Exhibit 99.1
WILSON GREATBATCH TECHNOLOGIES, INC. REPORTS RECORD THIRD QUARTER
SALES AND EARNINGS
Clarence, N.Y., November 5, 2003 - - Wilson Greatbatch Technologies, Inc. (the
"Company") (NYSE: GB), a leading developer and manufacturer of batteries,
capacitors, components and enclosures used in implantable medical devices and
specialty batteries used in demanding non-medical operations, today announced
record sales and earnings for the third fiscal quarter of 2003. The Company
reported record sales of $56.3 million, an increase of 24% compared to the $45.4
million reported in the third quarter of 2002. The Company also reported record
net income of $7.8 million, or $0.36 per diluted share, compared to $2.5
million, or $0.12 per diluted share, in the prior year third quarter.
"We are very pleased with the record sales and earnings we achieved in the
quarter," said Edward F. Voboril, the Company's Chairman, President and Chief
Executive Officer. "Our sales grew across all of our medical product lines, led
by our implantable cardioverter defibrillator ("ICD") battery and capacitors
sales, which increased by a combined 36% over the same quarter last year. In
addition, we improved our gross margin to 42.4% from 41.6% we reported last
quarter. We are realizing the benefits of our extensive efforts to improve our
operational efficiencies, " Voboril added.
Three Months Ended September 30, 2003
Sales
The following table summarizes the Company's sales by product line for the third
quarters in 2003 and 2002 (in thousands):
Product Lines 2003 2002 %
3rd Qtr 3rd Qtr Change
Medical Technology:
Medical Batteries:
ICDs $10,603 $7,650 +39%
Pacemakers 5,580 5,049 +11%
Other Devices 907 798 +14%
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Total Medical Batteries 17,090 13,497 +27%
Capacitors 7,869 5,894 +34%
Components 24,648 19,308 +28%
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Total Medical Technology 49,607 38,699 +28%
Commercial Power Sources 6,728 6,651 +1%
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Total Revenues $56,335 $45,350 +24%
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"The annual sales growth rate for both our high rate implantable defibrillator
ICD batteries and capacitors has been consistent on a trailing 12 month basis,
increasing by 37%. The third quarter marked commencement of shipments to our
second capacitor customer. Overall, the ICD market growth remains robust
compared to last year for these devices that are used in the treatment of heart
failure and the prevention of sudden cardiac death," said Voboril.
"Pacemaker battery sales continue to be favorably impacted by sales outside the
US, with a majority of the increase in the quarter coming from shipments to
certain European customers. We believe the underlying unit growth rate in the
pacemaker market over the past 12 months has remained in the mid single-digit
range. The higher relative growth rate we are experiencing this year is due to
adjustments that were made by these customers in 2002 to lower their inventory
levels."
"In terms of medical component sales, July marked the one year anniversary of
our acquisition of the Greatbatch-Globe enclosure business. The 28% sales
increase in the quarter represents the organic growth rate in the medical
component product line. This increase is primarily attributable to growth in
sales in both enclosures and electromagnetic interference ("EMI") filtered
feedthroughs used in both low rate and high rate cardiac rhythm management
("CRM") devices.
In the non-medical, commercial battery segment, demand has remained relatively
stable throughout this year, increasing approximately 5%. The majority of our
commercial revenue is derived from the oil and gas market. "We have enjoyed
relatively stable year over year growth in the commercial battery segment",
Voboril said.
Profit & Loss Summary
The following table summarizes selected information derived from the profit &
loss ("P&L") statements for the 3rd quarters of 2003 and 2002 (in thousands):
2003 2002
3rd Qtr 3rd Qtr
Gross Profit $23,873 $18,872
Gross Margin 42.4% 41.6%
SG&A Expenses $7,336 $6,300
SG&A Expenses as % of Sales 13.0% 13.9%
RD&E Expenses, net $3,960 $3,470
RD&E Expenses, net as % of Sales 7.0% 7.7%
Operating Income $11,781 $6,342
Operating Margin 20.9% 14.0%
Effective Tax Rate 28.8% 33.0%
Gross margins improved from 41.6% in the first half to 42.4% in the third
quarter. The increase mainly resulted from efficiency and yield improvements in
the capacitor and medical component product lines. "The implementation of lean
manufacturing is proceeding as planned. We are seeing the benefits in terms of
lower material scrap rates and improved cycle times throughout all of the
manufacturing facilities where lean manufacturing has been implemented," Voboril
commented.
SG&A expenses during the quarter increased by 16.4% compared to last year in
absolute dollars, but as a percent of sales decreased from 13.9% to 13.0% of
sales compared to last year. The lower relative spending was due to improved
operating leverage and a $0.3M gain recorded on an asset disposition.
RD&E expenses increased by 14% compared to last year in absolute dollars due to
the increase in the number of medical development projects underway in the
current year. As a percent of sales, RD&E spending decreased to 7.0% from 7.7%
last year. This is primarily due to improved operating leverage and increased
reimbursements for engineering services on medical technology development
contracts in the quarter.
The operating margin in the 2003 third quarter increased to 20.9% from 14.0%
earned in the same quarter last year. The improvement was due to the
aforementioned SG&A and RD&E factors. In addition, last year's expenses included
a $1.7 million charge for the one-time non-cash write-off of a non-compete
agreement.
In the third quarter, income tax expense was reduced by $0.3 million as a result
of several tax planning projects completed in the quarter. This lowered the
effective tax rate for the year to date to 30.4% from 31.5% recorded in the
first half of this year. This rate reduction increased diluted earnings per
share in the quarter by $0.01.
Nine Months Ended September 30, 2003
Sales increased by 39% to a record $167.0 million from $120.0 million for the
same period last year. Medical sales increased by 46% to $146.7 million and
commercial sales increased by 5% to $20.3 million. Gross profit increased by 39%
versus the prior year and represented a gross margin of 41.8% versus 42.0% last
year. The year over year gross margin decrease was primarily due to the costs
incurred in the current year for the consolidation of the commercial battery
facilities and from the costs associated with implementing lean manufacturing.
Operating expenses increased by 19.9% compared to last year in absolute dollars,
but as a percent of sales decreased from 27.0% to 23.2% of sales.
Net income and diluted earnings per share totaled $18.8 million, or $0.87 per
share, compared to $9.4 million, or $0.44 per share in 2002. Last year's results
were negatively impacted by $0.10 for the write-off of the aforementioned
non-compete agreement and for the $1.5 million non-cash write-off of an impaired
investment.
Outlook for the Remainder of the Year
"In terms of revenues, we are reaffirming our previously stated guidance of $215
million to $220 million for the full year, which anticipates year end inventory
reductions by certain medical customers. We expect medical sales to be in the
range of $189 million to $193 million and commercial sales to be in the range of
$26 million to $27 million. With respect to earnings per share, we are raising
our estimate to $1.08-$1.12, inclusive of the $0.05 charge for the second
quarter write-off of deferred financing fees from the early extinguishment of
debt. Our previously reported full year guidance was $1.03-$1.07. The increased
earnings guidance is primarily due to the success in improving our gross profit
margins, the reduction in operating expenses and the lower effective tax rate,"
Voboril concluded.
Conference Call
Mr. Voboril and Lawrence P. Reinhold, the Company's Executive Vice President and
Chief Financial Officer, will discuss third quarter 2003 financial results in a
conference call scheduled for today, Wednesday, November 5, at 5:00 p.m. EDT.
The conference call will be webcast live and is accessible through the Company's
website at www.greatbatch.com or at CCBN's individual investor center at
www.companyboardroom.com. The webcast will also include presentation visuals.
The webcast will be archived on both websites for future on-demand replay.
Forward-Looking Statements
Some of the statements in this press release and other written and oral
statements made from time to time by the company and its representatives are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934,
as amended, and involve a number of risks and uncertainties. These statements
can be identified by terminology such as "may," "will," "should," "could,"
"expects," "intends," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are based on the Company's current
expectations. The Company's actual results could differ materially from those
stated or implied in such forward-looking statements. Risks and uncertainties
that could cause actual results to differ materially from those stated or
implied by such forward-looking statements include, among others, the following
matters affecting the Company: dependence upon a limited number of customers;
product obsolescence; inability to market current or future products; pricing
pressure from customers; reliance on third party suppliers for raw materials,
products and subcomponents; fluctuating operating results; inability to maintain
high quality standards for our products; challenges to our intellectual property
rights; product liability claims; inability to successfully consummate and
integrate acquisitions; unsuccessful expansion into new markets; competition;
inability to obtain licenses to key technology; regulatory changes or
consolidation in the healthcare industry; and other risks and uncertainties
described in the Company's Annual Report on Form 10-K, including Exhibit 99.2
thereto, and in other periodic filings with the Securities and Exchange
Commission. The company assumes no obligation to update forward-looking
information in this press release whether to reflect changed assumptions, the
occurrence of unanticipated events or changes in future operating results,
financial conditions or prospects, or otherwise.
About Wilson Greatbatch Technologies
Wilson Greatbatch Technologies, Inc. (NYSE: GB) is a leading developer and
manufacturer of batteries, capacitors, precision components and enclosures used
in implantable medical devices and other technically demanding applications. The
Company has operations in New York, Maryland, Massachusetts, Nevada and
Minnesota. Additional information about the Company is available at
www.greatbatch.com.
Contact Information
Lawrence P. Reinhold Anthony W. Borowicz
Executive Vice President and Treasurer and
Chief Financial Officer Director, Investor Relations
(716) 759-5602 (716) 759-5809
lreinhold@greatbatch.com tborowicz@greatbatch.com
Wilson Greatbatch Technologies, Inc.
Condensed Consolidated Statement of Operations
(Unaudited)
(In thousands except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2003 2002 2003 2002
Sales $ 56,335 $ 45,350 $ 166,994 $ 119,981
Cost of sales 32,462 26,478 97,137 69,558
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Gross profit 23,873 18,872 69,857 50,423
Selling, general and administrative expenses 7,336 6,300 23,204 17,310
Research, development and engineering costs, net 3,960 3,470 13,155 10,514
Amortization of intangible assets 796 1,037 2,424 2,809
Write-off of noncompete agreement -- 1,723 -- 1,723
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Operating income 11,781 6,342 31,074 18,067
Interest expense 1,154 1,098 2,952 2,702
Interest income (253) (34) (384) (314)
Early extinguishment of debt -- -- 1,603 --
Write-off of investment in unrelated company -- 1,547 -- 1,547
Other (income) expense, net (40) 34 (58) 99
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Income before income taxes 10,920 3,697 26,961 14,033
Provision for income taxes 3,144 1,220 8,196 4,631
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Net income $ 7,776 $ 2,477 $ 18,765 $ 9,402
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Diluted earnings per share $ 0.36 $ 0.12 $ 0.87 $ 0.44
Diluted average shares outstanding 21,623 21,265 21,507 21,263
Wilson Greatbatch Technologies, Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
(In thousands)
ASSETS September 30, December 31,
2003 2002
Current assets:
Cash, cash equivalents and short-term investments $ 122,203 $ 4,608
Accounts receivable, net 26,997 19,310
Inventories 30,739 34,908
Prepaid expenses and other current assets 716 3,339
Refundable income taxes 624 3,038
Deferred income taxes 3,349 3,349
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Total current assets 184,628 68,552
Property, plant, and equipment, net 65,604 64,699
Intangible assets, net 52,241 55,804
Goodwill 119,521 119,407
Other assets 6,966 3,789
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Total assets $ 428,960 $ 312,251
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,371 $ 5,726
Accrued expenses and other current liabilities 22,017 13,872
Current portion of long-term debt 679 8,750
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Total current liabilities 27,067 28,348
Long-term debt, net of current portion 170,906 76,250
Other long-term liabilities 813 790
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Total liabilities 198,786 105,388
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Stockholders' equity:
Preferred stock -- --
Common stock 21 21
Additional paid-in capital 206,845 202,279
Deferred stock-based compensation (883) --
Retained earnings 24,191 5,426
Treasury stock, at cost -- (863)
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Total stockholders' equity 230,174 206,863
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Total liabilities and stockholders' equity $ 428,960 $ 312,251
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