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Greatbatch, Inc. Reports 2013 Second Quarter Results

Greatbatch, Inc. (NYSE: GB), today announced results for its second quarter ended June 28, 2013 highlighted by 6% constant currency organic revenue growth, 19% improvement in adjusted operating income and 30% improvement in adjusted diluted EPS over the prior year. Additionally, the Company raised its full year adjusted diluted EPS guidance to $2.05 - $2.15 per share.
     
Three Months Ended
(Dollars in thousands, except per share data) June 28,     June 29,     %     March 29,   %
2013 2012 Change 2013 Change
Sales $ 171,331 $ 166,548 3% $ 148,265 16%
Constant Currency Organic Sales Growth 6% 1% -4%
 
GAAP Operating Income $ 17,135 $ 11,091 54% $ 14,339 19%
GAAP Operating Income as % of Sales 10.0% 6.7% 9.7%
 
Adjusted Operating Income* $ 22,192 $ 18,589 19% $ 19,311 15%
Adjusted Operating Income as % of Sales 13.0% 11.2% 13.0%
 
GAAP Diluted EPS $ 0.39 $ 0.16 144% $ 0.23 70%
Adjusted Diluted EPS* $ 0.56 $ 0.43 30% $ 0.44 27%
 
Adjusted EBITDA* $ 31,281 $ 28,518 10% $ 28,075 11%
Adjusted EBITDA as a % Sales 18.3% 17.1% 18.9%
 
* Refer to Tables A, B and C at the end of this release for a reconciliation of GAAP to adjusted amounts.
 
  • Sales increased 3% over the second quarter of 2012 to a record $171.3 million, including 6% constant currency organic growth.
    • Cardiac/neuromodulation revenue increased 5% driven by stronger market performance and continued deepening relations with OEM partners.
    • Orthopaedic revenue decreased 2% over the prior year but grew organically by 14% due to implant market share gains and new customer wins, after adjusting for the divestiture of certain non-core product lines in Switzerland at the beginning of 2013.
    • Portable medical revenues increased 9% for the quarter reflecting the ongoing impact of products introduced in 2012.
  • GAAP Operating Income of $17.1 million increased $6.0 million or 54% in the quarter.
    • Gross margins improved 220 basis points to 33.4% driven by plant productivity, the completion of the Swiss orthopaedic facility consolidation and mix of product sales.
    • Total operating expenses declined $0.7 million or 2% as a result of lower other operating expenses reflecting lower consolidation and optimization charges, partially offset by higher selling, general and administrative spend because of continued investment in our sales and marketing capabilities.
  • Adjusted Operating Income improved 19% to $22.2 million.
    • Gross profit improvement and operational efficiencies flowed through to adjusted operating income.

CEO Comments

“We are very pleased with our performance in the second quarter, which reflected 6% constant currency organic revenue growth and a 30% increase in adjusted diluted earnings per share,” stated Thomas J. Hook, President and CEO, Greatbatch, Inc. “Additionally, during the quarter we took steps to realign our operating structure in order to further facilitate our growth strategy.”

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