Novanta Announces Financial Results for the Fourth Quarter and Full Year 2017

Published: Feb 28, 2018

BEDFORD, Mass., Feb. 28, 2018 /PRNewswire/ -- Novanta, Inc. (Nasdaq: NOVT) (the "Company"), a trusted technology partner to medical and advanced technology equipment manufacturers, today reported financial results for the fourth quarter and full year 2017.

    Financial Highlights                                                                       Three Months Ended December 31,                                Year Ended December 31,
    --------------------                                                                       -------------------------------                                -----------------------

    (In millions, except per share amounts)                                                         2017                                2016                               2017                      2016
                                                                                                    ----                                ----                               ----                      ----

    GAAP

    Revenue                                                                                                  $146.9                                            $98.9                              $521.3  $384.8

    Operating Income from Continuing Operations                                                               $19.1                                            $11.3                               $57.2   $32.6

    Net Income Attributable to Novanta Inc.                                                                    $8.9                                             $7.8                               $60.1   $22.0

    Diluted EPS from Continuing Operations                                                                  $(0.00)                                           $0.22                               $1.13   $0.63

    Non-GAAP*

    Adjusted Operating Income from Continuing Operations                                                      $25.8                                            $16.6                               $90.4   $55.8

    Adjusted Diluted EPS                                                                                      $0.44                                            $0.35                               $1.60   $1.09

    Adjusted EBITDA                                                                                           $30.0                                            $19.4                              $105.7   $68.0

    *Reconciliations of GAAP to non-GAAP financial measures, as well as definitions for the non-GAAP financial measures in this press release and the reasons for their use, are presented below.

"2017 was a defining year for Novanta with strong execution and financial results," said Matthijs Glastra, Chief Executive Officer of Novanta Inc. "We executed well on our strategic priorities and 2020 Strategic Direction. We accelerated organic revenue growth to 8% versus 2016 and made three acquisitions, namely, World of Medicine, Laser Quantum, and ThingMagic. These acquisitions have expanded our positions in growing medical markets and technologies, and are performing ahead of our expectations. Our performance in 2017 gives us confidence to reach our 2020 strategic goals. I am proud of our team of dedicated employees and the culture we have created, and I continue to feel excited about our future."

Fourth Quarter

During the fourth quarter of 2017, Novanta generated GAAP revenue of $146.9 million, an increase of $48.0 million, or 48.6%, versus the fourth quarter of 2016. The net effect of the Company's acquisition activities resulted in an increase in revenue of $39.1 million, or 39.5%, compared to the fourth quarter of 2016. Foreign currency exchange rates favorably impacted our revenue by $0.8 million, or 0.8%, during the fourth quarter of 2017. Our Organic Revenue Growth, which excludes the net impact of acquisitions and foreign currency exchange rates, increased 8.3%, versus the fourth quarter of 2016 (see "Organic Revenue Growth" in the non-GAAP reconciliation below).

In the fourth quarter of 2017, GAAP operating income from continuing operations was $19.1 million, compared to $11.3 million in the fourth quarter of 2016. GAAP net income attributable to Novanta Inc. was $8.9 million in the fourth quarter of 2017, compared to $7.8 million in the fourth quarter of 2016. GAAP diluted earnings (loss) per share ("EPS") from continuing operations was $(0.00) in the fourth quarter of 2017, compared to $0.22 in the fourth quarter of 2016.

In the fourth quarter of 2017, the Company increased the carrying amount of the redeemable noncontrolling interest in Laser Quantum by $8.9 million to reflect the estimated redemption value as of December 31, 2017. This nontaxable adjustment was recognized in retained earnings instead of net income, but resulted in a net ($0.25) reduction in EPS under U.S. GAAP accounting rules. In addition, the Company's GAAP net income and EPS for the fourth quarter of 2017 were negatively impacted by a $2.8 million tax provision recorded to reflect the estimated income tax effect as a result of the enactment of the U.S. Tax Cuts and Jobs Act, primarily from the revaluation of our deferred tax assets and liabilities to the new 21% U.S. federal corporate income tax rate that became effective as of January 1, 2018. Adjusted Diluted EPS was $0.44 in the fourth quarter of 2017, compared to $0.35 in the fourth quarter of 2016. The Company ended the fourth quarter of 2017 with 34.8 million weighted average shares outstanding. Adjusted EBITDA was $30.0 million in the fourth quarter of 2017, compared to $19.4 million in the fourth quarter of 2016.

Operating cash flow from continuing operations for the fourth quarter of 2017 was $22.1 million, compared to $13.1 million for the fourth quarter of 2016.

Full Year

For the full year 2017, Novanta generated GAAP revenue of $521.3 million, an increase of $136.5 million, or 35.5%, versus the full year 2016. The net effect of the Company's acquisitions in 2017 resulted in an increase in revenue of $105.8 million, or 27.5%. Foreign currency exchange rates adversely impacted our revenue by $1.9 million, or 0.5%, in 2017. Our Organic Revenue Growth, which excludes the net impact of acquisitions, divestitures, and foreign currency exchange rates, increased 8.5%, versus full year 2016 (see "Organic Revenue Growth" in the non-GAAP reconciliation below).

For the full year 2017, GAAP operating income from continuing operations was $57.2 million, compared to $32.6 million in 2016. GAAP net income attributable to Novanta Inc. was $60.1 million for the full year 2017, compared to $22.0 million in 2016. GAAP diluted EPS from continuing operations was $1.13 for the full year 2017, compared to $0.63 in 2016.

For the full year 2017, the Company increased the carrying amount of the redeemable noncontrolling interest in Laser Quantum by $20.2 million to reflect the estimated redemption value as of December 31, 2017. This nontaxable adjustment was recognized in retained earnings instead of net income attributable to Novanta Inc., but resulted in a net ($0.57) reduction in EPS under U.S. GAAP accounting rules. Adjusted Diluted EPS was $1.60 for the full year 2017, compared to $1.09 in 2016. The Company ended the full year 2017 with 35.3 million weighted average shares outstanding. Adjusted EBITDA was $105.7 million for the full year 2017, compared to $68.0 million in 2016.

Operating cash flow from continuing operations for the full year 2017 was $63.4 million, compared to $47.8 million in 2016. The Company finished 2017 with approximately $237.8 million of Gross Debt, and $137.7 million of Net Debt, as defined in the non-GAAP reconciliation below.

Financial Outlook

For the full year 2018, the Company expects GAAP revenue of approximately $585 million to $600 million. The Company expects Adjusted Diluted EPS to be in the range of $1.85 to $1.96, including the impact of the recently enacted U.S. tax law changes, and Adjusted EBITDA to be approximately $117 million to $122 million. The Company's Adjusted Diluted EPS and EBITDA guidance assumes no significant foreign exchange gains or losses.

For the first quarter of 2018, the Company expects GAAP revenue of approximately $138 million to $142 million. This represents reported growth in the range of 27% to 30%, and organic growth in the range of 7.5% to 8.5% year over year. The Company expects Adjusted Diluted EPS to be in the range of $0.40 to $0.43, including the impact of the recently enacted U.S. tax law changes, and Adjusted EBITDA to be approximately $25 million to $27 million. The Company's Adjusted Diluted EPS and EBITDA guidance assumes no significant foreign exchange gains or losses.

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 EBITDA and Adjusted 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 adjustments that could be made for noncontrolling interest redemption value adjustments; significant discrete income tax expenses (benefits); divestiture related expenses; acquisition-related expenses; impact of purchase price allocations for recently completed acquisitions; gains and losses from sale of real estate assets; costs related to product line closures; future changes in the fair value of contingent considerations; intangible asset impairment charges and related asset write-offs; future restructuring expenses; foreign exchange gains/(losses) on proceeds from divestitures; benefits or expenses associated with the completion of tax audits; and other charges reflected in our 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 Wednesday, February 28, 2018 at 10:00 a.m. ET to discuss these results. To access the call, please dial (877) 870-4263 prior to the scheduled conference call time. The conference ID number is 10113487. Alternatively, the conference call can be accessed online via a live webcast on the Investor Relations section of the Company's website at www.novanta.com.

A playback of this conference call will be available beginning 12:00 p.m. ET, Wednesday, February 28, 2018. The playback phone number is (877) 344-7529 and the code number is 10113487. The playback will remain available until 11:00 p.m. ET, Wednesday, March 21, 2018.

A replay of the audio webcast will be available approximately three hours after the conclusion of the call on the Investor Relations section of the Company's website at www.novanta.com.

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 from Continuing Operations and Operating Margin, Adjusted Income from Continuing Operations before Income Taxes, Adjusted Income Tax Provision (Benefit) and Effective Tax Rate, Adjusted Net Income Attributable to Novanta Inc., Net of Tax, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, 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 acquisition 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 and Organic Revenue Growth 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 and Organic Revenue Growth are used to determine bonus payments for senior management and employees. The Company also uses Adjusted Diluted EPS as a measurement for performance shares issued to certain executives. Accordingly, the Company believes that these non-GAAP 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 reaching our 2020 strategic goals; executing our strategy; anticipated financial performance, including our updated financial outlook for the first quarter 2018; expectations regarding market conditions; expectations regarding the Company's future; 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 and level of business activity; our significant dependence upon our customers' capital expenditures, which are subject to cyclical market fluctuations; our dependence upon our ability to respond to fluctuations in product demand; our ability to continually innovate and successfully commercialize our innovations; failure to introduce new products in a timely manner; customer order timing and other similar factors beyond our control; disruptions or breaches in security of our information technology systems; changes in interest rates, credit ratings or foreign currency exchange rates; risks associated with our operations in foreign countries; risks associated with increased outsourcing of components manufacturing; our failure to comply with local import and export regulations in the jurisdictions in which we operate; negative effects on global economic conditions, financial markets and our business as a result of the United Kingdom's impending withdrawal from the European Union and the actions of the current U.S. government; 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 businesses; our ability to attract and retain key personnel; our restructuring and realignment activities and disruptions to our operations as a result of consolidation of our operations; product defects or problems integrating our products with other vendors' products; disruptions in the supply of certain key components or other goods from our suppliers; failure to accurately forecast component and raw material requirements for our products; production difficulties and product delivery delays or disruptions; our compliance, or our failure to comply, with various federal, state and foreign regulations including rules and regulations issued by the U.S. Food and Drug Administration and similar international agencies; changes in governmental regulation of our businesses or products; our failure to comply with environmental regulations; our failure to implement new information technology systems and software successfully; our failure to realize the full value of our intangible assets; our exposure to the credit risk of some of our customers and in weakened markets; our reliance on third party distribution channels; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; tax audits by tax authorities; changes in tax laws, and fluctuations in our effective tax rates; anticipated impact from the recently enacted Tax Cuts and Jobs Act in the U.S.; 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; our ability to access cash and other assets of our subsidiaries; provisions of our articles of incorporation may delay or prevent a change in control; 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 Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, our subsequent filings with the Securities and Exchange Commission ("SEC"), and in our future filings with the SEC. 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 update any 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 healthcare and advanced industrial original equipment manufacturers ("OEMs") a competitive advantage. We combine deep proprietary technology expertise in photonics, vision, and precision motion with a proven ability to solve complex technical challenges. This enables Novanta to engineer core components and sub-systems that deliver extreme precision and performance, tailored to our customers' demanding applications. The driving force behind our growth is the team of innovative professionals who share a commitment to innovation and customer 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 Inc. Investor Relations at (781) 266-5137 or InvestorRelations@novanta.com.

Novanta Inc.
Investor Relations Contact:
Robert J. Buckley
(781) 266-5137

                                                                                            NOVANTA INC.

                                                                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                                                                             (Unaudited)


                                                                                      Three Months Ended                                      Year Ended December 31,
                                                                                       December 31,
                                                                                       ------------

                                                                                    2017                               2016                                 2017                       2016
                                                                                    ----                               ----                                 ----                       ----

    Revenue                                                                                 $146,918                                        $98,879                               $521,290            $384,758

    Cost of revenue                                                                         84,677                                         56,027                                300,759             222,306
                                                                                            ------                                         ------                                -------             -------

    Gross profit                                                                            62,241                                         42,852                                220,531             162,452
                                                                                            ------                                         ------                                -------             -------

    Operating expenses:

    Research and development and engineering                                                11,795                                          7,973                                 41,673              32,002

    Selling, general and administrative                                                     27,359                                         19,334                                102,025              81,691

    Amortization of purchased intangible assets                                              2,683                                          2,098                                 12,096               8,251

    Restructuring, acquisition and divestiture related costs                                 1,310                                          2,117                                  7,542               7,945
                                                                                             -----                                          -----                                  -----               -----

    Total operating expenses                                                                43,147                                         31,522                                163,336             129,889
                                                                                            ------                                         ------                                -------             -------

    Operating income from continuing operations                                             19,094                                         11,330                                 57,195              32,563

    Interest income (expense), net                                                         (2,291)                                       (1,088)                               (7,165)            (4,559)

    Foreign exchange transaction gains (losses), net                                         (271)                                         1,339                                  (447)              2,317

    Other income (expense), net                                                                 38                                            502                                    142               2,201

    Gain on acquisition of business                                                    -                                              -                                26,409                  -
                                                                                     ---                                            ---                                ------                ---

    Income from continuing operations before income taxes                                   16,570                                         12,083                                 76,134              32,522

    Income tax provision                                                                     6,893                                          4,327                                 13,827              10,519
                                                                                             -----                                          -----                                 ------              ------

    Income from continuing operations                                                        9,677                                          7,756                                 62,307              22,003

    Loss from discontinued operations, net of tax                                      -                                              -                                     -                 -
                                                                                     ---                                            ---                                   ---               ---

    Consolidated net income                                                                  9,677                                          7,756                                 62,307              22,003

    Less: Net income attributable to noncontrolling interest                       (812)                                              -                               (2,256)                 -
                                                                                    ----                                             ---                                ------                ---

    Net income attributable to Novanta Inc.                                                   $8,865                                         $7,756                                $60,051             $22,003
                                                                                              ======                                         ======                                =======             =======


    Earnings (loss) per common share from continuing operations:

    Basic                                                                                    $(0.00)                                         $0.22                                  $1.14               $0.63

    Diluted                                                                                  $(0.00)                                         $0.22                                  $1.13               $0.63

    Loss per common share from discontinued operations:

    Basic                                                                              $           -                                  $          -                          $          -      $           -

    Diluted                                                                            $           -                                  $          -                          $          -      $           -

    Earnings (loss) per common share attributable to Novanta Inc.

    Basic                                                                                    $(0.00)                                         $0.22                                  $1.14               $0.63

    Diluted                                                                                  $(0.00)                                         $0.22                                  $1.13               $0.63


    Weighted average common shares outstanding-basic                                        34,842                                         34,706                                 34,817              34,694

    Weighted average common shares outstanding-diluted                                      34,842                                         34,987                                 35,280              34,914

 

 

                                                                                        NOVANTA INC.

                                                                            CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                               (In thousands of U.S. dollars)

                                                                                         (Unaudited)


                                                                                                                  December 31,           December 31,

                                                                                                                          2017                    2016
                                                                                                                          ----                    ----

                                                          ASSETS

    Current Assets

    Cash and cash equivalents                                                                                                   $100,057                 $68,108

    Accounts receivable, net                                                                                                    81,482                  63,769

    Inventories                                                                                                                 91,278                  59,745

    Other current assets                                                                                                        15,062                   7,628
                                                                                                                                ------                   -----

    Total current assets                                                                                                       287,879                 199,250

    Property, plant and equipment, net                                                                                          61,718                  35,421

    Intangible assets, net                                                                                                     155,048                  61,743

    Goodwill                                                                                                                   210,988                 108,128

    Other assets                                                                                                                11,070                  21,095
                                                                                                                                ------                  ------

    Total assets                                                                                                                $726,703                $425,637
                                                                                                                                ========                ========

                               LIABILITIES, NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY

    Current Liabilities

    Current portion of long-term debt                                                                                             $9,119                  $7,366

    Accounts payable                                                                                                            39,793                  32,213

    Accrued expenses and other current liabilities                                                                              49,256                  30,917
                                                                                                                                ------                  ------

    Total current liabilities                                                                                                   98,168                  70,496

    Long-term debt                                                                                                             225,500                  70,554

    Other long-term liabilities                                                                                                 44,567                  25,717
                                                                                                                                ------                  ------

    Total liabilities                                                                                                          368,235                 166,767
                                                                                                                               -------                 -------

    Redeemable noncontrolling interest                                                                                          46,923                       -
                                                                                                                                ------                     ---

    Stockholders' Equity:

    Total stockholders' equity                                                                                                 311,545                 258,870
                                                                                                                               -------                 -------

    Total liabilities, noncontrolling interest and stockholders' equity                                                         $726,703                $425,637
                                                                                                                                ========                ========

 

 

                                                                                                                                                   NOVANTA INC.

                                                                                                                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                                                          (In thousands of U.S. dollars)

                                                                                                                                                   (Unaudited)


                                                                                                                                                               Three Months Ended                    Year Ended December 31,
                                                                                                                                                                December 31,
                                                                                                                                                                ------------

                                                                                                                                                             2017                 2016                             2017                           2016
                                                                                                                                                             ----                 ----                             ----                           ----

    Cash flows from operating activities:

    Consolidated net income                                                                                                                                            $9,677                       $7,756                                    $62,307                 $22,003

    Less: Loss from discontinued operations, net of tax                                                                                                         -                            -                                       -                       -
                                                                                                                                                              ---                          ---                                     ---                     ---

    Income from continuing operations                                                                                                                                 9,677                        7,756                                     62,307                  22,003

    Adjustments to reconcile income from continuing operations to net cash provided by operating activities of continuing operations:

    Depreciation and amortization                                                                                                                                     8,318                        5,040                                     30,758                  20,357

    Share-based compensation                                                                                                                                          1,270                          908                                      5,493                   4,293

    Gain on acquisition of business                                                                                                                             -                            -                                (26,409)                       -

    Deferred income taxes                                                                                                                                               353                      (1,928)                                   (2,560)                (1,766)

    Earnings from equity-method investment                                                                                                                      -                        (493)                                   (104)                 (2,191)

    Dividend from equity-method investment                                                                                                                      -                            -                                       -                   2,341

    Inventory acquisition fair value adjustments                                                                                                                -                            -                                   4,754                      173

    Other non-cash items                                                                                                                                              (144)                         851                                      2,990                   4,346

    Changes in assets and liabilities which provided (used) cash, excluding effects from businesses purchased or classified as held for sale:

    Accounts receivable                                                                                                                                               1,782                      (2,711)                                   (2,077)                (6,394)

    Inventories                                                                                                                                                     (1,781)                     (1,447)                                  (13,587)                (2,917)

    Other operating assets and liabilities                                                                                                                            2,616                        5,105                                      1,813                   7,543
                                                                                                                                                                      -----                        -----                                      -----                   -----

    Net cash provided by operating activities of continuing operations                                                                                               22,091                       13,081                                     63,378                  47,788

    Net cash provided by operating activities of discontinued operations                                                                                        -                            -                                       -                       -
                                                                                                                                                              ---                          ---                                     ---                     ---

    Net cash provided by operating activities                                                                                                                        22,091                       13,081                                     63,378                  47,788
                                                                                                                                                                     ------                       ------                                     ------                  ------

    Cash flows from investing activities:

    Purchases of property, plant and equipment                                                                                                                      (2,592)                     (1,457)                                   (9,094)                (8,462)

    Acquisition of businesses, net of cash acquired and working capital adjustments                                                                             -                          (6)                               (168,332)                 (8,958)

    Acquisition of intangible assets                                                                                                                            -                      (3,980)                                       -                 (3,980)

    Proceeds from sale of property, plant and equipment                                                                                                         2                             -                                      46                    7,037
                                                                                                                                                              ---                           ---                                     ---                    -----

    Net cash used in investing activities of continuing operations                                                                                                  (2,590)                     (5,443)                                 (177,380)               (14,363)

    Net cash provided by investing activities of discontinued operations                                                                                        -                            -                                       -                   1,498
                                                                                                                                                              ---                          ---                                     ---                   -----

    Net cash used in investing activities                                                                                                                           (2,590)                     (5,443)                                 (177,380)               (12,865)
                                                                                                                                                                     ------                       ------                                   --------                 -------

    Cash flows from financing activities:

    Borrowings under revolving credit facility                                                                                                                  -                            -                                 176,769                        -

    Repayments of long-term debt and revolving credit facility                                                                                                     (11,300)                     (1,875)                                  (26,925)               (16,250)

    Other financing activities                                                                                                                                        (468)                       (184)                                   (6,514)                (6,939)
                                                                                                                                                                       ----                         ----                                     ------                  ------

    Net cash provided by (used in) financing activities of continuing operations                                                                                   (11,768)                     (2,059)                                   143,330                (23,189)

    Net cash provided by (used in) financing activities of discontinued operations                                                                              -                            -                                       -                       -
                                                                                                                                                              ---                          ---                                     ---                     ---

    Net cash provided by (used in) financing activities                                                                                                            (11,768)                     (2,059)                                   143,330                (23,189)
                                                                                                                                                                    -------                       ------                                    -------                 -------

    Effect of exchange rates on cash and cash equivalents                                                                                                               175                      (2,210)                                     2,621                 (3,585)
                                                                                                                                                                        ---                       ------                                      -----                  ------

    Increase in cash and cash equivalents                                                                                                                             7,908                        3,369                                     31,949                   8,149

    Cash and cash equivalents, beginning of period                                                                                                                   92,149                       64,739                                     68,108                  59,959
                                                                                                                                                                     ------                       ------                                     ------                  ------

    Cash and cash equivalents, end of period                                                                                                                         $100,057                      $68,108                                   $100,057                 $68,108
                                                                                                                                                                     ========                      =======                                   ========                 =======

 

 

                                                           NOVANTA INC.

                                                   Revenue by Reportable Segment

                                                   (In thousands of U.S. dollars)

                                                            (Unaudited)


                      Three Months Ended December 31,                             Year Ended December 31,
                     -------------------------------                          -----------------------

                           2017                              2016                               2017            2016
                           ----                              ----                               ----            ----

    Revenue

    Photonics                        $61,856                                       $44,251                 $232,359   $174,158

    Vision                          58,131                                        33,482                  183,074    122,250

    Precision Motion                26,931                                        21,146                  105,857     88,350
                                    ------                                        ------                  -------     ------

    Total                           $146,918                                       $98,879                 $521,290   $384,758
                                    ========                                       =======                 ========   ========

 

 

                                                                                                       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 Segment (Non-GAAP):
    -----------------------------------------------------------------------------


                                                                                      Three Months Ended December 31,                       Year Ended December 31,
                                                                                      -------------------------------                       -----------------------

                                                                                            2017                               2016                             2017              2016
                                                                                            ----                               ----                             ----              ----

    Photonics

    Gross Profit (GAAP)                                                                             $28,694                                    $19,235                       $106,117             $76,696

    Gross Profit Margin (GAAP)                                                                      46.4%                                     43.5%                         45.7%              44.0%

    Amortization of intangible assets                                                               1,020                                        383                          4,005               1,535

    Acquisition fair value adjustments                                                         -                                          -                            699                  -
                                                                                             ---                                        ---                            ---                ---

    Adjusted Gross Profit (Non-GAAP)                                                                $29,714                                    $19,618                       $110,821             $78,231
                                                                                                    =======                                    =======                       ========             =======

    Adjusted Gross Profit Margin (Non-GAAP)                                                         48.0%                                     44.3%                         47.7%              44.9%


    Vision

    Gross Profit (GAAP)                                                                             $21,871                                    $14,735                        $69,249             $47,181

    Gross Profit Margin (GAAP)                                                                      37.6%                                     44.0%                         37.8%              38.6%

    Inventory related charges for discontinuation of Radiology products                        -                                          -                              -             1,370

    Amortization of intangible assets                                                               1,636                                        515                          4,460               2,222

    Acquisition fair value adjustments                                                         -                                          -                          4,055                205
                                                                                             ---                                        ---                          -----                ---

    Adjusted Gross Profit (Non-GAAP)                                                                $23,507                                    $15,250                        $77,764             $50,978
                                                                                                    =======                                    =======                        =======             =======

    Adjusted Gross Profit Margin (Non-GAAP)                                                         40.4%                                     45.5%                         42.5%              41.7%


    Precision Motion

    Gross Profit (GAAP)                                                                             $12,006                                     $9,287                        $46,564             $40,044

    Gross Profit Margin (GAAP)                                                                      44.6%                                     43.9%                         44.0%              45.3%

    Amortization of intangible assets                                                                  90                                        102                            359                 407

    Acquisition fair value adjustments                                                         -                                          -                              -                 -
                                                                                             ---                                        ---                            ---               ---

    Adjusted Gross Profit (Non-GAAP)                                                                $12,096                                     $9,389                        $46,923             $40,451
                                                                                                    =======                                     ======                        =======             =======

    Adjusted Gross Profit Margin (Non-GAAP)                                                         44.9%                                     44.4%                         44.3%              45.8%


    Unallocated Corporate and Shared Services

    Gross Profit (GAAP)                                                                              $(330)                                    $(405)                      $(1,399)           $(1,469)

    Amortization of intangible assets                                                          -                                          -                              -                 -

    Acquisition fair value adjustments                                                         -                                          -                              -                 -
                                                                                             ---                                        ---                            ---               ---

    Adjusted Gross Profit (Non-GAAP)                                                                 $(330)                                    $(405)                      $(1,399)           $(1,469)
                                                                                                      =====                                      =====                        =======             =======


    Novanta Inc.

    Gross Profit (GAAP)                                                                             $62,241                                    $42,852                       $220,531            $162,452

    Gross Profit Margin (GAAP)                                                                      42.4%                                     43.3%                         42.3%              42.2%

    Inventory related charges for discontinuation of Radiology products                        -                                          -                              -             1,370

    Amortization of intangible assets                                                               2,746                                      1,000                          8,824               4,164

    Acquisition fair value adjustments                                                         -                                          -                          4,754                205
                                                                                             ---                                        ---                          -----                ---

    Adjusted Gross Profit (Non-GAAP)                                                                $64,987                                    $43,852                       $234,109            $168,191
                                                                                                    =======                                    =======                       ========            ========

    Adjusted Gross Profit Margin (Non-GAAP)                                                         44.2%                                     44.3%                         44.9%              43.7%

 

 

                                                                                                                                                                   NOVANTA INC.

                                                                                                                                              Reconciliation of GAAP to Non-GAAP Financial Measures

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

                                                                                                                                                                   (Unaudited)


    Adjusted Operating Income from Continuing Operations and Adjusted EPS (Non-GAAP):
    ---------------------------------------------------------------------------------


                                                                                                                                  Three Months Ended December 31, 2017
                                                                                                                                  ------------------------------------

                                                                                          Operating    Operating Income from    Income Tax      Effective       Net Income
                                                                                          Income from                   Margin                         Continuing                            Provision    Tax Rate           Attributable
                                                                                          Continuing                                                   Operations                                                             to Novanta
                                                                                          Operations                                                      before                                                             Inc., Net of
                                                                                                                                                      Income Taxes                                                                Tax          Diluted EPS
                                                                                         ------------                ----------                      ------------                           -----------   ---------         -------------      -----------

    GAAP results                                                                                      $19,094                                 13.0%                                              $16,570            $6,893                41.6%                     $8,865
                                                                                                      -------                                  ----                                               -------            ------                 ----

    Less: Adjustment of redeemable noncontrolling interest to estimated redemption value                                                                                                                                                                   (8,941)
                                                                                                                                                                                                                                                            ------

    Net income (loss) attributable to Novanta Inc. after adjustment of redeemable
     noncontrolling interest to estimated redemption value                                                                                                                                                                                                   $(76)           $(0.00)

    Adjustment of redeemable noncontrolling interest to estimated redemption value                                                                                                                                                                           8,941               0.25
                                                                                                                                                                                                                                                             -----

    Net income attributable to Novanta Inc.                                                                                                                                                                                                                 $8,865

    Non-GAAP Adjustments:

    Amortization of intangible assets                                                           5,429                                3.7%                                            5,429

    Restructuring, divestiture and other costs                                                    146                                0.1%                                              146

    Acquisition related costs                                                                   1,164                                0.8%                                            1,164

    Tax effect on non-GAAP adjustments                                                                                                                                                                        2,845

    Non-GAAP tax adjustments                                                                                                                                                                                (2,584)
                                                                                                                                                                                                             ------

    Total non-GAAP adjustments                                                                        6,739                                  4.6%                                                6,739               261                                           6,478              0.19
                                                                                                      -----                                   ---                                                 -----               ---                                           -----              ----


    Adjusted results (Non-GAAP)                                                                       $25,833                                 17.6%                                              $23,309            $7,154                30.7%                    $15,343             $0.44
                                                                                                      =======                                  ====                                               =======            ======                 ====                     =======             =====


    Weighted average shares outstanding - Diluted                                                                                                                                                                                                                             34,842
                                                                                                                                                                                                                                                                              ======

 

 

                                                                                                                                                               NOVANTA INC.

                                                                                                                                          Reconciliation of GAAP to Non-GAAP Financial Measures

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

                                                                                                                                                               (Unaudited)


    Adjusted Operating Income from Continuing Operations and Adjusted EPS (Non-GAAP):
    ---------------------------------------------------------------------------------


                                                                                                                               Three Months Ended December 31, 2016
                                                                                                                               ------------------------------------

                                                                                       Operating    Operating Income from       Income Tax      Effective       Net Income
                                                                                       Income from                     Margin                           Continuing                            Provision    Tax Rate          Attributable
                                                                                       Continuing                                                       Operations                                                            to Novanta
                                                                                       Operations                                                          before                                                            Inc., Net of
                                                                                                                                                       Income Taxes                                                               Tax          Diluted EPS
                                                                                      ------------                    ---------                       ------------                             ----------  ---------         ------------      -----------

    GAAP results                                                                                   $11,330                                     11.5%                                              $12,083            $4,327               35.8%             $7,756           $0.22
                                                                                                   -------                                      ----                                               -------            ------

    Non-GAAP Adjustments:

    Amortization of intangible assets                                                        3,099                                    3.1%                                            3,099

    Restructuring, divestiture and other costs (gain)                                         (93)                                 (0.1)%                                             (93)

    Acquisition related costs                                                                2,210                                    2.3%                                            2,210

    CEO transition costs                                                                        25                                    0.0%                                               25

    Tax effect on non-GAAP adjustments                                                                                                                                                                           186

    Non-GAAP tax adjustments                                                                                                                                                                                     584
                                                                                                                                                                                                                 ---

    Total non-GAAP adjustments                                                                     5,241                                      5.3%                                                5,241               770                                  4,471            0.13
                                                                                                   -----                                       ---                                                 -----               ---                                  -----            ----


    Adjusted results (Non-GAAP)                                                                    $16,571                                     16.8%                                              $17,324            $5,097               29.4%            $12,227           $0.35
                                                                                                   =======                                      ====                                               =======            ======                ====             =======           =====


    Weighted average shares outstanding - Diluted                                                                                                                                                                                                                    34,987
                                                                                                                                                                                                                                                                     ======

 

 

                                                                                                                                                                      NOVANTA INC.

                                                                                                                                                 Reconciliation of GAAP to Non-GAAP Financial Measures

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

                                                                                                                                                                      (Unaudited)


    Adjusted Operating Income from Continuing Operations and Adjusted EPS (Non-GAAP):
    ---------------------------------------------------------------------------------


                                                                                                                                         Year Ended December 31, 2017
                                                                                                                                         ----------------------------

                                                                                           Operating     Operating Income from    Income Tax      Effective       Net Income
                                                                                           Income from                    Margin                         Continuing                            Provision    Tax Rate             Attributable
                                                                                           Continuing                                                    Operations                                                               to Novanta
                                                                                           Operations                                                       before                                                               Inc., Net of
                                                                                                                                                        Income Taxes                                                                  Tax          Diluted EPS
                                                                                          ------------                 ----------                      ------------                           -----------   ---------           -------------      -----------

    GAAP results                                                                                        $57,195                                 11.0%                                              $76,134             $13,827                18.2%                       $60,051
                                                                                                        -------                                  ----                                               -------             -------

    Less: Adjustment of redeemable noncontrolling interest to estimated redemption value                                                                                                                                                                       (20,244)
                                                                                                                                                                                                                                                                -------

    Net income attributable to Novanta Inc. after adjustment of redeemable noncontrolling
     interest to estimated redemption value                                                                                                                                                                                                                     $39,807               $1.13

    Adjustment of redeemable noncontrolling interest to estimated redemption value                                                                                                                                                                               20,244                0.57
                                                                                                                                                                                                                                                                 ------

    Net income attributable to Novanta Inc.                                                                                                                                                                                                                     $60,051

    Non-GAAP Adjustments:

    Amortization of intangible assets                                                           20,920                                 4.0%                                           20,920

    Restructuring, divestiture and other costs                                                     346                                 0.0%                                              346

    Acquisition related costs                                                                    7,196                                 1.4%                                            7,196

    Acquisition fair value adjustments                                                           4,754                                 0.9%                                            4,754

    Gain on acquisition of business                                                                                                                                                (26,409)

    Tax effect on non-GAAP adjustments                                                                                                                                                                          9,641

    Non-GAAP tax adjustments                                                                                                                                                                                      759
                                                                                                                                                                                                                  ---

    Total non-GAAP adjustments                                                                         33,216                                  6.3%                                                6,807              10,400                                            (3,593)             (0.10)
                                                                                                       ------                                   ---                                                 -----              ------                                             ------               -----


    Adjusted results (Non-GAAP)                                                                         $90,411                                 17.3%                                              $82,941             $24,227                29.2%                       $56,458               $1.60
                                                                                                        =======                                  ====                                               =======             =======                 ====                        =======               =====


    Weighted average shares outstanding - Diluted                                                                                                                                                                                                                                   35,280
                                                                                                                                                                                                                                                                                    ======

 

 

                                                                                                                                                  NOVANTA INC.

                                                                                                                             Reconciliation of GAAP to Non-GAAP Financial Measures

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

                                                                                                                                                  (Unaudited)


    Adjusted Operating Income from Continuing Operations and Adjusted EPS (Non-GAAP):
    ---------------------------------------------------------------------------------


                                                                                                                                   Year Ended December 31, 2016
                                                                                                                                   ----------------------------

                                                                                       Operating     Operating Income from      Income Tax      Effective       Net Income
                                                                                       Income from                   Margin                         Continuing                        Provision    Tax Rate           Attributable
                                                                                       Continuing                                                   Operations                                                         to Novanta
                                                                                       Operations                                                      before                                                           Inc., Net
                                                                                                                                                       Income                                                            of Tax
                                                                                                                                                       Taxes                                                                            Diluted EPS
                                                                                      ------------                  ---------                       -----------                        ----------  ---------          ------------      -----------

    GAAP results                                                                                    $32,563                                  8.5%                                         $32,522            $10,519               32.3%             $22,003           $0.63
                                                                                                    -------                                   ---                                          -------            -------

    Non-GAAP Adjustments:

    Amortization of intangible assets                                                       12,415                                 3.2%                                        12,415

    Restructuring, divestiture and other costs                                               2,970                                 0.8%                                         2,970

    Acquisition related costs                                                                4,975                                 1.3%                                         4,975

    Acquisition fair value adjustments                                                         205                                 0.1%                                           205

    Inventory related charges for discontinuation of Radiology products                      1,370                                 0.4%                                         1,370

    CEO transition costs                                                                     1,306                                 0.2%                                         1,306

    Tax effect on non-GAAP adjustments                                                                                                                                                                 5,668

    Non-GAAP tax adjustments                                                                                                                                                                           1,465
                                                                                                                                                                                                       -----

    Total non-GAAP adjustments                                                                     23,241                                  6.0%                                          23,241              7,133                                  16,108            0.46
                                                                                                   ------                                   ---                                           ------              -----                                  ------            ----


    Adjusted results (Non-GAAP)                                                                     $55,804                                 14.5%                                         $55,763            $17,652               31.7%             $38,111           $1.09
                                                                                                    =======                                  ====                                          =======            =======                ====              =======           =====


    Weighted average shares outstanding - Diluted                                                                                                                                                                                                              34,914
                                                                                                                                                                                                                                                               ======

 

 

 

                                                                               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,
                                                                                                          -------------------------------                       -----------------------

                                                                                                                2017                                  2016                           2017            2016
                                                                                                                ----                                  ----                           ----            ----

                 Consolidated Net Income (GAAP)                                                                             $9,677                           $7,756                          $62,307       $22,003

                 Net Income Margin                                                                                            6.6%                            7.8%                           12.0%         5.7%

                 Interest (income) expense, net                                                                              2,291                            1,088                            7,165         4,559

                 Income tax provision                                                                                        6,893                            4,327                           13,827        10,519

                 Depreciation and amortization                                                                               8,318                            5,040                           30,758        20,357

                 Share-based compensation                                                                                    1,270                              908                            5,493         4,293

                 Restructuring, acquisition and divestiture related costs                                                    1,310                            2,117                            7,542         7,945

                 Inventory related charges for discontinuation of Radiology products                                             -                               -                               -        1,370

                 Acquisition fair value adjustments                                                                              -                               -                           4,754           205

                 CEO transition costs                                                                                            -                              25                                -        1,306

                 Gain on acquisition of business                                                                                 -                               -                        (26,409)            -

                 Other, net                                                                                                    233                          (1,841)                             305       (4,518)


                 Adjusted EBITDA (Non-GAAP)                                                                                $29,992                          $19,420                         $105,742       $68,039
                                                                                                                 ===

                 Adjusted EBITDA Margin (Non-GAAP)                                                                           20.4%                           19.6%                           20.3%        17.7%



    Net Debt (Non-GAAP):
    --------------------


                                                     December 31, 2017                                                                December 31, 2016
                                                     -----------------                                                                -----------------

                 Total Debt (GAAP)                                                                                        $234,619                          $77,920

                 Plus: Deferred financing costs                                                                              3,159                            3,330


                 Gross Debt                                                                                                237,778                           81,250

                 Less: cash and cash equivalents                                                                         (100,057)                         (68,108)


                 Net Debt (Non-GAAP)                                                                                      $137,721                          $13,142
                 ===============


    Organic Revenue Growth (Non-GAAP):
    ----------------------------------


                                                    Three Months Ended                                                               Twelve Months Ended
                                                     December 31, 2017                                                                December 31, 2017
                                                     Compared to Three                                                               Compared to Twelve
                                                       Months Ended                                                                      Months Ended
                                                     December 31, 2016                                                                December 31, 2016
                                                     -----------------                                                                -----------------

                 Reported growth (GAAP)                                                                                      48.6%                           35.5%

                 Less: Change attributable to acquisitions                                                                   39.5%                           27.5%

                 Plus: Change due to foreign currency                                                                       (0.8)%                            0.5%


                 Organic growth (Non-GAAP)                                                                                    8.3%                            8.5%

 

 

 

 

Non-GAAP Measures

Organic Revenue Growth

We define the term "organic revenue" as revenue excluding the impact from business acquisitions, divestitures, product line discontinuations, and the effect of foreign currency translation. We use 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. We believe that this non-GAAP measure, when taken together with our GAAP financial measures, allows us and our investors to better measure our performance and evaluate long-term performance trends. Organic revenue growth also facilitates easier comparisons of our performance with prior and future periods and relative comparisons to our peers. We exclude the effect of foreign currency translation from these measures because foreign currency translation is subject to volatility and can obscure underlying trends. We exclude the effect of acquisitions and divestitures because these activities can vary dramatically between reporting periods and between us and our peers, which we believe makes comparisons of long-term performance trends difficult for management and investors. Beginning in 2017, 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 is displayed in the tables above. Adjusted Gross Profit and Adjusted Gross Profit Margin excludes amortization of acquired intangible assets, inventory and deferred revenue fair value adjustments from business acquisitions because: (1) the amounts are non-cash; (2) the Company cannot influence the timing and amount of future expense recognition; and (3) excluding such expenses provides investors and management better visibility into the components of operating costs. In addition, the Company excluded prior year inventory related charges associated with a product line closure as these costs occurred outside 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 from Continuing Operations and Adjusted Operating Margin

The calculation of Adjusted Operating Income from Continuing Operations and Adjusted Operating Margin is displayed in the tables above. Adjusted Operating Income from Continuing Operations and Adjusted Operating Margin exclude amortization of acquired intangible assets, inventory and deferred revenue fair value adjustments related to business acquisitions because: (1) the amounts are non-cash; (2) the Company cannot influence the timing and amount of future expense recognition; and (3) excluding such expenses provides investors and management better visibility into the components of operating costs. The Company also excluded prior year CEO transition costs related to CEO succession, prior year inventory related charges associated with a product line closure, and restructuring, acquisition and divestiture 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 from Continuing Operations before Income Taxes

The calculation of Adjusted Income from Continuing Operations before Income Taxes is displayed in the tables above. The calculation of Adjusted Income from Continuing Operations before Income Taxes excludes amortization of acquired intangible assets, inventory and deferred revenue fair value adjustments related to business acquisitions, prior year CEO transition costs related to CEO succession, prior year inventory related charges associated with a product line closure, and restructuring, acquisition and divestiture related costs for the reasons described for Adjusted Operating Income from Continuing Operations and Adjusted Operating Margin above.

Non-GAAP Income Tax Provision and Effective Tax Rate

The Non-GAAP Income Tax Provision and Effective Tax Rate are calculated based on the Adjusted Income from Continuing Operations before Income Taxes by jurisdiction and the applicable tax rates currently in effect for the respective jurisdictions. In addition, the Company excluded significant discrete income tax expenses (benefits) related to releases of valuation allowances, benefits or expenses associated with the completion of tax audits, effects of changes in tax laws, effects of acquisition related tax planning actions on our effective tax rate, and the income tax effect of non-GAAP adjustments discussed above.

Adjusted Net Income Attributable to Novanta Inc., Net of Tax

The calculation of Adjusted Net Income Attributable to Novanta Inc., net of tax, is displayed in the tables above. Because pre-tax income is included in determining net income attributable to Novanta Inc., net of tax, the calculation of Adjusted Net Income Attributable to Novanta Inc., net of tax, also excludes amortization of acquired intangible assets, inventory and deferred revenue fair value adjustments related to business acquisitions, prior year CEO transition costs related to CEO succession, prior year inventory related charges associated with a product line closure, and restructuring, acquisition and divestiture related costs for the reasons described for Adjusted Income from Continuing Operations before Income Taxes. In addition, the Company excluded significant discrete income tax expenses (benefits) related to releases of valuation allowances, benefits or expenses associated with the completion of tax audits, effects of changes in tax laws, effects of acquisition related tax planning actions on our effective tax rate, and the income tax effect of non-GAAP adjustments discussed above.

Adjusted Diluted EPS

The calculation of Adjusted Diluted EPS is displayed in the tables above. Because Net Income Attributable to Novanta Inc., net of tax, is used in the diluted EPS calculation, the calculation of Adjusted Diluted EPS excludes amortization of acquired intangible assets, inventory and deferred revenue fair value adjustments related to business acquisitions, prior year CEO transition costs related to CEO succession, prior year inventory related charges associated with a product line closure, restructuring, acquisition and divestiture related costs, significant discrete income tax expenses (benefits) related to releases of valuation allowances, benefits or expenses associated with the completion of tax audits, effects of changes in tax laws, effects of acquisition related tax planning actions on our effective tax rate, and the income tax effect of non-GAAP adjustments for the reasons described above for Adjusted Net Income Attributable to Novanta Inc., net of tax. In addition, the Company excluded the adjustment of redeemable noncontrolling interest to estimated redemption value as (1) the adjustment is unusual; (2) the amount is noncash; (3) the amount does not represent a measure of earnings and is excluded from the determination of net income attributable to Novanta Inc.; and (4) the Company believes it may not be indicative of future adjustments and that investors may benefit from an understanding of the Company's operating results without giving effect to this adjustment.

Adjusted EBITDA and Adjusted EBITDA Margin

The Company defines Adjusted EBITDA as the consolidated net income before deducting interest (income) expense, income taxes, depreciation, amortization, non-cash share-based compensation, restructuring, acquisition and divestiture related costs, acquisition fair value adjustments, prior year CEO transition costs, prior year inventory related charges associated with a product line closure, and other non-operating income (expense) items, including foreign exchange gains (losses) and earnings from an equity-method investment for the reasons described above in the introductory paragraphs of the "Use of Non-GAAP Financial Measures."

Adjusted EBITDA includes 100% of the results of our consolidated subsidiaries and therefore does not exclude the Adjusted EBITDA attributable to noncontrolling interests.

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.

Net Debt

The Company defines Net Debt as its total debt as reported on the consolidated balance sheet as of the end of the period plus unamortized deferred financing costs and less its cash and cash equivalents. 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.

* * * *

 

View original content with multimedia: http://www.prnewswire.com/news-releases/novanta-announces-financial-results-for-the-fourth-quarter-and-full-year-2017-300605760.html

SOURCE Novanta Inc.

Back to news