Novanta Inc.
Novanta is actually a Canadian-incorporated company that has long moved its operations and stock ticker to the U.S. Novanta was previously known as GSI Group, a manufacturer of technology lasers and it has evolved into a provider of technology and laser solutions for healthcare and industrial customers. Novanta has leveraged their solid cash flow and strong balance sheet to complement their growth strategy with strategic acquisitions which has resulted in accelerated growth in revenues and profitability. Management is optimistic about their exposure to themes such as DNA sequencing, minimally invasive robotic surgery, detection and analysis (reducing medical errors, improving workflow and patient outcomes). While the valuation looks fairly high, the company has a 2020 goal to increase revs to $750m (organic plus acquisition) from $521.3m in 2017 with 20% EBITDA margin and >50% of revs from medical.
Ests: 3Q18 4Q18 FY18 FY19
Revs 154.4 153.3 605.1 643
EPS .52 .50 2.00 2.21
There are now 3 analysts providing estimates, previously 1.
P=61.88, D/C=29%, NWC almost offsets debt, TTM EPS=2.02, P/E=31X, FY19 P/E=28X
3Q18 .61. vs .45, +36%, est .52
Nov 6, 2018, P=61.88, TTM EPS=2.02, P/E=31X, FY19 P/E=28X
Revs +10% to 160.8m (est 154.4m, +8% organic), GM 44.9% vs 44.5%, OM 18.5% vs 17.7%, OpInc +14.9%, EPS +36% due to lower tax rate, EBITDA +13% to 34.2%
Photonics -1% to 61.3m, GM 48.8% vs 48.4%, Vision +6.8% to 62.1m, GM 41.5$ vs 43.3%, Precision Motion +42.4% to 37.4m, GM 45.4% vs 39.5%
FY18 Guidance: Revs raised to 610-614m, adj EBITDA 122-124m, EPS 2.07-2.12, implies 4Q Revs 152.8-156.8m (+4-7%, est 153.3), EBITDA 29-31m vs 30m, EPS .48-.53 (+10-20%, est .50)
CFO 27.4m vs 11.8m, better usage of working capital
At end of 3Q purchased remaining shares of Laser Quantum for $45.7m (30.7m in CFO stmt). Sales declined this quarter as last year had very strong launch, expect this to continue for a few quarters then return to growth, Mgmt excited about long-term growth prospects for Laser Quantum and DNA sequencing
Implementing $25m share repurchase plan to keep shares flat over next 2 years, focusing capital on acquisition pipeline.
2Q18 .51 vs .41, +24%, est .49 up from .46
August 8, 2018 P=66.85, TTM EPS=1.86, P/E=36X, FY19 P/E=30X
Revs +26% to 150.4m (est 147.3m, +6.2% organic), GM 45% vs 46.3%, OM 17.2% vs 18.8%, OpInc +15.9%, EPS +24% due to lower tax rate
Photonics +10.7% to 64m, GM 49.1% vs 47.8%, Vision +58% to 53.8m, GM 41% vs 44.2%, Precision Motion +19.6% to 32.5m, GM 45.7% vs 47.2%
CFO +19% to 20m, FCF +1.5% to 15.7m
Guidance: 3Q Revs 153-156m (+5-6.6%, est 153.4m), EPS .50-.53 (+11-18%, est .51)
FY Guidance: mostly raise the bottom end of the range: Revs, 600-607m, adj EBITDA 121-125m, EPS 1.96-2.02
YTD design wins +>25%
Results continue to be solid, organic growth is slowing as per their guidance, balance sheet remains solid but valuation at 36X trailing EPS is factoring in strong growth due to acquisitions and lower tax rate.
1Q18 .47 vs .31, est .40
Revs +34.9% to 147m (est 139.6m, +9% organic), GM 44% vs 44.8%, OM 15.9% vs 15.3%, OpInc +40.4%
Photonics +21.9% to 61.8m, GM 49% vs 46.2%, Vision +71.6% to 56.2m, GM 38.1% vs 42.9%, Precision Motion +13.5% to 28.9m, GM 46.1% vs 45.6%
New Product revenue more than doubled, design wins up in mid-high teens.
Outlook: 2Q Revs 146-149m (est 147.1m), EPS .47-.50 (est .46), FY18 Revs 590-605m, EPS 1.93-2.02
Solid results and raised guidance, estimates will move up solid free cash flow to reduce debt, EBITDA margin 19.3% is near their 2020 goal.
4Q17 .44 vs .35, est .41 up from .35, FY EPS 1.60 vs 1.09
Revs +48.5% to 146.9m (+8.3% organic), GM 44.2% vs 44.3%, OM 17.6% vs 16.8%, OpInc +55.4% to 25.8m
Photonics +39.7% to 61.9m, GM 48% vs 44.3%, Vision +73.6% to 58.1m (-6% ex acquisitions), GM 40.4% vs 45.5%, Precision Motion +27.4% to 26.9m, GM 44.9% vs 44.4%, expect supply chain issues in Precision Motion to last a few more quarters.
Outlook: 1Q Revs 138-142m (est 141), EPS .40-.43 (est .38), FY18 Revs 585-600m (+12-15%, est 596m), EPS 1.85-1.96 (+15-23%, est 1.84) with .10 due to lower tax rate, 1Q to have strongest organic growth of the year with more normal organic growth for the rest of the year.
3Q17 .45 vs .29, est .34
Revs +49.6% to 146.3m (+8.1% organic), OM 17.6% vs 15.0%, OpInc +75.5% to 25.8m
Photonics +42.5% to 61.9m, GM 48.4% vs 43.7%, Vision +84% to 58.2m, GM 43.3% vs 41.1%, Precision Motion +15.2% to 26.2m, GM 39.5% vs 46.9%, some issues in Precision Motion but confident they will be resolved in a few quarters.
YTD design wins and new product revs +>30%
Recent acquisitions have pushed up debt/cap to 33%, net debt=151m, additional 101.5m in non-cash working capital so balance sheet is still solid.
Guidance: Raised again: FY Revs 518-522m, EPS 1.54-1.58, adj EBITDA 103-105m, implies 4Q Revs 143.6-147.6m (est 138.4), EPS .37-.41 (est .35), medium term organic growth +6% on avg, 2020 goal increase revs to $750m (organic plus acquisition) with 20% EBITDA margin and >50% of revs from medical.
2Q17 .41 vs .27, est .33
Revs +21.9% to 119.1 (+7.4% organic), OM 18.6% vs 14.6%, OpInc +55%, B/B=1.13, YTD design wins +>40% y/y, Closed WOM acquisition on July 3rd for €115m, now >50% of revs come from medical, medical markets continue to be robust and they have solid positions in high-growth segments, life sciences and invasive surgery, DNA sequencing, robotic surgery. Improving environment in industrial, solid performance in satellite communication, advanced laser processing, warehouse automation
Photonics +25.5% to 57.9m, GM 47.8% vs 46.1%, Vision +20.2% to 34.0m, GM 44.2% vs 39.1%, Precision Motion +16.6%, GM 47.2% vs 45.5%
Guidance: Raised: 3Q Revs 130-135m (est 111.5), EPS .34-.39, est .34, FY Revs 497-502, EPS 1.40-1.46 (est 1.30)
Very solid quarter, the company is a good balance of organic growth plus acquisitions. They have been more acquisitive recently but their balance sheet is still solid and they have a good track record with their acquisitions.
1Q17 .31 vs .18, est .24
Revs +21% to 109m (organic +10.5%), GM 44.8% vs 43.7%, OM 15.2% vs 11.3%, OpInc +62.7%
Photonics +25.7% to 50.7m, GM 46.2% vs 45.5%, Vision +13.5% to 32.8m, GM 42.9% vs 40.4%, Precision Motion +20.8% to 25.5m, GM 45.6% vs 46.3%, Book/Bill=1.11
Solid results across end markets, design wins +>50% y/y, new product revs +>40% y/y,
2Q Guidance: Revs 110-112 (est 107.5, vs 97.7m), EPS .30-.33 (est .30, vs .27), FY17 Guidance still stands at Revs 430-435m, EPS 1.20-1.25 vs 1.09
Solid quarter keeping in mind 1Q16 was a soft (but not bad) quarter, the company looks to be positioned to deliver results above its FY17 guidance (likely to update FY guidance when they report 2Q).