Q2 2025 Integer Holdings Corp Earnings Call
<unk> 2025 earnings call.
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The speaker's remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star.
Operator: and I will be your conference operator today.
Speaker Change: One on your telephone keypad. Thank you I would now like to turn the conference over to Sanjeev Aurora Senior Vice President strategy business development Investor Relations you may begin.
Operator: At this time, I would like to welcome everyone to the Integer Holdings Corporation second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.
Thank you for standing by. My name is Cena and I will be your conference operator. Today at this time I would like to welcome everyone to the integer Holdings Corporation second quarter, 2025 earnings call
Operator: Through the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. Thank you.
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Joe: Good morning, everyone. Thank you for joining us and welcome to <unk> second quarter 2025 earnings Conference call with me today are Joe <unk>, President and Chief Executive Officer payment <unk>, President and CEO.
Speaker Change: So the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star,
Sanjiv Arora: I would now like to turn the conference over to Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations. You may begin.
Speaker Change: And Chief operating officer.
Darren Smith: Darren Smith, Executive Vice President and Chief Financial Officer.
Sanjie Aurora: 1 on your telephone keypad, thank you. I would now like to turn the conference over to sanjie Aurora senior vice president strategy, Business Development, investor relations you may begin
Joe Dziedzic: Good morning, everyone. Thank you for joining us. And welcome to Integer's second quarter 2025 earnings conference call.
Darren Smith: Kristen Stewart director of Investor Relations.
Speaker Change: As a reminder, the results and data we discuss today reflect the consolidated results of integer for the periods indicated.
Joe Dziedzic: With me today are Joe Dziedzic, President and Chief Executive Officer, Payman Khales, President and CEO-Elect and Chief Operating Officer, Diron Smith, Executive Vice President and Chief Financial Officer, and Kristen Stewart, Director of Investor Relations. As a reminder, the results and data we discussed today reflect the consolidated results of integer for the periods indicated. During the call, we will discuss some non-GAAP financial measures. For reconciliation of non-GAAP financial measures, please refer to the appendix of today's presentation. Today's earnings press release and the trending schedules, which are available on our website at integer.net. Please note that today's presentation includes forward-looking statements.
Speaker Change: During the call, we'll discuss non-GAAP financial measures for reconciliation of non-GAAP financial measures. Please refer to the appendix of today's presentation today's earnings press release, and trending schedules, which are available on our website at <unk> dot net.
Speaker Change: Good morning everyone. Thank you for joining us and welcome to integer second quarter of 2025 earnings conference call. With me today are Joe D's deck, president and chief executive officer payment, kales president, and CEO elect and Chief Operating Officer Darren Smith, Executive, Vice, President and Chief Financial Officer and Kristen Stewart, director of investor relations.
Speaker Change: Please note that today's presentation includes forward looking statements.
Speaker Change: As a reminder, the results and data we discussed today, reflect the Consolidated results of integer for the periods indicated.
Speaker Change: Please refer to the company's SEC filings for a discussion of the risk factors that could cause our actual results to differ materially.
Speaker Change: On today's call Joe will provide his opening comments Darren will then review our adjusted financial results for the second quarter 2025, and provide an update on our full year 2025 outlook, Joe will come back to provide his closing remarks, and then we will open up the call for your questions with that.
Speaker Change: During the call, it will discuss some non-gaap Financial measures for reconciliation of non-gaap financial measures. Please refer to the appendix of today's presentation. Today's earnings press release and the trending schedules, which are available on our website at integer.net.
Joe Dziedzic: Please refer to the company's SEC filings for a discussion of the risk factors that could cause our actual results to differ materially.
Speaker Change: Please note that today's presentation includes forward-looking statements.
Speaker Change: I will turn the call over to Joe.
Please refer to the company's SEC. Filings for a discussion of the risk factors that could cause our actual results to differ materially.
Joe Dziedzic: On today's call, Joe will provide his opening comments.
Joe: Thank you Sanjeev and thank you to everyone for joining the call today.
Sanjiv Arora: Diron will then review our adjusted financial results for the second quarter of 2025 and provide an update on our full year 2025 outlook. Joe will come back to provide his closing remarks, and then we will open up the call for your questions.
Joe: In the second quarter, we delivered another quarter of strong year over year results.
Joe: Sales increased 11% on both a reported and organic basis.
Joe: Our adjusted operating income grew 15% as we continue to expand margins and our adjusted earnings per share grew 19% year over year to $1 55.
Joe Dziedzic: With that, I'll turn the call over to Joe.
Joe Dziedzic: Thank you, Sanjiv, and thank you to everyone for joining the call today. In the second quarter, we delivered another quarter of strong year-over-year results. Sales increased 11% on both a reported and organic basis. Our adjusted operating income grew 15% as we continue to expand margins and our adjusted earnings per share grew 19% year over year to $1.55. For the first half of 2025, we deliver a strong above market performance with sales increasing 9% and adjusted operating profit increasing 14%, or one and a half times the rate of sales growth. With the first half now behind us, we are raising the midpoint of our adjusted operating income and EPS outlook.
On today's call, Joe will provide his opening comments. Darren will then review our adjusted Financial results for the second quarter of 2025 and provide an update on our full year. 2025 Outlook, Joel will come back to provide his closing remarks and then we will open up the call for your questions with that. I'll turn the call over to Joe.
Joe: Thank you sanjie, and thank you to everyone for joining the call today.
Joe: For the first half of 2025, we delivered a strong above market performance with sales, increasing 9% and adjusted operating profit, increasing 14% or one five times the rate of sales growth.
Speaker Change: In the second quarter, we delivered another quarter of strong year-over-year results.
Speaker Change: Sales increased 11% on both a reported and organic basis.
Joe: With the first half now behind US we are raising the midpoint of our adjusted operating income and EPS outlook, we are maintaining our sales outlook midpoint, given our high visibility to customer demand, while tightening the sales range.
Speaker Change: Our adjusted operating income. Grew 15% as we continue to expand margins and our adjusted earnings per share grew 19% year-over-year to 1 dollar and 55 cents.
Joe: At the midpoint of our full year outlook, we expect to grow sales eight 5% adjusted operating income, 14% and adjusted EPS, 20%.
Speaker Change: For the first half of 2025, we delivered, a strong above market performance with sales, increasing 9% and adjusted operating profit increasing 14%, or 1 and a half times the rate of sales growth.
Joe: It is an exciting time at integer because we have a strong pipeline of new products concentrated in faster growing end markets. Our margins are expanding as a result of our manufacturing and business excellence initiatives and we continue to acquire and integrate tuck in acquisitions that add or compound differentiated.
Joe Dziedzic: We are maintaining our sales outlook midpoint, given our high visibility to customer demand while tightening the sales range. At the midpoint of our full year outlook, we expect to grow sales 8.5%, adjusted operating income 14%, and adjusted EPS 20%.
Speaker Change: With the first half now behind us, we are raising the midpoint of our adjusted operating income and EPS Outlook. We are maintaining our sales Outlook midpoint, given our high visibility to customer demand while tightening the sales range.
Joe: <unk> I am grateful for our associates around the world that are delivering for our customers and making a difference for patients.
Joe Dziedzic: It is an exciting time at Integer because we have a strong pipeline of new products concentrated in faster growing end markets. Our margins are expanding as a result of our manufacturing and business excellence initiatives, and we continue to acquire and integrate tuck-in acquisitions that add or compound differentiated capabilities.
Speaker Change: At the midpoint of our full year outlook, we expect to grow sales, 8 and a half percent adjusted operating income 14% and adjusted EPS 20%.
Darren Smith: I'll now turn the call over to Darren.
Darren Smith: Thank you Joe.
Darren Smith: Morning, everyone and thank you again for joining today's call.
Darren Smith: I'll provide more details on our second quarter 2025 financial results and provide an update on our 2025 outlook.
Joe Dziedzic: I am grateful for our associates around the world that are delivering for our customers and making a difference for patients.
Darren Smith: In the second quarter of 2025, we delivered strong financial results.
Darren Smith: Sales totaled $476 million.
Diron Smith: I'll now turn the call over to Diron. Thank you, Joe.
Speaker Change: It is an exciting time and integer because we have a strong pipeline of new products, concentrated in faster growing in markets, our margins are expanding as a result of our manufacturing and business Excellence initiatives and we continue to acquire and and integrate tuck in Acquisitions that, add or compound differentiated capabilities. I am grateful for our Associates around the world that are delivering for our customers and making a difference for patients.
Darren Smith: Reflecting 11% year over year growth on both a reported and organic basis.
Don: I'll now turn the call over to Don.
Diron Smith: Good morning, everyone. And thank you again for joining today's call. I'll provide more details on our second quarter 2025 financial results and provide an update on our 2025 outlook. In the second quarter of 2025, we delivered strong financial results. Sales totaled $476 million, reflecting 11% year-over-year growth on both a reported and organic basis. Organic sales growth removes the impact of our precision and VSI acquisitions, the strategic exit of the portable medical market, and foreign currency fluctuations. We delivered $99 million of adjusted EBITDA, up $9 million compared to the prior year, or an increase of 10%.
Darren Smith: Organic sales growth removes the impact of our precision and DSI acquisition.
Don: Thank you, Joe. Good morning, everyone. And thank you again for joining today's call.
Darren Smith: Our strategic exit of the portable medical market and foreign currency fluctuations.
Don: I'll provide more details on our second quarter, 2025 Financial results and provide an update on our 2025 Outlook.
Darren Smith: We delivered $99 million of adjusted EBITDA up $9 million compared to the prior year or an increase of 10%.
Don: In the second quarter of 2025, we delivered, strong financial results.
Darren Smith: Adjusted operating income grew 15% versus last year as we continue to make progress on our year over year margin expansion.
Don: Sales total of 476, million reflecting, 11% year-over-year growth on both, a reported and organic basis.
Darren Smith: Operating income as a percentage of sales expanded 50 basis points year over year to 17, 1% comprised.
Don: Organic sales growth removed, the impact of our precision, and DSi Acquisitions the Strategic exit of the portable Medical Market and foreign currency fluctuations.
Darren Smith: Of approximately 10 basis points from gross margin and 40 basis points from operating expense leverage.
Diron Smith: Adjusted operating income grew 15% versus last year as we continue to make progress on our year-over-year margin expansion. Adjusted operating income as a percentage of sales expanded 50 basis points year over year to 17.1%, comprised of approximately 10 basis points from gross margin and 40 basis points from operating expense leverage. Adjusted net income for the second quarter of 2025 was $55 million, up 23% year-over-year, while adjusted earnings per share totaled $1.55, up 19% from the same period last year. Turning to our sales performance by product line, cardio and vascular sales increased 24% in the second quarter 2025, driven by new product ramps in electrophysiology and incremental sales related to the precision and VSI acquisitions, as well as strong customer demand in neurovascular.
Don: %.
Darren Smith: Adjusted net income for the second quarter of 2025 was $55 million up 23% year over year, while adjusted earnings per share totaled $1 55 up 19% from the same period last year.
Don: Adjusted operating income. Grew 15% versus last year as we continue to make progress on our year-over-year margin expansion.
Don: Adjusted operating income as a percentage of sales, expanded 50 basis points year-over-year to 17.1%.
Darren Smith: Turning to our sales performance by product line cardio and vascular sales increased 24% in the second quarter 2025, driven by new product ramps in electrophysiology and incremental sales related to the precision in BSI acquisition as well as strong customer demand in neurovascular.
Don: Comprised of approximately 10 basis points from gross margin and 40 basis points from operating expense Leverage.
Darren Smith: On a trailing four quarter basis, <unk> sales increased 17% year over year with strong growth across all targeted C&D markets, driven by new product ramps and acquisitions.
Don: Adjusted net income for the second quarter of 2025 was 55 million up 23% year-over-year while adjusted earnings per share totaled $155 up. 19% from the same period last year.
Darren Smith: For the full year 2025, we continue to expect <unk> sales to grow in the mid teens compared to the full year 2024.
Darren Smith: Cardiac rhythm management Neuromodulation sales increased 2% in the second quarter of 2025, driven by strong growth from emerging PMA customers in Neuromodulation and normalized <unk> growth, partially offset by the planned decline of a neuromodulation program.
Diron Smith: On a trailing four-quarter basis, CMV sales increased 17% year-over-year with strong growth across all targeted CMV markets driven by new product ramps and acquisitions. For the full year 2025, we continue to expect C&V sales to grow in the mid-teens compared to the full year 2024. Cardiac Rhythm Management Neuromodulation sales increased 2% in the second quarter of 2025, driven by strong growth from emerging PMA customers in neuromodulation and normalized CRM growth, partially offset by the planned decline of a neuromodulation program. Back in 2020, we announced the planned decline of this program, and we expect 2025 is the last year of decline.
Don: Turning to our sales performance by product line, cardio and Vascular sales, increase 24% in the second quarter, 2025 driven by new product ramps and electrophysiology and incremental sales related to the Precision and vssi Acquisitions as well as strong customer demand and neurovascular.
Don: On a trailing 4 quarter basis, seeing these sales increase 17% year-over-year with strong growth across all targeted, CMV markets driven by new product ramps and acquisitions.
Darren Smith: Back in 2020, we announced the planned decline of this program and we expect 2025 of the last year of decline.
Don: For the full year, 2025, we continue to expect cnv sales to grow in the mid-. Teens, compared to the full year to 2024
Darren Smith: On a trailing four quarter basis, <unk> sales increased 5% year over year, primarily driven by strong growth from emerging PMA customers in neuromodulation.
Darren Smith: For the full year 2025, we now expect <unk> to grow in the mid single digits as compared to the prior year.
Don: Cardiac Rhythm management, neuromodulation sales increased 2% in the second quarter, 2025 driven by strong growth, from emerging PMA, customers and neuromodulation and normalized CRM growth. Partially offset by the planned decline of a neuromodulation program.
Darren Smith: Our expectation of mid single digits growth is higher than our prior range of low to mid single digits based on the strong order visibility we have for the balance of the year.
Diron Smith: On a trailing four quarter basis, CRM and N sales increased 5% year over year, primarily driven by strong growth from emerging PMA customers and neuromodulation. For the full year 2025, we now expect CRM&N to grow in the mid-single digits as compared to the prior year. Our expectation of mid-single digits growth is higher than our prior range of low to mid-single digits based on the strong order visibility we have to the balance of the year.
Don: Back in 2020. We announced the planned decline of this program and we expect 2025 is the last year of decline.
Darren Smith: Product line detail for other markets is included in the appendix of the presentation, which can be found on our website at <unk> dot net.
Don: On a trailing 4 quarter basis CRM andn sales increased 5% year-over-year primarily driven by strong growth from emerging PMA customers and neuromodulation.
Darren Smith: In the second quarter of 2025, we delivered $55 million of adjusted net income up $10 million versus a year ago.
Don: For the full year 2025. We now, expect CRM. Andm to grow in the mid single digits as compared to the prior year.
Darren Smith: This increase was driven mainly by operational improvements, which include higher sales volume manufacturing efficiencies operating expense management and acquisition performance.
Diron Smith: Product line detail for other markets is included in the appendix of the presentation, which can be found on our website at integer.net. In the second quarter 2025, we delivered $55 million of adjusted net income, up $10 million versus a year ago. This increase was driven mainly by operational improvements, which include higher sales volume, manufacturing efficiencies, operating expense management, and acquisition performance. We also benefited from lower interest expense as a result of our convertible debt offering in March 2025, as well as a lower adjusted effective tax rate. Our adjusted effective tax rate was 19% for the second quarter of 2025, down from 20.7% in the prior year, and we now expect our full year 2025 rate to be within the range of 18.5 to 19.5%, lower than our prior outlook of 19 to 21%.
Don: Our expectation of mid single digits growth is higher than our prior range of low to mid single digits based on the strong order of visibility we have to the balance of the year.
Darren Smith: We also benefited from lower interest expense as a result of our convertible debt offering in March 2025, as well as a lower adjusted effective tax rate.
Don: Product line detail for other markets is included in the appendix of the presentation which can be found on our website at integer.net.
Darren Smith: Our adjusted effective tax rate was 19% for the second quarter of 2025 down from 27% in the prior year and we now expect our full year 2025 rate to be within the range of 18, five to 19, 5% lower than our prior outlook of 19% to 21%.
Don: In the second quarter of 2025, we delivered 55 million of adjusted net income up. 10 million dollars versus a year ago.
Don: this increase was driven mainly by operational improvements which include higher sales, volume manufacturing, efficiencies operating expense management and acquisition performance,
Darren Smith: In the second quarter, we experienced an FX headwind of $3 million or <unk> <unk> of adjusted EPS. This was primarily due to the weakening U S dollar and its impact on U S dollar denominated receivables in our foreign entities.
Don: We also benefited from lower interest expense as a result of our convertible debt offering in March, 2025, as well as a lower adjusted effective tax rate.
Darren Smith: And our outlook, we have assumed no further weakening or strengthening of the dollar in relation to other foreign currencies and we continue to enhance our hedging program to mitigate the P&L impact of foreign currency fluctuations.
Diron Smith: In the second quarter, we experienced an FX headwind of $3 million or $0.09 of adjusted EPS. This is primarily due to the weakening U.S. dollar and its impact on U.S. dollar-denominated receivables in our foreign entities. In our outlook, we have assumed no further weakening or strengthening of the dollar in relation to other foreign currencies, and we continue to enhance our hedging program to mitigate the P&L impact of foreign currency fluctuations. Additionally, the year-over-year increase in Adjusted Weighted Average Shares Outstanding drove approximately 4 cents reduction to our Adjusted EPS. In aggregate, second quarter 2025 adjusted income is up 23% year over year, and adjusted earnings per share is up 19%, both growing much faster than our 11% sales growth, a very strong performance in the second quarter.
Don: Our adjusted effective tax rate was 19% for the second quarter of 2025 down from 20.7% in the prior year. And we now expect our full year, 2025 rate to be within the range of 18.5 to 19.5% lower than our prior Outlook of 19 to 21%.
Darren Smith: Additionally, the year over year increase in adjusted weighted average shares outstanding drove approximately four central deduction to our adjusted EPS.
Darren Smith: In aggregate second quarter 2025, adjusted net income is up 23% year over year and adjusted earnings per share is up 19%, both growing much faster than our 11% sales growth a very strong performance in the second quarter.
Don: In the second quarter, we experienced an fx headwind of 3 million or 9 cents of adjusted. EPS this is primarily due to the weakening US dollar and its impact on US dollar denominated receivables in our foreign entities,
Don: And our Outlook. We have assumed no further weakening or strengthening of the dollar in relation to other foreign currencies. And we continue to enhance our hedging program, to mitigate the p&l and talk to foreign currency fluctuations.
Darren Smith: In the second quarter of 2025, we generated $44 million of cash flow from operations, our capex spend in the second quarter was $19 million, which is in line with our full year outlook.
Don: Additionally, the year-over-year increase in adjusted weighted average shares outstanding drove approximately 4, Cent reduction, to our adjusted eps.
Darren Smith: As a result free cash flow was $25 million in the second quarter, an increase of $9 million from the prior year or a 55% improvement.
Don: In aggregate. Second quarter, 2025 adjusting, the income is up 23% year-over-year and adjusted earnings per share is up. 19% both growing much faster than our 11% sales growth. A very strong performance in the second quarter.
Darren Smith: At the end of the second quarter net total debt was $1 $204 million, which is a $25 million decrease compared to the first quarter 2025, ending balance our net total debt leverage at the end of the second quarter was three two times trailing four quarter adjusted EBITDA within our strategic target range of two 5% to three five times.
Diron Smith: In the second quarter of 2025, we generated $44 million of cash flow from operations. Our CapEx spend in the second quarter was $19 million, which is in line with our full year outlook. As a result, free cash flow was $25 million in the second quarter, an increase of $9 million from the prior year or a 55% improvement. At the end of the second quarter, net total debt was $1,204,000,000, which is a $25,000,000 decrease compared to the first quarter 2025 ending balance. Our net total debt leverage at the end of the second quarter was 3.2 times trailing four quarter adjusted EBITDA within our strategic target range of two and a half to three and a half times.
Don: In the second quarter 2025, we generated 44 million of cash flow from operations. Our capex spend in the second quarter was 19 million which is in line with our full year outlook.
Don: As a result, free cash, flow was 25 million in the second quarter and increase of 9 million from the prior year or a 55% Improvement.
Darren Smith: As Joe mentioned earlier, we are raising the midpoint of our adjusted operating income and EPS outlook.
Darren Smith: While maintaining the midpoint of our sales outlook and tightening the sales range on both the high and low end.
Darren Smith: We expect sales to be in the range of $1 $850 million to $1 billion to $876 million, an increase of approximately 8% to 9% versus last year.
Don: At the end of the second quarter, net total debt was 1,244 Million which is a 25 million decrease compared to the first quarter 2025. Ending balance, our net total debt leverage at the end of the second quarter was, 3.2 times trailing 4 quarter adjusted Eva. Within our, strategic target range of 2 and a half to 3 and a half times.
Diron Smith: As Joe mentioned earlier, we are raising the midpoint of our adjusted operating income and EPS outlook, while maintaining the midpoint of our sales outlook and tightening the sales range on both the high and low end. We expect sales to be in the range of $1,850,000,000 to $1,876,000,000, an increase of approximately 8-9% versus last year. Given our strong first half sales and visibility to customer demand in the second half, we believe $1,863,000,000 is the appropriate midpoint of our outlook. On an organic basis, we continue to expect sales growth to be within the range of six to eight percent, which is approximately 200 basis points above our underlying market growth rate estimate of four to six percent.
Darren Smith: Given our strong first half sales and visibility to customer demand in the second half we believe $1.863 billion is the appropriate midpoint of our outlook.
Don: As Joe mentioned earlier, we are raising the midpoint of our adjusted operating income and EPS Outlook.
Don: Point of our sales Outlook and tightening the sales range on both the high and low end.
Darren Smith: On an organic basis, we continue to expect sales growth to be within the range of 6% to 8%, which is approximately 200 basis points above our underlying market growth rate estimate of $4 two 6%.
Don: We expect sales to be in the range of 1,850, million to 1,876 million, and increase of approximately 8 to 9% versus last year.
Darren Smith: For adjusted EBITDA, We now expect a range of between 402 million to $418 million, reflecting growth of 11% to 16%.
Don: Given our strong first half sales and visibility to customer demand in the second half. We believe 1,863 million is the appropriate midpoint of our Outlook.
Darren Smith: We now expect adjusted operating income between $319 million and $331 million.
Darren Smith: Representing growth of 12% to 16%.
Darren Smith: This is an increase of $4 million on the low end and $2 million at the midpoint from our prior outlook.
Diron Smith: For adjusted EBITDA, we now expect a range of between $402 million to $418 million, reflecting growth of 11 to 16%. We now expect adjusted operating income between $319 million and $331 million, representing growth of 12 to 16%. This is an increase of $4 million on the low end and $2 million at the midpoint from our prior outlook. For adjusted net income, our outlook range is between $222 and $231 million, an increase of 21% to 26% versus 2024. This is also an increase of $2 million at the midpoint, reflecting the higher operational performance, lower adjusted effective tax rate, and the first half foreign currency headwinds below operating income.
Don: On an organic basis. We continue to expect sales growth to be within the range of 6 to 8%, which is approximately 200 basis points, above our underlying market growth rate, estimate of 426%
Darren Smith: For adjusted net income our outlook ranges between 222 and $231 million, an increase of 21% to 26% versus 2024. This is also an increase of $2 million at the midpoint, reflecting the higher operational performance lower adjusted effective tax rate in the first half foreign currency <unk>.
Don: for adjusted Evo. We now expect a range of between 402 million to 418 million, reflecting growth of 11 to 16%.
Don: We now expect adjusted operating income between 319 million and 3331 million representing growth of 12 to 16%.
Winds below operating income.
Don: This is an increase of 4 million dollars on the low end and 2 million at the midpoint from our prior Outlook.
Darren Smith: Lastly, we expect adjusted EPS of between $6 25.
Darren Smith: And $6 51, which is a growth of 18% to 23% on a year over year basis. This is a <unk> increase at the midpoint.
Darren Smith: Our outlook assumes an adjusted weighted average diluted shares outstanding of $35 5 million shares for the full year 2025 and.
Diron Smith: Lastly, we expect adjusted EPS of between $6.25 and $6.51, which is a growth of 18 to 23% on a year-over-year basis. This is a 5 cent increase at the midpoint. Our outlook assumes an adjusted weighted average diluted shares outstanding of 35.5 million shares for the full year 2025. In regards to the tariff landscape, we continue to expect a negligible impact in 2025, well within our range of $1 to $5 million. Our expected reported sales growth of 8% to 9% for 2025 includes inorganic growth of approximately $59 million from the Precision and VSI acquisitions, all set by an approximate $29 million decline from the previously announced portable medical exit, which is expected to be completed by the end of 2025.
Don: For adjusting net income. Our Outlook range is between 222 and 231 million and increase of 21 to 26% versus 2024. This is also an increase of 2 million at the midpoint reflecting the higher operational, performance, lower adjusted effective tax rate and the first half foreign currency headwinds below operating income.
Darren Smith: In regard to the tariff landscape, we continue to expect a negligible impact in 2025, well within our range of $1 million to $5 million.
Darren Smith: Our expected reported sales growth of 8% to 9% for 2025 includes inorganic growth of approximately $59 million from the precision in BSI acquisitions offset by an approximate $29 million decline from the previously announced portable medical exit which is expected to be completed by the end of <unk>.
Don: Lastly we expect adjusted EPS of between 6 and 25 and 651 which is a growth of 18 to 23% on a year-over-year basis. This is a 5-cent increase at the midpoint
Don: our Outlook assumes an adjusted weighted average diluted shares outstanding of 35.5 million shares for the full year 2025
Darren Smith: 2025.
Don: In regard to the Tariff landscape, we continue to expect a negligible impact in 2025, well, within our range of 1 to 5 million.
Darren Smith: Yeah.
Darren Smith: We expect second half, 2025% reported sales growth to be approximately 8% at the midpoint with similar sales growth rates in the third and fourth quarter.
Darren Smith: We expect adjusted operating income as a percentage of sales to increase throughout the remainder of 2025, driven by continued improvement in manufacturing efficiency and sales growth outpacing our growth in operating expenses at.
Don: Our expected reported sales, growth of 8 to 9% for 2025 includes inorganic growth of approximately 59 million dollars from the Precision and vssi acquisitions.
Don: All set by an approximate 29 million decline from the previously announced portable medical exit, which is expected to be completed by the end of 2025.
Diron Smith: We expect second half 2025 reported sales growth to be approximately 8% at the midpoint, with similar sales growth rates in the third and fourth quarter. We expect adjusted to operating income as a percentage of sales to increase throughout the remainder of 2025, driven by continued improvement in manufacturing efficiency and sales growth outpacing our growth in operating expenses. At the midpoint of the outlook, Adjusted Operating Income as a Percentage of Sales is now expected to expand 86 basis points in 2025 compared to the full year 2024. This is a 10 basis point improvement since our prior outlook.
Darren Smith: At the midpoint of the outlook adjusted operating income as a percentage of sales is now expected to expand 86 basis points in 2025 compared to the full year 2024. This is a 10 basis point improvement since our prior outlook.
Don: We expect second half 2025 reported sales growth to be approximately 8% at the midpoint with similar sales growth rates in the third and fourth quarter.
Darren Smith: We continue to expect cash flow from operations to be between 235 million to $255 million, which.
Don: We expected adjusted to operating income as a percentage of sales to increase throughout the remainder of 2025 driven by continued Improvement in manufacturing and sales. Growth outpacing, our growth and operating expenses.
Darren Smith: That's a 20% year over year increase at the midpoint of the outlook.
Darren Smith: Our outlook for capital expenditures is unchanged at $110 million to $120 million as we continue to invest in capabilities and capacity.
Diron Smith: We continue to expect cash flow from operations to be between $235 million to $255 million, which represents a 20% year-over-year increase at the midpoint of the outline. Our outlook for capital expenditures is unchanged at $110 to $120 million as we continue to invest in capabilities and capacity. As a result, we expect to generate free cash flow between $120 million and $140 million, which represents a 30% year-over-year increase at the midpoint. We expect our 2025 year-end net total debt to be between $1,115,000,000 and $1,135,000,000. And we expect to end the year with a leverage ratio within our target range of 2.5 and 3.5 times trailing four-quarter adjusted EBITDA.
Darren Smith: As a result, we expect to generate free cash flow between $120 million and $140 million, which represents a 30% year over year increase at the midpoint.
Don: At the midpoint of the Outlook adjusted operating income as a percentage of sales is now expected to expand 86 basis points in 2025 compared to the full year 2024. This is a 10 basis point Improvement, since our prior Outlook,
Darren Smith: We expect our 2025 year end net total debt to be between $1 billion $115 million and $1 billion $135 million and.
Don: We continue to expect cash flow from operations to be between 235 million to 2555 million, which represents a 20% year-over-year, increase at the midpoint of the Outlook.
Darren Smith: And we expect to end the year with a leverage ratio within our target range of two five and three five times trailing four quarter adjusted EBITDA.
Don: Our outlook for Capital expenditures is unchanged at 110 to 120 million as we continue to invest in capabilities and capacities.
Joe: With that I'll turn the call back to Joe. Thank you.
Don: As a result we expect to generate free cash flow between 120 million and 140 million, which represents a 30% year-over-year increase at the midpoint.
Joe: Thanks, Darren we delivered strong growth in the first and second quarter with sales up 9% and EPS up 17% in the first half of 2025.
Don: We expect our 2025 year-end net total debt to be between 1 billion, 11115 million, and 1 billion 135 million.
Joe: We are successfully executing our growth strategy to meet our financial objectives of growing organically above the market, while expanding margins and maintaining our targeted debt leverage we are confident this sustained level of performance, we will produce a premium valuation for our shareholders.
Joe Dziedzic: With that, I'll turn the call back to Joe. Thank you. Thanks, Diron. We delivered strong growth in the first and second quarter, with sales up 9% and EPS up 17% in the first half of 2025. We are successfully executing our growth strategy to meet our financial objectives of growing organically above the market while expanding margins and maintaining our targeted debt leverage. We are confident this sustained level of performance will produce a premium valuation for our shareholders.
Don: And we expect to end the year with a leverage ratio within our target range of 2 and a half and 3 and a half times trailing 4 quarter adjusted. Evida
Speaker Change: We will now turn the call over to our moderator for the Q&A portion of the call.
Speaker Change: As a reminder.
Speaker Change: I would like to ask a question press star one on your telephone keypad, we respectfully ask that you keep questions to one and one follow up we will pause for just a moment to compile the Q&A roster.
Don: With that, I'll turn the call back to Joe. Thank you! Thanks! Darren we delivered strong growth. In the first and second quarter with sales up, 9%, and EPS up. 17% in the first half of 2025, we are successfully, executing our growth strategy to meet our financial objectives of growing, organically above the market while expanding margins and maintaining our targeted debt.
Operator: We will now turn the call over to our moderator for the Q&A portion of the call. Thank you. As a reminder, if you would like to ask a question, press star one on your telephone keypad.
Don: Leverage, we are confident this. Sustained level of performance will produce a premium valuation for our shareholders.
Speaker Change: Our first question comes from the line of Brett <unk> with Keybanc capital markets. Please go ahead.
Speaker Change: we will now turn the call over to our moderator for the Q&A, portion of the call,
Brett: Hey, guys. Good morning, Thanks, very much for taking my questions. Just wanted to start off on the full year organic growth guidance update just based on the QQ upside here would have maybe expected a revision and a positive revision to the full year, just given where you are year to date. So I was just hoping you could maybe walk through the bridge.
Operator: We respectfully ask that you keep questions to one and one follow up. We will pause for just a moment to compile the Q&A roster.
Brett Fishbin: Our first question comes from the line of Brett Fishbin with KeyBank Capital Markets. Please go ahead. Hey guys, good morning. Thanks very much for taking the questions. Just wanted to start off on the full year organic growth guidance update. Just based on the 2Q upside here, would have maybe expected a revision, a positive revision to the full year, just given where you are year to date. So we're just hoping you could maybe walk through the bridge of, you know, the organic performance in 1H versus what you're expecting in 2H.
Speaker Change: Thank you as a reminder. If you would like to ask a question, press star 1 on your telephone keypad, we respectfully ask that you keep questions to 1 at 1 follow up. We will pause for just a moment to compile the Q&A roster.
Speaker Change: Of.
Speaker Change: Our first question comes from the line of Brett Fishman with keybanc capital markets, please go ahead.
Speaker Change: Organic performance in <unk> versus what you were expecting intuit.
Speaker Change: Yeah.
Speaker Change: Yes, hi.
Speaker Change: Yeah. Good morning, Brad This is a payment accounts hope youre doing well I hope the audio is okay.
Speaker Change: We had some technical difficulties.
Can you hear me well.
Speaker Change: Yes, you are coming through clear no technical difficulties this off through the call on my end.
Speaker Change: Alright, great excellent. Thank you very much.
Brett Fishman: For taking the questions. Um, just wanted to start off on the full year. Organic growth guidance update. Just based on the 2q upside here would have maybe expected a revision of positive revision to the full year um just given where you are year to date. So I was just hoping you could maybe walk through the bridge of, you know, the organic performance in 1H versus what you're expecting into each.
Payman Khales: Yeah, hi. Yeah, good morning, Brett. This is Payman Khales. Hope you're doing well. I hope the audio is okay. We have some technical difficulties. Can you hear me well? Yeah, you're coming through clear. No, no technical difficulties through the call on my end. Alright, thank you for the caller.
Speaker Change: So let me let me address that your your question was related to.
Speaker Change: Through the second H second Asia organic performance. So let me just let me just talk high level about the performance.
Brett Fishman: Yeah, hi. Uh, yeah, good morning, Brad. This is uh, a payment K. So hope you you're doing well. I hope the, the audio is okay. Uh, we, uh, we have some technical difficulties. Um, can you hear me? Well,
Speaker Change: That's what we've talked about for the year, we're still pointing to the midpoint.
Brett Fishman: Yeah, you're coming through clear? No, no technical difficulties uh, through the call, on my end.
Speaker Change:
Speaker Change: Of a range of our guidance, we gave at the second half of the year. We grew at 9% the second half of the year, we're projecting up 8% so that kind of puts us at about eight 5% or 18 63 at the midpoint.
Speaker Change: Some of the some of the color that I would add for the 40 years that we had a strong <unk>.
Speaker Change: That's from a revenue perspective, there are some a few things that drove that we had.
Speaker Change: Some some strong.
Speaker Change: New product launches.
Speaker Change: Timeliness of that.
Speaker Change: Typically our bread within the quarters, we have some movements in terms of customer demand.
Speaker Change: Our customers, sometimes a shift there their demand within the quarter, that's usually a small amount of it.
Brett Fishman: All right. Great. Excellent. Thank you very much. Uh, and, uh, so, so, let me, uh, let me address that your your, um, your question was related to, um, to the second age of the second age organic performance. So, um, let me just let me just talk high level, uh, about the performance, uh, uh, uh, uh, that, uh, that we've talked about. So, so for the year, we're still pointing, uh, uh, to the midpoint, um, of, uh, of a range of our guidance. Uh, uh, we, we the second half of the year. We grew at 9%, the second half of the year, uh, we're projecting at 8% so that kind of puts us at about 8 and a half percent, uh, or or 1863, uh, at midpoint, uh, the the, uh, some of the, some of the colors that I would add, uh, for the, uh, for the years that we
Brett Fishman: We had a strong 2q. Um,
Speaker Change: We have something similar in the second quarter.
Speaker Change: In the sense that some of the demand from <unk> came into <unk> and then and then lastly, we are we are.
Speaker Change: We had talked about the expansion of our Newark facility and executing the demand on that that demand came on full online in the middle of last year, and we've been executing a crossover demands and we executed a little bit more demand in Q2 that we had anticipated so.
Speaker Change: So all in all that that drove.
Speaker Change: Some strength into <unk>.
Speaker Change: If you really think about it we had we had projected.
Speaker Change: <unk> growth of in the high single digits. We ended up at around 11, that's about 200 bps you do the math that's about 10 million dose every single one of these things that I talked about added a few million dollars to kind of make up that.
Speaker Change: 200 bps so so.
Brett Fishman: Uh, that's from a revenue perspective. There's some, uh, a few things that drove, that, uh, we had, uh, some, uh, some strong, uh, uh, new product launches, uh, some some timeliness of that, uh, typically, uh, Brett within the quarters, we have some movements in terms of customer demand, uh, our customers sometimes shift their, uh, their demand within the quarter. That's usually a, uh, a small amount that we, we, we have something similar, uh, in the second quarter, uh, in the sense that, you know, some of the demand from 3Q came into 2q. And then, um, and then lastly, we, uh, we, uh, uh, we had talked about the, the expansion of our neuros facility and executing the demand on that. That demand came on full online in the middle of last year. And, and we've been executing a customer demand, and we executed a little bit more demand into q that we had anticipated. So, so, so, so all in all, uh, that, that drove, uh, uh, you know, some strength, uh,
Speaker Change: So overall I would I would look at that.
Speaker Change: The second half of the year of 8% it kind of.
Speaker Change: It keeps our guidance the same at eight and a half at that eight 5%.
Speaker Change: Mid point on 18, 63, just maybe one more thing that I would talk about in the second half of the year. We're.
Speaker Change: We're going to be bumping against.
Speaker Change: A tough comp in <unk> and <unk> of last year, we had a very strong growth.
Brett Fishman: Into 2q, uh, if you really think about it, uh, we we had, we had projected uh, 2q growth of, in the, in the high single digits. Uh, we ended up at around the 11, that's about 200 bips. You do the math, that's about 10 million. So, so, every single 1 of these things that I talked about, you know, added a few million to kind of make up that, um, uh, that 200 bips so. So, so overall, I would, I would look at, uh, the, the, the the second half of the year.
Speaker Change: 7%.
Speaker Change: So so so we're bumping up against some tough comps as well. So so so all in all we think that the year of 863 at midpoint is strong.
Speaker Change: Alright. Thank you for the color and then just one follow up question.
Brett Fishman: Of of 8%, it kind of uh, keeps our Guidance, the same at at 8 and a half at at 8 and a half percent of uh at midpoint and 1863 just maybe 1 more thing that I would talk about uh in the second half of the year.
Speaker Change: In CRM and neuro.
Speaker Change: Another quarter or 2% growth, but it sounded like the full year outlook is actually improving a little bit from low to mid single digits to mid single digits. I'm. Just curious if you could maybe give a little more color. There if it's coming from some of the new product ramps in neuromodulation or if youre seeing a little bit of a better.
Brett Fishman: We're going to be bumping against, uh, a tough comp in, uh, in 4 cube in 4 q of last year. We had a very strong growth, uh, of 11%. Uh, so so so, so we're bumping up against some tough comps as well. So, so, so all in all we think that the year at 1863 at midpoint is strong
Brett Fishbin: And then just one follow up question. In CRM and Neuro, another quarter, 2% grew up, but it sounded like the full-year outlook is actually improving a little bit from low to mid-single digits to mid-single digits. I was curious if you could maybe give a little more color there, if it's coming from some of the new product RAMs in neuromodulation, or if you're seeing a little bit of a better market dynamic in CRM or anything else there. Thank you very much.
Speaker Change: Market dynamic in CRM or anything else there. Thank you very much.
Speaker Change: Sure Hi, Brett, it's Joe So CRM and and as you highlighted in the first half sales were 2% and our guidance guidance for the year is mid single digit which means second half needs to be in the high single digits and there's two primary drivers as you highlighted neuromodulation gets better in the second half of the year based on some customer demand plus.
Speaker Change: We highlighted that there was a planned.
Joe Dziedzic: Hi, Brett. It's Joe. So, CRM and end, as you highlighted, the first half sales were 2%, and our guidance for the year is mid-single digit, which means second half needs to be in the high single digits. And there's two primary drivers. As you highlighted, neural modulation gets better in the second half of the year based on some customer demand. Plus, we highlighted that there was a planned IPG customer decline that occurred in the first half that relents and is less of an impact in the second half. That actually gets us about halfway from that 2% first half to the 8%-ish or 8 or 9 high single digits second half to get you to the midpoint of the guidance there, the mid-single digits.
Speaker Change: All right, thank you for the caller. And then just 1 follow-up question. Um, you know, in CRM and neuro, um, another quarter 2% growth, but it sounded like the full year outlook is actually improving a little bit from low to mid single digits to Mid single digits. Um, I was curious if you could maybe give a little more color there, if it's coming from some of the new product ramps in neuromodulation, or if you're seeing a little bit of a better, um, like End Market dynamic in CRM, or anything else there. Thank you very much.
Speaker Change: G customer decline that occurred in the first half that relates and is much less of an impact in the second half that actually gets us about halfway from that 2% first half to the 8% ish or a nine eight or nine high single digits second half to get you to the midpoint.
Speaker Change: The guidance there the mid single digits and then the other thing is the cardiac rhythm management actually picks up a little bit in the second half and I wouldn't highlight anything in particular, its just the timing of demand within our customers and how they're running their operations in.
Sure. Hi Brad. It's Joe. So CRM and in is, is you highlight in the first half, sales were 2% and our, our guys guidance for the year, is mid single digit. Which means second half needs to be in the high single digits. And there's 2 2 primary drivers. Uh, as you highlighted, neuromodulation gets better in the second half of the Year based on some customer demand plus, um, we highlighted that that there was a planned, um, I
Speaker Change: I'll highlight just maybe broadly that we think the best way to look at the trajectory of the business and our sales trend is to look at a rolling four quarter basis as payment highlighted in any given quarter. There's there is variation driven by how customers are managing their plants just to remind everybody of the majority of what we do is sole source.
Joe Dziedzic: And then the other thing is the cardiac rhythm management actually picks up a little bit in the second half. And I wouldn't highlight anything in particular. It's just the timing of demand within our customers and how they're running their operations.
Joe Dziedzic: And I'll highlight just maybe broadly that we think the best way to look at the trajectory of the business and our sales trend is to look at a rolling four-quarter basis. As Payment highlighted, in any given quarter, there's variation driven by how customers are managing their plants. Just to remind everybody, the majority of what we do is sole source. The majority of what we do, we ship to one of our customers' manufacturing plants. It gets incorporated into one of their devices. And then four to nine months later, it shows up in a procedure. And so a rolling four-quarter view, whether it's trailing or looking forward at the full year, it removes some of that noise and that variability in any given quarter.
Speaker Change: The majority of what we do we shipped to one of our customers manufacturing plants. It gets incorporated into one of their devices and then four to nine months later it shows up in a procedure and so our rolling four quarter view, whether it's trailing or looking forward at the full year. It removes some of that noise and that variability in any given quarter.
Speaker Change: And.
Speaker Change: Maybe what you were getting at about first half versus second half full year, we're right right in line with what we guided to at the beginning of the year eight 5% sales growth to $1 billion 63 of the organic growth is the same for the full year slightly.
Speaker Change: Slightly higher second quarter sales than what we were expecting and then what I think investors were expecting does not change our view of the full year.
Joe Dziedzic: And that's maybe what you were getting at about first half versus second half.
Joe Dziedzic: Full year, we're right in line with what we guided to at the beginning of the year, 8.5% sales growth, $1.863 billion. The organic growth is the same for the full year. That slightly higher second quarter sales than what we were expecting and then what I think investors were expecting does not change our view of the full year.
Speaker Change: Alright, Thanks again.
Joanne Wuensch: Your next question comes from the line of Joanne Wuensch.
Speaker Change: And I I wouldn't highlight anything in particular. It's just a timing of demand within our customers and how they're they're running their operations and you know I I'll highlight just maybe broadly that we think the best way to look at the trajectory of the business and our sales trend is to look at a rolling 4 quarter basis as payment highlighted in any given quarter there there's there's variation driven by how customers are managing their plans just to remind everybody. The majority of what we do is sole source. Um the majority of what we do, we ship to 1 of our customers, manufacturing plants, it gets incorporated into 1 of their devices and then 4 to 9 months later. It shows up in a procedure and so a rolling 4 quarter View whether it's trailing or, or looking forward at the full year, it removes some of that, that noise and that variability in any given quarter and um, that that's maybe what you were getting at about. First half versus the second half uh, full year. We're we're right, right in line with what we guided to at the beginning of the year.
Speaker Change: <unk> with Citi. Please go ahead.
Joanne Wuensch: Good morning, and thank you for taking the questions.
Joanne Wuensch: If I mathematically do this correctly it sounds like the second half of the year.
Speaker Change: Um, 8 and a half percent sales growth, the billion 863, the organic growth is the same for the full year, um that slightly higher second, quarter sales than what we were expecting. And then what I think investors were expecting does not change our, our view of the full year.
Brett Fishbin: All right, thanks again.
Joanne Wuensch: It should be still strong in cardiovascular and you raised the second half of the year for CRM.
Speaker Change: All right, thanks again.
Joanne Wuensch: Your next question comes from the line of Joanne Wuensch with Citi. Please go ahead. Good morning and thank you for taking the questions. If I mathematically do this correctly, it sounds like the second half of the year should be still strong in cardiovascular and you raise the second half of the year for CRM. but maybe narrowed the full year revenue guide. Does that mean your other markets is declining maybe a little bit faster than expected? I'm just trying to essentially get to the same question of how do you deliver such a really strong second quarter and then sort of talk down the top end of your range.
Joanne Wuensch: But maybe narrow the full year revenue guide does that mean your other markets is declining maybe a little bit faster than expected I'm just trying to essentially get to the same question of how do you do deliver such a really strong second quarter and then.
Speaker Change: Your next question comes from the line of Joanne. W witch with City, please go ahead.
Joanne Wuensch: You know sort of.
Joanne Wuensch: Talk down the top end of your range.
Joanne Wuensch: Thank you.
Speaker Change: Uh, good morning, and thank you for taking the questions. Um, if I mathematically do this correctly, it sounds like the second half of the year um should be still strong in um cardiovascular and you raise the second half of the year for CRM.
Joanne Wuensch: Yes, good morning, Joanne this is.
Speaker Change: This is payment and thanks for the question. So let me let me let me answer the mathematical question. If you will and then I'll try to add some color. So so at midpoint.
Joanne Wuensch: <unk> guidance is 5%.
Joanne Wuensch: CMV is mid teens, which we should be looking at.
Joanne Wuensch: Thank you.
Speaker Change: But maybe narrowed the full year Revenue guide, does that mean your other markets is is declining? Maybe a little bit faster than expected. I'm just trying to essentially get get to the same question of, how do you do deliver such a really strong second quarter and then, um, you know, sort of talk down the top end of your range.
Payman Khales: Yeah, good morning, Joanne. This is Payman. Thanks for the question.
Speaker Change: Thank you.
Joanne Wuensch: 15% and other markets is down $30 million to $205 million. So.
Payman Khales: So let me answer the mathematical question, if you will, and then I'll try to add some color. So at midpoint, our CRMN guidance is 5%. CNV is mid-teens, which we're looking at 15%. And other markets is down 32.5%. So that's because of the visibility that we have to the customer demand with the backlog that we have, which is still in the range of about $700 million. That gives us good visibility. So this is what guides us and why it makes us believe that the midpoint of 1863 is the appropriate place. Thank you.
Joanne Wuensch: So that that that's because of the visibility that we have through the customer demands with a backlog that we have which is which is still in the range of about 700 million that gives us good visibility. So so so this is what's what's what.
Joanne Wuensch: What guides us and why it makes us believe that the midpoint of $8 63.
Joanne Wuensch: Is the appropriate place to be.
Joanne Wuensch: Thank you and as my second question is there any inventory management that is happening.
Joanne Wuensch: From your customers in the back half of the year and as you go into 2026, if you think about managing tariffs.
Speaker Change: Yeah, good morning Joan. This is uh, this is payment. Thanks for the question. So let me, uh, let me cut. Let me answer the mathematical question if you will. And then I'll, I'll try to add some color. So, so at midpoint, uh, our our CRM and guidance is, is, is 5%. Uh, a CMV is, is maintenance which, which, which, which we're looking at at 15%. And other markets is down 32 and a half million. So, so, so so that that that's that's because of the visibility that we have to the customer Demand with a backlog that we have, which is, which is still in the range of about 700 million that gives us good visibility. So
Joanne Wuensch: Thanks.
Joanne Wuensch: Yeah, Yeah, so so inventory going back a couple of years dry on the second half of 2023.
Okay, so so this is what's what's uh, what what guides us and uh, and why it makes us believe that the midpoint of 1863 uh is the appropriate place to be.
Joanne Wuensch: And as my second question, is there any inventory management that is happening from your customers in the back half of the year?
Joanne Wuensch: When Oems started sending some letters to their suppliers effectively saying that look they are going to be adjusting their inventory after some period of supply challenges.
Payman Khales: And as you go into 2026, as you think about managing tariffs? Thanks. Yeah, yeah. So, inventory, going back a couple of years, Joanne, the second half of 2023 is when OEMs, you know, started sending some letters to their suppliers effectively saying that, look, they're going to be adjusting their inventory after some period of supply challenges. And over the last couple of years, I would say that the inventory management is is kind of more normalized. And now, I think it's important to understand one dynamic. So, even when customers have been managing inventory, it's not that they're overstocking everything.
Speaker Change: Thank you. And as, as my second question, is there any inventory management that is happening? Um, from your customers in the back half of the year and as you go into 2026 as you think about, um, managing tariffs
Joanne Wuensch: Over the last over the last couple of years I would say that the inventory management is a is kind of more normalized.
Thanks.
Joanne Wuensch: Now I think it's important to understand one dynamic so.
Joanne Wuensch: Even when customers have been managing inventory its not that theyre overstock and everything so obviously, they're the overstocking some things and some other things that are needed for their production.
Joanne Wuensch: Might be under Sox. So so so that's kind of what drives it a little bit of a variability and and and I mentioned earlier, we had a little bit of a demand kind of coming from <unk> to <unk>. These are some of that that would give us some of the things that that kind of drive that but really.
Payman Khales: So, obviously, they're overstocking some things and some other things that are needed for their production might be understocked. So, that's kind of what drives a little bit of a variability. And I mentioned earlier, we had a little bit of a demand kind of coming from 3Q to 2Q. These are some of the things that kind of drive that. But really, stepping back and kind of looking at things, the backlog that we have, the visibility that we have, and the guidance that we provided takes all of that into account, Joanne. So, we think that 1863, 8.5% at the midpoint is appropriate.
Joanne Wuensch: Stepping back and kind of looking at things that backlog that we that we have the visibility that we have and.
Joanne Wuensch: The guidance that we provided it takes all of that into account Joanne. So so so so we think that 18 to 60, 385% at the midpoint as appropriate.
Joanne Wuensch: I think the second part of your question was related to tariffs.
Speaker Change: Yeah. Yeah. So um, so inventory. Going back a couple of years joy. And uh, the second half of 2023 is uh, when oems, you know, started sending some letters to their suppliers effectively saying that look, they're going to be adjusting their, their, their inventory after some, uh, some period of Supply challenges and, and uh, uh, over the last over the last couple of years. I would say that that the inventory management is, uh, is it's kind of more normalized. Um, and then now, I think it's it's important to understand 1 Dynamic so, so so. So even when you know, customers have been managing inventory, it's not that they're overstocking everything. So so it's obviously the, the overall stock and some things. And, and, uh, some other things that are needed for the production, uh, might be under stock. So, so, so that's kind of what drives, a little bit of a variability. And, uh, and uh, and I mentioned earlier, we had a little bit of a demand kind of coming from 32 to 2 queue. These are some of the these are some of the things that that kind of drive that
Joanne Wuensch: For tariffs.
Joanne Wuensch: If if a dynamic landscape obviously.
Joanne Wuensch: The tariff.
Joanne Wuensch: The tariff situation changes, including recently, we have we have maintained continue to maintain that the impact on our business.
Payman Khales: I think the second part of your question was related to tariffs. For tariffs, it's a dynamic landscape. Obviously, the tariff situation changes, including recently. We have maintained and continue to maintain that the impact on our business would be minimal. We are still iterating that range of 1 to 5 million. We've mentioned that we are working to make that as close to zero or one as possible. And that continues to be our plan.
Joanne Wuensch: Would be minimal.
Joanne Wuensch: We are still iterating that.
Joanne Wuensch: The range of $1 million to $5 million.
Joanne Wuensch: We've mentioned that we're working to make that as close to zero or one as possible.
Joanne Wuensch: And that continues to be our plan, but our range of $1 million to $5 million.
Joanne Wuensch: Potential tariff impact has not changed.
Joanne Wuensch: Thank you very much.
Speaker Change: Your next question comes from the line of Nathan <unk> with Wells Fargo. Please go ahead.
Nathan <unk>: Hi, Thanks for taking the question.
Payman Khales: But our range of 1 to 5 million potential tariff impact is not.
Nathan <unk>: Just wanted to go back to CMV. It sounds like there was some pull forward of demand into Q2 can you just talk about it this was.
Speaker Change: Think, uh, that range of 1 to 5 million. Uh, We've mentioned that we are working to make that as close to zero or 1 as possible uh and uh and that continues to be our plan. But our range of 1 to 5 million of of potential terrorist impact, has not changed.
Joanne Wuensch: Thank you very much.
Speaker Change: Thank you very much.
Nathan <unk>: Rapid building of inventories either for electrophysiology, and Neurovascular, and then theres going to be.
Nathan Treybeck: Your next question comes from the line of Nathan Treybeck with Wells Fargo. Please go ahead. Hi, thanks for taking the question. I just wanted to go back to CMV. It sounds like there was some pull forward of demand into Q2. Can you just talk about if this was, you know, rapid building of inventories either for electrophysiology and neurovascular, and then there's going to be a steady drawdown of that inventory in the second half? I'm just trying to understand kind of the parts for the deceleration in the second half. And also, can you confirm the mid-team's guidance for CMV is not organic?
Nathan <unk>: That a drawdown of that inventory in the second half I'm just trying to understand.
Nathan Trek: Uh, Nathan Trek with Wells Fargo. Please go ahead.
Nathan <unk>: Kind of.
Nathan <unk>: The parts for the deceleration in the second half and also can you confirm the mid teens guidance for CMV is not organic.
Nathan <unk>: Yes. Thanks.
Nathan <unk>: Yes. Thank you Nathan Thanks for the question, let me, let me add some color let me start with CMV had a very strong performance.
Nathan <unk>: And <unk>.
Nathan <unk>: 24% reported 18% organic and 17% on a trailing four quarter, which is really the way. We think we should we should be looking at that our performance within the business. So.
Nathan Treybeck: And yeah, thanks.
Payman Khales: Yeah, thank you, Nathan. Thanks for the question. Let me add some color. Let me start with CMV had a very strong performance in 2Q at 24% reported, 18% organic, and 17% on trailing four quarter, which is really the way we think we should be looking at our performance within the business. So, there are a number of things. We talked about that the performance of the CMV was driven by a few factors. We had some new product launches. We had strength in some of the customer demand. Specific to a question about Specific to your question about the variability between the quarters, these are a combination of a few small things that kind of drove a little bit of a growth.
Nathan <unk>: There are none.
Nathan <unk>: Number of things.
Nathan <unk>: We talked about the performance of.
Nathan <unk>: Of this <unk> was driven by a few factors.
Nathan <unk>: We had some new.
Nathan <unk>: New product launches, we have we have strengthened some neovascular customer demand specific to your question about.
Nathan <unk>: Specific to your question about the variability between between the quarters.
Nathan <unk>: These are a combination of a few small things that kind of drove a little bit of a growth. So again.
Speaker Change: Can you just talk about if this was, you know, rapid building of inventories, either for electrophysiology and neurovascular and then there's going to be steady draw down of that inventory in the second half. I'm just trying to understand kind of, uh, the parts for for, for the deceleration in the second half. And also, can you confirm the mid teens guidance for CMV is not organic and, um, yeah, thanks, yeah. Thank you, Nathan. Uh, thanks for the question. Uh, let me, let me ask some color. Let me start with, uh, cnv had a very strong, uh, performance in U in 2q at 24% reported 18% organic and 17% on trailing 4 quarter, which is really the way we think we should. Uh, we should be looking at at our performance, uh, within the business. So, uh, there are a number of things. Uh, um, we talked about that the, um, that the performance, uh, of the of the CMV was driven by a few factors. Uh, we had we had some new
Nathan <unk>: That there was a demand.
Nathan <unk>: Demand profile changes between quarters and months, that's natural that's normal that's normal part of our business. In this case it kind of came into into into <unk> from <unk> nothing nothing unusual there there is a little bit of lumpiness, usually associated with new product launches.
Speaker Change: Uh, new product launches. Uh, we have we have strengths and uh, some of the last customer demand specific to a question about
Payman Khales: So again, there was a demand, some demand profile, you know, changes between quarters and months. That's natural. That's normal. That's normal part of our business. In this case, it kind of came into 2Q from 3Q, nothing unusual there. There is a little bit of a lumpiness, you know, usually associated with new product launches. If you think about a new product launch, there's a launch phase, a ramp phase, there's a stabilization phase. So there's some lumpiness associated with that. So if you look at all of that, that's why we had a little bit stronger in 2Q.
Nathan <unk>: If you think about our new product launches a launch phase E ramp phase there is a stabilization phase. So so theres some lumpiness associated with that so so so if you look at all of that.
Speaker Change: specific to your question about the variability between, uh, between the quarters. Uh, the, the, the, these are a combination of a few small things that kind of drove a little bit of a growth. So again, uh, uh, that there is a demand, uh, you know, some demand profile, you know, changes between quarters and months. That's natural, that's normal. That's normal.
Nathan <unk>: That's why that's why we had a little bit stronger in <unk>. Our view of the year has not changed we have said that mid teens is is our view for CMV for the year and we continue.
Nathan <unk>: And we continue to maintain that I think part of your question was whether this is this is this is organic this is total reported.
Nathan <unk>: 15%.
Payman Khales: Our view of the year has not changed. We have said that mid-teens is our view for C&V for the year, and we continue to maintain that. I think part of your question was, you know, whether this is organic. This is total reported at 15%. Okay, thank you for that.
Speaker Change: Okay. Thank you for that I was very helpful payment just at a high level kind of as you're stepping into the CEO role are there any strategic priorities you are beginning to kind of formulate and are there areas of improvement that you have your eyes set on thanks.
Speaker Change: Yes, that's a great question and thank you so.
Speaker Change: So look.
Speaker Change: As I've mentioned before.
Speaker Change: Part of our business. In this case. It it kind of came into uh into uh into 2 queue from 3Q, nothing. Um, nothing unusual. There. There is a little bit of a lumpiness, you know, usually associated with new product launches. If you think about it in your product launch, there's a launch phase, a ramp phase, there's a stabilization phase. So, so there's some lumpiness associated with that. So so so if you look at all of that, that's why that's why we had a little bit stronger in 2q, our view of the year has now changed. Now we have said that that nit teams is uh is our view for cnv uh, for the year and uh, and we continue. Um and and we continue to maintain that. I think part of your question was, you know, whether this is this is all this is organic. This is total reported uh at at 15%.
Payman Khales: That's very helpful.
Speaker Change: I've been with integer. This is my eighth year I've been part of the leadership team that has been developing and executing on our strategy.
Payman Khales: Payman, just at a high level, kind of as you're stepping into the CEO role, are there any strategic priorities you're beginning to kind of formulate? And are there areas of improvement that you have your eyes set on? Thanks.
Speaker Change: The same way that we have done in the past eight nine years I very much intend to continue refining and building on our strategy and ultimately.
Speaker Change: Okay, thank you for that. That's very helpful. Uh, payment. Just at a high level kind of as you're stepping into the CEO role. Are there any strategic priorities? You're beginning to kind of, formulate and are there areas of improvement that you have your eyes set on thanks?
Payman Khales: Yeah, that's a great question. Thank you. So, so look, as I've mentioned before, I've been with Integer, this is my eighth year, I've been part of the leadership team, you know, that has been developing and executing on our strategy.
Speaker Change: Executing on that strategy, so that we can outperform the market.
Speaker Change: Growth and.
Speaker Change: Expand expand margin faster than that so so the elements of the strategy that we've talked about building capabilities the growth markets that we have.
Payman Khales: The same way that we have done in the past eight, nine years, I very much intend to continue refining and building on our strategy, and ultimately executing on that strategy so that we can outperform the market in growth and expand margin faster than that. So the elements of the strategy that we've talked about, you know, building capabilities, the growth markets that we have, the margin expansion activities that we have within, you know, through our manufacturing excellence, I very much intend to continue doing that those are important pillars of the type of business that we have, and are critical for our success.
Speaker Change: Yeah, that's a great question. And thank you. So, um, so look, I, as I've mentioned before, uh, I've been uh, with integer, this is my eighth year, I've been part of the leadership team. Uh, you know, that has been developing and executing on our strategy uh the same way that we have done in the past 8, 9 years. I very much
Speaker Change: The margin expansion activities that we have with them.
Speaker Change: Through our manufacturing excellence are very much intend to continue doing that those are important pillars of the type of business that we have and are critical for our success and obviously, we've talked about the fact that that tuck in acquisitions to come.
Speaker Change: We're building capabilities and making sure that we stay within a reasonable range of leverage two five to three five.
Speaker Change: Seems to be a very important element of our strategy.
Speaker Change: Thanks.
Payman Khales: And obviously, you know, we've talked about the fact that, that talking acquisitions, you know, to continue building capabilities, and making sure that we stay within a reasonable range of leverage to one half to three and a half continues to be a very important element of our strategy.
Speaker Change: Your next question comes from the line of Craig <unk>.
Speaker Change: With Bank of America. Please go ahead.
Craig: Hey, good morning, guys. Thanks for thanks for taking the questions I wanted to start with a follow up on just on the Q2 performance and.
Speaker Change: Intend to continue refining and building on our strategy and, uh, and ultimately, uh, executing on that strategy so that we can outperform the market uh, in in growth and, uh, and expand expand margin faster than that. So so the elements of the strategy that that we've talked about, you know, building capabilities, the growth markets that we have, uh, the uh, the margin expansion activities that we have uh within, you know, through our manufacturing Excellence are very much intend to continue doing that. Those are important pillars of, uh, of the type of business that we have and are critical for our success. And obviously, you know, we've talked about the fact that that tuck and Acquisitions, you know, to continue building capabilities and making sure that we stay within a reasonable range of of Leverage 2 and a half to 3 and a half, uh, continues to be a very important element of our strategy.
Speaker Change: Apologies for asking again, but.
Speaker Change: Thanks.
Speaker Change: Just trying to understand if you know.
Craig Bijou: Your next question comes from the line of Craig Bijou with Bank of America. Please go ahead. Good morning, guys. Thanks for taking the questions.
Speaker Change: If you guys would be willing to quantify just how much of that like 11% versus the high single digits.
Speaker Change: The next question comes from the line of Craig. Vio with Bank of America. Please go ahead.
Speaker Change: Was from a pull forward.
Craig Bijou: I want to start with a follow-up on just on the Q2 performance, and apologies for asking again, but just trying to understand if, you know, if you guys would be willing to quantify just how much of that, like 11% versus the high single-digit was from a pull forward of the orders or just maybe better than expected performance. So just trying to understand, I appreciate the comments that for the full year you guys still expect the same, but just want to understand what was the surprise or what piece of that surprise did where the outperformance was was part of the pull forward.
Speaker Change: New orders or just maybe better better than expected performance. So just trying to understand I. Appreciate the comments that for the full year you guys still expect the same but just wanted to understand what was the surprise or.
Speaker Change: What.
Speaker Change: One piece of that surprised us.
Craig Vio: Good morning, guys. Thanks for thanks for taking the questions. Um, wanted to start with a follow-up on just on the Q2 performance and, um, apologies for asking again, but, um, just trying to understand if, you know, if you guys would be willing to quantify just how much of that like 11% versus the high single digits,
Speaker Change: The outperformance was was part of the pull forward.
Craig: Yes. Thank you for the question Craig.
Speaker Change: Let me answer that so so let me first maybe maybe ground us on the numbers I think as you pointed out.
Speaker Change: The growth that we had in the quarter of 11% was a little bit higher than the high single digits.
Speaker Change: We have talked about so that's about 200 bps and if you take that do the math on the 200 bps on the quarter, that's about give or take $10 million of $10 billion.
Craig Vio: Was from a poll forward of of the orders or just maybe better better than expected performance. So, just trying to understand, I I appreciate the comments that for the full year. You guys still expect the same but just want to understand, you know, what was the surprise or or um what what piece of that surprise did? Um, or the outperformance was was part of the pull forward?
Payman Khales: Yeah. Thank you for the question, Craig. Let me answer that. So, let me first maybe ground us on the numbers. I think, as you pointed out, the growth that we had in the quarter of 11% was a little bit higher than the high single digits that we had talked about. So, that's about 200 bps. And if you take that, do the math on the 200 bps on the quarter, that's about, give or take, 10 million of revenue. It's not a substantial revenue. So, normally, there are puts and takes within every quarter. There's some demand that goes into the next quarter, some comes in.
Speaker Change: Of revenue.
Speaker Change: It's not a it's not a substantial it's not a substantial revenue. So so abnormally dark puts and takes within every quarter theres. Some demand that goes into the next quarter. Some comes in but but in this quarter that little variability and every single one of those things that I talked about just a few million bucks, but what a.
Speaker Change: <unk> it.
Speaker Change: Drove that.
Speaker Change: That 10 millions of dollars. So so there was a <unk>.
Speaker Change: Little bit of the demand change and shift.
Speaker Change: From a few of our customers on a few programs every single one of those small in combination it was a few million dollars.
Payman Khales: But in this quarter, that little variability, and every single one of those things that I talked about, just a few million bucks. But in combination, it kind of drove that 10 million of dollars. So, there was a little bit of the demand change and shift from a few of our customers on a few programs, every single one of them small, and in combination, it was a few million. There was some acceleration of new product launches. And as I mentioned earlier, we were able to execute a little bit faster in customer demand from our NeurOS facility for Guidewire.
Speaker Change: There were some there was some acceleration of new product launches and as I mentioned earlier.
Speaker Change: We were able to execute a little bit faster.
Speaker Change: In.
Speaker Change: Customer demand from our newer facility for Guidewire. So so again every single one of those events that I talked about is the same.
Speaker Change: It's a few million bucks, but in combination it drove about 200 bps of revenue growth.
Speaker Change: Craig, um, let me, uh, let me answer that. So, so let me first maybe, um, maybe ground us on the numbers. I think, as you pointed out, uh, the growth that we had in the quarter, uh, of 11%, uh, was was a little bit higher than the high single digits that, um, that we had talked about. So, so that's about 200 bips and if you take that, do the math on the 200 BS on the quarter, that's about give or take 10 million of 10 million of of Revenue. It's not a, it's not a substantial, it's not a substantial Revenue. So so normally the puts and takes within every quarter, there's there's some demand that goes into the next quarter, you know, some comes in but but in this quarter that little variability and and, and every single 1 of those things that I talked about with just a few million bucks. But, but in combination, it kind of drove that, um, that that, that 10 million of dollars. So. So there, there was a little bit of of, uh, of the demand, uh, change and shift, uh, from a few of our customers and a few programs, every single 1 of them, small
Speaker Change: Got it. Thank you that's helpful.
Speaker Change: You guys had a pretty strong quarter, a very strong quarter in <unk> you called out the electrophysiology product ramps. So can you just help us understand how that rolling four quarter gross in EEP has trended over the last several quarters. So has that accelerated.
Payman Khales: So, but in combination, it drove about 200 bps of revenue growth. Got it. Thank you, Payman. That's helpful.
And combination, it was a few million. Um, there were some, there were some acceleration of new product launches and as I mentioned earlier, we were, we were able to execute a little bit faster, uh, in, uh, in customer demand from our neuros facility for guidewire. So, so again, every single 1 of those events that I talked about is a few, is a few million bucks. But, but in combination, it drove about 200 dips of Revenue growth.
Speaker Change: And I assume it's outpacing overall sandy, but just wanted to get your perspective on how sustainable the E. T growth specifically is over the next several quarters.
Payman Khales: So then you guys had a pretty strong quarter, a very strong quarter in CMV. You called out the electrophysiology product ramp. So can you just help us understand how that rolling four quarter growth in EP has trended over the last several quarters? So has that accelerated? And I assume it's outpacing overall CMV, but just wanted to get your perspective on how sustainable the EP growth specifically is over the next several quarters.
Speaker Change: Yeah. Thanks for the question. So so so EPS one of the four growth markets that we have.
Speaker Change: The other three being structural heart neurovascular neuromodulation.
Speaker Change: I'm really excited about every every one of them we have worked.
Speaker Change: In the past many years two to continue investing and building capabilities on pipeline. So that we can.
Payman Khales: Yeah, thanks for the question. So, so, so EP is one of the four growth markets that we have, you know, the other three being structural, hard, neurovascular, and neuromodulation. I'm really excited about every, every one of them. We, we have worked in the past many years to, to continue investing and building capabilities and pipelines so that we can continue to outperform the market at which, which we believe we've been doing.
Speaker Change: Turning to outperform the market.
Speaker Change: Which which we believe we have been doing so back to your question specific about EP. Let me just highlight that we have been present in EEP for many many years we have built.
Speaker Change: A lot of capabilities over the years and and and.
Speaker Change: Our participation in EP, I mean, theres a lot of obviously a lot of excitement in the market right now with EP.
Payman Khales: So, back to your question specific about EP. Let me just highlight that, that, that we have been present in EP for many, many years. We, we have built a lot of capabilities over the years and, and, and, and our participation in EP, I mean, there's a lot of, obviously, a lot of excitement in the market right now with EP, with, with PFA. That's kind of driving a lot of, a lot of growth, which is also great for patients. We're very excited about the, the technology. That, that's been, that's been driving, it's been giving us some, some, some tailwinds.
Speaker Change: With with TSA.
Speaker Change: That's kind of driving a lot of a lot of growth, which is also great for patients. We are very excited about the <unk>.
Speaker Change: Technology.
Speaker Change: That's been that's been driving.
Speaker Change: It's been giving us some some some tailwind with.
Speaker Change: With highlight that our participation in EEP is really across the procedure is not just only India ablation.
Speaker Change: <unk> technology itself, we participate.
Speaker Change: And in accessing guide wires, and <unk> and and diagnostics of course.
Speaker Change: The ablation itself. So so so so we have good content across the procedure.
Payman Khales: I would highlight that our participation in EP is really across the procedure. It's not just only in the ablation, ablation technology itself. We participate in, in, in access, in guide wires, in transectal sheaths, in, in, in diagnostics, and, of course, the, the, the ablation itself. So, so, so, so we have good content across the procedure, and that includes, that includes PFA, pulse field ablation. So, so, so we have, we have good, we have good momentum in that space, and we've got a strong pipeline. You mentioned whether we are outperforming the market. Yes, we believe we are.
Speaker Change: That includes that includes a PFA pulse field ablation. So so so we have we have good we have good momentum in that space and we've got a strong pipeline.
Speaker Change: You mentioned, whether we are outperforming the market. Yes. We believe we are if you look at.
Speaker Change: Our trailing four quarter, we didnt CMV that is one of the drivers.
Speaker Change: Of the growth that we have and we believe that we are outperforming the market and we continue to be very.
Speaker Change: Very excited about the momentum that we have.
Speaker Change: Thanks, guys.
Payman Khales: If you look at our, our, our trailing four quarter within CNV, that is one of the drivers of the growth that we have, and we believe that we are outperforming the market, and we continue to be very, very excited about the momentum that we have.
Speaker Change: Your next question comes from the line of Richard <unk> with <unk> Securities. Please go ahead.
Speaker Change: Uh huh.
Speaker Change: Maybe just thinking both on the.
Speaker Change: Starting with the top line, but also down the P&L if you have comments there.
Payman Khales: Thanks, guys.
Speaker Change: The <unk>.
Speaker Change: The cadence and how youre thinking about it I guess.
Richard Newitter: Your next question comes from the line of Richard Newitter with Truist Security. Please go ahead. Maybe just thinking both on the, starting with the top line, but also down the P&L if you have comments there, the 3Q versus 4Q kind of cadence and how you're thinking about it. I guess it sounds like the pull forward, or some of the overage, the roughly 200 basis points came mostly from 3Q, or at least, I'm guessing that's where you had the most visibility. And I'm not sure how much visibility you have out beyond 3 to 5 months. So, given the comps, you have a much tougher comp than 4Q, and it sounds like you had some pull forward specifically from the 3Q.
Speaker Change: It sounds like the pull forward.
Speaker Change: Or are some of the overage that roughly 200 basis points came mostly from <unk> or at least.
Speaker Change: I'm guessing that's where you have the most visibility and I'm not sure how much visibility you have out beyond three to five months so given.
Speaker Change: Given the comps you have a much tougher comp in <unk> and it sounds like you had some pull forward specifically from the street Q are there specific kind of nuances, we should be thinking about can you talk to the consensus that you need to.
Speaker Change: But it sounds like we should be thinking about maybe a lower than normal.
Speaker Change: <unk> performance or growth rate and then.
Speaker Change: Comp adjusted the <unk> is similar to where you thought you'd land.
Richard Newitter: Are there specific kind of nuances we should be thinking about? Can you talk to the consensus if you need to?
Speaker Change: Yes, good morning, Richard and thanks for the question. So so let me add a little bit of a color on the first half second half and then come back to your <unk> specific question. So so let me maybe start with your bigger picture question about guidance our guidance at the midpoint has not changed right, we've kind of narrowed the range a little bit.
Richard Newitter: But it sounds like we should be thinking about maybe a lower than normal 3Q performance or growth rate. And then, you know, comp adjusted, the 4Q is similar to where you thought you'd land.
Speaker Change: Given where we are in the in the year, but.
Diron Smith: Yeah, good morning Richard and thanks for the question. So let me add a little bit of a color in the first half, second half, and then, you know, come back to your 3Q specific question.
Speaker Change: But our midpoint, we believe is appropriate at <unk> 63, which is eight 5%. So if you break it down in the first half second half the first half growth was 9% we're projecting the second half to be 8% and we also said that that's going to be equal roughly equal growth in each of <unk>, so seeking social.
Diron Smith: So let me maybe start with your bigger picture question about guidance. You know, our guidance at midpoint has not changed. We kind of narrowed the range a little bit given where we are in the year, but our midpoint we believe is appropriate at 1863, which is 8.5%. So if you break it down into first half, second half, the first half growth was 9%. We're projecting the second half to be 8%. And we also said that that's going to be equal, you know, roughly equal growth in each of 3Q, 4Q. So that kind of portion of like 8%-ish for 3Q.
Speaker Change: That kind of pushed so about 8% ish to the fore.
Speaker Change: But our midpoint, we believe is appropriate at $8 63, which is eight 5%. So so if you break it down in the first half second half to first half growth was 9% we're projecting the second half to be 8% and we also said that thats going to be equal roughly equal growth in each of <unk>, so seeking social so.
Speaker Change: <unk>.
Speaker Change: We look we other than the little variation that I talked about that as just kind of a normal part of our business. We have generally good visibility to demand.
Speaker Change: We continue to maintain.
Speaker Change: A.
Speaker Change: Backlog was relatively steady is still under $700 million range and that gives us really really good visibility.
Speaker Change: That kind of pushed so about 8% ish to the fore.
Speaker Change: <unk>.
Diron Smith: Look, other than the little variation that I talked about that's just kind of, you know, normal part of our business, we have generally good visibility to demand. We continue to maintain a backlog that's relatively steady. It's still in the $700 million range, and that gives us really, really good visibility for the rest of the year, which is why, again, I keep coming back to the 8.5%, 1863, which we believe is the appropriate.
Speaker Change: We look we other than the little variation that I talked about that's just kind of.
Speaker Change: For the rest of the year, which is why again I keep coming back to the eight 5% $8 63, which we believe is the appropriate place.
Speaker Change: A normal part of our business.
Speaker Change: We have generally good visibility to demand.
Speaker Change: And if I could just on the payments to the to the bottom line that you were asking about this as dire and by the way.
Speaker Change: We continue to maintain.
Speaker Change: A.
Speaker Change: A backlog that's relatively steady is still under $700 million range and that gives us really really good visibility for.
Speaker Change: <unk>.
Speaker Change: On our on our AI, specifically are we delivered up about 14% in the first half.
Speaker Change: For the rest of the year, which is why again I keep coming back to the eight 5% <unk> 63, which we believe is the appropriate place.
Speaker Change: At midpoint for the full year that would suggest 14% as well so we see the second half growth on OE being very similar to the first half growth and when you look at that on a quarter by quarter basis.
Diron Smith: If I can add just on the cadence to the to the bottom line that you were asking about, this is Diron, by the way, you know, on our on our AOI specifically, we've delivered up about 14% in the first half at midpoint for the full year, that would suggest 14% as well. So, we see the second half growth on AOI being very similar to the first half growth. And when you look at that on a quarter by quarter basis, we shared in the earnings presentation that we expect our AOI as a percent of sales to grow each quarter.
Speaker Change: And if I could just on the cadence to the to the bottom line that you were asking about this as Dieter and by the way.
Speaker Change: Yes.
Speaker Change: We shared in the earnings presentation that we expect our <unk> as a percent of sales to grow each quarter. So it could get a little bit better in third quarter and get a little bit better in the fourth quarter to deliver on the full year, which again at midpoint. If you were to take that and use that as a reference that would be at a 17.
Speaker Change: Specifically, we delivered up about 14% in the first half.
Speaker Change: At midpoint for the full year that would suggest 14% as well so we see the second half growth on OE being very similar to the first half growth and when you look at that on a quarter by quarter basis.
Speaker Change: 4% of sales. So we see the kind of the cadence has been a gradual improvement quarter to quarter, both on a margin basis as well as on in a nominal dollars of NOI basis.
Speaker Change: We shared in the earnings presentation that we expect our <unk> as a percent of sales to grow each quarter, so to get a little bit better in third quarter and get a little bit better in the fourth quarter to deliver on the full year, which again at midpoint. If you were to pick that.
Diron Smith: So, to get a little bit better in third quarter and get a little bit better in fourth quarter to deliver on the on the full year, which, again, at midpoint, if you were to pick that and use that as a reference, that would be at 17.4% of sales. So, we see the kind of the AOI cadence as being a gradual improvement quarter to quarter, both on a margin basis as well as on a nominal dollars of AOI basis. Yeah, I think when you look at the sales guidance, and again, if you kind of reference what we had on the presentation specifically, we've shared that we expect the year-over-year growth in 3Q and 4Q to be very similar.
Speaker Change: Okay. That's helpful. Just just to make it even simpler.
Speaker Change: That is a reference that would be it.
Speaker Change: 17.
Speaker Change: We all have <unk> estimates there is a consensus out there all else equal if we were to take $10 million out of the back half and put it into <unk> would.
4% of sales. So we see the kind of the cadence has been a gradual improvement quarter to quarter, both on a margin basis as well as on an a.
Speaker Change: Would you have us.
Speaker Change: Take five and five for each of the <unk> and the <unk> for <unk>.
Speaker Change: Nominal dollars of NOI basis.
Speaker Change: Okay. That's helpful just to make it even simpler.
Speaker Change: Or do you take most of it from the <unk> and <unk>.
Speaker Change: We all have <unk> and <unk> estimate there is a consensus out there all else equal if we were to take $10 million out of the back half and put it into <unk> would.
Speaker Change: How would you have us do that.
Speaker Change: Yes, I think when you look at the sales guidance and again, if you kind of referenced what we had on the presentation. Specifically, we've shared that we expected the year over year growth in <unk> and <unk> to be very similar.
Speaker Change: Would you have us.
Speaker Change: Take $5 five from each of the <unk> and the <unk> for or.
Speaker Change: And at the midpoint again that would suggest the second half.
Speaker Change: Or do you take most of it from the <unk> and leap <unk>.
Speaker Change: How would you have us do that.
Speaker Change: <unk> growth of around 8%, so the third quarter and fourth quarter sales sales cadence would be very similar at the 8% for both <unk> and <unk> year over year.
Speaker Change: Yes, I think when you look at the sales guidance and again, if you kind of referenced what we had on the presentation. Specifically, we've shared that we expect the year over year growth in <unk> and <unk> to be very similar.
Speaker Change: At the midpoint.
Speaker Change: Okay.
Diron Smith: And at the midpoint, again, that would suggest a second half growth of around 8%. So the third quarter and fourth quarter sales cadence would be very similar at the 8% for both 3Q and 4Q year-over-year at the midpoint. Okay, so roughly five and five in each quarter. Thank you.
Speaker Change: And at the mid point again that would suggest the second half.
Speaker Change: Roughly five and sizing each quarter. Thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Growth of around 8%, so the third quarter and fourth quarter sales sales cadence would be very similar at the 8% for both <unk> and <unk> year over year.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Matthew O'brien with Piper Sandler. Please go ahead.
Matthew O'brien: Good morning, Thanks for taking the questions I don't really want to beat this dead horse too much on.
Speaker Change: At the midpoint.
Speaker Change: Okay.
Matthew O'brien: The top end of the guide, but I'm going to because the stock's down a little bit. This morning, and I think it's primarily related to that you did take the top end of the guide down by 100 basis points on a reported basis I am not sure if I heard from direct if it's currency related that's coming down, but given that thats coming down with things.
Speaker Change: Roughly five inside in each quarter. Thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Matthew O'brien: Your next question comes from the line of Matthew O'Brien with Piper Centler. Please go ahead. Good morning. Thanks for taking the questions. I don't really want to beat this dead horse too much on the top end of the guide, but I'm going to because the stock's down a little bit this morning and I think it's primarily related to that. You did take the top end of the guide down by 100 basis points on a reported basis. I'm not sure if I heard from Diron if it's currency related that that's coming down. But given that that's coming down with things, kind of decelerating a little bit on the stack to your basis during the back half of the year, it just makes I think everybody wonder if there's something going on from a, you know, just from a product perspective, especially in C&B, which has been, you know, well above the corporate average for a while.
Speaker Change: Your next question comes from the line of Matthew O'brien with Piper Sandler. Please go ahead.
Matthew O'brien: Good morning, Thanks for taking the questions I don't really want to beat this dead horse too much on.
Matthew O'brien: Kind of decelerating, a little bit on a stacked two year basis during.
Matthew O'brien: The top end of the guide, but I'm going to cause the stock's down a little bit. This morning, and I think it is primarily related to that you did take the top end of the guide down by 100 basis points on a reported basis I am not sure if I heard from direct if it's if it's currency related that that's coming down, but given that thats coming down with things.
Matthew O'brien: During the back half of the year. It just makes it I think everybody wonder if theres something going on from a.
Matthew O'brien: Just from a product perspective, especially in CMV, which has been well above the corporate average for a while is that something.
Matthew O'brien: Typically that you're calling out here or are we should interpret or or or no. There is theres not much to really be that concerned about but again the top end of that guidance did come down by about 100 basis points on a reported basis.
Matthew O'brien: Kind of decelerating, a little bit on a stacked two year basis during.
Matthew O'brien: During the back half of the year just makes it I think everybody wonder if theres something going on from a.
Matthew O'brien: Just from a product perspective, especially in CMV, which has been well above the corporate average for a while is that something that's.
Matthew O'brien: Yes, good morning, Matt Let me, let me maybe answer a couple of other questions that you asked so so this is not currency related and the guidance on the ranges that we're talking about are reported on a reported basis. So so now let me. Let me also just talked about your comments in general.
Matthew O'brien: Is that something specifically that you're calling out here or we should interpret or no, there's, you know, there's not much to really be that concerned about. But again, the top end of the guide did come down by about 100 basis points on the reported basis.
Matthew O'brien: Typically that you're calling out here or are we should interpret or or or no. There is theres not much to really be that concerned about but again the top end of the guidance did come down by about 100 basis points and a reported basis.
Matthew O'brien: So we narrowed the range just given where we are we are.
Payman Khales: Yeah, good morning, Matt.
Matthew O'brien: Yes, good morning, Matt Let me, let me maybe answer a.
Payman Khales: Let me maybe answer a couple of the questions that you asked. So this is not currency related and the guidance and the ranges that we talked about are reported on a reported basis.
Matthew O'brien: Our midpoint.
Matthew O'brien: <unk> to be the same.
Matthew O'brien: A couple of other questions that you asked so so this is not currency related.
Matthew O'brien: So a few things to think about as you as you mentioned the deceleration I think you've talked about in the second half. So that's kind of going from 9% in the first half to two 8% in the second half let me, let me point out adjust just for Q last year our growth in <unk>. If you take the sales of our fourth quarter.
Matthew O'brien: The guidance on the ranges that we're talking about are reported on a reported basis. So so now let me. Let me also just talking about your comments in general So we narrowed the range just given where we are we are.
Payman Khales: So now let me also just talk about your comments in general. So we narrowed the range just given where we are. Our midpoint continues to be the same. So a few things to think about, you know, as you mentioned, the deceleration I think you talked about in the second half. So that's kind of going from 9% the first half to 8% the second half. Let me point out just 4Q. Last year our growth in 4Q, if you take the sales of our fourth quarter last year, it was 7% higher than the average of the first three quarters.
Matthew O'brien: Our midpoint.
Matthew O'brien: <unk> to be the same.
Matthew O'brien: <unk> last year.
Matthew O'brien: So a few things to think about as you as you mentioned the deceleration I think you talked about in the second half. So that's kind of going from 9% in the first half to two 8% in the second half let me, let me point out adjust just for Q last year, our growth in <unk>. If you take the sales our fourth quarter.
Matthew O'brien: Was 7% higher than the average of the first three quarters. It was a very very strong quarter.
Matthew O'brien: 11% growth. So we are bumping against that a little bit in the second half. So so so that's there's an element of the comp that is there that that I think we want to recognize that we have taken into account then we have given our guidance.
Matthew O'brien: <unk> last year.
Matthew O'brien: There are other elements.
It was 7% higher than the average of the first three quarters. It was a very very strong quarter.
Payman Khales: It was a very, very strong quarter at 11% growth. So we're bumping against that a little bit in the second half. So there's an element of the comp that is there that I think we want to recognize and that we had taken into account when we had given our guidance. There are other elements. Another element to think from that facility in the middle of last year, just because that's when the capacity came online. So now we're butting against the anniversary of that as we go into 3Q. So there's an element of comps that are a little bit different.
Matthew O'brien:
Matthew O'brien: Another element to think about is that.
Matthew O'brien: At 11% growth, so we're bumping against that a little bit in depth in the second half. So so so thats. There is an element of the comp that is there that.
Matthew O'brien: On Eros facility that that I had mentioned earlier, we started increasing our demand from that facility in the middle of last year, just because thats when the capacity came online so now everybody against the anniversary of that.
Matthew O'brien: That I think we want to recognize that we have taken into account when we have given our guidance.
Matthew O'brien: Yes.
Matthew O'brien: There are other elements.
Matthew O'brien: As we go into <unk>. So so there is an element of.
Another element to think about it is that.
Matthew O'brien: Of comps that are up a little bit different but coming back to the year.
Matthew O'brien: Our new Ross facility that.
Matthew O'brien: I had mentioned earlier.
Matthew O'brien: We started increasing our.
Matthew O'brien: Our guidance midpoint of guidance has not changed.
Matthew O'brien: Demand from that facility in the middle of last year, just because thats when the capacity came online so now everybody against the anniversary of that.
Matthew O'brien: We just we just narrowed the range just given the good visibility that we have for the year.
Speaker Change: Got it and then just related question you know you mentioned PFA and being associated with that category on multiple levels. There is a pretty favorable reimbursement update.
Matthew O'brien: We go into <unk>, so so theres an element of comps.
Matthew O'brien: We are up a little bit different but coming back to the year.
Payman Khales: But coming back to the year, our midpoint of guidance has not changed. We just narrowed the range just given the good visibility that we have for the year. Got it.
Matthew O'brien: Our guidance midpoint of guidance has not changed.
Speaker Change: And the hypertension space with the renal denervation recently is that a category, where you have exposure and it could potentially be another driver as we head into 'twenty six 'twenty seven thank you.
Matthew O'brien: We just we just narrowed the range just given the good visibility that we have for the year.
Speaker Change: Got it and then just related question here, you mentioned PFA and being associated with that category on multiple levels. There was a pretty favorable reimbursement update within the hypertension space with renal denervation recently is that a category, where you have exposure and it could potentially be another driver.
Payman Khales: And then just a related question. You know, you mentioned PFA and being associated with that category on multiple levels. There was a pretty favorable reimbursement update within the hypertension space with the renal denervation recently. Is that a category where you have exposure and could potentially be another driver as we headed to 26 and 27? Thank you.
Speaker Change: Yes, Great question Rdna look it's a great technology a lot of people have been working on it for a number of years.
Speaker Change: We think we believe it's got the potential to two two.
Speaker Change: To be a very good valuable technology that would help patients.
Speaker Change: As we head into 'twenty six 'twenty seven thank you.
Speaker Change: And.
Speaker Change: We believe.
Payman Khales: Yeah, great question. RDN, look, it's a great technology. A lot of people have been working on it for a number of years. We think, we believe it's got the potential to be a very good viable technology that would help patients. And we believe the technology is closer to commercialization. You talked about some of the reimbursement, NCDs and whatnot.
Speaker Change: Yes, Great question Rdna look it's a great technology a lot of people have been working on it for a number of years.
Speaker Change: The technology.
Speaker Change: Allergies closer to commercialization.
Speaker Change: You talked about.
Speaker Change: Some of the reimbursement and Cds and whatnot.
Speaker Change: We think we believe.
Speaker Change: It's got the potential to two.
Speaker Change: Yes.
Speaker Change: As a whole.
Speaker Change: To be a very good viable technology that would help patients and we believe.
Speaker Change: It's a very small market today, obviously, because it's an emerging market. So so and the capabilities that we have.
Speaker Change: In EP are very are very transportable to RDM and.
Speaker Change: The technologies closer to commercialization.
Speaker Change: You talked about.
Speaker Change: And we have exposure to it that exposure is small today, just because the market is very small, but we believe that said that as.
Speaker Change: Some of the reimbursement and Cds and whatnot.
Payman Khales: Yeah, so as a whole, it's a very small market today, obviously, because it's an emerging market. And the capabilities that we have in EP are very transportable to RDN. And we have exposure to it. That exposure is small today, just because the market's very small. But we believe that as the market grows in the coming years, as you talked about, that can give us some tailwind as Great, thanks so much.
Speaker Change: Yes, so if as a whole it's a <unk>.
Speaker Change: Very small market today, obviously, because it's an emerging market. So so.
Speaker Change: As the market grows in the coming years as you talked about.
Speaker Change: And the capabilities that we have.
Speaker Change: That can that can give us some tailwind as well.
Speaker Change: In EEP are very are very transportable too.
Speaker Change: Great. Thanks, so much.
Speaker Change: Rd and and and.
Speaker Change: And we have exposure to it that exposure is small today, just because the market is very small, but we believe that as the as.
Speaker Change: Your next question comes from the line of Andrew Cooper with Raymond James. Please go ahead.
Andrew Cooper: Hey, everybody. Good morning, Thanks for the time, maybe just first a little bit different of a tariff question I just wanted to kind of hear the latest understand the minimal direct impact but has there been any change in your conversations with your customers given they likely are facing a little bit more of that headwind on trying to pass it through as Youre talking about.
Speaker Change: As the market grows in the coming years as you talked about.
Speaker Change: That can that can give us some tailwind as well.
Speaker Change: Great. Thanks, so much.
Andrew Cooper: Your next question comes from a line of Andrew Cooper with Framon James. Please go ahead. Hey, everybody. Good morning. Thanks for the time. Maybe just first, a little bit different of a tariff question, just want to kind of hear the latest understand the minimal direct impact. But has there been any change in your conversations with your customers, given they likely are facing a little bit more of that headwind on trying to pass it through as you're talking about, you know, extending contracts or extending partnerships? Has there been any change from their tone that you you would kind of link to tariffs?
Speaker Change: Your next question comes from the line of Andrew Cooper with Raymond James. Please go ahead.
Andrew Cooper: Extending contracts or extending partnerships has there been any change from their tone that you you would kind of linked to tariffs.
Andrew Cooper: Hey, everybody. Good morning, Thanks for the time, maybe just first a little bit different of a tariff question just wanted to kind of hear the latest understand the minimal direct impact but has there been any change in your conversations with your customers given they likely are facing a little bit more of that headwind on trying to pass it through as Youre talking about.
Speaker Change: Yes, good morning, guys.
Andrew Cooper: Yes, good morning, Andrew Thanks for the question.
Speaker Change: So.
Speaker Change: So I think.
Speaker Change: First let me just.
Andrew Cooper: Extending contracts or extending partnerships has there been any change from their tone that you you would kind of linked to tariffs.
Speaker Change: Talk about the fact that.
Speaker Change: As we've mentioned before.
The exposure that we have to tariffs is minimal as you as you pointed out now you talked about what our customers are talking to us about that bundle we are as our customers.
Andrew Cooper: Yeah, good morning. Yeah, good morning, Andrew. Thanks for the question.
Andrew Cooper: Yes, good morning, guys.
Andrew Cooper: Yes, good morning, Andrew Thanks for the question.
Payman Khales: So, so I think, first, let me just talk about the fact that, as we've mentioned before, the exposure that we have to tariffs is minimal, as you pointed out. Now, you talked about whether our customers are talking to us about that. No, no. We are, as our customers, we are trying to minimize the impact of tariffs while staying fully compliant, of course, with all the rules. I think a lot of the engagement that we have with our customers is around that. We've talked about some of the logistical changes, you know, as an example, if a product is built in Mexico, where in the past it entered the U.S.
Andrew Cooper: So.
Andrew Cooper: I think.
Andrew Cooper: First let me just.
Speaker Change: We are trying to minimize the impact of tariffs, while while staying for the compliance of course.
Andrew Cooper: Talk about the fact that.
Andrew Cooper: As we've mentioned before.
Speaker Change: With with all the rules I think a lot of the engagement that we have with our customers is around that we've talked about some of the logistical changes as an example, if a product is built in Mexico.
Andrew Cooper: The exposure that we have to tariffs is minimal as you as you pointed out now you talked about what our customers are talking to us about that bundle we are as our customers.
Speaker Change: Where in the past it entered the U S only to leave the U S to go through some international location, where we can direct ship those and whatnot. So so.
Andrew Cooper: We are trying to minimize the impact of tariffs, while staying for the compliance of course.
Speaker Change: There has been a lot of that type of discussion in terms of logistics.
Andrew Cooper: With with all the rules I think a lot of the engagement that we have with our customers is around that we've talked about some of the logistical changes as an example, if a product is built in Mexico.
Speaker Change: I'd also remind us that about 70% of the business is that we have is under contract.
Speaker Change: So we we have a very defined if you will terms as it relates to that but we'll be continuing to work very very.
Andrew Cooper: Where in the past you've entered the U S only to leave the U S to go to some international locations, where we can direct ship those and whatnot. So so.
Payman Khales: only to leave the U.S. to go to some international location, well, we can direct ship those and whatnot. So there has been a lot of, you know, that type of discussion in terms of logistics. I would also remind us that about 70% of the businesses that we have is under contract. So we have a very defined, if you will, terms as it relates to that, but what we continue to work very collaboratively with our customers to make sure that we can minimize their impact to the extent possible.
Speaker Change: Very collaboratively with our customers to make sure that we can minimize the impact to the extent possible.
Andrew Cooper: There has been a lot of that type of discussion in terms of logistics.
Andrew Cooper: I'd also remind us that about 70% of the business is that we have is on the contract.
Speaker Change: Okay. That's helpful and then.
Speaker Change: Maybe just one more on <unk>, a little bit different of an angle here I know.
Andrew Cooper: So we we have a very defined if you will terms as it relates to that but while we continue to work very collateral very collaboratively with our customers to make sure that we can minimize the impact to the extent possible.
Speaker Change: Why you can't and won't give too much specific on too specific of a customer but can you help frame. If we look across that PFA landscape that we think is likely to get or be getting a little bit more competitive how much variability is there and the amount of content you have on one players catheter versus another.
Andrew Cooper: Okay, that's helpful. And then maybe just one more on PFA, a little bit different of an of an angle here, you know, I know, kind of why you can't and won't give too much specific on too specific of a customer. But can you help frame if we look across that PFA landscape that we think is likely to get or be getting a little bit more competitive? How much variability is there in the amount of content you have on one player's catheter versus another? Or kind of in another, you know, another wording? How treybick d How many dollars might you see on your most penetrated catheter relative to, you know, maybe another player where you have less content and less part of that bill of materials?
Andrew Cooper: Okay. That's helpful and then.
Speaker Change: Maybe just one more on <unk>, a little bit different of an angle here I know kind of why you can't and won't give too much specific on too specific of a customer but can you help frame. If we look across that PFA landscape that we think is likely to get or be getting a little bit more competitive how much variability is there and the amount of content.
Speaker Change: Or kind of an another another wording.
Speaker Change: Yeah.
Speaker Change: Now.
Speaker Change: How many dollars might you see on your most penetrated catheter relative to maybe another player where you have less content in last part of that bill of materials.
Speaker Change: All right Andrew Thank you for starting your question with I know that you can't divulge that specifics because I can.
Speaker Change: You have on one players catheter versus another.
Speaker Change: Or kind of an another another wordings.
Speaker Change: Now.
Speaker Change: You don't have to give us names.
Speaker Change: How many dollars might you see on your most penetrated catheter relative to maybe another player where you have less content in last part of that bill of materials.
Speaker Change: Customers would not be thrilled with me if I started just mentioning what we do for them, but well let me do this let me let me talk about.
Speaker Change: In a broader sense in broader terms.
Payman Khales: All right, Andrew, thank you for starting your question with. I know that you can't divulge that, you know, specifics because I can't. You don't have to give a name. Our customers would not be thrilled with me if I started just, you know, mentioning what we do for them. But let me do this. Let me talk about, in a broader sense and broader terms. Look, because of our presence and capabilities that we've had for many, many years in the EP space, and because of the investments that we've made and the focus that we've had to build even more capabilities in the past seven, eight years, we have a lot of presence, you know, in EP with the leading players in the market.
Andrew Cooper: All right Andrew Thank you for starting your question with I know that you can't divulge that specifics because I can.
Speaker Change: We because of our presence and capabilities that we've had for many many years in the EP space and because of the investments that we've made and the focus that we've had to build even more capabilities in the past.
Speaker Change: You don't have to give us names.
Speaker Change: Customers would not be thrilled with me if I started just mentioning what we do for them, but well let me do this let me let me talk about.
Speaker Change: In the past seven eight years.
Speaker Change: We had a lot of presence in <unk>.
Speaker Change: With with the leading players in the market. So so so we have exposure to two <unk> in a broad sense.
Speaker Change: In a broader sense in broader terms.
Speaker Change: We because of our presence and capabilities that we've had for many many years in the EP space and because of the investments that we've made and the focus that we've had to build even more capabilities in the past.
Speaker Change: But again I keep bringing us back to.
Speaker Change: It is just what what is really driving the growth obviously and the excitement is it technology itself because it's safer it's better for the patient, but well there were a lot of other products 70 manufacturer that are really driven by that by that momentum. So so those are some of the products that we have had guidewire.
Speaker Change: In the past seven eight years.
Speaker Change: We had a lot of presence in EP with with the leading players in the market. So so so we have exposure to two <unk> in a broad sense, but again I keep bringing us back to how.
Payman Khales: So we have exposure to PFA in a broad sense. But again, I keep bringing us back to it is just what is really driving the growth, you know, obviously, and the excitement is the technology itself because it's safer, it's better for the patient. But there are a lot of other products that we manufacture that are really driven by that, you know, by that momentum. So those are some of the products that we have had, you know, again, guidewires, access sheets that I've talked about. That is just part of the breadth of the portfolio that we have.
Speaker Change: There is access sheath.
Speaker Change: It is just what what is really driving the growth obviously and the excitement is it technology itself because it's safer it's better for the patients, but but there are a lot of other products, having manufacturer that are really driven by that by that momentum. So so those are some of the products that we have had again guidewire.
Speaker Change: I've talked about that is just part of the breadth of the portfolio that we have so it's also so that that that growth is really across the procedure, but specific to two PFA look we have good exposure to.
Speaker Change: This technology with the leading players whether it's it's.
Speaker Change: It's complex components or sub assemblies or in some cases.
Speaker Change: Theres access sheath.
Speaker Change: That I've talked about that is just part of the breadth of the portfolio that we have so it's also so that that that growth is really across the procedure, but specific to two PFA look we have good exposure.
Speaker Change: Finished finished devices.
Payman Khales: So that growth is really across the procedure. But specific to PFA, look, we have good exposure to this technology with the leading players, whether it's complex components or subassemblies, or in some cases, finished devices.
Speaker Change: Great I'll stop there. Thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Your final question comes from the line of Suraj.
Speaker Change: To this technology with the leading players whether it.
Speaker Change: Kelly.
Speaker Change: This complex components or sub assemblies or in some cases.
Suraj Kelly: With Oppenheimer <unk> company. Please go ahead.
Speaker Change: Yeah.
Speaker Change: The finished finished devices.
Speaker Change: Good morning payment Darren I hope you're well.
Suraj Kalia: Great, I'll stop there. Thank you.
Speaker Change: Great I'll stop there. Thank you.
Speaker Change: Good morning, one question one question for you one for dire and.
Speaker Change: Thank you.
Speaker Change: Yeah.
Suraj Kalia: Your final question comes from the line of Suraj Kalia with Oppenheimer and Company. Please go ahead. Morning, Payman, Diron. Hope you're well. One question for you, one for Diron.
Speaker Change: Your final question comes from the line of.
Speaker Change: Payment, let me come at this the revenue pull through from a different angle like 70% of your contracts are long term right.
Speaker Change: Suraj Kalia.
Speaker Change: Kelly.
Speaker Change: With Oppenheimer <unk> company. Please go ahead.
Speaker Change: Yeah.
Speaker Change: So yes percentage of contracts are.
Speaker Change: Good morning payment Darren hope you're well.
Speaker Change: Are coming up for renewal.
Speaker Change: Good morning, one question one question for you one for dire and.
Speaker Change: And how flexible.
Speaker Change: And I think we face is the flexibility in these contracts for any customer deliverables change.
Suraj Kalia: Payman, let me come at this revenue pull through from a different angle. Like 70% of your contracts are long term, right? So what percentage of your contracts are coming up for renewal, and how flexible, let me rephrase, is the flexibility in these contracts for end customer deliverables? changing as your customers try to manage top-line margins in the customer line. I know a long question, hopefully it's made. Fair enough.
Speaker Change: Payment, let me commenced as the revenue pull through from a different angle like 70% of your contracts are long term right. So.
Speaker Change: Changing.
Speaker Change: As your customers trying to manage top line margins in the current environment I know a long question hopefully it makes sense yes.
Speaker Change: So yes percentage of your contracts are.
Speaker Change: Are coming up for renewal.
Suraj Kelly: Yes, no problem and I think it's a good question suraj. Thanks for asking it so let me kind of break it into two because.
Speaker Change: And how flexible.
Speaker Change: Let me rephrase instead.
Speaker Change: The flexibility in these contracts for any customer deliverables chain.
Suraj Kelly: One element of it is the contracts themselves on the nature of them. So so these contracts are multiyear and they don't all start and end at the same time, obviously right. So so theres always an overlap.
Speaker Change: Changing.
Speaker Change: As your customers try to manage topline margins in the current environment I know a long question hopefully it makes sense yes.
Speaker Change: Yes, no problem and I think it's a good question suraj. Thanks for asking it so let me kind of break it into two because.
Suraj Kelly: We have some contracts that we that we signed last year that are good for three years to five years on some contracts that are coming to exploration, but on average it's been kind of that ruling 70%. That's that's under contract. These contracts. Obviously defined terms are commercial terms on diagnostics.
Speaker Change: One element of it as the contracts themselves on the nature of them. So so these contracts are multiyear and they don't all start and end at the same time, obviously right. So so theres always an overlap.
Suraj Kelly: Help help help both.
Speaker Change: We have some contracts that we that we signed last year that are good for three to five years on some contracts that are coming to exploration, but on average it's been kind of that rolling 70%. That's that's under contract. These contracts, obviously defined terms commercial terms and whatnot to kind of help.
Suraj Kelly: Both protect both companies, but also kind of define.
Suraj Kelly: The rules of engagement if you will so so so that's that's a lot of things are covered in that we obviously want to make sure that that we protect ourselves right in the.
Suraj Kelly: In terms of.
Speaker Change: The terms of the contract as it relates to some commercial terms, probably somewhat but there are elements I think what you're alluding to is the operational elements of it. Yes of course, there are some elements that defines what what forecast on inventory I wasn't that you do on those obviously vary.
Speaker Change: Hello.
Speaker Change: Both protect both companies, but also kind of define.
Speaker Change: The rules of engagement if you will so so so that's that's a lot of things are covered in that we obviously want to make sure that that we protect ourselves right in the in the.
Speaker Change: But but generally speaking I think what's implied in your question is also maybe a little bit of a variability in the forecast these contracts nor nor most contracts that exists anywhere in any industry really don't define.
Speaker Change: In terms of.
Speaker Change: The terms of the contract as it relates to some commercial term spice and whatnot, but there are elements I think what you're alluding to is the operational elements of it. Yes of course, there are some elements that defines what what forecast on inventory I wasn't that you do on those obviously vary.
Speaker Change: A very specific multi year forecast and take or pay our customers. Obviously do not have certainty in the demand of the products nor would they want to put themselves in a position that they have two very clearly defined what those products would be not what we do just to make sure that we are running our operations efficiently.
Speaker Change: But but generally speaking I think what's implied in your question is also maybe a little bit of a variability in the forecast these contracts nor nor most contracts that exists anywhere in any industry really don't define.
Speaker Change: We have requirements from our customers and our customers usually give it to us any way just to make sure that we have prepared a visibility I would say within within 12 months, they give us 12 months forecast and advanced.
Speaker Change: A very specific multiyear forecast on take or pay our customers. Obviously do not have certainty in the demand of their products nor would they want to put themselves in a position that they have two very clearly define what those products would be not what we do just to make sure that we are running our operations efficiently.
Speaker Change: As as you kind of think about months six to 12 that forecast can have a little bit more variability to adjust that just by nature.
Speaker Change: We have requirements from our customers and our customers usually give it to us any way just to make sure that we have prepared a visibility I would say within within 12 months. They give us 12 months forecast in advance as as you kind of think about months six to 12 that forecast can have a little bit more variability to it just that's just by nature.
Speaker Change: As you get closer.
Speaker Change: It's a little bit tighter than that that one to three months forecast I would say is the tightest because that's where the that's where our manufacturing plans are in place and were our production plans are in place. So there is little variability there.
Speaker Change: And by Little I mean, usually there is not a drastic change I mean, there was that that few million give or take that I talked about.
Speaker Change: And as you get closer.
It's a little bit tighter than that.
Speaker Change: That one to three months forecast I would say is the tightest, because that's where the that's where our manufacturing plans are in place and we're our production plans are in place. So there is little variability there.
Speaker Change: But generally speaking we have good visibility to our demand and under $700 million backlog that that we keep talking about is I think about it as order books have an order book.
Speaker Change: And by a little I mean, usually there is not a drastic change I mean, there is that that few million give or take that I talked about.
Speaker Change: Those are the orders that we have.
Speaker Change: On our books that that that's specifically say what customer what that SKU, what month of shipments and that gives us that good visibility.
Speaker Change: But generally speaking we have good visibility to our demand and.
Speaker Change: A few quarters out.
Speaker Change: And the $700 million backlog that that we keep talking about is I think about it as order books as an order book.
Speaker Change: Fair enough.
Speaker Change: The $700 million backlog right.
Speaker Change: Those are the orders that we have on our books that that that specifically say what customer what SKU what month of shipment.
Speaker Change: I'm not sure maybe I missed it.
Speaker Change: How should we think about the backlog over the over what duration is the numerator of being considered.
Speaker Change: And that gives us that good visibility.
Speaker Change: A few quarters out.
Darren Smith: Also Darren.
Darren Smith: This contractual price volume based calculations of $700 million or have you also factored in.
Speaker Change: Fair enough and diamond due to the 700 million backlog right.
Diron Smith: And Diron, to that, to the 700 million backlog, right? I'm not sure, maybe I missed it.
Speaker Change: I'm not sure maybe I missed it.
Darren Smith: FX is all over the map nowadays so.
Diron Smith: How should we think about the backlog over the, over what duration is this numerator being considered? And also, Diron, are these contractual price volume based calculations of 700 million? Or have you also factored in, you know, FXs all over the map nowadays?
Speaker Change: How should we think about the backlog over the over what duration is the numerator.
Speaker Change: Given the depth and breadth of customers, maybe if you could just tie that together to help us understand the trend in backlog and how sacrosanct is the $700 million gentlemen, Thank you for taking my questions.
Speaker Change: Numerate are being considered.
Darren: Also Darren.
Darren: Contractual price volume based calculations of $700 million.
Suraj Kelly: Yes, Thank you suraj.
Darren: Or have you also factored in.
Suraj Kelly: The $700 million similar to kind of a payment. We're sharing you need to think about that $700 million firm firm orders from our customers.
Darren: FX is all over the map nowadays so.
Diron Smith: So, given your depth and breadth of customers, maybe if you could just tie that together and help us understand the trend in backlog, and how sacrosanct is the 700 million number?
Darren: Given your depth and breadth of customers, maybe if you could just tie that together to help us understand the trend in backlog, how sacrosanct is the $700 million gentlemen, thank you for taking my questions.
Suraj Kelly: There are specific skus specific quantities.
Suraj Kelly: Quantities specific deliverable delivery requests and promises and so that's really the order book that we that we have at this at this time.
Diron Smith: Gentlemen, thank you for taking my question. Yeah, thank you, Suraj. Yeah, so the $700 million is similar to kind of how Payman was sharing. You need to think about that $700 million as firm orders from our customers, you know, where there are specific SKUs, specific quantities, specific deliverable, delivery, you know, requests and promises. And so that's really the order book that we have at this time. At the end of the year, it was about $730 million. We're in that same neighborhood today. But there is variability in terms of, you know, what time period that is for.
Darren: Yes, Thank you suraj.
Darren: So the $700 million similar to kind of help payment. We're sharing you need to think about that $700 million firm firm orders from our customers where they.
Suraj Kelly: At the end of the year was about $730 million, where in that in that same neighborhood.
Darren: Our specific skus specific.
Suraj Kelly: <unk>.
Suraj Kelly: There is variability in terms of.
Darren: Quantities at specific deliverable delivery requests and promises and so that's really the order book that we that we have at this at this time.
Suraj Kelly: What time period that is for so the vast majority of that $700 million. It is going to be related to the next two quarters. There are some orders in there that may be three or four quarters out we even have some orders that will trickle into five quarters out et cetera, just based on the on the need so as we've shared before when it comes.
Darren: At the end of the year it was about $730 million, we're in that in that same neighborhood.
Darren: <unk>.
Darren: There is variability in terms of.
Suraj Kelly: Two things like new product launches, we asked for more firm orders a little bit longer out. So that we can best plan the manufacturing ramp to make sure we're aligned with our customer demand, whereas for other kind of normal flow products, we might only have a couple of quarters worth of orders on hand. So that's how you can think about.
Darren: What time period that is for so the vast majority of that $700 million is going to be related to the next two quarters. There are some orders in there that may be three or four quarters out we even have some orders that will trickle into five quarters out et cetera, just based on the on the need so as we've shared before when it comes.
Diron Smith: So the vast majority of that $700 million is going to be related to the next two quarters. There are some orders in there that may be three or four quarters out. We even have some orders that, you know, will trickle into, you know, five quarters out, et cetera, just based on the needs. So as we've shared before, when it comes to things like new product launches, we ask for more firm orders a little bit longer out so that we can best plan the manufacturing ramp to make sure we're aligned with our customer demand. Whereas for other, you know, kind of normal flow products, we might only have a couple quarters worth of orders on hand.
Suraj Kelly: I guess call it the age of the orders or kind of how far out to look from a horizon standpoint.
Darren: Two things like new product launches, we ask for more firm orders a little bit longer out. So that we can best plan the manufacturing ramp to make sure we're aligned with our customer demand, whereas for other kind of normal flow products, we might only have a couple of quarters worth of orders on hand. So that's how you can think about.
Suraj Kelly: As far as the orders again with 70% of the business under contracts. The vast majority of that is under some sort of pricing agreement.
Suraj Kelly: So when there are pricing tiers.
Diron Smith: So that's how you can think about, I guess, call it the age of the orders or kind of how far out to look from a horizon standpoint. You know, as far as the orders, again, with 70 percent of the business under contract, the vast majority of that is under some sort of pricing agreement. So, when there are pricing tiers, we reflect those orders at the appropriate pricing tier. But I will assure you that it does incorporate FX, but it's also important to note that almost all of our sales are U.S. dollar-based sales. We have very, very few sales that are denominated in a currency other than U.S.
Suraj Kelly: We reflect those orders at the at the appropriate pricing tier.
Darren: I guess call. It the age of the orders are kind of or how far out to look from a horizon standpoint.
Suraj Kelly: I will assure you that.
Suraj Kelly: It does not incorporate FX, but it's also important to note that almost all of our sales are U S. Dollar based sales. We are very very few sales that are denominated in a currency other than U S dollars.
As far as the orders again with 70% of the business under contract. The vast majority of that is under some sort of pricing agreement.
Darren: So when there are pricing tiers.
Suraj Kelly: So there is not much FX fluctuation that we see in our in our sales performance nor on the order book specifically.
Darren: We reflect those orders at the at the appropriate pricing tier.
Darren: But I will assure you that.
Darren: It does incorporate FX, but it's also important to note that almost all of our sales are U S. Dollar based sales. We are very very few sales that are denominated in the currency other than U S dollars.
Suraj Kelly: I appreciate it.
Suraj Kelly: Yes. Thank you.
Sanjay: I will now turn the call back over to Sanjay for closing remarks.
Diron Smith: dollars. So, there is not much FX fluctuation that we see in our sales performance, nor on the order book. Appreciate it. Yeah, thank you.
Sanjay: Thank you everyone for joining today's call you can access to replay of this call as well as the presentation on our Investor website at <unk> Dot net thank you for your interest in <unk>. This concludes today's call.
Darren: So there is not much FX fluctuation that we see in our sales performance nor on the order book specifically.
Darren: I appreciate it.
Darren: Yes. Thank you.
Sanjay: Okay.
Sanjiv Arora: I will now turn the call back over to Sanjiv for closing remarks. Thank you, everyone, for joining today's call. You can access the replay of this call as well as the presentation on our investor website at integer.net. Thank you for your interest in Integer.
Sanjay: I will now turn the call back over to Sanjay for closing remarks.
Sanjay: Thank you again for joining yesterday. This does conclude today's conference call you may now disconnect.
Sanjay: Thank you everyone for joining today's call you can access to replay of this call as well as the presentation on our Investor website at <unk> Dot net thank you for your interest in <unk>. This concludes today's call.
Operator: This concludes today's... Thank you again for joining us today. This does conclude today's conference call.
Sanjay: Okay.
Sanjay: Thank you again for joining US today. This does conclude today's conference call you may now disconnect.
Operator: You may now disconnect.
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