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News

ATS Reports Second Quarter Fiscal 2010 Results

ATS Automation

 

CAMBRIDGE, ON, Nov. 10, 2009 - ATS Automation Tooling Systems Inc. (‘‘ATS’‘ or the ‘‘Company’‘) today reported its financial results for the three and six months ended September 27, 2009.

Second Quarter Summary

  • Consolidated revenue was $148.2 million compared to $152.7 million in the first quarter of the fiscal year and $219.5 million in the same period a year ago;
  • Consolidated earnings from operations were $9.3 million compared to $0.5 million in the first quarter of the fiscal year and $13.6 million in the same period a year ago;
  • Per share earnings were $0.07 (basic and diluted) compared to $0.00 (basic and diluted) in the first quarter of the fiscal year and $0.12 (basic and diluted) in the same period a year ago;
  • The balance sheet remained strong with cash net of debt of $103.6 million compared to $106.5 million at March 31, 2009 and $40.0 million at September 30, 2008;
  • In October, the Company announced plans to serve the Ontario solar energy market;
  • Subsequent to quarter end, the Company reached agreement to extend its primary credit facility until April 2011.

In the Automation Systems Group segment (‘‘ASG’‘), customers are continuing to reduce and/or delay their capital spending programs. This resulted in a 47% reduction in Order Bookings compared to the same period a year ago. At Photowatt France (‘‘PWF’‘), reduced demand for solar modules, and lower year-over-year average selling prices per watt negatively impacted revenues and operations.

‘‘The actions we have taken to fix our operations and re-position Photowatt over the last 18 months have enabled us to operate profitably in the second quarter, despite a significant decline in our revenues,’‘ said Anthony Caputo, Chief Executive Officer. ‘‘We remain focused on the front-end of our business, in both ASG and Photowatt, and we will continue to adapt our strategies to respond to this difficult environment.’‘

Financial Results
In millions                    3 months   3 months   6 months   6 months
     of dollars,                      ended      ended      ended      ended
     except per                     Sept 27,   Sept 30,   Sept 27,   Sept 30,
     share data                        2009       2008       2009       2008
    -------------------------------------------------------------------------
    Revenue      ASG              $    97.0  $   147.4  $   212.2  $   290.2
     from        ------------------------------------------------------------
     continuing  Photowatt             51.5       72.5       91.6      141.9
     operations  ------------------------------------------------------------
                 Inter-segment         (0.3)      (0.4)      (2.9)      (0.5)
                 ------------------------------------------------------------
                 Consolidated     $   148.2  $   219.5  $   300.9  $   431.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA       ASG              $    15.3  $    16.0  $    32.0  $    28.3
                 ------------------------------------------------------------
                 Photowatt
                  Technologies
                   - Photowatt
                      France            4.7        9.8        1.3       19.1
                   - Other solar          -       (0.4)         -       (0.8)
                   - Gain on sale
                      of building         -          -          -        3.2
                   - Gain on
                      silicon sale        -          -          -        2.0
                 ------------------------------------------------------------
                 Corporate and
                  inter-segment
                  elimination          (4.5)      (5.8)     (11.1)     (10.1)
                 ------------------------------------------------------------
                 Consolidated     $    15.5  $    19.6  $    22.2  $    41.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income
     from
     continuing
     operations   Consolidated    $     6.0  $    12.7  $     6.3  $    27.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings     From continuing
     per share    operations
                  (basic &
                  diluted)        $    0.07  $    0.16  $    0.07  $    0.36
                 ------------------------------------------------------------
                 After
                  discontinued
                  operations
                  (basic &
                  diluted)        $    0.07  $    0.12  $    0.07  $    0.29

ASG Second Quarter Results

  •  
  • EBITDA was $15.3 million compared to $16.7 million in the first quarter of this fiscal year and $16.0 million in the same period a year ago;
  • Earnings from operations were $13.6 million compared to $14.8 million in the first quarter of this fiscal year and $13.9 million in the same period a year ago;
  • Period end Order Backlog was $197 million, a decrease of 14% from $230 million in the first quarter of this fiscal year and down from $247 million a year ago;
  • Order Bookings were 26% lower at $71 million compared to $96 million in the first quarter of fiscal 2010 and 47% lower compared to $133 million in the second quarter of fiscal 2009;
  • Order Bookings were $45 million during the first six weeks of the third quarter.

Despite a 34% year-over-year decrease in revenues in the second quarter, ASG's operating margin was 14% reflecting cost reductions implemented during fiscal 2009 and 2010, supply chain savings and improved program management. Revenue increased 38% in the healthcare industry, offset by decreases of 94% in computer-electronics, 33% in energy, 51% in automotive, and 24% in other markets (primarily consumer products).

Photowatt Second Quarter Results   

  • PWF revenue was $51.5 million, a 28% increase over fiscal 2010 first quarter revenues of $40.1 million, but down from $72.5 million a year ago;
  • PWF EBITDA was $4.7 million compared to negative EBITDA of $3.4 million in the first quarter of fiscal 2010 and EBITDA of $9.8 million a year ago;
  • PWF operating earnings were $0.6 million compared to an operating loss of $7.5 million in the first quarter of fiscal 2010 and operating earnings of $6.0 million a year ago;
  • Total megawatts (MWs) sold at PWF increased 28% to 10.6 MWs from 8.3 MWs in the first quarter of fiscal 2010, and were 29% lower than the 14.9 MWs sold a year ago;
  • Average cell efficiency improved for polysilicon products to 15.6% compared to 15.0% in the first quarter of fiscal 2010 and 15.4% a year ago.

The 29% year-over-year decline in revenues reflected lower MWs sold and lower average selling prices. PWF partially mitigated the impact of lower average selling prices through increased systems sales, which were up by 42% to $30.7 million from $21.6 million a year ago. Total polysilicon products represented $49.3 million or 96% of fiscal 2010 second quarter revenue compared to $21.0 million or 29% a year ago, as PWF rebalanced production towards polysilicon products to take advantage of better raw material pricing.
On October 21, 2009, ATS and Photowatt announced they were entering the Ontario solar energy market with a plan to: develop solar projects; offer complete solutions to installers and developers including modules, balance of system, technical support, project management, financing and site maintenance; and, encourage others wishing to participate in the market and/or produce solar products in Ontario to consider cooperation and co-location at a new ‘‘green wing’‘ that has been designated at ATS's existing Cambridge campus.

About ATS
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 a turn-key solar project developer and integrated manufacturer. Photowatt designs, manufactures and sells solar modules and installation kits and provides solar power systems design and other value-added services, principally in Western Europe and Ontario. ATS employs approximately 2,400 people at 14 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

Management's Discussion and Analysis
This Management's Discussion and Analysis (‘‘MD&A’‘) for the three and six months ended September 27, 2009 (second quarter of fiscal 2010) provides detailed information on the operating activities, performance and financial position of ATS Automation Tooling Systems Inc. (‘‘ATS’‘ or the ‘‘Company’‘) and should be read in conjunction with the unaudited interim consolidated financial statements of the Company for the second quarter of fiscal 2010. The Company assumes that the reader of this MD&A has access to and has read the audited annual consolidated financial statements and MD&A of the Company for the year ended March 31, 2009 and the unaudited interim consolidated financial statements and MD&A for the three months ended June 28, 2009 and, accordingly, the purpose of this document is to provide a second quarter update to the information contained in the fiscal 2009 MD&A. These documents and other information relating to the Company, including the Company's fiscal 2009 audited annual consolidated financial statements, MD&A and annual information form may be found on SEDAR at www.sedar.com.

Notice to Reader
The Company has two reportable segments: Automation Systems Group (‘‘ASG’‘) and Photowatt Technologies which includes Photowatt France (‘‘PWF’‘) (the ongoing Photowatt Technologies operations), and Other Solar which is comprised of now closed solar divisions, principally 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 Photowatt's 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 5 to the interim consolidated financial statements, during fiscal 2009, the Company completed the sale of its Precision Components Group (‘‘PCG’‘). The sale included the segment's key operating assets and liabilities including its China-based subsidiary. The results of PCG are reported in discontinued operations.

Non-GAAP Measures
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 and amortization (which includes amortization of intangible assets). The term ‘‘margin’‘ refers to an amount as a percentage of revenue. The terms ‘‘earnings (loss) from operations’‘, ‘‘operating earnings’‘, ‘‘margin’‘, ‘‘operating loss’‘, ‘‘operating results’‘, ‘‘operating margin’‘, ‘‘EBITDA’‘, ‘‘Order Bookings’‘ and ‘‘Order Backlog’‘ do not have any standardized meaning prescribed within Canadian generally accepted accounting principles (‘‘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. 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 operating earnings and EBITDA to total Company net income for the first and second quarters of fiscal 2010 and 2009 is contained in this MD&A (See ‘‘Reconciliation of EBITDA to GAAP Measures’‘). 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 and products 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. A reconciliation of Order Bookings and Order Backlog to total Company revenue for the first and second quarters of fiscal 2010 and 2009 is contained in the MD&A (See ‘‘ASG Order Backlog Continuity’‘).

Revenue was $97.0 million compared to $115.2 million in the first quarter and $147.4 million a year ago on lower Order Bookings and lower Order Backlog entering the quarter compared to the prior periods;

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