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ATS Reports Annual and Fourth Quarter Fiscal 2009 Results
ATS Automation Posted 06/10/2009
CAMBRIDGE, ON, June 9, 2009 /CNW/ - ATS Automation Tooling Systems Inc. today reported its financial results for the three and 12 months ended March 31, 2009. Annual consolidated revenue increased by 29% to $855.1 million; consolidated earning from operations increased 641% to $66.1 million; and earnings increased to $0.61 per share (basic) and $0.60 per share diluted compared to a loss of $0.33 per share (basic and diluted) a year ago.
Fourth Quarter Highlights
- Consolidated revenue increased to $201.8 million from $186.5 million a year ago;
- Consolidated earnings from operations increased to $17.7 million from $8.2 million a year ago;
- Earnings increased to $0.16 per share (basic) and $0.15 per share (diluted) compared to $0.10 per share (basic and diluted) a year ago;
- Cash net of debt improved to $118.4 million at March 31, 2009 from $45.8 million at December 31, 2008;
- On January 14, 2009, ATS completed an offering of 10 million common shares for gross proceeds of $50 million (net proceeds of approximately $47 million);
- The previously-announced sale of the Precision Components Group was completed; and
- Subsequent to the end of the quarter, the Company halted production at Photowatt France for a three-week period to manage lower demand.
ASG's customers and the markets into which ASG sells continue to be negatively impacted by the current global economic recession, the duration of which is uncertain. ASG customers are reducing their capital spending and / or delaying programs to varying degrees depending on the market segment and some may experience financial difficulties. At Photowatt, tightening in the global credit markets has reduced available funding for solar installation projects. The resulting reduction in demand for solar modules, in addition to increased global module capacity in the solar industry, could result in sustained over-supply in fiscal 2010.
"ATS has made good progress with our value creation plan even with the global financial crisis which is now presenting our businesses with significant challenges," said Anthony Caputo, Chief Executive Officer. "To deal with this, we are accelerating and expanding the consolidation and restructuring of Automation Systems operations, improvements to supply chain and approach to market, which will cost us between $4 million and $6 million in fiscal 2010. To keep Photowatt cost competitive, we are considering a plan to reduce the cost structure which may cost approximately $10 million in fiscal 2010."
ASG Fourth Quarter Results
- Revenue increased 23% to $154.3 million from $125.3 million a year ago on strong Order Bookings in the first three quarters of fiscal 2009;
- Fiscal 2009 fourth quarter EBITDA was $24.8 million compared to EBITDA of $6.9 million a year ago, excluding severance and restructuring costs of $2.7 million and $9.0 million respectively;
- Earnings from operations were $19.8 million, compared to an operating loss of $4.2 million in the same quarter a year ago;
- Period end ASG Order Backlog increased 10% year over year to $255 million;
- Order Bookings for the fourth quarter decreased to $126 million compared to $137 million a year ago;
- Order Bookings were $64 million during the first 10 weeks of the first quarter.
Earnings from operations, excluding restructuring charges incurred in the quarter, improved in all geographic areas due to revenue growth, cost reductions and better program management. Revenue increased year over year by 227% in energy and 17% in healthcare, more than offsetting 38%, 19% and 15% declines in computer-electronics, automotive and "other" markets (primarily consumer products) respectively.
Photowatt Technologies Fourth Quarter Results
- Photowatt Technologies revenue decreased 21% to $48.2 million compared to $61.3 million a year ago.
- Photowatt France ("PWF", the ongoing operations of Photowatt Technologies) EBITDA was $5.2 million compared to $6.8 million a year ago;
- PWF operating earnings were $1.0 million (2% operating margin) compared to $3.3 million a year ago (5% operating margin);
- Total megawatts (MWs) sold at PWF decreased 29% to 9.3 from 13.1 in the fourth quarter of fiscal 2008 - with UMG-Si products accounting for 70% of revenue;
- Average cell efficiency for UMG-Si cells improved to approximately 14.3% from 13.5% a year ago, while average cell efficiency for polysilicon decreased to 15.4% from 15.6% over the same period.
The year-over-year decline in operating results reflected lower MWs sold due to the impact on demand of tighter credit markets, which restricted funding available for solar projects. Decreases in average selling prices per watt also had a negative impact on total revenues. PWF increased revenue from the sale of module Systems to approximately $12.5 million from $9.1 million in the fourth quarter of fiscal 2008.
Quarterly Conference Call
ATS's quarterly conference call begins at 10 am eastern today and can be accessed over the Internet at www.atsautomation.com or on the phone at 416 644 3414.
ATS Automation Tooling Systems Inc. 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 healthcare, computer/electronics, energy, automotive and consumer products. It also leverages its many years of experience and skills to fulfill the specialized automation product manufacturing requirements of customers. Through Photowatt Technologies, ATS participates in the growing solar energy industry as an integrated manufacturer of ingots, wafers, cells and modules. Photowatt-branded products and systems serve businesses, institutions and homeowners in established and emerging markets. ATS employs approximately 2,600 people at 17 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 at www.atsautomation.com.
Note to Reader
This press release and Fourth Quarter Summary for the three months ended March 31, 2009 (fourth quarter of fiscal 2009) provide information on the Company's operating activities of the fourth quarter of fiscal 2009 and should be read in conjunction with the Company's audited Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") for the years ended March 31, 2009 and 2008 and the Company's fiscal 2009 Annual Report.
The Company assumes that the reader of this press release and Fourth Quarter Summary has access to, and has read the audited Consolidated Financial Statements and MD&A of the Company for fiscal 2009 and the unaudited interim Consolidated Financial Statements and MD&A for the first, second and third quarters of fiscal 2009. Accordingly, the purpose of this press release and fourth quarter summary is to provide a fourth quarter update. These documents and other information relating to the Company, including the Company's fiscal 2009 audited Consolidated Financial Statements, MD&A and Annual Information Form, may be found on the Company's website at www.atsautomation.com or SEDAR's website at www.sedar.com.
The Company has two reportable segments: Automation Systems Group ("ASG") and Photowatt Technologies ("Photowatt") which includes PWF (the ongoing Photowatt Technologies operations), Photowatt U.S.A., a small module assembly facility and sales operation closed during fiscal 2008 and Spheral Solar, a halted development project that has been wound down. References to cell 'efficiency' means the percentage of incident energy that is converted into electrical energy in a solar cell. Solar cells and modules are sold based on wattage output. "Silicon" refers to a variety of silicon feedstock, including polysilicon, upgraded metallurgical silicon ("UMG-Si") and polysilicon powders and fines. As described in Note 2 to the Consolidated Financial Statements, the Precision Components Group ("PCG") was classified as held for sale as of March 31, 2008 and sold during fiscal 2009. PCG results are reported in discontinued operations.
Throughout this document the term "operating earnings" is used to denote earnings (loss) from operations. EBITDA is also used and is defined as earnings (loss) from operations excluding depreciation, amortization (which includes amortization of intangible assets) and segment and division allocation of corporate costs. The term "margin" refers to an amount as a percentage of revenue. The terms "earnings from operations", "operating earnings", "margin", "operating loss", "operating margin", "EBITDA", "Order Bookings" and "Order Backlog" do not have any standardized meaning prescribed within GAAP and therefore may not be comparable to similar measures presented by other companies. Operating earnings and EBITDA are some of the measures the Company uses to evaluate the performance of its segments. ATS presents EBITDA to show its performance before depreciation and amortization. Management believes that ATS shareholders and potential investors in ATS use non-GAAP financial measures such as operating earnings and EBITDA in making investment decisions about the Company and measuring its operational results. A reconciliation of EBITDA to earnings from operations for the three and twelve month periods ending March 31, 2009 and 2008 is contained in the MD&A. EBITDA should not be construed as a substitute for net income determined in accordance with GAAP. Order Bookings represent new orders for the supply of automation systems that management believes are firm. Order Backlog is the estimated unearned portion of ASG revenue on customer contracts that are in process and have not been completed at the specified date.
Fourth quarter ASG revenue increased 23% or $29.0 million compared to the same quarter a year ago. This improvement was due to increased Order Bookings and Order Backlog in the first three quarters of fiscal 2009.
By industrial market, healthcare revenue increased 17% year over year on strong Order Bookings in the third and fourth quarters of the fiscal year. Computer-electronics revenue decreased 38%, primarily on lower Order Bookings in the third and fourth quarters in Asia and the U.S. Automotive revenue decreased 19%, reflecting lower automotive revenue in Europe as existing programs were completed. ASG revenue from the energy market increased 227%, primarily from activity in the solar and nuclear industries. Revenue from "other" markets decreased 15% due primarily to lower revenues in the consumer products industry.
On a regional basis, growth in programs installed in Asia and the U.S. more than offset lower revenues from installations in Europe and Canada. Automation Products ("APG") revenue increased 297% to $50.8 million in the fourth quarter of fiscal 2009, compared to $12.8 million a year ago, primarily reflecting two new APG customer programs.
Quarter-over-quarter foreign exchange rate changes positively impacted ASG revenues by an estimated $15.7 million for the fourth quarter, compared to a year ago, primarily reflecting a stronger U.S. dollar and Euro relative to the Canadian dollar.
Fiscal 2009 fourth quarter earnings from operations of $19.8 million (operating margin of 13%) included severance and restructuring costs of $2.7 million. This compares to an operating loss of $4.2 million, and severance and restructuring costs of $9.0 million, in the same quarter a year ago. Fiscal 2009 fourth quarter restructuring charges related to workforce reductions made primarily in ASG's Canadian operations.
Excluding severance and restructuring costs, fiscal 2009 fourth quarter operating earnings were $22.5 million (operating margin of 15%), compared to $4.8 million in fiscal 2008 (operating margin of 4%). This improvement was driven by increased revenue, cost reductions implemented during fiscal 2009, supply chain cost reductions, and improved program management. On a regional basis, improvements in Canadian operating results before severance and restructuring costs were partially offset by reduced earnings in the Company's U.S. operations compared to the same period a year ago.
Foreign exchange rate changes positively impacted ASG operating earnings in the fourth quarter of fiscal 2009 by an estimated $1.3 million compared to a year ago, primarily reflecting a stronger U.S. dollar and Euro relative to the Canadian dollar.
Order Backlog of $255 million at March 31, 2009 was 10% higher than at March 31, 2008 primarily reflecting higher Order Bookings in the first three quarters of fiscal 2009 compared to fiscal 2008 and the positive impact of foreign exchange rates. Increased healthcare Order Backlog primarily reflected higher Order Backlog in North America and Europe compared to the prior year. Decreased computer-electronics Order Backlog primarily reflected lower Order Backlog in North America and Asia, which more than offset slightly higher computer-electronics Order Backlog in Europe compared to the prior year. Lower automotive Order Backlog primarily reflected a decline in European automotive Order Backlog. The increase in energy Order Backlog reflects strong Order Bookings in both the nuclear and solar industries during fiscal 2009.
Photowatt Technologies' fourth quarter revenue of $48.2 million was 21% lower than in the fourth quarter of fiscal 2008. Lower year-over-year revenues primarily reflected a 29% decrease in total MWs sold at PWF to 9.3 MWs from 13.1 MWs in the fourth quarter of fiscal 2008. Lower MWs sold resulted from lower demand due to tighter credit markets, which restricted funding available for solar projects, and a general reluctance on the part of customers to commit to new orders until the solar market and average selling prices stabilize. Decreases in average selling prices per watt also had a negative impact on total revenues, partially offset by an increase in systems sales. PWF increased revenue from the sale of module systems to approximately $12.5 million from $9.1 million in the fourth quarter of fiscal 2008. Total UMG-Si products represented $33.7 million of fiscal 2009 fourth quarter revenue compared to $36.7 million a year ago. Average cell efficiency was improved in the fourth quarter to approximately 14.3% for UMG-Si cells, compared to approximately 13.5% during the fourth quarter of fiscal 2008. Revenue from polysilicon products was $13.3 million in the fourth quarter, compared to $24.6 million in the fourth quarter of fiscal 2008. Average polysilicon cell efficiency decreased in the fourth quarter to approximately 15.4%, compared to approximately 15.6% during the fourth quarter of fiscal 2008 due to increased purchases of externally-produced, lower-efficiency wafers. "Other" revenue included PWF technology licensing fees from the PV Alliance ("PVA"). Foreign exchange rate changes positively impacted PWF fourth quarter revenues compared to the fourth quarter a year ago by an estimated $3.7 million on translation, primarily reflecting a stronger Euro relative to the Canadian dollar.
Photowatt Technologies had operating earnings of $0.7 million in the fourth quarter of fiscal 2009 compared to operating earnings of $19.2 million in the fourth quarter of 2008. Fiscal 2009 fourth quarter earnings from operations for PWF were $1.0 million (operating margin of 2%), compared to earnings from operations of $3.3 million (operating margin of 5%) in the fourth quarter of fiscal 2008. Fourth quarter operating earnings in fiscal 2009 included insurance proceeds of $1.1 million associated with a claim filed in fiscal 2007, which was settled during the quarter. The year-over-year decline in operating earnings reflected lower MWs sold, partially offset by improved cell efficiency and manufacturing yields. PWF's operating earnings included approximately $0.6 million of costs related to its investment in PVA. PVA includes Lab-Fab, a research initiative to improve cell efficiency. PWF's amortization expense increased $0.7 million in the fourth quarter of fiscal 2009 reflecting additional depreciation and amortization from expansion and improvement initiatives.
The estimated effect of changes in foreign exchange rates increased fourth quarter fiscal 2009 operating earnings by $0.7 million compared to the fourth quarter fiscal 2008. "Other Solar" includes Spheral Solar, Photowatt U.S.A. and inter-solar eliminations. During the fourth quarter of fiscal 2009, costs were incurred related to equipment decommissioning and preparation for sale. A year ago, fourth quarter operating earnings included a gain of $16.8 million on the sale on non-solar grade silicon that had a nominal carrying value. This gain more than offset costs associated with winding down these operations.
Fourth quarter fiscal 2009 revenue from continuing operations was $201.8 million, $15.3 million or 8% higher than the same period a year earlier. This increase primarily reflected a 23% increase in ASG revenue, which was partially offset by a 21% decrease in Photowatt revenues. Changes in effective foreign exchange rates increased consolidated revenue by an estimated $19.4 million in the fourth quarter of fiscal 2009 compared to fiscal 2008. Fourth quarter consolidated earnings from operations was $17.7 million, compared to $8.2 million in the fourth quarter of fiscal 2008. The increase primarily reflected a $24.0 million increase in ASG earnings from operations and a $4.0 million decrease in corporate and intersegment elimination expenses, offset by an $18.5 million decrease in Photowatt earnings from operations. Fourth quarter earnings from operations in fiscal 2008 included a gain of $16.8 million on the sale of silicon not usable by PWF. Changes in effective foreign exchange rates increased consolidated operating earnings for the fourth quarter of fiscal 2009 compared to fiscal 2008 by an estimated $1.9 million.
This press release and Fourth Quarter Summary relating to the financial conditions, and results of operations of ATS for the three months and year ended March 31, 2009 contains certain statements that 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's 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: acceleration and expansion of restructuring of Automation Systems operations, improvements to supply chain and approach to market and costs associated therewith; plan to reduce Photowatt cost structure and costs associated therewith; and the possibility of oversupply in the solar market in fiscal 2010. The risks and uncertainties that may affect forward-looking statements include, among others: general market performance including capital market conditions and availability and cost of credit; economic market conditions; impact of factors such as health of automotive customers, financial failure and/or bankruptcy of customers, increased pricing pressure and possible margin compression; the success or failure of management strategies to address the weak global economy and weakened financial condition of actual and potential customers; foreign currency and exchange risk; the relative strength of the Canadian dollar; performance of the market sectors that ATS serves; extent of market demand for solar products; risk that the implementation of restructuring, consolidation, overhead reduction and other improvement initiatives at ASG and PWF will not result in intended outcomes and benefits within expected timeframes and budgets; that some or all of the trends towards automation that ATS believes are attractive dissipate or do not result in increased demand for automation; that multinational companies withdraw from global manufacturing for business, political, economic or other reasons; 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 becomes a party; exposure to product liability claims of Photowatt Technologies; risks associated with compliance with existing and new legislation; risks associated with greater than anticipated tax liabilities or expenses; and other risks detailed from time to time in ATS's filings with Canadian provincial securities regulators. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and ATS does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.
For further information: Maria Perrella, Chief Financial Officer; Carl Galloway, Vice-President and Treasurer, (519) 653-6500