Good afternoon. My name is Joey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Integer Holdings Q4 2017 Earnings Conference Call. [Operator Instructions] Thank you. Amy Wakeham, you may begin your conference.

Great. Thanks Joey. Good afternoon, everyone. Thanks for joining us and welcome to Integer's fourth quarter 2017 conference call. The call is being webcast live and the replay along with the copy of the press release and earnings presentation will be 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 periods indicated. During our call, we will discuss certain non-GAAP measures. For a reconciliation of these non-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, today’s presentation includes forward-looking statements. Please refer to our SEC filings for discussion of the risk factors that could cause our actual results to differ materially. Unless otherwise noted, our commentary today refer to our organic results which adjust for the impact of foreign exchange and any M&A activity during the relevant period. On our call today to discuss our quarterly results, our 2018 business outlook and our refocus strategy are Joe Dziedzic, President and Chief Executive Officer, and Gary Haire, Executive Vice President and Chief Financial Officer. Following their prepared remarks, the call operator will come back on the line for Q&A. I'd now like to turn the call over to Joe.

Thanks, Amy. Welcome everyone, and thank you for joining to hear about our fourth quarter results. I am happy to share with you another quarter of continued improvement. In fact, our highest sales and profit quarter in Integer was formed 2.5 years ago. But before we get into results of the quarter, I want to start by thanking all of our Integer Associates for delivering another quarter of strong topline and net income growth and continued strong cash flow. The teams and the manufacturing plant and everyone supporting them delivered not only strong fourth quarter results, but a strong 2017 as well. The positive trajectory is clear. Thank you. Now let’s review of fourth quarter results. Our fourth quarter results demonstrates strong revenue growth of 8% and net income growth of 28%. We continue to generate strong cash flow from operations and pay down $129 million of debt during 2017. Gary will take you through the financials, but I want to highlight that we finished the year above our original guidance on sales and at the high end on a EPS. We understand our credibility with our customers is based on delivering on our commitment and it is no different with our investors. Today we introduced our new strategy to drive accelerated sales and profit growth. Late last year, we completed a comprehensive strategic review of all aspects of our business and developed our new strategy which is focused on portfolio management and operational excellence. Within portfolio management, we organized our product lines into three groups, which are invest to grow, protect and preserve and improve profitability. I’ll cover our strategy in more detail later in the presentation. Turning to Slide 6, annual sales growth consistently improved throughout 2017 and we closed the year with organic growth of 5% for 2017 reflecting the progress we have made to change their trajectory of our sales back to growth. Every product line improved their trajectory either going from a decline in 2016 to growth in 2017, or slowing the rate of decline. 2017 was an inflection point for Integer back to growth. Gary will now provide more discussion regarding our financial results for the quarter and the full-year.

Thanks Joe, and good afternoon. I’m going to take you through our fourth quarter and full-year 2017 financial results. And then I will also take you through our 2018 full-year outlook. Consistent with prior quarters, any reference to organic when we are referring to sales excludes the impact of foreign exchange and M&A activity. Any reference to organic as we talk about adjusted EBITDA, adjusted net income and adjusted EPS excludes the impact of foreign currency gains and losses that are reported in nonoperating other income or expense. Turning to Slide 8. Here's a quick look at our results for the fourth quarter. Sales increased 7.6% organically closing out the year with record sales in our fourth quarter. In the quarter we saw growth accelerate in all of our medical product lines and continued double-digit growth in our Electrochem business. Adjusted EBITDA increased 11% year-over-year and during the quarter we incurred just under $1 million of losses due to foreign exchange impacted by the continued strengthening of the euro versus the dollar. However, the impact is lower this quarter due to restructuring actions we took to reduce our exposure. Excluding this FX impact, and taking into account the foreign exchange gain in last year's number which was $3 million, adjusted EBITDA would have been up nearly 17% year-over-year. Our adjusted net income increased 28% organically when you exclude the impact of the FX losses I just mentioned. Adjusted EPS was $0.96 on a reported basis and includes $0.02 related to the FX. And also worth noting is that our EPS was impacted by about $0.04 from share dilution year-over-year for a total of about $0.06 from these two items. Overall, we had really strong finish to the year with solid execution. Now moving to Slide 9. You could see that…

Before we get into the specifics of our updated strategy, I want to provide a little background on the strategic review process we went through last year. Shortly after becoming interim-CEO, I initiated a very structured three step process to access the strategy that was in place and determine our go forward strategy. The three steps were very straight forward. The first step was an external assessment of the markets we serve. This included emulations of the market size, growth rates, customers, competitors, technology trends, outsourcing trends and market share of the various participants. We developed an objective view of the markets we're competing in to determine what to expect from those markets. The second step was internally focused on Integer. This step was designed to answer the simple question, what is our strategy and is it working. We reviewed the results of our current strategy to understand our revenue growth rates versus the market, our profitability versus our competitors, our share of wallet with our customers, our technology position, and many others success measures. The result of this review combined with step one shaped our new strategy. So the final step produced what you see on Slide 20. The knowledge we gained and conclusions drawn from the external and internal assessments on the basis of this strategy. The left side groups are product lines into three categories, invest to grow, protect and preserve and improve profitability. The importance of understanding these groupings is clear. What should we expect from the markets we're in, given how we are positioned in them which then leads to very product lines specific strategies that enable us to win. The invest to grow category includes Cardio & Vascular, Neuromodulation and Electrochem. These markets have inherent tailwinds and are expanding. Our customers are innovating to…

[Operator Instructions] Your first question comes from the line of Matthew Mishan from KeyBanc. Your line is open.

I guess first off congratulations on presenting a very thorough and really well thought out plan to grow the business. Have you had the opportunity to present this to some of your customers and I just want to get their first reaction to it?

I will have the chance to do that on Tuesday of next week when I’m meeting with the customer. We have just unveiled this publicly today. We've been working on this obviously since the middle of last year. Internally we’ve been rolling this out over the past couple of weeks. So this is the first public announcement of this. So next week on Tuesday I'll be with the customer and I’ll get some initial impressions.

And on the last slide you put clear objectives over there and the objectives are to grow faster than the market and to earn valuation premium. What is your sense of what the market is now growing at, what has it been growing at. And then who you're trying to earn valuation premium to?

So we think the markets when you look at all of the markets that we’re competing in and you aggregate, we think it’s mid single digits maybe somewhere in the 4% to 5% range and we’re looking at this and thinking about it over a long time period not a discrete quarter or year. So as we think about over time, we’re thinking 4% to 5% as the market. So we aspire to be excellent which is above the market, above average and when we think about earning the valuation premium, there's not a lot of clear MDO public company comps. So as we look at companies that we think might be similar to us on other factors whether its size or being an industry but not the specific markets, or we look at other deals that have occurred and we look at the value, we think market for us is somewhere in the low to mid-teens in terms of our multiple of EBITDA where we're trading at a discount to that today and our objective is to earn a premium. We believe that if we deliver above market growth and we bring profit through it at least two times the revenue growth that will earn a premium.

And then how much of visibility do you have to growth. I mean do you have any idea of how much is - of the plan of the 2% to 5% next year. How much of that is new business wins or core volumes, and have you better aligned with your customers so that you are able to plan alongside them. Better so then you had over like the previous several years?

So, if your question is more about short-term understanding our customer's needs and their volume demands, I think we’ve made tremendous progress in the past couple of years and I’ll specifically point to what Jeremy Friedman our COO has done in building that process out to work with customers for our sales, operations planning process. I think we're well aligned with our customers and we understand their near-term needs from a production and delivery perspective. And I think we delivered very effectively in the fourth quarter and that was part of our success in the fourth quarter. What you may be asking more of is as we look beyond 2018 and how do we earn and - above market growth rate that's where our strategic imperatives for customers comes into play. The sales force excellence is about us making sure that we’re getting full value for what we currently have in terms of technology, manufacturing capability and how we can support our customer’s growth. I think what we have today should allow us to grow at least the market rate which we did in 2017. Looking backwards over time we have it but I think 2017 we are and expect to figure that up and look forward to grow at least the market rate and I think sales force excellence can get us there. The market focus innovation is how we get to grow above the market above what the market rate is by partnering with our customers in bringing innovative products and solutions to them. Jeremy is going to spend the rest of the 2018 focused on these two strategic imperatives to ensure that as we go into 2019 we have clear line of sight as to how we’re going to deliver above market growth.

Just last question for Gary. How should we - maybe I missed it in the presentation but how should we be thinking about interest expense in 2018 especially in kind of rising rate environment?

So from an interest expense standpoint and I’ll just stay to the cash side, the amortization of the deferred cost is going to be flat its around $7 million, but the cash side interest, we were about $96 million of cash interest in 2017. And as we look forward, we expect the cash interest to be down just a little bit and really to think about it is we have obviously heavy debt paydown. So we have a lower balance, but certainly the LIBOR is up. Right now, what we’re modeling is about kind of a weighted average rate up around 40 basis points year-over-year due to the LIBOR increases and that’s way I would look at it.

[Operator Instructions] Your next question comes from the line of Jim Sidoti from Sidoti. Your line is open.

If we go back three months and we listen to the tone on the call there, it sounded like you expected topline growth to moderate a little bit in the fourth quarter. And the numbers you reported today were very, very strong. Were you surprised to see how the business grew in the fourth quarter?

Jim thanks for the question. We absolutely did see stronger demand from customers in the fourth quarter then what we were anticipating. I’d say there were multiple factors that led to our outperformance in the fourth quarter versus our guidance. And it started with we executed. We fulfilled everything our customer ordered, and what they needed. The customer demand was stronger, you see the stronger revenues in their results based on their releases. And as we were entering the fourth quarter we were looking at 2016 and the fourth quarter 2016 was by far the biggest quarter of the year. And so as we were looking to our fourth quarter 2017 demand to think that we were going to be 8% over the highest quarter of 2016 was not what we were expecting obviously given our guidance. So we did perform better in terms of delivery in the fourth quarter and our customer demand was better. So we feel really good about entering 2018 with the momentum we have.

And then other than that one customer that was rebuilding some inventory in the quarter, I mean were there anyone - any sales that you would consider pull forward or one-time in the quarter and you think that…?

No, there was not in fact the one customer that was something we actually knew about early in the third quarter because it was a specific program for something that they’re working on. So we knew about that going into the third quarter. So that impact was customer driven and it was in our guidance going into the fourth quarter.

And then this is a same question I asked you three months ago, that was when do you think that the declines in the CRM business will be more than offset by the growth in the neuro business?

I know everyday we’re getting more and more traction in neuro and everyday our neuro customers continue to grow and perform well. I don't know when that tipping point comes but I want it sooner than you do.

Well based on your guidance for 2018 it sounds like we’re pretty close?

We believe there's opportunity for us in the Cardiac Rhythm Management business to actually make some inroads in certain segments that can allow us to get some growth despite the low growth in CRM in total. So even though it’s in protective reserve because we’re broadly well-positioned, we do see some segments of growth opportunity. We have to go execute and deliver for our customers which we’re working on. So we’re not giving up on growth in CRM but we recognize the realities of that market. And neuro we’re going to be very focused on accelerating the growth there and serving the high growth customers in that space. We don’t know exactly when that tipping points going to come but we’re focused on it.

And then the last question from me is on debt paydown, it sounds like you’re going to pay a little bit less debt in 2018 than you did in 2017 even though EPS should be greater. Is there a reason for that, is that cash being used for investments or what's going on there?

Jim, its Gary. So I think that what you’re seeing is a 100 plus on the debt paydown. I don’t know that I directly interrupt that as we’re going to paydown less. We generated really solid cash flow in 2017 on top of the cash flow that we generated operationally or free cash flow in 2017. We had couple other things that went to the debt payments which was one, we effectively use a little bit more cash to draw our cash balance down which we think is a prudent thing, we'll continue to do and also we got some cash in from stock option exercises probably more than a normal rate during this last year. So we had that excess cash. But I don’t know that would interpret as we're going to reduce our debt paydown from 2017 to 2018 maybe it's just - I’m not given specific guidance around it just for some possibility. But I wouldn’t say that it’s a change in the investments, yes that level should be pretty comparable as I said on the capital investments but I don’t think you should read too much into that.

There are no further questions at this time. I’ll turn the call back over to the presenters.

Thanks Joey. Thanks for taking time to join our call and for your continued interest in Integer. If you have any follow-up questions, please contact Investor Relations directly. Have a great evening.

This concludes today's conference call. You may now disconnect.