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ATS Reports Second Quarter Fiscal 2021 Results
ATS Automation Posted 11/04/2020
CAMBRIDGE, ON /CNW/ - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company") today reported its financial results for the three and six months ended September 27, 2020.
[ATS Automation Tooling Systems Logo (CNW Group/ATS Automation Tooling Systems Inc.)]
Second quarter highlights:
Revenues decreased 2% to $335.5 million.
- Earnings from operations were $23.4 million (7% operating margin), compared to $31.7 million (9% operating margin) a year ago. Adjusted earnings from operations1 were $40.1 million (12% margin), compared to $42.5 million (12% margin) a year ago.
- EBITDA1 was $41.5 million (12% EBITDA margin), compared to $49.8 million (15% EBITDA margin) a year ago.
- Earnings per share were 13 cents basic and diluted compared to 21 cents a year ago.
- Adjusted basic earnings per share1 were 26 cents compared to 29 cents a year ago.
- Order Bookings were $403 million, 26% higher than a year ago.
- Order Backlog increased 1% to $956 million at September 27, 2020 compared to $945 million a year ago.
"Second quarter performance featured strong Order Bookings, particularly in Life Sciences which accounted for 61% of our Order Backlog at period end, and the Consumer market including food," said Andrew Hider, Chief Executive Officer. "Operationally, our teams delivered exceptional work for our customers despite challenging conditions that reduced revenues in our after-sales services business and overall efficiency. We have adjusted to operate in this new climate and our significant Order Backlog and strong balance sheet position us well to execute our value creation strategy, build, grow and expand."
- Revenues decreased 3% to $660.4 million.
- Earnings from operations were $44.5 million (7% operating margin), compared to $60.3 million (9% operating margin) in the prior year. Adjusted earnings from operations1 were $69.8 million (11% margin), compared to $80.6 million (12% margin) in the prior year.
- EBITDA1 was $80.7 million (12% EBITDA margin), compared to $97.0 million (14% EBITDA margin) in the prior year.
- Earnings per share was 23 cents basic and diluted compared to 39 cents in the prior year.
- Adjusted basic earnings per share1 were 43 cents compared to 55 cents a year ago.
- Order Bookings were $728 million, compared to $744 million a year ago.
Mr. Hider added, "Despite the pandemic, our results in the first half of fiscal 2021 reflect solid Order Bookings, revenues and operating margins. Going forward, we will continue to drive improvement in our operations. In September, we initiated a reorganization plan that will streamline our transportation business once complete. We opened the ATS Innovation Centre and we secured the first assignment for our new SymphoniTM digital manufacturing technology that will enhance the productivity of a customer's automated assembly processes. By investing in innovation and product development and focusing on growth areas, we bring increased value to our customers with the goal of creating long-term shareholder value."
Second quarter summary
Fiscal 2021 second quarter revenues were 2% lower than in the corresponding period a year ago and included $8.6 million of revenues earned by acquired companies. Excluding acquired companies, second quarter revenues decreased $14.3 million, or 4% compared to the corresponding period a year ago. Revenues from services decreased 9% due primarily to travel restrictions and temporary closures and entry restrictions at some customer sites. Revenues from the sale of goods decreased 9% due primarily to lower after-sales services activity. This was partially offset by a 3% increase in revenues generated by construction contracts primarily due to the timing of program completion and contributions by acquired companies. Foreign exchange rate changes positively impacted the translation of revenues earned by foreign-based subsidiaries by approximately 3% compared to the corresponding period a year ago, primarily reflecting the weakening of the Canadian dollar relative to the Euro.
By market, revenues generated in life sciences decreased 5% on lower Order Backlog entering the second quarter of fiscal 2021 due to timing of customer projects. Revenues in transportation decreased 8% on lower Order Backlog entering the second quarter of fiscal 2021 due to a downturn in the transportation market brought on by the COVID-19 pandemic. Revenues generated in consumer products increased 31%, primarily on revenues earned by acquired companies. Revenues in energy decreased 14% due to timing of customer projects, primarily in the nuclear market.
Fiscal 2021 second quarter earnings from operations were 23.4 million (7% operating margin) compared to $31.7 million (9% operating margin) in the second quarter a year ago. Earnings from operations included $8.6 million related to amortization of acquisition-related intangible assets and $8.1 million of restructuring charges incurred as part of the Company's reorganization plan (see "Reorganization Plan"), compared to $8.8 million of amortization of acquisition-related intangible assets and $2.0 million of restructuring costs in the comparable period a year ago.
Excluding amortization of acquisition-related intangible assets and restructuring charges in both comparable quarters, adjusted earnings from operations were $40.1 million (12% margin), compared to $42.5 million (12% margin) a year ago. Lower second quarter fiscal 2021 adjusted earnings from operations reflected higher stock compensation expenses and higher selling, general and administrative expenses, partially offset by improved gross margin. In the second quarter, the Company benefited from payments received under the Canadian Emergency Wage Subsidy ("CEWS") program of $3.7 million, of which $2.7 million was recorded in Cost of Sales and $1.0 million was recorded in selling, general and administrative expenses. In addition, the Company realized benefits from cost containment measures including those taken during a reorganization completed in late fiscal 2020 and those implemented since in response to the challenging business conditions.
Depreciation and amortization expense was $18.1 million in both the second quarter of fiscal 2021, and the comparable period a year ago.
EBITDA was $41.5 million (12% EBITDA margin) in the second quarter of fiscal 2021, compared to $49.8 million (15% EBITDA margin) in the second quarter of fiscal 2020. Lower EBITDA reflected lower revenues due to lower after-sales services revenues, higher restructuring expenses and higher stock compensation expenses compared to a year ago, partially offset by improved gross margin.
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 4,200 people at 20 manufacturing facilities and has over 50 offices in North America, Europe, Southeast Asia and Chin