2Q18 Earnings Conference Call August 2, 2018
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 generally accepted in the United States, or GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures in this presentation, which include Adjusted Net Income, Adjusted Diluted EPS, Earnings Before Interest Taxes Depreciation and Amortization (EBITDA), Adjusted EBITDA, and organic growth rates should be considered in addition to, but not as substitutes for, the information prepared in accordance with GAAP. For reconciliations of these non-GAAP financial measures to the most comparable GAAP measures, please refer to the appendix to this presentation and the earnings release associated with this quarterly period which can be found in the investor relations section of our corporate website (investor.integer.net). Statements made in this presentation whether written or oral may be “forward -looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of Securities Exchange Act of 1934, as amended, and involve a number of risks and uncertainties. These statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or “variations” or the negative of these terms or other comparable terminology. These statements are based on the company’s current expectations and speak only as of August 2, 2018 . The Company’s actual results could differ materially from those stated or implied by such forward-looking statements. The Company assumes no obligation to update forward-looking information, including information in this presentation, to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects. ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 2
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
Opening Comments
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 10 th ) of sales and profit growth” Strategy • Completed AS&O divestiture on July 2, 2018 Reduced leverage to • Paid down $548 million of debt on July 10, 2018 4x EBITDA Completed AS&O Full Year Outlook divestiture on July 2 nd • Increased guidance by $0.15 to $3.35 - $3.65 Repaid $548 million of debt on July 10 th ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 5
Financial Results
2Q18 Adjusted Financial Results (1) – Pre-Divestiture ($ in millions, except per share amounts) Sales Adjusted EBITDA Adjusted Net Income organic (2) organic (3) organic (3) 10% 15% 37% % Growth 11% reported 27% reported 76% reported $403 $89 Reported Reported $399 $76 $87 $35 FX Adjusted FX Adjusted FX Adjusted Reported $363 $70 $33 $24 Reported Reported FX Adjusted FX Adjusted $20 Reported 2Q17 2Q18 2Q17 2Q18 2Q17 2Q18 $ 0.62 $ 1.06 Reported Adj. As reported GAAP and Non-GAAP numbers EPS FX $ 0.76 $ 1.01 Adjusted Foreign currency impact on reported GAAP and Non-GAAP numbers (1) Refer to the appendix of this presentation for a reconciliation of Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and organic growth rates to the most directly comparable GAAP measure (2) Organic growth for Sales excludes the impact of foreign currency exchange rates (3) Organic growth for Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS exclude the impact of foreign currency reported in other (income) loss, net ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 7
YOY Sales Improvement Continues Trailing 4 Quarters – Pre-Divestiture Advanced Surgical, Orthopedics & Portable Medical 12% 8% (1) Integer 4% 0% 8% 2Q17 3Q17 4Q17 1Q18 2Q18 Quarterly YOY % Change - Organic Cardio & Vascular Quarterly YOY % Change – Organic 6% 15% 5% 10% 5% 3% 0% 2% Cardiac & Neuromodulation 4% 2% 0% 0% 2Q17 3Q17 4Q17 1Q18 2Q18 (2)% (4)% Non-Medical (Electrochem) 40% 20% 0% (1) Excludes impact from changes in foreign currency exchange rates ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 8
Adjusted EBITDA & Adjusted Net Income ($ in millions except per share amounts) Adjusted EBITDA Adjusted Net Income $35 $1 $5 $89 Tax Rate $12 • +$19MYOY FX $70 • $16M from $20 ($3) Operations • $8M FX YoY Incentive Operational • ($5M) Incentive Compensation Improvement Compensation 2Q17 Incentive Operational FX Tax Rate 2Q18 2Q17 2Q18 Compensation Improvement Adj. (1) $0.62 ($0.09) $0.33 $0.17 $0.04 $1.06 EPS (1) Includes $0.02 unfavorable impact due to year-over-year share dilution Note: Amounts may not sum due to rounding ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 9
Continued Deleveraging Free Cash Flow (1) Cash Flow From Ops ($ in millions) ($ in millions) $46 $36 • Reduced leverage to 5.1x $39 $38 at end of Q2 $28 $34 $27 $21 • July 10 paid down $21 additional $548M from $13 divestiture proceeds • $75M debt pay down in 1H18 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 • No significant maturities Leverage (2) Debt Payments until 2020; well within ($ in millions) covenants 5.9x 5.8x $50 5.6x 5.4x $40 5.1x $38 $25 $43 4.0x $22 $31 $33 $18 $15 $8 $7 $7 $7 $5 July 10 th 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 (1) Free Cash Flow defined as Cash Flow from Operations Post less Capital Expenditures, net Divestiture Accelerated Repayment (2) Leverage calculated as Total Debt less Cash and Cash Required Repayment Equivalents divided by Adjusted EBITDA ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 10
Product Line Review
Cardio & Vascular Offering a full-range of services for the design, development, and manufacturing of diagnostic and interventional cardiac and endovascular delivery and retrieval devices, along with comprehensive supply-chain solutions Organic Quarterly YOY Growth 13% 11% 9% 8% % Change Guidewires, Stylets & Steerable Sheaths Catheters & Sheaths Introducers 7% Accessories • 0% Q2 YOY growth driven by increased sales of Catheter & 2Q17 3Q17 4Q17 1Q18 2Q18 Guidewires due to market growth and new business wins Trailing 4-Quarter Sales • Trailing 4-quarter sales driven by market penetration in the ($ in millions) high growth Peripheral Vascular, Neurovascular & $568 $550 $537 $522 $512 Structural Heart markets • 2H17 comparables more difficult, expect lower year-over- year growth rates 2Q17 3Q17 4Q17 1Q18 2Q18 7% 9% 9% 10% 11% ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 12
Cardiac & Neuromodulation Providing technology solutions for the active implantable medical device industry by partnering with customers to bring high-quality productsto established and emerging markets – from initial concept through to high-volume manufacturing Organic Quarterly YOY Growth 9% 5% % Change Pulse Generators & External Pulse Generator 1% Leads & Lead Components, Solutions (Programmers, (1)% Components & Adaptors & Assemblies 0% Chargers, Patient Devices) Assemblies 2Q17 3Q17 4Q17 1Q18 2Q18 (6)% • Neuromodulation increased from market demand for spinal cord stimulation leads and battery sales to a new customer Trailing 4-Quarter Sales ($ in millions) • CRM grew low single digits due to new component $443 business and increased capacitor volume $434 $433 $428 $428 • Trailing 4-quarter CRM and Neuro sales have returned to growth driven by Neuromodulation • 2H17 comparables more challenging as 4Q17 was ~13% higher than prior quarters 2Q17 3Q17 4Q17 1Q18 2Q18 (2)% (4)% (2)% 0% 2% ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 13
Advanced Surgical, Orthopedics & Portable Medical Providing a wide range of technologies and solutions to the Advanced Surgical and Orthopedic markets Organic Quarterly YOY Growth 12% 10% 9% 6% Orthopedic Implants & Arthroscopy Biopsy & Drug Portable Medical Laparoscopy & % Change (Power Solutions) Instruments General Surgery Products Delivery 0% • 2Q18 sales increase driven by instrument product launch, 0% 2Q17 3Q17 4Q17 1Q18 2Q18 market demand for implants and new business wins • Portable Medical continues to exhibit strong growth Trailing 4-Quarter Sales ($ in millions) • Trailing 4-quarter sales growth remains strong stemming $470 $456 $440 $428 from increased market penetration and timing from $421 inventory builds • AS&O Product line divested in the second half except Power Solutions and remaining sales to Viant 2Q17 3Q17 4Q17 1Q18 2Q18 (0)% 2% 6% 8% 12% ITGR: 2Q18 Earnings Conference Call / August 2, 2018 / Page 14
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