Piper Jaffray Conference Presentation December 5, 2019 - - PowerPoint PPT Presentation
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
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
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
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
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
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
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
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 - $4.25 Original Guidance
8 ITGR: Investor Presentation / November 2019
Debt Payments
(1) Free Cash Flow defined as Cash Flow from Operations less Capital Expenditures, net of proceeds from sale of property, plant, and equipment (2) Leverage calculated as total principal amount of debt outstanding less Cash and Cash Equivalents divided by Trailing 4 Quarter Adjusted EBITDA
Cash Flow From Ops Free Cash Flow(1) Leverage(2)
2019 Cash Flow Outlook
($ 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
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
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
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