Integer (ITGR) Piper Sandler 36th Annual Healthcare Conference summary

Industry growth and market outlook

• Organic growth in served markets was 8%-9% in 2023, above the historical 4%-6% rate, with expectations to return to 4%-6% in 2024 and 2025 based on customer demand trends.

• Growth is driven by being designed into customers' innovative programs, especially in structural heart, electrophysiology, neurovascular, and neuromodulation markets.

• Participation in fast-growing, underserved markets is prioritized, with a focus on innovation regardless of customer size.

• Structural heart and electrophysiology are expected to contribute above-average growth, with structural heart being a smaller but faster-growing segment.

• Margins across targeted growth areas are close to the company average, with new products offering higher margins early in their lifecycle.

Operational strategy and supply chain

• Vertical integration and supply chain simplification are key differentiators, enabling participation in all steps of procedures like electrophysiology.

• Supplier consolidation trends among large customers, such as Medtronic, favor partners with broad capabilities and trusted relationships.

• Maquiladora operations in Mexico minimize tariff exposure, with only a small portion of value added subject to duties.

• Customer order visibility and regular communication inform internal forecasts and guidance, mitigating risks from customer inventory fluctuations.

M&A and financial performance

• $400M-$500M in acquisitions over three years have expanded capabilities in steerable sheaths, neurovascular devices, and metals processing.

• Acquisitions target differentiated or complementary capabilities, with a focus on operational synergies and margin accretion.

• All recent acquisitions are exceeding deal models, especially in operational synergies, with commercial synergies expected over longer cycles.

• Debt leverage is managed within a 2.5-3.5x range, with $300M-$350M in available capacity for future deals.

• Strategy aims to outgrow markets by 200 basis points organically, add 2-4% top-line growth via tuck-ins, and grow operating profit at twice the sales rate.