BEDFORD, Mass.--(BUSINESS WIRE)--Novanta Inc. (Nasdaq: NOVT), a trusted technology partner to medical and advanced technology equipment manufacturers, today reported financial results for the third quarter 2020.
Third Quarter
“Novanta continues to execute well in the face of the ongoing difficulties caused by the COVID-19 pandemic,” said Matthijs Glastra, Chief Executive Officer of Novanta. “In the third quarter, our revenue and profit did better than we expected, and we delivered record cashflow performance. We are very pleased with the positioning and performance of our portfolio and are investing into the headwinds, focusing on the long-term growth drivers in our business. We continue to put the health and safety of our employees as a priority and are extremely proud of their dedication and commitment to the company and our customers.”
During the third quarter of 2020, Novanta generated GAAP revenue of $142.9 million, a decrease of $11.1 million, or 7.2%, versus the third quarter of 2019. The Company’s acquisition activities resulted in an increase in revenue of $0.1 million, or 0.1%, compared to the third quarter of 2019. Changes in foreign currency exchange rates year over year favorably impacted our revenue by $2.6 million, or 1.7%, during the third quarter of 2020. Our year-over-year Organic Revenue Growth, which excludes the net impact of acquisitions and changes in foreign currency exchange rates, was a decrease of 9.0% for the third quarter of 2020 (see “Organic Revenue Growth” in the non-GAAP reconciliations below).
In the third quarter of 2020, GAAP operating income was $11.9 million, compared to $12.8 million in the third quarter of 2019. GAAP net income was $8.3 million in the third quarter of 2020, compared to $8.9 million in the third quarter of 2019. GAAP diluted earnings per share (“EPS”) was $0.23 in the third quarter of 2020, compared to $0.25 in the third quarter of 2019.
Adjusted Diluted EPS was $0.42 in the third quarter of 2020, compared to $0.52 in the third quarter of 2019. The Company ended the third quarter of 2020 with 35.7 million diluted weighted average shares outstanding. Adjusted EBITDA was $30.2 million in the third quarter of 2020, compared to $31.0 million in the third quarter of 2019.
Operating cash flow for the third quarter of 2020 was $42.1 million, compared to $7.0 million in the third quarter of 2019. The Company completed the third quarter of 2020 with approximately $193.4 million of total debt and $106.6 million of total cash. Net Debt, as defined in the non-GAAP reconciliation below, was $91.4 million.
Financial Guidance
“We are seeing signs of a stronger economic climate, but with a resurgence of the COVID-19 virus occurring globally, we recognize we must remain vigilant and conservative in our planning,” said Matthijs Glastra. “We expect revenue to be up sequentially in the fourth quarter, and we also expect sequential gross margin expansion. In addition, we believe the fourth quarter will demonstrate strong design win momentum on the back of significant investments in innovation and product launches. While the resurgence of the virus is concerning, we are focusing on managing the things we can control.”
For the fourth quarter of 2020, the Company expects GAAP revenue of approximately $144 million to $149 million, and Adjusted EBITDA in the range of $30 million to $32 million. The Company’s Adjusted EBITDA guidance assumes no significant changes in foreign exchange rates.
Novanta provides earnings guidance on a non-GAAP basis and does not provide earnings guidance on a GAAP basis, with the exception of GAAP revenue guidance. A reconciliation of the Company’s forward-looking Adjusted EBITDA guidance to the most directly comparable GAAP financial measure is not provided because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including future changes in the fair value of contingent considerations; divestiture related expenses; acquisition and related expenses; impact of purchase price allocations for recently completed acquisitions; gains and losses from sale of real estate assets; costs related to product line closures; goodwill and intangible asset impairment charges and related asset write-offs; future restructuring expenses; foreign exchange transaction gains/(losses); and other charges reflected in the Company’s reconciliation of historical non-GAAP financial measures, the amounts of which, based on past experience, could be material. For additional information regarding Novanta’s non-GAAP financial measures, see “Use of Non-GAAP Financial Measures” below.
About Novanta
Novanta is a leading global supplier of core technology solutions that give medical and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage. We combine deep proprietary technology expertise and competencies in photonics, vision, and precision motion with a proven ability to solve complex technical challenges. This enables Novanta to engineer core components and sub-systems that deliver extreme precision and performance, tailored to our customers' demanding applications. The driving force behind our growth is the team of innovative professionals who share a commitment to innovation and customer success. Novanta’s common shares are quoted on Nasdaq under the ticker symbol “NOVT.”
More information about Novanta is available on the Company’s website at www.novanta.com.
