Integer Holdings Corporation Q2 FY2025 earnings call

• Joe mentioned the second quarter delivered strong year-over-year results with sales up 11% on reported and organic basis, adjusted operating income up 15%, and adjusted EPS up 19% to $1.55. • For the first half of 2025, sales increased 9% and adjusted operating profit increased 14%. • Diron reviewed financial results: sales at $476 million, 11% growth; adjusted EBITDA $99 million, up 10%; adjusted operating income up 15% with margin expansion. • Mentioned strong pipeline of new products in faster-growing end markets, margin expansion from manufacturing and business excellence, and tuck-in acquisitions. • Adjusted effective tax rate for Q2 2025 was 19%, lower than prior year, and full year outlook adjusted with raised midpoints for operating income and EPS.

In the second quarter of 2025, Cardio & Vascular sales increased 24%, with trailing 4-quarter growth of 17%. Cardiac Rhythm Management & Neuromodulation sales grew 2% in Q2, with trailing 4-quarter growth of 5%. Sales for Cardio & Vascular are expected to grow in the mid-teens for the full year 2025, while Cardiac Rhythm Management & Neuromodulation is expected to grow in the mid-single digits. Absolute sales for Cardio & Vascular in Q2 2025 were driven by new product ramps in electrophysiology and neurovascular, and for Cardiac Rhythm Management & Neuromodulation by emerging PMA customers and neuromodulation.

• Raised midpoint of adjusted operating income and EPS outlook, maintained sales midpoint and tightened sales range. • Sales expected to be $1.850 billion to $1.876 billion, midpoint $1.863 billion, up ~8%-9% y-o-y. • Adjusted EBITDA range $402 million to $418 million, growth 11%-16%. • Adjusted operating income range $319 million to $331 million, growth 12%-16%. • Adjusted net income range $222 million to $231 million, growth 21%-26%. • Adjusted EPS range $6.25 to $6.51, growth 18%-23%. • Sales organic growth expected 6%-8%, above underlying market growth. • Tariff impact expected negligible, within $1 million to $5 million.

• Foreign currency fluctuations: second quarter experienced $3 million FX headwind. • Tariff landscape: minimal impact expected in 2025, but potential for actual results to differ from guidance due to risk factors in SEC filings.

Q: Fair enough. And Diron, to that -- to the $700 million backlog, right. I'm not sure -- maybe I missed it. 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 calculation, the $700 million? Or have you also factored in -- FX is all over the map nowadays. 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?

A: Diron Smith stated that the $700 million backlog is firm orders with specific SKUs and delivery requests, mostly for next 2 quarters, some into 3-4 quarters. Orders are under pricing agreements, incorporate FX, and almost all sales are U.S. dollar-based, with minimal FX impact on the backlog.