Novanta — Third Quarter 2026 Earnings Summary

Financial Performance:

• GAAP revenue increased 23% year-over-year to $305 million ($305.0 million vs. $247.8 million).
• Organic revenue growth was 9.9%, excluding acquisition impact of 13.3% and unfavorable foreign currency impact of 0.1%.
• GAAP operating income was $13.9 million, down from $21.8 million in the prior year.
• GAAP net income was $2.0 million, down from $10.7 million in the prior year.
• GAAP diluted EPS was $0.05, down from $0.30 in the prior year.
• Adjusted EBITDA increased 38% to $80.3 million, with an Adjusted EBITDA margin of 26.3% (up 290 basis points year-over-year).
• Adjusted Diluted EPS increased 21% to $1.05, compared to $0.87 in the prior year.
• Operating cash flow was $39.3 million for the quarter, compared to $8.5 million in the prior year; year-to-date operating cash flow was $155.9 million versus $55.3 million.
• Free Cash Flow was $31.5 million for the quarter.
• Total debt (GAAP) was $829.8 million as of October 2, 2026, compared to $250.8 million as of December 31, 2025.
• Net Debt (Non-GAAP) was $689.4 million as of October 2, 2026, compared to a net cash position of $121.3 million as of December 31, 2025.

Guidance and Future Outlook:

• Full-year 2026 GAAP revenue guidance is raised to $1,135 million to $1,140 million, reflecting approximately 16% reported growth.
• Full-year 2026 Adjusted EBITDA guidance is $274 million to $277 million, and Adjusted Diluted EPS is $3.66 to $3.71.
• Full-year 2026 organic revenue growth is expected to be approximately 7% (16% on a reported basis).
• Full-year 2026 operating cash flow is expected to be approximately $200 million.
• Q4 2026 GAAP revenue is expected to be $306 million to $312 million, reflecting reported growth of more than 18%.
• Q4 2026 Adjusted EBITDA is expected to be $76 million to $79 million.
• Q4 2026 Adjusted Diluted EPS is expected to be $0.91 to $0.96.
• 2027 reported revenue growth is expected to be more than 15%.

Business Segments and Product Lines:

• Automation Enabling Technologies segment GAAP revenue was $145 million (up from $125 million), with a GAAP gross profit margin of 50.2% (up from 47.3%).
• Medical Solutions segment GAAP revenue was $160 million (up from $123 million), with a GAAP gross profit margin of 39.9% (down from 43.0%).
• Customer bookings increased 29% year-over-year.
• The backlog expanded to $543 million.
• Riverpoint Medical is performing in line with expectations, with progress being made on operational synergies and a new product pipeline.

Market and Competitive Landscape:

• The company cites leading positions in markets benefiting from favorable long-term secular trends.
• Momentum in customer bookings provides a solid foundation for future growth.

Risks and Challenges:

• Forward-looking statements involve risks including economic/political conditions, dependence on product demand fluctuations, and ability to innovate.
• Risks include customer order timing, backlog conversion, cybersecurity breaches, foreign operations, and outsourcing risks.
• Specific risks include integration of recent acquisitions (specifically Riverpoint Medical), accuracy of financial information regarding acquired entities, and ability to fund milestone payments.
• Regulatory risks include exposure to medical device regulations, potential recalls, and compliance with healthcare laws.
• Supply chain risks include component shortages, export restrictions, and production delays.
• Financial risks include interest rate changes, foreign currency fluctuations, and ability to maintain compliance with credit facility covenants.

Management Commentary and Tone:

• CEO Matthijs Glastra described the quarter as a "significant milestone" due to closing the largest acquisition in company history and delivering results exceeding expectations.
• Management highlighted strong commercial momentum, a solid foundation for future growth, and a commitment to sustainable growth and long-term shareholder value.
• The tone is confident regarding the strategy, the performance of the Riverpoint Medical acquisition, and the strength of the backlog.

Other Key Points:

• Novanta closed the largest acquisition in its history, Riverpoint Medical, which contributed $32.9 million to revenue growth (13.3% of total growth).
• Cash paid for business acquisition, net of working capital adjustments, was $1,200.6 million in the quarter.
• Borrowings under senior credit facilities were $626 million in the quarter.
• The company does not provide GAAP guidance for earnings, Gross Leverage, or Net Debt Leverage, only GAAP revenue guidance.
• Non-GAAP measures are used for management evaluation, bonus determinations, and performance targets for restricted stock units.