Integer Holdings Corporation

hello and welcome to the integer holdings corporation third quarter 2024 earnings call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question and answer session if you would like to ask a question during this time simply press star 1 on your telephone keypad i would now like to turn the conference over to andrew sen senior vice president of strategy business development and investor relations you may begin

Good morning, everyone. Thank you for joining us, and welcome to Integer's third quarter 2024 earnings conference call. With me today are Joe Dziedzic, President and Chief Executive Officer, and Dyron Smith, Executive Vice President and Chief Financial Officer. As a reminder, the results and the data we discussed today reflect the consolidated results of Integer for the periods indicated. Except for cash flow measures, prior period amounts have been recast to exclude the electrochem business, consistent with US GAAP continuing operations presentation. Unless otherwise stated, all results and comparisons are presented on a continuing operations basis. In the appendix of today's presentation, we have provided supplemental information which will help you update your financial models to reflect the impact of discontinued operations. During our call, we will discuss some non-GAAP financial measures. For reconciliation of non-GAAP financial measures, please refer to the appendix of today's presentation, today's earnings press release, and the trending schedules, 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 Dyron will then review our adjusted financial results for the third quarter of 2024 and provide an update on full-year 2024 outlook. Joe will come back to provide his closing remarks, and then we'll open up the call for your questions. With that, I will turn the call over to Joe.

Thank you, Andrew, and congrats on the new role. And thank you to everyone for joining the call today. This morning, in addition to our strong earnings announcement, we also announced the promotion of payment CAILs into the newly created role of Chief Operating Officer for Integer. Payman joined Integer in 2018 as president of our cardio and vascular business. I'm also excited to announce that Andrew Senn will become the president of the cardio and vascular business, succeeding Payman. Andrew has been with Integer for the last 18 years in a variety of leadership roles, primarily within our cardio and vascular business. You know him currently as our investor relations, business development, and strategy leader for Integer. Both Payment and Andrew have been integral leaders in the development, execution, and success of our strategy. Payment and Andrew will transition into their new roles in the first quarter of 2025. In the third quarter, we delivered another quarter of strong year-over-year results. Sales grew 9%, and our adjusted operating income grew 17%. On a year-to-date basis, sales have grown 10%, and operating income is up 23%. or 2.3 times the rate of sales growth. We are narrowing our sales outlook to deliver 10 to 11% growth in 2024. We are confident in our ability to deliver strong sales growth, given our high visibility to customer demand, including ramping programs and high growth markets, and additional guidewire capacity in Ireland. In addition to this above market sales growth, we are driving margin expansion across the business. We are raising the midpoint of our full year profit and earnings per share outlook. Our manufacturing excellence initiatives are delivering operational improvements in direct labor turnover, direct material scrap reduction, lower overtime, and direct labor efficiency. Combined with our strong OpEx leverage, we are confident in our ability to meet our increased full year profit outlook. At the midpoint of our outlook, we expect 20% adjusted operating income growth, an increase of $4 million over our prior guidance, and nearly two times the rate of sales growth at midpoint. We are also raising the midpoint of our adjusted earnings per share outlook to 16% year-over-year growth, an increase of 7 cents per share at midpoint over our prior guidance. On September 30th, We announced our entry into a definitive agreement to divest ElectroChem. The divestiture of our non-medical segment makes Integer a pure play medical technology company. The transaction is expected to be EPS neutral and generate $50 million in cash to support execution of our strategy. The strong execution of our strategy by all Integer associates is enabling us to meet or exceed our strategic financial targets of growing sales at 200 basis points above the market, expanding adjusted operating income at two times the rate of sales growth, and maintaining a debt leverage between two and a half and three and a half times adjusted EBITDA. We believe our strategic financial objectives demonstrate differentiated results that will drive a valuation premium for our shareholders. I'll now turn the call over to Dyron.