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Greatbatch, Inc. Reports 2013 Third Quarter Results

Greatbatch, Inc. (NYSE:GB), today announced results for its third quarter ended September 27, 2013 highlighted by 5% constant currency organic revenue growth, 18% improvement in adjusted operating income and 24% improvement in adjusted diluted EPS over the prior year.

  Three Months Ended
(Dollars in thousands, except per share data) September 27,   September 28,   %   June 28,   %
2013 2012 Change 2013 Change
Sales $ 167,730 $ 161,340 4 % $ 171,331 -2 %
Constant Currency Organic Sales Growth 5 % 8 % 6 %
 
GAAP Operating Income $ 17,002 $ 2,127 NA $ 17,135 -1 %
GAAP Operating Income as % of Sales 10.1 % 1.3 % 10.0 %
 
Adjusted Operating Income* $ 22,012 $ 18,664 18 % $ 22,192 -1 %
Adjusted Operating Income as % of Sales 13.1 % 11.6 % 13.0 %
 
GAAP Diluted EPS $ 0.44 $ (0.32 ) NA $ 0.39 13 %
Adjusted Diluted EPS* $ 0.57 $ 0.46 24 % $ 0.56 2 %
 
Adjusted EBITDA* $ 30,817 $ 27,953 10 % $ 31,281 -1 %
Adjusted EBITDA as a % Sales 18.4 % 17.3 % 18.3 %
 
* Refer to Tables A, B and C at the end of this release for a reconciliation of GAAP to adjusted amounts.
 
  • Sales increased to $167.7 million, reflecting 5% constant currency organic growth over the comparable 2012 quarter.
    • Cardiac/neuromodulation revenue increased 8% driven by sustained and deepening relations with OEM partners.
    • Orthopaedic revenue increased 11% over the prior year and 22% after adjusting for the divestiture of certain non-core product lines in Switzerland at the beginning of 2013 and foreign currency exchange rate fluctuations. Share gains in both implants and cases and trays generated the significant sales growth.
    • Electrochem revenue declined $1.9 million as a result of our increased pricing discipline and reduced government funding on military and environmental projects.
  • GAAP Operating Income of $17.0 million increased $14.9 million versus the same period last year.
    • Gross margins improved 170 basis points to 33.3% driven by higher volume and a better mix of product sales.
    • Total operating expenses declined $10.0 million or 20% as a result of lower consolidation and optimization charges, partially offset by higher selling and marketing investment and increased performance based compensation.
  • Adjusted Operating Income improved 18% to $22.0 million and increased 150 basis points to 13.1% of sales over the comparable 2012 quarter.
    • Gross profit improvement flowed through to adjusted operating income.

CEO Comments

“The third quarter proved to be another solid performance from the team with top line organic growth and operating leverage yielding an 18% increase in adjusted operating income and a 24% improvement in adjusted diluted EPS,” stated Thomas J. Hook, President and CEO, Greatbatch, Inc. “Our sales and marketing investments and consolidation initiatives are contributing to our revenue improvement and operating margin expansion. For the fifth consecutive quarter, we have increased our adjusted operating income and adjusted diluted EPS in comparison to the prior year. We expect these initiatives to continue to pay dividends for the remainder of 2013 and will position Greatbatch to meet its long-term objective of maintaining at least 5% constant currency organic revenue expansion and at least double that growth rate for adjusted diluted EPS over time.”

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