Novanta Inc.

Good morning. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to Novanta Incorporated's third quarter 2025 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 Ray Nash, corporate finance leader for Novanta. Please go ahead.

Thank you very much. Good morning, and welcome to Novanta's third quarter 2025 earnings conference call. This is Ray Nash, corporate finance leader for Novanta. With me on today's call is our chair and chief executive officer, Matthias Glostra, and our chief financial officer, Robert Buckley. If you've 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 in our SEC filings. We may make some comments today, both in our prepared remarks and in our responses to questions that may include forward-looking statements. These involve inherent assumptions with known and unknown risks and other factors that could cause our future results to differ materially from our current expectations. Any forward-looking statements made today represent our views only as of this time. We disclaim any obligation to update forward-looking statements in the future, even if our estimates change. So you should not rely on any of these forward-looking statements as representing our views as of any time after this call. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available as an attachment to our earnings press release. To the extent that we use non-GAAP financial measures during this call that are not reconciled to GAAP measures in the earnings press release, we will provide reconciliations promptly on the investor relations section of our website after this call. I'm now pleased to introduce the Chair and Chief Executive Officer of Novanta, Matthias Glostra.

Thank you, Ray. Good morning, everybody, and thanks for joining our call. Noventa delivered above expectations for the third quarter, beating our outlook for sales, margins, and adjusted EPS. We continue to see solid sequential momentum in the business, with a 3% increase in revenue, driven by investments in our commercial engine and innovation. Revenue reached a record $248 million, surpassing guidance, which represents reported revenue growth of plus 1% and organic revenue declines of 4%. New product revenue grew by nearly 60% year-over-year. Customer bookings grew 17% year-over-year and 4% sequentially, reflecting an improving outlook. We also saw significant design wind activity up 50% year-to-date. Adjusted gross margins over-delivered at 46.5%, and adjusted EBITDA margins was above 23%. I'm very proud of our team's ability to successfully execute in a fluid microeconomic and trade environment. With the strength of our third quarter results and the sequential improvement we're seeing in bookings and revenue across all of our businesses, we're confident that we've turned a corner and will return to positive organic growth and double-digit profit growth in the fourth quarter. And with our strong momentum of our growth platforms, recent customer design wins, and new product launches, we believe this is sets us up well to deliver mid-single-digit organic growth for the full year of 2026. Our long-term growth strategy remains focused on winning in markets with long-term secular tailwinds, such as AI-driven robotics and automation, advanced minimally invasive and robotic surgery, digital manufacturing, and precision medicine. Noventa holds strong technology leadership positions in these areas, which are still early in their adoption. We build trusted long-term collaborative partnerships with the world's leading OEM customers in these applications by solving their most complex needs with our proprietary technology solutions, securing up to 10 years of exclusive and sticky design in platforms. While our products typically represent no more than 10% of our customers' bill of materials, they enable differentiation and innovation in their systems for their customers, improving clinical outcome, throughput, yield, cost per procedure, or part or never before possible performance. Over the past decade, we have extended our proven business model into high-growth healthcare markets, medical consumables, and intelligent subsystems featuring advanced embedded software. Today, medical markets account for 53% of Novanta's year-to-date revenue. Intelligent subsystems contribute nearly 30%, and medical consumables represent about 15% of sales, the latter growing at a high teens rate. Looking forward, our strategic direction focuses on continuing to expand our business mix and technology leaderships in medical technologies, consumables, and embedded software. By strengthening our portfolio in these areas, we're positioning Noventa to deliver sustainable mid- to high-single-digit organic revenue growth with less cyclicality, ensuring resilience and consistent performance regardless of market fluctuations. We have prioritized commercial and innovation investments accordingly, with a specific focus on our growth platforms of insufflaters and pumps, robotic surgery technologies, intelligent physical AI solutions for connected care, warehouse automation, human noise and precision robotics, and also intelligent subsystems for laser beam steering and precision medicine applications. We've launched 20 new products here today in these areas and believe these growth platforms offer an additional $4 billion end market opportunity for Noventa by 2030. We are also investing in regionalized manufacturing are deploying the Novanta growth system and a new ERP system while reducing our manufacturing footprint to build a strong foundation for growth and resilience. In parallel to these organic investments, we are advancing our robust acquisition pipeline to expand our portfolio toward these same areas of medical technologies, consumables, and embedded software. This will have a compounding effect on the sustainability of our growth and the resilience of our business model. We continue to work on multiple acquisition opportunities while maintaining our discipline on leverage and cash returns. Now, let me provide an update on the customer and market dynamics we're seeing. Our sales and minimally invasive robotic surgery markets remain exceptionally strong with high teens double-digit growth in our advanced surgery business, driven by new product launches, share gains in surgical robotics, robust patient procedure growth rates, and hospital spending. This business supports our strategy by expanding our medical portfolio, boosting intelligent subsystem sales, and driving recurring consumables income. Our latest insufflator innovations set industry standards, improve patient safety, and efficiently address new smoke evacuation requirements while optimizing surgical workflows. Thanks to our recent product launches in this area, Noventa is on track to achieve $50 million in incremental new product revenue in 2025. In the third quarter, we further extended our market leadership position by securing yet another major new design win with a large OEM for future generation insufflayers, reinforcing our position as a trusted partner in this field. This ongoing customer adoption and innovation momentum strengthens our outlook for 2026 and our outlook that the advanced surgery business revenue will nearly double to $400 million by 2030. Moving on, our robotics and automation applications continue to see strong demand as evidenced by the sequential revenue growth in the third quarter. Growth in this business is driven by demand for our products that support physical AI applications such as Rouse Automation, Precision Robotics, and Humanoids. Robots surpass humans in speed and accuracy when analyzing complex data, but they often struggle to effectively navigate the physical world. Noventa has unique capabilities that enable the perception or reaction of precision robotics in this physical world and to do so safely. We are excited about our recent design wins in the warehouse automation space, our momentum in surgical robotics, and the ongoing development with multiple humanoid and warehouse automation players. We believe these physical AI applications are an important growth platform for Noventa, representing an incremental $1 billion of addressable market by 2030. Turning to our advanced industrial markets, we saw continued improvement in the quarter as our customers are now back to normalized order patterns. This resulted in sequential growth in our precision manufacturing business, And another quarter of double-digit growth of customer bookings positioned us well for further sequential revenue growth in the fourth quarter. In this third quarter, we also saw a sequential increase in sales to China, as our Chinese customers have grown confident in the progress of our in-region for region manufacturing plans. Design wins in the precision manufacturing business also continued their strong pace, showing year-to-date growth of over 60%. We're starting to see customer wins in attractive areas such as additive manufacturing driven by both aerospace investments and reshoring, and applications supporting AI investments like advanced packaging and on-device AI compute with our intelligent light engine and scan system. This growth platform represents an incremental $400 million of addressable market opportunity for Novanta by 2030, as customers continue to digitize and automate their manufacturing lines with ever-higher demands for throughput and productivity at ever-smaller form factor, higher tolerances, and quality levels. Next, in advanced semiconductor applications, which represent roughly 10% of our revenue, we saw some early signs of an upcycle, with wafer fab equipment growth expected to achieve mid-single-digit next year. Our short-cycle sales remain strong off the back of new construction for data centers and other AI-related infrastructure. Finally, speaking to life science equipment markets, which is mainly served by a precision medicine business, we were pleased to see the business show another quarter of sequential revenue growth in the third quarter, while we continue to work our way through consistent yet challenging end-market dynamics. We've invested in intelligent RFID solutions through the key on acquisition, and we have added advanced machine vision technology offerings to our portfolio through our new commercial partnership. These steps are helping to support the sequential momentum we're seeing and expect to see going forward. We continue to believe in the long-term opportunities in the life science equipment market and are seeing investments in early disease detection as a big driver of productivity in the healthcare industry. To conclude, I'm proud of our team's third quarter performance. We exceeded our expectations for sales, margins, and adjusted EPS. Our solid momentum in our growth platforms, design wins, and new product launches positioned us well for a return to positive organic growth in the fourth quarter of 2025 and for mid-single-digit organic growth in 2026. So with that, I will turn the call over to Robert to provide more details on our operations and financial performance. Robert? Thank you, Matthias.