![]() Edelstein’s tenure would be brief due to a disastrous turn of events. Sergio Edelstein took on the role of CEO after Charles Winston stepped down. Management eventually transitioned its focus to developing laser products and components for OEMs instead of selling fully integrated laser systems directly to end markets (a trait that continues to define Novanta today). At the same time, they were divesting non-core, lower margin business lines. Over the next 10 years, GSI Lumonics acquired more companies to expand its product offerings, addressable industries, and geographic markets. Charles Winston, the CEO of GSI and former management consultant, became the CEO for the newly combined company. This created the largest publicly traded company in the industrial laser systems industry. In 1999, they combined in a merger of equals to create GSI Lumonics, Inc. Both GSI and Lumonics designed, developed, manufactured, and marketed laser-based advanced manufacturing systems for semiconductor, electronics, aerospace, and automotive industries. Lumonics soon followed, incorporating in 1970 under the laws of Ontario. GSI was founded in Massachusetts in 1968. The history of Novanta begins with two companies, General Scanning, Inc. At the current share price, Novanta can provide shareholders annualized returns in the range of 10%–13% over the next 8.5 years. Andvari believes Novanta will grow revenues at high single or low double-digit rates and cash flows at a slightly faster rate. Further, Novanta will improve over time through application of NGS. ![]() With a current revenue base of ~$835 million, Novanta has ample room to grow organically and via M&A. Also important is the fact that there are many former Danaher managers and executives now at Novanta. Novanta is able to consistently realize synergies and extract additional value from acquisitions after implementing NGS. This has helped sustain and improve improved both margins and revenue growth. ![]() Third, Novanta has an active and effective R&D department which is launching new products at an ever-increasing rate and driving a high-single-digit organic growth rate.įinally, the company has their “Novanta Growth System” (NGS), a system of continuous improvement and lean manufacturing. This gives them pricing power and predictable streams of revenue. Further, these products are designed into OEM systems with typical life spans of 7–10 years. Second, the products sold by Novanta’s subsidiaries add a huge amount of value for being a relatively minor part of the total cost. The M&A process prioritizes cash returns and return on invested capital. They’ve divested businesses with limited prospects and have acquired over half a dozen companies with brighter futures. First, Novanta management have been adept capital allocators. The company has several attributes that has driven and will continue to drive its success. Free cash flows and operating profits have grown at an even faster rate. ![]() Since 2012, revenues have grown from $225 million to $835 million. The company has deep proprietary expertise in photonics, vision, and precision motion to engineer core components and sub-systems. Novanta supplies technology solutions to medical and advanced industrial original equipment manufacturers (“OEMs”). If you would like access to the portal or the individual report, please contact Executive Summary We also share a full summary of the corporate history that led to a Chapter 11 bankruptcy and then subsequent amazing turnaround.Īccess to the full, 13-page thesis is available through our client/prospective client document portal. We provide a summary of the important intangible business qualities we seek. Andvari is pleased to share a shortened version of our recent research report on Novanta (NOVT).
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