Integer Holdings Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Integer Holdings Corporation Q3 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 in your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to turn the call over to Anthony Berwitz, Senior Vice President of Strategy, Corporate Development and Investor Relations. Please go ahead. Anthony Berwitz, Senior Vice President of Strategy, Corporate Development and Investor Relations.

Good morning, everyone. Thank you for joining us and welcome to Integer's third quarter 2020 earnings conference call. With me today are Joe Disick, President and Chief Executive Officer, and Jason Garland, Executive Vice President and Chief Financial Officer. As a reminder, the results and data we discussed today reflect the consolidated results of integer for the periods indicated. During our call, we will discuss some non-GAAP measures. For reconciliation of these non-GAAP measures, please see the appendix of today's presentation and the notes of the financial statements in today's earnings release, which are available on our website at integer.net. Please note that today's presentation includes forward-looking statements. Please refer to the company's SEC filing for discussion of the risk factors that could cause our actual results to differ materially. On today's call, Joe will provide his opening comments on the third quarter. Jason will then review our financial results and provide an update on the fourth quarter outlook. Joe will come back on to discuss the impacts of COVID on integer sales and provide a review of our emerging customer portfolio. He will then provide his closing comments, and we'll take your questions. At this point, I'll turn the call over to Joe for his comments.

Thank you, Tony, and thanks to everyone for joining the call today. Throughout the pandemic, we have remained focused on executing our strategy, and one of the best examples of this is our Manufacturing Excellence Strategic Comparative, which has positioned us incredibly well to be able to navigate the uncertainty that COVID created. The agility the manufacturing team has displayed by being able to adjust to the fluctuating demand throughout our manufacturing footprint has been impressive, and our associates continue to deliver for our customers and the patients they serve. Our associates that come into our manufacturing plants every day during this pandemic to deliver the products patients need are inspiring and enabling us to realize our vision of enhancing patients' lives. We've also been very focused on protecting the investments in our strategy, whether it's by adding more R and D resources to continue developing new products for our customers or adding additional capabilities that allow us to penetrate faster growing segments. We continue to add strategic talent to the organization that bring with them the skills necessary for us to accelerate our top line growth. From a third quarter perspective, What we communicated on our earnings call back at the end of July is fundamentally what we delivered. We said that our sales would be down slightly from the second quarter, and they were, $4 million, right in line with what we expected internally. We also expected and communicated that the margin rate would improve in the third quarter versus the second quarter, even though sales were down slightly, and that is exactly what happened. We expanded margins by 150 basis points versus the second quarter. We have remained incredibly focused on working capital and driving cash flow. Despite the suppressed sales due to the pandemic, we were still able to reduce net total debt by $23 million within the quarter. The team has done a great job of reducing inventory levels and managing overall working capital. We are providing a high level outlook for the fourth quarter because we believe we have sufficient visibility and stability in our near term sales to do so. We expect the fourth quarter to be the start of our sales recovery from the pandemic. Our margin rate improved in the third quarter versus the second quarter, and we expect the fourth quarter to continue this trend. We fully expect that as the volume recovers, our profit margin rate will recover. and that is evident in our fourth quarter outlook. We have already made a significant debt reduction during the fourth quarter, as we recently paid down about 4% of our net debt with the cash we received from our successful patent lawsuit. Through the middle of October this year, we have reduced our net total debt by over $90 million, despite the significant sales reduction from the pandemic. Our focus on cash flow and debt reduction continues to deliver results. I'll now turn it over to Jason to provide an update on the financials.