Wilson Greatbatch Technologies announced a 61 percent drop in quarterly profits Tuesday because of a drop in sales.
Sales took a 20 percent hit from the previously announced decline in business with Guidant Corp., which cut its order for pacemaker batteries last spring.
But the company managed to beat Wall Street's estimates by keeping costs lower than expected.
Per-share profits of 14 cents were down from 36 cents a year ago, but roughly double most analysts' estimates.
"We have effectively contained discretionary spending, while continuing to invest in important long-term goals," president and CEO Edward F. Voboril said in a conference call with analysts.
Headquartered in Clarence, Wilson Greatbatch makes batteries for pacemakers and defibrillators, and related medical products. It has about 750 workers at plants in Erie County, more than half its total of 1,300 jobs.
Spending on a new assembly plant in Tijuana, Mexico, was lower than expected, although much of the expected costs will appear in the fourth quarter, officials said. Greatbatch also benefited from a lower tax bill and a progress payment for development expenses.
Cost-cutting earlier this year cut 7 percent of the work force, including about 100 jobs at local plants.
Pressure to cut prices is increasing as substitutes for its medical products spread, but Greatbatch is working on next-generation technology to maintain its lead, officials said.
"We're absolutely committed to technology and quality leadership," Voboril said. "We have not backed off one iota in investing in technologies we're preparing for the future, or the facilities to support these technologies."
Research and development costs rose 5 percent to $4.2 million for the third quarter.
An advanced battery plant under construction in Alden is nearing completion set for the first quarter of next year, the same time as the Tijuana plant.
Greatbatch shares climbed 42 cents Tuesday to close at $19.92 before the results were announced.
Sales were $45.2 million for the quarter ended Sept. 30, versus $56.3 million a year ago. Profits were $3 million compared to $7.8 million.
Management boosted expectations for the full year, revising profit projections to 64 to 68 cents per share, compared to previous estimates of 50 to 57 cents. This despite a pullback in the sales forecast to $195 to 200 million, reduced by $5 million at the top end of the range.
Sales projections for next year also came down, with a range of $200 million to $220 million instead of $207 million to $230 million. Profits for next year weren't estimated.
Next quarter, Greatbatch plans to restate past results, going back to the second quarter of 2003, to reflect its $170 million in convertible debt, which could be exchanged for 4.2 million shares. The restatement will dilute past earnings-per-share figures.