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Integer Holdings (ITGR) Up 18.9% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Integer Holdings Corporation (ITGR - Free Report) . Shares have added about 18.9% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ITGR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Recent Earnings

Integer Holdings posted first-quarter adjusted earnings per share of 61 cents per share, missing the Zacks Consensus Estimate by 14.1%. However, earnings rose 48.8% year over year.
Revenues totaled $382 million, beating the Zacks Consensus Estimate by 4%. Revenues also increased 10.5% on a year-over-year basis (8.8% organically).
Segment Details
Cardio & Vascular
This segment continued to see strong top-line growth. Revenues came in at $138.3 million, up 10.3% year over year (9.4% organically). The upside was driven by continued strong demand for Integer-owned products and rising demand for contract manufacturing components.
Advanced Surgical, Orthopaedics & Portable Medical
In the quarter under review, this segment posted revenues of $121.8 million, up 15.8% from the prior-year quarter (11.5% organically). Per management, growth has been driven by increases in Portable Medical products, spinal implants, continued ramping up of new products as well as accelerating sales from one customer as part of an inventory build program.
Notably, Integer Holdings planned a divestiture of the segment’s product lines for $600 million to MedPlast, LLC.
Cardiac & Neuromodulation
This segment raked in revenues of $108.9 million, up 4.9% from the year-ago quarter (4.9% organically). Per management, the neuromodulation market is a key growth driver for the product line.
Total Non-Medical sales were $12.7 million, up 12% both on an organic and year-over-year basis.
Margins
Gross profit in the quarter came in at $95.8 million, up 5% year over year. Gross margin was 25.1%, down 130 basis points (bps).
The company’s operating income totaled $34.7 million, up 30.8% on a year-over-year basis. Operating margin was 9.1%, up 140 bps. The upside can be attributed to a 5.6% reduction in operating expenses, which totaled $61.1 million.
Adjusted EBITDA increased 7% to $69 million.
Financial Condition
Integer Holdings exited the quarter with cash flow of $46 million from operations. This translated to $36 million of free cash flow.
Notably, in the reported quarter, the company cleared $50 million of debt.
Guidance
Buoyed by a stellar first quarter, Integer Holdings issued an impressive guidance.
The company expects adjusted earnings per share of $3.20-3.20, reflecting growth of 14-25%. Notably, the Zacks Consensus Estimate is pegged at $3.30, within the range.
Revenues are anticipated between $1.51 billion and $1.55 billion, indicating growth of 3-6%. The Zacks Consensus Estimate is pinned at $1.52 billion, which is within the given range.
The company expects cash flow from operations of $160 million and free cash flow of $110 million. The company further expects to pay down $115 million of debt in 2018.
For adjusted EBITDA, the company has raised the expected range to $310-320 million, up 9-12% approximately.
Full-year adjusted effective tax rate is expected at around 21-24%.
Integer Holdings posted first-quarter adjusted earnings per share of 61 cents per share, missing the Zacks Consensus Estimate by 14.1%. However, earnings rose 48.8% year over year.
 
Revenues totaled $382 million, beating the Zacks Consensus Estimate by 4%. Revenues also increased 10.5% on a year-over-year basis (8.8% organically).
 
Segment Details
 
Cardio & Vascular
 
This segment continued to see strong top-line growth. Revenues came in at $138.3 million, up 10.3% year over year (9.4% organically). The upside was driven by continued strong demand for Integer-owned products and rising demand for contract manufacturing components.
 
Advanced Surgical, Orthopaedics & Portable Medical
 
In the quarter under review, this segment posted revenues of $121.8 million, up 15.8% from the prior-year quarter (11.5% organically). Per management, growth has been driven by increases in Portable Medical products, spinal implants, continued ramping up of new products as well as accelerating sales from one customer as part of an inventory build program.
 
Notably, Integer Holdings planned a divestiture of the segment’s product lines for $600 million to MedPlast, LLC.
 
Cardiac & Neuromodulation
 
This segment raked in revenues of $108.9 million, up 4.9% from the year-ago quarter (4.9% organically). Per management, the neuromodulation market is a key growth driver for the product line.
 
Total Non-Medical sales were $12.7 million, up 12% both on an organic and year-over-year basis.
 
Margins
 
Gross profit in the quarter came in at $95.8 million, up 5% year over year. Gross margin was 25.1%, down 130 basis points (bps).
 
The company’s operating income totaled $34.7 million, up 30.8% on a year-over-year basis. Operating margin was 9.1%, up 140 bps. The upside can be attributed to a 5.6% reduction in operating expenses, which totaled $61.1 million.
 
Adjusted EBITDA increased 7% to $69 million.
 
Financial Condition
 
Integer Holdings exited the quarter with cash flow of $46 million from operations. This translated to $36 million of free cash flow.
 
Notably, in the reported quarter, the company cleared $50 million of debt.
 
Guidance
 
Buoyed by a stellar first quarter, Integer Holdings issued an impressive guidance.
 
The company expects adjusted earnings per share of $3.20-3.20, reflecting growth of 14-25%. Notably, the Zacks Consensus Estimate is pegged at $3.30, within the range.
 
Revenues are anticipated between $1.51 billion and $1.55 billion, indicating growth of 3-6%. The Zacks Consensus Estimate is pinned at $1.52 billion, which is within the given range.
 
The company expects cash flow from operations of $160 million and free cash flow of $110 million. The company further expects to pay down $115 million of debt in 2018.
 
For adjusted EBITDA, the company has raised the expected range to $310-320 million, up 9-12% approximately.
 
Full-year adjusted effective tax rate is expected at around 21-24%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

VGM Scores

At this time, ITGR has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

ITGR has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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