Welcome everyone to the First Quarter 2016 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. These statements are based upon Greatbatch Incorporated’s current expectations and actual results could differ materially from those stated or implied. The company assumes no obligations to update forward-looking information, included in this conference call to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects. I will like to turn the call over to today’s host, Vice President, Business Development and Director of Investor Relations, Tony Borowicz.

Great, thank you, and hello everyone and thanks for joining us on our call today. With us are Thomas J. Hook, President and Chief Executive Officer and Michael Dinkins, Executive Vice President and Chief Financial Officer. As we have done in the past, we are including slide visuals with this presentation which you can access now on our website at greatbatch.com. The terms of the agenda for today's call, Michael will review the first quarter financial results and provide second quarter revenue guidance and will reiterate our full year revenue, adjusted EBITDA and adjusted EPS guidance as previously issued. Next Tom Hook will discuss our three key strategic priorities which are one, to drive organic product growth and our core products; two, integrate our legacy Greatbatch and Lake Region Medical businesses; and three, to drive growth through complete medical device systems and partnerships with our customers. With that, now let me turn the call over to Michael Dinkins.

Thanks, Tony and good afternoon everyone. My comments today will include our operating performance, balance sheet metrics and guidance for the second quarter and full year. My comments will focus on comparable basis amounts for 2016 which excludes the results of Nuvectra Corporation prior to its spinoff on March 14. The comparable basis amounts for 2015 excluding results of Nuvectra and include the results of the former Lake Region Medical for the entire year. Our historical pro forma information presentation which were filed with the SEC on Form 8-K on February 29, contains the reconciliation of 2015 comparable amounts to as reported amounts. Please refer to tables A and B at the end of our press release where reconciliations of as reported adjusted amounts to GAAP. The first quarter results were in line with our expectations. In terms of comparison to 2015 we knew it was going to be a tough comparison because last year's first quarter does not reflect the full effect of the downturn in the energy market, the headwinds in CRM markets or the FX impacts from the declining euro. If you look at the variance analyses provided on Slide 5, you will see that these factors contributed to the negative sales volume variance of $0.13 per share in the quarter. In addition, the first quarter sales variance price as compared to productivity improvements achieved is a net negative partially due to price concessions made in the quarter for long term commitments and lower production volumes which resulted in lower fixed costs overhead absorption. We believe the higher revenue volume in the second half of the year, combined with integration synergies will result in gross margins returning to the 28% to 29% range. This improvement in gross margins along with achieving the balance of the current year's…

Thank you, Michael. Turning to Slide 15. To summarize, our performance in the quarter was in line with our expectations. In terms of comparison to 2015 we had difficult comparables. In last year's first quarter we had not yet seen the full effect of the downturn in the energy market and also had not experienced the headwinds in the Cardiac Rhythm Management market and the foreign exchange impact from the declining euro. As we head into 2016 these effects have mitigated but still remain. We feel customer demand in the energy market is adjusted to a new lower base line level and sales will remain flat into 2017. In the Cardiac Rhythm Management market, which now comprises approximately 20% of our revenue will continue to have some headwinds this year as our customers inventory levels continue to reset and OEM clinical market shares settle out on the positive side. Our growth in neuromodulation medical device revenue has largely offset the impact in our CRM products. In the quarter we completed the spin-off of Nuvectra as an independent neurostimulation platform company. Nuvectra is now entering the U.S. market and in combination with our existing neurostimulation market presence we had two catalysts enabling our strategy to grow revenue in complete medical device systems. Additionally, we are in the process of extending long-term contracts with several key major customers as we continue to demonstrate our ability to provide innovative, cost-effective solutions for fully integrated medical device systems. Taking all of the factors into consideration we are reconfirming the previous sales, adjusted EBITDA and adjusted EPS guidance as Michael has provided. It is important to reiterate as revenue increases our gross margins are expected to increase accordingly and the temporary tax effect we saw in the quarter will return back to the expected 30%…

Thank you. [Operator Instructions] And our first question comes from the line of Matt Mishan with KeyBanc Capital Markets. Your line is now open.

Hey good afternoon. Thank you for taking my questions.

Hey Matt.

Hi Matt.

Hey, just to start off, can you talk a little bit about the cadence of sales growth as you go through the course of the year? If I am looking at it right, it looks as if the second quarter is also going to be down in that mid-single digit area and then you have a recovery in the back half in the mid-to-high single digits to get you back to the midpoint of your sales guidance and I just would like to know what gives you confidence in that second half recovery on the sales?

I'll answer the math and the macro then Mike can provide some supplemental comments. So obviously as we look out with each of the product categories with our customers and planning for the long run we have a very good view through strategic dialogues with our customers, what our orders and flows some extortionist [ph] actions like foreign exchange, energy market dynamics et cetera which are tough to predict. We obviously feel that those effects can stabilize and bottom out so we don’t feel that those are headwinds for us anymore. They are not going to get any better. We don’t believe they are going to get any worse. So that gives us better predictability or customer ordering pattern. We believe the inventory rationalization took place and then some of the product categories will mitigate as well. So as we look out at our normal business flow from our customer relationships quarter-over-quarter, we ended up having more predictable streams based on product development products and new product introduction products that we worked on with them and as we actively plan out on a quarterly basis how they are launching and drawing those products. We largely get down to the traditional variables that have affected us which is the timing of those product launches which are primarily driven off the regulatory approvals that our customers obtain. So we think that is the risk factor that we're down to from a traditional standpoint. And then we think traditionally we manage that fairly well and we are not expecting any negative exogenous variables to affect us like it has in 2015.

Yes, I'll reiterate some comments. If you look at Portable Medical we've got it positioned in a lower cost production facility, which make us more effective in the marketplace. We're starting to see that recover as part of the drive for our second quarter. if we look in the second half particularly the third quarter for energy a very, very low quarter even below the run rate that we're at now, so it gives us a better comp or user comp in comparative energy in the third quarter if we just maintain where we're at. And as Tom just indicated, there are some product launches that we expected from customers in the second half of the year that is also driving the improvement.

Okay great, that's very helpful. I appreciate the color there. I think we saw some news today with St. Jude and Abbott. I was just hoping you could talk through what you think are the implications to Greatbatch Lake Region as a result of them coming together?

We saw the news of the St. Jude-Abbott deal this morning as well along with everyone else. We're very optimistic about the deal. We've been in touch and communicating at high levels with both companies and do on a regular basis both from a technology operations as well as executive management levels which we have already done today. We view the deal as not really the DNA of what is happening in the market. We've expected large deals to take place. There have been rumblings of continued consolidation throughout the healthcare markets including medical technologies, so these were expected. Specifically with regards to St. Jude and Abbott, we have very healthy and productive relationships with both customers, both from a legacy Greatbatch and legacy Lake Region perspective. We view what's driving the merger of Greatbatch and Lake Region together the [indiscernible] is at the heart of what's driving the St. Jude-Abbott and other consolidations with the industry to drive higher levels of effectiveness and efficiency and we believe we're capitalizing the integrated companies drive our ability to be productive both at a technology level and cost level for customers is being able to support complex deals like St. Jude and Abbott as a partner for those organizations. So we're bullish about the deal. Obviously it will take some time for it to close, but we plan on continuing to perform for each company in an independent basis until they are combined and we feel that that is a lot of areas where that combined company will be able to leverage the medical device systems capability of Integer that we're pulling together very quickly since we closed our deal back in October. So I think we've oriented Integer for success with St. Jude and Abbott independently and we'll be very well aligned with them post the close of that transaction in the future.

All right, thank you Tom, thank you Mike.

Thank you. [Operator Instructions] And our next question comes from the line of Glen Novarro with RBC Capital Markets. Your line is now open.

Hi guys, this is George on for Glen. Thanks for taking my questions.

Hey George.

Hi George.

On the CRM side has there been any changes from your point of view in the timing of the product launches in your dairy or in your schedules from clients, I mean how comfortable do you feel recovering that business throughout the rest of the year?

And your actual question is on a monthly basis we're always locking off with our customers on timeline adjustments. And the simple answer is George is there are constant adjustments in timelines both in and out for every product that we have on our plate. So as you would know that whether it is legacy Lake Region or legacy Greatbatch type product developments with our customers, these products have occurred multiple years ago. So we already have won those products and converted in qualified or components and are selling those products to feed the launches with the medical device customers. So while they sometimes they are just a month or two earlier or later their plans to ramp and on average those normalize out and we have internal systems that we apply risk factors to make sure that we're not overheating or underestimating our capacity planning to support those. So traditionally, we have done a very good job at predicting those and in partnership with our customers. So the guidance that we've provided both on annual and second quarter basis reflects that risk adjustment and right now I see products moving. I don't see any major changes occurring that would be untypical. There are always slight adjustments based on the FDA reviews and final approvals in the launch quantities to manufacturing for those. And I think some customers based on the products that they have, the higher levels of complexities sometimes and those can adjust larger than the smaller products. But we've see that historically and it is to be expected. So no surprises and as I was just saying in summary would be is that that's more of the traditional forecasting and guidance models that we run and we feel very confident that our guidance comprehends that.

Great, that's helpful and just a last one for me. It seems like the integration is just going very well so far and going on track to achieve cost synergies you've set out to achieve for this year. On the revenue synergy side when do you expect to begin generating some of those? Is it too soon or is it, are you just sort of seeing some of these revenue synergies come through right now?

George, it is an excellent question is the synergies for revenue we obviously are closing this deal said we would not provide any revenue synergies in the three-year period to be conservative as part of the transaction. However, we have immediately seen opportunities to join the capabilities of both companies and win product development projects with our customers. So we've already benefited from the ability of the combined broad portfolio of winning more broader suites of business with our customers. But as you know, the challenge with that is that generates for us research development and engineering expense that then in the future years will generate revenues. So we know this will lead to bookings and revenue, but we have to go through the qualification phase this will lead to bookings and revenue, but we have to go through the qualification phase with customers. We're still extremely bullish about it and that's one of the reasons why my comments was that the integration is going extremely well with the four product categories in place and already making traction with customers selling integrated medical device products beyond is our traditional discrete focus is off to a very strong start. That will facilitate us squeezing synergies out, but also evolving the company to be more systems level sale. So even though we won't generate near term revenue synergies because we have to follow up those products and as we explained back when the deal closed in the fourth quarter going forward we know those revenues will come in as we continue to win those products and then it is off to qualifications. The frustrating part for us is because those contracts that we win for development are under strict confidentiality provisions with our customers. We can only provide general comments of how we are doing here. We can't provide specific comments of which products we won. But I only can indicate that what drove the deal to put together the combined product portfolios is very effectively working five months into the transaction.

Great, thanks guys.

And one of the reasons why we added Slide 21 and 22 is to give you some ideas of the opportunities that are now available to us. So I would take a look at that to get some ideas of what we're capable of doing now.

Thank you. And our next question comes from the line of Charles Haff with Craig-Hallum. Your line is now open.

Hi thanks for taking my questions. I apologize I've been bouncing around between multiple earnings calls here. Did you mention anything about the Portland to Tijuana transition, is that been completed yet or are you still in process there?

That has essentially been completed. There is a little bit of – the last [indiscernible] so the door is shut and the lights turned off now but essentially has been completed. And the good thing about it is that is the new facility is operating the way that we have anticipated and then given those oddly advantages and efficiency gains that we had expected. We've hired some new people to help on the sales side of this now that we have a full facility and ready to go and part of the improvement that we're seeing in the second quarter performance and balance of the year is in our Portable Medical product line.

Okay, thanks for that Mike. And then I wanted to ask you about from the press release you said you've successfully implemented phase 2 of the synergy plan. I'm not familiar with the different phases of your synergy plan, so can you just kind of give us a brief snapshot of how many phases there are and how far along you are right now?

Yes, Charles this is Tom. It is multiple phases, but there's three organization phases that we fully implemented the executive leadership, the senior leadership which is the next level down and the administrative functions have all been implemented and completed. That's one bucket is organizational synergies and of course as we implemented those into the first quarter of this year in the balance of the year we will have a more full effect by quarter of that cost organizational rationalization. The second bucket or phase will actually come into what we would call direct-indirect spend that where we actually reach out and go through make or by decisions as a company, that is actively in deployment and will be continued to be deployed over the course of 2016 and 2017. And then the final phase which we have not provided any guidance or information on beyond the macro guidance for our synergy targets of $25 million, $50 million and $60 million is going to be the third market is manufacturing synergies. As we optimize our footprint in that we still are completing our analysis on and will be provided communications in sometime in 2016 with regards to what our plans more specifically are there. So those are the three major buckets of synergies within the integration plan that we're running in the first three pieces which the organizational pieces are done now, we are under the second and third buckets.

Okay, thanks for that detail. And then my last question is regarding the $5 million of synergies that have been achieved so far kind of following up on the previous question, you got on the revenue synergy side, I just want to be clear, is the $5 million that you're quoting here does that include some of those revenue synergies, are those that $5 million just the cast synergies?

So the cost synergies only we will – we're expecting no revenue synergies within the three-year integration period. We're just being conservative, so we're not going to guide to any revenue synergies. But we know we are already winning projects using the broad portfolio of Integer now, but obviously there will be product development projects in the bookings will occur years from now post qualifications and the revenues we're not going to count on. This will allow us to run a conservative model relative to synergies of the deal and it will be cost focused only. So the $5 million in the first quarter we've realized are cost only synergies. Our $25 million target, which we're very confident of achieving in 2016 are only cost synergies and then for the 2017 of $50 million and 2018 of $60 million those are only cost synergies. So any revenue synergies we would realized we would communicate clearly and it would be in addition to the cost synergies.

Okay, so I have one more quick one. You mentioned on the last quarterly call that you felt very comfortable retaining all of the business lines from Lake Region and you didn't see any divestitures at least at that particular time. I'm wondering now that you've had a few more months to look at it, do all of the businesses that you acquired from Accellent and Lake Region still make sense in the Integer kind of picture?

It is a great question Charles and the answer is an emphatic yes. I visited every single Lake Region facility and every single operating team and I'm extremely impressed with their operating prowess on par and in many areas capacity and high volume manufacturing superior to the Greatbatch operating capabilities. And I see really no areas of divestiture that would be desired or needed they have a very strong product portfolio and this is very complimentary with the Greatbatch portfolio. So I'm very bullish about Integer's discrete product offerings all the way through complete medical device offerings with the combined portfolio now. So I don’t see any trimming as we move forward into the future.

Okay, great, thanks for taking my questions.

Thank you. And our next question is a follow up from the line of Matt Mishan with KeyBanc Capital Markets. Your line is now open.

Hey great, I was hoping you could give us a little bit more color on the customer price concessions. In particular, I think Mike, you mentioned something about platinum and it being like a pass-through I was just curious what the headwind would be through the course of the year and so that we can maybe back it out of our revenue totals and the comps will be a little bit easier?

I'll let Mike give the specifics. I'll just give a quick macro here and let Mike chime in on the specific.

Yes, our pricing for the first quarter and for the year is approximately about a negative 1.6%. So I think that would be the best guidance that we would give with you and we go through this, one of the things that we have tried to do with most of our negotiations is tie price to either cost improvements initiatives as they will help us implement so that we can offset bad price and maintain our margins and/or additional volumes that we will run through our facilities. So as we negotiate these, we try to and then in most cases are successful of making sure that what we have given up in price we can target productivity or volume to offset it.

And Matt, just for a point of reference for both legacy Lake Region as well as legacy Greatbatch this is the typical level that we've seen on an annual basis. So there is nothing different that we've seen in 2016 looking forward than we have seen historically more consistent with that.

Okay, that's great. And then as I look at the second quarter, could you give a little bit of color maybe where you may start to see in some improvement amongst the segments? You've pretty much, it was pretty broad based on the decline side in the first quarter. Should we be modeling something similar to that as the revenue growth side for the second quarter or is one segment maybe picking up a little bit faster than some of the other ones?

For the second quarter was the exception of our energy segment, all of them or the other three are picking up in the second quarter. So it is spread reasonably across the other three product lines, but we don’t see a pickup in energy.

Okay, thank you.

Thanks Matt.

Thank you and I'm showing no further questions at this time. I would like to turn the conference back over to Mr. Tony Borowicz for any closing remarks.

Thank you all for joining us on the call today. As a reminder we've got the audio portion of this call along with the slides on our website for the next 30 days. Again, thank you for your participation today.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.