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News

ATS Reports Fourth Quarter and Annual Fiscal 2016 Results

ATS Automation

CAMBRIDGE, ON /CNW/ - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company") today reported financial results for the three and twelve months ended March 31, 2016.

Fourth Quarter and Annual Summary

  • Revenues from continuing operations were $246.8 million, 15% lower than the fourth quarter a year ago, primarily reflecting lower Order Backlog entering the fourth quarter of fiscal 2016 compared to a year ago. For the year, revenues from continuing operations were $1,039.6 million, 11% higher than in the corresponding period a year ago, primarily reflecting revenues earned by PA.
  • Earnings from continuing operations were $8.1 million (3% operating margin), compared to $22.6 million (8% operating margin) in the fourth quarter of fiscal 2015. Adjusted earnings from continuing operations1 were $23.2 million (9% margin), compared to $34.7 million (12% margin) a year ago. For the year, earnings from operations were $76.8 million (7% operating margin) compared to $67.0 million (7% operating margin) in the corresponding period a year ago. Adjusted earnings from operations were $114.4 million (11% margin) compared to adjusted earnings from operations of $109.8 million (12% margin) a year ago;
  • EBITDA1 was $17.7 million (7% margin), compared to $35.2 million (12% margin) in the fourth quarter a year ago. Excluding $2.3 million of restructuring and severance costs and executive transition expenses of $7.1 million, fourth quarter fiscal 2016 EBITDA was $27.1 million (11% margin), compared to $38.2 million (13% margin) (which excluded $1.4 million of restructuring and severance costs and acquisition-related costs of $1.6 million) a year ago. For the year, EBITDA was $116.1 million (11% EBITDA margin) compared to $107.5 million (11% EBITDA margin) in fiscal 2015;
  • Earnings per share from continuing operations were 2 cents basic compared to 15 cents basic a year ago. Adjusted basic earnings per share from continuing operations1 were 14 cents compared to 24 cents in the fourth quarter a year ago;
  • Order Bookings were a record $390 million, a 23% increase from the fourth quarter of fiscal 2015. For the year, Order Bookings were $1,070 million, a 9% increase from prior year Order Bookings of $981 million;
  • Period end Order Backlog was $652 million, 3% higher than at March 31, 2015; and
  • The Company's balance sheet and financial capacity to support growth remained strong, with unutilized credit facilities of $639 million and $4.8 million of credit available under letter of credit facilities.

1 Non-IFRS measure: see "Notice to Reader: Non-IFRS Measures and Additional IFRS Measures".

"Fourth quarter revenue performance was anticipated and reflected lower Order Backlog entering the period," said Anthony Caputo, Chief Executive Officer. "During the quarter, ATS set a new quarterly Order Bookings record on the way to generating over $1 billion in annual Order Bookings for the first time. Based on year-end Order Backlog, significant funnel and strong balance sheet, we are well positioned to continue to advance our value creation plan."

Fourth Quarter Summary
Fiscal 2016 fourth quarter revenues were 15% lower than in the corresponding period a year ago. Lower revenues primarily reflected lower Order Backlog entering the fourth quarter of fiscal 2016 compared to a year ago. This was partially offset by foreign exchange rate changes, which positively impacted the translation of revenues earned by foreign-based subsidiaries compared to the corresponding period a year ago, primarily reflecting the weakening of the Canadian dollar relative to the U.S dollar and Euro.

By market, fiscal 2016 fourth quarter revenues from consumer products & electronics were consistent with the corresponding period a year ago. Revenues generated in the energy market increased 9% due to Order Bookings. Revenues in the life sciences market decreased 24% primarily reflecting timing of project activities. Transportation revenues decreased 11% primarily reflecting lower Order Backlog entering fiscal 2016 fourth quarter due to timing of Order Bookings.

Fiscal 2016 fourth quarter earnings from operations were $8.1 million (3% operating margin) compared to $22.6 million (8% operating margin) in the fourth quarter of fiscal 2015. Fourth quarter fiscal 2016 earnings from operations included $7.1 million of executive transition expenses, $2.3 million of restructuring and severance costs and $5.7 million related to amortization of identifiable intangible assets recorded on the acquisitions of PA, IWK, and sortimat. Excluding these items, fourth quarter fiscal 2016 adjusted earnings from operations were $23.2 million (9% margin), compared to adjusted earnings from operations of $34.7 million (12% margin) a year ago. Lower adjusted earnings from operations primarily reflected lower revenues.

Depreciation and amortization expense was $9.6 million in the fourth quarter of fiscal 2016, compared to $12.6 million a year ago. The decrease primarily reflects lower amortization of identifiable intangible assets recorded on the acquisitions of PA, IWK, ATW and sortimat compared to the fourth quarter of fiscal 2015.

EBITDA was $17.7 million (7% EBITDA margin) in the fourth quarter of fiscal 2016 compared to $35.2 million (12% EBITDA margin) in the fourth quarter of fiscal 2015. Excluding executive transition expenses and restructuring and severance costs, fourth quarter fiscal 2016 EBITDA was $27.1 million (11% EBITDA margin). Comparably, excluding restructuring and severance costs and acquisition-related costs, fourth quarter fiscal 2015 EBITDA was $38.2 million (13% EBITDA margin).

Executive Transition
In March 2016, the Company announced that Anthony Caputo, the Chief Executive Officer of the Company, will be leaving the Company in February 2017. In connection with this, the CEO and the Company have entered into a transition agreement that amends the CEO's employment agreement to, among other things: (i) secure for the Company an orderly transition period of approximately 11 months, allowing for both continuity of leadership in the interim and a thorough search and selection process for a successor suitable to lead the Company as it continues to realize on its growth and value creation ambitions; and (ii) provide that the CEO may leave earlier if a transition is completed prior to February 2017. In turn, recognizing these clear benefits derived by the Company, the transition agreement provides for financial terms consistent with the CEO's long-standing employment agreement. In accordance with the transition agreement, the CEO will receive a lump sum payment estimated as $5.0 million, which payment encompasses bonus entitlement for fiscal 2017, and a portion of which is subject to change based on the date the transition is completed, and the Company will incur $2.1 million of post-employment benefit expenses related to an additional two years of credited service towards the CEO's pension entitlement.

Order Bookings
Fourth quarter fiscal 2016 Order Bookings were $390 million, a 23% increase from the fourth quarter of fiscal 2015. Strength in consumer products & electronics, energy and life sciences markets more than offset lower activity in the transportation market.

Included in fourth quarter fiscal 2016 Order Bookings is an enterprise program valued at approximately U.S. $100 million from a North America-based customer that is a global leader in the solar energy market. ATS has provided innovative core manufacturing solutions to this customer for a number of years. The Order Booking involves delivery and installation of systems at several locations that will enable the customer to roll out a new global product. Multiple ATS divisions will be involved with the program delivery and execution.

Foreign exchange rate changes positively impacted the translation of Order Bookings from foreign-based ATS subsidiaries compared to the corresponding period a year ago.

Quarterly Conference Call
ATS' quarterly conference call begins at 10:00 a.m. eastern on Thursday May 19, 2016, and can be accessed live at www.atsautomation.com or on the phone by dialing (647) 427-7450 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 May 26, 2016) by dialing (416) 849-0833 and entering passcode 9227924 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, chemicals, consumer products, electronics, food, beverage, transportation, energy, and oil and gas. Founded in 1978, ATS employs approximately 3,500 people at 24 manufacturing facilities and over 50 offices in North America, Europe, Southeast Asia and China.

Company Contact
Maria Perrella, Chief Financial Officer
Tel: 519 653-6500

 

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