Novanta Inc. (NASDAQ:NOVT) Q2 2022 Results Earnings Conference Call August 9, 2022 10:00 AM ET Company Participants Ray Nash - Corporate Finance Leader Matthijs Glastra - Chair and Chief Executive Officer Robert Buckley - Chief Financial Officer Conference Call Participants Lee Jagoda - CJS Securities, Inc. Brian Drab - William Blair Robert Mason - Robert W. Baird Andrew Buscaglia - Berenberg Capital Markets Operator Good morning. My name is Andrea and I will be your conference operator today. At this time, ...

Novanta A Trusted Technology Partner June 2022 Safe Harbor Statement The statements in this presentation that relate to guidance, pro forma presentations, future plans, goals, business opportunities, and future events or performance are forward-looking statements that involve risks and uncertainties, including risks associated with business and economic conditions, failure to achieve expected benefits of acquisitions, failure to comply with the Food and Drug Administration regulations, customer and/or suppl ...

Novanta Inc (NASDAQ:NOVT) Q1 2022 Earnings Conference Call May 10, 2022 10:00 AM ET Company Participants Ray Nash - Corporate Finance Leader Matthijs Glastra - CEO & Chairman of the Board Robert Buckley - CFO Conference Call Participants Lee Jagoda - CJS Securities Rob Mason - Baird Brian Drab - William Blair Andrew Buscaglia - Berenberg Operator Good morning. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Novanta Inc. 2022 First Quarte ...

Financial Data and Key Metrics Changes - In Q4 2021, Novanta reported revenue of $199 million, representing a 35% year-over-year growth on a reported basis and 14% organic growth [9] - For the full year 2021, total sales reached $707 million, up 20% year-over-year on a reported basis and 10% on an organic basis [9] - Adjusted EBITDA for Q4 was $43 million, a 31% increase year-over-year, while for the full year, it was $153 million, up 26% year-over-year [10] - Adjusted diluted earnings per share (EPS) in Q4 was $0.67, a 26% increase compared to the prior year, and for the full year, adjusted EPS was $2.62, up 34% year-over-year [10][39] Business Line Data and Key Metrics Changes - The Precision Motion segment experienced a 129% year-over-year revenue growth in Q4, significantly impacted by the ATI and IMS acquisitions [41] - The Vision segment saw a 3% year-over-year revenue growth, while bookings grew 57% year-over-year [43] - The Photonics segment reported a 12% year-over-year revenue increase, with bookings up 69% year-over-year [46] Market Data and Key Metrics Changes - Sales to advanced industrial markets accounted for 51% of total sales in Q4, with a 55% year-over-year growth [16][17] - Sales to medical applications represented 52% of total sales for the full year, growing by 12% year-over-year [19] - In Q4, sales in China grew 32% year-over-year, while sales in Europe and the United States grew 22% and 45% year-over-year, respectively [21] Company Strategy and Development Direction - Novanta aims to strengthen its corporate responsibility efforts and is committed to achieving net zero emissions by 2050 [28][29] - The company plans to continue focusing on acquisitions as a primary capital deployment strategy, with a strong pipeline of opportunities in 2022 [26] - The long-term vision includes broadening exposure to medical and advanced industrial applications with secular growth trends [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment despite ongoing supply chain disruptions and inflationary pressures [50][51] - The backlog reached a record $569 million, indicating strong customer demand that exceeds current supply capabilities [8][70] - Management expects revenue growth to improve as supply chain mitigation initiatives gain momentum and the new Taunton facility comes online [53] Other Important Information - The company launched 19 new products in 2021, maintaining a vitality index of over 25% of sales from new products [24] - Adjusted gross margins for Q4 were 44%, with expectations for expansion to approximately 46% for the full year 2022 [31][59] Q&A Session Summary Question: What is the significance of the backlog number? - Management indicated that the backlog is more than double pre-COVID levels, reflecting supply chain disruptions rather than a lack of customer demand [70][71] Question: Can you explain the factors affecting gross margins? - Management noted that logistics disruptions and the cost structure from the Taunton facility impacted gross margins, but they expect improvements in the second quarter [72][73] Question: What are the expectations for acquisition contributions in 2022? - Management expects the acquisitions to perform robustly throughout 2022, although specific guidance by business unit was not provided [79] Question: How is the company positioned in the semiconductor market? - Management stated that microelectronics exposure is around 10% to 12% of revenue, with a focus on structural automation and robotics markets for growth [82][96] Question: What revenue limitations are expected in Q1 due to the facility move? - Management estimated a low-single digit million revenue impact from the facility move and supply chain issues, but these are temporary and expected to improve throughout the year [89][90]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-35083 NOVANTA INC. (Exact name of registrant as specified in its charter) New Brunswick, Canada 98-0110412 (State or other jurisdiction of incorpor ...

Financial Data and Key Metrics Changes - In Q3 2021, Novanta reported approximately $178 million in revenue, representing a 24% year-over-year growth and 15% organic growth, marking the highest single-quarter sales in the company's history [8][10] - Adjusted EBITDA was $40 million, up 34% year-over-year, with an EBITDA margin of nearly 23%, an increase of 160 basis points year-over-year [9][10] - Adjusted diluted earnings per share increased by 79% year-over-year to $0.75 [10][35] Business Line Data and Key Metrics Changes - Medical applications accounted for 53% of total sales, growing 21% year-over-year and 7% sequentially [13][14] - Advanced industrial applications represented 47% of total sales, with a year-over-year growth of 28% and sequential growth of 5% [15] - The Photonics segment experienced a 19% year-over-year revenue increase, while the Precision Motion segment saw a 77% year-over-year growth [39][42] Market Data and Key Metrics Changes - Sales in China grew 28% year-over-year, while sales in Europe and the United States grew 20% and 27% respectively [16] - The overall book-to-bill ratio was 1.32, indicating strong demand across all segments [11] Company Strategy and Development Direction - The company closed the ATI and IMS acquisitions, which are expected to enhance its strategic positioning in high-growth markets [7][23] - Novanta's growth strategy includes expanding into new markets such as arthroscopy pumps and increasing R&D resources to capitalize on design wins [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges but expressed confidence in the company's ability to meet customer demand and maintain strong performance [12][26] - The company raised its guidance for the year, indicating optimism about long-term growth in both medical and industrial applications [26][45] Other Important Information - The company experienced a significant factory disruption at its Taunton facility, which impacted production and gross margins [29][31] - Despite supply chain issues, the company reported a healthy vitality index, with new product sales accounting for over 25% of total sales [19] Q&A Session Summary Question: Impact of the Taunton facility issue on revenue - The impact on organic growth was in the mid-single-digit range, approximately 4% to 7% [63] Question: Future gross margin expectations for the Photonics segment - Gross margins in Photonics are expected to remain flat in Q4 due to higher expenses associated with production [64] Question: Growth expectations for the ATI and IMS acquisitions - The ATI business is expected to grow mid- to high single digits, while IMS is anticipated to grow at a mid-single-digit rate [69][71] Question: DNA sequencing business outlook - The DNA sequencing business is expected to catch up to pre-pandemic levels, with strong growth driven by research lab reopenings and COVID variant sequencing [78][81] Question: Surgical market recovery expectations - Customers in the surgical market expect gradual recovery, with hospitals improving their handling of COVID cases and addressing patient backlogs [85]

Company Overview - Novanta is a technology partner in healthcare and advanced industrial markets[1] - The company focuses on cash returns with disciplined capital allocation[7] - The company has a high-performance growth culture through the Novanta Growth System[7] Market and Strategy - The company aligns with healthcare trends such as better outcomes at lower cost and personalized medicine[9] - The company plays in secular growth markets including robotic surgery, minimally invasive surgery, advanced diagnostics, and DNA sequencing[9] - The company wins through innovative technologies, OEM customer partnerships, proprietary IP, and global presence[9] - The company focuses on high-growth applications in photonics for Industrial 4.0 and medical applications[14, 16] - The company provides converging technology solutions for robotic applications including vision, sensing, and motion control[20] Financial Performance - The company's annual revenue is approximately $685 million, with over 50% in medical end-markets[6] - The company's addressable market is approximately $5 billion with a 5%-7% CAGR[6] - From 2012 to 2021, adjusted revenue increased from approximately $225 million to $685 million[29] - From 2012 to 2021, adjusted EBITDA increased from approximately $42 million to $145 million[29]

Financial Data and Key Metrics Changes - Novanta reported approximately $168 million in revenue for Q2 2021, representing a 16% year-over-year growth on a reported basis and 11% on an organic basis, marking the highest single-quarter sales in the company's history [8][9] - Adjusted EBITDA was $37 million, up 20% year-over-year, with an EBITDA margin of 22%, an increase of 80 basis points year-over-year [8][27] - Adjusted diluted earnings per share was $0.62, reflecting a 29% increase compared to 2020 [9][28] - Free cash flow performance was strong at $23 million, representing 200% of GAAP net income [9] Business Line Data and Key Metrics Changes - The photonics segment saw a revenue increase of 30% year-over-year, with bookings up 148% year-over-year and a book-to-bill ratio of 1.46 [21] - The precision motion segment also experienced 30% year-over-year revenue growth, with bookings nearly doubling year-over-year and a book-to-bill ratio of 1.6 [22] - The vision segment, primarily serving medical end markets, experienced a revenue decline of 2% year-over-year, but bookings grew 23% year-over-year with a book-to-bill of 1.15 [23][24] Market Data and Key Metrics Changes - Sales to advanced industrial applications accounted for 48% of total sales, with a year-over-year growth of 24% [10] - Sales to medical applications grew 9% year-over-year, although there was a slight sequential decline [10][11] - Strongest growth was observed in China, with sales increasing by 35% year-over-year, while sales in Europe grew double digits and sales in the United States grew 9% year-over-year [11] Company Strategy and Development Direction - The company announced two upcoming acquisitions, SEM for $115 million and ATI for $172 million, which are expected to enhance Novanta's strategic positioning in high-growth markets [14][16][17] - The vitality index, which measures revenue from new products launched in the last four years, remained healthy at above 25% of sales [12] - The company continues to invest in innovation, with a target of 25 new product launches for the full year, focusing on industrial and surgical robotics, minimally invasive surgery, and industry 4.0 [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategic positioning within medical and industrial applications, citing strong demand and a robust innovation pipeline [15][36] - The primary challenge remains supply chain disruptions, particularly related to electronic material shortages and logistics [29][30] - Despite these challenges, the company expects to raise its financial outlook for the third quarter and the remainder of the year [29][34] Other Important Information - Adjusted gross profit was $76.9 million, resulting in a 46% adjusted gross margin, an increase of over 340 basis points year-over-year [25] - R&D expenses were nearly $17 million, representing about 10% of sales, reflecting significant investment in innovation [26] - The company ended Q2 with gross debt of $196 million and a gross leverage ratio of 1.5x [28] Q&A Session Summary Question: Sustainability of precision motion margins - Management indicated that while there was a mix benefit in Q2, margins with a "5" in front of them are somewhat sustainable for the second half of the year [39] Question: Vision segment performance and recovery - Management attributed the decline in the vision segment to surgical market demand fluctuations, expecting a delayed impact on results [40][41] Question: Bookings strength and backlog conversion - Management noted that shipments have not filled customer stock, indicating that demand remains robust despite supply chain challenges [45][46] Question: Photonics segment order mix - The order mix in the photonics segment was balanced between industrial and medical applications, with strong performance in DNA sequencing and laser-based procedures [47] Question: Gross margin challenges and future outlook - Management confirmed that the guidance for gross margins remains around 46%, with expectations for continued expansion in the future [55]

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Novanta Inc. (NASDAQ:NOVT) Q1 2021 Earnings Conference Call May 11, 2021 10:00 AM ET Corporate Participants Ray Nash - Investor Relations Matthijs Glastra - Chief Executive Officer Robert Buckley - Chief Financial Officer Conference Call Participants Lee Jagoda - CJS Securities Richard Eastman - Robert W. Baird Brian Drab - William Blair Operator Good morning everyone. My name is Jimmy and I will be your conference operator today. At this time, I would like to welcome everyone to the Novanta Incorporated Fi ...