Slide 18: Electrochem
Electrochem Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications Organic Quarterly Y-o-Y Growth % Change 0% Battery Cells Battery Packs Battery Chargers • 1Q growth due to recovery from prior year inventory Re
Slide 19: 2019 Outlook
2019 Outlook
Slide 20: Managing Interest Expense
Managing Interest Expense % of Debt 100% 100% 100% • Inverted yield curve created opportunity Floating Interest 35% 79% Rate • Executed $400 million, twelve 66% month swap to fixed – Reduced rate risk 65% – Lowered interest expense Fixed Interest 34% – Maintains cap structure flexibility Rate 21% •
Slide 21: 2019 Outlook
2019 Outlook ($ in millions except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted EPS Growth % 4% - 6% 6% - 9% 9% - 15% $1,265 - $1,280 $275 - $283 $4.15 - $4.35 $1,213 $259 $3.80 Prior Guidance $1,260 - $1,280 $275 - $283 $4.05 - $4.25 ITGR: 1Q19 Earnings Conference Call / May 2, 2019 /
Slide 22: 2019 Cash Flow Outlook
2019 Cash Flow Outlook ($ in millions) Cash Flow From Ops Free Cash Flow(1) Debt Payments Leverage(2) $700 $548 $160 - $170 $110 - $120 $105 - $115 Target 2.5x - 3.5x $67 - $77 Divestiture Proceeds Accelerated Repayment Required Repayment Prior $160 - $170 $110 - $120 $105 - $115 2.5x - 3.5x Guidanc
Slide 23: Summary
Summary
Slide 24: Summary
Summary Management Team • Senior operating team complete • Dedicated SVP, Jen Bolt, to drive manufacturing excellence Strategy • Product line strategy – growth teams established in focused markets • Operational strategic imperatives – being led by senior executives Clear Objectives • Accelerate sale
Slide 25: Appendix
APPENDIX ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 25
Slide 26: Cash Flow & Leverage
Cash Flow & Leverage Cash Flow From Ops Free Cash Flow (1) ($ in millions) ($ in millions) 2019 1Q Highlights • Cash flows in line with expectations • Increase in working capital balances due to timing of cash receipts and payments Debt Payments Leverage (2) ($ in millions) $595 • Reduced leverage r
Slide 27: Historical Financial Results
Historical Financial Results (1) ($ in millions except per share amounts) (2) Adjusted Sales Adjusted EPS Organic Adjusted EPS(3) $0.58 $0.91 $0.98 $0.89 $0.66 $1.01 $1.10 $1.04 $1.00 $313 $315 $(0.05) $301 $305 $303 $285 $292 $280 $265 Impact of foreign currency reported in other gain or loss, net
Slide 28: 2019 Full-Year Outlook Supplemental Items Affecting Cash Flow
2019 Full-Year Outlook Supplemental Items Affecting Cash Flow ($ in millions, except per share amounts) ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 28
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Income from Continuing Operations and Diluted EPS Reconciliation – QTD ($ in thousands, except per share amounts) See the Footnotes to this table on Slide 30 of this presentation ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 29
Slide 30: Footnotes to Non-GAAP Reconciliation
Footnotes to Non-GAAP Reconciliation ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 30
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q19 Income from Continuing Operations and Diluted EPS Reconciliation – Detailed View ($ in thousands, except per share amounts) 2019 2018 GAAP Adjustments Non-GAAP Non-GAAP Debt / Other investment Adjusted Adjusted Continuing Amortization IP related operating related Continu
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA and Adjusted EBITDA Reconciliation ($ in thousands) ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 32
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation Organic Sales Growth Rate Reconciliation (% Change) ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 33
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP Organic Growth Rate Reconciliation (% Change) ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 34
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2019 Full-Year Outlook(a) ($ in millions, except per share amounts) ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 35
Slide 36: Capitalization
Capitalization ($ in millions) 03/29/19 Original 06/30/18 12/28/19 03/29/19 As Reported Rate Rate Rate Rate Cash & Cash Equivalents $ 14 $200M Revolver [Due 2020] $ 20 L + 325 L + 325 L + 250 L + 250 TLA [Due 2021] $ 296 L + 325 L + 325 L + 250 L + 250 TLB [Due 2022] $ 611 L + 425 L + 325 L + 300 L
Slide 37: Contact Information
Contact Information Tony Borowicz SVP, Strategy, Corporate Development & Investor Relations Integer Tony.Borowicz@Integer.net (O) 716.759.5809 www.integer.net ITGR: 1Q19 Earnings Conference Call / May 2, 2019 / Page 37