Exhibit 99.1
Wilson Greatbatch Technologies, Inc. Reports Record Quarterly Sales; Increases
Sales and Earnings Guidance for 2005
CLARENCE, N.Y.--(BUSINESS WIRE)--May 3, 2005--Wilson Greatbatch
Technologies, Inc. (the "Company") (NYSE: GB) today reported its
results for the first quarter ended March 31, 2005.
Business Summary
-- Recorded all-time record sales results of $56.4 million, led
by strong sales of ICD batteries, enclosures, coated
components and commercial power sources.
-- Shipped the first assembly products from facility in Tijuana,
Mexico. Remaining construction phases of Tijuana facility are
proceeding as planned.
-- Completed the construction of medical battery portion of new
advanced battery plant in Alden, NY. Began moving the
manufacturing equipment from existing medical battery plant
and expect to complete move by mid 2005. Planning for the
capacitor manufacturing move is underway and expect to
complete construction by mid 2005. Anticipate the move will
complete by the third quarter of 2005.
-- Signed a modification to an existing agreement with a major
customer, which includes a significant increase in contractual
minimum quantities of wet tantalum capacitors and extended
agreement through the first quarter of 2006.
-- Successfully completed 2004 Sarbanes-Oxley Section 404
assessment and received an unqualified audit opinion from
independent auditors.
Net sales totaled $56.4 million during the first quarter of 2005,
an increase of 2% from the first quarter of 2004. Net income totaled
$4.0 million, and diluted earnings per share were $0.19; compared to
$0.29 in the prior year.
The Company included the effect of the conversion of the
convertible subordinated notes into common stock in the weighted
average share and diluted earnings per share calculations using the
if-converted method, as long as the effect is dilutive. There was no
impact on the first quarter of 2005. The impact on the first quarter
of 2004 resulted in a restatement of diluted earnings per share of
$0.02, from $0.31 to $0.29 per share.
Edward F. Voboril, Chairman, President and Chief Executive Officer
commented, "We are very pleased with the record sales results and the
strong start to 2005. The CRM market growth remains very healthy as
evidenced by our strong sales in our ICD batteries and enclosure
products. In addition, we are placing increased selling and marketing
emphasis on our commercial battery product line, which is already
resulting in additional volume."
"The increased sales volume coupled with the cost reductions
programs put in place, resulted in earnings per share of $0.19 for the
first quarter. These earnings are inclusive of $2.4 million in
selective pre-tax charges primarily for severance and for start-up
expenses pertaining to the Tijuana, Mexico facility. In the quarter,
we commenced shipments on assembly products manufactured in Tijuana,
which marks an important strategic milestone for the Company," Voboril
concluded.
Sales Summary
The following table summarizes the Company's sales by business
unit and major product line for the first quarters of 2005 and 2004
(in thousands):
Business Unit/Product Lines 2005 2004 %
1st Qtr 1st Qtr Change
- ------------------------------------------ -------- --------- --------
Implantable Medical Components ("IMC"):
- ------------------------------------------ -------- --------- --------
ICD Batteries $10,751 $9,420 +14%
- ------------------------------------------ -------- --------- --------
Pacemaker & Other Batteries 5,255 5,694 -8%
- ------------------------------------------ -------- --------- --------
ICD Capacitors 4,297 8,408 -49%
- ------------------------------------------ -------- --------- --------
Feedthroughs 13,682 13,727 +0%
- ------------------------------------------ -------- --------- --------
Enclosures 6,547 5,397 +21%
- ------------------------------------------ -------- --------- --------
Other Medical 7,333 5,632 +30%
- ------------------------------------------ -------- --------- --------
Total Implantable Medical Components 47,865 48,278 -1%
- ------------------------------------------ -------- --------- --------
Electrochem Commercial Power ("ECP") 8,493 7,247 +17%
- ------------------------------------------ -------- --------- --------
Total Sales $56,358 $55,525 +2%
- ------------------------------------------ -------- --------- --------
The decrease in capacitor sales, due to lower demand by a major
customer, was partially offset by increased volume for ICD batteries
and enclosures, and a significant increase in coated component sales
reflecting higher demand for the Company's titanium nitride coatings.
The Company commenced shipments on its assembly components at its
Tijuana facility in March 2005. Sales for these assembly components
were de minimis and are included in the Other Medical category. The
17% increase in ECP sales is primarily due to increased demand for
power sources used in pipeline inspections. Driving this increase in
demand is Federal legislation, which requires more frequent
inspections, and an increase in our sales and marketing
commercialization efforts.
Profit & Loss Summary
The following table summarizes selected information derived from
the condensed consolidated statement of operations for the first
quarters in 2005 and 2004 (in thousands):
2005 2004 %
1st Qtr 1st Qtr Change
- -------------------------------------------- ------------ ------------
Gross Profit $20,787 $23,175 -10%
- -------------------------------------------- ------------ ------------
Gross Margin 36.9% 41.7%
- -------------------------------------------- ------------ ------------
- -------------------------------------------- ------------ ------------
SG&A Expenses $6,766 $6,925 - 2%
- -------------------------------------------- ------------ ------------
SG&A Expenses as % of Sales 12.0% 12.5%
- -------------------------------------------- ------------ ------------
- -------------------------------------------- ------------ ------------
RD&E Expenses, net $4,401 $4,881 -10%
- -------------------------------------------- ------------ ------------
RD&E Expenses, net as % of Sales 7.8% 8.8%
- -------------------------------------------- ------------ ------------
- -------------------------------------------- ------------ ------------
Other Operating Expense $2,388 $221 +981%
- -------------------------------------------- ------------ ------------
- -------------------------------------------- ------------ ------------
Operating Income $6,274 $10,373 - 40%
- -------------------------------------------- ------------ ------------
Operating Margin 11.1% 18.7%
- -------------------------------------------- ------------ ------------
- -------------------------------------------- ------------ ------------
Effective Tax Rate 30.0% 30.5%
- -------------------------------------------- ------------ ------------
The decrease in gross margin of 480 basis points was primarily due
to excess capacity costs at the Tijuana, Mexico plant and at the wet
tantalum capacitor facility.
The lower SG&A expenses is primarily due to the cost reduction
measures put in place in the second half of 2004.
The decrease in RD&E expenses is primarily due to engineering cost
reduction measures and increased reimbursement on new product
development projects.
The increase in other operating expenses is primarily due to
severance costs of $1.5 million, asset write-offs of $0.5 million, and
$0.4 million for expenses related to the closure of the Carson City
plant and the transfer of the manufacturing operation to the Tijuana
facility.
Outlook
Considering the Company's first quarter performance and the
prevailing strength of the core Medical and Commercial markets, the
Company now expects sales to be in the range of $210 to $225 million;
an increase of $5 million from the previous sales guidance range. The
Company also increased its earnings per share guidance by $0.05 and is
now anticipating earnings per share will be in the range of $0.12 to
$0.20. As previously announced, this earnings guidance includes
selective charges of $0.60 - $0.63 per share, representing costs for
the Alden and Tijuana startups, excess capacity, restructuring charges
and the Carson City plant consolidation. Capital spending is expected
to be in the range of $30 to $35 million, unchanged from the Company's
previous guidance.
Earnings per share guidance for 2005 excludes the effect of
expensing stock options. Consistent with the Securities and Exchange
Commission's announcement amending the compliance dates for Financial
Accounting Standards Board Statement ("FAS") 123R, the Company will
begin implementing FAS123R when it becomes effective, which is
currently anticipated to be the first quarter of 2006.
Conference Call
Mr. Voboril and Lawrence P. Reinhold, the Company's Executive Vice
President and Chief Financial Officer, will discuss first quarter 2005
financial results in a conference call scheduled for today, Tuesday,
May 3, at 10:00 a.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; customer
ordering patterns; product obsolescence; inability to market current
or future products; pricing pressure from customers; our ability to
timely and successfully implement our cost reduction initiatives;
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 99.1
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 critical components used in implantable
medical devices and other technically demanding applications.
Additional information about the Company is available at
www.greatbatch.com.
WILSON GREATBATCH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In thousands except per share amounts)
Three months ended
March 31
2005 2004
Sales $56,358 $55,525
Cost of sales 35,571 32,350
---------- ----------
Gross profit 20,787 23,175
Selling, general and administrative expenses 6,766 6,925
Research, development and engineering costs, net 4,401 4,881
Amortization of intangible assets 958 775
Other operating expense, net 2,388 221
---------- ----------
Operating income 6,274 10,373
Interest expense 1,131 1,160
Interest income (575) (313)
Other expense (income), net - 2
---------- ----------
Income before income taxes 5,718 9,524
Provision for income taxes 1,715 2,905
---------- ----------
Net income $4,003 $6,619
========== ==========
Diluted earnings per share $0.19 $0.29
WILSON GREATBATCH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In thousands)
ASSETS March 31, December 31,
2005 2004
Current assets:
Cash and cash equivalents $78,860 $89,473
Short-term investments 6,876 2,759
Accounts receivable, net 29,672 24,288
Inventories 32,277 34,027
Refundable income taxes 3,972 3,673
Deferred income taxes 3,622 3,622
Prepaid expenses and other current assets 5,987 4,637
---------- -------------
Total current assets 161,266 162,479
Property, plant, and equipment, net 97,791 92,210
Intangible assets, net 63,021 63,984
Goodwill 156,772 156,772
Other assets 4,317 4,493
---------- -------------
Total assets $483,167 $479,938
========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,006 $8,971
Accrued expenses and other current
liabilities 14,840 18,109
Current portion of long-term debt 890 1,000
---------- -------------
Total current liabilities 22,736 28,080
Long-term debt, net of current portion 408 652
Convertible subordinated notes 170,000 170,000
Deferred income taxes 26,988 25,029
---------- -------------
Total liabilities 220,132 223,761
---------- -------------
Stockholders' equity:
Preferred stock - -
Common stock 21 21
Additional paid-in capital 214,791 212,131
Deferred stock-based compensation (693) (833)
Treasury stock, at cost - (95)
Retained earnings 48,974 44,971
Accumulated other comprehensive income (58) (18)
---------- -------------
Total stockholders' equity 263,035 256,177
---------- -------------
Total liabilities and stockholders' equity $483,167 $479,938
========== =============
CONTACT: Wilson Greatbatch Technologies, Inc.
Lawrence P. Reinhold, 716-759-5602
lreinhold@greatbatch.com
or
Anthony W. Borowicz, 716-759-5809
tborowicz@greatbatch.com