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Greatbatch, Inc. Reports 2012 Fourth Quarter And Full Year Results

Greatbatch, Inc. (NYSE: GB), today announced results for its fourth quarter and full-year ended December 28, 2012:

FOURTH QUARTER

  • Sales increased 12% over the prior year to $159.2 million and included a 2% organic constant currency decline offset by additional revenue from our recent acquisitions:
    • Cardiac/Neuromodulation product line revenue decreased 5% primarily due to the tough comparable versus the prior year quarter, continued market headwinds and strong shipments in the third quarter of 2012.
    • Portable medical product line continues to benefit from our acquisition and new product introductions, which contributed $18.8 million to our growth.
    • Vascular product line growth of 14% was driven by growth in the underlying market and market share gains.
    • Orthopaedics constant currency revenue was consistent with the prior year quarter as stronger implant revenue offset the decline in instrument sales due to the transition of our Swiss facility.
  • GAAP net loss of $5.6 million resulted in a diluted EPS loss of $0.23 per share. This loss was primarily due to charges incurred in connection with the consolidation of our Swiss orthopaedic operations, which are expected to improve profitability beginning in the first quarter of 2013.
  • Fourth quarter adjusted operating income increased 34% due to gross profit from our acquisitions and a reduction in our RD&E expenses. These increases also contributed to a 36% increase in adjusted diluted EPS to $0.53 per share for the fourth quarter (Refer to Tables A and B at the end of this release).

TOTAL YEAR

  • Sales increased 14% over the prior year to $646.2 million and included a $1.2 million decline in organic constant currency revenue offset by additional sales from our recent acquisitions:
    • Cardiac/Neuromodulation product line revenue increased 2% and benefitted from further adoption of our Q series batteries.
    • Portable medical product line benefited from our acquisition and new product introductions, which contributed $72.1 million to our growth.
    • Vascular product line growth of 15% included the benefits of the commercialization of medical devices.
    • Orthopaedics constant currency revenue declined 8%, as the transition of our Swiss facility, which was completed in the fourth quarter of 2012, negatively impacted our revenues.
  • GAAP net loss of $4.8 million resulted in a diluted EPS loss of $0.20 per share. This loss was primarily due to charges incurred in connection with the consolidation of our Swiss orthopaedic operations, which are expected to improve profitability beginning in the first quarter of 2013.
  • Adjusted operating income increased 9% due to revenue growth and operating leverage improvements. These resulted in a 5% increase in adjusted diluted EPS to $1.77 per share for the year.
  • Cash flows from operations were $25 million for the fourth quarter and $65 million for the full year compared to $31 million and $90 million, respectively, for the comparable 2011 periods. During the 2012 fourth quarter and full year the Company paid down $8 million and $22 million, respectively, of long-term debt.
  Three months ended
(Dollars in thousands, except EPS data) December 28,   December 30,   %   September 28,   %
2012 2011 Change 2012 Change
Sales $ 159,186 $ 141,746 12 % $ 161,340 -1 %
 
GAAP Operating Income $ 1,405 $ 12,542 -89 % $ 2,127 -34 %
GAAP Operating Income as % of Sales 0.9 % 8.8 % 1.3 %
 
Adjusted Operating Income* $ 21,121 $ 15,748 34 % $ 18,664 13 %
Adjusted Operating Income as % of Sales 13.3 % 11.1 % 11.6 %
 
GAAP Diluted EPS $ (0.23 ) $ 0.24 N/A $ (0.32 ) -28 %
Adjusted Diluted EPS* $ 0.53 $ 0.39 36 % $ 0.46 15 %
 
Year ended
(Dollars in thousands, except EPS data)

December 28,

December 30,

%

2012 2011 Change
Sales $ 646,177 $ 568,822 14 %
 
GAAP Operating Income $ 25,821 $ 61,699 -58 %
GAAP Operating Income as % of Sales 4.0 % 10.8 %
 
Adjusted Operating Income* $ 73,889 $ 67,602 9 %
Adjusted Operating Income as % of Sales 11.4 % 11.9 %
 
GAAP Diluted EPS $ (0.20 ) $ 1.40 -114 %
Adjusted Diluted EPS* $ 1.77 $ 1.68 5 %
 
* Refer to Tables A and B at the end of this release for a reconciliation of adjusted amounts to GAAP.

CEO Comments

“Our fourth quarter performance is a step in the right direction,” stated Thomas J. Hook, President & CEO, Greatbatch, Inc. “Eliminating the operating losses from our Swiss operation will improve the overall earnings of Greatbatch going forward. While we continually identify and implement cost improvement initiatives, we have now completed all of our major plant consolidations, which began in 2007, so our leadership team can focus on achieving sustainable organic growth to leverage our available capacity. Fourth quarter revenues were up 12% and adjusted diluted EPS was up 36% reflecting a strong gross margin performance of 32.6% and a reduction in our RD&E expense, which included the achievement of milestones on two large customer projects that will commercialize into revenue over the next 12 to 24 months.”

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