Ortho, Cardio and Neuro Do Well By Greatbatch in FY 2013

Greatbatch Inc. has released results for its fourth quarter (Q4) and full fiscal year (FY) that ended Jan. 3, 2014. The year was highlighted by a 5 percent constant currency organic revenue growth for FY 2013; 12 percent year over year improvement in adjusted operating income; and 19 percent improvement in adjusted diluted EPS over 2012.

Fourth quarter and full year results for 2013 include an additional week of operations in comparison to the same periods of 2012 as the company alternates between 52- and 53-week fiscal years, which ends on the Friday nearest Dec. 31. Although this additional week of operations may have impacted certain financial statement line items, management reported that when combined with the additional holiday and weather related shutdowns, this additional week did not materially impact Greatbatch’s net operating results.

Q4 2013 sales increased 11 percent to $176.6 million. After adjusting sales by $3.1 million for the divestiture of certain non-core orthopedic 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 $19.5 million or 13 percent organically. This growth was primarily due to strong performance from Greatbatch’s cardiac/neuromodulation (17 percent) and orthopedic (33 percent) product lines. The growth in these areas has been attributed to an increased sales and marketing investment, customer product launches and the release of backlog stemming from consolidating company’s Swiss operations. This growth was partially offset by an 18 percent decline in portable medical sales.

Gross profit increased 11 percent to $57.4 million in Q4 2013, compared to $51.9 million for the comparable 2012 period due to higher sales volumes. In comparison to the prior year quarter, gross profit as a percentage of sales remained consistent at 32.5 percent. For the year, gross profit increased 9 percent to $219.3 million over 2012 and was driven by increased operational leverage due to Greatbatch’s higher sales volumes and productivity initiatives, as well as a favorable sales mix of higher margin products.

“Along with achieving our financial targets for 2013, we also made significant progress and achieved numerous milestones on our long-term strategic imperatives,” said Thomas J. Hook, president and CEO of Greatbatch. “This included our [U.S. Food and Drug Administration premarket approval] filing for our spinal cord stimulation system to treat chronic intractable pain of the trunk and/or limbs. We subsequently filed for CE mark approval in January of this year. Our intellectual property portfolio continues to expand with one third of the portfolio representing medical device patents. Through our new functional organization, we were able to improve and expand our sales and marketing efforts and deliver productivity improvements. We are renewed in our belief that our [research, development and engineering] and sales and marketing investments, coupled with our operating discipline, position Greatbatch to meet its long term objectives of maintaining 5 percent organic constant currency growth and double digit adjusted diluted [earnings per share (EPS)] growth.”

Greatbatch is based in Frisco, Texas. The company makes critical medical device technologies for the cardiac, neuromodulation, vascular and orthopedic markets, as well as batteries for high-end niche markets including medical.