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BUSINESS ACQUISITIONS | 6 Months Ended
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Jun. 27, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS 2025 Acquisitions Precision Coating LLC Acquisition On January 7, 2025, the Company acquired substantially all of the assets and assumed certain liabilities of certain subsidiaries of Katahdin Industries, Inc., including its main operating subsidiary, Precision Coating LLC (collectively “Precision”). Prior to the acquisition, Precision was a privately-held manufacturer specializing in high value surface coating technology platforms, including fluoropolymer, anodic coatings, ion treatment solutions and laser processing. Based in Massachusetts, Precision has additional locations in the New England area and an additional facility in Costa Rica. The total consideration transferred was $153.5 million, including contingent consideration, working capital and other purchase price adjustments. The Company recorded contingent consideration with an estimated acquisition date fair value of $1.4 million, representing the Company’s obligation, under the purchase agreement, to make an additional payment of up to $5.0 million based on a specified revenue growth milestone being met in 2025. The Company funded the purchase price with borrowings under its Revolving Credit Facility (as defined below). VSi Parylene Acquisition On February 28, 2025, the Company acquired substantially all of the assets and assumed certain liabilities of Vertical Solutions, Inc., d/b/a VSi Parylene (“VSi”). Headquartered in Colorado, prior to the acquisition VSi was a privately-held full-service provider of parylene coating solutions, primarily focused on complex medical device applications. (2.) BUSINESS ACQUISITIONS (Continued) The total consideration transferred was $24.0 million, including shares of Integer’s common stock (“Common Stock”) with a fair value of $4.0 million, contingent consideration, working capital and other purchase price adjustments. The Company recorded contingent consideration with an estimated acquisition date fair value of $1.1 million, representing the Company’s obligation, under the purchase agreement, to make additional payments of up to $4.0 million, in the aggregate, based on specified annual revenue growth milestones being met through 2028. The Company funded the cash portion of the purchase price with borrowings under its Revolving Credit Facility. Consistent with the Company’s tuck-in acquisition strategy, the acquisitions of Precision and VSi further increase the Company’s service offerings to include differentiated and proprietary coatings capabilities that position the Company to better meet customers’ evolving needs. The Company has preliminarily estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisitions. The determination of estimated fair value required management to make significant estimates and assumptions based on information that was available at the time that the condensed consolidated financial statements were prepared. The amounts reported are considered preliminary as the Company is completing the valuations that are required to allocate the purchase prices in areas such as property and equipment, intangible assets, liabilities and goodwill. As a result, the preliminary allocation of the purchase price may change in the future, including in ways which could be material. During the first six months of 2025, the Company recorded measurement period adjustments, inclusive of working capital and other closing adjustments, resulting in increases to property, plant and equipment and current liabilities and a net decrease to goodwill. The measurement period adjustments recorded during the first six months of 2025 were not material. The following table summarizes the preliminary purchase price allocations (in thousands):
| Precision |  | VSi |  | Total
Fair value of net assets acquired |  |  |  |  |
Current assets (excluding inventory) | $ | 11,609 |  |  | 1,982 |  |  | $ | 13,591 |
Inventory | 4,019 |  |  | 1,018 |  |  | 5,037 |
Property, plant and equipment | 12,949 |  |  | 2,732 |  |  | 15,681 |
Goodwill | 51,548 |  |  | 5,155 |  |  | 56,703 |
Definite-lived intangible assets | 72,700 |  |  | 13,600 |  |  | 86,300 |
Operating lease assets | 13,862 |  |  | 1,505 |  |  | 15,367 |
Other noncurrent assets | 43 |  |  | — |  |  | 43 |
Current liabilities (including current operating lease liabilities) | (4,341) |  |  | (773) |  |  | (5,114) |
Operating lease liabilities (noncurrent) | (8,922) |  |  | (1,256) |  |  | (10,178) |
Fair value of net assets acquired | $ | 153,467 |  |  | $ | 23,963 |  |  | $ | 177,430 |
Intangible Assets The preliminary fair values of the assets acquired were determined using one of three valuation approaches: market, income or cost. The selection of a particular method for a given asset depended on the reliability of available data and the nature of the asset, among other considerations. Current Assets and Liabilities The fair value of current assets and liabilities was assumed to approximate their carrying value as of the acquisition date due to the short-term nature of these assets and liabilities. Property, Plant and Equipment The fair value of Property, Plant and Equipment acquired was estimated by applying the cost approach for personal property and leasehold improvements. The cost approach was applied by developing a replacement cost and adjusting for economic depreciation and obsolescence. (2.) BUSINESS ACQUISITIONS (Continued) Leases The Company recognized operating lease liabilities and right-of-use assets for manufacturing facilities and equipment in accordance with ASC 842, Lease s. Additionally, the Company recorded favorable lease terms associated with Precision for operating leases in the U.S. in the amount of $4.2 million. The favorable lease terms were recorded as an increase to the right-of-use lease assets. Goodwill The excess of the purchase price over the fair value of net tangible and intangible assets acquired and liabilities assumed was allocated to goodwill. The goodwill resulting from the transaction is primarily attributable to future customer relationships and the assembled workforce of the acquired business. The goodwill acquired in connection with the Precision and VSi acquisitions is deductible for tax purposes. Intangible Assets The purchase price for each of Precision and VSi was allocated to definite-lived intangible assets as follows (dollars in thousands):
|  | Fair Value Assigned |  | Weighted Average Amortization Period (Years) |  |  |  | Weighted Average Discount Rate
Precision |  |  |  |  |  |  |  |
Customer lists |  | $ | 52,000 |  |  | 16 |  |  |  | 13.0%
Technology |  | 20,700 |  |  | 10.5 |  |  |  | 13.0%
|  | $ | 72,700 |  |  |  |  |  |  |
VSi |  |  |  |  |  |  |  |
Customer lists |  | $ | 7,700 |  |  | 16 |  |  |  | 12.0%
Technology |  | 5,900 |  |  | 17 |  |  |  | 12.0%
|  | $ | 13,600 |  |  |  |  |  |  |
Customer Lists - Customer lists represent the estimated fair value of contractual and non-contractual customer relationships Precision and VSi each had as of the acquisition date. These relationships were valued separately from goodwill at the amount that an independent third party would be willing to pay for these relationships. The fair value of customer lists was determined using the multi-period excess-earnings method, a form of the income approach. For both acquisitions, the estimated useful life of the existing customer base was based upon the historical customer annual attrition rate of 5.0%, as well as management’s understanding of the industry and product life cycles. Technology - Technology consists of technical processes, patented and unpatented technology, manufacturing know-how, trade secrets and the understanding with respect to products or processes that have been developed by Precision and VSi and that will be leveraged in current and future products. The fair value of technology acquired was determined utilizing the relief from royalty method, a form of the income approach, with royalty rates ranging from 5.0% to 8.0%. The estimated useful life of the technology is based upon management’s estimate of the product life cycle associated with the technology before it will be replaced by new technologies. Contingent Consideration (Earnouts) - As part of the Precision and VSi acquisitions, the Company may be required to pay additional consideration based on a specified revenue growth milestones. For Precision, the Company may be required to pay up to additional $5.0 million of consideration based on a specified revenue growth milestone being met in 2025. For VSi, the Company may be required to pay up to additional $4.0 million of consideration, in the aggregate, based on specified annual revenue growth milestones being met through 2028. Any amounts earned under the Precision or VSi earnouts will be paid in cash following the conclusion of each respective period. The contingent consideration is classified as Level 3 in the fair value hierarchy and the fair value is measured based on a probability-weighted discounted cash flow analysis. (2.) BUSINESS ACQUISITIONS (Continued) 2024 Acquisition On January 5, 2024, the Company acquired 100% of the outstanding capital stock of Pulse Technologies, Inc. (“Pulse”), a privately-held technology, engineering and contract manufacturing company focused on complex micro machining of medical device components for high growth structural heart, heart pump, electrophysiology, leadless pacing, and neuromodulation markets. Based in Pennsylvania, Pulse also provides proprietary advanced technologies, including hierarchical surface restructuring (HSR TM), scratch-free surface finishes, and titanium nitride coatings. Consistent with the Company’s tuck-in acquisition strategy, the acquisition of Pulse further increases the Company’s end-to-end development capabilities and manufacturing footprint in targeted growth markets and provides customers with expanded capabilities, capacity and resources to accelerate the time to market for customer products. The Company funded the purchase price with borrowings under its Revolving Credit Facility. The total consideration transferred was $142.3 million, including contingent consideration, working capital and other purchase price adjustments. The Company recorded contingent consideration with an estimated acquisition date fair value of $3.6 million, representing the Company’s obligation, under the purchase agreement, to make an additional payment of up to $20.0 million based on a specified revenue growth milestone being met in 2025. The final purchase price allocation was as follows (in thousands):
Fair value of net assets acquired |  |  |
Current assets (excluding inventory) |  |  | $ | 7,456 |
Inventory |  |  | 8,612 |
Property, plant and equipment |  |  | 25,950 |
Goodwill |  |  | 38,058 |
Definite-lived intangible assets |  |  | 64,000 |
Finance lease assets |  |  | 7,964 |
Current liabilities |  |  | (1,760) |
Finance lease liabilities |  |  | (7,936) |
Fair value of net assets acquired |  |  | $ | 142,344 |
Intangible Assets The purchase price was allocated to intangible assets as follows (dollars in thousands):
Definite-lived Intangible Assets |  | Fair Value Assigned |  |  |  |  |  |
Customer lists |  | $ | 48,000 |  |  |  |  |  |  |
Technology |  | 16,000 |  |  |  |  |  |  |
|  | $ | 64,000 |  |  |  |  |  |  |
Actual and Pro Forma disclosures The following table presents (in thousands) pro forma results of operations for the three and six months ended June 28, 2024 as if Precision had been included in the Company’s financial results as of the beginning of fiscal year 2024. Pro forma results for VSi have not been presented as the results of VSi are not material in relation to the condensed consolidated financial statements of the Company. Actual results for each acquired business are included in the Company’s consolidated results subsequent to the date of their acquisition (in thousands):
|  |  | Three Months Ended June 28, 2024 |  | Six Months Ended June 28, 2024 |  |
Sales |  |  | $ | 442,550 |  |  | $ | 862,420 |  |  |
Income from continuing operations |  |  | 28,525 |  |  | 43,382 |  |  |
(2.) BUSINESS ACQUISITIONS (Continued) The unaudited pro forma results are presented for illustrative purposes only and do not reflect the realization of potential cost savings, and any related integration costs. Certain costs savings may result from the acquisition; however, there can be no assurance that these cost savings will be achieved. These unaudited pro forma results do not purport to be indicative of the results that would have been obtained or a projection of results that may be obtained in the future. These unaudited pro forma results include certain adjustments, primarily due to increases in amortization expense due to the fair value adjustments of intangible assets, the increases to interest expense reflecting the amount borrowed in connection with the acquisition, acquisition related costs and the impact of income taxes on the pro forma adjustments. Sales related to Precision and VSi from the date of acquisition through the three and six months ended June 27, 2025 were $14.0 million and $27.2 million, respectively, in the aggregate and earnings were not material. Acquisition costs Direct acquisition costs are expensed as incurred and included in Restructuring and other charges in the Condensed Consolidated Statements of Operations and Comprehensive Income. During the three and six months ended June 27, 2025, direct costs of the Precision and VSi acquisitions were $0.7 million and $3.5 million, respectively. Direct costs of the Pulse acquisition during the three and six months ended June 28, 2024 were $0.1 million and $5.6 million, respectively.

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