Welcome everyone to the Fourth Quarter 2015 Greatbatch Incorporated Conference Call. Before we begin, I would like to read the Safe Harbor statement. This presentation and our press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involves a number of risks and uncertainties. These risks and uncertainties are described in the company’s annual report on Form 10-K. The statements are based on Greatbatch Incorporated’s current expectations and actual results could differ materially from those stated or implied. The company assumes the obligations to update forward-looking information, included in this conference call to reflect change assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects. I would now like to turn the call over to today’s host, Vice President, Business Development and Director of Investor Relations, Tony Borowicz.

Thank you, Karen and hello everyone and thank you for joining us today on our fourth quarter 2015 earnings call. With us on the call today are Thomas J. Hook, our President and Chief Executive Officer and Michael Dinkins, Executive Vice President and Chief Financial Officer. As we have done in the past, you can go to our website and see our slide visuals that will accompany this presentation, and afterwards these will be on our website at greatbatch.com for future viewing. Once Tom and Michael have completed their presentations, we will then open up the call for Q&A. Note that both Michael and I are available to take questions following this call. You can reach me on my mobile afterwards. So, let me turn the call over to Tom Hook.

Thanks, Tony. Starting on Slide 5, 2015 marks the completion of several key strategic milestones. At the top of the list was the completion of the transformative acquisition of Lake Region Medical. The acquisition is highly complementary with few overlapping products between the company and was strategic for many reasons. First, it expands our full medical device capabilities by expanding our product offerings in vascular and orthopedics. It also expands our reach into the advanced surgical market with a portfolio of minimally invasive devices used in laparoscopic and drug delivery applications. Second, the acquisition has significantly expanded our global manufacturing footprint. This increased scope and scale presented tremendous opportunity to leverage the expertise of both companies. Third, we have a much broader and diversified revenue base which will provide a greater opportunity to extend our partnerships with our OEM customers. And then fourth, the medical device market is growing approximately 4% annually with many sub-sectors expanding at an accelerated pace. Our OEM customers have had to minimize supply chain and regulatory risk by focusing their supplier base of higher quality partners. And additionally, clinical market pressure is driving OEMs to reduce costs which drive outsourcing demand. The second major milestone was obtaining an original FDA PMA approval for our Algovita spinal cord stimulation device. This represents the culmination of 7 years of dedicated effort by the QiG Group and Greatbatch teams. This active and final medical device targets the 100 million people who suffer from severe and chronic pain. We are proud to be one of the handful of companies in the world that is capable of developing complete active implantable medical device systems analysis. Obtaining PMA approval has enabled the spin-off of the technology into the standalone publicly traded company which will be called Nuvectra trading on the NASDAQ…

Thanks Tom and good afternoon everyone. My comments today will include our operating performance and balance sheet metrics. We are not providing guidance updates. The January 11 guidance still stands as of January 11. Before I begin, I want to take a moment to discuss our updated metrics. Beginning third quarter 2015, Greatbatch reported adjusted diluted earnings per share excluding amortization of intangible assets. This change aligns Greatbatch metrics with other medical device properties. Secondly, adjusted EBITDA has been refined to exclude stock-based compensation from this metric. A table in the earnings release outlines GAAP EPS and EBITDA to adjusted diluted EPS and adjusted EBITDA for both the quarter and total year. Turning to Slide 11, we have a summary of our fourth quarter revenue performance. The fourth quarter was a record quarter for legacy Greatbatch. We have advanced organic revenue growth of 7%, primarily because of growth in our neuromodulation. As you know, we began several years ago to focus on developing full medical device systems for the neuromodulation market where we had virtually no strength. We expect continued success because of the growth of the existing customers and the prospects of the 15 customers that are in various stages of approval. Although we delivered a very strong quarter, we did miss our expectations, primarily because of drivers that impacted our total year performance. End of life products with our CRM customers, inventory reductions by the same customers, delays in your product introductions, change in customer market shares that negatively impacted sales and although we did see some buy forwards [ph] of products for vascular and portable medical and advance of the startup production in Mexico it was lower than expected. We had a 7% organic growth quarter and successful with meeting the demand of a growing neuromodulation customer.…

Thank you, Mike. In May of this year, we will formally change the name of the company to Integer. The Integer name signals the transformation we have made to becoming the world’s leading medical device outsource partner. It is only appropriate and we re-brand ourselves to reflect a single, unified, complete medical device system company we would become. On Slide 17, you can see with our global presence and proprietary product offerings we are positioned to deliver everything from critical components to full systems to enable both emerging and established OEM customers to succeed. Again, it is worth noting that we can enable both the emerging set of companies and well-established OEMs. The investments we have made in our quality systems, global supply chain and proprietary product portfolio are difficult to replicate and has clearly distanced ourselves from our competition. And Slide 18 highlights that Integer’s revenues diversified across the four product categories. Our largest product line is cardio and vascular which provides a 39% of our total company sales. Within this market, we have the strong growth areas associated structural heart and neurology. We estimate market growth in this category to be around 5%. Advanced surgical and orthopedics market represents 29% of our total sales with market growth at approximately 3% to 5%. Cardiac rhythm management and neuro represents 28% of total sales with the slower growth CRM market comprising approximately 20% of our total company sales. The CRM market growth is flat with neuro demonstrating 6% to 8% growth. Our non-medical Electrochem business rounds out the remaining 4% of sales. This market as we all know is down to 30% for the year and is expected to remain flat in 2016. On Slide 19, in summary you can see we believe we are now well-positioned to grow alongside our customers. We have expanded our medical device capabilities which will facilitate customer innovation. We have the scale and global presence which is supported by our world class manufacturing quality standards. We remain true to our vision to enhance the lives of patients worldwide by being our customers’ partner of choice for innovative medical technologies and services. To conclude, we are confident in our ability as one of the largest outsourced medical device manufacturers. We will continue to create shareholder value by enhancing the lives of patients worldwide by being our customer’s partner of choice for innovative medical technology and services. I will now turn the call back over to the moderator who will take your questions and answers.

Thank you. [Operator Instructions] Our first question comes from the line of Charles Haff from Craig-Hallum.

Hi, thanks for taking my questions. My first question is on the guidance for 2016. Did I hear you right that you are suspending your guidance that you gave on January 11 or what is that exactly?

No, we are not suspending our guidance from January 11. That guidance as of January 11 still stands. We are not providing a new update guidance on this call as we work through the process of integrating Lake Region and Greatbatch and our Presidents have been in position for approximately 1 month.

So, you are reiterating the guidance that you gave on January 11 then?

No, the guidance on January 11 still stands as of January 11.

Okay. And then I heard you say that you had 28 facility – I am sorry, 30 facilities and then when you announced the deal with Lake Region on August 27, you said you had 28 combined facilities. So, did you add two additional facilities?

Some of the facilities as you know, Charles, are in transition right now due to some of the consolidation projects. So, we have with three facilities right now in a state of manufacturing wind-down, the Arvada facility, the Beaverton facility and pieces of the [indiscernible] facility. The number we gave today includes those even though they are on the tail of winding down. And overwhelmingly, those productions have transferred. There is still some limited production there just to support customer regulatory changeovers for the various entities outside the United States for inventory builds. And so the two numbers are the same, just one includes the transition facilities, one did not.

Okay. And then my last question and I will jump back in the queue here. For CRM neuro, did I hear you right saying that CRM, you are expecting that to be flat or it is currently flat and neuro is at 6% to 8% – or I didn’t catch the time period that you are referencing there when you said flat and 6% to 8%?

That would pertain to our view of neuromodulation is the 6% to 8%.

Market growth.

From a market growth.

Right. And then our CRM view is that it will be flat.

For market growth?

For market growth.

Okay, thank you.

Thank you. And our next question comes from the line of Glenn Novarro from RBC Capital Markets.

Hi, guys. This is George on for Glenn. Thanks for taking my questions. I wanted to start with CRM. I appreciate that you are not going to give out any signal level guidance for 2016, but qualitatively can you help us understand what level of growth we can expect from that business in 2016?

George thanks for the question. I think is where we are at right now on category management is from a historical perspective, we have all of our customers on long-term agreements and deep partnerships. However, as our end customers are adjusting their inventories what they have in the timing of new product introductions has changed slightly. It’s had an effect on us as well as some of the share shifts that have occurred. So, we are not really prepared to provide any additional color at this time with regards to category management, but we absolutely understand as we go forward we finished our top customer means with each of those category management customers. We will be updating our fourth quarter view in the future, but right now, we just don’t have any new information to report and don’t have any segment detail to give you any more detailed guidance at this time.

Okay, thank you. That’s helpful. Now, that you have closed this deal and you have a bigger presence in several growth businesses, including neurostim and some segments of vascular, but you also have Electrochem, which is expected to continue to be a headwind in 2016 given what’s going on in the energy space at the moment. Can you discuss your strategy in that business this year? What kind of level of growth can we expect there? Are you still seeing struggles in the end market?

Well, certainly Electrochem is in a market because it has a large majority of this business in the oil and gas market. It’s going to suffer from those headwinds. However, I would also say that it’s a very good time for strategic repositioning in that market to do more for our customers. So, somewhat paradoxically while the market is down and that flows through to us, there is also the same time with our key oil and gas services customers that are looking for cost reduction strategies, we actually can do more for them. In other words, they can outsource more to us. So, we could do more work for them, that presents us growth opportunities in the next couple of years. So, we plan on leveraging those. We are not prepared to provide any detailed guidance with regards to our outlook yet, because we are meeting with those customers, but I think for public information that I disclosed in our customers in that segment, the oil and gas services companies. You know they are aggressively cutting cost in outsourcing right now and we feel that we are really nicely positioned in Electrochem to pick up that work. And obviously we don’t suffer from the regulatory headwinds of the medical device markets in being able to pick up that work. So, it’s much quicker than outsourcing. So, we expect to have some ability to mitigate the market pressures that we have seen that have hit the Electrochem business on the top line and reposition that for other growth opportunities even though the market is down. We will provide more information on that as the year moves on.

That’s helpful. That’s all for me. Thank you.

Thank you. And our next question comes from the line of Matt Mishan from KeyBanc.

Hey, good evening and thank you for taking my questions.

Good evening.

Good evening.

Hey, guys. I think people generally understand you are going through two major events with integration of Lake Region and the spin of Nuvectra. Just my question for you on the guidance, has anything changed for the better or for the worse since you have given guidance on January 11? And then why should we have confidence in the January 11 guidance?

Matt, this is Tom Hook. Thanks for the question. Is where we stand is the business strategically obviously is we are becoming very highly focused as a medical device outsourcing partner for our customer. At the same time, we have combined really the top two medical device outsourcing companies, combining product lines. There is a lot to interface with our customers on from a strategic and a project perspective. And in many times, we are taking portfolios in which we each made half of the portfolio for customers and now we are entertaining doing larger subassemblies and complete devices for customers going forward. So, I don’t think there is a lot of new opportunities. So, strategically, the deals a big win. Actually, spinning out Nuvectra provides much cleaner focus with regards to our customers as it pertains to serving our customers medical device needs and not commercializing medical devices into the market directly. So, we are going to partner through our customers. So, there is a lot of moving pieces with the spin as well as the combination of these product lines. Everything we have seen in terms of our initial guidance for the year is following through per our expectations. We still have a lot of work to do in terms of identifying each individual specific product lines and since the product and board presidents are in place for only about a month, there is still a large work in progress. And we will come back once we have all that digested and we will provide updated information in the future. So, as of the January guidance, we are staying with it and then we will update it in the future once we have completed more of these leadership integrations and we have had all of the top customer meetings to bracket all the opportunities and we will be able to provide more color at that time.

And in regards to the confidence in the guidance we recognized that nothing we say is going to re-win our confidence. So, we recognized we have to execute that we watch people have confidence in our guidance going forward. So, that will be our focus.

Okay, got it. That’s helpful. And then with the management team of Nuvectra going on the road and talking to investors beginning on Wednesday, can you maybe talk a little bit about the valuation you are expecting for the spin?

I think in terms of the valuations, we will let the market determine that. We are quite excited about the products that we are bringing – that they are bringing to the marketplace and that we will be manufacturing for them. But there is a lot of different factors that come into how a startup company will be valued and we will let the market speak on that, but we are encouraged and think that we are bringing very great products to the marketplace led by our leadership team that many of the leaders, including the President [indiscernible] to the marketplace and have experience in doing this before. So a great leadership team and what we think and we are probably biased there as great products.

Okay. And then last question for me would be on free cash flow expectations for 2016, what should we expect in 2016 for your ability to generate cash and repay debt. And then what would normalize – what do you think would normalized free cash flow for this business, what do you think it’s going to look like?

The way that the working capital worked for Lake Region is not materially different than it is for legacy Greatbatch. And I am not surprised by that because we are selling to the same customers. So although we are not providing guidance at this point in time I think if you look at our historical run rate of our cash flow that’s where I would be. But I would note that there are two things that would impact that in terms of our pretax growth. So I think we would be in line with historical performance, minus the $75 million that we will be putting in the initial capital from Nuvectra and minus roughly around $50 million to $60 million that we will spend executing the synergies that would drive future synergies for this business in 2016. So adjustment of those two historical rates and I think you can get a feel for our cash flow. We think we can enter 2017, if we execute on our synergies way above our historical cash flows and be able to start paying down our debt at that time.

Okay, great. Thank you very much guys.

Thank you. [Operator Instructions] Our next question comes from the line of Greg Chodaczek from CRT Capital.

Thank you. Tom, Michael talked about looking back in 2015, citing inventory reductions, delay in products, end of life, change in market share, I guess my first question is you have a long-term contracts with most of your large OEM partners, did you see that coming, I mean based on these long-term contracts and I know you can’t talk about what’s exactly in those contracts, but can you help us understand those a little bit and how this crept up on your in 2015?

Yes. Well, I think is – Greg one thing I can help is kind of the big strategic transition here. We bet heavily 7 years, 8 years ago on neurostimulation. We have obviously seen the maturation of cardio rhythm management markets as it applies to legacy Greatbatch coming. And we made investments entering into higher growth areas. So we are starting to see that neurostimulation market emerge, it comes slower than we have wanted. We have seen some of the effects of the flattening of the cardio rhythm management markets from our perspective. Products at a clinical basis are more commoditizing less technically differentiated. Our customers are very focused on costs. We are in deep partnerships with all five of them, but as we cost rationalize components out as they are tighter on inventory paradoxically because we are performing for them, it puts a lot of pressure on our revenues. And it’s not being replaced by neurostimulation opportunities that at same rate, so it presents a bit of a delta in this. So some of these things we have seen, some of them are in the market share shifts in the clinical markets, because we have original mixes with certain customers that also affect us. So some of these effects we can’t see, some of the effects we have seen for years coming. And neurostimulation investments we have made have mitigated a very large percentage of them and these products have – this market analysis we have done took years for us to do and execute against. So I think we are strategically very well positioned for the realities of cardiac rhythm management market and also some of the pressures that will come forward. And I think we have invested correctly in neuromodulation. I mean had a whole other levels…

And it does, Tom. And so what I am hearing from you is, for the CRM business, the use of basal analogy we are in the late innings for your – neural stem is very early on. And then I guess the follow-up question is if I look at cardiovascular and advanced surgical orthopedics and portable, where do you see those businesses, somewhere in the middle of the two?

Well before I come on cardiac rhythm management, I am going to give you an X factor here Greg, to think about. The miniaturization of cardiac rhythm management devices as you know from various products that have been in the process of launching, both in the monitoring side as well as the pacing, undoubtedly will go to other areas, are really some breakthrough innovation that could significantly change how cardiac rhythm management therapies and monitoring has delivered, diagnostics has delivered. That presents opportunities to neuromodulation, really some breakthrough innovations to potentially change advance for technologies and also the prospects for us. That would reinvigorate some of the cardiac rhythm management product lines going forward. Now being a bit of a pessimist we are not planning on those things. We see that there is a lot of very innovative work that we are involved in those areas. We are not counting on it for the future. We could expect that could get positive influence but due to the size of that market and obviously very mature market in late innings, innovation at that level expected that miniaturization is very exciting. But due to the magnitude of that market relative to the neuromodulation it’s hard to make a deal grew to higher rates. Where I see areas like vascular and our cardiovascular business is I see an enormous opportunity for medical device outsourcing from those market areas. Clearly Lake Region Medical was very well positioned in those market areas. Traditionally, legacy Greatbatch is an extremely small player of only a couple of product lines. So the combination of those product lines along with the legacy of Lake Region product lines gives us the commanding product offering to attack very mature markets like interventional cardiology but also growing markets in a much structural…

And one quick follow-up Tom, in terms of synergistic revenue opportunities, how long do you think that takes, I know this is a month into it, how long do you think that takes to actually gain some of those?

Yes. So for a week, we originally provided information on the deal [Technical Difficulty] action that’s probably being a bit conservative, so we are actively very engaged with customers right now. But because of the nature having to qualify get regulatory approval, those revenue synergies will tend to come out in year three and beyond. We see a host of opportunities to do that. It’s just that kind of 12 months to 24 months of regulatory cycle is kind of the headwind. We know the demand is there for it could. We just got to get – it somewhat doesn’t even require technical development. It just requires legacy Greatbatch, legacy Lake Region to put the product lines together into subassemblies and some times devices and then go through that regulatory journey with the customers and get the individual facilities approved. So we push those revenue synergies out past year three for conservativeness. But we see a host of opportunities in most of the product categories with regards to this that I even included Electrochem in there which was the first question that came for Charles, I see opportunities to do that in the non-medical business as well.

Thank you. And our next question comes from the line of Jim Sidoti from Sidoti & Company.

Good afternoon, can you hear me.

We can Jim.

Great. I joined the call a little late did you give a pro forma operating margin for the quarter?

Pro forma for the…?

For the fourth quarter, right.

No, I did not, but I can get that for you.

Alright. And how about pro forma tax rate?

Again, we haven’t put our fourth quarter pro forma data yet, but we can get that for you.

Okay. Alright, great. And can you tell me, I understand you are a little hesitant to update the guidance at this point because you have a lot going, but just on a more general basis, I know your leverage ratio was up over 5x now, how many years do you think it will take to get it down to less than 3x?

We are targeting that sometime during the second, third year, that we can get at that rate. We won’t see a large progress in 2016 because of the dividend into Nuvectra and the spin to implement the synergies. But then because we have implemented those synergies and obviously without Nuvectra next year, that will be the focus to de-lever this balance sheet as fast as possible.

So you think you will get there by 2018?

We didn’t put a precise year on it, but we are going get there as fast as possible.

Alright. Thank you.

Thank you. And that concludes our question-and-answer session for today. I would like to turn the call back over to Tony Borowicz for any closing remarks.

Thank you, Karen. And again, I would like to remind everybody you can access the audio portion of this call and the slides on our website at greatbatch.com. They will be there for the next 30 days. Thank you all for joining the call today.