Novanta Announces Financial Results for the Fourth Quarter and Full Year 2025

BOSTON--(BUSINESS WIRE)--Novanta Inc. (Nasdaq: NOVT) (“Novanta” or the “Company”), a trusted technology partner to medical and advanced technology equipment manufacturers, today reported financial results for the fourth quarter and full year 2025.

“Novanta exceeded expectations for revenue in the fourth quarter, delivering accelerated reported growth of 9% and a return to positive organic growth,” said Matthijs Glastra, Chair and Chief Executive Officer. “Solid operating performance resulted in strong 17% improvement in Adjusted EBITDA and 20% in Adjusted EPS. Looking forward, we believe we are well positioned for continued momentum into 2026 as we ended the quarter with a 25% increase in customer bookings, and an overall book-to-bill of 1.11x.”

Mr. Glastra continued, “For the full year 2025, customer bookings advanced 14%, new product revenue surpassed our targets, and we secured several new significant design wins with leading OEMs. The Keonn acquisition continues to perform better than planned, and the recent fundraise has enabled numerous opportunities for potential value-creating acquisitions. I'm very proud of our team’s disciplined execution on our strategic priorities throughout 2025, the resilience of our business, and our collective commitment to creating enhanced long-term value for shareholders.”

Fourth Quarter

For the fourth quarter of 2025, Novanta generated GAAP revenue of $258.3 million, an increase of $20.3 million or 8.5%, compared to prior year. The Company’s acquisition activities resulted in a net increase in revenue of $8.1 million or 3.4%. Year-over-year changes in foreign currency exchange rates favorably impacted revenue by $6.9 million or 2.9%. Organic Revenue Growth, which excludes the net impact of acquisitions and changes in foreign currency exchange rates, was an increase of 2.2% (see “Organic Revenue Growth” in the non-GAAP reconciliations below).

For the fourth quarter of 2025, GAAP operating income was $24.8 million, compared to $26.7 million in the prior year. GAAP net income was $17.5 million, compared to $16.5 million in the prior year. GAAP diluted earnings per share (“EPS”) was $0.45, compared to $0.46 in the prior year. Diluted weighted average shares outstanding was 38.7 million for the fourth quarter of 2025.

Adjusted Diluted EPS increased 20% to $0.91, compared to $0.76 in the prior year. Adjusted EBITDA increased 17% to $60.7 million, compared to $52.1 million in the prior year.

Operating cash flow was $8.8 million, compared to $61.6 million in the prior year. The year-over-year decrease in operating cash flow was primarily driven by the Company’s strategy to regionalize manufacturing, which resulted in temporary increases in net working capital. These regionalized manufacturing initiatives are expected to be largely completed by the end of the second quarter of 2026.

Full Year

For the full year 2025, Novanta generated GAAP revenue of $980.6 million, an increase of $31.4 million or 3.3%, compared to prior year. The Company’s acquisition activities resulted in a net increase in revenue of $21.8 million or 2.3%. Year-over-year changes in foreign currency exchange rates favorably impacted our revenue by $14.6 million or 1.5%. Organic Revenue Growth, which excludes the net impact of acquisitions and changes in foreign currency exchange rates, was a decrease of 0.5% (see “Organic Revenue Growth” in Reconciliation of GAAP to Non-GAAP Financial Measures below).

For the full year 2025, GAAP operating income was $94.0 million, compared to $110.6 million in the prior year. GAAP net income was $53.8 million, compared to $64.1 million in the prior year. GAAP diluted EPS was $1.47, compared to $1.77 in the prior year.

Adjusted Diluted EPS increased 6.8% to $3.29, compared to $3.08 in the prior year. Adjusted EBITDA increased 5.3% to $221.0 million, compared to $209.8 million in the prior year.

Operating cash flow was $64.1 million, compared to $158.5 million in the prior year. The year-over-year decrease in operating cash flow was primarily driven by the Company’s strategy to regionalize manufacturing to mitigate the effects of trade costs and disruptions on our customers when purchasing Novanta’s products, which resulted in temporary increases in net working capital.

The Company finished the year with approximately $251 million of total debt and $381 million of total cash. Net Debt, as defined in the non-GAAP reconciliation below, was ($121) million.

Financial Guidance

"In 2026, we expect to drive mid-single-digit organic growth with sequential quarterly improvements in bookings and revenue across all of our businesses, the benefit from new product launches, and strong commercial execution in our target markets,” said Matthijs Glastra. “We also plan to improve margins and cash flows through the Novanta Growth System and by successfully completing our regional manufacturing strategy, which should also lower costs for customers and improve resilience to trade disruptions. Finally, with enhanced financial flexibility, and now with the largest acquisition pipeline in the company's history, we expect to meaningfully deploy capital through acquisitions to create significant shareholder value."

For the full year 2026, the Company expects GAAP revenue to be in the range of $1,030 million to $1,050 million. The Company expects Adjusted EBITDA to be in the range of $245 million to $250 million and Adjusted Diluted EPS to be in the range of $3.50 to $3.65. The Company expects Operating cash flow to be in the range of $145 million to $185 million. The Company’s guidance assumes no significant changes in foreign exchange rates.

For the first quarter of 2026, the Company expects GAAP revenue to be in the range of $250 million to $255 million. The Company expects Adjusted EBITDA to be in the range of $56 million to $58 million and Adjusted Diluted EPS to be in the range of $0.75 to $0.80. The Company’s guidance assumes no significant changes in foreign exchange rates.

Novanta provides earnings guidance on a non-GAAP basis and does not provide earnings guidance on a GAAP basis, with the exception of GAAP revenue guidance. A reconciliation of the Company’s forward-looking Adjusted EBITDA and Adjusted Diluted EPS guidance to the most directly comparable GAAP financial measures is not provided because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including acquisitions and related expenses; impact of purchase price allocations for recently completed acquisitions; future changes in the fair value of contingent considerations; future restructuring expenses; foreign exchange gains/(losses); significant discrete income tax expenses (benefits); benefits or expenses associated with the completion of tax audits; divestitures and related expenses; gains and losses from sale of real estate assets; costs related to product line closures; intangible asset impairment charges and related asset write-offs; and other charges reflected in the Company’s reconciliation of historical non-GAAP financial measures, the amounts of which, based on past experience, could be material. For additional information regarding Novanta’s non-GAAP financial measures, see “Use of Non-GAAP Financial Measures” below.

Conference Call Information

The Company will host a conference call on Tuesday, February 24, 2026 at 8:00 a.m. ET to discuss these results and to provide a business update. To access the call, please dial (888) 346-3959 prior to the scheduled conference call time. Alternatively, the conference call can be accessed online via a live webcast on the Events & Presentations page of the Investors section of the Company’s website at www.novanta.com.

A replay of the audio webcast will be available approximately three hours after the conclusion of the call in the Investor Relations section of the Company’s website at www.novanta.com. The replay will remain available until Monday, April 27, 2026.

Use of Non-GAAP Financial Measures

The non-GAAP financial measures used in this press release are Organic Revenue Growth, Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Income Tax Provision/(Benefit) and Effective Tax Rate, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow as a Percentage of Net Income, and Net Debt.

The Company believes that these non-GAAP financial measures provide useful and supplementary information to investors regarding the operating performance of the Company. It is management’s belief that these non-GAAP financial measures would be particularly useful to investors because of the significant changes that have occurred outside of the Company’s day-to-day business in accordance with the execution of the Company’s strategy. This strategy includes streamlining the Company’s existing operations through site and functional consolidations, strategic divestitures and product line closures, expanding the Company’s business through significant internal investments, and broadening the Company’s product and service offerings through acquisitions of innovative and complementary technologies and solutions. The financial impact of certain elements of these activities, particularly acquisitions, divestitures, and site and functional restructurings, is often large relative to the Company’s overall financial performance and can adversely affect the comparability of its operating results and investors’ ability to analyze the business from period to period.

The Company’s Adjusted EBITDA, Organic Revenue Growth and Adjusted Gross Profit Margin are used by management to evaluate operating performance, communicate financial results to the Board of Directors, benchmark results against historical performance and the performance of peers, and evaluate investment opportunities, including acquisitions and divestitures. In addition, Adjusted EBITDA, Organic Revenue Growth and Adjusted Gross Profit Margin are used to determine bonus payments for senior management and employees. The Company has also used in the past, and may use in the future, Adjusted Diluted EPS and Adjusted EBITDA as performance targets for certain performance-based restricted stock units. Accordingly, the Company believes that these non-GAAP financial measures provide greater transparency and insight into management’s method of analysis.

Non-GAAP financial measures should not be considered as substitutes for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on the Company’s reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company’s financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Safe Harbor and Forward-Looking Information

Certain statements in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements contained in this news release that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as “expect,” “intend,” “anticipate,” “estimate,” “believe,” “future,” “target,” “could,” “should,” “may,” “plan,” “aim,” and other similar expressions. These forward-looking statements include, but are not limited to, the statements of Mr. Glastra in this press release; statements regarding anticipated financial performance and financial position, including our financial outlook for the full year 2026 and first quarter of 2026; expectations for our customers and for our end markets; expectations for our strategy and business model; expectations for new product launches and commercial activities; expectations with respect to productivity enhancements, expectations for margin and cash flow performance; expectations for our site regionalization strategy; expectations for capital deployment to acquisitions or other investment options; and other statements that are not historical facts.

These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. 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 and practices; the effects of climate change and related regulatory responses; our exposure to the credit risk of some of our customers and in weakened markets; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; changes in tax laws and fluctuations in our effective tax rates; any need for additional capital to adequately respond to business challenges or opportunities and repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; our existing indebtedness limiting our ability to engage in certain activities; volatility in the market price for our common shares; and our failure to maintain appropriate internal controls in the future.

Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect the Company’s operating results and financial condition are discussed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as updated by our subsequent filings with the Securities and Exchange Commission. Such statements are based on the Company’s beliefs and assumptions and on information currently available to the Company. The Company disclaims any obligation to publicly update or revise any such forward-looking statements as a result of developments occurring after the date of this document except as required by law.

About Novanta

Novanta is a leading global supplier of core technology solutions that give medical, life science, and advanced industrial original equipment manufacturers a competitive advantage. We combine deep proprietary 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 Novanta to engineer proprietary technology solutions that deliver extreme precision and performance, tailored to our customers' demanding applications. The driving force behind our growth is the team of innovative professionals who share a commitment to innovation, the Novanta Growth System, and our customers’ success. Novanta’s common shares are quoted on Nasdaq under the ticker symbol “NOVT.”

More information about Novanta is available on the Company’s website at www.novanta.com. For additional information, please contact Novanta Investor Relations at (781) 266-5137 or InvestorRelations@novanta.com.

Net Debt (Non-GAAP):