ATS Corporation (TSX and NYSE: ATS) (“ATS” or the “Company”)
today reported its financial results for the three and six months
ended October 1, 2023. All references to "$" or "dollars" in this
news release are to Canadian dollars unless otherwise
indicated.
Second quarter highlights:
- Revenues increased 24.9% year over year to $735.7 million.
- Net Income was $50.7 million compared to $29.5 million a year
ago.
- Basic earnings per share were 51 cents, compared to 32 cents a
year ago.
- Adjusted EBITDA1 was $116.2 million, 29.4% higher compared to
$89.8 million a year ago.
- Adjusted basic earnings per share1 were 63 cents compared to 51
cents a year ago.
- Order Bookings1 were $742 million, 7.7% lower compared to $804
million a year ago.
- Order Backlog1 increased 12.4% to $2,016 million compared to
$1,793 million a year ago.
"Today we announced another quarter of strong results, including
solid revenues, Order Bookings, Order Backlog and adjusted
earnings," said Andrew Hider, Chief Executive Officer. "During the
quarter, we also hosted our Institutional Investor Day, announced
our latest acquisitions (Odyssey Validation Consultants, or
"Odyssey" and Avidity Science, LLC or "Avidity") and celebrated our
IWK business' 130th anniversary. These were all important
individual events and milestones that demonstrate the strength of
our global, decentralized organization."
Odyssey's strong focus on supporting customers in digital
transformation is expected to accelerate ATS' Process Automation
Solutions ("PA") business' strategy to drive validated production
process improvements through digital solutions. Avidity is a leader
in automated water purification systems for biomedical and life
sciences applications, with approximately 40% of revenues being
reoccurring in nature. Avidity is expected to join ATS' Life
Sciences group in the fourth quarter of calendar 2023 pending
completion of customary regulatory reviews.
Year-to-date highlights:
- Revenues increased 24.2% year over year to $1,489.4
million.
- Net Income increased 43.0% year over year to $98.5
million.
- Basic earnings per share increased 36.0% year over year to
$1.02.
- Adjusted EBITDA1 increased 29.1% year over year to $235.4
million.
- Adjusted basic earnings per share1 increased 22.2% year over
year to $1.32.
- Order Bookings1 were $1,432 million, compared to $1,539 million
a year ago.
Mr. Hider added: “With a solid Order Backlog to start the third
quarter, our teams remain clearly focused on delivering profitable
growth while serving our broader purpose of creating solutions that
positively impact lives around the world."
- Non-IFRS Financial Measure - See “Non-IFRS and Other Financial
Measures."
Financial results
(In millions of dollars, except per share
and margin data)
Three Months Ended
October 1, 2023
Three Months Ended October 2,
2022
Variance
Six Months Ended
October 1, 2023
Six Months Ended October 2,
2022
Variance
Revenues
$
735.7
$
588.9
24.9
%
$
1,489.4
$
1,199.5
24.2
%
Net income
$
50.7
$
29.5
71.9
%
$
98.5
$
68.9
43.0
%
Adjusted earnings from
operations1, 2
$
98.3
$
76.1
29.2
%
$
200.4
$
155.3
29.0
%
Adjusted earnings from operations
margin1, 2
13.4
%
12.9
%
44bps
13.5
%
12.9
%
51bps
Adjusted EBITDA1, 2
$
116.2
$
89.8
29.4
%
$
235.4
$
182.3
29.1
%
Adjusted EBITDA margin1, 2
15.8
%
15.2
%
55bps
15.8
%
15.2
%
61bps
Basic earnings per share
$
0.51
$
0.32
59.4
%
$
1.02
$
0.75
36.0
%
Adjusted basic earnings per
share1, 2
$
0.63
$
0.51
23.5
%
$
1.32
$
1.08
22.2
%
Order Bookings1
$
742.0
$
804.0
(7.7
)%
$
1,432.0
$
1,539.0
(7.0
)%
As At
October 1 2023
October 2 2022
Variance
Order Backlog1
$
2,016
$
1,793
12.4
%
- Non-IFRS Financial Measure - See “Non-IFRS and Other Financial
Measures."
- Certain Non-IFRS Financial Measures have been revised from
previously disclosed values to exclude the impact on stock-based
compensation expense of the revaluation of deferred stock units and
restricted share units resulting specifically from the change in
market price of the Company's common shares between periods.
Management believes that this adjustment provides further insight
into the Company's performance, as share price volatility drives
variability in the Company's stock-based compensation expense.
Second quarter summary Fiscal 2024 second quarter
revenues were 24.9% or $146.8 million higher than in the
corresponding period a year ago. This performance reflected
year-over-year organic revenue growth (growth excluding
contributions from acquired companies and foreign exchange
translation) of $96.6 million or 16.4%, and revenues earned by
acquired companies of $14.5 million. Foreign exchange translation
positively impacted revenues by $35.7 million or 6.0%, primarily
reflecting the strengthening of the U.S. dollar and Euro relative
to the Canadian dollar. Revenues generated from construction
contracts increased 32.4% or $117.3 million due to organic revenue
growth combined with positive foreign exchange translation impact.
Revenues from services increased 28.0% or $32.6 million due to
revenues earned by acquired companies of $13.9 million in addition
to organic revenue growth and the positive impact of foreign
exchange translation. Revenues from the sale of goods decreased
2.8% or $3.1 million primarily due to lower Order Backlog entering
the period compared to the prior year.
By market, revenues generated in life sciences increased $7.3
million or 2.6% year over year. This was primarily due to
contributions from acquisitions and the positive impact of foreign
exchange translation, partially offset by revenues earned on a
large $120.0 million program that was in progress a year ago.
Revenues in transportation increased $131.6 million or 109.1% on
higher Order Backlog entering the second quarter of fiscal 2024,
driven primarily by EV Order Bookings, including previously
announced electric vehicle ("EV") Order Bookings of U.S. $578.2
million. Revenues generated in food & beverage increased $34.8
million or 46.4% due to higher Order Backlog entering the second
quarter of fiscal 2024 and the positive impact of foreign exchange
translation. Revenues generated in consumer products decreased
$12.8 million or 16.6% primarily due to lower Order Backlog
entering the period as compared to the prior year, partially offset
by the positive impact of foreign exchange translation. Revenues in
energy decreased $14.1 million or 44.3% due to project timing,
partially offset by $3.5 million of contributions from
acquisitions.
Net income for the second quarter of fiscal 2024 was $50.7
million (51 cents per share basic), compared to $29.5 million (32
cents per share basic) for the second quarter of fiscal 2023. The
increase primarily reflected higher revenues, partially offset by
higher cost of revenues, selling, general and administrative
("SG&A"), income tax expense, and financing costs. Adjusted
basic earnings per share were 63 cents compared to 51 cents in the
second quarter of fiscal 2023 (see “Reconciliation of Non-IFRS
Measures to IFRS Measures”).
Depreciation and amortization expense was $34.0 million in the
second quarter of fiscal 2024, compared to $30.1 million a year
ago; the increase was primarily related to incremental depreciation
and amortization expense from recently acquired companies.
EBITDA was $117.0 million (15.9% EBITDA margin) in the second
quarter of fiscal 2024 compared to $83.1 million (14.1% EBITDA
margin) in the second quarter of fiscal 2023. EBITDA for the second
quarter of fiscal 2024 included $1.2 million of incremental costs
related to acquisition activity and a $2.0 million recovery of
stock-based compensation expenses due to revaluation. EBITDA for
the corresponding period in the prior year included $0.5 million of
incremental costs related to acquisition activity, $3.9 million of
acquisition-related inventory fair value changes, $1.3 million of
restructuring costs, and $1.0 million of stock-based compensation
revaluation expenses. Excluding these costs, adjusted EBITDA was
$116.2 million (15.8% adjusted EBITDA margin), compared to $89.8
million (15.2% adjusted EBITDA margin) for the corresponding period
in the prior year. Higher adjusted EBITDA reflected higher
revenues. EBITDA is a non-IFRS measure - see “Non-IFRS and Other
Financial Measures.”
Order Backlog
Continuity
(In millions of dollars)
Three Months
Ended
Three Months
Ended
Six Months
Ended
Six Months
Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Opening Order Backlog
$
2,023
$
1,555
$
2,153
$
1,438
Revenues
(736
)
(589
)
(1,489
)
(1,200
)
Order Bookings
742
804
1,432
1,539
Order Backlog adjustments1
(13
)
23
(80
)
16
Total
$
2,016
$
1,793
$
2,016
$
1,793
- Order Backlog adjustments include foreign exchange adjustments,
scope changes and cancellations.
Order Bookings Second quarter fiscal 2024 Order Bookings
were $742 million, a 7.7% year over year decrease, which reflected
an organic Order Bookings decline of 13.5%, primarily related to
the transportation market, partially offset by 2.0% growth from
acquired companies, in addition to a 3.8% increase due to foreign
exchange rate translation of Order Bookings from foreign-based ATS
subsidiaries, primarily reflecting the strengthening of the U.S.
dollar and Euro relative to the Canadian dollar. Order Bookings
from acquired companies totalled $15.7 million. By market, Order
Bookings in life sciences increased compared to the prior-year
period primarily due to a combination of new and existing
applications in the medical device submarket, positive foreign
exchange rate translation of Order Bookings from foreign- based ATS
subsidiaries, in addition to $4.1 million of contributions from
acquired companies. Order Bookings in transportation decreased
compared to the prior-year period, as expected, as a result of
variability on timing of large EV orders. Second quarter fiscal
2023 included a U.S. $167.0 million Order Booking from an existing
global automotive customer to move towards fully automated battery
assembly systems for their North American manufacturing operations.
Order Bookings in food & beverage increased compared to the
prior-year period primarily due to foreign exchange rate
translation of Order Bookings from foreign-based ATS subsidiaries.
Order Bookings in consumer products increased primarily due to the
timing of customer projects and contributions from acquired
companies. Order Bookings in energy increased primarily due to a
grid battery program order, along with contributions from
acquisitions.
Trailing twelve month book-to-bill ratio at October 1, 2023 was
1.10:1. Book-to-bill ratio is a supplementary financial measure -
see “Non-IFRS and Other Financial Measures.”
Backlog At October 1, 2023, Order Backlog was $2,016
million, 12.4% higher than at October 2, 2022. Order Backlog growth
was primarily driven by higher Order Bookings in the last twelve
months, primarily within the transportation, life sciences and
energy markets.
Outlook The life sciences funnel for fiscal 2024 remains
strong, with a focus on strategic submarkets of pharmaceuticals,
radiopharmaceuticals, and medical devices such as auto-fillers and
auto-injectors. Management continues to see opportunities with both
new and existing customers, including those customers using
auto-injectors for diabetes and obesity treatments, and producers
of contact lens and pre-filled syringes. Funnel activity to
leverage the Company's various life sciences integrated solutions
to serve broader customer needs remains active. In transportation,
the funnel largely includes strategic opportunities related to
electric vehicles, as the global automotive industry continues to
shift towards EV production. The strategic nature of EV programs
and typically larger average order values can cause variability in
Order Bookings. Management believes the Company's automated EV
battery pack and assembly capabilities position ATS well within the
industry. Funnel activity in food & beverage remains strong,
particularly for energy-efficient solutions. The Company continues
to benefit from strong brand recognition within the global tomato
processing industry, and is seeing continued growth within keg
filling. Funnel activity in consumer products is stable;
inflationary pressures continue to have an effect on discretionary
spending, which may impact timing of some customer investments.
Funnel activity in energy remains strong and includes some
longer-term opportunities in the nuclear industry. The Company is
focused on clean energy applications including solutions for the
refurbishment of nuclear power plants, early participation in the
small modular reactor market, and grid battery storage. Across all
markets, customers are exercising normal caution in their approach
to investment and spending.
Funnel growth in markets where environmental, social and
governance ("ESG") requirements are an increasing focus for
customers — including grid battery storage, EV and nuclear, as well
as consumer goods packaging — provide ATS with opportunities to use
its capabilities to respond to customer sustainability standards
and goals. Customers seeking to de-risk or enhance the resiliency
of their supply chains, address a shortage of skilled workers or
combat higher labour costs also provide future opportunities for
ATS to pursue. Management believes that the underlying trends
driving customer demand for ATS solutions including rising labour
costs, labour shortages, production onshoring or reshoring and the
need for scalable, high-quality, energy-efficient production remain
favourable.
Order Backlog of $2,016 million is expected to help mitigate
some of the impact of quarterly variability in Order Bookings on
revenues in the short term. The Company’s Order Backlog includes
several large enterprise programs that have longer periods of
performance and therefore longer revenue recognition cycles. These
programs have extended the average period over which the Company
expects to convert its Order Backlog to revenues, providing ATS
with longer visibility. In the third quarter of fiscal 2024,
management expects the conversion of Order Backlog to revenues to
be in the 34% to 37% range. This estimate is calculated each
quarter based on management’s assessment of project schedules
across all customer contracts, expectations for faster-turn product
and services revenues, expected delivery timing of third-party
equipment and operational capacity.
The timing of customer decisions on larger opportunities is
expected to cause variability in Order Bookings from quarter to
quarter. Revenues in a given period are dependent on a combination
of the volume of outstanding projects the Company is contracted to,
the size and duration of those projects, and the timing of project
activities including design, assembly, testing, and installation.
Given the specialized nature of the Company’s offerings, the size
and scope of projects vary based on customer needs. The Company
seeks to achieve revenue growth organically and by identifying
strategic acquisition opportunities that provide access to
attractive end-markets and new products and technologies and
deliver hurdle-rate returns.
Management is pursuing several initiatives to grow revenues and
improve profitability with the goal of expanding its adjusted
earnings from operations margin to 15% over time through a
combination of operational initiatives and portfolio development.
Operational initiatives include a focus on pursuing continuous
improvement in all business activities through the ABM, including
in acquired businesses, improving global supply chain management,
increasing the use of standardized platforms and technologies, and
growing revenues while leveraging the Company’s cost structure.
Portfolio development initiatives include efforts to grow the
Company's products and after-sales service revenues as a percentage
of overall revenues. After-sales revenues and reoccurring revenues,
which ATS defines as revenues from ancillary products and services
associated with equipment sales, and revenues from customers who
purchase non-customized ATS product at regular intervals, are
expected to provide some balance to customers' capital expenditure
cycles. Management estimates that reoccurring revenues are
currently in the range of 25-35% of total revenues on a trailing
twelve-month basis. Moreover, the Company's financial profile,
which has included strong growth, margin expansion and disciplined
working capital investment, has allowed it to generate free cash
flows that are reinvested back into the business. Management also
sees the development of the Company's digitalization capabilities
as another key area of growth for the portfolio, including the
collection and interpretation of data to drive meaningful change
that optimizes performance for customers. In addition, management
is focused on investing in innovation and employing a consistent,
strategic approach to acquisitions. The Company continues to make
progress in line with its plans to integrate acquired companies,
and expects to realize cost and revenue synergies consistent with
announced integration plans.
In the short term, ATS will continue to address disruptions to
global supply chains and cost pressures due to inflation, which
have been contributing to longer lead times and cost increases in
the supply base over the past several quarters. To date, the
Company has mitigated many of these supply chain disruptions
through the use of alternative supply sources and savings on
materials not affected by cost increases. However, prolonged cost
increases and price volatility have and may continue to disrupt the
timing and progress of the Company’s margin expansion efforts and
affect revenue recognition. Achieving and sustaining management's
margin target assumes that the Company will successfully implement
the initiatives noted above, and that such initiatives will result
in improvements to its adjusted earnings from operations margin
that offset the pressures resulting from disruptions in the global
supply chain (see “Forward-Looking Statements” for a description of
the risks underlying the achievement of the margin target in future
periods).
The Company regularly monitors customers for changes in credit
risk and does not believe that any single industry or geographic
region represents significant credit risk.
In the short term, the Company expects non-cash working capital
to remain above 10% as large enterprise programs progress through
milestones. Over the long-term, the Company expects to continue
investing in non-cash working capital to support growth, with
fluctuations expected on a quarter-over-quarter basis. The
Company’s long-term goal is to maintain its investment in non-cash
working capital as a percentage of annualized revenues below 15%.
However, given the size and timing of milestone payments for
certain large EV programs in Order Backlog, the Company could see
its working capital exceed 15% of annualized revenues in certain
periods as it did in the first two quarters of fiscal 2024. The
Company expects that continued cash flows from operations, together
with cash and cash equivalents on hand and credit available under
operating and long-term credit facilities will be sufficient to
fund its requirements for investments in non-cash working capital
and capital assets, and to fund strategic investment plans
including some potential acquisitions. Acquisitions could result in
additional debt or equity financing requirements for the Company.
Non-cash working capital as a percentage of revenues is a Non-IFRS
ratio - see “Non-IFRS and Other Financial Measures.”
New York Stock Exchange Listing On May 25, 2023, the
Company commenced trading of its common shares on the New York
Stock Exchange ("NYSE"), under ticker symbol "ATS". As a result,
ATS is now a dual-listed company, trading on both the Toronto Stock
Exchange ("TSX") and NYSE.
Reorganization Activity The Company periodically
undertakes reviews of its operations to ensure alignment with
strategic market opportunities. As a part of this review, the
Company has identified an opportunity to improve the cost structure
of the organization and reallocate investment to growth areas. The
majority of these actions are expected to be completed in the third
quarter of fiscal 2024. The estimated cost of these activities is
between $15 million and $20 million.
Quarterly Conference Call ATS will host a conference call
and webcast at 8:30 a.m. eastern on Wednesday, November 8, 2023 to
discuss its quarterly results. The listen-only webcast can be
accessed live at www.atsautomation.com. The conference call can be
accessed live by dialing (888) 660-6652 or (646) 960-0554 five
minutes prior. A replay of the conference will be available on the
ATS website following the call. Alternatively, a telephone
recording of the call will be available for one week (until
midnight November 15, 2023) by dialing (800) 770-2030 and using the
access code 8782510.
About ATS ATS Corporation is an industry-leading
automation solutions provider to many of the world's most
successful companies. ATS uses its extensive knowledge base and
global capabilities in custom automation, repeat automation,
automation products and value-added services including
pre-automation and after-sales services, to address the
sophisticated manufacturing automation systems and service needs of
multinational customers in markets such as life sciences, food
& beverage, transportation, consumer products, and energy.
Founded in 1978, ATS employs over 6,500 people at more than 60
manufacturing facilities and over 80 offices in North America,
Europe, Southeast Asia and Oceania. The Company's common shares are
traded on the Toronto Stock Exchange and the NYSE under the symbol
ATS. Visit the Company's website at www.atsautomation.com.
Consolidated Revenues
(In millions of dollars)
Revenues by type
Three Months Ended
October 1, 2023
Three Months Ended October 2,
2022
Six Months Ended
October 1, 2023
Six Months Ended October 2,
2022
Revenues from construction
contracts
$
479.7
$
362.4
$
988.6
$
737.5
Services rendered
149.1
116.5
291.4
230.6
Sale of goods
106.9
110.0
209.4
231.4
Total revenues
$
735.7
$
588.9
$
1,489.4
$
1,199.5
Revenues by market
Three Months Ended
October 1, 2023
Three Months Ended October 2,
2022
Six Months Ended
October 1, 2023
Six Months Ended October 2,
2022
Life Sciences
$
291.5
$
284.2
$
576.4
$
581.2
Transportation
252.2
120.6
470.7
217.5
Food & Beverage
109.8
75.0
240.5
183.8
Consumer Products
64.5
77.3
148.2
153.0
Energy
17.7
31.8
53.6
64.0
Total revenues
$
735.7
$
588.9
$
1,489.4
$
1,199.5
Consolidated Operating
Results
(In millions of dollars)
Three Months Ended
October 1, 2023
Three Months Ended October 2,
2022
Six Months Ended
October 1, 2023
Six Months Ended October 2,
2022
Earnings from
operations
$
83.0
$
53.0
$
162.1
$
114.6
Amortization of
acquisition-related intangible assets
16.1
16.4
34.7
36.7
Acquisition-related transaction
costs
1.2
0.5
1.3
0.9
Acquisition-related inventory
fair value charges
—
3.9
—
9.1
Restructuring charges
—
1.3
—
1.3
Mark to market portion of
stock-based compensation
(2.0
)
1.0
2.3
(7.3
)
Adjusted earnings from
operations1, 2
$
98.3
$
76.1
$
200.4
$
155.3
- Non-IFRS Financial Measure, See “Non-IFRS
and Other Financial Measures”
- The composition of these Non-IFRS
Measures has been revised from what was previously disclosed. See
"Non-IFRS and Other Financial Measures."
Three Months
Ended
Three Months Ended
Six Months
Ended
Six Months Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Earnings from
operations
$
83.0
$
53.0
$
162.1
$
114.6
Depreciation and amortization
34.0
30.1
69.7
63.7
EBITDA1
$
117.0
$
83.1
$
231.8
$
178.3
Restructuring charges
—
1.3
—
1.3
Acquisition-related transaction
costs
1.2
0.5
1.3
0.9
Acquisition-related inventory
fair value charges
—
3.9
—
9.1
Mark to market portion of
stock-based compensation2
(2.0
)
1.0
2.3
(7.3
)
Adjusted EBITDA1, 2
$
116.2
$
89.8
$
235.4
$
182.3
- Non-IFRS Financial Measure, See “Non-IFRS
and Other Financial Measures”
- The composition of these Non-IFRS
Measures has been revised from what was previously disclosed. See
"Non-IFRS and Other Financial Measures."
Order Backlog by
Market
(In millions of dollars)
As at
October 1, 2023
October 2, 2022
Life Sciences
$
857
$
782
Transportation
736
614
Food & Beverage
162
162
Consumer Products
152
167
Energy
109
68
Total
$
2,016
$
1,793
Reconciliation of Non-IFRS Measures to
IFRS Measures
(In millions of dollars, except per share
data)
The following table reconciles adjusted
EBITDA and EBITDA to the most directly comparable IFRS measure (net
income):
Three Months
Ended
Three Months Ended
Six Months
Ended
Six Months Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Adjusted EBITDA1
$
116.2
$
89.8
$
235.4
$
182.3
Less: restructuring charges
—
1.3
—
1.3
Less: acquisition-related
transaction costs
1.2
0.5
1.3
0.9
Less: acquisition-related
inventory fair value charges
—
3.9
—
9.1
Less: mark to market portion of
stock-based compensation
(2.0
)
1.0
2.3
(7.3
)
EBITDA
$
117.0
$
83.1
$
231.8
$
178.3
Less: depreciation and
amortization expense
34.0
30.1
69.7
63.7
Earnings from
operations
$
83.0
$
53.0
$
162.1
$
114.6
Less: net finance costs
15.5
13.4
32.4
24.2
Less: provision for income
taxes
16.8
10.1
31.2
21.5
Net income
$
50.7
$
29.5
$
98.5
$
68.9
- The composition of these Non-IFRS Measures has been revised
from what was previously disclosed. See "Non-IFRS and Other
Financial Measures."
The following table reconciles adjusted
earnings from operations, adjusted net income, and adjusted basic
earnings per share to the most directly comparable IFRS measure
(net income and basic earnings per share):
Three Months Ended October 1,
2023
Three Months Ended October 2,
2022
Earnings from
operations
Finance costs
Provision for income
taxes
Net income
Basic EPS
Earnings from operations
Finance costs
Provision for income taxes
Net income
Basic EPS
Reported (IFRS)
$
83.0
$
(15.5
)
$
(16.8
)
$
50.7
$
0.51
$
53.0
$
(13.4
)
$
(10.1
)
$
29.5
$
0.32
Amortization of acquisition-
related intangibles
16.1
—
—
16.1
0.17
16.4
—
—
16.4
0.18
Restructuring charges
—
—
—
—
—
1.3
—
—
1.3
0.01
Acquisition-related inventory
fair value charges
—
—
—
—
—
3.9
—
—
3.9
0.04
Acquisition-related transaction
costs
1.2
—
—
1.2
0.01
0.5
—
—
0.5
0.01
Mark to market portion of
stock-based compensation
(2.0
)
—
—
(2.0
)
(0.02
)
1.0
—
—
1.0
0.01
Tax effect adjustments1
—
—
(3.8
)
(3.8
)
(0.04
)
—
—
(5.9
)
(5.9
)
(0.06
)
Adjusted (non-IFRS)2
$
98.3
$
62.2
$
0.63
$
76.1
$
46.7
$
0.51
- Adjustments to provision for income taxes
relate to the income tax effects of adjustment items that are
excluded for the purposes of calculating non-IFRS based adjusted
net income.
- The composition of these Non-IFRS
Measures has been revised from what was previously disclosed. See
"Non-IFRS and Other Financial Measures."
Six Months Ended October 1,
2023
Six Months Ended October 2,
2022
Earnings from
operations
Finance costs
Provision for income
taxes
Net income
Basic EPS
Earnings from Operations
Finance costs
Provision for income taxes
Net Income
Basic EPS
Reported (IFRS)
$
162.1
$
(32.4
)
$
(31.2
)
$
98.5
$
1.02
$
114.6
$
(24.2
)
$
(21.5
)
$
68.9
$
0.75
Amortization of acquisition-
related intangibles
34.7
—
—
34.7
0.36
36.7
—
—
36.7
0.40
Restructuring charges
—
—
—
—
—
1.3
—
—
1.3
0.01
Acquisition-related fair value
inventory charges
—
—
—
—
—
9.1
—
—
9.1
0.10
Acquisition-related transaction
costs
1.3
—
—
1.3
0.01
0.9
—
—
0.9
0.01
Mark to market portion of
stock-based compensation
2.3
—
—
2.3
0.03
(7.3
)
—
—
(7.3
)
(0.08
)
Tax effect of the above
adjustments1
—
—
(9.6
)
(9.6
)
(0.10
)
—
—
(10.1
)
(10.1
)
(0.11
)
Adjusted (non-IFRS)2
$
200.4
$
127.2
$
1.32
$
155.3
$
99.5
$
1.08
- Adjustments to provision for income taxes
relate to the income tax effects of adjustment items that are
excluded for the purposes of calculating non-IFRS based adjusted
net income.
- The composition of these Non-IFRS
Measures has been revised from what was previously disclosed. See
"Non-IFRS and Other Financial Measures."
The following table reconciles organic
revenue to the most directly comparable IFRS measure (revenue):
Three Months
Ended
Three Months Ended
Six Months
Ended
Six Months Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Organic revenue
$
685.5
$
541.8
$
1,390.3
$
1,080.1
Revenues of acquired
companies
14.5
68.6
29.8
155.9
Impact of foreign exchange rate
changes
35.7
(21.5
)
69.3
(36.5
)
Total revenue
$
735.7
$
588.9
$
1,489.4
$
1,199.5
Organic revenue growth
16.4
%
15.9
%
The following table reconciles non-cash
working capital as a percentage of revenues to the most directly
comparable IFRS measures:
October 1
March 31
As at
2023
2023
Accounts receivable
$
512.3
$
399.7
Income tax receivable
18.5
15.2
Contract assets
591.6
527.0
Inventories
280.1
256.9
Deposits, prepaids and other
assets
91.5
93.4
Accounts payable and accrued
liabilities
(596.5
)
(647.6
)
Income tax payable
(39.2
)
(38.9
)
Contract liabilities
(286.7
)
(296.6
)
Provisions
(23.7
)
(30.6
)
Non-cash working
capital
$
547.9
$
278.5
Trailing six-month revenues
annualized
$
2,978.6
$
2,755.6
Working capital %
18.4
%
10.1
%
The following table reconciles net debt to
adjusted EBITDA to the most directly comparable IFRS measures:
October 1
March 31
As at
2023
2023
Cash and cash equivalents
$
187.4
$
159.9
Bank indebtedness
(3.0
)
(5.8
)
Current portion of lease
liabilities
(23.7
)
(24.0
)
Current portion of long-term
debt
(0.2
)
(0.1
)
Long-term lease liabilities
(81.9
)
(73.3
)
Long-term debt
(1,008.4
)
(1,155.7
)
Net Debt
$
(929.8
)
$
(1,099.0
)
Adjusted EBITDA (TTM)1
$
454.3
$
401.2
Net Debt to Adjusted
EBITDA1
2.0x
2.7x
- The composition of these Non-IFRS Measures has been revised
from what was previously disclosed. See "Non-IFRS and Other
Financial Measures."
The following table reconciles free cash
flow to the most directly comparable IFRS measures:
(in millions of dollars)
Three Months Ended
October 1, 2023
Three Months Ended October 2,
2022
Six Months Ended
October 1, 2023
Six Months Ended October 2,
2022
Cash flows provided by (used in)
operating activities
$
8.5
$
(38.0
)
$
(99.3
)
$
(69.8
)
Acquisition of property, plant
and equipment
(15.9
)
(6.6
)
(34.5
)
(14.1
)
Acquisition of intangible
assets
(5.9
)
(2.4
)
(10.3
)
(7.2
)
Free cash flow
$
(13.3
)
$
(47.0
)
$
(144.1
)
$
(91.1
)
Certain Non-IFRS Financial Measures have been revised from
previously disclosed values to exclude the impact on stock-based
compensation expense of the revaluation of deferred stock units and
restricted share units resulting specifically from the change in
market price of the Company's common shares between periods.
Management believes the adjustment provides further insight into
the Company's performance.
The following table reconciles total
stock-based compensation expense to its components:
(in millions of dollars)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Total stock-based compensation expense
$
3.5
$
10.0
$
19.3
$
9.9
$
5.3
$
(4.0
)
$
0.8
$
12.7
Less: Mark to market portion of
stock-based compensation
(2.0
)
4.4
15.1
5.6
1.0
(8.3
)
(4.2
)
7.3
Base stock-based compensation expense
$
5.5
$
5.6
$
4.2
$
4.3
$
4.3
$
4.3
$
5.0
$
5.4
The following table reconciles the
previously reported non-IFRS financial measures to reflect the
exclusion of the stock-based compensation revaluation expenses:
(in millions of dollars)
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Previously reported: adjusted
earnings from operations
$
80.6
$
75.1
$
87.5
$
85.8
$
70.4
$
70.7
Mark to market portion of
stock-based compensation
5.6
1.0
(8.3
)
(4.2
)
7.3
6.1
Revised: adjusted earnings
from operations
$
86.2
$
76.1
$
79.2
$
81.6
$
77.7
$
76.8
Previously reported: adjusted
EBITDA
$
95.1
$
88.8
$
100.8
$
99.1
$
83.5
$
83.3
Mark to market portion of
stock-based compensation
5.6
1.0
(8.3
)
(4.2
)
7.3
6.1
Revised: adjusted
EBITDA
$
100.7
$
89.8
$
92.5
$
94.9
$
90.8
$
89.4
Previously reported: adjusted
basic earnings per share
$
0.52
$
0.50
$
0.64
$
0.64
$
0.52
$
0.53
Mark to market portion of
stock-based compensation
0.06
0.01
(0.09
)
(0.05
)
0.08
0.07
Tax impact of mark to market
portion of stock-based compensation
(0.02
)
—
0.02
0.01
(0.02
)
(0.01
)
Revised: adjusted basic
earnings per share
$
0.56
$
0.51
$
0.57
$
0.60
$
0.58
$
0.59
INVESTMENTS, LIQUIDITY, CASH
FLOW AND FINANCIAL RESOURCES
(In millions of dollars, except
ratios)
As at
October 1, 2023
March 31, 2023
Cash and cash equivalents
$
187.4
$
159.9
Debt-to-equity ratio1
0.74:1
1.18:1
- Debt is calculated as bank indebtedness, long-term debt and
lease liabilities. Equity is calculated as total equity less
accumulated other comprehensive income.
Three Months
Ended
Three Months Ended
Six Months
Ended
Six Months Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Cash, beginning of period
$
123.5
$
139.9
$
159.9
$
135.3
Total cash provided by (used
in):
Operating activities
8.5
(38.0
)
(99.3
)
(69.8
)
Investing activities
(25.9
)
(8.8
)
(46.2
)
1.0
Financing activities
80.9
2.0
173.3
30.0
Net foreign exchange
difference
0.4
0.1
(0.3
)
(1.3
)
Cash, end of period
$
187.4
$
95.2
$
187.4
$
95.2
ATS CORPORATION
Interim Condensed Consolidated
Statements of Financial Position
(in thousands of Canadian dollars
- unaudited)
October 1
March 31
As at
2023
2023
ASSETS
Current assets
Cash and cash equivalents
$
187,382
$
159,867
Accounts receivable
512,263
399,741
Income tax receivable
18,465
15,160
Contract assets
591,585
526,990
Inventories
280,106
256,866
Deposits, prepaids and other
assets
91,467
93,350
1,681,268
1,451,974
Non-current assets
Property, plant and equipment
276,032
263,119
Right-of-use assets
102,736
94,212
Other assets
22,123
16,679
Goodwill
1,113,484
1,118,262
Intangible assets
566,677
593,210
Deferred income tax assets
4,627
6,337
2,085,679
2,091,819
Total assets
$
3,766,947
$
3,543,793
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness
$
2,951
$
5,824
Accounts payable and accrued
liabilities
596,528
647,629
Income tax payable
39,226
38,904
Contract liabilities
286,652
296,555
Provisions
23,675
30,600
Current portion of lease
liabilities
23,703
23,994
Current portion of long-term
debt
167
65
972,902
1,043,571
Non-current
liabilities
Employee benefits
24,382
25,486
Long-term lease liabilities
81,953
73,255
Long-term debt
1,008,437
1,155,721
Deferred income tax
liabilities
99,758
104,459
Other long-term liabilities
10,129
10,718
1,224,659
1,369,639
Total liabilities
$
2,197,561
$
2,413,210
EQUITY
Share capital
$
864,661
$
520,633
Contributed surplus
20,234
15,468
Accumulated other comprehensive
income
52,056
60,040
Retained earnings
629,406
530,707
Equity attributable to
shareholders
1,566,357
1,126,848
Non-controlling interests
3,029
3,735
Total equity
1,569,386
1,130,583
Total liabilities and
equity
$
3,766,947
$
3,543,793
ATS CORPORATION
Interim Condensed Consolidated
Statements of Income
(in thousands of Canadian
dollars, except per share amounts - unaudited)
Three months ended
Six months ended
October 1
2023
October 2
2022
October 1
2023
October 2
2022
Revenues
$
735,716
$
588,954
$
1,489,365
$
1,199,545
Operating costs and expenses
Cost of revenues
527,298
427,476
1,068,223
868,329
Selling, general and
administrative
121,940
101,849
245,624
214,021
Restructuring costs
—
1,271
—
1,271
Stock-based compensation
3,455
5,307
13,445
1,320
Earnings from
operations
83,023
53,051
162,073
114,604
Net finance costs
15,462
13,442
32,408
24,167
Income before income
taxes
67,561
39,609
129,665
90,437
Income tax expense
16,818
10,079
31,198
21,514
Net income
$
50,743
$
29,530
$
98,467
$
68,923
Attributable to
Shareholders
$
50,665
$
29,506
$
98,228
$
68,710
Non-controlling interests
78
24
239
213
$
50,743
$
29,530
$
98,467
$
68,923
Earnings per share
attributable to shareholders
Basic
$
0.51
$
0.32
$
1.02
$
0.75
Diluted
$
0.51
$
0.32
$
1.01
$
0.75
ATS CORPORATION
Interim Condensed Consolidated
Statements of Cash Flows
(in thousands of Canadian dollars
- unaudited)
Three months ended
Six months ended
October 1
2023
October 2
2022
October 1
2023
October 2
2022
Operating activities
Net income
$
50,743
$
29,530
$
98,467
$
68,923
Items not involving cash
Depreciation of property, plant
and equipment
6,888
6,032
13,680
12,099
Amortization of right-of-use
assets
7,235
5,669
14,352
11,401
Amortization of intangible
assets
19,921
18,361
41,650
40,192
Deferred income taxes
9,683
(7,225
)
(327
)
(14,225
)
Other items not involving
cash
(1,871
)
2,593
(562
)
8,547
Stock-based compensation
3,106
1,434
5,103
2,129
Change in non-cash operating
working capital
(87,212
)
(94,412
)
(271,666
)
(198,820
)
Cash flows provided by (used
in) operating activities
$
8,493
$
(38,018
)
$
(99,303
)
$
(69,754
)
Investing activities
Acquisition of property, plant
and equipment
$
(15,905
)
$
(6,640
)
$
(34,471
)
$
(14,135
)
Acquisition of intangible
assets
(5,896
)
(2,387
)
(10,305
)
(7,241
)
Business acquisitions, net of
cash acquired
(4,511
)
—
(9,659
)
—
Settlement of cross-currency
interest rate swap instrument
—
—
—
21,493
Proceeds from disposal of
property, plant and equipment
397
229
8,255
906
Cash flows provided by (used
in) investing activities
$
(25,915
)
$
(8,798
)
$
(46,180
)
$
1,023
Financing activities
Bank indebtedness
$
(389
)
$
14,945
$
(2,873
)
$
15,894
Repayment of long-term debt
(20,022
)
(10,001
)
(465,944
)
(14,302
)
Proceeds from long-term debt
131,889
12,883
315,984
70,289
Proceeds from exercise of stock
options
229
626
1,179
1,604
Proceeds from U.S. initial public
offering, net of issuance fees
(685
)
—
362,072
—
Purchase of non-controlling
interest
(208
)
—
(208
)
(452
)
Repurchase of common shares
—
(350
)
—
(21,071
)
Acquisition of shares held in
trust
(23,820
)
(11,181
)
(23,820
)
(11,181
)
Principal lease payments
(6,094
)
(4,908
)
(13,115
)
(10,807
)
Cash flows provided by
financing activities
$
80,900
$
2,014
$
173,275
$
29,974
Effect of exchange rate changes
on cash and cash equivalents
384
63
(277
)
(1,362
)
Increase (decrease) in cash and
cash equivalents
63,862
(44,739
)
27,515
(40,119
)
Cash and cash equivalents,
beginning of period
123,520
139,902
159,867
135,282
Cash and cash equivalents, end
of period
$
187,382
$
95,163
$
187,382
$
95,163
Supplemental
information
Cash income taxes paid
$
13,925
$
24,403
$
25,716
$
27,749
Cash interest paid
$
11,820
$
9,218
$
34,138
$
22,953
Please refer to complete Interim Condensed Consolidated
Financial Statements for supplemental notes which can be found on
the Company’s profile on SEDAR+ at www.sedarplus.com, the Company's
profile on the U.S. Securities and Exchange Commission's website at
www.sec.gov, and on the Company’s website at
www.atsautomation.com.
Notice to Reader: Non-IFRS and Other Financial Measures
Throughout this document, management uses certain non-IFRS
financial measures, non-IFRS ratios and supplementary financial
measures to evaluate the performance of the Company.
The terms “EBITDA”, "organic revenue", “adjusted net income”,
“adjusted earnings from operations”, “adjusted EBITDA”, “adjusted
basic earnings per share”, and “free cash flow”, are non-IFRS
financial measures, “EBITDA margin”, “adjusted earnings from
operations margin”, “adjusted EBITDA margin”, "organic revenue
growth", “non-cash working capital as a percentage of revenues”,
and “net debt to adjusted EBITDA” are non-IFRS ratios, and
"operating margin", “Order Bookings”, "organic Order Bookings",
"organic Order Bookings growth", “Order Backlog”, and “book-to-bill
ratio” are supplementary financial measures, all of which do not
have any standardized meaning prescribed within IFRS and therefore
may not be comparable to similar measures presented by other
companies. Such measures should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. In addition, management uses “earnings from operations”,
which is an additional IFRS measure, to evaluate the performance of
the Company. Earnings from operations is presented on the Company’s
consolidated statements of income as net income excluding income
tax expense and net finance costs. Operating margin is an
expression of the Company’s earnings from operations as a
percentage of revenues. EBITDA is defined as earnings from
operations excluding depreciation and amortization. EBITDA margin
is an expression of the Company’s EBITDA as a percentage of
revenues. Organic revenue is defined as revenues in the stated
period excluding revenues from acquired companies for which the
acquired company was not a part of the consolidated group in the
comparable period. Organic revenue growth compares the stated
period organic revenue with the reported revenue of the comparable
prior period. Adjusted earnings from operations is defined as
earnings from operations before items excluded from management’s
internal analysis of operating results, such as amortization
expense of acquisition-related intangible assets,
acquisition-related transaction and integration costs,
restructuring charges, the mark-to-market adjustment on stock-based
compensation and certain other adjustments which would be
non-recurring in nature (“adjustment items”). Adjusted earnings
from operations margin is an expression of the Company’s adjusted
earnings from operations as a percentage of revenues. Adjusted
EBITDA is defined as adjusted earnings from operations excluding
depreciation and amortization. Adjusted EBITDA margin is an
expression of the entity’s adjusted EBITDA as a percentage of
revenues. Adjusted basic earnings per share is defined as adjusted
net income on a basic per share basis, where adjusted net income is
defined as adjusted earnings from operations less net finance costs
and income tax expense, plus tax effects of adjustment items and
adjusted for other significant items of a non-recurring nature.
Non-cash working capital as a percentage of revenues is defined as
the sum of accounts receivable, contract assets, inventories,
deposits, prepaids and other assets, less accounts payable, accrued
liabilities, provisions and contract liabilities divided by the
trailing two fiscal quarter revenues annualized. Free cash flow is
defined as cash provided by operating activities less property,
plant and equipment and intangible asset expenditures. Net debt to
adjusted EBITDA is the ratio of the net debt of the Company (cash
and cash equivalents less bank indebtedness, long-term debt, and
lease liabilities) to adjusted EBITDA. Order Bookings represent new
orders for the supply of automation systems, services and products
that management believes are firm. Organic Order Bookings are
defined as Order Bookings in the stated period excluding Order
Bookings from acquired companies for which the acquired company was
not a part of the consolidated group in the comparable period.
Organic Order Bookings growth compares the stated period organic
Order Bookings with the reported Order Bookings of the comparable
prior period. Order Backlog is the estimated unearned portion of
revenues on customer contracts that are in process and have not
been completed at the specified date. Book to bill ratio is a
measure of Order Bookings compared to revenue.
Following amendments to ATS’ Restricted Stock Unit ("RSU") Plan
in 2022 to provide for settlement in shares purchased in the open
market and the creation of the employee benefit trust to facilitate
such settlement, ATS began to account for equity-settled RSUs using
the equity method of accounting. However, prior RSU grants which
will be cash-settled and deferred stock unit ("DSU") grants which
will be cash-settled are accounted for as described in the
Company's annual consolidated financial statements and have
significant volatility period over period based on the fluctuating
price of ATS’ common shares. As a result, certain Non-IFRS
Financial Measures (EBITDA, adjusted EBITDA, net debt to adjusted
EBITDA, adjusted earnings from operations and adjusted basic
earnings per share) were revised from previously disclosed values
to exclude the impact on stock-based compensation expense of the
revaluation of DSUs and RSUs resulting specifically from the change
in market price of the Company's common shares between periods.
Management believes that this adjustment provides further insight
into the Company's performance, as share price volatility drives
variability in the Company's stock-based compensation expense.
Operating margin, adjusted earnings from operations, EBITDA,
EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are used
by the Company to evaluate the performance of its operations.
Management believes that earnings from operations is an important
indicator in measuring the performance of the Company’s operations
on a pre-tax basis and without consideration as to how the Company
finances its operations. Management believes that organic revenue
and organic revenue growth, when considered with IFRS measures,
allow the Company to better measure the Company's performance and
evaluate long-term performance trends. Organic revenue growth also
facilitates easier comparisons of the Company's performance with
prior and future periods and relative comparisons to its peers.
Management believes that EBITDA and adjusted EBITDA are important
indicators of the Company’s ability to generate operating cash
flows to fund continued investment in its operations. Management
believes that adjusted earnings from operations, adjusted earnings
from operations margin, adjusted EBITDA, adjusted net income and
adjusted basic earnings per share are important measures to
increase comparability of performance between periods. The
adjustment items used by management to arrive at these metrics are
not considered to be indicative of the business’ ongoing operating
performance. Management uses the measure “non-cash working capital
as a percentage of revenues” to assess overall liquidity. Free cash
flow is used by the Company to measure cash flow from operations
after investment in property, plant and equipment and intangible
assets. Management uses net debt to adjusted EBITDA as a
measurement of leverage of the Company. Order Bookings provide an
indication of the Company’s ability to secure new orders for work
during a specified period, while Order Backlog provides a measure
of the value of Order Bookings that have not been completed at a
specified point in time. Both Order Bookings and Order Backlog are
indicators of future revenues that the Company expects to generate
based on contracts that management believes to be firm. Organic
Order Bookings and organic Order Bookings growth allow the Company
to better measure the Company's performance and evaluation
long-term performance trends. Organic Order Bookings growth also
facilities easier comparisons of the Company's performance with
prior and future periods and relative comparisons to its peers.
Book to bill ratio is used to measure the Company’s ability and
timeliness to convert Order Bookings into revenues. Management
believes that ATS shareholders and potential investors in ATS use
these additional IFRS measures and non-IFRS financial measures in
making investment decisions and measuring operational results.
A reconciliation of (i) adjusted EBITDA and EBITDA to net
income, (ii) adjusted earnings from operations to earnings from
operations, (iii) adjusted net income to net income, (iv) adjusted
basic earnings per share to basic earnings per share (v) free cash
flow to its IFRS measure components and (vi) organic revenue to
revenue, in each case for the three- and six-months ended October
1, 2023 and October 2, 2022 is contained in this document (see
“Reconciliation of Non-IFRS Measures to IFRS Measures”). This
document also contains a reconciliation of (i) non-cash working
capital as a percentage of revenues and (ii) net debt to their IFRS
measure components, in each case at both October 1, 2023 and March
31, 2023 (see “Reconciliation of Non-IFRS Measures to IFRS
Measures”). A reconciliation of Order Bookings and Order Backlog to
total Company revenues for the three- and six- months ended October
1, 2023 and October 2, 2022 is also contained in this news release
(see “Order Backlog Continuity”).
Note to Readers: Forward-Looking Statements This news
release contains certain statements that may constitute
forward-looking information and forward-looking statements within
the meaning of applicable Canadian and United States securities
laws ("forward-looking statements"). All such statements are made
pursuant to the “safe harbour” provisions of Canadian provincial
and territorial securities laws and the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
all statements that are not historical facts regarding possible
events, conditions or results of operations that ATS believes,
expects or anticipates will or may occur in the future, including,
but not limited to: the value creation strategy; the Company’s
strategy to expand organically and through acquisition, and the
expected benefits to be derived; the ABM; disciplined acquisitions;
various market opportunities for ATS; expanding in emerging
markets; the Company’s Order Backlog partially mitigating the
impact of variable Order Bookings; rate of Order Backlog conversion
to revenue; the potential impact of timing of customer decisions on
Order Bookings, performance period, and timing of revenue
recognition; the announcement of new Order Bookings and the
anticipated timeline for delivery; potential impacts on the time to
convert opportunities into Order Bookings; expected benefits with
respect to the Company’s efforts to grow its product portfolio and
after-sale service revenues; Company’s goal of expanding its
adjusted earnings from operations margin over the long term and
potential impact of supply chain disruptions; the ability of
after-sales revenues and reoccurring revenues to provide some
balance to customers’ capital expenditure cycles; the range of
reoccurring revenues as a percentage of total revenues; the impact
of developing the Company’s digitalization capabilities, including
the collection and interpretation of data, as a key area of growth,
and to drive meaningful change to optimize performance for
customers; expectation of synergies from integration of acquired
companies; non-cash working capital levels as a percentage of
revenues in the short-term and the long-term; reorganization
activity, and its ability to improve the cost structure of the
Company, and to be reallocated to growth areas, and the expected
timing and cost of this reorganization activity; expectations in
relation to meeting liquidity and funding requirements for
investments; potential to use debt or equity financing to support
strategic opportunities and growth strategy; underlying trends
driving customer demand; potential impacts of variability in
bookings caused by the strategic nature and size of electric
vehicle programs; expected capital expenditures for fiscal 2024;
the Company’s belief with respect to the outcome of certain
lawsuits, claims and contingencies; and the uncertainty and
potential impact on the Company’s business and operations due to
the current macroeconomic environment including the impacts of
infectious diseases and pandemics, including the COVID-19 pandemic,
inflation, supply chain disruptions, interest rate changes, and
regional conflicts.
Forward-looking statements are inherently subject to significant
known and unknown risks, uncertainties, and other factors that may
cause the actual results, performance, or achievements of ATS, or
developments in ATS’ business or in its industry, to differ
materially from the anticipated results, performance, achievements,
or developments expressed or implied by such forward-looking
statements. Important risks, uncertainties, and factors that could
cause actual results to differ materially from expectations
expressed in the forward-looking statements include, but are not
limited to: the impact of regional or global conflicts; general
market performance including capital market conditions and
availability and cost of credit; performance of the markets that
ATS serves; industry challenges in securing the supply of labour,
materials, and, in certain jurisdictions, energy sources such as
natural gas; impact of inflation; interest rate changes; foreign
currency and exchange risk; the relative strength of the Canadian
dollar; risks related to customer concentration; risks related to a
recession, slowdown, and/or sustained downturn in the economy;
impact of factors such as increased pricing pressure, increased
cost of energy and supplies, and delays in relation thereto, and
possible margin compression; the regulatory and tax environment;
the emergence of new infectious diseases and pandemics, including
the potential resurgence of COVID-19 and/or new strains of COVID-19
and collateral consequences thereof, including the disruption of
economic activity, volatility in capital and credit markets, and
legislative and regulatory responses; the effect of events
involving limited liquidity, defaults, non-performance or other
adverse developments that affect financial institutions,
transaction counterparties, or other companies in the financial
services industry generally, or concerns or rumours about any
events of these kinds or other similar risks, that have in the past
and may in the future lead to market-wide liquidity problems;
energy shortages and global prices increases; inability to
successfully expand organically or through acquisition, due to an
inability to grow expertise, personnel, and/or facilities at
required rates or to identify, negotiate and conclude one or more
acquisitions, including the Avidity acquisition, which remains
subject to the completion of customary regulatory approvals; or to
raise, through debt or equity, or otherwise have available,
required capital; that the ABM is not effective in accomplishing
its goals; ATS is unable to expand in emerging markets, or is
delayed in relation thereto, due to any number of reasons,
including inability to effectively execute organic or inorganic
expansion plans, focus on other business priorities, or local
government regulations or delays; that the timing of completion of
new Order Bookings is other than as expected due to various
reasons, including schedule changes; the customer exercising any
right to withdraw the Order Booking or to terminate the program in
whole or in part prior to its completion, thereby preventing ATS
from realizing on the full benefit of the program; that some or all
of the sales funnel is not converted to Order Bookings due to
competitive factors or failure to meet customer needs; that the
market opportunities ATS anticipates do not materialize or that ATS
is unable to exploit such opportunities; variations in the amount
of Order Backlog completed in any given quarter; timing of customer
decisions related to large enterprise programs and potential for
negative impact associated with any cancellations or
non-performance in relation thereto; that the Company is not
successful in growing its product portfolio and/or service offering
or that expected benefits are not realized; that efforts to expand
adjusted earnings from operations margin over long-term are
unsuccessful, due to any number of reasons, including less than
anticipated increase in after-sales service revenues or reduced
margins attached to those revenues, inability to achieve lower
costs through supply chain management, failure to develop, adopt
internally, or have customers adopt, standardized platforms and
technologies, inability to maintain current cost structure if
revenues were to grow, and failure of ABM to impact margins; that
after-sales or reoccurring revenues do not provide the expected
balance to customers’ expenditure cycles; that reoccurring revenues
are not in the expected range; the development of the Company’s
digitalization capabilities fails to achieve the growth or change
expected; that acquisitions made are not integrated as quickly or
effectively as planned or expected and, as a result, anticipated
benefits and synergies are not realized; non-cash working capital
as a percentage of revenues operating at a level other than as
expected due to reasons, including, the timing and nature of Order
Bookings, the timing of payment milestones and payment terms in
customer contracts, and delays in customer programs; that planned
reorganization activity does not succeed in improving the cost
structure of the Company or that the investment is not reallocated
to growth areas, or is not completed at the cost or within the
timelines expected, or at all; underlying trends driving customer
demand will not materialize or have the impact expected; that
capital expenditure targets are increased in the future or the
Company experiences cost increases in relation thereto; risk that
the ultimate outcome of lawsuits, claims, and contingencies give
rise to material liabilities for which no provisions have been
recorded; and other risks and uncertainties detailed from time to
time in ATS' filings with securities regulators, including, without
limitation, the risk factors described in ATS’ annual information
form for the fiscal year ended March 31, 2023, which are available
on the System for Electronic Document Analysis and Retrieval
("SEDAR+") at www.sedarplus.com and on the U.S. Securities Exchange
Commission’s Electronic Data Gathering, Analysis and Retrieval
System (“EDGAR”) at www.sec.gov. ATS has attempted to identify
important factors that could cause actual results to materially
differ from current expectations, however, there may be other
factors that cause actual results to differ materially from such
expectations.
Forward-looking statements are necessarily based on a number of
estimates, factors, and assumptions regarding, among others,
management's current plans, estimates, projections, beliefs and
opinions, the future performance and results of the Company’s
business and operations; the ability of ATS to execute on its
business objectives; and general economic and political conditions,
and global events, including the COVID-19 pandemic.
Forward-looking statements included in this news release are
only provided to understand management’s current expectations
relating to future periods and, as such, are not appropriate for
any other purpose. Although ATS believes that the expectations
reflected in such forward-looking statements are reasonable, such
statements involve risks and uncertainties, and ATS cautions you
not to place undue reliance upon any such forward-looking
statements, which speak only as of the date they are made. ATS does
not undertake any obligation to update forward-looking statements
contained herein other than as required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108645561/en/
For more information, contact: David Galison Head of
Investor Relations ATS Corporation 730 Fountain Street North
Cambridge, ON, N3H 4R7 (519) 653-6500
dgalison@atsautomation.com
For general media inquiries, contact: Matthew Robinson
Director, Corporate Communications ATS Corporation 730 Fountain
Street North Cambridge, ON, N3H 4R7 (519) 653-6500
mrobinson@atsautomation.com
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