4Q19 Earnings Conference Call February 20, 2020 ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 1
Integer Holdings Corporation Fourth Quarter 2019 Earnings Conference Call 9 a.m. Eastern Time, February 20, 2020 • A webcast of today’s call can be accessed Speakers: in the “Investors” section of the Company’s website: http://investor.integer.net Joe Dziedzic President and Chief Executive Officer • To participate on the call, please dial: • 833-236-5762 (U.S.) Jason Garland • 647-689-4190 (International) Executive Vice President, Chief • The conference ID is 8069250 Financial Officer • An online archive of the broadcast will be Tony Borowicz available at the website three hours after Senior Vice President, Strategy, the live call, and will be available through Corporate Development & Investor Thursday, February 27, 2020, by dialing Relations • 800-585-8367 (U.S.) • 416-621-4642 (International) • The conference ID is 8069250 ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 2
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 data contained herein reflect the consolidated results of the Company for the periods indicated. No representation is made that the information in this presentation is complete. For additional financial and business-related information, as well as information regarding business and product line trends, see the Company’s most recent Annual Report on Form 10 - K (“Form 10 - K”) and Quarterly Reports on Form 10 -Q filed with the U.S. Securities and Exchange Commission (the “SEC”), as well other reports filed with the SEC from time -to-time. Such reports are or will be available in the investor relations section of our corporate website (investor.integer.net ) and the SEC’s website ( www.sec.gov). Non-GAAP Financial Measures. This presentation includes financial information prepared in accordance with accounting principles generally accepted in the United States (“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 earnings per share, earnings before interest taxes depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted sales, 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 period which can be found in the investor relations section of our corporate website (investor.integer.net). Forward Looking Statements. Some of the statements contained 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 the Securities Exchange Act of 1934, as amended, including statements relating to future sales, expenses, profitability, cash flows, debt repayments and leverage; expected growth of our business and industry; our ability to execute our business model and our business strategy; our ability to identify trends within our industries and to offer products and services that meet the changing needs of those markets; our ability to repay existing indebtedness; projected capital expenditures; our expected tax rates; and other events, conditions or developments that will or may occur in the future. You can identify forward- looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “see,” “potential” or “ con tinue” or “variations” or the negative of these terms or other comparable terminology. These statements are based on the Company’s curr ent expectations and speak only as of as of the date of this presentation. The Company’s actual results could differ materially from those stated or implied by such forward-looking statements. Except as may be required by law, 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: 4Q19 Earnings Conference Call / February 20, 2020 / Page 3
Agenda • Opening Comments • Strategy Update • Financial Results • Product Line Review • 2020 Outlook • Question & Answer Period ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 4
Opening Comments ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 5
Strong 2019 Financial Results … 4Q Financial Results • +7% sales growth … solid growth in all product lines All product lines posted solid sales growth • Adj. EBITDA +8%, Adj. EPS +20% • Debt leverage below 3 times Adjusted EBITDA Full-Year Financial Results Achieved two strategic • +4% sales growth … at low end of original guidance growth rate objectives: grew profit 2x sales growth rate • Adj. EBITDA +9%, Adj. EPS +23% … exceeded original guidance and reduced debt leverage to 2.9x • Paid $117 million debt … exceeded original guidance (1) Guidance as provided during 4Q 2018 earnings call on February 21, 2019 ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 6
Strategy Update ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 7
Journey to Excellence Sales Growth versus Prior Year: 2015 * 2016 * 2017 * 2018 2017 2018 2015 2016 7% 5% Strategy Financial Objectives • Sales growth 200 basis (2)% 1 (4)% points above market Market growth Declined Declined ~1x sales growth 5.6x 3.5x >6x • Profit growth 2x sales 2 growth rate Disruption Stabilizing & Building • Integrated $1.7B Lake • New leadership team Region acquisition • Operational stabilization • 3 Debt leverage 2.5x - 3.5x • Spun off Nuvectra • Clear strategy • Challenging customer - Portfolio change relationships - Multi-year plans *Represents reported change prior to Advanced Surgical and Orthopedic (AS&O) divestiture ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 8
Strategy Developed in 2 nd half of 2017 Operational Strategy: Portfolio Strategy Strategic Imperatives How we win 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 Management ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 9
Leadership Team In Place Joe Dziedzic President & CEO July 2017 Business Presidents Functional Leaders Carter Houghton Elizabeth Giddens Joe Flanagan President, Electrochem General Counsel and Chief EVP, Quality & & Power Solutions Ethics & Compliance Officer Regulatory Affairs May 2019 August 2019 2012 Joel Becker Jason Garland Jen Bolt President, Cardiac SVP, Global Operations Chief Financial Officer Rhythm Management October 2018 2005 & Neuromodulation April 2019 Payman Khales Kirk Thor Tony Borowicz President Chief Human SVP, Strategy, Cardio & Vascular Resources Officer Business Development, February 2018 January 2018 Investor Relations 2002 6 new leaders in 2018/2019 ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 10
Building & Strengthening Culture Investing in Culture Strategic Imperatives 2018 & 2019 Actions Leadership Capability • Selection Process 1 − Structured Interview Training • Talent Analytics − 430+ Leaders Trained • Talent Review / Evaluation − 350+ Interviews Conducted • Selection Process • Candidate Assessment 2 • Leadership Development − Psychometric Assessment • Succession Planning − 70+ Candidates − Baseline for development plans HR Transformation Performance Excellence • Individual Development Plans 3 • Strategic Workforce Planning Headcount +8% − 40% of Sr. Leaders/Mgrs Dollars spend +13% • Associate Engagement − 60% of HiPo’s + Successors • Performance Management • Performance Management 4 • Total Rewards − HiPo’s + Successors • Organization Effectiveness − Key Role Identification − Compensation Differentiation Building Leadership Capability to Deliver Performance Excellence ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 11
Investing in Manufacturing Excellence and LEAN Adj. EBITDA Margin (1) LEAN Headcount July 2018 to December 2019 20 LEAN Diagnosis events +50% +190 bps Over 200 participants 140 Projects/Kaizen events 22.6% 120 Site leaders trained 20.7% All sites trained & initial LEAN Diagnosis executed 2017 2019 2017 2019 (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 ITGR: 4Q19 Earnings Conference Call / February 20, 2020 / Page 12
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