Integra LifeSciences Holdings Corporation · NASDAQ:IART
Integra LifeSciences — Q2 2016 Earnings Presentation
21 slides from Integra LifeSciences's earnings presentation, Jul 28, 2016
Slide 1: Second Quarter 2016 Earnings Call Presentation
Second Quarter 2016 Earnings Call Presentation July 28, 2016 1
Slide 2: Forward-Looking Statements Safe Harbor and Non-GAAP Financial Measures
Forward-Looking Statements Safe Harbor and Non-GAAP Financial Measures Certain statements in this presentation that are not historical in nature are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, the statements related to expec
Slide 3: Second Quarter and YTD 2016 Financial Highlights
Second Quarter and YTD 2016 Financial Highlights Jun YTD Jun YTD ($ millions) Q2 2016 Q2 2015 Change Change 2016 2015 Revenue $249.3 $212.7 17.2% $486.1 $415.2 17.1% Organic Growth* 10.7% 7.1% +360BPS 9.8% 8.0% +180BPS Adj. Gross Margin* 69.2% 67.9% +130BPS 69.2% 67.3% +190BPS Adj. EBITDA Margin* 21
Slide 4: Second Quarter Accomplishments
Second Quarter Accomplishments • Record organic growth led by both global segments • International sales exceeded expectations in both global segments • Strong ankle performance from Salto Talaris® and the Cadence™ Total Ankle System launch is on track • Continued progress on infrastructure and supp
Slide 5: Specialty Surgical Solutions Revenue Discussion
Specialty Surgical Solutions Revenue Discussion Second Quarter 2016 **All Commentary in Constant Currency** $158.2M; +7.8% Reported • Dural Repair sales increased mid-teens driven by higher demand for both DuraGen®and DuraSeal® $ in millions As reported • Precision Tools & Instruments increased mid-
Slide 6: Orthopedics & Tissue Technologies Revenue Discussion
Orthopedics & Tissue Technologies Revenue Discussion **All Commentary in Constant Currency** Second Quarter 2016 $91.1M; +38.2% Reported • Regenerative Technologies sales, excluding acquistions, grew mid-teens driven by skin and wound products and Private Label $ in millions Int’l: • Total Regenerat
Slide 7: Components of 2016 Revenue Guidance
Components of 2016 Revenue Guidance Full Year 2016 $1,100 $992 million – Acquired $1.002 billion • Acquired growth: ~4.5% $1,000 Organic (includes partial year contributions from Discontinued Products / FX TEI, Salto and Tekmed) $883 million $900 ($ millions) • Minimal currency impact at current rat
Slide 8: Second Quarter and YTD 2016 Results and 2016 Guidance
Second Quarter and YTD 2016 Results and 2016 Guidance Jun YTD Jun YTD Apr 2016 Jul 2016 % of revenue Q2 2016 Q2 2015 Change Change 2016 2015 Guidance Guidance Gross Margin 64.1% 64.6% (50BPS) 64.1% 63.8% +30BPS ~64% 64.5% - 65% Adj. Gross Margin* 69.2% 67.9% +130BPS 69.2% 67.3% +190BPS ~69% 69.5% -
Slide 9: Components of 2016 Adjusted EPS Guidance Increase
Components of 2016 Adjusted EPS Guidance Increase $3.75 Full Year 2016 Warrant $3.48 • Early adoption of FASB 2016-09 Accounting Q2 $3.44 Change Dilution Midpoint update adds 7¢ Performance $3.50 Midpoint ($.04) $.01 • Additional warrant dilution from $.07 stock performance is a 4¢ headwind $3.25 •
Slide 10: Cash Flow and Other Measures: Second Quarter and 2016 Guidance
Cash Flow and Other Measures: Second Quarter and 2016 Guidance Apr 2016 Jul 2016 ($ millions) Q2 2016 Q2 2015 Change Guidance Guidance Operating Cash Flow^ $38.1 $42.5 (10.4%) $125 - $140 $130 - $145 CapEx $8.3 $9.6 (13.5%) ~$40 No Chg Free Cash Flow* $29.8 $32.9 (9.4%) $90 - $100 $90 - $105 FCF Con
Slide 11: Current Capital Structure
Current Capital Structure Current Capitalization Credit Statistics ($ in millions) 06/30/2016 Current Bank Leverage Ratio* 2.9x Cash and Equivalents $ 86.8 Max Leverage Ratio 4.5x Current Acquisition Capacity $ 610 Revolver ($750.0) $ 140.0 *This ratio is calculated per the Senior Credit Term Loan $
Slide 12: Key Focus Areas for 2016 and Beyond
Key Focus Areas for 2016 and Beyond 1 Execute on our 2016 Financial Guidance 2 Successfully launch Omnigraft™ and our 3 x 3 Wound Care Strategy 3 Continue to drive organic growth with new product introductions / share gains: – Launch Salto Talaris® ankle & Cadence™ ankle – Continue share gains with
Slide 13: Appendix
Appendix Non-GAAP Reconciliations 13
Slide 14: Second Quarter and YTD 2016 Organic Growth Reconciliation
Second Quarter and YTD 2016 Organic Growth Reconciliation Jun YTD Jun YTD (In thousands) Q2 2016 Q2 2015 2016 2015 Specialty Surgical Solutions $158,163 $146,709 $309,338 $286,767 Domestic 112,872 106,542 221,272 206,939 International 45,291 40,167 88,066 79,828 Orthopedics and Tissue Technologies $
Slide 15: Adjusted EBITDA Margin Reconciliation
Second Quarter and YTD 2016 & 2015 Adjusted EBITDA Margin Reconciliation Jun YTD Jun YTD (In thousands) Q2 2016 Q2 2015 2016 2015 GAAP net income $12,755 $12,020 $26,173 $23,752 Depreciation and intangible asset amortization expense 18,014 12,541 36,267 24,753 Other (income) expense, net 852 860 1,5
Slide 16: Adjusted EPS Reconciliation
Second Quarter and YTD 2016 and 2015 Adjusted EPS Reconciliation Jun YTD Jun YTD (In thousands) Q2 2016 Q2 2015 2016 2015 GAAP net income $12,755 $12,020 $26,173 $23,752 Global ERP implementation charges 5,696 3,610 9,020 7,423 Structural optimization charges 1,838 3,641 3,547 5,418 Certain employee
Slide 17: Free Cash Flow Conversion Reconciliation
Second Quarter and YTD 2016 and 2015 (TTM) Free Cash Flow Conversion Reconciliation (In thousands) Q2 2016 Q2 2015 TTM 2016 TTM 2015 GAAP Net cash provided by operating activities* $38,079 $42,509 $108,362 $117,068 Purchases of Property and Equipment (8,267) (9,623) (37,622) (34,172) Free Cash Flow
Slide 18: Gross Margin Reconciliation
Second Quarter and YTD 2016 Gross Margin Reconciliation Jun YTD Jun YTD (In thousands) Q2 2016 Q2 2015 2016 2015 Reported Gross Profit $159,744 $137,422 $311,741 $264,735 Structural optimization charges 1,008 2,047 1,993 3,927 Certain employee severance charges 317 - 528 - Acquisition-related charge
Slide 19: Adjusted SG&A Reconciliation
Second Quarter and YTD 2016 Adjusted SG&A Reconciliation Jun YTD Jun YTD (In thousands) Q2 2016 Q2 2015 2016 2015 Reported SG&A $119,217 $99,318 $231,192 $192,583 Global ERP implementation charges 5,696 3,610 9,020 7,423 Structural optimization charges 830 1,594 1,554 1,869 Certain employee severanc
Slide 20: Impact of Adoption of FASB Update 2016-09 on Q1 2016 Results
Impact of Adoption of FASB Update 2016-09 on Q1 2016 Results GAAP Adjusted (In thousands) Post FASB Post FASB Reported Change Reported Change Update Update SG&A $111,975 $111,956 $19 $105,099 $105,080 $19 Pretax Income $14,995 $15,014 ($20) $39,319 $39,337 ($19) Tax $1,576 $3,366 ($1,790) $11,056 $1
Slide 21: Impact of Adoption of FASB Update 2016-09 on 2014 & 2015 Operating Cash Flow
Impact of Adoption of FASB Update 2016-09 on 2014 & 2015 Operating Cash Flow Post FASB Quarter Reported Change Update Q114 $3,993 $2,756 $1,237 Q214 $13,692 $11,505 $2,187 Q314 $27,038 $26,683 $355 Q414 $18,219 $17,899 $320 Q115 $29,302 $24,891 $4,411 Q215 $42,509 $37,060 $5,449 Q315 $19,613 $19,349
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