CAMBRIDGE, ON, Aug. 14, 2012 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three months ended July 1, 2012 for its continuing operations
(Automation Systems Group or "ASG") and discontinued operations
("Solar").
Financial Results
In millions of Canadian
dollars,
except per share data |
3
month ended
July 1, 2012 |
|
3
months ended
July 3, 2011 |
| |
|
|
|
|
|
|
| Revenues |
Continuing Operations |
$ |
152.2 |
|
|
126.9 |
| Discontinued Operations |
$ |
0.6 |
|
$ |
62.9 |
| Earnings from Operations1 |
Continuing Operations |
$ |
15.2 |
|
$ |
10.5 |
| EBITDA1 |
Continuing Operations |
$ |
18.1 |
|
$ |
13.6 |
| Net income (loss) |
Continuing Operations |
$ |
11.8 |
|
$ |
6.2 |
| Discontinued Operations |
$ |
(2.0) |
|
$ |
(11.2) |
| Earnings (loss) per share |
From continuing
operations
(basic & diluted) |
$ |
0.13 |
|
$ |
0.07 |
| From discontinued operations (basic &
diluted) |
$ |
(0.02) |
|
$ |
(0.13) |
1 Non-IFRS measures
"First quarter performance reflected our strong
operating foundation, leading market position and solid
year-over-year improvements from our fix, separate and grow
strategy," said Anthony Caputo,
Chief Executive Officer. "We have moved to the next phase of
ATS' development. Our go forward strategy - Grow, Expand and
Scale - will leverage the strength of our core business, which has
the demonstrated ability to grow organically, expand its offering
and markets served, and scale through accretive acquisitions."
First Quarter Summary of Continuing
Operations: ASG
- Revenues grew 20% to $152.2
million, from $126.9 million
in the first quarter a year ago;
- Earnings from continuing operations increased 45% to
$15.2 million (10% operating margin),
from $10.5 million (8% operating
margin) a year ago;
- EBITDA increased 33% to $18.1
million (12% EBITDA margin) from $13.6 million (11% EBITDA margin) in the first
quarter a year ago;
- Order Bookings increased 7% to $168
million from $157 million in
the first quarter of fiscal 2012;
- Period end Order Backlog was a record $397 million, an increase of 21% from
$328 million a year ago and an
increase of 4% from $382 million in
the fourth quarter of fiscal 2012; and
- The Company's balance sheet was strong, including cash net of
debt of $81.5 million, and the
Company has unutilized credit facilities of $28.6 million available under existing credit
facilities and another $8.6 million
of credit available under letter of credit facilities.
By industrial market, a 15% increase in consumer
products & electronics revenues reflected increased Order
Backlog entering the first quarter compared to a year ago,
consisting primarily of new Order Bookings in the consumer products
market. Revenues generated in the energy market decreased 54%
reflecting reduced activity primarily in the solar market. Revenues
from life sciences increased 18% year over year due to higher Order
Backlog entering the first quarter compared to a year ago. A 69%
increase in transportation revenues compared to a year ago
reflected higher Order Backlog entering the first quarter compared
to a year ago, primarily on improved activity in the global
automotive market.
Value Creation Strategy
In June 2012 the
ATS Board of Directors approved the next phase of the Company's
strategy: Grow, Expand and Scale. See "Value Creation Strategy" in
the Company's fiscal 2013 first quarter Management's Discussion and
Analysis.
First Quarter Summary of Discontinued Operations:
Solar
Solar revenues in the first quarter of fiscal
2013 included those of Ontario Solar only as a result of the
de-consolidation of Photowatt International S.A.S. ("PWF") during
fiscal 2012.
Ontario Solar generated revenues of $0.6 million in the first quarter of fiscal 2013
due to decreased market activity resulting primarily from
regulatory delays in project approvals. Ontario Solar recorded a
$2.0 million loss on lower than
planned revenues.
ATS is conducting a formal sale process to
divest the business. The Company has received a number of
non-binding indicative offers for the Ontario Solar business and is
working with the interested parties to conclude a transaction.
Regarding PWF, the agreement between the French
bankruptcy court and a subsidiary of the EDF group to purchase the
assets of PWF, and assume its operations and workforce was
finalized in July 2012.
Quarterly Conference Call
ATS's quarterly conference call begins at
10:00 a.m. eastern on Tuesday, August 14 and can be accessed live at
www.atsautomation.com or on the phone by dialing 416 644 3414 five
minutes prior.
Annual Meeting of Shareholders
ATS will hold its Annual Meeting of Shareholders
on August 15, 2012 at 10:00 a.m. eastern at the Holiday Inn Hotel and
Conference Centre, 30 Fairway Road South, Kitchener, Ontario, Canada.
About ATS
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 at
www.atsautomation.com.
Management's Discussion and Analysis
For the Quarter Ended July 1,
2012
This Management's Discussion and Analysis
("MD&A") for the three months ended July
1, 2012 (first quarter of fiscal 2013) is as of August 13, 2012 and provides 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 first quarter of fiscal
2013 which have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and are reported in Canadian
dollars. The Company assumes that the reader of this MD&A has
access to, and has read the audited consolidated financial
statements prepared in accordance with IFRS and MD&A of the
Company for the year ended March 31,
2012 (fiscal 2012) and, accordingly, the purpose of this
document is to provide a first quarter update to the information
contained in the fiscal 2012 MD&A. Additional information is
contained in the Company's filings with Canadian securities
regulators, including its Annual Information Form, found on SEDAR
at www.sedar.com and on the Company's website at
www.atsautomation.com.
Notice to Reader: Non-IFRS 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 IFRS 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-IFRS financial measures such as
operating earnings and EBITDA in making investment decisions and
measuring operational results. A reconciliation of operating
earnings and EBITDA to net income from continuing operations for
the three month periods ending July 1,
2012 and July 3, 2011 is
contained in this MD&A (see "Reconciliation of EBITDA to IFRS
Measures"). EBITDA should not be construed as a substitute for net
income determined in accordance with IFRS.
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. A reconciliation of Order Bookings and
Order Backlog to total Company revenues for the three month periods
ending July 1, 2012 and July 3, 2011 is contained in the MD&A (see
"ASG Order Backlog Continuity").
COMPANY PROFILE
The Company operates in two segments: Automation
Systems Group ("ASG"), the Company's continuing operations, and
Solar, which is classified as discontinued operations. Through ASG,
ATS 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
life sciences, transportation, energy, consumer products and
electronics. ATS 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.
Value Creation Strategy
To drive value creation, the Company implemented
a three-phase strategic plan: (1) fix the business (improve the
existing operations, gain operating control of the business and
earn credibility); (2) separate the businesses (create a standalone
ASG business, monetize non-core assets and strengthen the balance
sheet); and (3) grow (both organically and through
acquisition).
The Company has made significant progress in
each phase, including the separation of solar assets (see
"Discontinued Operations: Solar Separation and Outlook").
Accordingly, in June
2012, the ATS Board of Directors endorsed the Company's
vision and mission statements, and approved the next phase of the
Company's strategy: Grow, Expand and Scale. The strategy is
designed to leverage the strong foundation of ATS's core automation
business, continue the growth and development of ATS and create
value for all stakeholders.
Vision
Deliver enabling manufacturing solutions to the
world's market leaders.
Mission
We will achieve our mission by providing:
- Outstanding value to our customers;
- Superior financial returns to our shareholders; and
- A premier work environment.
Grow
To further the Company's organic growth, ASG
will continue to target providing comprehensive, value-based
programs and enterprise solutions for customers built on
differentiating technological solutions, value of customer outcomes
achieved and global capability.
Expand
The Company seeks to expand its offering of
products and services to the market. The Company intends to
build on its automation systems business to offer: engineering,
including design, modelling and simulation, and program management;
products, including contract manufacturing, automation and other
manufacturing products; and services, including pre automation,
post automation, training, life cycle material management, and
other services. Although engineering, products and services
are part of ATS's portfolio today, the Company has significant room
to grow these offerings in the future.
Scale
The Company is also committed to growth through
acquisition, and has an organizational structure, business
processes and the experience to successfully integrate acquired
companies. Acquisition opportunities are targeted and evaluated on
their ability to bring ATS market or technology leadership, scale
and/or an opportunity brought on by a weak economic environment.
For each of ASG's markets, the Company has analyzed the capability
value chain and made a grow, team or acquire decision. Financially,
targets are reviewed on a number of criteria including their
potential to add accretive earnings to current operations.
Overview - Operating Results from Continuing
Operations
Results from continuing operations comprise the
results of ASG and corporate costs not directly attributable to
Solar. The results of the Solar segment are reported as
discontinued operations.
Effective from Q1 of fiscal 2013, the Company
has changed the presentation of its revenues by industrial market
to align with the organization of its sales and marketing
group. Computer electronics has been combined with consumer
products (formerly known as "Other"). Comparative revenue figures
in this MD&A have been restated to reflect this change in
presentation.
Consolidated Revenues from Continuing Operations
(In millions of dollars)
| Revenues by market |
|
|
|
|
|
|
Three
Months
Ended
July 1, 2012 |
|
|
|
Three
Months
Ended
July 3, 2011 |
| Consumer products &
electronics |
|
|
|
|
|
|
$ |
19.4 |
|
|
|
$ |
16.9 |
| Energy |
|
|
|
|
|
|
|
11.6 |
|
|
|
|
25.0 |
| Life sciences |
|
|
|
|
|
|
|
52.7 |
|
|
|
|
44.5 |
| Transportation |
|
|
|
|
|
|
|
68.5 |
|
|
|
|
40.5 |
| Total revenues from continuing
operations |
|
|
|
|
|
|
$ |
152.2 |
|
|
|
$ |
126.9 |
First quarter revenues were 20% higher than in
the corresponding period a year ago as a result of increased Order
Backlog entering the first quarter compared to a year ago,
partially offset by a longer performance period on certain customer
programs and timing of the assembly and build phase of larger
programs.
By industrial market, the 15% increase in
consumer products & electronics revenues reflected increased
Order Backlog entering the first quarter compared to a year ago,
consisting primarily of new Order Bookings in the consumer products
market. Revenues generated in the energy market decreased 54% on
lower Order Backlog entering the first quarter compared to a year
ago, reflecting reduced activity primarily in the solar market.
Revenues from life sciences increased 18% year over year due to
higher Order Backlog entering the first quarter compared to a year
ago. The 69% increase in transportation revenues compared to a year
ago reflected higher Order Backlog entering the first quarter
compared to a year ago, primarily on improved activity in the
global automotive market.
Consolidated Operating Results
(In millions of dollars)
| |
|
|
Three
Months
Ended
July 1, 2012 |
|
Three
Months
Ended
July 3, 2011 |
| Earnings from operations |
|
|
$ |
15.2 |
|
$ |
10.5 |
| Depreciation and amortization |
|
|
|
2.9 |
|
|
3.1 |
| EBITDA |
|
|
$ |
18.1 |
|
$ |
13.6 |
Fiscal 2013 first quarter earnings from
operations were $15.2 million (10%
operating margin) compared to earnings from operations of
$10.5 million (8% operating margin)
in the first quarter of fiscal 2012. Increased earnings from
operations in the first quarter of fiscal 2013 primarily reflected
higher revenues earned during the period, partially offset by an
increase in selling, general and administrative expenses in support
of growth (see "Consolidated Results from Continuing Operations:
Selling, general and administrative").
Depreciation and amortization expense was
$2.9 million in the first quarter of
fiscal 2013, generally consistent with $3.1
million expensed in the same period a year ago.
ASG Order Bookings
First quarter fiscal 2013 Order Bookings were
$168 million, 7% higher than a year
ago, reflecting improved Order Bookings in transportation resulting
primarily from strength in the automotive markets on new product
launches by automotive OEMs and tier 1 suppliers.
ASG Order Backlog Continuity
(In millions of dollars)
| |
|
|
Three
Months
Ended
July 1, 2012 |
|
Three
Months
Ended
July 3, 2011 |
| Opening Order Backlog |
|
|
$ |
382 |
|
$ |
296 |
| Revenues |
|
|
|
(152) |
|
|
(127) |
| Order Bookings |
|
|
|
168 |
|
|
157 |
| Order Backlog adjustments1 |
|
|
|
(1) |
|
|
2 |
| Total |
|
|
$ |
397 |
|
$ |
328 |
1 Order Backlog adjustments include foreign exchange
adjustments and cancellations.
ASG Order Backlog by Industry
(In millions of dollars)
| |
|
|
Three
Months
Ended
July 1, 2012 |
|
|
Three
Months
Ended
July 3, 2011 |
| Consumer products & electronics |
|
|
$ |
45 |
|
|
$ |
29 |
| Energy |
|
|
|
17 |
|
|
|
44 |
| Life sciences |
|
|
|
148 |
|
|
|
112 |
| Transportation |
|
|
|
187 |
|
|
|
143 |
| Total |
|
|
$ |
397 |
|
|
$ |
328 |
At July 1, 2012,
ASG Order Backlog was $397 million,
21% higher than at July 3, 2011. This
growth reflected increased Order Bookings due to the Company's
revised approach to market, and improved market conditions,
particularly in transportation and life sciences and a longer
performance period for certain customer programs.
ASG Outlook
The general economic environment remains
uncertain, particularly with respect to the European economy due to
the Eurozone sovereign debt crisis. This has the potential to
result in tighter credit markets which could negatively impact
demand, particularly for the Company's European operations, and may
cause volatility in Order Bookings. A prolonged or more significant
downturn in the economy could negatively impact Order
Bookings. Impacts on demand for the Company's products and
services may lag behind global macroeconomic trends due to the
strategic nature of the Company's programs to its customers and
long lead times on projects.
Despite the uncertainty and volatility in the
global economy, activity in the Company's front-end of the business
is robust. The Company has seen strong activity in certain customer
markets such as transportation and life sciences, although many
customers remain cautious in their approach to capital investment.
Customer activity in the solar energy market has slowed, with
reductions in solar feed-in-tariffs in several markets negatively
impacting demand for solar products and for additional solar
manufacturing capacity.
The Company's sales funnel and proposal activity
are strong. The Company's sales organization will continue to work
to engage with customers on enterprise-type solutions. However,
this approach to market may cause variability in Order Bookings
from quarter to quarter and, as is already the case, lengthen the
performance period and revenue recognition for certain customer
programs. At the end of the first quarter of fiscal 2013,
Order Backlog was at its highest level ever, which will partially
mitigate the impact of volatile Order Bookings on revenues in the
short term.
Management expects that the implementation of
its strategic initiatives to improve business processes, leadership
and supply chain management will continue to have a positive impact
on ATS operations. Management's disciplined focus on program
management, cost reductions, standardization and quality put ATS in
a strong competitive position to capitalize on opportunities going
forward and sustain performance in difficult market conditions.
The Company is actively seeking to expand its
position in the global automation market organically and through
acquisition. To further this objective, management will continue to
review and pursue attractive opportunities and intends to apply
additional resources to acquisition activities going forward. The
Company's strong financial position provides a solid foundation to
pursue organic growth and the flexibility to pursue its acquisition
growth strategy.
Consolidated Results from Continuing Operations
| (In millions of dollars, except
per share data) |
|
|
|
|
Three
Months
Ended
July 1, 2012 |
|
Three
Months
Ended
July 3, 2011 |
| Revenues |
|
|
|
|
$ |
152.2 |
|
$ |
126.9 |
| Cost of revenues |
|
|
|
|
|
112.1 |
|
|
92.4 |
| Selling, general and administrative |
|
|
|
|
|
24.0 |
|
|
22.9 |
| Stock-based compensation |
|
|
|
|
|
0.9 |
|
|
1.1 |
| Earnings from operations |
|
|
|
|
$ |
15.2 |
|
$ |
10.5 |
| Net finance costs |
|
|
|
|
$ |
0.2 |
|
$ |
0.6 |
| Provision for income taxes |
|
|
|
|
|
3.2 |
|
|
3.7 |
| Net income from continuing operations |
|
|
|
|
$ |
11.8 |
|
$ |
6.2 |
| Loss from discontinued operations, net of
tax |
|
|
|
|
$ |
(2.0) |
|
$ |
(11.2) |
| Net income (loss) |
|
|
|
|
$ |
9.8 |
|
$ |
(5.0) |
| |
|
|
|
|
|
|
|
|
|
| Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
| Basic and diluted - from continuing
operations |
|
|
|
|
$ |
0.13 |
|
$ |
0.07 |
| Basic and diluted - from discontinued
operations |
|
|
|
|
$ |
(0.02) |
|
$ |
(0.13) |
| |
|
|
|
|
$ |
0.11 |
|
$ |
(0.06) |
Revenues. At $152.2 million, consolidated revenues from
continuing operations for the first quarter of fiscal 2013 were 20%
higher than for the corresponding period a year ago, which is a
result of increased Order Backlog entering the first quarter
compared to the corresponding period a year ago.
Cost of revenues. At $112.1 million, first quarter fiscal 2013 cost of
revenues increased over the corresponding period a year ago by
$19.7 million or 21% primarily on
higher revenues. At 26%, gross margin in the first quarter of
fiscal 2013 was relatively consistent with the 27% gross margin in
the corresponding period a year ago.
Selling, general and administrative
("SG&A") expenses. SG&A expenses for the first quarter
of fiscal 2013 of $24.0 million were
$1.1 million or 5% higher than the
$22.9 million in the corresponding
period a year ago. Increased SG&A expenses reflect incremental
spending on sales and marketing, professional fees and increased
costs related to mergers and acquisitions.
Stock-based compensation cost.
Stock-based compensation expense of $0.9
million in the first quarter of fiscal 2013 was generally
comparable to the $1.1 million
expensed in the corresponding period a year ago.
Earnings from operations. For the first
quarter of fiscal 2013, consolidated earnings from operations were
$15.2 million (operating margin of
10%), compared to earnings from operations of $10.5 million a year ago (operating margins of
8%). Higher earnings from operations in the first quarter of fiscal
2013 reflected higher revenues partially offset by increased
SG&A costs.
Net finance costs. Net finance costs were
$0.2 million in the first quarter of
fiscal 2013 compared to $0.6 million
a year ago. The decrease in net finance costs was mainly
attributable to lower facility fees.
Provision for income taxes. The Company's
fiscal 2013 first quarter effective income tax rate of 21% differed
from the combined Canadian basic federal and provincial income tax
rate of 26% primarily as a result of income earned in certain
jurisdictions with lower tax rates and where utilization of
unrecognized deferred tax assets resulted in lower income tax
expense for accounting purposes.
Net income from continuing operations.
Fiscal 2013 first quarter net income from continuing operations was
$11.8 million (13 cents per share basic and diluted) compared to
net income from continuing operations of $6.2 million (7
cents per share basic and diluted) for the first quarter of
fiscal 2012.
Reconciliation of EBITDA to IFRS
Measures
(In millions of dollars)
| |
|
|
Three
Months
Ended
July 1, 2012 |
|
Three
Months
Ended
July 3, 2011 |
| EBITDA |
|
|
$ |
18.1 |
|
$ |
13.6 |
| Less: depreciation and amortization expense |
|
|
|
2.9 |
|
|
3.1 |
| Earnings from operations |
|
|
$ |
15.2 |
|
$ |
10.5 |
| Less: net finance costs |
|
|
|
0.2 |
|
|
0.6 |
| Provision for income taxes |
|
|
|
3.2 |
|
|
3.7 |
| Net income from continuing operations |
|
|
$ |
11.8 |
|
$ |
6.2 |
Discontinued Operations: Solar
(In millions of dollars)
| |
|
|
Three
Months
Ended
July 1, 2012 |
|
Three
Months
Ended
July 3, 2011 |
| Total revenues |
|
|
$ |
0.6 |
|
$ |
62.9 |
| Loss from discontinued operations |
|
|
|
(2.0) |
|
|
(11.2) |
| Loss from discontinued operations, net of
tax |
|
|
|
(2.0) |
|
|
(11.2) |
| |
|
|
Revenues
Solar revenues in the first quarter of fiscal
2013 included those of Ontario Solar only as a result of the
de-consolidation of Photowatt International S.A.S. ("Photowatt
France" or "PWF") during fiscal 2012 (see "Solar Separation and
Outlook"). Fiscal 2013 first quarter revenues of $0.6 million were 99% lower than in the first
quarter of fiscal 2012 reflecting the de-consolidation of PWF and
decreased market activity in Ontario Solar due primarily to
regulatory delays in project approvals.
Loss from Discontinued Operations
Ontario Solar recorded a $2.0 million loss in the first quarter of fiscal
2013 on lower than planned revenues combined with higher fixed
costs. The first quarter loss in fiscal 2012 was $11.2 million, $0.5
million of which related to Ontario Solar. PWF's
operating loss of $10.7 million a
year ago included $6.0 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 changes in European feed-in tariffs ("FIT") and
excess module supply in the European solar industry.
Loss from Discontinued Operations, Net of
Tax
Solar's first quarter loss from operations, net
of tax, was $2.0 million compared to
a loss from operations, net of tax of $11.2
million in the corresponding period a year ago.
Solar Separation and Outlook
During the year ended March 31, 2011, the Company's Board of Directors
approved a plan designed to implement the separation of Solar from
ATS via a dual-track process involving either a spinoff of the
Company's combined solar businesses or a sale of PWF and/or the
Ontario solar business ("Ontario
Solar").
Regarding Ontario Solar, ATS is conducting a
formal sale process to divest the business. The Company has
received a number of non-binding indicative offers for the Ontario
Solar business and is working with the interested parties to
conclude a transaction.
The Ontario
provincial government recently completed its scheduled review of
the Ontario FIT program and is implementing the recommendations of
the review. Key changes going forward are expected to
streamline the regulatory approvals process, decrease FIT rates by
10% to 32% depending on the size and location of the installation
and in addition, the government has committed to review FIT rates
annually.
Ontario Solar PV Fields ("OSPV"), in which
Ontario Solar holds a 50% interest, has secured conditional FIT
contracts totalling approximately 64 MWs related to large-scale
ground-mount solar projects. OSPV is in the process of seeking
approvals necessary to begin construction on the projects. In the
short term, OSPV expects to have a definitive agreement in place
for financing and ultimate third-party project ownership.
During the first quarter of fiscal 2012, Ontario
Solar signed two customer agreements for the manufacture and supply
of customer-branded modules. The first agreement contemplates the
supply of 24 MWs over fiscal 2012 and 2013. To date, there have
been minimal deliveries under this agreement, and there are
currently no additional deliveries forecasted.
The second agreement contemplates the supply of
160 MWs over four years and allows for the potential to increase
volumes by an additional 160 MWs over the term of the agreement.
Under this agreement, Ontario Solar will recognize revenue for
module manufacturing services and module materials other than solar
cells, which will be provided by the customer. To date, there have
been no deliveries under this agreement, however Ontario Solar has
received an initial order for 5 MWs which is expected to be
delivered in the third quarter of fiscal 2013.
Ontario Solar has also signed agreements with
developers who have secured conditional FIT contracts for a number
of projects. Ontario Solar
expects to provide modules and other related services to these
projects.
As reported previously, discussions with parties
in regards to a sale of PWF concluded without producing an
acceptable transaction. The deterioration of economic conditions
and the solar market in Europe in
fiscal 2012, increased Asian competition and lower demand for solar
products (particularly in France)
severely impacted PWF. Consequently, the Company concluded
that the spinoff alternative was not viable. Other options in
relation to PWF were also exhausted, and given the aforementioned
conditions, PWF's filing for bankruptcy became necessary. On
November 8, 2011, a hearing was held
at which time the French bankruptcy court placed PWF into a
"recovery" proceeding ("redressement judiciaire") under the
supervision of a court appointed trustee.
The Company concluded that it ceased to have the
ability to exert control over PWF as of the Bankruptcy Date.
Accordingly, the Company's investment in PWF was deconsolidated
from the Company's consolidated financial statements beginning on
the Bankruptcy Date. Management reduced the carrying value of the
Company's equity investment in PWF to zero. The results of PWF up
to the Bankruptcy date are included in the consolidated statements
of income and presented as discontinued operations. On February 27, 2012, a subsidiary of the EDF group,
the French electricity utility, was selected by the French
bankruptcy court to purchase the assets of PWF, and the entire
workforce of PWF was subsequently transferred to the purchaser or
offered to be transferred within the purchaser's group. Effective
March 1, 2012, the purchaser assumed
control over the operations of PWF. The confirmation of a new
operator for the PWF business concluded ATS's operating support of
PWF. The agreement to purchase PWF was finalized in
July 2012.
Although a new operator has assumed the entire
operations of the PWF assets and all employees have been (or were
offered to be) transferred to this new operator or within its
group, the judicial liquidation process could take several years to
complete. In light of the current situation, management does not
expect to incur any additional expenses as a result of the
bankruptcy, however, until all matters are resolved under the
bankruptcy process, additional provisions may be required.
The Company will record any such provision if and when it becomes
known and the Company determines that the obligation will result in
a probable outflow of economic resources and, the Company is able
to measure the obligation with sufficient reliability.
Liquidity, Cash Flow and Financial
Resources
(In millions of dollars, except ratios)
| As at |
|
|
|
|
July 1,
2012 |
|
March 31,
2012 |
| Cash and cash equivalents |
|
|
|
|
$ |
84.0 |
|
$ |
96.2 |
| Debt-to-equity ratio |
|
|
|
|
|
0.01:1 |
|
|
0.01:1 |
| |
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
July 1,
2012 |
|
July 3,
2011 |
| Cash flows used in operating activities from
continuing operations |
|
|
|
|
$ |
(2.0) |
|
$ |
(25.6) |
At July 3, 2012,
the Company had cash and cash equivalents of $84.0 million compared to $96.2 million at March 31,
2012. The Company's total debt-to-total-equity ratio,
excluding accumulated other comprehensive income, at July 1, 2012 was 0.01:1. At July 1, 2012, the Company had $28.6 million of unutilized credit available
under existing credit facilities and another $8.6 million available under letter of credit
facilities.
In the first quarter of fiscal 2013, cash flows
used in operating activities from continuing operations were
$2.0 million ($25.6 million used in operating activities from
continuing operations in fiscal 2012). The decrease in cash
flows used in operating activities from continuing operations
related primarily to the timing of investments in non-cash working
capital in large customer programs.
In the first quarter of fiscal 2013, the
Company's investment in non-cash working capital increased by
$18.7 million from March 31, 2012. Accounts receivable increased 30%
or $27.4 million, due to timing of
billings on certain customer contracts. Net contracts in progress
decreased by 27% or $18.7 million
compared to March 31, 2012. The
Company actively manages its accounts receivable and net contracts
in progress balances through billing terms on long-term contracts
and by focusing on collection efforts. Inventories increased year
over year by 6% or $0.6
million. Deposits and prepaid assets increased by 29%
or $3.6 million due primarily to an
increase in prepaid assets due to timing of payments, an increase
in restricted cash used to secure letters of credit and an increase
in other deposits used to secure material for upcoming projects.
Accounts payable and accrued liabilities decreased 7% primarily due
to timing of purchases.
Capital expenditures totalled $1.1 million in the first quarter of fiscal 2013
and primarily related to computer hardware and equipment
improvements.
The Company's primary credit facility (the
"Credit Agreement") provides total credit facilities of up to
$95.0 million, comprised of an
operating credit facility of $65.0
million and a letter of credit facility of up to
$30.0 million for certain
purposes. The operating credit facility is subject to
restrictions regarding the extent to which the outstanding funds
advanced under the facility can be used to fund certain
subsidiaries of the Company. The Credit Agreement, which is secured
by the assets, including real estate, of the Company's North
American legal entities and a pledge of shares and guarantees from
certain of the Company's legal entities, is repayable in full on
September 30, 2012.
At July 1, 2012,
the Company had issued letters of credit in the amount of
$39.8 million under the operating
credit facility (March 31, 2012 -
$17.0 million) and $30.0 million under the letter of credit facility
(March 31, 2012 - $30.0 million). No other amounts were drawn on
the primary credit facility.
The operating credit facility is available in
Canadian dollars by way of prime rate advances, letters of credit
for certain purposes and/or bankers' acceptances and in U.S.
dollars by way of base rate advances and/or LIBOR advances. The
interest rates applicable to the operating credit facility are
determined based on certain financial ratios. For prime rate
advances and base rate advances, the interest rate is equal to the
bank's prime rate or the bank's U.S. dollar base rate in
Canada, respectively, plus 0.90%
to 2.40%. For bankers' acceptances and LIBOR advances, the interest
rate is equal to the bankers' acceptance fee or the LIBOR,
respectively, plus 1.90% to 3.40%.
Under the Credit Agreement, the Company pays a
fee for usage of letters of credit which ranges from 0.80% to
1.90%.
Under the Credit Agreement, the Company pays a
standby fee on the unadvanced portions of the amounts available for
advance or draw-down under the credit facilities at rates ranging
from 0.475% to 0.850%.
The Credit Agreement is subject to debt leverage
tests, a current ratio test and an interest coverage test.
Under the terms of the Credit Agreement, the Company is restricted
from encumbering any assets with certain permitted
exceptions. The Credit Agreement also limits advances to
subsidiaries and partially restricts the Company from repurchasing
its common shares, paying dividends and from acquiring and
disposing of certain assets.
The Company has additional credit facilities
available of $9.5 million
(6.1 million Euro, 33.0 million Indian Rupees and 1.0 million Swiss francs). The total amount
outstanding on these facilities is $2.6
million (March 31, 2012 -
$3.0 million), of which $0.2 million is classified as bank indebtedness
(March 31, 2012 - $0.4 million) and $2.4
million is classified as long-term debt (March 31, 2012 - $2.5
million). The interest rates applicable to these
additional credit facilities range from 2.8% to 13.5% per
annum. A portion of the long-term debt is secured by certain
assets of the Company. The 1.0 million Swiss
Francs and the 33.0 million Indian
Rupees credit facilities are secured by letters of credit
under the primary credit facility.
The Company expects to continue increasing its
investment in working capital to support its growing Order Backlog.
The Company expects that continued cash flows from operations,
together with cash and cash equivalents on hand and credit
available under operating and long-term credit facilities, will be
sufficient to fund its requirements for investments in working
capital and capital assets and to fund strategic investment plans
including some potential acquisitions. Significant acquisitions
could result in additional debt or equity financing requirements.
The Company expects to use moderate leverage to support its growth
strategy and is currently in discussions with lenders to replace
the Credit Agreement with a new primary credit facility. The
Company is targeting to increase the size of the current facility
and provide for additional management flexibility.
Contractual Obligations
(In millions of dollars)
The minimum operating lease payments related
primarily to facilities and equipment, purchase obligations and
other obligations are as follows:
| From continuing operations: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Operating
Leases |
|
Purchase
Obligations |
| |
|
|
|
|
|
|
|
|
| Due within one year |
|
|
|
|
|
$ |
3.5 |
|
$ |
42.1 |
| Due in one to five years |
|
|
|
|
|
|
7.4 |
|
|
0.2 |
| Due in over five years |
|
|
|
|
|
|
3.6 |
|
|
― |
| |
|
|
|
|
|
$ |
14.5 |
|
$ |
42.3 |
| From discontinued operations: |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Purchase
Obligations |
| Due within one year |
|
|
|
|
|
|
|
|
$ |
0.5 |
The Company's off-balance sheet arrangements
consist of purchase obligations and various operating lease
financing arrangements related primarily to facilities and
equipment, which have been entered into in the normal course of
business. The Company's purchase obligations consist primarily of
materials purchase commitments.
In accordance with industry practice, the
Company is liable to customers for obligations relating to contract
completion and timely delivery. In the normal conduct of its
operations, the Company may provide bank guarantees as security for
advances received from customers pending delivery and contract
performance. In addition, the Company provides bank
guarantees for post-retirement obligations and may provide bank
guarantees as security on equipment under lease and on order. At
July 1, 2012, the total value of
outstanding bank guarantees under credit facilities was
approximately $94.3 million
(March 31, 2012 - $57.4 million) from continuing operations and was
$nil (March 31, 2012 - $nil) from
discontinued operations.
The Company is exposed to credit risk on
derivative financial instruments arising from the potential for
counterparties to default on their contractual obligations to the
Company. The Company minimizes this risk by limiting counterparties
to major financial institutions and monitoring their
creditworthiness. The Company's credit exposure to forward foreign
exchange contracts is the current replacement value of contracts
that are in a gain position. For further information related
to the Company's use of derivative financial instruments refer to
note 11 of the interim consolidated financial statements. The
Company is also exposed to credit risk from its customers.
Substantially all of the Company's trade accounts receivable are
due from customers in a variety of industries and, as such, are
subject to normal credit risks from their respective
industries. The Company regularly monitors customers for
changes in credit risk. The Company does not believe that any
single industry or geographic region represents significant credit
risk. Credit risk concentration with respect to trade
receivables is mitigated by the Company's client base being
primarily large, multinational customers and through insurance
purchased by the Company.
During the first quarter of fiscal 2013, 68,000
stock options were exercised. As of August
13, 2012 the total number of shares outstanding was
87,510,855 and there were 7,545,580 stock options outstanding to
acquire common shares of the Company.
RELATED-PARTY TRANSACTIONS
There were no significant related-party
transactions in the first quarter of fiscal 2013.
FOREIGN EXCHANGE
The Company is exposed to foreign exchange risk
as a result of transactions in currencies other than its functional
currency of the Canadian dollar. Weakening in the value of the
Canadian dollar relative to the U.S. dollar had a positive impact
on translation of the Company's revenues in the first quarter of
fiscal 2013 compared to the corresponding period of fiscal
2012.
The Company's Canadian operations generate
significant revenues in major foreign currencies, primarily U.S.
dollars, which exceed the natural hedge provided by purchases of
goods and services in those currencies. In order to manage a
portion of this net foreign currency exposure, the Company has
entered into forward foreign exchange contracts. The timing and
amount of these forward foreign exchange contract requirements are
estimated based on existing customer contracts on hand or
anticipated, current conditions in the Company's markets and the
Company's past experience. Certain of the Company's foreign
subsidiaries will also enter into forward foreign exchange
contracts to hedge identified balance sheet, revenue and purchase
exposures. The Company's forward foreign exchange contract hedging
program is intended to mitigate movements in currency rates
primarily over a four-to-six month period. See note 11 to the
interim consolidated financial statements for details on the
derivative financial instruments outstanding at July 1, 2012.
In addition, from time to time, the Company
enters forward foreign exchange contracts to manage the foreign
exchange risk arising from certain inter-company loans and net
investments in certain self-sustaining subsidiaries.
The Company uses hedging as a risk management
tool, not to speculate.
Period average exchange rates in CDN$
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Three months ended |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
July 1, 2012 |
|
|
|
|
|
July 3,
2011 |
|
|
|
|
|
% change |
| U.S. Dollar |
|
|
|
|
|
|
|
|
1.0117 |
|
|
|
|
|
0.9690 |
|
|
|
|
|
4.4% |
| Euro |
|
|
|
|
|
|
|
|
1.2949 |
|
|
|
|
|
1.3941 |
|
|
|
|
|
-7.1% |
Consolidated Quarterly Results
Results have been reclassified to present Solar as discontinued
operations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of dollars,
except per share amounts) |
|
Q1
2013 |
|
Q4
2012 |
|
Q3
2012 |
|
Q2
2012 |
|
Q1
2012 |
|
Q4
2011 |
|
|
Q3
2011
|
|
Q2
2011 |
| Revenues from continuing operations |
|
$ |
152.2 |
|
$ |
173.5 |
|
$ |
149.1 |
|
$ |
145.9 |
|
$ |
126.9 |
|
$ |
148.4 |
|
$ |
120.8 |
|
$ |
114.3 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings from operations |
|
$ |
15.2 |
|
$ |
16.1 |
|
$ |
20.4 |
|
$ |
13.3 |
|
$ |
10.5 |
|
$ |
14.2 |
|
$ |
6.1 |
|
$ |
6.6 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from continuing operations |
|
$ |
11.8 |
|
$ |
10.9 |
|
$ |
17.6 |
|
$ |
9.3 |
|
$ |
6.2 |
|
$ |
14.4 |
|
$ |
3.0 |
|
$ |
4.8 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from discontinued operations, net of tax |
|
$ |
(2.0) |
|
$ |
(7.9) |
|
$ |
(8.0) |
|
$ |
(76.4) |
|
$ |
(11.2) |
|
$ |
(93.9) |
|
$ |
(16.1) |
|
$ |
(2.9) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
9.8 |
|
$ |
3.0 |
|
$ |
9.6 |
|
$ |
(67.1) |
|
$ |
(5.0) |
|
$ |
(79.5) |
|
$ |
(13.1) |
|
$ |
1.9 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted earnings per share from
continuing operations |
|
$ |
0.13 |
|
$ |
0.13 |
|
$ |
0.20 |
|
$ |
0.11 |
|
$ |
0.07 |
|
$ |
0.17 |
|
$ |
0.03 |
|
$ |
0.05 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted loss per share from discontinued
operations |
|
$ |
(0.02) |
|
$ |
(0.09) |
|
$ |
(0.09) |
|
$ |
(0.87) |
|
$ |
(0.13) |
|
$ |
(1.08) |
|
$ |
(0.18) |
|
$ |
(0.04) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted earnings (loss) per share |
|
$ |
0.11 |
|
$ |
0.04 |
|
$ |
0.11 |
|
$ |
(0.76) |
|
$ |
(0.06) |
|
$ |
(0.91) |
|
$ |
(0.15) |
|
$ |
0.01 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ASG Order Bookings |
|
$ |
168.0 |
|
$ |
187.0 |
|
$ |
179.0 |
|
$ |
165.0 |
|
$ |
157.0 |
|
$ |
206.0 |
|
$ |
133.0 |
|
$ |
105.0 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ASG Order Backlog |
|
$ |
397.0 |
|
$ |
382.0 |
|
$ |
376.0 |
|
$ |
363.0 |
|
$ |
328.0 |
|
$ |
296.0 |
|
$ |
215.0 |
|
$ |
208.0 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim financial results are not necessarily
indicative of annual or longer-term results because many of the
individual markets served by the Company tend to be cyclical in
nature. General economic trends, product life cycles and
product changes may impact revenues and operating performance. ATS
typically experiences some seasonality with its revenues and
operating earnings due to summer plant shutdowns by its
customers.
CRITICAL ACCOUNTING ESTIMATES, JUDGEMENTS
& ASSUMPTIONS
The preparation of the Company's consolidated
financial statements requires management to make estimates,
judgements and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities at the end of the reporting
period. Uncertainty about these estimates, judgements and
assumptions could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability
affected in future periods.
The Company based its assumptions on information
available when the consolidated financial statements were prepared.
Existing circumstances and assumptions about future developments
may change due to market changes or circumstances arising beyond
the control of the Company. Such changes are reflected in the
estimates as they occur. There have been no material changes to the
critical accounting estimates as described in the Company's fiscal
2012 MD&A.
ACCOUNTING STANDARDS CHANGES
IFRS 7 - Financial Instruments: Disclosures - Enhanced
Derecognition Disclosure Requirements
Effective April 1,
2012, the Company adopted the Canadian Institute of
Chartered Accountants ("CICA") amendment to IFRS 7 "Financial
Instruments: Disclosures - Enhanced Derecognition Disclosure
Requirements." The amendment requires additional disclosures for
financial assets that have been transferred, but not derecognized.
In addition, the amendment requires disclosures for continuing
involvement in derecognized assets. The adoption of these
amendments did not have a material impact on the financial
position, cash flows or earnings of the Company.
Future Accounting Standards Changes
Standards issued but not yet effective or
amended up to the date of issuance of the Company's interim
consolidated financial statements are listed below. This listing is
of standards and interpretations issued, which the Company
reasonably expects to be applicable at a future date. The Company
intends to adopt these standards when they become effective.
IFRS 9 - Financial Instruments: Classification and
Measurement
IFRS 9 as issued reflects the first phase of the
IASB's work on the replacement of IAS 39 and applies to
classification and measurement of financial assets and financial
liabilities as defined in IAS 39. The standard is effective for
fiscal periods beginning on or after January
1, 2015. In subsequent phases, the IASB will address
hedge accounting and impairment of financial assets. The
adoption of the first phase of IFRS 9 will have an impact on the
classification and measurement of financial assets, but will
potentially have no impact on classification and measurement of
financial liabilities. The Company will quantify the impact in
conjunction with the other phases when issued.
IFRS 10 - Consolidated Financial Statements
This standard will replace portions of IAS 27,
Consolidated and Separate Financial Statements and interpretation
SIC-12, Consolidated - Special Purpose Entities. This standard
incorporates a single model for consolidating all entities that are
controlled and revises the definition of when an investor controls
an investee to be when it is exposed, or has rights, to variable
returns from its involvement with the investee and has the current
ability to affect those returns through its power over the
investee. Along with control, the new standard also focuses on the
concept of power, both of which will include a use of judgment and
a continuous reassessment as facts and circumstances change. IFRS
10 is effective for fiscal periods beginning on or after
January 1, 2013, with early adoption
permitted. The Company is assessing the impact of IFRS 10 on its
financial position and results of operations.
IFRS 11 - Joint Arrangements
This standard will replace IAS 31, Interest in
Joint Ventures. The new standard will apply to the accounting for
interest in joint arrangements where there is joint control. Joint
arrangements will be separated into joint ventures and joint
operations. The structure of the joint arrangement will no longer
be the most significant factor on classifying a joint arrangement
as either a joint operation or a joint venture. IFRS 11 is
effective for fiscal periods beginning on or after January 1, 2013, with early adoption permitted.
The Company is assessing the impact of IFRS 11 on its financial
position and results of operations.
IFRS 12 - Disclosure of Interest in Other Entities
The new standard includes disclosure
requirements for subsidiaries, joint ventures and associates, as
well as unconsolidated structured entities and replaces existing
disclosure requirements. IFRS 12 is effective for fiscal periods
beginning on or after January 1,
2013, with early adoption permitted. The Company is
assessing the impact of IFRS 12 on its financial position and
results of operations.
IFRS 13 - Fair Value Measurement
The new standard creates a single source of
guidance for fair value measurement, where fair value is required
or permitted under IFRS, by not changing how fair value is used but
how it is measured. The focus will be on an exit price. IFRS 13 is
effective for fiscal periods beginning on or after January 1, 2013, with early adoption permitted.
The Company is assessing the impact of IFRS 13 on its financial
position and results of operations.
IAS 1 - Presentation of Financial Statements
The amendment requires financial statements to
group together items within other comprehensive income that may be
reclassified to the profit or loss section of the interim
consolidated statements of income. The amendment reaffirms existing
requirements that items in other comprehensive income and profit or
loss should be presented as either a single statement or two
consecutive statements. The amendment requires tax associated with
items presented before tax to be shown separately for each of the
two groups of other comprehensive income items (without changing
the option to present items of other comprehensive income either
before tax or net of tax). IAS 1 is effective for fiscal periods
beginning on or after July 1, 2012,
with early adoption permitted. The Company is assessing the impact
of IAS 1 on its financial position and results of operations.
IAS 19 - Employee Benefits
The amendment eliminates the option to defer the
recognition of gains and losses, known as the 'corridor method',
requires re-measurements to be presented in other comprehensive
income, and enhances the disclosure requirements for defined
benefit plans. The standard also requires that the discount rate
used to determine the defined benefit obligation should also be
used to calculate the expected return on plan assets by introducing
a net interest approach, which replaces the expected return on plan
assets and interest costs on the defined benefit obligation, with a
single net interest component determined by multiplying the net
defined benefit liability or asset by the discount rate used to
determine the defined benefit obligation. The amendment becomes
effective for fiscal periods beginning on or after January 1, 2013. The Company is assessing the
impact of IAS 19 on its financial position and results of
operations.
CONTROLS AND PROCEDURES
The Chief Executive Officer ("CEO") and the
Chief Financial Officer ("CFO") are responsible for establishing
and maintaining disclosure controls and procedures and internal
controls over financial reporting for the Company. The control
framework used in the design of disclosure controls and procedures
and internal control over financial reporting is the internal
control integrated framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
Management, including the CEO and CFO, does not
expect that the Company's disclosure controls or internal controls
over financial reporting will prevent or detect all errors and all
fraud or will be effective under all potential future conditions. A
control system is subject to inherent limitations and, no matter
how well designed and operated, can provide only reasonable, not
absolute, assurance that the control systems objectives will be
met.
During the three months ended July 1, 2012, there have been no changes in the
Company's internal controls over financial reporting that have
materially affected, or are reasonably likely to materially affect,
the Company's internal controls over financial reporting.
Note to Readers: Forward-Looking Statements:
This news release and management's discussion
and analysis of financial conditions, and results of operations of
ATS 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: the next phase of the Company's strategy: grow, expand, and
scale; potential impact of general economic environment, including
impact on credit markets and order bookings; the sales
organization's approach to market and expected impact on order
bookings; management's expectations in relation to the impact of
strategic initiatives on ATS operations; the Company's efforts to
expand organically and through acquisition; management's intention
to apply additional resources to acquisition activities; separation
of solar business; sale process for Ontario Solar; the Company's
work towards concluding a transaction for the sale of the Ontario
Solar business; expected impact of FIT program changes; OSPV
securing conditional FIT approvals totalling approximately 64 MWs
related to ground mount solar projects; OSPV seeking required
approvals; OSPV expectation to have a definitive agreement in place
for financing and ultimate third-party ownership of certain
projects; two customer agreements signed by Ontario Solar in first
quarter of 2012; Ontario Solar agreements with developers who have
secured conditional FIT approvals; management's expectation
not to incur additional expenses as a result of PWF bankruptcy;
Company's expectation to continue to increase its investment in
working capital; expectation that continued cash flows from
operations, together with cash and cash equivalents on hand and
credit available under operating and long-term credit facilities,
will be sufficient to fund requirements for investments;
discussions with lenders to replace the current credit facility;
foreign exchange hedging; and accounting standards changes.
The risks and uncertainties that may affect forward-looking
statements include, among others: impact of the global economy and
the Eurozone sovereign debt crisis; general market performance
including capital market conditions and availability and cost of
credit; performance of the market sectors that ATS serves; foreign
currency and exchange risk; the relative strength of the Canadian
dollar; impact of factors such as increased pricing pressure and
possible margin compression; the regulatory and tax environment;
inability to successfully expand organically or through
acquisition, due to an inability to grow expertise, personnel,
and/or facilities at required rates or to identify, negotiate and
conclude one or more acquisitions; that strategic initiatives
within ASG are delayed, not completed, or do not have intended
positive impact; that the sale process for Ontario Solar fails to
generate an acceptable transaction due to market, regulatory, or
other factors; unexpected delays and issues, on the timing, form
and structure of the solar separation; the financial attractiveness
of, and demand for, the solar projects being developed by Ontario
Solar; that OSPV is unable to reach a definitive agreement with an
ultimate owner of the projects or is delayed in that regard;
ability to obtain necessary government and other certifications and
approvals for solar projects in a timely fashion; labour
disruptions; that expenditures associated with the PWF bankruptcy
exceed current expectations; that one or both of the customer
agreements signed by Ontario Solar is terminated or impaired as a
result of a cancellation or material change in the FIT program in
Ontario, and, as a result
contemplated amounts to be supplied are not supplied with resulting
impacts on revenue and profitability; the success of developers
with whom Ontario Solar has signed agreements in ultimately
developing the projects; that one or more customers, or other
persons with which the Company has contracted, experience
insolvency or bankruptcy with resulting delays, costs or losses to
the Company; political, labour or supplier disruptions; 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 become a party; exposure to product liability
claims; 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 other than as required by applicable securities laws,
ATS does not undertake any obligation to update forward-looking
statements should assumptions related to these plans, estimates,
projections, beliefs and opinions change.
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Financial Position
(in thousands of Canadian dollars - unaudited) |
| |
|
|
July 1 |
|
March 31 |
| As at |
Note |
|
2012 |
|
2012 |
| ASSETS |
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
$ |
84,024 |
|
$ |
96,229 |
| Accounts receivable |
|
|
|
117,544 |
|
|
90,151 |
| Costs and earnings in excess of billings on contracts in
progress |
6 |
|
|
102,404 |
|
|
112,486 |
| Inventories |
6 |
|
|
10,852 |
|
|
10,278 |
| Deposits, prepaids and other assets |
7 |
|
|
16,081 |
|
|
12,474 |
| |
|
|
|
330,905 |
|
|
321,618 |
| Assets associated with discontinued operations |
5 |
|
|
34,833 |
|
|
35,746 |
| |
|
|
|
365,738 |
|
|
357,364 |
| Non-current assets |
|
|
|
|
|
|
|
| Property, plant and equipment |
8 |
|
|
78,057 |
|
|
78,880 |
| Investment property |
9 |
|
|
3,672 |
|
|
3,792 |
| Goodwill |
|
|
|
58,337 |
|
|
58,320 |
| Intangible assets |
10 |
|
|
28,078 |
|
|
28,641 |
| Deferred income tax assets |
|
|
|
14,974 |
|
|
15,544 |
| Investment tax credit receivable |
|
|
|
26,956 |
|
|
26,087 |
| |
|
|
|
210,074 |
|
|
211,264 |
| Total assets |
|
|
$ |
575,812 |
|
$ |
568,628 |
| |
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
| Bank indebtedness |
|
|
$ |
155 |
|
$ |
434 |
| Accounts payable and accrued liabilities |
|
|
|
105,186 |
|
|
113,133 |
| Provisions |
12 |
|
|
9,661 |
|
|
9,696 |
| Billings in excess of costs and earnings on contracts in
progress |
6 |
|
|
52,646 |
|
|
44,016 |
| Current portion of long-term debt |
13 |
|
|
254 |
|
|
263 |
| |
|
|
|
167,902 |
|
|
167,542 |
| Liabilities associated with discontinued operations |
5 |
|
|
6,485 |
|
|
9,969 |
| |
|
|
|
174,387 |
|
|
177,511 |
| Non-current liabilities |
|
|
|
|
|
|
|
| Employee benefits |
|
|
|
7,211 |
|
|
6,340 |
| Long-term debt |
13 |
|
|
2,151 |
|
|
2,262 |
| Deferred income tax liability |
|
|
|
1,641 |
|
|
1,063 |
| |
|
|
|
11,003 |
|
|
9,665 |
| Total liabilities |
|
|
$ |
185,390 |
|
$ |
187,176 |
| |
|
|
|
|
|
|
|
| EQUITY |
|
|
|
|
|
|
|
| Share capital |
14 |
|
$ |
483,598 |
|
$ |
483,099 |
| Contributed surplus |
|
|
|
18,384 |
|
|
17,868 |
| Accumulated other comprehensive loss |
|
|
|
(1,641) |
|
|
(383) |
| Retained deficit |
|
|
|
(110,002) |
|
|
(119,210) |
| Equity attributable to shareholders |
|
|
|
390,339 |
|
|
381,374 |
| Non-controlling interests |
|
|
|
83 |
|
|
78 |
| Total equity |
|
|
|
390,422 |
|
|
381,452 |
| Total liabilities and equity |
|
|
$ |
575,812 |
|
$ |
568,628 |
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Income
(in thousands of Canadian dollars, except per share amounts -
unaudited) |
| |
|
|
July 1 |
|
July 3 |
| For the three months ended |
Note |
|
2012 |
|
2011 |
| |
|
|
|
|
|
|
|
|
| Revenues |
|
|
|
|
|
|
|
| |
Revenues from construction contracts |
|
|
$ |
141,574 |
|
$ |
115,078 |
| |
Sale of goods |
|
|
|
4,811 |
|
|
5,835 |
| |
Services rendered |
|
|
|
5,824 |
|
|
5,962 |
| Total revenues |
|
|
|
152,209 |
|
|
126,875 |
| |
|
|
|
|
|
|
|
|
| Operating costs and expenses |
|
|
|
|
|
|
|
| |
Cost of revenues |
|
|
|
112,073 |
|
|
92,338 |
| |
Selling, general and administrative |
|
|
|
24,008 |
|
|
22,874 |
| |
Stock-based compensation |
16 |
|
|
962 |
|
|
1,136 |
| |
|
|
|
|
|
|
|
|
| Earnings from operations |
|
|
|
15,166 |
|
|
10,527 |
| |
|
|
|
|
|
|
|
|
| Net finance costs |
20 |
|
|
201 |
|
|
601 |
| |
|
|
|
|
|
|
|
|
| Income from continuing
operations before income taxes |
|
|
|
14,965 |
|
|
9,926 |
| |
|
|
|
|
|
|
|
|
| Income tax expense |
15 |
|
|
3,192 |
|
|
3,718 |
| |
|
|
|
|
|
|
|
|
| Income from continuing
operations |
|
|
|
11,773 |
|
|
6,208 |
| |
|
|
|
|
|
|
|
|
| Loss from discontinued operations,
net of tax |
5 |
|
|
(2,011) |
|
|
(11,222) |
| |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
$ |
9,762 |
|
$ |
(5,014) |
| |
|
|
|
|
|
|
|
|
| Attributable to |
|
|
|
|
|
|
|
| Shareholders |
|
|
$ |
9,757 |
|
$ |
(5,016) |
| Non-controlling interests |
|
|
|
5 |
|
|
2 |
| |
|
|
$ |
9,762 |
|
$ |
(5,014) |
| |
|
|
|
|
|
|
|
|
| Earnings (loss) per share
attributable to shareholders |
21 |
|
|
|
|
|
|
| Basic and diluted - from continuing operations |
|
|
$ |
0.13 |
|
$ |
0.07 |
| Basic and diluted - from discontinued
operations |
5 |
|
|
(0.02) |
|
|
(0.13) |
| |
|
|
$ |
0.11 |
|
$ |
(0.06) |
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Comprehensive Income
(in thousands of Canadian dollars - unaudited) |
| |
| |
|
July 1 |
July 3 |
| For the three months ended |
|
2012 |
2011 |
| |
|
|
|
|
|
| Net income (loss) |
|
$ |
9,762 |
|
$ |
(5,014) |
| |
|
|
|
|
|
|
| |
Other comprehensive income (loss): |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
Currency translation adjustment (net of income taxes of
$nil) |
|
|
(296) |
|
|
1,217 |
| |
|
|
|
|
|
|
| |
Net unrealized gain (loss) on derivative financial instruments
designated as cash flow hedges |
|
|
(1,067) |
|
|
218 |
| |
|
|
|
|
|
|
| |
Tax impact |
|
|
252 |
|
|
(47) |
| |
|
|
|
|
|
|
| |
Gain transferred to net income for derivatives designated as
cash flow hedges |
|
|
(177) |
|
|
(726) |
| |
Tax impact |
|
|
30 |
|
|
193 |
| |
|
|
|
|
|
|
| |
Actuarial losses on defined benefit pension plans |
|
|
(736) |
|
|
- |
| |
Tax impact |
|
|
187 |
|
|
- |
| |
|
|
|
|
|
|
| |
Net gain on hedges of net investments in foreign operations
(net of income taxes of $nil) |
|
|
- |
|
|
158 |
| |
|
|
|
|
|
|
| Other comprehensive income (loss) |
|
|
(1,807) |
|
|
1,013 |
| |
|
|
|
|
|
|
| Comprehensive income (loss) |
|
$ |
7,955 |
|
$ |
(4,001) |
| |
|
|
|
|
|
|
| Attributable to |
|
|
|
|
|
|
| Shareholders |
|
$ |
7,950 |
|
$ |
(4,003) |
| Non-controlling interests |
|
|
5 |
|
|
2 |
| |
|
$ |
7,955 |
|
$ |
(4,001) |
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars - unaudited) |
| Three months ended July 1,
2012 |
|
|
|
|
| |
|
|
|
|
|
Total |
|
|
| |
|
|
|
|
|
accumulated |
|
|
| |
|
|
Retained |
Currency |
|
other |
Non- |
|
| |
Share |
Contributed |
earnings |
translation |
Cash flow |
comprehensive |
controlling |
Total |
| |
capital |
surplus |
(deficit) |
adjustments |
hedges |
income |
interests |
equity |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, at March 31,
2012 |
$ |
483,099 |
$ |
17,868 |
$ |
(119,210) |
$ |
(559) |
$ |
176 |
$ |
(383) |
$ |
78 |
$ |
381,452 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
-- |
|
-- |
|
9,757 |
|
-- |
|
-- |
|
-- |
|
5 |
|
9,762 |
| Other comprehensive income
(loss) |
|
-- |
|
-- |
|
(549) |
|
(296) |
|
(962) |
|
(1,258) |
|
-- |
|
(1,807) |
| Total comprehensive income
(loss) |
|
-- |
|
-- |
|
9,208 |
|
(296) |
|
(962) |
|
(1,258) |
|
5 |
|
7,955 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based compensation |
|
-- |
|
679 |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
679 |
| Exercise of stock
options |
|
499 |
|
(163) |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
336 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, at July 1,
2012 |
$ |
483,598 |
$ |
18,384 |
$ |
(110,002) |
$ |
(855) |
$ |
(786) |
$ |
(1,641) |
$ |
83 |
$ |
390,422 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended July 3,
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
accumulated |
|
|
|
|
| |
|
|
|
|
|
Retained |
|
Currency |
|
|
|
other |
|
Non- |
|
|
| |
|
Share |
|
Contributed |
|
earnings |
|
translation |
|
Cash flow |
|
comprehensive |
|
controlling |
|
Total |
| |
|
capital |
|
surplus |
|
(deficit) |
|
adjustments |
|
hedges |
|
income |
|
interests |
|
equity |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, at March 31,
2011 |
$ |
481,908 |
$ |
14,298 |
$ |
(59,659) |
$ |
(2,767) |
$ |
1,279 |
$ |
(1,488) |
$ |
(224) |
$ |
434,835 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (Ioss) |
|
-- |
|
-- |
|
(5,016) |
|
-- |
|
-- |
|
-- |
|
2 |
|
(5,014) |
| Other comprehensive income
(loss) |
|
-- |
|
-- |
|
-- |
|
1,375 |
|
(362) |
|
1,013 |
|
-- |
|
1,013 |
| Total comprehensive income
(loss) |
|
-- |
|
-- |
|
(5,016) |
|
1,375 |
|
(362) |
|
1,013 |
|
2 |
|
(4,001) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based compensation |
|
-- |
|
939 |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
939 |
| Exercise of stock options
|
|
29 |
|
(10) |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
19 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, at July 3,
2011 |
$ |
481,937 |
$ |
15,227 |
$ |
(64,675) |
$ |
(1,392) |
$ |
917 |
$ |
(475) |
$ |
(222) |
$ |
431,792 |
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Cash Flows
(in thousands of Canadian dollars - unaudited)
|
| |
|
|
|
|
|
| |
|
|
July 1 |
|
July 3 |
| Three months ended |
Note |
|
2012 |
|
2011 |
| |
|
|
|
|
|
| Operating activities: |
|
|
|
|
|
| Income from continuing operations
|
|
$ |
11,773 |
$ |
6,208 |
| Items not involving cash |
|
|
|
|
|
| |
Depreciation of property, plant and
equipment |
|
|
1,621 |
|
1,816 |
| |
Amortization of intangible
assets |
|
|
1,321 |
|
1,291 |
| |
Accrued employee
benefits |
|
|
135 |
|
352 |
| |
Deferred income taxes
|
|
|
1,792 |
|
1,129 |
| |
Other items not involving
cash |
|
|
(869) |
|
(154) |
| |
Stock-based compensation |
16 |
|
962 |
|
1,136 |
| |
Gain on disposal of property, plant and
equipment |
|
|
(7) |
|
(7) |
| |
|
$ |
16,728 |
$ |
11,771 |
| Change in non-cash operating working
capital |
|
|
(18,741) |
|
(37,395) |
| Cash flows used in operating activities of
discontinued |
|
|
|
|
|
| operations |
5 |
|
(3,080) |
|
(11,873) |
| Cash flows used in operating
activities |
|
$ |
(5,093) |
$ |
(37,497) |
| |
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
| Acquisition of property, plant and
equipment |
|
$ |
(1,092) |
$ |
(1,652) |
| Acquisition of intangible
assets |
|
|
(1,364) |
|
(418) |
| Proceeds from disposal of property, plant and
equipment |
|
|
7 |
|
513 |
| Proceeds on sale of portfolio
investments |
|
|
-- |
|
2,054 |
| Cash flows used in investing activities of
discontinued operations |
5 |
|
(48) |
|
(1,867) |
| Cash flows used in investing
activities |
|
$ |
(2,497) |
$ |
(1,370) |
| |
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
| Restricted cash |
7 |
|
(1,643) |
|
1,301 |
| Bank indebtedness |
|
|
(253) |
|
2,430 |
| Repayment of long-term debt |
|
|
(40) |
|
(41) |
| Issuance of common shares
|
|
|
336 |
|
19 |
| Cash flows provided by (used in) financing
activities of |
|
|
|
|
|
| discontinued
operations
|
5 |
|
(144) |
|
2,932 |
| Cash flows provided by (used in) financing
activities |
|
$ |
(1,744) |
$ |
6,641 |
| |
|
|
|
|
|
| Effect of exchange rate changes on cash and cash
equivalents |
|
|
(1,561) |
|
134 |
| |
|
|
|
|
|
|
| Decrease in cash and cash
equivalents |
|
|
(10,895) |
|
(32,092) |
| |
|
|
|
|
|
|
| Cash and cash equivalents, beginning of
period |
|
|
96,692 |
|
124,268 |
| |
|
|
|
|
|
|
| Cash and cash equivalents, end of
period |
|
$ |
85,797 |
$ |
92,176 |
| |
|
|
|
|
|
| Attributable to |
|
|
|
|
|
| Cash and cash equivalents - continuing
operations |
|
$ |
84,024 |
$ |
83,715 |
| Cash and cash equivalents - associated with
discontinued operations |
|
|
1,773 |
|
8,461 |
| |
|
$ |
85,797 |
$ |
92,176 |
| |
|
|
|
|
|
|
| Supplemental information |
|
|
|
|
|
| Cash income taxes paid by continuing
operations |
|
$ |
239 |
$ |
446 |
| Cash interest paid by continuing
operations |
|
$ |
243 |
$ |
77 |
| Cash interest paid by discontinued
operations |
|
$ |
-- |
$ |
493 |
SOURCE ATS Automation Tooling Systems Inc.