Piper Jaffray Conference Presentation December 5, 2019 - - PowerPoint PPT Presentation

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Piper Jaffray Conference Presentation December 5, 2019 - - PowerPoint PPT Presentation

Piper Jaffray Conference Presentation December 5, 2019 Presentation of Financial Information & Forward-Looking Statements Historical financial and operating data in this presentation reflect the consolidated results of Integer for the


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SLIDE 1

Piper Jaffray Conference Presentation

December 5, 2019

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SLIDE 2

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 December 5, 2019. 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

  • ccurrence of unanticipated events or changes in future operating results, financial conditions or prospects.

2 ITGR: Investor Presentation / November 2019

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SLIDE 3

Cardiovascular / Structural Heart Peripheral Vascular Neurovascular

Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation 37% AS&O & Portable Medical 11% Electrochem 5%

Military Tachycardia SCS / Neurostimulation Adv Surgery Orthopedics

Revenue by Markets Served - $1.26 billion(1)

Steerable Sheaths Catheters & Sheaths Introducers Guidewires, Stylets & Accessories Finished Device Leads & Lead Components, Adaptors & Assemblies Orthopedic Implants Electrosurgical Accessories Battery Cells Battery Packs Core Battery Pack Assemblies Li-Ion Battery Packs Batteries Capacitors Feedthroughs Enclosures Stents / Valves Combined Devices Portable Medical Bradycardia Urology Oncology Electrophysiology Vascular Access

Markets Products Markets Products Markets Products Markets

Energy Environmental

Products

3 ITGR: Investor Presentation / November 2019 - (1) midpoint of 2019 guidance range

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SLIDE 4

Portfolio Strategy Operational Strategy: Strategic Imperatives

How we win in the markets we serve How we achieve excellence in everything we do

Focused Strategy to Drive Long-term Growth

Cardio & Vascular Neuromodulation Electrochem Portable Medical

Invest to Grow Protect & Preserve

Cardiac Rhythm Management

4 ITGR: Investor Presentation / November 2019

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SLIDE 5

Customers Culture Costs

Portfolio Strategy

Product Category Leaders

Operational Strategy

Strategic Imperative Leaders

Joel Becker President, CRM&N Kirk Thor CHRO Joel Becker President, Cardiac Rhythm Management & Neuromodulation Payman Khales President, Cardio & Vascular Carter Houghton President, Electrochem & Portable Medical Jen Bolt SVP, Global Ops Joe Flanagan EVP, Quality

Manufacturing Excellence Business Process Excellence Performance Excellence Leadership Capability Sales Force Excellence Market Focused Innovation

Payman Khales President, C&V

Executive Alignment to Drive Our Strategy

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SLIDE 6

Product Line Strategy and Growth Teams

Integer’s Sustainable Process to Drive Growth

Product Line Strategies Integer’s Product Line Strategy Process is how we develop winning strategies for Product Lines in our portfolio. Product Line Strategies include standard processes, tools and governance that drive our critical strategic decisions.

Growth Teams

Cross-functional teams in place - accountable for developing product line growth strategies in targeted markets

Inputs Planning Execution

Patient Needs / Clinical Trends Macro Technology Trends Regulatory Trends Emerging Markets Trends Consolidation Trends Manufacturing Trends Capability Prioritization for Target Markets Product Roadmap Technology & Capability Roadmap Sales Targeting & Account Management Manufacturing Plan Program Management for Development & Operations Clear Functional Accountability Sales Execution KPIs and Relevant Metrics Standard Processes & Business System Improvements

Continually Evolve Strategy in Order to Achieve Sustainable Revenue & Profit Growth

6 ITGR: Investor Presentation / November 2019

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SLIDE 7

Manufacturing Excellence: Business Optimization and Margin Expansion

Integer Production Systems Lean Diagnosis KPI and Dashboard Standardization Continuous Improvement Culture Status

  • Framework and detailed system

elements of our Integer manufacturing processes

  • Defined & scoped 16 elements that

comprise the IPS

  • IPS element tools, templates and

resources in process

  • Comprehensive diagnosis and

current-state mapping

  • Prioritized and aligned site

transformation plans

  • All 15 facilities have completed

their initial lean diagnosis

  • Improvement actions underway
  • Learnings advancing to addition

value streams within sites

  • Performance metrics with clear

definition and reporting

  • Safety, Quality, Delivery, Cost,

People

  • All site-level key process

indicators defined

  • Leadership dashboard

developed and implemented

  • Clear training and expectations
  • f leaders and all associates
  • Organizational design aligned

to optimized operations.

  • Site leadership lean training

complete for all sites

  • Organizational structure
  • ptimization in process

7 ITGR: Investor Presentation / September 2019

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2019 Full-Year Outlook

Adjusted EPS

$1,213 $3.80 $1,253 - $1,268 $4.55 - $4.65

($ in millions except per share amounts)

Growth % 3% - 4.5% 20% - 22%

Adjusted Sales

$259 $282 - $286 9% - 10%

Adjusted EBITDA

$1,260 - $1,280 $275 - $283 $4.05 - $4.25 Original Guidance

8 ITGR: Investor Presentation / November 2019

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SLIDE 9

Debt Payments

(1) Free Cash Flow defined as Cash Flow from Operations less Capital Expenditures, net of proceeds from sale of property, plant, and equipment (2) Leverage calculated as total principal amount of debt outstanding less Cash and Cash Equivalents divided by Trailing 4 Quarter Adjusted EBITDA

Cash Flow From Ops Free Cash Flow(1) Leverage(2)

2019 Cash Flow Outlook

($ in millions)

$548 $160 - $170 $110 - $120 $105 - $115 $67 - $77

Target 2.5x - 3.5x

Divestiture Proceeds Accelerated Repayment Required Repayment

$700

$160 - $170 $110 - $120 $105 - $115 2.5x - 3.5x Original Guidance No change, despite $15 million acquisition

~2.9x

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Disciplined capital deployment

ü Continued EBITDA growth ü Increased free cash flow ü Capacity for “bolt-on” acquisitions ü Recently amended credit facility reducing interest expense

Leverage framework

Significant deleveraging 6.1x 5.6x

2016

3.5x

2017 2018

~2.5 - 3.5x

Debt x EBITDA Leverage

Balanced & Disciplined Capital Allocation

10

Y/E19 Guidance

2.9x

ITGR: Investor Presentation / November 2019

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2021

Market + 2%

Revenue Growth versus Prior Year:

(2)% (4)%

2015 2016

5% 7%

2017 2018

Integer’s Journey – Executing Long-term Growth Strategy

Disruption Stabilizing & Building Sustained Outperformance 2015 2016 2017 2018 Strategic Objectives Executing Strategy

3% - 4.5%

2019 Guidance

  • Market growth
  • ~1x revenue growth
  • 6x à 3.5x
  • New leadership team
  • Operational stabilization
  • Clear strategy
  • Portfolio change
  • Multi-year plans

Declined Declined >6x

  • Integrated $1.7B Lake

Region acquisition

  • Spun off Nuvectra
  • Challenging customer

relationships

  • Market growth, ex Nuvectra
  • 2x revenue growth
  • Debt leverage 2.5x – 3.5x
  • Product line strategy
  • Operational Strategic

Imperatives

  • Executing bolt-on M&A
  • Disciplined capital

deployment

  • 200bps above market
  • At least 2x revenue growth
  • Debt 2.5x – 3.5x

“Excellence in everything we do”

11ITGR: Investor Presentation / November 2019

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SLIDE 12

Contact Information

Tony Borowicz

SVP, Strategy, Corporate Development & Investor Relations

Integer

Tony.Borowicz@Integer.net www.integer.net

(O) 716.759.5809

12ITGR: Investor Presentation / November 2019