NOVT - Earnings call transcript Q1 2022

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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 Quarter Earnings Call. [Operator Instructions] Please note this event is being recorded. . to Leader conference for like Nash, to now Finance Corporate Novanta. would turn over the Ray I Please go ahead.

Ray Nash

I Corporate Thank Officer, Chief you me Chief Quarter Call. Executive First welcome on Robert to Ray very much. our Glastra; Good Buckley. XXXX morning, today's call Officer, Earnings Chair Novanta. Matthijs Leader Financial of Finance and is Novanta's am With Nash, and Conference our and

it today, from a copy Investor of earnings you If may our have issued obtain is being of Please not received section will webcast you www.novanta.com. live website our the note, the shortly on call press Relations call. our at and release website archived after be this

our this with inherent any statements any future our only statements that outlined earnings to other and that factors begin, materially responses involve unknown the today earlier and risks in of disclaim both even release update known cause These to questions make our we to today and we've issued made represent may to prepared press forward-looking today comments statements our we estimates future, may our those as change. current could in filings. differ of forward-looking time. from expectations, our We We results need our and statements. SEC forward-looking forward-looking remarks include views in the some obligation our also everyone in Before for remind assumptions safe that harbor in if

of statements representing not So our on forward-looking views rely as call. time this you any as any these of after should

use non-GAAP comparable of an this press call. that of financial to measures measures measures. be earnings now on non-GAAP I promptly will release, after call is available the we Relations the most earnings our during non-GAAP we Chair introduce will directly certain Novanta, call, GAAP the Officer financial this to the section Investor Matthijs A to the our GAAP To that such in and reconciliation of measures pleased press to Glastra. to extent not measures financial release. provide as attachment During website are reconciled Executive this we reconciliations am Chief referring

Matthijs Glastra

Thank morning, EBITDA hit thanks delivered for revenue all-time and quarter and highs EPS. to Novanta XXXX. outstanding another our Good off joining call. you, start adjusted everybody, in new saw growth and adjusted and adjusted bookings, Ray. We for double-digit EBITDA

first of of quarter time the the level $XXX in we record with sales For ever, $XXX over and backlog delivered million another million. quarterly ended

continue well-positioned productivity industrial in capacity We X% sequential In and Novanta's from long-term revenue, markets reported year-over-year from representing that to competitive advanced such portfolio we and a basis. and basis on manufacturing to first up and organic $XXX our X% to delivered company automation, advantage and the XX% have tailwinds continue robust on basis medicine. revenue growth advanced precision health medical industrial on an care serve. our to tailwinds. the on customers these invest quarter, strengthen see very applications capitalize And million a in medical our secular we robotics and is demand to as benefit and growth

our XX% adjusted operating book-to-bill quarter $X.XX, healthy first and addition, XXXX. diluted year-over-year the earnings in adjusted all share In demand up million, was with saw excellent the of year-over-year XX% first first of quarter. EBITDA our of segments, of in We the strong orders up with having In quarter, each was many versus in our prior across solid bookings $XX performance per in XX% year. our of X.XX overall book-to-bill the with quarter growth versus segment applications and

environment. of proud System uncertain using this tools in operating Novanta Growth the extremely with teams unpredictable incredibly exceptional pleased drove and are and We our performance

macroeconomic global a we're take me seeing. the dynamics update about give Let moment to an

and display thoughts are product From surgical has Ukraine, Russia, a is in category. the all of with perspective, of business resolution our sales which large peaceful see into Novanta our stopped quickly. we hope to First, shipments and a the people majority

the did to excellent revenue, minutes, few so challenges. in of is supply implications say, inflation financial bigger environment. lingering full this that will the results, roughly difficult the of XXXX, product pandemic, consideration amount Robert the this $X the potential a job will year conflict detail what to it's For of a The of very effects million very and and in continues minor. given suffice the to to the team macroeconomic talk in an but outstanding clear be including more

year Although fairly have macroeconomic margins. the enabled and environment in X, us or our Novanta's guidance Despite the partnerships overall XXXX confident month in of full customer last uncertainty our strong now a our is increased remain maintain range. products the disruptive, outlook we the end differentiated of we upper towards in company, our the and resiliency to bias

markets in quarter, acquisitions what year-over-year, our we in quarter. markets industrial saw advanced XX% And turn and advanced multiple sequentially, to in our sales first areas. XX% were sales the the acquisitions. where well strength total as year-over-year, XX% to let's of ongoing in seeing sales Now excluding markets growth application growth we're X% to including Novanta growth as see industrial first

enabling multiple is penetration and production We of applications increased robotics increasing warehouse electric low, automation, adoption markets labor automation to experience due onshoring believe robotic We and such demand increased as still of vehicle automation relatively higher and that with and continue to technologies. drivers, and automation adoption productivity, in specifically the shortages.

higher applications. in We cloud-based EUV-based and also from demand see to investments continue microelectronics infrastructure

Turning to end our market. medical

sales XXXX, flat grew first of XXXX total applications first were quarter Novanta's medical sales of sequentially. and the X% to and of roughly the versus XX% quarter For

to for throughput strength DNA greater sequencing is OEM both high We in adoption another During and the sales very penetration year-over-year. which than we quarter, we XX% and growth both orders of low, particular medical robotics our that DNA saw of quarter and robotics still applications. with shipments saw market in strong relatively customers see strong with believe surgical and many sequencing, surgical of

research deal are legislation our saw in U.S. year-over-year strong perspective, and demand international we our first starting minimally sequencing as despite learn into by this in sales to our evacuation has where China clinical evacuation We geographies first in chasm surgery helped minimally technology the saw robotic which revenue cases surgical well the and DNA long-term quarter, across requiring product that chain the smoke supply electric invasive solution. acquisition, production Also the of I the Novanta to strong increased Omicron invasive in surgery more as applications, And XXXX We endemic. still here, which hospitals quarter rebound continuous various its more the from sales equipment growth by penetration particularly, cross major earlier. In a saw application. how invasive thesis minimally growth through variant as From hospitals unique and subdued was continue impacted the throughout vehicle medical that supports regional encouraged we shortages. that procedures is long-term smoke has We a insufflator still integrated spoke will XX% upside. and all to to with expect gradually ATI difficulties expect to demand. and offering

attributable X% year-over-year, constraints acquisitions Our chain China supply totally which excluding and was revenue declined to disruptions.

micromachining is production. and increased helped and exposure electric our production, strong, electric Our vehicle vehicle battery backlog China to in demand

grew in sales other regions. grew Moving Sales on in to year-over-year. XX% and Europe U.S. XX% the

Now touch let some of strategic Novanta's me metrics. on growth

right acquisitions. reminder, exclude a our As ATI now, these impact any from metrics and IMS

sales as in year-over-year on the with products revenues constraints supplied launched quarter, high-runner rolled and index, up to is NPIs revenue which versus first were last year at our vitality continues new years, from the low products. For XX% off healthy digits to last newer of single be we above X is NPI

I've the do of long-term about. call, company. As some near of we supply to programs, mentioned our term, reallocate that not trajectory material resources help the is of we've last the Despite in modest see had causing any engineering chain effect to difficulties this mitigate to in some growth on the some our our the delays, spoken of

strong a XXXX and new of lineup is of pipeline products launches very to continue a We healthy. have product

design invasive on, in prior wins comps year. big Moving declined for year, driven wins minimally last the company overall business versus from the surgery our tough by

reminder, applications the year. the vehicle In first battery up of with in more of the they EUV digits, be double a valve. more MIS wins matter timing, surgical design by Photonics manufacturing, decline We're attractive segment. as is last robotics, winning our such XXXX, a the in than and and were design This segments offset were laser wins to just electric high-growth than the doubled and continue quarter As Motion in micromachining, we platform. thrilled additive Precision

quarter, we strategic bookings to ATI strong businesses. pleased a acquisition sales give to We're and activities. Novanta's for integration the In IMS fit first update I'd for Next, on the of contribution like with and performance the and very Novanta. brief saw

M&A our our acquisitions a also like and for the continue capital give focus primary very to pipeline of As pipeline, deployment. I organization of be would update active on in work We'll to to Novanta's XXXX. opportunities an continue on culture.

talented excellent by committed the employees. performance our quarter in always, efforts possible of Novanta outstanding As and the our first made was

levels. our performance which in at low been tough attrition a labor rates, company as heavily has with Way, as strong invest in to well continue still we differentiator hiring "Novanta believe We market XXXX a culture, labor "which are

news have be sciences new called Precision We captures our our and leadership under developing Furthermore, and simplified We the AET. bench. and feel called of structure vision and technologies to an a about teams to a recently current organic growth annual In automation We also found wider drive in also and industry Way XXXX our announced programs commitments wider can ESG strong Motion the provide It Enabling in opportunity with which sustainability AAT and Photonics inclusion, this of picture future AAT furthermore our organizational around our opportunities recently section including understand to achievements enables website a we which our and acquisition life array for that share a internally at Growth culture, scope sustainability Novanta yet space. structure talent ESG ESG technology goals. on will in while of plans leadership more opens details Automation of multiple structure equity and report, and easy new a the opportunity robotics building we uniform and our and of published serve System, or the solutions. organized new details Technologies, [Indiscernible] diversity, comprehensive deployment Novanta our product sustainability.novanta.com. new customers

hardware Chuck Automation career leadership Danaher at We announce where Novanta Enabling joined has Technology very to after and both in executive impression software. It's comes time, to great as can't year held Chuck that team. And in a he businesses, have Group Group us he successful wait to impact in see to us, Ravetto care health to short to and pleased President. lead amount XX-plus are of with we the Chuck the high-tech and his a positions the industrial has strong various on Chuck been has and Novanta. made

ongoing other feel short-term despite we significant feel about challenges, results, quarter -- summary, the into in momentum we and into with first good heading year. So our our very further the positive

our we leadership strategic to team is believe Novanta's strengthen positioning continue We long-term extremely and bench, strong. and

care trends We precision application automation, -- our long-term medicine. applications secular health and and exposure and as to broaden robotics such that and medical continue to have industrial productivity

financial provide performance. call and that, with our will Robert? I to on to over Robert turn more So operations the details

Robert Buckley

everyone. Thank morning, you, Matthijs, and good

adjusted XX% million or non-GAAP margin was profit first XX% in to XXXX. $XX.X quarter Compared a quarter the gross million gross margin First adjusted gross of $XX.X adjusted or

points around the outcome. environment basis sequentially. XX quarter, gross increased and shortages, margins points really Considering inflation year-over-year approximately nearly we about adjusted this basis feel the XXX supply increased good chain For

from our While challenges shortages factories. productivity initiatives. supply pressures, seeing mitigating to teams an productivity benefits and these System, we first and Novanta we're we our overall deployment inflationary semiconductor at did continue Growth pricing continue notably affecting also our our numerous impacts of improvements and manufacturing Despite job with quarter, drive manufacturing the incredible performance in of the the are parts, the in to seeing experience chain most solid

solid In first the inflationary we successfully some our outcome. addition, pressures customers, passed helping to also us deliver a along quarter of to

sales. Moving up million to expenses of first quarter or XX% R&D on were roughly $XX.X

a first of XX% XX.X% in $XX.X the prior First variable EBITDA were expenses sales. result The or quarter impact XXXX increases SG&A Adjusted taxes their well R&D or were million payroll in guidance million programs expenses the the as of and operating line associated -- of margin. EBITDA in with sequential quarter as planned was the $XX compensation approximately seasonal investments. of

Our guidance. issued adjusted expectations our EBITDA performance and beat previously

first This tax On mainly the of the from driven tax front, a was of by statutory our mix XXXX rate income. for the jurisdictional differed XX%. quarter non-GAAP rate

was Our first The an and quarter XX% $X.XX increase the EPS EPS of a the achieved non-GAAP much adjusted to in in rate. financing year-over-year. tax quarter costs in higher higher XXXX, compared was $X.XX strong adjusted of increase despite

quarter approximately bonus as year-over-year million, our driven First compensation in $XX made XXXX an cash operating had increase mitigate a levels and notably working being the payments disruptions. in capital, flow chain flow This should driven with no some variable expectations. in declined normalize Cash purchases payments was which supply was cash is later by higher and inventory temporary help of higher year. most the the by impact line to inventory

ratio gross leverage of a $XXX with Finally, and gross debt of we the our X.Xx. million ended year

to now debt Our about net I'll $XXX of update operating was turn segments. the an performance million. our

Precision which start heavily continue growth to Reported acquisitions. I'll by with very first perform $XX to million Their ATI proceeding scheduled, very year-over-year exciting in experienced the Novanta. quarter, long-term the segment of These businesses they businesses well. IMS was the was continue is offer in our Motion as near-term and segment. growth revenue and sales, contributed XXX% expectations. This with approximately integration and growth opportunities for line In these First, impacted quarter. the

the bookings XX% ratio Excluding the the X.XX Motion acquisitions, and grew Precision XX% quarter. year-over-year. book-to-bill this an year-over-year, segment still was impressive Total in in overall grew

deploying expectations at grew Adjusted Precision margins. up XX%, improve XX% wins Excluding design in continues nearly gross versus prior year. were line this from full and Novanta was of margins for revenue Motion's product and IMS, year and and impact digits in for to the strong sales points impact very XX% with segment ATI XXX to in the over year-over-year a new total system growth came show basis year-over-year. of segment the the the up segment The structurally double

This Turning predominantly was market Vision decline which slightly than a segment. to of experienced our revenue end year-over-year, medical expectations. the serves segment better X% and our

in our months procedures of As surgical of infections COVID spike the the volume in declines in couple was by we first surgery our line. said call, the elective XXXX, in minimum in last impacted business of invasive resulted which

is Fortune second by business vendor. aggressively In should JADAK with quarter. XXX part a see addition, and our third This on significant experienced working single stabilize the shortages associated qualifying vendor sources shipments

segment segment to We and is we remained expect continue was declined X.XX win as one XX% these largest as drivers activity segment years the activity Novanta record as very sales. improve a with next saw minimum of of continue call. a both these into business in with healthy recovering year of this Index dynamics earnings the the XXXX matter design Design of as difficult production. the prior the the surgery year-over-year quarter progresses, the over to the in the segment of invasive see saw new with win faster. and segment The Vitality this wins few comparable faced prior customer book-to-bill Vision in This customers, up year significant ramp which level first as we timing, growth to largely in discussed of a of around

the quarter of the Finally, turning first Photonics XXXX. to segment in

Our revenue was year-over-year. X% up

because chain strategic chain the gradually reduce disruptions. particularly the was full our inhibited effects semiconductor the purchases production dynamics of inventory of of new this growth, by and of demand the Taunton and started customer production this respectful part level our should month, improve Taunton is and our it supply below Both teams is the level progresses, Although move supply made far factory as a because these both shortages. year to

to segment strong the fortunate and this DNA that in this in are segment demand in advanced the book-to-bill experience The industrial We applications very customer first continues in sequencing. quarter. X.XX was

wins XX% down quarter product sales XX%, of year-over-year, additive was and new more and first up stayed the driven was XX% were as The which EUV than applications from of quarter MVI addition, XXXX. the XX% laser manufacturing, fourth was the by expected, wins greater excellent year-over-year. micromachining gross quarter In up adjusted platform at revenue Design strong lithography. in than sales first margins year-over-year total as up were segment and sequentially Photonics but in

outlook. the to quarter now second Turning

first for We to expect most environment macroeconomic mirror quarter the the part.

are COVID-XX in lockdowns range clearly While risk. in guidance this the China worse the quarter, second our factors in

with the starting So guidance. revenue

expecting million. the environment For second here lower revenue XX% to the the revenue $XXX GAAP by policy. second in $XXX of quarter. year-over-year we million reflects XX% of range in expect the growth Regardless, a to worsening XXXX, quarter China stand X are we as of we end the caused to COVID-XX range today, lockdown The see of

strong On quarter, expect high continue demand of now to growth deliver new factory second as the Motion as acquisitions. is well our the segment Customer segment. expect XX% that by in strength segment the the we materials, business, continued to level, to very Photonics. growth we impact significant core in the growth. remains driven both have revenue will in And this Precision XX% of Taunton producing

As the prior quarter, XX% consequence, the expect grow to year. a versus second XX% we to sales

relatively the Finally, single our in quarter, vendor result part by a to our the the This expect in Vision business is shortages segment, flat from be solely caused year-over-year. we JADAK second business.

production. a efforts and to is company advanced vendor capacity mitigate Fortune they have additional significantly this adding quickly their before, shortages mentioned their I are As XXX and their to

as vendor the deliveries year progresses. expect to ramp from We to this continue

adjusted Moving gross overall on Novanta's to margins.

second We of to be the expect quarter gross XX% XX%. in range to margins the in

The the margin dynamics quarter. expected we as see gross is similar to second first quarter in experienced

to negative the mitigate manufacturing from the $XX second $XX R&D and in $XX success which consequence first the $X higher the were to we was quarter SG&A the of expense, the pressures share production in quarter from as of and EBITDA quarter. the million in expense programs supply expect first in similar able NPI continued chain the in we and further $XX and are be in recent second million progress first effects our project spend of the efforts higher inflationary strong were approximately XXXX, Adjusted quarter, ramp-up Depreciation range and and of million. customers In the quarter. first for well than second move NGS, the million the million was expected $XX prior $X compensation. nearly was pressures the our Taunton expense, the the compensation million to expenses, in $X quarter, Stock which to addition, be second be mainly a should convincing facility. be in to similar approximately quarter. in deploying majority key quarter, acquisitions as will a expected of thanks is of which which quarter year, million $X million second as million Interest to variable is which to

expect $X.XX XX% or diluted significant our Diluted weighted adjusted expect in per non-GAAP the of for will and rate eligible tax share, average changes of XXXX, the second we We to benefits. second mix $X.XX other XX to jurisdictional range income tax be approximately absent shares quarter any a in variability for around or quarter. be of million shares outstanding earnings

quarter cash we in doubling quarter cash expect versus nearly improve the second first sequentially flows operating the quarter, first Finally, flow. the to

sales The foreign first results markets, for earnings range us the nearly demand double-digit the any does of we quarter high not of year doubled to EBITDA adjusted had results. in year along and significant full we hit full across the adjusted changes and second Overall, record To first share. end communicated of rates. backlog. excellent our bookings, is a upper its strong of quarter, in assume per for end in a company the exchange XXXX As growth favorable the guidance positions recap, seeing -- deliver saw with We XXXX. order applications new outlook quarter previously our the towards performance guidance well to always, the strength

supply to continue their manage company teams ability and well new the as Our with through now as difficult COVID-XX chain innovations, help lockdowns. challenges impress to

with below-market COVID-XX see strong And We also significant continue great seeing semiconductor fairly macroeconomic labor at continue financial rates, Ukraine shortages, and we supply the talent. are inflation, some attracting success chains, lockdowns, China general challenges top attrition deliver and uncertainty. war global results to we the in to despite

our proud employees about Given advanced our end to and ability very open This prepared all deliver the employees, our help on partnerships very the efforts be our to their our very continuing medical are of of serve questions. forward environment. will in this, customers tireless remarks. performance we customers concludes excited look our a to our call markets remain We shareholders. customers. We excited importantly, and industrial us and our with now continued up about innovation in challenging successful and our We commitments most to remain our to for the

Operator

will Securities. And Instructions] question CJS [Operator our come from Lee first Jagoda of

Lee Jagoda

So Medical the starting segment. with just

whether I think Can things excuse and all? function cited up of a decline I change or than issue there's more supply -- quarter. demand headwinds. be demand just or declining if there's the function at chain you is And you that to mentioned any talk supplier surgical any may of all the if a robotics me, at that terms in know and DNA of of XX% one the the in you sequencing were built JADAK

Matthijs Glastra

Yes.

part -- you surgery about of very right? surgical the that. demand, are So -- robotics the so I And up part rightly So then multiple the Lee, DNA commented quoting our minimally We're drivers, and is business. invasive which there's sequencing XX%. excited that

hospitals we Let's demand good, supply versus, But how was the it's think, still work rebound levels. to learn subdued remaining and recover relatively starting better endemic situation. in the in I year chain say, was see the part as to the demand and it -- of previous but

electric online, in commenting on their I prepared it's players and that basically coming procedures So multiple remarks. back think

I extensively. the that's And the right? covered chain basically probably think in remarks think biggest his So headwind supply shortage, prepared was Robert, I that gated. really where JADAK mostly we're

situation improve to We want Robert, add you as expect anything supplier on that do well. gradually else? the to

Robert Buckley

Yes.

definitely, will in both declining. mean, is second quarter, JADAK Lee, we as the That where first JADAK MIS I quarter change declined. get into and the only So

probably So has I second the supplies temporary been third the be think -- starts in, company that coming the that. toughest until will to And their comparable and then quarter. quarter, supply that's really of public course, about in us

Lee Jagoda

terms reiterated sort to Got year -- that demand guidance, top continues supply above expect I about the of that book-to-bill growth of the you've full to best in to guess outstrip sets and looking the we continue it, in it. that think And XXXX? we're think Is through at then way given would run of balance of to one you should an the year, acceleration I which for up end.

Robert Buckley

Yes.

currently tough a where things that's answer. So I would question trending. to say are

how progresses. already the don't You backlog. fair say, we're of covered it's know in as year unfold terms will for to mean, the things I year

the last happening. think dynamics time period mindful in feel don't backlog. position stronger? We to the And that Does upper we the between why constantly the right? the environment war can we good. non-cancelable to to changing. all spoke So good time, so we're is l it at very there with range. XXXX feel that just a started deliver, us The have of we of what I into you, we Ukraine, I be all That's was want end towards in biased that's get and

Lee Jagoda

ordering customers still overordering are levels and in, demand? of more to others sneak current are understanding ordering are the thinking Well, that -- they I'll kind in ahead non-cancelable, just a one ask. that backlog Or terms the But we of here? little bit of is let

Matthijs Glastra

put hard way. the our customers the don't me it their their they our on I the in our shelf. the got customers we to putting putting market. majority are when mean, let and systems, We basically of for basically end Well, products immediately included demands, feel deliver on they're I products very, this moved mean get very actually and

what we're right or buildup We So channel inventory any don't see now. seeing something. that's

Operator

from question of Mason Rob Baird. next comes The

Rob Mason

isolate you My basically down question potentially was wondering I'm guidance margin. would of also? curious And would margin, us the to we could to quarter expected in just segments sequentially where sequentially. And some gross which improve see if where flat or be around look direct around to the degradation second any I'm implies gross

Robert Buckley

Yes. right? gross will else quarter, So China is I I dynamics first of around. quarter, date, the first effectively, the dynamics the and but second have, potential them all the being mean, mirror in the total the So think equal, mitigating really the rolling that a COVID-XX for variability in that driven right? is we've keep guide the lockdowns of the really guide company to in the segments margin by and mirror been in the the disruptions is they quarter might

where And there so adding had we from We that exist. that just get some supply think prudent I'm a little of looking out that. are things want says it I around materializing are worsening in around the But we when a chains environment contingency prudent comes contingency does first quarter. to little some not sure are guidance things that way now. right to

quarter. be a similar so equal, of it a as first to range And that. consequence relatively being All should there's else the

Matthijs Glastra

Yes.

short-term anything gated by is so other of demand, We're -- And now thing The would timing I more the more it's right? yes, it's disruptions. than that else. say, Rob,

we full we the the outlook. out Russia despite, I confident guide the revenue say, view in our that that think end of see. year, year's were the reiterating very despite of for full very range short-term volatility and We're taking specific let's upper there some about

Rob Mason

own ability direct that supply you your more your Or produce impact With that to country? is how into or date? it of Sure. respect around on areas facilities, getting China, impacted to business? other to in Is -- your impacting facilities is those

Robert Buckley

more the the quarter, our into in China. was sales Well, impact In more of first operations. it Yes. on an an quarter, of impact of second it's

manufacturing Our China is strategy. in-China in for-China

so about there to it's we produce customers China. being the products sold And in

and perspective. And about in been had the order getting product Suzhou to facility Suzhou so very factory mitigating at really up built running it and sleeping good impacts, production keep you workers We've particular, our door. the in living been getting that has The our scale in creative out from products can and in factory.

really as struggled thankfully have a We the material lot more, small smaller manufacturing in area. They've a to not us. Beijing facility,

think it. I is the and so And have lockdowns that the need we China factories materials in chains overall, at excellent across mitigating an regions we rolling we've different Where job of we worry done in might that that itself. affect supply how

So our through we're right now. that working way

to deal feel if to mitigate I we we that think and we've to mitigate pretty with. date. good to there's comes just like can that been feel down any it and It able to, we date surprises still more that

Rob Mason

Sure.

Okay.

question. Just last

dynamic very company tight supply flexibility around wins? sources, provide just around -- more of second is doing of are up been second that's on Virtually many opportunity? has conversely, result your that Novanta more talking what seeing you're environment. sourced if that sole that I'm a their to evolving as source if just And well, that. as design on Historically, sole-source your curious you opening opportunities front? obviously, is about seeing curious on I'm So qualifying own position a every products, redesigns

Matthijs Glastra

Yes.

It's the mean, supply. there defense offense product best the right? understands. the And customers. close and having and we're only collaboration ones, everybody by listen, our out way, is innovation, best just the having and I right? not So innovation with Gaining

and actually, a value parts, and chain. in are very the collaboratively find we're our of -- helping customers to cases, working lot So across

I many So winning design our and I Actually, relationship the last about double in have with our customers. mean, expanding wins. good feeling we're would we designs. year, say cases, we exposure very we're

our just on suggesting this we're innovation, invest that's and winning we to share in also environment, the you and which back of So that why sure capacity. having competitive continue is a you'll of advantage up keep as strengthening in great that make see into is thing manufacturing to production mean, with investments putting quite our expansion multiple we bit one demand. we're can facilities we that's speak keeps I that

So that's would how I it. answer

Rob Mason

are way, Matthijs, pieces opportunities, needing a any second... didn't seeing to that business go come maybe of you where back customers though, now into your

Matthijs Glastra

components. don't anymore strategically -- multiple supply see to me it Yes. to mean, and Always. listen, that the answer customers "We individual the chain what us let I way, do complexity of we maybe said, come deal with want of have this

have manage us, you trend intelligent to Can higher of asking subsystems. a so customers us." guys see complexity integration we towards do complexity you are manage that that can for basically, guys really what levels us that You So for is help them. that

in in around exciting we're also So capabilities, in the multiple side, we definitely see both advanced industrial medical side. the and but that conversations engaged

see definitely of this we that more So environment. as our want a capabilities. us, with result given to They do

Operator

comes question William next of from The Brian Blair. Drab

Brian Drab

sense first, for what you in for is revenue give for Just embedded year? me and organic the a quarter growth second full the the that's can guidance

Robert Buckley

similar to be quarter upon So second the the of quarter, that the range depending for first is. where it'd

around to half probably and somewhere quarter. X% looking You're closer a -- a second bit back The of X%, to to organically repeat that. year something the of X% continue then at that higher the end range at X%, hold the X%. maybe little for should X% at

year X% If right the as you half is it now we'll there for back we good should range, feel something And factor -- range. But pretty by supply the only year. well. think hold parts. for full guide the really the close the that deliver I just to is gating the then We take [Indiscernible] of

Brian Drab

it. Got

does apply be Okay. the of on end and And EPS? the to the high your then all that revenue, Or comments is specifically? of above it just to range, EBITDA revenue clear on

Robert Buckley

of All it.

good We -- at XXX that. XX%, XXX still that basis So about I off margin than finished points. think the we feel expanding basis be we'll least gross points at year that XXX at last reinforces higher

Brian Drab

on one just to -- last topic touch here. then And Okay.

think robotics both I DNA that were XX%, say, revenues than of and X-X? all, first up that did -- you more sequencing

Matthijs Glastra

X-X. right. That's

Brian Drab

on Okay. like you us of for on combined year? expect the like any trend percentage maybe lines sense even just throughout in Can questions a to that. revenue? you account give then follow-up how of basis, for roughly do total those that And terms much And growth how business

Matthijs Glastra

double really individual -- we're we're strong both I see clinical strong both guide to right? right? obviously. And demand so be think Which right, clinical But moving than integration commented of XX%, modalities of important, digits, adoption, of kind what what But the to on businesses, is is let's less and sequencing, we say, applications that would mean, DNA And I with going market, penetration Yes. from, research drug these up of amount the more and the now. the data actually right? long modalities a area development fast testing, very into is -- I right closer say, oncology another is on to as is think developing such genomic X% to is is trials. I just that they in mean, for strategically I not of important, sure, I of will Brian, run

an which you I modality into, think, so that moving mode, good. is And see rapidly expansion

for So we thesis but year, supports strong to it -- And same term. is it a expect our surgery. true for growth also robotic the longer contributor the be

haptic further put great players getting a many other and that to smoke content forms a see aspects where is being body anatomy well, for surgery the increase all on. different demand covered so technologies we like those Of of this platforms motion, human evacuation, that by and do opportunity course, for the into feedback for robotic multiple see there of in Novanta as and are sensing, content Precision insufflation the for vision-enabling and

see you area. in into medical multiple of the surgery content increasing in platforms adopting are that So rapidly Novanta robotic

So the long-term about also there, very here. thesis growth we're positive

Brian Drab

players, that other to talk the you about developing... well-positioned industry when you And throughout players continue be are with multiple the

Matthijs Glastra

business. That's work right. in We Yes, Yes. right. with the that's leaders the

Of we partnerships course, -- people. we have cannot with comment names, strong but yes, we multiple

Brian Drab

within you, to so the bit to I'm think asking I little going okay the But endemic, Matthijs, you me, pertains hospitals elaborate with the opportunity there. adjusting the ends it endemic as to one call, operating maybe. the on just more usually on a smoke and The can it evacuation Okay. comment made feel

but on dynamic, you the can understand I just think that? elaborate I

Matthijs Glastra

points, the COVID were Yes. endemic, to So and So Yes. going is procedures rebound hospitals to hospital Well, getting surges a X to less surgical as [Indiscernible] continue used affected be -- there separate elective by result, forward. expect, we right? that meaning

area. I view device in widely the held think medical consensus a that's

share And view. that so we

surgical a the pull the with rebound of our therefore, for and -- Yes. products. So procedures, be of course, there will

that expect Yes. starting So rebound therefore, -- quarter. probably in commented demand coming this to already be the half of will second the we that therefore, year it

that's one remark. So

a by or hospital and equivalent one therefore staff, is toxic, that caused that will that there's inhaling of staff, in you evacuation the needs by with passed evacuated. to around are smoke U.S. if energy-based smoke surgical through smoke the operating to remark the see about more legislative smoke. you be are -- and more plume the that smoke existing outside efforts in other do the for you particular hospitals that that feel pack The increased evacuation is continued and in in can OR or integrating basically was modality by And evacuation, And evacuation insufflation that the laws way that it's patients. mandatory evacuate U.S., being but integrating of market We stable devices to room again, smoke guarantee smoke an of of a basically actually, already the we you're best requiring which cigarettes because, the if we called smoke leader. also the smoke insufflation, cavity is

it's the to more patient cheaper. -- workflow. and in jeopardy. it's higher So going better you're the be not in It's much putting It's productivity

it requirements do the, the therefore, evacuation evacuation have on cheaper, further better, amount long this pool, functionality way. say, of hospitals We it's low. the bullish therefore, is see we're that and insufflation the the that and faster So of And in area. term, let's the relatively still also growth smoke penetration are smoke in -- to and legislative

Operator

from question Buscaglia The Berenberg. comes of next Andrew

Andrew Buscaglia

hoping So in got for maybe as I things huge of business. but we're more non-medical a not and you, your seeing that little just it's the logistics other industry can in areas about kind I of a guys exposure weather now, some I you -- or around talk risk? and there, you Vision seeing and you're some wonder what some around concerns know comment bit again okay could headlines was on businesses, feel your these negative you make know Vision you how overcapacity. -- seem then I -- but

Robert Buckley

Are delivering as or a or to materials market? of question, talking about to about to companies pertains it I as you it us -- crux your just UPS, as end shipping customer the understand Do so not [Indiscernible] like were you FedEx neither? pertains or them talking

Andrew Buscaglia

CapEx Yes, as seeing, a do a all slower they've in this with demand see but big up kind keep demand customer concerns if and a you way wanes, around cycle... to we're now of built

Robert Buckley

Yes -- ours. of those are so not customers

we a there. not any have don't So we don't any -- sell into just logistics markets. end That's exposure

semiconductor either markets, that and into then markets Our medical instrumentation products the science get the life which embedded largely industrial systems we count logistics markets, medical. wouldn't that, and in goes into in

Matthijs Glastra

Yes.

right, more warehouse and So productivity enhancing productivity that see factories. us on automation side, side automation technologies, to the those right, in factory drive require

Robert Buckley

like In a like warehouse or that. factory, not in an something Amazon

Andrew Buscaglia

Actually broadly. to manufacturing

RFID, just knock-on or with I I exposure there'd effects something? Vision logistics Okay. saw your thought Machine and be probably

Matthijs Glastra

Yes, we don't have exposure there.

Robert Buckley

No.

Machine our our IVD applications. RFID, goes Vision So device medical all into

Andrew Buscaglia

stuff. Medical

Robert Buckley

Yes.

that. detecting, drug things like So

Andrew Buscaglia

effects presenting is you you -- want do the opportunity acquisitive I'm going shy acquisitions working of guys here. hit kind away to Or make wondering of volatility market to you making more a how be forward? a this is or acquisitions it see for taking term? either now Okay. I'm good definitely kind near have these and And the with then wondering psychology you

Matthijs Glastra

of where preferred way mean, acquisitions long-term with in cultivating sellers founders manner we're a Well, potential the of and listen, I proprietary relationships is businesses.

a of endeavors. typically So multiyear these are result

at X companies because it's process. very So like was founders Brexit opportunity, It's So and of uncertainty let's period, your snap businesses. company that, not and finger you an surprise that of say, a bought you induce actually suddenly XX-month up right? U.K.-based of something. find course, a Having that it's long-term we it did not within, when uncertainty said wake or kind increased thoughtful a announced, provides

So sit, we we think that where creates uncertainty actually opportunity.

hear very report. we you'll these and obviously, acquisition events, an to when Now we're but have time active, cannot we

Operator

Instructions] [Operator

Matthijs Glastra

that, -- to we with I thank I Well, right. want think All operator. you,

our and sector, saw Novanta advanced these rising also minimally to the new strong so robotics, of to supply in surgery industrial strength a XXXX. high the secular well-positioned the the would X.X. so work continued diversified shareholders We're employees and environment. macro of Industry trends support the sectors motion, all continue to delivered In to tackle company all profit call. your of joining and is in call efforts appreciate in to challenge. in managing new several medical Thank and results Novanta first hard invasive adjured. all every I and look We their our for thank is long-term in XXXX see This more and in with excited much. cost on a Novanta and you for quarter participation sales always, and months precision in second of day our in like now summarize, the exposure customers, employees for automation, dedicated earnings double-digit sector. And you growth who bookings this our your achieved market uncertain record backlog. as in while very We chain I quarter interest disruptions, ongoing to especially We today's each grateful call. forward closing, our to be

Operator

today's attending you disconnect. and has now may concluded. Conference presentation, for you Thank now

Novanta (NOVT) 10 May 222022 Q1 Earnings call transcript