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Piper Jaffray Conference Presentation December 5, 2019

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Page 1: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Piper Jaffray Conference Presentation

December 5, 2019

Page 2: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Presentation of Financial Information & Forward-Looking Statements

Historical financial and operating data in this presentation reflect the consolidated results of Integer for the periodsindicated.

This presentation includes financial information prepared in accordance with accounting principles generally accepted inthe United States, or GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financialmeasures in this presentation, which include Adjusted Net Income, Adjusted Diluted EPS, Earnings Before Interest TaxesDepreciation and Amortization (EBITDA), Adjusted EBITDA, and organic growth rates should be considered in addition to,but not as substitutes for, the information prepared in accordance with GAAP. For reconciliations of these non-GAAPfinancial measures to the most comparable GAAP measures, please refer to the appendix to this presentation and theearnings release associated with this quarterly period which can be found in the investor relations section of our corporatewebsite (investor.integer.net).

Statements made in this presentation whether written or oral may be “forward-looking statements” within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E of Securities Exchange Act of 1934, asamended, 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 “variations” or the negative of these terms or other comparable terminology. These statements are based onthe company’s current expectations and speak only as of December 5, 2019. The Company’s actual results could differmaterially from those stated or implied by such forward-looking statements. The Company assumes no obligation toupdate forward-looking information, including information in this presentation, to reflect changed assumptions, theoccurrence of unanticipated events or changes in future operating results, financial conditions or prospects.

2 ITGR: Investor Presentation / November 2019

Page 3: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Cardiovascular / Structural Heart

Peripheral Vascular

Neurovascular

Cardio & Vascular

48%

Cardiac Rhythm Management &

Neuromodulation37%

AS&O & Portable Medical

11%Electrochem

5%

Military

Tachycardia

SCS / Neurostimulation

Adv Surgery

Orthopedics

Revenue by Markets Served - $1.26 billion(1)

Steerable Sheaths

Catheters & Sheaths

Introducers

Guidewires, Stylets & Accessories

Finished Device

Leads & Lead Components, Adaptors & Assemblies

Orthopedic Implants

Electrosurgical Accessories

Battery Cells Battery Packs

Core Battery Pack Assemblies

Li-Ion BatteryPacks

Batteries Capacitors

Feedthroughs

Enclosures

Stents / Valves Combined DevicesPortable Medical

BradycardiaUrology

Oncology

Electrophysiology

Vascular Access

Markets

Products

Markets

Products

Markets

ProductsMarkets

EnergyEnvironmental

Products

3 ITGR: Investor Presentation / November 2019 - (1) midpoint of 2019 guidance range

Page 4: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Portfolio Strategy Operational Strategy:Strategic ImperativesHow we win

in the markets we serve How we achieve excellence in everything we do

Focused Strategy to Drive Long-term Growth

Cardio & Vascular

Neuromodulation

Electrochem

Portable Medical

Invest to Grow

Protect & Preserve

Cardiac Rhythm Management

4 ITGR: Investor Presentation / November 2019

Page 5: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Customers

CultureCosts

Portfolio StrategyProduct Category Leaders

Operational StrategyStrategic Imperative Leaders

Joel BeckerPresident, CRM&N

Kirk ThorCHRO

Joel BeckerPresident, Cardiac Rhythm Management & Neuromodulation

Payman KhalesPresident, Cardio & Vascular

Carter HoughtonPresident, Electrochem & Portable Medical

Jen BoltSVP, Global Ops

Joe FlanaganEVP, Quality

Manufacturing Excellence

Business Process Excellence

Performance ExcellenceLeadership Capability

Sales Force Excellence

Market Focused Innovation

Payman KhalesPresident, C&V

Executive Alignment to Drive Our Strategy

Page 6: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Product Line Strategy and Growth TeamsInteger’s Sustainable Process to Drive Growth

Product Line

Strategies

Integer’s Product Line Strategy Process is how we develop winning strategies for Product Lines in our portfolio. Product Line Strategies include standard processes, tools and governance that drive our critical strategic decisions.

Growth TeamsCross-functional teams in place - accountable for developing product line growth strategies in targeted markets

Inputs Planning Execution

Patient Needs / Clinical Trends

Macro Technology Trends

Regulatory Trends

Emerging Markets Trends

Consolidation Trends

Manufacturing Trends

Capability Prioritization for Target Markets

Product Roadmap

Technology & Capability Roadmap

Sales Targeting & Account Management

Manufacturing Plan

Program Management for Development & Operations

Clear Functional Accountability

Sales Execution

KPIs and Relevant Metrics

Standard Processes & Business System Improvements

Continually Evolve Strategy in Order to Achieve Sustainable Revenue & Profit Growth

6 ITGR: Investor Presentation / November 2019

Page 7: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Manufacturing Excellence: Business Optimization and Margin Expansion

Integer Production Systems

Lean Diagnosis

KPI and DashboardStandardization

Continuous Improvement Culture

Status

• Framework and detailed system elements of our Integer manufacturing processes

• Defined & scoped 16 elements that comprise the IPS

• IPS element tools, templates and resources in process

• Comprehensive diagnosis and current-state mapping

• Prioritized and aligned site transformation plans

• All 15 facilities have completed their initial lean diagnosis

• Improvement actions underway • Learnings advancing to addition

value streams within sites

• Performance metrics with clear definition and reporting

• Safety, Quality, Delivery, Cost, People

• All site-level key process indicators defined

• Leadership dashboard developed and implemented

• Clear training and expectations of leaders and all associates

• Organizational design aligned to optimized operations.

• Site leadership lean training complete for all sites

• Organizational structure optimization in process

7 ITGR: Investor Presentation / September 2019

Page 8: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

2019 Full-Year Outlook

Adjusted EPS

$1,213$3.80

$1,253 - $1,268 $4.55 - $4.65

($ in millions except per share amounts)

Growth % 3% - 4.5% 20% - 22%

Adjusted Sales

$259

$282 - $286

9% - 10%

Adjusted EBITDA

$1,260 - $1,280 $275 - $283 $4.05 - $4.25Original Guidance

8 ITGR: Investor Presentation / November 2019

Page 9: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Debt Payments

(1) Free Cash Flow defined as Cash Flow from Operations less Capital Expenditures, net of proceeds from sale of property, plant, and equipment(2) Leverage calculated as total principal amount of debt outstanding less Cash and Cash Equivalents divided by Trailing 4 Quarter Adjusted EBITDA

Cash Flow From Ops Free Cash Flow(1) Leverage(2)

2019 Cash Flow Outlook($ in millions)

$548

$160 - $170$110 - $120

$105 - $115

$67 - $77

Target2.5x - 3.5x

Divestiture ProceedsAccelerated Repayment Required Repayment

$700

$160 - $170 $110 - $120 $105 - $115 2.5x - 3.5xOriginalGuidance

No change, despite

$15 million acquisition

~2.9x

Page 10: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Disciplined capital deployment

ü Continued EBITDA growth

ü Increased free cash flow

ü Capacity for “bolt-on” acquisitions

ü Recently amended credit facility reducing interest expense

Leverage framework

Significant deleveraging6.1x

5.6x

2016

3.5x

2017 2018

~2.5 - 3.5x

Debt x EBITDA

Leverage

Balanced & Disciplined Capital Allocation

10

Y/E19 Guidance

2.9x

ITGR: Investor Presentation / November 2019

Page 11: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

2021

Market + 2%

Revenue Growth versus Prior Year:

(2)%(4)%

2015 2016

5%7%

2017 2018

Integer’s Journey – Executing Long-term Growth Strategy

Disruption Stabilizing & Building Sustained Outperformance

2015 2016 2017 2018 Strategic Objectives

Executing Strategy

3% - 4.5%

2019 Guidance

• Market growth• ~1x revenue growth

• 6x à 3.5x

• New leadership team• Operational stabilization• Clear strategy

- Portfolio change

- Multi-year plans

DeclinedDeclined

>6x

• Integrated $1.7B Lake Region acquisition

• Spun off Nuvectra

• Challenging customer relationships

• Market growth, ex Nuvectra• 2x revenue growth

• Debt leverage 2.5x – 3.5x

• Product line strategy

• Operational Strategic Imperatives

• Executing bolt-on M&A• Disciplined capital

deployment

• 200bps above market• At least 2x revenue growth

• Debt 2.5x – 3.5x

“Excellence in everything we do”

11ITGR: Investor Presentation / November 2019

Page 12: Piper JaffrayConference Presentation · 5.12.2019  · Cardiovascular / Structural Heart Peripheral Vascular Neurovascular Cardio & Vascular 48% Cardiac Rhythm Management & Neuromodulation

Contact Information

Tony BorowiczSVP, Strategy, Corporate Development & Investor Relations

[email protected]

www.integer.net

(O) 716.759.5809

12ITGR: Investor Presentation / November 2019