Greatbatch Reports Beat Q4

| About: Integer Holdings (ITGR)
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Greatbatch, Inc. (GB) reported fourth quarter and fiscal 2009 results. The company’s fourth-quarter earnings per share of 40 cents beat the Zacks Consensus Estimate of 34 cents. However, earnings per share in the year-ago quarter was 50 cents. For fiscal 2009, earnings per share of $1.52 was ahead of last year’s profit of $1.40.

Quarterly results

Total revenue in the fourth quarter declined 14% year over year to $125.8 million. Greatbatch Medical revenue declined 14% year over year to $108.8 million. The decline was broad-based across all the sub-segments. CRM/Neuromodulation, Orthopedic and Vascular Access revenue declined 5%, 29% and 32% year over year to $76 million, $25.2 million and $7.6 million, respectively.

CRM/Neuromodulation revenue declined due to lower sales of Greatbatch batteries. Orthopedic revenue declined as a result of a weak economic scenario that prompted patients to defer their elective procedures. Vascular Access sales declined primarily due to lower introducer sales as a result of customer inventory adjustments.

Electrochem sales declined 14% year over year to $17.1 million. The decline was primarily due to a slowdown in the Energy and Portable Medical markets that resulted in customers lowering their inventory levels and deferring projects.

Greatbatch reported an expansion in margins in the fourth quarter. Gross margin increased 120 basis points (bps) year over year to 33.1%. Adjusted operating margin increased 10 bps year over year to 13.1%.

Fiscal year results

Greatbatch reported total revenue of $521.8 million in fiscal 2009, a decline of 5% year over year. Greatbatch Medical revenue declined 3% year over year to $455.1 million. Electrochem sales declined 15% year over year to $66.8 million.

CRM/Neuromodulation revenue increased 7% year over year to $305.4 million. Orthopedic and Vascular Access revenue declined 20% and 9% year over year to $113.9 million and $35.8 million, respectively.

Balance Sheet & Cash Flow

Greatbatch ended fiscal 2009 with cash and cash equivalents of roughly $37.9 million, an increase of 71.6% year over year. The company generated cash flow from operations of $22 million during the reported quarter.


Greatbatch has provided annual revenue growth rates guidance across its product lines for fiscal 2010. For the year, CRM/Neuromodulation, Orthopedic, Vascular Access and Electrochem revenues are expected to grow in the range of 2 to 5%, 3 to 7%, 3 to 7% and 0 to 5% year over year, respectively. In addition, Greatbatch expects adjusted operating margin to range between 12.0% and 13.5%.

Greatbatch, Inc., headquartered in Clarence, NY, is a leading producer and supplier of batteries, capacitors, and components used in implantable medical devices. The company also produces batteries for commercial and industrial applications such as oil and gas exploration, oceanographic equipment, seismic surveying equipment, and others. The National Aeronautics and Space Administration (NASA) uses Greatbatch batteries in its aerospace programs.