Integer Holdings Corporation Reports First Quarter 2024 Results

Rhea-AI Summary

Integer Holdings reported strong financial results for the first quarter of 2024, with a 10% increase in sales reaching $415 million. GAAP net income rose by 57% to $21 million, and non-GAAP adjusted net income increased by 33% to $39 million. The company expects sales growth of 9% to 11% and adjusted operating income growth of 13% to 20% for 2024. Cardio & Vascular sales increased by 16%, Cardiac Rhythm Management & Neuromodulation sales rose by 8%, and Advanced Surgical, Orthopedics & Portable Medical sales increased by 4%. Electrochem sales decreased due to a return to normalized levels after a supply chain recovery. Integer aims to continue expanding margins throughout the year.

Positive

• Sales increased by 10% to $415 million in the first quarter of 2024.
• GAAP net income rose by 57% to $21 million.
• Non-GAAP adjusted net income increased by 33% to $39 million.
• The company expects 2024 sales growth of 9% to 11% and adjusted operating income growth of 13% to 20%.
• Cardio & Vascular sales increased by 16%, Cardiac Rhythm Management & Neuromodulation sales rose by 8%, and Advanced Surgical, Orthopedics & Portable Medical sales increased by 4%.
• Electrochem sales decreased due to a return to normalized levels after a supply chain recovery.
• Integer aims to continue expanding margins throughout the year.

Negative

• None.

Insights

Financial Analyst

The disclosed figures from Integer Holdings Corporation indicate a significant 10% increase in sales to $415 million, which is a solid indicator of robust top-line growth. This is notable given the often-volatile nature of the healthcare sector. The organic growth rate of 6% is particularly impressive, suggesting that the company's core business is expanding without relying solely on acquisitions.

The reported 57% surge in GAAP net income and a 33% rise in non-GAAP adjusted net income are prominent highlights, demonstrating operational efficiency and profitability. Integer's effective tax management, as suggested by the increase in their adjusted effective tax rate to 19.0%-21.0%, has possibly contributed to this net income growth. The financial health of Integer can also be gauged by the 22% increase in adjusted EBITDA, which serves as a proxy for operational cash flow.

However, investors should be cautious about the rise in total debt, which now stands at $1.141 billion. The leverage ratio of 3.4 times adjusted EBITDA may raise debt sustainability concerns, particularly if revenue growth cannot be maintained. The capital expenditure guidance suggests a decrease when compared to the previous year, which could mean that the company is focusing on cost control and possibly improving cash flow.

Medical Devices Industry Expert

The sector-specific performance of Integer Holdings Corporation underscores its strong foothold in the Cardio & Vascular space with a notable 16% growth. This segment is typically resilient to economic downturns, as medical necessity drives consistent demand. The growth in electrophysiology and structural heart products aligns with broader industry trends towards minimally invasive procedures, which tend to be growth areas within medical technology.

Moreover, the growth reported in Cardiac Rhythm Management & Neuromodulation is in line with the industry's expansion into digital health and personalized medicine. The emerging Neuromodulation market, in particular, suggests that Integer is well-positioned in a field that is benefiting from technological advancements.

However, the decline in Portable Medical sales could be indicative of either market saturation or strategic shifts within the company, as they execute a planned multi-year exit. This realignment might free up resources for more profitable ventures but requires careful monitoring to ensure it doesn't detract from overall growth.

~ Strong start to the year with 1Q24 financial results ~
~ Reiterate 2024 financial outlook ~

PLANO, Texas, April 25, 2024 (GLOBE NEWSWIRE) -- Integer Holdings Corporation (NYSE:ITGR) today announced results for the three months ended March 29, 2024.

First Quarter 2024 Highlights (compared to First Quarter 2023, except as noted)

• Sales increased 10% to $415 million, with organic growth of 6%.
• GAAP net income increased $7 million to $21 million, an increase of 57%. Non-GAAP adjusted net income increased $10 million to $39 million, an increase of 33%.
• GAAP operating income increased $5 million to $39 million, an increase of 15%. Non-GAAP adjusted operating income increased $13 million to $63 million, an increase of 26%.
• GAAP diluted EPS increased $0.20 per share to $0.59 per share. Non-GAAP adjusted EPS increased $0.27 per share to $1.14 per share.
• Adjusted EBITDA increased $15 million to $81 million, an increase of 22%.
• From the end of 2023, total debt increased $181 million to $1.141 billion and net total debt increased $162 million to $1.112 billion, primarily to finance the acquisition of Pulse Technologies, resulting in a leverage ratio of 3.4 times adjusted EBITDA as of March 29, 2024.

“Integer started the year strong with first quarter 2024 sales growing 10% versus a year ago and adjusted operating income growing 26%, more than two and a half times the rate of sales growth.” said Joseph Dziedzic, Integer’s president and CEO.   “We continue to expect 2024 sales growth of 9% to 11% and adjusted operating income growth of 13% to 20% in 2024, as we execute our strategy and expand margins throughout the year.”

Discussion of Product Line First Quarter 2024 Sales

• Cardio & Vascular sales increased 16% in the first quarter 2024 compared to the first quarter 2023, driven by continued strong demand across all markets, new product ramps in electrophysiology and structural heart, and the InNeuroCo and Pulse acquisitions.
• Cardiac Rhythm Management & Neuromodulation sales increased 8% in the first quarter 2024 compared to the first quarter 2023, with strong growth in emerging Neuromodulation customers with PMA (pre-market approval) products and strong demand in Cardiac Rhythm Management.
• Advanced Surgical, Orthopedics & Portable Medical sales increased 4% in the first quarter 2024 compared to the first quarter 2023, driven by growth of Advanced Surgical and Orthopedics, partially offset by decline in Portable Medical from execution of the planned multi-year exit announced in 2022.
• Electrochem sales decreased in the first quarter 2024 compared to the first quarter 2023, returning to a normalized run-rate after previously higher sales from the supply chain recovery.

2024 Outlook^(a)

(dollars in millions, except per share amounts)		GAAP				Non-GAAP(b)
		As Reported		Change from Prior Year		Adjusted		Change from Prior Year
Sales		$1,735 to $1,770		9% to 11%		N/A		N/A
Operating income		$202 to $220		20% to 31%		$272 to $290		13% to 20%
EBITDA		N/A		N/A		$355 to $375		15% to 21%
Net income		$115 to $130		27% to 43%		$171 to $185		8% to 18%
Diluted earnings per share		$3.30 to $3.71		23% to 38%		$5.01 to $5.43		7% to 16%
Cash flow from operating activities		$185 to $205		3% to 14%		N/A		N/A

^(a)  Except as described below, further reconciliations by line item to the closest corresponding GAAP financial measure for Adjusted operating income, Adjusted EBITDA, Adjusted net income and Adjusted Earnings per Share (“EPS”), included in our “2024 Outlook” above, and Adjusted total interest expense, Adjusted effective tax rate and Leverage ratio in “Supplemental Financial Information” below, are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and visibility of the charges excluded from these non-GAAP financial measures.

^(b)  Adjusted operating income for 2024 consists of GAAP operating income, excluding items such as amortization of intangible assets, restructuring and restructuring-related charges, and acquisition and integration costs, totaling approximately $71 million, pre-tax. Adjusted net income and Adjusted EPS for 2024 consist of GAAP net income and diluted EPS, excluding items such as amortization of intangible assets, restructuring and restructuring-related charges, acquisition and integration costs, and gain or loss on equity investments totaling approximately $71 million, pre-tax. The after-tax impact of these items is estimated to be approximately $56 million, or approximately $1.63 per diluted share. Adjusted EPS is calculated using Adjusted weighted average shares. Adjusted EBITDA is expected to consist of Adjusted net income, excluding items such as depreciation, interest, stock-based compensation and taxes totaling approximately $184 million to $190 million.

Please see “Notes Regarding Non-GAAP Financial Information” for additional information regarding our use of non-GAAP financial measures.

Supplemental Financial Information

(dollars in millions)	2024 Outlook		2023 Actual
Depreciation and amortization	$105 to $115		$97
Adjusted total interest expense(a)	$56 to $61		$49
Stock-based compensation	$24 to $27		$23
Restructuring, acquisition and other charges(b)	$15 to $20		$22
Adjusted effective tax rate(c)	19.0% to 21.0%		17.7%
Leverage ratio(d)	2.5x to 3.5x		3.1x
Capital expenditures(d)	$90 to $110		$120
Cash income tax payments	$43 to $47		$30

^(a)  Adjusted total interest expense refers to our expected full-year GAAP interest expense, expected to range from $56 million to $61 million for 2024, adjusted to remove the full-year impact of charges associated with the accelerated write-off of debt discounts and deferred issuance costs (loss on extinguishment of debt) included in GAAP interest expense, if any. Adjusted total interest expense of $48.9 million for 2023 consists of GAAP interest expense of $53.4 million less $4.5 million of losses from the extinguishment of debt.

^(b)  Restructuring, acquisition and other charges consists of restructuring and restructuring-related charges, acquisition and integration costs, other general expenses and incremental costs of complying with the new European Union medical device regulations.

^(c)  Adjusted effective tax rate refers to our full-year GAAP effective tax rate, expected to range from 19.0% to 21.0% for 2024, adjusted to reflect the full-year impact of the items that are excluded in providing adjusted net income and certain other identified items. Adjusted effective tax rate of 17.7% for 2023 consists of GAAP effective tax rate of 15.5% adjusted to reflect the impact on the income tax provision related to Non-GAAP adjustments.

^(d)  Please see “Notes Regarding Non-GAAP Financial Information” for additional information regarding leverage ratio. Capital expenditures is calculated as cash used to acquire property, plant, and equipment (PP&E) less cash proceeds from the sale of PP&E.

Summary Financial Results
(dollars in thousands, except per share data)

	Three Months Ended
	March 29, 2024			March 31, 2023			QTD Change
Operating income	$	39,277		$	34,166		15.0	%
Net income	$	20,508		$	13,065		57.0	%
Diluted EPS	$	0.59		$	0.39		51.3	%
EBITDA(a)	$	65,385		$	57,377		14.0	%
Adjusted EBITDA(a)	$	81,238		$	66,345		22.4	%
Adjusted operating income(a)	$	62,875		$	49,862		26.1	%
Adjusted net income(a)	$	38,667		$	29,060		33.1	%
Adjusted EPS(a)	$	1.14		$	0.87		31.0	%

^(a)   EBITDA, Adjusted EBITDA, Adjusted operating income, Adjusted net income, and Adjusted EPS are non-GAAP financial measures. Please see “Notes Regarding Non-GAAP Financial Information” for additional information regarding our use of non-GAAP financial measures. Refer to Tables A, B and C at the end of this release for reconciliations of adjusted amounts to the closest corresponding GAAP financial measures.

Summary Product Line Results
(dollars in thousands)

	Three Months Ended
	March 29, 2024			March 31, 2023			QTD Change			Organic Change(a)
Medical Sales
Cardio & Vascular	$	221,836		$	191,203		16.0	%		9.3	%
Cardiac Rhythm Management & Neuromodulation		156,257			145,139		7.7	%		6.9	%
Advanced Surgical, Orthopedics & Portable Medical		29,121			27,924		4.3	%		21.4	%
Total Medical Sales		407,214			364,266		11.8	%		8.6	%
Non-Medical Sales		7,591			14,519		(47.7	)%		(47.7	)%
Total Sales	$	414,805		$	378,785		9.5	%		6.4	%

^(a)  Organic sales change is a non-GAAP financial measure. Please see “Notes Regarding Non-GAAP Financial Information” for additional information regarding our use of non-GAAP financial measures and refer to Table D at the end of this release for a reconciliation of these amounts.

Conference Call Information
The Company will host a conference call on Thursday, April 25, 2024, at 8 a.m. CT / 9 a.m. ET to discuss these results. The scheduled conference call will be webcast live and is accessible through our website at investor.integer.net or by dialing (888) 330-3567 (U.S.) or (646) 960-0842 (outside U.S.) and the conference ID is 9252310. The call will be archived on the Company’s website. An earnings call slide presentation containing supplemental information about the Company’s results will be posted to our website at investor.integer.net prior to the conference call and will be referenced during the conference call.

From time to time, the Company posts information that may be of interest to investors on its website at investor.integer.net. To automatically receive Integer financial news by email, please visit investor.integer.net and subscribe to email alerts.

About Integer^®
Integer Holdings Corporation (NYSE: ITGR) is one of the largest medical device contract development and manufacturing organizations (CDMO) in the world, serving the cardiac rhythm management, neuromodulation, and cardio and vascular markets. As a strategic partner of choice to medical device companies and OEMs, the Company is committed to enhancing the lives of patients worldwide by providing innovative, high-quality products and solutions. The Company's brands include Greatbatch Medical^®, Lake Region Medical^® and Electrochem^®. Additional information is available at www.integer.net.

Investor Relations:
Andrew Senn
763.951.8312
andrew.senn@integer.net

Notes Regarding Non-GAAP Financial Information
In addition to our results reported in accordance with generally accepted accounting principles in the United States of America (“GAAP”), we provide adjusted net income, adjusted EPS, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted operating income, and organic sales change.

Adjusted net income and adjusted EPS consist of GAAP net income and diluted EPS, respectively, adjusted for the following to the extent occurring during the period: (i) amortization of intangible assets, (ii) restructuring and restructuring-related charges; (iii) acquisition and integration related costs; (iv) other general expenses; (v) (gain) loss on equity investments; (vi) extinguishment of debt charges; (vii) European Union medical device regulation incremental charges; (viii) inventory step-up amortization; (ix) unusual, or infrequently occurring items; (x) the income tax provision (benefit) related to these adjustments and (xi) certain tax items that are outside the normal tax provision for the period. Adjusted EPS is calculated by dividing adjusted net income by Adjusted weighted average shares.

The weighted average shares used to calculate diluted EPS in accordance with GAAP includes dilution, when applicable, resulting from the potential conversion of our 2.125% Convertible Senior Notes due 2028 (the “2028 Convertible Notes”). In connection with the issuance of the 2028 Convertible Notes, we entered into capped call contracts which are expected to reduce the potential dilution on our common stock in connection with any conversion of the 2028 Convertible Notes, subject to a cap. Adjusted weighted average shares consists of GAAP weighted average shares used to calculate diluted EPS, excluding, when applicable, dilution resulting from the potential conversion of our 2028 Convertible Notes expected to be offset by the capped call contracts.

EBITDA is calculated by adding back interest expense, provision for income taxes, depreciation expense, and amortization expense from intangible assets and financing leases, to net income, which is the most directly comparable GAAP financial measure. Adjusted EBITDA consists of EBITDA plus adding back stock-based compensation and the same adjustments as listed above except for items (i), (vi), (x) and (xi). Adjusted operating income consists of operating income adjusted for the same items listed above except for items (v), (vi), (x) and (xi).

Organic sales change is reported sales growth adjusted to remove the impact of foreign currency, the contribution of acquisitions and the strategic exit of the Portable Medical market. To calculate the impact of foreign currency on sales growth rates, we convert any sale made in a foreign currency by converting current period sales into prior period sales using the exchange rate in effect at that time and then compare the two, negating any effect foreign currency had on our transactional revenue. For contribution of acquisitions, we exclude the impact on the growth rate attributable to the contribution of acquisitions in all periods where there were no comparable sales. For the strategic exit of the Portable Medical market, we exclude the impact on the growth rate attributable to Portable Medical sales for all periods presented.

We believe that the presentation of adjusted net income, adjusted EPS, EBITDA, adjusted EBITDA, adjusted operating income, and organic sales change, provides important supplemental information to management and investors seeking to understand the financial and business trends relating to our financial condition and results of operations. In addition to the performance measures identified above, we believe that net total debt and leverage ratio provide meaningful measures of liquidity and a useful basis for assessing our ability to fund our activities, including the financing of acquisitions and debt repayments. Net total debt is calculated as total principal amount of debt outstanding less cash and cash equivalents. We calculate leverage ratio as net total debt divided by adjusted EBITDA for the trailing 4 quarters.

Forward-Looking Statements
Some of the statements contained in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to: our 2024 outlook including future sales, expenses, and profitability; our ability to execute our business model and our business strategy; having available sufficient cash and borrowing capacity to meet working capital, debt service and capital expenditure requirements for the next twelve months; projected capital spending; and other events, conditions or developments that will or may occur in the future. You can identify forward-looking statements by terminology such as “outlook,” “projected,” “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “project,” or “continue” or variations or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those stated or implied by these forward-looking statements. In evaluating these statements and our prospects, you should carefully consider the factors set forth below.

Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the results expressed or implied by our forward-looking statements or that may affect our future results, some of these factors and other risks and uncertainties that arise from time to time are described in Item 1A, “Risk Factors” of our Annual Report on Form 10-K and in our other periodic filings with the SEC and include the following:

• operational risks, such as our dependence upon a limited number of customers; pricing pressures and contractual pricing restraints we face from customers; our reliance on third-party suppliers for raw materials, key products and subcomponents; interruptions in our manufacturing operations; our ability to attract, train and retain a sufficient number of qualified associates to maintain and grow our business; the potential for harm to our reputation and competitive advantage caused by quality problems related to our products; our dependence upon our information technology systems and our ability to prevent cyber-attacks and other failures; global climate change and the emphasis on Environmental, Social and Governance matters by various stakeholders; our dependence upon our senior management team and key technical personnel; our energy market revenues’ dependence on conditions in the historically volatile oil and natural gas industries; and consolidation in the healthcare industry resulting in greater competition;
• strategic risks, such as the intense competition we face and our ability to successfully market our products; our ability to respond to changes in technology; our ability to develop new products and expand into new geographic and product markets; and our ability to successfully identify, make and integrate acquisitions to expand and develop our business in accordance with expectations;
• financial and indebtedness risks, such as our ability to accurately forecast future performance based on operating results that often fluctuate; our significant amount of outstanding indebtedness and our ability to remain in compliance with financial and other covenants under the credit agreement governing our Senior Secured Credit Facilities; economic and credit market uncertainties that could interrupt our access to capital markets, borrowings or financial transactions; the conditional conversion feature of the 2028 Convertible Notes adversely impacting our liquidity, the conversion of our 2028 Convertible Notes, if it were to occur, diluting ownership interests of existing holders of our common stock; the counterparty risk associated with our capped call transaction; the counter financial and market risks related to our international operations and sales; our complex international tax profile; and our ability to realize the full value of our intangible assets;
• legal and compliance risks, such as regulatory issues resulting from product complaints, recalls or regulatory audits; the potential of becoming subject to product liability or intellectual property claims; our ability to protect our intellectual property and proprietary rights; our ability to comply with customer-driven policies and third-party standards or certification requirements; our ability to obtain and/or retain necessary licenses from third parties for new technologies; our ability and the cost to comply with environmental regulations; legal and regulatory risks from our international operations; the fact that the healthcare industry is highly regulated and subject to various regulatory changes; and our business being indirectly subject to healthcare industry cost containment measures that could result in reduced sales of our products; and
• other risks and uncertainties that arise from time to time.
  

Except as may be required by law, we assume no obligation to update forward-looking statements in this press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.

Condensed Consolidated Balance Sheets - Unaudited
(in thousands)
	March 29, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	42,156		$	23,674
Accounts receivable, net		237,154			238,277
Inventories		262,869			239,716
Refundable income taxes		2,848			1,998
Contract assets		90,873			85,871
Prepaid expenses and other current assets		32,673			28,132
Total current assets		668,573			617,668
Property, plant and equipment, net		448,712			407,954
Goodwill		1,043,876			1,011,007
Other intangible assets, net		828,854			783,146
Deferred income taxes		7,026			7,001
Operating lease assets		83,243			81,632
Financing lease assets		12,630			11,828
Other long-term assets		23,095			22,417
Total assets	$	3,116,009		$	2,942,653
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—		$	—
Accounts payable		116,220			120,293
Income taxes payable		5,963			3,896
Operating lease liabilities		8,550			8,692
Accrued expenses and other current liabilities		70,696			88,088
Total current liabilities		201,429			220,969
Long-term debt		1,140,724			959,925
Deferred income taxes		145,199			145,625
Operating lease liabilities		74,294			72,339
Financing lease liabilities		10,928			10,388
Other long-term liabilities		18,424			14,365
Total liabilities		1,590,998			1,423,611
Stockholders’ equity:
Common stock		34			33
Additional paid-in capital		725,247			727,435
Retained earnings		791,859			771,351
Accumulated other comprehensive income		7,871			20,223
Total stockholders’ equity		1,525,011			1,519,042
Total liabilities and stockholders’ equity	$	3,116,009		$	2,942,653

Condensed Consolidated Statements of Operations - Unaudited
(in thousands, except per share data)
	Three Months Ended
	March 29, 2024				March 31, 2023
Sales	$	414,805			$	378,785
Cost of sales (COS)		304,965				282,112
Gross profit		109,840				96,673
Operating expenses:
Selling, general and administrative (SG&A)		46,929				41,886
Research, development and engineering (RD&E)		15,753				19,092
Restructuring and other charges (R&O)		7,881				1,529
Total operating expenses		70,563				62,507
Operating income		39,277				34,166
Interest expense		14,671				17,254
(Gain) loss on equity investments		(1,136	)			155
Other loss, net		1,007				760
Income before taxes		24,735				15,997
Provision for income taxes		4,227				2,932
Net income	$	20,508			$	13,065
Earnings per share:
Basic	$	0.61			$	0.39
Diluted	$	0.59			$	0.39
Weighted average shares outstanding:
Basic		33,478				33,258
Diluted		34,993				33,575

Condensed Consolidated Statements of Cash Flows - Unaudited
(in thousands)
	Three Months Ended
	March 29, 2024				March 31, 2023
Cash flows from operating activities:
Net income	$	20,508			$	13,065
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		26,185				24,126
Debt related charges included in interest expense		931				5,149
Inventory step-up amortization		1,056				—
Stock-based compensation		6,848				6,102
Non-cash lease expense		2,295				2,741
Non-cash (gain) loss on equity investments		(1,136	)			155
Contingent consideration fair value adjustment		—				(265	)
Other non-cash (gains) losses		805				(1,417	)
Deferred income taxes		—				(5	)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		7,667				(24,206	)
Inventories		(17,271	)			(17,016	)
Prepaid expenses and other assets		(4,208	)			1,657
Contract assets		(5,255	)			(8,819	)
Accounts payable		2,669				12,877
Accrued expenses and other liabilities		(19,026	)			(7,773	)
Income taxes payable		1,171				(183	)
Net cash provided by operating activities		23,239				6,188
Cash flows from investing activities:
Acquisition of property, plant and equipment		(29,072	)			(24,694	)
Acquisitions, net		(139,126	)			—
Net cash used in investing activities		(168,198	)			(24,694	)
Cash flows from financing activities:
Principal payments of term loans		—				(390,938	)
Proceeds from issuance of convertible notes, net of discount		—				486,250
Proceeds from revolving credit facility		192,000				208,689
Payments of revolving credit facility		(12,000	)			(232,500	)
Purchase of capped calls		—				(35,000	)
Payment of debt issuance costs		—				(1,055	)
Proceeds from the exercise of stock options		313				555
Tax withholdings related to net share settlements of restricted stock unit awards		(9,348	)			(2,610	)
Principal payments on finance leases		(8,386	)			(275	)
Other financing activities		715				—
Net cash provided by financing activities		163,294				33,116
Effect of foreign currency exchange rates on cash and cash equivalents		147				1,722
Net increase in cash and cash equivalents		18,482				16,332
Cash and cash equivalents, beginning of period		23,674				24,272
Cash and cash equivalents, end of period	$	42,156			$	40,604

Table A: Net Income and Diluted EPS Reconciliations
(in thousands, except per share amounts)

	Three Months Ended
	March 29, 2024												March 31, 2023
	Pre-Tax				Net of Tax				Per Diluted Share(a)				Pre-Tax			Net of Tax			Per Diluted Share(a)
Net income (GAAP)	$	24,735			$	20,508			$	0.59			$	15,997		$	13,065		$	0.39
Adjustments(b):
Amortization of intangible assets		13,437				10,813				0.32				12,924			10,216			0.30
Restructuring and restructuring-related charges(c)		1,905				1,601				0.05				1,805			1,396			0.04
Acquisition and integration costs(d)		6,335				5,024				0.15				382			270			0.01
Other general expenses(e)		118				88				—				83			59			—
(Gain) loss on equity investments(f)		(1,136	)			(897	)			(0.03	)			155			123			—
Loss on extinguishment of debt(g)		—				—				—				4,393			3,470			0.10
Medical device regulations(h)		275				217				0.01				502			395			0.01
Other adjustments(i)		472				373				0.01				—			—			—
Inventory step-up amortization (COS)(j)		1,056				834				0.02				—			—			—
Tax adjustments(k)		—				106				—				—			66			—
Adjusted net income (non-GAAP)	$	47,197			$	38,667				1.14			$	36,241		$	29,060			0.87
Weighted average shares for diluted EPS (GAAP)						34,993											33,575
Less: 2028 Convertible Notes capped call contract impact						(1,028	)										—
Adjusted weighted average shares (non-GAAP)						33,965											33,575

^(a)  Net income (GAAP) per diluted share amounts are calculated in accordance with GAAP using Weighted average shares for diluted EPS. The per share amounts for the Adjustments and Adjusted net income are calculated using Adjusted weighted average shares.

^(b)  The difference between pre-tax and net of tax amounts is the estimated tax impact related to the respective adjustment. Net of tax amounts are computed using a 21% U.S. tax rate, and the statutory tax rates applicable in foreign tax jurisdictions, as adjusted for the existence of net operating losses (“NOLs”). Expenses that are not deductible for tax purposes (i.e. permanent tax differences) are added back at 100%.

^(c)  We initiate discrete restructuring programs primarily to realign resources to better serve our customers and markets, improve operational efficiency and capabilities, and lower operating costs or improve profitability. Depending on the program, restructuring charges may include termination benefits, contract termination, facility closure and other exit and disposal costs. Restructuring-related expenses are directly related to the program and may include retention bonuses, accelerated depreciation, consulting expense and costs to transfer manufacturing operations among our facilities.

^(d)  Acquisition and integration costs are incremental costs that are directly related to a business or asset acquisition. These costs may include, among other things, professional, consulting and other fees, system integration costs, and fair value adjustments relating to contingent consideration.

^(e)  Other general expenses are discrete transactions occurring sporadically and affect period-over-period comparisons. The expenses for the 2024 and 2023 periods include gains and losses in connection with the disposal of property, plant and equipment.

^(f)  Amounts reflect our share of equity method investee (gains) losses including unrealized appreciation/depreciation of the underlying interests of the investee.

^(g)  Loss on extinguishment of debt consists of accelerated write-offs of unamortized deferred debt issuance costs and discounts, which are included in interest expense. The 2023 amount represents a write-off of unamortized deferred debt issuance costs and discounts in connection with the amendments to the credit agreement governing our credit facilities, prepayments of portions of the Term Loan A Facility, and repayment in full of our Term Loan B Facility.

^(h)  The charges represent incremental costs of complying with the new European Union medical device regulations for previously registered products and primarily include charges for contractors supporting the project and other direct third-party expenses.

⁽ⁱ⁾  Amount primarily relates to costs associated certain formal strategic projects. Strategic projects primarily involve system reconfiguration to support our manufacturing excellence operational strategic imperative and investments in certain technology and platform development to align our capabilities to meet customer needs.

^(j)  The accounting associated with our acquisitions require us to record inventory at its fair value, which is sometimes greater than the previous book value of inventory. The increase in inventory value is amortized to cost of sales over the period that the related inventory is sold. We exclude inventory step-up amortization from our non-GAAP financial measures because it is a non-cash expense that we do not believe is indicative of our ongoing operating results.

^(k)  Tax adjustments predominately relate to acquired foreign tax credits, including utilization, changes to uncertain tax benefits and associated interest.

Please see “Notes Regarding Non-GAAP Financial Information” for additional information regarding our use of non-GAAP financial measures.

Table B: Adjusted Operating Income Reconciliations
(in thousands)

	Three Months Ended
	March 29, 2024			March 31, 2023
Operating income (GAAP)	$	39,277		$	34,166
Adjustments:
Amortization of intangible assets		13,437			12,924
Restructuring and restructuring-related charges		1,905			1,805
Acquisition and integration costs		6,335			382
Other general expenses		118			83
Medical device regulations		275			502
Other adjustments		472			—
Inventory step-up amortization		1,056			—
Adjusted operating income (non-GAAP)	$	62,875		$	49,862

Table C: EBITDA Reconciliations
(in thousands)

	Three Months Ended
	March 29, 2024				March 31, 2023
Net income (GAAP)	$	20,508			$	13,065
Interest expense		14,671				17,254
Provision for income taxes		4,227				2,932
Depreciation(a)		12,036				10,877
Amortization of intangible assets and financing leases		13,943				13,249
EBITDA (non-GAAP)		65,385				57,377
Stock-based compensation(a)		6,828				6,041
Restructuring and restructuring-related charges		1,905				1,805
Acquisition and integration costs		6,335				382
Other general expenses		118				83
(Gain) loss on equity investments		(1,136	)			155
Medical device regulations		275				502
Other adjustments		472				—
Inventory step-up amortization		1,056				—
Adjusted EBITDA (non-GAAP)	$	81,238			$	66,345

^(a) Excludes amounts included in Restructuring and restructuring-related charges.

Table D: Organic Sales Change Reconciliation (% Change)

	GAAP Reported Growth			Impact of Foreign Currency(a)			Impact of Strategic Exits and Acquisitions(a)			Non-GAAP Organic Change
QTD Change (1Q 2024 vs. 1Q 2023)
Medical Sales
Cardio & Vascular	16.0%			0.1%			6.6%			9.3%
Cardiac Rhythm Management & Neuromodulation	7.7%			—%			0.8%			6.9%
Advanced Surgical, Orthopedics & Portable Medical	4.3%			—%			(17.1)%			21.4%
Total Medical Sales	11.8%			—%			3.2%			8.6%
Non-Medical Sales	(47.7)%			—%			—%			(47.7)%
Total Sales	9.5%			—%			3.1%			6.4%

^(a)  Sales growth has been adjusted to exclude the impact of foreign currency exchange rate fluctuations and acquisitions and strategic exits.

Table E: Net Total Debt Reconciliation
(in thousands)

	March 29, 2024			December 31, 2023
Total debt	$	1,140,724		$	959,925
Add: Debt discounts and deferred issuance costs included in Total debt		13,276			14,075
Total principal amount of debt outstanding		1,154,000			974,000
LESS: Cash and cash equivalents		42,156			23,674
Net Total Debt (Non-GAAP)	$	1,111,844		$	950,326

FAQ

What were Integer Holdings 's sales in the first quarter of 2024?

Integer Holdings reported sales of $415 million in the first quarter of 2024.

By how much did GAAP net income increase in the first quarter of 2024?

GAAP net income increased by 57% to $21 million in the first quarter of 2024 for Integer Holdings

What is the expected sales growth for Integer Holdings in 2024?

Integer Holdings expects sales growth of 9% to 11% in 2024.

How did Cardio & Vascular sales perform in the first quarter of 2024 for Integer Holdings ?

Cardio & Vascular sales increased by 16% in the first quarter of 2024 for Integer Holdings

Why did Electrochem sales decrease in the first quarter of 2024 for Integer Holdings ?

Electrochem sales decreased in the first quarter of 2024 as they returned to a normalized run-rate after previously higher sales from the supply chain recovery.