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8-K - FORM 8-K - NOVANTA INCd922169d8k.htm

Exhibit 99.1

Use of Non-GAAP Financial Measures

The Company believes that the non-GAAP financial measures included in this Exhibit 99.1 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 to provide information regarding the impact of the disposition of the JK Lasers business, and with respect to organic revenue, the impact of recent acquisitions, on the Company, to facilitate the comparability of its results and investors’ ability to analyze the underlying trends of the business from period to period.

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 in this Exhibit 99.1.


Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands of U.S. dollars)

(Unaudited)

Adjusted Revenue by Segment (Non-GAAP):

 

     Three Months
Ended
    Twelve Months
Ended
    Three Months Ended  
     April 3,
2015
    December 31,
2014
    December 31,
2014
    September 26,
2014
    June 27,
2014
    March 28,
2014
 

Laser Products

            

Revenue (GAAP)

   $ 44,955      $ 177,726      $ 46,232      $ 45,806      $ 43,828      $ 41,860   

JK Lasers divestiture

     (5,678     (22,425     (6,132     (5,908     (5,330     (5,055

Acquisition fair value adjustments

     —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Revenue

$ 39,277    $ 155,301    $ 40,100    $ 39,898    $ 38,498    $ 36,805   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Medical Technologies

Revenue (GAAP)

$ 31,111    $ 122,187    $ 32,349    $ 32,680    $ 34,791    $ 22,367   

Acquisition fair value adjustments

  43      220      49      51      56      64   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Revenue

$ 31,154    $ 122,407    $ 32,398    $ 32,731    $ 34,847    $ 22,431   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Precision Motion

Revenue (GAAP)

$ 18,548    $ 64,793    $ 15,431    $ 16,170    $ 18,286    $ 14,906   

Acquisition fair value adjustments

  —        —        —        —        —        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Revenue

$ 18,548    $ 64,793    $ 15,431    $ 16,170    $ 18,286    $ 14,906   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GSI Group Inc.

Revenue (GAAP)

$ 94,614    $ 364,706    $ 94,012    $ 94,656    $ 96,905    $ 79,133   

JK Lasers divestiture

  (5,678   (22,425   (6,132   (5,908   (5,330   (5,055

Acquisition fair value adjustments

  43      220      49      51      56      64   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Revenue

$ 88,979    $ 342,501    $ 87,929    $ 88,799    $ 91,631    $ 74,142   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands of U.S. dollars)

(Unaudited)

Adjusted Gross Profit by Segment (Non-GAAP):

 

     Three Months
Ended
    Twelve Months
Ended
    Three Months Ended  
     April 3,
2015
    December 31,
2014
    December 31,
2014
    September 26,
2014
    June 27,
2014
    March 28,
2014
 

Laser Products

            

Gross profit (GAAP)

   $ 19,375      $ 74,224      $ 19,787      $ 20,269      $ 17,155      $ 17,013   

JK Lasers divestiture

     (1,637     (6,478     (1,863     (1,856     (1,371     (1,388

Amortization of intangible assets

     516        2,064        516        516        516        516   

Acquisition fair value adjustments

     —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Gross Profit

$ 18,254    $ 69,810    $ 18,440    $ 18,929    $ 16,300    $ 16,141   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit margin (GAAP)

  43.1   41.8   42.8   44.2   39.1   40.6

Adjusted Gross Profit Margin

  46.5   45.0   46.0   47.4   42.3   43.9

Medical Technologies

Gross profit (GAAP)

$ 12,513    $ 48,678    $ 13,006    $ 12,945    $ 13,838    $ 8,889   

Amortization of intangible assets

  547      3,287      900      900      900      587   

Acquisition fair value adjustments

  43      596      52      51      328      165   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Gross Profit

$ 13,103    $ 52,561    $ 13,958    $ 13,896    $ 15,066    $ 9,641   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit margin (GAAP)

  40.2   39.8   40.2   39.6   39.8   39.7

Adjusted Gross Profit Margin

  42.1   43.0   43.1   42.5   43.2   43.0

Precision Motion

Gross profit (GAAP)

$ 8,465    $ 28,333    $ 7,192    $ 6,776    $ 7,949    $ 6,416   

Amortization of intangible assets

  56      792      198      198      198      198   

Acquisition fair value adjustments

  —        —        —        —        —        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Gross Profit

$ 8,521    $ 29,125    $ 7,390    $ 6,974    $ 8,147    $ 6,614   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit margin (GAAP)

  45.6   43.7   46.6   41.9   43.5   43.0

Adjusted Gross Profit Margin

  45.9   45.0   47.9   43.1   44.6   44.4

Corporate, Shared Services and Unallocated

Gross profit (GAAP)

$ (347 $ (1,068 $ (257 $ (307 $ (291 $ (213

Amortization of intangible assets

  —        —        —        —        —        —     

Acquisition fair value adjustments

  —        —        —        —        —        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Gross Profit

$ (347 $ (1,068 $ (257 $ (307 $ (291 $ (213
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GSI Group Inc.

Gross profit (GAAP)

$ 40,006    $ 150,167    $ 39,728    $ 39,683    $ 38,651    $ 32,105   

JK Lasers divestiture

  (1,637   (6,478   (1,863   (1,856   (1,371   (1,388

Amortization of intangible assets

  1,119      6,143      1,614      1,614      1,614      1,301   

Acquisition fair value adjustments

  43      596      52      51      328      165   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Gross Profit

$ 39,531    $ 150,428    $ 39,531    $ 39,492    $ 39,222    $ 32,183   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit margin (GAAP)

  42.3   41.2   42.2   41.9   39.9   40.6

Adjusted Gross Profit Margin

  44.4   43.9   45.0   44.5   42.8   43.4


Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands of U.S. dollars)

(Unaudited)

Organic Revenue Growth (Non-GAAP):

 

     Three Months Ended
April 3, 2015
 

Reported growth (GAAP)

     19.6

Less: Change attributable to acquisitions & divestitures

     (16.8 )% 

Plus: Change due to foreign currency

     5.2
  

 

 

 

Organic growth (Non-GAAP)

  8.0
  

 

 

 


Non-GAAP Financial Measures

Adjusted Revenue

Adjusted Revenue excludes the JK Lasers business to only show the results of ongoing operations of the Company. As the JK Lasers business was sold in April 2015, the future results of the Company will no longer include revenues from this business. We excluded JK Lasers sales from Adjusted Revenue because divestiture activities can vary between reporting periods and between us and our peers, which we believe makes comparisons of long-term performance trends difficult for management and investors, and could result in overstating or understating to our investors the performance of our operations. Additionally, we include estimated revenue from contracts acquired with business acquisitions that will not be fully recognized due to business combination accounting rules. Because GAAP accounting rules require the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. These non-GAAP adjustments are intended to reflect the full amount of such revenue.

Organic Revenue Growth

We define the term “organic revenue” as revenue excluding the impact from business acquisitions, divestitures, and the effect of foreign currency translation. We use the related term “organic revenue growth” to refer to the measure of comparing current period organic revenue with the corresponding period of the prior year. We believe that this non-GAAP measure, when taken together with our GAAP financial measures, allows us and our investors to better measure our performance and evaluate long-term performance trends. Organic revenue growth also provides for easier comparisons of our performance with prior and future periods and relative comparisons to our peers. We exclude the effect of foreign currency translation from these measures because foreign currency translation is subject to volatility and can obscure underlying trends. We exclude the effect of acquisitions and divestitures because acquisition and divestiture activities can vary dramatically between reporting periods and between us and our peers, which we believe makes comparisons of long-term performance trends difficult for management and investors, and could result in overstating or understating to our investors the performance of our operations.

Adjusted Gross Profit and Adjusted Gross Profit Margin

The calculation of Adjusted Gross Profit and Adjusted Gross Profit Margin is displayed in the tables above. Adjusted Gross Profit and Adjusted Gross Profit Margin exclude the JK Lasers business to only show the results of ongoing operations, as the JK Lasers business was sold in April 2015. In addition, Adjusted Gross Profit and Adjusted Gross Profit Margin excludes the amortization of acquired intangible assets and revenue fair value adjustments from business acquisitions because: (1) the amounts are non-cash; (2) the Company cannot influence the timing and amount of future expense recognition; and (3) excluding such expenses provides investors and management better visibility into the components of operating expenses.

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