Operating cash flow surged to $64.9 million in 2026Q2, a 518% conversion of net income, but this was largely driven by a volatile $28.2 million working capital swing rather than consistent operational performance.
Novanta Inc. Tangible Equity Units (NOVTU) cash flow statement — 1-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 |
|---|
| Cash from Operations | 131.8M | 64.06M |
| Operating CF Margin % | - | 6.53% |
| Operating CF Growth % | 389.62% | - |
| Net Income | 61.76M | 53.83M |
| Depreciation & Amortization | 61.6M | 61.93M |
| Stock-Based Compensation | 16.53M | 0 |
| Deferred Taxes | -9.07M | -8.85M |
| Other Non-Cash Items | 23.24M | 32.28M |
| Working Capital Changes | -22.27M | -75.13M |
| Change in Receivables | -20.63M | -27.27M |
| Change in Inventory | -28.92M | -36.1M |
| Change in Payables | 42.45M | 3.71M |
| Cash from Investing | -19.3M | -74.32M |
| Capital Expenditures | -19.4M | -15.63M |
| CapEx % of Revenue | 1.88% | 1.59% |
| Acquisitions | 102.83K | -58.69M |
| Investments | - | - |
| Other Investing | 0 | 0 |
| Cash from Financing | 496.76M | 276.33M |
| Debt Issued (Net) | -335.26M | -287.63M |
| Equity Issued (Net) | 852.08M | 575.11M |
| Dividends Paid | 0 | 0 |
| Share Repurchases | -52.05M | -39.28M |
| Other Financing | -20.07M | -11.15M |
| Net Change in Cash | 608.74M | 266.88M |
| Free Cash Flow | 112.4M | 48.43M |
| FCF Margin % | 10.92% | 4.94% |
| FCF Growth % | - | - |
| FCF per Share | 2.73 | 1.32 |
| FCF Conversion (FCF/Net Income) | 1.82x | 1.19x |
| Interest Paid | 9.67M | 0 |
| Taxes Paid | 21.95M | 0 |
Quick answers to the most common questions about buying NOVTU stock.
Novanta Inc. Tangible Equity Units (NOVTU) generated $64.1M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Novanta Inc. Tangible Equity Units (NOVTU) generated $48.4M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Novanta Inc. Tangible Equity Units (NOVTU) spent $15.6M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Novanta Inc. Tangible Equity Units (NOVTU) spent $39.3M on share repurchases. This shows the company's commitment to returning capital to its equity investors.
Key Metrics
Top Statement Risk
Earnings quality dilution from SBC
Operating Cash Flow Surges, Masking Earnings Dilution
Operating cash flow converted at 518% of net income in 2026Q2, a dramatic improvement from 46% in the prior quarter, driven by a massive $28.2 million favorable working capital swing that masks underlying cash generation from operations.
The OCF/NI ratio of 5.18 in the latest quarter is an extreme outlier, indicating that net income is a highly misleading proxy for cash generation. This surge was propelled by a $28.2 million working capital benefit, which alone exceeded the $12.5 million in net income, suggesting the cash flow strength is more cyclical than structural. While the trend is positive, the heavy reliance on working capital release for cash flow quality warrants monitoring for sustainability.
Volatile Working Capital Swings Drive Cash Flow
Working capital provided a $28.2 million cash tailwind in 2026Q2, reversing a $33.4 million cash burn in 2025Q4, indicating significant volatility in the company's operating cycle that dominates quarter-to-quarter cash flow fluctuations.
The massive positive swing in working capital, from a $33.4 million outflow to a $28.2 million inflow over two quarters, is the primary driver of the recent operating cash flow surge. This volatility suggests either lumpy customer payment patterns or inventory management actions, rather than a steady-state operational efficiency improvement. Such swings make forecasting free cash flow difficult and highlight that the recent cash flow improvement may not reflect a sustainable change in underlying operations.
FCF Inflection Points Follow Working Capital
Free cash flow rebounded to a 21.6% margin in 2026Q2 from a trough of 1.8% in 2025Q4, a trajectory that appears to be primarily driven by working capital reversals rather than sustained operational leverage.
The FCF margin trajectory shows extreme volatility, from near-zero levels to best-in-class margins within two quarters. This pattern is inconsistent with the peer group's more stable margins and strongly suggests the recent outperformance is transient. The sharp inflection in FCF correlates precisely with the working capital inflection, reinforcing that the improvement is not yet embedded in the company's core operational cash generation.
Stock-Based Compensation Distorts Reported Earnings
Novanta's $9.8 million stock-based compensation in 2026Q2, equal to 78% of net income, represents a non-cash expense that inflates operating cash flow relative to true economic earnings and is fully paid out in dilutive shares.
The substantial SBC charge, which appeared in the prior quarter's analysis as a key factor eroding net income, has a direct cash flow implication that is often overlooked. While added back to calculate operating cash flow, this expense represents a real cost to shareholders via dilution, making the reported OCF/NI conversion ratio of 5.18 less impressive when considering the non-cash nature of the largest single expense category. This dilutive cost is not captured in free cash flow figures, meaning investors are paying for growth through share issuance rather than pure cash returns.