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Integer Holdings (ITGR) Q4 Earnings, Revenues Top Estimates
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Integer Holdings Corporation (ITGR - Free Report) delivered adjusted earnings per share (“EPS”) of 99 cents in the fourth quarter of 2021, which improved 39.4% year over year. The figure surpassed the Zacks Consensus Estimate by 3.1%.
The adjustments include expenses related to the amortization of intangibles, among others.
GAAP EPS for the quarter was 60 cents a share, reflecting an uptick of 27.7% year over year.
Full-year adjusted EPS was $4.08, reflecting a 47.3% increase from the year-ago period. The metric surpassed the Zacks Consensus Estimate by 0.7%.
Revenues in Detail
Integer Holdings registered revenues of $313 million in the fourth quarter, up 16.4% year over year. The figure surpassed the Zacks Consensus Estimate by 1.4%.
Organically, revenues increased 14.9%.
Robust performances by both segments of the company drove the top line.
Full-year revenues were $1.22 billion, reflecting a 13.8% improvement from the year-ago period. The metric was in line with the Zacks Consensus Estimate.
Segmental Analysis
Integer Holdings operates through two segments — Medical Sales and Non-Medical Sales.
Medical Sales reported revenues of $301.9 million, up 15.8% year over year on a reported and 14.3% on an organic basis.
Medical Sales has three product lines — Advanced Surgical, Orthopedics and Portable Medical (AS&O); Cardio & Vascular; and Cardiac & Neuromodulation.
Integer Holdings’ AS&O business includes sales under supply agreement with the acquirer of the divested AS&O product line. Revenues amounted to $26.7 million in the quarter, down 10.4% year over year both on a reported and on an organic basis. Per management, the downside was due to a decline in demand for COVID-related ventilator and patient monitoring components’ sales.
Integer Holdings Corporation Price, Consensus and EPS Surprise
Revenues at the Cardio & Vascular business totaled $163.4 million, up 19.2% from the prior-year quarter on a reported basis and 17.6% organically. The business recorded strong double-digit year-over-year sales improvement in the quarter across all Cardio & Vascular markets, with particular strength in the neurovascular market despite end-market demand fluctuations and supply-chain constraints.
Revenues at the Cardiac & Neuromodulation business were $111.9 million, up 19.2% year over year on a reported and 17.3% on an organic basis. The business recorded strong year-over-year sales across all markets, with both Cardiac Rhythm Management and Neuromodulation increasing in double digits despite end-market demand fluctuations and supply-chain constraints.
Revenues at the Non-Medical Sales segment totaled $11.1 million, up 33.6% year over year, both on a reported and an organic basis. Sales at the Electrochem product line, a part of the Non-Medical segment, improved 34% on the back of the continued recovery of the energy market.
Margin Analysis
Integer Holdings generated gross profit of $81.9 million in the fourth quarter, up 11.8% year over 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 costs 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% uptick from the prior-year quarter. Adjusted operating margin in the fourth quarter expanded 24 bps to 10.5%.
Financial Position
Integer Holdings exited full-year 2021 with cash and cash equivalents of $17.9 million compared with $49.2 million at the end of 2020. Total debt (including current portion) at the end of 2021 was $828.1 million compared with $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 with $181.3 million a year ago.
2022 Guidance
Integer Holdings has initiated its financial outlook for 2022.
For 2022, the company expects revenues to be in the range of $1,340-$1,365 million, reflecting an improvement of 10-12% from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $1.35 billion.
Organically, revenues are expected to increase by 5-7%.
The company expects full-year adjusted EPS in the band of $4.35-$4.65, indicating an uptick of 7-14% from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $4.65, which matches the upper end of Integer Holdings’ outlook.
For first-quarter 2022, the company projects its sales to be similar to the fourth quarter of 2021, which might be constrained by pandemic-led impacts on labor and supply chain.
Our Take
Integer Holdings exited the fourth quarter with better-than-expected results. Strong top- and bottom-line performances are impressive. Robust segmental performances, along with strength in majority of the product lines, are encouraging. Continued business recovery despite the U.S. labor constraints and global supply-chain disruptions is encouraging. Expansion of adjusted operating margin also bodes well for the stock. Management’s expectations of a strong sales growth in the first quarter of 2022 raise our optimism.
Integer Holdings continued to witness weak performance across its AS&O product line in the quarter under review. Contraction of gross margin also does not bode well.
Zacks Rank and Stocks to Consider
Integer Holdings currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Baxter International Inc. (BAX - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
Baxter, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2021 adjusted EPS of $1.04, which beat the Zacks Consensus Estimate by 0.9%. Revenues of $3.51 billion outpaced the consensus mark by 4.6%. You can see the complete 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 surpassed estimates in all the trailing four quarters, the average surprise being 9.1%.
West Pharmaceutical reported fourth-quarter 2021 adjusted EPS of $2.04, which surpassed the Zacks Consensus Estimate by 6.3%. Fourth-quarter revenues of $730.8 million outpaced the Zacks Consensus Estimate by 3.1%. It currently carries a Zacks Rank #2.
West Pharmaceutical has an estimated long-term growth rate of 27.6%. WST’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 26.3%.
Henry Schein reported fourth-quarter 2021 adjusted EPS of $1.07, which surpassed the Zacks Consensus Estimate by 18.9%. Fourth-quarter revenues of $3.33 billion outpaced the Zacks Consensus Estimate by 4.7%. It currently has a Zacks Rank #2.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%.
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Integer Holdings (ITGR) Q4 Earnings, Revenues Top Estimates
Integer Holdings Corporation (ITGR - Free Report) delivered adjusted earnings per share (“EPS”) of 99 cents in the fourth quarter of 2021, which improved 39.4% year over year. The figure surpassed the Zacks Consensus Estimate by 3.1%.
The adjustments include expenses related to the amortization of intangibles, among others.
GAAP EPS for the quarter was 60 cents a share, reflecting an uptick of 27.7% year over year.
Full-year adjusted EPS was $4.08, reflecting a 47.3% increase from the year-ago period. The metric surpassed the Zacks Consensus Estimate by 0.7%.
Revenues in Detail
Integer Holdings registered revenues of $313 million in the fourth quarter, up 16.4% year over year. The figure surpassed the Zacks Consensus Estimate by 1.4%.
Organically, revenues increased 14.9%.
Robust performances by both segments of the company drove the top line.
Full-year revenues were $1.22 billion, reflecting a 13.8% improvement from the year-ago period. The metric was in line with the Zacks Consensus Estimate.
Segmental Analysis
Integer Holdings operates through two segments — Medical Sales and Non-Medical Sales.
Medical Sales reported revenues of $301.9 million, up 15.8% year over year on a reported and 14.3% on an organic basis.
Medical Sales has three product lines — Advanced Surgical, Orthopedics and Portable Medical (AS&O); Cardio & Vascular; and Cardiac & Neuromodulation.
Integer Holdings’ AS&O business includes sales under supply agreement with the acquirer of the divested AS&O product line. Revenues amounted to $26.7 million in the quarter, down 10.4% year over year both on a reported and on an organic basis. Per management, the downside was due to a decline in demand for COVID-related ventilator and patient monitoring components’ sales.
Integer Holdings Corporation Price, Consensus and EPS Surprise
Integer Holdings Corporation price-consensus-eps-surprise-chart | Integer Holdings Corporation Quote
Revenues at the Cardio & Vascular business totaled $163.4 million, up 19.2% from the prior-year quarter on a reported basis and 17.6% organically. The business recorded strong double-digit year-over-year sales improvement in the quarter across all Cardio & Vascular markets, with particular strength in the neurovascular market despite end-market demand fluctuations and supply-chain constraints.
Revenues at the Cardiac & Neuromodulation business were $111.9 million, up 19.2% year over year on a reported and 17.3% on an organic basis. The business recorded strong year-over-year sales across all markets, with both Cardiac Rhythm Management and Neuromodulation increasing in double digits despite end-market demand fluctuations and supply-chain constraints.
Revenues at the Non-Medical Sales segment totaled $11.1 million, up 33.6% year over year, both on a reported and an organic basis. Sales at the Electrochem product line, a part of the Non-Medical segment, improved 34% on the back of the continued recovery of the energy market.
Margin Analysis
Integer Holdings generated gross profit of $81.9 million in the fourth quarter, up 11.8% year over 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 costs 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% uptick from the prior-year quarter. Adjusted operating margin in the fourth quarter expanded 24 bps to 10.5%.
Financial Position
Integer Holdings exited full-year 2021 with cash and cash equivalents of $17.9 million compared with $49.2 million at the end of 2020. Total debt (including current portion) at the end of 2021 was $828.1 million compared with $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 with $181.3 million a year ago.
2022 Guidance
Integer Holdings has initiated its financial outlook for 2022.
For 2022, the company expects revenues to be in the range of $1,340-$1,365 million, reflecting an improvement of 10-12% from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $1.35 billion.
Organically, revenues are expected to increase by 5-7%.
The company expects full-year adjusted EPS in the band of $4.35-$4.65, indicating an uptick of 7-14% from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $4.65, which matches the upper end of Integer Holdings’ outlook.
For first-quarter 2022, the company projects its sales to be similar to the fourth quarter of 2021, which might be constrained by pandemic-led impacts on labor and supply chain.
Our Take
Integer Holdings exited the fourth quarter with better-than-expected results. Strong top- and bottom-line performances are impressive. Robust segmental performances, along with strength in majority of the product lines, are encouraging. Continued business recovery despite the U.S. labor constraints and global supply-chain disruptions is encouraging. Expansion of adjusted operating margin also bodes well for the stock. Management’s expectations of a strong sales growth in the first quarter of 2022 raise our optimism.
Integer Holdings continued to witness weak performance across its AS&O product line in the quarter under review. Contraction of gross margin also does not bode well.
Zacks Rank and Stocks to Consider
Integer Holdings currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Baxter International Inc. (BAX - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
Baxter, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2021 adjusted EPS of $1.04, which beat the Zacks Consensus Estimate by 0.9%. Revenues of $3.51 billion outpaced the consensus mark by 4.6%. You can see the complete 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 surpassed estimates in all the trailing four quarters, the average surprise being 9.1%.
West Pharmaceutical reported fourth-quarter 2021 adjusted EPS of $2.04, which surpassed the Zacks Consensus Estimate by 6.3%. Fourth-quarter revenues of $730.8 million outpaced the Zacks Consensus Estimate by 3.1%. It currently carries a Zacks Rank #2.
West Pharmaceutical has an estimated long-term growth rate of 27.6%. WST’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 26.3%.
Henry Schein reported fourth-quarter 2021 adjusted EPS of $1.07, which surpassed the Zacks Consensus Estimate by 18.9%. Fourth-quarter revenues of $3.33 billion outpaced the Zacks Consensus Estimate by 4.7%. It currently has a Zacks Rank #2.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%.