ITGR - Earnings call transcript Q1 2019 | Integer Holdings Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the Integer Holdings Q1 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's there will be a question-and-answer session. you. Thank Instructions] [Operator Vice begin Corporate your Senior Relations, and you may conference. President, Borowicz, Development Strategy, Investor Tony

Tony Borowicz

Thank consolidated you, First Heidi. live of you Call. for And call and good morning, us, This with welcome everyone, a for release press and replay, section will we to the being Integer's our periods website. corporate presentation, today of and discuss is on data Quarter along Conference Integer available the joining be XXXX webcast earnings results reflect indicated. the The the and and Relations the copy of thank results Investor

During we discuss measures. our call, some non-GAAP will

reconciliation of today's the of notes For appendix to non-GAAP these financial statement see earnings the and today's the please presentation in measures, release.

statements. filings that Company's to forward-looking As to Please our refer for discussion factors risk a materially. SEC reminder, could the cause differ of results the presentation a today's includes

Jason Dziedzic, review and are Joining Chief Joe Executive me quarter today's will In opening first on will and results Executive our call, the provide to comments. and President Financial discuss Officer. Garland, Jason Vice our Joe call Officer; closing point, Chief results and your over quarter and then his Joe will his we'll provide then financial to I'll this comments. come turn back for for the questions. to Joe provide year At XXXX take on full the guidance. remarks, call President

Joe Dziedzic

thanks and are growth, to we associates delivered that our earnings customers. I'm the another our report Tony, of you, pleased morning, quarter both good for Thank sales everyone. and outstanding doing strong X,XXX to work

customer. to reported EPS and growth key profit which customer a a without because quarter, strategic ongoing announced strides further In long-term of make the and to not agreements our part deepened and recent they quarterly was of our with long-term from leadership lumpiness highlighted the existing will our We're with was for sales years, XX% double-digit profit very in products. sales and of accelerate delivered This the sales we execution have strong sales are to EBITDA agreement customer signing in the the by growth all we growth, our we execution with adjusted X significant and of current first agreement strategy. sales driven insight want continue long-term XX%. operational cannot event, highlighting our changes, or X% We with the In improved XXXX the driven of signing agreement. provide relationship the it our one incremental and we name. of into of business quarter very adjusted half rate. increasing imperatives enable us long-term we creates and The advancing the growth About by recently by this a disclose of because increasing strong positive strengthened run the in with growth this and their

for last at Profitability the Integer markets, a strategy. medical the responsible production commercial Jen President enterprise-wide in him provide CRM well of His I execute Bolt's Jen beginning In has role, manufacturing was at industry Integer serve to quarter strategic manufacturing Americas. role not provide in Rhythm operations spent in we leadership leadership he experience, the be forward a and the where of in Portable The update. growth the during Electrochem the brings Vice of Carter XX turning automotive brings domain to I Integer St. as development most to EPS. of device changes, her Jude to recently significantly Integer, around picture thank global Electrochem from gives capacity look this my a accelerate as significant weeks, our President of as In President, Invest Neuro Carter Jen leadership XX publicly which Integer week contributions the will our the to want to of promotion device and Jen customers, middle strategy, to Jen Vascular Joel first expanded model Medical experience industry will this move to and leading system. also X to the I both capacities, Medical, years three positions expertise. it since for Operations. Houghton for last Management a Cardio joining manufacturing but leading role. is in Prior excellence's announced new in Senior to Medical. includes Integer, Portable industry, in the well. and want new Joel's Improve slightly enabling background in of leadership lean strong the excellence to with President Global of and broader as extensive will Integer the including spent leader she most recently, years and -- starting product which increased our and significant organization year Grow more various expert The expertise on she sales our be Electrochem President in to and experience our the medical at line been year. Daniel start serving XX not spans financials adds experience. only brings knowledge her in Portable guidance, years have which joining manufacturing President the other of us Jen and honed will on we also will the as excellence, both well our who of last wealth manufacturing Neuromodulation, & details X only confidence during years CRMN. product us Cardiac imperative as his time and to having Integer joined Becker, of Medical. thank Joel her is the

or Hologic. all three work confident Haemonetics is we're aspire team. Carter's in that strategies strong President difference we passion served General experience on of he at leadership on that They momentum the a excellence, culture they through of as significant a has building My share the trust positive and to execute a Manager they comment for growth on leaders various Integer. will business business making world as at industrial that have fit they the the and past a they final in are the of for and I'm all For and build the medical a place. XX units do, work operate build to these years,

slide to leaders to left-hand a excellence achieve strategy report than is accelerate of to leadership of I The to line sales lead a and that change profit and goals our more the is our have position its depth the business. been element of I This one full of XXXX, and to use manufacturing their with to and complete to confident Invest to imperatives. core and of imperative the and late these expertise strategic side line too. operational Joe processes every Flanagan Portable the they moment rigorous take I our leadership the There product ever growth to on changes only Medical generating challenges, product to strategy, and Portable and slide elements manufacturing senior still experience imperatives. the are in the right accelerate the has drive the to are our enable our through the the process are in Slide Grow more but quality, that their very has shifted the one The and process structured the now growth. to manufacturing Carter's is I did line quality to take time now help operational that our medical growth strategy Integer, long-term effectively. consistent, creating summarizes domain are improve, operational end from asked important presidents device business strategic execute the Amy that operational the more about to on leadership what Jen address excellence. of pursue is out. There lines of delivery most our to product she the not team, opportunity is Medical on depict our the to slide and I product and Jen strategy which With At and operations. am leverages background takeaway changes, to on-time excellence Kirk Profitability in manufacturing In category. skills strategy do the experience all safety, financial his leading. long-term expertise want are that the our we team but of to over opportunities Joel's is excellence dedicated want this happy point right-hand across I markets. leaders imperatives efficiency a provide strategic in we his am above-market leader X new leadership every and stronger Improve position team will to in necessary they their category on strategy. day. the notable side. him

work developed have achieve X We streams manufacturing. to in excellence

across system stream practice this defines work system. will system. Integer All production core processes manufacturing first is the best the The sites elements. Integer the system This developing implement XX

in practice current The targeted state. which of state gaps performing gap I the been stream diagnosis, plan prioritized work is as resource drive the site the to allocation. transformation a lean characterize a second analysis have The best versus

September, leaders, of The makes a in that fourth our last in to and third sustainable. standard through site monitor our We entire standard what organizational imperative July culture work their in with manufacturing diagnosis. gaps this It the broader launched training, KPIs is closing process allow identified with alignment. progress and year lean developing stream stream of and team. is a improvement The involves work developing dashboards work leadership the continuous the this on

see have number of the can progress on we Slide significant X. You the made right

to to profitability key more goal of will the execution continuous at system, year. of a defined half sites to in of than is be process This this successful a our catalyst at and leaders improvement have defined. have this The been for imperative our completed driving establish production for The diagnosis rate indicators training and end culture the we improvement for manufacturing driving of by culture. site-level have completed XX growth. our sustainable, sales and the is the of sites continuous We all all our achieve expected Xx be further Integer will the enhance associates process framework training all lean

will the Let remarks to Jason I to turn our financial me results. questions. Afterwards, back your come provide opening now call discuss the Jason? call for some before over concluding to

Jason Garland

included call. the Good financial quarter. $XX our for of X% million, start Joe. morning, quarter with agreement, first growth was results. impact joining EBITDA everyone, and I'll the sales adjusted signing positive the first with you, The strong Thank in in you review and resulting strong again from on by reported basis. quarter provided diluted basis. thank adjusted net or our long-term the our adjusted of up XX% XX% XX% color to turn delivered earnings Slide a This which is reported million year-over-year increased leverage $XX income $X and a on attention your or per net of growth. on $X.XX XX. adjusted organically income I some share, Please Adjusted

income sales increased first reported on and management research volume, net operational adjusted on and was higher driven for up This increased $XX XX% Our X%. of funding expense million development. by sales year-over-year, improved growth growth SG&A customer quarter leverage

from our management. foreign first debt and of expense The saw by adjusted lowered reduced favorable driven $X to we interest exchange we XX.X% XX.X% our impact, rate improvement in addition, deleveraging interest rate the million was quarter we expense interest effective XXXX. ongoing of tax In our and

sales more XX Slide to in of the market results. that versus and Now how To review sales. quarter quarter an timing remind X purchasing believe meaningful we'll are product indicator our organic individual shows everyone, performing growth turn anomalies is we a We customer may of contain line of a decisions. from this trailing resulting trend the our

positive and We second in continue trends in to post expect the XXXX. medical Electrochem line of product half our growth positive core trends in

specific Now for line. turn to me each let discussions product

product Vascular first the in strong & line XX% Cardio continues year-over-year organic to the drive growth, increasing XX, line Slide to Moving top quarter.

discussed growth earlier. sales product the new quarter First driven impact by launches and long-term agreement customer of was gains, share includes the

growth, Excluding due to vascular sales agreement, was the with components. peripheral fuel the catheter of two quarters. and growth consistent impact Electrophysiology continue that primarily to previous

slow a to continue, of penetration, above-market neurovascular life arterial our electrophysiology and specific catheters program. trends will structural expect growth the and customer led maturing heart We to by though due cycle

On the first X% neuromodulation sales next the the and slide, returned product in growth cardiac in line quarter. the of

was growth still mentioned digits. single agreement, low Excluding positive long-term the at previously

in tied remain company. point increasingly stage of portion and neuromodulation important cord from already significant We're a trial is It's of the our with of to than with that partnering out double-digit We some revenue driven market expect emerged neuromodulation with the growth growth a strategy to companies. dozen, stimulation to clinical from approved more devices. range, early-stage neuro working by our early spinal phase which stronger have

growth part emerging Slide these segment. of integral remain neuro of last growth expect companies We our an story. the XX shows Medical part our to

July Surgical, AS&O Orthopedics line. in acquired with line includes our under Advanced XXXX, Viant recall Medical shown Viant. You'll & product Portable supply today The product sales agreements

difficult The offset first by in to quarter partially Portable Medical orthopedic strong a markets. comparable, was down demand

and orthopedic in half of We expect demand. continued second growth renewed XXXX Portable the Medical strong product

and year from nonmedical launch. new our customers reductions segment. sales Finally, the summarizes energy customer grew Electrochem prior quarter, recovery Slide in XX a by X% first product by driven inventory Electrochem,

accelerate the from funding. to second half launches growth customers, and our military new expect in renewed product We new

Before that our outlook our from taken our I'd now risk. have rate We diligent the like summarizing year. action increase April debt managing by one paying our in our to about remain fixed XX-month This capital an million to a improves structure, We down outlook, lowered contributing rate yield inverted revised an EPS curve notional allows At This reduced swap, executing of of the to ongoing XXXX. which guidance. share XXXX our forecast for horizon to X/X our April continue transition our our interest variable year We expense debt, to actively approximately advantage rates. April, we as interest exposure rates ability took our our $XXX and beginning to of interest risk. interest with of through we reduce capital also flexibility full factors the evaluate is structure. managing prior

XX, Moving raising sales we are earnings our both guidance. to Slide and

fourth year, a second for are year. was think is strong as quarter the the toughest the and remainder quarters quarter about the comparable, about first while average and the Our we start of third the

our of rate the $X.XXX to higher-than-expected year the growth agreement. $X to raised billion the between from The for billion. we X% range million of now $X.XXX increase full and our bottom the guidance to in of impact unchanged, end X% Our the however, range sales long-term end is expect be bottom reflects

X% expectations per lower increased X.Xx share Our more previous earnings our the $X.XX is by to line expense unchanged, growth of a to as EBITDA sales rate, which $X.XX growth sales $X.XX X% guidance remains discussed the at of with $X.XX, our $X.XX adjusted tax growth. reflecting from With than which between our improved of to XX%, to of new for range effective remain growth. twice to have rate interest X%, of and we to sight a

on incremental investments, operating make financial to continue this improved leverage. to both human deliver in We and capital

line to $XX quarter Turning included XX. our Slide was The year of it first timing first -- sales. outlook with the the remains low, to receivable Even including accounts and free in It customer cash though specific quarter expectation our full flow rebates. appears by impacted payments from intact. quarter, quarter and on increased end was also the higher of quarter million $X annual bonuses million

year, expect flow. For we generate of million cash operations $XXX to the million million to to $XXX from to full of cash $XXX $XXX and flow free million continue

invest spent million continue reflects to of spending aggressively strategy million to expect $XX more plan accelerated range capital in We our the our in $XX $XX to million as increase This to drive compared higher growth. slightly in XXXX. to

payment to continue -- use and the compared to addition spending, XXXX, million XX pertaining the spent deferred sale. in AS&O net expect In tax to $XX attributable to million capital higher to cash the loss taxes operating of to carryforward to full we primarily $XX increase

are projection, final debt X.Xx comments. of of XXXX, the back million the Given to now flow this range maintaining in I'll $XXX million cash leverage debt to our $XXX guidance his for pay-down we Joe EBITDA, in bolt-on call acquisitions. potential with inclusive turn to X.X of

Joe Dziedzic

Thanks, Jason.

the presidents, have of for relationships a realize the exemplifies added excellence XX of months, last for leaders and manufacturing to to CRMN Tony start Development In call strategy responsibilities. Process Business We Joel strategic I strong Quality our Officer. be and extremely Bolt be of CFO added and now is his will original many our and we our customers, professional closing, Investor Integer built dedication confident have customer have on facilitate to the to and improving Borowicz on leadership and Regulatory XX new customer the to an personal Human our shareholders. this Strategy remaining from is a has well associates wish to challenging line the I new the operating focus leadership the stepped Tony smooth to his execute the and developed X will for the you. of into to his joined his Thank has was moderator in year transition Joe excited are senior team I commitment shareholders. XX Q&A. we the vision Relations to expanded XXXX past phase to all over that for say years team. a guidance. imperative we now and leadership line I'm to and complete. and way increased and responsibilities manufacturing Flanagan the more leadership a valuation of I their Tony will leading missed. Tony and come. quarter his the first strategy product the and ensure the to our team am Our past both deliver for previous X.X year, positioned want life. senior we deliver to across delivering and rest Chief earn Resources sites. clear next customer Excellence X Integer felt place has objectives Jen publicly operational for added remain In a team over financial Heidi? meaningfully. Business All years. would and a am and a now patients' when new I available responsibilities, of deepened in for environment specifically, our while leadership that CRMN product turn years existing and our premium back best for in to customers, our thank Tony Gonzalez have will our the confident lives, Tony for personally that

Operator

instructions] first Matthew with KeyBanc. your And of the from [Operator question comes line Mishan

Matthew Mishan

the What What was income long-term of How impact was the in EBITDA the does and start agreement. kind the of -- let's quarter? just that $XX.X million with through? net flow agreement the to

Joe Dziedzic

look flowing flows the They'll average the line as We for in P&L. with through really that our rates at through at be that contract as the year.

Matthew Mishan

quarter? But for to EBITDA did the million quarter, like, $XX.X contribute net income the what for the

Joe Dziedzic

marginal first the little on customers, contract, we our process. a There's at the of end, profitability it be Again, look, for But our revenue example But the a for the drive see we're impact. average us. to work through and it's sign getting continue fairly it's extremely perform we're flows due to where quarter, with fact we will our this deepening -- focus. bit relationship less positive an want in the to Again, we as where that get getting a rates. the year, through the we great

Matthew Mishan

Okay.

income? in with So that like EBITDA on were associated there impact the net quarter, costs minimal

Joe Dziedzic

Absolutely.

Matthew Mishan

through the low-hanging in you've finding the issues areas? gone lean in a fruit then are there diagnosis, common certain Is conducted there And Excellent. and Okay. plans? as you're

Joe Dziedzic

of that of of XX there last XX -- half or range an opportunities Matt. that of a through Absolutely, operating assessment. -- our We wide were manufacturing sites. Jen in themes operating all of And absolutely in summer, came XXXX, led sites. our assessment each first the There's

more As the sites or XX approach their X.X-year is XX our all our end our very we're way run sophisticated, to implement you we're Integer elements ultimately, of a manufacturing standardized imagine, laid manufacturing production how of some the clear than can of our performed system for consistent, a to a same And sites will developed elements driving It's others. system lean strategy. production going sites. across where process we application about to out are more plan across plants. We've in very core practices be up Integer all with what

the quality, it at efficiency one lead the sites, of So but implementing the is thing on-time production vary in shareholders of for ultimately, to we the have impact safety, and, efficiencies. Integer And to for ultimately, four will for measure. know excellent to excellence system patients, we will delivery customers our those and through be deliver all across

we're We're So are there's results opportunity sites the into look XXXX guidance, meaningful. growth lean that's the you X X.Xx about process. in our at every diagnosis sales site. the When EBITDA And growth. showing

growth X% X% manufacturing to EBITDA of to That's X% early growth. excellence contributions result got X% direct the a strategic we've So on the early, of sales imperative.

XXXX us out look important element why freed profit get That's the into that's is the a and of on her of strategy manufacturing being this XXX% we As most is rate twice to focus sales strategy. going our exactly time to beyond, of driving the the excellence at imperative. up to future, critical Jen -- growing

Matthew Mishan

seen it are maybe comment the was you're share? seeing? take really bit neuromodulation. increasingly like from some some what guys deceleration seeing revenue guys private seeing someone and come Are you customers. hear I early-stage you've strong your Could that then you on you mean interesting a neuromodulation growth some of little in in from to And

Joe Dziedzic

the There's in on difference any prospects. so don't help industry, in any We in we're customers, heard think, start linear hearing first long-term -- you've with our positive. more not neuromodulation. me changed any from opportunities new consistent is for watching obviously let very with is for much to first, and company, has quite therapies our results in investment everything creates with patients view the the quarter, in Growth with No and that all neuromodulation long-term I remain that prospects Well, any the one's technology. view, we that. see

about consider look portfolio. for our we're we big think players neuro, have news as that hearing you neuro the We to serve at you the from. So Integer and

early-stage already they're the we're a that getting We also some of experiencing through to But have strong trial -- development trials commercialize. portfolio that and we where commercialization. in serve of some trials and growth companies their with working prototype, product companies on designs, their now emerging early-stage right clinical we're those and also have clinical companies starting

And so when our total for far you growth see portfolio, not as one in few upon at can And we look any dependent or double-digit a neuro we we're as look. players.

We have one a nice strong, that in the add diverse mix thing, Matt. we're more of serving players market. I'll

look we last for the for exiting and ahead when As were last year and year we're at year at expecting we year we beginning neuro forecast for -- what this at actually what going were look the we slightly entering of of planning the year. in late our XXXX,

Matthew Mishan

very And jump helpful. queue. then last All one, right, then that's I'll and back the in

you M&A? the were like active at that look M&A for bit And point? You does are talking last how quarter. a What about pipeline in this little

Joe Dziedzic

list it's talked and a I'll just the call. about last of It's opportunities. active, incredibly we long on what reiterate

We are looking for not revenue.

targeted We're that into we're to not faster-growing that to for the accelerate very get are acquiring specific We allow will the penetration targeting. and capability looking us markets scale. technologies

can specific cases, the doors help looking at us specific growing It's [indiscernible]. we're faster longer-term something we're a in looking our sale knocking that penetrate that pipeline. soon. We're for There's of some long number because opportunities we to for critical list. At In markets. aren't done will It's a We've the that we're So growth. focused this very technologies. it. capabilities very on get point on hopeful been

Operator

Sidoti And & your Company. from question next Sidoti comes line Jim with the of

Jim Sidoti

that million the in in that second, the and little the and quarter? down come first recognized revenue Should boost you quarters? your to of a quarter. fourth Will agreement Back numbers third $XX signing the that those because impact

Joe Dziedzic

that. what transition related saw. saw Jim. as No, lumpiness this to quarter first the quarters is future the the any and meaningful in don't we variation The contract, expect new we really we to to is lumpiness That

Jim Sidoti

the more that. accounts little one of Okay. revenue? And then I ticked due that saw part kind that -- of up your on bit. receivable net recognizing to in Is a

Joe Dziedzic

I up No, you up but quarter, ago at the going that ended look our bit with slow prepaid, so little with on with actually, half. got things first mentioned we that's off dynamic in it on -- in sales ended minute a just a classified back we a several lot there. and we that AR, if mean where we've started a we of I

so, And to you collections period. the as of course, cycle going know that's within through

So as that dynamic you've got well.

So a that's actually sitting different account. in

Jim Sidoti

you product Does that then category acquisitions, Portable improvement Grow in line. the mean product Invest And Okay. is to Medical or now manufacturing development, new mentioned or [indiscernible]? in efficiency

Joe Dziedzic

Jim, great question.

run when presidents, went Medical different by managed was chain and the sales and half commercial second marketing we in Portable our President. identified development of we and one the by the way of manufacturing through our strategy process So things supply side of it business. our and managed, The was one design a XXXX, was then being we the had

end therapy were opportunities looked hearing at the we to was under we the so acceptable would markets. markets profitability And not return. whether emergency serving, XXXX. the and business, care assist generating anything The clear late not cardiac we unacceptable. put And were or it's capitalizing the was And that that on below in end we're business when or us what quite accept we well of an in the resuscitation growth profitability was together frankly, is and the we -- it

accelerated the phenomenal and some imperative to redundancies an organization, leading manner. of of removing manufacturing strategic done elements take business. a that team and -- She's on step So into the in we quite the to business Jen over the streamlining frankly, job that asked driving really

focus capable the that growth. And so we've where now operations where we are growth, have of improved to that on the absorbing can point we profitability

and from operational shifting so yields increased purely and customers. And better now improvement delivery on-time in the serving and we're that business focus driving

the ready to business is Now absorb growth.

and right capability that a So look They There's us the and serving. growth, customers of -- scale. Jim. it's now, we're we're opportunities at company depth has to that looking as lots the with organic

to have country We a space. this very competitive that us operation in in allows low-cost an be

growth So for and making organic investments best is that returns generate the we're growth, and we're looking to so at because the accelerate organically opportunity that'll us. there quite

Operator

[Operator there the over And presenters. the Instructions] are to questions no the back further turn queue. in call I

Joe Dziedzic

to us Thank for by follow-up stand the you, call any everyone, joining questions. thanks answer attendance. today. ready your We Again, for on

Operator

And today's this concludes call. conference

disconnect. now You may

Integer (ITGR) 4 May 192019 Q1 Earnings call transcript