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Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2024 Integer Holdings Corporation Earnings Call. [Operator Instructions] I would now like to turn the call over to Andrew Senn, Senior Vice President, Strategy, Business Development and Investor Relations.
Good morning, everyone. Thank you for joining us, and welcome to Integer's First Quarter 2024 Earnings Conference Call. With me today are Joe Dziedzic, President and Chief Executive Officer; and Diron Smith, Executive Vice President and Chief Financial Officer. As a reminder, the results and the data we discuss today reflect the consolidated results of Integer for the periods indicated. During our call, we will discuss some non-GAAP financial measures. For reconciliation of these 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. Please refer to the company's SEC filings for a discussion of the risk factors that could cause our actual results to differ materially. On today's call, Joe will provide his opening comments and Diron will then review our adjusted financial results for the first quarter of 2024 and provide an update on our full year 2020 outlook. Joe will come back to provide his closing remarks, and then we'll open up the call for questions. With that, I'll turn the call over to Joe.
Thank you, Andrew, and thank you to everyone for joining the call today. We appreciate the sell-side analysts to have initiated coverage on Integer over the past year and welcome Kristen Stewart from CL King, who initiated coverage of Integer last month. We had a strong start to 2024 with sales growing 10% year-over-year and adjusted operating income up 26% or 2.7x the rate of sales growth compared to the first quarter of 2023. In addition, our adjusted earnings per share grew 31% year-over-year and gross margin expanded 120 basis points versus first quarter 2023, primarily due to the execution of our manufacturing excellence initiatives and an improved supply chain and direct labor environment. We are reiterating our full year outlook. We continue to expect sales growth of 9% to 11% and adjusted operating income growth of 13% to 20% versus 2023, a strong year-over-year increase. We are also confirming 2024 adjusted earnings per share of $5.01 to $5.43 and free cash flow of $85 million to $105 million. The strategy that we developed in 2017 and began implementing in 2018 is now producing sustained above-market sales growth and margin expansion. We also continue to manage our debt leverage within the range of 2.5 to 3.5x trailing 4 quarter adjusted EBITDA, while executing our inorganic growth strategy. 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 excellence initiatives, and we continue to acquire 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. I'll now turn the call over to Diron.
Thank you, Joe. Good morning, everyone, and thank you again for joining our discussion today. I'll provide more details on our first quarter 2024 financial results and provide an update on our 2024 outlook. We started 2024 with a strong first quarter. Sales of $415 million delivered 10% year-over-year growth on a reported basis and 6% on an organic basis, which excludes the impact of our recent InNeuroCo and Pulse acquisitions, the strategic exit of the portable medical market and foreign currency fluctuations. We delivered $81 million of adjusted EBITDA, up $15 million compared to the prior year or an increase of 22%. Adjusted operating income grew 26% versus last year, more than 2.5x the rate of sales growth. We continue to make progress on our year-over-year margin expansion. First quarter 2024 adjusted operating income as a percent of sales was 15.2%, which represents approximately 200 basis points of improvement versus a year ago. Adjusted net income for the first quarter of 2024 is $39 million, delivering $1.14 of adjusted diluted earnings per share up $0.27 or 31% from the first quarter 2023. C&V and CRM&N product line sales, which represent approximately 91% of our total sales, continued strong year-over-year growth on a trailing 4-quarter basis in the first quarter of 2024. For our Cardio and Vascular product line, trailing 4 quarter sales increased 18% year-over-year with double-digit growth across all CMB markets, driven by strong customer demand and sales from the InNeuroCo and Pulse acquisitions. Cardiac Rhythm Management and Neuromodulations trailing 4 quarter sales increased 12% year-over-year, primarily driven by double-digit CRM growth from strong customer demand and double-digit neuromodulation growth from emerging PMA customers. Further product line details are included in the appendix of the presentation on our website at integer.net. To provide more insight into our first quarter 2024 performance, we delivered $39 million of adjusted net income, up $10 million versus a year ago. Operational improvements, which include improved manufacturing efficiencies and operating cost leverage, delivered $10 million versus first quarter 2023. While improvements in our adjusted effective tax rate were more than offset by higher interest expense and slightly unfavorable foreign exchange. On a tax-effected basis, adjusted total interest expense was approximately $1 million higher than last year. This is primarily due to a higher average debt balance during the period, driven by funding for the acquisitions of InNeuroCo and Pulse technologies using our available revolver capacity. Our adjusted effective tax rate was 18.1% for the first quarter of 2024 compared to 19.8% in the prior year. Our lower adjusted effective tax rate compared to the prior year was primarily due to discrete tax benefits recognized upon vesting of restricted stock units during the first quarter of 2024. We continue to expect our adjusted effective tax rate to be between 19% to 21% for 2024, as discussed in our previous earnings call, this is mostly driven by the recent adoption of the OECD Pillar 2 framework by the EU member state establishing a minimum effective tax rate of 15% as well as the residual effect of the Malaysian tax holiday expiration. In the first quarter of 2024, we generated $23 million in cash flow from operations, up $17 million from a year ago. The improvement driven by higher sales volumes, improving margins and effective management of working capital was partially offset by higher annual bonus payments, which are made in the first quarter of every year. Our CapEx spend of $29 million in the first quarter is on track to our expected full year spend of $90 million to $110 million. As a result, free cash flow in the first quarter was a usage of $6 million. Net total debt ended at $1.1 billion for the first quarter of 2024, an increase of $162 million compared to the fourth quarter 2023 ending balance. This increase was driven by the approximate $140 million acquisition of Pulse Technologies in January of this year. Net total debt leverage at the end of the first quarter 2024 was 3.4x trailing 4 quarter adjusted EBITDA, which is within our strategic target range of 2.5x to 3.5x. As Joe mentioned in his opening remarks, we are reiterating our 2024 outlook for sales, profit and cash. We expect to deliver sales in the range of $1.735 billion to $1.770 billion, an increase of 9% to 11% versus last year, with organic growth of 6% to 8%, which is 200 basis points above our underlying market growth rate estimate of 4% to 6%. In addition to our organic growth, we expect the InNeuroCo and Pulse acquisitions, partially offset by the portable medical market exit, to contribute 3% inorganic growth. We anticipate adjusted EBITDA between $355 million to $375 million, reflecting growth of 15% to 21%. Similarly, we expect adjusted operating income to grow 13% to 20% to between $272 million and $290 million. At $281 million, which is the midpoint, adjusted operating income as a percent of sales is expected to grow 91 basis points compared to the full year 2023. We expect adjusted net income between $171 million and $185 million, which is growth of 8% to 18% compared to the prior year with adjusted earnings per share of $5.01 to $5.43, which is growth of $0.34 to $0.76 versus 2023. First quarter 2024 results were in line with our expectations. We further expect the first half of 2024 sales to grow high single digit year-over-year with sales continuing to increase throughout 2024 from new product introductions and emerging PMA customer growth. We expect adjusted operating income as a percent of sales to expand throughout the remainder of 2024, driven by continued improvement in manufacturing efficiency and sales growth outpacing our growth in operating costs. Similar to our outlook on profit and loss, we also reiterate our cash flow outlook and net total debt projections for 2024. We expect cash flow from operations between $185 million to $205 million, which represents an 8% year-over-year increase at midpoint of outlook. Our outlook for capital expenditures remains at $90 million to $110 million as we continue to invest in organic capabilities and capacity. As a result, we expect to generate free cash flow between $85 million and $105 million. Inclusive of our approximate $140 million acquisition of Pulse Technologies in January of this year, we expect our 2024 year-end net total debt to be between $1.010 and $1.030 billion, which is up $60 million to $80 million year-over-year. We expect to end the year with our leverage ratio within our target range of 2.5 to 3.5x trailing 4 quarter adjusted EBITDA. With that, I'll turn the call back to Joe. Thank you.
Thanks, Diron. With our strong start to 2024, we are reiterating our outlook of 9% to 11% sales growth and 13% to 20% increase in adjusted operating income. The execution of our strategy, both organically and inorganically is producing results as we continue to demonstrate above-market sales growth with expanding margins. We remain focused on executing our strategy to create a premium valuation for our shareholders. We will now turn the call over to our moderator for the Q&A portion of the call.
[Operator Instructions] Your first question comes from the line of Brett Fishbin of KeyBanc Capital Markets.
Just wanted to start off quickly on revenue growth trend in the March quarter. One topic that came up of your conversation was just the potential impact of some inventory build by customers that they were looking to reduce or take down. So just curious if looking across the different product areas, you might have seen some pockets where customers needed to actually take down their inventory before some of the ordering activity returned more in line with the underlying trends that we're seeing.
Brett, thanks for the question. I guess my immediate answer is we have an order book that's $900-ish million. It gives us really good visibility of what our customers' demand is. We have really good visibility, particularly in the second quarter and into third quarter, and so our guidance is based upon what customers are telling us they need in the near term based on actual orders. We highlighted last year on the third quarter earnings call and the year-end earnings call that last summer, we saw customers adjusting -- what we thought were adjusting inventory levels. We got some of the dear supplier letters on inventory adjustments that they do and when they oftentimes do mass adjustments, and we believe what we're seeing and experiencing now is normal inventory management by our customers. I think it's clear our customers, many of them have said that they are working to reduce their inventory levels. We've got all of that factored into our guidance. We think we started off the year with a strong first quarter, up 10%. And for the full year, we're confident of 9% to 11% sales growth.
All right. Certainly, very helpful. And then maybe on the other side in terms of potential tailwinds, a lot of conversations around emerging PSA products. So I'm just curious if there's any way that you could frame maybe the contribution of some of those products to the trends we're seeing in Cardio & Vascular. And then maybe just around the broader electrophysiology subsegments and the contribution to the quarter, and how you're thinking about it for the rest of the year as contemplated in the guidance?
Certainly. So we've talked a lot about our -- we believe we have a very strong position in electrophysiology, everything from from access devices through diagnostics as well as the ablation therapy itself, where highly vertically integrated. We're on a number of new programs, and we're excited to support our customers in bringing new and innovative therapies in that space in particular to the marketplace. We've experienced very strong electrophysiology growth. Last year, we had very strong growth in electrophysiology that continued into the first quarter. We expect that to continue throughout the year. We have our best estimate factored into our guidance, and that's what we built in based upon our customers' ramp programs and their launch programs. I would highlight our emerging PMA customers. We increased the growth forecast for those customers at the end of last year or beginning of this year, which we had done in the previous year as well. We're excited about those new programs, many of them are in emerging neuromodulation therapies and applications. We have structural heart programs that are launching that we're excited about. So we're excited about a lot of the new products that we're launching with our customers, and it's a result of the focus we've had on getting designed into the faster-growing end markets and into the therapies that our customers are counting on to drive their growth. So we're excited about last year's strong top line growth at 16%. And this year, we think 9% to 11% on top of that continues to demonstrate the success of our strategy of partnering with our customers.
Maybe if I can sneak in one more, last question. Just like one other thing that stood out, you quantified the 2 big segments, now over 90% of sales, but just given the magnitude of the decline in Biomedical, just curious maybe if you could touch on what the key driver of that was? And if we should think about it getting a little bit more towards -- I mean, I guess, really how to think about it for the rest of the year, maybe sequentially compared to like the baseline from 1Q.
Sure. So we've given guidance on Electrochem, a nonmedical segment, that we expect $32 million to $36 million of sales for the year, which will be a drag of 50 to 75 basis points for total Integer. You can do the math on a year-over-year basis. In the first quarter, it was a drag of about $7 million, so almost 200 basis points in the non-medical segment. So Medical segment in the first quarter was actually up 8.5% organically. You can see that in our press release and when we filed the qurey, we provide that level of detail. But in particular, the first quarter, and what we expect the first half to be down on a year-over-year basis, Electrochem had a couple of significant supply chain disruptions that suppressed their sales back in the 2021, 2022 time period. And we recovered from those supply chain challenges and had a bolus of backlog orders that we fulfilled in late '22 and the early part of '23. And so what we're seeing is we're seeing that normalize to what we expect to be a run rate for that business of $32 million to $36 million for 2024. And then we would expect that to grow mid-single digits going forward.
Your next question comes from the line of Matthew O'Brien from Piper Sandler.
Just to follow up a little bit more on the electrophysiology side of things. Joe, are you guys -- would you say you have the most exposure of any of your competitors to this growing dynamic that we're seeing in the market? And then do you have exposure across the board? Because I know there's a bunch of different companies developing products here. So are you -- you'd be able to supply everybody, or is it just focused on a couple of companies, and sorry for the long-winded question, but is it like the full catheter that you're going to be able to supply or just components of individual catheters?
Thanks for the question, Matt. Unfortunately, you know how much we would love to be able to tell you about the details of who we're supporting, and what exactly we're doing for them. But I can't provide that level of granularity. Our customers don't want us getting in front of them, talking about their most exciting programs and products that are driving their growth. What I can say is, we're highly vertically integrated. We do everything from components to finished device delivery. It's -- obviously -- we're not -- we don't have the same content on every device in the market and every device that's coming into the market. But given the breadth and depth of our capability, we can do anything for everyone. But it is different customer to customer. And so there absolutely is the variable of who wins and who wins in the short, medium and long term does affect us. But we have such a broad portfolio both in access. So think guidewires and guiding sheaths, think the diagnostic catheters they are necessary as well as the ablation catheters. And so we are very strong in access and diagnostics that oftentimes can be more agnostic to the therapy itself. And so as the overall market grows, we grow with that. And then on the therapy, in particular, what we're designed into and doing for customers can have a bit more of the impact of who wins based upon what dollars per unit, what content on the bill of material we have with that specific customers. But as electrophysiology grows, we'll win because of our access, delivery and diagnostic capabilities, and how we're serving the market. And I'll just reinforce, we had very strong growth in electrophysiology last year. That continued into the first quarter, and we expect that to continue throughout the year.
Got it. And then a follow-up question on C&V specifically, you had a tough comp here in Q1, but still put up pretty good growth. But I think it's maybe just a little bit below what some folks were expecting. And so I'm just wondering with all these new PMA products that are coming, do you anticipate a lot more contribution from those products here in kind of the last 3 quarters of the year and really strong performance out of that C&V business for the remainder of '24?
Sure. So C&V grew a reported 16% for the first quarter. We think that's a pretty strong result given the broad mix of products and markets that we serve. 18% on a rolling 4-quarter basis. We also have the acquisitions in there that are helping that. So obviously, that includes the benefit of those acquisitions. But even without that on organic basis, we still grew high single digits. So very, very strong results for the C&V business. And we would expect C&V to continue to grow throughout the year and continue to -- as new programs launched across structural art and electrophysiology and as we get the commercial synergies from the Pulse and and InNeuroCo acquisitions, although that won't necessarily be organic this year because of the timing of the acquisition, but that will fuel organic growth when we get into '25 and beyond.
Your next question comes from the line of Craig Bijou from Bank of America.
So another 1 on the EP business. And I recognize that you guys don't provide a lot of color on customers. But if you look at the business that you have today in the aggregate, I mean is there any way to quantify or directionally give some color on the portion of the business that's components versus full catheters today? And then how does that change with the new PFA launches? I believe you guys have said that you could see more content in the aggregate on PFA devices versus your existing portfolio?
Yes, great question. So I would start with we're strong in components assembly, and assembly, you can think of that from a few components to a significant number. We do have finish device capability. We do finish devices today. But the majority of our business is going to be in components and subassembly of those components. Our customers oftentimes want final device assembly, we've said that consistently. But there are absolutely finished devices that we're doing today. But as we move into the new programs, we are always working to take advantage of our vertical integration to help customers accelerate their speed to market, give them the synergies of having more of the device under 1 company, 1 roof, 1 supplier so that they have fewer people to work with, which is the benefits and strategic advantage of vertical integration. So we are always working to get a higher percentage of the bill of material and have more components on the device. And so that's our strategy is with every next-generation device to get a higher percentage of the bill of material.
Great. That's helpful. And on operating income growth, obviously, it was pretty strong at 26% in Q1, but you didn't change the guide for the year, which implies a bit of a slowdown or less leverage, if you will. So is that simply conservatism, or are there other things that we should be considering as you're moving throughout the year that may affect the amount of leverage you guys can deliver?
Sure. Thanks for noting. 26% is a very strong quarter. Last year, I'll start with 2023, we got progressively better throughout the year on the margin rate. You can see the adjusted operating income grew every quarter on a sequential basis. And so if you look at 2023 by quarter, the first quarter was the lowest, the fourth quarter was the highest, we would expect that pattern and that trend to repeat itself throughout 2024. I'll point to the supply chain environment has continued to improve if you compare where we are today to where we were last year, we are significantly better. The number of disruptions has reduced significantly, and the impact of those has reduced significantly. We've talked about the direct labor turnover that we had some significant turnover challenges in 2022, in particular, we got better throughout the year 2023. That trend has continued into 2024. Our direct labor turnover continues to improve, and that has helped us to drive that margin expansion. And so we would expect throughout 2024 to be able to sequentially grow both sales and profit on a sequential basis, which is consistent with the pattern last year. So the comps -- obviously, as you get better sequentially, the comps get tougher as the year goes. So I would just point to look at the quarter splits last year and think about the pattern of instant growth. And at the high end of our guidance, we're growing profit 1.9x the rate of sales, midpoint 1.7, we think. We think 13% to 20% profit growth for the year is very strong. We're excited to get off to a great start in the first quarter with 26% growth in the first quarter.
Got it. Helpful. And if I could just squeeze 1 more in on PFA. I think you said that it's included -- that you've included your best estimates in your guidance. What would have to happen from PFA or in PFA for you guys to see upside to your guide this year?
Yes. Maybe I'll answer that by saying if you think about what we do for our customers, we manufacture components, subassemblies and finished devices. And if it's a component or self-assembly, it gets shipped to one of our customers' manufacturing plants. They then build that into a product. They then put that into their distribution channel and then it goes into a procedure. And so what would have to happen is our customers would have to place significantly more orders into our order book and increase their manufacturing plans to drive incremental volume on us. And so if you think about when we build a product, in the second quarter of 2024, that's not going into a procedure until the second half of '24 and maybe even not until early 2025. And so you just got -- you got to think about the demand on us relative to procedure volume timing, and so if customers increase their manufacturing, and they increase their orders on us, then we'll deliver that for them. And given our primarily sole source nature, we ultimately get whatever their end market demand is.
Your next question comes from the line of Kristen Stewart from CL King.
Congratulations on a good quarter. I was wondering if you could just share a little bit more further details on in InNeuroCo and Pulse technologies, how they performed in the quarter and expectations for the year? And then any update on your thinking on M&A perspective?
Certainly, so InNeuroCo and Pulse are off to a great start. They both had strong first quarters. It's always good when they come out and meet or exceed the plans that you have for them in the first couple of quarters. We're seeing operational synergies. There are benefits and things we've learned from how they operate. We think we've been able to share some of the things we do, but it's very much been a two-way sharing, and we believe we're going to see synergies -- operational synergies in the year. From a commercial standpoint, we have a strong pipeline of conversations and activities with customers that we believe is going to help us accelerate those businesses, and we're very excited about having them be part of Integer. The integration thought process is well underway, and we're excited about what they bring to the business, and we expect to see organic growth accelerate from those 2 businesses when we get into 2025.
And then just thoughts on the M&A landscape.
Yes. Great, great. Sorry, missed your second part. We continue to curate a number of opportunities in our pipeline. We never stopped that process. The variable really is when do we have the debt leverage capacity to be able to do an acquisition. We ended the first quarter at 3.4x leverage, and that's after the 2 acquisitions in October of last year and January of this year. So we're well within our strategic range of 2.5 to 3.5x. Based on cash flow and EBITDA growth, we would expect to have more capacity in the second half of the year to continue to do the tuck-in acquisitions, while maintaining that leverage. We think we've got a competitive advantage in being able to curate the opportunities for these tuck-ins with founder-led or individual-owned businesses, and we'll continue to execute the strategy that we think has been working well for us.
Your next question comes from the line of Nathan Treybeck of Wells Fargo.
Joe, just a high-level question. How are you thinking about your long-term outlook of 4% to 6% market growth plus 200 basis points above this. You add -- [ saw those ] frameworks several years ago, and it seems maybe this kind of change the new industry developments like PSA and the tricuspid therapies. Could this potentially mean a higher structural growth rate for your business?
That's a great question, Nathan. And I would say, absolutely, the -- ultimately, over time, as the mix of the business shifts into a higher percentage in the faster-growing end markets that we've been targeting, we would absolutely expect the [ lambda, ] if you will, the weighted average market growth rate of our sales mix to increase the market growth because when we define market growth, we use our sales mix. So I absolutely would expect over time as the amount of sales we have in electrophysiology and structural heart, neuromodulation, neurovascular will absolutely increase our [ lambda ]. Having 80% of our development programs that we're working with customers on in those targeted growth markets will absolutely lead to that faster [ lambda. ] What it will also do is it will continue that pipeline of new programs that allow us to stay at least 200 basis points above that [ lambda ] because that's our ultimate measure of success is, are we growing faster than the market, that's how we know that we're winning. So it's a great point. And yes, over time, the mix of sales will absolutely lift the [ lambda ] of the business, which will lift the total, say, organic sales growth rate.
Okay. And how are you thinking about gross margin in 2024? Can you talk about the cadence relative to the 28% in Q1? You previously talked about pricing being flattish in 2024, but are you able to take price to offset any lingering inflation?
So our pricing for the year is largely established, but there still will be some pockets of opportunity as the year progresses, but we're comfortable with where we are on the flattish pricing for 2024. And we would expect to see some continued gross margin improvement throughout the rest of the year. We're -- at midpoint, we're at 91 basis points of operating margin, adjusted operating income, margin improvement, and we would expect some of that to come from gross margins, but we also work very hard to control the operating expense, SG&A and the R&D expense that we keep after recovering some from our customers. We'll work to get that operating expense leverage as well. So we would expect it to come for both gross margin and operating leverage.
[Operator Instructions] Your next question comes from the line of Joanne Wuensch of Citi Group.
This is Phillip [ Ilmar ] on for Joanne. Just quickly, I was wondering if you could just touch on like just how like internal and external investments are that you're making to build up the portfolio? I guess how you're seeing consolidation of share across your customers as you kind of expand your portfolio?
Certainly, if the question is about internal and external investment, I'd point to the CapEx investments that we're spending this year, which is still at a slightly elevated level because of the 2 Irish facility expansions that we've talked about. Maybe from a CapEx timing, I already expect the first half CapEx to be high in the second half to step down because we take possession of those 2 facilities middle of this year. And so we will have finished the build-out of those facilities. So CapEx, from a run rate standpoint, will step down in the second half. You can see the first quarter is higher than average level. From an external investment, if you mean the acquisition or inorganic, the 2 acquisitions we just closed, we're very excited about. And we would expect to have more debt capacity as we get into the second half of the year. And maybe the question about what we're seeing with customer or supplier consolidation, we continue to see our customers and hear from them that they want fewer, stronger, more strategic partner suppliers. We think that plays to our strength. We think we're incredibly well positioned to help them consolidate the supply chain, whether it's through the acquisitions or whether it's through continued vertical integration, even if we're not doing a finished device vertically integrating components and doing subassemblies or a significant portion of the device from an assembly standpoint gives us vertical integration capabilities that are -- we view a competitive advantage, and we think it enables us to accelerate our top line while helping our customers execute their strategies.
Great. And then on operating margins, I mean you were able to extend margins about 200 bps in the quarter. I'm just wondering like where did you have the most success? And where do you see the most room for opportunity for the rest of the year?
Certainly. Well, it was a combination of the improving supply chain and directly return over enabled us to recover some of the inefficiencies, while also now annualizing some of the prices to pass through -- the inflation pass-through that we did last year. And as the supply chain and labor environment continues to stabilize, we're working some of those inefficiencies out. I would also just point out that we don't expect to have 26% growth in operating profit for the year, the 13% to 20% remains our estimate for the year. And it's really every quarter in 2023, on a sequential basis, we improved on our operating profit and our margin rate, and we would expect to see that continuous improvement throughout 2024 as well. So we're working on that steady continuous improvement approach and would expect 2024 to follow a similar pattern.
There are no further questions at this time. I will now turn the conference back over to Andrew Senn for closing remarks.
Okay. Great. Thank you, everyone, for joining the call today. As always, you can access the replay of this call on our website as well as the presentation that we just covered. Thank you for your interest in Integer, and that concludes our call.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.