Q4 2023 Integer Holdings Corp Earnings Call

Operator: www.integerholdings.com Hello and welcome to the Q4 2023 Integer Holdings Corporation Earnings Call. All lines have been placed on mute to prevent any background noise.

Hello, and welcome to the Q4 2023 integer Holdings Corporation earnings call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question, simply press star 1 on your telephone keypad. I will now turn the conference over to Andrew Sens, Senior Vice President, Strategy and Business Development, and Investor Relations.

After the Speakers' remarks, there will be a question and answer session and if you would like to ask a question simply press star one on your telephone keypad.

I will now turn the conference over to Andrew <unk>, Senior Vice President strategy and business development and Investor Relations. Please go ahead.

Andrew Sens: Good morning, everyone. Thank you for joining us and welcome to Integer's fourth quarter 2023 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 in the slide. During our call, we will discuss some non-GAAP financial measures. For reconciliation of these non-GAAP financial measures, please refer to the appendix of today's presentation, today's earnings press release, and the trending schedules, which are all available on our website at integer.com. 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.

Andrew: Good morning, everyone. Thank you for joining us and welcome to <unk> fourth quarter 2023 earnings conference call with.

Andrew: With me today are Joe Dziedzic, President and Chief Executive Officer, and Darren Smith, Executive Vice President and Chief Financial Officer.

Andrew: As a reminder, the results and the data we discussed today reflect the consolidated results of integer for the periods indicated tahira.

Andrew: During our call we will discuss some non-GAAP financial measures a reconciliation of these non-GAAP financial measures. Please refer to the appendix of today's presentation today's earnings press release, and the trending schedules, which are all available on our website at <unk> Dot. Please.

Andrew: 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.

Andrew Sens: On today's call, Joe will provide his opening comments and an update on Integer's strategy, followed by an overview of how Integer will sustain above-market growth. Dyron will then review our adjusted financial results for the fourth quarter and full year 2023 and provide our full year 2024 outlook. Joe will come back to provide his closing remarks, and then we'll open the call for questions. With that, I will turn the call over to Joe.

Andrew: On today's call Joe will provide his opening comments and an update on <unk> strategy, followed by an overview of how integer will sustain above market growth.

Andrew: Alan will then review our adjusted financial results for the fourth quarter and full year 2023, and provided our full year 2020 for outlook.

Andrew: Joe will come back to provide his closing remarks, and then we'll open the call for questions with that I will turn the call over to Joe.

Joseph W. Dziedzic: Thank you, Andrew, and thank you to everyone for joining the call today. We had a strong fourth quarter and an even stronger full year. In 2023, sales were up 16%, and adjusted operating income grew by 26% over 2022. We were able to grow sales at a rate significantly above the market rate while expanding operating margin by 117 basis points. Adjusted operating income grew at 1.6 times the rate of sales growth, approaching our strategic target of two times.

Joseph W. Dziedzic: Thank you Andrew and thank you to everyone for joining the call today.

Joe Dziedzic: We had a strong fourth quarter and even stronger for year two.

Joseph W. Dziedzic: 2023 sales were up 16% and adjusted operating income grew by 26% over 2022.

Joseph W. Dziedzic: We were able to grow sales at a rate significantly above the market rate, while expanding operating margin by 117 basis points adjust.

Joseph W. Dziedzic: Adjusted operating income grew at one six times the rate of sales growth approaching our strategic target of two times.

Joseph W. Dziedzic: We expect this strong performance to continue in 2024 with an outlook of 9% to 11% sales growth and adjusted operating income growth of 13% to 20%. We are confident in sustaining above-market sales growth in 2024 and beyond. We acquired Pulse Technologies on January 5th, which deepens our precision micromachining capabilities and further strengthens our pipeline in high-growth markets like electrophysiology, structural heart, and heart pumps.

Joseph W. Dziedzic: We expect this strong performance to continue in 2024 with an outlook of 9% to 11% sales growth and adjusted operating income growth of 13% to 20%.

Joseph W. Dziedzic: We are confident in sustaining above market sales growth in 2024 and beyond.

Joseph W. Dziedzic: We acquired pulse technologies on January 5th, which deepens, our precision micro machining capabilities and further strengthens our pipeline in high growth markets like electrophysiology structural heart heart pumps.

Joseph W. Dziedzic: Yeah.

Joseph W. Dziedzic: Integer continues to execute its strategy to deliver sustained outperformance. Our portfolio and product line strategies position us for sustained above-market growth as we continue to shift the mix of our business to higher growth markets. The previously announced exit of our portable medical product line, which has limited technology differentiation and low growth, is proceeding as planned.

Joseph W. Dziedzic: <unk> continues to execute our strategy to deliver sustained outperformance of our portfolio and product line strategies position us for sustained above market growth as we continue to shift the mix of our business to higher growth markets.

Joseph W. Dziedzic: Previously announced exit of our portable medical product line, which has limited technology differentiation and load growth is proceeding as planned.

Joseph W. Dziedzic: We continue to make targeted organic and inorganic investments in capabilities and capacity to enable our growth. The supply chain and labor environments have meaningfully improved, and we have refocused our organization to execute our operational strategy to expand margins. At the J.P. Morgan Health Care Conference earlier this year, we publicly announced the acquisition of Pulse Technologies, our fourth tuck-in acquisition in 25 months.

We continue to make targeted organic and inorganic investments in capabilities and capacity to enable our growth.

Joseph W. Dziedzic: The supply chain and labor environments have meaningfully improved and we have refocused our organization to execute our operational strategy to expand margins.

Joseph W. Dziedzic: During the Jpmorgan healthcare conference earlier this year, we publicly announced the acquisition of pulse technologies, our fourth tuck in acquisition at 25 months the.

Joseph W. Dziedzic: The acquisitions of Oscorp, Aaron Biomedical, Anuroco, and Pulse Technologies have strengthened Integers' position in high-growth markets while adding differentiated capabilities for our customers. These acquisitions further our vertical integration strategy and help our customers consolidate and simplify their supply chain. In addition to the strategic benefits, these four acquisitions generate annualized sales of approximately $170 million with a creative margin. Oscar and Aaron were meaningful contributors to our sales and profit growth in 2023, and I look forward to NeuroCo Impulse being equally as successful as we integrate these differentiated businesses. Integer acquired Pulse Technologies on January 5, 2024, for approximately $140 million, with the potential for an additional earn-out in 2025 based on revenue growth. We paid less than 13 times trailing adjusted EBITDA multiple, or just over 11 times after considering the $15 million net present value tax benefit. Pulse deepens Integer's capabilities in precision micromachining and further strengthens our pipeline in high-growth markets.

Joseph W. Dziedzic: The acquisitions of <unk> score <unk>, biomedical and neuro co impulse technologies have strengthened <unk> position in high growth markets, while adding differentiated capabilities for our customers.

Joseph W. Dziedzic: Our acquisitions further our vertical integration strategy and help our customers consolidate and simplify their supply chains.

Joseph W. Dziedzic: In addition to the strategic benefits. These four acquisitions generate annualized sales of approximately $170 million with accretive margins.

Joseph W. Dziedzic: Ocular and Erin were meaningful contributors to our sales and profit growth in 2023, and I look forward to our neuro coed pulse being equally as successful as we integrate these differentiated businesses.

Joseph W. Dziedzic: <unk> acquired pulse technologies on January five 2024 for approximately $140 million with the potential for an additional earn out in 2025 based on revenue growth.

Joseph W. Dziedzic: We paid less than 13 times trailing adjusted EBITDA multiple or just over 11 times after considering the $15 million net present value tax benefit.

Joseph W. Dziedzic: Pulse deepens integers capabilities in precision micro machining and further strengthens our pipeline in high growth markets.

Joseph W. Dziedzic: We welcome the 250 talented associates in Quaker Town, Pennsylvania, to the Integer family. Pulse has been a longstanding strategic supplier of critical components to leading medtech OEMs. They're focused on high-growth markets and products, along with excellent customer relationships, aligned perfectly with Integer's strategy. We developed our portfolio strategy in 2017 and formed the growth teams in 2008. These market-focused teams have executed a structured and disciplined approach across the organization to shift our pipeline to high-growth products and markets, expand our capabilities, and ensure our investments are aligned to our strategy. These product line strategies have generated a strong product development pipeline that is delivering results and positions us for sustained above-market growth. This structured and disciplined process has been and will continue to be critical to Integer achieving sustained outperformance. We continue to invest in the highest growth C&V markets, the same markets where our customers are investing, and the areas with the greatest unmet clinical need. Integer is uniquely positioned to serve customers across all phases of the product life cycle because of our deep technology, breadth of capabilities and products, global manufacturing footprint, and vertical integration.

Joseph W. Dziedzic: We welcome the 250 talented associates in Quakertown, Pennsylvania to the <unk> family.

Joseph W. Dziedzic: Pulse has been a longstanding strategic supplier of critical components to leading med Tech Oems. They are focused on high growth markets and products, along with excellent customer relationships aligned perfectly with integer strategy.

Joseph W. Dziedzic: Okay.

Joseph W. Dziedzic: We developed our portfolio strategy in 2017 and formed the growth teams in 2018. These.

Joseph W. Dziedzic: These market focused teams have executed a structured and disciplined approach across the organization to shift our pipeline into high growth products and markets expand our capabilities and ensure our investments are aligned to our strategy.

Joseph W. Dziedzic: These product line strategies have generated a strong product development pipeline that is delivering results and positions us for sustained above market growth.

Joseph W. Dziedzic: This structured and disciplined process has been and will continue to be critical to integer achieving sustained outperformance.

Joseph W. Dziedzic: We continue to invest in the highest growth C&D markets. The same markets, where our customers are investing in the areas with the greatest unmet clinical need.

Joseph W. Dziedzic: <unk> is uniquely positioned to serve our customers across all phases of their product lifecycle because of our deep technology breadth of capabilities and products global manufacturing footprint and vertical integration.

Joseph W. Dziedzic: The products on the bottom of the slide highlight areas of continued investment in capabilities and capacity. Our 2023 C&B growth and product development pipeline are concentrated in these high growth end markets. We also continue to invest in the differentiated capabilities that serve both our traditional cardiac rhythm management and emerging neuromodulation products, including the high-growth sub-segments within Cardiac Rhythm Management. Integer is uniquely positioned to be able to bring full design, development, and high-volume manufacturing to these customers, while also vertically integrating the most technologically advanced components with our own intellectual property from decades of innovation. Very few other companies have the breadth of design and development capabilities, and even fewer offer the depth of component technology that Integer offers to its neuromodulation customers.

Joseph W. Dziedzic: The products on the bottom of the slide highlight areas of continued investment in capabilities and capacity.

Joseph W. Dziedzic: Our 2023, CMV growth and product development pipeline are concentrated in these high growth end markets.

Joseph W. Dziedzic: We also continued to invest in the differentiated capabilities that serve both our traditional cardiac rhythm management and emerging neuromodulation products, including the high growth sub segments within cardiac rhythm management.

Joseph W. Dziedzic: Integer is uniquely positioned to be able to bring full design development and high volume manufacturing to these customers. While also vertically integrating the most technologically advanced components with our own intellectual property from decades of innovation.

Joseph W. Dziedzic: Very few other companies have the breadth of design and development capabilities and even fewer offer the depth of component technology that <unk> offers to our neuromodulation customers.

Joseph W. Dziedzic: The products on the bottom of the slide highlight the high growth areas of CRM and N that contributed to our growth in 2023. Our product development pipeline is concentrated in these same high growth end markets. Interger partners with our customers to bring innovative medical technologies to market, and we are paid for this service throughout the product development cycle.

Joseph W. Dziedzic: The products on the bottom of the slide highlight the high growth areas of CRM and that contributed to our growth in 2023, our product development pipeline is concentrated in these same high growth end markets.

Joseph W. Dziedzic: And does your partners with our customers to bring innovative medical technologies to market and we are paid for this service throughout the product development cycle.

Joseph W. Dziedzic: As life-saving and life-enhancing products are introduced to the market and enter the manufacturing ramp phase, Integer benefits from accelerated sales growth. The amount of product development sales and the market growth rate of the products being developed are leading indicators for sustained above-market sales growth. Our product development sales have increased 230% since we developed our strategy in 2007, which means our pipeline of new programs has grown significantly, and we're being designed into our customers' novel products. We are confident that the current level of development revenue will continue to deliver sustained above-market growth.

Joseph W. Dziedzic: As lifesaving and life enhancing products are introduced to the market and into the manufacturing ramp phase integer benefits from accelerated sales growth the.

Joseph W. Dziedzic: The amount of product development sales and the market growth rate of the products being developed are leading indicators for sustained above market sales growth.

Joseph W. Dziedzic: Our product development sales have increased 230% since we developed our strategy in 2017, which means our pipeline of new programs has grown significantly and we are being designed into our customers novel products.

Joseph W. Dziedzic: We are confident that the current level of development revenue will continue to deliver sustained above market growth.

Joseph W. Dziedzic: We have continued to strategically target product development opportunities in high growth markets to accelerate our growth rate on a sustainable basis.

Joseph W. Dziedzic: We have continued to strategically target product development opportunities in high-growth markets to accelerate our growth rate on a sustainable basis. 80% of our development sales are currently in high-growth markets, with the remaining 20% in more mature markets. We continue to believe the mix of 80% high growth and 20% mature markets is the appropriate balance to accelerate our sales growth rate while sustaining our mature products for the benefits they deliver to our customers and industry. The development cycle in our industry is relatively long.

Joseph W. Dziedzic: 80% of our development sales are currently in high growth markets with the remaining 20% in more mature markets. We continue to believe the mix of 80% high growth at 20% mature markets is the appropriate balance to accelerate our sales growth rate, while sustaining our mature products for the benefits they deliver to our customers and integer.

Joseph W. Dziedzic: The development cycle in our industry is relatively long. So it is a meaningful milestone for us to achieve the level of product development sales and program mix necessary to sustain above market growth.

Joseph W. Dziedzic: So it is a meaningful milestone for us to achieve the level of product development sales and program mix necessary to sustain above market growth. We are excited to share our fourth annual update on emerging PMA customers. We presented this slide for the first time on our earnings call in the third quarter of 2020. These PMA customers are primarily single product, highly novel and innovative, and bring emerging neuromodulation therapies to market.

Joseph W. Dziedzic: We are excited to share our fourth annual update on emerging PMA customers.

Joseph W. Dziedzic: We presented this slide for the first time on our earnings call in the third quarter of 2020. These.

Joseph W. Dziedzic: These PMA customers are primarily single product highly novel and innovative and bring emerging neuromodulation therapies to market.

Joseph W. Dziedzic: We have been investing in this pipeline of PMA products for many years, and the advancement of these programs is a key contributor to our above-market sales growth. The left-hand side of this slide shows the number of customers we are working with at each phase of the product development process. The right-hand side highlights the actual sales generated in 2018, 2020, and 2022 for the nine customers who are in either product introduction or have launched since 2020. We are increasing our 2024 sales projection to a range of $100 to $120 million, which is the second consecutive year we have done so. This is the result of the success in the market for these novel therapies and demonstrates our strong pipeline of high-growth products that contribute to sustained above-market growth. In addition to our organic pipeline, we have demonstrated that we can consistently execute tuck-in acquisitions that enhance our capabilities and are accretive to our sales growth rate and profit margins. We are very targeted in the companies that we pursue and have remained disciplined relative to our acquisition criteria.

Joseph W. Dziedzic: We have been investing in this pipeline of PMA products for many years and the advancement of these programs is a key contributor to our above market sales growth.

Joseph W. Dziedzic: The left hand side of this slide shows the number of customers. We are working with at each phase of the product development process.

Joseph W. Dziedzic: Right hand side highlights the actual sales generated in 2018, 2020, and 2022 for the nine customers who are in either product introduction or launched since 2020.

Joseph W. Dziedzic: We are increasing our 2024 sales projection to a range of $100 million to $120 million, which is the second consecutive year. We have done. So this is the result of the success in the market for these novel therapies and demonstrates our strong pipeline of high growth products that contribute to sustained above market growth.

Joseph W. Dziedzic: Both.

Joseph W. Dziedzic: In addition to our organic pipeline, we have demonstrated that we can consistently execute tuck in acquisitions that enhance our capabilities and are accretive to our sales growth rate and profit margins.

Joseph W. Dziedzic: We're very targeted in the companies that we pursue and have remained disciplined relative to our acquisition criteria.

Joseph W. Dziedzic: We continue to cultivate relationships with a robust pipeline of founder-led and privately-owned businesses. We are confident we can continue to add 200 to 400 basis points of inorganic sales growth on an annual basis by deploying $250 to $300 million on acquisitions while maintaining a debt leverage of 2.5 to 3.5 times adjusted EBITDA. Prior to the development and implementation of our strategy, Integer was growing at about the market growth rate of 5%. I have highlighted how growth starts with product development, which is our focus strategy to get designed into our customers' most strategic products in high-growth markets, which is demonstrated by our product development sales growth of 230%, and 80% of our development portfolio is in high-growth markets. These key metrics reinforce why we remain confident we have the organic pipeline to deliver sustained organic growth 200 basis points above the market.

Joseph W. Dziedzic: We continue to cultivate relationships with a robust pipeline of founder led and privately owned businesses we.

Joseph W. Dziedzic: We are confident we can continue to add 200 to 400 basis points of inorganic sales growth on an annual basis by deploying 250 to 300 million on acquisitions, while maintaining a debt leverage of two five to three five times adjusted EBITDA.

Joseph W. Dziedzic: Prior to the development and implementation of our strategy integer was growing at about the market growth rate of 5%.

Joseph W. Dziedzic: I have highlighted how growth starts with product development, which is our focused strategy to get designed into our customers most strategic products in high growth markets.

Joseph W. Dziedzic: Which is demonstrated by our product development sales growth of 230%.

Joseph W. Dziedzic: And 80% of our development portfolio is in high growth markets.

Joseph W. Dziedzic: These key metrics reinforce why we remain confident we have the organic pipeline to deliver sustained organic growth 200 basis points above the market.

Joseph W. Dziedzic: Our acquisition strategy has added significant capability, depth, and breadth so we can better serve our customers in high-growth markets. Our recent acquisitions have also added to our organic pipeline and provided sales and profit acceleration. Going forward, we expect to add 200 to 400 basis points of growth annually from acquisitions. Our focus strategy, combined with our organic and inorganic investments, has generated a strong product development pipeline and the most vertically integrated provider to our customers in the fastest growing end market. This gives us confidence that we can sustainably grow sales from high single-digit to low double-digit going forward. The strategy that we launched in 2018 is producing results and has helped Integer accomplish its vision of being our customers' partner of choice for innovative medical technologies and services. I'll now turn the call over to Dyrus.

Joseph W. Dziedzic: Our acquisition strategy has added significant capability depth and breadth. So we can better serve our customers in high growth markets.

Joseph W. Dziedzic: Our recent acquisitions have also added to our organic pipeline and provided sales and profit acceleration.

Joseph W. Dziedzic: Going forward, we expect to add 200 to 400 basis points of growth annually from acquisitions.

Joseph W. Dziedzic: Our focused strategy combined with our organic and inorganic investments have generated a strong product development pipeline.

Joseph W. Dziedzic: And the most vertically integrated provider to our customers in the fastest growing end markets.

Joseph W. Dziedzic: This gives us confidence we can sustainably grow sales high single digit to low double digit going forward.

Joseph W. Dziedzic: The strategy that we launched it throughout 2018 is producing results and has helped integer accomplished its vision of being our customer's partner of choice for innovative medical technologies and services.

Joseph W. Dziedzic: I will now turn the call over to direct.

Dyron Smith: Thank you, Joe. Good morning, everyone, and thank you again for joining today's discussion. I'll provide more details on the fourth quarter and full year 2023 adjusted financial results and provide our 2024 outlook. It is important to note that the fourth quarter results are not impacted by our acquisition of Pulse Technologies, while the full year 2024 outlook includes this acquisition. We ended the year strong and delivered fourth-quarter results at the high end of our October 26, 2023 outlook. With sales of $413 million, Integer delivered 11% year-over-year sales growth on a reported basis and 9% on an organic basis, which excludes the impact of our fourth-quarter in-euro co-acquisition, the strategic exit of the portable medical market, and foreign currency fluctuation.

Direct: Thank you Joe Good morning, everyone and thank you again for joining today's discussion.

Direct: I'll provide more details on the fourth quarter and full year 2023, adjusted financial results and provide our 2024 outlook. It is important to note fourth quarter results are not impacted by our acquisition of pulse technologies, while the full year 2024 outlook includes this acquisition.

Direct: We ended our year strong and delivered fourth quarter results at the high end of our October 26, 2023 outlook with sales of $413 million integer delivered 11% year over year sales growth on a reported basis and 9% on an organic basis, which excludes the impact of our fourth quarter and <unk> acquisition.

Direct: The strategic exit of the portable medical market and foreign currency fluctuations our.

Dyron Smith: Our sales performance reflects the continued strong customer demand across our targeted growth markets and the ongoing improvements in the supply chain environment. We delivered $86 million of adjusted EBITDA, up $13 million compared to the prior year, or an increase of 18%. Adjusted operating income also increased 18% versus last year, and we continue to make progress on our year-over-year margin expansion. Compared to the prior year, adjusted operating income as a percent of sales increased to 16.4 percent, a 97 basis point improvement driven by gross margin expansion, volume leverage, and efficiencies gained from the continued improvement in the supply chain. With adjusted net income at $47 million, we delivered $1.39 of adjusted diluted earnings per share, up 28 cents or 25% from the fourth quarter of 2022. With our strong performance in the fourth quarter, our full-year financial results were at the high end of our 2023 earnings outlook. Sales were $1,597,000,000, which is a strong year-over-year increase of 16% or 15% organically.

Direct: Our sales performance reflects the continued strong customer demand across our targeted growth markets and the ongoing improvements in the supply chain environment.

Direct: We delivered $86 million of adjusted EBITDA up $13 million compared to the prior year or an increase of 18%.

Direct: Adjusted operating income also increased 18% versus last year.

Direct: We continue to make progress on a year over year margin expansion.

Direct: Impaired to the prior year adjusted operating income as a percent of sales increased to 16, 4% or 97 basis point improvement driven by gross margin expansion volume leverage and efficiencies gained from the continued improvement in the supply chain.

Direct: With adjusted net income at $47 million, we delivered $1 39 of adjusted diluted earnings per share up 28, or 25% from the fourth quarter 2022.

Direct: With our strong performance in the fourth quarter, our full year financial results were at the high end of our 2023 earnings outlook.

Direct: Sales were $1 billion and $597 million, which is a strong year over year increase of 16% or 15% organically.

Dyron Smith: Adjusted EBITDA was $309 million, up 21% versus last year, and adjusted operating income was $241 million, up $50 million, or 26% compared to the prior year. We delivered $158 million of adjusted net income and $4.67 of adjusted diluted earnings per share, up $0.79 or 20% from the prior year. I will touch on year-over-year growth and adjusted net income in a few moments. Taking a closer look at our CMV and CRM&N product lines, we delivered strong year-over-year growth on a trailing four-quarter basis in the fourth quarter of 2023. For our cardio and vascular product line, trailing four-quarter sales increased 20% year-over-year with double-digit growth across all CMV markets. This was driven by strong demand, acquisition performance, and supply chain improvement. Craniac rhythm management and neuromodulations trailing four-quarter sales increased 15% year-over-year.

Direct: Adjusted EBITDA was $309 million.

Direct: Up 21% versus last year, and adjusted operating income was $241 million up $50 million or 26% compared to the prior year.

Direct: We delivered $158 million of adjusted net income and $4 67 of adjusted diluted earnings per share up 79.

Direct: Or 20% from the prior year.

Direct: I will touch on the year over year growth in adjusted net income in a few moments.

Direct: Taking a closer look at our CMV and CR eminent product line sales, we delivered strong year over year growth on a trailing four quarter basis in the fourth quarter of 2023.

Direct: For our cardio and vascular product line trailing four quarter sales increased 20% year over year with double digit growth across all <unk> markets.

Direct: This was driven by strong demand acquisition performance and supply chain improvements.

Direct: <unk> management and Neuromodulation is trailing four quarter sales increased 15% year over year.

Dyron Smith: This was driven by double-digit CRM growth from strong customer demand, double-digit neuromodulation growth from emerging customers, and supply chain improvement. Further product line details are included in the appendix of the presentation on our website at integer.net. To provide more color on our full year 2023 performance, we increased adjusted net income by $28 million compared to 2022. Strong sales and operational improvements delivered $42 million, equivalent to $1.19 per share, which was partially offset by foreign exchange as well as higher interest and tax. We incurred adjusted total interest expense of approximately $10 million, or $9 million tax-affected higher than last year. This is due to a combination of a higher debt balance driven by $50 million in costs associated with the convertible notes issued in the first quarter of 2023 and an overall higher effective interest rate. Our adjusted effective tax rate was 17.7% for the full year 2023 compared to 16.1% in the prior year.

Direct: This was driven by double digit CRM growth from strong customer demand double digit neuromodulation growth from emerging customers and supply chain improvements.

Direct: Further product line details are included in the appendix of the presentation on our website at <unk> Dot net.

Direct: To provide more color on our full year 2023 performance, we increased adjusted net income by $28 million compared to 2022.

Direct: Strong sales and operational improvements delivered $42 million equivalent to $1 19 per share, which was partially offset by foreign exchange as well as higher interest and taxes.

Direct: We incurred adjusted total interest expense of approximately $10 million or $9 million tax effected higher than last year.

Direct: This is due to a combination of higher debt balance driven by $50 million and costs associated with the convertible notes issued in the first quarter of 2023 and overall higher effective interest rates.

Direct: Our adjusted effective tax rate was 17, 7% for the full year 2023, compared to 16, 1% in the prior year.

Dyron Smith: As described in last quarter's earnings call, the primary driver of our higher adjusted effective tax rate compared to the prior year is the expiration of the 10-year Malaysian tax holiday. For 2024, we expect our adjusted effective tax rate to be between 19 percent and 21 percent. This increase is mostly driven by the recently enacted Pillar 2 legislation in Europe, establishing a minimum effective tax rate of 15 percent, and the residual effect of the Malaysian tax holiday expiration.

Direct: As described in last quarter's earnings call. The primary driver of our higher adjusted effective tax rate compared to the prior year is the expiration of the 10 year Malaysian tax holiday.

Direct: For 2024, we expect our adjusted effective tax rate to be between 19% to 21%. This increase was mostly driven by the recently enacted pillar two legislation in Europe, establishing a minimum effective tax rate of 15% and the residual effect of the Malaysian tax holiday exploration.

Direct: Okay.

Dyron Smith: We delivered another quarter of strong conversion of income to cash in the fourth quarter of 2023 with $56 million of cash flow from operations. This strong performance was driven by high sales volumes and improving margins. In the fourth quarter, we generated $19 million in free cash flow, inclusive of $37 million of capital expenditure.

Direct: We delivered another quarter of strong conversion of income to cash in the fourth quarter of 2023 with $56 million of cash flow from operations. This strong performance was driven by high sales volumes and improving margins.

Direct: In the fourth quarter, we generated $19 million in free cash flow inclusive of $37 million of capital expenditures.

Dyron Smith: On a full-year basis, this equates to $180 million in cash flow from operating activities, a 55% increase versus 2022. Our full-year free cash flow of $60 million reflects $120 million in capital expenditures, which is in line with our outlook throughout the year. Net total debt ended at $950 million for the fourth quarter of 2023, an increase of $26 million compared to the third quarter ending balance.

Direct: On a full year basis, this equates to $180 million in cash flow from operating activities of 55% increase versus 2022.

Direct: Our full year free cash flow of $60 million reflects $120 million in capital expenditures, which is in line with our outlook throughout the year.

Direct: Net total debt ended at $950 million for the fourth quarter of 2023, an increase of $26 million compared to the third quarter ending balance. This reflects an increase in debt of $42 million to fund our fourth quarter acquisition of <unk> and another $8 million for earn out payments on previous acquisitions, partially offset by other deep.

Dyron Smith: This reflects an increase in debt of $42 million to fund our fourth-quarter acquisition of Inuroco and another $8 million for earn-out payments on previous acquisitions, partially offset by other decreases of $24 million. Net total debt leverage at the end of the fourth quarter of 2023 was 3.1 times trailing four-quarter adjusted EBITDA, which is within our strategic target range and down from three and a half times at the end of 2022. We will now transition to providing more detail on our outlook for 2024 sales, profit, and cash. The full-year outlook, as summarized earlier, reflects our strategy to deliver sustained above-market growth with expanding margins. We expect 2024 sales to be in the range of $1,735,000,000 to $1,770,000,000, an increase of 9 to 11 percent versus last year.

Direct: <unk> of $24 million.

Direct: Net total debt leverage at the end of the fourth quarter of 2023 was three one times trailing four quarter adjusted EBITDA, which is within our strategic target range and down from three five times at the end of 2022.

Speaker Change: We will now transition to providing more detail on our outlook for 2020 for sales profit and cash.

Speaker Change: The full year outlook as summarized earlier reflect our strategy to deliver sustained above market growth with expanding margins. We expect 2024 sales to be in the range of $1 $735 million to $1 billion $770 million, an increase of 9% to 11% versus last.

Speaker Change: At year.

Dyron Smith: Our outlook reflects organic growth of 6% to 8%, which is 200 basis points above our underlying market growth rate estimate of 4% to 6%, plus 3% inorganic growth from our NeuroCo and Pulse acquisitions, partially offset by the portable medical exit. Our outlook for 2024 adjusted EBITDA is between $355 and $375 million, which is 15 to 21% growth year over year. And we expect 2024 Adjusted Operating Income to be between $272 and $290 million, reflecting growth of 13% to 20%, which is 1.9 times our expected sales growth rate at the high end of our outlook. Adjusted net income is expected to be between $171 million and $185 million, reflecting year-over-year growth of 8 to 18 percent.

Speaker Change: Our outlook reflects organic growth of 6% to 8%, which is 200 basis points above our underlying market growth rate estimate of 4% to 6% plus 3% inorganic growth from our neuro co and pulse acquisitions, partially offset by the portable medical exit.

Speaker Change: Our outlook for 2024, adjusted EBITDA is between 355 and $375 million, which is 15% to 21% growth year over year.

Speaker Change: And we expect 2024, adjusted operating income to be between 272, and $290 million, reflecting growth of 13% to 20%, which is one nine times, our expected sales growth rate at the high end of our outlook.

Speaker Change: Adjusted net income is expected to be between $171 million and $185 million, reflecting year over year growth of 8% to 18%.

Dyron Smith: This delivers an adjusted EPF outlook between $5.01 and $5.43, a growth of 7% to 16%. This assumes an adjusted effective tax rate between 19% and 21% and higher interest expense compared to 2023, primarily due to a higher debt balance to support the acquisitions of Inuroco and Pulse Technologies. We expect sales in the first quarter of 2024 to grow high single-digit year-over-year with sequential sales acceleration in the second quarter through the fourth quarter from new product introductions and emerging PMA customer growth. We also anticipate our typical quarterly trend for product development revenue, which is generally at its lowest levels in the first quarter and at its highest levels in the fourth quarter.

Speaker Change: This delivers an adjusted EPS outlook between $5 and <unk> and $5 43.

Speaker Change: A growth of 7% to 16%. This assumes an adjusted effective tax rate between 19% and 21% and higher interest expense compared to 2023, primarily due to a higher debt balance to support the acquisitions of <unk> and pulse technologies.

Speaker Change: We expect sales in the first quarter of 2024 to grow high single digit year over year with sequential sales acceleration in the second quarter through the fourth quarter from new product introductions and emerging PMA customer growth.

Speaker Change: We also anticipate our typical quarterly trend for product development revenue, which is generally at its lowest levels in the first quarter and at its highest levels in the fourth quarter.

Speaker Change: We expect adjusted operating income as a percent of sales to expand throughout 2024 from our significantly improved supply chain direct labor attrition returning to pre pandemic levels and the typical quarterly trend for product development revenue.

Dyron Smith: We expect adjusted operating income as a percent of sales to expand throughout 2024 from a significantly improved supply chain, direct labor attrition returning to pre-pandemic levels, and the typical quarterly trend for product development revenue. To close our financial discussion, I would like to summarize our cash flow generation and our net total debt projection for 2024. We expect cash flow from operations between $185 million and $205 million, which represents an 8% year-over-year increase at the midpoint of our outlook. Our outlook for capital expenditures is $90 to $110 million as we continue to invest in organic capabilities and capacity. At midpoint, this is $15 million lower than 2023 capital expenditures, as the spending on our Irish capacity investments was at its highest in 2023. As a result, we expect to generate free cash flow between $85 million and $105 million.

Speaker Change: To close our financial discussion I would like to summarize our cash flow generation and our net total debt projection for 2024.

Speaker Change: We expect cash flow from operations between 185 million to $205 million, which represents an 8% year over year increase at midpoint of outlook our outlook for capital expenditures is $90 million to $110 million as we continue to invest in organic capabilities and capacity at mid point. This is 15 million.

Speaker Change: Lower than 2023 capital expenditures as the spending on our Irish capacity investments was at its highest in 2023.

Speaker Change: As a result, we expect to generate free cash flow between $85 million and $105 million.

Speaker Change: Inclusive of our approximate $140 million acquisition of pulse technologies in January of this year, we expect our 2020 for year end net total debt to be between $1 billion $10 million and $1 $30 million, which is up $60 million to $80 million year over year, we expect to end the year with our leverage ratio.

Dyron Smith: Inclusive of our approximate $140 million acquisition of Pulse Technologies in January of this year, we expect our 2024 year-end net total debt to be between $1,010,000,000 and $1,030,000,000, which is up $60 to $80 million year-over-year. We expect to end the year with our leverage ratio within our target range of 2.5 and 3.5 times trailing four-quarter adjusted EBITDA. With that, I'll turn the call back to Joe. Thank you. Thanks, Tyrone.

Speaker Change: <unk> within our target range of two five and three five times trailing four quarter adjusted EBITDA with that I will turn the call back to Jeff. Thank you.

Jeff: Thanks Darren.

Jeff: We delivered a very strong 2023 with full year sales up 16% and adjusted operating income improving by 26% over 2022.

Jeff: We expect this strong performance to continue in 2024 with an outlook of 9% to 11% sales growth and a 13% to 20% increase in adjusted operating income the execution of our strategy both organically and Inorganically is producing results as we continued to demonstrate above market sales growth with expanding <unk>.

Joseph W. Dziedzic: We delivered a very strong 2023, with full-year sales up 16% and adjusted operating income improving by 26% over 2022. We expect this strong performance to continue in 2024, with an outlook of 9% to 11% sales growth and a 13% to 20% increase in adjusted operating income. The execution of our strategy, both organically and inorganically, is producing results as we continue to demonstrate above-market sales growth with expanding margins. We remain focused on executing our strategy to create a premium valuation for our shareholders. I will now turn the call over to the moderator for the Q&A portion of our call. Thank you. To ask a question, please press star one on your telephone keypad.

Jeff: <unk>, we remain focused on executing our strategy to create a premium valuation for our shareholders.

Speaker Change: I will now turn the call over to the moderator for the Q&A portion of our call.

Speaker Change: Thank you to ask a question. Please press star one on your telephone keypad, please feel free to ask multiple questions.

Speaker Change: Your first question comes from the line of Brett Fishbein with Keybanc capital markets. Your line is open.

Speaker Change: Yes.

Brett Fishbein: Hey, guys. Thanks, so much for taking my questions just wanted to start off quickly with one on the 2024 guidance, maybe if you could just walk through a bit of the philosophy and then moving pieces around the 6% to 8% starting point for organic revenue growth and then just how you're balancing the thinking around really tough 2023 comparison.

Operator: Please feel free to ask multiple questions. Your first question comes from the line of Brett Fishbin with KeyBank Capital Markets. Your line is open.

Brett Fishbein: But in context of <unk>.

Brett Fishbein: Very elevated order book in the range of $1 billion exiting last year.

Brett Fishbin: Hey guys, Thanks so much for taking the questions. I just wanted to start off quickly with one on the 2024 guidance. Maybe if you could just walk through a bit of the philosophy and then the moving pieces around the 6% to 8% starting point for organic revenue growth and then just how you're balancing the thinking around, you know, really tough 2023 comparisons, but in the context of, you know, it's still a very elevated order book in the range of a billion dollars exiting last year. Great

Brett Fishbein: Okay.

Speaker Change: Great Hey, Brad Thanks, Thanks for the question.

Brad: So as we look at 2024 sales the 6% to 8% organic is consistent with our product development pipeline.

Speaker Change: That gives us great visibility into new programs that are ramping in 2020 for some of the growth in 'twenty. Four is from ramps that started in 2023 and 'twenty two and they pick up as the year progresses, and so six to eight.

Speaker Change: 6% to 8% organic growth for us is exactly what we've been talking about as our strategic objective and we're confident in being able to do that.

Joseph W. Dziedzic: Hey Brett, thanks for the question. So as we look at 2024 sales, the 6% to 8% organic is consistent with our product development pipeline that gives us great visibility into new programs that are ramping in 2024. Some of the growth in 2024 is from ramps that started in 2023 and 2022, and they pick up as the year progresses. And so 6% to 8% organic growth for us is exactly what we've been talking about as our strategic objective, and we're confident in being able to do that. Maybe to correlate that, we think the market in 2024 would be more similar to a longer-term outlook of 4% to 6%. We think 2023 was elevated for in-market growth, and 2022 was below average.

Speaker Change: To correlate that we think the market in 2024 would be more similar to kind of.

Speaker Change: Our longer term outlook of 4% to 6%. We think 2023 was elevated the end market growth. In 2022 was was below average and so as we look at 'twenty four we're assuming kind of a normal 4% to 6% industry growth and thats, the 6% to 8% the new products that are ramping gives.

Us confidence and being able to do that.

And to your question about the order book.

Speaker Change: Over 900 and over $900 million of orders on hand with customers gives us tremendous visibility into what customers are requesting from us both in the near term and out into the second half of the year and that's on top of what they give us on kind of a rolling 12 month basis kind of manufacturing plant and the manufacturing plant.

Speaker Change: Where they tell us what they're planning to produce for the next 12 months, which allows us to plan beyond that $900 million order book.

Speaker Change: Alright, Great and then maybe just following up on some of the comments around new product revenue.

Joseph W. Dziedzic: And so as we look at 2024, we're assuming kind of a normal 4% to 6% industry growth, and that's the 6% to 8%. The new products that are ramping up give us confidence in being able to do that. And to your question about the order book, over $900 million of orders on hand with customers gives us tremendous visibility into what customers are requesting from us, both in the near term and out into the second half of the year. And that's on top of what they give us on kind of a rolling 12-month basis, kind of manufacturing plant to manufacturing plant, where they tell us what they're planning to produce for the next 12 months, which allows us to plan beyond that All right, great.

Speaker Change: Did increase the outlook a little bit for this year, which was great to see <unk>.

Speaker Change: By approximately $20 million was just curious where youre seeing additional upside maybe in terms of product areas.

Speaker Change: A little extra color there would be really helpful. Thanks, so much.

Speaker Change: Sure is your question. Your question is specific to 'twenty three are looking forward to 'twenty four.

Speaker Change: Just looking at the 2020 for an estimate of $100 million to $120 million of new product revenue, just where youre seeing the additional upside thought relative to the prior year.

Speaker Change: Yes, you are referring to the emerging customers with PMA products, yes, exactly okay. Great. Yes. So we delivered about 250 basis points of total integer level growth in 'twenty three versus 2022 from this customer base and so if you triangulate that we had previously.

Brett Fishbin: And then maybe just following up on some of the comments around, you know, new product revenue. You did increase the outlook a little bit for this year, which was great to see by approximately $20 million. I was just curious, you know, where you're seeing additional upside, maybe in terms of product areas? A little extra color there would be really helpful. Thanks so much.

Speaker Change: We said, we'd grow from $50 million in 2022.

80 to 100 by 2024, and although it's not perfectly linear we did see strong progression. We actually we're ahead of kind of a linear progression towards that 80 to 100 and based upon the demand from customers in the success of their products in the marketplace. It gives us confidence in increasing the 2024.

Joseph W. Dziedzic: Sure, is your question specific to 23 or looking forward to 24? No, just looking at the 2024 estimate of $100 to $120 million of new product revenue, just where you were seeing the additional upside relative to the prior value last year. Yeah, you're referring to emerging customers with PMA products. Yeah, exactly. Okay, great.

Speaker Change: By another $20 million, we increased it last year you can see on the bottom right of the chart. We increased it last year from 60 to 80 to 80 to 100, we're doing that again this year, because we have confidence now given the manufacturing ramps and the demand that customers are seeing in the marketplace. So we're supporting their launch into the.

Joseph W. Dziedzic: Yeah, so we delivered about 250 basis points of total integer level growth in 2023 versus 2022 from this customer base. And so, you know, if you triangulate that, you know, we had previously said we'd grow from 50 million in 2022 to 80 to 100 by 2024. And although it's not perfectly linear, we did see strong progression. We actually were ahead of kind of a linear progression toward that 80 to 100.

Speaker Change: Marketplace of these novel therapies that are making a difference for patients and I'll. Just highlight these are mostly not spinal cord stem. So these are other neuromodulation emerging therapies that are meeting a lot of unmet patient need and so we're excited to support these customers and their success and you see that in our in our.

Speaker Change: Sales growth.

Speaker Change: Alright, thank you.

Speaker Change: Thanks, Brett.

Speaker Change: Do you have any further questions Brad.

Speaker Change: Okay.

Speaker Change: Amit I can go back in queue. If there is anyone else waiting to ask questions otherwise I can ask one or two more.

Joseph W. Dziedzic: And based upon the demand from customers and the success of their products in the marketplace, it gives us confidence in increasing the 2024 by another 20 million dollars. We increased it last year. You can see on the bottom right of the chart. We increased it last year from 60 to 80 to 80 to 100.

Speaker Change: Go ahead.

Speaker Change: Alright sure.

Brad: How about just a quick follow up around the starting range for operating margins I think I was calculating around one seven times or so at the midpoint compared to the sales growth rate, which seems a little bit better than last year, but still a little bit below the long term target. So maybe just a little bit around the key headwinds.

Joseph W. Dziedzic: We're doing that again this year because we have confidence now given the manufacturing ramps and the demand that customers are seeing in the marketplace. So, we're supporting their launch into the marketplace of these novel therapies that are making a difference for patients. And I'll just highlight that these are mostly not spinal cord STEM.

Brad: We're still seeing and then how you see those progressing.

Brad: As the year continues.

Brad: It might be a little early but whether you see some opportunity to continue pushing toward that two times target into 2025.

Joseph W. Dziedzic: So, these are other emerging neuromodulation therapies that are meeting a lot of unmet patient needs. And so, we're excited to support these customers in their success. And you see that in our sales growth. All right, thank you. Thanks, Brett. Do you have any further questions, Brett? I can go back in queue if there is anyone else waiting to ask questions. Otherwise, I could ask one or two more.

Speaker Change: Yes, great great Great Great question Bret your math is correct at midpoint. It is operating profit growing one seven times the growth rate in sales and what was the reason for that is we are just now getting back to the same level of direct labor turnover that we were at pre pandemic.

Speaker Change: We had talked about that when the direct labor turnover improves and supply chain disruption improves we felt like then we can work out the inefficiencies that we've experienced in manufacturing over the last three years driven by those disruptions and so.

Brett Fishbin: Go ahead. All right, yes. How about just a quick follow-up on the starting range for operating margins? I think I was calculating around 1.7 times or so at the midpoint compared to the sales growth rate, which seems a little bit better than last year, but still a little bit below the long-term target. So maybe just a little bit around the key headwinds you're still seeing, and then how you see those progressing as the year continues. It might be a little early, but whether you see some opportunity to continue pushing toward that two times target into 2025. Yeah, a great, great, great question, Brett.

Speaker Change: Im excited to say that our direct labor turnover is now in the first month of January we're actually back to 2019 levels. The fourth cohort every quarter in 2003 got better and better and we exited the fourth quarter with 23 slightly above 2019 that positive trend line has continued in <unk>.

Through 2024, and so that gives us confidence that we can work out the inefficiencies that we've experienced from direct labor turnover, but it will take us some time to work that out it won't it won't happen immediately we have we have a number of different initiatives in our manufacturing operations to deliver that those efficiencies, but we.

Joseph W. Dziedzic: Your math is correct. At midpoint, operating profit is growing 1.7 times the growth rate of sales. And the reason for that is we are just now getting back to the same level of direct labor turnover that we were pre-pandemic. We had talked about that when direct labor turnover improves, and supply chain disruption improves, we felt like then we could work out the inefficiencies that we've experienced in manufacturing over the last three years driven by those disruptions. And so I'm excited to say that our direct labor turnover is now in the first month of January, and we're actually back to 2019 levels. The fourth quarter, every quarter in 23 got better and better.

Speaker Change: That to continuously improve throughout the year and that gives us momentum going into 2025, our long term objective absolutely remains the two times operating profit growth two times the sales growth rate. The other thing I'll highlight is on supply chain. We saw continued improvement in supply chain.

Speaker Change: And throughout last year, and we entered 2024 with the lowest measure of disruption in the way we measure it the lowest since we started measuring it in early or in mid 2022, So I would say watch throughout the year, we expect margins to improve throughout the year as we get those efficiencies and our long term objective remains.

Joseph W. Dziedzic: And we exited the fourth quarter of 23 slightly above. In 2019, that positive trend line has continued into 2024. And so that gives us confidence that we can work out the inefficiencies that we've experienced from direct labor turnover. But it will take us some time to work that out. It won't happen immediately.

Speaker Change: Getting profit growing at least twice as fast as sales.

Speaker Change: Alright, it makes a ton of sense and then kind of along similar lines you have some of these cost headwinds starting to subside a little bit. But then there's also the flip side around pricing, which I know is a little bit of a modest positive to growth in 2023.

Joseph W. Dziedzic: We have a number of different initiatives in the manufacturing operations to deliver those efficiencies, and we expect that to continuously improve throughout the year. And that gives us momentum going into 2025. Our long-term objective absolutely remains two times operating profit growth and two times the sales growth rate. The other thing I'll highlight is supply chain. We saw continued improvement in supply chain throughout last year, and we entered 2024 with the lowest measure of disruption the way we measure it, the lowest since we started measuring it in early or mid-2022.

Speaker Change: It was a little bit different than in the past. So just curious on your thoughts here for 2024 as you know some of those cost headwinds start to cool down a little bit if pricing can still be a positive lever where at least continue to be more and more neutral than in the past.

Speaker Change: Sure pricing was was a slight positive in 'twenty, three which was really just sharing some of the material and wage inflation with our customers in a very collaborative partnership manner as we look forward to.

Joseph W. Dziedzic: So I would say watch throughout the year; we expect margins to improve throughout the year as we get those efficiencies. And our long-term objective remains to get profit growing at least twice as fast as sales. All right, that makes a ton of sense.

Speaker Change: 24, and beyond we expect pricing to be flattish and that's what we're modeling and assuming in 2024 based upon our agreements with our customers.

Speaker Change: Alright got it and then last one.

Speaker Change: I know you just.

Speaker Change: Completed the deal the post acquisition and it's a little bit early but just how folks should be thinking about the integration process for that deal in context of <unk> also being pretty recent just how youre prioritizing that.

Brett Fishbin: And then kind of along similar lines, you know, you have some of these cost headwinds starting to subside a little bit. But, you know, then there's also the flip side around pricing, which I know is a little bit of a modest positive to growth in 2023, which is a little bit different than in the past. So just curious on your thoughts here for 2024, as you know, some of those cost headwinds start to cool down a little bit, if pricing can still be a positive lever, or at least, you know, continue to be more neutral than in the past.

Speaker Change: <unk> of integration planning and maybe some of the key hurdles or just marks of success Youre looking for this year and thanks, a lot for taking the questions.

Speaker Change: So as soon as we closed we immediately started started talking to customers about commercial synergies and the capabilities and the capacity that we have with both of those acquisitions.

Joseph W. Dziedzic: Pricing was a slight positive in 2023, which was really just sharing some of the material and wage inflation with our customers in a very collaborative partnership manner. As we look forward to 2024 and beyond, we expect pricing to be flattish, and that's what we're modeling and assuming in 2024 based upon our agreements with our customers.

Speaker Change: We found great great reception and a very positive reaction from customers on those acquisitions because it enables us to do more for our customers those were smaller customer tuck ins. They were excited to see us ended thereby them to bring the scalability that we can and to integrate their.

Speaker Change: <unk> <unk> into the programs, we already have with those customers and it gives us more capabilities to do even more for them in vertical integration is a key point of differentiation that we bring and we already are the sales team is already working on a number of commercial synergies and our operating teams are already sharing best practice.

Brett Fishbin: And then last one, I know you just completed the deal, the Pulse acquisition, and it's a little bit early, but just how folks should be thinking about the integration process for that deal in the context of IndoroCo, also being pretty recent, just how you're, you know, prioritizing that level of integration you're planning and maybe some of the key hurdles or, you know, just marks of success you're looking for this And thanks so much for taking the questions. So as soon as we closed, we immediately started talking to customers about commercial synergies and the capabilities and the capacity that we have with both of those acquisitions. We found great reception and a very positive reaction from customers on those acquisitions because it enables us to do more for our customers. Those were smaller customer tuck-ins.

Speaker Change: And the great thing about it is the best practices are shared both ways. Because these smaller entrepreneurial innovative companies also find great ways to be efficient and low cost and so they're sharing some of their practices with us which is great.

Speaker Change: It also.

Speaker Change: Our customers we're excited because the four acquisitions in the last 25 months reduces the number of suppliers for them by four and they are excited to see us continue to do that and we're happy to help them consolidate and simplify their supply chain.

Speaker Change: Your next question comes from the line of Matthew O'brien with Piper Sandler Your line is open.

Joseph W. Dziedzic: They were excited to see us, Integer, buy them to bring the scalability that we can and to integrate their capabilities into the programs we already have with those customers. And it gives us more capabilities to do even more for them. And vertical integration is a key point of differentiation that we bring, and we already have, the sales team is already working on a number of commercial synergies. And our operating teams are already sharing best practices. And the great thing about it is that the best practices are shared both ways because these smaller, entrepreneurial, innovative companies also find great ways to be efficient and low cost.

Hey, good morning, Thanks for taking my questions maybe.

Matt Mishan: Maybe Joe just as I look at the stock opening up down a little bit. This morning, I'm thinking it's probably due to the organic growth outlook for the business and to follow up on <unk> question, a little bit I'm curious what's built in in terms of buffer because you mentioned more of a normalized environment. This year. Although we're hearing volumes are still very good.

Matt Mishan: I don't know if it just because the comp was tough last year, new product launches, there's some big ones in areas, where you guys are really strong and then obviously supply has gotten better as well so I'm just wondering.

Joseph W. Dziedzic: And so they're sharing some of their practices with us, which is great. And also, our customers were excited because the four acquisitions in the last 25 months reduced the number of suppliers for them by four. And they're excited to see us continue to do that, and we're happy to help them consolidate and simplify their supply chain. Your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open.

Matt Mishan: Just some of the buffers that you are building in on the top line, where that potentially could be a little bit better organic performance versus how you've guided.

Matt Mishan: Certainly.

Speaker Change: On the stock price I'll, let I'll, let you figure that one out we're just going to keep executing our strategy.

Speaker Change: In delivering on our financial objectives.

Speaker Change: Terms of growth, we have great visibility to 2024 because of the $900 million order book.

Operator: Good morning, thanks for taking my questions. Maybe, Joe, just to look at the stock opening up down a little bit this morning, I think it's probably due to the organic growth outlet for the business. And to follow up on Brett's question a little bit, I'm curious what's built in in terms of buffer, because, you know, you mentioned more of a normalized environment this year, although we're hearing, you know, volumes are still very good. I don't know if it's just because the comp was tough last year, but new product launches, there are some big ones in areas where you guys are really strong. And then, obviously, supply has gotten better as well.

Speaker Change: The success, our customers are having with their <unk>.

Speaker Change: Novel therapies that they are bringing to the marketplace and so we always come out with what we think is there is a balanced view that has the ability to.

Speaker Change: Ensure that we can deliver on this growth.

Speaker Change: We have we have rolling 12 month forecast from our customers and so as we look at 2024. We think this is higher than the market growth, which we think again it will be 4% to 6%. So we think our organic growth is delivering on our at least 200 basis points above and we're excited about the acquisitions and the additional <unk>.

Matt Mishan: So, I'm just wondering, you know, just some of the buffers that you're building in on the top line where there potentially could be a little bit better organic performance versus how you've guided. Certainly, on the stock price, I'll let you figure that one out. We're just going to keep executing our strategy and delivering on our financial objectives. In terms of growth, we have great visibility to 2024 because of the $900 million order book, and the success our customers are having with their novel therapies that they're bringing to the marketplace. And so, we always come out with what we think is a balanced view that has the ability to ensure that we can deliver on this growth. We have rolling 12-month forecasts from our customers.

Speaker Change: Marshall synergies that we can get when we get to later 'twenty four 'twenty five and beyond so we feel like this is a.

Speaker Change: <unk> balance.

Speaker Change: View of 2024, and we're excited to get into the year and execute in the first quarter.

Speaker Change: Got it and then from the acquisitions are you able to get into new areas that you hadn't been.

Speaker Change: <unk> before or are you just strengthening existing areas and then specifically track customers had been getting there has been some approvals. There recently is this.

Speaker Change: Area, where you can participate if that were to expand over the next several years and then I have one final final question.

Speaker Change: Certainly so one of the one of the great synergies with these acquisitions is they are serving the leading med tech Oems as well so our customers know them, we know them well and trust them.

Joseph W. Dziedzic: And so, as we look at 2024, we think this is higher than the market growth, which we think, again, will be 4% to 6%. So, we think our organic growth is delivering on at least 200 basis points above, and we're excited about the acquisitions and the additional commercial synergies that we can get when we get to later 2024 and 2025 and beyond. So, we feel like this is a really balanced view of 2024, and we're excited to get into the year and execute on the first quarter.

Speaker Change: For the design and development.

Speaker Change: The ability for them to ramp and scale is an area that they're excited for engineered O&M. It has gotten this exposure to maybe a couple of areas more so heart pumps being one example, with with pulse technologies, where it deepens our position in that space and the broader capabilities and.

Speaker Change: And capacity enables us to move faster with our customers. So we're excited about having having both the neuro go impulse technologies on the team.

Speaker Change: Got it and last question for Darren and congrats on the permanent title.

Joseph W. Dziedzic: And then from the acquisitions, are you able to get into new areas that you hadn't been in before, or are you just strengthening existing areas? And then specifically, Tricuspids, there have been some approvals there recently. Is this an area where you could participate if that were to expand over the next several years? And then I have one final question. Certainly, so one of the great synergies with these acquisitions is that they're serving the leading medtech OEMs as well, so our customers know them and know them well and trust them for design and development. The ability for them to ramp and scale is an area that they're excited for Integer to own them. It has gotten exposure to maybe a couple of areas, more so heart pumps being one example with Pulse Technologies, where it deepens our position in that space, and the broader capabilities and capacity enable us to move faster with our customers, so we're excited about having both NeuroCo and Pulse Technologies on the team. And last question for Dyron, and congrats on the permanent title.

Speaker Change: Just.

Darren Smith: Deleveraging that we're seeing on the on the income statement from top to bottom line, especially the low end of the range can you just maybe just I don't know if thats interest expense, specifically, but just talk about that and then it is a pretty broad range, which is makes sense early in the year, but just what gets you to the low end what gets you to the high end of that range.

Speaker Change: Yeah, and just to clarify you're referring to the adjusted net income.

Speaker Change: That's right the EPS numbers, yes, okay, yes, yes, just wanted to confirm.

Speaker Change: Yes so.

Speaker Change: Interest expense were up about $9 million midpoint on interest expense and Thats, primarily related to the acquisitions of AMERCO and bowls.

Speaker Change: So that drives about $13 million on the interest expense and then.

Speaker Change: The reduction in some additional paydown in debt.

Speaker Change: And then when you look at the tax rate were up about two percentage points on our adjusted tax rate year over year, that's primarily to two points.

Matt Mishan: Just the deleveraging that we're seeing on the income statement from top to bottom line, especially the low end of the range. Can you maybe just, I don't know if that's interest expense specifically, but just talk about that. And then it is a pretty broad range, which makes sense early in the year, but just what gets you to the low end, and what gets you to the high end of that range?

Speaker Change: One is the global pillar two minimum tax rate impact that's about a point of tax rate and then another just less than a point related to our Malaysian tax holiday exploration.

Speaker Change: That expired in 2023, and so there is some residual residual carryover impact of that.

Speaker Change: And then the other kind of other points would be a little bit of jurisdictional mix on the tax rate. So those two points are the primary primary drivers.

Matt Mishan: Thanks. And just to clarify, you're referring to the adjusted net income? That's right.

Dyron Smith: The EPS numbers. Yeah. Okay. Yeah. And the EPS, I just wanted to confirm.

Speaker Change: Weighted to the EPS.

Speaker Change: Got it thank you.

Speaker Change: Your next question comes from the line of Craig Bijou with Bank of America. Your line is open.

Dyron Smith: Yeah, so interest expense, you know, we're up about $9 million at midpoint on interest expense, and that's primarily related to the acquisitions of Ineroco and Pulse. So that dropped about $13 million on interest expense, and then the reduction is some additional pay down in debt. And then when you look at the tax rate, we're up about two percentage points on our adjusted tax rate year over year. That's primarily two points. One is the Global Pillar 2 minimum tax rate impact. That's about a point-ish of tax rate.

Craig William Bijou: Good morning, guys. Thanks for thanks for taking the questions.

Craig William Bijou: So just wanted to start we spent a lot of 23 talking about customer inventory worked down so I do apologize for asking this question again, but maybe we can.

Craig William Bijou: Kind of put it to put it to rest, but it sounds like inventory order patterns at your customers are getting to a more normal level. So.

Dyron Smith: And then another, just less than a point, related to our Malaysian tax holiday expiration that expired in 2023. And so there's some residual carryover impact of that, and then the other kind of other points would be a little bit of jurisdictional mix on the tax rate. So those two points are the primary drivers related to the EPS. Thank you. Your next question comes from the line of Craig Bijou with Bank of America. Your line is open. Good morning guys,

Craig William Bijou: Just wanted to hear kind of your thoughts there and if that is in fact true and 24 is going to be a normal year from that perspective.

Speaker Change: Yeah, Hey, Greg it wouldn't be an earnings call without without that question.

Speaker Change: So thank you so maybe I'll start with this.

Greg: Our view of the end market as 2022 was a below average growth year because of hospital staffing shortages in 2023 was a higher than average and if you look at the two years it looks to us like it kind of averages out to maybe more normal over the two years and we work closely with customers back in 2022 and when orders were.

Operator: Thanks for thanks for taking the questions. So just want to start. We spent a lot of 23 talking about customer inventory work down. So I do apologize for asking this question again, but maybe we can Kind of put this question to rest. But it sounds like inventory order patterns at your customers are getting to a more normal level. So, you know, just wanted to hear kind of your thoughts there. If that is in fact true, and you know 24 is going to be a normal year from that perspective, Hey It wouldn't be an earnings call without that question. So, thank you. So maybe I'll start with this one.

Greg: Coming in <unk>.

Greg: Fast and furious and high we work closer with customers to allocate capacity where in.

Greg: In order to support medical procedure volumes and that was that was our first question to customers. When we saw orders that look like they were meaningfully above any pattern or trend that we could observe in the end markets that.

Greg: And the nice thing is we're on we're aligned we're serving so many customers on so many different therapies and products, we can get a pretty good view of the overall market for different sub markets are pretty complex comprehensively given our sole source nature and so we were able to talk to customers about what we were seeing more holistic.

Craig William Bijou: Our view of the end market is 2022 was a below-average growth year because of hospital staffing shortages, and 2023 was higher than average. And if you look at the two years, it looks to us like it kind of averages out to maybe more normal over the two years. And we worked closely with customers back in 2022 when orders were coming in fast and furious and high. We worked closely with customers to allocate capacity in order to support medical procedure volumes. And that was our first question to customers when we saw orders that looked like they were meaningfully above any pattern or trend that we could observe in the end markets. The nice thing is that we're serving so many customers with so many different therapies and products.

Greg: <unk>.

We think for the most part that order patterns, maybe ordering was not normal but what we shipped was maybe more aligned to end markets.

Greg: On the third quarter earnings call, we saw some of the supplier adjustments the deere supplier, we're adjusting inventory letters that the customers oftentimes send out when they do things in mass. We saw some of that last summer I said on the third quarter earnings call that we were seeing what we would characterize as kind of a typical year end inventory management in some locations.

Patients then we would incorporate that both of those into our our guidance. It was in our third quarter that those adjustments were in our fourth quarter and I think given our order book, we've got really good visibility.

Craig William Bijou: We can get a pretty good view of the overall market for different submarkets pretty comprehensively given our sole source nature, and so we were able to talk to customers about what we were seeing more holistically. And we think for the most part that order patterns, maybe ordering was not normal, but what we shipped was maybe more aligned to end markets. As I shared on the third quarter earnings call, we saw some of the supplier adjustments that their suppliers were adjusting inventory letters that customers oftentimes send out when they do things in mass. We saw some of that last summer.

Greg: The next at least six months and even beyond with with some of the longer term orders. We have so we've baked all of that in we've got all of that factored into our guidance and we're confident in the guidance that we've provided both for the full year and the qualitative color that we provided on the first quarter.

Speaker Change: Got it thanks, thanks for the thorough answer.

Speaker Change: I wanted to follow up on the higher guidance for emerging customers.

Speaker Change: And.

Speaker Change: And sorry, if I missed this the specifics, but whats driving that raise to the $20 million. So.

Joseph W. Dziedzic: I said on the third quarter earnings call that we were seeing what we would characterize as kind of typical year-end inventory management in some locations, and we had incorporated both of those into our guidance. So it was in our third quarter that those adjustments were in our fourth quarter. And I think given our order book, we've got really good visibility to the next at least six months and even beyond with some of the longer-term orders we have. So we've baked all that in. We've got all that factored into our guidance, and we're confident in the guidance that we've provided both for the full year and the qualitative color that we've provided for the first quarter. I got it.

Speaker Change: Our performance versus what you were expecting.

Speaker Change: Through 'twenty three or is it a better.

Speaker Change: Higher expectations for 'twenty four for those products.

Yes, it's a great question I mean, the very nature of these customers are the success or failure in the marketplace will determine the success or failure on on slide 17 in our presentation that shows those the growth in those sales and so look we risk adjust our forecast from our customers because we know.

Speaker Change: No.

Speaker Change: We're going to plan for the best they can do to make sure that they've got they've got product to hit the most aggressive sales forecast that they have while we risk adjust that because we've got 40 plus years of doing this kind of kind of the IPG and lead development for Neuromodulation customers and so what youre seeing.

Craig William Bijou: Thanks. Thanks for the thorough answer. I wanted to follow up on the higher guidance for emerging customers. And, you know, and sorry if I missed this, you know, the specifics, but you know, what's driving that raise to 20 million? So, you know, was that outperformance versus what you were expecting through 23? Or is it a better, you know, higher expectations for 24 for those products? It's a great question.

Speaker Change: As you are seeing stronger success in the marketplace than what we risk adjusted the growth pattern here and quite frankly, you can look at it and see in fourth quarter of 'twenty. One we were saying 2024 was going to be 60 to 80, because when we did that we were still two years away. We got one more year of knowledge and then at the end of the end of 2022 weeks.

Joseph W. Dziedzic: I mean, the very nature of these customers, their success or failure in the marketplace will determine the success or failure on slide 17 in our presentation that shows the growth in those sales. And so, look, we risk adjust the forecast from our customers because we know that they're going to plan for the best they can do to make sure that they've got product to hit the most aggressive sales forecast that they have. Well, we risk adjust to that because we've got 40 plus years of doing this kind of IPG and lead development for neuromodulation customers. And so what you're seeing is you're seeing stronger success in the marketplace than what we risk adjusted, the growth pattern here. And quite frankly, you can look at it and see that in the fourth quarter of 21, we were saying 2024 was going to be 60 to 80 because when we did that, we were still two years away. We got one more year of knowledge, and then at the end of 2022, we said 80 to 100, and that risk adjustment proved to be overly conservative.

Speaker Change: At 80 to 100 and that risk adjustment proved to be overly conservative and so now we're seeing those customers success in the marketplace. We said.

Speaker Change: Alright, I commented earlier that our 23 versus 22 growth for integer was about 250 basis points from these customers. So you can do the math and extrapolate. We're ahead of the midpoint of 50 to 100, which gave us confidence to raise the 100 to 120, but ultimately it's the success of the.

Speaker Change: Alex in the marketplace and our risk adjustment prove conservative.

Speaker Change: Got it that's helpful and last one from me.

It sounds like you guys are modeling in.

Speaker Change: Decent amount of contribution from from New acquisition, So wanted to get your sense for.

Speaker Change: The end market acquisitions.

Speaker Change: Acquisitions for you guys I guess.

Speaker Change: Are there that many smaller smaller deals to be done.

Speaker Change: How is the pricing or valuation expectations on some of those deals.

Joseph W. Dziedzic: And so now we're seeing those customers' success in the marketplace. You know, we said, or I commented earlier that our 23 versus 22 growth per integer was about 250 basis points for these customers. So you can do the math and extrapolate.

Speaker Change: Bob.

Speaker Change: As a very robust pipeline of acquisition tuck in acquisitions for US. The team continues to do a phenomenal job of of identifying.

Speaker Change: The opportunities we think we're in a very unique position in the marketplace to be able to identify these tuck in acquisitions, we are oftentimes a supplier.

Joseph W. Dziedzic: We're ahead of the midpoint of 50 to 100, which gave us confidence to raise the 100 to 120. But ultimately, it's the success of the products in the marketplace, and our risk adjustment proved conservative.

Speaker Change: These targets or we might actually be partnering or working on a product that they are working on as well customers come to us and suggest to us acquisition opportunities, where they may love the technology and the design development capability, but they look at them and say, they're not big enough to scale or they don't want to take too.

Craig William Bijou: It sounds like you guys are modeling in, you know, a decent amount of contribution from new acquisitions. So I wanted to get your sense for the end market for acquisitions for you guys. I guess, you know, are there that many smaller, smaller deals to be done? And, you know, what are the pricing or valuation expectations on some of those deals?

Speaker Change: <unk> risk in some of the smaller customers on their most important high growth programs.

Speaker Change: How do we actually get costs from from targets themselves, who have seen what we've done with other acquisitions because they they have heard and they know from that network of other entrepreneur entrepreneurs founder led companies that we invest and grow the business, we bring commercial synergies. So we accelerate the growth of their business, we invest in there.

Joseph W. Dziedzic: So, there is a very robust pipeline of acquisitions, tuck-in acquisitions for us. The team continues to do a phenomenal job of identifying opportunities. You know, we think we're in a very unique position in the marketplace to be able to identify these tuck-in acquisitions.

Speaker Change: Our business and the vertical integration just just helps them accelerate the impact they're having in the marketplace and with patients. So they are excited about that.

Joseph W. Dziedzic: We are oftentimes a supplier to these targets, or we might actually be partnering with or working on a product that they're working on as well. Customers come to us and suggest acquisition opportunities where they may love the technology and the design development capability, but they look at them and say they're not big enough to scale, or they don't want to take too much risk, and some of the smaller customers on their most important high-growth programs. Sometimes we actually get calls from targets themselves who've seen what we've done with other acquisitions because they've heard, and they know from that network of other entrepreneurs, founder-led companies, that we invest in and grow the business.

Speaker Change: So we think we're in a unique position to be able to identify these tuck in acquisitions relative to others in the market who are pursuing them and your question on pricing of course, everybody wants the highest possible price split. These the trip liners and founder led companies care about lots of things when they make those decisions.

Speaker Change: And we think we get to a fair price for them.

Speaker Change: And oftentimes, we will put an earn out in there if they outperform over the first couple of years of ownership they can get more but we've been able to get these these acquisitions, we think that at a fair price the price that lets us them bring commercial and operational synergies and get and get a great return and we've built that muscle.

Joseph W. Dziedzic: We bring commercial synergies, so we accelerate the growth of their business. We invest in their business, and the vertical integration just helps them accelerate the impact they're having in the marketplace and with patients, so they're excited about that. So we think we're in a unique position to be able to identify these tuck-in acquisitions relative to others in the market who are pursuing them. And your question on pricing, well, of course, everybody wants the highest possible price, but these entrepreneurs and founder-led companies care about lots of things when they make those decisions, and we think we get to a fair price for them, and oftentimes we'll put an earnout in there if they outperform over the first couple years of ownership.

Speaker Change: Diligence ing and integrating we're.

Speaker Change: We're excited about the progress we've already made with the neuro co and pulse.

Speaker Change: <unk> already got commercial opportunities that are in process and the operational synergies also they start day, one because they're doing a lot of the same work serving the same customers and so it's pretty quick and pretty easy and so theyre also maybe to your question. They are serving the same end markets, they're targeting the same same higher.

Joseph W. Dziedzic: They can get more, but we've been able to get these acquisitions, we think, at a fair price, a price that lets us then bring commercial and operational synergies and get a great return, and we've built that muscle of diligence and integration. We're excited about the progress that we've already made with NeuroCo and Pulse. We've already got commercial opportunities that are in the process, and the operational synergies also start on day one because they're doing a lot of the same work, serving the same customers, and so it's pretty quick and pretty easy. And so they're also, maybe to your question, serving the same end markets, targeting the same higher growth markets as us, so they're great strategic fits, which is the discipline of following our criteria for acquisitions.

Speaker Change: Growth markets as us.

Speaker Change: It's a great strategic fit which is which is the discipline of following our criteria for acquisitions.

Speaker Change: Alright, thanks, guys.

Speaker Change: Thank you.

Speaker Change: Once again, ladies and gentlemen, if you have a question it is star one.

Speaker Change: Our next question comes from the line of Joanne Wuensch with Citi. Your line is open.

Joanne Wuensch: Good morning, and thank you very much for taking the question.

Joanne Wuensch: Running through my model. It looks like you have about somewhere between 50, and 70 basis points of operating margin expansion.

Joanne Wuensch: Mostly coming from gross margins just curious if I'm looking at this the right way.

Joanne Wuensch: And if so if we go back to sort of a pre pandemic operating margin is that the right way to think about the world or is it just the business and the model has changed so much since then.

Craig William Bijou: Great, thanks guys. Thank you. Once again, ladies and gentlemen, if you have a question, it is star number one. Your next question comes from the line of Joanne Wench with Citi. Your line is open.

Speaker Change: Good morning, Joanne your question was specific to fourth quarter or.

Joanne Wuensch: Our forecast I am sorry for terminal four.

Speaker Change: <unk> sorry.

Joanne Wuensch: That's okay. That's okay 2024.

Operator: Good morning, and thank you very much for taking the question. As I'm running through my model, it looks like you have somewhere between 50 and 70 basis points of operating margin expansion, mostly coming from gross margins. I'm just curious if I'm looking at this the right way, and if so, if we go back to sort of a pre-pandemic operating margin, is that the right way to think about the world, or is it just that the business and the model have changed so much since then? Good morning, Joanne. Your question was specific to the fourth quarter or forecast. I'm sorry.

Speaker Change: 2024 at midpoint on the adjusted operating income were up 91 basis points at midpoint.

Speaker Change: That I think it was commented earlier that operating profit growing one seven times as fast as the sales growth rate.

Speaker Change: Our 2020 for guidance.

Speaker Change: We're still driving towards the profit growing twice as fast and so this is this is above market sales growth with margin expansion in the 91 basis points as the mid point of our guidance.

Speaker Change: <unk> back to kind of pre pandemic.

Joanne Karen Wuensch: No, for 2024, sorry. That's okay. That's fine.

Speaker Change: That is still slightly below where we were pre pandemic and the biggest driver of that has to do with the direct labor attrition in the supply chain disruptions that we experienced heavily in 2022 and even throughout 2023 and the good news is.

Dyron Smith: 2024. So 2024 at midpoint on the adjusted operating income, we're up 91 basis points at midpoint. I think it was commented earlier that that's operating profit growing 1.7 times as fast as the sales growth rate. That's our 2024 guidance. We're still driving towards profit growing twice as fast. And so this is above market sales growth with margin expansion. And the 91 basis points is the midpoint of our guidance.

Speaker Change: More than half of our sites now their turnover is back to pre pandemic levels or better. We're confident that we will keep improving that throughout 2024 will work out those inefficiencies from before the pandemic and we're confident that we're going to get back to and exceed the margins that we had pre pandemic.

Speaker Change: Thank you for that my second question has to do somewhat with.

Dyron Smith: And referencing back to kind of pre-pandemic, that is still slightly below where we were pre-pandemic, and the biggest driver of that has to do with the direct labor attrition and the supply chain disruptions that we experienced heavily in 2022 and even throughout 2023. And the good news is that at more than half of our sites now, their turnover is back to pre-pandemic levels or better. We're confident that we'll keep improving that throughout 2024. We'll work out those inefficiencies from before the pandemic.

Speaker Change: Looking at the two segments and the <unk> sections of CRM and neuro Mod.

Speaker Change: Doing my math correctly in the fourth quarter, one segment, probably did better than the other.

Speaker Change: Comp issue or is it something else, we should be thinking about.

Speaker Change: Sure Joe.

Speaker Change: In cardiac rhythm.

Speaker Change: Management and Neuro mine <unk> mine continues to grow very strongly driven by the emerging PMA customers, we've talked a little bit about on this call cardiac rhythm management.

Joseph W. Dziedzic: It has actually grown very strongly throughout 2023.

Joseph W. Dziedzic: At some point.

Joseph W. Dziedzic: It's going to revert back to its more historical levels.

Dyron Smith: And we're confident that we're going to get back to and exceed the margins that we had pre-pandemic. Thank you for that. My second question has to do somewhat with looking at the two segments in the two sections of CRM and Neuromod. If I'm doing my math correctly, in the fourth quarter, one segment probably did better than the other. Is it a comp issue, or is it something else we should be thinking about?

Joseph W. Dziedzic: Our view is there were fewer procedures during the pandemic and the staffing shortages in hospitals in 'twenty. Two we saw very strong growth in the early part of 2023, and we think what Youre seeing.

Joseph W. Dziedzic: With the fourth quarter is cardiac rhythm management reverting back to a more historical low single digits. While neuromodulation continues to grow at a very strong level driven primarily by non spinal cord stim. The other emerging therapies in neuro with our emerging PMA customers.

Joanne Karen Wuensch: and thank you. Sure, so in cardiac rhythm management and neuromod, neuromod continues to grow very strongly driven by the emerging PMA customers we've talked a little bit about on this call. Cardiac rhythm management has actually grown very strongly throughout 2023, and at some point, it's going to revert back to its more historical levels. Our view is there were fewer procedures during the pandemic and the staffing shortages in hospitals in 22

Speaker Change: Terrific. Thank you very much have a great day.

Speaker Change: Great. Thanks Joanne.

Speaker Change: There are no further questions at this time I will turn the call to Andrew for closing remarks.

Yeah.

Andrew: Great. Thank you everyone for joining the call today as always you can access the replay of this call on our website as well as the presentation that we just covered.

Joseph W. Dziedzic: We saw very strong growth in the early part of 2023, and we think what you're seeing with the fourth quarter is cardiac rhythm management reverting back to a more historical low single-digit growth rate while neuromodulation continues to grow at a very strong level driven primarily by non-spinal cord stem cells and other emerging therapies in neuro with our emerging PMA customers. Thank you very much. Have a great day. Good. Thanks, Joanne

Andrew: Thank you for your interest in integer and that concludes our call today.

Speaker Change: This concludes today's conference call. We thank you for joining you may now disconnect your lines.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: [music].

Joanne Karen Wuensch: There are no further questions at this time. I will turn the call over to Andrew for closing remarks. Great, thank you everyone for joining the call today. As always, you can access the replay of this call on our website, as well as the presentation that we just discussed. Thank you for your interest in Integer, and that concludes our call today. We thank you for joining. You may now disconnect your lines.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.