novt-10q_20211001.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 October 27, 2021, there were 35,599,658 of the Registrant’s common shares, no par value, issued and outstanding.

	October 1,			December 31,
	2021			2020
ASSETS
Current assets
Cash and cash equivalents	$	102,395		$	125,054
Accounts receivable, net of allowance of $498 and $274, respectively		112,080			75,054
Inventories		119,422			92,737
Prepaid income taxes and income taxes receivable		7,252			3,203
Prepaid expenses and other current assets		12,163			8,125
Total current assets		353,312			304,173
Property, plant and equipment, net		86,279			78,676
Operating lease assets		43,459			34,444
Deferred tax assets		411			10,491
Other assets		2,809			2,894
Intangible assets, net		231,027			148,521
Goodwill		492,940			285,980
Total assets	$	1,210,237		$	865,179
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	5,207		$	5,508
Accounts payable		65,012			42,966
Income taxes payable		5,674			5,787
Current portion of operating lease liabilities		7,575			6,188
Accrued expenses and other current liabilities		104,506			53,780
Total current liabilities		187,974			114,229
Long-term debt		441,831			194,927
Operating lease liabilities		40,850			32,802
Deferred tax liabilities		21,936			24,134
Income taxes payable		5,789			5,112
Other liabilities		11,744			17,166
Total liabilities		710,124			388,370
Commitments and contingencies (Note 15)
Stockholders’ equity:
Preferred shares, no par value; Authorized shares: 7,000; No shares issued and outstanding		—			—
Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 35,600 and 35,163, respectively		423,856			423,856
Additional paid-in capital		48,489			58,992
Retained earnings		42,779			6,202
Accumulated other comprehensive loss		(15,011	)		(12,241	)
Total stockholders' equity		500,113			476,809
Total liabilities and stockholders’ equity	$	1,210,237		$	865,179

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

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2021			2020			2021			2020
Revenue	$	177,726		$	142,929		$	507,833		$	443,125
Cost of revenue		101,428			83,824			290,389			260,873
Gross profit		76,298			59,105			217,444			182,252
Operating expenses:
Research and development and engineering		17,468			15,231			53,104			45,005
Selling, general and administrative		31,296			26,788			94,189			82,451
Amortization of purchased intangible assets		4,139			3,533			11,300			10,388
Restructuring, acquisition and related costs		8,120			1,687			16,485			5,591
Total operating expenses		61,023			47,239			175,078			143,435
Operating income		15,275			11,866			42,366			38,817
Interest income (expense), net		(1,710	)		(1,698	)		(4,496	)		(5,077	)
Foreign exchange transaction gains (losses), net		34			(136	)		(299	)		(164	)
Other income (expense), net		(71	)		(14	)		(238	)		47
Income before income taxes		13,528			10,018			37,333			33,623
Income tax provision (benefit)		(75	)		1,760			756			1,758
Consolidated net income	$	13,603		$	8,258		$	36,577		$	31,865

Earnings per common share (Note 5):
Basic	$	0.38		$	0.23		$	1.03		$	0.91
Diluted	$	0.38		$	0.23		$	1.02		$	0.89

Weighted average common shares outstanding—basic		35,447			35,142			35,366			35,144
Weighted average common shares outstanding—diluted		35,764			35,688			35,771			35,609

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

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

	Three Months Ended October 1, 2021
Balance at July 2, 2021		35,489		$	423,856	$	52,243		$	29,176		$	(12,211	)	$	493,064
Consolidated net income		—			—		—			13,603			—			13,603
Common shares issued under stock plans		199			—		—			—			—			—
Common shares withheld for taxes on vested stock awards		(88	)		—		(12,244	)		—			—			(12,244	)
Share-based compensation		—			—		8,490			—			—			8,490
Other comprehensive income (loss), net of tax		—			—		—			—			(2,800	)		(2,800	)
Balance at October 1, 2021		35,600		$	423,856	$	48,489		$	42,779		$	(15,011	)	$	500,113

	Nine Months Ended October 1, 2021
Balance at December 31, 2020		35,163		$	423,856	$	58,992		$	6,202		$	(12,241	)	$	476,809
Consolidated net income		—			—		—			36,577			—			36,577
Common shares issued under stock plans		658			—		—			—			—			—
Common shares withheld for taxes on vested stock awards		(221	)		—		(30,672	)		—			—			(30,672	)
Share-based compensation		—			—		20,169			—			—			20,169
Other comprehensive income (loss), net of tax		—			—		—			—			(2,770	)		(2,770	)
Balance at October 1, 2021		35,600		$	423,856	$	48,489		$	42,779		$	(15,011	)	$	500,113

	Three Months Ended October 2, 2020
Balance at July 3, 2020		35,155		$	423,856	$	45,338		$	(14,712	)	$	(22,584	)	$	431,898
Consolidated net income		—			—		—			8,258			—			8,258
Common shares issued under stock plans		8			—		—			—			—			—
Common shares withheld for taxes on vested stock awards		(3	)		—		(366	)		—			—			(366	)
Share-based compensation		—			—		7,225			—			—			7,225
Other comprehensive income (loss), net of tax		—			—		—			—			4,234			4,234
Balance at October 2, 2020		35,160		$	423,856	$	52,197		$	(6,454	)	$	(18,350	)	$	451,249

	Nine Months Ended October 2, 2020
Balance at December 31, 2019		35,052		$	423,856	$	49,748		$	(38,319	)	$	(18,113	)	$	417,172
Consolidated net income		—			—		—			31,865			—			31,865
Common shares issued under stock plans		264			—		179			—			—			179
Common shares withheld for taxes on vested stock awards		(91	)		—		(8,302	)		—			—			(8,302	)
Repurchases of common shares		(65	)		—		(5,500	)		—			—			(5,500	)
Share-based compensation		—			—		16,072			—			—			16,072
Other comprehensive income (loss), net of tax		—			—		—			—

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	31

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44

ITEM 4.	CONTROLS AND PROCEDURES	44

PART II — OTHER INFORMATION		45

ITEM 1.	LEGAL PROCEEDINGS	45

ITEM 1A.	RISK FACTORS	45

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		48

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐