PLANO, Texas, Feb. 18, 2021 (GLOBE NEWSWIRE) -- Integer Holdings Corporation (NYSE:ITGR), a leading medical device outsource manufacturer, today announced results for the three and twelve months ended December 31, 2020. Unless otherwise stated, all results and comparisons are from continuing operations.
Executing strategy through the COVID-19 pandemic
- Throughout the pandemic, Integer associates continue to deliver critical products that customers and patients rely on every day.
- Integer’s Manufacturing Excellence strategic imperative delivered strong operational results in 2020, delivering productivity and continued improvements in safety, quality and on-time delivery.
- Integer continues to invest in its product line and operational strategy to create long-term value, including manufacturing capabilities, R&D resources and talent additions to execute the strategic imperatives.
Fourth Quarter 2020 Financial Results (compared to fourth quarter 2019, except as noted)
- Integer delivered fourth quarter sales at the high end of guidance and profit above guidance.
- Strong sequential improvement versus the third quarter including margin expansion on sales recovery and continued operating efficiencies.
- Sales declined 17% to $269 million.
- GAAP net income grew $4 million to $15 million, an increase of 40%. Adjusted net income declined $18 million to $23 million, a decrease of 43%.
- Adjusted EBITDA declined $24 million to $49 million, a decrease of 33%.
- GAAP diluted EPS grew $0.14 per share to $0.47 per share, an increase of 42%. Adjusted EPS declined $0.54 per share to $0.71 per share, a decrease of 43%.
- Net total debt decreased $59 million from the end of the third quarter 2020 to $689 million.
Full Year 2020 Financial Results (compared to full year 2019)
- Sales declined 15% to $1.073 billion.
- GAAP net income declined $14 million to $77 million, a decrease of 15%. Adjusted net income declined $63 million to $92 million, a decrease of 41%.
- GAAP diluted EPS declined $0.43 per share to $2.33 per share, a decrease of 16%. Adjusted EPS declined $1.91 per share to $2.77 per share, a decrease of 41%.
- Adjusted EBITDA declined $94 million to $190 million, a decrease of 33%.
- Generated $181 million of cash flow from operating activities.
- Reduced net total debt by $123 million.
“Our fourth quarter results reflect the beginning of the recovery from the pandemic as both sales and profit improved significantly from the third quarter,” said Joseph Dziedzic, Integer’s president and CEO. “Integer’s dedicated associates continued to deliver for our customers and their patients while executing our strategy to achieve excellence in everything we do. Our strong operational performance and continued strong cash generation last year enabled Integer to increase investments in our strategy versus 2019. During 2020, Integer improved our manufacturing processes, enhanced our customer relationships, built and added leadership capability and strengthened our culture, positioning 2021 to be a return to profitable growth on our Journey to Excellence.”
Discussion of Product Line Fourth Quarter and Full Year Sales
- Cardio & Vascular sales declined 14% in the fourth quarter and full year sales declined 7%. Sales were negatively impacted by the COVID-19 pandemic and a blend of our customers’ responses across nearly all C&V markets.
- Cardiac & Neuromodulation sales declined 21% in the fourth quarter and full year sales declined 24%. CRM and Neuromodulation declined due to the COVID-19 pandemic impact and a blend of our customers’ responses. Additionally, the fourth quarter 2019 Nuvectra bankruptcy created a $17 million headwind for the full year.
- Advanced Surgical, Orthopedics & Portable Medical includes sales to the acquirer of our AS&O product line, Viant, under supply agreements associated with the divestiture. Fourth quarter sales declined 12% and full year sales decreased 8%, driven by the COVID-19 pandemic impact and a blend of our customers’ responses.
- Electrochem sales declined 41% in the fourth quarter and full year sales declined 39% driven by a severe decline in the energy market and demand fall-out from the COVID-19 pandemic.
2021 Outlook
Our full year 2021 financial outlook reflects an expected recovery of the industry with year-over-year sales growth projected to be 8% to 12%. Integer’s first quarter sales are projected to be sequentially better than the fourth quarter of 2020 and we believe the second quarter should be similar or slightly better than the first quarter. We expect the improvement in the second half of 2021 to be determined by the pace of COVID-19 recovery.
We expect our operating income to reflect the increase in sales and the continued execution of our manufacturing excellence strategic imperative. We project to generate $90 to $110 of free cash flow, with an equivalent amount of net total debt reduction.
2021 Outlook(a) (dollars in millions, except per share amounts)
First Quarter 2021| GAAP | Non-GAAP(b) | |||||||
| As Reported | Change | Adjusted | Change | |||||
| Sales | $280 to $290 | (15)% to (12)% | $280 to $290 | (15)% to (12)% | ||||
| Operating income | $29 to $34 | (34)% to (23)% | $42 to $47 | (29)% to (20)% | ||||
| GAAP | Non-GAAP(b) | |||||||
| As Reported | Change | Adjusted | Change | |||||
| Sales | $1,160 to $1,200 | 8% to 12% | $1,160 to $1,200 | 8% to 12% | ||||
| Operating income | $116 to $136 | (4)% to 13% | $170 to $190 | 18% to 32% | ||||
| EBITDA | N/A | N/A | $230 to $250 | 21% to 32% | ||||
| Net income | $74 to $91 | (4)% to 18% | $113 to $130 | 23% to 41% | ||||
| Earnings per Diluted Share | $2.24 to $2.74 | (4)% to 17% | $3.40 to $3.90 | 23% to 41% | ||||
| (a) | Except as described below, further reconciliations by line item to the closest corresponding GAAP financial measure for Adjusted operating income, Adjusted EBITDA, Adjusted net income, and Adjusted Earnings per Share (“EPS”), all from continuing operations, included in our “2021 Outlook” above, are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and visibility of the charges excluded from these non-GAAP financial measures. |
| (b) | Adjusted operating income for 2021 is expected to consist of GAAP operating income, excluding items such as intangible amortization, certain legal expenses, reorganization and realignment costs, asset dispositions and severance, totaling approximately $54 million ($13 million for first quarter), pre-tax. Adjusted net income and Adjusted EPS for 2021 are expected to consist of GAAP net income and diluted EPS, excluding items such as intangible amortization, certain legal expenses, reorganization and realignment costs, asset dispositions, severance, gains and losses on equity investments and loss on extinguishment of debt totaling approximately $49 million, pre-tax. The after-tax impact of these items is estimated to be approximately $39 million, or approximately $1.16 per diluted share. |
Adjusted EBITDA is expected to consist of Adjusted net income, excluding items such as depreciation, interest, stock-based compensation and taxes totaling approximately $116 million to $120 million.
Supplemental Financial Information| 2021 Outlook | 2020 Actual | ||||
| Capital Expenditures, Net | $50 - $60 | $47 | |||
| Depreciation and Amortization | $80 - $90 | $79 | |||
| Stock-Based Compensation | $17 - $19 | $9 | |||
| Other Operating Expense | $8 - $12 | $8 | |||
| Adjusted Effective Tax Rate | 15.5% - 17.5% | 12.2% | |||
| Cash Tax Payments | $20 - $27 | $18 | |||
Summary of Financial and Product Line Results from Continuing Operations
(dollars in thousands, except per share data)
| Three Months Ended | |||||||||||||||
| GAAP | December 31, 2020 | December 31, 2019 | Change | Organic Change(a) | |||||||||||
| Medical Sales | |||||||||||||||
| Cardio & Vascular | $ | 137,063 | $ | 158,504 | (13.5 | ) | % | (14.3 | ) | % | |||||
| Cardiac & Neuromodulation | 93,838 | 119,262 | (21.3 | ) | % | (21.3 | ) | % | |||||||
| Advanced Surgical, Orthopedics & Portable Medical | 29,747 | 33,885 | (12.2 | ) | % | (12.2 | ) | % | |||||||
| Total Medical Sales | 260,648 | 311,651 | (16.4 | ) | % | (16.7 | ) | % | |||||||
| Non-Medical Sales | 8,311 | 13,986 | (40.6 | ) | % | (40.6 | ) | % | |||||||
| Total Sales | $ | 268,959 | $ | 325,637 | (17.4 | ) | % | (17.8 | ) | % | |||||
| Income from continuing operations | $ | 15,427 | $ | 11,044 | 39.7 | % | |||||||||
| Diluted EPS from continuing operations | $ | 0.47 | $ | 0.33 | 42.4 | % | |||||||||
| Year Ended | |||||||||||||||
| GAAP | December 31, 2020 | December 31, 2019 | Change | Organic Change(a) | |||||||||||
| Medical Sales | |||||||||||||||
| Cardio & Vascular | $ | 569,948 | $ | 610,056 | (6.6 | ) | % | (7.7 | ) | % | |||||
| Cardiac & Neuromodulation | 346,242 | 457,194 | (24.3 | ) | % | (24.3 | ) | % | |||||||
| Advanced Surgical, Orthopedics & Portable Medical | 121,788 | 132,429 | (8.0 | ) | % | (8.0 | ) | % | |||||||
| Total Medical Sales | 1,037,978 | 1,199,679 | (13.5 | ) | % | (14.0 | ) | % | |||||||
| Non-Medical Sales | 35,464 | 58,415 | (39.3 | ) | % | (39.3 | ) | % | |||||||
| Total Sales | $ | 1,073,442 | $ | 1,258,094 | (14.7 | ) | % | (15.2 | ) | % | |||||
| Income from continuing operations | $ | 77,258 | $ | 91,218 | (15.3 | ) | % | ||||||||
| Diluted EPS from continuing operations | $ | 2.33 | $ | 2.76 | (15.6 | ) | % | ||||||||
| (a) | Organic sales change is a Non-GAAP measure. Please see “Notes Regarding Non-GAAP Financial Information” for additional information regarding our use of non-GAAP financial measures and refer to Table C at the end of this release for a reconciliation of these amounts. |
| Three Months Ended | |||||||||||||||
| Non-GAAP(a) | December 31, 2020 | December 31, 2019 | Change | Organic Change(b) | |||||||||||
| Adjusted EBITDA | $ | 49,236 | $ | 73,273 | (32.8 | ) | % | (30.6 | ) | % | |||||
| Adjusted net income | $ | 23,424 | $ | 41,421 | (43.4 | ) | % | (40.4 | ) | % | |||||
| Adjusted EPS | $ | 0.71 | $ | 1.25 | (43.2 | ) | % | (40.5 | ) | % | |||||
| Year Ended | |||||||||||||||
| Non-GAAP(a) | December 31, 2020 | December 31, 2019 | Change | Organic Change(b) | |||||||||||
| Adjusted EBITDA | $ | 189,616 | $ | 283,770 | (33.2 | ) | % | (32.9 | ) | % | |||||
| Adjusted net income | $ | 91,849 | $ | 154,468 | (40.5 | ) | % | (39.8 | ) | % | |||||
| Adjusted EPS | $ | 2.77 | $ | 4.68 | (40.8 | ) | % | (40.0 | ) | % | |||||
| (a) | Refer to Tables A and B at the end of this release for reconciliations of adjusted amounts to the closest corresponding GAAP financial measures. |
| (b) | Organic change rates for Adjusted EBITDA from continuing operations, Adjusted net income, and Adjusted EPS are Non-GAAP measures. Please see “Notes Regarding Non-GAAP Financial Information” for additional information regarding our use of non-GAAP financial measures and refer to Table D at the end of this release for a reconciliation of these amounts. |
About Integer® Integer Holdings Corporation (NYSE: ITGR) is one of the largest medical device outsource (MDO) manufacturers in the world serving the cardiac, neuromodulation, vascular, portable medical and orthopedics markets. The Company provides innovative, high-quality medical technologies that enhance the lives of patients worldwide. In addition, the Company develops batteries for high-end niche applications in energy, military, and environmental markets. The Company's brands include Greatbatch Medical®, Lake Region Medical® and Electrochem®. Additional information is available at www.integer.net.
