NOVANTA INC
For the period ended Mar 28, 2025. Filed May 6, 2025.
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.
Mar 28, 2025 · Filed May 6, 2025
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 2024-09-27; filed 2024-11-05.
0000950170-24-121113
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-28; filed 2025-05-06.
0000950170-25-064018
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 140 previous paragraphs and 113 current paragraphs.
65 unchanged; 35 reworded; 13 added; 38 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 7 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 (13)
Current report
Reporting Segment Change
Current report
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.
Current report
Acquisition of Keonn Technologies, S.L.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
Unallocated
Current report
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.
Current report
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.
Removed paragraphs (38)
Previous report
Our Precision Medicine and Manufacturing segment designs, manufactures and markets photonics-based solutions, including laser scanning, laser beam delivery, CO2 laser, solid state laser, ultrafast laser, and optical light engine products to customers worldwide. The segment serves highly demanding photonics-based applications for advanced industrial processes, medical and life science imaging, DNA sequencing, and medical laser procedures, particularly ophthalmology applications. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.
Previous report
Acquisition of Motion Solutions
Previous report
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 report
Inflationary Pressures
Previous report
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 report
Geopolitical Conflicts
Previous report
In February 2022, Russian forces invaded Ukraine. In response, the U.S., the European Union (“EU”), and several other countries imposed economic and trade sanctions and other restrictions (collectively, “global sanctions”) targeting Russia and Belarus. Russia then imposed retaliatory economic measures against the U.S., the EU, and several other countries. Our historical sales to Russia were not material. We also do not have any assets, employees or third-party contractors in Russia or Ukraine. However, the duration of the conflict and further sanctions could have further impact on the global economy and inflation.
Previous report
In early October 2023, Israel declared war on Hamas. We are monitoring the social, political and economic environment in Israel and in the region for any impact on our businesses. Our historical sales to Israel were around 1% of our total sales. We do not have any assets, employees, or third-party contractors in Israel. Due to the uncertainty around the duration of the conflict, future impacts are unknown to our businesses.
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
Robotics and Automation segment revenue for the nine months ended September 27, 2024 was flat versus the prior year period.
Previous report
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 report
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 report
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 report
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 report
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 report
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 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.
Previous 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.
Previous report
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 report
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 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 report
Unallocated Corporate and Shared Services
Previous report
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 report
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 report
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 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
Previous report
Cash provided by operating activities was $97.0 million for the nine months ended September 27, 2024, versus $81.1 million for the prior year period. Cash provided by operating activities for the nine months ended September 27, 2024 increased from the prior year period primarily as a result of less cash paid for income taxes.
Previous report
Cash used in investing activities was $13.7 million for the nine months ended September 29, 2023, all related to capital expenditures.
Reworded paragraphs (35)
Previous wording
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; risks associated with epidemics, pandemics or other public health crises; our dependence upon our ability to respond to fluctuations in product demand; our ability to continuously innovate, introduce new products in a timely manner, and 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; 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; 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 relat…
Excerpt shortened here; the source contains the full paragraph.
Current wording
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 a…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
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 and manufacturing, medical solutions, and robotics and automation 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.
Current wording
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.
Previous wording
We operate in three reportable segments: Precision Medicine and Manufacturing, Medical Solutions, and Robotics and Automation. The reportable segments and their principal activities are summarized below.
Current wording
We operate in two reportable segments: Automation Enabling Technologies and Medical Solutions. The reportable segments and their principal activities are summarized below.
Previous wording
Our Robotics and Automation segment designs, manufactures and markets optical and inductive encoders, precision motors, servo drives and motion control solutions, integrated stepper motors, intelligent robotic end-of-arm technology solutions, and air bearing spindles to customers worldwide. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.
Current wording
The Automation Enabling Technologies segment designs, manufactures and markets laser beam delivery components, laser beam delivery solutions, CO 2 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.
Previous wording
Our Medical Solutions segment designs, manufactures and markets a range of medical grade technologies, including medical insufflators, pumps and related disposables; visualization solutions; wireless technologies, video recorder and video integration technologies for operating room integrations; optical data collection and machine vision technologies; radio frequency identification (“RFID”) technologies; thermal chart recorders; spectrometry technologies; embedded touch screen solutions; and high precision customized subsystems. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous wording
attracting, retaining, and developing world-class talented, diverse, and motivated employees.
Current wording
attracting, retaining, and developing world-class talented and motivated employees.
Previous 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
Current wording
Results of Operations for the Three Months Ended March 28, 2025 Compared with the Three Months Ended March 29, 2024
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
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 $23.3 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.
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 $23.2 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.
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 $44.3 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.
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 $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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous wording
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 wording
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.
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 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
Foreign exchange transaction gains (losses) were nominal for the three months ended March 28, 2025 and the three months ended March 29, 2024.
Previous 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.
Current wording
Net other expense was nominal for the three months ended March 28, 2025 and the three months ended March 29, 2024.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
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 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.
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 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.
Previous wording
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 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, 2023.
Current wording
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.
Previous wording
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, 2023. Through September 27, 2024, we have not entered into any other material new or modified contractual obligations since December 31, 2023.
Current wording
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.
Previous wording
As of September 27, 2024, $55.9 million of our $92.7 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 $93.8 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 September 27, 2024. Additionally, we may use intercompany loans to address short-term cash flow needs for various subsidiaries.
Current wording
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.
Previous wording
As of September 27, 2024, we had $76.6 million term loan and $383.8 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 September 27, 2024, we had outstanding borrowings under the Credit Agreement denominated in Euro and U.S. dollars of $93.8 million and $366.5 million, respectively.
Current wording
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.
Previous wording
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
Current wording
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.
Previous wording
Cash Flows for the Nine Months Ended September 27, 2024 and September 29, 2023
Current wording
Cash Flows for the Three Months Ended March 28, 2025 and March 29, 2024
Previous wording
Cash used in investing activities was $206.1 million for the nine months ended September 27, 2024, primarily driven by $191.2 million cash consideration, net of cash acquired and net working capital adjustments for the Motion Solutions acquisition. We also paid $14.9 million for capital expenditures.
Current wording
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.
Previous wording
We expect to use an aggregate of approximately $18 million to $20 million in 2024 for capital expenditures related to investments in new property, plant and equipment for our existing businesses.
Current wording
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.
Previous wording
Cash used in financing activities was $92.8 million for the nine months ended September 29, 2023, primarily due to $82.0 million of term loan and revolving credit facility repayments and $10.2 million of payroll tax payments upon vesting of share-based compensation awards.
Current wording
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.
Previous wording
Cash provided by financing activities was $92.6 million for the nine months ended September 27, 2024, primarily driven by $198.0 million of borrowings under our revolving credit facility to fund the Motion Solutions acquisition, partially offset by $96.0 million of term loan and revolving credit facility repayments and $8.9 million of payroll tax payments upon vesting of share-based compensation awards.
Current wording
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.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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 report — wording carried 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.