Greatbatch, Inc. (GB)

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Greatbatch, Inc. (GB)

Q1 2009 Earnings Call

May 7, 2009 8:00 am ET


Marco Benedetti - Corporate Controller

Thomas Hook - President & Chief Executive Officer

Thomas Mazza - Senior Vice President & Chief Financial Officer


Timothy Lee - Piper Jaffray

Jason Mills - Canaccord Adams

Jeffrey Englander - Standard & Poor's

Keay Nakae - Collins Stewart

Gregory Macosko - Lord Abbett

Stan Mann – Mann Family Investments



Welcome, everyone, to the first quarter Greatbatch, Inc. conference call.

Before we begin I would like to read the safe harbor statement:

This presentation and our press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These risks and uncertainties are described in the company's annual report on Form 10-K. The statements are based upon Greatbatch, Inc.'s current expectations and actual results could differ materially from those stated or implied. The company assumes no obligation to update forward-looking information included in the conference call to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects.

I would like to now turn the call over to today's host, Corporate Controller Marco Benedetti. Please proceed, sir.

Marco Benedetti

Thank you. On the call today are Thomas J. Hook, President and Chief Executive Officer, and Thomas J. Mazza, Senior Vice President and Chief Financial Officer.

In terms of today's agenda Tom Hook will start by providing a few brief comments regarding our first quarter results and then he will update you on our major strategic initiatives. After that Tom Mazza will provide further comments on our first quarter. We will then open up the floor to Q&A.

As we have done in the past, we are including slide visuals that will go along with this presentation which you can access over our website.

Let me now turn the call over to our President and Chief Executive Officer, Tom Hook.

Thomas J. Hook

Thank you, Marco. I'd like to thank everyone for joining our earnings call today. We are pleased to be able to share with you our results for the first quarter of 2009.

I'm extremely proud of our accomplishments and feel that the first quarter built upon the positive momentum we started in 2008. Despite the ever-increasing pressure of today's operating environment, we continued to make solid progress towards both our short-term operational and financial goals as well as our long-term strategic objectives. While we certainly are not immune to the impact of the strained economic environment, particularly as evidenced by the pressure on our Electrochem business, our performance reflects the execution we have made on our strategic goals. I believe that our portfolio of intellectual property, operational excellence and diverse revenue base have given us a solid foundation to weather the current economic storm.

During the quarter we delivered solid revenue growth once again, with sales increasing 14% over the prior year period, which correspondingly drove adjusted operating income to increase to $17.6 million or 12.6% of sales. Our operating margin benefited from several factors, including higher volumes, streamlined operation, as well as improved manufacturing and administrative efficiencies. We remain committed to ongoing improvements in our operating performance through continued facility consolidation and integration, optimizing our production efficiency and product development activities focused on high value added products. Tom Mazza will provide additional detail on our first quarter financial results later in the call.

During 2008 we took a close look at the brands we acquired over the last few years in order to strategically align them. This analysis resulted in our recently announced new structure and brand identity, which will unify our existing businesses under a common vision while consolidating our medical entities under a single brand, Greatbatch Medical.

Greatbatch Medical, formerly referred to as implantable medical components or IMC, encompasses our cardiac rhythm management, neuromodulation, vascular access and orthopedic product lines. This business is committed to the design and manufacture of critical technologies that enhance the reliability and performance of medical devices.

We also realigned a portion of our R&D resources under what we refer to as the QIG Group. This group is charged with facilitating the introduction of new and improved technologies in medical device markets by investing in the development of innovations for our customers. Simply said, we will continue to build on 40 years of success to provide cost-effective technologies to our customers that enable them to bring these solutions to market.

Our third brand, Electrochem, is our commercial [break in audio] business that delivers highly customized and reliable battery power and wireless sensing solutions to the energy, security, portable medical and environmental monitoring markets. This business has similarities with and the same operating model as Greatbatch Medical and it further diversifies our business. It has been and will continue to be a critical part of the overall business.

With regard to our logo, the hexagon shapes were chosen because of their ability to connect in the most efficient manner. They are a symbol of how Greatbatch connects with its customers. The symbol is also consistent with the Greatbatch Medical logo. It portrays Greatbatch Medical as what we are, a supportive and critical part of our customers' larger vision.

We feel the new Greatbatch family of companies and the identity system we now have in place will be successful in driving brand awareness, preference and loyalty. The new Greatbatch family of companies is strategically aligned to deliver unprecedented performance, reliability and critical technologies to allow our customers the opportunity to bring solutions to market. Greatbatch now is unified under a global brand based on our reputation of excellence and reliability.

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