Integer Holdings Corp (ITGR) 2017 Q1 法說會逐字稿

Good afternoon. My name is Kelly, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Q1 2017 Integer Holdings Corporation Earnings Conference Call. (Operator Instructions) Thank you. Amy Wakeham, Vice President of Investor Relations, you may begin your conference.

Great. Thank you, Kelly. Good afternoon, everyone. Thanks for joining us, and welcome to Integer's first quarter 2017 conference call. This call is being webcast live and, together with our earnings release and conference call presentation, are available on the Investor Relations section of our corporate website. The results and data we discuss today reflect the consolidated results of Integer for the period indicated.

During our call, we will discuss certain non-GAAP measures. For a reconciliation of the most directly comparable GAAP measures, please see the appendix of today's presentation and the notes to the financial statements in today's earnings release.

As a reminder, statements about expected future events and financial results are forward-looking and subject to risks and uncertainties. Our actual results may differ. Please refer to the risk factors detailed in our SEC filings for further discussion.

For anyone listening to a taped or webcast replay or reviewing a written transcript of this conference call, please note that all information presented is current only as of today's date, May 8, 2017. The company disclaims any duty or obligation to update any forward-looking information whether as a result of new information, future events or otherwise.

On the call today, to discuss our quarterly results and to update you on our business outlook and strategic initiatives are Joe Dziedzic, Interim President and Chief Executive Officer; and Gary Haire, Executive Vice President and Chief Financial Officer. Tom Mazza, Corporate Controller and Treasurer, will join us for the Q&A portion of the call. (Operator Instructions)

I'd now like to turn the call over to Joe.

Thank you, Amy. Welcome to everyone on the call, and thank you for joining us this afternoon. We are glad you're on the call to hear about our first quarter because we think we are off to a really good start in 2017. We're going to cover the usual topics today, but before we get started, I want to welcome Gary Haire, who joined Integer a week ago as Executive Vice President and CFO. We are pleased to have Gary on the Integer team. His extensive financial and operational experience with several large multinational companies will benefit us as we continue to execute our growth strategy and optimize our operations. I'm confident you will enjoy interacting with Gary and be as impressed with him as we have been.

And we have Tom Mazza on the call with us as well. You may know Tom from his previous days as CFO of Greatbatch, and he is currently Integer's Treasurer and Corporate Controller. Tom has been our acting CFO the past few months during the CFO transition. I'd like to thank Tom again for stepping up one more time for the company. We appreciate and value your leadership, Tom.

Before I address the first quarter, I think we can all reflect back on 2016 and acknowledge that it was a challenging year for Integer, but it was a tale of two halves. In the first half, we declined nearly double digits on the top line, and in the second half, we stopped the revenue erosion. However, revenue wasn't growing. It was flat.

Now we're at another inflection point for the business, one that points to growth. We delivered 5% organic revenue growth in the first quarter. Our intense focus on customers since the acquisition has really begun to pay dividends. Some of those dividends have come through increases in new products and programs and some have come by reducing the amount of lost business, but either way, they are dividends. The 2 legacy businesses had different approaches to customer engagement, and we chose to adopt the most customer-centric traits from both businesses, including realigning the structure of the sales organization and customer support teams. Increasing our customer focus does not mean we do not expect to be paid for the value we bring. We absolutely do. It does mean we are even more focused on serving our customers' needs by delivering innovation and leveraging the breadth of our capabilities and our global footprint across the entire product continuum.

Turning back to the first quarter. The team delivered 26% adjusted net income growth organically and continued to deliver strong cash flow growth, which supports the continued early paydown of our debt and is evidence of the positive trajectory of the business.

Operationally, we are beginning to shift the focus to the optimization of our new business processes as our initial acquisition integration plans winded down. We continue to drive synergy savings and are on track to achieve $50 million of cumulative integration savings through the end of 2017.

Commercially, we are focused on serving our customers' needs as their medical device outsource partner of choice. At the bottom of the page, we've highlighted 2 examples of progress we made during the quarter. In the first example, we leveraged the breadth of our capability and turned around a previously-strained relationship to win a transfer business program for a product that was previously 100% insourced by the customer. In the second example, we delivered an innovative supply chain process solution to the customer. Individually, these agreements do not significantly move the needle, but every customer is important and our business is made up of many of this size of deals. These are examples -- these examples simply provide us with the evidence that our strategy is working and we continue to gain traction with customers.

Before Gary covers our financial results, I'd like to highlight the improving trajectory of our business. On Slide 6, you can see a trailing 4-quarter view of our revenue and the improving trend in the first quarter of this year as well as the continued improvement in the outlook for the rest of the year. Every business has quarterly volatility, and we think looking at the trailing 4-quarter view provides a more representative view of the trajectory of the business. We will continue to highlight our business in this way.

Gary, welcome to your first earnings call. It is day 6, and now you're up.

Thanks, Joe, and good afternoon, everyone. I'm excited to finally be on board and a part of the Integer team, and I look forward to meeting with many of you in the near future. Today, I will take you through our first quarter financial results and also review our 2017 full year guidance. As I review our results, any reference to organic excludes the impact of foreign exchange and M&A activity for sales. And as we talk about adjusted EBITDA, adjusted net income and adjusted EPS, it excludes the impact of foreign exchange that is in nonoperating other income or expense.

Turning to Slide 8. Here is a quick snapshot of our key financial results. Revenue increased 4% year-over-year on a reported basis and 5% organically as we continue to see stabilization in our product lines, demonstrating we have transitioned the business back to growth. Joe will cover each of the product lines later in this call. Adjusted EBITDA declined 2% year-over-year on a reported basis but increased 4% on an organic basis. Similarly, adjusted net income and adjusted EPS were essentially flat year-over-year on a reported basis but organically increased 26% and 24%, respectively. I will discuss these changes in more detail on the next few slides.

Taking a closer look at the revenue trends for each of our product lines, you can clearly see the improvement and how this translates to total company growth, returning to positive year-over-year growth for the first time in 5 quarters. We are benefiting from enhanced customer relationships, which is allowing us to deepen our partnerships and win new and expanded business opportunities. Additionally, we are seeing improvement for certain product lines, such as Electrochem, and are benefiting from the return to normalized volumes in certain product categories as product transfer activities are completed.

We remain focused on improving adjusted EBITDA and optimizing our operations to drive profitability to the bottom line. On a reported basis, both adjusted EBITDA and adjusted diluted EPS declined slightly. However, when we exclude the impact of foreign exchange, which is included in nonoperating other income and expenses, adjusted EBITDA improved 4% and adjusted diluted EPS improved 24% year-over-year.

While we are pleased with these improvements and our comparables are beginning to turn positive, we did not see the full impact of the revenue increase flow through to the bottom line due to 2 specific items. The first specific item related to an unexpected increase in demand in one of our product lines from a large customer, which increased much faster than we would have expected. This unexpected spike in demand put pressure on our operations and caused inefficiencies and higher costs for us to ramp up and support the increased demand. Overall, the increase has driven higher-than-expected revenue, and we expect increased volumes to continue for a period of time. However, it also put pressure on gross profit in the near term as we work to meet the customer's needs.

The second item was around delays we have continued to experience with the transfer of products from our Plymouth, Minnesota facility to Tijuana, primarily relating to qualification of the transfer product as well as worldwide regulatory approvals. Our customers built up inventory levels in anticipation of these product transfers so that we have sufficient levels during the -- sufficient product levels during the transition.

We believe customers have now worked through their previously-purchased inventory, and we are seeing them begin to order in more significant volumes again. In order to meet increased demand, the product transfer delays have required us to manufacture the product at our legacy location, which is at a much higher cost than it will be once we complete the project. While we are pleased with the higher volumes, we must diligently work with our customers to validate and qualify the products at the new location so that we can finalize this project and realize the cost savings.

Overall, as we move forward, we are focused on optimization so that we can refocus our efforts on driving operational improvements that improve customer satisfaction. In addition, now that we have combined several processes, we have turned our attention to driving improvements in order to reduce cost and drive profitability.

As we look at our cash flow, I want to emphasize that generating strong cash flows to reduce leverage and invest for growth remains a top priority for us. We delivered another strong quarter with $39 million of cash flow from operations. During the quarter, we repaid $29 million on our debt obligations, including $18 million in accelerated payments. We are also actively managing our overall debt portfolio, and during the quarter, we executed an amendment to lower the interest on our Term B facility, which will reduce the interest rate on $1 billion of our debt by 75 basis points. This reduction will save us about $5.5 million in interest expense in 2017 and about $7 million on an annualized basis in future periods.

Turning to our full year outlook for 2017, we are reaffirming the guidance we issued on our last quarterly conference call. Our results for the first quarter were in line with our expectations and underscore our confidence in our full year outlook. Specifically, on revenue, we believe that we have good momentum coming out of the first quarter, and we have a solid pipeline with our customers. We have seen continued strong demand, and the building momentum in several of our product lines has continued into the second quarter. Our discussions with customers and our improving understanding of their future growth supports our confidence in the revenue outlook for the year, even as we face a tough comparison in the fourth quarter. From a profitability perspective, while we have had some challenges in the first quarter, we are now reaching a point of being significantly complete with our integration activities, and we have turned our focus to accelerating efficiency to deliver on results. And lastly, cash flow was very solid in the first quarter, and we will continue to make it a priority with a focus on working capital management as well as ensuring that our capital spending has appropriate returns.

I will now turn the call back to Joe.

Thanks, Gary. Now we'll provide an overview of each of our product lines, starting with Advanced Surgical, Orthopedics & Portable Medical product line, which represents about 1/3 of our 2016 revenues. The chart on the left highlights the improved trajectory of the product line primarily due to a return to normalized Portable Medical volume as we've moved beyond the temporary disruption caused by product transfers to our facility in Tijuana. As we expected and communicated last quarter, volumes are normalizing as the transfer product lines become fully qualified, and this is reflected in the strong growth this quarter. This product line's revenues can be lumpy due to product launches, and this year, we are benefiting from several launches in Orthopedics and arthroscopic.

Looking ahead, we expect to see revenue growth for the full year as new product launches reach expected volumes and we continue to drive market share growth within our existing products despite the impact of unfavorable currency changes and the historical level of price reductions. We are focused on growing the already strong relationships and the high levels of collaboration with our top customers in this product line. We continue to partner with our customers to support their cost management programs and to collaborate on internal continuous improvement and productivity initiatives to optimize our own cost. We continue to see significant opportunities to invest in technology and innovation with a focus on wireless technology and single-use orthopedic instrumentation.

The Cardio & Vascular product line had another strong quarter with year-over-year growth of 10%, driven by strong demand for existing OEM product lines and contract components. We saw particular strength on our vascular access and electrophysiology products. In addition, we benefited from customer restocking activities and expect to return to more normalized demand patterns.

Our outlook for 2017 remains positive for Cardio & Vascular, although we do expect the growth rate to moderate as the year progresses because last year, the first quarter was the lowest of the year. We are seeing strong demand for several key products and have a number of new opportunities in the sales pipeline. We continue to execute supply agreements that secure longer-term revenue and provide incentives for growth. Our customer relationship remains strong, and our partnership approach is enabling deeper penetration and increased opportunities for future growth.

The cardiac rhythm management and neuromodulation product line continues to be a solid contributor to our overall results. Having recovered from the CRM bottom in Q2 of '16, CRM and neuro demand is strengthening across several key customers, and we are ramping production in several of our medical component product areas. The overall CRM end market is relatively flat. However, our heightened focus on customer relationships, coupled with our value-added services and opportunity for economic efficiencies, is increasing the number of opportunities in our pipeline. We are well positioned to optimize total cost of ownership and supply chain control by leveraging our breadth and depth in the medical device supply chain.

Recent wins in the first quarter include incremental volume for next-generation pacemaker components with a major CRM customer as well as growth in our leads business. We've also seen demand increase for our existing batteries, enclosures and feedthrough technology from many of our current customers. In the neuromodulation market, we are actively supporting customers in the design, development and manufacture of everything from components to full systems for customer applications.

With strong end market growth and increasing applications for neuromodulation, the neuromodulation market is an important growth area to capitalize on our innovation. Examples that are contributing to our positive outlook include our support of a strategic customer that is growing faster than the market, and we recently won incremental component business from a major neuromodulation customer that is achieving double-digit growth in the neuro market. Additionally, we are finalizing long-term supply agreements with emerging players that are well positioned for future growth. We are excited about what is happening within this product line and our opportunities to grow and expand market share.

Wrapping up the product lines is Electrochem, our Non-Medical segment, which represents about 3% of our total revenues. The Electrochem product line continues to trend towards positive year-over-year growth, primarily driven by increased drilling activity in North America. We expect to see continued revenue improvements throughout the year as long as we see sustained stabilization in energy markets. In fact, we are starting to see growth again, which could be significant year-over-year growth. We are definitely seeing it in second quarter volumes so far. We also continue to vigilantly manage our cost structure and work to maintain appropriate inventory levels while effectively supporting customer needs.

As we have shared with you in the prior 2 quarters, even as we were impacted by challenges in the energy market throughout 2016, we remain focused on maintaining and growing a market share within this space. We are also aggressively pursuing new customers and new market opportunities. Our demonstrated history of operational excellence, high quality and value-added services has enabled us to seek and win incremental revenue opportunities, expanding our market share and increasing revenue growth.

Our vision is clear: to enhance the lives of patients worldwide. We do this through our customers by being their partner of choice. We have a strong history of delivering innovation. That is the foundation of our company, and it is what differentiates us. The strategy to realize our vision is also clear. We serve the needs of our customers as their medical device outsource partner. We do this by leveraging our global presence and breadth of capabilities to provide high-quality manufactured products from components to finished devices. In addition, a key point of differentiation is our innovative design, process solutions and service capabilities. We have over 9,000 highly motivated and energized associates across the world, executing our strategy every day to ensure we realize our vision, and I'm proud to be leading Integer during this transition period.

Everyone loves top line growth, and we are no different, but it has to deliver bottom line benefits to generate cash flow that fuels that growth. So we continue to drive operational efficiencies across the business, including supply chain optimization and standardization of processes. We've made progress in our standardization efforts, but there is still tremendous opportunity to optimize these new processes. The integration is a phrase that we're moving on from, and now we're focused on business process optimization. You'll hear us continue to talk about the strong brands of Lake Region, Greatbatch and Electrochem and the proud legacies of these brands, but today, we are Integer and we are executing our strategy to realize our vision together as one company.

The CEO search process is progressing well and has confirmed our expectations that Integer is a highly sought after opportunity that offers tremendous growth potential. My priorities as Interim President and CEO are very clear: first, I'm here to ensure a smooth transition and lead the company during the interim period; second, to continue the execution of our strategy to realize our vision; and third, to ensure we deliver on our commitments to customers, associates and investors. It is important to highlight that customers are first. We have to continue to deliver innovative, on-time and high-quality products. We have to deliver on our commitments to each other, the management team and associates. We've made commitments to each other in the form of individual and organizational goals and objectives that support the execution of our strategy, and we have to deliver. I'm confident that if we take great care of our customers and if we deliver on our commitments to each other, then investors are going to be very happy with the company we build and the growth we deliver.

Although Gary has been -- only been on the job formally for 6 business days now, he's spent a considerable amount of his personal time getting up to speed on the business over the past few months. I'm confident he is going to have an immediate impact, helping us drive profitable growth, increase cash flow generation and make operational improvements.

In conclusion, we are well positioned for growth. We have a unique breadth of capability to serve our customers across the entire product continuum and across multiple product lines. Whether a customer needs an engineered component or a complete device that we've developed or anything in between, we can deliver. Our innovative design and manufacturing capabilities, our global footprint and scalability, our high quality, and our customer focus enable us to deliver more for our customers than anyone else in our space. As the OEM markets continue to consolidate, the need for a world-class supplier which can scale with their ever-growing requirements places Integer in a unique position to excel.

I'd like to conclude by reiterating what I said at the beginning of the call. We are now growing revenues again and expect to for the full year. Commercially, our intense focus on customers is paying dividends. Operationally, we are transitioning from integration to business process optimization. We have a very clear strategy to realize our vision. It's an exciting time to be part of Integer, and I hope you share that view as an investor.

Kelly, we will now turn to the question-and-answer portion of the call.

(Operator Instructions) Our first question comes from Matt Mishan from KeyBanc.

Can you help me better understand some of the -- I guess, the moving pieces of, call it, like, the FX hit in the quarter and what really -- what drove that? Because it looked like only about -- on sales-wise, it's only about like $1.4 million, but what drove the excess hit to EPS? And then talk a little bit, if you can, and try to quantify some of the reasons why -- I guess the increased sales didn't flow through, and what you think the impact of that was to the P&L, if possible.

Sure. Matt, this is Gary. So I'll take the first question on the FX, and you brought up both the revenue piece and then what was the impact on earnings. So not to confuse the pieces, the top line part is -- you're right. It's just over $1 million, and that's a translational revenue. On the unrealized FX piece, as you know, now we have a much larger and more global business, and there are several intercompany loans that we're utilizing for a cash tax efficiency play. And because of this, we have some swings from quarter to quarter that are noncash FX gains or losses on the intercompany loans. And as what we're focused as always on our economic structure and on the cash perspective of the company. And we'll keep looking at this going forward, and we just may have some of these swings, positive or negative, quarter to quarter that -- again, they're unrealized noncash items, and it's pretty normal for a global company.

And then just your general thoughts on how -- if you could quantify sort of the delays in Plymouth and sort of -- and the increased demand on some of the higher-revenue products that put some pressure on your gross margins, if possible.

So Matt, we -- the 5% organic revenue is a good result for the quarter, and I think we're all happy with that. I'll point to a couple of things first. First quarter last year was the lightest out of the 4 quarters. We're about $20 million higher per quarter in the last 3 quarters but we also -- we saw growth in the quarter and it didn't pull through the levers that we expected, only 4% on the EBITDA. And Gary referenced 2 things: One is the plant transfer that we had that is causing us to have not only higher cost because we're operating out of a facility in Plymouth versus a facility in Tijuana. So there's higher cost, but we also had some redundant cost in our operations. So as we finish that transition, that transfer which will happen later this year, then we'll start to see the benefits of that and we'll get back to a more normal level of margin fall-through that we would expect. Then the other thing was we did have a particular customer that unexpectedly ramped volumes on us, and it affected about 4 of our facilities. And so we had some inefficiency as we hired people. We had to train them. We had some overtime work in order to meet the demands for that customer. And it's an important customer so we wanted to make sure that we were able to serve them and deliver on their surprise need for us -- from us. So that caused some extra cost in the quarter as well that prevented leverage from falling through to the profit. Those are the 2 biggest items. Every quarter has moving parts, but those are the 2 biggest items.

And then last question, did you see an outsized benefit from a major product launch from one of your customers in the quarter in the CRM field?

We have launches and customer product introductions that affect us every quarter, up and down, and this quarter was no different.

Your next question comes from Charles Haff from Craig-Hallum.

So the EPS guidance of $2.70 to $3.10 for 2017, I'm kind of scratching my head over this a little bit because you got a $7 million interest savings, which would translate to about $0.17, and you didn't raise the guidance. Am I right to be confused by that? Is this just lower profitability? Or am I missing something here?

Charles, this is Gary. So you are correct on the $7 million. That's exactly what we said back when we did the transaction when we closed it on March 17, and so that's a correct number. On an annual basis, the number in 2017 is somewhere between $5 million and $6 million since we did it in the middle of March. So that's one thing. The second thing to clarify is that's a pretax number. So you have to remember that, that has to be tax-effected to look at it on an EPS. And then what I'd say qualitatively around that is the guidance was given on February 27, back when we did our guidance call with our fourth quarter earnings. And at that time, of course, we would have already been working on the pipeline of that transaction for the debt. And as we thought about our guidance at the time, we're clearly considering it. And it's a broad range of $0.40, $2.70 to $3.10, and we're still within that range even with the debt change.

Okay. And then on the last page of the press release, you have other operating expense add-backs or adjustments of about $25 million to $30 million, and previous guidance was for $18 million to $22 million for that. So are these higher add-backs included in your guidance of $2.70 to $3.10? Because if you take the $7 million to $8 million of add-backs, additional add-backs here, that's about $0.18 using the 25% tax rate.

Yes. It's Gary again, Charles. So you're exactly correct. Our previous guidance was $0.18 to $0.22 on other operating expenses, and now it's $0.25 to $0.30. Clearly, we did not have the full cost of a CEO transition included when the guidance would have been provided at February 27. That is the largest item for the change.

Okay. And what were those transition costs for the CEO?

Yes, they're footnoted. They're approximately $5 million that we incurred in the first quarter, but remember, those are non-GAAP. So we're excluding -- those will be excluded, and that's why that's noted that way.

Okay, great. And then you mentioned the $50 million of synergies cumulatively for 2017. What were the synergies for this quarter?

The synergies for this quarter were about $3 million to $4 million. This is Tom, by the way. And for the year, we're anticipating about $15 million. We had about $35 million run rate, and we're going to push to get to $50 million by the end of this year on a cumulative basis.

Okay. And then my last question here is on CRM neuro. That came in better than I was expecting. And I know CRM neuro has the highest operating margins of your different businesses. So I'm just wondering since you had higher CRM neuro revenues than I think you and I were expecting, I'm just scratching my head on why that didn't drop through on the margins. I understand the reasons that you gave about the demand from one product and the delays for Plymouth, but it seems like you had a substantial mix benefit versus your original expectations. Am I missing something there on the mix benefit?

Well, we did have some delayed shipments in the quarter in that product line that offset some of the other growth that we experienced. And at least versus what we were tracking towards internally for the quarter, we were actually pretty much right on in that product line. Obviously, there's variability every year, every quarter, but internally, our first quarter for CRM was very close. But there was growth in one area and a drag in another, but the good news is the area that we had the drag is timing. So it will help us in the second quarter.

Your next question comes from Jim Sidoti from Sidoti & Company.

Can you just give a little more color on SG&A in the quarter? It was up pretty significantly from the fourth quarter when actually revenue was down.

I'm sorry. Did you ask about energy?

No, SG&A.

Oh, SG&A, sorry. Yes, I mean -- when I look at SG&A -- this is Gary. When I look, it's pretty flat, Q4 to Q1, Q4 '16 to Q1, around $32 million. So it's pretty flat as a percentage of revenue. You clearly -- you had a higher revenue in the fourth quarter, so it's going to look a little bit higher. But there are some costs that come through in the first quarter that would have not been incurred in the fourth quarter just as we start the year, but it's pretty flat fourth quarter to first quarter.

Jim, are you looking on it on a GAAP basis?

Yes.

Okay. The intangible asset amortization increased about $1.6 million in the quarter over last year, and that's due to the way the accounting requires you to do the amortization in accordance with the expected cash flows, so amortization. And that's why I was asking because on an adjusted basis, it's not in there.

I was speaking on an adjusted basis. I was speaking specifically on an adjusted basis, what you can see in the back in the appendix in the schedule if you wanted to clarify that later.

Okay. And then in general, would you consider the EPS in the first quarter in line with where you thought it would be 5 weeks or 6 weeks ago when you did the quarter?

In the context of our internal targets, thinking about the full year, yes. The one thing was the currency. Obviously, we don't predict currency rates, and that did move against us. I'll reinforce what Gary said: it's noncash; it's internal loan structures that are there to be cash tax efficient. And so there could be more of that, but we're looking at the economics of it. We don't plan to hedge something that's noncash, excluding the currency where our first quarter is very much in line with how we view the year, and our guidance is very much intact.

So based on that, you're looking for a nice pickup in EPS over the next 3 quarters. Should we assume that it will be primarily in the back half of the year? Or do you think you'll see it -- that pickup in the second and third quarters as well?

So a couple of things to highlight. Last year, the fourth quarter was the strongest quarter of the year from a top line standpoint. There's a schedule -- I think it's the first page in the appendix just so you can see that easily. So fourth quarter was the strongest. We are seeing really good strength in the middle quarters of this year. Just because last year was the strongest, I would expect the year-over-year comps to be a little tougher as we get to the end. So we do expect middle of the year to be stronger, thinking about the quarter splits. We also would expect to get more of the benefits from the synergies that Tom Mazza answered about, the integration synergies. Those would ramp and we'd get a bigger portion of those realized in the second half. And then as we finish the facility transfer that Gary talked about, that will also bring more benefits in the second half of the year. So there's a balancing act between volumes will be stronger in the middle, is what we're anticipating, and then profitability could improve later in the year as we get some of the benefits from facility transfer and integration synergies.

And where would you say you are in terms of integration at this point? Are you seventh or eighth inning at this point or you still have...

So there's a couple of different ways to think about it. The way I'd propose is when we had the original acquisition assumptions, we had a certain amount -- certain number of things we were going to do for integration. And the team has done a really good job of executing on those, and it's taken an unbelievable amount of effort across a huge number of people inside the company. And we're getting ready to wind down that initial plan. That doesn't mean that there aren't still significant number of things to be done, and there are. But we're going to transition from calling it integration because we've gotten over the hump of the bulk of it. We've put a lot of processes together and now we're going to focus on optimizing those newly-combined processes, and there's a lot of opportunity for those -- for the optimization. And we think that has the opportunity to bring a lot of productivity. And not only is it going to be bring productivity and savings, it's going to bring better customer service. It's going to allow us to serve our customers even better as we run our plants even more efficiently. So the term integration, we're going to move on from, and we're going to start talking about optimizing a newly-combined company because today, we're one Integer. We're one company.

That's all the time we have for questions today. Thank you for joining. This concludes today's conference call. You may now disconnect.