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Greatbatch Inc. (GB)
Q2 2008 Earnings Call
August 5, 2008 2:30 pm ET
Marco Benedetti - Corporate Controller
Thomas J. Hook - President and Chief Executive Officer
Thomas Mazza - Chief Financial Officer
Jason Mills - Canaccord Adams
Tim Lee - Piper Jaffray
Keay Nakae - Collins Stewart
Jeff Englander - Standard & Poor's
Stanman - Man Investment
Welcome everyone to the Second Quarter Greatbatch Incorporated Conference Call. Before we begin, I would like to read the Safe Harbor statement.
Previous Statements by GB
» Greatbatch, Inc. Q1 2009 Earnings Call Transcript
» Greatbatch Inc. Q4 2008 Earnings Call Transcript
» Greatbatch, Inc. Q3 2008 Earnings Call Transcript
The statements are based upon Greatbatch Incorporated's current expectations and actual results could differ materially from those stated and/or implied. The company assumes no obligation to update forward-looking information included in this conference call to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results, financial conditions or prospects.
I would now like to turn the call over to today’s host, Corporate Controller, Marco Benedetti. Please proceed sir.
Marco Benedetti – Corporate Controller
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 comments regarding our accomplishments for the quarter and then provide an update relative to our major strategic initiative in MRI Technologies. After that, Tom Mazza will provide a financial overview and further comment on our second quarter results after which 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 on our website.
Let me now turn the call over to our President and Chief Executive Officer, Tom Hook.
Thomas J. Hook - President and Chief Executive Officer
Thanks Marco and I would like to thank all of you for joining our second quarter 2008 earnings call. As you will note from this mornings release we are pleased with the financial results for this quarter. Furthermore, we are excited by the execution and progress we continue to make toward our long term strategic initiatives which include increasing the diversification of our sales mix, driving new product development and innovation during sales growth and improving the operational efficiency throughout the organization. We reported a record quarter with sales of a $141.6 million which represents an 81% increase over the second quarter of 2007 and a 16% sequential improvement over the first quarter of 2008. The benefits of our recent acquisition were reflected in the diversification of our sales mix as well as improved profitability as our adjusted operating income grew to $14.2 million during the quarter which is a substantial increase over the first quarter of 2008, Tom Mazza will provide additional detail in the financial results later in the call.
Over the past year we have worked diligently to find and complete strategic acquisitions that will improve the overall diversification of our business. These acquisitions offer significant opportunities to leverage the core operational and product development strengths of the company to significantly enhance our long term growth and profitability. This diversification strategy has helped to expand our opportunity within a variety of new markets including orthopaedics and therapy delivery.
As part of the acquisition, we are able to add preparatory technologies and product line to our portfolio as well as strategic manufacturing and product development capabilities. In addition, we expanded and diversified our global customer relationships. Although, the acquisition has clearly diversified our customer based and reduced our concentration of the few key accounts that also created additional opportunities to sell a broader portfolio products across multiple provisions within these key accounts instead of simply selling to give us cardiac rhythm management business with one of our key customers we now consult to orthopaedics modulation or therapy delivery businesses combined. We’ve taken great strides in diversifying Greatbatch and we will continue to integrate these new businesses and look for ways to drive both near term and long term revenue gains.
The key element of our strategy is focused on streamlining our operations and optimizing our production. In Greatbatch we have a history of successfully optimizing and consolidating our operations. We’ve already identified and implemented several key initiatives to enhance the operating performance of these new businesses and move them closely to our operating model.
As evidenced by the substantial proven and our adjusted operating margin this quarter, over the first quarter of 2008 we have begun to realize several of the benefits immediately. We’ve approach this initiative on several different fronts and then want to provide an overview of our plan for the next 24 months.
First, let’s review some of the initiatives and accomplishments in both the medical and commercial facilities. As of last month, the Columbia manufacturing facility has been closed. We have completed the expansion of a new research and development center in Western New York near Buffalo thereby illuminating the need for at least facility. In addition, we are in the process of finalizing the construction of the commercial manufacturing plants in Raynham, Massachusetts, the opening ceremony scheduled for later this month. This will enable a significant capacity increase over the Kent Massachusetts facility.
During the quarter we announced that will discontinue manufacturing operations in Suzhou, China in the third quarter of 2008 and our operations in Orchard Park New York will be consolidated into existing listening our facilities.