ITGR - Earnings call transcript Q3 2024 | Integer Holdings Corporation

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Operator

Hello and welcome to the Integer Holdings Corporation Third Quarter 2024 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Andrew Senn, Senior Vice President of Strategy, Business Development and Investor Relations.

You may begin.

Andrew Senn

Good morning everyone, thank you for joining us, and welcome to Integer's third quarter 2024 earnings conference call. With me today are Joseph Dziedzic, President and Chief Executive Officer and Diron Smith, Executive Vice President and Chief Financial Officer. and of we indicated. Integer results the today the results consolidated for reminder, the discuss data reflect A the periods for business, prior to measures, continuing cash have Except recast been operations period presentation. exclude with consistent amounts Electrochem US GAAP the flow the all supplemental basis. In operations. information financial help update of otherwise which continuing stated, presented models a we your the discontinued and will results Unless today's impact to are presentation, comparisons on operations appendix provided of reflect have you

today's full to our his and we'll materially. On actual the will website the we and schedules, an refer During non presentation, results turn up XXXX year could to financial call financial our come SEC the third results will comments, appendix I call, update will the that, and some that integer.net. Please our your company's will GAAP note for Joe. GAAP release includes risk today's cause measures, quarter, for refer over then discuss provide which for and opening to our today's then non adjusted provide review differ call, on discussion Joe a factors Diron to the questions. With of financial are the filings available of open that trending today's press of a to closing reconciliation earnings at forward-looking his on call XXXX measures, will please Joe provide outlook. the presentation remarks, statements. Please back

Joseph Dziedzic

Integer in Operating announced created into of our earnings our Integer. newly our Thank & in Andrew the Khales Cardio for role thank I This am joining of with business. succeeding XXXX has & role. joined of Integer call & you for Senn Payman. become to And Vascular the of you, President the of excited to strong the morning, XX leadership a for and years will also to Cardio the Payman the Vascular within business. Payman in that business Chief primarily been announce Vascular new we Andrew, variety everyone Officer Andrew today. announcement, promotion the as last Cardio also President on congrats addition roles,

currently leader basis, Both quarter operating Business Andrew in Investor year-over-year their Relations, the X.Xx XX%. third Andrew up him of for been sales know the execution of we Payman as in Integer. integral grew grew of our quarter of Sales X% On Strategy XXXX. In have a will Payman quarter our into & and sales Development You first results. year-to-date the and development transition and income and grown rate success another new roles XX% strategy. our have growth. XX% strong adjusted the operating or and is delivered income leaders

to confident our our programs to high XX% XX% in ramping capacity and to narrowing our Ireland. high guidewire sales to growth are strong deliver deliver in visibility in in customer markets, including additional outlook We're XXXX. sales ability We growth growth given demand,

market business. driving growth, expansion margin above are this across to the addition In sales we

earnings per and outlook. We profit share our are of midpoint the raising full-year

meet material Our we leverage, improvements strong and of rate are confident adjusted $X overtime prior direct scrap of labor increased Initiatives our turnover, are XX% million nearly an direct operating the Manufacturing guidance in Xx labor lower sales over income midpoint. growth at outlook. our outlook, our expect of OpEx Combined full-year profit the midpoint At growth, Excellence direct we ability and with our increase in efficiency. delivering operational to reduction, our

transaction call Integer exceed growing is sales strategy our expanding rate makes XX, enabling prior of be execution is maintaining Integer The to into premium $X.XX We associates $XX results guidance. On targets midpoint per Diron. strong of a definitive Electrochem. and over strategic X.X for by of a EPS basis turn the XX% demonstrate divest and our EBITDA. a the entry meet are growth The our of and of an drive also We share announced adjusted raising income our financial or objectives differentiated at us agreement at over strategic million debt of strategy. our shareholders. I'll our adjusted valuation company. will at adjusted year-over-year we growth, leverage in X.Xx neutral above September earnings between sales nonmedical points that segment all believe execution to midpoint per to outlook of share The expected cash our now Xx operating divestiture pure-play financial the support our to technology the our to a generate medical market, increase to XXX

Diron Smith

you, for Good thank morning, and you Thank call. again today's joining Joe. everyone,

Electrochem As as results by our I year-to-date first all classified financial business, been quarter a first XXXX basis results share presented continuing on operations Knowing discrete continuing our Electrochem discontinued quarter time the reminder, without are a business, otherwise a operations, from noted, seeing the exclude this is will third third and the are which has results. you unless operation. followed the results

year-over-year as foreign our XX%. sales margin of or million EBITDA, fluctuations. We our end expansion. As the to basis XX% $XX on the progress year rate acquisitions, versus to quarters delivered million we last X% the and prior an adjusted excludes which an outlook. Through on update operating up usual, on our to income of of X.Xx XXXX exit Portable XXXX, continue recent organic year-over-year performance. Medical a strong of increase we Pulse of reported billion compared market grew impact delivered of year, an delivered InNeuroCo Adjusted of X $X.XXX basis, make $XXX I currency with Sales growth strategic growth financial and the XX% have and will the

which for X% results. year as earnings year-to-date reported $X.XX an quarter or $X.XX the a to income the sales quarter basis a financial represents basis EBITDA, of basis. we the a income net prior the or of of million year-over-year share, Third adjusted XX.X%, year per compared quarter increase of XXXX year XX% rate of improvement efficiency grew of again year-to-date approximately versus reflecting up the million, adjusted percent adjusted growth. organic third on delivered a up $XX million from Sales XXX $XXX manufacturing operating versus $XXX ago. In or and XX% sales third strong delivering expense million leverage. Adjusted points of in while year $XX operating We operating was X% ago, and improvement last an delivered on continued of delivered adjusted income growth XX%, XXXX, Xx is

performance by operating adjusted quarters product offset details of sales sales more balance expense CRM&N the Rhythm low delivering to basis, leverage sales the improved quarter X-quarter a XX% normalized $XX our included XXX quarter average continue a The C&V percent up previously progress appendix As approximately in Adjusted Pulse quarter the in income as operational XXXX make InNeuroCo increased interest double-digit which by driven is basis. by website efficiencies emerging delivered is primarily product basis growth customers higher interest above-market product per we growth expansion, higher Pulse Neuromodulation across $XX product and This during Technologies. single-digit InNeuroCo adjusted the net X-quarter include line and at trailing Vascular and of to continue than discussed acquisition adjusted due we sales, Rhythm driven X-quarter for PMA heart on of Cardio driven third of $X operating found new in sales of we million million. to growth from XXXX. Both and earnings are and income Cardiac X $X.XX & partially & is by which delivered XX.X%. XX% period, million can structural the quarter a in increase million, on presentation, markets, acquisitions to $X.XX third improving share, integer.net. On year-over-year year-to-date third points first X% of or increase. Strong a growth from acquisitions. Cardiac was and $XX year-to-date C&V improvements, of debt in the by margin deliver all increased be on XXXX Management the net Neuromodulations and above-market The manufacturing lines year-over-year. expense year-over-year, growth trailing did line the cost third electrophysiology our and Management. Further trailing of XXXX XXXX. the income ramps

and rate the compared investments flow GAAP of XX.X% XXXX, period consistent a million cash sales, other improved non-GAAP flow, have cash effective from from the similarly second discrete improved cash last ending million an On free statement adjusted. In by generated quarter tax $X end from million capital been XX% not also of minimum tax adjusted million $XX the the year-to-date and ago we was at a the applicable reduction X, the cash expenditures. credits fully third debt increase performance flow a cash consistent balance. non-GAAP year the resulting million to quarter, Leverage, operations, measures due inclusive for higher higher supported XX% global continued tax we GAAP XXXX, third in $XX prior of $X.XXX been $XX of basis, free research by primarily up working the operational on to initiatives. Historical capital. In to operations with up effective measure, Electrochem, $XXX Pillar adjusted period was flow of year. Net items year-to-date in tax the flow $XX the from in total $XX year-to-date generated million offset year strong cash of Increases is has from of in operations, versus XX% million, quarter presentation flows. million of Malaysian tax from margins holiday quarter $XX This year-to-date expiration, impact Strong planning with is quarter. same ago. to million and primarily the execution, billion year and which XXXX, driven a same remove increase compared and not rate as generated has such $XX we Our of the of the third management expenditures, a ago. the tax cash flow a have a capital of are

a was midpoint X.Xx. adjusted EBITDA, result, As which X-quarter X.X leverage quarter X.Xx the to our range end target debt at at trailing total of strategic third of the of our is net the

XXXX $X increased performance on of share outlook execution midpoint outlook are our we raising per narrowing million have operating strong our year-to-date are XXXX sales midpoint. the we earlier, and outlook. mentioned at adjusted by Initiatives, Manufacturing our earnings With and income the Excellence raising profit confidence Joe and from As margin the

points basis deliver organic an to basis, last On our billion, range we market of to estimate XX% which X% billion year. sales is X%. approximately sales X%, to $X.XXX XXX of of versus expect increase to of in expect to above X% an $X.XXX the We growth underlying rate growth XX%

In growth, Medical to addition the and organic Pulse market offset inorganic X% to our the approximately InNeuroCo exit Portable acquisitions, growth. we contribute by partially expect

be which year raising expected XX% to XXXX. XX% year-over-year growth to Adjusted increase between growth the basis XX% from the to $X.XX, $XXX percent delivered are XX% adjusted of as EPS XX%. our operating outlook $XXX an between to midpoint XX% income year-over-year $X to $XXX adjusted XXX adjusted operating is our million, is million, operating to of year, year-over-year. to between operating $XXX $XXX million, expected million to reflecting million between This points We up is EBITDA $XXX a a outlook sales is XX% XXXX Adjusted be expected million prior and income XX%. by full adjusted and net to be to income XX% and grow expect income growth similar midpoint, income compared of outlook which $XXX to growth million and is at an $X.XX and rate. adjusted At expected of previous of to of the million, reflecting compared XX%, the

increase updated Our $X.XX outlook per an adjusted prior of EPS share our versus reflects midpoint. outlook at

to of our our from confidence in and income issued outlook performance. price have assumes and Manufacturing as offset an sales. XXXX Initiatives, Since in million to effect rate, which notes midpoint raising expected outlook improvements we our improvements in growth sales our operating of of based guidance estimated be operational July, dilution of percent our the tightening percent Excellence is adjusted as XX% projected has the XX%, recent XXXX. adjusted a now of by sales operating in between XX.X%, sales tax a XX% taking basis into points adjusted and XX.X been previous have income above-market shares, which the versus impact account Electrochem, income dilutive by weighted revised XX to to from of our outlook outstanding average adjusted points we This XX%. With upon increased shares basis our up is and exclude down an effective our operating from improvement Our stock XXX convertible

As emerging a customers our products. expect the driven Full third by we begin fourth increase X% the at X% new the sales guidewire capacity quarter, sales fourth increased quarter growth from quarter ramps, of of product XXXX, to XX% imply with organic we year midpoint growth premarket would of approval of organic and versus outlook. to

Moving to our cash outlook. XXXX

of We expect between midpoint. X% previous represents up XX% year-over-year from which cash to at million, from our outlook, flow outlook million midpoint $XXX operations $XXX at an of increase the

is organic $XXX capital invest capacity. capabilities outlook Our $XXX as to in expenditures and million for to million continue we

and million a $XXX we cash to free million. $XX between expect As result, generate flow

previous between $XXX midpoint, which and the the of this expected a represents by Electrochem from is proceeds $XXX our $XX driven year-end before our million October. be of Versus expect million We net million. reduction to debt end at the outlook, total sale XXXX

We year to expect the X.Xx. With turn ratio to back thank that, call with and X.X our X.X Joe, end adjusted you. and EBITDA, within of trailing I'll well X.Xx range and between target X-quarter leverage the a

Joseph Dziedzic

Diron. Thanks,

We after executing XXXX strategy our very deliver outlook are to strong a XXXX. successfully strong a

Over combined, at income the operating these grow expect sales adjusted XX% we outlook. and X of XX% midpoint to grow years

our inorganically expansion executing sales growth successfully are for both We financial to our debt margin organically objectives leverage. strategy, and meet and growth, strategic

performance will our valuation a this sustained premium for We are confident shareholders. of level produce

call moderator for the our over call. Q&A the to the We turn of will portion now

Operator

of Your first the line Instructions] with from [Operator Fishbin comes KeyBanc. Brett question

Brett Fishbin

to some Just maybe wondering, organic then trends And XQ But on the have on drove relative deceleration the for a the the quarter, briefly about that? of was to that exit and if X.X% wanted year-to-date just might you you bit to of just I year-to-date start the saw the off growth and could what touch X% third specifically rate. trend. a implied just talked you lot little we think

Joseph Dziedzic

been at biggest CRM biggest and where ordering X% at expected, And our X% for facility organic growth. to And have X%, wasn't or had us. little of So the the to we organic an the at book The of higher. of Helene we X% that But protect of of Florida expected on the driver the for we little for little beginning that the bit a C&V see what our we organic year-to-date, guidance end driver our the a meaningful had the would could been book has from were to the with That start is, the which we impact. and X% down I'll your have associates. slightly had shut an We of been been quarter come up We It Dominican order would but up line highlighted year. the about we have year material organic happen that higher that to throughout It have would the we year, order we would is more upon a organic to year, little X%, because first a on the full had in and half in to based demand as The the said from at that patterns bit so for we impact the had like down original the impact. the expected bit. quarter our Hurricane year, beginning and X% highlight, versus X% guidance the bottom organic in and segment end our reported is We the a a third the X%. happened was trend than the saw little Republic we based the that of we have. growth. X% quarter. X%,

the in that's of CRM terms would in normalize that look we earnings quarter patterns when happened. February what fourth half order moving what our perspective. ordering the it's that really had this call an we and shipments year of from -- year We beginning at of expected said in showed February, parts. on all second back So the And the our quarter,

So very customers. emerging to continued We business our growth in Neuromodulation continued perform there the saw strongly. PMA

emerging that year the in to quarter customers. customers the guided those strong the to $XXX for In of fact, to we the million And $XXX those had have we range. emerging high PMA shipments million actually fourth end tracking for PMA are that

So about we fourth guidance. feel great quarter outlook the the and

Brett Fishbin

was and on roles. Payman initiatives new structure. you bit give some ask can new and little I new then the of the think one just And the curious to changes the build Andrew team a around those and to more congratulations I background you how some wanted maybe for this can of quick follow-up, if maybe existing on And just impetus under

Joseph Dziedzic

Yes.

it's to size to strategy get So business. continuing basis our and and the really to bigger outperform on the sustainable we of as grow about continue a execute

longer, 'XX. the the company have Payman elements Andrew the the and over the our for in the in So beginning sales of because C&V have about Payman business. exceed of it's of and market organically strategy, enterprise-wide Payman growth really integral strategy strategy been the the our parts different executing of here objectives company in have Andrew been whole but XXXX. and operating business, only much the ownership and to financial C&V with but leaders profit has been he's and strategy since Andrew the been not meet above continuing or early joined Xx. company

XX% Cardio Andrew for has During the that his & doubled to He's Payman career we've & leading Integer. with in Cardio We're the done sales for lead business been Vascular. tenure sales everything entire business, into from role. over R&D to Cardiovascular up stepped marketing. Payman's almost since the leadership Vascular

for both and him our Investor know They the the customers as enterprise-wide M&A Process You industry more know Strategy well. recently and the leader Relations. for incredibly

the really customers to So accelerating responsibilities of help this deliver ultimately execution broader to for shareholders. us our our highly is strategy and leaders giving about for successful X and continue then

Operator

from Your of Bank Craig next question with line the of America. Bijou comes

Craig Bijou

all you benefit I the of if when go business about ask I of think your I 'XX. And of see changed looking if growth expected couple want So quarters. are maybe then And of because directly launch investors last over just QX. see we think in I launch in products I coming that's the your acceleration can as given PFA, start, the C&V the ask some products, expected the EP then over to end of guys to the at today wanted guess and to and from PFA business that trends

from maybe just that about emerging then you thinking PFA business, be kind could of should the So kind potential if how market? talk contribution frame about EP investors and of

Joseph Dziedzic

for patients, of I'll with and excited a Thanks start to of the industry and PFA. we're happening as Craig. about for with therapy remain incredibly the excited what and the can in PFA question, growth be it do we what's technology part a

view Our and outlook hasn't changed.

of In to seems therapy. closer products and every on this in continues coming deliver new participant passing more innovative industry of with with evolution -- having and fact, to and clinical the out market like it study progress better across it more closer getting announcement and get therapy every to another their new the

many. to is our of we important even but For us, growth within itself a we've X I'll markets. our an field help into well crossing that procedure. electrophysiology, the lot and It's ablation Everything full of access ablation targeted think of the talked therapy it's transseptal with guidewires, And play. the across part pulse one introducers, then one electrophysiology the from where how then about I highlight business, comes play the as specifically mapping perform then catheters diagnostic as

is an electrophysiology high-growth So market. exciting

are vertically We integrated. highly

expect the We we have and to a be participant. a very full footprint strong continue expect position And to we strong across and it growing, procedure.

factors and with end any driver us, for hasn't brighter of our outlook. highlight, and market outlook would think, many one product the so just biggest industry's I'll to single one I gets change materially And Every But growth or progress. expect brighter I changed. or not the it's the day, be it company

outlook. customers new to to our in as we product that continue it's their So with rollouts, factor our into work on we continue guidance

basis, continues end products We look customers' electrophysiology then our to the come X.X-ish that and Our by expect times a outperform accelerate more at growth business end to market. and we're continue to those more our as We market. market still rate reported we X-quarter and track by market. the sales to markets, on sales growing end trailing

Craig Bijou

ask in expected moving pieces. can on the a Great. in of and And I organic QX acceleration if understand also there's growth number

Electrochem, Portable So Medical out. is you're of coming getting rid

just maybe organic growth expectations you help acceleration by if can So for understand segment. us acceleration --

the then and Advanced even Surgical. CRM&N C&V, So

growth sense Just kind where going to organic to for of accelerate. want get a that is

Joseph Dziedzic

Sure.

a So will organic when X quarters. fourth look split and reported between at it be little a you quarter, from first the different than

little So X roughly difference very the net quarter, points XXX basis quarter. the had in and quarters, in organic. there's In the inorganic between of first reported fourth you

One of organic. acquisition acquisitions months and And coming down rolling by quarter. off, its offset then becomes fourth other Portable Medical the in is the XX rolls the

in you look number, at that of as and organic So reported that quarter. quarter fourth the think both guidance when

nuanced as and split. there inorganic be organic So that little you at stare a will

And that And do to emerging segment. million in end $XXX there's quarter stronger to sales CRM be of be fourth that we from the the in sales PMA. and and fourth Neuromod, in any the XQ rate at of commented do earlier expect had that are ramp $XXX fourth to that patterns expect acceleration I the because the roughly relative high continue quarter of we customers, expect plans the very million plans we particular, reported range a percentage given in long of same then of customer growth Neuro quarter, PMA of to order of see And the on we commercialization percentage the multiple or to Neuro, and beginning that, number, to higher So particular, in visibility and the slightly ramp very those in because orders same for quarter. new normal improvement emerging organic the the visibility, customers. at out. Cardiovascular a products those are the the in continued XX% because have we quarters good in These year to the that.

we've So seen that Portable on and all flattish to was small have flow expectation year, down, we which Medical this our trend an this demand. And question that our your a the Surgical in and coming business line. will piece of very be the Ortho, on functions an Advanced do organic of that's for And more inorganic decline. the basis,

Operator

Your from Securities. with the next of Rich question Newitter Truist comes line

Richard Newitter

at you A have hurricane one, divisions, color not, it I mentioned more specific there? impacted to And that fourth couple quarter. the relative why And division? impact our a if and just for that into consensus in and CRM any so the to that ones, What Was question going lingering I seemingly soft, on third me. quarter? if guess, additional expectations. the there segues Neuro. is little were into that impact just just guess least more on was my were expectations

Joseph Dziedzic

Sure.

for Rich. thanks question, So the

the shut of Cardio Florida facility the or and The up we down. is run to overtime down days first shut days, cost then Dominican and X & because then to up had to on few having Republic out ramp impact The back facility. catch X lingering Vascular coming the likely will it's of that be answer and mostly some

of cost. quarter, it expect fourth impact, bit to would we the quarter. small end a but was in a It the the So more at was incur little

days quarter. And so was you it have no the time few third the react really last to of when

hurricane the So that's on impact.

that of what than our and was the hurricane. all are far Fortunately, expected associates from particular was less that impact safe

question, the Rhythm earnings our Neuromod order do from patterns products pretty and book, broader in our could quarter growth. We had the fourth we Cardiac was what back because indicate of customers anything participants of in the that not order for the On on less call February. trends, which some strong said the back year beginning at CRM market CRM looked we point Management half, see market at to look at our saw second given the I'll that go trends necessarily to to would demand you the has I the we or with

the demand Some had growth. in at of order pattern don't year. how here run out got That got be weeks half We've sitting run they week it We a that necessarily in baked out of in their rate lower go, good market into facilities and and to this been played half, the the But lower is and a to to I look end that than expected which it the customers would now, at really the XXXX. we're mean of I of say, fourth expected beginning were rest like know on this a trend. had expectation us We first our we little second that of point placed I planning normalize saw the the bit and visibility we earnings we're would X year. got year. to across quarter. quarter guidance. the CRM would. our the in We've that the on to the said at the call that fourth meant I we've

So we in our we in given that of that about top summary line guided presentation. line by to feel the split product we've guidance the appendix really the the good segment and slides

Richard Newitter

XQ? in Great. about coming any XQ thinking last in Maybe Joe, day up be and/or should selling we just one. considerations one

Joseph Dziedzic

year I I'd a in Diron. back, our reporting calendar might or significant not back a Nothing something once to it was minus. plus we Internally, calendar be went ask There that's there. to have XXXX. that year for -- we noticed think

no, XXXX, I actually think we -- end it it a was went calendar to was calendar year. the year of

don't fiscal which an our there year, or X see every a a the out. for it day might a that calendar we we have year, I for impact. business be X. washes on had So But basis, a meaningful think X years, was But on so it operates, or been as how year all week. We extra we're

Operator

comes from line Citi. with next Wuensch Your of Joanne question the

Joanne Wuensch

for I on can little you commentary know early but we're provide this, a thinking about any you're XXXX? how

Joseph Dziedzic

we for this above our at normal. going objectives our to what was of the strategic organic played relative We growth organic upon strategic point very to different beginning that focus objectives, think market be had continue going which that. above this at to the kind say 'XX, the year I I'd said a And XXXX market, in year, be a seen we to we've financial growth thought growth, believe be normal was XXXX market. no on to is to out of basis executing points we the of reason any based normal have than has industry. XXX

the remain objectives. at is We sales. above X.X we'll our end our profit basis low leverage expected organically the growing also So twice on X.Xx market update year. operating fast on shared strategic And focused be as be range of end the cash that to least EBITDA. as the at down year we at growing of points this XXX the highlight, and our Sales I'll by where delivering end to of leverage on just flow

Joanne Wuensch

points you'll terms basis in seeing you that currently you're be what confirm of faster? XXX your think to just growth market And growing

Joseph Dziedzic

fourth That's not guidance our on objective. formal We'll our That's in earnings call. February provide guidance. our quarter

Operator

Your Matthew next of line the question comes Piper Sandler. with from O'Brien

Matthew O'Brien

it congratulations X-year little decel sticking do Andrew. of the sticking that, does in terms for second. QX like QX, on just And on stack. and just look Payman a before bit a to Maybe But of I a

being it any is cause of hurricane curious, entirely that guys just just slowdown? conservative? that I'm lingering Is the that impact So there there Or somewhat would is CRM? you

Joseph Dziedzic

sales about be order XX% see growth of Sure. in that same tracking profit At stack. we I X-year midpoint, may of not magnitude. operating the

based quarter, products we rolling customer acceleration supporting growth sales think out see and upon the emerging C&V we fourth the for So PMA. strong in the the new the we're Neuromod, of and

sitting of the also the X we was the last quarter were was million, margin last million of It with year. quarter so quarter It over given year to to $XXX highest the year rate and about that XX.X%. the well below that the good The into the year, profitability And year feel was quarters year. full $XXX weeks about highest was comps, compared AOI fourth the XX.X%. sales fourth we're it last was X go. here quarter of and thinking prior

the So improvement. you see quarterly

the look quarter is the is comp. our you the the fourth midpoint from year-to-date. operating quarter, a And at year-over-year if on for basis, a So guidance fourth rate toughest profitability standpoint for margin average

margin think guidance our That quarter is fourth year-to-date points with on XXX take XX.X% compares highlight year, bps opportunity from XX.X% operating rate margin to that's I'll is We're year-to-date. basis a year-over-year. this and basis, the XXX year-to-date. margins. up So And last to operating very consistent at we gross

getting particular, leverage So very out we're gross on focused we're a expanding margins, points gross of all of big OpEx. and of us been focus in has getting But this coming margin also and pandemic year, expansion on for we're which the XX disruption, margin. basis

with we're pleased the gross operating margin leverage. getting both and So making progress we're in

at shot another but question, your answer didn't take I if sorry I'll it. I'm So

Matthew O'Brien

or business? as side, a Is that cryo the I see that's of just inventory some even to And No, And Joe, a PFA, it kind just I'm be on then given to work to to on of guys perfect. start the moves the to business. then energy just point, to we've at down feeling at part products, should quickly bit of you your business, that we in the that that appreciate in really any -- you RF curious, the traditional the contribution questions. that. some of Craig's up all? weighing shift follow the was seen little guess, But electrophysiology really, kind PFA so dynamic on consider that continue I are

Joseph Dziedzic

to measurable seen think meaningful change. So is cryo believes shift or any everybody by haven't impacted I field going Obviously, out. time ablation be coming we over pulse

And strong continue so the kind in the the decline. other are applications, we see broader But we expectation cryo on factoring in and demand. assuming industry of to

footprint as customers positioned across on a significant electrophysiology and and our industry can the bring procedure during products to Our very the full to the continue participation all our vertical about incredibly basis. we're broad transition fast think broader to we market given we customers safe as well support marketplace. and integration, given this our be optimistic help And

the -- the integration, haven't and we in our any as and sure. seen vertical for you're tailwind hearing broader for industry. excited remain seeing we as and So broad electrophysiology, we beyond meaningful footprint see given a shift at And don't it what net look company

Matthew O'Brien

more? And sneak one in sorry, I can

Joseph Dziedzic

Yes.

Matthew O'Brien

I know The big adjustment terms or in release. 'XX investment there. R&D there cut of in to missed anything be the that of in an was quarter, why I was the that that? And if is about don't terms cautious 'XX in

Joseph Dziedzic

adjustments. Yes. No great a It's question.

cut your customers levels we is spend seeing given development quarters. off, to maybe R&D. levels -- Nominally, wrong of didn't customers, third first a What them So us discrete our quarter higher or more R&D. work for compared term for the we to other paying your do reimbursement there understanding higher in reimbursement our in to of of you're thought continue

by flat talk of think about is for R&D revenues. think line primarily doing couple you've it's very how is The cost in I heard our throughout activity to development our our last engineers the because quarter-to-quarter about The impacted years, us work. development the R&D year development revenues.

the more as particular, different they're XXX by milestones is development stay track. in milestones payroll or years, hit achieving paid what days we on in the year, work get revenues -- those year. quarter of on was on later our saw fourth we in the a connected and generate customers we a previous when programs. to customers in year and within When to pattern the we revenues So And our get

normalizing in been call year, this seeing that very that on on particular, think focused year. more we've or have quarter's much, commented highlighting here for much we saw quarters. out the the you're in a revenues kind We quarter been And than I what of third last revenues leveling I that is third for kind other actually more level-loaded the quarter, in that the actually work. And of work across

It's that's so R&D the because biggest reducing not being revenues, cost. of the down. expense of of driver because And

normal to And quarter as revenue quarter development year for have be fourth a strong average where we're now for fourth been a very more the might the so revenues. expecting compared years, quarter to prior

So We more highlighting actually important generated we're it for was costs. we I that revenues work because thanks doing. lower for any just that didn't the explained

Operator

comes question King. next Your the line from of Kirsten CL Instructions] Stewart [Operator with

Kristen Stewart

more whether level horizon a from if detail could if the I there's And associated perspective pre-COVID increase drove any going gross and was can achievement? what on about XX% just increase? kind with get the you time give that forward quarter, the then wondering of margins little sustainability that in how or you year-to-year just it bit a and should think back to not of we

Joseph Dziedzic

the year-to-date, get that. to we We But to and expect plan build don't basis Great. Thanks the back function we chain XX% It's for incurred points XXXX turnover. back supply recovering, on up question. have XX%. to stop of and the at disruption that year-over-year. to progress direct margins, absolutely made then the from expect getting some a of gross tremendous We XXX labor we really inefficiencies

really we're to our because in tools pre-pandemic, very lean the the There's at implementing total, Manufacturing Our on them still. supply engagement opportunity, labor reduction associates, turnover, at load -- that. and chain or which below we traction of material plants point. we're of good automation And driving focused the provide direct continued Excellence see labor labor managing job a the direct great. we're opportunities is team very, work whether or direct efficiency. significant very We're company Initiative scrap on lean has in reducing Kaizen on And doing this our stable and The direct with associates we getting overtime greater good with with done processes. events then we is were and how and it's where

driving see of to financial so small projects. hard those back the that to are been Many making. compound the expect can that that get work the really projects is time. now of And the for we them that management -- individual continue the to team the over teams doing. teams plant excited has starting progress and focusing benefits And team We're the on

that So gross on leverage operating sales sales. we while twice we operating profit absolutely expect to from growing expense. continuing and also the margins, get expect come growth is as our rate both objective, to would expanding The to fast continue as

last now, we're XXX that's And it's we'll and year on at so driving year-to-date good gross mix points forward. going the operating right a basis, from XX margin, and rate basis a basis keep OpEx. from points that level And margin XXX above

Kristen Stewart

about if on was an And you then could just M&A? I as your leverage give is coming us wondering thinking down, you're update how

Joseph Dziedzic

million a of range, to talked of end we've kind the by we end which a the $XXX capacity year, million our $XXX got on that rolling means we've of basis. low the to the about Well, at Yes. expect be annual

building premium, we'd and pipeline we that curate. acquisitions fair when we of Many robust choose ready that fair the their do, when a to work a paying to a they're would so business transact. get And pay we probably continue multiple. relationship, we rather ready, a did, they're don't to price, and understanding be we so multiple those we with targets have continuously we over years, If

So to the now within leverage our our over expect targeted range. that nice capacity inorganic thing the would and And and is continue have pipeline time. target continues team, that to be full executing curated by we strategy we Andrew his debt we

Operator

the line comes Oppenheimer. of Your from with Kalia final Suraj question

Suraj Kalia

for Diron, question question you start with one me you. let Diron, So you. Joe, for and out one

the I So in Helene, way. ask want X% a question the organic I because guess slightly to shortfall growth of Hurricane different

a customer your from would the would the a thinking contracts, throughout start quarter. how all Helene Maybe September of throughout orders concentration of last have can of into dictated it the be also? last reconcile should help a us the Given week long-term in I relatively you quarter visibility you customer we the in mean orders week quarter. tie about see and just relative steady cadence logic it

Diron Smith

a you of pattern, different Suraj. Sure, at mean Yes. couple order there's look our I that happen. variables when

order pattern about the smooth. We a week. relatively normal is is of One do them $XX million

timing you smooth. at the that, so relatively of most are look when And

happens the the that a quarter quarter. more some right near end bit specifically, talk Helene where little the it Hurricane have the of days when you few You have all you happened sterilization last in in of about bulk. And that

X days. that the right things about facility for And final were our So process up sterilization. was in when packed, already closing shipped, getting we of ended

that an primarily impact. it organic will be overall our Joe pressure percentage headwind work up. impact of earlier, re-ramped the So is have Again, through getting or outsized fourth caught kind for a about And mentioned bit you as up a X of cost be a it's a will that ultimately little quarter. in point cost growth to as we

Suraj Kalia

quarter. of hurricane the we thinking way the and at it? normal shouldn't think the end that towards So impact, besides about we about look fair concentration Is shouldn't -- cadence start a to

Diron Smith

from of think of last kind of ongoing not kind concentration. basis. correct. Yes, days Not couple should of you an Yes, a

Suraj Kalia

Joe, one in Any do you terms structural roll can you. of out the TriClip. give Remind new into all know should heart if color. there push of it about minimum in just we on about, appreciate I How any could heart. are you on color great. structural Or for tricuspid us would QX is the FY us, you adjustments be component Maybe volumes? as the we are 'XX? on I volumes? comment Joe, question guys I price based based think and products, talking

Joseph Dziedzic

based speak customer. upon maybe -- I more individual or any just respond pricing to tiered specific some can't some volume it program Raj. individual broadly, your We call I of question agreements fact, pricing. Thanks, levels. if in our to agreements But our Great. will, have

volume growth. with certain we benefit we As efficiencies in of thresholds, from fact, scale. do, And some that that we share synergies, drive our hit we so of additional customers both

Our to to have to earn participate there on help we our means sharing market. patients to is we which more we And enable in when grow in that, goal some the When and that, a and success, grow is that right. get programs. get in treat participate customers' them

in pricing launch. of training production, above you average line. kind a optimal line where at a in is -- then you've pricing comes you a the some full-scale the it new have into then would with be so more is are as that in move inefficiencies common manufacturing with because we product structure always very cost And the something got you function a product Yields of and with days It's full-scale of beginning launch, may the that a not that expect of introduce associates. have new And as ramp, kind early you customers. and a

of full-scale inefficiencies just succeed And that's the pricing so phase then of as kind there during ramp price objective production is helps really is the as a competitive in the with that customers our very that quickly a efficient matching dynamic. and end and to But possible, the market. that getting very and

Operator

session. question-and-answer the I This Andrew remarks. will concludes the closing turn call to for

Andrew Senn

Thank the Great. you, call for joining today. everyone,

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

Operator

We call. conference you today's concludes This thank joining. for

may You now disconnect.

Integer (ITGR) 24 Oct 242024 Q3 Earnings call transcript