Earnings call transcript Q2 2023

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Operator

Hello, my name is Jeremy and I'll be the conference operator today. At this time, I would like to welcome everyone to the Integer Holdings Corporation conference call. At this time all lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there'll be a question-and-answer session. [Operator Instructions].

to President to and of like Senn, speaker Investor now Vice Senior Strategy, would introduce your you Andrew Relations. I Business Development may you begin. Andrew,

Andrew Senn

Good and me and Officer. today and Joe Dziedzic, & joining quarter morning, Analysis Chief Interim earnings Vice are you Executive President and Integer's Planning Officer; XXXX With Financial to Smith, second us, call. conference President everyone. Thank Diron Chief welcome for Financial

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

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

measures, For discussion presentation, a actual statements. Please reconciliation could today's of please and are of a to refer the press at to that cause earnings our refer materially. our the these the today's that SEC non-GAAP integer.net. of on includes schedules, filings note for which financial the available presentation appendix forward-looking release, results company's factors trending to risk today's website Please differ

Joe call our opening the second call, provide will open remarks, for and an provide and his today's his XXXX, provide XXXX the results then Diron on guidance. to update comments, will review up come Joe financial quarter for will closing On questions. full-year then our back we'll and

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

Joe Dziedzic

everyone Thank to Andrew. you, And call thank for today. the joining you

investors. during excited welcome potential reach Integer to analysts and KeyBanc, on sell-side from analysts sell-side opportunity Citi coverage by to second America, of initiated from the to and appreciate excited coverage the addition In Fargo, the are Benchmark, Piper Bank quarter. Sandler, are more we all Wells who We and the

quarter lines. organically grew demand robust the across all second from strong of results. year-over-year Sales quarter, XX% In delivered we customer product another

guidance were as as the grew meaningful adjusted prior market. to a about expanding customers able due last chain XX% deliver We year. XX environment to well basis supply Our labor than improvement by products our more in points assumed our a compared to to income margins stabilizing operating while

are supply the chain encouraged by improvement. We significant

Based to improvements chain on continue our we risk. the customer supply and strong chain full are year supply continued However, labor, we raising demand experience and pockets outlook. of in

We Free to guidance to a million XX% flow adjusted is grow year-over-year. range expect a XX% grow XX% to operating income cash XX% of strong now to million, sales to year-over-year increase. $XX $XX and

X.Xx remain of is strategy chain The supply strategies our our market grow we We sales of at XXXX growth financial and more through sales sales in XXXX, to developed execution stabilize. to began environment, with above In manufacturing market. labor achieve growth. can at expect strategic income the fully growth in objective producing points and a when growth that X.Xx excellence rate and at confident XXX implementing we rate we of the XXXX sustain basis pipeline the income operating above growing the operating of the

exciting because Integer an incredibly at demand remains is time It strong.

that are products I We a our and are around a for difference the investments am making for delivering have we of and and deliver for growing grateful our markets world end robust to needed pipeline a the sustained faster new making associates growth. customers patients. concentrated

turn now I'll to call Diron. the over

Diron Smith

delivered both to XXXX which on Joe. outlook. of excludes sales start with XXXX, In for XX% I'll XXXX on million. growth the our of morning, and again organic we fluctuations. discussion. provide quarter, you, second on you continued financial everyone, Integer update more the second today's thank currency an Thank joining our Good details reported provide quarter basis, and on the and year-over-year sales impact $XXX our strong results

of to direct supply up last adjusted and the million million increase across We $XX demand of XX%. meaningful improvements the EBITA, sales chain and reflects performance an $XX all Our continued labor. compared lines in customer delivered year strong or product

percent XX%, Adjusted up driven our on to annual operating efficiency increased versus the prior offsetting by year-over-year as or operational XX% expansion. points margin merit million year a improvements and material XX since operating year Adjusted sales was we inflation income to as income progress make of last $XX by continue basis increases.

few a at we second from earnings of adjusted second all in will four income detail the of the share the net improvements lower delivered a XXXX, fixed supply adjusted $XX XXXX, and quarter growth sales due interest lines notes bit net of convertible to quarter income January and With on of strong $X.XX product up delivered more I year. million, adjusted this or share, $X.XX the from moments. demand year-over-year customer year-over-year in chain. growth per XX% issued in diluted for In the benefiting strong

of Cardio as guidewires, in new product demand performance. Vascular continued all XX% product the a delivered sales The ago, and supply were quarter such growth in second improvements compared year strong across growth the to & line in key drivers markets, strong products chain electrophysiology, ramps

increased This driven with from second XXXX growth sales quarter over and XX% products and demand, and Management double was including digit Cardiac chain Neuromodulation. Rhythm quarter of in strong emerging both improvements. PMA second double supply Management, Cardiac Neuromodulation’s customers Rhythm by with in the growth digit

year exit execution saw ago, Orthopedics medical increased of multi-year by result XXXX. of and in a growth demand announced continued the versus the portable Surgical, Advanced Portable in & the driven second as Medical XX% quarter price a

grew low-single-digit Surgical Advanced year-over-year. Orthopedics and Additionally,

on And military a market. the the Further by in lastly, in website non-medical segments, Electrochem segment offset decline line at by market year grew product partially ago, appendix and strong included details environmental energy of a in our presentation demand integer.net. our from are driven the X%

second net increased higher interest XXXX, million by partially or this of $X $X strong tax and quarter a million XXXX due taxes. to affected and more sales offset than incurred last rate to million interest approximately quarter related In operational we of total improvements, compared income primarily interest expense environment, $X year. Second higher adjusted

the XXXX, million we our reduced January notes expense quarter sequential by convertible $X first issuance. by of on affected, a basis the However, driven compared interest to tax

expiration effective second for under Additionally, tax Malaysian holiday quarter primary to a been XXXX have XX-year compared operating rate year. of the the is tax which we the higher prior driver of the adjusted

second expenditures. of quarter $XX from approximately from volumes, million driven the XXXX, year In inclusive to of capital discussed This margins, sales million accounts factoring million flow, tracking quarter, million $XX from year-to-date $XXX of effective $XX a expenditures guidance full performance in million, management previously million. With cash to $XX we program. receivable in $XXX $XX In the we by generated generated ago. second higher of capital year our million are free million operations, working is our and improving cash $XX up strong flow capital of our we

the in million quarter our strategic of total as a quarter sequentially total result, target was trailing improved range. four Net debt second the net our leverage by at our back debt the second end X.Xx quarter $XX adjusted within and EBITDA,

our now update an year XXXX on profit to transition for We providing sales, will cash. full and outlook

As of quarter Joe chain the our and first are supply improvements, with second through half outlook. raising mentioned in his strong opening full we XXXX, remarks XXXX performance year

Starting $X,XXX up with $X,XXX XX%. XX% last of sales outlook XX% with of a increasing an from XX% to million, year, midpoint, growth year-over-year at to versus to sales, increase million range previous of our our we guidance are

to million, XXXX to is guidance of for up of growth our XX% growth. range adjusted with XX% previous year-over-year XX% to XX% from $XXX a EBITDA outlook $XXX Our million

at million, $XX outlook operating adjusted We to $XXX are $XXX XX% million expect XXXX increasing income our and XX%. by operating growth year-over-year million be income of adjusted between midpoint and reflecting to

of X% reflecting to a X% $XXX This year-over-year. million is and a of to delivers between $X.XX, $XXX be EPS income XX% year-over-year between from now expected XX% and of million net an Adjusted previous growth up adjusted to outlook guidance expected XX%, to our growth $X.XX XX%.

half unchanged million our our projected April. tax XXXX $XXX an of to which recovery remains prior-year rate chain outlook, between were in from adjusted quarterly of color the be rate, in previous and our is more XX%. sales effective averaged $XXX outlook, supply run plus approximately into the To call discussed delays, our comprised million Our XX% provide and first

we similar expect the sales second As $XXX we first to half enter of million. rate run the half of XXXX,

continue manufacturing continue the as improve direct We expect in stabilizing a operating to adjusted XXXX throughout sales improve operate of we as to and a environment. of percent efficiencies labor to income remainder

operations our prior from XXXX we in Moving cash outlook, our to million expect increase consistent adjusted our cash million $XXX $XXX $X from with between flow to outlook increase of an EBITDA. million,

capacity Our receivable Irish expected call. from cash an full-year we February support manufacturing flow which operations shared our investments, includes impact from during million outlook facility factoring $XX earnings of to accounts our

Consistent continue expenditures million to on as expansion. outlook our strategy, $XXX in capacity invest with we maintaining of we million $XXX our to are capital

generated flow within net target of and cash free to year X.Xx trailing and we reduce free a adjusted four end million flow will to cash our The expect our between result, generate to total $XX $XX be ratio leverage our X.Xx As million. quarter with our expect EBITDA. we debt the range used to

I'll for And to Thank your you now turn back Joe. the time. call

Joe Dziedzic

with Integer quarter, XX% up growth growth in for year, a the in was second Thanks, quarter, and in track XX% the XX% operating quarter. XX% sales strong second first sales Diron. the first and on the is in Adjusted quarter. income

to We above sustained as our strategy growth margins. are raising execute with we our continue expanding XXXX outlook deliver market to

patients We on sustain pipeline above delivering our capacity new focused strong of and to products generate shareholders. the and for investing valuation premium serve they to a for a have are customers We in growth. the market remain our

back this portion call. for turn will now morning. call the our moderator to you Thank the joining of I Q&A our for call our

Operator

first much. [Operator's our you thank so All Awesome, right, ready question. we're for Instruction]

Matthew ahead. comes go from Matthew, Our question first Mishan. please

Matthew Mishan

Or the the Are experiencing Great, questions. that's taking guys better -- thought and start chain would into release some products of pull level you revenue supply the expected? ramping of just than XXXX? to just are just seeing are forward enabling with the you guys faster to volume thank some you you that beat. you going a wanted into much the I new than be sales for drivers environment Or are year? like procedural it

Joe Dziedzic

thank to our really orders placed demand lead meaningful the -- next longer nine a pre-pandemic, in now being at a and gives the for us. was We've that in backlog on not the everybody future. million how forward. to start good visibility placing is a way across function customers. months. the dollars, is the in customers about our approaching, we're necessarily which I'll We've visibility questions. And volume takeaway us and the got increase Good demand convinced is billion you morning, $XXX is there into demand. answer that right no industry it's compared anything six further good with, I'm We're talked pulling to have the times Matt, really our from of we meeting that simple The procedural

in the much a output in chain supply increase of second quarter improvement. And was the so very function

improvement our You the the the a about we of this chain -- procedure improved. see any we demand how basis. much the twelve really for we revenue And number meeting supply so supply know, backlog. the that us a more impact. our as it of talked coming We communicating But we quarter, of that we've meet six that we saw We now meeting very of volumes future. we've has been Throughout strong how continued track ensuring see been that's there, from and have track has of chain We've focus been don't on daily, procedure can because so demand it's quantify the that volumes. it And had. issues, enabled months demand to function to weekly in or have we is been we meet.

that, did outlook. second of still our we we're have challenges, managing which into chain We we pockets and factored half have supply highlight

process experiencing pipeline the to shared And talked development absolutely with the products our get there. other of products customers about. in have highlighted the product been of pipeline asked that talked that we to some about combined new Now we've about, strong we've our new emerging we've that you we've things from that and metrics, growth

get direct enable is have in to second to with that strong there. demand it's sharing door we demand quarter. the our that been the chain had and really the All ultimately had but the stabilize visibility three product to it's months customers. more ability over last since the and of to, the out more it really contributing about supply our supply is last And experiencing of been shared us or to chain we've our to And improve continue labor meet earnings call, that

the XX% is, in you're what midpoint our full meet so strong seeing seeing year. been sales being the that's have confidence us you're demand and able and the we And at to growth for demand remains there

Operator

All right, thank you. comes Matthew, ahead. question the from please Matthew our next And then go of line O'Brien.

Phillip Dantoin

and questions. Matt. for Phil this the Congrats our on on taking for thanks is great Hey, quarter

Just year great coming confidence vein guide, at where's similar is from than it's for XX% more the the market set? XX%, let’s in at you've know XXX market. get see the update Do starters, but about you you midpoint. this guide is year up or really are that QX, I'm and to that think points what above growing it shows basis to on coming trying the beat your to taking that XXX above the that up underlying intention And guidance about indicated the grow growing you've bps to we

Joe Dziedzic

question, you. thank Yeah, great great,

year. strong growing ability tell constraints that We we're the basis can working supply labor than As exceeding think best basis at demand after had meet above this we our that through -- think the the points XXX that that we're the industry, more chain this market, look XXX we points year. we've to as we and the

faster into You the faster that average customer our mid-single-digit historical whether markets kind weighted into the much the is based this a faster the know, would of the we industry growth year. than end mid-single-digits, we year than growing basis growth. But XXX try we're think the it. track see much on markets points to and progresses, as rate -- we sales than We'll our the sell market indicate going correlate

introduced I’d point in about, products development that's customers become points fair $XX to a product the that's growing this talked I fueling driving talked manufacturing million we've us. to would for basis from than XXXX. being and starting to million revenues faster talked emerging are a to $XXX market those therapies point And now production in strong the pipeline XXXX. that year calendar amount lot that that $XX we've about in and and roughly additional We are XXX XXXX in million also about to growth so the

might think XXX think be, basis the X%. market And still XXXX your faster go question the to which this do in forward next is estimate markets, is we our about -- the We mid-single-digit, -- I X% well, and beyond. points how X% than

tremendous the basis faster, X% the forward. think markets is a on to X% I demand that So points that about points strong in with fulfilling XXXX. XX% is we and basis still we've XXX to the here But we're do looking organic number XXX had right think really above growth in year think well

Operator

All Craig, a thank comes then our you. right, ahead. And question next go please from line of Bijou. Craig

Craig Bijou

and wanted Good questions morning, congrats taking guys. quarter. for the with on Thanks start strong to debt. the I the

debt guys the to getting reduce range, use strategic cash further your to obviously So, you going you're flow back the throughout are to year.

of this that meet some to the of maybe your and look you ’XX kind appetite demand to this either this M&A So talk with if at if about point, at capacity you strong underlying you demand? need on additional think maybe you're year, when just seeing, or bring

Joe Dziedzic

continue We free and we we We that to and by grow think as starts a continue the acquisitions. down X.Xx committed comes X.Xx we're Great, quick $XXX anything means range, And is doing, as we're to get that debt, to the our answer EBITDA spot. and year will which near or acquisition that half X.Xx, to to pay wouldn't say, very average cash or at great, million our at you $XXX to Maybe flow so certainly, our more we at million in creates do the think thanks. continue indicates leverage question. doing that down we on Thanks bottom closer right let's be know, remain midpoint between leverage. for have of creates term, still capacity. capacity the a meaningful. substantive in capital. that for Obviously lot year next, But we X.Xx, the the to end, as we

in to still The continue active very We is marketplace. be the activity high.

in high announced, at Memry’s Resonetics, teens XX have at trailing EBITDA the closer -- of You least maybe are can -- that to is teens. transactions by from been acquiring also Spectrum acquisition the that DuPont see GTCR maybe Memry the multiple. high

that where trading characterize multiples assets what saw assets, So multiples, you can going strong below some as the are see low a of years couple the premium premium still for would XXs, you at. ago, we assets the maybe best best

we premium So when that you assets and think at about think are acquired being values. still valuations, still trading premium

of We're fit -- those us for to an what about puts active size very at And that at at very our looking we've not clear very X.Xx kind leverage. to be $XXX our we've that We've basis. looking million, clear, X.Xx acquisitions is. within been remain We That acquisitions. been we're annual our staying on worked strategy. strategy in very

have more faster that bring looking with clear work additional acquisitions for looking criteria tuck for that allows are markets. in, end accelerate those very our capability We development growing us and that We're We're to partnership nature. in acquisitions customers in parameters. our and

manufacturing You've customers heard we to the enable times, think the that's us add is of operations, R&D we're them strategy. be neurovascular, execution patient of which to operations, neuromodulation, where we because accelerate are in their customers able structural heart, makes our that's them significant where in to strategy, and because our innovating help vascular, capabilities And peripheral electrophysiology choice, about many there continuing partner our need.

about capacity, we've been investing. question To your

facility and When feet somewhere in square this of square XXX,XXX feet think neighborhood the look of we year. got back available in driven XXX, we've got where Dominican in network. square Galway, that You we Ireland; got in part our guidewire Republic see square in our spending -- we were one adding which one by about in guidewire Ross in CapEx of capacity adding two new manufacturing we've Galway, in year, this facility, Ross; our is expansions facility, New square major Ireland, XXX feet XX,XXX to heavily million other in you step the our facilities. facility we're New or Integer, $XX at space US total feet as we're got feet acquisition spread obviously across of XX,XXX a We're our Tijuana Oscor; we've about XXX,XXX capacity our got

feel down to because Once we growth continue elevated a And and investments, we're ’XX into expect that. So we magnitude and Irish projecting. facility get of to we the don't come to CapEx that of CapEx back of XXXX level the spend we like capacity facility. is of support that the because year growing we beyond, have anticipate

really capacity But equipment to equipment, continue the the got the do we've growing. So you the to capital naturally product. need build

continued invest in capacity, forward. and So this growth confident the we're capacity that but we've equipment feel we've to year the looking to the the got that support not only that growth but experiencing

Operator

question Our comes from Treybeck. of [Operator Okay. line please Nathan Instructions] go ahead. next Nathan, the

Nathan Treybeck

Thanks congrats question, Hi. great quarter. a taking the on for

chain In thoughts relative and margins? terms the the of chain overall improvement, to normalize? getting on of the like, terms your in would the to Thanks. characterize supply your QX back how your expectations for when inflation thinking, you and supply state it pre-COVID of environment I'm

Joe Dziedzic

thanks Nathan, the for question.

number think in we're seeing us the improving of in assumed no we guided the going bit as have improves, happens, this but little second we meaningful the supply did no supply we half how more of in guidance, chain. that in chain and have uptick were supply further predict second We second in forecast supply changes. pockets saw the ship we our When to enabled third by year as to but to to chain quarter. first demand well. of being in chain chain. -- changes in to quarter. earlier, But more that's Similar not we supply changes after opportunity aggregate second of chain early chain. And to challenges. We the the further in to a the in supply if noted are improvement trend a deliver quarter. convey half the we assuming supply it it We're still there see And So that was try we've assumed someone we've increased tried an we issues constrained and in the quarter

getting back or ourselves of more serving. XXX margins, we're the way we're at looking pre-COVID see terms to markets is, we In basis points growing above it the

sales. to ’XX sorry, margins confidence the margins. X.X confidence at development continue do we that that. beyond, So in -- profit expanding, be about as year, emerging we to have expanding And we expand about pipeline, to we're have to X.Xx can look customers, This I'm growing we of at able operating and our continue growth

know, fully of our labor We're as twice operating grow sales chain profit and as the fast stabilize, sales. You we at is to environment the can supply rate. growing confident back growth rate to get more when twice target the profit

But that chain, fully to And predict back is chain. materials, that predict improve actions to talked something supply the dual know constraint. we're we're doing things We've shifting material of level, when aggressive in continuing to get sourcing, supply because chain that supply the going Insourcing whether I that is it's can't be we've we some taking if we're also about can't the it's done. to when in whether is. it's

Sometimes an chain could external mitigate which we've different addition to internal. in source external working we dual having a number and risk. be and been in to so supply ways manage There's source, of insource

got what top we're pipeline product this we development, the emerging achieve we confident think growth, So and in year, when a our get objectives. labor customers, of to we the strategic we're confident can is line challenging We've expanding financial stabilized can our we're margins products environment. twice still supply profit get chain environment. to sales fast we And and fully a as objective as growth more of new

Operator

I'm All this questions. seeing And at more time, any not right, perfect.

Senn team I'd Integer. like to back turn the So to it over Andrew at and

Andrew Senn

today. call the you thank Great, for joining

access our concludes in as you well on covered. was that that presentation the this as and for your Integer call. replay just of today's website, always, you interest the call can As Thank

Operator

you And you. now all Thank disconnect. may

Integer (ITGR) 27 Jul 232023 Q2 Earnings call transcript