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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 April 1, 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 May 3, 2022, there were 35,704,230 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

  

28

 

 

 

ITEM 3.

  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  

39

 

 

 

ITEM 4.

  

CONTROLS AND PROCEDURES

  

39

 

 

PART II — OTHER INFORMATION

  

41

 

 

 

ITEM 1.

  

LEGAL PROCEEDINGS

  

41

 

 

 

ITEM 1A.

  

RISK FACTORS

  

41

 

 

 

ITEM 2.

  

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

  

41

 

 

 

ITEM 3.

  

DEFAULTS UPON SENIOR SECURITIES

  

41

 

 

 

ITEM 4.

  

MINE SAFETY DISCLOSURES

  

41

 

 

 

ITEM 5.

  

OTHER INFORMATION

  

41

 

 

 

ITEM 6.

  

EXHIBITS

  

42

 

 

SIGNATURES

  

43

 

 

 

 


 

 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

NOVANTA INC.

CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

 

 

April 1,

 

 

December 31,

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

98,805

 

 

$

117,393

 

Accounts receivable, net of allowance of $601 and $556, respectively

 

123,759

 

 

 

115,617

 

Inventories

 

139,166

 

 

 

125,657

 

Prepaid income taxes and income taxes receivable

 

1,000

 

 

 

1,997

 

Prepaid expenses and other current assets

 

12,649

 

 

 

13,161

 

Total current assets

 

375,379

 

 

 

373,825

 

Property, plant and equipment, net

 

89,652

 

 

 

87,439

 

Operating lease assets

 

46,710

 

 

 

48,338

 

Deferred tax assets

 

4,498

 

 

 

12,206

 

Other assets

 

5,675

 

 

 

5,586

 

Intangible assets, net

 

208,455

 

 

 

220,989

 

Goodwill

 

475,795

 

 

 

479,500

 

Total assets

$

1,206,164

 

 

$

1,227,883

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Current portion of long-term debt

$

4,975

 

 

$

5,097

 

Accounts payable

 

72,035

 

 

 

68,514

 

Income taxes payable

 

7,702

 

 

 

4,514

 

Current portion of operating lease liabilities

 

7,468

 

 

 

7,334

 

Accrued expenses and other current liabilities

 

90,795

 

 

 

98,479

 

Total current liabilities

 

182,975

 

 

 

183,938

 

Long-term debt

 

412,521

 

 

 

429,361

 

Operating lease liabilities

 

43,889

 

 

 

45,700

 

Deferred tax liabilities

 

19,836

 

 

 

33,738

 

Income taxes payable

 

4,947

 

 

 

4,217

 

Other liabilities

 

7,303

 

 

 

9,638

 

Total liabilities

 

671,471

 

 

 

706,592

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

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: 35,684 and 35,601, respectively

 

423,856

 

 

 

423,856

 

Additional paid-in capital

 

52,809

 

 

 

53,768

 

Retained earnings

 

75,353

 

 

 

56,533

 

Accumulated other comprehensive loss

 

(17,325

)

 

 

(12,866

)

Total stockholders' equity

 

534,693

 

 

 

521,291

 

Total liabilities and stockholders’ equity

$

1,206,164

 

 

$

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

 

 

April 1,

 

 

April 2,

 

 

2022

 

 

2021

 

Revenue

$

204,216

 

 

$

162,584

 

Cost of revenue

 

113,940

 

 

 

93,844

 

Gross profit

 

90,276

 

 

 

68,740

 

Operating expenses:

 

 

 

 

 

 

 

Research and development and engineering

 

20,929

 

 

 

18,682

 

Selling, general and administrative

 

39,352

 

 

 

31,653

 

Amortization of purchased intangible assets

 

7,342

 

 

 

3,575

 

Restructuring, acquisition and related costs

 

(1,630

)

 

 

3,731

 

Total operating expenses

 

65,993

 

 

 

57,641

 

Operating income

 

24,283

 

 

 

11,099

 

Interest income (expense), net

 

(3,109

)

 

 

(1,408

)

Foreign exchange transaction gains (losses), net

 

69

 

 

 

(257

)

Other income (expense), net

 

(545

)

 

 

(70

)

Income before income taxes

 

20,698

 

 

 

9,364

 

Income tax provision (benefit)

 

1,878

 

 

 

(1,946

)

Consolidated net income

$

18,820

 

 

$

11,310

 

 

 

 

 

 

 

 

 

Earnings per common share (Note 4):

 

 

 

 

 

 

 

Basic

$

0.53

 

 

$

0.32

 

Diluted

$

0.53

 

 

$

0.32

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding—basic

 

35,538

 

 

 

35,279

 

Weighted average common shares outstanding—diluted

 

35,781

 

 

 

35,789

 

 

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

 

 

April 1,

 

 

April 2,

 

 

2022

 

 

2021

 

Consolidated net income

$

18,820

 

 

$

11,310

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax (1)

 

(4,772

)

 

 

(489

)

Pension liability adjustments, net of tax (2)

 

313

 

 

 

121

 

Total other comprehensive income (loss)

 

(4,459

)

 

 

(368

)

Total consolidated comprehensive income

$

14,361

 

 

$

10,942

 

 

(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 3 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)

 

 

Preferred Shares

 

 

Common Shares

 

 

Additional Paid-In

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive

 

 

 

 

 

 

# of Shares

 

 

Amount

 

 

# of Shares

 

 

Amount

 

 

Capital

 

 

(Deficit)

 

 

Loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended April 1, 2022

 

Balance at December 31, 2021

 

 

 

 

 

 

 

35,601

 

 

$

423,856

 

 

$

53,768

 

 

$

56,533

 

 

$

(12,866

)

 

$

521,291

 

Consolidated net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,820

 

 

 

 

 

 

18,820

 

Common shares issued under stock plans

 

 

 

 

 

 

 

134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares withheld for taxes on vested stock awards

 

 

 

 

 

 

 

(51

)

 

 

 

 

 

(7,733

)

 

 

 

 

 

 

 

 

(7,733

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

6,774

 

 

 

 

 

 

 

 

 

6,774

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,459

)

 

 

(4,459

)

Balance at April 1, 2022

 

 

 

 

 

 

 

35,684

 

 

$

423,856

 

 

$

52,809

 

 

$

75,353

 

 

$

(17,325

)

 

$

534,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended April 2, 2021

 

Balance at December 31, 2020

 

 

 

 

 

 

 

35,163

 

 

$

423,856

 

 

$

58,992

 

 

$

6,202

 

 

$

(12,241

)

 

$

476,809

 

Consolidated net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,310

 

 

 

 

 

 

11,310

 

Common shares issued under stock plans

 

 

 

 

 

 

 

354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares withheld for taxes on vested stock awards

 

 

 

 

 

 

 

(133

)

 

 

 

 

 

(18,272

)

 

 

 

 

 

 

 

 

(18,272

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

6,644

 

 

 

 

 

 

 

 

 

6,644

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(368

)

 

 

(368

)

Balance at April 2, 2021

 

 

 

 

 

 

 

35,384

 

 

$

423,856

 

 

$

47,364

 

 

$

17,512

 

 

$

(12,609

)

 

$

476,123

 

 

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

 

4


 

 

NOVANTA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

 

 

Three Months Ended

 

 

April 1,

 

 

April 2,

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Consolidated net income

$

18,820

 

 

$

11,310

 

Adjustments to reconcile consolidated net income to

   net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

14,044

 

 

 

9,849

 

Provision for inventory excess and obsolescence

 

397

 

 

 

1,136

 

Share-based compensation

 

6,774

 

 

 

6,644

 

Deferred income taxes

 

(5,140

)

 

 

(968

)

Write-off of unamortized deferred financing costs

 

624

 

 

 

 

Contingent consideration adjustments

 

(2,275

)

 

 

126

 

Other

 

240

 

 

 

287

 

Changes in assets and liabilities which (used)/provided cash, excluding

   effects from business acquisitions:

 

 

 

 

 

 

 

Accounts receivable

 

(8,949

)

 

 

(15,828

)

Inventories

 

(14,928

)

 

 

675

 

Prepaid income taxes, income taxes receivable, prepaid expenses

     and other current assets

 

4,040

 

 

 

(4,277

)

Accounts payable, income taxes payable, accrued expenses

     and other current liabilities

 

(38

)

 

 

13,745

 

Other non-current assets and liabilities

 

(2,262

)

 

 

569

 

Net cash provided by operating activities

 

11,347

 

 

 

23,268

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Working capital adjustments from business acquisition

 

820

 

 

 

 

Purchases of property, plant and equipment

 

(6,308

)

 

 

(3,268

)

Payment of contingent consideration related to acquisition of technology assets

 

(1,470

)

 

 

(2,200

)

Other investing activities

 

137

 

 

 

 

Net cash used in investing activities

 

(6,821

)

 

 

(5,468

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Repayments under term loan and revolving credit facilities

 

(11,640

)

 

 

(1,345

)

Payments of debt issuance costs

 

(2,133

)

 

 

 

Payments of withholding taxes from share-based awards

 

(7,733

)

 

 

(18,272

)

Payment of contingent consideration related to an acquisition

 

(375

)

 

 

(435

)

Purchase of building under finance lease

 

 

 

 

(8,743

)

Other financing activities

 

(148

)

 

 

(140

)

Net cash used in financing activities

 

(22,029

)

 

 

(28,935

)

Effect of exchange rates on cash and cash equivalents

 

(1,085

)

 

 

(357

)

Decrease in cash and cash equivalents

 

(18,588

)

 

 

(11,492

)

Cash and cash equivalents, beginning of the period

 

117,393

 

 

 

125,054

 

Cash and cash equivalents, end of the period

$

98,805

 

 

$

113,562

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid for interest

$

2,737

 

 

$

1,115

 

Cash paid for income taxes

$

2,624

 

 

$

1,983

 

Income tax refunds received

$

128

 

 

$

45

 

 

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

 

5


 

 

NOVANTA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF APRIL 1, 2022

(Unaudited)

 

1. Basis of Presentation

Novanta Inc. and its subsidiaries (collectively referred to as “Novanta”, the “Company”, “we”, “us”, “our”) is a leading global supplier of core technology solutions that give medical and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage. Novanta combines deep proprietary technology expertise and competencies in photonics, vision and precision motion with a proven ability to solve complex technical challenges. This enables Novanta to engineer core components and sub-systems that deliver extreme precision and performance, tailored to the customers’ demanding applications.

The accompanying unaudited interim consolidated financial statements have been prepared by the Company in United States (“U.S.”) dollars and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X pertaining to interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted. The interim consolidated financial statements and notes included in this report should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, these interim consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the interim periods presented. The results for interim periods are not necessarily indicative of results to be expected for the full year or for any future periods.

The Company’s unaudited interim consolidated financial statements are prepared for each quarterly period ending on the Friday closest to the end of the calendar quarter, with the exception of the fourth quarter which always ends on December 31.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Estimates and assumptions are reviewed on an on-going basis and the effects of revisions are reflected in the period in which such revisions are deemed to be necessary. The Company evaluates its estimates based on historical experience, current conditions, and various other assumptions that it believes are reasonable under the circumstances. Actual results could differ significantly from these estimates.

6


NOVANTA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

AS OF APRIL 1, 2022

(Unaudited)

 

Recent Accounting Pronouncements

The following table provides a brief description of recent Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”):

 

Standard

 

Description

 

Effective Date

 

Effect on the Financial Statements or Other Significant Matters

In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848): Facilitation of the effects of reference rate reform on financial reporting.”

 

ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

 

Upon issuance. Adoption of ASU 2020-04 is elective.

 

In March 2022, the Company amended the Third Amended and Restated Credit Agreement and replaced LIBOR with SOFR as the new reference rate for U.S. dollar borrowings. The ASU did not have any impact on the Company’s consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.”

 

ASU 2021-08 requires that entities recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASC 606, “Revenue from Contracts with Customers”. ASU 2021-08 also applies to contract assets or liabilities from other contracts to which the provisions of ASC 606 apply. The amendments in ASU 2021-08 do not affect the accounting for other assets or liabilities that may arise from revenue contracts with customers in accordance with ASC 606, such as refund liabilities, or in a business combination, such as customer-related intangible assets and contract-based intangible assets.

 

January 1, 2023. Early adoption is permitted.

 

The Company early adopted ASU 2021-08 as of January 1, 2022.  The adoption of ASU 2021-08 did not have any material impact on the Company’s consolidated financial statements.

 

2. Revenue

The Company recognizes revenue when control of promised goods or services is transferred to customers. The transfer of control generally occurs upon shipment when title and risk of loss pass to the customer. The vast majority of the Company’s revenue is generated from the sale of distinct products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for such products, which is generally at contractually stated prices. Sales taxes and value added taxes collected concurrently with revenue generating activities are excluded from revenue.

Performance Obligations

Substantially all of the Company’s revenue is recognized at a point in time, upon shipment, rather than over time.

At the request of its customers, the Company may perform professional services, generally for the maintenance and repair of products previously sold to those customers and for engineering services. Professional services for the maintenance and repair of products are typically short in duration, mostly less than one month, and generally involve a single distinct performance obligation. The related revenue is recognized at a point in time when control transfers to the customer upon completion of professional services. The consideration expected to be received in exchange for such services is typically the contractually stated amount. Certain engineering services are longer in duration and the related revenue is recognized over time. As the Company’s right to payment from a customer is based on the value of engineering services performed, the Company recognizes revenue based on the corresponding value to the customer from the Company’s performance completed to date. Revenue from engineering services aggregated to less than 3% of the Company’s consolidated revenue during the three months ended April 1, 2022 and April 2, 2021.

7


NOVANTA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

AS OF APRIL 1, 2022

(Unaudited)

 

The Company occasionally sells separately priced non-standard/extended warranty services or preventative maintenance plans with the sale of products. The transfer of control over the service plans is over time. The Company recognizes the related revenue ratably over the terms of the service plans. The transaction price of a contract is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using the expected cost plus a margin.

Shipping & Handling Costs

The Company accounts for shipping and handling activities that occur after the transfer of control over the related goods as fulfillment activities rather than performance obligations. Shipping and handling fees charged to customers are recognized as revenue and the related costs are recorded in cost of revenue at the time of transfer of control.

Warranties

The Company generally provides warranties for its products. The standard warranty period is typically 12 months to 36 months. The Company recognizes liabilities associated with standard warranty periods for its products in accordance with the provisions of ASC 450, “Contingencies,” as the Company has the ability to ascertain the likelihood of the liabilities and can reasonably estimate the amount of the liabilities. A provision for the estimated cost related to standard warranties is recorded as cost of revenue at the time revenue is recognized. The Company’s estimate of the costs to service the warranty obligations is based on historical experience and expectations of future conditions. To the extent that the Company’s experience in warranty claims or costs associated with servicing those claims differ from the original estimates, revisions to the estimated warranty liabilities are recorded at that time, with offsetting adjustments to cost of revenue.

Practical Expedients and Exemptions

The Company expenses incremental direct costs of obtaining a contract when incurred if the expected amortization period is one year or less. These costs are recorded within selling, general and administrative expenses in the consolidated statement of operations.

The Company does not adjust the promised amount of consideration for the effects of a financing component because the transfer of a promised good to a customer and the customer’s payment for that good are typically one year or less. The Company does not disclose the value of the remaining performance obligation for contracts with an original expected length of one year or less.

Contract Liabilities

Contract liabilities consist of deferred revenue and advance payments from customers, including amounts that are refundable. These contract liabilities are classified as either current or long-term liabilities in the consolidated balance sheet based on the timing of when the Company expects to recognize the related revenue. As of April 1, 2022 and December 31, 2021, contract liabilities were $7.5 million and $7.3 million, respectively, and are included in accrued expenses and other current liabilities and other liabilities in the accompanying consolidated balance sheets. The increase in the contract liability balance during the three months ended April 1, 2022 is primarily due to cash payments received in advance of satisfying performance obligations, partially offset by $3.2 million of revenue recognized during the period that was included in the contract liability balance as of December 31, 2021.

Disaggregated Revenue

See Note 15 for the Company’s disaggregation of revenue by segment, geography and end market.

 

 

8


NOVANTA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

AS OF APRIL 1, 2022

(Unaudited)

 

 

3. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss was as follows (in thousands):

 

Total Accumulated

 

 

 

 

 

 

 

 

 

 

Other

 

 

Cumulative

 

 

Pension

 

 

Comprehensive

 

 

Translation

 

 

Liability

 

 

Loss

 

 

Adjustments

 

 

Adjustments

 

Balance at December 31, 2021

$

(12,866

)

 

$

(5,753

)

 

$

(7,113

)

Other comprehensive income (loss)

 

(4,568

)

 

 

(4,772

)

 

 

204

 

Amounts reclassified from accumulated other comprehensive loss

 

109

 

 

 

 

 

 

109

 

Balance at April 1, 2022

$

(17,325

)

 

$

(10,525

)

 

$

(6,800

)

The amounts reclassified from accumulated other comprehensive loss were included in other income (expense) in the consolidated statements of operations.

4. Earnings per Common Share

Basic earnings per common share is computed by dividing consolidated net income by the weighted average number of common shares outstanding during the period.

For diluted earnings per common share, the denominator includes the dilutive effect of outstanding common share equivalents. For the three months ended April 1, 2022 and April 2, 2021, respectively, weighted average shares outstanding for the diluted earnings per common share included the dilutive effect of outstanding restricted stock units, stock options, and relative total shareholder return performance-based restricted stock units (“TSR-PSUs”), determined using the treasury stock method. The dilutive effects of market-based contingently issuable shares are included in the weighted average common share calculation based on the number of shares, if any, that would be issuable as of the end of the reporting period, assuming the end of the reporting period is also the end of the performance period. Dilutive effects of attainment-based contingently issuable shares granted to the former Laser Quantum Limited (“Laser Quantum”) noncontrolling interest shareholders, non-GAAP EPS performance-based restricted stock units (“EPS-PSUs”), operating cash flow performance-based restricted stock units (“OCF-PSUs”), and performance-based restricted stock units granted to the ATI Industrial Automation, Inc. (“ATI”) employees (“ATI-PSUs”) are included in the weighted average common share calculation when the performance targets have been achieved based on the cumulative achievement against the performance targets as of the end of each reporting period.

The following table sets forth the computation of basic and diluted earnings per common share (amounts in thousands, except per share data):

 

Three Months Ended

 

 

April 1,

 

 

April 2,

 

 

2022

 

 

2021

 

Numerators:

 

 

 

 

 

 

 

Consolidated net income

$

18,820

 

 

$

11,310

 

 

 

 

 

 

 

 

 

Denominators:

 

 

 

 

 

 

 

Weighted average common shares outstanding— basic

 

35,538

 

 

 

35,279

 

Dilutive potential common shares

 

243

 

 

 

510

 

Weighted average common shares outstanding— diluted

 

35,781

 

 

 

35,789

 

Antidilutive potential common shares excluded from above

 

93

 

 

 

27

 

 

 

 

 

 

 

 

 

Earnings per Common Share:

 

 

 

 

 

 

 

Basic

$

0.53

 

 

$

0.32