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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No.: 001-35083

 

NOVANTA INC.

(Exact name of registrant as specified in its charter)

 

New Brunswick, Canada

 

98-0110412

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

125 Middlesex Turnpike, Bedford, Massachusetts, USA

 

01730

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (781) 266-5700

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common shares, no par value

 

NOVT

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 1, 2022, there were 35,690,210 of the Registrant’s common shares, no par value, issued and outstanding.

 

 


 

NOVANTA INC.

TABLE OF CONTENTS

 

Item No.

 

 

Page
No.

 

 

PART I — FINANCIAL INFORMATION

 

1

 

 

 

ITEM 1.

 

FINANCIAL STATEMENTS

 

1

 

 

 

 

 

CONSOLIDATED BALANCE SHEETS (unaudited)

 

1

 

 

 

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

2

 

 

 

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

 

3

 

 

 

 

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

 

4

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

5

 

 

 

 

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

6

 

 

 

ITEM 2.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

30

 

 

 

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

43

 

 

 

ITEM 4.

 

CONTROLS AND PROCEDURES

 

43

 

 

PART II — OTHER INFORMATION

 

44

 

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

 

44

 

 

 

ITEM 1A.

 

RISK FACTORS

 

44

 

 

 

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

44

 

 

 

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

44

 

 

 

ITEM 4.

 

MINE SAFETY DISCLOSURES

 

44

 

 

 

ITEM 5.

 

OTHER INFORMATION

 

44

 

 

 

ITEM 6.

 

EXHIBITS

 

45

 

 

SIGNATURES

 

46

 

 

 

 


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

NOVANTA INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars or shares)

(Unaudited)

 

 

September 30,

 

 

December 31,

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

84,580

 

 

$

117,393

 

Accounts receivable, net of allowance of $741 and $556, respectively

 

144,633

 

 

 

115,617

 

Inventories

 

162,807

 

 

 

125,657

 

Prepaid income taxes and income taxes receivable

 

994

 

 

 

1,997

 

Prepaid expenses and other current assets

 

14,721

 

 

 

13,161

 

Total current assets

 

407,735

 

 

 

373,825

 

Property, plant and equipment, net

 

95,030

 

 

 

87,439

 

Operating lease assets

 

43,520

 

 

 

48,338

 

Deferred tax assets

 

11,538

 

 

 

12,206

 

Other assets

 

5,543

 

 

 

5,586

 

Intangible assets, net

 

179,113

 

 

 

220,989

 

Goodwill

 

465,052

 

 

 

479,500

 

Total assets

$

1,207,531

 

 

$

1,227,883

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Current portion of long-term debt

$

4,366

 

 

$

5,097

 

Accounts payable

 

79,577

 

 

 

68,514

 

Income taxes payable

 

7,822

 

 

 

4,514

 

Current portion of operating lease liabilities

 

7,663

 

 

 

7,334

 

Accrued expenses and other current liabilities

 

58,629

 

 

 

98,479

 

Total current liabilities

 

158,057

 

 

 

183,938

 

Long-term debt

 

438,447

 

 

 

429,361

 

Operating lease liabilities

 

40,907

 

 

 

45,700

 

Deferred tax liabilities

 

16,519

 

 

 

33,738

 

Income taxes payable

 

5,153

 

 

 

4,217

 

Other liabilities

 

6,246

 

 

 

9,638

 

Total liabilities

 

665,329

 

 

 

706,592

 

Commitments and contingencies (Note 15)

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred shares, no par value; Authorized shares: 7,000;
   
No shares issued and outstanding

 

 

 

 

 

Common shares, no par value; Authorized shares: unlimited;
   Issued and outstanding:
35,689 and 35,601, respectively

 

423,856

 

 

 

423,856

 

Additional paid-in capital

 

51,951

 

 

 

53,768

 

Retained earnings

 

115,322

 

 

 

56,533

 

Accumulated other comprehensive loss

 

(48,927

)

 

 

(12,866

)

Total stockholders' equity

 

542,202

 

 

 

521,291

 

Total liabilities and stockholders’ equity

$

1,207,531

 

 

$

1,227,883

 

 

The accompanying notes are an integral part of these consolidated financial statements.

1


 

NOVANTA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars or shares, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

October 1,

 

 

September 30,

 

 

October 1,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

$

222,958

 

 

$

177,726

 

 

$

642,530

 

 

$

507,833

 

Cost of revenue

 

124,550

 

 

 

101,428

 

 

 

358,601

 

 

 

290,389

 

Gross profit

 

98,408

 

 

 

76,298

 

 

 

283,929

 

 

 

217,444

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development and engineering

 

21,349

 

 

 

17,468

 

 

 

63,866

 

 

 

53,104

 

Selling, general and administrative

 

40,301

 

 

 

31,296

 

 

 

120,191

 

 

 

94,189

 

Amortization of purchased intangible assets

 

6,472

 

 

 

4,139

 

 

 

20,987

 

 

 

11,300

 

Restructuring, acquisition, and related costs

 

1,625

 

 

 

8,120

 

 

 

2,650

 

 

 

16,485

 

Total operating expenses

 

69,747

 

 

 

61,023

 

 

 

207,694

 

 

 

175,078

 

Operating income

 

28,661

 

 

 

15,275

 

 

 

76,235

 

 

 

42,366

 

Interest income (expense), net

 

(4,062

)

 

 

(1,710

)

 

 

(9,928

)

 

 

(4,496

)

Foreign exchange transaction gains (losses), net

 

2,086

 

 

 

34

 

 

 

2,307

 

 

 

(299

)

Other income (expense), net

 

87

 

 

 

(71

)

 

 

(390

)

 

 

(238

)

Income before income taxes

 

26,772

 

 

 

13,528

 

 

 

68,224

 

 

 

37,333

 

Income tax provision (benefit)

 

4,282

 

 

 

(75

)

 

 

9,435

 

 

 

756

 

Consolidated net income

$

22,490

 

 

$

13,603

 

 

$

58,789

 

 

$

36,577

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share (Note 5):

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.63

 

 

$

0.38

 

 

$

1.65

 

 

$

1.03

 

Diluted

$

0.63

 

 

$

0.38

 

 

$

1.64

 

 

$

1.02

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding—basic

 

35,729

 

 

 

35,447

 

 

 

35,625

 

 

 

35,366

 

Weighted average common shares outstanding—diluted

 

35,928

 

 

 

35,764

 

 

 

35,881

 

 

 

35,771

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

2


 

NOVANTA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands of U.S. dollars)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

October 1,

 

 

September 30,

 

 

October 1,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Consolidated net income

$

22,490

 

 

$

13,603

 

 

$

58,789

 

 

$

36,577

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax (1)

 

(18,972

)

 

 

(3,248

)

 

 

(37,672

)

 

 

(3,602

)

Pension liability adjustments, net of tax (2)

 

710

 

 

 

448

 

 

 

1,611

 

 

 

832

 

Total other comprehensive income (loss)

 

(18,262

)

 

 

(2,800

)

 

 

(36,061

)

 

 

(2,770

)

Total consolidated comprehensive income

$

4,228

 

 

$

10,803

 

 

$

22,728

 

 

$

33,807

 

 

(1)
The tax effect on this component of comprehensive income (loss) was nominal for all periods presented.
(2)
The tax effect on this component of comprehensive income (loss) was nominal for all periods presented. See Note 4 to the Consolidated Financial Statements for the total amount of pension liability adjustments reclassified out of accumulated other comprehensive income (loss).

The accompanying notes are an integral part of these consolidated financial statements.

 

3


 

NOVANTA INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands of U.S. dollars or shares)

(Unaudited)

 

Common Shares

 

 

Additional Paid-In

 

 

Retained

 

 

Accumulated Other Comprehensive

 

 

 

 

 

# of Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

Balance at July 1, 2022

 

35,623

 

 

$

423,856

 

 

$

46,146

 

 

$

92,832

 

 

$

(30,665

)

 

$

532,169

 

Consolidated net income

 

 

 

 

 

 

 

 

 

 

22,490

 

 

 

 

 

 

22,490

 

Common shares issued under stock plans

 

67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares withheld for taxes on vested stock awards

 

(1

)

 

 

 

 

 

(149

)

 

 

 

 

 

 

 

 

(149

)

Repurchases of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

5,954

 

 

 

 

 

 

 

 

 

5,954

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,262

)

 

 

(18,262

)

Balance at September 30, 2022

 

35,689

 

 

$

423,856

 

 

$

51,951

 

 

$

115,322

 

 

$

(48,927

)

 

$

542,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2022

 

Balance at December 31, 2021

 

35,601

 

 

$

423,856

 

 

$

53,768

 

 

$

56,533

 

 

$

(12,866

)

 

$

521,291

 

Consolidated net income

 

 

 

 

 

 

 

 

 

 

58,789

 

 

 

 

 

 

58,789

 

Common shares issued under stock plans

 

238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares withheld for taxes on vested stock awards

 

(66

)

 

 

 

 

 

(9,626

)

 

 

 

 

 

 

 

 

(9,626

)

Repurchases of common shares

 

(84

)

 

 

 

 

 

(10,000

)

 

 

 

 

 

 

 

 

(10,000

)

Share-based compensation

 

 

 

 

 

 

 

17,809

 

 

 

 

 

 

 

 

 

17,809

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,061

)

 

 

(36,061

)

Balance at September 30, 2022

 

35,689

 

 

$

423,856

 

 

$

51,951

 

 

$

115,322

 

 

$

(48,927

)

 

$

542,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended October 1, 2021

 

Balance at July 2, 2021

 

35,489

 

 

$

423,856

 

 

$

52,243

 

 

$

29,176

 

 

$

(12,211

)

 

$

493,064

 

Consolidated net income

 

 

 

 

 

 

 

 

 

 

13,603

 

 

 

 

 

 

13,603

 

Common shares issued under stock plans

 

199