3Q18 Earnings Conference Call November 1, 2018 ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 1
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 November 1, 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: 3Q18 Earnings Conference Call / November 1, 2018 / Page 2
Agenda • Opening Comments • Financial Results • Product Line Review • 2018 Outlook • Question & Answer Period ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 3
Opening Comments ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 4
Strong Financial Results…Executing Strategy…Building Team Financial Results • 3Q results support improved guidance Integer delivered - Revenue guidance increased to 6% - 7% growth another strong quarter - EPS guidance increased primarily due to lower taxes and interest expense of sales and profit • Continued Deleveraging growth - Paid down $595 million of debt in 3Q - Leverage ratio at 3.7 times adjusted EBITDA versus 5.6 at the beginning of 2018 Strategy Launched Operational • Launched execution of multi-year Operational Strategic Imperatives in September with Top 100 Senior Leaders Strategic Imperatives • Transitioning to a new sales organization structure in 4Q to drive customer focused growth strategies and increase accountability for sales growth Leadership Continued Building • Jason Garland joined as EVP/CFO to bring strong operational finance leadership to execution of Operational Strategic Imperatives Leadership Team • As previously announced, Jeremy Friedman, former COO/Interim CFO, retiring at end of 2018. Customer Operational Strategic Imperatives transitioned to Payman Khales (Pres. C&V) and Tony Gonzalez (Pres. CRMN) ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 5
Financial Results
3Q18 Adjusted Financial Results (1) ($ in millions, except per share amounts) Adjusted Sales Adjusted EBITDA Adjusted Net Income organic (2) organic (3) organic (3) 7% 9% 15% % Growth 7% reported 10% reported 18% reported $36 $68 FX adjusted $305 $31 $63 FX adjusted $285 Reported FX Adjusted FX Adjusted $35 Reported $67 $305 Reported $29 $60 Reported $284 FX Adjusted Reported Reported FX Adjusted FX Adjusted 3Q17 3Q18 3Q17 3Q18 3Q17 3Q18 $ 0.91 $ 1.06 Reported Adj. EPS FX As reported GAAP and Non-GAAP numbers $ 0.98 $ 1.10 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: 3Q18 Earnings Conference Call / November 1, 2018 / Page 7
Year-over-Year Sales Improvement Continues (1) Trailing 4 Quarters Cardio & Vascular 12% 8% 4% Integer 0% 9% Cardiac & Neuromodulation 8% 6% 7% 2% 6% (2)% 4% (6)% Advanced Surgical, Orthopedic & Portable Medical 15% 10% 0% 3Q17 4Q17 1Q18 2Q18 3Q18 5% 0% Non-Medical (Electrochem) 40% 20% 0% (1) Excludes impact from changes in foreign currency exchange rates ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 8
Adjusted EBITDA & Adjusted Net Income ($ in millions except per share amounts) Adjusted EBITDA Adjusted Net Income $9 $1 $35 $1 $67 $(1) $(4) $29 $60 FX Tax Rate • $10 from Operations • $1 FX Incentive Operational • $(4) Incentive Compensation Improvement Compensation 3Q17 3Q18 3Q17 Operational Incentive FX Interest Tax Rate 3Q18 Improvement Compensation (1) (1) Adj. $0.91 $0.25 $(0.12) $0.02 $0.03 $(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: 3Q18 Earnings Conference Call / November 1, 2018 / Page 9
Continued Deleveraging Free Cash Flow (1) Cash Flow From Ops $40 $54 ($ in millions) ($ in millions) $36 $46 • Reduced leverage ratio to $38 $27 3.7 times adjusted EBITDA $34 $21 • $548M from divestiture $21 $13 proceeds • $40M in additional accelerated pay down 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 • No significant maturities until 2021; well within Debt Payments Leverage (2) $595 ($ in millions) covenants 5.8x 5.6x 5.4x $50 $548 5.1x $38 3.7x $25 $22 $43 $40 $33 $18 $15 $7 $7 $7 $7 $5 (3) (1) Free Cash Flow defined as Cash Flow from Operations 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 less Capital Expenditures, net Accelerated Repayment from Divestiture Proceeds (2) Leverage calculated as Total Debt less Cash and Cash Equivalents divided by trailing 4 quarter Adjusted EBITDA Accelerated Repayment (3) 3Q18 Accelerated Repayments totaled $588M; $548 from Required Repayment divestiture proceeds plus $40M from operations ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 10
Product Line Review
Cardio & Vascular Offering a full-range of services for the design, development, and manufacturing of diagnostic and interventional cardiac and endovascular delivery and retrieval devices, along with comprehensive supply-chain solutions Organic Quarterly Y-o-Y Growth 13% 11% 10% 9% 7% % Change Guidewires, Stylets & Steerable Sheaths Catheters & Sheaths Introducers Accessories • 3Q18 year-over-year growth driven by continued strong 0% 3Q17 4Q17 1Q18 2Q18 3Q18 demand in the electrophysiology market stemming from customer share gains & new product launch and timing from Trailing 4-Quarter Sales a customer inventory replenishment ($ in millions) $575 $562 $544 $531 $516 • Trailing 4-quarter sales growth of 11% driven by continued strong demand and market penetration in the focus markets of electrophysiology, structural heart and peripheral vascular • Expect growth trend to remain above market from increased focus on high growth C&V market segments 3Q17 4Q17 1Q18 2Q18 3Q18 9% 10% 10% 11% 11% ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 12
Cardiac & Neuromodulation Providing technology solutions for the active implantable medical device industry by partnering with customers to bring high-quality productsto established and emerging markets – from initial concept through high-volume manufacturing Organic Quarterly Y-o-Y Growth 9% 8% 5% % Change 1% Pulse Generators & External Pulse Generator Leads & Lead Components, 0% Solutions (Programmers, Components & Adaptors & Assemblies 3Q17 4Q17 1Q18 2Q18 3Q18 Chargers, Patient Devices) Assemblies (6)% • CRM growth driven by increased components market penetration & lower 2017 comparables from customer Trailing 4-Quarter Sales inventory adjustments. Neuro growth driven by spinal cord ($ in millions) stimulation market demand and increased components $451 $443 $433 $427 $428 market penetration • Trailing 4-quarter CRM sales slightly ahead of market growth and neuromodulation sales running significantly ahead of market due to accelerating demand in finished devices and leads • Expect sales to decrease in 4Q18 compared to extremely 3Q17 4Q17 1Q18 2Q18 3Q18 strong 4Q17 (4)% (2)% (0)% 2% 6% ITGR: 3Q18 Earnings Conference Call / November 1, 2018 / Page 13
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