Novanta Inc. (NOVT) Earnings & Analysis

Latest quarter

Novanta reported Q2 FY2026 revenue of $265.8 million, above the consensus of $261.5 million. Adjusted earnings per share were $0.89, above the consensus of $0.83.

Revenue rose 10.3% from $241.0 million a year earlier. Novanta’s filing attributed the increase primarily to growth in both Automation Enabling Technologies and Medical Solutions. The filing said Automation revenue rose 12.0% as sales of robotics, automation and precision manufacturing products increased, while Medical Solutions revenue rose 8.6% on higher sales of advanced surgery and precision medicine products.

Novanta reported gross margin of 45.5%, up from 44.3% a year earlier, and operating margin of 6.79%, up from 6.19%. The filing said higher gross profit contributed to increased operating income, partly offset by higher selling, general and administrative expenses. It attributed the expense increase primarily to variable employee compensation and financial and operating system implementation work.

Diluted earnings per share rose to $0.30 from $0.12. Novanta reported free cash flow of $57.5 million, compared with $11.7 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Matthijs Glastra said all business units grew organically in the quarter and that new product revenue rose by more than 50%. He said bookings were up 18% year to date and backlog was up 11%, although customer order timing affected the advanced surgery business in the first and second quarters.

Glastra said Novanta closed its Riverpoint Medical acquisition at the end of July. He said the deal roughly doubles the recurring medical consumables business to approximately $300 million annualized and expands Novanta’s medical end-market exposure to 60% of revenue. Integration is underway under co-Chief Operating Officer John Lesica, Glastra said.

On manufacturing, Glastra said Novanta completed moves and closed 2 factories in the second quarter, then accelerated plans for 2 more closures by the end of the first quarter of 2027. CFO Robert Buckley said Novanta had also started doubling capacity at its China factory for air bearing spindles, a project partly funded by customers.

In the question-and-answer session, Buckley said the Automation Enabling Technologies business accounted for most of the improvement in the company’s base-business outlook, citing lower asset intensity and improved profitability after site closures. Asked about margins, he said Riverpoint and the core business both contributed to the outlook, but Novanta had to execute the additional closures effectively. He also said surcharges were not expected to completely absorb new tariff increases, although pricing actions and productivity improvements had helped.

Discussing robot-related demand, Glastra said bookings were improving from a small base as customers moved toward training robots rather than prototypes. He cautioned that the transition was at an early stage and said, “it’s anybody’s guess how long that will take.” On semiconductor-related demand, he cited customer communications and spindle backlog but said, “it’s too early to put a number for ’27 right now.”

For the third quarter, Buckley said Novanta expected precision medicine revenue to decline because of its life-science exposure, while advanced surgery was expected to grow on new product ramps and end-market demand.

Guidance

Novanta raised its full-year 2026 outlook after closing Riverpoint Medical, with CFO Robert Buckley saying the updated revenue outlook also raised the company’s organic growth expectations. Novanta now expects GAAP revenue of approximately $1,130 million to $1,140 million, including Riverpoint, and organic growth of up to 7%.