Integer Holdings (ITGR) Fourth Quarter Earnings, Key Revenue Estimates

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Integer Holdings Corporation ITGR delivered adjusted earnings per share (“EPS”) of 99 cents in the fourth quarter of 2021, which improved 39.4% year-over-year. The figure topped Zacks’ consensus estimate of 3.1%.

The adjustments include, among other things, expenses related to the amortization of intangible assets.

GAAP EPS for the quarter was 60 cents per share, reflecting a 27.7% year-over-year increase.

Adjusted EPS for the full year was $4.08, reflecting a 47.3% increase over the same period a year earlier. The metric beat the Zacks consensus estimate by 0.7%.

Income in detail

Integer Holdings reported fourth-quarter revenue of $313 million, up 16.4% year-over-year. The figure topped Zacks’ consensus estimate of 1.4%.

Organically, revenue grew 14.9%.

Strong performance from both segments of the company boosted revenue.

Revenue for the full year was $1.22 billion, reflecting a 13.8% improvement over the same period last year. The metric was consistent with the Zacks consensus estimate.

Segmental analysis

Integer Holdings operates through two segments: medical sales and non-medical sales.

Medical Sales recorded revenue of $301.9 million, up 15.8% year-over-year on a reported basis and 14.3% on an organic basis.

Medical Sales offers three product lines – Advanced Surgical, Orthopedics and Portable Medical (AS&O); Cardio & Vascular; and Cardiac & Neuromodulation.

Integer Holdings’ AS&O business includes sales under a supply agreement with the acquirer of the divested AS&O product line. Revenue was $26.7 million in the quarter, down 10.4% year-over-year on both a reported and organic basis. Management said the decline was due to lower demand for sales of COVID-related ventilators and patient monitoring components.

Integer Holdings Corporation Price, Consensus and EPS Surprise

Integer Holdings Corporation price-consensus-eps-surprise-chart | Quote from Integer Holdings Corporation

Cardio & Vascular revenue totaled $163.4 million, up 19.2% from the prior year quarter on a reported basis and 17.6% on an organic basis. Business delivered strong double-digit year-over-year sales improvement in the quarter across all cardiovascular and vascular markets, with particular strength in the neurovascular market despite fluctuating end-market demand and supply chain constraints.

Cardiac & Neuromodulation revenue was $111.9 million, up 19.2% year-over-year on a reported basis and 17.3% on an organic basis. Business reported strong year-over-year sales in all markets, with Cardiac Rhythm Management and Neuromodulation growing double-digit despite fluctuating end-market demand and supply chain constraints supply.

Non-Medical Sales segment revenue totaled $11.1 million, up 33.6% year-over-year, on both a reported and organic basis. Sales of the Electrochem product line, which is part of the non-medical segment, increased 34% as the energy market continued to recover.

Margin analysis

Integer Holdings reported gross profit of $81.9 million in the fourth quarter, up 11.8% year on year. However, gross margin in the reported quarter contracted 107 basis points (bps) to 26.2%.

Selling, general and administrative expenses were $36.3 million, up 3.5% year over year. Research, development and engineering expenses were $12.7 million in the quarter, up 20.3% year-over-year. Adjusted operating expenses of $49 million increased 7.4% year over year.

Adjusted operating profit totaled $32.9 million, reflecting a 19.1% increase over the prior year quarter. Fourth quarter adjusted operating margin increased 24 basis points to 10.5%.

Financial situation

Integer Holdings ended 2021 with cash and cash equivalents of $17.9 million compared to $49.2 million at the end of 2020. Total debt (including current portion) at the end of 2021 was $828.1 million compared to $731.3 million at the end of 2020.

Cumulative net cash flow from operating activities at the end of 2021 was $156.7 million, compared to $181.3 million a year ago.

Orientation 2022

Integer Holdings has launched its financial outlook for 2022.

For 2022, the company expects revenue to be between $1,340 million and $1,365 million, reflecting a 10-12% improvement from the reported 2021 figure. Zacks consensus estimate for the same is set at $1.35 billion.

Organically, revenue is expected to grow 5-7%.

The company expects full-year adjusted EPS in the range of $4.35 to $4.65, indicating a 7-14% upside from the 2021 reported figure. Zacks’ consensus for the same is pegged at $4.65, which matches the upper end of Integer Holdings’ outlook.

For the first quarter of 2022, the company expects its sales to be similar to those of the fourth quarter of 2021, which may be limited by the impacts of the pandemic on the workforce and the supply chain.

Our opinion

Integer Holdings ended the fourth quarter with better than expected results. The solid performance in terms of turnover and profit is impressive. Robust sector performance, as well as the strength of the majority of product lines, is encouraging. The continued recovery in activity despite US labor constraints and global supply chain disruptions is encouraging. The expansion of adjusted operating margin also bodes well for the stock. Management’s expectations of strong sales growth in the first quarter of 2022 reinforce our optimism.

Integer Holdings continued to perform poorly in its AS&O product line during the quarter under review. The contraction in the gross margin does not bode well either.

Zacks Ranking and Stocks to Consider

Integer Holdings currently carries a Zacks rank of #4 (sell).

Some top-ranked stocks in the broader medical field that have announced quarterly results are Baxter International Inc. BAx, West Pharmaceutical Services, Inc. WST and Henry Schein, Inc. HSIC.

Baxter, carrying a Zacks Rank #2 (Buy), for Q4 2021 Adjusted EPS of $1.04, which beat the Zacks consensus estimate by 0.9%. Revenue of $3.51 billion topped the consensus mark of 4.6%. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter has an estimated long-term growth rate of 9.5%. BAX’s earnings have exceeded estimates for the past four quarters, with the average surprise being 9.1%.

West Pharmaceutical reported fourth-quarter 2021 adjusted EPS of $2.04, which beat Zacks’ consensus estimate by 6.3%. Fourth-quarter revenue of $730.8 million beat Zacks’ consensus estimate by 3.1%. He currently wears a No. 2 Zacks rank.

West Pharmaceutical has an estimated long-term growth rate of 27.6%. WST’s earnings have exceeded estimates for the past four quarters, with the average surprise being 26.3%.

Henry Schein reported Q4 2021 Adjusted EPS of $1.07, which beat Zacks’ consensus estimate by 18.9%. Fourth-quarter revenue of $3.33 billion beat Zacks’ consensus estimate by 4.7%. He currently has a No. 2 Zacks rank.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings have exceeded estimates for the past four quarters, with the average surprise being 25.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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