Q2 2026 Novanta Inc Earnings Call

August 6, 2026

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 Inc.'s Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Marci Meditz, Corporate Finance Leader for Novanta. Please go ahead.

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 Inc's Q2 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. 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.

Speaker #1: Leader for NOVANTA. Please go

Speaker #2: Thank you very much. Good conference call. This is Marci Meadows, 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 Riveto and John Lesika.

Marci Meditz: Thank you very much. Good morning and welcome to Novanta's Q2 2026 earnings conference call. This is Marci 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.

Marcy Meditz: Thank you very much. Good morning and welcome to Novanta's Q2 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.

Marcy Meditz: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Marci Meditz: 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. 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.

Marcy Meditz: 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.

Speaker #2: 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.

Speaker #2: 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.

Marcy Meditz: 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.

Speaker #2: 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.

Marci Meditz: 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 am now pleased to introduce the Chair and Chief Executive Officer of Novanta, Matthijs Glastra.

Marcy Meditz: 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 am now pleased to introduce the Chair and Chief Executive Officer of Novanta, Matthijs Glastra.

Speaker #2: I'm now pleased to introduce the Chair and Chief Executive Officer of Novanta, Matthijs Glastra.

Speaker #3: Thank you, Marci. 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.

Matthijs Glastra: Thank you, Marci. Good morning, everybody. 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 are also raising our full year 2026 outlook, positioning Novanta to deliver more than 15% reported revenue growth year over year for the full year.

Matthijs Glastra: Thank you, Marcy. Good morning, everybody. 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.

Speaker #3: All of our business units grew organically in the quarter. The combination of these strong results gives us a terrific foundation to close our largest acquisition in history.

Matthijs Glastra: 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 are also raising our full year 2026 outlook, positioning Novanta to deliver more than 15% reported revenue growth year over year for the full year.

Speaker #3: 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% rewarded revenue growth year over year for the full year.

Speaker #3: We're 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 on our executing well on our top three priorities.

Matthijs Glastra: We are very proud of performance and 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 three 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, backlog is up 11%. While some timing of custom orders impacted our Advanced Surgery business in Q1 and Q2, our year-to-date book-to-bill was well over 1.0. Organic growth is now accelerating with all four business units delivering on solid organic growth in the quarter.

Speaker #3: 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.

Speaker #3: 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%.

Matthijs Glastra: Bookings are up 18% year to date, backlog is up 11%. While some timing of custom orders impacted our Advanced Surgery business in Q1 and Q2, our year-to-date book-to-bill was well over 1.0. Organic growth is now accelerating with all four business units delivering on solid organic growth in the quarter.

Speaker #3: While some timing of custom orders impacted our advanced surgery business in the first and second quarters, our year to date book-to-bill was well over 1.0.

Speaker #3: Organic growth is now accelerating with all four 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.

Matthijs Glastra: 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, 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, 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, expands our medical end market exposure to 60% of revenue. It is expected to be immediately accretive to revenue growth, gross margins, EBITDA margins, well as long-term organic growth rates.

Speaker #3: 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.

Speaker #3: 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.

Matthijs Glastra: 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, expands our medical end market exposure to 60% of revenue. It is expected to be immediately accretive to revenue growth, gross margins, EBITDA margins, well as long-term organic growth rates.

Speaker #3: It roughly doubles our recurring medical consumable business to approximately $300 million from about 15% of revenue to roughly $25% annualized. And expense our medical and market exposure to 60% of revenue.

Speaker #3: 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.

Speaker #3: Integration is underway under leadership of John Lesika, and the more time we spent with the Riverpoint team, the more impressed we are by the depth of their customer relationships, their innovation mindset, and their commitment to quality.

Matthijs Glastra: Integration is underway under the leadership of John Lesica. 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. Our third priority for 2026 is about completing our manufacturing foundation. In Q2, 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.

Speaker #3: We're excited to welcome them to NOVANTA. And our third priority for 2026 is about completing our manufacturing foundation. In the second quarter, we completed the manufacturing moves and closure of two of our factories.

Matthijs Glastra: In Q2, 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.

Speaker #3: The establishment of our regional lighthouse manufacturing centers of excellence, as well underway. Supported by two new MRP system implementations, the NOVANTA GROW system, and world-class manufacturing teams.

Speaker #3: 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 two additional factory closures by the end of the first quarter of 2027 as part of our current restructuring program.

Matthijs Glastra: 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 Q1 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 H1 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.

Speaker #3: 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.

Matthijs Glastra: 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 H1 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.

Speaker #3: Stepping back, the first half performance validates our strategy. We win an end markets with durable secular tailwinds, where our growth platforms represent a nearly $10 billion addressable market opportunity by 2030.

Speaker #3: We win in them by solving our OEMs' customers' hardest problems with proprietary technology, which designs us in for the better part of a decade.

Matthijs Glastra: We win in them by solving our OEMs' customers' hardest problems with proprietary technology, which designs us in for the better part of a decade. We deploy 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 segments' new product launches, design wins, and customer momentum behind these results, and more on the Riverpoint integration. John, over to you.

Speaker #3: And we deploy 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. What is in front of us is accelerating demand, record new product momentum, the strongest theme Novanta has ever had, and the balance sheet to keep acting.

Matthijs Glastra: 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 segments' new product launches, design wins, and customer momentum behind these results, and more on the Riverpoint integration. John, over to you.

Speaker #3: Chuck Rivera and John Lesika are both with us today. They will walk you through their segment's new product launches, design wins, and customer momentum behind these results.

Speaker #3: And more on the Riverpoint integration. John, over to you.

Speaker #2: Thanks, Matthijas. In the second quarter, revenue in the medical solutions segment grew 8.6% year over year, better than we expected. This segment saw book-to-bill of 0.79 in the second quarter and year to date had bookings growth of greater than 10% year over year.

John Lesica: Thanks, Matthijs. In Q2, 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 Q2, 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.

Speaker #2: 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.

John Lesica: 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.

Speaker #2: 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 two customers with first-generation arthroscopic fluid management platforms.

Speaker #2: 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.

John Lesica: 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 Q2, and a vitality index near 30%. We continue to have strong momentum in insufflation, expansion of our fluid management solutions in arthroscopy, and a scaling medical consumables business. In our Precision Medicine business, sales grew by 5% year-over-year.

Speaker #2: 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%.

John Lesica: 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 Q2, and a vitality index near 30%. We continue to have strong momentum in insufflation, expansion of our fluid management solutions in arthroscopy, and a scaling medical consumables business. In our Precision Medicine business, sales grew by 5% year-over-year.

Speaker #2: We continue to have strong momentum in insufflation, expansion of our fluid management solutions in arthroscopy, and a scaling medical consumables business. In our precision medicine business, sales grew by 5% year over year.

Speaker #2: The year-over-year growth in this business was driven by continued strong momentum from our Keyon acquisition. As well as our core growth from our medical customers.

John Lesica: The year-over-year growth in this business was driven by continued strong momentum from our Keyon 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 Keyon'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.

Speaker #2: 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.

Speaker #2: While this business has 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.

John Lesica: 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 Keyon'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.

Speaker #2: In addition, we've continued to invest in bringing Keyon'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.

Speaker #2: While this is a multi-year investment initiative, the progress and momentum we're seeing with Keyon's core business is a testament of the value proposition we believe we can offer.

John Lesica: While this is a multi-year investment initiative, the progress and momentum we're seeing with Keyon'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 Q2, and we expect gross margins to sequentially expand materially in Q3. Finally, I'm also pleased to share that we closed the acquisition of Riverpoint Medical, a milestone we're genuinely excited about.

Speaker #2: 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.

John Lesica: 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 Q2, and we expect gross margins to sequentially expand materially in Q3. Finally, I'm also pleased to share that we closed the acquisition of Riverpoint Medical, a milestone we're genuinely excited about.

Speaker #2: 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.

Speaker #2: 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.

John Lesica: 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.

Speaker #2: 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.

Speaker #2: Chuck will now cover the automation enabling technology segment.

Speaker #1: Thanks, John. In the second quarter, the automation enabling technology segment revenue grew by 12% year over year, better than expected. The book-to-bill in the segment was 1.1, and bookings were up 18% year over year.

Chuck Ravetto: Thanks, John. In Q2, the Automation Enabling Technologies segment revenue grew by 12% year-over-year, better than expected. The book-to-bill in the 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 the 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.

Speaker #1: Our precision manufacturing business, which mainly serves the industrial equipment market, saw year-over-year revenue growth of 9%, continuing the 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.

Chuck Ravetto: 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.

Speaker #1: Our intelligent laser beam staring 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.

Speaker #1: For example, in laser-additive manufacturing, NOVANTA subsystems enabled a rapid production of complex designs with dramatically reduced material waste through our low drift and fastest throughput technology.

Chuck Ravetto: For example, in laser additive manufacturing, Novanta subsystems enabled a 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 & 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, warehouse automation, continued momentum in advanced packaging and substrate production for AI GPU chips, and the front-end semiconductor wafer fab equipment market.

Speaker #1: We remain excited about the durability of these multi-year tailwinds for NOVANTA. In our robotics and automation business, revenue was up 13.5% year over year.

Speaker #1: 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.

Chuck Ravetto: 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, warehouse automation, continued momentum in advanced packaging and substrate production for AI GPU chips, and the front-end semiconductor wafer fab equipment market.

Speaker #1: The growth is supported by multiple Gen AI-driven tailwinds, new product advancements for precision robotics, humanoids, and warehouse automation, continued momentum An advanced packaging and substrate production for AI , GPU chips and the front end semiconductor wafer fab equipment market .

Speaker #1: In the quarter, we have seen our first significant orders of our servo drives to support the deployment of hundreds of humanoids, and customers' testing and learning facilities to start their journey of learning how to operate humanoids in a factory in a human-occupied environment.

Chuck Ravetto: 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 cost. Finally, our Robotics & 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 Q2.

Speaker #1: 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 technology to ensure safe operations of these systems .

Chuck Ravetto: 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 cost. Finally, our Robotics & 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 Q2.

Speaker #1: 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 .

Speaker #1: 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 .

Chuck Ravetto: Collectively, these applications grew approximately 25% year-over-year, and we expect this growth rate to continue as we progress through H2. 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.

Speaker #1: The overall automation enabling technology 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 INC 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 .

Chuck Ravetto: 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.

Speaker #1: It was a strong accomplishment for which I'm very proud of . The team . New product revenue for the 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 .

Chuck Ravetto: 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?

Speaker #1: 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 .

Speaker #1: Robert

Speaker #2: 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 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% .

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 into the advanced industrial markets were 49%. Our Q2 2026 non-GAAP adjusted gross profit was $125 million, 47% adjusted gross margin, compared to $111 million or 46% adjusted gross margin in Q2 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.

Speaker #2: 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 .

Robert Buckley: Our Q2 2026 non-GAAP adjusted gross profit was $125 million, 47% adjusted gross margin, compared to $111 million or 46% adjusted gross margin in Q2 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.

Speaker #2: 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 .

Speaker #2: Second quarter . G&A expenses were 60 million or approximately 22.6% of sales G&A expenses included 5.6 million , or 2.1% of sales in costs related to design and implementation phase of our new factory , MRP system , and some non-recurring costs .

Robert Buckley: Q2 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 design and implementation phase of our new factory MRP system and some non-recurring costs. The sequential increases in SG&A expenses in the quarter was the result of a 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 Q2 was 21%, flat to Q2 2025. Our non-GAAP adjusted earnings per share was $0.89 in Q2, up at 17% versus the prior year. Diluted shares outstanding in the quarter were 41.164 million.

Speaker #2: The sequential increases in energy and expenses in the quarter was the result of the higher variable compensation tied to stronger financial performance and outlook .

Speaker #2: 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 .

Robert Buckley: 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 Q2 was 21%, flat to Q2 2025. Our non-GAAP adjusted earnings per share was $0.89 in Q2, up at 17% versus the prior year. Diluted shares outstanding in the quarter were 41.164 million.

Speaker #2: 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 million .

Speaker #2: 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 .

Robert Buckley: 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 Q2 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 minerals. We ended Q2 with gross debt of $239 million and a growth leverage ratio of 1x. Our Q2 cash balance was $719 million, and so our net debt was -$480 million, giving us a net leverage ratio of -2x. Now turning to guidance.

Speaker #2: 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.

Speaker #2: 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 minerals .

Robert Buckley: 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 minerals. We ended Q2 with gross debt of $239 million and a growth leverage ratio of 1x. Our Q2 cash balance was $719 million, and so our net debt was -$480 million, giving us a net leverage ratio of -2x. Now turning to guidance.

Speaker #2: We ended the second quarter with gross debt of 239 million and a gross leverage ratio of one times our second quarter cash balance was 719 million .

Speaker #2: And so our net debt was -480 million , giving us a net leverage ratio of negative two times . Now turning to guidance NOVANTA INC core businesses are trending in line with or above expectations with continued momentum building in a handful of areas that 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 INC on the back of NOVANTA INC strongest organic revenue growth and cash flow growth in more than three years .

Robert Buckley: Novanta's core businesses are trending in line with or above expectations with continued momentum building in a handful of areas. 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 $1.13 to 1.14 billion, 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%.

Speaker #2: Confidently positions NOVANTA INC on a really exciting path and outlook as a consequence , for the full year 2026 , we now expect GAAP revenue to be approximately 1,000,000,130 million to 1,000,000,140 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 .

Robert Buckley: As a consequence, for the full year 2026, we now expect GAAP revenue to be approximately $1.13 to 1.14 billion, 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%.

Robert Buckley: For the rest of the full year guidance, we expect adjusted EBITDA to be between $273 to 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 end of 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 two additional manufacturing transfers and site closures as part of our current restructuring program to position us for even stronger 2027.

Speaker #2: 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% .

Speaker #2: Our updated range for EBITDA includes around 25 million of adjusted EBITDA for the Riverpoint medical business , which represents an end to July close , as well as some conservatism .

Speaker #2: 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 two 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 two additional manufacturing facilities already , both of which are on track for full production moves in transfers by the end of the first quarter of 2027 .

Robert Buckley: 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 two additional manufacturing transfers and site closures as part of our current restructuring program to position us for even stronger 2027.

Robert Buckley: We announced the closure of these two additional manufacturing facilities already, both of which were on track for full production moves and transfers by the end of Q1 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.

Speaker #2: In addition, we also started the doubling of capacity at our China factory to support the growth of our air bearing spindles business.

Speaker #2: This business now has committed demand for the next two years , putting us in a confident position to expand capacity , which is also partially funded by customers .

Robert Buckley: 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.

Speaker #2: 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 .

Speaker #2: Not only do we continue to have high confidence in NOVANTA INC growth and outlook , which is supported by committed backlog , accelerating customer optimism and solid execution of new product introductions .

Robert Buckley: 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 Q3 2026, we expect GAAP revenue to be approximately $300 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.

Speaker #2: But we're also thrilled to welcome NOVANTA INC 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% .

Speaker #2: This revenue outlook incorporates Riverpoint medical looking at growth in our segments in the third quarter , the automation Enabling technology segment is expected to achieve 12 to 14% growth versus the prior year , which represents another sequential improvement .

Robert Buckley: Looking at growth in our segments, in Q3, 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 H1, driven by continued momentum in AI-driven Robotics & 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 Q3 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.

Speaker #2: 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 .

Speaker #2: 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 .

Robert Buckley: 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.

Speaker #2: 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 INC total sales .

Speaker #2: 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 .

Robert Buckley: 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 Q3 to come in at approximately 48%. This sequential improvement is attributed to Riverpoint Medical's accretion and the completion of two manufacturing site closures that occurred at the end of Q2. Gross margins for the full year 2026 are expected to be around 47%. For operating expenses in Q3, 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.

Speaker #2: 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 .

Speaker #2: In this business, for NOVANTA INC adjusted gross margins, we expect the third quarter to come in at approximately 48%. This sequential improvement is attributed to Riverpoint Medical's accretion and the completion of two manufacturing site closures that occurred at the end of the second quarter.

Robert Buckley: For Novanta's adjusted gross margins, we expect Q3 to come in at approximately 48%. This sequential improvement is attributed to Riverpoint Medical's accretion and the completion of two manufacturing site closures that occurred at the end of Q2. Gross margins for the full year 2026 are expected to be around 47%. For operating expenses in Q3, 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.

Speaker #2: 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.

Speaker #2: 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 .

Robert Buckley: 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 Q2, is expected to be around $9 million in Q3. 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 Q3, we expect it to be between $74 million and $77 million, representing 27% to 33% increase year over year. We expect to achieve approximately a 25% EBITDA margin, which is 150 basis points higher than the prior year and quarter.

Speaker #2: Depreciation expense will be approximately $6 million, which incorporates Riverpoint Medical. Depreciation expense for the full year will be just over $19 million.

Speaker #2: Stock compensation expense , which was 9.3 million in the second quarter , is expected to be around 9 million in the third quarter .

Speaker #2: 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 would be just over $37 million for adjusted EBITDA in the third quarter .

Robert Buckley: Stock compensation expense in the full year will be just over $37 million. For adjusted EBITDA in Q3, we expect it to be between $74 million and $77 million, representing 27% to 33% increase year over year. We expect to achieve approximately a 25% EBITDA margin, which is 150 basis points higher than the prior year and quarter.

Speaker #2: We expect it to be between 74,000,077 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 end quarter .

Speaker #2: Interest expense , net of interest income , will be approximately 9 million in the third quarter , incorporating a partial quarter financing for Riverpoint medical .

Robert Buckley: Interest expense net of interest income will be approximately $9 million in Q3, incorporating a partial quarter financing for Riverpoint Medical. We expect our non-GAAP tax rate to be approximately 22% in Q3. 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 Q3, incorporating the $300 million fund raise as part of the Riverpoint Medical acquisition. As a reminder, the $300 million equity raise was registered on 29 June and remains fully tradable. Weighted average shares outstanding on a diluted basis in Q4 is also expected to be around 43 million shares.

Speaker #2: 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 .

Speaker #2: 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 fundraise as part of the Riverpoint Medical acquisition .

Robert Buckley: Diluted weighted average shares outstanding will be approximately 43 million shares in Q3, incorporating the $300 million fund raise as part of the Riverpoint Medical acquisition. As a reminder, the $300 million equity raise was registered on 29 June and remains fully tradable. Weighted average shares outstanding on a diluted basis in Q4 is also expected to be around 43 million shares.

Speaker #2: As a reminder , the 300 million equity raise was registered on June 29th 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 .

Robert Buckley: For Q3, we expect adjusted diluted earnings per share to be in the range of $0.95 to $1.00, representing year-over-year growth in the range of 10% to 15% year-over-year. We expect cash flow conversion to step down in Q3, 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 H1 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 Q3 is expected to be just north of $800 million, with growth pro forma leverage ratio of 2.7x, reflecting the Riverpoint Medical financing and Riverpoint plus Novanta's trailing four quarters of adjusted EBITDA.

Speaker #2: 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 .

Speaker #2: We expect cash flow conversion to step down in the third quarter , largely due to the dynamics of acquiring River Point Medical , which was acquired on a cash basis but will continue to be strong overall with more cash flow generated in the first half of this year than all of 2025 .

Robert Buckley: With more cash flow generated in H1 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 Q3 is expected to be just north of $800 million, with growth pro forma leverage ratio of 2.7x, reflecting the Riverpoint Medical financing and Riverpoint plus Novanta's trailing four quarters of adjusted EBITDA.

Speaker #2: 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 2.7 times , reflecting the River Point Medical financing and River point plus NOVANTA INC trailing four quarters of adjusted EBITDA .

Speaker #2: 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 three years .

Robert Buckley: 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 H2. 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 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 Novanta's infrastructure and overall operating foundation.

Speaker #2: 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 .

Speaker #2: Our cash flows are at record levels . Our teams have demonstrated incredible resolve and skill in navigating the ever changing macroeconomic and geopolitical dynamics .

Robert Buckley: Our cash flows are at record levels. Our teams have demonstrated 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 Novanta's infrastructure and overall operating foundation.

Speaker #2: In addition , the team successfully executed on two manufacturing moves while taking two additional manufacturing moves on and simultaneously upgrading our MRP environment while further strengthening the NOVANTA INC infrastructure and overall operating foundation .

Speaker #2: NOVANTA INC . 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 .

Robert Buckley: 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.

Speaker #2: This concludes our prepared remarks . We'll now open the call up for questions

Speaker #3: We will now begin the question and answer session . To ask a question , you may press star , then one on your touchtone phone .

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two. Our first question will come from Lee Jagoda of CJS Securities. Please go ahead.

Speaker #3: If you are using a speakerphone , please pick up your handset before pressing the keys to withdraw your question , please press then two And our first question will come from Lee of CJS securities .

Speaker #3: Please go ahead

Speaker #4: Hey , good morning . And congrats on getting River point starting line .

Lee Jagoda: Hey, good morning, congrats on getting Riverpoint across the starting line.

Speaker #5: Thanks , Lee . Good morning

Robert Buckley: Thanks, Lee. Good morning.

Speaker #4: , so I , I guess looking at the guidance , , Robert , what do you how should we think about the biggest drivers in the change in organic growth ?

Lee Jagoda: I guess, looking at the guidance, Robert, how should we think about the biggest drivers in the change in organic growth, and the EBITDA increase excluding the Riverpoint transaction?

Speaker #4: , and the EBITDA increase , excluding the , , river point transaction

Speaker #2: , so I would say the , the , a e t business is , , has done a little bit better in the , in the outlook .

Robert Buckley: I would say the AET business has done a little bit better in the outlook. If you're asking where in the segments, it's mostly coming from the AET area. Yeah, we've raised the guidance. From an EPS perspective, you got a $0.06 speed in Q2, then roughly a $0.02 improvement in the base business, that was largely coming from the AET side as they've not only decreased their asset intensity by closing a number of sites, but improved their profitability as a result of that. Then we pick up about $0.06 on the Riverpoint transaction in H2 as well.

Speaker #2: , so if you're asking like , where in the segments , it's mostly coming from the a e t area . Yeah . We've raised the guidance , , from an EPS perspective , you got a $0.06 beat in Q2 and then roughly a two cent improvement in the base business .

Speaker #2: And that was largely coming from the a T side , as they've not only decreased their their asset intensity by closing a number of sites , but have improved their profitability as a result of that .

Speaker #2: , and then we pick up about $0.06 on the river point transaction in the back half of the year as well

Speaker #4: 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 .

Lee Jagoda: Great. 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 multi-year contracts we should think about? Did that have a material impact on the really strong gross margins the segment had?

Speaker #4: 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 ?

Speaker #4: Is there any multi-year contracts we should think about ? , and did that have a material impact on the really strong gross margins of this segment ?

Speaker #4: Had

Speaker #1: I , Lee , this is . Chuck . Yeah . 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 , phase of this .

Chuck Ravetto: Hi, Lee, this is Chuck. Yeah, thanks for the question. What we saw here right in the last quarter is the first move maybe beyond prototyping, into training centers or development centers is really the next phase of this. The design is getting closer to completion, but there's a long path on the training cycle. 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.

Speaker #1: 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 these robots get out into the real world .

Speaker #1: , you know , it's not it's not a significant part of what drove the margin this quarter .

Speaker #5: So we see bookings rapidly improving , but from a small base . And if anything , it's a little faster than we expected .

Robert Buckley: 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 in towards training these robots. It's anybody's guess how long that will take. 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. 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.

Speaker #5: But we stick with kind of previous remarks that this is still a very early stages , although we're very encouraged that we're now seeing a kind of a rapid transition in towards training these robots .

Speaker #5: And then , you know , it's anybody's guess how long that will take . , but of course , the volumes for these training robots is larger than the prototypes .

Robert Buckley: 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. 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.

Speaker #5: And that's what we're starting to see in our , 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

Speaker #4: Got it . And then , , I guess one more for Robert , if I can just understanding the river point acquisitions accretive to your gross margins , how should we think about the core gross margin algo , , ex river point ?

Lee Jagoda: Got it. I guess one more for Robert, if I can. Just understanding the Riverpoint acquisition's 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.

Speaker #4: 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 , you know , either tail or , you know , headwinds to neutral .

Speaker #4: And , and potentially tailwinds .

Speaker #2: Yeah . , it's a , it's a solid question . You know , obviously when you got a lot of balls up in the air , you know , there's always some sort of risk associated with , with the improvement , , we , we delivered a 47% gross margin in the second quarter .

Robert Buckley: Yeah. 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. I would expect that to maintain into 2027. 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. I would say there's conservatism in that outlook of taking it from a 47% growth margin in 2026 to a 48% growth margin in 2027.

Speaker #2: We're looking at something closer to 48% in the back half of the year . And I would expect , , that to maintain into 2027 .

Speaker #2: So we're looking at another 100 basis points of improvement in 2027 . Part of that is obviously the , the benefit of the river buoy medical acquisition .

Robert Buckley: 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. I would say there's conservatism in that outlook of taking it from a 47% growth margin in 2026 to a 48% growth margin in 2027.

Speaker #2: And part of that is the core part of the business . , there will be further upside opportunities , but we have to execute on those , on those site closures and make sure they're done effectively .

Speaker #2: 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 .

Speaker #2: But we feel good that everything's on the right track . We've closed two sites successfully . We have two new sites that are underway .

Robert Buckley: We feel good that everything's on the right track. We've closed two sites successfully. We have two 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, Section 232 and Section 301 tariffs. Unfortunately, our customers bear the bulk of the IEEPA tariffs. 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.

Speaker #2: 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 .

Speaker #2: I would expect Surcharging not to completely absorb the new tariff increases . We're mostly impacted by , , section 201 , , and sorry , section 232 .

Speaker #2: And 301 tariffs . , unfortunately , our customers bear the bulk of the IEPA tariffs . , so , you know , that's expected to continue to be a bit of a headwind , but Chuck and John have drove tremendous productivity improvements in their business .

Robert Buckley: Unfortunately, our customers bear the bulk of the IEEPA tariffs. 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. 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.

Speaker #2: They've gotten some pricing actions . , the site closures help . And so when you , 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 .

Robert Buckley: 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.

Speaker #5: Yeah . So in summary , , Lee , we're tracking what we said we would do . , as per the last quarter , right ?

Matthijs Glastra: Yeah. 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.

Speaker #5: 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 .

Speaker #4: Great . Thanks very much

Lee Jagoda: Great. Thanks very much.

Speaker #3: The next question comes from Quinn Frederickson of Baird . Please go ahead .

Operator: The next question comes from Quinn Fredrickson of Baird. Please go ahead.

Speaker #6: Hey . Good morning guys .

Quinn Fredrickson: Hey, good morning, guys.

Speaker #5: Good morning Quinn .

Robert Buckley: Good morning, Quinn.

Speaker #6: I wanted to ask about your GenAI data center exposure. You said it was up 25% in the quarter, and you expect it to accelerate through the back half of the year.

Quinn Fredrickson: Wanted to ask about your GenAI 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. Just any color there would be helpful.

Speaker #6: What does your visibility of that business look like into 2027 ? I would imagine you're semi microelectronics should still be pretty strong . You sound more positive on humanoids .

Speaker #6: So just any color there would be helpful

Speaker #5: Yeah . As a reminder , this this bucket is a broad range of 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 , , of elements of this supply chain and value chain , as well as the GP who drilling that we talked about with our er , you know , er spindle business .

Matthijs Glastra: 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 this supply chain and value chain, as well as the GPU drilling that we talked about with our air-bearing spindle business. All that combined is 17% of revenue is a broad set of applications growing at a 25% of revenue, and we expect that to continue. Based on wafer fab outlook market reports, you see growth there. 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. The direction of travel continues to be positive as customers communicating that to us.

Speaker #5: So , so all that combined is 70% of revenues , a broad set of applications , you know , growing , 17 . Yeah .

Matthijs Glastra: All that combined is 17% of revenue is a broad set of applications growing at a 25% of revenue, and we expect that to continue. Based on wafer fab outlook market reports, you see growth there. 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. The direction of travel continues to be positive as customers communicating that to us. It's too early to put a number for 2027 in right now.

Speaker #5: Growing at a 25% of revenue and we , we expect that to continue . , you know , based on wafer fab outlook market reports .

Speaker #5: I mean , you see growth there . So , so the direction of travel continues to be positive . Robert commented on that .

Speaker #5: Our air bearing spindles business is , is booked for the next two years at least . We got we got strong backlog there .

Speaker #5: So so yeah , so direction of travel continues to be to be positive . , as , as customers are communicating that to us , but , but it's too early to put a number for 27 in right now

Matthijs Glastra: It's too early to put a number for 2027 in right now.

Speaker #6: Thanks . Matthias . , can you also expand on your comments around advanced surgery bookings in the quarter ? , it sounded like there was a timing element .

Quinn Fredrickson: Thanks, Matthijs. Can you also expand on your comments around Advanced Surgery bookings in the quarter? It sounded like there was a timing element. If you could just clarify what drove that and whether we should anticipate bookings to strengthen in the back half.

Speaker #6: So if you could just clarify what drove that and whether we should anticipate bookings to strengthen in the back half

Speaker #7: Yeah . Thanks for the questions . 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 .

John Lesica: Yeah, Quinn, thanks for the question. 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. As we look at the 4 quarter rolling average, we're above 1. As we look at the back H2 of the year, again, we're going to be above 1. We feel really good about the momentum in that business and the pace of bookings.

Speaker #7: , as we think about that business and looking at bookings , we really look at it across four quarter rolling average . , that gives us a really great sense of the health of that business .

Speaker #7: We have many customers that provide us , , annual POS and you can imagine the size of them based on timing . Can , can swing things .

John Lesica: We have many customers that provide us annual POs, and you can imagine the size of them based on timing can swing things. As we look at the 4 quarter rolling average, we're above 1. As we look at the back H2 of the year, again, we're going to be above 1. We feel really good about the momentum in that business and the pace of bookings.

Speaker #7: So as we look at , , the four quarter rolling average , we're above one as we look at the back half of the year , again , we're going to be above one .

Speaker #7: So we feel really good about the momentum in that business and the pace of bookings

Speaker #6: Thanks. And then just the last one for Robert would be on R&D. I think it's stepped down a good amount year over year.

Quinn Fredrickson: Thanks. 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.

Speaker #6: 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 .

Speaker #2: Yeah . 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 as P and L and P and L , so you're probably somewhere north around or something close to around $100 million of R&D for the full year .

Robert Buckley: Yeah. Probably look at it with a combination of Riverpoint. You'll obviously have a little bit of a step-up with the inclusion of that business's P&L into our P&L. You're probably somewhere north around or something close to around $100 million of R&D for the full year. About 8.5%, 8.7% of sales, somewhere in that range.

Speaker #2: So about 8.5 , 8.7% of sales somewhere in that range .

Speaker #6: Thank .

Speaker #8: You . You know , remember .

Quinn Fredrickson: Thank you.

Matthijs Glastra: Remember, Quinn, in the past, we were running closer to 10, right? We said that once these new products would kick in, which they are at a rapid rate and our organic growth starts to pick up, that actually the percentage would modestly scale down, and that's exactly what you see happening.

Speaker #5: Quinn in the past , we were running closer to ten , right . And we said that once these new products would kick in , , which they are in a rapid rate .

Speaker #5: And as our organic growth starts to pick up, that actually means the percentage, which was modestly scaled down, starts to increase. And that's exactly what you see happening.

Speaker #6: That's helpful context . Thanks

Quinn Fredrickson: That's helpful context. Thanks.

Speaker #3: The next question comes from Brian Drab of William Blair . Please go ahead .

Operator: The next question comes from Brian Drab of William Blair. Please go ahead.

Speaker #9: Thanks for taking the questions . , can you talk a little bit about the impact of Riverpoint for the back half of the year ?

Brian Drab: Thanks for taking the questions. Can you talk a little bit about the impact of Riverpoint for the H2 of the year, maybe starting with specifically the Q3, 7% to 9% organic revenue growth and your assumptions there for Riverpoint and maybe FX? 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 a significantly higher revenue run rate for Riverpoint than I would've thought. I'm probably doing the math wrong, but I don't know. I'm curious your thoughts on that.

Speaker #9: You know , maybe starting with specifically the third quarter , 7 to 9% organic revenue growth and your assumptions there for Riverpoint and , 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 .

Speaker #9: And I'm getting to like a , you know , significantly higher revenue run rate for Riverpoint than I would have thought . I'm probably doing the math wrong , but I don't know .

Speaker #9: , I'm curious your thoughts on that .

Robert Buckley: No, it should be somewhere around $35 million of revenue in Q3, so that's about right.

Speaker #2: , no , it should be somewhere around $35 million of revenue in the third quarter . So that's about right .

Speaker #9: , yeah .

Brian Drab: Yep.

Speaker #2: And then , , let's say maintaining for , for the fourth quarter , , obviously , you know , one thing , we're just a little like , as they've never closed a quarter in their life .

Robert Buckley: Let's say maintaining for Q4. Obviously, they've never closed a quarter in their life, and they've never been part of a public company. The dynamic of Q3 to Q4, we're just being a little conservative. Obviously, we've only got five-twelfths of the revenue forecasted in Q3, so you could expect a little bit of a better Q4. At this point in time, we're just being relatively conservative because they've never closed a quarter before. Say roughly, $35 million in Q3 and you're in 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 Q2 as we go into Q3.

Speaker #2: , and they've never been part of a public company . , so the dynamic of , of , you know , third quarter , the fourth quarter , or just being a little conservative , obviously , we've only got 5/12 of , of the revenue forecasted in the third quarter .

Speaker #2: 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 a quarter before .

Robert Buckley: At this point in time, we're just being relatively conservative because they've never closed a quarter before. Say roughly, $35 million in Q3 and you're in 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 Q2 as we go into Q3. The delta between the reported growth guidance and the organic is purely the Riverpoint transaction, right? I don't get into forecasting FX. If I did, I'd be in a different job. We just try to keep things relatively stable.

Speaker #2: So , say roughly , you know , , 35 million in the third quarter and you're a pretty good range . , that puts depending upon what your forecast is on organic growth .

Speaker #2: I think , you know , 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 .

Speaker #2: , so the delta between the reported growth guidance and , and , , and the organic is , is purely the River Boyne transaction , right ?

Robert Buckley: The delta between the reported growth guidance and the organic is purely the Riverpoint transaction, right? I don't get into forecasting FX. If I did, I'd be in a different job. We just try to keep things relatively stable.

Speaker #2: So no , no , major , I don't get into forecasting FX . If I did , I'd be in a different job .

Speaker #2: So , , we just try to keep things relatively stable .

Speaker #9: No , I understand you don't don't forecast it , but I'm trying to remember at the moment why I thought Riverpoint was I mean , you said when you acquired them that , , was running at about 150 million in revenue .

Brian Drab: No, I understand you don't forecast it. I'm trying to remember at the moment why I thought Riverpoint was. You said it when you acquired them, that it was running at about $150 million in revenue. If you're gonna do $34 million in a partial Q, then you're more like at a $200 million revenue run rate. I'm just wondering, is there seasonality in the business, or is that the run rate that we're at now with Riverpoint already?

Speaker #9: But if you're , if you're going to do 34 million in a partial quarter , then you're more like at a , at a 200 million revenue run rate .

Speaker #9: And I'm just wondering , is there is there seasonality in the business or is that is that the , the run rate that we're at now with Riverpoint already ?

Speaker #2: , well , the 35 because you're basically taking , you know , partial quarter , like .

Robert Buckley: Well, the 35 because you're basically taking partial quarter like.

Speaker #9: Yeah , I'm grossing it up . I mean , I plugged , yeah , I plugged 5/12 into my calculator about 100 times last night .

Brian Drab: Yeah, I'm grossing it up. I mean, Yeah, I plugged five-twelfths into my calculator about 100 times last night.

Robert Buckley: Yeah.

Speaker #9: Yeah , I know .

Brian Drab: Yeah, I know what you're.

Speaker #2: Yeah , I would just .

Robert Buckley: Yeah, I would just say.

Speaker #9: Say I'm .

Brian Drab: saying. I'm grossing it up

Robert Buckley: I would just say I'm being relatively conservative in Q4, right? I do think it's possible. I mean, if you range it between the high and the low end, you're $30 to $35 million of revenue in Q3, with a 35 in Q4. 35 times four still gets you below the $200 million.

Speaker #2: I would just say I'm being relatively conservative in the fourth quarter , right ? So , , you know , I , I do think , you know , it , it's , it's possible .

Speaker #2: I mean , if you range it between the high and the low end , you're 30 to 35 million of revenue in the third quarter .

Speaker #2: , with a 35 in the fourth quarter . So , you know , 35 times four is still gets you below the 200 million .

Speaker #9: But you're okay . So you're saying that it would 50 million for a full third quarter . In the fourth quarter , the run rate comes , comes down for the quarterly .

Brian Drab: You're saying that it would be $50 million for a full Q3, in Q4 with a run rate comes down for the quarterly. You have a full quarter in Q4. You're saying that would be $35?

Speaker #9: You have a full quarter in the fourth quarter . You're saying that would be 35 .

Speaker #2: So the so the half is 6060 to 65 . Think of it that way

Robert Buckley: The half is $60 to $65. Think of it that way.

Speaker #9: Okay .

Brian Drab: Okay.

Robert Buckley: Around $65 for the half.

Speaker #2: And

Speaker #9: Okay . In the in the margin that we're running at for River is still around 40% EBITDA .

Brian Drab: Okay. The margin that we're running at for Riverpoint is still around 40% EBITDA margin?

Speaker #2: Margin . , oh , the EBITDA margin .

Robert Buckley: Oh, the EBITDA margin?

Speaker #9: Yeah .

Brian Drab: Yeah.

Speaker #2: Well , it's 25 million , $25 million . So say 65 million of revenue and $25 million of EBITDA .

Robert Buckley: Well, it's $25 million. Say $65 million of revenue and $25 million of EBITDA.

Speaker #9: , okay . For the half . Okay . Okay . Which adds to the sixth .

Brian Drab: Okay.

Robert Buckley: For the half.

Brian Drab: Okay.

Robert Buckley: Which adds to $0.06, right? 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? $0.06, $25 million, $65 million for the half.

Speaker #2: Sense , right ? And the sixth sense is because you got $20 million of interest expense , a little bit of stock compensation , and then you tax effect it , right ?

Speaker #2: So $0.06 , 25 million , 65 million . .

Speaker #9: Okay , I'll follow up more on that later . I guess . , you know , I'll just leave the rest of the questions for , for , for later .

Brian Drab: Okay. I'll follow up more on that later, I guess. I'll just leave the rest of the questions for later. Thanks very much.

Speaker #9: Thanks very much .

Speaker #5: Thanks , Brian

Robert Buckley: Thanks, Brian.

Speaker #3: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Matthijs Glastra for any closing remarks.

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.

Speaker #5: 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% .

Matthijs Glastra: Thank you, operator, and thank you everyone for your questions. To wrap up, the Q2 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 in the face of bookings, new product revenue, and design win tailwinds. Our customers see the same trajectory we do. 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 Q3 2026 earnings call.

Speaker #5: 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 .

Speaker #5: Tell us our customers see the same trajectory we do . So NOVANTA INC trajectory from here is up in closing . As always , I would like to thank our customers or shareholders and especially our dedicated employees for their ongoing support and effort .

Matthijs Glastra: Our customers see the same trajectory we do. 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 Q3 2026 earnings call.

Speaker #5: We appreciate your interest in the company and your participation in today's call , and I look forward to joining all of you soon .

Speaker #5: At our third quarter 2020 earnings call

Operator: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

Q2 2026 Novanta Inc Earnings Call

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