Greatbatch Inc. (GB, Financial) filed Quarterly Report for the period ended 2010-10-01.
Greatbatch Inc. has a market cap of $520.5 million; its shares were traded at around $22.39 with a P/E ratio of 15.3 and P/S ratio of 1. Greatbatch Inc. had an annual average earning growth of 1.9% over the past 10 years.GB is in the portfolios of Mario Gabelli of GAMCO Investors, Jim Simons of Renaissance Technologies LLC.
GAAP operating income for the third quarter and year-to-date periods of 2010 were above the comparable prior year periods. Prior year GAAP results included a $34.5 million litigation charge related to a jury verdict against our Electrochem subsidiary as well as a higher level of consolidation and integration charges as those projects, which took place during 2009, were substantially completed by the end of that year. Selling, general and administrative expenses (SG&A) for the 2010 third quarter included $0.9 million in death benefits provided to the family of the Companys former Senior Vice President Orthopaedics. Adjusted operating income, which excludes these charges, was $14.4 million, or 11.3% of sales, in the third quarter of 2010, compared to $13.6 million, or 11.2% of sales, for the comparable 2009 period. Adjusted operating income for the first three quarters of 2010 was $47.2 million or 11.8% of sales compared to $46.1 million or 11.7% of sales for the comparable 2009 period. These increases were primarily due to higher gross profit levels, 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, adjusted operating income benefited in the 2010 periods from a lower level of SG&A due to our various consolidation and cost reduction initiatives that we have implemented over the last two years.
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 a higher level of discrete tax items during the 2009 periods and the expiration of the U.S. R&D tax credit at the end of 2009. The 2010 GAAP and adjusted effective tax rates benefitted from higher income from lower foreign tax rate jurisdictions. As a result, GAAP diluted earnings per share (EPS) was $0.25 per share and $0.82 per share for the third quarter and year-to-date period of 2010, respectively, compared to a loss of $0.90 per share and $0.33 per share for the comparable 2009 periods. Adjusted diluted EPS was $0.34 per share and $1.06 per share for the third quarter and year-to-date period of 2010, respectively, compared to $0.32 per share and $1.12 per share for the comparable 2009 periods.
Cash flows from operations for the third quarter of 2010 were $28 million and helped fund the repayment of $27 million on our outstanding line of credit. For the year, we have generated $72 million of cash flow from operations and repaid $57 million of debt. We currently expect that cash flow from operations will continue to be used to support routine capital expenditures, further pay down debt and fund our research and development projects.
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 fourth quarter of 2010 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 $520.5 million; its shares were traded at around $22.39 with a P/E ratio of 15.3 and P/S ratio of 1. Greatbatch Inc. had an annual average earning growth of 1.9% over the past 10 years.GB is in the portfolios of Mario Gabelli of GAMCO Investors, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Third quarter 2010 sales grew 5% over the prior year to $127.5 million, reflecting improvements in our vascular, orthopaedics 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 nine months of 2010, sales of $400 million were 1% higher than the prior year period as improvements in Electrochem revenue were partially offset by the slowdown in the CRM market, which caused customers to reduce inventory levels.GAAP operating income for the third quarter and year-to-date periods of 2010 were above the comparable prior year periods. Prior year GAAP results included a $34.5 million litigation charge related to a jury verdict against our Electrochem subsidiary as well as a higher level of consolidation and integration charges as those projects, which took place during 2009, were substantially completed by the end of that year. Selling, general and administrative expenses (SG&A) for the 2010 third quarter included $0.9 million in death benefits provided to the family of the Companys former Senior Vice President Orthopaedics. Adjusted operating income, which excludes these charges, was $14.4 million, or 11.3% of sales, in the third quarter of 2010, compared to $13.6 million, or 11.2% of sales, for the comparable 2009 period. Adjusted operating income for the first three quarters of 2010 was $47.2 million or 11.8% of sales compared to $46.1 million or 11.7% of sales for the comparable 2009 period. These increases were primarily due to higher gross profit levels, 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, adjusted operating income benefited in the 2010 periods from a lower level of SG&A due to our various consolidation and cost reduction initiatives that we have implemented over the last two years.
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 a higher level of discrete tax items during the 2009 periods and the expiration of the U.S. R&D tax credit at the end of 2009. The 2010 GAAP and adjusted effective tax rates benefitted from higher income from lower foreign tax rate jurisdictions. As a result, GAAP diluted earnings per share (EPS) was $0.25 per share and $0.82 per share for the third quarter and year-to-date period of 2010, respectively, compared to a loss of $0.90 per share and $0.33 per share for the comparable 2009 periods. Adjusted diluted EPS was $0.34 per share and $1.06 per share for the third quarter and year-to-date period of 2010, respectively, compared to $0.32 per share and $1.12 per share for the comparable 2009 periods.
Cash flows from operations for the third quarter of 2010 were $28 million and helped fund the repayment of $27 million on our outstanding line of credit. For the year, we have generated $72 million of cash flow from operations and repaid $57 million of debt. We currently expect that cash flow from operations will continue to be used to support routine capital expenditures, further pay down debt and fund our research and development projects.
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 fourth quarter of 2010 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.
Read the The complete Report
