NOVT

Novanta's second quarter was marked by broad-based organic growth across all business units and a favorable response from the market. Management attributed the strong results to both an acceleration in new product revenue—up more than 50% year-over-year—and operational improvements, including factory consolidations. CEO Matthijs Glastra highlighted that all business units grew organically and pointed to increased customer demand in precision robotics, AI-driven manufacturing, and minimally invasive surgery as significant contributors to quarterly performance. Is now the time to buy NOVT? Find out in our full research report (it’s free). Revenue: $265.8 million vs analyst estimates of $262.3 million (10.3% year-on-year growth, 1.3% beat) Adjusted EPS: $0.89 vs analyst estimates of $0.83 (7.2% beat) Adjusted EBITDA: $60.73 million vs analyst estimates of $58.88 million (22.8% margin, 3.1% beat) The company lifted its revenue guidance for the full year to $1.14 billion at the midpoint from $1.05 billion, an 8.4% increase Management raised its full-year Adjusted EPS guidance to $3.71 at the midpoint, a 3.8% increase EBITDA guidance for the full year is $275.5 million at the midpoint, above analyst estimates of $249.4 million Operating Margin: 11.5%, in line with the same quarter last year Market Capitalization: $6.34 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Lee Jagoda (CJS Securities) asked how to break down organic growth and EBITDA improvements excluding Riverpoint. CFO Robert Buckley highlighted stronger Automation Enabling Technologies performance and benefits from factory closures. Jagoda (CJS Securities) sought quantification of humanoid robotics orders and their impact on margins. COO Charles Ravetto clarified these were early-stage training deployments with limited near-term impact on gross margin. Jagoda (CJS Securities) questioned how core gross margin could evolve, excluding Riverpoint. Buckley pointed to expected 100 basis point improvements in 2026 and 2027, with some risk from tariffs and manufacturing transitions. Quinn Fredrickson (Baird) asked about visibility into Gen AI data center exposure and its durability into 2027. CEO Matthijs Glastra described a positive outlook, supported by strong backlog in air bearing spindles and ongoing customer optimism. Fredrickson (Baird) probed the dip in R&D spending. Buckley explained that as new products scale, R&D as a percentage of sales is expected to modestly decrease but remain substantial, with some increase from the Riverpoint integration. In the coming quarters, our analysts will monitor (1) the pace and financial impact of Riverpoint Medical integration, (2) the execution and cost savings from ongoing manufacturing site closures, and (3) continued momentum in AI-driven automation and robotics, especially as large orders transition from prototyping to broader deployment. The evolution of tariff-related headwinds and product mix changes will also be key indicators to watch. Novanta currently trades at $167.68, up from $153.12 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8:00 a.m. ET Chair and Chief Executive Officer - Matthijs Glastra Chief Financial Officer - Robert Buckley Co-Chief Operating Officer - Chuck Ravetto Co-Chief Operating Officer - John Lesica Corporate Finance Leader - Marcella Meditz Operator: Good morning. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to Novanta Incorporated Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Marcy Meditz, Corporate Finance Leader for Novanta. Please go ahead. Marcella Meditz: Thank you very much. Good morning, and welcome to Novanta's second quarter 2026 earnings conference call. This is Marcy Meditz, Corporate Finance Leader for Novanta. With me on today's call is our Chair and Chief Executive Officer, Matthijs Glastra; our Chief Financial Officer, Robert Buckley; and our Co-Chief Operating Officers, Chuck Ravetto and John Lesica. If you have not received a copy of our earnings press release issued last night, you may obtain it from the Investor Relations section of our website at www.novanta.com. Please note, this call is being webcast live and will be archived on our website shortly after the call. Before we begin, we need to remind everyone of the safe harbor for forward-looking statements that we've outlined in our earnings press release issued last night and also those in our SEC filings. We may make some comments today, both in our prepared remarks and in our responses to questions that may include forward-looking statements. These involve inherent assumptions with known and unknown risks and other factors that could cause our future results to differ materially from our current expectations. Any forward-looking statements made today represent our views only as of this time. We disclaim any obligation to update forward-looking statements in the future, even if our estimates change. So, you should not rely on any of these forward-looking statements as representing our views as of any time after this call. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available as an attachment to our earnings press release. To the extent that we use non-GAAP financial measures during this call that are not reconciled to GAAP measures in the earnings press release, we will provide reconciliations promptly on the Investor Relations section of our website after this call. I'm now pleased to introduce the Chair and Chief Executive Officer of Novanta, Matthijs Glastra. Matthijs Glastra: Thank you, Marcy. Good morning, everybody, and thanks for joining our call. Novanta delivered an outstanding second quarter. We delivered strong results, 9% organic sales growth, 10% on a reported basis, 16% adjusted EBITDA growth, 47% adjusted gross margin, which was a 100 basis point improvement year-over-year, adjusted EPS growth of 17% and operating cash flow that year-to-date exceeds the operating cash flow we generated in all of 2025. All of our business units grew organically in the quarter. The combination of these strong results give us a terrific foundation to close our largest acquisition in history. With the close of Riverpoint Medical at the end of July, we're also raising our full year 2026 outlook, positioning Novanta to deliver more than 15% reported revenue growth year-over-year for the full year. Very proud of the performance in our accomplishments, putting us on a solid growth trajectory and a path to exceeding our strategic goals. For 2026, we remain focused and are executing well on our top 3 priorities. First, organic growth. Our innovation engine is now a very strong contributor. New product revenue grew by more than 50% in the quarter and is up over 60% year-to-date, lifting our vitality index to approximately 29% of sales from 21% a year ago. Bookings are up 18% year-to-date, and backlog is up 11%. While some timing of customer orders impacted our advanced surgery business in the first and second quarters, our year-to-date book-to-bill was well over 1.0. Organic growth is now accelerating with all 4 business units delivering on solid organic growth in the quarter. As we look out to the remainder of the year, we expect to see many of these trends to continue, with strong new product revenue, design wins and continued strength in precision robotics, physical AI, semiconductors, and minimally invasive and robotic surgery. Second, acquisitions. In June, we announced and just recently closed the acquisition of Riverpoint Medical, a milestone transformative acquisition, our largest to date and an extremely strong strategic and financial fit for Novanta. Riverpoint accelerates our shift into minimally invasive surgery markets with long-term secular growth dynamics. It roughly doubles our recurring medical consumable business to approximately $300 million from about 15% of revenue to roughly 25% annualized and expands our medical end market exposure to 60% of revenue. It is expected to be immediately accretive to revenue growth, gross margins, EBITDA margins and earnings per share as well as long-term organic growth rates. Integration is underway under the leadership of John Lesica. And the more time we spend with the Riverpoint team, the more impressed we are by the depth of their customer relationships, their innovation mindset, and their commitment to quality. We're excited to welcome them to Novanta. Now our third priority for 2026 is about completing our manufacturing foundation. In the second quarter, we completed the manufacturing moves and closure of 2 of our factories. The establishment of our regional [ lighthouse ] manufacturing centers of excellence is well underway, supported by 2 new MRP system implementations, the Novanta Growth System and world-class manufacturing teams. Given the strong progress and momentum being made to regionalize our manufacturing, reduce the company's complexity and asset intensity, and establish a lower cost structure, we decided to accelerate our strategy by announcing 2 additional factory closures by the end of the first quarter of 2027 as part of our current restructuring program. These manufacturing moves are also underway now on a solid track to ensure Novanta achieves better scale, stronger systems, deeper talent, and a full in-region for-region capability, which ultimately deepens our preferred supplier position with leading OEMs, dramatically reduces or eliminates our sensitivity to trade disruptions while sustainably expanding gross margin, profit margins, and cash flows. Stepping back, the first half performance validates our strategy. We win in end markets with durable secular tailwinds where our growth platforms represent a nearly $10 billion addressable market opportunity by 2030. We win in them by solving our OEMs customers' hardest problems with proprietary technology, which designs us in for the better part of the decade. And we deployed capital to compound that position, which this quarter meant Riverpoint. The macro remains complex, and we're watching it closely, but complexity and opportunity travel together and what is in front of us is accelerating demand, record new product momentum, the strongest team Novanta has ever had, and the balance sheet to keep acting. Chuck Ravetto and John Lesica are both with us today. They will walk you through their segment's new product launches, design wins, and customer momentum behind these results and more on the Riverpoint integration. John, over to you. John Lesica: Thanks, Matthijs. In the second quarter, revenue in the Medical Solutions segment grew 8.6% year-over-year, better than we expected. This segment saw a book-to-bill of 0.79 in the second quarter and year-to-date had bookings growth of greater than 10% year-over-year. New product sales grew by nearly 50% year-over-year and the vitality index in this segment was above 30% of sales. Our advanced surgery business experienced 12% growth year-over-year, driven by both strong patient procedural growth rates and from our new product launches of our second-generation insufflators. Our second-generation insufflators have set the industry standard for patient safety, smoke evacuation, and surgical workflow optimization. In addition to our next-generation insufflators, we now have 2 customers with first-generation arthroscopic fluid management platforms. These first-generation systems will help us better identify the right combination of pump modalities to deliver to our customers and surgeons a tool that reduces the complexity of surgeries, enhances workflows to improve safety and productivity at a reduced cost to own and serve in a manner similar to what we achieved with our insufflator platform. The advanced surgery business remains on track for a strong full-year growth, supported by year-to-date bookings growth of greater than 8%, new product revenue growth of greater than 70% in the second quarter, and a vitality index near 30%. We continue to have strong momentum in insufflation, expansion of our fluid management solution in arthroscopy and a scaling medical consumables business. In our precision medicine business, sales grew by 5% year-over-year. The year-over-year growth in this business was driven by continued strong momentum from our Keonn acquisition as well as our core growth from our medical customers. Customer demand in sectors outside of life sciences are beginning to show momentum. Our life sciences exposure is still expected to be less than 10% of the company's overall revenue in 2026. While this business is not expected to return to sustained growth in 2026, we do see a path to growth materializing in 2027 based on how the market is recovering and the narrative from our customers. In addition, we've continued to invest in bringing Keonn's leading technology and AI-based software solutions to the healthcare market. Earlier this year, we established a strategic partnership with a direct-to-hospital provider to start prototyping solutions for that environment. While this is a multiyear investment initiative, the progress and momentum we're seeing with Keonn's core business is a testament of the value proposition we believe we can offer. Overall, Medical Solutions segment adjusted gross margins were approximately 41%, which is down 290 basis points year-over-year and down 230 basis points sequentially, primarily due to a higher mix of precision medicine products with lower margins and temporary cost increases incurred as part of our operational transformation as we accelerate site rationalization across the segment. Some of these costs were temporarily higher in the second quarter, and we expect gross margins to sequentially expand materially in the third quarter. Finally, I'm also pleased to share that we closed the acquisition of Riverpoint Medical, a milestone we're genuinely excited about. Riverpoint brings innovative fiber-based sutures and implantables that strengthen our position in high-growth sports medicine, cardiovascular and orthopedic applications, expanding the value we can deliver to our medical OEM customers. Just as important, we're thrilled to welcome over 600 talented Riverpoint colleagues to the Novanta team whose expertise will be instrumental in driving this next chapter of growth. Chuck will now cover the Automation Enabling Technologies segment. Charles Ravetto: Thanks, John. In the second quarter, the Automation Enabling Technologies segment revenue grew by 12% year-over-year, better than expected. The book-to-bill in this segment was 1.1 and bookings were up 18% year-over-year. Our precision manufacturing business, which mainly serves the industrial equipment market, saw year-over-year revenue growth of 9%, continuing momentum we discussed last quarter. The long-term growth driver here continues to be the automation and digitization of manufacturing lines with ever-increasing demands for throughput, productivity, smaller form factors, and tighter tolerances. Our intelligent laser beam steering subsystems offer unique proprietary capabilities to meet those needs across a broadening set of high-precision applications such as laser additive manufacturing, probe card production for AI GPU chips as well as advanced packaging and light engines for lithography. For example, in laser additive manufacturing, Novanta subsystems enable the rapid production of complex designs with dramatically reduced material waste through our low drift and fastest throughput technology. We remain excited about the durability of these multiyear tailwinds for Novanta. In our robotics and automation business, revenue was up 13.5% year-over-year. We continue to see a healthy outlook in this business with solid demand for advanced robotic applications and increasing strength in semiconductor applications benefiting from the investment in artificial intelligence. The growth is supported by multiple Gen AI-driven tailwinds, new product advancements for precision robotics, humanoids and warehouse automation, continued momentum in advanced packaging and substrate production for AI GPU chips and the front-end semiconductor wafer fab equipment market. In the quarter, we have seen our first significant orders of our servo drives to support the deployment of hundreds of humanoids in customers' testing and learning facilities to start their journey of learning how to operate humanoids in a factory and in a human-occupied environment. This is a significant and positive step forward on a long development path for these robotic systems to be commercially deployed. We are working closely with our OEM customers and other partners such as NVIDIA to continue to evolve the technology to ensure safe operations of these systems at reduced energy consumption and costs. Finally, our robotics and automation and precision manufacturing businesses carry the largest share of our exposure to Gen AI technologies and infrastructure, which we estimate at approximately 17% of total company revenue in the second quarter. Collectively, these applications grew approximately 25% year-over-year, and we expect this growth rate to continue as we progress through the second half. The overall Automation Enabling Technologies segment adjusted gross margins were approximately 53%, which is up 470 basis points sequentially and 450 basis points year-over-year. While we continue to incur factory redundancy costs, logistics and other supply chain inflationary costs as well as tariff and trade-related costs, our teams worked hard on deploying the tools from the Novanta Growth System to drive stronger productivity gains, to update pricing and surcharging schedules, to recover duty drawback and credits, and drove a stronger mix of higher-margin innovative products to deliver on their commitments. It was a strong accomplishment for which I'm very proud of the team. New product revenue for this segment grew over 60% year-over-year in the quarter, and customer design wins grew over 25% on the back of both our innovation and stronger commercial execution by our teams. In addition, the vitality index was 24%, which is an improvement of 700 basis points versus last year's performance. With that, I'll turn the call over to Robert to provide more details on our operations and financial performance. Robert? Robert Buckley: Thank you, Chuck. As you just heard, all of our business lines experienced organic revenue growth in the quarter. As we look out to the rest of the year, we continue to see sustained and accelerating customer demand supporting our organic growth outlook. Our sales in the medical end markets represented 51% of total company sales, while sales in the advanced industrial markets were 49%. Our second quarter 2026 non-GAAP adjusted gross profit was $125 million, 47% adjusted gross margin compared to $111 million or 46% adjusted gross margin in the second quarter of 2025. Adjusted gross margins were up 100 basis points year-over-year and 150 basis points sequentially. The details of this improvement were just discussed by John and Chuck. Moving on. R&D expenses were $24 million or approximately 9% of sales, which was down 150 basis points versus the prior year. Second quarter SG&A expenses were $60 million or approximately 22.6% of sales. SG&A expenses included $5.6 million or 2.1% of sales in costs related to the design and implementation phase of our new factory MRP system and some nonrecurring costs. The sequential increases in SG&A expenses in the quarter was a result of the higher variable compensation tied to stronger financial performance and outlook. Adjusted EBITDA was $60.7 million, demonstrating more than 16% growth year-over-year and achieving a nearly 23% adjusted EBITDA margin, which is up 120 basis points versus the prior year. On the tax front, our non-GAAP tax rate for the second quarter was 21%, flat to the second quarter of 2025. Our non-GAAP adjusted earnings per share was $0.89 in the second quarter, up 17% versus the prior year. Diluted shares outstanding in the quarter were 41.164 (sic ) [ 41,164 ] million. The recent $300 million equity raise to support the Riverpoint Medical acquisition had a minor impact on shares outstanding in the quarter. Operating cash flow for the second quarter was $65 million compared to $15 million in the prior year. Year-to-date operating cash flow was $117 million, which is already exceeding the operating cash flows we delivered for the full year of 2025. We are particularly proud of the teams for delivering this outcome despite a handful of manufacturing production moves underway and investments in safety stock to insulate ourselves from supply tightness, including electronic components and rare earth [ materials ]. We ended the second quarter with gross debt of $239 million and a gross leverage ratio of 1x. Our second quarter cash balance was $719 million, and so our net debt was negative $480 million, giving us a net leverage ratio of negative 2x. Now turning to guidance. Novanta's core businesses are trending in line with or above expectations with continued momentum building in a handful of areas. And we just closed our largest acquisition in the history of this company, Riverpoint Medical. Acquiring a business that is growing revenue, profit and cash flows faster than Novanta on the back of Novanta's strongest organic revenue growth and cash flow growth in more than 3 years, confidently positions Novanta on a really exciting path and outlook. As a consequence, for the full year 2026, we now expect GAAP revenue to be approximately $1,130 million to $1,140 million, which not only raises our organic growth outlook, but incorporates the Riverpoint Medical acquisition in our outlook. This represents reported growth greater than 15% on the full year basis and organic growth of up to 7%. For the rest of the full year guidance, we expect adjusted EBITDA to be between $273 million and $278 million, which represents year-over-year growth of 24% to 26% and adjusted diluted earnings per share to be in the range of $3.68 and $3.74, representing year-over-year growth in the range of 12% to 14%. Our updated range for EBITDA includes around $25 million of adjusted EBITDA for the Riverpoint Medical business, which represents an ended July close as well as some conservatism given the nature of the transition from private company to public company. Because of the strength we are seeing in our financial outlook and the progress and momentum our manufacturing teams have demonstrated, we are also taking the opportunity to accelerate 2 additional manufacturing transfers and site closures as part of our current restructuring program to position us for even stronger 2027. We announced the closure of these 2 additional manufacturing facilities already, both of which are on track for full production moves and transfers by the end of the first quarter of 2027. In addition, we also started the doubling of capacity of our China factory to support the growth of our air bearing spindles business. This business now has committed demand for the next 2 years, putting us in a confident position to expand capacity, which is also partially funded by customers. The expansion plan is something our teams have a track record of completing without disruptions and while meeting the growth needs of our customers, giving us confidence in the ability to execute this program as well. Not only do we continue to have high confidence in Novanta's growth and outlook, which is supported by committed backlog, accelerating customer optimism, and solid execution of new product introductions, but we're also thrilled to welcome Novanta Riverpoint Medical to the company at a time it is accelerating its own financial outlook. Turning now to the third quarter of 2026. We expect GAAP revenue to be approximately $300 million to $304 million, which represents year-over-year organic growth of 7% to 9% and reported revenue growth of 21% to 23%. This revenue outlook incorporates Riverpoint Medical. Looking at growth in our segments. In the third quarter, the Automation Enabling Technologies segment is expected to achieve 12% to 14% growth versus the prior year, which represents another sequential improvement building off of the first half, driven by continued momentum in AI-driven robotics and automation, digital and AI-driven manufacturing, and semi markets as described by Chuck earlier. Medical Solutions segment is expected to achieve 32% to 35% reported growth in the third quarter and a 2% to 4% organic growth. While our advanced surgery business is expected to continue to show approximately 10% growth on the strength of new product ramps and end market strength, our precision medicine business will decline in the quarter as expected and discussed in the prior earnings call. This decline is from our life science exposure, which is expected to be less than 10% of Novanta's total sales. Given the challenges over the last few years in this market, there are aspects of the life science market commoditizing and declining in the near term. As such, we're focused on high-growth life science applications where precision and performance matter, which we expect will enable us to return to growth in late 2027 in this business. For Novanta's adjusted gross margins, we expect the third quarter to come in at approximately 48%. The sequential improvement is attributed to Riverpoint Medical's accretion and the completion of 2 manufacturing site closures that occurred at the end of the second quarter. Gross margins for the full year 2026 are expected to be around 47%. For operating expenses in the third quarter, we expect approximately $80 million to $82 million. This represents roughly 26% to 27% of sales. The guidance excludes expected costs associated with our manufacturing MRP system. Full year operating expenses are expected to be around 27% to 28% of sales. Depreciation expense will be approximately $6 million, which incorporates Riverpoint Medical. Depreciation expense for the full year will be just over $19 million. Stock compensation expense, which was $9.3 million in the second quarter, is expected to be around $9 million in the third quarter. This higher stock compensation expense incorporates grants to Riverpoint Medical employees as both an incentive and retentive tool. Stock compensation expense in the full year will be just over $37 million. For adjusted EBITDA in the third quarter, we expect it to be seen between $74 million and $77 million, representing 27% to 33% increase year-over-year. And we expect to achieve approximately a 25% EBITDA margin, which is 150 basis points higher than the prior year and quarter. Interest expense, net of interest income will be approximately $9 million in the third quarter, incorporating a partial quarter financing from Riverpoint Medical. We expect our non-GAAP tax rate to be approximately 22% in the third quarter. The exact rate will depend mainly on jurisdictional mix of income and the impact of Riverpoint Medical acquisition on both profitability and the capital structure. The non-GAAP tax rate for the full year is expected to be just north of 21%. Diluted weighted average shares outstanding will be approximately 43 million shares in the third quarter, incorporating the $300 million fund raise as part of the Riverpoint Medical acquisition. As a reminder, the $300 million equity raise was registered on June 29 and remains fully tradable. Weighted average shares outstanding on a diluted basis in the fourth quarter is also expected to be around 43 million shares. For the third quarter, we expect adjusted diluted earnings per share to be in the range of $0.95 to $1, representing year-over-year growth in the range of 10% to 15% year-over-year. We expect cash flow conversion to step down in the third quarter, largely due to the dynamics of acquiring Riverpoint Medical, which was acquired on a cash free basis, but will continue to be strong overall. With more cash flow generated in the first half of this year than all of 2025, we're on track to a record year in cash flow generation in this company. Gross debt for the third quarter is expected to be just north of $800 million with gross pro forma leverage ratio of 2.7x, reflecting the Riverpoint Medical financing and Riverpoint plus Novanta's trailing 4 quarters of adjusted EBITDA. Net debt leverage is expected to be 10 to 30 basis points lower depending on cash flow dynamics in the quarter. In summary, we just delivered our strongest organic growth and cash flow growth in the last 3 years. We see this organic momentum maintaining in the second half. We also just closed the largest acquisition in the company's history, acquiring a business that enhances all of our critical growth, profit and cash flow metrics and goals. Our cash flows are at record levels. Our teams have demonstrated an incredible resolve and skill in navigating the ever-changing macroeconomic and geopolitical dynamics. In addition, the team successfully executed on 2 manufacturing moves while taking 2 additional manufacturing moves on and simultaneously upgrading our MRP environment while further strengthening the Novanta's infrastructure and overall operating foundation. Novanta is the strongest strategic and financial position in more than a decade with strong positions in high-growth end markets, exciting new customer wins, and continued momentum of new product launches. We see growing momentum and strong customer demand, which gives us confidence in our ability to achieve our new commitments in 2026, while putting in the foundation to maintaining and even accelerating our growth in 2027. This concludes the prepared remarks. We'll now open the call up for questions. Operator: [Operator Instructions] And our first question will come from Lee Jagoda of CJS Securities. Lee Jagoda: Congrats on getting Riverpoint across the starting line. So I guess, looking at the guidance, Robert, what do you -- how should we think about the biggest drivers in the change in organic growth and the EBITDA increase, excluding the Riverpoint transaction? Robert Buckley: So I would say the AET business has done a little bit better in the outlook. So if you're asking like where in the segments, it's mostly coming from the AET area. We've raised the guidance. From an EPS perspective, you got a $0.06 fee in Q2 and then roughly a $0.02 improvement in the base business, and that was largely coming from the AET side as they've not only decreased their asset intensity by closing a number of sites, but have improved their profitability as a result of that. And then we picked up about $0.06 on the Riverpoint transaction in the back half of the year as well. Lee Jagoda: Great. And then earlier in the call, I think Chuck referenced a significant or your first significant order related to some servo drives on the humanoid side. Is there any way you can quantify that in terms of magnitude? Was it the first material order from a customer that was doing prototyping? Is there any multiyear contracts we should think about? And did that have a material impact on the really strong gross margins the segment had? Charles Ravetto: Lee, this is Chuck. Yes, thanks for the question. What we saw here, right, in the last quarter is the first move maybe beyond prototyping, right, into training centers or development centers is really the next phase of this. So the design is getting closer to completion, but there's a long path on the training cycle. So we started to see some bigger orders that are filling out the training development, which we think is the next phase before these robots get out into the real world. It's not a significant part of what drove the margin this quarter. Matthijs Glastra: So we see bookings rapidly improving, but from a small base, Lee. And if anything, it's a little faster than we expected, but we stick with kind of previous remarks that this is still in very early stages, although we're very encouraged that we're now seeing a kind of a rapid transition towards training these robots. And then it's anybody's guess how long that will take. But of course, the volumes for these training robots is larger than the prototypes, and that's what we're starting to see in our bookings. And it's also a testament, I think, for the recognition that these OEMs recognize our leadership in enabling safe humanoids where we have unique proprietary IP. Lee Jagoda: Got it. And then I guess one more for Robert, if I can. Just understanding the Riverpoint acquisition is accretive to your gross margins. How should we think about the core gross margin algo ex-Riverpoint if you look out over the medium term? And maybe speak to some of the headwinds that we still have related to some repositioning activities and then the potential timing of those flipping from either headwinds to neutral and potentially tailwinds? Robert Buckley: It's a solid question. Obviously, when you got a lot of balls up in the air, there's always some sort of risk associated with the improvement. We delivered a 47% gross margin in the second quarter. We're looking at something closer to 48% in the back half of the year. And I would expect that to maintain into 2027. So we're looking at another 100 basis points of improvement in 2027. Part of that is obviously the benefit of the Riverpoint Medical acquisition and part of that is the core part of the business. There will be further upside opportunities, but we have to execute on those site closures and make sure they're done effectively. So I would say there's conservatism in that outlook of taking it from a 47% gross margin in 2026 to a 48% gross margin in 2027. But we feel good that everything is on the right track. We've closed 2 sites successfully. We have 2 new sites that are underway. The teams have already made tremendous progress on that. It is fair to say that from a tariff perspective, we have been operating in a net negative position. I would expect surcharging not to completely absorb the new tariff increases. We're mostly impacted by Section 201 and -- sorry, Section 232 and 301 tariffs. Unfortunately, our customers bear the bulk of the IEEPA tariffs. So that's expected to continue to be a bit of a headwind. But Chuck and John have drove tremendous productivity improvements in their business. They've gotten some pricing actions, the site closures help. And so when you take a step back, despite all the headwinds that we're seeing, even the inflationary pressures, we're still expanding gross margins 100 basis points this year and 100 basis points next year. Matthijs Glastra: Yes. So in summary, Lee, we're tracking what we said we would do as per the last quarter, right, improving on the core business and gross margin in the second half, and we're executing on that despite, I think, some of the noise that Robert is referring to, and teams are doing really well. Operator: The next question comes from Quinn Fredrickson of Baird. Quinn Fredrickson: I wanted to ask about your Gen AI data center exposure. You said it was up 25% in the quarter and you expect it to accelerate through the back half year. What does your visibility of that business look like into 2027? I would imagine your semi microelectronics should still be pretty strong. You sound more positive on humanoids. So just any color there would be helpful. Matthijs Glastra: Yes. As a reminder, this bucket is a broad range of applications, including lithography indeed other, let's say, high-end advanced node front-end semiconductor equipment, metrology equipment, manufacturing technologies that help with micromachining of elements of the supply chain and value chain as well as the GPU drilling that we talked about with our air spindle business. So all that combined is 70% of revenues, a broad set of applications growing 17 -- yes, growing at a 25% of revenue, and we expect that to continue. Based on wafer fab outlook market reports, I mean you see growth there. So the direction of travel continues to be positive. Robert commented on that our air bearing spindles business is booked for the next 2 years, at least we got strong backlog there. So yes, the direction of travel continues to be positive as customers are communicating that to us. But it's too early to put a number for '27 right now. Quinn Fredrickson: Can you also expand on your comments around advanced surgery bookings in the quarter? It sounded like there was a timing element. So if you could just clarify what drove that and whether we should anticipate bookings to strengthen in the back half? John Lesica: Yes, Quinn, thanks for the question. So, first off, just let me say how proud I am of our medical team for both their growth that they drove as well as the innovation. As we think about that business and looking at bookings, we really look at it across 4-quarter rolling average. That gives us a really great sense of the health of that business. We have many customers that provide us annual POs, and you can imagine the size of them based on timing can swing things. So as we look at the 4-quarter rolling average, we're above 1. As we look at the back half of the year, again, we're going to be above 1. So we feel really good about the momentum in that business and the pace of bookings. Quinn Fredrickson: And then just last one for Robert would be on R&D. I think it stepped down a good amount year-over-year. Just wondering if you could unpack that and whether that's the right run rate to be thinking about organically. Also just any color on how to think about what Riverpoint might add? Robert Buckley: Yes. So probably look at it with the combination of Riverpoint, you'll obviously have a little bit of a step-up with the inclusion of that business' P&L into our P&L. So you're probably somewhere north of around or something close to around $100 million of R&D for the full year. So about 8.5%, 8.7% of sales, somewhere in that range. Matthijs Glastra: Remember, Quinn, in the past, we were running closer to 10%, right? And we said that once these new products would kick in, which they are at a rapid rate and organic growth starts to pick up, that actually the percentage would modestly scale down, and that's exactly what you see happening. Operator: The next question comes from Brian Drab of William Blair. Brian Drab: Can you talk a little bit about the impact of Riverpoint for the back half of the year? Maybe starting with specifically the third quarter, 7% to 9% organic revenue growth and your assumptions there for Riverpoint and maybe FX. But it seems to me, I don't know if I'm doing the math wrong, but that Riverpoint would be contributing well over $30 million in revenue in a partial quarter, and I'm getting to like -- significantly higher revenue run rate for Riverpoint than I would have thought. I'm probably doing the math wrong, but I don't know. Curious your thoughts on that. Robert Buckley: It should be somewhere around $35 million of revenue in the third quarter. So that's about right. Brian Drab: Yes. Robert Buckley: And then, let's say, maintaining for the fourth quarter. Obviously, that -- one thing we're just a little like -- they've never closed a quarter in their life, and they've never been part of a public company. So the dynamic of third quarter to fourth quarter, we're just being a little conservative. Obviously, we only got 5/12 of the revenue forecasted in the third quarter. So you could expect a little bit of a better fourth quarter. But at this point in time, we're just being relatively conservative because they've never closed the quarter before. So say, it's roughly $35 million in the third quarter, a pretty good range. That puts -- depending upon what your forecast is on organic growth, I think a lot of indications that we continue to maintain this organic growth that we've demonstrated in the second quarter as we go into the third quarter. So the delta between the reported growth guidance and the organic is purely the Riverpoint transaction, right? So no major -- I don't get into forecasting FX. If I did, I'd be in a different job. So we just try to keep things relatively stable. Brian Drab: No, I understand you don't forecast it. I'm trying to remember at the moment why I thought Riverpoint was -- I mean you said when you acquired them, it's running at about $150 million in revenue. But if you're going to -- $34 million in a partial quarter, then you're more like at a $200 million revenue run rate. And I'm just wondering, is there seasonality in the business? Or is that the run rate that we're at now with Riverpoint already? Robert Buckley: Well, it's $35 million because you're basically taking partial quarter like... Brian Drab: Yes. I mean, I plugged -- yes, I plugged 5/12 into my calculator about 100 times last night. Robert Buckley: Yes. Brian Drab: Yes. I know it's saying -- Robert Buckley: Yes. I would just say I'm being relatively conservative in the fourth quarter, right? So I do think it's possible. I mean, if you range it between the high and the low end, you're $30 million to $35 million of revenue in the third quarter with a $35 million in the fourth quarter. So, 35 times 4 still gets you below the $200 million. Brian Drab: Okay. So you're saying that it would be $15 million for a full third quarter in the fourth with a run rate it comes down for the quarter. You have a full quarter in the fourth quarter. You're saying that would be $35 million? Robert Buckley: No, the half -- so the half is $60 million, $60 million to $65 million. Think of it that way. Brian Drab: Okay. And the margin that we're running at for Riverpoint, still around 40% EBITDA margin? Robert Buckley: Oh, the EBITDA margin? Brian Drab: Yes. Robert Buckley: It was $25 million. So say $65 million of revenue and $25 million of EBITDA. For the half. Which adds $0.06, right? And the $0.06 is because you got $20 million of interest expense, a little bit of stock compensation and then you tax affect it, right? So, $0.06, $25 million, $65 million. Brian Drab: Okay. I'll follow up more on that later. I guess -- I'll just leave the rest of the questions for later. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Matthijs Glastra for any closing remarks. Matthijs Glastra: Thank you, operator, and thank you, everyone, for your questions. So to wrap up, the second quarter delivered on what we said we would do. Organic growth of 9%, gross margins up 100 basis points, EBITDA and EPS growth in the mid- to high-teens, cash conversion above 100% and the largest acquisition in our history, closed and integrating. We're raising our full year outlook and the pace of bookings, new product revenue and design wins as our customers see the same trajectory we do. So Novanta's trajectory from here is up. In closing, as always, I would like to thank our customers, our shareholders, and especially, our dedicated employees for their ongoing support and effort. We appreciate your interest in the company and your participation in today's call, and I look forward to joining all of you soon at our third quarter 2026 earnings call. Operator: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Novanta (NOVT) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue: Reported revenue grew 10% year over year, with organic sales growth of 9% in the second quarter of 2026. Adjusted Gross Margin: Improved 100 basis points year over year to 47%, with adjusted gross profit of $125 million. Adjusted EBITDA: Increased 16% year over year to $60.7 million, achieving a nearly 23% margin, up 120 basis points. Adjusted EPS: Rose 17% year over year to $0.89 per diluted share. Operating Cash Flow: Reached $65 million in the second quarter, compared to $15 million in the prior year; year-to-date cash flow of $117 million exceeded full-year 2025 levels. Medical Solutions Segment Revenue: Grew 8.6% year over year, with advanced surgery up 12% and precision medicine up 5%. Automation Enabling Technologies Segment Revenue: Increased 12% year over year, with precision manufacturing up 9% and robotics and automation up 13.5%. New Product Revenue: Grew more than 50% in the quarter and over 60% year to date, lifting the vitality index to approximately 29% of sales. Bookings: Up 18% year to date, with backlog up 11%. R&D Expenses: $24 million, or approximately 9% of sales, down 150 basis points versus the prior year. SG&A Expenses: $60 million, or approximately 22.6% of sales, including $5.6 million in costs related to the MRP system implementation. Non-GAAP Tax Rate: 21% for the second quarter, flat year over year. Full-Year 2026 Revenue Guidance: Raised to approximately $1.130 billion to $1.140 billion, representing reported growth greater than 15% and organic growth of up to 7%. Full-Year 2026 Adjusted EBITDA Guidance: Expected between $273 million and $278 million, representing year-over-year growth of 24% to 26%. Full-Year 2026 Adjusted EPS Guidance: Expected in the range of $3.68 to $3.74, representing year-over-year growth of 12% to 14%. Warning! GuruFocus has detected 7 Warning Sign with NOVT. Is NOVT fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Novanta Inc (NASDAQ:NOVT) delivered strong Q2 2026 results with 9% organic sales growth, 16% adjusted EBITDA growth, and 17% adjusted EPS growth, exceeding expectations. The company closed its largest acquisition, Riverpoint Medical, which is expected to be immediately accretive to revenue growth, gross margins, EBITDA margins, and EPS, while expanding medical end-market exposure to 60% of revenue. New product revenue surged over 50% in Q2 and over 60% year-to-date, lifting the vitality index to approximately 29% of sales, up from 21% a year ago. All four business units achieved organic growth in Q2, with strong momentum in precision robotics, physical AI, semiconductors, and minimally invasive surgery, supported by bookings up 18% year-to-date. Operating cash flow for the first half of 2026 already exceeded the full-year 2025 total, positioning the company for a record year in cash flow generation. The company raised its full-year 2026 guidance, expecting over 15% reported revenue growth and continued margin expansion, with gross margins projected to improve to 48% in Q3. The Medical Solutions segment experienced a book-to-bill of 0.79 in Q2, indicating weaker order intake relative to shipments, though management attributes this to timing of customer orders. Precision medicine business grew only 5% year-over-year, with life sciences exposure expected to remain a drag, and management does not expect sustained growth in this segment until 2027. Medical Solutions adjusted gross margins declined 290 basis points year-over-year due to a higher mix of lower-margin precision medicine products and temporary costs from operational transformation. The company faces ongoing headwinds from tariffs, particularly Section 232 and 301, which are not fully offset by surcharging, and inflationary pressures on supply chain and logistics. The integration of Riverpoint Medical introduces execution risks, including transition from a private to public company, with management adopting a conservative outlook for the acquired business's financial performance. The company is accelerating two additional factory closures, which could disrupt operations and incur temporary costs, though management expects long-term benefits. Q: How should we think about the biggest drivers in the change to the organic growth and EBITDA increase guidance, excluding the Riverpoint transaction?A: Robert Buckley (CFO) stated that the increase is mostly coming from the Automation Enabling Technologies (AET) segment, which performed better than expected. The EPS guidance was raised by $0.06 due to a fee in Q2 and roughly a $0.02 improvement in the base business, largely from AET's improved profitability from closing sites. An additional $0.06 was picked up from the Riverpoint transaction in the back half of the year. Q: Can you quantify the first significant order for servo drives related to humanoids? Was it a material impact on the segment's strong gross margins?A: Charles Ravetto (Co-COO, Automation Enabling Technologies) explained that this order marks the first move beyond prototyping into training and development centers, which is the next phase before commercial deployment. Matthijs Glastra (CEO) added that bookings are improving rapidly from a small base, faster than expected, but it is still in very early stages. The order was not a significant driver of the quarter's margin improvement. Q: How should we think about the core gross margin algorithm ex-Riverpoint over the medium term, and the timing of headwinds from repositioning activities flipping to tailwinds?A: Robert Buckley (CFO) said the company delivered a 47% gross margin in Q2 and expects closer to 48% in the back half of the year, maintaining into 2027. This includes another 100 basis points of improvement in 2027, partly from Riverpoint and partly from the core business. He noted tariffs remain a headwind, but productivity improvements, pricing actions, and site closures are driving expansion despite inflationary pressures. Q: What does your visibility look like for the gen AI data center exposure into 2027?A: Matthijs Glastra (CEO) said this bucket includes a broad range of applications like lithography, advanced node semiconductor equipment, metrology, and GPU drilling. It represents 17% of revenue, growing at 25%, and they expect that to continue. The air bearing spindles business is booked for the next two years with strong backlog. While the direction of travel is positive, it's too early to put a number on 2027. Q: Can you expand on the advanced surgery bookings in the quarter and whether we should anticipate bookings to strengthen in the back half?A: John Lesica (Co-COO, Medical Solutions) said they look at bookings across a four-quarter rolling average, which is above 1.0. Many customers provide annual POs, and timing can swing quarterly numbers. The back half of the year is expected to remain above 1.0, and they feel good about the momentum in that business. Q: Can you unpack the R&D step-down year over year and whether that's the right run rate organically, plus what Riverpoint might add?A: Robert Buckley (CFO) said with Riverpoint included, R&D will be around $100 million for the full year, or about 8.5% to 8.7% of sales. Matthijs Glastra (CEO) added that the company previously ran closer to 10%, but as new products kick in and organic growth picks up, the percentage is scaling down as expected. Q: What is the impact of Riverpoint for the back half of the year, specifically the revenue contribution in Q3?A: Robert Buckley (CFO) said Riverpoint should contribute around $35 million of revenue in the third quarter, with a similar amount in the fourth quarter. He noted they are being conservative because Riverpoint has never closed a quarter as part of a public company. The half is expected to be $60 million to $65 million in revenue with $25 million in EBITDA. Q: Is the Riverpoint revenue run rate now around $200 million, and is the EBITDA margin still around 40%?A: Robert Buckley (CFO) clarified that the $35 million in Q3 is a partial quarter contribution. For the half, they expect $60 million to $65 million in revenue and $25 million in EBITDA, which adds $0.06 to EPS. He confirmed the EBITDA margin is roughly 40% for the partial period. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Novanta Inc.? Here are five stocks we like better. Novanta delivered strong Q2 performance, with 9% organic sales growth, a 16% increase in adjusted EBITDA, 17% adjusted EPS growth and adjusted gross margin expansion to 47%. Operating cash flow rose to $65 million, bringing year-to-date cash flow to $117 million. Automation Enabling Technologies led segment growth with 12% higher revenue, 18% bookings growth and a 1.1 book-to-bill ratio. Generative-AI-related applications accounted for about 17% of revenue and grew roughly 25%, while the company received its first major servo-drive orders for humanoid-robot development. Novanta raised its 2026 outlook after closing the Riverpoint Medical acquisition, which is expected to roughly double recurring medical consumables revenue to $300 million and increase recurring consumables to about 25% of sales. The company now expects $1.13 billion–$1.14 billion in revenue, $273 million–$278 million in adjusted EBITDA and adjusted EPS of $3.68–$3.74. Novanta (NASDAQ:NOVT) reported second-quarter results marked by 9% organic sales growth, expanding margins and higher operating cash flow, while raising its full-year outlook following the late-July closing of its Riverpoint Medical acquisition. Chair and Chief Executive Officer Matthijs Glastra said reported revenue grew 10% year over year during the quarter, while adjusted EBITDA increased 16% and adjusted earnings per share rose 17%. Adjusted gross margin reached 47%, up 100 basis points from a year earlier. Glastra also said year-to-date operating cash flow exceeded the company’s operating cash flow for all of 2025. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth “All of our business units grew organically in the quarter,” Glastra said, adding that the company’s new-product revenue rose more than 50% in the quarter and more than 60% through the first half. Novanta’s vitality index, which measures sales from newer products, rose to about 29% of sales from 21% a year earlier. The Automation Enabling Technologies segment posted 12% year-over-year revenue growth, exceeding management’s expectations. Bookings increased 18%, and the segment’s book-to-bill ratio was 1.1. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Co-Chief Operating Officer Chuck Ravetto said precision manufacturing revenue rose 9%, supported by demand for applications including laser additive manufacturing, probe-card production for AI graphics-processing chips, advanced packaging and lithography. Robotics and automation revenue increased 13.5%, aided by demand for advanced robotics and semiconductor applications tied to artificial-intelligence investment. Ravetto said the company received its first significant orders for servo drives intended to support hundreds of humanoid robots in customer training and development facilities. He described the orders as a move beyond prototyping, while noting that widespread commercial deployment of humanoid systems remains a longer-term development process. → Ulta's Growth Is Real, But So Are the Risks Applications connected to generative AI technologies and infrastructure represented about 17% of Novanta’s second-quarter revenue and grew approximately 25% from a year earlier, according to Ravetto. The company expects that growth rate to continue through the second half. Automation Enabling Technologies adjusted gross margin was about 53%, up 450 basis points year over year. Ravetto attributed the improvement to productivity efforts, pricing and surcharge actions, duty drawback and credits, and a stronger mix of higher-margin products, despite factory redundancy, logistics, supply-chain inflation and tariff-related costs. Medical Solutions revenue increased 8.6% year over year. The advanced surgery business grew 12%, driven by patient procedural growth and sales of second-generation insufflators. John Lesica, co-chief operating officer for Medical Solutions, said the business remains positioned for a strong full year, with bookings up more than 8% year to date and new-product revenue up more than 70% in the second quarter. Precision medicine sales increased 5%, supported by momentum from the Keonn acquisition and growth among core medical customers. Lesica said customer demand outside life sciences has begun to improve, though the company does not expect the precision medicine business to return to sustained growth in 2026. Novanta expects life-sciences exposure to represent less than 10% of company revenue this year and sees a path to growth in that business during 2027. Medical Solutions adjusted gross margin was approximately 41%, down 290 basis points from the prior year. Lesica said the decline reflected a higher mix of lower-margin precision medicine products and temporary costs associated with site rationalization. He said medical gross margin is expected to expand materially in the third quarter. The company closed its acquisition of Riverpoint Medical at the end of July. Glastra called the transaction Novanta’s largest acquisition to date and said it accelerates the company’s shift toward minimally invasive surgery markets. Riverpoint adds fiber-based sutures and implantables used in sports medicine, cardiovascular and orthopedic applications. Novanta said Riverpoint roughly doubles its recurring medical consumables business to approximately $300 million and increases recurring consumables to roughly 25% of annualized revenue from about 15%. The acquisition also raises medical end-market exposure to about 60% of revenue. Management said Riverpoint is expected to be immediately accretive to revenue growth, gross margin, EBITDA margin and earnings per share. CFO Robert Buckley said second-quarter adjusted gross profit was $125 million, compared with $111 million a year earlier. Adjusted EBITDA was $60.7 million, producing an adjusted EBITDA margin of nearly 23%. Adjusted diluted EPS was $0.89. Operating cash flow totaled $65 million in the quarter, versus $15 million in the prior-year period, bringing year-to-date operating cash flow to $117 million. At quarter-end, Novanta had $719 million of cash and gross debt of $239 million. The company completed two factory closures during the second quarter and announced plans to close two additional manufacturing facilities by the end of the first quarter of 2027. Buckley said Novanta is also doubling capacity at its China factory for air-bearing spindles, a business with committed demand for the next two years and customer-supported funding for part of the expansion. For full-year 2026, Novanta raised its outlook and expects: GAAP revenue of approximately $1.13 billion to $1.14 billion, representing reported growth of more than 15% and organic growth of up to 7%. Adjusted EBITDA of $273 million to $278 million, up 24% to 26% year over year. Adjusted diluted EPS of $3.68 to $3.74, up 12% to 14% year over year. For the third quarter, the company expects revenue of $300 million to $304 million, including Riverpoint Medical, with reported growth of 21% to 23% and organic growth of 7% to 9%. Novanta forecast third-quarter adjusted EBITDA of $74 million to $77 million and adjusted EPS of $0.95 to $1.00. Buckley said Riverpoint is expected to contribute about $25 million in adjusted EBITDA during the second half, based on its end-of-July closing date. He also said the company expects adjusted gross margin of approximately 48% in the third quarter and around 47% for the full year. Novanta, Inc (NASDAQ: NOVT) is a global technology company that designs and manufactures precision components, subsystems and software used in advanced photonics and motion control applications. The company serves customers in the medical device and advanced industrial markets, supplying critical technologies for diagnostics and therapeutic systems, semiconductor and electronics manufacturing, and scientific instrumentation. Novanta's product portfolio includes laser control modules, optics, beam delivery systems, high-precision motors, actuators, stages, and fluidics solutions designed to meet stringent accuracy and reliability requirements. Novanta's Photonics segment delivers laser and energy delivery components that enable minimally invasive surgical procedures and diagnostic imaging. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Novanta Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Second Quarter 2026 GAAP Revenue increased 10% to $266 million Second Quarter 2026 GAAP Net Income was $13 million, and Adjusted EBITDA increased 16% to $61 million Second Quarter 2026 GAAP Diluted EPS was $0.30, and Adjusted Diluted EPS increased 17% to $0.89 BOSTON, August 05, 2026--(BUSINESS WIRE)--Novanta Inc. (Nasdaq: NOVT) ("Novanta" or the "Company"), a trusted technology partner to medical and advanced technology equipment manufacturers, today reported financial results for the second quarter 2026. Second Quarter "Novanta delivered an exceptional second quarter, exceeding expectations across revenue, margins, and profitability," said Matthijs Glastra, Chair and Chief Executive Officer. "Revenue increased 10.3% year-over-year to $266 million on a reported basis and grew 9.3% organically, marking our strongest organic growth quarter since the first quarter of 2023. We also delivered a strong Adjusted Gross Margin of 47%, and generated Adjusted EBITDA of $60.7 million, a 16.4% increase year-over-year, representing an Adjusted EBITDA margin of 22.8%." For the second quarter of 2026, Novanta generated GAAP revenue of $265.8 million, an increase of $24.8 million or 10.3%, compared to prior year. Year-over-year changes in foreign currency exchange rates favorably impacted revenue by $2.4 million or 1.0%. Organic Revenue Growth, which excludes the net impact of changes in foreign currency exchange rates, was an increase of 9.3% (see "Organic Revenue Growth" in the non-GAAP reconciliations below). For the second quarter of 2026, GAAP operating income was $18.1 million, compared to $14.9 million in the prior year. GAAP net income was $12.5 million, compared to $4.5 million in the prior year. GAAP diluted earnings per share ("EPS") was $0.30, compared to $0.12 in the prior year. Diluted weighted average shares outstanding was 41.2 million for the second quarter of 2026. Adjusted Diluted EPS increased 17.1% to $0.89, compared to $0.76 in the prior year. Adjusted EBITDA increased 16.4% to $60.7 million, compared to $52.2 million in the prior year. Operating cash flow was $64.9 million, compared to $15.1 million in the prior year. Year-to-date operating cash flow was $116.5 million compared to $46.8 million in the prior year. Financial Guidance "As we enter the second half of 2026, we are encouraged by the accelerating momentum across our portfolio. Strong bookings, a healthy backlog, new product revenue contributions and disciplined commercial execution in market segments benefiting from long-term secular growth trends, reinforce our confidence in delivering robust organic revenue growth," said Matthijs Glastra, Chair and Chief Executive Officer. "In addition, we recently closed the acquisition of Riverpoint Medical, accelerating our expansion into minimally invasive surgery markets and adding another engine for growth and profitability," continued Mr. Glastra. "The acquisition roughly doubles our recurring medical consumables business, to approximately 25% of sales on an annualized basis, and increases our medical end-market exposure to approximately 60% of revenue. It also strengthens our regional manufacturing strategy for FDA-registered products. We expect Riverpoint to be immediately accretive to revenue growth, gross margins, EBITDA margins, and earnings per share." For the third quarter of 2026, the Company expects GAAP revenue to be in the range of $300 million to $304 million, or greater than 21% revenue growth. The Company expects Adjusted EBITDA to be in the range of $74 million to $77 million and Adjusted Diluted EPS to be in the range of $0.95 to $1.00 per diluted share. The Company’s guidance now incorporates the expected contribution from the Riverpoint Medical acquisition and assumes no significant changes in foreign exchange rates. For the full year 2026, the Company now expects GAAP revenue to be in the range of $1,130 million to $1,140 million, or greater than 15% revenue growth, Adjusted EBITDA to be in the range of $273 million to $278 million, or greater than 24% growth, and Adjusted Diluted EPS to be in the range of $3.68 to $3.74 per diluted share, or greater than 12% growth. The Company’s guidance now incorporates the expected contribution from the Riverpoint Medical acquisition and assumes no significant changes in foreign exchange rates. Novanta provides earnings guidance, Gross Leverage, and Net Debt Leverage on a non-GAAP basis and does not provide earnings guidance, Gross Leverage, and Net Debt Leverage on a GAAP basis, with the exception of GAAP revenue guidance. A reconciliation of the Company’s forward-looking Adjusted EBITDA, Adjusted Diluted EPS, Gross Leverage, and Net Debt Leverage guidance to the most directly comparable GAAP financial measures is not provided because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including acquisitions and related expenses; impact of purchase price allocations for recently completed acquisitions; future changes in the fair value of contingent considerations; future restructuring expenses; foreign exchange gains/(losses); significant discrete income tax expenses (benefits); benefits or expenses associated with the completion of tax audits; divestitures and related expenses; gains and losses from sale of real estate assets; costs related to product line closures; intangible asset impairment charges and related asset write-offs; and other charges reflected in the Company’s reconciliation of historical non-GAAP financial measures, the amounts of which, based on past experience, could be material. For additional information regarding Novanta’s non-GAAP financial measures, see "Use of Non-GAAP Financial Measures" below. Conference Call Information The Company will host a conference call on Thursday, August 6, 2026 at 8:00 a.m. ET to discuss these results and to provide a business update. To access the call, please dial (888) 346-3959 prior to the scheduled conference call time. Alternatively, the conference call can be accessed online via a live webcast on the Events & Presentations page of the Investors section of the Company’s website at www.novanta.com. A replay of the audio webcast will be available approximately three hours after the conclusion of the call in the Investor Relations section of the Company’s website at www.novanta.com. The replay will remain available until Monday, October 5, 2026. Use of Non-GAAP Financial Measures The non-GAAP financial measures used in this press release are Organic Revenue Growth, Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Income Tax Provision/(Benefit) and Effective Tax Rate, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Gross Leverage and Net Debt Leverage. The Company believes that these non-GAAP financial measures provide useful and supplementary information to investors regarding the operating performance of the Company. It is management’s belief that these non-GAAP financial measures would be particularly useful to investors because of the significant changes that have occurred outside of the Company’s day-to-day business in accordance with the execution of the Company’s strategy. This strategy includes streamlining the Company’s existing operations through site and functional consolidations, strategic divestitures and product line closures, expanding the Company’s business through significant internal investments, and broadening the Company’s product and service offerings through acquisitions of innovative and complementary technologies and solutions. The financial impact of certain elements of these activities, particularly acquisitions, divestitures, and site and functional restructurings, is often large relative to the Company’s overall financial performance and can adversely affect the comparability of its operating results and investors’ ability to analyze the business from period to period. The Company’s Adjusted EBITDA, Organic Revenue Growth and Adjusted Gross Profit Margin are used by management to evaluate operating performance, communicate financial results to the Board of Directors, benchmark results against historical performance and the performance of peers, and evaluate investment opportunities, including acquisitions and divestitures. In addition, Adjusted EBITDA, Organic Revenue Growth and Adjusted Gross Profit Margin are used to determine bonus payments for senior management and employees. The Company has also used in the past, and may use in the future, Adjusted Diluted EPS and Adjusted EBITDA as performance targets for certain performance-based restricted stock units. Accordingly, the Company believes that these non-GAAP financial measures provide greater transparency and insight into management’s method of analysis. Non-GAAP financial measures should not be considered as substitutes for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on the Company’s reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company’s financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release. Safe Harbor and Forward-Looking Information Certain statements in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements contained in this news release that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as "expect," "intend," "anticipate," "estimate," "believe," "future," "target," "could," "should," "may," "plan," "aim," and other similar expressions. These forward-looking statements include, but are not limited to, the statements of Mr. Glastra in this press release; statements regarding anticipated financial performance and financial position, including our financial outlook for the third quarter and full year 2026; expectations for our future growth and prospects; expectations for our customers and for our end markets; expectations for our strategy and business model; expectations for new product launches and commercial activities; expectations with respect to productivity enhancements; expectations for margin and cash flow performance; expectations for our site regionalization strategy; the financial contributions of the Riverpoint Medical acquisition to our future results of operations and financial condition, including our leverage ratio and other pro forma financial metrics; expectations regarding the anticipated benefits of the Riverpoint Medical acquisition, including its impact on revenue, profitability, addressable market, and manufacturing strategy; expectations for capital deployment to acquisitions or other investment options; 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 as a result of various important factors, including, but not limited to, the following: economic and political conditions and the effects of these conditions on our businesses and on our customers’ businesses, capital expenditures and level of business activities; our dependence upon our ability to respond to fluctuations in product demand; our ability to continuously innovate, to introduce new products in a timely manner, and to manage transitions to new product innovations effectively; customer order timing and other similar factors; disruptions or breaches in security of our or our third-party providers’ information technology systems; risks associated with our operations in foreign countries; our increased use of outsourcing in foreign countries; risks associated with increased outsourcing of components manufacturing; our exposure to increased tariffs, trade restrictions or taxes on our products; our ability to contain or reduce costs; violations of our intellectual property rights and our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our failure to successfully integrate recent and future acquisitions into our business or to realize the anticipated benefits or synergies from those acquisitions; the accuracy of financial and other information regarding Riverpoint Medical on which we relied in connection with the acquisition and our related financial projections, which was not subject to the same accounting oversight and controls as our own historical financial information; our ability to accurately forecast Riverpoint Medical's future financial performance and our ability to maintain compliance with financial covenants under our credit facility, including our leverage ratio, which depends in part on the future financial performance of the combined company; our ability to attract and retain key personnel; our restructuring and realignment activities; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key components and other goods from our suppliers; our failure to accurately forecast component and raw material requirements leading to additional costs and significant delays in shipments; production difficulties and product delivery delays or disruptions; our exposure to extensive medical device regulations, which may impede or hinder the approval, certification or sale of our products and, in some cases, may ultimately result in an inability to obtain approval or certification of certain products or may result in the recall or seizure of previously approved or certified products; potential penalties for violating foreign and U.S. federal and state healthcare laws and regulations; impact of healthcare industry cost containment and healthcare reform measures; changes in governmental regulations related to our business or products; actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards, and other requirements; our failure to implement new information technology systems successfully; changes in foreign currency rates; our failure to realize the full value of our intangible assets; our reliance on original equipment manufacturer customers; the loss of sales, or significant reduction in orders from, any major customers; increasing scrutiny and changing expectations from investors, customers, governments and other stakeholders and third parties with respect to corporate sustainability policies and practices; the effects of climate change and related regulatory responses; our exposure to the credit risk of some of our customers and in weakened markets; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; changes in tax laws and fluctuations in our effective tax rates; any need for additional capital to adequately respond to business challenges or opportunities and repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; our existing indebtedness limiting our ability to engage in certain activities; volatility in the market price for our common shares; and our failure to maintain appropriate internal controls in the future. Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect the Company’s operating results and financial condition are discussed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as updated by our subsequent filings with the Securities and Exchange Commission. Such statements are based on the Company’s beliefs and assumptions and on information currently available to the Company. The Company disclaims any obligation to publicly update or revise any such forward-looking statements as a result of developments occurring after the date of this document except as required by law. About Novanta Novanta is a leading global supplier of core technology solutions that give medical, life science, and advanced industrial original equipment manufacturers a competitive advantage. We combine deep proprietary expertise and competencies in precision medicine, precision manufacturing, robotics and automation, and advanced surgery with a proven ability to solve complex technical challenges. This enables Novanta to engineer proprietary technology solutions that deliver extreme precision and performance, tailored to our customers' demanding applications. The driving force behind our growth is the team of innovative professionals who share a commitment to innovation, the Novanta Growth System, and our customers’ success. Novanta’s common shares are quoted on Nasdaq under the ticker symbol "NOVT." More information about Novanta is available on the Company’s website at www.novanta.com. For additional information, please contact Novanta Investor Relations at (781) 266-5137 or [email protected]. Non-GAAP Financial Measures The following provides additional explanations for non-GAAP financial measures used by the Company, including explanations for certain non-GAAP adjustments that may not be present in the quarterly disclosures included in the current earnings release but have been used by the Company in the two most recent fiscal years. See the tables above for the calculations of the non-GAAP financial measures used in this earnings release. Organic Revenue Growth The Company defines the term "organic revenue" as revenue excluding the impact from business acquisitions, divestitures, product line discontinuations, and the effect of foreign currency translation. The Company uses the related term "organic revenue growth" to refer to the financial performance metric of comparing current period organic revenue with the reported revenue of the corresponding period in the prior year. The Company believes that this non-GAAP financial measure, when taken together with our GAAP financial measures, allows the Company and its investors to better measure the Company’s performance and evaluate long-term performance trends. Organic revenue growth also facilitates easier comparisons of the Company’s performance with prior and future periods and relative comparisons to its peers. The Company excludes the effect of foreign currency translation from these measures because foreign currency translation is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions and divestitures because these activities can vary dramatically between reporting periods and between the Company and its peers, which the Company believes makes comparisons of long-term performance trends difficult for management and investors. Organic Revenue Growth is also used as a performance metric to determine bonus payments for senior management and employees. Adjusted Gross Profit and Adjusted Gross Profit Margin The calculation of Adjusted Gross Profit and Adjusted Gross Profit Margin excludes amortization of acquired intangible assets because: (i) the amounts are non-cash; (ii) the Company cannot influence the timing and amount of future expense recognition; and (iii) excluding such expenses provides investors and management better visibility into the underlying trends and performance of our businesses. The Company also excludes inventory related charges associated with product line closures and operational transformation costs as these costs occurred outside of the Company’s day-to-day business for the reasons described above in the introductory paragraphs of the "Use of Non-GAAP Financial Measures." Adjusted Operating Income and Adjusted Operating Margin The calculation of Adjusted Operating Income and Adjusted Operating Margin excludes amortization of acquired intangible assets, inventory related charges associated with product line closures, and operational transformation costs for the reasons described above for Adjusted Gross Profit and Adjusted Gross Profit Margin. The Company also excludes restructuring costs, acquisition and related costs, discrete costs related to the planning and design phase of a Financial and Operation system implementation, charges related to an insurance recovery, and EU medical device regulation charges as the significant charges have occurred outside of the Company’s day-to-day business for the reasons described above in the introductory paragraphs of the "Use of Non-GAAP Financial Measures." Adjusted Income Before Income Taxes The calculation of Adjusted Income Before Income Taxes excludes amortization of acquired intangible assets, inventory related charges associated with product line closures, operational transformation costs, restructuring, acquisition and related costs, discrete costs related to the planning and design phase of a Financial and Operation system implementation, charges related to an insurance recovery, and EU medical device regulation charges for Adjusted Operating Income and Adjusted Operating Margin. The Company also excludes foreign exchange transaction gains (losses) as well as the write-off of costs related to our debt refinancing from the calculation of Adjusted Income Before Income Taxes as the Company cannot fully influence the timing and amount of foreign exchange transaction gains (losses). Non-GAAP Income Tax Provision/(Benefit) and Effective Tax Rate Non-GAAP Income Tax Provision/(Benefit) and Effective Tax Rate are calculated based on the Adjusted Income Before Income Taxes by jurisdiction, the applicable tax rates in effect for the respective jurisdictions and the income tax effect of non-GAAP adjustments discussed above. In addition, the Company excludes significant discrete income tax expenses (benefits) related to releases of valuation allowances and uncertain tax positions not related to current year activity, tax audits, certain changes in tax laws, and acquisition related tax planning actions on the Company’s effective tax rate. Adjusted Net Income Because Income Before Income Taxes is included in determining Net Income, the calculation of Adjusted Net Income also excludes amortization of acquired intangible assets, inventory related charges associated with product line closures, operational transformation costs, restructuring, acquisition and related costs, discrete costs related to the planning and design phase of a Financial and Operation system implementation, charges related to an insurance recovery, EU medical device regulation charges, write-off of costs related to our debt refinancing, and foreign exchange transaction gains (losses) for the reasons described above for Adjusted Income Before Income Taxes. In addition, the Company excludes (i) significant discrete income tax expenses (benefits) related to releases of valuation allowances and uncertain tax positions, tax audits or amendments to prior year returns, certain changes in tax laws, and acquisition related tax planning actions on the Company’s effective tax rate; and (ii) the income tax effect of non-GAAP adjustments discussed above. Adjusted Diluted EPS Because Net Income is used in the calculation of Diluted EPS, Adjusted Diluted EPS excludes: (i) amortization of acquired intangible assets; (ii) inventory related charges associated with product line closures; (iii) operational transformation costs; (iv) restructuring, acquisition and related costs; (v) discrete costs related to the planning and design phase of a Financial and Operation system implementation; (vi) charges related to an insurance recovery; (vii) EU medical device regulation charges; (viii) write-off of costs related to our debt refinancing (ix) foreign exchange transaction gains (losses); (x) significant discrete income tax expenses (benefits) related to releases of valuation allowances, uncertain tax positions, tax audits or amendments to prior year returns, certain changes in tax laws, and acquisition related tax planning actions on the Company’s effective tax rate; and (xi) the income tax effect of non-GAAP adjustments for the reasons described above for Adjusted Net Income. Adjusted EBITDA and Adjusted EBITDA Margin The Company defines Adjusted EBITDA as income before deducting interest (income) expense, income tax provision (benefit), depreciation, amortization, non-cash share-based compensation, inventory related charges associated with product line closures, restructuring, acquisition and related costs, discrete costs related to the planning and design phase of a Financial and Operation system implementation, charges related to an insurance recovery, operational transformation costs, EU medical device regulation charges, and other non-operating (income) expense items, including foreign exchange transaction (gains) losses, costs related to our debt refinancing and net periodic pension costs of the Company’s frozen U.K. defined benefit pension plan for the reasons described above in the introductory paragraphs of the "Use of Non-GAAP Financial Measures." Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of Revenue. In evaluating Adjusted EBITDA and Adjusted EBITDA Margin, you should be aware that in the future the Company may incur expenses that are the same as, or similar to, some of the adjustments in this presentation. Free Cash Flow The Company defines Free Cash Flow as net cash provided by operating activities less cash paid for purchases of property, plant and equipment and plus cash proceeds from sales of property, plant and equipment. Management believes this non-GAAP financial measure is an important indicator of the Company’s liquidity as well as its ability to service its outstanding debt and to fund future growth. Net Debt, Gross Leverage and Net Debt Leverage The Company defines Net Debt as its total debt as reported on the consolidated balance sheet plus unamortized deferred financing costs and less its cash and cash equivalents as of the end of the period presented. We define Gross Leverage and Net Debt Leverage as the ratio of Total Debt and Net Debt to the last 12 months Adjusted EBITDA, which includes Adjusted EBITDA from acquisitions. Management believes Net Debt, Gross Leverage and Net Debt Leverage ratios are important measures to monitor our financial flexibility and evaluate the strength of our balance sheet. Net Debt, Gross Leverage and Net Debt Leverage ratios should not be considered in isolation or as a substitute for an analysis of our results prepared and presented in accordance with GAAP. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805812152/en/ Contacts Novanta Inc. Investor Relations Contact:(781) 266-5137

Novanta (NOVT) came out with quarterly earnings of $0.89 per share, beating the Zacks Consensus Estimate of $0.83 per share. This compares to earnings of $0.76 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +7.23%. A quarter ago, it was expected that this photonic and motion control components maker would post earnings of $0.78 per share when it actually produced earnings of $0.81, delivering a surprise of +3.85%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Novanta, which belongs to the Zacks Electronics - Miscellaneous Components industry, posted revenues of $265.81 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.64%. This compares to year-ago revenues of $241.05 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Novanta shares have added about 34% since the beginning of the year versus the S&P 500's gain of 13%. While Novanta has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Novanta was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.95 on $264.11 million in revenues for the coming quarter and $3.59 on $1.05 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Miscellaneous Components is currently in the top 22% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, OSI Systems (OSIS), is yet to report results for the quarter ended June 2026. This airport security and full-body scanner manufacturer is expected to post quarterly earnings of $3.76 per share in its upcoming report, which represents a year-over-year change of +16.1%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. OSI Systems' revenues are expected to be $528.34 million, up 4.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Novanta Inc. (NOVT) : Free Stock Analysis Report OSI Systems, Inc. (OSIS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Universal Display Corp. (OLED) came out with quarterly earnings of $1.06 per share, beating the Zacks Consensus Estimate of $1.04 per share. This compares to earnings of $1.41 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +1.92%. A quarter ago, it was expected that this organic light-emitting diode technology company would post earnings of $1.13 per share when it actually produced earnings of $0.76, delivering a surprise of -32.74%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Universal Display, which belongs to the Zacks Electronics - Miscellaneous Components industry, posted revenues of $152.16 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 3.93%. This compares to year-ago revenues of $171.79 million. The company has not been able to beat consensus revenue estimates over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Universal Display shares have lost about 31.4% since the beginning of the year versus the S&P 500's gain of 6.9%. While Universal Display has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Universal Display was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.11 on $162.84 million in revenues for the coming quarter and $4.23 on $643.54 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Miscellaneous Components is currently in the top 26% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Novanta (NOVT), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This photonic and motion control components maker is expected to post quarterly earnings of $0.83 per share in its upcoming report, which represents a year-over-year change of +9.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Novanta's revenues are expected to be $261.53 million, up 8.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Universal Display Corporation (OLED) : Free Stock Analysis Report Novanta Inc. (NOVT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The market expects Novanta (NOVT) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 5. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This photonic and motion control components maker is expected to post quarterly earnings of $0.83 per share in its upcoming report, which represents a year-over-year change of +9.2%. Revenues are expected to be $261.53 million, up 8.5% from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Novanta, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +1.21%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination indicates that Novanta will most likely beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Novanta would post earnings of $0.78 per share when it actually produced earnings of $0.81, delivering a surprise of +3.85%. Over the last four quarters, the company has beaten consensus EPS estimates four times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Novanta appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Among the stocks in the Zacks Electronics - Miscellaneous Components industry, Novanta (NOVT), is soon expected to post earnings of $0.83 per share for the quarter ended June 2026. This estimate indicates a year-over-year change of +9.2%. This quarter's revenue is expected to be $261.53 million, up 8.5% from the year-ago quarter. Over the last 30 days, the consensus EPS estimate for Novanta has remained unchanged. Nevertheless, the company now has an Earnings ESP of +1.21%, reflecting a higher Most Accurate Estimate. This Earnings ESP, combined with its Zacks Rank #3 (Hold), suggests that Novanta will most likely beat the consensus EPS estimate. The company beat consensus EPS estimates in each of the trailing four quarters. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Novanta Inc. (NOVT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, you should consider Novanta (NOVT). This company, which is in the Zacks Electronics - Miscellaneous Components industry, shows potential for another earnings beat. This photonic and motion control components maker has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 3.63%. For the most recent quarter, Novanta was expected to post earnings of $0.78 per share, but it reported $0.81 per share instead, representing a surprise of 3.85%. For the previous quarter, the consensus estimate was $0.88 per share, while it actually produced $0.91 per share, a surprise of 3.41%. For Novanta, estimates have been trending higher, thanks in part to this earnings surprise history. And when you look at the stock's positive Zacks Earnings ESP (Expected Surprise Prediction), it's a great indicator of a future earnings beat, especially when combined with its solid Zacks Rank. Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Novanta has an Earnings ESP of +1.21% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock's Zacks Rank #3 (Hold), it shows that another beat is possibly around the corner. The company's next earnings report is expected to be released on August 5, 2026. Investors should note, however, that a negative Earnings ESP reading is not indicative of an earnings miss, but a negative value does reduce the predictive power of this metric. Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate. Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Novanta Inc. (NOVT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research