Greatbatch Inc. (GB, Financial) filed Quarterly Report for the period ended 2010-07-02.
Greatbatch Inc. has a market cap of $540.7 million; its shares were traded at around $23.28 with a P/E ratio of 16.2 and P/S ratio of 1. Greatbatch Inc. had an annual average earning growth of 1.9% over the past 10 years.
GAAP operating income for the second quarter of 2010 was $17.3 million compared to $12.5 million for the 2009 second quarter. Similarly, adjusted operating income was $17.8 million, or 12.7% of sales, in the second quarter 2010, compared to $14.9 million, or 11.1% of sales, for the comparable 2009 period. The increase in GAAP and adjusted operating income from the prior year was primarily due to higher revenue levels, as described above, partially offset by an increase in net research, development and engineering costs (RD&E), which, as expected, were higher in the current year period due to further investment in the development of new technologies, including systems level projects, in order to create long-term growth opportunities. Additionally, operating income benefited in the current period from a lower level of selling, general and administrative expenses (SG&A) due to our various consolidation and cost cutting initiatives.
This higher level of GAAP and adjusted operating income for the 2010 periods was offset by a higher effective tax rate than the prior year periods due to the favorable impact of the resolution of tax audits during the 2009 second quarter and the expiration of the U.S. R&D tax credit at the end of 2009. As a result, GAAP diluted earnings per share (EPS) was $0.57 per share for the first six months of 2010 compared to $0.56 for the 2009 period. Similarly, adjusted diluted EPS was $0.71 for the first six months of 2010 versus $0.80 for the comparable 2009 period.
Cash flows from operations for the first six months of 2010 were $44.2 million compared to $21.7 million for the 2009 period. The increase from the prior year is primarily due to our strategic initiatives designed to improve operational efficiency, as well as the timing of payments and lower consolidation and integrations costs. A portion of these cash flows from operations were used to repay the current portion of long-term debt of $30 million, which came due during the second quarter of 2010. The Company currently expects that cash flow from operations for the remainder of 2010 will continue to be used to support routine capital expenditures and to further pay down debt as we continue to take steps to strengthen our balance sheet in order to support future internal growth.
We estimate that the market opportunity for the OptiSeal project is approximately $10 $20 million of annual revenue. Additionally, it provides us with an opportunity for expansion into the vascular and peripheral access markets. In the second half of this year we expect to finalize distribution agreements with our customers and OptiSeal will begin to provide a return on the R&D investment we have made over the last two years.
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Greatbatch Inc. has a market cap of $540.7 million; its shares were traded at around $23.28 with a P/E ratio of 16.2 and P/S ratio of 1. Greatbatch Inc. had an annual average earning growth of 1.9% over the past 10 years.
Highlight of Business Operations:
Sales for the second quarter of 2010 were $140.8 million compared to $134.7 million in the comparable 2009 period. This 5% increase was primarily due to improvements in our vascular and Electrochem markets, which were negatively impacted in the 2009 period by customer inventory adjustments and a contraction in the underlying markets which have now begun to ease. For the first half of 2010, sales of $273 million were consistent with the prior year period.GAAP operating income for the second quarter of 2010 was $17.3 million compared to $12.5 million for the 2009 second quarter. Similarly, adjusted operating income was $17.8 million, or 12.7% of sales, in the second quarter 2010, compared to $14.9 million, or 11.1% of sales, for the comparable 2009 period. The increase in GAAP and adjusted operating income from the prior year was primarily due to higher revenue levels, as described above, partially offset by an increase in net research, development and engineering costs (RD&E), which, as expected, were higher in the current year period due to further investment in the development of new technologies, including systems level projects, in order to create long-term growth opportunities. Additionally, operating income benefited in the current period from a lower level of selling, general and administrative expenses (SG&A) due to our various consolidation and cost cutting initiatives.
This higher level of GAAP and adjusted operating income for the 2010 periods was offset by a higher effective tax rate than the prior year periods due to the favorable impact of the resolution of tax audits during the 2009 second quarter and the expiration of the U.S. R&D tax credit at the end of 2009. As a result, GAAP diluted earnings per share (EPS) was $0.57 per share for the first six months of 2010 compared to $0.56 for the 2009 period. Similarly, adjusted diluted EPS was $0.71 for the first six months of 2010 versus $0.80 for the comparable 2009 period.
Cash flows from operations for the first six months of 2010 were $44.2 million compared to $21.7 million for the 2009 period. The increase from the prior year is primarily due to our strategic initiatives designed to improve operational efficiency, as well as the timing of payments and lower consolidation and integrations costs. A portion of these cash flows from operations were used to repay the current portion of long-term debt of $30 million, which came due during the second quarter of 2010. The Company currently expects that cash flow from operations for the remainder of 2010 will continue to be used to support routine capital expenditures and to further pay down debt as we continue to take steps to strengthen our balance sheet in order to support future internal growth.
We estimate that the market opportunity for the OptiSeal project is approximately $10 $20 million of annual revenue. Additionally, it provides us with an opportunity for expansion into the vascular and peripheral access markets. In the second half of this year we expect to finalize distribution agreements with our customers and OptiSeal will begin to provide a return on the R&D investment we have made over the last two years.
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