Novanta Inc. Files Q3 2024 10-Q Report

TL;DR

Novanta's Q3 10-Q is in. Check financials.

AI Summary

Novanta Inc. filed its 10-Q for the period ending September 27, 2024. The filing details financial performance and operational updates. Key financial figures and strategic information are presented within this report.

Why It Matters

This 10-Q filing provides investors and analysts with a detailed look into Novanta's financial health and operational performance for the third quarter of 2024, influencing investment decisions.

Risk Assessment

Risk Level: low — This is a standard quarterly financial filing with no immediate red flags or significant negative news.

Key Numbers

• 1231 — Fiscal Year End (Indicates the end of the company's fiscal year.)
• 2024-09-27 — Report Date (The specific date the report covers.)
• 2024-11-05 — Filing Date (The date the report was officially submitted to the SEC.)

Key Players & Entities

• NOVANTA INC (company) — Filer of the 10-Q
• 2024-09-27 (date) — Period of report for the 10-Q
• 0000950170-24-121113 (other) — Accession number for the filing
• GSI GROUP INC (company) — Former company name
• GSI LUMONICS INC (company) — Former company name

FAQ

Filing Documents

• novt-20240927.htm (10-Q) — 2685KB
• novt-ex31_1.htm (EX-31.1) — 14KB
• novt-ex31_2.htm (EX-31.2) — 14KB
• novt-ex32_1.htm (EX-32.1) — 7KB
• novt-ex32_2.htm (EX-32.2) — 6KB
• 0000950170-24-121113.txt ( ) — 13119KB
• novt-20240927.xsd (EX-101.SCH) — 1739KB
• novt-20240927_htm.xml (XML) — 2949KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION 1 ITEM 1.

FINANCIAL STATEMENTS

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)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 6 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 27 ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 39 ITEM 4.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 39

— OTHER INFORMATION

PART II — OTHER INFORMATION 40 ITEM 1.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 40 ITEM 1A.

RISK FACTORS

RISK FACTORS 40 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 40 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 40 ITEM 4. MINE SAFETY DISCLOSURES 40 ITEM 5. OTHER INFORMATION 40 ITEM 6. EXHIBITS 41

SIGNATURES

SIGNATURES 42 P ART I—FINANCIAL INFORMATION I tem 1. Financial Statements NOVANTA INC. C ONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars or shares) (Unaudited) September 27, December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $ 92,690 $ 105,051 Accounts receivable, net of allowance of $ 630 and $ 571 , respectively 164,502 139,410 Inventories 154,021 149,371 Prepaid income taxes and income taxes receivable 12,844 8,105 Prepaid expenses and other current assets 12,877 13,360 Total current assets 436,934 415,297 Property, plant and equipment, net 119,596 109,449 Operating lease assets 44,645 38,302 Deferred tax assets 19,239 27,862 Other assets 5,927 5,617 Intangible assets, net 198,394 145,022 Goodwill 594,088 484,507 Total assets $ 1,418,823 $ 1,226,056 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 5,016 $ 4,968 Accounts payable 68,720 57,195 Income taxes payable 15,414 7,767 Current portion of operating lease liabilities 9,981 8,189 Accrued expenses and other current liabilities 57,469 61,056 Total current liabilities 156,600 139,175 Long-term debt 452,502 349,404 Operating lease liabilities 42,672 37,345 Deferred tax liabilities 14,324 16,305 Income taxes payable 5,340 4,435 Other liabilities 5,190 5,932 Total liabilities 676,628 552,596 Commitments and contingencies (Note 15) 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: 35,916 and 35,814 , respectively 423,856 423,856 Additional paid-in capital 79,928 70,180 Retained earnings 251,085 203,462 Accumulated other comprehensive loss ( 12,674 ) ( 24,038 ) Total st

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 27, 2024 (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 and manufacturing, medical solutions and robotics and automation 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, 2023. 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 f

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 27, 2024 (Unaudited) 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 November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280) -Improvements to Reportable Segment Disclosures." ASU 2023-07 clarifies or improves financial reporting by requiring disclosure of incremental segment information. The amendments require disclosure, on an annual and interim basis for all public entities, of significant segment expenses included in segment profit or loss, an amount and description of "other segment items" included in segment profit or loss, and an explanation of how reported segment profit or loss is assessed and allocated. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statement disclosures. 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 Company is currently evaluating the impact of ASU 2023-09 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 Custo

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 27, 2024 (Unaudited) 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 ex

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 27, 2024 (Unaudited) Allocation of Purchase Price The acquisition of Motion Solutions has been accounted for as a business combination. The purchase price is allocated based upon a valuation of the fair values of assets acquired and liabilities assumed. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. The excess of the purchase price over the fair values of the acquired tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The fair values of identifiable intangible assets were based on valuations using an income approach, specifically the multi-period excess earnings method for customer relationships and the relief-from-royalty method for developed technologies. The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including revenue growth rates, customer attrition rates, royalty rates, discount rates, technology obsolescence curves, and EBITDA margins. The Company's estimates and assumptions in determining the estimated fair value of certain assets and liabilities are subject to change within the measurement period (up to one year from the acquisition date) as a result of additional information to be obtained with regard to facts and circumstances that existed as of the acquisition date. Based upon the Company's preliminary valuation, the purchase price for Motion Solutions was allocated as follows (in thousands): Purchase Price Allocation Cash $ 776 Accounts receivable 8,515 Inventory 14,032 Property, plant and equipment 3,126 Operating lease assets 8,076 Intangible assets 83,000 Goodwill 106,569 Other assets 1,002 Total assets acquired 225,096 Accounts payable 5,305 Operating lease liabilities 8,514 Deferred tax liabilities 18,171 Other liabilities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 27, 2024 (Unaudited) deductible. The goodwill recorded represents the anticipated incremental value of future cash flows potentially attributable to: (i) Motion Solution's ability to grow the business with existing and new customers, including leveraging the Company's customer base; (ii) Motion Solution's ability to grow the business through new product introductions; and (iii) cost improvements due to the integration of Motion Solution's operations into the Company's existing infrastructure. The operating results of Motion Solutions were included in the Company's results of operations beginning January 2, 2024. Motion Solutions contributed revenues o f $ 62.6 million and a loss before income taxes of $ 1.3 millio n to the Company's operating results for the nine months ended September 27, 2024. The loss before income taxes from Motion Solutions for the period from the acquisition date through September 27, 2024 includ

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