NOVANTA INC
For the period ended Sep 27, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 27, 2024 · Filed Nov 5, 2024
NOVT$135.15+2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-28; filed 2024-08-06.
0000950170-24-091261
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-27; filed 2024-11-05.
0000950170-24-121113
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 142 previous paragraphs and 140 current paragraphs.
78 unchanged; 52 reworded; 9 added; 10 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Robotics and Automation segment revenue for the nine months ended September 27, 2024 was flat versus the prior year period.
Current report
R&D expenses were $70.2 million, or 9.9% of revenue, during the nine months ended September 27, 2024, versus $68.2 million, or 10.2% of revenue, during the prior year period. The increase in R&D expenses in terms of total dollars was primarily due to an increase in cost from the current year acquisition.
Current report
SG&A expenses were $132.6 million, or 18.7% of revenue, during the nine months ended September 27, 2024, versus $122.8 million, or 18.3% 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 officer transition costs, higher recruiting expenditures, and increased costs from the current year acquisition.
Current report
Precision Medicine and Manufacturing segment operating income was $11.9 million, or 19.6% of revenue, during the three months ended September 27, 2024, versus $18.5 million, or 26.0% of revenue, during the prior year period. The decrease in operating income was primarily due to a decrease in gross profit of $9.2 million, partially offset by a decrease in R&D expenses of $1.5 million and a decrease in restructuring, acquisition and related costs of $0.8 million.
Current report
Precision Medicine and Manufacturing segment operating income was $40.4 million, or 21.3% of revenue, during the nine months ended September 27, 2024, versus $54.8 million, or 25.5% of revenue, during the prior year period. The decrease in operating income was primarily due to a decrease in gross profit of $17.6 million, partially offset by a decrease in R&D expenses of $2.5 million.
Current report
Medical Solutions segment operating income was $12.4 million, or 12.0% of revenue, during the three months ended September 27, 2024, versus $11.1 million, or 13.3% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $8.3 million, partially offset by an increase in R&D expenses of $2.6 million, an increase in SG&A expenses of $1.9 million and an increase in amortization expense of $2.0 million as a result of the current year acquisition.
Current report
Medical Solutions segment operating income was $36.7 million, or 11.8% of revenue, during the nine months ended September 27, 2024, versus $31.0 million, or 12.7% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $22.0 million, partially offset by an increase in R&D expenses of $5.5 million, an increase in SG&A expenses of $4.3 million and an increase in amortization expense of $5.4 million as a result of the current year acquisition. Additionally, restructuring, acquisition and related costs increased $1.0 million compared to the prior year period.
Current report
Robotics and Automation segment operating income was $22.1 million, or 27.6% of revenue, during the three months ended September 27, 2024, versus $12.2 million, or 18.3% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $7.9 million and a decrease in restructuring, acquisition and related costs of $1.8 million.
Current report
Our effective tax rate for the nine months ended September 27, 2024 was 18.3%, versus 11.2% for the prior year period. Our effective tax rate of 18.3% for the nine months ended September 27, 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
Removed paragraphs (10)
Previous report
Robotics and Automation segment revenue for the three months ended June 28, 2024 decreased $4.4 million, or 6.2%, versus the prior year period, primarily due to a decrease in demand in our advanced industrial end markets.
Previous report
Unallocated corporate and shared services costs for the six months ended June 28, 2024 decreased $1.0 million versus the prior year period.
Previous report
R&D expenses were $47.0 million, or 10.1% of revenue, during the six months ended June 28, 2024, versus $46.2 million, or 10.3% of revenue, during the prior year period.
Previous report
SG&A expenses were $88.3 million, or 18.9% or revenue, during the six months ended June 28, 2024, versus $83.1 million, or 18.5% of revenue, during the prior year period. SG&A expenses increased in terms of total dollars and as a percentage of revenue primarily due to higher compensation related expenses and discretionary spending, mostly as a result of the current year acquisition.
Previous report
Precision Medicine and Manufacturing segment operating income was $12.7 million, or 19.9% of revenue, during the three months ended June 28, 2024, versus $19.6 million, or 26.4% of revenue, during the prior year period. The decrease in operating income was primarily due to a decrease in gross profit of $5.9 million, and an increase in restructuring, acquisition, and related costs of $1.3 million.
Previous report
Precision Medicine and Manufacturing segment operating income was $28.5 million, or 22.1% of revenue, during the six months ended June 28, 2024, versus $36.3 million, or 25.2% of revenue, during the prior year period. The decrease in operating income was primarily due to a decrease in gross profit of $8.5 million, partially offset by a decrease in R&D expenses of $1.0 million.
Previous report
Medical Solutions segment operating income was $12.3 million, or 11.7% of revenue, during the three months ended June 28, 2024, versus $10.1 million, or 12.1% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $6.1 million, partially offset by an increase in R&D expenses of $1.1 million, and an increase in amortization expense of $2.3 million as a result of the current year acquisition.
Previous report
Medical Solutions segment operating income was $24.3 million, or 11.7% of revenue, during the six months ended June 28, 2024, versus $19.9 million, or 12.4% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $13.6 million, partially offset by an increase in R&D expenses of $2.9 million, an increase in SG&A expenses of $2.4 million and an increase in amortization expense of $3.5 million as a result of the current year acquisition.
Previous report
Robotics and Automation segment operating income was $14.6 million, or 21.7% of revenue, during the three months ended June 28, 2024, versus $15.2 million, or 21.2% of revenue, during the prior year period. The decrease in operating income was primarily due to a decrease in gross profit of $1.5 million, partially offset by a decrease in R&D expenses of $0.7 million.
Previous report
Unallocated Corporate and Shared Services
Reworded paragraphs (52)
Previous wording
For the six months ended June 28, 2024, the medical market accounted for approximately 57% of our revenue. Revenue from our products sold to the medical market is generally affected by hospital and other healthcare provider capital spending, growth rates of surgical procedures, changes in regulatory requirements and laws, 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.
Current wording
For the nine months ended September 27, 2024, the medical market accounted for approximately 56% of our revenue. Revenue from our products sold to the medical market is generally affected by hospital and other healthcare provider capital spending, growth rates of surgical procedures, changes in regulatory requirements and laws, 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.
Previous wording
For the six months ended June 28, 2024, the advanced industrial market accounted for approximately 43% of our revenue. Revenue from our products sold to the advanced industrial market is affected by several factors, including changing technology requirements and preferences of our customers, productivity or quality investments in a manufacturing environment, 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.
Current wording
For the nine months ended September 27, 2024, the advanced industrial market accounted for approximately 44% of our revenue. Revenue from our products sold to the advanced industrial market is affected by several factors, including changing technology requirements and preferences of our customers, productivity or quality investments in a manufacturing environment, 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.
Previous wording
On January 2, 2024, we completed the acquisition of Motion Solutions Parent Corp. (“Motion Solutions”), an Irvine, California-based provider of highly engineered integrated solutions, specializing in proprietary precision motion and advanced motion control solutions, for a total purchase price of $192.0 million in cash, net of customary net working capital adjustments. The acquisition was financed with borrowings under our revolving credit facility. The addition of Motion Solutions enhances our product portfolio and further expands our presence in attractive medical and precision medicine spaces. The Motion Solutions acquisition is included in our Medical Solutions reportable segment.
Current wording
On January 2, 2024, we completed the acquisition of Motion Solutions Parent Corp. (“Motion Solutions”), an Irvine, California-based provider of highly engineered integrated solutions, specializing in proprietary precision motion and advanced motion control solutions, for a total purchase price of $192.0 million in cash, net of working capital adjustments. The acquisition was financed with borrowings under our revolving credit facility. The addition of Motion Solutions enhances our product portfolio and further expands our presence in attractive medical and precision medicine spaces. The Motion Solutions acquisition is included in our Medical Solutions reportable segment.
Previous wording
In the first half of 2024, we continued to experience higher than normal inflation of raw material and component prices and labor costs. We have generally been able to offset increases in these costs through various productivity cost reduction initiatives, as well as increasing our selling prices to pass through some of these higher costs to our customers. Given the timing of our actions compared to the timing of these inflationary pressures, there may be periods during which we are unable to fully recover the increases in our costs. Additionally, the inflationary pressures have given rise to significant increases in interest rates as various governments used monetary policy to contain and reduce inflation. As a result, our year to date weighted average interest rate increased from approximately 5.8% as of June 30, 2023 to approximately 6.6% as of June 28, 2024. These higher interest rates have caused access to credit to be more expensive and have impacted demand from some of our OEM customers, as they see some of their end market customers deferring new capital equipment orders due to the higher interest rate environment.
Current wording
During the nine months ended September 27, 2024, we continued to experience higher than normal inflation of raw material and component prices and labor costs. We have generally been able to offset increases in these costs through various productivity cost reduction initiatives, as well as increasing our selling prices to pass through some of these higher costs to our customers. Given the timing of our actions compared to the timing of these inflationary pressures, there may be periods during which we are unable to fully recover the increases in our costs. Additionally, the inflationary pressures gave rise to significant increases in interest rates in recent periods as various governments used monetary policy to contain and reduce inflation. As a result, our year to date weighted average interest rate increased from approximately 6.1% as of September 29, 2023 to approximately 6.7% as of September 27, 2024. These higher interest rates have caused access to credit to be more expensive and have impacted demand from some of our OEM customers, as they see some of their end market customers deferring new capital equipment orders due to the higher interest rate environment.
Previous wording
Results of Operations for the Three and Six Months Ended June 28, 2024 Compared with the Three and Six Months Ended June 30, 2023
Current wording
Results of Operations for the Three and Nine Months Ended September 27, 2024 Compared with the Three and Nine Months Ended September 29, 2023
Previous wording
Total revenue of $235.9 million for the three months ended June 28, 2024 increased $6.4 million, or 2.8%, from the prior year period primarily due to revenue from the Motion Solutions acquisition, partially offset by decreased demand in our advanced industrial end markets. The effect of our Motion Solutions acquisition resulted in an increase in revenue of $20.3 million, or 8.9%. In addition, foreign currency exchange rates unfavorably impacted our revenue by $1.7 million, or 0.8%, for the three months ended June 28, 2024.
Current wording
Total revenue of $244.4 million for the three months ended September 27, 2024 increased $22.9 million, or 10.3%, from the prior year period primarily due to revenue from the Motion Solutions acquisition. The effect of our Motion Solutions acquisition resulted in an increase in revenue of $21.1 million, or 9.5%. In addition, foreign currency exchange rates favorably impacted our revenue by $1.8 million, or 0.8%, for the three months ended September 27, 2024.
Previous wording
Total revenue of $466.8 million for the six months ended June 28, 2024 increased $18.2 million, or 4.1%, from the prior year period primarily due to revenue from the Motion Solutions acquisition, partially offset by decreased demand in our advanced industrial end markets. The effect of our Motion Solutions acquisition resulted in an increase in revenue of $41.5 million, or 9.3%. In addition, foreign currency exchange rates unfavorably impacted our revenue by $1.8 million, or 0.4%, for the six months ended June 28, 2024.
Current wording
Total revenue of $711.2 million for the nine months ended September 27, 2024 increased $41.1 million, or 6.1%, from the prior year period primarily due to revenue from the Motion Solutions acquisition, partially offset by decreased demand in our end markets including Motion Solutions end markets. The effect of our Motion Solutions acquisition resulted in an increase in revenue of $62.6 million, or 9.3%.
Previous wording
Operating income of $25.7 million for the three months ended June 28, 2024 decreased $6.5 million, or 20.1%, from the prior year period. This decrease was attributable to an increase in selling, general and administrative expenses of $2.6 million, an increase in amortization expense of $1.8 million, and an increase in restructuring, acquisition, and related charges of $1.3 million.
Current wording
Operating income of $32.6 million for the three months ended September 27, 2024 increased $2.2 million, or 7.4%, from the prior year period. This increase was attributable to an increase in gross profit of $7.6 million and a decrease in restructuring, acquisition and related charges of $2.0 million, partially offset by an increase in selling, general and administrative expenses of $4.7 million, an increase in amortization expense of $1.5 million, and an increase in research and development expenses of $1.2 million.
Previous wording
Operating income of $51.3 million for the six months ended June 28, 2024 decreased $7.2 million, or 12.3%, from the prior year period. This decrease was attributable to an increase in selling, general and administrative expenses of $5.2 million, an increase in amortization expense of $2.4 million, and an increase in restructuring, acquisition, and related charges of $1.1 million, partially offset by an increase in gross profit of $2.4 million.
Current wording
Operating income of $83.9 million for the nine months ended September 27, 2024 decreased $4.9 million, or 5.6%, from the prior year period. This decrease was attributable to an increase in selling, general and administrative expenses of $9.9 million, an increase in amortization expense of $3.9 million, and an increase in research and development expenses of $2.0 million, partially offset by an increase in gross profit of $10.0 million and a decrease in restructuring, acquisition and related charges of $0.9 million.
Previous wording
Basic earnings per common share (“Basic EPS”) of $0.38 for the three months ended June 28, 2024 decreased $0.20 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.38 for the three months ended June 28, 2024 decreased $0.20 from the prior year period. The decreases were primarily due to a decrease in operating income and an increase in interest expense.
Current wording
Basic earnings per common share (“Basic EPS”) of $0.53 for the three months ended September 27, 2024 decreased $0.06 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.53 for the three months ended September 27, 2024 decreased $0.06 from the prior year period. The decreases were primarily due to an increase in interest expense and an increase in income tax provision, partially offset by an increase in operating income.
Previous wording
Basic EPS of $0.79 for the six months ended June 28, 2024 decreased $0.30 from the prior year period. Diluted EPS of $0.79 for the six months ended June 28, 2024 decreased $0.30 from the prior year period. The decreases were primarily due to a decrease in operating income and an increase in interest expense.
Current wording
Basic EPS of $1.33 for the nine months ended September 27, 2024 decreased $0.35 from the prior year period. Diluted EPS of $1.32 for the nine months ended September 27, 2024 decreased $0.36 from the prior year period. The decreases were primarily due to a decrease in operating income, an increase in interest expense, and an increase in income tax provision.
Previous wording
Precision Medicine and Manufacturing segment revenue for the three months ended June 28, 2024 decreased $10.4 million, or 14.0%, versus the prior year period, primarily due to weaker demand in our advanced industrial end markets.
Current wording
Precision Medicine and Manufacturing segment revenue for the three months ended September 27, 2024 decreased $10.7 million, or 15.0%, versus the prior year period, primarily due to weaker demand in our advanced industrial end market and our precision medicine end market.
Previous wording
Precision Medicine and Manufacturing segment revenue for the six months ended June 28, 2024 decreased $14.7 million, or 10.2%, versus the prior year period, primarily due to weaker demand in our advanced industrial end markets.
Current wording
Precision Medicine and Manufacturing segment revenue for the nine months ended September 27, 2024 decreased $25.4 million, or 11.8%, versus the prior year period, primarily due to weaker demand in our advanced industrial end market and our precision medicine end market.
Previous wording
Medical Solutions segment revenue for the three months ended June 28, 2024 increased $21.2 million, or 25.4%, versus the prior year period, primarily due to $20.3 million of revenue contributions from the current year acquisition, an increase in sales of our minimally invasive surgery and detection and analysis products, partially offset by a decrease in revenue from visualization solutions products as a result of exiting the product line.
Current wording
Medical Solutions segment revenue for the three months ended September 27, 2024 increased $20.4 million, or 24.5%, versus the prior year period, primarily due to $21.1 million of revenue contributions from the current year acquisition and an increase in sales of minimally invasive surgery products, partially offset by a decrease in revenue from visualization solutions products as a result of exiting the product line.
Previous wording
Medical Solutions segment revenue for the six months ended June 28, 2024 increased $46.0 million, or 28.6%, versus the prior year period, primarily due to $41.5 million of revenue contributions from the current year acquisition, an increase in sales of our minimally invasive surgery and detection and analysis products, partially offset by a decrease in revenue from visualization solutions products as a result of exiting the product line.
Current wording
Medical Solutions segment revenue for the nine months ended September 27, 2024 increased $66.4 million, or 27.2%, versus the prior year period, primarily due to $62.6 million of revenue contributions from the current year acquisition, an increase in sales of detection and analysis products and an increase in sales of minimally invasive surgery products, partially offset by a decrease in revenue from visualization solutions products as a result of exiting the product line.
Previous wording
Robotics and Automation segment revenue for the six months ended June 28, 2024 decreased $13.2 million, or 9.1%, versus the prior year period, primarily due to a decrease in demand in our advanced industrial end markets.
Current wording
Robotics and Automation segment revenue for the three months ended September 27, 2024 increased $13.2 million, or 19.7%, versus the prior year period, primarily due to an increase in demand from advanced industrial end markets.
Previous wording
Precision Medicine and Manufacturing segment gross profit for the three months ended June 28, 2024 decreased $5.9 million, or 16.2%, versus the prior year period, primarily due to a decrease in both revenue and gross profit margin. Precision Medicine and Manufacturing segment gross profit margin was 47.8% for the three months ended June 28, 2024, versus a gross profit margin of 49.1% for the prior year period. The decrease in gross profit margin was primarily attributable to lower factory utilization due to a decline in production volumes.
Current wording
Precision Medicine and Manufacturing segment gross profit for the three months ended September 27, 2024 decreased $9.2 million, or 25.3%, versus the prior year period, primarily due to a decrease in both revenue and gross profit margin. Precision Medicine and Manufacturing segment gross profit margin was 44.6% for the three months ended September 27, 2024, versus a gross profit margin of 50.8% for the prior year period. The decrease in gross profit margin was primarily attributable to lower factory utilization due to a decline in production volumes and unfavorable product mix.
Previous wording
Precision Medicine and Manufacturing segment gross profit for the six months ended June 28, 2024 decreased $8.5 million, or 12.0%, versus the prior year period, primarily due to a decrease in both revenue and gross profit margin. Precision Medicine and Manufacturing segment gross profit margin was 48.3% for the six months ended June 28, 2024, versus a gross profit margin of 49.2% for the prior year period. The decrease in gross profit margin was primarily attributable to lower factory utilization due to a decline in production volumes.
Current wording
Precision Medicine and Manufacturing segment gross profit for the nine months ended September 27, 2024 decreased $17.6 million, or 16.5%, versus the prior year period, primarily due to a decrease in both revenue and gross profit margin. Precision Medicine and Manufacturing segment gross profit margin was 47.1% for the nine months ended September 27, 2024, versus a gross profit margin of 49.8% for the prior year period. The decrease in gross profit margin was primarily attributable to lower factory utilization due to a decline in production volumes, and unfavorable product mix.
Previous wording
Medical Solutions segment gross profit for the three months ended June 28, 2024 increased $6.1 million, or 17.8%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 38.6% for the three months ended June 28, 2024, versus a gross profit margin of 41.1% for the prior year period. The decrease was primarily due to an inventory related charge associated with our visualization solutions product line closure, which resulted in a 2.4 percentage point reduction in gross profit margin, and higher amortization expense on intangible assets primarily from the current year acquisition, which resulted in a 0.9 percentage point reduction in gross profit margin. Improved factory utilization in our minimally invasive surgery and detection and analysis products, partially offset by the dilutive effect of Motion Solution acquisition on gross profit margin, resulted in a 0.8 percentage point increase in gross profit margin.
Current wording
Medical Solutions segment gross profit for the three months ended September 27, 2024 increased $8.3 million, or 24.5%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 40.8% for the three months ended September 27, 2024, which was unchanged from the prior year period. Gross profit margins were favorably impacted by higher factory productivity in our minimally invasive surgery and detection and analysis products, fully offset by the dilutive effect of the Motion Solutions acquisition on gross profit margin.
Previous wording
Medical Solutions segment gross profit for the six months ended June 28, 2024 increased $13.6 million, or 20.6% versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 38.5% for the six months ended June 28, 2024, versus a gross profit margin of 41.1% for the prior year period. The decrease was primarily due to an inventory related charge associated with our visualization solutions product line closure, which resulted in a 1.2 percentage point reduction in gross profit margin, and higher amortization expense on intangible assets and inventory fair value adjustments primarily from the current year acquisition, which resulted in a 2.2 percentage point reduction in gross profit margin. Improved efficiency in factory utilization in our minimally invasive surgery and detection and analysis products, partially offset by the dilutive effect of Motion Solution acquisition on gross profit margin, resulted in a 0.8 percentage point increase in gross profit margin.
Current wording
Medical Solutions segment gross profit for the nine months ended September 27, 2024 increased $22.0 million, or 21.9%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 39.3% for the nine months ended September 27, 2024, versus a gross profit margin of 41.0% for the prior year period. The decrease was primarily due to an inventory related charge associated with our visualization solutions product line closure, which resulted in a 0.8 percentage point reduction in gross profit margin, and higher amortization expense on intangible assets and inventory fair value adjustments primarily from the current year acquisition, which resulted in a 2.1 percentage point reduction in gross profit margin. Improved efficiency in factory productivity in our minimally invasive surgery and detection and analysis products, partially offset by the dilutive effect of the Motion Solutions acquisition on gross profit margin, resulted in a 1.2 percentage point increase in gross profit margin.
Previous wording
Robotics and Automation segment gross profit for the three months ended June 28, 2024 decreased $1.5 million, or 4.4%, versus the prior year period, primarily due to a decrease in revenue. Robotics and Automation segment gross profit margin was 49.5% for the three months ended June 28, 2024, versus 48.6% for the prior year period. The increase in gross profit margin was primarily attributable to improved factory efficiency.
Current wording
Robotics and Automation segment gross profit for the three months ended September 27, 2024 increased $7.9 million, or 24.2%, versus the prior year period, primarily due to an increase in both revenue and gross profit margin. Robotics and Automation segment gross profit margin was 50.7% for the three months ended September 27, 2024, versus 48.8% for the prior year period. The increase in gross profit margin was primarily attributable to improved factory efficiency.
Previous wording
Robotics and Automation segment gross profit for the six months ended June 28, 2024 decreased $3.8 million, or 5.6%, versus the prior year period, primarily due to a decrease in revenue. Robotics and Automation segment gross profit margin was 48.9% for the six months ended June 28, 2024, versus 47.1% for the prior year period. The increase in gross profit margin was primarily attributable to improved factory efficiency.
Current wording
Robotics and Automation segment gross profit for the nine months ended September 27, 2024 increased $4.1 million, or 4.1%, versus the prior year period, primarily due to an increase in both revenue and gross profit margin. Robotics and Automation segment gross profit margin was 49.6% for the nine months ended September 27, 2024, versus 47.7% for the prior year period. The increase in gross profit margin was primarily attributable to improved factory efficiency.
Previous wording
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 $23.7 million, or 10.1% of revenue, during the three months ended June 28, 2024, versus $23.4 million, or 10.2% of revenue, during the prior year period.
Current wording
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 $23.3 million, or 9.5% of revenue, during the three months ended September 27, 2024, versus $22.0 million, or 9.9% of revenue, during the prior year period. The increase in R&D expenses in terms of total dollars was primarily due to an increase in costs from the current year acquisition.
Previous wording
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 $44.8 million, or 19.0% of revenue, during the three months ended June 28, 2024, versus $42.2 million, or 18.4% of revenue, during the prior year period. The increase in SG&A expenses in terms of total dollars and as a percentage of revenue was primarily due to increases in compensation related expenses and discretionary spending, mostly as a result of the current year acquisition.
Current wording
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 $44.3 million, or 18.1% of revenue, during the three months ended September 27, 2024, versus $39.6 million, or 17.9% 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 officer transition costs, higher recruiting expenditures, and increased costs from the current year acquisition.
Previous wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $6.9 million, or 2.9% of revenue, during the three months ended June 28, 2024, versus $5.1 million, or 2.2% of revenue, during the prior year period. The increase in terms of total dollars and as a percentage of revenue was the result of more acquired intangible assets from the current year acquisition.
Current wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $6.6 million, or 2.7% of revenue, during the three months ended September 27, 2024, versus $5.1 million, or 2.3% of revenue, during the prior year period. The increase in terms of total dollars and as a percentage of revenue was the result of more acquired intangible assets from the current year acquisition.
Previous wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $12.7 million, or 2.7% of revenue, during the six months ended June 28, 2024, versus $10.2 million, or 2.3% of revenue, during the prior year period. The increase in terms of total dollars and as a percentage of revenue was the result of more acquired intangible assets from the current year acquisition.
Current wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $19.2 million, or 2.7% of revenue, during the nine months ended September 27, 2024, versus $15.3 million, or 2.3% of revenue, during the prior year period. The increase in terms of total dollars and as a percentage of revenue was the result of more acquired intangible assets from the current year acquisition.
Previous wording
We recorded restructuring, acquisition, and related costs of $2.5 million during the three months ended June 28, 2024, versus $1.2 million during the prior year period. The increase in restructuring, acquisition and related costs is primarily due to expenses related to the 2024 restructuring plan.
Current wording
We recorded restructuring, acquisition, and related costs of $2.5 million during the three months ended September 27, 2024, versus $4.5 million during the prior year period. The decrease in restructuring, acquisition and related costs was primarily due to a decrease in our restructuring programs.
Previous wording
We recorded restructuring, acquisition, and related costs of $4.8 million during the six months ended June 28, 2024, versus $3.7 million during the prior year period. The increase was primarily due to a $1.7 million increase in acquisition and related expenses related to the current year acquisition.
Current wording
We recorded restructuring, acquisition, and related costs of $7.3 million during the nine months ended September 27, 2024, versus $8.2 million during the prior year period. The decrease in restructuring, acquisition and related costs was primarily due to a decrease in our restructuring programs.
Previous wording
Robotics and Automation segment operating income was $26.9 million, or 20.6% of revenue, during the six months ended June 28, 2024, versus $27.2 million, or 19.0% of revenue, during the prior year period. The decrease in operating income was primarily due to a decrease in gross profit of $3.8 million, partially offset by a decrease in R&D expenses of $1.4 million, a decrease in restructuring, acquisition and related costs of $1.4 million and a decrease in amortization expense of $0.8 million due to certain intangible assets being fully amortized in 2023.
Current wording
Robotics and Automation segment operating income was $49.0 million, or 23.2% of revenue, during the nine months ended September 27, 2024, versus $39.5 million, or 18.7% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $4.1 million, a decrease in restructuring, acquisition and related costs of $3.1 million, a decrease in R&D expenses of $1.4 million, and a decrease in amortization expense of $1.2 million.
Previous wording
Unallocated corporate and shared services 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 June 28, 2024 increased $1.2 million versus the prior year period. The increase in operating loss was primarily due to an increase in compensation related expenses.
Current wording
Unallocated corporate and shared services 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 September 27, 2024 increased $2.4 million versus the prior year period. The increase in operating loss was primarily due to an increase in SG&A expenses of $2.7 million.
Previous wording
Unallocated corporate and shared services costs for the six months ended June 28, 2024 increased $3.3 million versus the prior year period. The increase in operating loss was primarily due to an increase in SG&A expenses of $2.5 million, and an increase in restructuring, acquisition and related expenses of $1.6 million.
Current wording
Unallocated corporate and shared services costs for the nine months ended September 27, 2024 increased $5.7 million versus the prior year period. The increase in operating loss was primarily due to an increase in SG&A expenses of $5.3 million.
Previous wording
Net interest expense was $8.3 million for the three months ended June 28, 2024, versus $6.8 million for the prior year period. The increase in net interest expense was primarily due to an increase in average debt levels to fund the Motion Solutions acquisition and an increase in the weighted average interest rate on our senior credit facilities, partially offset by an increase in interest income. The weighted average interest rate on our senior credit facilities was 6.74% during the three months ended June 28, 2024, versus 6.14% during the prior year period.
Current wording
Net interest expense was $8.1 million for the three months ended September 27, 2024, versus $6.8 million for the prior year period. The increase in net interest expense was primarily due to an increase in average debt levels to fund the Motion Solutions acquisition and an increase in the weighted average interest rate on our senior credit facilities, partially offset by an increase in interest income. The weighted average interest rate on our senior credit facilities was 6.83% during the three months ended September 27, 2024, versus 6.68% during the prior year period.
Previous wording
Net interest expense was $16.5 million for the six months ended June 28, 2024, versus $13.1 million for the prior year period. The increase in net interest expense was primarily due to an increase in average debt levels to fund the Motion Solutions acquisition and an increase in the weighted average interest rate on our senior credit facilities, partially offset by an increase in interest income. The weighted average interest rate on our senior credit facilities was 6.64% during the six months ended June 28, 2024, versus 5.84% during the prior year period.
Current wording
Net interest expense was $24.6 million for the nine months ended September 27, 2024, versus $19.9 million for the prior year period. The increase in net interest expense was primarily due to an increase in average debt levels to fund the Motion Solutions acquisition and an increase in the weighted average interest rate on our senior credit facilities, partially offset by an increase in interest income. The weighted average interest rate on our senior credit facilities was 6.68% during the nine months ended September 27, 2024, versus 6.12% during the prior year period.
Previous wording
Foreign exchange transaction gains (losses) were nominal for both the three and six months ended June 28, 2024 and the three and six months ended June 30, 2023.
Current wording
Foreign exchange transaction gains (losses) were nominal for both the three and nine months ended September 27, 2024 and the three and nine months ended September 29, 2023.
Previous wording
Net other expense was nominal for both the three and six months ended June 28, 2024 and the three and six months ended June 30, 2023.
Current wording
Net other expense was nominal for both the three and nine months ended September 27, 2024 and the three and nine months ended September 29, 2023.
Previous wording
Our effective tax rate for the three months ended June 28, 2024 was 19.7%, versus 17.4% for the prior year period. Our effective tax rate of 19.7% for the three months ended June 28, 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, and R&D tax credits, partially offset by disallowed compensation deductions, uncertain tax position accruals, and Pillar Two inclusion.
Current wording
Our effective tax rate for the three months ended September 27, 2024 was 20.8%, versus 7.7% for the prior year period. Our effective tax rate of 20.8% for the three months ended September 27, 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 and R&D tax credits, partially offset by disallowed compensation deductions, uncertain tax position accruals, and Pillar Two inclusion.
Previous wording
Our effective tax rate of 17.4% for the three months ended June 30, 2023 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 and uncertain tax position accruals.
Current wording
Our effective tax rate for the three months ended September 29, 2023 of 7.7% 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 and uncertain tax position accruals.
Previous wording
Our effective tax rate for the six months ended June 28, 2024 was 16.5%, versus 13.0% for the prior year period. Our effective tax rate of 16.5% for the six months ended June 28, 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 Pillar two inclusion. For the six months ended June 28, 2024, the windfall tax benefits upon vesting of certain share-based compensation awards had a benefit of 3.5% on our effective tax rate.
Current wording
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 Pillar Two inclusion. For the nine months ended September 27, 2024, the tax benefits upon vesting of certain share-based compensation awards had a benefit of 3.1% on our effective tax rate.
Previous wording
Our effective tax rate of 13.0% for the six months ended June 30, 2023 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 certain share-based compensation awards, partially offset by disallowed compensation deductions and uncertain tax position accruals. For the six months ended June 30, 2023, the tax benefits upon vesting of certain share-based compensation awards had a benefit of 4.0% on our effective tax rate.
Current wording
Our effective tax rate of 11.2% for the nine months ended September 29, 2023 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 and uncertain tax position accruals. For the nine months ended September 29, 2023, the tax benefits upon vesting of certain share-based compensation awards had a benefit of 4.5% on our effective tax rate.
Previous wording
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 have estimated the impact of this minimum tax in our effective tax rate analysis, which did not have a material impact on our financial results in the current period. We continue to monitor developments and anticipate further legislative activity in 2024.
Current wording
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 35 countries. Additional countries are actively considering changes to their tax laws to adopt certain parts of the OECD’s proposals. We have estimated the impact of this minimum tax in our effective tax rate analysis, and it does not have a material impact on our financial results in the current period. We continue to closely monitor the progression of legislative activities.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Rule 10b-18 under the Securities Exchange Act of 1934. We did not repurchase any shares during the nine months ended September 27, 2024. We had $49.5 million available for share repurchases under the 2020 Repurchase Plan as of September 27, 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Unallocated corporate and shared services costs primarily represent costs of corporate and shared services functions that are not allocated to the operating segments. These costs for the three months ended June 28, 2024 decreased $0.9 million versus the prior year period.
Previous report — wording carried elsewhere
Consolidated Financial Statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Through June 28, 2024, we have not entered into any other material new or modified contractual obligations since December 31, 2023.