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Greatbatch profits climb 17 percent

Greatbatch Inc.’s fourth-quarter profits jumped by 17 percent, as growth in the company’s orthopedic and vascular products offset a slowdown in revenues from its cardiac and neuromodulation business.

The earnings topped analyst forecasts, and Greatbatch executives said they expect the company’s profits to grow by about 10 percent again this year, with sales rising by 5 percent.

“We expect 2015 to be a transformative year,” said Thomas J. Hook, Greatbatch’s president and CEO, during a conference call. “We are projecting a promising 2015.”

Greatbatch executives said they are expecting U.S. regulators during the first half of this year to approve its Algovita spinal cord stimulation system, which is undergoing clinical evaluations in Europe. “We are encouraged and very satisfied,” Hook said.

Greatbatch’s adjusted operating profits rose to $22.7 million, or 65 cents per share, from $19.4 million, or 55 cents per share, a year earlier, easily topping the 59 cents per share that analysts had been expecting.

Gregory P. Chodaczek, a Stern Agee analyst, said Greatbatch’s earnings were bolstered by improving profit margins resulting from a more lucrative product mix, its August acquisition of CCC Medical Devices, and improvements in its manufacturing operations, which are consolidating portable medical products production at its factory in Tijuana, Mexico.

Greatbatch’s sales fell by 4 percent to $169.7 million from $176.6 million, mainly because of a 19 percent drop in revenues from its cardiac and neuromodulation products. Hook blamed the slump in cardiac and neurostimulation sales on inventory adjustments by major customers, along with the end of two of the company’s older product lines.

That softness was partly offset by an 18 percent increase in sales of its vascular products and a 13 percent rise in energy, military and environmental product sales. Orthopedic product sales grew by 6 percent, while revenues from portable medical products declined by 13 percent.

The company, which is based in Dallas but has extensive production and research facilities in Clarence and Alden, said it expects its sales this year to rise to between $715 million and $730 million, compared with $688 million last year, with adjusted operating profits of between $2.61 and $2.71 per share, up from $2.42 last year.