Greatbatch Inc. began the year on a rocky note, with a disappointing 63 percent drop in profits, but chief executive Thomas J. Hook still feels good about the Clarence battery and medical device maker's prospects.
"We've built a very solid foundation and it shows in the efficiencies we've gained," Hook told shareholders during the company's annual meeting on Friday. "We've done a really nice job diversifying the revenue base of the company."
Those efforts have reduced the company's dependence on the cardiac rhythm management market, which accounted for 85 percent of Greatbatch's revenues eight years ago, to 45 percent of its revenues last year. At the same time, the company has expanded into new markets, such as orthopedic products, and expanded its commercial battery business.
The company also is trying to build on its technology by developing its own medical devices, with the first two hitting the market last year and more than 15 others under development.
"We've sought growth in other areas," Hook said.
Despite the weak first quarter, caused by production problems at its orthopedic products business, especially in Switzerland, Greatbatch is sticking with its forecast that sales this year will rise by about 15 percent to around $655 million from $569 million last year.
Because the company expects its profitability to improve as the year progresses, it also is standing by its forecast that its profits will rise by about 7 percent to $1.75 to $1.85 per share, up from $1.68 per share last year.
To bolster its profits, Greatbatch has upgraded its factory in Indianapolis and has started building a new plant in Fort Wayne, Ind. It is moving forward on plans to consolidate operations at its orthopedic products business, especially in Switzerland, where the company has three smaller facilities, Hook said.
The company also continues to invest heavily in research and development, which is a key part of its operations in the Buffalo Niagara region, where its capacitor and battery R&D operations are located. In all, Greatbatch has about 680 employees at its facilities in Clarence and Alden.
While Greatbatch isn't backing away from its growth forecast after its weak first quarter, the company's shares have stumbled, losing 28 percent of their value over the last year.
"We need to do a better job with investors communicating our strategy," Hook said. "We've really struggled since the beginning of 2011 to maintain our share performance."