Financial Data and Key Metrics Changes - Novanta reported $219 million in revenue for Q1 2023, reflecting a 7% year-over-year growth on a reported basis and 8% on an organic basis [7] - Adjusted EBITDA was $47 million, with an adjusted diluted earnings per share of $0.74, both exceeding expectations [7][27] - Non-GAAP adjusted gross profit was $101 million, maintaining a gross margin of 46%, consistent with the previous year [27] - Cash flow for the first quarter was approximately $7 million, up 28% year-over-year [29] Business Line Data and Key Metrics Changes - Medical markets sales grew 22% year-over-year, accounting for approximately 54% of total sales [11] - Advanced industrial markets, excluding microelectronics, saw a 1% year-over-year increase, representing about 38% of total sales [12] - Microelectronics, which constituted less than 9% of sales, experienced double-digit declines year-over-year [13] - The Precision Medicine and Manufacturing segment (formerly Photonics) grew 11% year-over-year [30] - Medical Solutions segment (formerly Vision) reported a 25% year-over-year growth [33] - Robotics and Automation segment (formerly Precision Motion) experienced a 9% year-over-year decline [36] Market Data and Key Metrics Changes - North America sales increased by 26% year-over-year, while Europe sales declined by 1% [14] - Sales in China, representing about 8% of total sales, fell 34% year-over-year, primarily due to microelectronics revenue decline [14] Company Strategy and Development Direction - The company emphasizes a diversified business model focused on high-growth medical and advanced industrial markets, leveraging long-term trends in robotics, automation, and precision medicine [8] - Investments in new manufacturing facilities and R&D are aimed at supporting future growth and product launches [16][49] - The company is transitioning its reporting segments to better align with strategic focus and customer needs [22][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year outlook, citing strong demand in medical markets and a robust backlog [19][51] - The company anticipates continued challenges in the microelectronics sector but expects to stabilize and grow in other areas [41][84] - Management highlighted the importance of new product launches and design wins for future revenue growth [66][72] Other Important Information - The vitality index for new products was in the mid-teens percentage of sales, reflecting a transition year [15] - The company is working to reduce lead times for products back to historical averages, which have improved significantly [10][78] Q&A Session Summary Question: Microelectronics business and EUV lithography - Management indicated that microelectronics exposure is around 7% to 8% of total revenue, with a shift towards EUV applications expected in the future [58] Question: Update on the Czech facility - The company is winding down lower-margin product lines at the Czech facility, which has been a margin headwind but is expected to improve as new products ramp up [60][61] Question: Opportunities related to new product launches - Management confirmed that the $50 million revenue opportunity for 2025 is based on a combination of new product launches and existing customer relationships [65][72] Question: Pricing strategy in the current environment - The company is using price increases to offset inflationary pressures while aiming to expand gross margins by 100 basis points [73][74] Question: Backlog and past due backlog - Management reported a 25% sequential reduction in past due backlog and a significant decrease in lead times, indicating improved operational efficiency [77][78]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 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 in ...

Financial Data and Key Metrics Changes - Novanta achieved record results in 2022, with revenue of $861 million, representing a 22% year-over-year growth on a reported basis and 14% growth on an organic basis [4] - Adjusted EBITDA for the full year was $184 million, up more than 20% versus 2021, and adjusted EPS was $3.07, up 17% [4][24] - In Q4 2022, revenue was $218 million, reflecting a 10% year-over-year growth on a reported basis and 14% growth on an organic basis [4] - Adjusted gross margins for the full year expanded approximately 50 basis points year-over-year, despite missing expectations due to lower margins in certain segments [9][24] Business Line Data and Key Metrics Changes - The Photonics segment saw revenue growth of 27% year-over-year in Q4 2022, driven by strong demand in advanced industrial applications and medical applications [10] - The Precision Motion segment experienced a revenue decline of nearly 10% year-over-year in Q4, primarily due to a significant drop in microelectronics applications [11] - The Vision segment reported revenue growth of 17% year-over-year, supported by strength in elective surgical procedures and smoke evacuation technologies [25] Market Data and Key Metrics Changes - Sales to medical markets grew by 16% for the full year, making up approximately 49% of total Novanta sales [5] - Sales in advanced industrial markets, excluding microelectronics, were up 9% year-over-year, contributing approximately 38% of total sales [21] - Sales in Europe grew 4% year-over-year, while North America saw a 31% increase; however, sales in China declined 39% year-over-year due to microelectronics revenue drop [21] Company Strategy and Development Direction - Novanta's strategy focuses on innovation in high-growth markets such as robotics, automation, and precision medicine, with a strong emphasis on R&D and new product development [6][20] - The company is investing in expanding its manufacturing capabilities, including new facilities in the Czech Republic and the UK, to address production capacity constraints [42] - Novanta aims to institutionalize the Novanta Growth System across its operations to enhance efficiency and margin expansion [9][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite macroeconomic challenges, highlighting strong demand in medical markets and ongoing innovation [4][20] - The company anticipates continued strong performance in 2023, particularly in medical businesses, while expecting headwinds in the microelectronics market [28] - Management noted that the backlog coverage is expected to normalize closer to 45% to 50% in 2023, down from the high 60% levels seen in 2022 [42] Other Important Information - The vitality index, representing revenue from new products launched in the last four years, remains healthy at about 25% of sales [6] - The company is focused on sustainability, with most sites now ISO 14001 certified and a roadmap to reduce its environmental footprint [23] Q&A Session Summary Question: Expectations for the Vision segment product mix - Management indicated that the Vision segment is expected to see continued growth, particularly from the JADAK business serving medical markets, which will positively impact gross margins [16] Question: Outlook for microelectronics market - Management expects the microelectronics market to bottom out in Q1 2023, with potential for recovery in the latter half of the year, but is not factoring this into current forecasts [36] Question: Impact of factory disruptions in China - Management acknowledged that disruptions from COVID-19 in China affected gross margins, but expects improvements as the situation stabilizes [37]

Financial Performance - Total revenue for 2022 was $860.9 million, an increase of $154.1 million, or 21.8%, compared to 2021, driven by acquisitions and increased demand in advanced industrial and medical markets [224]. - Operating income for 2022 was $103.1 million, an increase of $39.0 million, or 60.9%, primarily due to higher revenue and a decrease in restructuring and related charges [225]. - Basic earnings per share (EPS) for 2022 was $2.08, an increase of $0.66 from $1.42 in 2021, while diluted EPS was $2.06, up $0.65 from $1.41 in 2021 [226]. - Consolidated net income for 2022 was $74.1 million, compared to $50.3 million in 2021 [257]. Market Segmentation - The medical market accounted for approximately 49% of total revenue, while the advanced industrial market accounted for about 51% in 2022 [215][216]. - The Precision Motion segment revenue increased by $96.0 million, or 45.2%, primarily due to $88.0 million from acquisitions and increased demand [231]. Profitability and Margins - The gross profit for 2022 was $378.5 million, an increase of $78.1 million from 2021, with a total gross profit margin of 44.0% [232]. - The Photonics segment gross profit margin improved to 47.0% in 2022 from 46.5% in 2021, attributed to better factory productivity [233]. - Precision Motion segment gross profit for 2022 increased by $46.8 million, or 47.1%, with a gross profit margin of 47.4% compared to 46.8% in 2021 [235]. Operating Expenses - Total operating expenses for 2022 were $275.4 million, a 16.6% increase from $236.3 million in 2021 [236]. - Research and development expenses were $85.8 million, or 10.0% of revenue, in 2022, compared to $72.5 million, or 10.3% of revenue, in 2021 [237]. - Selling, general and administrative expenses increased to $158.9 million, or 18.5% of revenue, in 2022, from $129.2 million, or 18.3% of revenue, in 2021 [239]. - Amortization of purchased intangible assets was $26.3 million, or 3.1% of revenue, in 2022, up from $16.6 million, or 2.3% of revenue, in 2021 [241]. Debt and Interest - The weighted average interest rate increased from approximately 2.3% as of December 31, 2021, to approximately 5.1% as of December 31, 2022 [222]. - Interest expense increased to $15.6 million in 2022 from $7.4 million in 2021, primarily due to higher average debt levels and interest rates [251]. - The company has the ability to expand its borrowing capacity by up to $350.0 million under its revolving credit agreement [258]. - As of December 31, 2022, the company had $81.9 million in term loan and $358.4 million in revolving credit facility borrowings outstanding under its Senior Credit Facilities [274]. Cash Flow and Investments - Cash and cash equivalents totaled $100.1 million as of December 31, 2022, down from $117.4 million as of December 31, 2021, primarily due to $59.0 million of debt repayments and $46.3 million of contingent consideration payments related to acquisitions [276]. - Cash provided by operating activities was $90.8 million in 2022, a decrease from $94.6 million in 2021, attributed to a $48.6 million increase in inventories and an $8.4 million bonus payout in 2022 [278]. - Cash used in investing activities was $42.5 million in 2022, primarily driven by the MPH acquisition, which included a cash consideration of $22.4 million [280]. - Cash used in financing activities was $60.2 million in 2022, mainly due to $59.0 million of repayments under the term loan and revolving credit facility [283]. Future Outlook - The company expects to use approximately $25 million to $30 million in 2023 for capital expenditures related to investments in new property, plant, and equipment [282]. - The company’s maximum consolidated leverage ratio was 2.24 as of December 31, 2022, well below the requirement of 3.50, and the minimum fixed charge coverage ratio was 7.74, exceeding the requirement of 1.50 [275]. Tax and Legal Matters - The effective tax rate for 2022 was 15% of income before income taxes, compared to 10.4% in 2021 [254]. - As of December 31, 2022, the total amount of unrecognized tax benefits was $4.2 million, with $3.7 million potentially favorably affecting the effective tax rate if recognized [323]. - The amount of undistributed earnings of foreign subsidiaries totaled $330.8 million as of December 31, 2022, with estimated unrecognized tax liabilities of approximately $3.6 million [324]. - A valuation allowance of $2.0 million was established in 2022 for state R&D credits and net operating losses in certain tax jurisdictions [322]. - The company is subject to legal proceedings and assesses potential financial exposure on a quarterly basis, with significant judgment required for liability estimates [325]. Inventory and Asset Management - The company regularly reviews inventory quantities and may increase reserves for excess and obsolete inventory if sales do not materialize as planned [302]. - The most recent annual goodwill and indefinite-lived intangible asset impairment test noted no impairment as of the beginning of the second quarter of 2022 [318]. - The company assesses indefinite-lived intangible assets for impairment annually, with impairment charges recorded if fair value is less than carrying value [315]. Market Risks - The company is exposed to market risks from changes in foreign currency exchange rates and interest rates, which could affect operating results and cash flows [328]. - As of December 31, 2022, the company had foreign currency contracts with notional amounts totaling $117.1 million and a net fair value of less than $0.1 million [331]. - A hypothetical 10% strengthening of the U.S. dollar would result in an approximately $0.2 million increase in the net fair value of foreign currency contracts [331]. - The company had $440.3 million of outstanding variable rate debt as of December 31, 2022, with a 100 basis point increase in interest rates potentially increasing annual pre-tax interest expense by approximately $4.4 million [332].

Financial Data and Key Metrics Changes - Novanta achieved record results in Q3 2022 with revenue of $223 million, representing a 25% year-over-year growth on a reported basis and 21% organic growth [9][10] - Adjusted EBITDA was $49 million, up 22% year-over-year, with adjusted diluted earnings per share of $0.81, an 8% increase compared to the previous year [10][26] - The company raised its full-year 2022 financial guidance due to strong year-to-date performance [10][34] Business Line Data and Key Metrics Changes - Advanced industrial markets saw a 33% year-over-year growth and 5% sequential growth, driven by demand in automation and robotics [13] - Medical applications grew 19% year-over-year and 6% sequentially, with strong orders in surgical robotics and minimally invasive surgery equipment [15] - The Photonics segment experienced a 28% year-over-year revenue growth, while the Vision segment grew 12% year-over-year [28][30] Market Data and Key Metrics Changes - Sales in Europe grew 15%, while the U.S. saw a 36% year-over-year increase [16] - China revenue grew 9% year-over-year, but excluding acquisitions, it was down double digits due to the microelectronics downturn [16] - The overall book-to-bill ratio for Novanta normalized to 0.91 in Q3, with a year-to-date book-to-bill of 1.12 [12] Company Strategy and Development Direction - Novanta is focused on medical and advanced industrial applications, capitalizing on long-term trends such as robotics and automation [11][22] - The company continues to invest in R&D, with a Vitality Index of about 25% of sales from new products launched in the last four years [17] - A recent acquisition of MPH Medical Devices aims to enhance manufacturing capacity and improve gross margins in the medical consumables segment [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience amid macroeconomic challenges, with a strong backlog of $626 million [11][12] - The company anticipates continued strength in medical applications, which are expected to offset weaknesses in microelectronics [33] - Management expects to exit 2022 with near-record backlog and accelerating demand trends in medical markets [34] Other Important Information - Adjusted gross profit for Q3 was $101.7 million, with a 46% adjusted gross margin, up from 45% in the previous year [24] - Operating cash flow was approximately $15 million, impacted by higher inventory purchases and accounts receivables [27] - The company expects gross margins in Q4 to exceed 46%, maintaining a target of 46% for the full year [36] Q&A Session Summary Question: Can you parse out the mix of consumables versus capital equipment in the Vision segment? - Both consumables and capital equipment had strong growth in Q3, but volatility may arise in Q4 due to labor shortages in hospital systems [43] Question: How do you view the current capacity of the new facility acquired? - The facility will require 2023 for production line transfers and qualification, with significant contributions expected in 2024 [47] Question: What is the expected impact of currency on Q4 revenue guidance? - Similar FX headwinds as experienced in Q3 are expected to be embedded in the Q4 guidance [48][51] Question: How is the Precision Motion segment expected to trend in Q4 and beyond? - The segment is expected to decline 8% to 10% in Q4 due to the Westwind product line, but Celera Motion and ATI businesses are expected to grow mid-single digits [63] Question: What is the outlook for the medical market in 2023? - The medical market is expected to grow collectively in 2023, offsetting weaknesses in microelectronics [56]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 Or New Brunswick, Canada 98-0110412 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 125 Middlesex Turnpike, Bedford, Massachusetts, USA 01730 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including are ...

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]