Investor Presentation JP Morgan Conference January 2013 Greatbatch - PowerPoint PPT Presentation

Investor Presentation JP Morgan Conference January 2013

Greatbatch Team Thomas J. Hook President & CEO Michael Dinkins Senior Vice President & CFO 2

Forward-Looking Statements  We will be making forward-looking statements during today’s presentation.  Please refer to the appendix of this presentation and our most recent SEC filings for more information and cautionary language surrounding these statements. 3

Other 3% Energy/Environmental 11% Greatbatch Today Portable Medical 12% CRM/Neurology 47% 86% Orthopaedics Revenues from 19% Medical Device Market Vascular 8% 4

Blue Chip Customer Base 5

Our Vision Market-driven technologies and operational excellence in the medical device markets. Our Strategy Extend partnerships with key OEM customers beyond discrete components to include medical device systems. 6

 Identify AlgoStim commercial partner Strategic Monetize  Commercialize non-core assets through QiG Initiatives Investment licensing deals Advance  Funding alternatives for portfolio investments Medical  Strategic equity investments Device Initiatives  Orthopaedic consolidation on schedule Leverage  Investment in sales & marketing – Capacity improve organic growth performance  Continue development through focused R&D Core  Differentiated power technology solutions Development Technologies 7

Strengthening Our Core, Expanding Our Pipeline Dispositions Acquisitions • Technology • Operating company • Technology  Gain value from technologies that  Accelerate our growth  Complement our business model will not be commercialized  Deepen relationships with strategic  Leverage our outstanding talent OEMs through intellectual property and centers of excellence 8

Building Success in 2013 Profitable Accountability Growth Innovation Teamwork 9

Profitable Growth Top Line 5-8% 7-13% Adjusted EPS Growth Organic Revenue Growth Bottom 2-5% Revenue Growth supported by operational Pipeline Line excellence ~60bps Adjusted Operating Margin Increase 10

Key Enablers  Portable Medical 15-20% growth - Greater Market Share  Vascular 7-13% growth - New Product Introduction Organic  Orthopaedic 8-14% organic growth on new base business Growth (after estimated disposition of $15M of Orthopaedic products)  Focus R&D spend on Algostim and Portable Medical Rationalize  Targeted acquisitions to enhance growth trajectory R&D  Orthopaedic Transition to Fort Wayne and Mexico on schedule  Reduce R&D spend Margin  Targeted investment to improve core marketing sales capabilities Expansion and build pipeline for sustained growth 11

2013 Assumptions  Completion of Swiss Consolidation in Q1 2013  No acquisitions are included although we are actively engaged in looking for accretive deals that will improve our revenue growth performance  Impact of R&D commercialization not included in guidance (Algostim, MRI, Sensor)  Medical Device Tax estimated impact on Gross Profit $1.5M to $2.5M  Estimated 33% to 35% tax rate (includes only the 2013 benefit of the recently reenacted R&D tax credit) 12

Selected Highlights ($ in millions except for EPS) 2011A 2012E 2013E Sales $569 $645 $660 - $680 Adjusted Operating Margin 11.9% ~11.5% 12% - 12.5% Adjusted EPS $1.68 ~$1.77 $1.90 - $2.00 Operating Cash Flows $90 $48 $85 - $95* Capex $22 $35 $20 - $25 ROIC 7.3% 7.2% 8% - 9% Consolidations and organic growth driving solid operating performance. *Excludes one-time impact of $30M deferred tax payment related to redemption of 2007 Convertible Debt 13

Adjusted Operating Margin Expansion Opportunity +60 bps potential over 2012 % of sales 0.2% - 0.4% 12%-12.5% 0.3% - 0.6% ~11.5% 2012E Gross Margin Reduced Opex 2013E 14

Strong Operating Cash Flow $ in millions $10 $20 $(9) $25 $(21) $90 ~$82 $(17) 2013E Adjusted Depreciation Amortization Stock Based Interest Taxes Other 2013E Operating Comp Operating Cash Income Flow *Excludes one-time impact of $30M deferred tax payment related to redemption of 2007 Convertible Debt 15

Consistent Cash Flow Drives Lower Leverage $ in millions Total Debt Operating Cash Flow $289.4 $90.0* $89.9 $76.9 $71.8 $236.0 $232.0 $221.0 $220.6 $48.0 2009 2010 2011 2012E 2013E 2009 2010 2011 2012E 2013E Est. debt repayment of $125M from 2009 to 2012 5 year annual average of $75M *Excludes one-time impact of $30M deferred tax payment related to redemption of 2007 Convertible Debt 16

Capacity for Growth Opportunities $361M in Dry Powder Available Accordion $200M Unused Borrowing Capacity $161M Credit facility matures June 2016 $400M Line Outstanding on Converts of $198M Credit Outstanding on Borrowings Will utilize Line of Credit to finance $41M converts maturing in 2013 Cash $20M 17

Targeted acquisitions focused on returns Emphasis on Capital investments 2013 continued cost focused on new Profitable efficiencies product demands 60 bps Operating Margin Growth Capital Spend $20M - $25M Improvement Focused use of cash Operating Cash Flows $85M-$90M* *Excludes one-time impact of $30M deferred tax payment related to redemption of 2007 Convertible Debt 18

Appendix 19

Forward-Looking Statements Some of the statements made in the 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 the negative of these terms or other comparable terminology. These statements are based on the company’s current expectations. The company’s actual results could differ materially from those stated or implied in such forward-looking statements. The company assumes no obligations 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. 20

Revenue Growth Estimated Preliminary 2013 Estimated 2013 2012 Revenue Revenue Annual Growth Product Line (millions) (millions) Rate 0% – 2% $308 – $314 CRM & Neuromodulation $308 7% – 13% $56 – $60 Vascular Access $53 (5%) – 0% $113 – $119 Orthopaedic $119 15% – 20% $92 – $96 Portable Medical $80 $91 – $91 Energy & Other $85 7% 2% – 5% $660 – $680 Total Sales $645 21

Contact Information Michael Dinkins Chief Financial Officer Greatbatch, Inc. 2595 Dallas Parkway Suite 310 Frisco, TX 75034 Tel: 214-618-5242 MDinkins@greatbatch.com www.greatbatch.com 22