novt-10q_20200703.htm

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2020, there were 35,155,466 of the Registrant’s common shares, no par value, issued and outstanding.

	July 3,			December 31,
	2020			2019
ASSETS
Current assets
Cash and cash equivalents	$	97,494		$	78,944
Accounts receivable, net of allowance of $415 and $297, respectively		88,360			91,078
Inventories		107,380			116,618
Prepaid income taxes and income taxes receivable		6,720			5,905
Prepaid expenses and other current assets		10,423			11,967
Total current assets		310,377			304,512
Property, plant and equipment, net		75,276			77,556
Operating lease assets		34,300			35,180
Deferred tax assets		12,092			8,890
Other assets		2,995			2,713
Intangible assets, net		152,170			166,175
Goodwill		273,817			274,710
Total assets	$	861,027		$	869,736
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	5,054		$	5,031
Accounts payable		46,427			52,585
Income taxes payable		4,790			1,861
Current portion of operating lease liabilities		4,875			5,043
Accrued expenses and other current liabilities		68,131			70,326
Total current liabilities		129,277			134,846
Long-term debt		211,946			215,334
Operating lease liabilities		33,400			34,108
Deferred tax liabilities		26,028			26,676
Income taxes payable		5,143			4,713
Other liabilities		23,335			36,887
Total liabilities		429,129			452,564
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 35,155 and 35,052, respectively		423,856			423,856
Additional paid-in capital		45,338			49,748
Accumulated deficit		(14,712	)		(38,319	)
Accumulated other comprehensive loss		(22,584	)		(18,113	)
Total stockholders' equity		431,898			417,172
Total liabilities and stockholders’ equity	$	861,027		$	869,736

The accompanying notes are an integral part of these consolidated financial statements.

	Three Months Ended						Six Months Ended
	July 3,			June 28,			July 3,			June 28,
	2020			2019			2020			2019
Revenue	$	144,728		$	155,145		$	300,196		$	312,331
Cost of revenue		86,026			89,363			177,049			180,260
Gross profit		58,702			65,782			123,147			132,071
Operating expenses:
Research and development and engineering		14,440			13,388			29,774			27,385
Selling, general and administrative		24,908			29,204			55,663			61,051
Amortization of purchased intangible assets		3,410			3,772			6,855			7,770
Restructuring, acquisition, and related costs		2,243			4,313			3,904			6,367
Total operating expenses		45,001			50,677			96,196			102,573
Operating income		13,701			15,105			26,951			29,498
Interest income (expense), net		(1,701	)		(2,160	)		(3,379	)		(4,204	)
Foreign exchange transaction gains (losses), net		(282	)		27			(28	)		68
Other income (expense), net		(22	)		(70	)		61			(138	)
Income before income taxes		11,696			12,902			23,605			25,224
Income tax provision (benefit)		36			2,522			(2	)		2,591
Consolidated net income	$	11,660		$	10,380		$	23,607		$	22,633

Earnings per common share (Note 5):
Basic	$	0.33		$	0.30		$	0.67		$	0.65
Diluted	$	0.33		$	0.29		$	0.66		$	0.64

Weighted average common shares outstanding—basic		35,137			34,998			35,145			34,981
Weighted average common shares outstanding—diluted		35,579			35,503			35,570			35,491

The accompanying notes are an integral part of these consolidated financial statements.

	Common Shares					Additional Paid-In			Accumulated			Accumulated Other Comprehensive
	# of Shares			Amount		Capital			Deficit			Loss			Total

	Three Months Ended July 3, 2020
Balance at April 3, 2020		35,122		$	423,856	$	39,801		$	(26,372	)	$	(24,182	)	$	413,103
Consolidated net income		—			—		—			11,660			—			11,660
Common shares issued under stock plans		34			—		—			—			—			—
Common shares withheld for taxes on vested stock awards		(1	)		—		(111	)		—			—			(111	)
Share-based compensation		—			—		5,648			—			—			5,648
Other comprehensive income, net of tax		—			—		—			—			1,598			1,598
Balance at July 3, 2020		35,155		$	423,856	$	45,338		$	(14,712	)	$	(22,584	)	$	431,898

	Six Months Ended July 3, 2020
Balance at December 31, 2019		35,052		$	423,856	$	49,748		$	(38,319	)	$	(18,113	)	$	417,172
Consolidated net income		—			—		—			23,607			—			23,607
Common shares issued under stock plans		256			—		179			—			—			179
Common shares withheld for taxes on vested stock awards		(88	)		—		(7,936	)		—			—			(7,936	)
Repurchases of common shares		(65	)		—		(5,500	)		—			—			(5,500	)
Share-based compensation		—			—		8,847			—			—			8,847
Other comprehensive income, net of tax		—			—		—			—			(4,471	)		(4,471	)
Balance at July 3, 2020		35,155		$	423,856	$	45,338		$	(14,712	)	$	(22,584	)	$	431,898

	Three Months Ended June 28, 2019
Balance at March 29, 2019		34,998		$	423,856	$	42,855		$	(66,839	)	$	(20,171	)	$	379,701
Consolidated net income		—			—		—			10,380			—			10,380
Common shares issued under stock plans		23			—		—			—			—			—
Common shares withheld for taxes on vested stock awards		(10	)		—		(829	)		—			—			(829	)
Repurchases of common shares		(39	)		—		(3,339	)		—			—			(3,339	)
Share-based compensation		—			—		2,378			—			—			2,378
Other comprehensive income, net of tax		—			—		—			—			(2,109	)		(2,109	)
Balance at June 28, 2019		34,972		$	423,856	$	41,065		$	(56,459	)	$	(22,280	)	$	386,182

	Six Months Ended June 28, 2019
Balance at December 31, 2018		34,886		$	423,856	$	46,018		$	(79,092	)	$	(22,527	)	$	368,255
Consolidated net income		—			—		—			22,633			—			22,633
Common shares issued under stock plans		209			—		—			—			—			—
Common shares withheld for taxes on vested stock awards		(84	)		—		(6,719	)		—			—			(6,719	)
Repurchases of common shares		(39	)		—		(3,339	)		—			—			(3,339	)
Share-based compensation		—			—		5,105			—			—			5,105
Other comprehensive income, net of tax		—			—		—			—			247			247
Balance at June 28, 2019		34,972		$	423,856	$	41,065		$	(56,459	)	$	(22,280	)	$	386,182

The accompanying notes are an integral part of these consolidated financial statements.

New Brunswick, Canada		98-0110412
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

125 Middlesex Turnpike Bedford, Massachusetts, USA		01730
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, no par value	NOVT	The Nasdaq Global Select Market

Item No.		Page No.

PART I — FINANCIAL INFORMATION		1

ITEM 1.	FINANCIAL STATEMENTS	1

	CONSOLIDATED BALANCE SHEETS (unaudited)	1

	CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)	2

	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)	3

	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)	4

	CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)	5

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	29

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	43

ITEM 4.	CONTROLS AND PROCEDURES	43

PART II — OTHER INFORMATION		44

ITEM 1.	LEGAL PROCEEDINGS	44

ITEM 1A.	RISK FACTORS	44

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	45

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	45

ITEM 4.	MINE SAFETY DISCLOSURES	45

ITEM 5.	OTHER INFORMATION	45

ITEM 6.	EXHIBITS	46

SIGNATURES		47

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated Filer	☐	Smaller reporting company	☐

		Emerging growth company	☐