All right, I'd like to welcome everyone to the KeyBanc Life Sciences and MedTech Investor Forum. My name is Brett Fishbin, MedTech Analyst, and I'm pleased to be joined by Integer, who is represented today by Joe Dziedzic, President and CEO. I'll start us off with a few questions, but as always, this is 100% Q&A. We have an open text box below the video that you can submit questions on, and I can relay them to Joe. So maybe just getting started off here, a really similar question that I've been asking all the companies so far, just around maybe a broader update on how you're viewing the environment around some of the key end market trends, really procedural volumes for you guys as we kick off 2024, and how you'd compare it to the past couple of years. Yeah, great. Thanks, Brett. Thanks for having us, having me. I appreciate you reinitiating coverage, and it's great to be here with you today. We think when we look at 2022, the hospital shortages really, we think, constrained procedural volumes. And then last year, 2023, we saw a strong pickup and above-average growth in the overall marketplace. As we look at 2024, we see a very strong order book for ourselves. We see continued strong demand across the key markets that we're focusing on, in particular, electrophysiology and structural heart, neurovascular, neuromodulation. We've got a very robust pipeline of new products that we're bringing to market, and we're excited about the growth that we see in 2024 from strong customer demand and strong end market demand. No, sure. Just kind of a similar question, but on your recent 4Q call, you initiated guidance for the year. One of the moving pieces was organic growth of 6%-8%, and that being an area of strength for the company over the past couple of years. Just curious on some of the moving pieces that you think could potentially drive some upside or maybe leave you at the lower end of the range, just how you look at some of the key variables. Sure. So I'll start with our view on 2024 from an overall market perspective. We're looking at a weighted average market growth rate, weighted average by Integer sales into the markets that we serve, of what we would call more of a historical norm, 4%-6%. That's probably above what we saw in terms of the market growth in 2022 and below what the markets were doing in 2023 as procedure volumes were strong in 2023, catching up on some of the COVID pandemic era issues. As we look at 2024, we've given guidance of 6%-8% organic growth, so that's 200 basis points above what we view as the market growth rate. And that's really a function of the new products that we're launching with customers and the demand we're seeing in the targeted growth markets. We've spent a lot of effort and energy getting designed into our customers' most important programs in those faster-growing markets, and it's been a focus to shift the mix of our sales into those markets with stronger tailwinds. So as we look at the year, we enter the year with over $900 million of an order book. These are specific SKUs, specific products, specific quantities, and ship dates. And so we see strong growth throughout 2024. To your point about where could it be potentially stronger, I'd highlight our emerging, mostly neuromod pre-market approval customers where we've raised our forecast for the group of customers where we're helping them launch innovative therapies into the neuromod space. And we saw significant growth last year, over 200 basis points of impact on total Integer in 2023. We've been, I'll say, conservatively risk-adjusting those growth rates because until you get into the marketplace, you don't know exactly what that ramp is going to look like. And so the last three years, we've increased the outlook for that. So if those products continue to do well, that gives us the opportunity for potential upside. The other area I'd maybe point to is Pulse Field Ablation. There's been a number of approvals in the space that could also help us with higher growth in the year, also some structural heart applications as well. All right, super. Thank you for that caller. And one question, guidance-related, that's come up a lot with investors and really based on commentary from some other companies, is just the idea of a little bit of potential inventory overhang at certain customers, really depending on the product area. And it doesn't seem like a huge moving piece for you guys this year, but just wanted to follow up on that idea and maybe ask how aligned do you think production is with underlying procedural trends and whether you maybe included some potential conservatism in the guidance just to account for a little bit of inventory normalization. Sure. Brett, it wouldn't be an investor conference if that question wasn't asked. There has been a lot of focus on it. I'll point back to on our third-quarter earnings call last year, last October, I highlighted that we had seen some customers adjusting inventory levels last summer that was in our third-quarter results. I highlighted then and again on our fourth-quarter earnings call earlier this year that we saw what we would characterize as something more like normal year-end inventory adjustments that we periodically, on a regular basis, pre-pandemic used to see customers doing. And so we kind of view the inventory movements across the customers as a normal course of business. We think we've got really good visibility to what our customers are doing in terms of both their inventory as well as their production schedules. Recognizing most of what we manufacture, we actually shipped to one of their manufacturing plants to build product. We have over $900 million of orders on the books. We've got really good visibility to other high runners through what our customers call vendor-managed inventory, where we actually look into their systems on Monday morning, look at their inventory levels, and then ship to a min-max. These are the high runners with high predictability. Also, our customers' manufacturing plants give us rolling 12-month forecasts for how they're planning to run their plant, which gives us really good visibility to their demand. So of course, there's adjustments that customers make, but we think we've got really good visibility, and we build all that into our forecast. So my conclusion is we've got it baked into our guidance for the year. Then just maybe one on margins for the year. You're getting quite close to your long-term target of growing op income at two times the rate of sales growth, but not quite there in terms of what's implied in the guidance for this year. Can you just maybe walk through or remind investors on the key moving pieces holding you back from that target, and then just your level of visibility into some of those improving maybe as we shift into 2025? Absolutely. So when we launched our strategy in early 2018, it centered around the Integer Production System, which is our structured process for driving operational excellence across all of our manufacturing facilities. We've made tremendous progress in 2018 and 2019, expanding margins and growing it faster than the targeted operating income growth of two times or greater than the sales. Obviously, during the pandemic, we experienced, like many manufacturing companies, direct labor turnover, which is challenging in that it creates the need for more training. It creates the need for modifying the production schedule based upon availability of direct labor associates. Supply chain dynamic was also very challenging. Like many manufacturing companies, we had our challenges there as well. We've managed through those. And as we enter 2024, our direct labor turnover is getting back to pre-pandemic levels. Now we're very focused on getting our associates fully proficient and trained. That's going to help us to drive greater efficiencies, reduce material scrap. The supply chain environment is also meaningfully improved. I can't say that we were measuring supply chain disruptions pre-pandemic. They weren't at a level where they were causing meaningful challenges in the manufacturing environment. We're back to as close to normal as we can tell. As we enter 2024, we're working to recover some of the inefficiencies that we've experienced over the past two years. The high end of our guidance this year has us growing operating profit at 1.9 times the sales growth rate. We would expect throughout the year to continue to work through those inefficiencies. We continue to have our target of getting to operating income growing twice as fast as sales. We're confident in the Integer Production System and our ability to get there. The only question for us is timing. Sure, sure. And maybe then shifting a little bit longer term, let's touch on maybe a couple of growth and portfolio topics here. And I think one really nice piece of the story over the past five years has been a notable step up in organic growth trends, but really that being a result of some intentional investment decisions and reprioritization that you guys have gone through. So maybe just take a moment stepping back to touch on some of those key investments and strategic changes that you've implemented that have really supported an improved revenue trajectory and how you got here, and then just maybe specifically how you chose some of your core growth markets. Yeah, that's a great question, Brett. It takes us all the way back to 2017, 2018, when we developed our strategy that we're executing. In 2017, we went through and looked at the portfolio, and we did an assessment of the markets that we were currently serving. We asked ourselves, are these markets attractive or not? Through the lens of what's the growth rate, is there meaningful innovation occurring? Are we aligned with our customer strategy and where there's unmet patient need or underserved patients? We drew the conclusion for us that the advanced surgical and orthopedic segment, which was then $400 million out of $1.5 billion, we deemed it unattractive given that we saw a low single-digit growth rate. We saw limited ability to differentiate from a technology standpoint. We divested that business in 2018. That was helpful and meaningful because what it then allowed us to do is to focus our energies on the remaining markets that we're serving, which we determined were attractive because they had the ability to deliver above-market growth because there was meaningful opportunity from a technology differentiation perspective. So we identified those key growth markets. The way we identified them was where's the innovation in the industry occurring, which really leads you to where is there unmet clinical need? Where are our customers investing to meet the needs of more patients? So many of our customers are investing aggressively in structural heart, electrophysiology, neuromodulation, neurovascular. You've heard us talk about these markets extensively. That's where we're focusing our organic and our inorganic investments. Why? Because that's where the innovation in the industry is. That's where there's unmet or underserved patient need. That's where our customers are innovating and investing. By doing this, they're not just serving existing patients, but they're expanding the available market. They're expanding the number of patients that can be treated. That creates above-average growth rates for our customers and for us. So for us to participate in that, we knew we needed to ensure that we could serve our customers as they race to bring these new therapies to market because speed to market matters when you're trying to be the first mover. So our strategy started by identifying those markets so we know clearly what to say yes to and, more importantly, what we're going to say no to so that our asset allocation, our human capital allocation, is aligned to our strategy to accelerate our revenue growth. The other big thing we changed in 2017 and early 2018 is we became very focused on getting designed into our customers' new programs, designed into their new therapies in these targeted growth markets. Now, the thing we all have to understand is that the cycle times in our industry can be lengthy. For a 510(k) approval from the time you start the development of a product, it can be 3-5 years from getting through from development through any regulatory approval and then meaningful manufacturing revenues because our focus is on the manufacturing revenues for these products. For a pre-market approval, it can be 5-10 years or even longer. So we knew when we launched this strategy in early 2018, we knew it would take a number of years, 3-5 years, to accelerate the top-line growth. We set a strategy for ourselves that was attempting to be very clearly differentiated. 200 basis points above the markets we're serving. Again, the market growth of the markets we're serving based on our sales mix is 4%-6%. So getting designed into those programs has been the focus of the strategy. The way we've been measuring that is we've been looking at the design and development work and the revenues we're generating from the design and development work. We've been looking at the number of programs that we have with customers. That's a quantity measure. So we've grown the number of programs and the revenues by 230% from 2017 to 2023. So actual data to actual data, that's the quantity measure or shots on goal. The other measure we've been focused on is the quality measure. Are we winning in the targeted growth markets, which have above-average market growth rates, the tailwind markets? And the answer is yes because we've shifted the mix of those programs at design and development work to be 80% of them in those targeted growth markets. So what happens over time as you win business and launch programs in the faster-growing markets and our sales increase in those faster-growing markets, the weighted average market growth rate increases. And then you get more inherent tailwinds. And so we're excited because we're now bringing a number of the programs that we started back in 2018, 2019, 2020. We're bringing those programs to market and helping customers launch very innovative, novel therapies that are getting strong market reception, as evidenced by our emerging PMA customers. That's in a nutshell, Brett, the strategy shift. That's on the top line. We can talk about margin as well if you have a few questions on that. But our strategy also was very clear to grow profit twice as fast as the sales growth rate from the Integer Production System. No, certainly. And it has been fun to see all of this come to fruition from the initial plan. And you already touched on some of the metrics that you guys provide around PMA revenue and the long-term product development pipeline, which I think investors appreciate. So maybe just touching on a couple of examples. You did mention neuromodulation and some new applications in that area being a little bit of an upside driver to recent growth. Can you touch on a couple of examples, maybe just categories within neuromodulation where you're seeing that activity take place? Absolutely. I think I would probably point to sleep apnea as an area. Cochlear is another area that we're seeing significant growth and continue to see growth. We have almost 30 customers in our emerging pre-market approval group, which is mostly neuromodulation that we're serving and taking them all the way through prototypes, through clinical trials, all the way through regulatory approval, and then into high-volume manufacturing. And so whether it's deep brain stimulation or some of the emerging or more novel pain management therapies as well, we've got a very significant number of customers at the early stages. So we think of it as building a very strong funnel at the beginning, knowing that not all of them are going to ultimately reach the marketplace, but it doesn't take very many of them to have meaningful success in the marketplace to drive significant growth from us. I think we highlighted that back in 2018, we had $20 million of sales with nine specific customers that were either launching or starting to ramp. We've now given guidance for 2024 of $100-$120 million of sales for that group of customers. And we've increased that group of customers' outlook over the last couple, three years based upon their success in the marketplace. And so we think of it as fill the funnel and then support them all the way through the market introduction and high-volume manufacturing. So definitely a pretty broad and diversified funnel of opportunities in neuromodulation, which I think makes sense based on your customizable platform and relatively vertical integration in that area. So good to hear. Really like a new area that's been coming up a lot has you did mention it, Pulse Field Ablation. And we've been getting a lot of questions on the market. I think it's an area where everyone wants to understand a little bit better your positioning in that market. So maybe just starting at a high level, if you could touch on Integer's capabilities within Pulse Field Ablation and maybe directionally just your level of portfolio exposure without naming specific customers. Sure. So we think vertical integration is a key competitive advantage for Integer. There's very few players in this space, including our customers, that have the level of vertical integration that we have. And many of our customers do the final assembly and potentially manufacture some of the components. But because we serve the whole industry, our ability to generate efficiencies from scale and because it's our core business and our focus, we can develop manufacturing processes as well as automation techniques and processes to drive greater yield and greater efficiencies than others in the industry because we're serving the full industry. Specifically to electrophysiology, we have a very strong footprint and position, a significant amount of vertical integration. We think we're the most vertically integrated player in the space, including customers for electrophysiology. Our customers in this space, particularly with wanting to bring PFA therapies to the market very rapidly, are looking for supply chain partners like us who can help accelerate their time to market. The analogy that we use, we have about 10 different manufacturing sites that contribute components to a finished electrophysiology diagnostic or ablation catheter. The way to think about simplifying our customer supply chain is if our competitors could do two of those steps, they would have to go or our customers would have to go to four or five different suppliers and manage them through the design development process, manage them through the regulatory approval process, and then the manufacturing ramp. This is while they're racing to market to get first mover advantage. You can come to Integer and you can work with one R&D development team. You can work with one program manager. You give one customer an order and you establish the ramp plan. And then we go execute it for them. And so we think we're very differentiated in this space. Our capabilities for existing electrophysiology therapies translate very well to the Pulse Field Ablation market. We've got a number of programs in development. And we see PFA as being a tailwind. We also have the finished delivery devices like steerable sheaths that are necessary in this space. So we can contribute in the full procedure, not just the PFA therapeutic device itself. And so we see Pulse Field Ablation as a meaningful tailwind for Integer. Obviously, it matters which customers win. We don't have the exact same amount on every product. But the nice thing is with Pulse Field Ablation, we've been able to increase the amount of product we have on the bill of material because our customers are racing to get to market with PFA to get first mover advantage. And we're excited to be able to help them bring this innovative therapy to market quickly. You did use the word tailwind, understanding there's differences by customer or by OEM provider. How would you just frame how you see a potential shift in modality toward RFA if that does occur as expected over time? Just understanding you are pretty broad across the electrophysiology space. Sure. The breadth of our footprint gives us the ability to work with customers on whatever their next generation device is because we're doing something for all of our customers, whether it's an individual component at high volume or subassembly or even a finished device. And the nice thing as the next generation of therapies come to market in electrophysiology, our goal is to leverage our vertical integration and solve more of our customers' supply chain challenges and help them by simplifying their supply chain. And electrophysiology is a high-growth area, an area that we're incredibly well-positioned in. And we think we're able to solve our customers' supply chain challenges very effectively. And the nice thing is we get a higher percentage of the bill of material oftentimes on the next generation devices as they work to race to market to get first mover advantage. Interesting. All right. And then maybe shifting the conversation a little bit here toward M&A and portfolio. You did provide a couple of updated metrics on your most recent earnings call around M&A and just how you think about the cadence. So you're looking at $250-$300 million of expected spend per year. But you also quantified an expected typical contribution to revenue growth of 200-400 basis points per year. So I guess my question is, what gave you the confidence to provide those revenue targets now? And how sustainable do you think that can be? Sure. We think if you look at the last 24-28 months, we've done four acquisitions. Those acquisitions have added an annualized about $170 million worth of sales. We believe we're demonstrating our ability to identify and diligence and acquire and integrate these tuck-in acquisitions that bring either differentiated capabilities that are adding to our portfolio and enabling us to further our vertical integration strategy or they're compounding existing points of differentiation, which are important because it gives us greater scale and additional capacity. Oftentimes, these acquisitions bring very strong pipelines of development programs. Because of our position in the marketplace, we think we're able to diligence those pipelines more effectively than most because oftentimes, we are either already on those programs with our customers and with other components or in some other way. So we have good visibility to the trajectory of those programs. Or we might even have been competing for some of that business. So we have a pretty good sense of where that particular acquisition target is positioned in the marketplace. So we think we have a competitive advantage for being able to identify and diligence acquisitions. The market is still very, very fragmented, especially for the tuck-in acquisitions that we're targeting. And as we look at our free cash flow generation and our EBITDA growth, we're confident we can maintain our targeted debt leverage of 2.5-3.5 times. And that gives us $250-$300 million of dry powder to spend on an annual basis. And so we've guided this year's inorganic growth on top of our six-eight is another 300+ basis points from acquisitions. We were at 3.1x leverage at year-end, close to Pulse acquisition in the first quarter. By later this year, we'll have our debt leverage back down into a range where we could do additional tuck-ins. So the goal is to very methodically add 2-400 basis points of inorganic growth. When we look at the multiples that we're paying and we look at the dry powder we have, we feel confident in that 2-400 basis points of inorganic growth on a go-forward basis. Then maybe looking ahead a little bit, understand the first part of the year is probably a little bit more focused on leverage reduction, getting closer to the middle or lower end of your target range on leverage. Just maybe looking ahead a little bit, where are you seeing the most interesting M&A opportunities? Yeah. Sure. So we're obviously very focused on the four targeted growth markets and the capabilities that enable those growth markets: structural heart, electrophysiology, neurovascular, neuromodulation, just to reiterate them. So the capabilities that enable us to further vertical integrate in those therapies, those devices, or compound existing capabilities. We're very focused on those growth markets. We think there's still a tremendous amount of innovation that's coming in the marketplace. It's very much aligned with our customer strategies and their capabilities. They're looking for fewer but bigger, stronger supply chain partners. And so that's really what we remain focused on from an acquisition standpoint. So it's either closing the very few remaining capability gaps that we're working to close or it's compounding the existing capability, bringing on a strong development pipeline with these customers. But again, the tuck-in size that we're looking for, these are not large companies that we're acquiring, but they oftentimes bring very strong development capabilities. So anything that's going to help us with our design development capabilities so we can get designed into the next generation of therapies is a target acquisition for us. Certainly. All right. So sounds like pretty similar to the strategy that's been working for you the past couple of years, for sure. And I'm going to ask a couple of questions on margins, but I had one come in from the audience around taking a step back to some of the inventory conversation. And the question is that you quantified a backlog of around $1 billion in 3Q23, and now you're saying around $900 million. So just in terms of that coming down by $100 million, if it's not like an inventory management dynamic, where does that $100 million difference come from? Sure. So I'd have to go back and double-check. I think we were at $950 million, $960 million-ish. The order book fluctuates for a handful of reasons. I'll highlight now, we would expect the order book to come down over time. There are a handful of specific reasons why the order book spiked up from where it was. Remember, it was $300 million at the beginning of 2020. So we've gone from a $300 million order book in pre-pandemic to over $900 million. I think we ended the year last year at $900 million, $910 million, or $912 million. It's in the 10-K. So when we exited or we announced the exit of our Portable Medical Business, we did a last-time buy. We had all those customers place non-cancellable, non-changeable take-or-pay orders. So as those orders get fulfilled, then that comes out of the backlog and there won't be replacements. In our guidewire facility that we announced a couple of years, a year and a half ago, two years ago, a significant expansion in Ireland. So it's an 80,000 sq ft expansion. We were full. We were at capacity in 2022 and much of 2023. We continued to find ways to add capacity from a lean manufacturing perspective and some other operational changes and movements around the facility. But we'll take possession of that facility this year. We ask customers to place orders a year and a half in advance. And so we had effectively a full year's worth of orders for that facility on the books, which increased the order book. And so as that facility comes online and we don't need orders that far in advance, we would fully expect, obviously, those orders will come down. Then there's a handful of new products that we're launching this year that, as part of ramping and the commitment that we've made to our customers to add capacity and add resources to scale to the volumes they're projecting, we asked for firm orders for 2024 in order to ensure that we had visibility and that we could support those ramps. As we get new products, we would expect those to continue to replace those. We're not expecting the order book to increase based upon those specific reasons that we knew it spiked. Also, as lead times continue to come down, we would expect the order book to also adjust to those shorter lead times as we continue to reduce lead times. It's not surprising to us that the order book is at $900 where it is today. We would expect it to come down another $100 million-$200 million based on those specific reasons that we knew would increase. But I'll just highlight still, it'll still be more than double where it was pre-pandemic. That's a function of we have a bigger business. The acquisitions obviously have brought some backlog. But we're also growing at a faster rate. Even if we come down to $600 million or $700 million, that's still more than double where we were at the beginning of 2020. That's how we think about the order book. Yeah. No, thanks for that additional color. And maybe just shifting a couple of final topics here in our last few minutes. We talked a little bit about margins and guidance this year being in kind of that 1.8 times if you're thinking about operating income growth versus sales growth. And I understand there's a couple of near-term moving pieces or headwinds that are still lingering. But just maybe looking ahead, how certain are you that that's the right long-term objective or long-term way to measure performance on the margin side? Because to me, just thinking about it, and as you get bigger and bigger, it seems a little bit challenging. Well, Brett, when we set the strategy back in 2018, we said we wanted a premium valuation. And we reflected on what would earn a premium valuation for our investors by our investors. And we said we need to demonstrate that we're winning in the marketplace, that we're gaining share. And we determined that the best way to demonstrate that is to grow faster than the markets you're serving. We picked 200 basis points as just kind of a threshold to say if we're growing 200 basis points faster than the markets of 4%-6%, take 5% at the midpoint. That means you're growing 40% faster. 7% over 5% would be 40% faster than the markets you're serving. That would be demonstrating that you're winning in the marketplace. We believe we're demonstrating that. And then if you want a premium valuation, well, you need to do that while also expanding margins. So you're becoming more efficient and you're getting the leverage off of that growth. And so we pick for ourselves an objective of growing operating profit twice as fast as sales. And we did that because we said if we want a premium valuation, we have to earn it. We have to demonstrate it through the financial results. So that's how we determine what those goals were. We're confident in the Integer Production System and the execution of that, that we can drive the efficiencies in the business. And over the last couple of years, we've had significant inefficiencies from the direct labor turnover. That is now back very close to or at pre-pandemic levels. Supply chain disruptions, we're very inefficient. We're back to pre-pandemic levels, back to, I'll say, normal on that front. We're also continuing to focus on network optimization, making sure that as customers' products are maturing or reaching certain scale, we ensure we move those to lower cost locations. We save money. We share some of that with our customers. We're continuing to implement automation, collaborative robots. There's a myriad of ways in which we're driving efficiencies, focusing on yields in our manufacturing plants. As you launch new programs, there's usually an opportunity to improve yields. So the new programs that we're launching, we're very focused on delivering on the yields there and getting the efficiencies of scale. We remain confident that there's significant opportunity both on labor and material and network optimization and some of the other projects and continuous improvement initiatives that we can deliver operating profit of twice as fast growth as twice as fast as sales. All right. We're coming up on time here in our last minute. Maybe just if there's any final thoughts you'd like to leave investors with today and maybe around what makes you most excited about the Integer opportunity over the next couple of years. Well, Brett, first, thanks for inviting us to be part of the conference. Excited that you reinitiated coverage. We feel like our story is resonating with investors given some of the recent recognition and the valuation. We feel like we have a clear strategy. We feel like we're executing that strategy and demonstrating that with above-market sales or organic growth. We feel like the inorganic strategy is also working and adding a couple of 200-300 basis points. We're confident we can continue to do that. We remain excited in our strategy and partnership with our customers, focusing on the innovation that's driving their growth. I think our strategy is very much aligned with our customers and that we're an important strategic partner to them. And we look forward to continuing to execute our strategy to earn that valuation premium for investors. All right. Well, thank you so much for joining everyone.