March 27, 2013 Cautionary Statement This presentation contains - PowerPoint PPT Presentation

March 27, 2013

Cautionary Statement This presentation contains forward-looking statements, refers to non-GAAP financial measures and provides industry and market data. Please refer to the appendix to this presentation for more information and cautionary language regarding these statements, financial measures and data. 2

Our Vision Greatbatch will be the definitive leader in critical technologies by infusing integrity, innovation, and operational excellence into the medical device and commercial markets. Our Strategy Extend partnerships with key OEM customers beyond discrete components to include medical device systems . 3

Key Message Points Long-term agreements cover large percentage of revenue Strong Reputation for innovation & operational excellence Foundational Strong Core Business Strong Blue Chip customer base Business Strong markets with significant growth opportunity Grow Leveraging extensive Intellectual Property portfolio the Investment in Sales & Marketing to execute growth Core Targeted acquisitions expanding capabilities & growth Commercialize Algostim development successfully concluding Compelling value proposition Medical Deploy QiG business model Device Leverage capabilities, IP, KOLs & strategic partners Innovation Core medical business margins increasing Drive Future medical device spend funded with partners Profitable Strong balance sheet & cash flows Growth Key Messages 4

Sustainable Long-Term Growth ~ 5% Organic Growth Top • Line • • Leverage IP Pipeline • Innovation • Bottom Line ~ 2x Top Line Growth Adjusted EPS 5

Greatbatch Today Other 2% Energy $646M 10% Vascular 2012 Revenue 8% Cardiac & Neuromodulation Portable 48% Medical 88% 13% Revenues from Orthopaedics Medical Device Market 19% 6

Cardiac & Neuromodulation Orthopaedics Implants | Instruments | Delivery Systems Batteries | Capacitors | Catheters | Stimulation Leads | Feedthroughs | Device Enclosures & Cases | Device Headers | Device Assembly Feedthrough Reamer Handle Reamer Header Battery Handles Delivery System Enclosure Stimulation Leads Vascular Portable Medical Powered External Medical Devices Advanced Coatings | Catheters | Introducers Steerable Sheath Integrated Power Battery Packs Charging Stations Supplies Introducers 7

Portable Medical to Greatbatch Portable Medical Devices Powered, external medical devices which enable movement and portability for the medical professional, patient and / or caregiver Greatbatch’s Focus Greatbatch is committed to providing reliable, high quality power supplies, charging systems, and assembly to this market 8

Sustainable Organic Growth Targeted Sales Force Markets Emphasis Strategic Supported Investments Business Model 9

Greatbatch Market Opportunities: Medical Cardiac & Neuromodulation Orthopaedics GB Opportunity: $1.5B GB Opportunity: $3B GB Revenue: $309M GB Revenue: $122M Avg. Market CAGR: 3% Avg. Market CAGR: 5.5% Pacemakers Peripheral Nerve Fracture Repair Extremities ICDs and CRT-D Stimulation Joint Arthroscopy Deformities Implantable Cochlear Spine Dental Monitors Cardiac Surgery Orthobiologics Maxillofacial Spinal Cord Ventricular Assist Joint Reconstructio n Stimulation Devices Portable Medical Vascular GB Opportunity: $1B GB Opportunity: $1.3B GB Revenue: $82M GB Revenue: $52M Avg. Market CAGR: 6% Avg. Market CAGR: 3.5% Defibrillators Oxygen Concentrators Vascular Access Renal Denervation Ultrasound Ventilators Atrial Fibrillation Dialysis Staplers / Clips Orthotics & Prosthetics Interventional Cardiology Fluid Management Auto CPR Patient Monitors Peripheral Interventions Oncology Structural Heart See appendix of this presentation for footnote on industry and market data 10

Aggregate Opportunity Multi Billion Dollar end markets served Greatbatch $6.8B Total Greatbatch Opportunity Share $565M GB Share of Opportunity (8.7%) Greatbatch Opportunity Major growth opportunity through market share capture 11

Supported Business Model Targeted Sales Force Markets Emphasis Strategic Supported Investments Business Model 12

Blue Chip Customer Base 13

Expanding Intellectual Property Issued Patents: 1990 to 2012 1400 1,179 Patents Med Device Patents 1200 Issued: 160 1000 Pending: 57 800 500 Patents 600 593 (307 US) 158 Patents 400 Patents Pending 200 0 1992 1997 2002 2007 2012 US Total OUS Total WW Total 14

Long-Term Agreements 71% Greatbatch Medical revenue under LTAs › Current (through 2013) Terms Through 2014 65% - 70% Through 2015 50%+ Beyond 35% - 40% … in addition, product lifecycle / replacements drive core growth and protection 15

Portable Medical: Long Product Life Cycles Design wins early with key OEMs & in emerging segments fuel long term growth Long Product Life Cycles Support Double-Digit Growth Product Millions Revenue Design Service & Production Support Post Launch Phase 0 1 3 4 7 8 10 Years 16

Portable Medical: Long Product Life Cycles Focus on Portfolio Management and IP wins generational development Growth of AED and Defibrillator Battery Markets Replacements Drive Revenue Support Drives Revenue Number of Batteries Revenue Gen 3 Gen 2 Gen 1 0 5 10 15 0 5 10 15 Year Year P1 Replacements P2 Replacements P3 Replacements P4 Replacements Partner 1 Partner 2 Partner 3 Partner 4 17

Strategic Investments Targeted Sales Force Markets Emphasis Strategic Supported Investments Business Model 18

Operations Efficiency & Investment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Investment Plymouth Raynham Warsaw Tijuana II Med Device Alden I Tijuana I Alden II Clarence Indianapolis Fort Wayne R&D Center 2 sites into 2 sites into Consolidation 2 sites into Corgemont Clarence R&D Tijuana & Columbia City Clarence & Genesee Freemont Orchard Park 3 sites Blaine & 2 sites to to Alden to Holmes to Clarence to Raynham Plymouth Fort Wayne & Tijuana Investment Consolidation Low cost manufacturing Reduced operational burden Expanded capacity operation established Eliminated underperforming Enhanced Orthopaedics Medical device assembly product lines production environment capabilities Established unified resource Pursuing on-going cost Dedicated R&D centers locations reduction initiatives Shed low margin programs *Investments & Consolidations represent only a partial listing during the period 19

Quality: A Competitive Advantage Medical Device Integrate > Harmonize > Optimize Infrastructure Investment in leadership Over 100 years medical device quality leadership experience Harmonized quality systems Nine ISO 13485 certified facilities Common enterprise quality metrics Eight FDA registered facilities Product quality & capable Successful FDA inspections system focus On-going reduction in cost of Talent & infrastructure quality development 20

Acquisition Strategy Focus on innovative technologies in our medical markets Aligned with therapy areas Alignment with Technology to leverage and fill gaps Strategy Increasing market share via ‘tuck - ins’ Differentiated product or procedures Address Technology Proprietary positioning of products Needs Feasibility of concept Incremental revenue of $10 - $50M Meet Financial Profitable ROI (>20%) Criteria Accretive to sales growth, margins, and ROIC Targeted investments of $5 - $10M Minority Equity positions ranging from 10 - 20% ownership Investments Align with long-term M&A guidelines 21

Sales Force Emphasis Targeted Sales Force Markets Emphasis Strategic Supported Investments Business Model 22

Sales Force Optimization Organized for Equipped with Impactful Excellence Tools & Talent Results Investment in leadership Focus on winning generational development programs Customer relationship enhancement Enhanced customer relationships & touch points Distinct technical sales & account executives Drive for additional LTAs Upstream & downstream New pay for performance structure; marketing additions reps win when Greatbatch wins Unified sales operations Enhanced rep recruiting 23

Commercialize Medical Device Innovation Strong Leverage Value Capabilities Proposition Technology Innovation Addressing Future Unmet Opportunities Needs Commercialize Medical Device Innovation 24

Paddle Leads Algostim System Perc Leads Patient Programmer Clinician Programmer Patient Feedback Tool Charger CP PFT PPC Pocket Programmer External PoP Pulse Generator EPG Anchors Trial Cable Extensions Implantable Pulse Generators IPG Commercialize Medical Device Innovation 25

Neurostimulation Market Sizes Market Revenues (W.W.) Average Market CAGR: 2015: $3.6B 11% (7% - 17%) 2012: $2.6 B Other $125M Other $190M VNS $220M VNS $345M SCS SCS SNS $400M SNS $630M $1.4B $1.7B DBS $430M DBS $690M SCS: Spinal Cord SNS: Sacral Nerve Source: Neuromodulation company earnings releases and internal estimates. Excludes cochlear, DBS: Deep Brain VNS: Vagus Nerve drug pumps, external stimulation Commercialize Medical Device Innovation 26