5. Earnings per Common Share

Earnings per common share is computed by dividing net income attributable to Novanta Inc., after redeemable noncontrolling interest redemption value adjustment, by the weighted average number of common shares outstanding during the period. The Company recognizes changes in the redeemable noncontrolling interest redemption value by adjusting the carrying amount of the redeemable noncontrolling interest as of the end of the period to the higher of: (i) the estimated redemption value assuming the end of the period is also the redemption date or (ii) the carrying value without any redemption value adjustments. Such adjustments are recorded in retained earnings in stockholders’ equity instead of net income attributable to Novanta Inc. For both basic and diluted earnings per common share, such redemption value adjustments are included in the calculation of the numerator. For diluted earnings per common share, the denominator also includes the dilutive effect of outstanding restricted stock units, stock options, non-GAAP EPS performance-based restricted stock units and total shareholder return performance-based restricted stock units determined using the treasury stock method. Dilutive effects of contingently issuable shares are included in the weighted average dilutive share calculation when the contingencies have been resolved. For periods in which net losses are generated, the dilutive potential common shares are excluded from the calculation of diluted earnings per common share as the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per common share (amounts in thousands, except per share data):

	Three Months Ended						Nine Months Ended
	September 28,			September 29,			September 28,			September 29,
	2018			2017			2018			2017
Numerators:
Consolidated net income	$	14,989		$	8,366		$	39,451		$	52,630
Less: Net income attributable to noncontrolling interest		(435	)		(834	)		(1,986	)		(1,444	)
Net income attributable to Novanta Inc.		14,554			7,532			37,465			51,186
Redeemable noncontrolling interest redemption value adjustment (see Note 15)		6,877			(7,585	)		1,781			(11,303	)
Net income (loss) attributable to Novanta Inc. after adjustment for redeemable noncontrolling interest redemption value	$	21,431		$	(53	)	$	39,246		$	39,883

Denominators:
Weighted average common shares outstanding— basic		34,899			34,833			34,918			34,809
Dilutive potential common shares (1) (2)		586			—			551			426
Weighted average common shares outstanding— diluted		35,485			34,833			35,469			35,235
Antidilutive common shares excluded from above		—			—			—			—

Earnings (Loss) per Common Share Attributable to Novanta Inc.:
Basic	$	0.61		$	(0.00	)	$	1.12		$	1.15
Diluted	$	0.60		$	(0.00	)	$	1.11		$	1.13

(1)

53,968 non-GAAP EPS performance restricted stock units granted to certain members of the executive management team and 213,219 shares of restricted stock issued to Laser Quantum non-controlling interest holders (see Note 15) are considered contingently issuable shares and are excluded from the calculation of the denominator as the contingent conditions had not been met as of the end of each period presented.

(2)

Due to the Company’s net loss position after adjustment of redeemable noncontrolling interest to estimated redemption value for the three months ended September 29, 2017, all potentially dilutive shares are excluded from the calculation of the denominator as their effect would have been anti-dilutive.

Common Share Repurchases

During the nine months ended September 28, 2018, the Company repurchased 57 thousand of its common shares in the open market for an aggregate purchase price of $3.8 million at an average price of $66.16 per share.