Integer Holdings Corporation

Good day and thank you for standing by. Welcome to the Integer Holdings Corporation first quarter 2021 earnings call. At this time, all participants are on the mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on 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 hand the conference over to your speaker today, Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead.

Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. Please go ahead. Anthony Borowitz, Senior Vice President of Investor Relations. Thank you. 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 to 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 filings 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, and Jason will review our financial results for the first quarter and provide an update on our full year guidance. Joe will come back on to provide his closing remarks, and then we will open up the call for your questions. With that, I'll turn the call over to Joe.

Thank you, Tony, and thanks to everyone for joining the call today. We are off to a strong start in 2021 because of our dedicated associates who have continued to deliver for our customers throughout the pandemic. During our last earnings call, I shared with you how Integer has managed through the pandemic by taking care of our associates while remaining focused on executing our strategy. We have continued to invest in our strategy by adding capabilities, capacity, and talented associates to lead our product line and operational strategy. We have continued to strengthen our high performance culture, and it is because of the strength of our associates that I have confidence in our ability to deliver for all integer stakeholders. We delivered strong sequential improvement in our first quarter sales and profit and at the high end of our guidance. As expected, our reported sales and profit were down from the first quarter of 2020 because COVID did not impact us until the second quarter of 2020. We continue to generate strong cash flow and reduce net debt by another $25 million. The strength of our first quarter supports the increase in our full year guidance. We are often asked by investors, when will you get back to pre-COVID levels? We developed this chart in an attempt to quantifiably answer that question with acknowledgement that this is not a perfect metric, but we believe it is a representative and useful analytic. We selected Boston Scientific and Abbott as the most representative proxy for the total industry to compare to Integer. Integer serves very similar end markets as both OEMs, with the exception of Abbott, where we removed their publicly reported diabetes care sales from their reported medical devices segment sales. We believe the best comparison for pre-COVID is the fourth quarter of 2019, because we believe there was very little or no COVID impact in that quarter. Just to be clear, we are using sales that were publicly reported to investors in the SEC. We graphed the reported sales from the first quarter of 2020 to the first quarter of 2021 as a percentage of the fourth quarter 2019 to see how the sales in each quarter compared to the pre-COVID quarter. We believe this is a representative measure of the decline and recovery from the impact of COVID on medical device sales in the industry. There are two takeaways from this graph that are worth highlighting. The first is to answer the question. In our view, the industry is approximately 5% to 7% below pre-COVID levels based on both Boston Scientific and Abbott's first quarter sales compared to the fourth quarter of 2019. Integer is at 11%. But five percentage points of the decline is explained by our non-medical segment sales decline driven by the energy markets and fewer days in our first quarter of 2021 compared to the fourth quarter of 2019. This puts Integer at about the same level as Boston Scientific and Abbott. Again, this is not a perfect metric as there are other variables such as currency and acquisitions and dispositions that could cause variation to the fourth quarter of 2019. we believe this is a representative measure there is another takeaway that i would highlight which is how the pandemic impacted the industry compared to integer the change in sales for boston scientific and abbott moved very similarly to each other over the last four quarters but integers did not follow the same pattern we've explained this dynamic to investors over the last four quarters but we think this graphic makes it even easier to see that our first quarter of 2020 was not impacted by COVID as our sales were 101% of the fourth quarter 2019, whereas the industry was at about 88%. Our second quarter 2020 sales declined, but not as much as the industry because our customers did not reduce their orders with us as much as their sales declined. In the third quarter, Boston Scientific, Abbott, and most other OEMs in the industry saw a rapid rebound to about 90% of pre-COVID levels and have stayed at that level into the first quarter of 2021. Integer sales were about the same in the second and third quarter of 2020, and in the fourth quarter started recovering. This pattern for integer is what we predicted at the beginning of the pandemic and is playing out largely as we expected. Again, this is not a perfect metric, but we think it frames that the industry is approximately 5% to 7% below pre-COVID levels, and that Integer has also recovered to about the same level as the industry. This slide is a modified version of a slide that we've shared with investors the last four quarters to highlight the impact of COVID on Integer relative to the industry. The bars in the graph on the top half of the slide represent Integer's reported sales. which highlights that our first quarter of 2020 sales were not impacted by COVID. The bottom of the pandemic from a sales perspective was both the second and third quarters for Integer. Our sales recovery started in the fourth quarter and has continued into the first quarter of 2021. And as I highlighted on the prior slide, we believe we're back to about the same level as the industry relative to the pre-COVID sales levels. Looking forward, We expect to continue growing our sales as medical procedure volumes fully recover and then resume to at least mid-single digit pre-COVID growth rates. I'll now turn the call over to Jason to cover our financial results.