Q2 2021 Novanta Inc Earnings Call
Coming acquisitions, and the past months, both of which will be of great strategic fit for November.
And together, we will contribute significantly to an event those long term growth and our.
Our presence in attractive high growth application areas.
And these 2 transactions are both expected to close and the third quarter.
And we will speak to them in more detail and a few minutes.
Speaking of more detail to our second quarter results of our company delivered approximately 180 or $168 million and revenue representing.
Representing 16% year over year revenue growth on a reported basis and 11% on an organic basis. This is the highest ever single quarter sales for an event of which comes on the strength.
Of rebounding markets and exceptional exceptional execution by our teams.
We are also pleased to show healthy reported revenue growth of 8% versus.
The second quarter of 2019 as sign we are emerging stronger out of this pandemic.
In addition in the second quarter, we had excellent operating performance with adjusted EBITDA of $37 million, which is up 20% year over year.
This represents an EBITDA margin of 22% of sales, which is also up 80 basis points year over year. We are extremely pleased with and proud of how our teams drove exceptional operating performance using the Nevada growth system tools, despite widely reported supply chain challenges.
Adjusted diluted earnings per share was <unk> 62.
Which is up 29% versus 2020, and our teams delivered strong free cash flow performance and the second quarter of $23 million at a ratio of 200% of GAAP net income so all in all very strong results.
We saw record bookings momentum and the second quarter with sequential bookings growth of 12% versus an already strong first quarter and year over year bookings growth of 77% versus second quarter of 2020.
And we should we saw bookings strength across all of our segments with each segment, having positive book to bill and the quarter in the second quarter. Our overall book to Bill was 137.
We saw very healthy momentum and many of our advanced industrial applications as well as many medical applications and expect to be well above pre pandemic revenue levels in the remainder of 2021.
Now, let's turn and what we're seeing in our markets, where industrial and micro electronics continue to lead in November the recovery of <unk> sales to advance industrial applications were 48% of total sales and the second quarter and our sales continued to rebound across multiple application areas with sequential growth of 9%.
And year over year growth of 24%.
We also continued to experience high demand specific to the microelectronics investments and <unk> high speed networking and cloud based infrastructure as well as higher demand from <unk> based applications.
We continue to expect the increased microelectronics demand to be sustained throughout 2021 and likely into 2022.
The advanced industrial business also have an increase to and from new products, which I'll talk to in the second.
And the second quarter of 2021, 50% of 52% of November total sales went into medical applications overall sales to medical applications grew 9% versus the second quarter of 2020, but slightly down sequentially.
During the quarter, we did see a healthy rebound and orders and shipments to many of our medical OEM customers as hospitals slowly start to return to making capital investments. However, we're still seeing a slow recovery and some surgical applications with capital spending continuing to delay 2 experienced delays, particularly.
In light of the Delta variant resurgence and multiple parts of the world.
Despite the delay however, the majority of large medical Oems are increasing their demand and multiple multiple application areas are now starting of strong market rebound.
<unk> DNA sequencing for example is catching up to pre pandemic levels with a healthy outlook for the full year.
Also robotic.
Surgical robotics and.
Diagnostics are showing strong year over year and sequential growth the good outlooks.
All of the supports are viewed of medical sales should continue to grow as we progress further into the year.
Barring any further setbacks and the global recovery from the virus.
From a regional perspective, we saw growth across all geographies in the quarter. Our strongest growth continues to come from China, where sales grew 35% year over year and sales and Europe grew double digits and sales into United States grew 9% year over year.
Now, let me touch on some of the Ventas strategic growth metrics.
Our vitality index, which is revenue from new products launched and the last 4 years continues to be healthy at above 25% of sales for the second quarter.
Continuing to invest and our innovation pipeline with terrific results year to date, we launched 8 new products and we are on track for 25 launches for the full year with multiple new products in the queue for the second half of 2021.
With focus on the industrial and surgical robotics.
Our minimally invasive surgery precision motion and diagnostics and.
And the industry for the though we are very excited about all of these products and see a healthy uptick and technical evaluations requested by existing and new customers.
Let me highlight 1 of the products launched and the second quarter, which is called Evo and <unk>. This product serves our medical OEM customers and.
And there is a software based <unk> medical grade video recording system.
It takes live video from surgical kind of rounds, and then of course and converts images and videos into usable digital formats for secure used by the hospital.
This product furthers, our strategy to deliver more embedded software base functionality and and increasingly digital operating room environment.
Design wins, and the second quarter were up over 50% versus the prior year with multiple wins and most of our businesses continuing the significant momentum we built into the first quarter.
We expect to see continued success with our design wins during the remainder of the year.
Moving on to other updates the deployment of the November growth system continues to produce favorable financial results as evidenced by the growth margin expansion of over 300 basis points and strong cash flow in the second quarter of 2021.
We are very pleased with how our teams are adopting the common way of working and we see excellent opportunities during the rest of 2021 and beyond to continue to transform our operations and customer engagement using the an event the growth system.
We also continue to build and invest in our inclusive and diverse and <unk> culture with the appointment of MFA and as our Vice President leadership development and diversity equity and inclusion or DNI.
And partnership with myself and the new vent the leadership team.
And that will help build the diverse talent pipeline and embed the eni deeper into our culture of our systems and processes. So everyone regardless of their background can succeed at the event.
Finally, we continue to be active in the M&A market, we recently announced 2 acquisitions.
The Schneider electric motion or SCM and ATI.
Both the SCM and ATR and fantastic businesses, which will be excellent strategic additions to November.
Expanding our positions and high growth markets.
As of now we expect both transactions to close and the third quarter and.
Robert will give you more details on both businesses and just a few moments.
So in summary, our second quarter was stellar with record sales and bookings and excellent operating performance.
And we feel good about our long term strategic positioning of both medical and industrial applications with long term secular growth trends and robotics and automation.
Health care productivity and precision medicine.
And we're confident and our outlook for the year the strong year over year growth and we feel good about our momentum the space.
Strong innovation pipeline and balance sheet.
So with that I will turn the call over to Robert to provide more details on our operations and financial performance Robert.
Thanks, and good morning, everyone before walking through our operating results I will share some more details on the 2 acquisitions Matthias just mentioned.
And we've agreed to acquire <unk> per $115 million and cash at the end of the leader and innovative motion control solutions, specifically around brushless motor technologies integrated motor drive and electronic control the.
And the addition of <unk> technology, we will expand our precision motion control portfolio furthering our ability to serve customers with unique high performance solutions at the end of developed key solutions for applications demanding highly precise control of the movement in areas, including medical instrumentation lab automation.
And robotics and other advanced manufacturing applications.
<unk> is expected to help our expansion into automation and robotic applications through advanced motion control solutions the.
Business is also anticipated to increase and Novartis exposure, the life Sciences, and medical end markets, while broadening our access the sophisticated automation integrators.
The business is approximately $60 million 60 employees and is headquartered in Marlborough, Connecticut.
Next we have also agreed to acquire ATI for $172 million upfront along with additional contingent cash payout structured as an earn out.
Held a separate call on the ATI acquisition, but I'll repeat a few highlights from this exciting acquisition.
ATI is the leading supplier of intelligent and of our and technology solutions, the original equipment manufacturers and the robotic space.
As the leader and the robotics space and have more than $70 million and revenue and of high single digit growth industry.
Focus on robotic applications has positioned them to win and a marketplace with strong long term secular tailwind driven by continued penetration of automation robotics and both the advanced industrial and medical markets.
ATI develops manufactures and sells robotic changing system force towards sensors and collision centers for and industrial collaborative and medical robotic applications.
These products enable OEM and end users the increased safety versatility and productivity of the robotic systems.
Applications include electric vehicle robotic surgery and collaborative robots.
ATI really is a fantastic business with the strong fit with Nevada.
And the offer proprietary intellectual property and these attractive and growing robotic applications, giving novatel of significant foothold to allow us to expand content with our customers, while also serving new customers and applications.
And I was founded and 1989 has grown to over 350 employees, including 100 engineers and in the long tenured and technical workforce with deep expertise and Knowhow and the robotics space well recognized and the industry.
We are very excited to have both <unk> and ATI and joined the Nova and the family. We're currently and our customary waiting period on both transactions, which includes the regulatory review.
After the close both of these transactions will become part of the precision motion segment offering some of the most sophisticated technology solutions available and the precise motion and robotics space.
We look forward to working with <unk> and ATI teams with their talent the expertise and their unique capabilities.
Even after these 2 excellent transactions acquisitions will continue to be a primary focus on math of capital deployment. We continue to work on very active pipeline of opportunities and we feel good about the progress, we're making and this area.
I'll now turn to give our normal update about the performance of our operating segments.
Starting with our Photonics segment for.
For the second quarter of 2021, our revenue was up 30% year over year and up 7% sequentially.
The strong performance reflects the continued rebound and advance industrial applications and DNA sequencing.
<unk> were up 148% year over year, giving us confidence and the business outlook for the remainder of the year.
The book to Bill was 146 and the second quarter.
New product revenue stayed strong at greater than 25% of sales and in the second quarter and total NPI sales were up 76% year over year.
Design wins were up over 60% year over year.
And finally, the sales to customers and China grew more than 50% and the second quarter as we continue to see strong momentum and our photonics products and the China market.
Turning to the precision motion segment. This segment saw 30% year over year revenue growth and 14% sequential growth and the second quarter of 2021.
And with bookings nearly doubling year over year, giving us a book to bill ratio of 160 and the quarter.
Within the precision motion segment, and the second quarter and do product revenues grew by over 40% and was over 20% of total sales for the segment design win activity and this segment was up 30% on the year to date basis versus the prior year and finally, the segment saw another quarter of more of a 30% growth year over year from us.
Customers in China.
Finally, turning to the vision segment. The segment predominantly serves the medical end markets and saw a revenue decline of 2% year over year in line with expectations for the business given the difficult comparison to prior year.
While revenue growth continues to be delayed due to deferred hospital spending caused by COVID-19 hospitalization rates, our customers continue to see surgical procedure growth recover to pre pandemic levels and the United States, China and the European healthcare market.
With the continued progress with surgical procedure growth points to the second half of 2020, 1 recovery and the business.
With that being said the pandemic does not behind us and additional COVID-19 infection rates remain a concern we are carefully monitoring.
Despite the near term pause and sales growth. The vision segment saw bookings growth of 23% year over year and a book to Bill of 115.
The vitality index and this segment remained about 30% of sales with new products being a key driver of the resilience, we have been seeing and the business.
Design win activity was especially good in the quarter more than double the amount of activity from the prior year and the business slowed on closed on some significant wins with several large medical OEM customers.
This is a huge accomplishment of further solidifies the exciting growth prospects of this segment over the next several years.
I'll now turn back of the overall company and results.
Our second quarter non-GAAP adjusted growth profit was $76.9 million or a 46% adjusted growth margin compared to $61.4 million or 42% adjusted growth margin in the second quarter of 2020.
And the second quarter adjusted growth margins increased more than 340 basis points year over year and.
90 basis points sequentially.
The strong result was in line with our expectations and comes as a result of ongoing work from our operating teams to drive the Nevada growth system deeper into our day to day work.
And the factories, the better leverage their cost and drive supply chain efficiencies.
The significant challenges.
Nevada continues to experience significant supply chain disruptions manifesting, primarily around electronic materials shortages and logistics disruptions.
As we discussed and the first quarter earnings call, we expect supply chain disruptions and shortages will continue to remain our number 1 challenge in 2021.
And the second quarter, we were extremely proud of our manufacturing team's execution and ability to mitigate these challenges.
Second quarter, R&D expenses were nearly $17 million or roughly 10% of sales.
As demonstrated in November of 150% growth and design wins year to date, our investments and innovation and are making significant progress.
Second quarter, SG&A expenses were $31 million or 18, 6% of sales.
SG&A expenses were down slightly and the second quarter of 2021 on a sequential basis of the consequence of lower compensation related taxes.
Adjusted EBITDA was $37 million and the second quarter of 2021, and we're at 22% EBITDA margin or adjusted.
The EBITDA performance beat our expectations and our previously issued guidance, mainly driven by strong growth margin and higher sales volume flowing through to profit.
On the tax front, our non-GAAP tax rate for the second quarter of 2021 was 18, 2%. This differed from the statutory rate driven largely by jurisdictional mix of income.
On a non-GAAP basis adjusted earnings per share were <unk> 62.
In the quarter compared to <unk> 48, and the second quarter of 2020, and the favorable results for our adjusted EPS were driven by strong profit and higher sales.
Second quarter operating cash flow was nearly $29 million.
This good result was driven by strong profit and by sustained improvements and our networking capital.
And finally, we ended the second quarter with gross debt of $196 million and our growth leverage ratio was 1.5 times.
Our net debt was $62 million.
Turning now to guidance as we look at the third quarter, we continued to see strong demand from the advanced industrial sector with capital spending continuing a strong recovery.
With the bookings and backlog progress and remains very clear that our number 1 challenge in 2021 remains supply chain disruptions caused by electronic material shortages and the third party logistics constraints.
Thus far and manufacturing teams have been successful and mitigating the majority of the shortages.
But we continue to see some of these dynamics get more complicated and difficult to mitigate and the short term at least when it comes to meeting our customers' expectations.
We are using all of our resources and tools the limit the impact and expect this challenge to remain through year end.
However, it is clearly a temporary situation and despite this we feel we have solid visibility to not only raise our third quarter financial outlook, but also of the rest of the year.
Starting with the third quarter of 2021 as we stand here today, we expect GAAP revenue in the range of $165 million to $170 million, we're expecting that the year over year of 15% to 20% revenue growth and continued bookings progress.
The revenue range itself is governed by material availability of our factories third party logistics disruptions and possible disruptions with our customer production processes through their own supply chain challenges. It is not driven by demand, which is continuing to remain very robust.
In addition, the range also factors in some part shortages, we believe are unlikely to be mitigated before quarter end.
On a segment level, we expect continued growth in both the photonics and the precision motion segment comparable to the second quarter.
Whereas we expect our vision segment will be largely flat on a year over year basis, and a sequential basis.
We expect bookings and backlog the continued to build and this segment. The electronic materials shortages are concentrated in this segment, causing the under delivered of customers' demand and the third quarter.
Moving on to adjusted growth margins, we expect gross margins and the third quarter to continue to hold at nearly 46% growth margin.
Despite the significant supply chain disruptions.
While we continue to see some areas of higher cost. We also continued to be impressed with our manufacturing teams ability to find new productivity programs to mitigate these cost pressures through the application of the Nevada the growth system.
R&D expenses will increase from the second quarter, 2 of approximately $18 million and the third quarter as a consequence of normal fluctuations and project spending on our NPI programs.
SG&A expenses for the third quarter will be approximately $31 million similar on a percentage of sales to the second quarter.
Depreciation and amortization expense will be in line with the second quarter levels of slightly more of the $3 million and stock compensation expense and remain at roughly $5 million and the third quarter of 2021.
For adjusted EBITDA, we expect the range of $35 million to $37 million.
Interest expense, which is about $1.5 million and the second quarter will be similar and the third quarter of 2021 absent any impact from borrowings associated with the Snyder and ATI acquisition.
We expect our non-GAAP tax rate to be around 19% absent significant changes and jurisdictional mix of income or other variability of our eligible tax benefits.
Diluted weighted average shares outstanding will be approximately 36 million shares.
The adjusted diluted earnings per share, we expect the range of 55 to 60 and the third quarter.
Finally, we expect free cash flow to be lower and the third quarter than in the past few quarters..1 factor impacting this is an $8 million cash payment, we will be making and the third quarter, the finalize and earn out on an acquisition from several years ago.
The earn out payment is considered compensation under U S GAAP and there was.
Conditional on employee retention and thus classified under operating cash flow.
In addition, we expect capex to increase to approximately $9 million and the third quarter as a result of finishing our new Taunton U K manufacturing facility and our Photonics segment.
The third quarter guidance does not include the impact of closing of the SCM and ATI acquisition.
While we continue to expect these acquisitions to close at the end of the third quarter. We cannot include them in our guidance at this time.
Turning to the full year of 2021, we are raising our guidance based on the continued strong demand environment and despite the significant challenges associated with global supply chains.
We now expect full year revenue of approximately $660 million to $670 million.
And once again this revenue guidance excludes the expected revenue contributions from the SCM and ATI acquisition.
Therefore, we anticipate updating guidance again after these acquisitions have officially close before the end of the third quarter.
Gross margin for the full year of expected to be between 45, 5% and 46% representing 200 basis point improvement over 2020.
Overall, R&D and SG&A expenses for the full year of expected to between $195 million and $200 million roughly 30% of sales.
We expect adjusted EBITDA to be and the range of $140 million and $143 million and finally based on non-GAAP tax rate of 15% to 16% for the full year, we expect adjusted diluted earnings per share to be and the range of $2.30 and $2.40.
All of these financials will be updated again following the close of the SCM and ATI acquisitions later this quarter.
In conclusion, we continue to be extremely pleased with the quality of our businesses.
Quality of engagement of our teams and the strong and demand environment, while we expect to face our challenges around supply chain disruptions and even rising Covid cases. We believes these are temporary challenges and the company is well positioned to emerge stronger.
We remain very proud of the performance of our employees and their tireless efforts to help us be successful and a very challenging environment and.
And most importantly, we remain excited about our future and look forward to continuing to deliver on our commitments to our employees our customers and our shareholders.
This concludes our prepared remarks, we'll now open the call up for questions.
We will now begin the question and answer session.
Ask a question you May press Star then 1 on your Touchtone phone.
Youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then 2.
At this time, we will pause momentarily to assemble the roster.
And our first question comes from Lee Jagoda CJS Securities. Please go ahead.
Hey, good morning, and congrats on the quarter.
Good morning Lee.
So just starting with precision motion and the margins. There can you talk about the sustainability of the margins. There just because I think it may be the highest gross margin you've ever had and that segment.
Yes, there's a little bit of mix benefit there happening and the second quarter, but.
But I do think something with a 5 and front of it.
And what is sustainable as we get into the second half of the year.
Got ex.
And then on the vision side I know you mentioned you know there was headwinds and medical kind of.
And is slower to recover that being said it took a pretty material step down versus Q1, and historically other than last year, which was clearly COVID-19 related.
Don't have that seasonal step down in Q2 versus Q1 is it just short term demand fluctuations or is it.
And theres some seasonality because of some acquisitions you've been in the past that are causing the Q1 to Q2 step down and how should we think about that going forward.
All of it is.
The associated with just the surgical and market demand right now so it's not guided around this and.
And the first quarter, but.
I would say that it's all related to <unk>.
Where we sit and the supply chain on the surgical market. So the despite the fact that surgical procedures are picking up.
Will we have a bit of a delayed impact on that on our own results and and as more likely to manifest or start the manifest in the second half of the year.
Got it.
And just 1 more quick 1 the vision gross margins I assume that's just a greater mix of consumables, given the lower OEM equipment sales Thats correct.
Okay. It.
It sounds good thanks very much.
Right.
The next question comes from Rob Nathan of Baird. Please go ahead.
Hi, Yes, good morning, guys.
The bookings the bookings strength and the quarter and and really year to date has been outstanding and so.
I understand the supply constraints.
You think about your outlook, but how should we be thinking about the backlog conversion here and any changes in your customers' order patterns are they how much are they discounting maybe more extended lead times versus.
Just just the overall in demand.
Yeah, So I would say for the most part we have not shipped anything that is filled antibodies.
Alright, so everything that we've been shipping out the door has been subsequently going out the door from our customers.
So the degree that there is some sort of building happening we have not kept up with that.
With that the demand environment yet.
And that represented a little bit and that book to Bill. The fact that the book to Bill So much higher it's really we're not out of position, yet where we're exceeding their shipments and therefore, they are building up some safety stock.
We expect something in the bookings and the range of about 10% of it.
And maybe a little bit of planning around safety stock because there is some replenishment that needs to occur and a couple of customers.
And this year, we're not expecting the 2 to fill that up.
Due to the supply chain shortages.
Yes.
Macro wise, Rob this is amortize.
You basically see that the markets and which we operate.
And it's well reported the.
And the rebounding, particularly advanced industrial markets, which were benefiting from so we're operating well above 2019 levels actually and so it's coming back very healthily and we have additional tailings from from new products and there as well. So yes, we feel very good about that and.
And on the medical side, you will see.
<unk> robotics, and DNA sequencing coming back to pre pandemic levels and actually exceeding net and we had the very strong outlook for the year as well and and probably beyond 2021. So yes, we feel good I mean, it's the teams are working hard to fill the demand.
Like what were set there is part of it maybe is.
And.
Customers willing to make sure that they get in line, but most of it.
Achieving the.
The vast majority.
The structural sustained demand as we can see it.
Okay.
And just to speak just photonics, specifically a minute.
And where you probably had your greatest at least year over year bookings growth.
How did the the mix of orders there look between the industrial side and the medical side you do have more of the mix in that segment.
Yes, I would.
Say largely balanced because the big chunk of the medical exposure there is either tied to the DNA sequencing market, which is doing fairly well right now.
Or or some laser based I procedures that are actually doing okay as well.
So looking at the book to Bill ratios of industrial and medical within that segment, there are actually pretty comparable to each other.
Okay.
And maybe just the last question. It sounded like you said you did a very good.
Sure.
And you felt like you did a very good job and the second quarter mitigating some of the supply challenges in terms of being able to recognize shipments.
And maybe that gets a little more challenging and the third I'm just curious.
If there was a.
Our revenue or of built in backlog, maybe in the second quarter, what that might've been related to the supply challenges and and what you are.
May be assuming for the third quarter on that on that front as well.
Yes, what I'll say is the third quarter's hedged down first off for supply chain shortages that we don't think that we can mitigate before the end of the quarter and then the range of itself is really kind of the risk profile around.
The pluses and minuses of supply chain disruptions that we might experience or that of our customers right. The from a demand perspective, yes. We are we are seeing demand above the top end of the range that we provided for the third quarter.
But we've already kind of add back for what we know our material shortages that were not going to get back and time in order to ship the product out.
That's the way to think about.
And what we leave on the table of little bit is that we generally run of book to Bill of 1.
And so we're always and the fact that we're seeing order growth coming in at a higher rate and revenue.
The demand that were.
Part of that demand is sitting on the table. So I wouldn't get into how much better can we do right now just because of the demand environment is robust the supply chain of supply chain environment is not robust and.
And so we're just mitigating this as best we can but I will say that if you look at the 2019 levels were performing and kind of a high single digit growth rate and the back half.
And as a consequence of what we can deliver.
Okay and was there any under delivering to speak of and the second quarter.
There was.
There are certain situations, where we did not get the parts and time in order to meet customers' expectations.
So that is happening a little bit of the second quarter, that's already factored in to the third quarter.
But I don't want to kind of get into the specifics around it.
Okay.
Very good.
Alright, Thanks, Rob.
And again, if you would like to ask a question. Please press Star then 1.
And our next question will come from Brian Drab of William Blair. Please go ahead.
Hey, good morning.
And Brian.
Another question on the gross margin which was.
Just just outstanding and the quarter.
And maybe a couple of questions on gross margin, but did you say if you could quantify specifically what the challenges.
And just related to supply chain might've been in terms of basis points of headwind on gross margin and then.
The other question I have and gross margin of this.
Maybe I guess, the third quarter might be.
And just a little bit relative to Q, but.
Is the sort of the floor now for gross margin and.
And can you see it going up above 46, as we move into next year.
Yes, So let me answer the second question first the guidance that we provided for the back half of the year is roughly a 46% gross margin. We said for the full year 45, 5% to 46, that's over 200 basis point improvement over and over 2020. So at least the next 3 quarters of the gross margin.
Very sustainable we still fundamentally believe that we can drive about 100 basis points of gross margin expansion per year. So as we get into 2022, we would expect and our businesses are expecting to drive continued gross margin expansion and we still see that opportunity both of us.
Looking at the productivity programs and we have underway as well as looking at the new product launches and the mix of products and which we expect the launch. So I think we feel pretty good that this is a sustainable floor that we can build off of and continue to make progress.
Overall.
Be careful of getting a little bit into.
What more could you have done and do not have all of these costs hitting you I would say that that kind of gets into selective disclosures around only talking about the negatives and therefore your number can be higher it's still in the impressive gross margin expansion over the 2020 numbers and what gives us confidence we can continue to do.
And do it into 2021.
2022 got it.
Got it.
Are you able to.
Tell us which acquisition the earn.
Earn out was associated with.
The the 1 that's hitting our operating cash flow and the third quarter is the Zip line.
The acquisition.
So that's the net conductive coder business within the precision motion segment.
Got it.
And then speaking of the deadline and and the other acquisitions and done now of the SCM.
And ATI.
Just kind of zooming out and thinking about the strategy that you've talked about.
In terms of expanding the addressable market and.
And each of the segments through subsystems and.
The software et cetera.
How many.
Pieces of the puzzle I still missing.
And what you wanted to do in terms of that expansion.
What percentage of the pieces, maybe have you added and the last couple of years now the of the.
Total that you need.
Oh, My goodness I don't know about percentage of the business, but what I do know is.
If you look at where does it where the.
Industry and the market is going obviously, there is of tremendous need for robotics, and automation and robots that work side by sides of humans.
And need to operate more almost like humans, so they need to touch feel and move around <unk>.
And I see like humans, and there's a long way to go still before that that is the reality, but we're definitely making strong progress. So we won't be the enabling technology provider towards that towards that trend.
And we think that.
The acquisitions, we've just made are helping us tremendously.
And both getting deeper and lab automation or.
And co bots and <unk>.
<unk> of robots for electric vehicle production for example, but also deeper into robotic surgery again.
And with the force torque sensing capability that enhances just the the haptic feedback right of the surgeon while operating so.
The sensors and the feedback mechanisms as well as other sensing.
And beliefs.
It will be and continue its focus for the company.
And you'll see us, making more moves shut down the line, we think the market.
You are probably watching this as we do it's grown tremendously.
She the explosion of the ecommerce issue mobile robotics.
She's more side by side the improvement of safety that is really important and of.
Of course to be able to work together and side by side robots.
So all of these things require sophisticated technology that we want to be part of so.
It's bill.
Billions and billions of addressable market.
And at some point and we're just scratching the surface. So sorry, yes. So we're excited and we see some follow up opportunity with the particularly.
And particularly the ATI acquisition.
Alright, okay. Thanks for going through that I appreciate it.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to Matthias Gloucester for any closing remarks.
Thank you operator, so to summarize the Ventas performance and the second quarter of 2021 of US was excellent.
We had all time highs for sales and bookings and we beat our own expectations for profit and cash flows and.
And our innovation programs are healthy and progressing and after a storm and investments and the last few years and we saw another quarter of fantastic growth and design wins.
We signed agreements for 2 acquisitions, we talked about just now and which we believe align very well with the advent of strategy and we will open up more opportunities for us and attractive high growth markets and the future.
We're excited to see the continued strength of recovery and the global economy, and the advanced industrial sector and also and the medical sector and November is very well position and the sectors, we invest it for it and we.
And with diverse diversified exposure to long term secular macro trends of robotics, and automation and precision medicine of minimally invasive surgery and industry for the auto.
So in closing I would like to thank our customers our employees and our shareholders for their ongoing support and I'm very grateful for the dedication and strong contribution over teams and of committed the event the employees and particularly our supply chain and operations teams, who are working tirelessly to succeed.
Fully mitigate shortages.
We appreciate your interest and the company and your participation in todays call and I look forward to joining all of you and several months from the third quarter 2021. The earnings call. Thank you very much. This call is now adjourned.
The conference.
Vince has now concluded. Thank you for attending today's presentation and you may now disconnect.