Greatbatch Inc. (GB, Financial) filed Quarterly Report for the period ended 2010-04-02.
Greatbatch Inc. has a market cap of $509.9 million; its shares were traded at around $21.96 with a P/E ratio of 15.4 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 PRIMECAP Management.
GAAP operating income for the first quarter of 2010 was $14.0 million, or 10.6% of sales, compared to $14.8 million, or 10.6% of sales, for the 2009 first quarter. Similarly, adjusted operating income was $15.0 million, or 11.4% of sales, in the first quarter 2010, compared to $17.6 million, or 12.6% of sales, for the comparable 2009 period. The decrease in GAAP and adjusted operating income from the prior year was mainly due to lower revenue levels, as described above, as well as a higher level of 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 in order to create long-term growth opportunities, as well as a lower level of customer cost reimbursements. The negative impact of these variances was partially offset by a lower level of selling, general and administrative expenses (SG&A) due to our various consolidation and cost cutting initiatives, as well as reduced 2010 performance-based compensation of approximately $1.6 million for the quarter compared to the 2009 period.
This lower operating income, as well as a higher effective tax rate in 2010, due to the expiration of the U.S. R&D tax credit at the end of 2009, caused GAAP diluted EPS for the first quarter 2010 to decrease to $0.24 per share compared to $0.28 per share for the first quarter 2009. Similarly, adjusted diluted EPS were $0.32 per share in the first quarter 2010 versus $0.41 for the comparable 2009 period.
Cash flows from operations for the first quarter of 2010 were $21.2 million compared to $0.06 million for the 2009 first quarter and $21.5 million for the 2009 fourth quarter. The increase from the prior year first quarter is primarily due to our strategic initiatives designed to improve operational efficiency, which included initiatives to reduce inventory and receivable levels, as well as the timing of payments and lower consolidation and integrations costs. As of April 2, 2010, we had $56.3 million of cash and cash equivalents and $114 million of availability under our revolving line of credit. We currently expect that cash generated during 2010 will be used to support capital expenditures and to pay down debt.
First quarter 2010 sales for our vascular product line were $8.2 million, compared to prior year sales of $10.7 million. This decrease was primarily due to lower introducer sales as a result of customer inventory stocking during the first half of 2009 in connection with our on-going introducer litigation. The impact of this inventory stocking began to ease during the first quarter of 2010 as vascular sales increased 8% from the sequential quarter. We remain optimistic about the potential of this product line as we continue to work with customers on developing systems level products. However, many of the projects that we are currently working on will not begin to generate sales until the second half of 2010 and beyond.
Electrochem First quarter 2010 sales for the Electrochem business segment were $17.5 million, slightly below the $17.7 million in the first quarter 2009. The decrease from the prior year primarily related to the slowdown in the energy and portable medical markets, which caused customers to reduce inventory levels and push back projects. These conditions continued to ease in the first quarter of 2010, but are still expected to be a challenge for the next two quarters.
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Greatbatch Inc. has a market cap of $509.9 million; its shares were traded at around $21.96 with a P/E ratio of 15.4 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 PRIMECAP Management.
Highlight of Business Operations:
Sales for the first quarter of 2010 were $132.0 million compared to $139.8 million in the comparable 2009 period and $125.8 million for the fourth quarter of 2009. The 6% decline from the prior year was due to inventory stocking by our customers in the 2009 period and the uncertain economic and regulatory environment, which primarily impacted our orthopaedics and energy markets. However, in comparison to the sequential 2009 fourth quarter, sales increased 5% driven by improvements across all of our product lines, including a 17% increase in orthopaedics and an 8% increase in vascular sales. Our sequential growth was broad-based and was supported by improvement in all of the underlying markets we serve and is a positive sign that those markets have begun to stabilize.GAAP operating income for the first quarter of 2010 was $14.0 million, or 10.6% of sales, compared to $14.8 million, or 10.6% of sales, for the 2009 first quarter. Similarly, adjusted operating income was $15.0 million, or 11.4% of sales, in the first quarter 2010, compared to $17.6 million, or 12.6% of sales, for the comparable 2009 period. The decrease in GAAP and adjusted operating income from the prior year was mainly due to lower revenue levels, as described above, as well as a higher level of 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 in order to create long-term growth opportunities, as well as a lower level of customer cost reimbursements. The negative impact of these variances was partially offset by a lower level of selling, general and administrative expenses (SG&A) due to our various consolidation and cost cutting initiatives, as well as reduced 2010 performance-based compensation of approximately $1.6 million for the quarter compared to the 2009 period.
This lower operating income, as well as a higher effective tax rate in 2010, due to the expiration of the U.S. R&D tax credit at the end of 2009, caused GAAP diluted EPS for the first quarter 2010 to decrease to $0.24 per share compared to $0.28 per share for the first quarter 2009. Similarly, adjusted diluted EPS were $0.32 per share in the first quarter 2010 versus $0.41 for the comparable 2009 period.
Cash flows from operations for the first quarter of 2010 were $21.2 million compared to $0.06 million for the 2009 first quarter and $21.5 million for the 2009 fourth quarter. The increase from the prior year first quarter is primarily due to our strategic initiatives designed to improve operational efficiency, which included initiatives to reduce inventory and receivable levels, as well as the timing of payments and lower consolidation and integrations costs. As of April 2, 2010, we had $56.3 million of cash and cash equivalents and $114 million of availability under our revolving line of credit. We currently expect that cash generated during 2010 will be used to support capital expenditures and to pay down debt.
First quarter 2010 sales for our vascular product line were $8.2 million, compared to prior year sales of $10.7 million. This decrease was primarily due to lower introducer sales as a result of customer inventory stocking during the first half of 2009 in connection with our on-going introducer litigation. The impact of this inventory stocking began to ease during the first quarter of 2010 as vascular sales increased 8% from the sequential quarter. We remain optimistic about the potential of this product line as we continue to work with customers on developing systems level products. However, many of the projects that we are currently working on will not begin to generate sales until the second half of 2010 and beyond.
Electrochem First quarter 2010 sales for the Electrochem business segment were $17.5 million, slightly below the $17.7 million in the first quarter 2009. The decrease from the prior year primarily related to the slowdown in the energy and portable medical markets, which caused customers to reduce inventory levels and push back projects. These conditions continued to ease in the first quarter of 2010, but are still expected to be a challenge for the next two quarters.
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