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Greatbatch, Inc. Reports 2012 Third Quarter Results

Greatbatch, Inc. (NYSE: GB), today announced results for its third quarter ended September 28, 2012:
  • Sales increased 22% over the prior year to $161.3 million and included 8% organic constant currency growth, as well as additional revenue from our acquisitions:
    • CRM/Neuromodulation product line revenue increased 13%.
    • Portable Medical product line benefiting from new product introductions.
    • 20% Vascular Access growth driven by commercialization of medical devices.
    • Orthopaedics constant currency revenue declined 6%; continues to be negatively impacted by operational issues at our Swiss facilities, which are aggressively being addressed.
  • Third quarter GAAP operating income of $2.1 million and diluted EPS loss of $0.32 per share decreased versus the prior year primarily due to charges incurred in connection with the consolidation of our Swiss Orthopaedic operations, which are ultimately expected to improve profitability beginning in 2013.
  • Adjusted operating income increased 27% over the prior year due to revenue growth and improved operating leverage. This increase resulted in adjusted diluted EPS of $0.46 per share for the third quarter, 12% above the prior year.
  • Cash flows from operations were $16 million for the third quarter, which enabled the Company to pay down an additional $6 million of long-term debt.
Three Months Ended
(Dollars in thousands, except per share data) September 28,   September 30,   %   June 29,   %
2012 2011 Change 2012 Change
Sales $ 161,340 $ 131,718 22% $ 166,548 -3%
GAAP Operating Income $ 2,127 $ 12,888 -83% $ 11,091 -81%
GAAP Operating Income as % of Sales 1.3% 9.8% 6.7%
Adjusted Operating Income* $ 18,664 $ 14,714 27% $ 18,589 0%
Adjusted Operating Income as % of Sales 11.6% 11.2% 11.2%
GAAP Diluted EPS $ (0.32) $ 0.30 N/A $ 0.16 N/A
Adjusted Diluted EPS* $ 0.46 $ 0.41 12% $ 0.43 7%
* Refer to Tables A and B at the end of this release for a reconciliation of GAAP to adjusted amounts.

CEO Comments

“During the quarter, we continued to drive growth in our core business and benefited from favorable market trends and new product introductions within our Portable Medical product line,” commented Thomas J. Hook, President & CEO, Greatbatch Inc. “Additionally, during the quarter, we continued to deepen our relationship with our larger OEM customers and successfully negotiated several long-term agreements which secured existing revenue streams, as well as expanded those relationships into other product lines. As we move forward, our goal is to continue to drive core growth through an increased focus on and investment in sales and marketing and the commercialization of our medical device pipeline. Additionally, we are focused on further improving profitability by leveraging our infrastructure and optimizing our R&D investment. I am pleased with the progress we have made on our strategic objectives and remain confident that these initiatives will improve the long-term growth and profitability of our Company.”

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