Good morning, Craig Bijou, one of the medical device analysts here on the research team at BofA, and it's a pleasure to have Integer Holdings. And from the company, Joe Dziedzic, CEO. So, Joe, thank you. Great to be here, Craig. Thank you. So maybe start with, we're not too far from Q1 earnings, so maybe just start with a recap, with some of the growth dynamics you saw, maybe within your segments. You know, you had some tough comps, but you still put up some pretty solid growth. So maybe we can start there and then dive in. Sure. So first quarter, we had 10% reported growth. The cardiovascular business grew 16% reported. Cardiac rhythm management, neuromodulation grew 8% reported. So, on an organic basis, the medical segment grew 8.6%. So we think we had pretty strong growth in the first quarter, which was a great start to the year. Very much in line with what we expected, based upon our visibility to customer demand. A little bit of a drag from our non-medical segment in the first quarter is a couple hundred basis points of drag on a reported basis, organic basis, as that business normalizes after working through some of the supply chain challenges that they had back in 2022 and the early part of 2023. So 10% reported, right in line with the beginning of the year that we expected, consistent with our full-year guidance of 9%-11% sales growth, 13%-20% operating profit growth, pretty strong operating profit growth in the first quarter as well. Got it. And then maybe just thinking about how to look at guidance before kind of digging into some of the business. I think you made some comments on Q2 revenue growth, and I wanted to just kind of clarify, you know, how we should be thinking about it. I think you said high single-digit revenue growth for the first half. Mm-hmm. And the street is modeling 9% reported, which is roughly 6% organic, for Q2. So similar growth to Q2 or similar growth in Q2 as compared to Q1, despite some easier comps. So just want, you know, kind of want to understand, is that conservative to, to start the year? Is there anything else that, you know, we should, You know, any headwinds that we should be thinking about, either, you know, for in Q2 or the rest of the year? Yeah. So I'd say, no, no, no headwinds per se. I wish everything were up and to the right every quarter in the same consistent amount. But life isn't linear, business isn't either, and so our guidance on second quarter is very much in line with the demand profile we see from customers. It's consistent with the full year guidance that, When you think to your point about the organic, there's still a drag on the non-medical side of the business for the second quarter. That becomes less so of a drag on an organic basis when you get to the second half of the year. So medical sales will be stronger than the reported organic growth in the second quarter because of that. But the profile for the second quarter is consistent with customer order demand profile, and as we look at the visibility that we have, still a very strong order book, that gives us great visibility to the next couple quarters. In particular, this is the profile of demand for customers. Just remembering, we're shipping product mostly into our customers' manufacturing facilities, and so the demand we see is not based upon their end market demand in the quarter. It's based upon the product that they're building, and the profile that they've given us for the quarter. So again, second quarter is consistent with our outlook for the full year. Got it. Similar question, and we'll try to get these out of the way, upfront. Similar question on margins. So, you know, you grew operating income 26% in Q1 Mm-hmm. Obviously very strong. It was 2.7x revenue growth, and your target multiple there is 2x operating income growth, 2x what revenue growth is. But you kept guidance unchanged for the year, again- Mm-hmm You know, early in the year. But maybe just talk about what drove the stronger margins in Q1, and then why couldn't we see a similar operating income level? Or I guess, what is the appropriate operating income level for the rest of the year? Mm-hmm to think about, so? Sure. So maybe the best way to think about it is look at the operating income by quarter in 2023. So the first quarter operating income was $55 million. Second quarter of 2023 stepped up to $60 million, so it's a 20% increase from first to second quarter. So you just think about that when you get to first quarter 2024, second quarter 2024, the denominator just went up by 20%. And so we view that as the second quarter has a tougher comp compared to the first quarter because last year's income stepped up meaningfully from first quarter 2023 to second quarter 2023. And the reason it did is, we were coming off of the supply chain disruptions that we had in late 2022, and we were still working through that in the first quarter of 2023. We were able to work through a lot of those disruptions by the time we got to the second quarter, which is why you saw the meaningful step up in operating profit from first quarter to second quarter 2023. And so it's 20% harder in the second quarter to grow than it was in the first quarter. So the 26% in the first quarter of 2024, year-over-year growth, was in line with what we were expecting it to be. As we think about the full year, at 13%-20% for the full year, it gives us a great start in the first quarter. But again, given the visibility that we have to the demand from customers, we're able to operate the facilities in a way that delivers on the operating income that we guided to. Yep. And I believe you said you expect sequential improvements in operating margin throughout 2024. And I guess, what are some of those drivers that accelerate the operating margin? And then, what could drive upside? You know, I know, I know you gave the guidance, but what, you know, what, what could drive that upside to be above where you are, where the guidance is? Sure. I'll start with what could drive the upside is faster, greater success and faster success at the continuous improvement initiatives that we have across the business. The margin compression that we saw during the pandemic was driven by direct labor turnover. We had significant turnover that peaked in 2022, and then throughout 2023, the direct labor turnover improved literally every month, every quarter on a very, very sequential basis. That improvement has continued into 2024. Where we sit today, all or almost all of our sites are either at or below the levels of turnover that we had pre-pandemic. So it's really working the inefficiencies out as we get our direct labor workforce better trained and more proficient at what they do. One of the things we experienced in 2022 and throughout 2023, as part of that, one of the implications or ramifications of that turnover, our direct labor associates scrapped more material, so they wasted more material. We literally had to throw away more direct material than we had in prior years. So as we continue to train our workforce and they become more proficient at what they do, we cross-train them so that we've got backup when there's vacation times or absenteeism, or demand shifts from one product to another, we can work those inefficiencies out. The supply chain was also very disruptive, particularly in late 2022. We worked through a lot of that in the first half of 2023. So it's really just executing lean manufacturing practices as part of the Integer Production System, and getting the direct labor efficiency and getting the direct material waste out of the system. You know, we were 31% gross margins before the pandemic. We're in the 27%-28% range now. We're confident we can not only get back to that 31%, but continue to grow from there. What would make it better was just faster execution of those, working those inefficiencies out. On that last point, you know, given that you are seeing improvements throughout or each year year-over-year, I mean, how should we think about the timing to potentially get back to that 30-plus gross margin or the pre-COVID gross margin? Is that something that, you know, that could, you know, surprise us and happen sooner than expected, or? So our strategy has been from the beginning to grow operating profit twice as fast as sales. Last year, we hit 1.7x. I think the high end of our guidance this year is 1.9x. That's the high end. I think midpoint's around 1.7x-ish. And so that's still our goal. As we work through the direct labor turnover and working those inefficiencies out, we believe we can continue to expand margins. The pace of getting back to 31%, we haven't made a definitive statement or guidance on that, but we're driving for it because we know we can get there 'cause we've been there before. But we also think we can go beyond that because not all of our manufacturing processes are at world-class levels of efficiency, and that's where the lean manufacturing within the Integer Production System is driving to get us there. Got it. And maybe a follow-up on that. Just, M&A is obviously a key component of your business strategy, adding more capacity. How does that factor into some of the gross margin expectations? Or, you know, what's, You know, how much of a risk is that when you're bringing in a new facility? I guess, how much diligence do you do on that? Mm-hmm ahead of, so you don't go the other way, and you're continuously moving towards that, you know, 30+%, let's say, gross margin? Certainly. So one of our criteria for acquisitions, it starts with: How does it fit within our strategy and enable our strategy? So we're looking for capabilities that either compound existing points of differentiation or add new points of differentiation from a technology standpoint. We're looking for businesses that are focused on the four targeted growth markets that we're focused on: electrophysiology, neurovascular, neuromodulation, structural heart. You've heard us talk about those. So those are kind of the starting points. The diligence aspect that you bring up, there's a cultural element to the diligence, but from a financial profile, we're looking for businesses that have a pipeline in those four targeted growth markets, because we know the development cycle in the industry is longer, three to five or five to 10 years, if you're in a pre-market approval products. So we're also looking at profitability, contribution margin or gross margin, that is either accretive to Integer gross margins, or we can see a very clear path through synergies. The nice thing for us is, most of the time, we're doing acquisitions where it's one facility, which is an ideal scenario, and it's anywhere from $20 million-$40 million, maybe $60 million of sales. So in the context of $1 billion, $7 billion, $8 billion Integer, we have capabilities and practices around the company that we can usually bring to bear on those manufacturing facilities and help them. Sometimes it's procurement synergies, other times it might be practices or automation that we've already implemented. We also find that we learn a lot from these smaller and very entrepreneurial companies, too. And so we share, and you know, when you're buying a company, you're buying it because they're doing something really well. So we work really hard to understand what that is and then protect that. So the acquisitions we do, they are either already accretive at the gross margin level, or we have a very clear path to doing so in a tight timeframe. Got it. That's helpful. So I want to step back and maybe talk about some of your target growth markets- Mm-hmm and the opportunities that you see there. You know, it's really from a higher level, you know, how do you think about these opportunities? Like, for example, in electrophysiology, you have a pretty well established platform. Mm-hmm. Structural Heart, maybe not, maybe under index there Mm-hmm relative to the size of the market. So when you think about how your position in each of those, how do you, you know, see the growth opportunities? Is it better to be, you know, over-levered or in line with the market in terms of, you know, the contribution to your you? Mm-hmm. Or if you're under-indexed, you know, that's certainly an opportunity. So how do you see those, and how do you allocate your resources kinda to, to those growth markets? Yeah, great, great question. You gave a good summary of kinda how we're positioned from a vertical integration standpoint. Maybe the four targeted markets, electrophysiology, we're highly vertically integrated. We're, we believe, the most vertically integrated provider in the space. We manufacture components that even our customers don't do, and we do that at scale. And in addition to maybe the therapeutic device, the ablation device itself, we're also on the access, the delivery, as well as the mapping and the diagnostic catheters as well. So we play in the full procedure, and we have for a very long time, and that vertical integration positions us incredibly well. When there's next-generation products coming to market or when there's an innovation and there's a new therapy, like Pulsed Field Ablation, it gives us the opportunity to vertically integrate and help our customers accelerate their product getting to market. So electrophysiology, we're highly vertically integrated, we're. We serve the whole industry, and we see the growth in the procedure volumes coming from the anticipated acceptance of Pulsed Field Ablation being a tailwind for us. But I'll also say, because we had a lot of conversations on Pulsed Field Ablation, there's no one therapy that's going to be a meaningful impact on total $1.75 billion at midpoint sales for Integer, because we're so highly diversified. And to your other question, or to build on that, neuromodulation is a great example. Implantable Pulse Generators, we're the most vertically integrated provider in the industry. We're the only outsourced option for high-volume implantable batteries in Implantable Pulse Generators, filtered feed-throughs that are critical for Implantable Pulse Generators, the cases themselves, and then the design and assembly of those devices and helping support customers through regulatory approval. We can do the entire lead system vertically integrated as well. So Neuromodulation is also one of the four growth focus areas, highly vertically integrated. To your point, Structural Heart, we were less vertically integrated when Aortic was its growth driver. Now, with Mitral and Tricuspid, we've added the capabilities and now can offer the vertical integration there. Also moving up the value chain and doing more of the complicated, more complex delivery systems, which gives us higher dollar value per unit in Structural Heart. So, the vertical integration is a critical component of our strategy, and the technology differentiation is ultimately what enables us to win. Got it. That's helpful. I do want to touch on PFA. It's obviously a hot topic for investors, for me. And I think you've been pretty clear that you have exposure to, you know, the major players in PFA in some fashion. And is there a way to kinda talk about that exposure, whether it's components, whether it's full assembly, you know, partial assembly, you know, access, maybe even just mapping for some Mm-hmm some of the participants? But I think what investors are really trying to understand is, you know, what that actually means when you say you have exposure to all of the players. Yeah, I wish I could give you the details of the programs we're on and the content we have, and talk openly, like our customers are able to do about their new products and what's rolling out over the next 12, 24, 36 months. But our customers want to control the conversation with investors on their products and their programs. And they know investors are smart, and they look for insights anywhere they can get them. So I'll start with pulsed field ablation and for us, we believe it's a tailwind. It's a tailwind because we have a vertically integrated offering. But we also benefit significantly from electrophysiology procedure growth, because we do play in the access and the delivery, as well as the mapping and the diagnostic catheter. So it's not just the therapeutic ablation catheter that drives growth for us. We participate in the full procedure, which is, we think, one of the strengths of Integer. Our diversification is a strength. You may say, "Well, I'd rather you be indexed to one product and be a moonshot." And I'd say, "Well, we're highly diversified. We're taking lots of shots on goal with everyone in the industry, where we've been serving the industry very broadly for a very long time, and we think that gives us consistency in our growth trajectory." And we have four targeted growth markets, we're taking shots on goal with every customer on all the next generation and new therapies that they're bringing to market. We're excited to help them. But maybe one therapy isn't going to be a meaningful driver on the $1.75 billion of sales per Integer. But we're excited about Pulsed Field Ablation because of what it does for patients and for the tailwind that we think it delivers for us. Got it. And, I don't know if it's pushing or maybe just going a little bit deeper on that, but, I do want to follow up. You know, so PFA is a tailwind, and really trying to understand how the incremental contribution, and I know you're not gonna give numbers or say it specifically, but really trying to, you know, what does it being a tailwind mean relative to your existing EP business? So obviously, volume, you benefit from that. I believe that you've said that you have more content on PFA devices than your current, you know, EP AFib portfolio. So, you know, presumably you're gonna get more revenue per PFA- Mm-hmm. On average. So one, I guess that's the first question. The second is: Does that market, you know, with all of the pipeline products that are coming, do all the products need to be out there to see some of that benefit? Or so, are we talking about a couple of years? Maybe hard to answer, or you may not want to answer, but I have to ask, so. It's a new derivation of the question, which we've had a lot of them. If I answered with any specificity, you would then dial into the approved devices, the upcoming devices, and connect that to our sales, and so I I try. I appreciate that. It's been an ongoing dialogue. I'll say broadly, maybe to try to answer as indirectly as I can and give you some color. Different customers have different approaches with new products they introduce to the market, and they have a range of philosophies. Some want to build inventory as soon as they can, well before they receive regulatory approval in whichever markets that they have filed, so that as soon as it's approved, they can start shipping as much as they can immediately and reap the benefits. Other customers take a different approach, where they say: "I'm gonna wait until I've had conversations with the regulatory bodies on my submission, and I know I'm really close to getting approval, and then I'll accelerate and try to ramp and build as much product as I possibly can." And I don't think either approach is right or wrong, it's just different. But if you think about that for what we do, we ship product into our customers, mostly into their manufacturing plants. They then incorporate those components or subassemblies or even finish devices into a kit, and then ship them off to the market. And so you can just think about the different customers' approaches and how that may then translate into sales for us and the timing relative to when those products come to market, which I think is maybe one of the questions that you and investors have been trying to connect the dots on. And then I'll just say again that on balance, there is no one product or therapy that's going to be a material driver of Integer total sales. And we've got four different markets we're focused on to accelerate the sales growth. I recognize that. And maybe just last one on PFA, the contribution. So I, I think you bring up a good point that, maybe needs some clarification. You know, the timing of when you would see revenue and, you know, and I believe you've said this publicly, that it's less of a 2024, you know, contribution or. And it would be, you know, more broad or, I guess, further out, just given, some of the expectations of, of the market in general. So it would probably be a, a longer-term benefit to you guys, what you do see from an incremental perspective, and I think you alluded to it in your initial comments. You're not gonna see it tomorrow, you know, if, necessarily in the numbers. Is that If I get too specific, but give Right given the timing and nature of approvals- Got it any answer there might compromise what I've agreed to not disclose- Got it with our customers. All right, I apologize for asking all the questions. It's okay. But, um No, good question. It's fair. You know, maybe let's talk about some of the emerging growth, neuromodulation products. You obviously, you put this plan in place a number of years ago, and it's obviously been very successful. You've raised the guidance. So maybe just discuss kind of that plan, and, you know, it's been contributing 200+ basis points per year, you know, to your growth and, you know, really driving some of that above-market performance that you talked about. So maybe just, you know, a little bit on that and kind of where you see that, that program evolving. Mm. And that's, I mean, it's all Neuromod, so it's obviously not on the cardiovascular side, so something different. Well, there are a lot of exciting therapies that our customers are bringing to market, and we're gonna see more of those accelerate into the second half of the year. And so to your earlier questions around the organic growth rate in the first half compared to second half and the full year, two things in the second half: You'll see more of our Neuromod new products being launched and accelerating into the second half. As well as the Irish guidewire facility that we've made a significant investment in to add 80,000 sq ft. We get possession of that facility mid-year. We've already got equipment that we're setting up and qualifying so that as soon as we have possession of the building, we can start producing more product. And so you'll see higher sales out of that facility in the second half of the year, accelerating our growth. But on neuromodulation specifically, this is, Think about this, these are pre-market approval products where, for almost every one of these customers, we were there at the beginning and helping them develop the product and building prototypes and supporting them through regulatory approval. And then, in most cases, we do the entire implantable pulse generator, vertically integrated, usually with our implantable battery, our feed-throughs, our cases. And so this is where the vertical integration really solves a problem for these early-stage neuromodulation companies who have a great idea. They have technology that they've either acquired from a research institution or a hospital or an academic institution, or they've developed the idea themselves, physicians, and they're looking for someone to do the entire manufacturing, design, development, manage the entire supply chain for them. In most cases, we're either doing the entire implantable pulse generator, vertically integrated, and/or we're doing the full lead system, and fully vertically integrated as well. So it's a really elegant solution for these early-stage companies, and there's a strong pipeline of them. I think we showed at year end that we've got 17 of these early-stage companies in the development phase, and you know, it's a five, 10, 15-year process that we've had a funnel going for the last 25, 30 years. A number of those therapies are coming to market in the second, Well, they've been entering into the market, but they began to accelerate in the second half of the year, and we expect that to continue to be a strong growth driver for us. I do think an important distinction is, you know, you've kind of risk-based your Risk-adjusted the projections. Risk-adjust your projections. You know, what we've seen over the last couple of years is outperformance of, Mm-hmm of that. But so you take a conservative approach to what those products could contribute. Yeah, we showed that slide for the first time in late 2020, and we've been showing it at year-end every year since. And we take a risk-adjusted conservative view. Obviously, our customers that are launching new products, they want. They give us the most aggressive, most optimistic scenario. Why? Because they want us to have the capacity and be ready to meet any demand and all demand that they see. And nobody's perfect at predicting the market acceptance and the market success. So we work to have the capacity and flexibility, but in terms of what we count on, certainly what we guide to, we risk-adjust that to a level that we have a high confidence in being able to achieve. Got it. Couple of minutes left. I can't let you get out of here without an inventory work down question. It's now That makes it official. It's, I mean, it's at the bottom end. That's good. It's not the first question now. It's good. But I mean, you know, we laugh about it, but it's, You know, it seems like you've moved past this. There's still a narrative that's out there that your customers are working down inventory. You know, it hasn't shown up in your numbers. It seems like you, Any impact that you would see is contemplated already in your guidance. You have some visibility into that. So it's more just maybe a confirmatory statement from you that, you know, it's not an issue, and you know, it was a narrative of 2023 and not really- Yeah. something today. So it's a fair question. It's still circulating broadly in the industry, and I guess what my most definitive statement I can make is, it's been in our results, and it's in our guidance, and given the strong order book that we have, we have strong visibility to particularly the next couple of quarters. We're gonna ship to our customers what they're planning to build and how they're running their manufacturing plants, and so it's in our guidance, whatever it is. You know, it's not like our customers can hand us a granular, detailed plan or mapping of inventory levels. But what I'll say, I, Some of the conversations I've had with customers are, I don't think that we necessarily built or our customers built a meaningful amount of inventory with us, for a couple of reasons. One is, we serve everybody in the industry, and so when we saw spikes in demand, we were able to triangulate that with the overall industry growth rate and ask the customers the question: What's going on here? Everyone's trying to order 30% more, and the market still looks like it's growing 5%, 7%, 10%, whatever, and we don't have 30%-50% idle capacity sitting around. So even if we wanted to suddenly ship 30%-50% more of something, there isn't idle capacity. And as we plan out our manufacturing facilities, we don't allow for those spikes and drop-offs without charging customers for it. And when it comes down to a customer having to pay for a spike where they're thinking, "I'll build inventory, then I'll cut, drop it off to level out," they don't wanna pay for that. And so whether that was a driver for why maybe we haven't seen as pronounced adjustments as others, or quite frankly, maybe we've seen the pronounced adjustments, and we've just been able to outgrow the volatility of it. But I'll come back to my statement that I make often: Life isn't linear, neither is business, and there's a perfect example why it isn't linear in any given quarter. We love the visibility that we have, given our order book. It's in our guidance. We've got really good visibility, particularly the next quarter, but customers give us almost every plant we serve, gives us a rolling 12-month visibility to their demand and expectations. So I maybe it's confirmatory to say: Whatever it is, it's in our guidance. I think with that, we're out of time, Joe, so thank you. Great. Appreciate you coming. Thank you for the time, inviting us.