Fourth Quarter 2024 GAAP Revenue increased 13% to $238 million, including $2 million unfavorable FX impact
Fourth Quarter 2024 GAAP Diluted EPS of $0.46 and Adjusted EPS of $0.76
Full Year 2024 GAAP Revenue increased 8% to $949 million
Full Year 2024 GAAP Diluted EPS of $1.77, and Adjusted EPS of $3.08
Full Year 2024 Adjusted EBITDA increased 7% to $210 million
Full Year 2024 Operating Cash Flow increased 32% to $159 million

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 2024.

Financial Highlights	Three Months Ended December 31,				Year Ended December 31,
(In millions, except per share amounts)		2024		2023		2024		2023
GAAP
Revenue	$	238.1	$	211.6	$	949.2	$	881.7
Operating Income	$	26.7	$	21.7	$	110.6	$	110.5
Net Income	$	16.5	$	12.5	$	64.1	$	72.9
Diluted EPS	$	0.46	$	0.35	$	1.77	$	2.02
Non-GAAP*
Adjusted Operating Income	$	43.3	$	34.7	$	171.5	$	156.6
Adjusted Diluted EPS	$	0.76	$	0.63	$	3.08	$	3.02
Adjusted EBITDA	$	52.1	$	45.3	$	209.8	$	196.2

*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.

"Novanta achieved solid financial results for the full year 2024, effectively navigating a persistently challenging environment," said Matthijs Glastra, Chair and Chief Executive Officer. "We had strong operating performance, achieving above our expectations for Adjusted Gross Margins and Adjusted EBITDA, and also excellent cash flow generation, while also returning to organic growth in the Fourth Quarter. In the year, we delivered and launched multiple new products which are on schedule to ramp in 2025. The fundamentals of Novanta are strong, and we remain confident in our strategy, in our portfolio, our exposure to diversified end-markets, and in our ability to generate strong operating cash flows to compound our growth through our targeted acquisition strategy."

Fourth Quarter

During the fourth quarter of 2024, Novanta generated GAAP revenue of $238.1 million, an increase of 12.5% or $26.5 million, versus the fourth quarter of 2023. The Company's acquisition activities resulted in an increase in revenue of 9.4% or $19.8 million, compared to the fourth quarter of 2023. Changes in foreign currency exchange rates year-over-year adversely impacted revenue by 0.3% or $0.5 million, during the fourth quarter of 2024. Organic Revenue Growth, which excludes the net impact of acquisitions and changes in foreign currency exchange rates, was 3.4% for the fourth quarter of 2024 (see "Organic Revenue Growth" in the non-GAAP reconciliations below). Changes in foreign currency exchange rates versus prior quarter adversely impacted revenue by $2.3 million, or 1%, during the fourth quarter of 2024.

In the fourth quarter of 2024, GAAP operating income was $26.7 million, compared to $21.7 million in the fourth quarter of 2023. GAAP net income was $16.5 million in the fourth quarter of 2024, compared to $12.5 million in the fourth quarter of 2023. GAAP diluted earnings per share ("EPS") was $0.46 in the fourth quarter of 2024, compared to $0.35 in the fourth quarter of 2023. Diluted weighted average shares outstanding was 36.1 million in the fourth quarter of 2024.

Adjusted Diluted EPS increased 21% to $0.76 in the fourth quarter of 2024, compared to $0.63 in the fourth quarter of 2023. Adjusted EBITDA increased 15% to $52.1 million in the fourth quarter of 2024, compared to $45.3 million in the fourth quarter of 2023.

Operating cash flow for the fourth quarter of 2024 increased 58% to $61.6 million, compared to $39.0 million for the fourth quarter of 2023.

Full Year

For the full year 2024, Novanta generated GAAP revenue of $949.2 million, an increase of 7.7% or $67.6 million, versus the full year 2023. The Company's acquisition activities resulted in an increase in revenue of 9.4% or $82.4 million. Changes in foreign currency exchange rates year-over-year adversely impacted our revenue by 0.1% or $0.5 million, in 2024. Our year-over-year Organic Revenue Growth, which excludes the net impact of acquisitions and changes in foreign currency exchange rates, was a decrease of 1.6% for the full year 2024 (see "Organic Revenue Growth" in Reconciliation of GAAP to Non-GAAP Financial Measures below).

For the full year 2024, GAAP operating income was $110.6 million, compared to $110.5 million for 2023. GAAP net income was $64.1 million for the full year 2024, compared to $72.9 million for 2023. GAAP diluted EPS was $1.77 for the full year 2024, compared to $2.02 for 2023.

Adjusted Diluted EPS increased 2% to $3.08 for the full year 2024, compared to $3.02 for 2023. For the full year 2024, the Company had 36.1 million diluted weighted average shares outstanding. Adjusted EBITDA increased 7% to $209.8 million for the full year 2024, compared to $196.2 million for 2023.

Operating cash flow for the full year 2024 increased 32% to $158.5 million, compared to $120.1 million for 2023. The Company finished the year with approximately $416.6 million of total debt and $114.0 million of total cash. Net Debt, as defined in the non-GAAP reconciliation below, was $305.2 million.

Financial Guidance

"We continue to see strength in our medical business and reconfirm our outlook for incremental new product sales in 2025, the majority of which sell into hospital operating room and surgical equipment," said Matthijs Glastra. "Although capital spending in industrial, semiconductor, and life science is expected to remain volatile in the first half of the year due to trade war uncertainty, government funding, and geopolitical disruptions, there continues to be strong signs of growth slowly recovering. While we are optimistic about stronger revenue growth in these markets, our initial full-year guidance will remain conservative until these growth trends strengthen. Therefore, our full year revenue guidance is based on delivering $50 million of incremental new product sales, primarily in the medical technology markets, and presumes no market recoveries in the capital spending markets in industrial, semiconductor, and life science at this time."

For the full year 2025, the Company expects GAAP revenue of approximately $1.0 billion, representing revenue growth of approximately 5% year-over-year. The Company expects Adjusted Gross Profit Margin to be in the range of 47.0% to 47.5%. The Company expects Adjusted EBITDA to be in the range of $225 million to $235 million and Adjusted Diluted EPS to be in the range of $3.35 to $3.55. The Company's guidance assumes no significant changes in foreign exchange rates.

For the first quarter of 2025, the Company expects GAAP revenue of approximately $232 million to $236 million. The Company expects Adjusted Gross Profit Margin to be in the range of 46.0% to 46.5%. The Company expects Adjusted EBITDA to be in the range of $48 million to $51 million and Adjusted Diluted EPS to be in the range of $0.63 to $0.71. 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, February 25, 2025 at 10:00 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 21, 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 first quarter of 2025; 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.

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 for many reasons, 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; the loss of sales, or significant reduction in orders from, any major customers; 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; 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 December 31,						Year Ended December 31,
		2024			2023			2024			2023
Revenue	$	238,060		$	211,569		$	949,245		$	881,662
Cost of revenue		129,835			115,014			527,700			481,765
Gross profit		108,225			96,555			421,545			399,897
Operating expenses:
Research and development and engineering		25,285			23,452			95,515			91,682
Selling, general and administrative		43,301			41,702			175,943			164,460
Amortization of purchased intangible assets		6,548			5,101			25,794			20,445
Restructuring and acquisition related costs		6,384			4,623			13,709			12,814
Total operating expenses		81,518			74,878			310,961			289,401
Operating income		26,707			21,677			110,584			110,496
Interest income (expense), net		(6,890	)		(5,920	)		(31,489	)		(25,818	)
Foreign exchange transaction gains (losses), net		1,200			118			413			(255	)
Other income (expense), net		(222	)		(129	)		(442	)		(675	)
Income before income taxes		20,795			15,746			79,066			83,748
Income tax provision		4,331			3,235			14,979			10,870
Net income	$	16,464		$	12,511		$	64,087		$	72,878

Earnings per common share:
Basic	$	0.46		$	0.35		$	1.78		$	2.03
Diluted	$	0.46		$	0.35		$	1.77		$	2.02

Weighted average common shares outstanding—basic		35,980			35,858			35,950			35,844
Weighted average common shares outstanding—diluted		36,148			36,052			36,124			36,031

NOVANTA INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars) (Unaudited)

	December 31,		December 31,
		2024		2023
ASSETS
Current Assets
Cash and cash equivalents	$	113,989	$	105,051
Accounts receivable, net		151,026		139,410
Inventories		144,606		149,371
Prepaid expenses and other current assets		24,027		21,465
Total current assets		433,648		415,297
Property, plant and equipment, net		113,135		109,449
Operating lease assets		42,908		38,302
Intangible assets, net		185,844		145,022
Goodwill		584,098		484,507
Other assets		28,878		33,479
Total assets	$	1,388,511	$	1,226,056
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt	$	4,691	$	4,968
Accounts payable		76,890		57,195
Accrued expenses and other current liabilities		86,210		77,012
Total current liabilities		167,791		139,175
Long-term debt		411,949		349,404
Operating lease liabilities		40,548		37,345
Other long-term liabilities		22,525		26,672
Total liabilities		642,813		552,596
Stockholders' Equity:
Total stockholders' equity		745,698		673,460
Total liabilities and stockholders' equity	$	1,388,511	$	1,226,056

NOVANTA INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (Unaudited)

	Three Months Ended December 31,						Year Ended December 31,
		2024			2023			2024			2023
Cash flows from operating activities:
Net income	$	16,464		$	12,511		$	64,087		$	72,878
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,363			11,547			55,563			46,612
Share-based compensation		4,635			7,210			23,307			25,588
Deferred income taxes		(4,001	)		(2,398	)		(15,909	)		(14,726	)
Other non-cash items		1,171			1,778			12,546			11,051
Changes in assets and liabilities which provided/(used) cash, excluding effects from business acquisitions:
Accounts receivable		9,894			6,244			(6,193	)		(127	)
Inventories		4,365			5,747			4,781			11,366
Other operating assets and liabilities		14,671			(3,647	)		20,330			(32,567	)
Net cash provided by operating activities		61,562			38,992			158,512			120,075
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired and working capital adjustments		—			—			(191,200	)		—
Purchases of property, plant and equipment		(2,249	)		(6,220	)		(17,162	)		(19,961	)
Other investing activities		173			69			173			69
Net cash used in investing activities		(2,076	)		(6,151	)		(208,189	)		(19,892	)
Cash flows from financing activities:
Borrowings under revolving credit facilities		—			—			198,000			—
Repayments under term loan and revolving credit facilities		(35,083	)		(4,505	)		(131,066	)		(86,552	)
Payments of contingent consideration related to acquisitions		—			—			—			(81	)
Other financing activities		(533	)		(565	)		(9,991	)		(11,220	)
Net cash used in financing activities		(35,616	)		(5,070	)		56,943			(97,853	)
Effect of exchange rates on cash and cash equivalents		(2,571	)		1,319			1,672			2,616
Increase (decrease) in cash and cash equivalents		21,299			29,090			8,938			4,946
Cash and cash equivalents, beginning of period		92,690			75,961			105,051			100,105
Cash and cash equivalents, end of period	$	113,989		$	105,051		$	113,989		$	105,051

NOVANTA INC. Revenue by Reportable Segment (In thousands of U.S. dollars) (Unaudited)

	Three Months Ended December 31,				Year Ended December 31,
		2024		2023		2024		2023
Revenue
Automation Enabling Technologies	$	127,798	$	117,279	$	490,620	$	499,220
Medical Solutions		110,262		94,290		458,625		382,442
Total	$	238,060	$	211,569	$	949,245	$	881,662

NOVANTA INC. 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 December 31,						Year Ended December 31,
		2024			2023			2024			2023
Automation Enabling Technologies
Gross Profit (GAAP)	$	63,916		$	54,233		$	234,975		$	234,798
Gross Profit Margin (GAAP)		50.0	%		46.2	%		47.9	%		47.0	%
Amortization of intangible assets		1,569			1,758			6,281			7,045
Inventory related charges associated with a product line closure		—			—			—			473
Adjusted Gross Profit (Non-GAAP)	$	65,485		$	55,991		$	241,256		$	242,316
Adjusted Gross Profit Margin (Non-GAAP)		51.2	%		47.7	%		49.2	%		48.5	%

Medical Solutions
Gross Profit (GAAP)	$	44,970		$	43,752		$	189,957		$	170,787
Gross Profit Margin (GAAP)		40.8	%		46.4	%		41.4	%		44.7	%
Amortization of intangible assets		2,119			1,273			8,492			5,105
Acquisition fair value adjustments		—			—			2,777			—
Inventory related charges associated with a product line closure		—			—			2,493			—
Adjusted Gross Profit (Non-GAAP)	$	47,089		$	45,025		$	203,719		$	175,892
Adjusted Gross Profit Margin (Non-GAAP)		42.7	%		47.8	%		44.4	%		46.0	%

Unallocated
Gross Profit (GAAP)	$	(661	)	$	(1,430	)	$	(3,387	)	$	(5,688	)
Adjusted Gross Profit (Non-GAAP)	$	(661	)	$	(1,430	)	$	(3,387	)	$	(5,688	)

Novanta Inc.
Gross Profit (GAAP)	$	108,225		$	96,555		$	421,545		$	399,897
Gross Profit Margin (GAAP)		45.5	%		45.6	%		44.4	%		45.4	%
Amortization of intangible assets		3,688			3,031			14,773			12,150
Acquisition fair value adjustments		—			—			2,777			—
Inventory related charges associated with a product line closure		—			—			2,493			473
Adjusted Gross Profit (Non-GAAP)	$	111,913		$	99,586		$	441,588		$	412,520
Adjusted Gross Profit Margin (Non-GAAP)		47.0	%		47.1	%		46.5	%		46.8	%

NOVANTA INC. 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 December 31, 2024
	Operating Income		Operating Margin		Income Before Income Taxes			Income Tax Provision			Effective Tax Rate		Net Income		Diluted EPS
GAAP results	$	26,707	11.2	%	$	20,795		$	4,331		20.8	%	$	16,464	$	0.46
Non-GAAP Adjustments:
Amortization of intangible assets		10,236	4.3	%		10,236
Restructuring costs		5,495	2.3	%		5,495
Acquisition related costs		889	0.4	%		889
Foreign exchange transaction (gains) losses, net						(1,200	)
Tax effect of non-GAAP adjustments									5,388
Non-GAAP tax adjustments									(1,047	)
Total non-GAAP adjustments		16,620	7.0	%		15,420			4,341					11,079		0.30

Adjusted results (Non-GAAP)	$	43,327	18.2	%	$	36,215		$	8,672		23.9	%	$	27,543	$	0.76

Weighted average shares outstanding - Diluted																36,148

NOVANTA INC. 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 December 31, 2023
	Operating Income		Operating Margin		Income Before Income Taxes			Income Tax Provision			Effective Tax Rate		Net Income		Diluted EPS
GAAP results	$	21,677	10.2	%	$	15,746		$	3,235		20.5	%	$	12,511	$	0.35
Non-GAAP Adjustments:
Amortization of intangible assets		8,132	3.8	%		8,132
Restructuring costs		3,877	1.8	%		3,877
Acquisition related costs		746	0.4	%		746
Foreign exchange transaction (gains) losses, net						(118	)
Other non-recurring cost		241	0.2	%		241
Tax effect of non-GAAP adjustments									2,921
Non-GAAP tax adjustments									(196	)
Total non-GAAP adjustments		12,996	6.2	%		12,878			2,725					10,153		0.28

Adjusted results (Non-GAAP)	$	34,673	16.4	%	$	28,624		$	5,960		20.8	%	$	22,664	$	0.63

Weighted average shares outstanding - Diluted																36,052

NOVANTA INC. 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):

	Year Ended December 31, 2024
	Operating Income		Operating Margin		Income Before Income Taxes			Income Tax Provision			Effective Tax Rate		Net Income		Diluted EPS
GAAP results	$	110,584	11.6	%	$	79,066		$	14,979		18.9	%	$	64,087	$	1.77
Non-GAAP Adjustments:
Amortization of intangible assets		40,567	4.3	%		40,567
Restructuring costs		10,486	1.1	%		10,486
Acquisition related costs		3,223	0.3	%		3,223
Acquisition inventory fair value adjustments		2,777	0.3	%		2,777
Inventory related charges associated with a product line closure		2,493	0.3	%		2,493
Officers transition costs		1,411	0.1	%		1,411
Foreign exchange transaction (gains) losses, net						(413	)
Tax effect of non-GAAP adjustments									14,480
Non-GAAP tax adjustments									(1,139	)
Total non-GAAP adjustments		60,957	6.5	%		60,544			13,341					47,203		1.31

Adjusted results (Non-GAAP)	$	171,541	18.1	%	$	139,610		$	28,320		20.3	%	$	111,290	$	3.08

Weighted average shares outstanding - Diluted																36,124

NOVANTA INC. 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):

	Year Ended December 31, 2023
	Operating Income		Operating Margin		Income Before Income Taxes		Income Tax Provision		Effective Tax Rate		Net Income		Diluted EPS
GAAP results	$	110,496	12.5	%	$	83,748	$	10,870	13.0	%	$	72,878	$	2.02
Non-GAAP Adjustments:
Amortization of intangible assets		32,595	3.7	%		32,595
Restructuring costs		11,814	1.3	%		11,814
Acquisition related costs		1,000	0.2	%		1,000
Inventory related charges associated with a product line closure		473	0.1	%		473
Other non-recurring cost		241	0.0	%		241
Foreign exchange transaction (gains) losses, net						255
Tax effect of non-GAAP adjustments								9,843
Non-GAAP tax adjustments								422
Total non-GAAP adjustments		46,123	5.3	%		46,378		10,265				36,113		1.00

Adjusted results (Non-GAAP)	$	156,619	17.8	%	$	130,126	$	21,135	16.2	%	$	108,991	$	3.02

Weighted average shares outstanding - Diluted														36,031

NOVANTA INC. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands of U.S. dollars) (Unaudited)

Adjusted EBITDA (Non-GAAP):

	Three Months Ended December 31,						Year Ended December 31,
		2024			2023			2024			2023
Net Income (GAAP)	$	16,464		$	12,511		$	64,087		$	72,878
Net Income Margin		6.9	%		5.9	%		6.8	%		8.3	%
Interest (income) expense, net		6,890			5,920			31,489			25,818
Income tax provision		4,331			3,235			14,979			10,870
Depreciation and amortization		14,363			11,547			55,563			46,612
Share-based compensation		4,635			7,210			23,307			25,588
Restructuring and acquisition related costs		6,376			4,628			13,714			12,819
Acquisition inventory fair value adjustments		—			—			2,777			—
Inventory related charges associated with a product line closure		—			—			2,493			473
Officers transition costs		—			—			1,411			—
Other non-operating income (expense), net		(978	)		252			29			1,171
Adjusted EBITDA (Non-GAAP)	$	52,081		$	45,303		$	209,849		$	196,229
Adjusted EBITDA Margin (Non-GAAP)		21.9	%		21.4	%		22.1	%		22.3	%

Organic Revenue Growth (Non-GAAP):

	Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023		Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Reported Revenue Growth/(Decline) (GAAP)	12.5	%	7.7	%
Less: Change attributable to acquisitions	9.4	%	9.4	%
Plus: Change due to foreign currency	0.3	%	0.1	%
Organic Revenue Growth/(Decline) (Non-GAAP)	3.4	%	(1.6	)%

Net Debt (Non-GAAP):

	December 31,			December 31,
		2024			2023
Total Debt (GAAP)	$	416,640		$	354,372
Plus: Deferred financing costs		2,519			3,681
Gross Debt		419,159			358,053
Less: Cash and cash equivalents		(113,989	)		(105,051	)
Net Debt (Non-GAAP)	$	305,170		$	253,002

Free Cash Flow (Non-GAAP):

	Three Months Ended December 31,						Year Ended December 31,
		2024			2023			2024			2023
Cash Provided by Operating Activities (GAAP)	$	61,562		$	38,992		$	158,512		$	120,075
Less: Purchases of property, plant and equipment		(2,249	)		(6,220	)		(17,162	)		(19,961	)
Plus: Proceeds from sale of property, plant and equipment		173			69			173			69
Free Cash Flow (Non-GAAP)	$	59,486		$	32,841		$	141,523		$	100,183
Net Income (GAAP)	$	16,464		$	12,511		$	64,087		$	72,878
Net Cash Provided by Operating Activities as a Percentage of Net Income		374	%		312	%		247	%		165	%
Free Cash Flow as a Percentage of Net Income		361	%		262	%		221	%		137	%

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, inventory fair value adjustments related to business acquisitions, and inventory related charges associated with product line closures 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, amortization of inventory fair value adjustments related to business acquisitions, 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 officer transition costs, restructuring, and acquisition and related costs due to the significant changes that 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, amortization of inventory fair value adjustments related to business acquisitions, and inventory related charges associated with product line closures, officer transition costs, restructuring, and acquisition and related costs for the reasons described above for Adjusted Operating Income and Adjusted Operating Margin. The Company also excludes foreign exchange transaction gains (losses) 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, officer transition costs, restructuring, acquisition and related 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) officer transition costs; (iii) restructuring, acquisition and related costs; (iv) foreign exchange transaction gains (losses); (v) 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 (vi) 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, other non-operating (income) expense items, including foreign exchange transaction (gains) losses 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.

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Novanta Inc.

Investor Relations Contact:

Ray Nash

(781) 266-5137