What Novanta, Inc. told the SEC could break it.

For certain critical raw materials, components and parts in its principal products, Novanta has only a limited number of — or a single — source of supply, and also relies on a limited number of suppliers for subassemblies; it discloses that such single-source supply disruptions have already adversely affected its results of operations.

“For certain raw materials, components and parts used in the production of some of our principal products, we have identified only a limited number of suppliers or, in some instances, a single source of supply. We also rely on a limited number of suppliers to manufacture subassemblies for some of our products.”

Novanta assembles its products across facilities in the U.S., U.K., Germany, Czech Republic and China, but each product is typically manufactured in a single location — a single point of failure where a disruption (power curtailment, natural disaster, epidemic, terrorism) at any one site would halt that product line until production could be re-established elsewhere.

“We assemble our products at our facilities in the U.S., the U.K., Germany, Czech Republic and China. Each of our products is typically manufactured in a single manufacturing location.”

Novanta faces bidirectional China-tariff exposure: tariffs on raw materials and components it imports from China have already increased its manufacturing costs (contributing to a gross-margin decline alongside a costly regionalized-manufacturing response), and retaliatory Chinese tariffs hit its U.S.-made finished products exported to China.

“U.S. tariff impositions against Chinese exports in recent years were followed by retaliatory Chinese tariffs on U.S. exports to China. Certain of the raw materials and components we purchase from China are or were subject to these tariffs, which have increased our manufacturing costs and have made our products less competitive than those of our competitors whose inputs are not subject to these tariffs.”