Good morning. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Novanta Inc.'s 2023 second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. To ask a question, you may press Star, then one on your touch-tone phone. To withdraw your question, please press Star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Ray Nash, Corporate Finance Leader for Novanta. Please go ahead. Thank you very much. Good morning, welcome to Novanta's second quarter 2023 earnings conference call. I am Ray Nash, Corporate Finance Leader of Novanta. With me on today's call is our Chair and Chief Executive Officer, Matthijs Glastra, and our Chief Financial Officer, Robert Buckley. If you have not received a copy of our earnings press release issued today, you may obtain it from the investor relations section of our website at www.novanta.com. Please note this call is being webcast live and will be archived on our website shortly after the call. Before we begin, we need to remind everyone of the safe harbor for forward-looking statements that we've outlined in our earnings press release issued earlier today, and also those in our SEC filings. We may make some comments today, both in our prepared remarks and in our responses to questions that may include forward-looking statements. These involve inherent assumptions with known and unknown risks and other factors that could cause our future results to differ materially from our current expectations. Any forward-looking statements made today represent our views only as of this time. We disclaim any obligation to update forward-looking statements in the future, even if our estimates change, so you should not rely on any of these forward-looking statements as representing our views as of any time after this call. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available as an attachment to our earnings press release. To the extent that we use non-GAAP financial measures during this call that are not reconciled to GAAP measures in the earnings press release, we will provide reconciliations promptly on the investor relations section of our website after this call. I am now pleased to introduce the Chair and Chief Executive Officer of Novanta, Matthijs Glastra. Thank you, Ray. Good morning, everybody, and thanks for joining our call. Novanta had a fantastic second quarter. In the quarter, we delivered $229 million in revenue, representing 7% year-over-year revenue growth on a reported basis and 5% growth on an organic basis. Adjusted EBITDA was $52 million, and adjusted diluted earnings per share was $0.80. These results are better than our expectations and reflect excellent operating performance by our teams in an evolving macroeconomic environment. The Novanta business model, with diversified exposure to high-growth medical and advanced industrial markets, has proven resilient under multiple geopolitical and macroeconomic scenarios. Our proprietary products and technologies are well positioned in medical and advanced industrial applications with long-term secular tailwinds, such as Robotics and Automation, healthcare productivity, and Precision Medicine. We feel that the strength and diversification of our portfolio and business model, combined with our winning growth strategy, focused on where we play and how we win, drives our performance no matter the environment. Now, let's turn to what we're seeing in our markets and our customer activity. We continue to see strong ongoing demand from our customers in many application areas. Our teams made great progress, reducing our past due backlog to customers by more than 46% sequentially, while still maintaining a backlog of $583 million, which is still very high by historical standards. This past due reduction was better than expected and helped us deliver stronger sales growth versus our expectations as we accelerated more shipments into the second quarter versus the third quarter. Our book-to-bill in the second quarter was 0.92, which is in line with our expectations. As we discussed in the last earnings call, our teams continued to reduce our lead times for our products back to historical averages and customer expectations, yet we continue to see strong demand from our customers, represented by our strong backlog coverage for the remainder of the year. In the second quarter, sales to medical markets were very robust, growing 20% versus the prior year and making up approximately 53% of total Novanta sales. During the quarter, we saw very strong orders and shipments to many of our medical OEM customers, with noteworthy strength in minimally invasive surgery, equipment and consumables, in vitro diagnostics and patient monitoring equipment, surgical robotics, and DNA sequencing. These categories all saw strong double-digit growth in sales year-over-year. We're seeing structural growth in these applications based on underlying secular growth drivers, such as patient surgical procedure growth rates and advancements in biopharma technologies, including next-generation DNA sequencing. We continue to expect to see tailwinds in these end markets for the remainder of 2023 and in 2024, further supported by post-pandemic patient backlogs and the new product launches and cycles of our customers and ourselves. Turning to advanced industrial markets, our sales in the second quarter, excluding microelectronics applications, were up 4% year-over-year and made up approximately 39% of total Novanta sales. The slower growth was in line with our expectations and is the result of a tighter industrial capital spending macro environment, in line with contracting PMI indices. In addition, in the quarter, we saw the start of a short-term pause in industrial robotic spending, manifesting mainly in China and countries with strong exports to China, such as Germany. This has been reported on elsewhere, and as a result of some weakness in China's e-economy, and the volatility and uncertainty in Chinese subsidies and stimulus, as well as deferral of some China-based projects around electric vehicles and battery production facilities. Novanta is seeing these impacts in our ATI business, which saw a year-over-year decrease in sales in the second quarter versus a very strong 2022. This end market pause is undoubtedly temporary, as is the economic weakness in China, as the mid and long-term secular growth drivers of robotics and automation remain intact. At this time, it is expected to continue for the duration of the year, with a recovery happening in 2024. Beyond industrial robotics in China, we continue to see resilient sales performance in many of our other industrial end markets, including multiple precision manufacturing applications, driven by increased overall adoption of automation-enabling technologies to address workforce shortages, business resiliency, and to address production needs for certain megatrends such as electric vehicles and green energy investments. Overall, our industrial exposure is steadily geared towards markets with secular growth outlooks. In just our microelectronics markets, which represented less than 8% of sales in the quarter, the dynamics are roughly the same as we said in our last call. In the quarter, we saw a nearly 40% decline year-over-year from the cyclical downturn in this market, particularly driven by our PCBA via hole drilling business, which is now run rating at just $2 million of sales per quarter, lower than previously expected. We now estimate that the overall drop in microelectronics market will be a 300-400 basis point headwind on total Novanta sales growth for the full year. Despite these macroeconomic headwinds, Novanta's diversified end market exposure shows the strength of our strategy and focus, enabling the business to show strong growth in the second quarter. From a regional perspective, in the second quarter, sales to North America grew 24% year-over-year, and sales in Europe declined by 6%, which reflects the macroeconomic slowdown in this region is working through and its connections with the China market. Sales in China, which represented about 9% of overall sales, declined 30% year-over-year, which was caused by the decline in microelectronics revenue, the industrial robotics pause, and overall macroeconomic weakness in China right now. These regional trends are expected to continue in the third and fourth quarter, with a recovery coming in 2024. Now, let me touch on some of Novanta's strategic growth metrics. For our design wins, year to date, we have had an expected year-over-year decline, which is mainly timing related. We had a tough year-over-year comparison from large design wins achieved in the first half of 2022, mainly in our minimally invasive surgery business. As we've reported previously, our MIS business won large new pro-product platforms in early 2022, with both existing and new customers, which we expect will contribute significantly to our revenue growth in 2025 and beyond. Despite the tough comparison for design wins so far this year, we feel good about the absolute dollar wins in dollar terms, and we expect to return to growth in design wins year-over-year as the year progresses. Next, our vitality index in the second quarter was at about mid-teens% of sales, which was roughly the same as prior quarter and in line with our expectations. As a reminder, 2023 is a transition year for our vitality index, with several top products going beyond their 4-year milestone this year. This means they are no longer tracked in the index, but they continue to contribute significantly to overall sales growth. We expect our vitality index to stay at roughly this mid-teen, teens level for most of 2023, but given that our R&D pipeline is the strongest in a decade, we expect this index to rebound in 2024 and beyond as we launch and ramp multiple new product platforms, both this year and next year. On that note, in 2023 year to date, we're pleased to report that we've launched multiple exciting new products across our businesses, and I will share a few highlights. In our Precision Medicine and Manufacturing segment, we recently launched the new FIREFLY3D ScanHead subsystem, which has been specially designed for metal-based laser additive manufacturing in electric vehicle battery processing. This product combines our highest performing digital galvanometers with our proprietary beryllium optics technology to enable the levels of extreme speed, accuracy, and low drift needed in these demanding application areas. In our Robotics and Automation segment, we recently launched the new Denali servo drive, which is the smallest and most power-dense servo drive in the world. This product sets new standards for safety and efficiency for a servo drive, while also being incredibly compact in size, yet easy to integrate. The Denali servo drive is designed for use in robotic joints, lab automation equipment, service robotics, and haptic systems. We also launched next-generation force torque sensors for these same segments, as well as robotic surgery. One more highlight, also in Robotics and Automation, is our new Series A tool changer product line. This end-of-arm technology is the latest generation of robotic tool changers, which are located in the wrist of the robot and permit single robots to be designed for multiple tasks. Series A is a great option for electric vehicle production lines due to the versatility it offers and an attractive price point to the end user. These are just a few examples of leading-edge products we've introduced this year. We're proud of the efforts and innovations of our talented engineering teams. Their ability to design products that help create productivity and value for our customers. Moving on, I'm proud to see our, how our teams are doubling down on the Novanta Growth System, or NGS. During the second quarter, we brought together 100 of our leaders to meet and further accelerate NGS momentum. Results of fast through backlog reduction, delivery, and quality improvement, improving time to market of our new products, gross margin expansion, and cash flow conversions are all being driven and becoming apparent using the NGS tools and processes. Next, I'd like to give you a brief update on Novanta's acquisition integration activities. We are approaching our 1st anniversary of our acquisition of MPH Medical Devices, and the integration continues to progress ahead of our expectations. Customer qualification of the site are well on their way, and the team continues to ramp up its capabilities to produce Novanta's own proprietary medical consumable products at production volumes. We feel great about the progress being made and feel we are on track to achieve our plans for both capacity expansion and margin expansion, which this site is enabling for our Medical Solutions segment. In summary, we had a terrific second quarter and a great first half of the year. We had excellent sales growth, driven by strong demand in medical end markets. We also delivered very healthy margin expansion and profit growth, which is based on great progress in deploying the Novanta Growth System. Our strong performance in the first half is helping us to balance some of the risks we're now seeing in the second half of the year. This gives us confidence to narrow the range of our full year guidance, which Robert will speak to in a moment. We believe Novanta's long-term strategic position continues to be extremely strong, and we're staying the course on executing our strategy and capital deployment model. We see continued success in attracting and retaining top talent, and further establishing a thriving company culture built for the long term. With that, I will turn the call over to Robert to provide more details on our operations and financial performance. Robert? Thank you, Matthijs, good morning, everyone. Our second quarter non-GAAP adjusted gross profit was $108 million, or 47% adjusted gross margin, compared to $99 million or a 46% adjusted gross margin in the second quarter of 2022. For the quarter, adjusted gross margins were up sequentially and year-over-year by more than 100 basis points. This outcome was better than our expectations and represents strong execution by our teams to achieve this result. The largest driver for our performance was better production quality achieved through the deployment of the NGS productivity tools in our factories. The 47% gross margin puts us on a solid track to achieving our full year goal of expanding gross margins by 100 basis points. Moving on to operating expenses. R&D expenses were roughly $23 million, or approximately 10% of sales. First quarter SG&A expenses were $42 million, or roughly 18% of sales. Overall operating expenses as a percent of sales, were flat sequentially and flat year-over-year in the quarter. Adjusted EBITDA was approximately $52 million in the second quarter of 2023, or a 22.5% adjusted EBITDA margin, versus $45 million in the prior year. On the tax front, our non-GAAP tax rate for the second quarter of 2023 was 18%. This differed from the statutory rate due to jurisdictional mix of income. Our non-GAAP adjusted earnings per share was $0.80 in the quarter, compared to $0.78 in the second quarter of 2022. While adjusted EBITDA grew double digits, EPS continued to be muted solely to the higher interest expense from the jump in worldwide interest rates. Second quarter cash flow was approximately $23 million, up 25% versus the prior year. We expect cash flows to continue to improve through the rest of the year as we gradually bring down our inventory to more historical levels and continue to drive good profitability. We ended the quarter with gross debt of $413 million, and our gross leverage ratio was 2.1 times. Our net debt was $321 million, putting the company in a great position to fund further acquisitions. I'll now turn to an update for the performance of our operating segments. First, in the Precision Medicine and Manufacturing segment, the second quarter of 2023, revenue grew 7% year-over-year. This segment continues to experience strong customer demand in medical applications, especially an uptick in next-generation DNA sequencing. The book-to-bill in this segment was 8.84 in the second quarter, which reflects the normalization of lead times as customers adjusted their level of backlog coverage to pre-pandemic levels as expected. Within Precision Medicine and Manufacturing, new product revenue stayed strong at greater than 20% of sales in the second quarter. Our sales team continues to win excellent new business in attracting high-growth medical and industrial applications, winning new content, winning new customers, and winning new applications. Design wins in these segments in the quarter were down year-over-year, but this was really driven by timing and difficult comparisons, particularly around the 2022 wins in Laser Quantum-branded products. For the full year, we expect solid design win growth year-over-year. The Precision Medicine and Manufacturing segment adjusted gross margin was 51% in the quarter, which was up 500 basis points year-over-year. This is a great outcome and reflects the efforts and successes this team is having in deploying the Novanta Growth System deep into the organization and overcoming some of the operational supply chain challenges they experienced in the prior year. Turning to Robotics and Automation segment. This segment experienced revenue decline of 11% year-over-year in the quarter. This was in line with our expectations and prior guidance. The decline continues to be mainly driven by a steep year-over-year decline in microelectronics applications, particularly our PCB mechanical via hole drilling applications, which declined over 70%, and now at an immaterial level of sales for the company. This decline in PCBA drilling is causing a sales growth headwind for the overall Novanta of approximately 300-400 basis points for the full year, which is slightly worse than we previously estimated. In addition, as Matthijs mentioned, the segment started to see an impact from a short-term pause in the sales of industrial robotics, caused by weak macro conditions in China, which is currently the largest market in the world for industrial robotics. This downturn is more pronounced in the third and fourth quarters and re-reflected in the guidance for the second half. The overall book-to-bill ratio in this segment was 0.80, again, driven by the microelectronics decline and exposure. Microelectronics experienced a negligible level of bookings in the quarter. New product revenue was roughly 10% of total sales for the segment in the quarter. As a reminder, this ratio is lower than 2022 because this metric now includes new product sales from our ATI business line, which has low new products in its revenue, and therefore is having a dampening effect on the overall segment ratio. As Matthias spoke to earlier, this quarter, ATI launched 2 new products, the Series A Tool Changer and next generation force torque sensors, both of which position it to capture new growth opportunities in medical robotics and industrial robotic markets. Adjusted gross margin for the Robotics and Automation segment came in at about 51%, which was roughly flat year-over-year, and up sequentially by 300 basis points. We're proud of the progress our teams are making by adopting the Novanta Growth System that drives strong margin performance. To accomplish growth margin expansion, considering the sharp declines in microelectronics, is truly a testament to NGS. Finally, our Medical Solutions segment saw reported revenue growth of 27% year-over-year, which was stronger than our expectations. Growth in this segment continues to be driven by strength in elective surgical procedures, as well as our JADAK business line, where the business continues to perform well now that supply chain challenges have been mitigated. The Medical Solutions segment saw a book-to-bill of 1.09 in the second quarter, with bookings up 13% sequentially and 5% year-over-year, further indicating the building demand we are seeing in this end market. The vitality in this segment reduced versus prior year. As we mentioned in our last call, this is largely driven by our first-generation smoke evacuation insufflator products reaching their four-year milestone, and so we are no longer tracking it as part of our official vitality index. As a result, this segment has a vitality index in the mid-teens year to date, which was in line with our expectations. We expect this metric to stay at this level for 2023, but to increase thereafter as we launch our second-generation smoke evacuation insufflators and endoscopic pumps in 2024 and in 2025. Design win activity in this segment grew single digits in the second quarter year-over-year, on the strength of some exciting design wins in our integrated operating room technology products. Overall, our business units performed at or above our expectations and are performing in a manner that helps to mitigate the volatility seen in industrial capital spending, microelectronics, and macroeconomic conditions, particularly in China. Our strategy of using multiple business units in multiple application areas focused on secular growth trends, has diversified out significant volatility, allowing us to continue to deliver solid results in a challenging environment. Turning now to guidance. As Matthias mentioned, we continue to see ordering behavior from our customers returning to historical patterns as our product lead times drop. We are seeing a steady improvement in lead times everywhere in the portfolio, and in some cases, our current lead times are already matching historical levels. This will result in a book-to-bill ratio continuing to be below 1 in the back half of the year, as discussed in our prior calls. From an end market perspective, we expect demand at our medical end markets to remain strong, and we see solid growth coming from both our medical capital equipment and our medical consumable sales, as well as our IVD and other life science customers. Year-over-year growth in the second half of the year will slow, mainly due to accelerated past due backlog reduction that happened in the second quarter, and more difficult comparisons in the second half of the year. However, we continue to see strong customer activities in medical end markets, particularly around new product launches across our portfolio. These projects remain on track, and as a consequence, our sales funnel looks stronger for 2024 and beyond. In our advanced industrial end market, we expect the downturn in microelectronics and a pause in industrial robotics due to the China economic environment to last through the remainder of the year. For China, in July, we've seen a sharp decrease in manufacturing production as measured by the PMI Index, with an accompanying sharp decline in export orders, which is leading to further weakening of demand in the second half. Microelectronic sales are expected to fall to approximately 7% of revenue by year-end, resulting in a 300-400 basis point headwind for the full year sales. Sales to China are expected to fall to approximately 8% of revenue by year-end. However, we expect the remainder of our industrial applications to be resilient in the back half of the year, and we continue to have solid backlog coverage in these areas.... We continue to see robotics and automation investments, particularly in the U.S. and Europe, being made to support business resiliency, mitigate labor shortages, and support investments in green energy and electric vehicles. We also continue to expect our disciplined focus on secular growth applications, a broader focus on medical markets, and our effort to accelerate new product introductions to allow Novanta to weather a more uncertain macroeconomic environment. Based on this environment, we are narrowing the full year guidance, which we provided back in March, in addition to providing an update to our third quarter expectations. Starting with revenue guidance for the third quarter of 2023, as we stand here today, we expect GAAP revenue in the range of $221 million-$224 million, which represent reported revenue growth roughly flat on a year-over-year basis. If excluded the impact of microelectronics end market, our revenue growth in the third quarter would be approximately 4% year-over-year. The 3rd quarter will sequentially down from the 2nd quarter, in part due to the accelerated shipments we made in the 2nd quarter to help bring down our past due backlog and better satisfy our customers, and in part by a pause in industrial robotics spending in China, which is expected to recover in 2024. On the segment level, in the 3rd quarter, we expect Precision Medicine and Manufacturing segment to grow revenue in the 6%-8% range on a year-over-year basis. Customer demand remains resilient in this segment, and we continue growth in multiple medical and industrial applications, including DNA sequencing, micromachining, and laser-based material processing. Our Robotics and Automation segment is expected to be down sequentially, high single digits, and down approximately 15% year-over-year. The year-over-year decline is driven by the downturn in the microelectronics market and the pause in industrial robotic spending in China due to the local dynamics there. Our Medical Solutions segment is expected to demonstrate year-over-year revenue growth in the range of 8%-10% in the third quarter. While we are seeing more difficult comparisons, growth in our applications remains strong and building, thanks to the expected new product launches scheduled for 2024. For the full year of 2023, we expect GAAP revenue in the range of $892 million-$902 million. This would represent mid-single digit reported growth for the full year. This reflects our ongoing strength in medical markets, moderation in some industrial end markets, offset by weakness in microelectronics as well as in China in the second half of the year. Moving on to overall Novanta's gross margin. We expect gross margin in the third quarter to be approximately 46.5 to 47.5, which is up year-over-year, and be roughly flat sequentially. Precision Medicine and Manufacturing segment gross margin is expected to increase moderately from the second quarter, whereas Robotics and Automation and Medical Solutions segments are expected to be flat sequentially. On the full year of 2023, we expect adjusted gross margins to be approximately 46.5%-47%. We believe our team's efforts to use the Novanta Growth System will help us sustain and expand our gross margins as we head into the remainder of the year. Turning to R&D and SG&A expenses, they are expected to be approximately $65 million-$66 million in the third quarter. The increase in cost year-over-year is driven by labor cost increases and further investments in innovation, particular investments in our Medical Solutions segment, tied to the aforementioned development products and some further investments in our commercial engine. Depreciation expense, which was about $4 million in the second quarter, will be the same in the third quarter. Stock compensation expense, which was just below $6 million in the second quarter, will be slightly above $6 million in the third quarter. For adjusted EBITDA in the third quarter of 2023, we expect a range of $48 million-$51 million. For the full year of 2023, the adjusted EBITDA, we expect a range of $196 million-$204 million. This reflects our confidence to still show strong profit performance and cost management despite the macroeconomic conditions. Interest expense, which was nearly $7 million in the second quarter, is expected to be over $7 million in the third quarter of 2023, driven by the continued rise in interest rates. We continue to focus on paying down debt to mitigate the impact of rising rates. We expect our non-GAAP tax rate to be around 18% in the third quarter of 2023, similar to the second quarter and roughly the same as the prior year. Diluted weighted average shares outstanding will be approximately 36 million shares. For adjusted diluted earnings per share, we expect a range of $0.70-$0.77 in the third quarter. For the full year of 2023, adjusted diluted earnings per share, we now expect a range of $2.96-$3.15. This reflects our adjusted EBITDA outlook, but also an expectation of higher interest rates will continue through the end of the year. Finally, we expect cash flow to improve sequentially in the third quarter as we continue to focus our efforts on bringing down our inventory levels. In addition, we continue to invest in 2 significant manufacturing facility expansion projects, including our new Manchester, UK, optical subsystem manufacturing facility and our new Czech Republic medical consumable manufacturing facility. These investments are on track for the year, and the business case for making these investments continues to strengthen. As always, the guidance does not assume any significant changes to foreign exchange rates. In summary, Novanta's performance in the second quarter of 2023 was excellent. We beat our own expectations for sales growth, margin expansion, and profit performance. We saw tremendous growth in our medical end markets, which more than offset a known headwind in microelectronics. This dynamic is yet another testament to the diversification resiliency of our business portfolio. Our teams continue to deliver great results, helping the company work through a difficult operating environment while still winning new customer platforms and progressing our innovation pipeline. Despite a more challenging macroeconomic environment, particularly in China, and a higher interest rate environment, we are confident in our ability to deliver our updated outlook for full year 2023, and we see our sales growth prospects remaining strong well past this year, and on the back of exciting new product launches starting later this year, and our exposure to high-growth end markets in both medical and advanced industrial applications. We remain grateful for the outstanding performance of our employees and their tireless efforts to help us be successful in this dynamic environment. We look forward to continuing to deliver on our commitments and our employees, our customers, and our shareholders. This concludes the prepared remarks. We'll now open the call up for questions. We will now begin the question and answer session. To ask a question, you may press Star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star then two. Our first question comes from Lee Jagoda of CJS Securities. Please go ahead. Hi, good morning. Good morning, Lee. I, you touched a lot on the declines we're seeing in microelectronics, and the idea that the PCBA stuff is now at a pretty low run rate. Can you comment on the remainder of the microelectronics business and the trends you're seeing there? Yeah, I, I would say the PCBA exposure has now declined to just $2 million at this point. Really nothing, and it's bottomed out at that level. What's remaining is products sold into the EUV and Deep UV markets and applications. For those areas, we're actually seeing a little bit of growth right now. As we talked about in the last call, we expect that we'll continue to grow into 2024 and maybe even at an accelerated basis because of additional business that we've been winning in that marketplace. The overall exposure in microelectronics as we go into 2024, in our view, is now a little bit of a secular tailwind versus a dynamic of volatility that we're seeing in 2023. Got it. Then some of the companies that we follow here are commenting about weakness in the hospital procedure volumes. You know, what are you seeing there, and what are your OEM customers telling you about, their future volumes? Our customers are very bullish and upbeat about the remainder of this year and next year. Basically, on the back of, you know, improved procedure growth rates that are supported by still long patient backlogs, right? Further helped by product cycles and new product launches of our customers. Of course, for ourselves, we see new product launches coming in, you know, in the course of next year as well, that will further strengthen that. We feel that this area is strong for us. Again, we play in minimally invasive surgery, robotic surgery, in vitro diagnostics, DNA sequencing. Those were all up strong double digits in the second quarter, we expect them to remain strong in the second half of the year in 2024. All right. Then one more for Robert, and I'll hop back in queue. You mentioned the Manchester and the Czech facilities, as CapEx- Yep uses in 2023. What's the CapEx guidance for this year? Then assuming that it goes back to a more normalized level in 2024, how do you think about that range? Yeah. We added it in the queue. It's $25 million-$30 million is the total CapEx that we're expecting this year. As we get into next year, there might be a little carryover of that, but it'll start to drop then back down. I think overall, CapEx, as a% of sales, would probably drop closer to the 2% level on a go-forward basis. 2% of sales. Great. I'll hop back in queue. Yep. All right, Lee. Thanks. Next question comes from Brian Drab of William Blair. Please go ahead. Hi, good morning. Thanks for taking my question. Good morning, Brian. Morning. I just wanted to clarify, in microelectronics, you know, understand the Westwind business, I, I believe was, you know, about 2% of sales, and then we talked about that, I think it was in the fourth quarter, you know, going to, you know, 1%. It was, you know, basically cut in half. That, that, to me, like, felt like 100 basis point headwind. I'm just when you talk about the 300-400, can you just bridge that? You know, what, what else is in there and between the, you know, the 100 basis points and then bridging to the, the 300-400? ... it's a little bit more than that, but I would also say there's also back-- We also traditionally had some back-end semiconductor application areas. So the overall, like, the more volatile piece of it, of our microelectronics historically have been around 10% of sales. If you, if you look at the drop-down to 7% of sales, those are the more volatile pieces of it, about 3% of sales. They're effectively nothing on a go-forward basis. What's remaining, you know, that 7%, is the EUV and DUV-based applications. That's the way you should kind of think about it. There are other exposures in microelectronics, too. We talked about the mechanical piece, but there's also a laser-based piece as well. We just, you know, that, that's all kind of included in that 10 dropping to 7. Okay. In that, you know, outside of the Westwind business, the, the, the component, like, type of components or products that are seeing the, the headwind, is that more like precision motion type of product or photonics? Correct. Yeah, A lot of it is concentrated in this segment, in the Robotics and Automation segment. Not to say that there isn't any exposure elsewhere, it just happens to be mostly consolidated in that area. Okay, got it. I guess... I mean, the, the, the slowdown you're seeing overall, I mean, you, you just, you know, trimmed the, the, the guidance, I guess, you know. you know, I, I, I'm surprised a little bit that, you know, given the backlog that you have and that you said that, you know, the past due orders are, are cut significantly, so you're shipping out a backlog, is that, that wasn't able to soften the, the blow a little bit more? I mean, could you comment on that? Yeah, I would say it has softened it. There was, you know, more of an abrupt change in China. China has had some volatility, both from a macro perspective as well as around their incentives and stimulus that they've been putting in. You know, the COVID lockdowns did a little bit more of a number on the country, so because of that, you know, you can see this in the PMIs and the exports in China, that there was a bigger drop there. I would say our ability to mitigate that, you know, there's really kind of the microelectronics headwind, and then the China drop, has really been because of the higher backlog. Now, that being said, we do expect to exit the year with, you know, 2 or more quarters worth of backlog. While we're continuing to get at those reductions, the areas where there's the greatest increase in backlog, happen to be in our medical-based businesses, and that's somewhat hampered by the capacity of our facilities. Once our, our, our new Czech Republic facility comes online and our new Manchester, UK, facility comes online in early 2024, then we can start driving that higher growth coming out of the Medical Solutions part of the portfolio, and a little bit more in the, in our Precision Medicine part of the portfolio. Okay, thanks. Then just the, the last question. I mean, obviously working through the model here, but, I mean, it seems clear that the fourth quarter is expected to be a good step up from the third quarter in terms of revenue. First of all, is that, is that true? Then what, you know, what, how, what kind of visibility do you? Is there anything specific you have visibility to in the fourth quarter that, that results in that guide? It really just depends on how you look at the range in the third quarter and the range of the full year. To the degree that there's, you know, you have modeled more of a step up in, in Q4, what is that? I think that's continued ability to reduce the past due backlog and get more product out the door, right? So in other areas, we are, you know, we are seeing surprising resilience in some of the industrial-based applications we're serving unrelated to China. So there's areas there where companies are making investments in the U.S. and European markets. There is a little bit of a nearshoring effect going on, as well as just an increase in automation, generally speaking, because of labor shortages in those markets. There is a little bit of surprising better resilience that we're seeing in those two those application areas that's helping us along. Got it. All right. Thanks very much. Yep. Thanks, Ryan. Once again, if you would like to have a question, please press Star, then One. Our next question comes from Rob Mason of Baird. Please go ahead. Good morning. Yeah, thanks for taking my questions. Sure. Uh- Yep. I, I don't want to belabor this point around microelectronics, but, and maybe the other adjustments, but so if I'm doing the math right, you know, that's about an additional 1 point of headwind coming out of microelectronics. Correct. -versus your prior guide, then you layer on incremental China weakness. If I look at the way your overall guide, adjusted, it looks like you also increased in certain areas because those would have been, more punitive. I'm just curious what areas may have been taken up, to offset some of those incremental headwinds. Yeah, I mean, as we... You know, when you look at the back half of the year, the Precision Medicine area is actually doing quite well for Precision Medicine and Manufacturing area is doing quite well. It's, it's expected to report, you know, high, mid to high single digits, and that's a part of that is we got some new product in there. We have continued strength in the Laser Quantum-branded products, and we have continued progress in reducing the past due performance there. Overall, our Medical Solutions, Matthijs just mentioned we, we are seeing our customers have higher demand. There's higher backlog that they're working on reducing through their end users. The demand that's there is actually doing well on as well are JADAK-branded products. Overall, we feel pretty good about that. We are seeing a little bit of growth in, in medical robotics as well. We're not banking on all of that, just because it continues to be some, some supply shortages at our, at our end customers, unrelated to us, but we are seeing growth there. The real, the real only negative that, in our portfolio right now is the microelectronics piece, and then the pause in robotic spending in the China market, which, you know, is partly caused by a macro condition and partly caused by pullbacks and volatility in how they've been stimulating their economy, particularly around these areas: EVs, solar, battery, and robotic-based investments. Yeah. Yeah, so big picture, if you really look at it, Rob, right, you know, 8% of sales in microelectronics, weakness there, 9% of sales in China, weakness there. In the rest of the portfolio, a lot of resiliency and a lot of strength, right? Yeah. So. Yep. Just around China, Matthijs, you, you mentioned in your remarks a couple of times around China recovery in 2024. How would you frame up your visibility on, on that dynamic at this point? Yeah, I mean, it's a good, good question, right? Of course, it's. Yeah, based on what we're seeing, right? You, you look at the structural growth drivers in Robotics and Automation, electric vehicles, other robotics drivers in the China market, we feel they continue to be intact, and this is kind of a pause because of an extraordinary strong year last year, right? Don't forget that. They're probably got ahead a little bit of themselves. They're pausing. There is, of course, a business confidence weakening issue, we do feel that that will correct itself in 2024, based on what we're, you know, seeing with projects in the pipeline and the comments from our customers as of this date. Again, so that's what we're seeing, and so it's more of a destocking, pausing effect. We feel that the, the, the mid and long term continues to be attractive. I see. Just as a last question, we're all aware of kind of the new product cycle that, that will be ramping up. You mentioned some of those products may launch by the end of the year. I'm just curious, if you think about next year, you know, does the cadence of new product releases, does that weight more towards the first half of 2024 or the second half of 2024? It's, it's a matter of timing of the launch and materialization of the actual revenue itself, right? While, while, in the medical field specifically, as we launch new products, particularly, let's say, at the end of this year and early in Q1, the reality is, those products are going as part of the FDA qualification process of our end customers. The material, the revenue impact in the first half would be relatively muted. As we look in the second half, it begins to kind of ramp up, and it really is conditional upon, you know, how the individual customers clear through their processes. That is why when we went out with the guidance of $50 million of incremental revenue coming from our Medical Solutions area in 2025, we gave the guidance on 2025 and not 2024, knowing that 2024 had the element of volatility associated with the FDA qualifications of our customers. So it's fair to say the back half of the year will have more revenue coming from these products, but to get kind of specific around it, gets a little difficult just because of that piece of that FDA process. But, but- In addition, I would say. Your release- Yeah. I was just gonna. Your release schedule favors more the first half? It's customer by customer, so there are certain customers getting product in the first half, and there are certain customers getting product in the second half. It really is customer by customer. You're talking about, you know, how the customers themselves are successful. Yeah. It's multiple products to multiple customers throughout 2024, then really fully ramped or close to fully ramped in 2025. That's, that's how you need to see it on the medical side. On the industrial side, we're also expecting an increase in the rate of launches in 2024, which will also have a little bit less large, but also will have a supporting effect on growth to the company as well. Yeah. We focused a lot on the medical side and the $50 million, but you kind of see that what I commented on in my prepared remarks were actually mostly industrial products, right? Let's not forget about that. Sure. Very good. Thank you. All right. Thanks, Rob. This concludes our question and answer session. I would like to turn the conference back over to Mr. Matthijs Glastra for any closing remarks. Thank you, operator. To recap, Novanta had an excellent second quarter of 2023. We saw solid sales growth despite the headwinds in microelectronics and the frozen China industrial robotic spending. We beat our expectations for margins and profits. We've maintained a very robust level of backlog coverage while reducing our past due backlog. We see continued strong tailwinds in our medical businesses that continue to accelerate into 2024. We're progressing nicely our innovation pipeline and are excited for the large product launches happening later this year and next year. Novanta remains very well positioned in the medical and advanced industrial end markets, with diversified exposure to the long-term secular macro trends in robotics automation, precision medicine, minimally invasive surgery, and Industry 4.0. In 2023 and beyond, we will continue to focus on new product development, design wins in high-growth applications, and doubling down on the Novanta Growth System, driving cash flows and gross margin expansion. In closing, as always, I would like to thank our customers, our employees, and our shareholders for their ongoing support. I continue to be especially grateful for the dedicated efforts of all our Novanta employees, who work diligently every day to tackle new opportunities and manage through new challenges. We appreciate your interest in the company and your participation in today's call. I look forward to joining all of you in several months on our third quarter 2023 earnings call. Thank you very much. This call is now adjourned. Conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.