CAMBRIDGE, ON, Feb. 3, 2016 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three and nine months ended
December 27, 2015.
Third Quarter Summary
- Revenues from continuing operations were $274.9 million, 10% higher than the third quarter
a year ago, primarily reflecting foreign exchange rate changes and
the timing of project activities;
- Earnings from continuing operations were $26.8 million (10% operating margin), compared to
$15.9 million (6% operating margin)
in the third quarter of fiscal 2015. Adjusted earnings from
continuing operations1 were $32.1
million (12% margin), compared to $27.2 million (11% margin) in the third quarter a
year ago;
- EBITDA1 was $36.0
million (13% margin), compared to $28.7 million (12% margin) in the third quarter
of fiscal 2015. Excluding a gain of $3.7
million from the sale of a redundant U.S. facility and
restructuring and severance costs of $3.4
million, third quarter 2016 EBITDA was $35.7 million (13% margin), up from $30.4 million (12% margin), which excluded
$1.7 million of acquisition-related
costs;
- Earnings per share from continuing operations were 16 cents basic compared to 9 cents basic a year ago. Adjusted basic earnings
per share from continuing operations1 were 21 cents compared to 18
cents in the third quarter a year ago;
- Order Bookings were $228 million,
a 21% decrease from the third quarter of fiscal 2015;
- Period end Order Backlog was $546
million, 9% lower than at December
28, 2014; and
- The Company's balance sheet and financial capacity to support
growth remained strong, with unutilized credit facilities of
$616 million and $8.9 million of credit available under letter of
credit facilities.
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
Financial
Results
|
|
|
|
|
In millions of
Canadian dollars,
except per share
data
|
3 months
ended
December
27,
2015
|
3 months
ended
December
28,
2014
|
9 months
ended
December
27,
2015
|
9 months
ended
December
28,
2014
|
Revenues
|
Continuing
Operations
|
$
274.9
|
$
248.8
|
$
792.9
|
$
646.7
|
Earnings from
operations1
|
Continuing
Operations
|
$
26.8
|
$
15.9
|
$
68.7
|
$
44.4
|
Adjusted
earnings
from
operations1
|
Continuing
Operations
|
$
32.1
|
$
27.2
|
$
91.2
|
$
75.1
|
EBITDA1
|
Continuing
Operations
|
$
36.0
|
$
28.7
|
$
98.4
|
$
72.3
|
Net
income
|
Continuing
Operations
|
$
15.5
|
$
8.6
|
$
38.2
|
$
25.0
|
Discontinued
Operations
|
$
––
|
$
––
|
$
––
|
$
14.0
|
Earnings per
share
|
From
continuing
operations
(basic
and
diluted)
|
$
0.16
|
$
0.09
|
$
0.41
|
$
0.27
|
From
discontinued
operations
(basic
and
diluted)
|
$
––
|
$
(0.00)
|
$
––
|
$
0.15
|
Adjusted
earnings
per
share1
|
From
continuing
operations
(basic)
|
$
0.21
|
$
0.18
|
$
0.58
|
$
0.53
|
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
"Third quarter performance was strong with increased revenues
and earnings which reflected our solid operating foundation," said
Anthony Caputo, Chief Executive
Officer. "Market conditions have challenged the front end of our
business, with some customers delaying significant investment
decisions. Despite this, our funnel remains strong and
proposal activity robust. We have a strong balance sheet and
significant financial resources available to pursue our growth
strategy."
Third Quarter Summary Continuing Operations
Fiscal
2016 third quarter revenues were 10% higher than in the
corresponding period a year ago, primarily reflecting foreign
exchange rate changes and the timing of project activities.
Foreign exchange rate changes positively impacted the translation
of revenues earned by foreign-based subsidiaries compared to the
corresponding period a year ago, primarily reflecting the weakening
of the Canadian dollar relative to the U.S. dollar and Euro.
By market, fiscal 2016 third quarter revenues from consumer
products & electronics were consistent with the corresponding
period a year ago. Revenues generated in the energy market
decreased 18% due to the timing of project activities. Revenues
generated in the life sciences market increased 19% primarily due
to foreign exchange rate changes and the timing of project
activities. Transportation revenues increased 13% primarily due to
foreign exchange rate changes and the timing of project
activities.
Fiscal 2016 third quarter earnings from operations were
$26.8 million (10% operating margin)
compared to $15.9 million (6%
operating margin) in the third quarter of fiscal 2015. Third
quarter fiscal 2016 earnings from operations included a gain of
$3.7 million from the sale of a
redundant U.S. facility, $3.4 million
of restructuring and severance costs and $5.6 million related to amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK, and sortimat. Excluding these items, third quarter fiscal 2016
adjusted earnings from operations were $32.1
million (12% margin), compared to adjusted earnings from
operations of $27.2 million (11%
margin) a year ago. Higher adjusted earnings from operations
primarily reflected increased revenues.
Depreciation and amortization expense was $9.2 million in the third quarter of fiscal 2016,
compared to $12.8 million a year ago.
The decrease primarily reflects lower amortization of identifiable
intangible assets recorded on the acquisitions of PA, IWK, and
sortimat compared to the third quarter of fiscal
2015.
EBITDA was $36.0 million (13%
EBITDA margin) in the third quarter of fiscal 2016 compared to
$28.7 million (12% EBITDA margin) in
the third quarter of fiscal 2015. Excluding restructuring and
severance costs and the gain on the sale of a U.S. facility, third
quarter fiscal 2016 EBITDA was $35.7
million (13% EBITDA margin). Comparably, excluding
acquisition-related costs, third quarter fiscal 2015 EBITDA was
$30.4 million (12% EBITDA
margin).
In the third quarter of fiscal 2016, the Company's investment in
non-cash working capital decreased by $18.4
million from September 27,
2015. The Company has made progress towards its goal of
reducing its overall investment in non-cash working capital as a
percentage of revenues. However, at the end of the third quarter of
fiscal 2016 the Company's non-cash working capital as a percentage
of revenues was 15.4%. This remains above the Company's target of
15% or lower, which management expects to work towards over
time.
Order Bookings
Third quarter fiscal 2016 Order
Bookings were $228.0 million, a 21%
decrease from the third quarter of fiscal 2015, primarily
reflecting normal volatility in the Company's Order Bookings
including the timing of customer decisions on various larger
opportunities. Lower Order Bookings were realized in all customer
markets with the exception of energy. The most significant
decreases were realized in the life sciences and consumer products
and electronics markets.
Quarterly Conference Call
ATS's quarterly conference
call begins at 10 am eastern on
Wednesday February 3 and can be
accessed live at www.atsautomation.com or on the phone by dialing
(647) 427-7450 five minutes prior. A replay of the conference will
be available on the ATS website following the call. Alternatively,
a telephone recording of the call will be available for one week
(until midnight February 10, 2016) by
dialing (416) 849-0833 and entering passcode 35564430 followed by
the number sign.
About ATS
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 3,500 people at 24
manufacturing facilities and over 50 offices in North America, Europe, Southeast
Asia and China.
Management's Discussion and Analysis
For the Quarter
Ended December 27, 2015
This Management's Discussion and Analysis ("MD&A") for
the three and nine months ended December 27,
2015 (third quarter of fiscal 2016) is as of February 2, 2015 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 condensed
consolidated financial statements of the Company for the third
quarter of fiscal 2016 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 the MD&A of the Company for the year ended March 31, 2015 (fiscal 2015) and, accordingly,
the purpose of this document is to provide a fiscal 2016 third
quarter update to the information contained in the fiscal 2015
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 and Additional IFRS
Measures
Throughout this document management uses certain
non-IFRS measures to evaluate the performance of the Company. These
terms do not have any standardized meaning prescribed within IFRS
and therefore may not be comparable to similar measures presented
by other companies. The terms "operating margin", "EBITDA", "EBITDA
margin", "adjusted net income from continuing operations",
"adjusted earnings from operations", "adjusted basic earnings per
share from continuing operations", "non-cash working capital",
"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. Such measures
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. In
addition, management uses "earnings from operations" which is an
additional IFRS measure to evaluate the performance of the Company.
Earnings from operations is presented on the Company's consolidated
statements of income as net income from continuing operations
excluding income tax expense and net finance costs. Operating
margin is an expression of the Company's earnings from operations
as a percentage of revenues. EBITDA is defined as earnings from
operations excluding depreciation and amortization (which includes
amortization of intangible assets). EBITDA margin is an expression
of the Company's EBITDA as a percentage of revenues. Adjusted
earnings from operations is defined as earnings from operations
before items excluded from management's internal analysis of
operating results, such as amortization expense of
acquisition-related intangible assets, acquisition-related
transaction and integration costs, restructuring charges, and
certain other adjustments which would be non-recurring in nature
("adjustment items"). Adjusted basic earnings per share from
continuing operations is defined as adjusted net income from
continuing operations on a basic per share basis, where adjusted
net income from continuing operations is defined as adjusted
earnings from operations less net finance costs and income tax
expense, plus tax effects of adjustment items. Non-cash working
capital is defined as the sum of accounts receivable, costs and
earnings in excess of billing on contracts in progress,
inventories, deposits, prepaids and other assets, less accounts
payable, accrued liabilities, provisions and billings in excess of
costs and earnings on contracts in progress. Order Bookings
represent new orders for the supply of automation systems, services
and products that management believes are firm. Order Backlog is
the estimated unearned portion of revenues on customer contracts
that are in process and have not been completed at the specified
date.
Earnings from operations and EBITDA are used by the Company to
evaluate the performance of its operations. Management believes
earnings from operations is an important indicator in measuring the
performance of the Company's operations on a pre-tax basis and
without consideration as to how the Company finances its
operations. Management believes that EBITDA is an important
indicator of the Company's ability to generate operating cash flows
to fund continued investment in its operations. Management believes
that adjusted earnings from operations and adjusted basic earnings
per share from continuing operations (including adjusted net income
from continuing operations) are important measures to increase
comparability of performance between periods. The adjustment items
used by management to arrive at these metrics are not considered to
be indicative of the business's ongoing operating performance.
Management uses the measure non-cash working capital as a
percentage of revenues to evaluate the Company's management of its
investment in non-cash working capital. Management calculates
non-cash working capital as a percentage of revenues using period
end non-cash working capital divided by trailing two fiscal quarter
revenues annualized. Order Bookings provides an indication of
the Company's ability to secure new orders for work during a
specified period, while Order Backlog provides a measure of the
value of Order Bookings that have not been completed at a specified
point in time. Both Order Bookings and Order Backlog are indicators
of future revenues the Company expects to generate based on
contracts that management believes to be firm. Management believes
that ATS shareholders and potential investors in ATS use these
additional IFRS measures and non-IFRS financial measures in making
investment decisions and measuring operational results. EBITDA
should not be construed as a substitute for net income determined
in accordance with IFRS. Adjusted earnings from operations is
not necessarily indicative of earnings from operations or cash
flows from operations as determined under IFRS and may not be
comparable to similar measures presented by other companies.
A reconciliation of (i) earnings from operations and EBITDA to
net income from continuing operations, and (ii) adjusted earnings
from operations to earnings from operations, adjusted net income
from continuing operations to net income from continuing operations
and adjusted basic earnings per share from continuing operations to
basic earnings per share from continuing operations, in each case
for the three and nine month periods ending December 27, 2015 and December 28, 2014 is contained in this MD&A
(see "Reconciliation of Non-IFRS Measures to IFRS Measures"). A
reconciliation of Order Bookings and Order Backlog to total Company
revenues for the three and nine month periods ending December 27, 2015 and December 28, 2014 is also contained in the
MD&A (see "Order Backlog Continuity").
Company Profile
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 3,500 people at 24
manufacturing facilities and over 50 offices in North America, Europe, Southeast
Asia and China.
Value Creation Strategy
To drive value creation, the
Company is focused on its growth strategy: Grow, Expand and Scale.
The strategy is designed to leverage the strong foundation of ATS'
core automation business, continue the growth and development of
ATS and create value for all stakeholders.
Grow
To further the Company's organic growth,
ATS 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 after sales services.
Scale
The Company is committed to growth
through acquisition and management believes that the Company has
the organizational structure, business processes and experience to
successfully integrate acquired companies. Acquisition
targets are evaluated on their ability to bring ATS market or
technology leadership, scale and/or a market opportunity. For
each of ATS' 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. To date,
ATS has successfully acquired four complementary and accretive
businesses: sortimat Group ("sortimat") on June 1, 2010; Assembly & Test Worldwide
("ATW") on January 5, 2011; IWK
Verpackungstechnik and Oystar IWK USA, Inc. ("IWK") on September 30, 2013 and M+W Process Automation
GmbH and ProFocus LLC (collectively "Process Automation Solutions"
or "PA") on September 1, 2014.
Overview – Operating Results From Continuing
Operations
Results from continuing operations comprise the
results of ATS' continuing operations and corporate costs not
directly attributable to Solar. The results of the Solar
segment are reported in discontinued operations.
Consolidated Revenues from Continuing
Operations
|
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 27,
2015
|
Three
Months
Ended
December 28,
2014
|
Nine
Months
Ended
December 27,
2015
|
Nine
Months
Ended
December 28,
2014
|
Revenue by
Market
|
|
|
|
|
|
Consumer products
& electronics
|
$
45.8
|
$ 45.7
|
$ 121.5
|
$ 126.2
|
|
Energy
|
16.5
|
20.1
|
56.1
|
46.4
|
|
Life
sciences
|
114.0
|
95.6
|
330.0
|
254.3
|
|
Transportation
|
98.6
|
87.4
|
285.3
|
219.8
|
Total revenues
from continuing operations
|
$ 274.9
|
$ 248.8
|
$ 792.9
|
$ 646.7
|
|
|
|
|
|
Third Quarter
Fiscal 2016 third quarter revenues were
10% higher than in the corresponding period a year ago, primarily
reflecting foreign exchange rate changes and the timing of project
activities. Foreign exchange rate changes positively impacted the
translation of revenues earned by foreign-based subsidiaries
compared to the corresponding period a year ago, primarily
reflecting the weakening of the Canadian dollar relative to the
U.S. dollar and Euro.
By market, fiscal 2016 third quarter revenues from consumer
products & electronics were consistent with the corresponding
period a year ago. Revenues generated in the energy market
decreased 18% due to the timing of project activities. Revenues
generated in the life sciences market increased 19% primarily due
to foreign exchange rate changes and the timing of project
activities. Transportation revenues increased 13% primarily due to
foreign exchange rate changes and the timing of project
activities.
Year-to-date
Revenues for the nine months ended
December 27, 2015 were 23% higher
than in the corresponding period a year ago, primarily reflecting
revenues earned by PA. PA revenues for the nine months ended
December 27, 2015 were $205.0 million compared to $81.0 million for the nine months ended
December 28, 2014. Excluding PA,
revenues increased $22.2 million, or
4% from the corresponding period a year ago reflecting foreign
exchange rate changes (primarily the weakening of the Canadian
dollar relative to the U.S. dollar) which positively impacted the
translation of revenues earned by foreign-based subsidiaries
compared to the corresponding period a year ago.
By market, fiscal 2016 year-to-date revenues from consumer
products & electronics decreased 4%, primarily reflecting lower
activity in the consumer products market. Revenues generated in the
energy market increased 21%, primarily due to increased revenues in
the nuclear energy market. Revenues generated in the life
sciences market increased 30% primarily on revenues earned by PA.
Transportation revenues increased 30% primarily on revenues earned
by PA and foreign exchange translation.
Consolidated
Operating Results
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
27,
|
December
28,
|
December
27
|
December
28,
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Earnings from
operations
|
$
|
26.8
|
$
|
15.9
|
$
|
68.7
|
$
|
44.4
|
Amortization of
acquisition-related
|
|
|
|
|
intangible assets
|
5.6
|
9.6
|
18.9
|
19.0
|
Acquisition-related
transaction
|
|
|
|
|
and
integration costs
|
––
|
1.7
|
––
|
11.7
|
Restructuring
charges
|
3.4
|
––
|
7.3
|
––
|
Gain on sale of
assets
|
(3.7)
|
––
|
(3.7)
|
––
|
Adjusted
earnings from operations1
|
$
|
32.1
|
$
|
27.2
|
$
|
91.2
|
$
|
75.1
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
27,
|
December
28,
|
December
27,
|
December
28
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Earnings from
operations
|
$
|
26.8
|
$
|
15.9
|
$
|
68.7
|
$
|
44.4
|
Depreciation and
amortization
|
9.2
|
12.8
|
29.7
|
27.9
|
EBITDA1
|
$
|
36.0
|
$
|
28.7
|
$
|
98.4
|
$
|
72.3
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
Third Quarter
Fiscal 2016 third quarter earnings from
operations were $26.8 million (10%
operating margin) compared to $15.9
million (6% operating margin) in the third quarter of fiscal
2015. Third quarter fiscal 2016 earnings from operations included a
gain of $3.7 million from the sale of
a redundant U.S. facility, $3.4
million of restructuring and severance costs and
$5.6 million related to amortization
of identifiable intangible assets recorded on the acquisitions of
PA, IWK, and sortimat. Excluding these items, third quarter fiscal
2016 adjusted earnings from operations were $32.1 million (12% margin), compared to adjusted
earnings from operations of $27.2
million (11% margin) a year ago. Higher adjusted earnings
from operations primarily reflected increased revenues.
Depreciation and amortization expense was $9.2 million in the third quarter of fiscal 2016,
compared to $12.8 million a year ago.
The decrease primarily reflects lower amortization of identifiable
intangible assets recorded on the acquisitions of PA, IWK, and
sortimat compared to the third quarter of fiscal 2015.
EBITDA was $36.0 million (13%
EBITDA margin) in the third quarter of fiscal 2016 compared to
$28.7 million (12% EBITDA margin) in
the third quarter of fiscal 2015. Excluding restructuring and
severance costs and the gain on the sale of a U.S. facility, third
quarter fiscal 2016 EBITDA was $35.7
million (13% EBITDA margin). Comparably, excluding
acquisition-related costs, third quarter fiscal 2015 EBITDA was
$30.4 million (12% EBITDA
margin).
Year-to-date
For the nine months ended December 27, 2015, earnings from operations were
$68.7 million (9%
operating margin) compared to $44.4
million (7% operating margin) in the corresponding period a
year ago. Earnings from operations included a gain of $3.7 million from the sale of a redundant U.S.
facility, $7.3 million of
restructuring and severance costs and $18.9
million related to amortization of identifiable intangible
assets recorded on the acquisitions of PA, IWK, ATW and sortimat.
Excluding these items, adjusted earnings from operations were
$91.2 million (12% operating margin)
compared to adjusted earnings from operations of $75.1 million (12% operating margin) in the
corresponding period a year ago. Higher adjusted earnings from
operations primarily reflected increased revenues, lower employee
incentive costs and other discretionary spending reductions. These
were partially offset by higher cost of revenues caused by some
lower margin programs which were bid and executed by the Company,
and certain programs where costs exceeded budgets.
Depreciation and amortization expense was $29.7 million in the first nine months of fiscal
2016 compared to $27.9 million a year
ago.
Year to date fiscal 2016 EBITDA was $98.4
million (12% EBITDA margin) compared to $72.3 million (11% EBITDA margin) in the first
nine months of fiscal 2015. Excluding restructuring costs,
and the gain on the sale of the U.S. facility, fiscal 2016 year to
date EBITDA was $102.0 million (13%
EBITDA margin). Comparably, excluding acquisition-related costs,
fiscal 2015 year-to-date EBITDA was $84.0
million (13% EBITDA margin).
Order Bookings
Third quarter fiscal 2016 Order
Bookings were $228 million, a 21%
decrease from the third quarter of fiscal 2015, primarily
reflecting normal volatility in the Company's Order Bookings
including the timing of customer decisions on various larger
opportunities. Lower Order Bookings were realized in all customer
markets with the exception of energy. The most significant
decreases were realized in the life sciences and consumer products
and electronics markets.
Order Backlog
Continuity
|
|
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
27,
|
December
28,
|
December
27,
|
December
28,
|
|
2015
|
2014
|
2015
|
2014
|
Opening Order
Backlog
|
$
|
589
|
$
|
561
|
$
|
632
|
$
|
474
|
Revenues
|
(275)
|
(249)
|
(793)
|
(647)
|
Order
Bookings
|
228
|
287
|
680
|
663
|
Order Backlog
adjustments1
|
4
|
3
|
27
|
112
|
Total
|
$
|
546
|
$
|
602
|
$
|
546
|
$
|
602
|
1 Order
Backlog adjustments include foreign exchange adjustments,
cancellations and for the nine months ended
December 28, 2014,
incremental Order Backlog of $131 million acquired with
PA.
|
|
Order Backlog by
Market
|
|
|
(In millions of
dollars)
|
|
|
|
December
27,
|
December
28,
|
As
at
|
2015
|
2014
|
Consumer products
& electronics
|
$
|
89
|
$
|
68
|
Energy
|
48
|
43
|
Life
sciences
|
229
|
290
|
Transportation
|
180
|
201
|
Total
|
$
|
546
|
$
|
602
|
At December 27, 2015, Order
Backlog was $546 million, 9% lower
than at December 28, 2014. Lower
Order Backlog in life sciences, and transportation markets was
partially offset by higher Order Backlog in consumer products &
electronics, and energy markets as well as the impact of foreign
exchange rate changes.
Outlook
The global economic environment has continued
to show signs of volatility, and uncertainty remains. In the U.S.,
economic growth remains slow, and Canadian and European economies
remain weak. Economic growth continues to decelerate in
China and other parts of
Asia. A prolonged or more
significant downturn in an economy where the Company operates could
negatively impact Order Bookings and may add to volatility in Order
Bookings.
Many customers remain cautious in their approach to capital
investment. Although funnel activity in life sciences and
transportation markets has remained strong, customers have
continued to delay investment decisions as reflected in the
Company's lower Order Bookings. Opportunities in energy markets are
sporadic. Funnel activity in the consumer products and electronics
market has improved, however it remains low relative to other
customer markets. Overall, funnel activity remains strong and
proposal activity robust. The Company has several large
proposals pending, subject to customer decisions on those
opportunities.
The Company's sales organization continues to work to engage
customers on enterprise-type solutions. The Company expects that
this will provide ATS with more strategic relationships, increased
predictability, better program control and less sensitivity to
macroeconomic forces. This approach to market and the timing of
customer decisions on larger opportunities 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. The Company expects its Order Backlog of
$546 million at the end of the third
quarter of fiscal 2016 to partially mitigate the impact of volatile
Order Bookings on revenues in the short term. Management expects
that approximately 40% to 45% of its Order Backlog would typically
be completed each quarter. In the fourth quarter of fiscal 2016,
management expects to operate at the higher end of this range.
Management's disciplined focus on program management, cost
reductions, standardization and quality is expected to put ATS in a
strong competitive position to capitalize on opportunities. In the
third quarter of fiscal 2016, the Company initiated the closure of
its India-based operations,
completed the previously announced closure of a U.S. operation and
initiated additional actions to re-balance global capacity and
improve the Company's cost structure which, resulted in charges of
$3.4 million being incurred in the
third quarter of fiscal 2016. Over the first nine months of the
fiscal year, restructuring charges of $7.3
million were incurred, with an expected payback period of
less than one year. Management is continuing to evaluate its global
capacity and cost structure, and taking into consideration the
Company's decreased Order Backlog, expects to incur additional
restructuring expenses in the range of $2.0
million in the fourth quarter of fiscal 2016. However, these
actions are not expected to fully offset the expected negative
impact of the Company's decreased Order Backlog on revenues and
earnings from operations in the near term. Over the long term,
management expects that the application of its ongoing efforts to
improve ATS' cost structure, business processes, leadership and
supply chain management will have a positive impact on ATS
operations.
The Company seeks to continue to expand its position in the
global automation market organically and through acquisition. The
Company's solid foundation and strong cash flow generation
capability provide the flexibility to pursue its growth
strategy.
Consolidated
Results from Continuing Operations
|
|
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
27,
|
December
28,
|
December
27,
|
December
28,
|
|
2015
|
2014
|
2015
|
2014
|
Revenues
|
$
|
274.9
|
$
|
248.8
|
$
|
792.9
|
$
|
646.7
|
Cost of
revenues
|
204.8
|
186.0
|
595.3
|
473.8
|
Selling, general and
administrative
|
42.5
|
44.5
|
125.8
|
124.7
|
Stock-based
compensation
|
0.8
|
2.4
|
3.1
|
3.8
|
Earnings from
operations
|
$
|
26.8
|
$
|
15.9
|
$
|
68.7
|
$
|
44.4
|
Net finance
costs
|
$
|
6.9
|
$
|
4.4
|
$
|
18.7
|
$
|
7.6
|
Provision for income
taxes
|
4.4
|
2.9
|
11.8
|
11.8
|
Net income from
continuing operations
|
$
|
15.5
|
$
|
8.6
|
$
|
38.2
|
$
|
25.0
|
Income (loss) from
discontinued operations, net of tax
|
––
|
(0.0)
|
––
|
14.0
|
Net
income
|
$
|
15.5
|
$
|
8.6
|
$
|
38.2
|
$
|
39.0
|
Earnings (loss)
per share
|
|
|
|
|
Basic and diluted
from continuing operations
|
$
|
0.16
|
$
|
0.09
|
$
|
0.41
|
$
|
0.27
|
Basic and diluted
from discontinued operations
|
––
|
(0.00)
|
––
|
0.15
|
|
$
|
0.16
|
$
|
0.09
|
$
|
0.41
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
Revenues. At $274.9
million, consolidated revenues from continuing operations
for the third quarter of fiscal 2016 were $26.1 million or 10% higher than in the
corresponding period a year ago. At $792.9
million, year-to-date revenues were $146.2 million or 23% higher than in the
corresponding period a year ago. See "Overview – Operating Results
from Continuing Operations."
Cost of revenues. At $204.8
million, third quarter fiscal 2016 cost of revenues
increased over the corresponding period a year ago by $18.8 million or 10% primarily on higher
revenues. Year-to-date cost of revenues of $595.3 million increased by $121.5 million or 26%, primarily on higher
revenues generated compared to the corresponding period last
year.
At 26%, gross margin in the third quarter of fiscal 2016
increased marginally over the corresponding period a year ago,
primarily reflecting program mix which included some higher margin
programs compared to the corresponding period a year ago.
Year-to-date gross margin of 25% decreased 2% from the
corresponding period a year ago. Lower year-to-date gross margins
primarily reflected the addition of PA, which has typically
operated with a lower gross margin than ATS. For PA, higher cost of
sales is partially offset by lower selling, general and
administrative costs relative to revenues as compared to ATS. In
addition, lower gross margins reflected some lower margin programs
which were bid and are being executed by the Company, and certain
programs where costs have exceeded budgets.
Selling, general and administrative ("SG&A")
expenses. SG&A expenses for the third quarter of
fiscal 2016 were $42.5 million. This
included $3.4 million of
restructuring and severance costs, offset by a $3.7 million gain on the sale of a redundant U.S.
facility. Excluding these items, SG&A expenses were
$42.8 million, equal to the
$42.8 million of expenses in the
corresponding period a year ago, which was exclusive of
$1.7 million of costs related to the
Company's acquisition activity. Lower amortization of
acquisition-related intangible assets was offset by higher
employee-related costs and foreign exchange rate changes which
increased the translation of reported SG&A expenses of
foreign-based subsidiaries, primarily reflecting the weakening of
the Canadian dollar relative to the U.S. dollar and Euro.
For the nine months ended December 27,
2015, SG&A expenses were $125.8
million, which included $7.3
million of restructuring and severance costs, partially
offset by the $3.7 million gain on
the sale of the U.S. facility. Excluding these items, year-to-date
SG&A spending was $122.2 million,
$9.2 million or 8% higher compared to
the same period a year ago. Higher SG&A costs primarily
reflected the addition of PA SG&A expenses and foreign exchange
rate changes which increased the translation of reported SG&A
expenses of foreign-based subsidiaries primarily reflecting the
weakening of the Canadian dollar relative to the U.S. dollar and
Euro.
Stock-based compensation. Stock-based compensation
expense amounted to $0.8 million in
the third quarter of fiscal 2016 compared to $2.4 million of stock-based compensation expense
in the corresponding period a year ago. For the nine month period
ended December 27, 2015, stock-based
compensation expense decreased to $3.1
million from $3.8 million a
year earlier. The decrease in stock-based compensation costs
is attributable to lower expenses from stock options and the
revaluation of deferred stock units, share appreciation rights, and
restricted share units.
Earnings from operations. For the three and nine
month periods ended December 27,
2015, consolidated earnings from operations were
$26.8 million (10% operating margin)
and $68.7 million (9% operating
margin) respectively, compared to earnings from operations of
$15.9 million and $44.4 million in the corresponding periods a year
ago (operating margins of 6% and 7% respectively). See
"Overview – Operating Results from Continuing Operations."
Net finance costs. Net finance costs were
$6.9 million in the third quarter of
fiscal 2016, $2.5 million higher than
the corresponding period a year ago. For the nine months ended
December 27, 2015, finance costs were
$18.7 million compared to
$7.6 million in the corresponding
period a year ago. The increases reflected greater usage of the
Company's primary credit facility and interest on the Company's
Senior Notes, which were issued in June
2015 (see "Liquidity, Cash Flow and Financial
Resources"). The increased usage was used to finance the
acquisition of PA and to support letters of credit.
Income tax provision. For the three and nine months ended
December 27, 2015, the Company's
effective income tax rates of 22% and 24% respectively, differed
from the combined Canadian basic federal and provincial income tax
rate of 27% primarily as a result of income earned in certain
jurisdictions with different statutory tax rates. The Company
expects its effective tax rate to continue to be in the range of
25%.
Net income from continuing operations. Fiscal 2016 third
quarter net income from continuing operations was $15.5 million (16
cents per share basic and diluted) compared to $8.6 million (9
cents per share basic and diluted) for the third quarter of
fiscal 2015. Adjusted basic earnings per share from
continuing operations were 21 cents
in the third quarter of fiscal 2016 compared to 18 cents for the third quarter of fiscal
2015. See "Reconciliation of Non-IFRS Measures to IFRS
Measures."
Net income from continuing operations in the nine months ended
December 27, 2015, was $38.2 million (41
cents per share basic and diluted) compared to $25.0 million (27
cents per share basic and diluted) for the corresponding
period a year ago. Adjusted basic earnings per share from
continuing operations were 58 cents
in the nine months ended December 27,
2015 compared to 53 cents in
the corresponding period a year ago. See "Reconciliation of
Non-IFRS Measures to IFRS Measures."
Reconciliation of Non-IFRS Measures to IFRS
Measures
(In millions of dollars)
The following table reconciles EBITDA to the most directly
comparable IFRS measure (net income from continuing
operations):
|
Three
Months
|
Three
Months
|
|
Ended
|
Ended
|
|
December
27,
|
December
28,
|
|
2015
|
2014
|
EBITDA
|
$
|
36.0
|
$
|
28.7
|
Less: depreciation
and amortization expense
|
9.2
|
12.8
|
Earnings from
operations
|
$
|
26.8
|
$
|
15.9
|
Less: net finance
costs
|
6.9
|
4.4
|
Provision for income
taxes
|
4.4
|
2.9
|
Net income from
continuing operations
|
$
|
15.5
|
$
|
8.6
|
|
|
|
|
|
|
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
|
December
27,
|
December
28,
|
|
2015
|
2014
|
EBITDA
|
$
|
98.4
|
$
|
72.3
|
Less: depreciation
and amortization expense
|
29.7
|
27.9
|
Earnings from
operations
|
$
|
68.7
|
$
|
44.4
|
Less: net finance
costs
|
18.7
|
7.6
|
Provision for income
taxes
|
11.8
|
11.8
|
Net income from
continuing operations
|
$
|
38.2
|
$
|
25.0
|
|
|
|
The following table reconciles adjusted earnings from operations
and adjusted basic earnings per share from continuing operations to
the most directly comparable IFRS measure (net income from
continuing operations):
|
Three Months
Ended
|
Three Months
Ended
|
|
December 27,
2015
|
December 28,
2014
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
Adjustments
|
Adjusted
|
|
|
|
(non-IFRS)
|
|
|
(non-IFRS
)
|
Earnings from
operations
|
$
|
26.8
|
$
|
─
|
$
|
26.8
|
$
|
15.9
|
$
|
─
|
$
|
15.9
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
related intangible
assets
|
─
|
5.6
|
5.6
|
─
|
9.6
|
9.6
|
Acquisition-related
|
|
|
|
|
|
|
|
transaction
costs
|
─
|
─
|
─
|
─
|
1.7
|
1.7
|
Restructuring
charges
|
─
|
3.4
|
3.4
|
─
|
─
|
─
|
Gain on sale of
assets
|
─
|
(3.7)
|
(3.7)
|
─
|
─
|
─
|
|
$
|
26.8
|
$
|
5.3
|
$
|
32.1
|
$
|
15.9
|
$
|
11.3
|
$
|
27.2
|
Less: net finance
costs
|
$
|
6.9
|
$
|
─
|
$
|
6.9
|
$
|
4.4
|
$
|
─
|
$
|
4.4
|
Income from
continuing
|
|
|
|
|
|
|
|
operations
before
|
|
|
|
|
|
|
|
income
taxes
|
$
|
19.9
|
$
|
5.3
|
$
|
25.2
|
$
|
11.5
|
$
|
11.3
|
$
|
22.8
|
Provision for income
taxes
|
$
|
4.4
|
$
|
─
|
$
|
4.4
|
$
|
2.9
|
$
|
─
|
$
|
2.9
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
income
taxes1
|
─
|
1.4
|
1.4
|
─
|
3.3
|
3.3
|
|
$
|
4.4
|
$
|
1.4
|
$
|
5.8
|
$
|
2.9
|
$
|
3.3
|
$
|
6.2
|
Net income from
continuing
|
|
|
|
|
|
|
|
operations
|
$
|
15.5
|
$
|
3.9
|
$
|
19.4
|
$
|
8.6
|
$
|
8.0
|
$
|
16.6
|
Basic earnings per
share
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.16
|
$
|
0.05
|
$
|
0.21
|
$
|
0.09
|
$
|
0.09
|
$
|
0.18
|
1
Adjustments to provision for income taxes relate to the income tax
effects of adjustment items that are excluded for the
purposes of calculating non-IFRS based adjusted net income from
continuing operations.
|
|
Nine Months
Ended
|
Nine Months
Ended
|
|
December 27,
2015
|
December 28,
2014
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
Adjustments
|
Adjusted
|
|
|
|
(non-IFRS)
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
68.7
|
$
|
─
|
$
|
68.7
|
$
|
44.4
|
$
|
─
|
$
|
44.4
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
related intangible
assets
|
─
|
18.9
|
18.9
|
─
|
19.0
|
19.0
|
Acquisition-related
|
|
|
|
|
|
|
|
transaction
costs
|
─
|
─
|
─
|
─
|
11.7
|
11.7
|
Restructuring
charges
|
─
|
7.3
|
7.3
|
─
|
─
|
─
|
Gain on sale of
assets
|
─
|
(3.7)
|
(3.7)
|
─
|
─
|
─
|
|
$
|
68.7
|
$
|
22.5
|
$
|
91.2
|
$
|
44.4
|
$
|
30.7
|
$
|
75.1
|
Less: net finance
costs
|
$
|
18.7
|
$
|
─
|
$
|
18.7
|
$
|
7.6
|
$
|
─
|
$
|
7.6
|
Income from
continuing
|
|
|
|
|
|
|
|
operations
before
|
|
|
|
|
|
|
|
income
taxes
|
$
|
50.0
|
$
|
22.5
|
$
|
72.5
|
$
|
36.8
|
$
|
30.7
|
$
|
67.5
|
Provision for income
taxes
|
$
|
11.8
|
$
|
─
|
$
|
11.8
|
$
|
11.8
|
$
|
─
|
$
|
11.8
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
income
taxes1
|
─
|
6.7
|
6.7
|
─
|
7.9
|
7.9
|
|
$
|
11.8
|
$
|
6.7
|
$
|
18.5
|
$
|
11.8
|
$
|
7.9
|
$
|
19.7
|
Net income from
continuing
|
|
|
|
|
|
|
|
operations
|
$
|
38.2
|
$
|
15.8
|
$
|
54.0
|
$
|
25.0
|
$
|
22.8
|
$
|
47.8
|
Basic earnings per
share
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.41
|
$
|
0.17
|
$
|
0.58
|
$
|
0.27
|
$
|
0.26
|
$
|
0.53
|
1
Adjustments to provision for income taxes relate to the income tax
effects of adjustment items that are excluded for the
purposes of calculating non-IFRS based adjusted net income from
continuing operations.
|
Liquidity, Cash
Flow and Financial Resources
|
|
|
(In millions of
dollars, except ratios)
|
|
|
|
December
27,
|
March 31,
|
As
at
|
2015
|
2015
|
Cash and cash
equivalents
|
$ 136.0
|
$ 106.1
|
Debt-to-equity
ratio
|
0.59:1
|
0.54:1
|
|
|
|
|
December
27,
|
December
28,
|
For the three months
ended
|
2015
|
2014
|
Cash flows provided
by operating activities from
|
|
|
|
continuing
operations
|
$
31.6
|
$
31.2
|
At December 27, 2015, the Company
had cash and cash equivalents of $136.0
million compared to $106.1
million at March 31, 2015. At
December 27, 2015, the Company's
debt-to-total equity ratio was 0.59:1.
At December 27, 2015, the Company
had $616 million of unutilized
multipurpose credit, including letters of credit, available under
existing credit facilities and an additional $8.9 million available under letter of credit
facilities.
In the three months ended December 27,
2015, cash flows provided by operating activities from
continuing operations were $31.6
million ($31.2 million
provided by operating activities in the corresponding period a year
ago). In the nine months ended December 27,
2015, cash flows provided by operating activities from
continuing operations were $2.1
million ($37.9 million
provided by operating activities in the corresponding period a year
ago). The decrease in operating cash flows related primarily
to the timing of investments in non-cash working capital in certain
customer programs.
In the third quarter of fiscal 2016, the Company's investment in
non-cash working capital decreased by $18.4
million from September 27,
2015. The Company has made progress towards its goal of
reducing its overall investment in non-cash working capital as a
percentage of revenues. However, at the end of the third quarter of
fiscal 2016 the Company's non-cash working capital as a percentage
of revenues was 15.4%. This remains above the Company's target of
15% or lower, which management expects to work towards over time.
On a year-to-date basis, investment in non-cash working capital
increased by $50.2 million. Accounts
receivable increased 39% or $56.1
million compared to March 31,
2015 due to timing of billings on certain customer
contracts. Net contracts in progress increased 18% or $21.2 million compared to March 31, 2015. The Company actively manages its
accounts receivable and net contracts in progress balances through
billing terms on long-term contracts, collection efforts and
supplier payment terms. Inventories increased 10% or $4.0 million due to the timing of inventory
purchases. Deposits and prepaid assets increased 12% or
$1.7 million compared to March 31, 2015 due to the timing of program
execution. Accounts payable and accrued liabilities increased 11%
or $21.3 million compared to
March 31, 2015.
Capital expenditures totalled $7.5
million in the first nine months of fiscal 2016, primarily
related to computer hardware.
Intangible assets expenditures totalled $3.8 million in the first nine months of fiscal
2016, primarily related to computer software and internal
development projects.
During the first quarter of fiscal 2016, the Company completed a
private placement of U.S. $250
million aggregate principal amount of senior notes (the
"Senior Notes"). Transaction fees of $7.2
million were deferred and will be amortized over the term of
the Senior Notes. The Senior Notes are unsecured, were issued at
par, bear interest at a rate of 6.50% per annum and mature on
June 15, 2023. ATS used the majority
of net proceeds from the Senior Notes to repay amounts outstanding
under its senior secured credit facility, with the balance to be
used for general corporate purposes. The Company may redeem the
Senior Notes, in whole at any time or in part from time to time, at
specified redemption prices and subject to certain conditions
required by the Senior Notes. If the Company experiences a change
of control, the Company may be required to repurchase the Senior
Notes, in whole or in part, at a purchase price equal to 101% of
the aggregate principal amount of the Senior Notes, plus accrued
and unpaid interest, if any, to, but not including, the redemption
date. The Senior Notes contain customary covenants that restrict,
subject to certain exceptions and thresholds, some of the
activities of the Company and its subsidiaries, including the
Company's ability to dispose of assets, incur additional debt, pay
dividends, create liens, make investments, and engage in specified
transactions with affiliates. Subject to certain exceptions,
the Notes are guaranteed by each of the subsidiaries of the Company
that is a borrower or has guaranteed obligations under the Credit
Facility.
The Company's senior secured credit facility (the "Credit
Facility") provides a four-year committed revolving credit facility
of $750.0 million. The Credit
Facility is secured by (i) the Company's assets, including real
estate; (ii) assets, including certain real estate, of certain of
the Company's North American subsidiaries; and (iii) a pledge of
shares of certain of the Company's non-North American subsidiaries.
Certain of the Company's subsidiaries also provide guarantees under
the Credit Facility. At December 27,
2015, the Company had utilized $134.2
million under the Credit Facility by way of letters of
credit (March 31, 2015 - $290.0 million classified as long-term debt and
$85.0 million by way of letters of
credit). The Credit Facility matures on August 29, 2018.
The Credit Facility is available in Canadian dollars by way of
prime rate advances and/or bankers' acceptances, in U.S. dollars by
way of base rate advances and/or LIBOR advances, in Swiss francs,
Euros and British pounds sterling by way of LIBOR advances and by
way of letters of credit for certain purposes in Canadian dollars,
U.S. dollars and Euros. The interest rates applicable to the
Credit Facility are determined based on a debt to EBITDA ratio as
defined in the Credit Facility. 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 a margin ranging
from 0.45% to 2.00%. For bankers' acceptances and LIBOR
advances, the interest rate is equal to the bankers' acceptance fee
or the LIBOR, respectively, plus a margin that varies from 1.45% to
3.00%. The Company pays a fee for usage of financial letters of
credit which ranges from 1.45% to 3.00% and a fee for usage of
non-financial letters of credit which ranges from 0.97% to 2.00%.
The Company pays a standby fee on the unadvanced portions of the
amounts available for advance or draw-down under the Credit
Facility at rates ranging from 0.29% to 0.68%.
The Credit Facility is subject to a debt to EBITDA test and an
interest coverage test. Under the terms of the Credit
Facility, the Company is restricted from encumbering any assets
with certain permitted exceptions. The Credit Facility also
limits advances to subsidiaries and partially restricts the Company
from repurchasing its common shares and paying dividends. At
December 27, 2015, all of the
covenants were met.
The Company has additional credit facilities available of
$12.2 million (3.6 million Euro, 230.0
million Indian Rupees, 50.0 million
Thai Baht and 1.0 million Czech Koruna). The total
amount outstanding on these facilities at December 27, 2015 was $8.9
million, of which $2.1 million
was classified as bank indebtedness (March
31, 2015 - $1.7 million) and
$6.7 million was classified as
long-term debt (March 31, 2015 -
$4.9 million). The interest rates
applicable to the credit facilities range from 1.66% to 10.00% per
annum. A portion of the long-term debt is secured by certain assets
of the Company. The 230.0 million
Indian Rupees credit facilities are secured by letters of
credit under the Credit Facility.
Over the long-term, the Company generally expects to continue
increasing its overall investment in non-cash working capital to
support the growth of its business, with fluctuations on a
quarter-over-quarter basis. The Company's goal is to maintain its
investment in non-cash working capital as a percentage of
annualized revenues at a level below 15%. 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 non-cash 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 continue to use leverage to support its growth
strategy.
Contractual Obligations
(In millions of dollars)
The minimum operating lease payments (related primarily to
facilities and equipment) and purchase obligations are as
follows:
|
Operating
|
Purchase
|
|
leases
|
obligations
|
Less than one
year
|
$
|
9.8
|
$
|
55.8
|
One – two
years
|
8.6
|
1.1
|
Two – three
years
|
7.3
|
0.1
|
Three – four
years
|
6.4
|
0.1
|
Four – five
years
|
6.1
|
0.1
|
Due in over five
years
|
5.4
|
––
|
|
$
|
43.6
|
$
|
57.2
|
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
December 27, 2015, the total value of
outstanding bank guarantees was approximately $152.9 million (March 31,
2015 - $118.0 million).
In the normal course of operations, the Company is party to a
number of lawsuits, claims and contingencies. Although it is
possible that liabilities may be incurred in instances for which no
accruals have been made, the Company does not believe that the
ultimate outcome of these matters will have a material impact on
its consolidated financial position.
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 10 of the
interim condensed 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 market or
geographic region represents significant credit risk. Credit risk
concentration with respect to trade receivables is mitigated as the
Company primarily serves large, multinational customers and obtains
insurance in certain instances.
During the first nine months of fiscal 2016, 988,417 stock
options were exercised. At February 2,
2016 the total number of shares outstanding was
92,138,609 and there were 3,761,866 stock options
outstanding to acquire common shares of the Company.
Normal Course Issuer Bid
On November 4, 2015, the Company announced that the
Toronto Stock Exchange ("TSX") had accepted a notice filed by it of
its intention to make a normal course issuer bid ("NCIB"). Under
the NCIB, ATS has the ability to purchase for cancellation up to a
maximum of 4,600,000 common shares, representing approximately 5%
of the 92,541,582 common shares that were issued and outstanding as
of October 31, 2015.
Purchases under the NCIB will be made through the facilities of
the TSX and/or alternative trading systems in accordance with
applicable regulatory requirements, during the twelve month period
which commenced on November 6, 2015
and ending on or before November 5,
2016. The average daily trading volume of the common shares
on the TSX for the six calendar months ending October 31, 2015 was 160,087 common
shares. On any trading day ATS will not purchase more than 25%
of such average daily trading volume representing 40,021 common
shares, except where such purchases are made in accordance with
available block purchase exemptions. The common shares purchased
under this NCIB will be cancelled.
Some purchases under the NCIB may be made pursuant to an
automatic purchase plan between ATS and its broker. This plan would
enable the purchase of ATS common shares when ATS would not
ordinarily be active in the market due to internal trading blackout
periods, insider trading rules, or otherwise.
ATS believes that there are times when the market price of ATS
common shares may not reflect their underlying value and that the
purchase of shares by ATS will both provide liquidity to existing
shareholders and benefit remaining shareholders. The NCIB is viewed
by ATS management as one component of an overall capital structure
strategy and complimentary to its acquisition growth plans.
As at December 27, 2015, the
Company had purchased 481,473 common shares for $6.0 million under the NCIB. The weighted average
price per share repurchased in the three month period ended
December 27, 2015 was $12.45. ATS security holders may obtain a copy of
the notice, without charge, upon request from the Secretary of the
Company.
Related-Party Transactions
The Company has entered
into an agreement with a shareholder, Mason Capital Management, LLC
("Mason Capital"), pursuant to which Mason Capital has agreed to
provide ATS with ongoing strategic and capital markets advisory
services for an annual fee of U.S. $0.5
million. As part of the agreement, members of the
Company's board of directors who are associated with Mason Capital
have waived any fees to which they may have otherwise been entitled
for serving as members of the board of directors or as members of
any committee of the board of directors.
There were no other significant related-party transactions in
the first nine months of fiscal 2016.
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, through borrowings
made by the Company in currencies other than its functional
currency and through its investments in its foreign-based
subsidiaries.
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
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 10 to the interim
condensed consolidated financial statements for details on the
derivative financial instruments outstanding at December 27, 2015.
In addition, from time to time, the Company may hedge the
foreign exchange risk arising from foreign currency debt,
intercompany loans, net investments in foreign-based subsidiaries
and committed acquisitions through the use of forward foreign
exchange contracts or other non-derivative financial instruments.
The Company uses hedging as a risk management tool, not to
speculate.
Period average exchange rates in CDN$
|
Three months
ended
|
|
Nine months
ended
|
|
|
December
|
December
|
|
December
|
December
|
|
|
27, 2015
|
28, 2014
|
% change
|
27, 2015
|
28, 2014
|
% change
|
U.S.
Dollar
|
1.3348
|
1.1356
|
17.5%
|
1.2902
|
1.1048
|
16.8%
|
Euro
|
1.4601
|
1.4191
|
2.9%
|
1.4249
|
1.4521
|
(1.9)%
|
Consolidated Quarterly Results
|
|
|
|
|
|
|
(In millions of
dollars, except
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
per share
amounts)
|
2016
|
2016
|
2016
|
2015
|
2015
|
2015
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
Revenues from
continuing
|
|
|
|
|
|
|
|
|
operations
|
$
|
274.9
|
$
|
263.7
|
$
|
254.3
|
$
|
289.4
|
$
|
248.8
|
$
|
207.0
|
$
|
190.9
|
$
|
200.7
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
26.8
|
$
|
24.4
|
$
|
17.5
|
$
|
22.6
|
$
|
15.9
|
$
|
14.1
|
$
|
14.4
|
$
|
17.2
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from
|
|
|
|
|
|
|
|
|
operations
|
$
|
32.1
|
$
|
31.7
|
$
|
27.4
|
$
|
34.7
|
$
|
27.2
|
$
|
27.0
|
$
|
21.1
|
$
|
22.2
|
|
|
|
|
|
|
|
|
|
Income from
continuing
|
|
|
|
|
|
|
|
|
operations
|
$
|
15.5
|
$
|
12.8
|
$
|
9.8
|
$
|
13.9
|
$
|
8.6
|
$
|
7.4
|
$
|
9.0
|
$
|
11.7
|
|
|
|
|
|
|
|
|
|
Income (loss)
from
|
|
|
|
|
|
|
|
|
discontinued
operations
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
2.2
|
$
|
(0.0)
|
$
|
7.1
|
$
|
6.9
|
$
|
(0.4)
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
15.5
|
$
|
12.8
|
$
|
9.8
|
$
|
16.1
|
$
|
8.6
|
$
|
14.5
|
$
|
15.9
|
$
|
11.3
|
Basic earnings per
share from
|
|
|
|
|
|
|
|
|
continuing
operations
|
$
|
0.16
|
$
|
0.14
|
$
|
0.11
|
$
|
0.15
|
$
|
0.09
|
$
|
0.08
|
$
|
0.10
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
Adjusted basic
earnings per
|
|
|
|
|
|
|
|
|
share from
continuing
|
|
|
|
|
|
|
|
|
operations
|
$
|
0.21
|
$
|
0.19
|
$
|
0.18
|
$
|
0.24
|
$
|
0.18
|
$
|
0.19
|
$
|
0.15
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
|
|
|
|
|
|
|
|
from discontinued
operations
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
0.03
|
$
|
(0.00)
|
$
|
0.08
|
$
|
0.08
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.16
|
$
|
0.14
|
$
|
0.11
|
$
|
0.18
|
$
|
0.09
|
$
|
0.16
|
$
|
0.18
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.16
|
$
|
0.14
|
$
|
0.11
|
$
|
0.15
|
$
|
0.09
|
$
|
0.08
|
$
|
0.10
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per
|
|
|
|
|
|
|
|
|
share from
discontinued
|
|
|
|
|
|
|
|
|
operations
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
0.03
|
$
|
(0.00)
|
$
|
0.08
|
$
|
0.07
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.16
|
$
|
0.14
|
$
|
0.11
|
$
|
0.18
|
$
|
0.09
|
$
|
0.16
|
$
|
0.17
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
Order
Bookings
|
$
|
228
|
$
|
230.0
|
$
|
222.0
|
$
|
317.0
|
$
|
287.0
|
$
|
216.0
|
$
|
160.0
|
$
|
197.0
|
|
|
|
|
|
|
|
|
|
Order
Backlog
|
$
|
546
|
$
|
589.0
|
$
|
590.0
|
$
|
632.0
|
$
|
602.0
|
$
|
561.0
|
$
|
425.0
|
$
|
474.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Order Bookings, revenues and
earnings from operations due to summer plant shutdowns by its
customers. Operating performance quarter to quarter may also be
affected by the timing of revenue recognition on large programs in
Order Backlog, which is impacted by such factors as customer
delivery schedules, the timing of third-party content and by the
timing of acquisitions.
Critical Accounting Estimates and Assumptions
The
preparation of the Company's consolidated financial statements
requires management to make estimates, judgments 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, judgments 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 2015
MD&A.
Accounting Standards Change
IAS 19 – Employee
Benefits
Effective April 1,
2015, the Company adopted the amendments to IAS 19 –
Employee Benefits. The amendments require an
entity to consider contributions from employees or third parties
when accounting for defined benefit plans. When the contributions
are linked to service, they should be attributed to periods of
service as a negative benefit. These amendments clarify that, if
the amount of the contributions is independent of the number of
years of service, an entity is permitted to recognize such
contributions as a reduction in the service cost in the period in
which the service is rendered, instead of allocating the
contributions to the periods of service.
The application of the amendments to IAS 19 had no impact on the
interim condensed consolidated financial statements of the
Company.
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 (2013) 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 system's objectives will be met.
During the three and nine months ended December 27, 2015, there have been no changes in
the design of 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 may 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' 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 Company's growth
strategy: grow, expand, and scale; potential impact of general
economic environment, including impact on Order Bookings; activity
in the markets that the Company serves; the engagement with
customers on enterprise solutions providing ATS with more strategic
relationships, increased predictability, better program control and
less sensitivity to macroeconomic forces; the expected impact of
the sales organization's approach to market on Order Bookings,
performance period, and timing of revenue recognition; the
Company's Order Backlog partially mitigating the impact of
volatility in Order Bookings; the rate of completion of Order
Backlog; management's expectations in relation to the impact of
management focus and strategic initiatives on ATS operations;
expected payback period in relation to restructuring charges;
expected additional restructuring charges in fourth quarter and
expectation that any measures taken will not fully offset expected
negative impact of decreased Order Backlog on revenues and earnings
in the near term; the Company's strategy to expand organically and
through acquisition; the Company's expectation with respect to
effective tax rate; management's expectation with respect to
non-cash working capital as a percentage of revenues; Company's
expectation to continue to increase its investment in working
capital; expectation in relation to meeting funding requirements
for investments; and expectation to use increased leverage to
support growth strategy. The risks and uncertainties that may
affect forward-looking statements include, among others: impact of
the global economy; general market performance including capital
market conditions and availability and cost of credit; performance
of the markets 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; failure or delays associated
with new customer programs; timing of customer decisions related to
large enterprise programs and potential for greater negative impact
associated with any non-performance in relation thereto; variations
in the amount of Order Backlog completed in any given quarter; that
customers are more difficult to engage than expected; that
strategic initiatives are delayed, not completed, or do not have
intended positive impact; that measures to re-balance global
capacity and improve cost structure are delayed or that charges are
greater than expected and/or that the payback is not realized as
quickly as anticipated; that restructuring expenses in the fourth
quarter are other than expected; that near term Order Bookings are
made and revenued quickly so as to offset decreased Order Backlog
to a degree other than expected; 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; or to
raise, through debt or equity, or otherwise have available,
required capital; that acquisitions made are not integrated as
quickly or effectively as planned or expected and, as a result,
anticipated benefits and synergies are not realized; that the
effective tax rate is other than expected, due to reasons including
income spread among jurisdictions being other than anticipated;
non-cash working capital as a percentage of revenues operating at a
level other than as expected due to reasons, including, the timing
and nature of Order Bookings, the timing of payment milestones and
payment terms in customer contracts, and delays in customer
programs; that one or more customers, or other entities 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'
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)
|
|
|
|
|
|
|
December
27
|
March 31
|
As
at
|
Note
|
2015
|
2015
|
|
|
|
|
ASSETS
|
12
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
$
|
135,982
|
$
|
16,052
|
Accounts
receivable
|
|
201,453
|
145,342
|
Costs and earnings in
excess of billings
|
|
|
|
|
on contracts in
progress
|
6
|
228,370
|
192,813
|
Inventories
|
6
|
46,118
|
42,079
|
Deposits, prepaids
and other assets
|
7
|
16,465
|
14,731
|
|
|
628,388
|
501,017
|
Assets held for
sale
|
5
|
––
|
4,221
|
|
|
628,388
|
505,238
|
Non-current
assets
|
|
|
|
Property, plant and
equipment
|
8
|
80,294
|
83,901
|
Investment
property
|
|
4,322
|
3,880
|
Goodwill
|
|
446,449
|
405,881
|
Intangible
assets
|
9
|
187,694
|
183,610
|
Deferred income tax
assets
|
|
3,941
|
5,057
|
Investment tax credit
receivable
|
|
41,206
|
33,107
|
|
|
763,906
|
715,436
|
Total
assets
|
|
$
|
1,392,294
|
$
|
1,220,674
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Bank
indebtedness
|
12
|
$
|
2,135
|
$
|
1,731
|
Accounts payable and
accrued liabilities
|
|
222,183
|
200,871
|
Provisions
|
11
|
14,469
|
10,419
|
Billings in excess of
costs and earnings
|
|
|
|
|
on contracts in
progress
|
6
|
90,356
|
76,031
|
Current portion of
long-term debt
|
12
|
4,779
|
3,372
|
|
|
333,922
|
292,424
|
Liabilities directly
associated with assets held for sale
|
5
|
––
|
5,717
|
|
|
333,922
|
298,141
|
Non-current
liabilities
|
|
|
|
Employee
benefits
|
|
27,553
|
24,777
|
Long-term
debt
|
12
|
337,107
|
286,154
|
Deferred income tax
liabilities
|
|
34,056
|
40,870
|
|
|
398,716
|
351,801
|
Total
liabilities
|
|
$
|
732,638
|
$
|
649,942
|
|
|
|
|
Commitments and
Contingencies
|
12, 16
|
|
|
|
|
|
|
EQUITY
|
|
|
|
Share
capital
|
13
|
$
|
526,304
|
$
|
519,118
|
Contributed
surplus
|
|
13,568
|
14,420
|
Accumulated other
comprehensive income
|
|
81,153
|
33,434
|
Retained
earnings
|
|
38,433
|
3,590
|
Equity attributable
to shareholders
|
|
659,458
|
570,562
|
Non-controlling
interests
|
|
198
|
170
|
Total
equity
|
|
659,656
|
570,732
|
Total liabilities
and equity
|
|
$
|
1,392,294
|
$
|
1,220,674
|
|
|
|
|
|
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Income
|
(in thousands of
Canadian dollars, except per share amounts - unaudited)
|
|
|
|
|
|
|
|
Three months
ended
|
Nine months
ended
|
|
|
December
27
|
December
28
|
December
27
|
December
28
|
|
Note
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
Revenues from
construction contracts
|
|
$
166,556
|
$ 154,303
|
$
476,990
|
$ 472,188
|
|
Sale of
goods
|
|
18,807
|
18,145
|
59,257
|
44,761
|
|
Services
rendered
|
|
89,531
|
76,309
|
256,619
|
129,717
|
|
|
|
|
|
|
Total
revenues
|
|
274,894
|
248,757
|
792,866
|
646,666
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
Cost of
revenues
|
|
204,768
|
185,972
|
595,269
|
473,794
|
|
Selling, general and
administrative
|
|
42,518
|
44,459
|
125,769
|
124,712
|
|
Stock-based
compensation
|
15
|
786
|
2,439
|
3,140
|
3,796
|
|
|
|
|
|
|
Earnings from
operations
|
|
26,822
|
15,887
|
68,688
|
44,364
|
|
|
|
|
|
|
Net finance
costs
|
18
|
6,962
|
4,449
|
18,732
|
7,606
|
|
|
|
|
|
|
Income from
continuing operations
|
|
|
|
|
|
|
before income
taxes
|
|
19,860
|
11,438
|
49,956
|
36,758
|
|
|
|
|
|
|
Income tax
expense
|
14
|
4,364
|
2,864
|
11,794
|
11,790
|
|
|
|
|
|
|
Income from
continuing operations
|
|
15,496
|
8,574
|
38,162
|
24,968
|
|
|
|
|
|
|
Income (loss) from
discontinued operations,
|
|
|
|
|
|
|
net of tax
|
|
––
|
(22)
|
––
|
13,961
|
|
|
|
|
|
|
Net
income
|
|
$
15,496
|
$
8,552
|
$
38,162
|
$
38,929
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholders
|
|
$
15,484
|
$
8,468
|
$
38,134
|
$
38,789
|
Non-controlling
interests
|
|
12
|
84
|
28
|
140
|
|
|
$
15,496
|
$
8,552
|
$
38,162
|
$
38,929
|
|
|
|
|
|
|
Earnings (loss)
per share
|
|
|
|
|
|
|
attributable
to shareholders
|
19
|
|
|
|
|
Basic and diluted
–
|
|
|
|
|
|
|
from continuing
operations
|
|
$
0.16
|
$
0.09
|
$
0.41
|
$
0.27
|
Basic and diluted
–
|
|
|
|
|
|
|
from discontinued
operations
|
|
––
|
(0.00)
|
––
|
0.15
|
|
|
$
0.16
|
$
0.09
|
$
0.41
|
$
0.42
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Comprehensive Income
|
(in thousands of
Canadian dollars - unaudited)
|
|
|
|
|
|
|
Three months
ended
|
Nine months
ended
|
|
December
27
|
December
28
|
December
27
|
December
28
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Net
income
|
$
|
15,496
|
$
|
8,552
|
$
|
38,162
|
$
|
38,929
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustments
|
|
|
|
|
|
|
(net of income
taxes of $nil)
|
10,403
|
10,822
|
47,178
|
(7,300)
|
|
|
|
|
|
|
Net unrealized loss
on derivative
|
|
|
|
|
|
|
financial
instruments designated as
|
|
|
|
|
|
cash flow
hedges
|
(1,218)
|
(1,637)
|
(2,181)
|
(2,691)
|
|
Tax impact
|
|
317
|
387
|
544
|
653
|
|
|
|
|
|
|
Loss transferred to
net income
|
|
|
|
|
|
|
for
derivatives designated as
|
|
|
|
|
|
cash flow
hedges
|
1,102
|
589
|
2,903
|
1,109
|
|
Tax impact
|
|
(273)
|
(143)
|
(725)
|
(275)
|
|
|
|
|
|
Other
comprehensive income (loss)
|
10,331
|
10,018
|
47,719
|
(8,504)
|
|
|
|
|
|
Comprehensive
income
|
$
|
25,827
|
$
|
18,570
|
$
|
85,881
|
$
|
30,425
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
Shareholders
|
$
|
25,815
|
$
|
18,486
|
$
|
85,853
|
$
|
30,285
|
Non-controlling
interests
|
12
|
84
|
28
|
140
|
|
$
|
25,827
|
$
|
18,570
|
$
|
85,881
|
$
|
30,425
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Changes in Equity
|
(in thousands of
Canadian dollars - unaudited)
|
|
|
|
|
|
|
|
|
|
Nine months ended
December 27, 2015
|
|
|
|
|
|
|
|
Share
capital
|
Contributed surplus
|
Retained earnings
|
Currency
translation adjustments
|
Cash
flow
hedges
|
Total
accumulated
other
comprehensive
income
|
Non-
controlling interests
|
Total equity
|
Balance, at March
31, 2015
|
$
|
519,118
|
$
|
14,420
|
$
|
3,590
|
$
|
35,702
|
$
|
(2,268)
|
$
|
33,434
|
$
|
170
|
$
|
570,732
|
|
|
|
|
|
|
|
|
|
Net income
|
––
|
––
|
38,134
|
––
|
––
|
––
|
28
|
38,162
|
Other comprehensive
income
|
––
|
––
|
––
|
47,178
|
541
|
47,719
|
––
|
47,719
|
Total comprehensive
income
|
––
|
––
|
38,134
|
47,178
|
541
|
47,719
|
28
|
85,881
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
––
|
1,697
|
––
|
––
|
––
|
––
|
––
|
1,697
|
Exercise of stock
options
|
9,936
|
(2,549)
|
––
|
––
|
––
|
––
|
––
|
7,387
|
Repurchase of common
shares
|
(2,750)
|
––
|
(3,291)
|
––
|
––
|
––
|
––
|
(6,041)
|
|
|
|
|
|
|
|
|
|
Balance, at
December 27, 2015
|
$
|
526,304
|
$
|
13,568
|
$
|
38,433
|
$
|
82,880
|
$
|
(1,727)
|
$
|
81,153
|
$
|
198
|
$
|
659,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
December 28, 2014
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Retained
earnings
(deficit)
|
Currency
translation
adjustments
|
Cash flow
hedges
|
Total
accumulated
other
comprehensive
income
|
Non-
controlling
interests
|
Total
equity
|
Balance, at March 31,
2014
|
$
|
510,725
|
$
|
15,025
|
$
|
(44,311)
|
$
|
36,616
|
$
|
(646)
|
$
|
35,970
|
$
|
129
|
$
|
517,538
|
|
|
|
|
|
|
|
|
|
Net
income
|
––
|
––
|
38,789
|
––
|
––
|
––
|
140
|
38,929
|
Other comprehensive
loss
|
––
|
––
|
––
|
(7,300)
|
(1,204)
|
(8,504)
|
––
|
(8,504)
|
Total comprehensive
income (loss)
|
––
|
––
|
38,789
|
(7,300)
|
(1,204)
|
(8,504)
|
140
|
30,425
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
––
|
––
|
––
|
––
|
––
|
––
|
319
|
319
|
Stock-based
compensation
|
––
|
1,243
|
––
|
––
|
––
|
––
|
––
|
1,243
|
Exercise of stock
options
|
8,193
|
(2,424)
|
––
|
––
|
––
|
––
|
––
|
5,769
|
|
|
|
|
|
|
|
|
|
Balance, at December
28, 2014
|
$
|
518,918
|
$
|
13,844
|
$
|
(5,522)
|
$
|
29,316
|
$
|
(1,850)
|
$
|
27,466
|
$
|
588
|
$
|
555,294
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Cash Flows
|
(in thousands of
Canadian dollars - unaudited)
|
|
|
|
|
|
|
|
|
Three months
ended
|
Nine months
ended
|
|
|
December
27
|
December
28
|
December
27
|
December
28
|
|
Note
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
15,496
|
$
|
8,574
|
$
|
38,162
|
$
|
24,968
|
Items not involving
cash
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
2,362
|
2,117
|
7,121
|
5,941
|
|
Amortization of
intangible assets
|
|
6,900
|
10,643
|
22,587
|
21,936
|
|
Deferred income
taxes
|
14
|
(7,185)
|
1,780
|
(6,009)
|
(308)
|
|
Other items not
involving cash
|
|
(1,480)
|
(2,871)
|
(7,969)
|
(5,646)
|
|
Stock-based
compensation
|
15
|
786
|
2,439
|
3,140
|
3,796
|
|
Gain on disposal of
property, plant and
|
|
|
|
|
|
|
equipment
|
|
(3,639)
|
(11)
|
(4,724)
|
(334)
|
|
|
$
|
13,240
|
$
|
22,671
|
$
|
52,308
|
$
|
50,353
|
Change in non-cash
operating working capital
|
|
18,396
|
8,516
|
(50,187)
|
(12,485)
|
Cash flows used in
operating activities of
|
|
|
|
|
|
|
discontinued
operations
|
|
––
|
(195)
|
––
|
(3,223)
|
Cash flows
provided by operating activities
|
|
$
|
31,636
|
$
|
30,992
|
$
|
2,121
|
$
|
34,645
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
8
|
$
|
(2,128)
|
$
|
(2,830)
|
$
|
(7,536)
|
$
|
(7,115)
|
Acquisition of
intangible assets
|
9
|
(995)
|
(1,770)
|
(3,758)
|
(4,545)
|
Business acquisition,
net of cash acquired
|
|
––
|
67
|
––
|
(352,797)
|
Proceeds from
disposal of property,
|
|
|
|
|
|
|
plant and
equipment
|
|
13,119
|
56
|
14,920
|
8,816
|
Proceeds from sale of
subsidiary
|
5
|
––
|
––
|
2,274
|
–
|
Cash flows provided
by investing activities
|
|
|
|
|
|
|
of discontinued
operations
|
|
––
|
5,015
|
––
|
18,658
|
Cash flows
provided by (used in)
|
|
|
|
|
|
|
investing
activities
|
|
$
|
9,996
|
$
|
538
|
$
|
5,900
|
$
|
(336,983)
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Restricted
cash
|
7
|
$
|
––
|
$
|
395
|
$
|
––
|
$
|
328
|
Bank
indebtedness
|
|
(172)
|
473
|
415
|
366
|
Repayment of
long-term debt
|
|
(109)
|
(28,978)
|
(290,877)
|
(44,097)
|
Proceeds from
long-term debt
|
|
266
|
1,049
|
302,823
|
368,400
|
Issuance of common
shares
|
|
420
|
4,514
|
7,387
|
5,769
|
Repurchase of common
shares
|
13
|
(6,041)
|
––
|
(6,041)
|
––
|
Cash flows
provided by (used in)
|
|
|
|
|
|
|
financing
activities
|
|
$
|
(5,636)
|
$
|
(22,547)
|
$
|
13,707
|
$
|
330,766
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
|
|
|
|
|
and cash
equivalents
|
|
2,881
|
2,365
|
7,728
|
1,150
|
|
|
|
|
|
|
Increase in cash and
cash equivalents
|
|
38,877
|
11,348
|
29,456
|
29,578
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
97,105
|
96,844
|
106,526
|
78,614
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
135,982
|
$
|
108,192
|
$
|
135,982
|
$
|
108,192
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
Cash income taxes
paid by continuing operations
|
|
$
|
1,703
|
$
|
3,093
|
$
|
7,955
|
$
|
7,375
|
Cash interest paid by
continuing operations
|
|
$
|
12,075
|
$
|
4,273
|
$
|
15,513
|
$
|
7,016
|
SOURCE ATS Automation Tooling Systems Inc.