Integer at Wells Fargo Conference: Strategic Growth and Market Insights

On Thursday, 04 September 2025, Integer Holdings Corp (NYSE:ITGR) participated in the Wells Fargo 20th Annual Healthcare Conference 2025. The discussion, led by key executives, highlighted Integer’s strategic growth plans and market positioning. While the company remains confident about its market prospects, it acknowledged potential challenges, such as variability in quarterly performance.

Key Takeaways

• Integer maintains a strong backlog of approximately $700 million, ensuring visibility for upcoming quarters.
• The company reaffirmed its full-year guidance despite variability in quarterly results.
• Strategic acquisitions in the coatings sector aim to enhance capabilities and customer relationships.
• Integer is focusing on expanding gross margins to pre-COVID levels through operational improvements.
• The company anticipates significant growth in emerging markets such as renal denervation and structural heart therapies.

Financial Results

• Q2 2024 Revenue: Included a $10 million pull forward from Q3, exceeding sales expectations by $2 million even without this adjustment.
• CRM and N Guidance: Raised from low to mid-single digits to mid-single digits for the full year.
• Full-Year Guidance: Maintained despite a strong Q2 performance.
• Backlog: Approximately $700 million, providing visibility for about two quarters, down from $728 million at the end of Q4.
• CMV Growth: Expected to be at mid-teens (approximately 15%) for the year, compared to 7.8% organic growth in 2024.
• Emerging PMA Customers: Sales grew from $20 million in 2022 to $145 million in 2024, with a projected growth of 15% to 20% over the next three to five years.
• Pricing: Expected to remain neutral on average, with 70% of the business under contract.

Operational Updates

• Guidewire Facility: Celebrating the anniversary of its opening, contributing to capacity expansion.
• Coatings Acquisitions: Two companies acquired to enhance formulation capabilities and add coating services.
• Capacity Expansion: No significant expansions planned following recent developments in Ireland.
• Inventory Management: No unusual trends observed in customer inventory levels.
• Emerging PMA Customers: Nine customers at various launch phases.

Future Outlook

• Emerging PMA Customers CAGR: Anticipated growth of 15% to 20% over the next three to five years.
• RDN Market: Expected to grow from under $100 million this year to $200 million-$250 million next year.
• Tricuspid Market: Estimated to reach nearly $500 million in 2025, with growth forecasts of 66% in 2025 and 53% in 2026.
• M&A Strategy: Focused on strategic acquisitions to fill capability gaps, aiming for $200 million to $400 million in revenue.
• Margin Expansion: Plans to return to pre-COVID gross margin levels (31%) and operating margin levels (18.8%) through the Integer Production System (IPS).

Q&A Highlights

• CMV Deceleration: Attributed to comparables and timing of new product launches, with a positive outlook for mid-teens growth.
• Purchase Commitment Variability: Minimal in the near term, increasing slightly over nine to twelve months.
• Renal Denervation Contribution: Currently small but with potential growth in the coming years.
• Cardiac Rhythm Management Acceleration: Expected 8% growth in the second half, driven by reduced impact from a customer ramp-down.
• PFA Market Impact: Anticipated to replace legacy technologies, seen as positive for Integer’s business.

For further details, readers are encouraged to refer to the full transcript below.

Full transcript - Wells Fargo 20th Annual Healthcare Conference 2025:

Unidentified speaker: Statement. Sixty for everybody.

Nathan Trebek, Medical Device Analyst, Wells Fargo: Great. I think we’re live. Good afternoon, everyone. I’m Nathan Trebek, one of the medical device analysts at Wells Fargo. Welcome to day two of our healthcare conference. I’m pleased to have management from Integer with us. We have Joe Dziedzic, President and CEO, and Peyman Khales, the incoming CEO and the current Chief Operating Officer. In the audience, we have Diron Smith, the CFO, and Kristen Stewart from IR. Gentlemen, thank you for joining us.

Joe Dziedzic, President and CEO, Integer: It’s great to be here, Nathan.

Nathan Trebek, Medical Device Analyst, Wells Fargo: Great. I thought we could just start touching on Q2 and guidance. You called out a $10 million pull forward in revenue in Q2, which consisted of a number of small shifts that accumulated into that $10 million. Even excluding this, your sales beat by $2 million. You also raised CRM and N guidance for the full year from low to mid-single digits to mid-single digits. You maintained your full-year guidance despite the Q2 beat and the CRM and N guidance raise. Can you just talk about the thought process for guidance and help us understand if your outlook for the second half changed, particularly for CMV? Yeah, I can do that. Let me maybe just expand a little bit on the comment about pull forward. This is a little bit of a shifting between the quarters based on our customers’ demand profile.

Think about it as at the beginning of the quarter, Q2, our customers had asked us to ship certain products to them. Based on our production plan, we had told them that about $10 million of that would be in Q3. As we executed during the second quarter, we were able to meet their demand. That’s why something that we had thought would ship in Q3, shipped in Q2. That’s the $10 million that we talked about, which was a series of three events that each of them individually were negligible. That was us meeting our customer’s need, not necessarily pulling something forward. Specific to the guidance for the year, we have good visibility to our order patterns. We’ve talked about the fact that we have a backlog that’s about $700 million. At the end of Q4, it was about $728 million.

At the end of Q2, we said that our backlog is about the same. That gives us really good visibility for, say, about two quarters in advance. Our guidance for the year at midpoint has not changed. When we established our guidance, we did see some variability between the quarters. There are a few events that drive that. I can talk about, you know, there could be some variability, lumpiness, if you will, with the timing of product launches, whatnot. The Q4 comparables are a little bit more difficult because we had a very strong Q4 last year. Lastly, we are anniversarying, if you will, the opening of our new Guidewire facility with the capacity expansion that came online last year.

These events as a whole are the reason why the second-half demand profile might be a little bit different, but the guidance for the year has not changed because we get good visibility to our customers’ demand, and that’s what we guided to. I’ll just maybe answer your last question, which was related to cardiac rhythm management. We had guided to single-digit to low single-digit to mid-single-digit growth. We just tightened that. Effectively, we said that the CRM and growth is going to be mid-single digits, which is within that range. Right. I believe most of the pull forward was in CMV. Using some assumptions, just if we normalize for the fewer selling days in Q1, CMV grew about 14% in Q1. Correct me if I’m wrong, 14% in Q2 normalizing for this pull forward and would imply guidance of 7% in the second half.

This would be, you know, on a two-year stack basis, a pretty significant deceleration over what we saw in the last two years within the CMV segment. I guess what are the components driving this deceleration in CMV in the second half? If you look at it mathematically, our midpoint of guidance being the same, that implies that the second half growth in CMV is slower than the first half. Some of the things that I just talked about in the first question applied to some of the comparables and some of the timing of new product launches, etc. I would highlight that if you step back and look at the growth rate that we had for CMV last year on an organic basis, it was 7.8% for the year last year.

If you take the midpoint of our guidance, that implies that the growth of CMV is going to be higher this year. We’ve guided to about at mid-teens for CMV growth. We believe that that’s a very strong growth year over year. Maybe the one thing that I think I would want to highlight is that it’s more appropriate to look at our business on a rolling four-quarter basis because there is variability between the quarters. I can give you that point. Last year in 2024, CMV grew between 4% and 11% in the different quarters. The timing of demand, certain things associated with launch and ramp-up products are all things that can affect the different quarterly performance. As a whole, we believe that the mid-teens, which is about 15%, is a strong growth for CMV this year. Great.

I think investors appreciate your prior comments that customer manufacturing is not linear. At the same time, you have said that you have pretty good near-term visibility. To me, it seems like there might be some confusion there. Can you help us understand how much variation can there be around purchase commitments in the next three, six, nine months? Yeah, of course. In general, our customers give us a good level of visibility to their needs, say, on a rolling 12-month basis. Every month, they give us a forecast for 12 months, and they typically place orders, I would say, a couple of quarters in advance. The backlog that we have, which is essentially an order book, think about that as orders that we have from our customers for specific SKUs, quantities, and ship times. That really gives us really, really good visibility for the coming two quarters.

In the near term, which is, say, three months, there is very little variability. As I mentioned, there could be some, but those are usually very, very minor. In the three to six months, there could be slightly more. Generally speaking, we have really good visibility for the first six months. As time goes, the nine to 12 months, obviously the level of variability becomes higher. I see. You touched on lapping Guidewire, just the expansion this year. How should we think about the contribution from Guidewires this year? Guidewires have been strong for you for some time now. What is assumed in guidance now? We don’t break out specific products in terms of guidance. What I can tell you is this: every minimally invasive procedure uses at least one Guidewire. Many use more than one Guidewire.

As there’s more and more minimally invasive procedures that come into play, we see demand for Guidewires continue to increase. The expansion that we put in place last year was to ensure that we have the capacity to meet that demand for the future. On all the recent macro volatility, have you seen any notable demand changes from your customers? No, nothing notable that I can point to. Back to cardiac and vascular (CMV), growth accelerated in the prior three quarters. Is there any component here related to renal denervation? You started to call it out, I believe, two quarters ago. Medtronic is going to have final NCD coverage in October. How much contribution from RDN is built into your guide at this point? Yeah, we actually started talking about RDN first.

I believe it was February of 2022, something that, you know, we have been watching and that we’ve been looking at because the technology and the therapy itself is quite promising. We talked about it again, as you pointed out, in Q4, about our Q4 earnings, just because we are seeing the products getting closer and closer to commercialization. You talked about the NCDs and the reimbursement. We see that as a market and a therapy that can give us some tailwinds in the coming years. It’s a very small market today. I mean, globally, we think this year the market is less than $100 million, might be $200 million, $250 million next year. This is a total market globally. For us, for the global market, it’s very small, and for us, it’s still a very small part of our business.

It’s not immaterial in terms of growth for this year, but we think it’s got a lot of potential in the coming years. Okay. I mean, the $250 million estimate is in line with our forecast for RDN. I guess, you know, if we make some assumptions around gross margins and how much of the cost of goods you could capture, could it be reasonable to expect around $30 million of revenue for you from RDN next year? I guess, you know, off of what base is it growing? Yeah, we can’t specifically talk about a program or a product. We don’t call them out that way, other than what I just alluded to, that, you know, we think this is a market that has potential and that can give us tailwinds. Okay.

I think there is a line of sight in that market to a billion dollars plus in revenue coming off of a very small base, like you mentioned. Do you feel comfortable you have the capacity to supply this market at this point? Yeah, I mean, I will address the capacity question in two forms. What you’re talking about is a new product. When we work on new products with our customers, these are typically years and years in advance. Our customers give us a view of their thinking of the demand for when the product launches. Obviously, you know, those are estimates that as we get closer to launch, get tighter and tighter and a little bit more precise. We have visibility to our customers’ demand years in advance as we’re doing development for them. We plan for that.

We never want to be in a place where capacity constraint is an impedance to growth. That is true for that. Generally speaking, for our business, we have a long-range planning process where we look at our total business, the direction, the different markets, and where we think we need capacity so that, again, we put that capacity in place years in advance so that we’ll plan for it years in advance so that we’re never in a position to not have capacity to grow. Okay. It sounds like you’re pretty comfortable you can supply. Absolutely. Okay. The cardiac rhythm management guidance, so the mid-single digits, Q2, I believe, was impacted by the decline in Nevro’s business. What is giving you confidence that you’ll see the acceleration? I think your guidance assumes 8% growth in the second half versus 2% in the first half.

Are there new products or customers that maybe you could point to? Sure. The first thing is your reference to the SCS customer. I’ll highlight that we first communicated that was coming four years ago. I think it’s an indicator of the stickiness of the business and the visibility we have to both ramps as well as ramp-ups or as well as ramp-downs. The second half of the year, the impact of that is significantly lower than the first half. That’s probably about half of the improvement from the 2% growth rate in the first half to the 8% in the second half. The other 3% delta is really just the timing of customer demand based upon how they’re running their manufacturing plants and the demand that they needed from us in the quarter splits.

A little bit of the variability between the quarter splits that Peyman was commenting about earlier. Okay, that makes sense. Part of your growth algorithm that you’ve talked about for some time now is you would grow 200 basis points above the market, which is 4% to 6%, and a large part of it is your PMA portfolio. With the commercial launches in the PMA portfolio that you highlighted that began in Q4 of last year, why shouldn’t there be a continued growth acceleration through the second half? With the new launches, why shouldn’t the contribution this year be more than 200 basis points? You’re referring to our emerging PMA customers, which we started sharing, I think, at the end of sometime in late 2020, I think it was. Just to highlight, there has been substantial growth, right?

$20 million of sales in 2022 that’s grown to $145 million last year, 2024. Our outlook, our projection is for that to grow 15% to 20% over the next three to five years. It has contributed to our growth and being above the market, and we expect it to continue contributing. You can think of the math maybe in some different ways. If we think about a $145 million base and we think of $125 million.

Unidentified speaker: I’m sorry, 125. Thanks. Think about that growing 15% to 20%. That in-market is, we think, a high single-digit growth. If you think about neuromodulation, SCS obviously on the lower end of that, other neuromod therapies on the higher end of that. It’s really the delta. It’s really the 15% to 20% minus high single digits. Call it maybe 10%-ish %. Maybe 10% incremental growth above the market on that $125 million base, you get about $12 million. You get a little more than half, a little more than half a % of growth on the total company base. That’s how we think about it in terms of its contribution to being 200 basis points above the market.

Nathan Trebek, Medical Device Analyst, Wells Fargo: Can you say like the launches that happened in Q4? I mean, any way to quantify or talk about what spaces these launches were in? Was it a handful? Was it one or two? I don’t think you ever went into detail on what those launches were in Q4.

Unidentified speaker: Sure. There are nine customers in that group that they’re quantifying as the $125 million. They’re all in different phases of their launch. You think about how those programs work. They’re in development five, ten, maybe more years than that. They go through the market introduction. Every time a new region or a new area gets added, a sales force gets added, there needs to be inventory in the pipeline. There is lumpiness in those ramps. You’ve got an inventory build phase where you’re putting product into the distribution channels. You level off to a growth rate. There is just variability quarter to quarter. We knew this. If you think about last year, 2024, we entered the year knowing we were going to have a very strong fourth quarter. We ended up with 11% organic growth in the fourth quarter last year.

I remember on the third quarter earnings call, a lot of investors, sell-siders were asking us, what gives you confidence in that 11%? We said this has been our forecast all the year that we’ve had internally. We’ve got really good visibility to the emerging PMA customers because these are typically finished IPGs or finished lead systems that have a longer order lead time. They have a longer development or longer manufacturing process. We need more visibility to those. We’ve got really good visibility, even though it can be variable and lumpy at times. We’ve got really good visibility to that group of products and customers.

Nathan Trebek, Medical Device Analyst, Wells Fargo: Okay. Are these new launches still a headwind to margins at this point?

Unidentified speaker: We called it out as a headwind in the fourth quarter of last year, 2024, but then we made progress in mitigating some of that in the first quarter of this year when we had stronger gross margins. It’s really product and program specific. Optimally, we would launch every product with high yields and really efficient day one. The reality is sometimes you’re staffing a line to run at a certain volume, and it may take you a few quarters to get to that volume, to get to a level of efficiency. Even though we design for manufacturability to deliver high yields at the onset of a new program, it doesn’t always work out that way.

Nathan Trebek, Medical Device Analyst, Wells Fargo: Okay. Your outlook for 15% to 20% CAGR over the next three to five years of the $125 million, can you just talk about the linearity of this growth outlook? Is it more weighted to the beginning? Is it kind of even across those three to five years? How are you thinking about that?

Unidentified speaker: Yeah, we’ve got a model. We’ve got the forecast that we’ve gotten from customers, and we believe that we think of it more as a CAGR. These are longer-term products that have been in development for a long term. It’s really going to be dependent upon the success of those customers. We want them to be wildly successful, like our customers believe they will be. It’ll be dependent upon their success in the marketplace as to how it ultimately plays out and whether it’s straight up into the right or it has some variability. History would say most products do have some variability.

Nathan Trebek, Medical Device Analyst, Wells Fargo: Okay. You know, as of Q4 end, I think you had 19 in development, nine in clinical. Are there certain programs in the PMA portfolio that are, I guess, more material to your outlook versus others? Is it, you know, any way to say is it one or two? Is it five? Anything you could point to?

Unidentified speaker: I wouldn’t necessarily call any one out. They all have different end markets or total available markets that they’re working to serve. We have 40-plus years of experience in assessing potential development programs in this area. We’ve tried lots of different things that we’ve learned from. The ones that are in the 29 that are in the pipeline or those customers or those products, those are ones that we have vetted. We believe there is a very strong end market for those and that they have the potential to be meaningful solutions for patients and growth for Integer.

Nathan Trebek, Medical Device Analyst, Wells Fargo: Great. Maybe we could just shift gears to your recent M&A. You acquired two coatings companies recently. My question to you would be, have those capabilities, I guess, changed the conversations you’re having with your customers now? Does it make the relationships more sticky? Is there an upselling strategy here or both? Yeah, let me take that. I’ll start with maybe why coatings’ capabilities and what is the process? What is the strategy behind our acquisitions, if you will? As part of the strategy process that we have that we run, we always look at those critical capabilities that we believe are important to make sure that we can win in those markets and the therapies and the customers and devices that we want to win in. Coatings are something that had been on our capability roadmap for quite some time.

Now, let me start with we have a lot of coating capabilities as it relates to applying coatings. We get years and decades of experience in doing that as part of our manufacturing process. What these two acquisitions add, they add two things. They add, one, the ability to formulate certain coatings, which is one of the capability gaps that we had talked about. The second thing is that it adds coating as a service in our portfolio. Now back to your question about what customer, what conversations does this garner with our customers? Yeah, absolutely. Because now we have the ability to do more coatings for our customers for next-generation products. Even today, we do, now we do, we have visibility to parts and components that come to us to be coated as a service.

That gives us visibility to what perhaps might be another opportunity that we can talk to our customers about. It absolutely has generated a lot of conversations, and we feel good about it. I guess maybe I’m just not familiar with this, but where are coatings applied? Like which areas in medtech? Yeah, so coatings applied, that’s a good question, actually. If you think about it, you have interfaces between different products that go inside the body. As an example, when you have an introducer that enters the body to kind of allow other devices to be introduced, you know, then you might have a guidewire. That guidewire has to go through the vasculature, and you want to make sure that it’s very slippery.

Okay, so you have different types of coatings, not to get overly technical, but that allows those different components and products to be able to navigate the body inside of each other while generating the least amount of resistance. Gotcha. Okay. Some of your public competitors called out inventory management among OEMs as a headwind. Can you talk about what you’re seeing among your largest customers and what they’re doing with inventories? I guess just your outlook for this year, but also into next year. Yeah, we’re not seeing anything unusual this year. The guidance that we have provided takes all these variabilities into account. There was a time, I think two years ago, perhaps, that our customers had talked about that they are reducing inventory, but we don’t see anything unusual this year. Okay.

Peyman, I guess any early thoughts into 2026, just qualitative comments around key catalysts, macro considerations, margin considerations, pricing? Yeah, from a macro perspective, the underlying markets that we have continue to be strong. The four growth markets that we’ve talked about, electrophysiology, structural heart, neurovascular, neuromodulation, are all some of the most dynamic and attractive markets that we have in the industry in those areas that we participate in. We believe that the markets and the underlying conditions continue to be strong. As it relates to guidance, we are in our budget process at the moment, as are the majority of our customers. Through this process, we get a really, really good visibility of the demand profiles for next year. This is the reason why we typically give guidance at our Q4 earnings, which is in February. We’re not ready to share any specific guidance on that yet. Okay.

I mean, Street is modeling 7% organic growth, which is basically in line with how you view the business, 4% to 6% market, 200 basis points above that. I guess a comfortable number to be out there right now or anything to point out, any day impact or anything of that sort? I would be providing guidance if I cross-grounded denied that. Okay. Anything in the PMA portfolio, any large launches kind of like you had in Q4 of last year? Anything to be aware of? Any upcoming significant launches? Nothing to call out specifically. Anything that’s in there has been incorporated into our CRM and in guidance and outlook for the year. You highlighted the 8% growth in the second half. That includes the emerging PMA customers as part of that. Any meaningful capacity expansion plans for next year?

We have had a number of capacity expansions over the years, most notably recently to two facilities in Ireland. We do not have plans for any meaningful capacity expansions that we already talked about at the moment. Okay. Can you talk about the pricing environment this year? You know, areas where you’re able to take price. Do you still expect pricing action to be neutral, or could there actually be uplift to margins and earnings? We expect that our pricing will be on average neutral-ish. We have 70% of our business, give or take, that’s under contract, and pricing is determined for that. We have about 30% of our business that is not under contract, and as appropriate, at the right time, if there are pricing actions, we can take that within that 30%. Okay. Another large area, emerging areas, tricuspid.

We estimate that the worldwide transcatheter tricuspid market will be almost $500 million in 2025, and we forecast it’s going to grow 66% in 2025 and 53% in 2026. I guess, can you talk about, is tricuspid a large part of your business at this point? Are you anticipating strong growth for you in the coming years? Structural heart in general is one of the four focus markets that we have and one that we’ve been investing in and focusing on heavily over the past six, seven years. I would even expand that. I would say we see opportunities both in tricuspid and mitral. We are less indexed into TAVR, which has kind of leveled off a little bit, if you will. We have good capabilities and pipeline in tricuspid and mitral.

We’ve been working a lot to get designed in the delivery systems for those two therapies, and we do have a good business in structural heart guidewires. Okay. PFA has definitely been a big part of your story or at least investors’ interest in the story. You talked about EP growing one and a half times the market. I think the PFA players recently talked about volumes growing 15%. Obviously, there’s an ASP uplift, but volumes themselves are growing 15%. Is it fair to say that you’re growing one and a half times 15%? In that case, what does that imply for the size of the PFA business within CMV? Let me talk about the EP market in general. There’s a lot of momentum in that space at the moment. The procedures are increasing, yes. We’re definitely seeing that. Let me also just talk about EP in general.

For the EP procedures, we have exposure to the entire procedure, everything from accessing the body to navigating the body to do transseptal crossings, to do mapping and diagnostics. You get to the ablation device itself. As the number of procedures grow, we see that gives us tailwind in general. As it relates to the ablation device specifically, the PFA technology is cannibalizing some of the more legacy RF and cryo technologies in general. We see that too in our space. Net-net, we are positive on the PFA device itself, on the PFA devices themselves. Net-net, it’s a positive for us, both for ablation and also everything else that we participate in. Can you say if RF and cryo is kind of leveled out at this point, or are there still significant declines that you’re kind of offsetting?

We believe that over time, PFA is going to more and more replace those more legacy technologies. Whether they will entirely go away, I think that would be doubtful. I think there’s going to be time and place for each, for the different patient profiles. Our customers really are better positioned to talk about those. We believe that some of those technologies will stay, but they’re going to be more niche, and PFA is going to be the more prevalent technology. As far as other technologies, leadless pacers and then conduction system pacing is really kind of taking off at this point. Are you a player in this market? What’s your outlook here? Certainly, we are. We’re participating in the components that we supply to the industry broadly in that space, as we have for a very long time, and it has been part of our growth as well.

Back to PFA, there are launches outside the U.S. that are coming and are happening right now. Is OUS for you at this point a significant driver, or is that still kind of, you’re in the early stages of that and it’s going to take off? The products that we make for our customers, who are global customers, are intended for global consumption. This is a general comment that’s outside of just EP. When we manufacture products for them, they are generally used globally. That really depends what product we supply to them, what plant it goes to, and what the intended end market of the products are. J&J obviously had a hiccup with its PFA system. I think it’s public that J&J is a large customer of yours.

I know you don’t speak about specific customers, but any way you could frame to investors or give them comfort about your exposure here and any impact from the Barapulse product estimates coming down? We unfortunately cannot speak to specific customers and specific products. I’m sure you appreciate that. In terms of just on margins, how are you thinking about getting back to pre-COVID margins? I think it was 31% gross margin, 18.8% operating margin. What is the path to getting back there and the timeframe? Before COVID, pre-COVID, you’re correct. We were at 31%. During the COVID inflationary period, some of the pressures, that gross margin came up, and we’ve been expanding that gross margin since. Our operating margin expansion is a combination of gross margin expansion and operating leverage.

Gross margin expansion is a part of that, and that’s driven by our ITS Integer production system, which is our version of lean, to just make sure that we continue, that we implement continuous improvement in our processes so that we are more and more efficient. We continue to do that. There’s an element of it that, with operating leverage, there’s an element of R&D and there’s an element of SG&A. We obviously manage SG&A. Our SG&A growth rate is, we try to manage that typically within our growth rate. If you make an acquisition, typically that jumps up, but then we manage that down. Then there’s some R&D leverage as well. The short answer to your question is absolutely we plan to get back to pre-COVID levels and then continue from there. You previously highlighted M&A. It’s a big part of your story.

You’ve done a good amount of acquisitions in the prior years. I think you talked about 200 to 400 basis points contribution, averaged over several years. Can you talk about the M&A pipeline and how valuations have trended? What is the sweet spot for you in terms of multiples you’d be willing to pay for deals? What strategic deals would you be looking at? We look at M&A, first of all, based on their strategic value. That’s number one. They are very, very targeted. We have a pipeline, as you pointed out. We have developed that pipeline based on those strategic capabilities that we feel that we need. Then, you know, what are those companies that we feel can fill that gap? That’s how we come up with our acquisition pipeline. In terms of the valuation, we are responsible, obviously, depending on the asset. There are different valuations.

You talk about the overall trends. A few years ago, those valuations were very high. They have come down a little bit. It really depends on the asset, on the health of the business, and the capabilities of technologies that we have. We have demonstrated that we are quite responsible in terms of the acquisitions that we make, both in terms of the multiples as well as the range of leverage that we stay in, that, you know, we’ve stayed within two and a half to three and a half times that we’ve talked about. Acquisitions will continue to be an important part of our strategy. We do have a strong pipeline. Whether that’s $200 million or $400 million, I think that’s a good range. I think in terms of how much it can add, that’s typically what it’s been.

It really depends on the size of the asset at the time of the acquisition. I mean, we’re pretty much out of time, but just last question. With M&A, you could potentially get to double-digit reported revenue growth, and your target for operating income growth to double the revenue growth, that’s on the reported growth number, right? That’s on the reported growth number, correct. Okay, great. Gentlemen, thank you for joining. Joe, I believe this is your last conference as CEO. Good luck with everything. Thank you for all your help and interaction prior years. Thank you, Nathan. Thanks for having us.

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