Core Insights - Novanta Inc. has joined NVIDIA Halos AI Systems Inspection Lab, the first ANSI National Accreditation Board accredited inspection lab for AI-driven physical systems, aimed at accelerating certification and enhancing trust in robotics and physical AI systems [1][4]. Collaboration and Technology Validation - Through its participation in the Halos AI Systems Inspection Lab, Novanta will collaborate with NVIDIA to validate the interoperability of its motion control and sensing technologies with NVIDIA platforms, including NVIDIA IGX Thor, to simplify integration for original equipment manufacturers (OEMs) [2][4]. - The collaboration is intended to reduce integration complexity, accelerate time-to-market, and advance the adoption of robotic safety standards [2][4]. Safety and Standards - The Halos AI Systems Inspection Lab provides support for ecosystem participants in validating and certifying technologies for AI-powered systems, reinforcing Novanta's commitment to safety and interoperability standards in robotics [4][5]. - As physical AI applications transition to real-world deployment, the adoption of safety, performance, and interoperability standards is deemed critical [4]. Novanta's Technological Focus - Novanta's portfolio includes core robotic technologies designed for accurate control, safe movement, and reliable perception in demanding applications, which are essential as the adoption of physical AI accelerates across various industries [5][6]. - The company aims to be a pivotal player in establishing a standards-based foundation for scaling the deployment of robotics [5].

Company Overview - Novanta operates in high-precision technology solutions for medical and industrial applications, focusing on innovation in photonics and motion control [6] - The company has a market capitalization of $5 billion and reported revenue of $980.6 million for the trailing twelve months (TTM) [4][11] - Novanta's net income for the TTM was $53.8 million, down from $64.1 million the previous year [11] Recent Developments - On February 17, 2026, Harvey Partners disclosed a new position in Novanta, acquiring 304,000 shares valued at $36.17 million [1][2] - This new position represents 3.21% of Harvey Partners' reportable assets under management (AUM) [8] - Novanta's stock price was $145.37 as of February 17, 2026, remaining flat over the past year, significantly underperforming the S&P 500's 16% gain [8][10] Financial Performance - Novanta's revenue increased by approximately 3% year-over-year, but operating income fell from $110.6 million in 2024 to $94 million in 2025 [11] - The company exceeded revenue expectations in the quarter and returned to organic growth, although margins suffered [11] - CEO Matthijs Glastra indicated plans to improve margins and cash flow in the current year [11] Market Position and Strategy - Novanta provides components and subsystems for photonics, vision, and precision motion, primarily serving original equipment manufacturers (OEMs) in the medical and industrial sectors [9] - The company's strategy emphasizes a diversified product portfolio and deep engineering expertise to meet complex customer needs [6] - The recent investment by Harvey Partners suggests a focus on mission-critical subsystems rather than finished products, raising questions about Novanta's ability to enhance margins and cash flow [12]

Core Viewpoint - The sale of 7,500 shares by Novanta's CEO Matthijs Glastra is not concerning as it was executed under a Rule 10b5-1 trading plan, indicating routine liquidity management and not insider trading [1][4]. Company Overview - Novanta is a specialized provider of advanced photonics, vision, and motion technologies, focusing on high-growth medical and industrial applications [2]. - The company generates revenue by designing, manufacturing, and selling proprietary hardware and integrated solutions to original equipment manufacturers (OEMs) [3]. Financial Performance - In Q4, Novanta's revenue rose 9% year-over-year to $258 million, exceeding expectations, contributing to a total revenue of $981 million for 2025, a 3% increase year-over-year [7]. - The company forecasts revenue to exceed $1 billion in 2026, indicating continued growth [7]. Stock Performance - Following the CEO's sale, Novanta shares reached a 52-week high of $150.18, driven by strong business performance [6]. - The company's price-to-earnings ratio stands at 91, indicating that shares are currently expensive [8]. CEO's Trading Activity - The recent sale of 7,500 shares matches the largest trade size in the CEO's 10 sell-only transactions since February 2023, with a transaction value of approximately $1.09 million [5][6]. - After the sale, the CEO retains 57,367 directly-held shares and 54,382 shares in a trust, suggesting no urgency to sell further [6].

Core Insights - Novanta reported strong revenue and earnings growth, but fourth-quarter margins and cash flow fell below expectations due to operational choices prioritizing customer deliveries over manufacturing transfers [1][6] Financial Performance - Fourth-quarter revenue showed 9% reported growth, 2% organic growth, and 4% sequential growth, with bookings increasing 25% year-over-year and 12% sequentially, resulting in a 1.11 book-to-bill ratio [5] - Full-year revenue reached $981 million, marking the company's largest year ever, with bookings growing 14% and a vitality index of 22% for the year [4][3] - Fourth-quarter non-GAAP adjusted gross profit was $118 million, with a 45.5% adjusted gross margin, down from 47% a year earlier [7] Cash Flow and Working Capital - Operating cash flow was $9 million in the fourth quarter, significantly down from $62 million a year earlier, impacted by manufacturing dynamics and inventory builds [8] - The company ended the quarter with $381 million in cash and $260 million of gross debt, resulting in a net cash position of $121 million, the first in over a decade [9] Strategic Outlook - For 2026, the company expects GAAP revenue of $1.03 billion to $1.05 billion, representing 4% to 6% organic growth, with adjusted gross margin expected to be about 47% [13][14] - The company plans to focus on acquisitions in medical technologies and consumables, with nearly $1.5 billion in acquisition capacity [10][11] Product Development - New product revenue grew over 60% for the full year, with more than 80% growth in the fourth quarter, reflecting investments in commercial excellence and innovation [4][6]

Strategic Performance Drivers - Achieved record fourth-quarter revenue and a return to organic growth, driven by a 25% surge in bookings across all business units [4] - Attributed margin and cash flow pressure to a deliberate strategic decision to prioritize customer deliveries over the pace of regional manufacturing transfers [4] - Capitalized on AI-driven tailwinds in robotics, specifically as the sole-source supplier for precision drilling of high-density GPU boards [4] - Expanded the medical technology portfolio to 53% of total sales, leveraging next-generation insufflation platforms to drive double-digit growth in consumables [4] - Utilized the Novanta Growth System (NGS) to embed continuous improvement and operational efficiency as a competitive differentiator for OEM partnerships [4] 2026 Outlook and Strategic Priorities - Projecting mid-single-digit organic growth for 2026, supported by a record backlog and accelerating momentum in semiconductor and robotic surgery markets [4] - Anticipating 100 basis points of gross margin expansion as regional manufacturing transfers are scheduled for completion by the end of the second quarter [4] - Planning to deploy nearly $1.5 billion in acquisition capacity toward larger opportunities in medical technologies, bioprocessing, and embedded software [4] - Expecting a significant rebound in operating cash flow, forecasted at $145 million to $185 million, following the drawdown of temporary inventory buffers [4] - Integrating artificial intelligence tools across R&D and back-office processes to accelerate productivity goals and innovation cycles [4] Operational Context and Risk Factors - Identified a temporary 100 basis point headwind to gross margin due to dual running costs during the final phases of site regionalization [4] - Noted a $0.22 to $0.24 EPS headwind from the November equity fundraise, which remains a temporary drag until capital is deployed for M&A [4] - Flagged a one-time $0.14 EPS impact in 2026 related to a 2025 all-employee equity grant that replaced the standard cash bonus program [4] - Highlighted the Keyon acquisition's outperformance, which is serving as a strategic entry point for RFID and data solutions in hospital environments [4]

Financial Data and Key Metrics Changes - Novanta reported record revenue in Q4 2025 with a 9% reported growth, 2% organic growth, and 4% sequential growth [5] - Full-year revenue reached $981 million, marking the largest year in the company's history, with full-year bookings growing by 14% [5] - Adjusted EBITDA grew by 17% year-over-year, and Adjusted Diluted EPS increased by 20% [6][23] - Non-GAAP adjusted gross profit for Q4 was $118 million, with a 45.5% adjusted gross margin, down from 47% in Q4 2024 [21] - Operating cash flow in Q4 was $9 million, significantly lower than $62 million in Q4 2024, impacted by regional manufacturing dynamics [24] Business Line Data and Key Metrics Changes - New product revenue grew over 60% for the full year, with over 80% growth in Q4 [6][20] - Automation Enabling Technologies segment revenue grew by 2% year-over-year, with bookings up 33% [27] - Precision Manufacturing Business saw a 3% revenue decline year-over-year in Q4 but had an 8% sequential growth [27] - Medical Solutions segment revenue grew by 16% year-over-year in Q4, with advanced surgery business growing 15% [30] Market Data and Key Metrics Changes - Sales in medical end markets represented 53% of total sales, while advanced industrial markets accounted for 47% [20] - Medical consumable sales grew at a strong double-digit rate, representing 15% of total company sales [20] - The Robotics & Automation business is expected to see high single-digit growth in 2026, driven by AI-driven tailwinds [12][13] Company Strategy and Development Direction - Novanta's long-term growth strategy focuses on high-growth end markets such as AI-driven Robotics & Automation, minimally invasive surgery, and precision medicine [8] - The company aims to expand its business mix and technology leadership in medical technologies and embedded software [9] - Acquisitions are a key growth strategy, with a pipeline focused on mid to larger opportunities in medical technologies and consumables [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-single-digit organic growth in 2026, supported by strong bookings and new product launches [10][18] - The company anticipates a significant inventory drawdown and strong cash rebound as regional manufacturing initiatives are completed [24] - Management highlighted the importance of customer relationships and the need for capable suppliers in the medical technology space [84] Other Important Information - The company ended Q4 with gross debt of $260 million and a net cash position for the first time in over a decade [25] - Novanta's acquisition capacity stands at nearly $1.5 billion, with a robust acquisition pipeline [42] Q&A Session Summary Question: Can you elaborate on the increase in bookings in the Automation Enabling Technologies segment? - Management noted broad-based growth across all businesses, with strong momentum in Robotics & Automation driven by precision robotics and semiconductor capital equipment [46][47] Question: What is the revenue expectation for the industrial robotics order announced previously? - Management indicated that revenue from the order will ramp modestly this year, with expectations for sequential growth [54] Question: How does the company reconcile strong bookings momentum with EPS growth expectations? - Management explained that the EPS growth is impacted by the recent fundraise and an all-employee equity grant, but organic growth remains strong [62][63] Question: Can you provide insights on the GPU boards opportunity? - Management highlighted that the company is the leader in drilling for GPU boards, with increasing demand from new end users in the AI space [67][68] Question: Is the positive book-to-bill across all business units? - Management confirmed that all four business units had a positive book-to-bill ratio, indicating strong momentum and backlog growth [71][72]

Financial Data and Key Metrics Changes - Novanta reported record revenue in Q4 2025 with a 9% reported growth, 2% organic growth, and 4% sequential growth [5] - Full-year revenue reached $981 million, marking the largest year in the company's history, with full-year bookings growing by 14% [5] - Adjusted EBITDA grew by 17% year-over-year, and adjusted diluted EPS increased by 20% [6][23] - Non-GAAP adjusted gross profit for Q4 was $118 million, with a 45.5% adjusted gross margin, down from 47% in Q4 2024 [21] Business Line Data and Key Metrics Changes - New product revenue grew over 60% for the full year, with over 80% growth in Q4 [6][20] - The Automation Enabling Technologies segment saw a 2% year-over-year revenue growth in Q4, with bookings up 33% [27] - The Medical Solutions segment experienced a 16% year-over-year revenue growth in Q4, with bookings up 17% [29] Market Data and Key Metrics Changes - Sales in medical end markets represented 53% of total sales, while advanced industrial markets accounted for 47% [20] - The advanced surgery business grew by 15% year-over-year, driven by strong procedural growth and new product launches [29] - The precision manufacturing business saw a year-over-year revenue decline of 3% in Q4 but had double-digit bookings growth [27] Company Strategy and Development Direction - Novanta's long-term growth strategy focuses on high-growth end markets such as AI-driven robotics, minimally invasive surgery, and precision medicine [8] - The company aims to achieve mid-single-digit organic growth in 2026, supported by strong bookings and new product launches [10] - Acquisitions are a key growth strategy, with a pipeline focused on mid to larger opportunities in medical technologies and embedded software [10][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to mid-single-digit organic growth, driven by strong demand and a recovering semiconductor market [10][12] - The company anticipates a significant inventory drawdown and strong cash rebound as regional manufacturing initiatives are completed [24] - Management highlighted the importance of customer relationships and the need for capable suppliers in the medical technology space [82] Other Important Information - The company ended Q4 with gross debt of $260 million and a net cash position for the first time in over a decade [25] - Operating cash flow for the full year was $64 million, impacted by regional manufacturing dynamics and higher inventory builds [24] - Novanta expects to achieve approximately 47% adjusted gross margin for the full year 2026, representing a 100 basis points expansion year-over-year [32] Q&A Session Summary Question: Can you discuss the sequential increase in bookings in the Automation Enabling Technologies segment? - Management noted broad-based growth across all businesses, with strong momentum in robotics and automation, particularly in precision robotics and semiconductor capital equipment [45][46] Question: What is the revenue expectation for the industrial robotics order announced previously? - Management indicated that revenue from the industrial robotics order will ramp modestly this year, with expectations for sequential growth [53] Question: How does the company reconcile strong bookings momentum with EPS growth expectations? - Management explained that the EPS growth is impacted by a recent fundraise and an all-employee equity grant, but organic growth remains strong [61][62] Question: Can you elaborate on the GPU boards opportunity? - Management highlighted that Novanta is the leader in drilling for GPU boards, with increasing demand from new end users in the AI space [66][68] Question: Is the positive book-to-bill metric applicable across all business units? - Management confirmed that all four business units had a positive book-to-bill ratio, indicating strong demand and backlog growth [70][72]

Financial Data and Key Metrics Changes - Novanta reported record revenue in Q4 2025 with 9% reported growth, 2% organic growth, and 4% sequential growth, achieving $981 million in revenue for the full year, the largest in its history [5][6] - Adjusted EBITDA grew by 17% year-over-year, and Adjusted Diluted EPS increased by 20% in Q4 2025 [6][24] - Non-GAAP adjusted gross profit for Q4 was $118 million, with a gross margin of 45.5%, down from 47% in Q4 2024 [21][24] - Operating cash flow in Q4 was $9 million, significantly lower than $62 million in Q4 2024, impacted by regional manufacturing dynamics and higher inventory [25][26] Business Line Data and Key Metrics Changes - New product revenue grew over 60% for the full year, with over 80% growth in Q4, indicating strong commercial excellence and innovation investments [6][20] - The Automation Enabling Technologies segment saw a 2% year-over-year revenue growth in Q4, with bookings up 33% [28] - The Medical Solutions segment experienced a 16% year-over-year revenue growth in Q4, with advanced surgery business growing 15% [30][31] Market Data and Key Metrics Changes - Sales in medical end markets represented 53% of total sales, while advanced industrial markets accounted for 47% [20] - The precision manufacturing business saw a year-over-year revenue decline of 3% in Q4 but had double-digit growth in bookings [28][30] - The robotics and automation business grew revenues by 6% year-over-year in Q4, benefiting from demand in advanced robotic applications [28] Company Strategy and Development Direction - Novanta's long-term growth strategy focuses on high-growth end markets such as AI-driven robotics, minimally invasive surgery, and precision medicine, with a target of $4 billion incremental market opportunity by 2030 [7][9] - The company aims to drive mid-single-digit organic growth in 2026, supported by record bookings and new product launches [10][18] - Acquisitions are a key growth strategy, with a pipeline focused on mid to larger opportunities in medical technologies and embedded software [10][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to mid-single-digit organic growth, citing strong demand and a recovering semiconductor market [10][12] - The company anticipates a significant inventory drawdown and strong cash rebound as regional manufacturing initiatives are completed [25][26] - Management highlighted the importance of customer relationships and the ability to solve complex problems as a competitive advantage [82] Other Important Information - The company ended Q4 with gross debt of $260 million and a net cash position for the first time in over a decade [26] - Novanta's investments in intelligent RFID solutions and advanced machine vision technologies are expected to stabilize the outlook for the business [16] Q&A Session Summary Question: Can you elaborate on the sequential increase in bookings in the Automation Enabling Technologies segment? - Management noted broad-based growth across all businesses, with strong momentum in robotics and automation, particularly in precision robotics and semiconductor capital equipment [47][48] Question: What is the revenue expectation for the industrial robotics order announced previously? - Management indicated that revenue from the first phase of ramp will be modest this year, with sequential growth expected thereafter, highlighting technology leadership as a key factor [54][56] Question: How does the company reconcile strong bookings momentum with EPS growth expectations? - Management explained that the EPS growth is impacted by the recent fundraise and an all-employee equity grant, but organic growth remains strong despite these headwinds [62][63] Question: Can you provide insights on the GPU boards opportunity? - Management confirmed that they are the leading supplier for drilling AI-driven GPU boards, with strong demand expected to continue, indicating a multi-year growth trajectory [66][67] Question: Was the positive book-to-bill across all business units? - Management confirmed that all four business units had a positive book-to-bill ratio, indicating strong momentum and building backlog [71][72]

Revenue and Market Segmentation - Total revenue for 2025 was $980.6 million, an increase of $31.4 million, or 3.3%, compared to 2024, driven by acquisitions and growth in the Automation Enabling Technologies segment [219]. - The medical market accounted for approximately 53% of total revenue, while the advanced industrial market accounted for approximately 47% [209][210]. - The Automation Enabling Technologies segment revenue increased by $10.2 million, or 2.1%, primarily due to a $30.3 million increase in robotics and automation products [225]. - Medical Solutions segment revenue increased by $21.1 million, or 4.6%, driven by a $33.7 million increase in advanced surgery products [226]. Income and Earnings - Operating income for 2025 was $94.0 million, a decrease of $16.6 million, or 15.0%, compared to 2024, primarily due to increased SG&A expenses and restructuring costs [220]. - Basic and diluted earnings per share for 2025 were both $1.47, a decrease of $0.31 and $0.30, respectively, from 2024 [221]. - Net income for 2025 was $53.8 million, down from $64.1 million in 2024 [252]. Expenses - Total operating expenses for 2025 were $341.3 million, a 9.7% increase from $311.0 million in 2024 [231]. - Research and development expenses were $95.5 million, or 9.7% of revenue, in 2025, unchanged from 2024 [233]. - Selling, general and administrative expenses rose to $195.7 million, or 20.0% of revenue, from $175.9 million, or 18.5% of revenue in 2024 [235]. - Medical Solutions segment operating income decreased to $51.2 million, or 10.7% of revenue, from $57.5 million, or 12.5% in 2024 [242]. Cash and Financing - As of December 31, 2025, the company had $380.9 million in cash and cash equivalents, with $67.6 million held by subsidiaries outside North America [256]. - The company issued 12,650,000 tangible equity units at a public offering price of $50.00 per unit, raising $632.5 million in total [211]. - Cash and cash equivalents totaled $380.9 million as of December 31, 2025, a significant increase from $114.0 million as of December 31, 2024, primarily due to proceeds from the issuance of tangible equity units [269]. - The company had $276.3 million in net cash provided by financing activities in 2025, driven by proceeds from tangible equity units and borrowings under credit facilities [274]. Debt and Credit Facilities - The Fourth Amended and Restated Credit Agreement provides for an aggregate credit facility of approximately $1.0 billion, maturing in June 2030 [215]. - As of December 31, 2025, the company had $74.0 million (€63.1 million) outstanding under Euro Term Loans and $75.0 million outstanding under U.S. Term Loans, with no outstanding revolver borrowings [264][265]. - Future interest payments under the Senior Credit Facilities are estimated to be approximately $33.6 million through maturity, with $8.1 million payable within the next twelve months [280]. - As of December 31, 2025, the company had $110.6 million outstanding under Amortizing Notes, which bear interest at 6.30% per annum [268][282]. - The maximum consolidated leverage ratio permitted under the Fourth Amended and Restated Credit Agreement was increased to 3.75:1.00, with a step-up to 4.25:1.00 for certain acquisitions [262]. Tax and Legal Matters - A valuation allowance of $4.6 million was established in 2025 for net operating losses and other timing items in certain tax jurisdictions [317]. - As of December 31, 2025, the total amount of gross unrecognized tax benefits was $4.4 million, with $3.7 million potentially favorably affecting the effective tax rate if recognized [318]. - The estimated unrecognized income and foreign withholding tax liabilities on undistributed earnings from foreign subsidiaries is approximately $5.4 million [319]. - Legal proceedings and claims are reviewed quarterly, with liabilities accrued for probable losses that can be reasonably estimated [320]. Inventory and Impairment - The company regularly reviews inventory and may increase provisions for excess and obsolete inventory if sales do not meet forecasts [295]. - Impairment analyses of goodwill and indefinite-lived intangible assets are conducted annually, with no impairment noted as of the beginning of the second quarter of 2025 [312]. - The company assesses indefinite-lived intangible assets for impairment annually, with impairment recognized if fair value is less than carrying value [308]. Foreign Currency and Interest Rate Risk - The company had foreign currency contracts with notional amounts totaling $147.7 million and a net fair value of less than $0.1 million as of December 31, 2025 [325]. - A hypothetical 10% strengthening of the U.S. dollar against other currencies would result in an approximately $10.2 million increase in the net fair value of the company's foreign currency contracts as of December 31, 2025 [325]. - Conversely, a hypothetical 10% weakening of the U.S. dollar against other currencies would result in an approximately $10.2 million decrease in the net fair value of the company's foreign currency contracts as of December 31, 2025 [326]. - The company had $149.0 million of outstanding variable rate debt as of December 31, 2025 [327]. - A 100 basis point increase in interest rates at December 31, 2025 would increase the company's annual pre-tax interest expense by approximately $1.5 million [327]. Other Financial Information - The company expects to use approximately $20 million to $25 million in 2026 for capital expenditures related to investments in new property, plant, and equipment [273]. - Share-based compensation expenses are recognized based on fair value at grant date, with various performance-based awards impacting expense recognition [296]. - Revenue is recognized at a point in time upon shipment, with professional services accounting for less than 3% of consolidated revenue [289]. - The company provides warranties for products, typically ranging from 12 to 36 months, with warranty costs estimated based on historical experience [293].

Financial Performance - Fourth Quarter 2025 GAAP Revenue increased by 9% to $258.3 million, with GAAP Diluted EPS at $0.45[5] - Full Year 2025 GAAP Revenue rose by 3.3% to $980.6 million, while GAAP Diluted EPS decreased to $1.47 from $1.77[11] - Adjusted Diluted EPS for Q4 2025 increased by 20% to $0.91, and Adjusted EBITDA rose by 17% to $60.7 million[8] - Revenue for Q4 2025 was $258.3 million, a 8.7% increase from $238.1 million in Q4 2024[31] - Full-year revenue for 2025 reached $980.6 million, up 3.4% from $949.2 million in 2024[31] - Adjusted Diluted EPS for the year ended December 31, 2025, was $3.29, reflecting a significant increase from the previous year[44] - Adjusted Operating Income for the year ended December 31, 2024, was $541 million, with an operating margin of 18.1%[46] - Adjusted Diluted EPS for the same period was $3.08, reflecting a significant increase compared to previous periods[46] Customer Metrics - Customer bookings for Q4 2025 increased by 25%, with a book-to-bill ratio of 1.11x[4] - Full Year 2025 organic revenue growth was a decrease of 0.5%, despite a 14% increase in customer bookings[10] Cash Flow and Debt - Operating cash flow for Q4 2025 was $8.8 million, significantly lower than $61.6 million in the prior year due to regional manufacturing strategies[9] - The company ended 2025 with approximately $251 million in total debt and $381 million in total cash, resulting in a net debt of ($121) million[13] - Total Debt as of December 31, 2025, was $250.83 million, significantly reduced from $416.64 million in 2024[50] - Net Debt as of December 31, 2025, was -$121.32 million, showing a strong cash position compared to $305.17 million in 2024[50] - Free Cash Flow for the year ended December 31, 2025, was $54.03 million, representing 100% of net income[51] Profitability Metrics - Gross profit for Q4 2025 was $113.3 million, compared to $108.2 million in Q4 2024, reflecting a gross margin of 43.8%[31] - Operating income for Q4 2025 was $24.8 million, down from $26.7 million in Q4 2024[31] - Net income for Q4 2025 was $17.5 million, slightly up from $16.5 million in Q4 2024[31] - The company reported a net income margin of 5.5% for the year ended December 31, 2025[48] - The company reported a Gross Profit Margin of 44.4% for the year ended December 31, 2025, consistent with the previous year[38] Segment Performance - The Automation Enabling Technologies segment generated $130.7 million in revenue for Q4 2025, a slight increase from $127.8 million in Q4 2024[36] - Medical Solutions segment reported an Adjusted Gross Profit of $54,365 thousand in Q4 2025, an increase from $47,089 thousand in Q4 2024, with an Adjusted Gross Profit Margin of 42.6%[38] - Novanta Inc. achieved a Gross Profit of $113,263 thousand in Q4 2025, compared to $108,225 thousand in Q4 2024, with a Gross Profit Margin of 43.8%[38] - Adjusted Gross Profit for Automation Enabling Technologies was $64,108 thousand in Q4 2025, down from $65,485 thousand in Q4 2024, resulting in an Adjusted Gross Profit Margin of 49.1% compared to 51.2%[38] Future Outlook - The company expects 2026 GAAP revenue to be between $1,030 million and $1,050 million, with Adjusted EBITDA projected between $245 million and $250 million[15] - The company plans to enhance margins and cash flows through the Novanta Growth System and complete its regional manufacturing strategy by mid-2026[14] Research and Development - Research and development expenses for Q4 2025 were $22.9 million, down from $25.3 million in Q4 2024[31] Non-GAAP Adjustments - The total non-GAAP adjustments for the year ended December 31, 2025, amounted to $84,047 thousand, representing 8.3% of total income[44] - Adjusted EBITDA for the year ended December 31, 2025, reached $220.95 million, with an adjusted EBITDA margin of 22.5%[48] - Free Cash Flow as a Percentage of Net Income is calculated by dividing Free Cash Flow by Net Income, indicating the Company's liquidity and ability to service debt[62] - Net Debt is defined as total debt plus unamortized deferred financing costs minus cash and cash equivalents at the end of the period[63] - Management uses Net Debt to monitor outstanding debt obligations that cannot be satisfied by available cash and cash equivalents[63]