Envista (NVST) 2025 Conference May 28, 2025 01:50 PM ET Speaker0 We'll get going. Jon Block from Stifel. Good to see everyone again for the afternoon. And for our next session, we're excited to be rejoined by Envista's CEO, Paul Keel. Paul, thanks for coming. I'm sure you remember you were appointed CEO at Envista a little over a year ago and you did me a huge favor because we were really hoping Envista was going to come. You only had a month or so on the job and you still attended Jaws and Paul. So I'll st ...

Summary of Integer Holdings Conference Call Company Overview - **Company**: Integer Holdings - **Industry**: Medical Technology (Med Tech) Key Points and Arguments CEO Transition - Joe Dizik, the current CEO, is transitioning to retirement, with Peyman Kales set to take over later this year [5][7] - The transition is seen as timely, with the company in a strong position, having met strategic objectives set in 2018 [7][8] Financial Performance and Guidance - Integer Holdings reported sales growth of 8% to 10% for the year, with organic growth of 6% to 8% [8] - Net income is expected to rise by 19% to 26%, and earnings per share guidance is set at 16% to 23% [8] - Q1 results showed 6% organic growth, with a reported 17% growth in the cardiovascular segment [19][20] Strategic Focus and Market Position - The company has a strong presence in growth markets, particularly in electrophysiology (EP) and pulsed field ablation (PFA) [15][16] - The pipeline of opportunities has increased by 270%, with 80% focused on growth markets [16] - Integer Holdings aims to maintain a debt leverage ratio of 2.5 to 3.5, which is considered prudent for the industry [8][17] Operational Insights - Operating income grew by 14% in Q1, indicating strong operational leverage [28] - The company expects to see improvements in gross margins and operational efficiencies, particularly in R&D [30][32] - Integer Holdings is exiting the portable medical business, which is expected to decline by $29 million year-over-year, offset by $59 million from acquisitions [26][27] Tariff and Supply Chain Management - The expected tariff impact for 2025 is estimated to be between $1 million to $5 million, due to the company's supply chain positioning [40][41] - Integer Holdings has a global manufacturing footprint, which mitigates tariff risks [46][47] Growth Areas - The cardiovascular business has reached $1 billion and is growing double digits, driven by acquisitions and market expansion [55] - Emerging markets such as neuromodulation and cardiac rhythm management are expected to drive future growth, with a projected growth rate of 15% to 20% [66][67] Portfolio Management - Integer Holdings has divested non-core assets to focus on high-potential markets, particularly in cardiovascular and neuromodulation [68][70] - The company emphasizes the importance of cash generation from established segments to fund growth in faster-growing areas [70][72] Additional Important Insights - The leadership transition is expected to be smooth, with Peyman Kales being well-prepared to take over [11][15] - The company maintains strong relationships with customers, which aids in navigating pricing pressures and cost management [52][54] - Integer Holdings is committed to a long-term growth strategy, focusing on innovation and market leadership in targeted segments [17][60]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $337.7 million, a 20.3% increase from $280.7 million in Q1 2024 [9] - Adjusted earnings per share rose to $1.42, up 17.4% from $1.21 in Q1 2024 [9] - Adjusted EBITDA increased to $40.6 million, a 25.1% rise from $32.4 million in Q1 2024 [9] - Gross margin percentage improved to 31.9% from 31.4% in Q1 2024 [24] - Adjusted EBITDA margin was 12%, compared to 11.6% in Q1 2024 [25] Business Line Data and Key Metrics Changes - Personal Care segment revenues were $258.3 million, accounting for 76.5% of total revenue, with a 7.4% organic revenue growth [23] - Hospice same store revenue increased by 9.9%, with average daily census rising to 3,515, a 4.6% increase year-over-year [14][21] - Home Health segment revenues were $18 million, representing 5.3% of total revenue, with a 1.3% organic revenue growth [22] Market Data and Key Metrics Changes - Personal Care services received favorable reimbursement support, including a 5.5% rate increase in Illinois effective January 1, 2025 [12] - Same store hours in Personal Care increased by 2% compared to Q1 2024, marking the largest year-over-year volume growth in recent quarters [13] - The company experienced solid caregiver hiring success, with 79 hires per day in Personal Care, up from 78 in Q1 2024 [10] Company Strategy and Development Direction - The company aims for a minimum annual revenue growth of 10%, focusing on acquisitions that complement organic growth [17] - The Gentiva acquisition added approximately $280 million in annualized revenues, significantly expanding market coverage [22] - The company is actively pursuing additional acquisition opportunities to enhance density in existing markets and add clinical services [23][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued demand for home-based care, viewing it as a growth opportunity [18] - The company anticipates stable gross margins and consistent cash flow conversion in line with historical averages [25][27] - Management noted that the clinical hiring environment remains challenging, but improvements have been observed in the personal care segment [11][67] Other Important Information - The company utilized approximately $2.5 million in ARPA funding during Q1 2025, with $8.8 million remaining [28] - As of March 31, 2025, the company had cash on hand of approximately $97 million and reduced bank debt by $20 million [9][28] Q&A Session Summary Question: Commentary on hospice cap limitations - Management indicated that cap limitations have not been material, with effective management of referral mix [33][34] Question: Impact of weather on personal care services - Management confirmed weather events affected January but noted a rebound in February and March, expecting hours growth to remain in the 2% to 2.5% range [40][41] Question: Hospice revenue growth expectations - Management projected hospice revenue growth in the 5% to 7% range, leaning towards the upper end [44] Question: Margin expansion expectations - Management expects typical margin expansion of 40 to 50 basis points into Q2, with Q1 usually being the low point [50][51] Question: Impact of Medicaid changes - Management stated that potential changes to Medicaid would likely have no direct impact on the company, as its patient base is primarily elderly and disabled [54][56] Question: Performance of Gentiva post-acquisition - Management reported that Gentiva's bottom line performance has exceeded expectations, while top line growth was slightly lighter than anticipated [77] Question: Update on home health services - Management noted stability in Medicare rates and improvements in contracting with Medicare Advantage plans, with discounts narrowing from 40% to 15-20% [106]

Financial Data and Key Metrics Changes - Consolidated sales for Q1 2025 were $455.2 million, a year-over-year decrease of 1% [14] - Fully diluted earnings per share were $0.67 for Q1 2025, down from $0.70 in Q1 2024 [14] - Gross profit was $163.9 million, slightly up from $163.6 million in the prior year, with a gross margin of 36%, an improvement of 50 basis points [15] - Operating income was $44.1 million, down 8% from $47.9 million in the prior year, with an operating margin of 9.7% [15][16] Business Line Data and Key Metrics Changes - Water Systems segment sales in the U.S. and Canada were up 2%, with groundwater pumping equipment sales increasing by 6% and water treatment products by 7% [17] - Distribution segment sales decreased by 3% to $141.9 million, primarily due to lower volumes and commodity price declines [19] - Energy Systems segment sales increased by 8% to $66.8 million, with operating income rising to $21.9 million and an operating margin of 32.8% [20][21] Market Data and Key Metrics Changes - Water Systems sales outside the U.S. and Canada decreased by 2%, impacted by a 5% decline due to foreign currency translation [18] - The Energy Systems segment recorded growth across key product lines, supported by robust demand in the U.S. energy sector [11] Company Strategy and Development Direction - The company is focused on faster-growing markets, operational efficiency, and integrating recent acquisitions to enhance customer service [6][7] - Strategic acquisitions in Q1 2025 included PumpEng and Barnsley, aimed at expanding product offerings and market reach [28] - The company is committed to innovation and new product development, with a focus on high-growth verticals [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying business fundamentals despite challenges from tariffs and one-time costs [7][10] - The company is adjusting the lower end of its EPS guidance by $0.10, while maintaining full-year sales expectations [24] - Management noted that the business is largely in region for region, which historically tends to be resilient even during economic softness [29] Other Important Information - The effective tax rate for the quarter was 25%, up from 22% in the prior year, impacting EPS by approximately $0.03 [22] - The company ended Q1 2025 with a cash balance of $84 million and used $19.5 million in net cash flows from operating activities [23] Q&A Session Summary Question: Insights on the energy segment margins - Management indicated that while margins are strong, they do not expect the same growth as in previous quarters but anticipate maintaining strong margins due to smarter solutions and effective cost management [34] Question: Order trends in the water segment - Management believes the order growth is organic and not significantly influenced by tariff pull-forward, with selective inventory positioning to mitigate potential tariff impacts [35][36] Question: M&A priorities in the distribution segment - Management remains open to M&A opportunities in the distribution space but is currently focused on operational efficiencies and serving the market [39][40] Question: Tariff exposure and groundwater business performance - Management stated that the overall percentage of COGS from China is under 10%, and groundwater sales in North America showed strong growth, with residential sales up 11% and agricultural sales up 3% [48][51] Question: Organic book to bill ratio in water - The organic book to bill ratio was above one for the quarter, with backlog up mid to high single digits [57]

Integer (ITGR) Q1 2025 Earnings Call April 25, 2025 12:52 AM ET Company Participants Sanjiv Arora - SVP, Strategy, Business Development and IRJoseph Dziedzic - President & CEOPayman Khales - COODiron Smith - Executive VP & CFORichard Newitter - Managing DirectorNathan Treybeck - Equity Research Vice PresidentAndrew Cooper - VP - Equity ResearchJoanne Wuensch. - Managing DirectorSuraj Kalia - Managing Director Conference Call Participants Brett Fishbin - Vice President & Equity Research AnalystCraig Bijou - ...