Q1 2022 Integer Holdings Corp Earnings Call
Again, my name is Savannah, and I will be your conference operator for today.
I would like to welcome everyone to the integer Holdings Corporation first quarter 'twenty.
Right.
All lines have been placed on mute to prevent any background noise and after the Speakers' remarks, there'll be a question and answer session. If you would like to ask a question during that time. Please press star one.
I would like to withdraw your question. Please press star one again.
And I would now like to turn the conference over to Tony Bartlett. Please go ahead.
Good morning, everyone. Thank you for joining us and welcome to <unk> first quarter 2022 earnings Conference call with me today are Joe <unk>, President and Chief Executive Officer, and Jason Garland, Executive Vice President and Chief Financial Officer.
As a reminder, the results and data we discuss today reflect the consolidated results of integer for the periods indicated.
During our call we will discuss some non-GAAP measures for a reconciliation of these non-GAAP 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 <unk> Dot net please.
Please note that today's presentation includes forward looking statements. Please refer to the company's SEC filings for a discussion of the risk factors that could cause our actual results to differ materially.
On today's call Joe will provide his opening comments in more detail and the recently announced acquisition of air and biomedical Dave.
Jason will then review our adjusted financial results for the first quarter 2020 to provide additional insight on our product line performance and review our full year 2022 guidance.
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 Tony.
Thanks to everyone for joining the call today, especially the integer associates, who have continued to deliver for our customers. During these dynamic times, while also remaining focused on executing our strategy.
Our first quarter results were consistent with our expectations. When we provided full year guidance on our last earnings call.
We told investors that we expected our first quarter sales to be about the same as the fourth quarter of last year, they were within $2 million of that guidance.
We did not provide profit guidance for the first quarter, but I can share that we delivered to the exact adjusted operating income we were projecting which was $39 million.
We've shared on prior calls that we have good visibility to the demand from customers for the current quarter and we believe we continue to demonstrate that with our guidance.
The first quarter sales were about flat organically on a year over year basis, largely due to the high January COVID-19 related absenteeism and supply chain constraints.
This was incorporated into our guidance for both the first quarter and the full year.
Our adjusted operating income declined 16% year over year as we grew our direct labor associates, 10% and invested in training and over time to ramp up to meet the growing demand from our customers.
We also increased inventory in the first quarter by about $20 million to support our sales growth for the remainder of the year.
We feel our staffing and inventory levels are well positioned to deliver approximately double digit sales growth in the second quarter and the rest of the year, while also improving gross margins through the remainder of the year.
We are excited that <unk> biomedical joined integer earlier this month and we're confident that together, we can deliver even more innovation for our customers.
We updated our 2022 financial guidance to include Aaron's sales and profit.
Our two recent acquisitions have added differentiated capabilities in high growth markets, while also adding approximately $90 million of annualized sales at accretive growth rates I'm excited to share more about Aaron biomedical on the next few slides.
On April six we acquired interim biomedical and industry leader in bio material technologies used in cardiovascular implants. We are excited to welcome their 130 associates to integer and add Aaron's proprietary technologies to <unk> portfolio of innovative solutions.
This acquisition is accretive to sales growth and gross margin and fits perfectly with our strategy to offer end to end differentiated capabilities in high growth markets.
Erin was a privately owned medical device Outsourcer located in the medical device hub of Galway, Ireland and has been serving leading medical device companies for over 20 years.
Their focus has been on developing highly differentiated capabilities that are designed into customers implanted devices. Aaron is a fast growing business with $17 million of sales in 2021, and a strong development pipeline of new products, which gives us confidence in our projection they will grow 20% 30 person.
<unk> annually over at least the next few years.
Aaron's differentiated capabilities and proprietary medical textiles high precision bio material coverings, and coatings and advanced braking solutions combined with integers broad capabilities will expand our offering to provide end to end solutions for access devices delivery systems and implants.
Complex medical devices.
We believe this combination creates the most comprehensive outsourced offering in our targeted high growth end markets.
With <unk> strong sales pipeline the acquisition deal model includes limited commercial synergies, but we are confident our combined offering will deliver upside to the model.
We paid 120 million euros with an earn out of up to another 10 million euros for meeting 2022 sales targets.
Our leverage will rise above our target range for one quarter, but we expect to be back within that range by the third quarter of this year.
From a return perspective, we expect <unk> to be EPS accretive in 2023, and our return on invested capital for the acquisition to be greater than our weighted average cost of capital by year five.
During our last earnings call, we highlighted how we serve our customers across the entire product lifecycle for each of the markets. We serve from the emerging phase through growth and into the maturity phase.
We also shared how we are focusing our investments on the procedures that are receiving the most innovation funding by our customers and should therefore generate accelerated growth.
The green circles on this chart highlight the markets, where <unk> differentiated capabilities, our focus and where we see significant opportunity to accelerate our growth together.
On the right side of the slide we have highlighted more detail than usual to demonstrate the markets procedures and specific products that Aaron has the capabilities to deliver in these high growth markets.
The focus on structural heart neurovascular and peripheral vascular is by design and demonstrate aaron's alignment with the strategy we have been executing.
Aaron in integer together create a more comprehensive outsourced offering to enable our customers' innovation and our targeted high growth markets.
I'll offer one more example of how air and an integer together create what we believe is one of the broadest portfolios of access devices delivery systems and implants for our customers in the medical device outsourced market.
This slide is an example of our structural heart device, where integer can now provide all of the outsource components and sub assemblies. This same value proposition applies to other complex devices and high growth markets like neurovascular and peripheral vascular thanks to Erin integer can now offer customers full end to end capabilities on high <unk>.
Cardiovascular devices.
I'll now hand, the call over to Jason.
Thank you Joe.
Good morning. Thank you again for joining our call I'll provide more details on our first quarter 2022, adjusted financial results summarize our product line sales trends and conclude with our 2020 outlook, which has been updated to reflect the impact of our <unk> acquisition.
First quarter sales were consistent with our fourth quarter 2021 earnings guidance and first quarter. Adjusted operating income was consistent with our expectations both of which included the negative impact caused by high January and February absenteeism due to COVID-19 surge and from <unk>.
Ongoing supply chain constraints.
In the first quarter, our sales were $311 million delivering 7% growth over the first quarter of last year organic sales growth, which excludes $19 million of first quarter sales for our score and currency differences is 1% higher than the first quarter of last year.
Gross margins in the first quarter were consistent with those realized in the third and fourth quarters of 2021. So there was a decline versus first quarter 2021, a period not impacted by the same supply chain and labor constraints.
We continued to face direct labor headwinds caused by higher than normal overtime inefficiencies from delayed material as well as high training costs and the incremental salaries for the associates, we are hiring to support growth through the rest of 2022.
As Joe mentioned direct labor associates are up 10% versus the first quarter of 2021 with half of that increase in the last three months as we have continued to get better traction on hiring having.
Having the resources and inventory needed coupled with strong demand gives us confidence in our ability to grow in the second quarter. Furthermore, we entered the second quarter of 2022 with our highest order backlog in company history, we are well positioned to deliver approximately double digit sales growth for the remainder of the year.
A higher topline growth is expected to drive improved operating leverage and margin benefits from the reduction of inefficiencies and training costs.
Operating expense, including SG&A and R&D grew year over year, primarily due to the addition of <unk>, which was acquired in December 2021, as well as our annual salary increases we expect SG&A expense to increase marginally from <unk> 22 for the remainder of the year due to timing of <unk>.
Compensation expense for 2020, <unk> annual salary increase and.
And investments in operational strategic imperatives.
As discussed in our last earnings call. We continue to increase our support of product development programs that will drive revenue growth in our focused markets.
In addition to <unk> the year over year first quarter R&D expense increase was driven by higher resources to support the growth in these customer programs.
Expect quarterly R&D and <unk> expense to remain at about this level for the remainder of the year.
Our adjusted EBITDA in the quarter was $54 million down $7 million compared to last year, a decrease of 11% and adjusted operating income was $39 million a decline of 16% versus the prior year.
With adjusted net income at $26 million, we delivered 78 of adjusted diluted earnings per share down <unk> 19.
Or 19% from the first quarter of 2021.
To provide more color on the adjusted net income the first quarter decreased $6 million compared to the first quarter of 2021, primarily driven by the impact from the headwind created by supply chain constraints and high direct labor absenteeism from the January COVID-19 surge, partially offset by the.
The addition of <unk> on a year over year basis.
<unk> was slightly unfavorable versus 2021 by lower adjusted interest expense delivered a $2 million improvement in adjusted net income compared to last year, driven by our continued focus on debt repayment and the savings captured with our debt refinancing in the third quarter of 2021.
Our adjusted effective tax rate was 22% in the first quarter. This created a year over year headwind of $1 million due to the adjusted effective tax rate in 2021 being 16, 3%. The first quarter of 2021 benefited from a favorable discrete item.
Related to stock based compensation, while at the same discrete item in the first quarter of 2022 was unfavorable accounting for 300 basis points of the total year over year ETR headwind for the full year 2022, we expect our adjusted effective tax rate to be between 16% to 17, 5%.
We generated $18 million in cash flow from operating activities in the quarter and generated $8 million in free cash flow inclusive of $10 million of capital expenditures in the first quarter. This includes approximately $20 million increase in inventory to ensure we are positioned to meet customer.
<unk> and deliver sales growth in the second quarter and the second half as well as our typical first quarter cash flows for associated short term incentives and customer rebate payments.
Additionally, given the high absenteeism in January and February and the supply chain constraints mentioned sales were delayed into the latter part of the first quarter impacting the timing of collection.
Despite these headwinds net total debt decreased $7 million to $811 million and our debt leverage at the end of the first quarter was three four times trailing four quarter adjusted EBITDA within our target ratio range.
We will now transition to a discussion of our product line sales. Please note. These product lines sales include the product line reporting changes discussed in our earnings conference call in February of this year. As a reminder, this includes the move of active implantable medical device components into CRM and N and neuroma.
Duration from the <unk> and portable medical product line as well as the move of access and delivery products associated with CRM and Neuromodulation procedures to the CRM and then from their prior alignment within in cardiovascular.
Trailing four quarter reported sales continued to improve year over year in the first quarter of 2022 as reflected by the increase in our growth rates across all four product lines.
Beginning with our first product line cardio and vascular sales were up 13% in the first quarter compared to the first quarter of 2021, despite direct labor absenteeism and supply chain constraints. The first quarter growth was driven by strong demand, particularly in the neurovascular market and growth in our <unk>.
Structural heart product development revenue trailing.
Trailing four quarter sales continued strong year over year growth up 20% with an underlying double digit growth across all cardio and vascular markets.
Moving to cardiac rhythm management and Neuromodulation sales grew 1% in the first quarter as the sales growth from the recently acquired <unk> was offset by higher direct labor absenteeism and supply chain constraints for primarily long lead components while customer.
<unk> remained strong trailing four quarter sales continued strong year over year growth up 27%.
Moving to our advanced surgical orthopedic and portable medical product line, our first quarter sales declined 2% versus the prior year driven by decreased demand for ventilators and patient monitoring components that peaked last year during the pandemic.
Trailing four quarter sales declined 9% year over year due to a decline in advanced surgical and orthopedics and as previously noted a decline in portable medical is driven by lower demand for COVID-19 related components.
Finally, we will wrap up the product line discussion with electric <unk>, our non medical segment first quarter sales increased 18% despite negative impacts from supply chain constraints lifted by continued improvement in the energy market trailing.
Trailing four quarter sales grew 21% year over year also driven by the recovering energy market.
We will now transition to our updated expectations for 2022.
Starting with sales we are increasing our outlook to reflect the impact of the recent acquisition of errand biomedical and we now expect sales to be in the range of $1 $356 million to $1 billion $381 million, an increase of 11% to 13% compared to two.
21. This includes $16 million of projected Aaron's sales for the remaining nine months of 2022, which had been added to our sales guidance range on an organic basis, we still expect sales to grow 5% to 7% compared to 2021.
We expect the second quarter of 2022 to grow approximately double digit sequentially versus the first quarter with our direct labor and inventory well positioned to deliver an increasing customer demand further we expect sales growth in the second half of the year continue to grow approximately double digit as we.
Believe our ability to manage supply chain challenges, we will continue to improve and we will realize the impact of growth from new product introductions.
Having just discuss the sales outlook I'll focus on the updates for the rest of the P&L, which like sales now incorporates the contribution from Marin, adding $3 million of adjusted EBITDA from Erin We expect 2022, adjusted EBITDA to be between $273 million and 200.
$85 million, which is 12% to 17% year over year growth.
We expect 2022, adjusted operating income to be between $203 million to $250 million, reflecting growth of 9% to 15% and includes $2 million from Erin.
As discussed earlier, the adjusted EBITDA and adjusted operating income growth rates assume an improvement in margin rate starting in the second quarter and continuing in the second half from volume leverage and a reduction of inefficiencies and training costs.
Also reflects the Opex run rates for the remainder of 2022 that I described during the discussion in the first quarter results adjusted.
EPS is expected to be between $4 32.
$4 62.
Reflecting growth of 6% to 13%.
This assumes an adjusted effective tax rate between 16% to 17, 5% unchanged from our previous outlook. We have updated our adjusted interest expense to be between 28 and $32 million, which incorporates the incremental interest expense for financing the <unk> acquisition.
As I close we expect strong cash generation between $158 million to $173 million in cash flow from operations and between $88 million to $103 million in free cash flow both updated for the impact of Aaron consistent with our strategy, we are maintaining our out.
Look on capital expenditures as we continue to invest in the business to drive growth, we expect to spend between $65 million and $75 million, which is an increase in the run rate over our prior year's spending.
We expect to reduce net total debt by 83 million to $98 million and expect to end the year with our leverage ratio between three <unk> to three two times adjusted EBITDA within our target range of two five to three five times adjusted EBITDA, Although we anticipate slightly exceeding our.
Target range in the second quarter of 2022 due to the <unk> acquisition, we expect to be back within our targeted leverage range by the end of the third quarter 2022.
And with that I'll turn the call back to Jeff. Thank you. Thanks.
Thanks, Jason.
<unk> is uniquely positioned to serve our customers across all phases of their product life cycles, we continue to add differentiated capabilities, both organically and inorganically, while delivering for our customers our disciplined and structured product line strategies have positioned us well to accelerate our sales.
Growth rate, while expanding margins, we are confident we will deliver on our financial objectives because of the performance culture, we have created.
I'll wrap up by reiterating that our first quarter results were consistent with our expectations and with our financial guidance.
We updated our full year guidance for the acquisition of <unk> biomedical and we believe our staffing and inventory levels position us well to deliver approximately double digit growth in the second quarter and the rest of the year.
We continue to execute our strategy by adding differentiated capabilities in high growth markets that enable us to deliver more comprehensive solutions to our customers.
We believe our strategy focused on innovation and excellent service will accelerate our growth with customers by enabling their success.
I'll close by providing an example of how this strategy is paying dividends, we have been a strong partner to narrow for many years starting back in 2008 with the design and development of their high frequency spinal cord stimulation implantable pulse generator and supporting them through regulatory approval into high volume manufacturing.
Nevertheless success ultimately led them to decide to in source the assembly of their IPG, but they wanted a partner to provide a second source for business continuity I.
I am happy to announce that we have signed a multiyear supply agreement with <unk> to be their sole outsource manufacturer on their next generation platform, including annual volume commitments.
We will continue to be their sole source for their current generation product.
We have also agreed to further vertically integrate integer components into the narrow IPG or both integer and never was manufactured product.
We believe this partnership demonstrates the success of serving our customers with differentiated technology and service and as how we plan to continue fulfilling our vision of being our customer's partner of choice.
Thank you for joining our call. This morning, I will now turn the call back to our moderator for the Q&A portion of our call.
And as a reminder, that is star one if you would like to ask the question well.
For a moment to compile the Q&A roster.
And our first question will come from Matthew May Shawn.
Please go ahead.
Excellent good morning.
So Joe as you think about <unk> I was just going to get to.
Two part question as you think about your outlook today versus versus a couple of months ago.
Are you more or less confident in the visibility to that outlook and then the second part of that are there any components of raw materials materials that are particularly challenging at this point that could cause some uncertainty as you go through the summer.
Thanks, Matt Great great questions, which get at the heart of the supply chain challenges in the dynamic environment that we're all living and then I'll start with the versus a few months ago, we actually feel feel even better about the rest of our year. We had the advantage of our earnings call being in mid February .
So we had our fourth quarter earnings call. So we had already experienced a dramatic surge in absenteeism in January from the Covid surge heavily in the U S a little bit in Europe .
We had already seen how it was tapering off in February but still impacted February . So we were able to incorporate that impact in our first quarter expectations for revenue being flat with the fourth quarter as well as the operating profit and I mentioned, we landed right on the operating profit we were internally projecting so in terms of thinking about.
Where we are today versus mid February we actually feel a lot better about the rest of the year, because we've been able to build $20 million of inventory, we added 5% more direct labor associates within the first quarter. So we're up <unk> 12, 12% in the first quarter into first quarter. So we got really good traction, adding the direct labor.
That we need to fulfill on the growth in the second quarter. The rest of the year, Jason mentioned in the prepared remarks, we enter the quarter with the highest amount of orders for the quarter that we've ever had.
Just wanted to things we measure very closely.
We've got really good visibility for the next three four months and so we feel really good about the demand from customers.
So we feel really good about the rest of the year and we're glad to have the first quarter behind us because we feel like we've got a lot done even though the financial results reflect the investment in adding the head count and the Covid surge.
Prevented us from shipping as much product as we would've liked but we feel really good about where we are now for the rest of the year and being able to grow.
Your next question the components or raw materials, that's one of the areas that we continue to manage very closely you've heard everybody in the industry talk about availability of material.
Had the same challenges.
It's very disruptive to the manufacturing plant with suppliers can't ship on the date that they committed because you got your plant built to receive the material and run those lines and so we've been managing through that adding $20 million of inventory during the first quarter helps with that because it helps us to better be able to plan and schedule the plant.
We feel like we're dialed in to the particular materials resins being one of them. There are components that go into <unk> that are also challenging and have long lead times that we've been able to manage.
We think we have managed pretty well within the year the impact of inflation.
Everybody in the industry talk about inflation.
We have the advantage of last year, we launched a number of.
Programs to drive material cost down and we're getting the benefit of that is helping offset some of the inflationary pressures. This year. So we certainly do have components and raw materials that we're managing closely with suppliers.
Their biggest issue seems to be labor not necessarily material availability, but the labor to process. It and we feel really good about where we sit entering the second quarter and for the rest of the year to be able to deliver on our full year guidance and growing double digit in the second quarter and the rest of the year and hitting our guidance.
We expected the first quarter results that we delivered and we feel confident in the rest of the year.
And then the third.
Record order book.
You guys are talking about.
Is that due to.
Some back orders that may not have been able to be filled in the first quarter or is that due to just.
Really strong recovery.
From your customers and positive underlying momentum.
And the business.
I think there is three variables I think the strong recovery is one of them for certain as we look to the rest of the year, we have new products that are launching that.
We're ramping up and we're moving out of development into the manufacturing sites in order to be able to ramp to our customers' product introduction. So we see we see that is one factor of growth. There's absolutely volume that we were planning to ship in the first quarter, but because of this COVID-19 surge we were not able to.
We have the inventory we built as it related to that volume. So we enter the quarter with that volume in hand, and then there's a third variable where.
Our customers, but we see this as well as ourselves and everybody in the industry and probably in any manufacturing environment, everyone is placing orders further in advance to give supply chain greater visibility, we're doing that with our supply base. We are encouraging our suppliers to do with their supply base. Our customers are doing it so what it's doing is.
It's giving everybody a better visibility to be able to better manage the supply chain.
And we think what that does ultimately is it gives us even better visibility to the demand for the rest of the year, which increases our confidence in our guidance for the rest of the year.
Okay.
And then just lastly on the guidance is that there is.
Obviously, a lot of moving pieces.
Over the last couple of months.
Is the guidance reflective of.
Aaron So the sales Bob is Erin no change no change otherwise EPS down a little bit.
Is that a little dilutive because of because of the interest rate up progress are.
Or are there some other moving pieces to be considerably better.
Certainly so the only change in our guidance as we added Erin and so the change in our guidance is adding 16 of sales for Erin adding.
Three of EBITDA two <unk>.
And it's a few pennies dilutive on EPS, because we've got the debt for the full year and we only get nine much of the income and by the time, we get to 2023, we expect <unk> to be accretive flat to accretive to EPS.
Okay. So the only change and Eric the only changes Eric.
Alright, Thank you very much guys.
Thanks, Matt.
And again that is star one to ask a question. Our next question will come from Jim Sidoti with Sidoti. Please go ahead.
Hi, good morning, and thanks for taking the questions.
Can you talk a little bit about about how Aaron distributed their products and as a Standalone company and what distribution is going to look like now that they're part of integer.
Well I think the biggest one of the biggest advantages of combining with Aaron is we can now vertically integrate and be even more comprehensive have a more comprehensive offering to our customers and one of the things we love about Aaron is.
More than half load their pipeline and we were able to get very deep into their pipeline that theyre working on their development programs, which we talked a lot about <unk> development program pipeline on the on the last earnings call more than half of Aaron's development pipeline is in structural heart.
Which demonstrates the differentiation that they bring to their customers our ability to then help erin ramp and scale to high volume manufacturing and vertically integrate with our offerings on structural heart.
Access devices in delivery systems gives us a really comprehensive offering we think the most comprehensive offering in the industry and we think the combination is going to allow us to develop significant commercial synergies, we didn't make much commercial synergies into the deal because we didn't need to the pipeline Aaron has stood on its own.
And justify the deal, but we're really excited about the ability to partner and offer a more comprehensive solution to our customers and we think our scale and manufacturing capability, we will open up even more opportunities for for Aaron So we would expect to see.
See that growth that they have now that.
We expect 20% to 30% growth over at least the next few years with our pipeline, we think with our combination that we can even accelerate that and build and get more entered your product through to our customers with aaron's capabilities.
Okay.
Pacific for distribution, where they're using direct reps direct salespeople are independent reps.
After the.
Now that the two companies are combined.
They had a very similar model to integer their engineering teams work closely with the same customers we work with our.
Our customers' engineering team there are development engineers, we're selling in the same manner that we are what's different today is now they have a more comprehensive portfolio to offer and we obviously are much deeper given our size and scale with those same customers than they are so it'll be the same same same go to market approach.
With the engineers, Socgen engineers, and sell and differentiated technologies and capabilities, enabling them to get their their structural heart devices.
Peripheral vascular and neurovascular devices to market faster.
Okay and then.
A question Jason.
D is up a little over $3 million.
In the quarter and it sounds like it's going to stay that way is that.
Is that primarily due to the addition of folks from Oscar or was there something else going on there.
Great question, Jim So absolutely ask more of a piece of that.
A third of the growth the rest of it really is in line with our continued focus and investment in resources and programs.
The high growth focus areas and markets that we've been talking about so those resources continuing to grow.
Theres always a little bit as we've talked about timing.
Customer reimbursements, and how that flows through but right now.
We continue to grow that revenue.
The revenue side of that as well as the the program expense and we see that being more at that run rate that we had in <unk> for the rest of the year.
Okay alright, thank you.
Great. Thanks, Jim.
And our next question will come from Bob Wasserman with benchmark.
Go ahead.
Hey, Thanks, good morning, Congrats on the quarter I'm, just wondering if you could provide a little more color on the metro.
Contract that you talked about this morning in terms of the timing of when that moves and also the scale will be close to what what your contract year over year contracts and also whether there was any contribution in this round from either unless core or Erin components.
Great Hey, Bob Thanks for the question so on net ROE.
We've been we've been a strong partner with net ROE from their inception and as they were looking for their second source. We think we're uniquely positioned to serve them and so we were developed we are building their current generation device, we're working with them on their next generation device, which is what they plan to assemble there I think the latest thing they said Paul.
Quickly.
By late this year, they expect to have their plant up and running so we will support them as they as they go into that transition of doing their own assembly will now start providing them with additional components that we manufacture and that'll be vertically integrated into both our assembly as well as their assembly.
It's a multi year long term agreement there is share commitments for the components as well as volume commitments on the Ipg's.
We will support them as they ramp and be there to ensure that if they if they need any incremental volume additional volume over and above what they are planning to produce or as they work through.
Assembly there IPG for the first time ever will be there to support them and ensure that they have all the product that they need to meet their launch of their next generation products and their introduction of that whenever they do get that introduced.
And in terms of components.
Obviously <unk> was in the first quarter results. They were in the December results last year. So on a year over year basis, Oscar is inorganic and you see that in our results and about $19 million in sales in the first quarter. They had a very strong first quarter. It's a great start to the year, we're really excited about how well the integration.
Is going and how well they're performing.
We expect them to continue to outperform the rest of the year, we're excited about.
Combination and the additional commercial synergies that we're working on already.
Okay, Hey, great. Thanks, Thanks for the answer.
Thanks, Bob.
And with no further questions I'd like to turn the call back to Mr. Bonawitz for any additional closing remarks.
Great. Thanks, everyone for joining the call today. The replay of this call will be available on our website as well as the presentation. We just reviewed today and I'll look forward to taking your follow up questions and thank you for your interest in integer and that does include the call for today. Thank you.
And this will conclude today's conference. Thank you for your participation and you may have.
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