Novanta (NOVT) Q1 FY26 earnings call: guidance and Q&A

Clarification on the 15% of revenue attributed to DUV, EUV lithography, board drilling, and other AI-related applications; whether it's all semiconductor.

Matthijs clarified that the 15% is a collective of applications within Precision Manufacturing and Robotics & Automation, driven by GenAI infrastructure investments, not solely semiconductor. It includes DUV/EUV lithography, GPU drilling, advanced packaging, probe card production, and metrology for advanced wafer fab nodes, all requiring high precision.

“It includes current core business to deep UV, EUV lithography, new product ramps in deep UV and EUV lithography, GPU drilling, but also advanced manufacturing aspects like probe card production, which is used for GPU testing.”

asked by Lee Jagoda · answered by Matthijs Glastra

Details on the NVIDIA AI lab announcement, its positioning in robotics, and expected P&L impact.

Matthijs stated Novanta is the only servo drive manufacturer selected, certifying their drives within the NVIDIA ecosystem. This adds credibility for OEMs using NVIDIA infrastructure, leading to increased interest and more meaningful prototype orders, with more significant impact expected in 2027.

“We're the only servo drive manufacturer as far as we are aware that actually got selected. You need to go through a very rigorous certification process. And so what that means is that, yes, our drives are being tested and have been certified in the NVIDIA ecosystem.”

asked by Lee Jagoda · answered by Matthijs Glastra

Reconcile the 37% bookings growth with the lower organic revenue growth expectation, and if orders ship in 2027.

Matthijs explained that most orders ship within 12 months. The high bookings growth is partly due to a lower base in Q1 last year and some full-year orders placed by customers. He noted a typical 2-3 quarter lag between bookings and revenue, which supports confidence in the full-year outlook.

“The majority of the orders will ship in the next 12 months, right? So just to be clear, the other thing is just to be fair, it's off a lower number in the first quarter of last year.”

asked by Brian Drab · answered by Matthijs Glastra

Request for elaboration on the Westwind business opportunity in GPU drilling and its size, noting its previous $2M/quarter revenue.

Robert stated that the overall semiconductor business is roughly 10% of sales and includes GPU drilling and EUV/DUV applications. He emphasized that while this segment will grow faster than advanced manufacturing, it's not expected to dramatically outpace other high-growth areas like medical, maintaining its proportion of total sales. Matthijs added that Novanta holds niche leadership positions in these areas due to unique competencies.

“Just as a reminder, the robotics portion of our business is roughly 20% of sales. The semiconductor business is roughly 10% of sales, right? And embedded within our semiconductor are things like GPU drilling as well as EUV/DUV-based applications, right?”

asked by Brian Drab · answered by Robert Buckley

Whether the strengthening semi market could accelerate the ramp of EUV and DUV wins, which were previously expected later in the year.

Matthijs confirmed that core DUV/EUV business is growing nicely, and a new piece of business, previously delayed, is now expected to ramp in H2 this year, contributing meaningfully and becoming more pronounced in 2027.

“we have both core business today that we see growing very nicely in line with the growth rates that I mentioned for the GenAI piece, right? And then we have a new piece of business that we -- that has been delayed in the past, but we feel very good about that it will ramp this year. in the second half of the year.”

asked by Quinn Fredrickson · answered by Matthijs Glastra

Commentary on key regions, specifically why U.S. sales were down YoY, and the impact of regionalization.

Robert clarified that regional sales figures reflect shipping locations, not necessarily end-market demand. U.S. sales being down was due to customers shifting production to other locations (e.g., Mexico, Costa Rica) or splitting shipments. He noted growth in the U.S., China (semiconductor/industrial specific), and Europe (medical specific).

“Just as a reminder, our sales to regions are really shipping to factories of our customers, and so may not be representative of the end market demand in that area. So -- for example, the U.S. markets, generally speaking, are stronger right now. And yet when you say the sales are down year-over-year, that's just the fact that there's some shift of where our customers produce those products more than anything else.”

asked by Quinn Fredrickson · answered by Robert Buckley

More color on what drove the impact, especially freight and tariffs, and timing to close the gap.

Robert explained that tariffs were rapidly reimplemented and escalated (e.g., aluminum from 25% to 50%) within a 4-week period, impacting immediate shipments. Higher freight costs also contributed. Novanta has implemented new surcharges and product price increases, repricing backlog. He expects tariffs to be muted in Q2 and a positive price-cost ratio in Q3, driving H2 margin improvement.

“I would start with tariffs. They were thrown out by the Supreme Court and then rapidly reimplemented and then rapidly escalated again. So the tariff rates changed within a 4-week period in certain categories like aluminum, as an example, went from a 25% tariff to a 50% tariff.”

asked by Quinn Fredrickson · answered by Robert Buckley