- Third Quarter 2016 GAAP Revenue of $97.8 million
- Third Quarter 2016 GAAP Net Income of $7.5 million
- Third Quarter 2016 GAAP Earnings Per Share of $0.21
- Third Quarter 2016 Adjusted Earnings Per Share of $0.29
- Third Quarter 2016 Adjusted EBITDA of $17.8 million
BEDFORD, Mass., Nov. 2, 2016 /PRNewswire/ -- Novanta Inc. (NASDAQ: NOVT) (the "Company", "we", "our", "Novanta"), a global leader and supplier of photonics, precision motion, and vision technologies to original equipment manufacturers in the medical and advanced industrial markets, today reported financial results for the third quarter of 2016.
Three Months Ended
(In millions, except per share amounts)
Operating income from continuing operations
Consolidated net income
Diluted EPS from continuing operations
Adjusted operating income from continuing operations
*Reconciliations of GAAP to non-GAAP financial measures, as well as definitions for the non-GAAP financial measures in this press release and the reasons for their use, are presented below.
Third Quarter of 2016
"We delivered strong operating results in the third quarter. Our business delivered 6% reported revenue growth and more than 4% organic revenue growth in the quarter. Our new brand and focus around mission critical enabling solutions to Original Equipment Manufacturers in medical and advanced industrial markets continues to resonate with our customers and employees, driving sustained progress on customer design win activities. In addition, we delivered strong Adjusted EBITDA, up 11% versus the third quarter of last year," said Matthijs Glastra, Chief Executive Officer.
During the third quarter of 2016, Novanta generated GAAP revenue of $97.8 million, an increase of 6.0% from $92.3 million in the third quarter of 2015.
In the third quarter of 2016, GAAP operating income from continuing operations was $11.0 million, compared to $9.0 million in the third quarter of 2015. Adjusted operating income from continuing operations was $14.7 million in the third quarter of 2016, compared to $13.4 million in the third quarter of 2015.
GAAP Diluted EPS from continuing operations was $0.21 in the third quarter of 2016, compared to $0.19 in the third quarter of 2015. Adjusted EPS was $0.29 in the third quarter of 2016, compared to $0.24 in the third quarter of 2015. The Company ended the third quarter of 2016 with 34.9 million weighted average diluted common shares outstanding. GAAP consolidated net income was $7.5 million in the third quarter of 2016, compared to $6.6 million in the third quarter of 2015. Adjusted EBITDA was $17.8 million in the third quarter of 2016, compared to $16.1 million in the third quarter of 2015.
As of September 30, 2016, cash and cash equivalents were $64.7 million. The Company completed the third quarter of 2016 with approximately $79.6 million of total debt, and $18.4 million of Net Debt, as defined in the non-GAAP reconciliation below. Operating cash flow from continuing operations for the third quarter of 2016 was $10.9 million and $34.7 million for the first nine months of 2016.
For the full year of 2016, the Company expects GAAP revenue of approximately $384 million to $386 million and Adjusted EBITDA of approximately $66 million to $68 million. Additionally, the Company expects Adjusted EPS to be in the range of $1.00 to $1.03. This compares to Adjusted EPS of $0.93 in for the full year 2015.
"Overall, we expect to complete the year with a strong fourth quarter in both revenue growth and profit performance and to deliver mid-single digit revenue growth for the year despite the more challenging economic environment in the first half of the year. Our investments in both our commercial and operations organizations are showing great traction, while our acquisition pipeline is looking strong," said Robert Buckley, Chief Financial Officer.
Novanta provides earnings guidance on a non-GAAP basis and does not provide earnings guidance on a GAAP basis. A reconciliation of the Company's forward-looking adjusted EBITDA and adjusted diluted earnings per share guidance to the most directly comparable GAAP financial measures is not provided because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for significant discrete income tax expenses (benefits); divestiture related expenses; acquisition-related expenses; gains and losses from sale of real estate assets; costs related to product line closures; future changes in the fair value of contingent considerations; intangible asset impairment charges and related asset write-offs; future restructuring expenses; foreign exchange gains / (losses) on proceeds from divestitures; benefits or expenses associated with the completion of tax audits; and other charges reflected in our 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.
Conference Call Information
The Company will host a conference call on Wednesday, November 2, 2016 at 5:00 p.m. ET to discuss these results. Matthijs Glastra, Chief Executive Officer, and Robert Buckley, Chief Financial Officer, will host the conference call.
To access the call, please dial (877) 482-5124 prior to the scheduled conference call time. The conference ID number is 19314321.
A playback of this conference call will be available beginning 8:00 p.m. ET, Wednesday, November 2, 2016. The playback phone number is (855) 859-2056 or (404) 537-3406 and the code number is 19314321. The playback will remain available until 11:00 p.m. ET, Wednesday, November 23, 2016.
A replay of the audio webcast will be available approximately three hours after the conclusion of the call on the Investor Relations section of the Company's website at www.novanta.com.
Use of Non-GAAP Financial Measures
The non-GAAP financial measures used in this press release are Organic Revenue Growth, Adjusted Revenue, Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Operating Income from Continuing Operations, Adjusted Operating Margin, Adjusted Income from Continuing Operations before Income Taxes, Non-GAAP Income Tax Provision (Benefit) and Effective Tax Rate, Adjusted Income from Continuing Operations, net of tax, Adjusted Diluted EPS from Continuing Operations, Adjusted EBITDA, Adjusted EBITDA Margin, and Net Debt.
The Company believes that the non-GAAP financial measures provide useful and supplementary information to investors regarding the Company's operating performance. It is management's belief that these non-GAAP financial measures would be particularly useful to investors because of the significant changes that have occurred outside of the Company's day-to-day business in accordance with the execution of the Company's strategy. This strategy includes streamlining the Company's existing operations through site and functional consolidations, strategic divestitures and product line closures, expanding the Company's business through significant internal investments, and broadening the Company's product and service offerings through acquisition of innovative and complementary technologies and solutions. The financial impact of certain elements of these activities, particularly acquisitions, divestitures, and site and functional restructurings, is often large relative to the Company's overall financial performance and can adversely affect the comparability of its operating results and investors' ability to analyze the business from period to period.
The Company's Adjusted EBITDA is used by management to evaluate operating performance, communicate financial results to the Board of Directors, benchmark results against historical performance and the performance of peers, and evaluate investment opportunities including acquisitions and divestitures. In addition, Adjusted EBITDA is used to determine bonus payments for senior management and employees. The Company also uses non-GAAP EPS as a measurement for performance shares issued to certain executives. Accordingly, the Company believes that these non-GAAP measures provide greater transparency and insight into management's method of analysis.
Non-GAAP financial measures should not be considered as substitutes for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on the Company's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.
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