Novanta Inc 8-K, filed Jul 19, 2021
Novanta Inc (NOVT)
About this 8-K
Novanta Inc filed this 8-K on July 19, 2021, reporting on events of July 18, 2021.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On July 18, 2021, Novanta Corporation (the “U.S. Buyer”), a wholly-owned subsidiary of Novanta Inc., and Novanta Technologies (Suzhou) Co. Ltd., a wholly-owned subsidiary under Novanta Inc. (the “China Buyer” and, together with the U.S. Buyer, the “Buyer”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with ATI Industrial Automation, Inc. (“ATI”), ATI’s wholly-owned subsidiary, ATI Industrial Automation (Lang Fang) Co. Ltd. (“ATI China”), each of ATI’s shareholders, and BLDP, LLC, as representative of ATI’s shareholders. The Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Purchase Agreement, the U.S. Buyer and the China Buyer agree to acquire all of the capital stock of ATI and ATI China, respectively (collectively, the “ATI Acquisition”).
Pursuant to the terms of the Purchase Agreement, the Buyer has agreed to pay ATI’s shareholders an initial purchase price of $172.0 million in cash upon the closing of the ATI Acquisition, subject to certain customary closing adjustments, as well as an additional contingent cash payment in the first half of 2022 based on ATI’s 2021 adjusted EBITDA, as defined in the Purchase Agreement. A portion of the upfront consideration will be placed in escrow upon the closing of the ATI Acquisition to satisfy certain purchase price adjustments and indemnification obligations.
The completion of the ATI Acquisition is subject to certain conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The ATI Acquisition is expected to be completed in the third quarter of 2021. The Buyer intends to fund the ATI Acquisition using cash on hand and by drawing on Novanta Inc.’s revolving credit facility.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 in connection with the planned drawdown on Novanta’s revolving credit facility to fund a substantial majority of the initial purchase price for the ATI Acquisition is incorporated in this Item 2.03 by reference.
Item 7.01 Regulation FD Disclosure.
On July 19, 2021, Novanta Inc. issued a press release, announcing the signing of the Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.1.
Also on July 19, 2021, Novanta Inc. will hold a conference call to discuss the ATI Acquisition. A copy of the conference call presentation is attached hereto as Exhibit 99.2 and is also available on the Novanta Inc.’s website, https://www.novanta.com, in the Investor Relations section.
The information contained in Exhibit 99.1 and Exhibit 99.2 is furnished under this Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing thereunder or under the Securities Action of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Forward-Looking Statements
Certain statements in this Form 8-K are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements contained in this Form 8-K that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as “expect,” “intend,” “anticipate,” “estimate,” “believe,” “future,” “could,” “should,” “plan,” “aim,” and other similar expressions. These forward-looking statements include, but are not limited to, statements regarding the ATI Acquisition, including that the acquisition is expected to be completed in the third quarter of 2021; sources of funding for the ATI Acquisition; benefits of the ATI Acquisition; our expectation that ATI expands Novanta’s position in industrial and surgical robotics, adds intelligent technology solutions and expands our position in mission critical robotic applications, such as electric vehicle production, medical robotics, and collaborative robotics; our expectation that the ATI Acquisition will increase the scale of our Precision Motion segment and will create stronger partnerships with our customers to help us accelerate our strategic goals with an ability to cross sell to our mutual customers; ATI’s expected 2021 revenues; our expectation that the ATI Acquisition will be accretive to our free cash flows and non-GAAP earnings per share; expectations for our leverage ratio at the end of fiscal year 2021; and other statements that are not historical facts.
These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, but not limited to, the following: our ability to
make and integrate acquisitions and realize expected benefits and synergies; economic and political conditions and the effects of these conditions on our customers’ businesses and level of business activities; risks associated with the COVID-19 pandemic and other events outside our control; our significant dependence upon our customers’ capital expenditures, which are subject to cyclical market fluctuations; our dependence upon our ability to respond to fluctuations in product demand; our ability to continually innovate and successfully commercialize our innovations; failure to introduce new products in a timely manner; customer order timing and other similar factors beyond our control; disruptions or breaches in security of our information technology systems; our failure to comply with data privacy regulations; changes in interest rates, credit ratings or foreign currency exchange rates; risks associated with our operations in foreign countries; our increased use of outsourcing in foreign countries; risks associated with increased outsourcing of components manufacturing; our exposure to increased tariffs, trade restrictions or taxes on our products; negative effects on global economic conditions, financial markets and our business as a result of the United Kingdom’s withdrawal from the European Union; violations of our intellectual property rights and our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our ability to attract and retain key personnel; our restructuring and realignment activities and disruptions to our operations as a result of consolidation of our operations; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key components or other goods from our suppliers; our failure to accurately forecast component and raw material requirements leading to excess inventories or delays in the delivery of our products; production difficulties and product delivery delays or disruptions; our exposure to medical device regulations, which may impede or hinder the approval or sale of our products and, in some cases, may ultimately result in an inability to obtain approval of certain products or may result in the recall or seizure of previously approved products; potential penalties for violating foreign, U.S. federal, and state healthcare laws and regulations; impact of healthcare industry cost containment and healthcare reform measures; changes in governmental regulations affecting our business or products; our compliance, or failure to comply, with environmental regulations; our failure to implement new information technology systems and software successfully; our failure to realize the full value of our intangible assets; our exposure to the credit risk of some of our customers and in weakened markets; our reliance on third party distribution channels; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; changes in tax laws, and fluctuations in our effective tax rates; any need for additional capital to adequately respond to business challenges or opportunities and to repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; our existing indebtedness limiting our ability to engage in certain activities; volatility in the market price for our common shares; and our failure to maintain appropriate internal controls in the future.
These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, but not limited to, the failure to satisfy or waive the closing conditions contained in the Purchase Agreement. Other important risk factors that could affect the outcome of the events set forth in these statements are discussed in Item 1A of Novanta Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, its subsequent filings with the Securities and Exchange Commission (“SEC”), and its future filings with the SEC. Forward-looking statements are based on Novanta Inc.’s beliefs and assumptions and on information currently available to Novanta Inc. Novanta Inc. disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this Form 8-K except as required by law.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
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Description |
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99.1 |
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99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Novanta Inc. |
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Date: July 19, 2021 |
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By: |
/s/ Robert J. Buckley |
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Robert J. Buckley |
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Chief Financial Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
July 19, 2021
Novanta announces agreement to acquire ATI
BEDFORD, Massachusetts, July 19, 2021 -- Novanta Inc. (Nasdaq: NOVT) (the "Company"), a trusted technology partner to medical and advanced technology equipment manufacturers, announced today that it has reached an agreement to acquire privately held ATI Industrial Automation ("ATI") for $172 million upfront in cash and additional contingent cash payments associated with 2021 financial performance. In addition, to further incentivize future financial performance, the Company will also grant performance stock units. The transaction is expected to close in the third quarter of 2021.
ATI is a leading supplier of intelligent end-of-arm technology solutions to original equipment manufacturers ("OEMs") for advanced industrial and surgical robots. ATI develops, manufactures, and sells products such as robotic changing systems, force/torque sensors, and collision sensors for industrial, collaborative, and medical robotic applications. These products enable OEMs and end-users to increase safety, versatility, and productivity of their robotic systems. Founded in 1989, the business has over 350 employees and is headquartered outside Raleigh, North Carolina.
"ATI is a fantastic business with proprietary intellectual property in attractive and growing markets. The business adds intelligent technology solutions and expands Novanta’s position in mission critical robotic applications, such as electric vehicle production, medical robotics, and collaborative robotics,” said Matthijs Glastra, CEO and Chairman of Novanta. "In addition, the transaction creates a nearly $250 million Precision Motion Segment with significant engineering competency to further accelerate our growth.”
"We are excited to join Novanta at this stage of our development. We expect the combination of competencies and cultures to create better opportunities for our customers and employees," said Bob Little, Chief Executive Officer of ATI. "We feel confident our shared values, our passion for innovation, and our deep application knowledge will create stronger partnerships with our customers to help us accelerate our strategic goals.”
The transaction is subject to customary closing conditions, including regulatory approvals, and will be financed using available cash and the Company’s revolving credit facility. The acquisition is expected to be accretive to Novanta's free cash flow and non-GAAP earnings per share on a full year basis. ATI’s expected 2021 revenue will be greater than $70 million on a full year basis. ATI's actual revenue and profit contribution to Novanta's 2021 financial results will depend on the ultimate date of the closing of the transaction, among other factors.
Conference Call Information
The Company will host a conference call on Monday, July 19, 2021 at 11:00 a.m. ET to discuss the transaction. Matthijs Glastra, Chief Executive Officer, and Robert Buckley, Chief Financial Officer, will host the conference call. To access the call, please dial (888) 346-3959 prior to the scheduled conference
call time. Alternatively, the conference call can be accessed online via a live webcast on the Events & Presentations page of the Investors section of the Company’s website at www.novanta.com.
A replay of the audio webcast will be available approximately three hours after the conclusion of the call in the Investor Relations section of the Company’s website at www.novanta.com. The replay will remain available until Monday, October 6, 2021.
Safe Harbor and Forward-Looking Information
Certain statements in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements contained in this news release that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as “expect,” “intend,” “anticipate,” “estimate,” “believe,” “future,” “could,” “should,” “plan,” “aim,” and other similar expressions. These forward-looking statements include, but are not limited to, statements regarding the anticipated ATI acquisition, including that the acquisition is expected to close in the third quarter of 2021; sources of funding for the ATI acquisition; benefits of the ATI acquisition; our expectation that ATI expands Novanta’s position in industrial and surgical robotics, adds intelligent subsystem content and increases our exposure to the electric vehicle, medical robotics, and collaborative robotics markets; our expectation that the ATI acquisition increases the scale of our Precision Motion segment and will create stronger partnerships with our customers to help us accelerate our strategic goals with an ability to cross sell to our mutual customers; ATI’s expected 2021 revenues; our expectation that the ATI acquisition will be accretive to our free cash flows and non-GAAP earnings per share; and other statements that are not historical facts.
These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, but not limited to, the following: our ability to make and integrate acquisitions and realize expected benefits and synergies; economic and political conditions and the effects of these conditions on our customers’ businesses and level of business activities; risks associated with the COVID-19 pandemic and other events outside our control; our significant dependence upon our customers’ capital expenditures, which are subject to cyclical market fluctuations; our dependence upon our ability to respond to fluctuations in product demand; our ability to continually innovate and successfully commercialize our innovations; failure to introduce new products in a timely manner; customer order timing and other similar factors beyond our control; disruptions or breaches in security of our information technology systems; our failure to comply with data privacy regulations; changes in interest rates, credit ratings or foreign currency exchange rates; risks associated with our operations in foreign countries; our increased use of outsourcing in foreign countries; risks associated with increased outsourcing of components manufacturing; our exposure to increased tariffs, trade restrictions or taxes on our products; negative effects on global economic conditions, financial markets and our business as a result of the United Kingdom’s withdrawal from the European Union; violations of our intellectual property rights and our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our ability to attract and retain key personnel; our restructuring and realignment activities and disruptions to our operations as a result of consolidation of our operations; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key components or other goods from our suppliers; our failure to accurately forecast component and raw material requirements leading to excess inventories or delays in the delivery of our products; production difficulties and product delivery delays or disruptions; our exposure to medical device regulations, which may impede or hinder the approval or sale of our products
and, in some cases, may ultimately result in an inability to obtain approval of certain products or may result in the recall or seizure of previously approved products; potential penalties for violating foreign, U.S. federal, and state healthcare laws and regulations; impact of healthcare industry cost containment and healthcare reform measures; changes in governmental regulations affecting our business or products; our compliance, or failure to comply, with environmental regulations; our failure to implement new information technology systems and software successfully; our failure to realize the full value of our intangible assets; our exposure to the credit risk of some of our customers and in weakened markets; our reliance on third party distribution channels; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; changes in tax laws, and fluctuations in our effective tax rates; any need for additional capital to adequately respond to business challenges or opportunities and repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; our existing indebtedness limiting our ability to engage in certain activities; volatility in the market price for our common shares; and our failure to maintain appropriate internal controls in the future.
Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect the Company’s operating results and financial condition are discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as updated by our Quarterly Report on Form 10-Q for the quarter ended April 2 2021 and our future filings with the Securities and Exchange Commission (“SEC”). Such statements are based on the Company’s beliefs and assumptions and on information currently available to the Company. The Company disclaims any obligation to publicly update or revise any such forward-looking statements as a result of developments occurring after the date of this document except as required by law.
About Novanta
Novanta is a leading global supplier of core technology solutions that give medical and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage. We combine deep proprietary technology expertise and competencies in photonics, vision and precision 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. 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”.
More information about Novanta is available on the Company’s website at www.novanta.com. For additional information, please contact Novanta Inc. Investor Relations at (781) 266-5137 or InvestorRelations@novanta.com.
Novanta Inc.
Investor Relations Contact:
Ray Nash
(781) 266-5137
* * *
Announcement Novanta to acquire ATI July 19, 2021 Exhibit 99.2
2 Safe Harbor Statement The statements in this presentation that relate to the anticipated ATI acquisition, including that the acquisition is expected to close in the third quarter of 2021; sources of funding for the ATI acquisition; the benefits of the ATI acquisition; future financial results; business opportunities; and future events or performance are forward-looking statements that involve risks and uncertainties, including risks associated with our ability to make and integrate acquisitions and realize expected benefits and synergies, business and economic conditions, failure to comply with the 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, risks associated with the COVID-19 pandemic and other events outside our control, and other risks identified in our filings made with the Securities and Exchange Commission (“SEC”). Actual results, events and performance may differ materially from those anticipated in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking 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 included in the Company’s Form 10-K for the year ended December 31, 2020 and subsequent quarterly filings with the SEC, as applicable. Please see “Safe Harbor and Forward-Looking Information” in the Company’s most recent quarterly earnings release on Form 8-K for more information. 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.
ATI OVERVIEW 3 Confidential and Proprietary
Leading OEM supplier of end-of-arm technologies for robots in industrial and medical applications, with specialty in Robotic Changing Systems and Force/Torque Sensors ATI OVERVIEW Robotic Changing SysteMs Increase flexibility and productivity of industrial, collaborative and medical robots by allowing them to switch tooling during the manufacturing process. 65% 25% 10% Force/Torque Sensors Highly precise 6-dimensional sensing feedback, adding a feel of touch to the robot by monitoring, detecting and regulating linear and rotational forces exerted upon it. Collision Sensors, OTHER 4 Confidential and Proprietary
Creates Leading Position in End-of-arm Technologies Potential for technology convergence play with sensing, motion and software Executes on Our Strategy Expands presence in robotics, including surgical robotics applications Adds intelligent subsystem content Increases exposure to electric vehicle market Increases Scale of Our Precision Motion Group Expands to a ~$250 million platform Ability to cross sell to mutual customers Supply chain synergies with Novanta Adds New Capabilities and Strong IP North Carolina manufacturing center ~100 Engineers Strong IP with ~60 patents 5 Outstanding Strategic Fit
Perceiving and planning how to move in dynamic and static scenes via vision systems and optics Measuring force, torque, position, temperature, pressure, and other stimuli in the external environment Enabling precise movement via actuators, motors, drives, and mechatronics VISION SENSING MOTION CONTROL Giving robots the flexibility to change their environments with tool changing, material removal and force sensing ROBOTIC END EFFECTORS 6 Novanta and ATI have the opportunity to play the technology convergence between these capabilities Robots Need to Effectively Interact With Their Environments
7 Expands Content in Surgical Robots ATI F/T Sensor (x6) Increasing content and relevancy of intelligent technology solutions in mission critical applications Possibility to optimize an integrated servo and sensing solution for improved haptic experience of surgeons
8 Strong Presence in Robotics Robotics is a key enabler to Factory 4.0 goals of automating to improve safety, quality and productivity Portfolio of highly engineered, intelligent end-effector technologies Well-positioned to capture growth in automation and robotics Differentiated technologies, which could be further enhanced through Novanta’s offering
Headquartered outside of Raleigh, North Carolina 138,000 sq. ft. modern manufacturing facility Dedicated labs for R&D, Electronics, Mechanical Assembly, Sensor Calibration Long tenured technical workforce FACILITY >350 employees, with ~100 engineers Strong emphasis on Continuous Improvement and Lean (many employees have yellow belt) High commonality with Novanta manufacturing capabilities and know-how Close collaboration with customer R&D and engineering teams US revenue ~45% of total sales CAPABILITIES Adds New Talent and Capabilities 9
Additional contingent cash payments associated with 2021 financial performance To further incentivize future financial performance, expect to grant performance stock units Mid-teens Adjusted EBITDA multiple if performance milestones are achieved Financed through cash and credit facility Gross Debt Leverage is expected to be between 2.7x and 2.9x at year-end 2021, depending on earn-out achievement Attractive return profile and accretive Expected to close in 3Q21 $172M Upfront Purchase Price +$70M 2021 Expected Annual Sales ~2.5x 2021 Expected Annual Sales 10 Confidential and Proprietary Financial Highlights
Appendix 11
Increases flexibility and productivity of industrial, collaborative and medical robots by allowing them to automatically switch tooling during the manufacturing process Robotic Changing System 12 Confidential and Proprietary
Using the highest sensitivity SOI strain gauges available in the industry, ATI’s Force/Torque sensors provide 6-axis dimensional sensing feedback, essential for high precision robotics applications Force/Torque Sensors 13 Confidential and Proprietary
Thank You