Novanta Inc. Net Income increased on 9.2% while Revenue decreased on 5.7%
03/01/2021 • About Novanta Inc. (
$NOVT) • By InTwits
Novanta Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Novanta Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's in pair with industry average of 5.5%
- CAPEX is quite volatile: $26m in 2020, $45m in 2019, $5m in 2018, $9m in 2017, $14m in 2016
- In the last 5 years the company invested considerably less than D&A: $53m vs. $88m
- The company has business model with low profitability: ROIC is 7.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.3x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 5.7%. Revenue decline showed acceleration in 20Q4 - it was 7.6% YoY. During 2016-2020 Revenue growth topped in 2017 at 35.5% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.1 pp from 16.2% to 17.2% in 2020.
Gross Margin showed almost no change in 2020. During 2016-2020 Gross Margin topped in 2018 at 42.6% and was declining since that time. SG&A as a % of Revenue showed almost no change in 2020. SG&A as a % of Revenue stuck to a declining trend at -0.59 pp per annum in 2016-2020.
Net Income margin increased slightly on 1.0 pp from 6.5% to 7.5% in 2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.8% in 2020. Novanta Inc.'s CAPEX/Revenue showed almost no change from 2017 to 2020. Average CAPEX/Revenue for the last three years was 2.0%.
Return on investment
The company operates at low ROIC (7.9%) and ROE (10.0%). ROIC decreased slightly on 0.89 pp from 8.8% to 7.9% in 2020. ROE showed almost no change in 2020. During 2016-2020 ROIC topped in 2017 at 11.8% and was declining since that time. During the last 5 years ROE topped in 2017 at 21.1% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 2.5x. Net Debt / EBITDA dropped on 0.7x from 1.9x to 1.3x in 2020. Debt decreased on 7.5% while cash jumped on 58.4%.
Novanta Inc. has no short term refinancing risk: cash is higher than short term debt (583.9%).
Valuation and dividends
Novanta Inc.'s trades at EV/EBITDA 43.7x and P/E 97.1x.
Management team
Novanta Inc.'s CEO is Matthijs Glastra. Matthijs Glastra has 4 years tenure with the company. The company's CFO is Robert J Buckley. Robert J Buckley has 9 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
Novanta Inc. ($NOVT) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 384.8 | 521.3 | 614.3 | 626.1 | 590.6 | -5.7% |
| Gross Profit | 162.5 | 220.5 | 261.5 | 262.1 | 244.5 | -6.7% |
| SG&A | 81.7 | 102.0 | 115.9 | 118.4 | 109.9 | -7.2% |
| EBITDA | 52.9 | 88.0 | 108.1 | 101.2 | 101.9 | 0.7% |
| EBIT | 32.6 | 57.2 | 71.0 | | | |
| Tax | 10.5 | 13.8 | 10.2 | | | |
| Net Income | 22.0 | 60.1 | 49.1 | 40.8 | 44.5 | 9.2% |
| Stock Based Compensation | 4.3 | 5.5 | 7.7 | | | |
Balance Sheet
|
|---|
| Cash | 68.1 | 100.1 | 82.0 | 78.9 | 125.1 | 58.4% |
| Accounts Receivable | 63.8 | 81.5 | 84.0 | | | |
| Inventory | 59.7 | 91.3 | 104.8 | | | |
| Accounts Payable | 32.2 | 39.8 | 50.7 | | | |
| Short Term Debt | 7.4 | 9.1 | 4.5 | 11.4 | 21.4 | 88.2% |
| Long Term Debt | 78.7 | 233.4 | 202.8 | 264.3 | 233.6 | -11.6% |
Cash flow
|
|---|
| Capex | 8.5 | 9.1 | 14.7 | 10.7 | 10.5 | -2.0% |
| Acquisitions | 12.9 | 168.3 | 31.2 | | | |
Ratios
|
|---|
| Revenue growth | 3.0% | 35.5% | 17.8% | 1.9% | -5.7% | |
| EBITDA growth | 10.1% | 66.2% | 22.9% | -6.4% | 0.7% | |
|
|---|
| Gross Margin | 42.2% | 42.3% | 42.6% | 41.9% | 41.4% | -0.5% |
| EBITDA Margin | 13.8% | 16.9% | 17.6% | 16.2% | 17.2% | 1.1% |
| EBIT Margin | 8.5% | 11.0% | 11.6% | | |
| SG&A, % of revenue | 21.2% | 19.6% | 18.9% | 18.9% | 18.6% | -0.3% |
| SBC, % of revenue | 1.1% | 1.1% | 1.3% | | |
| Net Income Margin | 5.7% | 11.5% | 8.0% | 6.5% | 7.5% | 1.0% |
| CAPEX, % of revenue | 2.2% | 1.7% | 2.4% | 1.7% | 1.8% | 0.1% |
|
|---|
| ROIC | 9.5% | 11.8% | 11.7% | 8.8% | 7.9% | -0.9% |
| ROE | 8.7% | 21.1% | 14.4% | 10.4% | 10.0% | -0.4% |
| Net Debt/EBITDA | 0.3x | 1.6x | 1.2x | 1.9x | 1.3x | -0.7x |
People
|
|---|
| Insider ownership | 4.5% | 4.5% | 4.5% | | | |
| Employees | 1,269 | 2,034 | 2,133 | | | |
| Revenue/Employee, th. $ | 303 | 256 | 288 | | | |
Novanta Inc. ($NOVT) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 155 | 145 | 143 | 147 | | -1.1% | -6.7% | -7.2% | -7.6% |
| EBITDA | 25 | 25 | 23 | 29 | | -2.7% | -4.5% | -5.0% | 14.8% |
| Net Income | 12 | 12 | 8 | 13 | | -2.5% | 12.3% | -7.5% | 37.3% |
Balance Sheet
|
|---|
| Cash | 74 | 97 | 107 | 125 | | -0.5% | 47.5% | 73.7% | 58.4% |
| Short Term Debt | 19 | 19 | 20 | 21 | | 132.0% | 228.5% | 219.5% | 88.2% |
| Long Term Debt | 246 | 252 | 227 | 234 | | 3.9% | -1.9% | -17.5% | -11.6% |
Ratios
|
|---|
| Gross Margin | 41.5% | 40.6% | 41.4% | 42.2% | | -0.7% | -1.8% | -0.2% | 0.9% |
| EBITDA Margin | 15.8% | 17.3% | 16.3% | 19.7% | | -0.3% | 0.4% | 0.4% | 3.9% |
| Net Income Margin | 7.7% | 8.1% | 5.8% | 8.6% | | -0.1% | 1.4% | -0.0% | 2.8% |
Peers in Electronic Equipment & Instruments
Below you can find Novanta Inc. benchmarking vs. other companies in Electronic Equipment & Instruments industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Intellicheck, Inc. ($IDN) | - | -6.3% | 23.2% | 72.9% | 40.1% |
| nLIGHT, Inc. ($LASR) | - | 36.8% | 38.1% | -7.7% | 26.1% |
| Luna Innovations Incorporated ($LUNA) | - | -21.0% | 29.7% | 64.3% | 17.3% |
| PAR Technology Corporation ($PAR) | - | 1.3% | -13.5% | -7.0% | 14.2% |
| Cognex Corporation ($CGNX) | - | 44.7% | 5.3% | -10.0% | 11.8% |
| |
|---|
| Median (26 companies) | -3.8% | 4.1% | 10.4% | 5.2% | -2.7% |
|---|
| Novanta Inc. ($NOVT) | - | 35.5% | 17.8% | 1.9% | -5.7% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Intellicheck, Inc. ($IDN) | 80.0% | 85.5% | 91.3% | 87.0% | 86.7% |
| Cognex Corporation ($CGNX) | 75.2% | 75.6% | 74.4% | 73.8% | 74.5% |
| National Instruments Corporation ($NATI) | 74.5% | 74.5% | 75.4% | 75.1% | 71.2% |
| Coda Octopus Group, Inc. ($CODA) | - | 66.4% | - | 65.6% | 63.5% |
| Applied DNA Sciences Inc ($APDN) | 82.2% | 77.3% | 69.1% | 83.7% | 62.7% |
| |
|---|
| Median (26 companies) | 39.4% | 41.0% | 40.4% | 43.2% | 44.0% |
|---|
| Novanta Inc. ($NOVT) | 42.2% | 42.3% | 42.6% | 41.9% | 41.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Keysight Technologies Inc. ($KEYS) | 18.5% | 14.6% | -0.9% | 23.7% | 27.0% |
| Cognex Corporation ($CGNX) | 31.9% | 36.0% | 30.1% | 24.0% | 25.3% |
| National Instruments Corporation ($NATI) | 15.7% | 16.9% | 17.9% | 20.0% | 22.3% |
| FLIR Systems, Inc. ($FLIR) | 21.3% | 20.0% | 21.7% | 20.6% | 22.0% |
| Badger Meter, Inc. ($BMI) | 18.6% | 20.1% | 18.7% | 21.1% | 21.2% |
| |
|---|
| Median (26 companies) | 2.9% | 4.1% | 3.3% | 12.0% | 8.7% |
|---|
| Novanta Inc. ($NOVT) | 13.8% | 16.9% | 17.6% | 16.2% | 17.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Know Labs Inc ($KNWN) | 0.4% | 0.0% | 2.3% | 4.4% | 57.5% |
| Applied DNA Sciences Inc ($APDN) | 16.1% | 3.1% | 6.8% | 1.3% | 55.1% |
| nLIGHT, Inc. ($LASR) | 4.0% | 4.0% | 6.1% | 7.7% | 10.9% |
| Vishay Precision Group, Inc. ($VPG) | 4.6% | 2.7% | 4.8% | 3.9% | 8.5% |
| LightPath Technologies, Inc. ($LPTH) | 6.5% | 7.8% | 7.7% | 5.7% | 7.0% |
| |
|---|
| Median (25 companies) | 2.0% | 1.6% | 2.2% | 2.0% | 2.8% |
|---|
| Novanta Inc. ($NOVT) | 2.2% | 1.7% | 2.4% | 1.7% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zebra Technologies Corporation ($ZBRA) | 2.2% | 10.2% | 20.8% | 23.2% | 20.0% |
| Badger Meter, Inc. ($BMI) | 16.9% | 18.2% | 17.6% | 18.7% | 18.5% |
| Keysight Technologies Inc. ($KEYS) | 16.9% | 6.8% | -8.0% | 15.6% | 15.1% |
| National Instruments Corporation ($NATI) | 10.3% | 12.5% | 14.2% | 13.9% | 14.8% |
| Cognex Corporation ($CGNX) | 17.7% | 25.6% | 20.1% | 11.9% | 13.9% |
| |
|---|
| Median (26 companies) | 2.1% | 2.6% | 0.9% | 7.8% | 3.4% |
|---|
| Novanta Inc. ($NOVT) | 9.5% | 11.8% | 11.7% | 8.8% | 7.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Identiv, Inc. ($INVE) | - | - | 2.1x | 1.9x | 9.0x |
| Itron, Inc. ($ITRI) | 1.0x | 2.0x | 12.3x | 3.2x | 7.3x |
| Track Group Inc ($TRCK) | - | - | 12.2x | 5.2x | 3.5x |
| Trimble Inc. ($TRMB) | 1.1x | 1.3x | 3.4x | 2.9x | 2.2x |
| Luna Innovations Incorporated ($LUNA) | -6.9x | -108.1x | -19.9x | -2.9x | 1.8x |
| |
|---|
| Median (16 companies) | -0.9x | -0.9x | -1.0x | 0.2x | 0.3x |
|---|
| Novanta Inc. ($NOVT) | 0.3x | 1.6x | 1.2x | 1.9x | 1.3x |
