Open the filing on EDGARNovanta Announces Financial Results
for the Third Quarter 2025
Third Quarter 2025 GAAP Revenue increased 1.4% to $247.8 million
Third Quarter 2025 GAAP Net Income of $10.7 million
Third Quarter 2025 GAAP Diluted Earnings Per Share of $0.30
Third Quarter 2025 Adjusted EBITDA of $58.1 million
Third Quarter 2025 Adjusted EPS of $0.87
BOSTON, November 3, 2025 -- 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 third quarter 2025.
| Financial Highlights | Three Months Ended |
| (In millions, except per share amounts) | September 26, | September 27, |
| 2025 | 2024 |
| GAAP | | |
| Revenue | $247.8 | $244.4 |
| Operating Income | $21.8 | $32.6 |
| Net Income | $10.7 | $19.2 |
| Diluted EPS | $0.30 | $0.53 |
| Non-GAAP* | | |
| Adjusted Operating Income | $47.4 | $46.8 |
| Adjusted Diluted EPS | $0.87 | $0.85 |
| Adjusted EBITDA | $58.1 | $57.0 |
*Reconciliations of GAAP to non-GAAP financial measures, as well as definitions for the non-GAAP financial measures included in this press release and the reasons for their use, are presented below.
Third Quarter
“We exceeded our expectations for revenue, profit and Adjusted EPS growth in the third quarter, based on improving business fundamentals, strength of continued new product revenues and significant growth in our Advanced Surgery business. In addition, we achieved a book-to-bill of 1.03x and saw 17% bookings growth year-over-year,” said Matthijs Glastra, Chair and Chief Executive Officer. “We are proud of our teams' execution in achieving these results as we have been successfully navigating a complex macroenvironment.”
During the third quarter of 2025, Novanta generated GAAP revenue of $247.8 million, an increase of 1.4% or $3.4 million, versus the third quarter of 2024. The Company’s acquisition activities resulted in a net increase in revenue of $8.4 million, or 3.4%, compared to the third quarter of 2024. Year-over-year changes in foreign currency exchange rates favorably impacted revenue by 1.8% or $4.4 million, during the third quarter of 2025. Organic Revenue Growth, which excludes the net impact of acquisitions and changes in foreign currency exchange rates, was (3.8)% for the third quarter of 2025 (see “Organic Revenue Growth” in the non-GAAP reconciliations below).
In the third quarter of 2025, GAAP operating income was $21.8 million, compared to $32.6 million in the third quarter of 2024. GAAP net income was $10.7 million in the third quarter of 2025, compared to $19.2 million in the third quarter of 2024. GAAP diluted earnings per share (“EPS”) was $0.30 in the third quarter of 2025, compared to $0.53 in the third quarter of 2024. Diluted weighted average shares outstanding was 36 million in the third quarter of 2025.
Adjusted Diluted EPS was $0.87 in the third quarter of 2025, compared to $0.85 in the third quarter of 2024. Adjusted EBITDA was $58.1 million in the third quarter of 2025, compared to $57.0 million in the third quarter of 2024.
Operating cash flow for the third quarter of 2025 was $8.5 million, compared to $23.0 million for the third quarter of 2024. The year-over-year decrease in operating cash flow was primarily driven by an increase in inventory purchases as the Company continues to execute its plan to relocate certain manufacturing production, as well as the timing of tax payments and recent acquisition and restructuring activities.
Financial Guidance
“As underlying fundamentals begin to recover across various end markets we serve, in the fourth quarter we expect to see a return to year-over-year organic growth (mid to high single digit reported growth), and solid double-digit Adjusted EPS growth,” said Matthijs Glastra. “For the full year, we are confident in our ability to deliver on our financial objectives as incremental new product revenue remains on track and is expected to exceed $50 million given particular strength in our Medical Solutions segment.”
“Looking forward to full year 2026, we now expect to deliver mid-single digit organic revenue growth as a result of continued momentum in our business and end markets, the strength of new design wins, and our new product launches.”
For the fourth quarter of 2025, the Company expects GAAP revenue of approximately $253 million to $257 million. The Company expects Adjusted EBITDA to be in the range of $62 million to $65 million and Adjusted Diluted EPS to be in the range of $0.87 to $0.93. The Company’s guidance assumes no significant changes in foreign exchange rates.
For the full year 2025, the Company expects GAAP revenue of approximately $975 million to $979 million. The Company expects Adjusted EBITDA to be in the range of $222 million to $225 million and Adjusted Diluted EPS to be in the range of $3.24 to $3.30. 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 Gross Profit Margin, 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, November 4, 2025 at 8:30 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, December 29, 2025.
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,” “could,” “should,” “plan,” “aim,” and other similar expressions. These forward-looking statements include, but are not limited to, statements regarding anticipated financial performance and financial position, including our financial outlook for the full year 2025 and fourth quarter of 2025; expectations for new product sales; expectations for our end markets and market position; macroeconomic expectations; our competitive position, including our positioning for long-term growth, capital spending and momentum from new product launches; and other statements that are not historical facts.
Forward-looking statements notice
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, 2024, 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.
Novanta Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars or shares, except per share amounts)
(Unaudited)
| Three Months Ended |
|---|
| September 26, | September 27, |
|---|
| 2025 | 2024 |
|---|
| Revenue | $247,836 | $244,405 |
| Cost of revenue | 136,915 | 135,190 |
| Gross profit | 110,921 | 109,215 |
| Operating expenses: | | |
| Research and development and engineering | 24,090 | 23,253 |
| Selling, general and administrative | 51,378 | 44,319 |
| Amortization of purchased intangible assets | 6,928 | 6,589 |
| Restructuring, acquisition, and related costs | 6,677 | 2,499 |
| Total operating expenses | 89,073 | 76,660 |
| Operating income | 21,848 | 32,555 |
| Interest income (expense), net | (6,014) | (8,079) |
| Foreign exchange transaction gains (losses), net | 14 | (202) |
| Other income (expense), net | (90) | (49) |
| Income before income taxes | 15,758 | 24,225 |
| Income tax provision (benefit) | 5,105 | 5,033 |
| Net Income | $10,653 | $19,192 |
| Earnings per common share: | | |
| Basic | $0.30 | $0.53 |
| Diluted | $0.30 | $0.53 |
| Weighted average common shares outstanding - basic | 35,967 | 35,959 |
| Weighted average common shares outstanding - diluted | 36,040 | 36,129 |
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
(Unaudited)
| September 26, | December 31, |
|---|
| 2025 | 2024 |
|---|
| ASSETS | | |
| Current Assets | | |
| Cash and cash equivalents | $89,221 | $113,989 |
| Accounts receivable, net | 170,563 | 151,026 |
| Inventories | 179,977 | 144,606 |
| Prepaid expenses and other current assets | 28,658 | 24,027 |
| Total current assets | 468,419 | 433,648 |
| Property, plant and equipment, net | 119,773 | 113,135 |
| Operating lease assets | 43,283 | 42,908 |
| Intangible assets, net | 193,248 | 185,844 |
| Goodwill | 647,513 | 584,098 |
| Other assets | 33,575 | 28,878 |
| Total assets | $1,505,811 | $1,388,511 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
| Current Liabilities | | |
| Current portion of long-term debt | $5,685 | $4,691 |
| Accounts payable | 100,210 | 76,890 |
| Accrued expenses and other current liabilities | 80,965 | 86,210 |
| Total current liabilities | 186,860 | 167,791 |
| Long-term debt | 445,658 | 411,949 |
| Operating lease liabilities | 40,407 | 40,548 |
| Other long-term liabilities | 31,410 | 22,525 |
| Total liabilities | 704,335 | 642,813 |
| Stockholders’ Equity: | | |
| Total stockholders’ equity | 801,476 | 745,698 |
| Total liabilities and stockholders’ equity | $1,505,811 | $1,388,511 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
| Three Months Ended |
|---|
| September 26, | September 27, |
|---|
| 2025 | 2024 |
|---|
| Cash flows from operating activities: | | |
| Net Income | $10,653 | $19,192 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | |
| Depreciation and amortization | 15,711 | 14,155 |
| Share-based compensation | 6,698 | 6,364 |
| Deferred income taxes | (1,270) | (4,197) |
| Other | 1,706 | 1,993 |
| Changes in assets and liabilities which (used)/provided cash, excluding effects from business acquisitions: | | |
| Accounts receivable | (10,175) | (17,310) |
| Inventories | (13,055) | 7,002 |
| Other operating assets and liabilities | (1,773) | (4,173) |
| Net cash provided by operating activities | 8,495 | 23,026 |
| Cash flows from investing activities: | | |
| Cash paid for business acquisition, net of working capital adjustments | (1,118) | - |
| Purchases of property, plant and equipment | (4,283) | (3,561) |
| Net cash used in investing activities | (5,401) | (3,561) |
| Cash flows from financing activities: | | |
| Repayments under term loan and revolving credit facilities | (8,188) | (28,639) |
| Payments of debt issuance costs | (452) | - |
| Payments of withholding taxes from share-based awards | (533) | (63) |
| Repurchases of common shares | (14,056) | - |
| Other financing activities | (191) | (179) |
| Net cash provided by (used in) financing activities | (23,420) | (28,881) |
| Effect of exchange rates on cash and cash equivalents | (365) | 3,638 |
| Increase (decrease) in cash and cash equivalents | (20,691) | (5,778) |
| Cash and cash equivalents, beginning of period | 109,912 | 98,468 |
| Cash and cash equivalents, end of period | $89,221 | $92,690 |
Revenue by Reportable Segment
(In thousands of U.S. dollars)
(Unaudited)
| Three Months Ended |
|---|
| September 26, | September 27, |
|---|
| 2025 | 2024 |
|---|
| Revenue | | |
| Automation Enabling Technologies | $125,316 | $128,704 |
| Medical Solutions | 122,520 | 115,701 |
| Total | $247,836 | $244,405 |
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands of U.S. dollars)
(Unaudited)
Adjusted Gross Profit and Adjusted Gross Profit Margin by Reportable Segment (Non-GAAP):
| Three Months Ended |
|---|
| September 26, | September 27, |
|---|
| 2025 | 2024 |
|---|
| Automation Enabling Technologies | | |
| Gross Profit (GAAP) | $59,214 | $60,561 |
| Gross Profit Margin (GAAP) | 47.3% | 47.1% |
| Amortization of intangible assets | 1,473 | 1,580 |
| Adjusted Gross Profit (Non-GAAP) | $60,687 | $62,141 |
| Adjusted Gross Profit Margin (Non-GAAP) | 48.4% | 48.3% |
| Medical Solutions | | |
| Gross Profit (GAAP) | $52,697 | $49,429 |
| Gross Profit Margin (GAAP) | 43.0% | 42.7% |
| Amortization of intangible assets | 2,779 | 2,128 |
| Adjusted Gross Profit (Non-GAAP) | $55,476 | $51,557 |
| Adjusted Gross Profit Margin (Non-GAAP) | 45.3% | 44.6% |
| Unallocated | | |
| Gross Profit (GAAP) | $(990) | $(775) |
| Adjusted Gross Profit (Non-GAAP) | $(990) | $(775) |
| Novanta Inc. | | |
| Gross Profit (GAAP) | $110,921 | $109,215 |
| Gross Profit Margin (GAAP) | 44.8% | 44.7% |
| Amortization of intangible assets | 4,252 | 3,708 |
| Adjusted Gross Profit (Non-GAAP) | $115,173 | $112,923 |
| Adjusted Gross Profit Margin (Non-GAAP) | 46.5% | 46.2% |
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in thousands except per share amounts)
(Unaudited)
Adjusted Operating Income and Adjusted Diluted EPS (Non-GAAP):
| Three Months Ended September 26, 2025 |
|---|
| Operating Income | Operating Margin | Income Before Income Taxes | Income Tax Provision / (Benefit) | Effective Tax Rate | Net Income | Diluted EPS |
|---|
| GAAP results | $21,848 | 8.8% | $15,758 | $5,105 | 32.4% | $10,653 | $0.30 |
| Non-GAAP Adjustments: | | | | | | | |
| Amortization of intangible assets | 11,180 | 4.5% | 11,180 | | | | |
| Restructuring costs | 5,203 | 2.1% | 5,203 | | | | |
| Acquisition and related costs | 1,474 | 0.6% | 1,474 | | | | |
| Planning and design phase of the ERP system implementation | 3,519 | 1.4% | 3,519 | | | | |
| Costs incurred for insurance recovery claim | 3,042 | 1.2% | 3,042 | | | | |
| Officer transition costs | 1,137 | 0.5% | 1,137 | | | | |
| Foreign exchange transaction (gains) losses, net | | | (14) | | | | |
| Tax effect of non-GAAP adjustments | | | | 4,536 | | | |
| Non-GAAP tax adjustments | | | | 161 | | | |
| Total non-GAAP adjustments | 25,555 | 10.3% | 25,541 | 4,697 | | 20,844 | 0.57 |
| Adjusted results (Non-GAAP) | $47,403 | 19.1% | $41,299 | $9,802 | 23.7% | $31,497 | $0.87 |
| Weighted average shares outstanding - Diluted | | | | | | | 36,040 |
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in thousands except per share amounts)
(Unaudited)
Adjusted Operating Income and Adjusted Diluted EPS (Non-GAAP):
| Three Months Ended September 27, 2024 |
|---|
| Operating Income | Operating Margin | Income Before Income Taxes | Income Tax Provision / (Benefit) | Effective Tax Rate | Net Income | Diluted EPS |
|---|
| GAAP results | $32,555 | 13.3% | $24,225 | $5,033 | 20.8% | $19,192 | $0.53 |
| Non-GAAP Adjustments: | | | | | | | |
| Amortization of intangible assets | 10,297 | 4.2% | 10,297 | | | | |
| Restructuring costs | 1,919 | 0.8% | 1,919 | | | | |
| Acquisition and related costs | 580 | 0.2% | 580 | | | | |
| Officers transition costs | 1,411 | 0.6% | 1,411 | | | | |
| Foreign exchange transaction (gains) losses, net | | | 202 | | | | |
| Tax effect of non-GAAP adjustments | | | | 2,903 | | | |
| Non-GAAP tax adjustments | | | | 53 | | | |
| Total non-GAAP adjustments | 14,207 | 5.8% | 14,409 | 2,956 | | 11,453 | 0.32 |
| Adjusted results (Non-GAAP) | $46,762 | 19.1% | $38,634 | $7,989 | 20.7% | $30,645 | $0.85 |
| Weighted average shares outstanding - Diluted | | | | | | | 36,129 |
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands of U.S. dollars)
(Unaudited)
Adjusted EBITDA (Non-GAAP):
| Three Months Ended |
|---|
| September 26, | September 27, |
|---|
| 2025 | 2024 |
|---|
| Net Income (GAAP) | $10,653 | $19,192 |
| Net Income Margin | 4.3% | 7.9% |
| Interest (income) expense, net | 6,014 | 8,079 |
| Income tax provision (benefit) | 5,105 | 5,033 |
| Depreciation and amortization | 15,711 | 14,155 |
| Share-based compensation | 6,698 | 6,364 |
| Restructuring, acquisition and related costs | 6,156 | 2,491 |
| Planning and design phase of the ERP system implementation | 3,519 | - |
| Costs incurred for insurance recovery claim | 3,042 | - |
| Officer transition costs | 1,137 | 1,411 |
| Other, net | 76 | 251 |
| Adjusted EBITDA (Non-GAAP) | $58,111 | $56,976 |
| Adjusted EBITDA Margin (Non-GAAP) | 23.4% | 23.3% |
Organic Revenue Growth (Non-GAAP):
| Three Months Ended September 26, 2025 |
|---|
| Compared to |
|---|
| Three Months Ended June 28, 2024 |
|---|
| Reported Revenue Growth/(Decline) (GAAP) | 1.4% |
| Less: Change attributable to acquisitions | 3.4% |
| Plus: Change due to foreign currency | (1.8)% |
| Organic Revenue Growth/(Decline) (Non-GAAP) | (3.8)% |
Net Debt (Non-GAAP):
| September 26, | December 31, |
|---|
| 2025 | 2024 |
|---|
| Total Debt (GAAP) | $451,343 | $416,640 |
| Plus: Deferred financing costs | 5,661 | 2,519 |
| Gross Debt | 457,004 | 419,159 |
| Less: Cash and cash equivalents | (89,221) | (113,989) |
| Net Debt (Non-GAAP) | $367,783 | $305,170 |
Free Cash Flow (Non-GAAP):
| Three Months Ended |
|---|
| September 26, | September 27, |
|---|
| 2025 | 2024 |
|---|
| Net Cash Provided by Operating Activities (GAAP) | $8,495 | $23,026 |
| Less: Purchases of property, plant and equipment | (4,283) | (3,561) |
| Free Cash Flow (Non-GAAP) | $4,212 | $19,465 |
| Net Income (GAAP) | $10,653 | $19,192 |
| Net Cash Provided by Operating Activities as a Percentage of Net Income | 79.7% | 120.0% |
| Free Cash Flow as a Percentage of Net Income | 39.5% | 101.4% |
Non-GAAP Financial Measures
The following provides additional explanations for non-GAAP financial measures used by the Company, including explanations for certain non-GAAP adjustments that may not be present in the quarterly disclosures included in the current earnings release but have been used by the Company in the two most recent fiscal years. See the tables above for the calculations of the non-GAAP financial measures used in this earnings release.
Organic Revenue Growth
The Company defines the term “organic revenue” as revenue excluding the impact from business acquisitions, divestitures, product line discontinuations, and the effect of foreign currency translation. The Company uses the related term “organic revenue growth” to refer to the financial performance metric of comparing current period organic revenue with the reported revenue of the corresponding period in the prior year. The Company believes that this non-GAAP financial measure, when taken together with our GAAP financial measures, allows the Company and its investors to better measure the Company’s performance and evaluate long-term performance trends. Organic revenue growth also facilitates easier comparisons of the Company’s performance with prior and future periods and relative comparisons to its peers. The Company excludes the effect of foreign currency translation from these measures because foreign currency translation is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions and divestitures because these activities can vary dramatically between reporting periods and between the Company and its peers, which the Company believes makes comparisons of long-term performance trends difficult for management and investors. Organic Revenue Growth is also used as a performance metric to determine bonus payments for senior management and employees.
Adjusted Gross Profit and Adjusted Gross Profit Margin
The calculation of Adjusted Gross Profit and Adjusted Gross Profit Margin excludes amortization of acquired intangible assets because: (i) the amounts are non-cash; (ii) the Company cannot influence the timing and amount of future expense recognition; and (iii) excluding such expenses provides investors and management better visibility into the underlying trends and performance of our businesses. The Company also excludes inventory related charges associated with product line closures as these costs occurred outside of the Company’s day-to-day business for the reasons described above in the introductory paragraphs of the “Use of Non-GAAP Financial Measures.”
Adjusted Operating Income and Adjusted Operating Margin
The calculation of Adjusted Operating Income and Adjusted Operating Margin excludes amortization of acquired intangible assets and inventory related charges associated with product line closures for the reasons described above for Adjusted Gross Profit and Adjusted Gross Profit Margin. The Company also excludes restructuring costs, acquisition and related costs, discrete costs related to the planning and design phase of an ERP system implementation, charges related to an insurance recovery, and officer transition costs, as the significant charges have occurred outside of the Company’s day-to-day business for the reasons described above in the introductory paragraphs of the “Use of Non-GAAP Financial Measures.”
Adjusted Income Before Income Taxes
The calculation of Adjusted Income Before Income Taxes excludes amortization of acquired intangible assets, restructuring, acquisition and related costs, discrete costs related to the planning and design phase of an ERP system implementation, charges related to an insurance recovery, and officer transition costs, for Adjusted Operating Income and Adjusted Operating Margin. The Company also excludes foreign exchange transaction gains (losses) as well as the write-off of costs related to our debt refinancing from the calculation of Adjusted Income Before Income Taxes as the Company cannot fully influence the timing and amount of foreign exchange transaction gains (losses).
Non-GAAP Income Tax Provision/(Benefit) and Effective Tax Rate
Non-GAAP Income Tax Provision/(Benefit) and Effective Tax Rate are calculated based on the Adjusted Income Before Income Taxes by jurisdiction, the applicable tax rates in effect for the respective jurisdictions and the income tax effect of non-GAAP adjustments discussed above. In addition, the Company excludes significant discrete income tax expenses
(benefits) related to releases of valuation allowances and uncertain tax positions not related to current year activity, tax audits, certain changes in tax laws, and acquisition related tax planning actions on the Company’s effective tax rate.
Adjusted Net Income
Because Income Before Income Taxes is included in determining Net Income, the calculation of Adjusted Net Income also excludes amortization of acquired intangible assets, restructuring, acquisition and related costs, discrete costs related to the planning and design phase of an ERP system implementation, charges related to an insurance recovery, officer transition costs, and foreign exchange transaction gains (losses) for the reasons described above for Adjusted Income Before Income Taxes. In addition, the Company excludes (i) significant discrete income tax expenses (benefits) related to releases of valuation allowances and uncertain tax positions, tax audits or amendments to prior year returns, certain changes in tax laws, and acquisition related tax planning actions on the Company’s effective tax rate; and (ii) the income tax effect of non-GAAP adjustments discussed above.
Adjusted Diluted EPS
Because Net Income is used in the calculation of Diluted EPS, Adjusted Diluted EPS excludes: (i) amortization of acquired intangible assets; (ii) restructuring, acquisition and related costs; (iii) discrete costs related to the planning and design phase of an ERP system implementation; (iv) officer transition costs; (v) charges related to an insurance recovery; (vi) foreign exchange transaction gains (losses); (vii) significant discrete income tax expenses (benefits) related to releases of valuation allowances, uncertain tax positions, tax audits or amendments to prior year returns, certain changes in tax laws, and acquisition related tax planning actions on the Company’s effective tax rate; and (viii) the income tax effect of non-GAAP adjustments for the reasons described above for Adjusted Net Income.
Adjusted EBITDA and Adjusted EBITDA Margin
The Company defines Adjusted EBITDA as income before deducting interest (income) expense, income tax provision (benefit), depreciation, amortization, non-cash share-based compensation, restructuring, acquisition and related costs, discrete costs related to the planning and design phase of an ERP system implementation, charges related to an insurance recovery, officer transition costs, and other non-operating (income) expense items, including foreign exchange transaction (gains) losses, costs related to our debt refinancing and net periodic pension costs of the Company’s frozen U.K. defined benefit pension plan for the reasons described above in the introductory paragraphs of the “Use of Non-GAAP Financial Measures.”
Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of Revenue.
In evaluating Adjusted EBITDA and Adjusted EBITDA Margin, you should be aware that in the future the Company may incur expenses that are the same as, or similar to, some of the adjustments in this presentation.
Free Cash Flow and Free Cash Flow as a Percentage of Net Income
The Company defines Free Cash Flow as net cash provided by operating activities less cash paid for purchases of property, plant and equipment and plus cash proceeds from sales of property, plant and equipment. Free Cash Flow as a Percentage of Net Income is defined as Free Cash Flow divided by Net Income. Management believes these non-GAAP financial measures are important indicators of the Company’s liquidity as well as its ability to service its outstanding debt and to fund future growth.
Net Debt
The Company defines Net Debt as its total debt as reported on the consolidated balance sheet plus unamortized deferred financing costs and less its cash and cash equivalents as of the end of the period presented. Management uses Net Debt to monitor the Company’s outstanding debt obligations that could not be satisfied by its cash and cash equivalents on hand.
Contacts
Ray Nash
(781) 266-5137