Earnings call transcript Q4 2022

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Operator

Hello, everyone, and welcome to the Integer Holdings Corporation's Fourth Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. At this time, I would like to hand the conference over to Mr. Tony Borowicz, Senior Vice President of Investor Relations. Please go ahead, sir.

Tony Borowicz

everyone. morning, Good joining and for welcome Integer's to Thank year us, XXXX quarter full earnings fourth you and conference call. are Garland, and With Officer; today Joe and President me Chief and Jason Financial Executive Chief President Vice Officer. Dziedzic, Executive is Also Senn, President, Senior Development. Andrew joining Business the and Vice on us call Strategy of be this month. title when retire Investor will Andrew the at I Relations adding the of end

the and consolidated the As results data periods we indicated. today the a of results reflect Integer for reminder, discuss

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

For earnings financial the website a which measures, please appendix of our of these reconciliation non-GAAP and schedules, refer today's press trending on integer.net. to presentation, the available today's are at release,

of discussion forward-looking Please Joe that presentation note factors and the quarter for adjusted Integer's results full of could guidance. execution strategy. today's cause Please Jason back on call our for Joe a then provide his differ his provide refer an remarks, we'll will the full on year call, the and XXXX statements. today's that and the up open our update XXXX materially. On the actual closing come questions. risk our and company's results financial provide includes comments year to your to opening to will for SEC will then review filings fourth

With that, I'll turn the Joe. call over to

Joe Dziedzic

like month, significant have behalf and would your career next to your enter leadership a Integer for Integer. as I best On the investors, your of wish we associates, shape you journey. take close confident to the you today at Thank I'm the end we Integer to Tony. of helping XX-year Board many you the of including of as our to company you, in phase this bring And your Directors, and a contributions you at thank all recognize to moment

business We fourth strategy across sales officially a improvement year to been fourth Tony adjusted and Integer year. our up for with call, and had earnings will with lines the who has the adjusted also sales Relations strong pass growth improvement leading XX% double-digit Andrew corporate all a to a Investor Senn, last operating development XX%. this the quarter. XX% finish fourth product XX% full-year After in income responsibilities EBITDA. up ended sales delivered In in the quarter, and the we quarter XXXX in

Earlier half about and coupon approximately to this XX% of cost fixed variable debt variable. strategically a our month, replaced transaction significant debt savings This XX% X% fixed, and bond. rate our repositions with delivers interest X% we convertible and

outlook to growth X% sales XXXX is believe what Our we be organic above-market to an rate. X%

We XX% faster to income to grow at sales operating than expect XX%. adjusted

operating be of challenging performance At the a are margins strong We by chain supply believe about points. a expanding income basis our remains XX this guidance, we will what in environment. midpoint adjusted

We to growth top to our have expect executing been our deliver line accelerate above-market and product sustained line growth. strategies now

sustainably XXXX and executing is a believe high-growth growth existing Our Integer strategy Integer. markets, us we confidence Integer customer of believe compelling outlook. sales this programs above-market thesis outperform. to strong launches, acquisitions in gives strength the why summarizes for development pipeline tuck-in successful of in is product clear product We investment underlying beginning sustained and emerging The

Our serve. we how portfolio product the strategy and markets define in strategies win we line

approach we model culture. everything a we've develop resilient elements operational industry do that and business each to we articulates the define Our our with the slide we other. a taken The defines how growth in Integer engage create our strategy and the bottom generate performance how of and strategy values to the fundamentals of sales achieve excellence disciplined

we share clear company anchored which is the Everything to is in every and this Our strategy, measurable. financial do why objectives quarter. are we it

important the we of look our milestones achieved let's journey. at in have some strategy So

The last XXXX launch The are been the expanding new years an our of first each portfolio pipeline stronger strategy. challenging element have of our execution with years a launches, a of and we customers. our environment, to strategy but entering three of and unmatched expansion margin margins given product delivered two serve and the macro capabilities

in sales support our above-market we capacity As accelerate, this and sustained are growth. to investing growth to enable

December efficiencies. our acquisitions are of report pleased deal are sales April exceeding models to and operational Aran We through that XXXX XXXX the Oscor in Biomedical higher in and

shift teams are points growth The the sustainably accelerating we to and XXX grow XXXX. a formed our across our ensure investments in following disciplined executed market. have products XXXX above sales are high-growth to teams growth strategy. developed These structured our approach portfolio and and strategy our slides outline to basis capabilities, in aligned and to market-focused We pipeline expand the how the organization our markets,

process have strong results structured how end represents market These of delivering critical has in basis. growth are will maturity C&V the in a be to curve size above-market compare and rate that us are growth achieving outperformance. of phases the technology the time and market, illustrates emerging end sustained line. product development sustained line on mature to pipeline during where their is relative strategies they markets disciplined slower and and which end the curve This The growth. This generated a been Integer product continue slide for and position the

demonstrates phases Integer Integer, strategy the focus. global customers strategic with across is box alignment products, manufacturing near-term footprint customers. our life and most deep represents of the of serve breadth of to capability our all The blue both strong customers significant uniquely for our and cycle growth our opportunities positioned the of and technology, which product because our

highlight Rhythm there conventional the growth and capacity significant slide and in combines we The markets within spinal to expect the the deliver of of capabilities cord opportunities that bottom Integer. slide CRM areas Management products growth continued stimulation end products This demonstrates Neuromodulation are on to that beyond & and investment Cardiac neuromodulation.

and markets that technology large, and leadless also our customers has us cardiac subassembly serve markets and component pacing well the in positions CRM growth positioned to monitoring. differentiated extremely well CRM and us mature deep in smaller such emerging the conventional so historically Integer's as but

within neuromodulation The Integer most is own from uniquely conditions. have that innovation. than to or property design, with unmet of to emerging underserved companies be while able CRM investing our for manufacturing of patient growth positioned advanced bring C&V markets high-volume and vertically customers, or more early-stage to full the because these components of currently intellectual to the decades companies are develop the significantly and number markets integrating development, also technologically therapies

are technology to emerging customers. positioned enable Integer of bring to our offers offer Integer bring neuromodulation is fewer market. and Very capabilities design development update few the our the companies uniquely market, other even to and breadth of therapies have to to to component depth customers innovative their enabling third to annual emerging companies therapies us which our that we on brings that

XXXX, this our an quarter quarter the in we call. of and slide at on presented call update our fourth third earnings first We provided XXXX conference

We of pipeline many advancement key have the is been products and this of accelerating growth. a programs PMA investing in leading these years. our for for sales indicator

introduction our defined We since with five four supported programs launch what have million our We about call, about And as of are from we've quarter product customers in the that the and in delivered customers product XXXX phase. launched the that XXXX these $XX actually to proud XXXX and would first additional third introduction on we during sales we project emerging PMA in earnings we update customers. $XX million. programs have we generate report

in $XX generate year, million we $XX that during our fourth would call, XXXX between million earnings Last these from quarter XXXX and emerging customers. we estimated sales

$XXX and now increasing $XX are We that to million million. between projection

strong pipeline customers Our this in emerging our a high-growth to above-market growth. meaningful end market of is contributor sustained

technologies our with and throughout are this the development partners bring to we for service innovative paid Integer customers market, to medical cycle.

and benefits The the introduced ramp and products and life-saving indicators the above-market to growth. life-enhancing of these being the for sales are growth. development then market, the from products As growth product sales Integer of accelerated manufacturing sustained leading phase, amount rate are developed enter sales

have means product of of added significantly has as our since innovative increased development evidence sales XXX% programs medical pipeline XXXX, more have new our technologies. choice in and for resources. we Integer Our view customers launched XX% a This and we our development as strategy grown partner

We have markets a to high-growth sustainable opportunities product targeted rate accelerate on basis. growth in our development also strategically

XX% currently of benefits markets XX% with believe mix the to and development to remaining accelerate rate, We deliver they and mature Integer. markets. in for mature are high-growth the mature sales products of more our markets our growth our the while XX% appropriate XX% our high-growth balance in protecting customers sales the is

relatively cycle development long. our in industry The is

in invest a growth, capability support is the program meaningful us In above-market it of growth. mix level necessary sustain to to achieve development and above-market to capacity. and sustained product necessary it is for to order So, sales milestone manufacturing

continue and facilities of As we on higher for equipment allocate to the a our shown of the left in percentage chart to the capital side budget slide, growth. needed

The right this as our New construction announced as facility manufacturing The slide a XXXX, footprint facility facility acquisitions. which in primarily in from Galway, side XXXX the our has Ross, Ireland. come previously spending since driven of a Ireland, Guidewire in of increased growth of by is highlights new significant well expansion

our of development feet importantly, square our neurovascular facility manufacturing to Galway, This our customers' will investment allow some with capacity September structural R&D Galway, us expect high in XXXX. similar facilities. Ireland serve and space. In growth. is heart the and a increase facility because XX,XXX will growth, our back CapEx XXXX, adding in We by hub device and customers greenfield our to presence be facility new with global normal XXXX, medical announced to manufacturing This near at and we expand line sales in better levels new products

procedures. Ross, grow accelerated demand We guidewires used for performance and our Ireland of our product and to increased are ability and also additional like The scale. because expanding new proprietary guidewires of XXXX demand New has business in for higher-growth in industry-leading facility because submarkets minimally-invasive electrophysiology our through our

The will square feet add New of investment XX,XXX manufacturing space. Ross

portfolio We building expansion sustainably the points and with XXXX above structured generating a launched to strategy strategic growth win we our implemented the least at the sales expect XXX in in we will of XXXX to disciplined line complete teams basis We process how product XXXX. serve. the develop and objective by markets strategy market. with sales our We be in growing year-end

of growth deep strong premium that our valuation above-market creating deliver product are years for our We in the growth serve and and XXX% beginning Integer revenues uniquely of to of a milestone the customers our are growth global journey the breadth excited above-market The expect capability line for we of believe this to strategic pipeline to development and products, focus. shareholders. time come. because across reach manufacturing in technology, We will technology to demonstrates footprint phases for is maturity our sustained all our positioned XXXX

Jason. to over call the turn now I'll

Jason Garland

recovery and effectively high-end the today's XX, morning, fourth Good thank environment. we the continue adjusted more details quarter We and Though of fourth manage on you Joe. joining guidance, full-year results third from again I'll XXXX Thanks, our our XXXX results at the provide reflecting for our this and faced it October delivered provide supplier XXXX in remains discussion. financial quarter we challenging, a quarter. through delays to outlook.

In This fact, guidance. prior the $XXX last million in the fourth we our of of $XX delivered sales over quarter, sales, million or million fourth resulted up above XX% $XX in quarter midpoint year. of

year. organic currency XX% of than sales last Excluding impact the acquisitions growth higher our fluctuations, and was

XX% $XX We versus from net up to XX%. million, adjusted or compared and the delivered at million, EBITDA, $X.XX of $X.XX $XX an quarter to XXXX. Adjusted XX% of up increase million of earnings with per delivered last $XX adjusted income fourth of $XX year we and income operating diluted prior million, year of was share adjusted

I The have our the results, into financial go discussion sales a morning, on this detailed on this product slides the detail transition can be commentary wanted summarize traditionally and line focus product our to that we Before wanted lines. appendix performance. we highlights line each around full-year in the of across found presented to the quarter to product presentation. of fourth we But

product quarter lines. double-digit see As all can growth delivered in the we year-over-year fourth you XXXX, across

delivered Our sales heart by acquisitions. fourth of the sales Oscor products especially compared structural the XXXX, XX% as incremental strong line, & Cardio to Aran fourth and quarter guidewires, product growth first well Vascular, This such was as organic in XXXX. all from key and across demand as quarter driven markets,

quarter, supplier Management particularly & complex Additionally, negatively C&V of products. The for the of in quarter prior the impacted versus over XXXX third the performance catheter from from growth delivery XXXX. Oscor, fourth XXXX, supplier improved Rhythm fourth performance benefited quarter driven increased XX% the recent and improved quarter delivery by that our Cardiac sales acquisition the Neuromodulation's sales neuromodulation

from fourth Advanced demand increased medical Medical price at Surgical year-over-year fourth also low and quarter. portable achievement & Surgical, higher grew XXXX. that in exit the Orthopedics Advanced on announced Portable multi-year the start in & digit we of XXXX Orthopedics sales the quarter XX% double

non-medical XXXX quarter market And I Electrochem, segments sales third supplier million to recovery And quarter fourth of of with results. segment, strong increase from driven financial by finally, transition XX% XXXX, that, fourth across issues. our full-year incremental $X our delivered all will sales and delivery quarter the approximately now versus demand

was up X% year. the $XXX high-end prior guidance. billion, or last of strong Sales versus to improvement Adjusted million, of organically. delivered X% and in is year, the XX% fourth grew million, financials or quarter, With which X% full the adjusted year $X.XXX million $X our EBITDA earnings compared our year-over-year XXXX income $XXX up a at was operating increase

$XXX share, and earnings the down operational and we delivered as improvement offset provide $X.XX performance, from XXXX, tax net supported adjusted labor compared primarily million by year, to on due To adjusted million rate. net rates adjusted of by a full-year increasing sales to prior supply per income higher million the strong We more $X and the and to We challenging slightly income $X.XX volume year. compared decreased environment. delivered color chain of last XXXX diluted $X of interest

million higher XXXX. expense FX incurred last was or than $X favorable, we in contributing rate tax In interest effected year. approximately improvement environment, $XX million million versus higher the $X of adjusted interest

more into to environment this taking slides. go the high-rate interest we're Now, manage actions coming I during detailed expense will in

of approximately effective adjusted XXXX saw XX%. adjusted to from tax while million, of we and rate for $X benefits, settlement full-year favorable rate the being was XXXX Our prior a tax XX.X% discrete XXXX of due favorable impact non-recurring benefited tax effective a year-over-year remains the rate, the audits. this headwind year a including certain in

XX%. tax to have of we This between expiration mostly be XXXX, rate by to XX% For is holiday tax we expect the which Malaysian XX-year adjusted our driven effective increase the under We drove in to third cash activities, million operating the sequentially operating. generating of up cash in $XX fourth step-up XX% flow been the quarter, in a income from from the quarter. conversion

equates cash increase approximately of million in manufacturing activities capital flow, $XXX to quarter. $XX from to basis, million cash execution. inclusive operating of generated $XX inventory We free On fourth our in of of expenditures the million a flow full-year million in inclusive support this $XX

full-year million of of Our cash reflects free guidance. with million in-line $XX flow our impact the $XX of CapEx spent

making our As acquisition our last back Joe of continue growth, fourth strategic for the Aran slightly fourth mentioned focused earlier, the quarter, end total the adjusted our of after in need April range target to within quarter at X.Xx EBITDA for was stepping above with and the leverage trailing and quarters total investments to we million decreased $XX quarter XXXX. following two net consistent $XXX will debt the fuel debt million Net fulfill fourth to strategy.

sales sales, summarized growth. expect X% transition of and full-year XXXX the of to forecasting of year, $X.XXX growth increase X% are be to underlying billion the X% an $X.XXX in we to to more our outlook, the that we be detail earlier The that, remarks provide XXXX rate cash. We'll above of With guidance beginning on versus for billion, well as profit, last X%. above-market market sustained now sales to range to

to adjusted to $XXX year-over-year. XX% We million, between which to expect XXXX $XXX growth XX% EBITDA be million is

is We $XXX adjusted X.Xx our XX% XX%, between expected reflecting million growth X.Xx sales million, to income to XXXX be operating expect $XXX growth. a to of which to

objective supply Xx environment adjusted chain to rate efficiencies. from income operating we able fully manufacturing and our benefits our be more generate strategic the growth to growing expect once stabilizes, of sales financial achieve We

continues effective is EPS see as is to and our XX% to expected XX% earlier, million. pipeline year-over-year. be a represents adjusted to this development This adjusted tax mentioned We assumes that $X sales. And Joe be Adjusted demand between rate noted, robust converting between will interest $XX assumes growth million $XX which to having remain strong. expense X% to between XX%, as to $X.XX, a and an

on environment, second we sales our with quarterly The supply remainder quarter continue and although XXXX efficiencies the have impact expect first execute to a sales first our strategy. continues similar Adjusted to improved. to and throughout through as growth grow of sequential of of sales to is our the beyond we as half $XXX expected operating as XXXX quarter income challenging labor to on and the manufacturing of sales expand average XXXX sales, improving, an be chain percent XXXX million,

interest we management years, several continued priority. and to expense make have last the a Over debt

maintaining to with committed quarter balancing X.Xx be trailing consistent adjusted disciplined X.Xx EBITDA M&A to total our net to fourth leverage a debt repayment. continue We debt to by strategy

We structure low have variable our by spreads, credit Integer managed expense XXXX. mostly maintained our that environment a of rate September the to debt allowed and interest XXXX reduce through we have to in rate the from benefit interest beginning refinancing interest has

these we annual XXXX, With years. effective to achieve of the average able similar rate two interest X.X% were an in actions, last to

our we Now, close a leading and several XXXX the interest $XXX strategically our financial environment Facing partnered using rate that for headwind estimates to performance, rate several it with term. strong offering a that would operating X% a forward rate five-year effective firms the and higher. million creates scenarios higher interest of fixed or rate on we coupon modeled challenge reach think projected well-received convertible X.XXX% projected note for

of based million current down on a fees. revolver interest approximately highest of approximately our to adjusted all pay these market impact proceeds rates. rate and generate variable debt save expense actions paid today's or portion We EPS and $X.XX of interest will accretion debt outstanding outstanding $XX used of The covering B our balance after the to Term Loan

principal net with structure, B, settlement term now a maintaining secured convertible aligned while XXXX. rate note of flexibility fixed with we previous Additionally, Term our a we the through X.XXX%, Loan With have at share the can which our choice. principal repayment. Any repaid with $XXX cash, equity owed above premium or no on cash in million repay with principal be the the will avoids dilution dilution

the equity per a stock price approximately from a common not At XXXX. premium $XXX Integer price stock or any dilution X% XX% with the Integer sale on of increase approximately would reaches With call, would approximately closing until if with [ph] stock paid associated the is equity. capped XX, [$XXX.XX] of premium share, the January doubling paid or the be

we an the of dilution shows slide included that have potential the note, in Also price of the additional correlation growth. appendix stock presentation with

addition to allocation. interest In in management, our discipline in capital remain we our disciplined overall

share Before summarizing on to we full wanted I cash maintain strategy the flow employing cash to our generation. more flow outlook, details strong are

million. operational cash $XX any adjusted net investment to our addition EBITDA expect manufacturing receivables pressure improvement, million approximately benefit operational cash we $XX the generating will enter and that to incremental fall a needed factoring essentially trailing of leverage. from year-over-year And on eliminate program a In This flow cash of debt one-time one-time in Irish total offset provides through into improvements the with capacity to to expand our to facilities. cash free this, our incremental

projections would the factoring net between taking we interest that together from to the operational to favorable to rate, earnings debt addition further are be total of and slightly to million. we XXXX, our financial this operations reduced pull To and discussion, generation the increase, note generate of benefit. $XXX $XXX of cost the current for like inclusive program, actions expect impact interest one-time million CapEx also flow our and cash program payments, effective to our in summarize flow growth cash our to factoring I close several the cash providing I'll offset will the

expenditures we temporarily earlier, capacity capital facility XXXX in $XX we invest expect critical expansions in as in discussed increase our of approximately Irish As to million.

investment a spend between million $XX cash increase estimated expansions, to $XX free will we million Excluding CapEx total this remaining flow in on temporary $XXX result and to estimate between million expenditures $XX $XXX to between million. million to be million. our building in This capital $XX

total will be $XX debt we with the The note from to million year-end by additional million reduce associated capped early in flow debt February after call. used free the and the expect $X generate convertible to XXXX cash the to created net fees reducing

X.Xx expect year ratio X.Xx to to our We range leverage end adjusted our target of within the EBITDA. at

the With that, back to you. call I'll turn Thank Joe.

Joe Dziedzic

strong to up finish with income Thanks, up Jason. XXXX adjusted and operating XX% XX%. quarter Integer had fourth sales a

sales Our high challenging XXXX digits in remains outlook environment. is grow and margins what single to a expand supply chain

strong on combined our create focused executing believe in positions product we for We our demonstrated growth a above-market us our for XXXX, to with high-growth customer well growth. strategy beyond emerging sustained shareholders. remain pipeline development Looking premium valuation our markets,

the call. operator turn call now of our portion the for will the Q&A over to I

Operator

Thank Mishan, take Matthew you, sir. question [Operator Instructions] a We will from KeyBanc.

Matthew Mishan

the for I through you Hey you guess the wish very wanted morning for the good you, the all just thank taking first, Thank best say to to years and thank question. help Tony Tony. retirement. you I and in

Tony Borowicz

Thank Matt. you,

Matthew Mishan

then the acquisitions? on plus over to the contribution I does and off years start of from Nevro next, it incorporating the that X? that include Is then plus on, kind to here from And potential mean X to also portable X% exit And from medical like market X X% market within growth in-sourcing just you how basis. including, are X% to sustainable with going a I'm – the

Joe Dziedzic

Good a revenues. include maybe does order. in morning, Matt. reverse Thank I'll you for It not start the acquisition question.

part the second the Integer. of of growth part our grew looking was acquisitions year-over-year are XXXX quarter any not help Oscor growth acquisitions you about year above around accelerating of end forma, be XXX would contributing did a and the we basis inorganic two if pro revenue and on of that Aran, our forward, points both when organic do they look the because XXXX. basis think Acquisitions of in the XX% top So on prior at of to market. They we the at

growers. strong they're So,

those digit, basis, two growth, Now, a low and expect two acquisitions. from every but those businesses we we XX% digit [don't] year, [ph] have year-over-year on single performed high strong double expect well very

for company the So that rate total to growth contribute sure. does

on growth the as And definitely already question we've Nevro. When about That's we – pipeline of – do the a I'll in-sourcing we three-year strong have think our think of Nevro, with looking other you that from impact them it's see guidance. agreement that we Nevro into highlight forward, have. about we transition. a couple Your factored in long-term

for second source for second their to are We in-source. manufacturing, them their source

We also have vertical to integration we're components of that selling them.

So been guidance. that's been And that into our like we've for, it in-sourcing. X.X announced X factored years planning years their they feels for since longer-term to gosh,

our reinforces guidance. question in-sourcing So, to customers That's remainder. And sheer to take going highlight years. because that's finish the of your in that about from four XXXX And in I that was years they're our what do. for to outlook it for we stickiness medical, I'll doing two then three portable another again, think it's to start the finish, the those about

do XX products it's business, million we medical total, we're we that in about XX portion didn't of retaining. We're in cochlear which determined failure vertical The serves and were points that we million it it exiting, integration, is we manufacturing, we're of what portable applications part have of was The about have that the sales and do there because heart have we XX largely meaningful differentiation. what retaining assembly. of differentiation million was

of regulatory of the and through it time to standpoint, a get is years qualification our we're four which customers process. have that an takes The exiting meaningful part alternate does exiting, then take XX from we're technology the will it. amount That million supply to find differentiation exit because why of not

minimal So, reinforce technology I'll was just that technology, low differentiation.

have our know-how with are our incredibly the technological of the that parts points do or what do other we of differentiation Contrast and rest of we business capability, business differentiation process sticky. where in manufacturing

that's customer years XXXX take where another with XXXX, outlook do feel programs that we we've to we've what ago, the an be as for particularly manage least can particularly going based transferred And couple to that so, indicators development think strong away, to pipeline emerging we business look it's that but point, for the that of the we of years we our we with growth, growth three we leading and the pipeline. and in for have, years, we trajectory at going on the thought at we that to strong outperformed increased last two were important X.X compared provided to

Matthew Mishan

Okay. Excellent.

that So, fully clear think clean you the guidance growth you've given did Oscor I into was last term number or Did that's incorporate that the help those that as think you fantastic. bit number, little the gave Oscor by that? that's was a – as you closed customers? increase, the And that a emerging longer time a far time. Aran maybe how about when on and emerging company and guidance then are

Joe Dziedzic

They the numbers, years. particularly in the out help

does businesses contributes the to growth. that And so, growing it accelerated than contribute average, faster as those growth to the the And are for sure.

about the capitalizing opportunity the We also and synergies. commercial on more, bring really from us the to do think that's capabilities both of gives those businesses

capabilities. having Aran and synergies vertically are is what stability, see the now confident with size to and We Oscor we part right strength, who we that ability and our broader Integer, those have that scale give we're us of Now us customers Integer that the faster of help in those think now, incorporated are play growth. discussions commercial the here over but too, visibility even will and time we've will growth. what accelerate But out integrate

acquired sales. projects of Recognizing XXXX, was development become into Aran, those development product in last in it in times, businesses particular, Oscor April commercial turn cycle the December time of the then to then opportunities takes development – year,

growth that meaningful product see to programs capitalize time in potential frame, are development the that the not Oscor the within beginning can on there's we probably but sooner. plenty XXXX so, And And require in products particular, of of we're that. off-the-shelf

and opportunities, here, are in accretive incremental frame have I on there the years. probably and future to but the what So, we probably them as slide would

Matthew Mishan

question moving near-term Okay. to then on before just And a margins.

of Just and growth commentary the through organic operating margin as you cadence move on progression any XXXX?

Joe Dziedzic

in Sure. the of little on tried quarter, first first expect to first We to We fourth to Great financial outlook. highlighted in quarter the we question. expect sales. deck sales to our that bit down a we quarter convey a quarter step compared that

was of think, XXX Slide in in have it quarter some ideally XXXX supply the was we year that shipped last the think second had XXXX we XX, had not half first about to the look when fourth did because with what number we I we have That's – quarter at would chain that really in the of be issues. really million. some expect where third of I it was sales quarter the range

to XXXX then quarter average first XXXX look go bit and second expect half would we So, from a of the there. like more

that's rate, a XXXX, really of quarter bit quarter had COVID In to first happened U.S. first a XXXX, what the remembering impacted going quarter in a the strong a world, and first January strong growth sales be that year-over-year our absenteeism. first to really the Asia the spike Europe and in in Now year-over-year, quarter. XXXX particularly

like year-over-year very expect So, but look a would I nominal the quarter, first XXXX. second bit half the sales a strong will of

then the and expect we sales margin build And fourth profile. that rates third then And would mirror that would nominal expect growth quarter. level you of in off of to to second,

the and a a little will be then lower, little probably sales progresses. lower volume picking is the as So, year little first quarter a up because are lower margin rate the

Jason Garland

And is referencing clarity, XX. just for Slide Joe

Sorry.

Matthew Mishan

and margins, guys were in where I plans. you about where the for And and when to of fully productivity start to XXXX here? kind Xx commentary But waiting at things expecting we chain to Jason's are as you around should I kind normalize accelerated going in the back do you be some are you about And where of mean pace XXXX Okay. better of then appreciate think the and versus new off. think you to like base lost margin margin thinking of recapture get today better? ability XXXX an a like from a from sales you have more to where a be Or get little bit growth you this supply as

Joe Dziedzic

Yes. Great question, Matt.

back as of XXXX. pre-COVID talk what like, from heard you've point they think to you if all XXXX I looks way outlook about our most customers, the

basis back delta I XXX-plus some that that. order say of about point fully get think there's a time everybody will to you've heard to take magnitude

don't it was clear said I'm expect anytime customers one message. paraphrasing, a think I soon. I our but of think largest that

Without consider call, of those labor earnings where has been wages been think gone can forward are I last of doubt, the a we margins this and is and have inefficiencies up that still everyone's there a environment you inflation their expand material disruption past environment through supply supply environment, three chain to created have we going On which confident the the in by the years. challenging environment.

recognizing It's supply It's chain than challenging but incredibly but was it definitely environment. it challenging. better remains an improving, it was,

environment macro can in margins. we're And and to we for supply stabilize, confident as the believe chain expand to so, we and we And labor can continue continue margins improve XXXX. expand

on margins, to So, a believe a to frame time put getting without on with to labor respect will efficiency. we putting back can't get as back XXXX expand time chain and we we it supply the those there. continuously because getting margins levels the frame back environment I environment of matter

and inflation labor the wage customers. at year. through of to successfully material a that highlight X% the pass we I'll our of able Last price to been we've down some X% have we year, Historically, We that company. some last were wage range. low-end did of – to and the inflation been also

will In and low we on that were year-over-year the slightly XXXX, XXXX, be basis, the we which into XXXX. positive end. improvement continue to at in price in a captures expect In XXXX,

margins, I helps. will. if But put like time frame a can't we but back that confident XXXX, getting I'm we continuously to So expand

Matthew Mishan

out. then jump question, just And last Okay. then I'll and

plan, right and $XXX the how about a your you're dollar this year. you much you Just the type thinking point, I the CapEx M&A about willing think how potential mean M&A years the to acquisition? go if rates? but X.X I X higher with introduced of your years greater I free think investments moving side or interest change you million, are of does are mean it is variable figure do rate you this cash more at in M&A making you debt on forward? the and environment it in see the As X% rate coming flow strategy interest is where, ago like than

Joe Dziedzic

Yes.

So, great it's a question.

Oscor USD in So, of XXXX. We Aran, April in we XXXX. December XXX-ish [ph] [XXX-ish of closed closed million million]

from nominal think how cadence, flow put second about would we about, think about our in a thinking half do the it So, if about standpoint. the year, dollars. cadence But well, a the just of you cadence your question

X.Xx cost, bond and is, XX% floating, how X what We interest or look of it's over we where debt committed we for and I a X%, be this were manage convertible leverage. to leverage now last we X to The very our weighted average which at expense. estimate our year, think, continue the just did, phenomenal debt interest going X.Xx remain little to matches We're issue we [XX-ish and [ph] percent] right to example is years. our we about fixed a

it's the we've same in high-rate at environment, interest interest average the even got about that So, in weighted expense P&L rate. this

reflect XXXX but that's the costs three borrowing all there interest incur we're we average years depending the of interest a balancing very weighted to consistent on rates acquisitions, So, higher going potentially obviously, in over and is in expect and beyond. that, do as rate what XXXX and with rates, you're coming here on past in short-term, variable down higher what the

we So, of now at I'd acquisition. commitment end right, quarter, our by X.Xx, We to But top right above say, of context the fourth to bump That did our at in the to of the X.Xx the X.Xx X.Xx leverage. range. of did maintaining couple debt we're quarters quarter. was right X.Xx Aran when think a second it X.Xx later,

leverage maintaining in it we commitment to our range. of really our and So, the of context think that debt

range. the of Maybe and looking questions, plan within when one very for a high-value robust. that the Valuations near-term it for changed might few with materially next remains is pipeline can pipeline about get what bump the to your that for. a be robust path we're clear up haven't back target little a meaningfully There think a we bit we quarters assets

accretive term near a our we growth to operational given and capability want accretive we margins or markets we already relative in faster-growing targeting. we've compound ideally business accretive Integer to end and want can Integer with we capability in have or differentiated make the rate, either been further that to that We something an grow the synergies, want and commercial

acquisitions of our and for while leverage continuing about we're So, all company. leverage accretive think maybe our to to committed that, summary to the maintaining in do

Matthew Mishan

before the I even Given will of them, queue ask out ask. that answering the you are else I jump questions and let somebody

Joe Dziedzic

Thank you, Matt.

Operator

the appear this more in At to be there Instructions] no time, queue. [Operator questions

Tony Borowicz

Great. Thank for you, call. joining everyone, today's

as website, earnings Andrew think with to the pleasure It's a for all with my time, call you our hands you and pleasure you. that, been Thank well I've of replay great can the forward. with that my shareholders these going assured this the in just I And interact have on absolute access done rest presentation XX we covered. – as the over last career, of calls. be

Operator

again, does you Once all conference. like for participation your that would to everyone, thank conclude today. today's We

now may You disconnect.

Integer (ITGR) 16 Feb 232022 Q4 Earnings call transcript