CAMBRIDGE, ON, Nov. 3, 2021 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today reported its
financial results for the three and six months ended September 26, 2021.
Second quarter highlights:
- Revenues increased 55.6% year over year to $522.1 million.
- Earnings from operations1 were $55.4 million (10.6% operating margin), compared
to $23.4 million (7.0% operating
margin) a year ago. Adjusted earnings from operations1
were $70.7 million (13.5% margin),
compared to $40.1 million (12.0%
margin) a year ago.
- EBITDA1 was $81.2
million (15.6% EBITDA margin), compared to $41.5 million (12.4% EBITDA margin) a year ago.
Adjusted EBITDA1 was $83.3
million (16.0% adjusted EBITDA margin), compared to
$49.6 million (14.8% adjusted EBITDA
margin) a year ago.
- Earnings per share were 41 cents
basic and diluted compared to 13
cents a year ago.
- Adjusted basic earnings per share1 were 53 cents compared to 26
cents a year ago.
- Order Bookings1 were $510
million, 26.6% higher compared to $403 million a year ago.
- Order Backlog1 increased 35.5% to $1,295 million at September 26, 2021 compared to $956 million a year ago.
"The second quarter featured strong operational results
including organic revenue growth, acquisition contributions from
CFT and BioDot, margin expansion in line with our plan, solid Order
Bookings and record Order Backlog," said Andrew Hider, Chief Executive Officer. "With our
Order Backlog providing good revenue visibility, a healthy balance
sheet in place to support growth, and our talented and committed
workforce pursuing continuous improvement through our ABM, ATS is
well positioned to continue creating value."
Year-to-date highlights:
- Revenues increased 56.4% year over year to $1,032.7 million.
- Earnings from operations1 were $107.3 million (10.4% operating margin), compared
to $44.5 million (6.7% operating
margin) in the prior year. Adjusted earnings from
operations1 were $136.1
million (13.2% margin), compared to $69.8 million (10.6% margin) in the prior
year.
- EBITDA1 was $157.0
million (15.2% EBITDA margin), compared to $80.7 million (12.2% EBITDA margin) in the prior
year. Adjusted EBITDA1 was $161.2
million (15.6% adjusted EBITDA margin), compared to
$88.8 million (13.4% adjusted EBITDA
margin) a year ago.
- Earnings per share was 78 cents
basic and diluted compared to 23
cents in the prior year.
- Adjusted basic earnings per share1 were $1.01 compared to 43
cents a year ago.
- Order Bookings1 were $1,146
million, compared to $728
million a year ago.
Mr. Hider added, "During the quarter, we made acquisitions that
strengthen our consulting capabilities in process engineering,
enhance our digital offerings, expand our portfolio of precision
conveyor technologies and reinforce our position in the food and
beverage end-market. We welcome BLSG and NCC to the ATS family. We
also entered into an agreement to acquire DF S.r.l. and made good
progress with the integration of CFT by rolling out the ATS
Business Model and firming up supply chain and cost structure
synergies opportunities. Organically, ongoing investments in
innovation and product development are furthering our build, grow
and expand value creation strategy."
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
Financial results
(In millions of dollars, except
per share data)
|
Three
Months
Ended September 26, 2021
|
Three Months
Ended
September 27, 2020
|
Six
Months Ended September
26, 2021
|
Six Months
Ended
September 27,
2020
|
Revenues
|
$
|
522.1
|
$
|
335.5
|
$
|
1,032.7
|
$
|
660.4
|
Earnings from
operations
|
$
|
55.4
|
$
|
23.4
|
$
|
107.3
|
$
|
44.5
|
Adjusted earnings
from operations1
|
$
|
70.7
|
$
|
40.1
|
$
|
136.1
|
$
|
69.8
|
EBITDA1
|
$
|
81.2
|
$
|
41.5
|
$
|
157.0
|
$
|
80.7
|
Adjusted
EBITDA1
|
$
|
83.3
|
$
|
49.6
|
$
|
161.2
|
$
|
88.8
|
Net income
|
$
|
38.4
|
$
|
11.6
|
$
|
72.3
|
$
|
21.4
|
Basic and diluted
earnings per share
|
$
|
0.41
|
$
|
0.13
|
$
|
0.78
|
$
|
0.23
|
Adjusted basic
earnings per share1
|
$
|
0.53
|
$
|
0.26
|
$
|
1.01
|
$
|
0.43
|
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
Second quarter summary
Fiscal 2022 second quarter
revenues were 55.6% or $186.6 million
higher than in the corresponding period a year ago and included
$120.4 million of revenues earned by
acquired companies, most notably $92.5
million from CFT S.p.A ("CFT") which was acquired in the
fourth quarter of fiscal 2021. Organic growth, excluding
contributions from acquired companies and the impact of foreign
exchange fluctuations was $79.9
million, or 23.8% higher than the second quarter of fiscal
2021. Organic revenue growth primarily related to increased
activity in the life sciences market which generated higher
revenues related to projects for COVID-19 applications and
increased activity in other medical device and pharmaceutical
projects. Foreign exchange negatively impacted revenues by
$13.7 million or 4.1% primarily
reflecting the strengthening of the Canadian dollar relative to the
U.S. dollar and Euro. Revenues generated from construction
contracts increased 58.1% due to a combination of revenues earned
by acquired companies of $63.8
million (primarily $61.9
million from CFT), and organic revenue growth. Revenues from
services increased 13.0% due to revenues earned by acquired
companies of $13.2 million. Revenues
from the sale of goods increased 186.1% due primarily to revenues
earned by acquired companies of $43.6
million, reflecting increased product sales from acquired
companies, primarily CFT and BioDot whose businesses generate a
higher percentage of their revenues from product sales.
By market, revenues generated in life sciences increased
$77.7 million or 42.7% year over year
on higher Order Backlog entering the second quarter of fiscal 2022
compared to the corresponding period in the prior year, including
$27.3 million of revenues earned by
acquired companies, primarily BioDot and CIM. Revenues generated in
food & beverage, which were previously reported under consumer
products, increased $91.1 million or
1,124.7%, primarily due to the acquisition of CFT in the fourth
quarter of fiscal 2021. CFT generated $91.5
million of food & beverage revenues in the second
quarter of fiscal 2022. Revenues in transportation decreased
$2.2 million or 3.1%, on lower Order
Backlog entering the second quarter of fiscal 2022. Revenues
generated in consumer products increased $13.7 million or 26.9%, on higher Order Backlog
entering the second quarter of fiscal 2022. Revenues in energy
increased $6.3 million or 26.9% due
to project timing.
Net income for the second quarter of fiscal 2022 was
$38.4 million (41 cents per share basic and diluted), a
$26.8 million (or 231.0%) increase
compared to $11.6 million
(13 cents per share basic and
diluted) for the second quarter of fiscal 2021. The increase was
primarily a result of contributions from acquired companies of
$6.5 million, coupled with organic
revenue growth and improved operating margin as a result of the
previously implemented reorganization.
Fiscal 2022 second quarter earnings from operations were
$55.4 million (10.6% operating
margin) compared to $23.4 million
(7.0% operating margin) in the second quarter a year ago. Earnings
from operations included: $13.2
million related to amortization of acquisition-related
intangible assets and $2.1 million of
incremental costs related to the Company's acquisition activity,
compared to $8.6 million of
amortization of acquisition-related intangible assets and
$8.1 million of restructuring costs
in the comparable period a year ago.
Excluding these items in both quarters, adjusted earnings from
operations were $70.7 million (13.5%
margin), compared to $40.1 million
(12.0% margin) a year ago. Contributions from acquired companies
were $12.9 million, with BioDot
contributing $10.2 million, and CFT
contributing $2.2 million. Higher
second quarter fiscal 2022 adjusted earnings from operations
reflected higher gross margin due to efficiency gains made in the
Company's cost structure as a result of the previously implemented
reorganization plans, improved program execution which has reduced
the number and impact of Red projects (projects which are not on
budget, on schedule or have quality issues), increased revenues
from after-sales services as well as a reduction in travel and
entry restrictions and temporary closures at customer sites related
to COVID-19 compared to a year ago. In the second quarter of fiscal
2022, the Company did not receive recoveries under the Canadian
Emergency Wage Subsidy ("CEWS") program compared to recoveries of
$3.7 million a year ago.
Depreciation and amortization expense was $25.8 million in the second quarter of fiscal
2022, compared to $18.1 million a
year ago, primarily due to the addition of identifiable intangible
assets recorded on the acquisitions of CFT and BioDot.
EBITDA was $81.2 million (15.6%
EBITDA margin) in the second quarter of fiscal 2022 compared to
$41.5 million (12.4% EBITDA margin)
in the second quarter of fiscal 2021. EBITDA for the second quarter
of fiscal 2022 included $2.1 million
of incremental costs related to the Company's acquisition activity,
compared to the corresponding period in the prior year which
included $8.1 million of
restructuring charges. Excluding these costs, adjusted EBITDA was
$83.3 million (16.0% adjusted EBITDA
margin), compared to $49.6 million
(14.8% adjusted EBITDA margin) a year ago. Higher EBITDA margin
reflected an improved cost structure and more pronounced pandemic
inefficiencies in the same period a year ago.
Order Backlog1 Continuity
(In
millions of dollars)
|
Three
Months Ended September
26, 2021
|
Three Months
Ended
September 27,
2020
|
Six
Months Ended September
26, 2021
|
Six Months
Ended
September 27,
2020
|
Opening Order
Backlog1
|
$
|
1,248
|
$
|
909
|
$
|
1,160
|
$
|
942
|
Revenues
|
(522)
|
(336)
|
(1,033)
|
(660)
|
Order
Bookings1
|
510
|
403
|
1,146
|
728
|
Order Backlog
adjustments2
|
59
|
(20)
|
22
|
(54)
|
Total
|
$
|
1,295
|
$
|
956
|
$
|
1,295
|
$
|
956
|
1
Non-IFRS measure: see "Notice to Reader: Non-IFRS
Measures and Additional IFRS Measures".
|
2 Order
Backlog adjustments include incremental Order Backlog of acquired
companies ($13 million acquired with NCC, and $24 million acquired
with BioDot), foreign exchange adjustments, scope changes and
cancellations.
|
Order Bookings
Second quarter fiscal 2022 Order
Bookings were $510 million. The 26.6%
year-over-year increase reflected organic growth of 4.5% and 25.0%
growth from acquired companies, partially offset by a 2.9% decrease
due to foreign exchange rate translation of Order Bookings from
foreign-based ATS subsidiaries, primarily reflecting the
strengthening of the Canadian dollar relative to the U.S. dollar
and Euro. The growth in Order Bookings from acquired companies
totalled $101 million, of which CFT
contributed $79 million. By market,
Order Bookings in life sciences were flat. Order Bookings in food
& beverage increased due to the addition of CFT. Order Bookings
in transportation increased due to an EV program win and timing of
customer orders. Order Bookings in consumer products decreased due
to timing of customer projects. Order Bookings in energy increased
due to timing of customer projects, primarily in the nuclear
market.
Second quarter fiscal 2022 book-to-bill
ratio1 was 0.98:1, compared to 1.20:1 in the
corresponding period a year ago. Book-to-bill ratio for the six
months ended September 26, 2021 was
1.11:1, compared to 1.10:1 in the corresponding period a year
ago.
Order Backlog
At September
26 2021, Order Backlog was $1,295
million, 35.5% higher than at September 27, 2020. Order Backlog growth was
primarily driven by higher Order Bookings in fiscal 2022 in all end
markets, and Order Backlog from acquired businesses. Foreign
exchange rate changes positively impacted the translation of Order
Backlog from foreign-based ATS subsidiaries by approximately 2.4%
in the first six months of fiscal 2022, primarily reflecting the
weakening of the Canadian dollar relative to the U.S. dollar and
Euro.
Outlook
The Company's funnel (which includes customer
requests for proposal and ATS identified customer opportunities)
remains significant; however, the timing to convert opportunities
into Order Bookings may be extended as some customers manage their
responses to the pandemic by delaying planned project timing.
By market, the life sciences funnel remains robust as a result
of strong activity in medical devices, pharmaceuticals and
radiopharmaceuticals, and augmented by some opportunities related
to the fight against COVID-19. Funnel activity in food &
beverage is robust and with the addition of CFT, the Company has
increased exposure to opportunities in this market. In
transportation, the funnel largely includes strategic opportunities
related to electric vehicles. Funnel activity in energy is stable
and comprised of some longer-term opportunities. Funnel activity in
consumer products has improved; however, management expects some
customers to remain cautious in deploying capital in the current
economic environment. Order Backlog of $1,295 million will help mitigate 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. In the third quarter of fiscal
2022, management expects the conversion of Order Backlog to
revenues to be in the 35% to 40% range. This estimate was
calculated based on the combination of management's estimate based
on current projects which comprise Order Backlog and historical
Order Backlog conversion data.
The Company's approach to the market and the timing of customer
decisions on larger opportunities is expected to cause variability
in Order Bookings from quarter to quarter and lengthen the
performance period and revenue recognition for certain customer
programs. The revenue of the Company in a given period is dependent
on a combination of the volume of outstanding projects the Company
is contracted to and the size and duration of those projects, and
is driven by 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 continues to achieve revenue growth
organically and by identifying strategic acquisition opportunities
that can provide access to attractive end-markets. The Company is
working to grow its product portfolio and after-sales service
revenues as a percentage of overall revenues over time, which is
expected to provide some balance to the capital expenditure cycle
of the Company's customers.
Management is pursuing several initiatives to grow its revenues
and improve its profitability with the goal of expanding its
adjusted earnings from operations margin to 15% over the long term
from 13.2% in the first six months of fiscal 2022. These
initiatives include growing the Company's after-sales service
business; improving global supply chain management; increasing the
use of standardized platforms and technologies; growing revenues
while leveraging the Company's cost structure; and the ongoing
pursuit of continuous improvement in all business activities
through the ABM. In the short-term, the global COVID-19 pandemic
has disrupted global supply chains, leading to longer lead-times
and cost increases on certain raw materials and components used by
the Company. To date the Company has largely mitigated these supply
chain disruptions through the use of alternative supply sources and
savings on materials not affected by cost increases. However,
prolonged disruptions or further cost increases could impact the
timing and progress of the Company's margin expansion efforts and
the timing of revenue recognition. Achieving the 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 (see
"Note to Readers: Forward-Looking Statements" for a description of
the risks underlying the assumptions to the achievement of the
margin target in future periods).
The Company continues to make progress in line with its plans to
integrate acquired businesses, and expects to realize cost and
revenue synergies consistent with announced integration plans. In
the short-term, BioDot has benefitted from increased volumes
related to specific COVID-19 applications, which the Company
expects to diminish over time. With respect to the integration of
CFT, and pursuant to its strategy of improving business
performance, the Company is implementing a reorganization plan
which will include the consolidation of certain subsidiaries in
order to improve CFT's efficiency and cost structure. Management
expects to incur restructuring costs of approximately $4 million, expensed during the third and fourth
quarters of fiscal 2022.
COVID-19 resulted in governments worldwide enacting emergency
measures to combat the spread of the virus. These measures, which
included the implementation of travel restrictions, quarantine
periods and physical distancing requirements have affected
economies and disrupted business operations for ATS and its
customers. Vaccination programs are underway and generally
restrictions are being easing across most geographies served by the
Company. However, there is ongoing uncertainty regarding potential
new COVID-19 variants, and as a result it is difficult to predict
the duration or severity of the pandemic or its affect on the
business, financial results and conditions of the Company.
Over the long term, the Company generally expects to continue
investing in non-cash working capital to support the growth of its
business, with fluctuations expected on a quarter-over-quarter
basis. The Company's goal is to maintain its investment in non-cash
working capital as a percentage of annualized revenues below 15%.
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 fund strategic investment
plans including some potential acquisitions. Acquisitions could
result in additional debt or equity financing requirements for the
Company.
Quarterly Conference Call
ATS will host a conference
call and webcast at 8:30 a.m. eastern
on Wednesday, November 3, 2021 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 (416) 764-8659 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 10, 2021) by dialing (416) 764-8677 and
entering passcode 774356 followed by the number sign.
About ATS
ATS 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
5,000 people at 28 manufacturing facilities and over 50 offices in
North America, Europe, Southeast
Asia and China.
Consolidated Revenues
(In millions of dollars)
Revenues by
type
|
Three
Months Ended September
26, 2021
|
Three Months
Ended
September 27,
2020
|
Six Months
Ended September 26, 2021
|
Six Months
Ended
September 27,
2020
|
Revenues from
construction contracts
|
$
|
326.7
|
$
|
206.7
|
$
|
669.7
|
$
|
419.7
|
Services
rendered
|
113.0
|
100.0
|
213.5
|
186.7
|
Sale of
goods
|
82.4
|
28.8
|
149.5
|
54.0
|
Total
revenues
|
$
|
522.1
|
$
|
335.5
|
$
|
1,032.7
|
$
|
660.4
|
|
|
|
|
|
Revenues by
market
|
Three
Months Ended September
26, 2021
|
Three Months
Ended
September 27,
2020
|
Six
Months Ended September
26, 2021
|
Six Months
Ended
September 27,
2020
|
Life
Sciences
|
$
|
259.6
|
$
|
181.9
|
$
|
490.2
|
$
|
363.4
|
Food &
Beverage
|
99.2
|
8.1
|
213.2
|
15.2
|
Transportation
|
69.0
|
71.2
|
144.1
|
138.3
|
Consumer
Products
|
64.6
|
50.9
|
126.1
|
92.0
|
Energy
|
29.7
|
23.4
|
59.1
|
51.5
|
Total
revenues
|
$
|
522.1
|
$
|
335.5
|
$
|
1,032.7
|
$
|
660.4
|
Consolidated Operating Results
(In millions of
dollars)
|
Three
Months
Ended
September 26, 2021
|
Three Months
Ended
September 27,
2020
|
Six
Months Ended September
26, 2021
|
Six Months
Ended
September 27,
2020
|
Earnings from
operations
|
$
|
55.4
|
$
|
23.4
|
$
|
107.3
|
$
|
44.5
|
Amortization of
acquisition-related intangible assets
|
13.2
|
8.6
|
24.6
|
17.2
|
Restructuring
charges
|
––
|
8.1
|
––
|
8.1
|
Acquisition-related
transaction costs
|
2.1
|
––
|
4.2
|
––
|
Adjusted earnings
from operations1
|
$
|
70.7
|
$
|
40.1
|
$
|
136.1
|
$
|
69.8
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
|
|
|
|
|
Three
Months Ended September
26, 2021
|
Three Months
Ended
September 27, 2020
|
Six Months
Ended
September 26, 2021
|
Six Months
Ended
September 27,
2020
|
Earnings from
operations
|
$
|
55.4
|
$
|
23.4
|
$
|
107.3
|
$
|
44.5
|
Depreciation and
amortization
|
25.8
|
18.1
|
49.7
|
36.2
|
EBITDA1
|
$
|
81.2
|
$
|
41.5
|
$
|
157.0
|
$
|
80.7
|
Restructuring
charges
|
––
|
8.1
|
––
|
8.1
|
Acquisition-related
transaction costs
|
2.1
|
––
|
4.2
|
––
|
Adjusted
EBITDA1
|
$
|
83.3
|
$
|
49.6
|
$
|
161.2
|
$
|
88.8
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
Order Backlog by Market
(In millions of dollars)
As
at
|
September
26, 2021
|
September 27,
2020
|
Life
Sciences
|
$
|
778
|
$
|
580
|
Food &
Beverage
|
143
|
11
|
Transportation
|
190
|
183
|
Consumer
Products
|
96
|
83
|
Energy
|
88
|
99
|
Total
|
$
|
1,295
|
$
|
956
|
Reconciliation of Non-IFRS Measures to IFRS
Measures
(In millions of dollars, except per share data)
The following table reconciles EBITDA to the most directly
comparable IFRS measure (net income):
|
Three
Months Ended September
26, 2021
|
Three Months
Ended
September 27,
2020
|
Six
Months Ended September
26, 2021
|
Six Months
Ended
September 27,
2020
|
Adjusted
EBITDA
|
$
|
83.3
|
$
|
49.6
|
$
|
161.2
|
$
|
88.8
|
Acquisition-related
transaction costs
|
2.1
|
––
|
4.2
|
––
|
Restructuring
charges
|
––
|
8.1
|
––
|
8.1
|
EBITDA
|
$
|
81.2
|
$
|
41.5
|
$
|
157.0
|
$
|
80.7
|
Less: depreciation
and amortization expense
|
25.8
|
18.1
|
49.7
|
36.2
|
Earnings from
operations
|
$
|
55.4
|
$
|
23.4
|
$
|
107.3
|
$
|
44.5
|
Less: net finance
costs
|
7.2
|
8.0
|
14.6
|
16.2
|
Provision for income
taxes
|
9.8
|
3.8
|
20.4
|
6.9
|
Net
income
|
$
|
38.4
|
$
|
11.6
|
$
|
72.3
|
$
|
21.4
|
The following table reconciles adjusted earnings from operations
and adjusted basic earnings per share to the most directly
comparable IFRS measure (net income and basic earnings per
share):
|
Three Months Ended
September 26, 2021
|
Three Months Ended
September 27, 2020
|
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
Earnings from
operations
|
$
|
55.4
|
$
|
––
|
$
|
55.4
|
$
|
23.4
|
$
|
––
|
$
|
23.4
|
Acquisition-related
transaction costs
|
––
|
2.1
|
2.1
|
––
|
––
|
––
|
Amortization of
acquisition-
|
|
|
|
|
|
|
related intangible
assets
|
––
|
13.2
|
13.2
|
––
|
8.6
|
8.6
|
Restructuring
charges
|
––
|
––
|
––
|
––
|
8.1
|
8.1
|
|
$
|
55.4
|
$
|
15.3
|
$
|
70.7
|
$
|
23.4
|
$
|
16.7
|
$
|
40.1
|
Less: net finance
costs
|
$
|
7.2
|
$
|
––
|
$
|
7.2
|
$
|
8.0
|
$
|
––
|
$
|
8.0
|
Income before
income taxes
|
$
|
48.2
|
$
|
15.3
|
$
|
63.5
|
$
|
15.4
|
$
|
16.7
|
$
|
32.1
|
Provision for income
taxes
|
$
|
9.8
|
$
|
––
|
$
|
9.8
|
$
|
3.8
|
$
|
––
|
$
|
3.8
|
Adjustment to
provision for
|
|
|
|
|
|
|
income
taxes1
|
––
|
4.0
|
4.0
|
––
|
4.5
|
4.5
|
|
$
|
9.8
|
$
|
4.0
|
$
|
13.8
|
$
|
3.8
|
$
|
4.5
|
$
|
8.3
|
Net
income
|
$
|
38.4
|
$
|
11.3
|
$
|
49.7
|
$
|
11.6
|
$
|
12.2
|
$
|
23.8
|
Basic earnings per
share
|
$
|
0.41
|
$
|
0.12
|
$
|
0.53
|
$
|
0.13
|
$
|
0.13
|
$
|
0.26
|
1 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 following table reconciles non-cash working capital as a
percentage of revenues to the most directly comparable IFRS
measures:
As at
|
September
26, 2021
|
March 31,
2021
|
Accounts
receivable
|
$
|
414.1
|
$
|
285.9
|
Income tax
receivable
|
5.2
|
8.2
|
Contract
assets
|
317.0
|
272.8
|
Inventories
|
144.2
|
135.0
|
Deposits, prepaids
and other assets
|
70.6
|
37.8
|
Accounts payable and
accrued liabilities
|
(438.3)
|
(367.3)
|
Income tax
payable
|
(40.3)
|
(32.9)
|
Contract
liabilities
|
(328.8)
|
(218.3)
|
Provisions
|
(25.7)
|
(29.0)
|
Non-cash working
capital
|
$
|
118.0
|
$
|
92.2
|
Trailing six-month
revenues annualized
|
$
|
2,065.4
|
$
|
1,539.2
|
Working capital
%
|
5.7%
|
6.0%
|
The following table reconciles net debt to adjusted EBITDA to
the most directly comparable IFRS measures:
As
at
|
September
26,
2021
|
March 31,
2021
|
Cash and cash
equivalents
|
$
|
181.3
|
$
|
187.5
|
Bank
indebtedness
|
(1.2)
|
(1.1)
|
Current portion of
lease liabilities
|
(20.0)
|
(15.2)
|
Current portion of
long-term debt
|
(0.0)
|
(0.1)
|
Long-term lease
liabilities
|
(61.4)
|
(57.8)
|
Long-term
debt
|
(521.6)
|
(430.6)
|
Net
debt
|
$
|
(422.9)
|
$
|
(317.3)
|
Adjusted EBITDA
(TTM)
|
$
|
273.1
|
$
|
200.7
|
Net Debt to
Adjusted EBITDA
|
1.5x
|
1.6x
|
The following table reconciles free cash flow to the most
directly comparable IFRS measures:
(in millions of
dollars)
|
Three Months
Ended
September 26,
2021
|
Three Months
Ended
September 27,
2020
|
Six Months
Ended
September 26,
2021
|
Six Months
Ended
September 27,
2020
|
Cash flows provided
by operating activities
|
$
|
55.7
|
$
|
20.3
|
$
|
104.1
|
$
|
67.3
|
Acquisition of
property, plant and equipment
|
(8.8)
|
(1.9)
|
(19.8)
|
(5.9)
|
Acquisition of
intangible assets
|
(2.5)
|
(3.8)
|
(5.8)
|
(5.6)
|
Free cash
flow
|
$
|
44.4
|
$
|
14.6
|
$
|
78.5
|
$
|
55.8
|
INVESTMENTS, LIQUIDITY, CASH FLOW AND FINANCIAL
RESOURCES
(In millions of dollars, except ratios)
As at
|
September 26,
2021
|
March 31,
2021
|
Cash and cash
equivalents
|
$
|
181.3
|
$
|
187.5
|
Debt-to-equity
ratio1
|
0.65:1
|
0.59:1
|
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
September 26,
2021
|
Three Months
Ended
September 27,
2020
|
Six Months
Ended
September 26,
2021
|
Six Months
Ended
September 27,
2020
|
Cash flows provided
by operating activities
|
$
|
55.7
|
$
|
20.3
|
$
|
104.1
|
$
|
67.3
|
ATS AUTOMATION TOOLING SYSTEMS INC.
Interim
Consolidated Statements of Financial Position
(in thousands
of Canadian dollars - unaudited)
As at
|
Note
|
September 26
2021
|
March 31
2021
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets
|
11
|
|
|
Cash and cash
equivalents
|
|
$
|
181,330
|
$
|
187,467
|
Accounts
receivable
|
|
414,070
|
285,947
|
Income tax
receivable
|
|
5,223
|
8,158
|
Contract
assets
|
17
|
316,956
|
272,847
|
Inventories
|
5
|
144,214
|
134,978
|
Deposits, prepaids
and other assets
|
6
|
70,629
|
37,807
|
|
|
1,132,422
|
927,204
|
Non-current
assets
|
|
|
|
Property, plant and
equipment
|
|
208,799
|
191,169
|
Right-of-use
assets
|
7
|
80,903
|
72,570
|
Other
assets
|
8
|
6,948
|
5,882
|
Goodwill
|
|
786,227
|
671,057
|
Intangible
assets
|
|
317,934
|
264,691
|
Deferred income tax
assets
|
|
9,024
|
11,087
|
Investment tax credit
receivable
|
|
23,836
|
52,440
|
|
|
1,433,671
|
1,268,896
|
Total
assets
|
|
$
|
2,566,093
|
$
|
2,196,100
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Bank
indebtedness
|
11
|
$
|
1,184
|
$
|
1,106
|
Accounts payable and
accrued liabilities
|
|
438,307
|
367,303
|
Income tax
payable
|
|
40,324
|
32,938
|
Contract
liabilities
|
17
|
328,846
|
218,290
|
Provisions
|
10
|
25,666
|
29,034
|
Current portion of
lease liabilities
|
7
|
19,986
|
15,197
|
Current portion of
long-term debt
|
11
|
20
|
79
|
|
|
854,333
|
663,947
|
Non-current
liabilities
|
|
|
|
Employee
benefits
|
|
33,702
|
34,110
|
Long-term lease
liabilities
|
7
|
61,420
|
57,764
|
Long-term
debt
|
11
|
521,620
|
430,634
|
Deferred income tax
liabilities
|
|
79,443
|
74,437
|
Other long-term
liabilities
|
8
|
24,989
|
22,548
|
|
|
721,174
|
619,493
|
Total
liabilities
|
|
$
|
1,575,507
|
$
|
1,283,440
|
|
|
|
|
Commitments and
contingencies
|
11, 15
|
|
|
|
|
|
|
EQUITY
|
|
|
|
Share
capital
|
12
|
$
|
529,572
|
$
|
526,446
|
Contributed
surplus
|
|
11,168
|
11,170
|
Accumulated other
comprehensive income
|
|
63,311
|
59,830
|
Retained
earnings
|
|
368,884
|
297,818
|
Equity attributable
to shareholders
|
|
972,935
|
895,264
|
Non-controlling
interests
|
|
17,651
|
17,396
|
Total
equity
|
|
990,586
|
912,660
|
Total liabilities
and equity
|
|
$
|
2,566,093
|
$
|
2,196,100
|
See accompanying
notes to the interim condensed consolidated financial
statements.
|
ATS AUTOMATION TOOLING SYSTEMS INC.
Interim
Consolidated Statements of Income
(in thousands of Canadian
dollars, except per share amounts - unaudited)
|
|
Three months
ended
|
Six months
ended
|
|
Note
|
September 26
2021
|
September 27
2020
|
September 26
2021
|
September 27
2020
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
Revenues from
construction contracts
|
|
$
|
326,715
|
$
|
206,725
|
$
|
669,722
|
$
|
419,736
|
Services
rendered
|
|
113,050
|
100,031
|
213,536
|
186,660
|
Sale of
goods
|
|
82,369
|
28,776
|
149,491
|
54,003
|
|
|
|
|
|
|
Total
revenues
|
17
|
522,134
|
335,532
|
1,032,749
|
660,399
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
Cost of
revenues
|
|
369,385
|
244,308
|
736,083
|
489,932
|
Selling, general and
administrative
|
|
86,867
|
58,669
|
170,062
|
115,167
|
Restructuring
costs
|
|
––
|
8,147
|
––
|
8,147
|
Stock-based
compensation
|
14
|
10,507
|
983
|
19,280
|
2,619
|
|
|
|
|
|
|
Earnings from
operations
|
|
55,375
|
23,425
|
107,324
|
44,534
|
|
|
|
|
|
|
Net finance
costs
|
18
|
7,177
|
8,037
|
14,682
|
16,231
|
|
|
|
|
|
|
Income before
income taxes
|
|
48,198
|
15,388
|
92,642
|
28,303
|
|
|
|
|
|
|
Income tax
expense
|
13
|
9,819
|
3,763
|
20,383
|
6,924
|
|
|
|
|
|
|
Net
income
|
|
$
|
38,379
|
$
|
11,625
|
$
|
72,259
|
$
|
21,379
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholders
|
|
$
|
38,119
|
$
|
11,770
|
$
|
71,455
|
$
|
21,469
|
Non-controlling
interests
|
|
260
|
(145)
|
804
|
(90)
|
|
|
$
|
38,379
|
$
|
11,625
|
$
|
72,259
|
$
|
21,379
|
Earnings per
share
|
|
|
|
|
|
attributable to
shareholders
|
|
|
|
|
|
Basic and
diluted
|
19
|
$
|
0.41
|
$
|
0.13
|
$
|
0.78
|
$
|
0.23
|
See accompanying
notes to the interim condensed consolidated financial
statements.
|
ATS AUTOMATION TOOLING SYSTEMS INC.
Interim
Consolidated Statements of Cash Flows
(in thousands of
Canadian dollars - unaudited)
|
|
Three months
ended
|
Six months
ended
|
|
Note
|
September 26
2021
|
September 27
2020
|
September 26
2021
|
September 27
2020
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Net income
|
|
$
|
38,379
|
$
|
11,625
|
$
|
72,259
|
$
|
21,379
|
Items not involving
cash
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
4,987
|
3,706
|
10,046
|
7,358
|
Amortization of
right-of-use assets
|
7
|
5,574
|
4,130
|
10,850
|
8,250
|
Amortization of
intangible assets
|
|
15,280
|
10,294
|
28,753
|
20,580
|
Deferred income
taxes
|
13
|
(5,948)
|
(3,750)
|
(9,079)
|
(5,343)
|
Other items not
involving cash
|
|
4,426
|
1,527
|
9,888
|
859
|
Stock-based
compensation
|
14
|
372
|
175
|
655
|
311
|
|
|
63,070
|
27,707
|
123,372
|
53,394
|
Change in non-cash
operating working capital
|
|
(7,404)
|
(7,405)
|
(19,293)
|
13,897
|
Cash flows
provided by operating activities
|
|
$
|
55,666
|
$
|
20,302
|
$
|
104,079
|
$
|
67,291
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
$
|
(8,826)
|
$
|
(1,921)
|
$
|
(19,824)
|
$
|
(5,918)
|
Acquisition of
intangible assets
|
|
(2,537)
|
(3,814)
|
(5,809)
|
(5,555)
|
Business acquisition,
net of cash acquired
|
|
(51,392)
|
––
|
(166,185)
|
––
|
Purchase of
non-controlling interest
|
|
(590)
|
––
|
(675)
|
––
|
Proceeds from
disposal of property, plant and equipment
|
|
101
|
417
|
195
|
3,064
|
Cash flows used in
investing activities
|
|
$
|
(63,244)
|
$
|
(5,318)
|
$
|
(192,298)
|
$
|
(8,409)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Restricted
cash
|
|
$
|
––
|
$
|
51
|
$
|
––
|
$
|
––
|
Bank
indebtedness
|
|
203
|
752
|
56
|
929
|
Repayment of
long-term debt
|
|
(81,860)
|
(247,444)
|
(83,069)
|
(302,479)
|
Proceeds from
long-term debt
|
|
56,621
|
––
|
171,026
|
55,080
|
Proceeds from
exercise of stock options
|
|
418
|
1,537
|
2,469
|
3,806
|
Principal lease
payments
|
|
(5,145)
|
(3,918)
|
(10,543)
|
(7,689)
|
Cash flows
provided by (used in)
|
|
|
|
|
|
financing
activities
|
|
$
|
(29,763)
|
$
|
(249,022)
|
$
|
79,939
|
$
|
(250,353)
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
|
|
|
|
and cash
equivalents
|
|
2,231
|
(1,876)
|
2,143
|
(4,531)
|
|
|
|
|
|
|
Decrease in cash and
cash equivalents
|
|
(35,110)
|
(235,914)
|
(6,137)
|
(196,002)
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
216,440
|
398,557
|
187,467
|
358,645
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
181,330
|
$
|
162,643
|
$
|
181,330
|
$
|
162,643
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
Cash income taxes
paid (received)
|
|
$
|
3,408
|
$
|
(3,265)
|
$
|
8,129
|
$
|
(379)
|
Cash interest
paid
|
|
$
|
3,356
|
$
|
3,195
|
$
|
13,786
|
$
|
16,884
|
See accompanying
notes to the interim condensed consolidated financial
statements.
|
Notice to reader: Non-IFRS measures and additional IFRS
measures
Throughout this document, management uses certain
non-IFRS measures to evaluate the performance of the Company. The
terms "operating margin", "EBITDA", "EBITDA margin", "adjusted net
income", "adjusted earnings from operations", "adjusted EBITDA",
"adjusted EBITDA margin", "adjusted basic earnings per share",
"non-cash working capital as a percentage of revenues", "free cash
flow", "net debt to adjusted EBITDA", "Order Bookings", "Order
Backlog", and "book-to-bill ratio" 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. 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, and
certain other adjustments which would be non-recurring in nature
("adjustment items"). 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. 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.
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 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 EBITDA and adjusted basic earnings per share
(including adjusted net income) 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 asses 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. 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 earnings
from operations, (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 and
(v) free cash flow to its IFRS measure components, in each case for
the three- and six-month periods ended September 26, 2021 and September 27, 2020 is contained in this MD&A
(see "Reconciliation of Non-IFRS Measures to IFRS Measures"). This
MD&A also contains a reconciliation of (i) working capital as a
percentage of revenues and (ii) net debt to their IFRS measure
components, in each case at both September
26, 2021 and March 31, 2021
(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-month periods ended September 26, 2021 and September 27, 2020 is also contained in this
MD&A (see "Order Backlog Continuity").
Note to Readers: Forward-Looking Statements
This news
release and results of operations of ATS contains certain
statements that may constitute forward-looking information within
the meaning of applicable securities laws ("forward-looking
statements"). Such forward-looking statements involve 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.
Forward-looking statements include all disclosure regarding
possible events, conditions or results of operations that is based
on assumptions about future economic conditions and courses of
action. Forward-looking statements may also include, without
limitation, any statement relating to future events, conditions or
circumstances. ATS cautions you not to place undue reliance upon
any such forward-looking statements, which speak only as of the
date they are made.
Forward-looking statements relate to, among other things: the
strategic framework; the Company's strategy to expand organically
and through acquisition; the ATS Business Model ("ABM"); conversion
of opportunities into Order Bookings; the Company's Order Backlog
partially mitigating the impact of variable Order Bookings; rate of
Order Backlog conversion; the potential impact of the Company's
approach to market and timing of customer decisions on Order
Bookings, performance period, and timing of revenue recognition;
expected benefits with respect to the Company's efforts to expand
its services revenues; Company's goal of expanding its adjusted
earnings from operations margin to 15% (the "margin target") over
the long term and potential impact of COVID-19; expectation of
synergies from integration of acquired businesses; expectation in
relation to future business volume at BioDot; timing and amount of
restructuring costs; non-cash working capital levels as a
percentage of revenues; expectation in relation to meeting
liquidity and funding requirements for investments; potential to
use leverage to support growth strategy; the potential impact of
COVID-19 and government emergency measures; expected timing of
closing of DF acquisition; expected capital expenditures for fiscal
2022; and the Company's belief with respect to the outcome of
certain lawsuits, claims and contingencies.
The risks and uncertainties that may affect forward-looking
statements include, among others: the progression of COVID-19 and
its impacts on the Company's ability to operate its assets,
including the possible shut-down of facilities due to COVID-19
outbreaks; the severity and duration of the COVID-19 pandemic in
all jurisdictions where the Company conducts its business; the
nature and extent of government imposed restrictions on travel and
business activities and the nature, extent, and applicability of
government assistance programs, in both cases related to the
COVID-19 pandemic, as applicable in all jurisdictions where the
Company conducts its business; the impact of the COVID-19 pandemic
on the Company's employees, customers, and suppliers; impact
of COVID-19 on the global economy; general market performance
including capital market conditions and availability and cost of
credit; performance of the markets that ATS serves; foreign
currency and exchange risk; the relative strength of the Canadian
dollar; impact of factors such as increased pricing pressure,
increased cost of supplies and delays in relation thereto, and
possible margin compression; the regulatory and tax environment;
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, or to raise, through debt or
equity, or otherwise have available, required capital; that some or
all of the sales funnel is not converted to Order Bookings due to
competitive factors or failure to meet customer needs; timing of
customer decisions related to large enterprise programs and
potential for negative impact associated with any cancellations or
non-performance in relation thereto; variations in the amount of
Order Backlog completed in any given quarter; that the Company is
not successful in growing its service offering or that expected
benefits are not realized; the margin target is not a projection or
forecast, but a management objective and there is no certainty that
the Company will achieve a 15% margin target in the near or longer
term; 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 acquisitions made are not integrated as
quickly or effectively as planned or expected and, as a result,
anticipated benefits and synergies are not realized; that future
business volumes at BioDot are other than as expected; that the
restructuring plan is not implemented as anticipated, takes longer
than anticipated, and/or does not achieve the anticipated benefits,
resulting in delays, increased costs, and/or lower than expected
improvements to operating performance; 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 closing
of the DF acquisition is delayed or prohibited as a result of the
completion of regulatory filing process; 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; that one or
more customers, or other entities with which the Company has
contracted, experience insolvency or bankruptcy with resulting
delays, costs or losses to the Company; political, labour or
supplier disruptions; the development of superior or alternative
technologies to those developed by ATS; the success of competitors
with greater capital and resources in exploiting their technology;
market risk for developing technologies; risks relating to legal
proceedings to which ATS is or may become a party; exposure to
product and/or professional liability claims; risks associated with
greater than anticipated tax liabilities or expenses; and other
risks detailed from time to time in ATS' filings with Canadian
provincial securities regulators. Forward-looking statements are
based on management's current plans, estimates, projections,
beliefs and opinions, and other than as required by applicable
securities laws, ATS does not undertake any obligation to update
forward-looking statements should assumptions related to these
plans, estimates, projections, beliefs and opinions change.
SOURCE ATS Automation Tooling Systems Inc.