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ATS Reports Annual and Fourth Quarter Fiscal 2010 Results
ATS Automation Posted 06/02/2010
CAMBRIDGE, ON - ATS Automation Tooling Systems Inc. ("ATS" or the "Company") today reported its financial results for the three and 12 months ended March 31, 2010.
Annual Results Summary
Consolidated revenue was $577.8 million, a 32% year-over-year reduction as difficult market conditions caused lower demand in ATS' markets. Consolidated earnings per share decreased to $0.14 (basic and diluted) compared to $0.61 (basic) and $0.60 (diluted) a year ago.
In fiscal 2010, Automation Systems Group ("ASG") Order Bookings and revenue were negatively impacted by the global economic recession, which began to impact ASG in the fourth quarter of fiscal 2009. This has and will continue to cause volatility in Order Bookings, which amounted to $105 million in the fourth quarter. At Photowatt Technologies ("Photowatt"), difficult market conditions, including reductions in feed-in-tariffs and tighter credit markets negatively impacted funding available for solar installation projects which reduced demand for photovoltaic products and put downward pressure on average selling prices. This negatively impacted revenue and operating earnings and is expected to continue to result in lower demand for solar modules and lower average selling prices per watt.
Fourth Quarter Summary
- Consolidated revenue was $138.8 million compared to $138.1 million in the third quarter of the fiscal year and $201.8 million in the fourth quarter a year ago. Consolidated loss from operations was $26.0 million compared to earnings from operations of $4.7 million in the third quarter of fiscal 2010 and earnings from operations of $17.7 million a year ago;
- Included in the fourth quarter loss from operations was expenses for the write-down of inventories in Photowatt of $40.3 million and a related $1.6 million asset impairment expense against silicon deposits and the incremental benefit of $6.1 million due to the recognition of previously un-recognized investment tax credits receivable in ASG;
- Included in fourth quarter net income is a future income tax benefit of $30.5 million related to a change in the Company's assessment of its ability to utilize certain future tax assets in its Canadian operations;
- Per share earnings were $0.03 (basic and diluted) compared to $0.16 (basic) and $0.15 (diluted) a year ago;
- The balance sheet remained strong with cash net of debt of $148.3 million at March 31, 2010 compared to $106.5 at March 31, 2009;
- On June 1, 2010, the Company completed its acquisition of the Sortimat Group, a manufacturer of specialized assembly systems for medical products and pharmaceutical dosing devices; and
- Subsequent to year-end, the Company initiated a formal process to separate Photowatt and engaged advisors to assist the Company in identifying and evaluating strategic alternatives.
"In the fourth quarter, we continued to experience challenging market conditions which negatively impacted Order Bookings and revenues in both ASG and Photowatt. Despite these challenges, ASG operating results remained strong. At Photowatt, normalized for the significant non-cash inventory write-offs, operating results approached breakeven," said Anthony Caputo, Chief Executive Officer. "As we move forward in fiscal 2011, our focus is on growth in our core ASG business and the separation of Photowatt. We have created a solid operational and financial foundation to support this strategy. The acquisition of Sortimat and the formal process to separate Photowatt are steps in this regard."
Acquisition of Sortimat Group
On June 1, 2010, ATS completed its acquisition of the Sortimat Group ("Sortimat"). The Sortimat acquisition aligns with ATS' strategy of expanding its position in the global automation market and enhancing growth opportunities, particularly in strategic segments, such as healthcare. The Company will benefit from Sortimat's significant experience and products in advanced system development, manufacturing, handling, and feeder technologies. This acquisition will provide ATS with the scale required to further organize its marketing and divisions into a group focused on healthcare with the objective to grow its exposure to this market segment and help customers differentiate themselves from their competitors. To implement the integration and effect margin improvements, the Company will deploy people to apply best practices, command and control, program management and advance approach to market.
The total consideration for Sortimat is expected to be $56.7 million based on current foreign exchange rates (43.6 million Euro), which includes potential future payments of up to $8.6 million (6.6 million Euro) payable subject to achievement of certain milestones related to operating earnings performance and specific management services to be provided over the next two and a half years. In the first quarter of fiscal 2011, the Company paid approximately $48.1 million (37.0 million Euro) in cash. The cash consideration of the purchase price along with transaction costs have been funded with existing cash on hand, making effective use of ATS' strong cash position. The potential future payments will also be funded from cash on hand.
ASG Fourth Quarter Results
- Revenue was $91.6 million compared to $78.6 million in the third quarter of the fiscal year and $154.3 million in the fourth quarter a year ago;
- Fiscal 2010 fourth quarter EBITDA was $21.1 million compared to EBITDA of $10.0 million in the third quarter and $22.1 million a year ago;
- Earnings from operations were $19.5 million (operating margin of 21%), compared to $8.4 million (operating margin of 11%) in the third quarter of this fiscal year and $19.8 million (operating margin of 13%) in the fourth quarter a year ago;
- Period end Order Backlog was $209 million, an increase of 3% from $203 million in the third quarter of this fiscal year and down from $255 million a year ago;
- Order Bookings for the fourth quarter were $105 million compared to $92 million in the third quarter of fiscal 2010 and $126 million in the fourth quarter a year ago;
- Order Bookings were $50 million during the first 8 weeks of the first quarter of fiscal 2011.
Included in fiscal 2010 fourth quarter operating earnings is an incremental benefit of $6.1 million due to the recognition of previously unrecognized investment tax credits receivable. This reflects a change in the Company's expectation to utilize the credits, due to the improved operating performance of ASG's Canadian operations. Despite a 41% year-over-year reduction in revenues in the fourth quarter, and excluding the investment tax credit benefit, ASG's operating margin was 15%, reflecting cost reductions implemented during fiscal 2009 and 2010, supply chain savings and improved program management. Revenue decreased year over year by 71% in energy, 6% in healthcare, 33% in computer-electronics, 51% in automotive and 6% in "other" markets (primarily consumer products).
Photowatt Fourth Quarter Results
- Revenue was $48.6 million, a 19% decrease from fiscal 2010 third quarter revenues of $59.7, but slightly higher compared to $48.2 million in the fourth quarter a year ago;
- EBITDA was negative $38.3 million compared to EBITDA of $5.7 million in the third quarter of fiscal 2010 and EBITDA of $4.9 million a year ago;
- Loss from operations was $42.4 million compared to earnings from operations of $1.6 million (operating margin of 3%) in the third quarter of fiscal 2010 and operating earnings of $0.7 million (1% operating margin) in the fourth quarter a year ago;
- Total megawatts (MWs) sold decreased 1% to 12.7 MWs from 12.8 MWs in the third quarter of fiscal 2010, but were 37% higher than the 9.3 MWs sold in the fourth quarter of fiscal 2009.
Photowatt fiscal 2010 fourth quarter operating loss reflected a $40.3 million charge to write-down inventory to its net realizable value, the majority of which relates to UMG-Si based products, and a related $1.6 million impairment charge against silicon deposits. Excluding the write-down and related impairment charge, Photowatt's fiscal 2010 fourth quarter loss from operations was $0.5 million. The year-over-year decline in operating earnings reflected lower average selling prices per watt and costs related to the start-up of Photowatt Ontario, partially offset by lower direct manufacturing costs per watt and increased system sales. Revenue from system sales increased to $25.1 million in the fourth quarter of fiscal 2010 compared to $12.5 million in the fourth quarter of fiscal 2009. Polysilicon products represented $48.4 million or 100% of fiscal 2010 fourth quarter revenue compared to $13.3 million or 28% for the same period a year ago.
Quarterly Conference Call
ATS's quarterly conference call begins at 10 am eastern today and can be accessed live at www.atsautomation.com or on the phone by dialing 416 644 3417 five minutes prior.
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 2,300 people at 13 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.