10-Q

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

NOVANTA INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars or shares)

(Unaudited)


	March 28,			December 31,
	2025			2024
ASSETS
Current assets
Cash and cash equivalents	$	106,045		$	113,989
Accounts receivable, net of allowance of $611 and $505, respectively		164,201			151,026
Inventories		145,435			144,606
Prepaid income taxes and income taxes receivable		5,830			8,076
Prepaid expenses and other current assets		12,627			15,951
Total current assets		434,138			433,648
Property, plant and equipment, net		112,514			113,135
Operating lease assets		41,321			42,908
Deferred tax assets		25,004			22,887
Other assets		5,701			5,991
Intangible assets, net		177,724			185,844
Goodwill		589,054			584,098
Total assets	$	1,385,456		$	1,388,511
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	4,852		$	4,691
Accounts payable		82,513			76,890
Income taxes payable		15,977			16,000
Current portion of operating lease liabilities		9,958			9,879
Accrued expenses and other current liabilities		56,290			60,331
Total current liabilities		169,590			167,791
Long-term debt		385,279			411,949
Operating lease liabilities		38,694			40,548
Deferred tax liabilities		13,208			13,093
Income taxes payable		4,673			4,941
Other liabilities		4,257			4,491
Total liabilities		615,701			642,813
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred shares, no par value; Authorized shares: 7,000; No shares issued and outstanding		—			—
Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 35,964 and 35,938, respectively		423,856			423,856
Additional paid-in capital		78,488			84,214
Retained earnings		288,757			267,549
Accumulated other comprehensive loss		(21,346	)		(29,921	)
Total stockholders' equity		769,755			745,698
Total liabilities and stockholders’ equity	$	1,385,456		$	1,388,511

The accompanying notes are an integral part of these consolidated financial statements.

NOVANTA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars or shares, except per share amounts)

(Unaudited)


	Three Months Ended
	March 28,			March 29,
	2025			2024
Revenue	$	233,366		$	230,916
Cost of revenue		129,012			130,500
Gross profit		104,354			100,416
Operating expenses:
Research and development and engineering		23,238			23,246
Selling, general and administrative		45,596			43,530
Amortization of purchased intangible assets		5,554			5,750
Restructuring, acquisition, and related costs		(2,455	)		2,283
Total operating expenses		71,933			74,809
Operating income		32,421			25,607
Interest income (expense), net		(5,644	)		(8,254	)
Foreign exchange transaction gains (losses), net		(368	)		(321	)
Other income (expense), net		9			(116	)
Income before income taxes		26,418			16,916
Income tax provision		5,210			2,240
Net income	$	21,208		$	14,676

Earnings per common share (Note 4):
Basic	$	0.59		$	0.41
Diluted	$	0.59		$	0.41

Weighted average common shares outstanding—basic		36,024			35,914
Weighted average common shares outstanding—diluted		36,130			36,127

The accompanying notes are an integral part of these consolidated financial statements.

NOVANTA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands of U.S. dollars)

(Unaudited)


	Three Months Ended
	March 28,		March 29,
	2025		2024
Net income	$	21,208	$	14,676
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax (1)		8,558		(4,396	)
Pension liability adjustments, net of tax (2)		17		283
Total other comprehensive income (loss)		8,575		(4,113	)
Total consolidated comprehensive income	$	29,783	$	10,563

(1)

The tax effect on this component of comprehensive income (loss) was nominal for all periods presented.

(2)

The tax effect on this component of comprehensive income (loss) was nominal for all periods presented. See Note 3 to the Consolidated Financial Statements for the total amount of pension liability adjustments reclassified out of accumulated other comprehensive income (loss).

The accompanying notes are an integral part of these consolidated financial statements.

NOVANTA INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands of U.S. dollars or shares)

(Unaudited)


	Common Shares					Additional Paid-In			Retained		Accumulated Other
	# of Shares			Amount		Capital			Earnings		Comprehensive Loss			Total

	Three Months Ended March 28, 2025
Balance at December 31, 2024		35,938		$	423,856	$	84,214		$	267,549	$	(29,921	)	$	745,698
Net income		—			—		—			21,208		—			21,208
Common shares issued under stock plans		119			—		—			—		—			—
Common shares withheld for taxes on vested stock awards		(47	)		—		(6,669	)		—		—			(6,669	)
Repurchases of common shares		(46	)		—		(6,157	)		—		—			(6,157	)
Share-based compensation		—			—		7,100			—		—			7,100
Other comprehensive income (loss), net of tax		—			—		—			—		8,575			8,575
Balance at March 28, 2025		35,964		$	423,856	$	78,488		$	288,757	$	(21,346	)	$	769,755

	Three Months Ended March 29, 2024
Balance at December 31, 2023		35,814		$	423,856	$	70,180		$	203,462	$	(24,038	)	$	673,460
Net income		—			—		—			14,676		—			14,676
Common shares issued under stock plans		129			—		—			—		—			—
Common shares withheld for taxes on vested stock awards		(52	)		—		(8,385	)		—		—			(8,385	)
Share-based compensation		—			—		6,077			—		—			6,077
Other comprehensive income (loss), net of tax		—			—		—			—		(4,113	)		(4,113	)
Balance at March 29, 2024		35,891		$	423,856	$	67,872		$	218,138	$	(28,151	)	$	681,715

The accompanying notes are an integral part of these consolidated financial statements.

NOVANTA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)


	Three Months Ended
	March 28,			March 29,
	2025			2024
Cash flows from operating activities:
Net income	$	21,208		$	14,676
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,563			12,929
Provision for inventory excess and obsolescence		757			1,424
Share-based compensation		7,100			6,077
Deferred income taxes		(2,393	)		(3,711	)
Inventory acquisition fair value adjustments		—			2,777
Loss (gain) on disposal of fixed assets		(4,367	)		—
Other		393			312
Changes in assets and liabilities which (used)/provided cash, excluding effects from business acquisitions:
Accounts receivable		(12,188	)		(4,162	)
Inventories		(61	)		(3,781	)
Prepaid income taxes, income taxes receivable, prepaid expenses and other current assets		6,098			(954	)
Accounts payable, income taxes payable, accrued expenses and other current liabilities		1,685			7,052
Other non-current assets and liabilities		(111	)		190
Net cash provided by operating activities		31,684			32,829
Cash flows from investing activities:
Cash paid for business acquisitions, net of working capital adjustments		—			(191,200	)
Purchases of property, plant and equipment		(4,284	)		(6,415	)
Proceeds from sale of property, plant and equipment		5,537			—
Net cash used in investing activities		1,253			(197,615	)
Cash flows from financing activities:
Borrowings under revolving credit facilities		—			198,000
Repayments under term loan and revolving credit facilities		(29,719	)		(35,976	)
Payments of withholding taxes from share-based awards		(6,669	)		(8,385	)
Repurchases of common shares		(6,157	)		—
Other financing activities		(186	)		(176	)
Net cash provided by (used in) financing activities		(42,731	)		153,463
Effect of exchange rates on cash and cash equivalents		1,850			(208	)
Decrease in cash and cash equivalents		(7,944	)		(11,531	)
Cash and cash equivalents, beginning of the period		113,989			105,051
Cash and cash equivalents, end of the period	$	106,045		$	93,520
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,643		$	7,848
Cash paid for income taxes	$	5,296		$	1,410
Income tax refunds received	$	105		$	557

The accompanying notes are an integral part of these consolidated financial statements.

NOVANTA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 28, 2025

(Unaudited)

1. Basis of Presentation

Novanta Inc. (collectively with its subsidiaries, referred to as “Novanta”, the “Company”, “we”, “us”, “our”) is a leading global supplier of core technology solutions that give medical and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage. Novanta combines deep proprietary technology expertise and competencies in precision medicine, precision manufacturing, robotics and automation, and advanced surgery 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 the customers' demanding applications.

The accompanying unaudited interim consolidated financial statements have been prepared by the Company in United States (“U.S.”) dollars and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X pertaining to interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted. The interim consolidated financial statements and notes included in this report should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In the opinion of management, these interim consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the interim periods presented. The results for interim periods are not necessarily indicative of results to be expected for the full year or for any future periods.

The Company’s unaudited interim consolidated financial statements are prepared for each quarterly period ending on the Friday closest to the end of the calendar quarter, with the exception of the fourth quarter which always ends on December 31.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Estimates and assumptions are reviewed on an on-going basis and the effects of revisions are reflected in the period in which such revisions are deemed to be necessary. The Company evaluates its estimates based on historical experience, current conditions, and various other assumptions that it believes are reasonable under the circumstances. Actual results could differ significantly from these estimates.

Recent Accounting Pronouncements

The following table provides a brief description of recent Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”):


Standard	Description	Effective Date	Effect on the Financial Statements or Other Significant Matters
In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to SEC’s Disclosure Update and Simplification Initiative.”	ASU 2023-06 clarifies or improves disclosure and presentation requirements of a variety of topics, which allow users to easily compare entities subject to the SEC’s existing disclosure requirements with those entities that were not previously subject to such requirements and align the requirements in the FASB Accounting Standards Codification with the SEC’s regulations.	The effective date for each amendment in ASU 2023-06 will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.	The Company is currently evaluating the impact of ASU 2023-06 on its consolidated financial statement disclosures.


Standard	Description	Effective Date	Effect on the Financial Statements or Other Significant Matters
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740) -Improvements to Income Tax Disclosures."	ASU 2023-09 provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid.	The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. Early adoption is permitted.	The amendments in this update affects financial statement disclosure only and, as a result, will have no impact on results of operations, cash flows or financial condition.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.”	ASU 2024-03 improves financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at both interim and annual reporting periods.	The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.	The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statement disclosures.

2. Revenue

The Company accounts for its revenue transactions in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers,” which requires entities to recognize revenue in a way that depicts the transfer of control over goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The Company recognizes revenue when control of promised goods or services is transferred to the customer. The transfer of control generally occurs upon shipment when title and risk of loss pass to the customer. The vast majority of the Company’s revenue is generated from the sale of distinct products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for such products, which is generally at contractually stated prices. Sales taxes and value added taxes collected concurrently with revenue generating activities are excluded from revenue.

Performance Obligations

Substantially all of the Company’s revenue is recognized at a point in time, upon shipment, rather than over time.

At the request of its customers, the Company may perform professional services, generally for the maintenance and repair of products previously sold to those customers and for engineering services. Professional services are typically short in duration and aggregate to less than 3% of the Company’s consolidated revenue. Revenue is typically recognized at a point in time when control transfers to the customer upon completion of professional services. These services generally involve a single distinct performance obligation. The consideration expected to be received in exchange for such services is normally the contractually stated amount.

The Company occasionally sells separately priced non-standard/extended warranty services or preventative maintenance plans with the sale of products. The transfer of control over the service plans is over time. The Company recognizes the related revenue ratably over the terms of the service plans. The transaction price of a contract is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using the expected cost plus a margin.

Shipping & Handling Costs

The Company accounts for shipping and handling activities that occur after the transfer of control over the related goods as fulfillment activities rather than performance obligations. Shipping and handling fees charged to customers are recognized as revenue and the related costs are recorded in cost of revenue at the time of transfer of control.

Warranties

The standard warranty periods for the Company’s products are typically 12 months to 36 months. The Company recognizes estimated liabilities associated with standard warranty periods for its products in accordance with the provisions of ASC 450, “Contingencies,” as the Company has the ability to ascertain the likelihood of the liabilities and can reasonably estimate the amount of the liabilities. A provision for the estimated cost related to standard warranties is recorded as cost of revenue at the time revenue is recognized. The Company’s estimate of the costs to service the warranty obligations is based on historical experience and expectations of future conditions. To the extent that the Company’s experience in warranty claims or costs associated with servicing those claims differ from the original estimates, revisions to the estimated warranty liabilities are recorded at that time, with offsetting adjustments to cost of revenue.

Practical Expedients and Exemptions

The Company expenses incremental direct costs of obtaining a contract when incurred because the expected amortization period is typically one year or less. These costs are recorded within selling, general and administrative expenses in the consolidated statement of operations.

The Company does not adjust the promised amount of consideration for the effects of a financing component because the transfer of a promised good to a customer and the customer’s payment for that good are typically one year or less. The Company does not disclose the value of the remaining performance obligation for contracts with an original expected length of one year or less.

Contract Liabilities

Contract liabilities consist of deferred revenue and advance payments from customers, including amounts that are refundable. These contract liabilities are classified as either current or long-term liabilities in the consolidated balance sheet based on the timing of when the Company expects to recognize the related revenue. As of March 28, 2025 and December 31, 2024, contract liabilities were $8.4 million and $5.9 million, respectively, and are included in accrued expenses and other current liabilities and other liabilities in the accompanying consolidated balance sheets. The increase in the contract liability balance during the three months ended March 28, 2025 is primarily due to cash payments received in advance of satisfying performance obligations, partially offset by $2.3 million of revenue recognized during the period that was included in the contract liability balance as of December 31, 2024.

Disaggregated Revenue

See Note 15 for the Company’s disaggregation of revenue by segment, geography and end market. The following table presents revenues disaggregated by the capabilities of the underlying products and technologies during the three months ended March 28, 2025 and March 29, 2024, respectively (in thousands):


	Three Months Ended
	March 28,		March 29,
	2025		2024
Precision Manufacturing	$	44,579	$	54,159
Robotics and Automation		78,588		63,230
Automation Enabling Technologies		123,167		117,389

Precision Medicine		54,011		64,601
Advanced Surgery		56,188		48,926
Medical Solutions		110,199		113,527
Total Revenue	$	233,366	$	230,916

3. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss were as follows (in thousands):


	Total Accumulated
	Other			Cumulative			Pension
	Comprehensive			Translation			Liability
	Loss			Adjustments			Adjustments
Balance at December 31, 2024	$	(29,921	)	$	(23,686	)	$	(6,235	)
Other comprehensive income (loss)		8,377			8,558			(181	)
Amounts reclassified from accumulated other comprehensive loss		198			—			198
Balance at March 28, 2025	$	(21,346	)	$	(15,128	)	$	(6,218	)

The amounts reclassified from accumulated other comprehensive loss were included in other income (expense) in the consolidated statements of operations.

4. Earnings per Common Share

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Fully vested restricted stock units and deferred stock units granted to members of the Company’s Board of Directors are included in the calculation of weighted average number of common shares outstanding.

For diluted earnings per common share, the denominator includes the dilutive effect of outstanding common share equivalents. The dilutive effects of outstanding common share equivalents, including outstanding service-based restricted stock units, stock options and performance-based restricted stock units, are determined using the treasury stock method. Performance-based restricted stock units are considered contingently issuable shares, the vesting of which may be based on achievement of specified company financial performance metrics (“attainment-based PSUs”), certain market conditions (“market-based PSUs”) or a hybrid of company financial performance metrics and market conditions (“hybrid PSUs”). The dilutive effects of market-based PSUs are included in the weighted average common share calculation based on the number of shares, if any, that would be issuable as of the end of the reporting period, assuming the end of the reporting period is also the end of the performance period. The dilutive effects of attainment-based and hybrid PSUs are included in the weighted average common share calculation based on the cumulative achievement against the performance targets only when the performance targets have been achieved as of the end of the reporting period.

The following table sets forth the computation of basic and diluted earnings per common share (amounts in thousands, except per share data):


	Three Months Ended
	March 28,		March 29,
	2025		2024
Numerators:
Net income	$	21,208	$	14,676

Denominators:
Weighted average common shares outstanding— basic		36,024		35,914
Dilutive common share equivalents		106		213
Weighted average common shares outstanding— diluted		36,130		36,127
Antidilutive common share equivalents excluded from above		175		71

Earnings per Common Share:
Basic	$	0.59	$	0.41
Diluted	$	0.59	$	0.41

For the three months ended March 28, 2025, 221 thousand shares of attainment-based PSUs and hybrid PSUs were excluded from the calculation of the denominator because they were considered contingently issuable shares and the related performance targets had not been achieved as of March 28, 2025.

For the three months ended March 29, 2024, 182 thousand shares of attainment-based PSUs and hybrid PSUs were excluded from the calculation of the denominator because they were considered contingently issuable shares and the related performance targets had not been achieved as of March 29, 2024.

5. Fair Value Measurements

ASC 820, “Fair Value Measurements,” establishes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the third is considered unobservable:

•

Level 1: Quoted prices for identical assets or liabilities in active markets which the Company can access

•

Level 2: Observable inputs other than those described in Level 1

•

Level 3: Unobservable inputs

Current Assets and Liabilities

The Company’s cash equivalents are highly liquid investments with original maturities of three months or less, which represent assets measured at fair value on a recurring basis. The Company determines the fair value of cash equivalents using a market approach based on quoted prices in active markets. The fair values of cash equivalents, accounts receivable, income taxes receivable, accounts payable, income taxes payable and accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.

Foreign Currency Contracts

The Company addresses market risks from changes in foreign currency exchange rates through a risk management program that includes the use of derivative financial instruments to mitigate certain balance sheet foreign currency transaction exposures. The Company uses foreign currency forward contracts as a part of its strategy to manage exposures related to foreign currency denominated monetary assets and liabilities. The fair value of these foreign currency forward contracts is reported either in other current assets or in other current liabilities as of the end of the period.

Summary by Fair Value Hierarchy

The following table summarizes the fair values of the Company’s assets and liabilities measured at fair value on a recurring basis as of March 28, 2025 (in thousands):


			Quoted Prices in				Significant Other
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Prepaid expenses and other current assets:
Foreign currency forward contracts	$	4	$	—	$	4	$	—
	$	4	$	—	$	4	$	—
Liabilities
Accrued expenses and other current liabilities:
Contingent considerations - Current	$	59	$	—	$	—	$	59
Foreign currency forward contracts		118		—		118		—
	$	177	$	—	$	118	$	59

The following table summarizes the fair values of the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 (in thousands):


			Quoted Prices in				Significant Other
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Prepaid expenses and other current assets:
Foreign currency forward contracts	$	1,226	$	—	$	1,226	$	—
	$	1,226	$	—	$	1,226	$	—
Liabilities
Accrued expenses and other current liabilities:
Contingent considerations - Current	$	57	$	—	$	—	$	57
Foreign currency forward contracts		1,401		—		1,401		—
	$	1,458	$	—	$	1,401	$	57

See Note 9 to Consolidated Financial Statements for a discussion of the estimated fair value of the Company’s outstanding debt.

6. Foreign Currency Contracts

The Company addresses market risks from changes in foreign currency exchange rates through a risk management program that includes the use of derivative financial instruments to mitigate certain foreign currency transaction exposures from future settlement of non-functional currency monetary assets and liabilities as of the end of a period. The Company does not enter into derivative transactions for speculative purposes. Gains and losses on these derivative financial instruments substantially offset losses and gains on the underlying hedged exposures and are included in foreign exchange transaction gains (losses) in the consolidated statements of operations. Furthermore, the Company manages its exposures to counterparty risks on derivative instruments by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

As of March 28, 2025, the aggregate notional amount and fair value of the Company’s foreign currency forward contracts was $178.0 million and a net loss of $0.1 million, respectively. As of December 31, 2024, the aggregate notional amount and fair value of the Company’s foreign currency forward contracts was $187.4 million and a net loss of $0.2 million, respectively.

The Company recognized an aggregate net gain of $0.3 million for the three months ended March 28, 2025 and an aggregate net gain of $1.2 million for the three months ended March 29, 2024. These amounts were included in foreign exchange transaction gains (losses) in the consolidated statements of operations.

7. Goodwill and Intangible Assets

Goodwill

Goodwill is recorded when the consideration paid for a business combination exceeds the fair value of net tangible and identifiable intangible assets acquired. The Company tests its goodwill balances for impairment annually as of the beginning of the second quarter or more frequently if indicators are present or changes in circumstances suggest that an impairment may exist. The Company performed the most recent annual goodwill and indefinite-lived intangible asset impairment test as of the beginning of the second quarter of 2024 and noted no impairment.

The following table summarizes changes in goodwill during the three months ended March 28, 2025 (in thousands):


	Amount
Balance at beginning of the period	$	584,098
Effect of foreign exchange rate changes		4,956
Balance at end of the period	$	589,054

Goodwill by reportable segment as of March 28, 2025 was as follows (in thousands):


	Reportable Segment
	Automation Enabling Technologies			Medical Solutions			Total
Goodwill	$	432,461		$	307,822		$	740,283
Accumulated impairment of goodwill		(119,507	)		(31,722	)		(151,229	)
Total	$	312,954		$	276,100		$	589,054

Goodwill by reportable segment as of December 31, 2024 was as follows (in thousands):


	Reportable Segment
	Automation Enabling Technologies			Medical Solutions			Total
Goodwill	$	439,980		$	295,347		$	735,327
Accumulated impairment of goodwill		(119,507	)		(31,722	)		(151,229	)
Total	$	320,473		$	263,625		$	584,098

Intangible Assets

Intangible assets as of March 28, 2025 and December 31, 2024, respectively, are summarized as follows (in thousands):


	March 28, 2025							December 31, 2024
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and developed technologies	$	220,852	$	(164,259	)	$	56,593	$	218,867	$	(159,041	)	$	59,826
Customer relationships		267,582		(166,044	)		101,538		265,156		(158,938	)		106,218
Trademarks and trade names		23,600		(17,034	)		6,566		23,367		(16,594	)		6,773
Amortizable intangible assets		512,034		(347,337	)		164,697		507,390		(334,573	)		172,817
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Total intangible assets	$	525,061	$	(347,337	)	$	177,724	$	520,417	$	(334,573	)	$	185,844

All definite-lived intangible assets are amortized either on a straight-line basis or an economic benefit basis over their remaining estimated useful life. Amortization expense for patents and developed technologies is included in cost of revenue in the accompanying consolidated statements of operations. Amortization expense for customer relationships and definite-lived trademarks, trade names and other intangibles is included in operating expenses in the accompanying consolidated statements of operations. Amortization expense was as follows (in thousands):


	Three Months Ended
	March 28,		March 29,
	2025		2024
Amortization expense – cost of revenue	$	3,561	$	3,692
Amortization expense – operating expenses		5,554		5,750
Total amortization expense	$	9,115	$	9,442

As of March 28, 2025, estimated amortization expense for each of the five succeeding years and thereafter was as follows (in thousands):


Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2025 (remainder of year)	$	10,739	$	16,762	$	27,501
2026		13,455		20,037		33,492
2027		10,616		15,894		26,510
2028		8,875		12,802		21,677
2029		6,095		9,196		15,291
Thereafter		6,813		33,413		40,226
Total	$	56,593	$	108,104	$	164,697

8. Supplementary Balance Sheet Information

The following tables provide the details of selected balance sheet items as of the periods indicated (in thousands):

Inventories


	March 28,		December 31,
	2025		2024
Raw materials	$	93,761	$	92,198
Work-in-process		23,589		24,719
Finished goods		27,606		27,327
Demo and consigned inventory		479		362
Total inventories	$	145,435	$	144,606

Accrued Expenses and Other Current Liabilities


	March 28,		December 31,
	2025		2024
Accrued compensation and benefits	$	22,904	$	28,361
Accrued warranty		4,732		4,805
Contract liabilities, current portion		8,173		5,715
Finance lease obligations		770		759
Other		19,711		20,691
Total	$	56,290	$	60,331

Accrued Warranty


	Three Months Ended
	March 28,			March 29,
	2025			2024
Balance at beginning of the period	$	4,805		$	5,292
Provision charged to cost of revenue		400			438
Warranty liabilities acquired from acquisitions		—			76
Use of provision		(505	)		(440	)
Foreign currency exchange rate changes		32			(12	)
Balance at end of the period	$	4,732		$	5,354

Other Long-Term Liabilities


	March 28,		December 31,
	2025		2024
Finance lease obligations	$	2,978	$	3,175
Other		1,279		1,316
Total	$	4,257	$	4,491

9. Debt

Outstanding debt consisted of the following (in thousands):


	March 28,			December 31,
	2025			2024
Senior Credit Facilities – term loan	$	4,869		$	4,710
Less: unamortized debt issuance costs		(17	)		(19	)
Total current portion of long-term debt	$	4,852		$	4,691

Senior Credit Facilities – term loan	$	66,695		$	65,698
Senior Credit Facilities – revolving credit facility		320,795			348,751
Less: unamortized debt issuance costs		(2,211	)		(2,500	)
Total long-term debt	$	385,279		$	411,949

Total Senior Credit Facilities	$	390,131		$	416,640

Senior Credit Facilities

On December 31, 2019, the Company entered into an amended and restated credit agreement (the “Third Amended and Restated Credit Agreement”) with existing lenders for an aggregate credit facility of $450.0 million, consisting of a $100.0 million U.S. dollar equivalent euro-denominated (approximately €90.2 million) 5-year term loan facility and a $350.0 million 5-year revolving credit facility (collectively, the “Senior Credit Facilities”). The Third Amended and Restated Credit Agreement had an original maturity date of December 31, 2024.

On March 27, 2020, the Company entered into an amendment (the “First Amendment”) to the Third Amended and Restated Credit Agreement and exercised a portion of the uncommitted accordion option. The First Amendment increased the revolving credit facility commitment by $145.0 million, from $350.0 million to $495.0 million, and reset the uncommitted accordion option to $200.0 million for potential future expansion.

On October 5, 2021, the Company entered into an amendment (the “Fourth Amendment”) to the Third Amended and Restated Credit Agreement to exercise the accordion option. The Fourth Amendment increased the revolving credit facility commitment by $200.0 million, from $495.0 million to $695.0 million, and reset the uncommitted accordion option to $200.0 million for potential future expansion.

On March 10, 2022, the Company entered into an amendment (the “Fifth Amendment”) to the Third Amended and Restated Credit Agreement to extend the maturity date from December 31, 2024 to March 10, 2027, update the pricing grid, replace LIBOR with SOFR as the reference rate for U.S. dollar borrowings, and increase the uncommitted accordion option from $200 million to $350 million.

The outstanding principal balance under the term loan facility is payable in quarterly installments of €1.1 million that began in March 2020, with the remaining balance due upon maturity. The Company may make additional principal payments at any time, which will reduce the next quarterly installment payment due. Borrowings under the revolving credit facility may be repaid at any time until maturity. The Company made principal payments of €1.1 million ($1.2 million) towards its term loan and $28.5 million towards its revolving credit facility during the three months ended March 28, 2025.

The Company is required to satisfy certain financial and non-financial covenants under the Third Amended and Restated Credit Agreement. The Third Amended and Restated Credit Agreement also contains customary events of default. The Company was in compliance with these covenants as of March 28, 2025.

Liens

The Company’s obligations under the Senior Credit Facilities are secured, on a senior basis, by a lien on substantially all of the assets of Novanta Inc.

Fair Value of Debt

As of March 28, 2025 and December 31, 2024, the outstanding balance of the Company’s debt approximated its fair value based on current rates available to the Company for debt of similar maturities. The fair value of the Company’s debt is classified as Level 2 under the fair value hierarchy.

10. Leases

Most leases held by the Company expire between 2025 and 2036. In the U.K., where longer lease terms are more common, the Company has a land lease that extends through 2078. Certain leases include one or more options to renew the lease terms from one to ten years and options to terminate the leases within one year. The exercise of lease renewal or termination options is at the Company’s sole discretion; therefore, the majority of renewal options to extend the lease terms are not included in the Company’s right-of-use assets and operating lease liabilities as they are not reasonably certain of being exercised. The Company regularly evaluates the renewal options and includes the renewal periods in the lease term when they are reasonably certain of being exercised. The depreciable lives of the right-of-use assets and leasehold improvements are limited to the expected lease terms.

The following table summarizes the components of lease costs (in thousands):


	Three Months Ended
	March 28,		March 29,
	2025		2024
Operating lease cost	$	2,739	$	2,967
Finance lease cost
Amortization of right-of-use assets		151		151
Interest on lease liabilities		52		62
Variable lease cost		276		251
Total lease cost	$	3,218	$	3,431

The following table provides additional details of balance sheet information related to the Company’s leases (in thousands, except lease term and discount rate):


	March 28,			December 31,
	2025			2024
Operating leases
Operating lease right-of-use assets	$	41,321		$	42,908

Current portion of operating lease liabilities	$	9,958		$	9,879
Operating lease liabilities		38,694			40,548
Total operating lease liabilities	$	48,652		$	50,427

Finance leases
Property, plant and equipment, gross	$	9,582		$	9,582
Accumulated depreciation		(7,025	)		(6,874	)
Finance lease assets included in property, plant and equipment, net	$	2,557		$	2,708

Accrued expenses and other current liabilities	$	770		$	759
Other liabilities		2,978			3,175
Total finance lease liabilities	$	3,748		$	3,934

Weighted-average remaining lease term (in years):
Operating leases		7.3			7.4
Finance leases		4.3			4.5

Weighted-average discount rate:
Operating leases		4.81	%		4.82	%
Finance leases		5.54	%		5.54	%

The following table provides additional details of cash flow information related to the Company’s leases (in thousands):


	Three Months Ended
	March 28,		March 29,
	2025		2024
Cash paid for lease liabilities:
Operating cash outflows related to finance leases	$	52	$	62
Operating cash outflows related to operating leases	$	2,465	$	2,123
Financing cash outflows related to finance leases	$	186	$	176

Supplemental non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities(1)	$	221	$	8,676

(1)The amount for the three months ended March 29, 2024 includes $8.1 million of right-of-use assets acquired as part of the Motion Solutions acquisition.

Future minimum lease payments under operating and finance leases expiring subsequent to March 28, 2025, including operating leases associated with facilities that have been vacated as a result of the Company’s restructuring actions, are summarized as follows (in thousands):


Year Ending December 31,	Operating Leases			Finance Leases
2025 (remainder of year)	$	8,761		$	715
2026		10,554			979
2027		8,994			1,003
2028		6,146			1,003
2029		5,349			502
Thereafter		19,376			—
Total minimum lease payments		59,180			4,202
Less: Interest		(10,528	)		(454	)
Present value of lease liabilities	$	48,652		$	3,748

11. Preferred and Common Shares and Share-Based Compensation

Preferred Shares

In May 2021, the Company’s shareholders approved a special resolution to amend the Company’s articles to authorize up to 7.0 million preferred shares for future issuance. The Company’s Board of Directors is authorized to designate and issue one or more series of preferred shares, fix the rights, preferences and designation, as deemed necessary or advisable, relating to the preferred shares, provided that no shares of any series may be entitled to more than one vote per share. As of March 28, 2025, no preferred shares had been issued and outstanding.

Common Share Repurchases

In February 2020, the Company’s Board of Directors approved a share repurchase plan (the “2020 Repurchase Plan”), authorizing the repurchase of $50.0 million worth of the Company’s common shares. During the three months ended March 28, 2025, the Company repurchased 46 thousand shares under the 2020 Repurchase Plan for an aggregate purchase price of $6.2 million and an average price of $134.54 per share. As of March 28, 2025, the Company had $43.3 million available for future share repurchases under the 2020 Repurchase Plan.

Share-Based Compensation Expense

The table below summarizes share-based compensation expense recorded in the consolidated statements of operations (in thousands):


	Three Months Ended
	March 28,		March 29,
	2025		2024
Selling, general and administrative	$	6,136	$	5,097
Research and development and engineering		615		559
Cost of revenue		349		421
Total share-based compensation expense	$	7,100	$	6,077

Share-based compensation expense reported in selling, general and administrative expenses included expenses related to restricted stock units granted to the members of the Company’s Board of Directors of $1.6 million and $1.4 million during the three months ended March 28, 2025 and March 29, 2024, respectively.

Restricted Stock Units

The Company’s restricted stock units (“RSUs”) have generally been issued with vesting periods ranging from zero to four years and vest based solely on service conditions. Accordingly, the Company recognizes compensation expense on a straight-line

basis over the requisite service period. The Company reduces the compensation expense by an estimated forfeiture rate which is based on anticipated forfeitures and historical forfeiture experience.

The table below summarizes activities relating to RSUs issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended March 28, 2025:


	Shares (In thousands)			Weighted Average Grant Date Fair Value
Unvested at December 31, 2024		198		$	154.43
Granted		131		$	143.54
Vested		(72	)	$	150.60
Forfeited		(5	)	$	158.19
Unvested at March 28, 2025		252		$	149.81
Expected to vest as of March 28, 2025		227

The total fair value of RSUs that vested during the three months ended March 28, 2025 was $10.2 million based on the market price of the underlying shares on the date of vesting.

Performance Stock Units

The Company typically grants PSUs that are based on the Company’s financial performance metrics, market conditions, or a hybrid of company financial performance metrics and market conditions. These PSUs generally cliff vest on the first day following the end of the specified performance period.

The number of common shares to be issued upon settlement following vesting of attainment-based PSUs is determined based on the Company’s financial performance metrics over the specified performance period against the targets established by the Company’s Board of Directors at the time of grant and will be in the range of zero to 200% of the target number of shares. The Company recognizes the related compensation expense ratably over the performance period based on the number of shares that are deemed probable of vesting at the end of the specified performance period. This probability assessment is performed quarterly and the cumulative effect of a change in the estimated compensation expense, if any, is recognized in the consolidated statement of operations in the period in which such determination is made.

The number of common shares to be issued upon settlement following vesting of market-based PSUs is determined based on the relative market performance of the Company’s common shares compared to the Russell 2000 Index over the specified performance period using a payout formula established by the Company’s Board of Directors at the time of grant and will be in the range of zero to 200% of the target number of shares. The Company recognizes the related compensation expense based on the fair value of the market-based PSUs, determined using the Monte-Carlo valuation method as of the grant date, on a straight-line basis from the grant date to the end of the specified performance period. Compensation expense on market-based PSUs will not be affected by the number of shares that will ultimately vest at the end of the specified performance period.

The number of common shares to be issued upon settlement following vesting of PSU awards that are based on the achievement of a hybrid of company financial performance metrics and market conditions (“Hybrid PSUs”) is determined based on the Company's financial performance metrics achieved over the specified performance period against the targets established by the Company's Board of Directors at the time of grant and a market-based multiplier based on the percentile ranking of the relative market performance of the Company’s common shares compared to the Russell 2000 Index companies. The payout will be in the range of zero to 260% of the target number of shares. The Company determines the fair value of these Hybrid PSUs using the Monte-Carlo valuation method as of the grant date. The Company recognizes compensation expense associated with the Hybrid PSUs ratably over the performance period based on the fair value of the PSUs as of the grant date and the number of shares that are deemed probable of vesting based on the estimated achievement of the pertinent company financial performance metrics at the end of the specified performance period. The probability assessment is performed quarterly and the cumulative effect of a change in the estimated compensation expense, if any, is recognized in the consolidated statement of operations in the period in which such determination is made.

The table below summarizes the activities relating to the performance-based awards issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended March 28, 2025:


	Shares (In thousands)			Weighted Average Grant- Date Fair Value
Unvested at December 31, 2024		227		$	165.13
Granted		82		$	160.93
Performance adjustments(1)		(7	)	$	140.62
Vested		(49	)	$	139.41
Forfeited		(8	)	$	164.74
Unvested at March 28, 2025		245		$	169.62
Expected to vest as of March 28, 2025		207

(1) The amount shown represents performance adjustments related to the performance-based awards vested during the three months ended March 28, 2025.

The unvested PSUs are shown at target payout levels in the table above. As of March 28, 2025, the maximum number of common shares that could be earned under these PSU grants was approximately 551 thousand shares.

The total fair value of PSUs that vested during the three months ended March 28, 2025 was $7.2 million based on the market price of the underlying common shares on the date of vesting.

The grant-date fair value per unit of the hybrid PSUs granted during the three months ended March 28, 2025 was estimated using the Monte Carlo valuation method with the following assumptions:


	Three Months Ended March 28, 2025
Grant-date stock price	$	142.80
Expected volatility		36.94	%
Risk-free interest rate		4.18	%
Expected annual dividend yield		—
Fair value	$	160.93

Stock Options

The table below summarizes the activities relating to stock options issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended March 28, 2025:




	Shares (In thousands)			Weighted Average Exercise Price
Outstanding as of December 31, 2024		149		$	139.17
Granted		—		$	—
Exercised		(4	)	$	135.86
Forfeited or expired		(4	)	$	156.91
Outstanding as of March 28, 2025		141		$	138.77
Exercisable as of March 28, 2025		94
Expected to vest as of March 28, 2025		47

12. Income Taxes

The Company determines its estimated annual effective tax rate at the end of each interim period based on full year forecasted pre-tax income and facts known at that time. The estimated annual effective tax rate is applied to the year-to-date pre-tax income at the end of each interim period with the cumulative effect of any changes in the estimated annual effective tax rate being recorded in the period in which the changes are determined. The tax effect of significant unusual items is reflected in the period in which they occur. Since the Company is incorporated in Canada, it is required to use Canada’s statutory tax rate of 29.0% in the determination of the estimated annual effective tax rate.

The Company maintains a valuation allowance on deferred tax assets associated with certain U.S. state net operating losses, credits and certain non-U.S. tax attributes that the Company has determined are not more likely than not to be realized. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company continuously reassesses the possibility of adding a new or additional valuation allowance or releasing the valuation allowance currently in place on its deferred tax assets.

The Company’s effective tax rate of 19.7% for the three months ended March 28, 2025 differs from the Canadian statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated deductions for Foreign Derived Intangible Income, U.K. patent box deductions and R&D tax credits, partially offset by disallowed compensation deductions, withholding taxes, non-deductible expenses and an estimated Pillar Two inclusion.

The Company’s effective tax rate of 13.2% for the three months ended March 29, 2024 differs from the Canadian statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated deductions for Foreign Derived Intangible Income, U.K. patent box deductions, R&D tax credits and windfall tax benefits upon vesting of share-based compensation awards, partially offset by disallowed compensation deductions, uncertain tax position accruals, and estimated Pillar Two inclusion. For the three months ended March 29, 2024, the tax benefits upon vesting of certain share-based compensation awards had a benefit of 6.8% on the Company’s effective tax rate.

13. Restructuring, Acquisition, and Related Costs

The following table summarizes restructuring, acquisition, and related costs in the accompanying consolidated statements of operations (in thousands):


	Three Months Ended
	March 28,			March 29,
	2025			2024
2024 restructuring	$	590		$	548
2020 restructuring		(3,595	)		—
Total restructuring charges		(3,005	)		548
Acquisition and related charges		550			1,735
Total restructuring, acquisition, and related costs	$	(2,455	)	$	2,283

2024 Restructuring

As a result of the Company’s acquisitions and ongoing integration activities, the Company initiated the 2024 restructuring program in the first quarter of 2024 in order to reduce operating complexity. During the three months ended March 28, 2025, the Company recorded $0.6 million in severance, facility related and other charges in connection with the 2024 restructuring program. As of March 28, 2025, the Company had incurred cumulative costs of $11.1 million related to this restructuring program. The Company anticipates substantially completing the 2024 restructuring program by the end of 2025 and expects to incur additional restructuring charges of $5.0 million to $6.0 million related to the 2024 restructuring program.

The following table summarizes restructuring costs associated with the 2024 restructuring program by reportable segment (in thousands):


	Three Months Ended
	March 28,		March 29,
	2025		2024
Automation Enabling Technologies	$	486	$	279
Medical Solutions		82		206
Unallocated		22		63
Total	$	590	$	548

2020 Restructuring

As a result of the Company’s ongoing evaluations and efforts to reduce its operating costs, while improving efficiency and effectiveness, the Company initiated the 2020 restructuring program in the third quarter of 2020. This program was focused on reducing operating complexity in the Company, including reducing infrastructure costs and streamlining the Company’s operating model to better serve its customers. In addition, the program was focused on cost reduction actions to improve gross margins for the overall company. As of March 28, 2025, the Company had incurred cumulative costs of $13.1 million related to the 2020 restructuring program. The 2020 restructuring program activities were completed in the fourth quarter of 2023. In January 2025, the Company sold a facility from the 2020 restructuring program and recorded a $3.6 million gain in the Company’s Automation Enabling Technologies segment.

Roll-forward of Accrued Expenses Related to Restructuring

The following table summarizes the accrual activities, by component, related to the Company’s restructuring plans recorded in the accompanying consolidated balance sheets (in thousands):


	Total			Employee Related			Facility Related			Facility Sale			Other
Balance at December 31, 2024	$	6,751		$	5,690		$	1,061		$	—		$	—
Restructuring charges		(3,005	)		(107	)		719			(4,325	)		708
Cash payments		4,444			(581	)		(147	)		5,537			(365	)
Non-cash write-offs and other adjustments		(1,679	)		162			(629	)		(1,212	)		—
Balance at March 28, 2025	$	6,511		$	5,164		$	1,004		$	—		$	343

Acquisition and Related Charges

Acquisition costs in connection with business combinations, including finders’ fees, legal, valuation, and other professional or consulting fees, totaled $0.6 million for three months ended March 28, 2025, and $1.7 million for the three months ended March 29, 2024. The majority of acquisition and related costs for the three months ended March 28, 2025 and the three months ended March 29, 2024 were included in unallocated costs.

14. Commitments and Contingencies

Purchase Commitments

There have been no material changes to the Company’s purchase commitments since December 31, 2024.

Legal Contingencies

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company reviews the status of each significant matter and assesses the potential financial exposure on a quarterly basis. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best

information available as of the date of the consolidated balance sheet. As additional information becomes available, the Company reassesses the potential liability related to any pending claims and litigation and may revise its estimates. When a material loss contingency is considered reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the potential loss or a range of potential losses, if such an estimate can be reasonably made. Legal fees are expensed as incurred. The Company does not believe that the outcome of outstanding claims will have a material adverse effect on its consolidated financial statements but there can be no assurance that any such claims, or any similar claims, would not have a material adverse effect on its consolidated financial statements.

Guarantees and Indemnifications

In the normal course of its operations, the Company executes agreements that provide for indemnification and guarantees to counterparties in transactions such as business dispositions, sale of assets, sale of products, and operating leases. Additionally, the by-laws of the Company require it to indemnify certain current or former directors, officers, and employees of the Company against expenses incurred by them in connection with each proceeding in which they are involved as a result of serving or having served in certain capacities. Indemnification is not available with respect to a proceeding as to which it has been adjudicated that the person did not act in good faith in the reasonable belief that the action was in the best interests of the Company. Certain of the Company’s officers and directors are also a party to indemnification agreements with the Company. These indemnification agreements provide, among other things, that the director or officer shall be indemnified to the fullest extent permitted by applicable law against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such director or officer in connection with any proceeding by reason of their relationship with the Company. In addition, the indemnification agreements provide for the advancement of expenses incurred by such director or officer in connection with any proceeding covered by the indemnification agreement, subject to the conditions set forth therein and to the extent such advancement is not prohibited by law. The indemnification agreements also set out the procedures for determining entitlement to indemnification, the requirements relating to notice and defense of claims for which indemnification is sought, the procedures for enforcement of indemnification rights, the limitations on and exclusions from indemnification, and the minimum levels of directors and officers liability insurance to be maintained by the Company.

15. Segment Information

Reportable Segments

The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM utilizes financial information to make decisions about allocating resources and assessing performance for the entire Company. The CODM evaluates the performance of, and allocates resources to, its segments based on revenue, gross profit and operating income. The Company’s reportable segments have been identified based on commonality and adjacency of end markets and customers amongst the Company’s individual product lines.

During the fourth quarter of 2024, the Company updated its organizational structure and re-aligned its financial reporting structure under two reportable segments: Automation Enabling Technologies and Medical Solutions. Prior to the reorganization, the Company's historical reportable segments were: Precision Medicine and Manufacturing, Robotics and Automation, and Medical Solutions. Prior period segment financial information has been recast to align with the new reportable segments herein, as well as in Notes 7 and 13.

Automation Enabling Technologies

The Automation Enabling Technologies segment designs, manufactures and markets laser beam delivery components, laser beam delivery solutions, CO2 lasers, solid state lasers, ultrafast lasers, optical and inductive encoders, precision motors, integrated stepper motors, servo drives, motion control solutions, intelligent robotic end-of-arm technology solutions, and air bearing spindles to customers worldwide. The segment serves highly demanding applications for advanced industrial processes, advanced industrial and medical robotics, other medical and life science automation applications, and medical laser procedures such as ophthalmology applications. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells the majority of these products directly, utilizing a highly technical sales force, and also sells some indirectly, through resellers and distributors.

Medical Solutions

The Medical Solutions segment designs, manufactures and markets a range of medical grade technologies, including medical insufflators and endoscopic pumps and related disposables, laser beam delivery solutions, video processing and streaming and capture, machine vision technologies, radio-frequency identification (“RFID”) technologies, barcode identification technologies, thermal chart recorders, light and color measurement technologies, touch panel displays, and advanced motion control solutions. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells the majority of these products directly, utilizing a highly technical sales force, and also sells some indirectly, through resellers and distributors.

Reportable Segment Financial Information

Results of operations, depreciation and amortization expenses by reportable segments for the periods indicated were as follows (in thousands):


	Three Months Ended March 28, 2025
	Automation Enabling Technologies			Medical Solutions		Total
Revenue	$	123,167		$	110,199	$	233,366
Cost of revenue		62,422			62,036
Amortization of purchased intangible assets		1,359			2,202
Segment gross profit		59,386			45,961		105,347
Research and development and engineering		9,439			13,955
Selling, general and administrative		19,159			14,732
Amortization of purchased intangible assets		2,408			3,146
Restructuring, acquisition, and related costs		(3,109	)		99
Segment operating income		31,489			14,029		45,518
Unallocated costs		—			—		(13,097	)
Interest income (expense), net		—			—		(5,644	)
Other income (expense), net		—			—		(359	)
Income before income taxes	$	31,489		$	14,029	$	26,418


	Three Months Ended March 29, 2024
	Automation Enabling Technologies		Medical Solutions		Total
Revenue	$	117,389	$	113,527	$	230,916
Cost of revenue		60,318		65,182
Amortization of purchased intangible assets		1,569		2,123
Segment gross profit		55,502		46,222		101,724
Research and development and engineering		9,997		13,266
Selling, general and administrative		18,495		13,622
Amortization of purchased intangible assets		2,801		2,949
Restructuring, acquisition, and related costs		279		366
Segment operating income		23,930		16,019		39,949
Unallocated costs		—		—		(14,342	)
Interest income (expense), net		—		—		(8,254	)
Other income (expense), net		—		—		(437	)
Income before income taxes	$	23,930	$	16,019	$	16,916


	Three Months Ended
	March 28,		March 29,
Depreciation and Amortization Expenses	2025		2024
Automation Enabling Technologies	$	5,476	$	5,856
Medical Solutions		7,679		6,597
Unallocated		408		476
Total	$	13,563	$	12,929


	March 28,		December 31,
	2025		2024
Accounts Receivable
Automation Enabling Technologies	$	77,726	$	70,829
Medical Solutions		86,475		80,197
Total accounts receivable	$	164,201	$	151,026
Inventories
Automation Enabling Technologies	$	90,002	$	89,009
Medical Solutions		55,433		55,597
Total inventories	$	145,435	$	144,606
Total segment assets	$	309,636	$	295,632

Revenue by Geography

The Company aggregates geographic revenue based on the customer locations where products are shipped to. Revenue by geography was as follows (in thousands):


	Three Months Ended
	March 28,		March 29,
	2025		2024
United States	$	123,646	$	117,081
Germany		28,477		33,181
Rest of Europe		31,781		30,971
China		21,434		17,071
Rest of Asia-Pacific		23,379		27,256
Other		4,649		5,356
Total	$	233,366	$	230,916

The majority of revenue from the Automation Enabling Technologies and Medical Solutions segments are generated from sales to customers within the United States and Europe. Each segment also generates revenue across the other geographies, with no significant concentration of any segment’s remaining revenue.

Revenue by End Market

The Company primarily operates in two end markets: the medical market and the advanced industrial market. Revenue by end market was approximately as follows:


	Three Months Ended
	March 28,			March 29,
	2025			2024
Medical		55	%		55	%
Advanced Industrial		45	%		45	%
Total		100	%		100	%

The majority of the revenue from the Automation Enabling Technologies segment is generated from sales to customers in the advanced industrial market. The majority of the revenue from the Medical Solutions segment is generated from sales to customers in the medical market.

16. Subsequent Event

On April 8, 2025, the Company acquired 100% the outstanding stock of Keonn Technologies, S.L. (“Keonn”), a Barcelona, Spain-based leader in Radio-Frequency Identification (“RFID”) solutions for an initial cash payment of €60.6 million ($66.4 million), subject to customary closing and net working capital adjustments. The purchase includes up to €20.0 million ($21.9 million) in contingent consideration payable upon the achievement of certain revenue targets through December 2027. In addition, the Company has granted equity totaling €9.0 million ($9.9 million) to Keonn employees.

The acquisition was financed with cash on-hand and borrowings under the Company's revolving credit facility. The Keonn acquisition will be included in the Medical Solutions reportable segment. Information required by ASC 805-10, “Business Combinations,” is not disclosed herein as the Company is in the process of completing its purchase accounting evaluation, including purchase price allocation and other related disclosures.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Consolidated Financial Statements and Notes included in Item 1 of this Quarterly Report on Form 10-Q. The MD&A contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. These forward-looking statements include, but are not limited to, our financial results and our financial condition; our belief that the Purchasing Managers Index (“PMI”) may provide an indication of the impact of general economic conditions on our sales into the advanced industrial end market; our strategy; anticipated financial performance; expected liquidity and capitalization; drivers of revenue growth and our growth expectations in various markets; management’s plans and objectives for future operations, expenditures and product development, and investments in research and development; business prospects; potential of future product releases and expansion of our product and service offerings; industry trends; market conditions; our competitive positions; changes in economic and political conditions, including supply chain disruptions and constraints and inflationary pressures; changes in accounting principles; changes in actual or assumed tax liabilities and tax law; expectations regarding tax exposures; anticipated reinvestment of future earnings and dividend policy; anticipated expenditures in regard to our benefit plans; future acquisitions and integration and anticipated benefits from acquisitions and dispositions; anticipated economic benefits and expected costs of restructuring programs; our ability to repay our indebtedness; our intentions regarding the use of cash; expectations regarding legal and regulatory requirements, including environmental requirements, and our compliance thereto; and other statements that are not historical facts.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various important factors, including, but not limited to, the following: economic and political conditions and the effects of these conditions on our customers’ businesses, capital expenditures and level of business activities; our dependence upon our ability to respond to fluctuations in product demand; our ability to continuously innovate, to introduce new products in a timely manner, and to manage transitions to new product innovations effectively; customer order timing and other similar factors; disruptions or breaches in security of our or our third-party providers’ information technology systems; 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; our ability to contain or reduce costs; 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 failure to successfully integrate recent and future acquisitions into our business; our ability to attract and retain key personnel; our restructuring and realignment activities; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key components and other goods from our suppliers; our failure to accurately forecast component and raw material requirements leading to additional costs and significant delays in shipments; production difficulties and product delivery delays or disruptions; our exposure to extensive medical device regulations, which may impede or hinder the approval, certification or sale of our products and, in some cases, may ultimately result in an inability to obtain approval or certification of certain products or may result in the recall or seizure of previously approved or certified products; potential penalties for violating foreign and U.S. federal and state healthcare laws and regulations; impact of healthcare industry cost containment and healthcare reform measures; changes in governmental regulations related to our business or products; actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards, and other requirements; our failure to implement new information technology systems successfully; changes in foreign currency rates; our failure to realize the full value of our intangible assets; our reliance on original equipment manufacturer customers; the loss of sales, or significant reduction in orders from, any major customers; increasing scrutiny and changing expectations from investors, customers, governments and other stakeholders and third parties with respect to corporate sustainability policies and practices; the effects of climate change and related regulatory responses; our exposure to the credit risk of some of our customers and in weakened markets; 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 Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 under the heading “Risk Factors”, as updated in our other filings with the Securities and Exchange Commission.

In this Quarterly Report on Form 10-Q, the words “expects,” “intends,” “anticipates,” “estimates,” “believes,” “future,” “plans,” “aims,” “would,” “could,” “should,” “potential,” “continues,” and similar words or expressions (as well as other words or expressions referencing future events, conditions, or circumstances) identify forward-looking statements. Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Management and the Company disclaim any obligation to publicly update or revise any such forward-looking statements to reflect any changes in its

expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements, except as required under applicable law.

Accounting Period

The interim consolidated financial statements of Novanta Inc. (the “Company”, “Novanta”, “we”, “us”, “our”) are prepared for each quarterly period ending on the Friday closest to the end of the calendar quarter, except for the fourth quarter which always ends on December 31.

Business Overview

We are 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 precision medicine, precision manufacturing, robotics and automation, and advanced surgery with a proven ability to solve complex technical challenges. This enables us to engineer core components and sub-systems that deliver extreme precision and performance, tailored to our customers' demanding applications.

Reportable Segments

Reporting Segment Change

During the fourth quarter of 2024, we updated our organizational structure and re-aligned our financial reporting structure under two reportable segments: Automation Enabling Technologies and Medical Solutions. Prior to the reorganization, our historical reportable segments were: Precision Medicine and Manufacturing, Robotics and Automation, and Medical Solutions. Prior period segment financial information has been recast to align with the new reportable segments.

We operate in two reportable segments: Automation Enabling Technologies and Medical Solutions. The reportable segments and their principal activities are summarized below.

Automation Enabling Technologies

Medical Solutions

The Medical Solutions segment designs, manufactures and markets a range of medical grade technologies, including medical insufflators and endoscopic pumps and related disposables, laser beam delivery solutions, video processing and streaming and capture, machine vision technologies, radio frequency identification (“RFID”) technologies, barcode identification technologies, thermal chart recorders, light and color measurement technologies, touch panel displays, and advanced motion control solutions. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells the majority of these products directly, utilizing a highly technical sales force, and also sells some indirectly, through resellers and distributors.

End Markets

We primarily operate in two end markets: the medical market and the advanced industrial market.

Medical Market

For the three months ended March 28, 2025, the medical market accounted for approximately 55% of our revenue. Revenue from our products sold to the medical market is generally affected by hospital, life science, and other healthcare provider capital spending, growth rates of surgical procedures, changes in regulatory requirements and laws, demand level for life science automation technology, aggregation of purchasing by healthcare networks, changes in technology requirements, timing of OEM customers’ product development and new product launches, changes in customer or patient preferences, and general demographic trends.

Advanced Industrial Market

For the three months ended March 28, 2025, the advanced industrial market accounted for approximately 45% of our revenue. Revenue from our products sold to the advanced industrial market is affected by a number of factors, including changing technology requirements and preferences of our customers, productivity or quality investments in a manufacturing environment, the financial conditions of our customers, changes in regulatory requirements and laws, and general economic conditions. We believe that the PMI on manufacturing activities specific to different regions around the world may provide an indication of the impact of general economic conditions on our sales into the advanced industrial market.

Strategy

Our strategy is to drive sustainable, profitable growth through short-term and long-term initiatives, including:

•

disciplined focus on our diversified business model of providing functionality to long life-cycle OEM customer platforms in attractive medical and advanced industrial niche markets;

•

improving our business mix to increase medical sales as a percentage of total revenue by:

introducing new products aimed at attractive medical applications, such as minimally invasive and robotic surgery, ophthalmology, patient monitoring, drug delivery, clinical laboratory testing and life science equipment;

deepening our key account management relationships with and driving cross selling of our product offerings to leading medical equipment manufacturers; and

pursuing complementary medical technology acquisitions;

•

increasing our penetration of high growth advanced industrial applications, such as laser materials processing, intelligent end-of-arm robotic technology solutions, robotics, laser additive manufacturing, automation and metrology, by working closely with OEM customers to launch application specific products that closely match the requirements of each application;

•

broadening our portfolio of enabling proprietary technologies and capabilities through increased investment in new product development, and investments in application development to further penetrate existing customers, while expanding the applicability of our solutions to new markets;

•

broadening our product and service offerings through the acquisition of innovative and complementary technologies and solutions in medical and advanced industrial technology applications;

•

expanding sales and marketing channels to reach new target customers;

•

improving our existing operations to expand profit margins and improve customer satisfaction by implementing lean manufacturing principles, strategic sourcing across our major production sites, and optimizing and limiting the growth of our fixed cost base; and

•

attracting, retaining, and developing world-class talented and motivated employees.

Significant Events and Updates

Acquisition of Keonn Technologies, S.L.

Business Environment

In recent years, the global economy has faced significant challenges, including inflation, supply chain disruptions, business slowdowns, labor shortages, and market volatility, and recently new and proposed tariffs announced by the U.S. Presidential Administration have introduced additional uncertainty. We address macroeconomic challenges by continuing to execute our strategy. There have been improvements in the supply chain with better on-time deliveries, and recent efforts have successfully addressed talent shortages. However, uncertainty remains about overall macroeconomic conditions due to geopolitical tensions and changes in trade policies.

Economic tensions and changes in trade policies, such as higher tariffs, retaliatory measures, renegotiated free trade agreements, changes in government funding, and the ongoing impact from prolonged inflationary pressures could impact the global market for our products and the cost to manufacture.

Results of Operations for the Three Months Ended March 28, 2025 Compared with the Three Months Ended March 29, 2024

Overview of Financial Results

Total revenue of $233.4 million for the three months ended March 28, 2025 increased $2.5 million, or 1.1%, from the prior year period. Foreign currency exchange rates unfavorably impacted our revenue by $1.5 million, or 0.6%, for the three months ended March 28, 2025.

Operating income of $32.4 million for the three months ended March 28, 2025 increased $6.8 million, or 26.6%, from the prior year period. This increase was attributable to an increase in gross profit of $4.0 million and a decrease in restructuring, acquisition and related charges of $4.7 million, partially offset by an increase in selling, general and administrative expenses of $2.1 million.

Basic earnings per common share (“Basic EPS”) of $0.59 for the three months ended March 28, 2025 increased $0.18 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.59 for the three months ended March 28, 2025 increased $0.18 from the prior year period. The increases were primarily due to an increase in operating income and a decrease in interest expense, partially offset by an increase in income tax provision.

Revenue

The following tables set forth external revenue by reportable segment for the periods noted (dollars in thousands):


	Three Months Ended
	March 28,		March 29,		Increase			Percentage
	2025		2024		(Decrease)			Change
Automation Enabling Technologies	$	123,167	$	117,389	$	5,778			4.9	%
Medical Solutions		110,199		113,527		(3,328	)		(2.9	)%
Total	$	233,366	$	230,916	$	2,450			1.1	%

Automation Enabling Technologies

Automation Enabling Technologies segment revenue for the three months ended March 28, 2025 increased $5.8 million, or 4.9%, versus the prior year period, primarily due to increased demand in robotics and automation products, partially offset by a decrease in demand in precision manufacturing products.

Medical Solutions

Medical Solutions segment revenue for the three months ended March 28, 2025 decreased $3.3 million, or 2.9%, versus the prior year period, primarily due to a decrease in sales of precision medicine products, partially offset by an increase in sales of advanced surgery products.

Gross Profit and Gross Profit Margin

The following table sets forth the gross profit and gross profit margin for each of our reportable segments for the periods noted (dollars in thousands):


	Three Months Ended
	March 28,			March 29,
	2025			2024
Gross profit:
Automation Enabling Technologies	$	59,386		$	55,502
Medical Solutions		45,961			46,222
Unallocated		(993	)		(1,308	)
Total	$	104,354		$	100,416
Gross profit margin:
Automation Enabling Technologies		48.2	%		47.3	%
Medical Solutions		41.7	%		40.7	%
Total		44.7	%		43.5	%

Gross profit and gross profit margin can be influenced by a number of factors, including product mix, pricing, volume, manufacturing efficiencies and utilization, costs for raw materials and outsourced manufacturing, trade tariffs, freight costs, headcount, inventory excess and obsolescence, and warranty expenses.

Automation Enabling Technologies

Automation Enabling Technologies segment gross profit for the three months ended March 28, 2025 increased $3.9 million, or 7.0%, versus the prior year period, primarily due to an increase in both revenue and gross profit margin. Automation Enabling Technologies segment gross profit margin was 48.2% for the three months ended March 28, 2025, versus a gross profit margin of 47.3% for the prior year period. The increase in gross profit margin was primarily attributable to product mix.

Medical Solutions

Medical Solutions segment gross profit for the three months ended March 28, 2025 decreased $0.3 million, or 0.6%, versus the prior year period, primarily due to a decrease in revenue. Medical Solutions segment gross profit margin was 41.7% for the three months ended March 28, 2025, versus a gross profit margin of 40.7% for the prior year period. The increase in gross profit margin is primarily due to a one-time inventory fair value adjustment associated with a prior year acquisition, partially offset by product mix.

Operating Expenses

The following table sets forth operating expenses for the periods noted (in thousands):


	Three Months Ended
	March 28,			March 29,
	2025			2024
Research and development and engineering	$	23,238		$	23,246
Selling, general and administrative		45,596			43,530
Amortization of purchased intangible assets		5,554			5,750
Restructuring, acquisition, and related costs		(2,455	)		2,283
Total	$	71,933		$	74,809

Research and Development and Engineering Expenses

Research and Development and Engineering (“R&D”) expenses are primarily comprised of employee compensation related expenses and cost of materials for R&D projects. R&D expenses were $23.2 million, or 10.0% of revenue, during the three months ended March 28, 2025, versus $23.2 million, or 10.1% of revenue, during the prior year period.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses include costs for sales and marketing, sales administration, finance, human resources, legal, information systems, and executive management functions. SG&A expenses were $45.6 million, or 19.5% of revenue, during the three months ended March 28, 2025, versus $43.5 million, or 18.9% of revenue, during the prior year period. The increase in SG&A expenses, both in total dollars and as a percentage of revenue, was primarily driven by higher outside service spending and employee compensation.

Amortization of Purchased Intangible Assets

Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $5.6 million, or 2.4% of revenue, during the three months ended March 28, 2025, versus $5.8 million, or 2.5% of revenue, during the prior year period.

Restructuring, Acquisition, and Related Costs

We recorded restructuring, acquisition, and related costs of $(2.5) million during the three months ended March 28, 2025, versus $2.3 million during the prior year period. The decrease in restructuring, acquisition and related costs was primarily due to a gain on the sale of an owned facility.

Operating Income (Loss) by Segment

The following table sets forth operating income (loss) by segment for the periods noted (in thousands):


	Three Months Ended
	March 28,			March 29,
	2025			2024
Operating Income (Loss)
Automation Enabling Technologies	$	31,489		$	23,930
Medical Solutions		14,029			16,019
Unallocated		(13,097	)		(14,342	)
Total	$	32,421		$	25,607

Automation Enabling Technologies

Automation Enabling Technologies segment operating income was $31.5 million, or 25.6% of revenue, during the three months ended March 28, 2025, versus $23.9 million, or 20.4% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $3.9 million and a decrease in restructuring, acquisition and related charges of $3.4 million.

Medical Solutions

Medical Solutions segment operating income was $14.0 million, or 12.7% of revenue, during the three months ended March 28, 2025, versus $16.0 million, or 14.1% of revenue, during the prior year period. The decrease in operating income was primarily due to an increase in SG&A expenses of $1.1 million and an increase in R&D expenses of $0.7 million.

Unallocated

Unallocated costs primarily represent costs of corporate and shared services functions that are not allocated to the operating segments, including certain restructuring and most acquisition costs. These costs for the three months ended March 28, 2025 decreased $1.2 million versus the prior year period. The decrease in operating loss was primarily due to a decrease in acquisition and related charges of $1.0 million.

Other Income and Expense Items

The following table sets forth other income and expense items for the periods noted (in thousands):


	Three Months Ended
	March 28,			March 29,
	2025			2024
Interest income (expense), net	$	(5,644	)	$	(8,254	)
Foreign exchange transaction gains (losses), net	$	(368	)	$	(321	)
Other income (expense), net	$	9		$	(116	)

Interest Income (Expense), Net

Net interest expense was $5.6 million for the three months ended March 28, 2025, versus $8.3 million for the prior year period. The decrease in net interest expense was primarily due to a decrease in the average debt levels under our senior credit facilities and a decrease in the weighted average interest rate. The weighted average interest rate on our senior credit facilities was 5.77% during the three months ended March 28, 2025, versus 6.54% during the prior year period.

Foreign Exchange Transaction Gains (Losses), Net

Foreign exchange transaction gains (losses) were nominal for the three months ended March 28, 2025 and the three months ended March 29, 2024.

Other Income (Expense), Net

Net other expense was nominal for the three months ended March 28, 2025 and the three months ended March 29, 2024.

Income Tax Provision (Benefit)

Our effective tax rate for the three months ended March 28, 2025, was 19.7%, versus 13.2% for the prior year period. Our effective tax rate of 19.7% for the three months ended March 28, 2025 differs from the Canadian statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated deductions for Foreign Derived Intangible Income, U.K. patent box deductions and R&D tax credits, partially offset by disallowed compensation deductions, withholding taxes, non-deductible expenses and an estimated Pillar Two inclusion.

Our effective tax rate for the three months ended March 29, 2024 of 13.2% differs from the Canadian statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated deductions for Foreign Derived Intangible Income, U.K. patent box deductions, R&D tax credits, and windfall tax benefits upon vesting of share-based compensation awards, partially offset by disallowed compensation deductions, uncertain tax position accruals, and estimated Pillar Two inclusion. For the three months ended March 29, 2024, the tax benefits upon vesting of certain share-based compensation awards had a benefit of 6.8% on the Company’s effective tax rate.

On December 12, 2022, the EU member states agreed to implement the Organization for Economic Co-operation and Development’s (“OECD”) Pillar Two Model Rules. These rules, which impose a global corporate minimum income tax rate of 15%, have been enacted or introduced in proposed legislation in 45 countries. Additional countries are actively considering changes to their tax laws to adopt certain parts of the OECD’s proposals. We operate in many jurisdictions that have adopted these rules. We fall under the transitional safe harbor rules in the majority of jurisdictions in which we operate and are therefore not subject to the Pillar Two global minimum tax. Where we cannot apply the safe harbor rules, we have estimated the impact of this minimum tax in our effective tax rate analysis. We continue to closely monitor the progression of legislative activities.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our primary ongoing cash requirements are funding operations, capital expenditures, investments in businesses, and repayment of our debt and related interest payments. Our primary sources of liquidity are cash flows from operations and borrowings under our revolving credit facility. We believe our future operating cash flows will be sufficient to meet our future operating and capital expenditure cash needs for the foreseeable future, including at least the next 12 months. The availability of borrowing capacity under our revolving credit facility provides another potential source of liquidity for any future capital expenditures and other liquidity needs. In addition, we have the ability to expand our borrowing capacity by up to $350.0 million by exercising the accordion option under our revolving credit agreement. We may also seek to raise additional capital, which could be in the form of bonds, convertible debt or preferred or common equity, to fund business development activities or other future investing cash requirements, subject to approval by the lenders in the Third Amended and Restated Credit Agreement (as amended, the “Credit Agreement”). There is no assurance that such capital will be available on reasonable terms or at all.

Significant factors affecting the management of our ongoing cash requirements are the adequacy of available bank lines of credit and our ability to attract long term capital with satisfactory terms. The sources of our liquidity are subject to all of the risks of our business and could be adversely affected by, among other factors, risks associated with events outside of our control, such as economic consequences of geopolitical conflicts, monetary, fiscal, tax or trade policy changes in the U.S. and other countries and their impact on the global financial markets, a decrease in demand for our products, our ability to integrate current and future acquisitions, deterioration in certain financial ratios, availability of borrowings under our revolving credit facility, and other market changes in general. See “Risks Relating to Our Common Shares and Our Capital Structure” included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Our cash requirements primarily consist of principal and interest payments associated with our Senior Credit Facilities (as defined below), operating and finance leases, purchase commitments, and pension obligations. Such contractual obligations are described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to Consolidated Financial Statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. On April 8, 2025, we drew down on our revolving credit facility under the Senior Credit Facilities to fund the acquisition of Keonn Technologies, S.L.

Our ability to make payments on our indebtedness and to fund our operations may be dependent upon the operating income and the distribution of funds from our subsidiaries. However, as local laws and regulations and/or the terms of our indebtedness restrict certain of our subsidiaries from paying dividends and transferring assets to us, there is no assurance that our subsidiaries will be permitted to provide us with sufficient dividends, distributions or loans when necessary.

As of March 28, 2025, $77.2 million of our $106.0 million cash and cash equivalents was held by subsidiaries outside of Canada and the U.S. Generally, our intent is to use cash held in these foreign subsidiaries to fund our local operations or acquisitions by those local subsidiaries and to pay down borrowings under our Senior Credit Facilities. Approximately $88.3 million of our outstanding term loan and revolver borrowings under our Senior Credit Facilities were held in our subsidiaries outside of Canada and the U.S. as of March 28, 2025. Additionally, we may use intercompany loans to address short-term cash flow needs for various subsidiaries.

Senior Credit Facilities

In December 2019, we entered into the Third Amended and Restated Credit Agreement (as amended from time to time, the “Credit Agreement”), originally consisting of a $100.0 million U.S. dollar equivalent euro-denominated (approximately €90.2 million) 5-year term loan facility and a $350.0 million 5-year revolving credit facility (collectively, the “Senior Credit Facilities”). The Senior Credit Facilities had an original maturity date of December 2024 and included an uncommitted accordion option pursuant to which the commitments under the revolving credit facility may be increased by an additional $200.0 million in aggregate, subject to certain customary conditions. The term loan facility requires quarterly scheduled principal repayments of approximately €1.1 million beginning in March 2020 with the remaining principal balance due upon maturity. We may make additional principal payments at any time, which will reduce the next quarterly installment payment due. We may pay down outstanding borrowings under our revolving credit facility with cash on hand and cash generated from future operations at any time.

On March 27, 2020, we entered into an amendment (the “First Amendment”) to the Credit Agreement and exercised a portion of the uncommitted accordion option. The First Amendment increased the revolving credit facility commitment under the Credit Agreement by $145.0 million, from $350.0 million to $495.0 million, and reset the uncommitted accordion option to $200.0 million for potential future expansion.

On October 5, 2021, we entered into an amendment (the “Fourth Amendment”) to the Credit Agreement to exercise the accordion option. The Fourth Amendment increased the revolving credit facility commitment under the Credit Agreement by $200.0

million, from $495.0 million to $695.0 million, and reset the uncommitted accordion option to $200.0 million for potential future expansion.

On March 10, 2022, we entered into an amendment (the “Fifth Amendment”) to the Credit Agreement to extend the maturity date thereof from December 31, 2024 to March 10, 2027, update the pricing grid, replace LIBOR with SOFR as the reference rate for U.S. dollar borrowings, and increase the uncommitted accordion option from $200 million to $350 million.

As of March 28, 2025, we had $71.6 million term loan and $320.8 million revolver borrowings outstanding under our Senior Credit Facilities. The borrowings outstanding under the Senior Credit Facilities bear interest at rates based on (a) the Base Rate, as defined in the Credit Agreement, plus a margin ranging between 0.00% and 0.75% per annum, determined by reference to our consolidated leverage ratio, or (b) the Term SOFR Screen Rate, the Alternative Currency Daily Rate or the Alternative Currency Term Rate, as defined in the Credit Agreement, plus a margin ranging between 0.75% and 1.75% per annum, determined by reference to our consolidated leverage ratio. In addition, we are obligated to pay a commitment fee on the unused portion of the revolving credit facility, ranging between 0.20% and 0.30% per annum, determined by reference to our consolidated leverage ratio. As of March 28, 2025, we had outstanding borrowings under the Credit Agreement denominated in Euro and U.S. dollars of $88.3 million and $304.1 million, respectively.

The Credit Agreement contains various covenants that we believe are usual and customary for this type of agreement, including a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio (as defined in the Credit Agreement). The following table summarizes these financial covenants and our compliance therewith as of March 28, 2025:


	Requirement	Actual
Maximum consolidated leverage ratio (1)	3.50	1.73
Minimum consolidated fixed charge coverage ratio	1.50	4.93

(1)Maximum consolidated leverage ratio shall be increased to 4.00 for four consecutive quarters following a designated acquisition, as defined in the Fifth Amendment.

Share Repurchase Plans

Our Board of Directors may approve share repurchase plans from time to time. Under these repurchase plans, shares may be repurchased at our discretion based on ongoing assessment of the capital needs of the business, the market price of our common shares, and general market conditions. Shares may also be repurchased through an accelerated share purchase agreement, on the open market or in privately negotiated transactions in accordance with applicable federal securities laws. Repurchases may be made under certain SEC regulations, which would permit common shares to be repurchased when we would otherwise be prohibited from doing so under insider trading laws. While the share repurchase plans are generally intended to offset dilution from equity awards granted to our employees and directors, the plans do not obligate us to acquire any particular amount of common shares. No time limit is typically set for the completion of the share repurchase plans, and the plans may be suspended or discontinued at any time. We expect to fund share repurchases through cash on hand and cash generated from operations.

In February 2020, our Board of Directors approved a share repurchase plan (the “2020 Repurchase Plan”) authorizing the repurchase of $50.0 million worth of common shares. Share repurchases have been made under the 2020 Repurchase Plan pursuant to Rule 10b-18 under the Securities Exchange Act of 1934. We repurchased 46 thousand shares under the 2020 Repurchase Plan for an aggregate purchase price of $6.2 million and average price of $134.54 per share during the three months ended March 28, 2025. We had $43.3 million available for share repurchases under the 2020 Repurchase Plan as of March 28, 2025.

Cash Flows for the Three Months Ended March 28, 2025 and March 29, 2024

The following tables summarize our cash flows, cash and cash equivalents, and unused and available funds under our revolving credit facility for the periods indicated (in thousands):


	Three Months Ended
	March 28,			March 29,
	2025			2024
Net cash provided by operating activities	$	31,684		$	32,829
Net cash provided by (used in) investing activities	$	1,253		$	(197,615	)
Net cash provided by (used in) financing activities	$	(42,731	)	$	153,463

	March 28,			December 31,
	2025			2024
Cash and cash equivalents	$	106,045		$	113,989
Unused and available funds under the revolving credit facility	$	374,205		$	346,249

Operating Cash Flows

Cash provided by operating activities was $31.7 million for the three months ended March 28, 2025, versus $32.8 million for the prior year period.

Investing Cash Flows

Cash provided by investing activities was $1.3 million for the three months ended March 28, 2025, primarily driven by $5.5 million of cash received from the sale of properties. We also paid $4.3 million for capital expenditures.

Cash used in investing activities was $197.6 million for the three months ended March 29, 2024, primarily related to the $191.2 million of cash considerations (net of cash acquired) paid for our 2024 acquisition and $6.4 million for capital expenditures.

We expect to use an aggregate of approximately $20 million to $30 million in 2025 for capital expenditures related to investments in new property, plant and equipment for our existing businesses.

Financing Cash Flows

Cash used in financing activities was $42.7 million for the three months ended March 28, 2025, primarily driven by $29.7 million of term loan and revolving credit facility repayments, $6.7 million of payroll tax payments upon vesting of share-based compensation awards and $6.2 million related to the repurchase of common shares.

Cash provided by financing activities was $153.5 million for the three months ended March 29, 2024, primarily driven by $198.0 million of borrowings under our revolving credit facility to fund our 2024 acquisition, partially offset by $36.0 million of term loan and revolving credit facility repayments and $8.4 million of payroll tax payments upon vesting of share-based compensation awards.

Critical Accounting Policies and Estimates

The critical accounting policies that we believe impact significant judgments and estimates used in the preparation of our consolidated financial statements presented in this periodic report on Form 10-Q are described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to Consolidated Financial Statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates through March 28, 2025 from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Recent Accounting Pronouncements

See Note 1 to Unaudited Interim Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk exposures are foreign currency exchange rate fluctuations and interest rate sensitivity. During the three months ended March 28, 2025, there have been no material changes to the information included under Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities and Exchange Act of 1934 (the “Exchange Act”), our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of March 28, 2025, the end of the period covered by this report. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 28, 2025.

Changes in Internal Control Over Financial Reporting

There has been no change to our internal control over financial reporting during the fiscal quarter ended March 28, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various legal proceedings and claims that arise in the ordinary course of business. We do not believe that the outcome of these claims will have a material adverse effect upon our financial condition or results of operations but there can be no assurance that any such claims, or any similar claims, would not have a material adverse effect upon our financial condition or results of operations.

Item 1A. Risk Factors

Our operations and financial results are subject to various risks and uncertainties, including the factors discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, which could adversely affect our business, financial conditions and future results. Other than the risk factor set forth below, there have been no material changes from the risk factors discussed in our Annual Report.

Our results of operations could be adversely affected by economic and political conditions and the effects of these conditions on our customers’ businesses, capital expenditures and levels of business activities.

A large portion of our product sales are dependent on our customers’ need for increased capacity, productivity and cost saving initiatives, improved product quality and performance, and new investments. Weaknesses in our end markets could negatively impact our revenue and gross margin and consequently have a material adverse effect on our business, financial condition and results of operations. A severe and/or prolonged overall economic downturn or a negative or uncertain political climate could lead to weaknesses in our end markets and adversely affect our customers’ financial condition and the timing or levels of our customers’ capital expenditures or business activities. We have experienced significant cyclical end market fluctuations in the past. For example, diminished growth expectations, economic and political uncertainty in regions across the globe and effects of the COVID-19 pandemic adversely impacted our customers’ financial condition and ability to maintain product order levels and reduced the demand for our products in 2020, and other pandemics and public health crises could have similar consequences. Political conditions, including new and changing laws or tariffs, regulations, government funding, executive orders and enforcement priorities, may impact customer budgets and create uncertainty about how such laws and regulations will be interpreted and applied, which may impact customer demand and adversely impact our business. For example, changes in the regulatory environment affecting life sciences, bioprocessing, and pharmaceutical companies, and reduced headcount and budget allocations to government agencies that fund research and development activities, such as the U.S. Food and Drug Administration (‘FDA’), U.S. National Institutes of Health (‘NIH’), or targeted headcount reductions or cancellations of certain grants or contracts by the U.S. federal government, could adversely affect our business or results of operations. In addition, certain sub-segments of the advanced industrial market that we serve, including the microelectronics and industrial capital equipment sector, are cyclical and have historically experienced periods of oversupply, resulting in downturns in demand for capital equipment in which many of our products are used. It is difficult to predict the timing, length and severity of these downturns and their impact on our business. Further, our order levels or results of operations for a given period may not be indicative of order levels or results of operations for subsequent periods. For the foreseeable future, our operations will continue to depend upon industries that are subject to market cycles which, in turn, could adversely affect the market demand for our products.

We have also faced increases in inflationary conditions in materials and components. These inflationary conditions have caused us to increase prices; however, such price increases may not be accepted by our customers or may not adequately offset the increases in our costs, thereby negatively affecting our results of operations. Changes in global economic conditions, including inflationary conditions, could also shift demand for products or services for which we do not have competitive advantages. This could negatively affect the amount of business that we are able to obtain. In addition, if we are unable to successfully anticipate changes in economic and political conditions, we may be unable to effectively plan for and respond to those changes, and our business could be negatively affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth certain information with respect to repurchases of the Company’s common shares during the three months ended March 28, 2025.


ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Approximate Dollar Value That May Yet Be Purchased Under the Plans or Programs(1)
January 1, 2025 - January 31, 2025		—	$	—		—	$	—
February 1, 2025 - February 28, 2025		—	$	—		—	$	—
March 1, 2025 - March 28, 2025		45,769	$	134.54		45,769	$	43,342,302
Total		45,769				45,769

(1) In February 2020, the Company’s Board of Directors approved the 2020 Repurchase Plan, authorizing the repurchase of an additional $50.0 million worth of common shares. During the three months ended March 28, 2025, the Company repurchased 46 thousand shares under the 2020 Repurchase Plan for an aggregate purchase price of $6.2 million and an average price of $134.54 per share. The Company had $43.3 million available for share repurchases under the 2020 Repurchase Plan as of March 28, 2025.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Disclosure in lieu of reporting on a Current Report on Form 8-K

None.

Material changes to the procedures by which security holders may recommend nominees to the board of directors.

None.

Rule 10b5-1 Trading Plans

The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our Section 16 officers and directors during the three months ended March 28, 2025, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (“Rule 10b5-1 Plan”), are summarized below.


Name	Title	Action	Date	Total Shares to Be Sold	Expiration Date
Robert J. Buckley	Chief Financial Officer	Adoption	March 13, 2025	43,920	March 30, 2026

None of our officers or directors adopted or terminated a “non-Rule 10b5-1 trading arrangement” as defined in Item 408 of Regulation S-K.

Item 6. Exhibits

      
     Incorporated by Reference

     Exhibit
Number

     Exhibit Description

     Form

     File No.

     Exhibit

     Filing
Date

     Filed/
Furnished
Herewith

     3.1

     Certificate and Articles of Continuance of the Registrant, dated March 22, 1999

     S-3

     333-202597

     3.1

     03/09/2015

     3.2

     By-Laws of the Registrant, as amended

     10-K

     001-35083

     3.2

     03/01/2021

     3.3

     Articles of Reorganization of the Registrant, dated July 23, 2010

     8-K

     000-25705

     3.1

     07/23/2010

     3.4

     Articles of Amendment of the Registrant, dated May 26, 2005

     10-K

     001-35083

     3.4

     3/1/2023

     3.5

     Articles of Amendment of the Registrant, dated December 29, 2010

     8-K

     000-25705

     3.1

     12/29/2010

     3.6

     Articles of Amendment of the Registrant, dated May 11, 2016

     8-K

     001-35083

     10.1

     05/12/2016

     3.7

     Articles of Amendment of the Registrant, dated April 29, 2022

     10-Q

     001-35083

     3.6

     05/10/2022

     31.1

     Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     *

     31.2

     Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     *

     32.1

     Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     **

     32.2

     Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     **

     101.INS

     Inline eXtensible Business Reporting Language (XBRL) Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

     *

     101.SCH

     Inline XBRL Taxonomy Extension Schema Document

     *

     104

     Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

     *

† Certain schedules or appendices to this exhibit have been omitted pursuant to Regulation S-K Item 601(a)(5). A copy of any omitted schedule will be furnished to the Securities and Exchange Commission or its staff upon request.

* Filed herewith

** Furnished herewith


New Brunswick, Canada		98-0110412
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

125 Middlesex Turnpike, Bedford, Massachusetts, USA		01730
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, no par value	NOVT	The Nasdaq Global Select Market


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


Item No.		Page No.

PART I — FINANCIAL INFORMATION		1

ITEM 1.	FINANCIAL STATEMENTS	1

	CONSOLIDATED BALANCE SHEETS (unaudited)	1

	CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)	2

	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)	3

	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)	4

	CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)	5

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36

ITEM 4.	CONTROLS AND PROCEDURES	36

PART II — OTHER INFORMATION		37

ITEM 1.	LEGAL PROCEEDINGS	37

ITEM 1A.	RISK FACTORS	37

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38

ITEM 4.	MINE SAFETY DISCLOSURES	38

ITEM 5.	OTHER INFORMATION	38

ITEM 6.	EXHIBITS	39

SIGNATURES		40


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934