NOVANTA INC
For the period ended Apr 3, 2026. Filed May 11, 2026.
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.
Apr 3, 2026 · Filed May 11, 2026
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 2025-09-26; filed 2025-11-03.
0001193125-25-262774
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-04-03; filed 2026-05-11.
0001193125-26-217064
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 134 previous paragraphs and 112 current paragraphs.
61 unchanged; 37 reworded; 13 added; 29 removed; 7 previous and 1 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
strengthening our operational performance to expand profit margins and enhance customer satisfaction by deploying lean manufacturing principles and advancing strategic sourcing initiatives across our major production sites, while regionalizing our manufacturing footprint and establishing manufacturing centers of excellence to achieve greater efficiency and reduce overall production complexity; and
Current report
advancing a people first culture that promotes a growth mindset, cohesive and engaged teams, and continuous employee development to enable long‑term organizational excellence.
Current report
The global economy has continued to face significant challenges, including inflation, supply chain disruptions, business slowdowns, labor shortages, market volatility, and evolving U.S. trade policies such as tariffs and retaliatory measures. Tariffs imposed by the U.S. government on imports from certain countries, including China, have increased our cost of revenue and contributed to gross margin compression in both of our reportable segments during the three months ended April 3, 2026. Retaliatory tariffs and trade restrictions imposed by other countries have further increased the cost of cross-border commerce. The scope, duration, and ultimate impact of current and potential future tariff actions remain uncertain and difficult to predict, and the Company may not be able to fully offset the effects through pricing, sourcing, or operational adjustments.
Current report
In addition, the conflict arising from coordinated US and Israeli military strikes on Iran beginning in February 2026, and Iran's subsequent retaliatory actions, including the temporary closure of the Strait of Hormuz, has contributed to increased global energy prices, heightened supply chain uncertainty, and rising freight and commodity costs. Although the Company does not have material operations in the Middle East, further escalation or a resumption of hostilities could disrupt global supply chains and energy markets, increase component and raw material costs, exacerbate inflationary pressures on our manufacturing operations, and adversely affect overall macroeconomic conditions in the markets in which we operate.
Current report
These conditions have impacted, and may continue to impact in the future, the Company’s business, financial condition and results of operations. We address macroeconomic challenges by continuing to execute our strategy.
Current report
Medical Solutions segment gross profit for the three months ended April 3, 2026 increased $6.2 million, or 13.5%, versus the prior year period, primarily due to an increase in revenue. Medical Solutions segment gross profit margin was 41.3% for the three months ended April 3, 2026, versus a gross profit margin of 41.7% for the prior year period. The decrease in gross profit margin was primarily due to higher material costs, increased tariff costs, as well as changes in product mix.
Current report
Automation Enabling Technologies segment operating income was $31.1 million, or 23.7% of revenue, during the three months ended April 3, 2026, versus $31.5 million, or 25.6% of revenue, during the prior year period. The decrease in operating income was primarily due to an increase in restructuring, acquisition, and related costs of $3.7 million, and an increase in SG&A expense of $0.7 million, partially offset by an increase in gross profit of $3.4 million.
Current report
Medical Solutions segment operating income was $16.7 million, or 13.2% of revenue, during the three months ended April 3, 2026, versus $14.0 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 $6.2 million, partially offset by an increase in SG&A expenses of $1.6 million, an increase in restructuring, acquisition, and related costs of $1.1 million, and an increase in amortization expenses of $0.5 million.
Current report
On November 5, 2025, the Company entered into an amendment (the “First Amendment”) to the Fourth Amended and Restated Credit Agreement. The First Amendment increases the maximum consolidated leverage ratio permitted thereunder to 3.75:1.00, with a step-up to 4.25:1.00 following a designated acquisition and revised the Company's consolidated leverage ratio definition (as defined in the Fourth Amended and Restated Credit Agreement) allowing for the use of up to $100 million unrestricted cash and cash equivalents as a reduction to consolidated funded indebtedness (as defined in the Fourth Amended and Restated Credit Agreement).
Current report
Tangible Equity Units - Amortizing Notes
Current report
On November 12, 2025, we issued 12,650,000 of our 6.50% tangible equity units (“Units”) at a public offering price of $50.00 per Unit for an aggregate offering of $632.5 million (the “Units Offering”). We received proceeds of $613.0 million after the deduction of the underwriters’ fees and other issuance costs. Each Unit is comprised of a prepaid stock purchase contract and a senior amortizing note. Each purchase contract will automatically settle on November 1, 2028, and we will deliver at least 0.3729, but no more than 0.4662 of our common shares per purchase contract, subject to adjustment based upon the applicable market value of our common shares. Each amortizing note has a principal amount of $8.74 and bears interest at a rate of 6.30% per annum, with a final installment date of November 1, 2028 (“Amortizing Note”).
Current report
As of April 3, 2026, we had $103.1 million outstanding under the Amortizing Notes.
Current report
Cash used in financing activities was $40.1 million for the three months ended April 3, 2026, primarily driven by $18.6 million related to the repurchase of common shares, $8.8 million of debt repayments, $7.0 million of payroll tax payments upon vesting of share-based compensation awards, and $4.4 million of contingent consideration payments related to the 2025 acquisition.
Removed paragraphs (29)
Previous report
Reporting Segment Change
Previous 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.
Previous report
improving our existing operations to expand profit margins and improve customer satisfaction by implementing lean manufacturing principles, strategic sourcing across our major production sites, and optimizing and limiting the growth of our fixed cost base; and
Previous report
attracting, retaining, and developing world-class talented and motivated employees.
Previous report
Significant Events and Updates
Previous report
Acquisition of Keonn Technologies, S.L.
Previous report
On April 8, 2025, we acquired 100% of the outstanding stock of Keonn Technologies, S.L. (“Keonn”), a Barcelona, Spain-based leader in Radio-Frequency Identification (“RFID”) solutions for a purchase price of €64.8 million ($71.0 million), net of cash acquired, including €4.1 million ($4.5 million) estimated fair value of contingent consideration and €2.0 million ($2.2 million) related to a purchase price holdback. 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, we have granted equity totaling €9.0 million ($9.9 million) to Keonn employees. Keonn is included in the Medical Solutions segment.
Previous 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.
Previous 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 have impacted the global market for our products and the cost to manufacture.
Previous report
Operating income of $69.2 million for the nine months ended September 26, 2025 decreased $14.7 million, or 17.5%, from the prior year period. This decrease was attributable to an increase in selling, general and administrative expenses of $11.4 million, an increase in restructuring, acquisition and related costs of $9.5 million, and an increase in research and development and engineering expenses of $2.4 million, partially offset by an increase in gross profit of $8.7 million.
Previous report
Basic earnings per common share (“Basic EPS”) of $1.01 for the nine months ended September 26, 2025 decreased $0.32 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $1.01 for the nine months ended September 26, 2025 decreased $0.31 from the prior year period. The decreases were primarily due to a decrease in operating income and an increase in foreign exchange transaction losses, partially offset by a decrease in interest expense.
Previous report
Automation Enabling Technologies segment revenue for the nine months ended September 26, 2025 increased $7.3 million, or 2.0% 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.
Previous report
Medical Solutions segment revenue for the nine months ended September 26, 2025 increased $3.7 million, or 1.1%, versus the prior year period, primarily due to the net impact of $13.7 million revenue contributions from the current year acquisition, and an increase in sales of advanced surgery products, partially offset by a decrease in sales of precision medicine products.
Previous report
Automation Enabling Technologies segment gross profit for the nine months ended September 26, 2025 increased $5.7 million, or 3.4%, 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 47.8% for the nine months ended September 26, 2025, versus a gross profit margin of 47.1% for the prior year period. The increase in gross profit margin was primarily attributable to factory productivity improvement and favorable product mix, partially offset by higher tariff costs.
Previous report
Medical Solutions segment gross profit for the three months ended September 26, 2025 increased $3.3 million, or 6.6%, versus the prior year period, primarily due to an increase in both revenue and gross profit margin. Medical Solutions segment gross profit margin was 43.0% for the three months ended September 26, 2025, versus a gross profit margin of 42.7% for the prior year period. The increase in gross profit margin was primarily due to factory productivity improvements.
Previous report
Medical Solutions segment gross profit for the nine months ended September 26, 2025 increased $3.2 million, or 2.2%, versus the prior year period, primarily due to an increase in both revenue and gross profit margin. Medical Solutions segment gross profit margin was 42.1% for the nine months ended September 26, 2025, versus a gross profit margin of 41.6% for the prior year period. The increase in gross profit margin was primarily due to factory productivity improvements, a prior year one-time inventory related charge associated with a product line closure, and a prior year amortization of inventory fair value adjustment associated with our 2024 acquisition.
Previous report
R&D expenses were $72.6 million, or 10.1% of revenue, during the nine months ended September 26, 2025, versus $70.2 million, or 9.9% of revenue, during the prior year period. The increase in R&D expenses, both in total dollars and percentage of revenue, was primarily driven by higher spending on projects related to new product introductions and increased costs from the current year acquisition.
Previous report
SG&A expenses were $144.1 million, or 19.9% of revenue, during the nine months ended September 26, 2025, versus $132.6 million, or 18.7% 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 costs associated with planning and design phase of our ERP system implementation, costs associated with an officer transition, costs incurred in connection with an insurance recovery claim, and increased costs from the current year acquisition.
Previous report
Automation Enabling Technologies segment operating income was $27.4 million, or 21.8% of revenue, during the three months ended September 26, 2025, versus $30.1 million, or 23.4% of revenue, during the prior year period. The decrease in operating income was primarily due to a decrease in gross profit of $1.3 million, an increase in R&D expenses of $0.8 million, and an increase in SG&A expenses of $0.5 million.
Previous report
Automation Enabling Technologies segment operating income was $85.7 million, or 23.2% of revenue, during the nine months ended September 26, 2025, versus $75.5 million, or 20.8% of revenue, during the prior year period. The increase in operating income was primarily due to an increase in gross profit of $5.7 million, a decrease in restructuring, acquisition and related costs of $3.5 million, and a decrease in amortization expenses of $1.1 million.
Previous report
Medical Solutions segment operating income was $15.9 million, or 13.0% of revenue, during the three months ended September 26, 2025, versus $16.3 million, or 14.1% of revenue, during the prior year period. The decrease in operating income was primarily due to an increase in restructuring, acquisition and related costs of $2.0 million, an increase in SG&A expenses of $1.0 million, and an increase in amortization expenses of $0.6 million, partially offset by an increase in gross profit of $3.3 million.
Previous report
Medical Solutions segment operating income was $36.6 million, or 10.4% of revenue, during the nine months ended September 26, 2025, versus $50.5 million, or 14.5% of revenue, during the prior year period. The decrease in operating income was primarily due to an increase in restructuring, acquisition and related costs of $8.5 million, an increase in SG&A expenses of $4.3 million, an increase in R&D expenses of $3.1 million, and an increase in amortization expenses of $1.2 million, partially offset by an increase in gross profit of $3.2 million.
Previous report
These costs for the nine months ended September 26, 2025 increased $11.0 million versus the prior year period. The increase in operating loss was primarily driven by costs associated with planning and design phase of our ERP system implementation, officer transition costs, costs incurred in connection with an insurance recovery claim and costs associated with 2025 restructuring programs.
Previous report
Net interest expense was $17.5 million for the nine months ended September 26, 2025, versus $24.6 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 5.48% during the nine months ended September 26, 2025, versus 6.68% during the prior year period.
Previous report
Foreign exchange transaction gains (losses) were less than $0.1 million for the three months ended September 26, 2025 versus $(0.2) million for the prior year period.
Previous report
Foreign exchange transaction gains (losses) were $(3.1) million for the nine months ended September 26, 2025 and $(0.8) million for the prior year period. The increase in net foreign exchange transaction losses was primarily due to changes in the value of the U.S. Dollar against the British Pound and Euro, and realized losses on foreign currency contracts.
Previous report
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 FDII, 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, 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
On July 4, 2025, the U.S. enacted H.R.1 - One Big Beautiful Bill Act (the “Act”). The Act contains numerous income tax provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and modifications to the international tax framework. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We continue to evaluate the implications of the Act on our consolidated financial statements and related disclosures. We included an estimated impact of items affecting our income tax expense for the three and nine months ended September 26, 2025.
Previous report
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 our 2024 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.
Reworded paragraphs (37)
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, 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.
Current wording
We are a leading global supplier of core technology solutions that give medical, life science, 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 proprietary technology solutions that deliver extreme precision and performance, tailored to our customers' demanding applications.
Previous 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.
Current wording
The Automation Enabling Technologies segment designs, manufactures and markets laser beam steering and scanning solutions, laser sources, robotic and precision motion, robotic end-of-arm tooling, and 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
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.
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, imaging, identification and RFID solutions, advanced motion control solutions, light engines, and integrated operating room technologies. 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 26, 2025, the medical market accounted for approximately 53% 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.
Current wording
For the three months ended April 3, 2026, the medical market accounted for approximately 53% 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 26, 2025, the advanced industrial market accounted for approximately 47% 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.
Current wording
For the three months ended April 3, 2026, the advanced industrial market accounted for approximately 47% 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
disciplined focus on our diversified business model of providing functionality to long life-cycle OEM customer platforms in attractive medical and advanced industrial niche markets;
Current wording
disciplined focus on our diversified business model of providing proprietary technology to long life-cycle OEM customer platforms in attractive medical and advanced industrial niche markets;
Previous wording
Results of Operations for the Three and Nine Months Ended September 26, 2025 Compared with the Three and Nine Months Ended September 27, 2024
Current wording
Results of Operations for the Three Months Ended April 3, 2026 Compared with the Three Months Ended March 28, 2025
Previous wording
Total revenue of $247.8 million for the three months ended September 26, 2025 increased $3.4 million, or 1.4%, from the prior year period primarily due to revenue from our current year acquisition, partially offset by a decrease in revenue in the Automation Enabling Technologies segment and a decrease in revenue in the Medical Solutions segment excluding the impact of current year acquisition. The net effect of our acquisition resulted in an increase in revenue of $8.4 million, or 3.4%. In addition, foreign currency exchange rates favorably impacted our revenue by $4.4 million, or 1.8%, for the three months ended September 26, 2025.
Current wording
Total revenue of $257.7 million for the three months ended April 3, 2026 increased $24.3 million, or 10.4%, from the prior year period primarily due to revenue from the 2025 acquisition, an increase in revenue in the Medical Solutions segment excluding the impact of the 2025 acquisition and an increase in revenue in the Automation Enabling Technologies segment. The net effect of our acquisition resulted in an increase in revenue of $9.0 million, or 3.8%. In addition, foreign currency exchange rates favorably impacted our revenue by $8.2 million, or 3.5%, for the three months ended April 3, 2026.
Previous wording
Operating income of $21.8 million for the three months ended September 26, 2025 decreased $10.7 million, or 32.9%, from the prior year period. This decrease was attributable to an increase in selling, general and administrative expenses of $7.1 million, an increase in restructuring, acquisition and related costs of $4.2 million, and an increase in research and development and engineering expenses of $0.8 million, partially offset by an increase in gross profit of $1.7 million.
Current wording
Operating income of $27.5 million for the three months ended April 3, 2026 decreased $4.9 million, or 15.1%, from the prior year period. This decrease was attributable to an increase in selling, general and administrative expenses of $8.8 million, and an increase in restructuring, acquisition, and related costs of $5.1 million, partially offset by an increase in gross profit of $9.2 million.
Previous wording
Basic earnings per common share (“Basic EPS”) of $0.30 for the three months ended September 26, 2025 decreased $0.23 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.30 for the three months ended September 26, 2025 decreased $0.23 from the prior year period. The decreases were primarily due to a decrease in operating income.
Current wording
Basic earnings per common share (“Basic EPS”) of $0.52 for the three months ended April 3, 2026 decreased $0.07 from the prior year period. Diluted earnings per common share (“Diluted EPS”) of $0.51 for the three months ended April 3, 2026 decreased $0.08 from the prior year period. The decreases were primarily due to an increase in the weighted average common shares outstanding as a result of a prior year tangible equity unit offering.
Previous wording
Automation Enabling Technologies segment revenue for the three months ended September 26, 2025 decreased $3.4 million, or 2.6%, versus the prior year period, primarily due to a decrease in demand in precision manufacturing products.
Current wording
Automation Enabling Technologies segment revenue for the three months ended April 3, 2026 increased $8.1 million, or 6.6%, versus the prior year period, primarily due to an increase in demand in robotics and automation products.
Previous wording
Medical Solutions segment revenue for the three months ended September 26, 2025 increased $6.8 million, or 5.9%, versus the prior year period, primarily due to the net impact of $8.4 million revenue contributions from the current year acquisition, and an increase in sales of advanced surgery products, partially offset by a decrease in sales of precision medicine products.
Current wording
Medical Solutions segment revenue for the three months ended April 3, 2026 increased $16.3 million, or 14.8%, versus the prior year period, primarily due to the net impact of $9.0 million revenue contributions from the 2025 acquisition, and an increase in sales of advanced surgery products.
Previous wording
Gross profit and gross profit margin can be influenced by a number of factors, including product mix, pricing, volume, manufacturing efficiencies and utilization, costs for raw materials and outsourced manufacturing, trade tariffs, freight costs, headcount, inventory excess and obsolescence, and warranty expenses.
Current wording
Gross profit and gross profit margin can be influenced by a number of factors, including product mix, pricing, volume, manufacturing efficiencies and utilization, costs for raw materials and outsourced manufacturing, headcount, inventory obsolescence and fair value adjustments, warranty expenses, and intangible amortization.
Previous wording
Automation Enabling Technologies segment gross profit for the three months ended September 26, 2025 decreased $1.3 million, or 2.2%, versus the prior year period, primarily due to a decrease in revenue. Automation Enabling Technologies segment gross profit margin was 47.3% for the three months ended September 26, 2025, versus a gross profit margin of 47.1% for the prior year period.
Current wording
Automation Enabling Technologies segment gross profit for the three months ended April 3, 2026 increased $3.4 million, or 5.7%, versus the prior year period, primarily due to an increase in revenue. Automation Enabling Technologies segment gross profit margin was 47.8% for the three months ended April 3, 2026, versus a gross profit margin of 48.2% for the prior year period. The decrease in gross profit margin is primarily due to higher material costs, increased freight and tariff costs, as well as temporary cost increases incurred as part of our regionalized manufacturing strategy.
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 $24.1 million, or 9.7% of revenue, during the three months ended September 26, 2025, versus $23.3 million, or 9.5% 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 9.0% of revenue, during the three months ended April 3, 2026, versus $23.2 million, or 10.0% 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 $51.4 million, or 20.7% of revenue, during the three months ended September 26, 2025, versus $44.3 million, or 18.1% 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 costs associated with planning and design phase of our enterprise resource planning (“ERP”) system implementation, costs associated with an officer transition, costs incurred in connection with an insurance recovery claim, 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 $54.4 million, or 21.1% of revenue, during the three months ended April 3, 2026, versus $45.6 million, or 19.5% 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 employee compensation, costs associated with the planning and design phase of our financial and operation system implementation and the impact of our prior 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 2.8% of revenue, during the three months ended September 26, 2025, versus $6.6 million, or 2.7% of revenue, during the prior year period.
Current wording
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $5.8 million, or 2.2% of revenue, during the three months ended April 3, 2026, versus $5.6 million, or 2.4% of revenue, during the prior year period.
Previous wording
We recorded restructuring, acquisition, and related costs of $16.8 million during the nine months ended September 26, 2025, versus $7.3 million during the prior year period. The increase in restructuring, acquisition and related costs was primarily due to expenses related to the 2025 restructuring program, and an increase in acquisition and related expenses related to our current year acquisition, partially offset by a gain on the sale of an owned facility.
Current wording
We recorded restructuring, acquisition, and related costs of $2.6 million during the three months ended April 3, 2026, versus $(2.5) million during the prior year period. The increase in restructuring, acquisition and related costs was primarily due to a gain recorded in the prior year on the sale of an owned facility and an increase in restructuring costs incurred in connection with the 2025 restructuring program.
Previous 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 September 26, 2025 increased $7.6 million versus the prior year period. The increase in operating loss was primarily driven by costs associated with planning and design phase of our ERP system implementation, costs incurred in connection with an insurance recovery claim and officer transition costs.
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 April 3, 2026 increased $7.2 million versus the prior year period. The increase in operating loss was primarily driven by costs associated with planning and design phase of our financial and operation system implementation and higher employee compensation.
Previous wording
Net interest expense was $6.0 million for the three months ended September 26, 2025, versus $8.1 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 5.32% during the three months ended September 26, 2025, versus 6.83% during the prior year period.
Current wording
Net interest expense was $1.8 million for the three months ended April 3, 2026, versus $5.6 million for the prior year period. The decrease in net interest expense was primarily due to lower interest expense as a result of reduced average debt levels and higher interest income. For the three months ended April 3, 2026, the weighted average interest rate on our senior credit facilities was 5.81%, versus 5.77% in the prior year period.
Previous wording
Net other expense was nominal for the three and nine months ended September 26, 2025 and the three and nine months ended September 27, 2024.
Current wording
Net other expense was nominal for the three months ended April 3, 2026 and the three months ended March 28, 2025.
Previous wording
Our effective tax rate for the three months ended September 26, 2025 was 32.4%, versus 20.8% for the prior year period. Our effective tax rate of 32.4% for the three months ended September 26, 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 U.S. tax benefits for Foreign Derived Intangible Income (“FDII”) and R&D tax credits, and U.K. patent box deductions; partially offset by various non-deductible transaction-related and compensation expenses and uncertain tax position accruals.
Current wording
Our effective tax rate for the three months ended April 3, 2026 was 19.9%, versus 19.7% for the same period in the prior year. Our effective tax rate of 19.9% for the three months ended April 3, 2026 differs from the Canadian federal and provincial combined statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, estimated U.S. tax benefits for Foreign-Derived Deduction Eligible Income (“FDDEI”) (formerly FDII), a decrease in the Canadian valuation allowance, R&D tax credits, and U.K. patent box deductions; partially offset by various non-deductible transaction-related and compensation expenses, Pillar Two tax, and uncertain tax position accruals.
Previous wording
Our effective tax rate for the three months ended September 27, 2024 of 20.8% 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 FDII, 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 of 19.7% differs from the Canadian federal and provincial combined 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
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 numerous countries worldwide, including many jurisdictions in which we operate. Additional countries are actively considering changes to their tax laws to adopt certain parts of the OECD’s proposals. We fall under the transitional safe harbor rules in the majority of jurisdictions in which we operate and are therefore not subject to Pillar Two global minimum tax in those jurisdictions. 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.
Current wording
On December 12, 2022, the EU member states agreed to implement the Organisation for Economic Co-operation and Development’s (“OECD”) Pillar Two Model Rules. These rules, which establish a global minimum corporate income tax rate of 15%, have been enacted or proposed legislation in numerous countries worldwide, including most of the jurisdictions in which we operate. We qualify for the transitional safe harbor rules in the majority of jurisdictions in which we operate and are therefore not subject to Pillar Two global minimum tax in those jurisdictions. 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 monitor any legislative developments closely.
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, 2024.
Current wording
Our cash requirements primarily consist of principal and interest payments associated with our Senior Credit Facilities (as defined below), principal and interest payments associated with the tangible equity unit Amortizing Notes, 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, 2025.
Previous wording
As of September 26, 2025, $58.0 million of our $89.2 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 $162.9 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 26, 2025. Additionally, we may use intercompany loans to address short-term cash flow needs for various subsidiaries.
Current wording
As of April 3, 2026, $84.6 million of our $388.8 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 $71.4 million of our outstanding borrowings under our Senior Credit Facilities were held in our subsidiaries outside of Canada and the U.S. as of April 3, 2026. Additionally, we may use intercompany loans to address short-term cash flow needs for various subsidiaries.
Previous wording
The term loan facilities require quarterly scheduled principal repayments of €1.1 million beginning in September 2025 (with respect to the Euro Term Loans), and $0.5 million beginning in September 2026, increasing to $0.9 million in September 2027 (with respect the U.S. Term Loans), with the remaining principal balance of the term loans due on June 27, 2030, if the maturity date of the term loan facility is not otherwise extended. We may make additional principal payments at any time, which will reduce the next quarterly installment payment due. We may pay down outstanding borrowings under our revolving credit facility with cash on hand and cash generated from future operations at any time.
Current wording
The term loan facilities require quarterly scheduled principal repayments of €1.1 million that began in September 2025 (with respect to the Euro Term Loans), and $0.5 million beginning in September 2026, increasing to $0.9 million in September 2027 (with respect the U.S. Term Loans), with the remaining principal balance of the term loans due on June 27, 2030, if the maturity date of the term loan facility is not otherwise extended. We may make additional principal payments at any time, which will reduce the next quarterly installment payment due. We may pay down outstanding borrowings under our revolving credit facility with cash on hand and cash generated from future operations at any time.
Previous wording
As of September 26, 2025, we had $150.4 million term loans and $306.6 million revolver borrowings outstanding under our Senior Credit Facilities. Borrowings under the Credit Agreement bear interest at the Base Rate (as defined in the Credit Agreement) plus a margin ranging between zero and 0.75% per annum, determined by reference to the our consolidated leverage ratio, or SOFR, SONIA or EURIBOR, as applicable, plus a margin ranging between 1.00% 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 Facility. As of September 26, 2025, we had outstanding borrowings under the Credit Agreement denominated in Euro and U.S. dollars of $162.9 million and $294.1 million, respectively.
Current wording
As of April 3, 2026, we had $71.4 (€61.9) million outstanding under the Euro Term Loans and $75.0 million outstanding under the U.S. Term Loans. As of April 3, 2026, we had no outstanding revolver borrowings under our Senior Credit Facilities. Borrowings under the Credit Agreement bear interest at the Base Rate (as defined in the Credit Agreement) plus a margin ranging between zero and 0.75% per annum, determined by reference to the consolidated leverage ratio, or SOFR, SONIA or EURIBOR, as applicable, plus a margin ranging between 1.00% 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 Facility. As of April 3, 2026, we had outstanding borrowings under the Credit Agreement denominated in Euro and U.S. dollars of $71.4 million and $75.0 million, respectively.
Previous wording
(1) Maximum consolidated leverage ratio shall be increased to 4.00 for four consecutive quarters following a designated acquisition, as defined in the Fourth Amended and Restated Credit Agreement.
Current wording
(1) Maximum consolidated leverage ratio shall be increased to 4.25 for four consecutive quarters following a designated acquisition, as defined in the Fourth Amended and Restated Credit Agreement.
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 Rule 10b-18 under the Securities Exchange Act of 1934. We repurchased 179 thousand shares under the 2020 Repurchase Plan for an aggregate purchase price of $21.1 million and average price of $118.09 per share during the nine months ended September 26, 2025. We had $28.4 million available for share repurchases under the 2020 Repurchase Plan as of September 26, 2025.
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 88 thousand shares under the 2020 Repurchase Plan for an aggregate purchase price of $10.2 million and an average price of $116.13 per share during the three months ended April 3, 2026. As of April 3, 2026, we had completed the 2020 Repurchase Plan.
Previous wording
In September 2025, our Board of Directors approved a new share repurchase plan (the “2025 Repurchase Plan”) authorizing the repurchase of an additional $200.0 million worth of common shares. The 2025 Repurchase Plan does not obligate the Company to acquire any particular amount of common shares. No time limit was set for the completion of the 2025 Repurchase Plan, and the plan may be suspended or discontinued at any time. No shares have been repurchased under the 2025 Repurchase Plan to date.
Current wording
In September 2025, our Board of Directors approved a new share repurchase plan (the “2025 Repurchase Plan”) authorizing the repurchase of an additional $200.0 million worth of common shares. The 2025 Repurchase Plan does not obligate the Company to acquire any particular amount of common shares. No time limit was set for the completion of the 2025 Repurchase Plan, and the plan may be suspended or discontinued at any time. We repurchased 71 thousand shares under the 2025 Repurchase Plan for an aggregate purchase price of $8.4 million and an average price of $118.08 per share during the three months ended April 3, 2026. As of April 3, 2026, we had $191.6 million available for future share repurchases under the 2025 Repurchase Plan.
Previous wording
Cash Flows for the Nine Months Ended September 26, 2025 and September 27, 2024
Current wording
Cash Flows for the Three Months Ended April 3, 2026 and March 28, 2025
Previous wording
Cash provided by operating activities was $55.3 million for the nine months ended September 26, 2025, versus $97.0 million for the prior year period. Cash provided by operating activities for the nine months ended September 26, 2025 decreased from the prior year period primarily as a result of an increase in inventory and higher cash paid for income taxes.
Current wording
Cash provided by operating activities was $51.6 million for the three months ended April 3, 2026, versus $31.7 million for the prior year period. Cash provided by operating activities for the three months ended April 3, 2026 increased from the prior year period primarily as a result of improved net working capital and the reduction of bonus payouts in 2026 following the conversion of 2025 annual bonuses to equity.
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 of cash consideration (net of cash acquired) paid for our 2024 acquisition and $14.9 million for capital expenditures.
Current wording
Cash used in investing activities was $3.8 million for the three months ended April 3, 2026, primarily driven by $4.1 million for capital expenditures.
Previous wording
Cash used in investing activities was $70.7 million for the nine months ended September 26, 2025, primarily driven by $64.3 million of cash consideration (net of cash acquired) paid for our 2025 acquisition and $12.0 million for capital expenditures, partially offset by $5.5 million of cash received from the sale of properties.
Current wording
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.
Previous wording
We expect to use an aggregate of approximately $15 million to $20 million in 2025 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 $30 million to $40 million in 2026 for capital expenditures related to investments in new property, plant and equipment for our existing businesses, which includes a significant capacity expansion project in China.
Previous wording
Cash provided by financing activities was $11.3 million for the nine months ended September 26, 2025, primarily driven by $72.8 million of borrowings under our revolving credit facility to fund our 2025 acquisition, partially offset by $49.2 million of term loan and revolving credit facility repayments, $20.2 million related to the repurchase of common shares and $7.7 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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Foreign exchange transaction gains (losses) were nominal for the three months ended April 3, 2026 and the three months ended March 28, 2025.
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
Fourth Amended and Restated Credit Agreement
Previous report — wording carried elsewhere
On June 27, 2025, we entered into the Fourth Amended and Restated Credit Agreement. The Fourth Amended and Restated Credit Agreement amends and restates, in its entirety, the Third Amended and Restated Credit Agreement dated as of December 31, 2019 (the “Third Agreement”). The Fourth Amended and Restated Credit Agreement provides for an aggregate credit facility of approximately $1.0 billion, comprised of a €65.3 million euro-denominated 5-year term loan facility (the “Euro Term Loans”), a $75.0 million U.S. dollar denominated 5-year term loan facility (the “U.S. Term Loans”), and an $850.0 million 5-year revolving credit facility (the “Revolving Facility”, and together with the Euro Term Loans and the U.S. Term Loans, collectively, the “Senior Credit
Previous report — wording carried elsewhere
Facilities”). The Senior Credit Facilities mature in June 2030 and include an uncommitted “accordion” feature pursuant to which the commitments thereunder may be increased by an additional $350.0 million in aggregate, subject to the satisfaction of certain customary conditions.
Previous report — wording carried elsewhere
Total revenue of $722.3 million for the nine months ended September 26, 2025 increased $11.1 million, or 1.6%, from the prior year period, primarily due to revenue from our current year acquisition and an increase in revenue in the Automation Enabling Technologies segment, partially offset by a decrease in revenue in the Medical Solutions segment excluding the impact of current year acquisition. The net effect of our acquisition resulted in an increase in revenue of $13.7 million, or 1.9%. In addition, foreign currency exchange rates favorably impacted our revenue by $7.6 million, or 1.1%, for the nine months ended September 26, 2025.
Previous report — wording carried elsewhere
Amortization of purchased intangible assets, excluding amortization of developed technologies which is included in cost of revenue, was $19.4 million, or 2.7% of revenue, during the nine months ended September 26, 2025, versus $19.2 million, or 2.7% of revenue, during the prior year period.
Previous report — wording carried elsewhere
We recorded restructuring, acquisition, and related costs of $6.7 million during the three months ended September 26, 2025, versus $2.5 million during the prior year period. The increase in restructuring, acquisition and related costs was primarily due to expenses related to the 2025 restructuring program.
Previous report — wording carried elsewhere
Our effective tax rate for the nine months ended September 26, 2025 was 24.2%, versus 18.3% for the prior year period. Our effective tax rate of 24.2% for the nine months ended September 26, 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 U.S. tax benefits for FDII and R&D tax credits, and U.K. patent box deductions; partially offset by various non-deductible transaction-related and compensation expenses and uncertain tax position accruals.