Investor Presentation. June 2016

Transcription

1 Investor Presentation June 2016

2 Safe Harbor Statement The statements in this presentation that relate to guidance, pro forma presentations, future plans, goals, business opportunities, 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 Food and Drug Administration regulations, customer and/or supplier contract cancellations, manufacturing risks, competitive factors, ability to successfully introduce new products, uncertainties pertaining to customer orders, demand for products and services, growth and development of markets for the Company's products and services, and other risks identified in our filings made with the Securities and Exchange Commission. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forwardlooking statements, which speak only as of the date of this presentation. The Company disclaims any obligation to update these forward-looking statements as a result of developments occurring after the date of this presentation. Readers are encouraged to refer to the risk disclosures described in the Company s Form 10-K for the year ended December 31, 2015 and subsequent filings with the SEC, as applicable. Please see Safe Harbor and Forward-Looking Information in the Appendix to this presentation for more information. In this presentation, we present the non-gaap financial measures of Adjusted Revenue, Adjusted EPS, Adjusted EBITDA, free cash flow and net debt. Please see Use of Non-GAAP Financial Measures and our fourth quarter and full year 2015 earnings press release for the reasons we use these measures, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these measures. The Company neither updates nor confirms any guidance regarding the future operating results of the Company which may have been given prior to this presentation. 2 Factors affecting future performance & Non-GAAP Financials

3 Company Overview Leading provider of laser, precision motion, and vision technologies Canadian company founded in 1968, with U.S. Headquarters in Bedford, MA $368M in revenue, $61M in Adjusted EBITDA, and $0.93 non-gaap EPS Serving global addressable market of ~$2 billion, growing 5-7% per year Approximately 1,350 employees for continuing operations Trade on NASDAQ (NOVT) 3 Supplier of advanced technologies to medical & industrial markets

4 Medical Technology Leadership Visualization and integration technology that improves image quality, color gamut and integration in endoscopic surgery ~$38M Machine vision, RFID and scanning technology that enable the most accurate, high quality results in clinical analysis procedures ~$25M Scanners that control beam speed and accuracy during OCT retinal scans, enabling more clinically valuable scans ~$22M Data collection and chart recording technologies ensure accuracy and safety of patient monitoring systems ~$20M Precision motion technologies that enable more accurate control of arms in robotic surgery systems, while also enhancing safety ~$8M 4 Our technology enables OEM s to improve patient outcomes

5 Business Model Core Technology Target Applications Photonics (lasers, laser beam delivery, optics, machine vision, image recognition and visualization) Precision motion Industrial equipment using advanced technology Medical Equipment Value Chain Focus Components Sub-Systems Software & Controls Systems Hardware components and subsystems Selective offerings with software, connectivity & controls Business Model Highly engineered and (semi) customized solutions to OEM s Mid to long design-in cycles Medium volume (1000 s) asset-light assembly operations Leverage cross-selling to OEM s in target applications Operations Excellence/Continuous improvement based on lean 5 Focus on precision components/subsystems for OEM s

6 Revenue Breakdown Product Groups End Markets Precision Motion Laser Products Medical Vision Technologies 22% 35% 34% 47% 18% 44% 45% 55% Advanced Industrial 6 Significant revenue from medical markets

7 Global Presence % of sales 41% Americas 32% EMEA 27% Asia Poole, UK Seattle, WA Silicon Valley, CA Syracuse, NY Boston, MA Munich, Germany Beijing, China Suzhou, China Tokyo, Japan Shenzhen, China Major Sales & Service Site Major R&D Site Major Manufacturing Site 7 Global reach to over 3000 OEM customers around the world

8 Industrial Roots Technologies Applications Laser Scanheads Galvonometers CO2 Lasers Laser Marking Laser Cutting Laser Welding Advanced Applications Machine Vision Precision Motors Optical Encoders Precision Technologies Robotics 3D Printing Measurement RFID Modules Ultrafast Polygon Scanners Touch Panels OEM Design-in Expertise Wire Bonding Via Hole Drilling LCD Testing Air Bearing Spindles 2D Colorimeters Robust Quality System $1 billion market 5% to 7% CAGR 8 Advanced Industrial technologies in growing applications

9 Our Medical Technology Technologies Applications RFID Bar Code Scanning Machine Vision Advanced Applications Robotic Surgery Minimally Invasive Surgery Patient Monitoring Surgical Displays Networking/ Informatics Software High Speed Polygon Scanners Touch Panels Thermal Printers Precision Technologies OEM Design-in Expertise Glucose Monitoring Retinal Diagnostics Laser Surgery Life Sciences Precision Motors Optical Encoders Laser Scanning Robust Quality System Drug Delivery Endo/GI Blood Analysis 9 Our technology improves safety, workflow and patient outcomes

10 Strong Medical Positioning Market Size: $1B CAGR: 5-7% Segments Key Applications Novanta Solutions Our Position Growth Drivers Ophthalmology Critical Care Lab Equipment Surgical Treatment OCT Cataract Surgery LASIK Surgery Laser Scanning Visualization Precision Motion Aging population Laser technology penetration Patient Monitoring EKG Defibrillation Auto ID / RFID Precision Motion Machine Vision IVD Life Sciences Analytical Machine Vision Precision Motion Laser Scanning Endoscopy Robotic Surgery Surgical Tools Visualization Precision Motion Machine Vision #1 #1 #1 or 2 #1 or 2 New product expansion Market growth Technology penetration of precision motion and machine vision Robotic surgery Connected OR Machine vision 10 We have leading positions in our major applications

11 Technology for the OR Minimally Invasive Surgery Patient Monitoring Robotic Surgery Drug Delivery Laser Surgery Our Technologies RFID Bar Code Scanning Machine Vision Software WiFi Surgical Displays Touch Displays Precision Motors CO 2 Lasers Informatics Thermal Printers Laser Scanners Optical Encoders 11 We have increased our content in surgical applications

12 Integrated OR Opportunity Increased number of procedures with same labor, equipment and hospital infrastructure Improved Healthcare Productivity Improve patient outcomes Real time patient data Remote consultation Less anesthesia time Improved visualization for HCPs any image to any screen at any time Higher OR productivity Shorter procedure time Faster setup & turn-over Increased clinical flexibility for OR usage Less overtime Typical OR cost $ k per hour ($60-73 per minute); majority of costs are fixed < 2 hours in productivity saving per week guaranties 1 year payback for hospital ior investment 12 Our technology enables the integrated OR

13 Endoscopic Imaging Chain Cameras (connectivity) Video Processing Video Capture Connectivity Visualization ZeroWire Wireless Video Over- (Ethernet, IP) Digital video (DVI, SDI, HDMI) 2D, 3D & 4K UHD Proprietary color calibration Correction of optical distortions Scaling Converting 2D, 3D & 4K UHD Multi-channel Patient documentation capabilities Data archiving ZeroWire Wireless In-OR & X-OR integration 2D, 3D & 4K UHD streaming Video Over- (Ethernet, IP) 3D & 4K UHD Ultra-wide gamut Proprietary color calibration Hybrid OR DICOM calibration Clinical and technical expertise that adds value to differentiated roadmaps for OEM s While our independence allows us to standardize video processing & connectivity 13 OR workflow solutions based on hardware, software & connectivity

14 Clinical Analyzers Precision Laser Control Market leader in highest speed and accurate laser positioning Enables faster processing of samples Smart Cameras Machine Vision Market leader in machine vision for the medical market Workflow productivity and effort reduction solutions RFID & Barcode Readers Market leader in Barcoding, RFID for the medical market Reducing medication errors and harm via the five rights : the right patient, the right drug, the right dose, the right route, and the right time. Position Measurement Market leader in ultra precision optical encoder position detectors Enables precision motion control at submicron accuracy Motors & Actuators Market leader in ultra precision motors and actuators in the medical market Reduces errors, while increasing precision testing Driving Content in the box 14 Our technology enables OEM s to improve patient outcomes

15 OCT Retinal Scanning Servo controlled optical steering of the scan beam Serving major OEM s across the application Fastest available 1D and 3D scanning speeds Improved in-field serviceability Designed into OEM next generation platforms 15 A leading position in beam delivery for eye care applicaitons

16 2020 Strategic Vision Building a Leading Precision Technology Company through Innovation at the Intersection of Photonics & Motion Breakthrough Scale Double in size to $750 million in revenue Superior Profitability Deliver 20% EBITDA margins Substantial Value Creation Attain $1 Billion market capitalization Consistent Growth Realize 50% of revenue from medical applications Market Leadership Top 3 share position (technologies & applications) Globalization Support customers with global capabilities Reputation for Excellence Widely recognized as a world class operating company 16 Sustained profitable growth via technology & operations leadership

17 Medical Cross Selling Program Approach Team selling within major OEM accounts with multi-product potential Cross training on product offerings Dedicated Program Leader ongoing communication forums for teams Sharing insights into customer roadmaps and product requirements Holding Tech Days at major OEM s Broadening relationships with customer decision makers and influencers Joint presence at medical trade shows * Data presented is pro-forma 2015 adjusting for all acquisitions and divestitures Compensation Schemes adjusted for 2016 to reward behaviors 17 Deepening our relationship with Top 100 medical OEM s

18 Productivity Programs Lean Conversion Strategic Sourcing Cost Base: ~$60M (labor, mfg. overhead) At least one major Kaizen event per month Focus on improved on-time delivery, yields and reduced cost of poor quality Savings programs and goals defined by site 2015 Actual Savings = $1.5M 2016 Target Savings = $2.8M Cost Base: ~$150M (material spend) Spend Analytics Tool in place Savings programs and goals defined by site and commodity Focused on standardizing contract terms 2015 Actual Savings = $4.0M 2016 Target Savings = $5.2M 18 Our commitment to Continuous Improvement is now saving $$

19 Adjusted Revenue ~15% CAGR $368M Mid-Single Digit Growth $225M Outlook *Adjusted Revenue is a non-gaap measure. The reconciliation to our most comparable GAAP numbers is our earnings press release issued on May 6, Novanta s transformation is gaining momentum

20 Adjusted EBITDA ~12% CAGR $51M $56M $61M Mid-to-High Single Digit Adjusted E.P.S. +22% CAGR $0.62 $0.81 $0.93 8% to 10% $42M $ Outlook Outlook *Adjusted EBITDA & Adjusted E.P.S. are a non-gaap measures. The reconciliation to our most comparable GAAP numbers is provided * Data in our presented earnings is press pro-forma release 2015 issued adjusting on May for 6, all acquisitions and divestitures ** 2016 Outlook reflects guidance provided on May 6, Our technology enables OEM s to improve patient outcomes

21 About Novanta Novanta is a leading global supplier of core technology solutions that give advanced industrial and healthcare OEMs a competitive advantage. We combine deep expertise at the intersection of photonics and 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. We deliver highly engineered laser, vision and precision motion solutions to customers around the world. 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. 21 Bringing The Innovation Advantage to everything we do