ATS Reports Third Quarter Fiscal 2013 Results
ATS Automation Posted 02/06/2013CAMBRIDGE, ON - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company") today reported financial results for the three and nine months ended December 30, 2012 for its continuing operations (Automation Systems Group or "ASG") and discontinued operations ("Solar").
Third Quarter Summary
- Revenues from continuing operations were $144.2 million, 3% lower than the corresponding period a year ago and 2% higher than the second quarter of fiscal 2013;
- Earnings from continuing operations were $13.6 million (9% operating margin) compared to adjusted earnings from operations of $13.7 million (9% operating margin) in the corresponding period a year ago (which exclude non-recurring gains of $6.7 million from the sale of a facility and the benefit of U.S. research and development tax credits) and earnings from operations of $13.8 million (10% operating margin) in the second quarter of fiscal 2013;
- EBITDA was $16.6 million (12% EBITDA margin) compared to adjusted EBITDA of $16.8 million (11% EBITDA margin) in the corresponding period a year ago and EBITDA of $16.7 million (12% EBITDA margin) in the second quarter of fiscal 2013;
- Order Bookings were $173 million, a 3% decrease from the third quarter of fiscal 2012 and a 54% increase from the $112 million of Order Bookings in the second quarter of fiscal 2013;
- Included in Order Bookings is a $40 million program for the first phase of a potential multi-year enterprise-type solution for ATS with a new North American based customer in the life sciences market;
- Period end Order Backlog was $388 million, an increase of 3% from $376 million a year ago and an increase of 7% from $361 million in the second quarter of fiscal 2013;
- The Company's balance sheet was strong with cash net of debt of $108.3 million. During the quarter, the Company established a new $250 million credit facility, which provides improved terms and flexibility over the previous facility; and
- During the quarter, the Company signed a definitive agreement to sell four ground-mount solar projects, representing approximately 34 megawatts ("MWs"). Net proceeds to the Company are expected to be approximately $20 million.
Third Quarter Summary Continuing Operations
By industrial market, consumer products & electronics revenues declined 36% year over year due to lower Order Bookings and lower Order Backlog entering the third quarter compared to a year ago, primarily on lower activity in the consumer products markets. Energy market revenues decreased 48% on lower Order Backlog entering the third quarter compared to a year ago, reflecting reduced activity primarily in the solar market. Revenues from life sciences increased 6% year over year due to higher Order Backlog entering the third quarter compared to a year ago on continued strength in the industry. Transportation revenues increased by 9% on higher Order Backlog entering the third quarter compared to a year ago reflecting continued strength in the automotive industry in both new and existing technologies.
Foreign exchange rate changes negatively impacted the translation of revenues earned by foreign-based ASG subsidiaries by approximately $4.9 million compared to the third quarter of fiscal 2012, primarily reflecting the strengthening of the Canadian dollar relative to the Euro. Normalized for this impact, third quarter revenues were flat compared to the corresponding period a year ago.
Fiscal 2013 third quarter earnings from operations were $13.6 million (9% operating margin) compared to earnings from operations of $20.4 million (14% operating margin) in the third quarter of fiscal 2012. Included in fiscal 2012 third quarter earnings from operations was a gain of $3.0 million relating to the sale of a redundant ASG facility in France, and the benefit of $3.7 million of previously unrecognized U.S. research and development tax credits which were recorded due to improved profitability in the Company's U.S. businesses. Excluding these two items, earnings from operations were $13.7 million (9% operating margin).
ASG Order Bookings
Third quarter fiscal 2013 Order Bookings were $173 million, a 3% decrease from the third quarter of fiscal 2012 Order Bookings of $179 million. Included in this fiscal year's third quarter Order Bookings, is a program valued at approximately $40 million for a new, North-American based life sciences customer. This is the first phase of a potential multi-year enterprise-type solution for ATS with this customer. The manufacturing system was co-developed by ATS and the customer, through a year-long structured development process, using a number of proprietary ATS technologies. Future phases of the program are dependent on a successful launch of the customer's product and market penetration.
Quarter over quarter foreign exchange rate changes negatively impacted the translation of Euro-denominated Order Bookings, reflecting the strengthening of the Canadian dollar relative to the Euro.
Third Quarter Summary of Discontinued Operations: Solar
Fiscal 2013 third quarter revenues of $0.9 million were 91% lower than in the third quarter of fiscal 2012 reflecting the de-consolidation of Photowatt International S.A.S. ("PWF").
Fiscal 2013 third quarter loss from discontinued operations, net of tax was $21.7 million. Included in the fiscal 2013 loss from discontinued operations, net of tax was $4.9 million of non-cash charges related to the write-down of inventory to its net realizable value, following declines in market average selling prices due to uncertainty in Ontario as a result of regulatory delays and $14.9 million of non-cash property, plant and equipment impairment charges to write down assets to their expected recoverable amounts, following management's decision to pursue separate sales of the manufacturing operations and the remaining three ground-mount solar projects.
During the three months ended December 30, 2012, Ontario Solar's 50% owned joint venture, Ontario Solar PV Fields ("OSPV") signed a definitive agreement to sell four ground-mount solar projects, representing approximately 34 MWs. The transaction is subject to a number of approvals and conditions, including the purchaser securing financing for the projects. The Company expects the transaction to close in early calendar 2013. OSPV will retain 25% ownership of the projects until the projects reach commercial operation, which is expected to happen in the second half of calendar 2013. Net proceeds to the Company are expected to be approximately $20 million, which is expected to be paid out through calendar 2013, based on the projects achieving certain development milestones.
The Company intends to complete the separation of Solar via the divestment of the remaining projects owned by OSPV and the Ontario Solar manufacturing operations. The Company is continuing to work with interested parties to conclude agreements. Overall, management expects that the estimated proceeds to be realized on the pending and potential sales of the ground-mount solar projects will more than offset the impairment charges recorded in the Ontario Solar manufacturing operations.
Quarterly Conference Call
ATS's quarterly conference call begins at 10 am eastern on Wednesday February 6 and can be accessed live at www.atsautomation.com or on the phone by dialing 416 644 3416 five minutes prior.
ATS Automation provides innovative, custom designed, built and installed manufacturing solutions to many of the world's most successful companies. Founded in 1978, ATS uses its industry-leading knowledge and global capabilities to serve the sophisticated automation systems' needs of multinational customers in industries such as consumer products & electronics, energy, life sciences and transportation. It also leverages its many years of experience and skills to fulfill the specialized automation product manufacturing requirements of customers. Through its Ontario solar business, ATS participates in the solar energy industry. ATS employs approximately 2,400 people at 20 manufacturing facilities in Canada, the United States, Europe, Southeast Asia and China. The Company's shares are traded on the Toronto Stock Exchange under the symbol ATA. Visit the Company's website.