CAMBRIDGE, ON, May 19, 2016 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three and twelve months ended
March 31, 2016.
Fourth Quarter and Annual Summary
- Revenues from continuing operations were $246.8 million, 15% lower than the fourth quarter
a year ago, primarily reflecting lower Order Backlog entering the
fourth quarter of fiscal 2016 compared to a year ago. For the year,
revenues from continuing operations were $1,039.6 million, 11% higher than in the
corresponding period a year ago, primarily reflecting revenues
earned by PA.
- Earnings from continuing operations were $8.1 million (3% operating margin), compared to
$22.6 million (8% operating margin)
in the fourth quarter of fiscal 2015. Adjusted earnings from
continuing operations1 were $23.2
million (9% margin), compared to $34.7 million (12% margin) a year ago. For the
year, earnings from operations were $76.8
million (7% operating margin) compared to $67.0 million (7% operating margin) in the
corresponding period a year ago. Adjusted earnings from operations
were $114.4 million (11% margin)
compared to adjusted earnings from operations of $109.8 million (12% margin) a year ago;
- EBITDA1 was $17.7
million (7% margin), compared to $35.2 million (12% margin) in the fourth quarter
a year ago. Excluding $2.3 million of
restructuring and severance costs and executive transition expenses
of $7.1 million, fourth quarter
fiscal 2016 EBITDA was $27.1 million
(11% margin), compared to $38.2
million (13% margin) (which excluded $1.4 million of restructuring and severance costs
and acquisition-related costs of $1.6
million) a year ago. For the year, EBITDA was $116.1 million (11% EBITDA margin) compared to
$107.5 million (11% EBITDA margin) in
fiscal 2015;
- Earnings per share from continuing operations were 2 cents basic compared to 15 cents basic a year ago. Adjusted basic
earnings per share from continuing operations1 were
14 cents compared to 24 cents in the fourth quarter a year ago;
- Order Bookings were a record $390
million, a 23% increase from the fourth quarter of fiscal
2015. For the year, Order Bookings were $1,070 million, a 9% increase from prior year
Order Bookings of $981 million;
- Period end Order Backlog was $652
million, 3% higher than at March 31,
2015; and
- The Company's balance sheet and financial capacity to support
growth remained strong, with unutilized credit facilities of
$639 million and $4.8 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
March 31,
2016
|
3 months ended
March 31,
2015
|
12 months
ended
March 31,
2016
|
3 months ended
March 31,
2015
|
Revenues
|
Continuing
Operations
|
$
|
246.8
|
$
|
289.4
|
$
|
1,039.6
|
$
|
936.1
|
Earnings from
operations1
|
Continuing
Operations
|
$
|
8.1
|
$
|
22.6
|
$
|
76.8
|
$
|
67.0
|
Adjusted
earnings
from operations1
|
Continuing
Operations
|
$
|
23.2
|
$
|
34.7
|
$
|
114.4
|
$
|
109.8
|
EBITDA1
|
Continuing
Operations
|
$
|
17.7
|
$
|
35.2
|
$
|
116.1
|
$
|
107.5
|
Net
income
|
Continuing
Operations
|
$
|
1.4
|
$
|
13.9
|
$
|
39.6
|
$
|
38.9
|
Discontinued
Operations
|
$
|
––
|
$
|
2.2
|
$
|
––
|
$
|
16.2
|
Earnings per
share
|
From
continuing
operations (basic)
|
$
|
0.02
|
$
|
0.15
|
$
|
0.43
|
$
|
0.43
|
From
discontinued
operations (basic)
|
$
|
––
|
$
|
0.03
|
$
|
––
|
$
|
0.18
|
From
continuing
operations (diluted)
|
$
|
0.02
|
$
|
0.15
|
$
|
0.43
|
$
|
0.42
|
From
discontinued
operations (diluted)
|
$
|
––
|
$
|
0.03
|
$
|
––
|
$
|
0.18
|
Adjusted
earnings
per share1
|
From
continuing
operations (basic)
|
$
|
0.14
|
$
|
0.24
|
$
|
0.72
|
$
|
0.77
|
1 Non-IFRS measure: see "Notice to Reader: Non-IFRS
Measures and Additional IFRS Measures".
"Fourth quarter revenue performance was anticipated and
reflected lower Order Backlog entering the period," said
Anthony Caputo, Chief Executive
Officer. "During the quarter, ATS set a new quarterly Order
Bookings record on the way to generating over $1 billion in annual Order Bookings for the first
time. Based on year-end Order Backlog, significant funnel and
strong balance sheet, we are well positioned to continue to advance
our value creation plan."
Fourth Quarter Summary
Fiscal 2016 fourth quarter
revenues were 15% lower than in the corresponding period a year
ago. Lower revenues primarily reflected lower Order Backlog
entering the fourth quarter of fiscal 2016 compared to a year ago.
This was partially offset by foreign exchange rate changes, which
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 fourth quarter revenues from consumer
products & electronics were consistent with the corresponding
period a year ago. Revenues generated in the energy market
increased 9% due to Order Bookings. Revenues in the life sciences
market decreased 24% primarily reflecting timing of project
activities. Transportation revenues decreased 11% primarily
reflecting lower Order Backlog entering fiscal 2016 fourth quarter
due to timing of Order Bookings.
Fiscal 2016 fourth quarter earnings from operations were
$8.1 million (3% operating margin)
compared to $22.6 million (8%
operating margin) in the fourth quarter of fiscal 2015. Fourth
quarter fiscal 2016 earnings from operations included $7.1 million of executive transition expenses,
$2.3 million of restructuring and
severance costs and $5.7 million
related to amortization of identifiable intangible assets recorded
on the acquisitions of PA, IWK, and sortimat. Excluding these
items, fourth quarter fiscal 2016 adjusted earnings from operations
were $23.2 million (9% margin),
compared to adjusted earnings from operations of $34.7 million (12% margin) a year ago. Lower
adjusted earnings from operations primarily reflected lower
revenues.
Depreciation and amortization expense was $9.6 million in the fourth quarter of fiscal
2016, compared to $12.6 million a
year ago. The decrease primarily reflects lower amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK, ATW and sortimat compared to the fourth quarter of fiscal
2015.
EBITDA was $17.7 million (7%
EBITDA margin) in the fourth quarter of fiscal 2016 compared to
$35.2 million (12% EBITDA margin) in
the fourth quarter of fiscal 2015. Excluding executive transition
expenses and restructuring and severance costs, fourth quarter
fiscal 2016 EBITDA was $27.1 million
(11% EBITDA margin). Comparably, excluding restructuring and
severance costs and acquisition-related costs, fourth quarter
fiscal 2015 EBITDA was $38.2 million
(13% EBITDA margin).
Executive Transition
In March
2016, the Company announced that Anthony Caputo, the Chief Executive Officer of
the Company, will be leaving the Company in February 2017. In connection with this, the CEO
and the Company have entered into a transition agreement that
amends the CEO's employment agreement to, among other things: (i)
secure for the Company an orderly transition period of
approximately 11 months, allowing for both continuity of leadership
in the interim and a thorough search and selection process for a
successor suitable to lead the Company as it continues to realize
on its growth and value creation ambitions; and (ii) provide that
the CEO may leave earlier if a transition is completed prior to
February 2017. In turn, recognizing these clear benefits
derived by the Company, the transition agreement provides for
financial terms consistent with the CEO's long-standing employment
agreement. In accordance with the transition agreement, the
CEO will receive a lump sum payment estimated as $5.0 million, which payment encompasses bonus
entitlement for fiscal 2017, and a portion of which is subject to
change based on the date the transition is completed, and the
Company will incur $2.1 million of
post-employment benefit expenses related to an additional two years
of credited service towards the CEO's pension entitlement.
Order Bookings
Fourth quarter fiscal 2016 Order
Bookings were $390 million, a 23%
increase from the fourth quarter of fiscal 2015. Strength in
consumer products & electronics, energy and life sciences
markets more than offset lower activity in the transportation
market.
Included in fourth quarter fiscal 2016 Order Bookings is an
enterprise program valued at approximately U.S. $100 million from a North America-based customer that is a global
leader in the solar energy market. ATS has provided innovative core
manufacturing solutions to this customer for a number of years. The
Order Booking involves delivery and installation of systems at
several locations that will enable the customer to roll out a new
global product. Multiple ATS divisions will be involved with the
program delivery and execution.
Foreign exchange rate changes positively impacted the
translation of Order Bookings from foreign-based ATS subsidiaries
compared to the corresponding period a year ago.
Quarterly Conference Call
ATS' quarterly conference
call begins at 10:00 a.m. eastern on
Thursday May 19, 2016, 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 May 26, 2016) by
dialing (416) 849-0833 and entering passcode 9227924 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 Year
Ended March 31, 2016
This Management's Discussion and Analysis ("MD&A") for
the year ended March 31, 2016 (fiscal
2016) is as of May 18, 2016 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 audited
consolidated financial statements of the Company for the fiscal
2016 which have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and are reported in Canadian
dollars. 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 twelve month periods ending March 31, 2016 and March
31, 2015 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 twelve month periods ending March 31,
2016 and March 31, 2015 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 by offering:
pre-automation services including, engineering, design, modelling
and simulation, and program management; products, including
contract manufacturing, automation and other manufacturing
products; and after sales services, including training,
preventative maintenance and process optimization, emergency on
call support, life cycle material management, retooling and
retrofits 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.
BUSINESS OVERVIEW
ATS is an industry-leading
automation solutions provider to many of the world's most
successful multinational companies. ATS has expertise in custom
automation, repeat automation, automation products and value-added
services including pre automation and after-sales services.
ATS serves customers in the following markets: life sciences,
transportation, energy, consumer products, electronics, chemicals,
food, beverage, and oil and gas. With broad and in-depth knowledge
across multiple industries and technical fields, ATS is able to
deliver single-source solutions to customers that lower their
production costs, accelerate delivery of their products, and
improve quality control. ATS engages with customers on both
greenfield programs, such as equipping new factories, and
brownfield programs such as capacity expansions, line moves,
equipment upgrades, software upgrades, efficiency improvements and
factory optimization.
ATS and its subsidiaries engage at varying points in the
customers' automation cycle. During the pre-automation phase, ATS
offers a number of services including discovery and analysis,
concept development, simulation and total cost of ownership
modelling, all of which helps to verify the feasibility of
different types of automation, set objectives for factors such as
line speed and yield, assess production processes for
manufacturability and calculate the total cost of ownership.
For customers that have decided to proceed with an automation
project, ATS offers a number of automation and integration
services, including engineering design, prototyping, process
verification, specification writing, software and manufacturing
process controls development, equipment design and build, standard
automation products/platforms, third-party equipment qualification,
procurement and integration, automation system installation,
product line commissioning, validation, and documentation.
Following the installation of custom automation, ATS may supply
duplicate or "repeat" automation systems to customers that leverage
engineering design completed in the original customer program. For
customers seeking complex equipment production or build-to-print
manufacturing, ATS provides value engineering, supply chain
management, integration and manufacturing capabilities and other
automation products and solutions.
Post automation, ATS offers a number of services including
customer training, preventative maintenance, process optimization,
emergency and on call support, spare parts, retooling, retrofits
and equipment relocation.
Contract values for individual automation systems vary and are
often in excess of $1 million, with
some contracts for enterprise-type programs well in excess of
$10 million. Due to the custom nature
of customer projects, contract durations vary, with typical
durations ranging from six to 12 months, and some larger contracts
extending up to 18 to 24 months. Contract values for pre-automation
services and post-automation services range in value and can exceed
$1 million with varying durations
which can sometimes extend over a number of years.
Competitive Strengths
Management believes ATS has the
following competitive strengths:
Global presence, size and critical mass: ATS'
global presence and scale provide an advantage in serving
multinational customers. The markets in which the Company operates
are served primarily by competitors with narrow geographic and/or
industrial market reach. ATS has manufacturing operations in
Canada, the United States, Germany, China, Malaysia, and Thailand. ATS can deliver localized service
through a network of over 50 offices located around the world.
Management believes that ATS' scale and global footprint provide it
with competitive advantages in winning large, multinational
customer programs that have become increasingly common in the
industry.
Technical skills, capabilities and experience:
Automation manufacturing is a knowledge-based business. ATS has
designed, manufactured, assembled and serviced over 23,000
automation systems worldwide and has an extensive knowledge base
and accumulated design expertise. Management believes ATS' broad
experience in many different industrial markets and with diverse
technologies, its talented workforce which includes over 1,200
engineers and over 180 program management personnel, and its
ability to provide custom automation, repeat automation, automation
products and value-added services, position the Company well to
serve complex customer programs in a variety of markets.
Product and technology portfolio: Through its
history of bringing thousands of unique automation projects to
market, ATS and its subsidiaries have developed an extensive
product and technology portfolio. ATS has a number of standard
automation platforms, including: SuperTrakTM, an
in-line, high-speed flexible pallet transport system; Discovery
DialTM, a rotary dial indexer; and JetwingTM
and SpacelineTM, both synchronous indexing chassis. Each
of these automation platforms can be tailored to a customer's
unique requirements. The Company has recently introduced
OmniTrakTM, which combines the synchronous drive of the
SpacelineTM chassis with asynchronous pallet movement
provided by the programmable SuperTrakTM pallet transfer
system, which allows for multiple process times and selective
synchronization of devices.
Other standard automation products and technologies include
advanced vision systems used to ensure product or process quality,
numerous material handling and feeder technologies, high-accuracy
and high precision laser processing technologies, high performance
tube filling and cartoning technologies and advanced HMI control
systems. Management believes the Company's extensive product and
technology portfolio gives it an advantage in developing unique and
leading solutions for customers and maintaining
competitiveness.
Recognized brands: Management believes ATS is well
known within the global automation industry due to its long history
of innovation and broad scope of operations. In addition, ATS'
subsidiaries include several strong brands: "sortimat", which
specializes in the life sciences market; "ATW", which specializes
in the transportation market; "IWK", which specializes in the
packaging market; and "Process Automation Solutions" or "PA", which
provides innovative automation solutions for process and production
sectors. Management believes that ATS' brand names and global
reputation improve sales prospecting, allowing the Company to be
considered for a wide variety of customer programs.
Trusted customer relationships: ATS serves
some of the world's largest multinational companies. Most of ATS'
customers are repeat customers and many have long-standing
relationships with ATS, often spanning more than a decade.
Management estimates that approximately 90% of ATS Order Bookings
in fiscal 2016 were placed by repeat customers.
Total-solutions capabilities: Management
believes the Company gains competitive advantages because ATS
provides total turn-key solutions in automation. This allows
customers to single source their most complex projects to ATS
rather than rely on multiple engineering firms and equipment
builders. In addition, ATS can provide customers with other
value-added services including pre-automation consulting, total
cost of ownership studies, life cycle material management,
post-automation service, training and support.
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, which was divested in fiscal
2015. The results of the Solar segment are reported in
discontinued operations.
|
|
|
|
|
|
|
|
|
Consolidated
Revenues from Continuing Operations
|
|
|
|
|
|
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by
market
|
|
Q4
2016
|
|
Q4 2015
|
|
Fiscal
2016
|
|
Fiscal
2015
|
Consumer products
& electronics
|
$
|
38.9
|
$
|
38.9
|
$
|
160.4
|
$
|
165.1
|
Energy
|
|
18.4
|
|
16.9
|
|
74.5
|
|
63.3
|
Life
sciences
|
|
105.6
|
|
138.8
|
|
435.5
|
|
393.1
|
Transportation
|
|
83.9
|
|
94.8
|
|
369.2
|
|
314.6
|
Total revenues
from continuing operations
|
$
|
246.8
|
$
|
289.4
|
$
|
1,039.6
|
$
|
936.1
|
|
|
|
|
|
|
|
|
|
Revenues by
installation location
|
|
Q4
2016
|
|
Q4 2015
|
|
Fiscal
2016
|
|
Fiscal
2015
|
North
America
|
$
|
93.3
|
$
|
151.9
|
$
|
456.9
|
$
|
450.4
|
Europe
|
|
100.6
|
|
96.7
|
|
394.1
|
|
330.1
|
Asia/Other
|
|
52.9
|
|
40.8
|
|
188.6
|
|
155.6
|
Total revenues
from continuing operations
|
$
|
246.8
|
$
|
289.4
|
$
|
1,039.6
|
$
|
936.1
|
Fourth Quarter
Fiscal 2016 fourth quarter revenues
were 15% lower than in the corresponding period a year ago. Lower
revenues primarily reflected lower Order Backlog entering the
fourth quarter of fiscal 2016 compared to a year ago. This was
partially offset by foreign exchange rate changes, which 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 fourth quarter revenues from consumer
products & electronics were consistent with the corresponding
period a year ago. Revenues generated in the energy market
increased 9% due to Order Bookings. Revenues in the life sciences
market decreased 24% primarily reflecting timing of project
activities. Transportation revenues decreased 11% primarily
reflecting lower Order Backlog entering the fiscal 2016 fourth
quarter due to timing of Order Bookings.
Full Year
Fiscal 2016 revenues were 11% higher than in
the corresponding period a year ago, primarily reflecting revenues
earned by PA. Fiscal 2016 PA revenues were $271.0 million compared to $151.5 million in fiscal 2015, which included
only seven months of PA (which was acquired on September 1, 2014). Excluding PA, revenues
decreased $16.0 million or 2% from
the corresponding period a year ago. Foreign exchange rate
changes positively impacted the translation of revenues earned by
foreign-based subsidiaries compared to a year ago, primarily
reflecting the weakening of the Canadian dollar relative to the U.S
dollar and Euro.
By market, fiscal 2016 revenues from consumer products &
electronics market decreased 3% primarily reflecting timing of
project activities. Revenues generated in the energy market
increased 18%, primarily reflecting higher Order Bookings in the
previous three quarters. Revenues generated in the life sciences
market increased 11%, primarily on revenues earned by PA.
Transportation revenues increased 17%, primarily on revenues earned
by PA and foreign exchange translation.
Consolidated
Operating Results
|
|
|
|
|
|
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
Q4
2016
|
|
Q4 2015
|
|
Fiscal
2016
|
|
Fiscal
2015
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
8.1
|
$
|
22.6
|
$
|
76.8
|
$
|
67.0
|
Amortization of
acquisition-related
|
|
|
|
|
|
|
|
|
intangible
assets
|
|
5.7
|
|
9.1
|
|
24.5
|
|
28.1
|
Acquisition-related
transaction costs
|
|
─
|
|
1.6
|
|
─
|
|
13.3
|
Restructuring
charges
|
|
2.3
|
|
1.4
|
|
9.7
|
|
1.4
|
Gain on sale of
assets
|
|
─
|
|
─
|
|
(3.7)
|
|
─
|
Executive transition
expenses1
|
|
7.1
|
|
─
|
|
7.1
|
|
─
|
Adjusted earnings
from operations2
|
$
|
23.2
|
$
|
34.7
|
$
|
114.4
|
$
|
109.8
|
1 See
"Executive Transition" below.
|
|
|
|
|
|
|
2 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2016
|
|
Q4 2015
|
|
Fiscal
2016
|
|
Fiscal
2015
|
Earnings from
operations
|
$
|
8.1
|
$
|
22.6
|
$
|
76.8
|
$
|
67.0
|
Depreciation and
amortization
|
|
9.6
|
|
12.6
|
|
39.3
|
|
40.5
|
EBITDA2
|
$
|
17.7
|
$
|
35.2
|
$
|
116.1
|
$
|
107.5
|
2 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
|
|
|
|
Fourth Quarter
Fiscal 2016 fourth quarter earnings
from operations were $8.1 million (3%
operating margin) compared to $22.6
million (8% operating margin) in the fourth quarter of
fiscal 2015. Fourth quarter fiscal 2016 earnings from operations
included $7.1 million of executive
transition expenses, $2.3 million of
restructuring and severance costs and $5.7
million related to amortization of identifiable intangible
assets recorded on the acquisitions of PA, IWK, and sortimat.
Excluding these items, fourth quarter fiscal 2016 adjusted earnings
from operations were $23.2 million
(9% margin), compared to adjusted earnings from operations of
$34.7 million (12% margin) a year
ago. Adjusted earnings from operations primarily reflected lower
revenues.
Depreciation and amortization expense was $9.6 million in the fourth quarter of fiscal
2016, compared to $12.6 million a
year ago. The decrease primarily reflected lower amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK, ATW and sortimat compared to the fourth quarter of fiscal
2015.
EBITDA was $17.7 million (7%
EBITDA margin) in the fourth quarter of fiscal 2016 compared to
$35.2 million (12% EBITDA margin) in
the fourth quarter of fiscal 2015. Excluding executive transition
expenses and restructuring and severance costs, fourth quarter
fiscal 2016 EBITDA was $27.1 million
(11% EBITDA margin). Comparably, excluding restructuring and
severance costs and acquisition-related costs, fourth quarter
fiscal 2015 EBITDA was $38.2 million
(13% EBITDA margin).
Full Year
Earnings from operations were $76.8 million (7% operating margin) compared to
$67.0 million (7% operating margin)
in the corresponding period a year ago. Earnings from operations
included $7.1 million of executive
transition expenses, a gain of $3.7
million on the sale of a redundant U.S. facility,
$9.7 million of restructuring and
severance costs and $24.5 million of
amortization costs related to the amortization of identifiable
intangible assets recorded on the acquisitions of PA, IWK, ATW, and
sortimat. Excluding these items, adjusted earnings from operations
were $114.4 million (11% margin)
compared to adjusted earnings from operations of $109.8 million (12% 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 $39.3 million in fiscal 2016 compared to
$40.5 million a year ago.
EBITDA was $116.1 million (11%
EBITDA margin) compared to $107.5
million (11% EBITDA margin) in fiscal 2015. Excluding
executive transition expenses, restructuring costs, and the gain on
the sale of the U.S. facility, fiscal 2016 EBITDA was $129.2 million (12% EBITDA margin). Comparably,
excluding restructuring costs and acquisition-related costs, fiscal
2015 EBITDA was $122.2 million (13%
EBITDA margin).
Executive Transition
In March 2016, the Company
announced that Anthony Caputo, the
Chief Executive Officer of the Company, will be leaving the Company
in February 2017. In connection with
this, the CEO and the Company have entered into a transition
agreement that amends the CEO's employment agreement to, among
other things; (i) secure for the Company an orderly transition
period of approximately 11 months, allowing for both continuity of
leadership in the interim and a thorough search and selection
process for a successor suitable to lead the Company as it
continues to realize on its growth and value creation ambitions;
and (ii) provide that the CEO may leave earlier if a transition is
completed prior to February 2017. In turn, recognizing these
clear benefits derived by the Company, the transition agreement
provides for financial terms consistent with the CEO's
long-standing employment agreement. In accordance with the
transition agreement, the CEO will receive a lump sum payment
estimated as $5.0 million, which
payment encompasses bonus entitlement for fiscal 2017, and a
portion of which is subject to change based on the date the
transition is completed, and the Company will incur $2.1 million of post-employment benefit expenses
related to an additional two years of credited service towards the
CEO's pension entitlement.
Order Bookings by
Quarter
|
|
|
(In millions of
dollars)
|
|
|
|
Fiscal
2016
|
Fiscal
2015
|
Q1
|
$
|
222
|
$
|
161
|
Q2
|
|
230
|
|
216
|
Q3
|
|
228
|
|
287
|
Q4
|
|
390
|
|
317
|
Total Order
Bookings
|
$
|
1,070
|
$
|
981
|
Fourth Quarter
Fourth quarter fiscal 2016 Order
Bookings were $390 million, a 23%
increase from the fourth quarter of fiscal 2015. Strength in
energy, consumer products & electronics, and life sciences more
than offset lower activity in the transportation market.
Included in fourth quarter fiscal 2016 Order Bookings is an
enterprise program valued at approximately U.S. $100 million from a North American-based customer
that is a global leader in the solar energy market. ATS has
provided innovative core manufacturing solutions to this customer
for a number of years. The Order Booking involves delivery and
installation of systems at several locations that will enable the
customer to roll out a new global product. Multiple ATS divisions
will be involved with the program delivery and execution.
Foreign exchange rate changes positively impacted the
translation of Order Bookings from foreign-based ATS subsidiaries
compared to the corresponding period a year ago.
Full Year
Fiscal 2016 Order Bookings were $1,070 million, a 9% increase from prior year
Order Bookings of $981 million. The
increase in Order Bookings reflected a full year's contribution
from PA (compared to seven months in fiscal 2015). By market,
strength in energy, as well as consumer products & electronics
more than offset lower activity in life sciences and
transportation. Foreign exchange rate changes also positively
impacted the translation of Order Bookings from foreign-based ATS
subsidiaries compared to fiscal 2015.
Order Backlog
Continuity
|
|
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
Q4
2016
|
Q4 2015
|
Fiscal
2016
|
Fiscal
2015
|
Opening Order
Backlog
|
$
|
546
|
$
|
602
|
$
|
632
|
$
|
474
|
Revenues
|
|
(247)
|
|
(289)
|
|
(1,040)
|
|
(936)
|
Order
Bookings
|
|
390
|
|
317
|
|
1,070
|
|
981
|
Order Backlog
adjustments1
|
|
(37)
|
|
2
|
|
(10)
|
|
113
|
Total
|
$
|
652
|
$
|
632
|
$
|
652
|
$
|
632
|
1 Order
Backlog adjustments include foreign exchange adjustments and
cancellations. Fiscal 2015
also included incremental Order Backlog of $131 million acquired
with PA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order Backlog by
Market
|
|
|
|
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2016
|
Fiscal
2015
|
Consumer products
&
electronics
|
|
|
|
|
$
|
85
|
$
|
64
|
Energy
|
|
|
|
|
|
186
|
|
53
|
Life
sciences
|
|
|
|
|
|
224
|
|
255
|
Transportation
|
|
|
|
|
|
157
|
|
260
|
Total
|
|
|
|
|
$
|
652
|
$
|
632
|
At March 31, 2016, Order Backlog
was $652 million, 3% higher than at
March 31, 2015. Higher Order Backlog
in consumer products & electronics and energy markets was
partially offset by lower Order Backlog in life sciences and
transportation markets. Foreign exchange rate changes also
positively impacted the translation of Order Backlog from
foreign-based ATS subsidiaries compared to fiscal 2015.
Outlook
The global economic environment has continued
to show signs of volatility and uncertainty remains. In the U.S.,
economic growth remains slow, and the 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, a number of customers
have continued to delay investment decisions. Opportunities in
energy markets are sporadic. Funnel activity in the consumer
products & electronics market has improved; however, it remains
low relative to other customer markets. Overall, funnel activity
remains strong and proposal activity is robust; however, conversion
of opportunities into Order Bookings is variable.
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
$652 million at the end of fiscal
2016 to partially mitigate the impact of volatile Order Bookings on
revenues in the short term. In the first quarter of fiscal 2017,
management expects Order Backlog conversion to be in the range of
35% to 40%. The expected conversion rate is lower than in recent
quarters due primarily to lower Order Bookings in the first three
quarters of fiscal 2016, which will only be partially offset by the
ramp-up of the U.S. 100 million enterprise program which is
expected to be substantially completed over the next four quarters.
Based on the lower expected conversion of Order Backlog, the
Company expects its earnings from operations to be negatively
impacted in the first quarter of fiscal 2017 due to lower expected
revenues. Based on the Company's current Order Backlog, management
believes it has the appropriate cost structure to deliver on its
programs going forward.
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
fiscal 2016, the Company initiated the closure of its India-based operations, completed the
previously announced closure of a U.S. operation, completed the
divestiture of a Swiss-based automation operation through a sale to
a third party, and initiated additional actions to re-balance
global capacity and improve the Company's cost structure. These
actions resulted in charges of $9.7
million in fiscal 2016. 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
SELECTED FOURTH QUARTER AND ANNUAL INFORMATION
(In
millions of dollars, except per share data)
|
Q4
2016
|
Q4
2015
|
Fiscal
2016
|
Fiscal
2015
|
Fiscal
2014
|
Revenues
|
$
|
246.8
|
$
|
289.4
|
$
|
1,039.6
|
$
|
936.1
|
$
|
683.4
|
Cost of
revenues
|
|
185.7
|
|
217.3
|
|
780.9
|
|
691.1
|
|
501.7
|
Selling, general and
administrative
|
|
53.5
|
|
49.0
|
|
179.3
|
|
173.7
|
|
113.3
|
Stock-based
compensation
|
|
(0.5)
|
|
0.5
|
|
2.6
|
|
4.3
|
|
7.3
|
Earnings from
operations
|
$
|
8.1
|
$
|
22.6
|
$
|
76.8
|
$
|
67.0
|
$
|
61.0
|
Net finance
costs
|
$
|
7.9
|
$
|
4.3
|
$
|
26.7
|
$
|
11.9
|
$
|
3.0
|
Provision for
(recovery of) income taxes
|
|
(1.2)
|
|
4.4
|
$
|
10.5
|
|
16.2
|
|
8.6
|
Net income
from
|
|
|
|
|
|
|
|
|
|
|
continuing
operations
|
$
|
1.4
|
$
|
13.9
|
$
|
39.6
|
$
|
38.9
|
$
|
49.4
|
Income from
discontinued
|
|
|
|
|
|
|
|
|
|
|
operations, net of
tax
|
$
|
─
|
$
|
2.2
|
$
|
─
|
$
|
16.2
|
$
|
12.8
|
Net
income
|
$
|
1.4
|
$
|
16.1
|
$
|
39.6
|
$
|
55.1
|
$
|
62.2
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
Basic from continuing
operations
|
$
|
0.02
|
$
|
0.15
|
$
|
0.43
|
$
|
0.43
|
$
|
0.56
|
Basic from
discontinued operations
|
$
|
─
|
$
|
0.03
|
$
|
─
|
$
|
0.18
|
$
|
0.14
|
|
$
|
0.02
|
$
|
0.18
|
$
|
0.43
|
$
|
0.61
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
Diluted from
continuing operations
|
$
|
0.02
|
$
|
0.15
|
$
|
0.43
|
$
|
0.42
|
$
|
0.55
|
Diluted from
discontinued operations
|
$
|
─
|
$
|
0.03
|
$
|
─
|
$
|
0.18
|
$
|
0.14
|
|
$
|
0.02
|
$
|
0.18
|
$
|
0.43
|
$
|
0.60
|
$
|
0.69
|
From continuing
operations:
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
|
$
|
1,367.5
|
$
|
1,220.7
|
$
|
778.4
|
Total cash and
short-term investments
|
|
|
|
|
$
|
170.0
|
$
|
106.1
|
$
|
76.5
|
Total bank
debt
|
|
|
|
|
$
|
323.7
|
$
|
291.3
|
$
|
6.0
|
Revenues. At $246.8
million, consolidated revenues from continuing operations
for the fourth quarter of fiscal 2016 were $42.6 million or 15% lower than the corresponding
period a year ago. At $1,039.6
million, fiscal 2016 revenues were $103.5 million, or 11%, higher than in the
corresponding year ago. See "Overview – Operating Results from
Continuing Operations."
Cost of revenues. At $185.7
million, fourth quarter fiscal 2016 cost of revenues
decreased compared to the corresponding period a year ago by
$31.6 million or 15%, primarily on
lower revenues. Annual cost of revenues of $780.9 million increased by $89.8 million or 13%, primarily on higher
revenues generated compared to the corresponding period last year
due to incremental PA revenues.
At 25%, gross margin in the fourth quarter of fiscal 2016 was
consistent with the corresponding period a year ago. Fiscal 2016
gross margin of 25% decreased 1% from the corresponding period a
year ago. Lower fiscal 2016 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 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 exceeded
budgets.
Selling, general and administrative ("SG&A")
expenses. SG&A expenses for the fourth quarter of
fiscal 2016 were $53.5 million, which
included $5.7 million of amortization
costs related to the amortization of identifiable intangible assets
recorded on the acquisitions of PA, IWK, and sortimat, $2.3 million of restructuring and severance costs
and $7.1 million of executive
transition expenses. Excluding these costs, SG&A expenses were
$38.4 million in the fourth quarter
of fiscal 2016. Comparably, SG&A expenses for the fourth
quarter of fiscal 2015 were $36.9
million, which excluded $9.1
million of amortization costs related to the amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK, ATW and sortimat, $1.6 million
of acquisition-related costs, and $1.4
million of restructuring and severance costs. Excluding
these items, higher SG&A expenses in the fourth quarter of
fiscal 2016 primarily reflected foreign exchange rate changes which
increased the translation of reported SG&A expenses of
foreign-based subsidiaries due to the weakening of the Canadian
dollar relative to the U.S. dollar and Euro.
Fiscal 2016 SG&A expenses were $179.3
million, which included $24.5
million of amortization costs related to the amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK,ATW, and sortimat, $9.7 million
of restructuring and severance costs, a gain of $3.7 million on the sale of a U.S. facility, and
$7.1 million of executive transition
expenses. Excluding these items, SG&A expenses were
$141.7 million for fiscal 2016.
Comparably, SG&A expenses for fiscal 2015 were $130.9, which excluded $28.1 million of amortization costs related to
the amortization of identifiable intangible assets recorded on the
acquisitions of PA, IWK, ATW and sortimat, $13.3 million of acquisition-related costs and
$1.4 million of restructuring and
severance costs. Higher SG&A expenses in fiscal 2016 primarily
reflected the addition of PA and foreign exchange rate changes
which increased the translation of reported SG&A expenses of
foreign-based subsidiaries, primarily due to the weakening of the
Canadian dollar relative to the U.S. dollar and Euro.
Stock-based compensation. Stock-based compensation
recovery amounted to $0.5 million in
the fourth quarter of fiscal 2016 compared to $0.5 million of stock-based compensation expense
in the corresponding period a year ago. Fiscal 2016 stock-based
compensation expense decreased to $2.6
million from $4.3 million a
year ago. 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 twelve
month periods ended March 31, 2016,
consolidated earnings from operations were $8.1 million (3% operating margin) and
$76.8 million (7% operating margin),
respectively, compared to earnings from operations of $22.6 million (8% operating margin) and
$67.0 million (7% operating margin),
respectively, in the corresponding periods of fiscal 2015. See
"Overview – Operating Results from Continuing Operations."
Net finance costs. Net finance costs were
$7.9 million in the fourth quarter of
fiscal 2016, $3.6 million higher than
the corresponding period a year ago. Fiscal 2016 finance costs were
$26.7 million compared to
$11.9 million in the corresponding
period a year ago. The increase reflected interest on the Company's
Senior Notes, which were issued in June
2015 (see "Liquidity, Cash Flow and Financial Resources").
The increased usage relates to financing the acquisition of PA and
to support letters of credit.
Income tax provision. For the three months ended
March 31, 2016, the Company recorded
an income tax recovery of $1.2
million. This primarily reflected losses for income tax
purposes that were realized in certain jurisdictions, for which a
future benefit is expected to be realized.
For the twelve months ended March 31,
2016, the Company's effective income tax rate of 21%
differed from the combined Canadian basic federal and provincial
income tax rate of 27% primarily as a result of the income tax
recovery recorded in the fourth quarter of fiscal 2016 and income
earned in certain jurisdictions with different statutory tax rates.
The Company expects its effective tax rate to below 25% in the near
term.
Net income from continuing operations. Fiscal 2016 fourth
quarter net income from continuing operations was $1.4 million (2
cents per share basic and diluted) compared to $13.9 million (15
cents per share basic and diluted) for the fourth quarter of
fiscal 2015. Adjusted basic earnings per share from
continuing operations were 14 cents
in the fourth quarter of fiscal 2016 compared to 24 cents for the fourth quarter of fiscal
2015. See "Reconciliation of Non-IFRS Measures to IFRS
Measures."
Fiscal 2016 net income from continuing operations was
$39.6 million (43 cents per share basic and diluted) compared to
$38.9 million (43 cents per share basic and 42 cents per share diluted) for the corresponding
period a year ago. Adjusted basic earnings per share from
continuing operations were 72 cents
in fiscal 2016, compared to 77 cents
in the corresponding period a year ago. See "Reconciliation
of Non-IFRS Measures to IFRS Measures."
Income from discontinued operations, net of tax. For the
three and twelve month periods ended March
31, 2015, Ontario Solar recorded income of $2.2 million and $16.2
million respectively, which related to the sale of its
ground-mount solar projects. During fiscal 2015, all remaining
solar assets were divested. There were no such transactions in
fiscal 2016.
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):
|
Fiscal
2016
|
Fiscal
2015
|
Fiscal
2014
|
EBITDA
|
$
|
116.1
|
$
|
107.5
|
$
|
79.4
|
Less: depreciation
and amortization expense
|
|
39.3
|
|
40.5
|
|
18.4
|
Earnings from
operations
|
$
|
76.8
|
$
|
67.0
|
$
|
61.0
|
Less: net finance
costs
|
|
26.7
|
|
11.9
|
|
3.0
|
Provision for income
taxes
|
|
10.5
|
|
16.2
|
|
8.6
|
Net income from
continuing operations
|
$
|
39.6
|
$
|
38.9
|
$
|
49.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2016
|
Q4 2015
|
EBITDA
|
|
|
$
|
17.7
|
$
|
35.2
|
Less: depreciation
and amortization expense
|
|
|
|
9.6
|
|
12.6
|
Earnings from
operations
|
|
|
$
|
8.1
|
$
|
22.6
|
Less: net finance
costs
|
|
|
|
7.9
|
|
4.3
|
Provision for
(recovery of) income taxes
|
|
|
|
(1.2)
|
|
4.4
|
Net income from
continuing
operations
|
|
|
$
|
1.4
|
$
|
13.9
|
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 and basic earnings per share
respectively):
|
|
|
Three Months
Ended
March 31,
2016
|
Three
Months Ended
March 31,
2015
|
|
|
|
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
Adjustments
|
Adjusted
|
|
|
|
|
|
(non-IFRS)
|
|
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
8.1
|
$
|
─
|
$
|
8.1
|
$
|
22.6
|
$
|
─
|
$
|
22.6
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related intangible
assets
|
|
─
|
|
5.7
|
|
5.7
|
|
─
|
|
9.1
|
|
9.1
|
Acquisition-related
|
|
|
|
|
|
|
|
|
|
|
|
|
|
transaction
costs
|
|
─
|
|
─
|
|
─
|
|
─
|
|
1.6
|
|
1.6
|
Restructuring
charges
|
|
─
|
|
2.3
|
|
2.3
|
|
─
|
|
1.4
|
|
1.4
|
Executive transition
expenses1
|
|
─
|
|
7.1
|
|
7.1
|
|
─
|
|
─
|
|
─
|
|
$
|
8.1
|
$
|
15.1
|
$
|
23.2
|
$
|
22.6
|
$
|
12.1
|
$
|
34.7
|
Less: net finance
costs
|
$
|
7.9
|
$
|
─
|
$
|
7.9
|
$
|
4.3
|
$
|
─
|
$
|
4.3
|
Income from
continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes
|
$
|
0.2
|
$
|
15.1
|
$
|
15.3
|
$
|
18.3
|
$
|
12.1
|
$
|
30.4
|
Provision for
(recovery of)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes
|
$
|
(1.2)
|
$
|
─
|
$
|
(1.2)
|
$
|
4.4
|
$
|
─
|
$
|
4.4
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes2
|
|
─
|
|
4.0
|
|
4.0
|
|
─
|
|
3.5
|
|
3.5
|
|
$
|
(1.2)
|
$
|
4.0
|
$
|
2.8
|
$
|
4.4
|
$
|
3.5
|
$
|
7.9
|
Net income from
continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
|
1.4
|
$
|
11.1
|
$
|
12.5
|
$
|
13.9
|
$
|
8.6
|
$
|
22.5
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.02
|
$
|
0.12
|
$
|
0.14
|
$
|
0.15
|
$
|
0.09
|
$
|
0.24
|
1 See
"Overview – Operating Results from Continuing Operations –
Executive Transition".
|
2
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.
|
|
|
|
Three Months
Ended
March 31,
2016
|
Three Months
Ended
March 31,
2015
|
|
|
|
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
Adjustments
|
Adjusted
|
|
|
|
|
|
(non-IFRS)
|
|
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
76.8
|
$
|
─
|
$
|
76.8
|
$
|
67.0
|
$
|
─
|
$
|
67.0
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related intangible
assets
|
|
─
|
|
24.5
|
|
24.5
|
|
─
|
|
28.1
|
|
28.1
|
Acquisition-related
|
|
|
|
|
|
|
|
|
|
|
|
|
|
transaction
costs
|
|
─
|
|
─
|
|
─
|
|
─
|
|
13.3
|
|
13.3
|
Restructuring
charges
|
|
─
|
|
9.7
|
|
9.7
|
|
─
|
|
1.4
|
|
1.4
|
Gain on sale of
assets
|
|
─
|
|
(3.7)
|
|
(3.7)
|
|
─
|
|
─
|
|
─
|
Executive transition
expenses
|
|
─
|
|
7.1
|
|
7.1
|
|
─
|
|
─
|
|
─
|
|
$
|
76.8
|
$
|
37.6
|
$
|
114.4
|
$
|
67.0
|
$
|
42.8
|
$
|
109.8
|
Less: net finance
costs
|
$
|
26.7
|
$
|
─
|
$
|
26.7
|
$
|
11.9
|
$
|
─
|
$
|
11.9
|
Income from
continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes
|
$
|
50.1
|
$
|
37.6
|
$
|
87.7
|
$
|
55.1
|
$
|
42.8
|
$
|
97.9
|
Provision for income
taxes
|
$
|
10.5
|
$
|
─
|
$
|
10.5
|
$
|
16.2
|
$
|
─
|
$
|
16.2
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes1
|
|
─
|
|
10.7
|
|
10.7
|
|
─
|
|
11.4
|
|
11.4
|
|
$
|
10.5
|
$
|
10.7
|
$
|
21.2
|
$
|
16.2
|
$
|
11.4
|
$
|
27.6
|
Net income from
continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
|
39.6
|
$
|
26.9
|
$
|
66.5
|
$
|
38.9
|
$
|
31.4
|
$
|
70.3
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.43
|
$
|
0.29
|
$
|
0.72
|
$
|
0.43
|
$
|
0.34
|
$
|
0.77
|
1 See
"Overview – Operating Results from Continuing Operations –
Transition Agreement".
|
2
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.
|
SUMMARY OF
INVESTMENTS, LIQUIDITY, CASH FLOW AND FINANCIAL RESOURCES
|
Investments
|
(In millions of
dollars)
|
|
Fiscal
2016
|
Fiscal
2015
|
Investments –
increase
(decrease)
|
|
|
|
|
Non-cash operating
working
capital
|
$
|
30.8
|
$
|
(3.6)
|
Property, plant and
equipment
|
|
10.1
|
|
11.2
|
Acquisition of
intangible
assets
|
|
5.6
|
|
6.8
|
Business acquisition,
net of cash
acquired
|
|
─
|
|
355.4
|
Purchase of
non-controlling
interest
|
|
0.1
|
|
4.4
|
Proceeds from
disposal of
assets
|
|
(22.3)
|
|
(8.9)
|
Proceeds from sale of
subsidiary
|
|
(2.3)
|
|
―
|
Investing activities
of discontinued
operations
|
|
─
|
|
(22.1)
|
Total net
investments
|
$
|
22.0
|
$
|
343.2
|
In fiscal 2016, the Company's investment in non-cash working
capital increased $30.8 million
compared to a decrease of $3.6
million a year ago. Accounts receivable increased 35%
or $50.6 million, driven by the
increase in fiscal 2016 revenues and the timing of billings on
certain customer contracts. Net contracts in progress decreased 34%
or $40.2 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
$4.1 million primarily due to the
timing of inventory purchases. Deposits and prepaid assets
increased 52% or $7.6 million
compared to March 31, 2015 due to the
timing of program execution. Accounts payable and accrued
liabilities decreased 11% or $22.0
million compared to March 31,
2015. Provisions increased 95% or $9.8 million compared to March 31, 2015 due to the executive transition
provision accrued in fiscal 2016.
Capital expenditures totalled $10.1
million for fiscal 2016, primarily related to computer
hardware. Capital expenditures totalled $11.2 million in fiscal 2015, primarily related
to incremental capital expenditures from the addition of
PA.
Intangible assets expenditures for fiscal 2016 and fiscal 2015
were $5.6 million and $6.8 million respectively and primarily related
to computer software and internal development projects.
Business acquisition, net of cash acquired was $355.4 million in fiscal 2015 due to the
acquisition of PA. There were no such transactions in fiscal 2016.
Purchase of non-controlling interest was $0.1 million in fiscal 2016 compared to
$4.4 million in fiscal 2015.
Proceeds from disposal of assets were $22.3 million in fiscal 2016, compared to
$8.9 million in fiscal 2015. The
increase primarily reflects the sale of a U.S. facility and the
sale of certain other redundant assets.
Proceeds from sale of subsidiary were $2.3 million in fiscal 2016, compared to $nil in
fiscal 2015. The increase reflected the sale of a Swiss subsidiary,
which closed in the first quarter of fiscal 2016.
The Company performs impairment tests on its goodwill and
intangible asset balances on an annual basis or as warranted by
events or circumstances. The Company conducted its annual
impairment assessment in the fourth quarter of fiscal 2016 and
determined there is no impairment of goodwill or intangible assets
as of March 31, 2016 (fiscal 2015 –
$nil).
All of the Company's investments involve risks and require that
the Company make judgments and estimates regarding the likelihood
of recovery of the respective costs. In the event management
determines that any of the Company's investments have become
permanently impaired or recovery is no longer reasonably assured,
the value of the investment would be written down to its estimated
net realizable value as a charge against earnings. Due to the
magnitude of certain investments, such write-downs could be
material.
LIQUIDITY, CASH
FLOW AND FINANCIAL RESOURCES
(In millions of
dollars, except ratios)
|
|
|
|
|
|
|
|
Fiscal 2016
|
|
Fiscal
2015
|
Cash and cash
equivalents
|
$
|
170.0
|
$
|
106.1
|
Debt-to-equity
ratio
|
|
0.56:1
|
|
0.54:1
|
Cash flows provided
by operating activities from
|
|
|
|
|
continuing
operations
|
$
|
35.8
|
$
|
82.1
|
At March 31, 2016, the Company had
cash and cash equivalents of $170.0
million compared to $106.1
million at March 31, 2015. At
March 31, 2016, the Company's
debt-to-total equity ratio was 0.56:1.
At March 31, 2016, the Company had
$639.0 million of unutilized
multipurpose credit, including letters of credit, available under
existing credit facilities and an additional $4.8 million available under letter of credit
facilities.
In fiscal 2016, cash flows provided by operating activities from
continuing operations were $35.8
million ($82.1 million
provided by 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.
During fiscal 2016, the Company completed a private placement of
U.S. $250.0 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 Senior 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 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 March 31,
2016, the Company had utilized $115.1
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
March 31, 2016, all of the covenants
were met.
The Company has additional credit facilities available of
$12.7 million (3.6 million Euro, 275.0
million Indian Rupees, 50.0 million
Thai Baht and 1.1 million Czech Koruna). The total
amount outstanding on these facilities at March 31, 2016 was $9.4
million, of which $2.3 million
was classified as bank indebtedness (March
31, 2015 - $1.7 million) and
$7.1 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 275.0 million
Indian Rupees and the 50.0 million
Thai Baht 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 Company's minimum operating lease payments (related
primarily to facilities and equipment) and purchase obligations are
as follows:
|
Operating
|
Purchase
|
|
leases
|
obligations
|
Less than one
year
|
$
|
10.1
|
$
|
91.5
|
One – two
years
|
|
8.0
|
|
0.6
|
Two – three
years
|
|
6.9
|
|
0.1
|
Three – four
years
|
|
6.0
|
|
0.1
|
Four – five
years
|
|
5.6
|
|
0.1
|
Due in over five
years
|
|
4.5
|
|
––
|
|
$
|
41.1
|
$
|
92.4
|
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 commitments for material
purchases.
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 letters of credit as security for advances
received from customers pending delivery and contract performance.
In addition, the Company provides letters of credit for
post-retirement obligations and may provide letters of credit as
security on equipment under lease and on order. At
March 31, 2016, the total value of
outstanding letters of credit was approximately $137.0 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 14 of the
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 fiscal 2016, 1,145,167 stock options were
exercised. At May 18, 2016 the
total number of shares outstanding was 92,294,859 and there
were 3,432,366 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 the
Company 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 March 31, 2016, the Company
had purchased 481,473 common shares for $6.0
million under the NCIB. The weighted average price per share
repurchased 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
On April 1, 2014, the Company entered into an
agreement with a shareholder, Mason Capital Management, LLC ("Mason
Capital"), pursuant to which Mason Capital 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
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.
The Company uses cross-currency swaps as derivative financial
instruments to hedge a portion of its foreign exchange risk related
to its U.S.-dollar-denominated Senior Notes. On March 29, 2016 the Company entered into a
cross-currency interest rate swap instrument to swap U.S.
$150.0 million into Canadian
dollars. The Company will receive interest of 6.50% U.S. per
annum and pay interest of 6.501% Canadian. The terms of the
hedging relationship will end on June 15,
2023.
The Company manages foreign exchange risk on its Euro
denominated net investments. The Company uses cross-currency
swaps as derivative financial instruments to hedge a portion of the
foreign exchange risk related to its Euro-denominated net
investment. On March 29, 2016,
the Company entered into a cross-currency interest rate swap
instrument to swap 134.1 million Euro
into Canadian dollars. The Company will receive interest of
6.501% Canadian per annum and pay interest of 5.094% Euro.
The terms of the hedging relationship will end on June 15, 2023. As a result of the cross currency
interest rate swap instruments, the Company expects its interest
expenses to be reduced by approximately U.S. $2 million per annum.
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. See note 14 to the consolidated financial statements for
details on the derivative financial instruments outstanding at
March 31, 2016.
|
Year-end actual
exchange rates
|
Period average
exchange rates
|
|
March
31,
|
March
31,
|
|
March
31,
|
March 31,
|
|
|
2016
|
2015
|
% change
|
2016
|
2015
|
% change
|
U.S.
Dollar
|
1.2987
|
1.2666
|
2.5%
|
1.3110
|
1.1384
|
15.2%
|
Euro
|
1.4777
|
1.3615
|
8.5%
|
1.4474
|
1.4383
|
0.6%
|
CONSOLIDATED QUARTERLY RESULTS
(In millions of
dollars, except
per share amounts)
|
Q4 2016
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from
continuing
operations
|
$
|
246.8
|
$
|
274.9
|
$
|
263.7
|
$
|
254.3
|
$
|
289.4
|
$
|
248.8
|
$
|
207.0
|
$
|
190.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
8.1
|
$
|
26.8
|
$
|
24.4
|
$
|
17.5
|
$
|
22.6
|
$
|
15.9
|
$
|
14.1
|
$
|
14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from operations
|
$
|
23.2
|
$
|
32.1
|
$
|
31.7
|
$
|
27.4
|
$
|
34.7
|
$
|
27.2
|
$
|
27.0
|
$
|
21.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
1.4
|
$
|
15.5
|
$
|
12.8
|
$
|
9.8
|
$
|
13.9
|
$
|
8.6
|
$
|
7.4
|
$
|
9.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
from discontinued
operations
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
2.2
|
$
|
(0.0)
|
$
|
7.1
|
$
|
6.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
1.4
|
$
|
15.5
|
$
|
12.8
|
$
|
9.8
|
$
|
16.1
|
$
|
8.6
|
$
|
14.5
|
$
|
15.9
|
Basic earnings per
share from
continuing operations
|
$
|
0.02
|
$
|
0.16
|
$
|
0.14
|
$
|
0.11
|
$
|
0.15
|
$
|
0.09
|
$
|
0.08
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted basic
earnings per share
from continuing operations
|
$
|
0.14
|
$
|
0.21
|
$
|
0.19
|
$
|
0.18
|
$
|
0.24
|
$
|
0.18
|
$
|
0.19
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share from
discontinued operations
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
0.03
|
$
|
(0.00)
|
$
|
0.08
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.02
|
$
|
0.16
|
$
|
0.14
|
$
|
0.11
|
$
|
0.18
|
$
|
0.09
|
$
|
0.16
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.02
|
$
|
0.16
|
$
|
0.14
|
$
|
0.11
|
$
|
0.15
|
$
|
0.09
|
$
|
0.08
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share from
discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
―
|
$
|
0.03
|
$
|
(0.00)
|
$
|
0.08
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.02
|
$
|
0.16
|
$
|
0.14
|
$
|
0.11
|
$
|
0.18
|
$
|
0.09
|
$
|
0.16
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Bookings
|
$
|
390.0
|
$
|
228.0
|
$
|
230.0
|
$
|
222.0
|
$
|
317.0
|
$
|
287.0
|
$
|
216.0
|
$
|
160.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Backlog
|
$
|
652.0
|
$
|
546.0
|
$
|
589.0
|
$
|
590.0
|
$
|
632.0
|
$
|
602.0
|
$
|
561.0
|
$
|
425.0
|
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.
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. 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.
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.
Notes 2 and 3 to the consolidated financial statements describe
the basis of accounting and the Company's significant accounting
policies.
Revenue recognition and contracts in
progress
The nature of ATS contracts requires the use of
estimates to quote new business and most automation systems are
typically sold on a fixed-price basis. Revenues on
construction contracts and other long-term contracts are recognized
on a percentage of completion basis as outlined in note 3(d)
"Construction contracts" to the consolidated financial
statements. In applying the accounting policy on construction
contracts, judgment is required in determining the estimated costs
to complete a contract. These cost estimates are reviewed at
each reporting period and by their nature may give rise to income
volatility. If the actual costs incurred by the Company to complete
a contract are significantly higher than estimated, the Company's
earnings may be negatively affected. The use of estimates involves
risks, since the work to be performed requires varying degrees of
technical uncertainty, including possible development work to meet
the customer's specification, the extent of which is sometimes not
determinable until after the project has been awarded. In the
event the Company is unable to meet the defined performance
specification for a contracted automation system, it may need to
redesign and rebuild all or a portion of the system at its expense
without an increase in the selling price. Certain contracts
may have provisions that reduce the selling price if the Company
fails to deliver or complete the contract by specified dates. These
provisions may expose the Company to liabilities or adversely
affect the Company's results of operations or financial
position.
ATS' contracts may be terminated by customers in the event of a
default by the Company or, in some cases, for the convenience of
the customer. In the event of a termination for convenience,
the Company typically negotiates a payment provision reflective of
the progress achieved on the contract and/or the costs incurred to
the termination date. If a contract is cancelled, Order
Backlog is reduced and production utilization may be negatively
impacted.
A complete provision, which can be significant, is made for
losses on such contracts when the losses first become known.
Revisions in estimates of costs and profits on contracts, which can
also be significant, are recorded in the accounting period in which
the relevant facts impacting the estimates become known.
A portion of ATS' revenue is recognized when earned, which is
generally at the time of shipment and transfer of title to the
customer, provided collection is reasonably assured.
Income taxes
Deferred income tax assets, disclosed in
note 19 to the consolidated financial statements, are recognized to
the extent that it is probable that taxable income will be
available against which the losses can be utilized. Significant
management judgment is required to determine the amount of deferred
income tax assets that can be recognized based upon the likely
timing and level of future taxable income together with future tax
planning strategies.
If the assessment of the Company's ability to utilize the
deferred income tax asset changes, the Company would be required to
recognize more or fewer of the deferred income tax assets, which
would increase or decrease income tax expense in the period in
which this is determined. The Company establishes provisions
based on reasonable estimates for possible consequences of audits
by the tax authorities of the respective countries in which it
operates. The amount of such provisions is based on various
factors, such as experience of previous taxation audits and
differing interpretations of tax regulations by the taxable entity
and the respective tax authority. These provisions for
uncertain tax positions are made using the best estimate of the
amount expected to be paid based on a qualitative assessment of all
the relevant factors. The Company reviews the adequacy of
these provisions at each quarter. However, it is possible that at
some future date an additional liability could result from audits
by the taxation authorities. Where the final tax outcome of
these matters is different from the amount initially recorded, such
differences will affect the tax provisions in the period in which
such determination is made.
Stock-based payment transactions
The Company measures
the cost of transactions with employees by reference to the fair
value of the equity instruments at the date at which they are
granted. Estimating fair value for stock-based payment transactions
requires the determination of the most appropriate valuation model,
which is dependent on the terms and conditions of the grant. This
estimate also requires determination of the most appropriate inputs
to the valuation model, including the future forfeiture rate, the
expected life of the share option, weighted average risk-free
interest rate, volatility and dividend yield, and formation of
assumptions. The assumptions and models used for estimating fair
value for stock-based payment transactions are disclosed in note 20
of the consolidated financial statements.
Impairment of non-financial assets
Impairment exists
when the carrying value of an asset or cash generating unit exceeds
its recoverable amount, which is the higher of its fair value less
cost to sell and its value in use. The calculations involve
significant estimates and assumptions. Items estimated
include cash flows, discount rates and assumptions on revenue
growth rates. These estimates could effect the Company's
future results if the current estimates of future performance and
fair values change. Goodwill is assessed for impairment on an
annual basis as described in note 12 to the consolidated financial
statements. The Company performed its annual impairment test of
goodwill as at March 31, 2016 and
determined there was no impairment (March
31, 2015 – $nil).
Provisions
As described in note 3(q) to the
consolidated financial statements, the Company records a provision
when an obligation exists, an outflow of economic resources
required to settle the obligation is probable and a reliable
estimate can be made of the amount of the obligation. The Company
records a provision based on the best estimate of the required
economic outflow to settle the present obligation at the
consolidated statement of financial position date. While management
believes these estimates are reasonable, differences in actual
results or changes in estimates could have a material impact on the
obligations and expenses reported by the Company.
Employee Benefits
The cost of defined benefit pension
plans and the present value of the pension obligations are
determined using actuarial valuations. An actuarial valuation
involves making various assumptions that may differ from actual
developments in the future. These include the determination of the
discount rate, future salary increases, mortality rates and future
pension increases. Due to the complexity of the valuation, the
underlying assumptions and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
In determining the appropriate discount rate, management
considers the interest rates of corporate bonds in their respective
currency, with extrapolated maturities corresponding to the
expected duration of the defined benefit obligation. The mortality
rate is based on publicly available mortality tables for the
specific country. Future salary increases and pension increases are
based on expected future inflation rates for the respective
country. Further details about the assumptions used are provided in
note 16 of the consolidated financial statements.
ACCOUNTING STANDARDS ADOPTED IN FISCAL 2016
IAS 19
– Employee Benefits
Effective April
1, 2015, the Company adopted the amendments to IAS 19 –
Employee Benefits ("IAS 19"). 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
consolidated financial statements of the Company.
IFRS 8 – Operating Segments
IFRS 8 – Operating
Segments has been amended to require disclosure of the
judgments made by management in aggregating operating segments
along with the requirement to include a reconciliation of segment
assets to the entity's assets when segment assets are
reported. As the Company operates in one segment, there has
been no impact to the financial statements related to these
amendments.
IFRS 9 – Financial Instruments
Effective December 28, 2015, the Company early adopted IFRS
9. IFRS 9 replaces IAS 39 and addresses the accounting for
financial instruments including hedge accounting. IFRS 9
contains three principal classification categories for financial
assets: measured at amortized cost, FVTOCI and FVTPL. IFRS 9
classification is generally based on the business model in which a
financial asset is managed and its contractual cash flows.
The business model assessment was completed based on the facts and
circumstances which existed as at the initial date of
application. IFRS 9 eliminates the existing IAS 39 categories
of held-to-maturity, loans and receivables, and
available-for-sale. Under IFRS 9, derivative embedded
contracts where the host is a financial asset in the scope of IFRS
9 are never bifurcated. Instead, the whole hybrid instrument
is assessed for classification. The requirements for
classification and measurement of financial liabilities under IFRS
9 largely carry forward existing requirements in IAS 39.
IFRS 9 replaces the "incurred loss" model under IAS 39 with an
"expected credit loss" model as it relates to the impairment of
financial assets. The new impairment model does not apply to
equity investments. The Company's trade receivables generally
have a maturity date of 90 days or less, therefore the adoption of
this model did not impact the Company's financial
statements.
IFRS 9 amends the requirements for hedge effectiveness and
consequently the application of hedge accounting. The IAS 39
effectiveness test is replaced with a requirement for an economic
relationship between the hedged item and the hedging instrument,
and for the "hedged ratio" to be the same as that used by the
Company for risk management purposes. The new standard
requires alignment between the risk management objective of an
individual hedging relationship and the risk management strategy of
the Company. When assessing hedge effectiveness under IFRS 9,
the Company is required to ensure credit risk due to counterparty
or own creditworthiness does not dominate the change in fair value
of either the hedged item or hedging instrument. Generally,
the mechanics of hedge accounting remain unchanged.
Changes in accounting policies resulting from the adoption of
IFRS 9 have been applied retrospectively. However, in
accordance with the IFRS 9 transitional provisions, the Company has
elected not to restate the comparative periods. Financial
instruments derecognized prior to the effective date were accounted
for in accordance with IAS 39, as permitted under the transitional
provisions of IFRS 9. The IFRS 9 adoption did not impact the
measurement or carrying amounts of financial instruments and
therefore did not impact retained earnings.
Classification impact:
IFRS 9 introduced new financial
instrument classification guidance. The classification
effects of adopting IFRS 9 are noted below. There was no effect on
the carrying value of the Company's financial assets upon adoption
of IFRS 9.
Financial
Statement Line
|
IAS 39
Classification
|
IFRS 9
Classification
|
Cash and cash
equivalents
|
Loans and
receivables
|
Amortized
cost
|
Accounts
receivable
|
Loans and
receivables
|
Amortized
cost
|
Deposits
|
Loans and
receivables
|
Amortized
cost
|
Bank
indebtedness
|
Loans and
receivables
|
Amortized
cost
|
Accounts payable and
accrued liabilities
|
Amortized
cost
|
Amortized
cost
|
Long-term
debt
|
Amortized
cost
|
Amortized
cost
|
Derivatives
|
FVTPL
|
FVTPL
|
Derivatives
designated as cash flow hedges
|
FVTOCI
|
FVTOCI
|
ACCOUNTING STANDARDS ISSUED BUT NOT YET
EFFECTIVE
IFRS 15 – Revenue from Contracts with
Customers
In May 2014, the
IASB issued IFRS 15 – Revenue from Contracts with Customers
("IFRS 15") which establishes a single comprehensive model for
entities to use in accounting for revenue arising from contracts
with customers. Under IFRS 15, revenue is recognized to depict the
transfer of promised goods or services to customers at an amount
that reflects the consideration to which an entity expects to be
entitled in exchange for those goods or services. The principles in
IFRS 15 provide a more structured approach to measuring and
recognizing revenue. The new revenue standard will supersede all
current revenue recognition requirements under IFRS. The
standard currently requires a full or modified retrospective
application for annual periods beginning on or after January 1, 2018 with early option
permitted. The Company is in the process of reviewing the
standard to determine the impact on its consolidated financial
statements.
IFRS 16 – Leases
In January
2016, the IASB issued IFRS 16 – Leases which requires
lessees to recognize assets and liabilities for most leases.
There are minimal changes to the existing accounting in IAS 17 –
Leases from the perspective of lessors. The new standard is
effective for annual periods beginning on or after January 1, 2019, with early adoption permitted
provided IFRS 15 has been adopted or is adopted at the same
date. The Company is in the process of reviewing the standard
to determine the impact on its consolidated financial
statements.
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").
Disclosure controls and procedures
An evaluation of
the design and operating effectiveness of the Company's disclosure
controls and procedures was conducted as of March 31, 2016 under the supervision of the CEO
and CFO as required by CSA National Instrument 52-109 -
Certification of Disclosure in Issuers' Annual and Interim
Filings. The evaluation included documentation, review,
enquiries and other procedures considered appropriate in the
circumstances. Based on that evaluation, the CEO and the CFO have
concluded that the Company's disclosure controls and procedures are
effective to provide reasonable assurance that information relating
to the Company and its consolidated subsidiaries that is required
to be disclosed in reports filed under provincial and territorial
securities legislation is recorded, processed, summarized and
reported to senior management, including the CEO and the CFO, so
that appropriate decisions can be made by them regarding required
disclosure within the time periods specified in the provincial and
territorial securities legislation.
Internal control over financial reporting
CSA National
Instrument 52-109 requires the CEO and CFO to certify that they are
responsible for establishing and maintaining internal control over
financial reporting for the Company, and that those internal
controls have been designed and are effective in providing
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance
with IFRS.
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.
The CEO and CFO have, using the framework and criteria
established in "Internal Control – Integrated Framework (2013)"
issued by COSO, evaluated the design and operating effectiveness of
the Company's internal controls over financial reporting and
concluded that, as of March 31, 2016,
internal controls over financial reporting were effective to
provide reasonable assurance that information related to
consolidated results and decisions to be made based on those
results were appropriate.
During the year ended March 31,
2016, other than as noted below, 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.
In May 2013, COSO released an
updated version of the 1992 internal control integrated
framework. The original framework was available through
December 15, 2014, at which time the
1992 framework was superseded. During fiscal 2015, the
Company adopted the new framework.
OTHER MAJOR CONSIDERATIONS AND RISK FACTORS
Any
investment in ATS will be subject to risks inherent to ATS'
business. The following risk factors are discussed in the Company's
Annual Information Form, which may be found on SEDAR at
www.sedar.com.
- Market volatility;
- Strategy execution risks;
- Liquidity, access to capital markets and leverage;
- Restrictive covenants;
- Availability of performance and other guarantees from financial
institutions;
- Share price volatility;
- Competition;
- Industry consolidation;
- First-time program and production risks;
- Automation systems pricing;
- Revenue mix risk;
- Pricing, quality, delivery and volume risks;
- Product failure;
- Insurance coverage;
- Acquisition risks;
- Expansion risks;
- Availability of raw materials and other manufacturing
inputs;
- Customer risks;
- Cumulative loss of several significant contracts;
- Lengthy sales cycle;
- Lack of long term customer commitment;
- New product market acceptance, obsolescence, and
commercialization risk;
- Foreign exchange risk;
- Doing business in foreign countries;
- Availability of human resources and dependence on key
personnel;
- Legislative compliance;
- Environmental compliance;
- Corruption of Foreign Public Officials Act, United States
Foreign Corrupt Practices Act and anti-bribery laws risk;
- Intellectual property protection risks;
- Infringement of third parties' intellectual property rights
risk;
- Security breaches or disruptions of information technology
systems;
- Internal controls;
- Impairment of intangible assets risk;
- Income and other taxes and uncertain tax liabilities;
- Variations in quarterly results;
- Litigation;
- Natural disasters, pandemics, acts of war terrorism,
international conflicts or other disruptions;
- Manufacturing facilities disruption; and
- Dependence on performance of subsidiaries.
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; the receipt of an Order Booking
in relation to an enterprise program with a North American-based
customer and the expected timing of substantial completion for
same; 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; the Company's
expectation of lower revenues in the first quarter of fiscal 2017
and the expected negative impact of this on earnings from
operations during the same period; management's expectations in
relation to the impact of management focus and strategic
initiatives on ATS operations; 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;
expectation in relation to meeting funding requirements for
investments; expectation to use increased leverage to support
growth strategy; the Company's belief with respect to the outcome
of certain lawsuits, claims and contingencies; and the Company's
expectation with respect to a reduction of interest expense
resulting from cross-currency interest rate swaps. 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; that the timing of completion of the enterprise
program with a North American-based customer is other than expected
due to reasons, including schedule changes, or the customer
exercising any right to terminate the program in whole or in part;
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; 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 near
term Order Bookings are made and revenued quickly so as to offset
decreased Order Backlog to a degree other than expected; risk that
the ultimate outcome of lawsuits, claims, and contingencies give
rise to material liabilities for which no accruals have been made;
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.
Consolidated Statements of Financial Position (in thousands
of Canadian dollars)
|
|
|
|
|
|
|
As at
|
Note
|
March 31
2016
|
March 31
2015
|
|
|
|
|
|
|
ASSETS
|
17
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
170,034
|
$
|
106,052
|
Accounts
receivable
|
|
|
195,911
|
|
145,342
|
Costs and earnings in
excess of billings on contracts in progress
|
8
|
|
202,694
|
|
192,813
|
Inventories
|
8
|
|
46,200
|
|
42,079
|
Deposits, prepaids
and other assets
|
9
|
|
22,324
|
|
14,731
|
|
|
|
637,163
|
|
501,017
|
Assets held for
sale
|
6
|
|
––
|
|
4,221
|
|
|
|
637,163
|
|
505,238
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment
|
10
|
|
71,060
|
|
83,901
|
Investment
property
|
11
|
|
4,211
|
|
3,880
|
Goodwill
|
12
|
|
431,747
|
|
405,881
|
Intangible
assets
|
13
|
|
177,065
|
|
183,610
|
Deferred income tax
assets
|
19
|
|
2,534
|
|
5,057
|
Investment tax credit
receivable
|
19
|
|
43,683
|
|
33,107
|
|
|
|
730,300
|
|
715,436
|
Total
assets
|
|
$
|
1,367,463
|
$
|
1,220,674
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Bank
indebtedness
|
17
|
$
|
2,319
|
$
|
1,731
|
Accounts payable and
accrued liabilities
|
|
|
178,826
|
|
200,871
|
Provisions
|
15
|
|
20,267
|
|
10,419
|
Billings in excess of
costs and earnings on contracts in progress
|
8
|
|
126,127
|
|
76,031
|
Current portion of
long-term debt
|
17
|
|
5,259
|
|
3,372
|
|
|
|
332,798
|
|
292,424
|
Liabilities directly
associated with assets held for sale
|
6
|
|
––
|
|
5,717
|
|
|
|
332,798
|
|
298,141
|
Non-current
liabilities
|
|
|
|
|
|
Employee
benefits
|
16
|
|
28,252
|
|
24,777
|
Long-term
debt
|
17
|
|
316,120
|
|
286,154
|
Deferred income tax
liabilities
|
19
|
|
39,740
|
|
40,870
|
|
|
|
384,112
|
|
351,801
|
Total
liabilities
|
|
$
|
716,910
|
$
|
649,942
|
|
|
|
|
|
|
Commitments and
contingencies
|
17, 21
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
18
|
$
|
528,184
|
$
|
519,118
|
Contributed
surplus
|
|
|
13,201
|
|
14,420
|
Accumulated other
comprehensive income
|
|
|
68,319
|
|
33,434
|
Retained
earnings
|
|
|
40,634
|
|
3,590
|
Equity attributable
to shareholders
|
|
|
650,338
|
|
570,562
|
Non-controlling
interests
|
|
|
215
|
|
170
|
Total
equity
|
|
|
650,553
|
|
570,732
|
Total liabilities
and equity
|
|
$
|
1,367,463
|
$
|
1,220,674
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
Consolidated Statements of Income (in thousands of Canadian
dollars, except per share amounts)
|
|
|
|
|
Years ended March
31
|
Note
|
2016
|
2015
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
Revenues from
construction contracts
|
|
$
|
617,487
|
$
|
651,710
|
|
Sale of
goods
|
|
|
80,153
|
|
62,997
|
|
Services
rendered
|
|
|
342,000
|
|
221,370
|
|
|
|
|
|
|
Total
revenues
|
|
|
1,039,640
|
|
936,077
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
780,948
|
|
691,067
|
|
Selling, general and
administrative
|
|
|
179,297
|
|
173,703
|
|
Stock-based
compensation
|
20
|
|
2,638
|
|
4,316
|
|
|
|
|
|
|
Earnings from
operations
|
|
|
76,757
|
|
66,991
|
|
|
|
|
|
|
Net finance
costs
|
23
|
|
26,652
|
|
11,931
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
|
|
50,105
|
|
55,060
|
|
|
|
|
|
|
Income tax
expense
|
19
|
|
10,507
|
|
16,162
|
|
|
|
|
|
|
Income from
continuing operations
|
|
|
39,598
|
|
38,898
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax
|
7
|
|
––
|
|
16,198
|
|
|
|
|
|
|
Net
income
|
|
$
|
39,598
|
$
|
55,096
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholders
|
|
$
|
39,553
|
$
|
54,963
|
Non-controlling
interests
|
|
|
45
|
|
133
|
|
|
$
|
39,598
|
$
|
55,096
|
|
|
|
|
|
|
Earnings per share
attributable to shareholders
|
24
|
|
|
|
|
Basic – from
continuing operations
|
|
$
|
0.43
|
$
|
0.43
|
Basic – from
discontinued operations
|
7
|
|
––
|
|
0.18
|
|
|
$
|
0.43
|
$
|
0.61
|
|
|
|
|
|
|
Earnings per share
attributable to shareholders
|
24
|
|
|
|
|
Diluted – from
continuing operations
|
|
$
|
0.43
|
$
|
0.42
|
Diluted – from
discontinued operations
|
7
|
|
––
|
|
0.18
|
|
|
$
|
0.43
|
$
|
0.60
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Consolidated Statements of
Comprehensive Income (in thousands of Canadian
dollars)
|
|
|
|
|
|
Years ended March
31
|
|
2016
|
|
2015
|
|
|
|
|
|
Net
income
|
$
|
39,598
|
$
|
55,096
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
Currency
translation adjustment (net of income taxes of $nil)
|
|
30,780
|
|
(914)
|
|
|
|
|
|
|
Net unrealized gain
(loss) on derivative financial instruments
|
|
|
|
|
|
|
designated as cash
flow hedges
|
|
1,309
|
|
(4,584)
|
|
Tax impact
|
|
(349)
|
|
1,145
|
|
|
|
|
|
|
Loss transferred to
net income for
|
|
|
|
|
|
|
derivatives
designated as cash flow hedges
|
|
4,136
|
|
2,417
|
|
Tax impact
|
|
(1,029)
|
|
(600)
|
|
|
|
|
|
|
Cash flow hedge
reserve adjustment
|
|
51
|
|
––
|
|
Tax impact
|
|
(13)
|
|
––
|
|
|
|
|
|
Items that will not
be reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains
(losses) on defined benefit pension plans
|
|
1,099
|
|
(4,245)
|
|
Tax impact
|
|
(317)
|
|
1,198
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
35,667
|
|
(5,583)
|
|
|
|
|
|
Comprehensive
income
|
$
|
75,265
|
$
|
49,513
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
Shareholders
|
$
|
75,220
|
$
|
49,380
|
Non-controlling
interests
|
|
45
|
|
133
|
|
$
|
75,265
|
$
|
49,513
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
Consolidated Statements of Changes in Equity (in thousands
of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March
31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
Contributed
surplus
|
|
Retained
earnings
(deficit)
|
|
Currency
translation
adjustments
|
|
Cash flow
hedge reserve
|
|
Total
accumulated
other
comprehensive
income
|
|
Non-
controlling
interests
|
|
Total
equity
|
Balance, as at
March 31, 2015
|
$
|
519,118
|
$
|
14,420
|
$
|
3,590
|
$
|
35,702
|
$
|
(2,268)
|
$
|
33,434
|
$
|
170
|
$
|
570,732
|
Netincome
|
|
––
|
|
––
|
|
39,553
|
|
––
|
|
––
|
|
––
|
|
45
|
|
39,598
|
Other comprehensive
income
|
|
––
|
|
––
|
|
782
|
|
30,780
|
|
4,105
|
|
34,885
|
|
––
|
|
35,667
|
Totalcomprehensiveincome
|
|
––
|
|
––
|
|
40,335
|
|
30,780
|
|
4,105
|
|
34,885
|
|
45
|
|
75,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-basedcompensation
|
|
––
|
|
1,899
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
1,899
|
Exercise of stock
options
|
|
11,807
|
|
(3,118)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
8,689
|
Repurchase of common
shares
|
|
(2,741)
|
|
––
|
|
(3,291)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
(6,032)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at
March 31,
2016
|
$
|
528,184
|
$
|
13,201
|
$
|
40,634
|
$
|
66,482
|
$
|
1,837
|
$
|
68,319
|
$
|
215
|
$
|
650,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
Contributed
surplus
|
|
Retained
earnings
(deficit)
|
|
Currency
translation
adjustments
|
|
Cash flow
hedge reserve
|
|
Total
accumulated
other
comprehensive
income
|
|
Non-
controlling
interests
|
|
Total
equity
|
Balance, as at March
31, 2014
|
$
|
510,725
|
$
|
15,025
|
$
|
(44,311)
|
$
|
36,616
|
$
|
(646)
|
$
|
35,970
|
$
|
129
|
$
|
517,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
––
|
|
––
|
|
54,963
|
|
––
|
|
––
|
|
––
|
|
133
|
|
55,096
|
Other comprehensive
income (loss)
|
|
––
|
|
––
|
|
(3,047)
|
|
(914)
|
|
(1,622)
|
|
(2,536)
|
|
––
|
|
(5,583)
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
51,916
|
|
(914)
|
|
(1,622)
|
|
(2,536)
|
|
133
|
|
49,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests (note 5)
|
|
––
|
|
––
|
|
(4,015)
|
|
––
|
|
––
|
|
––
|
|
(92)
|
|
(4,107)
|
Stock-based
compensation
|
|
––
|
|
1,867
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
1,867
|
Exercise of stock
options
|
|
8,393
|
|
(2,472)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
5,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at March
31, 2015
|
$
|
519,118
|
$
|
14,420
|
$
|
3,590
|
$
|
35,702
|
$
|
(2,268)
|
$
|
33,434
|
$
|
170
|
$
|
570,732
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Consolidated Statements of Cash
Flows (in thousands of Canadian dollars)
|
|
|
|
|
Years ended March
31
|
Note
|
2016
|
2015
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
39,598
|
$
|
38,898
|
Items not involving
cash
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
|
9,681
|
|
8,208
|
|
Amortization of
intangible assets
|
|
|
29,681
|
|
32,316
|
|
Deferred income
taxes
|
19
|
|
(232)
|
|
1,002
|
|
Other items not
involving cash
|
|
|
(9,560)
|
|
(5,952)
|
|
Stock-based
compensation
|
20
|
|
2,638
|
|
4,316
|
|
Gain on disposal of
property, plant and equipment
|
|
|
(5,232)
|
|
(295)
|
|
|
|
66,574
|
|
78,493
|
Change in non-cash
operating working
capital
|
|
|
(30,814)
|
|
3,580
|
Cash flows used in
operating activities of discontinued
operations
|
7
|
|
––
|
|
(1,556)
|
Cash flows
provided by operating activities
|
|
$
|
35,760
|
$
|
80,517
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
10
|
$
|
(10,050)
|
$
|
(11,154)
|
Acquisition of
intangible assets
|
13
|
|
(5,611)
|
|
(6,752)
|
Business acquisition,
net of cash acquired
|
5
|
|
––
|
|
(355,381)
|
Purchase of
non-controlling interest
|
5
|
|
(71)
|
|
(4,426)
|
Proceeds from
disposal of property, plant and equipment
|
|
|
22,323
|
|
8,942
|
Proceeds from sale of
subsidiary
|
6
|
|
2,274
|
|
––
|
Cash flows provided
by investing activities
|
|
|
|
|
|
|
of discontinued
operations
|
7
|
|
––
|
|
22,097
|
Cash flows
provided by (used in) investing
activities
|
|
$
|
8,865
|
$
|
(346,674)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Restricted
cash
|
9
|
$
|
––
|
$
|
327
|
Bank
indebtedness
|
|
|
661
|
|
645
|
Repayment of
long-term debt
|
|
|
(290,984)
|
|
(82,692)
|
Proceeds from
long-term debt
|
|
|
303,670
|
|
363,653
|
Issuance of common
shares
|
|
|
8,689
|
|
5,921
|
Repurchase of common
shares
|
18
|
|
(6,032)
|
|
––
|
Cash flows
provided by financing activities
|
|
$
|
16,004
|
$
|
287,854
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
2,879
|
|
6,215
|
|
|
|
|
|
|
Increase in cash and
cash equivalents
|
|
|
63,508
|
|
27,912
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of year
|
|
|
106,526
|
|
78,614
|
|
|
|
|
|
|
Cash and cash
equivalents, end of year
|
|
$
|
170,034
|
$
|
106,526
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Cash and cash
equivalents – continuing operations
|
|
$
|
170,034
|
$
|
106,052
|
Cash and cash
equivalents – held for sale
|
|
|
––
|
|
474
|
|
|
$
|
170,034
|
$
|
106,526
|
Supplemental
information
|
|
|
|
|
|
Cash income taxes
paid by continuing operations
|
|
$
|
10,078
|
$
|
11,980
|
Cash interest paid by
continuing operations
|
|
$
|
16,619
|
$
|
10,874
|
SOURCE ATS Automation Tooling Systems Inc.