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Greatbatch, Inc. Reports 2013 Third Quarter Results

Stocks in this article: GB

CFO Comments

“For the fourth consecutive quarter our gross margins have improved in comparison to the prior year and totaled 33.3% for the current quarter. Most notably, increased operational leverage and a better sales mix, as well as productivity enhancements from our Swiss consolidation and business restructuring have led to our continued progress,” commented Michael Dinkins, Executive Vice President & CFO, Greatbatch, Inc. “This volume leverage, along with continued productivity, cost controls, functional alignment and excellent execution also drove a 150 basis point improvement in adjusted operating margins to 13.1% in the quarter. Additionally, adjusted EBITDA improved 10%, which drove adjusted cash flows from operations of $32.7 million for the quarter and $27.0 million of debt repayment. Our third quarter results position us to be at the lower end of our revenue guidance provided at the beginning of the year and at the middle to upper end of our adjusted diluted EPS guidance, which we raised last quarter.”

Third Quarter Results

Third quarter 2013 sales increased $6.4 million to $167.7 million. After adjusting sales by $3.2 million for the divestiture of certain non-core orthopaedic product lines during the first quarter of 2013 and approximately $1 million for the positive impact of foreign currency exchange rate fluctuations in comparison to the prior year, sales increased $8.6 million or 5% organically. This growth was primarily due to above market growth (8% growth) from our cardiac/neuromodulation product line, as well as implant and cases and tray market share gains, which helped drive 22% organic constant currency growth in our orthopaedic product line. This growth was partially offset by a $1.4 million and $1.9 million decline in vascular and Electrochem sales, respectively, due to the previously disclosed voluntary recall of two vascular medical devices and continued pricing discipline in our Electrochem product lines resulting in the loss of some low-margin business. For the remainder of 2013, we expect revenue to remain strong as new product introductions are commercialized, as we further partner across business lines with our large OEM customers, and as we further leverage our sales and marketing resources to drive core business growth.

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