greatbatch fy 2015 fourth quarter earnings call · q4 2015 financial overview ($ inthousands,...
TRANSCRIPT
![Page 1: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/1.jpg)
1
GreatbatchFY 2015 Fourth Quarter
Earnings Call
February 29, 2016
![Page 2: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/2.jpg)
2
Forward‐Looking Statement
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 Actof 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 byterminology 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. Thesestatements are based on the company’s current expectations. The company’s actualresults could differ materially from those stated or implied in such forward‐lookingstatements. The company assumes no obligations to update forward‐lookinginformation, including information in this presentation, to reflect changed assumptions,the occurrence of unanticipated events or changes in future operating results, financialconditions or prospects.
![Page 3: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/3.jpg)
3
Q4 Earnings Call Presenters
Thomas J. HookPresident & CEO
Michael DinkinsExecutive Vice President & Chief Financial Officer
![Page 4: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/4.jpg)
4
Agenda
Thomas J. Hook 2015 Achievements Nuvectra Update Acquisition Update
Michael Dinkins Financials
Thomas J. Hook Introducing Integer
Question & Answer
![Page 5: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/5.jpg)
5
Multiple Achievements in 2015
Completed transformative acquisition of Lake Region Medical
Received FDA approval for the Algovita medical device
Expanded CCC Medical Device manufacturing capacity to meet acceleratingNeurostimulation market demands
Proposed Nuvectra spin and potential upside for GB stockholders
Continued advancement of Manufacturing performance and Quality metrics
![Page 6: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/6.jpg)
6
On February 23, Greatbatch Board of Directors approved the spin‐off of Nuvectra
Nuvectra common stock will be distributed on March 14, 2016 to Greatbatch stockholders of record as of the close of the business on March 7, 2016̶ Greatbatch shareholders will receive one share of Nuvectra common stock for every
three shares of Greatbatch common stock
Nuvectra will launch their Investor Roadshow on March 2, 2016̶ Normal trading expected to commence on March 14, 2016 on the Nasdaq stock exchange
under the trading symbol NVTR
The spin‐off will provide clear shareholder benefits̶ Dividend of Nuvectra shares to our Greatbatch shareholders̶ Reduced Greatbatch operating expenses of up to $16M annually̶ Long term manufacturing agreement with Integer and Nuvectra
Nuvectra Spin‐off Update
![Page 7: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/7.jpg)
7
Acquisition Synergy Plan Update Clear line of sight to deliver 3 year synergy plan of at least
$60m Integration well underway and progressing on track to achieve
targeted first year synergies of $25m. Current focus in the areas of:
– Overlapping organization structures, contract spending and IT costs
Longer focus will be on manufacturing footprint optimization and process improvements
New Integer Executive & Leadership teams in place. Organization centered around four main product lines:
– CRM & Neuro; – Cardio & Vascular; – Advanced Surgical & Ortho; – Electrochem
Regular monitoring in place to enhance customers’ partnerships, operating performance, and associate retention
![Page 8: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/8.jpg)
8
Declan SmythPresident – Advanced Surgical & Ortho
Tony GonzalezPresident –CRM & Neuro
Senior Management TeamTom HookPresident &Chief Executive Officer
Jen BoltPresident –Electrochem
Jeremy FriedmanPresident –Cardio & Vascular
President/CEO since 2004;President CTI Solutions Group 2002 – 04; 20 years experience in senior leadership roles
EVP/CFO since 2012; EVP/CFO USI Insurance 2008 – 12; 20 years experience as public company CFO and 15 years as public company Director
EVP/CHRO since 2015; CHRO MTS Systems 2012 – 15; 10 years experience as senior HR executive
EVP Global Operations since 2013; President Greatbatch Medical 2010 -13; 20 years experience in plant management & consolidations
10 years experience in senior leadership roles in managing, expanding and consolidating plants
15 years experience in senior leadership roles in engineering supply chain, operations management and facility optimization
Mauricio ArellanoExecutive Vice President – Global Operations
EVP/COO Cardio Vascular business in Lake Region; 20 years experience in senior leadership roles in Finance, General Management and Operations Management
President Advanced Surgical since 2013; 20 years experience in senior leadership roles in Product Development, Marketing and Strategic Management
Michael DinkinsExecutive Vice President & Chief FinancialOfficer
Kristin TreckerExecutive Vice President & Chief Human Resources Officer
![Page 9: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/9.jpg)
9
2015: Acquired Lake
Region
2015:Announced spin‐off ofNuvectra, the owner of
Algovita®
2014:Acquired CCCMedical; CE
Mark received for Algovita®
2011 – 2012:AcquiredMicro Power
and NeuroNexus
2007 – 2008:(6) Acquisitions that established Med Device Platform
2006:Thomas Hook
Becomes CEO of Integer
2009:Re‐Optimization;Medical Device
initiative
Established Track Record of Integrating Businesses and Driving Top Line Growth
2007 2015
Market Capitalization: $1.6bn
2015 Sales:~$1,443mm
Cardio & VascularCardiac & Neuromodulation
Advanced Surgical, Orthopedics, & Portable Medical Energy, Environmental & Military
Diversified across six product lines and completed 10 acquisitions, growing revenue by >4x since 2007
Our Capabilities TodayCRM & VascularOur Capabilities Then
Market Capitalization: $450mm2007 Sales:~$320mm
![Page 10: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/10.jpg)
10
Financials
![Page 11: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/11.jpg)
11
Q4 2015 Sales PerformanceGB Organic Constant Currency (CC) Growth
(Sales in $ thousands) GreatbatchQ4 2015
Lake Region Q4 2015
Total Q42015
Total Q42014 % Change
Advanced Surgical, Orthopaedics and Portable Medical $54,729 $37,861 $92,590 $56,415 64%
Cardio and Vascular 17,094 88,796 105,890 15,560 581%
Cardiac/Neuromodulation 93,888 13,726 107,614 74,493 44%
Electrochem 13,217 ‐ 13,217 23,258 (43)%
Elimination of Intercompany Sales ‐ (1,744) (1,744) ‐ NA
Total Sales $178,928 $138,639 $317,567 $169,726 87%
Organic Constant Currency Sales Increase (Decrease) Vs PY 7% (5)%
Advanced Surgical, Orthopaedics and Portable Medical Organic Constant Currency Sales Increase Vs PY 1% 10%
7%
13%
Total GB GB ex Electrochem
Sales of $179 million was a record quarter for legacy Greatbatch
$139M in Sales from Lake Region Medical post acquisition
Organic growth in Cardiac/Neuromodulation business
Macro economic challenges in Energy market severely impacted Electrochem sales
Continued Fx headwind of $2.5M
![Page 12: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/12.jpg)
12
Q4 2015 Financial Overview($ in thousands, except per share data) Three Month Ended
January 1, 2016
January 2, 2015 % Change
SalesOrganic Constant Currency Sales Growth
$317,5677%
$169,726(5)%
87%
GAAP Diluted EPSAdjusted Diluted EPS
$(0.85)$0.92
$0.54$0.77
(257)%19%
EBITDA*Adjusted EBITDAAdjusted EBITDA as % of Sales
$5,592$69,00521.7%
$27,871$36,29521.4%
(80)%90%
Adj. EPS Comments
2014 Adjusted EPS $0.77
GB ‐ Price/Volume/Mix 0.29 Increase in legacy GBM sales volume driven by Neuromodulation growth partially offset by price reductions.
GB ‐ Adj OpEx 0.10 Lower functional expenses driven by cost controls partially offset by increase in RD&E for organic development programs and Nuvectra commercialization expenses.
GB ‐ G2B 0.14 Lower Funding of the plan compared to prior year
Lake Region Medical (LRM) Impact 0.57 Q4 post acquisition contribution from LRM net of higher interest and weighted average share count was dilutive $0.08 per share.
Interest and Other Gains and Losses (0.78) Primarily higher interest expenses driven by increased debt from LRM acquisition
Share Count (0.14) Increase of share count primarily from LRM acquisition
Tax Rate (0.02)
2015 Adjusted EPS $0.92
The per share data in this table have been rounded to the nearest $0.01 and therefore may not sum to the total.
![Page 13: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/13.jpg)
13
2015 Financial Overview($ in thousands, except per share data) Year End
January 1, 2016
January 2, 2015 % Change
SalesOrganic Constant Currency Sales Growth
$800,414(2)%
$687,7873%
16%
GAAP Diluted EPSAdjusted Diluted EPS
$(0.29)$2.90
$2.14$2.86
(114)%1%
EBITDAAdjusted EBITDAAdjusted EBITDA as % of Sales
$62,445$165,874
20.7%
$118,028$147,790
21.5%
(47)%12%
Adj. EPS Comments
2014 Adjusted EPS $2.86
GB ‐ Price/Volume/mix (0.20) Reflects reduction in legacy GBM sales volume, price reductions and impact on productivity.
GB – Operating Expenses (0.09)Higher Nuvectra commercialization and CCC Medical Devices acquisition/G&A infrastructure costs partially offset by reduction in Nuvectra R&D and functional spending control.
GB – Performance Based Compensation 0.40 Lower funding of the plan compared to prior year.
Lake Region Medical (LRM) Impact 0.57 YTD post acquisition contribution from LRM net of higher interest and weighted average share count was dilutive $0.05 per share
Interest and Other Gains and Losses (0.57) Primarily higher interest expenses driven by increased debt from LRM acquisition.
Share Count (0.15) Increase of share count primarily from LRM acquisition.
Tax Rate 0.08 Improvement driven by a full year impact of the Maquiladora tax structure and the favorable outcome of discrete tax items.
2015 Adjusted EPS $2.90
The per share data in this table have been rounded to the nearest $0.01 and therefore may not sum to the total.
![Page 14: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/14.jpg)
14
Balance Sheet Metrics($ in millions except for EPS)
2015 2014
Days Sales Outstanding* 54 66
Days Inventory Outstanding* 86 103
Our balance sheet is solid and will become stronger with the combined companies
2015 2014
Adjusted EBITDA $166 $148
ROIC* 5.0% 8.4%
2015 2014Working Capital $361 $242
Operating Cash Flow $12 $81
* 2015 Metrics calculated based on pro forma financials for combined company
![Page 15: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/15.jpg)
15
Lake Region Medical Financing
Term Loan A/Revolver Size $575MPricing Libor + 325 bpsMaturity 6 years (TLA)
5 years (Revolver)
Term Loan B Size $1,025MPricing Libor + 425 bps; 1% libor floorOID 99Maturity 7 years
Senior Unsecured Notes Size $360MPricing 9.13%OID None (par)Maturity 8 years (non-call 3 years)
Financial Covenants
Term Loan A/Revolver Total Net Leverage Maximum net leverage ratio 6.50:1.00
Interest Coverage Minimum ratio of Adj EBITDA to interest expense of not less than 3.00:1.00
Secured $1,760 million financing
![Page 16: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/16.jpg)
16
Imagine What We Wi l lBui ld Together
INTRODUCING
![Page 17: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/17.jpg)
17
Introducing IntegerWorld’s Leading Medtech Manufacturing Partner
>2x Larger than Closest Competitor
$1.4bn in Revenue
90% of Neurostimulation devices on market contain an Integer Component
Presence across 100 countries
More than 1,200 patent issued and nearly 1,700 patents filed and pending
Over 50%+ stock price growth since 2007
Medical Device Systems
Early Stage Innovation Partner
Critical Components for Medical Devices
Enhancing the Lives of Patients Worldwide As Our Customers’ Partner of Choice for Innovative Medical Technologies and Services
![Page 18: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/18.jpg)
18
39%
29%
4%
28%
$1,443M
Integer’s Diversified Revenue Base
Cardio & Vascular
Cardiac & Neuromodulation
Advanced Surgical, Orthopedics, and Portable
Medical1
Cardiovascular / Structural Heart
Peripheral Vascular
Neurovascular
Urology
Oncology
Laparoscopy / General Surgery Arthroscopy (knees)
Biopsy / Drug Delivery
1 Orthopedics, Advanced Surgical, and Portable Medical represent 13%, 12%, and 6% of revenue respectively.
Electrochem
Energy
Military
Environmental
Joint Preservation & Reconstruction
Tachycardia
Neurostimulation
Bradycardia
2015 Proforma Sales Mix
![Page 19: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/19.jpg)
19
Partner of Choice to MedTech Customers
Well‐Positioned to Partner With Our Customers As They Grow and Evolve
Design & Development Expertise to Facilitate Customer Innovation1
Global Supply Chain Footprint With Established Manufacturing & Quality Standards2
Full Spectrum of Manufacturing Capabilities, Including Ability To Build Complex Products and Work Them Up the Value Chain 3
Ability to Deliver Innovative Products4
![Page 20: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/20.jpg)
20
Appendix
![Page 21: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/21.jpg)
21
Net Income and Diluted EPS ReconciliationGAAP Reconciliation
(a) Given our acquisition of Lake Region Medical in the fourth quarter of 2015 and in order to present our financial results in a form more comparable to other medical device companies and less acquisitive companies, during the third quarter of 2015, we began excluding intangible asset amortization for purposes of calculating adjusted net income and adjusted diluted EPS. Prior period adjusted amounts have been recalculated to exclude intangible amortization for all periods presented.
(b) In 2013, we filed suit against AVX Corporation alleging they were infringing on our intellectual property. Given the complexity and significant costs incurred pursuing this litigation, during the second quarter of 2015, we began excluding these litigation expenses from adjusted amounts. Total costs incurred in connection with this litigation in 2015 was $4.4 million pre-tax. This matter proceeded to trial during the first quarter of 2016 and a federal jury awarded Greatbatch $37.5 million in damages. Prior period adjusted amounts have been recalculated to exclude these costs for all periods presented.
(c) Net of tax amounts computed using a 35% U.S., Mexico, and France statutory tax rate, a 25% Uruguay statutory tax rate, and a 12.5% Ireland statutory tax rate. Expenses that are not deductible for tax purposes (i.e. permanent tax differences) are added back at 100%.
(d) During 2015 and 2014, we incurred costs primarily related to the transfer of our Beaverton, OR portable medical and Plymouth, MN vascular manufacturing operations to Tijuana, Mexico. Additionally, with the acquisition of Lake Region Medical, these costs now include expenses incurred in connection with the closure of Lake Region Medical’s Arvada, Colorado site and the consolidation of its two Galway, Ireland sites initiated by Lake Region Medical in 2014.
(e) During 2015, we incurred costs related to the acquisition of Lake Region Medical ($28.0 million pre-tax during the fourth quarter of 2015 and $33.1 million pre-tax for fiscal year 2015) and the integration of CCC Medical Devices. During 2014, we incurred costs related to the integration of CCC Medical Devices.
(f) 2015 costs primarily include legal and professional fees incurred in connection with the pending spin-off of Nuvectra ($1.4 million pre-tax during the fourth quarter of 2015 and $6.0 million pre-tax for fiscal year 2015). 2014 costs primarily include costs in connection with our business reorganization to realign our contract manufacturing operations.
(g) We recorded $4.7 million pre-tax and $9.5 million pre-tax for the 2015 fourth quarter and full-year periods, respectively, in transaction costs (i.e. debt commitment fees, interest rate swap termination costs, debt extinguishment charges) in connection with our acquisition of Lake Region Medical.
(h) Pre-tax amount is a loss of $1.8 million and a gain of $3.4 million for the 2015 fourth quarter and full-year periods, respectively, and a gain of $445 thousand and $4.4 million for the 2014 fourth quarter and full-year periods, respectively.(i) The 2015 Federal R&D tax credit was enacted during the fourth quarter of 2015 and the 2014 Federal R&D tax credit was enacted in the fourth quarter of 2014. Amounts assume that the tax credit was effective at the beginning of the year for
2015 and 2014. (j) The per share data in this table have been rounded to the nearest $0.01 and therefore may not sum to the total.(k) Fourth quarter and full year 2015 adjusted diluted weighted average shares include 947,000 and 941,000 shares of dilution, respectively, related to outstanding equity awards that were not dilutive for GAAP EPS purposes.
Three Months Ended Year EndedJanuary 1,
2016January 2,
2015January 1,
2016January 2,
2015
(in thousands except per share amounts)
NetIncome (Loss)
PerDilutedShare
NetIncome
PerDilutedShare
NetIncome (Loss)
PerDilutedShare
NetIncome
PerDilutedShare
Net income (loss) as reported $ (24,907) $ (0.85) $ 14,176 $ 0.54 $ (7,594) $ (0.29) $ 55,458 $ 2.14Adjustments:
Amortization of intangibles(a)(c) 5,277 0.18 2,432 0.09 12,273 0.45 9,637 0.37Inventory step-up amortization (COS)(c) 15,605 0.52 138 0.01 15,605 0.57 195 0.01IP related litigation (SG&A)(b)(c) 735 0.02 628 0.02 2,871 0.11 1,626 0.06Consolidation and optimization expenses (OOE)(c)(d) 5,736 0.19 2,804 0.11 21,158 0.77 6,567 0.25Acquisition and integration expenses (OOE)(c)(e) 20,924 0.69 222 0.01 25,885 0.95 61 —Asset dispositions, severance and other (OOE)(c)(f) 1,499 0.05 1,187 0.05 5,099 0.19 3,463 0.13Lake Region Medical transaction costs (interest expense)(c)(g) 3,039 0.10 — — 6,151 0.23 — —(Gain) loss on cost and equity method investments, net (other income, net)(c)(h) 1,150 0.04 (290) (0.01) (2,177) (0.08) (2,841) (0.11)R&D Tax Credit(i) (1,200) (0.04) (1,200) (0.05) — — — —Adjusted net income and diluted EPS(j) $ 27,858 $ 0.92 $ 20,097 $ 0.77 $ 79,271 $ 2.90 $ 74,166 $ 2.86
Adjusted diluted weighted average shares(k) 30,125 26,071 27,304 25,975
![Page 22: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/22.jpg)
22
Adjusted EBITDA reconciliation
Three Months Ended Year EndedJanuary 1, January 2, January 1, January 2,
(dollars in thousands) 2016 2015 2016 2015Net income (loss) as reported $ (24,907) $ 14,176 $ (7,594) $ 55,458
Interest expense 25,362 1,044 33,513 4,252Provision (benefit) for income taxes (12,554) 3,310 (8,106) 21,121Depreciation 10,203 5,915 27,136 23,320Amortization 7,488 3,426 17,496 13,877
EBITDA 5,592 27,871 62,445 118,028
Inventory step-up amortization 22,986 173 22,986 260IP related litigation 1,131 967 4,417 2,502Stock-based compensation 288 2,655 9,287 12,893Consolidation and optimization expenses 7,191 4,218 26,393 11,188Acquisition and integration expenses 28,083 251 33,449 3Asset dispositions, severance and other 1,741 605 6,622 4,106Noncash (gain) loss on cost and equity method investments 1,993 (445) 275 (1,190)
Adjusted EBITDA $ 69,005 $ 36,295 $ 165,874 $ 147,790Adjusted EBITDA as a % of sales 21.7% 21.4% 20.7% 21.5%
GAAP Reconciliation
![Page 23: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/23.jpg)
23
Other Operating Expenses 2015
Q1 Q2 Q3 Q4 YTD
2014 Investments and Capacity and Capabilities $6.5 $6.3 $5.1 $5.2 $23.0
Portable Medical and Vascular product line transfers
Orthopaedic Optimization $0.5 $0.5 $0.4 $1.4
Lake Region Consolidation and Optimization $2.0 $2.0
Acquisition and Integration Costs $0.1 $0.1 $5.2 $28.1 $33.5 Lake Region Medical and CCC Medical Devices
Asset Dispositions and Other $0.8 $0.9 $3.2 $1.7 $6.6 Nuvectra spin off
Total OOE $7.9 $7.8 $13.8 $37.0 $66.5
![Page 24: Greatbatch FY 2015 Fourth Quarter Earnings Call · Q4 2015 Financial Overview ($ inthousands, except per share data) Three Month Ended January 1, 2016 January 2, 2015 % Change Sales](https://reader034.vdocuments.us/reader034/viewer/2022042220/5ec62e560613c4741e42bcbe/html5/thumbnails/24.jpg)
24
Contact Information
Tony BorowiczVice President Business Development
& Investor Relations
[email protected]: 716‐759‐5809 Mobile: 716‐572‐9972
www.greatbatch.com