Integer Holdings Corp (ITGR) Q4 2024 Earnings Summary

Executive Summary

Integer delivered Q4 2024 sales of $0.45B (+11% YoY), GAAP diluted EPS of $0.91 (+15% YoY), and adjusted EPS of $1.43 (+1% YoY); adjusted EBITDA rose to $95.1M (+11% YoY) .
Management initiated 2025 guidance calling for 8–10% sales growth ($1.846–$1.880B) and 11–16% adjusted operating income growth, implying continued margin expansion; adjusted EPS guided to $5.84–$6.20 .
Strategic actions: completed Electrochem divestiture (Nov-2024), closed Precision Coating acquisition (Jan-2025), and signed VSi Parylene deal (Feb-2025), enhancing proprietary coating capabilities and vertical integration while maintaining leverage within the 2.5x–3.5x target .
Operational narrative: strong C&V and CRM&N growth; near-term margin mix impacted by ramp inefficiencies from multiple new programs, expected to normalize as lines level-load and associates gain proficiency .

What Went Well and What Went Wrong

What Went Well
- Above-market organic growth in Q4 (total sales +11.1% reported, +10.6% organic); C&V +14.7% reported (+11.4% organic) and CRM&N +11.3% reported (+10.2% organic) driven by EP ramps, structural heart, and emerging neuromod customers with PMA products .
- Margin progress: adjusted operating income +12.6% YoY to $76.0M and adjusted EBITDA +10.8% YoY to $95.1M, reflecting manufacturing excellence and OpEx leverage .
- Strategic portfolio optimization: Electrochem divestiture completed, making Integer a pure-play medtech CDMO and providing capital to reduce debt . Management: “Integer delivered strong fourth quarter and full year 2024 sales and income…” .
What Went Wrong
- Near-term gross margin optics: Q4 gross profit was $116.8M vs $109.6M YoY; management flagged transient inefficiencies from multiple new program ramps (training, yield learning curves) that weighed on gross margin direction in the quarter .
- Higher interest and tax headwinds: adjusted total interest expense was ~$56M for 2024, with Pillar 2 and Malaysia holiday expiry lifting the adjusted effective tax rate to 18.3% for 2024 .
- Other Markets declined 17.3% YoY in Q4 due to the ongoing, planned Portable Medical exit, creating inorganic drag (offset by acquisitions) .

Financial Results

Metric (USD)	Q2 2024 (oldest)	Q3 2024	Q4 2024 (newest)
Sales ($MM)	$436.2	$431.4	$449.5
GAAP Diluted EPS (Continuing Ops)	$0.88	$1.01	$0.91
Adjusted EPS (Non-GAAP)	$1.30	$1.43	$1.43
Adjusted Operating Income ($MM)	$71.8	$75.6	$76.0
Adjusted EBITDA ($MM)	$91.1	$95.5	$95.1

Margin (%)	Q2 2024	Q3 2024	Q4 2024
Gross Profit Margin %	27.38%*	27.02%*	25.97%*
EBITDA Margin %	20.89%*	22.14%*	21.16%*
EBIT Margin %	12.65%*	13.45%*	12.69%*

Values marked with * retrieved from S&P Global.

Segment/Product Lines – Q4 2024

Product Line	Q4 2024 Sales ($000s)	YoY Change	Organic Change
Cardio & Vascular	$255,298	+14.7%	+11.4%
Cardiac Rhythm Mgmt & Neuromodulation	$170,524	+11.3%	+10.2%
Other Markets	$23,675	(17.3%)	+0.4%
Total	$449,497	+11.1%	+10.6%

KPIs and Balance Sheet

KPI	Q4 2024
Backlog	$728M (ending 2024; above pre-pandemic ~$300M)
Leverage Ratio	2.6x (net total debt / TTM adj. EBITDA)
Net Total Debt	$954.5M
Cash from Operations	$205.2M for 2024; Q4 ~$63M
Capex	$105M for 2024
Cash & Equivalents	$46.5M at 12/31/2024

Estimates vs. Actuals

S&P Global consensus for revenue/EPS was unavailable at the time of this analysis; therefore, we cannot quantify beat/miss vs Street for Q4 2024. We note strong reported and adjusted metrics as above [GetEstimates error].

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales	FY 2025	N/A	$1.846–$1.880B; +8%–10% YoY	Initiated
Adjusted Operating Income	FY 2025	N/A	$315–$331M; +11%–16% YoY	Initiated
Adjusted EBITDA	FY 2025	N/A	$401–$422M; +11%–17% YoY	Initiated
Adjusted Net Income	FY 2025	N/A	$208–$221M; +13%–20% YoY	Initiated
GAAP Diluted EPS	FY 2025	N/A	$4.09–$4.44; +17%–27% YoY	Initiated
Adjusted EPS	FY 2025	N/A	$5.84–$6.20; +10%–17% YoY	Initiated
Cash Flow from Ops	FY 2025	N/A	$225–$245M	Initiated
Adjusted Effective Tax Rate	FY 2025	N/A	19–21%	Initiated
Capital Expenditures	FY 2025	N/A	$110–$120M	Initiated
Leverage Target	FY 2025	N/A	2.5x–3.5x	Maintained

Notes: 2025 outlook includes Precision Coating and pending VSi Parylene, partially offset by Portable Medical exit .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Manufacturing Excellence & Margins	Focus on scrap, overtime, labor efficiency; AOI growing ~2x sales; gross margin improving; Q2 AOI margin 16.5%	Ramp inefficiencies in Q4 from multiple new programs; continued expectation of gross margin and OpEx leverage through 2025	Improving underlying, transient ramp drag
EP/PFA Tailwind	Strong visibility; participation across access, diagnostics, ablation; in-sourcing risk mitigated by long cycles and vertical integration	“Outgrowing the market” in EP; EP and structural heart driving C&V; low DD C&V growth expected 2025	Structural tailwind intact
Structural Heart	Under-indexed to TAVR; focus on mitral/tricuspid; guidewire capacity expansion in Ireland	Continued above-market; cautious on specifics; Galway facility supports growth	Positive trajectory
CRM & Neuromod (Emerging PMA)	PMA portfolio $100–$120M in 2024; back-half weighted; CRM deceleration expected H2	PMA sales ~$125M in 2024; CAGR outlook 15–20% over 3–5 years; CRM normalized low single digits	PMA strengthening; CRM normalized
Supply Chain/Labor Stability	Stabilizing; turnover below pre-pandemic; efficiency projects underway	Stable; continued margin expansion initiatives	Stable/improving
Tariffs/Mexico Maquiladoras	N/A	Planning mitigations amid uncertainty; cannot quantify until structures known	Risk monitoring
M&A/Vertical Integration	Strong tuck-in pipeline; leverage within 2.5–3.5x; acquisitions ahead of models	Precision Coating closed; VSi Parylene signed; coatings-as-a-service early engagement and capabilities	Accretive scope expansion

Management Commentary

Joe Dziedzic, CEO: “Integer finished the year with strong sales growth in the fourth quarter, up 11%… For 2025, we expect reported sales to grow 8% to 10% and adjusted operating income growth of 11% to 16%.” .
DZ on acquisitions: “Precision Coating… ~10x TTM adjusted EBITDA… expected 2025 sales ~$52M with an accretive margin… VSi Parylene… ~$28M; ~9x TTM adjusted EBITDA; expected ~$7M 2025 sales partial year” .
CFO Diron Smith: “Adjusted EPS improved year-over-year… mostly offset by higher interest, taxes, FX, and convertible note share dilution….” .
DZ on Q4 margins: “When you launch a lot of new programs… hire and train… inefficiencies during ramp periods… we’ll continue to improve those processes… lines become more balanced…” .

Q&A Highlights

Growth drivers: Low-double-digit C&V growth expected in 2025; continued strength in EP and structural heart; CRM normalized to low-single digits .
Gross margin outlook: Transient Q4 ramp costs; expect annual gross margin expansion plus OpEx leverage to drive AOI expansion ~2x sales long term .
Tariffs exposure: Operating as though tariffs may be implemented; mitigation actions in place; uncertainty prevents quantification .
PMA portfolio: ~$125M in 2024; 15–20% CAGR over 3–5 years; not perfectly linear due to launch lumpiness, but increasingly predictable with larger base .

Estimates Context

S&P Global consensus estimates could not be retrieved at the time of writing; we therefore cannot assess beat/miss for Q4 2024 vs. Street. However, Integer’s reported Q4 metrics showed strong double-digit sales growth and consistent adjusted profitability trends [GetEstimates error].
Forward estimates likely need to reflect 2025 inorganic contributions (~$59M from coatings) and ~$29M decline from Portable Medical exit, with AOI growth ~1.6x sales at midpoint, and adjusted EPS dilution from convertibles partially offset by capped calls .

Key Takeaways for Investors

Near-term margin noise from ramping multiple new programs should be transitory; manufacturing excellence and OpEx leverage are intact, supporting 2025 AOI growth ahead of sales .
Strategic coatings acquisitions expand proprietary, differentiated capabilities and early design engagement; expect accretive margins and enhanced vertical integration (coatings-as-a-service) .
Backlog remains elevated (~$728M), underpinning 2025 visibility; organic growth guided at 6–8%, ~200bps above underlying market .
Portfolio mix continues to shift toward high-growth EP, structural heart, and emerging PMA customers; CRM normalizes at low-single-digit growth .
Balance sheet: leverage at 2.6x YE 2024 with FCF generation and capex investments to support capacity and capabilities; target leverage 2.5–3.5x sustained .
Tariff policy remains a watch item; mitigations underway, but quantification awaits policy clarity .
Street models should incorporate coatings contribution, Portable Medical exit, adjusted interest expense ($52–$57M), and adjusted tax rate (19–21%), as well as convertible dilution mechanics .